FOCUSED & BUILDING - MaxVILthe company towards becoming a services centric business, its services revenue increased from Rs. 34.24 crore in the previous year to Rs. 37.68 crore in

M A X I N D I A L I M I T E DMax House, Okhla III New Delhi 110 020TELEPHONE +91 11 2693 3610 WEBSITE www.maxindia.com

F O C U S E D & B U I L D I N G

M A X I N D I A L I M I T E D A N N U A L R E P O R T 2 0 0 3 - 2 0 0 4

MA

X IN

DIA

LIM

ITE

D A

NN

UA

L R

EP

OR

T 2

00

3-

20

04

CONTENTSLETTER TO SHAREHOLDERS 06

MANAGEMENT DISCUSSION & ANALYSIS 10

CORPORATE GOVERNANCE 20

COMMUNITY CONTRIBUTION 24

SHAREHOLDERS INFORMATION 26

COMPANY INFORMATION 29

FINANCIALS 30

MAX INDIA LIMITED 30

MAX INDIA LIMITED CONSOLIDATED STATEMENT OF ACCOUNTS 73

MAX NEW YORK LIFE INSURANCE COMPANY LIMITED 105

OTHER SUBSIDIARY COMPANIES 136

WORLD-CLASS QUALITY, CUSTOMER DELIGHT MODEL OF EXCELLENCE, KNOWLEDGE ANDSTRENGTH

MAX NEW YORK LIFE NOW HAS5608 AGENTS, OVER 1200EMPLOYEES, AND A TOTAL SUMASSURED OF Rs 11,123 CRORE

HAVING ESTABLISHED ITSELFAS A QUALITY PLAYER MNYLIS DETERMINED TO BE MOSTADMIRED

max india ar 10/12/04 11:24 AM Page 2

THE STATE-OF-THE-ART, MAXDEVKI DEVI HOSPITAL WILL BEOPEN TO PATIENTS FROMOCTOBER THIS YEAR

MAX HEALTHCARE IS NOW INMEDICAL COLLABORATION WITHSINGAPORE GENERAL HOSPITAL


the 80s and 90s, the current context and

competitive landscape demands acute

focus in the chosen area. Moreover, I am

glad that the nature of our new businesses

make them more than just businesses to us;

providing a simultaneous opportunity to pay

back to society as a responsible corporate

citizen.

Everything that Max does today is “All

about Life!” There is complete synergy in our

core businesses of life insurance and

healthcare. Our ‘Champion Agent Advisors’

and ‘Champion Clinicians’ are the new face

of Max, upholding our values and delivering

our promise of care and service excellence.

Today, we are a 6000 strong family

catering to over 250,000 customers in both

the service businesses of life insurance and

healthcare. By the end of this year, we shall

have over 45 operational locations across

India. Our presence in the NCR region is

already significant and well acknowledged.

As we progress further, Max shall be a

household name- at least in North India.

THE YEAR IN REVIEWFiscal year 2003-04 marked the successful

culmination of financial closure for all the

future business requirements of the Group.

All the businesses have reported increased

revenue and strong fundamentals. The core

businesses of Life Insurance and

Healthcare are poised to realize their full

potential and emerge as leaders in their

respective segments, generating long-term

value for investors.

On a consolidated basis, whilst still in a

nascent phase in the growth of its new

businesses, Max India reported a 31% year-

on-year increase in total income, from Rs.

390.62 crore in FY 2002-03 to Rs. 510.46

crore in FY 2003-04. Core businesses of Life

Insurance and Healthcare achieved traction

in their respective fields and continued

robust growth.

On a stand-alone basis, the Company was

successful in reducing its debt to Rs 93

crore as of March 31, 2004, from a level of

Rs 144 crore as of March 31, 2003.

As a result of planned debt repayment,

the financial expenses reduced from Rs.

26.28 crore in the previous year to Rs. 17.82

crore in the current year.

DIVESTMENT FROM MAXHEALTHSCRIBEIn the year under review, Max India divested

its equity stake in Max HealthScribe Limited,

a leading medical transcription company, to

HealthScribe Inc., the US-based JV partner.

Max India’s entire 64.99% stake was bought

over by HealthScribe Inc. for US$ 10.34

million or approximately Rs 46 crore. Profit

of Rs 28.66 crore on this divestment

translates into 58% CAGR over the three

year holding period of this investment.

The strategic divestment from Max

HealthScribe was in continuance of our

pursuit to focus on the core businesses of

life insurance and healthcare. The

divestment helps us realize our business

vision whilst enabling HealthScribe to build

on its core competency.

BUSINESS UPDATE

M A X N E W Y O R K L I F EThis year, Max New York Life (MNYL)

maintained its strong position amongst all

leading private life insurance companies in

the country. Life insurance premium income

increased from Rs. 96.59 crore in FY 2002-

03 to Rs. 215.24 crore in FY 2003-04, a

growth of 123% over the previous year. As of

March 2004, Max New York Life had booked

sum insured aggregating Rs. 11,123 crore,

up 105% from Rs. 5,419 crore the previous

year. MNYL’s product mix continues to be

dominated by Whole Life policies, which

comprise more than half the company’s

product portfolio. The company is insuring

young and healthy lives and is thereby

building a sound business that has superior

embedded value. MNYL has sold more than

290,000 insurance policies till March 2004

and has successfully established a

pan-India presence by having a network of

35 offices in 27 cities.

This company has firmly established itself

in the marketplace as a quality player. It is

selling protection oriented, long life tenor

insurance products; it has built the best-in-

class capability for face to face selling; it has

created a high degree of service orientation

and quality management; it believes in and

ensures strong execution and it has been

able to significantly develop strong customer

trust and market credibility.

The numbers speak for themselves –

� At Rs. 346 crore, MNYL is amongst the

highest capitalized life insurance

companies

Dear Shareholders,

As we close another year of growth and

consolidation, our vision unfolds to reveal

the strong foundation of the legacy that we

dream to build.

The two words that epitomize our efforts

for the year are – “Focus” and “Build”.

Famous American Investor and stock

market guru Warren Buffet says, “Wide

diversification is only required when

investors do not understand what they are

doing.” Max India restructured its

businesses to focus on core areas much

before ‘specialization’ became an industry

mantra; and particularly before Healthcare

and Insurance became business buzzwords!

Thereupon, we embarked on the journey

to become one of India’s most admired

corporates for service excellence.

WHAT ARE WE BUILDING?Our transformation from a B-to-B to a B-to-C

company was essentially borne out of a

need to super-focus on service-sector

businesses. Whilst diversified business

strategy made prudent business sense in

M A X I N D I A A N N U A L R E P O R T 2 0 0 3 - 2 0 0 46 M A N A G E M E N T D I S C U S S I O N A N D A N A L Y S I S 7

Everythingthat Max doestoday is “All aboutLife!” There iscompletesynergy in ourcore businessesof lifeinsurance andhealthcare

MAX INDIA CONTINUESTO BELIEVEIN P E O P L E K N O W L E D G E E N T E R P R I S E

L E T T E R T O S H A R E H O L D E R S

FOCUS ON VALUE


Successfully operating one of India’s

largest VSAT Services, the company’s future

growth drivers lie in Remote Network

Management, Facilities Management

Services, Application Service Provider and

Knowledge Solutions. The company has

developed specific applications and

solutions for the banking sector and is

already a leader in the segment.

To signify the strategic shift in the focus of

the company towards becoming a services

centric business, its services revenue

increased from Rs. 34.24 crore in the

previous year to Rs. 37.68 crore in the

current financial year.

Comsat Max has a Blue-chip clientele

that boasts of some of top names in

corporate India. The company was

adjudged as the overall best VSAT Service

Provider by Voice & Data/ IDC Survey 2003.

Neeman Medical International has now

developed critical mass in all three of it’s

major geographies and is recognized as the

SMO to work with when tackling global

projects that include either India or Latin

America as part of the development plan.

CLOSING PERSPECTIVEMax India completes 20 years of its

existence in 2005.

As we look back on 19 years, we reflect

upon the ‘Spirit of Max’. What is this spirit? It

is the spirit of victory in togetherness. It is the

spirit of enterprise, aspiration, persistency

and determination; perhaps best

symbolized by the rising flame that burns

incessantly, illuminating the way ahead!

My gratitude to all employees and

associates who have contributed to the

success and growth of the company. The

recognition that we earn is the accolade they

deserve.

A word of thanks to our shareholders who

have demonstrated faith in our abilities and

have extended support to our plans.

Our gratitude to New York Life

International, Harvard Medical International

and Singapore General Hospital for their

support.

For Max India Limited

N E W D E L H I A N A L J I T S I N G H

August 12, 2004 Chairman

� The company's group business is

surging ahead with 132,000 lives

covered during the financial year

� 96 per cent of the company's business

portfolio comprises Whole Life and

long-term endowment policies

� Employees in excess of 1,200

On the agency distribution side, the

company has built a truly enviable sales

force. The market acknowledges it. The

agency persistency rates of MNYL are

among the highest.

MNYL’s average sum assured per policy is

among the highest. The company tops in

MDRT- the true measure of the excellence of

any company's agency distribution system.

26 MDRTs in 2002, 45 in 2003 and 81 this

year, makes MNYL the principal of choice

for Agent Advisors.

Swiss Re gave MNYL a resounding

endorsement when they conducted an

underwriting and claims review process

audit in June 2003. The company’s Total

Quality Management approach to business

has resulted in it becoming India’s First Life

Insurance Company to get the ISO

9001:2000 certification.

Last year, MNYL was also rated among

India’s Top 20 Great Places to Work in the

annual survey done by the Great Places to

Work Institute, Inc. This was the first-ever

survey done in India and featured some of

India’s finest companies.

M A X H E A L T H C A R EMax Healthcare continued to move forward

to become a dominant player in North India

and a trusted provider of high quality

healthcare services in the National Capital

Region. Revenues from healthcare services

witnessed a year-on-year increase of 111%

from Rs. 12.84 crore in FY 2002-03 to

Rs. 27.10 crore in FY 2003-04. Max

Healthcare has achieved financial closure

for the project cost of Rs. 454 crore with a

debt/ equity ratio of 0.9.

Since January 2004, new records have

been set by Max Medcentre- Panchsheel,

Max Hospital – Pitampura and Max Hospital

– Noida in terms of outpatient and in-patient

volumes. An increasing number of

customers and the company’s evaluation

process ‘TCEQ’ (Total Customer Experience

Questionnaire), have rated the overall

experience at Max Healthcare to be better

than other hospitals in the National Capital

Region.

The count down to the Max Devki Devi

Hospital at Saket has already begun.

Preparations for completing Max Heart and

Vascular Institute, comes closer, as the

clock ticks, with operations expected to

commence in the last calendar quarter of

2004. The exteriors of the building now give

a glimpse of the final imposing edifice. The

Institute for Joint Replacement and

Orthopaedics, Institute for Neuro Sciences

and Institute for Minimal Invasive Surgery,

are expected to be commissioned in the

second calendar quarter of 2005.

Max Healthcare has enhanced its

network through a built-up hospital owned

by ‘Balaji Medical & Diagnostic Research

Centre’ in East Delhi. This enables Max

Healthcare to provide care to thousands of

residents in the trans-Yamuna area and

nearby UP. Max Balaji Hospital, Patparganj,

expected to be commissioned in the last

calendar quarter of 2004, will be yet another

step towards Max Healthcare becoming the

chief healthcare provider for the National

Capital Region.

Max Healthcare plans to launch a 100 +

100 bed Hospital at Gurgaon. Construction

work is underway. Additionally, the

Panchsheel, Noida and Pitampura

Hospitals are being further augmented in

terms of service profile and capacity.

Max Healthcare has entered into a

medical collaboration with Singapore

General Hospital (SGH) in the areas of

Medical Training, Nursing, Telemedicine,

Paramedical and Processes. SGH is a

prestigious institution and has a reservoir of

expertise in healthcare delivery in the Asian

context.

Max Healthcare, having a network of

more than 335 leading doctors and an

owned patient base in excess of 125,000

patients is aiming to achieve bed capacity of

1,100 beds by 2006; making it a dominant

healthcare provider in North India and usher

in an approach to modern medicine hitherto

not seen in the country.

M A X S P E C I A L I T Y P R O D U C T S : AT R A D I T I O N A L A S S E TThe BOPP product segment recorded a

turnover of Rs 126.30 crore, registering a

growth of 8% over last year. Sales of high

value adding products like preferred

unmetallised products, metallized films and

thermal films grew by 20%, 29% and 95%

respectively, over the previous year.

Max Speciality Products (MSP) continues

to be a leader in the BOPP segment in India.

It has positioned itself as a niche supplier of

high quality BOPP films and value added

products rather than mere commodities. In

spite of saturation in the domestic market,

MSP has continued to increase its sales

quantity, through 90% capacity utilization.

For MSP’s Leather Finishing Foil

business, the focus continues to be on direct

exports. MSP has successfully initiated

commercialization of recently developed

and highly promising Speciality Thick Foil

Products.

O T H E R B U S I N E S S E SComsat Max, which became a wholly owned

subsidiary of the Max group in FY 2003-04,

has been moving its service offerings further

up the value chain. Comsat Max now offers

services that cut across the industry

segments of Telecom, IT, BPO and are more

broadly covered by IT enabled services in

the area of networking, business continuity

and knowledge solutions.


MNYL’s TQM approach has resulted in it becoming India’s FirstLife Insurance Company to get the ISO 9001:2000 certification

Max Healthcare, having a network ofmore than 335 leading doctors andan owned patient base in excess of125,000 patients is targeting toachieve bed capacity of 1,100 bedsby 2006


MAX INDIA LIMITED ON A STAND-

ALONE BASIS

� Profit before tax of Rs. 30.64 crore as

compared to Rs. 3.23 crore in the

previous year.

� Secured loans reduced from Rs. 60.07

crore in the previous year to Rs. 34.07

crore as of March 31, 2004.

Unsecured loans reduced from Rs.

83.93 crore in the previous year to Rs.

59.00 crore as of March 31, 2004.

� As a result of planned debt repayment,

the financial expenses have been

reduced from Rs. 26.28 crore in the

previous year to Rs. 17.82 crore in the

current year.

MAX INDIA LIMITED ON A

CONSOLIDATED BASIS

� Consolidated revenues increased from

Rs. 390.62 crore in the previous year to

Rs. 510.46 crore in the current year,

signifying a 31% year-on-year growth.

� Consolidated service income

increased by 59% year-on-year from

Rs. 203.87 crore in FY 2002-03 to Rs.

324.19 crore in FY 2003-04.

� Life insurance premium income

increased from Rs. 96.59 crore in FY

2002-03 to Rs. 215.24 crore in FY

2003-04, a growth of 123% over the

previous year.

� Income from healthcare services

increased from Rs. 12.84 crore in FY

2002-03 to Rs. 27.10 crore in FY

2003-04, a growth of 111% over the

previous year.

� Losses before tax reduced by 29%

over the previous year, from Rs. 130.62

crore in FY 2002-03 to Rs. 92.77 crore

in FY 2003-04.

� Consolidated fixed asset base of Rs.

303.16 crore as of March 31, 2004 as

compared to Rs. 257.26 crore as of

March 31, 2003.

� Investment portfolio of Rs. 318.01

crore as of March 31, 2004 as

compared to Rs. 259.66 crore as of

March 31, 2003.

D I V E S T M E N T F R O M M A XH E A L T H S C R I B EMax India Limited divested its equity stake in

Max HealthScribe Limited (MHL), a leading

medical transcription company, in favour of

HealthScribe Inc., the US-based JV partner.

Under the divestment agreement, the

10,820,634 equity shares of Rs 10/- each,

representing entire 64.99% of Max India’s

stake, was bought by HealthScribe Inc. for

USD 10.34 million or approximately Rs 46

crore.

MHL, originally founded by HealthScribe

Inc. in 1994, provides medical transcription

services to hospitals, clinics and physician

practice groups. Headquartered in

Bangalore, the JV was formed in 2000 when

Max India bought controlling stake. MHL

was a pioneer in the early days of offshore

medical transcription and as the largest

India-based medical transcription

operation, has become a premier business

process outsourcing (BPO) company in

India serving the healthcare market.

Max HealthScribe has contributed

significantly to the Group and has been yet

another success story. Profit of Rs 28.66

crore on this divestment translates into 58%

CAGR over the 3 year holding period of this

investment.

Our new focus areas are bound by a common

thread with their relevance to People

everywhere and their shared domain is

Knowledge. In the year 2003-04, Max India

took several strides forward in giving

concrete shape to its vision of building “one

of India’s most admired corporates for

Service Excellence”. And the route to that is

Operational and Service Excellence. Even

as we expand at an incredible pace, we

relentlessly pursue our guiding principles of

Service and Quality.

The fiscal year 2003-04 marked the

successful financial closure of all the future

business requirements of the Group. All the

businesses have reported increased

revenue and strong fundamentals. The core

businesses of Life Insurance and

Healthcare moved forward through growth

and achievement and are poised to realize

their full potential to emerge as leaders in

their respective segments, generating long-

term value for the investors.

SIGNIFICANTDEVELOPMENTS OF 2003-04

F I N A N C I A L H I G H L I G H T SThe process of business building by various

subsidiaries continued. The core

businesses of life insurance and healthcare

achieved traction in their respective fields

and the impact of increase in size of

operations and resultant economies is

becoming visible as each of these

businesses get closer to their break even

levels.


M A N A G E M E N T D I S C U S S I O N & A N A L Y S I S

BUILDING TO EXPAND

People, thegreatest assetof a serviceorganisation,continued towork towardsthe vision ofmaking Max

“one of India’smost admiredCoporates forserviceexcellence”

WE RELENTLESSLYPURSUE OURGUIDING PRINCIPLESOF Q U A L I T YS E RV I C E E X C E L L E N C E

COREBUSINESSESCLOSER TOBREAK EVEN

LEVELS

The fiscal year 2003-04 marked thesuccessful financial closure of allthe future business requirements ofthe Group. All the businesses havereported increased revenue andstrong fundamentals

pg10-17new final 10/12/04 11:29 AM Page 10

aggressively pursuing alternative channels

of distribution. During the year Max New

York Life established corporate agencies in

Aurangabad, Jodhpur, Udaipur and Nashik.

The company also established its first

bancassurance relationship by tying up with

the Thane Janata Sahakari Bank in

Maharashtra. The company has also formed

strategic alliances and is pursuing some

others.

Group business is gathering momentum

with the company entering more than a

hundred corporate relationships and

covering 132,000 lives, as against 42,000

lives the previous year.

CUSTOMER SERVICEENHANCEMENTMax New York Life has launched a Direct

Customer Service programme to provide

personalized services to those customers

who wish to deal directly with the company.

Importantly, the company’s claims

experience has been better than

expectations. A total of 338 claims were paid

during the year amounting to Rs. 5.58 crore.

The average turnaround time in the

settlement of these claims was 5 days and

all claims were settled within the IRDA

stipulation of 30 days. Swiss Re conducted

an audit of the Company’s underwriting and

claims process and gave it a satisfactory

rating, calling the claims process as being of

a “very high standard”.

The company also moved to a new

technology system, which will bring in

multiple business benefits and help improve

processes. The project required 14 months

and over 15,000 man days to complete. A

team of more than 60 people from Max New

York Life were involved in putting the world-

class policy administration system in place.

QUALITY PORTFOLIOMax New York Life aims to be a quality

player selling true life insurance products in

a market where people are grossly under-

insured and where life insurance has

traditionally been viewed as an investment

and tax saving device. 96 per cent of the

company’s business portfolio is made up of

Whole Life and long-term endowments. The

average tenure of policies is over 30 years

and the average age of people insured is

around 28 years.

STRONG MEDIA VISIBILITYMax New York Life maintains its top quartile

ranking with Cirrus in terms of media

visibility. Cirrus is a corporate image monitor

that measures and evaluates a company’s

media visibility and evaluates that visibility in

terms of issues, trends, publication and

journalist influence, share, and tone of

voice. At the end of March 31, 2004, Max

New York Life was ranked third among 12

private life insurance companies in terms of

media visibility.

THE YEAR AHEADIn 2004-05, Max New York Life will further

consolidate its market presence by

extending its reach to more cities and

aggressively grow its agency operations and

diversify into alternative distribution

channels. The company will also launch

unit-linked insurance plans and form more

strategic alliances.

The company will continue to play a

thought leadership role in focusing attention

on key industry issues.

Max New York Life will continue to

espouse the cause of Indian life insurers to

move towards a maturity level where self-

regulation becomes possible. This, the

company believes, will come if all

companies come together on a common

platform to adopt best business practices

where the customer’s interest is paramount.

The company will also continue to focus

on pensions, which are an extension of the

financial relationship life insurance

companies have with customers.

Max New York Life will further build on its

present strengths and will continue to map

its progress according to stakeholder

expectations. That is the way to grow and

continue the company’s journey towards

becoming India’s most admired life

insurance company.

Max New York Life’s vision is to become

“India’s most admired life insurance

company”. In a short span of time, the

company has established a strong

reputation with customers, agents and

employees due to its quality business model

and best business practices.

BUSINESS IS GROWINGRAPIDLYMNYL’s strategy has been to build a quality

business portfolio by insuring young and

healthy lives and by selling protection-based

life insurance products to its customers. The

growth of the company in its third full year of

business operations shows that the strategy

is paying off handsomely. In 2003-04, Max

New York Life earned a total premium

income of Rs. 215 crore, a 124 per cent

increase over the previous year. The

company sold 1,45,582 policies during the

year, as against the 77,531 it wrote last year.

The total number of policies sold by the

company now stands at 2,92,112. The

company distributed life insurance worth

Rs. 5,700 crore during the year, as against

Rs. 3,283 crore last year. The total sum

assured with the company is now Rs.

11,123 crore.

The company’s agency force stands at

5,608, a 66 per cent growth over the

number of Agent Advisors in the previous

year. The agency distribution system set in

place by Max New York Life is widely

acknowledged as the best in the Indian

marketplace and the number of Agent

Advisors who make it to the Million Dollar

Round Table (MDRT), the symbol of

excellence among insurance professionals

worldwide, continues to rise. The company

led private life insurers in India with 26

MDRTs in 2002 and 45 in 2003. This year

this number has further gone up to 81.

PAN-INDIA PRESENCEMax New York Life has established a

countrywide presence. It added 13 cities to

its network during the financial year. As of

March 31, 2004, it has a network of 35

offices and representatives in 27 cities.

Among the cities where the company

established offices and representatives this

year were: Surat, Indore, Nagpur, Ludhiana,

Jalandhar, Aurangabad and Nashik. In

addition, it opened three rural area offices in

Patiala, Bhatinda and Sangrur by

establishing a unique hub and spoke model

in Punjab to take the benefits of life

insurance to rural India.

The company believes that life insurance

is a product that is best sold face to face by

trained Agent Advisors. Having spent its first

few years in setting up a proprietary agency

distribution system, the company is now



MAX NEW YORK LIFE

WE HAVEESTABLISHED A COUNTRYWIDEPRESENCE

N E T W O R K O F 3 5 O F F I C E S R E P R E S E N TAT I V E S O F 2 7 C I T I E S

SOLD1,45,582

POLICIES ASAGAINST77,531

WRITTENLAST YEAR

26MDRTs

IN 2002; 45 IN

2003 AND 81 IN2004


factories, office buildings, schools, etc. They

cater to the captive clientele offered by these

locations. At present, Dr Max™ Implants are

at Hutch, GE Capital, EXL Services, Wipro

Spectramind Call Centre, National Highways

Authority of India (NHAI), Japanese

Embassy and Vasant Valley School.

S E C O N D A R Y C A R E H O S P I T A L S A N DM A X M E D C E N T R E ™� State-of-the-art conveniently located

facilities Offering consultancy and a

complete range of Diagnostics

including MRI, CT Scan, etc.

� In-patient services

�Well-equipped operation theatres with

Hepa filters and electrostatic proof

flooring where a range of surgeries can

be conducted:

� 24 hours Emergency Services

� ACLS (Advanced Cardiac Life Support)

equipped ambulance – depending on

the severity of the case – the patient is

accompanied by both the nurse and

doctor or at least the nurse

� A comprehensive Maternity

programme covering ante natal (pre-

delivery), delivery and post natal care

�OPD consultation in all specialties

� Preventive Health Programme (total

body check-up depending on the age

and sex of the patient)

� Chronic Care programme in Diabetes,

Asthma, Arthritis and Hypertension

� Complete range of diagnostics:

� Complete Pathology Laboratory;

Complete Radiology; X-Ray,

Ultrasound, Fluoroscopy, Bone

Densitometry, Mammography;

Cardiology: TMT, Doppler, Echo, ECG;

MRI and CT; Neurology: EEG, EMG,

NCV; Holter analyzer; Urodynamics,

Lithotripsy & Laser

� 24 hour Pharmacy

O P E R AT I O N S P E R F O R M A N C E –S E C O N D A R Y H O S P I T A L S� The Secondary hospitals at

Panchsheel, Pitampura and Noida

registered significant growths during

the year. Overall revenue of the

company from these facilities grew by

around 115% from Rs 12.4 Crore to Rs

26.9 Crore

� The clinical work in the secondary

centres shifted significantly towards

inpatient and surgical work; the overall

revenue from inpatient work grew from

27% to 46% of the total revenue.

� Around 2800 surgeries were

performed at these centres during the

year

�Number of registered patients crossed

the 100,000 mark during the year

FINANCIAL PERFORMANCE�Revenue for the year from healthcare

services grew 111%; from Rs 12.84

crore to Rs 27.10 crore

� Cash losses for the year grew from Rs

23 crore to Rs 25 crore; due to further

investments in the existing centres and

for projects under implementation

� Project Cost of Rs 454 crore to be

funded by Rs 210 crore of senior debt,

which has been fully tied up with multi

lateral funding institutions and Indian

Banks. Some Indian banks have

already disbursed during the year.

� Equity to be funded by holding

company fully tied up

� Significant focus to cut down the cash

losses through cost reductions and

revenue ramp up

�One of the three secondary hospitals

has reached the EBIDTA break even

level during the year; other two are

Max Healthcare is India’s first provider of

comprehensive, standardized, seamless,

and integrated world-class healthcare

services. Seeking to service all three levels

of healthcare (primary, secondary and

tertiary), within one system, Max Healthcare

is building its network in phases; starting

with primary level clinics, establishing

secondary care general hospitals and then

advancing to tertiary care speciality

hospitals. Having launched its operations in

January 2001, Max Healthcare is primarily

focused on the National Capital Region and

is well on its way to becoming Delhi’s chief

healthcare provider.

VISION To deliver world-class healthcare with a

service focus, by creating an institution

committed to the highest standards of

medical & service excellence, patient care,

scientific knowledge and medical

education.

MISSION� Create unparalleled standards of

medical and service excellence

�Brand of FIRST CHOICE

� Principal choice for physicians

� Ethical practices

�Dominant player in Delhi – National

Capital Region

COMPREHENSIVEHEALTHCARE SYSTEMMax Healthcare model envisages setting up

of a world-class healthcare model offering

the best medical assistance delivered

seamlessly through state-of-the-art medical

facilities at Primary level (Dr Max™ Clinics),

Secondary level (Secondary Care Hospitals

& Max Medcentre™ Nursing Home +

Diagnostics) and Tertiary level (Max Multi-

Speciality Hospital).

P R I M A R Y C A R EDR. MAX™ CLINICS

These are conveniently located

neighbourhood clinics. The services at

Dr.Max™ clinics are designed to support

and supplement the service of regular family

physicians. A Dr. Max™ clinic includes

specialist doctor consultation in a range of

specialties; Specialist clinics – Child

Development Clinic and Adolescent Health

Clinic; Chronic care programmes –

Diabetes, Asthma, Hypertension and

Arthritis. In addition it offers basic

diagnostics (X-Ray and ECG), pathology

collection, Physiotherapy, and Dentistry.

DR. MAX™ IMPLANTS

Dr Max Clinics™ are also replicated as Dr

Max™ Implants; these are dedicated

primary care centres in institutions like



MAX HEALTHCARE

THREE NEW HOSPITALBUILDINGS215 CORPORATECLIENTS D O M I N A N C E I N N C R F U N D I N G T I E D - U P

335LEADINGDOCTORS;PATIENT

BASE OVER125,000

REGISTEREDPATIENTS

CROSSED THE100,000 MARKDURING THE

YEAR

One of the three secondary hospitalshas reached the EBIDTA break evenlevel during the year; other two areexpected to achieve this level by endof the current financial year


INDUSTRY STRUCTURE ANDDEVELOPMENTInstalled capacity of BOPP films, in India,

increased substantially by approximately.

35% during 2003-04. Aggressive market

positioning by leading competitors, will

result in increase of capacity by additional

30% before end of 2004.

Demand for the product in India has been

growing impressively in-excess-of 15% year-

on-year. However, due to a sharp increase in

capacity, the margins have been reduced to

an all-time-low in the last decade.

Globally, the BOPP Films’ demand (which

is in excess of 30 times India’s capacity) has

been consistently growing at the rate of 8%.

This provides an opportunity for increasing

exports from India.

OPPORTUNITIESDemand of packaging-converters in India

(for their domestic & export markets)

provides a big opportunity for growth for high

quality BOPP film producers. Max Speciality

Products has positioned itself as a niche

supplier of high quality BOPP films and

value added products rather than

commodities. Therefore, in-spite of over-

capacity in India, MSP has continued to not-

only-remain-fully-loaded, but also increased

its sales quantity, through optimisation of

available capacity. MSP continues to be the

preferred supplier for top-end quality-

conscious customers of BOPP films.

For MSP’s Leather Finishing Foil

business, the focus continues to be on

direct-exports and the exports-led speciality

business. MSP has successfully started

commercialisation of recently developed

and highly promising STF Products.

THREATS, RISKS ANDCONCERNThough, BOPP films’ Industry has been

growing at a reasonable rate, both in India

and globally, yet the disturbing fact is that

the explosion in capacity-addition, has

happened mostly in China, the Middle East

and South East Asia. There is a potential

threat of ‘dumping’ in India, at very low

prices. Recent reduction in import duty from

25% to 20% and the appreciating rupee can

further compound this concern. However,

for MSP, the negative impact of this threat is

reduced to a large extent, as the possibility of

large scale imports/dumping, can be mainly

in commodity-BOPP-films rather than in

niche/ specialised products.

MSP’s customer-retention at 90% has

been exemplary in-spite of its limited

capacity. This has been achieved due to

continually improving Customer Satisfaction

Index (CSI), through consistent quality of

products and services.

MSP’s main drive will be to continue to

improve its product mix with increasing ratio

of higher value-added speciality products.

INTERNAL CONTROL SYSTEMAND ADEQUACY Internal Audit Department, comprising of a

team of qualified and experienced employees,

conduct regular audits. Both the divisions of

MSP are ISO 9001:2000 accredited and

there are well established management

systems in Max Speciality Products.

FINANCIAL PERFORMANCEFor 2003-04, Max Speciality Products,

recorded sales turnover of Rs 133.0 crore,

and PBIDT of Rs 24.5 crore versus Rs 123.0

crore and Rs 26.3 crore respectively, for the

previous year.

During 2003-04, Maxmet Division

recorded sale of Rs 126.20 crore,

registering a growth of 8% over last year.

Impressive growth was achieved in all

product segments with higher value-

additions viz. Metallised Films, Thermal Film

and Preferred unmetallised Films, by 29%,

95% and 20% respectively, over the

previous year.

The negative impact of a sharp squeeze

in margins (due to substantial increase in

installed capacity and therefore over

capacity of BOPP films in India) was

overcome to some extent, by better

product-mix.

HUMAN RESOURCESHuman Resources are the most valuable

asset at MSP and it continues to attract and

retain the best available talent. MSP

provides an excellent and professional work-

environment and ensures customised

training & development programmes for all

levels of employees. Innovation and Merit

performance are recognised and rewarded.

Max Speciality Products has also initiated

skill-upgradation and education

programmes for its workmen. The total

number of employees (as on March 31,

2004) are 310.

expected to achieve this level by end of

the current financial year

� Current year projected growth 70%

from the existing operations; and total

growth of 200% including Saket

Hospital

PROJECTS—TERTIARY CAREHOSPITAL �Max Devki Devi Hospital, Saket to be

launched during the current financial

year in two phases

�East Wing will focus on heart and

vascular work – to be named as Max

Heart & Vascular Institute. It will have

248 beds and cover an area of 21976

sq. metres

�West Wing will have

• Institute of Neuro Sciences

• Institute of Joint Replacement &

Orthopaedics

• Institute of Minimally Invasive Surgery

� Leading physicians for the tower

specialties identified

� In addition, to the above, the focus

would also include Internal Medicine,

Pulmonology, Gastroenterology,

Endocrinology & Other Support

Services

� To employ 750 people in the first

phase; 2000 people by end of project

� Applying for Accreditation by NABL

and ISO Certification

� Total project cost Rs 240 Crore

PROJECTS—SECONDARY CAREHOSPITALSExpansion projects have been undertaken

at Noida and Pitampura to increase in-

patient bed capacity; Noida will be a 55 bed

hospital post expansion and Pitampura is

scheduled to become a 110 bed hospital

from September 2004.

MAX BALAJI HOSPITAL,

PATPARGANJ

To be incorporated in Sept. 2004

�Beds 110 with 4 OTs and 2 Labor

Rooms

�Services General Practitioner, OTs. &

Gynaecology, Paediatrics, Trauma,

Orthopaedics, Urology, Cath Lab, PHP,

full Pathology & Radiology, Dentistry,

Blood Bank with components.

MAX HOSPITAL, GURGAON

To be incorporated in 2005

�Beds 100 +100 (later addition)

� Focus on PHP, Obstetrics &

Gynaecology, Paediatrics,

Ophthalmology, Plastic & Reconstructive

Surgery, 24 hr Chemist, General &

Minimally Invasive surgeries, Blood

Bank with components.

I N T E R N A L C O N T R O L SInternal Controls in the business are

adequate and is reviewed by the internal

audit team of Max India periodically and

there exists a system to periodically review

the status of implementation of

recommendations.

R I S K S�Delays in project implementation and

start up of facilities leading to:

• Higher cash losses

• Lose first mover advantage

�Medico legal cases of substantial

amounts

�Key physicians not joining per plan



MAX SPECIALITY PRODUCTS

PITAMPURA IS SCHEDULEDTO BECOME A

110 BEDHOSPITAL

Max Healthcare envisages setting upof a world-class healthcare modeloffering the best medical assistancedelivered seamlessly through state-of-the-art medical facilities


M A N A G E M E N T D I S C U S S I O N A N D A N A L Y S I S 19

INDUSTRY OVERVIEWThe pharmaceutical drug development

industry has enjoyed over a century of

continued growth and expansion. However,

currently the industry is at the crossroads

where many of the big players have grown

top heavy while their pipelines of drugs have

begun to dry up. In addition to a less robust

pipeline, KPMG’s PHARMA report says, “in

order to maintain market share the

pharmaceutical industry will need to double

its output over the next three years”. This

escalating pressure on the pharmaceutical

industry to produce a greater output faster

has created new opportunities for

outsourcing groups such as Neeman

Medical International (NMI). NMI is the only

global Site Management Organization

(SMO) with a significant presence in the US

(representing 85% worldwide ethical

pharmaceutical sales) and in the two fastest

growing regions of the world, India (second

only to China and representing a 16% sales

forecast for Asia) and Latin America

(experiencing growth in sales equivalent to

Japan and Europe).

OUTLOOKThe outlook for the industry remains strong

and NMI’s now enjoys the very enviable

position of having provided high quality

service to the top 20 pharmaceutical and

top 10 Clinical Research Organizations

(CRO)

Neeman has geographic spread,

documented performance and is managed

by a team of industry experts. For all of these

reasons Neeman Medical International has

the distinction to be the first global SMO.

RISKS AND CONCERNSFor all its stability, the pharmaceutical

industry is a very volatile business due to the

fact that literally hundreds of compounds

must face rigorous testing through 3 phases

of development before achieving approval

from the various government regulatory

agencies. Roughly 9 out of every 10 NCE’s

(new chemical entities) that make it into late

Phase II early Phase III development will be

found non-viable for one reason or another

and the program canceled. Therefore the

concern is that a big part of the job NMI

shares with the pharmaceutical industry is

to help them find the products that should

be dropped as rapidly as possible.

However, since there are 8,000 to 10,000

NCE’s under development in this industry

on an annual basis, there is ample growth

potential available for NMI.

INTERNAL CONTROL SYSTEMSFrom its inception Neeman has placed a

great deal of attention on well spelt out

standard operating procedures

implemented uniformly across all of our

locations. Each location conducts internal

audits and employs external auditors to

double check the ICH/GCP compliance of

the operations. The Costa Rican operations

has participated in “pivotal” NDA studies

and been audited 6 times by the FDA.

BUSINESS PERFORMANCEAs the business building process continues,

the consolidated revenues for the three NMI

locations in 2003-04 touched $3.5 million.

The business funnel size of $5.0 million is

growing steadily with more and more new

clinical trials being awarded.

The US operations is now spread over 7

locations across North America. Neeman

US has an investigator network in excess of

90. Neeman Asia continues to expand its

presence all over India and manages more

than 30 clinical trial sites. Neeman Asia also

has the distinction of having a high patient

retention rate of 99.5% as compared with

the industry average of 85%. The new

patent regime in India effective from

January 2005 is likely to have a positive

impact on the volume of clinical research

business in India.

The Latin American operations have

traditionally been based solely in Costa Rica.

However, in Costa Rica, NMI has faced

unexpected regulatory challenges and

changes in government policy, which have

significantly slowed down the study approval

process. In order to mitigate this business

risk, NMI plans to expand its operations into

other countries in Latin America such as

Brazil, Argentina, Mexico, Chili, Colombia

and Guatemala.

CLIENTSINCLUDETOP 20

PHARMACOMPANIES

AND TOP 10 CROs

INDUSTRY STRUCTURE ANDDEVELOPMENTSComsat Max Ltd (CML) has traditionally

been operating in the Wide Area Networking

(WAN) solutions segment. With the spread

of basic telecom providers leading to WAN

fast becoming a commodity business, CML

has been moving its service offerings further

up the value chain. The improvement in

Internet services and connectivity options

with a definite shift towards a truly global

economy has made organizations re-think

their strategy on competitive advantage.

Due to technological advancements,

there is growing convergence among the

telecom, IT and content businesses as

Information Technology plays a key role in

ensuring business can be transacted

successfully using facilities spread over a

wide geography while serving Customers

who are present in a Global Market.

In its quest to be ahead of the industry,

CML has strategically decided to offer

services that cut across the industry

segments of Telecom, IT, BPO and are more

broadly covered by IT Enabled Services in

the area of Networking, Business Continuity

and Knowledge Solutions.

OPPORTUNITIES ANDTHREATS The mix of the business portfolios of CML as

well as the dynamics of the markets being

serviced by it make it uniquely poised for

tapping into a huge overseas business

opportunities. CML's forays into virgin

geographies of the Middle East and Africa

have already tasted success with the

winning of multi-million Dollar Operation &

Maintenance contracts in the field of VSAT &

ISP businesses. These geographies

continue to hold tremendous potential for

CML. The developed markets of the US with

a potential of US$ 8 billion, offers

tremendous opportunity for its Network

Infrastructure Management Services

(NIMS). With its proven expertise in

managing complex networks of demanding

MNC clients as well as its well-equipped

infrastructure and skill sets, CML is all set to

convert its pilot project into orders.

Domestically, the Learning Management

solutions launched by CML have now been

expanded to also confer Knowledge

Management capabilities; with the

acquisition of Knowledge Management

business from, Max Ateev Ltd., a group

company. CML's Disaster Recovery &

Business continuity services have been well

received and with a keen awareness among

the corporates about the value and need for

such services.

There continues to be a threat from

growing opposition to outsourcing of work

from developed economies like USA, which

may impact segments like NIMS. The

growing political instability in Middle Eastern

economies is another threat to smooth

continuation of implementation of projects

therein.

OUTLOOKIn the backdrop of significant market

opportunities as described earlier, the

outlook for the coming years is extremely

promising. With conscious strategy to

reduce dependence on hardware and low-

margin service revenues, in order to

enhance the profitability, the year ahead

would be dedicated to achieving services

offering build-ups, while also serving the

existing corporate clients' needs.

FINANCIAL PERFORMANCEThe hardware revenues of combined

businesses of CML and CMax Infocom Pvt

Ltd, the Group Company engaged in the

hardware business, were at Rs 1376 lakhs

as against previous year's Rs. 2360 lakhs. In

spite of the significant pricing pressures, the

service revenues posted an increase of

about 10% from Rs 3457 lakhs last year to

Rs 3795 lakhs this year. The profitability of

the combined businesses has also improved

at Rs 186 lakhs as profit-before-tax against

Rs 250 lakhs loss-before-tax last year.

M A X I N D I A A N N U A L R E P O R T 2 0 0 3 - 2 0 0 418


COMSAT MAXM A N A G E M E N T D I S C U S S I O N & A N A L Y S I S

NEEMAN MEDICAL INTERNATIONAL

COMBINEDREVENUESOF 5171LAKHS;

PBT OF 186LAKHS


COMMITTEES OF THE BOARD

AUDIT COMMITTEEThis Committee currently comprises of Mr.

N.C. Singhal (Chairman), Dr. S.S. Baijal, Mr.

K.K. Mathur, Mr. Ashwani Windlass and Mr.

Anuroop (Tony) Singh. All members of the

Committee are non executive independent

directors. The Company Secretary of the

Company acts as the Secretary of this

Committee. This committee inter alia,

recommends appointment of statutory

auditors and internal auditors; reviews

Company’s financial reporting processes

and systems; reviews financial and risk

management policies, Company’s financial

statements, including annual and quarterly

financial results; and financial accounting

practices & policies. The scope of the audit

committee has been defined by the Board of

Directors in accordance with Clause 49 of

the Listing Agreement and Section 292A of

the Companies Act, 1956.

The Internal Auditors and Group Finance

Director also attend the Audit Committee

meetings. Representatives of Statutory

Auditors are invited, as required. The then

Chairman of the Audit Committee, Mr. K.K.

Mathur was present at the last Annual

C O R P O R A T E G O V E R N A N C E 21

PHILOSOPHY OF CORPORATEGOVERNANCE Corporate Governance is the leitmotiv and

fundamental article of faith for all our actions

in Max India Limited. It has been the guiding

force in our quest for instituting within our

edifice, systems and processes that

promote the values of transparency,

professionalism and accountability and

compliance.

The Company remains firmly committed

to this central theme and endeavors to

improve these values on an ongoing basis.

BOARD COMPOSITIONThe Board of Directors of the Company

comprises of ten members with three

executive directors and seven non executive

directors. Eight of the members of the Board

are independent directors except Mr. Analjit

Singh, Chairman and Dr. Bhai Mohan Singh,

Lifetime Chairman Emeritus, being

Promoter Directors of the Company. Mr.

Analjit Singh, Mr. B. Anantharaman and Mr.

Surendra Kaul are Executive Directors of the

Company. None of the non executive

directors has any pecuniary relationship

with the Company. None of the Directors is a

member in more than ten committees, or

acts as Chairman of more than five

committees, across all public companies in

which he is a Director.

Attendance of Directors at Board

Meetings for the financial year 2003 - 2004,

the last AGM and the number of other

Directorships & Memberships /

Chairmanships of other Board Committees

as on March 31, 2004 is given in Table 1.


It has been theguiding force inour quest forinstitutingwithin ouredifice,systems andprocesses thatpromote thevalues oftransparency,professionalismandaccountability

C O R P O R A T E G O V E R N A N C E

GUIDED BY FAITH

MAX INDIA ISCOMMITTED TO

E T H I C S C O M P L I A N C E

TABLE2 DETAILS OF BOARD MEETINGS HELD DURING THE FINANCIAL YEAR

ENDED MARCH 31, 2004

Date Board Strength No. of Directors present

April 22, 2003 10 10

June 5, 2003 10 04

June 26, 2003 10 05

July 29, 2003 10 08

September 26, 2003 10 04

October 31, 2003 10 09

January 9, 2004 10 06

January 29, 2004 10 09

February 13, 2004 10 06

TABLE1 ATTENDANCE OF DIRECTORS AT BOARD MEETINGS FOR THE FINANCIAL YEAR 2003- 2004, THE LAST AGM

AND THE NUMBER OF OTHER DIRECTORSHIPS & MEMBERSHIPS/ CHAIRMANSHIPS OF OTHER BOARD COMMITTEES AS ON

MARCH 31, 2004

Director Board meetings Attendance Directorships* Memberships/Chairmanships

attended at last AGM of Board Committees**

Dr. Bhai Mohan Singh Promoter Director 04 – 3 Nil

Mr. Analjit Singh Promoter Director 07 – 8 3 (including 1 as Chairman)

Dr. S.S. Baijal Non-executive Director 06 � 6 9 (including 5 as Chairman)

Mr. N.C. Singhal Non-executive Director 05 – 10 10 (including 5 as Chairman)

Mr. K.K. Mathur Non-executive Director 07 � 2 3 (including 1 as Chairman)

Mr.Ashwani Windlass Non-executive Director 06 – 3 3

Mr. Bharat Sahgal Non-executive Director 03 – Nil Nil

Mr. Anuroop (Tony) Singh Non-executive Director 06 – 2 2

Mr. Surendra Kaul Executive Director 08 � 8 4 (including 1 as Chairman)

Mr. B. Anantharaman Executive Director 09 � 10 5 (including 2 as Chairman)

* Excludes Directorships in Indian private limited companies, foreign companies, memberships of managing committees of various chambers/ bodies and alternate director-

ships. ** Represents Memberships/Chairmanships of Audit Committee, Investor Grievance Committee and Remuneration Committee.


C O R P O R A T E G O V E R N A N C E 23

prescribed period and published in the

Financial Express and the Punjabi Tribune.

The results can also be accessed on the

Company’s website www.maxindia.com.

GENERAL SHAREHOLDERINFORMATIONA section on the ‘Shareholder Information’ is

annexed, and forms part of this Annual

Report.

MANAGEMENT DISCUSSION &ANALYSISA section on the ‘Management Discussion &

Analysis’ is annexed, and forms part of this

Annual Report.

COMPLIANCE CERTIFICATEOF THE AUDITORSThe statutory auditors of the Company have

certified that the Company has complied

with the conditions of corporate governance

as stipulated in Clause 49 of the Listing

Agreement with Stock Exchanges and the

same is annexed to the Report.


N E W D E L H I A N A L J I T S I N G H

August 12, 2004 Chairman

AUDITORS’ CERTIFICATE ONCOMPLIANCE WITH CONDITIONSOF CORPORATE GOVERNANCEUNDER CLAUSE 49 OF THELISTING AGREEMENT(S)To the Members of Max India Limited

1. We have reviewed the implementation of

Corporate Governance procedures by

Max India Limited during the year ended

March 31,2004, with the relevant records

and documents maintained by the

Company, furnished to us for our review

and the report on Corporate Governance

as approved by the Board of Directors.

2. The compliance of conditions of

corporate governance is the responsibility

of the management. Our examination was

limited to a review of procedures and

implementation thereof, adopted by the

Company for ensuring the compliance of

the conditions of Corporate Governance.

It is neither an audit nor an expression of

opinion on the financial statements of the

Company.

3. We further state that such compliance is

neither an assurance as to the future

viability of the Company nor the efficiency

or effectiveness with which the

management has conducted the affairs of

the Company.

4. On the basis of our review and according

to the information and explanations given

to us, the conditions of Corporate

Governance as stipulated in Clause 49 of

the listing agreements with the Stock

Exchanges have been complied with in all

material respect by the Company and that

no investor grievance is pending for a

period exceeding one month against the

Company as per the records maintained

by the Investor Grievance, Relations and

Share Transfer Committee.

V . N I J H A W A N

PartnerFor and on behalf of

NEW DELHI PRICE WATERHOUSE

August 12, 2004 Chartered Accountants

General Meeting. Meetings and attendance

of the Audit Committee during the year is

given in Table 3.

REMUNERAT ION COMMITTEE This Committee comprises of Dr. S.S. Baijal

(Chairman), Mr. Analjit Singh, Mr. Ashwani

Windlass and Mr. Anuroop (Tony) Singh. All

the members of the Committee, except Mr.

Analjit Singh, are non executive

independent directors. This Committee

evaluates compensation and benefits for

Executive Directors and administers the

ESOP Schemes of the Company. The

remuneration policy is aimed at attracting

and retaining the best talent to leverage

performance in a significant manner. The

strategy takes into account, the

remuneration trends, talent market and the

competitive requirements. Meetings and

attendance of the Remuneration Committee

during the year is given in Table 4.

R E M U N E R AT I O N P A I D T O D I R E C T O R SD U R I N G 2 0 0 3 - 0 4The Company has not paid any

remuneration to its non executive directors,

except the Sitting Fees for attending

meetings of the Board/ Committees. In

addition, in terms of the Employee Stock

Option Plan – 2000, the following non

executive directors, viz., Dr. S.S. Baijal, Mr.

N.C. Singhal, Mr. K.K. Mathur and Mr.

Ashwani Windlass have exercised their

options and the company had allotted them

4000 equity shares each at an exercise

price of Rs. 100.50 per equity share. Details

of the remuneration paid to the executive

directors of the Company is given in Table 5.

INVESTOR GRIEVANCE , RELAT IONSAND SHARE TRANSFER COMMITTEE This Committee comprises of Mr. K.K.

Mathur (Chairman) Mr. Ashwani Windlass,

Mr. Surendra Kaul and Mr. B.

Anantharaman. It approves the transfer and

transmission of securities; issuance of

duplicate certificates, redressal of investors’

grievances. It also suggests and monitors

measures to improve investor relations.

Meetings and attendance of the Investor

Grievance, Relations and Share Transfer

Committee during the year is given in Table 6.

Besides, the Company Secretary has

been authorized to effect transfer of shares

upto 500 per folio. Mr. V. Krishnan,

Company Secretary is the Compliance

Officer for the Company. The Company has

normally attended to the Shareholders/

Investors complaints within a period of 7

working days except in cases which were

under legal proceedings/ disputes. The

Company received 180 complaints from the

shareholders during the financial year

ended March 31, 2004 and the Company

has attended to all the complaints received.

BANKING OPERAT IONS COMMITTEEThis Committee approves opening and

operation of bank accounts and review its

mandates, from time to time. It comprises of

Mr. Analjit Singh and Mr. B. Anantharaman.

During the year, this Committee met four

times.

DISCLOSURES(A) RELATED PARTY

TRANSACTIONS

The Company has not entered into any

transaction of a material nature with the

promoters, directors or the management,

their subsidiaries or relatives, etc., that may

have any potential conflict with the interests

of the Company.

(B) COMPLIANCE BY THE COMPANY

The Company has complied with the

requirements of the stock exchanges, SEBI

and other statutory authorities on all matters

relating to capital markets during the last

three years. No penalties or strictures have

been imposed on the Company by the stock

exchanges, SEBI, or other statutory

authorities relating to the above.

GENERAL BODY MEETINGSThe annual general meetings (AGM) of the

Company have always been held at the

Registered Office of the Company.

The last three AGMs were held as under:

Date Time

September 14, 2001 10:30 am

September 30, 2002 5:00 pm

September 30, 2003 10:30 am

MEANS OF COMMUNICATIONTimely disclosure of reliable information on

corporate financial performance is at the

core of good corporate governance. Towards

this direction, the quarterly/annual results of

the Company were announced within the


TABLE 5 DETAILS OF THE REMUNERATION PAID TO THE EXECUTIVE DIRECTORS OF THE COMPANY

AMOUNT IN RS.

Analjit Singh Surendra Kaul B. Anantharaman

Period 01.04.03 – 31.03.04 01.04.03 – 31.03.04 01.04.03 – 31.03.04

Salary 60,00,000 32,64,000 51,51,120

House Rent Allowance/ Housing — 12,60,000 14,40,000

Benefits (Perquisites) 10,83,329 1,98,377 2,99,446

Bonuses/Performance Incentives — 18,44,500 33,12,000

Retirals 16,20,000 6,48,000 8,10,000

Service contract 4 years effective 31.10.01 4 years effective 08.02.03 4 years effective 04.05.01

Notice period 3 months 3 months 3 months

Severance fees — — —

*Stock options, if any (in numbers) — 11,667 25,000

*Options were granted on October 1, 2003 and are exercisable over a 1 1/2 year period commencing from October 1, 2004.

TABLE 4 MEETINGS AND ATTENDANCE OF THE REMUNERATION COMMITTEE

DURING THE YEAR

Director Number of meetings held Number of meetings attended

Dr. S.S. Baijal 2 2

Mr. Analjit Singh 2 —

Mr. Ashwani Windlass 2 1

Mr. Anuroop (Tony) Singh 2 1

TABLE 6 MEETINGS AND ATTENDANCE OF THE INVESTOR GRIEVANCE, RELATIONS

AND SHARE TRANSFER COMMITTEE DURING THE YEAR

Director Number of meetings held Number of meetings attended

Mr. K.K. Mathur 5 4

Mr. Ashwani Windlass 5 —

Mr. Surendra Kaul 5 5

Mr. B. Anantharaman 5 3

TABLE 3 MEETINGS AND ATTENDANCE OF THE AUDIT COMMITTEE

DURING THE YEAR

Director attended Number of meetings held Number of meetings attended

Mr. N. C. Singhal 6 6

Dr. S.S. Baijal 6 5

Mr. K.K. Mathur 6 5

Mr. Ashwani Windlass 6 4

Mr. Anuroop (Tony) Singh 5* 2

* Meetings held after his co-option to this Committee.


Insurance has sustained the momentum of

this effort, and Max Healthcare has

identified new areas and commenced

healthcare initiatives in partnership with

Chinmaya Mission.

MAX FAMILY HELPS SOSBUILD NEW HOMES IN BHUJThe corpus donated earlier by the Max

Group to the SOS Children’s Villages of India

found its true meaning in the two homes

constructed at the BHUJ SOS Children’s

Village complex. These two homes now fully

complete, provide environment conducive

for creating opportunities for the young

victims of the earthquake to regain hope for

a normal life.

MAX NEW YORK LIFE –PUTTING A SMILE ONCHILDREN’S FACESAt Max New York Life, financial strength,

integrity and a caring attitude are our

defining beliefs. Humanity is the central

philosophy that guides the Company in its

decisions and its interactions with

policyholders, agents and employees. This

principle also shapes its responsibilities to

the communities where we conduct

business and where our involvement makes

a difference in other people’s lives. Max New

York Life has initiated several steps to

institutionalize its commitment to support

the SOS Children’s Villages of India. Max

New York Life uses the SOS logo and a brief

message outlining the SOS-MNYL

relationship, which is printed on every

product brochure on all policies. For every

policy sold by MNYL a sum of Rs. 10/- goes

to the SOS Children’s Villages. The sense of

ownership and involvement is reinforced

within MNYL through regular employee

visits to the SOS Villages. Some other

significant steps include the David Allen

Rolling Trophy wherein a personal

contribution of Rs. 50,000/- has been made

by Mr. David Allen, Head- Asia Region, New

York Life Insurance to encourage and

recognize students of the Herman Gmeiner

(SOS) School at Faridabad, for his/her

outstanding caring attitude and socially

responsible behaviour. In addition the

employees of the Company have instituted

two revolving trophies for winners of painting

competitions and made financial

contributions for supporting the children’s

education at the SOS Children’s Villages.

Max New York Life has also been

associated closely with the Red Cross in

organizing blood donation camps, with the

cancer-inflicted children at the Tata

Memorial Centre, Mumbai.

MAX HEALTHCARE –SPREADING AWARENESS ONHEALTH ISSUESMax Healthcare has joined hands with the

Chinmaya Mission to set up the Chinmaya

Health Care Centre at Sun Light Colony, New

Delhi. This primary health care centre

operates for 2 hours a day, 5 days a week. It

offers consultation and medicines free of

cost to the local community. A nominal sum

of Rs.10/- is charged towards

administration. Max Healthcare offers a

discount of 50% to the community for

diagnostics at Dr. Max™ Clinics. The

operating costs of the clinic are shared

between Max and the Chinmaya Mission on

a 50:50 ratio. The Centre has also taken on

itself the task of reaching out to the

community in whose midst it operates and

create awareness of health and hygiene

issues. It has also been at the forefront in the

polio inoculation campaign.

"The fundamental concepts of care and a

more holistic attitude towards business

practice will be the building blocks of

success for the Twenty-first century

Corporation."

Paul Dickinson and Neil Svensen

in ‘Beautiful Coporations’

THE FUTURE ROAD MAP FOR

CORPORATIONS OF THE 21ST CENTURY

These words summarize the importance of

socially responsible collaborative efforts,

which the Corporations of the future need to

forge. Such an approach requires ushering

in a new mindset and imbibing new value

systems within the operating mechanism.

We at Max use this philosophy as the

tempering discipline that guides all our

business activities. Max has over the years,

built valuable and enduring brands and

successful businesses that have contributed

to its stakeholders, and to the community on

the whole.

With a view to maximizing the impact of its

efforts and align community initiatives with

businesses, Max has focused on community

development projects and nurtured

volunteering opportunities among her

employees and channeled it to those

pockets of the community which are directly

impacted and share synergy with her core

businesses of healthcare and life insurance.

Our Annual Report for the financial year

2002-2003 talked of the collaboration that

Max New York Life Insurance has forged

with SOS Children’s Villages of India and

community initiatives launched by Max

Healthcare with an NGO. Max New York Life

M A X I N D I A A N N U A L R E P O R T 2 0 0 3 - 2 0 0 424 C O M M U N I T Y C O N T R I B U T I O N 25

C O M M U N I T Y C O N T R I B U T I O N

CARING FOR LIFE

Max has overthe years, builtvaluable andenduringbrands andsuccessfulbusinessesthat havecontributedto itsstakeholders,and to thecommunity onthe whole

FOR EVERYPOLICY SOLDBY MNYL Rs.

10/- GOESTO SOS

CHILDREN’SVILLAGES.

Max has over the years, builtvaluable and enduring brands andsuccessful businesses that havecontributed to its stakeholders, andto the community on the whole.


S H A R E T R A N S F E R S Y S T E MIn respect of shares upto 500 per folio,

transfers are effected on a weekly basis. For

others, the transfers are effected within

limits prescribed by law. The average

turnaround time for processing registration

of transfers is 9 days from the date of receipt

of requests. After such processing, the

facility of simultaneous transfer and

dematerialisation of shares is provided to

27S H A R E H O L D E R I N F O R M A T I O N

R E G I S T E R E D O F F I C EBhai Mohan Singh Nagar, Railmajra

Tehsil Balachaur, District Nawanshahr

Punjab 144533

I N V E S T O R H E L P L I N EMax House , 1 Dr. Jha Marg Okhla

New Delhi 110 020

TEL 011 2693 3610 FAX 011 2632 4126

EMAIL [email protected]

S H A R E T R A N S F E R A G E N TMas Services Private Limited

AB–4 Safdarjung Enclave

New Delhi 110 029

TEL 011 2610 4326 / 2610 4142

FAX 011 26181081


A N N U A L G E N E R A L M E E T I N GDATE Thursday, September 30, 2004

TIME 10:30 am VENUE Registered Office

B O O K C L O S U R EFriday, September 24, 2004 to

Thursday, September 30, 2004

(both days inclusive)

F I N A N C I A L C A L E N D A R – 2 0 0 4 - 0 51. FIRST QUARTER RESULTS July, 2004

2. SECOND QUARTER & HALF YEARLY

RESULTS October, 2004

3. THIRD QUARTER RESULTS January, 2005

4. ANNUAL RESULTS June, 2005

L I S T E D O N S T O C K E X C H A N G E S ATKolkata, Ludhiana, Mumbai and National

Stock Exchanges.

Listing fee up to the year 2004-05 has been

paid to all the Exchanges.

C O N N E C T I V I T Y W I T H D E P O S I T O R I E S National Securities and Depository Limited

(NSDL)

Central Depository Services (India) Limited

(CDSL)

S T O C K C O D EBOMBAY STOCK EXCHANGE

Reuters Bloomberg

maxi.bo max.in.equity

NATIONAL STOCK EXCHANGE

Reuters Bloomberg

maxi.ns n.max.in.equity

D E M AT E R I A L I S AT I O N S T AT U S1. Shareholding in dematerialised mode

94.11%

2. Shareholding in physical mode 5.89%

FOR SHAREHOLDERSHOLDING SHARES INDEMATERIALISED MODE Shareholders holding shares in

dematerialised mode are requested to

intimate all changes with respect to bank

details, mandate, nomination, power of

attorney, change of address, change of

name etc. to their depository participant

(DP). These changes will be reflected in the

Company’s records on the down loading of

information from Depositories which will

help the Company provide better service to

its shareholders.


S H A R E H O L D E R I N F O R M A T I O N

INVESTING IN CONFIDENCE

MONTHLY HIGH AND LOW QUOTATION ON MUMBAI STOCK EXCHANGE (BSE)

AND NATIONAL STOCK EXCHANGE (NSE) AMOUNT IN RS.

Month Bombay Stock Exchange National Stock Exchange

High Low High Low

April, 03 73.60 64.20 73.90 62.85

May, 03 92.75 64.30 92.75 65.20

June, 03 89.90 73.50 89.50 73.30

July, 03 86.50 72.30 86.50 72.50

August, 03 116.50 75.00 116.20 75.65

September, 03 113.00 90.00 112.60 90.00

October, 03 104.65 91.05 104.75 90.90

November, 03 105.00 89.10 104.90 90.10

December, 03 205.90 97.60 204.70 97.60

January, 04 200.00 130.45 196.80 131.50

February, 04 177.00 139.00 172.70 139.40

March, 04 151.00 106.35 148.90 106.60

SHAREHOLDING PATTERN AS ON MARCH 31, 2004

Category No. of shares held % of shareholding

Promoters 11945759 51.64

Mutual Funds and UTI 229178 0.99

Banks, Financial Institutions,

Insurance Companies 147775 0.64

Foreign Institutional Investors 920750 3.98

Bodies Corporate 801347 3.46

Non-resident Indians/

Overseas Corporate Bodies 2716054 11.74

Resident Individuals 6374297 27.55

Total 23135160 100.00


D I R E C T O R S

DR. BHAI MOHAN SINGH Lifetime Chairman Emeritus

MR. ANALJIT SINGH Chairman

DR. S. S. BAIJAL

MR. N. C. SINGHAL

MR. K. K. MATHUR

MR. ASHWINI WINDLASS

MR. BHARAT SAHGAL

MR. ANUROOP (TONY) SINGH

MR. SURENDRA KAUL Whole-time Director

MR. B. ANANTHARAMAN Jt. Managing Director

C O M P A N Y S E C R E T A R Y

MR. V. KRISHNAN

M A J O R I N T E R N A T I O N A L A F F I L I A T E S

NEW YORK LIFE INTERNATIONAL INC., USA

HUTCHISON TELECOMMUNICATIONS LTD., HONG KONG

A U D I T O R S

PRICE WATERHOUSE Chartered Accountants

B A N K E R S

THE HONGKONG & SHANGHAI BANKING CORPORATION LTD.

ICICI BANK LTD.

CANARA BANK

C O R P O R A T E O F F I C E

Max House, Okhla, New Delhi 110020

S H A R E T R A N S F E R A G E N T

MAS SERVICES PRIVATE LIMITED

AB-4, Safdarjung Enclave, New Delhi 110029

TEL 011 2610 4326, 2610 4142

FAX 011 2618 1081


WEBSITE www.maxindia.com

shareholders.

The processing activities with respect to

requests received for dematerialisation are

completed within 8 -10 days.

U N C L A I M E D / U N P A I D D I V I D E N DUnder Section 205C of the Companies Act,

1956 the amount of dividend remaining

unclaimed for a period of seven years from

the date of payment have been transferred

to the Investor Education and Protection

Fund.

Shareholders who have not encashed the

dividend for the financial year 1996-97 and

onwards, are requested to make their claims

to the Company. No claim shall lie against

the Company or the said Fund in respect of

dividend amounts which remain unclaimed

for a period of seven years from the date of

payment and no payment shall be made in

respect of any such claims.

C O M M U N I C AT I O N O F F I N A N C I A LR E S U L T SThe unaudited quarterly financial results

and the audited annual accounts are

normally published in the Financial Express

and the Punjabi Tribune. The financial

results are also available on the Company's

website – www.maxindia.com

Please visit us at www.maxindia.com for

financial and other information about your

Company.


NEW DELHI MR. B. ANANTHARAMAN

August 12, 2004 Jt. Managing Director

M A X I N D I A A N N U A L R E P O R T 2 0 0 3 - 2 0 0 428 C O M P A N Y I N F O R M A T I O N 29

C O M P A N Y I N F O R M A T I O N

LEADERSHIP & SUPPORT

DISTRIBUTION OF SHAREHOLDING AS ON MARCH 31, 2004

No. of Percentage to Shareholdings No. of shares Percentage to

Shareholders total total

19511 46.11 1 – 50 459753 1.99

9699 22.92 51 – 100 887760 3.84

6733 15.91 101 – 200 1102562 4.77

4507 10.65 201 – 500 1501789 6.49

1110 2.62 501 – 1000 828853 3.58

620 1.48 1001 – 5000 1264206 5.46

58 0.14 5001 – 10000 420616 1.82

73 0.17 10001 & above 16669621 72.05

42311 100.00 Total 23135160 100.00


MAX INDIA LIMITED

Max-India 30-72.p65 9/14/2004, 11:33 AM30

31

M A X I N D I A L I M I T E D

M A X A N N U A L R E P O R T 2 0 0 3 - 2 0 0 4

DIRECTORS’ REPORT

Your Directors have pleasure in presenting the sixteenth Annual Reportof your Company, with the audited Statement of Accounts, for thefinancial year ended March 31, 2004. The year under review is yetanother year, which marks your Company’s growth and evolution as acustomer oriented, service driven organization.

FINANCIAL RESULTS(Rs. Crore)

Year Ended Year EndedMarch 31, March 31,

2004 2003Income

Gross sales 128.18 160.35Less: Excise duty 14.59 16.97Net sales 113.59 143.38Service and other income 46.70 18.82Total Income 160.29 162.20

ExpenditureManufacturing and other expenses 104.82 124.81Financial expenses 17.83 26.29Depreciation and amortization 7.00 7.87Total expenditure 129.65 158.97

Profit before tax and exceptional items 30.64 3.23Tax expense 2.83 (9.03)Profit after tax and before exceptional items 27.81 12.26Exceptional items 9.19 65.52Net Profit/(Loss) 18.62 (53.26)

RESULTS OF OPERATIONSGross sales decreased to Rs. 128.18 Crore from Rs. 160.35 Crore inthe previous year. The sales value decreased in the current year sincethe financial results of the previous year included gross sales fromPharma division for the five months from April 2002 to August 2002amounting to Rs. 36.77 Crore. The Pharma division of your Companywas divested effective September 1, 2002.

During the year under review, Max Speciality Products (“MSP”)division witnessed intense pressures on selling prices and accompanyingprofit margins relating to all BOPP products. The metallized productrange, in particular, came under severe pricing pressures due to existenceof over capacity in the market. However, despite the above mentionedodds, MSP managed to register a reasonable increase in the gross salesvalue, which increased from Rs. 117.51 Crore in the previous year toRs. 126.78 Crore in the current financial year. The year-on-year growthin the sales value was an outcome of continuing optimization ofproduction processes coupled with further improvements in the productmix.

Service and other income for the current year includes a profit ofRs. 28.66 Crore arising from the divestment of 1,08,20,634 equityshares representing entire 64.99% stake held by the Company in MaxHealthscribe Limited to Healthscribe Inc., USA for US $ 10.34 million.The aforesaid profit translates into a CAGR of 58% over the 3-yearholding period of this investment.

During the year under review, your Company further reduced itsoutstanding debt by Rs. 50.94 Crore. As a result, financial expensesreduced sharply from Rs. 26.29 Crore in the previous year to Rs. 17.83Crore in the year under review. Your Company is targeting to becomesubstantially debt free by the end of next financial year.

Profit before tax increased from Rs. 3.23 Crore in the previousyear to Rs. 30.64 Crore in the year under review.

Various subsidiaries of your Company continued to do robustbusiness and made excellent progress during the current year. A briefupdate on the business achievements of your Company’s key operatingsubsidiaries is provided in the following paragraphs:

Max New York Life Insurance Company Limited (“MNYL”) continuesto be amongst the first quartile of private life insurance companies inIndia. As of March 31, 2004, the value of sum assured by MNYLincreased to Rs. 11,123 Crore from Rs. 5,419 Crore as of March 31,2003. MNYL sold 145,582 policies for the year ended March 31,2004 as against 77,531 policies sold in the previous year. The totalnumber of policies sold by the company till March 31, 2004 adds upto 292,112. The number of insurance agents with MNYL as of March31, 2004 was 5,608, a 66% growth over the number of agent advisorsin the previous year. MNYL has established a countrywide presence byadding 13 new cities to its network during the year under review. As ofMarch 31, 2004, the company has a network of 35 offices in 27 cities.The Group business of MNYL is also catching momentum with thecompany entering into more than 100 corporate relationships andcovering 132,000 lives under group policies as compared to 42,000lives covered in the previous year.

Max Healthcare Institute Limited (“Max Healthcare”) continued tomove forward to become a dominant player and a trusted provider ofhigh quality healthcare services in the National Capital Region. As ofMarch 31, 2004, Max Healthcare network comprised three secondarycare hospitals at Panchsheel, Pitampura and Noida plus two Dr. Maxprimary clinics in South Delhi and seven Dr. Max implants at variousplaces. The company has on its network, 335 leading doctors and hasan owned patient base of over 125,000 patients. The tertiary carehospitals are close to completion and are expected to shortly commenceoperations. Max Healthcare’s revenue increased from Rs. 12.18 Crorein the previous year to Rs. 27.33 Crore in the year under review.

Comsat Max Limited (“Comsat Max”) has been migrating its serviceofferings further up the value chain. Comsat Max now offers servicesthat cut across the industry segments of telecom, IT, BPO and are morebroadly covered by IT enabled services in the area of networking, businesscontinuity and knowledge solutions. To signify the strategic shift in thefocus of the company towards becoming a services centric business,its services revenue increased from Rs. 34.24 Crore in the previousyear to Rs. 37.68 Crore in the year under review.

The Clinical Research businesses are well positioned for substantialgrowth in the years to come. In the year under review, the subsidiariesengaged in clinical trials continued to focus on building revenue pipelinefunnel in excess of US $ 5 million through vigorous business developmentinitiatives and on developing a wide network of trained physicians toconduct clinical trials in North America, Latin America and in India.

During earlier financial years, your Company had invested in 10,000equity shares of US $ 30 each and had also given loans to its whollyowned subsidiary, Max Visions Inc., amounting to Rs. 0.95 Crore andRs. 4.65 Crore respectively. Max Visions Inc. was engaged in thedevelopment of an enterprise solutions practice in the USA, primarilyto serve as a front end for the information technology services businessof Max Ateev Limited. However, consequent to the winding up ofinformation technology services business in India by Max Ateev Limited,Max Visions Inc. also discontinued its enterprise solutions practice in2003. Accordingly, based on prudent and conservative accountingpractice, your Company decided to provide for diminution in the value

Max-India 30-72.p65 9/14/2004, 11:33 AM31



32

of investments and loans given to Max Visions Inc. The Company is inthe process of seeking requisite regulatory approvals to initiate windingup proceedings of this subsidiary.

Max Ateev Limited, a wholly owned subsidiary of your Companyhad initiated a restructuring exercise in the previous year by ceasingoperations in the information technology services business and focusingon its knowledge management practice. As part of the restructuringexercise, Max Ateev Limited executed a Business Transfer Agreementon April 28, 2004 for the sale of its knowledge management businessto Comsat Max Limited, an affiliate company. After the sale of thisbusiness, Max Ateev Limited will not be left with any operating business.Accordingly, the Company decided to provide for diminution in thebalance value of investments in and loans given to Max Ateev Limitedamounting to Rs. 2.44 Crore and Rs.1.15 Crore respectively, whichwere not represented by any assets of Max Ateev Limited.

NEW BUSINESS INVESTMENTS AND NEW SUBSIDIARIESAdditional Investments in Max New York Life Insurance CompanyYour Company made further investment of Rs. 62.90 Crore in MNYLduring the year under review, taking the total contribution made by theCompany in the equity share capital of MNYL to Rs. 251.60 Crore as ofMarch 31, 2004.

Acquisition of equity stake in Comsat Max Limited (“Comsat Max”)On February 20, 2003, your Company had entered into a Share Saleand Purchase Agreement with Comsat Investments Inc., ComsatCorporation and Comsat Max for acquisition of balance 49% equitystake in Comsat Max by your Company for a consideration ofUS$ 750,000. The aforesaid acquisition transaction completed duringthe current financial year and consequently your Company along withanother subsidiary now holds 100% equity stake in Comsat Max.

Investment in Neeman Medical International (Asia) Limited(“Neeman Asia”)Neeman Asia is a company engaged in the field of Clinical Researchbusiness in India. Your Company has been allotted 41,66,743 equityshares of Rs. 10/- each of Neeman Asia on March 18, 2004 representing99.99% equity share capital of that company by virtue of which NeemanAsia became a subsidiary.

Pharmax Corporation Limited (“Pharmax”)Your Company had an investment in 4,27,311 cumulative convertiblepreference shares of Rs. 100/- each of Pharmax. These preferenceshares were compulsorily converted into 4,27,31,100 equity shares ofRe. 1/- each of Pharmax on March 16, 2004 in terms of the said issue.The consolidated holding of your Company in 4,71,17,247 equity sharesof Pharmax post conversion translates into 85.94% stake on a fullydiluted basis. Therefore, by virtue of the aforesaid conversion, Pharmaxbecame a subsidiary of your Company.

CMax Infocom Pvt. Limited (“CMax”)CMax is a company in the business of trading of telecommunicationand networking equipments in India. Your Company acquired 10,000equity shares of Rs. 10/- each of CMax on June 13, 2003 representingits 100% stake.

Investment in Max HealthStaff International Limited (“Max Healthstaff”)During the year under review, your Company has been allotted 15,60,000equity shares of Rs. 10/- each amounting to Rs. 1.56 Crore for 50%equity stake in Max Healthstaff, which is engaged in the business oftraining and placement of nursing staff in the USA.

MANAGEMENT DISCUSSION & ANALYSISA review of the performance of businesses, including those of yourCompany’s joint ventures and subsidiaries, is provided in theManagement Discussion & Analysis section which forms part of thisReport.

DIVIDENDYour Directors do not recommend any dividend in view of their decisionto deploy the internal accruals in growing businesses of Life Insuranceand Healthcare.

SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURESFinal redemption amounting to Rs. 15.27 Crore in respect of 12.5%Secured Redeemable Non Convertible Debentures having face value ofRs. 250/- each was made on March 2, 2004. Subsequent to the year-end, the related charges on the assets of the Company have been vacated.

FIXED DEPOSITSThere are no overdue deposits as at the end of the financial year underreview. Your Company has not accepted/renewed any deposit up to thedate of this Report.

EMPLOYEE STOCK OPTION PLANSYour Company has two stock option plans. These are summarized below:

Employee Stock Option Plan – 2000 (“2000 Plan”):The 2000 Plan provided for the grant of stock options to eligible non-executive directors, whole time directors and employees of the Company.The 2000 Plan was approved by the Board of directors in January 2000and by the shareholders in March 2000. All the options granted underthe 2000 Plan were to be exercised by March 29, 2004.

Employee Stock Option Plan – 2003 (“2003 Plan”):During the year under review, your Company instituted the 2003 Plan,which was approved by the Board of directors in August 2003 and bythe shareholders in September 2003. The 2003 Plan provides for grantof stock options aggregating not more than 5% of number of issuedequity shares of the Company to eligible employees and directors of theCompany. The 2003 Plan shall be administered by the RemunerationCommittee of Board of directors.

The particulars of options granted under the aforesaid stock optionplans as required under SEBI (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines, 1999 is given below:

Description 2000 Plan 2003 Plan

(a) Total number of options granted 152,000 66,667(b) The pricing formula 50% of the Fixed at

closing market Rs. 10/-price on the per share

Bombay StockExchange onJanuary 14,

2000(c) Number of options vested 136,000 Nil(d) Number of options exercised 71,000 Nil(e) Total number of shares arising

from exercise of options 71,000 Nil(f) Number of options lapsed 65,000 Nil(g) Variation in terms of options None None(h) Money realized by exercise of

options (Rs. Lacs) 71.36 Nil

Max-India 30-72.p65 9/14/2004, 11:33 AM32

33



Description 2000 Plan 2003 Plan

(i) Total number of options inforce as on March 31, 2004 Nil 66,667

(j) Number of options granted to seniormanagement including directors 152,000 66,667

(k) Employees holding 5% or more ofthe total number of optionsgranted during the year None None

(l) Employees granted options equalto or exceeding 1% or more ofthe issued capital during the year None None

The diluted earnings per share was Rs. 8.03 for the financial yearended March 31, 2004. The earnings per share for the previous yearwas not dilutive.

In respect of stock options granted under the 2003 Plan, theCompany has calculated employee compensation cost using intrinsicvalue of the stock options. Accordingly, an amount of Rs. 58.33 Lacshas been recognized as total compensation charge out of which, in thecurrent financial year, Rs. 20. 11 Lacs has been taken to the profit andloss account as expense. The additional details required to be disclosedin accordance with SEBI (Employee Stock Option Scheme and EmployeeStock Purchase Scheme) Guidelines, 1999 relating to the 2003 Planare given below:a) The employee compensation cost based on fair value of 66,667

stock options granted under the 2003 Plan is Rs. 59.17 Lacs, outof which, in the current financial year, Rs. 20.33 Lacs would havebeen recognized as compensation cost if the Company had usedfair value basis instead of adopting intrinsic value basis ofaccounting for these stock options.

b) Had the company adopted fair value basis of recognizing theemployee compensation cost, profit after tax and exceptional itemsfor the current financial year would have been Rs. 1861.37 Lacsinstead of Rs. 1861.59 Lacs reported in the profit and loss account.However, due to insignificant difference in the cost computed usingintrinsic and fair value basis, the basic and diluted earnings pershare for the year ended March 31, 2004 would remain unchanged.

c) The exercise price of the stock options on the grant date is Rs. 10/-per share and the fair value of each option works out to Rs. 88.76.

d) The computation of fair value of stock options granted under the2003 Plan has been done using Black Scholes Option PricingModel. The following assumptions have been used in applying thisoptions pricing model:i) Risk free interest rate of 4.63%,ii) Expected life of 2.5 years of these stock options,iii) Expected volatility of 72.34% based on historical volatility of

the Company’s share,iv) No dividend expectation based on current year’s dividend

recommendation, andv) Price of Rs. 97.50 per share being the closing price of the

Company’s share on the National Stock Exchange on the dateof grant.

CHANGES IN SHARE CAPITALWith the allotment of 71,000 equity shares of Rs. 10/- each of theCompany arising from the exercise of Option by the Option-holdersunder Max India Employee Stock Option Scheme – 2000 on February16, 2004, the paid up capital of the Company has increased fromRs. 23,06,41,600/- to Rs. 23,13,51,600/-.

In an Extra-ordinary General Meeting of the Shareholders of theCompany held on June 21, 2004, the Authorised Share Capital of theCompany was restructured by increasing the equity share capital fromRs. 30 Crore to Rs. 42 Crore and simultaneously reducing the un-issued Preference Share Capital to Rs. 8 Crore. In the said meeting,the Shareholders have also approved the proposal to issue 10 millionequity shares on a preferential basis @ Rs. 200/- per equity share toM/s Parkville Holdings Limited and/or its affiliates, belonging to theWarburg Pincus Group, constituting 29.17% of the post-issue equityshare capital and 1.15 million equity shares, on preferential basis @Rs. 200/- per equity share to person/entities forming part of the promotergroup, aggregating in all, to Rs. 223 Crore. With the issue of more than15% equity share capital to entities belonging to Warburg Pincus Group,the said Group has submitted a proposal to Securities and ExchangeBoard of India (SEBI) for acquisition of 20% of shareholding from thepublic under Open Offer, in terms of the SEBI (Substantial Acquisitionof Shares and Takeover) Regulations, 1997.

ADDITIONAL INFORMATIONInformation in accordance with the provisions of Section 217(1)(e) ofthe Companies Act, 1956, read with the Companies (Disclosures ofParticulars in the Report of Board of Directors) Rules, 1988 are givenin the prescribed format annexed to this Report as Annexure -A.

PARTICULARS OF EMPLOYEESA statement giving particulars of employees under Section 217(2A) ofthe Companies Act, 1956 read with the Companies (Particulars ofEmployees) Rules, 1975 for the financial year ended March 31, 2004is annexed to this Report as Annexure-B.

SUBSIDIARY COMPANIESStatement pursuant to Section 212 of the Companies Act, 1956, relatingto the subsidiaries of your Company, is annexed to this Report.

AUDITORSM/s Price Waterhouse, Statutory Auditors of your Company, retire andoffer themselves for re-appointment. Your Company has received fromthem, a certificate required under Section 224(1-B) of the CompaniesAct, 1956 to the effect that their re-appointment, if made, would be inconformity with the limits specified in that Section.

GROUP FOR INTERSE TRANSFER OF SHARESAs required under Clause 3(e) of Securities and Exchange Board ofIndia (Substantial Acquisition of Shares and Takeovers) Regulations,1997, persons constituting Group within the meaning as defined in theMonopolies and Restrictive Trade Practices Act, 1969 for the purposeof Regulation 10 to 12 of aforesaid SEBI Regulations are as follows:

(a) Mr. Analjit Singh, (b) Mrs. Neelu Analjit Singh, (c) Ms. PiyaSingh (d) Mr. Veer Singh, (e) Ms. Tara Singh, (f) Neelu Family Trust, (g)Medicare Investment Limited, (h)Cheminvest Limited, (i) LiquidInvestment & Trading Co., (j) Maxopp Investments Limited, (k) MohairInvestment & Trading Co. (P) Ltd., (l) Boom Investments Private Limited,(m) PVT Investment Limited, (n) Maxpak Investment Limited, (o) PenInvestments Limited, (p) Pivet Finances Limited and (q) Dynavest IndiaPrivate Limited.

DIRECTORSMr. B. Anantharaman, Group Finance Director was appointed as the Jt.Managing Director of the Company effective August 11, 2004.

In accordance with the provisions of the Companies Act, 1956 and

Max-India 30-72.p65 9/14/2004, 11:33 AM33



34

the Articles of Association of the Company, Mr. K.K. Mathur, Mr. AshwaniWindlass, Mr. Bharat Sahgal and Mr. N.C. Singhal retire by rotation atthe ensuing Annual General Meeting and are eligible for re-appointment.

DIRECTORS’ RESPONSIBILITY STATEMENTThe Board of Directors of the Company confirms that(i) In the preparation of annual accounts, the applicable accounting

standards have been followed, along with proper explanation relatingto material departures.

(ii) The Directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that arereasonable and prudent, so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year andof the profit or loss of the Company for that period.

(iii) The Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with

the provisions of the Companies Act, 1956 for safeguarding theassets of the Company and for preventing and detecting fraud andother irregularities.

(iv) The Directors had prepared the annual accounts on a going concernbasis.

APPRECIATIONYour Board would like to place on record its sincere appreciation for theinvaluable support and contribution made by its employees as also itsshareholders, bankers, joint venture partners and all other businessassociates.

For and on behalf of the Board of DirectorsNew Delhi ANALJIT SINGHAUGUST 12, 2004 Chairman

Max-India 30-72.p65 9/14/2004, 11:33 AM34

35



ANNEXURE - A

PARTICULARS PURSUANT TO COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988

A CONSERVATION OF ENERGYThe Company has taken several steps to conserve energy. Energy conservation continues to be high priority for existing as well as new projects.Various steps taken to bring about savings are -• Installation of High Efficiency (EFF1) motors in all new additions/modifications including the new Metalliser plant, which was commissioned

in June 2003.• A new energy efficient Centrifuge Chiller was installed, which resulted in savings of about 5.71 lakh KwH per annum.• Lighting distribution plan was optimized by using timers to control switching during daytime. This resulted in savings of 7% in consumption

of electricity for lighting.• New air-conditioning drive was installed in the water removal blower, which resulted in savings of around 0.52 Lakh KwH per annum.

Details of energy consumption is as under:

S. Detail Unit Year ended Year endedNo. March 31, 2004 March 31, 2003

1 BOPP DIVISION1.1 Purchased

Units Million KwH 16.82 15.11Value Rs. Lacs 670.63 551.31Rate per unit Rs. Per KwH 3.99 3.65

1.2 Own generationUnits Million KwH 0.37 0.92Units per litre of diesel oil KwH 3.04 3.41Cost per unit Rs. Per KwH 5.91 4.66Fuel consumption KL 120.57 270.59Cost of fuel Rs. Lacs 21.65 42.99

1.3 Electricity consumption per unitof production of mill rolls

KwH/Kg of BOPP film 1.47 1.64KwH/Kg of metallised film 0.69 0.62KwH/Kg of thermal film 0.62 0.71

2. MAXFOIL DIVISION2.1 Purchased

Units Million KwH 0.39 0.34Value Rs. Lacs 15.66 12.57Rate per unit Rs. Per KwH 3.99 3.65

2.2 Electricity consumption per unit of productionKwH/ Sq Mt of leather finishing foils 0.41 0.45

B TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

1 Research and Development• Through in-house Research and development efforts, developed new products for various applications and also upgraded the existing ones.• Continuous reduction in cost and reduction in dependence on key raw materials through indigenisation and development of new vendors

and suppliers.• Development of Speciality Thick Foil for goods and accessories markets.• Indegenisation of imported spares.• Innovation in packaging of goods.

2 Process Improvement and Development• Increase in line speed for manufacture of export grade film.• Improvement in delivery index for supplies to key customers.• Introduction of total quality management (TQM) concept in production, packaging and logistics to (a) improve productivity, (b) reduce

costs and (c) enhance service excellence.

Max-India 30-72.p65 9/14/2004, 11:33 AM35



36

3 Benefits Derived• Improved productivity and process efficiencies• Improvement in efficiency and product quality, resulting in lower cost and higher productivity.• Conservation of foreign exchange• Reduction in packaging cost of finished goods

4 Future Plan of Action• Continuous development of high value added new products of international standards.• Carry forward TQM concept for further optimization of process parameters, product quality and cost reduction.• Minimize wastages and achieving resultant yield improvements.• Customer service excellence to be continuous focus area.

5 Particulars of Imported Technology in last 5 years• BOPP and Foil business did not import any technology in the last 5 years.

6 Expenditure on R & D• Capital : included in respective fixed assets accounts• Recurring : Rs. 25.22 Lacs• R & D expenditure as % of net sales : 0.22%

7 Activities Relating to Exports• Due to various initiatives taken, exports have grown by 32% in value terms over 2002-2003.• Export of Thermal BOPP films doubled in FY 2003-04• Export of leather finishing foils increased by 38% over previous year.

C FOREIGN EXCHANGE EARNING AND OUTGO(RS. LAKH)

Year ended Year endedMarch 31, 2004 March 31, 2003

Earnings 6378.84 3202.25Outgo 2359.73 3201.42

For and on behalf of the Board of DirectorsNew Delhi ANALJIT SINGHAUGUST 12, 2004 Chairman

Max-India 30-72.p65 9/14/2004, 11:33 AM36

37



PARTICULARS OF EMPLOYEESINFORMATION AS PER SECTION 217(2A) READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975 AND FORMING PART OF THE DIRECTORS’

REPORT FOR THE YEAR ENDED MARCH 31, 2004Sl. Name Age Designation Remuneration Qualification Date of Experience Last Employment heldNo. (Yrs.) (in Rs.) Commencement (Yrs.) Organisation Designation

of employment

A Employed throughout the year and were in receipt of remuneration of not less than Rs. 24,00,000/- per annum1 Anantharaman, B. 49 Group Finance 10,982,711 B.Com, FCA, 07.02.2001 25 Indo Rama President &

Director FICWA, FCS Synthetics Chief FinancialIndia Ltd Officer

2 Kaul, Surendra 48 Director - Legal & 7,213,381 B.Com., LLB, 15.10.1986 24 Ranbaxy Secretarial OfficerCorporate Affairs FCS, MIIA Laboratories Ltd.

3 Ramsinghaney, K.S. 51 Chief Executive Officer 6,021,553 B.E. (Mech.) 01.12.1983 31 U.P. Carbide & Sr. MechanicalMax Speciality Products Chemicals Ltd. Engineer

4. Saxena, Vivek 44 Chief Operating Officer 2,670,981 B.Tech, 16.06.1993 21 SRF Ltd. Manager - PlanningMax Speciality Products PGDM

5 Shivdasani, Mukesh 50 Chief Executive - 5,839,985 B. E.,PGDBM 01.10.2001 27 Bank of America Sr. VP / RegionalHuman Capital Director, Personnel

(North Asia)6 Singh, Analjit 50 Chairman 8,727,393 BA, BS, MBA 30.10.2001 26 Max UK Ltd. Chairman

(Boston)

B Employed for part of the year and were in receipt of remuneration of not less than Rs. 2,00,000/- per month1 Anand, R.K. 48 Vice President - 2,393,638 B. Com. (H), 15.06.2002 26 Neeman Medical Global Chief

Finance FCA International Finance Officer -(Asia) Ltd. Neeman Medical

International2 Chaudhry, Sumanjit 57 Chief Executive- 147,593 M. A. 19.08.2002 32 Bharti Telenet Chief Executive

Healthcare Staffing (Contab) Ltd. Officer3 Malhotra, Vishal 52 Chief Executive Officer 13,949,706 B.Tech. 01.12.2000 30 Max-GB Ltd. Chief Executive-

Pharmaceuticals HMGB4 Prakash, Ravi 42 Chief Group Taxation 2,618,901 B.Com., CA, 01.02.1990 19 Price Waterhouse Assistant Manager -

Tax Mgr. Course & Co. Taxation

Notes: 1 Remuneration includes salary, allowances, value of rent free accommodation, bonus, medical reimbursement, leave travel assistance, Company’s contributionto Provident, Pension, Gratuity and Superannuation fund, leave encashment and monetary value of perquisites.

2 None of the above employees is a relative of any director of the Company except Mr. Analjit Singh who is a relative of Dr. Bhai Mohan Singh.3 The services of employees are contractual in nature.4 The designation of the aforesaid employees is indicative of their nature of duties also and governed by the general terms and conditions of the employment

contract with the Company.5 None of the above employee holds by himself or along-with his spouse and dependent children 2% or more of Equity Shares of the Company.

On behalf of the Board of DirectorsNew Delhi ANALJIT SINGHAUGUST 12, 2004 Chairman

ANNEXURE - B

Max-India 30-72.p65 9/14/2004, 11:33 AM37



38

AUDITORS’ REPORT

TO THE MEMBERS OF MAX INDIA LIMITED1. We have audited the attached Balance Sheet of Max India Limited,

as at March 31, 2004, and the related Profit and Loss Accountand Cash Flow Statement for the year ended on that date annexedthereto, which we have signed under reference to this report. Thesefinancial statements are the responsibility of the company’smanagement. Our responsibility is to express an opinion on thesefinancial statements based on our audit.

2. We conducted our audit in accordance with the auditing standardsgenerally accepted in India. Those Standards require that we planand perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit providesa reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 issuedby the Central Government of India in terms of sub-section (4A) ofSection 227 of ‘The Companies Act, 1956’ of India (the ‘Act’) andon the basis of such checks of the books and records of the companyas we considered appropriate and according to the information andexplanations given to us, we further report that:i a The company is maintaining proper records showing full

particulars including quantitative details and situation offixed assets.

b The fixed assets are physically verified by the managementaccording to a phased programme designed to cover allthe items over a period of three years, which in our opinion,is reasonable having regard to the size of the companyand the nature of its assets. Pursuant to the programme,a portion of the fixed assets were physically verified bythe management during the year and no materialdiscrepancies between the book records and the physicalinventory were noticed.

c In our opinion and according to the information andexplanations given to us, a substantial part of fixed assetshas not been disposed of by the company during the year.

ii a The inventory has been physically verified by themanagement during the year. In our opinion, the frequencyof verification is reasonable.

b In our opinion, the procedures of physical verification ofinventory followed by the management are reasonable andadequate in relation to the size of the company and thenature of its business.

c On the basis of our examination of the inventory records,in our opinion, the company is maintaining proper recordsof inventory. The discrepancies noticed on physicalverification of inventory as compared to book records werenot material.

iii The company has neither granted nor taken any loans, securedor unsecured, to/from companies, firms or other parties coveredin the register maintained under Section 301 of the Act.

iv In our opinion and according to the information andexplanations given to us, there are adequate internal controlprocedures commensurate with the size of the company andthe nature of its business for the purchase of inventory, fixed

assets and for the sale of goods. Further, on the basis of ourexamination of the books and records of the company, andaccording to the information and explanations given to us, wehave neither come across nor have been informed of anycontinuing failure to correct major weaknesses in the aforesaidinternal control procedures.

v In our opinion and according to the information andexplanations given to us, there are no transactions that needto be entered into the register in pursuance of Section 301 ofAct.

vi The company has not accepted any deposits from the publicwithin the meaning of Sections 58A and 58AA of the Act andthe rules framed there under.

vii In our opinion, the company has an internal audit systemcommensurate with its size and nature of its business.

viii The Central Government of India has not prescribed themaintenance of cost records under clause (d) of sub-section(1) of Section 209 of the Act for any of the products of thecompany.

ix a According to the information and explanations given to usand the records of the company examined by us, in ouropinion, the company is regular in depositing theundisputed statutory dues including provident fund,investor education and protection fund, employees’ stateinsurance, income-tax, sales-tax, wealth tax, customs duty,excise duty, cess and other material statutory dues asapplicable with the appropriate authorities.

b According to the information and explanations given to usand the records of the company examined by us, theparticulars of dues of sales-tax, income-tax, customs duty,wealth tax, excise duty and cess as at March 31, 2004which have not been deposited on account of a dispute,are disclosed in note B1(e) and B7 on Schedule 25.

x The company has no accumulated losses as at March 31, 2004and it has not incurred any cash losses in the financial yearended on that date or in the immediately preceding financialyear.

xi According to the records of the company examined by us andthe information and explanation given to us, the company hasnot defaulted in repayment of dues to any financial institutionor bank or debenture holders as at the balance sheet date.

xii In our opinion, the company has maintained adequatedocuments and records in the cases where the company hasgranted loans and advances on the basis of security by way ofpledge of shares, debentures and other securities.

xiii The provisions of any special statute applicable to chit fund /nidhi / mutual benefit fund/societies are not applicable to thecompany.

xiv In our opinion, the company has maintained proper records oftransactions and contracts relating to dealing or trading in shares,securities, debentures and other investments during the yearand timely entries have been made therein. Further, suchsecurities have been held by the company in its own name.

xv In our opinion and according to the information andexplanations given to us, the terms and conditions of theguarantees given by the company, for loans taken by othersfrom banks or financial institutions during the year, are notprejudicial to the interest of the company.

Max-India 30-72.p65 9/14/2004, 11:33 AM38

39



xvi In our opinion, and according to the information and explanationsgiven to us, on an overall basis, the term loans have been appliedfor the purposes for which they were obtained.

xvii On the basis of an overall examination of the balance sheet ofthe company, in our opinion and according to the informationand explanations given to us, there are no funds raised on ashort-term basis which have been used for long-terminvestment, and vice versa.

xviii The company has not made any preferential allotment of sharesto parties and companies covered in the register maintainedunder Section 301 of the Act during the year.

xix As at the year end, there are no debentures in respect of whichsecurities need to be created.

xx The company has not raised any money by public issues duringthe year.

xxi During the course of our examination of the books and recordsof the company, carried out in accordance with the generallyaccepted auditing practices in India, and according to theinformation and explanations given to us, we have neither comeacross any instance of fraud on or by the company, noticed orreported during the year, nor have we been informed of suchcase by the management.

4. Further to our comments in paragraph 3 above, we report that:a We have obtained all the information and explanations, which

to the best of our knowledge and belief were necessary for thepurposes of our audit;

b In our opinion, proper books of account as required by lawhave been kept by the company so far as appears from ourexamination of those books;

c The Balance Sheet, Profit and Loss Account and Cash FlowStatement dealt with by this report are in agreement with thebooks of account;

d In our opinion, the Balance Sheet, Profit and Loss Accountand Cash Flow Statement dealt with by this report complywith the accounting standards referred to in sub-section (3C)of Section 211 of the Act;

e On the basis of written representations received from thedirectors, as on March 31, 2004 and taken on record by theBoard of Directors, none of the directors is disqualified as onMarch 31, 2004 from being appointed as a director in termsof clause (g) of sub-section (1) of Section 274 of the Act;

f In our opinion and to the best of our information and accordingto the explanations given to us, the said financial statementstogether with the notes thereon and attached thereto give inthe prescribed manner the information required by the Actand give a true and fair view in conformity with the accountingprinciples generally accepted in India:i in the case of the Balance Sheet, of the state of affairs of

the company as at March 31, 2004;ii in the case of the Profit and Loss Account, of the profit for

the year ended on that date; andiii in the case of the Cash Flow Statement, of the cash flows

for the year ended on that date.

