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Cipla Ltd Pharmaceuticals - Indian - Bulk Drugs & Formln
BSE Code
500087
ISIN Demat
INE059A01026
Book Value
93.45
NSE Symbol
CIPLA
Div & Yield %
0.88621
Market Cap (Rs Cr.)
25367.6255
P/E
22.56786
EPS
14
Face Value
2
CIPLA LIMITED

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

Congratulations  to all Cipla shareholders on the occasion of  the  Diamond 
Jubilee  of  your Company. Thanks to your continuing  support,  the  strong 
backing  of  the medical community and the untiring efforts of  the  entire 
team  of  employees  and associates, Cipla has completed  a  remarkable  75 
years.

When the first Cipla products were ready for the market in September  1937, 
The Sunday Standard predicted that 'with intelligent direction and skillful 
production, (Cipla) bids fair to establish a great reputation in the East'. 
Indeed,  the  Company's reputation has gone beyond the East. From  a  quiet 
beginning,today Cipla is well known internationally by doctors and patients 
alike, in most countries across the globe.

The Directors take pleasure in presenting the Seventy-Fourth Annual  Report 
of the Company and Audited Accounts for the year ended 31St March 2010.

Financial Summary                                    Rupees in crore


Year ended		                Year ended	Increase over
31st March                              31st March      previous year 
2009	                                      2010		  (%)


5,377	       Sales and other income	     5,765	            7

901	       Profit before tax	     1,325	           47

777	       Profit after tax	             1,081	           39

	       Surplus brought forward
510	       from last balance sheet	       955

	       Profit available for
1,287	       appropriation	             2,036
	       Appropriations:

156	       Dividend	                       160

26	       Tax on dividend	                27

150	       Transfer to general 
               reserve	                       150

955	       Surplus carried 
               forward	                     1,699


SHARE CAPITAL

Following  the  approval  accorded by the members  at  the  Annual  General 
Meeting  held  on  26th August 2009, the Company has,  in  September  2009, 
raised  Rs.675.99  crore through an issue of 2,56,30,000 equity  shares  of 
Rs.2  each issued ata price of Rs.263.75 (including premium  of  Rs.261.75) 
under Qualified Institutions Placement (QIP). These shares have been listed 
on Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India 
Limited (NSE).Consequently the paid-up equity share capital of the  Company 
stands increased to Rs.160.58 crore.

DIVIDEND

The Directors recommend a dividend of Rs.2 per share on 80,29,21,357 equity 
shares of Rs.2 each for the year 2009-10 amounting to Rs.160.58 crore.

MANAGEMENT REVIEW: 2009-10

Industry Structure and Development

During  the  year, positive signs had begun to emerge  in  many  countries, 
signifying  recovery  from  the  general  recession  and  economic  crisis. 
However,  there  is  high  uncertainty,  with  one  crisis  or  the  other, 
particularly in Europe, affecting overall sentiments. The developed nations 
will  need  to take the initiative to pull the rest of the  world  back  to 
normalcy. 

The recovery of the Indian economy seems to be on track with GDP  predicted 
tog row to higher levels. Industrial recovery has also gathered momentum in 
recent months.The government is expected to adopt a gradual approach  while 
withdrawing policy stimulus measures so that the recovery is not hampered.

The Indian pharmaceutical industry maintained its momentum and registered a 
growth of about 18 per cent, according to ORG-IMS statistics.

The   dynamics  of  the  Indian  pharmaceutical  industry   is   undergoing 
significant  changes.Multinational  corporations are  working  to  entrench 
themselves  as evidenced by the recent buyouts of the domestic business  of 
major  Indian  pharmaceutical  organisations.  In  the  coming  years,  the 
industry may witness a significant shift and a consolidation phase. All the 
major players are trying to reach out to emerging rural markets in order to 
expand their reach.

According to a recent report,the Indian healthcare services industry  which 
primarily includes hospitals, is growing at an unprecedented rate of 16 per 
cent and is already one of the largest service sectors in the country.  The 
Indian pharmaceutical industry will need to realign its strategies to cater 
to this segment.

