5322960310

ANNUAL REPORT 2009-2010 31

Auditors Report

Auditors report to the Board of Directors of Glenmark Pharmaceuticals Limited on the Consolidated Financial Statements of Glenmark Pharmaceuticals Limited

1. We have audited the attached consolidated balance sheet of Glenmark Pharmaceuticals Limited (the Company) and its subsidiaries and its jointly controlled entity; hereinafter referred to as the Group (refer Note 1 on Schedule 21 to the attached consolidated fi nancial statements) as at 31st March, 2010, the related consolidated Profi t and Loss Account and the consolidated Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These consolidated fi nancial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these fi nancial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We did not audit the fi nancial statements of thirty three subsidiaries and one jointly controlled entity included in the consolidated fi nancial statements, which constitute total assets of Rs. 10,603,282 (000) and net assets of Rs. 5,254,257 (000) as at 31st March, 2010, total revenue of Rs. 16,886,790 (000), net profi t of Rs. 2,076,632 (000) and net cash fl ows amounting to Rs. 436,382 (000) for the year then ended. These fi nancial statements and other fi nancial information have been audited by other auditors whose reports have been furnished to us, and our opinion on the consolidated fi nancial statements to the extent they have been derived from such fi nancial statements is based solely on the report of such other auditors.

4. We report that the consolidated fi nancial statements have been prepared by the Companys Management in accordance with the requirements of Accounting Standard (AS) 21 - Consolidated Financial Statements and Accounting Standard (AS) 27 - Financial Reporting of Interests in Joint Ventures notifi ed under sub-section 3C of Section 211 of the Companies Act, 1956.

5. Based on our audit and on consideration of reports of other auditors on separate fi nancial statements and on the other fi nancial information of the components of the Group as referred to above, and to the best of our information and according to the explanations given to us, in our opinion, the attached consolidated fi nancial statements give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the consolidated Balance Sheet, of the state of aff airs of the Group as at 31st March, 2010;

(b) in the case of the consolidated Profi t and Loss Account, of the profi t of the Group for the year ended on that date; and

(c) in the case of the consolidated Cash Flow Statement, of the cash fl ows of the Group for the year ended on that date.

For Price WaterhouseFirm Registration Number: 301112E

Chartered Accountants

Partha GhoshPartner

Membership Number: F-55913 Place: MumbaiDate: 28th May, 2010

32 GLENMARK PHARMACEUTICALS LIMITED

Consolidated Balance Sheet

Rs. in (000s)

Schedules As at

31st March, 2010 As at

31st March, 2009 I. SOURCES OF FUNDS

1. SHAREHOLDERS' FUNDSa) Capital 1 269,838 250,520 b) Reserves and Surplus 2 23,282,495 15,731,044

23,552,333 15,981,564 2. MINORITY INTEREST 130,075 31,552 3. LOAN FUNDS

a) Secured Loans 3 2,414,139 3,826,548 b) Unsecured Loans 4 16,279,767 17,116,917

18,693,906 20,943,465 4. DEFERRED TAX LIABILITY 5 1,275,009 1,054,748

TOTAL 43,651,323 38,011,329

II. APPLICATION OF FUNDS1. FIXED ASSETS 6

a) Gross Block 21,755,428 18,385,786 b) Less: Depreciation 3,882,342 2,723,341 c) Net Block 17,873,086 15,662,445 d) Capital Work-in-progress 6,007,692 5,454,080

23,880,778 21,116,525 2. INVESTMENTS 7 181,229 181,229 3. DEFERRED TAX ASSET 8 564,860 485,489 4. CURRENT ASSETS, LOANS AND ADVANCES

a) Inventories 9 7,084,591 6,302,253 b) Sundry Debtors 10 10,782,779 9,553,428 c) Cash and Bank Balances 11 1,070,200 714,823 d) Loans and Advances 12 5,273,096 4,220,877

24,210,666 20,791,381 LESS: CURRENT LIABILITIES AND PROVISIONSa) Current Liabilities 13 4,986,466 4,398,904 b) Provisions 14 199,744 164,391

5,186,210 4,563,295 NET CURRENT ASSETS 19,024,456 16,228,086

TOTAL 43,651,323 38,011,329 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 21Schedules referred to above and notes attached thereto form an integral part of the Consolidated Balance Sheet.

This is the Consolidated Balance Sheet referred to in our report of even date.

For Price Waterhouse For and on behalf of the Board of DirectorsFirm Registration Number: 301112EChartered Accountants Partha Ghosh Glenn Saldanha Cheryl Pinto A. S. MohantyPartner Managing Director & CEO Director Director Membership Number: F-55913

Place: Mumbai Marshall MendonzaDate: 28th May, 2010 Vice President - Legal & Company Secretary


Consolidated Profi t and Loss Account

Rs. in (000s)

SchedulesYear ended

31st March, 2010 Year ended

31st March, 2009 INCOME

Sales & Operating Income 15 25,006,466 21,160,332 Other income 16 489,635 1,740,116

25,496,101 22,900,448 EXPENDITURE

Cost of Sales 17 10,193,390 8,750,997 Selling and Operating Expenses 18 7,844,662 6,976,794 Depreciation/Amortisation 6 1,206,104 1,026,827 Interest (net) 19 1,640,213 1,404,766 Research and Development Expenses 20 772,758 882,703

21,657,127 19,042,087 Profi t before Tax and Exceptional items 3,838,974 3,858,361

Exceptional Item - 1,169,548 PROFIT BEFORE TAX 3,838,974 2,688,813

Provision for Taxation- Current Year [includes wealth tax provision Rs. 200 (2009 - Rs. 288)] 914,730 651,299 - Mat Credit (Entitlement)/Utilisation (520,504) 395,278 - Deferred Tax 137,071 (383,148)- Fringe Benefi t Tax - 81,373 - Prior Period Tax (2,639) 9,282

NET PROFIT AFTER TAX BEFORE MINORITY INTEREST 3,310,316 1,934,729 Share of (profi t)/loss transfer to Minority (65,608) (18,092)

NET PROFIT AFTER TAX & MINORITY INTEREST 3,244,708 1,916,637 Balance Profi t Brought Forward 11,215,453 10,276,665

NET PROFIT AVAILABLE FOR APPROPRIATION 14,460,161 12,193,302 Proposed Dividend on Equity Shares 107,935 100,208 Tax on Proposed Dividend on Equity Shares 17,927 17,030 Residual Dividend and Dividend Tax 163 - Transfer to Foreign Currency Monetary Item Translation Diff erence Account - 366,121 Transfer to General Reserve 128,463 494,490

BALANCE CARRIED TO BALANCE SHEET 14,205,673 11,215,453 Earnings Per Share (Rs.) [Refer Note 5 of Schedule 21]

Basic 12.4 7.7 Diluted 12.4 7.5 Face Value per Share 1.0 1.0

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 21Schedules referred to above and notes attached thereto form an integral part of the Consolidated Profi t and Loss Account.

This is the Consolidated Profi t and Loss Account referred to in our report of even date.




Consolidated Cash lo State ent

Rs. in (000s)Year ended


31st March, 2009 A. CASH FLOW FROM OPERATING ACTIVITIES:

Net Profi t before tax 3,838,974 2,688,813 Adjustments for: Depreciation 1,206,104 1,026,827 Interest Expense 1,655,035 1,457,208 Interest Income (14,822) (52,442) Income from Investment - Dividends (75) (38) (Profi t)/Loss on Fixed Assets sold 8,413 518 Bad Debts written off - 5,729 Provision for Bad & Doubtful Debts 32,932 54,181 Provision for Doubtful Advances (700) - Provision for Gratuity & Leave Encashment 47,838 53,414 Unrealised foreign exchange (gain)/loss (282,149) 196,081 Operating Profi t Before Working Capital Changes 6,491,550 5,430,291 Adjustments for changes in Working Capital: - (Increase) in Sundry Debtors (1,168,169) (1,580,108) - (Increase) in Other Receivables (571,227) (1,215,386) - (Increase) in Inventories (782,338) (2,294,862) - Increase in Trade and Other Payables 428,159 1,213,717 Cash Generated from Operations 4,397,975 1,553,652 - Taxes (Paid) (873,954) (1,394,571)Net Cash from Operating Activities 3,524,021 159,081

B. CASH FLOW FROM INVESTING ACTIVITIES: Purchase of Fixed Assets (3,404,395) (7,662,729) Capital Work-in-Progress (553,612) (2,081,793) Proceeds from Sale of Fixed Assets 73,984 183,496 Proceeds/(Payment) for Sale/Purchase of Investments - 6,942 Interest Received 14,822 52,442 Dividend Received 75 38 Net Cash used in Investing Activities (3,869,126) (9,501,604)


Consolidated Cash lo State ent

Rs. in (000s)Year ended


31st March, 2009 C. CASH FLOW FROM FINANCING ACTIVITIES:

Proceeds from Fresh Issue of Share Capital (including Securities Premium) 4,142,780 350,586 Net Assets fi nanced by Minority Shareholders 32,915 (1,336) Exchange Fluctuation Reserves 16,015 (254,409) Proceeds/(Payment) of Long Term Borrowings 6,639,196 164,905 Proceed from Short Term Borrowings (5,250,473) 8,059,154 Proceeds from Working Capital Facilities movement (2,713,047) 1,614,427 Redemption of FCCB (279,960) - FCCB Premium paid on redemption including TDS (105,288) - Interest Paid (1,663,660) (1,441,050) Dividend Paid (100,966) - Dividend Tax Paid (17,030) -

Net Cash from Financing Activities 700,482 8,492,277

Net Increase/(Decrease) in Cash and Cash Equivalents 355,377 (850,246)

Cash and Cash Equivalents as at 31st March, 2009 714,823 1,565,069

Cash and Cash Equivalents as at 31st March, 2010 1,070,200 714,823

Cash and Cash Equivalents Comprise:

Cash 3,839 6,123 Deposits with Scheduled Banks 31,214 51,126 Deposits with Non-Scheduled Banks 2,829 126 Balance with Scheduled Banks 145,815 92,669 Balance with Non-Scheduled Banks 886,503 564,779

1,070,200 714,823

Notes:1. The Cash Flow Statement has been prepared under the "Indirect Method" as set out in Accounting Standard - 3 on Cash Flow

Statements issued by the Institute of Chartered Accountants of India.2. Cash and Cash Equivalents includes Rs. 3,122 which are not available for use by the Company. (Refer Schedule 13 to the Consolidated

Financial Statements)3. Figures in bracket indicate Cash outgo.

