Aarti 20 Annual Report

20th Annual Report 2004-05
2 0 t h
A n n u a l
R e p o r t
2 0 0 4 - 0 5
Board ofDirectors
C. V. Gogri
Chairman
M. P. Savla
Vice Chairman
P. M. Patil
Managing Director
S. P. Nachane
Managing Director
H. M. Savla
Jt. Managing Director
H. P. Shah
Whole-time Director
R. C. Gogri
Whole-time Director
U. M. Patil
Whole-time Director
S. T. Shah
R. V. Gogri
P. H. Desai
N. N. Prabhu
1
2 0 t h
A n n u a l
R e p o r t
2 0 0 4 - 0 5
C o r p o r a te Information
Company Secretary
Prakash Khedekar
Solicitors
M/s. M. P. Savla & Co.
Bharat House, 2nd Floor,
104 Mumbai Samachar Marg,
Mumbai - 400 001.
Auditors
M/s. Parikh Joshi & Kothare
49/2341, M.H.B. Colony,
Gandhi Nagar,
Bandra (East),
Mumbai-400 051.
Plants
Plot Nos. N-198, G-60, E-120,
K-40, K-41, E-9/3-4 and E-21/22,
MIDC Industrial Area,
Tarapur, Village Pamtembhi,
Tal-Palghar, Thane - 401 506.
Bankers
Union Bank of India
Bank of Baroda
Bank of India
State Bank of India
Citibank N.A.
Corporation Bank
Plot Nos. 2902/2904,

GIDC,
Sarigam-396155,
Dist. Valsad, Gujarat.
Registered Office
Plot No. N - 198, M.I.D.C.,
Tarapur,
Village - Pamtembhi,
Taluka - Palghar,
Dist. Thane-401 506,
Maharashtra.
R&D Centres
Plot Nos. N-198 & G-60,
MIDC Industrial Area,
Tarapur, Village Pamtembhi,
Tal-Palghar, Thane - 401 506.
Plot Nos. D-277/278
TTC Industrial Area,
Turbhe, Navi Mumbai.
Corporate Office
Mahendra Industrial Estate,
Ground Floor, Plot No. 109-D
Road No. 29, Sion (E),
Mumbai-400 022.
Registrar & Transfer Agent

Sharepro Services (India) Pvt. Ltd.
Satam Estate, 3rd Floor,
Above Bank of Baroda,
Cardinal Gracious Road, Chakala,
Andheri (E), Mumbai - 400 099.
Visit us at www.aartidrugs.com
Contents
Boad of Directors
Corporate Information
Financial Highlights
Notice
Directors Report
Management Discussion & Analysis
Report on Corporate Governance
2
1
2
3
5
7
10
14
Conservation of Energy etc.

Auditors Report
Balance Sheet
Profit & Loss Account
Schedules
Balance Sheet Abstract
Cash Flow Statement
Proxy Form
21
23
26
27
28
41
42
Highlights
Profit Before Interest, Depreciation & Tax
Turnover
2 6 5 .27
3 3.6 2
2 3 7 .70
1 7 4 .6 1
2 5 .32
1 9 2 .14
2 6.6 4
2 4.4 1
2 0 .68
1 4 9 .9 1
Profit Before & After Tax
Earning Per Share
20.61
12.01
17.06
8.48
7.91
13.82
12.29
11.44
10.93
10.32
14.0 6
8.40
12.0 8
8.89
6.08
P rofit B e fore Tax
P rofit A fter Tax
Book Value
Fixed Assets (Net Block)
6 2.50
1 0 7 .75
4 9.86
8 2 .06
5 2.92
4 3.86
7 1 .95
3 6.05
6 7 .3 4
5 7 .5 1
Net Worth
7 3 .18
5 7 .0 5
5 8 .38
6 1 .96
4 6 .8 9
(Rupees in Lakhs)
Particulars
31-Mar-01
31-Mar-02
31-Mar-03
31-Mar-04
31-Mar-05
Sales
14,991.53
17,460.79
19,214.22
23,770.47
26,527.27
2,068.42
2,532.04
2,441.54
2,663.72
3,362.00
Interest
831.35
865.93
549.67
385.82
586.08
Depreciation
389.24
437.51
509.65
572.23
714.70
Profit Before Tax
847.83
1,228.60
1,382.22
1,705.67
2,061.22
Profit After Tax
790.83
1,092.60
1,144.04
1,207.67
1,406.22
15
10
15
30
30
195.14
130.09
175.63
351.26
351.26
Equity Capital
1,300.95
1,300.95
1,170.86
1,170.86
1,170.86
Reserves & Surplus
3,410.96
4,420.19
4,675.71
5,477.57
6,486.07
22.60
15.76
8.92
451.97
339.32
4,689.31
5,705.38
5,837.65
6,196.46
7,317.61
Long Term
2,840.73
2,276.89
2,662.98
3,081.23
4,680.16
Short-Term-Bank
3,178.58
3,938.03
4,463.71
5,368.61
4,524.31
Short-Term-Others
399.82
693.09
1,228.44
2,231.35
4,923.25
Total Borrowings
6,419.13
6,908.01
8,355.13
10,681.19
14,127.72
Gross Block
7,857.90
9,276.53
10,204.15
11,787.22
15,037.17
Less : Depreciation
2,107.27
2,542.32
3,009.42
3,581.36
4,262.30
5,750.63
6,734.21
7,194.73
8,205.86
10,774.87
Capital Work In Progress
302.59
nil
nil
617.92
2,260.06
Investments
116.99
128.87
132.55
31.44
145.70
Current Assets, Loans and Advances
8,044.98
8,742.51
10,698.51
14,925.62
15,131.79
Current Liabilities
3,106.76
2,992.21
3,448.37
6,152.53
5,866.42
4,938.22
5,750.30
7,250.15
8,773.09
9,265.37
36.05
43.86
49.86
52.92
62.50
6.08
8.40
8.89
10.32
12.01
Profit Before Interest and Depreciation
Dividend (%)
Payout
Less : Miscellaneous Expenditure

Net Worth
Borrowings
Net Block
Net Working Capital

Book Value
Earning per share
Financial Highlihts
NOTICE
NOTICE is hereby given that the Twentieth Annual General Meeting of the Members of AARTI DRUGS LIMITED
will be held on Saturday, 6th day of August, 2005 at 11.00 a.m. at TIMA Hall, MIDC Tarapur, Taluka Palghar,
Dist. Thane 401506, Maharashtra to transact the following ordinary business :
1.
To receive, consider and adopt the Balance Sheet as at 31st March, 2005 and the Profit and Loss Account
for the year ended on that date and the Reports of the Directors and Auditors thereon.
2.
To declare final dividend.
3.
To appoint a Director in place of Shri. Rashesh C. Gogri. who retires by rotation and, being eligible, offers
himself for re-appointment.
4.
To appoint a Director in place of Shri. Chandrakant V. Gogri, who retires by rotation and, being eligible,
offers himself for re-appointment.
5.
To appoint a Director in place of Shri. Manilal P. Savla, who retires by rotation and, being eligible, offers
himself for re-appointment.
6.
To appoint Auditors and to fix their remuneration.
Registered Office :
Plot No.N-198, MIDC,
Tarapur, Village-Pamtembhi,
Taluka-Palghar,
Dist. Thane 401 506.
By Order Of The Board

Sd/Prakash Khedekar
Company Secretary
Place : Mumbai
Date : 25th April, 2005
NOTES
1.
A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND

AND VOTE (ON POLL) INSTEAD OF HIMSELF AND A PROXY NEED NOT BE A MEMBER OF THE
COMPANY. A PROXY IN ORDER TO BE EFFECTIVE MUST 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 Friday, 29th
July, 2005 to Saturday, 6th August, 2005 (both days inclusive) for determining the names of members
eligible for final dividend, if declared, by the Company subject to the provisions of Section 206A of the
Companies Act, 1956. In respect of shares held in Electronic Form, the dividend will be paid on the basis of
ownership as per details furnished by the Depositories for the purpose. Dividend when declared will be paid
on or after 12th August, 2005.
3.
The members are requested to note :

(i)
Change of Address /Bank details : Members are requested to inform the Company or M/s Sharepro
Services (India) Private Limited, immediately of any change in their address. Members holding shares
in dematerialized form are requested to intimate all changes with respect to their address, bank
details, mandate etc. to their respective Depository Participants. These changes will then be
automatically reflected in the Companys records. This will help the Company to provide efficient and
better service to the members.
(ii) Electronic Clearing Service (ECS) Facility : We are pleased to offer the facility of electronic
credit of dividend directly to your bank account through ECS. This facility is currently made available
at Ahmedabad, Bangalore, Bhubaneshwar, Chandigarh, Chennai, Guwahati, Hydarabad, Jaipur,
Kanpur, Kolkata, Mumbai, Nagpur, New Delhi, Patna, Thiruvananthapuram.
Shareholders holding shares in the physical form who wish to avail ECS facility, may authorise the
Company with their ECS mandate in the prescribed form, which is enclosed herewith separately.
Requests for payment of dividend through ECS for the year 2004-2005 should be lodged with M/s
Sharepro Services (India) Private Limited on or before 25th July, 2005.
(iii) Shares of the Company are traded compulsorily in dematerialized form for all investors.
Shareholders are requested to open an account with Depository Participants, if not done so far.
5
(iv) Section 109A of the Companies Act, 1956 provides for Nomination by the shareholders of the Company
in the prescribed Form No. 2B (which will be made available on request). Shareholders are requested
to avail this facility.
(v) Members desirous of obtaining any information or clarification concerning the accounts or
intending to raise any query are requested to forward the same at least 10 days before the date of the
meeting to the Company at the Registered Office, so that the same may be attended to appropriately to
the extent possible.
(vi) Unclaimed Dividends : The Company has already transferred all unpaid dividends declared up to
financial years 1994-95 to the General Revenue Account of the Central Government as required by the
Companies Unpaid Dividend (Transfer to General Revenue Account of the Central Government) Rules,
1978. Shareholders who have so far not claimed or collected their dividend up to the aforesaid financial
year are requested to claim their dividend from the Registrar of Companies, Maharashtra, CGO Complex,
2nd floor, A Wing, CBD-Belapur, Navi Mumbai 400 614 in the prescribed form. The amount of unclaimed
dividend for the year 1995-96 has been transferred to the Investor Education and Protection Fund
(IEPF) of the Central Government, pursuant to Section 205C of the Companies Act, 1956. Members
who have not encashed their dividend warrant(s) for the below mentioned financial years are requested
to approach to the Companys Registrar and Transfer Agents, M/s Sharepro Services (India) Private
Limited. Any such amounts of dividend remaining unclaimed for a period of seven years from the date
of payment shall be transferred to the IEPF of the Central Government, pursuant to Section 205C of
the Companies Act, 1956. Kindly note that no claim shall lie against the Company or the said
Fund in respect of the amounts remaining unclaimed after unclaimed dividend are
transferred to the said Fund.
4.
Financial Year Ended
Due Date for transfer to IEP Fund
31.03.1998
31.03.1999
31.03.2000 (1st Interim)
31.03.2000 (2nd Interim)
31.03.2001
31.03.2002
31.03.2003
31.03.2004 (Interim)
31.03.2004 (Final)
31.03.2005 (Interim)
25/10/2005
27/10/2006
26/02/2007
26/04/2007
12/08/2008
30/10/2008
07/08/2009
29/11/2010
05/08/2011
28/11/2011
Brief resumes of Directors seeking re-election are as under:

Name of the Director Shri R. C. Gogri
Shri. C. V. Gogri
Shri. M. P. Savla
Age
31 Years
58 Years
68 Years
Date of Appointment
31.10.2001
28.09.1984
28.06.1996
Qualification
B.E. (Production)
B. Chem
Solicitor
Expertise in specific
functional areas
10 Years
30 Years
40 Years
Chairmanship/
Directorship
held in other
public companies
1. Aarti Industries Ltd. 1. Aarti Industries Ltd.

