23 annual general meeting contents - · pdf file2 shilpa medicare limited annual report...

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C O N T E N T S

Page No.

Performance at a glance ................................................................................................. 3

Notice to Members ......................................................................................................... 4

Directors Report ............................................................................................................. 8

Management Discussion and Analysis ..................................................................... 12

Corporate Governance Report .................................................................................. 15

Managing Director & Finance Manager's Certificate ............................................ 23

Auditors Certificate on Corporate Governance ..................................................... 24

Auditor's Report ........................................................................................................... 25

Balance Sheet ................................................................................................................ 28

Profit & Loss Account ................................................................................................ 29

Cash Flow Statement ................................................................................................... 30

Schedules to Accounts ................................................................................................ 31

Significant Accounting Policies and Notes to Accounts ...................................... 38

Balance Sheet Abstract ................................................................................................ 47

Auditors Report on Consolidated Financial Statements ....................................... 49

Consolidated Balance Sheet ....................................................................................... 50

Consolidated Profit & Loss Account ....................................................................... 51

Consolidated Cash Flow Statement .......................................................................... 52

Consolidated Schedules .............................................................................................. 54

Consolidated Significant Accounting Policies and Notes to Accounts ............ 61

Statement pursuant to Section 212 of the Companies Act, 1956 ....................... 66

Proxy Form and Attendance Slip .............................................................................. 67

23rd

ANNUAL GENERAL MEETING

Thursday, the 30th day of September, 2010 at 11.30 AM, at

Hotel Nrupatunga, Ambedkar Circle, Station Road, Raichur - 584 101. (Karnataka)

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COMPANY INFORMATION

Board of DirectorsOmprakash Inani : Chairman

Vishnukant C Bhutada : Managing DirectorCarlton Felix Periera : Independent DirectorPramod Kasat : Independent Director

Venugopal Loya : Independent DirectorRajendra Sunki Reddy : Independent DirectorN.P.S. Shinh : Independent Director

Dr. Abhay B Upasani : Independent Director

AuditorsBohara Bhandari Bung And Associates

Chartered Accountants,Amar Complex, M.G. Road,

Raichur - 584 101

Registered Office1st Floor, 10/80, Rajendra Gunj,

Raichur-584 102 (Karnataka)Phone: 08532-235704, 235006Fax: 08532-235876

Email: [email protected]: www.vbshilpa.com

Board CommitteesAudit CommitteeVenugopal Loya - Chairman

Omprakash Inani - MemberPramod Kasat - MemberRajendra Sunki Reddy - Member

Remuneration CommitteePramod Kasat- ChairmanOmprakash Inani - Member

Venugopal Loya - Member

Investor Grievances CommitteeOmprakash Inani - Chairman

Vishnukant C Bhutada - MemberVenugopal Loya - Member

Company SecretaryNagalakshmi Popuri

BankersThe Lakshmi Vilas Bank Ltd.ICICI Bank Ltd.State Bank of India

Axis Bank Ltd.

Registrars & Share Transfer AgentM/s. Karvy Computershare Pvt. Ltd.

Plot No. 17 to 24, Vithalrao Nagar,Madhapur, Hyderabad-500 081 (A.P.)Tel: 040-23420815-28

Fax: 040-23420814/23420857Email: [email protected]: www.karvycomputershare.com

WorksDeosugur Industrial Area,Deosugur - 584 170(Raichur District)

100% Export Oriented Unit33-33A, 40 to 47,

Raichur Industrial Growth Center,Wadloor Road,Chicksugur Cross,

Chicksugur - 584 134(Raichur District)

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0PERFORMANCE OF THE COMPANY STANDALONE

AT GLANCE FOR 5 YEARS

(Rs. in Lakhs)

Year 2005-06 2006-07 2007-08 2008-09 2009-10

Gross Revenue 4885.34 6983.13 9557.69 13670.24 23557.90

Profit before Depreciation and Taxes 761.29 1200.20 2031.73 2206.45 7700.89

Depreciation 176.79 187.33 351.09 604.37 976.47

Taxes * 188.05 303.41 543.62 860.38 2123.15

Profit After Taxes 396.45 709.46 1137.02 741.70 4601.27

Dividend (Incl. Dividend Tax) 71.25 81.23 99.56 128.84 180.37

PERFORMANCE PARAMETERS

Net Fixed Assets 1657.59 2921.15 8290.63 12724.30 13099.67

Share Capital 347.15 347.15 425.48 440.48 440.48

Reserves & Surplus 3154.59 3773.80 5111.71 6344.36 10778.98

Net Worth (Net) 3501.74 4120.95 5537.19 6784.84 11219.46

Return on Net Worth (%) 20.73@ 17.22 20.53 @@10.93 41.02

Borrowings 210.59** 723.66** 7592.89 9732.66 6746.74

Debt Equity Ratio (Gross) 0.06 0.18 1.37 1.43 0.60

Dividend (%) 18 20 20 25 35

Earning per Share (Rs.) 13.56 20.44 # 5.34 #3.40 #20.89

* Includes Deferred Taxes of the respective year.

** Only Working Capital Borrowings and no Term Loans.

@ On effective Net Worth

@@ Reduced due to impact of exchange fluctuation on ECB on Profit.

# On Rs. 2/- per share.

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0 NOTICE

Notice is hereby given that the 23rd Annual General Meeting of the Company will be held on Thursday, the 30th day of

September, 2010 at 11.30 AM, at Hotel Nrupatunga, Ambedkar Circle, Station Road, Raichur-584 101, Karnataka totransact the following items of business:

ORDINARY BUSINESS:

1. To receive, consider and adopt the Audited Profit and Loss Account for the financial year ended 31st March, 2010 and the

Balance Sheet and other statements as on that date together with the Report of the Board of Directors and the Auditor'sReport thereon.

2. To declare dividend on Equity Shares.

3. To appoint a Director in place of Mr. Venugopal Loya who retires by rotation and being eligible, offers himself for re-appointment.

4. To appoint a Director in place of Mr. Rajendra Sunki Reddy who retires by rotation and being eligible, offers himself forre-appointment.

5. To appoint a Director in place of Mr. N.P.S. Shinh who retires by rotation and being eligible, offers himself for re-appointment.

6. To appoint Auditors and to fix their remuneration and in this regard to consider and if thought fit, to pass with or withoutmodification(s), the following resolution as an Ordinary Resolution.

"RESOLVED THAT M/s. Bohara Bhandari Bung And Associates, Chartered Accountants be and are hereby re-appointedas the Statutory Auditors of the Company to hold office from the conclusion of this Annual General Meeting until the

conclusion of the next Annual General Meeting and to authorize the Board of Directors to fix their remuneration."

SPECIAL BUSINESS:

7. To consider and if thought fit, to pass with or without modification, the following Resolution as an Ordinary

Resolution:

"RESOLVED THAT pursuant to the provisions of the Companies Act, 1956 Mr. Pramod Badrinarayan Kasat, who has

been co-opted as an Additional Director of the company on 16th March, 2010 to act as an Independent Director, in respect ofwhom the Company has received a notice in writing from a member under Section 257 of the Companies Act proposing hiscandidature for the office of a Director, be and is hereby appointed as a Director of the Company who is liable to retire by

rotation."

By order of the Board of Directorsfor SHILPA MEDICARE LIMITED,

Sd/-Place : Raichur Nagalakshmi Popuri

Date : 01st September, 2010 Company Secretary

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0NOTES:

1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY

TO ATTEND AND VOTE INSTEAD OF HIMSELF AND SUCH A PROXY NEED NOT BE A MEMBER OF THECOMPANY.

2. The Explanatory Statement in respect of the special business in the Notice, Pursuant to Section 173(2) of theCompanies Act,1956 is annexed hereto.

3. Brief Profile of Mr. Venugopal Loya, Mr. Rajendra Sunki Reddy and Mr.N.P.S.Shinh who have been proposed to be re-appointed u/s.256 and Mr.Pramod Badrinarayan Kasat, has been annexed alongwith explanatory statement in pursuance ofClause 49 of the listing Agreement.

4. Proxy forms in order to be effective must be received by the company not less than 48 hours before the meeting.

5. The Share Transfer Register and the Register of Members of the Company will remain closed from 20.09.2010 to 22.09.2010(both days inclusive) in connection with the Annual General Meeting and Dividend.

6. The Dividend for the year ended 31st March, 2010 as recommended by the Board, if approved at the meeting, will be paid to

those members whose names appear in the Company's Register of Members after effecting valid transfers received upto theclose of business hours on 19th September, 2010. In respect of shares held in electronic form, the dividend will be payable onthe basis of beneficial ownership as per details provided as at the close of business hours on 22nd September, 2010 by National

Securities Depository Limited and Central Depository Services (India) Limited for this purpose.

7. M/s. Karvy Computershare Pvt. Ltd., Plot No. 17 to 24, Vithalrao Nagar, Madhapur, Hyderabad- 500081, A.P. is the Share

Transfer Agent (STA) of the Company. All communications in respect of share transfers and change in the address of themembers may be communicated to them.

8. Members seeking any information or clarification on the accounts are requested to send queries in writing to the Company, atleast one week before the date of the meeting. Replies will be provided in respect of such written queries at the meeting.

9. Securities and Exchange Board of India, vide Circular Ref.No.MRD/Dop/Cir-05/2009 dated May 20, 2009 made it mandatoryto have PAN particulars for registration of physical share transfer requests. Based on the directive contained in the said

circular, all share transfer requests received after 20th May, 2009 should therefore be accompanied with PAN details.

10. Members holding shares in physical form are informed to furnish their bank account details to the STA to have printed the

same on the dividend warrants so as to avoid fraudulent encashment.

11. All the shareholders and Beneficial Owners who have not claimed the dividend for the years 2003-04 to 2008-2009 are

required to submit their claims immediately to the Company/ STA for the respective dividends. The dividends unclaimed for7 years will be transferred to Investor Education and Protection Fund and the shareholders are not entitled to make any claimfrom the said Fund in relation to the transferred unclaimed- dividends.

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0 12. Details of Directors seeking re-appointment at the upcoming 23rd Annual General Meeting

(pursuant to Clause 49 of the Listing Agreement)

As required under the Listing Agreement, the particulars of Directors, Mr. Venugopal Loya, Mr. Rajendra Sunki Reddy, andMr. N.P.S.Shinh, who are proposed to be re-appointed are given below:

a Name Mr. Venugopal Loya Mr. Rajendra Sunki Reddy Mr. N.P.S. Shinh

b Brief Resume:

i) Age 46 Years 46 Years 65 Years

ii) Qualification B.Com PG in Pharma B.Com, LLB and MBA fromDelhi University.

iii) Experience in specificfunctional area 21 Years 17 Years 40 Years

iv) Date of appointmenton the Board of the 07-10-2002 30-06-2008 30-06-2008Company (ShilpaMedicare Ltd.)

c Nature of expertise in Has gained very good Having rich exposure in was acknowledged as anspecific functional Areas exposure to the accounting the field of Pharma. He Expert in art of turning

systems and other business is a founder secretary of around the Sick/loss makingrelated activities as he has Navodaya Educational companies into Profitablebeen managing various Trust, Raichur which is Companies. He has highlybusinesses of his family running several institutions been exposed to managingsince last 25 years. of Medical, Para-Medical, the companies in difficult

Dental, Pharmacy, Nursing times and bringing themand a host of other from out of problemsinstitiutions.

d Name(s) of the other 1. National StandardCompanies in which (India) Limiteddirectorship held (as per 2. National Standard TyreSection 275 and 278 of the Moulds (India) Limited.Companies Act, 1956) NIL NIL 3. Ezra Trading & Finance

Company Limited4. Mountain Dew

Properties Ltd5. Panel Boards &

Laminates Limited6. Bakelite Hylam Limited7. Sanathnagar

Enterprises Limited.

e Name(s) of Companies in 1. Shilpa Medicare Ltd 1. Shilpa Medicare Ltd 1. National Standard Tyre

which Committee a) Audit Committee a) Audit Committee Moulds (India) Limited

Membership(s) held b) Remuneration a) Share Committee

Committee

c) Investor GrievanceCommittee

f No. of shares of Rs.2/-each held by the Director NIL 5300 Nil

g Relationship betweenDirectors inter se (As perSection 6 and Schedule 1A — — —of the CompaniesAct,1956)

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0EXPLANATORY STATEMENT PURSUANT TO SECTION 173 OF THE COMPANIES ACT, 1956

ITEM NO. 7

To make the Board more independent, to appraise the operational activities particularly the accounting systems and assess theimplementation of decisions and their impact on the performance of the Company, the Board proposed to co-opt Mr. PramodKasat as an Independent Director considering his exposure to financial markets as well as pharma industry particularly in relation

to new developments taking place in the global markets. He was a director of the Company during the period 27-01-2006 to30-09-2009.

Mr. Pramod Kasat, aged about 41 years, an engineer in Electrical and MBA in Finance, joined IL&FS in 1995 after working 3 yearsin various departments at Capital Markets Division of Citi Bank NA. He held various positions at IL&FS and gained rich experiencein investment Banking, Corporate finance, Capital markets and finance structuring for infrastructure projects, Asset & Structured

Finance & Investment Banking Business. He also worked as a Director Global Markets Solutions Group with Credit Suisse aninternational prominent investment banker. He joined the Board of the Company as an Additional Director and has also beenappointed as a Member & Chairman of Remuneration Committee and a Member of Audit Committee.

Mr. Pramod Kasat does not hold any shares of the Company as on 31st March, 2010. The Company has received special notice in

writing from a member as per the provisions of section 257 of the Companies Act, 1956 proposing Mr.Promod Kasat's appointmentas Director of the Company. Considering his rich experience and to get the able guidance and benefit of his experienced ideas, theBoard recommends his appointment.

Other Company Directorships held:

Money Matters Financial Services LimitedSupreme Infrastructure India Limited

None of the Directors of the Company are interested in passing this resolution except Mr. Pramod Kasat being the appointee.

By order of the Board of Directors

for SHILPA MEDICARE LIMITED,

Sd/-Place : Raichur Nagalakshmi Popuri

Date : 01st September, 2010 Company Secretary

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0 DIRECTOR'S REPORT

To,

The Shareholders,

Your Directors have pleasure in presenting herewith the 23rd Annual Report on the business of Your Company together with theAudited Accounts for the financial year ended 31st March, 2010.

FINANCIAL RESULTS (Rs. in lakhs)

Financial Year Financial Year

PARTICULARS 2009-10 2008-09

Standalone Consolidated Standalone Consolidated

Sales (Net of ED) 23445.97 26491.20 13595.51 16643.22

Other Income 111.94 177.45 74.73 103.64

Profit before Interest, Depreciation, Income tax

& Exchange Fluctuation 7783.67 7765.41 3748.83 3301.14

Interest 504.04 542.29 499.52 576.75

Depreciation 976.47 1271.61 604.37 941.10

Exchange Fluctuation Loss (+)/Income (-) -421.26 417.86 1042.86 1027.26

Net profit before tax 6724.43 6369.37 1602.08 756.03

Provision for taxation

a. Current tax 1840.00 1841.46 525.00 524.88

b. Deferred tax 283.15 268.40 332.18 332.18

c. Fringe Benefit Tax 0.00 0.00 3.20 3.20

Profit after tax 4601.28 4259.51 741.70 -104.23

Prior period adjustment (Loss) 10.66 4.68 14.79 14.79

Brought forward from previous year 3216.35 2364.75 2688.69 2682.94

Profit before transfer to General Reserve 7828.29 6628.94 3445.18 2593.50

Transfer to General Reserve 500.00 500.00 100.00 100.00

Provision for proposed Dividend and Dividend Tax 180.37 180.37 128.84 128.84

Add : Loss pertaining to Minority share – 0.09 – 0.08

Balance carried to Balance Sheet 7147.92 5948.66 3216.34 2364.74

FINANCIAL PERFORMANCE

Your Company scaled and recorded newer heights and benchmarks in terms of sales and profits for the year ended March 31, 2010.