V. NIJHAWANPartner

Membership Number F-87228

For and on behalf ofNew Delhi Price WaterhouseJUNE 29, 2004 Chartered Accountants

Max-India 30-72.p65 9/14/2004, 11:33 AM39



40

(RS. LACS)SCHEDULE As at As at

March 31, 2004 March 31, 2003

SOURCES OF FUNDSSHAREHOLDERS’ FUNDSShare Capital 1 2313.52 2306.42Employee Stock Option 2 58.33 196.51Reserves and Surplus 3 44875.92 42787.84

47247.77 45290.77LOAN FUNDSSecured Loans 4 3407.68 6007.61Unsecured Loans 5 5900.19 8393.79

9307.87 14401.40Advances from Others 6 8160.00 —

64715.64 59692.17

APPLICATION OF FUNDSFIXED ASSETS 7Gross Block 10084.14 9156.84Less: Depreciation 3708.51 3142.92Net Block 6375.63 6013.92Capital Work in Progress 25.09 212.88Pre-operative Expenses Pending Capitalisation 44.09 100.48

6444.81 6327.28

INVESTMENTS 8 51883.07 46954.00

CURRENT ASSETS, LOANS AND ADVANCESInventories 9 1068.79 1266.18Sundry Debtors 10 2072.57 1957.54Cash and Bank Balances 11 381.15 352.26Other Current Assets 12 256.99 152.32Loans and Advances 13 7182.13 6830.34

10961.63 10558.64Less: CURRENT LIABILITIES AND PROVISIONSCurrent Liabilities 14 3275.75 3439.59Provisions 15 683.87 287.44

3959.62 3727.03NET CURRENT ASSETS 7002.01 6831.61Deferred Tax Liability (Net) 16 (758.99) (629.49)

MISCELLANEOUS EXPENDITURE 17 144.74 208.77(To the extent not written off or adjusted)

64715.64 59692.17SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS 25

BALANCE SHEET A S A T M A R C H 3 1 , 2 0 0 4

For and on behalf of the Board of Directors

ANALJIT SINGH ChairmanB. ANANTHARAMAN Group Finance DirectorN.C. SINGHAL Director

NEERAJ BASUR General Manager-FinanceV KRISHNAN Company Secretary

The Schedules referred to above form anintegral part of the Balance Sheet

This is the Balance Sheet referred toin our report of even date

V. NIJHAWANPartner

For and on behalf ofPrice WaterhouseChartered Accountants

New DelhiJUNE 29, 2004

Max-India 30-72.p65 9/14/2004, 11:33 AM40

41



(RS. LACS)SCHEDULE For the For the

Year Ended Year EndedMarch 31, 2004 March 31, 2003

INCOMESales 12817.51 16035.41Less: Excise Duty 1459.44 1697.83

11358.07 14337.58Service Income 18 265.74 218.05Income from Investment Activities 19 3826.23 933.46Other Income 20 578.58 730.61

16028.62 16219.70INCREASE/(DECREASE) IN INVENTORY 21 0.83 (337.12)

16029.45 15882.58EXPENDITUREManufacturing and Other Expenses 22 10584.79 12207.91Financial Expenses 23 1782.61 2628.88Depreciation 7 597.74 722.53

12965.14 15559.32

PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS 3064.31 323.26Tax Expense 24 283.58 (903.25)PROFIT AFTER TAX AND BEFORE EXCEPTIONAL ITEMS 2780.73 1226.51Exceptional Items (Refer Note B10 on Schedule 25) 919.14 6552.56PROFIT/(LOSS) AFTER TAX AND EXCEPTIONAL ITEMS 1861.59 (5326.05)

PROFIT BROUGHT FORWARD 21984.21 25633.3323845.80 20307.28

Transfer from Debenture Redemption Reserve 763.72 1822.79PROFIT AVAILABLE FOR APPROPRIATION 24609.52 22130.07APPROPRIATIONSTransfer to Debenture Redemption Reserve 146.26 145.86BALANCE CARRIED FORWARD TO THE BALANCE SHEET 24463.26 21984.21

Earning Per Share (Rs. per equity share of Rs. 10/- each)(Refer Note B13 on Schedule 25)

- Basic 8.07 (23.09)- Diluted 8.03 (23.09)Number of Shares used in computing earning per share- Basic 2,30,72,890 2,30,64,160- Diluted 2,31,72,181 2,30,64,160

SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS 25

PROFIT AND LOSS ACCOUNT F O R T H E Y E A R E N D E D M A R C H 3 1 , 2 0 0 4




The Schedules referred to above form anintegral part of the Profit and Loss Account

This is the Profit and Loss Account referred toin our report of even date

V. NIJHAWANPartner



Max-India 30-72.p65 9/14/2004, 11:33 AM41



42

CASH FLOW STATEMENT F O R T H E Y E A R E N D E D M A R C H 3 1 , 2 0 0 4

(RS. LACS)For The For The


A CASH FLOW FROM OPERATING ACTIVITIESNET PROFIT BEFORE TAX AND EXTRAORDINARY ITEMS 3064.31 323.26Adjustments for:Depreciation 597.74 722.53Miscellaneous Expenditure Written Off 102.25 63.98ESOP Lapsed Written Back (34.28) (114.25)ESOP Compensation Expense 20.11 —Net (Profit)/Loss on Sale of Fixed Assets 23.49 37.31Net (Profit)/Loss on Sale of Investments (3031.34) (259.87)Assets Written Off 7.99 3.98Bad Debts Written Off 0.20 6.71Provision for Doubtful Debts 33.35 30.75Provision for Doubtful Interest 4.92 31.84Provision for Leave Encashment 2.12 (0.95)Provision for Gratuity 31.57 (22.21)Interest Expense 1662.21 2500.10Interest Income (672.69) (654.62)Dividend Income (42.57) (15.13)Prior Period Expense (Net) (2.58) 13.59Profit on Sale of Business — (241.62)Liability/Provision no Longer Required Written Back (101.40) (59.33)Unrealised Foreign Exchange (Gain)/Loss 28.27 (10.22)TDS on Service/Other Operating Income (24.60) (26.57)Diminution in Value of Stock in Trade (Net) (79.63) (3.84)Provision for Diminution in Value of Investment-Long Term 6.85 —Operating Profit Before Working Capital Changes 1596.29 2325.44

Adjustments for:Trade and Other Receivables (645.09) (3223.40)Inventories 277.02 (702.47)Trade Payables (511.95) 1546.14Increase in Deferred Expenses — (180.75)Cash Generated From Operations 716.27 (235.04)

Direct taxes refunded/(paid) 359.00 9.91Prior Period Expense (Net) 2.58 (13.59)Cash From/(Used in) Operating Activities 1077.85 (238.72)

B CASH FLOW FROM INVESTING ACTIVITIESPurchase of Investments (31343.00) (21895.57)Sale of Investments 24411.71 22549.50Purchase of Fixed Assets (1034.39) (526.68)Capital Work in Progress 244.18 (344.25)Sale of Fixed Assets 43.46 78.41Proceeds from Sale of Investment in Subsidiary 4665.37 —Proceeds from Sale of Business — 6287.32Other Advances Received 8160.00 —Interest and Dividend Received (Net) 484.85 512.28Cash From/(Used In) Investment Activities 5632.18 6661.01

Max-India 30-72.p65 9/14/2004, 11:33 AM42

43



(RS. LACS)For The For The


C CASH FLOW FROM FINANCING ACTIVITIESESOPs Excercised 71.36 —Interest Paid (1523.88) (2593.41)Proceeds from Long Term Borrowings 500.00 —Repayment of Long Term Loans (2511.98) (6156.10)Proceeds from Short Term Borrowings 4925.84 3858.36Repayment of Short Term Loans (7561.22) (2483.60)Cash From/(Used in) Financing Activities (6099.88) (7374.75)

Net Increase/(Decrease) In Cash and Cash Equivalents 610.15 (952.46)

Cash and Cash Equivalents As At March 31, 2003 (1116.26) (163.80)Cash and Cash Equivalents As At March 31, 2004 (506.11) (1116.26)Net Increase/(Decrease) In Cash and Cash Equivalents 610.15 (952.46)

Notes

1 The above Cash Flow statement has been prepared under the “Indirect Method” as set out in the Accounting Standard-3 on Cash FlowStatements issued by the Institute of Chartered Accountants of India.

2 Cash and Cash Equivalents at the end of the year consist of Cash, Cheques in hand and balances with banks:(RS. LACS)

As at As at

March 31, 2004 March 31, 2003

Cash in hand 4.40 7.02Stamps in Hand — 0.07Cheques in Hand 35.68 16.54Balances with Banks 332.31 319.87Book Overdraft (13.28) (4.37)Cash Credit (865.22) (1455.39)

(506.11) (1116.26)

3 Previous years’ figures have been regrouped wherever necessary to conform to current years’ classification

SIGNIFICANT ACCOUNTING POLICIES & NOTES TO THE ACCOUNTS 25




The Schedules referred to above form anintegral part of the Cash Flow Statement

This is the Cash Flow Statement referred toin our report of even date

V. NIJHAWANPartner



Max-India 30-72.p65 9/14/2004, 11:33 AM43



44

(RS. LACS)As at As at

March 31, 2004 March 31, 2003

SCHEDULE–1SHARE CAPITALAuthorised3,00,00,000 Equity Shares of Rs. 10/- each 3000.00 3000.00(Previous year 3,00,00,000 Equity Shares of Rs. 10/- each)20,00,000 Preference Shares of Rs. 100/- each 2000.00 2000.00(Previous year 20,00,000 Preference Shares of Rs. 100/- each)

5000.00 5000.00Issued, Subscribed and Paid Up2,31,35,160 Equity Shares of Rs. 10/- each fully paid up 2313.52 2306.42(Previous year 2,30,64,160 Equity Shares of Rs. 10/- each fully paid up)

2313.52 2306.42Paid up Share Capital includes 1,15,32,080 (Previous year 1,15,32,080) Equity Sharesof Rs. 10/- each allotted as fully paid up by way of bonus shares out of Share PremiumAccount and 71,000 (Previous year Nil) Equity Shares of Rs. 10/- each allottedunder employees stock option plan(Refer Notes A9 & B8 on Schedule 25)

SCHEDULE–2EMPLOYEE STOCK OPTION(Refer Notes A9 & B8 on Schedule 25)

Employee Stock Option Outstanding 58.33 196.5158.33 196.51

SCHEDULE–3RESERVES & SURPLUS(Refer Notes A8 & B5 on Schedule 25) As at Additions Deletions As at

March 31, 2003 March 31, 2004

Capital Reserve 54.95 — — 54.95Share Premium Account 7591.08 226.49 — 7817.57Debenture Redemption Reserve 1096.60 146.26 763.72 479.14Amalgamation Reserve 2988.05 — — 2988.05General Reserve 9072.95 — — 9072.95Profit and Loss Account 21984.21 2625.31 146.26 24463.26

42787.84 2998.06 909.98 44875.92

SCHEDULES A N N E X E D T O A N D F O R M I N G P A R T O F T H E A C C O U N T S

Max-India 30-72.p65 9/14/2004, 11:33 AM44

45




March 31, 2004 March 31, 2003

SCHEDULE–4SECURED LOANS(Refer Note B4 on Schedule 25)

DebenturesNil (Previous year 15,27,440), 12.5% Secured RedeemableNon Convertible Debentures of Rs. 250/- each — 1527.44(Fully redeemed as per terms of issue)

Interest accrued and due on Debentures — 1.36

From banksTerm Loan 2525.97 3000.00Fund Based Working Capital Facilities 865.22 1455.39Interest Accrued and due 5.98 2.40

OthersInterest free Loan from Department of Industries, Punjab 10.51 21.02

3407.68 6007.61Amount repayable within one year Rs. 560.73 Lacs (Previous year Rs. 2084.76 Lacs)

SCHEDULE–5UNSECURED LOANS(Refer Note B4 on Schedule 25)

Debentures25 (Previous year 25), 12.5% Redeemable Non Convertible 2500.00 2500.00Debentures of Rs. 1,00,00,000/- each

Short Term LoansFrom banks 2500.00 2000.00From Financial Institutions — 990.80From Others 690.00 2840.00Interest accrued and due on Short Term Loans 146.70 4.92

Other LoansFrom Banks 63.49 58.07

5900.19 8393.79

Amount repayable within one year Rs. 3214.32 Lacs (Previous year Rs. 5848.51 Lacs)

SCHEDULE–6ADVANCES FROM OTHERS(Refer Note B6 on Schedule 25)

Other Advances 8160.00 —8160.00 —


Max-India 30-72.p65 9/14/2004, 11:33 AM45



46


SCHEDULE–7FIXED ASSETS(Refer Notes A3, A4, A5 & B17 on Schedule 25)

(RS. LACS)

Gross Block Depreciation Net Block

Particulars As at April Additions Deletions/ As at March As at April Additions Deletions/ As at March As at March As at March

01, 2003 Adjustments 31, 2004 01, 2003 Adjustments 31, 2004 31, 2004 31, 2003

Tangible Assets

Land (Freehold) 29.28 — — 29.28 — — — — 29.28 29.28

Building 1208.02 112.13 — 1320.15 234.81 39.03 — 273.84 1046.31 973.21

Leasehold Improvements 387.94 — — 387.94 107.83 51.23 — 159.06 228.88 280.11

Plant and Machinery 6383.52 802.50 — 7186.02 2368.07 403.62 — 2771.69 4414.33 4015.45

Furniture, Fixtures and

Equipments 832.82 31.51 57.12 807.21 358.71 71.33 20.25 409.79 397.42 474.11

Vehicles 246.10 46.41 49.97 242.54 51.37 23.82 11.90 63.29 179.25 194.73

Intangible Assets

Software 69.16 41.84 — 111.00 22.13 8.71 — 30.84 80.16 47.03

Total 9156.84 1034.39 107.09 10084.14 3142.92 597.74 32.15 3708.51 6375.63 6013.92

Previous Year 15710.11 561.29 7114.56 9156.84 4691.42 722.53 2271.03 3142.92

Capital Work in Progress [Includes Capital Advance Rs. 25.09 Lacs (Previous year Rs. 28.28 Lacs)] 25.09 212.88

Pre-Operative Expenses Pending Capitalisation (Refer Note B19 on Schedule 25) 44.09 100.48

6444.81 6327.28Notes:

1. Additions includes Foreign Exchange Fluctuations Rs. 13.36 Lacs (Previous year Nil).

2. Plant and Machinery includes an amount of Rs. 135.08 Lacs (Previous year Rs. 135.08 Lacs) paid to PSEB for drawing a power line representing assets not owned by the Company.

The same is being depreciated over a period of five years.

3. The above includes vehicles hypothecated amounting to Rs. 114.04 Lacs (Previous year Rs. 92.65 Lacs).

Max-India 30-72.p65 9/14/2004, 11:33 AM46

47





March 31, 2004 March 31, 2003

SCHEDULE–8INVESTMENTS(Refer Notes A6, B15, B16, B18 & B20 on Schedule 25)

a) Subsidiaries, at costEquity Shares 50876.08 42909.86Less: Provision for Diminution (3238.86) 47637.22 (2900.00)Preference Shares 1505.00 2793.32

b) Long Term Trade (Unquoted)Equity Shares 158.50 2.50

c) Long Term-Non Trade(Quoted)Equity Shares 0.66 501.60Less: Provision for Diminution — 0.66 (287.39)

(Unquoted)Units of Interest in Limited Liability Company 3652.56 3652.56Less: Provision for Diminution (3652.56) — (3652.56)

Preferred Stock 1902.39 1902.39

Equity Shares 253.00 253.00Less: Provision for Diminution (219.85) 33.15 (213.00)

Debentures 3.28 4.41

Bonds — 7.20

d) Current Non Trade (Unquoted)Units in Mutual Fund 600.87 850.49

e) Share Application Money Pending Allotment 42.00 1129.62

51883.07 46954.00

Aggregate value of unquoted investments 51840.41 45610.17

Aggregate value of quoted investments 0.66 214.21

Market value of quoted investments 0.77 214.21

SCHEDULE–9INVENTORIES(Refer Note A7 on Schedule 25)

Manufacturing ActivitiesRaw Materials in stores/transit 586.46 761.84Stores and Spares 232.78 164.47Work in Process 199.49 187.74Finished Goods 41.74 52.66

Investment ActivitiesStock of Securities 8.32 99.47

1068.79 1266.18

Max-India 30-72.p65 9/14/2004, 11:33 AM47



48



March 31, 2004 March 31, 2003

SCHEDULE–10SUNDRY DEBTORS(Unsecured)

Debts exceeding six monthsConsidered good 124.17 333.48Considered doubtful 149.29 118.20Less: Provision for doubtful debts (149.29) (118.20)

124.17 333.48Other Debts

Considered good 1948.40 1624.062072.57 1957.54

SCHEDULE–11CASH AND BANK BALANCESCash in Hand 4.40 7.02Cheques in Hand 35.68 16.54Balances with Scheduled Banks

In Current Accounts 196.47 189.94In Dividend Accounts 85.84 93.07In Debenture Interest Accounts 50.00 36.86In Fixed Deposit Accounts* 8.76 8.76

Stamps in Hand — 0.07381.15 352.26

* held under lien by Debenture Trustees for 13.5% Non convertible debentures

SCHEDULE–12OTHER CURRENT ASSETSInterest Receivable*

Considered Good 256.99 152.32Considered Doubtful 179.59 159.54Less: Provision for Doubtful Interest (179.59) 256.99 (159.54)

256.99 152.32* Includes Interest accrued on investments Nil (Previous Year Rs. 0.01 Lacs)

Max-India 30-72.p65 9/14/2004, 11:33 AM48

49




SCHEDULE–14CURRENT LIABILITIES(Refer Note B21 on Schedule 25)

Acceptances 489.97 133.97Sundry Creditors

Total outstanding dues of small scale industrial undertakings 43.11 26.91Total outstanding dues of creditors other than small scaleindustrial undertakings 2313.58 2625.93

Subsidiary Companies 45.05 125.37Advance Income Received 11.64 59.53Investor Education and Protection Fund

Unpaid Dividend 92.74 99.92Unpaid Debenture Interest 47.65 32.98Unpaid Matured Deposits 0.25 0.25

Interest Accrued but not Due 152.86 158.52Book Overdraft 13.28 4.37Other Liabilities 65.62 171.84

3275.75 3439.59


March 31, 2004 March 31, 2003

SCHEDULE–13LOANS & ADVANCES(Considered good, unless otherwise stated)

SecuredHousing Loans 10.21 124.70UnsecuredSubsidiary Companies— Advances

Considered Good 1337.26 1379.18Considered Doubtful 115.14 —Less: Provision for Doubtful Advances (115.14) 1337.26 —

— Loans 3239.60 2631.30— Inter Corporate Deposits

Considered Good 1219.82 1661.42Considered Doubtful 441.60 —Less: Provision for Doubtful Deposits (441.60) 1219.82 —

Others— Advances recoverable in cash or in kind or for value to be received

Considered Good 646.19 316.01Considered Doubtful 11.31 9.79Less: Provision for Doubtful Advances (11.31) 646.19 (9.79)

— Loans to Employees 16.45 17.07

— Inter Corporate DepositsConsidered Good 500.00 500.00Considered Doubtful 200.00 200.00Less: Provision for Doubtful Deposits (200.00) 500.00 (200.00)

— Balance with Excise Authorities 26.61 17.89— Prepaid Expenses 34.79 21.31— Security Deposits 151.20 161.46

7182.13 6830.34Balance outstanding from directors of Rs. 67.01 Lacs (Previous year Rs. 231.17 Lacs) includes

Nil (Previous year Rs. 89.03 Lacs) towards housing loan. Maximum amount outstanding

from directors during the year Rs. 161.22 Lacs (Previous year Rs. 257.01 Lacs)

Max-India 30-72.p65 9/14/2004, 11:33 AM49



50



March 31, 2004 March 31, 2003

SCHEDULE–15PROVISIONS(Refer Notes A10 & A11 on Schedule 25)

Leave Encashment 52.67 50.55Gratuity 62.39 30.82Provision for Income Tax 1769.42 1618.52Less: Advance Income Tax (1200.61) 568.81 (1412.45)

683.87 287.44

SCHEDULE–16DEFERRED TAX LIABILITY (NET)(Refer Notes A10 & B9 on Schedule 25)

Opening Balance 629.49 1534.54Movement for the year 129.50 (905.05)

758.99 629.49

SCHEDULE–17MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted)(Refer Notes A14 & B14 on Schedule 25)

Preliminary, Share and Debenture Issue Expenses 10.39 19.19Deferred Employee Compensation 38.22 —Deferred Revenue Expenditure 96.13 189.58

144.74 208.77

(RS. LACS)For the For the


SCHEDULE–18SERVICE INCOME(Refer Note A2 on Schedule 25)

Service Income* 217.85 170.29Non-Competition Fee 47.89 47.76

265.74 218.05* Tax deducted at source Rs. 5.80 Lacs (Previous year Rs. 4.99 Lacs)

Max-India 30-72.p65 9/14/2004, 11:33 AM50

51




SCHEDULE–19INCOME FROM INVESTMENT ACTIVITIES(Refer Notes A2, A6, B15, B20 & B25 on Schedule 25)

Profit on sale of stock of securitiesOpening Stock 199.51 199.51Less: Provision for Diminution (100.05) (103.89)Add : Purchases — —Less: Sales 170.77 —Less: Closing Stock 8.32 199.51

Less: Provision for Diminution — (100.05)79.63 3.84**

Dividend Income FromNon Trade Investments-Long Term 9.19 4.17Non Trade Investments-Current 28.97 6.80Stock of Securities 4.41 42.57 4.16

Interest on Loans and Non Trade Investments (Gross)Government Securities — 7.54Bonds 0.20 48.75Debentures 0.33 0.49Loans 607.73 570.85Fixed Deposits 3.16 4.24Others 61.27 672.69 22.75

Profit on Sale of Investment in Subsidiary 2866.31 —Profit on Sale of Trade Investments-Long Term — 133.45Net Profit on Sale of Non Trade Investments-Long Term # 133.66 43.86Net Profit on Sale of Non Trade Investments-Current 31.37 78.27Provision for Diminution on Long Term Shares Written Back — 4.29

3826.23 933.46** Represents provision for diminution written back of Rs. 3.84 Lacs

# Includes provision for diminution written back Rs. 287.39 Lacs (Previous year Rs. 174.49 Lacs)

SCHEDULE–20OTHER INCOMELiabilities/Provisions no longer required written back 101.40 59.33Prior Period Income (Refer Note B28 on Schedule 25) 3.23 0.09Profit on Sale of Business (Refer Note B17 on Schedule 25) — 241.62Miscellaneous Income ## 473.95 429.57

578.58 730.61## Tax deducted at source Rs. 0.14 Lacs (Previous year Nil)

SCHEDULE–21INCREASE/(DECREASE) IN INVENTORYOpening Stock

Work in Process 187.74 390.15Finished Goods 52.66 187.37

240.40 577.52Less: Closing Stock


241.23 240.40

Net Increase/(Decrease) 0.83 (337.12)



Max-India 30-72.p65 9/14/2004, 11:33 AM51



52




SCHEDULE–22MANUFACTURING AND OTHER EXPENSESManufacturingRaw Materials Consumed 6053.20 6035.62Goods Purchased for Resale 133.99 631.77Power and Fuel 903.35 954.30Stores and Spares 199.43 272.79Packing Material 378.24 422.42Freight Inward 27.29 29.88Repairs and Maintenance-Plant and Machinery 79.07 101.32Processing Charges 32.26 155.09

7806.83 8603.19PersonnelSalaries, Wages and Bonus (Net) 1066.08 1325.85Contribution to Provident and Other Funds 150.66 141.42Recruitment 8.78 13.44Staff Welfare 55.29 60.23

1280.81 1540.94Administration and OthersRent (Net)* 201.72 209.72Insurance 74.28 73.66Rates and Taxes 62.34 133.43Repairs and Maintenance:

Building 15.35 31.91Others 155.37 180.31

Electricity and Water 29.99 31.65Printing and Stationery 50.43 52.65Travelling and Conveyance 234.05 240.44Communication 77.48 81.47Legal and Professional 220.26 188.70Directors’ Fee 3.11 3.69Business Promotion 60.30 69.70Commission 91.11 304.20Selling and Distribution 431.64 439.60Advertisement and Publicity 4.83 8.94Royalty — 32.55Provision for Doubtful Debts and Advances 33.35 30.75Net Loss on Sale/Disposal of Fixed Assets 23.49 37.31Provision for Diminution in Long Term Investments 6.85 —Bad Debts Written Off 0.20 6.71Fixed Assets and Spares Written Off 7.99 3.98Charity and Donation 0.40 0.58Provision for Doubtful Interest 4.92 31.84Prior Period Expense (Refer Note B28 on Schedule 25) 0.65 13.68Product Development Expenses — 0.77Amortisation of Miscellaneous Expenditure 102.25 63.98Net Loss/(Gain) on Foreign Exchange Fluctuation 19.11 17.65Miscellaneous Expenses 21.18 50.05Less: Overheads Recovery** (Refer Note B29 on Schedule 25) (435.50) (276.14)

1497.15 2063.78

10584.79 12207.91* Tax Deducted at source Rs. 0.66 Lacs (Previous year Rs. 3.61 Lacs)

** Tax Deducted at source Rs. 18.00 Lacs (Previous year Rs. 13.18 Lacs)

Max-India 30-72.p65 9/14/2004, 11:33 AM52

53





SCHEDULE–23FINANCIAL EXPENSESInterest on:

Debentures 488.52 1194.75Short Term Loans 350.43 346.09Acceptances 87.59 68.78Term Loans 716.39 841.08Cash Credit 13.75 43.46Others 5.53 5.94

Bank Charges 92.56 80.38Finance Charges 27.84 48.40

1782.61 2628.88

SCHEDULE–24TAX EXPENSE(Refer Notes A10 & B9 on Schedule 25)

Current Year Tax 154.08 1.80[Includes Wealth Tax Rs. 1.01 Lacs (Previous year Rs. 1.80 Lacs)]

Add:-Deferred Tax for the year 129.50 58.99

283.58 60.79Less:-Opening Deferred Tax Liability Written Back — (964.04)

283.58 (903.25)


Max-India 30-72.p65 9/14/2004, 11:33 AM53



54

SCHEDULE–25A SIGNIFICANT ACCOUNTING POLICIES1 Accounting Convention

The accompanying financial statements are prepared in accordance with Generally Accepted Accounting Principles in India (“GAAP”), underthe historical cost convention, on the accrual basis. GAAP comprises mandatory accounting standards issued by the Institute of CharteredAccountants of India (“ICAI”) and the provisions of the Companies Act, 1956, as adopted consistently by the Company.

2 Revenue Recognition(a) Export sales are accounted on the basis of the date of bill of lading/airways bill. Other sales are accounted for at ex-factory prices on

dispatch. Sales are inclusive of excise duty and net of trade discounts and sales returns.(b) Income from investments is credited to revenue in the year in which it accrues. Income is stated in full with the tax thereon being

accounted for under advance tax.(c) Dividend is recognised as income as and when the right to receive such payment is established.

3 Fixed Assets(a) Fixed Assets are stated at their original cost including freight, duties (net of CENVAT), taxes and other incidental expenses relating to

acquisition and installation.(b) Expenses of revenue nature, which can be regarded as incidental and related to project set-up are transferred to “Pre-operative expenses

pending capitalisation”. These expenses are allocated to fixed assets in the year of commencement of the related project.

4 Borrowing CostsBorrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of thecost of that asset in accordance with Accounting Standard 16 issued by ICAI on “Borrowing Costs”. Other borrowing costs are recognized asan expense in the period in which they are incurred. Capitalisation of borrowing costs ceases when substantially all activities necessary toprepare the qualifying assets for its intended use or sale are complete.

5 Depreciation(a) Depreciation is charged on straight-line method on a pro-rata basis at rates prescribed under Schedule XIV to the Companies Act, 1956.(b) Leasehold improvements are depreciated over respective lease periods.(c) Assets costing not more than Rs. 5,000 each individually are depreciated at 100%.

6 Investments(a) Investments are either classified as current investments or long-term investments. The cost of investments includes acquisition charges

such as brokerage, fees and duties. Current investments are carried at lower of cost and fair value.(b) Long-term investments are carried at cost and provisions are recorded to recognise any decline, other than temporary, in the carrying value

of each investment.

7 Inventories(a) Inventories are valued at lower of cost and net realisable value. Cost for this purpose is calculated on a weighted average method. In

respect of finished goods and work in process, appropriate overheads are loaded.(b) Stock of securities is valued at lower of cost and market value, determined category wise. Cost for this purpose is calculated under First

In First Out Method.

8 Capital SubsidyCapital Subsidies, received under the state capital subsidy scheme are accounted for as capital reserve.

9 Employee Stock Option Scheme(a) The value of options is equal to the aggregate of the fair value of the options granted. Fair value is the option discount represented by the

excess of market price on grant date over the exercise price of the option and is amortised on a straight line method basis over the vestingperiod in line with the Securities and Exchange Board of India (SEBI) Guidelines.

(b) As and when the options are exercised, the same are accounted for as paid up capital to the extent of the face value and Share Premiumto the extent of excess of market price over face value on grant date.

(c) Options that lapse are reversed by a credit to employee compensation expense equal to the amortised portion of the value of the lapsedoptions and a credit to deferred employee compensation expense equal to the unamortised option.

10 TaxationIncome taxes are computed using the tax effect accounting method, where taxes are accrued in the same period in which the related revenueand expenses arise. Provision for tax consists of current tax and deferred tax. A provision is made for income tax annually based on the tax


Max-India 30-72.p65 9/14/2004, 11:33 AM54

55



liability computed, after considering tax allowances and exemptions. Provisions are recorded when it is estimated that a liability due todisallowances or other matters is probable.The differences that result between the profit offered for income tax and the profit as per the financial statements are identified, and thereaftera deferred tax asset or deferred tax liability is recorded for timing differences namely the differences that originate in one accounting periodand reverse in another, based on the tax effect of the aggregate amount being considered. The tax effect is calculated on the accumulatedtiming differences at the end of an accounting period based on prevailing enacted or substantially enacted regulations. Deferred tax assets arerecognised only if there is virtual certainty that they will be realised and are reviewed for the appropriateness of their respective carrying valuesat each balance sheet date.

11 Employee Benefits(a) Gratuity

In accordance with the Payment of Gratuity Act, 1972, the Company provides gratuity, a benefit plan (the “Gratuity Plan”) coveringeligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termina-tion of employment, of an amount based on the respective employee’s salary and the tenure of employment. Liabilities with regard to theGratuity Plan are determined by actuarial valuation, based upon which, the Company contributes to a Master policy with Life InsuranceCorporation of India.

(b) SuperannuationCertain employees of the Company are participants of a defined superannuation plan. The Company makes contributions under thesuperannuation plan to “Max India Limited Superannuation Fund” based on a specified percentage of each covered employee’s salary.

(c) Provident FundEligible employees receive benefits from a provident fund, which is a defined contribution plan. The Company makes contributions underProvident Fund to “Max India Limited Employees Provident Fund Trust”. Both the employee and the Company make monthly contributionsto the provident fund trust equal to a specified percentage of the covered employee’s salary.

(d) Leave EncashmentAccrual for leave encashment is made on the basis of actuarial valuation done at the year end.

12 Research and DevelopmentResearch and development expenditure in relation to development of new products are treated as deferred revenue expenditure and areamortised over a period of five years from the financial year in which commercial operation of respective product commences as per AccountingStandard-8 on “Accounting for Research and Development”.

13 Foreign Exchange Transactions(a) Monetary assets and liabilities related to foreign currency transactions remaining unsettled at the end of the year are translated at year-end

rates.(b) The difference in translation of monetary assets and liabilities and realised gains and losses on foreign exchange transactions, other than

relating to Fixed Assets, are recognised in the profit and loss account.(c) Exchange difference in respect of liabilities incurred to acquire fixed assets is adjusted to the carrying amount of fixed assets.

14 Miscellaneous Expenditure(a) Preliminary and Issue expenses are amortised over a period of 10 years, except cost incurred on raising of funds, which is being amortised

over the life of the respective financial instrument.(b) Deferred employee compensation expense is amortised over the vesting period.(c) Other deferred revenue expenditure is amortised from the year they have been incurred/related projects commence operations, over 3 to

5 years based on the period over which future benefits are expected to be received.

15 LeasesLeases of assets under which the lessor effectively retains all the risks and benefits of ownership are classified as operating lease. Paymentsmade under operating lease are charged to Profit and Loss Account on a straight-line basis over the period of the lease.

B NOTES TO ACCOUNTS(RS. LACS)

Current Year Previous Year

1 Contingent Liabilitiesa Corporate guarantees 8323.75 4084.50b Claims against the Company not acknowledged as debts:

Customs 303.04 198.41Service Tax 71.04 —Other 582.18 3.88Total 956.26 202.29

Max-India 30-72.p65 9/14/2004, 11:33 AM55



56

c Bank guarantees 60.73 —d Letter of Credit outstanding 754.93 630.69e Excise Duty:

(i) During the current financial year, the Company received show cause notices, from AssistantCommissioner, Central Excise Division Phagwara, aggregating to Rs. 1.15 Lacs relating toexcise duty paid on goods sent for repair on job work. The Company has submitted its reply tothe above mentioned show cause notices and is hopeful of a favorable response.

(ii) During the current financial year, the Company received a show cause notice from AdditionalCommissioner, Central Excise Jallandhar, amounting to Rs. 39.43 Lacs relating to applicabilityof the excise duty rate on reprocessed granules sold by the Company. The Company has submittedits reply to the above mentioned show cause notice and is hopeful of a favorable outcomesince the Company has received relief on a similar demand raised previously.

2 a Uncalled liability on shares partly paid — 3330.00b Estimated amount of contracts (net of advances) remaining to be

executed on capital account and not provided for 39.67 443.91

3 Concession in Custom Duty availed on Capital equipment imported during the year against export obligation undertaken under ‘Export Promo-tion Capital Goods’ Scheme Rs. 14.29 Lacs (Previous year Rs. 58.82 Lacs).

4 Loans(a) Nil (Previous year 15,27,440) – 12.5% Secured Redeemable Non Convertible Debentures of face value of Rs. 250/- each were secured

by first pari passu charge on certain immovable assets by way of joint equitable mortgage and hypothecation of movable fixed assets of theCompany. The first redemption of Rs. 75/- per debenture aggregating to Rs. 1145.58 Lacs was done on March 02, 2002, the secondredemption of Rs. 75/- per debenture aggregating to Rs. 1145.58 Lacs was done on March 02, 2003 and the last redemption of Rs. 100/-per debenture aggregating to Rs. 1527.44 Lacs was done on March 02, 2004. Subsequent to the year end, the charges on the assets ofthe Company have been vacated.

(b) Term loan from ICICI Bank Ltd. amounting to Rs. 2025.97 Lacs (Previous year Rs. 3000.00 Lacs), is secured by first pari passu chargeon certain immovable assets by way of joint equitable mortgage and by way of hypothecation of movable fixed assets of the Company.

(c) Term Loan from Punjab National Bank amounting to Rs. 500.00 Lacs is secured by first pari passu charge on immovable assets by way ofjoint equitable mortgage and by way of hypothecation of movable fixed assets of the Company.

(d) Fund based working capital facilities from banks are secured by a first pari passu charge on stocks and book debts, outstanding monies,receivables and a second charge on immovable and movable fixed assets of the Company, both present and future.

(e) Interest free loan from Department of Industries, Punjab is secured by lien on a deposit of Rs. 8.62 Lacs (Previous year Rs. 13.66 Lacs)on which interest of Rs. 12.05 Lacs (Previous year Rs. 15.42 Lacs) has accrued till March 31, 2004. This deposit has been placed withPunjab State Industrial Development Corporation as a guarantee for the loan.

(f) 25 – 12.5% Redeemable Non Convertible Debentures of face value of Rs. 1,00,00,000/- each, amounting to Rs. 2500.00 Lacs areredeemable on December 18, 2005.

(g) Short-term loans from IDBI Bank Ltd. of Rs. 1000.00 Lacs (Previous year Rs. 2000.00 Lacs) are secured by way of a first pari-passucharge on certain fixed assets (both movable and immovable) including plant and machinery, tools, accessories and stores (present andfuture) of Max Healthcare Institute Ltd. (a subsidiary).

(h) Short Term loans from The Bank of Rajasthan Ltd. amounting to Rs. 1500.00 Lacs are secured by the pledge of shares of the Company,which are owned by certain related parties.

5 Debentures amounting to Rs. 1527.44 Lacs were redeemed during the year, the corresponding debenture redemption reserve amounting toRs. 763.72 Lacs created during the earlier years was transferred to the Profit and Loss Account. An amount of Rs. 146.26 Lacs was createdas debenture redemption reserve in respect of 12.5% Redeemable Non-Convertible Debentures.

6 The Company signed an amendment to the Joint Venture Agreement (“JVA”) with New York Life International Inc. (“NYLI”) on May 20, 2003.In terms of the amended JVA, both the parties agreed that the Company shall not transfer or otherwise dispose its shareholding to an extent of24% of the paid up issued share capital (“Restricted Shares”) of Max New York Life Insurance Company Ltd. (“MNYL”) to any person otherthan NYLI. The parties also agreed that NYLI shall pay to the Company the aggregate par value equal to 24% of the paid up issued share capitalof MNYL from time to time.The aforesaid payment may be applied by NYLI to purchase of the Restricted Shares of MNYL from the Company, when and to the extentpermitted pursuant to applicable laws by March 2010 or become repayable thereafter.The Company received Rs. 8160.00 Lacs in aggregate from NYLI during the current financial year in accordance with the aforesaid agreement.

(RS. LACS)Current Year Previous Year

Max-India 30-72.p65 9/14/2004, 11:33 AM56

57



7 Income Tax Cases(a) During the year ended March 31, 2001 an income-tax demand of Rs. 9503.93 Lacs was raised in the case of a subsidiary of the Company

for the assessment year 1998-99, against which the Company was contingently liable in terms of a Scheme of Arrangement sanctioned bythe Hon’ble High Court of Punjab and Haryana at Chandigarh vide Order dated March 20, 1999. The subsidiary company had filed anappeal against the said demand. The said appeal had been disposed off in favour of the subsidiary company by the CIT (Appeals), and theIncome-tax department had gone in appeal against the same to Income Tax Appellate Tribunal. Subsequently, in the assessment of the same subsidiary company for the assessment year 1999-2000 the transaction that had resultedin the above mentioned demand was also assessed as taxable on protective basis under a different head of income. This, alongwith a fewother additions, resulted in further creation of demand of Rs. 25630.03 Lacs (which included the demand of Rs. 25002.53 Lacs onprotective basis). The subsidiary company had filed an appeal against the same. The said appeal has also been disposed off in favour ofthis subsidiary company by the CIT (Appeals), and the income-tax department has gone in appeal against the same to Income TaxAppellate Tribunal.

(b) The Company had received an Income-tax demand of Rs. 835.78 Lacs for the assessment year 2000-01 at processing stage consequentto withdrawal of the set-off of losses of earlier years namely 1997-98, 1998-99 and 1999-2000. The said demand was reduced to Rs.1.75 Lacs consequent to the appellate orders passed for the assessment years 1997-98, 1998-99 and 1999-2000 in which relief wasallowed to the Company resulting in losses available for set-off in the assessment year 2000-01. However, the income-tax department hasgone into appeal against the said appellate orders.Subsequently, in the assessment that was completed under section 143(3) of the Income Tax Act, for the assessment year 2000-01, ademand of Rs. 5.91 Lacs had been created. The Company had filed an application for rectification and demand has been cancelled.

(c) The Company had received an Income-Tax demand of Rs. 15.65 Lacs for the assessment year 2001-02 in the assessment under Section143(3) of the Income Tax Act. The Company has filed an appeal against the order before CIT (Appeal) and is hopeful that this demand willbe cancelled on the disposal of appeal.

8 Employee Stock Option plansThe Company has two stock option plans. These are summarized below:

Employee Stock Option Plan – 2000 (“the 2000 Plan”):The 2000 Plan provided for the grant of stock options to eligible non-executive directors, whole-time directors and employees of the Company.The 2000 Plan was approved by the board of directors in January 2000 and by the shareholders in March 2000. All the options granted underthe 2000 Plan were to be exercised by March 29, 2004. Details of the 2000 Plan are given below:


Options outstanding, beginning of the year 86,000 1,36,000Exercised during the year 71,000 —Forfeited/lapsed during the year 15,000 50,000Options outstanding, end of the year — 86,000

Employee Stock Option Plan – 2003 (“the 2003 Plan”):During the year, the Company instituted the 2003 Plan, which was approved by the board of directors in August 2003 and by the shareholdersin September 2003. The 2003 Plan provides for grant of stock options aggregating not more than 5% of number of issued equity shares of theCompany to eligible employees and directors of the Company. The 2003 Plan shall be administrated by the remuneration committee appointedby the board of directors. On October 01, 2003, 66,667 stock options were granted under the 2003 Plan at an exercise price of Rs. 10/- pershare. These options shall vest on October 01, 2004, on April 01, 2005 and on April 01, 2006.

9 Deferred TaxThe break up and movement of deferred tax assets and deferred tax liabilities into major components is given below:

(RS. LACS)Particulars Opening Movement Closing

As at April 01, 2003 during the year As at March 31, 2004

Depreciation 939.73 129.20 1068.93Deferred Revenue Expenses and preoperative expenditure 29.35 15.43 44.78Deduction u/s 35D/35DD 3.36 (1.38) 1.98Deduction u/s 43B (71.81) (42.81) (114.62)Other Provisions (286.92) 44.84 (242.08)Managerial Remuneration 15.78 (15.78) —Net Deferred Tax Liability/(Asset) 629.49 129.50 758.99

Note: Deferred tax assets are created to the extent of their realisability in future.

Max-India 30-72.p65 9/14/2004, 11:33 AM57



58

10 Exceptional ItemsDiminution in the value of investment in Max Vision Inc.During earlier financial years, the Company had invested in 10,000 equity shares of USD 30/- each and had also given loans to its whollyowned subsidiary Max Vision Inc. amounting to Rs. 94.50 Lacs and Rs. 465.13 Lacs respectively. This subsidiary was in the process ofdeveloping an enterprise solutions practice in USA, primarily to serve as a front end for the information technology services business of MaxAteev Ltd. However, consequent to the winding up of information technology services business in India by Max Ateev Ltd., Max Visions Inc. alsodiscontinued its enterprise solutions practice in 2003. Accordingly, based on prudent and conservative accounting practice, the managementdecided to provide for diminution in the value of investments and loans given to Max Visions Inc. The Company is in the process of seekingnecessary regulatory approvals for initiating winding up proceedings of this subsidiary.

Diminution in the value of investment in Max Ateev Ltd.Max Ateev Ltd., a wholly owned subsidiary of the Company had initiated a restructuring exercise last year by ceasing operations in theinformation technology services business and focusing on the knowledge management practice. As part of the restructuring exercise, MaxAteev Ltd. executed a Business Transfer Agreement on April 28, 2004 for the sale of its knowledge management business to Comsat Max Ltd.,an affiliate company. After the sale of this business, Max Ateev Ltd. will not be left with any operating business. Accordingly, the managementdecided to provide for diminution in the balance value of investments in and loans given to Max Ateev Ltd. by the Company amounting toRs. 244.36 Lacs and Rs. 115.15 Lacs respectively, which were not represented by any assets of Max Ateev Ltd.The aforesaid decline in the carrying amount of investment in and loans given to Max Vision Inc. and Max Ateev Ltd. have been regarded asother than temporary and have been accordingly charged to the profit and loss account as an exceptional expense.

11 Income from Interest on Loans and Non Trade Investments in Schedule 19 is gross of the following Tax Deducted at Source:• Bonds Rs. 0.04 Lacs (Previous year Rs. 13.11 Lacs)• Debentures Rs. 0.07 Lacs (Previous year Rs. 0.10 Lacs)• Fixed Deposits Rs. 0.59 Lacs (Previous year Rs. 0.84 Lacs)• Loans Rs. 124.57 Lacs (Previous year Rs. 115.47 Lacs)• Dividend Nil (Previous year Rs. 1.59 Lacs)• Others Rs. 0.47 Lacs (Previous year Nil)

12 Directors’ RemunerationDirectors’ remuneration paid/provided in the accounts: (RS LACS)

Current Year Previous Year#

a Salary and Allowances 222.72 232.59b Contribution to Provident Fund and Superannuation Fund 15.50 34.57c Value of perquisites 30.78 57.80

Total 269.00 324.96The above does not include provision for leave encashment and gratuity.Notes:During the year, the Company paid remuneration to the executive directors in accordance with the resolutions passed by the Remuneration Committee of theBoard of Directors and the Shareholders. With regard to a director, an amount of Rs. 29.25 Lacs (Previous year Rs. 21.15 Lacs) was paid in excess of thelimits prescribed under Section II of Part II of Schedule XIII to the Companies Act, 1956. The Company is in the process of obtaining requisite approvals fromthe Central Government for the same.In view of the aforesaid, the excess amounts of Rs. 29.25 Lacs for the current year and Rs. 43.52 Lacs* for the previous years, received by the concerneddirectors, are held by them in trust for the Company.Remuneration for current year also includes an amount of Rs. 0.47 Lacs (Previous year Rs. 39.95 Lacs) relating to earlier years for which the Company hasreceived Central Government approval during the current year.* Includes Rs. 10.20 Lacs held by a former director.# Includes Rs. 0.89 Lacs related to earlier years.

13 Earnings Per Share (EPS)Calculation of EPS (Basic and Diluted)Particulars For the Year Ended For the Year Ended

March 31, 2004 March 31, 2003

BasicProfit/(Loss) after tax (Rs. Lacs) 1861.59 (5326.05)Weighted average number of Equity Shares 2,30,72,890 2,30,64,160EPS (Rupees) 8.07 (23.09)

Share Details (Nos)Outstanding as at the beginning of the year 2,30,64,160 2,30,64,160Issued on February 16, 2004 71,000 —Outstanding as at the end of the year 2,31,35,160 2,30,64,160

Max-India 30-72.p65 9/14/2004, 11:33 AM58

59



DilutedProfit/(Loss) after tax (Rs. Lacs) 1861.59 (5326.05)Weighted average number of Equity Shares 2,31,72,181 2,30,64,160EPS (Rupees) 8.03 (23.09)

Share Details (Nos)Outstanding as at the beginning of the year 2,30,64,160 2,30,64,160Opening balance under the 2000 Plan 86,000 —ESOPs lapsed on June 30, 2003 under the 2000 Plan (15,000) —ESOPs granted under the 2003 Plan 66,667 —Outstanding as at the end of the year 2,32,01,827 2,30,64,160

Reconciliation of denominators used for calculating basic and diluted earnings per share

Particulars For the Year EndedMarch 31, 2004

Denominator used for computing basic Earnings Per Share 2,30,72,890Add:- Dilutive impact of -

(i) Outstanding ESOPs under the 2000 Plan 65,958(ii) Outstanding ESOPs under the 2003 Plan 33,333

Denominator used for computing diluted Earnings Per Share 2,31,72,181

14 Miscellaneous Expenditure (RS. LACS)Particulars As at Additions Amortised As at

April 1, during the March 31,2003 year 2004

Preliminary, Share and Debenture Issue Expenses 19.19 — 8.80 10.39Deferred Employee Compensation — 58.33 20.11* 38.22Deferred Revenue Expenditure

- Product/Market Development Expenditure 21.95 — 9.17 12.78- Non Compete Fees 167.63 — 84.28 83.35

208.77 58.33 122.36 144.74

* Amortisation has been charged to salaries, wages and bonus.

15 The Company sold 1,08,20,634 equity shares representing its entire 64.99% stake in Max Healthscribe Ltd. to Healthscribe Inc., USA forUSD 10.34 million, on December 18, 2003. The profit of Rs. 2866.31 Lacs on divestment of this stake is included under the head “Incomefrom Investment Activities”.

16 New Subsidiaries:Neeman Medical International (Asia) Ltd. (“Neeman Asia”)Neeman Asia is a company engaged in the field of Clinical Research business in India. The Company has been allotted 41,66,743 equityshares of Rs. 10/- each of Neeman Asia by conversion of outstanding unsecured loans on March 18, 2004 representing 99.99% stake of thatcompany by virtue of which Neeman Asia became a subsidiary of the Company.

Pharmax Corporation Ltd. (“Pharmax”)The Company had an investment in 4,27,311 cumulative convertible preference shares of Rs. 100/- each of Pharmax. These preference sharesgot compulsorily converted into 4,27,31,100 equity shares of Re. 1/- each of Pharmax on March 16, 2004 as part of the terms of their issue.The consolidated holding of the Company in 4,71,17,247 equity shares of Pharmax post conversion translates into 85.94% stake on a fullydiluted basis. Therefore, by virtue of the aforesaid conversion, Pharmax became a subsidiary of the Company.

CMax Infocom Pvt. Ltd. (“CMax”)CMax is a company in the business of trading of telecommunication and networking equipment in India. The Company acquired 10,000 equityshares of Rs. 10/- each of CMax on June 13, 2003 representing 100% stake of that company by virtue of which CMax became a subsidiary ofthe Company.

17 Effective September 01, 2002, the Company had divested its pharmaceuticals manufacturing business located at Nanjangud, Mysore as agoing concern, on a slump sale basis. Consequently, results of the Company for the previous year ended March 31, 2003 include results of thepharmaceuticals business for a period of five months i.e. from April 01, 2002 to August 31, 2002.

Particulars For the Year Ended For the Year EndedMarch 31, 2004 March 31, 2003

Max-India 30-72.p65 9/14/2004, 11:33 AM59



60

18 The Company had made equity investments in Alta Cast LLC (“Alta Cast”), a limited liability Company. Alta Cast was undergoing protectivebankruptcy under US laws. On March 02, 2004, the US Bankruptcy Court, District of Delaware confirmed the plan of reorganisation filed byAlta Cast. In terms of this plan of reorganisation, the Company’s interest in Alta Cast as a stakeholder has got completely extinguished and theCompany will not receive any consideration on account of its shareholding. The carrying value of Company’s investment in Alta Cast had beenfully provided in the previous year.

19 Pre-operative Expenses Pending CapitalisationThe details of pre-operative expenses pending capitalisation are given below: (Rs. Lacs)Particulars As at As at

March 31, 2004 March 31, 2003

Opening Balance 100.48 —Salaries and Wages 37.75 26.84Recruitment 0.04 0.09Staff Welfare 0.05 0.03Rent 0.78 —Insurance — 3.93Printing and Stationary 0.12 0.02Travelling and Conveyance 10.01 20.74Communication 1.08 0.04Legal and Professional 2.16 4.76Business Promotion — 0.05Technical Fees 0.01 —Software Development — 40.60Miscellaneous 0.17 3.38

152.65 100.48Less:Capitalised 108.56 —

Closing Balance 44.09 100.48

20 InvestmentsThe details of investments are given below:

Current Year Previous YearParticulars Face Value Numbers as at Value as at Numbers as at Value as at

(Rs.) March 31, 2004 March 31, 2004 March 31, 2003 March 31, 2003(Rs. Lacs) (Rs. Lacs)

SUBSIDIARIES, AT COSTEquity SharesMax Telecom Ventures Ltd. 10 3,03,64,800 3036.48 3,03,64,800 3036.48Max Estates Ltd. 10 50,000 5.01 50,000 5.01Malsi Estates Ltd. 10 50,000 5.01 50,000 5.01Comsat Max Ltd. 10 2,62,80,000 1538.70 1,19,72,000 1189.64Max Ateev Ltd. 10 3,14,43,600 3144.36 3,14,43,600 3144.36Provision for Diminution (3144.36) (2900.00)Max New York Life Insurance Company Ltd. 10 25,16,00,014 25160.00 22,20,00,000 18870.00Max HealthScribe Ltd. 10 — — 1,04,00,000 1821.21Max Healthcare Institute Ltd. 10 10,37,89,127 10378.91 10,37,89,127 10378.91Pharmax Corporation Ltd. 1 4,71,17,247 1420.65 43,86,147 132.33CMax Infocom Pvt. Ltd. 10 10,000 1.01 — —Neeman Medical International (Asia) Ltd. 10 41,66,743 416.67 — —Max Asia Pac Ltd. USD 10 12,04,677 5461.78 9,00,000 4019.41Max UK Ltd. GBP 1 2,99,742 213.00 2,99,742 213.00Max Visions Inc. USD 30 10,000 94.50 10,000 94.50Provision for Diminution (94.50) — 47637.22 40009.86Preference SharesPharmax Corporation Ltd.-CCP 100 — — 4,27,311 1288.32Pharmax Corporation Ltd.-9% CRPS 100 15,00,000 1500.00 15,00,000 1500.00Neeman Medical International (Asia) Ltd. 10 50,000 5.00 50,000 5.00 1505.00 2793.32

Max-India 30-72.p65 9/14/2004, 11:33 AM60

61



LONG TERM TRADE (UNQUOTED)Max Healthstaff International Ltd. 10 15,85,000 158.50 25,000 2.50 158.50 2.50LONG TERM NON TRADE (QUOTED)Equity SharesICICI Bank Ltd. 10 250 0.65 58,750 148.56Mahindra & Mahindra Ltd. 10 6 0.01 72,756 156.32Satyam Computers Services Ltd. 10 — — 35,750 196.72 0.66 501.60Less: Provision for Diminution — (287.39)

0.66 214.21LONG TERM NON TRADE (UNQUOTED)(i) Units of Interest in limited liability companyAlta Cast LLC 1,12,47,360 3652.56 1,12,47,360 3652.56Less: Provision for Diminution (3652.56) (3652.56)

— —(ii) Preferred StockMindCrossing Inc. $0.001 18,76,511 1902.39 18,76,511 1902.39

1902.39 1902.39(iii) Equity SharesInvestment Research & Information Services Ltd. 10 2,30,000 253.00 2,30,000 253.00Less: Provision for diminution (219.85) (213.00)

33.15 40.00(iv) Debentures14.5% National Aluminium Co Ltd. 1000 340 3.28 340 4.41 3.28 4.41(v) Bonds11% Housing Development Finance Corporation Ltd. 1000 — — 720 7.20 — 7.20CURRENT NON TRADE (UNQUOTED)Units in Mutual FundBirla Cash Plus-(Plan B)-Growth 10 — — 7,33,047.543 119.09HDFC Liquid Fund-Premium Plan-Growth 10 — — 39,94,600.450 480.59HSBC Mutual Fund-HSBC Cash Fund (HCF)-Growth 10 — — 2,50,000.000 25.00Tempelton India Treasury Management A/C –Growth 1000 — — 14,998.207 225.81Grindlays Cash Fund-Inst Plan B-Weekly Dividend 10 20,46,109.430 210.83 — —Alliance Cash Manager-IP-Daily Dividend 10 39,00,404.996 390.04 — —

600.87 850.49

TOTAL 51841.07 45824.38Share Application Money Pending Allotment 42.00 1129.62TOTAL 51883.07 46954.00

MOVEMENT IN INVESTMENTS IN SUBSIDIARIES2

Purchases SalesName of the Investment Face Value Shares/Unit Value Shares/Units Value

per share (Numbers) (Rs. Lacs) (Numbers) (Rs. Lacs)(Rupees)

Max New York Life Insurance Company Ltd. 10 2,96,00,014 6290.00 — —Comsat Max Ltd 1 10 1,43,08,000 349.06 — —Max Asia Pac Ltd USD 10 3,04,677 1442.37 — —Neeman Medical International (Asia) Ltd 10 41,66,743 416.67 — —CMax Infocom Pvt Ltd 10 10,000 1.01 — —Max Healthscribe Ltd 10 4,20,634 0.32 1,08,20,634 4687.84

1. Represents acquisition of balance 49% share capital in Comsat Max Ltd. from Comsat Investment Inc. for USD 7,50,000. The company along with

another subsidiary currently holds 100% equity stake in Comsat Max Ltd.

2. Excludes conversion of 4,27,311 Preference Shares of Rs. 100/- each of Pharmax Corporation Ltd. into 4,27,31,100 equity shares of Re. 1/- each.

Current Year Previous YearParticulars Face Value Numbers as at Value as at Numbers as at Value as at

(Rs.) March 31, 2004 March 31, 2004 March 31, 2003 March 31, 2003(Rs. Lacs) (Rs. Lacs)

Max-India 30-72.p65 9/14/2004, 11:33 AM61



62

Max HealthStaff International Ltd. 10 15,60,000 156.00 — —

MOVEMENT IN LONG TERM NON TRADE (QUOTED)

ICICI Bank Ltd 10 — — 58,500 113.59Mahindra & Mahindra Ltd 10 — — 72,750 156.87Satyam Computers Services Ltd 10 — — 35,750 76.80

MOVEMENT IN LONG TERM NON TRADE (UNQUOTED)

11% Housing Development Finance Corporation Ltd 1000 — — 720 7.20

MOVEMENT IN CURRENT NON TRADE INVESTMENTS (UNQUOTED)

Alliance Cash Manager-Dividend 10 75,01,160.980 750.12 36,00,755.984 360.08Birla Cash Plus-Plan-B-Growth 10 4,58,302.188 76.00 11,91,349.731 195.49Birla Cash Plus-Plan-A-Dividend 10 57,66,230.941 621.94 57,66,230.941 622.04Birla Cash Plus-Plan-B-Dividend 10 41,68,387.231 687.56 41,68,387.231 690.75HDFC Liquid Fund-Premium Plan-Dividend 10 41,80,042.264 509.33 81,74,642.712 997.80HSBC Cash Fund – Growth 10 — — 2,50,000.000 25.69HSBC Cash Fund – Growth-I 10 4,70,93,711.775 4883.12 4,70,93,711.775 4894.29HSBC Cash Fund-Weekly Dividend 10 1,59,87,495.920 1669.61 1,59,87,495.920 1669.60HSBC Cash Fund-Daily Dividend 10 84,11,761.000 877.89 84,11,761.00 877.89Kotak Mahindra Mutual Fund-Liquid plan 10 42,47,875.789 525.00 42,47,875.789 527.22Kotak Mahindra Mutual Fund-Dividend 10 2,14,16,446.072 2240.28 2,14,16,446.072 2240.93SCB Grindlays Cash Fund-Growth 10 2,29,17,565.452 2629.50 2,29,17,565.452 2630.23SCB Grindlays Cash Fund-Inst Plan-B 10 59,30,275.880 683.28 59,30,275.880 685.05SCB Grindlays Cash Fund-Dividend 10 5,93,17,889.793 6113.05 5,72,71,780.363 5901.00Templeton India Treasury Management a/c-Growth 1000 98,235.078 1508.00 1,13,233.285 1737.60

21 The names of small scale industrial undertakings to whom the Company owes any sum and is outstanding for more than thirty days as at theBalance Sheet date are Brisk India, NEC Packaging Corporation, Suvidha Tubes and ADH Polymers.

22 Segment Reportinga Business Segments

The Company has considered business segment as the primary segment for disclosure. The products/ services included in each of thereported business segments are as follows:• Speciality Plastic Products - The manufacturing facility located at Railmajra, Nawanshar (Punjab), produces packaging films supported

with polymers of propylene, leather finishing transfer foils and related products.• Business Investments - The Company has sizeable business investments in companies operating in the areas of Life Insurance,

Healthcare, Clinical Research and Networking Security and Connectivity Solutions businesses. These investments along with itstreasury investments have been combined to form Business Investment Segment.

• Pharma – For a part of the financial year 2002-03, the manufacturing facility located at Nanjangud, Mysore was engaged in theproduction of bulk drugs like Carbamezapine, Azithromycin and Citalopram etc.

• Business Services - This segment consists of providing corporate services of strategic nature to companies within the group and isrepresented by the pool of resources available at the corporate office.

• Others – The trading activities undertaken by the Company are classified under this segment.

The above business segments have been identified considering:i The nature of products and services,ii The differing risks and returns,iii Organisational structure of the group, andiv The internal financial reporting systems.

Segment Revenue consists of revenue from external customers only since there are no significant inter segment transfers.Segment Result is the difference of segment revenue and segment operating expenses.Unallocated Assets include assets pertaining to the corporate office such as loans, advance and deposits.Unallocated Liabilities include tax provisions and interest bearing loans.

MOVEMENT IN LONG TERM TRADE INVESTMENTS (UNQUOTED)Purchase Sales

Name of the Investment Face Value Shares/Unit Value Shares/Units Valueper share (Numbers) (Rs. Lacs) (Numbers) (Rs. Lacs)(Rupees)

Max-India 30-72.p65 9/14/2004, 11:33 AM62

63



Unallocated Expenses - Expenses incurred at corporate office relate to various business segments. As there is no reasonable basis of allocatingthis expenditure to various segments, the same are shown as unallocated reconciling expenses. Interest expense is not treated as part of asegment expense and is reflected as a separate line item.

b Geographical SegmentsThe Company has considered geographical segment as secondary reporting segment for disclosure. For this purpose, the revenues arebifurcated based on location of customers in India and outside India (primarily Europe and North America).

Primary Segments (RS. LACS)Particulars Specialty Business Business Pharma* Other Total

Plastic Investments ServicesProducts

a Segment Revenue from:Sales to external customers 11645.89 — — — 139.81 11785.70

(10687.39) (—) (—) (3431.34) (606.69) (14725.42)Service income 167.85 47.89 50.00 — — 265.74

(120.34) (47.76) (49.95) (—) (—) (218.05)Income from investment activities — 3761.60 — — — 3761.60

(—) (905.67) (—) (—) (—) (905.67)Other income 38.72 — — — — 38.72

(38.38) (0.98) (—) (31.03) (—) (70.39)Total Segment Revenue 11852.46 3809.49 50.00 — 139.81 15851.76

(10846.11) (954.41) (49.95) (3462.37) (606.69) (15919.53)Interest income 64.63

(27.79)Unallocated income 112.23

(272.38)Total Revenue 16028.62

(16219.70)

b Segment Results 1960.14 3797.73 50.00 — 25.94 5833.81(2224.16) (858.86) (49.95) (838.44) (28.88) (4000.29)

Interest Income 64.63(27.79)

Less:-Unallocated expenses 1054.10

(1062.35)Interest Expense 1782.61

(2628.88)Prior Period items (2.58)

(13.59)Profit before tax and Exceptional items 3064.31

(323.26)Provision for taxation (includes provision for Deferred Tax Liabilities) 283.58

((903.25))Profit after tax and before Exceptional items 2780.73

(1226.51)Exceptional items 919.14 919.14

(6552.56) (6552.56)Profit / (Loss) after tax and exceptional items 1861.59

((5326.05))

c Carrying amount of segment assets 9058.17 58862.91 — — 151.40 68072.48(8727.49) (53430.21) (—) (—) (279.99) (62437.69)

Unallocated assets 1361.77(1611.00)

Total Assets 69434.25(64048.69)

d Segment Liabilities 2011.05 377.12 — — 177.71 2565.88(1965.75) (58.29) (—) (—) (279.45) (2303.49)

Max-India 30-72.p65 9/14/2004, 11:33 AM63



64

(RS. LACS)Particulars Specialty Business Business Pharma* Other Total

Plastic Investments ServicesProducts

Unallocated liabilities 19620.60(16454.43)

Total Liabilities 22186.48(18757.92)

e Cost to acquire tangible and intangible fixed assets 1000.94 — — — — 1000.94(353.20) (—) (—) (62.02) (—) (415.22)

Unallocated 33.45(146.07)

Total Addition 1034.39(561.29)

f Depreciation and amortisation expense 502.83 — — — — 502.83(443.57) (34.78) (—) (191.56) (—) (669.91)

Unallocated Depreciation and amortisation 197.16(116.60)

Total depreciation and amortisation 699.99(786.51)

g Non-cash expenses other thandepreciation and amortisation 33.98 169.70 — — — 203.68

(47.82) (252.16) (—) (3.33) (—) (303.31)Unallocated Non cash expenses 31.05

(28.83)Total 234.73

(332.14)*Refer note 17

Secondary Segments (RS. LACS)Particulars India Outside India Totala Revenue from external customers 10734.76 5117.00 15851.76

(12571.76) (3347.77) (15919.53)b Carrying amount of segment assets by location of assets 59454.00 8618.48 68072.48

(55355.13) (7082.56) (62437.69)c Cost to acquire tangible and intangible fixed assets by location of assets 1034.39 — 1034.39

(561.29) (—) (561.29)Notes:

(i) Reconciliation of revenue –

Sales shown above includes Scrap sale of Rs. 427.63 Lacs (Previous year Rs. 387.84 Lacs) classified as Other Income in Profit and Loss Account.

(ii) Figures in brackets are for Previous year.

23 Related Parties (as identified by the management) are classified as:Subsidiaries Max New York Life Insurance Company Ltd., Max Ateev Ltd., Comsat Max Ltd., Max Asia Pac Ltd., Neeman Medical

International BV, Neeman Medical International NV, Neeman Medical International Plc. UK, Neeman Medical InternationalInc., USA, Neeman ICIC SA, Costa Rica, Max Visions Inc., USA, Max Telecom Ventures Ltd., Max Medical Services Pvt.Ltd., Max Healthcare Institute Ltd., Max Estates Ltd., Malsi Estates Ltd., Max UK Ltd., Pharmax Corporation Ltd.,Neeman Medical International (Asia) Ltd., CMax Infocom Pvt. Ltd., Max HealthScribe Ltd.

Joint Ventures & Associates Max HealthStaff International Ltd., Atotech India Ltd.

Key Management Personnel Mr. Analjit Singh, Mr. B Anantharaman, Mr. Surendra Kaul(Directors)

Relatives of Key Mrs. Neelu Analjit Singh (wife of Mr. Analjit Singh), Mr. Veer Singh (son of Mr. Analjit Singh)Management Personnel

Enterprises over which Liquid Investments & Trading Company, New Delhi House Services Ltd., Medicare Investments Ltd., Maxopp Investmentskey management personnel Ltd., Cheminvest Ltd., Pen Investments Ltd., Pivet Finances Ltd., Gaylord Impex Ltd., Lakeview Enterprises, Delhi Guesthave significant influence House Pvt. Ltd., Trophy Holdings Pvt. Ltd., Dynavest India Pvt. Ltd., Boom Investments Pvt. Ltd., Malsi Holdings Ltd.

Employee benefit funds Max India Ltd. Employees’ Provident Fund Trust

Max-India 30-72.p65 9/14/2004, 11:33 AM64

65



Summary of significant related party transactions (as identified by the management) carried out in ordinary course of business are as follows:

(RS. LACS)Particulars Subsidiaries Joint Venture Key Relatives of Enterprises over Employee

& Associates Management Key which key benefitPersonnel Management Management Funds

Personnel Personnelhave significant

influence

1 Fixed Assets Transferred 0.18 8.80 8.13 — 0.63 —(0.32) (—) (0.10) (—) (4.37) (—)

2 Fixed Assets Purchased 0.51 — — — — —(82.20) (—) (—) (—) (—) (—)

3 Deposits and advances given — — 33.70 — — —(—) (—) (32.97) (—) (—) (—)

4 Deposits and advances accepted 4.73 — — — — —(33.12) (38.68) (—) (—) (—) (—)

5 Loans taken — — — — 2805.00 —(—) (—) (—) (—) (1090.00) (—)

6 Sundry creditors transferred 18.71 — — — — —(65.46) (—) (—) (—) (—) (—)

7 Loans given 782.55 — — — — —(3290.43) (87.00) (69.37) (—) (39.00) (—)

8 Income and reimbursementsInterest income 535.31 — 4.96 — 67.50 —

(305.97) (157.38) (16.88) (—) (67.50) (—)Services rendered 50.00 — — — — —

(—) (37.00) (—) (—) (—) (—)Non competition fee and royalty — 47.89 — — — —

(—) (47.76) (—) (—) (—) (—)Reimbursement of expenses 342.18 38.29 — — 12.87 —

(332.51) (40.36) (—) (—) (114.49) (—)9 Expense

Services received — — — — 86.46 —(3.38) (—) (—) (—) (85.85) (—)

Interest paid — — — — 139.09 —(—) (—) (—) (—) (67.36) (—)

Other Expenses 127.41 — — 7.88 43.65 —(52.52) (134.42) (34.47) (7.51) (34.45) (—)

Non Competition fee Paid — — — — — —(—) (—) (168.55) (—) (—) (—)

Director’s remuneration — — 269.00 — — —(—) (—) (324.96) (—) (—) (—)

Company’s contribution to PF trust — — — — — 36.69(—) (—) (—) (—) (—) (36.52)

10 Purchase of investmentsActuals 7368.49 156.00 — — — —

(12968.50) (2.50) (—) (—) (5.00) (—)Advance against equity — 42.00 — — — —

(741.23) (—) (—) (—) (388.39) (—)

Max-India 30-72.p65 9/14/2004, 11:33 AM65



66

(RS. LACS)Particulars Subsidiaries Joint Venture Key Relatives of Enterprises over Employee

& Associates Management Key which key benefitPersonnel Management Management Funds

Personnel Personnelhave significant

influence

11 Amount outstandingCorporate Guarantee 8323.75 — — — — —

(3929.50) (155.00) (—) (—) (—) (—)Against loan given 5165.73 — — — 500.00 —

(3469.47) (969.55) (89.03) (—) (500.00) (—)Interest receivable 242.16 — — — 26.76 —

(23.53) (153.48) (—) (—) (—) (—)Against loan taken — — — — 550.00 —

(—) (—) (—) (—) (840.00) (—)Interest payable — — — — 163.80 —

(—) (—) (—) (—) (53.22) (—)Other receivable 1221.12 0.37 67.02 — — —

(1161.09) (118.33) (53.84) (—) (—) (—)Other payable 7.95 — — — 14.58 —

(16.53) (1.86) (4.46) (—) (14.25) (—)Income received in advance — 11.64 — — — —

(—) (59.53) (—) (—) (—) (—)Figures in brackets are for previous year

Other relevant informationi) Fixed Assets are transferred or sold at book value.ii) Inter corporate loans are given at interest rates prevailing in the market except interest free loans amounting to Rs. 82.50 Lacs (Previous

year Rs. 489.25 Lacs) given to subsidiaries and associates to promote business interest.iii) Services received and rendered are at agreed rates.iv) Investment in subsidiaries is at par value and in associates based on agreed valuation of the business.v) The above excludes sitting fees Rs. 3.11 Lacs (Previous year Rs. 3.69 Lacs) paid to non-executive directors.

24 LeasesAccounting for leases has been done in accordance with Accounting Standard-19 issued by the ICAI. Following are the details of leasetransactions for the year:a Finance Lease

The Company does not have any finance lease arrangement.b Operating Lease

(i) Lease rentals recognised in the profit and loss account for the year is Rs. 201.72 Lacs (Previous year Rs. 209.72 Lacs).(ii) The Company has entered into operating leases for its office and for employees’ residence that are renewable on a periodic basis and

cancellable at Company’s option. The Company has not entered into sublease agreements in respect of these leases.(iii) The total of future minimum lease payments under non-cancellable leases are as follows:

(RS. LACS)March 31, 2004 March 31, 2003

Not later than one year 19.71 17.91Later than 1 year and not later than 5 years 6.41 23.08Later than five years — —Total 26.12 40.99

Max-India 30-72.p65 9/14/2004, 11:33 AM66

67



Additional information pursuant to the provisions of paragraph 3, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956:

25 Details of Stock of SecuritiesCurrent Year Previous Year

Numbers Value Numbers Value(Rs. Lacs) (Rs. Lacs)

Equity SharesOpening Balance 10,53,390 99.46 10,53,390 95.62Purchases /Vesting shares * 46,146 — — —Sales 2,25,921 170.77 — —Closing Stock 8,73,615 8.32 10,53,390 99.46

* The Company received one bonus equity share for every two equity shares held in Lumax Industries Ltd. on October 31, 2003. On that datethe Company was holding 92,292 equity shares of Lumax Industries Ltd.

26 A (i) Installed Capacity & Actual ProductionInstalled Capacity* Actual Production

Product Unit (Annual)

BOPP Film Tonnes 11,550 12271.46**(9000) (10514.13)

Soft Leather Finishing Foil Lacs (SFT) 320 86.02(320) (81.10)

Bulk Drugs Tonnes — —(—) (81.01)***

Figures in brackets are for previous year.Notes:

Licensed capacity is not applicable.* Annual installed capacities are certified by the management.** Includes captive consumption 2890.33 Tonnes (Previous year 2296.24 Tonnes).*** Includes intermediates 16 Tonnes.

(ii) Stock of Finished GoodsOpening Stock Closing Stock

Product Unit Quantity Value Quantity Value(Rs. Lacs) (Rs. Lacs)

ManufacturedBOPP Film Tonnes 37.50 35.68 29.92 29.14

(23.50) (22.08) (37.50) (35.68)Soft Leather Finishing Foil Lacs (SFT) 0.40 1.33 0.40 1.53

(2.44) (9.30) (0.40) (1.33)Bulk Drugs Tonnes — — — —

(9.77) (138.50) (—) (—)TradedSoft Leather Finishing Foil Lacs (SFT) 1.50 15.65 1.03 11.07

(1.60) (17.49) (1.50) (15.65)Total 52.66 41.74

(187.37) (52.66)Figures in brackets are for Previous year

Max-India 30-72.p65 9/14/2004, 11:33 AM67



68

(iii) TurnoverProduct Unit Quantity Value (Rs. Lacs)

a) Manufactured GoodsBOPP Film Tonnes 9388.71 11993.86

(8204.00) (11085.30)Soft Leather Finishing Foil Lacs (SFT) 86.02 650.95

(83.14) (582.05)Bulk Drugs Tonnes — —

(86.21)* (3677.40)b) Traded Goods

Soft Leather Finishing Foil Lacs (SFT) 2.32 32.89(5.84) (83.97)

c) Others** Nos. — 139.81(—) (606.69)

Total 12817.51(16035.41)

Figures in brackets are for previous yearNotes:* Includes intermediates 24 Tonnes of Rs. 175.07 Lacs** It is not practical to furnish quantitative information in view of large number of items, each being less than ten percent in value of total.

(iv) Purchase of Finished GoodsCurrent Year Previous Year

Product Unit Quantity Value Quantity Value(Rs. Lacs) (Rs. Lacs)

Soft Leather Finishing Foil Lacs (SFT) 1.85 20.12 5.74 53.96Others* — 113.87 — 577.81Total 133.99 631.77* It is not practical to furnish quantitative information in view of large number of items, each being less than ten percent in value of total.

(v) Raw Materials ConsumedCurrent Year Previous Year

Materials Unit Quantity Value Quantity Value(Rs. Lacs) (Rs. Lacs)

Polypropylene Tonnes 9348.60 4255.55 8688.22 3687.26Polypropylene Compounds Tonnes 882.30 1010.83 799.60 880.59Erythromycin Base Tonnes — — 15.53 549.95Others * — — 786.82 — 917.82Total 6053.20 6035.62Note: * It is not practical to furnish quantitative information in view of large number of items, each being less than ten percent in value of total.

(vi) Consumption of Raw Materials, Stores and SparesCurrent Year Previous Year

Materials Value % of Value % of(Rs. Lacs) Consumption (Rs. Lacs) Consumption

Raw MaterialsImported 1960.96 32.40 2585.77 42.84Indigenous 4092.24 67.60 3449.85 57.16Total 6053.20 100.00 6035.62 100.00Store & SparesImported 51.73 25.94 63.30 23.20Indigenous 147.70 74.06 209.49 76.80Total 199.43 100.00 272.79 100.00

Max-India 30-72.p65 9/14/2004, 11:33 AM68

69



B Value of Imports calculated on CIF Basis (Payment basis) (RS. LACS)Current Year Previous Year

Raw Materials 1585.48 2109.71Components and Spare Parts 75.56 44.62Capital Goods 415.05 219.77Trading Goods 80.69 552.56Total 2156.78 2926.66

C Expenditure in Foreign Currency* (Payment basis)Royalty/Technical Know-how 10.98 12.97Commission — 72.57Others 191.97 189.22Total 202.95 274.76* Excludes amounts spent on Investments

D Earnings in Foreign Currency (Receipt basis)Exports on FOB basis 2131.47 3202.25Sale proceeds of investments in subsidiary 4247.37 —Total 6378.84 3202.25

27 Auditors’ RemunerationAudit fees (including service tax) 10.80 10.80Out of Pocket Expenses 0.50 0.59Total 11.30 11.39

28 A break up of prior period expenses and prior period income on the basis of nature of items involved is given below:

PRIOR PERIOD EXPENSESalary & Wages — 0.82Travel and Conveyance 0.02 1.31Legal and Professional — 3.72Membership and Subscriptions 0.10 0.45Repair and Maintenance 0.53 5.11Communication Expenses — 0.16Miscellaneous Expenses — 2.11Total 0.65 13.68

PRIOR PERIOD INCOMESalary 1.13 —Miscellaneous Income 2.10 0.09Total 3.23 0.09

29 During the year, the Company shared the services of some of its employees and facilities with group companies. Consequently, the share ofcosts attributable to these companies has been charged out in accordance with service agreements.

30 Previous year figures have been regrouped/reclassified wherever necessary to conform to current year’s classification.





Max-India 30-72.p65 9/14/2004, 11:33 AM69



70

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILEI REGISTRATION DETAILS

Registration No. 0 8 0 3 1 State Code 1 6Balance Sheet Date 3 1 0 3 2 0 0 4

Date Month Year

II CAPITAL RAISED DURING THE YEAR (Amount in Rs. Thousand)Public Issue Right IssueN I L N I LBonus Issue OthersN I L 7 1 0

III POSITION OF MOBILISTION AND DEPLOYMENT OF FUNDS(Amount in Rs. Thousand)Total Liabilities Total Assets6 4 7 1 5 6 4 6 4 7 1 5 6 4

SOURCES OF FUND

Paid-up Capital Reserve & Surplus2 3 1 3 5 2 4 4 8 7 5 9 2

Employee Stock Option Secured Loans5 8 3 3 3 4 0 7 6 8

Unsecured Loans Advances from Others5 9 0 0 1 9 8 1 6 0 0 0

APPLICATION OF FUNDS

Net Fixed Assets Investments6 4 4 4 8 1 5 1 8 8 3 0 7

Net Current Assets Mics. Expenditure7 0 0 2 0 1 1 4 4 7 4

Deferred Tax Liability (Net) Accumulated Losses( 7 5 8 9 9 ) N I L

IV PERFORMANCE OF COMPANY (Amount in Rs. Thousand)Turnover (Total Income) Total Expenditure1 6 0 2 8 6 2 1 2 9 6 4 3 1

Profit/Loss before tax Profit/Loss after tax and+ - and exceptional items + - before exceptional items✓ 3 0 6 4 3 1 ✓ 2 7 8 0 7 3

Profit/Loss after taxExceptional Items + - and exceptional items

9 1 9 1 4 ✓ 1 8 6 1 5 9+ - Basic Earning per share in Rs. Dividend Rate (%)✓ 8 . 0 7 N I L+ - Diluted Earning per share in Rs.✓ 8 . 0 3

V NAME OF THREE PRINCIPAL PRODUCTS/SERVICE OF COMPANYItem Code No. (ITC code) 3 9 2 0 . 2 0

Product Description F I L M S S U P P O R T E DW I T H P O L Y M E R SO F P R O P Y L E N E

Max-India 30-72.p65 9/14/2004, 11:33 AM70

71



(RS. LACS)

S. No. Name Amount OutstandingAs of March Maximum amount

31, 2004 during the year

I. Loans and advances in the nature of loansA. To SubsidiariesA.1 Comsat Max Ltd. 250.27 250.27A.2 Max Visions Inc. 441.60 441.60A.3 Max Ateev Ltd. 693.23 742.15A.4 Max Telecom Ventures Ltd. 52.78 52.78A.5 Malsi Estates Ltd. 527.50 527.50A.6 Max Estates Ltd. 145.78 145.78A.7 Max Healthcare Institute Ltd. 3239.60 3303.29A.8 Pharmax Corporation Ltd. 969.55 969.55

B. To Associates Nil Nil

C. Where there is no repayment schedule or repayment beyond seven years Nil Nil

D. Where there is no interest or interest below Section 372A of Companies Act Nil Nil

E. To firms/Companies in which directors are interestedE.1 New Delhi House Services Ltd. 500.00 500.00

II. Investments by the loanee in the shares of parent company and subsidiary companywhen the company has made loan or advance in the nature of loan Nil Nil

DISCLOSURE OF LOANS/ADVANCES AND INVESTMENTSA S R E Q U I R E D U N D E R C L A U S E 3 2 O F T H E L I S T I N G A G R E E M E N TF O R T H E F I N A N C I A L Y E A R E N D E D M A R C H 3 1 , 2 0 0 4

Max-India 30-72.p65 9/14/2004, 11:33 AM71

MA

X

AN

NU

AL

R

EP

OR

T

20

03

-2

00

4

MA

X I

ND

IA

LI

MI

TE

D

72 STATEMENT REGARDING SUBSIDIARY COMPANIES PURSUANT TO SECTION 212(3) AND 212(5) OF THE COMPANIES ACT, 1956Name of the Subsidiary Company Financial Year to Holding Company’s interest as at close of Financial Year of Net aggregate amount of Subsidiary Net aggregate amount of Subsidiary Holding

which Accounts Subsidiary Company Company’s profits after deducting its Company’s profits after deducting its Company’srelate losses or vice-versa, so far as it concerns losses or vice-versa, so far as it concerns interest as at

Members of Holding Company which are Members of Holding Company which are 31.03.2004not dealt within the Company’s Account dealt within the Company’s Account incorporating

changes(i) Shareholding (ii) Extent of For the For the For the For the since close

Holding Current Previous Current Previous of FinancialAccounting Financial Accounting Financial Year/Period of

Year Years Year Years Subsidiary(Rs. Lacs) (Rs. Lacs) (Rs. Lacs) (Rs. Lacs) Company

Domestic:

Comsat Max Ltd. (Note 1) 31.03.2004 2,62,80,000 Equity Shares of Rs. 10 each 96.08% 215.43 81.88 NIL NIL Not Applicable

Max Telecom Ventures Ltd. 31.03.2004 3,03,64,800 Equity Shares of Rs. 10 each 60.80% (1.18) 6150.13 NIL 16500.00 Not Applicable

Max Estates Ltd. 31.03.2004 50,000 Equity Shares of Rs. 10 each 100% (0.82) (24.42) NIL NIL Not Applicable

Malsi Estates Ltd. 31.03.2004 50,000 Equity Shares of Rs. 10 each 100% (5.02) (39.85) NIL NIL Not Applicable

Max Ateev Ltd. 31.03.2004 3,14,43,600 Equity Shares of Rs. 10 each 100% (600.49) (2785.04) NIL NIL Not Applicable

Max New York Life Insurance Co Ltd. 31.03.2004 25,16,00,014 Equity Shares of Rs. 10 each 72.70% (17109.52) 10.96 NIL NIL Not Applicable

Max Healthcare Institute Ltd. 31.03.2004 10,37,89,127 Equity Shares of Rs. 10 each 87.90% (3241.83) (3320.26) NIL NIL Not Applicable

Max Medical Services Pvt. Ltd. (Note 2) 31.03.2004 85,000 Equity Shares of Rs. 10 each 74.72% 0.66 (233.28) NIL NIL Not Applicable

CMax Infocom Pvt. Ltd. 31.03.2004 10,000 Equity Shares of Rs. 10 each 100.00% (0.81) N.A. NIL N.A. Not Applicable

Neeman Medical International (Asia) Ltd. 31.03.2004 41,66,743 Equity Shares of Rs. 10 each 99.99% (1.03) N.A. NIL N.A. Not Applicable

Pharmax Corporation Ltd. 31.03.2004 4,71,17,247 Equity Shares of Re. 1 each 85.94% 1.32 N.A. NIL N.A. Not Applicable

Overseas:Max Visions Inc.,USA 31.03.2004 10,000 Ordinary Shares of US$ 30 each 100% 51.36 (721.79) NIL NIL Not Applicable

Max UK Ltd., UK 31.03.2004 2,99,742 Ordinary Shares of GBP 1 each 100% (57.79) * (68.97) ** NIL NIL Not Applicable

Max Asia-Pac Ltd., Hongkong 31.03.2004 12,04,677 Shares of US$ 10 each 100% 268.57 * (1856.09) ** NIL NIL Not Applicable

Neeman Medical International Plc, UK (Note 3) 31.03.2004 36,430 Ordinary Shares of GBP 1 each 72.86% (1.01) * (225.69) ** NIL NIL Not Applicable

Neeman Medical International BV (Note 3) 31.03.2004 36 Ordinary Shares of Euro 500 each 100% (2.29) * (3.14) ** NIL NIL Not Applicable

Neeman Medical International NV (Note 4) 31.03.2004 90 Ordinary Shares of Euro 500 each 72.86% (57.19) * (2346.39) ** NIL NIL Not Applicable

Neeman Medical International Inc., USA (Note 5) 31.03.2004 325 Shares (Note 6) 72.86% (611.68) * (491.90) ** NIL NIL Not Applicable

Neeman ICIC, S.A. (Note 5) 31.12.2003 1,50,000 Common Nominative Shares of 54.10% (92.00) * (237.30) ** NIL NIL No Change

US$ 1 each

* Conversion rate US$ -Rs. 45.902, GBP 78.1741 as on March 31, 2004

** Converted at average exchange rate of the respective financial year

Notes

1. Includes 10% share held by Max Telecom Ventures Ltd., effective holding 6.08%

2. Held through Max Healthcare Institute Ltd.

3. Held through Max Asia-Pac Ltd.

4. Held through Neeman Medical International B.V.

5. Held through Neeman Medical International N.V.

6. Paid value of 325 shares is US$ 750,000 equivalent Rs. 350.78 Lacs.

7. Figures in brackets indicate loss.

8. N.A.- Not Applicable in view of first year of acquisition.

For and on behalf of the Board of DirectorsNew Delhi ANALJIT SINGHAugust 12, 2004 Chairman

Max-India 30-72.p65

9/14/2004, 11:33 AM

72

M A X I N D I A L I M I T E DM A X I N D I A L I M I T E DM A X I N D I A L I M I T E DM A X I N D I A L I M I T E DM A X I N D I A L I M I T E DC O N S O L I DC O N S O L I DC O N S O L I DC O N S O L I DC O N S O L I DAAAAAT E DT E DT E DT E DT E D S TS TS TS TS TAAAAAT E M E NT E M E NT E M E NT E M E NT E M E NT O F A C C OT O F A C C OT O F A C C OT O F A C C OT O F A C C OUUUUUNNNNNTTTTTSSSSS

Max CONSO 73-104.p65 9/14/2004, 11:33 AM73

M A X I N D I A L I M I T E DC O N S O L I D A T E D S T A T E M E N T O F A C C O U N T S


REPORT OF THE AUDITORS TO THE BOARD OFDIRECTORS OF MAX INDIA LIMITED1. We have audited the attached Consolidated Balance Sheet of Max

India Limited and its subsidiaries as at March 31, 2004, theConsolidated Profit and Loss Account for the year ended on thatdate annexed thereto, and the Consolidated Cash Flow Statementfor the year ended on that date, which we have signed underreference to this report. These consolidated financial statementsare the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these consolidated financialstatements based on our audit.

2. We conducted our audit in accordance with auditing standardsgenerally accepted in India. Those Standards require that we planand perform the audit to obtain reasonable assurance about whetherthe financial statements are prepared, in all material respects, inaccordance with an identified financial reporting framework andare free of material misstatement. An audit includes examining, ona test basis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessing theaccounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basisfor our opinion.

3. We did not audit the financial statements of certain subsidiaries,whose financial statements reflect total assets of Rs. 184.99 croresas at March 31, 2004 and total revenues of Rs. 43.20 crores forthe year ended on that date. These financial statements have beenaudited by other auditors whose reports have been furnished to us,and our opinion, insofar as it relates to the amounts included inrespect of these subsidiaries, is based solely on the report of theother auditors.

4. We report that the consolidated financial statements have beenprepared by the company in accordance with the requirements ofAccounting Standard 21, Consolidated Financial Statements, issuedby the Institute of Chartered Accountants of India and on the basisof the separate audited financial statements of Max India Limitedand its subsidiaries included in the consolidated financialstatements.

5. On the basis of the information and explanations given to us andon consideration of the separate audit reports on individual auditedfinancial statements of Max India Limited and its aforesaidsubsidiaries, in our opinion, the consolidated financial statementsgive a true and fair view in conformity with the accounting principlesgenerally accepted in India:(a) in the case of the Consolidated Balance Sheet, of the

consolidated state of affairs of Max India Limited and itssubsidiaries as at March 31, 2004;

(b) in the case of the Consolidated Profit and Loss Account, of theconsolidated results of operations of Max India Limited andits subsidiaries for the year ended on that date; and

(c) in the case of the Consolidated Cash flow Statement, of theconsolidated cash flows of Max India Limited and itssubsidiaries for the year ended on that date.

V. NIJHAWANMembership No. F 87228

Partner


AUDITORS’ REPORT

Max CONSO 73-104.p65 9/14/2004, 11:33 AM74


75M A X A N N U A L R E P O R T 2 0 0 3 - 2 0 0 4

(RS. LACS)SCHEDULE As at As at

March 31, 2004 March 31, 2003

SOURCES OF FUNDSSHAREHOLDERS’ FUNDSShare Capital 1 2313.52 2306.42Employee Stock Option 2 58.33 196.51Reserves & Surplus 3 25007.85 33709.54

27379.70 36212.47LOAN FUNDSSecured Loans 4 9155.81 10142.27Unsecured Loans 5 11265.33 13145.75

20421.14 23288.02Advances from Others 6 8160.00 —Policyholders’ Liabilities 16011.97 7122.77Minority Interest 2975.40 7787.68

74948.21 74410.94APPLICATION OF FUNDSFIXED ASSETS 7Gross Block 37719.69 33888.48Less: Depreciation 11637.52 9639.77Net Block 26082.17 24248.71Capital Work in progress 4234.21 1477.93

30316.38 25726.64Pre-operative Expenses Pending Capitalisation 8 2216.54 3671.32INVESTMENTS 9 31801.09 25966.49CURRENT ASSETS, LOANS AND ADVANCESInventories 10 3841.75 2050.37Sundry Debtors 11 4964.09 4895.31Cash and Bank Balances 12 2429.47 1197.84Other Current Assets 13 605.63 869.77Loans and Advances 14 6960.49 5754.73

18801.43 14768.02Less: CURRENT LIABILITIES AND PROVISIONSCurrent Liabilities 15 14690.59 10765.40Provisions 16 313.32 329.40

15003.91 11094.80

NET CURRENT ASSETS 3797.52 3673.22Deferred Tax Liability (Net) 17 (1624.60) (1349.19)MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted) 18 265.04 1009.63Deficit in Policy Holders’ Account — 15712.83Profit and Loss Account 8176.24 —

74948.21 74410.94SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS 30

CONSOLIDATED BALANCE SHEET A S A T M A R C H 3 1 , 2 0 0 4






V. NIJHAWANPartner



Max CONSO 73-104.p65 9/14/2004, 11:33 AM75



(RS. LACS)SCHEDULE For the For the


INCOMESales 14302.24 17207.93Less: Excise Duty 1459.44 1697.83

12842.80 15510.10Service Income 19 32418.87 20387.16Income from Investment Activities 20 5009.50 2258.69Other Income 21 774.79 905.96

51045.96 39061.91INCREASE/(DECREASE) IN INVENTORY 22 0.83 (337.12)

51046.79 38724.79EXPENDITUREManufacturing, Trading and Direct Expenses 23 26556.28 19624.20Personnel Expenses 24 14499.83 13493.48General and Administration Expenses 25 13429.08 11922.82Financial Expenses 26 2740.95 3279.09Depreciation 7 3098.21 3467.58

60324.35 51787.17

LOSS BEFORE TAX AND EXCEPTIONAL ITEMS (9277.56) (13062.38)Tax Expense 27 346.56 (602.15)LOSS AFTER TAX AND BEFORE EXCEPTIONAL ITEMS (9624.12) (12460.23)Exceptional Items – 4075.42LOSS AFTER TAX AND EXCEPTIONAL ITEMS (9624.12) (16535.65)Transfers related to Policyholders’ Account (15712.83) 7890.00Consolidation Adjustments 28 7502.70 664.88NET LOSS (17834.25) (7980.77)

PROFIT BROUGHT FORWARD 12848.80 19284.77Transfer from Debenture Redemption Reserve 763.72 1822.79PROFIT/(LOSS) BEFORE APPROPRIATIONS (4221.73) 13126.79Appropriations 29 (3954.51) (277.99)PROFIT/(LOSS) CARRIED FORWARD TO THE BALANCE SHEET (8176.24) 12848.80

Earning Per Share (Rs. per equity share of Rs. 10/- each)(Refer Note B19 on Schedule 30)

Basic (77.30) (34.60)Diluted (76.96) (34.60)Number of Shares used in computing earning per shareBasic 2,30,72,890 2,30,64,160Diluted 2,31,72,181 2,30,64,160

SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS 30

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2004






V. NIJHAWANPartner



Max CONSO 73-104.p65 9/14/2004, 11:33 AM76



A. CASH FLOW FROM OPERATING ACTIVITIESNet Profit/(Loss) before tax and extraordinary items (9277.56) (13062.38)Adjustments for:Depreciation 3098.21 3467.58Interest Expense 2384.51 3031.94Interest and Dividend Income (2078.30) (1933.02)Lease Rent - Finance Lease 95.36 87.31Net (profit)/loss on Sale of Fixed Assets 50.54 75.77Net (profit)/loss on Sale of Investments (2859.43) (315.40)Miscellaneous Expenditure Written off 171.80 112.37Assets Written off 327.57 53.40Debts and Advances Written off 0.32 78.57Provision for Doubtful Debts and Advances 184.97 147.40Liability/Provisions no longer required Written Back (269.71) (185.82)Profit on Sale of Business — (241.62)Prior Period Expenses/(Income) (net) 5.15 18.30Lapsed ESOPs Written Back (34.28) (114.25)Other Provisions 124.71 36.78ESOP Compensation Expense 20.11 —Change in Policyholder Reserves 8645.89 4521.34Operating Profit Before Working Capital Changes 589.86 (4221.73)

Adjustments for:Trade and Other Receivables 738.08 172.62Inventories (1552.73) (591.11)Trade Payables 2488.82 3089.60Increase in Deferred Revenue Expenses — (180.75)Provisions for Retirement Benefits 145.81 36.73Other Current Assets 5.29 (2.49)Accrued Liabilities 7.79 31.53Cash Generated From Operations 2422.92 (1665.60)

Direct Taxes Refunded/(Paid) (net) 255.22 (21.40)Prior Period (Expenses)/Income (net) (5.15) (18.30)Cash From/(Used in) Operating Activities 2672.99 (1705.30)

B. CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets (5380.57) (4969.99)Sale of Fixed Assets 303.83 249.10Purchase of Investments (59283.65) (34804.80)Sale of Investments 49943.93 36325.08Interest and Dividend received (net) 2079.75 2119.43Proceeds from Sale of Business — 6287.32Other Advances Received 8160.00 —Proceeds from Sale of Investment in Subsidiary 4665.37 —Principal portion of Finance Lease Payment (90.30) (69.88)Increase in Pre-operative and Miscellaneous Expenses (169.24) (85.89)Cash and Cash Equivalents relinquished on De-Subsidiarisation (149.27) —Cash and Cash Equivalents acquired on Subsidiarisation 96.57 —Cash From/(Used In) Investing Activities 176.42 5050.37

CONSOLIDATED CASH FLOW STATEMENT FO R T H E Y E A R E N D E D M A R C H 3 1 , 2 0 0 4

(RS. LACS)DETAILS For the Year For the Year

Apr 01, 2003 to Apr 01, 2002 toMarch 31, 2004 March 31, 2003

Max CONSO 73-104.p65 9/14/2004, 11:33 AM77



(RS. LACS)DETAILS For the Year For the Year

Apr 01, 2003 to Apr 01, 2002 toMarch 31, 2004 March 31, 2003

C. CASH FLOW FROM FINANCING ACTIVITIESESOPs Exercised 71.35 —Increase in Share Capital (Minority share in subsidiaries) 4818.11 130.00Proceeds from Long Term Borrowings 4880.97 620.04Repayment of Long Term Loans (2711.98) (6801.10)Proceeds from Short Term Borrowings 5114.04 6744.18Repayment of Short Term Loans (10631.48) (2580.36)Interest Paid (2585.84) (3271.38)Cash From/(Used In) Financing Activities (1044.83) (5158.62)

Net Increase/(Decrease) in Cash and Cash Equivalents 1804.58 (1813.55)Impact of Foreign Exchange Fluctuations 0.02 16.37Cash and Cash Equivalents - Opening Balance (299.82) 1497.36Cash and Cash Equivalents - Closing Balance 1504.78 (299.82)

Notes1 The above Cash Flow statement has been prepared under the “Indirect Method” as set out in the Accounting Standard-3 on Cash Flow Statements issued

by the Institute of Chartered Accountants of India.2 Cash and Cash Equivalents at the end of the year consist of Cash, Cheques in hand and balances with banks:


March 31, 2004 March 31, 2003

Cash in Hand 15.38 12.34Stamps in Hand 11.69 30.70Cheques in Hand 777.50 239.64Fixed Deposits 910.00 8.19Book Overdraft (13.28) (13.12)Cash Credit (865.22) (1455.39)Balance with banks 668.71 877.82Total 1504.78 (299.82)

3 Previous years’ figures have been regrouped wherever necessary to conform to current years’ classification.





The Schedules referred to above form anintegral part of the Cash Flow Statement

This is the Cash Flow Statement referred toin our report of even date

V. NIJHAWANPartner



Max CONSO 73-104.p65 9/14/2004, 11:33 AM78




March 31, 2004 March 31, 2003

SCHEDULE–1SHARE CAPITALAuthorised3,00,00,000 Equity Shares of Rs. 10/- each 3000.00 3000.00(Previous year 3,00,00,000 Equity Shares of Rs. 10/- each)20,00,000 Preference Shares of Rs. 100/- each 2000.00 2000.00(Previous year 20,00,000 Preference Shares of Rs. 100/- each)

5000.00 5000.00Issued, Subscribed and Paid Up2,31,35,160 Equity Shares of Rs. 10/-each fully paid up 2313.52 2306.42(Previous year 2,30,64,160 Equity Shares of Rs. 10/- each fully paid up)

2313.52 2306.42Paid up Share Capital includes 1,15,32,080 (Previous year 1,15,32,080)

Equity Shares of Rs. 10/- each allotted as fully paid up by way of bonus shares out of

Share Premium Account and 71,000 (Previous year Nil) Equity Shares of Rs. 10/-

each allotted under Employees Stock Option Plan (Refer Note A10 & B16 on

Schedule 30).

SCHEDULE–2EMPLOYEE STOCK OPTION(Refer Notes A10 & B16 on Schedule 30)

Employee Stock Option Outstanding 58.33 196.5158.33 196.51

SCHEDULE–3RESERVES AND SURPLUS(Refer Notes A4, A9, B3, B13 & B33 on Schedule 30) As at Additions Deletions/ As at

March 31, 2003 Adjustments March 31, 2004

Capital Reserve 999.03 689.19 — 1688.22Share Premium Account 9987.31 728.78 — 10716.09Debenture Redemption Reserve 1096.60 146.26 763.72 479.14Amalgamation Reserve 2988.05 — — 2988.05Revaluation Reserve 67.80 — 4.39* 63.41General Reserve 9072.94 — — 9072.94Capital Deficit on Demerger (3350.99) — (3350.99)** —Profit and Loss Account 12848.80 — 12848.80 —

33709.54 1564.23 10265.92 25007.85* On account of exchange fluctuations in opening balance pertaining to earlier years.

