31st Annual Report 2013-14

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BOARD OF DIRECTORS

MR. ALOK JAGDISH SAXENAManaging Director & Chief Executive Offi cer

MR. YUSUF KARIM KHAN*Executive Director

DR. R. SRINIVASAN*Independent Director

DR. JOGINDER SINGH JUNEJAIndependent Director

DR. SAILENDRA NARAINIndependent Director

MR. MICHAEL BASTIAN*Independent Director

MR. SALEEM SHERVANI*Independent Director

DR. S. JAYARAM*Independent Director

MR. EDOARDO CARLO RICHTER*Director

MRS. URVASHI SAXENA*Independent Director

MR. JAMES McEUEN*Director

Mr. Farid R. Gulmohamed*Independent Director Appointed w.e.f 14th February, 2014

Chief Operating Offi cerDr. Anuj Saxena

Company Secretary/ Compliance Offi cerMr. S.P. Date (Since retired)

Mr. Vijendra Jain w.e.f 15th May, 2014

Chief Financial Offi cerMr. Suresh V. Pai*Mr. Bimal Desaiw.e.f 1st December, 2014

Audit CommitteeDR. JOGINDER SINGH JUNEJA Chairman

DR. SAILENDRA NARAIN

MRS. URVASHI SAXENA

MR. FARID GULMOHAMED

DR. S. JAYARAM

MR. SALIM SHERVANI

(*) Since Resigned

Nomination & Remuneration Committee

DR. S. JAYARAM Chairman

MR. FARID GULMOHAMED,

MR. ALOK JAGDISH SAXENA,

MR. SALIM SHERVANI

Corporate Social Responsibility CommitteeDR. JOGINDER SINGH JUNEJA Chairman

DR. SAILENDRA NARAIN

MR. ALOK JAGDISH SAXENA

Stakeholders Relationship CommitteeMRS. URVASHI SAXENA Chairman

DR. S. JAYARAM

DR. SHAILENDRA NARAIN

MR. ALOK JAGDISH SAXENA

Auditors

M/S. S.S. KHADELWAL AND CO.CHARTERED ACCOUNTANTSFountan Cham,bers Nanabhai lane,Mumbai 400023

Cost AuditorsM/s. Sevekari, Khare & Associates, A-4, Hari Niwas, 1st Floor (Rear Side), L.J.Road, Mumbai – 400 028.

BankersBank Of IndiaDevelopment Credit Bank Ltd.Axis Bank Ltd.

Registrar & Share Transfer Agents

C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (West), Mumbai-400078TelNo. (022) 25963838Fax (022) 25946969Email: Mumbai@linktime.co.in

Corporate InformationRegistered Offi ce

Elder House ,Plot No C9,Dalia Industrial Estate ,Off Veera Desai Road Andheri,Mumbai- 400058TelNo. (022) 26730058Fax (022) 26730051Email: corporate@elderindia.comWeb:www.elderindia.com

Factories

Plot No. D-219 & 220 T.T.C. Industrial Area,Thane-Belapur Road, Navi Mumbai 400 706

Plot No. C-21/2, T.T.C. Industrial Area, Village – Pawane Navi Mumbai 400 704

Plot No. A-36 Patalganga Industrial Area,

Village Khaire, Taluka Khalapur District Raigad, Maharashtra 410 220

Plot No. C-11/2 Selaqui Industrial AreaNear Dehradun Uttarakhand

Plot No. 103,Paonta Sahib Industrial Area Village: Gondpur Tehsil: Paonta Sahib District: Sirmour Himachal Pradesh

Village Charba Pargana Pachwa DoonTehsil – Vikasnagar District – DehradunUttarakhand

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CORPORATE INFORMATION ................................................... 02

Global Pharmaceutical Market ................................................... 05

Management Discussion and Analysis ....................................... 06

Company Overview .................................................................... 07

MANAGEMENT REPORTS

Notice ......................................................................................... 08

Directors’ Report ........................................................................ 12

Report on Corporate Governance ............................................ 19

FINANCIAL STATEMENTS

Auditors’ Report ......................................................................... 29

Balance Sheet ........................................................................... 34

Profi t and Loss Account .............................................................. 35

Cash Flow Statement ................................................................. 36

Consolidated Financial Statements ............................................ 59

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The Indian economy has been going through challenging times that culminated in lower than 5 percent growth of Gross

Domestic Product (GDP) at factor cost, at constant prices for two consecutive years, 2012-13 and 2013-14. India’s

economy has been dragged down by slumping industry. Industrial production shrank a provisional 0.1 percent in

the fi scal year that ended in March, keeping overall economic growth below 5 percent for a second straight year. Persistent

uncertainty in the global outlook, caused by the crisis in the Euro-area and general slowdown in the global economy impacting

the demand for exports compounded by the domestic structural constraints such as low manufacturing base, delays in projects

approvals among others and infl ationary pressures has resulted in protracted slowdown.

India’s GDP & other factors such as pricing impacted Pharmaceutical products during 2013-14 when GDP growth marginally

improved to 4.7 percent compared to 4.5 percent in 2012-13. Externally, the global economy is stabilizing, with better growth

expected in 2014. Indian exports have already started to lift. The stream of bad news emanating from the Indian economy has

fi nally begun to slow and Pharma sector also has begun its upward swing. With the opening up of foreign direct investment

(FDI) in several sectors, the country is an eye-catching destination for overseas investors. The relaxation of norms by the

government has also created a vast opportunity for foreign players, who are competing for a greater role in the Indian market.

Sectors projected to do well in the coming years include automotive, technology, life sciences and consumer products.

There is a growing list of reasons to believe that the Indian economy has started to turn the corner, albeit slowly, after two and

a half years of sub-par growth. Economic growth has stabilized and downside risks have fallen. This year the economy should

perform better than in 2013, but it will be a long time before India’s economy is growing back at its potential.

With the expectation of better performance in manufacturing, improved balance of payments situation and modest global

growth revival, the economy is expected to grow in the range of 5.4 -5.9 percent in 2014-15. Priorities for boosting the growth

includes reviving investments, strengthening macroeconomic stability, creating non-agricultural jobs, developing infrastructure

& fostering agricultural development.

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Global Pharmaceutical MarketThe market size of global pharmaceutical industry is estimated to reach US$ 1.2 trillion by 2017 growing at compound annual

growth rate (CAGR) of 3-6% and the emerging markets are likely to be the key growth drivers. Several factors like economic

growth, demographic changes, transition in community health and policy responses and focus on healthcare funding are

expected to lead to double-digit growth in the pharma emerging markets.

On the other hand, economic and healthcare austerity measures and the saving realized from the growing availability of

generic drugs, following their patent expiry, may see developed markets record low single-digit growth.

GLOBAL GENERICS:

A shift of the global spending mix towards generic over the next fi ve years has been forecasted, a move primarily driven by

the pharmerging markets, despite branded drugs continuing to form almost two-third of the global spending in the developed

markets.

It is estimated that the generic spending on medicines will grow from US$ 261 billion in 2012 to US$ 421 – 432 billion by 2017

globally. Global generic spending is likely to reach 36% of the total spending by 2017, as against 27% in 2012.

GLOBAL PHARMA INDUSTRY – GROWTH DRIVERS

Increase in life expectancy and ageing population: Life expectancy is expected to reach 73.7 years by 2017 from an estimated

72.6 years in 2012, bringing more than 10% of the total global population to over the age of 65 years.

Moreover, the global population aged 60 or above has almost tripled over the period 1950-2000 and is expected to reach

nearly two billion by 2050 – prompting the need for more medical care, a key demand driver for pharmaceutical industry

Rising income of households: It is forecasted that the number of high-income households will rise by about 10%, taking the

count to over 500 millions by 2017 – almost over 50% of such growth will come from Asia. Rising income will make expensive

medicines affordable, providing a thrust to growth of the pharmaceuticals industry.

Growing incidence of chronic disease: At present, chronic diseases, including heart disease, cancer, stroke, diabetes and

respiratory illnesses top the global health agenda, accounting for over 63% of all deaths worldwide. Sedentary lifestyles,

diet changes and rising obesity levels are likely causes. Healthcare demand for these diseases will contribute to the industry

growth.

Improved Healthcare access reforms: With more than one billion people lacking access to a healthcare system across the

world, different countries are introducing healthcare reforms, including increase in government funding and broader insurance

coverage.

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Management Discussion and AnalysisIndian pharmaceutical industry

The Indian pharmaceutical industry currently tops the chart amongst India’s science-based industries with wide ranging capabilities in the complex fi eld of drug manufacture and technology. A highly organized sector, the Indian pharmaceutical industry is growing at the rate of $ 4.5 billion, at about 9 percent annually. It ranks very high amongst all the third world countries, in terms of technology, quality and the vast range of medicines that are manufactured. It ranges from simple headache pills to sophisticated antibiotics and complex cardiac compounds, almost every type of medicine is now made in the Indian pharmaceutical Industry.More than 20,000 registered units are fragmented across the country and reports say that 250 leading Indian pharmaceutical companies control 70% of the market share with stark price competition and government price regulations. The Indian pharmaceutical sector is highly fragmented with more than 20,000 registered units. It has expanded drastically in the last two decades. The Pharmaceutical and Chemical industry in India is an extremely fragmented market with severe price competition and government price control. The Pharmaceutical industry in India meets around 70% of the country’s demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals, and injectables. There are approximately 250 large units and about 8000 Small Scale Units, which form the core of the pharmaceutical industry in India. Indian pharmaceutical industry is expected to grow at 9-10% in 2014. India is now among the top fi ve pharmaceutical emerging markets. There will be new drug launches, new drug fi lings, and Phase II clinic trials throughout this year& next. On back of increasing sales of generic medicines, continued growth in chronic therapies and a greater penetration in rural markets, the domestic pharmaceutical market is expected to register a strong double-digit growth of 13-14 per cent in subsequent years. Moreover, the increasing population of the higher-income group in the country will open a potential US$ 8 billion market for multinational companies selling costly drugs by 2015. Besides, the domestic pharma market is estimated to touch US$ 20 billion by 2015, making India a lucrative destination for clinical trials for global giants. Further estimates of the healthcare market in India to reach US$ 31.59 billion by 2020 with more of exponential growth expected from bulk drugs & exports to add to this growth phenomena.The Indian Pharmaceutical Industry, particularly, has been the front runner in a wide range of specialties involving complex drugs’ manufacture, research & development and technology.

Indian pharmaceutical market segments by value

Anti - infectives

Caradiovascular (CVS)

Gastro-intestinal

Vitamins, minerals

Respiratory

Pain/analgesic

Anti diabetic

Others

16%

13%

11%

8%9%7%

7%

29%

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India’s pharmaceutical sector will touch US$ 45 billion by 2020, according to a major study by global management and consulting fi rm, McKinsey & Company. The reasons for this optimism are well founded. In the period 2002-2012, the country’s healthcare sector grew three times in size. India’s pharmaceutical market experienced a similar boom, reaching US$ 18 billion in 2012 from US$ 6 billion in 2005. The report further states that the Indian pharmaceutical market will be the sixth largest in the world by 2020.

The rise of pharmaceutical outsourcing and investments by multinational companies (MNCs), allied with the country’s growing economy, committed health insurance segment and improved healthcare facilities, is expected to drive the market’s growth.

India is today one of the top emerging markets in the global pharmaceutical scene. The sector is highly knowledge-based and its steady growth is positively affecting the Indian economy. The organized nature of the Indian pharmaceutical industry is attracting several companies that are fi nding it viable to increase their operations in the country.

Company Overview Elder Pharmaceutical Ltd is one of the leading domestic manufacturing and marketing company with pan-India geographical presence by virtue of its extensive fi eld force. The company has now set in motion to progress its step towards restructuring its strong foot print in Indian pharmaceutical market. Elder Pharma is taking a strong initiative to create a super brand out of Eldervit by extending the brand to other products, besides expanding its reach to a larger market. The company is also looking to grow another nutritional product, Thrive a natural supplement that helps fi ghts chronic diseases. The company would concentrate and build on its domestic business of Anti-infective, Neurological, Neutraceutical & Lifestyle disease segment and grow its business in the UK and Europe. The company already has some presence in skin care category but with a slew of new launches, it plans to grab a healthy market share in each sub-category. The company is all set to enter into oral care market which is one of the fastest growing FMCG sector specifi cally in the mouthwash category through one of its promising brand AMPM entering Dentist & General Physicians outreach to create awareness on Oral health & its relation to Over-all health in Cardiac, Respiratory & Pregnancy outcomes. Apart from the marketing strength, the Company manufactures formulations in 6 manufacturing plants across the country & all of them conform to the GMP norms. The dosage forms that are being manufactured in these plants include tablets, capsules, syrups, injectables, oral rinse, skin creams and ointments. The company also manufactures few API’s some of which are used for captive consumption. Additionally, company has two step down subsidiaries, Elder Biomeda (Bulgaria) & NeutraHealth PLC (UK), which facilitate its presence in these International markets. Financials

Standalone Operating Income for the fi nancial year ended June 2014 stood at ` 483.47 crores as against ` 1233.10 crores for the period ended June 2013. When we compare similar periods, the revenue generated during the current fi nancial year is lower than the earlier fi nancial year by 50.99%. The profi t after tax for the year under review stood at ` 17.18 crores as compared to ` 93.74 crores for the period ended June 2013. When we compare similar periods, the profi ts after tax generated during the current fi nancial year are lower than the earlier fi nancial year by 77.09%. The consolidated Operating Income for the fi nancial year ended June 2014 stood at `1008.91 crores as against `1641.70 crores for the period ended June 2013. When we compare similar periods, the revenues generated during the current fi nancial year are lower than the earlier fi nancial year by 23.18%. The profi t after tax for the period under review stood at ` 2.73crores as compared to ` 82.39 crores for the period ended June 2013. When we compare similar periods, the profi ts generated during the current fi nancial year are lower than the earlier fi nancial year by 95.86 %

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NoticeNotice is hereby given that the 31st Annual General Meeting of the Shareholders of Elder Pharmaceuticals Limited will be held at Gms Banquet Hall, Sitladevi Complex, 1st Floor, D.N.Nagar, Opp. Indian Oil Nagar, Link Road, Andheri (W), Mumbai – 400 053 on Tuesday the 24th day of March 2015 at 10.30 a.m. to transact the following business:As Ordinary Business:1. To receive and adopt the Audited Balance Sheet as at

30th June 2014 and the Profi t & Loss Account for the year ended on that date together with the Reports of the Directors and Auditors thereon.

2. To appoint M/s. S S Khandelwal & Co., Chartered Accountants (Registration No.105064W) as Statutory Auditors of the Company from conclusion of this meeting until conclusion of AGM for the year 2016-2017 and to fi x their remuneration.

3. Mrs. Urvashi Saxena (DIN No. 02021303) who retires by rotation has resigned w.e.f. 28th November 2014 with an intent not to be re-appointed and company resolved not to fi ll in the vacancy.

4. Dr. S. Jayaram (DIN No. 01244431 who retires by rotation has resigned w.e.f. 1st December 2014 with an intent not to be re-appointed and company resolved not to fi ll in the vacancy

As Special Business:5. To consider and if thought fi t to pass with or without

modifi cation(s) the following resolution as a Special Resolution:

“RESOLVED THAT in supersession of the ordinary resolution passed at the Annual General Meeting held on 28th September, 2012 under section 293(1)(d) of the Companies Act, 1956 and pursuant to the provisions of section 180(1)(c ) of the Companies Act 2013 and all other applicable provisions if any, or any other law for the time being in force (including any statutory modifi cation or amendment thereto or re-enactment thereof for the time being in force) and in terms of Articles of Association of the Company, the Company hereby accords its consent to the Board of Directors (hereinafter referred to as “the Board” which term shall be deemed to include any Committee which the Board may constitute for this purpose) of the Company, for borrowing any sum or sums of money from time to time whether in Indian rupees or foreign currency (including external commercial borrowings in foreign denominated currencies from any foreign source / countries as prescribed by guidelines, if any in this respect) from any one or more Company’s bankers and /or from any one or more persons, fi rms, bodies corporate, fi nancial institutions, banks or other acceptable source whether by way of advances, deposits, loans, non-convertible debentures, bonds or otherwise and whether unsecured or secured notwithstanding that the moneys to be borrowed together with moneys already borrowed by the Company (apart from the temporary loans obtained from the Company’s Bankers in the ordinary course of business) will or may exceed the aggregate paid-up

capital of the Company and its free reserves, that is to say, reserves not set apart for any specifi c purpose but, so however, that the total amount up to which the moneys may be borrowed by the Board of Directors and outstanding shall not exceed the sum of ` 2000 Crores (Rupees Two Thousand Crores only) at any one time.”

“RESOLVED FURTHER THAT for the purpose of giving effect to the above resolution, the Board be and is hereby authorized to do all such acts, deeds and things as it may in its absolute discretion deem fi t, necessary, proper or desirable and to settle any question, diffi culty, doubt that may arise in respect of the borrowing(s) aforesaid and further to do all such acts, deeds and things and to execute all documents and writings as may be necessary, proper, desirable or expedient to give effect to this resolution.”

6. To consider and if thought fi t, to pass, with or without modifi cation(s), the following resolution as a Special Resolution:

“RESOLVED THAT in supersession of the ordinary resolution passed at the Annual General Meeting held on 28th September, 2012 under section 293(1)(a) of the Companies Act, 1956 and pursuant to the provisions of section 180(1)(a) of the Companies Act 2013 and all other applicable provisions if any, or any other law for the time being in force (including any statutory modifi cation or amendment thereto or re-enactment thereof for the time being in force) and in terms of Articles of Association of the Company, the consent of the members be and is hereby accorded to the Board of Directors of the Company for mortgaging / charging all or any of the immovable and movable properties of the Company both present and future and the whole or substantially the whole of the undertaking or the undertakings of the Company on such terms and conditions, as may be agreed to between the Board and Lender(s) to secure the loans / borrowings obtained or as may be obtained, which may exceed the paid-up capital and free reserves in the ordinary course of business but not exceeding ` 2000 Crores (Rupees Two Thousand Crores only) at any one time.”

“RESOLVED FURTHER THAT for the purpose of giving effect to the above resolution, the Board be and is hereby authorized to do all such acts, deeds and things as it may in its absolute discretion may deem fi t, necessary, proper or desirable and to settle any question, diffi culty, doubt that may arise in respect of the borrowing(s) aforesaid and further to do all such acts, deeds and things and to execute all documents and writings as may be necessary, proper, desirable or expedient to give effect to this resolution.”

7. To consider and if thought fi t, to pass, with or without modifi cation(s), the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014 and Companies (Cost Records and Audit) Rules, 2014 (including any statutory

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modifi cation(s) or re-enactment(s) thereof, for the time being in force), the remuneration payable to T. M. Rathi, Cost Auditor (Registration No10079) appointed by the Board to conduct Audit of the cost records of the Company relating to the Product “Pharmaceuticals” (formulation and bulk drug activities) for the Financial Year 2014-15, as set out in the statement annexed to the notice convening this meeting, be and is hereby ratifi ed.

RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorized to do all acts and take all such steps as may be necessary, proper or expedient to give effect to this resolution.”

By Order of the BoardVijendra Jain

Company Secretary(Membership No. 12608)

Registered Offi ce: Elder House, Plot No. C-9,Dalia Industrial Estate,Off Veera Desai Road, Andheri (West)Mumbai 400 053. Dated: 13th February, 2015Notes:1. A MEMBER ENTITLED TO ATTEND AND VOTE AT

THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE ON POLL INSTEAD OF HIMSELF/HERSELF AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY. A person can act as proxy on behalf of members not exceeding fi fty and holding in the aggregate not more than ten percent of the total share capital of the company carrying voting rights. A member holding more than ten percent of the total share capital of the Company carrying voting rights may appoint a single person as proxy and such person shall not act as a proxy for any other person or shareholder.

2. The instrument appointing a Proxy should be deposited at the Registered Offi ce of the Company not less than 48 hours before the commencement of the Meeting.

3. An Explanatory Statement pursuant to Section 102(1) of the Companies Act, 2013, relating to the Special Business to be transacted at the meeting is annexed hereto.

4. Transfer Books of the Company shall remain closed from the Wednesday 22nd day of December 2014 to Monday 29th day of December 2014 (both days inclusive).

5. Any queries on accounts must reach the Registered Offi ce at least seven days before the date of the Meeting.

6. The Members are requested to bring their copy of Annual Report with them.

7. Any change of address should be notifi ed to the Company immediately.

8 . The dividend for the year 2006-07 has become due and transferred to Investor Education and Protection Fund (‘IEPF’) on 3rd December 2014.

9. Members may note that Securities and Exchange Board of India (SEBI) has vide its circular dated January 7, 2010 made it mandatory to furnish a copy of PAN in the following cases:(i) Deletion of name of deceased shareholders(s),

where the shares are held in the name of two or more shareholders

(ii) Transmission of shares to the legal heir(s), where deceased shareholder was the sole holder of shares and

(iii) Transposition of shares- when there is a change in order of names in which physical shares are held jointly in the name of two or more shareholders.

10. Electronic copy of the Notice of the 31st Annual General Meeting of the Company interalia indicating the process and manner of e-voting alongwith Attendance Slip and Proxy Form is being sent to all the members whose email-ids are registered with the Company /Depository Participant(s) for communication purposes unless any member has requested for a hard copy of the same. For members who have not registered their email address, physical copies of the Notice of the 31st Annual General Meeting of the Company inter alia indicating the process and manner of e-voting along with Attendance Slip and Proxy Form is being sent in the permitted mode.

11. In compliance with the provisions of Section 108 of the Act and the Rules framed there under, the Members are provided with the facility to cast their vote electronically, through the e-voting services provided by NSDL, on all resolutions set forth in this Notice.

The instructions for e-voting are as under:A. In case a Member receives an e-mail from NSDL (for

Members whose e-mail addresses are registered with the Depositories):i. Open e-mail and also open PDF viz. “Elder-voting.

pdf” with your Client ID or Folio No. as password. The said PDF fi le contains your user ID and password for e-voting. Please note that the password is an initial password. If you are already registered with NSDL then your are requested to use your existing user ID and Password.

ii. Open the internet browser by typing the following URL: https://www.evoting.nsdl.com

iii. Click on “Shareholder - Login”.iv. If you are already registered with NSDL for e-voting

then you can use your existing user ID and password.

v. If you are logging in for the fi rst time, please enter the user ID and password provided in the PDF fi le attached with the e-mail as initial password.

vi. Password Change Menu will appear on your screen. Change the password with new password of your choice with minimum 8 digits/characters or combination thereof. Please note your new password. We strongly recommend that you do not share your new password and take utmost care to keep your password confi dential.

vii. Once the e-voting home page opens, click on e-voting> Active Voting Cycles.

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viii. Select “EVEN” (E-Voting Event Number) of Elder Pharmaceuticals Limited. Now you are ready for e-voting as Cast Vote page opens.

ix. Cast your vote by selecting appropriate option and click on “Submit” and also “Confi rm” when prompted. Upon confi rmation, the message “Vote cast successfully” will be displayed.

x. Once the vote on the resolution is cast, the Member shall not be allowed to change it subsequently.

xi. Institutional shareholders (i.e. other than individuals, HUF, NRI, etc.) are also required to send scanned copy (PDF/JPG format) of the relevant Board Resolution/Authority letter, etc., together with attested specimen signature of the duly authorized signatory(ies) who are authorized to vote, to the Scrutinizer through e-mail on elderscrutinizer@gmail.com with a copy marked to evoting@nsdl.co.in

xii. In case of any queries, you may refer the Frequently Asked Questions (FAQs) - Shareholders and e-voting user manual - Shareholders, available at the downloads section of www.evoting.nsdl.com or call NSDL on 022-24994600.

B. In case a Member receives physical copy of the Notice of AGM:i. User ID and Initial password are provided in the

enclosed ballot form.ii. Please follow all steps from Sl. No. (ii) to Sl. No. (xii)

above, to cast vote.C. Other Instructions:

i. The e-voting period commences on Wednesday 18th March 2015 (9.00 a.m. IST) and ends on Wednesday 18th March 2015(6.00 p.m. IST). During this period, Members of the Company, holding shares either in physical form or in dematerialized form, as on 20th February, 2015, may cast their vote electronically. The e-voting module shall be disabled by NSDL for voting thereafter. Once the vote on a resolution is cast by the Member, he shall not be allowed to change it subsequently.

ii. The voting rights of Members shall be in proportion to their shares of the paid up equity share capital of the Company as on 20th February, 2015.

iii. M/s. D K M & Associates, Practicing Company Secretaries, have been appointed as the Scrutinizer to scrutinize the e-voting process (including the Ballot Form received from the Members who do not have access to the e-voting process) in a fair and transparent manner.

iv. The Scrutinizer shall, within a period not exceeding three working days from the conclusion of the e-voting period, unblock the votes in the presence of at least two witnesses not in the employment of the Company and make a Scrutinizer’s Report of the votes cast in favour or against, if any, forthwith to the Chairman of the Company.

v. Members who do not have access to e-voting facility may send duly completed Ballot Form (enclosed with the Annual Report) so as to reach the Scrutinizer at the Registered Offi ce of the Company not later than Wednesday 18th March 2015 (5.00 p.m. IST). Members are required to fi ll in the Ballot Form and enclose it in a sealed envelope and send it to the Scrutinizer. Unsigned, incomplete or incorrectly ticked forms shall be liable to be rejected. Members have the option to request for physical copy of the Ballot Form by sending an e-mail to investors@elderindia.com by mentioning their Folio / DP ID and Client ID No. However, the duly completed Ballot Form should reach the Registered Offi ce of the Company not later than Wednesday 18th March 2015 (5.00 p.m. IST). Ballot Form received after this date will be treated as invalid. A Member can opt for only one mode of voting i.e. either through e-voting or by Ballot. If a Member casts votes by both modes, then voting done through e-voting shall prevail and physical Ballot shall be treated as invalid.vi. The results declared along with the Scrutinizer’s Report shall be placed on the Company’s website http://www.elderindia.com and on the website of NSDL www.evoting.nsdl.com within two days of the passing of the resolutions at the 31st AGM of the Company on 26th March, 2015 and communicated to BSE Limited and The National Stock Exchange of India Limited, where the shares of the Company are listed.