Performance Review

The  Company  achieved an overall growth of about 8 per  cent  in  turnover 
during  the year. Domestic growth was steady at 10 per cent.  According  to 
ORG-IMS, Cipla remained the leader in the domestic market, as on 311  March 
2010  with a market share of 5.38 percent. However, growth  in  formulation 
exports  was affected due to various factors  including  non-availabilityof 
important  raw  materials,  lowertender business  in  anti-retrovirals  and 
unfavourable movements in foreign exchange rate.

Products

The  Company  introduced many new drugs and formulations during  the  year. 
Some of the significant introductions were:

*  Advent  Forte  (amoxycillin and clavulanic  acid  syrup)  -  combination 
antibiotic for difficult infections

* Antiflu (oseltamivir capsules and syrup) - first oral drug for bird flu

*  Bosentas  (bosentan  tablets) - first  specific  therapy  for  pulmonary 
arterial hyperte nsion

*   Cinmove  (cinitapride  tablets)  -  new  anti  -  motility   drug   for 
gastrointestinal disorders

* Clearnoz NS (sodium chloride nasal spray) - saline sprayfordry nose

*  Creslip  (telmisartan  and atorvastatin  tablets)  -  novel  combination 
therapy for hypertension with coexisting lipid disorders

* Daruvir (darunavir ethanolate tablets) - new PI boosterdrug for HIV/AIDS

*  Foratec  (arformoterol tartrate  respules)-first  long-acting  nebulized 
bronchodilator

*  Furamist  (fluticasone  furoate nasal spray)  new  once-daily  preventer 
therapy for allergic rhinitis

* Furamist AZ (fluticasone furoate and azelastine nasal spray) - novel  once-
daily combination nasal spray forallergic rhinitis

* IF2 (olopatadine tablets) - new drug for allergies

*  Infunor (noradrenaline injection)- life-saving therapy for septic  shock 
and severe hypotension

*  Junior Lanzol (lansoprazole suspension)-new acid controller  liquid  for 
children

*  Lenmid  (lenalidomide capsules) - new drug for transfusion  -  dependent 
anaemia and multiple myeloma

* Nestacort (deflazacort tablets) - new steroid for organ transplant therapy

* Nicotex (nicotine polacrilex sugarfree gum) - smoking cessation aid

*  Nova  Plus (pregabalin, mecobalamin and alpha lipoic  acid  capsules)  - 
triple combination drug therapy for neuropathic pain

*  Nova SR (pregabalin sustained release tablets)-once-daily treatment  for 
neuropathic pain

* Nutrimune (antioxidant tablets) - supportive therapy for HIV/AIDS

* Pazflo (pazufloxacin injection)-third generation quinolone antibacterial

* Prandial (voglibose mouth dissolving tablets) - novel drug for diabetes

* Pulmopres (tadalafil tablets)-for pulmonary hypertension

*  Rixmin  (rifaximin  tablets)  -  new  antibiotic  for   gastrointestinal 
infections

*  Rosulip  (rosuvastatin  tablets)- new drug  for  cholesterol  and  lipid 
disorders

* Starpill (atorvastatin, atenolol, aspirin and losartan  tablets)-polypill 
therapy for cardiovascular disease

*  Ston 1B(6) (potassium citrate, magnesium citrate and vitamin  B(6)  oral 
solution) - for prevention of recurrence of urinary stones

*  Triexer  (glimepiride,  pioglitazone  and  metformin  extended   release 
tablets)-triple combination therapy for diabetes

*  Tripill  (metformin  extended  release,  glimepiride  and   atorvastatin 
tablets)  -  triple  combination  therapy  for  diabetes  with   coexisting 
dyslipidemia

* Tugain(minoxidilfoam)-for hair loss and baldness treatment

* Vesigard(darifenacin tablets)-new therapy for over active urinary bladder

* Xgain (volumizing shampoo)-pH balanced volumizing shampoo

* Zolmist (zolmitriptan nasal spray)-new migraine therapy

Among  other  developments, during the year, Cipla  sold  its  intellectual 
property   rights  and  technical  know-how  of  'i-pill;'   an   emergency 
contraceptive  brand, to Piramal Healthcare Limited, for the  territory  of 
India, atan aggregate consideration of Rs.95 crore.

Cipla has entered into a strategic alliance with Stempeutics Research  Pvt. 
Ltd., promoted by the Manipal Group,for the marketing rights of  stem-cell-
based  products being developed by Stempeutics. Cipla is sponsoring  up  to 
Rs.50  crore, in the initial phase, for research and development  of  these 
products.