** Capital deficit on demerger has been set off against the opening reserves in consonance with Accounting Standard 26.

SCHEDULES A N N E X E D T O A N D F O R M I N G P A R T O F T H E C O N S O L I D A T E D A C C O U N T S

Max CONSO 73-104.p65 9/14/2004, 11:33 AM79




March 31, 2004 March 31, 2003

SCHEDULE–4SECURED LOANS(Refer Notes B12 & B13 on Schedule 30)

DebenturesNil (Previous year 15,27,440), 12.5% Secured RedeemableNon Convertible Debentures of Rs. 250/- each — 1527.44(Fully redeemed as per terms of issue)

Interest accrued and due on Debentures — 1.36

From banksTerm Loans 7882.79 6200.00Fund Based Working Capital Facilities 1187.05 2390.02Interest Accrued and due 75.46 2.43

OthersInterest free Loan from Department of Industries, Punjab 10.51 21.02


SCHEDULE–5UNSECURED LOANS(Refer Notes B12 & B30 on Schedule 30)

Debentures25 (Previous year 25), 12.5% Redeemable Non ConvertibleDebentures of Rs. 1,00,00,000/- each 2500.00 2500.00

Short Term LoansFrom banks 2500.00 2000.00Foreign Currency Loans 3200.25 4121.02From Financial Institutions — 990.80From others 2690.00 3400.00

Interest accrued and due on Short Term Loans 176.93 11.11

Other LoansFrom Banks 198.15 122.82



SCHEDULE–6ADVANCES FROM OTHERS(Refer Note B14 on Schedule 30)

Other Advances 8160.00 —8160.00 —

Max CONSO 73-104.p65 9/14/2004, 11:33 AM80




SCHEDULE–7FIXED ASSETS(Refer Notes A4, A5, A6, A16, B6, B7, B12, B21, B22, B23 & B28 (a) on Schedule 30)

(RS. LACS)

Gross Block Depreciation Net BlockParticulars As On April Additions Deletions/ Translation As On March As On April Additions Deletions/ Translation As On March As At March As At March

01, 2003 Adjustments Reserve 31, 2004 01, 2003 Adjustments Reserve 31, 2004 31, 2004 31, 2003TANGIBLE ASSETSLand (Freehold) 957.68 0.84 — (21.63) 936.89 — — — — — 936.89 957.68

Land (Leasehold) 95.96 1.82 10.26 0.55 88.07 14.71 0.76 10.26 0.55 5.76 82.31 81.25

Building 1727.17 829.26 — (18.90) 2537.53 325.96 55.84 (73.63) (3.60) 451.83 2085.70 1401.21

Leasehold

Improvements 4895.07 551.49 1156.34 (0.13) 4290.09 961.77 574.10 517.33 (0.09) 1018.45 3271.64 3933.30

Plant and Machinery 14983.86 1974.78 665.37 (0.24) 16293.03 5249.63 904.06 (8.54) — 6162.23 10130.80 9734.23

R&D Equipments 168.67 0.37 13.55 (10.41) 145.08 72.81 20.97 2.47 (5.56) 85.75 59.33 95.86

Vehicles 867.64 360.04 243.88 (3.53) 980.27 200.71 145.08 73.08 (1.25) 271.46 708.81 666.93

Furniture, Fixtures

and Equipments 4620.45 555.65 873.54 (9.67) 4292.89 1763.46 568.30 530.24 (3.84) 1797.68 2495.21 2856.99

INTANGIBLE ASSETSSoftware 2017.09 650.82 14.22 (5.23) 2648.46 712.94 608.94 33.00 (2.46) 1286.42 1362.04 1304.15

Goodwill 2894.40 3051.70 1099.21 — 4846.89 — — — — — 4846.89 2894.40

Technical Know-how 660.49 — — — 660.49 337.78 220.16 — — 557.94 102.55 322.71

Total 33888.48 7976.77 4076.37 (69.19) 37719.69 9639.77 3098.21 1084.21 (16.25) 11637.52 26082.17 24248.71Previous Year 36035.99 5518.15 7703.93 38.27 33888.48 8637.68 3467.58 2516.25 50.76 9639.77

Capital work in progress [includes capital advance Rs. 1817.66 Lacs (Previous year Rs. 104.17 Lacs)] 4234.21 1477.93

30316.38 25726.64

Notes:-a) Additions during the year include:

- Interest cost capitalised Nil (Previous year Rs. 13.92 Lacs)

- Foreign Exchange Fluctuation Rs. 0.44 Lacs (Previous year Rs. 8.51 Lacs)

b) Deletions include an amount of Rs. 42.00 Lacs (Previous year Rs. 107.67 Lacs) transferred to inventories.

c) Plant and Machinery includes an amount of Rs. 135.08 Lacs (Previous year Rs. 135.08 Lacs) paid to PSEB for drawing a power line representing assets not owned by

the Company. The same is being depreciated over a period of five years.

d) Hypothecated vehicles amounting to Rs. 206.10 Lacs (Previous year Rs. 166.70 Lacs) are included under the category of vehicles above.

e) Capital work in progress includes Rs. 51.73 Lacs (Previous year Rs. 46.54 Lacs) on account of interest being borrowing cost.

f) Adjustment includes an amount of Rs. Nil (Previous year Rs. 18.27 Lacs) on account of exchange fluctuations in opening balance.

Max CONSO 73-104.p65 9/14/2004, 11:33 AM81





March 31, 2004 March 31, 2003

SCHEDULE–8PRE-OPERATIVE EXPENSES PENDING CAPITALISATION(Refer Note A4 on Schedule 30)

Opening Balance 3671.32 3570.36Add: Incurred during the yearSalaries and Wages 119.20 121.31Recruitment 2.46 2.30Staff Welfare 0.05 6.76Rent 0.78 24.33Insurance — 3.93Repairs and Maintenance-Others 1.04 8.55Power and Fuel — 8.58Printing and Stationary 0.12 3.00Travelling and Conveyance 24.44 31.34Communication 1.08 1.02Legal and Professional 70.08 121.21Business Promotion — 0.05Advertisement — 0.36Technical Fees 0.01 54.88Interest — 9.32Software Development — 40.60Miscellaneous 0.17 10.73

3890.75 4018.63Less:Income during Pre-operative period — 9.27Capitalised 108.56 263.43Transferred/Charged off 1565.65 72.16Other Adjustments — 2.45Closing Balance 2216.54 3671.32

Max CONSO 73-104.p65 9/14/2004, 11:33 AM82





March 31, 2004 March 31, 2003

SCHEDULE–9INVESTMENTS(Refer Notes A7, B1 & B2 on Schedule 30)

a) Long Term-Trade (Unquoted)Equity Shares 83.38 2.50Preference Shares — 2793.32

b) Long Term-Non Trade(Quoted)Government Securities* 16807.15 8915.18Equity Shares 0.66 501.60Less: Provision for Diminution — 0.66 (287.39)Bonds** 6118.86 4294.71

(Unquoted)Units of Interest in Limited Liability Company 4075.42 4075.42Less: Provision for Diminution (4075.42) — (4075.42)

Preferred Stock 1902.39 1902.396% Convertible Debt — 82.57Equity Shares 3253.00 3253.00Less: Provision for Diminution (219.85) 3033.15 (213.00)

Debentures 3.28 4.41Treasury Bills 378.59 —Bonds — 7.20

c) Current-Non Trade(Quoted)Government Securities — 1494.63Units in Mutual Fund — 500.08

(Unquoted)Units in Mutual Fund 3431.63 2326.90

d) Share Application Money Pending Allotment 42.00 388.3931801.09 25966.49

Aggregate value of unquoted investments 8832.42 10159.29

Aggregate value of quoted investments 22926.67 15418.81

Market value of quoted investments 27789.52 17862.92

* Includes Rs. 13491.27 Lacs (Previous year Rs. 5046.87 Lacs) earmarked for Life Insurance Policyholders

** Includes Rs. 2520.71 Lacs (Previous year Rs. 1511.29 Lacs) earmarked for Life Insurance Policyholders

Max CONSO 73-104.p65 9/14/2004, 11:33 AM83





March 31, 2004 March 31, 2003

SCHEDULE–10INVENTORIES(Refer Note A8 on Schedule 30)

Manufacturing ActivitiesRaw Materials in stores/transit 586.46 761.84Stores and Spares 232.77 164.47Work in Process 199.49 187.74Finished Goods 41.74 52.66Trading ActivitiesStock-in-trade 927.58 784.19Investment ActivitesStock of Securities 8.32 99.47Construction ActivitiesWork in Process 1835.73 —Clinical Research ActivitiesWork in Process 9.66 —

3841.75 2050.37

SCHEDULE–11SUNDRY DEBTORS(Refer Notes B11 & B25 on Schedule 30)

(Unsecured)Debts exceeding six months

Considered good 1032.42 1172.18Considered doubtful 448.33 330.31Less: Provision for doubtful debts (448.33) 1032.42 (330.31)

Other DebtsConsidered good 3931.67 3723.13Considered doubtful 18.88 6.24Less: Provision for doubtful debts (18.88) 3931.67 (6.24)

4964.09 4895.31Amount due from directors during the year Rs. 0.16 Lacs (Previous year Nil)Maximum amount outstanding from directors during the year Rs. 0.22 Lacs ( Previous year Rs. 0.40 Lacs)

SCHEDULE–12CASH AND BANK BALANCESCash in Hand 15.38 12.34Cheques in Hand 777.51 239.64Balances with Scheduled Banks

In Current Accounts 533.14 747.76In Dividend Accounts 85.84 93.07In Debenture Interest Accounts 50.00 36.86In Fixed Deposit Accounts * 954.36 37.47

Margin Money 1.55 —Stamps in Hand 11.69 30.70

2429.47 1197.84* held under lien by various authorities Rs. 44.36 Lacs (Previous year Rs. 29.16 Lacs)

SCHEDULE–13OTHER CURRENT ASSETSInterest Receivable*

Considered Good 605.63 869.77Considered Doubtful 156.06 159.54Less: Provision for Doubtful Interest (156.06) 605.63 (159.54)

605.63 869.77* Includes Interest accrued on investments Rs. 468.87 Lacs (Previous year Rs. 334.91 Lacs)

Max CONSO 73-104.p65 9/14/2004, 11:33 AM84





March 31, 2004 March 31, 2003

SCHEDULE–14LOANS AND ADVANCES(Refer Note B10 on Schedule 30)

(Considered good, unless otherwise stated)

SecuredHousing Loans 27.35 183.81Loans to Policyholders 0.39 —

UnsecuredAdvances recoverable in cash or in kind or for value to be received

Considered Good 2108.81 972.33Considered Doubtful 28.08 11.03Less: Provision for Doubtful Advances (28.08) 2108.81 (11.03)

Loans to employees 31.84 21.45Inter Corporate Deposits

Considered Good 1440.47 1568.55Considered Doubtful 200.00 200.00Less: Provision for Doubtful Deposits (200.00) 1440.47 (200.00)

Balance with Excise Authorities 26.61 19.58Prepaid Expenses 181.65 266.70Security Deposits

Considered Good 2754.75 2536.99Considered Doubtful 26.35 4.67Less: Provision for Doubtful Deposits (26.35) 2754.75 (4.67)

Other Deposits 388.62 185.326960.49 5754.73

Balance outstanding from directors of Rs. 69.18 Lacs (Previous year Rs. 173.21 Lacs) includesNil (Previous year Rs. 89.03 Lacs) towards housing loan. Maximum amount outstanding fromdirectors during the year Rs. 191.38 Lacs (Previous year Rs. 302.50 Lacs)

SCHEDULE–15CURRENT LIABILITIESAcceptances 489.97 133.97Sundry Creditors

Total outstanding dues of small scale industrial undertakings 56.36 42.26Total outstanding dues of creditors other than small scaleindustrial undertakings 11421.81 8724.15

Advance Income Received 797.63 650.65Investor Education and Protection Fund

Unpaid Dividend 92.74 99.92Unpaid Debenture Interest 47.65 32.98Unpaid Matured Deposits 0.25 0.25

Interest Accrued but not Due 160.61 164.57Book Overdraft 13.28 12.98Other Liabilities 1610.29 903.67

14690.59 10765.40

Max CONSO 73-104.p65 9/14/2004, 11:33 AM85





March 31, 2004 March 31, 2003

SCHEDULE–16PROVISIONS(Refer Notes A11 & A12 on Schedule 30)

Leave Encashment 123.83 139.33Gratuity 111.32 107.96Provision for Income Tax 1964.54 1706.18Less: Advance Income tax (1886.37) 78.17 (1624.07)

313.32 329.40

SCHEDULE–17DEFERRED TAX LIABILITY (NET)(Refer Notes A11 & B17 on Schedule 30)

Opening Balance 1349.19 1983.09Movement for the year 275.41 (633.90)

1624.60 1349.19

SCHEDULE–18MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted)(Refer Notes A15 & B20 on Schedule 30)

Preliminary, Share and Debenture Issue Expenses 12.78 48.70Deferred Employee Compensation 38.22 —Deferred Revenue Expenditure 214.04 960.93

265.04 1009.63

For the For theYear Ended Year Ended

March 31, 2004 March 31, 2003

SCHEDULE–19SERVICE INCOME(Refer Note A3 on Schedule 30)

Life Insurance Premium 21524.72 9659.35Less: Premium on Reinsurance Ceded (318.45) (153.61)

21206.27 9505.74Healthcare Services* 2420.94 1143.70Medical Transcription Services 3439.20 4309.35Bandwidth Usage Charges 3710.58 3387.55Income from Clinical Trials 1328.84 1216.07Software Services 41.51 360.17Non-Competition Fee 47.89 47.76Other Services ** 223.64 416.82


** Tax deducted at source Rs. 6.09 Lacs (Previous year Rs. 24.62 Lacs)

Max CONSO 73-104.p65 9/14/2004, 11:33 AM86






SCHEDULE–20INCOME FROM INVESTMENT ACTIVITIES***(Refer Notes A3, B22 & B24 on Schedule 30)

Profit on sale of stock of securitiesOpening Stock 199.51 199.51Less: Provision for diminution (100.05) (103.89)Less: Sales 170.77 —Less: Closing Stock 8.32 199.51Less: Provision for diminution — (100.05)

79.63 3.84****Dividend Income from

Non Trade Investments-Long term 9.19 4.17Non Trade Investments-Current 61.67 26.99Stock of Securities 4.41 75.27 4.16

Interest on Loans and Non Trade Investments (Gross)Government Securities 1127.97 1000.53Bonds 508.63 507.57Debentures 0.33 0.49Loans 218.28 314.70Fixed Deposits 9.98 7.55Others 129.98 1995.17 74.23

Surplus on De-Subsidiarisation 2584.66 —Profit on Sale of Trade Investments - Long term — 133.45Net Profit on Sale of Non Trade Investments - Long term ***** 165.04 43.86Net Profit on Sale of Non Trade Investments - Current 109.73 132.86Provision for Diminution on Long Term Shares Written Back — 4.29

5009.50 2258.69*** Net of amortisation of Rs. 91.04 Lacs (Previous year Rs. 110.66 Lacs)

**** Represents provision for diminution written back of Rs. 3.84 Lacs

***** Includes provision for diminution written back Rs. 287.39 Lacs (Previous year Rs. 174.49 Lacs)

SCHEDULE–21OTHER INCOMELiabilities/Provisions no longer required written back 269.71 185.82Prior Period Income 3.23 0.09Profit on sale of business — 241.62Net Gain/(Loss) on Foreign Exchange Fluctuation — 2.93Miscellaneous Income* 501.85 475.50

774.79 905.96* Tax deducted at source Rs. 0.14 Lacs (Previous year Nil)

SCHEDULE–22INCREASE/(DECREASE) IN INVENTORYOpening Stock


240.40 577.52Less: Closing Stock


241.23 240.40Net Increase/(Decrease) 0.83 (337.12)

Max CONSO 73-104.p65 9/14/2004, 11:33 AM87






SCHEDULE–23MANUFACTURING, TRADING AND DIRECT EXPENSES

Manufacturing and Trading ExpensesRaw Materials Consumed 6053.20 6035.62Goods Purchased for Resale 1177.40 1461.08Power and Fuel 1116.84 1132.88Stores and Spares 199.43 281.22Packing Material 378.24 422.42Freight Inward 27.29 29.88Repairs and Maintenance - Plant and Machinery 236.49 188.84Processing Charges 32.26 155.09

9221.15 9707.03Direct Expenses

Insurance BusinessAgents’ Commission 4027.52 1849.42Increase in Policy Reserves 8645.89 4521.34Dividend to Policyholders 773.67 564.62Death Claims 599.64 248.71

14046.72 7184.09Healthcare BusinessConsumption of Medical Consumables 357.43 275.41Cost of Goods Sold - Pharmacy 136.38 47.77Professional and Consultancy Fee 637.10 298.14Outside Lab Investigation 39.47 30.29Patient Catering Expenses 43.44 16.72

1213.82 668.33

Networking and IT Enabled Services BusinessSpace Segment and Lease Line Charges 1704.91 1719.31

Clinical Research BusinessClinical Trial Expenses 369.68 345.44

26556.28 19624.20

SCHEDULE–24PERSONNEL EXPENSESSalaries, Wages and Bonus (Net) 12207.52 11030.08Contribution to Provident and Other Funds 736.28 700.29Recruitment 1242.18 1268.58Staff Welfare 313.85 494.53

14499.83 13493.48

Max CONSO 73-104.p65 9/14/2004, 11:33 AM88






SCHEDULE–25GENERAL AND ADMINISTRATION EXPENSESRent (Net)* 2169.18 2111.69Insurance 243.47 181.84Rates and Taxes 161.22 150.14Repairs and Maintenance:

Building 34.86 64.99Others 1220.64 1067.81

Electricity and Water 476.82 406.13Printing and Stationery 530.62 397.12Travelling and Conveyance 1430.04 1407.49Communication 1083.90 788.52Legal and Professional 1859.55 1593.57Directors’ Fee 12.93 15.35Business Promotion 102.55 178.37Commission 91.11 287.93Selling and Distribution 471.56 475.15Advertisement and Publicity 1933.07 1326.97Royalty 5.85 39.02Provision for Doubtful Debts and Advances 180.06 147.40Net Loss on Sale/Disposal of Fixed Assets 50.54 75.77Loss on Sale of Trade Investments — 2.90Provision for Diminution in Long Term Investments 6.85 —Bad Debts Written off 7.82 78.57Fixed Assets and Spares Written Off 327.57 53.40Charity and Donation 8.28 12.31Provision for Doubtful Interest 4.92 31.84Prior Period Expense 8.38 18.38Product Development Expenses — 20.73Amortisation of Miscellaneous Expenditure 171.80 112.36Net Loss/(Gain) on Foreign Exchange Fluctuation 22.46 —Miscellaneous Expenses 904.90 991.31Less: Overheads recovered** (Refer Note B35 on Schedule 30) (91.87) (114.24)


** Tax deducted at source Rs. 18.03 Lacs (Previous year Rs. 15.61 Lacs)


Debentures 488.52 1194.75Short Term Loan 429.04 424.49Acceptances 87.59 68.78Term Loans 1207.58 1076.75Cash Credit 75.72 64.01Others 101.11 11.67

Bank Charges 323.55 181.31Finance Charges 27.84 257.33

2740.95 3279.09

Max CONSO 73-104.p65 9/14/2004, 11:33 AM89






SCHEDULE–27TAX EXPENSE(Refer Notes A11 & B17 on Schedule 30)

Current Year Tax 160.97 31.23[Includes Wealth Tax Rs. 7.89 Lacs (Previous year Rs. 10.57 Lacs)]

Add:-Deferred Tax for the year 200.08 358.68Taxation Adjustment of Previous years (14.49) 0.52

Less:-Opening Deferred Tax Liability Written Back — (992.58)

346.56 (602.15)

SCHEDULE–28CONSOLIDATION ADJUSTMENTS

Exchange Translation 98.77 269.99Transfer to Minority Interest 7390.85 394.89Transfer to Capital Reserve (44.12) —Change in Value of Investments in Associates as per AS-23 57.20 —(Refer Note B2(a) & (c) on Schedule 30)

7502.70 664.88

SCHEDULE–29APPROPRIATIONS

Capital Deficit on Demerger transferred to Reserves (3350.99) —Non Compete Fees transferred to Reserves (457.26) —Change in Value of Investments in Associates as per AS-23 — (132.33)(Refer Note B2(c) on Schedule 30)

Transfer to Debenture Redemption Reserve (146.26) (145.86)Brought Forward Loss on De-Subsidiarisation — 0.20

(3954.51) (277.99)

Max CONSO 73-104.p65 9/14/2004, 11:33 AM90



SCHEDULE–30A. SIGNIFICANT ACCOUNTING POLICIES1 Accounting Convention

The consolidated financial statements are prepared in accordancewith Indian Generally Accepted Accounting Principles (“GAAP”)under the historical cost convention, except as disclosed in theaccounting policies given below, on an accrual basis. GAAPcomprises mandatory accounting standards issued by the Instituteof Chartered Accountants of India (“ICAI”) and the provisions ofthe Companies Act, 1956, insofar as applicable to the consolidatedfinancial statements.

2 Basis of ConsolidationThe consolidated financial statements are prepared in accordancewith the principles and procedures laid down by the accountingstandard on Consolidated Financial Statements issued by the ICAI.The subsidiaries of Max India Ltd. (“Company”) have been definedas those entities in which the Company owns directly or indirectlymore than one half of the voting power or otherwise has power toexercise control over the composition of the Board of Directors ofsuch entities. Max India Ltd. and its subsidiaries are herein afterreferred to as Group Companies or Group.The financial statements of subsidiaries are consolidated from thedate on which the control is transferred to a Group Company andare excluded from consolidation from the date such control ceases.The financial statements of all Group Companies have been combinedon a line-by-line basis by adding together the book values of likeitems of assets, liabilities, income and expenses after eliminatingall intra-group balances and transactions and resulting unrealisedgains/losses. The consolidated financial statements are preparedapplying uniform accounting policies in use by the Company.

3 Revenue Recognition(a) Life Insurance Business: Premium is recognised as income

when due. Further, uncollected premium on lapsed policies isnot recognised as income.Reinsurance premium ceded is accounted at the time ofrecognition of premium income in accordance with the treatyarrangement with the re-insurers.Interest on investments is recognised when accrued and takento the revenue/ profit and loss account, as appropriate.

(b) Clinical Research Business: Revenue from services arerecognised by reference to the stage of completion of clinicalstudy projects subscribed with pharmaceutical companies.

(c) Medical Transcription Business: Revenue in respect of medicaltranscription business is recognised when the services areperformed and final transcribed document of acceptable qualityis made available to the customer. Revenue in respect ofproduct development is recognised based on agreed billablehours on a monthly basis.

(d) Healthcare Business: Revenue from healthcare services isrecognised on the performance of related service and includespharmacy services on patients undergoing treatment andpending billing.Revenue from pharmacy sale is recognised on delivery of goods.

(e) Software servicesi) Revenue from software development on time and material

contracts is recognised based on the software developed


and billed to the clients as per the terms of specificcontracts.

ii) On fixed priced contracts, revenue is recognised based onmilestones achieved as specified in the contracts on theproportionate-completion method.

iii) Revenue from annual maintenance services is recognisedproportionately over the period for which services arerendered.

iv) Revenue from the sale of licenses for the use of softwareapplications is recognised on transfer of the title in theuser license.

(f) Networking, Business Continuity and Knowledge SolutionsServices Business:i) Revenue for networking equipment/product sales is

recognised upon despatch and is net of sales tax.ii) Service revenue relating to installation services is

recognised when installation of networking equipment iscompleted and acceptance of the same by the customeris communicated.

iii) Other service revenue is recognised on an accrual basisupon commissioning of such services and is net of servicetax.

(g) Lease RentalsIn respect of lease rentals, revenue is recognised proportionatelyover the period of the related agreements.

(h) Export sales are accounted for on the basis of the date of billof lading/airway bill. Other sales are accounted for at ex-factoryprices on dispatch. Sales are inclusive of excise duty and netof trade discounts and sales returns.

(i) Income from investments is credited to revenue in the year inwhich it accrues. Income is stated in full with the tax thereonbeing accounted for under advance tax.

(j) Dividend is recognised as and when the right to receive suchpayment is established.

4 Fixed Assets(a) Fixed Assets are stated at their original cost including freight,

duties (net of CENVAT), taxes and other incidental expensesrelating to acquisition and installation.

(b) Expenses of revenue nature, which can be regarded asincidental and related to project set-up are transferred to “Pre-operative Expenses Pending Capitalisation”. These expensesare allocated to fixed assets/deferred revenue in the year ofcommencement of the related project.

(c) In the case of VSAT business, inventory transferred to fixedassets or vice versa, is recognised at net values.

(d) Assets, which are revalued, are stated at the revalued amounts.The resultant increase in carrying amounts is credited to therevaluation surplus. Depreciation relating to the revaluedamounts is adjusted against the revalued surplus.

5 Borrowing CostsBorrowing costs that are directly attributable to the acquisition,construction or production of a qualifying asset are capitalised aspart of the cost of that asset in accordance with Accounting Standard16 on “Borrowing Costs”. Other borrowing costs are recognised asan expense in the period in which they are incurred. Capitalisationof borrowing costs ceases when substantially all activities necessary

Max CONSO 73-104.p65 9/14/2004, 11:33 AM91



to prepare the qualifying assets for its intended use or sale arecomplete.

6 Depreciation(a) Depreciation is charged on straight-line method on a pro-rata

basis at rates estimated by the management based on theeconomic useful life of the assets, which are not lower thanthe rates prescribed under Schedule XIV to the Companies Act,1956.

(b) Leasehold improvements are depreciated over respective leaseperiods.

(c) Assets costing not more than Rs. 5,000 each individually aredepreciated at 100%.

7 Investments(a) Investments are classified into current investments and long-

term investments. The cost of investments includes acquisitioncharges such as brokerage, fees and duties. Current investmentsare carried at lower of cost and fair value.

(b) Long-term investments are valued at cost. Provision fordiminution is made to recognise a decline, other than temporary,in the carrying value of each investment.

(c) Life insurance business:i) Investments are made in accordance with the Insurance

Act, 1938 and the Insurance Regulatory and DevelopmentAuthority (Investment) Regulations, 2000.

ii) Debt securities, which include government securities, aremeasured at historical cost. The premium/ discount, if any,on purchase of debt securities is amortised over the periodto maturity on the basis of their intrinsic yield.

iii) Investments in mutual funds units are valued at fair value,and unrealized gain/losses thereon are taken to the ‘FairValue Change Account’.

iv) Investments are transferred to policyholders fromshareholders at lower of book value (amortized cost) andmarket value.

8 Inventories(a) Inventories are valued at lower of cost and net realisable value.

Cost for this purpose is calculated on a weighted average methodexcept in the case of VSAT equipment and medical supplieswhere cost is calculated on First In First Out basis. In respectof finished goods and work in process, appropriate overheadsare loaded.

(b) Stock of securities is valued at lower of cost and market value,determined category wise. Cost for this purpose is calculatedunder First In First Out Method.

9 Capital SubsidyCapital Subsidies, received under the state capital subsidy scheme,are accounted for as capital reserve.

10 Employee Stock Option Scheme(a) The value of options is equal to the aggregate of the fair value

of the options granted. Fair value is the option discountrepresented by the excess of the market price on grant dateover the exercise price of the option and is amortised on astraight line method basis over the vesting period in line withthe Securities and Exchange Board of India (SEBI) Guidelines.

(b) As and when the options are exercised, the same will beaccounted for as paid up capital to the extent of the facevalue and Share Premium to the extent of excess of marketprice over face value on grant date.

(c) Options that lapse are reversed by a credit to employeecompensation expense equal to the amortised portion of thevalue of the lapsed options and a credit to deferred employeecompensation expense equal to the unamortised option.

11 TaxationIncome taxes are computed using the tax effect accounting method,where taxes are accrued in the same period in which the relatedrevenue and expenses arise. Provision for tax consists of currenttax and deferred tax. A provision is made for income taxes annuallybased on the tax liability computed at rates as per local laws of thecountry in which each Group Company is incorporated afterconsidering applicable tax allowances and exemptions. Provisionsare recorded when it is estimated that a liability due todisallowances or other matters is probable.The differences that result between the profit offered for incometaxes and the profit as per financial statements are identified and,thereafter, a deferred tax asset or deferred tax liability is recordedfor timing differences, namely the differences that originate inone accounting period and reverse in another, based on the taxeffect of the aggregate amount being considered. Deferred tax assetsare recognised only if there is virtual certainty that they will berealized and are reviewed for the appropriateness of their respectivecarrying values at each balance sheet date.

12 Employee Benefits(a) Gratuity: In accordance with the Payment of Gratuity Act 1972,

the Company provides gratuity, a benefit plan (the “GratuityPlan”) covering eligible employees. The Gratuity Plan providesa lump sum payment to vested employees at retirement, death,incapacitation or termination of employment, of an amountbased on the respective employee’s salary and the tenure ofemployment. Liabilities with regard to the Gratuity Plan aredetermined by actuarial valuation, based upon which, theCompany contributes all the ascertained liabilities to a Masterpolicy with Life Insurance Corporation of India.

(b) Superannuation: Certain employees of the Company areparticipants of a defined superannuation plan. The Companymakes contributions under the superannuation plan to “MaxIndia Limited Superannuation Fund” based on a specifiedpercentage of each covered employee’s salary.

(c) Provident Fund: Eligible employees receive benefits from aprovident fund, which is a defined contribution plan. TheCompany makes contributions under Provident Fund to “MaxIndia Limited Employees Provident Fund Trust”. Both theemployee and the Company make monthly contributions tothe provident fund trust equal to a specified percentage of thecovered employee’s salary.

(d) Leave Encashment: Accrual for leave encashment is made onthe basis of actuarial valuation done at the year end.Other Group Companies within India have various schemes ofretirement benefits namely provident fund, superannuationand gratuity. Contributions made to these benefit plans arecharged to revenue every year. Accruals for gratuity and leaveencashment are made on the basis of actuarial valuation doneat the year end.

Max CONSO 73-104.p65 9/14/2004, 11:33 AM92



Group Companies situated outside India have employee benefitschemes as per their respective local laws (Refer Note B34).

13 Research and DevelopmentResearch and development expenditure in relation to developmentof new products are treated as deferred revenue expenditure andare amortised over a period of five years from the financial year inwhich commercial operation of respective product commences asper provisions of Accounting Standard-8 on “Accounting forResearch and Development”.

14 Foreign Exchange Transactions(a) Monetary assets and liabilities related to foreign currency

transactions remaining unsettled at the end of the year aretranslated at year end rates.

(b) The difference in translation of monetary assets and liabilitiesand realised gains and losses on foreign exchange transactions,other than relating to Fixed Assets, are recognised in the profitand loss account.

(c) Exchange difference in respect of liabilities incurred to acquirefixed assets is adjusted to the carrying amount of respectivefixed assets.

(d) For consolidation of accounts, in respect of Group Companiessituated outside India, the assets and liabilities are translatedat closing rate whereas the revenue and expenses are translatedusing the average rate during the year. The resultant gain orloss arising out of such translation is recognised in the profitand loss account.

15 Miscellaneous Expenditure(a) Preliminary and share issue expenses are amortised over a

period of 5 to 10 years, except cost incurred on raising offunds, which is being amortised over the life of the respectivefinancial instrument.

(b) Deferred employee compensation expense is amortised overthe vesting period.

(c) Other deferred revenue expenditure is amortised from the yearthey have been incurred/related projects commence operations,over 3 to 5 years based on the period over which future benefitsare expected to be received.

16 LeasesAssets given under operating lease are shown in the balance sheetunder fixed assets and are depreciated on a basis consistent withthe depreciation policy of the company. Lease income is recognisedin the profit and loss account on accrual basis.Assets acquired on finance lease are recognised in the financialstatements at an amount equal to the fair value of the leased assetat the inception of the lease. The depreciation policy for such assetsis consistent with that for depreciable assets that are owned by theGroup.Operating lease expense is recognised in the profit and loss accounton a straight-line basis over the lease term.

17 Benefits for Life Insurance Policy HoldersBenefits paid to the policyholders in the life insurance businessconsist of the policy benefit amount and claim settlement costs, ifany, and are accounted as and when incurred and notified. Anadditional provision is made for benefits incurred but not reported.

18 Policy Holders’ Acquisition CostIn the life insurance business, policyholders’ acquisitions costs,including commissions, are expensed in the year in which theseare incurred.

19 Liability for Life Insurance Policies in ForceThe estimation of liability against life policies in force is determinedby the appointed actuary of Max New York Life Insurance CompanyLtd. (“MNYL”), pursuant to his annual investigation of the lifeinsurance business and as per gross premium valuation methodspecified by Insurance Regulatory and Development Authority(Actuarial Report and Abstract) Regulations, 2000. The liability isso calculated that together with future premium payments andinvestment income, all future claims (including bonus entitlementsto policyholders) and expenses are met.

20 Contributions to Policyholders’ Account (Technical Account)Contribution to Policyholders’ Account (Technical Account) is madeas decided by the board of directors of MNYL.

B. NOTES TO ACCOUNTS1 The consolidated financial statements have been prepared in

accordance with Accounting Standard 21, Consolidated FinancialStatements, issued by the ICAI. The consolidated financialstatements comprises the financial statements of Max India Limitedand its subsidiaries, listed below:

Name of the Subsidiary Country of Proportion of Proportion ofIncorporation ownership as at ownership as at

March 31, 2004 March 31, 2003

INDIAN SUBSIDIARIES

1 Max New York Life

Insurance Company Limited India 72.70% 74%

2 Max Healthcare Institute Ltd. India 87.90% 100%

3 Max Medical Services Pvt. Ltd. India 85% 85%

4 Comsat Max Ltd. India 100% 51%

5 CMax Infocom Pvt. Ltd. India 100% —

6 Neeman Medical International

(Asia) Ltd. India 99.99% —

7 Pharmax Corporation Ltd. India 85.94% 48.13%

8 Max Telecom Ventures Ltd. India 60.80% 60.80%

9 Max Estates Ltd. India 100% 100%

10 Malsi Estates Ltd. India 100% 100%

11 Max Ateev Ltd. India 100% 100%

12 Max Healthscribe Ltd. India — 62.46%

FOREIGN SUBSIDIARIES

1 Max Asia Pac Ltd. Hong Kong 100% 100%

2 Neeman Medical

International Plc1 United Kingdom 72.86% 72.86%

3 Neeman Medical

International BV1 Netherlands 100% 100%

4 Neeman Medical

International NV2 Netherlands 72.86% 72.86%

5 Neeman ICIC, S.A.3 Costa Rica 74.25% 74.25%

6 Neeman Medical United States

International, Inc.3 of America 100% 100%

7 Max UK Ltd. United Kingdom 100% 100%

8 Max Visions Inc. United States

of America 100% 100%

Notes:1 – Held through Max Asia-Pac Limited, Hong Kong2 – Held through Neeman Medical International BV, Netherlands3 – Held through Neeman Medical International NV, Netherlands

Max CONSO 73-104.p65 9/14/2004, 11:33 AM93



New Subsidiaries:

Neeman Medical International (Asia) Ltd. (“Neeman Asia”)Neeman Asia is a company engaged in the field of Clinical Researchbusiness in India. The Company has been allotted 41,66,743 equityshares of Rs. 10/- each of Neeman Asia representing 99.99% stake,by conversion of outstanding unsecured loans on March 18, 2004by virtue of which Neeman Asia became a subsidiary.

Pharmax Corporation Ltd. (“Pharmax”)The Company had an investment in 4,27,311 CumulativeConvertible Preference Shares of Rs. 100/- each of Pharmax. Thesepreference shares got compulsorily converted into 4,27,31,100equity shares Re. 1/- each of Pharmax on March 16, 2004 as partof the terms of their issue. The consolidated holding of the Companyin 4,71,17,247 equity shares of Pharmax post conversion translatesinto 85.94% stake on a fully diluted basis. Therefore, by virtue ofthe aforesaid conversion, Pharmax became a subsidiary.

CMax Infocom Pvt Ltd. (“CMax”)CMax is a company in the business of trading of telecommunicationand networking equipment in India. The Company acquired 10,000equity shares of Rs. 10/- each of CMax on June 13, 2003representing 100% stake in this company.

2 Investments in AssociatesThe Company has applied Accounting Standard 23 (“AS 23”),Accounting for Investments in Associates in Consolidated FinancialStatements issued by the ICAI. In accordance with the disclosurerequirements of AS 23, the prescribed information and detailsrelating to associate companies are given below –

Associate companyThe Company regards those investee entities as Associates whichare not considered as subsidiaries, but in which it holds directly orindirectly 20% or more voting power.

a) Max HealthStaff International Ltd. (“HealthStaff”)HealthStaff is a company, which is engaged in the business ofhealthcare staffing services. This company was incorporatedon March 04, 2003 and has obtained the certificate ofcommencement of business on April 16, 2003.As of March 31, 2004, the Company holds 15,85,000 (Previousyear 25,000) equity shares of HealthStaff, which translates intoan ownership interest and voting power equal to 50%.Accordingly, investment in HealthStaff has been accountedfor as an Associate in accordance with AS 23 and the Companyhas recognised Rs. 75.12 Lacs in the Consolidated Statementof Profit and Loss towards its share of losses of HealthStaff forthe current financial year. Consequently, the carrying value ofinvestment in this company has been reduced to Rs. 83.38Lacs as of March 31, 2004.

b) Alta Cast LLC (“Alta Cast”)Alta Cast is a Delaware, US based company engaged in theinformation technology business relating to providing healthcareinformation systems to hospitals and entities engaged in thebusiness of healthcare delivery.The Group held 1,24,12,749 units of interest in Alta Cast for39.30% stake in this company.

Alta Cast had been undergoing protective bankruptcy underUS laws. On March 02, 2004, the US Bankruptcy Court, Districtof Delaware confirmed the plan of reorganisation filed by AltaCast. In terms of the plan of reorganisation, the Group’s interestin Alta Cast as stakeholder has got completely extinguishedand the Group will not receive any consideration on account ofits shareholding in Alta Cast. In the previous year the Grouphad fully provided for the carrying value of its investment inAlta Cast in line with Accounting Standard 13. Consequently,AS 23 has not been applied to this investment.

c) PharmaxPharmax is a company, which derives income mainly from leaserentals related to certain office properties. As of March 31,2003, the Company held 43,86,147 equity shares of Pharmax,which translated into an ownership interest and voting powerequal to 48.13% in this company and consequently thisinvestment was accounted for in accordance with AS 23 inthe previous year.The Company was also holding 4,27,311 10% CumulativeConvertible Preference Shares (“CCPS”) of Pharmax. As pertheir terms of issue these CCPS were converted on March 16,2004 into 4,27,31,100 equity shares of Re. 1/- each fullypaid up. Consequent to this conversion Pharmax became85.94% subsidiary of the Company.Accordingly, the share of losses in Pharmax accounted for inline with AS 23, in the consolidated financial statements forthe year 2002-03 amounting to Rs. 132.33 Lacs has beenreversed during the current financial year.

3 Reserves shown in the consolidated balance sheet represent theGroup’s share in the respective reserves of the Group Companies.Goodwill arising on consolidation is shown under fixed assets (referschedule 7).

4 The movement in share of minority interests is as follows(RS. LACS)

Name of the Balance as on Increase in Profit/(Loss) Adjustment* Balance as on

Subsidiary March 31, 2003 Capital for the year March 31, 2004

Max New York Life

Insurance Co. Ltd. 6633.84 2818.11 (6354.48) 0.19 3097.66

Max Healthcare

Institute Ltd. — 1497.71 (409.13) (401.85) 686.73

Comsat Max Ltd. 851.20 — — (851.20) —

Max Telecom

Ventures Ltd. 1223.02 — 9.83 — 1232.85

Max Healthscribe Ltd. 713.78 — 110.48 (824.26) —

Max Medical Services

Pvt. Ltd. 113.33 — (28.02) (154.74) (69.43)

Neeman Medical

International Plc. (62.39) — — 5.88 (56.51)

Neeman Medical

International NV (1800.45) — (239.51) 84.17 (1955.79)

Neeman Asia — 0.01 (0.01) — —

Neeman ICIC, S.A. 115.35 2.90 (78.36) — 39.89

Total 7787.68 4318.73 (6989.20) (2141.81) 2975.40

* The adjustments in minority interest consist of:(i) Changes in the shareholding pattern in Max Healthcare Institute Ltd., Comsat

Max Ltd., Max Healthscribe Ltd. and MNYL.(ii) Share of Non-Compete fee in Max Medical Services Pvt. Ltd. on application of

AS 26.

(iii) Exchange translation impact.

Max CONSO 73-104.p65 9/14/2004, 11:33 AM94



5 Contingent Liabilities(RS. LACS)

Current Year Previous Yeara) Corporate guarantees 11768.54 4084.50b) Claims not acknowledged as debts:

Excise Duty 185.85 263.27Customs 303.04 198.41Service Tax 71.04 —Income Tax Refer Note B8 162.75Other 1216.86 98.24Uncalled liability ofshares partly paid 651.50* —Total 2428.29 722.67

c) Bank guarantees 60.98 550.82d) Letter of Credit outstanding 775.74 630.69e) Arrears of Dividend on

Preference Shares 47.17 —f) Corporate Dividend Tax 6.04 —

* Represents amount required to acquire 15% shareholding in Max Medical Services

Pvt. Ltd.

6 Capital Commitments (RS. LACS)


Estimated amount of contracts(net of advances) remaining tobe executed on capital accountand not provided for 2577.63 867.98

7 Concession in Custom Duty availed on Capital equipment importedduring the year against export obligation is Rs. 14.29 Lacs (Previousyear Rs. 338.71 Lacs).

8 Income Tax CasesMax India Ltd.(a) The Company had received an Income-tax demand of

Rs. 835.78 Lacs for the assessment year 2000-01 atprocessing stage consequent to withdrawal of the set-off oflosses of earlier years namely 1997-98, 1998-99 and1999-2000. The said demand was reduced to Rs. 1.75 Lacsconsequent to the appellate orders passed for theassessment years 1997-98, 1998-99 and 1999-2000in which relief was allowed to the Company resulting in lossesavailable for set-off in the assessment year 2000-01. However,the income-tax department has gone into appeal against thesaid appellate orders.Subsequently, in the assessment that was completed undersection 143(3) of the Income Tax Act, for the assessmentyear 2000-01, a demand of Rs. 5.91 Lacs had beencreated. The Company had filed an application for rectificationand the demand has been cancelled.

(b) The Company had received an Income-tax demand of Rs. 15.65Lacs for the assessment year 2001-02 in the assessment thatwas completed under section 143(3) of the Income TaxAct. The Company has filed an appeal against the order undersection 143(3) before CIT (Appeal) and is hopeful that thisdemand will be cancelled on the disposal of appeal.

Comsat Max Ltd. (“Comsat Max”)(a) During the year ended March 31, 2003 an income-tax demand

of Rs. 162.75 Lacs was raised on Comsat Max for theassessment year 2000-01. The demand was based ondisallowance of DOT license fees as being capital in nature

and was computed without offsetting available tax losses whichwould have reduced the demand to Nil. Subsequent to theyear end, Comsat Max had filed an appeal against the samebefore the CIT (Appeals) and is confident of a favorable orderagainst this demand.

(b) Subsequent to the year ended March 31, 2004, an income-tax demand of Rs. 736.80 Lacs has been raised on ComsatMax for the assessment year 2001-02. The demand is basedon treating DOT license fees and space segment charges ascapital expenditure and has been computed without givingeffect to set-off against brought forward tax-losses, which wouldhave reduced this demand to about Rs. 150.00 Lacs. ComsatMax is in the process of filing an appeal against the samebefore the CIT (Appeals) and is confident of a favorabledisposition against this demand.

Max Telecom Ventures Ltd. (“MTVL”)During the year ended March 31, 2001, an income-tax demand ofRs. 9503.93 Lacs was raised relating to the assessment year 1998-99, against which the Company was contingently liable in terms ofa Scheme of Arrangement sanctioned by the Hon’ble High Court ofPunjab and Haryana at Chandigarh vide Order dated March 20,1999. MTVL had filed an appeal against the said demand. Thesaid appeal had been disposed off in favour of this subsidiarycompany by the CIT (Appeals), resulting in cancellation of thedemand created. Subsequently, in the assessment of MTVL for the assessment year1999-2000 the transaction, which had resulted in the abovementioned demand was also assessed as taxable on protective basisunder a different head of income. This, alongwith a few otheradditions, resulted in further creation of demand of Rs. 25630.03Lacs (which included the demand of Rs. 25002.54 Lacs onprotective basis). The subsidiary company had filed an appealagainst the same. The said appeal has also been disposed off infavour of MTVL by the CIT (Appeals), and the demand created hasbeen cancelled.Thereafter, the Income tax department has filed an appeal withIncome Tax Appellate Tribunal against the above orders.

Max Ateev Ltd. (“Max Ateev”)Income-tax assessment for the assessment year 2001-02 wascompleted under section 143(3), of the Income Tax Act, 1961. Ademand of Rs. 5.73 Lacs has been created in the order undersection 143(3) against which the company has filed an appealbefore Commissioner of Income Tax (Appeals).

9 Other creditors of Neeman Medical International NV (“NeemanNV”) amounting to Rs. 1447.85 Lacs (US$ 3,281,250) representamount due on the purchase of investments in Neeman ICIC, S.A.payable to Dr. G. Rodriguez. This amount has been guaranteed bya standby letter of credit issued by Group’s bank in India. However,Neeman NV has disputed payment of the balance purchase priceto Dr. G. Rodriguez in the Delhi High Court, since in that company’sview the purchase price fixed by Dr. G. Rodriguez for sale of his75% stake in Neeman ICIC, S.A. was wrongly arrived at on thebasis of fraudulent misrepresentations made by him. The DelhiHigh Court vide its order dated December 19, 2003 has restrainedthe bank in India who issued the standby letter of credit frommaking any further payments under the said standby letter of credittill the final disposal of the case. The matter is currently subjudice.

Max CONSO 73-104.p65 9/14/2004, 11:33 AM95



10 Deposits of Comsat Max included under Loans and Advances anamount of Rs. 100.00 Lacs placed as security deposit for officepremises. Consequently, upon relocation of the said office, a CourtReceiver under consent terms filed by both parties had beenappointed for securing the refund of the same. Subsequently, theCourt has directed the Court Receiver to sell the suit premises and/or the property by public auction and/or private treaty and utilisethe sale proceeds for satisfaction of the company’s dues. Themanagement is confident of the eventual recovery of the full amount.

11 Debtors of Comsat Max, over 180 days include an amount ofRs. 71.28 Lacs disputed by a customer, which has been referredto arbitration. The management is confident of the eventual recoveryof the entire amount.

12 LoansMax India Ltd.(a) Nil (Previous year 15,27,440) – 12.5% Secured Redeemable

Non Convertible Debentures of original face value of Rs. 250/-each were secured by first pari passu charge on certainimmovable assets by way of joint equitable mortgage and byway of hypothecation of movable fixed assets of the Company.The first redemption of Rs. 75/- per debenture aggregating toRs. 1145.58 Lacs was done on March 02, 2002, the secondredemption of Rs. 75/- per debenture aggregating toRs. 1145.58 Lacs was done on March 02, 2003 and the lastredemption of Rs. 100/- per debenture aggregating toRs. 1527.44 Lacs was done on March 02, 2004. Subsequentto the year end, the charges on the assets of the Companyhave been vacated.

(b) Term loan from ICICI Bank Ltd. amounting to Rs. 2025.97Lacs (Previous year Rs. 3000.00 Lacs), is secured by firstpari passu charge on certain immovable assets by way of jointequitable mortgage and by way of hypothecation of movablefixed assets of the Company.

(c) Term Loan from Punjab National Bank amounting to Rs. 500.00Lacs is secured by first pari passu charge on immovable assetsby way of joint equitable mortgage and by way of hypothecationof movable fixed assets of the Company.

(d) Interest free loan from Department of Industries, Punjab issecured by lien on a deposit of Rs. 8.62 Lacs (Previous yearRs. 13.66 Lacs) on which interest of Rs. 12.05 Lacs (Previousyear Rs. 15.42 Lacs) has accrued till March 31, 2004. Thisdeposit has been placed with Punjab State IndustrialDevelopment Corporation as a guarantee for the loan.

(e) Fund based working capital facilities from banks are securedby a first pari passu charge on stocks and book debts,outstanding monies, receivables and a second charge onmovable and immovable fixed assets of the Company, bothpresent and future.

(f) Short term loans from The Bank of Rajasthan Ltd. amountingto Rs. 1500.00 Lacs are secured by the pledge of shares ofthe Company, which are owned by certain related parties.

(g) 25 – 12.5% Redeemable Non Convertible Debentures of facevalue of Rs. 1,00,00,000/- each, amounting to Rs. 2500.00Lacs are redeemable on December 18, 2005.

(h) Short-term loans from IDBI Bank Ltd. of Rs. 1000.00 Lacs(Previous year Rs. 2000.00 Lacs) are secured by way of a firstpari-passu charge on certain fixed assets (both movable andimmovable) including plant and machinery, tools, accessoriesand stores (present and future) of Max Healthcare Institute Ltd.

Comsat Max(a) Term Loan availed by Comsat Max from ICICI Bank is secured

by first charge on immovable properties and second charge onmovable properties.

(b) The working capital facilities availed by Comsat Max are securedby first charge on inventories, book debts and all current assetsand second charge on immovable properties.

Max Healthcare Institute Ltd. (“MHIL”)Term loan of Rs. 2500.00 Lacs (Previous year Rs. 2500.00 Lacs)availed by MHIL from Canara Bank and another term loan ofRs. 1600.00 Lacs (Previous year Nil) availed from United Bank ofIndia are secured by way of a pari passu charge on its entire fixedassets (both movable and immovable) including land, plant andmachinery, medical equipment (present and future).

PharmaxTerm loan from Canara Bank amounting to Rs. 608.83 Lacs availedby Pharmax is secured against charge of monthly lease rentalsreceivable from various lessee and equitable mortgage of undividedshare of freehold property at Okhla, New Delhi.

Neeman ICIC, S.A.An amount of Rs. 148.11 Lacs (US$ 335,667) representingbalance due by Neeman ICIC S.A. against a line of credit availedfrom a bank in Costa Rica is secured by mortgage of its land.

13 Debentures amounting to Rs. 1527.44 Lacs were redeemed duringthe year by the Company. The corresponding debenture redemptionreserve amounting to Rs. 763.72 Lacs created during the earlieryears was transferred to profit and loss account. An amount ofRs. 146.26 Lacs was created as debenture redemption reserve inrespect of 12.5% Redeemable Non-Convertible Debentures.

14 The Company signed an amendment to the Joint Venture Agreement(“JVA”) with New York Life International Inc. (“NYLI”) on May 20,2003. In terms of the amended JVA, both the parties agreed thatthe Company shall not transfer or otherwise dispose its shareholdingto an extent of 24% of the paid up issued share capital (“RestrictedShares”) of MNYL to any person other than NYLI. The parties alsoagreed that NYLI shall pay to the Company the aggregate par valueequal to 24% of the paid up issued share capital of MNYL fromtime to time.The aforesaid payment may be applied by NYLI to purchase of theRestricted Shares of MNYL from the Company, when and to theextent permitted pursuant to applicable laws by March 2010 orbecome repayable thereafter.The Company received Rs. 8160.00 Lacs in aggregate from NYLIduring the current financial year in accordance with the aforesaidagreement.

15 Actuarial Assumptions – Life Insurance BusinessAll valuation assumptions have been decided by the AppointedActuary keeping in view the regulations issued by the InsuranceRegulatory and Development Authority (“IRDA”) and professionalguidance of the Actuarial Society of India. The details are givenbelow:(a) Interest: Considering the yield on the fund and the yields

expected to be obtained from sums to be invested in future,the basis has been chosen depending on the nature of plans ofassurance and the term over which such assurance is operative.

Max CONSO 73-104.p65 9/14/2004, 11:33 AM96



The expected level varies by plan from 4.9% to 6.15% andalso includes the margin for adverse deviations of 0.25% to1.5%.

(b) Mortality: Based on analysis of experience and allowing forsome conservatism, the basis used is 82.5% of LIC (94-96)ultimate in year 1 increasing to 100% of LIC (94-96) ultimatein year 5 and thereafter. This basis also includes a margin of10% for adverse deviations.

(c) Morbidity: Due to lack of any published Indian experience,110% of 1991-97 UK experience table rates and 125% of1959-74 US experience table rates are used, as applicable.This also includes a margin for adverse deviations of 15%.

(d) Expenses: Policy maintenance expenses analysed by fixed andvariable expenses with reference to the MNYL’s business plansadjusted for stable level of expenses and inflation were usedand includes margin for adverse deviation of 5% forparticipating policies and 10% for non-participating policies.

(e) Inflation: Provision for inflation at 5% has been made.(f) Commission: Allowed at actual rates paid and is upto 7.5%

for 2nd and 3rd year and upto 5% for subsequent years.(g) Lapses: Lapses are provided in the range of 1% to 15% during

2nd year, at 1% to 10% during 3rd year and 1% to 3% thereafter.(h) Future bonuses: Provision is made for future bonuses based

on the estimated expected bonus payouts.Overall, the valuation assumptions provide a conservative setof bases.

16 Employee Stock Option plansThe Company has two stock option plans. These are summarizedbelow:

Employee Stock Option Plan – 2000 (“the 2000 Plan”):The 2000 Plan provided for the grant of stock options to eligiblenon-executive directors, whole-time directors and employees of theCompany. The 2000 Plan was approved by the board of directorsin January 2000 and by the shareholders in March 2000. All theoptions granted under the 2000 Plan were to be exercised by March29, 2004. Details of the 2000 Plan are given below:

Year Ended

March 31, 2004 March 31, 2003

Options granted, beginning of the year 86,000 1,36,000

Exercised during the year 71,000 —

Forfeited/lapsed during the year 15,000 50,000

Options granted, end of the year — 86,000

Employee Stock Option Plan – 2003 (“the 2003 Plan”):During the year, the Company instituted the 2003 Plan, which wasapproved by the board of directors in August 2003 and by theshareholders in September 2003. The 2003 Plan provides for grantof stock options aggregating not more than 5% of number of issuedequity shares of the Company to eligible employees and directorsof the Company. The 2003 Plan shall be administrated by theremuneration committee appointed by the board of directors. OnOctober 1, 2003, 66,667 stock options have been granted underthe 2003 Plan at an exercise price of Rs. 10/- per share. Theseoptions shall vest on October 01, 2004, on April 01, 2005 and onApril 01, 2006.

17 Deferred TaxThe movement of deferred tax is given below

(RS. LACS)

Particulars Opening Reversed Provision Adjust- Closing

As at during for the ment As atApril the year year March

01, 2003 31, 2004

Depreciation 1509.25 62.56 286.29 57.46 1790.44

Deferred Revenue

Expenses and

preoperative expenditure 286.14 9.48 15.43 — 292.09

Deduction u/s 35D/35DD 1.82 — (1.37) 1.56 2.01

Deduction u/s 43B (105.59) — (56.68) (3.69) (165.96)

Other Provisions (396.56) 31.75 12.83 19.98 (395.50)

Managerial Remuneration 24.44 — (24.44) — —

Loss carried forward (381.73) — (182.64) — (564.37)

Liability for increase in

surcharge (5.22) — 4.96 0.02 (0.24)

Deferred Tax Liability/(Asset) 932.55 103.79 54.38 75.33 958.47Add: Valuation Allowance 416.64 0.24 249.73 — 666.13

Net Deferred Tax

Liability/(Asset) 1349.19 104.03 304.11 75.33 1624.60

Notes:

1. Valuation allowance has been created against deferred tax assets in

Max Ateev, Max Asia Pac Ltd., Neeman Medical International Inc. and

Max Vision Inc.

2 Deferred tax assets are created to the extent of their realisability in

future.

3 Adjustments consist of movements due to De-Subsidiarisation of Max

Healthscribe Ltd. and also the movement related to Pharmax and Neeman

Asia which became subsidiaries during the current year.

18 Directors’ Remuneration (RS. LACS)

Current Year Previous Year#Directors’ remuneration paid/provided in the accountsa Salary and allowances 451.48 444.91b Contribution to provident fund

and superannuation fund 42.31 45.50c Value of perquisites 475.02 68.11Total 968.81 558.52

Does not include provision for leave encashment & gratuity.

Note: During the year, the Company paid remuneration to its executive directors

in accordance with the resolutions passed by the Remuneration

Committee of the Board of Directors and the Shareholders. With regard

to a director, an amount of Rs. 29.25 Lacs (Previous year Rs. 21.15

Lacs) was paid in excess of the limits prescribed under Section II of

Part II of Schedule XIII to the Companies Act, 1956. The Company is

in the process of obtaining requisite approvals from the Central

Government for the same.

In view of the aforesaid, the excess of Rs. 29.25 Lacs for the current

year and Rs. 43.52 Lacs* for the previous year, received by the

concerned directors is being held by them in trust for the Company.

Remuneration for current year also includes an amount of Rs. 24.74

Lacs (Previous year Rs. 39.95 Lacs) relating to earlier years for which

the Company has received Central Government approval during the

current year.

* Includes Rs. 10.20 Lacs held by a former director.

# Includes Rs. 0.89 Lacs related to earlier years.

Max CONSO 73-104.p65 9/14/2004, 11:33 AM97



19 Earning Per Share (EPS)Calculation of EPS (Basic and Diluted)

Particulars For the Year Ended For the Year Ended

March 31, 2004 March 31, 2003

Basic

Profit/(Loss) after tax (Rs. Lacs) (17834.25) (7980.77)

Weighted average number of equity shares 23072890 23064160

EPS (Rupees) (77.30) (34.60)

Share Details (Nos)

Outstanding as at the beginning of the year 23064160 23064160

Issued on February 16, 2004 71,000 —

Outstanding as at the end of the year 23135160 23064160

Diluted

Profit/(Loss) after tax (Rs. Lacs) (17834.25) (7980.77)

Weighted average number of Equity Shares 23172181 23064160

EPS (Rupees) (76.96) (34.60)

Share Details (Nos)

Outstanding as at the beginning of the year 23064160 23064160

Opening balance under the 2000 Plan 86,000 —

ESOPs lapsed on June 30, 2003

under the 2000 Plan (15,000) —

ESOPs granted under the 2003 Plan 66,667 —

Outstanding as at the end of the year 23201827 23064160

Reconciliation of denominators used for calculating basic and dilutedearnings per share

Particulars For the

year ended

March 31, 2004

Denominator used for computing basic Earnings Per Share 23072890

Add:- Dilutive impact of -

(i) Outstanding ESOPs under the 2000 Plan 65958

(ii) Outstanding ESOPs under the 2003 Plan 33333

Denominator used for computing diluted Earnings Per Share 23172181

20 Miscellaneous Expenditure(RS. LACS)

As at Additions Adjusted/ Amortised As atApril 01, Transfer during March 31,

2003 the Year 2004

Preliminary and

Issue Expenses 48.70 — 0.99 36.38 13.31

Deferred Employee

Compensation — 58.33 — 20.11* 38.22

Deferred Revenue

Expenditure 771.35 — (612.00)** 41.97 117.38

Product/Market

Development

Expenditure 21.95 — — 9.17 12.78

Non Compete Fees 167.63 — — 84.28 83.35

1009.63 58.33 (611.01) 191.91 265.04

* Amortisation has been charged to Salaries, Wages and Bonus.

** Transferred Rs. 457.26 Lacs to Reserves and Rs. 154.74 Lacs to Minority Interest

in consonance with Accounting Standard 26.

21 Effective September 01, 2002, the Company had divested itspharmaceuticals manufacturing business located at Nanjangud,Mysore as a going concern, on a slump sale basis. Consequently,results of the Company for the previous year ended March 31, 2003include results of the pharmaceuticals business for a period of fivemonths only i.e. from April 1, 2002 to August 31, 2002.

22 The Company sold 1,08,20,634 equity shares representing itsentire 64.99% stake in Max Healthscribe Ltd. to HealthscribeInc., USA for US$ 10.34 million, on December 18, 2003. Thesurplus of Rs. 2584.66 Lacs being the difference between theproceeds from the disposal of investment in Max Healthscribe Ltd.and the carrying amount of its assets and liabilities has beenrecognised as surplus on de-subsidiarisation and has been classifiedunder the head “Income from Investment Activities” in Schedule20.

23 Capital Work in ProgressCapital Work in Progress of MHIL includes an amount of Rs.1096.49 Lacs paid against allotment of land and other expensesfor a hospital project. MHIL has obtained possession of the land,and the same would be capitalised consequent to execution ofrequired documents.

24 Income from Interest on Loans and Non Trade Investments inSchedule 20 is gross of the following tax deducted at source:� Bonds Rs. 0.04 Lacs (Previous year Rs. 13.11 Lacs)� Debentures Rs 0.07 Lacs (Previous year Rs. 0.10 Lacs)� Fixed Deposits Rs. 0.59 Lacs (Previous year Rs. 1.55 Lacs)� Loans Rs. 124.57 Lacs (Previous year Rs. 116.73 Lacs)� Others Rs. 37.83 Lacs (Previous year Rs. 4.43 Lacs)

25 Max Ateev’s debtors include an amount of Rs. 381.87 Lacs(Previous year Rs. 381.87 Lacs) being services rendered for“consideration other than cash”, and realisable in equity for whichMax Ateev is yet to receive shares in accordance with RBI approval.

26 Segment Reporting(a) Business Segments

The Company has considered business segment as the primarysegment for disclosure. The products/services included in eachof the reported business segments are as follows:� Speciality Plastic Products - The holding company’s

manufacturing facility located at Railmajra, Nawanshar(Punjab), produces packaging films supported withpolymers of propylene, leather finishing transfer foils andrelated products.

� Pharma – For a part of the financial year 2002-03 (ReferNote B21), the holding Company’s manufacturing facilitylocated at Nanjangud, Mysore was engaged in theproduction of bulk drugs like Carbamezapine, Azithromycinand Citalopram etc.

� Life Insurance – This segment relates to the nation widelife insurance business carried out by one of thesubsidiaries.

� Healthcare Services – One of the Company’s subsidiary isengaged in the delivery of healthcare services in thenational capital territory of Delhi through its primary andtertiary health care delivery centers.

� Software Services – This segment consists of activitiesinvolving providing software solutions and knowledgemanagement products.

� Medical Transcription – For a part of financial year2003-04 (Refer Note B22), business activities of asubsidiary carrying out the business of medicaltranscription, which offers comprehensive businessprocess outsourcing solutions for the healthcare sector.

Max CONSO 73-104.p65 9/14/2004, 11:33 AM98



� Networking, Business Continuity and Knowledge SolutionsServices - Include business operations of two subsidiarieswhich provide a gamut of managed services comprising ofhosting, protecting, delivering and managing connectingand networking infrastructure. This segment also includessale of connectivity hardware, mainly VSAT equipmentsand provision of security solutions, disaster recovery andlearning management solutions by these subsidiaries.

� Clinical Research – Consists of business activities relatingto conduct of ethical medical research involved in drugdevelopment process as a Site Management Organisation.The group of subsidiaries involved in this business segmentoffer study management services to the pharmaceutical,biotechnology and Contact Research Organizationsworldwide.

� Business Investments – Include investments of the holdingcompany in downstream companies having interest intelecom and connectivity services industries, investmentin company providing knowledge management solutionsetc.

� Business Services – This segment consists of providingcorporate services of strategic nature to companies withinthe group and is represented by the pool of resourcesavailable at the corporate office of the holding company.

� Others – The trading activities undertaken by the holdingcompany are classified under this segment.

The above business segments have been identified considering:(i) The nature of products and services

(ii) The differing risks and returns(iii) Organisational structure of the group, and(iv) The internal financial reporting systems.

Segment Revenue consists of revenue from external customersand revenue from other segments.Segment Result is the difference of segment revenue andsegment operating expenses.Unallocated Assets include assets pertaining to the holdingcompany’s corporate office such as loans, advances and deposits.Unallocated Liabilities include tax provisions and interestbearing loans.Unallocated Expenses - Expenses incurred at corporate officeof the holding company relate to various business segments.As there is no reasonable basis of allocating this expenditureto various segments, the same are shown as unallocatedreconciling expenses. Interest expense is not treated as part ofa segment expense and is reflected as a separate line item.The segment information has been prepared in conformity withthe accounting policies adopted for preparing and presentingthese financial statements.

(b) Geographical SegmentsThe Company has considered geographical segment assecondary reporting segment for disclosure. For thispurpose, the revenues are bifurcated based on location ofcustomers in India and outside India.

Max CONSO 73-104.p65 9/14/2004, 11:33 AM99

MA

X I

ND

IA

LI

MI

TE

DC

ON

SO

LI

DA

TE

D

ST

AT

EM

EN

T

OF

A

CC

OU

NT

S

MA

X

AN

NU

AL

R

EP

OR

T

20

03

-2

00

410

0 SEGMENT INFORMATIONPrimary Segments Pharma Specialty Plastic Healthcare Business Business Life Software Medical Networking and IT Clinical Others (RS. LACS)

(Refer Note 21) Products Investment Services Insurance Services Transcription Enabled Services Research Totala Segment Revenue from

Sales to external customers — 11645.89 174.67 — — — 48.68 — 1401.20 — — 13270.44(3431.33) (10687.39) (60.84) (—) (—) (—) (96.45) (—) (1621.92) (—) (—) (15897.93)

Service income — 167.85 2420.94 47.89 — 21206.27 47.20 3462.32 3737.56 1328.84 — 32418.87(—) (120.35) (1143.70) (47.76) (49.95) (9505.74) (573.13) (4342.92) (3387.55) (1216.06) (—) (20387.16)

Service/Interest income from — — 31.37 409.27 56.57 — — — 173.51 128.05 — 798.77inter segments (—) (—) (—) (275.12) (16.27) (—) (—) (—) (37.03) (—) (—) (328.42)Income from investment activities — — 38.48 3070.69 — 1694.88 — 45.47 — — — 4849.52

(—) (—) (9.82) (630.55) (—) (1490.59) (—) (26.20) (—) (—) (—) (2157.16)Other income — 38.72 5.38 0.08 — 8.87 82.21 0.12 90.61 8.87 — 234.86

(31.03) (38.38) (0.49) (0.98) (—) (9.15) (76.20) (1.82) (83.38) (1.23) (0.15) (242.81)Total Segment Revenue — 11852.46 2670.84 3527.93 56.57 22910.02 178.09 3507.91 5402.88 1465.76 — 51572.46

(3462.36) (10846.12) (1214.85) (954.41) (66.22) (11005.48) (745.78) (4370.94) (5129.88) (1217.29) (0.15) (39013.48)Less: Inter segment revenue 798.77

(328.42)Segment Revenue fromexternal customers 50773.69

(38685.06)Add: Unallocated Revenue 109.06

(275.23)Add: Interest income 159.98

(101.53)Add: Prior Period Income 3.23

(0.09)Total Revenue 51045.96

(39061.91)b Segment Results — 1960.14 (2808.56) 3466.15 25.80 (7531.45) (541.47) 252.48 501.77 (929.15) (26.73) (5631.02)

(838.44) (2224.17) ((2943.58)) (852.45) ((85.69)) ((7422.49)) ((1225.56)) (533.78) (144.77) ((1716.16)) ((4.32)) ((8804.19))Interest income 159.98

(101.53)Sub total (5471.04)

(8702.66)Less:Unallocated expenses 1060.42

(1062.34)Interest Expenses 2740.95

(3279.09)Prior Period items 5.15

(18.29)Loss before tax and exceptional items (9277.56)

((13062.38))Provision for taxation (includesprovision for Deferred Tax Liabilities) 346.56

((602.15))Loss after tax and beforeexceptional items (9624.12)

((12460.23))Exceptional items — —

(4075.42) (4075.42)Loss after tax and exceptional items (9624.12)

((16535.65))

Max C

ON

SO

73-104.p659/14/2004, 11:33 A

M100

MA

X I

ND

IA

LI

MI

TE

DC

ON

SO

LI

DA

TE

D

ST

AT

EM

EN

T

OF

A

CC

OU

NT

S

101

MA

X

AN

NU

AL

R

EP

OR

T

20

03

-2

00

4

Primary Segment Pharma Specialty Plastic Healthcare Business Business Life Software Medical Networking and IT Clinical Others (RS. LACS)(Refer Note 21) Products Investment Services Insurance Services Transcription Enabled Services Research Total

c Carrying amount of segment assets — 9058.17 14940.95 13227.34 104.04 34492.46 650.21 — 5525.13 11767.78 6089.24 95855.32(—) (8727.49) (15064.46) (16426.35) (153.48) (20890.20) (1380.77) (2335.39) (6456.50) (7648.82) (604.51) (79687.97)

Add: Unallocated assets 1361.77(1611.02)

Cost of Control 4846.89(2894.40)

Less: Inter Group Advances 18663.50(13051.29)

Total Assets 83400.48(71142.10)

d Segment Liabilities — 2011.94 4586.41 60.49 3.10 23141.70 1382.56 — 1915.38 10932.37 4366.11 48400.06(—) (1965.75) (4993.99) (121.44) (10.39) (11085.08) (1476.24) (473.64) (1888.75) (7298.02) (655.98) (29969.28)

Add: Unallocated liabilities 31485.06(25936.79)

Less: Inter Group Advances 18663.50(13051.29)

Total Liabilities 61221.62(42854.78)

e Cost to acquire tangible and — 1000.94 333.43 — 0.17 1692.69 8.00 24.54 328.85 80.44 1422.55 4891.61intangible fixed assets (62.02) (353.20) (1566.64) (—) (—) (1870.67) (38.39) (76.78) (1408.97) (75.84) (1.45) (5453.96)Unallocated 3085.16

(64.19)Total Addition 7976.77

(5518.15)f Depreciation and amortisation expenses — 502.83 617.55 0.93 1.34 1014.21 293.86 179.87 364.09 74.52 23.66 3072.86

(191.56) (443.57) (655.40) (35.72) (14.41) (716.68) (348.23) (248.46) (732.64) (76.50) (0.18) (3463.35)Unallocated Depreciation & amortisation 197.15

(116.60)Total depreciation and amortisation 3270.01

(3579.95)g Non-cash expenses other than — 33.98 99.33 169.70 8.81 — 283.17 0.07 90.84 23.25 — 709.15

depreciation and amortisation (3.33) (47.82) (18.42) (252.16) (24.43) (—) (109.89) (—) (61.93) (71.07) (1.50) (590.55)Unallocated Non-cash expenses 31.05

(28.83)740.20

Total (619.38)

Secondary Segments (RS. LACS)India North America Europe, South Asia Total

Canada, Australia Americaa Revenue from external customers 44126.19 3932.19 2086.30 284.24 344.77 50773.69

(29268.78) (5895.89) (2024.11) (351.83) (1144.45) (38685.06)b Carrying amount of segment assets by location of assets 79030.15 7350.04 2020.23 2541.24 4913.66 95855.32

(68719.97) (4388.49) (6145.44) (—) (434.07) (79687.97)c Cost to acquire tangible and intangible fixed assets by location of assets 7953.83 21.18 0.17 1.59 — 7976.77

(5441.06) (77.09) (—) (—) (—) (5518.15)Sales shown above includes Scrap sale of Rs. 427.64 Lacs (Previous year Rs. 387.84 Lacs) classified as other income in Profit and Loss Account

Max C

ON

SO

73-104.p659/14/2004, 11:33 A

M101



27 Related Parties (as identified by the management) are classified as:

Joint Ventures and Max HealthStaff International Ltd., Atotech India Ltd.Associates

Key Management Mr. Analjit Singh, Mr. B. Anantharaman, Mr. Surendra KaulPersonnel(Directors)

Relatives of Key Mrs. Neelu Analjit Singh (wife of Mr. Analjit Singh),Management Mr. Veer Singh (son of Mr. Analjit Singh),Personnel

Enterprises over which Liquid Investments & Trading Company, New Delhi House Services Ltd., Medicare Investments Ltd.,key management Maxopp Investments Ltd., Cheminvest Ltd., Pen Investments Ltd., Pivet Finances Ltd., Gaylord Impex Ltd.,personnel have Lakeview Enterprises, Delhi Guest House Pvt. Ltd., Trophy Holdings Pvt. Ltd., Dynavest India Pvt. Ltd.,significant influence Boom Investments Pvt. Ltd., Malsi Holdings Ltd., Grow Talent Pvt. Ltd.

Employee benefit funds Max India Ltd. Employees Provident Fund Trust

Summary of significant related party transactions (as identified by the management) carried out in ordinary course of business are as follows:(RS. LACS)

Particulars Joint Key Relatives Enterprises Employeeventures and management of key over which key provident

associates personnel management management fundpersonnel personnel have

significantinfluence

1 Fixed assets transferred 22.27 8.13 — 0.67 —(—) (0.10) (—) (4.37) (—)

2 Fixed Assets Purchased — — — — —(—) (—) (—) (579.79) (—)

3 Deposits and advances accepted/given — 33.70 — — —(334.04) (84.04) (—) (—) (—)

4 Loans taken — — — 2805.00 —(—) (—) (—) (1266.93) (—)

5 Sundry creditors transferred — — — — —(4.61) (—) (—) (24.51) (—)

6 Loans given — — — — —(87.00) (69.37) (—) (39.00) (—)

7 Income and reimbursementsInterest income — 4.96 — 67.50 —

(157.38) (16.88) (—) (67.50) (—)Services rendered — — — 2.56 —

(4596.20) (1.43) (1.16) (22.20) (—)Non competition fee and royalty 47.89 — — — —

(47.76) (—) (—) (—) (—)Reimbursement of expenses 38.29 — — 12.87 —

(93.16) (1.41) (—) (63.30) (—)8 Expenses

Services received — 269.00 — 86.46 —(—) (560.77) (—) (528.51) (—)

Interest paid — — — 139.09 —(8.40) (—) (—) (137.36) (—)

Non Competition fee paid — — — — —(—) (168.55) (—) (—) (—)

Other expenses — — 7.88 43.72 —(134.42) (604.35) (8.14) (68.55) (—)

Company’s contribution to PF trust — — — — 36.69(—) (—) (—) (—) (36.52)

Max CONSO 73-104.p65 9/14/2004, 11:33 AM102



9 Purchase of investmentsActual 156.00 — — — —

(425.35) (—) (—) (135.00) (—)Advance against equity 42.00 — — — —

(—) (—) (—) (388.39) (—)10 Amount outstanding

Corporate guarantee — — — — —(155.00) (—) (—) (—) (—)

Against loan given — — — 500.00 —(969.55) (89.03) (—) (500.00) (—)

Interest receivable — — — 26.76 —(153.48) (—) (—) (—) (—)

Against loan taken — — — 1050.00 —(60.00) (—) (—) (2412.54) (—)

Interest payable — — — 163.80 —(—) (—) (—) (53.22) (—)

Other receivable 0.37 67.02 — 3.23 —(489.21) (80.20) (—) (6.28) (—)

Other payable — — — 33.22 —(1.86) (4.46) (—) (1115.38) (—)

Income received in advance 11.64 — — — —(59.53) (—) (—) (—) (—)

Other relevant informationi The above excludes sitting fees Rs. 12.93 Lacs (Previous year Rs. 15.35 Lacs) paid to non-executive Directors.ii Services received includes an amount of Rs. 269.00 Lacs (Previous year Rs. 558.52 Lacs) paid to Key management Personnel as remuneration.iii Previous year’s figures are given in brackets.

Particulars Joint Key Relatives Enterprises Employeeventures and management of key over which key provident

associates personnel management management fundpersonnel personnel have

significantinfluence

28 LeasesAccounting for leases has been done in accordance with AccountingStandard-19 issued by the ICAI. Following are the details of leasetransactions for the year:(a) Finance Lease

The details of finance lease pertaining to Comsat Max compriseof fixed assets including following assets acquired on financelease for a duration of 36 months:Networking Equipment for Points of Presence- Rs. 84.91 LacsComputer Servers- Rs. 167.30 Lacs

(RS. LACS)

March 31, 2004 March 31, 2003Minimum Lease Paymentsat Balance Sheet date 79.57 174.93Present Value 74.67 155.20Due within 1 Year 74.67 109.34Due within 2-5 years — 45.86

(b) Operating LeaseIncomeCMax(i) Fixed Assets of CMax includes assets given on operating

lease to different customers for various periods, renewableon mutual agreement.

(ii) Lease rentals recognised in the profit and loss account forthe year is Rs. 23.80 Lacs.

(iii) The future minimum lease payments under the aforesaidleases are as follows:

(RS. LACS)

March 31, 2004Not later than one year 12.34Later than 1 year andnot later than 5 years —Later than five years —Total 12.34

Note: The figures for the previous year are not given, since CMax became

the subsidiary during the current year.

ExpenseGroup

(i) Lease rentals recognised in the profit and loss account forthe year is Rs. 2169.18 Lacs.

(ii) The Company has entered into operating leases for its officeand for employees’ residence, vehicles for transportation,furniture that are renewable on a periodic basis. The totalof future minimum lease payments under non-cancellableleases are as follows:

Max CONSO 73-104.p65 9/14/2004, 11:33 AM103



(RS. LACS)

March 31, 2004 March 31, 2003Not later than one year 967.66 946.81Later than 1 year andnot later than 5 years 2003.30 1185.55Later than five years 1061.89 —Total 4032.85 2132.36

29 Movement in Policyholders’ Liability(RS. LACS)

Current YearOpening Balance 7122.77Add: Transfer to reserve 8645.89Add: Bonus payable to policyholders 243.31Closing Balance 16011.97

30 Max Visions Inc. had taken a non interest bearing loan of Rs. 165.47Lacs (US$375,000) from Alda Ltd. Alda Ltd., in partial settlementof the dues receivable from the company, has accepted theassignment of Convertible Promissory Notes(s) of the value ofRs. 77.22 Lacs (US$175,000) held by the company, in Alta Cast.With this settlement, the loan of Alda Ltd has got reduced toRs. 88.25 Lacs (US$200,000) as of March 31, 2004.

31 Subsequent to the year end, Max Ateev has decided to divest itsknowledge management business as a going concern on a slumpsale basis with effect from April 01, 2004 to Comsat Max forRs. 255.00 Lacs. Accordingly, Max Ateev has entered into aBusiness Transfer Agreement with Comsat Max on April 28, 2004.Max Ateev operated in only one business segment i.e. knowledgemanagement solutions and does not have any other businessoperation. The financial impact of the sale of knowledgemanagement business would be considered in the ensuing financialstatements.

32 In January 2004, Dr. G. Rodriguez, former CEO Executive Directorof Neeman ICIC, S.A. filed a labour claim against Neeman ICIC,S.A., alleging unpaid bonuses under his work contract. The amountof claim filed before the labour court amounts to Rs. 330.94 Lacs(US$750,000) and according to legal counsel, the amount of thebonuses, if applicable, would not exceed Rs. 220.63 Lacs(US$500,000). The Courts placed preventive embargo on thecompany’s assets to cover the aforesaid claim.The claim was contested by Neeman ICIC, S.A. on March 30, 2004.Because this legal proceeding is at an early stage, the ultimateoutcome of the matter cannot presently be determined, and noprovision for any liability that may result has been made in thefinancial statements.

33 Pursuant to Share Sale and Purchase agreement dated February20, 2003, amongst Comsat Investments Inc (CIIM), ComsatCorporation, the Company and Comsat Max, the Company acquiredthe balance 49% of the shareholding in Comsat Max. In terms ofthe aforesaid agreement in addition to payment of the purchaseprice, the Company was required to secure an unconditional releasefrom letters of comfort given by CIIM to a bank in respect of certainfacilities availed by Comsat Max. The release was obtained by the

Company giving a corporate guarantee to the bankers.Upon fulfillment of the conditions stipulated in the aforesaidagreement, the loans including accumulated interest thereon, givenby CIIM and its associates to Comsat Max, were deemed to havebeen repaid in full and extinguished, during the current financialyear. Accordingly, loans related to acquisition of fixed assetsamounting to Rs. 384.78 Lacs have been set off against cost ofthe related fixed assets and the corresponding accumulateddepreciation amounting to Rs. 319.98 Lacs has been reversedand set off against current year’s depreciation charge. The balanceamount of Rs. 510.83 Lacs included in the total loan amount wasretained by the Comsat Max to continue to maintain and supportits infrastructure thereby enabling, through a deemed grant byvirtue of the corporate guarantee referred to above, as approved byits board of directors, the strengthening of its net worth position.The amount so retained has been transferred by Comsat Max to itsCapital Reserve.

34 Employee Compensation(a) The Costa Rican Labour code establishes a severance payment

to employees in the event of retirement, death or dismissalwithout just cause. The compensation is determined accordingto length of service and varies between 19.5 days to 22 daysper working year, without limit of years. It is the policy ofNeeman ICIC, S.A. to record a reserve on the basis of 5.33%of the salaries paid to its employees monthly.

(b) Neeman Medical International, Inc. provides a 401 (k)retirement savings plan for substantially all employees.Participation is generally subject to the employee’s age andlength of employment with the company. The company’scontribution to the plan is based on a percentage of employeesalaries and is discretionary.

35 During the year, the Company shared the services of some of itsemployees and facilities with third parties. Consequently, the shareof costs attributable to these companies has been charged out inaccordance with service agreements.

36 Previous year figures have been regrouped/reclassified wherevernecessary to conform to current year’s classification.

For and on behalf of the Board of DirectorsANALJIT SINGH Chairman

B. ANANTHARAMAN Group Finance Director

N.C. SINGHAL Director

New Delhi NEERAJ BASUR General Manager-Finance

JUNE 29, 2004 V KRISHNAN Company Secretary

Max CONSO 73-104.p65 9/14/2004, 11:33 AM104

MAX NEW YORKLIFE INSURANCE COMPANY LIMITED

MNYL 105-135.p65 9/14/2004, 11:33 AM105

M A X N E W Y O R K L I F E I N S U R A N C E C O M P A N Y L I M I T E DR E G I S T R A T I O N N O . W I T H T H E I R D A : 1 0 4 D A T E D N O V E M B E R 1 5 , 2 0 0 0


Your Directors have pleasure in presenting the Fourth Annual Report ofyour Company with the Audited Accounts for the financial year endedMarch 31, 2004.

AWARENESS IS GROWINGIndia remains grossly underinsured. The latest Swiss Re’s Sigma reportplaces India in the 80th position in a list of 90 countries in terms ofper capita premium paid. The insurance density (per capita premiumpaid) was estimated at $14.7 as at end March 2003 compared to theglobal average of $422.9 and Asian average of $167.8. According toSwiss Re’s vision for India, by 2013 life insurance premiums ought tocross Rs. 200,000 crore. Asia is seen as the major growth market forthe insurance sector with India and China being leading markets.

Slowly, but steadily, the Indian consumer has begun to appreciatethat life insurance is about prudently balancing risk cover withinvestment component. This paradigm shift is important in a countrywhere life insurance sales have historically been driven by tax savingsand investments.

The country’s life insurance landscape stands transformed duemainly to the intense awareness creation activities of private life insurers.While initially the life insurance opportunity was thought to beconcentrated in top 20 cities in India, now increasingly tier 2 cities arepresenting themselves as the new frontiers. Research reports revealthat sales from small and mid-sized towns constitute more than half ofcountrywide sales of TVs and frost-free refrigerators. Increasingly, lifeinsurance companies are now deepening their presence in the smalland mid-sized towns.

INSURING YOUNG, HEALTHY LIVESYour Company’s vision is to become India’s most admired life insurancecompany. It is performing well. The aim is to be a quality player, acompany that sells true life insurance products in the marketplace. Ifyou look at your Company’s business portfolio, 96 per cent of it is madeup of Whole Life and long-term endowments. The average tenure of ourpolicies is over 30 years and the average age of people insured is around28 years. By insuring young and healthy lives, your Company is buildinga quality business, consistent with its vision of becoming India’s mostadmired life insurance company.

A PARTNERSHIP FOR LIFEYour Company is promoted by Max India Limited and New York Life.New York Life is one of the largest and strongest life insurance companiesin the world with more than US$10.8 billion in surplus and reserves. Ithas more than $556 billion worth individual life insurance in force.New York Life, with a heritage of 159 years as a life insurance specialist,has entered India as part of its global expansion and already sees Indiabecoming one of its top three markets globally.

Max India Limited is one of India’s well-regarded multi-businessconglomerates. Its entry into life insurance is part of its strategicparadigm shift towards service-driven businesses. It views the lifeinsurance business as one of its two core business activities.

The partnership between Max India and New York Life is based onshared values, ethics and the true spirit of partnership.

BUSINESS IS RAMPING UP RAPIDLYYour Company has scored significant business successes in 2003-2004.During the year under review, your Company has recorded� Sum assured of Rs. 11,123 crore—up from Rs. 5,410 crore last

year. In cumulative life insurance distributed, your Company isamong the highest in the industry.

� Total number of policies sold during the year reached 1,45,582,taking the total policies sold to date to more than 2,92,112.Your Company’s first year premium income in 2003-04 went up to

over Rs. 137 crore, up from around Rs. 67 crore last year. Renewalpremium income grew even more impressively—it went up from Rs. 29crore to Rs. 78 crore, a 169% increase. That takes the total premiumincome up to Rs. 215 crore, a 124 per cent increase over the previousyear.

Your Company has a pan-India presence with 35 offices in 27Indian cities. 16 new offices were added to our network during the yearwhich is set to grow further in the months to come.

FOCUS ON AGENCY DISTRIBUTIONYour Company believes in building the company block by block. It firstconcentrated on setting up its own proprietary agency channel. Havingdone that your Company is now aggressively pursuing alternativechannels of distribution.

In agency distribution, your Company has installed itself as thebest in class in the Indian industry. It has built an outstanding force ofmore than 5,600 Agent Advisors. The Company’s Agent Advisors haveamong the highest productivity in the industry and also the highestaverage sum assured per policy. The quality of MNYL’s agency force isadequately reflected in its dominance of the Million Dollar Round Table(MDRT), which is an exclusive congregation of the world’s top sellinglife insurance agents. MDRT membership is internationally recognizedas the standard of excellence in the life insurance business. After 26MDRT agents in 2002 and 45 last year, 81 Agent Advisors have qualifiedfor the MDRT this year.

MNYL’s agency focus replicates the New York Life model of sellinglife insurance. Because of the complex nature of insurance, New YorkLife believes that customers benefit from the advice and support of aqualified, highly-trained professional. Your Company has an in houseteam of 62 trainers. The course content is developed with technicalsupport from New York Life and your Company is the only life insurer inthe country to be IRDA certified for training. In fact, training plays akey role in driving productivity of the Company’s agency force.

PURSUING ALTERNATIVE DISTRIBUTION CHANNELSYour Company is aggressively pursuing alternative distribution channels.Your Company has:-� Established seven franchisee relationships. In addition to Vadodara,

Coimbatore, and Cochin, the Company tied up with businesspartners in four other cities this year—Jodhpur, Udaipur,Aurangabad and Nasik.

� Entered one bancassurance alliance and many more are on theanvil.

� Formed other strategic alliances and is pursuing some others.� Met its rural and social commitments for the third year running

and has also established a unique hub and spoke model to sellinsurance in rural Punjab. This year it opened three area offices—in Patiala, Bhatinda and Sangrur—which are supported by 12 officesat the tehsil level. More rural area offices are planned this year.

� Your Company’s group business is surging ahead. 1,32,000 liveswere covered during the year, as against 45,000 lives the previousyear. Your Company now has more than 100 corporate relationships.

DIRECTORS’ REPORT

MNYL 105-135.p65 9/14/2004, 11:33 AM106



SERVICE DELIVERY INITIATIVESYour Company has introduced following customer service initiativesduring this year:� We send SMS alerts that inform customers about policy renewal� We have a Direct Customer Service programme under which we

have set up a Direct Customer Services (DCS) Unit to providepersonalized services to those customers who wish to deal directlywith the company

� We continuously strive to make our customer’s experience hassle-free. We have toll-free lines for both our customers as well as AgentAdvisors. For policy renewals, we offer five options: regular chequepayments; direct debit from bank account; credit card payment(also cash can be paid at our branch offices); drop boxes (we havemore than 900 such boxes across 9 cities); and online paymentusing the Bill Junction payment service.

FAVOURABLE CLAIMS EXPERIENCEImportantly, your Company’s claims experience has been better thanexpectations. A total of 338 claims were paid during the year amountingto Rs. 5.58 crore. The average turnaround time in the settlement ofthese claims was 5 days and all claims were settled within the IRDAstipulation of 30 days. Swiss Re conducted an audit of your Company’sunderwriting and claims process and gave it a satisfactory rating, callingthe claims process as being of a “very high standard”.

NEW TECHNOLOGY PLATFORMYour Company successfully transitioned to a new technology system.Called myLife, it will provide the Company with multiple business benefitsand help improve many of its processes. The project required 14 monthsand over 15,000 mandays to complete. A team of more than 60 peoplefrom Max New York Life was involved in putting the world-class policyadministration system in place. More than 280,000 policies have beensuccessfully migrated to the new system. This large programme ofchange came about from a concerted effort put in by cross-functionalteams and the project has been completed within budget and onschedule.

The new system will fuel the Company’s growth by offeringcomprehensive functionalities and significantly enhancing productivity.It will enable your Company to manage its working capital better andcreate a comprehensive database for extracting consistent and accurateinformation for management decisions. The system will help us manageour sales channels better by making available flexible performance andcompensation mechanisms and will in time help create a near paperlessenvironment and significantly improve turnaround times forpolicyholders. It also sets the stage for the launch of additional products,in particular unit-linked insurance plans.

BONUS PAYMENTThe Company has declared cash bonuses (dividends) for the year 01stApril 2004 to 31st March 2005 on the following participating policies/options:� Whole Life� Option to Participate in Progressive Bonuses� 20 Year Endowment� Endowment to Age 60� Children Endowment to Age 18 & 24

Policyholders who have been issued policies on or before 31st March2002 would be eligible for bonuses at rates which depend upon theduration for which the policies have been in force.

Your Company pays cash bonus while most other life insurance

companies follow a reversionary bonus policy, where the bonus is paidto the customer only on the policy’s maturity or on death. Cash bonus,on the other hand, offers flexibility, giving customers the choice ofusing it the way they wish. The cash mode of bonus payment is popularworldwide, particularly in developed countries. Shortly after its foundingin 1845, New York Life became one of the first life insurers to offercash bonus to policyholders.Our customers have four ways of exercising their bonus option:� Buy Paid Up Additions to increase the death benefit of the base

policy.� Use it to offset against future payable premiums.� Take the amount in cash.� Buy a one-year additional term cover.

ENHANCING THE SUITE OF LIFE INSURANCE PRODUCTSYour Company enhanced its suite of products by launching two newproducts:� Stepping Stones, a product specifically aimed at parents looking

at securing the future of their children. The product design ensuresperiodic paybacks fulfilling needs at various life stages of a childand has a built-in waiver of future premiums in case of the deathof the parent. The unique features of Stepping Stones are that itoffers an additional 30 per cent of sum assured on maturity andgives the customer flexibility to choose the tenure of the policy—from 11 to 26 years—depending on the child’s age.

� Life Gain Plus, a limited pay endowment plan that requires thecustomer to make limited term premium payments, yet enjoy full-term coverage and benefits of a regular endowment plan. The uniquefeatures of Life Gain Plus are that it guarantees double the sumassured in case of death of insured after five policy years and aguaranteed additional bonus of 10 per cent of the sum assuredpayable on maturity.This takes the suite of products offered by your Company to 13. In

addition your Company offer 9 riders and 2 options. The combinationof products and riders affords greater flexibility and enables a customizedsolution to be offered rather than a pre-packaged product. Our options/riders provide a means of customizing a base product to over 400 productcombinations to meet specific customer requirements.

PENETRATING THE RURAL MARKETYour Company’s mission to take the benefits of life insurance to ruralIndia gathered impressive momentum this year. It opened three areaoffices for rural business—in Patiala, Bhatinda and Sangrur. It has putin place a hub and spoke model of distribution to deepen insurancepenetration in rural India. The area offices will oversee representativeoffices at the tehsil level, from where the Company’s highly trainedAgent Advisors will sell life insurance in rural areas. There are 12 officesat the tehsil level.

Your Company sees rural market as an opportunity rather than purelya compliance requirement. Your Company met the IRDA targets for therural and social business all three years it has been operating.

PEOPLE STRENGTHYour Company has successfully built a team of over 1,186 employeesled by a strong management cadre. The extended Max New York Lifefamily includes over 5,500 top-notch Agent Advisors. Your Companybelieves in a quality approach to business and therefore selects andtrains the best people to deliver value to the customer. The annualsatisfaction survey conducted by Gallup showed that overall employeesatisfaction is showing marked and consistent improvement.

MNYL 105-135.p65 9/14/2004, 11:33 AM107



AWARDS AND RECOGNITION� Your Company was rated among the top 25 companies in India to

work with. The first ever Great Places to Work survey in India placesMax New York Life alongside some of the finest Indian and globalcorporations. It is a matter of pride for all of us that a highly crediblesurvey, known and respected internationally, places us among thebest companies in India. The survey is conducted by The GreatPlace to Work® Institute, Inc., a research and managementconsultancy based in the US with international affiliates throughoutthe world. It is conducted in 22 countries. The results of the Indiansurvey have been published in the September 2003 issue ofBusiness World magazine, which collaborated with the Grow Talentmanagement consultancy. Significantly, in other countries wherethe study is carried out annually it has been proved that companiesidentified as the best workplaces have been significantly moresuccessful than the competition. They have consistently reportedhigher levels of employee and customer satisfaction and haveclocked higher profits and enjoyed better valuations than their peers.The employee-centered model of the survey is recognized as a clear,comprehensive representation of the importance of trust in creatinggreat workplace relationships.

� Max New York Life is the first life insurance company in India toreceive the ISO 9001:2000 certification. ISO certification isinternationally recognized as a quality standard that is critical toachieving success in the global marketplace. The certificationprocess was conducted by Bureau Veritas (BVQi), the largestcertification body in India. ISO 9001:2000 certification is awardedto companies who have proven they are organized in such a waythat their business procedures will automatically follow universalinternational business procedures. Every internal process in theCompany was evaluated and brought up to a tightly definedinternational business standard.

RESPONSIBLE CITIZENYour Company donates part of the proceeds on every policy sold to SOSChildren’s Villages of India with whom your Company has been associatedsince inception in April 2001. Children are at the very heart of MaxNew York Life’s strategy. SOS Children’s Villages of India is internationallyrecognized for its work in giving underprivileged children a wholesomelife. The mission of SOS is “to help orphaned and abandoned children,by providing them with a family, a permanent home, education andstrong foundation for an independent life.” It’s a mission that ties inwith Max New York Life’s philosophy of helping people secure the futureof their near and dear ones.

Max New York Life uses the SOS logo and a brief message outliningthe SOS-MNYL relationship is printed on every product brochure ofMax New York Life. On November 28, 2003, Max New York Lifeorganized a function where Mr. Anuroop ‘Tony’ Singh presented a chequefor Rs. 5,00,000 to Mr. Pradeep Singh, SOS Children’s Villages nationaldirector. Children of the SOS Children’s Greenfields Village in Faridabad,the very first SOS Village in India established in 1968, put together alively cultural programme. Several employees donated clothes and toysand some others donated funds at a personal level. Employee visits toSOS Villages were organized regularly to generate a sense of ownershipand involvement among employees. An outcome of this involvementwas a painting competition organized by Max New York Life employeeson Children’s Day in 2003. The theme of the painting competition was:“Making my wishes come true”. The employees instituted two revolvingtrophies for winners of painting competitions and donated Rs. 18,900of their own accord for supporting the education of SOS children.

Max New York Life has also instituted the David Allen trophy forthe Most Socially Responsible Student at SOS Children’s Villages. DavidAllen, an employee of New York Life, has donated Rs. 50,000 towardsthe rolling trophy, which will be awarded to a student, of the HermanGmeiner (SOS) School at Faridabad, who displays and shows caring andsocial responsibility towards his/her schoolmates or on a larger stage.

SHARE CAPITALDuring the year the paid-up share capital of the Company has beenincreased to Rs. 346 Crore. Your Company is now one of the highestcapitalized private life insurance companies in India.

DIRECTORSIn accordance with the provisions of the Companies Act, 1956 and theArticles of Association of the Company Mr. Analjit Singh and Dr. S. S.Baijal retire by rotation, and being eligible have offered themselves forre-appointment.

The Board appointed Mr. Anuroop Singh as additional director andas Chief Executive Officer & Managing Director for a further period oftwo years effective February 23, 2004. Pursuant to Section 260 of theCompanies Act, 1956 the office of Mr. Singh, as Additional Directorexpires at the ensuing AGM.

The Company has received a notice from a member proposing thecandidature of Mr. Singh for appointment as Director.

AUDIT COMMITTEEThe Audit Committee of the Company comprises of four non-executiveDirectors. Three meetings of the Committee were held during the year.Mr. David J. Skinner (Chairman), Mr. B. Anantharaman, Ms. Cynthia Y.Valko and Mr. N. C. Singhal are the present Committee Members.

AUDITORSM/s. Lovelock & Lewes, Chartered Accountants were appointed to fillthe casual vacancy caused by resignation of M/s. Price Waterhouse &Co. whose application for empanelment with IRDA is pending approval.

Joint Auditors M/s. S R Batliboi & Co. and M/s. Lovelock & Leweswill retire at the conclusion of the forthcoming Annual General Meeting.M/s. Lovelock & Lewes have offered themselves for reappointment.M/s. S R Batliboi & Co. are not seeking reappointment on their retirementat the Annual General Meeting. It is proposed that M/s. Bharat S Raut &Co., Chartered Accountants be appointed as joint auditors.

M/s. Bharat S Raut & Co. and M/s Lovelock & Lewes are dulyempanelled with IRDA. The Company has received certificates fromthe auditors that their re-appointment will be in accordance with thelimits specified under Section 224(1B) of the Companies Act, 1956.

PARTICULARS OF DEPOSITSThe Company has not accepted any deposits under Section 58A of theCompanies Act, 1956.

PARTICULARS OF EMPLOYEESThe Statement giving particulars, under Section 217(2A) of theCompanies Act, 1956 read with the Companies (Particulars ofEmployees) Rules, 1975, for the year ended March 31, 2004, is annexedto the Report and marked as ANNEXURE I.

DIRECTORS’ RESPONSIBILITY STATEMENTPursuant to Section 217(2AA) of the Companies Act, 1956, theResponsibility Statement of the Directors, is annexed to the Report andmarked as ANNEXURE II.

MNYL 105-135.p65 9/14/2004, 11:33 AM108



ADDITIONAL INFORMATIONInformation in accordance with the provisions of Section 217(1)(e) ofthe Companies Act, 1956 read with the Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988, are asfollows:

A CONSERVATION OF ENERGY NA

B TECHNOLOGY ABSORPTION NA

C. FOREIGN EXCHANGE EARNINGS AND OUTGO:(RS. IN CRORE)

Year ended 31. 03.2004

Earnings (including equity infusion) 23.75Outgo 12.95

Activities relating to Exports, initiatives taken to increase exports, developNew Export markets, Exports Plan etc. NA

ACKNOWLEDGMENTSThe Directors wish to place on record their deep appreciation for thehard work, dedicated efforts, teamwork and professionalism shown bythe employees and the Agents Advisors, which has enabled the Companyto successfully establish itself amongst the leading private life insurancecompanies in India. Your Directors also express gratitude to the InsuranceRegulatory and Development Authority of India, the Reserve Bank ofIndia, Central and State Governments and the joint venture partners,i.e., Max India Limited and New York Life International, LLC. for theircontinued co-operation, support and assistance.