This is the Consolidated Cash Flow Statement referred to in our report of even date.




Schedules annexed to and forming part of the Consolidated Balance Sheet

Rs. in (000s) As at


31st March, 2009 1. CAPITAL

Authorised350,000,000 (2009 350,000,000) Equity Shares of Re. 1 each 350,000 350,000 4,000,000 (2009 4,000,000) Cumulative Redeemable Non-ConvertiblePreference Shares of Rs. 100 each 400,000 400,000

Issued, Subscribed and Paid-up269,837,553 (2009 250,519,758) Equity Shares of Re. 1 each 269,838 250,520

TOTAL 269,838 250,520

Notes: 1. During the year ended 31st March, 2010 the Company, pursuant to Employee Stock Option Scheme 2003, has granted 236,500

(2009 - 2,305,500) options at market price as defi ned in SEBI (ESOS) Guidelines and cancelled 601,100 (2009 - 1,697,500) options. 2. During the year 604,860 (2009 - 500,300) options were converted into Equity Shares under the Employee Stock Option Scheme,

2003. As at 31st March, 2010 2,633,500 options were outstanding under Employee Stock Option Scheme 2003. On exercise of the options so granted under Employee Stock Option Scheme 2003, the paid up Equity Share Capital of the Company will increase by a like number of shares.

3. During the year, Nil (2009 - 7,500) Zero Coupon Foreign Currency Convertible Bonds (FCCB) of USD 1,000 each aggregating USD Nil (2009 - USD 7.5 million) were converted into Nil (2009 - 1,293,706) equity shares of Re. 1 each. As at 31st March, 2010, FCC Bonds amounting to USD 30 million were outstanding.

4. On 18th September, 2009 the Company allotted 18,712,935 Equity Shares of Re. 1 each at a premium of Rs. 220/- per share to Qualifi ed Institutional Buyers pursuant to chapter VIII of the Securities Exchange Board of India (Issue of Capital and Disclosure Requirement) Regulation 2009.

5. Of the above 158,371,140 (2009 - 158,371,140) Equity Shares of Re. 1 each are allotted as fully paid-up Bonus Shares by Capitalisation of Reserves.



Rs. in (000s) As at


31st March, 2009 2. RESERVES AND SURPLUS

Securities Premium AccountBalance at the beginning of the year 3,184,454 2,896,843 Add: Premium on Issue of Shares pursuant to Conversion of ESOP 36,659 22,636 Add: Premium on Issue of Shares to Qualifi ed Institutional Buyers 4,116,846 - Less: Issue expenses on issue of shares to QIBs 65,829 - Add: Premium on Issue of Shares pursuant to Conversion of FCC Bonds - 326,156 Add: Writeback of redemption premium for FCC Bonds converted during the year - 66,115 Less: Redemption premium of FCC Bonds outstanding at year end 149,623 127,296 Add: Tax impact on FCCB redemption premium 35,787 - Closing Balance 7,158,294 3,184,454

General ReserveBalance at the beginning of the year 1,494,336 1,487,026 Add: Transferred from Profi t & Loss Account 128,463 494,490 Add: Transfer to Fixed assets (Refer Note 11 of Schedule 21) - 3,915 Less: Transfer from Foreign Currency Monetary Item Translation Diff erence Account(Refer Note 11 of Schedule 21) - 491,095 Closing Balance 1,622,799 1,494,336

Foreign Currency Monetary Item Translation Diff erence AccountBalance at the beginning of the year (178,259) - Addition/(Reduction) during the year 645,275 (289,670)Amortisation of Foreign Currency Monetary Item Translation Diff erence (202,362) 111,411 Closing Balance 264,654 (178,259)

Capital Redemption Reserve 200,000 200,000

Capital Reserve 1,000 1,000

Exchange Fluctuation ReservesBalance at the beginning of the year (185,940) 68,469 Addition/(Reduction) during the year 16,015 (254,409)Closing Balance (169,925) (185,940)

Profi t and Loss Account Balance 14,205,673 11,215,453 TOTAL 23,282,495 15,731,044

3. SECURED LOANSFrom Banks NoteTerm Loan 1 2,266,286 873,080 Working Capital Facilities 2 147,853 2,860,900 Other Loans 3 - 92,568

TOTAL 2,414,139 3,826,548

Notes: 1. Term loan is secured by way of exclusive charge as the case may be, at certain locations, on Company's fi xed assets both present and

future.2. Working Capital Facilities is secured by hypothecation of Stocks of raw materials, packing materials, fi nished goods, work-in-process,

receivables and equitable mortgage on fi xed assets at the manufacturing facility at Nasik and Research and Development centre at Sinnar, Nasik.

3. Other Loans are secured by way of Hypothecation of certain Premises, Equipment and Vehicles.


Rs. in (000s) As at


31st March, 2009 4. UNSECURED LOANS

Short Term Loan from Banks 4,100,431 9,358,889 Other Loans from Banks 10,771,319 5,876,916 Foreign Currency Convertible Bonds (due within one year) [Refer Note 6 of Schedule 21] 1,354,200 1,835,280 Security Deposit 53,817 45,832

TOTAL 16,279,767 17,116,917

5. DEFERRED TAX LIABILITY [Refer Note 2(xi) of Schedule 21]Depreciation 1,158,540 880,151 Foreign Currency Long Term Loans and Others 17,809 174,597 Others 98,660 -

TOTAL 1,275,009 1,054,748


6. FIXED ASSETS [Refer Note 2(ii), 2(iii), 2(iv), 2(v)(b) and 2(xii) of Schedule 21] Rs. in (000s)

GROSS BLOCK DEPRECIATION / AMORTISATION NET BLOCK

As on 31st March,

2009

Acquisition during the

year

Additions during the

year

Consolidation Adjustment

Deduction As on 31st March,

2010

As on 31st March,

2009

Acquisition For the year

Consolidation Adjustment

On Deduction

As on 31st March,

2010

As on 31st March,

2010

As on 31st March,

2009

Tangible assets

Freehold Land 52,067 - 11,737 (2,391) - 61,413 - - - - - - 61,413 52,067

Leasehold Land 203,208 - 162,692 (6,008) (54,400) 305,492 20,189 - 9,742 (2,364) (1,098) 26,469 279,023 183,019

Factory Buildings 2,194,377 - 648,971 68,995 - 2,912,343 182,621 - 73,164 (5,611) - 250,174 2,662,169 2,011,756

Other Buildings and Premises

883,441 - 75,808 41,007 (1,872) 998,384 98,875 - 41,155 (5,604) (64) 134,362 864,022 784,566

Plant and Machinery 2,156,556 - 147,799 127,232 (1,661) 2,429,926 143,259 - 63,925 2,655 (46) 209,793 2,220,133 2,013,297

Furniture and Fixtures

602,068 - 68,158 17,386 (262) 687,350 173,824 - 53,804 (806) (9) 226,813 460,537 428,244

Equipments 3,002,184 - 615,669 161 (4,776) 3,613,238 681,241 - 315,893 (15,421) (3,189) 978,524 2,634,714 2,320,943

Vehicles 110,284 - 25,688 (1,835) (14,315) 119,822 47,380 - 18,632 (1,709) (7,886) 56,417 63,405 62,904

Intangible assets

Goodwill 800,586 - 116,703 26,084 - 943,373 236,803 - 35,588 10,409 - 282,800 660,573 563,783

Computer software 480,743 - 85,001 41,236 (16,558) 590,422 103,936 - 42,039 2,981 (152) 148,804 441,618 376,807

Brands 7,900,272 - 1,677,821 (482,566) (1,862) 9,093,665 1,035,213 - 552,162 (19,189) - 1,568,186 7,525,479 6,865,059

TOTAL 18,385,786 - 3,636,047 (170,699) (95,706) 21,755,428 2,723,341 - 1,206,104 (34,659) (12,444) 3,882,342 17,873,086 15,662,445

Previous Year 11,241,021 - 9,327,763 521,104 (2,704,102) 18,385,786 2,055,881 - 1,026,827 81,670 (441,037) 2,723,341

Capital Work-in-progress 6,007,692 5,454,080

Notes:

1. Equipment and Other Premises include assets aggregating Rs. 162,435 (2009 Rs. 26,539) [net book value as at 31st March, 2010 Rs. 71,844 (2009 Rs. Nil)], and Rs. 132,422 (2009 Rs. 81,438) [net book value as at 31st March, 2010 Rs. 64,012 (2009 Rs. 31,065)] respectively, which have been acquired on fi nance lease.

