MIRA INFORM REPORT

Report Date :

05.04.2011

IDENTIFICATION DETAILS

Name :	DISHMAN PHARMACEUTICALS AND CHEMICALS LIMITED
Registered Office :	Bhadra-Raj Chambers, Swastik Cross Road, Navrangpura, Ahmedabad-380009, Gujarat
Country :	India
Financials (as on) :	31.03.2010
Date of Incorporation :	29.06.1983
Com. Reg. No.:	04-6329
CIN No.: [Company Identification No.]	L24230GJ1983PLC006329
TAN No.: [Tax Deduction & Collection Account No.]	AHMD00851E
PAN No.: [Permanent Account No.]	AAACD4161D/ AAACD4164D
Legal Form :	Public Limited Liability Company. The company’s shares are listed on the Stock Exchanges.
Line of Business :	Manufacturers and Exporters of Bulk Drugs, Organic Chemicals and Fine Chemicals.

RATING & COMMENTS

MIRA’s Rating :

A (66)

RATING		STATUS	PROPOSED CREDIT LINE
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large

Maximum Credit Limit :	USD 24000000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Exists
Comments :	Subject is a well established and a reputed company having good track. Financial position of the company appears to be sound. Directors are reported to be experienced and respectable businessmen. Trade relations are reported as fair. Business is active. Payments are reported to be regular and as per commitments. The company can be considered good for normal business dealings at usual trade terms and conditions.

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – April 1, 2010

Country Name	Previous Rating (31.12.2009)	Current Rating (01.04.2010)
India	A1	A1

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

LOCATIONS

Registered Office :	Bhadra-Raj Chambers, Swastik Cross Road, Navrangpura, Ahmedabad – 380009, Gujarat, India
Tel. No.:	91-79-26445807 / 26443053 / 26560089/ 26420198
Fax No.:	91-79-26420198
E-Mail :	jrvyas@adl.vsnl.net.in dishman@dishmangroup.com
Website :	http://www.dishmangroup.com
Corporate Office :	301-306, Samudra Annexe, Off C. G. Road, Navrangpura, Ahmedabad - 380 009, Gujarat, India
Factory 1 :	Plot No. 1216/20, Phase IV, GIDC Estate, Naroda, Ahmedabad – 382 330, Gujarat, India
Tel. No.:	91-79-2811633 / 2814234
Factory 2 :	Survey No. 47, Paiki Sub Lot No. 1, Village Lodariya, Taluka Sanand, District Ahmedabad, Gujarat, India
Factory 3:	Swastika Cross Road, Navrangpura, Ahmedabad 380 009, Gujarat, India
Tel. No.:	91-79-26420198
Branches :	401, Sangeet Plaza, Marol Marashi Road, Andheri (East), Mumbai - 400 059, Maharashtra
Tel. No.:	91-22-2859 2120/ 29204537
Fax No.:	91-22-2859 2226/ 66964055
E-Mail :	mumbai@dishmangroup.com
Branch Office:	Located At: Mumbai Fort, Mumbai Ahmedabad Baroda Coimbatore Kolkata New Delhi Pune
Overseas Office :	Located At: China Shanghai Netherlands Veenedaal Carbogen Amcis Aarau Neuland Manchester
Sales Offices:	Located At: Australia China Japan UK US

DIRECTORS

As on 31.03.2010

Name :	Mr. Janmejay R. Vyas
Designation :	Chairman and Managing Director
Address :	B/1-A, Rajhans Society, Ellisbridge, Ahmedabad – 380 006, Gujarat
Date of Birth :	29.04.1951
Qualification :	B. Sc. (Tech.)
Name :	Mrs. Deohooti J. Vyas
Designation :	Whole-time Director
Address :	B/1-A, Rajhans Society, Ellisbridge, Ahmedabad – 380 006, Gujarat
Date of Appointment :	01.12.1997
Qualification :	A Bachelor Degree in Science
Other Directorship :	Schutz Dishman Biotech Private Limited B. R. Laboratories Private Limited Bhadra Raj Holdings Private Limited Dishman FZE
Name :	Mr. Yagneshkumar B. Desai
Designation :	Director
Date of Appointment :	26.11.2003
Qualification :	A bachelors degree in Economics A fellow of the Indian Institute of Bankers
Other Directorship :	Deutsche Trustee Services (India) Private Limited Kabra Extrusiontechnik Limited LIC Housing Finance Limited
Name :	Mr. Sanjay S. Majmudar
Designation :	Director
Date of Appointment :	14.02.2004
Qualification :	CA, LLB, Company Secretary
Other Directorship :	· Aarvee Denims and Exports Limited · AIA Engineering Limited · Carbogen Amcis (India) Limited · Keyur Financial Services Private Limited · Welcast Steels Limited
Name :	Mr. Ashok C. Gandhi
Designation :	Director
Date of Appointment:	30th July, 2004
Qualification :	B. Com, LLB
Other Directorship :	Amol Dicalite Limited Jayatma Spinners Limited Bloom Dekor Limited Aarvee Denims and Exports Limited Ahmedabad Steel Craft Limited Gujarat Ambuja Exports Limited Soma Textile and Industries Limited Nishit Synthetics Private Limited Meteor Satellite Private Limited