Your Company recorded all time high net sales of Rs.23445.97 Lacs (Rs.13595.51 Lacs) recording a growth of 72.45 %. It recordednet profit (after tax) of Rs.4601.28 lacs (Rs.741.70 Lacs ) growth of 520.36% over the previous year due to good margins in theoncology products and increase in production of other products. The net profit in terms of EPS is Rs.20.89 against Rs.3.40 in the

previous year.

During the year under review the Company has performed very well in all product segments recording new customers from various

countries. Operations of EOU stabilized and the Company is expecting better volumes in the future from this unit.

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs.0.70 i.e. 35% (Rs.0.50 i.e. 25%) per equity share of Rs.2/- each for the

financial year under review absorbing an amount of Rs.180.37 lacs inclusive of tax on dividend.

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0SUBSIDIARIES

Operations of M/s. Loba Feinchemie GmbH, Austria are satisfactory and registered cash profit during the financial year. It isexpected that it would breakeven during the year.

Raichem Lifesciences Private Limited, a 100% Subsidiary Company started its marketing operations and is receiving good responsefrom the market.

AWARDS & CERTIFICATIONS

During the year under review the Company achieved the following:

Date Details description of Achievements/Certifications (2009-10)

19.03.2009 Non-Oncology APIs registered in Taiwan

24.03.2009 Recognition & ranked 172nd for its superior financial performance during 2007-08 from SMB Awards(Industry 2.0 Magazine)

23.09.2009 Filed USDMF of Anastrozole with USFDA (23123)

19.10.2009 Ambroxol MF Holder & Site Registered with PMDA, Japan

15.01.2010 Filed USDMF of Temozolomide with USFDA (23479)

21.01.2010 Patent Filed for Novel Polymorphic Form of Bortezomib (160/CHE/2010)

29.01.2010 Filed USDMF of Irinotecan HCl Trihydrate with USFDA (23562)

11.02.2010 Filed USDMF of Oxaliplatin with USFDA (23563)

11.03.2010 Site inspected Effectively by TGA, Australia

Further, during the period April'10 to Aug'10 following important events have happened:

05.05.2010 Export Excellence Award-2010 received from FKCCI, Bangalore

08.06.2010 Obtained EUGMP Certificate for Gemcitabine HCl EP from AFSSAPS, France

15.06.2010 Obtained ISO 9001:2008 Certification for Raichem Lifesciences Pvt Ltd

16.07.2010 State Export Excellence Award-2007-08 & 2008-09 from VITC, Bangalore

28.07.2010 Obtained EUGMP Certificate for Temozolomide (Unit-1) & Capecitabine (Unit-2) from BSG, Hamburg

29.07.2010 Obtained EUGMP Certificate for Anastrozole, Irinotecan & Oxaliplatin from INFARMED, Portugal

INVESTMENTS

During the year the Company has completed 100% EOU Project and stabilized its operations and total sum of Rs 97.42 Crs till

date incurred towards the capital expenses.

Operation of Subsidiaries:

Company has invested Rs 281 lacs in the Raichem Lifesciences Private Limited, a WOS of the Company to meet its capital andoperational expenses. During the year this subsidiary has commenced its commercial operations.

Your Company has invested Rs77.25 lacs in Raichem Medicare Private Limited an Associate and proposed joint venture with Italian

Company.

During the period the Company also invested Rs.10.00 lac in Reva Pharmachem Private Limited an Associate of the Company in

which the Company holds 47.54% of shareholding.

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0 DIRECTORS INFORMATION U/S 217(2A) OF THE COMPANIES ACT, 1956.

Details of employees drawing remuneration exceeding limits prescribed U/s 217 (2A) of the Companies Act, 1956 read with theCompanies (Particulars of Employees) Rules, 1975 is attached with the report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956 Your Directors confirm that:

i. In preparation of annual accounts for the financial year ended 31st March, 2010 the applicable Accounting Standards havebeen followed.

ii. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the financialyear ended 31st March, 2010 and of the profit and loss of the Company for the year.

iii. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with

the provisions of the Company Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraudand other irregularities and

iv. The Directors have prepared the annual accounts on a 'going concern' basis.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND

OUTGO

As required under Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report ofBoard of Directors) Rules, 1988, the information is given as Annexure to this report.

CORPORATE GOVERNANCE

Your Company has complied with the requirements of Clause 49 of the Listing Agreement entered with the Stock Exchanges.Report on Corporate Governance including Auditor's Certificate on compliance with the code of Corporate Governance underClause 49 of the listing agreement is enclosed as Annexure to this report.

MANAGEMENT DISCUSSION AND ANALYSIS

A report on the Management Discussion and Analysis for the year under review is annexed hereto and forms part of the AnnulReport.

AUDITORS

The Statutory Auditors of the Company, M/s. Bohara Bhandari Bung And Associates, Chartered Accountants, retire at the conclusionof the forthcoming Annual General Meeting and are eligible for re-appointment. The Audit Committee and the Board recommendthe re-appointment of M/S. Bohara Bhandari Bung And Associates, Chartered Accountants, as Statutory Auditors of your Company.

ACKNOWLEDGEMENTS

Your Directors wish to express their gratitude to the Central and State Governments, investors, analysts, financial institutions,banks, business associates and customers, the medical profession, distributors and suppliers for their whole-hearted support. Your

Directors commend all the employees of your Company for their continued dedication, significant contributions, hard work andcommitment.

For and on behalf of the Board of Directors

Sd/-Place : Raichur Omprakash Inani

Date : 01st September, 2010 Chairman

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0ANNEXURES ATTACHED TO DIRECTORS REPORT

Form-"A"Particulars under the Companies (Disclosures of particulars in the report of the Board of Directors) Rules, 1998.

Conservation of Energy

A. Power and Fuel Consumption 2009-10 2008-09

1. Electricity

a) Purchased Unit (Kwh) 5876466 2883684

Total Amount (Rs.) 28,497,085 13,099,274

Rate/Unit (Rs.) 4.85 4.54

b) Own Generation

Through Diesel Generator

Unit (Kwh) 359487 164435

Units per Ltr of Diesel Oil (Kwh) 3.38 3.36

Cost/Unit (Rs.) 8.92 9.21

2. Paddy Husk

Qty (Kg) 6458675 1294025

Value (Rs.) 12,732,935 2,440,528

Rate/Kg (Rs.) 1.97 1.89

3. Fire Wood

Qty (Kg) 167702 5812466

Value (Rs.) 264,349 9,022,308

Rate/Kg (Rs.) 1.59 1.55

B. Consumption * per Unit of Production

Electricity (Kwh) 27.33 18.30

Paddy Husk (Kg) 28.30 7.77

Wood (Kg) 0.73 34.89

Note : *Production Unit is different for different products, hence consumption per unit cannot be worked out precisely. Therefore,here total quantity of production considered in kgs only

PARTICULARS OF EMPLOYEES AS REQUIRED UNDER SECTION 217(2A) OF THE COMPANIES ACT, 1956

AND FORMING PART OF THE DIRECTORS' REPORT FOR THE YEAR ENDED 31ST MARCH, 2010

Name & Designation/ Date of Particulars of

Age (Years) Nature of Remunne- Qualifications Experience Joining last Employ-

Duties ration (Years) Employer ment, Name of

Designation,

Period of

Service

Vishnukant C Managing

Bhutada Director Rs.19,935,335/- B.Pharm 23 Years Nov. 1987 None(47 Years)

NOTES: 1. Remuneration includes actual payment of salary, commission and/or taxable value of perquisites, Company'sContribution to Provident Fund

2. Nature of appointment - The appointment is on contractual basis.

3. Other terms and conditions - As per the resolution of general meeting dt. 30-9-2009

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0 Form-"B"PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION

A. RESEARCH AND DEVELOPMENT (R&D)

B. TECHNOLOGY ABSORPTION, ADOPTION AND INNOVATION

SPECIFIC AREAS IN WHICH R&D WAS CARRIED OUT

Research & Development activity gained momentum during the financial year. Development stage of our Oncology products

is satisfactory.

BENEFITS DERIVED

Product stabilization and reduction of cost found non-infringing process for Oncology products. Further, Company plans todevelop new products to increase revenue from Oncology products and share in the market.

EXPENDITURE

Total R&D expenditure during the year was Rs.221.44 lakhs including capital expenditure of Rs.25.08 lakhs excluding firsttime investment in new plant. The corresponding previous year spends were Rs.288.01 lakhs including capital expenditure ofRs.211.88 lakhs.

FOREIGN EXCHANGE EARNINGS AND OUTGO: Please refer Note No.19 (F) of Notes to Accounts.

MANAGEMENT DISCUSSION AND ANALYSIS

INDUSTRY STRUCTURE AND OVERVIEW :

The pharmaceutical industry in India has leap-frogged from Rs. 1500 crore in 1980 to approximately Rs. 1,00,611 crore in 2009-10,thanks to the revival of overall industrial growth to 7.3% during 2009-10.

Industry estimates suggest, that by 2015, when the Indian pharmaceutical market would be worth $20 billion, about 15 percent oftotal drugs would be patented molecules. The Indian pharmaceutical industry currently estimated to be Rs 1,00,611 crore, as theindustry sector growth is back in track following the revival of the economy.

India's pharma sector now ranks 3rd in terms of volume of production with 10% share of the global pharmaceutical market andoccupy 14th possion by value. The Indian pharma industry growth has been fuelled by exports which registered a growth of 35% in2009-10.

The Indian Pharmaceutical Industry today is in the front rank of India's science-based industries with wide ranging capabilities inthe complex field of drug manufacture and technology. A highly organized sector, the Indian Pharma Industry is estimated to beworth $ 4.5 billion, growing at about 8 to 9 percent annually. It ranks very high in the third world, in terms of technology, qualityand range of medicines manufactured. From simple headache pills to sophisticated antibiotics and complex cardiac compounds,almost every type of medicine is now made indigenously.

Due to economic prosperity, a lot more customers are entering organized healthcare, antibiotics and acute therapies are normallythe first line of defence, say analysts. While India's metros and class I cities drive the growth tier II cities and rural market add to thegrowth momentum.

Playing a key role in promoting and sustaining development in the vital field of medicines, Indian Pharma Industry boasts ofquality producers and many units approved by regulatory authorities in USA and UK. International companies associated with thissector have stimulated, assisted and spearheaded this dynamic development in the past 53 years and helped to put India on thepharmaceutical map of the world.

The pharmaceutical industry in India meets around 70% of the country's demand for bulk drugs, drug intermediates, pharmaceuticalformulations, chemicals, tablets, capsules, orals and injectibles. The industry produces the complete range of pharmaceuticalformulations, i.e., medicines ready for consumption by patients and about 350 bulk drugs, i.e., chemicals having therapeutic valueand used for production of pharmaceutical formulations.

Following the de-licensing of the pharmaceutical industry, industrial licensing for most of the drugs and pharmaceutical productshas been done away with. Manufacturers are free to produce any drug duly approved by the Drug Control Authority. Technologicallystrong and totally self-reliant, the pharmaceutical industry in India has low costs of production, low R&D costs, innovative scientific

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0manpower, strength of national laboratories and an increasing balance of trade. The pharmaceutical Industry, with its rich scientifictalents and research capabilities, supported by Intellectual Property Protection regime is well set to take on the international market.

INDIAN ONCOLOGY MARKET :

The oncology market in India has seen a great deal of activity in the last decade. That is essentially because cancer is not considereda disease of developed nations alone any longer with more than 700,000-800,000 new cancer cases being registered in India perannum. The National Cancer Registry Program's data indicates that at any given time there are about 2.5 million cancer patients andthat there are about 450,000 cancer related deaths each year making cancer the fourth largest cause of death in India.

The most important issue facing clinicians in India today is poor awareness about cancer and its prevention among lay public andthe consequent late stage detection of most cancers; the lack of latest or more advanced treatment options, both in terms of drugsand other therapeutic approaches; and the lack of qualified and well-trained oncologists that could shoulder the vast cancer burdenin India (it is believed that there are just 0.98 oncologists per 100,000 people in India).

Despite these daunting statistics, the market for oncology drugs has been on the rise in the last few years with major players - bothdomestic and international - eyeing the increasing cancer patient base in the country.

The oncology market in India is expected to touch nearly INR 3 to 4 billion by 2014. According to a recent Frost & Sullivan report,the cancer market is expected to grow at a compounded annual growth rate (CAGR) of 21% from 2008 to 2014. The growth willbe driven by the introduction of new treatments, increasing number of patients on chemotherapy, and improved access to moderncancer therapies.

GLOBAL ONCOLOGY MARKET :

The global cancer market has been growing at 17 percent from 2006 representing a CAGR of 5 percent (2007-13). Oncology is oneof the leading therapeutic categories in the global pharmaceutical market and two classes of anticancer drugs represent some of thetop 10 global drugs, these are antineoplastics and immunostimulants. The top 10 global cancer brands account for nearly 45 percentof global pharmaceutical sales.

Within the global oncology market, the leading class of drugs continues to remain the antineoplastics growing at more than 20

percent.

Your company being one of the niche player in this segment, it will certainly have good prospects in year to come as the demand

for these drugs is expected to grow faster than other drugs. Having established increased capacity of API's at company's EOU, it

is embarking on formulation business in Oral, Injectibles and Lyophilised segments at SEZ. Being plant in SEZ, it will be eligible

for benefits for such unit. It is expected that plant should be operational in about 18 months time.

OUTLOOK ON OPPORTUNITIES :

The days when the Indian pharmaceutical industry was synonymous with cheap generic drug production are passing while generics

continue to play a major part in the industry's success, many companies have started down the long road of drug discovery and

branded product development. With low-cost manufacturing, high-quality research and manufacturing facilities and educated

personnel, the Indian pharmaceutical industry presents both a competitive threat and partner opportunities. India is the world's

fourth largest producer of pharmaceuticals by volume, accounting for around 8% of global production. In value terms, production

accounts for around 1.5% of the world total.

There are around 270 large R&D based pharmaceutical companies in India, including multinationals, government-owned and private

companies, there are also around 5,600 smaller licensed generics manufacturers, although in reality only around 3,000 companies are

involved in pharmaceutical production. Most small firms do not have their own production facilities, but operate using the spare

capacity of other drug manufacturers. The advent of pharmaceutical product patent recognition in January 2005 changed the ground

rules for Indian companies. In the run up to the new post-patent era and since, the Indian industry has been evolving. R&D departments

are moving away from reverse engineering in favor of developing novel drug delivery systems and discovery research.

In the last few years India has witnessed many new entrants in the oncology market. Patent-protected brands from global multinationals

have found their way into this market despite the regulatory hurdles. This ingression is largely driven by the rapidly changing

economy in India that has caused a shift in the disease patterns and resulted in a rise in the incidence of many cancers. "Although

the market still remains largely generic, trends show an increasing demand for the latest oncology drugs, irrespective of their

premium pricing".