For and on behalf of the Board of DirectorsNew Delhi ANALJIT SINGHJUNE 01, 2004 Chairman

MNYL 105-135.p65 9/14/2004, 11:33 AM109



ANNEXURE IPARTICULARS OF EMPLOYEESINFORMATION AS PER SECTION 217(2A) READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975 AND FORMING PART OF THE DIRECTORS’ REPORT

Sl. Name Age Designation Remuneration Qualifications Date of Years of Last Employment DesignationNo. (Yrs.) (Rs.) Commencement of Experience Held

Employment

A Employed throughout the year and were in receipt of remuneration not less than Rs.2,00,000/- per Month1 Amit Kumar 42 Sr. Vice President - 9,168,956 B-Tech, MSC 3-Jun-02 19 Associates India Regional Chief

Head of Technology Financial Services Information officer2 Anil Mehta 43 Director - Group Business 6,328,281 MMS 1-Oct-00 18 ANZ Grindlays Bank Head - Risk Mgmt,

Middle East & South Asia3 Arnab Mallik 39 Vice President - Bancassurance 2,669,910 BSC, PGDM 17-Apr-02 12 American Express Head - Lending4 Debashis Sarkar 44 Director - Additional 4,949,995 B-Tech,PGDM 11-Jan-02 19 Reckitt Benckiser Mktg. Controller

Distribution & Marketing5 Deepa Pandit 42 Vice President Underwriting 2,533,093 MSc 11-Mar-02 20 OM Kotak Mahindra Manager Actuarial &

Chief Underwriting6 Kapil Mehta 36 Vice President Business Develop- 4,064,893 B Tech, MBA 10-Feb-03 11 McKinsey & Company Engagement Manager

ment & Strategic Planning7 Kenneth Sannoo 42 Zone Vice President-Agency 2,836,172 BA 29-Mar-01 20 Singer I Ltd General Manager - Sales

(North)8 Rajan Gupta 38 Vice President - 3,974,002 B. Tech, MBA 23-Oct-00 14 ANZ Grindlays Bank Head - IT

Information Technology9 Rajendra Sharma 65 Chief Actuary 11,617,860 MS, MBA 17-May-02 36 Metropoliton Life Appointed Actuary

Insurance10 Rajesh Sud 35 Director - Agency Distribution 7,637,321 MBA 16-Oct-00 11.5 ANZ Grindlays Bank Head, Asset Finance11 Rajit Mehta 42 Director - Human Resources 6,576,907 MBA 16-Oct-00 19.5 Bank of America Director - Personnel12 Sanjeev Mago 37 Sr. Vice President - Quality 4,642,275 CA 1-Jul-02 14.25 Bharti Televentures VP - Quality13 Sunil Kakar 47 Director / Chief Financial 5,933,900 B.Tech (Chem.), 1-Mar-01 21 Bank of America CFO

Officer MBA (Finance)14 Sunil Sharma 49 Executive Director & 12,819,897 Masters in Personnel 1-Oct-00 26 ANZ Grindlays Bank Head of Sales, Service and

Chief Operating Officer Mgmt, MBA (Sales & Mktg) Change Mgmt - Middle East &South Asia

15 V. Vishwanand 34 Zone Vice President - Agency 2,592,162 MMS 26-Nov-00 13 SC Grindlays Bank Branch Manager(South)

16 Vijay Gupta 41 Vice President National 2,698,679 MSC, PGDGM 3-Jun-02 18 Team Results PresidentTraining Manager (Agency)

B. Employed for part of the year and were in receipt of remuneration of not less than Rs.2,00,000/- per Month1 Ajay Seth 40 Director - Legal & Compliance 4,919,264 BA,LLB,AICWA,ACS 14-Apr-03 16 Madura Coats Ltd VP Legal & Co Secretary2 Atul Joshi 41 Director - Supplementary 890,421 MBA,MA 1-Dec-00 17 ICI(India) Ltd. General Manager

Distribution3 Sanjay Sharma 43 Sr. Vice President Customer 2,522,794 B-Tech,PGDBM 15-Oct-01 17 Connectvantage CEO

Operations & Service Delivery4 Sushanto Mukherjee 36 Zone Vice President - Agency 486,117 MBA 1-Mar-04 14 Tata AIG Life Insurance Zone Head South

(South) Co. Ltd East-AgencyNote 1 Nature of employment is on contractual basis.

2. Remuneration includes Basic Salary, Allowances & Perquisites and Company contribution to Provident Fund.3. All Perquisites have been computed in accordance with Income Tax Act, 1961.4. None of the Employees holds by himself or alongwith his spouse and dependent children, 2% or more Equity Shares of the Company.


MNYL 105-135.p65 9/14/2004, 11:33 AM110



ANNEXURE II

DIRECTORS’ RESPONSIBILITY STATEMENTPursuant to Section 217(2AA) of the Companies Act, 1956, yourDirectors hereby state that:1 In the preparation of the Annual Accounts for the year ended March

31, 2004, the applicable accounting standards have been followedalong with proper explanation, relating to any material departures.

2. Your Directors have selected such accounting policies and appliedthem consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of thestate of affairs as on March 31, 2004 and of the Profit and LossAccount for the aforesaid period.

3. Proper and sufficient care has been taken by your Directors for themaintenance of adequate accounting records in accordance withthe provisions of the Companies Act, 1956 for safeguarding theassets of the Company and for preventing and detecting fraud andother irregularities.

4. The Annual Accounts of the Company for the period under reviewhave been prepared on a going concern basis.


MNYL 105-135.p65 9/14/2004, 11:33 AM111



AUDITORS’ REPORT

TO THE MEMBERS OF MAX NEW YORK LIFE INSURANCECOMPANY LIMITED1. We have audited the accompanying balance sheet of Max New

York Life Insurance Company Limited (‘the Company’) as at March31, 2004 and the statements of revenue, profit and loss and receiptsand payments account for the year then ended annexed thereto,prepared in conformity with accounting principles generallyaccepted in India. These financial statements are the responsibilityof the Company’s management. Our responsibility is to express anopinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standardsgenerally accepted in India. Those standards require that we planand perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit providesa reasonable basis for our opinion.

3. In accordance with the provisions of Section 11 of the InsuranceAct, 1938 (‘the Insurance Act’) read with the Insurance Regulatoryand Development Authority (Preparation of Financial Statementsand Auditor’s Report of Insurance Companies) Regulations, 2002(‘the Regulations’), and the provisions of sub-sections (1), (2) and(5) of Section 211 and sub-section (5) of Section 227 of theCompanies Act, 1956 (‘the Companies Act’), the balance sheet,the statements of revenue and profit and loss are not required tobe, and are not, drawn up in accordance with Schedule VI to theCompanies Act. The balance sheet, the statements of revenue andprofit and loss are, therefore, drawn up in conformity with Regulation3(1) of the Regulations.

4. We report that:(a) We have obtained all the information and explanations which

to the best of our knowledge and belief were necessary for thepurposes of our audit and have found them to be satisfactory.

(b) In our opinion, proper books of account as required by lawhave been maintained by the Company so far as appears fromour examination of those books.

(c) As the Company’s financial accounting is centralized, no returnsfor the purposes of our audit are prepared at the branches ofthe Company.

(d) The balance sheet, revenue account, profit and loss accountand receipts and payments account referred to in this reportare in agreement with the books of account.

(e) The actuarial valuation of liabilities for policies in force is theresponsibility of the Company’s appointed actuary (‘theappointed actuary’). The actuarial valuation of liabilities forpolicies in force as at March 31,2004 has been duly certifiedby the appointed actuary. The appointed actuary has certifiedthat the assumptions for such valuation are in accordance withthe guidelines and norms issued by the Insurance Regulatoryand Development Authority (‘IRDA’) and the Actuarial Societyof India in concurrence with IRDA. We have relied on theappointed actuary’s certificate in this regard.

(f) On the basis of the written representations received from thedirectors existing as on March 31, 2004 and taken on record

by the board of directors, none of the directors is disqualifiedas on March 31, 2004 from being appointed as a director interms of Section 274(1)(g) of the Companies Act.

5. In our opinion and to the best of our information and according tothe information and explanations given to us:(a) The accounting policies selected by the Company are

appropriate and in compliance with the applicable accountingstandards referred to in Section 211(3C) of the CompaniesAct and the accounting principles prescribed in the Regulationsand orders or directions issued by IRDA in this behalf. Thebalance sheet, revenue account, profit and loss account andreceipts and payments account referred to in this report are incompliance with the applicable accounting standards referredto in Section 211(3C) of the Companies Act.

(b) Investments of the Company have been valued in accordancewith the provisions of the Insurance Act and the Regulations.

(c) The said financial statements are prepared in accordance withthe requirements of the Insurance Act, the Insurance Regulatoryand Development Act, 1999, the Regulations and theCompanies Act, to the extent applicable and in the manner sorequired, and give a true and fair view in conformity with theaccounting principles generally accepted in India, as applicableto insurance companies:i in the case of the balance sheet, of the state of affairs of

the Company as at March 31, 2004;ii. in the case of the revenue account, of the results of

activities of the Company for the year endedMarch 31, 2004;

iii. in the case of the profit and loss account, of the loss ofthe Company for the year ended March 31, 2004; and

iv. in the case of the receipts and payments account, of thereceipts and payments of the Company for the year endedMarch 31, 2004.

6. Further, according to the information and explanations given to usand to the best of our knowledge and belief, we certify that:(a) We have reviewed the management report attached to the

financial statements for the year ended March 31, 2004 andthere is no apparent mistake or material inconsistency withthe financial statements; and

(b) The Company has complied with the terms and conditions ofregistration as specified in Regulation 10 of the InsuranceRegulatory and Development Authority (Registration of IndianInsurance Companies) Regulations, 2000.

KAUSHIK DUTTA For S. R. Batliboi & Co.Partner Chartered Accountants(Membership No.88540)

For and on behalf of per V V RANGANATHANLovelock & Lewes PartnerChartered Accountants (Membership No. 019463)

New Delhi New DelhiJUNE 3, 2004 JUNE 3, 2004

MNYL 105-135.p65 9/14/2004, 11:33 AM112



In accordance with the information and explanations given to us and tothe best of our knowledge and belief and based on our examination ofthe books and records maintained by Max New York Life InsuranceCompany Limited (‘the Company’), for the year ended March 31, 2004,we certify that:(a) We have verified the cheques on hand to the extent considered

necessary and securities relating to the Company’s investmentsand policy loans as at March 31, 2004, by actual inspection or onthe basis of certificates/ confirmations received from the depositoryparticipant appointed by the Company, as the case may be. As atMarch 31, 2004, the Company had no cash balance, reversionsand life interests;

(b) We are informed by the Company that there are no trusts undertakenby the Company as a trustee;

(c) No part of the assets of the policyholders’ funds has been directlyor indirectly applied in contravention of the provisions of theInsurance Act relating to the application and investments of thepolicyholders’ funds; and

(d) All expenses of management in respect of life insurance businesstransacted by the Company in India have been fully debited to thestatement of revenue as expenses.

This certificate has been issued to comply with the requirements ofSchedule C to the Insurance Regulatory and Development Authority(Preparation of Financial Statements and Auditor’s Report of InsuranceCompanies) Regulations, 2002 (‘the Regulations’), read with Regulation3 of the Regulations and Section 40B of the Insurance Act 1938 andmay not be suitable for any other purpose.

KAUSHIK DUTTA For S. R. Batliboi & Co.Partner Chartered Accountants(Membership No.88540)

For and on behalf of per V V RANGANATHANLovelock & Lewes PartnerChartered Accountants (Membership No. 019463)


AUDITOR’S CERTIFICATE

MNYL 105-135.p65 9/14/2004, 11:33 AM113



BALANCE SHEET A S A T M A R C H 3 1 , 2 0 0 4(All Amounts in Thousands of Indian Rupees)

PARTICULARS SCHEDULE As at As atMarch 31, 2004 March 31, 2003

SOURCES OF FUNDSSHAREHOLDERS’ FUNDSShare Capital 5 3,460,811 2,547,410Reserves and Surplus 6 — 1,481Credit/(Debit) fair value change account 376 8Sub-Total 3,461,187 2,548,899

BORROWINGS 7 — —

POLICYHOLDERS’ FUNDS

Credit/(Debit) Fair Value Change Account — —

Policy Liabilities:(Refer to Note II (o) on Schedule 16)– Participating Individual Life Policies 1,479,878 640,650– Participating Deferred Annuities Policies 21,132 7,301– Non-Participating Individual Life Policies 86,665 54,104– Non-Participating Group Policies 13,522 10,222

Insurance Reserves– Participating Individual Life Policies — —– Participating Deferred Annuities Policies — —– Non-Participating Individual Life Policies — —– Non-Participating Group Policies — —

Provision for Linked Liabilities — —Sub-Total 1,601,197 712,277Funds for Future Appropriations — —Total 5,062,384 3,261,176

APPLICATION OF FUNDSINVESTMENTSShareholders’ Investments 8 851,970 864,646Policyholders’ Investments 8A 1,601,198 655,816

ASSETS HELD TO COVER LINKED LIABILITIES 8B — —

LOANS 9 39 —

FIXED ASSETS 10 554,754 339,092

CURRENT ASSETSCash and Bank Balances 11 169,423 50,271Advances and Other Assets 12 271,871 176,103Sub-Total (A) 441,294 226,374

CURRENT LIABILITIES 13 709,627 395,718PROVISIONS 14 3,390 315Sub-Total (B) 713,017 396,033

NET CURRENT ASSETS (C) = (A) – (B) (271,723) (169,659)

MISCELLANEOUS EXPENDITURE (to the extent not written off or adjusted) 15 — —

FORM A – BS

MNYL 105-135.p65 9/14/2004, 11:33 AM114



(All Amounts in Thousands of Indian Rupees)

PARTICULARS SCHEDULE As at As atMarch 31, 2004 March 31, 2003

DEBIT BALANCE IN PROFIT AND LOSS ACCOUNT (SHAREHOLDERS’ ACCOUNT) 2,326,146 —

DEFICIT IN THE REVENUE ACCOUNT (POLICYHOLDERS’ A/c)- Participating Individual Life Policies (Technical Account) — 1,376,362- Participating Deferred Annuities Policies (Technical Account) — 14,590- Non-participating Individual Life Policies (Technical Account) — 151,285- Non-participating Group Policies (Technical Account) — 29,044Total 5,062,384 3,261,176

CONTINGENT LIABILITIESPartly paid-up investment — —Underwriting commitments outstanding (in respect of shares and securities) — —Claims, other than against policies, not acknowledged as debts by the company — —Guarantees given by or on behalf of the Company — —Statutory demands/ liabilities in dispute, not provided for — —Reinsurance obligations to the extent not provided for in accounts — —Others — —




ANALJIT SINGH ChairmanDAVID J. SKINNER DirectorANUROOP SINGH Chief Executive Officer & Managing DirectorSUNIL SHARMA Executive Director & Chief Operating Officer

SUNIL KAKAR Chief Financial OfficerB. ANANTHARAMAN DirectorAJAY SETH Director-Regulatory Affairs & ComplianceRAJENDRA P. SHARMA Chief Actuary (Appointed Actuary)RAVI BHADANI Company Secretary




KAUSHIK DUTTA Per V V RANGANATHANPartner Partner

For and on behalf of For and on behalf ofLoverlock & Lewer S.R. Batliboi & Co.Chartered Accountants Chartered Accountants


FORM A – BS

MNYL 105-135.p65 9/14/2004, 11:33 AM115




PARTICULARS SCHEDULE Year Ended Year EndedMarch 31, March 31,

2004 2003

TRANSFER FROM THE POLICYHOLDERS’ ACCOUNT- Participating Individual Life Policies (Technical Account) — —- Participating Deferred Annuities Policies (Technical Account) — —- Non-participating Individual Life Policies (Technical Account) — —- Non-participating Group Policies (Technical Account) — —

— —INCOME FROM INVESTMENTS(a) Interest Income from Investments, net of premium amortised 76,049 109,377

[Gross of Tax deducted at Source Rs. Nil (2003: Rs Nil](b) Profit on sale/redemption of investments 5,847 1,857(c) (Loss on sale/ redemption of investments) — —

OTHER INCOME- Miscellaneous Income 56,462 71(Refer to Note II (o) on Schedule 16)

Total (A) 138,358 111,305

EXPENSES OTHER THAN THOSE DIRECTLY RELATED TO THE INSURANCE BUSINESSAmortisation of preliminary expenses 2,590 1,074Filing fees, rates & taxes 8,902 1,039Salaries and allowances 4,293 4,397Others 140 164Bonus to individual life participating policyholders — 56,462Bad debts written off — —Provisions (other than taxation)(a) For diminution in the value of investments (Net) — —(b) Provision for doubtful debts — —(c) Contribution to the Policyholders Fund(Refer to Note II (o) on Schedule 16)

- Participating Individual Life Policies (Technical Account) 2,049,614 —- Participating Deferred Annuities Policies (Technical Account) 10,634 —- Non-participating Individual Life Policies (Technical Account) 321,348 —- Non-participating Group Policies (Technical Account) 68,464 —

(d) Others — —

Total (B) 2,465,985 63,136

Profit/(Loss) before tax (C)=(A)-(B) (2,327,627) 48,169Provision for Taxation — —Profit/ (loss) after tax (2,327,627) 48,169

APPROPRIATIONS(a) Balance at the beginning of the year 1,481 (46,688)(b) Interim dividends paid during the year — —(c) Proposed final dividend — —(d) Dividend distribution on tax — —(e) Transfer to reserves/ other accounts — —

Profit/(Loss) carried forward to the Balance Sheet (2,326,146) 1,481SIGNIFICANT ACCOUNTING POLICIES & NOTES TO THE ACCOUNTS 16

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2004SHAREHOLDERS’ ACCOUNT (Non-technical Account)





The Schedules referred to above form anintegral part of the Profit & Loss Account

This is the Profit & Loss Account referred toin our report of even date




FORM A – PL

MNYL 105-135.p65 9/14/2004, 11:33 AM116



(All Amounts in Thousands of Indian Rupees)Year Ended March 31, 2004 Year Ended March 31, 2003

Participating Policies Non-Participating Participating Policies Non-ParticipatingPolicies Total Policies Total

Particulars Schedule Individual Deferred Individual Group Individual Deferred Individual GroupLife Annuity Life Life Annuity Life

Premiums earned - netPremiums 1 2,013,398 42,810 43,717 52,546 2,152,471 857,203 8,483 80,035 20,213 965,934Less : Re-insurance ceded 21,846 — 3,150 6,850 31,846 9,957 — 1,059 4,346 15,362Add : Reinsurance Accepted — — — — — — — — — —

1,991,552 42,810 40,567 45,696 2,120,625 847,246 8,483 78,976 15,867 950,572Income from Investments(a) Interest Income from Investments,

net of premium amortised 79,271 866 6,128 1,492 87,757 38,262 195 1,812 311 40,580(b) Profit on sale/redemption of investments — — — — — — — — — —(c) (Loss on sale/redemption of investments) — — — — — — — — — —(d) Transfer/ Gain on revaluation/change in fair value — — — — — — — — — —

Other IncomeContribution from the Shareholders’ a/c 2,049,614 10,634 321,348 68,464 2,450,060 — — — — —(Refer to Note II (o) on Schedule 16)Miscellaneous Income 1,289 2 28 1 1,320 1,117 5 58 12 1,192Total (A) 4,121,726 54,312 368,071 115,653 4,659,762 886,625 8,683 80,846 16,190 992,344

Commission 2 393,702 2,190 6,350 511 402,753 176,730 631 7,512 65 184,938Operating Expenses related toInsurance Business 3 1,375,339 23,701 169,240 59,067 1,627,347 989,010 15,341 80,982 34,069 1,119,402Provision for doubtful debts — — — — — — — — — —Bad debts written off — — — — — — — — — —Provision for Tax — — — — — — — — — —Provision (other than taxation)(a) For diminution in the value of investments (Net) — — — — — — — — — —(b) Others — — — — — — — — — —Total (B) 1,769,041 25,891 175,590 59,578 2,030,100 1,165,740 15,972 88,494 34,134 1,304,340

Benefits Paid (Net) 4 27,598 — 8,635 23,731 59,964 22,075 — 1,918 878 24,871Interim Bonuses Paid — — — — — — — — — —Change in valuation of liability against lifepolicies in force, Gross 827,101 13,831 34,249 3,300 878,481 385,163 7,301 51,230 10,925 454,619Less: Amount ceded in Re-insurance 12,205 — 1,688 — 13,893 1,611 — 171 703 2,485Add: Amount accepted in Reinsurance — — — — — — — — — —Total (C) 842,494 13,831 41,196 27,031 924,552 405,627 7,301 52,977 11,100 477,005SURPLUS/ (DEFICIT) (D)= (A) - (B) - (C) 1,510,191 14,590 151,285 29,044 1,705,110 (684,742) (14,590) (60,625) (29,044) (789,001)Deficit at the beginning of the year (1,376,362) (14,590) (151,285) (29,044) (1,571,281) (691,620) — (90,660) — (782,280)

SURPLUS AVAILABLE FOR APPROPRIATION 133,829 — — — 133,829 (1,376,362) (14,590) (151,285) (29,044) (1,571,281)APPROPRIATIONSAllocation of Bonus to Individual Life Participating Policyholders(Refer to Note II (o) on Schedule 16)- 2002-03 56,462 — — — 56,462- 2003-04 77,367 — — — 77,367Transfer to Shareholders’ Account — — — — — — — — — —Transfer to Other Reserves — — — — — — — — — —Balance being Funds for Future Appropriations — — — — — — — — — —Insurance reserve carried to the Balance Sheet — — — — — (1,376,362) (14,590) (151,285) (29,044) (1,571,281)

Details of Surplus(a) Interim Bonus Paid — — — — — — — — — —(b) Allocation of Bonus to Policyholders 133,829 — — — 133,829 — — — — —(c) Surplus Shown in the Revenue Account — — — — — — — — — —(d) Total Surplus : [(a)+(b)+(c)] 133,829 — — — 133,829 — — — — —

We hereby certify that all expenses of management in respect of life insurance business transacted by the Insurer have been fully debited in the Revenue Accounts as expenses.


REVENUE ACCOUNT F O R T H E Y E A R E N D E D M A R C H 3 1 , 2 0 0 4

FORM A – RA

POLICYHOLDERS’ ACCOUNT (Technical Account)





The Schedules referred to above form anintegral part of the Revenue Account

This is the Revenue Account referred toin our report of even date




MNYL 105-135.p65 9/14/2004, 11:33 AM117



RECEIPTS AND PAYMENTS ACCOUNT FOR THE YEAR APRIL 01, 2003 TO MARCH 31, 2004



CASH FLOWS FROM OPERATING ACTIVITIESReceipts from customers 2,080,783 927,575Amount received in Advance from customers 124,276 34,422Commission paid to agents (417,004) (177,522)Claims Paid to policyholders (56,236) (20,274)Claims Recovered from Reinsurers 8,247 6,400Re-insurance Premium Paid (25,666) (12,969)Payments/advances to suppliers/employees (1,395,180) (971,818)Loans recovered from employees — 10,338Deposit given to RBI (21,000) (12,000)Cash deployed in operations 298,220 (215,848)Wealth tax paid (294) (230)Net cash deployed in operating activities 297,926 (216,078)

CASH FLOWS FROM INVESTING ACTIVITIESPurchase of fixed assets (325,489) (131,113)Proceed from sale of fixed assets 12,687 10,960Purchase of Investments (2,634,866) (909,850)Proceeds from sale/maturity of investments 1,701,437 999,885Interest received 156,646 154,810Refund of Tax deducted at Source — 1,516Net cash from investing activities (1,089,585) 126,208

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issuance of share capital 910,811 50,000Interest paid — (13)Net cash generated from financing activities 910,811 49,987

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 119,152 (39,883)CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 50,271 90,154CASH AND CASH EQUIVALENTS AT END OF YEAR 169,423 50,271

Notes1 The above Receipts and Payments Account has been prepared under the “Direct Method” as set out in the Accounting Standard-3 on Cash

Flow Statement issued by the Institute of Chartered Accountants of India, as prescribed by Insurance Regulatory & Development Authority(Preparation of Financial Statements and Auditors Report of Insurance Companies) Regulations, 2002.

2. Figures in brackets represent cash outflow.3. Cash and cash equivalents at the end of the year consist of cash, cheques in hand, fixed deposits and balance with banks.

As at March As at March31, 2004 31, 2003

Cash in hand — —Stamps in hand 1,169 3,062Cheques in hand 69,597 21,526Balance with banks

Current Account 7,657 25,683Fixed Deposit 91,000 —

Total 169,423 50,271





This is the Receipts & Payments Account referred toin our report of even date




MNYL 105-135.p65 9/14/2004, 11:33 AM118




Year Ended March 31, 2004 Year Ended March 31, 2003Participating Policies Non-Participating Participating Policies Non-Participating

Policies Total Policies TotalParticulars Individual Deferred Individual Group Individual Deferred Individual Group

Life Annuity Life Life Annuity Life

SCHEDULE–1PREMIUM(Refer to Note I (a) on Schedule 16)

First year premiums 1,137,620 34,881 26,761 42,509 1,241,771 528,113 8,383 18,512 20,213 575,221

Renewal premiums 748,012 5,722 15,872 10,037 779,643 288,512 — 4,285 — 292,797

Single premiums 127,766 2,207 1,084 — 131,057 40,578 100 57,238 — 97,916

Total premium 2,013,398 42,810 43,717 52,546 2,152,471 857,203 8,483 80,035 20,213 965,934

Total premium in India 2,013,398 42,810 43,717 52,546 2,152,471 857,203 8,483 80,035 20,213 965,934

Total Premium outside India — — — — — — — — — —

SCHEDULE–2COMMISSION(Refer to Note I (b) on Schedule 16)

Commission Paid

Direct first year premiums 348,168 2,066 5,529 511 356,274 157,738 629 6,300 65 164,732

Direct renewal premiums 44,085 101 799 — 44,985 18,221 — 260 — 18,481

Direct single premiums 1,449 23 22 — 1,494 771 2 952 — 1,725

Add : Commission on Re-insurance Accepted — — — — — — — — — —

Less : Commission on Re-insurance Ceded — — — — — — — — — —

Net Commission 393,702 2,190 6,350 511 402,753 176,730 631 7,512 65 184,938

SCHEDULE–3OPERATING EXPENSES RELATED TO INSURANCE BUSINESS(Refer to Note I (i) on Schedule 16)

Employees remuneration and welfare benefits 543,433 8,443 62,867 28,963 643,706 379,126 5,764 28,139 11,439 424,468

Travel, conveyance and vehicle running expenses 61,144 1,063 8,032 3,968 74,207 53,950 877 4,195 1,782 60,804

Training expenses 77,459 1,347 10,175 1,930 90,911 85,288 1,392 6,626 2,820 96,126

Rent, rates & taxes 95,467 1,660 12,540 3,053 112,720 80,938 1,320 6,289 2,676 91,223

Information technology maintenance expenses 21,665 377 2,846 731 25,619 23,382 382 1,817 773 26,354

Repairs 30,976 539 4,069 702 36,286 23,884 389 1,855 788 26,916

Printing and stationery 33,273 472 5,877 347 39,969 22,175 343 1,766 256 24,540

Communication expenses 59,231 1,030 7,780 1,743 69,784 34,349 560 2,669 1,136 38,714

Legal, professional and consultancy charges 101,929 1,530 16,815 3,011 123,285 61,150 996 4,751 2,022 68,919

Medical fees 17,331 301 2,276 372 20,280 9,810 160 762 324 11,056

Auditors’ fees, expenses etc :

a) as auditor 882 15 116 19 1,032 665 11 52 22 750

b) as advisor or in any other capacity, in respect of :

i) Taxation matters — — — — — 323 5 25 11 364

ii) Insurance matters — — — — — — — — — —

iii) Management services; and 53 1 7 1 62 162 3 13 5 183

c) in any other capacity

(including out of pocket expenses) 269 5 35 6 315 89 1 7 3 100

Advertisement and publicity

(including promotional expenses) 150,736 3,916 14,893 4,482 174,027 93,779 1,344 12,126 3,213 110,462

Interest and bank charges 2,523 44 331 55 2,953 976 16 76 32 1,100

Recruitment and relocation 18,797 327 2,469 1,142 22,735 17,039 279 1,324 566 19,208

Electricity and water 19,023 331 2,499 502 22,355 15,020 245 1,167 496 16,928

Insurance 4,735 82 622 226 5,665 3,207 51 250 106 3,614

Policy issuance costs 48,656 771 2,346 5,582 57,355 15,739 95 1,790 3,352 20,976

Donations 641 11 84 14 750 465 8 36 15 524

Other miscellaneous expenses 3,901 68 513 17 4,499 4,860 79 380 161 5,480

Depreciation 83,215 1,368 12,048 2,201 98,832 62,634 1,021 4,867 2,071 70,593

Total 1,375,339 23,701 169,240 59,067 1,627,347 989,010 15,341 80,982 34,069 1,119,402

SCHEDULE A N N E X E D T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T A T E M E N T S

MNYL 105-135.p65 9/14/2004, 11:33 AM119




(All Amounts in Thousands of Indian Rupees)Year Ended March 31, 2004 Year Ended March 31, 2003

Participating Policies Non-Participating Participating Policies Non-ParticipatingPolicies Total Policies Total

Particulars Individual Deferred Individual Group Individual Deferred Individual GroupLife Annuity Life Life Annuity Life

SCHEDULE–4BENEFITS PAID [NET] IN INDIA(Refer to Note I (c) on Schedule 16)

Insurance Claims*a) By death 35,547 — 8,875 29,364 73,786 22,753 — 8,568 1,213 32,534b) By Maturity — — — — — — — — — —c) Annuities/ Pension payment, — — — — — — — — — —d) Other benefits 185 — — — 185 33 — — — 33Total paid 35,732 — 8,875 29,364 73,971 22,786 — 8,568 1,213 32,567Less : Amount ceded in re-insurance :a) By death 8,134 — 240 5,633 14,007 711 — 6,650 335 7,696b) By Maturity — — — — — — — — — —c) Annuities/ Pension payment, — — — — — — — — — —d) Other benefits — — — — — — — — — —Total ceded 8,134 — 240 5,633 14,007 711 — 6,650 335 7,696Add : Amount accepted in re-insurance :a) By death — — — — — — — — — —b) By Maturity — — — — — — — — — —c) Annuities/ Pension payment, — — — — — — — — — —d) Other benefits — — — — — — — — — —Total accepted — — — — — — — — — —

Net Paid 27,598 — 8,635 23,731 59,964 22,075 — 1,918 878 24,871

* Including claim investigation expenses amounting to Rs. 239 (2003 Rs. 419)

As at As atMarch 31, 2004 March 31, 2003

SCHEDULE–5SHARE CAPITALAuthorised400,000,000 Equity Shares of Rs. 10 each (2003: 300,000,000 Equity Shares) 4,000,000 3,000,000Issued and Subscribed346,081,100 Equity Shares of Rs. 10 each (2003: 300,000,000 Equity Shares) 3,460,811 3,000,000Paid up346,081,100 Equity Shares of Rs. 10 each : Fully paid up (2003: 250,000,000Equity Shares of Rs 10 each : Fully paid up and 50,000,000 Equity Shares ofRs. 10 each : Re 1 paid up) 3,460,811 2,550,000Less: Calls unpaid — —Add : Shares forfeited (Amount originally paid up) — —Less: Par value of equity shares bought back — —Less: Preliminary Expenses (to the extent not written off or adjusted) — 2,590Total 3,460,811 2,547,410

Of the above, 251,600,014 equity shares of Rs. 10 each fully paid up (2003: 185,000,000 equity shares ofRs. 10 each fully paid up and 37,000,000 equity shares of Rs. 10 each, Re 1 paid up) are held by Max India Limited and its nominees.


Shareholder Shares of Rs. 10 Shares of Rs. 10 Total Shares of Rs. 10 Shares of Rs. 10 Totaleach fully paid up each Re 1 paid up each fully paid up each Re 1 paid up

SCHEDULE–5APATTERN OF SHAREHOLDING (as certified by Management)

PromotersIndian 251,600,014 — 251,600,014 185,000,000 37,000,000 222,000,000Foreign 89,981,086 — 89,981,086 65,000,000 13,000,000 78,000,000

Other 4,500,000 — 4,500,000 — — —(Refer to Note II (j) on Schedule 16)Total 346,081,100 — 346,081,100 250,000,000 50,000,000 300,000,000Promoters

Indian 72.70% 74.00%Foreign 26.00% 26.00%

Others 1.30% —Total 100% 100%

MNYL 105-135.p65 9/14/2004, 11:33 AM120




(All Amounts in Thousands of Indian Rupees) As at As at

March 31, 2004 March 31, 2003

SCHEDULE–6RESERVE AND SURPLUSCapital Reserve — —Capital Redemption Reserve — —Share Premium — —Revaluation Reserve — —General Reserve — —Less: Debit balance in Profit and Loss Account, if any — —Less: Amount utilised for Buy-back — —Catastrophe Reserve — —Other Reserves — —Balance of profit/ (loss) in Profit and Loss Account — 1,481Total — 1,481

SCHEDULE–7BORROWINGSDebentures/Bonds — —Banks — —Financial Institutions — —Others — —Total — —

SCHEDULE–8INVESTMENT SHAREHOLDERS (In India) (Refer to Note I (d) and II (c), (f), (g) and (h) on Schedule 16)

LONG TERM INVESTMENTSGovernment securities and Government guaranteed bonds including Treasury Bills 331,588 386,832Other Approved Securities — —Other investmentsa) Shares

aa) Equity — —bb) Preference — —

b) Mutual Funds — —c) Derivative Instruments — —d) Debentures/ Bonds 192,846 158,243e) Other Securities — —f) Subsidiaries — —Investment Properties-Real Estate — —Investments in Infrastructure and Social Sector 166,970 120,100Other than Approved Investments — —

SHORT TERM INVESTMENTSGovernment securities and Government guaranteed bonds including Treasury Bills 37,859 149,463Other Approved Securities — —Other investmentsa) Shares


b) Mutual Funds* 122,707 50,008c) Derivative Instruments — —d) Debentures/Bonds — —e) Others-Commercial Paper — —f) Subsidiaries — —Investment Properties-Real Estate — —Investments in Infrastructure and Social Sector — —Other than Approved Investments — —

Total 851,970 864,646

Aggregate Market Value of Investments - Shareholders 954,948 995,988* Historical Cost of Mutual Funds, which have been valued at fair value : Rs 122,331 (2003 : Rs 50,000)

MNYL 105-135.p65 9/14/2004, 11:33 AM121




Year Ended March 31, 2004 Year Ended March 31, 2003Participating Policies Non-Participating Participating Policies Non-Participating

Policies Total Policies TotalParticulars Schedule Individual Deferred Individual Group Individual Deferred Individual Group


SCHEDULE–8AINVESTMENTS POLICYHOLDERS (IN INDIA)

(Refer to Note I (d) and II (c), (f), (g) and (h) on Schedule 16)

LONG TERM INVESTMENTSGovernment securities and Government

guaranteed bonds including Treasury Bills 1,246,801 17,799 73,028 11,499 1,349,127 449,566 5,619 41,636 7,866 504,687

Other Approved Securities — — — — — — — — — —

a) Shares

aa) Equity — — — — — — — — — —

bb) Preference — — — — — — — — — —

b) Mutual Funds — — — — — — — — — —

c) Derivative Instruments — — — — — — — — — —

d) Debentures/ Bonds — — — — — — — — — —

e) Other Securities — — — — — — — — — —

f) Subsidiaries — — — — — — — — — —

g) Investment Properties-Real Estate — — — — — — — — — —

Investments in Infrastructure and Social Sector 233,078 3,333 13,638 2,022 252,071 134,623 1,682 12,468 2,356 151,129

Other than Approved Investments — — — — — — — — — —

SHORT TERM INVESTMENTSGovernment securities and Government

guaranteed bonds including Treasury Bills — — — — — — — — — —

Other Approved Securities — — — — — — — — — —

a) Shares

aa) Equity — — — — — — — — — —

bb) Preference — — — — — — — — — —

b) Mutual Funds — — — — — — — — — —

c) Derivative Instruments — — — — — — — — — —

d) Debentures/ Bonds — — — — — — — — — —

e) Other Securities — — — — — — — — — —

f) Subsidiaries — — — — — — — — — —

g) Investment Properties-Real Estate — — — — — — — — — —

Investments in Infrastructure and Social Sector — — — — — — — — — —

Other than Approved Investments — — — — — — — — — —

Total 1,479,879 21,132 86,666 13,521 1,601,198 584,189 7,301 54,104 10,222 655,816

Aggregate Market Value of Investments - Policyholders 1,686,150 24,112 98,658 14,631 1,823,551 684,907 8,560 63,432 11,984 768,883

Note: The Management has a policy of transferring, on a regular basis, assets in the form of earmarked investments to the policyholders. The earmarked investments reflect and are

matched approximately to the total estimated liabilities including bonus to the policy holder and the related income thereon accrues to the policy holders from that date.


SCHEDULE–8BASSETS HELD TO COVER LINKED LIABILITIESLONG TERM INVESTMENTSGovernment securities and Government guaranteed bonds including Treasury Bills — —Other Approved Securities — —Other investmentsa) Shares


b) Mutual Funds — —c) Derivative Instruments — —d) Debentures/ Bonds — —e) Other Securities — —f) Subsidiaries — —g) Investment Properties-Real Estate — —Investments in Infrastructure and Social Sector — —Other than Approved Investments — —


MNYL 105-135.p65 9/14/2004, 11:33 AM122




March 31, 2004 March 31, 2003

SCHEDULE–8B ContinuedSHORT TERM INVESTMENTSGovernment securities and Government guaranteed bonds including Treasury Bills — —Other Approved Securities — —Other investmentsa) Shares


b) Debt Mutual Funds Units — —c) Derivative Instruments — —d) Debentures/ Bonds — —e) Others-Commercial Paper — —f) Subsidiaries — —g) Investment Properties-Real Estate — —Investments in Infrastructure and Social Sector — —Other than Approved Investments — —

Total — —

Aggregate Market Value of Investments — —

SCHEDULE–9LOANSSECURITY-WISE CLASSIFICATIONSecureda) On mortgage of property

aa) In India — —bb) Outside India — —

b) On Shares, Bonds, Govt. Securities, etc. — —c) Loans against policies 39 —d) Others — —Unsecured — —Total 39 —

BORROWER-WISE CLASSIFICATIONa) Central and State Governments — —b) Banks and Financial Institutions — —c) Subsidiaries — —d) Companies — —e) Loans against policies 39 —f) Others — —Total 39 —

PERFORMANCE-WISE CLASSIFICATIONa) Loans classified as standard

aa) In India 39 —bb) Outside India — —

b) Non-standard loans less provisionsaa) In India — —bb) Outside India — —

Total 39 —

MATURITY-WISE CLASSIFICATIONa) Short Term 39 —b) Long Term — —Total 39 —


MNYL 105-135.p65 9/14/2004, 11:33 AM123





SCHEDULE–10FIXED ASSETS(Refer to Note I (e) on Schedule 16)

Gross Block Depreciation Net BlockParticulars April Additions Sale/ March April For the On Sales/ March March March

1, 2003 Disposal 31, 2004 1, 2003 Year Disposal 31, 2004 31, 2004 31, 2003Goodwill — — — — — — — — — —Intangibles - Software 52,834 24,967 — 77,801 14,084 17,228 — 31,312 46,489 38,750Land-Freehold — — — — — — — — — —Leasehold improvements 135,709 48,781 2,702 181,788 22,548 19,705 1,262 40,991 140,797 113,161Vehicles 36,470 25,650 9,804 52,316 8,505 9,425 3,131 14,799 37,517 27,965Buildings — — — — — — — — — —Office equipment 48,783 20,997 2,112 67,668 14,831 11,497 580 25,748 41,920 33,952Furniture and fixtures 52,014 16,428 2,597 65,845 15,483 4,110 362 19,231 46,614 36,531Information technologyequipment 134,333 32,448 593 166,188 52,583 36,867 212 89,238 76,950 81,750Total 460,143 169,271 17,808 611,606 128,034 98,832 5,547 221,319 390,287 332,109

Capital Work in Progress(including Capital advances) 164,467 6,983Grand Total 460,143 169,271 17,808 611,606 128,034 98,832 5,547 221,319 554,754 339,092Previous Year 287,433 187,068 14,358 460,143 60,851 70,593 3,410 128,034 339,092

Note: Additions during the year include gain on account of foreign currency fluctuation aggregating Rs. 6,406 (2003 : Rs 1399)

As at As at

March 31, 2004 March 31, 2003

SCHEDULE–11CASH AND BANK BALANCESCash [including cheques in hand Rs. 69,597 (2003: Rs. 21,526) and InsuranceStamp Rs. 1,169 (2003 : Rs. 3,062)] 70,766 24,588

Balances with banks in India*a) Deposit Accounts

aa) Short-term fixed deposit (i.e. maturing in 12 months) 91,000 —bb) Others — —

b) In current accounts 7,657 25,683c) Others — —

Money at Call and Short Noticea) With Banks — —b) With other Institutions — —Others — —Total 169,423 50,271

*Balances with non-scheduled bank included in (b) above — 265

SCHEDULE–12ADVANCES AND OTHER ASSETSADVANCESReserve deposit with ceding companies — —Application money for investments — —Prepayments 7,306 7,695Advances to Directors / Officers — 153Advance tax paid and taxes deducted at source (Net of provision for taxation) — —OthersAdvances to suppliers 13,075 3,546Advances to employees for travel, etc. 3,900 5,160Total (A) 24,281 16,554

MNYL 105-135.p65 9/14/2004, 11:33 AM124





March 31, 2004 March 31, 2003

SCHEDULE–12 ContinuedOTHER ASSETSIncome accrued on investments 46,887 33,161Outstanding Premiums 56,105 20,231Agents’ Balances — —Foreign Agencies Balances — —Due from other entities carrying on insurance business (including reinsures) 7,306 1,546Due from subsidiaries / holding company — —Deposits with Reserve Bank of India (Pursuant to Section 7 of Insurance Act, 1938) 38,000 17,000Others:- Security and other deposits 99,292 87,611Total (B) 247,590 159,549

Total (C) = (A) + (B) 271,871 176,103

SCHEDULE–13CURRENT LIABILITIESAgents’ balances 3,036 17,287Balance due to other insurance companies 11,508 5,328Deposits held on reinsurance companies — —Premium received in advance 40,939 10,487Unallocated premium 79,219 25,327Sundry creditors 457,262 280,123Due to holding company 3,199 1,158Claims Outstanding (pending investigation) 33,887 16,152Annuities Due — —Due to Officers/ Directors — —Others:Proposal / Policyholder deposits, to be refunded 7,440 3,323Withholding Tax Deducted at Source 61,671 32,906Others:-Statutory liabilities 11,466 3,627Total 709,627 395,718

SCHEDULE–14PROVISIONSFor taxation (less payments and taxes deducted at source) — —For proposed dividends — —For dividend distribution tax — —Others :- Provision for Gratuity 2,981 —- Provision for Wealth tax 409 315Total 3,390 315

SCHEDULE–15MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)

Discount Allowed in issue of shares/debentures — —Others — —Total — —

MNYL 105-135.p65 9/14/2004, 11:33 AM125



SCHEDULE–16SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTSI SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements are prepared under the historical cost convention on the accrual basis of accounting, in accordance with theaccounting principles prescribed by the Insurance Regulatory and Development Authority (Preparation of Financial Statement and Auditor’sReport of Insurance Companies) Regulations, 2002, the accounting standards issued by the Institute of Chartered Accountants of India andthe requirements of the Companies Act, 1956, to the extent applicable. The significant accounting policies are as follows :

(a) Revenue RecognitionPremium is recognised as income when due. Further, uncollected premium on lapsed policies is not recognised as income.Re-insurance premium ceded is accounted at the time of recognition of the premium income in accordance with the treaty arrangement withthe re-insurers.

Interest on investments is recognised when accrued and taken to the Revenue/Profit and Loss Account, as appropriate.

(b) Acquisition CostsAcquisition costs, including commission, are expensed in the year in which they are incurred.

(c) BenefitsBenefits paid consists of the policy benefit amount and claim settlement costs, if any, and are accounted as and when incurred and notifiedto the Insurer. An additional provision is made for benefits incurred but not reported.

(d) InvestmentsInvestments are recorded at cost, and exclude interest paid, if any, on purchase.

Investments intended to be held for a period less than one year or maturing within 12 months are classified as ‘Short term investments’ whilethose intended to be held for a period of one year or above are classified as ‘ Long term investments’.

Debt securities, which include government securities, are measured at historical cost. The premium/discount, if any, on purchase of debtsecurities is amortised over the period to maturity on the basis of their intrinsic yield.

Investments in Mutual fund units are valued at fair value and unrealised gains/losses thereon are credited/debited to the ‘Fair Value ChangeAccount’.

Diminution in the value of investment, other than temporary decline, is charged to revenue /profit and loss account.

Investment are transferred to policyholders from shareholders at lower of book value (amortised cost) and market value.

(e) Fixed Assets and depreciationFixed Assets are capitalised on the day they are ready for use, and stated at their original cost which includes freight, duties, taxes and otherincidental expenses relating to acquisition and installation.

Depreciation on assets is charged on straight-line method, on a pro-rata basis at the following rates over their useful lives as estimated by theManagement:

Nature of Assets Rate (%)

Leasehold Improvements Over the tenureof lease (3 - 10 years)

Office Equipment 20.00%Furniture and Fixtures 10.00%Information Technology Equipment and software (including software licensesbut excluding Policy Administration System) 25.00%Policy Administration System (hardware and software) 16.67%Vehicles 20.00%

Assets costing less than Rs 5,000/- each are depreciated at the rate of 100% in the year of purchase.

SCHEDULE ANNEXED TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2004(All Amounts in Thousands of Indian Rupees, unless otherwise stated)

MNYL 105-135.p65 9/14/2004, 11:33 AM126



(f) Liability for Life Policies in ForceThe estimation of liability against life policies in force is determined by the appointed actuary of the Insurer pursuant to his annual investigationof the life insurance business and as per Gross Premium Valuation Method specified by Insurance Regulatory and Development Authority(Actuarial Report and Abstract) Regulations, 2000. The liability is so calculated that together with future premium payments and investmentincome, the Insurer meets all future claims (including bonus entitlements to policyholders) and expenses.

(g) Retirement BenefitsThe retirement benefits, namely Provident Fund and Gratuity, are administered through various trusts and Insurer’s contributions thereto arecharged to the Revenue Account every year. Accrual for gratuity is made on the basis of actuarial valuation carried out at year end.

(h) Foreign Exchange TransactionsTransactions in foreign currency are recorded at the rates of exchange prevailing on the date of transaction. Monetary assets and liabilitiesdenominated in foreign currencies are translated at year end rates.

The difference in translation of monetary assets and liabilities and realised gains and losses on foreign exchange transactions, other thanrelating to fixed assets are recognised in the profit and loss account.

Exchange difference in respect of liabilities incurred to acquire Fixed Assets is adjusted to the carrying amount of Fixed Assets.

(i) Operating ExpensesOperating expenses relating to insurance business are assigned to individual life participating policies, deferred annuity participating policies,individual life non-participating policies and group non-participating policies business segments (‘ the business segments’) as follows :

Expenses directly identifiable to the business segments are allocated on an actual basis. Other expenses, which are not directly identifiable,are apportioned to the business segment by adopting one of the following basis, which is considered as most appropriate :(a) total number of policies in-force, (b) annualised first year premium, (c) combination of annualised first year premium, renewal premiumincome and total number of policies in force, (d) sum assured and (e) first year commission.

(j) Contribution to Policyholders’ Account (Technical Account)Contribution to Policyholders’ Account (Technical Account) is made as decided by the Board of Directors.

(k) TaxationProvision for current income tax and wealth tax, if any, is made on accrual basis after taking credit allowances and exemptions. Deferred taxassets and liabilities, if any, are computed on the timing differences at the balance sheet date between the carrying amount of assets andliabilities and their respective tax bases. Deferred-tax assets, if any, are recognised based on management estimates of available future taxableincome and assessing its certainity.

(l) LeasesLease of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases.Payments made under operating leases are charged to the Revenue Account on a straight line basis over the period of the lease.

(m) Employee Stock Option SchemeThe value of options is equal to the aggregate of the fair value of the options granted. Fair value is the option discount, represented by theexcess of the face value on the grant date over the exercise price of the option and is amortised on a straight-line basis over the vesting period.As and when the option is exercised by the employee, the same is accounted for as paid up capital to the extent of the face value.

II NOTES TO ACCOUNTS(a) Background

Max New York Life Insurance Company Limited (‘the Insurer’) was incorporated on July 11, 2000 as a public limited company under theCompanies Act,1956 to undertake and carry on the business of life insurance and annuity. The Insurer has obtained a license from theInsurance Regulatory and Development Authority (‘IRDA’) dated November 15, 2000 for carrying on life insurance business.

The Insurer offers a wide range of life insurance products to the customers. These include whole life, endowment policies, renewable,convertible term policies, deferred annuities, Group policies and easy term policies, with the option of purchasing additional riders with thebasic policy.

(b) Actuarial assumptionsAll valuation assumptions have been decided by the Appointed Actuary keeping in view the regulations issued by the IRDA and professionalguidance of the Actuarial Society of India. The details are given below:

MNYL 105-135.p65 9/14/2004, 11:33 AM127



Interest: Considering the yield on the fund and the yields expected to be obtained from sums to be invested in future, the basis has beenchosen depending on the nature of plans of assurance and the term over which such assurance is operative. The expected level varies by planfrom 4.9% to 6.15% and also includes the margin for adverse deviations of 0.25% to 1.5%.

Mortality: Based on analysis of experience and allowing for some conservatism, the basis used is 82.5% of LIC (94-96) ultimate in year 1increasing to 100% of LIC (94-96) ultimate in year 5 and thereafter. This basis also includes a margin of 10% for adverse deviations.

Morbidity: Due to lack of any published Indian experience, 110% of 1991-97 UK experience table rates and 125% of 1959-74 US experiencetable rates are used, as applicable. This also includes a margin for adverse deviations of 15%.

Expenses: Policy maintenance expenses analysed by fixed and variable expenses with reference to the Insurer’s business plans adjusted forstable level of expenses and inflation were used and includes margin for adverse deviation of 5% for participating policies and 10% for non -participating policies.

Inflation: Provision for inflation at 5% has been made.

Commission: Allowed at actual rates paid and is upto 7.5% for 2nd and 3rd year and upto 5% for subsequent years.

Lapses: Lapses are provided in the range of 1% to 15% during 2nd year, at 1% to 10% during 3rd year and 1% to 3% thereafter.

Future bonuses: Provision is made for future bonuses based on the estimated expected bonus payouts.

Overall, the valuation assumptions provide a conservative set of bases.

(c) Investments are made in accordance with the Insurance Act, 1938 and the Insurance Regulatory & Development Authority (Investment)Regulations, 2000.

(d) The assets of the Insurer in India are free from all encumbrances. The Insurer do not have any assets outside India.

(e) Estimated amount of contracts remaining to be executed on capital account (net of advances) is Rs 38,010 (2003 Rs 18,489).

(f) Value of contracts in relation to investments, for:(a) Purchases where deliveries are pending- Rs NIL (2003 Rs NIL)(b) Sales where payments are overdue- Rs NIL (2003 Rs NIL)

(g) The Insurer does not have any investment property.

(h) All the investments are performing in nature.

(i) Directors’ RemunerationDirectors’ remuneration paid in the accounts is as below

March 31, 2004 March 31, 2003

Salary & Allowances 11,833 11,348Contribution to Provident Fund 366 356Value of Perquisites 621 614Others 45,000 —

57,820 12,318

Note:(i) The above figures do not include provision for gratuity payable to the Directors as the same is actuarially determined for the Insurer as a whole.(ii) The above remuneration is in accordance with the requirements of Section 34A of the Insurance Act, 1938 and as approved by IRDA.(iii) All Perquisites have been computed in accordance with Income Tax Act, 1961.(iv) Others include value of shares issued under Employee Stock Option Plan.

(j) During the year, the insurer has announced an Employee Stock Option Scheme “ Employee Stock Option Plan- 2003” which has beenapproved by the Board of Directors on October 05, 2003. The plan covers selected employees of the company and it provides for issue of8,000,000 shares of Rs 10 each at an exercise price of Re 1 per 1000 fully paid shares. To administer and implement the plan, the insurerhas setup an ESOP Trust.

Under the Plan, 4,500,000 equity shares were granted on November 05, 2003 and were immediately vested. The grant was approved by theshareholders at the Extraordinary General Meeting held on October 5, 2003. All the options granted under the plan were exercised by theemployees on November 14, 2003.

MNYL 105-135.p65 9/14/2004, 11:33 AM128



(k) Percentage of policies written business sector - wise is as below:March 31, 2004 March 31, 2003

First Year First YearPolicy Nos. No of Lives Premium Policy Nos No of Lives Premium

covered Income covered Income

Total Business 14,669 276,663 1,372,829 77,562 110,236 673,137Rural Sector 24,110 — 31,072 9,345 — 3,077As % of Total Business 164.36% — 2.26% 12.05% — 0.46%Social Sector — 15,654 2,278 — 15,669 942As % of Total Business — 5.66% 0.17% — 14.21% 0.14%

(l) The extent of risk retained and reinsured is given below :

March 31, 2004 March 31, 2003

Risk retained 98.52% 98.41%Risk reinsured 1.48% 1.59%

(m) The Insurer has leased Information technology equipment (including Software) and office spaces under various agreements with variousexpiration dates extending upto 10 years. Lease payments made under operating lease agreements have been fully recognised in the books ofaccounts. The total lease rentals paid for the year ended March 31, 2004 is 104,948 (2003 Rs 92,497).

Some of the agreements have lock-in periods and same has been considered as the non-cancelable period of the lease(s). None of the leasesare having more than three years of non cancellable period.

The future minimum lease payments under non-cancelable operating leases with remaining lease terms at March 31, 2004 are as follows :

(AMOUNT IN RS.)2004 2003

Upto One Year 34,922 33,372One to Two Years 26,776 12,769Two to Three Years 19,925 3,192Total 81,623 49,333

(n) Claims from Policyholders which are settled and unpaid for more than 6 months as on Balance Sheet date amount to Rs Nil (2003-Rs Nil)

(o) As recommended by the Appointed Actuary, the Board of Directors have declared a Bonus of Rs 77,367 (2003 Rs. 56,462) to participatingindividual life policyholders. To Comply with the IRDA circular No F&A/CIR/011/Mar04 dated March 23, 2004, the insurer has, pursuant to aspecial resolution passed by the Shareholders transferred amounts aggregating to Rs 2,450,060, from the Shareholder’s Account (Non-technical Account) to the Policyholder’s Account (Technical Account) as shown below:-

To fund negative insurance reserves in all Policyholder’s account as at 31st March 2003 1,571,281In relation to bonus declared to individual life participating policyholders during the year ended31st March 2003 from Shareholders’ Account. 56,462For Covering the deficit in Revenue Account for the year ended 31st March 2004 (before declaration of bonus for the year). 744,950Bonuses declared to individual life participating policyholders during the year ended 31st March 2004 77,367

The above amounts transferred from shareholders’ account (non technical) are irreversible in nature and shall not be recouped to the shareholdersat any point of time in future

The Insurer has nullified, during the current year, the effect of bonus amounting to Rs 56,462 debited to Shareholders’ Account in the earlieryear by crediting the same to miscellaneous income.

Accordingly the contribution to Policyholders’ Account has been increased during the current year to result into an appropriate adjustment ofbonus debited in the earlier year.

The bonus liability as on March 31, 2004 of Rs 80,793 (2003: Rs 56,462) is shown under respective participating policy liabilities.

(p) Segmental ReportingThe Insurer’s business is organised on a national basis around five business segments, namely Individual Life Participating business, DeferredAnnuity Participating business, Individual Life Non-participating business, Group business and investments of Shareholders’ Funds.

Accordingly, the Insurer has provided primary segment information for these segments as per the Accounting Standard 17 on ‘ SegmentReporting’, issued by the ICAI, read with the Accounting Regulations.

MNYL 105-135.p65 9/14/2004, 11:33 AM129



The segmental report for the year ended March 31, 2004 is given below

Particulars Participating Policies Non-Participating Policies Investment ofIndividual Deferred Individual Group Shareholder Total

Life Annuity Life Funds

SEGMENTAL SHAREHOLDERS’ / POLICYHOLDERS’ ACCOUNTRevenuePremium earned-net 1,991,552 42,810 40,567 45,696 — 2,120,625Income from Investments 79,271 866 6,128 1,492 81,896 169,653Other Income 2,050,903 10,636 321,376 68,465 — 2,451,380Unallocated Revenue —Total Revenue (net) 4,121,726 54,312 368,071 115,653 81,896 4,741,658Commission 393,702 2,190 6,350 511 — 402,753Operating Expenses 1,375,339 23,701 169,240 59,067 4,293 1,631,640Benefits Paid (Net) 27,598 — 8,635 23,731 — 59,964Change in valuation of liability against life policies in force (Net) 814,896 13,831 32,561 3,300 — 864,588Contribution to policyholders fund — — — — 2,450,060 2,450,060Allocation of Bonus to Policyholders- 2002-03 56,462 — — — — 56,462- 2003-04 77,367 — — — — 77,367Segment Operating Results 1,376,362 14,590 151,285 29,044 (2,372,457) (801,176)Unallocated other income 56,462Unallocated expenses (11,632)Net Operating Results (756,346)

SEGMENTAL BALANCE SHEETSegment assetsInvestments 1,479,879 21,132 86,666 13,521 851,970 2,453,168Loan 39 — — — — 39Net Fixed Assets 470,106 8,175 61,750 14,723 — 554,754Advances and Other Assets 220,964 3,864 20,494 6,365 16,284 267,971Total Segment Assets 2,170,988 33,171 168,910 34,609 868,254 3,275,932Unallocated AssetsCash and Bank Balances 169,423Advances and Other Assets 3,900Debit Balance In Profit And Loss Account (Shareholders’ Account) — — — — 2,326,146 2,326,146Deficit In The Revenue Account (Policyholders’ A/C) — — — — — —Total Assets 5,775,401Segment LiabilitiesPolicy Liabilities 1,479,878 21,132 86,665 13,522 — 1,601,197Current Liabilities 543,930 9,812 71,352 22,862 — 647,956Fair Value Change Account — — — — 376 376Total Segment Liabilities 2,023,808 30,944 158,017 36,384 376 2,249,529Segment Reserves — — — — — —Reserves and Surplus —Equity Capital 3,460,811Unallocated LiabilitiesCurrent Liabilities 61,671Provisions 3,390Total Liabilities 5,775,401

Non-participating businesses include policies with committed cash flows, with no rights to the surplus in the business. Participating businessinclude policies other than those of non-participating businesses. Investment of shareholder funds constitute investible funds relating toshareholders.

The accounting principles used in presentation of financial statements are also applied to record revenue and expenditure in individualsegments. All segment revenue are directly attributed to individual segments. There are no intersegment revenues. Income and expenses thatcannot be allocated to the segments on a reasonable basis are disclosed as unallocated Income/expense.

Since the business operation of the Insurer is in India only, the same is considered as one geographical segment.

Segment assets and liabilities include those, which are employed by a segment in its operating activity. Other common assets and liabilities areallocated to the segment on a pre-determined basis. Assets and liabilities that cannot be allocated to all segments on a reasonable basis havebeen disclosed as unallocated assets/liabilities.

MNYL 105-135.p65 9/14/2004, 11:33 AM130



OTHER INFORMATIONCapital Expenditure during the year 279,231 4,856 36,678 5,989 — 326,755Depreciation for the year 83,215 1,368 12,048 2,201 — 98,832Non-cash expenditure other than depreciation

Liabilities to Policyholders 814,896 13,831 32,561 3,300 — 864,588Unallocated preliminary expenses 4,293

The Segmental Report for the year ended March 31, 2003 is given below

Segmental Shareholders’ / Policyholders’ AccountRevenuePremium earned-net 847,246 8,483 78,976 15,867 — 950,572Income from Investments 38,262 195 1,812 311 111,234 151,814Other Income 1,117 5 58 12 — 1,192Total Revenue (net) 886,625 8,683 80,846 16,190 111,234 1,103,578Commission 176,730 631 7,512 65 — 184,938Operating Expenses 989,010 15,341 80,982 34,069 1,017 1,120,419Benefits Paid (Net) 22,075 — 1,918 878 — 24,871Change in valuation of liability against life policies in force (Net) 383,552 7,301 51,059 10,222 — 452,134Segment Operating Results (684,742) (14,590) (60,625) (29,044) 110,217 (678,784)Unallocated other income 71Unallocated expenses (5,657)Bonus to individual life participating policyholders (56,462)Net Operating Results (740,832)

SEGMENTAL BALANCE SHEETSegment assetsInvestments 584,189 7,301 54,104 10,222 864,646 1,520,462Net Fixed Assets 300,858 4,908 23,377 9,949 — 339,092Advances and Other Assets 134,696 2,014 10,843 4,380 18,858 170,790Total Segment Assets 1,019,743 14,223 88,324 24,551 883,504 2,030,344Unallocated AssetsCash and Bank Balances 50,271Advances and Other Assets 5,313Total Assets 2,085,928Segment LiabilitiesPolicy Liabilities 584,188 7,301 54,104 10,222 — 655,815Current Liabilities 378,681 4,611 25,534 10,447 — 419,272Fair Value Change Account — — — — 8 8Total Segment Liabilities 962,869 11,912 79,638 20,669 8 1,075,095Segment Reserves (1,376,362) (14,590) (151,285) (29,044) — (1,571,281)Profit in Profit and Loss account 1,481Equity Capital 2,547,410Unallocated LiabilitiesCurrent Liabilities 32,908Provisions 315Total Liabilities 2,085,928

OTHER INFORMATIONCapital Expenditure during the year 169,828 2,770 13,196 5,615 — 191,410Depreciation for the year 62,634 1,021 4,867 2,071 — 70,593Non-cash expenditure other than depreciation

Liabilities to Policyholders 383,552 7,301 51,059 10,222 — 452,134Unallocated preliminary expenses 1,074

The segmental report for the year ended March 31, 2004 is given below

Particulars Participating Policies Non-Participating Policies Investment ofIndividual Deferred Individual Group Shareholder Total

Life Annuity Life Funds

MNYL 105-135.p65 9/14/2004, 11:33 AM131



(q) The ratios as prescribed by IRDA are given belowFor the Year ended March 31, 2004 For the Year ended March 31, 2003

Participating Non-Participating Participating Non-Participating

Policies Policies Total Policies Policies Total

Ratios for the year ended March 31, 2004 Individual Deferred Individual Group Individual Deferred Individual Group


(a) New Business Premium Income Growth 223% 437% 37% 210% 204% 150% NA 808% — 173%

(Current Year New Business Premium as a % of

Previous Year New Business Premium)

(b) Net Retention Ratio 99% 100% 93% 87% 99% 99% 100% 99% 78% 98%

(Net premium as a % of gross premium)

(c) Ratio of Expenses of Management 88% 60% 402% 113% 94% 136% 188% 111% 169% 135%

(Expenses of Management as a % of Gross Premium)

(d) Commission Ratio 20% 5% 15% 1% 19% 21% 7% 9% 0% 19%

(Gross Commission as a % of Gross Premium)

(e) Ratio of Policy holders’ liabilities to shareholders’ funds 141% 26%

(Policyholders’ Liability as a % of Shareholders’ Fund)

(f) Growth rate of Shareholders’ Fund -55% 4%

(Increase/ (Decrease) in Shareholders’ Fund over

previous year as a % of Shareholders’ Funds of

Previous year)

(g) Ratio of Policyholders’ Surplus to Policy holders’ liability 106% -120%

(Policyholders’ Surplus as a % of Policyholders’ Liability)

(Refer to Note II (o) on Schedule 16)

(h) Change in net worth (over previous year) 16% -41%

(Increase/ (Decrease) in Net Worth over previous year

as a % of Net Worth of Previous year)

(i) Profit after tax / Total Income -1682% 43%

(Refer to Note II (o) on Schedule 16)

(j) (Total Real Estate+Loans)/ Cash & Invested assets NA NA

(k) Total Investments/(Capital + Total Surplus) 216% 156%

(l) Total Affiliated Investments/(Capital + Total Surplus) NA NA

Notes for Calculation of above Ratios1) Expenses of Management include operating expenses and commission.

2) Shareholders funds = Share Capital (net of Preliminary Expenses to the extent not written off /adjusted) + Reserve and Surplus/ Deficit in Profit and Loss Account.

3) Total Surplus = Policyholders’ Reserves + Debit balance in Profit and Loss Account (Non-Technical) as appearing in Balance Sheet + Deficit in the Revenue Account

(Technical) as appearing in Balance Sheet.

4) Net Worth = Shareholders Funds + Insurance Reserves+Deficit in the Revenue Account (Technical) as appearing in Balance Sheet.

5) Profit After Tax and total income are as disclosed in the Profit and Loss Account (Non - Technical).

MNYL 105-135.p65 9/14/2004, 11:33 AM132



(r) The details of significant related party transactions as per Accounting Standard 18 issued by ICAI is given belowSummary of Related Parties transactions for Holding Fellow Shareholders Key Enterprises Totalthe year ended March 31, 2004 Company Subsidiaries with Management Related

(a) (b) Significant Personnel to keyInfluence (c) (d) Management

Personnel (e)

Equity Share Capital 629,000 — 236,811 — — 865,811Purchase of Fixed Assets — 530 12,299 — — 12,829Premium received — — — 97 — 97Rendering Services — — 1,177 — — 1,177Receiving of Services 5,571 8,452 51,095 65,739 — 130,857Management Contracts Includingfor deputation of employees — — 15 — — 15Total 634,571 8,982 301,397 65,836 — 1,010,786

Balance receivable/(payable) as at March 31, 2004 (3,199) (1,536) (89,444) — —

Note : No Payments have been made to individual in which directors are interested (2003: Rs. Nil)

Summary of Related Parties transactions for Holding Fellow Shareholders Key Enterprises Totalthe year ended March 31, 2003 Company Subsidiaries with Management Related

(a) (b) Significant Personnel to keyInfluence (c) (d) Management

Personnel (e)

Equity Share Capital 37,000 — 13,000 — — 50,000Purchase of Fixed Assets — 454 57,979 — — 58,433Premium received — — — 107 — 107Receiving of Services 1,264 5,492 42,531 69,306 324 118,917Management Contracts Includingfor deputation of employees — — 499 — — 499Total 38,264 5,946 114,009 69,413 324 227,956

Balance receivable/(payable) as at March 31, 2003 (1,158) (792) (108,252) 210 —

Other relevant information:i) Fixed assets are purchased from holding company, fellow subsidiary and Shareholders with significant influence at book value and normal

commercial terms respectively.ii) Payment for services received from the holding company are at actual cost incurred by them; those received from fellow subsidiary and

shareholder with significant influence are at agreed terms.iii) Payments for management contract, including for deputation of employees is at actual cost incurred by them.iv) Payments for services received from Key Management Personnel represent remuneration as computed under the Income Tax Act, 1961 and do

not include provision for gratuity payable to them as the same is actuarially determined for the Insurer as a whole.

Description of relationship Name of Party(a) Holding company Max India Ltd.(b) Fellow Subsidiaries Comsat Max Ltd. and Max Healthcare Institute Ltd.(c) Shareholder with significant influence New York Life International Llc(d) Key Management Personnel Analjit Singh(Chairman)/ Anuroop Singh(CEO & Managing Director)/ Sunil Sharma(Executive

Director &COO)/ Sunil Kakar(Chief Financial Officer)/Ajay Seth (Director- Regulatory Affairs& Compliance) / Rajesh Sud(Director-Agency Distribution)/Rajit Mehta(Director-HumanResources)/Anil Mehta (Director - Group Business)/Kapil Mehta (Vice President - BusinessDevelopment & Strategic Planning)/Rajendra Sharma (Chief Actuary)/Debashis Sarkar(Director-Additional Distribution & Marketing)/Atul Joshi (Director-Supplementary Distributionfor part of year)

(e) Enterprises related toKey Management Personnel Nil

MNYL 105-135.p65 9/14/2004, 11:33 AM133



(s) Summary of Financial Statements forming part of Notes to Accounts (Rs in lakhs) is given belowParticulars 2003-2004 2002-2003 2001-2002 2000-2001

POLICYHOLDERS’ A/C1 Gross Premium Income 21,525 9,659 3,895 162 Net Premium Income (Net of Re-insurance ceded) 21,206 9,506 3,860 163 Income from Investments (Net) 878 406 77 —4 Other Income (Miscellaneous Income) 24,514 12 1 —5 Total Income (2+3+4) 46,598 9,924 3,938 166 Commission 4,028 1,849 1,186 57 Brokerage — — — —8 Operating Expenses related to Insurance Business 16,273 11,194 8,489 1,7949 Total Expenses (6+7+8) 20,301 13,043 9,675 1,79910 Payments to Policyholders * 1,938 249 67 —11 Increase in Actuarial Liability 8,646 4,521 2,021 1612 Surplus/Deficit from Operations 15,713 (7,890) (7,823) (1,799)

SHAREHOLDERS’ A/C13 Total Income under Shareholders’ Account 1,384 1,113 1,307 34514 Profit/(loss) before Tax (23,276) 482 1,139 (1,606)15 Provision for Tax — — — —16 Profit/(loss) after tax (23,276) 482 1,139 (1,606)17 Profit/(loss) carried to Balance Sheet (23,276) 482 1,139 (1,606)

MISCELLANEOUS18 Policyholders’ account:

Total Funds 16,012 (9,155) (5,786) 16Total Investments 16,012 6,558 2,053 —Yield on Investments (%) 8.09% 9.89% 7.84% —

Shareholders’ account:Total Funds 11,350 25,489 24,496 8,847Total Investments 8,520 8,646 14,125 7,516Yield on Investments (%) 9.49% 9.95% 12.41% 9.61%

19 Yield on Total Investments 8.71% 9.93% 12.02% 9.61%20 Paid up Equity capital 34,608 25,474 24,963 10,50021 Net Worth 11,350 9,776 16,674 8,84722 Total Assets 9,961 5,655 4,559 2,017

23 Earning per share - Basic & Diluted (Face Value : Rs 10 each) in Rs.** (7.90) 0.19 0.59 (3.67)24 Book Value per Share: Rs 10 Paid up 3.28 3.83 6.67 8.43

Book Value per Share: Re 1 Paid up — 0.38 — —

* Includes Bonus to Policyholders.** Earnings per share have been calculated as follows, in accordance with AS-20 :Numerator - Profits/ (Loss) for the year (23,276) 482 1,139 (1,606)Denominator - Weighted Average number of shares at year end (in 000) 294,617 250,000 192,083 43,750

(t) Previous year amounts have been re-classified wherever necessary to conform to current year’s presentation.

(u) Previous year financial statements have been jointly audited by Price Waterhouse and S.R. Batliboi & Co. The financial statements in thecurrent year have been jointly audited by Lovelock & Lewes and S.R. Batliboi & Co.




Signatures to Schedules 1 to 16


MNYL 105-135.p65 9/14/2004, 11:33 AM134



With respect to the operations of the Company for the financial yearApril 1, 2003 to March 31, 2004 and results thereof, the Managementof the Company confirms, certifies and declares:

1. The Company is doing business on the basis of certificate ofregistration granted and renewed by IRDA.

2. The Company has paid all dues payable to statutory authorities.

3. There has been no change in the Indian and Foreign shareholdingpattern of the Company and the same are in conformity with thestatutory or regulatory requirements for the same.

4. The Company has not directly or indirectly invested outside Indiathe funds of the holders of policies in India.

5. The Company is maintaining the required solvency margins asundertaken to the Insurance Regulatory and Development Authority.

6. The values of all the assets have been reviewed on the date of theBalance Sheet and in the Managements’ belief, the assets set forthin the Balance-sheets are shown in the aggregate amounts notexceeding their realisable or market value under their relatedheadings.

7. No part of the life insurance fund has been directly or indirectlyapplied in contravention of the provisions of the Insurance Act,1938 (4 of 1938) relating to the application and investment of thelife insurance funds.

8. The Company has entered into re-insurance treaties to mitigate itsrisk exposure where threshold limits have been exceeded. As atMarch 31, 2004, the extent of risk retained and reinsured is givenbelow :

Sum Assured Premium

March 31, March 31, March 31, March 31,

2004 2003 2004 2003

Risk retained 78.65% 79.63% 98.52% 98.41%

Risk reinsured 21.35% 20.37% 1.48% 1.59%

9. The Company does not have operations in any other country otherthan India.

10. Average claim settlement time to-date has been 8 days from theday the final document submitted with Company (2003 : 16 days).

11. The values of investments as shown in the balance sheet, otherthan Mutual Funds, has been valued at historical cost subject toamortisation. Investments in Mutual fund units are valued at fairvalue. Market values have been ascertained on the basis of quotesreceived from market participants.

12. The Company has invested only in approved debt securities,primarily in Central Government treasury bills and securities andhighly rated bonds/mutual funds. Accordingly, the Management isconfident of the quality of the investments.

13. The financial statements of Max New York Life Insurance CompanyLimited and all information in this annual report are theresponsibility of the Management and have been reviewed by theAudit Committee and approved by the Board of Directors.

(a) The financial statements have been prepared in accordancewith generally accepted accounting standards and principlesand policies have been followed with no material departures;

(b) The financial statements have been prepared in accordancewith the accounting policies adopted by the Management andstated therein; these financial statements contain some itemswhich reflect the best estimates and judgement of theManagement.When alternative accounting methods exist, Management haschosen those it deems most appropriate in the circumstancesto ensure the financial statements are presented fairly, in allmaterial respects. The choice of estimates and judgement havebeen made are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end ofthe financial year and the operating loss of the Company forthe year;

(c) The Management of the Company has taken proper andsufficient care for the maintenance of adequate accountingrecords in accordance with the applicable provisions of theInsurance Act, 1938 and Companies Act, 1956, forsafeguarding the assets of the Company and for preventingand detecting fraud and other irregularities;

(d) The financial statements have been prepared on a going concernbasis;

(e) The Company has set up an internal audit systemcommensurate with the size and nature of the business andthe same is operating effectively.

14. The details of transactions with related parties for the year endedMarch 31, 2004 are given in Note No.II (r) in schedule 16 of thefinancial statements.

For and on behalf of the Board of DirectorsANALJIT SINGH ChairmanDAVID J. SKINNER DirectorANUROOP SINGH Chief Executive Officer & Managing DirectorSUNIL SHARMA Executive Director & Chief Operating Officer



MANAGEMENT REPORT

MNYL 105-135.p65 9/14/2004, 11:33 AM135

MAX HEALTHCARE INSTITUTE LIMITED

HEALTHCARE 136-155.p65 9/14/2004, 11:33 AM136

M A X H E A L T H C A R E I N S T I T U T E L I M I T E D( F O R M E R L Y M A X H E A L T H C A R E I N S T I T U T E P R I V A T E L I M I T E D )


DIRECTORS’ REPORT

Your Directors are pleased to present their third Annual Report, alongwith the Audited Accounts for the financial year ended March 31, 2004.

PERFORMANCE 2003-04During 2003-04, your company registered gross revenue of Rs. 27.09Crores from Healthcare operations, a growth of 111% over last year.The company’s operations in the existing units grew significantly, lead-ing to this revenue growth. The Medcentre at Panchsheel Park wasexpanded by adding 6 in-patient beds at a cost of Rs. 76 Lacs. Beinga long gestation business the operations for the year resulted in a lossof Rs. 31.78 Crores.

PROJECTS UNDER IMPLEMENTATIONThe completion work of Max Devki Devi Hospital, Saket, New Delhi,which commenced during the last financial year has progressed signifi-cantly. The hospital is expected to commence operations, from secondquarter of the current financial year, with around 220 beds. The hospi-tal will be a center of excellence for cardio vascular sciences with aproject cost of Rs. 140 crores. Construction work at the adjoining hos-pital land, also commenced during the year. This hospital will be a150-bed facility on commencement of operations, and will be a centreof excellence for neurology, orthopedics and joint replacements, andminimally invasive surgery. The facility is expected to commence op-erations during the first quarter of next financial year, at a project costof Rs 100 Crores. The 370-bed facility at Saket can be increased to500 beds in the future in line with the utilization.

The bed utilizations at Noida and Pitampura grew significantly resultingin your company’s decision to expand these facilities. Pitampura hospitalis being expanded to a 100-bed hospital at a project cost of Rs. 6.1Crores, by acquiring additional floors in the existing facility. Noidahospital is being expanded to a 40-bed hospital, by adding 18 beds inthe adjoining building at a project cost of Rs 1.4 Crores. Both expansionsare expected to be completed during the first two quarters of the currentfinancial year.

Work has also commenced for a 100+100 bed hospital at Gurgaon, ona site owned by DLF Universal Limited. The hospital, with aproject cost of Rs. 34 Crores is expected to commence operationsduring 2005.

PROJECT FINANCINGThe company has achieved financial closure for the total project cost ofRs. 420 Crores, which involves the roll out of a total of 16 Dr MaxClinics, 4 Secondary hospitals and the tertiary care hospital at Saket.The project is to be funded by long term debt of Rs. 210 Crores and thebalance through equity. Some Indian banks have also partially disbursedthe loans during the year. An amount of Rs. 123.80 Crores has beeninfused by the shareholders as equity and Rs. 32.39 Crores as quasiequity.

DIVIDENDIn view of the cash losses incurred by the business, your Directors areunable to recommend any dividend for the year under review.

ALLOTMENT OF NEW EQUITY SHARESDuring the year under review, your Company allotted 71,42,857 equityshares and 71,42,858 equity shares of Rs. 10/- each at a premium of

Rs. 4/- per share to S& G Investments Limited, Mauritius and HamletInvestments Limited, Mauritius, respectively.

DIRECTORSIn accordance with the provisions of the Companies Act, 1956 and theCompany’s Articles of Association, Mr. B. Anantharaman, Mr. AnaljitSingh and Dr. R.P. Soonawala are due to retire by rotation and areeligible for re-appointment.

AUDIT COMMITTEEPursuant to Section 292A of the Companies Act, 1956, your Companyhad constituted the Audit Committee of the Board, comprising ofMr. Akbar Hameed Jung (Chairman), Mr. K.K. Mathur and Mr. B.Anantharaman. All the members of the Committee are non-executivedirectors. The role and terms of reference of the Audit Committee cov-ers the areas mentioned under Section 292A of the Companies Act,1956 besides other terms, as may be referred to it by the Board ofDirectors of the Company.

DIRECTORS’ RESPONSIBILITY STATEMENTThe Board of Directors of the Company confirms that:(i) In the preparation of annual accounts, the applicable accounting

standards have been followed, along with proper explanation relat-ing to material departures.

(ii) The Directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that are rea-sonable and prudent, so as to give a true and fair view of the stateof affairs of the Company at the end of the financial year and of theprofit or loss of the Company for that period.

(iii) The Directors had taken proper and sufficient care for the mainte-nance of adequate accounting records in accordance with the pro-visions of the Companies Act, 1956 for safeguarding the assets ofthe Company and for preventing and detecting fraud and otherirregularities.

(iv) The Directors had prepared the annual accounts on a going con-cern basis.

ADDITIONAL INFORMATIONInformation in accordance with the provisions of Section 217 (1)(e) ofthe Companies Act, 1956 read with the Companies (Disclosure of Par-ticulars in the Report of Board of Directors) Rules, 1988, are given inthe prescribed format annexed to the Report as Annexure – ‘A’.

SUBSIDIARY COMPANYStatement pursuant to Section 212 of the Companies Act, 1956, relat-ing to Max Medical Services Private Limited, the subsidiary of yourCompany, is annexed to this Report as Annexure – ‘B’.

PARTICULARS OF DEPOSITSYour Company has not accepted any deposits from the public duringthe year under review.

HUMAN CAPITALThe company has continued to attract eminent physicians from theNCR as well as from abroad. There are around 70 physicians oncompany’s rolls as well as 200 physicians as visiting consultants in thesystem. For the company’s hospital at Saket, eminent physicians intheir respective specialties have already been agreed and identified.

HEALTHCARE 136-155.p65 9/14/2004, 11:33 AM137



Annexure A

Particulars Pursuant to Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988

1 CONSERVATION OF ENERGYThe Company has taken measures to reduce the energy consumption, by using energy efficient equipment, incorporating latest technology andregular maintenance.

2 RESEARCH AND DEVELOPMENT (R&D) Nil

3 TECHNOLOGY ABSORPTION• Specific areas in which R&D carried out by the Company Nil• Benefits derived as a result of above NA• Future Plan of Action NA• Expenditure on R&D NA

4 FOREIGN EXCHANGE EARNINGS AND OUTGOActivities relating to Exports, initiativestaken to increase exports,develop New Export markets, Exports Plan etc NA

(RS.IN CRORE)

For the year ended For the Year ended31.03.2004 31.03. 2003

a Foreign Exchange Earnings 0.02 0.03b Foreign Exchange Outgo

1 C.I.F. value of imports(Capital Goods) 0.77 0.37

2 Others 2.58 3.35 2.03 2.40

On behalf of the Board of Directors

New Delhi ANALJIT SINGHJULY 14, 2004 Chairman & Managing Director

A statement giving particulars of employees under Section 217 (2A) ofthe Companies Act, 1956 read with the Companies (Particulars ofEmployees) Rules, 1975 for the year ended March 31, 2004 is annexedto the Report as Annexure –‘C’.

AUDITORSM/s Price Waterhouse, Chartered Accountants, the Statutory Auditorsof the Company, retire at the conclusion of the ensuing Annual GeneralMeeting and are eligible for re-appointment. The Company has received

from them a certificate to the effect, that their re-appointment, if made,will be in conformity with the limits specified under Section 224 (1B)of the Companies Act, 1956.



HEALTHCARE 136-155.p65 9/14/2004, 11:33 AM138

MA

X H

EA

LT

HC

AR

E I

NS

TI

TU

TE

LI

MI

TE

D(

FO

RM

ER

LY

MA

X H

EA

LT

HC

AR

E IN

ST

ITU

TE

PR

IVA

TE

LIM

ITE

D)

139M

AX

A

NN

UA

L

RE

PO

RT

2

00

3-

20

04

Annexure BStatement regarding subsidiary Companies pursuant to Section 212(3) and 212(5) of ‘The Companies Act, 1956’.

Name of the Subsidary Financial Holding Company’s interest as at close of Net aggregate amount of Subsidiary Company’s profits after Net aggregate amount of Holding Company’sYear to Financial Year of the Subsidiary Company deducting its losses or vice versa, so far as it concerns Subsidiary Company’s interest as atwhich Members of Holding company which are not dealt within the profits after deducting its 31.3.04Accounts Company’s Account losses or vice versa, so far incorporatingrelate as it concerns Members of changes since

Holding company which close of Financialare dealt within the Year/Period ofCompany’s Account Subsidiary

Company

Shareholding Extent of For the Current For the Previous For the Current For the CurrentHolding Accounting Year Financial Years Accounting Year Accounting

(Rs.) (Rs.) (Rs.) Year (Rs.)Max Medical ServicesPrivate Limited 31.03.2004 85,000 Equity shares 85% 68,619 (265,365) Nil Nil No Change

of Rs.10 each



HE

ALT

HC

AR

E 136-155.p65

9/14/2004, 11:33 AM

139



ANNEXURE CINFORMATION AS PER SECTION 217(2A) READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975 AND FORMING PART OF THE DIRECTORS’REPORT FOR THE YEAR ENDED MARCH 31, 2004Sl. Name Age Designation Remuneration Qualification Date of Experience Last Employment DesignationNo. (Years) (Rs.) Commencement (Years) held

of employment

A. Employed throughout the year and were in receipt of remuneration of not less than Rs. 24,00,000/- per annum

1 Dr. Puri, Narottam 57 Medical Director 4,593,861 MBBS, MS, 15.01.2003 36 Sant Parmanand Sr. Honarary Consultant &FICS Hospital Head of the Dept. ENT

B. Employed for part of the year and were in receipt of remuneration of not less than Rs. 2,00,000/- per month

1. Dr. Marya, 46 Director-Orthopaedics 1,202,671 MBBS,MS 29.01.2004 20 Indraprastha Director, Div of JointSanjiv K.S. and Institute of Ortho,DND Apollo Hospital Replacement Surgery,

Joint Replacement Ortho, Sr.ConsultantSurgery M.CH Ortho. Orthopaedics & Trauma

Department ofOrthopaedics

2. Nakra, Rajender* 52 Chief Operating 10,637,575 B. Tech. 01.04.2002 28 Max India Limited Chief Operating OfficerOfficer PGDBM

3. Rohatgi, Rajnish 42 Vice President- 3,811,327 B. Tech. 01.04.2002 17 Max India Limited Vice President -Marketing & (Metallurgy) Marketing &Customer Relations PG Diploma Customer Relations

in BusinessAdministration

4. Sapra, V. K. 56 General Manager- 3,854,305 B.A, Diploma 01.04.2002 37 Max India Limited General Manager-Corporate Affairs in Materials Corporate Affairs

Management

*Refer Note C7 on Schedule 18 of attached financials

Notes :

1. Remuneration includes salary, allowances, Consultation fee, Severance Pay, Medical benefits, leave travel allowance, Company’s contribution to PF, Pension,Gratuity and Superannuation funds, Leave encashment and monetary value of perquisites at cost to the Company.

2. None of the above employee holds by himself or along-with his spouse and dependent children 2% or more of Equity Shares of the Company.3. Nature of employment is on contractual basis.4. The designation of the aforesaid employees is indicative of their nature of duties also and governed by the general terms and conditions of the employment

contract with the Company.5. None of the above employee is relative of any Director of the Company.



HEALTHCARE 136-155.p65 9/14/2004, 11:33 AM140



AUDITORS’ REPORT

TO THE MEMBERS OF MAX HEALTHCARE INSTITUTELIMITED1. We have audited the attached Balance Sheet of Max Healthcare

Institute Limited, as at March 31, 2004, and the related Profitand Loss Account for the year ended on that date annexed thereto,which we have signed under reference to this report. These financialstatements are the responsibility of the company’s management.Our responsibility is to express an opinion on these financialstatements based on our audit.


3. As required by the Companies (Auditor’s Report) Order, 2003 issuedby the Central Government of India in terms of sub-section (4A) ofSection 227 of ‘The Companies Act, 1956’ of India (the ‘Act’) andon the basis of such checks of the books and records of the companyas we considered appropriate and according to the information andexplanations given to us, we further report that:i (a) The company is maintaining proper records showing full


(b) The fixed assets are physically verified by the managementaccording to a phased programme designed to cover allthe items over a period of three years, which in our opinion,is reasonable having regard to the size of the companyand the nature of its assets. Pursuant to the programme,a portion of the fixed assets has been physically verifiedby the management during the year and no materialdiscrepancies between the book records and the physicalinventory have been noticed.

(c) In our opinion, and according to the information andexplanations given to us, a substantial part of fixed assetshas not been disposed of by the company during the year.

ii (a) The inventory has been physically verified by themanagement during the year. In our opinion, the frequencyof verification is reasonable.

(b) In our opinion, the procedures of physical verification ofinventory followed by the management are reasonable andadequate in relation to the size of the company and thenature of its business.

(c) On the basis of our examination of the inventory records,in our opinion, the company is maintaining proper recordsof inventory. The discrepancies noticed on physicalverification of inventory as compared to book records werenot material.


iv In our opinion and according to the information andexplanations given to us, having regard to the explanation thatcertain items purchased are of special nature for which suitable

alternative sources do not exist for obtaining comparativequotations, there are adequate internal control procedurescommensurate with the size of the company and the nature ofits business for the purchase of inventory, fixed assets and forthe sale of goods. Further, on the basis of our examination ofthe books and records of the company, and according to theinformation and explanations given to us, we have neither comeacross nor have been informed of any continuing failure tocorrect major weaknesses in the aforesaid internal controlprocedures.

v (a) In our opinion and according to the information andexplanations given to us, the transactions that need to beentered into the register in pursuance of Section 301 ofAct, have been so entered.

(b) In our opinion and according to the information andexplanations given to us, there are no transactions madein pursuance of contracts or arrangements entered intothe register in pursuance of Section 301 of the Act andexceeding the value of Rupees Five Lakhs in respect ofany party during the year, which have been made at priceswhich are not reasonable having regard to the prevailingmarket prices at the relevant time.

vi The company has not accepted any deposits from the publicwithin the meaning of Sections 58A and 58AA of the Act andthe rules framed there under.

vii In our opinion, the company has an internal audit systemcommensurate with its size and nature of its business.

viii The Central Government of India has not prescribed themaintenance of cost records under clause (d) of sub-section(1) of Section 209 of the Act for any of the products of thecompany.

ix (a) According to the information and explanations given to usand the records of the company examined by us, in ouropinion, the company is generally regular in depositingthe undisputed statutory dues including provident fund,investor education and protection fund, employees’ stateinsurance, income-tax, sales-tax, wealth tax, customs duty,excise duty, cess and other material statutory dues asapplicable with the appropriate authorities.

(b) According to the information and explanations given to usand the records of the company examined by us, there areno dues of sales tax, income-tax, customs duty, wealth-tax, excise duty and cess which have not been depositedon account of any dispute.

x As the company is registered for a period less than five years,clause (x) of paragraph 4 of the Companies (Auditor’s Report)Order, 2003 is not applicable to the company for the currentyear.

xi According to the records of the company examined by us andthe information and explanation given to us, the company hasnot defaulted in repayment of dues to any financial institutionor bank or debenture holders as at the balance sheet date.

xii The company has not granted any loans and advances on thebasis of security by way of pledge of shares, debentures andother securities.

xiii The provisions of any special statute applicable to chit fund /nidhi / mutual benefit fund/societies are not applicable to thecompany.

HEALTHCARE 136-155.p65 9/14/2004, 11:33 AM141



xiv In our opinion, the company is not a dealer or trader in shares,securities, debentures and other investments.

xv In our opinion, and according to the information andexplanations given to us, the company has not given anyguarantee for loans taken by others from banks or financialinstitutions during the year.

xvi In our opinion, and according to the information andexplanations given to us, on an overall basis, the term loanshave been applied for the purposes for which they wereobtained.

xvii On the basis of an overall examination of the balance sheet ofthe company, in our opinion, and according to the informationand explanations given to us, there are no funds raised on ashort-term basis which have been used for long-terminvestment, and vice versa.

xviii The company has not made any preferential allotment of sharesto parties and companies covered in the register maintainedunder Section 301 of the Act during the year.

xix The company has not raised any money by public issues duringthe year.

xx During the course of our examination of the books and recordsof the company, carried out in accordance with the generallyaccepted auditing practices in India, and according to theinformation and explanations given to us, we have neither comeacross any instance of fraud on or by the company, noticed orreported during the year, nor have we been informed of suchcase by the management.

xxi The other clauses, (xix) of paragraph 4 of the Companies(Auditor’s Report) Order 2003 are not applicable in the caseof the company for the current year, since in our opinion thereis no matter which arises to be reported in the aforesaid order.

4. Further to our comments in paragraph 3 above, we report that:(a) We have obtained all the information and explanations, which


(b) In our opinion, proper books of account as required by lawhave been kept by the company so far as appears from ourexamination of those books;

(c) The Balance Sheet and Profit and Loss Account dealt with bythis report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet and Profit and Loss Accountdealt with by this report comply with the accounting standardsreferred to in sub-section (3C) of Section 211 of the Act;

(e) On the basis of written representations received from thedirectors, as on March 31, 2004 and taken on record by theBoard of Directors, none of the directors is disqualified as onMarch 31, 2004 from being appointed as a director in termsof clause (g) of sub-section (1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and accordingto the explanations given to us, the said financial statementstogether with the notes thereon and attached thereto give inthe prescribed manner the information required by the Actand give a true and fair view in conformity with the accountingprinciples generally accepted in India:(i) in the case of the Balance Sheet, of the state of affairs of

the company as at March 31, 2004; and(ii) in the case of the Profit and Loss Account, of the loss for

the year ended on that date.

V. NIJHAWANPartner

Membership No. F 87228


HEALTHCARE 136-155.p65 9/14/2004, 11:33 AM142




SCHEDULE RUPEESAs at As at

31.03.2004 31.03.2003

SOURCES OF FUNDSSHAREHOLDERS’ FUNDSShare Capital 1 1,180,748,420 1,037,891,270Reserves & Surplus 2 57,220,860 78,000

1,237,969,280 1,037,969,270LOAN FUNDSSecured Loans 3 413,955,788 250,000,000Unsecured Loans 330,702,541 260,300,811

744,658,329 510,300,811

Deferred Tax Liability (Net) 4 53,529,412 33,210,8582,036,157,021 1,581,480,939

APPLICATION OF FUNDSFIXED ASSETS 5Gross Block 674,715,696 657,213,578Less : Depreciation 117,970,744 61,904,270Net Block 556,744,952 595,309,308Capital Work in progress 154,947,572 108,384,405

711,692,524 703,693,713

Pre-operative Expenses Pending Capitalisation 6 216,848,778 356,687,317

INVESTMENTS 7 154,643,058 192,799,194

CURRENT ASSETS, LOANS & ADVANCES 8Inventories 26,401,419 19,626,396Sundry Debtors 22,236,016 5,268,572Cash & Bank Balances 10,227,186 3,833,061Loans & Advances 353,543,540 76,293,770

412,408,161 105,021,799Less : CURRENT LIABILITIES & PROVISIONSCurrent Liabilities 9 129,340,288 110,393,033Provisions 10 5,340,408 4,862,249

134,680,696 115,255,282

NET CURRENT ASSETS 277,727,465 (10,233,483)

MISCELLANEOUS EXPENDITURE 11 4,949,636 6,395,538(To the extent not written off or adjusted)Profit & Loss Account 670,295,560 332,138,660

2,036,157,021 1,581,480,939SIGNIFICANT ACCOUNTING POLICIES & NOTES TO THE ACCOUNTS 18


ANALJIT SINGH Chairman & Managing DirectorB. ANANTHARAMAN Director

SUDIP DASGUPTA Chief Financial Officer



V. NIJHAWANPartner



HEALTHCARE 136-155.p65 9/14/2004, 11:33 AM143



PROFIT & LOSS ACCOUNT F O R T H E Y E A R E N D E D M A R C H 3 1 , 2 0 0 4

SCHEDULE RUPEESFor the Year For the Year

01.04.2003 to 01.04.2002 to31.03.2004 31.03. 2003

INCOMEHealthcare Revenue 12 262,697,255 120,454,457Other Income 13 10,646,180 1,394,458

273,343,435 121,848,915EXPENDITUREStores and spares consumed 14 49,380,759 30,646,035Operating and Administrative expenses 15 400,836,337 298,567,005Financial Expenses 16 80,655,245 28,939,879Depreciation 60,309,438 62,348,764

Total 591,181,779 420,501,683

(Loss) for the Year (317,838,344) (298,652,768)Provision for Taxation 17 - Current Tax (Wealth Tax) — 161,916

- Deferred Tax Liability 20,318,554 33,210,858

(Loss) for the year after tax (338,156,898) (332,025,542)

(Loss) brought forward from the previous year (332,138,662) (113,118)

Balance Carried forward to the Balance Sheet 670,295,560 332,138,660

Basic & Diluted EPS (Refer Note C8 on Schedule 18) (3.11) (7.46)



ANALJIT SINGH Chairman & Managing DirectorB. ANANTHARAMAN Director

SUDIP DASGUPTA Chief Financial Officer



V. NIJHAWANPartner



HEALTHCARE 136-155.p65 9/14/2004, 11:33 AM144



SCHEDULE A N N E X E D T O A N D F O R M I N G P A R T O F T H E A C C O U N T S

RUPEESAs at As at

31.03.2004 31.03. 2003

SCHEDULE–1SHARE CAPITALAuthorised125,000,000 Equity Shares (Previous year 105,000,000)Shares of Rs.10/- each 1,250,000,000 1,050,000,000

1,250,000,000 1,050,000,000

Issued, subscribed & paid up118,074,842 (Previous year 103,789,127) Equity Shares of Rs.10/-each fully paid up 1,180,748,420 1,037,891,270

1,180,748,420 1,037,891,270Of the above:– 103,779,127 (Previous year 103,779,127) equity shares have

been issued for consideration other than cash

– 103,879,127 (Previous year 103,879,127) equity shares are held

by Max India Limited, the holding Company)

SCHEDULE–2RESERVES & SURPLUSShare Premium Account 57,142,860 —Capital Reserve 78,000 78,000

57,220,860 78,000

SCHEDULE–3SECURED LOANSTERM LOANTerm Loans from Banks 410,000,000 —Short Term Loan from Bank — 250,000,000Interest accrued and due on term loans 3,955,788 —

413,955,788 250,000,000

Secured by way of a first pari passu charge on the Company’s entire fixed assets

(both movable and immovable) including Land, plant and machinery, medical equipment etc. (present and future).

Amount repayable within one year Rs. Nil (Previous year Rs. 250,000,000/-).

UNSECURED LOANS(Refer Note C5 on Schedule 18)

Loan from Holding Company 323,960,000 254,409,337Other loans from Banks 6,742,541 5,787,993Interest accrued and due — 103,481

330,702,541 260,300,811Amount repayable within one year Rs. 2,058,148/- (Previous year Rs. 256,126,529 /-).

SCHEDULE–4DEFERRED TAX LIABILITY(Refer Note C6 on Schedule 18)

At April 1, 2003 33,210,858 —Adjustment for the year 20,318,554 33,210,858

53,529,412 33,210,858

HEALTHCARE 136-155.p65 9/14/2004, 11:33 AM145



SCHEDULE–5Fixed Assets (Refer Notes C3, C4, and C5 on Schedule 18)

RUPEES

Particulars Gross Block Additions Sale/ Gross Block Depreciation Depreciation Depreciation on Depreciation Net Block Net Block

as on 1-Apr-03 During Adjustment as on as on for the sale/Adjustment as on as on as on

the Year during the Year 31-Mar-04 1-Apr-03 Year for the Year 31-Mar-04 31-Mar-04 31-Mar-03

Tangible Assets

Building (Lease Hold

Improvement) 194,938,990 3,765,391 — 198,704,381 19,307,700 23,506,064 — 42,813,764 155,890,617 175,631,290

Plant & Machinery 81,172,530 2,159,517 — 83,332,047 3,327,273 3,964,076 — 7,291,349 76,040,698 77,845,257

Furniture Fixture 35,346,525 1,811,530 355,069 36,802,986 5,714,316 2,806,072 91,602 8,428,786 28,374,200 29,632,209

Office Equipment & Computers 63,110,481 5,020,858 1,399,880 66,731,459 13,342,120 7,901,176 210,774 21,032,522 45,698,937 49,768,361

Medical Equipment 258,919,674 16,404,173 — 275,323,847 17,397,019 18,979,199 — 36,376,218 238,947,629 241,522,655

Motor Vehicles 11,177,885 4,181,992 3,687,627 11,672,250 781,893 1,113,330 564,690 1,330,533 10,341,717 10,395,992

Intangible Assets

Software 12,547,493 — 10,398,767 2,148,726 2,033,949 2,039,521 3,375,898 697,572 1,451,154 10,513,544

Total 657,213,578 33,343,461 15,841,343 674,715,696 61,904,270 60,309,438 4,242,964 117,970,744 556,744,952 595,309,308

Previous Year 511,859,797 156,933,489 11,579,708 657,213,578 — 62,348,764 444,494 61,904,270 595,309,308

Capital Work in Progress includes Capital advances Rs. 9,982,622 /- (previous year Rs. 4,37,500/-) 154,947,572 108,384,405

711,692,524 703,693,713

Notes: 1 Additions include interest capitalised Rs. NIL (Previous Year Rs. 932,192/-) and exchange fluctuation Rs. 43,853/- (Previous Year Rs. 46,606/-).