KEY EXECUTIVES

Name :	Mr. Deepak S. Pandya
Designation :	Company Secretary And Compliance Officer

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 31.12.2010

Names of Shareholders	Total No. of Shares	Total Shareholding as a % of total No. of Shares
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Individuals / Hindu Undivided Family	48,541,469	60.15
Bodies Corporate	600,000	0.74
Sub Total	49,141,469	60.90
(2) Foreign
Total shareholding of Promoter and Promoter Group (A)	49,141,469	60.90
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	5,432,742	6.73
Financial Institutions / Banks	2,103,531	2.61
Insurance Companies	1,250	-
Foreign Institutional Investors	6,972,807	8.64
Sub Total	14,510,330	17.98
(2) Non-Institutions
Bodies Corporate	11,317,038	14.02
Individuals
Individual shareholders holding nominal share capital up to Rs.0.100 Million	4,342,755	5.38
Individual shareholders holding nominal share capital in excess of Rs.0.100 Million	591,235	0.73
Any Others (Specify)	794,309	0.98
Non Resident Indians	485,532	0.60
Clearing Members	308,777	0.38
Sub Total	17,045,337	21.12
Total Public shareholding (B)	31,555,667	39.10
Total (A)+(B)	80,697,136	100.00

BUSINESS DETAILS

Line of Business :

Manufacturers and Exporters of Bulk Drugs, Organic Chemicals and Fine Chemicals.

Products :

Product Description	Item Code No. (ITC Code)
Bulk Drugs	292390.00
Fine Chemicals	292390.00
Phase Transfer Catalysts	294200.29

PRODUCTION STATUS (AS ON 31.03.2010)

Particulars	Unit	Actual Production
Bulk Drugs and Intermediates	MT	2566.23

GENERAL INFORMATION

Suppliers :

• Ablaze Glass Works Private Limited.
• Akshar Containers
• Amar Industries
• Anmol Safety Products (P) Limited
• Asha Wooden Box
• Chitra Machine Tools
• Deedy Chemicals Private Limited
• Dhruv Chem Industries
• Dwarkesh Chemicals
• Eskay Industries
• Explosionproff Electrical Cont
• Classic Chemicals
• Gayatri Engineering Works
• Goodluck Plastic Industries
• Insulation Associates
• Jay Ambe Fabricators

Customers :

• Bayer AG
• DuPont
• Merck
• Solvay
• DOW Chemicals
• BASF
• Pfizer
• FCC
• Sanofi Synthelabo
• Takeda
• Schering Plough
• Ranbaxy Laboratories
• Dr. Reddy’s Laboratories
• Rallies India Limited
• Atul Products Limited
• Sun Pharma

Bankers :

Ø State Bank of India

Ø Bank of Baroda

Ø Corporation Bank

Ø Bank of India

Facilities :

Secured Loan	As on 31.03.2010 (Rs. in Millions)	As on 31.03.2009 (Rs. in Millions)
Non Convertible Debenture	750.000	0.000
Term Loans
Foreign Currency Loans from Banks	1637.005	883.402
Rupee Loans	884.850	708.057
Working Capital Loans
Foreign currency loans	402.627	2.943
Rupee Loans	105.452	714.726
Hire Purchase Loans
From Banks	7.364	12.723
From Financial Institution (Of the Term Loans Rs.555.821 Millions are repayable within a period of twelve months)	1.861	0.000
Total	3789.159	2321.851
Unsecured Loan
Long Term Loans - From Banks	0.000	71.402
- From Directors	54.547	54.547
Short Term Loans - From Bank	383.683	317.821
- From Directors	0.990	12.722
Foreign currency convertible bonds (FCCBS)
Of the above, long term loans Rs. Nil ( Previous Year Rs.71.402 Millions are repayable within a period of twelve months)	112.250	126.850
Total	551.470	583.342

Banking Relations :	--
Auditors :
Name :	Deloitte Haskins and Sells Chartered Accountants
Address :	‘Herigate’, 3rd Floor, Near Gujarat Vidhyapith, Off. Ashram Road, Ahmedabad-380014, Gujarat, India
Associates/Subsidiaries :	Dishman Europe Limited Dishman USA Inc. Dishman International Trading (Shanghai) Company Limited Dishman FZE Dishman Switzerland Limited Dishman Pharma Solutions AG. Dishman Pharmaceuticals and Chemicals (Shanghai) Company Limited Carbogen Amcis AG. Carbogen Amcis Limited (U.K.) Innovative Ozone Service Inc. (IO3S) Dishman Netherlands B.V. Dishman Holland B.V. Dishman Japan Limited Carbogen Amcis (India) Limited Dishman Australasia Pty. Limited Dishman Care Limited Dishman LLP Dishman Pharma Solutia AG Carbogen Amcis Limited Dishman Holland B.V Dishman Africa (Proprietary) Limited Dishman Netherlands B.V. Carbogen Amcis AG Dishman U.K LLP Innovative Ozone Service Inc Bhadra-Raj Holdings Private Limited
Joint Ventures Company:	Schutz Dishman Biotech Limited CAD Middle East Pharmaceuticals Industries Dishman Arabia Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
100000000	Equity Shares	Rs.2/- each	Rs.200.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
80697136	Equity Shares	Rs.2/- each	Rs.161.394 Millions