2. Ganesh Polychem Ltd. 2. Aarti Healthcare Ltd.
3. Aarti Corporate Services Ltd.
4. Transmetal Ltd.
5. Surfactant Specialities Ltd.
Membership held in
Committees of such
Boards of other public
companies
NIL
NIL
Shareholder Grievence
NIL
Committee and Remuneration
Committee of Aarti Industries Ltd.
Audit Committee of Surfactant
Specialities Ltd.
Directors Report
Dear Shareholders,
Your Directors take pleasure in presenting the 20 th Annual Report and Audited Statement of Accounts for
the year ended 31 st March, 2005.
FINANCIAL RESULTS
Gross Sales / Income from Operations

Less : Excise Duty & Sales Tax
Net Sales / Income from operations
(Increase) / Decrease in stock in trade
Consumption of Raw Materials
Staff Cost
Other Expenditure
Total Expenditure
Operating Profit Before Interest, Depreciation & Tax
Non Operating Income
Profit before Interest, Depreciation & Tax
Interest
Depreciation
Profit Before Tax & Extra-ordinary Items
Provision for taxation Current
Deferred
Profit After Tax
Add : Profit brought forward previous year
Profit available for appropriation
Appropriations:
Tax For earlier years
Transfer to General Reserve
Interim Dividend (14%)
Proposed Dividend (16%)
Tax on Dividend
Balance carried to Balance Sheet
Earning Per Share (Rs.)
2004-2005
26527
2378
24149
101
16294
621
3850
20866
3283
79
3362
586
715
2061
405
250
1406
4685
6091
(Rupees in Lakhs)
2003-2004
23770
2075
21695
(490)
15080
635
3902
19127
2568
96
2664
386
572
1706
132
366
1208
4004
5212
141
164
187
46
5553
12.01
9
121
141
211
45
4685
10.32
DIVIDEND
Your Company had paid interim dividend of Rs.1.40 ps. @ 14% per equity share of Rs.10/- each. Your
Directors are pleased to recommend a Final Dividend of Rs.1.60 ps @ 16% per share for the year ended 31st
March, 2005.
Total Dividend for the year 2004-2005 would thus be Rs. 3/- @ 30% per share (Previous year : Rs.3/- @
30%) subject to declaration of final dividend at the forthcoming Annual General Meeting (AGM). Total cash
outflow on account of total dividend payment including dividend tax will be Rs.397.70 lakhs (Previous
year: Rs. 396.81 lakhs).
The final dividend after approval by the shareholders at the AGM will be paid on or after 12th August, 2005
to the eligible shareholders.
7
OPERATIONS REVIEW
During the year under review, the Company has achieved Sales turnover of Rs. 26527 lakhs (Previous Year
: Rs. 23770 lakhs) registering a growth of 12%.
Operating Profit before Interest, Depreciation & Tax was Rs 3283 lakhs (Previous Year : Rs. 2568 lakhs),
registering a growth of 28%.
Profit after Tax was Rs.1406 lakhs (Previous Year : Rs. 1208 lakhs), registering a growth of 16%.
During the years the company has achieved an export turnover of Rupees 9116 lakhs. The Company has
been exporting its products to more than 80 countries. Strategic initiatives are being considered and planned
to achieve quantum growth more particularly in regulated and untapped markets.
The Companys initiatives for growth have resulted in the following achievements :
(i)
Negotiations are on with some key USA companies to finalize deals on contract manufacturing for a
Number of new molecules.
(ii) The Company has shortlisted reliable partners to setup or acquire manufacturing facilities to serve
the local Chinese market.
(iii) More than 30 new molecules have already been launched by the Company. Additionally, another 10
new molecules are planned to be commercialized.
(iv) The Company has already started commercial production at its newly setup Intermediate Plant at
Tarapur. Production at the USFDA Compliant plant is expected to start in July, 2005. The Company
proposes to file at least 6 to 8 DMF during current year.
(v) Capital expenditure is planned for Debottlenecking and Balancing Equipments to expand existing
capacities for Ciprofloxacin/ Metformin/ Nimesulide and for new aquisitions. The new Research &
Development facility at Turbhe has been developed to commercialize new products.
(vi) Focus is now being shifted from old commodity products to new molecules which are high value which
would substantially improve the profitability.
ISSUE OF FOREIGN CURRENCY CONVERTIBLE BONDS
The Company has issued Unsecured Foreign Currency Convertible Bonds (FCCBs) of US$12,750,000 (US
Dollar Twelve Million Seven Hundred Fifty Thousand only) during April, 2005 to fund expansions,
modernization and corporate investments in Industrial Sector. The said FCCBs are listed on the Luxembourg
Stock Exchange.
DIRECTORS RESPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act, 1956, we hereby state :
(i)
That in the preparation of the annual accounts for the Year ended March 31, 2005 the applicable
accounting standards have been followed. There are no material departures from the applicable
accounting standards;
(ii) That the Directors had selected such accounting policies and applied them consistently and made
judgements and estimates that are reasonable and prudent so as to give a true and fair view of the
state of affairs of the Company at the end of the financial year and of the profit of the Company for that
year;
(iii) That the Directors had taken proper and sufficient care for the maintenance of adequate accounting
records in accordance with the provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
(iv) That the Directors had prepared the annual accounts on a going concern basis.
8
DIRECTORS
In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company,
Shri. Rashesh C. Gogri , Shri. Chandrakant V. Gogri and Shri. Manilal P. Savla retire by rotation and being
eligible, offer themselves for re-appointment.
MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis Report prescribed under the Listing Agreement is included as a part
of the Annual Report.
CORPORATE GOVERNANCE
Report on Corporate Governance compliance is included as a part of the Annual Report along with the
Auditors Certificate.
RESEARCH AND DEVELOPMENT
The Company is concentrating more and more on R&D with a view to exploit high growth potential expected
in pharma sector. After completing initial development on laboratory scale at R&D Centres, Further
development is carried out on pilot scale at respective plants. Company has successfully carried out Research
and Development in Anti-Fouling Agents for a Multi National Company.
DISCLOSURE OF PARTICULARS
Particulars required under Section 217(1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating to conservation of
energy, research & development, technology absorption, foreign exchange earnings and outgo are given in
the annexure to this Report.
There are no particulars to be disclosed under Section 217 (2A) of the Companies Act, 1956, read with the
Companies (Particulars of Employees) Rules, 1975, as amended up to date.
AUDITORS
Messrs. Parikh Joshi & Kothare, Mumbai retire as Auditors of the Company at the ensuing Annual General
Meeting and are eligible for reappointment. Members are requested to appoint Auditors and to fix their
remuneration.
HUMAN RESOURCES
Cordial and harmonious relations with our employees continued to prevail throughout the year under
review.
ACKNOWLEDGEMENT
We take this opportunity to place on record our appreciation of the dedicated service and contribution by
the employees at all levels. Our sincere appreciation is also due to all our customers and suppliers.
We also thank our Bankers, financial institutions, shareholders for their continued support to the Company
and its management.
By Order of the Board
Mumbai, April 25, 2005
Sd/Chandrakant V. Gogri
Chairman
MANAGEMENT DISCUSSION AND ANALYSIS

Pharmaceutical Industry Global & Indian
The Indian Pharmaceutical industry ended the year 2004 with estimated sales of over Rs. 206 billion,
growth of 6.5% over the previous year. After a growth of just 5% in 2003, the Industry seems to be on a
recovery path and recorded good growth. However, this trend has been impacted in the first quarter of 2005
primarily due to reduced buying by the trade on account of proposed introduction of Value Added Tax (VAT)
from April, 2005.
For Indian bulk drug manufacturers, the high impact opportunities present themselves in two forms
export of off-patent bulk drugs to regulated market of US and Europe, and contract manufacturing of
patent-protected bulk drugs for patent/license holders. India offers the advantage of its low production
cost, quality production, and abundant skills in chemistry. More and more Indian pharmaceutical companies
are going for the US FDA compliant plants and this has resulted in increased volume, margins, and profits.
The US is the biggest market for Indian pharmaceutical exports followed by Germany, Russia, UK, and China.
Indias skills in chemistry and cost competitiveness along with quality facilitate exports. Over the last 2-3
years, India has emerged as a country with maximum number of US FDA approved plants outside the US.
India has emerged as a preferred source for quality medicines at affordable prices. In addition to opportunities
in the domestic market, there are various opportunities for exporting to regulated and unregulated markets.
India offers a competitive advantage in outsourcing due to its abundance of scientific and technical manpower,
large and diverse patient pool for conducting clinical trials and technical capability of producing active
pharmaceutical ingredients as well as finished dosage forms, All these services will be highly cost competitive
and they offer several opportunities to small as well as mid-sized pharmaceutical companies.
Introduction of product patents from 2005 presents an opportunity for the growth of the pharmaceuticals
industry, depending on the implementation and enforcement of the product patent regime. It is hoped that
this will facilitate speedier introduction of new research products, attracts investment in research and lead
to development of the industry and market. This coupled with Indias growing population and increasing
health awareness should further open up the avenues for growth of industry.
The proposed New Drugs Policy and Price Control Order promised reduced span of price control and an
opportunity for the industry to invest and grow the market. The implementation of this new Policy has
been pending for the past over two years. The absence of a clear objective and transparent policy on drug
price control is impacting the overall industry direction.
Business Strategy In order to translate the above into reality for the Company, we plan to harness our existing strengths and
implement the following strategy:
In addition to the existing established molecules, Aarti Drugs Limited (ADL) is now focusing on
selected value-added molecules from therapeutic segments like cardio-vascular, anti-diabetes, anti-fungal, antibiotics, anti-allergic, anti- arthritis, etc. as the choice of molecules and
composition of product portfolio would be critical to the future growth of the company.
Concentration on niche markets like China along with increased presence in the regulated markets
will continue to remain an area of priority. It has already filed for import drug permit for Tinidazole and
Nimesulide with China FDA so that ADL will be freely allowed to sell the product in the Chinese market.
The Company has already started commercial production at its newly setup Intermediate Plant at
Tarapur. Production at the USFDA Compliant plant is expected to start in July, 2005. The Company
proposes to file at least 6 to 8 DMF during current year.
Acquisitions of synergic projects or mergers would remain another focus area.
10
The Company is on the look out for joint ventures both India and abroad as an expansion strategy.
For Contract Research And Manufacturing Services (CRAMS), ADL is targeting strategic tieups and alliances and it aims to harness existing long-standing relationships with esteemed
buyers and its varied custom synthesis capabilities.
ADL and University Department of Chemical Technology (UDCT) plan to extend their existing relationship of many years for co-operation on manufacturing and quality assurance to collaborative research.
Some of our techno-promoters are alumni of UDCT and have greatly facilitated the relationship.
With substantial R&D spending, the company is concentrating on development of NCE (New
Chemical Entity) and effective drug discovery.
SWOT Analysis
Strengths:
1.
ADL has already established itself as a strong player in the global as well as domestic market
and is a market leader in more than fifteen principal products. In other therapeutic segments too, it
is confident of increasing its share in the near future.
2.
With the desire to build world-class capabilities and by dint of sheer hard work, ADL has been successful
in developing state- of- the- art R & D Center at Tarapur, which is recognized by Department of
Science and Industrial Research, Government of India. The Center has successfully developed
around 30 new molecules in the past four years and is in the process of continuously developing newer
value-added molecules through innovative and cost-effective process routes so as to cash in on the opportunity presented by patent expiry of many blockbuster molecules in the near future. These facilities have
been inspected and approved by some reputed MNCs who plan to get contract manufacturing done.
3.
ADL has established manufacturing facilities for approx. 7500 tons including custom synthesis facilities for varied reactions at seven manufacturing locations at Tarapur, Sarigam.
4.
ADL should also be able to provide dedicated facilities for CRAMS ( Contract Research and Manufacturing services).
5.
Regulatory Approvals & accreditations
ADL already possess Certificate of Suitability for seven of our leading products and have filed
for two more.
It has also filed for patent for di-hydrochloride of levo-citrazine molecule in the antihistamine
therapeutic segment.
ADL has Sixteen Drug Master Files in CTD format with another Three under preparation.
The Speciality Chemicals plant and intermediate section of USFDA compliant plant is ISO 9002
certified.
Good Manufacturing Practices (GMP) certificate for the products is obtained.
The above developments are expected to add scalability to ADLs operations.
Other strengths:
l
ADL is constantly involved in R & D to achieve cost reduction through alternative process routes,
manufacturing excellence, and reduction in energy costs.
For last couple of years, ADL has been publishing audited Financial Results within 25 days of the
subsequent month ensuring good corporate governance.
It has a very well developed MIS and System of Internal Control, which helps the management
to take informed and timely decisions.
ADL has always aimed at creating strong fundamentals, consistent profitability, credibility,
11
sustainable growth and returns to the shareholders.