Manufacturing Facilities

In   April   2010,   the  Company  commenced   commercial   production   of 
pharmaceutical formulations at its Special Economic Zone (SEZ) project,  at 
Indore,   Madhya  Pradesh.  This  project  includes  facilities   for   the 
manufacture of aerosols, respules, liquid orals, pre-filled syringes (PFS), 
nasal  sprays,  large volume parenterals (LVP), eye drops, tablets  and  ca 
psules. The total investment for this project is about Rs.900 crore.

The Company is investing about Rs.250 crore in a new R&D and administration 
facility atVikhroli, Mumbai.

Cipla   is  setting  up  API  facilities  at  Bengaluru   for   anti-cancer 
products.  The  Company is upgrading its API facilities  at  Patalganga  to 
scale-up  production.  The  total  investment for  these  two  projects  is 
estimated to be about Rs.200 crore.

In May 2010, Cipla acquired an undertaking for Rs.30.64 crore, by way of  a 
slump  sale  arrangement.  The undertaking has  a  manufacturing  facility, 
approved  by  US FDA and WHO, for APlsand intermediates. It is  located  at 
Kurkumbh (Pune district).

The Company proposes to subscribe to the share capital of two biotechnology 
companies, located in India and Hong Kong, to obtain a 40 per cent and a 25 
per  cent  share, respectively. The total investment will be about  USD  65 
million, in a phased manner, for setting up state-of-the-art facilities for 
biosimilar products in Goa and China.

Work  at the Company's SEZ project at Kerim,Goa continues to  be  suspended 
due to the stop-work order issued by the State Government. The Company  had 
received  a communication dated 11 t'July 2008 fro m the  State  Government 
revoking its stop-work order, consequent to the filing of a petition by the 
developer  of the SEZ against the order. The petition is currently  pending 
before the Goa Bench of Bombay High Court.

Regulatory Approvals

Several dosage forms and APIs manufactured in the Company's plants continue 
to  enjoy  the approval of major international regulatory  agencies.  These 
agencies  include  the  US  FDA,  MHRA  (UK),  PIC  (Germany),  MCC  (South 
Africa),TGA  (Australia), Department of Health (Canada),  ANVISA  (Brazil), 
SIDC  (Slovak Republic), Ministry of Health (Kingdom of Saudi Arabia),  the 
Danish Medical Agency and the WHO.

Opportunities

Domestic Markets

Every year,Cipla continues to introduce new products and dosage forms  that 
offer significant growth opportunities. Cipla has chalked out key marketing 
strategies  to  tap  the potential offered by the Indian  economy  and  the 
booming  healthcare services industry. Given the Company's vast  experience 
spanning  a  number  of therapeutic categories and the wide  range  of  its 
products in multiple dosage forms, Cipla is confident of also doing well in 
these market segments.

The  Company  will continue to leverage its brand value  to  capitalise  on 
existing   opportunities  available  through  trade   channels,   including 
stockists, hospitals and other institutions.

International Markets

The  Company  has long-standing key alliances for product  development  and 
supply  with large generic companies in the developed markets and has  over 
6,000  product registrations in more than 170 countries. Cipla  exports  to 
more  than 170 countries worldwide and operates through low-risk,  low-cost 
partnership arrangements. The large number of products in the  registration 
pipeline will aid in increasing the Company's market share.

Cipla  continues its focus on existing and new off-patent generic  products 
in  the developed markets. The Company identifies  potential  opportunities 
and  works  with  its  strategic partners to  market  generics  when  these 
products  go off-patent. During the year, Cipla maintained its strategy  of 
becoming  the  identified  source  of  supply  for  third  party   generics 
companies, thus exploiting new opportunities for export of generics.

Income  from  technological  consultancy services for the  year  was  about 
Rs.154 crore. Technology transfer will continue to be a focus area for  the 
Company.

Threats, Risks, Concerns

Patents

As  expected,  the  Patent  Bill 2005,  which  introduced  product  patents 
retrospectively  from  1995,  has given rise to  a  series  of  litigations 
between    Cipla   and   many   pharmaceutical    companies,    essentially 
multinationals.  Cipla continues to challenge many  pre-grant  applications 
and post-grant patents, which should not have been granted. India is  under 
pressureto  change  its  current  patent  laws  to  suitonly  multinational 
companies.  Cipla and other like-minded organisations are fighting this  as 
best as possible.