While recent reports have indicated the rising incidence of cancer in India, there is very little current information available about

the diagnosed incidences of various types of cancers. Further, in the absence of any established treatment guidelines from any

medical bodies in India, the practice of oncology varies depending on availability of treatment options and the patient's ability to

pay.

The fact remains that most oncology treatments are hospital-based and hospital-related drug consumption information is not very

accurately documented in India. These short comings complicate the issue of sizing the market for oncology drug treatments.

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0 According to the report titled, 'Market Insight: Oncology in India' the market for chemotherapeutic drugs in India is worth INR12.5 billion or $271m, based on in-hospital sales of various anti-cancer drugs in the leading hospitals and cities in India. This marketis forecast to grow at a CAGR of 16% in the next five years.

The report reveals that although the Indian oncology market is currently dominated by Indian companies, global pharmaceuticalcompanies with premium-priced brands are slowly gaining momentum. This is largely driven by the uptake of newer anti-cancertreatments, especially the biologic drugs.

The Indian oncology market is likely to be dominated by generics in the coming years since the generic pricing brings these drugswithin the reach of a vast majority of Indians. However, as the Indian economy transforms and disposable incomes increase, therewill likely be a small but significant proportion of Indian cancer patients who will be able to afford the newer and premium-pricedanti-cancer treatments.

Deaths from lung cancer, breast cancer, ovarian cancer and pancreatic cancer are rising in India. Cancer accounts for 8% of themain causes of deaths in India. In males, lung cancer has the highest mortality, whereas cervical cancer is found to be the mostcommon cancer in females. Lung cancer is also the most commonly diagnosed cancer in the world. The primary cause of lungcancer in up to 90% of patients is tobacco. Lung cancer represents one-fifth of all cancer-related deaths in India.

Keeping this in view it was said that "New therapies to arrive on the market are priced in a much higher bracket because of theirproven survival benefits and reduced toxicity. These therapies are preferred over generic drugs, thereby generating more revenues."

OUTLOOK ON THREATS, RISK AND CONCERNS :

There are risks and uncertainties relevant to the Company's business, financial condition and results of operations that may affectthe Company's performance and ability to achieve its objectives. Launching of new drugs, competition particularly from ChineseIndustry, different type of regulatory procedures are some of the factors that the Company identifies the most significant risksfaced, could cause its actual results to differ materially from expected and historical results. There are other risks and uncertaintiesnot currently known to the Company.

The Company has implemented a system of internal control that involves policies and procedures, communication and trainingprogrammes, supervision and monitoring and processes for escalating issues to the appropriate level of senior management. Sucha system helps to facilitate the Company's ability to respond appropriately to risks and to achieve objectives and helps ensurecompliance with applicable laws, regulations and internal policies. It is not possible, however, for the Company to implementcontrols to respond to all the risks that it may face, and there can be no assurance that the steps the Company has taken to addresscertain risks will manage these risks effectively or at all.

INTERNAL CONTROL SYSTEMS AND ADEQUACY

The Company has an adequate internal control system including suitable monitoring procedures commensurate with its size andthe nature of the business. The internal control systems provide for all documented policies, guidelines, authorization and approvalprocedures. The Company has an internal audit department which carries out audits throughout the year. The statutory auditorswhile conducting the statutory audit, review and evaluate the internal controls and their observations are discussed with the AuditCommittee of the Board.

FINANCIAL PERFORMANCE

During the year, the Company recorded sales of Rs. 2398.94Mn. Operating margins improved significantly primarily due to favorableproduct mix, forex movement and close management of costs during the year. Earnings before tax were at Rs 6724.42 Mn andEarnings after tax were at Rs. 460.13 Mn, representing 19.18% margin to sales.

HUMAN RESOURCES :

Human resources are the most valuable asset for the Company, and Shilpa Medicare continues to seek, retain and enrich the bestavailable talent.

The human resource plays an important and vital role in the growth and success of an organization. Your Company has maintainedcordial and harmonious relations with all employees.

The Company provides an environment which encourages initiative, innovative thinking, and rewards performance. The Companyensures training and development of its personnel through succession planning, job rotation, on-the-job training, and varioustraining programs and workshops. The total number of employees of the Company as on March 31, 2010 is 296.

CAUTIONARY STATEMENT :

Statements in the "Management Discussion and Analysis" describing the Company's objectives, estimates, expectations or projectionsmay be "forward looking statements" within the meaning of applicable laws and regulations. Actual results could differ materiallyfrom those expressed or implied. Important factors that could make a difference to the Company's operations; include Governmentregulations, patent laws, tax regimes, economic developments within India and countries in which the Company conducts business,litigation and other allied factors.

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0CORPORATE GOVERNANCE REPORT FOR THE

YEAR 2009-2010(As required under Clause 49 of the listing agreement)

The Company's shares were listed on Bombay Stock Exchange Limited on 19.06.1995 and National Stock Exchange Limited on

03.12.2009. The Corporate Governance Report has been prepared in accordance with Clause 49 of the Listing Agreement with theStock Exchanges.

1. CORPORATE GOVERNANCE PHILOSOPHY

The Company is committed to the highest standards of Corporate Governance practices. The Company relies on the strongCorporate Governance systems and policies of business for healthy growth, accountability and transparency. Good CorporateGovernance will certainly benefit the Board and Management to carry out the objectives effectively for the benefit of the

company and its shareholders. The code of Corporate Governance emphasizes the transparency of systems to enhance thebenefit of shareholders, customers, creditors and employees of the Company. In addition to compliance with regulatoryrequirements, the Company endeavors to ensure that the highest standards of ethical conduct are maintained throughout the

organization.

The Company has complied with the requirements of the Corporate Governance code in terms of Clause 49 of the Listing

Agreement with the Stock Exchanges as disclosed herein below.

2. BOARD OF DIRECTORS

The Board of Directors along with its committees provides focus and guidance to the Company's Management as well asdirects and monitors the performance of the Company.

The Board presently comprises of Eight (8) Directors, having rich and vast experience with specialized skills in their respectivefields, out of which seven are Non-Executive Directors. The Company has a Non-Executive Chairman and Six IndependentDirectors comprising more than one third of the total strength of the Board. The Non-Executive Directors are more than

50% of the total number of Directors with the Managing Director being the only Executive Director on the Board of theCompany.

All the Directors on the Board of the Company have made necessary declarations/disclosures regarding their other Directorshipsalong with Committee positions held by them in other companies.

During the year under review five Board Meetings were held on 27-04-2009, 22-07-2009, 31-08-2009, 21-10-2009 and

25-01-2010. The Maximum time-gap between any two consecutive meetings did not exceed four months. The details of themeetings held are as follows:

Name of the Director Category No of Board Attendance No of No of

Meetings at last Director- Member-

during the AGM ships held ships held in

Year 30.09.2009 in other committees

2009-2010 Companies

Held Attended

Omprakash Inani Chairman, Non-executive 5 4 P NIL 3

Vishnukant C Bhutada Managing Director 5 5 P NIL 1

Venugopal Loya Director, Independent 5 4 P NIL 3

Carlton Felix Pereira Director, Independent 5 4 A 2 NIL

Narinderpal Singh Shinh Director, Independent 5 4 A 7 NIL

Rajendra Sunki Reddy Director, Independent 5 4 P NIL 1

* Abhay Bindu Madhav Upasani Director, Independent 2 1 – NIL NIL

#$Pramod Badrinarayan Kasat Director, Independent 3 2 A NIL 2

Note: Excluding Directorship in Foreign and Private Limited Companies

# Ceased to be a director w.e.f. 30th September, 2009.$ Appointed as Additional Director w.e.f. 16th March, 2010* Appointed as Director w.e.f 30th September, 2009

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0 3. COMMITTEES OF DIRECTORS

A. Audit Committee

The Company constituted a Qualified and Independent Audit Committee comprising of three Non-Executive IndependentDirectors in accordance with the provisions of Clause 49 of the Listing Agreement with the Stock Exchanges and Section292A of the Companies Act, 1956.

The Committee is empowered with the powers as prescribed under Clause 49 of Listing Agreement and Section 292A of the

Companies Act, 1956. The Committee also acts in terms of reference and directions of the Board from time to time.

The composition of the Audit Committee and the attendance of each Member of the Committee at the meetings were asfollows:

No. of meetings

Sl.No. Name of the Director Category held during No. of meetings

the year attended

1 Venugopal Loya Chairman 5 5

2 Omprakash Inani Member 5 5

3 Pramod Kasat #$ Member 3 2

4 Rajendra Sunki Reddy Member 5 5

# Ceased to be a director w.e.f. 30th September, 2009.

$ Appointed as Additional Director w.e.f. 16th March, 2010

The Chairman of the Audit Committee also attended the last Annual General Meeting of the company.

The Managing Director, Sr. Mgr. Finance and Statutory Auditors are also invited to the meetings, as required, to brief theCommittee Meetings. The Company Secretary acts as the Secretary of the Committee.

The Audit Committee meetings were held during the year under review on the following dates 25-04-2009, 22-07-2009

29-08-2009, 20-10-2009 and 23-01-2010. The gap between audit committee meetings was not more than four months.

The necessary quorum was present at all the meetings.

B. REMUNERATION COMMITTEE

The Remuneration Committee comprises of three Non-Executive Directors. The composition of the Remuneration Committee

is as follows:

S.No. Name of the Director Category

1 Pramod Kasat Chairman

2 Omprakash Inani Member

3 Venugopal Loya Member

The Remuneration committee reviews the remuneration package payable to Executive Director(s) and Executives in the toplevel management of the Company and other elements of their appointment and gives its recommendations to the Board andacts in terms of reference of the Board from time to time.

The details of remuneration and commission paid during the year to the Managing Director, is as follows:

Rs./lacs.

Salary 50.00

Allowances, Perquisites & Others 29.94

Commission 113.66

Companies Contribution to PF 5.76

Total 199.35

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0Apart from the above, he is also eligible for the Leave Encashment, Leave Travel Concession, Gratuity and other benefits interms of his appointment and rules of the Company.

Compensation paid to Non Executive Directors and their shareholding is as follows:

Name of the Director Sitting Fees Paid Rs. No. of shares held on 31-03-2010

Omprakash Inani 40000 779776

N.P.S. Shinh 50000 NIL

Carlton Felix Pereira 40000 NIL

Pramod Badrinarayan Kasat Nil NIL

Venugopal Loya 30000 NIL

Rajendra Sunki Reddy Nil 5300

Abhay Bindumadhav Upasani 10000 NIL

Other than the sitting fees to Non-Executive Directors, there was no material pecuniary relationship or transaction with theCompany. The Company has not issued any stock options to its Directors/Employees.

C. INVESTOR RELATIONS COMMITTEE

The Present Composition of the Investors Relations Committee (Shareholders / Investors Grievances Committee) is asunder:

Name of the Director Nature of Directorship Membership

Omprakash Inani Non-Executive Chairman

Vishnukant C Bhutada Managing Director Member

Venugopal Loya Non-Executive Member

The Investors Relations Committee of the Board is empowered to oversee the redressal of investor's complaints pertaining to

share transfer, non-receipt of Annual Reports, dividend payments, issue of duplicate share certificate, transmission of sharesand other miscellaneous complaints. In accordance with Clause 49 of the Listing Agreement with Stock Exchanges, the Boardhas authorized the Compliance Officer to approve the share transfers/ transmissions and comply with other formalities in

relation thereto. All investor's complaints, which cannot be settled at the level of the Compliance Officer, will be placed beforethe Committee for final settlement.

There were no pending share transfers and un-resolved shareholders' grievances pertaining to the Financial Year ended

31st March, 2010.

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0 D. GENERAL BODY MEETINGS

i) The Details of the last three Annual General Meetings are given below:

Financial Special Resolution

year ended Date Venue Time passed

March 31st, 2007 5th September, 10/80, 1st Floor, 1) Sub division of Authorised

2007 Rajendra Gunj, 11.00 am share CapitalRaichur-584102 2) Re-appoinment of

Mr.Vishnukant C Bhutada as

Managing Director

March 31st, 2008 19th September, 10/80, 1st Floor,

2008 Rajendra Gunj, 12.15 pm No Special ResolutionRaichur-584102

March 31st, 2009 30th September, Hotel Nrupatunga, 1) Appoinment of Mr. Deepak2009 Ambedkar Circle, Kumar Inani as Manager

Station Road, (Marketing) of the CompanyRaichur-584101, 11.00 am and to hold an office or placeKarnataka. of profit.

2) Re-appoinment ofMr. Vishnukant C Bhutada as

Managing Director

ii) During the last three years the following Extra-Ordinary General Meetings were held at 10/80, 1st Floor, RajendraGunj, Raichur.

Year Date Time Special Resolution Passed

2007-2008 26.11.2007 02.00 PM i) Court convened shareholders meeting to approve the

amalgamation of Shilpa Organics Private Limited withthe Company.

2008-2009 No Extra-ordinary General Meeting of the Members was held during the year.

2009-2010 NoExtra-ordinary General Meeting of the Members was held during the year.

4. DISCLOSURES

A. Disclosures on Materially Significant Related Party Transactions

There were no materially significant related party transactions compared to the business volume of the Company duringthe year conflicting with the interest of the company.

B. Details of Non-Compliance and Penalties

There was no non-compliance during the last three years by the company on any matter related to Capital Market. Therewere no penalties imposed nor strictures passed on the company by the Stock Exchanges, SEBI and any StatutoryAuthority relating to Capital markets.

C. CEO/CFO Certification

The Managing Director and Manager-Finance (who is heading the finance functions) have certified to the Board inaccordance with Clause 49(V) of the Listing Agreement pertaining to CEO certification for the financial year ended

31st March, 2010.

D. Compliance Certificate

Compliance Certificate for Corporate Governance from Auditors of the Company is annexed hereto and forms part of

this Report.

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0E. Code of Conduct

The Company has framed the Code of Conduct for Directors and Senior Management. The Code of Conduct isapplicable to all Directors and Senior Management of the Company. All the members of the Board and Senior Management

of the Company have affirmed compliance with their respective Codes of Conducts for the Financial Year ended31st March, 2010. A declaration to this effect, duly signed by the Managing Director is annexed hereto and forms part ofthis Report.

F. Details of Compliance with Mandatory Requirements and Adoption of the Non-Mandatory Requirements

The Company has complied with the mandatory requirements of Clause 49 and is in the process of implementation ofNon-mandatory requirements.

G. Relationship inter-se among Directors

In accordance with the provisions of Section 6 read with Schedule IA of the Companies Act, 1956, Managing Director,Mr. Vishnukant Chaturbhuj Bhutada and Chairman of the Board Mr.Omprakash Inani belongs to promoter group andare related to each other.

5. MEANS OF COMMUNICATION

A. Quarterly and half-yearly reports are published in two Newspapers- One in English and one in Kannada.

B. The Financial Results are regularly submitted to the Stock Exchanges in accordance with the Listing Agreement andsimultaneously displayed on the Company's website www.vbshilpa.com. The Secretarial Department serves to inform theinvestors by providing key and timely information like details of Directors, Financial Results, Shareholding pattern, etc.