Market position and Competitive threat As far as the established molecules are concerned, ADL already enjoys leadership in the domestic market and strong
presence in the international market. It has been exporting to more than 80 countries worldwide.
Weaknesses
The R & D Center of ADL is constantly involved in development of new molecules, which are scheduled to
go off patent in the near future. However, there is very little stress on basic research and development of
NCE (New Chemical Entity) or Drug Discovery.
ADL has also been a late entrant in the Regulated markets. It plans to overcome this weakness by timely
completion of the plant and planning systematic growth by selection of key blockbuster molecules from cardiovascular, anti-diabetic and anti-histamine therapeutic segments, which have growing demand the world over.
Opportunities and threats
The year 2005 indicates the significant development of enforcement of GATT and WTO guidelines. All
medium sized pharmaceutical companies, which have succeeded in achieving manufacturing excellence over
the years and have developed cost-effective synthesis routes, have scope for partnering with multi-national
companies for contract manufacturing and research services, i.e. CRAMS. With the state-of the art R & D
Center, kilo-lab, extensive manufacturing facilities and custom synthesis capabilities, ADL is geared up to
cash in on the opportunities that the future is most likely to present.
The threat of Chinese competition seems to be diminishing slowly as Chinese costs have been increasing
recently probably due to infrastructure bottlenecks. Chinese Government policy of concentrating on more
environmental friendly chemical plants is forcing some plants in China to close down. Also, a revaluation
of Chinese currency is expected in the near future.
Internal competition has to be tackled with constant cost-reduction, savings and efficiency through manufacturing excellence.
Internal Control Systems and their adequacy
The Company has sound and adequate internal control systems commensurate with its size and nature of
business. The said systems are periodically reviewed by the Audit Committee of the Board. The systems
ensure protection of assets and proper recording of all transactions and timely reporting. Internal Audit is
being carried out by an independent firm of Chartered Accountants. Periodic Reports of the Internal Auditors
are also reviewed by the Audit Committee. Any issues raised by the Internal Auditors and Statutory Auditors
are discussed and addressed by the Audit Committee.
Discussion on Financial an Operational Performance
Sales Volume Growth : ADL has achieved the total sales of Rs. 265.27 crores with 12% growth over the
previous year sales of Rs. 237.70 crores.
Bottmeline Growth : Operating Profit has been Rs. 32.83 crores against Rs. 25.68 crores in the previous
year with growth of 28%. Net Profit after tax has been Rs. 14.06 crores against Rs. 12.08 crores in the
previous year with growth of 16%.
One of the main reason for volume growth has been on account of new bulk drug products. In addition to
that there has been growth in Metronidazole Benzoate, Niacinamide, Diclofenac Sodium, OPTSA Methyl
Ester, Secnidazole & Tolnaftate.
In spite of increase in raw material costs due to increase in petroleum prices, ADL could improve profits
due to better utilisation of capacity, better yields, saving in fuel cost and various cost control and cost
reduction measures taken by the Company coupled with better working capital and finance management.
12
Analysis of Expenditure as a percentage to Operating Income

Items
Manufacturing costs
Staff costs
Research & Development
Administrative & Other expenses
Depreciation /Amortisation
Interest
2004 - 05
78.41%
2.34%
1.92%
6.09%
2.70%
2.21%
2003-04
78.17%
2.67%
2.15%
7.59%
2.41%
1.62%
Human Resources
Human Resource being the most significant of the factors contributing to the success of the Company in
achieving its objectives, the Company has been following a proactive policy for Human Resource Management.
Adequate sized team has been developed and maintained to facilitate smooth and uninterrupted functioning
of all departments. Further, new recruitments have been made to keep pace with increasing requirement of
skilled and experienced technical personnel for new projects and expansion.
Initiative to develop a team compatible of functioning in the changing scenario of regulation systems was
carried on through training. Training programmes were conducted for making the teams capable of managing
QMS such as ISO, USFDA, Technical upgradations in manufacturing. For developing supervisory skills
amongst young supervisors, a Diploma Programme in Supervisory Management is being conducted.
Total 527 programmes were conducted during the year in review on subjects spreading from Behavioral
aspects, Individual and Process Safety, QMS and Technical aspects by Companys HRD Centre, which has
been handled by a qualified team of HR Professionals. The Company is a leading participant in activities of
Tarapur Management Association - a local association affiliated with All India Management Association.
As contribution towards Community Development to fulfill Companys obligations towards the society,
activities are carried out on regular basis. Some of these activities are: Blood Donation Camp, Eye Checkup
camp, Health check up camp, Career Guidance Workshop for young students. As a step towards our objective
of upgradation of primary education in the surrounding areas, infrastructure development of school was
initiated and supported. Contributions were made to primary school of surrounding villages for painting of
school buildings, purchase of benches and furniture, sports equipment, record storage facilities etc. for
sporting activities in the surrounding area. Company has taken initiative by providing the Palghar Dahanu
Taluka Sports Association with developing and maintaining the cricket field.
Employee Strength is:
Division/Functions
2004-05
2003-04
Manufacturing Factory - Dedicated
580
516
- Others
25
27
Sales & Marketing - Domestic
10
12
- Exports
8
15
Research & Development
60
58
Establishment/Others
54
47
Total
737
675
Outlook
Armed with strong resource base and a vision to be Indias leading manufacturer of bulk drugs and high
value Active Pharma Ingredients (APIs) in select therapeutic areas, ADL is poised to unleash its true
potentials to meet the challenges and exploit the growth opportunities ahead.
Cautionary Statement
Statement in the Management Discussion and Analysis describing the Companys objectives, projections,
expectations and estimates regarding future performance may be forward looking statements and are
based on currently available information. The management believes these to be true to the best of its
knowledge at the time of preparation of this report. However, these statements are subject to certain future
events and uncertainties, which could cause actual results to differ materially from those that may be
indicated in such statements.
13
REPORT ON CORPORATE GOVERNANCE

Your Company has complied in all material respects with the Corporate Governance Code as per Clause 49
of the Listing Agreement with the Stock Exchanges. A Report on the Corporate Governance compliance is
furnished below :
(1) Companys Philosophy on Corporate Governance

Good Corporate Governance helps enhancement of long term shareholder value and interest of other
stakeholders. This is achieved through increased awareness for responsibility, transparency and
professionalism and focus on effective control and management of the organization. The Board of
Directors of the Company is committed to the consistent adherence to the corporate governance code
and constant review of the Board processes, practices and the Management systems to maintain a
greater degree of responsibility and accountability.
Mandatory Requirements :
(2) Board of Directors
ADL Board consists of 12 Directors, out of which 6(Six) i.e. 50% Directors are non-executive and
5(Five) Directors are independent.
The constitution of the Board and other relevant details are given below :
Name of Director
Executive /
Non-Executive /
Independent
* No. of
other
Directorship
Mr. C. V. Gogri
Chairman Non-Executive
Mr. M. P. Savla
Vice Chairman
Independent
Mr. P. M. Patil
No. of
Committee
membership
in all
companies
No. of
Board
Meetings
attended **
Annual
General
Meeting
Attendance
Yes
Nil
Nil
No
Managing Director
Yes
Mr. S. P. Nachane
Managing Director
Yes
Mr. H. M. Savla
Joint Managing
Director
Yes
Mr. H. P. Shah
Executive
Yes
Mr. R. C Gogri
Executive
Nil
No
Mr. U. M. Patil
Executive
Nil
Nil
Yes
Mr. R. V. Gogri
Independent
No
Mr. S. T. Shah
Independent
Yes
Mr. P. H. Desai
Independent
No
Mr. N. N. Prabhu
Independent
No
This excludes directorships held in private limited and overseas companies.
**
Board meetings : During the year 2004-05, five meetings were held on 23.04.04, 28.07.04, 29.10.04,
31.12.04 and 21.01.05.
The last Annual General Meeting (AGM) was held on 06.07.2004.

14
Directors Remuneration : The Remuneration payable to the Directors is considered and approved
by the Remuneration Committee constituted in accordance with the Corporate Governance Code and
the provisions of the Companies Act, 1956, having due regard to the relevant factors. Non-executive
Directors are paid Sitting fees at the rate of Rs.3000/- for each of the meetings of the Board or Committee
thereof attended by them. Directors remuneration paid during year 2004-2005:
Name of Director
3.
Salary/LTA/ Medical
Commission
Sitting Fees
Total
Allowance (Rs.)
for 2003-04 (Rs.)
(Rs.)
(Rs.)
Mr. C. V. Gogri
Nil
Nil
117000
117000
Mr. M. P. Savla
Nil
Nil
9000
9000
Mr. P. M. Patil
1230900
357336
Nil
1588236
Mr. S. P. Nachane
1230900
357336
Nil
1588236
Mr. H. M. Savla
995100
357336
Nil
1352436
Mr. H. P. Shah
866400
357336
Nil
1223736
Mr. R. C. Gogri
1019900
357336
Nil
1377236
Mr. U. M. Patil
200000
Nil
Nil
200000
Mr. R. V. Gogri
Nil
Nil
72000
72000
Mr. S. T. Shah
Nil
Nil
36000
36000
Mr. P. H. Desai
Nil
Nil
21000
21000
Mr. N. N. Prabhu
Nil
Nil
24000
24000
Audit Committee
Terms of Reference : As per the guidelines set out in the listing agreements that, inter alia, include
overseeing financial reporting processes, reviewing with the management the financial statements,
accounting policies and practices, adequacy of internal control systems, adequacy of internal audit
function and discussion with internal auditors on any significant findings, financial and risk management
policies.
Meetings : During the year 2004-05, three Audit Committee meetings were held on 23.04.2004,
29.10.2004 and 21.01.2005.
The composition of the Audit Committee and other relevant details are given below :
Name of Director
Category
Profession
No. of
meetings
attended
Mr. S. T. Shah
Chairman *
Non-executive (Independent)
Industrialist
Mr. S. P. Nachane
Executive
Industrialist
Mr. P. H. Desai
Industrialist
Mr. N. N. Prabhu
Company Executive
* With effect from 23rd April, 2004.

15
4.
Shareholders Grievance Committee

Terms of Reference : The Committee had been formed to address and approve matters relating to
transfer/transmission of shares, issue of duplicate certificates, non-receipt of balance sheet, non-receipt
of dividend, review /redressal of investors grievances etc.
Meetings : During the year 2004-05, four Committee meetings were held on 21.06.2004, 29.09.2004,
12.01.2005 and 28.03.2005.
The composition of the Shareholders Grievance Committee and other relevant details are given below :
Name of Director
Category
No. of meetings attended
Mr. S. T. Shah, Chairman
Independent
Mr. S. P. Nachane
Managing Director
Mr. C. V. Gogri
Non-Executive
Mr. H. M. Savla
Joint Managing Director
Shareholders complaints : During the year, 30 complaints were received. All the complaints were
resolved to the satisfaction of shareholders in due course.
No request for share transfers or dematerialisation was pending as on 31.03.2005.
5.
General Shareholders Information

1.
20th Annual General Meeting Day, Date. Time and Venue

Day
Date
Time
Venue
Saturday
06.08.2005
11.00 a.m.
TIMA Hall, MIDC Tarapur,

Taluka Palghar, Dist. Thane 401506, Maharashtra
2. Financial Calendar
Financial Year
1st April to 31st March
Adoption of Quarterly Results
Latest by 25th of the month following each quarter
Dates of Book Closure (Both days inclusive) 29th July, 2005 to 6th August, 2005
Dividend Payment Date
3.
on or after 12th August, 2005
Means of Communication
The quarterly financial results were published in following Newspapers
Financial Results for the quarter ended
Quarter Ended Newspapers
30.06.2004
30.09.2004
31.12.2004
31.03.2005
Economic Times and Maharashtra Times