2. Addition to assets include Rs. 7,499 (2009 - Rs. 5,400) being borrowing costs.



Rs. in (000s) As at


31st March, 2009 7. INVESTMENTS [Refer Note 2(vi) of Schedule 21]

LONG TERM INVESTMENTS - At Cost - fully paidQuoted - non-tradeEquity shares9,000 (2009 9,000) Bank of India of Rs. 10 each [Market Value Rs. 3,067 (2009 Rs. 1,979)] 405 405 1,209 (2009 1,209) IDBI Bank Limited of Rs. 10 each [Market Value Rs. 139 (2009 Rs. 55)] 34 34

439 439 Investment in Government SecuritiesNational Savings Certifi cate - Sixth Issue 22 22 National Savings Certifi cate - Eighth Issue 10 10

Unquoted - non-trade1 (2009 1) Time Share of Dalmia Resorts Limited 20 20 1 (2009 1) Equity Share of Esquados 340,000 of Glenmark Pharmaceutica Limitada., Lisbon (Portugal) 48 48 213,032 (2009 - 213,032) Equity Shares of Bharuch Eco-Aqua Infrastructure Limited ofRs. 10 each, fully paid-up 2,130 2,130 1,350,000 (2009 - 1,350,000) 7% cumulative preference shares of Rs. 100 each fullypaid-up of Marksans Pharma Ltd. 135,000 135,000 Investment with Napo Pharmaceuticals Inc. [1,176,471 (2009 - 1,176,471) Preferred shares of USD 0.85 each] 43,560 43,560

180,790 180,790 TOTAL 181,229 181,229

Aggregate book value of Investments - Quoted [Market value Rs. 3,206 (2009 - Rs. 2,034)] 439 439 - Unquoted 180,790 180,790

TOTAL 181,229 181,229

8. DEFERRED TAX ASSET [Refer Note 2(xi) of Schedule 21]Provision for Bad Debts and Doubtful Advances 79,968 69,784 Unabsorbed Losses and Depreciation 421,839 307,669 Others 63,053 108,036

TOTAL 564,860 485,489

9. INVENTORIES [Refer Note 2(vii) of Schedule 21](As certifi ed by the management)Raw Materials 1,588,410 1,187,623 Packing Materials 344,867 259,356 Work-in-Process 1,143,752 951,568 Stores and Spares 49,811 45,235 Finished Goods 3,957,751 3,858,471

TOTAL 7,084,591 6,302,253

10. SUNDRY DEBTORSOutstanding for more than six monthsSecured, considered good 98,460 - Unsecured, considered good 3,541,547 1,524,610 Unsecured, considered doubtful 234,927 191,959

3,874,934 1,716,569 Less: Provision for doubtful debts 234,927 191,959

3,640,007 1,524,610 Other debts -Secured, considered good 41,275 2,543 Unsecured, considered good 7,101,497 8,026,275

7,142,772 8,028,818 TOTAL 10,782,779 9,553,428


Rs. in (000s) As at


31st March, 2009 11. CASH AND BANK BALANCES

Cash in hand 3,839 6,123 Balances with Scheduled Banks- Current Accounts 122,659 92,593 - Margin Money Account 31,214 51,126 - EEFC Account 23,156 76 Balances with Non-Scheduled Banks- Current Accounts 886,503 564,779 - Deposit Accounts 2,829 126

TOTAL 1,070,200 714,823 The balances in the margin money accounts are given as security against guarantees issued by banks on behalf of the Company.

12. LOANS AND ADVANCES (unsecured, considered good unless otherwise stated)Advances recoverable in cash or kind or for value to be received

Considered good 2,439,132 1,767,369 Considered doubtful 29,100 29,800

2,468,232 1,797,169 Less: Provision for Doubtful advances (29,100) (29,800)

2,439,132 1,767,369 Advance to Vendors 773,046 772,069 Advance tax (net of provision) 491,526 531,737 MAT Credit Entitlement 685,253 164,749 Balance with Excise Authorities 702,579 800,335 Deposits 181,560 184,618

TOTAL 5,273,096 4,220,877

13. CURRENT LIABILITIESAcceptances 821,134 - Sundry Creditors- Total outstanding dues to Micro enterprises and small enterprises - 26,524 - Total outstanding dues to creditors other than Micro enterprises and small enterprises 2,971,576 3,408,255 Investor Education and Protection Fund shall be credited by- Unclaimed Dividend 3,122 3,717 [There are no amounts due and outstanding to be credited to Investor Education and Protection Fund]Advances from Customers - 46,648 Other Liabilities 732,644 491,478 Interest accrued but not due 457,990 422,282

TOTAL 4,986,466 4,398,904

14. PROVISIONSProposed Dividend 107,935 100,208 Tax payable on Proposed Dividend 17,927 17,030 Provision for Wealth Tax 252 276 Provision for Fringe Benefi t Tax - 2,050 Provident Fund Scheme payable 7,543 7,288 Provision for Gratuity and Leave Encashment 66,087 37,539

TOTAL 199,744 164,391



Schedules annexed to and forming part of the Consolidated Profi t and Loss Account

Rs. in (000s) Year ended


31st March, 2009 15. SALES AND OPERATING INCOME [Refer Note 2(ix) of Schedule 21]

Sale of goods and IP assets 24,991,174 21,145,423 Income from services 15,292 14,909

TOTAL 25,006,466 21,160,332

16. OTHER INCOMELease Rent 2,184 11,431 Dividend received on non-trade Investments 75 38 Exchange gain - 1,352,331 Export Incentive 237,605 297,093 Provision for Doubtful Advances Written back 700 - Miscellaneous Income 249,071 79,223

TOTAL 489,635 1,740,116

17. COST OF SALESSalary, wages, bonus and allowances 495,374 485,023 Contribution to Provident and other Funds 10,320 8,838 Labour charges 316,135 325,489 Consumption of raw & packing materials 5,441,962 4,917,533 Purchase of Traded goods 2,692,326 3,774,902 Excise Duty 201,880 295,483 Sales Tax 680,848 462,829 Power, fuel and water charges 293,220 231,447 Consumption of stores and spares 174,600 153,144 Repairs and maintenance - plant and machinery 64,040 61,395 Repairs and maintenance - building 21,193 18,600 Rent, rates and taxes 13,633 8,027 Other manufacturing expenses 79,323 119,990 (Increase)/Decrease in inventory (291,464) (2,111,703)

TOTAL 10,193,390 8,750,997


Rs. in (000s) Year ended


31st March, 2009 18. SELLING AND OPERATING EXPENSES

Salary, bonus and allowances 2,173,598 2,057,021 Contribution to Provident and other funds 144,732 103,402 Staff welfare expenses 75,509 69,133 Directors' salaries, allowances and commission 105,799 144,805 Incentive and commission 191,060 140,813 Sales promotion expenses 1,529,366 1,370,270 Export Commission 62,007 59,620 Commission on sales 125,238 45,193 Travelling expenses 654,307 690,247 Freight outward 514,716 465,045 Telephone expenses 90,112 59,673 Rates and taxes 39,942 56,049 Provision for doubtful debts 32,932 54,181 Bad debts written off - 5,729 Insurance premium 69,406 69,449 Electricity charges 25,399 24,084 Rent 284,082 270,158 Legal and Professional Expenses 406,242 390,847 Repairs and Maintenance - others 128,143 123,618 Auditors' remuneration and expenses - Audit fees* 25,455 20,191 - Certifi cation and other matters 485 1,500 - Reimbursement of out-of-pocket expenses 37 124 Loss on sale of fi xed assets 8,413 518 Amortisation of Pre-operative/Preliminary expenses - 7,422 Exchange Loss 290,201 - Other operating expenses 867,481 747,702

TOTAL 7,844,662 6,976,794 * Audit fees include fees paid to statutory auditors of subsidiary companies.

19. INTEREST (Net)On term loans from bank 969,981 810,305 On other loans from bank 685,054 646,903

1,655,035 1,457,208 Less: Interest IncomeOn deposits with banks 14,822 52,442

14,822 52,442 TOTAL 1,640,213 1,404,766

20. RESEARCH AND DEVELOPMENT EXPENSES [Refer Note 2(x) of Schedule 21]Salary, bonus and allowances 409,688 237,275 Contribution to Provident and other funds 8,907 16,847 Staff welfare expenses 856 168 Directors' Remuneration 225 211 Incentive and commission 1,216 5,190 Consumable and Chemicals 62,989 106,084 Electricity charges 10,609 6,446 Repairs and maintenance - building 182 131 Repairs and maintenance - others 24,505 5,631 Insurance premium 1,696 1,980 Other expenses 251,885 502,740

TOTAL 772,758 882,703

Schedules annexed to and forming part of the Consolidated Profi t and Loss Account


Schedules annexed to and forming part of the Consolidated Financial Statements

1. BACKGROUNDThe consolidated fi nancial statements relate to Glenmark Pharmaceuticals Limited ( the Company) and its following subsidiaries and Joint Venture company (the Group). Name of the Subsidiary/Joint Venture Country of

IncorporationOwnership and Percentage either directly or through

subsidiaries as at 31st March2010 2009

Glenmark Pharmaceuticals Europe Ltd.* United Kingdom 100% 100%Glenmark Generics (Europe) Ltd.** (formerly Glenmark Pharmaceuticals (Europe) Ltd.) United Kingdom 100% 100%Glenmark Pharmaceuticals S.R.O. (Formerly known as Medicamenta A.S., Czech Republic)*

Czech Republic 100% 100%

Glenmark Pharmaceuticals SK, S.R.O. * (Formerly known as Medicamenta SK SRO) Slovak Republic 100% 100%Glenmark Pharmaceuticals S.A.* Switzerland 100% 100%Glenmark Holding S.A. Switzerland 100% 100%Glenmark Generics Holding S.A.** Switzerland 100% 100%Glenmark Generics Finance S.A.** Switzerland 100% 100%Glenmark Pharmaceuticals S.R.L.* Romania 100% 100%Glenmark Pharmaceuticals Eood * Bulgaria 100% 100%Glenmark Distributor SP z.o.o.* Poland 100% 100%Glenmark Pharmaceuticals SP z.o.o.* Poland 100% 100%Glenmark Generics Inc. **(formerly Glenmark Pharmaceuticals Inc.) USA 100% 100%Glenmark Therapeutics Inc.* USA 100% 100%Glenmark Farmaceutica Ltda* Brazil 100% 100%Glenmark Generics S.A. ** (formerly Servycal S.A.) Argentina 100% 100%Glenmark Pharmaceuticals Mexico, S.A. DE C.V. * Mexico 100% 100%Glenmark Pharmaceuticals Peru SAC * Peru 100% 100%Glenmark Pharmaceuticals Colombia Ltda.* Colombia 100% 100%Glenmark Uruguay S.A. (formerly known as Badatur S.A., Uruguay)* Uruguay 100% 100%Glenmark Pharmaceuticals Venezuela, C.A.* Venezuela 100% 100%Glenmark Dominicana SRL, Dominican Republic (formerly known asGlenmark Dominicana S.A.)