C. The Company is also displaying official news on its website www.vbshilpa.com.

D. Management Discussion & Analysis forms part of this Annual Report.

6. GENERAL SHAREHOLDER'S INFORMATION

A. Annual General Meeting

Date and Time : Thursday, 30th September, 2010 at 11.30AM

Venue : Hotel Nrupatunga, Ambedkar Circle, Station Road,

Raichur-584101,Karnataka

Last Date of Proxy forms submission : 11.30 AM on 28.09.2010

B. Financial Year : April 1st , 2009 to March 31st , 2010

C. Book Closure : 20.09.2010 to 22.09.2010

D. Dividend Payment Date : Within 15 days from the date AGM's approval

E. Listing on Stock Exchanges : 1. Bombay Stock Exchange Limited,Phiroze Jeejeebhoy Towers,Dalal Street, MUMBAI - 400 051

2. National Stock Exchange of India Limited,'EXCHANGE PLAZA' 5th Floor, Plot No.C/1, G-Block,

Bandra-kurla Complex, Bandra (E), MUMBAI-400 051

F. Stock Code

Name of the Stock Exchange Stock Code Scrip Code

Bombay Stock Exchange Limited 530549 SHILPA MEDCA

National Stock Exchange of India Limited N.A SHILPAMED-EQ

Demat ISIN No. for NSDL & CDSL INE790G01023

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0 The Companies Securities are listed on the Bombay Stock Exchange Limited and National Stock Exchange of IndiaLimited. The Listing fee for the year 2009-2010 has been paid to both the above said Stock Exchanges.

G. Market Price Data

The monthly High, Low and trading volumes of the Companies Equity Shares during the last financial year 2009-2010at The Bombay Stock Exchange Limited and the National Stock Exchange of India Limited are given below:

Bombay Stock Exchange National Stock Exchange

Month Limited (BSE) of India Limited (NSE)#

High (Rs.) Low (Rs.) Volume High (Rs.) Low (Rs.) Volume

April, 2009 64.00 32.50 61,475 N.A N.A N.A

May, 2009 80.35 49.55 1,65,855 N.A N.A N.A

June, 2009 93.50 74.00 2,11,102 N.A N.A N.A

July, 2009 100.05 63.50 1,68,394 N.A N.A N.A

August, 2009 141.65 86.00 9,29,790 N.A N.A N.A

September, 2009 178.20 140.05 12,45,749 N.A N.A N.A

October, 2009 198.00 128.05 7,32,459 N.A N.A N.A

November, 2009 212.40 165.00 4,04,175 N.A N.A N.A

December, 2009 208.50 173.40 3,01,671 206.80 171.00 15,326

January, 2010 271.80 191.05 30,82,973 270.80 190.00 18,08,199

February, 2010 251.95 221.00 2,37,663 258.40 220.00 1,25,030

March, 2010 285.80 233.05 5,11,159 288.0 230.60 4,47,319

# The shares were listed w.e.f. 3rd December, 2009

H. Share Performance of the Company in Comparison with BSE Sensex

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0All Services relating to share transfer/transmissions and information may be addressed to:

I. Registrar and Share Transfer Agent

M/s. Karvy Computershare Private Limited,Plot No. 17 to 24, Vithalrao Nagar, Madhapur

Hyderabad-500 081, A.P.Tel: 040-23420815-28Fax: 040-23420814/23420857

E-mail: [email protected]: www.karvycomputershare.com

The Company periodically audits the operations of share transfer agent.

J. Share Transfer System

Share Transfers in physical form shall be lodged with the Registrar at the said address. The share transfers are generallyprocessed by our Registrars within 15 days from the date of receipt, provided the documents are complete in all respects.

Pursuant to Clause 47(c) of the Listing Agreement with the Stock Exchanges, certificates, on half-yearly basis, have been

given by a Practicing Company Secretary due compliance of shares transfer formalities.

K. Distribution of Equity Shares as on 31st March, 2010

CATEGORY No of % to Total No. of

Shareholders Shareholders Shares Held % to Capital

From To

1 5000 2824 94.07 1886275 8.56

5001 10000 72 2.40 548415 2.49

10001 20000 31 1.03 435265 1.98

20001 30000 13 0.43 344635 1.56

30001 40000 7 0.23 250956 1.14

40001 50000 4 0.13 190000 0.86

50001 100000 16 0.53 1122175 5.10

100001 ABOVE 35 1.18 17246444 78.31

TOTAL 3002 100.00 22024165 100.00

L. Shareholding Pattern as on 31st March, 2010

Category No. of Shares held % of Capital

Indian Promoters 13204441 59.95

Clearing Members 9755 0.04

HUF 172393 0.78

Banks, Financial institutions, Insurance Companies(Central/State Govt institutions/ Non-Govt. institution) 500 0.00

Mutual Funds 845066 3.84

Indian Public 5142300 23.35

Private Corporate Bodies 1652990 7.51

NRI's/OCB's/FCCB's, others 996720 4.53

Total 22024165 100.00

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0 M. Dematerialization of shares and liquidity

The Company has made necessary arrangements with National Securities Depository Limited (NSDL) and CentralDepository Services (India) Limited (CDSL) for dematerialization facility. As on 31st March, 2010, 97.28% of the

Company's Equity Shares are in dematerialized form. The ISIN No./ Code for the Company's Equity Shares isINE790G01023. Shareholders can open an account with any of the depository participants registered with any of thesedepositories.

N. Plant Locations

1. 1A,1B,2,2A,3A to 3E & 4A to 4C,5A,5BDeosugur Industrial Area,Deosugur-584 170

(Dist. Raichur)

2. 100% EOU, 33-33A, 40 to 47,Raichur industrial Growth Centre,Wadloor Road, Chicksugur Cross,

Chicksugur-584 134(Dist. Raichur)

3. Wind Mills

Machine-No.1 Machine-No.2 Machine-No.3 Machine-No.4

Madkaripura, Jogimatti, Vanivilas sagar, Chikkanayakanhalli,

Dist. Chitradurga Dist. Chitradurga Dist. Chitradurga Dist. Tumkur

O. Subsidiaries

1. LOBA Feinchemie GmbH,

Fahragasse 7,A-2401, Fischamend, Austria.

2. ZATORTIA HOLDING LIMITED

17, Gr.Xnopoulo Street,

Totalserve House-3106Limasol - Cyprus,P.O.Box-54425, 3724

3. RAICHEM LIFESCIENCES PRIVATE LIMITED,

8, Shreeji House, 1st Floor, 75,Mint Road, Fort,Mumbai-400041

P. Registered Office & Address for Correspondence

Shilpa Medicare Limited

1st Floor, 10/80,Rajendra Gunj,Raichur-584 102

Karnataka

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0Managing Director and Finance Manager's Certification

We have reviewed the financial statements, read with the cash flow statement of Shilpa Medicare Limited for the year ended

March 31st, 2010 and that to the best of our knowledge and belief, we state that;

a) (i) These statements do not contain any materially untrue statement or omit any material fact or contain statements that may

be misleading.

(ii) These statements present true and fair view of the company's affairs and are in compliance with current Accounting

standards, applicable laws and regulations.

b) There are, to the best of our knowledge and belief, no transaction entered into by the company during the year which arefraudulent, illegal or in violation of the company's Code of Conduct.

c) We accept responsibility for establishing and maintaining internal controls for financial reporting. We have evaluating theeffectiveness of internal control systems of the Company and have disclosed to the auditors and audit committee deficienciesin the design or operation of internal control, if any, and steps taken or proposed to be taken for rectifying these deficiencies.

d) We have indicated to the auditors and audit committee:

(i) Significant changes in accounting policies made during the year and that the same have been disclosed suitably in thenotes to the financial statements; and

(ii) There are no instances of fraud involving the management or an employee.

Sd/- Sd/-

Place : Raichur N.C.Bhandari Vishnukant C Bhutada

Dated : 01st September, 2010. Sr. Mgr. Finance Managing Director

Declaration by the Managing Director

I, Vishnukant C Bhutada, Managing Director, hereby declare that the Company has received the declarations from all the Board

Members and Senior Management Personnel affirming compliance with Code of Conduct for Members of the Board and SeniorManagement for the year 2009-2010.

Sd/-

Place : Raichur Vishnukant C Bhutada

Dated : 01st September, 2010. Managing Director

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0 AUDITOR'S CERTIFICATE ON CORPORATE GOVERNANCE

To,

The Members of Shilpa Medicare Ltd.,

We have examined the compliance of Corporate Governance by Shilpa Medicare Ltd., for the financial year ended on31st March, 2010, as stipulated in clause 49 of the Listing Agreement of the said Company with the concerned Stock Exchange.

The Compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination has beenlimited to a review of the procedures and implementations thereof, adopted by the Company for ensuring compliance with theconditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the

Company.

In our opinion and to the best of our information and according to the explanations given to us and based on the representationsmade by the Directors and the Management, we certify that the Company has complied with the conditions of Corporate Governanceas stipulated in the above mentioned Listing Agreement.

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

For Bohara Bhandari Bung And Associates

Chartered Accountants (Firm Reg No: 008127S)

Sd/-CA.P.M.Bhandari

Partner M.No.036241

Place : RaichurDated : 01st September, 2010

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0AUDITOR'S REPORT

To,

The Members ofShilpa Medicare Limited,

We have audited the attached Balance Sheet of Shilpa Medicare Limited ("the Company") as at 31st March, 2010, and also theProfit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statementsare 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 the auditing standards generally accepted in India. Those Standards require that we planand 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, evidences supporting the amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used and significant estimates made by management, as well as evaluating theoverall 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 (as amended) ("the order") issued by the Central Government of

India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on thematters specified in paragraphs 4 & 5 of the said Order to the extent applicable.

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

1. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for thepurposes of our audit;

2. 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;

3. The Balance Sheet, Profit and Loss Account and Cash flow statement, dealt with by this report are in agreement with thebooks of account;

4. 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;

5. On the basis of written representations received from the Directors, as on 31st March, 2010, and taken on record by the Boardof Directors, we Report that none of the directors is disqualified as on 31st March, 2010 from being appointed as a director in

terms of clause (g) of sub-section (1 ) of section 274 of the Companies Act,1956;

6. In our opinion and to the best of our information and according to the explanations given to us, the said accounts readtogether with the Significant Accounting Policies and other notes thereon, give the information required by the CompaniesAct,1956, 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, 2010;

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

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


Chartered Accountants

(Firm Reg No: 008127S)

Sd/-

CA.P.M.Bhandari

Partner M.No.036241

Place : RaichurDated : 01st September,2010

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0 ANNEXURE REFERRED TO IN OUR REPORT OF EVEN DATE

On the basis of such checks as we considered appropriate and in terms of information and explanation given to us, we

further state that:

1. In respect of Fixed Assets:

a) The Company has maintained proper records, showing full particulars including Quantitative details and situation ofFixed Assets.

b) As explained to us, Fixed Assets have been physically verified wherever feasible by the Management and no material

discrepancy with respect to book records was noticed on such verification.

c) During the year the company has not disposed off a substantial part of the Fixed Assets.

2. In respect of Inventories:

a) The Inventory in its possession has been physically verified by the management. In our opinion the frequency of theverification is reasonable. The Stocks lying with third parties have been verified with reference to Statements of Accounts

or Subsequent return of goods.

b) The procedure as explained to us and followed by the Management for physical verification of Inventories is reasonable

and adequate in relation to the size of the company and the nature of its business.

c) According to the information and explanations given to us, no material discrepancies were noticed on physical verificationas compared to book records.

3. In respect of the loans, secured or unsecured, granted or taken by the company to/from companies, firm or other partiescovered in the register maintained under section 301 of the Companies Act, 1956:

a) The Company has advanced interest free Unsecured Loan of Rs.867.14 Lakhs to its subsidiary Companies, of whichRs.2479.51 are outstanding as on 31.03.2010, from the companies covered in the register maintained under section 301of the Act.

b) The rates of interest and the terms and conditions of the above said transactions where ever applicable, are prima-facie

not prejudicial to the interest of the company.

c) The payment of Principal amount and interest thereon, where ever applicable are regular.

d) There were no overdue amounts of the aforesaid transactions.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control systemcommensurate with the size of the company and the nature of its business for the purchase of inventory and fixed Assets and

also for the sale of goods. During the course of our audit, we have not observed any continuing failure to correct majorweaknesses in internal control systems.

5. In respect of contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a) According to information and explanations given to us, the transactions made in pursuance of contracts or arrangementsthat needs to be entered in the Register maintained under sections 301 of the Companies Act, 1956, have been soentered.

b) According to the information and explanations given to us, the transactions made in pursuance of contracts or arrangementsentered in the register maintained under sec.301 of the Companies Act, 1956 have been made at prices which are

reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to information and explanations given to us, the company has not accepted any deposits fromthe Public.

7. In our opinion, the company has an internal Audit System commensurate with the size and nature of its business.

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08. On the basis of records produced, we are of the opinion that prima-facie cost records and accounts prescribed by the centralgovernment under section 209(1) d of the Companies Act, 1956 in respect of the products of the company under the rules

under said section are generally maintained / are under preparation. However, we have not made a detailed examination of therecords with a view to determining whether they are accurate or complete.

9. In respect of statutory dues:

a) According to the records of the company, undisputed statutory dues including Provident Fund, Investors EducationFund, Income-tax, Sales-tax, Wealth-tax, Service tax, Customs duty, Excise duty, Cess and any other statutory dues havebeen regularly deposited with the appropriate authorities. According, to the information and explanations given to us, no

undisputed amount payable in respect of the aforesaid dues were outstanding as at 31st March, 2010 for a period of morethan Six months from the date they became payable.

10. The company does not have accumulated losses at the end of the financial year. The Company has not incurred cash lossesduring the financial year covered by the audit and in the immediately preceding financial year.

11. Based on our audit procedures and according to the information and explanation given to us, the company has not defaultedin repayment of dues to financial institutions, banks or debenture holders.

12. According to the information and explanation given to us and based on the information available, no loans and advances havebeen granted by the Company on the basis of Security by way of pledge of shares, debentures and other Securities.

13. In our opinion the company is not a chit fund or a nidhi fund/mutual Benefit fund/society. Therefore, provisions of

clause4 (xiii) of the Companies (Auditor's Report) Order, 2003 is not applicable to the company.

14. The Company did not either deal or trade in shares, securities, debentures and other Investment and hence clause 4(xiv) is not

applicable.

15. According to the information provided to us, the company has not given any guarantee for loans taken by others from banks

or financial institutions.

16. In our opinion and according to information and explanation given to us, the term loans have been applied for the purpose forwhich they were raised.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of theCompany, we are of the opinion that there are no funds raised on short-term basis that have been used for long-terminvestment and vice versa.

18. During the year, the company has not made preferential Allotment of Equity shares to parties and companies covered in theRegister maintained under Section.301 of the Companies Act, 1956.

19. The Company has not raised funds by way of issue of Debentures; Hence, Clause 4(xix) of Companies (Auditor's Report)

Order, 2003 is not applicable to the company.

20. The Company has not raised any funds through Public Issue during the year and hence Clause 4(xx) of Companies (Auditor's

Report) Order, 2003 is not applicable to the company.

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


Chartered Accountants (Firm Reg No: 008127S)

Sd/-CA.P.M.Bhandari

Place : Raichur Partner

Dated : 01st September, 2010 M.No.036241

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Particulars Sch.No. Current Year Previous Year

Balance Sheet as at 31st March, 2010

Schedule 01 to 10 and Notes to Accounts form an integral part of Balance Sheet.As per our Report of even date Attached.

