The Directors present before you the Eighteenth Annual Report on the business and operations along with the Audited Statement of Accounts of the Company for the year ended March 31, 2012.

I.  FINANCIAL RESULTS :                                  [ Rs. in Lacs]

Particulars                  For the Year ended   For the Year ended
                                 March 31, 2012       March 31, 2011

Revenue from Operations [Net]         15,148.99            82,484.95

[Add]/Less : Finance Costs            [5,835.57]           12,079.69

[Add]/Less : Depreciation & 
Amortisation                          [6,603.08]            6,079.70

Profit/[Loss] before tax             [15,210.52]           [4,676.54]

Add : Exceptional Items              [13,636.71]                   -

                                     [28,847.23]           [4,676.54]

Add : Provision for earlier 
year Taxation                           [282.15]             [141.07]

Add : Provision for Deferred 
Tax                                   [1,620.01]           [2,063.18]

Profit/[Loss] after tax              [30,749.39]           [6,880.80]

The Ministry of Corporate Affairs [MCA] vide notification no. S.O.447[E] dated February 28, 2011 amended the existing schedule VI to the Companies Act, 1956. The Revised Schedule VI is applicable from financial year commencing from April 1, 2011. The Financial Statements of your Company for the year ended March 31, 2012 have been prepared in accordance with the Revised Schedule VI and accordingly the company has regrouped/reclassified/recasted the previous year figures in accordance with the requirement for the current period.

OVERVIEW OF OPERATIONS :

The year under review was the toughest in the history of the company. The last four years of the last decade saw the business expanding with huge opportunities on the horizon. The Company incurred huge Capex for capacity expansion mainly by short term borrowings and leveraged its strengths with focus on the future. The Company was on an inflexion point by the end of 2010 and had sincerely taken up the challenge of high growth. With a view to complete the expansion project at Baddi within the regulatory timeline; the Company funded the last two stages of project with short term funds at high rate of interest. It also had to restrategise the on going and future activities in tune with money, efforts and manpower to avail the various tax benefits available, but the circumstances proved to be otherwise and as a result situations was difficult in 2011 and detoriated in 2012.

As a consequence of downsizing the business, the total income of the Company for the reporting year was Rs. 15,167.59 Lacs which is not comparable with that of last year. The Net loss for the year was Rs. 30,749.39 Lacs.

The lull of the last two years and may be one more year has made us more Rerniantf:

So what down we are, but not out. We believe that being focused towards growth, nothing is difficult. We are determined and geared to succeed again. A good range of products for contract manufacturing has been developed and validation of MNC pharma companies has been pursued.

The proposal for restructuring of debts under Corporate Debt Restructuring [CDR] mechanism was approved by the CDR Empowered Group at their meeting held on June 30, 2011 and August 30, 2011. The critical conditions as put forth in the letter of approval of CDR have been complied with by the Management and a sum of Rs. 1,500 Lacs has been brought in by the promoters. Majority of the bankers have restructured their loans.

AUTHORISED CAPITAL :

During the year special resolutions to raise the authorised share capital from Rs. 2,800 Lacs to Rs. 18,500 Lacs were passed vide Postal Ballots on March 13, 2012 and July 06, 2012 respectively

ISSUE OF OPTIONALLY CONVERTIBLE CUMULATIVE REDEEMABLE PREFERENCE SHARES [OCCRPS] AND EQUITY SHARES :

Pursuant to the scheme of CDR, the Company passed a resolution through Postal Ballot to issue 1,32,19,790, 0.001% Optionally Convertible Cumulative Redeemable Preference Shares of Rs. 100/- each and to convert unsecured loans of Promoters into Equity Share Capital by issue of 3,13,63,000 Equity Shares of Rs. 10/- each at a premium of Rs. 36/- per share . However the company has not made any allotment in respect thereof during the year under review.

DIVIDEND :

In view of the loss for the year and the accumulated losses of the previous year, your Directors are unable to recommend any dividend for the year ended March 31, 2012.

LISTING OF SHARES :

Your Company's Equity Shares are listed on BSE Limited and The National Stock Exchange of India Limited.

PUBLIC DEPOSITS :

The Company has accepted deposits of Rs. 2,941.83 Lacs from public in pursuance of section 58A of the Companies Act, 1956 and rules framed under the Companies [Acceptance of Deposits] Rules, 1975. The Company could not service interest on the deposits from February 2012 and also could not make payment of matured deposits from October 2011 on account of severe liquidity constraints. However, the Company intends to service pending interest as well as matured deposit payments on improvement in financials.

DIRECTORS :

In accordance with the provisions of the Companies Act, 1956 and the Company's Articles of Association, Mr. Ramesh Batham, retires by rotation at the ensuing Annual General Meeting, and being eligible offers himself for re-appointment. His re-appointment forms part of the Notice of the Annual General Meeting and the resolution is recommended for your approval.

Mr. Anilkumar Khadke, representative of Central Bank of India, has been appointed as a Nominee Director on the Board with effect from August 14, 2012.

AUDITORS :

M/s. M. G. Vashi & Co, Chartered Accountants, Firm Registration No. 128577W Statutory Auditors of the Company retires at the ensuing Annual General Meeting are eligible for re-appointment and have expressed their willingness to accept office if re-appointed. The Company has received confirmation from them that their re-appointment, if made, would be within the limits prescribed under Section 224[1-B] of the Companies Act, 1956, and that they are not disqualified for such re-appointment within the meaning of section 226 of the said Act. Your directors' recommend their re-appointment.