Economic Times, Maharashtra Times, Asian Age and Tarun Bharat
Economic Times, Maharashtra Times, Free Press Journal and Navshakti
Economic Times, Maharashtra Times, Free Press Journal and Navshakti
Apart from this the Half yearly financial results published under Clause 41 of the Listing Agreement
were sent to all the shareholders at their registered addresses.
4.
16
These results, official news releases are available on the website of the Stock Exchange,
Mumbai (www.bseindia.com), National Stock Exchange (www.nseindia.com) and the
website of Securities and Exchange Board of India (SEBI) on (www.sebiedifar.nic.in)
Listing on Stock Exchanges
: The Stock Exchange, Mumbai
Stock Code : 524348
National Stock Exchange of India Limited
Stock Code : AARTIDRUGS
Liquidity of Shares: The Equity Shares of the Company are included under B1 category at The
Stock Exchange, Mumbai. Equity Shares of the Company are also listed on the National Stock
Exchange of India Limited.
Listing fees and Annual Custodial Fee : The Company has paid the annual listing fees of the
stock exchanges and annual custodial fees of the depositories for the year 2005-2006.
Compliances : The Company has complied with the requirements of the Stock Exchanges, SEBI
and other statutory authorities on all matters related to capital markets during the last three
years. No penalties or strictures have been imposed on the Company by the said authorities.
Dematerialisation status : Equity Shares of the Company are traded compulsorily in
dematerialized form for all investors. Shareholders are requested to open an account
with Depository Participants, if not done so far dematerialisation of Shares. Security Code
No. with NSDL and CDSL is - ISIN No. INE767A01016. As on 31st March, 2005, 82,94,339
Equity Shares representing 70.84% of the Paid-up Share Capital of the Company stands
dematerialised.
5.
Share Transfer Agents :
M/s Sharepro Services (India) Private Limited,

Satam Estate, 3rd Floor,
Above Bank of Baroda, Chakala,
Andheri (East), Mumbai 400 099.
Tel.: 28215168
The shareholders are requested to address their communications/ suggestions/ grievances/ queries
to the Share Transfer Agents at above address.
6.
Compliance Officer
7.
Share Transfer System
Mr. Prakash Khedekar, Company Secretary

Udyog Kshetra, 222, Mulund Goregaon Link Road,
Off LBS Marg, Mulund(W), Mumbai 400 080.
Tel.: 55976656
To expedite the transfer process in the physical segment, authority has been delegated to the Share
Transfer Committee, which comprises of Shri. Chandrakant V. Gogri, Shri. Rajendra V. Gogri and
Shri. Satish Nachane. Committee meets every fortnightly for approval of the transfer request.
Reports on Share Transfer/transmission are placed before the Shareholders Grievances Committee
and the Board from time to time.
8.
Market Price Data:

Month
April 2004
May 2004
June 2004
July 2004
August 2004
September 2004
October 2004
November 2004
December 2004
January 2005
February 2005
March 2005
Bombay Stock Exchange

High (Rs.) Low (Rs.)
Volume
91.00
75.05
390,927
89.95
67.00
568,118
87.00
77.00
969,532
88.55
77.50
670,857
95.80
78.05
772,228
112.85
88.00
2,225,630
152.95
110.00
3,715,780
175.45
132.15
2,713,341
183.20
150.00
2,380.206
173.50
136.35
1,285,976
179.70
139.10
1,828,193
153.35
127.05
1,603,993
National Stock Exchange

High (Rs.) Low (Rs.)
Volume
92.60
74.00
480,919
89.90
66.05
602,730
87.00
77.00
818,564
88.80
77.50
799,857
95.70
79.00
944,603
113.00
87.25
3,169,413
153.60
110.00
5,697,537
176.15
132.25
6,641,419
182.10
149.70
4,683,326
172.80
136.85
1,736,550
180.00
139.00
2,010,944
152.00
127.50
1,431,370
17
BSE
Senesex
NSE
Aarti Drugs ltd
NSE Nifty
8000
200
7000
180
160
6000
Aarti Drugs ltd
2500
200.00
180.00
160.00
140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00
2000
140
5000
120
4000
100
3000
80
1500
1000
60
2000
40
1000
Shareholding Pattern as on 31.03.2005

Category
Promoters Indian
Bodies Corporate
NRIs/OCBs/FIIs
Banks, Financial Institutions
Mutual Funds
Public
Total
%
60.00
6.88
0.85
0.01
1.63
30.63
100.00
Distribution of Shareholding as on 31.03.2005

No. of Shares
Shareholders
Shares
Number
Number
Less than 250
8990
79.41
944810
8.07
251-500
1223
10.80
473548
4.04
501-1000
526
4.65
407669
3.48
1001-2000
265
2.34
391597
3.35
2001-3000
76
0.67
197536
1.69
3001-4000
42
0.37
154759
1.32
4001-5000
35
0.31
164276
1.40
5001-10000
58
0.51
437425
3.74
106
0.94
8536930
72.91
11321
100.00
11708550
100.00
10001-99999999
TOTAL
10. Registered Office
Plot No. N-198, M.I.D.C.,

Tarapur, Village - Pamtembhi,
Tal-Palghar, Dist. Thane 401 506
Maharashtra
11. Plant locations
Plot No. N-198, G-60, E-120,

K-40, K-41, E-9/3 ,E-9/4, E-21 and E-22
MIDC Industrial Area, Tarapur,
Tal-Palghar,
Dist. Thane 401 506.
Plot Nos. 2902/2904,
GIDC, Sarigam 396155,
Dist. Valsad, Gujarat.
18
Mar-05
Jan-05
No. of Shares
7025449
805230
99116
700
190983
3587072
11708550
Feb-05
Dec-04
Oct-04
Nov-04
Sep-04
Jul-04
Aug-04
Jun-04
Apr-04
May-04
Mar-05
Jan-05
Feb-05
Dec-04
Oct-04
Nov-04
Sep-04
Jul-04
Aug-04
Jun-04
May-04
0
Apr-04
9.
500
20
12. General Body Meetings

Details of the last three Annual General Meetings are as under :
Year
Day
Date
Time
Place
2002
Saturday
31.08.2002
9.30 a.m.
Plot N-198, M.I.D.C., Tarapur,

Village - Pamtembhi, Tal-Palghar,
Dist. Thane 401 506
Maharashtra
2003
Saturday
09.08.2003
9.30 a.m.
-Do-
2004
Tuesday
06.07.2004
11.00 a.m.
TIMA Hall, MIDC Tarapur,

Taluka Palghar,
Dist. Thane 401506,
Maharashtra
During the last year no resolution was put through postal ballot. No resolution is proposed to be
passed through postal ballot at the ensuing Annual General Meeting.
13. Related Party Transactions disclosure :
Disclosure of transactions with any related parties i.e. Promoters, Directors, Relatives, Subsidiary,
or Management have been made in the Balance Sheet in Schedule P - Notes to Accounts.
Non-Mandatory Requirements
Remuneration Committee
Terms of Reference : The Committee is empowered to review and recommend/approve remuneration payable
to the Managerial Personnel.
Meetings : During the year 2004-05, the Remuneration Committee meeting was held on 28.07.2004 and
was attended by all the members.
The composition of the Remuneration Committee is as under :
Name of Director
Category
Mr. C. V. Gogri
Chairman, Non-executive
Mr. S. T. Shah
Independent
Mr. P. M. Patil
Managing Director
Mr. S. P. Nachane
Managing Director
Mr. N. N. Prabhu
Independent
Mr. P. H. Desai
Independent
19
Auditors Report on Corporate Governance

CERTIFICATE
To the Members of
Aarti Drugs Ltd.
Mumbai.
We have examined the compliance of conditions of corporate governance by Aarti Drugs Ltd., for the year
ended on 31st March, 2005, as stipulated in clause 49 of the Listing Agreement of the said company with
stock exchanges.
The compliance of conditions of corporate governance is the responsibility of the management. Our
examination was limited to procedures and implementation thereof, adopted by the company for ensuring
the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of
opinion on the financial statements of the company.
In our opinion and to the best of our information and according to the explanations given to us, we certify
that the Company has complied with the conditions of Corporate Governance as stipulated in the
abovementioned Listing Agreement.
We state that no investor grievance is pending for a period exceeding one month against the company as per
the records maintained by the Shareholders/ Investors Grievance Committee.
We further state that such compliance is neither an assurance as to the future viability of the company nor
the efficiency or effectiveness with which the management has conducted the affairs of the company.
For PARIKH JOSHI & KOTHARE
Chartered Accountants
Sd/(Yatin R. Vyavaharkar)
Partner
Mumbai
Dated : 25-04-2005
20
Annexure I to Directors Report

ADDITIONAL INFORMATION AS REQUIRED UNDER THE COMPANIES (DISCLOSURE OF
PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988.
1. CONSERVATION OF ENERGY
(a) ENERGY CONSERVATION MEASURES TAKEN
Replacement of Furnace Oil Fired Boiler with Coal Fired Boiler.
Installation of Energy Conservation Unit for Lighting Loads.
Efficiency improvement in Refrigeration plants & Air compresssors.
Installation of capacitor Banks for improvement of Power Factor.
Rationalization of usage of utility pumps for Electrical Power Savings.
Replacement of electrical motors with energy efficient motors at suitable places.
Installation of auto Star-Delta switches for Centrifuse.
Installation of Thermostat based auto cut-off switches for Cooling Tower fans.
Continuous overhauling of all insulations to reduce loss of heat due to radiation.
(b) Additional Investments & Proposals, if any, being implemented for reduction of consumption of energy
Replacement of Furnace Oil Fired Boiler with Coal Fired Boiler was completed costing Rs. 147.53 lacs.
(c) The adoption of energy conservation measures indicated above have resulted in substantial savings in
overall utility costs and, in turn, reduction in utility cost/Kg of product for most of the Products.
(d) Total energy consumption and energy consumption per unit of Production.
I.
Power & Fuel Consumption
Current Year
Previous Year
1
Electricity
Purchased Units (KWH)
14585048
13580990
Total Amount (Rs. In Lakhs)
536.27
506.83
Per Unit (Rs.)
3.68
3.73
2
L.D.O.
Purchased Units (MT)
62.72
51.61
10.41
7.13
Per Unit (Rs.) (Per Kg)
16.59
13.82
3
Furnace Oil
Purchased Units (MT)
3602.78
5031.80
375.74
520.82
Per Unit (Rs.) (Per Kg)
10.43
10.35
4
Others (Rs. In Lacs)
Diesel (Rs in Lakhs)
20.79
37.69
Coal (Rs in Lakhs)
210.39
34.79
II. Consumption per unit of Production
Since the Company manufactures difference types of bulk drugs and its intermediates, it is not
practicable to give consumption per unit of production.
2
RESEARCH AND DEVELOPMENT (R&D)
(a) Areas in which R&D carried out by the Company
The Company has carried out Research & Development in the following areas:
Steroids, Hormones & Glucocorticoids
Antidepressant, Antiallergenic, Antihypertension, Antibiotics, Antidiabetics, NSAIDS,

Cardioprotectant, Antihistamine, Antianginal, Antibacterial, Anticonvabants, Antifungals,
Antiosteoportis, Dinrefics, Sedative.
Company has successfully carried out Research and Development in Anti-Fouling Agents for a Multi
National Company.
The R&D centre has developed patent non-infringing process and filed patent initially in India for
Levocetirizine and its intermediates.
(b)
Significant process improvements have been made in Hydrocortisone Sodium succinate (Steroid).
21
The development work for improving recoveries of solvents and simplification of manufacturing process
has resulted in improved production. By developing Lypholisation technique, the Company has
successfully launched the sterile preparations in bulk form. The R&D Centre has transferred the
production technology of Steroids, namely, Danazol, Stanazolol, Testosterone Propionate, Testosterone
enanthate, Hydrocortisone sodium succinate and Hydrocortisone acetate.
The Company has introduced Antidiabetic products, namely Metformin, Pioglitazone and Antibiotic
products, namely Ciprofloxacin, Spoarfloxacin.
The manufacture process for NSAIDS, namely, Aceclofenae has been made more economical as
well as more greener reducing effluent drastically.
The recovery techniques for some of input raw materials have been developed for platelet
aggregation inhibitors and in Antibiotic products.
The Company will shortly introduce some of these products to international market. The Company
is also in the process of registration for these products in some countries and will earn valuable
foreign exchange.
(c) Future Plan of the Company

The Companys R&D program is currently focused on new products in Non-steroidal, NSAID compounds,
Antihyper lepoproteinimic and Diuretic inhibitors. The Company is also experimenting to standardize
the sterile bulk APIs by gamma radiation technique. Company will continue to do R&D on APIs
which are off-patent and will work on patent non-infringing route of Synthesis. The R&D team through
its intensive research efforts expected to develop many new products in future and as a result the
Company expects substantial commercial benefits in future
After taking intial development in Laboratory scale further develpment will be carried out on pilot
scale at respective plants of the company at dirrerent locations.
(d) Expenditure on R&D
(Rs. In Lakhs)
Current Year
Previous Year
Capital
302.59
330.14
Recurring
208.00
181.94
Total
510.59
512.08
Total R & D Expenditure as a percentage of total turnover :
1.92%
2.15%
3.
TECHNOLOGY ABSORPTION ADAPTATIONS AND INNOVATION