Dominican Republic 100% 100%

Glenmark Pharmaceuticals Egypt S.A.E. Egypt 100% 100%Glenmark Pharmaceuticals FZE U.A.E. 100% 100%Glenmark Impex L.L.C Russia 100% 100%Glenmark Philippines Inc. Philippines 100% 100%Glenmark Pharmaceuticals (Nigeria) Ltd. Nigeria 100% 100%Glenmark Pharmaceuticals Malaysia Sdn Bhd Malaysia 100% 100%Glenmark Pharmaceuticals (Australia) Pty Ltd. Australia 100% 100%Glenmark South Africa (pty) Ltd.* (formerly known as Glenmark Pharmaceuticals Pty Ltd.)

South Africa 100% 100%

Glenmark Pharmaceuticals South Africa (Pty) Ltd.*(formerly known as Bouwer Bartlett Pty Ltd.)

South Africa 100% 100%

Glenmark Pharmaceuticals (Thailand) Co. Ltd. Thailand 49% 49%Glenmark Exports Ltd. India 100% 100%Glenmark Generics Ltd. India 96.93% 98%* held through Glenmark Holding S.A., Switzerland ** held through Glenmark Generics Ltd.

SCHEDULE 21 - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2. SIGNIFICANT ACCOUNTING POLICIES

i) Basis of preparation of Consolidated Financial Statements

The consolidated fi nancial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting in accordance with the accounting principles generally accepted in India and comply with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India to the extent applicable. The Consolidated Financial statements have been prepared using uniform accounting policies for like transactions and other events in similar circumstances and are presented to the extent possible in the same manner as the Companys separate fi nancial statements. However, it was not practicable to use uniform accounting policies for depreciation in the case of following subsidiaries:



Rs. in (000s) Gross Block as on 31st March, 2010

Percentage of Total Assets

Glenmark Pharmaceuticals S.A. 457,872 2.10% Premises 20% Vehicles 40% Laboratory Instruments and Equipments 40%Glenmark Pharmaceuticals South Africa (Pty) Ltd. 598 0.00% Computer Software 50%Glenmark Philippines Inc. 18,107 0.08% Vehicles 33% Equipments 33% Furniture and fi xtures 20%Glenmark Pharmaceuticals (Australia) Pty Ltd. 136 0.00% Equipments 25% to 40%Glenmark Generics Inc. 57,610 0.26% Leasehold Improvement 12.5% Furniture and fi xtures 14%Glenmark Generics (Europe) Ltd. 13,701 0.06% Equipments 25%

The Consolidated Financial Statements have been prepared on the following basis :

(a) In respect of Subsidiary Companies, the fi nancial statements have been consolidated on a line-by-line basis by adding together the book values of like item of assets, liabilities, incomes and expenses, after fully eliminating intra-group balances and unrealised profi ts/losses on intra-group transactions as per Accounting Standard - AS 21 Consolidated Financial Statements. In case of Joint Venture Companies, the fi nancial statements have been consolidated as per Accounting Standard (AS 27) Financial Reporting of Interests in Joint Ventures.

(b) The excess of cost to the Company of its investment in the Subsidiary Company over the Companys share of net assets of the subsidiary company is recognised in the fi nancial statements as Goodwill, which is tested for impairment, if any, at each balance sheet date. The excess of Companys share of net assets of the subsidiary company over the cost of acquisition is treated as Capital Reserve.

(c) The results of operations of a subsidiary are included in the Consolidated Financial Statements from the date on which the parent-subsidiary relationship comes into existence.

(d) The translations of fi nancial statements into Indian Rupees relating to non-integral foreign operations have been carried out using the following procedures :

- assets and liabilities have been translated at closing exchange rates at the year end; and

- income and expenses have been translated at an average of monthly exchange rates.

The resultant translation exchange gain/(loss) has been disclosed as Exchange Fluctuation Reserve under Reserves and Surplus.

(e) The Notes and Signifi cant Accounting Policies to the Consolidated Financial Statements are intended to serve as a guide for better understanding of the Groups position. In this respect, the Group has disclosed such notes and policies, which represent the requisite disclosure.

ii) Fixed Assets (including Intangibles), Depreciation and Amortisation

Fixed assets are stated at cost less accumulated depreciation and amortisation. The Group capitalises all costs relating to the acquisition and installation of fi xed assets. Expenditure of revenue nature, incurred in setting up of new projects, is capitalised as an indirect cost towards construction of the fi xed assets.

Depreciation is provided using the straight line method, pro-rata to the period of use of assets, based on the useful lives of fi xed assets as estimated by management, or at the rates specifi ed in Schedule XIV of the Companies Act, 1956, whichever is higher. Brands/IP Rights are amortised from the month of products launch/commercial production, over the estimated economic life not exceeding 10 years.

Fixed assets having aggregate cost of Rs. 5,000 or less are depreciated fully in the year of acquisition.


The Group has estimated the useful life of its assets as follows:

Category Estimated useful life (in years)

Plant and machinery 8 - 20

Vehicles 5 - 6

Equipments and Air Conditioners 4 - 20

Furniture and Fixtures 10

Computer Software 5

Brands 5 - 10

Leasehold land and improvement is amortised over the period of lease.

iii) Borrowing Costs

Borrowing costs that are attributable to the acquisition and construction of a qualifying asset are capitalised as a part of the cost of the asset. Other borrowing costs are recognised as an expense in the year in which they are incurred.

iv) Impairment of Assets

The Group assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exist, the Group estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profi t and Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exist, the recoverable amount is reassessed and the asset is refl ected at the recoverable amount.

v) Foreign Currency Transactions

(a) Foreign currency transactions are recorded at the exchange rates prevailing on the date of such transactions. Monetary assets and liabilities as at the Balance Sheet date are translated at the rates of exchange prevailing at the date of the Balance Sheet. Gain/loss arising on account of diff erences in foreign exchange rates on settlement/translation of monetary assets and liabilities are recognised in the Profi t and Loss Account. Non-monetary foreign currency items are carried at cost.

(b) Gain/loss on account of foreign exchange fl uctuation in respect of liabilities in foreign currencies specifi c to acquisition of fi xed assets are recognised in the Profi t and Loss Account.

vi) Investments

Long-term investments are stated at cost. Provision, where necessary, is made to recognize a decline, other than temporary, in the value of the investments.

vii) Inventories

Inventories of fi nished goods, consumable store and spares are valued at cost or net realisable value, whichever is lower. Cost of raw materials and packing materials is ascertained on a fi rst-in-fi rst-out basis. Cost of work-in-process and fi nished goods include the cost of materials consumed, labour and manufacturing overheads. Excise and customs duty accrued on production or import of goods, as applicable, is included in the valuation of inventories. Net realisable value is the estimate of the selling price in the ordinary course of the business.

viii) Employee Benefi ts

Long-term Employee Benefi ts

In case of Defi ned Contribution plans, the Companys contributions to these plans are charged to the Profi t and Loss Account as incurred. Liability for Defi ned Benefi t plans is provided on the basis of valuations, as at the Balance Sheet date, carried out by an independent actuary. The actuarial valuation method used for measuring the liability is the Projected Unit Credit method. The estimate of future salary increases considered takes into account the infl ation, seniority, promotion and other relevant factors. The expected rate of return of plan assets is the Companys expectation of the average long-term rate of return expected on investments of the fund during the estimated term of the obligations. Plan assets are measured at fair value as at the Balance Sheet date.

ix) Revenue Recognition

The Group recognises revenue on despatch of goods to customers. Revenues from services are recognized on completion of such services. Revenue from IP asset/Marketing rights is recognized on transfer of ownership/right to use in accordance with the terms of relevant agreements. Revenue from contract research being in the nature of product development activities is recognized as per the terms of the agreement. Revenues are recorded at invoice value, inclusive of excise duty and sales-tax, but net of returns and trade discounts.



x) Research and Development

Capital expenditure on Research and Development (R & D) is capitalised as fi xed assets. Development cost relating to the new and improved product and/or process development is recognised as an intangible asset to the extent that it is expected that such asset will generate future economic benefi ts. Other research and development costs are expensed as incurred.

xi) Taxation

Current Tax

Current tax is determined as the amount of tax payable in respect of taxable income for the year.

Deferred Tax

Deferred tax is recognised, subject to the consideration of prudence, on timing diff erences being the diff erence between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent period. Deferred tax assets are not recognised on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that suffi cient future taxable income will be available against which such deferred assets can be realised.

Deferred tax assets/liabilities recognised as above is after excluding the amounts, which are getting reversed during the tax holiday period.

xii) Leases

Finance Leases

Assets acquired under fi nance lease are recognised as assets with corresponding liabilities in the Balance Sheet at the inception of the lease at amounts equal to lower of the fair value of the leased asset or at the present value of the minimum lease payments. These leased assets are depreciated in line with the Groups policy on depreciation of fi xed assets. The interest is allocated to periods during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Operating Leases

Lease rent in respect of assets taken on operating lease are charged to the Profi t and Loss Account as per the terms of lease agreements.

xiii) Employee Stock Option Schemes (ESOS)

The Company accounts for compensation expense under the Employee Stock Option Schemes using the intrinsic value method as permitted by the Guidance Note on Accounting for Employee Share-based Payments issued by the Institute of Chartered Accountants of India. The diff erence between the market price and the exercise price as at the date of the grant is treated as compensation expense and charged over the vesting period.

xiv) Provisions and Contingent Liabilities

The Group recognises a provision when there is a present obligation as a result of a past event that probably requires an outfl ow of resources and a reliable estimate can be made of the amount of the obligation. 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 obligation or a present obligation that the likelihood of outfl ow of resources is remote, no provision or disclosure is made.

