nutralite annual report 2007-08 - Zydus WellnessAnnual Report 2007-2008 CARNATION NUTRA-ANALOGUE FOODS LIMITED TM 3 4. The bank account particulars of the members will be printed on

2007-08annual report

Carnation Nutra-Analogue Foods Ltd.(A Subsidiary of Cadila Healthcare Ltd.)

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www.nutralite.com

Annual Report 2007-2008

CARNATION NUTRA-ANALOGUE FOODS LIMITEDTM

1

COMPANY INFORMATION

CHAIRMAN Mr. Mukesh M. Patel

MANAGING DIRECTOR Mr. Jitendra R. Patel

DIRECTORS Dr. Mukesh R. Patel

Dr. Ganesh N. Nayak

Mr. Manubhai K. Patel

COMPANY SECRETARY Mr. Dhaval N. Soni

BANKERS Bank of Baroda,

Ashram Road Branch, Ahmedabad.

AUDITORS M/s. Mukesh M. Shah & Co.,

Chartered Accountants

REGISTERED & CORPORATE OFFICE “Zydus Tower”, Satellite Cross Roads,

Sarkhej-Gandhinagar Highway,

Ahmedabad - 380 015.

REGISTRAR AND SHARE TRANSFER AGENT Intime Spectrum Registry Limited,

211, Sudarshan Complex,

Nr. Mithakhali Underbridge,

Navrangpura, Ahmedabad- 380 009.

WORKS 7A, 7B & 8, Saket Industrial Estate,

Sarkhej Bawala Road, Gam Moraiya,

Taluka Sanand, Dist. Ahmedabad.

CONTENTS Page No.

Notice 02

Directors’ Report and relevant Annexures 05

Management Discussion and Analysis 10

Corporate Governance Report 11

Auditors’ Report 19

Balance Sheet 22

Profit and Loss Account 23

Schedules 24

Cash Flow Statement 37

2 Annual Report 2007-2008


CARNATION NUTRA-ANALOGUE FOODS LIMITEDRegistered Office: “Zydus Tower”, Satellite Cross Roads,

Sarkhej-Gandhinagar Highway, Ahmedabad- 380 015.

NOTICE is hereby given that the FOURTEENTH ANNUAL GENERAL MEETING of the members of Carnation Nutra-

Analogue Foods Limited will be held on Thursday, the 10th day of July 2008 at 10:00 A.M. at AMA Seminar Hall,

ATIRA Campus, Dr. Vikram Sarabhai Marg, Ahmedabad – 380 015 to transact the following business:

ORDINARY BUSINESS:

1. To receive, consider and adopt Audited Balance Sheet as at 31st March, 2008 and Profit and Loss Account

for the year ended on that date and the Reports of the Board of Directors and Auditors thereon;

2. To declare dividend on equity shares;

3. To appoint a Director in place of Dr. Ganesh N. Nayak, who retires by rotation and being eligible offers

himself for re-appointment;

4. To appoint a Director in place of Mr. Manubhai K. Patel, who retires by rotation and being eligible offers

himself for re-appointment;

5. To appoint M/s. Mukesh M. Shah & Co., Chartered Accountants, as an auditor, to hold office from the

conclusion of this Annual General Meeting until the conclusion of next Annual General Meeting and to fix

their remuneration.

By order of the Board,

Date : 28th April, 2008. Dhaval N. SoniPlace : Ahmedabad. Company Secretary

NOTES :

1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT ONE OR MOREPROXIES TO ATTEND AND VOTE INSTEAD OF HIMSELF, ON A POLL ONLY AND SUCH PROXY NEED NOT BEA MEMBER OF THE COMPANY.

However Proxy Form(s) duly stamped, completed and signed, should be deposited at the Registered Office

of the Company not less than 48 hours before the Meeting.

2. The Register of Members and Share Transfer Books of the Company will remain closed from 7th July, 2008

to 9th July, 2008 (both days inclusive).

The dividend, if declared, will be paid on or after 15th July, 2008 but within the statutory time limit of 30

days, to those members entitled thereto whose names appear in the Register of Members of the Company as

on 9th July, 2008. With respect to shares held in dematerialised form in the Depository System, dividend

thereon will be paid to the beneficial owners as per the list to be provided by the Depositories.

3. Payment of Dividend through ECS:

A Members holding shares in physical form are advised to submit particulars of their bank account, viz.,

Name and address of the branch of the bank, 9 digit MICR code of the branch, type of account and

account number latest by 1st July, 2008 directly to the Company’s Share Transfer Agent, M/s. Intime

Spectrum Registry Limited, 211 Sudarshan Complex, Near Mithakhali Six Roads, Navrangpura, Ahmedabad

380 009.

B Members holding shares in demat form are advised to inform the particulars of their bank account to

their respective depository participant.

NOTICE



3

4. The bank account particulars of the members will be printed on the dividend warrants with respect to

shares held in physical form. The bank account particulars should be sent to the Company or to its Registrar

and Transfer Agent.

Members holding shares in demat form must give particulars of their bank account to their Depository

Participants. The Company or its Registrar and Transfer Agent will not act on any such request received

from members for change in their bank account particulars. Further, instructions given by members for

shares held in physical form would not be applicable to the dividend paid on shares also held in demat

form.

5. Members holding shares in physical form are requested to intimate Registrar and Transfer Agent of the

Company viz., Intime Spectrum Registry Limited, 211 Sudarshan Complex, Near Mithakhali Six Roads,

Navrangpura, Ahmedabad 380 009, changes, if any, in their registered address alongwith Pin Code. Members

holding shares in electronic form may update such details with their respective Depository Participant.

6. Pursuant to Clause 49 of the Listing Agreement with the Stock Exchange, where the equity shares of the

Company are listed, additional information pertaining to Directors proposed for re-appointment at the

Annual General Meeting is attached hereto.

REQUEST TO THE MEMBERS :

1. Members desiring to have any relevant information on the accounts at the Annual General Meeting are

requested to write to the Company at least seven days in advance at its Registered Office, so as to enable

the company to keep the information ready.

2. Members are requested to bring their copy of the Annual Report to the Meeting.

NOTICE



ANNEXURE TO THE NOTICEDisclosure pursuant to Clause 49 of Listing Agreement with regard to the Directors seeking re-appointment at

the forthcoming Annual General Meeting (Refer Item Nos. 3 and 4 of the Notice)

Name of the Director Brief resume and nature of expertise in List of other Directorships /

functional area Committee memberships in

Public Companies as on

31st March, 2008.

Dr. Ganesh N. Nayak is an Executive Director of Cadila

Healthcare Limited [CHL], spearheads the

international operations of the group. He also

oversees the Joint Venture Companies and Consumer

Products Business of CHL. He is associated with Zydus

Cadila Group since 1977, having experience of more

than 30 years. With strategic insight and business

acumen, Dr. Nayak has played a key role in several

M&A deals and alliances. Strategic management skills,

long-standing expertise in sales and marketing and

new insights from the Harvard Business School have

catapulted him to the global league of marketing

professionals. He has further enhanced his learning

with the degree of Doctorate in Marketing

Management and Business Administration from the

Belford University, USA.

Dr. Ganesh N. Nayak

(Director)

Other Directorship:

1. Zydus Animal Health

Limited

2. Liva Healthcare Limited

Member of Audit Committeeof the following Companies:

1. Carnation Nutra – Analogue

Foods Limited

2. Zydus Animal Health

Limited

NOTICE

Mr. Manubhai K. Patel

(Director)

He is a Chartered Accountant, having rich experience

of accounts, finance, taxation and Company Law. He

is working as Chief Financial Officer in Cadila

Healthcare Limited for 29 years.

Other Directorship:Dialforhealth Unity Limited



5

DIRECTORS’ REPORT

To,

The Members of

Carnation Nutra-Analogue Foods Limited,

Your directors have pleasure in presenting their FOURTEENTH Annual Report of the Company along with the

Audited statement of accounts for the year ended 31st March, 2008. The summarised financial results are given

below.

SUMMARISED FINANCIAL HIGHLIGHTS :

Rupees in thousands Growth in

Particulars 2007-08 2006-07 %

Sales and Other Income 579041 438071 32.18

Profit before Interest, Depreciation & Tax 78776 51629 52.58

Less : Interest 1200 95 1263.18

Depreciation 7258 4239 71.22

Provision for Tax 24770 23399 5.86

Profit after Interest, Depreciation & Tax 45548 23896 90.61

Add: Depreciation written back — 18820

B/F Surplus in Profit & Loss A/c 76084 44390

Profit available for Appropriation 121632 87106 39.64

Proposed Dividend 5575 5575

Dividend Tax 947 947

Amount transferred to General Reserve 5500 4500

Balance carried to Balance Sheet 109610 76084

For the year ended on 31st March, 2008, the sales and other income of the Company have increased by

32.18 % and was Rs. 579041 thousands compared to Rs. 438071 thousands in the previous year. Profit before

Interest, Depreciation & Tax increased to Rs. 78776 thousands compared to Rs. 51629 thousands in the previous

year. The profit after interest, depreciation and tax increased to Rs. 45548 thousands compared to Rs. 23896

thousands in the previous year.