A plant for catalytic hydrogenation was commissioned.
TOTAL FOREIGN EXCHANGE EARNINGS AND OUTGO :
Total Foreign Exchange Earned

Total Foreign Exchange Used
CIF Value of Imports :
Raw Material
Capital Goods
Expenditure in Forign Currency
Commission
Travelling Expenses
Sales Promotion
Foreign Bank charges
Others
Total
(Rs. In Lakhs)
Current Year
Previous Year
7058.45
7598.10
4557.42
110.77
4531.57
24.32
93.03
30.60
16.02
24.50
37.25
4869.59
88.09
38.51
8.69
20.34
5.60
4717.12
By Order of the Board
Mumbai, 25th April, 2005

22
Sd/Chandrakant V. Gogri
Chairman
Auditors Report
To the Members of
AARTI DRUGS LIMITED,
Mumbai.
1.
We have audited the attached Balance Sheet of AARTI DRUGS LIMITED, as at 31st March, 2005 and
also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed
thereto. These financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on our audit.
2.
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 used 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.
3.
As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of
India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure
a statement on the matters specified in paragraphs 4 and 5 of the said Order.
4.
Further to our comments in the Annexure referred to above, we report that :

(i)
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;
(ii) In our opinion, proper books of account as required by law have been kept by the Company so far
as appears from our examination of those books;
(iii) The Balance Sheet and Profit and Loss Account and Cash Flow Statement dealt with by this
report are in agreement with the books of account;
(iv) In our opinion, the Balance Sheet and 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;
(v) On the basis of written representations received from the directors, as on 31st March 2005, and
taken on record by the Board of Directors, we report that none of the directors is disqualified as
on 31st March, 2005 from being appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956;
(vi) In our opinion and to the best of our information and according to the explanations given to us,
the said accounts 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;
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2005;
(b) in the case of the Profit and Loss Account, of the Profit for the year ended on that date; and
(c)
in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
M. No. 33915
Partner
Place: Mumbai,
23
Annexure to the Auditors Report

(Referred to in para 3 of our Report of even date)
As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in
terms of sub-section (4A) of section 227 of the Companies Act, 1956 and explanations given to us and on the
basis of such checks, as we considered appropriate, we have to state that:
The nature of the Companys business during the year has been such that clause (xiii) pertaining to Chit
Funds etc, and clause (xiv) pertaining to Dealing/Trading in Securities etc, of paragraph 4 of the Companies
(Auditors Report) Order, 2003, are not applicable to the Company.
(i)
(a) The Company has maintained proper records showing full particulars including quantitative details
and situation of its fixed assets.
(b) The fixed assets were physically verified by the Management during the year.
We have been informed that no material discrepancies were noticed on such physical verification.
(c) Substantial part of fixed assets have not been disposed off during the year.
(ii) (a) The stock of inventory has been physically verified during the year by the Management at
reasonable intervals.
(b) In our opinion, the procedures of physical verification of inventory followed by the management
are reasonable and adequate in relation to the size of the company and the nature of its business.
(c) The company is maintaining proper records of inventory. The discrepancies noticed on physical
verification of stocks as compared to book records were not material, however, the same have
been properly dealt with in the books of account.
(iii) (a) The Company has not granted any loans, secured or unsecured to Companies, firms or other
parties covered in the register maintained under section 301 of the Companies Act, 1956.
(b) The Company has taken a loan from a Company covered in the register maintained under section
301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.17 Lakhs
and the year-end balance of the loan taken was Rs.17 Lakhs.
(c) In our opinion, the rate of interest and other terms and conditions on which the loan has been
taken from the company listed in the register maintained under section 301 of the Companies Act,
1956 are not, prima facie, prejudicial to the interest of the Company.
(d) The Company is regular in repaying the principal amount as stipulated and has been regular in
the payment of the interest.
(e) There is no overdue amount of the loan taken from the company listed in the register maintained
under section 301 of the Companies Act, 1956.
(iv) In our opinion, there is an adequate internal control system, commensurate with the size of the
company and the nature of its business, for the purchase of inventory and fixed assets and for the sale
of goods. During the course of our audit no major weakness has been observed in the internal controls.
(v) (a) The particulars of contracts or arrangements referred to in section 301 of the Act have been
entered in the register required to be maintained under that section.
(b) In our opinion, the transactions made in pursuance of such contracts or arrangements have been
made at prices which are reasonable having regard to the prevailing market prices at the relevant
time.
(vi) The company has accepted deposits from the public. In our opinion, the directives issued by the Reserve
Bank of India and the provisions of sections 58A and 58AA and other relevant provisions of the Act
and the rules framed thereunder, where applicable, have been complied with.
(vii) In our opinion, the company has an internal audit system commensurate with its size and nature of its
business.
(viii)We have broadly reviewed the books of account maintained by the Company pursuant to the Rules
made by the Central Government for the maintenance of cost records under section 209(1) (d) of the
Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records
24
have been made and maintained.

(ix) (a) The Company is regular in depositing undisputed statutory dues including Provident Fund,
Investor Education and Protection Fund, Employees State Insurance, Income-tax, Sales-tax,
Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues with the
appropriate authorities.
(b) According to the information and explanations given to us, no undisputed amounts were payable
in respect of income tax, wealth tax, service tax, sales tax, customs duty, for more than six
months from the date they became payable.
(c) According to the records of the Company, the dues of Sales Tax, Income-Tax, Customs, WealthTax, Service Tax, Excise Duty, Cess, which have not been deposited on account of disputes and the
Forum where the dispute is pending are as under :
Natue of Statute
Nature of the Dues
Amount Forum where
Pending
(Rs. in lacs) Dispute is pending
1. Income Tax Act

Income Tax Demand
5.79 CIT (Appeals)
2.
Central Excise
Excise Demand
102.90
CEGAT
3.
Central Excise
Excise Demand
57.06
CEGAT
4.
Customs Act
Customs Duty
7.03
SETTLEMENT
COMMISSION
(x)
The Company does not have accumulated losses. The Company has not incurred cash losses in the financial
year under report and in the immediately preceding financial year.
(xi)
The Company has not defaulted in repayment of dues to financial institutions or banks.
(xii)
The company has not granted loans and advances on the basis of security by way of pledge of shares, debentures
and other securities.
(xiii) The Company has not given guarantee for loans taken by others from banks or financial institutions.
(xiv) Term loans availed by the Company were, prima facie, applied by the Company during the year for the
purposes for which the loans were obtained.
(xv)
On an overall basis, the funds raised on short-term basis have, prima facie, not been used for long term
investment.
(xvi) 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, during the year and hence the question of
whether the price at which shares have been issued is prejudicial to the interest of the Company does not arise.
(xvii) The Company has not issued any debentures.
(xviii) The Company has not raised money by public issues during the year and hence the question of disclosure and
verification of end use of such money does not arise.
(xix) Based on the checks carried out by us, any fraud on or by the Company has not been noticed or reported
during the year.
Place : Mumbai,
Date: 25th April, 2005
M. No. 33915
Partner
25
Balance Sheet as at 31st March 2005

(FIGURES IN RUPEES)
SCHEDULE
AS AT 31ST
AS AT 31ST
MARCH, 2005
MARCH, 2004
SOURCES OF FUNDS
SHAREHOLDERS FUNDS
Share Capital
Reserves & Surplus
Deferred Tax
LOAN FUNDS
Secured Loans
Unsecured Loans
A
B
117,085,500
648,607,709
765,693,209
100,066,133
C
D
920,447,795
492,324,776
1,412,772,571
2,278,531,913
TOTAL
117,085,500
547,756,052
664,841,552
75,066,133
844,984,277
223,135,472
1,068,119,749
1,808,027,434
APPLICATION OF FUNDS
FIXED ASSETS
Gross Block
Less :- Depreciation
E
1,503,716,783
426,229,776
Net Block
Capital Work-in-Progress
INVESTMENTS
F
CURRENT ASSETS,LOANS & ADVANCES
G
Less : CURRENT LIABILITIES AND PROVISIONS H
Net Working Capital
MISCELLANEOUS EXPENDITURE
(to the extent not w/off or adjusted)
Preliminary Expenses
TOTAL
926,536,620
1,178,721,583
358,136,536
820,585,047
61,791,784
3,144,837
1,492,561,905
615,253,126
877,308,779
33,931,907
2,278,531,913
45,196,987
1,808,027,434
1,077,487,007
226,006,339
14,570,040
1,513,178,757
586,642,137
NOTES TO ACCOUNTS
P
As per our Report of even date

For and on behalf of the Board of Directors
For Parikh Joshi & Kothare
Sd/(Y. R. Vyavaharkar)
Partner
Place : Mumbai
26
Sd/(Satish P. Nachane)
Managing Director
Sd/(Harshit M. Savla)
Sd/(Prakash P. Khedekar)
Company Secretary
Profit & Loss Account for the year ended 31st March 2005
(FIGURES IN RUPEES)
SCHEDULE FOR THE YEAR ENDED

FOR THE YEAR ENDED
31st March 2005
31st March 2004
INCOME
Sales & Income from Operation
Other Income
TOTAL
2,652,726,726
7,922,602
2,660,649,328
2,377,047,292
9,573,447
2,386,620,739
1,824,286,109
10,067,415
318,468,327
43,251,559
115,624,912
70,853,220
505,837
2,383,057,379
277,591,949
71,470,154
206,121,796
40,500,000
165,621,796
25,000,000
140,621,796
468,561,794
14,100,000
1,576,311,393
(49,040,277)
400,062,495
46,466,891
133,731,211
49,276,806
2,022,260
2,158,830,779
227,789,960
57,222,899
170,567,061
13,200,000
157,367,061
36,600,000
120,767,061
400,476,778
901,039
12,100,000
16,391,970
18,733,680
4,644,489
555,313,451
14,050,260
21,075,390
4,555,356
468,561,794
EXPENDITURE
Manufacturing Expenses
(Increase)/Decrease in inventory
Purchase of goods traded in
Office & Administration Expenses
Selling & Distribution Exps
Borrowing Cost
Non Operative Expenses
TOTAL
Profit before Depreciation
Depreciation
Profit before tax
Provision for taxation
Profit after tax
Provision for Deffered Taxation for Current Year
Profit after Deffered tax
Balance b/fd from previous year
Income Tax of Earlier Year
Transfer to General Reserve
Proposed Dividend :
1st Interim Dividend
Final Proposed Dividend
Dividend Tax
Balance Carried To Balance Sheet
L
M
N
O
NOTES TO ACCOUNTS
P
Earning Per Share
12.01
10.32

Partner
Place : Mumbai
Managing Director
Company Secretary
27
Schedules forming part of Balance Sheet as at 31st March, 2005

(FIGURES IN RUPEES)
AS AT 31ST
AS AT 31ST
MARCH 2005 MARCH 2004
SCHEDULE - A - SHARE CAPITAL

AUTOHRISED :
2,00,00,000 Equity shares of Rs. 10/- each
(Previous Year 1,30,09,500 Equity Shares
of Rs. 10/- each and 69,90,500 Preference Shares of Rs.10/- each)
ISSUED & SUBSCRIBED & PAID-UP :

13009500 (Previous Year 130,09,500) Equity
Shares of Rs. 10/- each fully paid up Of the above
shares - 37,56,333 (Previous year 37,56,333) shares
have been issued and allotted in terms of the Scheme
of Amalgamation of RCIL,RCPL ,MCPL,MPPL AND ECPL
sanctioned by the Honourable High Court at Mumbai vide
its order dated 29th March, 1996. (Of the above shares
60,03,167 Shares are allotted as fully paid Bonus shares
by Capitalisation of Share Premium Account)
Less :1300950 Equity Shares of Rs.10/- each bought back
200,000,000
130,095,000
69,905,000

200,000,000
200,000,000

130,095,000
13,009,500
TOTAL
117,085,500
117,085,500

117,085,500
117,085,500

SCHEDULE - B - RESERVES & SURPLUS
Capital Reserves
Capital Redemption Reserve
Securities Premium Account
General Reserve
Profit & Loss Account
TOTAL
Previous Year
As at
31/03/2004
20,074,336
13,009,500
15,923,780
30,186,642
468,561,794
547,756,052
467,571,036
Addition
During the Year
Nil
Nil
Nil
14,100,000
140,621,796
154,721,796
131,966,022
(FIGURES IN RUPEES)
Deduction
As at
During the Year
31/3/2005
Nil
20,074,336
Nil
13,009,500
Nil
15,923,780
Nil
44,286,642
53,870,139 555,313,451
53,870,139 648,607,709
51,781,006
547,756,052
SCHEDULE - C - SECURED LOANS