2 Capital Work in progress includes Rs. 5,173,318 /- (Previous year Rs. 4,653,935/-) on account of borrowing cost.

3 Of the above, motor vehicles hypothecated amount to Rs. 8,883,812/- (Previous year Rs. 7,081,733/-).

RUPEES

As at As at31.03.2004 31.03. 2003

SCHEDULE–6PRE-OPERATIVE EXPENSES PENDING CAPITALISATION(Refer Note C2 on Schedule 18)

Opening Balance 356,687,317 356,791,265Current Year ExpensesSalaries 8,144,897 9,446,835Legal & Professional 6,792,587 11,073,355Recruitment 242,130 219,963Travelling 1,443,246 663,242Advertisement & Business Promotion — 36,401Communication — 98,435Rates & Taxes — 8,690Printing & Stationery — 298,272Watch & Ward — 168,457Staff Welfare Expenses — 673,125Misc Expenses — 726,426Repair & Maintenance - Others 103,733 686,712Power & Fuel — 858,291Rent Company Lease Accommodation — 23,617Rent-facilities — 2,409,387Professional & Consultation fee paid to doctors — 571,246Technical Know how Fees — 5,487,459Interest — 932,192Total Expenses for the year 16,726,593 34,382,105Less: Revenues during Pre-operative period — (926,492)Less: Capitalised during the year — (26,343,329)Less: Amount transferred/debited to Deferred Revenue Expenditure (156,565,132) (7,216,232)

Balance carried to Balance Sheet 216,848,778 356,687,317


HEALTHCARE 136-155.p65 9/14/2004, 11:33 AM146



SCHEDULE–7INVESTMENTSa Long Term-Trade

(Unquoted)85,000 (Previous year 85,000) Equity Shares in Max Medical 3,849,650 3,849,650Services Limited a subsidiary Company

Application Money paid to Subsidiary pending allotment 140,425,350 140,425,350

b Current Investments (Non Trade)(Quoted)Units in Mutual Fund 10,368,058 48,524,194(Refer Note C13 on Schedule 18)

154,643,058 192,799,194

Aggregate value of unquoted investments 3,849,650 3,849,650Aggregate value of quoted investments 10,368,058 48,524,194Market value of quoted investments 10,368,058 49,146,367


RUPEESAs at As at

31.03.2004 31.03. 2003

HEALTHCARE 136-155.p65 9/14/2004, 11:33 AM147




RUPEESAs at As at

31.03.2004 31.03. 2003

SCHEDULE–8CURRENT ASSETS LOANS & ADVANCESInventoriesStock of medicines and consumables 15,633,209 11,941,343Medical and surgical instruments 10,768,210 7,685,053

26,401,419 19,626,396Sundry Debtors(Unsecured)Debts exceeding six months- Considered good 2,220,551 607,128- Considered doubtful 1,307,124 255,502Less : Provision for doubtful debts 1,307,124 2,220,551 255,502 607,128

Other Debts- Considered good 20,015,465 4,661,444

22,236,016 5,268,572Amount outstanding from directors during the year Rs. 16,115/- (Previous year Rs. Nil)Amount outstanding from company’s under the same management Rs. 781,538/- (Previous year Rs. 287,341/-) which comprises:- From Max New York Life Insurance Co Limited- Rs. 7,59,903/- (Previous year Rs. 280,341/-)- From Max Ateev Limited - Nil (Previous year 7,100/-)- From Max India Limited Rs. 3,735/-(Previous year 7,100/-)- From Max Healthstaff Int. Limited Rs. 17,900/- (Previous year Rs. NIL)Maximum amount outstanding during the year - Rs. 1,043,198/- (Previous year Rs.830,920)- From Max New York Life Insurance Co Limited - Rs. 1,014,463/- (Previous year Rs.823,820/-)- From Max Ateev Limited- Rs. 7,100/- (Previous year Rs. 7,100/-)- From Max India Limited Rs. 3,735/- (Previous year Rs. NIL)- From Max Healthstaff Int. Limited Rs. 17,900/- (Previous year Rs. NIL)Maximum amount outstanding from directors during the year Rs. 22,015/- (Previous year Rs. 40,093)

CASH & BANK BALANCESCash in hand 852,700 488,454Cheques in hand 1,761,661 426,332Balances with Scheduled Banks- In Current Accounts 7,587,825 2,893,275- Margin Accounts 25,000 25,000

10,227,186 3,833,061

LOANS & ADVANCES(Refer Note C2 & C7 on Schedule 18)(Considered good, unless otherwise stated)

UNSECUREDAdvances Recoverable in Cash or kind or value to be received 20,757,442 22,589,357Subsidiary Company- Loans (ICD) 108,467,375 —- Pre-operative expenses recoverable 156,565,132 —- Interest Recoverable 4,605,598 —- Others 7,921,946 —Security Deposits 44,269,784 43,563,784Loans to employees- Considered good 1,315,608 4,112,137- Considered doubtful 185,000 185,000Less : Provision for doubtful debts 185,000 1,315,608 185,000 4,112,137

Prepaid Expenses 5,610,870 5,555,375Advance Income Tax 2,597,590 473,117Income Accrued 1,432,195 —

353,543,540 76,293,770Maximum amount outstanding from directors during the year Rs.2,426,561 /- (Previous year Rs. 2,426,561/-)Amounts due from subsidiary company Rs. 169,092,676 /- (Previous year Rs.18,431/-)Amount due from Holding Company - Rs. NIL (Previous year Rs. 11,020,785/-)Amounts due from Companies under same management - Rs. NIL (Previous year Rs. 34,983/-)Max Ateev Ltd. (Advance) Rs. NIL (Previous year-Rs. 22,500) , Max New York Life Insurance Co Ltd. Nil (Previous year - Rs 12,485/-).Maximum amount outstanding during the year Rs.150,342 /- (Previous year Rs. 34,985 /-)- Max Ateev Ltd. (Advance) Rs. NIL (Previous year-Rs. 22,500) ,- Max New York Life Insurance Co Ltd. Rs.12,485/- (Previous year - Rs 12,485/-) ,- Neeman Medical Intl. (Asia) Ltd. Rs. 42,857/- (Previous Year Nil)- Comsat Max Rs. 95,000/- (Previous year NIL)- Max Medical Services Private Limited Rs.169,092,676/- (Previous year - Rs 18,431/-) ,

HEALTHCARE 136-155.p65 9/14/2004, 11:33 AM148



SCHEDULE–9CURRENT LIABILITIES(Refer Note C11 on Schedule 18)

Sundry Creditors - Total outstanding dues of small scale industrial undertakings 1,324,897 1,535,404 - Total outstanding dues of creditors other than small scale 97,029,267 78,724,067 industrial undertakingsAcceptances of Letter of Credits 5,319,451 —Advance from customers 1,746,468 778,587Other Liabilities 10,968,029 9,610,646Interest accrued but not due on loans 12,952,176 19,744,329

129,340,288 110,393,033

SCHEDULE–10PROVISIONSWealth Tax — 90,000Leave encashment 4,441,138 2,935,413Gratuity payable 899,270 1,836,836

5,340,408 4,862,249

SCHEDULE–11MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)(Refer Note C9 on Schedule 18)

- Preliminary and Share & Debenture Issue Expenses 18,550 21,200- Deferred Revenue Expenditure 4,931,086 6,374,338

4,949,636 6,395,538

RUPEESFor the Year For the Year

1.04.2003 to 1.04.200231.03.2004 31.03.2003

SCHEDULE–12INCOME FROM HEALTHCARE SERVICESRevenue from Centres* 253,556,265 122,378,421Less: Discount 8,325,708 245,230,557 8,008,427 114,369,994

Sale of drugs and pharmaceuticals 17,466,698 6,084,463262,697,255 120,454,457

*Includes Tax deducted at source Rs. 824,826/- (Previous year Rs. 398,158/-)

SCHEDULE–13OTHER INCOME(Refer Note C13 on Schedule 18)

Interest from Banks* 378,220 145,018Interest others** 5,881,428 218,857Profit on sale of current investment (Non trade) 3,848,351 981,784Write back of Wealth Tax Provision 75,964 —Miscellaneous Income 462,217 48,799

10,646,180 1,394,458

*Includes Tax deducted at source Rs. 78,203/-(Previous Year Rs. 32,233/-)

** Includes Tax deducted at source Rs.11,87,606/- (Previous Year Rs.Nil)


RUPEESAs at As at

31.03.2004 31.03. 2003

HEALTHCARE 136-155.p65 9/14/2004, 11:33 AM149





1.04.2003 to 1.04.200231.03.2004 31.03.2003

SCHEDULE–14STORES & SPARES CONSUMEDConsumption of Medical consumables etc 35,742,774 25,869,089Cost of Goods Sold -Pharmacy 13,637,985 4,776,946

49,380,759 30,646,035

SCHEDULE–15OPERATING AND ADMINISTRATIVE EXPENSESPERSONNELSalaries, Wages and Bonus 117,047,045 77,698,360Contribution to Provident and other Funds 7,732,663 5,936,484Recruitment expenses 3,440,241 1,550,185Staff Welfare 5,475,440 4,220,301

OPERATING AND ADMINISTRATION EXPENSESProfessional & Consultation fees 63,709,847 29,813,650Outside Lab investigations 3,947,054 3,028,672Patient Catering Expenses 4,343,777 1,671,656Rent (net)* 44,418,783 44,926,341Insurance 5,331,295 3,026,040Rates and Taxes 406,072 86,702Repairs and Maintenance:-Building 1,614,821 1,266,353-Plant & Machinery 5,939,773 1,383,218-Others 6,773,883 7,624,241Facility Maintenance Expenses 22,629,097 14,744,119Power & Fuel 20,860,491 16,313,971Printing & Stationery 5,728,041 6,505,831Travelling and Conveyance 6,556,556 5,852,393Communication 8,835,837 6,521,541Legal and Professional 35,657,439 28,324,484Security Charges 3,882,811 3,412,458Advertisement and Publicity 10,598,951 12,883,247Miscellaneous expenses 479,732 515,569Charities & donations 36,201 1,100Settlement Charges — 4,300,000Technical Know-how Fee 1,897,445 6,320,640Equipment Hiring Charges 595,350 903,894Provision for Doubtful Debts & Advances 1,051,622 440,502Net Loss on sale/disposal of Fixed Assets 1,859,215 900,035Fixed Assets Written Off 7,022,869 501,498Net Loss/(Gain) on Foreign Exchange Fluctuation 137,057 54,542Amortization of Miscellaneous Expenditure 1,445,902 844,544Registration Fee 1,381,027 6,994,434

400,836,337 298,567,005*Net of recovery Rs. Nil (Previous year Rs. 202,860/- including Tax deducted at source Rs. 42,601)

HEALTHCARE 136-155.p65 9/14/2004, 11:33 AM150




RUPEESFor the Year For the Period

1.04.2003 to 1.04.200231.03.2004 31.03.2003


Inter Corporate Loan 37,413,769 21,907,564Short Term Loan 22,928,413 5,854,948On Term Loans 13,348,597 —

Bank Charges 6,379,378 784,938Interest Others 585,088 392,429

80,655,245 28,939,879

SCHEDULE–17PROVISION FOR TAXATION(Refer Note C6 on Schedule 18)

Current year tax — 161,916(Previous year includes wealth tax Rs.90,000/- for 2002-03 and Rs. 71,916/- for 2001-02)

Add :Deferred tax for the year 20,318,554 33,210,858

20,318,554 33,372,774

SCHEDULE–18A. NATURE OF BUSINESS

The company is in the process of setting up a healthcare deliverymodel. The existing units consists of Dr Max Clinics, Max Hospitalsand Medcentre. Dr Max Clinics deliver healthcare at the primarylevel while Max Hospitals & Max Medcentre render healthcareservice at the secondary level. The company is also in the processof setting up a multi-speciality hospital at the tertiary level.

B. SIGNIFICANT ACCOUNTING POLICIES1 Accounting Convention

The Financial Statements are prepared under the historical costconvention on an accrual basis and in accordance with accountingstandards issued by the Institute of Chartered Accountants of India.

2 Revenue Recognition(a) Revenue from Centres is recognised on the performance of

related service and includes pharmacy services for patientsundergoing treatment and pending billing.

(b) Revenue from pharmacy sale is recognised on delivery of goods.

3 Fixed Assets(a) Fixed Assets are stated at their original cost including freight,

duties, taxes and other incidental expenses relating toacquisition and installation.

(b) Assets acquired under the business transfer agreement arestated at amounts based on a valuation report.

(c) Expenses of revenue nature which can be regarded as incidentaland related to project setup are transferred to “Preoperativeexpenses pending Capitalisation”. These expenses are allocatedto fixed assets/deferred revenue in the year of commencementof the related project.

4 Borrowing CostsBorrowing costs that are directly attributable to the acquisition,construction or production of a qualifying asset are capitalised aspart of the cost of that asset in accordance with Accounting Standard16 on “Borrowing Costs”. Interest on working capital is charged torevenue.

5 Depreciation(a) Depreciation is charged on straight-line method on a pro-rata

basis at rates prescribed under Schedule XIV to the CompaniesAct, 1956.

(b) Leasehold improvements are depreciated over respective LeasePeriods.

(c) Assets costing not more than Rs.5,000/- each individually havebeen depreciated at 100%.

6 Investments(a) Investments are classified into current investments and long-

term investments. The cost of investments includes acquisitioncharges such as brokerage, fees and duties.

(b) Long-term investments are valued at cost. Provision fordiminution is made to recognise a decline, other than temporary.

7 InventoriesInventories are valued at lower of cost and net realisable value.Cost for this purpose is calculated on a ‘First In First Out’ methodand includes duties and taxes.

8 TaxationProvision for tax consists of current tax and deferred tax. Currenttax provision is computed for current income based on the taxliability after considering allowances and exemptions. Deferred taxassets and liabilities are computed on the timing differences at

HEALTHCARE 136-155.p65 9/14/2004, 11:33 AM151



the balance sheet date between the carrying amount of assets andliabilities and their respective tax bases and carry forward ofoperating loss. Deferred tax assets are recognised based onmanagement estimates of available future taxable income andassessing its certainty.

9 Retirement BenefitsThe Company has various schemes of retirement benefits namelyProvident Fund, Superannuation and Gratuity. These retirementbenefits are administered through various Trusts and Company’scontribution thereto are charged to revenue every year. Accrualsfor gratuity and Leave Encashment are made on the basis of actuarialvaluation done at the year end.

10 Foreign Exchange Transactions(a) Monetary assets and liabilities related to foreign currency

transactions remaining unsettled at the end of the year aretranslated at year-end rates.

(b) The difference in translation of monetary assets and liabilitiesand realised gains and losses on foreign exchange transactions,other than relating to Fixed Assets, are recognised in the profitand loss account.

(c) Exchange difference in respect of liabilities incurred to acquireFixed Assets is adjusted to the carrying amount of Fixed Assets.

11 Miscellaneous Expenditure(a) Preliminary expenses are amortised over a period of 10 years,

except cost incurred on raising of funds, which is beingamortised over the life of the respective financial instrument.

(b) Other Deferred Revenue Expenditure is amortised from theyear it is incurred/related projects commence operations, over3 to 5 years based on the period over which future benefits areexpected to be received.

12 Lease charges relating to operating leases are charged to revenueon a straight line basis.

C. NOTES TO THE ACCOUNTS(RUPEES)

Current Year Previous Year1 Contingent Liabilities

– Claims against the Companynot acknowledged as debts 28,541,288 8,700,000

– Payments towards Investments 65,150,000 —– Bank Guarantee to Sales Tax

Department 25,000 25,000

Total 93,716,288 8,725,000

2 Contingent Liability of Rs. 65,150,000 represents amount requiredto acquire 15% Shareholding in Max Medical Services PrivateLimited, currently a Company, engaged in the construction of ahospital.

Preoperative expenses of Rs. 156,565,132/- incurred by thecompany on behalf of Max Medical Services Pvt. Ltd. have beentransferred during the current year and disclosed under ‘Loans andAdvances’

(RUPEES)

Current Year Previous Year3 Estimated amount of contracts

(net of advances) remaining to beexecuted on capital account andnot provided for 188,224,455 23,243,609

4 Capital work in progress includes an amount of Rs. 109,648,589paid against allotment of land and other expenses for a Hospitalproject. The Company has obtained possession of the Land, andthe same would be capitalised consequent to execution of requireddocuments.

5 A loan taken from Industrial Development Bank of India by theHolding Company, namely Max India Limited, is secured by way ofa first pari passu charge on the Company’s fixed assets (bothmovable and immovable) including plant and machinery, tools,accessories and stores (present and future).

6 The movement of provision for deferred tax is given below(RUPEES)

Provision for Opening Provision ClosingDeferred Tax As at for the year As at

March 31, 2003 March 31, 2004

Depreciationrelated 34,814,235 24,296,084 59,110,319Preliminaryexpenses 946 955 1,901Deduction u/s 43Bof the IncomeTax Act (140,837) (1,775,034) (1,915,871)Other Provisions (2,329,767) (1,337,170) (3,666,937)ManagerialRemuneration 866,281 (866,281) —Net Deferred TaxLiability/(Asset) 33,210,858 20,318,554 53,529,412

Deferred Tax assets are created to the extent of their realisability.

7 Directors’ Remuneration (RUPEES)Current Year* Previous Year

a) Directors’ remuneration paid/provided in the accounts:(i) Salary and Allowances 2,407,459 1,543,296(ii) Perquisites 19,102 43,801(iii) Contribution to Provident

Fund and Superannuation Fund — 285,678

2,426,561 1,872,775

b) Professional Fees Paidto Directors 46,750 —

Total 2,473,311 1,872,775

Note:*Includes an amount of Rs. 2,426,561 relates to earlier year towhich the Company received requisite Central Governmentapproval during the Current Year.

HEALTHCARE 136-155.p65 9/14/2004, 11:33 AM152



8 Earning Per ShareCalculation of EPS (Basic and Diluted)Particulars For the For the

Year ending Year endingMarch 31, 2004 March 31, 2003

Basic & DilutedLoss after tax (Rupees) 338,156,898 332,025,542Weighted Average number of equityshares outstanding 108,668,128 44,505,682EPS (Rupees) (3.11) (7.46)Share Details (No. of Shares)Outstanding as at the beginningof the year 103,789,127 10,000Issued as on November 28th 2003 14,285,715 103,779,127Outstanding as at the endof the year 118,074,842 103,789,127

9 Miscellaneous Expenditure represents:(RUPEES)

As at Amortised As atApril 1, during the March 31,

2003 Year 2004

Preliminary and IssueExpenses 21,200 2,650 18,550Deferred Revenue Expenditure:

Transfer fromPre Operative 6,374,338 1,443,252 4,931,086

6,395,538 1,445,902 4,949,636

10 The provisions of Accounting Standard 17 on Segment Reportingare not applicable to the Company as the Company operates in asingle business segment of Healthcare services.

11 The names of small scale industrial undertakings to whom theCompany owes monies are Alps Internal Pvt Limted, AppaswamyMedical Equipments Pvt Limited, Metalbeds India, NavairInternational Ltd, R.D.Plast, Surgident India, Usha Dragger, FabricCreations, Mac Décor Limited, Soft comp, Sunrise MediaConsultants, Siora Surgicals (Pvt) Ltd., The South India SurgicalCo. Ltd.

12 LeasesAccounting for leases has been made in accordance with AccountingStandard-19 issued by the Institute of Chartered Accountants ofIndia. Following are the details of lease transactions for the year:

a) Finance LeaseThe Company has not entered into any finance lease agreement.

b) Operating Leasei) Lease rentals recognized in the Profit and Loss account

for the year is Rs. 44,418,783 (Previous YearRs. 44,926,341/-)

ii) The Company has entered into operating leases for its officeand for employees’ residence that are renewable on aperiodic basis and cancellable at Company’s option.

iii) The total of future minimum lease payments under non-cancellable leases are as follows:

RUPEES

March 31, 2004 March 31, 2003

Not later than one year 39,913,451 33,931,822Later than 1 year and notlater than 5 years 114,142,998 24,372,624Later than five years 86,263,542 NilTotal 240,319,991 58,304,446

13 Details of Current Investments sold/purchased

Opening Balance Purchase Sale Closing Balance

Name of the Fund Units Value Units Value Units Value Profit Unit Value

Rupees Rupees Rupees Rupees Rupees

Grindlays Cash Fund –

Institutional Plan B Nil Nil 12,234,116 130,736,650 11228104 121,709,770 1,341,178 1,006,012 10,368,058

Templeton India Treasury Managmt.

Account- GROWTH Nil Nil 19,771 30,000,000 19,771 30,029,753 29,753 Nil Nil

Grindlays Cash Fund 1,188,547 13,202,614 Nil Nil 1,188,547 13,436,653 234,039 Nil Nil

HDFC Mutual Fund - LIQUID FUND

GROWTH - (New) 2,973,923 35,321,580 3,301,638 40,000,000 6,275,561 75,975,844 654,264 Nil Nil

HDFC Mutual fund – Premium Plan Nil Nil 4,950,748 60,025,844 4,950,748 60,291,822 265,978 Nil Nil

Chola Mutual Fund Nil Nil 204,848 2,500,000 204,848 2,510,693 10,693 Nil Nil

Birla Sunlife Asset Management

Co.- Cash Plus -Growth Nil Nil 3,435,367 56,490,000 3,435,367 57,084,342 594,342 Nil Nil

HSBC Cash Fund - Growth Nil Nil 8,284,209 86,000,000 8,284,209 86,718,104 718,104 Nil Nil

Total 4,162,470 48,524,194 32,430,697 405,752,494 27,302,945 447,756,981 3,848,351 1,006,012 10,368,058

14 A. Material consumed consists of items of varied nature. Accordingly it is not feasible to give details as required under part II of Schedule VIto the Companies Act, 1956.

B. Trading Sales includes Profit on Sale of Equipment:

Opening Balance Purchase Sale Closing BalanceUnits Value Units Value Units Value Profit Unit Value

Rupees Rupees Rupees Rupees RupeesBuilding Equipment Nil Nil 5 5,166,522 5 5,298,572 132,050 Nil Nil

HEALTHCARE 136-155.p65 9/14/2004, 11:33 AM153



AMOUNT IN RUPEES


C. Value of Imports calculated on CIF Basis- Capital Equipment 7,695,586 3,666,386

D. Expenditure in Foreign Currency*- Technical Know-how — 12,200,777- Professional Fee 18,070,580 8,000,769- Other Charges 73,843 129,905

Total 18,144,423 20,331,451

E. Earnings in Foreign Currency* 164,310 268,585*Cash basis

15 Auditors’ Remuneration- Audit fees 696,000 600,000- Out of Pocket Expenses 15,648 —Total 711,648 600,000

16 The Company is in the process of appointing a whole time companysecretary.

17 Previous Year figures have been regrouped / reclassified, wherevernecessary, to conform to current year’s classification.

For and on behalf of the Board of DirectorsANALJIT SINGH Chairman &

Managing DirectorB. ANANTHARAMAN Director

New Delhi SUDIP DASGUPTA Chief FinancialJUNE 22, 2004 Officer

HEALTHCARE 136-155.p65 9/14/2004, 11:33 AM154




Registration No. 1 1 1 3 1 3 State Code 5 5Balance Sheet Date 3 1 0 3 2 0 0 4

Date Month Year

II CAPITAL RAISED DURING THE YEAR (Amount in Rs. Thousand)Public Issue Right IssueN I L N I LBonus Issue OthersN I L 1 4 2 8 5 7

III POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS(Amount in Rs. Thousand)Total Liabilities Total Assets2 0 3 6 1 5 7 2 0 3 6 1 5 7

SOURCES OF FUND

Paid-up Capital Reserve & Surplus1 1 8 0 7 4 8 5 7 2 2 1Secured Loans

4 1 3 9 5 6Unsecured Loans Deferred Tax Liability

3 3 0 7 0 3 5 3 5 2 9APPLICATION OF FUNDS

Net Fixed Assets Investments9 2 8 5 4 1 1 5 4 6 4 3

Net Current Assets Misc. Expenditure2 7 7 7 2 7 4 9 5 0

Accumulated Losses6 7 0 2 9 6

IV PERFORMANCE OF COMPANY (Amount in Rs. Thousand)Turnover (Total Income) Total Expenditure

5 9 1 1 8 1+ - Profit/Loss before tax + - Profit/Loss after tax

✓ 3 1 7 8 3 8 ✓ 3 3 8 1 5 7

Earning per share in Rs. Dividend Rate %Basic - 3 . 1 1 N I L

V NAME OF THREE PRINCIPAL PRODUCTS/SERVICE OF COMPANYProduct Description H E A L T H C A R E R E L A T E D S E R V I C E S

2 7 3 3 4 3

HEALTHCARE 136-155.p65 9/14/2004, 11:33 AM155

MAX MEDICAL SERVICES PRIVATE LIMITED

MaxMediServices 156-168.p65 9/14/2004, 11:33 AM156

M A X M E D I C A L S E R V I C E S P R I V A T E L I M I T E D


DIRECTORS’ REPORT

COMPLIANCE CERTIFICATE

Your Directors are pleased to present their tenth Annual Report, alongwith the Audited Accounts for the financial year ended March 31, 2004.

OPERATIONSDuring the previous year, your Company had undertaken a contract toconstruct a hospital, which is likely to be completed by September2004. Your Company has incurred a loss (before tax) of Rs. 8.51 Lacsduring the year under review.

DIVIDENDIn view of the losses, your Directors do not recommend any dividend forthe year under review.


ADDITIONAL INFORMATIONAs your Company does not carry on any manufacturing activity,information in accordance with the provisions of Section 217(1)(e) ofthe Companies Act, 1956 read with the Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988 is notfurnished herewith.

DIRECTORS’ RESPONSIBILITY STATEMENTAs per the provisions of Section 217(2AA) of the Companies Act, 1956,the Directors confirm that:

(i) In the preparation of annual accounts, the applicable accountingstandards have been followed, along with proper explanation relatingto material departures;

(ii) The Directors had selected such accounting policies and appliedthem consistently and made judgements and estimates that arereasonable and prudent, so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year andof the profit or loss of the Company for that period;

(iii) The Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance withthe provisions of the Companies Act, 1956 for safeguarding theassets of the Company and for preventing and detecting fraud andother irregularities; and


PARTICULARS OF EMPLOYEESThe Company does not have any employee who is covered under theprovisions of Section 217 (2A) of the Companies Act, 1956, read withthe Companies (Particulars of Employees) Rules, 1975.

DIRECTORSIn accordance with the provisions of the Companies Act, 1956 and theArticles of Association of the Company, Mr. Surendra Kaul and Mr. B.Anantharaman are liable to retire by rotation at the ensuing AnnualGeneral Meeting and being eligible offer themselves for re-appointment.During the year under review, Mr. Rajender Nakra resigned from theBoard of Directors of the Company effective September 3, 2003. YourDirectors place on record, their appreciation for the valuable contributionmade by Mr.Nakra during his association with the Company.

AUDITORSM/s Luthra & Luthra, Chartered Accountants, the Statutory Auditors ofthe Company, retire at the conclusion of the ensuing Annual GeneralMeeting and are eligible for re-appointment. The Company has obtainedfrom them a Certificate to the effect, that their re-appointment, if made,will be in conformity with the limits specified under Section 224 (1B)of the Companies Act, 1956.

COMPLIANCE CERTIFICATE UNDER THE COMPANIES ACT, 1956A certificate issued by M/s. A.K. Samal & Co., Company Secretaries interms of the provisions of Section 383A of the Companies Act, 1956 tothe effect that the Company has complied with the applicable provisionsof the said Act is attached to this Report.

On behalf of the Board of DirectorsNew Delhi ANALJIT SINGHJULY 14, 2004 Chairman

Registration No. of the Company: 55 - 61314Nominal Capital: Rs. 10,00,00,000/-

To,The MembersM/s Max Medical Services Private Limited.Max House1, Dr. Jha Marg, OkhlaNew Delhi – 110 020

I have examined the registers, records, books and papers of M/s MaxMedical Services Private Limited (the Company) as required to be

maintained under the Companies Act, 1956 (the Act) and the rulesmade there under and also the provisions contained in the Memorandumand Article of Association of the Company for the financial year endingon 31st March 2004 (financial year from 1st April 2003 to 31st March2004). In my opinion and to the best of my information and accordingto the examinations carried out by me and explanations furnished tome by the Company, its officers, and agents, I certify that in respect ofthe aforesaid financial year:1. The Company has kept and maintained all registers as stated in

Annexure A to this certificate, as per the provisions of the Act andthe rules made there under and all entries therein have been dulyrecorded.




2. The Company has duly filed the forms and returns as stated inAnnexure B to this certificate, with the Registrar of Companies,NCT of Delhi & Haryana, New Delhi, within the time prescribedunder the Act and the rules made there under.

3. The Company being a Private Limited Company has the minimumprescribed paid-up capital and its maximum number of membersduring the said financial year was 2 (two) excluding its present andpast employees and the company during the year under scrutiny:• has not invited public to subscribe for its shares or debentures,

and• has not invited or accepted any deposits from persons other

than its members, Directors or their relatives.4. The Board of Directors duly met Four times respectively on June

20, 2003, September 3, 2003, December 29, 2003 (Adjourned),January 5, 2004, March 18, 2004 (Adjourned) and March 25,2004 in respect of which meetings, proper notices were given andthe proceedings were properly recorded and signed in the MinutesBook maintained for the purpose.

5. The Company has not closed its registers of members during thefinancial year.

6. The Annual General Meeting for the financial year ended on 31stMarch 2003 was held on Friday, September 12, 2003 after givingdue notice to the members of the Company and the resolutionspassed thereat were duly recorded in Minutes Book maintained forthe purpose.

7. One Extra Ordinary General Meeting was held during the financialyear.

8. The Company being a Private Company, section 295 of the Act isnot applicable.

9. The Company has not entered into any contracts falling within thepurview of Section 297 of the Act.

10. The Company was not required to make any entries in the registermaintained under Section 301 of the Act.

11. As there were no instances falling within the purview of section314 of the Act, the Company has not obtained any approvals fromthe Board of Directors, members or Central Government as the casemay be.

12. The Company has not issued any duplicate share certificates duringthe financial year.

13. The Company(i) has not transferred the shares/securities during the financial

year.(ii) has not deposited the amount of dividend, as there was no

dividend declared during the financial year.(iii) has duly complied with the requirements of section 217 of the

Act.14. The Board of Directors of the Company is duly constituted. There

was no appointment of Additional Director and Alternate Directorduring the financial year.

15. The Company has not appointed any Managing Director/ Whole TimeDirector during the Financial Year.

16. The Company has not appointed any sole-selling agents during thefinancial year.

17. The Company was not required to obtain any approvals of the CentralGovernment, Company Law Board, Regional Director, Registrar ofCompanies and/or such authorities prescribed under the variousprovisions of the Act during the financial year.

18. The directors have disclosed their interests in other firms/companiesto the Board of Directors pursuant to the provision of the Act andthe rules made there under.

19. The Company has not issued any shares or other securities duringthe financial year.

20. The Company has not bought back any shares during the financialyear.

21. There was no redemption of Preference shares or Debentures duringthe financial year.

22. There were no transactions necessitating the Company to keep inabeyance the rights to dividend, rights shares and bonus sharespending registration of transfer of shares.

23. The Company has not invited/accepted any deposits including anyunsecured loans falling within the purview of section 58A duringthe financial year.

24. The Company has not made the borrowings during the financialyear.

25. The Company has not made any loans or advances or givenguarantees or provided securities to other body corporates.

26. The Company has not altered the provisions of the Memorandumwith respect to the situation of the Company’s registered officefrom one state to another during the financial year under scrutiny.

27. The Company has not altered the provisions of the Memorandumwith respect to the objects of the Company during the year underscrutiny.

28. The Company has not altered the provisions of the Memorandumwith respect to name of the Company during the year under scrutiny.

29. The Company has not altered the provisions of the Memorandumwith respect to share capital of the company during the year underscrutiny.

30. The Company has altered its Articles of Association during thefinancial year.

31. There were no prosecution initiated against or show cause noticesreceived by the Company and no fines or penalties or any otherpunishment was imposed on the Company during the financialyear for offences under the Act.

32. The Company has not received any money as securities from itsemployees during the financial year.

33. The Company has not deposited both employer’s and employees’contribution towards Provident Fund during the financial year, asthe Provident Fund Act is not applicable to this company.

For A.K. SAMAL & Co.,Company Secretaries

New Delhi ANUP KUMAR SAMALJULY 14, 2004 C.P. No.: 3523




ANNEXURE A

FORMS AND RETURNS AS FILED BY THE COMPANY WITH THE REGISTRAR OF COMPANIES, REGIONAL DIRECTOR, CENTRAL GOVERNMENT OR OTHER AUTHORITIES

DURING THE FINANCIAL YEAR ENDING ON MARCH 31, 2004.

Sl. No. Form No./ Return Filed u/s For Date of Whether filed If delay in Remarksfiling within filing whether

prescribed requisitetime. additional

fee paid

1. Balance sheet andP&L Account 220 31-03.2003 23-09-2003 Yes N.A. ROC receipt no. 482345.

2. Annual Return 160 12-09-2003 10-11-2003 Yes N.A. ROC receipt no. 496983.3. Compliance certificate 383A(1) 12-09-2003 23-09-2003 Yes N.A. ROC receipt no. 482345.4. Form No. 32 303 03-09-2003 23-09-2003 Yes N.A. ROC receipt no. 482345.5. Form No. 23 31 & 192 03-09-2003 23-09-2003 Yes N.A. ROC receipt no. 482345.

For A.K. SAMAL & Co.,Company Secretaries

New Delhi ANUP KUMAR SAMALJULY 14, 2004 C.P. No.: 3523

STATUTORY REGISTERS AS MAINTAINED BY THE COMPANY

1 Register of members u/s 150 of the Companies Act, 1956.2 Minute Book u/s 193 of the Companies Act, 1956 containing

minutes of— Board Meeting— General Meeting

3. Books of Accounts u/s 209 of the Companies Act, 1956.4. Register of Directors, Managing Director/Manager/Secretary u/s 303

of the Companies Act, 1956.5. Register of Share Transfer.

Note: The Company has not maintained the following registers as itwas informed that there were no entries / transaction to berecorded therein:

1. Index of members.2. Register of debenture holders.3. Index of Debenture holders.4. Register of Investments u/s 372A.5. Register of Directors’ contracts in which Directors are interested

u/s 301.6. Register of Contract u/s 297.7. Register of charges u/s 130.8. Register of loans u/s 372A.9. Register of Directors’ shareholdings.10. Register of deposits.

ANNEXURE B




AUDITORS’ REPORT

We have audited the attached Balance Sheet of Max Medical ServicesPrivate Limited as at March 31, 2004 and the Profit & Loss Accountfor the year ended on that date. These financial statements are theresponsibility of the Company’s management. Our responsibility is toexpress an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standardsgenerally accepted in India. Those Standards require that we plan andperform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includesexamining, on test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessingthe accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis forour opinion.1 The Companies (Auditor’s Report) Order, 2003 issued by the Central

Government in terms of sub-section (4A) of Section 227 of theCompanies Act, 1956 is not applicable to the company.

2 We report that :a We have obtained all the information and explanations which


b In our opinion, proper books of account as required by lawhave been kept by the Company in so far as appears from ourexamination of those books;

c The said Balance Sheet and Profit & Loss Account are inagreement with the books of account;

d In our opinion, the Balance Sheet and the Profit & Loss Accountcomply with the Accounting Standards referred to in Section211(3C) of the Companies Act, 1956;

e In our opinion and to the best of our information and accordingto the explanations given to us, the said accounts, read togetherwith notes thereon in Schedule-15, give the informationrequired by the Companies Act, 1956 in the manner so requiredand give a true and fair view:-i in the case of Balance Sheet, of the state of affairs of the

Company as at 31st March 2004; andii in the case of Profit & Loss Account, of the net profit for


For Luthra & LuthraChartered Accountants

K.B. AGRAWALNew Delhi PartnerJUNE 16, 2004 M.No. : 95829




RUPEESSCHEDULE As at As at

31.03.2004 31.03.2003

SOURCES OF FUNDSSHAREHOLDERS’ FUNDSShare Capital 1 1,000,000 1,000,000Share Application Money 155,275,350 155,275,350

RESERVE & SURPLUSShare Premium 2,999,650 2,999,650

LOAN FUNDSUnsecured Loan 2 108,467,375 —

Deferred Tax Liability (Net) 3 24,136,073 25,068,333291,878,448 184,343,333

APPLICATION OF FUNDSFIXED ASSETS 4Gross Block 284,690 57,948Less : Depreciation 60,511 30,047Net Block 224,179 27,901Capital Work in Progress 5 97,484,087 —

97,708,266 27,901

CURRENT ASSETS, LOANS & ADVANCESConstruction Work in Progress 6 183,572,785 1,372,712Cash and Bank Balances 7 3,863,312 6,382Other Current Assets 8 2,112,022 599,945Loans & Advances 9 96,436,858 85,300,000

285,984,977 87,279,039

LESS : CURRENT LIABILITIES & PROVISIONS 10 186,754,796 301,112186,754,796 301,112

NET CURRENT ASSETS 99,230,181 86,977,927

MISCELLANEOUS EXPENDITURE 11 67,575,711 69,892,487(To the extent not written off or adjusted)

PROFIT & LOSS ACCOUNT 27,364,290 27,445,018291,878,448 184,343,333





ANALJIT SINGH ChairmanB. ANANTHARAMAN Director

AUDITORS’ REPORT“As per our separate report of the even date”


K B AGRAWALPartnerM No. 95829






INCOMEOther Income 12 1,528,868 599,068

1,528,868 599,068

EXPENDITUREConstruction, Administrative and other expenses 13 2,341,271 2,343,776Financial Expenses 14 8,665 2,450Depreciation 30,464 30,047

2,380,400 2,376,273

Profit/(Loss) for the Year (851,532) (1,777,205)Provision for Taxation- Current Tax — —- Deferred Tax Liability (932,260) (1,465,011)

Profit/(Loss) for the year after tax 80,728 (312,194)

Profit/(Loss) brought forward from the previous year (27,445,018) (27,132,824)

Balance Carried forward to the Balance Sheet (27,364,290) (27,445,018)

Earning Per ShareBasic 0.81 (3.12)Diluted 0.01 (0.02)

RUPEESSCHEDULE For the Year For the Period

01.04.2003 to 01.04.2002 to31.03.2004 31.03.2003



ANALJIT SINGH ChairmanB. ANANTHARAMAN Director

AUDITORS’ REPORT“As per our separate report of the even date”


K B AGRAWALPartnerM No. 95829





RUPEESAs at As at

31.03.2004 31.03.2003


SCHEDULE–1Share Capital Authorised1,00,00,000 (Previous year 1,00,00,000) Equity Shares of Rs. 10/- each 100,000,000 100,000,000

100,000,000 100,000,000

Issued, Subscribed & Paid up1,00,000 (Previous year 1,00,000) Equity Shares of Rs. 10/- each 1,000,000 1,000,000

1,000,000 1,000,000

SCHEDULE–2LOANSUnsecured LoansFrom Corporates* 108,467,375 —

108,467,375 —* Loans availed from the holding Company Max Healthcare Institiute Limited

Maximum amount oustanding during the year is Rs. 108,467,375

SCHEDULE–3DEFERRED TAX LIABILITY(Refer Note A6 on Schedule 15)

- Opening Balance 25,068,333 26,533,344- Depreciation related 16,191 (2,122)- Revaluation difference — (611,474)- Deferred Tax Liability Written back (948,451) (851,415)

24,136,073 25,068,333

SCHEDULE–4FIXED ASSET (Refer Note A3, A4 on Schedule 15) RUPEES

Particulars Gross Block Additions Sale Gross Block Depreciation Depreciation Depreciation Net Block Net Block

as on During During as on as on for the as on as on as on

01.04.2003 the year the year 31.03.2004 01.04.2003 year 31.03.2004 31.03.2004 31.03.2003

Furniture Fixture 16,547 21,399 — 37,946 9,447 3,002 12,449 25,497 7,100

Office Equipment & Computer software 41,401 205,343 — 246,744 20,600 27,462 48,062 198,682 20,801

Total 57,948 226,742 — 284,690 30,047 30,464 60,511 224,179 27,901

Previous Year — 57,948 — 57,948 — 30,047 30,047 27,901

RUPEES

As at As at31.03.2004 31.03.2003

SCHEDULE–5(Refer Note A3, A5 on Schedule 15 & Schedule 6)

CAPITAL WORK IN PROGRESSFixed Assets under installation 38,688,331 —Capital Advances 3,938,259 —Expenses Pending Capitalisation 54,857,496 —

97,484,087 —




SCHEDULE–6CONSTRUCTION WORK IN PROGRESS(Refer Note A7 on Schedule 15, Schedule 13 & Schedule 14)

Opening Balance 1,372,712 —Add : Subcontract Expenses 69,283,580 1,372,712Other Expenses 10,350,531 —Interest 5,793,205 —

85,427,316 1,372,712

Add : Preoperatives Expenses Transferred from Max Healthcare Institute Ltd 151,630,253 —237,057,569 1,372,712

Less : Expenses transferred to Capital Work In Progress * 54,857,496 —

Closing Balance ** 183,572,785 1,372,712

* Includes Interest for Rs. 1,951,035

** Includes Interest for Rs. 3,842,170

SCHEDULE–7CASH & BANK BALANCESCash-in-hand 10,346 299Balance with Banks-In Current Accounts 1,464,017 6,083-Fixed Deposit Accounts * 2,388,949 —

3,863,312 6,382* Under Lien with IDBI Bank Ltd for Opening of Letter of Credit

SCHEDULE–8OTHER CURRENT ASSETSInterest Receivable 1,672,800 473,264Prepaid Expenses — 877TDS Recoverable 439,222 125,804

2,112,022 599,945

SCHEDULE–9LOANS & ADVANCES(Considered good, unless otherwise Stated)UnsecuredAdvances recoverable in cash or kind or value to be received 3,840,247 500,000Loans 14,296,611 6,500,000Security Deposits 78,300,000 78,300,000

96,436,858 85,300,000

RUPEESAs at As at

31.03.2004 31.03.2003





RUPEESAs at As at

31.03.2004 31.03.2003


SCHEDULE–10CURRENT LIABILITIESSundry Creditors* 179,429,573 296,862Interest Accrued but not due 4,605,598 —Other Liabilities 2,719,625 4,250

186,754,796 301,112

*Payable to holding company Max Healthcare Institute Limited Rs. 164,487,078/- (Previous year Rs. 18,431/-)

SCHEDULE–11MISCELLANEOUE EXPENDITURE(To the extent not written off or adjusted)(Refer Note A8 on Schedule 15)

a) Deferred Revenue ExpenditureNon Compete FeesOpening balance 61,200,000 61,200,000Less: Amortised during the year — —Closing Balance 61,200,000 61,200,000Professional Fees & Other ExpensesOpening balance 8,683,875 10,999,575Less: Amortised during the year 2,315,700 2,315,700Closing Balance 6,368,175 8,683,875

b) Preliminary ExpensesOpening balance 8,612 9,688Less: Amortised during the year 1,076 1,076Closing Balance 7,536 8,612

TOTAL 67,575,711 69,892,487


01.04.2003 to 01.04.2002 to31.03.2004 31.03.2003

SCHEDULE–12OTHER INCOMEInterest on Loans 1,508,850 599,068Interest on Fixed Deposits 20,018 —

1,528,868 599,068Tax Deducted at Source Rs. 3,13,418/- (Previous Year Rs. 1,25,804/-)





01.04.2003 to 01.04.2002 to31.03.2004 31.03.2003


SCHEDULE–13CONSTRUCTION, ADMINISTRATION & OTHER EXPENSESSubcontract Expenses 69,283,580 —Personnel Expenses

Salaries, Wages and bonus 1,694,511Contribution to Provident & Other Funds 75,510Staff Welfare 57,580 1,827,601 29,385

Power & Fuel 25,838 —Electricity & water 929,439 252,866Legal & Professional 5,494,488 529,573Travelling & Conveyance 871,366 19,465Repair & Maintenance - Others 546,924 405,512Launch & Pooja Expenses 455,863 31,582Communication Expenses 116,888 47,360Printing & Stationery 69,698 54,969Miscellaneous Expenses 12,427 2,000

79,634,111 1,372,712Less : Transferred to Construction Work In Progress 79,634,111 1,372,712

— —

Audit Fees 19,980 16,200Amortization of Misc. expenditure 2,316,776 2,316,776Miscellaneous Expenses 4,515 10,800

2,341,271 2,343,776

SCHEDULE–14FINANCIAL EXPENSES(Refer Schedule 6)

Bank Charges 8,665 2,450Interest 5,793,205Less : Transferred to Construction Work In Progress 5,793,205

— —8,665 2,450




SCHEDULE–15A. SIGNIFICANT ACCOUNTING POLICIES1 Accounting Conventions

The books of account are maintained on historical cost conventionon an accrual basis and in accordance with the applicableaccounting standards issued by the Institute of CharteredAccountants of India (ICAI).

2 Revenue RecognitionThe company is in the business of constructing and leasing ofmedical & other equipments. The Construction contract in hand isa “Cost Plus Contract” and the company has adopted “CompletedContract Method” of recognizing the revenue. Revenue will berecognized on the completion of construction of hospital. Leaserentals are recognized on straight line method.

3 Fixed Assetsa Fixed Assets are stated at their original cost including freight,

duties, taxes and other incidental expenses relating toacquisition and installation.

b Expenses incidental and related to the acquisition andinstallation of fixed assets are transferred to “Expenses pendingcapitalization”.

4 Depreciationa Depreciation is charged on straight line method at rates

specified in schedule XIV of the Companies Act, 1956 on aprorata basis.

b Assets costing not more than Rs. 5000/- each individuallyhave been depreciated at 100%.

5 Borrowing CostBorrowing cost that are directly attributable to the acquisition,installation of the fixed assets have been included in the “ Expensespending capitalization”, and the same shall be capitalized inaccordance with Accounting Standard 16 “Borrowing Costs”.

6 Income TaxCurrent tax Provisions computed for current income based on thetax liability after considering allowances and exemptions. Deferredtax assets and liabilities are computed on the timing differences atthe Balance Sheet date between the carrying amount of the assetsand liabilities and their respective tax basis. No deferred tax assetsare recognized based on management estimates of available futuretaxable income and assessing its certainity.

7 Construction Work in ProgressExpenses attributable to the construction activity have beenclassified under “Construction work in Progress”.

8 Miscellaneous Expenditurea The company has paid non-compete fees as per agreement

amounting to Rs. 6,12,00,000/-. The same will be amortisedon the commencement of operations in the Hospital Project.

b Preliminary expenses are amortised over a period of 10 years.c Deferred Revenue Expenditure includes consultancy charges

for structuring of business and is being amortised over a periodof five years.


B. NOTES TO ACCOUNTS

1 Contingent LiabilitiesLetter of Credit Outstanding : Rs. 20,81,288/-Estimated amount of contracts (net of advances) remaining to beexecuted on capital account and not provided Rs. 65,572,121/-

2 As the Company has entered into the contracts for construction ofhospital on December 10, 2001, the accounting statements areprepared in accordance with the old Accounting Standard-7.(Accounting for construction contracts).

3 Auditors Remuneration:

RUPEES


Audit Fees (inclusive of service tax) 19,980 16,200

4 Expenditure in foreign currency is Rs. 783,502/- (Previous YearRs. 3,19,619/-).

5 Earning per share

S.No Earning Per Share Current Year Previous Year

a Profit after Tax 80,728 (312,194)b No of Shares Outstanding 100,000 100,000c Earning per Share basic (a/b) 0.81 (3.12)d No. of shares resulting on

allotment of share againstapplication money 15,627,535 15,627,535

e Earning per share- Diluted (a/d) 0.01 (0.02)

6 Previous year figures have been regrouped or rearranged wherevernecessary.

7 Current year figures are rounded of to the nearest of rupee.


New Delhi ANALJIT SINGH ChairmanJUNE 16, 2004 B. ANANTHARAMAN Director






Date Month Year

II CAPITAL RAISED DURING THE YEAR (Amount in Rs. Thousand)Public Issue Right IssueN I L N I LBonus Issue OthersN I L N I L

III POSITION OF MOBILISTION AND DEPLOYMENT OF FUNDS(Amount in Rs. Thousand)Total Liabilities Total Assets

2 9 1 8 7 8 2 9 1 8 7 8

SOURCES OF FUNDS

Paid-up Capital Reserve & Surplus1 0 0 0 3 0 0 0

Share Application Money Secured Loans1 5 5 2 7 5 N I L

Unsecured Loans Deferred Tax Liability1 0 8 4 6 7 2 4 1 3 6


Net Fixed Assets Investments9 7 7 0 8 N I L

Net Current Assets Misc. Expenditure9 9 2 3 0 6 7 5 7 6

Accumulated Losses2 7 3 6 4


1 5 2 9 2 3 8 0+ - Profit/Loss before tax + - Profit/Loss after tax

✓ 8 5 1 ✓ 8 1

Earning per Share in Rs. Dividend Rate (%). 8 1 N I L

V NAME OF THREE PRINCIPAL PRODUCTS/SERVICE OF COMPANYProduct Description C O N S T R U C T I O N


COMSAT MAX LIMITED

MAX Comsat 169-187.p65 9/14/2004, 11:33 AM169

C O M S A T M A X L I M I T E D


DIRECTORS’ REPORT

Your Directors are pleased to present their Tenth Annual Report andAudited Accounts for the year ended March 31, 2004.

FINANCIAL RESULTSBuilding on the conscious strategy of focusing on Services stream, theService revenue posted an increase of more than 10% over correspondingfigure for last year, despite intense market pressure continuing to erodethe price realisations. With the re-organisation last year of your Company’shardware business, the hardware sales were lower at Rs. 5.02 croreagainst Rs. 10.15 crore in earlier year. As a result, your Companyachieved a total turnover of Rs. 43.69 Crore during the year againstRs. 45.50 Crore in the previous year.

Better margins on Services revenues coupled with reversal ofaccumulated provision for depreciation, no longer required uponextinguishments of loans availed for acquisition of fixed assets, haveled to profit before taxes of Rs. 1.85 Crore for the current year as againstthe loss of Rs. 1.96 Crore for the previous year. The cash accrualsgenerated from the business were also higher at Rs. 6.21 Crore asagainst Rs. 5.89 Crore in previous year. The Debt : Equity of yourCompany in terms of borrowings significantly improved from 1.03 lastyear to 0.49 on March 31, 2004.

CHANGES IN SHAREHOLDINGDuring the year under review, pursuant to Share Sale and PurchaseAgreement with Comsat Corporation and others, Max India Ltd, yourCompany’s holding Company, acquired 49% of Comsat Corporation’sEquity shareholding in the Company. The deal was a result of LockheedMartin’s (ultimate parent Company of Comsat Corporation) decision toexit telecom sector globally and represented Max India’s commitmentto the success of your Company’s business. The Board takes thisopportunity to place on record its appreciation of the valuablecontribution made by Comsat Corporation over the years to the strategicdirection and growth of Company’s business.

DIVIDENDIn view of the accumulated losses, your Directors are unable torecommend any dividend on Equity Shares.

BUSINESS OPERATIONSThe start of consolidation in ATM Infrastructure in Banking sector coupledwith slow-down in Manufacturing sector’s IT spending resulted in lowerexpansion in your Company’s installed base of total VSATs during theyear. The Company plans to selectively pursue the key opportunities inVSAT segment in the coming year.

Benefiting from the greater competitive reach from higher numberof PoPs (Points of Presence), the Internet VPN business of your Companycontinues to grow at a steady pace; with higher business volumes, theCompany expects to sustain the profitability while having to augmentthe capacity of the backbone infrastructure of your Company.

During the year, your Company further expanded the scope of itsHPDM (Host, Protect, Deliver and Manage) business services model byintroduction of higher-value added services like Learning ManagementSolutions designed to address corporate training needs using ITenablement. In order to lend greater competitive edge to this offering,subsequent to the close of year under review, your Company acquiredKnowledge Management business from Max Ateev Ltd, a subsidiary ofMax India Ltd, your Company’s parent company. The combined serviceoffering, a Knowledge Solution practice, enables your company to service

its corporate customers’ needs in the arena of harnessing their businessintelligence in a cost effective manner for gaining competitive advantage.

The closure of this transfer of business is expected to beconsummated in the first half of the financial year 2004-05.

The forays initiated by your Company in offering its NetworkManagement services in a remotely controlled Global scenario haveshown very encouraging results and the Company plans to capitalize onthe same by creating new revenue streams during the coming year.

NETWORK OPERATIONThe cumulative Network availability for all the Closed User Groups (CUG)networks continued to be better than 99.7%. The availability of networkon VPN backbone was in excess of 98%.

The availability of satellite resources has seen significantimprovement in flexibility in availment and rationalization of pricing.Arising from this, your Company expects to generate substantial costefficiencies in the coming year. Your Company has deployed an optimumcombination of domestic and foreign satellites capacities on differentfrequency bands to upgrade the quality of service and efficiency ofservice delivery.

DIRECTORSIn accordance with the provisions of the Companies Act, 1956 and theCompany’s Articles of Association, Mr. B. Anantharaman is due to retireby rotation and is eligible for re-appointment. During the year underreview, Mr. Surendra Kaul was appointed as a Director. As of the dateof this Report, Mr. Analjit Singh has been appointed as an AdditionalDirector of the Company and shall hold office upto the ensuing AnnualGeneral Meeting. The Company has received a notice from a memberof the Company under Section 257 of the Companies Act 1956proposing his candidature for the office of Director. Upon hisappointment as Additional Director, Mr Analjit Singh was co-opted asChairman of the Board of Directors of the Company.

COMPOSITION OF AUDIT COMMITTEE & REMUNERATIONCOMMITTEEWith the co-option of Mr. Analjit Singh as an Additional Director, theAudit Committee and Remuneration Committee were re-constituted withMr Analjit Singh chairing the same. The Committees further compriseof Mr. B. Anantharaman and Mr. Surendra Kaul. The current terms ofreference of these Committees fully conform to the requirements of theCompanies Act, 1956.

DIRECTORS’ RESPONSIBILITY STATEMENTThe Board of Directors of the Company confirm that:(i) In the preparation of annual accounts, the applicable accounting

standards have been followed along with proper explanation relatingto material departures;

(ii) The Directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year andof the profit of the Company for that period;


MAX Comsat 169-187.p65 9/14/2004, 11:33 AM170




FIXED DEPOSITSYour Company has not accepted/renewed any deposits from the publicduring the year.

PARTICULARS OF EMPLOYEESA statement giving particulars under Section 217 (2A) of the CompaniesAct, 1956 as amended, read with the Companies (Particulars ofEmployees) Rules, 1975, for the year ended March 31, 2004 is annexedto the Report as Annexure-A.

ADDITIONAL INFORMATIONInformation in accordance with the provisions of Section 217 (1) (e) ofthe Companies Act, 1956 read with the Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988 is given inthe prescribed format annexed to the Report as Annexure-B.

AUDITORSDuring the year, M/s S. R. Batliboi & Co., Chartered Accountants,statutory auditors of your company, resigned from office. Consequently,M/s Price Waterhouse, Chartered Accountants, were appointed as theStatutory auditors of your Company at the last Annual General Meetingof the Company. M/s Price Waterhouse retire at the ensuing AnnualGeneral Meeting and offer themselves for re-appointment. The Companyhas received a certificate from M/s Price Waterhouse as required underSection 224 (1-B) of the Companies Act, 1956 to the effect that theirre-appointment, if made, will be in conformity with the limits specifiedin that Section.

AUDITORS’ REPORTThe observations made by the Auditors in their report are self-explanatoryand have also been further amplified in the Notes to the Accounts,wherever required.

ACKNOWLEDGEMENTSYour Directors acknowledge with thanks the co-operation and assistancereceived by the Company from the Central and State Government andBanks. The Directors also record their appreciation of the dedication ofthe employees of the Company for their support and commitment toensure the continuous growth of the Company.

For and on behalf of the Board of DirectorsNew Delhi ANALJIT SINGHAPRIL 28, 2004 Chairman

MAX Comsat 169-187.p65 9/14/2004, 11:33 AM171



ANNEXURE A

PARTICULARS OF EMPLOYEESINFORMATION AS PER SECTION 217 (2A) READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975 AND FORMING PART OF THE DIRECTORS’REPORT YEAR ENDED MARCH 31, 2004Sl. Name Age Designation Remuneration Qualification Date of Experience Last Employment DesignationNo. (Years) (Rs.) Commencement (Years) held

of employment

a Employed throughout the year and were in receipt of remuneration of not less than Rs. 24,00,000/-per annum

1. Mr. Sudipta K Sen 50 Managing Director 3,304,230 B.Sc., MBA 08.12.1995 26 Tata Information Country Head-

Systems Ltd. Sales

2. Mr. Joyjit Chatterji 39 Vice President - Sales 2,520,904 B.E. (Elect 20.09.1996 17 DDE ORG Regional

& EDC Operation & Comn) Systems Limited Manager

Notes 1. Remuneration includes salary, allowances, value of rent free accommodation, bonus, medical reimbursement, leave travel assistance, Company’scontribution to Provident, Pension, Gratuity and Superannuation fund, leave encashment and monetary value of perquisites.

2. None of the above employees is a relative of any director of the Company.3. The services of employees are contractual in nature.4. The designation of the aforesaid employees is indicative of their nature of duties also and governed by the general terms and conditions of the

employment contract with the Company.5. None of the above employee holds by himself or along-with his spouse and dependent children 2% or more of Equity Shares of the Company.


ANNEXURE B

A CONSERVATION OF ENERGYa Energy Conservation Measures Taken Steps taken to bring about savings on power consumption by better

housekeeping, installation of usage optimisation devices and energyefficient tubelights.

b Additional Investment and proposals,if any, for reduction of consumption of energy. Nil

B TECHNOLOGY ABSORPTION1 Specific areas in which R&D carried out by the Company Nil2 Benefits derived as a result of above NA3 Future Plan of Action NA4 Expenditure on R&D NA

C FOREIGN EXCHANGE EARNING AND OUTGOActivities relating to Exports, initiatives taken to increase exports, developNew Export markets, Exports Plan etc. NA

(Rs. Crore) Year ended Year ended

31.03.2004 31.03.2003

Earning 2.16 2.63Outgo 1.79 6.54


MAX Comsat 169-187.p65 9/14/2004, 11:33 AM172



AUDITORS’ REPORT

TO THE MEMBERS OF COMSAT MAX LTD.1 We have audited the attached Balance Sheet of Comsat Max Limited,

as at March 31, 2004 and the related Profit and Loss Account forthe year ended on that date annexed thereto, which we have signedunder reference to this report. These financial statements are theresponsibility of the company’s management.Our responsibility is to express an opinion on these financialstatements based on our audit.

2 We conducted our audit in accordance with the auditing standardsgenerally accepted in India. Those Standards require that we planand perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit providesa reasonable basis for our opinion.

3 As required by the Companies (Auditor’s Report) Order, 2003 issuedby the Central Government of India in terms of sub-section (4A) ofSection 227 of ‘The Companies Act, 1956’ of India (the ‘Act’) andon the basis of such checks of the books and records of the companyas we considered appropriate and according to the informationand explanations given to us, we further report that:i (a) The company is maintaining proper records showing full


(b) The fixed assets are physically verified by the managementonce in three years under a phased programme, which inour opinion, is reasonable having regard to the size of thecompany and the nature of its assets. Pursuant to theprogramme, no physical verification has been carried outduring the year.

(c) In our opinion and according to the information andexplanations given to us, a substantial part of fixed assetshas not been disposed of by the company during the year.

ii (a) The inventory (excluding stocks with third parties) has beenphysically verified by the management during the year. Inrespect of inventory lying with third parties, these havesubstantially been confirmed by them. In our opinion, thefrequency of verification is reasonable.




iv In our opinion and according to the information andexplanations given to us, having regard to the explanation thatcertain items purchased are of special nature for which suitablealternative sources do not exist for obtaining comparativequotations, there are adequate internal control procedures

commensurate with the size of the company and the nature ofits business for the purchase of inventory, fixed assets and forthe sale of goods. Further, on the basis of our examination ofthe books and records of the company, and according to theinformation and explanations given to us, we have neither comeacross nor have been informed of any continuing failure tocorrect major weaknesses in the aforesaid internal controlprocedures.

v The company has not accepted any deposits from the publicwithin the meaning of Sections 58A and 58AA of the Act andthe rules framed there under.

vi In our opinion, the company has an internal audit systemcommensurate with its size and nature of its business.

vii We have broadly reviewed the books of account maintained bythe company in respect of products where, pursuant to theRules made by the Central Government of India, themaintenance of cost records has been prescribed under clause(d) of sub-section (1) of Section 209 of the Act and are of theopinion that prima facie, the prescribed accounts and recordshave been made and maintained. We have not, however, madea detailed examination of the records with a view to determinewhether they are accurate or complete.

viii (a) According to the information and explanations given tous and the records of the company examined by us, in ouropinion, the company is regular in depositing theundisputed statutory dues including provident fund,investor education and protection fund, employees’ stateinsurance, income-tax, sales-tax, wealth tax, customs duty,excise duty, cess and other material statutory dues asapplicable with the appropriate authorities.

(b) According to the information and explanations given tous and the records of the company examined by us, theparticulars of dues of sales-tax, income-tax, customs duty,wealth tax, excise duty and cess as at March 31, 2004which have not been deposited on account of a disputeare disclosed in note B 1(2 & 3) on Schedule 13.

ix The company has accumulated losses as at March 31, 2004which are less than fifty percent of its share capital and it hasnot incurred any cash losses in the financial year ended onthat date or in the immediately preceding financial year.

x According to the records of the company examined by us andthe information and explanation given to us, the company hasnot defaulted in repayment of dues to any financial institutionor bank or debenture holders as at the balance sheet date.

xi The company has not granted any loans and advances on thebasis of security by way of pledge of shares, debentures andother securities.

xii The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to thecompany.

xiii In our opinion, the company is not a dealer or trader in shares,securities, debentures and other investments.

xiv In our opinion, and according to the information andexplanations given to us, the company has not given anyguarantee for loans taken by others from banks or financialinstitutions during the year.

xv The company has not obtained any term loans during the year.xvi On the basis of an overall examination of the balance sheet of

MAX Comsat 169-187.p65 9/14/2004, 11:33 AM173



the company, in our opinion and according to the informationand explanations given to us, there are no funds raised on ashort-term basis which have been used for long-terminvestment, and vice versa.

xvii The company has not made any preferential allotment of sharesto parties and companies covered in the register maintainedunder Section 301 of the Act during the year.

xviii During the course of our examination of the books and recordsof the company, carried out in accordance with the generallyaccepted auditing practices in India, and according to theinformation and explanations given to us, we have neither comeacross any instance of fraud on or by the company, noticed orreported during the year, nor have we been informed of suchcase by the management.

xix The other clauses, (v), (xix) and (xx) of paragraph 4 of theCompanies (Auditor’s Report) Order, 2003 are not applicablein the case of the company for the current year, since in ouropinion there is no matter which arises to be reported in theaforesaid order.

4 Further to our comments in paragraph 3 above, we report that:(a) We have obtained all the information and explanations, which






(f) In our opinion and to the best of our information and accordingto the explanations given to us, the said financial statementstogether with the notes thereon and attached thereto give inthe prescribed manner the information required by the Actand give a true and fair view in conformity with the accountingprinciples generally accepted in India:i in the case of the Balance Sheet, of the state of affairs of

the company as at March 31, 2004; andii in the case of the Profit and Loss Account, of the profit for


V NIJHAWANPartner

Membership No.:F 87228

For and on behalf ofNew Delhi Price WaterhouseAPRIL 28, 2004 Chartered Accountants

MAX Comsat 169-187.p65 9/14/2004, 11:33 AM174




31.03.2004 31.03.2003

SOURCES OF FUNDSSHAREHOLDERS’FUNDSShare Capital 1 292,000,000 292,000,000Capital Reserves 51,083,475 —(Refer Note II on schedule 13 B)

LOAN FUNDS 2Secured Loans 82,183,458 129,753,810Unsecured Loans 85,740,139 171,103,430

DEFERRED TAX LIABILITY 3 8,811,099 17,296,031Total 519,818,171 610,153,271

APPLICATION OF FUNDSFIXED ASSETS 4Gross Block 573,463,216 595,608,921Less : Depreciation 317,909,855 285,352,622Net Block 255,553,361 310,256,299Capital Work In Progress 2,588,729 7,825,463

258,142,090 318,081,762CURRENT ASSETS, LOANS & ADVANCES 5Inventories 54,425,041 58,793,028Sundry Debtors 107,295,130 155,342,690Cash and Bank Balances 437,015 772,972Other Current Assets 36,942,965 36,744,356Loans and Advances 96,008,445 57,500,031

295,108,596 309,153,077LESS : CURRENT LIABILITIES & PROVISIONS 6Sundry Creditors 121,393,628 126,933,532Provisions 3,354,164 8,969,148

124,747,792 135,902,680NET CURRENT ASSETS 170,360,804 173,250,397MISCELLANEOUS EXPENDITURE 7 491,386 982,772(to the extent not written off or adjusted)

PROFIT & LOSS ACCOUNT 90,823,891 117,838,340Total 519,818,171 610,153,271

NOTES TO ACCOUNTS AND ACCOUNTING POLICIES 13



B. ANANTHARAMAN DirectorSUDIPTA K. SEN Managing DirectorSURENDRA KAUL Director

SHRIKANT S. MATE CFO & Company Secretary


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

V. NIJHAWANPartner


New DelhiAPRIL 28, 2004

MAX Comsat 169-187.p65 9/14/2004, 11:33 AM175



SCHEDULE RUPEESYear Ended Year EndedMarch 31, March 31,

2004 2003

INCOME 8Sales 50,189,100 101,522,362Service Income 376,834,676 342,457,177Other Income 9,891,278 11,069,692Total Income 436,915,054 455,049,231

EXPENSESCost of Sales and Services 9 219,881,154 254,750,685Employee Remuneration and Benefits 10 53,807,100 44,849,369Operating and Other Expenses 11 84,034,981 68,515,456Interest 12 25,542,466 33,769,229Depreciation 35,119,836 72,772,246(Refer Note II on schedule 13 B) 418,385,537 474,656,985

PROFIT/(LOSS) BEFORE TAX 18,529,517 (19,607,754)Less Taxation :

- Current Tax — —- Deferred Tax (Refer Note XIV on Schedule 13B) (8,484,932) (5,815,905)

PROFIT/(LOSS) AFTER TAX 27,014,449 (13,791,849)Balance of Loss brought forward (117,838,340) (104,046,491)BALANCE OF LOSS CARRIED FORWARD (90,823,891) (117,838,340)

Weighted Average number of Equity Shares outstandingduring the year

: Basic 29,200,000 29,200,000: Diluted 35,359,836 36,991,667

Basic earnings per share (Rs.) 0.93 (0.47)Diluted earnings per share (Rs.) 0.76 (0.37)







This is the Profit & Loss Account referred to in our report of even date

V. NIJHAWANPartner



MAX Comsat 169-187.p65 9/14/2004, 11:33 AM176



SCHEDULES ANNEXED TO AND FORMING PART OF ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2004

RUPEESAs at As at

31.03.2004 31.03.2003

1 CAPITALAUTHORISED32,000,000 Equity Shares of Rs. 10/-each 320,000,000 320,000,000

ISSUED29,200,000 (2003 : 29,200,000) Equity Shares of Rs. 10/-each 292,000,000 292,000,000

SUBSCRIBED & PAID UP29,200,000 (2003 : 29,200,000) Equity Shares of Rs. 10/-each 292,000,000 292,000,000fully paid up

292,000,000 292,000,000

Out of the above, 2,920,000 (2003 : 2,920,000) Equity Shares of Rs. 10/-each are held by Max Telecom Ventures Limited, which is a subsidiary of MaxIndia Limited & 26,280,000 (2003 : 11,972,000) Equity Shares of

Rs. 10/- each are held by Max India Ltd., the ultimate holding company.

2 LOAN FUNDSSECURED LOANSLoans From BanksCash Credit from ICICI Bank Limited repayable on demand 32,183,458 59,753,810(Secured by first charge on inventories, book debts and allother current assets, and second charge on immovable properties)

Term Loan from ICICI Bank Ltd. 50,000,000 70,000,000(Secured by first charge on immoveable properties andsecond charge on moveable properties)

(Amount due within one year Rs. 20,000,000 (2003: Rs. 20,000,000))

82,183,458 129,753,810UNSECURED LOANSOthersRupee Loans from Max India Ltd. - Holding Company 25,027,000 25,027,000Foreign Currency Loans from Comsat Investments Inc — 41,824,458(Refer Note II on Schedule 13B)

Foreign Currency Loans from Comsat Corporation — 47,737,490(Refer Note II on Schedule 13B)

Rupee Loans from New Delhi House Service Limited 50,000,000 50,000,000(erstwhile Max House Services Limited)

Rupee Loans from Pharmax Corporation Limited 6,000,000 6,000,000Interest Accrued and Due 4,713,139 514,482(Refer Note II on Schedule 13B)(Amount due within one year Rs. 4,713,139; 2003: Rs. 514,482)

85,740,139 171,103,430

3 DEFERRED TAXLIABILITY(Refer Note XIV on schedule 13B)

Deferred Tax Liability:For fiscal allowances on fixed assets 19,804,818 26,060,564Less:Deferred Tax Assets:For other timing differences (10,993,719) (8,764,533)

8,811,099 17,296,031

MAX Comsat 169-187.p65 9/14/2004, 11:33 AM177




4 FIXED ASSETS (Refer Note II on schedule 13A and notes II and XI on schedule 13B) RUPEES

Depreciation Gross Block ( At Cost ) Depreciation Net Block

Rate As at Deletions/ As at Upto Deletions/ As at As at

DESCRIPTION 31.03.2003 Additions Adjustments 31.03.2004 31.03.2003 For the year AdJustment 31.03.2004 31.03.2004 31.03.2003

Leasehold Land — 8,624,775 — — 8,624,775 500,032 76,289 — 576,321 8,048,454 8,124,743

Building 3.33% 21,729,386 — — 21,729,386 4,084,698 729,598 — 4,814,296 16,915,090 17,644,688

Plant and Machinery 14.28% 498,050,998 * 21,577,619 45,866,947 473,761,670 254,292,859 55,853,173 34,320,720 275,825,312 197,936,358 243,758,139

Computers 33.33% 12,213,232 1,607,447 — 13,820,679 10,465,235 1,536,044 35,000 11,966,279 1,854,400 1,747,997

Furnitures, Fixtures

and Office

Equipment 16.66% / 33.33% 45,362,196 840,276 304,100 45,898,372 13,494,035 7,704,792 205,070 20,993,757 24,904,615 31,868,161

Vehicles 20.00% 2,484,721 — — 2,484,721 1,748,891 417,236 — 2,166,127 318,594 735,830

Lease hold

Improvements 11.10% 7,143,613 — — 7,143,613 766,872 800,891 — 1,567,763 5,575,850 6,376,741

Total 595,608,921 24,025,342 46,171,047 573,463,216 285,352,622 67,118,023 34,560,790 317,909,855 255,553,361 310,256,299

Capital Work-in- Progress (including Capital Advances Rs. NIL (2003 : Rs. 171,700/-) 2,588,729 7,825,463

Grand Total 595,608,921 24,025,342 46,171,047 573,463,216 285,352,622 67,118,023 34,560,790 317,909,855 258,142,090 318,081,762

Previous Year 484,011,726 140,897,211 29,300,016 595,608,921 229,385,384 72,772,246 16,805,008 285,352,622 318,081,762

* Includes Exchange rate Difference capitalised Rs.Nil ( 2003: De-capitalised Rs. 5,94,485/- )* Includes assets transferred to Inventory Rs. 4,199,896/- ( 2003 : Rs. 10,767,155/-) at net values

MAX Comsat 169-187.p65 9/14/2004, 11:33 AM178




RUPEESAs at As at

31.03.2004 31.03.2003

5 CURRENT ASSETS, LOANS AND ADVANCESINVENTORIES - at lower of cost or net realisable valueStock in Trade 54,425,041 58,793,028

54,425,041 58,793,028Note : Includes material with third parties amounting toRs.11,419,317/- (2003 : Rs. 18,523,806/-)

SUNDRY DEBTORS - Unsecured(Refer Note II.3)Over Six months - Good * 37,402,370 41,319,927

- Doubtful 20,075,631 13,108,608Others - Considered Good * 69,892,760 114,022,763

- Doubtful 1,887,779 129,258,540 — 168,451,298Provision for Doubtful Debts (21,963,410) (13,108,608)

107,295,130 155,342,690* Includes Outstanding from Max New York Life Insurance Co. Ltd.

Rs. 875,545 /- (2003 : Rs. 581,606/-), from Max Ateev LtdRs. 1,880,770/- (2003 : Rs. 1,910,246), CMax Infocom Pvt. Ltd.Rs. 7,966,594 (2003 : Rs. 25,884,800) being Companies underthe same Management

CASH & BANK BALANCESCash in hand 75,216 276,066Balances with scheduled Banks in :Current Account 231,799 316,906Margin Account 130,000 180,000

437,015 772,972

OTHER CURRENT ASSETSDeposits (Refer Note III.2 on Schedule 13B ) 37,409,965 37,211,356

Less : Provision for Doubtful Deposits (467,000) (467,000)36,942,965 36,744,356

LOANS AND ADVANCES(Unsecured, considered good)Taxation (Net of Provision Rs. 21,50,000/-, 2003 : Rs. 2,150,000) 26,306,023 18,688,158Advances recoverable in cash or kind or for value to be received 69,702,422 38,811,873Includes amount of Rs. 50,510,228 (2003 : Rs. 29,331,700) due

from Associate Companies 96,008,445 57,500,031

Total 295,108,596 309,153,077

MAX Comsat 169-187.p65 9/14/2004, 11:33 AM179




RUPEESAs at As at

31.03.2004 31.03.2003

6 CURRENT LIABILITIES & PROVISIONSCURRENT LIABILITIESSundry CreditorsTotal Outstanding dues of creditors other than 53,753,363 45,408,710

small scale industrial undertakingsAdvances from Customers 12,374,449 6,352,780Other liabilities 54,939,789 74,683,001Interest accrued but not due 326,027 489,041

121,393,628 126,933,532

As identified by management, there are no dues outstanding to small scale undertakings.

PROVISIONSLeave Encashment, Super Annuation & Gratuity 3,354,164 2,624,734Others — 6,344,414

3,354,164 8,969,148

7 MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)

Preliminary Expenses 53,250 106,500Deferred Revenue Expenses 438,136 876,272

491,386 982,772

Year Ended Year EndedMarch 31, March 31,

2004 2003

8 SALES AND OTHER INCOME

NETWORKING EQUIPMENTS 50,189,100 101,522,36250,189,100 101,522,362

SERVICE INCOMENetwork Installation, Usage and Maintenance Charges 277,351,603 276,573,424VPN and Internet Service Charges 65,727,271 47,341,930Hosting & Security Charges 33,755,802 18,541,823

376,834,676 342,457,177Service Income is net of credit notes amounting to Rs. NIL (2003 : Rs. 2,465,056/-)issued to certain customers during the year upon conclusion of price and related re-negotiations retrospectively.

OTHER INCOMEInterest - Others 211,701 812,389Sundry Credit Balances Written back 412,027 2,244,801Profit on Sale of Fixed Assets (Net ) 9,767 3,028Excess provisions written back 8,131,227 2,877,795Gain on Exchange Rate Difference 608,840 1,916,106Others 517,716 3,215,573

9,891,278 11,069,692

MAX Comsat 169-187.p65 9/14/2004, 11:33 AM180



RUPEESYear Ended Year Ended

31.03.2004 31.03.2003

9 COST OF SALES AND SERVICESCOST OF SALESStock as at 01.04.2003 58,793,028 83,890,010Purchases - Traded goods * 53,758,402 74,347,594

112,551,430 158,237,604Less : Capitalised 8,736,000 16,625,010

103,815,430 141,612,594Less : Closing Stock as at 31.03.2004 54,425,041 58,793,028

49,390,389 82,819,566COST OF SERVICESSpace Segment & Leased Lines Charges 97,561,333 91,119,183DoT License fees 35,742,981 46,901,904Installation and Maintenance Charges 37,186,451 33,910,032

170,490,765 171,931,119

Total 219,881,154 254,750,685

* Purchase includes amount transferred from Fixed Assets at net book value of Rs. 4,199,896 ( 2003 : Rs.10,767,155 )

10 EMPLOYEE REMUNERATION AND BENEFITS(Refer Note IV on Schedule 13B)

Salaries & Wages 45,030,257 37,700,203Contribution to provident /other funds 4,342,562 3,548,065Staff Welfare expenses 4,434,281 3,601,101

53,807,100 44,849,369

11 OPERATING AND OTHER EXPENSES(Refer Note IV on Schedule 13B)

Power & Fuel 11,936,282 9,461,875Rent 12,910,749 11,545,953Rates & Taxes 427,918 441,769Travel & conveyance 9,311,054 8,893,726Communication 6,066,702 7,953,300Business Promotion & Advertisement 1,401,901 2,632,716Printing & Stationery 1,289,717 1,126,953Repairs & Maintenance

- Plant & Machinery 7,609,857 3,979,993- Building 15,396 139,210- Others 938,583 1,519,393

Freight Forwarding & Cartage 2,021,162 3,554,967Insurance 679,389 681,171Bank Charges 2,797,947 1,744,139Legal and Professional Charges 9,687,267 1,981,991Provision for Doubtful Debts and Advances 8,854,802 6,196,098Auditors Remuneration (net of Service Tax) :

- Statutory Audit 370,000 370,000- Tax Audit 100,000 100,000- Other Fees 20,000 20,000

Office Maintenance Expenses 2,618,068 2,324,835Security Expenses 1,571,728 1,227,031Miscellaneous expenses 2,915,073 2,128,952Amortisation of Miscellaneous Expenditure 491,386 491,384

84,034,981 68,515,456


MAX Comsat 169-187.p65 9/14/2004, 11:33 AM181




RUPEESYear Ended Year Ended

31.03.2004 31.03.2003

12 INTERESTOn Term Loans 18,223,120 22,338,337On Working Capital Loan 6,813,209 6,716,207On Others 506,137 4,714,685

25,542,466 33,769,229

MAX Comsat 169-187.p65 9/14/2004, 11:33 AM182



SCHEDULE–13NOTES TO ACCOUNTS AND ACCOUNTING POLICIESA SIGNIFICANT ACCOUNTING POLICIESI Convention

The Financial Statements are prepared under the historical cost convention on an accrual basis and in accordance with accounting standardsissued by the Institute of Chartered Accountants of India.

II Fixed AssetsFixed Assets are recorded at cost of acquisition (including installation expenses). Foreign Exchange fluctuations consequent on restatement ofliability relating to Fixed Asset are adjusted to cost.

Inventory transferred to Fixed Assets or vice versa are recognised at net values.

III DepreciationDepreciation on Fixed Assets is provided on the straight-line method at rates based on the management’s estimate of the economic useful lifeof the assets which are not lower than the rates stipulated in Schedule XIV of the Companies Act, 1956. Assets acquired as Hard Furnishingitems are depreciated at 33.33 per cent. Lease-hold Improvements are depreciated over the entire period of the lease. Depreciation is chargedon a pro-rata basis for assets acquired/disposed of during the year.

IV InventoriesInventories are valued at lower of cost and net realisable value on FIFO basis.

V Retirement BenefitsThe Company contributes to Superannuation Fund, Provident Fund & Gratuity Fund in accordance with the rules of the approved funds.Provision in respect of leave encashment is made on actuarial valuation.

VI Miscellaneous expenditurePreliminary expenses/deferred revenue expenses are amortised over a period of 10 years.

VII Foreign Currency transactionsForeign currency transactions are recognised at rates on the date of transaction. Realised exchange gains/losses are charged to the Profit &Loss Account. Current assets and liabilities are restated at year-end rates and translation differences are charged to Profit & Loss Account.Exchange differences relating to Fixed Assets are adjusted to the carrying cost of the assets.

VIII Revenue RecognitionRevenue for networking equipment/product sales is recognised upon despatch and is net of Sales tax.Service Revenue relating to installation services is recognised when installation of networking equipment is completed and acceptance of thesame by the customer is communicated and is net of Service Tax.Other Service Revenue is recognised on an accrual basis upon commissioning of such services and is net of Service tax.

IX LeasesAssets given under operating lease are shown in the balance sheet under fixed assets and depreciated on a basis consistent with the depreciationpolicy of the company. The lease income is recognised in the Profit and Loss account on accrual basis.Assets acquired on Finance Lease are recognised in the Financial Statements at an amount equal to the Fair Value of the Leased Asset at theinception of the lease. Depreciation Policy for such Assets is consistent with that for depreciable assets that are owned.

X Borrowing CostsBorrowing Costs that are directly attributable to the acquisition and construction of a qualifying asset are capitalised as part of the cost of theasset.

XI TaxationIncome Tax expense comprises of Current tax and Deferred Tax Charge or Credit. Current Income tax is accrued in the same period as profitsarise. For the purposes of Deferred Tax, the differences between the taxable profits and the profits as per financial statements are identified asPermanent differences and Timing differences. The tax effects are calculated on the accumulated timing differences at the end of eachaccounting period based on the applicable corporate tax rates and deferred tax liability /asset (net) is recognised. Deferred Tax Assets are notrecognised on unabsorbed depreciation and carried forward losses unless there is virtual certainty that sufficient future taxable income will beavailable against which such deferred tax assets can be realised.

MAX Comsat 169-187.p65 9/14/2004, 11:33 AM183



B NOTES TO ACCOUNTSI Contingent Liabilities not provided for :

1 Counter guarantees issued on behalf of the Company Rs. 43,645,163 (2003: Rs. 54,272,198).2 During the year ended 31.03.2003 an income-tax demand of Rs.16,274,936/- was raised on the Company for the assessment year 2000-

01. The demand was based on disallowance of DOT Licence Fees as being capital in nature and was computed without offsetting availabletax – losses which would have reduced the demand to Nil. Subsequent to the year-end, the company had filed an appeal against the samebefore the CIT (Appeals) and is confident of a favourable order against this demand.

3. Subsequent to the year ended 31st March, 2004, an income-tax demand of Rs. 73,680,124/- has been raised on the Company for theassessment year 2001-02. The demand is based on treating DOT Licence Fees and Space Segment Charges as capital expenditure andhas been computed without giving effect to set-off against brought forward tax-losses, which would have reduced this demand to aboutRs. 150 Lakhs. The Company is in the process of filing an appeal against the same before the CIT ( Appeals) and is confident of afavourable disposition against this demand.

II Pursuant to Share Sale and Purchase agreement dated February 20, 2003, amongst Comsat Investments Inc ( CIIM), Comsat Corporation,Max India Limited and the Company, Max India Limited acquired the balance 49% of the share holding in the Company. In terms of theaforesaid agreement in addition to payment of the purchase price, Max India Limited was required to secure an unconditional release fromletters of comfort given by CIIM to a bank in respect of certain facilities availed by the Company. The release was obtained by Max India Limitedgiving a Corporate Guarantee to the bankers.Upon fulfilment of the conditions stipulated in the aforesaid agreement, the loans including accumulated interest thereon, given by CIIM andits associates to the Company, were deemed to have been repaid in full and extinguished, during the financial year. Accordingly, loans relatedto acquisition of fixed assets amounting to Rs.38,478,473 have been set off against cost of the related fixed assets and the correspondingaccumulated depreciation amounting to Rs. 31,998,187 has been reversed and set off against current year’s depreciation charge. The balanceamount of Rs. 51,083,475 included in the total loan amount was retained by the Company to continue to maintain and support its infrastructurethereby enabling, through a deemed grant by virtue of the Corporate Guarantee referred to above, as approved by the Board of Directors, thestrengthening of its net worth position. The amount so retained has been transferred to Capital reserves.

III 1. Estimated Amount of contracts (net of advances Rs. NIL ( 2003 : Rs. 171,700)) remaining to be executed on Capital Account and notprovided for, Rs. NIL (2003: Rs. 674,700)

2. Deposits included under Other Current Assets include an amount of Rs.10,000,000/- placed as Security Deposit for Office premises.Consequent upon relocation of the said office, a Court Receiver under consent terms filed by both parties had been appointed for securingthe refund of the same. Subsequently, the Court has directed the Court Receiver to sell the said premises and/or the property by publicauction and/or private treaty and utilise the sale proceeds for satisfaction of the Company’s dues. Management is confident of the eventualrecovery of the full amount.

3. Debtors over 180 days include an amount of Rs.7,128,173 disputed by the customer which has subsequently been referred to Arbitration.Management is confident of the eventual recovery of the entire amount.

IV Employee Remuneration and benefits are net of an amount of Rs. 5,173,940 (2003 : Rs. 9,178,695), Power and Fuel Expenses are net ofan amount of Rs. 2,387,256 (2003 : Rs.2,867,235), Rent Expenses are net of an amount of Rs.2,157,482 (2003 : Rs.2,971,372), Repairsto Buildings are net of an amount of Rs. 2,566 (2003 : Rs. 32,374), Repairs to Plant& Machinery are net of an amount of Rs. 2,101,158(2003: Rs.925,580), Insurance are net of an amount of Rs. 135,878 (2003 : Rs.206,416 ) and Other Operating Expenses are net of anamount of Rs. 5,231,283 (2003 : Rs. 8,139,277) and Interest charges are net of an amount of Rs.3,737,366 (2003 : Rs.NIL), being costsrecovered from an Associate company, pursuant to an agreement for sharing of common costs.

V Particulars in respect of Sales:ITEM 2003-2004 2002-2003

Qty Amount Qty Amount(Nos.) (Rs.) (Nos.) (Rs.)

SATELLITE COMMUNICATION EQUIPMENT:VSAT EQUIPMENTS* 332 10,751,333 1,628# 61,325,088OTHERS — 39,437,767 — 40,197,274

* includes IDU, ODU, Antenna, LNB, NIU and ESP Cards# excludes 650 nos. items (2003 : 758 nos.) capitalised during the year

VI Opening and Closing Stock of goods dealt by the companyOpening Stock Closing Stock

ITEM 2003-2004 2002-2003 2003-2004 2002-2003Qty Amount Qty Amount Qty Amount Qty Amount

(Nos.) (Rs.) (Nos.) (Rs.) (Nos.) (Rs.) (Nos.) (Rs.)

SATELLITE COMMUNICATION EQUIPMENTVSAT EQUIPMENT* 875 49,139,453 1585 67,063,483 810 49,788,552 875 49,139,453OTHERS — 9,653,575 — 16,826,527 — 4,636,489 — 9,653,575

* includes IDU, ODU, Antenna, LNB, NIU and ESP Cards

MAX Comsat 169-187.p65 9/14/2004, 11:33 AM184



VII Purchases of traded itemsITEM 2003-2004 2002-2003


SATELLITE COMMUNICATION EQUIPMENTVSAT EQUIPMENT* 917 11,376,741 1676 26,698,881OTHERS — 38,181,765 — 47,648,713


* includes amount transferred from Fixed Assets at net book value

Amount (Rs.)2003-2004 2002-2003

VIII Imports on CIF BasisTraded items 1,160,640 10,202,262Capital Goods 4,205,344 1,533,745

IX Expenditure in Foreign CurrencyTravelling [net of Costs recovered Rs. 227,649 (2003: Rs. 106,747)] (refer Note IV) 1,365,893 352,267Others [net of Costs recovered Rs. 224,749 (2003: Rs. 413,042)] (refer Note IV) 11,185,758 21,840,023

X Earnings in Foreign CurrencyIncome from Sale of Networking Equipment and Services 21,563,824 20,210,851

XI Accounting for LeasesA Fixed Assets includes following Assets acquired under Finance Lease for a duration of 36 months.

1 Networking Equipments for PoPs – Rs. 8,491,530/- and2 Computer Servers – Rs. 16,730,200/-.

Networking Equipment Computer Servers

Minimum Lease Payments at BalanceSheet date

Rs. 3,218,628 Rs. 4,738,095(Rs. 6,437,256) (Rs. 11,055,555)

Present Value Rs. 2,994,729 Rs. 4,471,898(Rs. 5,660,908) (Rs. 9,859,281)

Due Not later than 1 year Rs. 2,994,729 Rs. 4,471,898(Rs. 3,690,595) (Rs. 7,243,824)

Due Later than 1 year and not Later than 5 years: — —(Rs. 1,970,313) (Rs. 2,615,457)

B Operating LeaseThe Company has entered into operating leases for its office premises that are renewable on a periodic basis and cancellable at theCompany’s option.Lease Rentals charged in the Profit & Loss Account for the year is Rs. 7,893,603 (2003 : Rs.7,758,472).The total of future minimum lease payments under the aforesaid leases are as follows:

March 31, 2004 March 31, 2003Not later than 1 year Rs. 1,801,264 Rs. 7,758,472Later than 1 Year and not later than 5 years Rs. 85,592 Rs. 1,801,264Later than 5 years — —Total Rs. 1,886,856 Rs. 9,559,736

MAX Comsat 169-187.p65 9/14/2004, 11:33 AM185



XII Managerial Remuneration2003-04 2002-03

Salary Rs. 2,665,260 Rs.2,193,157Contribution to Provident and Other Funds Rs. 307,800 Rs. 307,800Other Perquisites Rs. 331,170 Rs. 373,125

The Central Government approval for appointment and payment of remuneration to the Managing Director has been obtained.

XIII Borrowing CostsAdditions to Fixed Assets during the year, in connection with setting up of the Enterprise Data Centre at the New Delhi facilities, include anamount of Rs NIL (2003: Rs. 460,274) being borrowing costs capitalised.

XIV Details of Deferred Tax Liabilities / (Deferred Tax Assets) as at March 31, 2004RUPEES

Particulars Opening Reversal / Additions for ClosingAs at April 01, 2003 the year As at March 31, 2004

On fiscal allowances on fixed assets 26,060,564 (6,255,746) 19,804,818Deduction u/s 43B of Income Tax Act (3,297,000) 388,398 (2,908,602)Provision for Doubtful Debts (4,932,971) (3,113,939) (8,046,910)Liability for (decrease) / increase in surcharge and Others (534,562) 496,355 (38,207)Net Deferred Tax Liability/(Asset) 17,296,031 (8,484,932) 8,811,099

XV Previous years figures are regrouped/rearranged wherever necessary.




Signatures to 1 to 13 annexedto and forming part of Accounts.


MAX Comsat 169-187.p65 9/14/2004, 11:33 AM186





Date Month Year

II CAPITAL RAISED DURING THE YEAR (Amount in Rs. Thousand)Public Issue Right IssueN I L N I LBonus Issue Private PlacementN I L N I L


5 1 9 8 1 8 5 1 9 8 1 8

SOURCES OF FUND

Paid-up Capital Reserve & Surplus2 9 2 0 0 0 5 1 0 8 4

Secured Loans Unsecured Loans8 2 1 8 3 8 5 7 4 0

Deferred Tax Liability8 8 1 1


Net Fixed Assets Investments2 5 8 1 4 2 N I L

Net Current Assets Mics. Expenditure1 7 0 3 6 1 4 9 1

Accumulated Losses9 0 8 2 4

IV PERFORMANCE OF COMPANY (Amount in Rs. Thousand)Turnover Total Expenditure

4 3 6 9 1 5 4 1 8 3 8 6+ - Profit/Loss before tax + - Profit/Loss after tax✓ 1 8 5 2 9 ✓ 2 7 0 1 4

(Please tick Appropriate box + for Profit, - for Loss)Earning per Share in Rs. Dividend Rate (%)

+ 0 . 9 3 N I L

V GENERIC NAMES OF PRINCIPAL PRODUCTS/SERVICE OF COMPANYItem Code No. (ITC code) 8 5 2 5

Product Descriptionn D I G I T A L C O M M U N I C A T I O NS E R V I C E S F O R D A T A , F A XA N D V I D E O U S I N GS A T E L L I T E T E C H N O L O G Y




MAX Comsat 169-187.p65 9/14/2004, 11:33 AM187

CMAX INFOCOM PRIVATE LIMITED

CMAX INFOCOM 188-200.p65 9/14/2004, 11:33 AM188

C M A X I N F O C O M P R I V A T E L I M I T E D


Your Directors are pleased to present their third Annual Report andAudited Accounts for the year ended March 31, 2004.

FINANCIAL RESULTSReflecting the changing mix of technology platforms and the generaltrend of dropping prices of technology assets, the turnover of yourCompany for the year dropped to Rs 9.14 Crore from Rs. 13.82 Croreduring previous year. However, owing to better margins, coupled withcost efficiencies, the Net Loss for the year was reduced to Rs 0.01Crore from Rs 0.55 Crore for the previous year.

DIVIDENDIn view of the loss for the year, no dividend is being recommended onEquity Shares.

BUSINESS OPERATIONSWith the emergence of several cost effective alternatives, the off-takefor Company’s products is expected to be remain steady. While hardwareprices have nearly reached stabilisation, the general downward trend inprices is expected to continue. Your Company continues to build on itsinitiative to optimise hardware sourcing costs with a view to improvingthe margins.

DIRECTORS’ RESPONSIBILITY STATEMENTThe Board of Directors of the Company confirm that:(i) In the preparation of annual accounts, the applicable accounting


(ii) The Directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year andof the profit of the Company for that period;


DIRECTORS’ REPORT


FIXED DEPOSITSYour Company has not accepted/renewed any deposits from the publicduring the year.

PARTICULARS OF EMPLOYEESYour Company had no employee during the period under review.

ADDITIONAL INFORMATIONInformation in accordance with the provisions of Section 217 (1) (e) ofthe Companies Act, 1956 read with the Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988 is given inthe prescribed format annexed to the Report as Annexure-A.

AUDITORSDuring the year, M/s S. R. Batliboi & Co., Chartered Accountants,statutory auditors of your company, resigned from their office.Consequently, M/s Price Waterhouse, Chartered Accountants, wasappointed as the Statutory auditors of your Company at the last AnnualGeneral Meeting of the Company. M/s Price Waterhouse retire at theensuing Annual General Meeting and offer themselves for re-appointment. The Company has received a certificate from M/s PriceWaterhouse as required under Section 224 (1-B) of the CompaniesAct, 1956 to the effect that their re-appointment, if made, will be inconformity with the limits specified in that Section.

ACKNOWLEDGEMENTSYour Directors would like to place on record their gratitude for theinvaluable co-operation and support extended to the Company by theshareholders, business partner, Central and State Governments.

For and on behalf of the Board of DirectorsNew Delhi SHRIKANT MATE DirectorAPRIL 28, 2004 JOYJIT CHATTERJI Director

A CONSERVATION OF ENERGYa Energy Conservation Steps taken to bring about savings on power

consumption by better housekeeping andenergy efficient tubelights.

b Additional Investment and proposals, Nilif any, for reduction of consumption of energy.

B TECHNOLOGY ABSORPTION1 Specific areas in which R&D carried out by the Company Nil2 Benefits derived as a result of above NA3 Future Plan of Action NA4 Expenditure on R&D NA

ANNEXURE–A

C FOREIGN EXCHANGE EARNING AND OUTGO NilActivities relating to Exports, initiatives takento increase exports, develop New ExportMarkets, Export Plans etc. NA

Rs Crore

Year ended Period ended31.03.2004 31.03.2003

Earnings 0.17 0.88Outgo 4.30 4.57

For and on behalf of the Board of DirectorsNew Delhi SHRIKANT MATE DirectorAPRIL 28, 2004 JOYJIT CHATTERJI Director

CMAX INFOCOM 188-200.p65 9/14/2004, 11:33 AM189



AUDITORS’ REPORT

TO THE MEMBERS OF CMAX INFOCOM PRIVATE LTD.1. We have audited the attached Balance Sheet of CMax Infocom

Private Limited, as at March 31, 2004 and the related Profit andLoss Account for the year ended on that date annexed thereto,which we have signed under reference to this report. These financialstatements are the responsibility of the company’s management.Our responsibility is to express an opinion on these financialstatements based on our audit.


3. As required by the Companies (Auditor’s Report) Order, 2003 issuedby the Central Government of India in terms of sub-section (4A) ofSection 227 of ‘The Companies Act, 1956’ of India (the ‘Act’) andon the basis of such checks of the books and records of the companyas we considered appropriate and according to the informationand explanations given to us, we further report that:i (a) The company is maintaining proper records showing full


(b) The fixed assets of the company have been physicallyverified by the management during the year and no materialdiscrepancies between the book records and the physicalinventory have been noticed. In our opinion, the frequencyof verification is reasonable.

(c) In our opinion and according to the information andexplanations given to us, no fixed assets has not beendisposed of by the company during the year.

ii (a) The inventory has been physically verified by themanagement during the year. In our opinion, the frequencyof verification is reasonable.




iv In our opinion and according to the information andexplanations given to us, having regard to the explanation thatcertain items purchased are of special nature for which suitablealternative sources do not exist for obtaining comparativequotations, there are adequate internal control procedurescommensurate with the size of the company and the nature ofits business for the purchase of inventory, fixed assets and forthe sale of goods. Further, on the basis of our examination of

the books and records of the company, and according to theinformation and explanations given to us, we have neither comeacross nor have been informed of any continuing failure tocorrect major weaknesses in the aforesaid internal controlprocedures.

v As the company is not listed on any stock exchange or thepaid-up capital and reserves as at the commencement of thefinancial year did not exceed Rupees Fifty Lakhs or the averageannual turnover for a period of three consecutive financialyears immediately preceding the financial year did not exceedRupees Five Crores, clause (vii) of paragraph 4 of theCompanies (Auditor’s Report) Order, 2003 is not applicableto the company for the current year.

vi The Central Government of India has not prescribed themaintenance of cost records under clause (d) of sub-section(1) of Section 209 of the Act for any of the products of thecompany.

vii (a) According to the information and explanations given tous and the records of the company examined by us, in ouropinion, the company is regular in depositing theundisputed statutory dues including investor educationand protection fund, income-tax, sales-tax, wealth tax,customs duty, excise duty, cess and other material statutorydues as applicable with the appropriate authorities. Asinformed, the provisions relating to Employees ProvidentFund and Miscellaneous Provisions Act, 1952 andEmployees’ State Insurance are not applicable to theCompany.

(b) According to the information and explanations given tous and the records of the company examined by us, thereare no dues of sales tax, income-tax, customs duty, wealth-tax, excise duty and cess which have not been depositedon account of any dispute.

viii As the company is registered for a period less than five years,clause (x) of paragraph 4 of the Companies (Auditor’s Report)Order, 2003 is not applicable to the company for the currentyear.

ix The company has not granted any loans and advances on thebasis of security by way of pledge of shares, debentures andother securities.

x The provisions of any special statute applicable to chit fund /nidhi / mutual benefit fund/societies are not applicable to thecompany.

xi In our opinion, the company is not a dealer or trader in shares,securities, debentures and other investments.

xii In our opinion, and according to the information andexplanations given to us, the company has not given anyguarantee for loans taken by others from banks or financialinstitutions during the year.

xiii The company has not obtained any term loans.xiv On the basis of an overall examination of the balance sheet of

the company, in our opinion and according to the informationand explanations given to us, there are no funds raised on ashort-term basis which have been used for long-terminvestment, and vice versa.

xv During the course of our examination of the books and recordsof the company, carried out in accordance with the generallyaccepted auditing practices in India, and according to the

CMAX INFOCOM 188-200.p65 9/14/2004, 11:33 AM190



information and explanations given to us, we have neither comeacross any instance of fraud on or by the company, noticed orreported during the year, nor have we been informed of suchcase by the management.

xvi The other clauses, (v), (vi), (xi), (xviii), (xix) and (xx) of paragraph4 of the Companies (Auditor’s Report) Order 2003 are notapplicable in the case of the company for the current year,since in our opinion there is no matter which arises to bereported in the aforesaid order.









the year ended on that date.V NIJHAWAN

PartnerMembership No.: F 87228

For and on behalf ofNew Delhi Price WaterhouseAPRIL 28, 2004 Chartered Accountants

CMAX INFOCOM 188-200.p65 9/14/2004, 11:33 AM191




31.03.2004 31.03.2003

SOURCES OF FUNDSSHAREHOLDERS’FUNDSShare Capital 1 100,000 100,000DEFERRED TAX LIABILITY 2 299,906 148,215Total 399,906 248,215

APPLICATION OF FUNDSFIXED ASSETS 3Gross Block 8,860,249 3,090,249Less : Depreciation 961,073 163,362Net Block 7,899,176 2,926,887

CURRENT ASSETS, LOANS & ADVANCES 4Inventories 11,931,499 12,242,798Sundry Debtors 43,609,657 35,610,463Cash and Bank Balances 1,535,004 8,391,754Other Current Assets 1,463,146 1,357,553

58,539,306 57,602,568LESS : CURRENT LIABILITIES & PROVISIONS 5Sundry Creditors 72,315,591 66,457,287

72,315,591 66,457,287NET CURRENT ASSETS (13,776,285) (8,854,719)

PROFIT & LOSS ACCOUNT 6,277,015 6,176,047Total 399,906 248,215




SHRIKANT S. MATE DirectorJOYJIT CHATTERJI Director

The Schedules referred to above form anintegral part of the Balance Sheet.