By Order of the BoardVijendra Jain

Company Secretary(Membership No. 12608)

Registered Offi ce: Elder House, Plot No. C-9,Dalia Industrial Estate,Off Veera Desai Road, Andheri (West)Mumbai 400 053. Dated: 13th February, 2015

31st annual report 2013-14

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EXPLANATORY STATEMENT PURSUANT TO SECTION 102(1) OF THE COMPANIES ACT, 2013:Item No. 5In terms of provisions of section 180(1)(c ) of the Companies Act, 2013, the Board of Directors of the Company cannot, except with the consent of the Company in a general meeting, borrow moneys apart from temporary loans obtained from the Company’s bankers in the ordinary course of business, in excess of the aggregate of the paid-up capital and its free reserves. The members in their Annual General Meeting held on 28th September 2012 had accorded their consent under section 293(1)(d) of the Companies Act, 1956 as applicable at that time, to the Directors for borrowing moneys up to a limit of ` 2000 Crores (excluding temporary loans obtained from the Company’s bankers in the ordinary course of business).Taking into account the current situation and future fi nance requirements for growth plans and re-structuring of the Company and to cater to the working capital needs, a fresh resolution is proposed providing that, in addition to the Company’s existing borrowings, the Directors may, for and on behalf of and for the purpose of the Company, borrow sums of money amounting in the aggregate to a sum not exceeding ̀ 2000 Crores. Hence the members are requested to accord their approval for maintaining the borrowing power limit of the Board for ` 2000 Crores.Your Directors recommend the above Special Resolution for your approval.None of the Directors, Key Managerial Persons of the Company and their relatives are concerned or interested in the resolution.Item No.6For creation of security through mortgage or pledge or hypothecation or otherwise or through combination for securing the limits as may be sanctioned by the lenders, for the loans to be sanctioned by any one or more Company’s bankers and /or by any one or more persons, fi rms, bodies corporate, or fi nancial institutions or banks, the Company would be required to secure all or any of the movable and immovable properties of the Company present and future. Section 180(1)(a) of the Companies Act, 2013, provides that the Board of Directors of a Company shall not, without the consent of members in general meeting, sell, lease or otherwise dispose of the whole or substantially the whole of the undertaking of the Company, hence it is necessary for the members to pass a resolution under section 180(1)(a) of the Companies Act, 2013 authorizing the Board of Directors or its committees to mortgage / charge the properties and/or

the whole or substantially the whole of the undertaking of the Company as aforesaid to the lenders.Mortgaging / charging the properties of the Company require approval of Members in the General Meeting pursuant to the provisions of section 180(1)(a) of the Companies Act, 2013. The resolution set forth in Item No. 6 therefore requires approval of the members.Your Directors recommend the above Special Resolution for your approval.None of the Directors, Key Managerial Persons of the Company and their relatives are concerned or interested in the above Resolution.Item No.7:As the members are aware, in terms of Section 148 of the Companies Act, 2013 and Companies (Cost Records and Audit) Rules, 2014, the Company is required to carry out the Cost Audit of the Product “Pharmaceuticals” (formulation and bulk drug activities) T. M. Rathi, Cost Accountant have been appointed as the Cost Auditors of the Company for the Financial Year 2014-15 by the Board of Directors, in its meeting held on 14th November 2014, on the recommendation of the Audit Committee of the Company. The Board has fi xed remuneration of ` 3,00,000/- (Rupees Three Lacs only ) exclusive of applicable service tax and out-of-pocket expenses.In terms of Section 148 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, the remuneration of the Cost Auditor as fi xed by the Board of Directors shall be ratifi ed by the members.None of the Directors, Key Managerial Persons of the Company and their relatives are concerned or interested in the above Resolution.Your Directors recommend the above Ordinary Resolution for your approval.

By Order of the BoardVijendra Jain

Company Secretary(Membership No. 12608)

Registered Offi ce: Elder House, Plot No. C-9,Dalia Industrial Estate,Off Veera Desai Road, Andheri (West)Mumbai 400 053. Dated: 13th February, 2015

12

Directors’ ReportThe Directors are pleased to present the Thirty-first Annual Report of the Company together with the audited Accounts for the year ended 30th June 2014. The working results of the Company for the year ended 30th June 2014 vis-à-vis those of the previous year are summarized below:

Year ended 30.06.2014

Fifteen monthsPeriod ended 30.06.2013

(` In Crores) (` In Crores)1. Operating Income 483.47 1233.10

2. Other Income 15.13 26.223. Profit before Tax 17.85 115.714. Less: Provision for Tax

Current Year - 24.50Deferred Tax 0.67 (2.53)

5. Profit after Tax 17.18 93.746. Less: Prior year Tax

adjustments9.26 -

7. Add: Profit as per the last Balance Sheet

216.62 192.88

8. Profit available for appropriation Out of which Directors recommend Appropriation as under:

224.54 286.62

a) Proposed Dividend - -b) Tax on Dividend - -c) Transfer to General Reserve 30.00 30.00d) Transfer to Debenture

Redemption Reserve40.00 40.00

e) Surplus carried forward to Balance Sheet

154.54 216.62

OPERATIONS AND PERFORMANCE:

During the y ear ended 30th June 2014, your company’s Operating Income was `483.47 Crores for the year as compared to `1233.10 Crores for the fifteen months period ended 30th June, 2013. This represents an decrease of `749.63 Crores over the previous year mainly on account of constraints of working capital. Profit before Tax was ` 17.85 Crores as against ` 115.71 Crores, for the previous year and Net Profit after providing for taxes was ` 17.18 Crores as against `93.74 Crores for the previous year.

For the year ended 30th June 2014 financial results showed Exceptional Item accounted of ` 380.04 Crores (net) which is comprising of Profit from Slump sale of ` 1734.31 Crores (net of Tax) after writing off Trade receivables ` 322.71 Crores and advances ` 1031.56 Crores.

GLOBAL DEPOSITORY RECEIPTS:

The Company had made an issue of Global Depository Receipts (GDRs) during the year 2004-05. All the issued GDRs have been

converted into equity shares and no GDRs are outstanding as on 30th June 2014. The Company’s listing for the GDRs, however, continues on the Luxembourg Stock Exchange and as on 30th June 2014 the same were quoted at $ 7.243.

DIVIDEND:

In view of the severe financial constraints faced by the Company the Directors at their meeting held on 27th August 2014 have decided to skip dividend for the accounting year under review.

DIRECTORS:

Mrs. Urvashi Saxena who retires by rotation has resigned w.e.f. 28th November 2014 with an intent not to be re-appointed and company resolved not to fill in the vacancy.

Dr. S. Jayaram who retires by rotation has resigned w.e.f. 1st December 2014 with an intent not to be re-appointed and company resolved not to fill in the vacancy.

The Board of Directors of the Company (“the Board”) under Section 161 of the Companies Act, 2013 and the Clause 120 of Articles of Association of the Company, appointed Mr. Farid Gulmohamed as Additional Director of the Company with effect from 14th February 2014. In terms of Section 161 of the Companies Act, 2013, and Clause 120 of Articles of Association of the Company Mr. Farid Gulmohamed holds office upto the date of this Annual General Meeting has resigned w.e.f. 14th November 2014 with an intent not to be re-appointed and company resolved not to fill in the vacancy.

There is no re-appointment of any director who are retire by rotation. Therefore as required under Clause 49 of the Listing Agreement, details are not given in the report on Corporate Governance,forming part of this Annual Report.

Mr. Edoardo Carlo Richter, the Director of the Company has resigned as Director of the Company with effect from 14th February, 2014, Mr. James McEuen has resigned as Director of the Company with effect from14th May 2014, Dr. R. Srinivasan the Director of the Company has resigned as Director of the Company with effect from 5th June 2014 and Mr. Michael Bastain the Director of the Company has resigned as Director of the Company with effect from 9th August, 2014. The Board accepted their resignations and place on record their appreciation for the valuable guidance and advice provided by Mr. Edoardo Carlo Richter , Mr. James McEuen, Dr. R. Srinivasan and Mr. Michael Bastain during their tenure as Directors of the Company.

AUDITORS:

M/s. S. S. Khandelwal & Co., Chartered Accountants, Mumbai retire as the Auditors of the Company at the conclusion of the ensuing Annual General Meeting. They have signified their willingness to get re-appointed and have confirmed their eligibility in terms of the provisions of Section 141 of the Companies Act, 2013 and Rule 4 of Companies (Audit and Auditors) Rules, 2014. On the recommendation of the Audit Committee, the Board proposes for consideration of the Shareholders pursuant to the provisions of Section 139, 142 and other applicable provisions, if any, of the

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13

Companies Act, 2013, as Statutory Auditors of the Company, to hold office from the conclusion of the 31st Annual General Meeting up to the conclusion of the 34th consecutive Annual General Meeting. You are requested to appoint Auditors and fix their remuneration.

COST AUDITORS:

With the resignation of M/s. Sevakari, Khare and Associates, Cost Accountants, Mumbai having registration No. 00084, on the recommendation of the Audit Committee at its meeting held on November, 14th, 2014, the Board has, considered and approved the appointment of T.M. Rathi, Mumbai having Registration No10079 as the cost auditor for the Bulk Drugs and Formulations for the financial year 2014-2015.

The Cost Audit Reports for bulk drugs and formulations for fifteen months period ended on 30th June 2013 will be filed with the Central Government in due course of time. The Cost Audit Report for the accounting period for the year ended 30th June 2014 would be submitted to the Central Government in due course of time.

JOINT VENTURES / SUBSIDIARIES / INVESTMENTS:

‘ELDER INTERNATIONAL FZCO’ the wholly owned subsidiary of the Company in Jebel Ali, Dubai, United Arab Emirates (Dubai WOS), continues to hold 100% stake in the U. K. based NeutraHealth Limited.

Dubai WOS also continues to hold 100% interest in Elder Biomeda EAD, Bulgaria which in turn continues to hold 100% stake in downstream Bulgarian entities, namely, Elder Bulgaria EOOD, the manufacturing company and Biomeda 2000 EOOD, the distribution company. Bulgaria, being a part of the European Union, offers an excellent opportunity for the Company to enter the Eastern European as well as CIS countries. The manufacturing unit in Bulgaria is being upgraded and once upgradation is completed it is expected that there will be a lot of opportunities for manufacturing products for the Eastern European, CIS and other markets. The distribution business has a lot of potential and during the year under review it has received a number of registrations which will help the distribution company to widen its scope. The distribution company which used to be operating only in the Bulgarian market has now started exporting some of its products to nearby countries.

The Dubai WOS continues to hold 100% interest in NutraHealth Ltd., the U.K. subsidiary. The U. K. operations have shown very encouraging results despite the slowing down of the U. K. economy. The said U. K. subsidiary has, in a cashless transaction, acquired Max Healthcare Ltd., U.K. to re-enter the OTC pharmaceutical category and extend and enhance its product range.

The Company continues to hold it’s investment in the Nepal Joint Venture. During recent period there have been certain issues on unilateral decisions taken by the Nepalese partner whereby the Company’s stake in terms of percentage to total capital was reduced from earlier 40% to 30.6%. The Company has notified its dissent to the action taken by the partner and has written to the Ministry of Industry, Government of Nepal seeking an amicable solution in the matter. The discussions were held with the Nepalese partner as directed by the Director of Industry, Government of Nepal for arriving at an acceptable solution, however no settlement could

be reached so far. Efforts are being made to work out an amicable settlement to resolve the matter.

BANKERS AND FINANCIAL INSTITUTIONS:

The Directors wish to place on record their sincere gratitude to the consortium of Banks for working capital lead by State Bank of India for their continued and timely support to the Company.

The Directors also wish to place on record their sincere gratitude to the various term lenders and NCD holders for their continued and timely support to the Company. During the year under review, the company has been defaulting in the repayment of NCD and Interest thereon. The company is working on Short Term and Medium Term plan for regularization of default.

EXPORT HOUSE STATUS:

The Company continues to enjoy ‘Export House’ status. The Company’s products are exported to certain African and South East Asian markets. The registration procedures are presently going on in a number of countries and once their formalities are completed, the Company’s exports are expected to increase.

ISO / WHO GMP ACCREDITATION:

The Company continues to be certified as conforming to ISO 9001 : 2000 for development, manufacturing and marketing of pharmaceutical products. The Company’s bulk drug manufacturing plant at Patalganga was upgraded according to ICH Q7A guidelines for manufacturing products for the European markets. The said bulk drug plant as well as formulation plants of the Company are now approved by WHO GMP and certified as conforming to ISO 9001 : 2008 standards relating to Quality Management Systems. While the Selaqui formulations plant of the Company has been accredited for WHO GMP the said plant is being upgraded for UK MHRA accreditation. The formulation plants at Nerul, Paonta Sahib have been accredited for WHO GMP standards. The formulations plant at Langha Road near Dehradun is designed as per USFDA compliance requirements and is also accredited for WHO GMP

DIRECTORS’ RESPONSIBILITY STATEMENT:

Pursuant to Section 217(2AA) of the Companies Act, 1956 the Directors, on the basis of compliance certificate received from Managing Director, CFO and other executives of the Company and subject to disclosures in annual accounts as on 30th June 2014 and on the basis of discussions with the Statutory Auditors of the Company from time to time, declare and confirm:

a) that in preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) that the Directors had selected such accounting policies and applied them consistently and made judgments 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 year ended on 30th June 2014 and the profit of the Company for that year.

c) That the Directors had taken proper and sufficient care for maintenance of adequate accounting records for the year ended 30th June 2014 in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the

14

Company and for prevention and detection of fraud and other irregularities.

d) That the Directors had prepared the accounts for the year ended 30th June 2014 on a ‘going concern basis’.

CORPORATE GOVERNANCE:

In pursuance of the system of Corporate Governance instituted by SEBI and forming part of the Listing Agreement with the Stock Exchanges, a report thereon is separately attached to this report.

RESEARCH AND DEVELOPMENT ACTIVITY:

The Research and Development activities of the Company continue to be recognized by the Department of Science and Technology, Government of India. The Research and Development laboratory of the Company has successfully developed certain import substitute molecules / intermediates and has been working on development of a number of other molecules. It has also been continuously working on process developments of the molecules already developed by it. It has been engaged in development of new products and their improvement in terms of delivery, absorption and efficacy. The Company has applied for seventeen Indian patents with seven PCT applications. Out of these one PCT application has been entered in the USA, Europe and Japan.

INSURANCE OF ASSETS:

The Company is in the process of renewing the insurance cover for all the fixed assets, finished goods, semi-finished goods, raw materials, packing materials and other goods and assets of the Company lying at different locations against fire, burglary, transit, riots, strike, malicious damage and allied risks as well as goods in transit.

CAPITALISATION:

During the year under review the Company has added fixed assets worth ` 3.48 Crores whereas disposal and adjustment of fixed assets amounted to ` 46.66 Crores. The Company had capital work in progress amounting to ` 304.26 Crores as at 30th June 2014 at various project sites.

DEPOSITS:

The Company is irregular in repayment of principal and payment of interest and has defaulted therein. The Company has made application to the Company Law Board for the extension of time in repayment of Deposits and approval is yet to be received. The Company has been complying with the provisions of Section 58A and other applicable provisions, if any, of the Companies Act, 1956 and the rules made thereunder. As at 30th June 2014 the fixed deposits outstanding under the public deposit schemes were `143.38 Crores. The Company has discontinued acceptance of deposits from public.

AUDITORS’ REPORT:

The comments / observations of the Auditors, if any, are self explanatory and do not call for any further explanations or clarifications except the following :

As regards Point No.1 of the basis for qualified opinion of the Auditor, the Company is of the view that the Plant concerned has intrinsic value which is higher than the values carried in the books of accounts as capitalization as well as capital Work in progress. As regards Point No.2 (i) & (ii), the management had reviewed all the balances carried in the accounts and taking a conservative view decided to write off those carrying amounts where no further economic benefit will be realizable from those pertinent assets, & management decided that it is now imperative that the same should get appropriately reflected in the Profit & Loss Account of the financial year ended 30th June, 2014. Our efforts for recovery to write off shall continue and recoveries will be accounted in the year of realization on cash basis. Point No. 3 & 4 of the qualified opinion of the Auditor are self explanatory.

As regards the comments of the Auditors in serial no. 1 & 2 under the ‘Emphasis of matter’, the Company has completed first round of re-structuring by divesting some of its brands to M/s. Torrent Pharmaceuticals Ltd., for a consideration of ` 2004 crores during the year. The Company is further exploring the possibilities of divestment of some of its non-core assets and infusion of long term equity capital / debt funds for the revival of the company. The management has initiated efforts to pursue business plan involving existing products and launching of new products with effective marketing strategy and extending contract manufacturing activites. As regards the comments of the Auditors in Serial no. 3 the Company seized of the matter and in the process of completing reconciliation / confirmation of Trade receivables, inter-divisional balances, loans and advances and in certain cases of few bank accounts. The effect of the same shall be given in the accounts for the next financial year. However, management does not expect any significant impact of the same on the results of the Company. As regards Serial No.4, the company is seized of the matter and shall take appropriate steps in due course.

As regards non-depositing or investment of a sum of not less than 15% of the amount of debentures maturing during the period ended 30th June, 2014, the company is seized of the matter and said amount will be deposited / invested in due course.

PARTICULARS OF EMPLOYEES:

Information as per Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 as amended is available at the registered office of the Company. As per the provisions of Section 219(i)(b)(iv) of the Companies Act, 1956 this Report and Accounts are being sent to all Shareholders of the Company and others entitled to it excluding the aforesaid information. Any Shareholder interested in obtaining a copy of the statement under Section 217(2A) of the Companies Act, 1956 may write to the Company Secretary at the address of the registered office of the Company.

EMPLOYER / EMPLOYEE RELATIONS:

The relationship with the workers of the Company’s manufacturing units and other staff continues to be cordial. The Directors wish to place on record their sincere appreciation and gratitude for the services rendered by the workers and staff at all levels.

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EMPLOYEE STOCK OPTION PLAN:

The Shareholders at the 21st Annual General Meeting of the Company passed a resolution approving the Employee Stock Option Plan called ‘Elder ESOP 2004’. A total of 1,439,274 equity shares of the Company are available under Elder ESOP 2004 for grant of Options at an exercise price of 15% discount to the market rate. The Company had granted Options in respect of 399,250 shares which were to be exercised in four equal parts ending on 27th March 2008 at an exercise price of ` 209/- per share inclusive of a premium of ` 199/- per share. Out of the Options granted 285,748 were exercised during the accounting year under review. Options that were not exercised within the stipulated period have lapsed. There are 1,153,526 shares for which Options can still be granted to Employees under Elder ESOP 2004.

CORPORATE SOCIAL RESPONSIBILITY

The Board of Directors constituted a Corporate Social Responsibility (CSR) Committee in terms of the provisions of Section 135(1) of the Companies Act, 2013 on 21st August, 2014 with the strong belief in the principle of Trusteeship to serve the community

This CSR Committee shall review and restate the Company’s CSR policy in order to make it more comprehensive and aligned with the activities specified in Schedule VII of the Companies Act, 2013.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

In accordance with Rule 2 of the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 as applicable, the particulars relating to conservation of energy and technology absorption are given in Annexure 1 to this Report.

The foreign exchange outgoings during the year under review was ` 4.31 Crores for imports of raw materials / finished goods and ` 0.34 Crores for foreign travel. The Company also paid ` 6.56 Crores in foreign exchange as interest on the External Commercial Borrowing and other expenses of ` 1.31 Crores. The foreign exchange earnings during the year were ̀ 30.66 Crores on account of exports on FOB basis.

For and on behalf of the BoardAlok Jagdish Saxena

Managing Director & CEO

Mumbai, 13th February, 2015

16

Annexure – IA. POWER & FUEL CONSUMPTION 2013-14

(12 months) 2012-13

(15 months)1. ELECTRICY PURCHASED: Units 5927252 9,596,764 Total Amount ` 368,92,965 ` 55,949,947 Rate/Unit ` 6.22 ` 5.832. COAL Not Applicable Not Applicable3. FURNACE OIL (L.D.O): Quantity (Ltrs) 27739 90,769 Total Amount ` 20,89,339 ` 6,297,544 Average Rate ` 75.32 ` 69.384. FURNACE OIL: Quantity (Ltrs) 148117 186,323 Total Amount ` 70,34,160 ` 7,727,538 Average Rate ` 47.49 ` 41.475. FURNACE OIL (DIESEL) Quantity (Ltrs) 7300 10,681 Total Amount ` 392608 ` 466,039 Average Rate ` 53.78 ` 43.636. Liquified Petroleum Gas (LPG): Quantity (Kgs) 183719 389,483 Total Amount ` 173, 36,580 ` 31,806,083 Average Rate ` 94.36 ` 81.667. OTHER/INTERNAL GENERATION Units 282393 904,970 Quantity H.S.D. (Ltrs) 75047 289,514 Total Amount ` 41, 68,687 ` 13,289,720 Rate/Unit ` 14.76 ` 14.69

CONSUMPTION PER UNIT OF PRODUCTION:For finished Packed Production per lac packs of formulations/per Kg. of Bulk Drug

Item 2013-14 (12 months)

2012-13 (15 months)

1. Electricity: For Formulations ` 34122.50 ` 37,516.39 For Bulk Drugs ` 242.44 ` 151.782. L.D.O. For Formulations ` 2290.12 ` 12,434.31 For Bulk Drugs - ` 8.463. Furnace Oil For Bulk Drugs ` 295.96 ` 132.494. Furnace Oil (Diesel) For Formulations ` 430.34 ` 39,787.985. Liquified Petroleum Gas: For Formulations ` 37493.62 ` 29,111.816. Coal: Not Applicable Not Applicable7. a) LSHS Not Applicable Not Applicable b) HSD Not Applicable Not Applicable

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17

Form ‘B’Elder pharmaceuticals Ltd., a multicrore company dealing in APIs & various dosage forms has focused on modifying it APIs operations required for its branded dosage forms and has created facility in Patalganga which is approved by EDQM. With a view to targeting niche molecules, the Company has established its Research and Development Centre (R & D Centre) at Nerul, Navi Mumbai .The basic aim is to synthesize import substituent required for the dosage forms thus controlling the quality at every stage. This strategy was further extended to move into the export markets. The R & D Centre is also recognized by the Department of Scientific & Industrial Research, Ministry of Science & Technology, New Delhi. Company’s Research and Development is a major part its business strategy that is giving an advantage for competitiveness in the business. The Company has filed a total of seventeen Indian patents with PCT applications. One of the patent is granted in US, Europe & Japan & another one In US & Japan

The objectives of the Research & Development activity are as under:

- Process Development for cost & quality effectiveness;

- Improvements in existing processes;

- Development of analytical method / impurity profiling;

- Customer support.

The R & D activities are focused on therapeutic segments such as urinary tract infections, non steroidal & anti inflammatory molecules with specific focus on areas such as wound healing &, woman health care .The Development is continuous and some of the major APIs that have been developed and commercialized

are Amiloride Hydrochloride, Flavoxate Hydrochloride, Carbocistein, Diosmin , Tolfenamic Acid and Diacerin along with continuous efforts to modify and improve their processes without compromising quality. Some of the niche formulations that have been developed and commercialized include Clopidogrel tablets, Zalain pessaries, Elmecob LC, Repral, Elfi-XL, Hibor, Amifru S, Eltrodar, Bonviva, Anamol, Elnutrin C, Enzar, CMPH, Flavospas, Somazina, Shelcal, Thrive, etc.

R&D has also created new portfolio of custom made advanced API intermediates and have successfully developed some innovative compounds for international customers and have started exporting them.