DIVIDEND :

The Board is pleased to recommend a dividend of 10 % (Re. 1/- per equity share) for the year 2007-08, if

approved by the shareholders at the ensuing Annual General Meeting. Dividend payable will be Rs. 6522 thousands

inclusive of dividend distribution tax.

BUSINESS OUTLOOK :

The Company is spending huge money on building brand image of its products. Further, the Company has also

strengthened its distribution network. Looking to the market acceptance of the products of the Company, the

Company has increased its production capacity and also developed technology. In view of these measures

taken, the Company will achieve better turnover in the coming years. However, due to continuous increase in

the prices of input cost, there will be some impact on the profit margin of the Company.



FIXED DEPOSITS :

The Company has not accepted any deposits from the public.

DIRECTORS :

Dr. Ganesh N. Nayak and Mr. Manubhai K. Patel, Directors, retire by rotation at the ensuing Annual General

Meeting and are eligible for reappointment. They have expressed their willingness for re-appointment. The

Board recommends their appointment by the members.

In accordance with the stipulation under Clause 49 of the Listing Agreement, brief resume of Dr. Ganesh N.

Nayak and Mr. Manubhai K. Patel together with the nature of their expertise in specific functional areas and

names of companies in which they hold office as Director and /or Chairman/ member of committees of the

Board are given as an attachment to the notice.

AUDITORS :

The Audit Committee of the Board of Directors of the Company has recommended the re-appointment of

M/s. Mukesh M. Shah & Co., Chartered Accountants, who retire at the conclusion of the ensuing Annual General

Meeting. The Auditors have offered themselves for reappointment. The Board recommends their appointment by

the members.

DIRECTORS’ RESPONSIBILITY STATEMENT :

Pursuant to requirement under Section 217(2AA) of the Companies Act 1956 with respect to Directors responsibility

statement, your directors confirm that:

a) the annual accounts for the financial year ended 31st March, 2008 are prepared as a “going concern” basis;

b) in the preparation of the annual accounts, the applicable accounting standards have been followed;

c) selected such accounting policies and applied them consistently and made judgments and estimates that

were reasonable and prudent so as to give a true and fair view of the state of the affairs of the Company at

the end of the financial year and of the profit of the Company for the year ended on 31st March 2008;

d) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance

with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for

preventing and detecting fraud and other irregularities.

MANAGEMENT DISCUSSION AND ANALYSIS :

Management Discussion and Analysis Report as required under the Listing Agreement with the Stock Exchange

is given as a separate statement, which forms part of the Annual Report.

CORPORATE GOVERNANCE :

The report on Corporate Governance as required under Clause 49 of the Listing Agreement is made as a part of

this report.

In compliance with Section 292A of the Companies Act 1956 and the Listing Agreement, an audit committee

consisting of 3 independent directors has been formed.

A certificate from KANHA ASSOCIATES, Practicing Company Secretaries, regarding compliance of the conditions

stipulated under clause 49 of the Listing Agreement is attached to the Corporate Governance report.

DIRECTORS’ REPORT



7

DIRECTORS’ REPORT

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ETC. :

Information in accordance with the provisions of Section 217 (1) (e) of the Companies Act 1956 read with the

Companies (Disclosure of Particulars in the report of Board of Directors) Rules 1988 regarding the particulars

relating to conservation of energy, technology absorption and foreign exchange earnings and outgo have been

provided in the Annexure to this report.

PARTICULARS OF EMPLOYEES :

There was no employee drawing remuneration in excess of limits prescribed under Section 217(2A) of the

Companies Act, 1956, and Companies (Particulars of Employees) Rules, 1975 and therefore not applicable to

the Company.

ACKNOWLEDGEMENTS :

Your Directors wish to place on record their deep sense of appreciation for the contribution made by the

employees at all levels enabling the company to achieve a satisfactory performance during the year under

review.

Your Directors also take this opportunity to place on record the co-operation and continued support extended

by the Banks, Government Authorities and Shareholders during the year under review.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

Place : Ahmedabad. MUKESH M. PATELDate : 28th April, 2008 CHAIRMAN



ANNEXURE TO THE DIRECTORS’ REPORT

Additional information as required under the Companies (Disclosures in the Report of Board of Directors)Rules, 1988.

A. CONSERVATION OF ENERGY

(a) Energy Conservation measures taken:

1. Several energy conservation steps were initiated at the manufacturing site such as reduction in

lighting load, rationalization in running hours of non-critical equipments, improvement of power

factor, etc.

2. Noise level at various work places is routinely measured. Necessary noise reduction measures are

initiated to keep the noise levels within acceptable limits.

(b) Additional investments and proposals, if any, being implemented for reduction of consumptionof energy : No

(c) Impact of measures taken:

The adoption of energy conservation measures indicated above has resulted in savings of extra cost and

has brought awareness amongst employees.

FORM A – FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY

Unit ofMeasure 2007-08 2006-07

A. Power and Fuel Consumption :

1. Electricity :

(a) Purchased :

Units Nos. 1001158 785408

Total Amount Rs. 4804892 3703259

Rate/Unit Rs. 4.79 4.71

(b) Own Generation:

Through Diesel Generator :

Units Nos. 4548 units 3600 units

(1516 lit Diesel (1200 lit Diesel

consumed) consumed)

Units per lt. Of Diesel oil Nos. 3 3

Cost/Unit Rs. 12 10

2. Others/Internal Generation :

Solid Fuel (wood) :

Quantity Kgs. 420,378 511,105

Total Cost Rs. 840,756 860,486

Rate/Unit Rs. 2.00 1.65

B. Consumption per unit of production :

Product / unit Margarine / ton 6349 Margarine / ton 5203

Electricity consumed Nos. 0.1577 KWh 0.151 KWh



9

FORM B - FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO ABSORPTION

(1) RESEARCH & DEVELOPMENT (R&D) :

1. Specific areas in which R & D activities carried out by the Company – Nil

2. Benefits derived as a result of the above R & D – N.A.

3. Future plan of action: N.A.

4. Expenditure on R & D:

A Capital – Nil

B Recurring – Nil

C Total – Nil

D Total R & D expenditure as a percentage of total turnover – Nil

(2) TECHNOLOGY ABSORPTION, ADAPTION AND INNOVATION :

The Company has not imported any technology during last five years.

(3) FOREIGN EXCHANGE EARNINGS AND OUTGO :

RUPEES

Particulars 2007-08 2006-07

Earnings NIL NIL

Outgo 91,000 26,861,054

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

Place : Ahmedabad. MUKESH M. PATELDate : 28th April, 2008. CHAIRMAN

ANNEXURE TO THE DIRECTORS’ REPORT



India is second largest food producing country in the world after China. The Indian Food Processing is one of

the most promising industry.

India’s homogeneous market size endowed with growing incomes and changing life styles has created incredible

market opportunities for food producers.

Indian Food Processing Industry

The food processing industry has witnessed a double-digit growth of 13.7 per cent during the last four years. As

per the Ministry of Food Processing Industries, Government of India has set a growth target of 20 per cent by

the year 2015. Experts estimate the industry GDP at 6-8 per cent with value addition of food products to

increase from 8 percent to 35 per cent by the end of 2025.

The food growth in the Indian economy, coupled with a strong desire among the Indian consumers to maintain

a healthy lifestyle and the growing awareness of functional ingredients such as herbs, minerals, vitamins,

omega fatty acids and probiotics are driving the functional foods and beverages market. Functional foods are

also likely to witness an expanding consumer base due to their specific health benefits.

OUR PRODUCT’S PERFORMANCE REVIEW

About Nutralite

Nutralite table spread is India’s leading butter substitute with several health benefits over butter. It is cholesterol

free, has no hydrogenated fats, no trans fats. Compared to normal butter, it is low in saturated fats and has

more unsaturated fats. It is also enriched with vitamins A, D and E. Nutralite is now an AGMARK certified

product.

As an endeavor to give superior quality products with international standards of packaging, Nutralite has been

introduced in a tub pack – a first of its kind in India. It is airtight, tamperproof and microwaveable.

Competition / Outlook on Opportunities

The urban middle class continues to grow by 20-25 million annually, the population is predominantly young,

better exposed to modern lifestyles, and prefers packaged food and beverages. This growing Indian population

have higher propensity to consume health foods and functional foods, primarily due to their potential health

and nutritional benefits.

Food consumption habits are drastically changing in urban India. There is a significant influence of cross-

cultural food habits.