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

V. NIJHAWANPartner

For and on behalf of Price WaterhouseChartered Accountants


CMAX INFOCOM 188-200.p65 9/14/2004, 11:33 AM192



SCHEDULE RUPEESYear Ended Year EndedMarch 31, March 31,

2004 2003

INCOME 6Sales 87,524,564 134,530,080Other Income 3,834,615 3,790,539Total Income 91,359,179 138,320,619

EXPENSESCost of Goods sold 7 66,245,016 111,938,466Employee Remuneration and Benefits 8 5,173,940 9,178,696Operating and Other Expenses 9 15,354,453 22,428,444Interest 3,737,336 —Depreciation 797,711 163,362

91,308,456 143,708,968Profit/(Loss) before Tax 50,723 (5,388,349)Less, Taxation :

- Current Tax — —- Deferred Tax (Refer Note VIII Schedule 10B) 151,691 148,215

(Loss) after tax (100,968) (5,536,564)

Balance of Loss brought forward (6,176,047) (639,483)Balance of Loss carried forward to Balance Sheet (6,277,015) (6,176,047)

Earnings per share (10.10) (553.66)





The Schedules referred to above form anintegral part of the Profit and Loss Account.

This is the Profit and Loss Account referred to in our report of even date

V. NIJHAWANPartner



CMAX INFOCOM 188-200.p65 9/14/2004, 11:33 AM193




RUPEESAs at As at

31.03.2004 31.03.2003

1 CAPITALAUTHORISED20,000 Equity Shares of Rs. 10/- each 200,000 200,000

ISSUED, SUBSCRIBED & PAID UP10,000 Equity Shares of Rs. 10/- each(Of the above 10,000 Equity Shares are held byMax India Limited, the Holding Company) 100,000 100,000

100,000 100,000

2 DEFERRED TAX LIABILITY(Refer Note VIII on Schedule 10B)

Deferred Tax Liability:On fiscal allowances on fixed assets and others 299,906 148,215

299,906 148,215

3 FIXED ASSETS (Refer Notes IV on Schedule 10A and Note IX on Schedule 10B) RUPEES

Depreciation Gross Block ( At Cost) Depreciation Net Block as at

DESCRIPTION Rate As at As at Upto Up to 31.03.2004 31.03.2003

31.03.2003 Additions 31.03.2004 31.03.2003 For the year 31.03.2004

Plant and Machinery

under Operating

Lease 14.28% 3,090,249 5,770,000 8,860,249 163,362 797,711 961,073 7,899,176 2,926,887

(transferred

from Inventory)

Total 3,090,249 5,770,000 8,860,249 163,362 797,711 961,073 7,899,176 2,926,887

Previous Year — 3,090,249 3,090,249 — 163,362 163,362 2,926,887 —

CMAX INFOCOM 188-200.p65 9/14/2004, 11:33 AM194




4 CURRENT ASSETS, LOANS AND ADVANCESInventoriesStock in Trade 11,931,499 11,120,885Stock-in-Transit — 1,121,913

11,931,499 12,242,798

Sundry Debtors – UnsecuredOver Six Months — Considered Good 9,677,242 9,005,087

— Doubtful 238,644 —Others — Considered Good 33,932,415 26,605,376

43,848,301 35,610,463

Provision for Doubtful Debts (238,644) —43,609,657 35,610,463

Cash & Bank BalancesCash-in-hand 54,070 99,832Balances with scheduled Banks in :Current Account 1,480,934 8,291,922

1,535,004 8,391,754

OTHER CURRENT ASSETSUnsecured, considered good

Advances recoverable in cash or kind or for value to be received 1,457,402 1,352,553Tax Deducted at Source 744 —Deposits 5,000 5,000

1,463,146 1,357,553

Total 58,539,306 57,602,568

RUPEESAs at As at

31.03.2004 31.03.2003

CMAX INFOCOM 188-200.p65 9/14/2004, 11:33 AM195




RUPEESAs at As at

31.03.2004 31.03.2003

5 CURRENT LIABILITIES & PROVISIONSCURRENT LIABILITIESSundry Creditors:Total Outstanding dues of creditors other than 67,035,052 62,684,690small scale industrial undertakingsAdvances from Customers 1,630,018 2,412,746Income Billed in advance 1,234,426 —Other liabilities 2,416,095 1,359,851

72,315,591 66,457,287

As identified by management, there are no dues outstanding to small scale undertakings.

RUPEESYear Ended Year EndedMarch 31, March 31,

2004 2003

6 SALES AND OTHER INCOMENetworking Equipments 87,524,564 134,530,080

87,524,564 134,530,080

OTHER INCOMEService Income 2,697,575 3,234,000Exchange Rate Difference 1,137,040 556,539

3,834,615 3,790,539

7 COST OF GOODS SOLD

Opening Stock 12,242,798 8,751,198Purchases — Traded goods 71,703,717 117,398,402

83,946,515 126,149,600Less: Capitalised 5,770,000 3,090,249

78,176,515 123,059,351Less: Closing Stock as at 31.03.2004 11,931,499 11,120,885

66,245,016 111,938,466

8 EMPLOYEE REMUNERATION AND BENEFITS(Refer Note VII on Schedule 10B)

Salaries & Wages 5,173,940 9,178,6965,173,940 9,178,696

CMAX INFOCOM 188-200.p65 9/14/2004, 11:33 AM196



RUPEESYear Ended Year EndedMarch 31, March 31,

2004 2003

9 OPERATING AND OTHER EXPENSES(Refer Note VII on Schedule 10B)

Freight Forwarding & Cartage 1,971,263 2,810,273Installation Charges 406,781 602,718Power & Fuel 2,387,256 2,867,235Rent 2,157,482 2,971,372Communication 1,213,438 2,410,091Business Promotion & Advertisement 280,500 797,792Repairs & Maintenance:— Plant & Machinery 2,101,158 925,580— Building 2,566 32,374— Others 156,431 750,712

Provision for Doubtful Debts 238,644 —Auditors Remuneration :— Statutory Audit 85,000 85,000— Tax Audit 25,000 25,000— Other Fees 10,000 —— Out of Pocket Expenses 2,750 —

Professional Service charges 397,350 3,340,000Insurance Charges 135,878 213,056Printing & Stationery 261,543 346,001Rates and Taxes 6,800 1,000Travel & Conveyance charges 1,861,761 2,695,793Hire Charges 63,758 67,790Misc. Expenses 5,750 8,423Office Maintenance 523,614 704,496Sales commission 95,000 279,800Security Charges 314,346 371,827Bank Charges 650,384 122,111

15,354,453 22,428,444


CMAX INFOCOM 188-200.p65 9/14/2004, 11:33 AM197



SCHEDULE–10NOTES TO ACCOUNTS AND ACCOUNTING POLICIESA SIGNIFICANT ACCOUNTING POLICIESI Convention

The financial statements are prepared under historical cost convention on an accrual basis and in accordance with accounting standardsissued by the Institute of Chartered Accountants of India (ICAI).

II InventoriesInventories are valued at lower of cost and net realisable value. The cost for this purpose is calculated on FIFO basis.

III Fixed AssetsFixed Assets are recorded at cost of acquisition (including installation expenses).Inventory transferred to Fixed Assets or vice versa are recognised at net values.

IV DepreciationDepreciation on Fixed Assets is provided on the straight-line method at rates based on the management’s estimate of the economic useful lifeof the assets which are not lower than the rates stipulated in Schedule XIV of the Companies Act, 1956.

V Foreign Currency transactionsForeign currency transactions are recognised at rates on the date of transaction. Realised exchange gains/losses are charged to the Profit &Loss Account. Current assets and liabilities are restated at year-end rates and translation differences are charged to Profit & Loss Account.Exchange differences relating to fixed assets are adjusted to the carrying cost of the assets.

VI Revenue RecognitionRevenue for networking equipment/product sales is recognised upon despatch and is net of Sales tax.Service Revenue relating to installation services is recognised when installation of networking equipment is completed and acceptance of thesame by the customer is communicated and is net of Service Tax.

VII TaxationIncome Tax expense comprises of Current tax and Deferred Tax. Current Income tax is accrued in the same period as profits arise. For thepurposes of Deferred Tax, the differences between the taxable profits and the profits as per financial statements are identified as Permanentdifferences and Timing differences. The tax effects are calculated on the accumulated timing differences at the end of each accounting periodbased on the applicable corporate tax rates and deferred tax liability /asset (net) is recognised.

VIII LeasesAssets given under operating lease are shown in the balance sheet under fixed assets and depreciated on a basis consistent with the depreciationpolicy of the company. The lease income is recognised in the Profit and Loss account on accrual basis.Initial direct costs are recognised as an expense in the statement of profit and loss in the period in which they are incurred.

B NOTES TO ACCOUNTS

I Particulars in respect of SalesITEM 2003-2004 2002-2003


SATELLITE COMMUNICATION EQUIPMENTVSAT EQUIPMENTS* 2692# 66,829,674 5916 128,215,284OTHERS — 20,694,890 — 6,314,796

* includes IDU, ODU, Antenna, LNB, NIU and ESP Cards# excludes 468 nos. items (2003 : 19 nos.) capitalised during the year

II Opening and Closing Stock of goods dealt by the companyOpening Stock Closing Stock

ITEM 2003-2004 2002-2003 2003-2004 2002-2003Qty Amount Qty Amount Qty Amount Qty Amount

(Nos.) (Rs.) (Nos.) (Rs.) (Nos.) (Rs.) (Nos.) (Rs.)

SATELLITE COMMUNICATION EQUIPMENTVSAT EQUIPMENT* 673 11,120,885 596 8,751,198 698 11,931,499 673 11,120,885



CMAX INFOCOM 188-200.p65 9/14/2004, 11:33 AM198





III Purchases of traded itemsITEM 2003-2004 2002-2003


SATELLITE COMMUNICATION EQUIPMENTVSAT EQUIPMENT* 3,185 64,558,608 6,012 111,798,607OTHERS 7,145,109 5,599,795


AMOUNT (RS.)2003-2004 2002-2003

IV Imports on CIF BasisTraded items 42,577,323 51,114,655

V Expenditure in Foreign CurrencyTravelling 227,649 106,747Others 224,749 413,042

VI Earnings in Foreign CurrencyIncome from Sale of Networking Equipment 1,061,638 8,847,286

VII Employee Remuneration and benefits include an amount of Rs. 5,173,940 (2003 : Rs. 9,178,695), Power and Fuel Expenses include anamount of Rs. 2,387,256 (2003 : Rs. 2,867,235), Rent includes an amount of Rs. 2,157,482 (2003 : Rs. 2,971,372), Repairs to Buildingsinclude an amount of Rs. 2,566 (2003 : Rs. 32,374), Repairs to Plant & Machinery includes an amount of Rs. 2,101,158 (2003 : Rs. 925,580),Insurance includes an amount of Rs. 135,878 (2003 : Rs. 206,416) and Other Operating Expenses include an amount of Rs. 5,231,283(2003 : Rs. 8,139,277) and Interest charges include an amount of Rs. 3,737,366 (2003 : Rs. NIL) being costs recovered by an Associatecompany, pursuant to an agreement for sharing of common costs.

VIII Deferred Tax Assets are not recognised on unabsorbed depreciation and carried forward losses unless there is virtual certainty that sufficientfuture taxable income will be available against which such deferred tax assets can be realised.

Details of Deferred Tax Liabilities/(Deferred Tax Assets) as at March 31, 2004 (IN RUPEES)Particulars Opening (Reversal)/Additions Closing

As at April 01, 2003 for the year As at March 31, 2004

On fiscal allowances on fixed assets 148,215 237,303 385,518On Provision for Doubtful Debts — (85,613) (85,613)Net Deferred Tax (Asset)/Liability 148,215 151,690 299,905

IX Accounting for LeasesFixed Assets includes Assets given on Operating Lease to different customers for various periods, renewable on mutual agreement.Lease Rentals recognised as income in the Profit & Loss Account for the year is Rs. 2,380,075 (2003 : Rs.732,000).The total of future minimum lease payments under the aforesaid leases are as follows:

March 31, 2004 March 31, 2003Not later than 1 year Rs. 1,234,426 —Later than 1 Year and not later than 5 years — —Later than 5 years — —Total Rs. 1,234,426 —

X Previous years figures are regrouped/rearranged wherever necessary.


Signatures to Schedule 1 to 10 annexed to and forming part of Accounts.

CMAX INFOCOM 188-200.p65 9/14/2004, 11:33 AM199





Date Month Year

II CAPITAL RAISED DURING THE YEARPublic Issue Right IssueN I L N I LBonus Issue Private PlacementN I L N I L


4 0 0 4 0 0

SOURCES OF FUNDS

Paid-up Capital Reserve & Surplus1 0 0 N I L

Secured Loans Unsecured LoansN I L N I LDeferred Tax Liability

3 0 0


Net Fixed Assets Investments7 8 9 9 N I L

Net Current Assets Mics. Expenditure- 1 3 7 7 6 N I L

Accumulated Losses6 2 7 7


9 1 3 5 9 9 1 3 0 8+ - Profit/Loss before tax + - Profit/Loss after tax✓ 5 1 ✓ 1 0 1

Earning per Share in Rs. Dividend Rate (%)- 1 0 . 1 0 N I L

V GENERIC NAME OF THREE PRINCIPAL PRODUCTS/SERVICES OF COMPANYItem Code No. (ITC code) 8 5 2 5

Product Descriptionn D I G I T A L C O M M U N I C A T I O NS E R V I C E S F O R D A T A , F A XA N D V I D E O U S I N GS A T E L L I T E T E C H N O L O G Y



CMAX INFOCOM 188-200.p65 9/14/2004, 11:33 AM200

MAX ASIA PAC LIMITED

MaxAsiaPac 201-210.p65 9/14/2004, 11:33 AM201

M A X A S I A P A C L I M I T E D


The Directors have pleasure in submitting their Annual Report and theaudited Accounts for the year ended 31st March, 2004.

PRINCIPAL ACTIVITIESThe principal activities of the Company are to hold unlisted investmentsin overseas subsidiary companies, which have been formed for thepurpose of establishing and operating an international clinical studyconduct organisation to perform clinical trials.

RESULTS AND DIVIDENDSThe results of the Company for the year ended 31st March, 2004 areset out in the Income Statement.

The Directors recommend that no dividend be declared.

SHARES ISSUEDPursuant to the Ordinary Resolutions passed on 16th June, 2003 and31st March, 2004, the authorised capital of the Company was increasedfrom US$9,000,000.00 to US$12,520,700.00 by the creation ofadditional 200,000 shares and 152,070 shares of US$10.00 eachrespectively.

During the year, 304,677 shares of US$10.00 each were issuedat par and were fully paid up to provide funds for the Company.

CAPITAL RESERVEDetails of movements in Capital Reserve during the year are set out inNote 7 to the Accounts.

DIRECTORSThe Directors who held office during the year and up to the date of thisreport were:SURENDRA KAULSANTHANAGOPALAN KRISHNAMACHARYVIVEK JETLEY (resigned on 18/6/2003)

All the Directors shall retire from office in accordance with theCompany’s Articles of Association and, being eligible, offer themselvesfor re-election at the forthcoming Annual General Meeting.

DIRECTORS’ REPORT

DIRECTORS’ INTERESTSNo contracts of significance, to which the Company was a party and inwhich a Director had a material interest, subsisted at the end of theyear or at any time during the year.

At no time during the year was the Company a party to anyarrangements to enable the Directors of the Company to acquire benefitsby means of the acquisition of shares in or debentures of the Companyor any other body corporate.

MANAGEMENT CONTRACTSNo contracts concerning the management and administration of thewhole or any substantial part of the business of the Company wereentered into or existed during the year.

AUDITORSMessrs. Kenneth Chau & Co. retire and, being eligible, offer themselvesfor re-appointment.

On behalf of the BoardHong Kong SURENDRA KAUL20 MAY, 2004 Chairman

MaxAsiaPac 201-210.p65 9/14/2004, 11:33 AM202



TO THE SHAREHOLDERS OF MAX ASIA-PAC LIMITED(Incorporated in Hong Kong with limited liability)

We have audited the financial statements annexed here to which havebeen prepared in accordance with accounting principles generallyaccepted in Hong Kong.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORSThe Companies Ordinance requires the directors to prepare financialstatements which give a true and fair view. In preparing financialstatements which give a true and fair view, it is fundamental thatappropriate accounting policies are selected and applied consistently.

It is our responsibility to form an independent opinion, based onour audit, on those statements and to report our opinion to you.

BASIS OF OPINIONWe conducted our audit in accordance with Statements of AuditingStandards issued by the Hong Kong Society of Accountants. An auditincludes examination, on a test basis, of evidence relevant to theamounts and disclosures in the financial statements. It also includesan assessment of the significant estimates and judgements made bythe directors in the preparation of the financial statements, and ofwhether the accounting policies are appropriate to the Company’scircumstances, consistently applied and adequately disclosed.

AUDITORS’ REPORT

We planned and performed our audit so as to obtain all theinformation and explanations which we considered necessary in orderto provide us with sufficient evidence to give reasonable assurance asto whether the financial statements are free from material misstatement.In forming our opinion we also evaluated the overall adequacy of thepresentation of information in the financial statements. We believe thatour audit provides a reasonable basis for our opinion.

OPINIONIn our opinion the financial statements give a true and fair view of thestate of the Company’s affairs as at 31st March, 2004, and of its netprofit for the year then ended and have been properly prepared inaccordance with the Companies Ordinance.

KENNETH CHAU & CO.,Hong Kong Certified Public Accountants,20 MAY, 2004 Hong Kong

MaxAsiaPac 201-210.p65 9/14/2004, 11:33 AM203



BALANCE SHEET AS A T M A R C H 3 1 , 2 0 0 4

NOTE US$ US$2004 2003

NON-CURRENT ASSETSInterests in Subsidiary Companies 2 9,867,616.78 7,625,539

CURRENT ASSETSAmount due by a Director 3 4,641.05 10,374Trade and Other Receivables, lessProvision 4 784,265.46 852,314Cash at Banks 10,706.62 29,600

799,613.13 892,288LESS: CURRENT LIABILITIESTrade and Other Paybles 5 156,509.50 112,926NET CURRENT ASSETS 643,103.63 779,362NET ASSETS 10,510,720.41 8,404,901

CAPITAL AND RESERVESIssued Capital 6 12,046,770.00 9,000,000Capital Reserve 7 2,000,000.00 2,000,000Accumulated Loss (3,536,089.59) (4,121,174)SHAREHOLDERS’ FUNDS 10,510,680.41 6,878,826Share Application Money Received 40.00 1,526,075

10,510,720.41 8,404,901

The annexed notes form an integral part of these Accounts. For and on behalf of the Board of Directors

The financial statements are authorised for issue on 20 MAY, 2004 SURENDRA KAUL Director(date of Board authorisation for issue). SANTHANAGOPALAN KRISHNAMACHARY Director

MaxAsiaPac 201-210.p65 9/14/2004, 11:33 AM204



INCOME STATEMENT F O R T H E Y E A R E N D E D M A R C H 3 1 , 2 0 0 4

NOTE US$ US$2004 2003

TURNOVERDividends Received From Unlisted Investments in Subsidiary Companies — —

OTHER REVENUE 664,183.72 28,0698 664,183.72 28,069

LESS: Administrative Expenses 52,375.77 99,170Other Operating Expenses 26,634.16 —

79,009.93 99,170PROFIT/(LOSS) FROM OPERATIONS 585,173.79 (71,101)FINANCE COSTS (89.95) —

PROFIT/(LOSS) BEFORE TAXATION 9 585,083.84 (71,101)Taxation 11 — —NET PROFIT/(LOSS) FOR THE YEAR 585,083.84 (71,101)

ACCUMULATED LOSS BROUGHT FORWARD (4,121,173.43) (4,050,073)ACCUMULATED LOSS CARRIED FORWARD (3,536,089.59) (4,121,174)

STATEMENT OF CHANGES IN EQUITY F O R T H E Y E A R E N D E D M A R C H 3 1 , 2 0 0 4

NOTE US$ US$2004 2003

OPENING BALANCE-Total Equity 6,878,826.57 949,927Issue of Additional Share Capital 3,046,770.00 6,000,000Net Profit/(Loss) for the Year 585,083.84 (71,101)CLOSING BALANCE-Total Equity 10,510,680.41 6,878,826

MaxAsiaPac 201-210.p65 9/14/2004, 11:33 AM205



1 SIGNIFICANT ACCOUNTING POLICIES(a) Basis of Preparation

These financial statements have been prepared in accordance with Hong Kong Statements of Standard Accounting Practice, accountingprinciples generally accepted in Hong Kong and requirements of the Hong Kong Companies Ordinance.These financial statements have been prepared under the historical cost convention.

(b) Subsidiary CompanyA company is a subsidiary if more than 50% of its issued capital is held for long term investment. The Company’s investment in the subsidiaryis stated at cost less provision, if appropriate, for impairment in value.The results of a subsidiary are included in the Company’s accounts only to the extent of dividends received and receivable on or before thebalance sheet date.

(c) Group AccountsNo group accounts have been prepared by the Company, as the Directors are of the opinion that it would involve expenses and delay out ofproportion to the value to the members of the Company.

(d) Related PartyParties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influenceover the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common controlor common significant influence.

(e) Translation of Foreign CurrenciesForeign currency balances of unlisted investments in subsidiary companies are translated into U.S. dollars at historical rates. Other foreigncurrency balances of monetary assets and liabilities at year end are translated into U.S. dollars at approximately the market rates of exchangeruling at the balance sheet date.Exchange differences on foreign currency translation are dealt with in the income statement.

(f) Revenue RecognitionDividend income from unlisted investment is recognised when the right to receive dividend from the investment has been established.

(g) Current TaxationThe charge for current taxation is based on the results for the year as adjusted for items which are non-assessable or disallowed.

(h) Deferred TaxationDeferred tax liabilities are the amounts of income taxes payable in future years in respect of taxable temporary differences.Deferred tax assets are the amounts of income taxes recoverable in future years in respect of:(i) deductible temporary differences;(ii) the carryforward of unused tax losses; and(iii) the carryforward of unused tax credits.A deferred tax asset should be recognised to the extent that it is probable that future taxable profit will be available against which thedeductible temporary differences, the unused tax losses and unused tax credits can be utilised.To the extent that it is not probable that future taxable profit will be available against which the unused tax losses or unused tax credits can beutilised, the deferred tax asset is not recognised.

2 INTERESTS IN SUBSIDIARY COMPANIESUS$ US$

2004 2003

Unlisted Investments, at cost (per details in (a) below) 170,744.89 170,745Amounts due by Subsidiary Companies:

Neeman Medical International PLC, U.K. 296,405.87 296,406Neeman Medical International B.V., The Netherlands 9,851,918.78 3,217,829

Amount due by Sub-subsidiary Company:Neeman Medical International N.V., The Netherlands — 5,046,663

10,319,069.54 8,731,643Less: Provision for Impairment Loss at 31.03.2003 (1,106,104.00) (1,106,104)Less: Provision for Impairment Loss Written Back (per details in (e) below) 654,651.24 —

(451,452.76) (1,106,104)9,867,616.78 7,625,539

NOTES TO THE ACCOUNTS (EXPRESSED IN UNITED STATES DOLLARS, UNLESS OTHERWISE STATED)

MaxAsiaPac 201-210.p65 9/14/2004, 11:33 AM206



(a) Particulars of the Company’s unlisted investments in the subsidiary companies at 31st March, 2004 are as follows:US$

Name of subsidiary Place of Principal No. of Ordinary Percentage Holding Cost

Company Incorporation Activities Shares Held at 31/3/2004 2004 2003

Neeman Medical International Plc. U.K. Clinical Research 36,430 shares of 72.86% 155,046.89 155,047

£ 1 each

Neeman Medical International B.V. The Netherlands Clinical Research 36 shares of 100% 15,698.00 15,698

EURO$ 500 each

170,744.89 170,745

(b) The accounting policies of the Company relating to “subsidiary company” and “group accounts” are stated in Notes 1(b) and 1(c) to theAccounts.

(c) The accounting date of Neeman Medical International PLC, U.K., has been changed from 31st December to 31st March of each year witheffect from the accounting period commencing on 1st January, 2003 in order to conform with the accounting date of the ultimate holdingcompany. For disclosure purposes, the management accounts of the above subsidiary company for the period ended 31st March, 2004 aresummarized as follows:-

US$ US$01.01.2003- Year Ended

NEEMAN MEDICAL INTERNATIONAL PLC, U.K. 31.03.2004 31.12.2002

INCOME STATEMENTTurnover — —Other Revenue — 1

— 1Less: Administrative Expenses 3,009 46,204Loss from Operations (3,009) (46,203)Finance Costs — —Loss before Taxation (3,009) (46,203)Taxation — —Over-provision for Taxation in previous year — 124Loss for the period (3,009) (46,079)Accumulated Loss b/f. (685,387) (639,308)Accumulated Loss c/f. (688,396) (685,387)

US$ US$At At

31.12.2004 31.12.2002

BALANCE SHEETNon-current Assets — —Current Assets — 1,609Current Liabilities (471,916) (470,516)Non-current Liabilities — —Net Liabilities (471,916) (468,907)

CAPITAL AND RESERVESIssued Capital (50,000 Ordinary Shares of £1 each) 82,000 82,000Share Premium Account 134,480 134,480Accumulated Loss (688,396) (685,387)Shareholders’ Fund/(Deficiency) (471,916) (468,907)

The above loss for the period and the accumulated loss at period end relate to post-acquisition results.

MaxAsiaPac 201-210.p65 9/14/2004, 11:33 AM207



(d) For disclosure purposes, the management accounts of Neeman Medical International B.V., The Netherlands, for the year ended 31st March,2004 are summarised as follows:-

US$ US$Period from

Year Ended 05.12.2001 toNEEMAN MEDICAL INTERNATIONAL B.V., THE NETHERLANDS 31.03.2004 31.03.2003

INCOME STATEMENTTurnover —Other Revenue 520 18

520 18Less: Administrative Expenses 1,970 3,254Loss from Operations (1,450) (3,236)Finance Costs (3,539) (3,246)Loss before Taxation (4,989) (6,482)Taxation — —Loss for the year (4,989) (6,482)Accumulated Loss b/f. (6,482) —Accumulated Loss c/f. (11,471) (6,482)

US$ US$At At

31.03.2004 31.3.2003

BALANCE SHEETNon-current Assets 39,244 39,244Current Assets 9,970,150 3,189,157Current Liabilities (10,005,167) (3,219,185)Non-current Liabilities — —Net Assets 4,227 9,216

CAPITAL AND RESERVESIssued Capital (36 Ordinary Shares of EURO$500 each) 15,698 15,698Accumulated Loss (11,471) (6,482)Shareholders’ Fund 4,227 9,216

The above loss for the year and the accumulated loss at year end relate to post-acquisition results.

(e) Neeman Medical International PLC, U.K., is due to be liquidated in the near future and provision for impairment loss amounting toUS$1,106,104.00 was already made in the Accounts in previous years. However, the directors are of the opinion that provision for impairmentloss of US$451,452.76 in respect of the Company’s interests in the above subsidiary company at 31st March, 2004 is adequate in allrespects. The over-provision for impairment loss amounting to US$654,651.24 was written back in the accounts during the year.

(f) The unlisted share investment in Neeman Medical International B.V., The Netherlands, is held for long term. The directors of the Company areof the opinion that no provision for impairment in value of the investment is required and that no provision for bad and doubtful debts isrequired in respect of the amount due by the said subsidiary company.

3 AMOUNT DUE BY A DIRECTORAmount due by a director of the Company disclosure pursuant to Section 161B of the Companies Ordinance is as follows:-

US$Debit balance Maximum debit Debit balanceb/f. from balance outstanding outstanding at

Name of Borrower Positioin Last year during Year year end

Santhanagopalan Director 10,374.52 10,374.52 4,641.05Krishnamachary

The above amount is unsecured, non-interest bearing and has no fixed repayment term. The directors are of the opinion that no provision is required inrespect of the balance.

MaxAsiaPac 201-210.p65 9/14/2004, 11:33 AM208



US$ US$2004 2003

4 TRADE AND OTHER RECEIVABLES, LESS PROVISIONFellow Subsidiary Company — —Others 919,648.78 987,697

919,648.78 987,697Less: Provision for Bad and Doubtful Debts (135,383.32) (135,383)

784,265.46 852,314

5 TRADE AND OTHER PAYABLESFellow Subsidiary Company - Max UK Limited 123,241.50 96,626Others 33,268.00 16,300

156,509.50 112,926

6 SHARE CAPITALAuthorized1,252,070 Shares (2003: 900,000 Shares) of US$10.00 each 12,520,700 9,000,000

Issued and Fully Paid1,204,677 Shares (2003: 900,000 Shares) of US$10.00 each 12,046,770 9,000,000

7 CAPITAL RESERVEBalance at 31/3/2003, b/f. 2,000,000 2,000,000Addition/(Deduction) —- —Balance at 31/3/2004, c/f. 2,000,000 2,000,000

8 TURNOVER AND REVENUESThe principal activities of the Company are to hold unlisted investments in overseas subsidiary companies. Turnover represents dividendsreceived from unlisted investments in subsidiary companies. Revenues recognised during the year are as follows:-

US$ US$2004 2003

TurnoverDividends Received from Unlisted Investments in Subsidiary Companies — —

Other RevenueBank Interest Received — 250Interest Received from Others 9,532.48 26,826Profit on Exchange — 993Provision for Impairment Loss in Interests in Subsidiary Company Written Back 654,651.24 —

664,183.72 28,069Total Revenues 664,183.72 28,069

9 PROFIT/(LOSS) BEFORE TAXATIONProfit/(Loss) before Taxation has been arrived at after crediting and charging the following items:

(a) CREDITINGProfit on Exchange — 993Provision for Impairment Loss in Interest in Subsidiary Company 654,651.24 —

(b) CHARGINGUnder Administrative Expenses:

Auditors’ Remuneration 8,000 8,000Under Other Operating Expenses:

Loss on Exchange 26,634.16 — Under Finance Costs:

Bank Interest Paid 89.95 —

MaxAsiaPac 201-210.p65 9/14/2004, 11:33 AM209



10 DIRECTORS’ REMUNERATIONDirectors’ Remuneration disclosed in accordance with the provisions of Section 161 of the Companies Ordinance is as follows :-

US$ US$2004 2003

From the Company:Fees 20,000 24,000Other Emoluments — —

20,000 24,000

From the Subsidiaries:Fees — —Other Emoluments — —

— —

11 TAXATION(a) Current Taxation:

Estimated liability to Profits Tax for the year of assessment 2003/04at the rate of 17.5% (2002/03: 16%) on taxable profit for the year — —

Deferred Taxation:Deferred Tax (Expenses)/Income recognised during year (see Note 12) — —Tax for the year — —

(b) Taxation for the year can be reconciled to the profit/(loss) per the income statement as follows:-Profit/(Loss) before Taxation 585,083 (71,101)

Tax (Expenses)/Income at profits tax rate of 17.5% (2003: 16%) (102,390) 11,376Tax effect of Non-Taxable Revenue 114,564 199Tax effect of Non-Deductible Expenses (6,237) (8,999)Tax effect of Non-Deductible Loss in view of no trading in Hong Kong (5,937) (2,576)Tax for the year — —

12 DEFERRED TAXAt 31st March, 2004, the Company has balance of deferred tax assets of US$212,720 (2003: $212,598) which are not recognised, as it isnot probable that immediate future taxable profit will be available against which the deductible temporary differences and unused tax lossescan be utilized.The components of deferred tax assets which have not been recognised in the balance sheet are as follows:-

US$ US$2004 2003

Deferred Tax Assets:Re. Deductible Temporary Differences 23,692 23,692Re. Unused Tax Losses 189,028 188,906

212,720 212,598

13 ULTIMATE HOLDING COMPANYIn the opinion of the Directors, the ultimate holding company of the Company is Max India Limited, a company incorporated in India.

MaxAsiaPac 201-210.p65 9/14/2004, 11:33 AM210

NEEMAN MEDICAL INTERNATIONAL B.V.

NeemanMedI Int BV 211-216.p65 9/14/2004, 11:33 AM211

N E E M A N M E D I C A L I N T E R N A T I O N A L B . V .


THE BOARD OF DIRECTORS OF NEEMAN MEDICALINTERNATIONAL B.V. NOOTDORP

INTRODUCTIONIn accordance with your instructions we have audited the financialstatements of Neeman Medical International B.V., Nootdorp, for theyear ended March 31, 2004. These financial statements are theresponsibility of the company’s management. Our responsibility is toexpress an opinion on these financial statements based on our audit.

SCOPEWe conducted our audit in accordance with auditing standards generallyaccepted in the Netherlands. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessingthe accounting principles used and significant estimates made bymanagement, as well as evaluating the overall presentation of thefinancial statements. We believe that our audit provides a reasonablebasis for our opinion.

OPINIONIn our opinion, the financial statements give a true and fair view of thefinancial position of the company as at March 31, 2004, and of theresult for the year then ended in accordance with accounting principlesgenerally accepted in the Netherlands and comply with the financialreporting requirements included in Part 9 of Book 2 of the NetherlandsCivil Code.

For and on behalf ofPrice WaterhouseCoopersAccountants N.V.Marten Meesweg 253068 AV RotterdamThe Netherlands20 MAY, 2004

AUDITORS’ REPORTSTATEMENT OFDIRECTORS’ REPORTY E A R E N D E D 3 1 S T M A R C H , 2 0 0 4

The directors present their report and the financial statements of thecompany for the year ended March 31, 2004.

PRINCIPAL ACTIVITIES AND BUSINESS REVIEWThese accounts are prepared for the company as an individualundertaking only.

The principal activity of the company was that of an intermediateholding company for a group that was to conduct clinical trials forvarious pharmaceutical companies around the world.

The company’s shareholders therefore set up Neeman MedicalInternational NV in the Netherlands which is 100% subsidiary of theCompany.

RESULTS AND DIVIDENDSThe trading results for the year, and the company’s financial position atthe end of the year are shown in the attached financial statements.

The directors have not recommended a dividend.

AUDITORSA resolution to re-appoint PricewaterhouseCoopers Accountants N.V.as auditors for the ensuing year will be proposed at the annual generalmeeting in accordance with section 385 of the Companies Act 1985.

Signed by order of the DirectorsRegistered Office B. ANANTHARAMAN20 MAY, 2004 Director




BALANCE SHEET AS AT M A R C H 3 1 , 2 0 0 4( B E F O R E A P P R O P R I A T I O N O F R A S U L T )

US$ US$NOTE As at As at

31.03.2004 31.03.2003

INVESTMENTS 2 39,244 39,244

CURRENT ASSETSCash at bank 8,072 2,088Advances 3 9,962,078 3,187,069

9,970,150 3,189,157

Creditors: amount falling due within one year 4 10,001,918 3,217,829Accruals 3,249 1,356

10,005,167 3,219,185Net current (liabilities)/assets (35,017) (30,028)Total assets less current liabilities 4,227 9,216

CAPITAL AND RESERVESCalled-up equity share capital 6 15,698 15,698Retained Earnings (6,482) —Profit and loss account (4,989) (6,482)Net Capital 4,227 9,216

PROFIT AND LOSS ACCOUNT F O R T H E P E R I O D A P R I L 1 , 2 0 0 3 T O M A R C H 3 1 , 2 0 0 4

NOTE US$ US$Period from Period from

Apr 01, 2003 to Dec 06, 2001 toMar 31, 2004 Mar 31, 2003

REVENUEOther income 7 — 18Administrative & Other expenses 8 (1,450) (3,254)OPERATING GAIN/(LOSS) (1,450) (3,236)

Interest and Bank Charges 9 (3,539) (3,246)

PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION (4,989) (6,482)Tax on profit/(loss) on ordinary activities — —LOSS ON ORDINARY ACTIVITIES AFTER TAXATION,BEING LOSS FOR THE FINANCIAL YEAR (4,989) (6,482)

The company has no recognised gains or losses other than the results for the year as set out above.

All of the activities of the company are classed as continuing.




US$ US$Period from Period from


A. CASH FLOW FROM OPERATING ACTIVITIESNet Profit/(Loss) before tax and extraordinary items (4,989) (6,482)

Adjustments for:Interest Expense 214 610Other Provisions 1,893 1,356Operating Profit Before Working Capital Changes (2,882) (4,516)

Adjustments for:Other receivables (6,775,009) (3,187,069)Cash Generated From Operations (6,777,891) (3,191,585)Cash From/(Used In) Operating Activities (6,777,891) (3,191,585)

B. CASH FLOW FROM INVESTING ACTIVITIESPurchase of Investments — (39,244)Cash From/(Used In) Investing Activities — (39,244)

C. CASH FLOW FROM FINANCING ACTIVITIESProceeds from fresh issue of Share Capital (including Share Premium) — 15,698Proceeds from long term borrowings 6,784,089 3,217,829 Interest Paid (214) (610) Cash From/(Used In) Financing Activities 6,783,875 3,232,917

Net Increase/(Decrease) in Cash & Cash Equivalents 5,984 2,088Cash and Cash Equivalents - Opening Balance 2,088 —Cash and Cash Equivalents - Closing Balance 8,072 2,088

Cash and cash equivalents compriseBalance with banks 8,072 2,088Total 8,072 2,088

CASH FLOW STATEMENT Y E A R E N D E D M A R C H 3 1 , 2 0 0 4




1 ACCOUNTING POLICIESBasis of accountingThe financial statements have been prepared under the historicalcost convention, and in accordance with applicable accountingstandards.

These accounts are accounts of the company as an individualundertaking and are not consolidated accounts. In accordance witharticle 408 Book 2 of the Dutch Civil Code, no consolidated financialstatements are included of the company and the group companieswhich are economically and organizationally linked to the company.

RevenueThe revenue shown in the profit and loss account represents amountsinvoiced during the year, exclusive of value added tax.

Foreign currenciesAssets and liabilities in foreign currencies are translated intoUS Dollars at the rates of exchange ruling at the balance sheetdate. Transactions in foreign currencies are translated into USDollars at the rate of exchange ruling at the date of the transaction.Exchange differences are taken into account in arriving at theoperating result.

2 INVESTMENTS2004 2003US$ US$

Shares in group undertakings 39,244 39,244

The investment represents 72.86% of the issued share capital ofNeeman Medical International N.V., a company incorporated inthe Netherlands. The (negative) net equity value of Neeman MedicalInternational N.V. as at 31st March 2004 is US$ (6,773,762) andthe result of this company for the year 2003/2004 is (negative)US$ (170,998).

The ultimate parent, Max India Limited, intends to continue fundingthe business of Neeman Medical International N.V. and NeemanMedical International B.V. at least through March 31, 2005 toenable that company to fulfil all its debt obligations. In additionAlda Limited, minority shareholder of Neeman Medical InternationalN.V., intends to continue funding the business of Neeman MedicalInternational N.V. at least through March 31, 2005 to enable thatcompany to fulfil all its debt obligations.

3 ADVANCES2004 2003US$ US$

Amounts owed by group undertakings 9,962,078 3,187,069(Neeman Medical International N.V.)

9,962,078 3,187,069No interest is charged on the above inter-company balance.

NOTES TO THE FINANCIAL STATEMENTS Y E A R E N D E D M A R C H 3 1 , 2 0 0 4

4 CREDITORS2004 2003US$ US$

Amounts owed to group undertakings:Max Asia Pac Ltd 9,851,918 3,217,829Others 150,000 —

10,001,918 3,217,829No interest is charged on the balance due to Max Asia Pac Ltd.

Other creditors relate to an advance received by a third party bearingan interest rate of 6% per annum.

5 RELATED PARTY TRANSACTIONSThe company was under the control of its immediate parentundertaking, Max Asia-Pac Limited, throughout the year. Theultimate controlling party was Max India Limited.

6 SHARE CAPITAL2004 2003EURO EURO

Authorised share capital:180 Ordinary shares of Euro 500/- each 90,000 90,000

2004 2003US$ US$

Allotted, called up and fully paid:Ordinary share capital brought forwardIssue of ordinary shares 15,698 15,69836 Ordinary shares of Euro 500/- each 15,698 15,698

7 OTHER INCOMEPeriod from Period from

Apr 01, Dec 06,2003 to 2001 to

Mar 31, 2004 Mar 31, 2003US$ US$

Interest earned — 18

8 ADMINISTRATIVE EXPENSESPeriod from Period from

Apr 01, Dec 06,2003 to 2001 to

Mar 31, 2004 Mar 31, 2003US$ US$

Legal & Professional 1,985 1,816Loss/(gain) on translation difference (15) 1,351Other (520) —Share Capital Tax — 87

1,450 3,254




9 BANK CHARGES AND INTEREST EXPENSESPeriod from Period from

Apr 01, Dec 06,2003 to 2001 to

Mar 31, 2004 Mar 31, 2003US$ US$

Bank charges 1,432 2,636Interest expenses 2,107 610

3,539 3,246

10 Max India Limited, as the ultimate parent company of NeemanMedical International B.V. and Alda Limited, minority shareholderof Neeman Medical International N.V. are funding Neeman MedicalInternational N.V. share (through intermediate subsidiary companiesNeeman Medical International B.V. and Max Asia Pac Limited) atleast up to and including March 31, 2005 to enable it to fulfil allits debts.

11. ULTIMATE PARENT COMPANYThe ultimate parent undertaking was Max India Limited, a companyincorporated in India. Copies of these accounts are availablefrom Max India Limited, Max House, 1, Dr. Jha Marg, Okhla, NewDelhi-110020, India.

These financial statements were approved by the directors on theMay 20, 2004 and are signed on their behalf by:

B. ANANTHARAMANDirector

OTHER INFORMATION

PROFIT APPROPRIATION ACCORDING TO THE ARTICLES OFASSOCIATION

ARTICLE 241. The profits of the Company shall be at the disposal of the General

Meeting.2. The Company may distribute profits only if and to the extent that

its shareholder’ equity is greater than the sum of the paid andcalled-up part of the issued capital and the reserves which mustbe maintained by virtue of the law.

3. Dividends may be paid only after approval and adoption of theannual accounts which show that they are justified.

4. For the purposes of determining the allocation of profits any sharesor depositary receipts held by the Company and any shares ordepositary receipts of which the Company has a usufruct shall notbe taken into account.

5. The General Meeting may resolve to declare interim dividends. Aresolution to declare an interim dividend from the profits realisedin the current financial year may also be passed by the Board ofDirectors. Dividend payments as referred to in this paragraph maybe made only if the provision in paragraph 2 of this Article hasbeen met.

6. Unless the General Meeting sets a different term for that purpose,dividends shall be made payable within thirty days after they aredeclared.

7. A General Meeting declaring a dividend may direct that it is to besatisfied wholly or partly by the distribution of assets.

8. Any deficit may be set off against the statutory reserves only if andto the extent that the law shall permit.

PROPOSED PROFIT APPROPRIATIONAwaiting the decision of the shareholders, the net loss for the year isseparately included in shareholders’ equity as net loss for the year.


NEEMAN MEDICAL INTERNATIONAL N.V.

NeemanMedI Int NV 217-223.p65 9/14/2004, 11:33 AM217

N E E M A N M E D I C A L I N T E R N A T I O N A L N . V .

2 1 8 M A X A N N U A L R E P O R T 2 0 0 3 - 2 0 0 4

The directors present their report and the financial statements of thecompany for the period April 1, 2003 to March 31, 2004.

PRINCIPAL ACTIVITIES AND BUSINESS REVIEWThese accounts are prepared for the company as an individualundertaking only.

The principal activity of the company was that of an intermediateholding company for a group that was to conduct clinical trials forvarious pharmaceutical companies around the world.

RESULTS AND DIVIDENDSThe trading results for the year and the company’s financial position atthe end of the year are shown in the attached financial statements.


AUDITORSA resolution to re-appoint PricewaterhouseCoopers Accountants N.V.as auditors for the ensuing year will be proposed at the annual generalmeeting in accordance with section 385 of the Companies Act 1985.

Signed by order of the DirectorsRegistered Office B. ANANTHARAMAN20 MAY, 2004 Director

AUDITORS’ REPORT

THE BOARD OF DIRECTORS OF NEEMAN MEDICALINTERNATIONAL N.V. NOOTDORP

STATEMENT OFDIRECTORS’ REPORTY E A R E N D E D 3 1 S T M A R C H , 2 0 0 4

INTRODUCTIONIn accordance with your instructions we have audited the financialstatements of Neeman Medical International N.V., Nootdorp, for theyear ending March 31, 2004. These financial statements are theresponsibility of the company’s management. Our responsibility is toexpress an opinion on these financial statements based on our audit.

SCOPEWe conducted our audit in accordance with auditing standards generallyaccepted in the Netherlands. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessingthe accounting principles used and significant estimates made bymanagement, as well as evaluating the overall presentation of thefinancial statements. We believe that our audit provides a reasonablebasis for our opinion.

OPINIONIn our opinion, the financial statements give a true and fair view of thefinancial position of the company as at March 31, 2004, and of theresult for the year then ended in accordance with accounting principlesgenerally accepted in the Netherlands and comply with the financialreporting requirements included in Part 9 of Book 2 of the NetherlandsCivil Code.

For and on behalf ofPrice WaterhouseCoopersAccountants N.V.Marten Meesweg 253068 AV RotterdamThe Netherlands20 MAY, 2004



M A X A N N U A L R E P O R T 2 0 0 3 - 2 0 0 4 2 1 9

NOTES US$ US$As at As at

31.03.2004 31.03.2003

INVESTMENTS 2 7,330,084 7,330,084CURRENT ASSETSDebtors 3 337,064 83,276Cash at bank 2,280 37,641Advances 4 2,862,136 814,875

3,201,480 935,792CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 5 13,650,930 12,595,822Accruals 6 373,146 85,318

NET CURRENT (LIABILITIES)/ASSETS 14,024,076 (10,822,596) 12,681,140 (11,745,348)

Total assets less current liabilities (3,492,512) (4,415,264)

CREDITORS: AMOUNTS FALLING DUE AFTERMORE THAN ONE YEAR 7 3,281,250 2,187,500

(6,773,762) (6,602,764)

CAPITAL AND RESERVESCalled-up equity share capital 9 53,634 53,634Share Application Money 10 229 229Retained earnings (6,656,627) —Profit and loss account (170,998) (6,656,627)Deficiency (6,773,762) (6,602,764)

PROFIT AND LOSS ACCOUNT F O R T H E P E R I O D A P R I L 1 , 2 0 0 3 T O M A R C H 3 1 , 2 0 0 4

NOTES US$ US$Period from Period from


REVENUE 11 279,026 102Administrative & Other expenses 12 (74,627) (5,675,432)

OPERATING PROFIT/(LOSS) 204,399 (5,675,330)

Interest and Bank Charges 13 375,397 981,297

PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION (170,998) (6,656,627)

Tax on profit/(loss) on ordinary activities — —

LOSS ON ORDINARY ACTIVITIES AFTER TAXATION,BEING LOSS FOR THE FINANCIAL YEAR (170,998) (6,656,627)

The company has no recognised gains or losses other than the results for the year as set out above.All of the activities of the company are classed as continuing.

BALANCE SHEET AS AT M A R C H 3 1 , 2 0 0 4( B E F O R E A P P R O P R I A T I O N O F R A S U L T )




CASH FLOW STATEMENT Y E A R E N D E D M A R C H 3 1 , 2 0 0 4

US$ US$Period from Period from


A. CASH FLOW FROM OPERATING ACTIVITIESNet Profit/(Loss) before tax and extraordinary items (170,998) (6,656,627)

Adjustments for: Interest Expense 179,026 644,642

Other Provisions 108,903 31,380Interest Income (191) —

Operating Profit before Working Capital Changes 116,740 (5,980,605)

Adjustments for: Trade receivables (253,787) (83,276)

Other receivables (2,047,070) (814,875) Trade payables (170,797) 198,627

Cash generated from Operations (2,354,914) (6,680,129)

Cash From/(Used In) Operating Activities (2,354,914) (6,680,129)

B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of Investments — (7,330,084)

Cash From/(Used In) Investing Activities — (7,330,084)

C. CASH FLOW FROM FINANCING ACTIVITIES Proceeds from fresh issue of Share Capital (including Share Premium) — 53,863 Proceeds from long term borrowings 2,319,654 14,584,695 Interest Paid (101) (590,704)

Cash From/ (Used In) Financing Activities 2,319,553 14,047,854

Net Increase/(Decrease) in Cash & Cash Equivalents (35,361) 37,641 Cash and Cash Equivalents - Opening Balance 37,641 — Cash and Cash Equivalents - Closing Balance 2,280 37,641

Cash and cash equivalents compriseBalance with banks 2,280 37,641

Total 2,280 37,641





These accounts are accounts of the company as an individualundertaking and are not consolidated accounts.

In accordance with article 408 Book 2 of the Dutch Civil Code, noconsolidated financial statements are included of the company andthe group companies which are economically and organizationallylinked to the company.

RevenueThe turnover shown in the profit and loss account representsamounts invoiced during the year, exclusive of value added tax.

Foreign currenciesAssets and liabilities in foreign currencies are translated intoUS Dollars at the rates of exchange ruling at the balance sheetdate. Transactions in foreign currencies are translated into USDollars at the rate of exchange ruling at the date of the transaction.Exchange differences are taken into account in arriving at theoperating result.

2 INVESTMENTS2004 2003US$ US$

Shares in group undertakings 7,330,084 7,330,084

The investments represent two investments, first one being 74.25%of the issued share capital of Neeman ICIC S.A., (US$ 6,580,084)a company incorporated in Costa Rica, whose principal activity isthe conduct of clinical trials and, second one being 100% of theissued ordinary share capital of Neeman Medical International,Inc. (US$ 750,000) a company incorporated in the USA. Theprincipal activity of that company is to provide marketing and otherservices in connection with clinical trials and also to conduct clinicaltrials.

The net equity value of Neeman ICIC S.A. as at 31st December2003 is US$ 667,428 and the result of this company for the year2003 is (negative) US$ (370,475).

The (negative) net equity value of Neeman Medical International,Inc. as at 31st March 2004 is US$ (2,534,538) and the result ofthis company for the year 2003/2004 is (negative) US$(1,828,957). The ultimate parent, Max India Limited, intends tocontinue funding the business of Neeman Medical InternationalN.V. at least through March 31, 2005 to enable that company tofulfil all its debt obligations. In addition Alda Limited, minorityshareholder of Neeman Medical International N.V., intends tocontinue funding the business of Neeman Medical InternationalN.V. at least through March 31, 2005 to enable that company tofulfil all its debt obligations.

NOTES TO THE FINANCIAL STATEMENT Y E A R E N D E D M A R C H 3 1 , 2 0 0 4

3 DEBTORS2004 2003US$ US$

Debtorsexceeding six months 217,064 —others 120,000 83,276

337,064 83,276

4 ADVANCES2004 2003US$ US$

Neeman Medical International Inc 2,726,945 772,945Neeman Medical International Plc 35,000 35,000Neeman ICIC 100,191 —VAT Receivables — 6,930

2,862,136 814,875

5 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR2004 2003

US$ US$

Amounts owed to groupundertakings:Neeman Medical

International BV 9,962,078 3,187,069

Max UK 1,950 1,950

Max Asia Pac Ltd — 5,046,663

9,964,028 8,235,682

Others:Alda Ltd 3,661,022 3,069,713

PricewaterhouseCoopers 25,880 25,880

Dr. G. Rodriguez — 1,093,750

Basham, Ringe Y Correa — 39,547

Harvard Medical International — 131,250

13,650,930 12,595,822

No interest is charged on inter-company balances.

6 ACCRUALS2004 2003US$ US$

Guarantee Charges payable to bank 353,294 81,879Professional fee payable to Landwell — 3,439VAT Payables 6,053 —Other Provisions 13,799 —

373,146 85,318

7 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONEYEAR

2004 2003US$ US$

Other creditors(Payable to Dr. G. Rodriguez) 3,281,250 2,187,500

Other creditors represent amount due on the purchase ofinvestments in Neeman ICIC payable to Dr. G. Rodriguez. Thisamount has been guaranteed by a Standby Letter of Credit issued




by group’s bank in India. However, the Company has disputedpayment of the balance purchase price to Dr. G. Rodriguez in theDelhi High Court, India, since in the Company’s view the purchaseprice fixed by Dr. G. Rodriguez for sale of his 75% stake in NeemanICIC was wrongly arrived at on the basis of fraudulentmisrepresentations made by Dr. G. Rodriguez. The Delhi High Courtvide its order dated December 19, 2003 has restrained the bankin India who issued the Standby Letter of Credit from making anyfurther payments under the said Standby Letter of Credit till thefinal disposal of the case. The matter is currently subjudice.

8 RELATED PARTY TRANSACTIONSThe company was under the control of its immediate parentundertaking, Neeman Medical International BV. The ultimatecontrolling party was Max India Limited.

At March 31, 2004, the company owed Alda Limited, the minorityshareholder, US$ 3,661,021/-.

At March 31, 2004, the company’s group company Neeman MedicalInternational plc. owed to the Company US$ 35,000.

In revenue an amount of US$ 278,787 is included for servicesrendered to Neeman ICIC.

9 SHARE CAPITAL2004 2003Euro Euro

Authorised share capital:Ordinary shares ofEuro 500/- each (225 nos) 112,500 112,500

2004 2003US$ US$

Allotted, called up and fully paid:Ordinary share of 123 shares of Euro 500/- eachNeeman Medical InternationalBV (90 shares) 39,245 39,245Alda Ltd. (33 shares) 14,839 14,839

53,634 53,634

10 SHARE APPLICATION MONEY2004 2003US$ US$

Alda Limited 229 229

The negative net equity value of Neeman Medical InternationalN.V. as at 31st March 2004 is US$ 6,773,762 and the result ofNeeman Medical International N.V. as at 31st March 2004 is US$(170,998). The ultimate parent, Max India Limited, intends tocontinue funding the business of Neeman Medical InternationalN.V. at least through March 31, 2005 to enable that company tofulfil all its debt obligations. In addition Alda Limited, minorityshareholder of Neeman Medical International N.V., intends tocontinue funding the business of Neeman Medical InternationalN.V. at least through March 31, 2005 to enable that company tofulfil all its debt obligations.

11 REVENUEPeriod from Period from

Apr 01, Dec 06,2003 to 2001 to

Mar 31, 2004 Mar 31, 2003US$ US$

Service Income 278,787 —Interest earned 239 102

279,026 102

12 ADMINISTRATIVE & OTHER EXPENSESPeriod from Period from

Apr 01, Dec 06,2003 to 2001 to

Mar 31, 2004 Mar 31, 2003US$ US$

Audit and certification fee 8,508 12,788Legal & Professional 53,948 1,077,098Prior Period expenses 12,176 —Loss (Gain) on foreign currency translation (5) (2,405)Marketing expenses — 2,569,799New site development expenses — 151,020Site development expenses — 1,789,551Travelling Expenses — 76,003Miscellaneous expenses — 1,578

74,627 5,675,432

13 BANK CHARGES AND INTEREST

Bank and guarantee charges 196,371 336,655Interest expenses 179,026 644,642

375,397 981,297

14 Max India Limited, as the ultimate parent company of NeemanMedical International N.V. and Alda Limited, other shareholder ofthe company are funding Neeman Medical International N.V.

15 Previous period figures have been regrouped/reclassified wherevernecessary to conform to current year’s classification.

16 ULTIMATE PARENT COMPANYThe ultimate parent undertaking was Max India Limited, a companyincorporated in India. This company is the parent undertaking ofthe largest and the smallest group for which group accountsincluding Neeman Medical International NV are drawn up. Copiesof these accounts are available from Max India Limited, Max House,1, Dr. Jha Marg, Okhla, New Delhi-110020, India.

These financial statements were approved bythe directors on MAY 20, 2004 and B. ANANTHARAMANare signed on their behalf by Director




OTHER INFORMATION

PROFIT APPROPRIATION ACCORDING TO THE ARTICLES OFASSOCIATION

ARTICLE 181. Profits shall be established in accordance with generally accepted

accounting standards.2. The general meeting of shareholders shall determine whether profits

made in any financial year shall be paid out partly or wholly, oradded to the reserves.

3. The general meeting of shareholders can only resolve to pay outprofits and/or reserves and the Company may only make paymentsout of profits and/or reserves open to payment, as far as theshareholders’ equity of the Company exceeds the amount of thepaid-up and claimed part of the capital, increased with reserves,to be kept pursuant to the law or the articles of association.

4. Dividends shall be made payable within a month after the adoptionof the annual account. The general meeting of shareholders maydetermine that dividends shall be paid, wholly or partly, in anotherfrom than in cash.

5. The general meeting of shareholders or the management board isauthorized to make interim payments out of profits and/ or reservedwith due observance of the provisions of paragraph 3.

6. The claim to pay dividend shall lapse five years the dividend wasmade payable.

PROPOSED PROFIT APPROPRIATIONAwaiting the decision of the shareholders, the net loss for the year isseparately included in shareholders’ equity as net loss for the year.


NEEMAN MEDICAL INTERNATIONAL INC.

NeemanMedI Int Inc 224-230.p65 9/14/2004, 11:33 AM224

N E E M A N M E D I C A L I N T E R N A T I O N A L I N C .


The directors present their report and the financial statements of thecompany for the year ended 31, March 2004.

PRINCIPAL ACTIVITIES AND BUSINESS REVIEWThe Company was organized in the State of Delaware and is based inCary, North Carolina, USA. The principal activity of the company is toprovide marketing, technical assistance, training, quality assurance andcertain administrative functions with respect to the conduct of multi-national clinical research studies for the pharmaceutical, biotech andContract Research companies.In 2002 - 03, the Company began operating clinical research centersto perform clinical trials in the United States, which coordinate theadministration of patient recruitment, retention and monitor adherenceto the designated testing protocols. As on March 31, 2004, the companyhad clinical research proposals in excess of US $ 5.0 million frommultinational companies like Glaxo Smithkline, Pfizer, Bristol Meyers ,Ortho Biotech, Wyeth, ICON, Eli Lilly and other reputed companies.Your Company is present in seven geographies spread across NorthAmerica, i.e., Alabama, Georgia, Massachusetts, New York, NorthCarolina, Texas and Wisconsin. Your Company has a net work of over90 principal investigators and offers to conduct clinical trials in multipletherapeutic specializations. The Company is also driving global businessdevelopment efforts for its sister companies in India and Latin America.

DIRECTORS’ REPORT

The Company is a wholly-owned by Neeman Medical International NV.,The Netherlands.The Company is a wholly-owned by Neeman MedicalInternational NV., The Netherlands.The Company is a wholly-owned by Neeman Medical International NV.,The Netherlands.

RESULTSThe financial results for the year, and the company’s balance sheetposition at the end of the year are shown in the attached financialstatements.

DIRECTORSDuring the year, there was no change in the constitution of the Board ofdirectors.

AUDITORSM/s Joseph P Handy, CPA, Plc., Certified Public Accountants, Miamiare proposed to be re-appointed as the Statutory Auditors of the Companyfor the next financial year.or the next financial year.

Signed by order of the DirectorsCATHLEEN A. WHITE

APRIL 22, 2004 Global CEO and Director




US$ US$March 31, 2004 March 31, 2003


ASSETSCURRENT ASSETS:Cash 1,078 200Accounts receivable 312,669 26,463Receivables from related parties 11,813 15,924Other current assets 33,866 49,927Total current assets 359,426 92,514

PROPERTY AND EQUIPMENT, AT COST:Furniture and fixtures 157,861 118,875Computer equipment and software 81,934 75,515Equipment 2,240 1,500Leasehold improvements — 10,360

242,035 206,250Less accumulated depreciation 92,228 62,935

149,807 143,315OTHER ASSETS:Deposits 3,470 353Organization cost, net of accumulated amortization 320 640Total other assets 3,790 993

Total assets 513,023 236,822

LIABILITIES AND SHAREHOLDER’S DEFICITCURRENT LIABILITIES:Bank overdraft — 892Accounts payable 105,620 74,052Note payable to bank — 15,000Advances from parent company 2,726,945 772,945Deferred revenue 100,808 11,896Accrued expenses 114,188 67,618Total current liabilities 3,047,561 942,403

SHAREHOLDER’S DEFICIT:Common stock, no par value; 1,500 shares authorized;325 issued and outstanding 750,000 750,000Retained earnings deficit (3,284,538) (1,455,581)Total shareholder’s deficit (2,534,538) (705,581)

Total liabilities and shareholder’s deficit 513,023 236,822

The accompanying notes to financial statements are an integral part of these statements.




US$ US$March 31, 2004 March 31, 2003

SERVICE REVENUES 921,423 2,041,313Cost of services 1,079,004 60,264Gross loss (157,581) 1,981,049

GENERAL AND ADMINISTRATIVE EXPENSES:Salaries 778,966 1,402,490Payroll taxes 49,527 78,647Employee benefits 94,066 128,133Legal and professional fees 47,136 52,898Rent 159,054 141,592Travel and lodging 107,069 125,209Contract services 29,012 120,225Communications 77,000 92,490Marketing 159,806 230,179Depreciation and amortization 39,973 40,505Other 127,643 162,485Total general and administrative expenses 1,669,252 2,574,853

LOSS FROM OPERATIONS (1,826,833) (593,804)

OTHER INCOME (EXPENSE):Interest income 510 1,150Interest expense (2,634) (1,466)Gain on sale of assets — 1,914Total other income (expense) (2,124) 1,598

Net loss (1,828,957) (592,206)

Retained earnings deficit, beginning of year (1,455,581) (863,375)Retained earnings deficit, end of year (3,284,538) (1,455,581)


STATEMENT OF LOSS AND RETAINED EARNINGS DEFICIT FOR THE YEARS ENDED MARCH 31, 2004 AND 2003

0




US$ US$March 31, 2004 March 31, 2003

OPERATING ACTIVITIES:NET LOSS (1,828,957) (592,206)

ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED BY OPERATING ACTIVITIES:Depreciation and amortization 39,973 40,505Gain on sale of assets — (1,914)Changes in operating assets and liabilities:

Accounts receivable (321,534) (24,167)Other current assets 16,061 7,806Deposits (3,117) 22,213Accounts payable 31,568 (7,122)Customer deposits on contracts 88,912 11,896Accrued expenses 46,570 53,269

Net cash used by operating activities (1,930,524) (489,720)

INVESTING ACTIVITY:Purchase of property and equipment (10,817) (63,182)Sale of property and equipment — 24,800Cash used by investing activities (10,817) (38,382)

FINANCING ACTIVITIES:Net (payment) borrowing on note payable to bank (15,000) 15,000Increase in advances from affiliates, net of payments 1,954,000 484,922Net payments from (to) related parties 4,111 (15,924)Cash provided by financing activities 1,943,111 483,998

NET CHANGE IN CASH 1,770 (44,104)CASH BALANCE AT BEGINNING OF YEAR (692) 43,412CASH AT END OF YEAR 1,078 (692)

SUPPLEMENTAL DISCLOSURES:Cash paid during the year for interest 2,634 1,466

2,634 1,466

During the year 2004, the Company assumed certain contracts from another company that ceased its clinical research business. In connectionwith the assumption of the contracts, the Company obtained property and equipment of $35,328 in lieu of the payment of advance paymentson the assumed contracts.


STATEMENTS OF CASH FLOWS F O R T H E Y E A R S E N D E D M A R C H 3 1 , 2 0 0 4 A N D 2 0 0 3




NOTES TO FINANCIAL STATEMENTS F O R T H E Y E A R S E N D E D M A R C H 3 1 , 2 0 0 4 A N D 2 0 0 3

1 ORGANIZATION AND SUMMARY OFSIGNIFICANT ACCOUNTING POLICIESNature of the BusinessNeeman Medical International, Inc. (the “Company”) was organizedin the State of Delaware and is based in Cary, North Carolina. TheCompany offers marketing, technical assistance, training, qualityassurance and certain administrative functions with respect to theconduct of multi-national clinical research studies for thepharmaceutical, biotech, Contract Research Organization and deviceindustries.

During 2003, the Company began operating centers to performclinical research trials in the Unites States. The centers coordinatethe administration of patient recruitment and retention and monitoradherence to the designated testing protocols.

The Company is wholly-owned by Neeman Medical InternationalNV.

Cash and Cash EquivalentsThe Company considers all short-term investments with maturity ofthree months or less to be cash equivalents.

Revenue RecognitionThe contracts for clinical research testing may require an extendedtime to complete, and testing protocols are usually designed withmultiple stages.

If the contract specifies a contracted amount for each stage, revenueis recorded based on the contract amounts as each stage iscompleted. When the contract amount for each stage is not specified,the Company analyzes the expected costs for each stage andrecognizes income for each stage in the proportion of the costs forthat stage to the total contract cost.

Contracts frequently include an advance payment to cover start-upcosts. These payments are shown as liabilities until the revenue onthe contract is earned. At March 31, 2004, $100,808 and at March31, 2003, $11,896 of advance payments are shown as deferredrevenue in the accompanying balance sheet. These deposits arerecognized as income as the testing is completed on the relatedcontracts.

Property and EquipmentProperty and equipment is recorded at cost and depreciated usingthe straight-line method over the estimated useful lives of therespective assets as follows:

EstimatedUseful Lives in Years

Furniture and fixtures 10Computer equipment 4-10Computer software 3Equipment 7-10

Gain or loss is recognized upon the disposal of property andequipment, and the asset and related accumulated depreciationare removed from the accounts. Maintenance and repairs are charged

to operations as they are incurred and major additions andbetterments are capitalized.

Long-lived assets are reviewed for impairment whenever events orcircumstances indicate the carrying value of an asset may not berecoverable.

Management EstimatesThe preparation of financial statements in conformity with generallyaccepted accounting principles requires management to makeestimates, including estimates relating to assumptions that affectthe reported amounts of assets and liabilities and disclosures ofcontingent assets and liabilities at the date of financial statementsand the reported amounts of revenues and expenses during thereporting period. Actual results could differ from these estimates.

Income TaxesIncome taxes are accounted for under the liability method. Theprovision for income taxes is based on income recognized forfinancial statement purposes and includes the effect of temporarydifferences between such income and that recognized for incometax purposes. Deferred tax assets, net of any valuation allowance,and liabilities are determined based on differences between thefinancial reporting and tax bases of assets and liabilities, and aremeasured using the tax rates and laws that are expected to be ineffect when the differences reverse.

2 TRANSACTIONS WITH RELATED PARTIESAt March 31, 2004 and March 31, 2003, the Company hadreceived advances of $2,726,945 and $772,945 respectively fromits parent company. These advances were non-interest bearing anddue on demand.

On March 21, 2002, the Company entered into an agreement withits parent company to provide management and marketing servicesto the subsidiaries of its parent company. The agreement coversthe period from January 1, 2002 to December 31, 2004.

In exchange for its services, the Company will be reimbursed forspecified costs, up to a maximum of $2,038,000 in 2002, plus aprofit margin of 5% for 2002. The maximum reimbursementamount and profit percentage will be adjusted annually, basedupon the results of the Company’s audit. The reimbursement forthe fiscal year ended March 31, 2003 was $1,934,388 and isshown as revenues in the accompanying statement of loss. Inaddition, the parent Company has agreed to fund any losses incurredby the Company at least through fiscal year 2004.

During the year ended March 31, 2004 and March 31, 2003, theCompany advanced costs of $11,813 and $15,924 respectivelyto companies related by common ownership. The advances arenon-interest bearing and are due on demand.

3 COMMITMENTSThe Company leases office space, office equipment and computersoftware under various operating leases. Minimum rentalcommitments payable in future years under operating leases having




an initial or remaining non-cancelable terms of one year or more atMarch 31, 2004 are as follows:

US$2005 51,7342006 2,571Total minimum rentals 54,305

The Company leases its corporate offices under an operating leasethat expires in February, 2005. Office space is also leased in fourlocations where clinical testing is performed. These leases expireat various dates through June, 2005. In addition, the Companyrents housing facilities on a short-term basis for use by businessvisitors.

The Company has operating leases for its telephone equipmentthrough March, 2005 and computer equipment through February,2005.

Rent expense aggregated $159,054 and $141,592 for the yearsended March 31, 2004 and 2003 respectively.

The Chief Executive Officer has also signed a non-competitionagreement with the Company that expires six months after thetermination of employment. The agreement prohibits the ChiefExecutive Officer from engaging in a competitive business wherethe Company maintains an active business or to solicit customersof the Company.

4 EMPLOYEE BENEFIT PLANSThe Company provides a 401(k) retirement savings plan forsubstantially all employees. Participation is generally subject tothe employee’s age and length of employment with the Company.The Company’s contribution to the plan is based on a percentageof employee salaries and is discretionary. The Company’s expensefor its contributions to the plan was $55,032 and $64,428 for theyears ended March 31, 2004 and 2003 respectively.

The Company provides a comprehensive benefits package to allemployees which consists of health, life and disability insurance.Premiums are paid by the Company and amounted to $67,373and $63,705 for the years ended March 31, 2004 and 2003respectively.

5 INCOME TAXESThe provision or benefit for income taxes includes income taxescurrently payable and those deferred because of temporarydifferences between the financial statement and income tax basesof assets and liabilities.

The benefit for income taxes for the two years consisted of thefollowing:

US$ US$2004 2003

FEDERAL INCOME TAX BENEFITCurrent 254,000 81,000Deferred 3,000 —STATE INCOME TAX BENEFITCurrent 126,000 40,000Deferred 1,000 —Valuation allowance (384,000) (121,000)

— —

For financial reporting purposes, deferred taxes are offset by avaluation allowance because of the uncertainties associated withfuture realizability of the asset.

The components of the Company’s net deferred tax asset were asfollows:

US$ US$2004 2003

Net operating loss carryforwards,expiring through 2024 686,378 302,994Start-up costs capitalized forincome tax purposes 512 1,025Difference between tax andfinancial statement depreciation (52,965) (4,763)Valuation allowance (633,925) (299,256)

— —

The reconciliation of income tax computed at the expected statutoryrate to income tax for financial statement purposes is as follows:

2004 2003

Federal statutory rate (15.0)% (15.0)%State tax rate, net of Federal tax benefit (5.9) (5.9)Other .1 .1Valuation allowance 20.8 20.8

—% —%

The Company expects that the net operating loss carryforward willbenefit future income at the lowest Federal tax rate, which iscurrently 15%.


NEEMAN ICIC, S.A.

Neeman ICIC 231-242.p65 9/14/2004, 11:33 AM231

N E E M A N I C I C , S . A .( A C O S T A R I C A N S U B S I D I A R Y O F N E E M A N M E D I C A L I N T E R N A T I O N A L N V )


DIRECTORS’ REPORT

The Directors present their report and the financial statements of theCompany for the year from 1st January 2003 to 31st December 2003.

PRINCIPAL ACTIVITIES AND BUSINESS REVIEWDuring the year, the Company conducted clinical research studies withmultinational customers like Glaxo Smithkline, Wyeth, Pfizer, Abbott,Merck, Johnson & Johnson, Organon, Quintiles and PPD. As on April 1,2004, the Company had clinical research awards in hand for US $ 1.5million. The company was also negotiating contracts for US$1.3 millionwith multinational companies like Wyeth, Purdue Pharma etc.

The operations of the Company were disappointing during the yearunder review. To make the business situation more difficult, in thecurrent year, the Clinical research activities in Costa Rica came underthe purview of a new legislation and the local government took a toughstand on giving approvals for conducting research in social securitysector. Due to these changes in regulations governing Clinical Trials,Glaxo Smithline cancelled the Rota Virus Vaccine Clinical Trial withNeeman ICIC SA, which was estimated at US$3 million.

However, post October 2003, the board of directors initiated severalre-organization measures in order to cut losses and bring the operationsback on rails. A new Chief Operating Officer was appointed who iscurrently working on a plan to bring the Company to a break-even levelin the near future and thereafter embark on a business expansionprogram in the Latin American region.

FINANCIAL RESULTSThe income from operations during the year under review was CostaRican colones c918,122,144 (US$2,322,423) an increase of 13%over last year. Due to cost rationalization and cost control measures

initiated during the year, the company was able to cut down it’s lossessignificantly to colones c162,553,175 (US$370,475) as compared tocolones c 387,531,315 (US$1,087,749) reported last year. Financialresults for the year, and the Company’s balance sheet position at theend of the year are shown in the attached financial statements.

DIRECTORSThe Directors who served the Company during the year under review,were as follows:Mr. Analjit Singh Appointed on December 21, 2000Ms. Cathy White Appointed on December 21, 2000Mr. B. Anantharaman Appointed on March 8, 2001Mr. Surendra Kaul Appointed on December 21, 2000Mr. G. Rodriguez Resigned on November 19, 2003Mr. J.J. Flores Resigned on November 14, 2003Mr. Raj Anand Resigned on November 20, 2003Dr. Vijai Kumar Appointed on November 20, 2003Mr. Fernando Vargas Appointed on November 20, 2003Mr. Robert K. Crone Resigned on November 20, 2003

AUDITORSM/s Price Waterhouse Coopers, Statutory Auditors of the Company, areproposed to be re-appointed as the Statutory Auditors of the Companyfor the next financial year.

ANALJIT SINGHApril 27, 2004 President

TO THE BOARD OF DIRECTORS AND STOCKHOLDERSOF NEEMAN ICIC, S.A.We have audited the accompanying balance sheets of Neeman ICIC,S.A. as of December 31, 2003 and 2002, and the related statementsof income, of changes in stockholders’ equity and of cash flows for theyears then ended, expressed in Costa Rican colones and their translationinto U.S. dollars. These financial statements are the responsibility ofthe Company’s management. Our responsibility is to express an opinionon these financial statements based on our audits.

We conducted our audits in accordance with International Standardson Auditing. Those Standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessingthe accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statementpresentation. We believe that our audits provide a reasonable basis forour opinion.

In our opinion, the financial statements expressed in Costa Ricancolones present fairly, in all material respects, the financial position of

REPORT OF INDEPENDENT AUDITORS

Neeman ICIC, S.A. as of December 31, 2003 and 2002 and the resultsof its operations and its cash flows for the years then ended in accordancewith International Financial Reporting Standards.

The accompanying financial statements expressed in U.S. dollarsgive effect to the translation of the Costa Rican colones financialstatements, on the basis described in Note 3 to the financial statements.This translation should not be construed as representing that the CostaRican colones amounts actually represent or have been, or could beconverted into U.S. dollars.

PricewaterhouseCoopersLic. Alejandro Campoo SanchezFidelity policy R-1153Expiration date: September 30, 2004¢1,000 Stamp tax Law N° 6663

APRIL 27, 2004

Neeman ICIC 231-242.p65 9/14/2004, 11:33 AM232



BALANCE SHEET D E C E M B E R 3 1 , 2 0 0 3 A N D 2 0 0 2

NOTES Colones–Note 1 (¢) US Dollars–Note 3 ($)2003 2002 2003 2002

ASSETSCURRENT ASSETSCash 13,191,191 9,200,866 31,622 24,347Trading Investments 4 574,315 15,513,688 1,377 41,066Notes and accounts receivable 5 200,659,964 254,467,649 481,025 674,273Prepaid expenses 6,331,003 7,855,493 15,177 20,770Total current assets 220,756,473 287,037,696 529,201 760,456

NON-CURRENT ASSETSNotes and long-term accounts receivable 5 — 10,766,464 — 28,453Property, furniture and equipment, net 6 511,459,556 541,374,719 1,516,201 1,623,955Intangible assets, net 7 20,485,881 26,003,485 63,423 81,501Other Assets 9,263,274 5,890,619 22,206 15,579Total non-current assets 541,208,711 584,035,287 1,601,830 1,749,488

761,965,184 871,072,983 2,131,031 2,509,944

LIABILITIES AND STOCKHOLDER’S EQUITYCURRENT LIABILITIESBank Loans 8 183,457,564 265,347,191 439,788 700,000Trade and other accounts payable 9 293,021,150 114,535,711 702,437 303,530Total current liabilities 476,478,714 379,882,902 1,142,225 1,003,530

NON-CURRENT LIABILITIESRelated companies 10 119,068,614 166,311,265 285,434 439,749Provision for severance compensation 11 14,994,318 10,902,103 35,944 28,762Total non-current liabilities 134,062,932 177,213,368 321,378 468,511

Total liabilities 610,541,646 557,096,270 1,463,603 1,472,041

STOCKHOLDER’S EQUITYCapital stock 12 174,703,017 52,426,517 666,261 150,000Additional paid-in capital 12 — 122,276,500 — 516,261Legal reserve 20,000 20,000 64 64Revaluation reserve 209,919,323 209,919,323 265,640 265,640(Deficit) retained earnings 15 (233,218,802) (70,665,627) (264,537) 105,938Total stockholders’ equity 151,423,538 313,976,713 667,428 1,037,903

761,965,184 871,072,983 2,131,031 2,509,944The Accompanying notes are an integral part of these financial statements

Neeman ICIC 231-242.p65 9/14/2004, 11:33 AM233



STATEMENTS OF INCOME Y E A R S E N D E D D E C E M B E R 3 1 , 2 0 0 3 A N D 2 0 0 2


INCOME FROM OPERATIONS 918,122,144 812,219,378 2,322,423 2,250,858LessDirect research costs (346,591,790) (324,898,629) (883,596) (902,923)Indirect research costs (165,942,186) (208,170,963) (418,712) (577,324)Total research costs 13 (512,533,976) (533,069,592) (1,302,308) (1,480,247)Gross profit 405,588,168 279,149,786 1,020,115 770,611

OPERATING COSTSGeneral and administrative expenses (524,008,502) (647,857,252) (1,353,712) (1,697,496)Bio-equivalence — (6,745,737) — (19,446)

13 (524,008,502) (654,602,989) (1,353,712) (1,716,942)

Operating loss (118,420,334) (375,453,203) (333,597) (946,331)

Exchange differences, net (27,865,275) (315,985) — —Financial expenses, net (16,307,053) (16,840,661) (41,143) (46,232)Other income, net 39,847 5,078,534 (2,525) 14,247Translation gain (loss) — — 6,790 (109,433)Net loss (162,553,175) (387,531,315) (370,475) (1,087,749)The Accompanying notes are an integral part of these financial statements

Capital Additional paid Legal Revaluation Retained TotalNotes stock in capital reserve reserve earning (deficit) equity

¢ ¢ ¢ ¢ ¢ ¢

COLONES – NOTE 1Balance at December 31, 2001 1,000,000 122,276,500 20,000 209,919,323 368,378,669 701,594,492Capitalisation of profits 51,426,517 — — — (51,426,517) —Other adjustments — — — — (86,464) (86,464)Net loss — — — — (387,531,315) (387,531,315)Balance at December 31, 2002 52,426,517 122,276,500 20,000 209,919,323 (70,665,627) 313,976,713Capitalization of additionalPaid-in capital 12 122,276,500 (122,276,500) — — — —Net loss — — — — (162,553,175) (162,553,175)Balance at December 31, 2003 174,703,017 — 20,000 209,919,323 (233,218,802) 151,423,538

$ $ $ $ $ $

U.S. DOLLARS – NOTE 3Balance at December 31, 2001 4,222 516,261 64 265,640 1,340,797 2,126,984Capitalisation of profits 147,110 — — — (147,110) —Exchange difference effect onCapitalization of profits (1,332) — — — — (1,332)Net loss — — — — (1,087,749) (1,087,749)Balance at December 31, 2002 150,000 516,261 64 265,640 105,938 1,037,903Capitalization of additionalpaid-in capital 12 516,261 (516,261) — — — —Net loss — — — — (370,475) (370,475)Balance at December 31, 2003 666,261 — 64 265,640 (264,537) 667,428

The Accompanying notes are an integral part of these financial statements

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY YEARS ENDED DECEMBER 31, 2003 AND 2002

Neeman ICIC 231-242.p65 9/14/2004, 11:33 AM234



STATEMENTS OF CASH FLOWS Y E A R S E N D E D D E C E M B E R 3 1 , 2 0 0 3 A N D 2 0 0 2


CASH FLOWS FROM OPERATING ACTIVITIESNet loss (162,553,175) (387,531,315) (370,475) (1,087,749)Adjustments to reconcile net loss to net cashprovided by (used in) operating activitiesDepreciation 6 26,908,036 26,490,740 97,856 97,952Amortization 7 7,915,472 6,045,272 24,631 18,963Allowance for doubtful accounts 5 — 6,609,305 31,992 18,359Provision for severance compensation 11 11,005,838 15,404,141 27,813 42,868Loss on disposal of fixed assets 6 4,409,392 9,814,404 13,519 30,619Unrealized exchange difference on bank loans 23,262,379 6,031,936 — —

Changes in assets and liabilitiesDecrease (increase) in trading investments 14,513,688 (12,382,868) 36,232 (34,254)Decrease in notes and accounts receivable 64,999,834 9,016,946 162,264 24,943Decrease (increase) in prepaid expenses 1,524,490 (999,182) 3,806 (2,764)Increase in other assets (3,372,655) (1,661,675) (8,419) (4,597)Increase in trade and other accounts payable 178,485,439 86,845,956 445,568 240,238Decrease (increase) in accounts payable torelated companies (47,242,651) 166,311,265 (117,936) 460,059Decrease in long-term accounts payable — (811,254) — (2,244)Payments of severance compensation 11 (6,913,623) (15,489,637) (20,631) (42,848)Net cash provided by (used in) operating activities 112,942,464 (86,305,966) 326,219 (240,455)

CASH FLOWS FROM INVESTING ACTIVITIESAdditions to property, furniture and equipment 6 (1,402,265) (26,207,697) (3,621) (70,966)Additions to intangible assets 7 (2,397,868) (8,222,841) (6,553) (25,901)Net cash used in investing activities (3,800,133) (34,430,538) (10,174) (96,867)

CASH FLOWS FROM FINANCING ACTIVITIESNew loans 232,721,815 259,228,791 599,500 717,628Repayment of loans (337,873,821) (160,311,046) (860,743) (443,792)Net cash (used in) provided by financing Activities (105,152,006) 98,917,745 (261,243) 273,836

Effect of exchange rate change in cash — — (13,865) (3,027)Net increase in cash 3,990,325 (21,818,759) 40,937 (66,513)Cash at beginning of year 9,200,866 31,019,625 24,347 90,860Cash at end of year 13,191,191 9,200,866 65,284 24,347

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATIONInterest paid 14,222,509 16,297,142 37,131 45,116

The Accompanying notes are an integral part of these financial statements

Neeman ICIC 231-242.p65 9/14/2004, 11:33 AM235



NOTES TO FINANCIAL STATEMENTS D E C E M B E R 3 1 , 2 0 0 3 A N D 2 0 0 2

1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESNature of operationsNeeman ICIC, S.A. was organized as a corporation on January 10, 1992, in accordance with the laws of the Republic of Costa Rica for a periodof ninety-nine years. The principal activity of the Company is to render clinical research services in the medicine area. The Company may alsoconduct other industrial and commercial activities in general.Until March 31, 2002 the Company was a subsidiary of Neeman Medical International Plc, domiciled in the United Kingdom. From this dateit is a subsidiary of Neeman Medical International NV domiciled in the Netherlands which in turn is a subsidiary (72.86%) of Max India Ltd,domiciled in India.As indicated in Note 14 to the financial statements, the Company is regulated by Ley del Régimen de Zona Franca (Free Zone Law No. 7210)of November 23, 1990. The Company is subject to the regulations of Promotora de Comercio Exterior de Costa Rica (Procomer) (Costa Ricanexports board).

Basis of preparation of financial statementsThe accompanying financial statements have been prepared in accordance with International Financial Reporting Standards. These financialstatements have been prepared under the historical cost convention, except as disclosed in the accounting policies below.

A summary of the most important accounting polices used by the Company in the preparation of the financial statements is set forth below:

Use of estimatesThe preparation of financial statements requires the Company’s management to make estimates and assumptions that affect the reportedamounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reportedamounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Currency and foreign currency transactionsThe accounting records of the Company are maintained in Costa Rican colones. The information regarding currency regulations and theexchange rates is presented in Note 2. The Company records its foreign currency transactions at the exchange rate of the corresponding day.When determining the financial position and the results of operations, the Company values and adjusts their assets and liabilities denominatedin foreign currency at the exchange rate prevailing at the date of such determination or valuation. The resulting differences are included in theresults of the period in which they occur.

CashCash is included in the balance sheet at cost.

InvestmentsThe Company’s investments acquired principally for the purpose of generating a profit from short-term fluctuations in price, are classified astrading investments.The trading investments are traded in active markets and are valued at market value at the end of each year. Trading investments are classifiedas current assets because they are expected to be realized within twelve months of the statement of financial position date.In the cash flow statement, trading investments are presented within the section on operating activities as part of changes in working capital.In the statement of activities, changes in fair values of trading investments are recorded in other operating income.

Trade accounts receivableTrade accounts receivable are recorded at original invoice amount. Collectibility of accounts receivable is analyzed periodically and an allowanceis made for those accounts considered doubtful.

Property, furniture and equipmentThe value of land and buildings were adjusted based on appraisals made by independent appraisers up to December 31, 2000. The netadjustment resulting from the application of this policy was credited to revaluation surplus, as part of stockholders’ equity. All other fixedassets are stated at historical cost.Depreciation on cost and valuation in excess of cost is calculated on the straight-line method over the estimated useful life of the respectiveassets as follows:

Buildings 50 yearsFurniture and equipment 10 to 15 yearsVehicles 10 years

Gains and losses resulting from sales or disposals of fixed assets are determined by comparing proceeds from sale with the carrying amount andare included in the results of the period when realized. Construction and installation costs are charged to transitory accounts and subsequentlytransferred to their respective asset accounts at the conclusion of the construction and installation.

Neeman ICIC 231-242.p65 9/14/2004, 11:33 AM236



Intangible assetsThe costs of software for internal use are recognized as intangible assets under the assumption that such costs will generate profits in thefuture. These costs have been capitalized and are amortized from the moment the software enters in use, using the straight-line method overa five-year period.

Impairment of long-lived assetsIn the event the facts and circumstances indicate that the long-term assets may be impaired, an evaluation of recoverability would beperformed, which is compared to the asset’s carrying amount. The recoverable amount is defined as the higher of the asset’s net selling priceand value in use. Value in use is based on the discounted cash flows expected to arise from the continuing use of an asset and from its disposalat the end of its useful life. If impairment in the real value of the fixed assets is observed, a loss for impairment will be recognized in the resultsof the year; this loss will be equivalent to the difference between the carrying amount and the recoverable value of the assets.

Deferred incomeDeferred income recorded by the Company correspond to payments received in advance from the pharmaceutical companies, which will berecognized as operating income when the services are rendered.

Provision for severance compensationThe Costa Rican Labor Code establishes a severance payment to employees in the event of retirement, death or dismissal without just case.This compensation is determined according to length of service and varies between 19.5 days and 22 days per working year, without limit ofyears. It is the policy of the Company to record a reserve on the basis of 5.33% of salaries paid to its employees monthly.

Legal reserveThe legal reserve has been constituted in order to comply with the provisions of article 143 of the Costa Rican Commercial Code, whichrequires that 5% of the net income of a period be utilized to form a reserve up to the equivalent of 20% of the capital stock.

Revenue recognitionRevenue from services are recognized by reference to the stage of completion of clinical studies projects subscribed with pharmaceuticalcompanies. Interest income is recognized on an effective yield basis.

2 FINANCIAL RISK MANAGEMENTFinancial risk factorsThe activities of the Company are exposed to a variety of financial risks, which it tries to minimize through the application of policies andprocedures of risk management. These policies cover the foreign currency exchange risk, interest rate risk, credit risk and liquidity risk.

Foreign exchange riskThe Costa Rican colon experiences constant devaluations with respect to the U.S. dollar, in accordance with the monetary and foreignexchange policies of the Central Bank of Costa Rica. At December 31, 2003 the exchange rates for the purchase and sale of U.S. dollars were¢418.04 and ¢419.01, respectively (2002- ¢378.39 and ¢379.05, respectively).The Company has assets and liabilities denominated in U.S. dollars, which are subject to foreign exchange fluctuations that affect theCompany’s results, financial position and cash flows. The Company’s exposure to foreign exchange risk (assets and liabilities denominated inU.S. dollars) at December 31, 2003 and 2002 is summarized as follows:

Colones (¢) US Dollars ($)2003 2002 2003 2002

ASSETS 214,831,592 232,357,569 513,902 614,069Liabilities (561,630,948) (428,888,416) (1,340,376) (1,133,456)Net exposure (346,799,356) (196,530,847) (826,474) (519,387)

Interest rate riskThe income and operating cash flows of the Company are substantially independent of changes in market interest rates. The Company has nosignificant interest-bearing assets other than surplus cash balances. Loans payable are subject to interest rate risk, because they are contractedat variable interest rates. The Company does not use derivative financial instruments to convert borrowings from floating rates to fixed rates.

Credit riskThe credit risk arises from the possibility that the counter-party to a transaction may be unable to meet its obligations causing a financial lossto the Company. The Company does not have significant concentrations of credit risk and have policies in place to ensure that sales are madeto customers with an appropriate credit history. Specific payment terms and credit limits are established based on regular analysis of the abilityof the customers to meet their obligations.

Neeman ICIC 231-242.p65 9/14/2004, 11:33 AM237



Liquidity riskThe Company is required to maintain enough cash to meet their financial obligations. Accordingly, it maintains sufficient cash in banks andcredit lines available with banks in case of cash shortages to meet its short-term financial obligations.

Fair value of financial instrumentsFair value is the amount for which a financial asset could be exchanged, or a financial liability settled, between knowledgeable, willing partiesin an arm’s length transaction. The fair value is best determined based on market quotes.The fair value estimates are made in a date assigned, based on market estimates and financial instrument information. These estimates do notreflect any premium or discount resulting from the offer for sale of a particular financial instrument in a date assigned. These estimates aresubjective, involve uncertainty and judgment; therefore, they cannot be determined with accuracy. Any change in the criteria could affectsignificantly these estimates.The carrying amounts of the following financial assets and liabilities approximate to their respective fair value: cash, accounts receivable,accounts payable, loans payable and balances with related companies.

3 TRANSLATION INTO U.S. DOLLARSThe accompanying financial statements expressed in Costa Rica colones were translated into U.S. dollars for convenience of the reader asfollows: monetary assets and liabilities were translated at year-end exchange rate, non-monetary assets and stockholders’ equity at historicalexchange rates and income and expense accounts were translated at the average rates prevailing during the year, except depreciation andamortization which were translated at historical rates. The resulting translation effects are included in income for the period. This translationshould not be construed as representing that the Costa Rican colones amounts actually represent or have been, or could be converted into U.S.dollars.

4 TRADING INVESTMENTSTrading investments correspond to participations in investment funds on demand in a local private bank, denominated in United States dollars.The average yield of these funds during the year ended December 31, 2003 was 3.05% annual (2002 - 3.06%).

5 NOTES AND ACCOUNTS RECEIVABLEColones–Note 1 (¢) US Dollars–Note 3 ($)

2003 2002 2003 2002

Trade accounts receivable 95,016,157 47,416,015 227,775 125,515Unbilled accounts receivable 78,094,235 128,051,207 187,209 339,968Related companies (Note 10) 34,623,450 70,931,097 83,000 187,455Accounts receivable from a former employee 6,142,901 10,766,464 14,726 28,453Officers and employees 230,089 3,725,348 551 9,861Other accounts receivable 1,370,684 5,676,955 3,285 15,003

215,477,516 266,567,086 516,546 706,255Less – Allowance for doubtful Accounts (14,817,552) (1,332,973) (35,521) (3,529)

200,659,964 265,234,113 481,025 702,726Less – Long-term receivables — (10,766,464) — (28,453)

200,659,964 254,467,649 481,025 674,273

The movement in the allowance for doubtful accounts for the year ended December 31, 2003 is shown as follows:

Balance at beginning of year 1,332,973 29,360,856 3,529 86,001Charged to income statement 13,484,579 6,609,305 31,992 18,359Utilized during the year — (34,637,188) — (100,831)Balance at end of year 14,817,552 1,332,973 35,521 3,529

Neeman ICIC 231-242.p65 9/14/2004, 11:33 AM238



6 PROPERTY, FURNITURE AND EQUIPMENT¢ ¢ ¢ ¢ ¢

Land and Furniture and Vehicles Construction TotalBuidings equipment in progress

COLONES–NOTE 1At December 31, 2002 421,335,440 91,857,751 26,935,991 1,245,537 541,374,719Additions 189,570 1,212,695 — — 1,402,265Disposals — (4,409,392) — — (4,409,392)Depreciation charge (5,051,131) (18,399,099) (3,457,806) — (26,908,036)At December 31, 2003 416,473,879 70,261,955 23,478,185 1,245,537 511,459,556

At December 31, 2003Cost and valuation 441,545,684 154,303,838 34,578,066 1,245,537 631,673,125Accumulated depreciation (25,071,805) (84,041,883) (11,099,881) — (120,213,569)Net book amount 416,473,879 70,261,955 23,478,185 1,245,537 511,459,556

At December 31, 2002Cost and valuation 441,356,115 158,313,720 34,578,066 1,245,537 635,493,438Accumulated depreciation (20,020,675) (66,455,969) (7,642,075) — (94,118,719)Net book amount 421,335,440 91,857,751 26,935,991 1,245,537 541,374,719

$ $ $ $ $

US DOLLAR–NOTE 3At December 31, 2002 1,225,276 309,803 84,292 4,584 1,623,955Additions 501 3,120 — — 3,621Disposals — (13,519) — — (13,519)Depreciation charge (20,361) (65,934) (11,561) — (97,856)At December 31, 2003 1,205,416 233,470 72,731 4,584 1,516,201

At December 31, 2003Cost and valuation 1,326,662 578,188 115,611 4,584 2,025,045Accumulated depreciation (121,246) (344,718) (42,880) — (508,844)Net book amount 1,205,416 233,470 72,731 4,584 1,516,201

At December 31, 2002Cost and valuation 1,326,161 591,094 115,611 4,584 2,037,450Accumulated depreciation (100,885) (281,291) (31,319) — (413,495)Net book amount 1,225,276 309,803 84,292 4,584 1,623,955

Property and buildings were revalued in 2000 by independent appraisers. If these assets had been maintained at historical cost, the amountswould be as follows :

Colones–Note 1 (¢) US Dollars–Note 3 ($)2003 2002 2003 2002

Cost 206,701,723 206,512,153 976,095 975,595Accumulated depreciation (20,115,180) (17,542,362) (103,605) (90,516)

186,586,543 188,969,791 872,490 885,079

As described in Note 8, land is mortgaged in guarantee of bank loans.

Neeman ICIC 231-242.p65 9/14/2004, 11:33 AM239



7 INTANGIBLE ASSETS

Colones–Note 1 (¢) U.S. dollars–Note 3 ($)

At December 31, 2002 26,003,485 81,501Additions 2,397,868 6,553Amortization charge (7,915,472) (24,631)At December 31, 2003 20,485,881 63,423

At December 31, 2003Cost 40,410,143 126,151Accumulated amortization (19,924,262) (62,728)Net book amount 20,485,881 63,423

At December 31, 2002Cost 38,012,275 119,961Accumulated amortization (12,008,790) (38,460)Net book amount 26,003,485 81,501

8 BANK LOANSCorrespond to disbursements made under a revolving credit line of US$700,000 with a local private bank, it is secured by mortgage on theCompany’s land. At December 31, 2003 the amount disbursed under this credit line amounted to ¢183,457,564 (US$439,788) (2002-¢265,347,191, US$700,000). See Note 16 on subsequent events.The average interest rate of these obligations at the date of balance sheet is 6.13% (2002 - 6%).

9 TRADE AND OTHER ACCOUNTS PAYABLEColones–Note 1 (¢) US Dollars–Note 3 ($)

2003 2002 2003 2002

Trade accounts payable 31,301,595 27,929,014 75,037 73,732Deferred Income 244,872,415 33,839,254 5,87,013 89,389Other accounts payable and Accrued expenses 16,847,140 52,767,443 40,387 140,409

293,021,150 114,535,711 702,437 303,530

10 BALANCES AND TRANSACTIONS WITH RELATED COMPANIESColones–Note 1 (¢) US Dollars–Note 3 ($)

2003 2002 2003 2002

Advances receivableNeeman Medical International NV 34,623,450 — 83,000 —

Accounts receivableNeeman Medical International NV — 69,039,147 — 182,455Neeman Medical International Curacao — 1,891,950 — 5,000

— 70,931,097 — 187,455Accounts payableNeeman Medical International NV 115,577,485 166,311,265 277,065 439,749Neeman Medical International Asia, Ltd. 3,491,129 — 8,369 —

119,068,614 166,311,265 285,434 439,749

During 2003 it was accrued the amount of US$317,574 (2002 – US$489,748) to Neeman Medical International NV for corporate marketing (Note 14).

Neeman ICIC 231-242.p65 9/14/2004, 11:33 AM240



11 PROVISION FOR SEVERANCE COMPENSATIONColones–Note 1 (¢) US Dollars–Note 3 ($)

2003 2002 2003 2002

Balance at beginning of year 10,902,103 10,987,599 28,762 32,133Charged to income statement 11,005,838 15,404,141 27,813 42,868Utilized during the year (6,913,623) (13,308,704) (20,631) (39,635)Unused amounts reversed — (2,180,933) — (6,604)Balance at end of year 14,994,318 10,902,103 35,944 28,762

12 CAPITAL STOCK AND ADDITIONAL PAID-IN CAPITALCapital stockAt December 31, 2002, the subscribed and paid capital stock of the Company amounts to US$150,000 (¢52,426,517), represented by150,000 common nominative shares of US$1 (¢349.51) each.On May 26, 2003, the stockholders agreed to increase the capital stock through the capitalization of the additional paid-in capital for$516,261. Consequently, from that date the capital stock of the Company amounts to $661,261 (¢174,703,017) represented by 661,261common and nominative shares of $1 each.

Additional paid-in capitalAdditional contributions are denominated in U.S. dollars.