Note: Of the above, 1,01,00,000 equity shares of Rs. 10 each were issued as bonus shares by way of capitalisation of reserves in earlier years.

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2010	31.03.2009	31.03.2008
SHAREHOLDERS FUNDS
1] Share Capital		161.394	161.394	159.368
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		5968.187	5374.757	4378.482
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		6129.581	5536.151	4537.850
LOAN FUNDS
1] Secured Loans		3789.159	2321.851	2061.935
2] Unsecured Loans		551.470	583.342	563.203
TOTAL BORROWING		4340.629	2905.193	2625.138
DEFERRED TAX LIABILITIES		271.377	203.059	186.298
TOTAL		10741.587	8644.403	7349.286
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		3538.401	2686.003	2556.310
Capital work-in-progress		2676.401	1729.647	1106.161
INVESTMENT		1819.921	1563.740	1325.061
DEFERREX TAX ASSETS		0.000	0.000	0.000
FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE ACCOUNT		4.860	27.549	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	997.528	1163.171	1206.301
	Sundry Debtors	702.434	615.509	1114.954
	Cash & Bank Balances	42.820	32.048	44.930
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	2025.200	1596.206	892.157
Total Current Assets		3767.982	3406.934	3258.342
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	750.638	229.225
	Other Current Liabilities	163.974	90.167	595.085
	Provisions	151.366	450.078	307.872
Total Current Liabilities		1065.978	769.470	902.957
Net Current Assets		2702.004	2637.464	2355.385
MISCELLANEOUS EXPENSES		0.000	0.000	6.369
TOTAL		10741.587	8644.403	7349.286

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2010	31.03.2009	31.03.2008
	SALES
		Income	3526.088	4158.847	3592.003
		Other Income	31.528	9.416	45.789
		TOTAL (A)	3557.616	4168.263	3637.792
Less	EXPENSES
		Materials and Manufacturing Expenses	1625.968	1984.257	2341.554
		Research & Development Expenses	50.664	47.859	0.000
		Employee Emoluments	337.131	309.202	284.028
		Administrative, Selling & Other Expenses	210.909	353.445	201.514
		Increase or decrease in stock	128.747	100.068	(155.720)
		Transferred From Revaluation Reserve	(0.167)	(0.167)	(0.168)
		TOTAL (B)	2353.252	2794.664	2671.208
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		1204.364	1373.599	966.584
Less	FINANCIAL EXPENSES (D)		203.718	224.986	72.135
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		1000.646	1148.613	894.449
Less/ Add	DEPRECIATION/ AMORTISATION (F)		206.577	198.032	168.332
	PROFIT BEFORE TAX (E-F) (G)		794.069	950.581	726.117
Less	TAX (H)		83.334	29.130	112.306
	PROFIT AFTER TAX (G-H) (I)		710.735	921.451	613.811
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		794.227	486.070	NA
Less	APPROPRIATIONS
		Transfer to General Reserve	750.000	500.000	NA
		Dividend	96.837	96.837	NA
		Tax on Dividend	16.083	16.457	NA
		Transfer to Debenture Redemption Reserves	62.500	0.000	NA
	BALANCE CARRIED TO THE B/S		579.542	794.227	NA
	EARNINGS IN FOREIGN CURRENCY
		Export of Goods on FOB	2955.163	3085.245	2349.213
		Contract Research Services	143.124	209.837	46.631
	TOTAL EARNINGS		3098.287	3295.082	2395.844
	IMPORTS
		Raw Materials	517.859	562.273	631.392
		Capital Goods and Services	504.054	62.675	19.197
	TOTAL IMPORTS		1021.913	624.948	650.589
	Earnings Per Share (Rs.) (Basic)		8.81	11.43	7.81
	Earnings Per Share (Rs.) (Diluted)		8.74	11.33	--

QUARTERLY RESULTS

PARTICULARS	30.06.2010	30.09.2010	31.12.2010
Type	1^st Quarter	2^nd Quarter	3^rd Quarter
Net Sales	712.080	865.940	959.040
Total Expenditure	487.650	669.430	697.990
PBIDT (Excl OI)	224.430	196.510	261.050
Operating Profit	224.430	196.510	261.050
Interest	53.030	60.480	74.3500
PBDT	171.400	136.030	186.700
Depreciation	65.360	67.900	63.680
Profit Before Tax	106.040	68.1300	123.020
Tax	11.120	5.700	15.790
Profit After Tax	94.920	62.430	107.230
Prior Period Expenses	1.120	0.540	(0.390)
Net Profit	96.050	62.970	106.840