In order to reduce risks related to Cardio vascular diseases, high cholesterol and obesity, Dieticians and Nutritionists

recommend a diet lower in total fats and cholesterol. Normal butter has higher content of saturated fats,

cholesterol and low levels of unsaturated fats – all are potential problems for an unhealthy heart. Nutralite

contains no dietary cholesterol and has a healthier proportion of saturated and unsaturated fats compared to

normal butter, it may be recommended as a sensible alternative.

Risk and concern

The key raw material for the manufacturing of Nutralite is refined vegetable oil. Globally, in the past two years,

there has been a steep increase in raw material prices. This has had a significant impact on the gross margins

of the company. This phenomenon is likely to continue in the coming months. However, the company is

exploring various alternatives for procurement of the raw materials in order to rationalize the impact of price

increase.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT



11

1. COMPANY‘S PHILOSOPHY ON CORPORATE GOVERNANCE

Corporate Governance is a set of processes, customs, policies, laws and institutions affecting the way a

Company is directed, administered or controlled. It is about acceptance by the management of the absolute

right of shareholders as true owners and of their role as trustees on behalf of the shareholders.

We at Carnation believe that Corporate Governance hinges on total transparency, integrity and accountability.

The importance of Corporate Governance lays in the contribution both to business prosperity and to

accountability. We take pleasure in reporting that your company ‘s existing policies and procedures are in

conformity with the requirements stipulated under Clause 49 of the Listing Agreement.

2. BOARD OF DIRECTORS

a) Composition of the Board

The composition of the Board of Directors, with reference to the number of Executive and Non Executive

directors meets the requirements of Code of Corporate Governance. The Board of your Company comprises

of five directors. Except one, all Directors are Non Executive and Independent Directors. The Board

represents an optimum mix of professionalism, knowledge and expertise.

During the financial year 2007-08, 6 meetings of the Board of Directors were held on 25th April, 2007,

31st July, 2007, 20th August, 2007, 17th September, 2007, 26th October, 2007 and 31st January,

2008. The maximum time gap between two meetings was not more than 4 months.

The complete details regarding the directors, position held, attendance record and other directorships

(excluding private, foreign and alternative directorships) and the membership of Board committees

other than your Company (committee includes Audit Committee and Shareholder / Investor Grievance

Committee) as on date is provided in the following table.

Name of Director Position Attendance No. of Board Member of Numberat the Meetings other Board of Other

last AGM Attended Committees Director-ship held

Mr. Mukesh M. Patel Chairman, Yes 6 5 7

Non Executive and

Independent Director

Mr. Jitendra R. Patel Managing Director Yes 4 NIL NIL

Dr. Ganesh N. Nayak Non Executive and Yes 1 1 2


Dr. Mukesh R. Patel Non Executive and Yes 6 NIL 1


Mr. Manubhai K. Patel Non Executive and Yes 6 NIL 1


b) Information placed before the Board:

The information generally provided to the Board for its consideration and approval are as specified in

Clause 49 of the Listing Agreement whenever applicable and materially significant. Such information is

submitted well in advance with the agenda papers.

3. CODE OF CONDUCT:

All Board and Senior Management personnel have affirmed compliance with the Code of Conduct for the

year ended 31st March, 2008. The said code is posted on the website of the Company www.carnationnutra.com

CORPORATE GOVERNANCE REPORT



4. COMMITTEES OF THE BOARD

A. AUDIT COMMITTEE :

Terms of Reference :

The Audit Committee was formed on 25th March, 2003 and was reconstituted on 27th July, 2006 in

accordance with the guidelines set out in the Listing Agreement with the Stock Exchange.

The Terms of Reference of the Audit Committee cover the matters specified for Audit Committees under

Clause 49 of the Listing Agreement and Section 292A of the Companies Act, 1956.

The role of the Audit Committee, among others, include the following:

• Supervision of the Company’s financial reporting process,

• Reviewing with the Management, the financial results before placing them to the Board with a

special emphasis on accounting policies and practices, internal controls, compliance with the

accounting standards and other legal requirements concerning financial statements,

• Reviewing the adequacy of the audit and compliance function, including their policies, procedures,

techniques and other regulatory requirements with the statutory auditors,

• Reviewing the observations of statutory auditors about the findings during the audit of the

Company,

• Keeping watch on timely payment to shareholders and creditors,

• Reviewing the performance of statutory auditors,

• Reviewing management discussion and analysis of financial condition and result of operations,

• Reviewing of significant related party transactions, if any.

The Company continued to benefit from the deliberations in the Audit committee meetings since

members are experienced in the areas of finance, accounts, taxation, corporate laws, marketing and

the industry. It ensures accurate and timely disclosures that maintain the transparency, integrity and

quality of financial control and reporting.

Composition, Name of Members and Chairman :

Audit Committee was reconstituted on 27th July, 2006. Mr. Mukesh M. Patel, Dr. Ganesh N. Nayak and

Dr. Mukesh R. Patel were appointed as members of the Committee.

Mr. Mukesh M. Patel is the Chairman of the Committee. The Chairman was present at the last Annual

General Meeting.

Meetings and Attendance during the year :

During the year, four Audit Committee Meetings were held on the following dates:

25th April, 2007, 31st July, 2007, 26th October, 2007 and 31st January, 2008.

The details of committee member’s attendance at the meetings are provided in the below-given table:

Sr. No. Member Position Meetings Attended

1. Mr. Mukesh M. Patel Chairman 4

2. Dr. Ganesh N. Nayak Member 1

3. Dr. Mukesh R. Patel Member 4

Mr. Dhaval N. Soni, Company Secretary acts as Secretary to the Committee.

B. SHAREHOLDERS’ / INVESTORS’ GRIEVANCE COMMITTEE :

The Board constituted a Shareholders’ / Investors’ Grievance Committee on 25th March, 2003 for

redressal of Shareholders’ / Investors’ grievances, like transfer & transmission of shares, non-receipt of




13


dividend, dematerialisation of shares and matters relating to duplicate share certificate, deletion of

name, splitting and consolidation of shares and also delegate any of its powers, oversee the performance

of the Registrar and Share Transfer Agent as well as recommend suggestions to improve the Investors’

Services .

During the year 2007-08, the complaints received from Shareholders / Investors were resolved

satisfactorily. No complaints were pending as on 31st March, 2008.

The Company has acted upon all valid share transfers received during the year 2007 – 08. There were

no transfers pending as on 31st March, 2008.

Constitution

The Shareholders’ / Investors’ Grievance Committee was reconstituted on 27th July, 2006. During the

year, four meetings were held on 25th April, 2007, 31st July, 2007, 26th October, 2007 and 31st

January, 2008. The details of committee member’s attendance at the meetings are provided in the

below table.

Name of Member Category Committee Meetings Attended

Dr. Mukesh R. Patel Chairman 4

Mr. Mukesh M. Patel Member 4

Dr. Ganesh N. Nayak Member 1

Investors may send their query to the Company Secretary at the following address.

Mr. Dhaval N. Soni

Company Secretary

Carnation Nutra-Analogue Foods Ltd.

“Zydus Tower”, Satellite Cross Roads, Sarkhej Gandhinagar Highway, Ahmedabad- 380 015.

[email protected]

CEO / CFO certification:

Since, the operations of the Company does not require the appointment of the Chief Financial Officer,

in order to comply with the requirements of Clause – 49 of the Listing Agreement, the compliance

certificate required under Clause 49(V) has been signed jointly by the Managing Director and the Group

CFO.

5. GENERAL BODY MEETINGS

Details of last three Annual General Meetings held are mentioned below:

Financial Date & Venue Details of Special Resolution(s) passedYear Time Resolutions through postal ballot

2006-2007 23-7-2007 Seminar Hall, Ahmedabad NIL No

10.00 a.m. Management Association,

ATIRA Campus, Dr. Vikram Sarabhai

Marg, Ahmedabad- 380 015.

2005-2006 29-9-2006 Seminar Hall, Ahmedabad Nil No

10.00 a.m. Management Association,

ATIRA Campus, Dr. Vikram Sarabhai

Marg, Ahmedabad- 380 015.

2004-2005 29–9-2005 A-204, Samudra, Sardar Patel Delisting of Shares No

11.00 a.m. Nagar, C.G. Road, Navrangpura, from Ahmedabad

Ahmedabad 380 009. Stock Exchange Ltd.



6. DISCLOSURES

a) There were no materially significant related party transactions that may have potential conflict with

the interests of the Company at large. The related party transactions are disclosed in the Notes on

Accounts to the Balance Sheet.

b) There were no cases of non-compliance by the Company. During last three years, no penalties, strictures

were imposed on the Company by the Stock Exchange or SEBI or any statutory authority on any matter

related to capital markets,

c) No treatment different from the Accounting Standards, prescribed by the Institute of Chartered

Accountants of India, has been followed in the preparation of Financial Statements.

d) The Company has complied with all mandatory requirements of Clause 49 of the Listing Agreement.