BENEFITS DERIVED:

a) The creative approach to developed and commercialized formulations and APIs has opened the extended export market;

b) The synthesizing the APIs from key raw materials has helped the Company to emerge competitive in pharma market;

c) The custom synthesis and intermediate exporting has widened the technological base along with export market.

d) EXPENDITURE ON R&D:

2013-14(` in lacs)

2012-13(` in lacs)

a. Capital Expenditure 0.60 10.46b. Recurring Expenditure 434.86 728.05

18

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES:

Name of the Subsidiary: : Elder International FZCO, Dubai, U.A.E.Financial Year of the

Subsidiary Company : 1st April to 31st March every year

Extent of Interest : 100%

No. of Shares held by : 4 Shares of DHS 1,00,000 each held in the name of Elder Elder Pharmaceuticals Pharmaceuticals Limited and 1 Share of DHS 1,00,000 Limited each held in the name of Mr. J. Saxena for the benefit of Elder Pharmaceuticals Limited

Net aggregate amount Profits / (Losses) of the : Not ApplicableSubsidiary so far as it concerns to the membersof Elder Pharmaceuticals Limited as it is not dealtwith the Company’s Accounts for the year ended 31st March 2014 of the subsidiary

Net aggregate amount Profits / (Losses) of the : The accounts of the Subsidiary were audited for the year endedSubsidiary so far as dealt with or provision is 31st March 2014. The loss of `1445.35 lacs has been dealt with inmade for those losses in the accounts of Elder the consolidated accounts of Elder Pharmaceuticals Limited.Pharmaceuticals Limited for subsidiary’s Financial Year ended 31st March 2014

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Report on Corporate Governance REPORT ON CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges the Directors submit for the information of the Shareholders the following Report on Corporate Governance.

1. CORPORATE PHILOSOPHY:

The Management has always believed in good corporate governance and has been practicing it since inception to the extent feasible and beneficial for the enhancement of long term shareholder value and protecting the interests of the other elements involved in the working of the Company. It has adopted the philosophy of openness and transparency in its dealings with the insiders and outsiders alike.

2. BOARD OF DIRECTORS:

The Board of Directors of the Company now comprises eight Directors, two (25%) of whom are executive Directors and remaining six Directors (75%) are independent and non-executive Directors. The Company is in compliance with Clause 49 of the Listing Agreement regarding composition of the Board of Directors.

With effect from 12th August 2011 the Company has been paying sitting fees of ̀ 20,000/- to the non-executive Directors for the meetings of the Board or Committees of the Board attended by them.

THE STATEMENT OF OTHER DIRECTORSHIPS, MEMBERSHIPS OF COMMITTEES, ETC. IS GIVEN BELOW.

Name of Directors Chair-manships Director-ships Member of Committees Attendance at The last AGM1. Mr. Alok Jagdish Saxena One Four Two Yes2. Mr. Yusuf Karim Khan None One None Yes3. Dr. R.Srinivasan

(resigned w.e.f 05/06/2014)One Ten Ten Yes

4. Dr. J. S. Juneja None Four Two Yes5. Dr. Sailendra Narain None None None No6. Mr. Michael Bastian

(resigned w.e.f 09/08/2014)None Three Four No

7. Dr. S. Jayaram None None None Yes8. Mr.Saleem I. Shervani None Nine One No9. Mr. Edoardo Richter

(resigned w.e.f 14/02/2014)None None None No

10. Mrs. Urvashi Saxena None Five Four Yes11. Mr. James McEuen

(resigned w.e.f 14/05/2014)None None None No

12. Mr. Farid R. Gulmohamed (joined w.e.f 14.02.2014)

None Eight One NA

ATTENDANCE OF DIRECTORS AT BOARD MEETINGS:

During the year ended 30th June 2014 the Board of Directors met on eleven occasions. The dates on which the Board Meetings were held are 11th July 2013, 24th July 2013, 20th August 2013, 29th August 2013, 20th September 2013, 11th October 2013, 21st October 2013, 13th November 2013, 30th December 2013, 14th February 2014, 15th May 2014. The time gap between two consecutive Board meetings was not more than four months. Necessary quorum was present at all the meetings of the Board held during the accounting year under review.

Name of Director Number of Board Meetings held Number of Meetings attended1. Mr. Alok Jagdish Saxena Eleven Nine2. Mr. Yusuf Karim Khan Eleven Ten3. Dr. R. Srinivasan Eleven Ten4. Dr. J. S. Juneja Eleven Nine5. Dr. Sailendra Narain Eleven Five6. Dr. S. Jayaram Eleven Eight7. Mr. Michael Bastian Eleven Four8. Mr. Saleem I. Shervani Eleven None9. Mr. Edoardo Richter Eleven None

10. Mrs. Urvashi Saxena Eleven Nine11. Mr. James McEuen Eleven Three12. Mr. Farid R. Gulmohamed

(joined w.e.f 14.02.2014)Two One

20

BOARD PROCEDURE:

The Board of Directors of the Company meets at regular intervals at meetings of the Board and also informally as and when required.

The following information is placed before the Board at its meetings:

1. Annual operating plans and budgets and any updates.

2. Capital budgets and any updates.

3. Quarterly results for the company and its operating divisions or business segments.

4. Minutes of meetings of audit committee and other committees of the Board.

5. The information on recruitment and remuneration of senior officers just below the Board level, including 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 nonpayment 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 on 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 in 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 and shareholders service such as non-payment of dividend, delay in share transfer etc.

16. Statutory Compliances.

17. Disclosure of interest by Directors.

18. Review of Cost Audit Reports.

19. Appointment of Chief Financial Officer on the recommendation of the Audit Committee.

20. Appointment of the Cost Auditor on the recommendation of Audit Committee.

3. AUDIT COMMITTEE:

The Board of Directors has set up an Audit Committee which presently has five members namely, Dr. J. S. Juneja, Dr. Sailendra Narain, Mrs. Urvashi Saxena, Mr. Farid Gulmohamed and Dr. S. Jayaram all of whom are non-executive and independent Directors having financial and accounting knowledge. Mr. J. s. Juneja has been appointed as the Chairman of the Audit Committee from 21st August 2014. The Managing Director, Executive Director, Chief Financial Officer, the statutory Auditors, Cost Auditors and internal auditors are the invitees at the meetings of Audit Committee, as and when required. The Audit Committee met on Four occasions during the accounting year under review.

The role of the Audit Committee was defined and continues to be as under:

1. Oversight of the Company’s financial reporting process and the disclosures of its financial information to ensure that the financial information is correct, sufficient and credible.

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

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

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

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

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

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

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

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

f. Disclosure of any related party transactions

g. Qualifications in the draft audit report.

5. Reviewing, with the management, the quarterly financial statements before submission to the board for approval

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

7. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.

8. Discussion with internal auditors any significant findings and follow up there on.

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9. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of material nature and reporting the matter to the board.

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

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

12. To review the functioning of the Whistle Blower mechanism, in case the same is existing.

13. Approval of appointment of CFO (i.e. the whole time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience & background, etc. of the candidate and recommending to the Board for his appointment.

14. Recommending to the Board the firm / individual for appointment as Cost Auditor.

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

Explanation (i): The term “related party transactions” shall have the same meaning as contained in the Accounting Standard 18, Related Party Transactions, issued by The Institute of Chartered Accountants of India.

Explanation (ii): If the company has set up an audit committee pursuant to provision of the Companies Act, the said audit committee shall have such additional functions / features as is contained in this clause.

The attendance at the meetings of the Audit Committee was as under:

Name No. of meetingsHeld Attended

Mr. Michael Bastian Four ThreeDr. R. Srinivasan Four Three Dr. J. S. Juneja Four FourDr. Sailendra Narain Four One

Necessary quorum was present at all the Audit Committee meetings. Mr.S.P.Date, Company Secretary till 14th February 2014 and thereafter Mr. Vijendra Jain, Company Secretary acts as the Secretary of the Audit Committee.

4. REMUNERATION OF DIRECTORS:

Non-executive Directors:

The Company does not pay any remuneration to non-executive Directors except by way of sitting fee which with effect from 12th August 2011 has been ` 20,000/- for every meeting of the Board or the Committee thereof attended by them. Mr. James McEuen does not claim any sitting fees.

Details of Sitting Fees Payable to Non-Executive Directors during the accounting period ended 30th June 2014 are given below:

Name Sitting Fees (`)

1. Dr. R. Srinivasan 280,000

2. Dr. Joginder Singh Juneja 280,000

3. Dr. Sailendra Narain 120,000

4. Mr. Saleem Shervani Nil

5. Dr. S. Jayaram 160,000

6. Mr. Michael Bastian 160,000

7. Mr. Edoardo Richter Nil

8. Mrs. Urvashi Saxena 180,000

9. Mr. James McEuen Nil

10. Mr. Farid Gulmohamed 20,000

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Whole-Time Directors:

The Whole-Time Directors of the Company received their remuneration by way of monthly remuneration. Such remuneration (inclusive of perquisites) made to the Whole-Time Directors during the year ended June 2014 is given in the table below.

Name/Designation Amount (`) Salary Perquisites & Allowances Retiral Benefits Total

Mr. J. SaxenaManaging Director (Upto 9th Oct 2013)

64,84,050 24,38,655 6,75,828 95,98,533

Mr. Alok Jagdish SaxenaManaging Director & CEO

79,20,760 47,61,697 7,83,636 1,34,66,093

Mr. Yusuf Karim KhanExecutive Director

68,30,980 6,05,300 9,07,950 83,44,230

Notes:

1. The appointment of each of the Managing Director & CEO and Executive Director is for a period of five years. Either party to the agreement is entitled to terminate the agreement by giving not less than three months’ prior notice in writing to the other party.

2. Under the Employee Stock Option Scheme ‘Elder ESOP 2004’, Mr. Yusuf Karim Khan was given 5,600 Options entitling him to subscribe to 5,600 Equity Shares of `10/- each for cash at a price of ` 209/- per share. Mr. Yusuf Karim Khan had fully exercised Options granted to him.

Nomination and Remuneration Committee:

The Company has re-constituted the remuneration committee as Nomination and Remuneration committee comprising of four Directors namely, Dr. S. Jayaram, Mr. Farid Gulmohamed, Mr. Salim Shervani and Mr. Alok Jagdish Saxena, and Dr. S. Jayaram a non executive independent Director as its Chairman. The Nomination and Remuneration Committee reviews the remuneration of Working / Executive Directors of the Company and recommends to the Board periodical revisions in their remuneration. There was no meeting during the accounting period under review

Mr. Vijendra Jain, Company Secretary acts as the Secretary to Remuneration Committee.

Remuneration Policy:

The Company decides the remuneration package of Working / Executive Directors after considering employment scenario, remuneration package of the industry for the like candidates and remuneration package of managerial talent of other industries. The annual pay is also linked to the performance of the Company in general and individual achievements measured against specific key result areas based on Company’s objectives.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

The Management Discussion and Analysis Report on various matters is appearing elsewhere in this Annual Report.

5. SHAREHOLDERS:

The Company has re-constituted “Shareholders/Investors Grievances Committee” as “Stakeholders Relationship Committee” under the Chairmanship of Mrs. Urvashi Saxena, a non-executive Director with Dr. S. Jayaram, Dr. Shailendra Narain and Mr. Alok Jagdish Saxena as the other members thereof to look into the redressing of shareholders and investors complaints. Since there have not been any major complaints from shareholders and / or investors the Committee did not meet during the year under review.

Mr. Vijendra Jain, the Company Secretary acts as the Compliance Officer of the Company. It is the policy of the Company to attend to and address the complaints of shareholders and investors as early as they can be. During the year under review the Company had received 19 complaints/requests from shareholders and all of them have been promptly attended to and addressed. As on 30th June 2014 no requests/complaints were pending to be attended to.

The Board of Directors of the Company has delegated the power of share transfers to the Registrars and Share Transfer Agents, namely, Link Intime India Pvt. Ltd. who are attending to the work of share transfers and dematerialisation of shares at regular periodicity. The share transfer and dematerialisation work is overseen by the Company Secretary and periodically reported to Directors at their meetings.

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6. DETAILS OF THE LAST THREE ANNUAL GENERAL MEETINGS HELD:

For the Year Date & Time of AGM Venue2012-13 30th AGM 30th December 2013

10.30 a.m.Hotel Blue Waters, Opposite Crystal Point, Near Tata Power House, New Link Road, Andheri (West), Mumbai 400 053

2011-12 29th AGM 28th September 2012 10.30 a.m.

Hotel Blue Waters, Opposite Crystal Point, Near Tata Power House, New Link Road, Andheri (West), Mumbai 400 053

2010-11 28th AGM 26th September 201110.30 a.m.

Juhu Vile Parle Gymkhana Club, Plot No.U-13, 13th Road, JVPD Scheme, Juhu, Mumbai 400 049.

During the last three AGMs the following Special Resolutions were passed.

28th AGM – Special Resolution for authorizing the Board of Directors to issue FCCBs/ADRs/GDRs, Equity Shares, etc. pursuant to provisions of Section 81 and / or 81(1A) as applicable and other applicable provisions of the Companies Act, 1956.

29th AGM – Special Resolution for authorizing the Board of Directors to issue FCCBs/ADRs/GDRs, Equity Shares etc. pursuant to provisions of Section 81 and / or 81(1A) as applicable and other applicable provisions of the Companies Act, 1956.

30th AGM– No Special Resolution was passed in the 30th AGM.

Special Resolution was passed last year through postal ballot for the Transfer of Company’s India and Nepal Formulation Business relating to Teams A2, B-Gynae, and B-CP by way of slump sale as a going concern.

7. DISCLOSURES:

The Company has not entered into any transaction of material nature with the Promoters, the Directors or the Management, their subsidiaries or relatives, etc. that may have any potential conflict with the interests of the Company. Wherever such transactions are entered into approvals are obtained from appropriate authority/ies.

The Company has complied with the requirements of the Stock Exchanges, SEBI and other statutory authorities on all matters relating to capital markets. There were no penalties imposed or any strictures passed on the Company by the Stock Exchanges, SEBI or any other statutory authority relating to the above.

Code of Conduct:

The Code of Conduct for Directors and Senior Management of the Company has been laid down by the Board and the same is posted on the website of the Company. The CEO / Managing Director declares that the Board Members and Senior Management covered by the Code of Conduct affirmed compliance with the Code of Conduct of the Company.

CEO / CFO Certification:

The CEO / CFO of the Company have certified to the Board as required under Clause 49(v) of the Listing Agreement.

8. MEANS OF COMMUNICATION:

The quarterly/annual unaudited provisional financial results are published in the newspapers Free Press Journal and Nav Shakti as per the following indicative schedule.

For the quarter ending 30th June – last week of August

For the quarter ending 30th September – second week of November

For the quarter ending 31st December – second week of February

For the quarter/year ending 31st March – second week of May.

The provisional as well as audited financial results and official news releases are up loaded on the Company’s webside viz. http://www.elderindia.com

9. GENERAL SHAREHOLDER INFORMATION:

Date, time and venue of the 31st AGM

: 24th March 2015at 10.30 a.m. at Gms Banquet Hall, Sitladevi Complex, 1st Floor, D.N.Nagar, Opp. Indian Oil Nagar, Link Road, Andheri (W), Mumbai - 400053

Financial Year : July 2013 to June 2014

Date of Book Closure : 22nd December 2014 to 29th December 2014 (Both days inclusive)

Listing on Stock Exchanges : Equity shares of the Company are listed on the Bombay Stock Exchange Ltd., Mumbai (BSE) and the National Stock Exchange of India Limited (NSE). The Annual Listing fees as prescribed for both the exchanges have been paid for the year 2013-14.

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Stock Code:

The Stock Exchange, Mumbai (BSE) - 532322

Scrip ID on Bolt - ELDERPH

The National Stock Exchange of India (NSE) - ELDERPHARM

NSDL/CDSL – ISIN - for fully paid-up Equity Shares is INE 975A01015

Corporate Identity Number (CIN)

The Company’s CIN, allotted by the Ministry of Corporate Affairs, Government of India, is L24239MH1983PLC029714.

STOCK MARKET DATA

The monthly high and low quotations and volume of shares traded during 1st July 2013 to 30th June 2014 on The Stock Exchange, Mumbai (BSE) and the National Stock Exchange of India Limited (NSE) are as follows:

National Stock Exchange(NSE) The Stock Exchange, Mumbai(BSE) High Low Volume High Low VolumeJul-13 377.80 281.00 2,196,784 380.00 281.00 8,60,886 Aug-13 365.00 254.10 1,884,413 364.50 275.15 6,62,724 Sep-13 378.00 295.90 3,078,066 377.40 296.40 10,57,916 Oct-13 346.90 280.35 2,001,543 346.70 280.90 6,25,906 Nov-13 322.95 285.40 1,787,250 323.50 286.00 5,92,672 Dec-13 349.30 230.00 8,897,174 349.00 228.50 31,86,967 Jan-14 265.00 180.00 7,468,824 264.50 197.20 23,58,834 Feb-14 209.50 188.00 2,217,703 209.90 188.00 8,78,677 Mar-14 215.00 191.00 2,314,440 214.80 191.50 9,26,100 Apr-14 273.70 200.00 4,052,502 257.00 200.00 10,87,572 May-14 232.50 197.25 1,578,997 231.75 198.30 4,58,902 Jun-14 234.10 208.00 3,039,011 233.95 208.70 11,09,773

REGISTRAR AND SHARE TRANSFER AGENTS:

The Company has appointed Link Intime India Pvt. Ltd. (Link Intime) as its Registrar and Share Transfer Agents for both Demat as well as Physical segment. The Office of Link Intime is situated at C-13, Pannalal Silk Mills Compound, L. B. S. Marg, Bhandup (West), Mumbai 400 078. They are available on Phone No. (022) 2596 3838 and their Fax No. is (022) 2594 6969. Their e-mail ID is mumbai@linkintime.co.in

SHARE TRANSFER SYSTEM:

Link Intime India Pvt. Ltd., the Registrars and Share Transfer Agents follow the following transfer procedure. All the documents received by them are numbered and inwarded. After specimen signatures are checked and tallied with those on record the transfer documents are edited, checked and in case of objections, objection code is marked and communicated to the Transferee. After the objection is cleared all valid cases are allotted transfer numbered. A dummy transfer register is generated for checking and after corrections, if any, final transfer register is prepared. Endorsements stickers are affixed on the share certificates and covering letters are attached to the transferred certificates. A journal for registration is created and the transfer documents checked with the journal are dispatched. Simultaneously shareholders records are updated.

In case of demat transfers the data of transfers is received from the depositories once in a week. The same is downloaded and the shareholder records are updated.

DISTRIBUTION OF SHAREHOLDING AS ON 30TH JUNE 2014.

No. of Equity Shares held No. of Shareholders % of Shareholders No.of Shares held % of ShareholdingUpto 500 23,460 95.84 1,710,194 8.33501 to 1000 523 2.14 416,665 2.031001 to 2000 211 0.86 326,262 1.592001 to 3000 85 0.35 212,005 1.033001 to 4000 43 0.18 155,701 0.764001 to 5000 28 0.11 131,849 0.645001 to 10000 51 0.21 395,541 1.9310001 and above 77 0.31 17,188,719 83.70Grand Total 24,478 100.00 20,536,936 100.00

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Out of the above

NUMBER OF SHARES IN PHYSICAL MODE: 2,28,030 Equity Shares in respect of 4,269 holders as on 30th June 2014.

NUMBER OF SHARES IN DEMAT MODE: 2,03,08,906 Equity Shares in respect of 20,209 holders as on 30th June 2014.

CATEGORY OF SHAREHOLDERS AS ON 30TH JUNE 2014

Category No. of Shares

% of Shareholding

Promoters & Promoter Group

5,187,780 25.26

Financial Institutions/Banks/Insurance companies

2,802,813 13.65

NRI/Foreign Holding 5,984,028 29.14 Private Corporate Bodies 3,332,176 16.22 Indian Public 3,230,139 15.73 Total 20,536,936 100.00

GDRs:

The Global Depository Receipts (GDRs) issued by the Company are listed on the Luxembourg Stock Exchange. The said GDRs were quoted at US$ 7.24 as on 30th June 2014. As at the end of the accounting year under review no GDRs were outstanding.

Elder ESOP 2004:

At the 21st Annual General Meeting of the Company held on 28th September 2004 the Shareholders of the Company had approved Employees Stock Option Scheme called ‘Elder ESOP 2004’. On 28th March 2006 the Compensation Committee allotted 3,99,250 Options to eligible Grantees entitling them to subscribe to one equity share of `10/- each per Option granted at an Exercise Price of `209/- per share inclusive of `199/- per share as premium. These Options were to be exercised in four equal parts every three months upto 27th March 2008 after initial Vesting Period of one year. Accordingly, Grantees have exercised their Options in respect of 285,748 equity shares of `10/- each from 28th March 2007 to 27th March 2008. The paid up share capital of the Company after the last of the allotments of equity shares under ESOP made on 30th April 2008 stands increased to `188574860/-. There were no Options outstanding as at 31st March 2008 and the Options that were not exercised within the prescribed period have lapsed. However, Elder ESOP 2004 still has a balance of 1,153,526 shares for which Options can be issued to Employees.

Plant Loations:

The Company’s plants are situated at the following locations:

1. Plot No. D-219 & 220 T.T.C. Industrial Area, Thane-Belapur Road, Navi Mumbai 400 706

2. Plot No. C-21/2, T.T.C. Industrial Area, Village – Pawane Navi Mumbai 400 704

3. Plot No. A-36 Patalganga Industrial Area, Village Khaire, Taluka Khalapur District Raigad, Maharashtra 410 220

4. Plot No. C-11/2 Selaqui Industrial Area Near Dehradun Uttarakhand

5. Plot No. 103, Paonta Sahib Industrial Area Village: Gondpur Tehsil: Paonta Sahib District: Sirmour Himachal Pradesh

6. Village Charba Pargana Pachwa Doon Tehsil – Vikasnagar District – Dehradun Uttarakhand

Address for Correspondence:

The Company has appointed Link Intime India Pvt. Ltd. as its Share Transfer Agents. All communications with regard to transfer, transmission, instructions / enquiries on Electronic Clearing Service (ECS), dividend, dematirialising of shares, etc. should be addressed to the Share Transfer Agents at the following address.

C-13, Pannalal Silk Mills Compound, L. B. S. Marg, Bhandup (West), Mumbai 400 078. Email: mumbai@linkintime.co.in

The Shareholders are also welcome to communicate directly with the Company at the following address.

Registered Office: Secretarial Department Elder Pharmaceuticals Limited ‘Elder House’, Plot No. C-9,

Dalia Industrial Estate, Off Veera Desai Road,

Andheri (West), Mumbai 400 053.

E-mail: corporate@elderindia.com

Details of directors seeking re-appointment given pursuant to clause 49 of the listing agreement:

There is no re-appointment of any director who are liable for retire by rotation. Therefore as required under Clause 49 of the Listing Agreement, details are not given in the report.

Unclaimed Dividend

The unclaimed dividend in respect of the Financial years up to 2005 - 06 has been transferred to Investor Education and Protection Fund (IEPF) A/C established under the Revenue A/C of Central Government on 10/12/2013.

26

The following Dividend, if unclaimed for 7 years, will be transferred to IEPF as follows:

Financial year Unclaimed Dividend As on 30/06/2014 (`)

Unclaimed dividend A/C with

2006-07 5,35,996.00 Standard Chartered Bank

2007-08 6,32,052.50 State Bank of India2008-09 3,25,979.50 State Bank of India2009-10 4,04,214.00 State Bank of India2010-11 3,89,742.00 Axis Bank Ltd.2011-12 4,20.534.00 Axis Bank Ltd.

10. RISK ASSESSMENT AND MITIGATION:

The Company has formulated an appropriate policy for identification, assessment and mitigation of risks. The policy will be reviewed as and when required depending upon the change in the circumstances affecting the Company and its business.

11. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Adequate well established control procedures for internal control are already in place. The well qualified Internal Audit Team implements these procedures and controls. Risk evaluation procedures have also been introduced. However, in view of growing activities the internal audit team is being strengthened and the scope of internal audit is widened.

12. FINANCIAL AND OPERATIONAL PERFORMANCE:

Sales: Company’s operating income for the year ended 30th June 2014 was ` 483.47 Crores as against ` 1233.10 Crores in the previous year marking an decrease of about 50.99%.

Depreciation: Depreciation / Amortisation was at ` 29.15 Crores as compared to previous year was at ` 36.52 Crores.

PBT and PAT: Profit before tax during the year under review was lower at ` 17.85 Crores as against ` 115.71 Crores in the previous year. Profit after tax was lower at `17.18 Crores as against `93.74 Crores in the previous year.

Earning per Share/Book Value Per Share: Earning per Share for the year under review was ` 8.37 as basic and on diluted basis per share as against ` 45.64 as basic and on diluted basis per share in the previous year.

Book value per Share was ` 304.60 as on 30th June 2014 as against ` 320.64 as on 30th June 2013.

Net Worth: Net Worth of the Company as on 30th June 2014 was `625.56 Crores as against `658.50 Crores as on 30th June 2013 which has reduced by `32.94 Crores as compared to that on 30th June 2013.

WEBSITE OF THE COMPANY:

The Company’s website address is http/www.elderindia.com and the quarterly un-audited financial statements and shareholding distribution are uploaded on the website on a regular basis. The website has a separate section for the investors through which they can reach the Company for redressing their complaints/grievances, if any.

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27

DeclarationAs per Clause 49 of Listing Agreement with Stock Exchanges, this is to confirm that all Board Members and Senior Management personnel have affirmed compliance with Code of Conduct of the Company for the Financial Year 2013-14.