3. CONTINGENT LIABILITIES NOT PROVIDED FOR

Rs. in (000s)

2010 2009(a) Bank guarantees 74,147 71,532

Disputed Income Tax/Excise Duty/Sales Tax 33,249 33,769 Claims against the Company not acknowledged as debts (Refer Note i) 386 380 Open letters of credit (Refer Note ii) 141,615 92,726 Sundry debtors factored with recourse option (Refer Note iii) 3,911,451 2,800,000 Guarantees for Rent 7,691 7,689 Indemnity Bond 345,366 331,876 Corporate Guarantee (USD 27 million) 1,218,780 1,376,460 Note:i) In respect of labour/industrial disputes.ii) The total amount related to LC outstanding as on 31st March, 2010.iii) The amount related to Credit facilities given by Bank against debtors.

(b) Estimated amount of contracts remaining to be executed on capital account, net of advances, not provided for as at 31st March, 2010 aggregate Rs. 430,447 (2009 - Rs. 271,734).



4. During the year, the Company subscribed to 71,510,000 equity shares for a consideration of Rs. 7,151,000 (000) in its subsidiary Glenmark Generics Limited for the balance Business sale consideration.

5. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net profi t for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the weighted average number of shares outstanding are adjusted for the eff ects of all dilutive potential equity shares from the exercise of options on unissued share capital and on conversion of FCC Bonds.

The calculations of earnings per share (basic and diluted) are based on the earnings and number of shares as computed below.

Rs. in (000s)

31st March, 2010 31st March, 2009Profi t after tax and Minority Interest (attributable to equity shareholders) 3,244,708 1,916,637

In (000s)Reconciliation of number of shares No. of Shares No. of Shares Weighted average number of shares: For basic earnings per share 260,759 250,025 Add: Deemed exercise of options on unissued equity share capital and Conversion of FCC Bonds

565 5,237

For diluted earnings per share 261,324 255,262 Earnings per share (nominal value Re. 1 each) Rs. Rs. Basic 12.4 7.7 Diluted 12.4 7.5

6. FOREIGN CURRENCY CONVERTIBLE BOND ISSUED

A) The Company had issued 30,000 Zero Coupon Foreign Currency Convertible Bonds of USD 1,000 each (Rs. 1,331,700 at issue)

(i) Convertible at the option of the bondholder at any time on or after 11th November, 2007 but prior to the close of business on 29th November, 2010 at a fi xed exchange rate of Rs. 44.94 per 1 USD and the conversion price of Rs. 582.60 per share of Re. 1 each.

(ii) Redeemable in whole but not in part at the option of the Company on or after 10th January, 2010 if closing price of the share for each of the 25 consecutive trading days immediately prior to the date upon which notice of such redemption is given was atleast 130% of the applicable Early Redemption Amount divided by the Conversion Ratio.

(iii) Redeemable on maturity date on 11th January, 2011 at 139.729% of its principal amount if not redeemed or converted earlier. The redemption premium of 39.729% payable on maturity of the bond if there is no conversion of the bond to be debited to Securities Premium Account evenly over the period of 5 years from the date of issue of bonds. As of 31st March, 2010, 30,000 FCC bonds (2009 - 30,000) of USD 1,000 each aggregating to USD 30 million are outstanding.

B) The Company had issued 20,000 Zero Coupon Foreign Currency Convertible Bonds of USD 1,000 each (Rs. 873,200 at issue)

(i) Convertible at the option of the bondholder at any time on or after 28th March, 2005 but prior to the close of business on 2nd January, 2010 at a fi xed exchange rate of Rs. 43.66 per 1 USD and price of Rs. 215.60 (Post adjustment for bonus and split) per share of Re. 1 each.

(ii) Redeemable in whole but not in part at the option of the Company on or after 15th February, 2008 if closing price of the Share for each of the 25 consecutive trading days immediately prior to the date upon which notice of such redemption is given was atleast 130% of the applicable Early Redemption Amount divided by the Conversion Ratio.

(iii) Redeemable on maturity date on 16th February, 2010 at 133.74% of its principal amount if not redeemed or converted earlier. The redemption premium of 33.74% payable on maturity of the Bond if there is no conversion of the Bond to be debited to Securities Premium Account evenly over the period of 5 years from the date of issue of Bonds. During the year, 1,000 FCC Bonds of USD 1,000 each aggregating to USD 1 Million were redeemed on 16th February, 2010 on maturity. As of 31st March, 2010, NIL FCC Bonds (2009 - 1,000) of USD 1,000 each are outstanding.

C) The Company had issued 50,000 Zero Coupon Foreign Currency Convertible Bonds of USD 1,000 each (Rs. 2,183,000 at issue)

(i) Convertible at the option of the bondholder at any time on or after 15th November, 2006 but prior to the close of business on 2nd January, 2010 at a fi xed exchange rate of Rs. 43.66 per 1 USD and the price of Rs. 253.11 (post adjustment for split) per share of Re. 1 each.

(ii) Redeemable in whole but not in part at the option of the Company on or after 15th February, 2009 if closing price of the share for each of the 25 consecutive trading days immediately prior to the date upon which notice of such redemption is given was atleast 130% of the applicable Early Redemption Amount divided by the Conversion Ratio.



(iii) Redeemable on maturity date on 16th February, 2010 at 134.07% of its principal amount if not redeemed or converted earlier. The Redemption Premium of 34.07% payable on maturity of the Bond if there is no conversion of the Bond to be debited to Securities Premium Account evenly over the period of 5 years from the date of issue of Bonds. During the year, 5,000 FCC Bonds of USD 1,000 each aggregating to USD 5 Million were redeemed on 16th February, 2010 on maturity. As of 31st March, 2010, NIL FCC Bonds (2009-5000) of USD 1,000 each are outstanding.

7. SEGMENT INFORMATION

Business segments

The Group is primarily engaged in a single segment business of manufacturing and marketing of pharmaceutical formulations and active pharmaceutical ingredients and is governed by a similar set of risks and returns.

Geographical segments

In the view of the management, the Indian and export markets represent geographical segments.

Sales by market The following is the distribution of the Companys sale by geographical market:

Rs. in (000s)

2009-2010 2008-2009Geographical segment India 8,767,083 7,155,326 Other than India* 16,239,383 14,005,006

TOTAL 25,006,466 21,160,332

Assets and additions to fi xed assets by geographical area The following table shows the carrying amount of segment assets and additions to fi xed assets by geographical area in which the assets are located:

Rs. in (000s)

India 2009-2010

Others* 2009-2010

India 2008-2009

Others* 2008-2009

Carrying amount of segment assets 17,886,600 30,386,073 16,077,552 26,011,583 Additions to fi xed assets 1,459,979 2,176,068 1,620,088 7,707,675

* Others represent receivables from debtors located outside India including those related to deemed exports and cash and bank balances of branches outside India.

8. RELATED PARTY DISCLOSURES

In accordance with the requirements of Accounting Standard - 18 Related Party Disclosures, the names of the related parties where control exists and/or with whom transactions have taken place during the year and description of relationships, as identifi ed and certifi ed by the Management are as follows:

a) Key Management Personnel Mr. Gracias Saldanha Mrs. B. E. Saldanha Mr. Glenn Saldanha Mrs. Cheryl Pinto Mr. R. V. Desai Mr. A. S. Mohanty

b) Transactions with related parties during the year

Rs. in (000s)

2009-2010 2008-2009

Managerial Remuneration

Name of Directors

1. Mr. Gracias Saldanha 120 25,882

2. Mrs. B. E. Saldanha 60 40

3. Mr. Glenn Saldanha 18,282 34,093

4. Mrs. Cheryl Pinto 9,409 15,011

5. Mr. R. V. Desai - 9,190

6. Mr. A. S. Mohanty 8,202 11,213



9. LEASES

a) The Group has entered into operating and fi nance lease agreements for the rental of property, vehicles, computers, equipments and other assets. Typically, lease agreements are for a period of three to fi fteen years.

As at 31st March,2010, the Group had commitments under non-cancellable fi nance leases as follows:Rs. in (000s)

31st March, 2010 31st March, 2009 Minimum lease payments Due within one year 53,104 10,355 Due later than one year and not later than fi ve years 34,897 27,345 Due later than fi ve years 36,330 33,141

Total 124,331 70,841 Present value of minimum lease payments Due within one year 50,335 9,815 Due later than one year and not later than fi ve years 29,887 23,206 Due later than fi ve years 23,039 20,233

Total 103,261 53,254

b) Glenmark Generics Inc., USA (GGI) conducts its operations from facilities that are leased under a 97-month non-cancellable operating lease expiring in September 2013. Additional offi ce space were subleased under a 52-month non-cancellable operating lease which expired in September 2008.

Glenmark Pharmaceuticals South Africa (PTY) Limited has entered into operation lease agreement for the rental of its offi ce premises. The lease agreement is for a period of 5 years.

Glenmark Philippines Inc. has entered into operating lease agreements for the rental of its warehouse and offi ce premises. The lease agreement is for a period of 4 years.

Glenmark Pharmaceuticals SP z.o.o. has entered into operating lease agreements for the rental of its offi ce premises for a period of 3 to 5 years.

Rs. in (000s)

31st March, 2010 31st March, 2009 Minimum lease payments Due within one year 53,132 56,709 Due later than one year and not later than fi ve years 83,813 179,790 Due later than fi ve years - 21,674

Total 136,945 258,173

c) The Group has taken on lease/leave and licence godowns/residential & offi ce premises at various locations.

i) The Groups signifi cant leasing arrangements are in respect of the above godowns & premises (Including furniture and fi ttings therein, as applicable). The aggregate lease rentals payable are charged to Profi t and Loss Account as Rent.

ii) The Leasing arrangements which are cancellable range between 11 months and 5 years. They are usually renewable by mutual consent on mutually agreeable terms. Under these arrangements, generally refundable interest free deposits have been given. An amount of Rs. 83,911 (2009 - Rs. 78,559) towards deposit and unadjusted advance rent is recoverable from the lessor.