KEY RATIOS

PARTICULARS		31.03.2010	31.03.2009	31.03.2008
PAT / Total Income	(%)	19.98	22.11	16.87
Net Profit Margin (PBT/Sales)	(%)	22.52	22.86	20.21
Return on Total Assets (PBT/Total Assets}	(%)	10.87	15.60	12.49
Return on Investment (ROI) (PBT/Networth)		0.13	0.17	0.16
Debt Equity Ratio (Total Liability/Networth)		0.88	0.66	0.77
Current Ratio (Current Asset/Current Liability)		3.53	4.42	3.61

LOCAL AGENCY FURTHER INFORMATION

PERFORMANCE AND OPERATION REVIEW:

During the year, the company achieved a turnover of Rs.3526.088 millions as against Rs. 4158.847 millions during the previous year reflecting a degrowth of 15.21%. Exports constitute Rs.3181.100 millions or 90% of sales for 2009-’10. Other income earned during the year stood at Rs.31.528 millions as against Rs.9.416 millions in the previous year. Profit before tax degrown by about 16.46% (Rs.794.069 millions during the year as against Rs.950.581million in the previous year). Profit after tax for the year was Rs.703.687 millions as against Rs.925.563 Millions during previous year. Earning per share for the year works out to Rs.8.81 per share on absolute basis and Rs.8.74 on diluted basis as against Rs.11.43 per share on absolute basis and Rs.11.33 on diluted basis. The consolidated turnover, which includes results of all its wholly owned subsidiaries, proportionate share in the joint ventures (Schutz Dishman Biotech Limited , CAD Middle East Pharmaceutical Inds., Dishman Arabia Limited , and Dishman Japan Limited ) and associate (Bhadra- Raj Holdings Private Limited ) reported 13.84% degrowth in sales to Rs.91535.74 lacs for the current financial year 2009-10 compared to the previous year’s sales of Rs. 10623.578 lacs. Consolidated Profit before tax and other adjustment of the Company stood at Rs.1325.288 millions (previous year Rs. 1574.556 millions ) and profit after tax for the year at Rs.1175.763 millions (Previous year Rs. 1467.366 millions ) for the current financial year 2009-10. The consolidated Earning per share for the year works out to Rs.14.55 per share as against Rs.18.13 per share on absolute basis and Rs.14.44 per share against Rs.17.98 per share on diluted basis.

New High-Potency Manufacturing Unit

The commissioning of its World-class High Containment API facility for manufacture of a range of Oncology APIs and other related high potency products at its Bavla complex, near Ahmedabad from January, 2010. This facility has been set up primarily by the Technical Team of Dishman’s Swiss Subsidiary namely Carbogen Amcis AG. with active support of local Dishman team. This facility is, to the best of our knowledge, the only one of its kind not only in India, but in the entire Asia and comparable with very few such facilities in the world. This is a significant milestone in the history of the company and opens up huge opportunities for manufacture of high potency oncology APIs for manufacture of High value Oncology APIs and similar product on Contract Manufacturing Basis for the leading pharmaceuticals companies in the World.

Vitamin D Analogue manufacturing facility

A new Vitamin-D Analogue manufacturing facility was inaugurated on 27 November 2009 at Veenendaal, the Netherlands. The laboratory consists of 6 dedicated clean rooms with a scale of operation of up to 1 kg in addition to all standard laboratory facilities.

US FDA Approval

In the month of February, 2010, US FDA team has successfully completed inspection of Dishman’s EOU facility situated at its Naroda works, Ahmedabad and approved the said facility for API production for US market.

TGA Approval

The Company’s Bavla Facilities are approved by Therapeutic Goods Administration (TGA), Department of Health and Ageing, Australian Government, Australia, for all Active Pharmaceutical Ingredients (API) production.

Sratagic alliance with Codexis Inc.

The Company has finalized a Strategic alliance with California based biotechnology Company, Codexis Inc, to utilize the Enzymatic Biocatalysts Technology. As per the Agreement between both the parties i.e. DISHMAN and CODEXIS, the company use codexis technology to manufacture building blocks, intermediates and API’s for innovator pharmaceutical companies. This agreement make the Company the only Indian company to have High Grade Technology in the Indian CRAMS Segment. It adds another dimension to the already extensive portfolio of services offered by the Dishman Group. The technology deals with reduction of chiral Compounds in the APIs and provides cheaper, cleaner, greener processes of manufacturing at a lower cost of production. The Company will be offering these facilities to its customers and codexis will be offering a wide selection of enzymes for the pharma synthesis of Chiral Compounds. This alliance provides considerable benefits to Dishman and put it far ahead in the race of companies dealing in the CRAMS Business. By utilizing this biocatalyst Technology, Dishman can reduce the quantity of Chiral Compound that is mainly used in preparation of drugs in larger quantity.