For and on behalf of the Board

Alok Jagdish Saxena

Mumbai, 14th November, 2014 Managing Director & CEO

To The Members of

ELDER PHARMACEUTICALS LIMITED

We have examined the compliance of conditions of Corporate Governance by Elder Pharmaceuticals Limited (the Company) for the period ended on 30th June 2013 as stipulated in Clause 49 of the Listing Agreement of the said Company with the stock exchanges.

The Compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of 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, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement.

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

For S S KHANDELWAL & CO.Chartered Accountants

(Firm Registration No:105064W)

(S S KHANDELWAL)(Proprietor)

Membership No.31487

Mumbai, 27th August, 2014

Certificate on Corporate Governance

Financials

31st annual report 2013-14

29

Independent Auditors’ ReportTo the Members ofElder Pharmaceuticals LimitedReport on the Financial StatementsWe have audited the accompanying fi nancial statements of Elder Pharmaceuticals Limited (“the Company”) which comprise the Balance Sheet as at 30th June, 2014, and the Statement of Profi t and Loss and the Cash Flow Statement for the year ended on that date, and a summary of signifi cant accounting policies and other explanatory notes.Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and presentation of fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ow of the Company in accordance with applicable Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act 1956 (“the Act”) read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the designing, implementing and maintenance of internal control relevant to the preparation and presentation of fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.Auditors’ ResponsibilityOur responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with Standards on Auditing issued by the Institute of Chartered Accountants of India. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the fi nancial statements.We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our modifi ed audit opinion.Basis for Qualifi ed Opinion1. Fixed Assets Some of the company’s Plant & Machineries acquired/installed have not been put to use and some have been operational for a

small fraction of the installed capacity. Further, Capital work-in-progress-being carried forward as such since previous year’s, are yet to be capitalized and put to use. On such assets, the company has not provided for impairment loss.

Non provision of impairment loss is a departure from AS-28 “Impairment of Assets” as prescribed under the Act. Management has neither provided a Technical Evaluation Report nor a Valuation Report in order to arrive at the fair value and, consequently, quantifying the possible impairment loss on these assets could not be arrived.

2. Long Term Loans & Advancesi) Writing off Trade Advances and Other Advances Pursuant to the authorization of resolution passed by the Board of Directors, the Company has written off Trade Advances

` 17,624.04 lacs and other advances ` 85,532.10 lacs, made to various parties on current account either during the year or in earlier fi nancial years. We have been informed that there were no stipulations for repayments thereof.

The reasons for writing off, details to ascertain fi nancial capability of these parties and confi rmation/details of these accounts were not made available to us. Also, we have not been provided any information and documentary evidence in respect of actions initiated by the company for recovery of these advances.

ii) Capital Advances, Trade Advances and Other Advances: As regards to Capital Advances ` 3,041.00 lacs, Trade Advances ` 3,625.57 lacs and Other Advances (net) paid for Brand

Building Payments ` 7,850.00 lacs, documentation/confi rmation as also reconciliation, if any, were not made available to us for our verifi cation and examination.

3. Trade Receivables Pursuant to the Resolution passed by the Board of Directors, the Company has written off during the year Trade Receivables

aggregating to ` 32,270.76 lacs since the same has not been acquired by Torrent Pharmaceuticals Limited (Refer Note No. 29). The company has stated that Trade Receivables pertaining to products transferred to Torrent Pharmaceuticals Limited cannot be recovered.

We have neither been provided confi rmation to verify the balance of such accounts nor actions initiated by the company for recovery of such Trade Receivables.

4. Legal suits As informed, various legal suits have been fi led against the Company under various Acts and Statutes applicable to the Company,

the same are being contested by the Company at various foras. The outcome of such suits and their impact on the affairs of the Company were not made available/explained to us.

Emphasis of MatterWithout qualifying our report, we draw attention to the following points:1. We draw attention to Note No. 40 of the Notes annexed to and forming part of the fi nancial statements stating that the fi nancial

statements are being prepared on a going concern basis, notwithstanding the fact that the Company has sold and transferred its branded domestic formulations business in India and Nepal to Torrent Pharmaceuticals Limited on a slump sale basis. There are major liabilities outstanding towards vendors, statutory dues and payment to fi xed deposit holders and non-convertible debenture

30

holders. These events cast signifi cant doubt on the ability of the Company to continue as a going concern. The appropriateness of the said basis is interalia dependent on the Company’s ability to streamline its operations as well as infusing requisite fi nance to meet its short term and long term fi nancial obligations and other statutory liabilities.

The Company mentions that the proceeds of such sale and transfer were used to repay fi nancial obligations of banks/institutions. Further, for details of exceptional items and working thereof, refer Note No. 29.

2. We draw your attention to Note No. 29 of the Notes annexed to and forming part of the fi nancial statements. With a view to reducing the debts of the Company, the Board of Directors of the Company had approved the proposal to restructure the Company’s business involving either raising of capital, hiving off of assets or other strategic options and had appointed advisors for the purpose. The Company had offered for sale on slump sale basis its business of sale, marketing and distribution of the products of Team A-2 and Team B – Gynae through sales force or otherwise, in India and Nepal (excluding exports from India and Nepal) which included amongst others, intellectual property, current assets, specifi ed liabilities, employees, data and records, third party manufacturing contracts, C & F agreements, etc. as a going concern and a defi nitive Business Transfer Agreement was signed with Torrent Pharmaceuticals Limited, Ahmedabad, on 13 December 2013 for a total consideration of ` 200,400.00 lacs. The said slump sale transaction was consummated and closed on 29 June 2014.

3. Balances under Trade Receivables, Inter-division balances, Loans & Advances in several cases as also in case of a few Bank Accounts have not been reconciled / confi rmed and consequently reconciliation / adjustments, if any, required upon such confi rmation are not ascertainable. (Refer Note No. 33)

4. The company provides gratuity benefi t to its employees as per AS 15 “Employee Benefi ts”. Based on actuarial valuation as at March 31, 2014, the Company was having plan assets of ` 965.58 lacs against the actuarial liability of ` 1,293.94 lacs. (Refer to Note No. 37).

Our opinion is not qualifi ed in respect of these matters.OpinionIn our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the Basis for Qualifi ed Opinion paragraph and Emphasis of Matter paragraph, the fi nancial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:I. In the case of Balance Sheet, of the state of affairs of the Company as at 30th June, 2014;II. In the case of Statement of Profi t and Loss, of the Profi t of the Company for the year ended on that date; andIII. In the case of Cash Flow Statement, of the cash fl ows of the Company for the year ended on that date.Report on Other Legal and Regulatory Requirements1) As required by the Companies (Auditors’ Report) Order, 2003 (“the Order”) issued by the Central Government of India in terms

of sub-section (4A) of the section 227 of the Act, we give in the Annexure a statement on the matters specifi ed in paragraphs 4 and 5 of the said order.

2) As required by section 227 (3) of the Act, we report that:a) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the

purposes of our audit;b) 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;c) the Balance Sheet, the Statement of Profi t and Loss and the Cash Flow Statement referred to in this report are in agreement

with the books of account;d) in our opinion, the Balance Sheet, the Statement of Profi t and Loss and the Cash Flow Statement comply with the Accounting

Standards referred to in sub-section (3C) of Section 211 of the Companies Act 1956 read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013;

e) in absence of written representation from the Directors as on 30th June, 2014, we could not ascertain whether any of the Director is disqualifi ed as on 30th June, 2014 from being appointed as director in terms of Clause (g) of sub- section (1) of section 274 of the Act.

Other Matters1. The company has not deposited or invested a sum not less than 15% of the amount of debentures maturing during the year

ending on the 31st day of March next following in one or more of the methods as specifi ed in clarifi cation issued by Ministry of Corporate Affairs vide circular no. 04/2013 dated 11/02/2013 regarding Debenture Redemption Reserve

2. Pursuant to the authorization of resolution passed by the Board of Directors, the Company has excluded inventories aggregating to ` 9,575.92 lacs from the closing stock during the year. The company has stated that Inventories pertaining to products transferred which were not acquired by Torrent Pharmaceuticals Limited, are to be destroyed and cannot be carried forward in closing stock.

Our opinion is not qualifi ed in respect of these matters. For S.S.KHANDELWAL & CO.

Chartered Accountants (Firm Registration No.105064W)

S.S. Khandelwal Proprietor

Membership No. 031487Mumbai, 27 August, 2014

31st annual report 2013-14

31

Annexure to the Independent Auditors’ Report(Referred to paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)

Based on the audit procedures performed for the purpose of reporting a true and fair view on the fi nancial statements of the Company and taking in to consideration, the information and explanations given to us during the course of audit, we report that:I. a) The Company has maintained proper records to show full particulars, including quantitative details and situation of fi xed

assets. b) As explained to us, some of the fi xed assets of the Company have been physically verifi ed by the management during the

year in accordance with a phased program of verifi cation designed to cover all the fi xed assets over a period of three years, which in our opinion, is reasonable having regard to the size of the Company and nature of its assets. The discrepancies noticed on such physical verifi cation were not material and have been properly dealt with in the books of account.

c) The fi xed assets disposed off during the year were not substantial and therefore do not affect the going concern status of the Company.

II. a) As explained to us, the inventories have been physically verifi ed by the management at regular intervals during the year. The intervals at which the inventories have been verifi ed are, in our opinion, reasonable in relation to the size of the Company and nature of its business.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verifi cation of inventories followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business.

c) The Company has maintained proper records of inventories. As explained to us, there was no material discrepancies noticed on physical verifi cation of inventory.

III. In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, fi rms or parties covered in the register maintained under section 301 of the Companies Act, 1956;a) The Company has granted unsecured loans to a wholly owned subsidiary and a joint venture company covered in the

register maintained under section 301 of the Companies Act, 1956. In respect of the said loans the maximum amount outstanding at any time during the year is ` 21,542.57 lacs and the year- end balance is ` 21,542.57 lacs.

The Company has also given interest free advance to related parties covered in the register maintained under section 301 of the Companies Act, 1956. In respect of the said loans the maximum amount outstanding at any time during the year is ` 8,426.87 lacs and the year-end balance is ` 8,095.47 lacs. The loans also include ` 1,123.48 lacs due from a company for more than three years whose net worth is negative.

b) As per the information and explanations given to us, the terms and conditions of such loan given to the subsidiary and the joint venture company covered in the register maintained under section 301 of the Companies Act, 1956 are prejudicial to the interest of the company since these loans do not have any provision for interest payment.

c) As per the information and explanations given to us, the principal amounts of the said loans are repayable on demand and there is no repayment schedule.

d) According to the information and explanations given to us the Company has not taken loans from the parties listed in the register maintained under section 301 of the Companies Act. 1956.

IV. According to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of inventory, fi xed assets and for the sale of goods and services.

V. a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and according to the information and explanations given to us, transactions made in pursuance to such contracts or arrangements are specialized in nature and comparable prices are not always determinable and the price is charged are prima facie reasonable.

VI. In our opinion and according to the information and explanations given to us, the Company has accepted the deposit from the public to which the directives issued by the Reserve bank of India, provisions of sections 58A and 58AA of the Companies Act, 1956 and the Companies [Acceptance of Deposits] Rules, 1975 are applicable.

However, the Company has not complied with the provisions of Section 58A of the Companies Act, 1956 and the Companies [Acceptance of Deposits] Rules, 1975 in relation to the following issues:a. The company has defaulted in repayment of public deposits or part thereof and interest thereupon.b. The Company has not kept required liquid assets with scheduled bank in respect of public deposit maturing on or before

30.06.2014 as per Rule 3A of Companies [Acceptance of Deposit] Rules, 1975.c. The Company Law Board, Mumbai Bench (CLB), vide its order dated March 29, 2014, has directed to the Company to

pay principal and interest by 30.04.2014 due to 12 depositors who have made an application under section 58A (9) of the Companies Act, 1956 and to fi le an affi davit of compliance of the same order with the CLB by 01.05.2014.

The CLB again vide its order dated July 11, 2014, has directed to the Company to pay principal and/or interest to senior citizens by August 10,2014 and to other depositors by September 9, 2014. The CLB has directed the Company to fi le an affi davit by 15.09.2014 for compliance of the said order.

d. The company has also borrowed short term funds from non-corporate entities.

32

VII. The Company has an internal audit system which needs to be strengthened commensurate with the size and the nature of its business.

VIII. The Central Government has prescribed maintenance of Cost Records under Section 209(1)(d) of the Companies Act, 1956 in respect of certain manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection and are of the opinion, that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the same. The cost audit report was also not available for our verifi cation.

IX. a) As per information and explanations given to us, the Company has been irregular in depositing the undisputed statutory dues including Provident Fund, Income tax, sales tax, Service Tax and Employees State Insurance with the appropriate authorities and there has been serious delay in many cases.

The following undisputed statutory dues were outstanding as on 30th June 2014 for a period of more than six months from the date they become payable:

Sr. No

Name of the Statute Nature of the Dues Financial Year

Amount(`)

Payment made up to the date of Auditor’s Report

1 Income Tax Act, 1961 TDS on SalariesTDS on OthersDividend distribution tax

*2013-14*2013-142011-12

3,87,02,800/-1,16,96,009/-

99,94,521/-

Not paid

2 Professional Tax Act, 1975 Profession Tax 2012-13*2013-14

4,08,925/-13,76,355/-

Not paid

3 Employees’ State Insurance Act, 1948 Employees’ State Insurance Fund

2012-13*2013-14

2,654/-3,83,451/-

Not paid

4 The Finance Act, 1994 Service Tax 2012-13*2013-14

19,35,990/-11,42,320/-

Not paid

* Figures for fi nancial year 2013-2014 are in respect of period upto December 31, 2013.b) According to the information and explanations given to us, the dues in respect of Income tax, sales tax, custom duty,

excise duty and service tax that has not been deposited with the appropriate authorities on account of dispute and the forum where the disputes are pending as on 30th June, 2014 are as given below:

Sr. No.

Name of the statute

Nature of dues Period to which the amount relates

Forum where the dispute is pending

Amount (` in Lacs)

1 Income Tax Block assessment dues Block period 1.4.95 to 18.9.2001

High court, Mumbai 216.53

2 Income Tax Assessment dues Assessment Year 2002 - 2003

High court, Mumbai 23.66

3 Income Tax Assessment dues Assessment Year 2008 - 2009

Commissioner of Income Tax

28.39

4 Service tax Reversal ratio of service tax attributable for manufacture of exempted goods under rule 6(5) of CENVAT Credit Rules (CCR)

September 06 to March 2012

Commissioner Service tax, Belapur

461.32

5 Service tax The opening balance lying with Input Service Distributor (ISD) as on 1.4.2012 is not to be considered while distributing the credit by ISD to Nerul unit. The earlier Show Cause Notice (SCN) Sept 2006 to March 2012 is adjudicated on eligibility of each unit on the basis of turnover of each unit during the year and the credit lying with ISD has no relevance.

April 2012 to March 2013

Commissioner Service tax, Belapur

107.07

6 Service tax Service Tax payable on reverse charge method.

October 06 to March 2011

Commissioner (Appeal)

40.01

7 Service tax CENVAT availed on improper documents. 2009-10,2011-12 Commissioner (Appeal)

2.68

8 Service tax Rebate claim sanctioned, received but reviewed by Excise Dept and disputed that one of the document is not in the name of the exporter.

2012-13 Joint secretary to Govt of India, Ministry of Finance.

0.98

9 Service tax Protective demand in continuation to earlier SCN

April 2013 to Sept 2013

Additional Commissioner of Central Excise Belapur

22.25

10 Service tax ISD credit April 2007 to Mar 2008, April 2010 to March 2011

Additional Commissioner of Central Excise Belapur

5.23

31st annual report 2013-14

33

X. The Company has no accumulated losses and has not incurred any cash losses during the fi nancial year covered by our audit or in the immediately preceding fi nancial year.

XI. According to information and explanations given to us and based on the documents and records produced before us, the Company has defaulted in repayment of principal dues to debenture holders amounting to ` 4,042.69 lacs as at the balance sheet date.

XII. In our opinion and according to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

XIII. In our opinion and according to the information and explanations given to us, the nature of activities of the company does not attract any special statute applicable to chit fund and nidhi/ mutual benefi t fund/ society

XIV. As per information and explanation given to us, the Company is not dealing or trading in shares, securities and other investments.XV. According to the information and explanations given to us and the records examined by us, the terms and conditions of the

guarantee given by the company for loans taken by others from a bank are not prejudicial to the interest of the company.XVI. To the best of our knowledge and belief and according to the information and explanation given to us by the management the

term loans availed by the Company were, prima facie, applied by the Company during the year for the purpose for which the loans were obtained.

XVII. According to the Cash Flow statement and other records examined by us and the information and explanations given to us, on overall basis, funds raised on short term basis, have prima facie, not been used during the year for long term investments.

XVIII. The company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the companies act, 1956.

XIX. As per information and explanation given to us and based on records examined by us the company has created charge in respect of debentures.

XX. To the best of our knowledge and belief and according to the information and explanation given to us, the company has not raised any money through a public issue during the year.

XXI. In our opinion and according to the information and explanations given to us, read with para 2 of Basis of Qualifi ed Opinion, no fraud on or by the Company has been noticed or reported during the year, which causes the fi nancial statements to be materially misstated.

For S.S.KHANDELWAL & CO. Chartered Accountants

(Firm Registration No.105064W)

S.S. Khandelwal Proprietor

Membership No. 031487Mumbai, 27 August, 2014

34

(` in Lacs)

NoteNo.

As At30th June, 2014

As At30th June, 2013

(I) EQUITY AND LIABILITIES(1) Shareholders’ Funds(a) Share Capital 2 2,056.66 2,056.66(b) Reserves and Surplus 3 76,502.62 75,726.46(2) Non-current Liabilities(a) Long-term Borrowings 4 34,910.26 57,363.47(b) Long-term Provisions 5 1,459.57 1,654.78(3) Current Liabilities(a) Short-term Borrowings 6 19,553.58 39,862.84(b) Trade Payables 7 3,382.52 6,805.74(c) Other Current Liabilities 8 33,857.73 34,420.54(d) Short-term Provisions 9 21,854.22 2,932.72

TOTAL 193,577.16 220,823.21

(II) ASSETS(1) Non-current Assets(a) Fixed Assets:

Tangible Assets 10 43,490.65 47,355.88 Intangible Assets 10 - 1,067.12 Capital Work-in-Progress 10 30,426.24 26,836.17

(b) Non-current Investments 11 246.27 251.27(c) Deferred Tax Assets (net) 12 2.85 69.97(d) Long-term Loans and Advances 13 47,280.74 75,419.73(2) Current Assets(a) Current Investments 14 127.00 138.50(b) Inventories 15 2,789.73 15,925.97(c) Trade Receivables 16 8,446.73 32,836.91(d) Cash and Cash Equivalents 17 53,838.60 8,783.49(e) Short-term Loans and Advances 18 3,076.54 8,804.76(f) Other Current Assets 19 3,851.81 3,333.44

TOTAL 193,577.16 220,823.21

Signifi cant Accounting Policies 1The accompanying notes 1 to 48 are an integral part of the fi nancial statements.

Balance Sheet as at 30th June, 2014

As per our report of even date

For S S Khandelwal & Co.,Chartered Accountants(Firm Registration No:105064W)

Alok Jagdish SaxenaManaging Director & CEO

Yusuf Karim KhanExecutive Director

(S S Khandelwal)(Proprietor)Membership No. 031487

Suresh V PaiChief Financial Offi cer

Vijendra JainCompany Secretary

Mumbai, 27th August, 2014

31st annual report 2013-14

35

As per our report of even date

For S S Khandelwal & Co.,Chartered Accountants(Firm Registration No:105064W)

Alok Jagdish SaxenaManaging Director & CEO

Yusuf Karim KhanExecutive Director

(S S Khandelwal)(Proprietor)Membership No. 031487

Suresh V PaiChief Financial Offi cer

Vijendra JainCompany Secretary

Mumbai, 27th August, 2014

(` in Lacs)

NoteNo.

Year Ended30th June, 2014

Year Ended30th June, 2013

INCOME

(I) Revenue from Operations 20 48,347.42 123,309.66

(II) Other Income 21 1,513.24 2,621.76

(III) TOTAL REVENUE ( I + II ) 49,860.66 125,931.42

(IV) EXPENSES

Cost of Materials Consumed 22 4,884.40 12,247.05

Purchases of Stock in Trade 23 13,182.44 39,346.17

Changes (Increase) in Inventories of Finished goods, work-in-progress and stock-in-trade

24 12,768.37 5,715.91

Employee Benefi ts Expense 25 11,238.82 15,143.29

Finance Costs 26 26,006.44 13,797.34

Depreciation and Amortisation Expense 10 2,915.77 3,652.09

Other Expenses 27 14,648.63 23,222.33

R & D Expenditure 28 434.86 728.05

TOTAL EXPENSES 86,079.73 113,852.23

(V) PROFIT/(LOSS) BEFORE EXCEPTIONAL ITEMS AND TAX (III - IV) (36,219.07) 12,079.19

(VI) Exceptional Item (Net) 29 38,004.43 508.77

(VII) PROFIT BEFORE TAX (V + VI) 1,785.36 11,570.42

(VIII) Less: Tax Expense

Current Tax - 2,450.00

Deferred Tax 67.13 (253.34)

Tax for earlier years 925.97 -

(IX) PROFIT FOR THE PERIOD (VII - VIII) 792.26 9,373.76

(X) Basic and Diluted EPS (Face Value `10/-) 8.37 45.64

Statement of Profi t and Loss for the year ended 30th June, 2014

36

(` in Lacs)

2 0 1 3 - 2 0 1 4 2 0 1 2 - 2 0 1 3(A) CASH FLOW FROM OPERATING ACTIVITIES

Net Profi t before tax & extraordinary items (36,219.07) 12,079.19Add: Adjustment for

Depreciation 2,915.77 3,652.09(Profi t)/Loss on Sale of Fixed Assets 1,258.78 0.61Finance costs 26,006.44 13,797.34Dividend Received (30.94) (81.18)Interest Received (994.90) (2,086.34)Extraordinary Items 38,004.43 (508.77)Other income (291.03) (346.08)

66,868.55 14,427.67 Operating Profi t before working capital changes 30,649.48 26,506.86 Working capital changes

Adjustments for (Increase)/decrease in operating assets:Inventories 13,136.24 6,199.10Trade Receivable 24,390.18 (4,389.63)Short-term Loans & Advances 5,728.22 (4,489.00)Long-term Loans & Advances 28,138.99 (45,972.84)Other Current Assets (518.37) (1,139.55)Adjustments for Increase/(decrease) in operating liabilities:Trade payable (3,423.22) 2,423.10 Other current liabilities (562.81) 18,218.86 Short-term provision 18,921.50 1,673.39 Long-term provision (195.21) 226.74

85,615.52 (27,249.83)CASH GENERATED FROM OPERATIONS 116,265.00 (742.97)Tax Paid - (2,450.00)Income Tax for earlier year (925.97) -Net Cash Flow from Operating Activities - (A) 115,339.03 (3,192.97)

(B) CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (2,871.70) (9,059.37)Sale of Fixed Assets 39.41 9.63Sale/(Purchase) of Current Investments 11.50 1,681.50Sale of Non-current Investment 5.00 38.04Interest Received 994.90 2,086.34Dividend Received 30.94 81.18Other income 291.03 346.08

Net Cash Used in Investing Activities - (B) (1,498.92) (4,816.60)

Cash Flow Statement for the year ended 30th June, 2014

31st annual report 2013-14

37

2 0 1 3 - 2 0 1 4 2 0 1 2 - 2 0 1 3(C) CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from Long Term Borrowings (22,453.21) 14,966.05Net increase/(decrease) in working capital borrowings (21,842.49) 1,927.50Proceeds from other Short Term Borrowings 1,533.23 2,245.52Foreign Currency Translation Reserve (85.41) (490.76)Hedging 69.32 (275.49)Finance costs (26,006.44) (13,797.34)Dividend Paid - (616.11)Tax on distributed Dividend - (99.95)

Net Cash fl ow from Financing Activities - (C) (68,785.00) 3,859.42 Net Increase / (Decrease) in Cash and Cash Equivalents - (A+B+C)

45,055.11 (4,150.15)

Add: Cash and Cash Equivalents at the beginning of the Year 8,783.49 12,933.64Cash and Cash Equivalents at the end of the Year 53,838.60 8,783.49

Cash Flow Statement for the year ended 30th June, 2014

As per our report of even date

For S S Khandelwal & Co.,Chartered Accountants(Firm Registration No:105064W)

Alok Jagdish SaxenaManaging Director & CEO

Yusuf Karim KhanExecutive Director

(S S Khandelwal)(Proprietor)Membership No. 031487

Suresh V PaiChief Financial Offi cer

Vijendra JainCompany Secretary

Mumbai, 27th August, 2014

38

Notes Annexed to and forming part of the Financial Statementsfor the year ended 30th June, 2014NOTE 1

SIGNIFICANT ACCOUNTING POLICIES:

i. Basis of Accounting Policies:

The fi nancial statements have been prepared under the historical cost convention on accrual basis in accordance with the Companies (Accounting Standards) Rules, 2006 issued under sub-section (3C) of section 211 of the Companies Act, 1956.