10. EMPLOYEE BENEFITS

The disclosures as required as per the revised AS 15 are as under:

1. Brief description of the Plans

The Group has various schemes for long-term benefi ts such as Provident Fund, Superannuation, Gratuity, Pension Fund, Social Securities and Leave Encashment. In case of funded schemes, the funds are recognised by the Income tax authorities and administered through appropriate authorities. The Group's defi ned contribution plans are Superannuation and Employees' Provident Fund and Pension Scheme since the Company has no further obligation beyond making the contributions. The Group's defi ned benefi t plans include Gratuity and Leave Encashment.



2. Charge to the Profi t and Loss Account based on contributions:

Rs. in (000s)

2009-10 2008-09Superannuation 2,331 2,326 Provident Fund, Pension Fund and Social Securities 165,351 129,087

167,682 131,413

3. Disclosures for defi ned benefi t plans based on actuarial reports as on 31st March, 2010:

Rs. in ('000s)

2009-2010 2008-2009

Gratuity(Funded plan)

Leave Encashment

(Funded plan)Gratuity

(Funded plan)

Leave Encashment

(Funded plan)(i) Change in Defi ned Benefi t Obligation

Opening defi ned benefi t obligation 121,429 68,839 103,127 48,330 Current service cost 20,086 16,881 15,036 15,079 Interest cost 9,112 4,873 7,710 3,169 Actuarial loss/(gain) 2,549 12,075 5,095 13,209 Benefi ts paid (8,720) (15,062) (9,539) (10,948)Closing defi ned benefi t obligation 144,456 87,606 121,429 68,839

(ii) Change in Fair Value of AssetsOpening fair value of plan assets 117,459 35,271 76,559 29,790 Expected return on plan assets 10,815 2,506 8,152 2,422 Actuarial gain/(loss) 3,628 789 (4,781) 91 Contributions by employer 10,117 20,019 47,067 13,917 Benefi ts paid (8,720) (15,062) (9,539) (10,949)Closing fair value of plan assets 133,299 43,523 117,458 35,271

(iii) Reconcilation of Present Value of Defi ned Benefi t Obligation and the Fair Value of AssetsPresent Value of Funded Obligation as at end of the year

144,456 87,607 121,429 68,839

Fair Value of Plan Assets as at end of the year (133,299) (43,523) (117,458) (35,271)Funded Liability/(Asset) recognised in the Balance Sheet 11,157 44,084 3,971 33,568 Present Value of Unfunded Obligation as at end of the year

- - - -

Unrecognised Actuarial Gain/(Loss) - - - - Unfunded Liability/(Asset) recognised in the Balance Sheet - - - -

(iv) Amount recognised in the Balance SheetPresent value of obligations as at year end 144,456 87,607 121,429 68,839 Fair value of plan assets as at year end (133,299) (43,523) (117,458) (35,271)Amount not recognised as an asset - - - - Net (asset)/liability recognised as on 31st March, 2010 11,157 44,084 3,971 33,568

(v) Expenses recognised in the Profi t and Loss AccountCurrent service cost 20,086 16,881 15,036 15,079 Interest on defi ned benefi t obligation 9,112 4,873 7,710 3,169 Expected return on plan assets (10,815) (2,506) (8,152) (2,422)Net actuarial loss/(gain) recognised in the current year (1,079) 11,286 9,876 13,118 Total expense 17,304 30,534 24,470 28,944

(vi) Actual Return on Plan AssetsExpected return on plan assets 10,815 2,506 8,152 2,422 Actuarial gain/(loss) on Plan Assets 3,628 789 (4,781) 91 Actual Return on Plan Assets 14,443 3,295 3,371 2,513

(vii) Asset informationAdministered by Birla Sunlife Insurance Co. Ltd. and LIC of India

100% 100% 100% 100%



2009-2010 2008-2009

Gratuity(Funded plan)

Leave Encashment

(Funded plan)Gratuity

(Funded plan)

Leave Encashment

(Funded plan)(viii) Principal actuarial assumptions used

Discount rate (p.a.) 8% 8% 7.5%-8% 7.5%-8%Expected rate of return on plan assets (p.a.) 8%-9% 8%-9% 8%-9% 8%-9.25%

(ix) Experience AnalysisActuarial gain/(loss) on change in assumptions 6,297 (1,922) - - Experience (Gain)/Loss on Liabilities (3,748) 13,997 - - Actuarial gain/(loss) on Obligation 2,549 12,075 - -

(x) Expected employers contribution for the next year is Rs. 29,351 ('000) for Gratuity and Leave Encashment.

11. As per the transitional provision given in the notifi cation issued by Ministry of Corporate Aff airs dated 31st March, 2009 the Group has opted for the option of adjusting the exchange diff erence on long term foreign currency monetary items:

i) To the cost of the assets acquired out of this foreign currency monetary item. During the year, the Group has decapitalised exchange diff erence amounting to Rs. 105.46 lakhs on restatement of long-term loans used for acquiring the fi xed assets.

ii) To the Foreign Currency Monetary Item Translation Diff erence account. During the year, the Group has transferred exchange gain of Rs. 6,452.75 lakhs on restatement of long-term loans. Accordingly, proportionate amount of Rs. 2,023.62 lakhs is amortised and Depreciation charged of Rs. 17.04 lakhs for the year ended 31st March, 2010. Due to the above profi t for the year is lower by Rs. 4,551.64 lakhs.

12. Extracts of Assets and Liabilities as on 31st March, 2010 and Income and Expenses for the year ended 31st March, 2010 related to the interest of the Company [without elimination of the eff ect of transactions between the Company and Glenmark Pharmaceuticals (Thailand) Co. Ltd., Thailand] have been extracted from the audited accounts.

Rs. in (000s)

Particulars 2009-2010 2008-2009AssetsNet Fixed Assets including CWIP 5 - Deferred Tax Asset 236 52 Cash Bank Balances 1,029 1,114 Loans and Advances 57 59 LiabilitiesCurrent Liabilities 144 66 IncomeNet Sales - - ExpensesSelling and Operating expenses 1,269 325 Depreciation 1 - Provision for Taxation including Deferred Tax (191) (49)

13. PRIOR YEAR COMPARATIVES

Prior years fi gures have been regrouped or reclassifi ed wherever necessary to confi rm to current years classifi cation.

Rs. in ('000s)

Signatures to the Schedules 1 to 21 which form an integral part of the Financial Statements.





Profi les of Directors

Mr. Gracias Saldanha (Chairman)

Mr. Gracias Saldanha, 72, is the founder of the Company. He has over 38 years experience in the industry. His educational qualifi cations include a M.Sc. from Bombay University with a Diploma in Management Studies from Jamnalal Bajaj Institute of Management Studies, Mumbai. He has worked with leading pharmaceutical companies like Abbott Laboratories and E. Merck.

Mr. Glenn Saldanha (Managing Director & CEO)

Mr. Glenn Saldanha, 40, is a B.Pharm from Bombay University and was awarded the Watumall Foundation Award for overall excellence. His other educational qualifi cations include an MBA from New York Universitys Leonard N. Stern School of Business (US). He has worked for Eli Lilly in the US and was a Management Consultant with Price Waterhouse Coopers. His services have been used by Smithkline Beecham, Rhorer, Astra, Merck and Johnson and Johnson, among others.

Mr. A. S. Mohanty (Director Corporate Communications & CSR)

Mr. A. S. Mohanty, 56, is M.Sc., and looks after Corporate Communications & CSR activities. He has over 32 years experience in pharmaceutical sales and marketing as well as healthcare sectors.

Mr. N. B. Desai (Non-Executive Director)

Mr. N. B. Desai, 83, is a retired General Manager of Bank of Baroda. He has over 46 years experience in the Banking Sector. He has worked in India and overseas. He was Chairman of Bank of Baroda Uganda Ltd. He was the founder and Managing Director of Equitorial Bank PLC, UK from which he retired in 1992.

Mr. Sridhar Gorthi (Non-Executive Director)

Mr. Sridhar Gorthi, 38 is a B.A., L.L.B., (Hons.) from the National Law School of India University. Mr. Sridhar Gorthi is presently a partner in Trilegal and has worked with Arthur Anderson and Lex Inde, Mumbai. He is involved in legal advisory services to various multinational and domestic corporations on restructuring, debt fi nance, joint ventures, acquisition/mergers etc.

Mr. D. R. Mehta (Non-Executive Director)

Mr. D. R. Mehta, 73, has graduated in Arts and law from Rajasthan University. He also studied at Royal Institute of Public Administration, London, UK and the Alfred Sloan school of Management, Boston, U.S.A. He has over 40 years experience in civil services and has held various positions in the Government of Rajasthan and Government of India. He was the Deputy Governor of Reserve Bank of India and also the chairman of the Securities and Exchange Board of India.

Mrs. Cheryl Pinto (Director - Corporate Aff airs)

Mrs. Cheryl Pinto, 43, is a graduate in Pharmacy from the University of Bombay. She has over 22 years experience in the pharmaceuticals business.

Mrs. B. E. Saldanha (Non-Executive Director)

Mrs. B. E. Saldanha, 70, has graduated in B.Sc., B.Ed., from Bombay University and was a Whole-time Director of the Company from 1982 to 2005. She was responsible to a large extent in developing the Companys export business.

Mr. Julio F. Ribeiro (Non-Executive Director)

Mr. Julio F. Ribeiro, 81, is a retired government offi cial and has served the country under various assignments. Amongst the major positions held, he has been the Ex-commissioner of Police, Mumbai, former Special Secretary to Government of India, Ministry of Home Aff airs, former Director General of Police, Punjab, Ex-Adviser to the Governor of Punjab, Ex-Ambassador of India to Romania.

