NOTICE DIRECTORS REPORT INCLUDING MANAGEMENT DISCUSSION AND ANALYSIS REPORT REPORT ON CORPORATE GOVERNANCE AUDITORS REPORT BALANCE

SHEET PROFIT AND LOSS ACCOUNT

4-6 7-17 18-26 27-31 32 33 34-35 36-41 42-60 61-72 73-96 97 99

CONTENTS

CASH FLOW STATEMENT SCHEDULES NOTES TO THE FINANCIAL STATEMENTS REPORTS AND ACCOUNTS OF THE SUBSIDIARY COMPANY DUCHEM LABORATORIES LIMITED CONSOLIDATED STATEMENT OF PFIZER LIMITED AND DUCHEM LABORATORIES LIMITED PROXY CUM ATTENDANCE SLIP CIRCULAR TO SHAREHOLDERS

Pfizer Limited: Ten Year Financial Summary

Rupees in Lakhs 1999 2000 2001 2002

2003 2004

2005

2006

2007

2008

Sources of Funds

Shareholders Funds Share Capital 1172 Share Capital Suspense A/c Reserves and Surplus 9541 Total Shareholders Funds 10713 Borrowed Funds Secured Loans Unsecured Loans 1 Total 10714

2344* 2344 2344 2880 2880 2984 2984 2984 2984 536 104 11167 14645 27923 27960 31292 34672 37589 61880 86972 13511 16989 30803 30840 34276 37656 40573 64864 89956 1200 13511 16989 30803 30840 35476 37656 40573 64864 89956 5696 529 790 6110 324 989 7564 324 636 7770 903 6675 1436 7040 50 1298 8306 50 2267 12468 5973 54306 1449 24795 98991

Application of Funds

Net Fixed Assets 3502 3728 4210 Investments 324 324 324 Deferred Tax Asset (Net) 310 503 Current Assets, Loans and Advances: Inventories 4486 5780 5644 Sundry Debtors 3810 3918 5421 Cash and Bank Balances 2329 4609 5763 Other Current Assets Loans & Advances 3839 3529 4289 Total Current Assets, Loans and Advances 14464 17836 21117 Less: Current Liabilities and Provisions Current Liabilities 5439 6771 6312 Provisions 2376 2366 2853 Net Current Assets 6649 8699 11952 Misc. Expenditure (Deferred Revenue Expenditure) Voluntary Retirement Scheme 239 Commercial Rights 450 Total 10714 13511 16989 Gross sales Less: Excise duty Less: Sales tax Net sales Operating and other Income

8484 8658 7389 8983 9845 9506 12341 5883 7174 8282 6901 6137 6840 8908 16110 20993 30651 47979 45 137 214 903 817 7260 8330 6840 6693 6821 13537 34925 31824 37650 45165 55121 77976

11112 9619 11284 13404 14495 10628 12214 5244 4192 5421 6448 9498 11165 7444 18569 18013 20945 25313 31128 56183 79333 5219 5404 6007 3670 1334 293 30803 30840 35476 37656 40573 64864 89956 77301 76482 6199 5409 3836 3302 67266 67771 34270 9342 101536 77113 23148 10170 20510 2 958 54788 46748 (1735) 45013 11120 33893 24.7 50.3# 113.58 27.50 8206 217.37 23759 10210 20966 1112 56047 21066 20790 41856 11944 29912 28.5 44.1** 100.24 12.50 3730 301.46

Income

28733 32719 36207 65127 55896 65966 69750 76586 3796 5719 3954 4884 5416 6039 2643 5165 4478 5304 4482 4312 29768 54243 47464 55778 59852 66235 5107 5162 6147 6007 4051 3924 4103 5953 Total 33840 37881 35915 60250 51515 59702 63955 72188 8830 10066 4865 5056 14100 15774 54 37 768 676 Total 28617 31609 5223 6272 5223 6272 2130 2518 3093 3754 40.8 40.1 10.8 11.5 26.39 16.02@ 5.00 4.00 586 938 91.41 57.64@ 10736 5580 11154 26 717 28213 7702 7702 2953 4749 38.3 13.1 20.26 5.00 1172 72.48 21978 8784 17183 76 1064 49085 11165 1518 12683 5089 7594 40.1 11.7 26.37 7.50 2160 106.95 19737 7942 16409 39 1083 45210 6305 (1673) 4632 1881 2751 40.6 4.9 9.55 7.50 2160 107.08 22370 8255 18564 81 1026 50296 9406 (1922) 7484 2932 4552 39.2 6.9 15.25 10.00 2984 114.86 20007 10014 19273 15 1385 50694 13261 (2337) 10924 4112 6812 37.6 9.8 22.83 10.00 2984 126.19 22356 10234 19746 7 1307 53650 18538 (2337) 16201 5628 10573 34.7 13.8 35.43 22.50 6714 135.95