The Company has sold and transferred its branded domestic formulations business in India and Nepal to Torrent Pharmaceuticals Limited on a slump sale basis. The proceed of sale and transfer was primarily utilised to repay fi nancial obligations to banks/institutions. The Company has major liabilities towards vendors, statutory dues, payment to fi xed deposit holders and non-convertible debenture holders. Although these events or conditions may cast signifi cant doubt on the Company’s ability to continue as a going concern, it has detailed plans to strengthen its business operations. The Company is negotiating with the banks to infuse additional fi nance to streamline its operations. Based on the detailed evaluation of the current situation, plans formulated and active discussions underway, the management is confi dent of raising adequate fi nance, rescheduling debt and receiving continued support from the parties. The Company has got strong and adequate fi xed assets capital base to raise additional resources and funds.

Therefore, the management holds the view that the Company will realize its assets and discharge liabilities in the normal course of business. Accordingly, the fi nancial statements have been prepared on the basis that the Company is a going concern and that no adjustments are required to the carrying value of assets and liabilities

ii. Use of Estimates:

The preparation of fi nancial statements requires the Management of the company to make estimates and assumptions that affect the reported balance of Assets & Liabilities, revenue and expenses and disclosures relating to the contingent liabilities. The management believes that the estimates used in preparation of the fi nancial statements are prudent and reasonable. Future events could differ from these estimates. Any revision of accounting estimates is recognised prospectively in the current and future periods.

iii. Fixed Assets:

Fixed Assets are stated at their original cost of acquisition or construction including incidental expenses related to acquisition and installation of the concerned assets.

When an asset is scrapped or otherwise disposed of, the cost and related depreciation are removed from the books of account and resultant profi t or loss, if any, is refl ected in the Profi t and Loss Account.

iv. Depreciation:

Depreciation on fi xed assets is provided on straight line method as per Section 205 (2) (b) of the Companies Act, 1956 at the rates and in the manner prescribed under Schedule XIV to the said Act.

The softwares are an integral part of hardware and accordingly considered part of computers.

v. Investments:

Long term investments are stated at cost. Diminution in value, if any, which is of a temporary nature, is not provided for.

vi. Intangible Assets:

Intangible Assets are initially measured at cost and amortized so as to refl ect the pattern in which the assets’ economic benefi ts are consumed.

Expenditure on acquiring trade marks is being amortized over a period of fi ve years.

vii. Inventories:

a) Inventories comprise all costs of purchase, conversion and other costs incurred in bringing the inventories to their present location and condition.

31st annual report 2013-14

39

b) Raw Materials, Stores & Spare Parts, Packing Materials, Finished Goods and Work-in-Progress are valued at lower of cost and net realisable value.

c) Cost (net of input tax credit availed) of Raw Materials, Stores & Spare Parts, Packing Materials & Finished Goods is determined on FIFO basis.

d) Cost of Finished Goods and Work-in-Progress is determined by taking raw material/packing material cost (net of input tax credit availed), labour and relevant appropriate overheads.

viii. Foreign currency transactions:

Transactions in foreign currencies are normally recorded at the exchange rate prevailing on the date on which the transactions occur.

Outstanding balances of foreign currency monetary items are reported using the year end rates. Non-monetary items carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rate that existed when the values were determined.

Exchange differences arising as a result of the above are recognised as income or expense, as the case may be, in the profi t and loss account.

In respect of forward contract, the premium or discount on these contracts is recognized as income or expenditure, as the case may be, over the period of the contracts. Any profi t or loss arising on cancellation or renewal of such contracts is recognized as income or expense of the year.

ix. Derivatives Instruments and Hedge Accounting:

The Company is exposed to foreign currency fl uctuation on foreign currency assets and forecasted cash fl ows denominated in foreign currency. The Company limits the effects of foreign exchange rate fl uctuations by following established risk management policies including the use of derivatives. The Company enters into forward exchange and option contracts, where the counter party is a bank. The forward contracts or options are not used for trading or speculation purposes.

In case of forward contract, the difference between the forward rate and the exchange rate, being the premium or discount at the inception of a forward exchange contract is recognised as income/expense over the life of the contract. Exchange differences on such contracts are recognised in the profi t and loss account in the reporting period in which the rates change. Any profi t or loss arising on cancellation or renewal of forward exchange contract is recognised as income or expense for the period.

To designate a forward contract or option as an effective hedge, management objectively evaluates and evidences with appropriate supporting documents at the inception of each contract whether the contract is effective in achieving offsetting cash fl ows, attributable to the hedged risk. To the extent, hedges are designated effective, neither gain nor loss is recognised in the profi t and loss account.

x. Foreign operations :

The fi nancial statements of integral foreign operations are translated as if the transactions of the foreign operations have been those of the Company itself.

In translating the fi nancial statements of a non-integral foreign operation for incorporation in the fi nancial statements, the assets and liabilities, both monetary and non-monetary, of the non-integral foreign operation are translated at the closing rate; income and expense items of the non-integral foreign operation are translated at average exchange rate prevailing during the year and all resulting exchange differences are accumulated in a foreign currency translation reserve until the disposal of the net investment.

On the disposal of the non-integral foreign operation, the cumulative amount of the exchange difference which has been deferred and which relate to the operation are recognised as income or expense in the same period in which the gain or loss on disposal is recognised.

When there is a change in the classifi cation of a foreign operation, the transaction procedures applicable to the revised classifi cation are applied from the date of the change in classifi cation.

40

xi. Sales:

Revenue from sales of goods is being recognized on accrual basis on transfer of ownership to the customers. The sales are stated net of trade discounts, excise duty, sales returns and sales taxes.

Revenue from rendering of services is recognized on completion of service.

xii. Export Benefi ts / Incentives :

Benefi ts on account of entitlement of export incentives are recognized as and when the right to receive the same is established.

xiii. Leases :

Lease rentals are accounted on accrual basis in accordance with the terms of respective lease agreements.

xiv. Research and Development :

Revenue expenditure incurred on Research and Development is charged to Profi t & Loss Account in the year it is incurred.

Capital expenditure is included in the respective heads under fi xed assets.

xv. Retirement Benefi ts :

a). Contributions to the Provident Fund are made at a pre-determined rate and charged to the Profi t & Loss Account.

b). Liability towards Gratuity and Leave Encashment is provided on the basis of actuarial determination. Liability towards Superannuation is provided in accordance with the scheme administered by Life Insurance Corporation of India.

xvi. Borrowing Costs :

Borrowing costs directly attributable to the acquisition or construction of an asset are capitalized as part of the cost of that asset, up to the date such assets are ready for their intended use.

Other borrowing/ fi nancing costs are charged to the Profi t & Loss Account.

xvii. Taxation:

Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the provisions of local Income tax as applicable to the fi nancial year.

Deferred income tax refl ect the impact of current year timing differences between taxable income and accounting income of the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted at the Balance Sheet date.

In case where the tax assessments have been completed but the appeals are pending at various appeal fora, the tax payments have been set-off against the provisions in the Balance Sheet. Appropriate disclosures have been made towards contingent liabilities, if any

xviii. Provisions and Contingent Liabilities:

A provision is recognized when the Company has a present obligation as a result of a past event. it is probable that an outfl ow of resources will be required to settle the obligation, in respect of which reliable estimates can be made.

Provisions are not discounted to its present value and are determined based on best estimates required to settle the obligation at the Balance Sheet date.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outfl ow of resources. Where there is a possible or present obligation in respect of which the likelihood of outfl ow of resources is remote, no provision or disclosure is required.

31st annual report 2013-14

41

NOTE 2(` in Lacs)

As At30th June, 2014

As At30th June, 2013

SHARE CAPITAL(i) AUTHORISED

3,00,00,000 (Previous Year : 3,00,00,000) 3,000.00 3,000.00Equity Shares of `10/- each .

3,000.00 3,000.00

(ii) ISSUED2,05,96,486 (Previous Year : 2,05,96,486) Equity Shares of `10/- each 2,059.65 2,059.65

(iii) SUBSCRIBED AND PAID-UP2,05,36,936 (Previous Year : 2,05,36,936) 2,053.69 2,053.69Equity Shares of `10/- each fully paid up.Add : Forfeiture of Shares:59,550 Shares forfeited, amount paid-up 2.97 2.97` 5/- per Share.

2,056.66 2,056.66

(a) Reconciliation of the shares outstanding at the beginning and at the end of the reporting period.As at 30th June, 2014 As at 30th June, 2013

No ` in Lacs No ` in LacsAt the beginning of the period 20,536,936 2,053.69 20,536,936 2,053.69Outstanding at the end of the period 20,536,936 2,053.69 20,536,936 2,053.69

(b) Rights, preferences, and restrictions attached to Equity shares

The Company has only one class of Equity shares having par value of `10/- each. Each holder of Equity share is entitled to one vote per share.

The Company pays dividend to Equity share holders in Indian rupees. In the event of the liquidation of the Company, the holders of Equity shares will be entitled to receive remaining assets of the Company. The distribution will be in proportion to the number of Equity shares held by the shareholders.

(c) The details of shareholders holding more than 5% shares:Name of shareholder As at 30th June, 2014 As at 30th June, 2013

No. of shares

% holding No. of shares

% holding

1 Indart Exports Private Limited 1,550,684 7.55 2,493,647 12.142 Semit Pharmaceuticals & Chemicals Private Limited 1,554,802 7.57 1,567,593 7.633 Acraf S.P.A. 2,619,000 12.75 2,619,000 12.754 Citicorp International Financial Corporation 1,730,000 8.42 1,730,000 8.425 Development Credit Bank Limited 1,233,791 6.01 - -

As per records of the Company, including its register of shareholders / members and other declarations received from shareholders regarding benefi cial interest the above shareholding represent both legal and benefi cial ownerships of the shares.

Notes forming part of the Financial Statementsfor the year ended 30th June, 2014

42

NOTE 3(` in Lacs)

As At30th June, 2014

As At30th June, 2013

RESERVES AND SURPLUSSECURITY PREMIUM RESERVEOpening Balance 25,074.56 25,074.56Add : Addition/Adjustment during the year - -Closing balance (A) 25,074.56 25,074.56HEDGING RESERVEOpening Balance (69.31) 206.18Add : Addition/Adjustment during the year 69.31 (275.49)Closing balance (B) - (69.31)DEBENTURE REDEMPTION RESERVEOpening Balance 12,000.00 8,000.00Add : Transfer from surplus balance in the statement of Profi t & Loss 4,000.00 4,000.00Closing balance (C) 16,000.00 12,000.00FOREIGN CURRENCY TRANSLATION RESERVEOpening Balance (1,059.19) (568.43)Add : Addition/Adjustment during the year (85.41) (490.76)Closing Balance (D) (1,144.60) (1,059.19)GENERAL RESERVE Opening Balance 18,118.51 15,118.51Add : Transfer from surplus balance in the statement of Profi t & Loss 3,000.00 3,000.00Closing balance (E) 21,118.51 18,118.51SURPLUS IN THE STATEMENT OF PROFIT AND LOSSOpening Balance 21,661.89 19,288.13Add : Profi t for the year 792.26 9,373.76

22,454.15 28,661.89Less: Appropriationsi) Transfer to General Reserve 3,000.00 3,000.00ii) Transfer to Debenture Redemption Reserve 4,000.00 4,000.00

7,000.00 7,000.00Closing Balance (F) 15,454.15 21,661.89

Total (A+B+C+D+E+F) 76,502.62 75,726.46

31st annual report 2013-14

43

NOTE 4(` in Lacs)

As At30th June, 2014

As At30th June, 2013

LONG-TERM BORROWINGS(I) SECURED BORROWINGS(A) Non-convertible Debenture 18,780.00 25,438.00

18,780.00 25,438.00

a) Loan against 10.75%,11.25% & 12.50% Non-convertible debentures aggregating to ` 11880 lacs,` 7300 lacs & ` 7000 lacs respectively are secured by fi rst pari-passu charge on all fi xed assets of the Company along with all the existing charge holders against term loans.

b) The non-convertible debentures are to be redeemed as follows:- Financial year 2014-15 ` 5305.00 lacs, Financial year 2015-16 ` 6180.00 lacs, Financial year 2016-17 ` 3210.00 lacs, Financial year 2017-18 ` 3210.00 lacs, Financial year 2018-19 ` 875.00 lacs,

(B) Term Loans1 From Banks - 19,838.462 From others - 1,529.31

- 21,367.77(C) Foreign currency loans 6,758.68 8,928.90

(D) Others 24.63 36.57

Vehicle loan is secured against vehicle acquired under the scheme repayable as follows:-Financial year 2014-15 `11.89 lacs,Financial year 2015-16 `12.74 lacs.TOTAL E = (A + B + C + D) 25,563.31 55,771.24Less: CURRENT MATURITIES (F) 5,316.89 16,611.22TOTAL (I) = (E - F) 20,246.42 39,160.02

(II) UNSECURED BORROWINGSFixed Deposits 13,232.24 16,766.85Trade Deposits 1,431.60 1,436.60TOTAL (II) 14,663.84 18,203.45TOTAL (I + II) 34,910.26 57,363.47

44

NOTE 5 (` in Lacs)As At

30th June, 2014As At

30th June, 2013LONG-TERM PROVISIONSProvision for leave benefi ts 165.63 383.50Provision for Gratuity 1,293.94 1,271.28

1,459.57 1,654.78

NOTE 6As At

30th June, 2014As At

30th June, 2013SHORT-TERM BORROWINGS(I) SECURED BORROWINGS Working capital loans from banks repayable on demand 2,224.83 24,067.32

2,224.83 24,067.32

(Working capital loans are secured by First pari-passu Charge by way of hypothecation of Raw & Packing Materials, Finished Goods, stocks-in-trade and Book Debts and second pari passu charge over entire Fixed Assets of the company and also personally guaranteed by two of the Directors.)

(II) UNSECURED BORROWINGS From Banks - 12,266.58 From Others Parties 17,328.75 3,528.94

17,328.75 15,795.52TOTAL (I+II) 19,553.58 39,862.84

NOTE 7As At

30th June, 2014As At

30th June, 2013TRADE PAYABLESDues to Micro, Small & Medium enterprises # 380.43 415.10Others 3,002.09 6,390.64

TOTAL 3,382.52 6,805.74

# Details have been determined to the extent such parties have been identifi ed on the basis of information available with the Company and relied upon by the auditors.

NOTE 8As At

30th June, 2014As At

30th June, 2013OTHER CURRENT LIABILITIESCurrent maturities of long term debts 5,316.89 16,611.22Interest accrued and due on borrowings 3,391.71 1,754.96Unpaid matured deposit and interest accrued thereon 1,105.91 -Unpaid Matured debentures and interest accrued thereon 4,619.67 -Unclaimed dividends 24.22 30.38Statutory remittances 1,972.01 2,837.58Creditors for capital items 268.72 560.85Interest accrued and due on Non-convertible Debentures 2,141.99 1,464.93Advances from customers 7.99 1,098.09Temporary overdrawn from banks 1,717.72 1,743.13Others 13,290.90 8,319.40

TOTAL 33,857.73 34,420.54

31st annual report 2013-14

45

NOTE 9 (` in Lacs)

As At30th June, 2014

As At30th June, 2013

SHORT-TERM PROVISIONSProvision for Taxation 21,518.21 2,559.60Provision for Leave benefi ts 236.06 273.17Other Provisions: Tax on proposed Dividend 99.95 99.95

TOTAL 21,854.22 2,932.72

NOTE 10

FIXED ASSETS(` in Lacs)

Description of Assets Gross Block Depreciation / Amortisation Net Block

Cost as at01.07.2013

Additions Adjustment Cost as at30.06.2014

Upto30.06.2013

Adjustment For thePeriod

Upto30.06.2014

As At30.06.2014

As At30.06.2013

A Tangible

Land-Freehold 2,377.96 - - 2,377.96 - - - - 2,377.96 2,377.96

Land-Leasehold 256.18 - - 256.18 42.79 - 3.33 46.12 210.06 213.39

Buildings 20,526.44 230.34 - 20,756.78 3,152.92 - 652.30 3,805.22 16,951.56 17,373.52

R&D-Building 79.40 - - 79.40 13.96 - 2.65 16.61 62.79 65.44

Plant & Machinery 36,322.71 51.58 (3,347.78) 33,026.51 10,569.58 (2,052.48) 2,029.55 10,546.65 22,479.86 25,753.13

R&D-Plant & Machinery 514.17 0.60 - 514.77 186.81 - 25.93 212.74 302.03 327.36

Furniture & Fixtures 2,312.53 66.25 (3.90) 2,374.88 1,347.45 (2.50) 149.02 1,493.97 880.91 965.08

R&D-Furniture & Fixtures 107.37 - - 107.37 45.26 - 6.80 52.06 55.31 62.11

Motor Vehicles 507.44 (21.36) 486.08 289.55 (19.83) 46.19 315.91 170.17 217.89

Total 63,004.20 348.77 (3,373.04) 59,979.93 15,648.32 (2,074.81) 2,915.77 16,489.28 43,490.65 47,355.88

B Intangible

Technical Know-How * 1,293.17 - (1,293.17) 0.00 226.05 (226.05) - - 1,067.12

Total 64,297.37 348.77 (4,666.21) 59,979.93 15,874.37 (2,300.86) 2,915.77 16,489.28 43,490.65 48,423.00

Previous Year 63,006.95 1,324.05 (33.63) 64,297.37 12,245.69 (23.41) 3,652.09 15,874.28 48,423.09 50,761.26

C Capital Work -In-Progress** 30,426.17 26,836.17

**Includes `3418.61 Lacs being advance given for setting-up plant on turn-key basis.

46

NOTE 11

NON CURRENT INVESTMENTS(At Cost, Fully paid, Other than Trade) (` in Lacs)

Nature ofInvestment

Face Value `

Numbers ValueAs at

30th June, 2014As at

30th June, 2013As at

30th June, 2014As at

30th June, 2013(A) Investment In

Subsidiary Companies:Elder International FZCO, Dubai, U.A.E.

Equity Shares 100000 DHS

5 5 62.41 62.41

(B) Investment In Joint Venture:Elder Universal Pharmaceuticals (Nepal) P Ltd

Equity Shares 10 500,000 500,000 50.00 50.00

(C) Unquoted:Maharashtra Apex Corp. Limited

Non-Convt. Debenture

1000 25 25 0.21 0.21

Bombay Mercantile Co-op.Bank Limited

Equity Shares 30 533 533 0.16 0.16

Elder Instruments Private Limited

Equity Shares 10 765,000 765,000 76.50 76.50

The Saraswat Co-operative Bank Limited

Equity Shares 10 2,500 2,500 0.25 0.25

VTC Industries Limited Equity Shares 10 10,000 10,000 2.10 2.10The Kalyan Janata Sahakari Bank Limited

Equity Shares 25 - 20,000 - 5.00

(D) Quoted:Elder Projects Limited Equity Shares 10 300,200 300,200 22.52 22.52Elder Health Care Limited Equity Shares 10 321,200 321,200 32.12 32.12

Total 246.27 251.27

Aggregate Value of Investment 30th June, 2014 30th June, 2013Market Value Book Value Market Value Book Value

Quoted 376.96 54.64 240.51 54.64Unquoted - 191.63 - 196.63

(` in Lacs)NOTE 12

As at30th June, 2014

As at30th June, 2013

DEFERRED TAX ASSETS ( NET )A Deferred Tax Liabilityi Depreciation 1,333.18 1,424.52B Less : Deferred Tax Asseti Leave encashment 76.77 262.52ii Others 1,259.26 1,231.97

1,336.03 1,494.49Deferred Tax Asset / (Liability) (Net) ( A - B ) 2.85 69.97

31st annual report 2013-14

47

NOTE 13(` in Lacs)

As At30th June, 2014

As At30th June, 2013

LONG-TERM LOANS AND ADVANCES(Unsecured, Considered Good)Capital Advances 3,220.44 113.44Security Deposits 416.05 359.44Loans and Advances to related parties 7,965.74 1,123.48Advances to Subsidiary 21,520.41 11,287.94Trade Advances 4,413.87 25,678.56Others 9,744.23 36,856.87

47,280.74 75,419.73

NOTE 14

CURRENT INVESTMENTSIn Mutual Funds (Other than Trade) (` in Lacs)

NAME OF MUTUAL FUND UNITAS AT 1stJULY, 2013

UNITPURCHASE2013-2014

UNITREDEEMED2013-2014

UNITAS AT 30thJUNE, 2014

VALUEAS AT 30thJUNE, 2014

VALUEAS AT 30thJUNE, 2013

UTI Infrastructure Growth Fund 50,925.37 - - 50,925.37 5.00 5.00

UTI Infrastructure -DDP Fund 22,353.25 - - 22,353.25 20.00 20.00

HDFC AMC-PMS-REAL ESTATE PORTFOLIO-I - - - - 100.00 100.00

DSP Black Rock Top 100 Eq-Growth 2,914.52 - 2,914.52 - - 3.00

HDFC Balance Fund Growth 4,168.10 - 4,168.10 - - 2.50

Franklin India Flexi Cap Fund Growth 9,327.18 664.67 9,991.85 - - 3.00

BNP Paribas Dividend Yield Fund Growth 15,839.20 - 15,839.20 - - 3.00

CANARA Robeco Equity Diversifi ed Regular Growth

1,629.99 - - 1,629.99 1.00 1.00

CANARA Robeco Balance-Regular Growth 1,438.44 - - 1,438.44 1.00 1.00

TOTAL 127.00 138.50

NOTE 15(` in Lacs)

As At30th June, 2014

As At30th June, 2013

INVENTORIES(At cost, as taken, valued and certifi ed by the management)i) Raw Materials 881.27 1,376.45ii) Packing Materials 346.84 207.92iii) Work-in-Process 174.79 1,971.81iv) Finished Goods 171.02 8,645.38v) Stocks-in-trade 1,177.55 3,674.54vi) Stores and Spares 38.26 49.87

TOTAL 2,789.73 15,925.97

48

NOTE 16 (` in Lacs)

As At 30th June, 2014 As At 30th June, 2013TRADE RECEIVABLES(Unsecured, Considered Good unless stated otherwise)More than six months 939.48 2,245.78Doubtful 116.35 116.35

1,055.83 2,362.13LESS: Provision For Doubtful Debts 116.35 116.35

939.48 2,245.78Others Receivables 7,507.25 30,591.13

TOTAL 8,446.73 32,836.91

NOTE 17As At

30th June, 2014As At

30th June, 2013CASH AND CASH EQUIVALENTSCash on hand 34.82 52.81Cheques, Drafts on hand 0.70 -Balances with Banks: In Current Accounts 2,346.69 6,148.80 In Escrow Accounts 40,478.15 - In Deposits with original maturity for less then 12 months 9,364.08 1,223.93 In Unpaid Dividend Accounts 25.20 31.37Other Bank Balances: In Deposits with original maturity for more then 12 months - 500.00 In Deposits held as Margin Money 1,588.96 826.58

TOTAL 53,838.60 8,783.49

NOTE 18As At

30th June, 2014As At

30th June, 2013SHORT-TERM LOANS AND ADVANCES(Unsecured, Considered Good)Loans and Advances to employees 714.65 771.53Prepaid Expenses 51.47 50.60Balance with Government Authoritiesi) CENVAT credit receivable 370.20 382.22ii) Service Tax credit receivable 197.68 274.38Advances to Sundry Creditors 1,742.54 7,326.03

TOTAL 3,076.54 8,804.76

NOTE 19As At

30th June, 2014As At

30th June, 2013OTHER CURRENT ASSETS(Unsecured, Considered Good)Interest Accrued on Deposits 3,248.17 2,677.85Duty Drawback Receivable 28.84 29.74License and Other Recoverable 574.80 625.85

TOTAL 3,851.81 3,333.44

31st annual report 2013-14

49

NOTE 20(` in Lacs)

Year Ended30th June, 2014

Year Ended30th June, 2013

REVENUE FROM OPERATIONSSale of products (Refer note 20.i.) 48,481.44 124,203.57Less: Excise Duty 411.32 48070.12 1,210.94 122992.63Sale of Services (Refer note 20.ii.) 277.30 317.03

Total 48,347.42 123,309.66

20. i. Details of products sold: Formulation & Bulk Drugs 47,970.32 122,741.33 Others 511.12 1,462.25

Total 48,481.44 124,203.58

ii. Sale of Services consists of export incentives and services arising from other ancillary activities.