Mr. Hocine Sidi Said (Non-Executive Director)

Mr. Hocine Sidi Said, 45, has graduated in B.A (International Marketing). He is the Founder & Director of Bio-nAbler, an investment company that partners with Sovereign Wealth Funds and Private Equity Firms across Asia and the MENA region to identify and execute product and company acquisitions. He has over 20 years of experience in the pharmaceuticals industry and has worked with companies like Pfi zer and UCB. During his stint at UCB, he was incharge of the entire Emerging Markets Region and designated as Senior Vice President. Prior to joining UCB, he spent close to 17 years with Pfi zer in various senior management and developmental roles in the Middle East, Central and Eastern Europe and Asia.


Directors Report

Your Directors have pleasure in presenting their 32nd Annual Report and Audited Accounts of the Company for the year ended 31st March, 2010.

FINANCIAL RESULTS

(Rs. in Millions)

Standalone Consolidated

2009-2010 2008-2009 2009-2010 2008-2009

Profi t before Interest, Depreciation & Tax 1724.50 3206.13 6685.29 6289.95

Less: Interest 301.58 551.39 1640.21 1404.76

Less: Depreciation 212.78 191.04 1206.10 1026.83

Less: Tax (Current Year & Deferred Tax) (74.49) 281.46 528.66 754.08

Less: Exceptional Items - 2.98 - 1169.55

Profi t after Tax 1284.63 2179.26 3310.32 1934.73

Share of (Profi t)/Loss of Minority Interest - - (65.61) (18.09)

Profi t after Tax and Minority Interest 1284.63 2179.26 3244.71 1916.64

Surplus brought forward from earlier years 7480.98 5636.88 11215.45 10276.66

Profi t available for appropriations 8765.61 7816.14 14460.16 12193.30

APPROPRIATIONS

Proposed Dividend on Equity Shares 107.94 100.21 107.94 100.21

Tax on Proposed Dividend on Equity Shares 17.93 17.03 17.93 17.03Transfer to Foreign Currency Monetary Item Translation Diff erence Account - - - 366.12

Residual Dividend and Dividend Tax 0.16 - 0.16 -

Transfer to General Reserves 128.46 217.93 128.46 494.49

Balance carried to Balance Sheet 8511.12 7480.97 14205.67 11215.45

8765.61 7816.14 14460.16 12193.30

DIVIDEND

Your Directors recommend a Dividend of 40% (Re. 0.40 per equity share of Re. 1/ each) to be appropriated from the profi ts of the year 2009-10 subject to the approval of the members at the ensuing Annual General Meeting. The dividend will be paid in compliance with applicable regulations. The dividend, if approved, will result in an outfl ow of Rs. 125.87 million (including dividend tax).

CONSOLIDATED ACCOUNTS

In accordance with the requirements of Accounting StandardAS-21 prescribed by the Institute of Chartered Accountants of India, the Consolidated Accounts for the year ended 31st March, 2010, under Indian GAAP forms part of the Annual Report.

RESULTS OF OPERATIONS

The Company achieved consolidated Gross revenue ofRs. 25006.47 million (Rs. 21160.33 million) registering a growth of 18.18% over the previous year and the Consolidated operating profi t before interest, depreciation and tax was Rs. 6685.29 million as compared to Rs. 6289.95 million in the previous year.

On standalone basis the company achieved a gross revenue of Rs. 10296.87 million and the Standalone operating profi t before interest, depreciation & tax was Rs. 1724.50 million as compared to Rs. 3206.13 million in the previous year.

CHANGES IN CAPITAL STRUCTURE

Issue of shares on exercise of Employees Stock Options:

During the year, the Company allotted 604,860 Equity Shares ofRe. 1/- each (on pari-passu basis) pursuant to exercise of Stock

Options by the eligible employees of the Company and its subsidiaries.

Issue of shares under QIP:

During the year, the Company allotted 18,712,935 Equity Shares of Re. 1/- each at a premium of Rs. 220/- per share to Qualifi ed Institutional Buyers pursuant to Chapter VIII of the Securities Exchange Board of India (Issue of Capital Disclosure Requirements) Regulations 2009. The issue proceeds were utilised towards repayment of debts.

EMPLOYEE STOCK OPTION SCHEME

During the year, Stock Options have been issued to the employees of the Company. On exercising the convertible options so granted, the paid-up equity share capital of the company will increase by a like number of shares.

The details of stock options granted by the Company are disclosed in compliance with clause 12 of the Securities Exchange Board of India (Employee Stock Options Scheme and Employee Stock Purchase Scheme), 1999 and set out in the Annexure-B to this Report.

LISTING AT STOCK EXCHANGES

The Equity shares of the Company continue to be listed on Bombay Stock Exchange Ltd., and The National Stock Exchange of India Ltd. Foreign Currency Convertible Bonds are listed on the Singapore Stock Exchange.

SUBSIDIARY COMPANIES

During the year the name of Badatur S.A. was changed to Glenmark Uruguay S.A. and Glenmark Dominicana S.A. to


Glenmark Dominicana, SRL. The Company has also incorporated a subsidiary i.e. Glenmark Generics B.V., Netherlands.

Pursuant to the provisions of Section 212 (8) of the Companies Act, 1956, the Company has obtained exemption from Ministry of Corporate Aff airs, New Delhi, vide its letter No. 47/420/2010-CL-III dated 28th June, 2010 to attach Audited Accounts of its subsidiaries together with Directors Report and Auditors Report. The Audited Accounts of the subsidiaries together with its Directors Report and Auditors Report are available for inspection of members on any working day at the Corporate Offi ce of the Company between 11 a.m. to 1 p.m.

DIRECTORS

Mr. Glenn Saldanha, Mr. Sridhar Gorthi and Mr. J. F. Ribeiro retire by rotation at the ensuing Annual General Meeting and being eligible, off er themselves for re-appointment.

Mr. M. Gopal Krishnan resigned as Director of the Company w.e.f. 29th January, 2010. Your Directors wish to place on record their sincere appreciation of the valuable contribution made byMr. Gopal Krishnan during his tenure on the Board.

Mr. Hocine Sidi Said has been appointed as Additional Director w.e.f. 29th October, 2009. He holds offi ce as Director upto the date of the ensuing Annual General Meeting. Notice has been received from a member of the Company pursuant to the provisions of Section 257 of the Companies Act, 1956 signifying his intention to appoint Mr. Hocine Sidi Said as Director on the board of the Company.

CORPORATE GOVERNANCE

Report on the Corporate Governance forms an integral part of this Report. The Certifi cate of the Practicing Company Secretary certifying compliance with the conditions of Corporate Governance as stipulated in clause 49 of the Listing Agreement with Stock Exchanges is annexed with the report on Corporate Governance.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The management discussion and analysis report on the operations of the company, as required under the Listing agreements with the stock exchanges is provided in a separate section and forms a part of this report.

AUDITORS

M/s. Price Waterhouse, Chartered Accountants, have been the Statutory Auditors of the Company since F.Y. 2002-03. The Audit Committee and the Board of Directors have decided that in order to adhere to the best Corporate Governance practices, the Statutory Auditors should be changed periodically on rotational basis. The Company has received a Special Notice pursuant to Section 225 of the Companies Act, 1956 from a member proposing to move a resolution for the appointment of Walker, Chandiok & Co. Chartered Accountants, as Statutory Auditors of the Company in place of the retiring auditors, M/s. Price Waterhouse at the ensuing Annual General Meeting.

Your Directors propose the appointment of Walker, Chandiok & Co., Chartered Accountants, as Statutory Auditors of the Company at the ensuing Annual General Meeting.

Walker, Chandiok & Co. is a member fi rm of M/s Grant Thornton who is a leading international fi rm rated among the top 10 fi rms.

They have a large international network and would be helpful and useful to the Company in managing its international operations. They have representations on various Accounting Board & committees in India and cater to leading companies.

HUMAN RESOURCES

Companys industrial relations continued to be harmonious during the year under review.

PARTICULARS OF EMPLOYEES

Information as required under the provisions of Section 217(2A) of the Companies Act, 1956 read together with the Companies (particulars of Employees) Rules, 1975, as amended, are given in an Annexure forming part of this report.

CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHNAGE EARNINGS AND OUTGO

The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 are set out in the Annexure-A to this Report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the directors confi rm that

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

(ii) appropriate accounting policies have been selected and applied consistently and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of aff airs of the Company as at 31st March, 2010 and of the profi t of the Company for the year ended 31st March, 2010;

(iii) proper and suffi cient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the annual accounts have been prepared on a going concern basis.

APPRECIATION AND ACKNOWLEDGEMENTS

Your Directors express their gratitude to the Companys customers, shareholders, business partners viz. distributors and suppliers, medical profession, Companys bankers, fi nancial institutions including investors for their valuable sustainable support andCo-operation.

Your Directors commend the continuing commitment and dedication of employees at all levels.

For and on behalf of the Board of Directors

G. SaldanhaChairman

MumbaiDate: 9th August, 2010


ANNEXURE-A

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

A. CONSERVATION OF ENERGY

Energy Generation Measures Taken

A. Power and Fuel Consumption 2009-10 2008-09

1. Electricity

(a) Purchased

Unit (in 000 Kwhrs) 7995.98 6210.77

Total Amount (Rs. in 000s) 35385.00 27587.12

Rate/Unit (Rs.) 4.43 4.44

(b) Own Generation

i) Through Diesel Generator

Unit (in 000 Kwhrs) 1187.92 992.99

Units per Ltr. of Diesel Oil 3.33 3.50

Cost/Unit (Rs.) 9.51 10.64

ii) Through Steam Turbine/Generator NIL NIL

2. Coal NIL NIL

Qty.

Total Cost

Avg. Rate

3. Furnace Oil/Light Diesel Oil

Qty. (K. Ltr.) 52.40 54

Total Amount (Rs. in 000s) 2391.40 2395.32

Avg. Rate (Rs./K. Ltr.) 45.64 44.35

4. i) Internal generation

Light Diesel Oil

Qty. (In Ltr. 000s) NIL NIL

Total Cost (Rs. in 000s) NIL NIL

Rate/Unit (Rs.) NIL NIL

ii) Natural Gas

Qty. (M3 000s) NIL NIL

Total Cost (Rs. in 000s) NIL NIL

Rate/Unit (Rs.) NIL NIL

Annexures to the Directors Report

B. Consumption

The Company manufactures several Drug Formulations in diff erent pack sizes. In view of this, it is impracticable to apportion the consumption and cost of utilities to each Product/Formulation.