13 OPERATING COSTS AND EXPENSESColones–Note 1 (¢) US Dollars–Note 3 ($)

2003 2002 2003 2002

Professional services 480,727,767 526,410,016 1,215,852 1,456,155Personnel costs 290,398,648 305,978,294 731,529 847,047Laboratory services 49,738,375 44,525,044 125,020 123,305Rent 43,925,557 41,738,453 111,232 116,502Depreciation and amortization 34,823,508 32,536,012 122,487 116,915Public services 28,081,488 23,122,069 72,092 64,436Allowance for doubtful accounts 12,670,002 49,628,172 31,992 17,076Insurance 10,743,866 14,489,364 27,134 40,431Travel Expenses 10,299,929 13,726,432 25,718 38,661Security 9,846,606 10,560,312 24,897 29,454Stationery and supplies 9,287,093 9,289,155 23,601 25,939Maintenance 8,490,599 11,978,563 21,426 33,366Bonuses — 43,528,650 — 115,000Other Operating expenses 47,509,040 60,162,045 123,040 172,902

1,036,542,478 1,187,672,581 2,656,020 3,197,189

A detail of personnel costs is shown below :Colones–Note 1 (¢) US Dollars–Note 3 ($)

2003 2002 2003 2002

Wages and salaries 197,827,708 203,666,168 498,302 563,813Social security 43,673,936 45,276,105 109,993 125,339Christmas Bonus 16,600,758 17,257,605 41,806 47,775Severance compensation 11,005,838 32,030,111 27,813 88,670Vacations 10,785,918 2,767,663 27,184 7,662Others 10,504,490 4,980,642 26,431 13,788

290,398,648 305,978,294 731,529 847,047

During the year ended December 31, 2003, the average number of full-time employees was 28 (2002 – 49 employees).

Neeman ICIC 231-242.p65 9/14/2004, 11:33 AM241



14 COMMITMENTS AND CONTRACTSFree Zone LawAccording to executive agreement of the Ministerio de Comercio Exterior issued on October 5, 1993, Neeman ICIC, S.A. operates under theFree Zone Regime Law No. 7210 of November 23, 1990, which grants, among others, the following benefits:a Exemption of customs rights, taxes and other consular charges applicable to the importation of raw material, finished and semi finished

products, components and parts, packing and packaging material and other elements required for its operation. This exemption does nothave maturity date.

b Exemption on all the benefits applicable to tax on sales, consumption, remittances abroad, taxes on income, as well as any other, whosetaxable base is determined in relation to the gross profit or net profit and dividends to stockholders. The exemption will be applicable100% during the first eight years (until 2001) and 50% during the following four years.

The principal obligations of Neeman ICIC, S.A. are the following:• Maintain books and specific records authorized by the Corporación de la Zona Franca de Exportación (the Corporation) of the Company’s

operations regarding tax-exempt goods authorized by the Ministerio de Hacienda, which may be subject to inspection by the Corporaciónand the tax authorities.

• Maintain at least 14 employees once the Company starts operations and a minimum investment of US$234,357.• Comply with all the obligations and conditions imposed to the beneficiaries under the Free Zone Law and its regulations, as well as the

operating contracts subscribed with the Corporación.

Global services contractOn December 9, 2002, Neeman ICIC, S.A. signed a contract with its stockholder Neeman Medical International NV, for global marketing andcoordination services. For this service the Company should pay 20% of the budgeted cost by this activity worldwide. The term of the contractis three years beginning in January 2002 and can be extended by mutual agreement between the parties.

15 DEFICITAt December 31, 2003, the Company’s deficit exceeded the capital paid by more than 50%. In accordance with dispositions of the CostaRican Code of Commercial, this situation may allow a creditor to initiate a process to dissolve the Company if obligations are not paid upondemand. However, the Company’s management considers that this situation will not occur since the Company has enough liquidity to meet itsshort-term obligations.

16 SUBSEQUENT EVENTSOut of court payment agreementIn April 2004, the Company reached a payment agreement out of court with the banking institution that provided a revolving credit line. Inorder to secure outstanding balances against the line of credit, the bank had contemplated initiation of legal remedies. However, in terms ofthe revised repayment schedule agreed by the bank, the Company would entirely repay the outstanding dues against the line of credit bySeptember 2004. The Company has been regular in making payments to the bank in accordance with the agreed repayment schedule.

LitigationIn January 2004, Dr. Guillermo Rodríguez Gómez, former CEO Executive Director filed a labor claim against the Company, alleging unpaidbonuses under his work contract. The amount of claim filed before the labor court amounts to ¢312,862,500 (US$750,000) and accordingto legal counsel, the amount of the bonuses, if applicable, would not exceed ¢208,575,000 (US$500,000). The Courts placed preventiveembargo on the Company’s assets to cover the aforesaid claim.The claim was contested on March 30, 2004. Because this legal proceeding is at an early stage, the ultimate outcome of the matter cannotpresently be determined, and no provision for any liability that may result has been made in the financial statements.

Neeman ICIC 231-242.p65 9/14/2004, 11:33 AM242

NEEMAN MEDICAL INTERNATIONAL (ASIA) LIMITED

NeemanMedI Int Asia 243-256.p65 9/14/2004, 11:33 AM243

N E E M A N M E D I C A L I N T E R N A T I O N A L ( A S I A ) L I M I T E D


Your Directors have pleasure in presenting their fifth Annual Reportalong with the Audited Accounts for the financial year ended March31, 2004.

FINANCIAL RESULTSDuring the year under review, your Company achieved Gross revenue ofRs. 238.17 Lakh (Previous year: Rs. 232.83 Lakh). During this periodof strengthening of its operations and consolidation of businessdevelopment efforts, your Company incurred a net loss of Rs. 26.90Lakh (Previous year: Rs. 46.87 Lakh).

OPERATIONSDuring the year under review, your Company continued to concentrateon strengthening of the unique selling proposition of its services andestablished a directional flow for its business development activities.The Company concretised its plans to explore the US and Europeanmarkets, where the Company‘s services serve as a better propositionfor a strong value add. Quality Assurance, identified as a key strategicdriver, in delivering quality offerings to the clients, continued to gainattention and response of the management team.

During the year, your Company successfully registered its presencewith a number of new Principal Investigators (PIs) functional at differentsites across the geographical territory of India. This enabled the Companyto widen its base of active PIs. The wider PI base and improved functionalunderstanding with the sites has ensured timely planning for the sites’activities resulting in cutting down the time required to initialise theclinical study, which is one of most important objectives for any clinicalstudy sponsor. With a promise to deliver quality clinical data within thetimelines expected by the clients, your Company expects to drive repeatorders resulting in better volume of business for the Company.

Your Company has been managing Clinical Trials of many well-known Indian and Global Pharma majors in wide ranging therapeuticareas. During the year, your Company developed its exposure in someof the new therapeutic areas, like Infectious Diseases and MetabolicDisorders. Other areas included Ophthalmology, Tuberculosis,Dermatology, and Psychiatric disorders etc.

FUTURE OUTLOOKDuring the year, a few encouraging developments happened in the areaof clinical research e.g. removal of import duty on clinical trial material,congregation of group of professionals from across the world in aprofessional symposium on clinical trial organised by CII etc. Theseactivities will go a long way in placing India on the global clinical researchmap in terms of outsourcing of management of clinical research inIndia. With expanded customer base, your Company also stands at anadvantage in terms of improved acceptance for its services ensuring

higher volumes and profitability in the coming years. Also, with theadvent of year 2005, which promises a regulatory regime aligned tointernational standards and better protection of Intellectual PropertyRights, India can be considered future destination of world class clinicalresearch. The fact gets strengthened due to establishment of worldclass diagnostic set ups and an ever increasing strength of GCP trainedPIs in India, which poses great potential in establishment of qualityclinical data requisitioned by any global regulatory agency. With theimproved Indian image across the globe and impressive operationaltrack record (with an average patient retention rate of 99.4%) yourCompany is poised for significant growth in the business during thecoming years.

DIVIDENDIn view of the losses, your Directors are unable to recommend anydividend for the period under review.

DIRECTORSIn accordance with the provisions of the Articles of Association of theCompany and of the Companies Act, 1956, Mr. Surendra Kaul retiresby rotation at the ensuing Annual General Meeting and being eligibleoffers himself for re-appointment.

DIRECTORS’ RESPONSIBILITY STATEMENTAs per the provisions of Section 217(2AA) of the Companies Act, 1956,the Directors confirm that:i in the preparation of annual accounts, the applicable accounting


ii the Directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year andof the profit or loss of the Company for that period;

iii the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance withthe provisions of the Companies Act, 1956 for safeguarding theassets of the Company and for preventing and detecting fraud andother irregularities; and

iv the Directors had prepared the annual accounts, on a going concernbasis.

PARTICULARS OF DEPOSITSYour Company has not accepted any deposits from the public duringthe year under review. There were no unclaimed/overdue deposits as atMarch 31, 2004.

DIRECTORS’ REPORT

PARTICULARS OF EMPLOYEESINFORMATION AS PER SECTION 217(2A) OF THE COMPANIES ACT, 1956 READ WITH COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975 FOR THE YEAR ENDED MARCH 31, 2004 ISAS UNDER

Sl. Name Age Designation and Remuneration Qualifications Date of Experience Last Employment DesignationNo. (Yrs.) nature of duties (Rs.) Commencement of Held

Employment

1 Dr. Vijai Kumar 58 President and CEO 2,483,489 MBBS, MD 01.06.2001 34 Max India Ltd. Head-Clinical Research

Notes: 1. Remuneration includes salary, allowances, bonus, medical reimbursement, Company‘s contribution to Provident and Pension Fund, Superannuation and monetary value of perquisites.2. The above employee does not hold by himself or along with his spouse and dependent children 2% or more of Equity Shares of the Company.3. His services are contractual in nature.4. He is not a relative of any Director of the Company.5. The designation of the aforesaid employee is indicative of the nature of duties also and governed by the general terms and conditions of the employment contract with the Company.




INCREASE IN SHARE CAPITALDuring the year under review, the Authorized share capital of theCompany was increased from Rs. 1.00 Crore to Rs. 4.35 Crore bycreation of additional 33,50,000 Equity Shares of Rs. 10/- each forissuing fresh Equity Shares. The Board of Directors of the Companyallotted 41,66,743 Equity Shares of Rs. 10/- each aggregating toRs. 4,16,67,430/- on March 18, 2004 to Max India Limited.Consequent to the said allotment, the Company has become a subsidiaryof Max India Limited.

AUDITORSM/s Mohinder Puri & Co., Chartered Accountants, the Statutory Auditorsof the Company retire at the conclusion of the ensuing Annual GeneralMeeting and have expressed their inability for re-appointment. TheCompany proposes to appoint M/s Price Waterhouse as the StatutoryAuditors. M/s Price Waterhouse has confirmed that their appointmentas Statutory Auditors of the Company, if made, will be in accordancewith the limits specified under Section 224(1B) of the Companies Act,1956.

ACKNOWLEDGEMENTSYour Directors would like to place on record their gratitude for the co-operation and support extended to the Company by its employees,customers and the Government.

On behalf of the Board of DirectorsNew Delhi B. ANANTHARAMAN DirectorJUNE 18, 2004 SURENDRA KAUL Director




AUDITORS’ REPORT

TO THE MEMBERS OFNEEMAN MEDICAL INTERNATIONAL (ASIA) LIMITEDWe have audited the attached Balance Sheet of NEEMAN MEDICALINTERNATIONAL (ASIA) LIMITED as on 31st March, 2004 and alsoProfit and Loss Account for the year ended on that date annexed thereto.These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on thesefinancial statements based on our audit.

We conducted our audit in accordance with auditing standardsgenerally accepted in India. Those Standards require we plan andperform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessingthe accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis forour opinion.

As required by the Companies (Auditor’s Report) Order, 2003 issuedby the Central Government of India in terms of sub-section (4A) ofSection 227 of the Companies Act, 1956, we enclose in the Annexurea statement on the matters specified in Paragraphs 4 and 5 of the saidOrder to the extent applicable to the Company.

Further to our comments in the Annexure referred to above, wereport that:(i) We have obtained all the information and explanations, which to

best of our knowledge and belief were necessary for the purpose ofour audit;

(ii) In our opinion, proper books of account as required by law havebeen kept by the company so far as appears from our examinationof those books;

(iii) The Balance Sheet and Profit and Loss Account dealt with by thisreport are in agreement with the books of account;

(iv) In our opinion, the Balance Sheet and Profit and Loss Accountdealt with by this report comply with the accounting standardsreferred to in sub-section (3C) of Section 211 of the CompaniesAct, 1956;

(v) On the basis of written representations received from the directors,as on 31st March, 2004 and taken on record by the Board ofDirectors, we report that none of the directors is disqualified as on31st March 2004 from being appointed as a director in terms ofclause (g) of sub-section (1) of section 274 of the Companies Act,1956;

(vi) In our opinion and to the best of our information and according tothe explanations given to us, the said accounts give the informationrequired by the Companies Act, 1956, in the manner so requiredand give a true and fair view in conformity with the accountingprinciples generally accepted in India:a in the case of the Balance Sheet, of the state of affairs of the

Company as at 31st March, 2004; andb in the case of the Profit and Loss Account of the Loss for the

year ended on that date.

For Mohinder Puri & CompanyChartered Accountants

VIKAS VIGNew Delhi Partner30 APRIL, 2004 Membership Number 16920




TO THE AUDITOR’S REPORT OF NEEMAN MEDICAL INTERNAIONAL (ASIA) LIMITED

FOR THE YEAR ENDED 31ST MARCH, 2004

1 The company has maintained proper records to show full particulars,including quantitative details and situation of fixed assets.

2 The fixed assets have been physically verified by the managementduring the year and as per the explanation furnished to us, thereexists a program of verification which, in our opinion, is reasonablehaving regard to the size of the Company and the nature of itsassets. No material discrepancies were noticed on such verification.

3 The Company, being a Service Provider, engaged in the field ofmanagement of Clinical trials, has no inventories; hence theprovisions of Clauses 4 (ii) (a) to 4 (ii) (c) of Companies AuditorsReport Order 2003 have been found to be not applicable.

4 As informed to us, the Company has neither granted nor taken anyloans, secured or unsecured to/from Companies, firms or otherparties listed in the register maintained under Section 301 of theCompanies Act, 1956.

5 In our opinion and according to the information and explanationsgiven to us, there are adequate internal control procedurescommensurate with the size of the Company and the nature of itsbusiness with regard to the purchase of fixed assets and with regardto the sale of services. We have not observed any failure by themanagement to correct any major weaknesses observed.

6 Based on the information and explanations given to us, there areno transactions with Parties covered u/s 301 of the Companies Actand hence the provisions of Clauses 4(v)(a) and 4(v)(b) have beenfound to be not applicable to the Company.

7 The Company has not accepted any deposits from the Public andhence the provisions of Sections 58A and 58AA of the CompaniesAct, 1956 and the rules framed there have been found to be notapplicable. As per the information available, no order has beenpassed by the Company Law Board in this regard.

8 As the paid up Capital and Reserves of the Company does notexceed Rs. 50 lakhs at the commencement of the financial yearand the average annual turnover does not exceed Rupees five crorefor a period of three consecutive financial years immediatelypreceding the financial year concerned, the provisions of clause4(vii) regarding internal audit has been found to be not applicableto the Company.

9 The Central Government has not prescribed the maintenance ofcost records under Section 209 (1)(d) of the Companies Act, 1956for the Company.

10 According to the records of the Company, the Company is generallyregular in depositing with appropriate authorities undisputedstatutory dues including provident fund, income-tax and otherstatutory dues applicable to it. According to the information andexplanations given to us, no undisputed amounts payable in respectof income tax, wealth-tax, were outstanding, as at 31st March 2004for a period of more than six months from the date they becamepayable. According to the records of the company, there are nodues outstanding of income tax, Wealth tax, Cess on account ofany dispute.

11 As the Company is registered for less than five years, we are notrequired to comment whether the accumulated losses of theCompany are more than fifty percent of its net worth and whetherthe Company has incurred any cash losses during the financialyear covered by our audit and the immediately preceding financialyear.

12 Based on the information and explanations given to us and basedon the documents and records produced to us, the company hasneither taken any loan from any financial institution or bank norissued any debentures; hence the clause (xi) of Companies AuditorsReport Order 2003 regarding default in repayment of dues of anyfinancial institution, bank or debenture holders does not have anyapplication to the company.

13 According to the information and explanation given to us and basedon the documents and records produced to us, the Company hasnot granted loans and advances on the basis of security by way ofpledge of shares, debentures and other securities.

14 Based on the information and explanations given to us by themanagement, no long-term loans were availed by the company.

15 The clause in respect of dealing or trading in shares, securities,debentures, other investments, their proper records beingmaintained for the transactions and contracts and timely entrieshave been made therein is not applicable since there are noinvestments made by the company during the year.

16 Based on the information and explanations given to us and basedon the documents and records produced to us, the Company hasonly used funds raised on long term basis for long-term investmentand its operations including the short term working capital.

17 The Company has not made any preferential allotment of shares toparties and companies covered in the register maintained undersection 301 of the Act.

18 Based upon the audit procedures performed by us for expressingour opinion on these financial statements and information andexplanations given by the management, we report that no fraud on/or by the Company has been noticed or reported during the courseof our audit.

19 Other Clauses of the Companies (Auditor’s Report) Order 2003have been found to be not applicable to the Company.

For Mohinder Puri & CompanyChartered Accountants

VIKAS VIGNew Delhi Partner30 APRIL, 2004 Membership Number 16920

ANNEXURE





31.03.2004 31.03.2003

SOURCES OF FUNDSSHAREHOLDERS’ FUNDSShare Capital 1 42,168,130 500,700Share Application Money — 38,819,941

42,168,130 39,320,641APPLICATION OF FUNDSFIXED ASSETS 2Gross Block 5,231,879 5,236,840

Less: Depreciation 1,127,471 697,493Net Block 4,104,408 4,539,347

CURRENT ASSETS, LOANS & ADVANCESSundry Debtors 3 2,878,733 2,698,138Cash & Bank Balances 4 6,623,191 531,886Other Current Assets 5 966,381 1,356,587Loans & Advances 6 1,389,190 2,405,685

11,857,495 6,992,296Less: CURRENT LIABILITIES & PROVISIONSCurrent Liabilities 7 8,737,327 4,949,209Provisions 8 940,933 743,991

9,678,260 5,693,200


Deferred Tax Asset (net) 9 215,751 89,430

MISCELLANEOUS EXPENDITURE 10 — 414,134(To the extent not written off or adjusted)

PROFIT & LOSS ACCOUNT 35,668,736 32,978,634

TOTAL 42,168,130 39,320,641

SIGNIFICANT ACCOUNTING POLICIES & NOTES TO ACCOUNTS 14



B. ANANTHARAMAN DirectorSURENDRA KAUL Director

NAVIN SETHI Manager - Finance

For and on behalf ofMohinder Puri & CompanyChartered Accountants

VIKAS VIGPartner

New Delhi30 APRIL, 2004




SCHEDULE RUPEESFor the Year For the Year

01.04.2003 to 01.04.2002 to31.03.2004 31.03.2003

INCOMEClinical Trial Income (Refer Note 1 (B) on Schedule 14) 11 23,718,579 23,038,100(Tax Deducted at Source of Rs. 215,292/-, previous year Rs. 236,990/-)

Other income 12 98,894 244,940(Tax Deducted at Source of Rs. 11,655/-, previous year Rs. 8,051/-)

23,817,473 23,283,040EXPENDITUREOperating & Administration Expenses 13 26,077,885 27,605,052Depreciation 556,011 531,506

26,633,896 28,136,558

(LOSS) BEFORE TAX (2,816,423) (4,853,518)Less: Tax Expense (126,321) (166,143)(LOSS) AFTER TAX (2,690,102) (4,687,375)

(LOSS) BROUGHT FORWARD (32,978,634) (28,291,259)

BALANCE CARRIED OVER TO BALANCE SHEET (35,668,736) (32,978,634)

Earning Per Share (Rs. per equity share of Rs. 10/- each)- Basic & Diluted (17) (66,962)Number of Shares used in computing earning per share- Basic & Diluted Earning Per share 159,454 70

SIGNIFICANT ACCOUNTING POLICIES & NOTES TO ACCOUNTS 14

PROFIT AND LOSS ACCOUNT F O R T H E Y E A R E N D E D M A R C H 3 1 , 2 0 0 4





VIKAS VIGPartner





RUPEESAs at As at

31.03.2004 31.03.2003

SCHEDULE–1SHARE CAPITALAuthorised42,50,000 (Previous year 9,00,000) Equity Shares of Rs. 10/- each 42,500,000 9,000,0001,00,000 (Previous year-1,00,000)-13% Non-cumulativeRedeemable Pref. Shares of Rs. 10/- each 1,000,000 1,000,000

Issued, Subscribed & Paid Up41,66,813 (Previous year 70) Equity Shares of Rs. 10/- each 41,668,130 700(Refer note 2 (C) on schedule 14)

50,000 (Previous year-50,000)-13% Non-cumulative 500,000 500,000Redeemable Pref. Shares of Rs. 10/- each(to be redeemed on December 09, 2004)

42,168,130 500,700

SCHEDULE–2FIXED ASSETS(Refer Notes 1(C) and 1(D) on Schedule 14)

RUPEES


Particulars As at Additions Deletions As at As at For the Deletions/ Upto As at As at

01.04.2003 during during 31.03.2004 01.04.2003 Year Adjustments 31.03.2004 31.03.2004 31.03.2003

the year the year

Lease hold improvement 2,578,726 — — 2,578,726 277,911 287,631 — 565,542 2,013,184 2,300,815

Plant & Machinery 19,823 — — 19,823 2,400 1,401 — 3,801 16,022 17,423

Furniture & Fixtures 448,440 — 7,000 441,440 46,936 27,820 1,329 73,427 368,013 401,504

Office Equipment 768,759 70,050 86,273 752,536 88,320 66,524 13,034 141,810 610,726 680,439

Computers 540,438 60,047 — 600,485 129,727 89,761 — 219,488 380,997 410,711

Vehicles 880,654 400,000 441,785 838,869 152,199 82,874 111,670 123,403 715,466 728,455

TOTAL 5,236,840 530,097 535,058 5,231,879 697,493 556,011 126,033 1,127,471 4,104,408 4,539,347

Previous Year 2,449,572 3,202,568 415,300 5,236,840 5,591 531,506 16,291 697,493 4,539,347

SCHEDULE–3SUNDRY DEBTORS(Unsecured)Debts exceeding six months

Considered good — 200,000Other Debts

Considered good 2,878,733 2,498,1382,878,733 2,698,138

SCHEDULE–4CASH & BANK BALANCECash in hand 16,351 23,499Balance with Scheduled Banks in Current Accounts 3,998,341 508,387Cheques in Hand 2,608,499 —

6,623,191 531,886





SCHEDULE–5OTHER CURRENT ASSETSStudies in Progress 966,381 1,356,587

966,381 1,356,587

SCHEDULE–6LOANS & ADVANCES(considered good)

SecuredHousing loan to employees 252,655 401,255

UnsecuredAdvances to companies under the same management* 546,793 1,229,175Advances recoverable in cash or in kindor for value to be received 123,353 388,856Advance Tax 236,608 367,268Prepaid Expenses 229,781 19,131

1,389,190 2,405,685*Amount recoverable from Neeman ICIC S.A; maximum amount outstanding

during the year being Rs. 1,269,825/- (Previous year being Rs. 1,229,175/-)

SCHEDULE–7CURRENT LIABILITIESSundry Creditors 1,001,598 1,649,748Advance from customers 4,540,884 478,299Other Liabilities 3,194,845 2,821,162

8,737,327 4,949,209

SCHEDULE–8PROVISIONSSuperannuation 597,456 458,705Gratuity 53,673 70,184Leave Encashment 289,804 215,102

940,933 743,991

SCHEDULE–9DEFERRED TAX ASSET 215,751 89,430(Refer note 2 (E) on schedule 14)

215,751 89,430

SCHEDULE–10MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)(Refer Note 1 (H) on Schedule 14)

Preliminary Expenses — 414,134— 414,134

RUPEESAs at As at

31.03.2004 31.03.2003





RUPEESFor the For the

Year Ended Year Ended31.03.2004 31.03.2003


SCHEDULE–11SERVICE INCOMEClinical Trial Services 23,718,579 23,038,100

23,718,579 23,038,100

SCHEDULE–12OTHER INCOMEInterest received on deposits with Bank 63,187 46,432Other Interest 35,707 27,625Liabilities no longer required written back — 170,883

98,894 244,940

SCHEDULE–13OPERATING & OTHER EXPENSESOperating & Administration ExpensesClinical Trial Expenses 5,445,392 5,868,777Rent 831,600 831,600Electricity & Water charges 197,449 121,879Repair & Maintenance 1,837,685 1,043,752Legal & Professional 576,125 1,383,578Printing & Stationery 181,144 178,768Business Promotion 182,047 88,501Travelling & Conveyance 2,649,972 5,060,280Communication Expenses 843,881 1,242,755Vehicle Running & Maintenance 304,300 357,278Training & Seminar expenses 222,469 138,942Insurance 47,650 55,644Advertisement 25,317 11,548Books & Periodicals 7,066 4,893Auditor’s remuneration 16,200 16,200Membership & Subscription 19,727 15,467Charity & Donation — 2,600Bank Charges 61,515 47,588Loss on sale/disposal of Fixed Assets 234,633 9,024Amortisation of Preliminary Expenses 414,134 414,130Share issue expenses 217,750 —Loss on Foreign Exchange Fluctuation (Refer Note 1(G) on Schedule 14) 60,223 46,108Prior Period Expenses (Refer Note 2 (H) on Schedule 14) (286,505) (81,015)

Personnel ExpensesSalary & Wages 11,222,021 9,867,350Contribution to Provident Fund & other employee retirals 615,906 728,427Staff Welfare 150,184 150,978

26,077,885 27,605,052




SCHEDULE–14SIGNIFICANT ACCOUNTING POLICIES, CONTINGENT LIABILITIES AND NOTES TO ACCOUNTS1 SIGNIFICANT ACCOUNTING POLICIESA Accounting Convention

The financial statements are prepared under historical cost convention in accordance with applicable Accounting Standards issued by TheInstitute of Chartered Accountants of India and provisions of the Companies Act 1956, on the accrual basis, as adopted consistently by thecompany.

B Revenue RecognitionRevenue is recognised based on percentage of work completed in accordance with milestones of studies.Interest on deployment of surplus funds is recognised using the time proportion method, based on interest rates implicit in the transaction.

C Fixed AssetsFixed assets are stated at cost of acquisition including freight, duties, taxes and other incidental expenses relating to acquisition and installation.

D Depreciation(i) Depreciation is charged on pro rata basis on straight-line method at rates prescribed under Schedule XIV to the Companies Act 1956.(ii) Leasehold improvements are depreciated over respective lease periods.(iii) Assets costing not more than Rs.5000 each individually are depreciated at 100%.

E Accounting for TaxesProvision for tax consists of current tax and deferred tax. Current tax provision is computed for current income based on the tax liability afterconsidering allowances and exemptions.Deferred tax is recognised subject to the consideration of prudence on timing differences, being the difference between taxable income andaccounting income that originate in one period & are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilityare being offset as they relate to taxes on income levied by the same governing taxation laws.

F Retirement Benefits(i) The company has schemes of retirement benefits like Provident Fund and Gratuity.(ii) Company’s contribution to Provident Fund as required under The Employees Provident Funds and Miscellaneous Provisions Act 1952, is

charged to revenue.(iii) Gratuity liability is administered through a gratuity trust. Accruals for the gratuity liability are made, based on actuarial valuation done at

the year-end. Company’s contribution to the trust is charged to revenue.(iv) Accruals for leave encashment are made on the basis of actuarial valuation done at the year-end.

G Foreign Exchange Transactions(i) Foreign currency transactions are recognised at the rates prevailing on the date of transaction.(ii) Monetary assets and liabilities related to foreign currency transactions remaining unsettled at the close of accounting year are translated

at year end rates.(iii) The difference in translation of monetary assets and liabilities and realised gains and losses on foreign exchange transactions are recognised

in the profit and loss account.

H Miscellaneous ExpenditurePreliminary Expenses represents expenses incurred at the time of incorporation and the same have been amortised over a period of 5 years.

2 NOTES TO ACCOUNTS

A Contingent liabilities : Nil

B1 Expenditure in Foreign Currency (On payment basis)RUPEES

Current PreviousYear Year

Professional and consultation fees 345,864 161,769Others 203,102 645,280

B2 Earnings in Foreign Currency (On receipt basis)Service Income 17,597,152 14,498,573





C During the year, the company converted a sum of Rs. 4,16,67,430/-, out of the advance received from Max India Ltd., into 41,66,743 Equityshares of Rs. 10 each. Consequent upon allotment of shares, the company has become the subsidiary of Max India Limited, which now holds99.99% equity of the company.

D In view of losses in the reported period, the company has not provided for any dividend on 13% Non Cumulative Preference Shares.

E In view of losses in the reported period, there is no tax liability, however, provision for deferred tax liability and deferred tax assets, arising dueto related timing difference, has been made in the books of account.

Break up of deferred tax assets/liabilities and reconciliation of current year deferred tax charge:RUPEES

Opening Charged/ Closing(Credited) to P&L

Deferred Tax Liabilities (A) 1,83,987 (32,407) 1,51,580Tax impact of difference between carrying amount of fixed assets inthe financial statements and the income tax returnFor Decrease in surcharge (B) — 2,129 2,129Deferred Tax Assets (C) (2,73,417) (96,043) (3,69,460)Tax impact of expenses charged in the financial statements butallowable as deductions in future years under income taxTotal (A-B-C) (89,430) (1,26,321) (2,15,751)

F Accounting for leases has been done in accordance with Accounting Standard-19 issued by the Institute of Chartered Accountants of India.Following are the details of lease transactions for the year

1. Finance LeaseThe Company does not have any finance lease arrangement.

2. Operating Lease(i) Lease rentals recognized in the Profit and Loss account for the year is Rs. 8,31,600/- (previous year – Rs. 8,31,600/-).(ii) The company has entered into operating leases for its office and for employees’ residence that are renewable on a periodic basis and

cancelable at Company’s option. The company has not entered into sublease agreements in respect of these leases.

G Earnings per share (EPS)RUPEES

Particulars For the Year Ended For the Year EndedMarch 31, 2004 March 31, 2003

Basic and DilutedLoss after Tax (A) 2,690,102 4,687,375No. of shares outstanding (B) 159,454 70EPS (A/B) (17) (66,962)

H A break up of prior period expenses on the basis of nature of items involved is given below

PRIOR PERIOD EXPENSE:Clinical Trial Expenses (54,540) —Repair & Maintenance 3,750 —Travelling & Conveyance — (115,039)Electricity & Water — 21,593Legal & Professional — 13,000Salary & Wages (239,871) 9,056Staff Welfare — (9,866)Communication Expenses 4,156 241Total (286,505) (81,015)




I Previous figures have been regrouped/reclassified wherever necessary to make them comparable with current year figures.

J No amount is outstanding as on Balance Sheet date to any Small Scale Industrial Undertaking.

K The Company is in the process of appointing a whole time company secretary.

L Auditor‘s RemunerationRUPEES

Current PreviousYear Year

- Audit Fee 16,200 16,200- In Other Capacity Nil NilTotal 16,200 16,200

M Other requirements of Schedule VI Part II are not applicable.





VIKAS VIGPartner





BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILEI REGISTRATION DETAILS:


Date Month Year

II CAPITAL RAISED DURING THE YEAR (Amount in Rs. Thousands)Public Issue Rights IssueN I L N I LBonus Issue Private PlacementN I L 4 1 6 6 7


4 2 1 6 8 4 2 1 6 8

SOURCES OF FUND

Paid-up Capital Reserves & Surplus4 2 1 6 8 N I L

Secured Loans Unsecured LoansN I L N I L


Net Fixed Assets Investments4 1 0 4 N I L

+ - Net Current Assets Misc. Expenditure✓ 2 1 7 9 N I LAccumulated Losses Deferred Tax Asset

3 5 6 6 9 2 1 6

IV PERFORMANCE OF COMPANY (Amount in Rs. Thousands)Turnover Total Expenditure

2 3 8 1 8 2 6 6 3 4+ - Profit/Loss before tax + - Profit/Loss after tax

✓ 2 8 1 6 ✓ 2 6 9 0

+ - Earning per share in Rs. Dividend Rate %✓ 1 7 N I L

V NAME OF THREE PRINCIPAL PRODUCTS/SERVICE OF COMPANYProduct Description C L I N I C A L T R I A L S E R V I C E S


NEEMAN MEDICAL INTERNATIONAL PLC.

NeemanMedI Int Plc 257-263.p65 9/14/2004, 11:33 AM257

N E E M A N M E D I C A L I N T E R N A T I O N A L P L C .


THE DIRECTORS’ REPORT P E R I O D F R O M 1 S T J A N U A R Y 2 0 0 3 T O 3 1 S T M A R C H 2 0 0 4

The directors present their report and the financial statements of thecompany for the period from 1st January 2003 to 31st March 2004.

PRINCIPAL ACTIVITIES AND BUSINESS REVIEWThe company is due to be liquidated in the near future and these accountshave been prepared on a breakup basis.

RESULTS AND DIVIDENDSThe trading results for the period, and the company’s financial positionat the end of the period are shown in the attached financial statements.


DIRECTORSThe directors who served the company during the period were as follows:A. SINGHG. RODRIGUEZ GOMEZB. ANANTHARAMAN

No director held any interest in the shares of the company or of thegroup.

POLICY ON THE PAYMENT OF CREDITORSIt is group policy, in respect of all its suppliers, to settle the terms ofpayment when agreeing the terms of each transaction, to ensure thatsuppliers are made aware of the terms of payment, and to abide by theterms of payment.

For the period ended 31st March 2004, the average payment periodfor trade creditors was 10 days (2002:10 days).

Registered officeHillbrow HouseHillbrow Road Signed on behalf of the DirectorsEsher B. ANANTHARAMANSurrey, KT109NW Director

Approved by the Directors on 21 MAY, 2004

STATEMENT OF DIRECTORS’ RESPONSIBILITIESP E R I O D F R O M 1 S T J A N U A R Y 2 0 0 3 T O 3 1 S T M A R C H 2 0 0 4

Company law requires the directors to prepare financial statements foreach financial year which give a true and fair view of the state of affairsof the company at the end of the period and of the profit or loss for theperiod then ended. In preparing those financial statements, the directorsare required to:— select suitable accounting policies, as described in note 1, and

then apply them consistently;— make judgements and estimates that are reasonable and prudent;— state whether applicable accounting standards have been followed,

subject to any material departures disclosed and explained in thefinancial statements; and

— prepare the financial statements on the going concern basis unlessit is inappropriate to presume that the company will continue inbusiness.

The directors are responsible for keeping proper accounting recordswhich disclose with reasonable accuracy at any time the financialposition of the company and to enable them to ensure that the financialstatements comply with the Companies Act 1985. The directors arealso responsible for safeguarding the assets of the company and hencefor taking reasonable steps for the prevention and detection of fraudand other irregularities.




INDEPENDENT AUDITORS’ REPORT PERIOD FROM 1ST JANUARY 2003 TO 31ST MARCH 2004

TO THE SHARE HOLDERSWe have audited the financial statements which comprise the profitand loss account, balance sheet, cash flow statement and the relatednotes. These financial statements have been prepared under thehistorical cost convention and on the basis of the accounting policiesset out therein.

This report is made solely to the company’s shareholders, as abody, in accordance with Section 235 of the Companies Act 1985. Ouraudit work has been undertaken so that we might state to the company’sshareholders those matters we are required to state to them in anauditors’ report and for no other purpose. To the fullest extent permittedby law, we do not accept or assume responsibility to anyone other thanthe company and the company’s shareholders as a body, for our auditwork, for this report, or for the opinions we have formed.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORSAs described in the Statement of Directors’ Responsibilities thecompany’s directors are responsible for the preparation of the financialstatements in accordance with applicable law and United KingdomAccounting Standards.

Our responsibility is to audit the financial statements in accordancewith relevant legal and regulatory requirements and United KingdomAuditing Standards.

We report to you our opinion as to whether the financial statementsgive a true and fair view and are properly prepared in accordance withthe Companies Act 1985. We also report to you if, in our opinion, theDirectors’ Report is not consistent with the financial statements, if thecompany has not kept proper accounting records, if we have not receivedall the information and explanations we require for our audit, or ifinformation specified by law regarding directors’ remuneration andtransactions with the company is not disclosed.

We read the Directors’ Report and consider the implications for ourreport if we become aware of any apparent misstatements within it.

BASIS OF AUDIT OPINIONWe conducted our audit in accordance with United Kingdom AuditingStandards issued by the Auditing Practices Board. An audit includesexamination, on a test basis, of evidence relevant to the amounts and

disclosures in the financial statements. It also includes an assessmentof the significant estimates and judgements made by the directors inthe preparation of the financial statements, and of whether theaccounting policies are appropriate to the company’s circumstances,consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all theinformation and explanations which we considered necessary in orderto provide us with sufficient evidence to give reasonable assurance thatthe financial statements are free from material misstatement, whethercaused by fraud or other irregularity or error. In forming our opinion wealso evaluated the overall adequacy of the presentation of informationin the financial statements.

BASIS OF PREPARATIONWe draw your attention to note 1 which explains that the directors havedecided that the company will be liquidated. Accordingly the goingconcern basis of accounting is no longer appropriate. Adjustments havebeen made in these financial statements to reduce assets to theirrealisable values and to provide for liabilities arising from the decision.Our opinion is not qualified in this respect.

OPINIONIn our opinion the financial statements give a true and fair view of thestate of the company’s affairs as at 31st March 2004 and of its loss forthe period then ended, and have been properly prepared in accordancewith the Companies Act 1985.

42-46 High StreetEsher RICHES & COSurrey KT10 9QY Chartered Accountants21 MAY, 2004 & Registered Auditors




NOTE Year to31 Mar 04 31 Dec 02

US$ US$

PROFIT AND LOSS ACCOUNT P E R I O D F R O M 1 S T J A N U A RY 2 0 0 3 T O 3 1 S T M A R C H 2 0 0 4

TURNOVER — —Administrative expenses 3,009 46,204OPERATING LOSS 2 (3,009) (46,204)

Interest receivable 4 — 1

LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (3,009) (46,203)

Tax on loss on ordinary activities 5 — (124)

LOSS FOR THE FINANCIAL PERIOD (3,009) (46,079)

All of the activities of the company are classed as discontinued.The company has no recognised gains or losses other than the results for the period as set out above.

BALANCE SHEET 3 1 S T M A R C H 2 0 0 4

NOTE 31 Mar 04 31 Dec 02US$ US$ US$ US$

CURRENT ASSETSCash at bank — 1,609

CREDITORS: AMOUNTS FALLINGDUE WITHIN ONE YEAR 6 471,916 470,516

NET CURRENT LIABILITIES (471,916) (468,907)Total assets less current liabilities (471,916) (468,907)

CAPITAL AND RESERVESCalled-up equity share capital 8 82,000 82,000Share premium account 134,480 134,480Profit and loss account 9 (688,396) (685,387)

Deficiency 10 (471,916) (468,907)

These financial statements were approved by thedirectors on the 21 MAY, 2004 and are signed on their behalf by

B. ANANTHARAMANDirector




CASH FLOW STATEMENT P E R I O D F R O M 1 S T J A N U A R Y 2 0 0 3 T O 3 1 S T M A R C H 2 0 0 4

Year toNOTE 31 Mar 04 31 Dec 02

US$ US$ US$ US$

NET CASH OUTFLOW FROM OPERATING ACTIVITIES 11 (1,609) (144,291)

RETURNS ON INVESTMENTS AND SERVICING OF FINANCEInterest received — 1

NET CASH INFLOW FROM RETURNS ONINVESTMENTS AND SERVICING OF FINANCE — 1

Taxation — (71)

Decrease in cash 12 (1,609) (144,361)





The company is due to be liquidated in the near future. Confirmationhas been received that an associated company will continue tomeet the day to day operating expenses of the company. Theaccounts have been prepared on a breakup basis. All assets havebeen written down to their recoverable amounts and all liabilitiesexpected to be incurred have been included.

Foreign currenciesAssets and liabilities in foreign currencies are translated into USDollars at the rates of exchange ruling at the balance sheet date.Transactions in foreign currencies are translated into US Dollars atthe rate of exchange ruling at the date of the transaction. Exchangedifferences are taken into account in arriving at the operating result.

2 OPERATING LOSSOperating loss is stated after charging/(crediting):

Year to31 Mar 04 31 Dec 02

US$ US$Directors’ emoluments — —Auditors’ remuneration

as auditors — 2,800Net loss/(profit) on foreigncurrency translation 276 (69)

3 PARTICULARS OF EMPLOYEESNo salaries or wages have been paid to employees, including thedirectors, during the period.

4 INTEREST RECEIVABLEYear to

31 Mar 04 31 Dec 02US$ US$

Bank interest receivable — 1

5 TAX ON LOSS ON ORDINARY ACTIVITIESYear to

31 Mar 04 31 Dec 02US$ US$

Current tax :Corporation tax — —Over/under provision in prior year — (124)Total current tax — (124)

NOTES TO THE FINANCIAL STATEMENTS PERIOD FROM 1ST JANUARY 2003 TO 31ST MARCH 2004

6 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEARYear to

31 Mar 04 31 Dec 02US$ US$

Amounts owed to group 441,816 421,816undertakingsAccruals and deferred income 30,100 48,700

471,916 470,516

7 RELATED PARTY TRANSACTIONSThe company was under the control of its immediate parentundertaking, Max Asia-Pac Limited, throughout the period. Theultimate controlling party was Max India Limited.

At 31st March 2004 the company owed Max Asia-Pac LimitedUS$296,406 (2002:US$296,406).

At 31st March 2004 the company owed Alda Limited, the minorityshareholder, US$110,410 (2002:US$110,410).

At 31st March 2004 the company owed Neeman Medical InternationalNV, a fellow subsidiary, US$35,000 (2002:US$15,000).

8 SHARE CAPITALYear to

31 Mar 04 31 Dec 02£ £

Authorised share capital100,000 Ordinary sharesof £1 each 100,000 100,000Allotted and called up:

31 Mar 04 31 Dec 02No US$ No US$

Ordinary sharesof £1 each 50,000 82,000 50,000 82,000

9 PROFIT AND LOSS ACCOUNTYear to

31 Mar 04 31 Dec 02US$ US$

Balance brought forward (685,387) (639,308)Accumulated loss for thefinancial period (3,009) (46,079)Balance carried forward (688,396) (685,387)




10 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDSYear to

31 Mar 04 31 Dec 02US$ US$

Loss for the financial period (3,009) (46,079)Opening shareholders’equity deficit (468,907) (422,828)Closing shareholders’equity deficit (471,916) (468,907)

11 RECONCILIATION OF OPERATING LOSS TONET CASH OUTFLOW FROM OPERATING ACTIVITIES

Year to31 Mar 04 31 Dec 02

US$ US$Operating loss (3,009) (46,204)Decrease in debtors — 925Increase/(decrease) in creditors 1,400 (99,012)

Net cash outflow fromoperating activities (1,609) (144,291)

12 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NETDEBT

31 Mar 04 31 Dec 02US$ US$ US$ US$

Decrease in cash

in the period (1,609) (144,361)(1,609) (144,361)

Change in net funds (1,609) (144,361)Net funds at

1 January 2003 1,609 145,970Net funds at

31 March 2004 — 1,609

13 ANALYSIS OF CHANGES IN NET DEBTAt At

1 Jan 2003 Cash flows 31 Mar 2004

US$ US$ US$

Net cash:Cash in hand and at bank 1,609 (1,609) —Net funds 1,609 (1,609) —

14 ULTIMATE PARENT COMPANYThe ultimate parent undertaking was Max India Limited, a companyincorporated in India. This company is the parent undertaking ofthe largest and the smallest group for which group accountsincluding Neeman Medical International plc are drawn up. Copiesof these accounts are available from Max India Limited, Max House,1, Dr.Jha Marg, Okhla, New Delhi - 110020, India.


MAX TELECOM VENTURES LIMITED

MaxTelecom 264-272.p65 9/14/2004, 11:33 AM264

M A X T E L E C O M V E N T U R E S L I M I T E D


DIRECTORS’ REPORT

Your Directors are pleased to present their ninth Annual Report alongwith the Audited Accounts for the financial year ended March 31, 2004.

OPERATIONSThe operations of Comsat Max Limited (Comsat Max) and HutchisonMax Telecom Private Limited (Hutchison Max), the companies in whichyour Company holds investments are as under:

COMSAT MAXComsat Max achieved a turnover of Rs. 43.69 Crore during the yearagainst Rs. 45.31 Crore in the previous year. Earning before interest,tax, depreciation and amortisation for the current year is Rs. 7.97 Croreagainst Rs. 8.74 Crore for the previous year. Comsat Max has earned aprofit before tax of Rs. 1.85 Crore during the current year as against aloss of Rs. 1.96 Crore in the previous year.

Comsat Max is strategically shifting its focus from operating in thewide area networking solutions to moving its service offerings furtherup the value chain. Comsat Max now offers services that cut across theindustry segments of telecom, IT, BPO and are more broadly covered byIT enabled services in the area of networking, business continuity andknowledge solutions. Income from its entire services segment duringthe current year is Rs. 37.68 Crore as compared to Rs. 34.25 Croreduring the previous year.

Owing to Lockheed Martin’s (Comsat Investment Inc.’s parentcompany) decision to exit the telecom business globally, Max IndiaLimited acquired the balance 49% of the shareholding in Comsat Maxheld by Comsat Investment Inc. Consequently, the outstanding loansincluding accrued interest payable by Comsat Max to Comsat InvestmentInc. were deemed to have been repaid in full and extinguished.

Subsequent to the close of the current financial year, Comsat Maxexecuted a Business Transfer Agreement with Max Ateev Limited, anaffiliate company for acquiring the Knowledge Management businesssegment of Max Ateev Limited, with effect from April 1, 2004, therebystrengthening the services segment of Comsat Max.

HUTCHISON MAXDuring the year ended December 31, 2003, revenue of Hutchison Maxwas Rs.943 Crore and profit after tax for the year was Rs. 127.60Crore, as against Rs. 730.10 Crore and Rs. 98.35 Crore, respectivelyin the previous year. Hutchison Max has wiped off all the accumulatedlosses of earlier years and has contributed to Reserves and SurplusRs. 7.60 Crore as on December 31, 2003. During the year HutchisonMax has fully repaid the secured loans of Rs.181.67 Crore.

The subscriber base of Hutchison Max, during the year under review,increased by 63% for the second consecutive year. The blended AirtimeRevenue per Subscriber (ARPU) was Rs. 685/- per month in the currentyear as against Rs.788/- per month in the previous year. The reductionwas due to lower tariffs consequent to new Interconnect Usage Charge(IUC) regime and the entry of the Wireless in Local Loop (WLL) serviceproviders.

The Industry saw some significant changes during the year, both inregulatory regime as well as the consolidation and realignment of thecellular industry. The introduction of unified licensing by TRAI for alltelecommunication services was the biggest change during the year.

FINANCIAL RESULTSYour Company has incurred a net loss of Rs.1.95 Lacs during the yearunder review.

DIVIDENDIn view of the losses, your Directors have decided not to recommendany dividend for the year.


ADDITIONAL INFORMATIONAs your Company does not carry on any manufacturing activity,information in accordance with the provisions of Section 217(1)(e) ofthe Companies Act, 1956 read with the Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988 are notfurnished herewith.

PARTICULARS OF EMPLOYEESYour Company had no employee during the year under review.

DIRECTORSIn accordance with the provisions of Section 256 of the CompaniesAct, 1956 and Article No. 138 of the Articles of Association of theCompany, Mr. B. Anantharaman, Director is liable to retire by rotationat the ensuing Annual General Meeting and being eligible offers himselffor re-appointment.

AUDIT COMMITTEEAudit Committee of Directors presently comprises of Mr. Surendra Kaul,Mr. Gautam Saigal and Dr. Archana Hingorani. The role and terms ofreference of the Audit Committee covers the areas mentioned underSection 292A of the Companies Act, 1956 besides other terms, asmay be referred to it by the Board of Directors of the Company.

DIRECTORS’ RESPONSIBILITY STATEMENTThe Board of Directors of the Company confirms that:(i) In the preparation of annual accounts, the applicable accounting

standards have been followed, along with proper explanation relatingto material departures.

(ii) The Directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that arereasonable and prudent, so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year andof the profit or loss of the Company for that period.

(iii) The Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance withthe provisions of the Companies Act, 1956 for safeguarding theassets of the Company and for preventing and detecting fraud andother irregularities.


AUDITORSM/s. Price Waterhouse, Chartered Accountants, the Statutory Auditorsof the Company, retire at the conclusion of the ensuing Annual GeneralMeeting and are eligible for re-appointment. The Company has receivedfrom them a certificate to the effect, that their re-appointment, if made,will be in conformity with the limits specified under Section 224 (1B)of the Companies Act, 1956.

For and on behalf of the Board of DirectorsNew Delhi B. ANANTHARAMAN DirectorJUNE 24, 2004 SURENDRA KAUL Director

MaxTelecom 264-272.p65 9/14/2004, 11:33 AM265



TO THE MEMBERS OF MAX TELECOM VENTURES LIMITED1 We have audited the attached Balance Sheet of Max Telecom

Ventures Limited, as at March 31, 2004 and the related Profit andLoss Account for the year ended on that date annexed thereto,which we have signed under reference to this report. These financialstatements are the responsibility of the company’s management.Our responsibility is to express an opinion on these financialstatements based on our audit.


3 As required by the Companies (Auditor’s Report) Order, 2003 issuedby the Central Government of India in terms of sub-section (4A) ofSection 227 of ‘The Companies Act, 1956’ of India (the ‘Act’),and on the basis of such checks of the books and records of thecompany as we considered appropriate and according to theinformation and explanations given to us, we further report that:i The company has neither granted nor taken any loans, secured

or unsecured, to/from companies, firms or other parties coveredin the register maintained under Section 301 of the Act.

ii In our opinion, the company has an internal audit systemcommensurate with its size and nature of its business.

iii The Central Government of India has not prescribed themaintenance of cost records under clause (d) of sub-section(1) of Section 209 of the Act for any of the products of thecompany.

iv (a) According to the information and explanations given to usand the records of the company examined by us, in ouropinion, the company is regular in depositing undisputedstatutory dues including investor education and protectionfund, income tax, sales tax, wealth tax, customs duty,excise duty, cess and other material statutory dues asapplicable, with the appropriate authorities. As informed,the provisions relating to Employees’ State Insurance arenot applicable to the Company.

(b) According to the information and explanations given to usand the records of the company examined by us, theparticulars of dues of sales-tax, income-tax and exciseduty as at March 31, 2004 which have not been depositedon account of a dispute are disclosed in note B1 onSchedule 8.

v The company’s accumulated losses are less than fifty per centof its net worth as at March 31, 2004. However, it has incurredcash losses in the financial year ended on that date and in theimmediately preceding financial year.

vi During the course of our examination of the books and recordsof the company, carried out in accordance with the generallyaccepted auditing practices in India, and according to theinformation and explanations given to us, we have neither comeacross any instance of fraud on or by the company, noticed or

AUDITORS’ REPORT

reported during the year, nor have we been informed of suchcase by the management.

vii The other clauses, (i), (ii), (iv), (v), (vi), (xi), (xii), (xiii), (xiv),(xv), (xvi), (xvii), (xviii), (xix) and (xx) of paragraph 4 of theCompanies (Auditor’s Report) Order, 2003 are not applicablein the case of the company for the current year, since in ouropinion there is no matter which arises to be reported in theaforesaid order.






(e) On the basis of written representations received from thedirectors and taken on record by the Board of Directors, noneof the directors is disqualified as on March 31, 2004 frombeing appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and accordingto the explanations given to us, the said financial statementstogether with the notes thereon and attached thereto give inthe prescribed manner the information required by the Actand give a true and fair view in conformity with the accountingprinciples generally accepted in India:i in the case of the Balance Sheet, of the state of affairs of

the company as at March 31, 2004; andii in the case of the Profit and Loss Account, of the loss for


V. NIJHAWANPartner

Membership Number – F 87228


MaxTelecom 264-272.p65 9/14/2004, 11:33 AM266



SCHEDULE (RS. ’000)As at As at

March 31, 2004 March 31, 2003

SOURCES OF FUNDSSHAREHOLDERS’ FUNDSShare Capital 1 499,421 499,421Reserves and Surplus 2 386,579 386,579Total 886,000 886,000


INVESTMENTS 3 329,200 329,200

CURRENT ASSETS, LOANS & ADVANCES 4Bank Balance 47 —Loans and Advances 338 338

385 338LESS: CURRENT LIABILITIES 5 6,049 5,900

NET CURRENT ASSETS (5,664) (5,562)

MISCELLANEOUS EXPENDITURE 6 94 187(To the extent not written off or adjusted)

PROFIT & LOSS ACCOUNT 11,220 11,025

CAPITAL DEFICIT ON DEMERGER 551,150 551,150

Total 886,000 886,000

SIGNIFICANT ACCOUNTING POLICIESAND NOTES TO THE ACCOUNTS 8



B. ANANTHARAMAN DirectorARCHANA HINGORANI Director



V. NIJHAWANPartner



MaxTelecom 264-272.p65 9/14/2004, 11:33 AM267



SCHEDULE (RS. ’000)Current Year Previous Year

01.04.2003 to 01.04.2002 to31.03.2004 31.03.2003

INCOMELiabilities written back 8 —

8 —

EXPENDITUREAdministrative and other expenses 7 91 549Prior Period Expenses (Legal & Professional Expenses) 19 310Preliminary expenses written off 93 93

203 952

(LOSS) BEFORE TAX (195) (952)Provision for Tax — —

(LOSS) AFTER TAX (195) (952)

(LOSS) BROUGHT FORWARD (11,025) (10,073)

(LOSS) CARRIED FORWARD (11,220) (11,025)

Earnings Per Share (Rs. per equity share of Rs.10/- each)Basic and Diluted EPS (Refer Note B5 on Schedule 8) (0.00) (0.02)




B. ANANTHARAMAN DirectorARCHANA HINGORANI Director


This is Profit & Loss Account referred toin our report of even date

V. NIJHAWANPartner



MaxTelecom 264-272.p65 9/14/2004, 11:33 AM268



SCHEDULES A N N E X E D T O & F O R M I N G P A R T O F A C C O U N T S

(RS. ’000)As at As at

March 31, 2004 March 31, 2003

SCHEDULE–1SHARE CAPITALAuthorised50,000,000 Equity Shares of Rs. 10/- each 500,000 500,000

Issued, Subscribed & Paid Up49,942,105 (Previous year 49,942,105) Equity Shares of Rs. 10/- each 499,421 499,421(Includes 30,364,800 Equity shares held by Max India Limited, the holding company)

SCHEDULE–2RESERVES AND SURPLUSShare Premium 386,579 386,579

386,579 386,579

SCHEDULE–3INVESTMENTS - AT COST(Refer Note A2 on Schedule 9)

LONG TERM TRADE INVESTMENTS - UNQUOTEDHutchison Max Telecom Pvt. Limited 300,000 300,0001,08,43,882 (Previous year 1,08,43,882) EquityShares of Rs.10/- each

Comsat Max Limited29,20,000 (Previous year 29,20,000) Equity 29,200 29,200Shares of Rs.10/- each

329,200 329,200

SCHEDULE–4CURRENT ASSETS, LOANS & ADVANCESCash & Bank BalancesBalances with Scheduled bank- In Current Account 47 —

47 —Loans & Advances(Unsecured and considered good)

Advance tax 338 338(net of provisions Rs. 6,741 thousands)(Previous year Rs. 6,741 thousands)

338 338

SCHEDULE–5CURRENT LIABILITIESSundry Creditors (other than small scale industries)* 6,048 5,899Other Liabilities 1 1

6,049 5,900* Includes Rs. 5,278 thousands (Previous year Rs.5,123 thousands) due to Max India Limited, the holding company

MaxTelecom 264-272.p65 9/14/2004, 11:33 AM269




March 31, 2004 March 31, 2003

SCHEDULE–6MISCELLANEOUS EXPENDITUREPreliminary Expenses:Opening Balance 187 280Less: Written off during the year 93 93

94 187

Current Year Previous Year01.04.2003 to 31.03.2004 01.04.2002 to 31.03.2003

SCHEDULE–7ADMINISTRATIVE AND OTHER EXPENSESTravelling & Conveyance

Others 18 1Audit Fee 22 21Bank Charges 3 —Filing Fees 2 4Legal & Professional 46 502Sitting Fees — 4Other Fees — 11Miscellaneous Expenses — 6

91 549


MaxTelecom 264-272.p65 9/14/2004, 11:33 AM270




SCHEDULE–8A SIGNIFICANT ACCOUNTING POLICIES1 The financial statements are prepared under historical cost

convention on an accrual basis and in accordance with accountingstandards issued by the Institute of the Chartered Accountants ofIndia.

2 Long-term investments are stated at cost, except for diminution,other than temporary, which is provided for.

3 Dividends are recognised as and when the right of the Company toreceive payment is established.

4 Preliminary expenses represent expenses in connection withincorporation of the Company and are written off over a period of10 years.

5 Current Tax provision is computed for current income based on thetax liability after considering allowances and exemptions. Deferredtax assets and liabilities are computed on the timing differences atthe balance sheet date between the carrying amount of assets andliabilities and their respective tax bases. Deferred tax assets arerecognised based on management estimates of available futuretaxable income and assessing its certainty.

B NOTES TO THE ACCOUNTS1 Contingent liability

During the year ended 31.03.2001 an income tax demand relatingto the assessment year 1998-99 of Rs. 9,50,393 thousands wasraised. The Company had filed an appeal against the demand. Thesaid appeal had been disposed off in favour of the Company by theCIT(Appeals) resulting in cancellation of the demand created.Subsequently, in the assessment of the Company for the assessmentyear 1999-2000 the transaction which, had resulted in the abovementioned demand was also assessed as taxable on protective basisunder a different head of income. This, along with a few otheradditions, resulted in further creation of demand of Rs. 25,63,003thousands (which included the demand of Rs. 25,00,254 thousands

on protective basis). The Company had filed an appeal against thesame. The said appeal has also been disposed off in favour ofthe Company by the CIT (Appeals), and the demand created hasbeen cancelled.Thereafter, the Income-tax department has filed an appeal withIncome Tax Appellate Tribunal against the above orders.

2 ‘Capital Deficit on Demerger’ represents the differential betweenthe amount of Company’s assets and balance lying in GeneralReserve and Profit and Loss Account transferred on demerger toMax Corporation Limited as on May 9, 1998, pursuant to a Schemeof Arrangement sanctioned by the Hon’ble High Court of Punjab &Haryana at Chandigarh vide its Order dated March 20, 1999 andwhich became effective on March 31, 1999.

3 There are no timing differences between the carrying amount ofassets & liabilities and their respective tax bases.

4 Other disclosure requirements of Schedule VI to the CompaniesAct, 1956 are not applicable to the Company.

5 Earning Per ShareCalculated on EPS (Basic and Diluted)

Current Year Previous YearProfit/(Loss) after tax(Amount-Rs. Thousand) (195) (952)Number of Shares outstanding 49,942,105 49,942,105EPS (Rupees) (0.00) (0.02)

6 Previous year figures have been regrouped/reclassified wherevernecessary to make conform to current year’s classification.

On behalf of the Board of DirectorsB. ANANTHARAMAN DirectorARCHANA HINGORANI Director


MaxTelecom 264-272.p65 9/14/2004, 11:33 AM271





Date Month Year

II CAPITAL RAISED DURING THE YEAR (Amount in Rs. Thousand)Public Issue Right IssueN I L N I LBonus Issue Private Placement/OtherN I L N I L


8 8 6 0 0 0 8 8 6 0 0 0

SOURCES OF FUND

Paid-up Capital Reserve & Surplus4 9 9 4 2 1 3 8 6 5 7 9

Secured Loans Unsecured LoansN I L N I L


Net Fixed Assets InvestmentsN I L 3 2 9 2 0 0+ - Net Current Assets Misc. Expenditure

✓ 5 6 6 4 9 4Accumulated Losses Capital Deficit on Demerger

1 1 2 2 0 5 5 1 1 5 0


8 2 0 3+ - Profit/Loss before tax + - Profit/Loss after tax

✓ 1 9 5 ✓ 1 9 5

+ - Earning per share in Rs. Dividend Rate %✓ 0 . 0 0 N I L

V NAME OF THREE PRINCIPAL PRODUCTS/SERVICE OF COMPANYProduct Description N O T A P P L I C A B L E

MaxTelecom 264-272.p65 9/14/2004, 11:33 AM272

MAX ESTATES LIMITED

MaxEstate 273-280.p65 9/14/2004, 11:33 AM273

M A X E S T A T E S L I M I T E D


DIRECTORS’ REPORT

Your Directors are pleased to present their fifth Annual Report alongwithAudited Accounts for the financial year ended March 31, 2004.

OPERATIONSThe Company is in the process of evolving plans for development ofland owned by it in Dehradun. During the year under review, yourCompany incurred a net loss of Rs. 0.82 Lacs.

DIVIDENDIn view of the losses, your Directors do not recommend any dividend.



DIRECTORS’ RESPONSIBILITY STATEMENTAs per the provisions of Section 217(2AA) of the Companies Act, 1956,the Directors confirm that:i in the preparation of annual accounts, the applicable accounting


ii the Directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year andof the profit or loss of the Company for that period;

iii the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance withthe provisions of the Companies Act, 1956 for safeguarding theassets of the Company and for preventing and detecting fraud andother irregularities; and

iv the Directors had prepared the annual accounts, on a going concernbasis.

PARTICULARS OF EMPLOYEESThe Company had no employee during the year under review.

DIRECTORSIn accordance with the provisions of the Companies Act, 1956 and theArticles of Association of the Company, Mr. Ashok Tyagi is liable toretire by rotation at the ensuing Annual General Meeting and beingeligible offers himself for re-appointment.

AUDITORSM/s Price Waterhouse, Chartered Accountants, the Statutory Auditorsof the Company, retire at the conclusion of the ensuing Annual GeneralMeeting and are eligible for re-appointment. The Company has receivedfrom them a Certificate to the effect that their re-appointment, if made,will be in conformity with the limits specified under Section 224 (1B)of the Companies Act, 1956.

On behalf of the Board of DirectorsNew Delhi ASHOK TYAGI DirectorJUNE 22, 2004 SURENDRA KAUL Director

MaxEstate 273-280.p65 9/14/2004, 11:33 AM274



To the Members of Max Estates Limited1. We have audited the attached Balance Sheet of Max Estates Limited,

as at March 31, 2004, and the related Profit and Loss Account forthe year ended on that date annexed thereto, which we have signedunder reference to this report. These financial statements are theresponsibility of the company’s management. Our responsibility isto express an opinion on these financial statements based on ouraudit.


3. As required by the Companies (Auditor’s Report) Order, 2003 issuedby the Central Government of India in terms of sub-section (4A) ofSection 227 of ‘The Companies Act, 1956’ of India (the ‘Act’),and on the basis of such checks of the books and records of thecompany as we considered appropriate and according to theinformation and explanations given to us, we further report that:i (a) The company is maintaining proper records showing full



(c) In our opinion and according to the information andexplanations given to us, the Company has not disposedany fixed assets during the year.

ii The company has neither granted nor taken any loans, securedor unsecured, to/from companies, firms or other parties coveredin the register maintained under Section 301 of the Act.

iii In our opinion and according to the information andexplanations given to us, there are adequate internal controlprocedures commensurate with the size of the company andthe nature of its business for the purchase of fixed assets.Further, on the basis of our examination of the books andrecords of the company, and according to the information andexplanations given to us, we have neither come across norhave been informed of any continuing failure to correct majorweaknesses in the aforesaid internal control procedures.

iv As the paid-up capital and reserves as at the commencementof the financial year did not exceed Rupees Fifty Lakhs or theaverage annual turnover for a period of three consecutivefinancial years immediately preceding the financial year didnot exceed Rupees Five Crores, clause (vii) of paragraph 4 ofthe Companies (Auditor’s Report) Order, 2003 is not applicableto the company for the current year.

v The Central Government of India has not prescribed themaintenance of cost records under clause (d) of sub-section(1) of Section 209 of the Act for any of the products of thecompany.

vi (a) According to the information and explanations given to usand the records of the company examined by us, in ouropinion, the company is regular in depositing undisputedstatutory dues including investor education and protectionfund, income tax, sales tax, wealth tax, customs duty,excise duty, cess and other material statutory dues asapplicable, with the appropriate authorities. As informed,

AUDITORS’ REPORT

the provisions relating to Employees Provident Fund andMiscellaneous Provisions Act, 1952 and Employees’ StateInsurance are not applicable to the Company.

(b) According to the information and explanations given to usand the records of the company examined by us, there areno dues of sales tax, income tax, customs duty, wealthtax, excise duty and cess which have not been depositedon account of a dispute.

vii The company has accumulated losses, as at March 31, 2004more than fifty percent of its net worth and has incurred cashlosses during the financial year and in the immediatelypreceding financial year.

viii On the basis of an overall examination of the balance sheet ofthe company, in our opinion and according to the informationand explanations given to us, there are no funds raised on ashort-term basis which have been used for long-terminvestment, and vice versa.

ix During the course of our examination of the books and recordsof the company, carried out in accordance with the generallyaccepted auditing practices in India, and according to theinformation and explanations given to us, we have neither comeacross any instance of fraud on or by the company, noticed orreported during the year, nor have we been informed of suchcase by the management.

x The other clauses, (ii), (v), (vi), (xi), (xii), (xiii), (xiv), (xv), (xvii),(xviii), (xix) and (xx) of paragraph 4 of the Companies (Auditor’sReport) Order, 2003 are not applicable in the case of thecompany for the current year, since in our opinion there is nomatter which arises to be reported in the aforesaid order.






(e) On the basis of written representations received from thedirectors and taken on record by the Board of Directors, noneof the directors is disqualified as on March 31, 2004 frombeing appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act;




V. NIJHAWANPartner

Membership No. – F 87228


MaxEstate 273-280.p65 9/14/2004, 11:33 AM275



(Rs. ’000)As at As at

SCHEDULE March 31, 2004 March 31, 2003

SOURCES OF FUNDSSHAREHOLDERS’ FUNDSShare Capital 1 500.00 500.00

LOAN FUNDSUnsecured Loan from the Holding Company 14,577.60 14,513.92Total 15,077.60 15,013.92

APPLICATION OF FUNDSFIXED ASSETS 2Gross Block 12,600.84 12,600.84Less: Depreciation 42.05 28.02Net Block 12,558.79 12,572.82

CURRENT ASSETS, LOANS & ADVANCESBank Balances 3 1.32 17.12

1.32 17.12

Less: CURRENT LIABILITIES & PROVISIONSCurrent Liabilities 4 12.82 25.83

12.82 25.83

NET CURRENT ASSETS (11.50) (8.71)

PROFIT & LOSS ACCOUNT 2,524.12 2,442.31


Total 15,077.60 15,013.92

SIGNIFICANT ACCOUNTING POLICIES ANDNOTES TO THE ACCOUNTS 6


For and on Behalf of the Board of Directors

SURENDRA KAUL DirectorASHOK TYAGI Director



V. NIJHAWANPartner



MaxEstate 273-280.p65 9/14/2004, 11:33 AM276



SCHEDULE (Rs. ’000)Current Year Previous Year

01.04.2003 to 01.04.2002 to31.03.2004 31.03.2003

INCOMEExcess provision no longer required written back — 7.65

— 7.65

EXPENDITUREMaintenance Expenses 48.67 47.75Legal & Professional charges 5.90 14.05Travelling Expenses 4.71 —Filing Fee 0.60 13.30Electricity & Water 2.81 5.25Communication 3.37 0.15Amortisation of Preliminary Expenses 1.30 1.30Depreciation 14.03 14.03Printing & Stationary — 3.81Bank Charges 0.42 0.53

81.81 100.16

LOSS FOR THE YEAR 81.81 92.51LOSS BROUGHT FORWARD 2,442.31 2,349.80LOSS TRANSFERRED TO THE BALANCE SHEET 2,524.12 2,442.31

Earnings Per Share (Rs. per equity share of Rs. 10/- each) - Basic and Diluted EPS (Refer Note B5 on Schedule 6) (1.64) (4.15)Number of Shares used in computing Earnings per share - Basic 50,000 22,274






This is the Profit & Loss Accout referred toin our report of even date

V. NIJHAWANPartner



MaxEstate 273-280.p65 9/14/2004, 11:33 AM277



SCHEDULES A N N E X E D T O A N D F O R M I N G P A R T O F A C C O U N T


March 31, 2004 March 31, 2003

SCHEDULE–1SHARE CAPITALAuthorised50,000 (Previous Year 50,000) Equity Shares of Rs. 10/- each 500.00 500.00

500.00 500.00

Issued, Subscribed & Paid-up50,000 (Previous Year 50,000) Equity Shares of Rs. 10/- each (Held by the 500.00 500.00Holding Company, Max India Limited)

500.00 500.00

SCHEDULE–2FIXED ASSETS (Refer Notes A3 and A4 on Schedule 6)

(Rs. ’000)GROSS BLOCK DEPRECIATION NET BLOCK

Particulars Opening Additions Closing Opening During Closing

as at during as at as at the as at As at As at

1.4.2003 the year 31.3.2004 1.4.2003 year 31.3.2004 31.3.2004 31.3.2003

Freehold Land 11,740.00 — 11,740.00 — — — 11,740.00 11,740.00

Boundary Wall 860.84 — 860.84 28.02 14.03 42.05 818.79 832.82

Total 12,600.84 — 12,600.84 28.02 14.03 42.05 12,558.79 12,572.82

Previous Year 12,600.84 — 12,600.84 13.99 14.03 28.02 12,572.82


SCHEDULE–3CASH & BANK BALANCESBank Balances with Scheduled Bank– In Current Account 1.32 17.12

1.32 17.12

SCHEDULE–4CURRENT LIABILITIESSundry Creditors– Total outstanding dues of small scale industrial undertakings — —– Total outstanding dues of creditors other than small scale industrial undertakings 12.37 25.66TDS Payable 0.45 0.17

12.82 25.83

SCHEDULE–5MISCELLANEOUS EXPENDITURE (Refer Note A2 on Schedule 6)(To the extent not written off or adjusted)

Preliminary Expenses 7.49 8.80Less: Written off during the year 1.30 1.30

6.19 7.50

MaxEstate 273-280.p65 9/14/2004, 11:33 AM278



SCHEDULES A N N E X E D T O A N D F O R M I N G P A R T O F A C C O U N T

SCHEDULE–6A SIGNIFICANT ACCOUNTING POLICIES1 The financial statements are prepared under historical cost

convention on an accrual basis and in accordance with accountingstandards issued by the Institute of the Chartered Accountants ofIndia.

2 Preliminary expenses represent expenses in connection withincorporation of the Company and are written off over a period of10 years.

3 Fixed Assets are stated at Cost of Acquisition inclusive of incidentalexpenses related to the acquisition and installation/construction.

4 Depreciation is charged on straight-line method and on pro-ratabasis at rates prescribed under Schedule XIV to the CompaniesAct, 1956.

5 Current tax provision is computed for current income based on thetax liability after considering allowances and exemptions. Deferredtax assets and liabilities are computed on the timing differences atthe balance sheet date between the carrying amount of assets andliabilities and their respective tax bases. Deferred tax assets arerecognised based on management estimates of available futuretaxable income and assessing its certainty.

B NOTES TO THE ACCOUNTS1 Contingent Liability

The Company had received an Order in earlier years from the Courtof Tehsildar, Dehradun, imposing a fine of Rs. 910 Thousands foralleged occupation of land belonging to the Gram Sabha. TheCompany had filed an Appeal before the Court of Collector, Dehradunwho set aside the above mentioned Order and had issued a directiveto the Tehsildar to review the matter again. The Upper Tehsildar/Assistant Collector has passed an Order dated April 8, 2003directing the concerned Tehsildar, Dehradun for demarcation ofthe land belonging to the Company and that of the Gram Sabha.

2 Auditors’ remuneration(RS. ‘000)

Current Year Previous YearAudit Fee 5.40 5.25Out of pocket Expenses 0.50 0.30Total 5.90 5.55

3 There are no timing differences between the carrying amount ofassets and liabilities and their respective tax bases.

4 Unsecured interest free loan aggregating to Rs. 14,578 thousands(Previous year Rs. 14,514 thousands) received from the holdingcompany is repayable on demand.

5 Earning Per ShareCalculation of EPS (Basic and Diluted)

Current Year Previous YearBasic and Diluted(Loss) after tax (Amount in Rs.) (81,807) (92,514)Weighted Average number ofEquity Shares 50,000 22,274EPS (Rupees) (1.64) (4.15)

Share Details (Nos)Outstanding as at thebeginning of the year 50,000 10,000Issued as on December 10, 2002 — 40,000Outstanding as at the end of the year 50,000 50,000

6 Previous Year figures have been regrouped/classified wherevernecessary to conform to current year’s classification.


For and on behalf of the Board of DirectorsNew Delhi SURENDRA KAUL DirectorJUNE 22, 2004 ASHOK TYAGI Director

MaxEstate 273-280.p65 9/14/2004, 11:33 AM279





Date Month Year

II CAPITAL RAISED DURING THE YEAR (Amount in Rs. Thousand)Public Issue Right IssueN I L N I LBonus Issue Private Placement/OthersN I L N I L

III POSITION OF MOBILISTION AND DEPLOYMENT OF FUNDS(Amount in Rs. Thousand)Total Liabilities Total Assets1 5 0 7 7 . 6 0 1 5 0 7 7 . 6 0

SOURCES OF FUNDSPaid-up Capital Reserve & Surplus

5 0 0 N I LSecured Loans Unsecured LoansN I L 1 4 5 7 7 . 6 0

APPLICATION OF FUNDSNet Fixed Assets Investments1 2 5 5 8 . 7 9 N I L+ - Net Current Assets Misc. Expenditure

✓ 1 1 . 5 0 6 . 1 9Accumulated Losses

2 5 2 4 . 1 2

IV PERFORMANCE OF COMPANY (Amount in Rs. Thousand)Turnover Total ExpenditureN I L 8 1 . 8 1+ - Profit/Loss before tax + - Profit/Loss after tax

✓ 8 1 . 8 1 ✓ 8 1 . 8 1

+ - Earning per share in Rs. Dividend Rate %✓ 1 . 6 4 N I L


MaxEstate 273-280.p65 9/14/2004, 11:33 AM280

MALSI ESTATES LIMITED

MalsiEstates 281-289.p65 9/14/2004, 11:33 AM281

M A L S I E S T A T E S L I M I T E D


DIRECTORS’ REPORT

Your Directors are pleased to present their fifth Annual Report alongwithAudited Accounts for the financial year ended March 31, 2004.

OPERATIONSThe Company is in the process of evolving plans for development ofland owned by it in Dehradun. During the year under review, yourCompany incurred a net loss of Rs. 5.02 Lacs.

DIVIDENDIn view of the losses, your Directors do not recommend any dividend.



DIRECTORS’ RESPONSIBILITY STATEMENTAs per the provisions of Section 217(2AA) of the Companies Act, 1956,the Directors confirm that:(i) in the preparation of annual accounts, the applicable accounting


(ii) the Directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year andof the profit or loss of the Company for that period;

(iii) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance withthe provisions of the Companies Act, 1956 for safeguarding theassets of the Company and for preventing and detecting fraud andother irregularities; and

(iv) the Directors had prepared the annual accounts, on a going concernbasis.

PARTICULARS OF EMPLOYEESThe Company had no employee during the year under review.

DIRECTORSIn accordance with the provisions of the Companies Act, 1956 and theArticles of Association of the Company, Mr. Surendra Kaul is liable toretire by rotation at the ensuing Annual General Meeting and beingeligible offers himself for re-appointment.

AUDITORSM/s Price Waterhouse, Chartered Accountants, the Statutory Auditorsof the Company, retire at the conclusion of the ensuing Annual GeneralMeeting and are eligible for re-appointment. The Company has receivedfrom them a Certificate to the effect that their re-appointment, if made,will be in conformity with the limits specified under Section 224 (1B)of the Companies Act, 1956.

On behalf of the Board of DirectorsNew Delhi ASHOK TYAGI DirectorJUNE 22, 2004 SURENDRA KAUL Director




TO THE MEMBERS OF MALSI ESTATES LIMITED1 We have audited the attached Balance Sheet of Malsi Estates

Limited, as at March 31, 2004, and the related Profit and LossAccount for the year ended on that date annexed thereto, which wehave signed under reference to this report. These financialstatements are the responsibility of the company’s management.Our responsibility is to express an opinion on these financialstatements based on our audit.


3 As required by the Companies (Auditor’s Report) Order, 2003 issuedby the Central Government of India in terms of sub-section (4A) ofSection 227 of ‘The Companies Act, 1956’ of India (the ‘Act’),and on the basis of such checks of the books and records of thecompany as we considered appropriate and according to theinformation and explanations given to us, we further report that:i a The company is maintaining proper records showing full


b The fixed assets of the company have been physicallyverified by the management during the year and no materialdiscrepancies between the book records and the physicalinventory have been noticed. In our opinion, the frequencyof verification is reasonable.

c In our opinion and according to the information andexplanations given to us, the Company has not disposedany fixed assets during the year.


iii In our opinion and according to the information andexplanations given to us, there are adequate internal controlprocedures commensurate with the size of the company andthe nature of its business for the purchase of fixed assets.Further, on the basis of our examination of the books andrecords of the company, and according to the information andexplanations given to us, we have neither come across norhave been informed of any continuing failure to correct majorweaknesses in the aforesaid internal control procedures.

iv As the paid-up capital and reserves as at the commencementof the financial year did not exceed Rupees Fifty Lakhs or theaverage annual turnover for a period of three consecutivefinancial years immediately preceding the financial year didnot exceed Rupees Five Crores, clause (vii) of paragraph 4 ofthe Companies (Auditor’s Report) Order, 2003 is not applicableto the company for the current year.

v The Central Government of India has not prescribed themaintenance of cost records under clause (d) of sub-section (1)of Section 209 of the Act for any of the products of the company.

vi (a) According to the information and explanations given to usand the records of the company examined by us, in ouropinion, the company is regular in depositing undisputedstatutory dues including investor education and protectionfund, income tax, sales tax, wealth tax, customs duty,excise duty, cess and other material statutory dues asapplicable, with the appropriate authorities. As informed,

AUDITORS’ REPORT

the provisions relating to Employees Provident Fund andMiscellaneous Provisions Act, 1952 and Employees’ StateInsurance are not applicable to the Company.

(b) According to the information and explanations given to usand the records of the company examined by us, there areno dues of sales tax, income tax, customs duty, wealthtax, excise duty and cess which have not been depositedon account of a dispute.

vii The company has accumulated losses, as at March 31, 2004more than fifty percent of its net worth and has incurred cashlosses during the financial year and in the immediately pre-ceding financial year.

viii On the basis of an overall examination of the balance sheet ofthe company, in our opinion and according to the informationand explanations given to us, there are no funds raised on ashort-term basis which have been used for long-terminvestment, and vice versa.

ix During the course of our examination of the books and recordsof the company, carried out in accordance with the generallyaccepted auditing practices in India, and according to theinformation and explanations given to us, we have neither comeacross any instance of fraud on or by the company, noticed orreported during the year, nor have we been informed of suchcase by the management.

x The other clauses, (ii), (v), (vi), (xi), (xii), (xiii), (xiv), (xv), (xvi),(xviii), (xix) and (xx) of paragraph 4 of the Companies (Auditor’sReport) Order, 2003 are not applicable in the case of thecompany for the current year, since in our opinion there is nomatter which arises to be reported in the aforesaid order.






(e) On the basis of written representations received from the di-rectors and taken on record by the Board of Directors, none ofthe directors is disqualified as on March 31, 2004 from beingappointed as a director in terms of clause (g) of sub-section(1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and accord-ing to the explanations given to us, the said financial state-ments together with the notes thereon and attached theretogive in the prescribed manner the information required by theAct and give a true and fair view in conformity with the ac-counting principles generally accepted in India:i in the case of the Balance Sheet, of the state of affairs of

the company as at March 31, 2004; andii in the case of the Profit and Loss Account, of the loss for


V. NIJHAWANPartner

Membership Number – F 87228





SCHEDULE (RS. ’000)As at As at

March 31, 2004 March 31, 2003

SOURCES OF FUNDSSHAREHOLDERS’ FUNDSShare Capital 1 500.00 500.00

LOAN FUNDSUnsecured Loan from the Holding Company 52,749.99 51,004.51Total 53,249.99 51,504.51

APPLICATION OF FUNDSFIXED ASSETS 2Gross Block 47,834.11 47,834.11Less: Depreciation 3.85 1.50Net Block 47,830.26 47,832.61Capital work in Progress 1,222.42 49,052.68 — 47,832.61

CURRENT ASSETS, LOANS & ADVANCESBank Balances 3 0.88 12.01Loans and Advances 4 3.54 0.44

4.42 12.45Less: CURRENT LIABILITIES & PROVISIONSCurrent Liabilities 5 21.44 54.26Provisions 278.87 278.87

300.31 333.13NET CURRENT ASSETS (295.89) (320.68)

PROFIT & LOSS ACCOUNT 4,487.00 3,985.08


Total 53,249.99 51,504.51SIGNIFICANT ACCOUNTING POLICIES ANDNOTES TO THE ACCOUNTS 7






V. NIJHAWANPartner






SCHEDULE (RS. ’000)Current Year Previous Year

01.04.2003 to 01.04.2002 to31.03.2004 31.03.2003

INCOMEExcess provision no longer required written back — 7.15

— 7.15

EXPENDITUREMaintenance Expenses 72.98 128.98Legal & Professional charges 40.95 34.05Travelling Expenses 92.74 7.54Filing Fee 0.60 13.30Electricity & Water 7.32 6.35Capital Advances Written Off — 150.00Amortisation of Preliminary Expenses 1.30 1.30Depreciation 2.35 1.50Bank Charges 3.48 2.21Communication 1.00 —Printing & Stationery — 3.78Miscellaneous Expenses 0.33 0.20

223.05 349.21

LOSS FOR THE YEAR 223.05 342.06Provision for Wealth Tax 278.87 361.40LOSS AFTER TAX 501.92 703.46

LOSS BROUGHT FORWARD 3,985.08 3,281.62

LOSS TRANSFERRED TO BALANCE SHEET 4,487.00 3,985.08

Earnings Per Share (Rs. per equity share of Rs. 10/- each)Basic and Diluted EPS (Refer Note B6 on Schedule 7) (10.04) (31.58)






This is the Profit & Loss Account referred toin our report of even date

V. NIJHAWANPartner






SCHEDULES A N N E X E D T O & F O R M I N G P A R T O F T H E A C C O U N T S


March 31, 2004 March 31, 2003

SCHEDULE–1SHARE CAPITALAuthorised50,000 (Previous Year 50,000) Equity Shares of Rs. 10/- each 500.00 500.00

500.00 500.00

Issued, Subscribed & Paid-up50,000 (Previous Year 50,000) Equity Shares of Rs. 10/- each (Held by the 500.00 500.00Holding Company, Max India Limited)

500.00 500.00

SCHEDULE–2FIXED ASSETS (Refer Notes A3 and A4 on Schedule 7)

(RS. ’000)GROSS BLOCK DEPRECIATION NET BLOCK

Particulars Opening Additions Closing Opening During Closing

as at during as at as at the as at As at As at

1.4.2003 the year 31.3.2004 1.4.2003 year 31.3.2004 31.3.2004 31.3.2003

Freehold Land 47,689.71 — 47,689.71 — — — 47,689.71 47,689.71

Boundary Wall 144.40 — 144.40 1.50 2.35 3.85 140.55 142.90

Total 47,834.11 — 47,834.11 1.50 2.35 3.85 47,830.26 47,832.61

Capital Work in Progress (Includes capital advance Rs. 432 Thousands (Previous Year Rs. Nil) 1,222.42 —

49,052.68 47,832.61

Previous Year 47,689.71 144.40 47,834.11 — 1.50 1.50 47,832.61


March 31, 2004 March 31, 2003

SCHEDULE–3CASH & BANK BALANCESBank Balance with Scheduled Bank

– In Current Account 0.88 12.010.88 12.01

SCHEDULE–4LOANS AND ADVANCES(Unsecured, Considered Good)

Advances recoverable in cash or kind or for value to be received 3.54 0.443.54 0.44

Due to Company under the same management - Rs. 0.75 Thousands (Previous year Rs. 0.44 Thousands)Maximum amount outstanding during the year - Rs. 0.75 Thousands (Previous year Rs. 0.44 Thousands)Due to Director - Rs. 2.795 Thousands (Previous year Rs. Nil)Maximum amount outstanding during the year - Rs. 100 Thousands (Previous year Rs. Nil)






March 31, 2004 March 31, 2003

SCHEDULE–5CURRENT LIABILITIES & PROVISIONSCurrent LiabilitiesSundry Creditors

Total outstanding dues of small scale industrial undertakings — —Total outstanding dues of creditors other than small scale industrial undertakings 21.00 54.09

Other Liabilities 0.44 0.1721.44 54.26

ProvisionsWealth tax 278.87 278.87

278.87 278.87

SCHEDULE–6MISCELLANEOUS EXPENDITURE (Refer Note A2 on Schedule 7)

(To the extent not written off or adjusted)

Preliminary Expenses 7.50 8.80Less: Written off during the year 1.30 1.30

6.20 7.50

SCHEDULE–7A SIGNIFICANT ACCOUNTING POLICIES1 The financial statements are prepared under historical cost convention on an accrual basis and in accordance with accounting standards

issued by the Institute of the Chartered Accountants of India.

2 Preliminary expenses represent expenses in connection with incorporation of the Company and are written off over a period of 10 years.

3 Fixed Assets are stated at Cost of Acquisition inclusive of incidental expenses related to the acquisition and installation/construction.

4 Depreciation is charged on straight-line method and on pro-rata basis at rates prescribed under Schedule XIV to the Companies Act, 1956.

5 Current tax provision is computed for current income based on the tax liability after considering allowances and exemptions. Deferred taxassets and liabilities are computed on the timing differences at the balance sheet date between the carrying amount of assets and liabilitiesand their respective tax bases. Deferred tax assets are recognised based on management estimates of available future taxable income andassessing its certainty.

B NOTES TO THE ACCOUNTS1 Contingent Liability

The Company had received a notice from the Collector of Stamps, Dehradun regarding short payment of stamp duty to the extent of Rs. 281thousands. In response to which the Company had filed an objection before the Collector of Stamps, Dehradun.

The Collector of Stamps, Dehradun, rejecting the application filed by the Company, passed an Order on June 11, 2001 to pay Rs. 371thousands including a fine of Rs. 90 thousands. The Company has filed an appeal against the order before the Commission Pauri GarhwalCamp, Dehradun. The Commission had upheld the order of Collector of Stamps, Dehradun.

The Company has filed a suit against the order of Commissioner with the Hon’ble High Court of Uttranchal at Nainital. The Hon’ble High Courthas stayed the order of the Commissioner vide his Order dated March 26, 2003.

2 Estimated amount of contract (net of advances) remaining to be executed on capital account and not provided for are Rs. 3600 Thousands(Previous year Rs. Nil)





3 Auditors’ remuneration(RS. ’000)


Audit Fee 5.40 5.25Out of pocket Expenses 0.53 0.52

Total 5.93 5.77

4 There are no timing differences between the carrying amount of assets and liabilities and their respective tax bases.

5 Unsecured interest free loan aggregating to Rs. 52,749.99 thousands (Previous year Rs. 51,004.51 thousands) received from the holdingcompany and is repayable on demand.



Basic and DilutedProfit/(Loss) after tax (Amount Rs.) (501,925) (703,459)Weighted Average number of Equity Shares 50,000 22,274EPS (Rupees) (10.04) (31.58)

Share Details (Nos)Outstanding as at the beginning of the year 50,000 10,000Issued as on December 10, 2002 — 40,000

Outstanding as at the end of the year 50,000 50,000

7 Previous Year figures have been regrouped/classified wherever necessary to conform to current year’s classification.

8 Other disclosure requirements of Schedule VI to the Companies Act, 1956 are not applicable to the Company.









Date Month Year

II CAPITAL RAISED DURING THE YEAR (Amount in Rs. Thousand)Public Issue Right IssueN I L N I LBonus Issue Private Placement/OthersN I L N I L


5 3 2 5 0 5 3 2 5 0

SOURCES OF FUNDS

Paid-up Capital Reserve & Surplus5 0 0 N I L

Secured Loans Unsecured LoansN I L 5 2 7 5 0



+ - Net Current Assets Misc. Expenditure✓ 2 9 6 6

Accumulated Losses4 4 8 7


N I L 2 2 3+ - Profit/Loss before tax + - Profit/Loss after tax

✓ 2 2 3 ✓ 5 0 2

+ - Earning per share in Rs. Dividend Rate %✓ 1 0 . 0 4 N I L



PHARMAX CORPORATION LIMITED

Pharmax Corporation 290-304.p65 9/14/2004, 11:33 AM290

P H A R M A X C O R P O R A T I O N L I M I T E D


DIRECTORS’ REPORT

Your Directors have pleasure in presenting the fifteenth Annual Reportof the Company together with the Audited Annual Accounts for the yearended March 31, 2004.

FINANCIAL RESULTSDuring the year under review, your Company earned a total incomeamounting to Rs. 544.75 Lacs against Rs. 598.46 Lacs in previousyear. The lower income was on account of decrease in lease rentals andother income. Higher provision for tax had also resulted in lower netprofit.

Key highlights of the financial results for the year under review areas under:

Current Year Previous Year(Rs. Lacs) (Rs. Lacs)

Service Income 1.20 2.21Lease Rentals 403.99 439.96Other Income 139.56 156.29Total Income 544.75 598.46Total Expenditure 438.96 423.79Profit /(Loss) before tax 105.79 174.67Provision for Taxation 68.30 31.04Profit /(Loss) after tax 37.49 143.63

DIVIDENDIn view of carry forward loss, your Directors do not recommend anydividend on Equity Shares or on Preference Shares.

INCREASE IN SHARE CAPITALDuring the year under review, the Authorised share capital of theCompany was increased from Rs. 23 Crore to Rs. 25.70 Crore.Simultaneously, your company restructured the authorized share capitalwith the cancellation of un-issued preference share capital. The increaseand restructuring of share capital was made to facilitate conversion ofCumulative Convertible Preference (CCP) Shares into equity shares ofthe Company. The Board of Directors of the Company allotted4,57,13,500 Equity Shares of Re. 1/- each aggregating toRs. 4,57,13,500/- on March 16, 2004 to the CCP holders holdingfully paid-up shares. Consequent to the said allotment, the Companyhas become a subsidiary company of Max India Limited.

AMENDMENT OF OBJECT CLAUSEThe shareholders in the Extraordinary General Meeting held on January30, 2004, amended the Main Objects of the Memorandum ofAssociation of the Company so as to enable the Company to carry onthe business for providing Healthcare services.

DIRECTORSDuring the year under review, Mr. B. Anantharaman and Mr. V. Seshadriwere appointed as Directors of the Company, in the casual vacanciescaused by the resignations of Mr. Ashok Tyagi and Mr. Vishal Malhotra,respectively. Your directors place on record their deep appreciation forthe valuable contribution made by Mr. Tyagi and Mr. Malhotra duringtheir association with the Company.

In accordance with the provisions of Section 256 of the CompaniesAct, 1956 and Article 143 of the Articles of Association of the Company,Mr. K.S. Ramsinghaney retires by rotation at the ensuing Annual GeneralMeeting, and being eligible offers himself for re-appointment.

AUDIT COMMITTEEThe Audit Committee of the Company currently comprises of Mr. B.Anantharaman, Mr. K.S. Ramsinghaney and Mr. S.C. Chopra. The Boardhas appointed Mr. V. Seshadri as Director-in-charge of Finance on thisCommittee. The current terms of reference of this committee fullyconform to the requirements of Section 292A of the Companies Act,1956.

DIRECTORS’ RESPONSIBILITY STATEMENTPursuant to the requirement under Section 217(2AA) of the CompaniesAct, 1956, with respect to Directors’ Responsibility Statement, theBoard of Directors of the Company confirms that :(i) In the preparation of annual accounts, applicable accounting

standards have been followed alongwith proper explanation relatingto material departures;

(ii) The Directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that arereasonable and prudent, so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year, andof the profit or loss of the Company for that period;

(iii) The Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance withthe provisions of the Companies Act, 1956 for safeguarding theassets of the Company, and for preventing and detecting fraud andother irregularities; and


ADDITIONAL INFORMATIONAs your Company does not carry on any manufacturing activity,information in accordance with the provisions of Section 217 (1) (e) ofthe Companies Act, 1956 read with the Companies (Disclosure ofParticulars in the Report of the Board of Directors) Rules, 1988 is notfurnished herewith.

PARTICULARS OF DEPOSITSThe Company has not accepted any deposits under Section 58A of theCompanies Act, 1956.

PARTICULARS OF EMPLOYEESThe Company does not have any employee who is covered under theprovisions of Section 217 (2A) of the Companies Act, 1956 read withthe Companies (Particulars of Employees) Rules, 1975.

AUDITORSM/s. Mitra Mitra & Associates, Chartered Accountants, the StatutoryAuditors of the Company, cease to hold office at the conclusion of theensuing Annual General Meeting and offer themselves for re-appointment. The Company has received from them a Certificate to theeffect that their re-appointment, if made, would be in conformity withthe limits specified under Section 224(1B) of the Companies Act, 1956.

For and behalf of Board of DirectorsNew Delhi S.C. CHOPRA DirectorJUNE 2, 2004 K.S. RAMSINGHANEY Director




AUDITORS’ REPORT

TO THE MEMBERS OF PHARMAX CORPORATION LIMITEDWe have audited the attached Balance Sheet of PHARMAXCORPORATION LIMITED as on 31st March, 2004 and also Profit andLoss Account for the year ended on that date annexed thereto. Thesefinancial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on thesefinancial statements based on our audit.

We conducted our audit in accordance with auditing standardsgenerally accepted in India. Those Standards require we plan andperform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessingthe accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis forour opinion.

As required by the Companies (Auditor’s Report) Order, 2003 issuedby the Central Government of India in terms of sub-section (4A) ofSection 227 of the Companies Act, 1956, we enclose in the Annexurea statement on the matters specified in Paragraphs 4 and 5 of the saidOrder to the extent applicable to the Company.Further to our comments in the Annexure referred to above, we reportthat:i We have obtained all the information and explanations, which to

best of our knowledge and belief were necessary for the purpose ofour audit;

ii In our opinion, proper books of account as required by law havebeen kept by the company so far as appears from our examinationof those books;

iii The Balance Sheet and Profit and Loss Account dealt with by thisreport are in agreement with the books of account;

iv In our opinion, the Balance Sheet and Profit and Loss Accountdealt with by this report comply with the accounting standardsreferred to in sub-section (3C) of Section 211 of the CompaniesAct, 1956;

v On the basis of written representations received from the directors,as on 31st March, 2004 and taken on record by the Board ofDirectors, we report that none of the directors is disqualified as on31st March 2004 from being appointed as a director in terms ofclause (g) of sub-section (1) of section 274 of the Companies Act,1956;

vi In our opinion and to the best of our information and according tothe explanations given to us, the said accounts give the informationrequired by the Companies Act, 1956, in the manner so requiredand give a true and fair view in conformity with the accountingprinciples generally accepted in India:a) in the case of the Balance Sheet, of the state of affairs of the

Company as at 31st March, 2004; andb) in the case of the Profit and Loss Account of the Profit for the

year ended on that date.

For Mitra Mitra & AssociatesChartered Accountants

AMIT MITRANew Delhi Partner02 JUN 2004 Membership Number 94518




1 The company has maintained proper records to show full particulars,including quantitative details and situation of fixed assets.

2 The fixed assets have been physically verified by the managementduring the year and as per the explanation furnished to us, thereexists a program of verification which, in our opinion, is reasonablehaving regard to the size of the Company and the nature of itsassets. No material discrepancies were noticed on such verification.

3 The Company, being in the field of management of real estate, hasno inventories; hence the provisions of Clauses 4 (ii) (a) to 4 (ii) (c)of Companies Auditors Report Order 2003 have been found to benot applicable.

4 As informed to us, the Company has neither granted nor taken anyloans, secured or unsecured to/from Companies, firms or otherparties listed in the register maintained under Section 301 of theCompanies Act, 1956.

5 In our opinion and according to the information and explanationsgiven to us, there are adequate internal control procedurescommensurate with the size of the Company and the nature of itsbusiness with regard to the purchase of fixed assets and with regardto the sale of services. We have not observed any failure by themanagement to correct any major weaknesses observed.

6 Based on the information and explanations given to us, there areno transactions with Parties covered u/s 301 of the Companies Actand hence the provisions of Clauses 4(v)(a) and 4(v)(b) have beenfound to be not applicable to the Company.

7 The Company has not accepted any deposits from the Public andhence the provisions of Sections 58A and 58AA of the CompaniesAct, 1956 and the rules framed there have been found to be notapplicable. As per the information available, no order has beenpassed by the Company Law Board in this regard.

8 The company has an internal audit system commensurate with itsnature and size of the business.

9 The Central Government has not prescribed the maintenance ofcost records under Section 209 (1)(d) of the Companies Act, 1956for the Company.

10 According to the records of the Company, the Company is regular indepositing with appropriate authorities undisputed statutory duesincluding, income-tax and other statutory dues applicable to it.According to the information and explanations given to us, noundisputed amounts payable in respect of income tax, wealth-tax,were outstanding, as at 31st March 2004 for a period of more thansix months from the date they became payable. According to therecords of the company, there are no dues outstanding of incometax, Wealth tax, Cess on account of any dispute.

ANNEXURE T O T H E A U D I T O R ’ S R E P O R T O F P H A R M A X C O R P O R A T I O N L I M I T E D F O R T H EY E A R E N D E D 3 1 S T M A R C H , 2 0 0 4

11 The Company has not incurred any cash losses during the financialyear covered by our audit and the immediately preceding financialyear.

12 Based on the information and explanations given to us and basedon the documents and records produced to us we state that thecompany has taken a term loan from Canara Bank and not defaultedin repayment of dues to the bank.

13 According to the information and explanation given to us and basedon the documents and records produced to us, the Company hasnot granted loans and advances on the basis of security by way ofpledge of shares, debentures and other securities.

14 Based on the information and explanations given to us by themanagement, has utilised the long-term loan availed from CanaraBank for the purpose for which it borrowed.

15 As per the books and records examined by us, in respect of dealingor trading in shares, securities, debentures and other investments,proper records have been maintained of the transactions andcontracts and timely entries have been made therein and thesecurities consisting of mainly units were held by the Company inits own name.

16 Based on the information and explanations given to us and basedon the documents and records produced to us, the funds raised onshort term basis have not been used for long-term investmentsand vice versa.

17 The Company has not made any preferential allotment of shares toparties and companies covered in the register maintained undersection 301 of the Act.

18 Based upon the audit procedures performed by us for expressingour opinion on these financial statements and information andexplanations given by the management, we report that no fraud onor by the Company has been noticed or reported during the courseof our audit.