NOTE 21(` in Lacs)

Year Ended30th June, 2014

Year Ended30th June, 2013

OTHER INCOMEInterest: From Bank Deposits 206.60 413.32 From Others 788.30 994.90 1,673.02 2086.34Dividend: From Current Investments 30.81 77.54 From Long Term Investments 0.13 30.94 3.64 81.18Profi t & Loss on Sale Of Share - 106.27Sundry Balances Written back 196.37 1.89Miscellaneous Income 291.03 346.08

Total 1513.24 2621.76

NOTE 22(` in Lacs)

Year Ended30th June, 2014

Year Ended30th June, 2013

COST OF MATERIALSInventory at the beginning of the year 1,376.45 1,878.94Add: Purchases 4,389.22 11,744.56

5,765.67 13,623.50Less: Inventory at the end of the year 881.27 1,376.45 Cost of Materials consumed Total 4884.40 12247.05

Notes forming part of the Financial Statements for the year ended 30th June, 2014

50

NOTE 23(` in Lacs)

Year Ended30th June, 2014

Year Ended30th June, 2013

PURCHASES OF STOCKS-IN-TRADEPurchases of Stocks-in-Trade 13182.44 39346.17

Total 13182.44 39346.17

NOTE 24(` in Lacs)

Year Ended30th June, 2014

Year Ended30th June, 2013

CHANGE IN INVENTORIES(A) Inventory at the end of the year Work-in-process 174.79 1,971.81 Finished Goods 171.02 8,645.38 Stock-in-trade 1,177.55 3,674.54

1,523.36 14,291.73(B) Inventory at the beginning of the year Work-in-process 1,971.81 2,984.62 Finished Goods 8,645.38 10,131.33 Stock-in-trade 3,674.54 6,891.69

14,291.73 20,007.64Change in Inventory ( A - B ) 12,768.37 5,715.91

NOTE 25(` in Lacs)

Year Ended30th June, 2014

Year Ended30th June, 2013

EMPLOYEE BENEFITS EXPENSESSalaries and Wages 10436.83 13882.02Contribution To Provident and Other Funds 518.00 742.51Staff Welfare Expenses 283.99 518.76

Total 11238.82 15143.29

NOTE 26(` in Lacs)

Year Ended30th June, 2014

Year Ended30th June, 2013

FINANCE COSTSInterest Expenses 22,902.73 11,384.93Borrowing Costs 3,103.71 2,412.41

Total 26006.44 13797.34

31st annual report 2013-14

51

NOTE 27(` in Lacs)

Year Ended30th June, 2014

Year Ended30th June, 2013

OTHER EXPENSESRent 371.78 537.91Rates and Taxes 521.68 709.96Power and Fuel 699.62 1109.00Spares & Tools 101.52 173.31Packing materials 1476.00 1038.27Manufacturing charges 366.39 1073.75Repairs and Maintenance: To Building 4.38 28.82 To Machinery 46.49 99.85 To Others 129.46 180.33 257.14 385.81Insurance 63.30 143.34Travelling and Conveyance 2450.04 6000.30Printing and Stationery 85.14 184.00Selling Expenses 1983.78 6111.93Sales Discount 1208.79 1561.33Communication 462.37 448.82Packing, Freight and Forwarding 389.15 827.61Vehicles Maintenance 159.93 225.12Payment to Auditors:

Audit Fees 23.60 21.00 Certifi cation & Quarterly review 16.05 12.97 Taxation matters 11.24 2.80 Other management Services 8.43 0.23 Reimbursement of Expenses 0.17 59.49 0.85 37.85

Legal and Professional charges 780.72 1077.90 Donation 9.87 10.20Director’s Sitting Fees 12.00 13.68Loss on Sale of Assets 2323.74 0.64Provision for doubtful debts - 2.32Miscellaneous 942.99 1549.28

Total 14648.63 23222.33

NOTE 28(` in Lacs)

Year Ended30th June, 2014

Year Ended30th June, 2013

R & D EXPENDITURER & D Chemicals & Expenses 25.44 101.18Power & Fuel 7.35 16.07Salaries, Wages and Allowances 373.16 556.98Contribution to Provident and other funds 16.35 24.17Staff Welfare 10.41 24.34Miscellaneous Expenses 2.15 5.31

Total 434.86 728.05

52

29. Exceptional Item:(` in Lacs)

Year ended 30th June, 2014

Year ended 30th June, 2013

Purchase Consideration of its branded domestic formulations business in India and Nepal sold and transferred to Torrent Pharmaceuticals Limited on Slump Sale basis :

200,400 -

WORKING CAPITAL ADJUSTMENTS :-Normal Working Capital (4,400) -Actual Net Working Capital 179 (4,221) -Net Purchase Consideration 196,179 -LESS:Slump sale Advisory Expenses 2,747 -Tax 20,000 22,747 -

Net of Tax 173,432 -Less :Loss on Sale of Advances 103,156 Sundry Debtors Written off 32,271 135,427

Total 38,005 -Exchange Loss - 509 Net Exceptional Items 38,005 509

30. Earnings Per Share

Year ended 30th June, 2014

Year ended 30th June, 2013

Profi t attributable to equity shareholders (` in lacs) 1,718.23 9,373.90Weighted average number of equity shares 20,536,936 20,536,936Diluted Weighted average number of equity shares 20,536,936 20,536,936Nominal value of equity share ( in `) 10/- 10/-

Basic and Diluted EPS ( in `) 8.37 45.64

31. CONTINGENT LIABILITIES AND COMMITMENTS(` in Lacs)

As at30th June, 2014

As at30th June, 2013

(I) Contingent Liabilities a) Letters of Credit 2,015.82 405.09 b) Bank Guarantees 182.04 305.37 c) Corporate Guarantees to Subsidiary 12,432.00 19,473.75 d) Disputed liability in respect of : i) Income tax * 268.58 268.58 ii) Sales tax 29.19 - iii) Service Tax 639.54 717.51 * Includes demand of ` 216.53/- lacs decided in favour of the Company

but disputed by Income-tax Department.(II) Claim against the Company not acknowledged as debts a) Interest on Unsecured Loan 578.99 - b) Other - 224.00(III) Commitments a) Estimated amount of contracts remaining to be executed on Capital

Account and not provided for.548.58 386.45

31st annual report 2013-14

53

32. The Consolidated Financial Statements present the consolidated accounts of Elder Pharmaceuticals Limited with its following Subsidiaries.

Name of Subsidiaries Country of Incorporation Proporation of ownership interest for the period year ended

30th June, 2014 30th June, 2013Direct SubsidiaryElder International FZCO United Arab Emirates 100.00% 100.00%Indirect Subsidiary1) Neutra Health Limited United Kingdom 100.00% 100.00%2) Elder Biomeda EAD Bulgaria 100.00% 100.00%

33. The balance in respect of trade receivable, inter-division balances, bank balances in few cases and loans & advances are subject to reconciliation/confi rmations by the respective parties.

34. With a view to reducing the debts of the Company, the board of directors has approved the proposal to restructure the Company’s business involving either raising of capital, hiving off assets or other strategic options and have appointed advisers for this purpose. The advisers have commenced due diligence of the Company’s operations. No strategy has yet been fi nalized. The slump sales transaction with Torrent Pharmaceuticals Limited was completed & consummated on 29th June,2014.

35. Some lenders have fi led legal cases against the Company, its directors and other offi cers under section 138 of the Negotiable Instruments Act 1981. In some cases winding up petition under section 433 and 434 of the Companies Act 1956 has also been fi led. The Company in some cases has made part payments and settlement negotiations are initiated in other cases.

36. Some of the Non-convertible Debenture Holders have preferred legal action against the Company for non-payment of Principle and interest thereon.

37. Disclosure as per Accounting Standard 15 (Revised) “Employee Benefi ts” as notifi ed by the Companies (Accounting Standard) Rules, 2006.

a) Defi ned Contribution Plan

Contribution to defi ned contribution plans are recognized as an expense for the year are as under:-(` in Lacs)

2013 - 14 2012 - 13Employer’s contribution to Provident Fund and Pension Fund 479.47 718.81

The Company makes contribution towards Provident Fund and Pension Fund for qualifying employees to the Regional Provident Fund Commissioner.

b) Defi ned Benefi t Plan

The Company provides gratuity benefi ts to its employees which is defi ned benefi t plan. The present value of obligation is determined based on the actuarial valuation which recognizes each period of service as giving rise to additional unit employee benefi t entitlement and measures each unit separately to build up fi nal obligations.

(` in Lacs)

Change in the benefi t obligation Year ended 30th June, 2014

Year ended 30th June, 2013

Projected Benefi t Obligation (PBO) at the beginning of the year 1,271.28 1,141.58Service cost 113.05 107.67Interest cost 101.70 91.33Benefi ts paid (121.58) (105.94)Actuarial loss/(gain) (70.52) 36.64PBO at the end of the year 1,293.94 1,271.28

54

Change in the benefi t obligation Year ended 30th June, 2014

Year ended 30th June, 2013

Change in plan assetsFair value of plan assets at the beginning of the year 990.40 948.63Expected return on plan assets 82.75 86.99Employer contributions 14.01 60.72Benefi ts paid (121.58) (105.94)Actuarial gain/(loss) - -Fair value of plan assets at the end of year 965.58 990.40Present value of unfunded obligation 328.36 280.88Recognized liability 328.36 280.88Net gratuity cost for the year ended is as followsService cost 113.05 107.67Interest cost 101.70 91.33Expected return on plan assets (82.75) (86.99)Actuarial loss/(gain) (70.52) 36.64Net gratuity cost 61.48 148.65

The actuarial calculations used to estimate defi ned benefi t commitments and expenses are based on the following assumptions which if changed, would affect the defi ned benefi t commitment’s size, funding requirements.

Particulars Gratuity GratuityDiscount Rate 8.00% 8.00%Salary Increase for different categories of employees 5.00% 5.00%

The Company has funded its gratuity obligation under group gratuity policy managed by the Life Insurance Corporation of India.

The disclosure stated above have been obtained from an independent actuary.

38. DUES TO MICRO, SMALL & MEDIUM ENTERPRISES

Micro, Small and Medium enterprises have been identifi ed by the Company on the basis of the information available. Total outstanding dues of Micro and Small enterprises, which are outstanding for more than the stipulated period are given below :-

(` in Lacs)

30th June, 2014 30th June, 2013

a) Dues remaining unpaid at the year ended

Principal 380.43 415.10

Interest - -

b) Interest paid in terms of section 16 of the Act - -

c) Amount of interest due and payable for the period of delay on payments made beyond the appointed day during the year.

- -

d) Amount of interest accrued and remaining unpaid as at - -

e) Further interest due and payable even in the succeeding years, until such date when the interest due as above are actually paid to the small enterprises.

- -

31st annual report 2013-14

55

39. Segment Information

The company is primarily engaged and deals in pharmaceuticals & related products, which in the context of Accounting Standard-17, is the only business segment and has been identifi ed as the primary reporting segment. Accordingly, the information appearing in these fi nancial statements relate to the aforesaid primary reporting segment.

Secondary segmental reporting is performed on the basis of the geographical locations of customers. The geographical segments considered for disclosure are based on the revenue within India (including sales to customers located in India and service income accrued in India) and revenues outside India (sales to customers located outside India).

(` in Lacs)

Segment India Outside India Total

Year ended Year ended Year ended

30.06.14 30.06.13 30.06.14 30.06.13 30.06.14 30.06.13

Segment Revenue 45,259.24 120,412.32 3,222.19 3,791.26 48,481.43 124,203.58

Segment Assets** 6,887.22 32,324.97 779.59 511.94 8,446.73 32,836.91

** Segment Assets represent amount due from customers only.

40 “The Company has sold and transferred its branded domestic formulations business in India and Nepal to Torrent Pharmaceuticals Limited on a slump sale basis. The proceed of sale and transfer was primarily utilised to repay fi nancial obligations to banks/institutions. The Company has major liabilities towards vendors, statutory dues, payment to fi xed deposit holders and non-convertible debenture holders. Although these events or conditions may cast signifi cant doubt on the Company’s ability to continue as a going concern, it has detailed plans to strengthen its business operations. The Company is negotiating with the banks to infuse additional fi nance to streamline its operations. Based on the detailed evaluation of the current situation, plans formulated and active discussions underway, the management is confi dent of raising adequate fi nance, rescheduling debt and receiving continued support from the parties. The Company has got strong and adequate fi xed assets capital base to raise additional resources and funds.

Therefore, the management holds the view that the Company will realize its assets and discharge liabilities in the normal course of business. Accordingly, the fi nancial statements have been prepared on the basis that the Company is a going concern and that no adjustments are required to the carrying value of assets and liabilities.”

41 Advances to sundry creditors under short term loans and advances includes ` 851.59 Lacs advances to related parties on current account/trade advance.

42. Related Party Disclosures

Related party disclosures, as required by AS-18, “Related Party Disclosures” are given below :

(I) Names of the related parties and description of relationship:

A) Related parties where control exists i) Subsidiaries Elder International FZCO Dubai, UAE ii) Associates/ Joint Venture Elder Universal Pharmaceuticals (Nepal) Private Limited

B) Enterprises over which key management Elder Health Care Limited. personnel and their relatives are able to Elder Projects Limited. exercise signifi cant infl uence Elder Instruments Private Limited. Maveer Prints Private Limited E W F Pharmaceuticals Private Limited. Redle Pharmaceuticals Private Limited Akshaya Holdings Private Limited. Anjay Prints Ansul Printers

C) Key Management Personnel Mr. Alok Jagdish Saxena and their Relatives Mr. Yusuf Karim Khan Mrs. Shalini Kumar

Note: Related party relationship is as identifi ed by the company and relied upon by the auditors.

56

(II) The following transactions were carried out with the related parties in the ordinary course of business.

(1) Details relating to parties referred to (B) above :(` in Lacs)

Particulars Year ended30th June, 2014

Year ended30th June, 2013

1 Purchase of materials / fi nished goods. 1884.56 6627.092 Sale of materials / fi nished goods. 8.48 300.523 Expenses charged to other companies. 11.33 46.684 Expenses charged by other companies. 180.99 1745.925 Advances on Current Account 851.59 6006.996 Outstanding Payables 158.13 62.247 Loans and Advances Given 7965.74 1123.488 Advances to subsidiary/ Joint Venture 21542.57 11310.10

(2) Details relating to persons referred to in item (C) above:(` in Lacs)

Particulars Year ended30th June, 2014

Year ended30th June, 2013

Remuneration /Others 358.24 835.86

43. BRAKE UP OF MATERIALS & CONSUMABLE STORES CONSUMED(` in Lacs)

2013 -14 2012 -13

AMOUNT % AMOUNT %

a) Materials

Imported 819.41 16.78 2,851.58 23.28

Indigenous 4,064.99 83.22 9,395.47 76.72

4,884.40 100.00 12,247.05 100.00

b) Consumable stores & spares

Imported - - - -

Indigenous 101.52 100.00 173.31 100.00

TOTAL 4,985.92 100.00 12,420.36 100.00

44. LOANS & ADVANCES IN THE NATURE OF LOANS GIVEN TO SUBSIDIARY & JOINT VENTURE(` in Lacs)

Particulars 2013-14 2012-13

a) Elder International FZCO 21,520.41 11,287.94

(Maximum balance due during the year ` 21520.41 lacs; Previous Year `11287.94 lacs)

b) Elder Universal Pharmaceuticals (Nepal) Private Limited 22.16 22.16

(Maximum balance due during the year ` 22.16 lacs; Previous Year `22.16 lacs)

Notes : Loans & advances shown above are in the nature of loans which are repayable on demand and do not have any repayment schedule.

31st annual report 2013-14

57

45. Value of Import on CIF basis

(` in Lacs)

Year ended30th June, 2014

Year ended30th June, 2013

a) Raw Materials/Finished goods 431.03 2,335.30

b) Finished goods - 569.24

Total 431.03 2,904.54

46. Expenditure in Foreign currency

(` in Lacs)

Year ended30th June, 2014

Year ended30th June, 2013

- Travelling 33.94 50.22

- Interest 656.25 583.13

- Others 131.48 71.73

Total 821.67 705.08

47. Earning in Foreign Exchange

(` in Lacs)

Year ended30th June, 2014

Year ended30th June, 2013

Export of Goods on FOB basis 3,065.89 3,176.95

48. The accounts for current fi nancial year are for a period of fi fteen months as compared to twelve months accounting period for previous year and hence to that extent the fi gures are not comparable.

As per our report of even date

For S S Khandelwal & Co.,Chartered Accountants(Firm Registration No:105064W)

Alok Jagdish SaxenaManaging Director & CEO

Yusuf Karim KhanExecutive Director

(S S Khandelwal)(Proprietor)Membership No. 031487

Suresh V PaiChief Financial Offi cer

Vijendra JainCompany Secretary

Mumbai, 27th August, 2014

58

(` in Lacs)

Name of the Subsidiary Reporting Currency

Capital Reserves & Surplus

Total Assets

Total Liabilities

Details ofInvestments(excluding investments in subsidiaries)

Gross Turnover

PBT Provision of tax

PAT Proposed Dividend

Direct SubsidiaryElder International FZCO AED 81.73 (1,907.78) 29,568.71 31,394.77 - 148.24 (747.75) - (747.75) -

Indirect Subsidiary1) Nutrahealth Ltd. GBP 18,197.86 4,109.59 42,262.53 19,955.07 - 44,842.39 437.12 264.32 172.80 -

2) Elder Biomeda EAD BGN 5,042.70 (5,307.44) 5,107.83 5,372.57 - 8,696.56 (880.37) - (880.37) -

*The financial statements of the Foreign Subsidiaries have been converted into Indian rupee as at 30th June 2014 exchange rate.

Detail of Subsidiaries

31st annual report 2013-14

59

Independent Auditors’ Report On Consolidated Financial Statements

TO THE BOARD OF DIRECTORS OFELDER PHARMACEUTICALS LIMITEDWe have audited the accompanying consolidated fi nancial statements of ELDER PHARMACEUTICALS LIMITED (the “Company”) and its subsidiaries (the Company and its subsidiaries constitute the “Group”), which comprise the Consolidated Balance Sheet as at 30th June, 2014, the Consolidated Statement of Profi t and Loss and the Consolidated Cash Flow Statement for the year ended on that date, and a summary of the signifi cant accounting policies and other explanatory information.Management’s Responsibility for the Consolidated Financial StatementsThe Company’s Management is responsible for the preparation of these consolidated fi nancial statements that give a true and fair view of the consolidated fi nancial position, consolidated fi nancial performance and consolidated cash fl ows of the Group in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the consolidated fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.Auditors’ ResponsibilityOur responsibility is to express an opinion on these consolidated fi nancial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated fi nancial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the consolidated fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and presentation of the consolidated fi nancial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the consolidated fi nancial statements.We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our modifi ed audit opinion.Basis for Qualifi ed Opinion1. Fixed Assets Some of the company’s Plant & Machineries acquired/installed have not been put to use and some have been operational

for a small fraction of the installed capacity. Further, Capital work-in-progress-being carried forward as such since previous year’s, are yet to be capitalized and put to use. On such assets, the company has not provided for impairment loss.

Non provision of impairment loss is a departure from AS-28 “Impairment of Assets” as prescribed under the Act. Management has neither provided a Technical Evaluation Report nor a Valuation Report in order to arrive at the fair value and, consequently, quantifying the possible impairment loss on these assets could not be arrived.

2. Loans & Advancesi. Writing off Trade Advances and Other Advances: Pursuant to the authorization of resolution passed by the Board of Directors, the Company has written off Trade

Advances ` 17,624.04 lacs and other advances ` 85,532.10 lacs, made to various parties on current account either during the year or in earlier fi nancial years. We have been informed that there were no stipulations for repayments thereof.

The reasons for writing off, details to ascertain fi nancial capability of these parties and confi rmation/details of these accounts were not made available to us. Also, we have not been provided any information and documentary evidence in respect of actions initiated by the company for recovery of these advances.

ii. Capital Advances, Trade Advances and Other Advances: As regards to Capital Advances ` 3,041.00 lacs, Trade Advances ` 3,625.57 lacs and Other Advances (net) paid for

Brand Building Payments ` 7,850.00 lacs documentation/confi rmation as also reconciliation, if any, were not made available to us for our verifi cation and examination.

60

3. Trade Receivables Pursuant to the Resolution passed by the Board of Directors, the Company has written off during the year Trade Receivables

aggregating to ` 32,270.76 lacs since the same has not been acquired by Torrent Pharmaceuticals Limited (Refer Note No. 29). The company has stated that Trade Receivables pertaining to products transferred to Torrent Pharmaceuticals Limited cannot be recovered.

We have neither been provided confi rmation to verify the balance of such accounts nor actions initiated by the company for recovery of such Trade Receivables.

4. Legal suits As informed, various legal suits have been fi led against the Company under various Acts and statutes applicable to the

Company, the same are being contested by the Company at various foras. The outcome of such suits and their impact on the affairs of the Company were not made available/explained to us.

Emphasis of Matter1. We draw attention to Note No. 38 of the Notes annexed to and forming part of the fi nancial statements stating that the

same are being prepared on a going concern basis, notwithstanding the fact that the Company has sold and transferred its branded domestic formulations business in India and Nepal to Torrent Pharmaceuticals Limited on a slump sale basis. There are major liabilities outstanding towards vendors, statutory dues and payment to fi xed deposit holders and non-convertible debenture holders. These events cast signifi cant doubt on the ability of the Company to continue as a going concern. The appropriateness of the said basis is interalia dependent on the Company’s ability to streamline its operations as well as infusing requisite fi nance to meet its short term and long term fi nancial obligations and other statutory liabilities.

The Company mentions that the proceeds of such sale and transfer were used to repay fi nancial obligations of banks/institutions. Further, for details of exceptional items and working thereof, refer Note No. 29.

2. We draw your attention to Note No. 29 of the Notes annexed to and forming part of the fi nancial statements. With a view to reducing the debts of the Company the Board of Directors of the Company had approved the proposal to restructure the Company’s business involving either rising of capital, hiving off of assets or other strategic options and had appointed advisors for the purpose. The Company had offered for sale on slump sale basis its business of sale, marketing and distribution of the products of Team A-2 and Team B – Gynae through sales force or otherwise, in India and Nepal (excluding exports from India and Nepal) which included amongst others, intellectual property, current assets, specifi ed liabilities, employees, data and records, third party manufacturing contracts, C & F agreements, etc. as a going concern and a defi nitive Business Transfer Agreement was signed with Torrent Pharmaceuticals Limited, Ahmedabad, on 13 December 2013 for a total consideration of ` 200,400.00 lacs. The said slump sale transaction was consummated and closed on 29 June 2014.

3. Balances under Trade Receivables, Inter-division balances, Loans & Advances in several cases as also in case of a few Bank Accounts have not been reconciled / confi rmed and consequently reconciliation / adjustments, if any, required upon such confi rmation are not ascertainable. (Refer Note No. 33)

Our opinion is not qualifi ed in respect of these matters.OpinionIn our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the Basis for Qualifi ed Opinion paragraph and Emphasis of Matter paragraph, the fi nancial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:I. In the case of Balance Sheet, of the state of affairs of the Group as at 30th June, 2014;II. In the case of Statement of Profi t and Loss, of the Profi t of the Group for the year ended on that date; andIII. In the case of Cash Flow Statement, of the cash fl ows of the Group for the year ended on that date.Other Matter1. We did not audit the fi nancial statements / consolidated fi nancial statements / fi nancial information of the subsidiaries

(listed in Note 32 to the consolidated fi nancial statements), whose fi nancial statements / consolidated fi nancial statements / fi nancial information refl ect total assets of ̀ 47591.60 Lacs as at 31st March, 2014, total revenues of ̀ 53595.95 Lacs and net cash fl ows amounting to ` (738.09) Lacs for the year ended on that date, as considered in the consolidated fi nancial statements. These fi nancial statements / consolidated fi nancial statements / fi nancial information have been prepared by the Management as at 31st March, 2014 and our opinion, in so far as it relates to the amounts and disclosures included in respect of the subsidiaries, is based solely on the reports and details provided by the management.

31st annual report 2013-14

61

2. The company has not deposited or invested a sum not less than 15% of the amount of debentures maturing during the year ending on the 31st day of March next following in one or more of the methods as specifi ed in clarifi cation issued by Ministry of Corporate Affairs vide circular no. 04/2013 dated 11/02/2013 regarding Debenture Redemption Reserve

3. Pursuant to the authorization of resolution passed by the Board of Directors, the Company has excluded inventories aggregating to ` 9,575.92 lacs from the closing stock during the year. The company has stated that Inventories pertaining to products transferred which were not acquired by Torrent Pharmaceuticals Limited, are to be destroyed and cannot be carried forward in closing stock.

Our opinion is not qualifi ed in respect of these matters.For S. S. Khandelwal & Co.

Chartered Accountants(Firm Registration No. 105064W)

S. S. KhandelwalProprietor

Membership No. 031487Mumbai, 27th August, 2014

62

(` in Lacs)NOTE

No. As At As At

30th June, 2014 30th June, 2013 (I) EQUITY AND LIABILITIES (1) Shareholders' Funds

(a) Share Capital 2 2,056.66 2,056.66 (b) Reserves and Surplus 3 75,278.22 74,869.71

(2) Non-current liabilities (a) Long-term Borrowings 4 48,889.77 70,393.69 (b) Deferred Tax Liabilities (Net) 5 497.22 290.20 (c) Long-term Provisions 6 2,120.87 1,654.78

(3) Current liabilities (a) Short-term Borrowings 7 26,466.43 44,351.04 (b) Trade Payables 8 9,612.23 12,045.49 (c) Other current Liabilities 9 42,043.99 40,586.32 (d) Short-term Provisions 10 21,854.22 2,999.68

TOTAL 228,819.61 249,247.57 (II) ASSETS (1) Non-current Assets

(a) Fixed assets: Tangible Assets 11 48,728.55 50,629.31 Intangible Assets 11 21,970.71 18,430.54 Capital Work-in-Progress 11 30,538.27 27,252.81 (b) Non-Current Investments 12 183.86 188.86 (c) Long-Term Loans and Advances 13 34,998.25 64,832.80

(2) Current Assets (a) Current Investments 14 127.00 138.50 (b) Inventories 15 12,798.61 24,506.93 (c) Trade Receivables 16 16,567.65 39,814.79 (d) Cash and Cash Equivalents 17 54,661.01 10,343.99 (e) Short-term Loans and Advances 18 4,195.07 9,470.42 (f) Other Current Assets 19 4,050.63 3,638.62

TOTAL 228,819.61 249,247.57 Signifi cant Accounting Policies 1

The accompanying notes 1 to 41 are an integral part of the fi nancial statements.