7. MEANS OF COMMUNICATION

The quarterly and annual results are published in widely circulated national and local dailies such as “The

Hindu Business Line” and “Jansatta”, in English and Gujarati. The same were sent to the Stock Exchange

and posted on the Company’s website.

Management Discussion and Analysis Report

The Management Discussion and Analysis Report (MDA) forms part of the Annual Report.

8. GENERAL SHAREHOLDER’S INFORMATION

A. Annual General Meeting

Date : July 10, 2008

Time : 10:00 A.M.

Venue : AMA Seminar Hall, ATIRA Campus, Dr. Vikram Sarabhai Marg,

Ahmedabad-380015

Date of Book Closure : 7th July, 2008 to 9th July, 2008 (Both days inclusive)

B.Financial Calendar

Key Financial Reporting Dates for the financial year 2008 – 2009 (subject to change)

First quarter Results : Before July 31, 2008

Half yearly Results : Before October 31, 2008

Third quarter Results : Before January 31, 2009

Audited results for the year 2008-09 : Before June 30, 2009

C. Dividend Payment Date

The dividend, if any, declared at the ensuing Annual General Meeting will be paid to the members

eligible for it on or after 15th July, 2008.

D. Listing on Stock Exchanges

The Equity Shares of the Company are listed only on the Bombay Stock Exchange Limited. (BSE). The

stock code is 531335.

The Company has paid annual listing fees for the year 2008-09.




15


E. Market Price Data: High, Low during each month in last financial year and its comparison tobroad- base index BSE Sensex.

Rupees

MONTH HIGH LOW

April – 07 98.90 73.65 13872.37

May 102.95 81.90 14544.46

June 105.00 79.60 14650.51

July 108.00 80.00 15550.99

August 97.80 78.00 15318.60

September 99.00 84.10 17291.10

October 110.00 64.20 19837.99

November 127.00 87.05 19363.19

December 130.95 109.10 20286.99

January – 08 142.80 96.00 17648.71

February 99.95 87.00 17578.72

March 94.00 66.00 15644.44

The following chart gives the indication of performance of the Company’s script viz-a-viz BSE sensex.

F. Registrar and Transfer Agent

For lodgement of transfer deeds and other documents or for any grievances / complaints, investors

may contact the Company’s Registrar and Transfer Agent at the following address:

Intime Spectrum Registry Limited211, Sudarshan Complex, Mithakhali Six Roads, Navrangpura, Ahmedabad – 380 009

e-mail : [email protected] Phone : 079-26465179 Fax : 079-26465179

CARNATION DAILY SHARE PRICE Vs SENSEX

70

80

90

100

110

120

130

140

150

2 April 3 May 31 May 28 June 26 July 24 August 21 September 22 October 19 November 17 December 16 January 13 February 24 March

Trading days

Pri

ce (

in R

s.)

10000

12000

14000

16000

18000

20000P

oin

ts

STOCK PRICE SENSEX

SE

NS

EX

BSE SENSEX




G. Share Transfer System

The Board of Directors of the Company has delegated the powers of share transfers, splitting /

consolidation of share certificates and issue of duplicate shares, rematerialisation of shares, etc. to

Share Transfer Committee. The committee attends the share transfer formalities at least once in a

fortnight. The Registrar and Share Transfer Agent register the shares received for transfer in physical

mode, within 30 days from the date of lodgement, if documents are complete in all respects. Share

transfers under objection are returned within two weeks.

H. Dematerialisation of Shares and Liquidity

With effect from 26th June, 2000, trading in Equity Shares of the Company at the Stock Exchange is

permitted only in dematerialized form. The Company’s shares are available for trading in the depository

systems with National Securities Depository Limited (NSDL) and the Central Depository Services (India)

Limited (CDSL).

As on March 31, 2008, 5,398,655 Equity Shares of the Company, representing 96.84 % of the Share

Capital of the Company are held by the members in electronic form.

I. Distribution of Shareholding as on March 31, 2008

Shareholders Shares

No. of Equity Shares Numbers % of Total Number % of Total

1 to 500 1426 82.475 235557 4.225

501 to 1000 118 6.825 98037 1.758

1001 to 2000 63 3.644 97157 1.743

2001 to 3000 42 2.429 109470 1.964

3001 to 4000 20 1.157 69480 1.246

4001 to 5000 17 0.983 77698 1.394

5001 to 10000 16 0.925 123007 2.206

10001 & above 27 1.562 4764694 85.464

TOTAL 1729 100 5575100 100

J. Shareholding Pattern

11%

2%

62%

8%17%

Other Bodies Corporate

Promoter

Foreign Inst. Investors

Non Resident Indians

Indian Public

SHAREHOLDING PATTERN AS ON 31ST MARCH, 2008



17


K. Outstanding GDRs/ADRs/Warrants or any convertible instruments, conversion date and likelyimpact on equity

The Company has not issued any GDRs /ADRs, warrants or any convertible instruments.

L. Plant Locations

The Company’s Plant is located at 7A / 7B Saket Industrial Estate, Sarkhej – Bavla Highway, Moraiya,

Tal: Sanand, Dist.: Ahmedabad.

M. Address for correspondence

The shareholders may address their communication / grievances at the following address.

The Company Secretary

Carnation Nutra-Analogue Foods Ltd.

“Zydus Tower”, Satellite Cross Roads, Sarkhej-Gandhinagar Highway, Ahmedabad- 380 015.

N. Non-mandatory Requirements

The Company has constituted a Remuneration Committee. Relevant details of the Committee is provided

as under:

Terms of Reference

The Remuneration Committee was formed on 25th March, 2003. The Committee was set up to determine

the Company’s policy on remuneration package for Managing Director and any other Executive Director.

Composition, Name of Members and Chairman

The Remuneration Committee was reconstituted on 27th July, 2006. Mr. Mukesh M. Patel is the Chairman

of the Committee while Dr. Ganesh N. Nayak and Dr. Mukesh R. Patel are members of the Committee.

Mr. Jitendra Raojibhai Patel was appointed as the Managing Director w.e.f. 1st May, 2007 in place of

Mr. Ashish Amin, who passed away on February 27, 2007. Mr. Jitendra R. Patel is paid contractual

remuneration by way of salary, dearness allowance, perquisites and other allowances or any combination

thereof which does not exceed Rs. 9 lacs p.a. The remuneration was approved by the Remuneration

Committee at its meeting held on 25th April, 2007 and the same was approved by the members at the

13th Annual General Meeting of the Company held on 23rd July, 2007.

During the year, the Managing Director was paid a remuneration of Rs. 8.25 lacs for the period from

1st May, 2007 to 31st March, 2008.

No other Directors were paid any remuneration, including sitting fees. The Company has no pecuniary

relationship or transaction with its Non-Executive Directors.

The Company does not have a stock option or performance linked incentives for its Directors.

DECLARATION

All Board Members and Senior Management personnel have affirmed compliance with the Code of Conduct for

Directors and Senior Management, as approved by the Board.

Place : Ahmedabad. MUKESH M. PATELDate : 28th April, 2008. CHAIRMAN



CORPORATE GOVERNANCE COMPLIANCE CERTIFICATE

ToThe Members ofCarnation Nutra-Analogue Foods Limited

In accordance with Clause 49 of the Listing Agreement entered into by Carnation Nutra – Analogue Foods

Limited (the Company) with the Stock Exchange, we have examined all relevant records of the Company relating

to its compliance of Corporate Governance as stipulated in Clause 49 for the financial year ended 31st March,

2008.

It is the responsibility of the Company to prepare and maintain the relevant necessary records under the SEBI

guidelines, Listing Agreement and other applicable laws. Our responsibility is to carry out an examination, on

the basis of our professional judgement so as to award a reasonable assurance of the correctness and completeness

of the records for the purpose of this certificate.

We have obtained all the information and explanations, which to the best of our knowledge and belief were

necessary for the purpose of certification and have been provided with such records, documents, certificates,

etc. as had been required by us.

We certify that from the records produced and the explanations given to us by the Company for the purposes of

this certificate and to the best of our information, the Company has complied with all the mandatory requirements

of the said Clause 49 of the Listing Agreement.

FOR KANHA ASSOCIATESPRACTICING COMPANY SECRETARIES

Place : Ahmedabad. HITESH BUCHDate : 28th April, 2008. PARTNER



19

To the Members ofCarnation Nutra-Analogue Foods Limited

We have audited the attached Balance Sheet of CARNATION NUTRA-ANALOGUE FOODS LTD., as at 31st March,

2008 and the Profit and Loss Account of the Company for the year ended on that date and the cash flow

statement for the year ended on that date. These financial statements are the responsibility of the Company’s

management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards

require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements

are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the

amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles

applied and significant estimates made by management, as well as evaluating the overall financial statement

presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditor’s Report) Order, 2003 as amended by the Companies (Auditor’s Report)

(Amendment) Order, 2004 issued by the Central Government of India in terms of section 227(4A) of the

Companies Act, 1956 we enclose in the annexure, a statement on the matters specified in paragraph 4 and 5 of

the said Order.

