TERM-PAPER OF ACCOUNTING

FOR MANAGERS:-
Submitted to:-
Ms. Ashu kakkar
Submitted by:-
Nisha rialch
Roll no- R315 a27
Mba 1st (sem)

ACKNOWLEDGEMENT
 First and foremost I want to thank my teacher Miss Ashu kakkar who has assigned

me this term paper to bring out my creative capabilities. I express my gratitude to my

parents for being a continuous source of encouragement and for all their financial aids

given to me.

-I would like to acknowledge the assistance provided to me by the library staff of Lovely

Professional University. My heartfelt gratitude to my friends, roommates for helping me

to complete my work in time.

Zandu Pharmaceutical Works

Limited.
Company Overview:-
Zandu Pharmaceutical Works (Zandu) is a manufacturer of over the counter
ayurvedic healthcare products which include rheumatology, gynaecology and CNS
 (Central nervous system). It also manufactures chemicals and cosmetics. Zandu's
products are available in the US, Europe, Asian and African countries. The company
primarily operates in India. The company is headquartered in Mumbai, India and
employs 2,000 people.
The company recorded revenues of INR1,289.1 million (approximately $28.6 million)
during the fiscal year ended March 2007, an increase of 12.8% over 2006. The
operating profit of the company was INR241.8 million (approximately $5.4 million)
during fiscal year 2007, an increase of 12.7% over 2006. The net profit was INR146
million (approximately $3.2 million) in fiscal year 2007, an increase of 18.7% over 2006.

Company profile: Zandu pharma works LTD.

Business type: Export/manufacturer

Year Established: 1910
Major Industry: Drugs, Cosmetics & Health Care
Sub Industry: Diversified Drugs, Cosmetics, & Health Care
Bankers: Central Bank of India
Website: http://www.zanduayurveda.com
Country: India

profitability position:-
Zandu Pharmaceutical Works Limited. The Group's principal activity is to
manufacture and market ayurvedic formulations like, avalehas, asavarishtas,
ointment, churnas, tablets and pills as well as allopathic formulations like,
tinctures, liquid extracts etc. The Group manufactures specialized ayurvedic
products in rheumatology, gynaecology and central nervous system etc. The
Group operates in two segments, namely, Pharmaceuticals and Chemicals.
The Group has four manufacturing units.
Business description:

2004 2005 2006 2007 2008

Net sales 108.94 100.49 114.24 128.91 136.24
Gross profit 17.67 15.86 21.03 23.76 26.92
Net profit 9.98 8.73 12.13 14.6 16.41
after tax
Operating 18.39 16.39 21.44 24.16 27.32
profit
Gross profit 16.23 15.78 18.41 18.43 19.76
ratio
Net profit 9.16 8.69 10.62 11.33 12.04
ratio
Operating 16.88 16.31 18.77 18.74 20.05
profit ratio

Analysis and interpretation:-

 From the above data we can see that the profitability position of the company is
good. The net sales of the company are constantly increasing after the initial decrease
in 2005. After 2005 the net sales have been increased by 13-14% in 2006.after that the
net sales have been constantly increased by 13-15% every year.
The gross profit ratio has also been increased after the initial decrease in 2005. The
gross profit ratio has been constantly increased by 16-17% every year. The net profit
ratio and operating profit ratio has also been increased after the initial decrease in
2005. Hence we can say that overall position of the company is satisfactory.

Asset and liability position:

Balance-sheet:
2008 2007 2006 2005 2004
SOURCES OF FUNDS :
Share Capital 8.06 8.06 6.05 6.05 4.03
Reserves Total 69.58 60.41 56.14 49.01 45.37
Total Shareholders’ Funds 77.64 68.47 62.19 55.06 49.4
Secured Loans 0 0 0 0.13 0
Unsecured Loans 0.16 0.2 0.39 0.79 1.35
Total Debt 0.16 0.2 0.39 0.92 1.35

Total Liabilities 77.8 68.67 62.58 55.98 50.75

APPLICATION OF
FUNDS :