As per our report of even date

For S S Khandelwal & Co.,Chartered Accountants(Firm Registration No:105064W)

Alok Jagdish SaxenaManaging Director & CEO

Yusuf Karim KhanExecutive Director

(S S Khandelwal)(Proprietor)Membership No. 031487

Suresh V PaiChief Financial Offi cer

Vijendra JainCompany Secretary

Mumbai, 27th August, 2014

Consolidated Balance Sheet as at 30th June 2014

31st annual report 2013-14

63

Consolidated Statement of Profi t and Loss For the period ended 30th June, 2014

(` in Lacs)NOTE

NO Year Ended

30th June, 2014 Year Ended

30th June, 2013 INCOME(I) Revenue from Operations 20 100,890.79 164,170.11 (II) Other Income 21 2,565.82 3,269.88 (III) TOTAL REVENUE ( I + II ) 103,456.61 167,439.99

(IV) EXPENSES Cost of Materials Consumed 22 5,281.40 12,583.26 Purchases of Stock-in-Trade 23 47,183.06 71,182.21

Changes(Increase) in Inventories of Finished goods, work-in-progress and stock in trade

24 11,826.98 (130.19)

Employee Benefi ts Expenses 25 21,790.12 23,308.64 Finance Costs 26 27,563.12 15,482.59 Depreciation and Amortisation Expense 3,612.55 4,407.57 Other Expenses 27 22,293.31 29,155.89 R & D Expenditure 28 434.86 736.26 TOTAL EXPENSES (IV) 139,985.40 156,726.23 (V) PROFIT / (LOSS) BEFORE EXCEPTIONAL ITEM AND TAX (III - IV) (36,528.79) 10,713.76

(VI) EXCEPTIONAL ITEM (NET) 29 37,127.33 283.03

(VII) PROFIT BEFORE TAX (V + VI) 598.54 10,430.73

(VIII) Less : Tax Expense Current Tax 195.24 2,516.96 Deferred Tax 130.42 (325.40) Tax for earlier years 925.97 -(IX) PROFIT / (LOSS) FOR THE YEAR (653.09) 8,239.17

(X) Basic and Diluted EPS (Face Value `10/-) 30 1.33 40.12

As per our report of even date

For S S Khandelwal & Co.,Chartered Accountants(Firm Registration No:105064W)

Alok Jagdish SaxenaManaging Director & CEO

Yusuf Karim KhanExecutive Director

(S S Khandelwal)(Proprietor)Membership No. 031487

Suresh V PaiChief Financial Offi cer

Vijendra JainCompany Secretary

Mumbai, 27th August, 2014

64

Consolidated Cash Flow Statement for the period ended 30th June, 2014

(` in Lacs)2 0 1 3 - 2 0 1 4 2 0 1 2 - 2 0 1 3

(A) CASH FLOW FROM OPERATING ACTIVITIES :Net Profi t before tax & extraordinary items (36,528.79) 10,713.76 Add Adjustment for

Depreciation 3,612.55 4,407.57 (Profi t)/Loss on Sale of Fixed Assets 1,258.78 0.61 Finance costs 27,563.12 15,482.59 Dividend Received (30.94) (81.18)Extraordinary Items (2,045.01) (2,516.97)Interest Received 37,127.33 (283.03)Other income (293.50) (561.94)

67,192.33 16,447.65 Operating Profi t before working capital changes 30,663.54 27,161.41 Working capital changesAdjustments for (Increase)/decrease in operating assets:

Inventories 11,708.32 4,785.84 Trade Receivable 23,247.14 (5,684.30)Short-term Loans & Advances 5,275.35 (4,486.51)Long-term Loans & Advances 29,834.55 (42,636.78)Other Current Assets (412.01) (1,444.73)

Adjustments for Increase/(decrease) in operating liabilities:

Trade payable (2,433.26) 3,248.39 Other current liabilities 1,457.67 21,265.83 Short-term provision 18,854.54 1,740.35 Long-term provision 466.09 226.74

87,998.39 (22,985.17)CASH GENERATED FROM OPERATIONS 118,661.93 4,176.24

Tax Paid (195.24) (2,516.96)Income tax for earlier year (925.97) -

Net Cash Flow from Operating Activities - (A) 117,540.72 1,659.28

(B) CASH FLOW FROM INVESTING ACTIVITIES :Purchase of Fixed Assets (8,030.58) (11,213.61)Sale of Fixed Assets 39.42 9.62 Current Investments 11.50 1,681.50 Non- current Investment 5.00 38.04 Interest Received: 2,045.01 2,516.97 Dividend Received 30.94 81.18 Other income 293.50 561.94

Net Cash Used in Investing Activities - (B) (5,605.21) (6,324.36)

31st annual report 2013-14

65

Consolidated Cash Flow Statement for the period ended 30th June, 2014

(` in Lacs)2 0 1 3 - 2 0 1 4 2 0 1 2 - 2 0 1 3

(C) CASH FLOW FROM FINANCING ACTIVITIES :Proceeds from Long Term Borrowings (21,503.92) 12,140.72 Net increase/(decrease) in working capital borrowings

(19,416.31) 2,618.86

Proceeds from other Short Term Borrowings 1,531.70 2,250.82 FOREIGN CURRENCY TRANSLATION RESERVE

(736.15) (927.27)

HEDGING 69.31 (275.49)Finance costs (27,563.12) (15,482.59)Dividend Paid - (616.11)Tax on distributed Dividend - (99.95)

Net Cash fl ow from Financing Activities - (C) (67,618.49) (391.01)

Net Cash fl ow after Financing Activities - (A+B+C) 44,317.02 (5,056.09)

Cash and Cash EquivalentsAdd: Opening Cash and Cash Equivalents 10,343.99 15,400.08

Closing Cash and Cash Equivalents 54,661.01 10,343.99

As per our report of even date

For S S Khandelwal & Co.,Chartered Accountants(Firm Registration No:105064W)

Alok Jagdish SaxenaManaging Director & CEO

Yusuf Karim KhanExecutive Director

(S S Khandelwal)(Proprietor)Membership No. 031487

Suresh V PaiChief Financial Offi cer

Vijendra JainCompany Secretary

Mumbai, 27th August, 2014

66

NOTE 1

SIGNIFICANT ACCOUNTING POLICIES

i. Principles of Consolidation:

a) The fi nancial statements of the Company and its subsidiary companies are combined on line - by - line basis by adding together the book values of like items of assets, liabilities, income and expenses after fully eliminating intra-group balances and intra-group transactions resulting in unrealised profi ts or losses in accordance with the Accounting Standards - AS (21) ‘Consolidated fi nancial statements’ as notifi ed by the Companies (Accounting Standards) Rules, 2006.

b) The Company has sold and transferred its branded domestic formulations business in India and Nepal to Torrent Pharmaceuticals Limited on a slump sale basis. The proceed of sale and transfer was primarily utilised to repay fi nancial obligations to banks/institutions. The Company has major liabilities towards vendors, statutory dues, payment to fi xed deposit holders and non-convertible debenture holders. Although these events or conditions may cast signifi cant doubt on the Company’s ability to continue as a going concern, it has detailed plans to strengthen its business operations. The Company is negotiating with the banks to infuse additional fi nance to streamline its operations. Based on the detailed evaluation of the current situation, plans formulated and active discussions underway, the management is confi dent of raising adequate fi nance, rescheduling debt and receiving continued support from the parties. The Company has got strong and adequate fi xed assets capital base to raise additional resources and funds.

Therefore, the management holds the view that the Company will realize its assets and discharge liabilities in the normal course of business. Accordingly, the fi nancial statements have been prepared on the basis that the Company is a going concern and that no adjustments are required to the carrying value of assets and liabilities

c) The difference between the cost of investments in subsidiaries, over the net assets at the time of acquisition of shares in the subsidiaries is recognised in the fi nancial statements as Goodwill.

d) As far as possible, the consolidated fi nancial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances and are presented in the same manner as the Company’s separate fi nancial statement.

e) Investments other than in subsidiaries have been accounted as per Accounting Standard - AS (13) ‘Accounting of Investments’.

ii. Basis of Accounting Policies:

The fi nancial statements have been prepared under the historical cost convention on accrual basis in accordance with the Companies (Accounting Standards) Rules, 2006 issued under sub-section (3C) of section 211 of the Companies Act, 1956.

iii. Use of Estimates:

The preparation of fi nancial statements requires the Management of the company to make estimates and assumptions that affect the reported balance of Assets & Liabilities, revenue and expenses and disclosures relating to the contingent liabilities. The management believes that the estimates used in preparation of the fi nancial statements are prudent and reasonable. Future events could differ from these estimates. Any revision of accounting estimates is recognised prospectively in the current and future periods.

iv. Fixed Assets:

Fixed Assets are stated at their original cost of acquisition or construction including incidental expenses related to acquisition and installation of the concerned assets.

When an asset is scrapped or otherwise disposed of, the cost and related depreciation are removed from the books of account and resultant profi t or loss, if any, is refl ected in the Profi t and Loss Account.

v. Depreciation:

Depreciation on fi xed assets is provided on straight line method as per Section 205 (2) (b) of the Companies Act, 1956 at the rates and in the manner prescribed under Schedule XIV to the said Act.

The softwares are an integral part of hardware and accordingly considered part of computers.

Notes Annexed to and forming part of the Financial Statements for the year ended 30th June, 2014

31st annual report 2013-14

67

vi. Investments: Long term investments are stated at cost. Diminution in value, if any, which is of a temporary nature, is not provided for.

vii. Intangible Assets: Intangible Assets are initially measured at cost and amortized so as to refl ect the pattern in which the assets’ economic

benefi ts are consumed.

Expenditure on acquiring trade marks is being amortized over a period of fi ve years.

viii. Inventories:a) Inventories comprise all costs of purchase, conversion and other costs incurred in bringing the inventories to their

present location and condition.

b) Raw Materials, Stores & Spare Parts, Packing Materials, Finished Goods and Work-in-Progress are valued at lower of cost and net realisable value.

c) Cost (net of input tax credit availed) of Raw Materials, Stores & Spare Parts, Packing Materials & Finished Goods is determined on FIFO basis.

d) Cost of Finished Goods and Work-in-Progress is determined by taking raw material/packing material cost (net of input tax credit availed), labour and relevant appropriate overheads.

ix. Foreign currency transactions: Transactions in foreign currencies are normally recorded at the exchange rate prevailing on the date on which the

transactions occur.

Outstanding balances of foreign currency monetary items are reported using the year end rates.

Non-monetary items carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rate that existed when the values were determined.

Exchange differences arising as a result of the above are recognised as income or expense, as the case may be, in the profi t and loss account.

In respect of forward contract, the premium or discount on these contracts is recognized as income or expenditure, as the case may be, over the period of the contracts. Any profi t or loss arising on cancellation or renewal of such contracts is recognized as income or expense of the year.

x. Derivatives Instruments and Hedge Accounting: The Company is exposed to foreign currency fl uctuation on foreign currency assets and forecasted cash fl ows denominated

in foreign currency. The Company limits the effects of foreign exchange rate fl uctuations by following established risk management policies including the use of derivatives. The Company enters into forward exchange and option contracts, where the counter party is a bank. The forward contracts or options are not used for trading or speculation purposes.

In case of forward contract, the difference between the forward rate and the exchange rate, being the premium or discount at the inception of a forward exchange contract is recognised as income/expense over the life of the contract.

Exchange differences on such contracts are recognised in the profi t and loss account in the reporting period in which the rates change. Any profi t or loss arising on cancellation or renewal of forward exchange contract is recognised as income or expense for the period.

To designate a forward contract or option as an effective hedge, management objectively evaluates and evidences with appropriate supporting documents at the inception of each contract whether the contract is effective in achieving offsetting cash fl ows, attributable to the hedged risk. To the extent, hedges are designated effective, neither gain nor loss is recognised in the profi t and loss account.

xi. Foreign operations : The fi nancial statements of integral foreign operations are translated as if the transactions of the foreign operations have

been those of the Company itself.

In translating the fi nancial statements of a non-integral foreign operation for incorporation in the fi nancial statements, the assets and liabilities, both monetary and non-monetary, of the non-integral foreign operation are translated at the closing rate; income and expense items of the non-integral foreign operation are translated at average exchange rate prevailing during the year and all resulting exchange differences are accumulated in a foreign currency translation reserve until the disposal of the net investment.

68

On the disposal of the non-integral foreign operation, the cumulative amount of the exchange difference which has been deferred and which relate to the operation are recognised as income or expense in the same period in which the gain or loss on disposal is recognised.

When there is a change in the classifi cation of a foreign operation, the transaction procedures applicable to the revised classifi cation are applied from the date of the change in classifi cation.

xii. Sales:

Revenue from sales of goods is being recognized on accrual basis on transfer of ownership to the customers. The sales are stated net of trade discounts, excise duty, sales returns and sales taxes.

Revenue from rendering of services is recognized on completion of service.

xiii. Export Benefi ts / Incentives :

Benefi ts on account of entitlement of export incentives are recognized as and when the right to receive the same is established.

xiv. Leases :

Lease rentals are accounted on accrual basis in accordance with the terms of respective lease agreements.

xv. Research and Development :

Revenue expenditure incurred on Research and Development is charged to Profi t & Loss Account in the year it is incurred.

Capital expenditure is included in the respective heads under fi xed assets.

xvi. Retirement Benefi ts :

a). Contributions to the Provident Fund are made at a pre-determined rate and charged to the Profi t & Loss Account.

b). Liability towards Gratuity and Leave Encashment is provided on the basis of actuarial determination. Liability towards Superannuation is provided in accordance with the scheme administered by Life Insurance Corporation of India.

xvii. Borrowing Costs :

Borrowing costs directly attributable to the acquisition or construction of an asset are capitalized as part of the cost of that asset, up to the date such assets are ready for their intended use.

Other borrowing/ fi nancing costs are charged to the Profi t & Loss Account.

xviii. Taxation:

Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the provisions of local Income tax as applicable to the fi nancial year.

Deferred income tax refl ect the impact of current year timing differences between taxable income and accounting income of the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted at the Balance Sheet date.

In case where the tax assessments have been completed but the appeals are pending at various appeal fora, the tax payments have been set-off against the provisions in the Balance Sheet. Appropriate disclosures have been made towards contingent liabilities, if any

xix. Provisions and Contingent Liabilities:

A provision is recognized when the Company has a present obligation as a result of a past event. it is probable that an outfl ow of resources will be required to settle the obligation, in respect of which reliable estimates can be made.

Provisions are not discounted to its present value and are determined based on best estimates required to settle the obligation at the Balance Sheet date.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outfl ow of resources. Where there is a possible or present obligation in respect of which the likelihood of outfl ow of resources is remote, no provision or disclosure is required.

31st annual report 2013-14

69

NOTE 2 (` in Lacs)

As At 30th June, 2014

As At 30th June, 2013

SHARE CAPITALi AUTHORISED :

3,00,00,000 (Previous Year : 3,00,00,000) 3,000.00 3,000.00 Equity Shares of `10/- each .

3,000.00 3,000.00 ii ISSUED

2,05,96,486 (Previous Year : 2,05,96,486) Equity Shares of `10/- each 2,059.65 2,059.65

iii SUBSCRIBED AND PAID-UP2,05,36,936 (Previous Year : 2,05,36,936) 2,053.69 2,053.69 Equity Shares of `10/- each fully paid up.Add : Forfeiture of Shares:No. of Shares forfeited are 59550 and amount 2.97 2.97 forfeited ` 5/- per Share.

2,056.66 2,056.66 a Reconciliation of the shares outstanding at the

beginning and at the end of the reporting period.30th June, 2014 30th June, 2013

No. ` in Lacs No. ` in LacsAt the beginning of the period 20,536,936 2,053.69 20,536,936 2,053.69 Outstanding at the end of the period 20,536,936 2,053.69 20,536,936 2,053.69

b Rights, preferences, and restrictions attached to Equity sharesThe Company has only one class of Equity shares having par value of `10/- each. Each holder of Equity share is entitled to one vote per share. In the event of the liquidation of the Company, the holders of Equity shares will be entitled to receive remaining assets of the Company. The distribution will be in proportion to the number of Equity shares held by the shareholders.

(c) The details of shareholders holding more than 5% shares:

As at 30th June, 2014 As at 30th June, 2013Name of shareholder No. of shares % holding No. of shares % holding

1 Indart Exports Private Limited 1,550,684 7.55 2,493,647 12.14 2 Semit Pharmaceuticals & Chemicals Private Limited 1,554,802 7.57 1,567,593 7.63 3 Acraf S.P.A. 2,619,000 12.75 2,619,000 12.75 4 Citicorp International Financial Corporation 1,730,000 8.42 1,730,000 8.42 5 Development Credit Bank Limited 1,233,791 6.01 - -

As per records of the Company, including its register of shareholders / members and other declarations received from shareholders regarding benefi cial interest the above shareholding represent both legal and benefi cial ownerships of the shares.

Notes forming part of the Consolidated Financial Statementsfor the year ended 30th June, 2014

70

NOTE 3(` in Lacs)

As At 30th June, 2014

As At 30th June, 2013

RESERVES AND SURPLUSCAPITAL RESERVEOpening Balance 1,726.65 1,896.03 less::Addition/Adjustment during the year 1,728.44 (169.38)Closing balance (A) 3,455.09 1,726.65 SHARE PREMIUM:Opening Balance 25,074.57 25,074.57 Add :Addition/Adjustment during the year - -Closing balance (B) 25,074.57 25,074.57 HEDGING RESERVEOpening Balance (69.31) 206.18 Add :Addition/Adjustment during the year 69.31 (275.49)Closing balance (C) - (69.31)DEBENTURE REDEMPTION RESERVEOpening Balance 12,000.00 8,000.00 Add :Transfer from surplus balance in the statement of Profi t & Loss 4,000.00 4,000.00 Closing balance (D) 16,000.00 12,000.00 FOREIGN CURRENCY TRANSLATION RESERVEOpening Balance (1,250.59) (323.32)Add :Addition/Adjustment during the year (736.15) (927.27)

(E) (1,986.74) (1,250.59)GENERAL RESERVE :Opening Balance 18,118.53 15,118.53 Add :Transfer from surplus balance in the statement of Profi t & Loss 3,000.00 3,000.00 Closing balance (F) 21,118.53 18,118.53 SURPLUS IN THE STATEMENT OF PROFIT AND LOSS Opening Balance 19,269.86 18,030.69 Add : Profi t for the year (653.09) 8,239.17

18,616.77 26,269.86 Less: Appropriationsi) Transfer to General Reserve 3,000.00 3,000.00 ii) Transfer to Debenture Redemption Reserve 4,000.00 4,000.00

7,000.00 7,000.00 (G) 11,616.77 19,269.86

Total (A+B+C+D+E+F+G) 75,278.22 74,869.71

31st annual report 2013-14

71

NOTE 4(` in Lacs)

As At 30th June, 2014

As At 30th June, 2013

LONG TERM BORROWINGSI SECURED BORROWINGS(A) Non-convertible Debenture 18,780.00 25,438.00

18,780.00 25,438.00 a) Loan against 10.75%,11.25% & 12.50% Non-convertible debentures

aggregating to ` 11880 lacs,` 7300 lacs & ` 7000 lacs respectively are secured by fi rst pari-passu charge on all fi xed assets of the Company along with all the existing charge holders against term loans.

b) The non-convertible debentures are to be redeemed as follows:-Financial year 2014-15 ` 5305.00 lacs,Financial year 2015-16 ` 6180.00 lacs,Financial year 2016-17 ` 3210.00 lacs,Financial year 2017-18 ` 3210.00 lacs,Financial year 2018-19 ` 875.00 lacs,

(B) Term Loans1 From Banks 18,068.73 35,876.83 2 From others - 1,529.31

18,068.73 37,406.14

(C ) Foreign currency loans 6,758.68 8,928.90

(D) Others 24.63 39.05 Vehicle loan is secured against vehicle acquired under the scheme repayable as follows:-Financial year 2014-15 `11.89 lacs,Financial year 2015-16 `12.74 lacs. TOTAL E ( A + B + C + D ) 43,632.04 71,812.09 Less: CURRENT MATURITIES (F) 9,406.11 19,621.85 TOTAL (E - F) 34,225.93 52,190.24

II UNSECURED BORROWINGSFixed Deposits 13,232.24 16,766.85 Trade Deposits 1,431.60 1,436.60 TOTAL 48,889.77 70,393.69

72

NOTE 5 (` in Lacs) As At

30th June, 2014 As At

30th June, 2013 DEFERRED TAX LIABILITY ( NET )A Deferred Tax Liabilityi Depreciation 1,833.25 1,784.69 B Less : Deferred Tax Asseti Leave encashment 76.77 262.52 ii Others 1,259.26 1,336.03 1,231.97 1,494.49

DEFERRED TAX LIABILITY (NET) ( A - B ) 497.22 290.20

NOTE 6 (` in Lacs) As At

30th June, 2014 As At

30th June, 2013LONG TERM PROVISIONSProvision for leave benefi ts 676.73 383.50 Provision for Gratuity 1,293.94 1,271.28 Others 150.20 -

2,120.87 1,654.78

NOTE 7 (` in Lacs) As At

30th June, 2014 As At

30th June, 2013SHORT TERM BORROWINGS

I SECURED BORROWINGSWorking capital loans from banks repayable on demand 9,133.91 28,550.22

9,133.91 28,550.22 (Working capital loans are secured by First pari-passu Charge by way of hypothecation of Raw & Packing Materials, Finished Goods, stocks-in-trade and Book Debts and second pari passu charge over entire Fixed Assets of the company and also personally guaranteed by two of the Directors.)

II UNSECURED BORROWINGSFrom Banks - 12,266.58 From others 17,332.52 3,534.24

17,332.52 15,800.82 TOTAL (I + II) 26,466.43 44,351.04

NOTE 8 (` in Lacs) As At

30th June, 2014 As At

30th June, 2013 TRADE PAYABLESDues to Micro, Small & Medium enterprises # 380.43 415.10 Others 9,231.80 11,630.39 TOTAL 9,612.23 12,045.49 # Details have been determined to the extent such parties have been identifi ed on the basis of information available with the Company. This has been relied up on by the auditors.