FIXED LOANS :
From Financial Institutions
From Scheduled Banks
OTHER LOANS :
From Financial Institutions
From Scheduled Banks
TOTAL
215,071,761
252,944,773
207,301,844
100,821,008
764,977
45,545,000
451,666,284
491,316,425

920,447,795
844,984,277

SCHEDULE - D UNSECURED LOANS

From Directors
From Others
Interest accrued and due thereon
Directors
Others
TOTAL
28
7,473,000
484,836,113
7,273,000
210,555,101
644,875
15,663
4,662,496

492,324,776
223,135,472

Schedules
SCHEDULE - E - FIXED ASSETS

(FIGURES IN RUPEES)
ITEM
GROSS BLOCK
AS AT
1-4-2004
LEASEHOLD LAND
ADDITION DEDUCTION
DURINGTHE DURING THE
YEAR
YEAR
DEPRECIATION
AS AT
31-03-2005
UP TO
1-4-2004
NET BLOCK
FOR THE DEDUCTION

YEAR DURING THE
YEAR
UP TO
31-03-2005
AS AT
31-03-2005
AS AT
31-3-2004
24,013,814
15,068,318
15,068,318
8,945,496
24,013,814
Nil
Nil
Nil
140,862,951
42,840,211
183,703,162
26,950,975
5,257,880
32,208,855
2,200,000
2,200,000
618,750
1,581,250
2,200,000
PLANT & MACHINERY
992,475,058
261,126,138
1,253,601,196
321,432,697
61,170,472
OFFICE EQUIPMENTS
12,962,018
3,995,836
16,957,854
3,601,983
1,843,488
5,445,471
11,512,383
9,360,035
FURNITURE
7,049,510
9,117,500
16,167,010
1,762,299
689,825
2,452,125
13,714,885
5,287,211
VEHICLES
8,103,727
3,836,026
2,666,007
9,273,746
3,769,831
927,239
1,176,914
3,520,156
5,753,590
4,333,896
TOTAL
1,178,721,583
329,861,207
4,866,007 1,503,716,783
358,136,536
71,470,154
PREVIOUS YEAR
1,020,414,650
158,451,043
144,110 1,178,721,583
300,941,226
57,222,899
BUILDING
TRADEMARK
382,603,169
151,494,307 113,911,976
1,581,250
870,998,028 671,042,361
3,376,914 426,229,776 1,077,487,007 820,585,047

27,589 358,136,536
820,585,047
29
Schedules
SCHEDULE - F - INVESTMENTS
(FIGURES IN RUPEES)
Name of the company

Opening
Add
Less Closing
As at
As at
Balance
Acquisition
Disposed Balance 31/3/2005
31/3/2004
during the year during the year
(Rs.)
(Rs.)
I.
Investment (Quoted) (valued at cost)
a.
Investment (Quoted) in Shares :
Aarti Industries Ltd.
100
275
Nil
375
6,066
6,066
Alembic Ltd
6
12
Nil
18
1,315
1,315
Aurobindo Pharma Ltd
10
Nil
Nil
10
1,700
1,700
Aventis Pharma Ltd.
5
Nil
Nil
5
1,630
1,630
Cadila Healthcare Ltd.
5
Nil
Nil
5
655
655
Cipla Ltd.
5
20
Nil
25
7,050
7,050
Dabur India Ltd.
50
Nil
Nil
50
5,530
5,530
Dabur Pharma Ltd.
25
Nil
25
Dr Reddys Laboratories Ltd.

2
Nil
Nil
2
1,912
1,912
Glenmark Pharmaceuticals Ltd.
25
Nil
Nil
25
1,330
1,330
Ipca Lab.Ltd.
105
105
Nil
210
25,490
25,490
Ind-Swifts Lab Ltd.
5
Nil
Nil
5
112
112
Ind-Swifts Ltd.
5
Nil
Nil
5
345
345
Jagsonpal Pharma Ltd.
5
35
Nil
40
463
463
J. B. Chemicals & Pharmaceuticals Ltd. 100
Nil
Nil
100
21,120
21,120
Kopran Ltd
5
Nil
Nil
5
172
172
Krebs Bio Ind.
100
Nil
Nil
100
25,907
25,907
Kojam Fininvest Ltd.
14
Nil
14
Lupin Laboratories Ltd.

5
Nil
Nil
5
1,135
1,135
Matrix Laboratories Ltd
5
45
Nil
50
2,365
2,365
Morepen Laboratories Ltd.
5
Nil
Nil
5
85
85
Natco Lab Ltd.
5
Nil
Nil
5
345
345
Neuland Lab. Ltd.
100
Nil
Nil
100
34,375
34,375
Nicolas Piramal I.Ltd.
58
232
Nil
290
43,816
43,816
Novartis
5
Nil
Nil
5
1,155
1,155
Orchid Chemicals & Pharmaceuticals Ltd. 5
Nil
Nil
5
595
595
Panacea Biotec Ltd.
5
Nil
Nil
5
158
158
Pfizer Ltd.
10
Nil
Nil
10
4,950
4,950
Ranbaxy Laboratories Ltd.
2
Nil
Nil
2
1,410
1,410
Reliance Industries Ltd
116
Nil
Nil
116
10,000
10,000
Shasun Chemcials & Drugs Ltd.
100
Nil
Nil
100
16,875
16,875
Strides Arcolab Ltd.
100
Nil
Nil
100
22,282
22,282
Sun Pharmaceuticals Ind Ltd.
5
5
Nil
10
1,660
1,660
Tasc Pharmaceuticals Ltd.
100
Nil
Nil
100
5,219
5,219
Torrent Pharmaceuticals Ltd.
5
Nil
Nil
5
990
990
Unichem Laboratories Ltd.
200
200
Nil
400
24,825
24,825
Bank of Baroda
1,500
Nil
Nil
1,500 126,000
126,000
Bank of India
2,300
Nil
Nil
2,300 103,500
103,500
Union Bank of India
12,000
Nil
Nil
12,000 192,000
192,000
Wyeth Ltd.
5
Nil
Nil
5
1,300
1,300
b.
Bonds (Quoted)
Unit Trust of India (US-64)
190
Nil
Nil
190
19,000
19,000

714,837
714,837

II.
Investment (Unquoted) (Valued at Cost)
a.
Equity shares :
Aarti Biotech Ltd.
1,200
Nil
Nil
1,200
12,000
12,000
Perfect Enviro Control Systems Ltd. 240,200
Nil
Nil 240,200 2,402,000
2,402,000
Aarti Health Care Ltd.
Nil
Nil
Suyash Laboratories Ltd

1,500
43,435
Nil
44,935 11,440,203
15,000
b.
Certificate :
N.S.C
1,000
Nil
Nil
1,000
1,000
1,000
(One Certificate of Rs:-1000/- Face Value)

13,855,203
2,430,000

TOTAL
14,570,040
3,144,837

(Aggregate market value of quoted investment : as at 31st March,2005 Rs.2,446,794/- and as at 31st March,2004 Rs.1,539,677/-)
30
Notes :
1.
Alembic Limited : Bonus shares alloted in the ratio of 2:1.
2.
Aarti Industries Limited : Bonus shares alloted in the ratio of 2:1.
3.
Cipla Ltd : Sub Division of shares from Rs. 10/- to Rs. 2/- each.
4.
Dabur Pharma Ltd. : 25 shares were alloted under the scheme of arrangement as a shareholder of Dabur India Ltd.
5.
Ipca Laboratories Limited : Bonus shares alloted in the ratio of 1:1
6.
Jagsonpal Pharma Ltd : Sub Division of shares from Rs. 10/- to Rs. 5/- each and issue of bonus shares in the ratio of 3:1.
7.
Kojam Finvest Ltd : 14 Equity shres of Kojam Finvest Ltd were alloted under the scheme of arrangement as a
shareholder of Nicholas Piramal (I) Ltd.
8.
Matrix Laboratories Limited : Sub Division of shares from Rs. 10/- to Rs. 2/- and allotment of bonus shares in the ratio
of 1:1.
9.
Nicholas Piramal (I) Ltd : Sub Division of shares from Rs. 10/- to Rs. 2/10. Sun Pharmaceutical India Ltd : Bonus shares alloted in the ratio of 1:1.
11. Unichem Laboratories Ltd : Sub Division of shares from Rs. 10/- to Rs. 5/- each
(FIGURES IN RUPEES)
AS AT 31ST
AS AT 31ST

SCHEDULE - G - CURRENT ASSETS, LOANS & ADVANCES

CURRENT ASSETS
Inventories
Stores & Spares
Packing Materials
Raw Materials
Finished Goods
Trading Goods
Work in process
Sundry Debtors
Unsecured,considered good
Debts outstanding for a period
exceeding six months
Others
Less: Provision for Doubtful Debts
Cash and Bank Balances
Cash on Hand
Cheques on Hand
Balances with Scheduled Banks :
On Current Accounts
On Deposit Accounts
Other Current Assets
LOANS AND ADVANCES
(Unsecured,considered good)
Capital Advances
Advances and loans
Advances recoverable in cash or
kind or for value to be received
Advance tax and tax deducted at source
TOTAL
9,700,616
1,305,798
216,242,525
140,840,789
4,998,639
152,654,065
9,068,622
1,860,463
184,524,481
152,397,140
3,295,197
151,165,129
525,742,432
502,311,032
34,155,817
585,109,851
619,265,668
6,321,628
23,053,805
669,248,007
692,301,812
8,623,430
612,944,041
683,678,382
860,506
8,305,313
1,959,211
15,866,201
14,260,106
61,808,429
6,371,524
11,683,722
85,234,354
35,880,659
11,769,724
11,316,525
3,865,403
1,864,122
25,781,741
2,114,905
166,943,508
104,815,173
143,136,704
88,341,954
259,375,305
1,492,561,903
277,488,206
1,513,178,757
31
(FIGURES IN RUPEES)
AS AT 31ST
AS AT 31ST

SCHEDULE - H - CURRENT LIABILITIES & PROVISIONS

CURRENT LIABILITIES
Sundry Creditors
(Includes Rs.296270/- payable to SSI
Units which is due more than 30 Days)
PROVISIONS
Provision for taxation
Proposed dividend
467,108,457
533,877,736
119,533,680
586,642,137
60,300,000
21,075,390
81,375,390
615,253,126
100,800,000
18,733,680
TOTAL
SCHEDULE - I MISCELLANEOUS EXPENDITURE

Product Development Expenses
Preliminary Expenses
33,514,846
44,570,950
417,061
626,037

33,931,907
45,196,987

Schedules Forming Part of Profit & Loss Account for the year ended 31st March, 2005
FOR THE
YEAR ENDED
31ST MARCH 2005
FOR THE
YEAR ENDED
31ST MARCH 04
SCHEDULE - J - OTHER INCOME

Dividend
Interest (Gross)
Miscellaneous income
TOTAL
SCHEDULE - K - MANUFACTURING EXPENSES
Raw Material Consumption
Excise Duty
Packing Materials
Freight Inward
Processing Charges
Salaries,Wages and Bonus
Labour Charges
Insurance ( Manufacturing)
Lease Expenses
Labour Welfare Expenses
Power & Fuel
Stores & Spares
Repairs & Maintenance - Building
- Plant & Machinery
R & D Expenses
Product Development Exps W/off
Other Manufacturing Expenses
TOTAL
32
63,580
637,348
1,564,785
1,088,839
6,294,237
7,922,602
7,847,260
9,573,447
1,255,781,483
206,445,916
26,684,429
28,543,952
40,322,292
46,400,979
9,346,580
8,744,336
5,682,075
115,358,901
20,594,624
281,665
3,442,741
20,800,374
11,056,104
24,799,658
1,824,286,109
1,059,899,199
171,013,963
20,673,135
27,358,663
44,596,644
45,681,970
8,431,757
8,970,354
285,780
5,296,983
110,726,375
16,777,669
19,182
3,281,430
18,193,870
10,709,572
24,394,847
1,576,311,393
(FIGURES IN RUPEES)
SCHEDULE - L - OFFICE & ADMINISTRATION EXPENSES