Expenditure

Material Cost Personnel Cost Manufacturing and other expenses Interest Expense Depreciation

Profit Before Taxation & Exceptional Items Exceptional items - Net Profit Before Taxation Taxation Profit After Taxation Tax Provision as % of PBT Net Profit as % of Sales Earnings per share (Rs.) Equity Dividend per share (Rs.) Total Dividend Amount (Rs. in Lakhs) Book Value per share (Rs.)
* @ # **

Increase due to issue of Bonus Shares in the ratio 1:1 Diluted due to issue of Bonus Shares in the ratio of 1:1 Includes results of erstwhile Parke-Davis (India) Ltd. on its amalgamation with the Company Includes results of erstwhile Pharmacia Healthcare Ltd. on its amalgamation with the Company Includes profit on sale of Chandigarh property. Includes profit on sale of 4 consumer healthcare brands.

R. A. Shah Kewal Handa

Chairman Managing Director Director Executive Director, Technical Director Managing Director Pharmaceutical Marketing Technical Operations Medical & Regulatory Affairs Legal Consumer Health Pharmaceutical Sales Finance Strategy & Business Development Corporate Affairs Asia Strategy Human Resources Business Technology & Distribution Animal Health

BOARD OF DIRECTORS

Pradip P. Shah Dr. Bomi M. Gagrat Operations Richard Gane Kewal Handa Anjan Sen Bomi M. Gagrat (Dr.) C. N. Potkar (Dr.) Dipali Talwar (Ms.) Hiroo Mirchandani (Ms.) Partha Ghosh S. Sridhar S. Venkatesh Siddhartha Prakash Sunil Madhok Uday Mohan Venkat Iyer Yash Goyal
COMPANY SECRETARY Prajeet Nair AUDITORS B S R & Co.

EXECUTIVE COMMITTEE

REGISTERED OFFICE Pfizer Limited Pfizer Centre, Patel Estate, Off S. V. Road, Jogeshwari (W), Mumbai - 400 102, Tel.: 022 6693 2000, Fax.: 022 6693 2377 Email: contactus.india@pfizer.com REGISTRARS & TRANSFER AGENTS: Karvy Computershare Pvt. Ltd., UNIT : Pfizer Limited Plot No. 17-24, Vittalrao Nagar, Near Image Hospital, Madhapur, Hyderabad - 500 081. Tel.: 040 23420815 - 28 Fax: 040 23420814, 23420857 Email: einward.ris@karvy.com

Notice
Notice is hereby given that the 58th Annual General Meeting of the members of Pfizer Limited will be held at the Yeshwantrao Chavan Pratishthan Auditorium, General Jagannath Bhosale Marg, Next to Sachivalaya Gymkhana, Mumbai 400 021 on Wednesday, April 15, 2009, at 3.00 p.m. to transact the following business:

Ordinary Business
1. 2. 3. 4. To receive, consider and adopt the Audited Balance Sheet as at November 30, 2008, Profit and Loss Account for the year ended on that date and the Reports of the Board of Directors and Auditors. To declare Dividend for the year ended November 30, 2008. To appoint a Director in place of Mr. Pradip Shah, who retires by rotation and being eligible, offers himself for re-appointment. To appoint Auditors and to fix their remuneration.