For Bohara Bhandari Bung And Associates For and on behalf of the Board of DirectorsChartered Accountants Sd/- Sd/- Sd/-

(Firm Reg No:008127S) Omprakash Inani Vishnukant C Bhutada Carlton Felix Periera

Sd/- Chairman Managing Director Independent DirectorCA.P.M. Bhandari Sd/- Sd/- Sd/-

Partner Pramod Kasat Venugopal Loya Rajendra Sunki Reddy

M.No.036241 Independent Director Independent Director Independent DirectorSd/- Sd/- Sd/-

Place : Raichur N.P.S.Shinh Abhay B Upasani Nagalakshmi Popuri

Dated : 01st September,2010 Independent Director Independent Direcotr Company Secretary

(Amount in Rs)

I. SOURCE OF FUNDS:

1 Share Holder's Fund

Share Capital 1 44,048,330 44,048,330

2 Reserves & Surplus 2 1,077,898,406 634,436,456

3 Loan Funds

a) Secured Loan 3 674,673,589 973,266,474

b) Unsecured Loan 3 15,302,106 –

4 Deferred Tax Liability 136,408,437 108,093,660

T O T A L 1,948,330,868 1,759,844,920

II. APPLICATION OF FUNDS

1 Fixed Assets

Gross Block 4 1,559,627,825 1,422,600,256

Less: Accumulated Depreciation 280,240,311 183,973,089

Net Block 1,279,387,514 1,238,627,167

Add: Capital Work - in - Progress 4 30,580,253 33,802,788

1,309,967,767 1,272,429,955

2 Investments 5 36,947,400 222,380

3 Current Assets, Loans & Advances

a) Inventories 6 436,457,329 229,491,321

b) Sundry Debtors 7 314,864,913 188,304,578

c) Cash & Bank Balances 8 20,913,359 33,511,675

d) Loans & Advances 9 432,280,711 285,770,313

1,204,516,312 737,077,887

Less: Current Liabilities & Provisions 10 603,100,611 249,885,302

601,415,701 487,192,585

T O T A L 1,948,330,868 1,759,844,920

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Profit and Loss Account for the year ended 31st March, 2010(Amount in Rs)

INCOMESales 2,398,943,132 1,380,846,921Less: Excise Duty 54,346,288 21,296,178

2,344,596,844 1,359,550,743Variation in Finished Goods 11 (699,665) 1,971,201Other Income 12 11,194,041 7,472,800

T O T A L 2,355,091,220 1,368,994,744

EXPENDITUREMaterials 13 1,282,904,859 837,407,797Employee Cost 14 121,237,650 64,751,923Operating & Administrative Expenditure 16 172,581,520 91,951,964Exchange (Gain) / Loss (42,126,350) 104,285,680Interest 50,404,433 49,952,050Depreciation 4 97,646,584 60,436,841

T O T A L 1,682,648,695 1,208,786,255

PROFIT BEFORE TAX 672,442,524 160,208,489Less:Tax Expense

a) Current Tax 184,000,000 52,500,000b) Fringe Benefit Tax – 319,565c) Deferred Tax 28,314,777 33,218,442

212,314,777 86,038,007

PROFITS AFTER TAXES 460,127,747 74,170,482Add: Prior Period Adjustments 15 1,066,223 1,479,426

461,193,970 75,649,908Add: Profits from Earlier Years 321,634,995 268,869,227

Profits available for appropriation 782,828,965 344,519,135Appropriations

a) Transferred to General Reserve 50,000,000 10,000,000b) Provision for Proposed Dividend 15,416,916 11,012,085c) Tax on Dividend 2,620,104 1,872,055

68,037,020 22,884,140

Balance carried to Balance Sheet 714,791,945 321,634,995

Earnings per ShareBasic & Diluted(Face value Rs.2 ) 20.89 3.40

Weighted Average No. of Equity SharesBasic & Diluted 22,024,165 21,839,233

Schedules 11 to 16 and Notes to Accounts form an integral part of Profit and Loss Account.As per our Report of even date Attached.

For Bohara Bhandari Bung And Associates For and on behalf of the Board of DirectorsChartered Accountants Sd/- Sd/- Sd/-(Firm Reg No:008127S) Omprakash Inani Vishnukant C Bhutada Carlton Felix Periera

Sd/- Chairman Managing Director Independent DirectorCA.P.M. Bhandari Sd/- Sd/- Sd/-Partner Pramod Kasat Venugopal Loya Rajendra Sunki Reddy




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Particulars Current Year Previous Year

Cash Flow Statement for the year ended 31st March, 2010(Amount in Rs)

A. CASH FLOWS FROM OPERATING ACTIVITIES

Profits Before Tax (PBT) 672,442,524 160,208,489Add: Adjustments

Add : Depreciation 97,646,584 60,436,841Add : (Profit) / Loss on sale of Fixed Assets 2,485,127 809,125Add : Interest(Net) 48,939,515 49,256,816Add: Bad debts 1,639,122 1,010,520Add: Prior Period Income 1,066,223 –Add: Unrealized Exchange Loss 29,823,323 115,776,275Less: Unrealized Exchange Gain (54,820,166) (16,478,483)

799,222,252 371,019,583Adjustments for working capital changesIncrease/(Decrease)in Current Liabilities 213,121,689 69,588,934(Increase)/Decrease in trade receivables (135,460,023) (54,056,976)Decrease/(Increase) in Inventory (206,966,008) (34,346,463)Decrease/(Increase) in Other Loans and Advances (80,602,858) (5,998,665)

589,315,052 346,206,413Less:Income Tax paid (126,345,867) (45,172,488)

Net Cash generated by Operating activities 462,969,185 301,033,925

B. CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (Incl Capital Work in progress) (140,192,611) (504,962,317)Sale of Fixed Assets 2,523,088 349,000Interest received 1,464,918 695,234Purchase of shares in subsidiary companies. (36,725,020) (100,000)

Net cash used in Investing Activities (172,929,625) (504,018,083)

C. CASH FLOWS FROM FINANCING ACTIVITIES

Increase in share capital – 1,500,000Increase in share premium (Net) – 52,500,000Interest Expenses (50,404,433) (49,952,050)Secured Loans (255,017,885) 128,941,841Unsecured Loans 15,302,106 (23,424,839)Subsidy received during the year 305,000 2,000,000Dividend & Dividend distribution tax (12,822,664) (9,880,487)

Net Cash earned from Financing Activities (302,637,876) 101,684,465

Net Increase/(decrease)in Cash and Cash Equivelants (12,598,316) (101,299,693)Cash & Cash Equivelants at the Beginning of the year 33,511,675 134,811,368

Cash & Cash Equivelants at the End of the year 20,913,359 33,511,675

As per our Report of even date Attached.

For Bohara Bhandari Bung And Associates For and on behalf of the Board of DirectorsChartered Accountants Sd/- Sd/- Sd/-(Firm Reg No:008127S) Omprakash Inani Vishnukant C Bhutada Carlton Felix Periera

Sd/- Chairman Managing Director Independent DirectorCA.P.M. Bhandari Sd/- Sd/- Sd/-Partner Pramod Kasat Venugopal Loya Rajendra Sunki Reddy




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Amount Amount Amount Amount

Schedules Attached to and forming Part of Balance Sheet and Profit

& Loss Account for the year ended 31st March, 2010(Amount in Rs)

SCHEDULE No: 01

SHARE CAPITAL

Authorised Capital:

400,00,000 Equity Shares of Rs.2/- 80,000,000 80,000,000

Issued, Subscribed and Paid Up Capital:

1) 22,024,165 Equity Shares of Rs.2/- 44,048,330 44,048,330

Of the above -

a) 6,662,500 Equity Shares of Rs.2/- eachwere issued as fully paid Bonus shares byway of Capitalisation of Reserves.

b) During the year 2008-09 39,16,665 sharesof Rs.2/- allotted to the erstwhile

shareholders of Shilpa Organics Pvt Ltdon approval of Amalgamation scheme bythe Hon.High Court of Karnataka by

transferring such amount from ShareCapital Suspense A/c.

c) During the year 2008-09, 750,000 shares ofRs.2/- each were allotted to share warrantholders on exercising their option for

conversion at a premium of Rs.78/- per share.

T O T A L 44,048,330 44,048,330

SCHEDULE No: 02

RESERVES & SURPLUS

a) SubsidyOpening Balance 5,172,199 3,172,199Additions during the year 305,000 5,477,199 2,000,000 5,172,199

b) Share Premium AccountOpening Balance 274,625,000 216,125,000Additions during the year – 274,625,000 58,500,000 274,625,000

c) General ReserveOpening Balance 29,768,369 19,768,369

Additions during the year 50,000,000 79,768,369 10,000,000 29,768,369

d) Capital Reserve

Opening Balance 3,235,893 3,235,893

Additions during the year – 3,235,893 – 3,235,893

e) Surplus from Profit & Loss Account 714,791,945 321,634,995

T O T A L 1,077,898,406 634,436,456

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SCHEDULE No: 03

SECURED & UNSECURED LOANS

A) Secured Loansa) External Commercial Borrowings 338,550,000 509,460,000

[repayable within one year

Rs.11,28,50,000 (PY:12,73,75,000)]b) Term Loan 134,609,368 336,579,554

(repayable within one year

Rs.609,06,979/-(PY:655,89,101/-)c) Working Capital Loan (Cash

Credit/Packing Credit/Deposit Loan) 201,514,221 674,673,589 127,226,920 973,266,474

Note: For Nature of Securities ReferNote no 03 & 04 of Notes to Accounts

B) Unsecured Loans

a) From Bank 15,302,106 –

T O T A L 689,975,695 973,266,474

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SCHEDULE No: 05

INVESTMENTS

Longterm (at Cost)A) Investment in Wholly Owned Subsidiary(unquoted)

a) 1000 (1000) Equity Shares of 1.74 Euro each fully

paid in Zatortia Holdings Ltd 107,380 107,380

b) 410,000 (10,000) Equity Shares of Rs.10/- (10/-)

each fully paid up in Raichem Lifesciences (P) Ltd.

Additional issue made at a premium of Rs.60/-

per share. 28,100,000 28,207,380 100,000

B) Investment in Associate (unquoted)

a) 5,000 Equity Shares of Rs.10/-each fully paid in

Raichem Medicare Pvt Ltd. 50,000

b) Share Application Money in Raichem Medicare Pvt Ltd. 7,675,000 7,725,000 –

C) Investment in Associate (unquoted)

a) 96,667 Equity Shares of Rs.10/-each fully paid in

Reva Pharmachem Pvt Ltd. 966,670

b) Share Application Money in Reva Pharmachem Pvt Ltd 33,350 1,000,020 –

D) In Government Securities (NSC-Assigned as Securities to

Government Department) 15,000 15,000

T O T A L 36,947,400 222,380

Aggregate amount of unquoted investments 36,947,400 222,380

SCHEDULE No: 06

INVENTORIES

a) Finished Goods 1,854,448 2,554,113

b) Raw Materials 148,141,389 88,705,517

c) Work-in-progress 283,179,156 135,806,875

d) Stores & Spares 2,763,783 2,128,137

e) Packing Material 518,553 296,679

T O T A L 436,457,329 229,491,321

SCHEDULE No: 07

SUNDRY DEBTORS (Unsecured)

Exceeding Six Months

a) Considered good 2,240,167 7,560,482

b) Considered Bad / Doubtful 1,639,122 1,010,520

3,879,289 8,571,002

Less: Bad debts written off 1,639,122 2,240,167 1,010,520 7,560,482

Others

a) Considered good 312,624,746 180,744,096

T O T A L 314,864,913 188,304,578

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SCHEDULE No: 08

CASH & BANK BALANCES

a) Cash-in-Hand 260,277 217,832

b) Foreign Currency in hand 55,208 50,158

c) Balance with Scheduled Bank:

1. In Current Accounts 2,117,032 9,986,563

2. In Fixed Deposits 18,480,842 23,257,122

(Assigned to Bank towards Margin

Money for Bank Guarantee)

T O T A L 20,913,359 33,511,675

SCHEDULE No: 09

LOANS & ADVANCES

Unsecured (Considered good)

a) Loans and advances to wholly owned

subsidiary Company 247,951,527 183,800,035

b) Advances Recoverable in cash or kind or for value

to be recovered 6,353,723 3,336,613

c) Sundry Deposits 159,000 105,500

d) Deposits with Government Offices/

Local Authorities 4,449,155 16,085,039

e) Advance Income Tax / TDS receivable 126,522,793 38,052,496

f) Interest accrued but not due on fixed

deposit with Bank. 756,746 211,477

g) Refund of Excise Duty/ Service Tax Receivable 27,856,429 20,818,807

h) VAT paid on Capital & Other Items 2,786,776 9,628,445

i) CST Receivable 15,444,562 13,418,960

j) VAT Receivable – 312,941

T O T A L 432,280,711 285,770,313

Maximum balances outstanding during the year

a) Loans to subsidiaries 270,768,321 183,800,035

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SCHEDULE No: 10

CURRENT LIABILITIES & PROVISIONS

A) Current Liabilities

a) Investors Education and Protection Fund -

Unclaimed Dividend 587,301 525,825

b) Unclaimed bonus/salary 73,950 64,910

c) Interest Payable but not due on loans 426,952 1,150,296

d) Sundry Creditors:

i) For Goods 303,304,184 113,361,759

ii) For Others 72,354,566 375,658,750 66,326,483 179,688,242

e) VAT, Entry Tax & Profession Tax 1,418,594 3,000

f) Tax Deducted at Source (TDS) payable 5,640,404 627,115

B) Provisions

a) Provision for Income Tax 198,624,430 52,500,000

b) Proposed Dividend 15,416,916 11,012,085

c) Provision for Tax on Proposed Dividend 2,620,104 1,872,055

d) Provision for Gratuity 2,633,210 219,294,660 2,441,774 67,825,914

T O T A L 603,100,611 249,885,302

SCHEDULE No: 11

INCREASE / (DECREASE ) IN

FINISHED GOODS

Closing Stock of Finished Goods 1,854,448 2,554,113

Less: Opening Stock of Finished Goods 2,554,113 582,912

T O T A L (699,665) 1,971,201

SCHEDULE No: 12

OTHER INCOME

a) Miscellaneous Income 11,194,041 7,472,800

T O T A L 11,194,041 7,472,800

SHEDULE No: 13

MATERIALS

a) Raw Materials Consumed 1,411,027,447 786,419,164

Less: Change in Work in Progress (147,372,281) 1,263,655,166 (19,255,919) 767,163,245

b) Cost of Materials Traded 16,562,787 68,928,331

c) Packing Material Consumed 2,686,906 1,316,221

T O T A L 1,282,904,859 837,407,797

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SCHEDULE No: 14

EMPLOYEE COST

a) Salaries, Wages, Bonus and Allowances. 115,648,381 59,534,417

b) Contribution to Provident Fund,Gratuity and Other Funds. 3,357,718 3,988,080

c) Employee Welfare Expenses. 2,231,551 1,229,426

T O T A L 121,237,650 64,751,923

SCHEDULE: 15

PRIOR PERIOD INCOME

Prior Period Income 1,066,223 1,479,426

T O T A L 1,066,223 1,479,426

SCHEDULE No: 16

OPERATING & ADMINISTRATIVE EXPENSES

a) Commission, Brokerage & Consultancy 31,881,013 12,542,189

b) Clearing & Forwarding 11,097,904 7,336,643

c) Laboratory Expenses & R&D Expenses 16,250,587 4,196,829

d) Power & Fuel 45,191,847 25,422,323

e) Repairs & Maintenance

i) Plant & Machinery 12,479,116 5,782,086

ii) Building 4,049,606 1,719,795

iii) Others 1,656,301 18,185,023 892,989 8,394,870

f) Transportation Expenses 7,638,137 4,673,183

g) VAT,Entry Tax & Profession Tax 408,935 143,925

h) Travelling Expenses 7,176,746 5,991,484

i) Advertisements & Sales Promotion Expenses 4,580,934 6,090,486

j) Insurance 1,413,143 1,058,044

k) Legal Charges/License Fees/Rates & Taxes 1,382,242 1,463,834

l) Miscellaneous Expenses 9,314,899 8,639,969

m) Bank Charges 4,467,066 3,579,724

n) Auditor Fees 400,000 365,000

o) Listing Fees 59,887 116,062

p) Job work Expenses 9,008,908 117,754

q) Bad Debts written off 1,639,122 1,010,520

r) Loss on Transfer of Assets 2,485,127 809,125

T O T A L 172,581,520 91,951,964

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0 Significant Accounting Policies:

Basis of preparation of financial statements:

(a) The financial statements are prepared on historical cost convention and on the presumption of going concern in accordancewith generally accepted accounting principles in India and the applicable mandatory Accounting Standards and the relevantprovisions of the Companies Act, 1956 of India as adopted consistently by the Company.