Gross Block 68.72 69.46 69.58 65.78 63.25

Less : Accumulated
Depreciation 50.72 48.51 45.8 42.67 40.02
Less: Impairment of Assets 0 0 0 0 0
Net Block 18 20.95 23.78 23.11 23.23
Lease Adjustment 0 0 0 0 0
Capital Work in Progress 26.19 14.88 0 0.97 1.19
Investments 12.03 6.68 11.37 7.82 3.13
Current Assets, Loans &
Advances
Inventories 16.05 18.41 18.76 19.22 18.93
Sundry Debtors 3.36 3.48 5.66 5.25 9.17
Cash and Bank 12.54 12.42 12.77 7.45 4.73
Loans and Advances 17.03 14.5 11.4 12.64 16.98
Total Current Assets 48.98 48.81 48.59 44.56 49.81
 Less : Current Liabilities and
Provisions
Current Liabilities 22.19 19.36 19.56 16.19 15.27
Provisions 4.38 2.36 0.55 3.68 10.74
Total Current Liabilities 26.57 21.72 20.11 19.87 26.01
Net Current Assets 22.41 27.09 28.48 24.69 23.8
Miscellaneous Expenses not
written off 0 0 0 0 0
Deferred Tax Assets 0.57 0.69 0.64 0.6 0.53
Deferred Tax Liability 1.4 1.62 1.69 1.21 1.13
Net Deferred Tax -0.83 -0.93 -1.05 -0.61 -0.6

Total Assets 77.8 68.67 62.58 55.98 50.75

Common-size analysis:-

SOURCES OF FUNDS : 2008 2007 2006 2005 2004

10.81
Share Capital 10.36% 11.74% 9.67% % 7.94%
89.71 87.55
Reserves Total 89.43% 87.97% % % 89.4%
99.38 98.36 97.34
Total Shareholders’ Funds 99.8% 99.71% % % %
Secured Loans 0 0 0 0.23% 0
Unsecured Loans 0.21% 0.29% 0.62% 1.41% 2.66%
Total Debt 0.21% 0.29% 0.62% 1.64% 2.66%

Total Liabilities 100% 100% 100% 100% 100%

APPLICATION OF
FUNDS :
101.15 111.2 117.5 124.6
Gross Block 88.33% % % % %
Less : Accumulated 73.19 76.22 78.86
Depreciation 65.19% 70.64% % % %
Less: Impairment of Assets 0 0 0 0 0
41.28 45.77
Net Block 23.14% 30.51% 38.0% % %
Lease Adjustment 0 0 0 0 0
Capital Work in Progress 33.66% 21.67% 0 1.73% 2.34%
Investments 15.46% 9.73% 18.17 13.97 6.17%
 % %
Current Assets, Loans &
Advances
29.98 34.33
Inventories 20.63% 26.81% % % 37.3%
18.07
Sundry Debtors 4.32% 5.07% 9.04% 9.38% %
20.41 13.31
Cash and Bank 16.12% 18.09% % % 9.32%
18.22 22.58 33.46
Loans and Advances 21.89% 21.19% % % %
77.64 98.15
Total Current Assets 62.96% 71.08% % 79.6% %
Less : Current Liabilities and
Provisions
31.26 28.92 30.09
Current Liabilities 28.52% 28.19% % % %
21.16
Provisions 5.63% 3.44% 0.88% 6.57% %
32.13 51.25
Total Current Liabilities 34.15% 31.63% % 35.5% %
45.51 44.11
Net Current Assets 28.8% 39.45% % % 46.9%
Miscellaneous Expenses not
written off 0 0 0 0 0
Deferred Tax Assets 0.73% 1.0% 1.02% 1.07% 1.04%
Deferred Tax Liability 1.8% 2.36% 2.7% 2.16% 2.23%
Net Deferred Tax -1.07% -1.35% -1.68% -1.09% -1.18%

Total Assets 100% 100% 100% 100% 100%

Analysis and interpretation:-

Asset Position: - The Company’s total assets have been constantly increased
every year. From 50.75 to 77.8. This shows that company‘s profits is increasing at rapid
rate. This helps the company to maintain its financial position in the market. The Trend
Analysis shows that company’s %change is increasing which helps company to
increase position in the market. The position of the company is quite satisfactory.