Disinfectant Division

The Company through its disinfection division offers a range of Antiseptics and Disinfectants for application in healthcare and related industries it has developed a unique position in bulk actives in the area of disinfectants. Company has established a new wholly owned subsidiary company in the name of Dishman Care Limited for the Disinfectant project and invested seed capital of Rs.5.00 lacs in the month of March, 2010.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENT:

The Ministry of Corporate Affairs, Government of India vide its order No.47/70/2010-CL-III dated 23rd February, 2010, issued under section 212(8) of the Companies Act, 1956 has granted an exemption to the Company from attaching the accounts along with the report of the Board of Directors and Auditors as required by section 212(1) of the Companies Act, 1956, of its 17 (seventeen) subsidiary companies namely i) Dishman Europe Limited, ii) Dishman U.S.A. Inc., iii) Dishman International Trading (Shanghai) Company Limited , iv) Dishman FZE, v) Dishman Switzerland Limited , vi) Dishman Pharma Solutions AG., vii) Dishman Pharmaceuticals and Chemicals (Shanghai) Company Limited , viii) Carbogen Amcis AG., ix) Carbogen Amcis Limited (Name was changed from “Synprotec DCR Limited” w.e.f. 05/07/2007), x) Dishman Africa (Pty.) Limited , xi) Innovative Ozone Service Inc. (IO3S), xii) Dishman Netherlands B.V. (Name was changed from “Pharma Syn. B.V.” w.e.f. 08/11/2007), xiii) Dishman Holland B.V., xiv) Dishman Japan Limited , xv) Carbogen Amcis (India) Limited , xvi) Dishman Australasia Pty. Limited , and xvii) Dishman LLP, to the balance sheet of the Company for the financial year ended on 31st March, 2010. The Company will provide the annual accounts of its subsidiary companies and the related detailed information on the specific request made by any investors and the said annual accounts are open for the inspection at the registered office of the Company during office hours on all working days, except Sundays and holidays, between 2.00 p.m. and 4.00 p.m. Particulars relating to the Subsidiary Companies, as per the condition (iii) of the above mentioned order of the Ministry of Corporate Affairs, are attached alongwith the consolidated financial statement. As required under Clause 32 of Listing Agreement with the stock exchange(s) and in accordance with the requirements of Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, the Company has prepared Consolidated Financial Statements of the Company and While preparing the consolidated financial statements, Company has consolidated the accounts of three Joint Venture companies namely Schutz Dishman Biotech Limited (22.33% holding by the Company), CAD Middle East Pharmaceutical Industries (30% holding by the Company), and Dishman Arabia Limited (50% holding by the Company), and one associate company namely, Bhadra Raj Holdings Private Limited (40% holding by the Company), as per the requirements of Accounting Standard 27 (AS 27) and Accounting Standard 23 (AS-23) respectively. During the year, Company has formed an Indian wholly owned subsidiaries, namely Dishman Care Limited (DCL), and invested Rs.5.00 Lacs into equity shares of DCL. In the month of February, 2010, the Company has invested SAR 6.90 million in the equity of Joint Venture Company namely CAD Middle East Pharmaceuticals Industries, established in Saudi Arabia. The Company has also invested JPY 17.50 million in the share capital of the Japanese subsidiary company namely Dishman Japan Limited , in the month of March, 2010. During the year, Company has invested total amount of USD 3.50 million into the share capital of its wholly owned subsidiary company namely Dishman Pharmaceuticals and Chemicals (Shanghai) Company Limited (Dishman China), incorporated in China. Thus, total investment into share capital of Dishman China at the year-end stood at USD 8.50 million. The Company’s step down subsidiary namely Dishman Africa Pty. Limited , which was dormant and inoperative since long, has been wound-up w.e.f. 26th January, 2010, on the application made by the Company.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

INDUSTRY OVERVIEW:

The global CRAMS market is expected to grow further to US $83 billions approximately by 2012. Degrowth witnessed in 2009-10 was an aberration due to the global economic slowdown. Shift of CRAMS business from developed countries to developing countries will continue as the innovator companies will lose patent protection for many of their blockbuster drugs in the next couple of years forcing them to look for various alternatives such as, cost control, introduction of generics to their portfolio etc. Dishman has an advantage in CRAMS segment in India because of its non-conflicting business policies, technical capabilities and relationship built with various customers during the last 10 years. The trust and confidence of innovator companies has successfully positioned Dishman as preferred outsourcing partner. The company’s order book is expanding consistently reflecting its capacity and customer confidence. Financial year 2009-10 was characterized by lower demand, especially for CRAMS players, due to inventory rationalization by major pharma companies and reduction in Rand D budgets due to global recession and mergers between major pharma companies. This resulted in less orders for contract manufacturing and contract research. The company has reacted to this volatile business environment by cost control measures, restructuring of operations in Switzerland.