19 Other Clauses of the Companies (Auditor’s Report) Order 2003have been found to be not applicable to the Company.

For Mitra Mitra & AssociatesChartered Accountants

New Delhi AMIT MITRA02 JUN 2004 Partner




RUPEESSCHEDULE As at As at

March 31, 2004 March 31, 2003

SOURCES OF FUNDSSHAREHOLDERS’ FUNDSShare Capital 1 205,262,987 205,533,187

LOAN FUNDS 2Secured Loan 60,883,358 76,558,453Unsecured Loan 257,499,961 110,593,868

523,646,306 392,685,508

APPLICATION OF FUNDSFIXED ASSETS 3Gross Block 140,478,223 142,028,223Less: Depreciation 26,134,528 21,702,021Net Block 114,343,695 120,326,202Capital Work in-Progress — 313,740

114,343,695 120,639,942

INVESTMENTS 4 150,000,000 —

CURRENT ASSETS, LOANS & ADVANCES 5Sundry Debtors 2,806,209 6,034,559Cash & Bank Balances 3,034,132 612,852Loans & Advances 164,790,064 128,089,613

170,630,405 134,737,024Less: CURRENT LIABILITIES & PROVISIONS 6Current Liabilities 78,017,574 33,497,066Provisions 9,934,000 9,628,409

87,951,574 43,125,475


MISCELLANEOUS EXPENDITURE 7 107,418 168,994(To the extent not written off or adjusted)Profit & Loss Account 176,516,362 180,265,023

523,646,306 392,685,508

SIGNIFICANT ACCOUNTING POLICIES 11CONTINGENT LIABILITIES & NOTES TO ACCOUNTS



S.C. CHOPRA DirectorV. SESHADRI Director

“As per our report attached”

For and on behalf ofMitra Mitra & AssociatesChartered Accountants

AMIT MITRAPartner

New Delhi02 JUN 2004




RUPEESSCHEDULE For the Year For the Year

01.04.2003 to 01.04.2002 to31.03.2004 31.03.2003

INCOMEService Income * 120,000 220,965Lease Rentals ** 40,399,001 43,996,299Other Income 8 13,955,896 15,628,776

54,474,897 59,846,040* Tax Deducted At Source Rs. Nil (Previous Year Rs. 0.16 Lacs)

** Tax Deducted At Source Rs. 94.44 Lacs (Previous Year Rs. 84.21 Lacs)

EXPENDITUREAdminstrative and Other Expenses 9 13,446,827 10,965,931Amortisation of Miscellaneous Expenses 61,576 116,527Interest 10 25,686,862 26,822,959Depreciation 4,700,971 4,473,584

43,896,236 42,379,001

PROFIT/(LOSS) BEFORE TAX 10,578,661 17,467,039

Provision for Taxation 6,830,000 3,104,000

PROFIT/(LOSS) AFTER TAX 3,748,661 14,363,039

LOSS BROUGHT FORWARD (180,265,023) (194,628,062)

LOSS CARRIED FORWARD (176,516,362) (180,265,023)

Earning Per Share (Face value Re. 1/-)Basic (1.48) 1.04Diluted (1.48) 0.26

Number of Shares used in computing earning per shareBasic 11,112,456 9,114,052Diluted 11,112,456 55,533,152

SIGNIFICANT ACCOUNTING POLICIES 11CONTINGENT LIABILITIES & NOTES




“As per our report attached”


AMIT MITRAPartner






RUPEESAs at As at

March 31, 2004 March 31, 2003

1 SHAREHOLDERS’ FUNDSSHARE CAPITALAuthorised60,000,000 Equity Shares of Re. 1/- each 60,000,000 17,500,000(Previous year 17,500,000 Equity Shares of Re. 1/- each)

12% Nil Cumulative Preference Shares of Rs. 100/- each — 2,500,000(Previous year 12% 25,000 Cumulative Preference Shares of Rs. 100/- each)

10% 470,000 Cumulative Convertible PreferenceShares of Rs. 100/- each (Previous year 10% 600,000 47,000,000 60,000,000Cumulative Convertible Preference Shares of Rs. 100/- each)

9% 1,500,000 Cumulative Redeemable PreferenceShares of Rs. 100/- each (Previous year 9% 1,500,000 Cumulative 150,000,000 150,000,000Redeemable Preference Shares of Rs. 100/- each)

257,000,000 230,000,000

Issued, Subscribed & Paid Up54,827,552 Equity Shares of Re. 1/- each fully paid up 54,827,552 9,114,052(Previous year 9,114,052 equity shares of Re. 1/- each)(of the above Shares, 9,113,982 Equity Shares werealloted as fully paid up for consideration other thancash in terms of a Scheme of Arrangement approvedand sanctioned by the Hon’ble High Court of Punjab

& Haryana in the year 1990-91)

[of the above 47,117,247 (Previous Year 4,386,147) Equity sharesare held by Max India Ltd, the Holding Company][Also Refer Note 3a of Schedule 11 (B)]

11,124 10% Cumulative Convertible Preferenceshares of Rs. 100/- each, (Previous year 468,259 1,112,400 46,825,90010% Cumulative Convertible Preference Shares of Rs. 100/- each)

Less: Allotment money to be received (676,965) (406,765)[Refer Note 3b of Schedule 11 (B)]

9% 1,500,000 Cumulative Redeemable PreferenceShares of Rs. 100/- each (Previous year 9% 1,500,000 Cumulative 150,000,000 150,000,000Redeemable Preference Shares of Rs. 100/- each)(Redeemable at par on or before 31st March, 2019at the discretion of the Board.)[of the above 1,500,000 (Previous Year 1,500,000) shares

are held by Max India Ltd, the holding company]

205,262,987 205,533,187





RUPEESAs at As at

March 31, 2004 March 31, 2003

2 LOAN FUNDS

SECURED LOANSLoans and Advances from Banks * 60,883,358 76,558,453(Secured against charge of monthly Lease

Rentals receivable from various lessee and

equitable Mortgage of undivided share of

Freehold Property at Okhla)

* Amount repayable with in one year Rs. 177.18 Lacs (Previous year Rs. 156.75 Lacs)

UNSECURED LOANSInter Company Loans**— Due to the holding company 104,476,789 109,079,418— Others 153,023,172 1,514,450

318,383,319 187,152,321** Amount repayable within one year Rs. 2575.00 Lacs (Previous year Rs. 1105.94 Lacs)

3 FIXED ASSETSRUPEES


Particulars As at Additions Deletions As at As at During Deletions/ As at As at As at

April 01, during during March 31, April 01, the Year Adjustments March 31, March 31, March 31,

2003 the year the year 2004 2003 2004 2004 2003

Land (Freehold) 84,296 — — 84,296 — — — — 84,296 84,296

Land (Leasehold) 182,365 — — 182,365 — — — — 182,365 182,365

Building 71,713,373 — — 71,713,373 6,195,393 1,168,013 — 7,363,406 64,349,967 65,517,980

Plant & Machinery 67,638,777 — — 67,638,777 15,169,586 3,212,842 — 18,382,428 49,256,349 52,469,191

Furniture & Fixtures 525,412 — — 525,412 133,260 31,738 — 164,998 360,414 392,152

Computers 84,000 — — 84,000 61,903 13,373 — 75,276 8,724 22,097

Software 1,550,000 — 1,550,000 — 17,209 251,255 268,464 — — 1,532,791

Vehicles 250,000 — — 250,000 124,670 23,750 — 148,420 101,580 125,330

Total 142,028,223 — 1,550,000 140,478,223 21,702,021 4,700,971 268,464 26,134,528 114,343,695 120,326,202Previous Year 140,583,423 1,550,000 105,200 142,028,223 17,255,869 4,473,584 27,432 21,702,021

Capital Work in Progress * 313,740

114,343,695 120,639,942

* Includes advances to suppliers Rs. Nil (Previous year Rs. 3,13,740)

Refer note no C,D, G of Schedule 11(A) and note 4 of Schedule 11 (B)

Also Refer note 4 b (i) of Schedule 11 B for assets given on operating lease





RUPEESAs at As at

March 31, 2004 March 31, 2003

4 INVESTMENTS-CURRENT (UNQUOTED)*(NON TRADE)1) 4,999,350.084 Units (Face Value Rs. 10/-) of Alliance Cash Manager 50,000,000 —2) 4,725,183.337 Units (Face Value Rs. 10/-) of GCDB Grindlays Cash Fund 50,000,000 —3) 4,988,327.3141 Units (Face Value Rs. 10/-) of Kotak Liquid Institutional Plan 50,000,000 —

150,000,000 —* NAV as on 31.03.2004 is Rs. 1509.00 Lacs (Previous year Rs. Nil)

5 CURRENT ASSETS, LOANS & ADVANCESSUNDRY DEBTORS**(Unsecured)i) Due for More than six months

- Considered Good 1,196,767 1,799,121- Considered Doubtful — 2,749,614Less: Provision for Doubtful debts — (1,189,614)

1,196,767 3,359,121ii) Others - Considered Good 1,609,442 2,675,438

2,806,209 6,034,559** The above amounts include debts due from companies under the same management:i) Max India Ltd. Rs. 21,199/- (Previous Year Rs. 171,326/-), Maximum balance outstanding during the year Rs. 292,562/- (Previous Year Rs. 171,326/-)ii) Max Healthcare Institute Ltd. Rs. 2,785,010/- (Previous Year Rs. 3,267,605/-), Maximum balance outstanding during the year Rs. 3,586,042/-

(Previous Year Rs. 3,267,605/-)iii) Comsat Max Ltd. Rs. Nil (Previous Year Rs. 72,738/-), Maximum balance outstanding during the year Rs. Nil (Previous Year Rs. 72,738/-)iv) Neeman Medical International Asia Ltd. Rs. Nil (Previous Year Rs. 407,640/-), Maximum balance outstanding during the year Rs. Nil (Previous Year

Rs. 407,640/-)

CASH & BANK BALANCESCash in Hand 37,121 35,872Cheques in Hand 51,277 203,820With Scheduled Banks in Current Accounts 2,945,734 373,160

3,034,132 612,852LOANS & ADVANCES(Unsecured and considered good unless otherwise stated)

Advances recoverable in cash or in kindor for value to be received- Considered Good 50,109,239 4,586,313- Considered doubtful 1,492,368 1,492,368Less: Provision for Doubtful Advances (1,492,368) (1,492,368)Inter Corporate Deposits*- Considered Good 85,750,000 85,675,000- Considered doubtful — —Prepaid Expenses 28,341 30,762Advance Income Tax 28,524,346 37,419,400Security Deposits 378,138 378,138

164,790,064 128,089,613

* The above amounts include debts due from companies under the same management:

Comsat Max Ltd. Rs. 6,000,000/- (Previous Year Rs. 6,000,000/-), Maximum balance outstanding during the year Rs. 6,000,000/- (Previous Year

Rs. 6,000,000/-)





RUPEESAs at As at

March 31, 2004 March 31, 2003

6 CURRENT LIABILITIES & PROVISIONS

CURRENT LIABILITIESSundry Creditors— Outstanding dues of small scale industrial undertakings — —— Outstanding dues of creditors other than small scale

Industrial undertakings 484,082 736,359Other Liabilities 77,195,345 32,760,707Interest accrued but not due 338,147 —

78,017,574 33,497,066PROVISIONSLeave Encashment — 9,409Income Tax 9,934,000 9,619,000

9,934,000 9,628,409Total Current Liabilities 87,951,574 43,125,475

7 MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)

[Refer Note 6 of schedule 11(b)]

Preliminary Expenses 107,418 168,994107,418 168,994

For the Year For the Year1.04.2003 to 1.4. 2002 to31.03.2004 31.3.2003

8 OTHER INCOME

Interest on Inter Corporate Loans (Gross) * 12,757,321 15,548,497Unclaimed balances written back (Net) 1,022,286 80,279Miscellaneous Income 67,047 —Net Profit on sale of Non trade investments - Current 109,242 —[Refer Note 7 of Schedule 11(B)]

13,955,896 15,628,776* Tax deducted at source Rs. 23.82 Lacs (Previous Year Rs. 32.65 Lacs)




For the Year For the Year1.04.2003 to 1.4. 2002 to31.03.2004 31.3.2003

9 ADMINISTRATIVE AND OTHER EXPENSESCompensation Expenses 50,000 —Rates and Taxes 8,753,457 8,715,598Insurance 111,076 115,277Legal and Professional Charges 425,997 182,000Filing Fee 139,000 3,050Travelling and Conveyance 132,759 100,964Repairs and Maintenance - Building 20,000 —Repairs and Maintenance - Others 261,865 515Printing & Stationery 333,146 169,516Donation — 1,000Prior Period Expenses (Refer Note 8 of Schedule 11(b)) 1,525,583 1,375Miscellaneous 98,668 21,143Assets written off 1,281,536 77,769Provision for Doubtful Amounts — 1,549,724Debit balances written off 313,740 28,000

13,446,827 10,965,931

10 INTERESTInterest on fixed loan 8,821,465 10,735,705Other Interest 16,865,397 16,087,254

25,686,862 26,822,959





11 SIGNIFICANT ACCOUNTING POLICIES, CONTINGENT LIABILITIES AND NOTES TO THE ACCOUNTS

A. SIGNIFICANT ACCOUNTING POLICIESa Accounting Convention

The Financial Statements are prepared under the historical cost convention on an accrual basis and in accordance with accounting standardsissued by the Institute of Chartered Accountants of India.

b Revenue Recognition(i) In respect of lease rentals, the revenue which arises is recognized proportiontely over the period of the related agreements.(ii) Interest is recognized on time proportionate basis, taking into the account the amount outstanding and the rates applicable.

c Fixed AssetsFixed Assets are stated at their original cost including freight, duties (net of MODVAT), taxes and other incidental expenses relating toacquisition and installation less accumulated depreciation.

d Depreciation(i) Depreciation on fixed assets is charged on straight-line method on a pro-rata basis to the date of addition/deletion at rates prescribed

under Schedule XIV to the Companies Act, 1956.(ii) Assets costing less than Rs. 5000/- each individually are depreciated at 100%.

e Investments(i) Investments are classified into current investments and long-term investments. The cost of investments includes acquisition charges such

as brokerage, fees and duties.(ii) Long-term investments are valued at cost. Provision for diminution is made to recognize a decline, other than temporary.

f Miscellaneous ExpenditurePreliminary Expenditure represents cost incurred for incorporation of the Company and expenses incurred on Rights Issue. These are beingwritten off over a period of 10 years.

g Accounting for LeasesThe assets given under operating lease are shown in the balance sheet under fixed assets and depreciated on a basis consistent with thedepreciation policy of the Company. The lease income is recognised in the Profit and Loss account on accrual basis. The initial direct costincurred for finalising the lease arrangement is recognised as expense immediately in profit and loss account.

h TaxationProvision for tax consists of current tax and deferred tax, which is computed for current income based on the tax liability after consideringallowances and exemptions. Deferred tax assets and liabilities when applicable are computed on timing difference at the balance sheet datebetween the carrying amount of assets and liabilities and their respective tax bases. Deferred tax assets are recognised based on managementestimates of available future taxable income and assessing its certainty.

B. CONTINGENT LIABILITIES AND NOTES.

1 Contingent Liability(i) (a) Arrears of dividend on 10% Cumulative Convertible Preference Share is Rs. 335.48 Lacs (Previous year Rs. 291.33 Lacs). Corporate

Dividend Tax thereon is Rs. 42.99 Lacs (Previous year Rs. 37.33 Lacs)(b) Arrears of dividend on 9% Cumulative Redeemable Preference Share is Rs. 540.00 Lacs (Previous year Rs. 405.00 Lacs). Corporate

dividend tax thereon is Rs. 69.19 Lacs (Previous year Rs. 51.89 Lacs)(ii) Claims against the Company not acknowledged as debts Rs. 5.77 Lacs (Previous year Rs. 4.36 Lacs)(iii) Debtors include amount due of Rs. Nil (Previous year Rs. 26.92 Lacs) for which the Company has filed legal suits for recovery.

2 Though reasonable efforts were made by the Company to appoint, the Company does not have any whole time Company Secretary as requiredunder Section 383A of the Companies Act, 1956.

3a As per terms of the issue, the Company on 16th March 2004, converted 4,57,135 10% Cumulative Convertible Preference Share of Rs. 100/-each fully paid up into 45,713,500 equity shares of Re. 1/- each fully paid up.

3b Pending reconciliation of the allotment money receivable for remaining 11,124 10% Cumulative Convertible Preference Share of Rs. 100/-each the conversion will be taken up at a latter date to be decided by the board.




4 LeasesAccounting for lease has been done in accordance with Accounting Standard–19 issued by the Institute of Chartered Accountants of India.Following are the details of the transaction for the year:a) Finance Lease:

The Company does not have any finance lease arrangement.b) Operating lease Income

i) Details of Assets given under operating lease are as under:RUPEES

Particulars Gross value as at Additions/ Total value of Depreciation Depreciation Net valueApril 01, 2003 (deletion) during assets given during the year reserve upto of Assets

the year on lease March 31, 2004Land 266,661 — 266,661 — — 266,661Building 71,713,373 — 71,713,373 1,168,013 7,363,406 64,349,967Plant & Machinery 67,638,777 — 67,638,777 3,212,842 18,382,428 49,256,349Total 139,618,811 — 139,618,811 4,380,855 25,745,834 113,872,977Previous Year 139,618,811 — 139,618,811 4,380,855 21,364,979 118,253,832

ii) There are no leases entered by the company which are classified as non cancelable lease.iii) The company has entered into lease contracts (cancelable) for its assets as mentioned above with various parties including group

companies as under:iv) Description of the significant leasing arrangements

The Company has given its assets on operating lease to different parties for various periods, renewable on mutual agreement. A list ofthe significant lease arrangements is given below:

Lease Rent (Per Month) in Rs. Lease PeriodAssociated Merchandising Corporation 1,394,838 01.02.2003 to 31.01.2006Max India Ltd (the holding company) 967,080 01.12.2002 to 30.11.2005Maersk India Ltd 607,200 01.01.2000 to 31.12.2005Max Healthcare Institute Ltd 332,965 01.04.2003 to 31.03.2005Neeman Medical International (Asia) Ltd 64,500 01.04.2002 to 31.03.2005

5 Deferred Taxa) Since the main income of the Company (Lease Rentals) is taxed under the head “Income from House Property” and the expenses are not

claimed as Business expenses therefore, there are no timing difference at the balance sheet date between carrying amount of assets andliabilities and their respective tax bases thus no deferred tax Liability/Asset has been created therefore.

b) No deferred tax asset has been created on account of the carry-forward business losses since there is no reasonable certainty of utilizingthem at a future date.

6 Miscellaneous Expenditure representsRUPEES

Balance as on Additions Amortized during Balance as on31.03.2003 the year 31.03.2004

Preliminary Expenses 168,994 — 61,576 107,418

7 During the year, the Company purchased and sold following Current Non Trade Investments (unquoted):

Purchase SalesName of the Investment Face Value Number of Units Value Number of Value

(Rupees) Purchased (Rs Lacs) Units Sold (Rs Lacs)Birla Sun Life Mutual Funds 10 428,226.226 70 432,416.792 * 70.68HSBC Mutual Funds 10 9,575,975.792 1000 9,583,382.144 ** 1,000.40

* 4190.556 units were issued and added under profit reinvestment plan

** 7406.352 units were issued and added under profit reinvestment plan




8 Break up of prior year expensesRUPEES

Prior year Expense Current Year Previous YearRepair & Maintenance – Building 10,000 —Rates & Taxes 1,372,355 1,375Legal & Professional 143,228 —Total 1,525,583 1,375

9 Auditors RemunerationRUPEES

Description Current Year Previous YearAs Audit Fees (including service tax) 32,400 31,500Certification Fees (including service tax) 2,430 —

Total 34,830 31,500

10 During the year, the Company shared the services of some of the employees of its associate Companies and was charged the costs attributableto the Company in accordance with the respective service agreements.

11 No liability has been provided for Leave encashment and other retirement benefits since there are no employees in the Company.

12 Other disclosure requirements of Schedule VI part II are not applicable to the Company.

13 There are no amounts due to parties classified as small-scale industrial undertaking.

14 Previous year figures have been regrouped and rearranged wherever necessary to make them comparable with current year figures.



Signatures to Schedules 1 to 11“As per our report attached”


AMIT MITRAPartner






Registration No. 0 0 0 9 7 4 1 State Code 1 6Balance Sheet Date 3 1 0 3 2 0 0 4

Date Month Year

II CAPITAL RAISED DURING THE YEAR (Amount in Rs. Thousand)Public Issue Right IssueN I L N I LBonus Issue OthersN I L N I L


5 2 3 6 4 5 5 2 3 6 4 5

SOURCES OF FUNDS

Paid-up Capital Reserve & Surplus2 0 5 2 6 3

Secured Loans Unsecured Loans6 0 8 8 3 2 5 7 4 9 9


Net Fixed Assets Investments1 1 4 3 4 4 1 5 0 0 0 0

Net Current Assets Misc. Expenditure8 2 6 7 8 1 0 7



5 4 4 7 5 4 3 8 9 6+ - Profit/Loss before tax + - Profit/Loss after tax✓ 1 0 5 7 9 ✓ 3 7 4 9+ - Earning per Share in Rs. Dividend Rate (%)

✓ 1 . 4 8 N I L

V NAME OF THREE PRINCIPAL PRODUCTS/SERVICE OF COMPANYProduct Descriptionn L E A S I N G O F E S T A T E S

Item Code No. (ITC code) N . A


MAX ATEEV LIMITED

MaxAteev 305-317.p65 9/14/2004, 11:33 AM305

M A X A T E E V L I M I T E D


DIRECTORS’ REPORT

Your Directors have pleasure in presenting their tenth Annual Reportalong with the Audited Accounts for the financial year ended March31, 2004.

FINANCIAL RESULTSDuring the year under review, your Company achieved a gross revenueof Rs. 121.0 Lacs (previous year Rs. 555.82 Lacs). Your Companyincurred a loss after tax of Rs. 600.49 Lacs (previous year Rs. 1150.17Lacs).

OPERATIONSYour Company was engaged in Knowledge Management Practice duringthe year under review. Your Company continued to consolidate its marketposition and signed new sales orders during the year. Your Companyhas sold its knowledge management solutions to a wide spectrum ofcustomers like Goodlass Nerolac Paints, Max Healthscribe, EurekaForbes, Mahindra & Mahindra, Confederation of Indian Industry,Geologistics (India), Ma Foi Management Consultants, etc. As part ofthe operational restructuring exercise initiated last year, your Companyexplored various avenues.

Subsequent to the year end, your Company executed a BusinessTransfer Agreement for the sale of its Knowledge Management businessas a going concern on a slump sale basis effective April 1, 2004 toComsat Max Limited, an affiliate company.

Comsat Max Limited offers services that cut across the industrysegments of telecom, IT, BPO and more broadly IT enabled services inthe areas of networking, business continuity and knowledge solutions.Your Company believes that there are natural synergies in the businessoperations of Comsat Max Limited and the knowledge managementpractice of your company and consequently the knowledge managementbusiness will strategically benefit from integration with larger businessoperations of Comsat Max Limited.

DIVIDENDIn view of the losses, your Directors do not recommend any dividend forthe year under review.

DIRECTORSIn accordance with the provisions of the Companies Act 1956 and theCompany’s Articles of Association, Mr. Analjit Singh is due to retire byrotation and is eligible for re-appointment.

AUDIT COMMITTEEPursuant to the provisions of Section 292 A of the Companies Act,1956,the Board of Directors had constituted an Audit Committee of Directorslast year. Currently, the Audit Committee comprises of Mr. Analjit Singh,Mr. B. Anantharaman and Mr. Surendra Kaul. The current terms ofreference fully conform to the requirements of Section 292A of theCompanies Act, 1956.

PARTICULARS OF DEPOSITSYour Company has not accepted any deposit from the public during theyear under review. There were no unclaimed /over due deposit as atMarch 31, 2004.

DIRECTORS’ RESPONSIBILITY STATEMENTAs per the provisions of Section 217(2AA) of the Companies Act,1956,the Directors confirm that:(i) in the preparation of annual accounts, the applicable accounting

standards have been followed along with proper explanationrelating to material departures;

(ii) the Directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial yearand of the profit or loss of the Company for that period;

(iii) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Companies Act, 1956 for safeguardingthe assets of the Company and for preventing and detectingfraud and other irregularities; and

(iv) the Directors had prepared the annual accounts, on a goingconcern basis.

ADDITIONAL INFORMATIONInformation in accordance with the provisions of Section 217 (1) (e) ofthe Companies Act, 1956 read with the Companies (Disclosure ofParticulars in the Report of the Board of Directors) Rules, 1988 aregiven hereunder:

i CONSERVATION OF ENERGYThe nature of your Company’s operation does not involve intensiveenergy consumption. However, the Company has taken adequatemeasures to maintain energy efficient infrastructure.

ii TECHNOLOGY ABSORPTION : N.A.

iii ACTIVITIES RELATING TO EXPORTSThe knowledge management software solution has good exportpotential since the product offered by your Company comparesfavourably with the products being sold by global technology playerssuch as Microsoft, Wipro, PWC, etc. During the year under review,your Company continued with its business development efforts forthe sale of this product outside India.

iv FOREIGN EXCHANGE EARNINGS AND OUTGO

(Rs. In Crore)Year ended Year ended

March 31, 2004 March 31, 2003

a Foreign Exchange Earnings — 3.16b Foreign Exchange Outgo

i C.I.F. value of imports(Capital goods) —- —

ii Others (Expenditure inforeign currency) 0.03 0.86

MaxAteev 305-317.p65 9/14/2004, 11:33 AM306



PARTICULARS OF EMPLOYEESINFORMATION AS PER SECTION 217(2A) OF THE COMPANIES ACT, 1956 READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975 FOR THE

YEAR ENDED MARCH 31, 2004 IS AS UNDER:Sl. Name Age Designation Remuneration Qualification Date of Experience Last DesignationNo. (Yrs.) (in Rs.) Commencement (Yrs.) Employment held

of employment

Employed throughout the year and was in receipt of remuneration of not less than Rs. 24,00,000/- per annum1 Patil, Rajesh 38 Chief Executive 4,686,691 B.E., M.S. 01.04.2001 14 Max India Limited Chief Executive

Notes 1. Remuneration includes salary, allowances, value of rent free accommodation, bonus, medical reimbursement, leave travel assistance, gratuity, company’scontribution to provident fund and pension, leave encashment and monetary value of perquisites.

2. The above employee is not a relative of any Director of the Company3. The services are contractual in nature.4. The designation of the aforesaid employee is indicative of the nature of duties also and governed by the general terms and conditions of the employment

contract with the Company.5. The above employee does not hold by himself or along-with his spouse and dependent children 2% or more of equity shares of the Company.

AUDITORSM/s Price Waterhouse, Chartered Accountants, Auditors of the Companyretire at the conclusion of the ensuing Annual General Meeting and areeligible for re-appointment. The Company has received from them aCertificate to the effect that their re-appointment, if made, will be inaccordance with the limits specified under Section 224(1B) of theCompanies Act, 1956.

AUDITORS’ REPORTThe observations of the Auditors are explained wherever necessary, inthe appropriate notes to the accounts. In addition, as already explainedmore fully in the operations section, subsequent to the end of currentfinancial year, the Company has decided to divest its knowledge

management business as a going concern on slump sale basis for aconsideration of Rs. 2.55 Crore to Comsat Max Limited, an affiliatecompany, effective April 1, 2004. Post completion of the aforesaidtransaction, the Company will not have any other business operation.

ACKNOWLEDGEMENTSYour Directors acknowledge and appreciate the support received fromMax India Limited, its business partners and employees.

For and on behalf of the BoardNew Delhi ANALJIT SINGHJUNE 24, 2004 Chairman

MaxAteev 305-317.p65 9/14/2004, 11:33 AM307



TO THE MEMBERS OF MAX ATEEV LIMITED1 We have audited the attached Balance Sheet of Max Ateev Limited



3 As required by the Companies (Auditor’s Report) Order, 2003 issuedby the Central Government of India in terms of sub-section (4A) ofSection 227 of ‘The Companies Act, 1956’ of India (the ‘Act’) andon the basis of such checks of the books and records of the companyas we considered appropriate and according to the information andexplanations given to us, we further report that:i (a) The company is maintaining proper records showing full



(c) In our opinion, the company has not disposed of asubstantial part of fixed assets during the year. However,we draw attention to Note B1 on Schedule 14.


iii In our opinion and according to the information andexplanations given to us, there are adequate internal controlprocedures commensurate with the size of the company andthe nature of its business for the purchase of fixed assets andfor the sale of goods. Further, on the basis of our examinationof the books and records of the company, and according to theinformation and explanations given to us, we have neither comeacross nor have been informed of any continuing failure tocorrect major weaknesses in the aforesaid internal controlprocedures.

iv In our opinion, the company has an internal audit systemcommensurate with its size and nature of its business.

v The Central Government of India has not prescribed themaintenance of cost records under clause (d) of sub-section(1) of Section 209 of the Act for any of the products of thecompany.

vi (a) According to the information and explanations given to usand the records of the company examined by us, in ouropinion, the company is regular in depositing theundisputed statutory dues including provident fund,investor education and protection fund, employees’ stateinsurance, income-tax, sales-tax, wealth tax, customs duty,excise duty, cess and other material statutory dues asapplicable with the appropriate authorities in India.

(b) According to the information and explanations given to us

and the records of the company examined by us, theparticulars of dues of sales-tax, income-tax, customs duty,wealth tax, excise duty and cess as at March 31, 2004which have not been deposited on account of a dispute,are as follows -

Name of Nature of Amount Period to Forum wherethe dues (Rs.) which the the dispute isstatute amount relates pending

Income Tax Disallowances Rs. 573,230 Assessment CommissionerAct, 1961 of certain Year 2001-02 Appeals,

expenditure New Delhi

vii The company has accumulated losses, as at March 31, 2004more than fifty percent of its net worth and has incurred cashlosses during the financial year and in the immediatelypreceding financial year. However, reference is drawn to NoteB1 on Schedule 14.

viii During the course of our examination of the books and recordsof the company, carried out in accordance with the generallyaccepted auditing practices in India, and according to theinformation and explanations given to us, we have neither comeacross any instance of fraud on or by the company, noticed orreported during the year, nor have we been informed of suchcase by the management.

ix The other clauses, (ii), (v), (vi), (xi), (xii), (xiii), (xiv), (xv), (xvi),(xvii), (xviii), (xix) and (xx) of paragraph 4 of the Companies(Auditor’s Report) Order, 2003 are not applicable in the caseof the company for the current year, since in our opinion thereis no matter which arises to be reported in the aforesaid order.







(f) In our opinion and to the best of our information and accordingto the explanations given to us, the said financial statementstogether with the notes thereon and attached thereto give in theprescribed manner the information required by the Act and givesubject to Note B1 on Schedule 14 regarding subsequent saleof the company’s business and the preparation of these accountson a going concern basis a true and fair view in conformity withthe accounting principles generally accepted in India:(i) in the case of the Balance Sheet, of the state of affairs of



V. NIJHAWANPartner

Membership Number F87228For and on behalf of

New Delhi Price WaterhouseJUNE 24, 2004 Chartered Accountants

AUDITORS’ REPORT

MaxAteev 305-317.p65 9/14/2004, 11:33 AM308



SCHEDULE (Rs. ’000)As at As at

31.03.2004 31.03.2003

SOURCES OF FUNDSSHAREHOLDERS’ FUNDSShare Capital 1 314,436 314,436

LOAN FUNDSUnsecured Loans 2 105 196

314,541 314,632APPLICATION OF FUNDSFIXED ASSETS 3Gross Block 96,614 140,276Less : Depreciation 74,518 61,841Net Block 22,096 78,435

INVESTMENTS 4 — —

DEFERRED TAX 5 — —

CURRENT ASSETS, LOANS & ADVANCES 6Sundry Debtors 38,804 40,981Cash and Bank Balances 1,620 2,543Loans & Advances 3,431 7,241

43,855 50,765LESS : CURRENT LIABILITIES & PROVISIONSCurrent Liabilities 7 88,829 91,572Provisions 8 1,134 1,512

89,963 93,084

NET CURRENT ASSETS (46,108) (42,319)MISCELLANEOUS EXPENDITURE 9 — 12(To the extent not written off or adjusted)

PROFIT & LOSS ACCOUNT 338,553 278,504

314,541 314,632







V. NIJHAWANPartner



MaxAteev 305-317.p65 9/14/2004, 11:33 AM309



SCHEDULE (Rs. ’000)For the Year For the Year

1.04.2003 to 1.04.2002 to31.03.2004 31.03.2003

INCOME(Refer Note A2 on Schedule 14)

Sales* 4,868 9,645Consultancy 10 569 36,017Service Income** 4,151 2,131Other Income 11 2,512 7,789* Tax deducted at source Rs. 3,538 (Previous year Rs. 1,05,146) 12,100 55,582** Tax deducted at source Rs. 185,046 (Previous year Rs. 72,307)

EXPENDITURESoftware purchased for resale 280 111Administration and Other Expenses 12 42,452 96,207Financial Expenses 13 43 290Depreciation 3 29,374 34,557

72,149 131,165

(LOSS) BEFORE TAX AND EXCEPTIONAL ITEMS (60,049) (75,583)Provision for Taxation

Deferred Tax 5 — (2,855)Wealth Tax — 4

(LOSS) AFTER TAX AND BEFORE EXCEPTIONAL ITEMS (60,049) (72,732)Exceptional items — 42,285(LOSS) AFTER TAX AND EXCEPTIONAL ITEMS (60,049) (105,017)(Loss) Brought Forward (278,504) (163,487)(LOSS) CARRIED FORWARD TO BALANCE SHEET (338,553) (278,504)

Earning Per Share (Rs. per equity share of Rs. 10/- each)Basic & Diluted EPS (Refer Note B7 on Schedule 14) (1.91) (5.56)







V. NIJHAWANPartner



MaxAteev 305-317.p65 9/14/2004, 11:33 AM310




31.03.2004 31.03.2003

1 SHARE CAPITALa Authorised

3,15,00,000 (Previous year 3,15,00,000) equity shares of Rs.10/- each 315,000 315,000315,000 315,000

b Issued, Subscribed & Paid Up(Refer Note B3 on Schedule 14)

3,14,43,600 (Previous year 3,14,43,600) equity shares of Rs. 10/- each 314,436 314,436314,436 314,436

2 UNSECURED LOANS (Refer Note B4 on Schedule 14)

From Banks 105 196105 196

Amount repayable within one year Rs. 105,472 (Previous year Rs. 91,005)

3 FIXED ASSETS(Refer Notes A4 & B4 on Schedule 14)

(Rs. ’000)


Particulars As On Additions Deletions As On As On Additions Deletions As On As on As on

1.4.2003 31.3.2004 1.4.2003 31.3.2004 31.3.2004 31.3.2003

Leasehold Improvements 36,783 — 36,783 — 10,424 1,579 12,003 — — 26,359

Plant and Machinery 3,243 — 454 2,789 349 142 37 454 2,335 2,894

Computer 22,268 737 5,423 17,582 15,466 4,980 4,180 16,266 1,316 6,802

Furniture & Fixtures 6,617 12 351 6,278 1,185 397 206 1,376 4,902 5,432

Office Equipment 3,151 51 395 2,807 360 153 116 397 2,410 2,791

Motor Vehicles 2,165 — 1,056 1,109 279 107 155 231 878 1,886

Technology Fees 66,049 — — 66,049 33,778 22,016 — 55,794 10,255 32,271

Total 140,276 800 44,462 96,614 61,841 29,374 16,697 74,518 22,096 78,435

Previous Year 140,459 3,746 3,929 140,276 27,732 34,557 448 61,841 78,435


31.03.2004 31.03.2003

4 INVESTMENTS(Refer Note A6 on Schedule 14)

Long term-Trade (unquoted)1,165,389 (Previous year 1,165,389) units of interest in LimitedLiability Company – Alta+Cast LLC, Delaware 42,285 42,285Provision for diminution (42,285) (42,285)

— —

5 DEFERRED TAX(Refer Notes A7 and B5 on Schedule 14)

Opening Balance (Deferred Tax Liability) 3,667 (2,855)Add: Created during the year 7,167 6,522Less: Valuation Allowance 10,834 3,667Closing balance — —

SCHEDULES A N N E X E D T O A N D F O R M I N G P A R T O F T H E A C C O U N T S FOR THE YEAR ENDED 31ST MARCH, 2004

MaxAteev 305-317.p65 9/14/2004, 11:33 AM311





31.03.2004 31.03.2003

6 CURRENT ASSETSSUNDRY DEBTORS(Refer Note B6 on Schedule 14)

(Unsecured)Debts exceeding six months - Considered good 38,638 39,026 - Considered doubtful 479 1,407 - Provision for doubtful debts (479) 38,638 (1,407) 39,026

Other Debts- Considered good 166 1,955- Considered doubtful — 171

- Provision for doubtful debts — 166 (171) 1,95538,804 40,981

Debts due from companies under the same managementNIL (Previous year Rs. 865,307/-)

CASH & BANK BALANCESCash * *Cheques in Hand 165 —With Scheduled Banks - in Current Accounts 284 1,421 - in Fixed Deposit (held under lien) 1,171 1,122

1,620 2,543* Cash in Hand Rs. 207 (Previous Year Rs. 16.07)

LOANS & ADVANCESAdvances recoverable in cash or in kind or for value to be received - Considered good 939 1,749 - Considered doubtful — 124 - Provision for doubtful advances — 939 (124) 1,749Security Deposit - Considered good 1,201 - Considered doubtful 2,635 - Provision for doubtful advances (2,635) 1,201 4,599Prepaid Expenses 39 40Advance income Tax 1,243 843Interest Receivable 9 10

3,431 7,241Advances due from companies under the same managementNIL (Previous year Rs. 69,432/-)

43,855 50,765

7 CURRENT LIABILITIES (Refer Note B13 on Schedule 14)

Sundry Creditors 19,154 24,813Other Liabilities 256 883Advance Income 96 131Due to holding company-Max India Ltd. 69,323 65,745

88,829 91,572

MaxAteev 305-317.p65 9/14/2004, 11:33 AM312





31.03.2004 31.03.2003

8 PROVISIONS (Refer Note A8 on Schedule 14)

Leave encashment 351 214Gratuity 286 181Superannuation 497 1,113Wealth Tax — 4

1,134 1,512

9 MISCELLANEOUS EXPENDITURE (Refer Note A10 on Schedule 14)

Preliminary ExpensesOpening Balance 12 24Less: Charged to Profit and Loss Account 12 12

— 12

(Rs. ’000)For the Year For the Year

01.04.2003 to 01.04.2002 to31.03.2004 31.03.2003

10 CONSULTANCY*Outside India — 35,059Domestic 569 958

569 36,017* Includes TDS Rs. 29,147 (Previous Year Rs. 6,527)

11 OTHER INCOMEInterest on: (Gross)**

– Fixed Deposits 72 77– Others 44 91

Liabilities no longer required written back 2,378 7,512Miscellaneous income 18 109

2,512 7,789** Includes TDS Rs 14,867 (Previous Year Rs 16,001)

MaxAteev 305-317.p65 9/14/2004, 11:33 AM313



(Rs. ’000)For the Year For the Year

01.04.2003 to 01.04.2002 to31.03.2004 31.03.2003

12 ADMINISTRATION AND OTHER EXPENSESPERSONNELSalaries and Wages 8,698 46,740Contribution to Provident and other Funds 565 1,883Recruitment and Relocation Expenses 34 2,740Employees Severance 404 7,002Staff Welfare 29 612ADMINISTRATION & OTHER EXPENSESLegal and Professional 660 2,771Travelling and Conveyance 1,025 7,196Rent-Net (Refer Note B8 on Schedule 14) * 768 10,043Communication 354 5,210Water and Electricity 313 2,652Hiring charges 118 1,287Rates & Taxes — 31Printing & Stationery 17 370Charity & Donation — 589Repairs and Maintenance-Plant & Machinery 91 427Repairs and Maintenance-Others 830 1,287Filing Fee 3 1,334Advertisement and Publicity 3 777Insurance 59 215Business Promotion 7 119Membership & Subscription 101 121Selling Expenses — 186Amortisation of Miscellaneous Expenditure 12 12Loss on sale of Fixed Assets 373 880Loss on Forex Fluctuation — 216Debit balances written off 12 479Assets/CWIP/Advances Written Off 24,935 4,000Provision for doubtful debts and advances 3,114 1,702Miscellaneous Expenses 4 121Prior Period Expenses 151 160Overheads recovered ** (228) (4,955)

42,452 96,207* Net of Recovery Rs.45,566/- (Previous Year Rs. 71,695/-)

** Tax deducted at source Rs. 3,196/- (Previous year Rs. 243,338/-)

13 FINANCIAL EXPENSESInterest paid 27 181Bank Charges 16 109

43 290


MaxAteev 305-317.p65 9/14/2004, 11:33 AM314




SCHEDULE–14A Significant Accounting Policies1 Accounting Convention

The Financial Statements are prepared under net realisable valueon accrual basis and in accordance with accounting standards issuedby the Institute of Chartered Accountants of India.

2 Revenue Recognitioni Revenue from software development on time and material

contracts is recognised based on the software developed andbilled to the clients as per the terms of specific contracts.

ii On fixed Priced contracts, revenue is recognised based onmilestones achieved as specified in the contracts on theproportionate-completion method.

iii Revenue from Annual Maintenance Services is recognisedproportionately over the period in which services are rendered.

iv Revenue from the sale of Licenses for the use of softwareapplications is recognised on transfer of the title in the user license.

3 ExpenditureThe cost of software purchased for use in software developmentand services is charged to revenue in the year the software isacquired.

4 Fixed Asset and Depreciationi Fixed assets are stated at cost of acquisition including freight,

duties and other incidental expenses relating to acquisitionand installation.

ii Depreciation on fixed assets is provided under the straight-linemethod on a pro-rata basis at rates prescribed by Schedule XIVto the Companies Act, 1956 except on computers which aredepreciated over a period of three years i.e. useful life of assetas estimated by the management and on LeaseholdImprovements, which are depreciated over the period of thelease.The technology fee capitalized is depreciated over a period ofthree years.

5 Borrowing CostsBorrowing Costs that are directly attributable to the acquisition,construction or production of a qualifying asset are capitalised aspart of the cost of that asset in accordance with Accounting Standard16 on “Borrowing Costs”. Other borrowing costs are charged torevenue.

6 InvestmentsLong term investments are valued at cost. Provision for diminutionis made only to recognise a permanent erosion in value.

7 Income TaxProvision for tax consists of current tax and deferred tax. Currenttax provision is computed for current income based on the tax liabilityafter considering allowances and exemptions. Deferred tax assetsand liabilities are computed on the timing differences at the BalanceSheet date between the carrying amount of assets and liabilitiesand their respective tax bases and carry forward of operating loss.Deferred tax assets are recognised based on management estimatesof available future taxable income and assessing their certainty.

8 Retirement BenefitsThe Company has various schemes of retirement benefits namelyProvident Fund and Gratuity. Accruals for gratuity and leaveencashment are made on actual basis at the year end. Accrual forSuperannuation is made on pro-rata basis @ 15% of the basicsalary drawn by the employee and as per superannuation policy onthe basis of number of years of service rendered.

9 Foreign Exchange Transactionsi Monetary assets and liabilities related to foreign currency

transactions remaining unsettled at the end of the year aretranslated at year-end rates.

ii The difference in translation of monetary assets and liabilitiesand realised gains and losses on foreign exchange transactions,other than relating to Fixed Assets, are recognised in the Profitand Loss Account.

iii Exchange difference in respect of liabilities incurred to acquireFixed Assets is adjusted to the carrying amount of the FixedAssets.

10 Miscellaneous ExpenditurePreliminary expenses are being amortised over a period of ten yearscommencing from the year in which the Company was incorporated.

B Notes to Accounts

1 Subsequent to the year end, the Company has decided to divestits knowledge management business as a going concern on a slumpsale basis with effect from April 01, 2004 for a consideration ofRs. 255 Lacs to Comsat Max Ltd, an affiliate company. Accordinglythe Company has entered into a Business Transfer Agreement withComsat Max Limited on April 28, 2004. The Company operatedin only one business segment i.e. knowledge management solutionsand does not have any other business operation. The financialimpact of the sale of knowledge management business would beconsidered in the ensuing financial statements.

2 Contingent Liabilities Current Year Previous Yeara Claims against the company

not acknowledge as debts 244,000 NILb Income-tax assessment for the assessment year 2001-02 was

completed under section 143 (3), of the Income Tax Act, 1961,a demand of Rs. 573,230/- has been created, the companyhas filed an appeal against the order before Commissioner ofIncome Tax (Appeals).

3 Out of the total share capital of Rs. 314,436,000/- as on 31.03.04,Max India Limited holds Rs. 314,435,800/- of the share capital,consisting of 3,1443,580 shares of Rs.10 each. The remainingshare capital of Rs. 200/- consisting of 20 shares of Rs. 10/- eachare held by nominees of Max India Limited.

4 The Company has entered into Loan agreements with ICICI Bankfor finance of Motor Vehicles. As at March 31, 2004 the outstandingliability stood at Rs.105,472/- (Previous year Rs. 196,477/-). Thevehicles are hypothecated in favour of ICICI Bank. Gross amountof the vehicle hypothecated is Rs. 323,000/- (Previous Year Rs.323,000/-)

MaxAteev 305-317.p65 9/14/2004, 11:33 AM315



5 Deferred Tax (Liability)/Asset(Amount in Rs.)

Particulars Opening As at Provision for Closing As atApril 1, 2003 the year March 31, 2004

Depreciation related 1,879,965 6,119,133 7,999,098

Deduction u/s 43B (60,215) — (60,215)

Other Provisions 1,859,448 1,047,812 2,907,260

Liability for increase in surcharge (12,240) — (12,240)

Net Deferred Tax (Liability)/Asset 3,666,958 7,166,945 10,833,903Less: Valuation Allowance 3,666,958 10,833,903

Net Nil

Valuation Allowance has been created due to uncertainties associated with the futurerealisibility of the Deferred Tax Asset as referred in Note B1 above.

6 Debtors include an amount of Rs. 38,186,512/- (Previous yearRs. 38,186,512/-), being services rendered for “consideration otherthan cash”, and realisable in equity for which the Company is yetto receive shares in accordance with RBI approval.


Current Year Previous YearBasic and DilutedProfit/(Loss) after tax(Amount Rs.’000) (60,049) (115,017)Weighted Average numberof Equity Shares 31,443,600 20,692,425EPS (Rupees) (1.91) (5.56)Share Details (Nos.)Outstanding as at thebeginning of the year 31,443,600 10,000,000Issued during the year(Previous year 30.09.2002) — 21,443,600Outstanding as at theend of the year 31,443,600 31,443,600

8 LeasesAccounting for leases has been done in accordance with AccountingStandard-19 issued by the Institute of Chartered Accountants ofIndia.Following are the details of lease transactions for the year:a Finance Lease

The Company does not have any finance lease arrangement.b Operating Lease

i Lease rentals recognized in the Profit and Loss account forthe year is Rs. 768,435/- (Previous year Rs. 1,004,255/-)

ii The Company has entered into operating leases for its officeand for employees’ residence that are renewable on aperiodic basis and cancellable at Company’s option. TheCompany has not entered into sublease agreements inrespect of these leases.

iii There are no future commitments for lease payments forany of the above mentioned leases.

(Amount in RS.)


9 Value of imports calculated on CIF basisPurchase of Software 280,176 —

280,176 —

10 Expenditure in Foreign Currency (Payment basis)Professional/Consultancy — 2,429,540Other matters — 6,214,823

— 8,644,363

11 Earnings in Foreign Currency (Receipt basis)Consultancy — 31,491,987Other — 71,810

— 31,563,797

12 Auditors’ RemunerationAudit fees 45,000 150,000Reimbursement of Service Tax 3,600 —Out of pocket expenses 23,735 16,500

72,335 166,500

13 There are no dues to creditors coming under the definition of SmallScale Industrial undertaking(s) as at March 31, 2004 and March31, 2003.


15 The Company is in the process of appointing a whole time Companysecretary.

16 Previous year’s figures have been regrouped/reclassified, wherevernecessary to make them comparable with current year figures.


New Delhi B. ANANTHARAMAN DirectorJune 24, 2004 SURENDRA KAUL Director

MaxAteev 305-317.p65 9/14/2004, 11:33 AM316





Date Month Year

II CAPITAL RAISED DURING THE YEAR (Amount in Rs. Thousand)Public Issue Right IssueN I L N I LBonus Issue Private Placement/OtherN I L N I L


3 1 4 5 4 1 3 1 4 5 4 1

SOURCES OF FUND

Paid-up Capital Reserve & Surplus3 1 4 4 3 6 N I L

Secured Loans Unsecured LoansN I L 1 0 5



+ - Net Current Assets Mics. Expenditure✓ 4 6 1 0 8 N I L



1 2 1 0 0 7 2 1 4 9+ - Profit/Loss before tax + - Profit/Loss after tax

✓ 6 0 0 4 9 ✓ 6 0 0 4 9

+ - Earning per Share in Rs. Dividend Rate (%)✓ 1 . 9 1 N I L

V NAME OF THREE PRINCIPAL PRODUCTS/SERVICE OF COMPANYProduct Description S O F T W A R E S E R V I C E S

MaxAteev 305-317.p65 9/14/2004, 11:33 AM317

MAX UK LIMITED

MAX UK 318-325.p65 9/14/2004, 11:34 AM318

M A X U K L I M I T E D


DIRECTORS’ REPORTY E A R E N D E D 3 1 s t M A R C H 2 0 0 4


DIRECTORSThe directors who served the company during the year were as follows:S. KAULK. STANLEY

None of the Directors hold any interest in the shares of the company orof the group.

Registered office:Hillbrow HouseHillbrow RoadEsher Signed by order of the DirectorsSurrey K. STANLEYKT109 NW Director

Approved by the Directors on 20th MAY, 2004

STATEMENT OF DIRECTORS’ RESPONSIBILITIESY E A R E N D E D 3 1 s t M A R C H 2 0 0 4

Company law requires the directors to prepare financial statements foreach financial year which give a true and fair view of the state of affairsof the company at the end of the year and of the profit or loss for the yearthen ended. In preparing those financial statements, the directors arerequired to:— select suitable accounting policies, as described in Note 2, and

then apply them consistently;— make judgements and estimates that are reasonable and prudent;

and

— prepare the financial statements on the going concern basis unlessit is inappropriate to presume that the company will continue inbusiness.

The directors are responsible for keeping proper accounting recordswhich disclose with reasonable accuracy at any time the financialposition of the company and to enable them to ensure that the financialstatements comply with the Companies Act 1985. The directors are alsoresponsible for safeguarding the assets of the company and hence fortaking reasonable steps for the prevention and detection of fraud andother irregularities.

The directors present their report and the financial statements of thecompany for the year ended 31st March 2004.

PRINCIPAL ACTIVITIES AND BUSINESS REVIEWThe company is incorporated in England and Wales.

The principal activities of the company have been the sale of bulkpharmaceutical products on a commission basis and consultancyservices to the healthcare and pharmaceutical industries.

The company’s agreement for commission has now expired and thecompany has been trying to source new revenue sources. The companywill continue to seek commission income, however, in the meantime itwill act as a representative office of its parent company.

RESULTS AND DIVIDENDSThe trading results for the year, and the company’s financial position atthe end of the year are shown in the attached financial statements.

MAX UK 318-325.p65 9/14/2004, 11:34 AM319



TO THE SHAREHOLDERSWe have audited the financial statements which comprise the profitand loss account, balance sheet and the related notes. These financialstatements have been prepared under the historical cost conventionand on the basis of the accounting policies set out therein.This report is made solely to the company’s shareholders, as a body, inaccordance with Section 235 of the Companies Act 1985. Our auditwork has been undertaken so that we might state to the company’sshareholders those matters we are required to state to them in anauditors’ report and for no other purpose. To the fullest extent permittedby law, we do not accept or assume responsibility to anyone other thanthe company and the company’s shareholders as a body, for our auditwork, for this report, or for the opinions we have formed.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS ANDAUDITORSAs described in the Statement of Directors’ Responsibilities thecompany’s directors are responsible for the preparation of the financialstatements in accordance with applicable law and United KingdomAccounting Standards.Our responsibility is to audit the financial statements in accordancewith relevant legal and regulatory requirements and United KingdomAuditing Standards.We report to you our opinion as to whether the financial statements givea true and fair view and are properly prepared in accordance with theCompanies Act 1985. We also report to you if, in our opinion, theDirectors’ Report is not consistent with the financial statements, if thecompany has not kept proper accounting records, if we have not receivedall the information and explanations we require for our audit, or ifinformation specified by law regarding directors’ remuneration andtransactions with the company is not disclosed.

INDEPENDENT AUDITORS’ REPORT YEAR ENDED 31ST MARCH, 2004

We read the Directors’ Report and consider the implications for ourreport if we become aware of any apparent misstatements within it.

BASIS OF AUDIT OPINIONWe conducted our audit in accordance with United Kingdom AuditingStandards issued by the Auditing Practices Board. An audit includesexamination, on a test basis, of evidence relevant to the amounts anddisclosures in the financial statements. It also includes an assessmentof the significant estimates and judgements made by the directors inthe preparation of the financial statements, and of whether theaccounting policies are appropriate to the company’s circumstances,consistently applied and adequately disclosed.We planned and performed our audit so as to obtain all the informationand explanations which we considered necessary in order to provide uswith sufficient evidence to give reasonable assurance that the financialstatements are free from material misstatement, whether caused byfraud or other irregularity or error. In forming our opinion we also evaluatedthe overall adequacy of the presentation of information in the financialstatements.

OPINIONIn our opinion the financial statements give a true and fair view of thestate of the company’s affairs as at 31st March 2004 and of its loss forthe year then ended, and have been properly prepared in accordancewith the Companies Act 1985.

42-46 High StreetEsherSurrey RICHES & COKT10 9QY Chartered Accountants20th MAY, 2004 & Registered Auditors

MAX UK 318-325.p65 9/14/2004, 11:34 AM320



PROFIT AND LOSS ACCOUNT Y E A R E N D E D M A R C H 3 1 , 2 0 0 4

Note £ £2004 2003

TURNOVER 3 8,400 21,626Cost of sales — 185

GROSS PROFIT 8,400 21,441Administrative expenses 103,529 202,025

OPERATING LOSS 4 (95,129) (180,584)Interest receivable 2,663 5,270Interest payable and similar charges 7 — (8)

LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (92,466) (175,322)Tax on loss on ordinary activities 8 (18,541) (9,944)Loss for the financial year (73,925) (165,378)

All of the activities of the company are classed as continuing.The company has no recognised gains or losses other than the results for the

year as set out above.

BALANCE SHEET Y E A R E N D E D M A R C H 3 1 , 2 0 0 4

Note £ £ £ £2004 2004 2003 2003

FIXED ASSETSTangible assets 9 968 5,573

CURRENT ASSETSDebtors 10 100,268 94,072Cash at bank and in hand 48,858 124,701

149,126 218,773

Creditors: Amounts falling due within one year 11 13,717 14,044

NET CURRENT ASSETS 135,409 204,729Total assets less current liabilities 136,377 210,302

CAPITAL AND RESERVESCalled-up equity share capital 14 299,742 299,742Profit and loss account 15 (163,365) (89,440)Shareholders’ funds 16 136,377 210,302

These financial statements were approved by the directorson the 20/05/2004 and are signed on their behalf by :

K. STANLEYDirector

MAX UK 318-325.p65 9/14/2004, 11:34 AM321



1 COUNTRY OF INCORPORATIONMax UK Limited is incorporated in England and Wales.

2. ACCOUNTING POLICIESBASIS OF ACCOUNTINGThe financial statements have been prepared under the historical cost convention.

CASH FLOW STATEMENTThe directors have taken advantage of the exemption in Financial Reporting Standard No 1 (revised) from including a cash flow statement inthe financial statements on the grounds that the company is small.

TURNOVERThe turnover shown in the profit and loss account represents amounts invoiced during the year, exclusive of value added tax.

FIXED ASSETSAll fixed assets are initially recorded at cost.

DEPRECIATIONDepreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset asfollows:

Leasehold Property period of leaseFixtures & Fittings 15% per annumEquipment 33% per annum

OPERATING LEASE AGREEMENTSRentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged againstprofits on a straight line basis over the period of the lease.

FOREIGN CURRENCIESAssets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions inforeign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Exchange differences are taken intoaccount in arriving at the operating profit.

3 TURNOVERThe turnover and loss before tax are attributable to the one principal activity of the company.An analysis of turnover is given below:

£ £2004 2003

Non EU countries 8,400 21,626

4 OPERATING LOSSOperating loss is stated after charging :Directors’ emoluments 37,625 35,000Depreciation of owned fixed assets 1,708 19,154Loss on disposal of fixed assets 1,668 —Auditors’ remuneration- as auditors 3,000 5,000Operating lease costs:Land and buildings 15,925 42,145

Net loss on foreign currency translation — 4,379

NOTES TO THE FINANCIAL STATEMENTS Y E A R E N D E D M A R C H 3 1 , 2 0 0 4

MAX UK 318-325.p65 9/14/2004, 11:34 AM322



No. No.2004 2003

5 PARTICULARS OF EMPLOYEESThe average number of staff employed by the companyduring the financial year amounted to:Number of administrative staff 1 2

£ £2004 2003

The aggregate payroll costs of the above were :Wages and salaries 37,625 53,731Social security costs 4,225 6,324

41,850 60,055

6 DIRECTORS’ EMOLUMENTSThe directors’ aggregate emoluments in respect of qualifying services were :Emoluments receivable 37,625 35,000

7 INTEREST PAYABLE AND SIMILAR CHARGESOther similar charges payable — 8

8 TAX ON LOSS ON ORDINARY ACTIVITIESa Analysis of charge in the year

Current taxUK TaxationUK Corporation tax based on the results for the year at 30% (2003 - 30%) — (11,000)Over/under provision in prior year (18,541) 691

(18,541) (10,309)Foreign taxCurrent tax on income for the year — 365Total current tax (18,541) (9,944)

b Factors affecting current tax charge

The tax assessed on the loss on ordinary activities for the year is higher than the standard rate of corporationtax in the UK of 30% (2003 - 30%).

Loss on ordinary activities before taxation (92,466) (175,322)

Profit on ordinary activities by rate of tax (27,740) (50,347)Disallowable expenses 3,770 —Depreciation for period in excess of capital allowances (152) 1,830Losses 24,121 36,303Over/ under provision in prior year (18,541) 691Other 1 1,579Total current tax (note 8(a)) (18,541) (9,944)

MAX UK 318-325.p65 9/14/2004, 11:34 AM323



9 TANGIBLE FIXED ASSETS£ £ £ £

Leasehold Property Fixtures & Fittings Equipment Total

COSTAt 1st April 2003 13,125 23,226 23,774 60,125Additions — — 221 221Disposals (13,125) (16,946) (179) (30,250)At 31st March 2004 — 6,280 23,816 30,096

DepreciationAt 1st April 2003 13,125 18,053 23,374 54,552Charge for the year — 1,249 459 1,708On disposals (13,125) (13,828) (179) (27,132)At 31st March 2004 — 5,474 23,654 29,128

Net book valueAt 31st March 2004 — 806 162 968At 31st March 2003 — 5,173 400 5,573

10 DEBTORS£ £

2004 2003

Amounts owed by group undertakings 95,833 68,748Corporation tax repayable — 11,000Other debtors 2,253 2,853Prepayments and accrued income 2,182 11,471

100,268 94,072

11 CREDITORS£ £

2004 2003

AMOUNTS FALLING DUE WITHIN ONE YEARTrade creditors 4,381 455Other taxation and social security 1,722 891Other creditors 114 98Accruals and deferred income 7,500 12,600

13,717 14,044

12 COMMITMENTS UNDER OPERATING LEASESAt 31st March 2004 the company had annual commitments under non-cancellable operating leases as set out below.

£ £2004 2003

Land & BuildingOperating leases which expire:Within 1 year 3,938 —Within 2 to 5 years — 32,725

3,938 32,725

MAX UK 318-325.p65 9/14/2004, 11:34 AM324



13 RELATED PARTY TRANSACTIONSThroughout both periods the controlling and ultimate controlling party was Max India Limited, a company incorporated in India.During the year Max UK Limited provided services of £8,400 (2003: £21,626) to Max India Limited. At 31st March 2004 Max India Limitedowed Max UK Limited £9,870 (2003: £–).At 31st March 2004 Max Asia-Pac Limited, a subsidiary of Max India Limited owed Max UK Limited £67,500 (2003 £67,500).At 31st March 2004 Neeman Medical International NV, a subsidiary of Max India Limited owed Max UK Limited £1,248 (2003 £1,248) inrespect of recharged expenses.During the year Max UK Limited loaned £17,215 to Max Visions, Inc.. At 31st March 2004 Max Visions, Inc. still owed Max UK Limited thisamount.All of these amounts are interest free and have no fixed repayment date.In the year the company paid £9,600 of expenses on behalf of other group companies, this amount was written off in the year as irrecoverable.

14 SHARE CAPITAL£ £

2004 2003Authorised share capital1,000,000 Ordinary shares of £1 each 1,000,000 1,000,000

Allotted, called up and fully paidNo. £ No. £

2004 2004 2003 2003

Ordinary shares of £1 each 299,742 299,742 299,742 299,742

15 PROFIT AND LOSS ACCOUNT£ £

2004 2003Balance brought forward (89,440) 75,938Accumulated loss for the financial year (73,925) (165,378)Balance carried forward (163,365) (89,440)

16 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDSLoss for the financial year (73,925) (165,378)Opening shareholders’ equity funds 210,302 375,680Closing shareholders’ equity funds 136,377 210,302

17 ULTIMATE PARENT COMPANYThe ultimate parent company was Max India Limited, a company incorporated in India. This company is the parent undertaking of the largestand the smallest group for which group accounts including Max UK Limited are drawn up. Copies of these accounts are available from MaxIndia Limited, Max House, 1, Dr.Jha Marg, Okhla, New Delhi - 110020, India.

MAX UK 318-325.p65 9/14/2004, 11:34 AM325

MAX VISIONS, INC.

MaxVisionsInc 326-332.p65 9/14/2004, 11:34 AM326

M A X V I S I O N S , I N C .


The Directors present the report and the financial statements of theCompany for the year ended March 31, 2004.

PRINCIPAL ACTIVITIES AND BUSINESS REVIEWThe company was in the process of developing an enterprise solutionspractice in the USA, primarily to serve as a front end for the informationtechnology services business of Max Ateev Limited, an affiliate company.However, consequent to the winding up of information technologyservices business in India by Max Ateev Limited, following the generalslow down of global economy, your Company also discontinued itsenterprise solutions practice in the USA. Currently your Company isnot into any operating business.

RESULTSThe financial statement for the year, and the Company’s financial positionat the end of the year are shown in the attached financial statements.

DIRECTORSThe Board of Directors currently comprises of Mr. Analjit Singh, Mr.Neeraj Basur and Mr. Manish Agarwal.

DIRECTORS’ REPORT

AUDITORSDuring the year under review, M/s. Melamed Handy & Karp, LLP, CertifiedPublic Accountants, Miami resigned as the Statutory Auditors of theCompany. M/s. Mitra Mitra & Associates, Chartered Accountants wereappointed as the Statutory Auditors of the Company in casual vacancycaused by the resignation of M/s. Melamed Handy & Karp, LLP.M/s. Mitra Mitra & Associates, Chartered Accountants are proposed tobe re-appointed as the Statutory Auditors of the Company at the ensuingannual meeting of shareholders.


NEERAJ BASUR DirectorJUNE 7, 2004 MANISH AGARWAL Director




AUDITORS’ REPORT

TO THE MEMBERS OF MAX VISIONS INC.1 We have audited the attached Balance Sheet of Max Visions Inc.



3 The rupee amounts are presented in the accompanying financialstatements solely for the convenience of the reader and have beentranslated on the basis described in Note A1 of Schedule 8. Thetranslation from US$ to Indian Rupees is Unaudited.

4 As required by the Companies (Auditor’s Report) Order, 2003 issuedby the Central Government of India in terms of sub-section (4A) ofSection 227 of ‘The Companies Act, 1956’ of India (the ‘Act’) andon the basis of such checks of the books and records of the companyas we considered appropriate and according to the information andexplanations given to us, we further report that:a The company has neither granted nor taken any loans, secured

or unsecured, to/from companies, firms or other parties coveredin the register maintained under Section 301 of the Act.

b In our opinion, the company has an internal audit systemcommensurate with its size and nature of its business.

c The Central Government of India has not prescribed themaintenance of cost records under clause (d) of sub-section(1) of Section 209 of the Act for any of the products of thecompany.

d According to the information and explanations given to us andthe records of the company examined by us, in our opinion,the company is regular in depositing the undisputed statutorydues including provident fund, investor education andprotection fund, employees’ state insurance, income-tax, sales-tax, wealth tax, customs duty, excise duty, cess and othermaterial statutory dues as applicable with the appropriateauthorities.

e According to the information and explanations given to us andthe records of the company examined by us, there are no duesof sales-tax, income-tax, customs duty, wealth tax, excise dutyand cess as at March 31, 2004 which have not been depositedon account of any dispute.

f The company has accumulated losses, as at March 31, 2004more than hundred per cent of its net worth and has incurredcash losses during the financial year and in the immediatelypreceding financial year. However, reference is drawn to NoteA2 and B1 on Schedule 8.

g During the course of our examination of the books and recordsof the company, carried out in accordance with the generallyaccepted auditing practices in India, and according to the

information and explanations given to us, we have neither comeacross any instance of fraud on or by the company, noticed orreported during the year, nor have we been informed of suchcase by the management.

h The other clauses (i), (ii), (iv), (v), (vi), (xi), (xii), (xiii), (xiv),(xv), (xvi), (xvii), (xviii), (xix) and (xx) of paragraph 4 of theCompanies (Auditor’s Report) Order, 2003 are not applicablein the case of the company for the current year, since in ouropinion there is no matter which arises to be reported in theaforesaid order.

4 Further to our comments in paragraph 3 above, we report that:a We have obtained all the information and explanations, which


b In our opinion, proper books of account as required by lawhave been kept by the company so far as appears from ourexamination of those books;

c The Balance Sheet and Profit and Loss Account dealt with bythis report are in agreement with the books of account;

d In our opinion, the Balance Sheet and Profit and Loss Accountdealt with by this report comply with the accounting standardsreferred to in sub-section (3C) of Section 211 of the Act to theextent applicable;

e In our opinion and to the best of our information and accordingto the explanations given to us, the said financial statementstogether with the notes thereon and attached thereto give inthe prescribed manner the information required by the Actand give subject to Note A1 & B2(a) of schedule 8 regardingnon-provision of interest on loan taken from Max India Ltd andto that extent it will increase the loss and A2 and B1 onSchedule 8 regarding proposed liquidation of the company’sbusiness and the preparation of these accounts on a goingconcern basis a true and fair view in conformity with theaccounting principles generally accepted in India:(i) in the case of the Balance Sheet, of the state of affairs of

the company as at March 31, 2004; and(ii) in the case of the Profit and Loss Account, of the profit for


For and on behalf ofMitra Mitra & Associates

Chartered Accountants

M.M. MITRANew Delhi PartnerJUNE 7, 2004 Membership Number F 7049





SCHEDULE (US $) (RUPEES)As at As at As at As at

31.03.2004 31.03.2003 31.03.2004 31.03.2003(Refer note B3 on Schedule 8)

SOURCES OF FUNDSSHAREHOLDERS’ FUNDSShare Capital 1 300,000 300,000 13,237,500 14,295,000LOAN FUNDSUnsecured Loans 2 1,136,000 1,311,000 50,126,000 62,469,150Total 1,436,000 1,611,000 63,363,500 76,764,150


INVESTMENTS 3 — 175,000 — 8,338,750

CURRENT ASSETS, LOANS AND ADVANCES 4 6,500 30,693 286,815 1,462,521

LESS : CURRENT LIABILITIES 5 89,891 230,477 3,966,435 10,982,229

NET CURRENT ASSETS (83,391) (199,784) (3,679,620) (9,519,708)

PROFIT AND LOSS ACCOUNT 1,519,391 1,635,784 67,043,120 77,945,108

Total 1,436,000 1,611,000 63,363,500 76,764,150



NEERAJ BASUR DirectorMANISH AGARWAL Director



M M MITRAPartnerMembership Number – F 7049






PROFIT & LOSS ACCOUNT F O R T H E Y E A R A P R I L 0 1 , 2 0 0 3 T O M A R C H 3 1 , 2 0 0 4

SCHEDULE (US $) (RUPEES)Current Year Previous Year Current Year Previous Year

01.04.2003 to 01.04.2002 to 01.04.2003 to 01.04.2002 to31.03.2004 31.03.2003 31.03.2004 31.03.2003

(Refer note B3 on Schedule 8)

INCOMEService Income — 396,134 — 18,875,785Provisions no longer required written back 126,906 — 5,599,755 —Gain on sale of assets 2,528 — 111,539 —Interest income — 64 — 3,050

129,434 396,198 5,711,294 18,878,835

EXPENDITURECost of services — 491,517 — 23,420,785Depreciation — 5,249 — 250,115Administrative and other expenses 6 10,585 835,449 467,063 39,809,145Finance Charges 7 2,456 43,664 108,382 2,080,590

13,041 1,375,879 575,445 65,560,635

NET PROFTI/(LOSS) 116,393 (979,681) 5,135,849 (46,681,800)

BALANCE BROUGHT FORWARD (1,635,784) (656,103) (72,178,969) (31,263,308)

BALANCE CARRIED TO THE BALANCE SHEET (1,519,391) (1,635,784) (67,043,120) (77,945,108)

Basic and Diluted earnings per share 11.64 (97.97) 513.58 (4,668.18)





This is Profit & Loss Account referred toin our report of even date

M M MITRAPartnerMembership Number – F 7049



SCHEDULES A N N E X E D T O & F O R M I N G P A R T O F T H E A C C O U N T S(US $) (RUPEES)

As at As at As at As at31.03.2004 31.03.2003 31.03.2004 31.03.2003


SCHEDULE–1SHARE CAPITALAuthorised10,000 (Previous year 10,000) Shares of $30 per value 300,000 300,000 13,237,500 14,295,000

Issued, Subscribed & Paid Up10,000 (Previous year 10,000) Shares of $30/- each 300,000 300,000 13,237,500 14,295,000(Held by the holding Company, Max India Ltd)





(US $) (RUPEES)As at As at As at As at

31.03.2004 31.03.2003 31.03.2004 31.03.2003(Refer note B3 on Schedule 8)

SCHEDULE–2LOAN FUNDS(Refer Note No B2 on Schedule 8)

Unsecured LoanFrom Max India Limited (the holding company) 936,000 936,000 41,301,000 44,600,400From Alda Limited 200,000 375,000 8,825,000 17,868,750

1,136,000 1,311,000 50,126,000 62,469,150

SCHEDULE–3INVESTMENTS(Refer Note No B3 on Schedule 8)

Alta+Cast LLC — 175,000 — 8,338,750

— 175,000 — 8,338,750

SCHEDULE–4CURRENT ASSETS, LOANS & ADVANCESCash & Bank BalancesCash in hand — 16,319 — 777,600

Loans & AdvancesDue from Comsat Max Ltd 6,500 6,500 286,815 309,725(A company under the same management)Property held for sale — 7,874 — 375,196

6,500 30,693 286,815 1,462,521

SCHEDULE–5CURRENT LIABILITIESAccounts payable and accrued expenses 8,902 170,202 392,783 8,110,130Interest accrued on loan from Max India Ltd 49,874 49,874 2,200,685 2,376,491(the holding company)Payable to Max UK Ltd 31,115 — 1,372,967 —(A company under the same management)Current portion of Long Term Debts — 10,401 — 495,608

89,891 230,477 3,966,435 10,982,229

(US $) (RUPEES)Current Year Previous Year Current Year Previous Year

01.04.2003 to 01.04.2002 to 01.04.2003 to 01.04.2002 to31.03.2004 31.03.2003 31.03.2004 31.03.2003


SCHEDULE–6ADMINISTRATIVE AND OTHER EXPENSESPersonnelSalaries — 368,855 — 17,575,941Employee termination cost — 86,781 — 4,135,115

Administrative and OthersLegal & Professional 10,585 27,596 467,063 1,314,949Taxes and Licenses — 22,454 — 1,069,933Travel and Lodging — 101,873 — 4,854,248Occupancy — 42,058 — 2,004,064Telephone — 20,736 — 988,070Loss on sale of assets — 60,949 — 2,904,220Bad debts — 20,237 — 964,293Other — 83,910 — 3,998,312

10,585 835,449 467,063 39,809,145

SCHEDULE–7FINANCE CHARGESInterest expense — 43,664 — 2,080,590Bank charges 2,456 — 108,382 —

2,456 43,664 108,382 2,080,590




SCHEDULE–8A. SIGNIFICANT ACCOUNTING POLICIES1 Basis of Preparation

The financial statements are prepared under the historical costconvention in accordance with the Generally Accepted AccountingPrinciples in India, accounting standards issued by the Institute ofChartered Accountants of India and the provisions of CompaniesAct, 1956 as adopted consistently by the Company. All the incomeand expenditure having a material bearing on the financialstatements are recognized on the accrual basis excepting intereston loan from Max India Ltd. which has been dealt with as per ParaB 2(a).

The financial statements have been prepared for the purpose ofcompliance with the provisions of Section 212 of the CompaniesAct, 1956 and have been restated to Indian rupees at the exchangerates prevailing as at last day of the financial year. The functionalcurrency of the Company is United States Dollar (USD).

2 Use of estimatesThe preparation of financial statements in conformity with thegenerally accepted accounting principles requires management tomake estimates and assumptions that affect the reported amountof assets and liabilities, disclosure of contingent assets and liabilitiesat the date of the financial statements and the reported amountsof revenues and expenses during the reporting period.

The Company has materially curtailed its scale of operations anddoes not plan to have continuing operations in the foreseeablefuture.

3 ExpenditureExpenses are accounted for on the accrual basis and provisions aremade for all known losses and liabilities excepting interest on loantaken from Max India Ltd.

4 TaxationProvision for tax consists of current tax and deferred tax. Currenttax provision is computed for current income based on the taxliability after considering allowances and exemptions. Deferred taxassets and liabilities are computed on the timing differences at thebalance sheet date between the carrying amount of assets andliabilities and their respective tax basis. Deferred tax assets arerecognized based on management estimates of available futuretaxable income and assessing its certainty.


B NOTES TO THE ACCOUNTS1 Continuing Operations

The Company has discontinued its operations during the year 2003.Since the Company does not have any operating activity and doesnot have any plan for the future, it is proposed to liquidate theCompany. However, the above-mentioned liquidation is subject toobtaining an approval from the Reserve Bank of India. Accordingly,the shareholders of the Company have filed necessary applicationin this regard and the awaiting requisite approvals.

2 Loans(a) The company had taken loan of $936,000 @5.50% interest

p.a. from Max India Ltd, the holding company. Since theCompany is proposed to be liquidated and it does not havesufficient assets to pay off its liabilities no interest is providedon loan taken from Max India Limited.

(b) The Company had taken loan of $375,000 (non-interestbearing) from Alda Ltd. Alda Ltd, in partial settlement of thedues receivable from the Company, has accepted theassignment of Convertible Promissory Notes(s) of the value ofUS$175,000/- held by the Company, in Alta+Cast LLC. Withthis settlement, loan of Alda Ltd has got reduced to $200,000as of March 31, 2004.

3 The exchange rate applied for translation of balance sheet as at31st March, 2004 and Profit and Loss Account for the year ended31st March, 2004 from USD to Rupee is 1 USD = Rs.44.125 andfor comparative figures is 1 USD = Rs. 47.65. The exchange ratesare telegraphic transfer buying rates prevailing as on 31st March,2004 and 31st March, 2003 respectively.

4 Previous year figures have been regrouped/reclassified wherevernecessary to conform to current year’s classification.





1

NOTICE is hereby given that the sixteenth Annual GeneralMeeting of Max India Limited will be held on Thursday,September 30, 2004 at 10.30 AM at the Registered Office ofthe Company at Bhai Mohan Singh Nagar, Railmajra, TehsilBalachaur, District Nawanshahr, Punjab–144533 to transact thefollowing business:

Ordinary Business

1. To consider, approve and adopt Directors’ Report, Auditors’Report, Audited Profit and Loss Account for the year endedMarch 31, 2004 and Balance Sheet as at that date.

2. To elect a Director in place of Mr. K.K. Mathur who retiresby rotation and being eligible, offers himself for re-election.

3. To elect a Director in place of Mr. Ashwani Windlass whoretires by rotation and being eligible, offers himself for re-election.

4. To elect a Director in place of Mr. Bharat Sahgal who retiresby rotation and being eligible, offers himself for re-election.

5. To elect a Director in place of Mr. N.C. Singhal who retiresby rotation and being eligible, offers himself for re-election.

6. To appoint M/s. Price Waterhouse, Chartered Accountants,as Statutory Auditors of the Company for the periodcommencing from the conclusion of this meeting till theconclusion of the next Annual General Meeting and to fixtheir remuneration.

Special Business

7. To consider and if thought fit, to pass the following resolutionwith or without modification(s), as a Special Resolution:

“RESOLVED THAT the title of “Lifetime Chairman Emeritus”be and is hereby conferred upon Dr. Bhai Mohan Singh inrecognition of his continued guidance and contribution tothe Company’s progress and success.”

“RESOLVED FURTHER THAT approval of the shareholdersof the Company be and is hereby accorded in accordancewith applicable provisions of the Companies Act, 1956 orany statutory modification or re-enactment thereof andsubject to the approval of the Central Government forincurring of and/or reimbursement of medical expenses ofDr. Bhai Mohan Singh on actual basis subject to a limit ofRs. 18.00 Lakhs per annum.”

“RESOLVED FURTHER THAT the Board be and is hereby

authorised to take such steps as it may consider necessaryto give effect to the above resolution.”


“RESOLVED THAT, pursuant to the approval accorded bythe Shareholders of the Company in its Annual GeneralMeeting held on October 22, 1998, the Company be and ishereby authorised to continue to meet such costs andexpenses as may be incurred by Dr. Bhai Mohan Singh inperformance of his role as “Lifetime Chairman Emeritus”and that the expenses that may be incurred by Dr. BhaiMohan Singh shall not in any way operate so as to conferany remuneration, perquisites, or benefits to him, it beingthe intent that such payments shall be confined at all timesto the actual expenses incurred in respect of performanceof the foregoing role in connection with the business of theCompany.”

“RESOLVED FURTHER THAT the Board be and is herebyauthorised to take such steps as it may consider necessaryto give effect to the above resolution.”


“RESOLVED THAT in accordance with the provisions ofSections 198, 269, 309 and other applicable provisions ofthe Companies Act, 1956 (the ‘Act’) or any statutorymodification or re-enactment thereof and subject to theapproval of the Central Government, if any, Mr. B.Anantharaman be and is hereby appointed the JointManaging Director of the Company effective August 11,2004, for a period of 5 (five) years and that the remunerationpayable to Mr. Anantharaman for the period of three yearsfrom August 11, 2004, in terms of Schedule XIII to the Act,is set out hereunder:

Description (Rs. per annum)

(i) a. Basic salary : Not exceeding 30,00,000/-b. Management Allowance : Not exceeding 24,00,000/-

(ii) Housing : Not exceeding 18,60,000/-(iii) Performance Incentives upto

a maximum of : 40,00,000/-(iv) Perquisites:

a. Gas, electricity and water : Not exceeding 3,00,000/-b. Club membership : Twoc. Leave Travel Assistance : 1,00,000/-d. Accident Insurance premium : Not exceeding 25,000/-e. Medical reimbursements : As per Company policyf. Hard furnishing/Allowance

[Rs. 4.50 Lakh in a blockof 3 years] : 1,50,000/-

NOTICE

2

The value of perquisites would be evaluated as per Income TaxRules, 1962 wherever applicable, and at cost where such Rulesdo not apply and shall be subject to an annual overall ceiling ofan amount of Rs.20,00,000/-. In addition to the remunerationand perquisites to be paid as aforesaid, the Company shall alsomake contributions to provident fund & superannuation fund inaccordance with the limits set out in Income Tax Act, 1961 andprovide for gratuity not exceeding half-a month salary for eachcompleted year of service. In addition, Mr. Anantharaman shallbe entitled to encashment of leave. The Company shall alsoprovide a car with driver for business and his personal usealongwith the facility of telephone installed at his residence.Besides, Mr. Anantharaman is entitled to housing loan as perCompany policy.”

“RESOLVED FURTHER THAT, if in any financial year, duringthe term of office of Mr. B. Anantharaman as the Joint ManagingDirector, the Company has in-adequate profits as computed underthe applicable provisions of the Companies Act, 1956, he shallbe entitled to receive the aforementioned remuneration as theminimum remuneration as provided under the Companies Act,1956.”

“RESOLVED FURTHER THAT, if in any financial year, duringthe term of office of Mr. B. Anantharaman as the Joint ManagingDirector, the Company has adequate profits as computed underthe applicable provisions of the Companies Act, 1956,notwithstanding the above, Mr. Anantharaman shall be entitledto receive remuneration in accordance with provisions of Sections198, 309, 349 and 350 of the Companies Act, 1956.”

“RESOLVED FURTHER THAT the Company or Mr. B.Anantharaman shall be entitled at any time to terminate thisappointment by giving three months written notice or by anyshorter notice as may be accepted by the Board.”

“RESOLVED FURTHER THAT Mr. B. Anantharaman be and ishereby authorised to exercise such powers of management, asmay be delegated to him by the Board of the Company, fromtime to time, subject however, to the overall superintendence,control and direction of the Board.”

“RESOLVED FURTHER THAT the Board of Directors of theCompany and/or its Committee thereof, be and is herebyauthorised to regulate the payment of remuneration to Mr. B.Anantharaman within the aforesaid limits, from time to time.”

By Order of the BoardFor Max India Limited

New Delhi V. KrishnanAugust 12, 2004 Company Secretary

NOTES

1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THEMEETING IS ENTITLED TO APPOINT A PROXY TO ATTENDAND VOTE INSTEAD OF HIMSELF AND SUCH PROXY NEEDNOT BE A MEMBER OF THE COMPANY.

2. Proxies in order to be effective, must be received atthe Registered Office of the Company at Bhai Mohan SinghNagar, Railmajra, Tehsil Balachaur, District Nawanshahr,Punjab–144 533 at least 48 hours before thecommencement of the meeting. A format of proxy isenclosed.

3. The Explanatory Statement pursuant to Section 173(2) ofthe Act is annexed hereto and forms part of this Notice.

4. The Register of Members and Share Transfer Books of theCompany will remain closed from Friday, September 24,2004 to Thursday, September 30, 2004 (both daysinclusive).

5. Shareholders with shares in physical form are requestedto send all their correspondence directly to Mas ServicesPrivate Limited, Share Transfer Agent of the Company, atAB–4, Safdarjung Enclave, New Delhi–110 029,Tel–011–26104142 / 011–26104326,Fax–011–26181081, e–mail: [email protected].

6. Your Company has made arrangements with HDFC Bank tofacilitate shareholders to open Demat Account withoutmaking any payments, except transaction charges. Thedetails of the arrangement can be obtained from our InvestorHelpline at:

Max House, 1, Dr. Jha Marg, Okhla, New Delhi–110 020;Phone: 011–26933610; Fax: 011–26324126;E–mail: [email protected]

7. Mem bers/Proxies for Members should bring the attendanceslip duly filled–in for attending the meeting.

8. Members/Proxies for Members holding shares indematerialized form should also bring their latest Statementof Account held with the concerned depository participantfor attending the meeting.

9. The documents referred to in the proposed resolutions areopen for inspection at the Registered Office of the Companyduring working hours between 9.30 a.m. and 1.00 p.m.,except on holidays.

3

10. Re–appointment of Directors:At the ensuing Annual General Meeting, Mr. K.K. Mathur,Mr. Ashwani Windlass, Mr. Bharat Sahgal and Mr. N. C.Singhal retire by rotation and being eligible offer themselvesfor re-appointment. The information required to be disclosedunder Clause 49 of the Listing Agreement on corporategovernance, in respect of the aforesaid Directors, is as under:

MR. K. K. MATHURDate of Birth 12.10.1937Qualification BSc (Hons.), MA

Mr. Mathur, a senior public administrator and member ofthe Indian Administrative Service (IAS) was heading India’spremier trade promotion agency, the India Trade PromotionOrganisation as its Chairman and Managing Director tillNovember 1997. Prior to this, he was Secretary to theGovernment of India in the Department of Chemicals andPetrochemicals. Mr. Mathur has worked at the level ofSecretary to the Govt. of India in the Departments of Home,Power and the Ministry of Health and Family Welfare andalso as Chief Secretary of Delhi and Goa. He has rich andwide experience of over 37 years in policy formulation,management, planning, coordination and development indiverse fields with particular specialization in industrialmanagement. He joined the Board of the Company in 1998.

Mr. Mathur is a Director of Max Healthcare Institute Limitedand Chairman of Sarat Chatterjee & Co. (VSP) PrivateLimited. He is a member of the Audit Committee and InvestorGrievance, Relations & Share Transfer Committee of theCompany and member of the Audit Committee of MaxHealthcare Institute Limited.

MR. ASHWANI WINDLASSDate of Birth 02.07.1956Qualification B.Com., Bj. MBA

Mr. Ashwani Windlass was the Joint Managing Director ofthe Company from 1995 to 1998 and Managing Director ofHutchison Max Telecom Limited. Prior to this, he had workedwith the Company in various capacities and gained richexperience and vast knowledge and had played a pivotalrole in turning the Company into a multi business enterprise.From 1998 to 2000, Mr. Windlass was the Vice Chairmanand Managing Director of Reliance Telecom Limited.

Mr. Windlass is currently holding directorships inHomelinkers eServices Private Limited, MGRM MedicareLimited, MGRM Net Limited, Argus eServices PrivateLimited, Sanam Investment Private Limited, MGRM

Technologies Inc., NY, USA. He is also a member of theAudit Committee, Remuneration Committee and InvestorGrievance, Relations & Share Transfer Committee of theCompany.

MR. BHARAT SAHGALDate of Birth 28.11.1956

Mr. Bharat Sahgal joined Brean Murray in October 1999 asSenior Managing Director, specializing in energy and untilrecently as Director of Research. Prior to his joining, he waswith Ladenburg Thalmann & Co. for over 16 years as Directorof Research and on the firm’s Management Committee andBoard of Directors. His activities include institutional andretail sales, corporate finance and research. He has beenranked as the #1 Oil Analyst on two separate occasions inThe Wall Street Journal All–Star Survey. He has made regularappearances on national television including CNBC and hasoften been quoted in the business press.

Mr. Sahgal was previously with Prudential Securities andNeuberger Berman for a total of 10 years. He is active invarious non–profit organizations and has served on the Boardsof several international companies.

Mr. Sahgal received a Bachelor’s degree in ElectricalEngineering with honors in 1971 followed by a Master’sdegree in Business in 1972 from Imperial College at theUniversity of London, England.

MR. N.C. SINGHALDate of Birth 10.08.1936Qualification MA (Economics), MSc (Statistics),

PGDPA

Mr. N.C. Singhal was the founder Chief Executive Officer,designated as the Vice–Chairman & Managing Director ofthe erstwhile SCICI Limited (formerly known as The ShippingCredit & Investment Corporation of India Limited), sinceDecember 1986 till August 1996.

Before moving over to the SCICI, Mr. Singhal was a seniorexecutive of The Industrial Credit & Investment Corporationof India Limited (since renamed as ICICI Limited), for 15years from 1971 to 1986 and of the Oil & Natural GasCommission, from 1958 to 1971.

Mr. Singhal was deputed by the Government of India as aBanking Expert to the Industrial Development Bank ofAfghanistan, Kabul, during 1974–75, as part of the WorldBank sponsored programme for setting up the Bank. He was

4

also engaged as a Consultant and Management Specialistwith the Asian Development Bank, Manila. Currently, he isa member of Advisory Board of several industrial housesand institutions.

Mr. Singhal is holding Directorship in CholamandalamInvestment & Finance Company Limited, Shapoorji PallonjiFinance Limited, Deepak Fertilisers & PetrochemicalsCorporation Limited, Ambit Corporate Finance PrivateLimited, Shipping Corporation of India Limited, SamalpattiPower Company Private Limited, Max New York LifeInsurance Company Limited, UTI Bank Limited, Birla SunLife Asset Management Company Limited, and TolaniShipping Limited. Besides the Chairman of the AuditCommittee of your Company, he is member of the AuditCommittee of Deepak Fertilisers & PetrochemicalsCorporation Limited, The Shipping Corporation of IndiaLimited, Cholamandalam Investment & Finance CompanyLimited, UTI Bank Limited, and Max New York Life InsuranceCompany Limited. He is the Chairman of Remuneration &Nomination Committee of Cholamandalam Investment &Finance Company Limited and Chairman of Shareholders’Grievance Committee of Shipping Corporation of IndiaLimited. He is also a member of Remuneration Committeeof Birla Sun Life Asset Management Company Limited.

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2)OF THE COMPANIES ACT, 1956 IN RESPECT OF SPECIALBUSINESSES SET OUT IN THE NOTICE

Item No. 7The shareholders of the Company in their annual general meetingheld on October 22, 1998 conferred the title of ‘ChairmanEmeritus’ upon Dr. Bhai Mohan Singh in recognition of his roleas the Chairman of the Board of Directors of the Company andhis contribution in that capacity to the Company’s progress andsuccess.

Though Dr. Bhai Mohan Singh ceased to be the Chairman of theBoard of Directors of the Company after the elevation to theposition of ‘Chairman Emeritus’, he continues to be a director ofthe Company and guides the Company.

In view of the Board’s deep appreciation for the long standingrole played by him in his capacity as the Chairman of the Boardof Directors, and also in recognition of his role as ‘ChairmanEmeritus’ and the continued guidance provided to the Company,it was proposed to confer the title of ‘Lifetime Chairman Emeritus’of the Company on Dr. Bhai Mohan Singh and that the Companyshould meet the medical expenses of Dr. Bhai Mohan Singhsubject to the requisite regulatory approvals.

Your Directors, therefore, recommend the above resolution foryour approval.

None of the Directors of the Company, except Dr. Bhai MohanSingh and Mr. Analjit Singh, being a relative of Dr. Bhai MohanSingh, may be deemed to be interested or concerned in passingof the above resolution.

Item No. 8The shareholders of the Company in their annual general meetingheld on October 22, 1998 permitted the Company to meet suchcosts and expenses as may be incurred by Dr. Bhai Mohan Singhin performance of his role as ‘Chairman Emeritus’ withoutoperating in any way so as to confer any remuneration, perquisite,or benefit to him with the intent that such payments shall beconfined at all times to the actual expenses incurred in respectof performance of the role as ‘Chairman Emeritus’ in connectionwith the business of the Company.

Though Dr. Bhai Mohan Singh ceased to be the Chairman ofthe Board of Directors of the Company after the elevation to theposition of ‘Chairman Emeritus’, he continues to be a director ofthe Company and guides the Company. While the expensesincurred as above are being met by the Company, Dr. Bhai MohanSingh is not drawing any remuneration, perquisite, or benefitfrom the Company.

It is now proposed by the Company to continue to meet suchcosts and expenses as may be incurred by Dr. Bhai Mohan Singhin performance of his role as ‘Lifetime Chairman Emeritus’.

Your Directors, therefore, recommend the above resolution foryour approval.

None of the Directors of the Company, except Dr. Bhai MohanSingh and Mr. Analjit Singh, being a relative of Dr. Bhai MohanSingh, may be deemed to be interested or concerned in passingof the above resolution.

Item No. 9The Board of Directors of the Company in its meeting held onAugust 11, 2004 appointed Mr. B. Anantharaman as the JointManaging Director of the Company. The Remuneration Committeein its meeting held on the same day approved the terms andconditions of his appointment, for the time being, on existingterms and conditions on which he was earlier appointed as awhole-time director. The existing terms were earlier approved bythe shareholders of the Company in their fourteenth annualgeneral meeting held on September 30, 2002. The Ministry ofCompany Affairs, Government of India has already approved thesaid terms of remuneration vide its letter no. 2/103/2002-CL.VII

5

dated August 6, 2004 for a period up to May 3, 2005. Theabove remuneration is currently under revision and will be placedbefore the shareholders for their approval, as and when finalized.Your approval is sought for his appointment as the Joint ManagingDirector and payment of remuneration.

The following disclosure is made in terms of NotificationNo. GSR36(E) dated January 16th 2002 relating to theappointment and payment of remuneration to executive directors:

I General information about the Company

Nature of industryThe Company’s business involves the manufacture and saleof specialty plastic products including Bi-axially OrientedPolypropylene (“BOPP”) films. The Company has subsidiariesand joint ventures that are involved in the businesses ofhealthcare services, information technology relatedand connectivity solutions services, life insurance, andclinical research. One of Max’s subsidiaries, Max TelecomVentures Limited has a residual equity interest in an entityproviding telecom services, Hutchison Max Telecom PrivateLimited.

Commercial productionAs regards its manufacturing businesses, the Companycommenced commercial production of Speciality Plasticsat its manufacturing facility at Railmajra, Punjab in1989-90.

Financial performanceThe year in review, registered a turnover of Rs. 128.18 crore,as against a turnover of Rs. 160.35 crore for the previousyear. Net Profit for the year ended March 31st 2004, wasRs. 18.62 crore, compared to a Net Loss of Rs.53.26 crorefor the previous year. These figures represent the revenueand net profit for businesses fully owned by Max IndiaLimited.

Due to various initiatives taken, exports have grown by 32%in value terms over 2002-03. Export of Thermal BOPP filmsdoubled in 2003-04. Export of leather finishing foilsincreased by 38% over the previous year.

II Information about the Joint Managing Director

Profile of Mr. B. AnantharamanPrior to elevation as the Joint Managing Director of theCompany, Mr. Anantharaman was heading Max India’s GroupFinance function as a whole time Director. He brings withhim 24 years of rich and wide International experience inthe areas of Finance and Business.

His responsibilities include, providing leadership in the areasof finance, business and resource planning to the Group’sdiverse businesses of Life Insurance, Healthcare, InformationTechnology, Telecom and Specialty Plastics. In addition, asthe head of the Group’s finance and strategic planningfunctions, he provides direction to the group’s overallbusiness plans, financial policies and accounting practices,mergers and acquisitions, divestments and compliance.

He is also the Chief Advisor to the Chairman, on issuesranging from business evaluation and analysis to strategicplanning. He is responsible for managing externalrelationships with the financial community and stakeholders,both national and international, and for promoting thecompany at large with the overseas and domestic investors.Mr. Anantharaman spearheaded the Group’s restructuringefforts and successfully tied up the resources to fund thehigh-growth core businesses of life insurance and healthcare.Mr. Anantharaman additionally heads the Speciality Plasticproducts, Telecom, IT and Clinical Research businesses. Healso serves on the boards of Max Healthcare and Max NewYork Life Insurance Company and Hutchison Max Telecom.

Prior to joining Max India Limited, Mr. Anantharaman hasworked for over 16 years with the Goodyear Tyre & RubberCompany, U.S.A. and held several key positions around theworld. Mr. Anantharaman has extensive internationalexperience in strategic planning and business managementand played a key role in setting up export sales operationsin Europe, Japan and South Korea. He was a Steering Councilmember for Goodyear, responsible for successfully rollingout SAP R3 in Malaysia, Japan, Thailand and India. He alsoserved as President & Chief Financial Officer of Indo RamaSynthetics India Limited. He began his career with WimcoLtd. and spent five years in various financial managementpositions.

Mr. Anantharaman holds a Bachelor’s Degree in Commercefrom Madras University and is a Fellow Member of theInstitute of Chartered Accountants of India; the Institute ofCost and Works Accountants of India and the Institute ofCompany Secretaries of India.

Comparison with industryThe ‘Remuneration Profile’ of Mr. Anantharaman is basedon a comparative basket of companies comprisingMultinationals and High Performing Indian Companies, fromboth the Service and Manufacturing sector, which have aGlobal presence. Individual specific remuneration is anoutcome of a strategic Human Capital Initiative, whichmeasures ‘Competency Profiles’ for each person and ratesthe individual vis–à–vis the standard required for the job.

6

The eventual pricing matrix is then a function of this rating,which is superimposed on the target market price, currentlybenchmarked at the ‘Top Quartile’.

III Other informationThe services business of Healthcare and Life Insurance havea long gestation and are highly capital intensive in naturerequiring large out–flow of funds. This has impacted thereturn on the investments from these businesses.

Despite revenues from the existing businesses of SpecialityPlastics, the overall profitability of the Company may not bepositive at least in the near future.

Your Directors, therefore, recommend the above resolutionsfor your approval.

None of the Directors, except Mr. B. Anantharaman isconcerned or interested in passing of the above resolutions.

The Notice and Explanatory Statement may be treated as theabstract of the terms of appointment and payment ofremuneration to Mr. B. Anantharaman, as required to becirculated in terms of Section 302 of the Act.

PROXY FORM

MAX INDIA LIMITEDRegd. Office: Bhai Mohan Singh Nagar, Railmajra, Tehsil Balachaur, District Nawanshahr, Punjab–144 533

I/We .....................................................................................................................................................................................

............................................................................................. of ..........................................................................................

..................................................................................................................................... being member/members of the above

named company hereby appoint .............................................................................................................................................

of ................................................................................................................................................................. in the district of

.............................................................................................................................................................................. or failing

him ........................................................................................ of ....................................................................................... in

the district of .......................................................................................................................................................................

as my/our proxy to attend and vote on my/our behalf at the Annual General Meeting of the Company to be held on Thursday,September 30, 2004 at 10.30 AM and at any adjournment thereof.

Signed this ...........…day of ……………………………..2004

Notes1 Proxy need not be a member2 Proxy form duly signed across revenue stamp should reach Company’s Registered Office at-least 48 hours before the time of

the meeting.3 The Company reserves the right to ask for identification of the proxy.4 Proxy cannot speak at the meeting or vote on a show of hands.

MAX INDIA LIMITED

ATTENDANCE SLIP

Regd.Folio No .........................................................................

No. of Shares held ..................................................................

DP.ID No. ............................................................................... Client ID No. ..........................................................................

I certify that I am a member/proxy for the member of the Company.

I hereby record my presence at the Annual General Meeting of the Company at the Registered Office on Thursday, September 30,

2004 at 10.30 AM.

........................................................................................ .......................................................................................

Member’s/Proxy’s name in Block Letters Signature of Member/Proxy

Note:

Please fill up this attendance slip and hand over at the entrance of the meeting hall.

Affixrevenuestamp ofRe. 1/-

CORE BUSINESSES GROWINGFAST—TRADITIONALBUSINESSES PERFORMING WELL— MAX EYES THE WORLD

DE

SIG

N I

TU

CH

AU

DH

UR

I D

ES

IGN

• P

RIN

TE

D A

T T

HO

MS

ON

PR

ES

S

FOCUSED & BUILDING - MaxVILthe company towards becoming a services centric business, its services revenue increased from Rs. 34.24 crore in the previous year to Rs. 37.68 crore in

Documents