Apart from the above, the question of data exclusivity has as yet not  been 
resolved.  The  definition  of the term, 'counterfeit' has  also  not  been 
explained  under the law. The word counterfeit should  largelyapplyto  sub-
standard and spurious drugs. Many companies apply for frivolous patents and 
also multiple patenting of the same product. Certain export consignments of 
Indian  pharmaceutical  companies including Cipla, legally  sent  to  Latin 
America and other countries, were stopped in transitat European airports on 
the ground that they did notfulfil European Intellectual Property Laws.

The Indian government should safeguard Indian consumers from a monopoly  in 
healthcare.  Time  and again,Cipla has called for  a  pragmatic  compulsory 
licensing  system. ln keeping with the guidelines of TRIPS, a country  like 
India  with its wide range of diseases and large population  simply  cannot 
afford  monopoly.  India's  millions  need  access  to  all  medicines   at 
affordable prices.

In the light of these threats, Cipla is continuously fighting to  safeguard 
the interest not only of the Company, but also of the country.

Drug Pricing

It is now well over 5 years since the government announced thedrug  pricing 
policy.This  matter has to be approached with seriousness by the  concerned 
authorities.  At sometime a policy should be announced, which is  open  and 
transparent.  Cipla  reiterates that open competition is the  only  way  to 
control and reduce prices. Monopolies must be discouraged.

Two  approaches have been suggested by Cipla. First, all imported  patented 
drug formulations, where there is a monopoly should be under price control. 
All  drugs sold in India by more than five companies should be outside  the 
purview of price control.

On several occasions, Cipla has approached the Indian government,  offering 
to   give  technology  freeofchargeto  the  public  sector   pharmaceutical 
undertakings, so that they can manufacture and market important life-saving 
drugs at economical prices. With both public and private sectors  operating 
in  the same segment,this would benefit the patients and the  country.  The 
government  has now responded to our offer and has agreed to  consider  our 
proposal.

Cipla  has some pending legal cases on account of alleged  overcharging  in 
respect of certain drugs under the Drug Price Control Order. The  aggregate 
amount  of  the demand notices received is Rs.1157.12 crore  (inclusive  of 
interest).The Company has been legally advised that based on the directions 
given  by the Supreme Court,there is no probability of the demand  becoming 
payable  by  the  Company. Hence,no provision is  considered  necessary  in 
respect of the aforesaid amount. However, any unfavourable outcome in these 
proceedings could have an adverse impact on the Company.

Regulatory Approvals

Our  manufacturing  facilities  are  monitored  and  approved  by   various 
regulatory authorities across the globe. These authorities have become more 
vigilant  and strict with respect to compliance. Periodically, the  US  FDA 
conducts routine audits of all approved facilities and accordingly  several 
of  our  plants  including Goa, Patalganga,  Kurkumbh  and  Bengaluru  were 
inspected  by the US FDA. Currently all facilities continue to be  approved 
by the US FDA.

Exchange Rate Movements

More  than 50 percent of the Company's turnover is contributed by  overseas 
business. During the year, the Indian rupee appreciated by more than 10 per 
cent  vis-a-vis  the US Dollar. Further, the Euro depreciated by  about  10 
percent  vis-a-vis  the  US Dollar during the last 2  months.  Such  severe 
fluctuations  in  foreign currency exchange rates can  have  a  significant 
impact on the Company's operations and financial results.

Safety Measures

As  always, the Company kept up high standards of occupational  health  and 
safety  practices  at  all its manufacturing units.  During  the  year  the 
Company reviewed the safety measures at its premises all over India.

Various  health  and  safety programmes were organised  for  villagers  and 
schoolchildren  living  around  the  Company's  units  at  Baddi  (Himachal 
Pradesh),  Patalganga (Maharashtra), Kurkumbh (Maharashtra),  Verna  (Goa), 
Bengaluru (Karnataka) and Kumrek (Sikkim).

Internal Control Systems

As  always, the Company's internal control procedures are tuned to keep  up 
with  the  organisation's  pace  of growth  and  increasing  complexity  of 
operations. These ensure compliance with various regulations. The  internal 
audit  team  carries out extensive audits throughout the year,  across  all 
functional  areas  and submits its reports to the Audit  Committee  of  the 
Board of Directors.