Special Business
5. To consider, and if thought fit, to pass with or without modification(s), the following resolution as an ORDINARY RESOLUTION: RESOLVED that pursuant to the provisions of Sections 198, 309, 310, Schedule XIII and other applicable provisions, if any, of the Companies Act, 1956 (the Act) consent of the Company be and is hereby accorded to the revision in the remuneration payable to Mr. Kewal Handa, Managing Director, with effect from April 1, 2009, as given below: A. Salary and Bonus/Performance Linked Incentives: The aggregate of Salary and Bonus/Performance Linked Incentives payable to Mr. Kewal Handa, Managing Director shall be subject to a maximum limit of Rs.2,50,00,000/- (Rupees Two Crores Fifty Lakhs only) per annum. B. All the other terms and conditions of his appointment as approved by the shareholders at the 55th Annual General Meeting held on April 21, 2006 remain unaltered. RESOLVED FURTHER that the Board of Directors of the Company be and is hereby authorised to amend, alter or otherwise vary the terms and conditions of the appointment of Mr. Kewal Handa, Managing Director, including remuneration from time to time, provided that such remuneration shall not exceed the maximum limits for payment of managerial remuneration as may be admissible within the overall limits specified in the Act, as existing or as amended, modified or re-enacted from time to time by the Government of India, as the Board of Directors of the Company may deem fit. RESOLVED FURTHER that the Board of Directors of the Company be and is hereby authorised to do all such acts, deeds, matters and things, as in its absolute discretion, may consider necessary, expedient or desirable, in order to give effect to this Resolution. 6. To consider, and if thought fit, to pass with or without modification(s), the following resolution as a SPECIAL RESOLUTION: RESOLVED that pursuant to the provisions of Section 309(4) of the Companies Act, 1956 (the Act) and Article 125 of the Articles of Association of the Company and other applicable provisions, if any, of the Act, the Company do hereby approve the payment to the Resident Indian Non-Executive Directors of the Company, a commission at the rate of 1% of the net profits of the Company, subject to a maximum limit of Rs.50,00,000/- (Rupees Fifty Lakhs only) per annum, to be computed in the manner laid down in Section 198(1) of the Act, for a period of five years commencing from December 1, 2008. RESOLVED FURTHER that the Board of Directors of the Company be and is hereby authorised to determine the precise quantum of commission payable to each such Resident Indian Non-Executive Directors on a year to year basis. RESOLVED FURTHER that the Board of Directors of the Company be and is hereby authorised to do all such acts, deeds, matters and things, as in its absolute discretion, may consider necessary, expedient or desirable, in order to give effect to this Resolution. NOTES: 1. 2. The relative Explanatory Statement pursuant to Section 173 of the Companies Act, 1956 in respect of Item Nos.5 and 6 of Special Business is annexed hereto. The Register of Members and the Share Transfer Books of the Company will remain closed from April 6, 2009 to April 15, 2009 (both days inclusive).

3.

A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND A PROXY NEED NOT BE A MEMBER OF THE COMPANY. The instrument appointing Proxy, duly completed and signed, must be deposited at the Registered Office of the Company not less than 48 hours before the Meeting.

4. 5.

The members/proxies are requested to bring duly filled-in Attendance Slips for attending the Meeting. Re-appointment of Director retiring by rotation: Mr. Pradip Shah was appointed as a Director liable to retire by rotation by the shareholders at the 55th Annual General Meeting held on April 21, 2006. Mr. Pradip Shah is liable to retire by rotation at the 58th Annual General Meeting and, being eligible, offers himself for re-appointment. The information required to be furnished under the Code of Corporate Governance is given hereunder: Mr. Pradip Shah holds an MBA from the Harvard Business School. He is also a Chartered Accountant and a Cost Accountant and ranked first in India in the Chartered Accountancy Examination. Mr. Pradip Shah is the ex-Managing Director of CRISIL, Indias first and the largest credit rating agency. Prior to founding CRISIL, Mr. Shah assisted in founding the Housing Development Finance Corporation (HDFC) in 1977. Mr. Shah has also served as a consultant to USAID, the World Bank and the Asian Development Bank. Mr.Shah is a Director on the Board of several reputed companies. He is also a member of Managing committees of two chambers of commerce. Mr. Shah is presently the Chairman of Indasia Fund Advisors Pvt. Ltd. Mr. Pradip Shah is the Chairman/Director of the following other public limited companies and Chairman/Member of the following other Board Committees as on November 30, 2008: Name of Company Asset Reconstruction Company (India) Limited BASF India Limited Godrej & Boyce Mfg. Co. Limited Grindwell Norton Limited Kansai Nerolac Paints Limited KSB Pumps Limited Mukand Limited Panasonic Energy India Co. Limited Patni Computer Systems Limited Shah Foods Limited Sonata Software Limited Tata Investment Corporation Limited Wartsila India Limited Wockhardt Hospitals Limited Designation Director Director Director Director Director Director Director Director Director Chairman Chairman Director Director Director Chairmanship/Membership of Audit Committee of Board Member Chairman Member Member Member Chairman Chairman

6. 7.