Liability Position: - The Company has raised its share capital from 7.94% to
10.36% in 2008.Where as there is a drastic decrease in unsecured loans of the
company. Therefore the total debt of company has been reduced from 2.66% to 0.21%
in 2008. The current liabilities of the company have also been decreased from 51.25%
in 2004 to 34.15% in 2008. Hence the total liability of the company has been reduced
subsequently. Hence the Liability position of the company is satisfactory.
Corporate Governance Report:-
Company's philosophy on code of Corporate Governance:-

The main elements of Corporate Governance are fairness, transparency,

Accountability and responsibility. The Company has always focused on good
Corporate Governance, which is the key driver of sustainable corporate
Growth, as well as for creating sustainable long-term value for the
Shareholders.
The Company recognizes that good Corporate Governance is a continuing
Exercise.
Board of Directors:-
The composition of the Board and the category of Directors as of 31st, March
2008, which meets the stipulated requirement is as under

Category No. of Directors

Executive Directors 2
Independent Directors 5
-The Company has a majority of Directors who are Non Executive, Independent
Directors.

-The Chairman of the Board is an Independent Director.

-The Independent Directors are acknowledged as leading professionals in their

respective fields.

Details of Directors

Name of Director A B C D E

Sheri Y.P.Trivedi ID Yes 10 5 5

Shri P. P. Vora ID Yes 6 2 -
Shri K.Natarajan ID Yes 3 - -
Prof (Dr.) S. S. Handa ID Yes - - -
Shri A. V. Shah ID Yes - 1 1
Shri Garish G. Parikh ED Yes 2 2 -
Sheri D.M.Parikh ED Yes 4 1 -

A = Category (1)

B = Last AGM held on 29/09/07 Attendance

C = No. Of Directorships and Committee Member/Chairmanship Other
Directorship (2)

D = No. Of Directorships and Committee Member/Chairmanship Committee

Membership (3)

E = No. Of Directorships and Committee Member/Chairmanship Committee

Chairmanship (3)

COMMITTEES OF THE BOARD:-

Details of the Statutory and Functional Committees of the Board and other related
information

-Statutory Committees
-Audit Committee Shareholders/Investor Grievance Committee
-Functional Committees
-Business Committee Scientific & Technical Advisory Committee Corporate
Governance Committee Finance Committee Human Resource Committee Health,
Safety and Environment Committee

BOARD OF DIRECTORS MEETING:-

As per the provisions, the Board shall meet at least four times a year, with a
maximum time gap of four months between any two meetings. The Company has held
6 meetings of the Board, during the year 2007-2008.

The Board Meetings were held on:

Date of Board Board Strength No. of Directors

Meeting present

21st Apr 07 7 7
21st Jul 07 7 6
28th Aug 07 7 7
29th Sep 07 7 5
20th Oct 07 7 6
22nd Jan 08 7 7

Name of Director No. of Board Meetings attended

Sheri Y.P. Trivedi 6

Sheri P.P. Vora 6
Sheri K. Natarajan 4
Prof (Dr.) S. S. Handa 4
Sheri A. V. Shah 6
Sheri Garish G. Parikh 6
Sheri D. M. Parikh 6

-Senior Management personnel are invited to the meetings to provide vital inputs for
the relevant agenda items being discussed by the Board of Directors.
-The agenda for the Board Meeting, along with explanatory notes are circulated in
advance.
-The Company places before the Board, material significant information from
time to time as specified below

1. Annual operating plans and budgets, including updates from time to time.

2. Capital Expenditure and any updates.

3. Quarterly/Annual results of the Company.

4. Minutes of meetings of Audit Committee and other Committees of the

Board.

5. The information on appointment or removal of Chief Financial Officer and

the Company Secretary.