Human Resources

The leadership position attained by the Company

over  the  years  is largely due to the dedication and  commitment  of  its 
people.  The Company strives not only to impart adequate training but  also 
to  provide the right environment to maximise team effort  while  enhancing 
individual growth potential The Directors record their appreciation of  the 
support  and  contribution  of  all employees towards  the  growth  of  the 
Company.

Particulars of employees required to be furnished under section 217(2A)  of 
the Companies Act, 1956form part of this report. Any shareholder interested 
in  obtaining a copy may write to the Company Secretary at  the  Registered 
Office of the Company.

CORPORATE SOCIAL REPSONSIBILITY

Cipla Palliative Care and Training Centre in Pune continues to provide care 
to  cancer patients. As of date,the Centre has provided comfort and  solace 
to more than 6,600 patients. The focus is on reaching out to more and  more 
cancer  patients  who need palliative care and  on  integrating  palliative 
medicine with curative therapy.

In  addition, the Company continued to support the promotion  of  education 
and community welfare, both directly and through its charitabletrusts.

As  regards  environment care, the Company continued  to  maintain  modern, 
well-designed  effluent  treatment plants at its factories.  Treated  water 
from these 'zero discharge' facilities is used for maintaining a green belt 
at  all the locations. The Company regularly undertakes various  innovative 
measures to conserve energy, reduce wastage and optimize consumption.

CORPORATE MATTERS

Responsibility Statement

Pursuant  to  section 217(2AA) of the Companies Act, 1956 it  is  confirmed 
that the Directors have: 

i.  followed  applicable  accounting standards in the  preparation  of  the 
annual accounts;

ii.  Selected  such accounting policies and applied them  consistently  and 
madejudgements and estimates that are reasonable and prudent so as to  give 
a  true and fair view of the state of affairs of the Company at the end  of 
the  financial year ended 31 1 March 2010 and of the profit of the  Company 
for that period;

iii.  Taken  proper  and  sufficient  care  for  maintenance  of   adequate 
accounting records in accordance with the provisions of the Companies  Act, 
1956  for  safeguarding the assets of the Company and  for  preventing  and 
detecting fraud and other irregularities; and

iv. Prepared the annual accounts on a going concern basis.

Subsidiary Companies

As  per the exemption order no. 47/307/2010-CL-III dated 22nd  April  2010, 
passed  by  the Ministry of Corporate Affairs, Government  of  India  under 
section 212(8) of the Companies Act, 1956, the audited financial statements 
of  the  subsidiary  company viz. Cipla FZE have  not  been  attached.  The 
consolidated  financial statements presented in this Annual Report  include 
financial information of the subsidiary company. A statement under  section 
212(3), which contains information in terms of the exemption order, is also 
attached.

In  terms of the aforesaid approval, the annual accounts of the  subsidiary 
company  and the related detailed information will be made  available  upon 
request.  These  documents  will also be available for  inspection  by  any 
member at the registered office of the Company.

In  May  2010,  the Company has set up  a  wholly-owned  subsidiary  'Cipla 
Singapore Pte. Ltd.'; in Singapore to aid logistics and distribution of the 
Company's export business.

In  May  2010, Cipla acquired 100 per cent shareholding of  a  company  for 
Rs.51.38   crore.   This  company  has  a   state-of-the-art   formulations 
manufacturing facility at Sikkim with capabilities to manufacture  tablets, 
capsules,  oral liquids, injections,dry syrup and  ointments/creams.  This, 
along  with  the  acquisition of the undertaking of  the  API  facility  in 
Kurkumbh under the slump sale arrangement mentioned earlier, was done  with 
an  objective  to  exercise control over operations  of  these  facilities. 
Entities  controlled by relatives of the promoters were major  shareholders 
in the two units.

Corporate Governance

Your  Company  is  committed to good corporate  governance  practices.  The 
report on corporate governance as stipulated under Clause 49 of the Listing 
Agreement forms part of this report.

By and large,your Company is already complying with the recommendations  of 
Corporate  Governance Voluntary Guidelines 2009 issued by the  Ministry  of 
Corporate Affairs.