Mr. Shah does not hold any shares in the Company either in his name or for other persons on a beneficial basis. Mr. Shah is not related to any other Director of the Company. The members seeking any information with regard to accounts are requested to write to the Company at an early date to enable the Management to keep the information ready. Members (Beneficiaries) holding shares in dematerialized mode are requested to note that the bank details furnished by them to their respective Depository Participants will be printed on their Dividend Warrants, if not opted for Electronic Clearing Service (ECS). This is pursuant to the SEBI directive vide Circular No. D&CC/FITTC/CIR-4/2001 dated 13.11.2001. 5

8.

In compliance with Sections 205A & 205C of the Companies Act, 1956, unclaimed dividend for the year ended 2001 has been transferred to the Investor Education and Protection Fund established by the Central Government. Members shall not be able to register their claim in respect of their unencashed dividend with regard to the said dividend. Unclaimed dividend for all the subsequent years will be transferred to the Investor Education and Protection Fund according to the statutory stipulations. Members are requested to contact the Companys Registrars and Transfer Agents, in respect of their outstanding dividends for the succeeding years. By Order of the Board of Directors

Mumbai, January 30, 2009 Registered Office: Pfizer Limited Pfizer Centre, Patel Estate, Off S.V. Road, Jogeshwari (W), Mumbai 400 102.

Prajeet Nair Company Secretary

Explanatory statement pursuant to Section 173 of the Companies Act, 1956.

ITEM NO. 5: At the 56th Annual General Meeting held on March 22, 2007, the shareholders have approved the revision in remuneration payable to Mr. Kewal Handa, Managing Director upto a maximum limit of Rs.1,80,00,000/- (Rupees One Crore Eighty Lakhs only) per annum towards Salary and Bonus/Performance Linked Incentives. The Board of Directors have revised the aggregate of Salary and Bonus/Performance Linked Incentives payable to Mr. Handa to a maximum limit of Rs.2,50,00,000/- (Rupees Two Crores Fifty Lakhs only) per annum with effect from April 1, 2009. The perquisites which are computed with reference to the salary shall consequently, with effect from April 1, 2009, be computed with reference to the revised salary. The above increase in limit for Salary and Bonus/Performance Linked Incentives is an enabling provision and the actual salary payable would be within the aforesaid limit. The Board recommends this Resolution for the approval of the Members. The above particulars may be treated as an Abstract pursuant to Section 302 of the Companies Act, 1956. Mr. Kewal Handa is deemed to be interested in this Resolution as it concerns him. No other Director is concerned or interested in the passing of this Resolution. ITEM NO.6: At the 53rd Annual General Meeting of the Company held on April 29, 2004, the shareholders had approved payment of commission at the rate of 1% of the net profits of the Company subject to a maximum limit of Rs.20,00,000/- (Rupees Twenty Lakhs only) per annum to Non-Executive Directors who are resident in India. This approval was effective for a period of five years commencing from December 1, 2003. Approval of the shareholders by a Special Resolution is being sought, pursuant to the provisions of Section 309(4) of the Companies Act, 1956 for payment of commission at the rate of 1% of the net profits of the Company subject to maximum limit of Rs.50,00,000/(Rupees Fifty Lakhs only) per annum to Non-Executive Directors who are resident in India. This approval would be effective for a period of five years commencing from December 1, 2008. Mr. R.A. Shah and Mr. Pradip Shah who are Resident Indian Non-Executive Directors of the Company may be deemed to be concerned or interested in the passing of this Special Resolution as it concerns them. None of the other Directors of the Company are interested or concerned in the passing of this Special Resolution. Mumbai, January 30, 2009 Registered Office: Pfizer Limited Pfizer Centre, Patel Estate, Off S.V. Road, Jogeshwari (W), Mumbai 400 102. 6 By Order of the Board of Directors