6. Show cause, demand, prosecution notices and penalty notices which are
materially important.

7. Fatal or serious accidents, dangerous occurrences, any material effluent

or Pollution problems.

8. Any material default in financial obligations to and by the Company, or

substantial non payment for goods sold by the Company.

9. Any issue, which involves possible public or product liability, claims

of substantial nature, including any judgement or order which, may have
passed strictures on the Conduct of the Company or taken an adverse view
regarding another enterprise that can have negative implications for the
Company.

10. Details of any joint venture or collaboration agreement.

11. Transactions that involve substantial payment towards goodwill, brand

equity, or intellectual property.

12. Significant labour problems and their proposed solutions. Any

significant development on Human Resources / Industrial Relations front
like, signing of wage agreement, implementation of Voluntary Retirement
Scheme, etc.

13. Sale of material nature, of investments, subsidiaries, assets, which is

not in normal course of business.

14. Quarterly details of foreign exchange exposures and the steps taken by
management to limit the risks of adverse exchange rate movement, if
material.

15. Non-compliance of any regulatory, statutory or listing requirements.

16. Status of business risk exposures, its management and related action
plans.

17. Dividend/Bonus declaration.

18. General notice of interest of Directors and notice under section 274
(1)(g) of the Companies Act, 1956 on disqualification of Directors.

19. Subsidiary company -

- Minutes of board meeting

- Operational/financial statements

20. To decide the terms of reference of Committees as formed by the Board.

21. Facilitating efficient working of Board Committees.

Code of Conduct:-

The Board has adopted the Code of Conduct for Directors and Senior
Management.(The Code).

A copy of the Code is put on the Company's website. The Code has been
circulated to all the Members of the Board and Senior Management and the
compliance of the same has been affirmed by them.

Share price performance in comparison to BSE sensex

BSE BSE SENSEX NSE

Zandu's Price Zandu's Price
(in Rs.) (in Rs.)
Months Months High Low Months Months
High Price Low Price High Price Low Price

Apr. 2007 4058 3275 14384 12426 4050 3250

May 2007 3875 3471 14576 13554 3850 3400
Jun.2007 3740 3333 14683 13947 3735 3461
Jul. 2007 3768 3520 15869 14639 3750 3458
Aug.2007 3590 3370 15542 13780 3620 3335
Sep.2007 5390 3500 17361 15323 5400 3455
Oct.2007 6706 4400 20238 17145 6751 4400
Nov.2007 8465 6400 20204 18183 8477 6370
Dec.2007 7153 6507 20498 18886 7170 6601
Jan.2008 7944 5985 21207 15332 7780 5969
Feb.2008 6790 6420 18895 16458 7197 6230
Mar.2008 6994 6131 17228 14677 6850 6250

Shareholding Pattern by Size.

No.of Equity A B C D E F
shareholding

Upto 50 7782 88.76 15,323 63,507 78,830 9.78

51 - 100 354 4.04 6,043 20,116 26,159 3.24
101 - 200 274 3.13 13,120 27,059 40,179 4.98
201 - 300 79 0.90 5,476 13,518 18,994 2.36
301 - 400 59 0.67 8,847 11,790 20,637 2.56
401 - 500 35 0.40 5,948 10,157 16,105 2.00
501 - 1000 75 0.86 22,658 30,647 53,303 6.61
1001-Above 109 1.24 175,466 376,727 552,193 68.48

Total 8,767 100.00 252,879 953,521 806,400 100.00

A = No.of Folios
B = No. of Folios %
C = No. Of shares Physical
D = No. Of shares Electronic
E = Total Shares
F = Total Shares

Shareholding Pattern by Ownership

Category No.of Shares % No.of Folios

Directors/Promoters
and Famil Members 452,699 56.14 189

Banks 1,153 0.14 6

Corporate Bodies 66052 8.19 208

Individuals 281,463 34.90 8301

Foreign Institutional
Investor 325 0.04 1

Non Resident Indian 4,708 0.58 62

Total 806,400 100.00 8767

Notes to accounts:-

SIGNIFICANT ACCOUNTING POLICIES:

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

The accompanying financial statements have been prepared under historical

cost convention in accordance with generally accepted accounting principles and
provisions of the Companies Act, 1956 and the applicable accounting
standards.