Group

Pursuant  to intimation from Promoters, persons constituting  group  coming 
within  the definition of 'group' for the purpose of Regulation  3(1)(e)(i) 
of  the Securities and Exchange Board of India (Substantial Acquisition  of 
Shares  and  Takeovers) Regulations, 1997, include Yusuf Hamied  Trust  and 
Farida Hamied Trust.

Disclosure of Particulars

As  required by the Companies (Disclosure of Particulars in the  Report  of 
Board  of  Directors)  Rules,  1988,  the  relevant  information  and  data 
areannexed to this report.

Directors

Dr.H.R.  Manchanda  and  Mr.Ramesh Shroff retire  by  rotation  and,  being 
eligible,offer  themselves for re-appointment. A brief resume of  the  said 
directors is provided in the Notice.

Auditors

Messrs.V.  Sankar Aiyar & Co.and Messrs. R.G.N. Price & Co.,joint  auditors 
of the Company, retire at the conclusion of the forthcoming Annual  General 
Meeting and are eligiblefor re-appointment.

On behalf of the Board,

Y. K. Hamied
Chairman & Managing Director

Mumbai, 15th June 2010

ANNEXURE TO THE DIRECTORS' REPORT

Information  under section 217(1)(e) of the Companies Act, 1956, read  with 
the  Companies  (Disclosure of Particulars in the Report of  the  Board  of 
Directors) Rules, 1988.

I. CONSERVATION OF ENERGY

a.  The  Company is striving continuously to conserve  energy  by  adopting 
innovative measures to reduce wastage and optimize consumption. Some of the 
specific measures undertaken are:

i. Implemented chiller water close loop system at various factories.

ii.  Diesel generator sets have been replaced with government power  supply 
in Baddi factory during peak period resulting in cost reduction.

iii. Automated machines have been installed for changeover of nitrogen  gas 
cylinders resulting in reduction of nitrogen wastage in Goa factory.

iv.  Added new contact type stainless steel water level sensors  in  Indian 
duo rapid plant tank and electrically operated control valves installed  to 
avoid overflow of water in Goa and Patalganga factories.

v.  Lighting energy savers have been installed at various units which  have 
led to significant savings in power usage.

vi. Motion sensors have been installed in Patalganga and Kurkumbh factories 
to reduce wastage of power.

vii. It is proposed to provide variable-frequency drive to reduce number of 
air  changes  per  hour up to 6 (as defined in guidelines,  minimum  6  air 
changes  per  hour  for  IS08) in night shift as well  as  on  holidays  in 
Kurkumbh factory.

viii.  Reduction  in  power bill achieved by maintaining  power  factor  at 
acceptable levels at Patalganga factory.

ix. Air Handling Unit cum dehumidifier with direct expansion unit  replaced 
by Air Handling Unit cum dehumidifier with chilled water coil in Patalganga 
factory, which has led to substantial saving in power consumption.

x. Energy efficient motors are installed at various factories.

xi.  Energy  saving  through  timer and  temperature  based  operations  of 
ventilation and Air Handling Units in Kurkumbh factory.

xii. Rain water harvesting at new store and shipper store terrace to reduce 
water consumption at Patalganga factory.

b.  Impact  of the above measures for reduction of energy  consumption  and 
consequent impact on the cost of production of goods:

The  adoption  of  the above energy conservation measures  have  helped  to 
curtail  the  proportionate increase in total energy  usage  consequent  to 
overall increase in production. This has made it possible to maintain  cost 
of production at optimum levels.

c.  Total energy consumption and energy consumption per unit of  production 
as per Form A:

Considering that the Company has a multi-product, multi-facility production 
system,   it  is  not  possible  to  determine  product-wise   energy   con 
sumption. Therefore,the consumption is categorised under different  classes 
of  goods  as  shown  below.  The figures for  the  year  are  not  exactly 
comparable  with  the  previous year's figures because of  changes  in  the 
product mix.
	