Prajeet Nair Company Secretary

DIRECTORS REPORT including Management Discussion and Analysis Report

TO THE MEMBERS Your Directors have pleasure in presenting this 58th Annual Report together with the Audited Accounts for the year ended November 30, 2008. The Report reviews the Companys diversified operations covering Pharmaceutical and Animal Health Products. DIVIDEND Your Directors are pleased to recommend a dividend of Rs. 12.50 per share (125%) for the financial year ended November 30, 2008. The dividend payout will aggregate to Rs. 3730.18 Lakhs and the tax on distributed profits payable by the Company would amount to Rs. 634.13 Lakhs. FINANCIAL RESULTS Rupees in Lakhs Year Ended November 30, 2008 67771 9342 21066 20790 41856 12451 228 (735) 29912 44989 74901 2991 3730 634 67545 CORPORATE In compliance with Accounting Standard No.21, your Company has attached the Consolidated Statement of Accounts giving therein the Consolidated Financial Statements relating to Pfizer Limited and its subsidiary Duchem Laboratories Limited. OUTLOOK The Indian economy was one of the fastest growing economies in the world with an annual GDP growth in excess of 9% over the last 3 years. However, with the current global economic recession, the growth during the second quarter of financial 7 Year Ended November 30, 2007 67266 34270 46748 (1735) 45013 10740 242 138 33893 24097 57990 3400 8206 1395 44989
30
Dividend per Share (Rs.)
22

Normal Dividend

Special Dividend
.50 .50 * .00 27 #

25 20
.00 .00

10

7.5

.50

5 0
Nov. 03 Nov. 04 Nov. 05 Nov. 06 Nov. 07 Nov. 08

Special Dividend * of Rs.10.00 on account of sale of Chandigarh Plant # of Rs.15.00 on account of sale of 4 Consumer Healthcare Brands

Year Ended

Sales (Net of Excise Duty & Sales Tax) Operating and other Income Profit Before Tax and Exceptional Items Exceptional Items (Expenses)/Income Profit Before Tax Less: Taxation - Current Tax - Fringe Benefit Tax - Deferred Tax (Credit)/Debit Profit After Tax Balance of Profit from Prior Years Surplus available for Appropriation Appropriations: Transfer to General Reserve Proposed Dividend Tax on Dividend Balance carried to Balance Sheet Your Companys sales grew marginally from Rs.67266 Lakhs in the previous year to Rs.67771 Lakhs. Members may note that the above growth was achieved despite the sale of four Consumer Healthcare Brands to M/s. Johnson & Johnson Limited. Excluding the divested brands, your Companys sales grew by 12% over the corresponding previous year. Your Company achieved a net profit of Rs. 29912 lakhs as compared to Rs.33893 lakhs for the previous year showing a decline of 11.75%. This decline is due to the impact of other income and exceptional items in the previous year and the year under review respectively. The Profit before exceptional items / other income however, recorded an increase of 9%.

12

12

10

10

10

15

.50

12 .50

.00

15

year 2008-09 came in at 7.6%, lower than the previous quarters growth of 7.9% and, in fact, the lowest since 2004-05. There has been a slowdown across all sectors. Industry growth decelerated to 6.1% in the second quarter of the financial year 2008-09 vis--vis 9.4% in the corresponding quarter of the previous year. This was primarily on account of manufacturing sector growth, which dipped sharply to 5.0% in the second quarter of financial year 2008-09 as compared to 9.2% for in the corresponding previous year. For Pharmaceutical Industry, this slowdown may result in greater use of low cost generics. The Government is also increasing its commitment towards extending healthcare services for the poor and underprivileged. In the coming two years, the Government plans to double the public healthcare expenditure in areas such as preventive care, improving access to quality healthcare for the rural population and investing in healthcare delivery infrastructure. A chain of chemist shops selling medicines at affordable prices is being set up across the country to improve access to the underprivileged population.
EPS & DPS (Rs.)
120 110 100 90 80 70 60 50 40 30 20 10 0 32 EPS DPS 28 24 20 16 12 8 4 Nov. 2004 Nov. 2005 Nov. 2006 Year Ended Nov. 2007 Nov. 2008 0
Dividend per share