(b) The Company generally follows mercantile system of accounting and recognizes all the income and expenditure on accrualbasis.

Use of Estimates

The preparation of financial statements in conformity with generally accounting principles requires management to make estimatesand assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on thedate of the financial statements and the results of operations during the said reporting period. Although these estimates are basedupon management's best knowledge of current events and actions, actual results could differ from these estimates. Differencebetween the actual results and estimates are recognized in the period in which the results are known / materialized.

Fixed Assets:

a) Tangible Assets are stated at cost less accumulated depreciation and impairment loss if any. Cost comprises of purchase priceand any attributable cost of bringing the assets to its working condition for its intended use.

b) Intangible Assets are stated at cost less accumulated amortization. Cost includes any expenditure directly attributable onmaking the asset ready for its intended use.

Depreciation:

Depreciation on Fixed Assets is provided on straight line method as prescribed in Schedule XIV of the Companies act 1956 ofIndia. Intangible assets are amortized over their useful life/ a period of ten years.

Impairment:

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value being higher of value in use and netselling price. Value in use is computed at net present value of cash flow expected over the balance useful life of the assets. Animpairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is identified as impaired.

Investments:

a. Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered being otherthan temporary in nature.

b. Current investments are stated at lower of cost and fair value.

Inventory:

a) Raw-Materials, Stores and Packing Materials are valued at cost - Cost is determined on FIFO basis.

b) Work-in-progress & Finished goods are valued at estimated cost or net realizable value whichever is lower.

Employee Benefits:

Employee benefits of short term nature are recognized as expenses as and when it accrues. Long Term employee benefits/ postemployment benefits (e.g. gratuity), both funded and non-funded, are recognized as expense based on actuarial valuation at yearend which takes into account actuarial gains and losses.

Sales and Purchases:

Sales and Purchases are accounted net of returns basis. Sales include Export Entitlements / Benefits. Export entitlements areaccounted on accrual basis at realizable value or entitlement value whichever is less.

Foreign Currency Transactions:

Transactions in foreign exchange are accounted at the exchange rate prevailing on the date of transaction. The exchange differencearising out of these transactions are dealt in profit and loss account.

Derivative Instruments:

The Company uses derivative financial instrument such as forward contract to hedge its risk associated with foreign currencyfluctuation. In respect of transactions covered by Forward Exchange Contract, the difference between the forward rate and theexchange rate at inception of contract is recognized as income or expense over the life of the contract.

Taxes on Income:

Tax on Income for the current period is determined on the basis of taxable income and tax credits computed in accordance withthe provisions of the Income Tax Act, 1961.

Deferred tax is provided in conformity with Accounting Standard-22 issued by the Institute of Chartered Accountants of Indiabased on the timing difference between the accounting income and the taxable income.

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0NOTES TO ACCOUNTS:

1. Previous year's figures have been regrouped, rearranged and / or reworked wherever necessary.

2. Figures have been rounded off to the nearest rupee.

3. Working Capital Loans from The Lakshmi Vilas Bank Ltd., is secured by hypothecation of stock and book debts and bycharge on the Fixed Assets of the Company.

4. Following term loans :

a) External Commercial Borrowing (ECB) from ICICI Bank Ltd is secured by first charge on all movable and immovableproperties created by such loans and irrevocable guarantee of some of the Directors of the Company.

b) Term Loan from Axis Bank is secured by First Pari passu charge on all fixed assets of the Company and Collateral paripassu charge on the current assets of the Company.

c) Term Loan from KSFC is secured by charge on assets of erstwhile Shilpa Organics (P) Ltd.

5. Deferred Taxes:


On account of Depreciation 136,408,437 108,093,660

6. In the opinion of the Management, the value of the Current Assets, Loans and Advances under the ordinary course ofbusiness would at least be equal to the amount as stated in the Balance Sheet.

7. The Company has granted the following advances as interest free advance to its wholly owned Subsidiaries. However, there is

no agreement as to the repayment of the Loan.


Raichem Lifesciences Pvt Ltd 45,397,343.00 5,336,594.00

Zatortia Holdings Ltd 202,554,184.00 178,463,441.00

Total 24,7951,527.00 183,800,035.00

8. Sundry Debtors and Sundry Creditors are subject to confirmation.

9. There are no delays in payments to Micro and Small Enterprises as required to be disclosed under the Micro, Small andMedium Enterprises Development Act, 2006. The Information regarding Micro and Small enterprises has been determined

to the extent such parties have been identified on the basis of information available with the Company. This has been reliedupon by the auditors.

10. Exchange fluctuation includes credit of Rs. 435,75,000/- (PY: Debit 108,460,000) on account of Exchange difference arisingin respect of outstanding ECB Loan and Debit/Credit Rs. Nil /-(PY: 4,310,195/-) in respect of Loss / Profit arising from

Forward Exchange Contracts for the year. There are no other outstanding Forward Exchange Contracts on 31.03.2010.

11. Disclosure as required by Accounting Standard 15 (Revised) on Employee Benefits.

1. In respect of gratuity, a defined benefit scheme (based on Actuarial Valuation)

Movement of present value of the defined benefit obligation Amount in Rs.

Obligations at period beginning 53,84,489

Service Cost 650,435

Interest on Defined benefit obligation 430,759

Benefits settled –

Actuarial (gain)/loss (301,645)

Obligations at period end 61,64,035

Change in plan assets

Plans assets at period beginning, at fair value 30,42,197

Difference in Opening balance (250,000)

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0

Expected return on plan assets 242,486

Actuarial gain/(loss) 18,394

Contributions 477,748

Benefits settled 0

Plans assets at period end, at fair value 35,30,825

Reconciliation of present value of the obligation and the fair value of the plan assets: –

Closing PBO 61,64,035

Closing Fair value of plan assets 35,30,825

Closing Funded status (26,33,210)

Unrecognised actuarial (gains).losses –

Net asset/(Liability) recognized in the balance sheet (26,33,210)

Expenses recognised in the P & L account –

Service cost 650,435

Interest cost 430,759

Expected return on plan assets (242,486)

Actuarial (gain)/loss (320,039)

Net gratuity cost 518,669

Experience Adjustment on Plan Assets 18,394

Experience Adjustment on Plan Liabilities (301,645)

C. Principal Actuarial Assumptions

Interest rate 8%

Discount rate (based on the market yields available on Government bond at the accounting

date with a term that matches that of the Liabilities) 8%

Expected rate of return on assets 0%

Salary increase (taking into account inflation, seniority, promotion

And other relevant factors) 6%

Attrition rate of employees 5%

Retirement age of employees (Years) 58

Actuarial (gain) / loss is recognised immediately. The estimates of salary increase take into account inflation, promotion etc.

The Company has various schemes (funded/unfunded) for payment of gratuity to all eligible employees calculated at specific

no. of days (ranging from 15 days to 1 month) of the last drawn salary depending upon tenure of service for each year ofcompleted service subject to minimum of five years payable at the time of separation upon superannuation or on exit otherwise.

12. Capital Work in Progress includes Rs 30,580,253 /- (PY: 33,802,788/-) being expenditure during construction period pendingcapitalization/ allocation. Expenditure during construction period includes;


Advance to Machinery Suppliers, Civil Constructions & Contractors 2,709,472 25,921,027

Advances towards Building Under Construction, Electrical, Plant &Machinery under erection. 27,870,781 7,434,633

Others 0 447,128

Total 30,580,253 33,802,788

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013. Audit fees include payment towards:

Particulars Current year* Previous year*

Statutory Audit 250,000 225,000

Tax Audit. 80,000 80,000

Certification 70,000 60,000

TOTAL 400,000 365,000

*excludes service tax

14. Managerial Remuneration:


Salary 5,000,000 3,600,000

Perquisites 2,993,769 1,560,000

Commission 11,365,566 840,000

Company's Contribution to PF 576,000 432,000

Total 19,935,335 6,432,000

15. Computation of Net Profit u/s 349 of the companies Act 1956.

Particulars Amount (Rs.)

Profit before Tax as per P&L A/c. 672,442,524

Add:1) Depreciation 97,646,584

2) Managerial Remuneration 8,569,769

3) Loss on sale of fixed assets 24,85,127

781,144,004

Less: Depreciation as per section: 350 of the Companies Act 1956. 97,646,584

Net Profit 683,497,420

Aggregate of Salary and Commission shall not exceed @ 5% of Net Profit.** 34,174,871

** w.e.f 01-09-2009. Hence, remuneration restricted to Rs.199,35,341/-.

Interest Paid includes:


To Bank / Financial Institutions 50,404,433 48,903,185

To Corporate Bodies – 963,107

To Government Bodies – 85,758

Total 50,404,433 49,952,050

16. Other Income Includes:


Interest (TDS CY:Rs.230,914/- PY:183,463/-) 1,464,917 695,234

Duty Drawback (Rebate) / Cenvat 7,783,932 6,394,495

Credit Balance No Longer Required 1,363,996 49,826

Miscellaneous Receipts 570,000 –

Discount Received 11,196 8,495

Dividend from subsidiary companies – 324,750

Total 11,194,041 7,472,800

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0 17. Prior Period Income includes


Taxes pertaining to earlier years (Net) – 1,949,751

Claims and provisions no longer required (Net) (1,066,223) (3,429,177)

Total (1,066,223) (1,479,426)

18 Contingent Liabilities:


For Local and Foreign L/Cs 56,086,888 53,009,622

Guarantees 3,330,000 1,804,000

Bills discounted 15,302,106 8,214,081

Letter of Comfort 121,120,000 202,440,000

Estimated amount of contracts remaining to be executed on capitalaccount and not provided for (Net of advances) 191,72,443 9,950,000

Claim against the Company not acknowledged as debts 2,340,000 800,000

Total 217,351,437 276,217,703

19. Other Statutory Information:

(a) Annual capacities (as certified by the Management and relied upon

by the Auditors being technical matter)

a) Wind Energy 3.86 MW 3.86 MW

In view of multiple products and processes individual annual capacities cannot be quantified, hence not applicable.

A) Actual Production

Sl. No. Production Current year Previous year

1. Bulk Drug (Kgs) 79,646.44 64,474.96

2. Intermediates(Kgs) 148,554.19 102,118.20

3. Wind Energy (Units) 709,456.00 7,058,416.00

B) Stock & Turnover

Particulars Current year Previous year

Qty (Kgs) Amount (Rs) Qty (Kgs) Amount (Rs)

Opening Stock

Bulk Drugs 915.100 2,554,113 125.00 237,500

Total 915.100 2,554,113 125.00 237,500

Closing Stock

Bulk Drugs 700.00 1,854,448 915.100 2,554,113

Total 700.00 1,854,448 915.100 2,554,113

Turnover

Bulk Drugs 80,547.21 1,428,086,173 63,435.96 601,987,510

Intermediates 148,552.19 889,697,265 102,118.20 658,122,858

Others 2,206,441 75,130,971

Wind Energy - Units 709,456.00 24,606,965 7,058,416 24,309,404

Total 2,344,596,844 1,359,550,743

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0C) Major raw material consumed (exceeding 10% of the total consumption)

Particulars Current year Previous year


Cholic Acid 186800.00 572,840,378 91,500.00 259,710,039

4-Amino-1(3,3 Difluoro-4-

Hydroxy-5-Hydroxy) 950.00 192,389,507 300.00 88,792,825

3a.7a, dihydroxy-5b Cholan-24 OIC Acid – – 12,600.00 54,784,500

Tri fluoro methane sulfulfonate 11100.00 54,478,150 3733.00 11,932,184

2-Deoxy 2,2 Difluoro-D-Erythro-Pentafanous 3372.00 46,120,647 52.50 21,77,898

N-Acetyl Cytosine 13585.80 31,417,937 2903.25 5,414,997

3a.-Hydroxy -7-Keto5b Cholan-24 OIC 19625.00 88,600,267 23,079.00 97,456,501

Potassium Tetra Chloro Platinate 25.30 26,304,372 36.00 33,240,923

Trans-4-Amnio Cyclohexanol 19182.00 28,248,362 18,006.00 22,596,733

Others 370,627,827 210,312,564

Total 1,411,027,447 786,419,164

D) Cost of major materials traded

Raw Material Current year Previous year


Ursodeoxy Cholic Acid 962 15,371,096 4131 68,841,650

Others – 1,191,691 – 86,681

Total 16,562,787 68,928,331

E) Value of Imported & Indigenous Raw Materials & Spares consumed

A) Raw Material Current year Previous year

% Amount % Amount

Imported 71.90 1,060,138,006 75.96 600,473,817

Indigenous 28.10 414,318,235 24.04 190,082,034

Total 100.00 1,474,456,241 100.00 790,555,851

B) Spares Consumed

Imported – – – –

Indigenous 100.00 6,596,614 100 5,397,456

Total 100.00 6,596,614 100 5,397,456

F) Foreign Exchange Earnings


Total Direct Export (FOB) 1,686,390,206 1,021,641,762

Dividend received – 324,750

Others – 156,500

Total 1,686,390,206 1,022,123,012

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0 Foreign Exchange Expenditure

Total Expenditure in Foreign Currency Current Year Previous Year

Foreign travel 662,773 1,489,029

Imports (CIF) 1,073,471,561 663,933,904

Interest 11,525,989 23,228,997

Others 23,944,599 65,337,566

TOTAL 1,113,604,867 753,989,496

Dividend paid to NRI's/FCB


(Rs.) (Rs.)