Infrastructure:

The company continued its investment in creation of new manufacturing plants in India and china to meet the expected demand of customers in the coming years. During the year 2009-10, two new units were set up in Bavla, Ahmedabad, India for manufacture of HIPO products and Shanghai, China for manufacture of APIs and API intermediates for CRAMS customers. The company has also renovated one of the intermediate plants in Bavla as cGMP pilot plant to cater to the growing needs of contract research customers. Commercial production from the above mentioned units will be commenced during the year 2010-11. In addition to the above, the company has also decided to set up four more units in Bavla to meet the growing demand from its customers.

BUSINESS HIGHLIGHTS:

Sales:

Dishman has achieved a turnover of Rs.3526.100 millions in 2009-10 as against Rs.4158.800 millions during the previous year recording a degrowth of over 15.21%. Exports constituted around 90% of turnover as against 82% during the previous year.

Material costs:

Raw material consumption for the year was Rs.1228.000 millions as against Rs.1232.600 millions during the previous year. Inventory of raw materials decreased by during the year by Rs.43.900 millions . Work in process and finished goods decreased by Rs.45.800 Millions and Rs.82.900 millions respectively. Above decrease of raw materials, work in process and finished goods are mainly due to lower sales and steps taken by the company for better inventory management.

Manufacturing expenses:

Manufacturing expenses mainly comprises of Power and Fuel Rs.180.300 millions , repairs and maintenance Rs.62.000 millions , as against Rs.205.300 millions , Rs.50.600 millions respectively during the previous year. Manufacturing expenses account for 10.58% of sales during the year as against 8.78% during the previous year. Manufacturing expenses during the year as a percentage of sales are higher due to lower sales and product mix.

Employee Emoluments:

Employee emoluments (other than managerial remuneration) have increased to Rs.290.900 millions during the year as against Rs.253.500 millions during the previous year. This increase is mainly due to salary increase given to employees and recruitment of employees to run the new facilities created at Bavla.

Administrative, Selling and Other Expenses:

Major components of administrative, selling and other expenses include clearing and forwarding, insurance premium, traveling and conveyance, sundry balances written off and donations etc. Administrative, selling and other expenses for year amounted to Rs.210.900 millions as against Rs.353.400 millions during the previous year. These expenses accounted for 5.98% sales during the year as against 8.5% during the previous year. Previous years administrative, selling and other expenses include an amount Rs.13.50 millions towards foreign exchange rate fluctuation loss. During the current year, the company accounted Rs.16.900 millions as foreign exchange fluctuation gain, which was included in other income.

Interest and Finance charges:

Interest and Finance charges during the year have decreased to Rs.203.700 millions as against Rs.225.000 millions during the previous year.

Depreciation:

Depreciation charge for the current year came to Rs.206.400 millions as against Rs.197.900 millions during the previous year. Addition to fixed assets during the year was Rs.1061.600 millions as against Rs.326.000 millions during the previous year.

Change in accounting policy:

From the financial year 2008-09, the company changed its accounting policy pertaining to recognition of exchange rate differences on settlement or restatement of foreign currency monetary assets and liabilities by exercising the option as per the notification dated March 31, 2009 issued by the Ministry of Corporate Affairs. As a result: The exchange differences arising on restatement or settlement of long-term foreign currency monetary items in so far as they relate to acquisition of a depreciable capital asset are adjusted to the cost of such asset and depreciated over the balance life of the asset. In other cases, they have been accumulated in ‘Foreign Currency Monetary Items Translation Difference Account’ and amortized over the balance period of such long-term asset/ liability but not beyond March 31, 2011 by recognition as an income and expenses in each of such periods. Accordingly, Rs.83.772 Millions have been reduced from cost of fixed assets, Rs.17.828 lacs has been reduced from ‘Foreign Currency Monetary Items Translation Difference Account’ and Rs.4.859 lacs has been amortized and charged to profit and loss account during the year. The amount remaining to be amortized in subsequent periods as at the balance sheet is Rs.4.860 Millions.

Provision for Tax:

Rs.22.100 millions (net of MAT entitlement) was provided during the year towards current tax as against Rs.5.000 millions during the previous year. The company has also provided Rs.68.300 millions towards deferred tax during the year as against Rs.16.800 millions during the previous year. Fringe benefit tax was not provided in the current year (previous year Rs.3.200 millions) as the same was withdrawn.

Profit after tax:

Profit after tax for the current year was Rs.703.700 millions as against Rs.925.600 millions during the previous year.

Earnings per share:

Basic earnings per share for the current year works out to Rs.8.81 as against Rs.11.43 during the previous year. Diluted EPS worked out to Rs.8.74 as against Rs.11.33 during the previous year.