Salaries and Bonus
Provident Fund Contribution
Staff Welfare Expenses
Directors Remuneration
Books & Periodicals
Auditors Remuneration
Conveyance Expenses
Legal & Professional Charges
Membership & Subscriptions
Printing & Stationery
Postage,Telegram & Telephone
Office Electricity Charges
Insurance Charges
Repairs & Maintanance - Others
Entertainment Expenses
Rent
Rates & Taxes
Miscellaneous Expenses
Vehicle Expenses
Travelling Expenses
- Directors
- Others
Directors Sitting Fees
TOTAL
FOR THE
YEAR ENDED
31ST MAR 2005
FOR THE
YEAR ENDED
31ST MARCH 04
9,162,354
456,530
416,874
8,621,910
85,549
249,840
1,609,281
4,139,042
385,822
1,257,806
3,611,565
737,523
5,458,189
1,193,609
490,055
44,073
1,766,876
237,383
1,752,873
1,212,405
362,000
43,251,559
11,431,367
647,151
440,653
8,100,454
135,160
285,450
2,665,600
4,490,492
364,730
951,849
3,406,463
896,979
6,496,346
647,512
480,179
42,000
31,675
714,748
213,013
2,722,520
991,550
311,000
46,466,891
SCHEDULE - M - SELLING & DISTRIBUTION EXPENSES

Advertisement & Sales Promotion
Freight & Forwarding Charges
Commission on Sales
Insurance on Sales
Sales Tax
E.C.G.C. Premium
Other Export Expenses
Other Local Sales Expenses
Bad Debts
TOTAL
3,079,892
51,769,600
21,098,863
892,280
31,315,687
2,324,228
4,074,178
1,064,726
5,458
115,624,912
4,609,756
62,623,904
19,239,157
1,590,477
36,513,075
2,000,631
6,001,623
827,636
324,952
133,731,211
17,660,009
33,564,874
7,382,791
12,245,546
70,853,220
17,564,315
14,910,668
6,107,256
10,694,567
49,276,806
296,861
208,976
505,837
1,755,815
266,445
2,022,260
SCHEDULE - N - BORROWING COSTS

Interest on Term Loans
Interest on Working Capital
Interest on Others
Bank Charges
Total
SCHEDULE - O - NON-OPERATIVE EXPENSES

Donations
Preliminary expenses written off
TOTAL
33
SCHEDULE P NOTES ANNEXED TO AND FORMING PART OF ACCOUNTS FOR THE YEAR
ENDING 31ST MARCH 2005
PART - A
1.
Accounting Policies :
a)
Recognition of Income and expenditure

These accounts are prepared under the historical cost convention on accrual basis and under the
going concern assumption in accordance with the accounting principles generally accepted in
India and the relevant provisions of the Companies Act, 1956.
b)
Fixed assets and depreciation

Fixed assets include all expenditure of capital nature and are stated at cost of acquisition,
installation and commissioning less depreciation. Fixed assets values are stated at historical
cost. Depreciation on fixed assets other than land is charged under the straight-line method in
accordance with Schedule XIV of the Companies Act, 1956.
c)
Investments
Long Term Investments are stated at cost.
d)
Valuation of Inventories
Inventories are stated at the lower of cost or net realisable value . Cost is determined as per FIFO
method.
e)
f)
Retirement Benefits
I.
In respect of Gratuity and Superannuation fund, the Companys contribution to group

insurance scheme of Life Insurance Corporation of India are charged against revenue.
II.
Provision for incremental liability in respect of encashable privilege leave on separation

benefit is made as per independent actuarial valuation at the year end.
Foreign currencies.
All exchange differences arising from foreign currency transactions are dealt with in the Companys
profit and loss account. In case of foreign currency loans utilized upto 31st March 2004 directly
for acquisition of fixed assets, the loss/gain is regarded as adjustment of cost and is included in
the carrying amount of the related fixed asset(s).
g)
Lease Rent
Rentals in respect of leases are charged against the profits of the year to which they relate.
h)
Research & Development Expenditure :

Revenue Expenses are accounted under the head Research & Development and Capital Expenses
are Accounted under the respective heads of Fixed Assets.
PART - B
2.
Contingent Liabilities :
a)
34
In respect of bank guarantees issued & L/C opened by the Companys bankers Rs. 781.00 lakhs
(As at 31st March 2004 Rs 210.96 lakhs).
Schedules
3.
b)
Demand in respect of additional income tax disputed in appeal Rs.276.23 lakhs (As at 31st
March 2004 Rs. 10.32 lakhs).
c)
Demand in respect of Excise duty disputed in appeal :

1)
Excise duty in case of Ammonium Sulphate of Rs.102.90 lakhs (As at 31 st March 2004 Rs.
102.90 lakhs) appeal pending before CEGAT.
2)
Availment of Excise Duty Amounting to Rs.1.02 lakhs (As at 31st March 2004 Rs. 1.02
lakhs) paid under protest. Appeals pending before Commissioner of Excise (Appeals).
3)
Case pending regarding Capital Modvat of Rs.57.06 lakhs (As at 31st March 2004 Rs. 57.06
Lakhs) appeal pending before CEGAT
d)
Custom duty in case of Per chloro Ethelene of Rs. 14.74 lakhs (already paid Rs.7.72 lacs) (As at
31 st March 2004 Rs.Nil) appeal pending before The Additional Bench of Settlement Commission,
Mumbai.
e)
Liability for duty on raw material imported under advance licence benefit scheme against which
export obligation remained to be fulfilled Rs.55.17 lakhs (As at 31st March 2004 Rs.73.84 lakhs).
f)
Estimated amount of contracts remaining to be executed on capital account and not provided for
(net of advances) Rs 100.02 lakhs (As at 31st March 2004 Rs.499.28 lakhs).
Securities for loans taken from Financial Institutions and Banks :

a)
Balances in respect of outstanding term loan from The Industrial Development Bank of India Rs.
472.22 lakhs (As at 31st March 2004 Rs.NIL), The Export Import Bank of India Rs.1678.49
lakhs (As at 31 st March 2004 Rs 2073.02 lakhs), RABO Bank N.A. Rs.1967.40 lakhs (As at 31st
March 2004 Rs. Nil), Corporation Bank Rs. 220.23 lakhs (As at 31st March 2004 Rs. 440.37
Lakhs) ABN Amro bank Rs. 341.82 lakhs (As at 31st March 2004 Rs. 567.84 Lakhs) are secured
by pari-passu first charge by way of mortgage of immovable properties & hypothecation of moveable
fixed assets, both present & future at Tarapur & Sarigam units. The working Directors of the
Company have personally guaranteed these loans.
b)
Loans from Scheduled Banks Rs.4524.31 lakhs (As at 31st March 2004 Rs. 5368.61 lakhs)are
secured by hypothecation of Companys raw materials stock, stock-in-process, finished goods,
packing materials, stores & spares, book debts, foreign documentary bills and all other current
assets including goods in transit governed by documents of title and also pari-passu second charge
by way of mortgage of immovable properties and hypothecation of moveable fixed assets. The
working Directors of the Company have personally guaranteed these loans.
4.
Investments made by the Company are strategic and long-term in nature and are shown at cost. Any
diminution in the value of Investments are considered as temporary in nature and hence no provision
has been made in these accounts as per Accounting Standard: 13.
5.
In the opinion of the Board the Current Assets and Loans and Advances have a value on realisation at
least equal to the amounts at which they are stated in the Balance Sheet.
35
Schedules
6.
Advance towards equity of E-Novative Solutions (I) Pvt. Ltd. of Rs.31.50 lakhs (As at 31st March
2004 Rs. 31.50 lakhs) in which the Company is one of the co-promoters, is intended to be adjusted
against the value of equity shares to be issued by such co-promoted company in the event the relative
project is implemented.
7.
Segment-wise Disclosure as per Accounting Standard: 17.

Based on a reconsideration of relevant factors the Company is considered to be a single segment
Company engaged in pharmaceuticals business hence, the disclosure requirement as per AS-17 Segment
reporting is not attracted.
8.
Related parties transactions :

Related party disclosure as required by Accounting Standard 18. Related Party Disclosures issued
by The Institute of Chartered Accountants of India are given below :
A
Name and Relationship of the Related Parties :

3(b) Associates & Joint Ventures
1. Perfect Enviro Control System Ltd.
3(d) Key Management personnel alongwith their relatives have significant influence.
1.
2.
Key Management Personnel

Mr. Chandrakant V. Gogri
Mr. Prakash M. Patil
Mr. Satish P. Nachane
Mr. Harshit M. Savla
Mr. Harit. P. Shah

Mr. Rashesh C. Gogri
Mr. Uday M. Patil
Relatives of Key Management Personnel

Jaya C. Gogri
Seema H. Savla
Dhanvanti V. Gogri
Bhoomi H. Savla
Priti P. Patil
Vishwa H. Savla
Arun M. Patil
Jayashree H. Shah
Dr. Vikas M. Patil
Pragji M. Shah
Adish P. Patil
Keserben P. Shah
Aarti P. Patil
Sameer P. Shah
Kalika P. Patil
Sadhana S. Nachane
Mehul S. Nachane
Manjari M. Sabnis
Monali S. Nachane
Sudhir P. Nachane
3(e) Enterprise/firms over which controlling individuals have significant influence.

1. Aarti Industries Ltd.
2. Aarti Healthcare Ltd.
3. Valiant Chemicals Corporation
4. Suyash Laboratories Ltd.
5. Rupal Drugs Ltd.
6. Gogri & Sons Investments Pvt. Ltd.
7. Ganesh Chemical Industries
36
Schedules
B
Transaction with the related parties during the year :
Note : Proportions given in the following statement belong to the respective accounting group as
shown in the financial statements for the year ended 31st March 2005.
Transaction
with Related
Parties
Associates
& Joint
Ventures
Enterprise /
firms over
which
controlling
individuals
have
significant
influence
Key
Management
Personel
Relative of
Key
Management
Personnel
C.Y.
P.Y.
C.Y.
P.Y.
C.Y.
P.Y.
C.Y.
P.Y.
Nil
Nil
5.76
3.94
Nil
Nil
Nil
Nil
0.07
1.03
16.38
19.26
Nil
Nil
0.01
0.02
Office & Administration Expenses
Nil
Nil
0.06
Nil
20.43
17.89
1.78
1.31
Fixed Assets
Nil
Nil
1.60
Nil
Nil
Nil
Nil
Nil
Other Income
Nil
Nil
5.88
17.63
Nil
Nil
Nil
Nil
Borrowing costs
Nil
Nil
Nil
Nil
Nil
Nil
5.95
8.12
Unsecured Loans Accepted
Nil
Nil
Nil
Nil
Nil
Nil
0.21
1.08
Unsecured Loans Repaid
Nil
Nil
Nil
Nil
Nil
Nil
0.21
0.71
Outstanding Payable
Nil
Nil
3.3
17.39
Nil
Nil
Nil
Nil
0.12
0.25
3.64
2.38
Nil
Nil
Nil
Nil
Nil
Nil
0.35
0.76
1.52
3.26
5.09
11.43
Sales & Income from Operations

Manufacturing Expenses
Outstanding Receivable
Outstanding Unsecured Loan
Note : Sr. 3(b),3(d),3(e) refer to the relevant Para of AS 18.