No.of Share holders 21 28

No.of Shares 2,659,820 2,879,838

Dividend 1,329,913 1,151,935

20. SEGMENT REPORTING:

The Company has two reportable segments viz., Bulk drugs & Intermediates and Power. The financial Information aboutthese business segments is presented as under:

(Rs in Lakhs)


SEGMENT REVENUE

Bulk Drugs and Intermediates 23199.89 13,352.42

Power 246.07 243.09

TOTAL 23,445.96 13,595.51

SEGMENT RESULTS

Profit before Interest and Tax:

Bulk Drugs and Intermediates 7206.54 2078.50

Power 21.92 23.11

SUB -TOTAL 7228.46 2,101.61

Less: Interest 504.04 499.52

Profit Before Tax 6,724.42 1,602.08

CAPITAL EMPLOYED

(Segment Assets - Segment Liabilities)


Power. 983.65 1,176.17

TOTAL 16,328.49 15,277.79

21. RELATED PARTIES DISCLOSURES PURSUANT TO ACCOUNTING STANDARD 18:

List of related parties

1. Associates 2. Subsidiaries

Bhakra Investments (P) Ltd Zatortia Holdings LtdShilpa Finvest (P) Ltd Raichem Lifesciences (P) LtdSrinidhi Cottons (P) Ltd Loba Feinchemie GmbhReva Pharma Chem Pvt LtdRaichem Medicare Pvt Ltd

3. Key Management Personnel 4. Relatives

Vishnukant C Bhutada Dharmavati BhutadaDeepak Kumar Inani

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1Sa

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1. Registration Details: Amount in Rs.'000

Registration No. : 8739 State Code: 08

Balance Sheet dated : 31st March, 2010.

2. Capital raised during the Year:

Public Issue Nil Rights Issue Nil

Bonus Issue Nil Private Placement Nil

Conversion of Warrants Nil

3. Position of Mobilization & Deployment of Funds:

Total Liabilities Rs. 2,551,431.48

Total Assets Rs. 2,551,431.48

SOURCE OF FUNDS:

Share Capital 44,048.33 Reserves Surplus 1,077,898.41

Secured Loan 674,673.58 Unsecured Loan 15,302.10

Deferred Tax Liability 136,408.43

APPLICATION OF FUNDS:

Net Fixed Assets (Incl.CWIP) 1,309,967.76 Investment 36,947.40

Current assets 1,204,516.31 Misc. Expenditure Nil

Accumulated Losses Nil

4. Performance of the Company

Turnover and other Income 2,355,091.22 Total Expenditure 1,682,648.69

Profit for the year before taxes 672,442.52 Profit after taxes 460,127.75

Earnings / per share 20.89

Dividend: 35%

5. Generic Names of Three Principal Products/Services of The Company (in monetary terms)

Production Description Bulk Drug Intermediates Power

Item Code No.(I.T.C code) 2901 2901

Turnover 1,428,086.17 889,697.26 24,606.65

Balance Sheet Abstract and Company's General Business Profile :









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CONSOLIDATED

FINANCIAL STATEMENTS

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AUDITOR'S REPORT TO THE BOARD OF DIRECTORS OF SHILPA MEDICARE LIMITED ON THE

CONSOLIDATED FINANCIAL STATEMENTS OF SHILPA MEDICARE LIMITED AND ITS SUBSIDIARIES.

1) We have audited the attached Consolidated Balance sheet of SHILPA MEDICARE LIMITED (the Company) and its

Subsidiaries (collectively referred to as "The Group") as at 31st March 2010, the Consolidated Profit and Loss Account andalso the Consolidated Cash Flow Statement for the year ended on that date annexed thereto. The Consolidated financialstatements include investments in Associates accounted on equity method in accordance with Accounting Standard

23(Accounting for Investments in Associates in Consolidated Financial Statements) as Notified under the Companies(Accounting Standards) Rules, 2006. These financial statements are the responsibility of the Company's management. Ourresponsibility is to express an opinion on these financial statements based on our audit.

2) We conducted our audit in accordance with generally accepted auditing standards in India. Those standards require that weplan and perform the audit to obtain reasonable assurance whether the financial statements are prepared, in all material

respects, in accordance with an identified financial reporting framework and are free of material misstatements. An auditincludes, examining on test basis, evidence supporting the amounts and disclosures in financial statements. An audit alsoincludes, assessing the accounting principles used and significant estimates made by the management, as well as evaluating the

overall financial statements. We believe that our audit provides a reasonable basis for our opinion.

a) The financial Statements of M/s. Zatortia Holdings Limited, A wholly owned foreign subsidiary, is audited by otherauditors as per the requirement of the International Financial Reporting Standards as adopted by the European Unionand the requirements of the Cyprus Companies Law. These financial statements have been converted as per the requirement

of Indian GAAP and reflect total assets of Rs.2027.91 Lakhs as at 31st March, 2010 and total revenue of Rs. Nil and netcash outflow amounting to Rs.2.32 Lakhs for the year then ended.

b) The financial Statements of M/s. Loba Feinchemie AG (GmbH), foreign sub-subsidiary, are unaudited these unauditedfinancial statements and other financial statements have been prepared by the management and are presented to us andwe do not express an opinion thereto.

As per the Austrian Act M/s. Loba Feinchemie AG(GmbH), foreign sub-subsidiary is a "small company with a limitedliability (GmbH) and is exempted from audit for the period. The unaudited financial statement reflect total assets of

Rs.1532.06 Lakhs as at 31st March, 2010 and total revenue of Rs.3037.76 Lakhs and net cash outflow amounting toRs.12.98 Lakhs for the year then ended.

3) We report that the consolidated financial statements have been prepared by the company in accordance with the requirementof Accounting standard (AS) 21, "Consolidated Financial Statements", (AS) 23 " Accounting for Investments in Consolidated

Financial Statements" and other applicable Accounting Standards as notified under Companies (Accounting Standards) Rules,2006.

4) On the basis of the information and explanation given to us and on the consideration of the separate audit reports on theindividual audited financial statements of SHILPA MEDICARE LIMITED and its subsidiaries and subject to our remark inparagraph 2(b)and read with other notes, we are of the opinion that:

a) the Consolidated Balance Sheet gives a true and fair view of the consolidated State of affairs as at 31st March 2010.

b) the Consolidated profit and Loss Account gives a true and fair view of the results of operation for the year ended: and

c) the consolidated Cash flow Statement gives a true and fair view, of the cash flows for the year ended on that date.


Chartered Accountants(Firm Reg No:008127S)

Sd/-CA.P.M.Bhandari

Place : Raichur PartnerDated : 01st September,2010 Membership No:036241

Auditor's Report on the Consolidated Financial Statements

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Consolidated Balance Sheet as at 31st March, 2010(Amount in Rs)

I. SOURCE OF FUNDS:

1 Share Holder's Fund

a) Share Capital 1 44,048,330 44,048,330

2 Reserves & Surplus 2 957,972,457 549,276,192

3 Foreign Currency Translation reserve 10,724,995 (6,642,467)

4 Loans Funds

a) Secured Loan 3 733,783,637 1,085,577,031

b) Unsecured Loan 3 38,879,250 41,246,894

5 Minority Interest 5,148 6,141

6 Deferred Tax Liability (Net) 134,196,839 108,093,660

TOTAL 1,919,610,656 1,821,605,781

II. APPLICATION OF FUNDS

1 Fixed Assets

Goodwill 28,101,294 31,312,340

Gross Block 4 2,189,113,880 2,089,404,864

Less: Depreciation 4 741,760,362 675,639,535

Net Block 1,475,454,812 1,445,077,669

Add: Capital Work in Progress 32,862,115 36,513,788

1,508,316,927 1,481,591,457

2 Investments 5 27,017,355 16,680,702

3 Current Assets, Loans & Advances:

a) Inventories 6 504,342,847 320,908,703

b) Sundry Debtors 7 348,940,278 237,008,360

c) Cash & Bank Balance 8 26,287,458 40,594,629

c) Loans & Advances 9 192,413,441 110,231,622

1,071,984,024 708,743,314

Less: Current Liabilities & Provisions 10 688,268,126 386,397,527

383,715,898 322,345,787

4 Miscellaneous Exp to the extent not written off 560,476 987,835

TOTAL 1,919,610,656 1,821,605,781

Schedule 01 to 10 and Notes to Accounts form an integral part of Balance Sheet.As per our Report of even date Attached.






Place : Raichur N.P.S. Shinh Abhay B Upasani Nagalakshmi Popuri

Dated : 01st September, 2010 Independent Director Independent Direcotr Company Secretary

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Consolidated Profit and Loss Account for the year ended 31st March, 2010

Schedules 11 to 16 and Notes to Accounts form an integral part of Profit and Loss Account.As per our Report of even date Attached.






Place : Raichur N.P.S. Shinh Abhay B Upasani Nagalakshmi Popuri

Dated : 01st September, 2010 Independent Director Independent Direcotr Company Secretary

(Amount in Rs)

INCOMESales 2,703,466,615 1,685,618,220Less: Excise Duty 54,346,288 21,296,178

2,649,120,327 1,664,322,042Variation in Finished Goods 11 (18,731,814) (16,412,008)Other Income 12 17,745,517 10,363,653

TOTAL 2,648,134,030 1,658,273,687

EXPENDITUREMaterials 13 1,347,353,509 920,053,070Employee Expenditure 14 283,641,998 238,533,310Operating & Administrative Expenditure 16 240,597,690 169,572,469Exchange (Gain) / Loss (41,786,124) 102,726,384Interest 54,229,049 57,674,729Depreciation 4 127,160,846 94,110,346

TOTAL 2,011,196,967 1,582,670,308

PROFIT / (LOSS) BEFORE TAX 636,937,063 75,603,379Less:Tax Expense

a) Current Tax 184,145,556 52,488,642b) Fringe Benefit Tax – 319,565c) Deferred Tax 26,840,308 33,218,442

210,985,864 86,026,649

PROFITS / (LOSS) AFTER TAXES BEFORE MINORITY INTEREST 425,951,198 (10,423,270)Less: Loss Pertaining to Minority Interest (8,815) (8,413)Add: Prior Period Adjustments 15 468,272 (1,479,426)

426,428,285 (8,935,431)Add: Profits from Earlier Years 236,474,731 268,294,302

Profits available for appropriation 662,903,016 259,358,871Appropriations

a) Transferred to General Reserve 50,000,000 10,000,000b) Provision for Proposed Dividend 15,416,916 11,012,085c) Dividend Tax (Incl.Surcharge and Cess) 2,620,104 1,872,055

68,037,020 22,884,140

Balance carried to Balance Sheet 594,865,996 236,474,731

Earnings per ShareBasis & Diluted(Rs.2 & Rs.2 per share respectively) 19.34 (0.48)

Weighted Average No. of Equity sharesBasic & Diluted 22,024,165 21,839,233

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Consolidated Cash Flow Statement for the year ended 31st March, 2010(Amount in Rs)

A. Cash Flows from Operating Activities

Profits Before Tax (PBT) 636,937,063 75,603,379

Add: Adjustments

Add : Depreciation 127,160,846 94,110,346

Add : (Profit) / Loss on sale of Fixed Assets 2,369,334 809,125

Add : (Profit) / Loss on sale of Investments (192,227) –

Add : Interest (Net) 52,763,126 55,896,761

Expenditure related to Financial Investment – 164,903

Add: Doubtful recoveries provided / Written off 1,698,078 1,501,931

Add: Prior Period Income 468,272 –

Add: Deffered Revenue expenses written off 282,990 –

Add: Revaluation of Foreign Curreny Balances (23,121,911) 91,788,141

Add: Unrealized exchange Loss 29,823,323 (7,509,651)

Less: Unrealized exchange Gain (54,820,166) 115,776,275

Add: Foreign Currency translation reserve 1,874,932 (16,478,483)

798,365,570 319,874,586

Operating profit before working capital changes

Increase/(Decrease)in Current Liabiliaties 172,120,550 69,714,833

Decrease/(Increase) in Receivables (126,448,655) (42,574,754)

Decrease/(Increase) in Inventory (195,960,740) 4,085,347

Decrease/(Increase) in Miscellaneous expenditure (843,466) (967,646)

Decrease/(Increase) in Other Loans and Advances 11,816,306 (6,344,801)

659,049,565 343,787,564

Less:

Income Tax paid (123,832,725) (46,359,840)

Net Cash from Operating activities 535,216,841 297,427,724

B. Cash Flows from Investing Activities

Purchase of Fixed Assets and change in CWIP (176,434,136) (521,196,949)

Sale of Fixed Assets 2,699,742 192,500

Interest received 1,465,923 1,613,065

Purchase of shares in Subsidiaries and other Companies. (26,224,636) (1,561,887)

Purchase of securities held as fixed assets (181,875) –

Sale of Securities held as fixed assets 11,352,859 –

Goodwill – (5,613,804)

Sale of Investments 4,727,264 –

Net cash from Investing Activities (182,594,859) (526,567,074)

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Consolidated Cash Flow Statement for the year ended 31st March, 2010(Amount in Rs)

C. Cash flows from Financing Activities

Increase in Share Capital – 1,500,000

Increase in Share Premium – 52,500,000

Interest Expenses (54,229,049) (57,674,729)

Secured Loans (296,701,030) 163,569,984

Unsecured Loans (3,481,410) (28,027,236)

Subsidy received during the year 305,000 2,000,000

Dividend & Dividend distribution tax (12,822,664) (9,880,487)

Net Cash from Financing Activities (366,929,153) 123,987,532

Net Increase/(decrease)in Cash and Cash Equivelants (14,307,171) (105,151,818)

Cash & Cash Equivelants at the Beginning of the year 40,594,629 145,746,447

Cash & Cash Equivelants at the End of the year 26,287,458 40,594,629


For Bohara Bhandari Bung And Associates For and on behalf of the Board of Directors

Chartered Accountants Sd/- Sd/- Sd/-(Firm Reg No:008127S) Omprakash Inani Vishnukant C Bhutada Carlton Felix Periera

Sd/- Chairman Managing Director Independent Director

CA.P.M. Bhandari Sd/- Sd/- Sd/-Partner Pramod Kasat Venugopal Loya Rajendra Sunki Reddy

M.No.036241 Independent Director Independent Director Independent Director

Sd/- Sd/- Sd/-Place : Raichur N.P.S. Shinh Abhay B Upasani Nagalakshmi Popuri


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Consolidated Schedules Attached to and forming Part of Balance

Sheet and Profit & Loss Account for the year ended 31st March, 2010(Amount in Rs)

SCHEDULE No: 01

SHARE CAPITAL

Authorised Capital:

400,00,000 Equity Shares of Rs.2/-each. 80,000,000 80,000,000

Issued, Subscribed and Paid Up Capital:

1) 22,024,165 Equity Shares of Rs.2/- 44,048,330 44,048,330

Of the above -

a) 6,662,500 Equity Shares of Rs.2/- each

were issued as fully paid Bonus shares by way of

Capitalisation of Reserves.

b) During the year 2008-09 39,16,665 shares of Rs.2/-

allotted to the erstwhile shareholders ofShilpa Organics Pvt Ltd on approval ofAmalgamation scheme by the Hon.High Court of

Karnataka by transferring such amount from ShareCapital Suspense A/c.

c) During the year 2008-09, 750,000 shares of

Rs.2/- each were allotted to share warrant holderson exercising their option for conversion at apremium of Rs.78/- per share.

