The 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-a-vis those of the previous year are summarized below:

                                           Year ended    Fifteen months
                                           30.06.2014    Period ended
                                                         30.06.2013
                                      (Rs. In Crores)   (Rs. In Crores)

1.  Operating Income                          483.47           1233.10

2.  Other Income                               15.13             26.22

3.  Profit before Tax                          17.85            115.71

    Current Year                                  -              24.50

    Deferred Tax                                0.67            (2.53)

5.  Profit after Tax                           17.18             93.74

6.  Less: Prior year Tax                        9.26                 -
    adjustments

7.  Add: Profit as per the last               216.62            192.88
    Balance Sheet

8.  Profit available for                      224.54            286.62
    appropriation Out of which
    Directors recommend
    Appropriation as under:

 a) Proposed Dividend                              -                -

 b) Tax on Dividend                                -                -

 c) Transfer to General Reserve                30.00             30.00

 d) Transfer to Debenture                      40.00             40.00
    Redemption Reserve

e) Surplus carried forward to                 154.54            216.62
   Balance Sheet

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

For the year ended 30th June 2014 financial results showed Exceptional Item accounted of Rs. 380.04 Crores (net) which is comprising of Profit from Slump sale of Rs. 1734.3 1 Crores (net of Tax) after writing off Trade receivables Rs. 322.71 Crores and advances Rs. 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 RS. 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 froml4th 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 l39, l42 and other applicable provisions, if any, of the 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 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 Rs. 3.48 Crores whereas disposal and adjustment of fixed assets amounted to Rs. 46.66 Crores. The Company had capital work in progress amounting to Rs. 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 Rs.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 Rs. 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.

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 of15% 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 Rs. 209/- per share inclusive of a premium of Rs. 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 Rs. 4.31 Crores for imports of raw materials / finished goods and Rs. 0.34 Crores for foreign travel. The Company also paid Rs. 6.56 Crores in foreign exchange as interest on the External Commercial Borrowing and other expenses of Rs. 1.3 1 Crores. The foreign exchange earnings during the year were Rs. 30.66 Crores on account of exports on FOB basis.

                                         For and on behalf of the Board
                                                    Alok Jagdish Saxena
                                                Managing Director & CEO