                                                       2010	       2009
A. Power and Fuel Consumption

1. Electricity

a. Purchased

Units	                           kwh	           91567258	  112381314

Total amount	                   Rs. in crore	      47.74	      76.51

Rate/Unit	                   Rs.	               5.21	       6.81

b. Own generation

i. Through diesel generator

Units	                           kwh	           57331785	   21368800

Units per litre of diesel oil	   kwh	               4.16	       3.35

Cost/Unit	                   Rs.	               9.65	      10.05

ii. Through steam 
turbine/generator	                                  -	          -

2. Others/Internal generation
Light diesel oil/diesel 
oil/furnace oil
			
Quantity	                   kl	              21467	      13479
			
Total cost	                   Rs. in crore	      76.12	      40.51
			
Average rate	                   Rs./kl	      35459	      30054  

B. Consumption per Unit 
of Production
	
1. Electricity
		
Bulkdrugs	                   (kwh/mt)	      60374	      73554  
	
2. Light diesel oil/diesel 
oil/furnace oil
		
Bulkdrugs	                   (kl/mt)	       4.76	       4.53

It  is notfeasible to classify energy consumption data of  formulations  on 
the  basis  of product categories, since the Company manufactures  a  large 
range of formulations with different energy requirements.

II. RESEARCH & DEVELOPMENT AND TECHNOLOGY ABSORPTION
	
A. Research & Development

1. Specific areas in which R&D work is carried out:

The  focus  of  the Company's R&D efforts was on the  following  areas:  

i. Development of new drug formulations for existing and newer active  drug 
substances.

ii.   Development  of  agrotechnology,  genetics  and   biotechnology   for 
cultivation  of medicinal plants and isolation of active  ingredients  from 
plant materials.

iii. Development of new drug delivery systems for existing and newer active 
drug substances as also newer medical devices.

iv.  Patenting  of  newer  processes/newer  products/newer  drug   delivery 
systems/newer  medical  devices/newer  usage of drugs for  both  local  and 
international markets.
 
v. Development of new innovative technology for the manufacture of existing 
APIs and their intermediates.

vi.  Development  of  new products, both in the area of  APls  as  well  as 
formulations, specifically for export.

vii. Development of methods to improve safety procedures, effluent control, 
pollution control, etc.

viii.  Projects  to  develop APIs and formulations  jointly  with  overseas 
companies. ix. Development of products related to the indigenous system  of 
medicines.

2.  Some  of  the major benefits derived as a result  of  R&D  include:  i. 
Successful  commercial scale-up of several new APIs and  formulations.  ii. 
Development  of  new  drug  delivery systems  and  devices.  iii.  Improved 
processes and enhanced productivity in both APIs and formulations.

3. Future plan of action:

The Company will continue its R&D efforts in the various areas indicated in 
(1)  above. The major thrust would be on developing new products  and  drug 
delivery systems.

4. Expenditure on R&D:
	
		                   Rs. in crore
	
a. Capital	                          11.99
	
b. Recurring	                         250.69
	
Total	                                 262.68

The total R&D expenditure as a percentage of total turnover is around 5 per 
cent.

B. Technology Absorption, Adaptation and Innovation

1.  Efforts, inbrief, made to wards technology absorption,  adaptation  and 
innovation:

i.  Development  and  patenting  of new  molecular  forms  and  methods  of 
synthesis. 

ii. Development of new drug delivery systems.

2. Benefits derived as a result of the above efforts:

i. Improvement in operational efficiency through reduction in batch  hours, 
increase  in  batch sizes, better solvent recovery  and  simplification  of 
processes.

ii.  Meeting  norms  of external regulatory  agencies  to  facilitate  more 
exports.

iii.  Improvements in effluent treatment, pollution control  and  all-round 
safety standards.

iv. Maximum utilisation of indigenous raw materials.

v. Development of products for import substitution.

III. FOREIGN EXCHANGE EARNINGS AND OUTGO

1.  Activities relating to exports, initiatives taken to increase  exports, 
development  of  new export markets for products and  services  and  export 
plans:

Export  sales  were Rs.2901 crore for the financial year  2009-10.  Exports 
constituted  more  than  50 per cent of total turnover.  In  addition,  the 
Company  earned Rs.154 crore towards technical know- how/fees. The  Company 
continues to leverage on its strategic marketing alliances and partnerships 
in more than 170 countries.

2. Total foreign exchange used and earned:

During  the  year,  the foreign exchange outgo was Rs.1202  crore  and  the 
earnings  in foreign exchange was Rs.3058 crore. Details of the  same  have 
been given in Notes 15 to 17 in Schedule S to the Accounts.

On behalf of the Board,

Y.K. Hamied
Chairman & Managing Director

Mumbai, 15th June 2010