Further to our comments in the Annexure referred to 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 the purposes of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the company, so far as it

appears from our examination of the books;

(c) The Balance Sheet, Profit and Loss account and Cash Flow Statement dealt with by this report are in

agreement with the books of account;

(d) In our opinion, the Balance Sheet, Profit and Loss account and Cash Flow Statement dealt with by this

report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies

Act, 1956;

(e) On the basis of the written representations received from the directors of the company and taken on record

by the Board of Directors, we report that no director is disqualified as on 31st March, 2008 from being

appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

and

(f) In our opinion, and to the best of our information and according to the explanations given to us, the said

accounts subject to significant accounting policies and notes thereon give the information required by the

Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the

accounting principles generally accepted in India;

(i) In the case of the Balance Sheet, of the state of affairs of the company as at 31st March, 2008;

(ii) In the case of the Profit and Loss account, of the profit for the year ended on that date; and

(iii) In the case of cash flow statement, of the cash flows for the year ended on that date.

For Mukesh M. Shah & Co.,Chartered Accountants

Chandresh S. ShahPlace : Ahmedabad. Partner

Date : 28.04.2008. Membership No. 42132

AUDITORS' REPORT



ANNEXURE TO THE AUDITORS' REPORT

With reference to the Annexure referred to in paragraph 3 of the report of the Auditors’ to the Members of

Carnation Nutra-Analogue Foods Limited on the accounts for the year ended 31st March, 2008, we report that:

1. (a) The company has maintained proper records showing full particulars, including quantitative details

and situation of fixed assets.

(b) Some of the fixed assets were physically verified during the year by the management in accordance

with programme of verification, which in our opinion provides for physical verification of all the fixed

assets at reasonable intervals. According to the information and explanations given to us no material

discrepancies were noticed on such verification.

(c) Fixed Assets disposed off during the year were not substantial and therefore do not affect the going

concern assumption.

2. (a) The inventory has been physically verified by the management during the year. In our opinion, the

frequency of such verification is reasonable.

(b) In our opinion, the procedure for physical verification of inventory followed by the management is

reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company has maintained proper records of the inventory. As informed to us, no material discrepancy

was noticed on physical verification of the inventory.

3. (a) The Company has granted an unsecured loan to fellow subsidiary companies as detailed below:

Name of the Company Amount Amount Amount outstandinggiven (Rs.) recovered (Rs.) as at 31.03.2008

Liva Healthcare Ltd. 14,50,00,000 2,00,00,000 12,50,00,000

Zydus Animal Health Ltd. 2,00,00,000 2,00,00,000 NIL

(b) The rate of interest and other terms and conditions on which the above loans have been granted are

not prima facie prejudicial to the interest of the Company.

(c) There is no stipulation about the repayment of the loan given to Liva Healthcare Ltd.

4. The Company has not taken any loans, secured or unsecured, from companies, firms or other parties

covered in the register maintained under section 301 of the Act. Accordingly, clause (iii) (f) and (iii) (g)

of paragraph 4 of the Order are not applicable to the Company for the current year.

5. (a) Based on the audit procedures applied by us and according to the information and explanations

provided by the management, the transactions that need to be entered into a register in pursuance of

Section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made

in pursuance of such contracts or arrangements have been made at prices, which are reasonable having

regard to prevailing market prices at the relevant time.

6. In our opinion, and according to the information and explanations given to us, the company has not

accepted any deposits from the Public within the meaning of the provisions of section 58A and 58AA of the

Companies Act, 1956 and the rules framed there under. Further, we are informed that no order has been

passed by the Company Law Board.

7. The Company has an internal audit system, which, in our opinion, is commensurate with its size and the

nature of its business.

8. As per the information and explanations given to us, the Central Government has not prescribed for

maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 for any of the products

of the Company.



21

9. (a) In our opinion and according to the information and explanations given to us and on the basis of our

examination of the books of account, the company has generally been regular in depositing undisputed

statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State

Insurance, Income-tax, Sales-tax, Wealth tax, Custom duty, Excise duty, Service Tax, Cess and any

other dues during the year with the appropriate authorities. As at 31st March 2008, there are no

undisputed dues payable for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no cases of non-deposit with

appropriate authorities of disputed dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise

Duty and Cess and other Statutory Dues.

10. The company does not have any accumulated losses at the end of the financial year and has not incurred

cash losses in the financial year and in the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are

of the opinion that the company has not defaulted in repayment of dues to a bank.

12. The company has not granted any loans and advances on the basis of security by way of pledge of shares.

13. The company is not a chit fund / nidhi / mutual benefit fund / society.

14. According to the information and explanations given to us, the company is not dealing or trading in

shares, securities, debentures and other investments.

15. According to the information and explanations given to us, the Company has not given any guarantees or

provided any security in respect of borrowings taken by others from banks and financial institutions.

16. The Company has not taken any term loans from any Bank or Financial Institution during the current year.

17. According to the information and explanations given to us and on an overall examination of the Cash Flow

Statement and other records examined by us, we report that no funds raised on short term basis have prima

facie, been used during the year for long term investment.

18. The company has not made any preferential allotment of shares to parties and companies covered in the

register maintained under section 301 of the Companies Act, 1956.

19. The Company has not issued any debentures hence; question of creating securities does not arise.

20. The company has not raised any money by public issues during the year.

21. To the best of our knowledge and belief, and according to the information and explanations given to us, no

fraud on or by the company was noticed or reported during the year.

For Mukesh M. Shah & Co.,Chartered Accountants

Chandresh S. ShahPlace : Ahmedabad. Partner

Date : 28.04.2008. Membership No. 42132

ANNEXURE TO THE AUDITORS' REPORT



Sche- Rupees in thousands

dule As at March 31,

No. 2008 2007

SOURCES OF FUNDS :

Shareholders’ Funds :

Capital 1 55751 55751

Reserves and Surplus 2 189033 150007

244784 205758

Deferred Tax Liability [ Net ] 16053 11153

Total 260837 216911

APPLICATION OF FUNDS :

Fixed Assets : 3

Gross Block 200574 90514

Less : Depreciation and Amortisation 31222 24783

Net Block 169352 65731

Current Assets, Loans and Advances :

Inventories 4 24975 25370

Sundry Debtors 5 11648 9953

Cash and Bank Balances 6 3285 136795

Loans and Advances 7 130581 19285

170489 191403

Less : Current Liabilities & Provisions :

Liabilities 8 71250 32076

Provisions 9 7754 8147

79004 40223

Net Current Assets 91485 151180

Total 260837 216911

Significant Accounting Policies and Notes on Accounts 14

As per our report of even date For and on Behalf of the Board

For, Mukesh M. Shah & Co. Mukesh M. PatelChartered Accountants Chairman

Chandresh S. Shah Dhaval N. Soni Jitendra R. PatelPartner Company Secretary Managing Director

Membership No. 42132

Place : Ahmedabad Place : Ahmedabad

Date : 28.04.2008 Date : 28.04.2008

BALANCE SHEET AS AT MARCH 31, 2008



23

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED ON MARCH 31, 2008

Sche- Rupees in thousands

dule Year ended March 31,

No. 2008 2007

INCOME :

Sales 563329 427052

Other Income 10 15712 11019

579041 438071

EXPENDITURE :

Consumption of Materials and Finished Goods 11 306746 249729

General Expenses 12 194719 136808

Depreciation 7258 4239

508723 390776

Profit before Tax 70318 47295

Less : Provision for Taxation 13 24770 23399

Profit after Tax 45548 23896

Add : Depreciation Written Back 0 18820

Profit for the year 45548 42716

Add : Balance brought forward 76084 44390

PROFIT AVAILABLE FOR APPROPRIATIONS : 121632 87106

Appropriations :

Dividends :

Proposed Dividend on Equity Shares 5575 5575

Corporate Dividend Tax on Proposed Dividend 947 947

6522 6522

Transfer to General Reserve 5500 4500

12022 11022

Balance carried to Balance Sheet 109610 76084

Basic and Diluted E P S [in Rupees] before Extra-ordinary items 8.17 4.29

Basic and Diluted E P S [in Rupees] after Extra-ordinary items 8.17 7.66

Significant Accounting Policies and Notes on Accounts 14






Date : 28.04.2008 Date : 28.04.2008



SCHEDULES FORMING PART OF THE BALANCE SHEET

Rupees in thousands

As at March 31,

2008 2007

Schedule : 1 - Capital :

Authorised :

60,00,000 Equity Shares of Rs.10/- each 60000 60000

60000 60000

Issued, Subscribed and Paid-up :

55,75,100 Equity Shares of Rs.10/- each fully paid-up 55751 55751

Total 55751 55751

Note : Of the above shares, 34,32,138 equity shares of

Rs. 10/- each, fully paid up are held by Cadila

Healthcare Ltd., a holding Company.