B. TECHNOLOGY ABSORPTION, RESEARCH & DEVELOPMENT(R & D)

1. Specifi c areas in which R & D is carried out by the Company and its subsidiaries and benefi ts derived as a result of the same.

Formulation Development:

a) Pharmaceutical Formulation Development:

Development of formulations as immediate release, delayed release, enteric release, sustained release and various platform technologies. This includes literature survey,

preformulation studies, formulation and standardization of dosage forms for selected drug molecules on laboratory scale.

R & D has developed the new formulations for new and existing molecules and drug combinations. Which includes its standardization and execution at production site, evaluation of these batches against reference samples for pharmaceutical andbio-equivalence.

The following products are ready for commercialization and commecialized during the fi nancial year 2009-2010.

Anti infl ammatory and analgesic

1. Lornoxicam + Paracetamol Tablets (4 mg+500 mg) (commecialized)

2. Lornoxicam + Paracetamol Tablets (8 mg+500 mg) (commecialized)


3. Lornoxicam SR Tablets 16 mg (commecialized)4. Dexibuprofen tablets 300 mg (commecialized)5. Dexibuprofen tablets 400 mg (commecialized)6. Dexibuprofen + Paracetamol tablets 300 + 500 mg

(commecialized)7. Diacerein ER capsules 100 mg (Ready for

commercialization) Anti Allergic

1. Levocetirizine + Phenylephrine capsules(5mg + 10 mg) (commecialized)

Anti Diabetic

1. Metformin Hydrochloride Extended Release Tablets 1000 mg (Ready for commercialization)

2. Miglitol and metformin Hydrochloride SR Tablets(25 mg + 500 mg) and (50 mg + 500 mg) (commecialized)

Anti Asthmatic

1. Acebrophylline Capsule 100 mg (commecialized)2. Montelukast & Levocetirizine Tablets (Ready for

commercialization)3. Doxofylline & Salbutamol Capsules (400 + 2 & 400

+ 4) (Ready for commercialization)

Anti Hypertensive

1. Telmisartan & Metoprolol tablets (40 mg + 25 mg) (Ready for commercialization)

2. Telmisartan & Metoprolol tablets (40 mg + 50 mg) (Ready for commercialization)

3. Olmesartan Tablets 40mg (commecialized)4. Olmesartan + Hydrochlorothiazide Tablets (40 mg

+12.5 mg) (commecialized)

Hormones

1. Buserelin Injection 1 mg / ml (commecialized)2. Cyproteronoe Acetate & Ethinyl Estradiol tablets

(Ready for commercialization)

Anti Bacterial

1. Tigecycline Injection (commecialized)2. Ofl oxacin and Ornidazole Tablet (commecialized)3. Colistimethate Injection 1 Million IU (Ready for

commercialization)

Dermatology

1. Benzoyl Peroxide Gel 2.5% (Ready for commercialization)

2. Benzoyl Peroxide Gel 5% (Ready for commercialization)

3. Sertaconazole + Beclomethasone Dipropionate Cream (Ready for commercialization)

4. Hydroquinone+Tretinoin+Fluocinolone Acetonide Cream (commecialized)

5. Clotrimazole + Beclomethaosne Dipropionate + Lidocaine + Ofl oxacin Ear Drops (commecialized)

6. Tretinoin cream (Ready for commercialization)

Topical Solutions

1. Minoxidil 10% + Aminexil 1.5% Topical Solution (Ready for commercialization)

Liquid Orals

1 Levosalbutamol Sulphate + Guaiphenesin + Ambroxol Hydrochloride Expectorant (commecialized)

2. Amantadine Hydrochloride + Paracetamol + Phenylephrine Hydrochloride + Chlorpheniramine Maleate Oral Solution (commecialized)

Oncology

1. Pemetrexed for Injection (commecialized)2. Bortezomib for Injection (commecialized)3. Erlotinib Tablets (commecialized)

NCE Formulation Development

1. Formulation Development for NCE 8200 - tablet batch for clinical bridging study 50/100 mg (Completed)

2. Formulation Development NCE 4039-Tablet and capsule batches for clinical study.

3. Formulation Development NCE 10693- Preclinical development & clinical development

4. Formulation Development NCE 15300 - Preclinical development and clinical studies.



7. Formulation Development NCE 17173 - Preclinical development.

US market

1. Omeprazole capsule 10 mg, 20 mg, 40 mg (Ready for commercialization)

Analytical Method Development:

a) Development of new analytical test procedures for Establishing the quality and setting up specifi cation for the release testing of Dosage Forms and Active Pharmaceutical, Finished Intermediates is the responsibility of Analytical Method Development group at Glenmark R & D. These methods are validated as per International Regulatory Standards.

The responsibilities of this department also include the evaluation of the stability of the products developed at R&D under various Climatic Conditions as ICH Guidelines of Stability. This data is used as a basis to predict the shelf life of the products and also to prepare the stability study protocols for the commercial products manufactured as drug products/drug substance.

Category Method Developed

Methods Validated

Methods Transferred

to the manufacturing

SiteOral Solid Dosages 87 46 19Derma products 29 33 17Oncology products 10 5 4API 3 9 9Documents for Drug Substance(STP, Specs etc.)

49


In Analytical Research activities for NCE research:

a) We developed new analytical test procedures to establish the structure and evaluate the quality of NCE prior to initial biological screening. During pre-clinical studies, we generated analytical data for establishing the quality and setting up specifi cation for the release testing of Drug substances. The methods used to release the drug substances which are used in clinical trials, are validated as per International Regulatory Standards.

b) We evaluated physicochemical properties of new chemical entity; did the characterization studies, stability studies (under various Climatic Conditions as per ICH Guidelines of Stability).

c) CMC related Dossiers, study protocols and study reports were prepared to support various pre-clinical studies and clinical trial applications with Regulatory Agencies.

d) We performed polymorphic evaluation and salt selection studies on various NCEs drug substance and drug products.

e) Reference standards of NCE were generated and supplied to CROs and manufacturing sites.

Category NumbersMethods developed 131Methods Validated 3Methods Transferred to the Manufacturing Sites

4

Reference Standards for NCEs 9Stability Studies 136Developmental Studies 15Documents for Drug Substance (Dossiers, Specs, CoA, TTD, etc.)

413

2. Future plan of action

R & D is working on new molecules in the following segment;

- Oncology Products

- Antifungal molecules

- Antibacterial molecules

- Antiasthmatic molecules

- Antidiabetic products

- Antiaging products

- Antiinfl ammatory products

- Atihyperlipidemic products

- Antiosteoporosis products

- Antiemetic products

- Sunscreens Products

- Technology such as microspheres & aerosols foam Mousse.

- Technology to replace solvents used in fi lm coating by water.

- Development of formulations for Semi regulatory market.

- Development of formulations for Latin American market.

- Development of formulations for US market.

- Antihypertensive molecules

- Metered dose inhaler products for India market.

- Metered dose inhaler products for Brazil market

- Development of specialized NDDS products for Indian/SRM.

TECHNOLOGY ABSORPTION, ADOPTION AND INNOVATION:

1. Eff orts in brief towards technology absorption, adoption and innovation.

Most of our eff orts in the area of technology absorption, adoption and innovation are based on our own eff orts in R & D. They include improvement in yield and quality, improvement of processes and development of new processes with validation studies.

2. Benefi ts derived:

Benefi ts derived are enhanced production of our products, improvement in the yield and quality of products and introduction of new products, cost reduction of products and processes without aff ecting the quality of the products and process effi cacy.

Our R & D Centre is recognised by D.S.I.R., Ministry of Science and Technology, Government of India.

Information regarding technology imported during the last fi ve years Nil.

3. Expenditure on R & D: (Rs. in Million)

2009-10 2008-09a) Capital Expenditure 57.98 104.46

b) Revenue Expenditure 460.56 514.58c) Total 518.54 619.04d) R & D Expenditure as a

percentage of total turnover4.99% 6.41%

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

1. Activities relating to exports; initiatives taken to increase exports; development of new export markets for products and services; and export plans. The Management Discussion and Analysis report forming a part of the Directors Report deals with the same.

2. Total foreign exchange earned was Rs. 2953.47 million and outfl ow was Rs. 596.83 million.

For and on behalf of the Board of Directors

G. SaldanhaChairman

MumbaiDate: 9th August, 2010


Particulars

a Options granted 10,134,900

b Pricing Formula Exercise Price shall be the latest available closing market price of the equity shares of the company, prior to the date of grant

c Options Vested** 5,764,000

d Options Exercised** 2,252,500

e Total no. of shares arising as result of exercise of Options 2,252,500

f Options lapsed * 5,248,900

g Variation in terms of Options None

h Money realised by exerise of Options (in lakhs) 952.85

i Total number of options in force** 2,633,500

** The number of options have been reported as on 31.03.2010

* Lapsed Options includes options cancelled/lapsed

j Employee wise details of options granted to :

- Senior Management Name of the employee No. of options granted

Chanakya Mishra 10000

Jaswinder Gill 10000

Paulo Tadeu Resende 27500

Penny Ward 35000

Rajeev Sibal 10000

Rick Finnegan 25000

Sanjay Gupta 20000

- any other employee who receives a grant in any one year of option amounting to 5% or more of option granted during that year

None

- employees who were granted option, during any one year, equal to or exceeding 1% of the issued capital (excluding warrants and conversions) of the Company at the time of grant

None

k Diluted earnings

5322960310

Documents

separate fi nancial

fi nancial information

related consolidated

auditors reportauditors

net assets of rs

accounting principles

net profi t of rs

total assets of rs