OPPORTUNITIES

Most of the innovator companies are facing challenge of depleting research pipeline and losing patent protection for their blockbuster drugs in the next few years. This has opened up opportunities to CRAMS players from low cost destinations like India. Dishman has identified this opportunity very early and started working with innovators with customs synthesis projects and contract manufacturing of APIs. These efforts can be converted into sustainable revenue streams starting from financial year 2010-11 onwards. In view of the huge potential the CRAMS segment offers to Indian companies, many of the big pharmaceutical companies in India started exploring opportunities for a share in CRAMS segment with big investments. This may result in increased competition in the long run. In addition to the above, increasing regulatory requirements from the western countries may partly offset the cost advantage. However, Dishman has geared up to meet the above challenges and maintain the growth in the coming years.

OUTLOOK:

The global pharma industry is undergoing a major change in terms of increasing focus on generic products, consolidation and in-licensing and out-licensing deals. The global pharma market is expected to register 4.4% CAGR over 2008-13 (Industry reports) and most of this growth would be fuelled by emerging markets like Asia, Commonwealth of Independent States (CIS) and Latin America. Developed markets like the US, EU and Japan are expected to witness subdued growth. Another reason for the growth of Pharma sector is breakneck running of the market with number of forces like the shift of growth from developed countries to emerging ones, large role played by a specialist-driven products, losing patent protection by blockbuster drugs and rising of influence of regulators and payers on healthcare decisions. As per one of the Report given by RNCOS Industry Research Solutions, India currently holds US$ Six Billion of the $550 Billion global pharmaceutical industry; its share is increasing at 10% a year. As compared 7% annual growth for the overall world markets, this figure speaks of a very promising scenario. Domestics pharmaceutical companies will increasingly be looking for consolidation across the value chain by forming partnerships or mergers with companies of complementary strengths. As drug discovery becomes more expensive, and the costs of administration and regulatory compliance continuously rise, these partnerships will become more central to Pharma companies’ business proposition. Now the Indian companies have started to acquire the firms that give them client access, create necessary manufacturing/ research facilities and widen portfolio of clients and services reducing concentration risks. In today’s scenario Indian companies are present in the highest value adding segments - high potency substances in CMO and discovery research in CRO. The term Contract manufacturing includes outsourcing manufacturing of intermediates and active pharmaceutical ingredients (APIs) as per the specific requirements of the innovator and generic companies, while R and D outsourcing is driven by two major benefits i) reduced operating costs and ii) an increased number of drugs moving into development. To ensure Company’s long-term success, the management is appropriately placing its best on R and D with contract research that lead them towards future manufacturing contracts. Contract Research and Manufacturing (CRAM) business is the core of company’s business model and company is focusing most of its investments in CRAMS segment.

Fixed Assets:

• Land
• Building
• Plant and Machinery
• Laboratory Equipment
• Electrical Installation
• Furniture and Fixtures
• Office Equipment and Computer
• Vehicles
• Software

UNAUDITED FINANCIAL RESULTS FOR THE QUARTER ENDED 31^ST DECEMBER, 2010

Rs. in Millions

PARTICULAR	FOR THE QUARTER ENDED	FOR THE NINE MONTHS ENDED
	31.12.2010	31.12.2010
(a) Net Sales / Income from operations	935.782	2507.670
(b) Other Operating Income	23.259	29.384
Total Income	959.040	2537.054
Expenditure
a) (Increase) / Decrease in stock in trade and work in progress	(29.780)	(111.455)
b) Consumption of raw materials	422.546	1136.382
c) Purchase of traded goods	4.046	8.118
d) Employees cost	126.703	341.177
e) Depreciation	63.678	196.946
f) Other expenditure	174.477	480.838
Total	761.670	2052.005
Profit from operations before other income, interest and exceptional Items	197.370	485.049
Other income	--	--
Profit before interest and exceptional Items	197.370	485.049
Interest	74.353	187.859
Profit after Interest but before Exceptional Items	123.017	297.190
Exceptional Items	--	--
Profit (+)/Loss(-) from Ordinary Activities before tax	123.017	297.190
Tax expense	15.789	32.601
Net Profit (+)/Loss(-) from Ordinary Activities after tax	107.228	264.588
Extraordinary items (net of tax expenses)	--	--
Prior period expenses	0.387	(1.269)
Net Profit (+) / Loss (-) for the year period	106.841	265.857
Paid up equity share capital (Face value of Rs.2/- per share)	161.394	161.394
Reserves excluding revaluation reserves as per balance sheet of previous accounting year	--	--
Earning per share (EPS)
(a) Basic and diluted EPS before Extraordinary items for the period, for the year to date and for the previous year (not to be annualised)	1.32	3.29
(a) Basic and diluted EPS before Extraordinary items for the period, for the year to date and for the previous year (not to be annualised)	1.32	3.29
Public shareholding
Number of shares	31555667	31555667
Percentage of shareholding	39.10	39.10
Promoters and Promoters group Shareholding-
a) Pledged /Encumbered
Number of shares	--	--
Percentage of shares (as a % of total shareholding of the promoter and promoter group)	--	--
Percentage of shares (as a % of total share capital of the company)	--	--
b) Non Encumbered
Number of shares	49141469	49141469
Percentage of shares (as a % of total shareholding of the promoter and promoter group)	100.00	100.00
Percentage of shares (as a % of total share capital of the company)	60.90	60.90