Schedule : 2 - Reserves & Surplus :

Capital Reserve Account :

Balance as per last Balance Sheet 4571 4571

Share Premium Account :


General Reserve :


Add : Transfer from Profit & Loss Account 5500 4500

20000 14500

Balance in Profit and Loss Account 109610 76084

Total 189033 150007

Schedule : 3 - Fixed Assets :

Rupees in thousands

GROSS BLOCK DEPRECIATION/AMORTISATION NET BLOCK

Nature of Fixed As At Additions Deduction As At Up to For the Deduction Upto As At As At

Assets 31-03-07 During during 31-03-08 31-03-07 Year during 31-03-08 31-03-08 31-03-07

the year the year the year

Freehold Land 477 0 0 477 0 0 0 0 477 477

Buildings 13492 0 0 13492 4514 569 0 5083 8409 8978

Plant & Machinery 71211 110364 1419 180156 19344 6361 457 25248 154908 51867

Furniture Fixtures &

Office equipments 1505 616 0 2121 440 101 0 541 1580 1065

Vehicles 2129 577 2005 701 385 57 362 80 621 1744

Technical Know-how 200 0 0 200 12 20 0 32 168 188

Trademarks 500 0 0 500 29 50 0 79 421 471

Non-Compete Fees 1000 0 0 1000 59 100 0 159 841 941

Capital Work under 0 1927 0 1927 0 0 0 0 1927 0

progress

Total 90514 113484 3424 200574 24783 7258 819 31222 169352 65731

2006-07 87468 3046 0 90514 39364 4239 18820 24783 65731



25

Schedule : 4 - Inventories :

[As taken, valued and certified by the management]

[Valued at lower of cost and net realisable value]

Stock-in-Trade :

Raw Materials 6230 6046

Packing Materials 1949 3138

Finished Goods 16796 16111

24975 25295

Stock-in-process 0 75

Total 24975 25370

Schedule : 5 - Sundry Debtors :

[Unsecured, Considered Good]

Debts outstanding for a period exceeding six months 149 72

Other debts 11499 9881

Total 11648 9953

Schedule : 6 - Cash and Bank Balances :

Cash Balance 116 56

Bank Balances :

With Scheduled Banks :

In Current Accounts 3169 2577

[Including Rs. 392 {as at 31-03-07 Rs. 406} thousands

in Unclaimed dividend Accounts]

In Fixed Deposit Accounts 0 134162

3169 136739

Total 3285 136795

Rupees in thousands

As at March 31,

2008 2007





Rupees in thousands

As at March 31,

2008 2007

Schedule : 7 - Loans and Advances :

[Considered Good , unsecured unless otherwise stated]

Advances for capital goods 0 9817

Advances recoverable in cash or in kind or for value to be received 5581 2905

Due from Liva Healthcare Ltd., a company under the same management 125000 0

[Maximum amount outstanding at any time during the year Rs. 145000

thousands {Previous year Rs. Nil}]

Interest receivable 0 6563

Total 130581 19285

Schedule : 8 - Current Liabilities :

Sundry Creditors :

Micro and Small Enterprises 0 0

Others 69678 30485

69678 30485

Trade Deposits 1180 1180

Investor Education and Protection Fund :

Unclaimed Dividend 392 411

[There are no amounts due and outstanding to be

credited to Investor Education and Protection Fund]

Total 71250 32076

Schedule : 9 - Provisions :

Proposed dividend 5575 5575

Corporate Dividend Tax on Proposed Dividend 947 947

Provision for Income Tax [Net of Advnace Tax] 885 887

Provision for retirement benefits 347 738

Total 7754 8147



27

Schedule : 10 - Other Income :

Interest on Deposits / Inter corporate Loans [Gross] [TDS Rs. 2906 12924 9439

previous year Rs. 2110} thousands]

Miscellaneous Income 2788 1580

Total 15712 11019

Schedule : 11 - Consumption of Materials and Finished Goods :

Raw Materials :

Stock at commencement 6046 14166

Add : Purchases 273921 217540

279967 231706

Less : Stock at close 6230 6046

273737 225660

Packing Materials Consumed 33619 29697

[Increase] in Stock of Finished Goods and Stock in Process :

Stock at close :



16796 16186

Less : Stock at commencement:



16186 10558

(610) (5628)

Total 306746 249729

Rupees in thousands

Year ended March 31,

2008 2007

SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT



SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT

Schedule : 12 - General Expenses :

Personnel expenses :

Salaries, wages and bonus 27108 25472

Company’s contribution to provident & other funds 849 1457

Staff welfare expenses 422 346

28379 27275

Power & fuel 5730 4482

Insurance 431 391

Repairs :

Buildings 384 400

Plant and Machinery 1962 2247

Others 29 99

2375 2746

Rent 3115 2163

Rates and Taxes 1340 689

Managing Director’s Remuneration 825 2250

Miscellaneous Expenses 4870 6024

Selling & Distribution Expenses :

Commission on sales 8241 8274

Freight and forwarding on sales 36755 29169

Advertisement expenses 87462 41537

Sales promotion expenses 11974 8103

Other marketing expenses 923 658

145355 87741

Interest Paid :

To Banks 757 24

To Others 443 71

1200 95

Loss on Sale of Assets 307 0

Loss on account of fluctuations on account of changes in the foreign

currency exchange rates 379 0

Prior Period expenses 413 2952

Total 194719 136808

Schedule : 13 - Provision for Taxation :

Current Tax 19200 16500

Fringe Benefit Tax 670 284

Deferred Tax 4900 6734

Total 24770 23518

[Less]/Add : Prior year’s tax adjustments 0 (119)

Total 24770 23399

Rupees in thousands

Year ended March 31,

2008 2007



29

Schedule : 14 - Significant Accounting Polices & Notes forming part of Accounts :

A Significant Accounting Policies :

1 Basis of Accounting :

The financial statements are prepared under the historical cost convention on the “Accrual Concept”

of accountancy in accordance with the accounting principles generally accepted in India and comply

in all material aspects in respect with the Notified Accounting Standards by the Companies Accounting

Standards Rules, 2006 and with the applicable provisions of the Companies Act, 1956.

2 Use of Estimates :

The preparation of Financial statements are in conformity with the accounting standards generally

accepted in India requires, the management to make estimates and assumptions that affect the

reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of the

financial statements and reported amounts of revenues and expenses for the year. Actual results could

differ from these estimates.

Any revision to accounting estimates is recognised prospectively in current and future periods.

3 Fixed Assets and Depreciation :

A Fixed Assets are stated at historical cost of acquisition / construction less accumulated depreciation.

Cost includes incidental expenditure incurred to bring the respective asset to its present location.

B Depreciation is provided on “straight line method” as per Section 205 (2) (b) of the Companies

Act, 1956 at the rates prescribed in Schedule XIV thereto.

C Depreciation on additions / disposals of the fixed assets during the year is provided on pro-rata

basis according to the period during which assets are put to use.

D The cost of acquisition of Trade Mark, Technical Know How and similar rights are amortised over

its estimated economic life of 10 years.

4 Inventories :

A Raw Materials , Packing Materials , Finished Goods and Stock-in-process are valued at lower of

cost and net realisable value.

B Cost of Raw Materials, Packing Materials & Finished Goods is determined on FIFO basis.

C Cost of Finished Goods and Stock-in-process is determined by taking material cost, labour and

relevant appropriate overheads.

5 Revenue Recognition :

A Sales of products in domestic market are recognised when they are despatched to customers at

invoice value and are reported net of trade discounts, price differences and sales tax.

B Interest income is recognised on time proportionate method.

C Revenue in respect of other income is recognized when no significant uncertainty as to its

determination or realisation exists.

6 Foreign Currency Transactions :

A The transactions in foreign currencies on revenue accounts are stated at the rates of exchange

prevailing on the date of transaction.

B The net gain or loss on account of exchange differences either on settlement or on translation,

including those on account of liabilities relating to fixed assets acquired outside India are recognised

in the Profit and Loss Account.

C The foreign currency assets and liabilities are restated at the prevailing exchange rates at the year

end.

7 Employee Benefits :

A Defined Contribution Plans :

The Company contributes on a defined contribution basis to Employee’s Provident Fund towards

post employment benefits, all of which are administered by the respective Government authorities,

and has no further obligation beyond making its contribution, which is expensed in the year to

which it pertains.

Schedules forming part of the Balance Sheet and Profit and Loss Account



B Defined Benefit Plans :

The gratuity scheme is administered through the Life Insurance Corporation of India [ LIC ]. The

liability for the defined benefit plan of Gratuity is determined on the basis of an actuarial valuation

by an independent actuary at the year end, which is calculated using projected unit method.