AUDITORS' QUALIFICATION :

Qualification 1 : The provisions of accrued gratuity liability [amount not ascertainable in the absence of Actuarial Valuation report] has not been made. [Auditors Report 'e']

Explanation-Q1 : The provision of gratuity as per AS15 is proposed to be undertaken from the upcoming Financial Year.

[read along with explanation to Q-2 below]

Qualification 2 : Provision has not been made in respect of interest amounting to Rs. 9,52,77,286/- on some of the unsecured loans resulting in understatement of the loss and liability by an equivalent amount. Had the company provided for the same, the loss for the year would have been Rs. 3,17,02,15,848/-. [Auditors Report 'f']

Explanation-Q2 : Since the order for winding up has been passed, wherein the Company was directed by the Hon'ble High Court of Bombay to file a scheme of arrangement/compromise with all creditors, the Company has initiated the process of filling the scheme of arrangement and looking at the current financial crunch, it appears that the Company will not be in position to pay the accrued/unpaid interest and waiver of the same is being requested by the Company under the scheme of arrangement.

Qualification 3 : The company is not regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance fund, income tax, sales tax, wealth tax, custom duty, excise duty, cess and other material statutory dues wherever applicable to it. [Annexure to Auditors' Report ix (a)]

Qualification 4 : 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 and also on payment of interest on the public deposits.

b. The company has accepted new public deposits after making default in repayment of earlier deposits.

c. The company has not repaid these new deposits within 30 days of acceptance of such deposits.

d. The company has not filed annual return of deposits for the year ended on 31.03.2012 with the Registrar of Companies and Reserve Bank of India, which were required to be filed on or before 30.06.2012.

e. The fixed deposit receipts with scheduled bank as are required to be kept as liquid assets in respect of public deposit maturing on or before 31.03.2012 are not free of charge/lien.

f. As on the Balance Sheet date, proceedings for violation of provisions of Section 58A and Companies [Acceptance of Deposit] Rules, 1975 were pending before the Company Law Board consequent to the complaints filed by the depositors. An order was passed on 09.04.2012 by the Company Law Board for repayment of deposits to the extent of Rs. 32,87,000/- by30.04.2012. [Annexure to Auditors' Report vi]

Qualification 5 : On the basis of our examination and according to the information and explanation given to us, we are of the opinion that during the year the company has defaulted in repayment of dues to the banks and financial institution. The amount defaulted is Rs. 70,34,76,343 [Term Loans: Rs. 38,75,30,629 and Interest: Rs. 31,59,45,714 ]. The company has not obtained any borrowings by way of debentures. [Annexure to Auditors' Report xi]

Explanation : The Company is facing severe liquidity problems on account of continued cash losses, which are being attended to. As soon as the Q3/4/5 same are eased out, the outstanding Statutory dues and other defaulted amounts will be paid.

The Company is also vigorously exploring various options to raise funds to overcome the financial crises.

COST AUDIT :

Pursuant to the provisions of Section 233B of Companies Act, 1956, the Central Government has prescribed Cost Audit for the industry in which your Company operates. Based on the recommendation of the Audit Committee, M/s. Avnesh Jain & Co., Cost Accountants [PR0P/00642] were appointed as the Cost Auditors' of the Company for the Financial Year 2011-12 in accordance with the requirements of the Companies [Cost Accounting Records] Rules, 2011.

EXTENSION OF AGM DATE :

The Registrar of Companies, Mumbai - 400 002, Maharashtra vide its letter dated September 03, 2012 has granted permission for holding the Annual General Meeting of the Company for the Financial Year ended March 31, 2012 up to December 31 2012.

INDUSTRIAL RELATIONS :

The industrial relations continue to be cordial and harmonious at all the three manufacturing units of the Company.

RELATED PARTY DISCLOSURES :

The Company has made disclosures in compliance with the Accounting Standards on related party disclosures as required by Clause 32 of the listing agreement with the Stock Exchanges.

DIRECTORS' RESPONSIBILITY STATEMENT :

Pursuant to amended Section 217[2AA] of the Companies Act, 1956, the Directors of the Company confirm that :

1. in the preparation of Annual Accounts, the applicable Accounting Standards have been followed and there has been no material departure;

2. they have 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 of the financial year under review and for the Profit and Loss account for that period;

3. they have taken proper and sufficient care for the maintenance of adequate Accounting Records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

4. the attached Annual Accounts for the year ended March 31, 2012 are prepared on going concern basis.

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

[A] Conservation of Energy and Technology Absorption

Particulars as required under Section 217 [1] [e] of the Companies Act, 1956 read with rule 2 of the Companies [Disclosure of Particulars in the Report of the Board of Directors] Rules, 1988 are given in the Annexure I to this report.

[B] Foreign Exchange Earned and Used

                                                  in Lacs 
Particulars                        2011-2012    2010-2011 

Earned                                  1.12           -- 

Used                                   83.24       500.60

PARTICULARS OF EMPLOYEES

Information as per Section 217[2A][b][II] read with Companies [Particulars of Employee's] Rule, 1975

None of the employee of the Company are is receipt of remuneration in excess of the limits prescribed under Section 217 [2A] of the Companies Act, 1956 read with Companies [Particulars of Employees] Rules, 1975.

ACKNOWLEDGMENTS

The Directors take this opportunity to place on record their appreciation for the continued trust and confidence reposed in the Company by the bankers, business associates, regulatory authorities, customers, vendors, depositors, shareholders and employees at all levels.

Registered Office : For and on behalf of the Board of Directors C-306, Crystal Plaza, Andheri Link Road, Andheri [West], Mumbai - 400 053.

                                                          Purnandu Jain
Date : November 10, 2012                 Chairman and Managing Director