SEGMENT REVENUE RESULTS AND CAPITAL EMPLOYED

Rs. in Millions

PARTICULAR	FOR THE QUARTER ENDED	FOR THE NINE MONTHS ENDED
	31.12.2010	31.12.2010
Segment Revenue
CRAMS	686.009	1794.265
Marketable Molecules (MM)	249.772	713.405
Other	0.000	0.000
Total	935.781	2507.670
Less: Inter Segment Revenue	--	--
Net Sales /Income from Operation	935.781	2507.670
Segment Results (Profit / Loss) before tax and interest form each segment
CRAMS	179.404	423.641
Marketable Molecules (MM)	17.965	61.408
Other	0.000	0.000
Total	197.370	485.049
Less: Interest	74.353	187.859
Other Un-allocable expenditure net off un-allocable income	--	--
Total profit before tax	123.017	297.190
Capital employed (segment assets – segment liabilities)
CRAMS	4701.470	4701.470
Marketable Molecules (MM)	1248.324	1248.324
Other	5941.068	5941.068
Total	11890.862	11890.862

Note:

• The figures have been re-grouped, re-cast and re-arranged wherever necessary.

• The financial results have been reviewed by the Audit Committee and taken on record by the Board of Directors at their meetings held on 11th February, 2011

• As per revised clause 41 of the listing agreement, the Company has opted to publish only consolidated financial results, The stand-alone financial results are available for perusal on the Company’s website as well as on the stock exchanges’ websites as stated below:

www.dishmangroup.com , www.bseindia.com and www.nse-india.com

• The Statutory Auditors have carried out a “Limited Review” of the stand-alone financial results of the Company for the quarter ended 31 December, 2010

• From the financial year 2008-09, the Company has exercised the option related to amortization of foreign exchange fluctuation differences as per notification dated March 31, 2009 issued by the Ministry of Corporate Affairs. Government of India, Continuing the practice in current quarter,

• The exchange differences arising on restatement of long term foreign currency monetary items in so far as they relate to acquisition of a depreciable capital assets are adjusted to the cost of such assets and depreciated over the balance life of the assets.

• In other cases, the differences have been accumulated in ‘Foreign Currency Monetary Item Translation Difference Account’ and amortized over the balance period of such long-term asset I liability but not beyond March 31, 2011.

• Accordingly, on Standalone basis Rs.4.402 millions has been decreased from the cost of the capital assets and.Rs1.803 millions has been debited to the profit and loss account for the quarter.

• Accordingly, on consolidated basis Rs.4.402 millions has been decreased from the cost of the capital assets and Rs.62.281 millions has been credited to the profit and loss account for the quarter.

• Details of Number of investor complaints for the quarter ended 31’ December, 2010: beginning - NIL, received - 3, resolved - 3, pending NIL as at 318t December, 201 0

• The business segments of the Company comprise the followings:

Segment	Description of the activity
CRAMS	Contract Re
MM

• During the quarter the name of Company’s wholly owned step down subsidiary company namely “Dishman Holland BV.”, has been changed to “Cohecie Fine Chemicals BV.”

• Consolidated financial results comprise of the results of the parent Company, Dishman Pharmaceuticals and Chemicals Limited and its subsidiaries viz. Dishman Europe Limited, Dishman USA Inc., Dishman International Trading (Shanghai) Company Limited , Dishman FZE, Dishman Switzerland Limited, Dishman Pharma Solutions AG, Switzerland, Dishman Pharmaceuticals and Chemicals (Shanghai) Company Limited , Innovative Ozone Services Inc. (103$), Dishman Netherlands B.V, (formerly known as “Pharma Syn B. V.”), Cohecie Fine Chemicals B.V. (formerly known as “Dishman Holland B.V), Carbogen Arncis Limited (formerly known as “Synprotec OCR Limited ”), CARBOGEN AMCIS AG, Carbogen Amcis (India) Limited, Dishman Australasia Pty. Limited , Dishman LLP UK, Dishman Care Limited , Dishman Japan Limited (85% holding by Dishman), three joint venture Companies., namely Schutz-Dishman Biotech Limited (22.33% holding by Dishman), CAD Middle East Pharmaceutical Industries, LLC. (30% holding by Dishman) and Dishman Arabia Limited, (50% holding by Dishman) and one associate company namely, Bhadr-Raj Holdings Private Limited (40% holding by Dishman) as per relevant Accounting Standards.

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.44.65
UK Pound	1	Rs.71.93
Euro	1	Rs.63.24

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	7
OPERATING SCALE	1~10	7
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	8
--PROFITABILIRY	1~10	8
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	7
--RESERVES	1~10	8
--CREDIT LINES	1~10	7
--MARGINS	-5~5	----
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	YES
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		66

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
-	NB	New Business	-

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.