Actuarial gains and losses which comprise experience adjustment and the effect of changes in

actuarial assumptions are recognised in the Profit and Loss Account.

C Leave Liability :

The employees of the Company are entitled to leave as per the leave policy of the Company. The

liability in respect of unutilised leave balances is provided based on an actuarial valuation carried

out by an independent actuary as at the year end and charged to the Profit and Loss Account.

8 Taxes on Income :

A Current tax is determined on the basis of the amount of tax payable on taxable income for the

year.

B In accordance with Accounting Standard 22 - “ Accounting for Taxes on Income “ , issued by the

Institute of Chartered Accountants of India, amount of the deferred tax for timing differences

between the book and tax profits for the year is accounted for using the tax rates and laws that

have been enacted as of the balance sheet date. Deferred tax assets arising from temporary timing

differences are recognised to the extent there is reasonable certainty that the assets can be

realised in future.

9 Impairment of Assets :

The Company assesses at each balance sheet date whether there is any indication of impairment of any

asset. If such indication exists, assets are impaired by comparing carrying amount of each asset

and / or cash generating unit to the recoverable amount being higher of the net selling price or value

in use. Value in use is determined from the present value of the estimated future cash flows from the

continuing use of the assets.

B Notes on Accounts :

1 Hitherto, the company used to capitalise the Exchange differences arising on account of variations in

the liabilities incurred in foreign currency in respect of acquiring assets from out of India. However, in

terms of the statutory change in Schedule - VI to the Companies Act, 1956, the Company has

charged/credited such exchange rate differences to the Profit and Loss Account during the year. Due

to this, the profit for the year is lower by Rs. 379116/-

2 In the opinion of the Board, Current Assets, Loans & Advances are stated at value realisable in the

ordinary course of business.

3 Previous year figures have been regrouped and rearranged wherever necessary.

Rupees in thousands

Year ended March 31,2008 2007

4 Remuneration to Managing Director :

Salary 825 2250

Contribution of Provident Fund 0 7

Bonus / Ex-gratia 0 9

Total 825 2266

5 Remuneration to Auditors :

Audit Fees 112 112

Tax Audit Fees 85 56

Other Services 10 0

Total 207 168





31

6 Contingent Liabilities not provided for:

A The company has Imported certain capital Equipment at concessional rate of custom duty under

“Export promotion of Capital Goods scheme” of the Central Government .The Company has

undertaken an Incremental export obligation to the extent of US $ 2433 thousands {equivalent to

Rs. 99264 thousands Approx.} [Previous Year US $ NIL {Equivalent to Rs. NIL}] to be fulfilled

during a specified period as applicable from the date of imports. The liability towards custom duty

payable thereon in respect of unfulfilled export obligation as on 31st March, 2008 of Rs.12408

thousands [ as at 31-03-07 - Rs. NIL] is not provided for.

7 Estimated amount of contracts remaining to be executed on capital account and not provided for

[Net of Advances ] Rs. Nil {as at 31.03.07 Rs. 21958} thousands

8 Segment Information :

The company operates in one segment only namely Margarine, Butter & Cheese. The Company has only

one plant located in Gujarat and the company sells its products in India. Hence, there is no geographical

segment also. Therefore, no segment wise figures are given.

9 Micro, Small and Medium Enterprises :

A Under the Micro, Small and Medium Enterprises Development Act, 2006, [ MSMED ] which came

into force from October 2, 2006, certain disclosures are required to be made relating to Micro,

Small and Medium enterprises.

Year endedMarch 31, 2008

Rupees in Thousands

Principal amount remaining unpaid to any supplier as at the year end 0

Interest due thereon 0

Amount of interest paid by the Company in terms of section 16 of the

MSMED, along with the amount of the payment made to the supplier

beyond the appointed day during the accounting year 5

Amount of interest due and payable for the period of delay in making

payment (which have been paid but beyond the appointed day during

the year) but without adding the interest specified under the MSMED 0

Amount of interest accrued and remaining unpaid at the end of the

accounting year 0

B The above information has been compiled in respect of parties to the extent to which they could

be identified as Micro, Small and Medium Enterprises on the basis of information available with

the Company.

10 Related Party Transactions :

A Name of the Related Party and Nature of the Related Party Relationship :

a Holding Company :

Cadila Healthcare Limited

b Fellow Subsidiaries :

German Remedies Limited Zydus Healthcare S. A. [Pty] Ltd. [South Africa]

Zydus Pharmaceuticals Limited Zydus Healthcare (USA) LLC (USA)

Zydus International Pvt. Ltd. (Ireland) Zydus France SAS (France)

Dialforhealth India Ltd. Zydus Noveltech Inc. (USA)

Dialforhealth Unity Limited Zydus Pharmaceuticals Inc. (JAPAN)

Nippon Universal Pharmaceuticals Ltd. Quimica e Pharmaceutica Nikkho Do, Brasil Ltda.

(Japan) (Brazil)

Zydus Healthcare Brasil Ltda (Brazil) Zydus Netherlands B. V. (The Netherlands)

Zydus Pharmaceuticals USA Inc. (USA) Zydus Animal Health Limited

Liva Healthcare Limited M/s Zydus Healthcare, Sikkim - a Partnership Firm







c Directors and their relatives :

Shri Mukesh M. Patel Chairman

Shri Jitendra R. Patel Managing Director [ from 1st May, 2007 ]

Dr. Ganesh N. Nayak Director

Dr. Mukesh R. Patel Director

Shri Manubhai K. Patel Director

B Transactions with Related Parties :

The following transactions were carried out with the related parties in the ordinary course of

business.

Rupees in thousands

Year ended March 31,Nature of transactions 2008 2007

a Details relating to parties referred to in items A (a)

Purchases - Raw Materials 23 0

b Details relating to parties referred to in items A (b) :

Services 0 5

Inter Corporate Deposits given 145000 0

Interest received on Inter Corporate Deposit 9667 0

c Details relating to parties referred to in items A (c) :

Remuneration 825 2266

Others 0 1700

Sales of fixed assets 0 0

11 Disclosure pursuant to Accounting Standard - 15 [Revised] ‘Employee Benefits’ :

A The Company has, with effect from 1st April, 2007, adopted Accounting Standard 15, Employee

Benefits [ revised 2005 ] [the ‘revised AS 15’], issued by the Institute of Chartered Accountants of

India. The transitional effect of Gratuity and Leave liability is as follows:

Rs. In ths.

Gratuity (340)

Leave liability 174

Total Transitional Adjustment (166)

B Defined benefit plan and long term employment benefit

a General description :

Gratuity [ Defined benefit plan ] :

The Company has a defined benefit gratuity plan. Every employee who has completed five

years or more of service gets a gratuity on death or resignation or retirement at 15 days

salary (last drawn salary) for each completed year of service. The scheme is funded with an

insurance company in the form of a qualifying insurance policy

Leave wages [ Long term employment benefit ] :

The leave wages are payable to all eligible employees at the rate of daily salary for each day

of accumulated leave on death or on resignation or upon retirement on attaining

superannuation age.



33

Rs. In thousands

Year ended 31st March, 2008

Leave Wages Gratuity

b Change in the present value of the definedbenefit obligation :

Opening defined benefit obligation 535 703

Interest cost 15 57

Current service cost 159 139

Benefits paid (56) (364)

Actuarial (gain) / losses on obligation (306) 67

Closing defined benefit obligation 347 602

c Change in the fair value of plan assets :

Opening fair value of plan assets 0 876

Expected return on plan assets 0 80

Contributions by employer 0 326

Benefits paid 0 (364)

Actuarial gains / (losses) 0 (3)

Closing fair value of plan assets 0 (915)

Total actuarial gain (loss) to be recognized 0 70

d Actual return on plan assets :

Expected return on plan assets 0 80

Actuarial gain / (loss) on plan assets 0 (3)

Actual return on plan assets 0 77

e Amount recognized in the balance sheet :

Assets / ( Liability ) at the end of the year (347) (602)

Fair value of plan Assets at the end of the year 0 915

Difference (347) 313

Unrecognised past Service cost 0 0

Assets / ( Liability ) recognized in the Balance Sheet (347) 313

f (Income) / Expenses recognized in the Profit & LossAccount statement :

Current service cost 159 139

Interest cost on benefit obligation 15 57

Expected return on plan assets 0 (80)

Net actuarial (gain) / loss in the period (306) 70

Net (benefit) / expense (132) 186

g Movement in net liability recognised in Balance Sheet :

Opening net liability 535 (172)

Expenses as above [ P & L Charge ] (132) 186

Employers contribution (56) (326)

Amount recognized in the balance sheet 347 (312)





h Principal actuarial assumptions as at Balance Sheet date :

Discount rate 8.10% 8.10%

[The rate of discount is considered based on market yield

on Government Bonds having currency and terms

consistence with the currency and terms of the post

employment benefit obligations]

Expected rate of return on plan Assets 0.00% 9.00%

[The expected rate of return assumed by the Insurance

Company is generally based on their Investment patterns

as stipulated by the Government of India]

Annual increase in salary cost 5.00% 5.00%

[The estimates of future salary increases considered in

actuarial valuation, take account of Inflation, Seniority,

Promotion and other relevant factors such as supply and

demand in the employment market]

i The category of plan assets as a % of total plan assets are :

Insurance Company 0.00% 100.00%

12 Deferred Tax :

A The Deferred Tax liability of Rs.4900 thousands for the year has been recognised in the Profit and

Loss Account.