2. USE OF ESTIMATES:

The preparation of financial statements, in conformity with the generally

accepted accounting principles, requires estimates and assumptions to be
made that affect the reported amounts of assets and liabilities on the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Differences between actual results
and estimates are recognized in the period in which the results are known /
materialized.

3. FIXED ASSETS:

Fixed Assets are recorded at cost of acquisition or construction including

incidental expenses. They are stated at historical cost less accumulated
depreciation and accumulated impairment losses, if any.

4. INTANGIBLE ASSETS:

Intangible Assets are stated at cost of acquisition less accumulated amortization

and impairment losses, if any.

5. DEPRECIATION AND AMORTISATION:

(i) Depreciation on fixed assets is provided on written down value method

except in respect of non-factory building at Mumbai (Head Office) and
Bangalore depot, furniture, fixtures and equipments at Bangalore and Raipur
depots and Vehicles at Raipur depot which are depreciated on straight line
method, at the rates and in the manner prescribed under schedule XIV of the
Companies Act, 1956.

(ii) Leasehold land is amortised over the period of lease.

(iii) Intangible assets Computer Software is amortised over a period of

five years being its estimated useful life determined by the management on-
the basis of technical evaluation etc.

6. INVESTMENTS:

Investments classified as long-term investments are stated at cost. Provision is

made to recognise a decline, other than temporary in the value of investments. Current
Investments are stated at lower of cost and fair value.

7. INVENTORIES:

Items of inventories are valued on the basis given below:

(i) Stores and Spares:

At Cost on First in First out (FIFO) basis or net realisable value whichever is lower.
(ii) Raw Materials and Packing Materials:

At Cost on First in First out (FIFO) basis or net realisable value whichever is
lower.

(iii) Stock in process and finished goods:

At cost or net realisable value whichever is lower. Cost comprises of cost of

purchases, cost of conversion and other cost incurred in bringing the inventory to their
present location and condition.

(iv) Trading goods:

At weighted average cost or net realisable value whichever is lower.

8. Employee Benefits: (Refer note no 7 of schedule 17 (II))

a) Post Employment Benefits and Other Long Term Benefits.

i) Defined Contribution Plan

Company's contribution for the year paid/payable to defined contribution

retirement benefit plans are charged to Profit and Loss Account.

ii) Defined Benefit and Other Long Term Benefit Plans

Company's liabilities towards defined benefit plans and other long term
benefits viz. gratuity and compensated absences expected to occur after
twelve months, are determined using the Projected Unit Credit Method.
Actuarial valuations under the Projected Unit Credit Method are carried out
at the balance sheet date. Actuarial gains and losses are recognised in the
Profit and Loss account in the period of occurrence of such gains and
losses. Past service cost is recognised immediately to the extent benefits
are vested, otherwise it is amortised on straight-line basis over the
remaining average period until the benefits become vested.

The retirement benefit obligation recognised in the balance sheet

represents the present value of the defined benefit obligation as adjusted
for unrecognised past service cost, and as reduced by the fair value of
scheme assets. Any asset resulting from this calculation is limited to past
service cost, plus the present value of available refunds and reductions in
future contributions to the scheme.

b) Short-term employee benefits

Short-term employee benefits expected to be paid in exchange for the services
rendered by employees are recognised undiscounted during the period employee
renders services.These benefits include compensated
absences.

9. FOREIGN CURRENCY TRANSACTIONS:

Transactions in foreign currency are recorded at the original rate of exchange in

force at the time transactions are effected. Exchange differences arising on
settlement of all transactions are recognized in the profit and loss account. Monetary
items denominated in foreign currency are restated using the exchange rate prevailing
at the date of the Balance Sheet and resulting net exchange difference is recognized
in the Profit and Loss Account.