31st annual report 2013-14

73

NOTE 9 (` in Lacs) As At

30th June, 2014 As At

30th June, 2013 OTHER CURRENT LIABILITIESCurrent maturities of long term debts 9,406.11 19,621.85 Interest accrued and due on borrowings 3,575.66 1,965.74 Unpaid matured deposit and interest accrued thereon 1,105.91 -Unpaid matured debentures and interest accrued theron 4,619.67 -Unclaimed dividends 24.22 30.38 Statutory remittances 2,076.49 2,837.58 Creditors for capital items 268.72 560.85 Interest accrued on others 2,141.99 1,464.93 Advances from customers 7.99 1,098.09 Temporary overdrawn from banks 1,717.72 1,743.13 Others 17,099.51 11,263.77 TOTAL 42,043.99 40,586.32

NOTE 10 (` in Lacs) As At

30th June, 2014 As At

30th June, 2013 SHORT TERM PROVISIONSProvision for Taxation 21,518.21 2,626.56 Provision for Leave benefi ts 236.06 273.17 Other Provisions:Tax on proposed Dividend 99.95 99.95 TOTAL 21,854.22 2,999.68

NOTE 11 (` in Lacs) DESCRIPTION OF ASSETS GROSS BLOCK DEPRECIATION / AMORTISATION NET BLOCK

Cost as at 01.07.2013

Additions Adjustment Cost as at 30.06.2014

Upto 30.06.2013

Adjustment For the Period

Upto 30.06.2014

As At 30.06.2014

As At 30.06.2013

CONSOLIDATED FIXED ASSETSA TANGIBLE

LAND-FREEHOLD 2,390.48 - 7.19 2,397.67 - - - - 2,397.67 2,390.48 LAND-LEASEHOLD 256.18 - - 256.18 42.79 - 3.33 46.12 210.06 213.39 BUILDINGS 22,168.01 1,010.19 577.69 23,755.89 4,132.28 229.96 752.86 5,115.10 18,640.79 18,035.79 R&D-BUILDING 79.40 - - 79.40 13.96 - 2.65 16.61 62.79 65.44 PLANT & MACHINERY 47,242.10 504.57 (588.61) 47,158.06 18,802.57 (269.53) 2,448.44 20,981.48 26,176.58 28,439.53 R&D-PLANT & MACHINERY 514.17 0.60 - 514.77 186.81 - 25.93 212.74 302.03 327.36 FURNITURE & FIXTURES 2,957.72 66.25 (3.90) 3,020.07 1,991.14 25.51 199.50 2,216.15 803.92 966.58 R&D-FURNITURE & FIXTURES 107.37 - - 107.37 45.26 - 6.80 52.06 55.31 62.11 MOTOR VEHICLES 678.73 (22.93) 655.80 550.04 (19.83) 46.19 576.40 79.40 128.69

. TOTAL 76,394.16 1,581.61 (30.56) 77,945.21 25,764.85 (33.89) 3,485.70 29,216.66 48,728.55 50,629.37 B INTANGIBLE

TECHNICAL KNOW-HOW * 1,293.17 - (1,293.17) 0.00 226.05 (226.05) - - - 1,067.12 GOODWILL 15,245.14 94.37 3,766.03 19,105.54 - 437.48 9.91 447.39 18,658.15 15,245.14 SOFTWARE/LICENCES/CONTRACTS

2,118.28 771.84 628.71 3,518.83 206.27 206.27 3,312.56 2,118.28

TOTAL 18,656.59 866.21 3,101.57 22,624.37 226.05 211.43 216.18 653.66 21,970.71 18,430.54 TOTAL 95,050.75 2,447.82 3,071.01 100,569.58 25,990.90 177.54 3,701.88 29,870.32 70,699.26 69,059.91

Previous Year 92,198.33 2,826.51 25.91 95,050.75 21,565.26 479.71 4,406.47 25,990.90 69,059.85 70,633.07 C CAPITAL WORK -IN-PROGRESS** 30,538.27 27,252.81

**Includes ` 3418.61 Lacs being advance given for setting-up plant on turn-key basis.

74

NOTE 12 : (` in Lacs)

Nature of Investment

Face Value

`

Numbers Value AS AT 30TH

JUNE,2014AS AT 30THJUNE,2013

AS AT 30THJUNE,2014

AS AT 30THJUNE,2013

NON CURRENT INVESTMENTS(At Cost, Fully paid, Other than Trade) (A) INVESTMENT IN JOINT VENTURE: Elder Universal Pharmaceuticals (Nepal)

P LtdEquity Shares 10 500,000 500,000 50.00 50.00

(B) UNQUOTED: Maharashtra Apex Corp. Limited Non-Convt.

Debenture1000 25 25 0.21 0.21

Bombay Mercantile Co-op.Bank Limited Equity Shares 30 533 533 0.16 0.16 Elder Instruments Private Limited Equity Shares 10 765,000 765,000 76.50 76.50 The Saraswat Co-operative Bank Limited Equity Shares 10 2,500 2,500 0.25 0.25 VTC Industries Limited Equity Shares 10 10,000 10,000 2.10 2.10 The Kalyan Janata Sahakari Bank Limited Equity Shares 25 - 20,000 - 5.00

(C) QUOTED: Elder Projects Limited Equity Shares 10 300,200 300,200 22.52 22.52 Elder Health Care Limited Equity Shares 10 321,200 321,200 32.12 32.12 TOTAL 183.86 188.86

Aggregate Value of Investment 30th June, 2014 30th June, 2013 Market Value Book Value Market Value Book ValueQuoted 376.96 54.64 240.51 54.64 Unquoted - 129.22 - 134.22

NOTE 13 : (` in Lacs)

As At 30th June, 2014

As At 30th June, 2013

LONG- TERM LOANS AND ADVANCES (Unsecured, Considered Good) Capital Advances 3,220.44 113.44 Security Deposits 417.46 359.44 Loans and Advances to related parties 7,965.74 1,123.48 Trade Advances 4,413.87 25,678.56 Others 18,980.74 37,557.88 34,998.25 64,832.80

31st annual report 2013-14

75

NOTE 14 (` in Lacs) NAME OF MUTUAL FUND

UNIT AS AT 1STJULY,2013

UNIT PURCHASE2013-2014

UNIT REDEEMED2013-2014

UNIT AS AT 30THJUNE,2014

VALUEAS AT 30THJUNE,2014

VALUEAS AT 30THJUNE,2013

CURRENT INVESTMENTSIn Mutual Funds (Other than Trade)UTI Infrastructure Growth Fund 50,925.37 - - 50,925.37 5.00 5.00 UTI Infrastructure -DDP Fund 22,353.25 - - 22,353.25 20.00 20.00 HDFC AMC-PMS-REAL ESTATE PORTFOLIO-I

- - - - 100.00 100.00

DSP Black Rock Top 100 Eq-Growth 2,914.52 - 2,914.52 - - 3.00 HDFC Balance Fund Growth 4,168.10 - 4,168.10 - - 2.50 Franklin India Flexi Cap Fund Growth 9,327.18 664.67 9,991.85 - - 3.00 BNP Paribas Dividend Yield Fund Growth 15,839.20 - 15,839.20 - - 3.00 CANARA Robeco Equity Diversifi ed Regular Growth

1,629.99 - - 1,629.99 1.00 1.00

CANARA Robeco Balance-Regular Growth 1,438.44 - - 1,438.44 1.00 1.00 TOTAL 127.00 138.50

NOTE 15 (` in Lacs)

As At 30th June, 2014

As At 30th June, 2013

INVENTORIES (At cost, as taken, valued and certifi ed by the management) Raw Materials 2,652.28 2,660.93 Packing Materials 346.84 207.92 Work-in-Process 2,108.78 3,373.48 Finished Goods 171.02 8,645.38 Stocks-in-trade 7,481.43 9,569.35 Stores and Spares 38.26 49.87 TOTAL 12,798.61 24,506.93

NOTE 16 (` in Lacs)

As At 30th June, 2014

As At 30th June, 2013

TRADE RECEIVABLES (Unsecured, Considered Good unless stated otherwise) More than six months 274.37 2,470.68 Doubtful 116.35 116.35 390.72 2,587.03 LESS: Provision For Doubtful Debts 116.35 116.76 274.37 2,470.27 Others Receivables 16,293.28 37,344.52 TOTAL 16,567.65 39,814.79

76

NOTE 17 (` in Lacs)

As At 30th June, 2014

As At 30th June, 2013

CASH AND CASH EQUIVALENTS Cash on hand 66.97 52.81 Cheques, Drafts on hand 0.70 - Balances with Banks:

In Current Accounts 3,136.95 7,151.80 In Escrow Accounts 40,478.15 -

In Deposits with original maturity for less then 12 months 9,364.08 1,781.43 In Unpaid Dividend Accounts 25.20 31.37

Other Bank Balances: In Deposits with original maturity for more then 12 months - 500.00 In Deposits held as Margin money 1,588.96 826.58

TOTAL 54,661.01 10,343.99

NOTE 18 (` in Lacs)

As At 30th June, 2014

As At 30th June, 2013

NOTE 18 SHORT TERM LOANS AND ADVANCES (Unsecured, Considered Good) Loans and Advances to employees 714.65 771.53 Prepaid Expenses 1,170.00 716.26 Balance with Government Authorities: i) CENVAT credit receivable 370.20 382.22 ii) Service Tax credit receivable 197.68 274.38 Advances to Sundry Creditors 1,742.54 7,326.03 TOTAL 4,195.07 9,470.42

NOTE 19 (` in Lacs)

As At 30th June, 2014

As At 30th June, 2013

OTHER CURRENT ASSETS (Unsecured, Considered Good) Interest Accrued on Deposits 3,398.34 2,971.70 Duty Drawback Receivable 28.84 29.74 License and Other Recoverables 623.45 637.18 TOTAL 4,050.63 3,638.62

31st annual report 2013-14

77

Notes Forming Part of the Consolidated Financial Statementsfor the year ended 30th June, 2014

NOTE 20 : (` in Lacs)

Year Ended30th June, 2014

Year Ended30th June, 2013

REVENUE FROM OPERATIONS Sale of products(Refer note20.i) 101,024.81 165,064.02 Less: Excise Duty 411.32 100613.49 1,210.94 163853.08

Sale of Services (Refer note 20.ii) 277.30 317.03 Total 100,890.79 164,170.11

20.i Details of products sold Year Ended

30th June, 2014 Year Ended

30th June, 2013 Formulation & Bulk Drugs 100,513.69 163,601.78Others 511.12 1,462.25Total 101,024.81 165,064.03

20.ii Sale of Services consists of export incentives and services arising from other ancillary activities.

NOTE 21 : (` in Lacs)

Year Ended30th June, 2014

Year Ended30th June, 2013

OTHER INCOME Interest : From Banks Deposits 206.60 444.96 From Others 1,838.41 2,045.01 2,072.01 2,516.97 Dividend : From Current Investments 30.81 77.54 From Non Current Investments 0.13 30.94 3.64 81.18 Profi t & Loss on Sale Of Share - 106.27 Sundry Balances Written back 196.37 3.52 Miscellaneous Income 293.50 561.94 Total 2,565.82 3,269.88

NOTE 22 : (` in Lacs)

Year Ended30th June, 2014

Year Ended30th June, 2013

COST OF MATERIALS Inventory at the beginning of the year 2,660.93 2,540.32 Add: Purchases 5,272.75 12,703.87

7,933.68 15,244.19 Less: Inventory at the end of the year 2,652.28 2,660.93 Cost of Materials consumedTotal 5281.40 12583.26

78

NOTE 23 : (` in Lacs)

Year Ended30th June, 2014

Year Ended30th June, 2013

PURCHASES OF STOCKS-IN-TRADE Purchases of Stocks-in-Trade 47183.06 71182.21 Total 47183.06 71182.21

NOTE 24 : (` in Lacs)

Year Ended30th June, 2014

Year Ended30th June, 2013

CHANGE IN INVENTORIES Inventory at the end of the year Work-in-process 2,108.78 3,373.48 Finished Goods 171.02 8,645.38 Stock-in-trade 7,481.43 9,569.35

9,761.23 21,588.21 Inventory at the beginning of the year Work-in-process 3,373.48 3,094.88 Finished Goods 8,645.38 10,131.33 Stock-in-trade 9,569.35 8,231.81

21,588.21 21,458.02

Change in Inventory ( A - B ) Total 11,826.98 (130.19)

NOTE 25 : (` in Lacs)

EMPLOYEE BENEFITS EXPENSES Year Ended30th June, 2014

Year Ended30th June, 2013

Salaries and Wages 20767.22 21886.08 Contribution To Provident and Other Funds 655.56 833.06 Staff Welfare Expenses 367.34 589.50 Total 21790.12 23308.64

NOTE 26 : (` in Lacs)

Year Ended30th June, 2014

Year Ended30th June, 2013

FINANCE COSTS Interest Expenses 24,333.92 12,939.03 Borrowing Costs 3,229.20 2,543.56 Total 27563.12 15482.59

31st annual report 2013-14

79

NOTE 27 : (` in Lacs)

Year Ended30th June, 2014

Year Ended30th June, 2013

OTHER EXPENSES Rent 1,629.01 1385.29 Rates and Taxes 899.70 966.53 Power and Fuel 1490.30 1915.95 Spares & Tools 175.74 272.08 Packing materials 1581.18 1117.48 Manufacturing charges 503.55 1171.10 Repairs and Maintenance: To Building 140.96 153.55 To Machinery 485.68 424.31 To Others 129.46 756.10 257.14 835.00 Insurance 416.97 414.41 Travelling and Conveyance 2783.36 6252.98 Printing and Stationery 150.71 232.25 Selling Expenses 2996.45 6981.83 Sales Discount 1208.79 1561.33 Communication 660.33 581.77 Packing, Freight and Forwarding 620.96 1012.09 Vehicles Maintenance 346.41 331.51 Payment to Auditors:

Audit Fees 118.45 94.56 Certifi cation & Quarterly review 16.05 12.97 Taxation matters 34.73 20.39 Other management Services 8.43 0.23 Reimbursement of Expenses 0.17 0.85

177.83 129.00 Legal and Professional charges 1499.32 1505.19 Donation 9.87 10.20 Director's Sitting Fess 12.00 13.68 Loss on Sale of Assets 2323.74 0.64 Provision for doubtful Debts - 2.32 Miscellaneous 2050.99 2463.26 Total 22293.31 29155.89

NOTE 28 : (` in Lacs)

Year Ended30th June, 2014

Year Ended30th June, 2013

R & D EXPENDITURE: R & D Chemicals & Expenses 25.44 109.39 Power & Fuel 7.35 16.07 Salaries, Wages and Allowances 373.16 556.98 Contribution to Provident and other funds 16.35 24.17 Staff Welfare 10.41 24.34 Miscellaneous Expenses 2.15 5.31 Total 434.86 736.26

80

29 Exceptional Item:(` in Lacs)

Year ended 30th June, 2014

Year ended 30th June, 2013

Purchase Consideration of its branded domestic formulations business in India and Nepal sold and transferred to Torrent Pharmaceuticals Limited on Slump Sale basis :

200,400 -

Working Capital Adjustments :-Normal Working Capital (4,400) - Actual Net Working Capital 179 (4,221) - Net Purchase Consideration 196,179 - LESS:Slump sale Advisory Expenses 2,747Tax 20,000 22,747 -

Net of Tax 173,431 -LESS :Loss on Sale of Advances 103,156 -Sundry Debtors Written off 32,271 135,427 -

Total 38,004 -Exchange Loss 877 283 Net Exceptional Items 37,128 283

30. Earnings Per Share

Year ended 30th June, 2014

Year ended 30th June, 2013

Profi t attributable to equity shareholders (` in lacs) 272.86 8,239.17 Weighted average number of equity shares 20,536,936 20,536,936 Diluted Weighted average number of equity shares 20,536,936 20,536,936 Nominal value of equity share ( in `) 10/- 10/- Basic and Diluted EPS ( in `) 1.33 40.12

31. CONTINGENT LIABILITIES AND COMMITMENTS (` in Lacs)

As at 30th June, 2014

As at 30th June, 2013

(I) Contingent Liabilities a) Letters of Credit 2,015.82 405.09 b) Bank Guarantees 182.04 305.37 c) Corporate Guarantees to Subsidiary 12,432.00 19,473.75 d) Disputed liability in respect of : i) Income tax * 268.58 268.58 ii) Sales tax 29.19 - iii) Service Tax 639.54 717.51 * Includes demand of ` 216.53/- lacs decided in favour of the Company but disputed by Income-tax Department.(II) Claim against the Company not acknowledged as debts a) Interest on Unsecured Loan 578.99 - b) Other - 224 (III) Commitments a) Estimated amount of contracts remaining to be executed on Capital Account and not provided for.

548.58 386.45

31st annual report 2013-14

81

32 The Consolidated Financial Statements present the consolidated accounts of Elder Pharmaceuticals Limited with its following Subsidiaries.Name of Subsidiaries Country of

IncorporationProporation of ownership interest for the

period year ended30th June, 2014 30th June, 2013

Direct SubsidiaryElder International FZCO United Arab Emirates 100.00% 100.00%Indirect Subsidiary1) Neutra Health Limited United Kingdom 100.00% 100.00%2) Elder Biomeda EAD Bulgaria 100.00% 100.00%

33 The balance in respect of trade receivable, trade payable,inter-division balances, bank balances in few cases and loans & advances are subject to reconciliation/confi rmations by the respective parties.

34 With a view to reducing the debts of the Company, the board of directors has approved the proposal to restructure the Company’s business involving either raising of capital, hiving off assets or other strategic options and have appointed advisers for this purpose. The advisers have commenced due diligence of the Company’s operations. No strategy has yet been fi nalized. The slump sales transaction with Torrent Pharmaceuticals Limited was completed & consummated on 29th June,2014.

35 Some lenders have fi led legal cases against the Company, its directors and other offi cers under section 138 of the Negotiable Instruments Act 1981. In some cases winding up petition under section 433 and 434 of the Companies Act 1956 has also been fi led. The Company in some cases has made part payments and settlement negotiations are initiated in other cases.

36 Some of the Non-convertible Debentures Holders have preferred legal action against the Company for non-payment of Principal and interest thereon.

37 Segment Information

The company is primarily engaged and deals in pharmaceuticals & related products, which in the context of Accounting Standard-17, is the only business segment and has been identifi ed as the primary reporting segment. Accordingly, the information appearing in these fi nancial statements relate to the aforesaid primary reporting segment.

Secondary segmental reporting is performed on the basis of the geographical locations of customers. The geographical segments considered for disclosure are based on the revenue within India (including sales to customers located in India and service income accrued in India) and revenues outside India (sales to customers located outside India).

Segment India Outside India TotalYear ended Year ended Year ended

30.06.14 30.06.13 30.06.14 30.06.13 30.06.14 30.06.13Segment Revenue 45,259.24 120,412.32 3,222.19 3,791.26 48,481.43 124,203.58 Segment Assets** 7,667.14 32,324.97 779.59 511.94 8,446.73 32,836.91

** Segment Assets represent amount due from customers only.

38 “The Company has sold and transferred its branded domestic formulations business in India and Nepal to Torrent Pharmaceuticals Limited on a slump sale basis. The proceed of sale and transfer was primarily utilised to repay fi nancial obligations to banks/institutions. The Company has major liabilities towards vendors, statutory dues, payment to fi xed deposit holders and non-convertible debenture holders. Although these events or conditions may cast signifi cant doubt on the Company’s ability to continue as a going concern, it has detailed plans to strengthen its business operations. The Company is negotiating with the banks to infuse additional fi nance to streamline its operations. Based on the detailed evaluation of the current situation, plans formulated and active discussions underway, the management is confi dent of raising adequate fi nance, rescheduling debt and receiving continued support from the parties. The Company has got strong and adequate fi xed assets capital base to raise additional resources and funds.

Therefore, the management holds the view that the Company will realize its assets and discharge liabilities in the normal course of business. Accordingly, the fi nancial statements have been prepared on the basis that the Company is a going concern and that no adjustments are required to the carrying value of assets and liabilities”

39. Advances to sundry creditors under short term loans and advances includes ` 851.59 Lacs advances to related parties on current account/trade advance.

82

40. Related Party DisclosuresRelated party disclosures, as required by AS-18, "Related Party Disclosures" are given below :(I) Names of the related parties and description of relationship:A) Related parties where control exists i) Subsidiaries Elder International FZCO Dubai, UAE ii) Associates/ Joint Venture Elder Universal Pharmaceuticals (Nepal) Private

Limited

B) Enterprises over which key management Elder Health Care Limited. personnel and their relatives are able to Elder Projects Limited. exercise signifi cant infl uence Elder Instruments Private Limited.

Maveer Prints Private LimitedE W F Pharmaceuticals Private Limited.Redle Pharmaceuticals Private LimitedAkshaya Holdings Private Limited.Anjay PrintsAnsul Printers

C) Key Management Personnel and their Relatives Mr. Alok Jagdish SaxenaMr. Yusuf Karim KhanMrs. Shalini Kumar

Note: Related party relationship is as identifi ed by the company and relied upon by the auditors. (II) The following transactions were carried out with the related parties in the ordinary course of business.

(1) Details relating to parties referred to (B) above :

(` in Lacs)Particulars Year ended

30th June, 2014Year ended

30th June, 20131 Purchase of materials / fi nished goods. 1884.56 6627.092 Sale of materials / fi nished goods. 8.48 300.523 Expenses charged to other companies. 11.33 46.684 Expenses charged by other companies. 180.99 1745.925 Advances on Current Account 851.59 7130.476 Outstanding Payables 158.13 62.247 Loans and Advances Given 7965.74 11310.10

(2) Details relating to persons referred to in item (C) above:(` in Lacs)

Particulars Year ended 30th June, 2014

Year ended 30th June, 2013

Remuneration /Others 358.24 835.86

41. The accounts for current fi nancial year are for a period of twelve months as compared to fi fteen months accounting period for previous year and hence to that extent the fi gures are not comparable. The pervious year fi gures have been re-grouped,re-arranged,re-worked & reclassifi ed,where ever necessary.

As per our report of even date

For S S Khandelwal & Co.,Chartered Accountants(Firm Registration No:105064W)

Alok Jagdish SaxenaManaging Director & CEO

Yusuf Karim KhanExecutive Director

(S S Khandelwal)(Proprietor)Membership No. 031487

Suresh V PaiChief Financial Offi cer

Vijendra JainCompany Secretary

Mumbai, 27th August, 2014

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CIN : L24239MH1983PLC029714Registered Office : ELDER HOUSE, Plot No. C-9, Dalia Industrial Estate, Off Veera Desai Road, Andheri (West), Mumbai - 400 053.

Tel: 022-26730058 - 67, Fax – 022-26730051 • Website:www.elderindia.com

ATTENDANCE SLIP31st Annual General Meeting on Tuesday the 24th day of March 2015 at 10.30 am

at Gms Banquet Hall, Sitladevi Complex, 1st Floor, D.N.Nagar, Opp. Indian Oil Nagar, Link Road, Andheri (W), Mumbai – 400 053.

Folio No. ........................................................ DP ID No.*..................................................... & Client ID No.* ..........................................................

Name of the Member...........................................................................................................................Signature………...........………....…………...

Name of the Proxy holder ..............................................................................................................................

Signature……...…...........………………………..

1. Only Member/Proxy holder can attend the Meeting.

2. Member/Proxy holder should bring his/her copy of the Annual Report for reference at the Meeting_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

CIN : L24239MH1983PLC029714Registered Office : ELDER HOUSE, Plot No. C-9, Dalia Industrial Estate, Off Veera Desai Road, Andheri (West), Mumbai - 400 053.

Tel: 022-26730058 - 67, Fax – 022-26730051 • Website:www.elderindia.com

PROXY[Pursuant to section 105(6) of the Companies Act, 2013 and rule 19(3) of the Companies (Management and Administration) Rules, 2014]

Name of the Company : Elder Pharmaceuticals Limited CIN : L24239MH1983PLC029714

Registered Office : ELDER HOUSE, Plot No. C-9, Dalia Industrial Estate, Off Veera Desai Road, Andheri (West), Mumbai - 400 053.

Name of the member(s) :..................................................................................................... E-mail ID :.................................................................

Registered address ...............................................................................................................................................................................................

.............................................................................................................................................................................................................................

Folio No / Client ID :................................................................................ DP ID :....................................................................................................

I / We, being the member(s) of Elder Pharmaceuticals Limited holding.....................................shares of the above named company, hereby appoint

1. Name :..................................................................................................................................... E-mail :...........................................................

Address :..........................................................................................................................................................................................................

....................................................................................................................... Signature : ......................................................... , or failing him

2. Name :............................................................................................................................. E-mail :...........................................................

Address :............................................................................................................................................................................................................

...................................................................................................................... Signature : ......................................................... , or failing him

3. Name :......................................................................................................................................... E-mail :...........................................................

Address :............................................................................................................................................................................................................

................................................................................................................ Signature : .................................................................................

as my/our proxy to attend and vote (on a poll) for me/us and on my/our behalf at the 31st Annual General Meeting of the Company, to be held on Tuesday, the 24th day of March, 2015 at 10.30 a.m. at Gms Banquet Hall, Sitladevi Complex, 1st Floor, D.N.Nagar, Opp. Indian Oil Nagar, Link Road, Andheri (W), Mumbai – 400 053. and at any adjournment thereof in respect of such resolutions as are indicated overleaf:

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Resolution No Description of Resolution For Against

1 Adoption of Statement of Profit & loss, Balance Sheet, Report of Board of Directors of the Company

2 To appoint the Auditors of the Company

3 Mrs. Urvashi Saxena (DIN No. 02021303) who retires by rotation has resigned w.e.f. 28th November 2014 with an intent not to be re-appointed and company resolved not to fill in the vacancy.

4 Dr. S. Jayaram (DIN No. 01244431) who retires by rotation has resigned w.e.f. 1st December 2014 with an intent not to be re-appointed and company resolved not to fill in the vacancy

5 Approval of the borrowing power upto ` 2,000 crores pursuant to Section 180(1)(c) of the Companies Act, 2013 and the Rules made there under.

6 Approval of creation of charge/mortgage on the movable and/or immovable properties of the Company, both present and future in favour of the lender pursuant to Section 180(1)(a) of the Companies Act, 2013 and the Rules made there under .

7. To approve remuneration to be paid to the Cost Auditor, T. M. Rathi for conducting Cost Audit for the Financial Year 2014-15 appointed by the Board of Directors.

Signed this __________day of _________________20__

Signature of the Shareholder __________________________________ Signature of the proxy holder(s)________________________________

---------------------------------------------------------------------------------------------------------------------------------------------------------------------------Notes 1. This form of proxy in order to be effective should be duly completed and deposited at the Registered office of the Company at ELDER

HOUSE, Plot No. C-9, Dalia Industrial Estate, Off Veera Desai Road, Andheri (West), Mumbai - 400 053. not less than 48 hours before the commencement of the meeting.

2. Those Members who have multiple folios with different joint holders may use copies of this Attendance Slip/Proxy.

AffixRevenueStamp

If undelivered, please return to:

“Elder House”, C9, Dalia Industrial Estate ,Off Veera Desai Road Andheri,Mumbai- 400058http://www.elderindia.com P

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