9.
a)
Directors Remuneration :
Salary to Managing Directors and Wholetime Directors

Bonus/Leave Travel Allowance/House Rent Allowance /
Medical/Commission/Leave Salary
Contribution to Provident Fund
Superannuation fund scheme
Total Remuneration
Note :
Current Year Previous Year

49,86,000
46,16,402
23,42,710
22,83,152
46,800
46,800
12,46,400
11,54,100

86,21,910
81,00,454

The above figures do not include contribution to gratuity fund as separate figures are
not available for the managing / whole time directors.
37
Schedules
b)
Computation of Managerial Remuneration :
Profit before tax as per Profit & Loss Account
(Rs. In Lakhs)

2061.22
1705.67
Add: Managing and Wholetime Directors remuneration

Depreciation and obsolescence charged to the accounts
Less: Depreciation and obsolescence as per Section 350

of the Companies Act 1956 (net)
Net profit as per Section 198 of the Companies Act, 1956
Maximum permissible managerial remuneration to Wholetime
Directors under section 349 of the Companies Act, 1956 @ 10%
of the profits computed above
Commission payable to Managing/Wholetime Director @ 1%
of Net Profit
86.22
81.00
714.70
572.23

2862.14
2358.90
714.70
572.23

2147.44
1786.67

214.74
178.66
21.47
17.86
10. Prior period adjustments included under the respective heads of Accounts are as under :
Prior period expenses
39,686
Nil
Nil
33,222
1,95,000
1,95,000
Tax Audit Fees
35,000
35,000
Certification
15,940
35,000
Prior period income

11. Auditors remuneration includes
Audit Fees
Service Tax
Total
Service Tax (Cenvatable)
Cess on Service Tax (Cenvatable)
Total
3,900
20,450

2,49,840
2,85,450

18,125
Nil
364
Nil

2,68,329
2,85,450

12. Earning Per Share :

Net Profit available for Equity Shareholder (Rs.)
14,06,21,796
Number of Equity (Nos.)
1,17,08,550
1,17,08,550

12.01
10.32

Basic EPS
38
12,07,67,061
Schedules
13. Deferred Tax Liability : Major components due to timing difference
(Rs. In Lakhs)

Depreciation
8,15,44,324
Others
5,62,57,253
1,85,21,809
1,88,08,880

10,00,66,133
7,50,66,133

Total
14. Product Development Expenditure
a)
Amortisation Period : 5 years

Opening Balance
4,28,38,285
Nil
17,32,665
5,35,47,857
During the year

Amortisation
1,10,56,104
1,07,09,572

3,35,14,846
4,28,38,285

Closing
b)
Development in Progress
Nil
17,32,665

3,35,14,846
4,45,70,950

15. Additional information pursuant to the provisions of paragraphs 3, 4CD, 4D and part II of
Schedule VI of the Companies Act, 1956 (Figures in bracket relate to 31 st March 2004)
a)
Licensed capacity installed capacity and production (as certified by the Management and not
verified by the Auditors, it being a technical matter.)
(Qty in 000s Kgs)
Class of Goods
Pharmaceutical
Units * Licenced
Kgs
Installed
21695
(19386)
Production
Captive
Net Production
18022.54 2184.94
(13454.66) (1344.04)
15837.60
(12110.62)
* As the licence is not required Licenced Capacity not given.

b)
Opening Stock, Closing Stock and Sales

(Qty in 000s Kgs)
Product Name
Pharmaceuticals
Opening
Qty.
Kgs
Stock Closing
Amt
Qty
Rs.
Kgs
597.63 15,23,97,140 761.66

(633.63) (11,11,37,079) (597.63)
Stock
Amt
Rs.
Sales *
Qty
Kgs
Amt
Rs
14,08,40,789 18434.53
(15,23,97,140) (14918.18)
265,27,26,726
(237,70,47,292)
* Sales include Trading sales.

39
Schedules
c)
Raw Material Consumed
Quantity
Amount
(Kgs)
(Rs)
3,63,73,454
125,57,81,483
(3,14,68,624)
(105,98,99,199)
27,64,539
31,84,68,327
(27,71,559)
(40,00,62,495)
Percentage (%)
Amount (Rs)
65.09
81,73,32,917
(59.24)
(62,85,72,271)
34.91
43,84,48,566
(40.76)
(43,13,26,928)
100
2,05,94,624
(100)
(1,67,77,669)
Current Year
Previous Year
Chemicals & Solvents

d)
Purchase of trading items :
e)
Value of Raw materials and spares consumed
Raw Material :
Indigenous
Imported
Stores & spares :
Indigenous
f)
g)
h)
C.I.F Value of Imports

Raw Material
Rs. 45,57,42,137 Rs. 45,31,57,392
Capital Goods
Rs. 1,10,77,291 Rs.
24,32,050
Commission
Rs.
93,03,087 Rs
88,09,016
Travelling Expenses
Rs.
30,59,652 Rs
38,50,557
Sales Promotion
Rs.
16,02,088 Rs.
8,68,849
Foreign Bank charges
Rs.
24,49,824 Rs.
20,34,242
Others
Rs.
37,25,108 Rs.
5,59,872
Expenditure in Foreign Currency
Earnings in Foreign Exchange

F.O.B. Value of Exports
Rs. 70,58,45,336 Rs. 75,98,10,406
16. Figures of the previous year have been regrouped and rearranged wherever necessary.

Partner
Place : Mumbai
40
Managing Director
Company Secretary
Balance Sheet Abstract and Companys General Business Profile

I.
II.
Registration Details
Registration No.
55433
Balance Sheet Date
:31st March, 2005
State code
11
Capital Raised during the year (Amount in Rs. Thousands)

Public Issue
Nil
Right Issue
Nil
Bonus Issue
Nil
Private Placement
Nil
III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities
2278532
Paid up Capital
Secured Loans
Unsecured Loans
Total Asset
2278532
117086
Reserves & Surplus :
648608
920448
Deferred Tax
100066
492325
Net Fixed Assets
1077487
Investment
14570
Capital WIP
226006
Misc. Expenditure
33932
Net Current Assets
926537
Accumulated Losses
Nil
2446605
Profit/Loss After Tax :
140622
Source of Funds
Application of Funds
IV. Performance of company (Amount in Rs. Thousands)
Turnover
2652727
Profit/Loss Before Tax
206122
Earning Per Share in Rs.
12.01
Total Expenditure
Dividend rate %
30%
Generic Names of Three Principal Products/Services of Company (as per Monetary terms)
Item Code No. (ITC Code) :
293329-02
Product Description : METRONIDAZOLE
293329-01
Product Description : TINIDAZOLE

293329-02 Product Description : METRONIDAZOLE BENZOATE
Managing Director
Place : Mumbai
Date : 25 th April, 2005
Company Secretary
41
Cash Flow Statement

(Rupees in Lacs)
FOR THE YEAR ENDED FOR THE YEAR ENDED
31ST MARCH 2005
31ST MARCH 2004

A.
Cash Flow from Operating Activities

Net Profit before Tax and Extraordinary items
ADJUSTMENT FOR :
Depreciation
Expenses Amortised
Interest Paid
Interest Received
Dividend Received
Profit on Sale of Asset
Dividend Tax
Loss on Sale of Asset
Profit on Sale of Investments
Operating Profit before Working Capital Charges
Trade & Other Receivable
Inventories
Trade Payable
Cash generated from operation
Direct Taxes Paid
Net Cash Flow from Operating Activities
B.
Cash Flow from Investing Activities

Purchase of Fixed Assets
Purchase of Investment
Product Development Investment
Sale of Fixed Assets
Acquisitions of Companies
Unallocated Pre-operative Expenses
Sale of Investment
Interest Received
Dividend Received
Net Cash Flow from Investing Activities
C.
Cash Flow from Financing Activities

Receipts of Subsidy
Proceeds from Long Term Borrowings
Proceeds from Unsecured Loans & from Scheduled Bank
Buy Back of Equity Shares
Dividend Paid
Interest Paid
Net Cash Flow from Financing Activities
2,061.22
1,705.67
714.70
112.65
708.53
(15.65)
(0.64)
0.00
(46.44)
9.32
0.00
3,543.69
686.41
(234.31)
(667.69)
3,328.10
(164.73)
3,163.37
572.23
2.66
492.77
(10.89)
(6.37)
0.00
(45.55)
0.00
(32.44)
2,678.08
(2,733.67)
(1,100.90)
2,573.04
1,416.55
(278.55)
1,138.00
(4,940.76)
(114.25)
0.00
5.57
0.00
0.00
0.00
15.65
0.64
(5,033.15)
(2,202.43)
(0.92)
(445.71)
1.17
0.00
0.00
134.45
10.89
6.37
(2,496.18)
0.00
1,598.94
1,900.51
0.00
(374.67)
(761.45)
2,363.32
493.53
358.81
852.34
0.00
418.25
1,856.49
0.00
(316.13)
(441.44)
1,517.17
158.99
199.81
358.81
Net Increase in Cash and Cash Equivalents (A+B+C)

Opening Cash and Cash Equivalents
Closing Cash and Cash Equivalents
Note : (i) Figures in brackets indicate outflows

Sd/Sd/(Y. R. Vyavaharkar)
(Satish P. Nachane)
Partner
Managing Director
Place : Mumbai
th
Date : 25 April, 2005
The Board of Directors,

Aarti Drugs Ltd.
Tarapur.
We have examined the attached Cash Flow Statement of Aarti Drugs Ltd. for the year ended 31st March, 2005. The Statement has been
prepared by the Company in acordance with the requirments of listing agreement Clause 32 with the Stock Exchange and, subject to
reallocations made by the Company, is based on and in agreement with the corresponding profit and loss account and balance sheet of
the Company covered by our report of 25th April 2005 to the members of the Company.
Place : Mumbai
42
Partner
Registered Office: Plot No. N-198, MIDC, Tarapur, Village Pamtembhi, Tal. Palghar, Dist. Thane - 401 506.
TWENTIETH ANNUAL GENERAL MEETING 6TH AUGUST, 2005

ADMISSION SLIP
I certify that I am a registered shareholder/proxy for the registered shareholder of the Company
I hereby record my presence at the TWENTIETH ANNUAL GENERAL MEETING of the Company held at
TIMA Hall, MIDC Tarapur, Taluka-Palghar, Dist. Thane 401 506, Maharashtra on Saturday, 6th August,
2005 at 11.00 a.m
______________________________________
______________________________________
Name of the Member in BLOCK Letters
Members Signature
______________________________________
______________________________________
Name of the Proxy in BLOCK Letters
Proxys Signature
Note: Please fill this attendance slip and hand it over at the Entrance of the Hall.
Registered Office: Plot No. N-198, MIDC, Tarapur, Village Pamtembhi, Tal. Palghar, Dist. Thane - 401 506.
TWENTIETH ANNUAL GENERAL MEETING 6TH AUGUST, 2005

PROXY FORM
I/We ..........................................................................................................................................................................................
of ...................................................................................... in the district of ...........................................................................
being a Member/Members of Aarti Drugs Limited, hereby appoint .................................................................................
of ..................................................................................... in the district of .............................................................................
or failing him/her ...................................................................................................................................................................
of ....................................................................................... in the district of ............................................................................
as my/our proxy to vote for me/us on my/our behalf at the TWENTIETH ANNUAL GENERAL MEETING of the
Company to be held on Saturday, 6th August, 2005 and at any adjournment thereof.
Affix
Re.1/Revenue
Stamp
Place .....................
Date ......................
Signed ..................................
Note: This Proxy Form in order to be effective should be duly stamped, complete and signed and must be deposited at
the registered office of the Company not less than 48 hours before the meeting.

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20th Annual Report 2004-05

20th Annual Report 2004-05

Plot Nos. 2902/2904,

Registrar & Transfer Agent

Conservation of Energy etc.

20th Annual Report 2004-05

Profit Before Interest, Depreciation & Tax

Profit Before & After Tax

Earning Per Share

P rofit B e fore Tax

P rofit A fter Tax

Fixed Assets (Net Block)

Profit Before Tax

Profit After Tax

Reserves & Surplus

Capital Work In Progress

Current Assets, Loans and Advances

Profit Before Interest and Depreciation

Less : Miscellaneous Expenditure

Net Working Capital

20th Annual Report 2004-05

20th Annual Report 2004-05

To declare final dividend.

To appoint Auditors and to fix their remuneration.

By Order Of The Board

A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND

The members are requested to note :

20th Annual Report 2004-05

Financial Year Ended

Due Date for transfer to IEP Fund

Brief resumes of Directors seeking re-election are as under:

1. Aarti Industries Ltd. 1. Aarti Industries Ltd.

20th Annual Report 2004-05

Gross Sales / Income from Operations

20th Annual Report 2004-05

20th Annual Report 2004-05

Mumbai, April 25, 2005

20th Annual Report 2004-05

MANAGEMENT DISCUSSION AND ANALYSIS

Acquisitions of synergic projects or mergers would remain another focus area.

20th Annual Report 2004-05

Regulatory Approvals & accreditations

Good Manufacturing Practices (GMP) certificate for the products is obtained.

The above developments are expected to add scalability to ADLs operations.

20th Annual Report 2004-05

sustainable growth and returns to the shareholders.

20th Annual Report 2004-05

Analysis of Expenditure as a percentage to Operating Income

20th Annual Report 2004-05

REPORT ON CORPORATE GOVERNANCE

(1) Companys Philosophy on Corporate Governance

This excludes directorships held in private limited and overseas companies.

The last Annual General Meeting (AGM) was held on 06.07.2004.

20th Annual Report 2004-05

for 2003-04 (Rs.)

* With effect from 23rd April, 2004.

20th Annual Report 2004-05

Shareholders Grievance Committee

No. of meetings attended

Mr. S. T. Shah, Chairman

Joint Managing Director

General Shareholders Information

20th Annual General Meeting Day, Date. Time and Venue

TIMA Hall, MIDC Tarapur,