In case of forward exchange contracts entered into to hedge the foreign currency
exposure in respect of monetary items, the difference between the exchange rate on
the date of such contracts and the year end rate is recognized in the Profit and
Loss Account. Any profit/loss arising on cancellation of forward exchange contract is
recognized as income or expense of the year. Premium/discount arising on such
forward exchange contracts is amortised as income/expense over the life of contract.

10. REVENUE RECOGNITION:

(i) Revenue from sale of goods is recognised when significant risk and
rewards of ownership are transferred to the customers which is at the time
of dispatch of goods to the customers, in case of domestic sales and on
shipment of goods in case of export sales, and is recorded net of trade
discount, sales tax, and sales return.
(ii) Revenue in respect of insurance/ other claims, interest, etc., is
recognised only when it is reasonably certain that the ultimate collection
will be made.

(iii) Interest income is recognised on time proportion basis.

(iv) Dividend from investment is recognised in the Profit and Loss Account
when the right to receive payment is established.

(v) Revenue is recognised when no significant uncertainty as to

eollectability or measurability exists.

11. EXCISE DUTY:

Excise duty is accounted on the basis of payments made in respect of goods

cleared and provision is made for goods lying in bonded Warehouses.

12. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions involving substantial degree of estimation in measurement are

recognised when there is a present obligation as a result of past events and it is
probable that there will be an outflow of resources. Contingent liabilities are not
recognised but are disclosed in the notes to accounts. Contingent assets are neither
recognised nor disclosed in the financial statements.

Director’s report:-

To,
The Members,

The Directors are pleased to present their 89th Annual Report and the
Financial Accounts for the year ended 31st March, 2008.

FINANCIAL RESULTS (STANDALONE)

(Rs in lacs)

2007-2008 2006-2007
(Rs.) (Rs.) (Rs.) (Rs.)

Sales 15474.55 14725.52

Profit Before
Depreciation,
Interest & Tax 2732.33 2417.69

Interest 39.85 39.75

Depreciation 261.72 301.57 310.38 350.13

Profit Before Tax 2430.77 2067.56

Provision for
Taxation

Current Tax 755.60 576.00

Income Tax Earlier

Years (Net) (-) 4.22 -

Deferred Tax (-) 1.93 (-)11.61

Fringe Benefit tax 40.50 789.5 43.53 607.92

Net Profit After Tax 1640.82 1459.64

Balance Profit
brought forward
from previous Year 1074.63 1046.13

Balance available
for appropriation 2715.45 2505.77

Interim Equity
Dividend 403.20 604.80

Final Equity
Dividend 201.60 -

Proposed One Time

Special Dividend - 120.96

Corporate
Dividend Tax 102.79 105.38

Transferred To
General Reserve 800.00 600.00

Balance Carried
Forward to Next Year 1207.86 1074.63
YEAR IN RETROSPECT

During the year under report, the Company achieved a turnover of Rs.15475
lacs an increase of approx. 5% over the previous year. The net profit after
tax was Rs.1641 lacs as against Rs.1460 lacs of the previous year, an
increase of approx. 12%.

The turnover achieved by the Company during the year under report is the
highest ever in the history of the Company. It is the third successive year
in which the Company has achieved the higher turnover by surpassing the
previous year's turnover.

The Analysis of the financial performance of the Company is given under

Management Discussion and Analysis.

CARE, the leading credit rating agency, has continued assigning the rating
of 'PR1+' for the issue of Commercial Paper / MIBOR linked short term
instrument, which indicates a superior capacity for repayment of short term
promissory obligations. However, the Company has not issued any such
instrument during the year under review.

DIVIDEND

The Directors have recommended the final dividend of Rs.25/- per share
raising the dividend for the year as a whole to Rs.75/per share. The
Directors had already authorised payment of interim dividend of Rs.50/- per
share on 22nd January, 2008.

During the previous year, to commemorate the 125th birth anniversary year
of late Sheri Jugatram Vaidya, one time Special dividend of Rs.15/- per
share was paid in addition to interim dividend of Rs.75/- per share.