T O T A L 44,048,330 44,048,330

SCHEDULE No: 02

RESERVES & SURPLUS

a) Subsidy


Additions during the year 305,000 5,477,199 2,000,000 5,172,199

b) Share Premium Account

Opening Balance 274,625,000 216,125,000

Additions during the year – 274,625,000 58,500,000 274,625,000

c) General Reserve

Opening Balance 29,768,369 19,768,369

Add:Additions during the year 50,000,000 79,768,369 10,000,000 29,768,369

d) Capital Reserve


Add:Additions during the year – 3,235,893 – 3,235,893

e) Surplus from Profit & Loss Account 594,865,996 236,474,731

T O T A L 957,972,457 549,276,192

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SCHEDULE No: 03

SECURED & UNSECURED LOANS

A) Secured Loansa) External Commercial Borrowings (Term Loan) 338,550,000 509,460,000

[repayable within one year Rs.11,28,50,000

(PY:12,73,75,000)]

b) Term Loan 134,609,368 336,579,554

(repayable within one year Rs.609,06,979/-

(PY:655,89,101/-)

c) Working Capital Loan (Cash Credit/

Packing Credit/Deposit Loan etc) 260,624,269 733,783,637 239,537,477 1,085,577,031

Note: For Nature of Securities

Refer Note no 03 & 04 of Notes to Accounts

B) Unsecured Loans

a) From Bank 15,302,106 –

b) Loan from Share holders – 41,221,894

c) Loan from Sleeping Partner 23,577,144 38,879,250 25,000 41,246,894

T O T A L 772,662,887 1,126,823,925

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and

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the

year

end

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1st M

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0S

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TS

(Am

oun

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Rs)

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SCHEDULE No: 05

INVESTMENTS

A) Investment in Associate (unquoted)a) 5,000 Equity Shares of Rs.10/-each fully paid in

Raichem Medicare Pvt Ltd. 50,000

b) Share Application Money in Raichem

Medicare Pvt Ltd. 7,675,000 7,725,000

B) Investment in Associate (unquoted)

a) 96,667 Equity Shares of Rs.10/-

each fully paid in Reva Pharmachem Pvt Ltd. 966,670

b) Share Application Money in

Reva Pharmachem Pvt Ltd 33,350 1,000,020

C) Investment in Equity Shares of

Nu Therapeutics Private Limited, Cherlapally 17,499,616

D) Repurchase value reinsurance 772,719 12,098,613

E) Investment fund units – 4,562,089

F) In Government Securities (NSC-Assigned as Securities

to Government Dept) 20,000 20,000

T O T A L 27,017,355 16,680,702

SCHEDULE No: 06

INVENTORIES

a) Finished Goods 65,170,284 90,617,240

b) Raw Materials 150,082,646 91,326,528

c) Work-in-progress 285,807,581 136,540,119

d) Stores & Spares 2,763,783 2,128,137

e) Packing Material 518,553 296,679

T O T A L 504,342,847 320,908,703

SCHEDULE No: 07

SUNDRY DEBTORS

a) Unsecured:

Outstanding for more than six months :

Considered good 6,802,813 7,560,482

Considered Doubtful / Bad 1,692,348 1,515,000

8,495,161 9,075,482

Less: Bad Debts Written off 1,692,348 6,802,813 1,515,000 7,560,482

b) Outstanding for less than six months :

Considered Good 342,137,465 229,447,878

T O T A L 348,940,278 237,008,360

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SCHEDULE No: 08

CASH & BANK BALANCES

a) Cash-in-Hand 456,788 473,913b) Foreign Currency in hand 55,208 50,158c) Balance with Scheduled Bank:

1. In Current Accounts 7,234,620 16,813,4362. In Fixed Deposits 18,540,842 23,257,122

(Assigned to Bank towards Margin Moneyfor Bank Guarantee)

T O T A L 26,287,458 40,594,629

SCHEDULE No: 09

LOANS & ADVANCES

a) Advance Recoverable in cash or kind for value to be recovered 12,188,474 5,638,793b) Sundry Deposits 1,464,044 1,150,700c) Deposits with Government Offices/Local Authorities 4,835,648 20,964,363d) Advance Income Tax / TDS receivable 126,525,019 38,052,496e) Interest accrued but not due on fixed deposit with Bank. 757,751 211,477f) Refund of Excise Duty receivable pertaining to current year 27,856,429 20,824,166g) VAT paid on Capital & Other Items 2,786,776 9,628,445h) CST Receivable 15,444,562 13,418,960i) VAT Recievable – 341,862j) Service Tax Receivable – 360k) Other Advances 554,738 –

T O T A L 192,413,441 110,231,622

SCHEDULE No: 10

CURRENT LIABILITIES & PROVISIONS

A) Current Liabilities

a) Investors Education and Protection Fund -Unclaimed Dividend 587,301 525,825

b) Unclaimed bonus/salary 73,950 64,910c) Interest Payable but not due 426,952 1,150,296d) Sundry Creditors:

i) For Goods 311,683,154 146,448,475ii) For Others 103,902,354 415,585,509 96,166,032 242,614,507

e) VAT, Entry Tax & Profession Tax 1,467,093 4,585f) Tax Deducted at Source (TDS) payable 5,685,562 629,381g) Salary Payable – 53,625h) Other Liabilities 454,270 61,426,011

B) Provisions

a) Provision for Income Tax 199,103,641 52,500,000b) Proposed Dividend 15,416,916 11,012,085c) Provision for Tax on Proposed Dividend 2,620,104 1,872,055d) Provision for Gratuity/severance/pension accruals 46,846,828 263,987,489 14,544,247 79,928,387

T O T A L 688,268,126 386,397,527

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SCHEDULE No: 11

VARIATION IN FINISHED GOODS

Closing Stock of Finished Goods 46,971,046 66,549,935Less: Opening Stock of Finished Goods 66,549,935 82,961,943

(19,578,889) (16,412,008)

Closing Stock of Consignment Stock 847,075 –Less: Opening Stock of Consignment Stock –

847,075 –

T O T A L (18,731,814) (16,412,008)

SCHEDULE No: 12

OTHER INCOME

a) Miscellaneous Income 17,745,517 10,363,653

T O T A L 17,745,517 10,363,653

SHEDULE No: 13

MATERIALS

a) Raw Materials Consumed 1,479,591,105 839,540,559(Less) / Add: Change in Work in Progress (149,554,789) 1,330,036,316 (19,255,919) 820,284,640

b) Cost of Materials Traded 14,246,631 98,339,835c) Packing Material Consumed 3,070,562 1,428,595

T O T A L 1,347,353,509 920,053,070

SCHEDULE No: 14

EMPLOYEE EXPENDITURE

a) Salaries, Wages, Bonus and Allowances. 241,592,356 195,235,501

b) Contribution to Provident Fund,Gratuity andOther Funds. 36,963,196 4,299,314

c) Welfare Expenses. 5,086,446 38,998,495

T O T A L 283,641,998 238,533,310

SCHEDULE No: 15

PRIOR PERIOD EXPENSES

Prior Period (Income) / Expenses 468,272 (1,479,426)

T O T A L 468,272 (1,479,426)

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SCHEDULE No: 16

OPERATING & ADMINISTRATIVE EXPENSES

a) Commission, Brokerage & Consultancy 32,798,167 12,542,189b) Clearing & Forwarding 11,097,904 7,336,643c) Laboratory Expenses & R&D Expenses 16,250,587 5,633,674

d) Power & Fuel 57,599,590 49,601,111e) Repairs & Maintenance

i) Plant & Machinery 16,011,182 13,951,648

ii) Building 6,314,576 4,048,783iii) Others 6,052,293 28,378,051 4,658,577 22,659,008

f) Transportation Expenses 12,066,949 8,260,542

g) VAT,Entry Tax & Profession Tax 408,935 767,459h) Travelling Expenses 11,620,909 12,392,539i) Advertisements & Sales Promotion Expenses 6,136,442 4,466,194

j) Insurance 7,637,434 7,128,748k) Legal Charges/License Fees/Rates & Taxes 11,331,046 13,924,386l) Miscellaneous Expenses 26,154,957 15,858,876

m) Bank Charges 4,478,207 4,805,024n) Auditor Fees 601,998 1,651,205o) Storage and Handling Charges 617,318 –

p) Deferred Revenue expenditure 282,990 –q) Listing Fees 59,887 116,062r) Job work Expenses 9,008,908 117,754

s) Bad Debts written off 1,698,078 1,501,931t) Loss on Transfer of Assets 2,369,334 809,125

T O T A L 240,597,690 169,572,469

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0Significant Accounting Policies:

a) Basis of Preparation

The consolidated financial statement of Shilpa Medicare Limited, its Subsidiaries and associates ("the Group") are preparedunder the historical cost convention and in accordance with the requirements of the Companies Act, 1956.

b) Principles of consolidation

The financial statements of the subsidiary companies used in the consolidation are drawn up to the same reporting date as ofthe Company.

The consolidated financial statements have been prepared on the following basis:

1. The financial statements of the Company and its subsidiary companies have been combined on a line-by-line basis byadding together like items of assets, liabilities, income and expenses. Inter-company balances and transactions and unrealized

profits or losses have been fully eliminated.

2. Interest in an Associate has been reported under Equity method of consolidation. An associate is an enterprise in which

the investor has significant influence and which is not a subsidiary.

3. The excess of cost to the Group of its investments in subsidiary companies over its share of the equity of the subsidiary

companies at the dates on which the investments in the subsidiary companies are made, is recognized as 'Goodwill' beingan asset in the consolidated financial statements.

4. Minority interest in the net assets of consolidated subsidiary consists of the amount of equity attributable to the minorityshareholders at the dates on which investments are made by the Group in the subsidiary companies and further movements

in their share in the Profit / (Loss) thereon.

c) Use of estimates

The preparation of financial statements requires the management of the Group to make estimates and assumptions that

affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of thefinancial statements and reported amounts of income and expenses during the year. Example of such estimates includeprovision for doubtful debts, employee benefit plans, provision for income taxes, accounting of depreciation on fixed assetsand provision for impairments.

d) In case of foreign subsidiaries, being non-integral foreign operations, revenue items are converted at the average rates prevailing

during the year. All assets and Liabilities are converted at rates prevailing at the end of the year. Any exchange differencearising on consolidation is recognised in the "Foreign Currency Translation Reserve".

e) The consolidated financial statements are prepared by adopting uniform accounting policies for like transactions and otherevents in similar circumstances and are presented, to the extent possible, in the same manner as the company's separatefinancial statements except otherwise stated elsewhere in this schedule.

f) A) The subsidiaries considered in the Consolidated Financial Statements are as under:

Sl. No. Name of the Subsidiary Country Extent of Holding

1. Zatortia Holdings Limited ('Zatortia') Cyprus 100.00%

2. Loba Feinchemie GmbH ('Loba') Austria 99.99%

3. Raichem Lifesciences Pvt Ltd ('Raichem')(formerly known as Raichem Pharma Pvt Ltd) India 100.00%

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0 B) The Associates considered in the Consolidated Financial Statements are as Under

Sl. No. Name of the Subsidiary Country Extent of Holding

1. Reva Pharma Chem (P) Ltd India 47.54%

2. Raichem Medicare (P) Ltd India 50.00%

i) Loss for the year attributable to Minority has been calculated proportionately on the basis of their respective holdings.

Other Notes

1. In view of different sets of environment in which Cyprus & Austrian subsidiaries namely Zatortia & Loba respectively andRaichem Lifesciences P Ltd, (an Indian Subsidary) are operating, Accounting policies followed in respect of following items

by them are different from the accounting policies mentioned in Schedule 20 of the Financial statements of the parent Unit:

Particulars Accounting Policies 2009-10

Company Subsidiaries Amount Proportion

(a) Depreciation and a) Depreciation is charged a) Depreciation is charged 7,731,745 99.99%Amortization on the basis of rates and based on balance useful

manner specified for each life of assets (ranging

class of assets in Schedule from 10% -50%) onXIV of the companies straight line basisAct, 1956. depending on the item

of assets.

2. In respect of accounting of employee benefits AS-15 has been strictly complied with by the Holding Company in respect of

all the employee benefits. The details of which are given elsewhere in the standalone notes.

In respect of subsidiary companies employee benefits i.e. pension plan where ever the employees of the company qualify it is

fully funded by way of reinsurance with the Insurance Company. In respect of provision for severance payments / jubileepayments in case of foreign subsidiary have been provided for based on the on valuations of that company.

3. Balance in provision for income tax account is after netting-off the payments made and refunds received.

4. Contingent Liabilities:


For Local and Foreign L/Cs 68,994,628 53,009,622

Guarantees 3,330,000 16,171,132

Bills discounted 15,302,106 82,14,081

Letter of Comfort 121,120,000 202,44,0000

Estimated amount of contracts remaining

to be executed on capital account and notprovided for (Net of advances) 19,172,443 99,50000

Claim against the Company not acknowledged as debts 2,340,000 8,00,000

Total 23,02,59,177 29,05,84,835

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5 RELATED PARTIES DISCLOSURES PURSUANT TO ACCOUNTING STANDARD 18:

List of Related parties

1 Associates

1.01 Bhakra Investments (P) Ltd

1.02 Shilpa Finvest (P) Ltd

1.03 Srinidhi Cottons (P) Ltd

2 Key Management Personnel

2.01 Vishnukant C Bhutada

2.02 Rajkumar Somani

3 Relatives

3.01 Dharmavati Bhutada

3.02 Deepak Kumar Inani

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0

1In

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6. All other notes to accounts are as appearing in the notes to accounts of the Parent Company.

7. Consolidated Segment Report

The Company has two reportable segments viz., Bulk drugs, Intermediates & Power. The financial Information about thesebusiness segments is presented as under:

(Amount In Lakhs )

PARTICULARS Current Year Previous Year

SEGMENT REVENUE


Power 246.08 243.09

Total 26,491.21 16,643.22

SEGMENT RESULTS

Profit before Interest and Tax:


Power 23.11 23.11

SUB -TOTAL 6911.66 1,332.78

Less: Interest 542.29 576.75

Profit Before Tax 6,369.37 756.03

CAPITAL EMPLOYED

(Segment Assets- Segment Liabilities)


Power 983.65 1,176.17

TOTAL 18310.69 17,531.83

66

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Rep

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I/We ……………………………......……… of …..........………………………….… being a member/members of ShilpaMedicare Limited, hereby appoint .......................... of ...............................………………. or failing him/her……………………………………… of …..................……………………….. as my/our proxy to attend and vote for me/us onmy/our behalf at the 23rd Annual General Meeting of the Company at Hotel Nrupatunga, Ambedkar Circle, Station Road,Raichur-584 101, Karnataka on Thursday, the 30th Day of September, 2010 at 11.30 AM.

As WITNESS my / our hand/ hands this ………………………….. day of……………………….2010

Signed by the said …………………………………

Note: 1. The proxy must be deposited at the Registered Office of the Company.not less then 48 Hours before the time for holding the meeting.

2. Please bring your copy of this Annual Report for the meeting.

AffixRevenueStamp

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SiSiSiSiSigngngngngnaturaturaturaturatureeeee

Shilpa Medicare LimitedRegistered Office: 10/80, 1st Floor, Rajendra Gunj, Raichur - 584 102 (Karnataka)

Regd.Folio No. : No. of Shares Held :

Client ID No. :

A T T E N D A N C E S L I P(Please present this slip at the Meeting Venue)

ANNUAL GENERAL MEETING - ON THURSDAY, 30TH SEPTEMBER, 2010.

............……………………....... .............................................

Name of the Shareholder / Proxy Signature of Member / Proxy

P R O X Y F O R M

Regd.Folio No. : No. of Shares Held:

Client ID No. :

Shilpa Medicare LimitedRegistered Office: 10/80, 1st Floor, Rajendra Gunj, Raichur - 584 102 (Karnataka)

I hereby record my presence at the 23rd Annual General Meeting of the Company being held on Thursday, 30th September, 2010at 11.30 AM at Hotel Nrupatunga, Ambedkar Circle, Station Road, Raichur - 584 101, Karnataka.

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