B Break up of Deferred Tax Liabilities into major components of the respective balances are as

under:

Rupees in thousands

Charge for

the year to

As on Profit & As on31-03-07 Loss A/c. 31-03-08

Deferred Tax Liabilities :

Depreciation 11332 4900 16232

Less : Deferred Tax Assets :

Retirement benefits 179 0 179

Net Deferred Tax Liability 11153 4900 16053

13 Calculation of Earnings per Share [EPS] :

The numerators and denominators used to calculate the basic and diluted EPS are as follows:

Year ended March 31,2008 2007

A Profit after tax attributable to Shareholders:

a Before extra-ordinary items Rs. ’000 45548 23896

b After extra-ordinary items Rs. ’000 45548 42716

B Basic and weighted average number of Equity Shares

outstanding during the year Nos. 5575100 5575100

C Nominal value of equity share Rs. 10 10

D Basic and Diluted EPS

a Before extra-ordinary items Rs. 8.17 4.29

b After extra-ordinary items Rs. 8.17 7.66





35



14 Quantitative and value analysis of sales turnover :Year ended March 31,

Units of 2008 2007

Class of Goods Measure Qty. Rs. ‘000 Qty. Rs. ‘000

Margarine M.T. 6343 563329 4976 420922

Butter M.T. 0 0 12 1231

Cheese M.T. 0 0 42 4899

Total 563329 427052

15 Quantitative and Value analysis of Opening/Closing stock :As at March 31,

Units of 2008 2007 2006

Class of Goods Measure Qty. Rs. ‘000 Qty. Rs. ‘000 Qty. Rs. ‘000

Finished Goods :

Margarine M.T. 289 16796 293 16111 136 8548

Butter M.T. 0 0 0 0 14 1368

Cheese M.T. 0 0 0 0 8 640

Total 16796 16111 10556

16 Quantitative information in respect of each class of goods manufactured by the company (ascertified by the management)

Installed capacity Actual ProductionUnit of As at March 31, Year ended March 31,

Class of Goods Measure 2008 2007 2008 2007

Margarine M.T. 8500 5500 6349 5167

Butter M.T. 0 0 0 0

Cheese M.T. 0 0 0 36

Note : In view of delincensing, information of licensed capacity of production are not applicable.

17 Consumption of Raw Materials and Packing Materials :Year ended March 31,

2008 2007

Rs.’000 % to total Rs.’000 % to total

Value of Raw Material Consumed :

Imported 0 0 37533 17

Indigenous 273737 100 188127 83

Total 273737 100 225660 100

Value of Packing Material Consumed 33619 100 29697 100

18 Value of imports calculated on CIF basis :

Capital Goods 50798 0

Raw Material 0 17044

Stores & Spares 23 739

Exchange Rates Fluctuations 11 0

19 Expenditure in foreign currency :

Traveling 91 0

20 Remittances made on account of dividendsin foreign currency : 39 0



BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

Balance Sheet Abstract and Company's General Business Profile :

I. Registration Details :

Registration No. (CIN) L15201GJ1994PLC023490

State Code 04

Balance Sheet Date 31-03-08

Rs. In thousands

II. Capital Raised During the year :

Public Issue / Right Issue / Bonus Issue / Private Placement Nil

III Position of Mobilisation and Deployment of Funds :

Total Liabilities 260837

Total Assets 260837

Sources of Funds :

Paid Up Capital 55751

Reserves and Surplus 189033

Deferred Tax Liabilities 16053

Applications of Funds :

Net Fixed Assets 169352

Net Current Assets 91485

IV Performance of the Company :

Total Turnover [ Including Other Income ] 579041

Total Expenditure 508723

Profit before Tax 70318

Profit after Tax 45548

Earning per Share [ Rupees ] 8.17

Dividend Rate [ % ] 10

V Generic Names of three Principal Products of Company(As per Monetary Terms) :

Product Description Item Code No.

Table Margarine and Spreads 15171000







Date : 28.04.2008 Date : 28.04.2008



37

Rupees in thousandsYear ended March 31,

2008 2007

A. Cash Flow from Operating Activities :

Net Profit after Tax 45548 42716

Adjustment for:

Depreciation 7258 4239

Excess Provision of Depreciation written back 0 (18820)

Provision for Taxation 24770 23399

Loss on sale of assets 307 0

Interest expenses 1200 95

Interest Income (12924) (9439)

20611 (526)

Operating Profit before working Capital Changes 66159 42190

Adjustment for:

Trade and Other Receivables (1695) (7514)

Inventories 395 1955

Loans, Advances & Deposits (111296) (7867)

Current Liabilities and Provisions 38784 18865

(73812) 5439

Cash Generated from Operations (7653) 47629

Interest Paid (1200) (95)

Income Tax Paid (19871) (16987)

(21071) (17083)

Cash Flow before Extra-Ordinary items (28724) 30547

B. Cash Flow from Financing Activities :

Dividend Paid (5575) (5575)

Corporate Dividend Tax paid (947) (782)

(6522) (6357)

CASHFLOW STATEMENT FOR THE YEAR ENDED ON MARCH 31, 2008



C. Cash flow from Investing Activities :

Purchase of Fixed Assets (113484) (3046)

Sale of fixed assets 2297 0

Interest Income 12924 9439

Net Cash used in Investing Activities (98263) 6393

Net Increase / (Decrease) in Inflow of Cash / (133509) 30583

Cash Equivalents (A+B-C)

Add : Balance at the beginning of the Year 136795 106211

Cash / Cash equivalents at the close of the Year 3286 136794

Rupees in thousandsYear ended March 31,

2008 2007

CASHFLOW STATEMENT FOR THE YEAR ENDED ON MARCH 31, 2008


For, Mukesh M. Shah & Co., Mukesh M. PatelChartered Accountants Chairman



Place : Ahmedabad. Place : Ahmedabad.

Date : 28.04.2008. Date : 28.04.2008.



39



FORM OF PROXY

I/We of being a

member/ members of CARNATION NUTRA-ANALOGUE FOODS LIMITED hereby appoint

of or failing him/her

of as my/our proxy to vote for me/us on my/our behalf at the

FOURTEENTH ANNUAL GENERAL MEETING of the company scheduled to be held on Thursday, the 10th day of July

2008 at 10.00 A.M. at AMA Seminar Hall, ATIRA Campus, Dr. Vikram Sarabhai Marg, Ahmedabad – 380 015, and

at any adjournment thereof.

Ledger Folio No./ Client ID No.

No. of shares

Signed this day of 2008

IMPORTANT

1. This form duly completed and signed across the stamp as per the specimen signature registered with the

Company should be deposited at the registered office of the Company not less than 48 hrs before the time

fixed for the commencement of the meeting.

2. Revenue stamp of Re.1 is to be affixed on this form.

3. A proxy need not be a member.

Affix

revenue

stamp of

requisite

Value

Signature



ATTENDANCE SLIP

PLEASE COMPLETE THIS ATTENDANCE SLIP AND HAND IT OVER AT THE ENTRANCE OF THE MEETING HALL. JOINT

SHAREHOLDERS MAY OBTAIN ADDITIONAL ATTENDANCE SLIP ON REQUEST.

NAME

REG FOLIO NO. / CLIENT ID NO.

NO OF SHARES HELD

I hereby record my presence at the Fourteenth Annual General Meeting of the Company on Thursday, the 10th

day of July 2008 at 10.00 A.M. at AMA Seminar Hall, ATIRA Campus, Dr. Vikram Sarabhai Marg, Ahmedabad –

380 015

Signature of Shareholder / Proxy

www.nutralite.com

If undelivered, please return to:

Carnation Nutra-Analogue Foods Ltd.(A Subsidiary of Cadila Healthcare Ltd.)

Regd. Office: Zydus Tower, Satellite Cross Road,

Ahmedabad - 380015. Gujarat

www.nutralite.comwww.carnationnutra.com

Book-Post

To,

nutralite annual report 2007-08 - Zydus WellnessAnnual Report 2007-2008 CARNATION NUTRA-ANALOGUE FOODS LIMITED TM 3 4. The bank account particulars of the members will be printed on

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