The total dividend outflow including dividend tax is Rs.707.59 lacs as

compared to the previous year's figures of Rs.831.14 lacs on enhanced
equity capital of Rs.806.40 lacs.

The dividend income earned by the shareholders is exempt from income tax.
However, the Company has to pay a dividend tax @ 16.99% (including
surcharge, education cess).

The dividend payout ratio (including dividend tax) of last few years

Year 2003-04 2004-05 2005-06 2006-07 2007-08

Dividend Payout % 22.38% 37.87% 42.05% 56.94% 43.12%

NEW MANUFACTURING UNIT

As informed, the Company has set up a State of the Art manufacturing unit
at Uttarakhand, which will further improve the operational efficiency of
the Company. The work is near completion and will commence production
shortly. The capital work in progress including advances for this unit
stood at Rs. 2428.93 lacs.

ZANDU CHEMICALS LTD. (ZCL)-SUBSIDIARY

ZCL has become the subsidiary of the Company with effect from 1st November
2006.

Sheri K. Natarajan, Sheri P. P. Vora and Sheri Garish G. Parikh, Directors of

the Company are also Directors on the Board of Zandu Chemicals Ltd.

As required under Section 212 of the Companies Act, 1956 the Audited
Statement of Accounts, alongwith the Report of the Board of Directors and
the Auditors Report of Zandu Chemicals Limited for the year ended 31st
March 2008, are annexed. The total turnover of ZCL during the year was
Rs.3236 lacs - as compared to Rs.4517 lacs in the previous year. The net
profit was Rs.9 lacs as against Rs.219 lacs in the previous year.

CONSOLIDATED FINANCIAL STATEMENT

The audited consolidated financial statements are prepared in accordance

with the applicable Accounting Standard forms part of the annual report.

The major highlights of the consolidated financial statement are as follows

(Rs. In Lacs)

Sales 18710.71
PBDIT 2883.94
PBT 2443.34
PAT 1649.91

CORPORATE GOVERNANCE

Your Company has been following the principle of Corporate Governance since several
years, long before the clause 49 was inserted in the Listing Agreement by the Stock
Exchanges. The Company complies with the provisions of the clause 49 of the Listing
Agreement.

A separate section titled 'Corporate Governance' alongwith the Certificate from the
Auditors of the Company regarding the compliance of clause 49 of
the Listing Agreement forms part of this annual report.
MANAGEMENT's DISCUSSION AND ANALYSIS

The business environment is very competitive. The Company envisage huge scope
to ramp up existing operations / strategies, which in near future requires significant
investments.

The Company is focussing on growth from the core activities as well as exploring the
possibilities of growth from related activities. The Company continues to enjoy
remarkable market share in the ointment segment. The issue of counterfeits,
duplicates, spurious products is affecting the industry to a great extent.

Several initiatives have been undertaken / are underway for topline and bottomline
growth of the Company. We are confident that with such initiatives the
performance of the Company will improve substantially in the years to come.

Few growth avenues namely are -

- Introduction of new products - New products are in the pipeline which are
expected to be launched in the coming period, which will augment growth.

- To increase the penetration and coverage in all geographical markets, so

as to increase the market share.

- Effective brand communication.

- Improving the sales channels/distribution strategy.

- Presenting Ayurveda in a Scientific manner.

- Revamping product profile and product mix.

- Rebuild/restructure R&D.

The management periodically carries out risks assessment exercises. The

management does not perceive any major technological, environmental and /
or financial risks for the Company in the near future. There are well
established procedures for internal control. The Audit Committee reviews
the Internal Audit Report and takes note of action taken on these Report.
The Statutory Auditors, Internal Auditors and Cost Auditors are invited to
the Audit Committee meetings.

The Company recognises that the people are key drivers in its success. The
Company has made efforts to create the motivated environment as well as to
attract, develop and retain the best talent at all levels. The industrial
relations continue to be harmonious.
BIBLIOGRAPHY:-
(1) CAPITALLINE SOFTWARE
(2) THE BOOK FOR ACCOUNTING FOR MANAGERS BY ‘JUNEJA’ & ‘BAGGA’.