disposable incomes, better diagnosis, improved healthcare infrastructure and increasing penetration of patented products. Pharmaceutical companies will also continue to grow through acquisitions, joint ventures, leveraging low operational costs and outsourcing. Outlook and Implications Today, the Indian pharmaceutical industry stands at a crossroad. The introduction of product patents may result in an increase in R&D investments by multinational companies. Leading domestic manufacturers have also stepped up levels of investment in R&D, but are wary of compromising the financial stability of their core businesses resulting in more and more companies spinning off R&D divisions. However, ambiguity surrounding issues such as the scope of patentability, compulsory licensing, recent economic slowdown, pre-grant opposition and data protection continue to deter large scale foreign investments that can accelerate growth of the Industry. Tighter controls on pricing envisioned in the New Drug Policy (under discussion) threaten to reduce margins and impact business. However, factors such as rising prevalence of lifestyle related diseases coupled with improving health awareness and purchasing power, will continue to drive growth in the pharmaceutical market. Notable changes occurring on the healthcare provider landscape in India include a growing presence of corporate hospitals and an expansion of retail outlets. These developments will result in greater access to treatment facilities and medicines. Medical tourism that was fuelling the growth of corporate hospitals has slowed down on account of the global economic meltdown.
Sales & Profit After Tax (Rs. in Lakhs)
80000 Sales 70000 60000
Sales

PHARMA INDUSTRY IN 2008 AN OVERVIEW The audited Indian retail pharmaceutical market grew by 9.8%, with volumes contributing 1.5%, new products contributing 7.1% and price 1.2% (ORG-IMS MAT Dec. 2008). Over the years the growth has been driven mainly by increased expenditure on healthcare, rising disposable income, increasing penetration of health insurance, changing disease profile and regulatory reforms. In addition, the strong growth registered by the Indian economy over the last few years has also helped the domestic pharmaceutical market. On an overall basis, Indian companies outgrew the market at 11.9%, while MNCs registered a growth of 5.5%. Acute therapy dominates the market with a value contribution of over 75%. The chronic segment has registered a healthy growth of 21% as against 11% of acute segment. The Indian pharmaceutical market is expected to grow at 11-12%. It is expected to be valued at $20 billion by 2015, thus becoming one of the worlds top 10 pharmaceutical markets. This growth will primarily be driven by increase in healthcare spending as a result of increasing health awareness, rising 8

Earnings per share

40000 35000 30000 25000 20000 15000 10000

Profit after Tax

PAT

50000 40000 30000 20000 Nov. 2004 Nov. 2005 Nov. 2006 Nov. 2007 Year Ended Nov. 2008

5000 0

REVIEW OF OPERATIONS BUSINESS SEGMENT: PHARMACEUTICALS DIVISION Performance 2008 Your Company has a market share of 2.2%, and is currently ranked 14th (ORG-IMS MAT Dec. 2008) after the divestment of 4 brands of the Consumer Health portfolio to M/s. Johnson & Johnson Ltd. In the last few years, we have consolidated our

brands, developed a strategic focus when it comes to customer engagement and building new channels for expanding our business. Our current portfolio includes some of Indias best known brands within the pharmaceutical industry. These brands have stood the test of time and even today are growing from strength to strength. Dedicated focus has been established on specific brands to ensure more of our brands that have the potential to perform, are given the opportunity to grow in the market. In addition, your Company has increased focus on launching new brands. Four new brands were launched in 2008 viz., Champix, Cyclokapron, Acupil and Trulimax. A new indication of Lyrica in Fibromyalgia was also launched. Focus on Institutional and Retail sales has also considerably increased. Marketing & Medical Initiatives Your Companys commitment to develop and consolidate strong relationships with customers has continued during 2008 with the launch of several initiatives. One such initiative was PROTECT (PRevent cOmplicaTions and dEath Caused by hyperTension) which aimed to increase awareness about the diagnosis and management of hypertension at an early stage to prevent long term morbidity and mortality. A number of symposia were conducted across India, where opinion leaders addressed leading primary care physicians. The aim of this event was to increase awareness about the importance of early diagnosis and treatment of cardiovascular diseases. This initiative was successfully rolled out at the zonal level and will soon be disseminated to the district level. Another innovative initiative to spread awareness about the dangers of smoking amongst youth was launched in partnership with a popular music station Red FM. The initiative called Pfizer Presents Red FM Quit Smoking Express was launched on World No Tobacco Day on May 25, 2008. The campaign involved Pfizer, Red FM, Saalam Bombay and Brihanmumbai Municipal Corporation. It comprised of on air and on ground elements which were conducted across six cities. A special toll free number (1800 4190 190) and an informative website (www.champsclub.in) providing advice on how to quit smoking were launched. Other initiatives on World Heart Day, World Diabetes Day, World No Hypertension Day, etc., were carried out with the help of physicians to increase awareness among customers and establish leadership in the hypertension segment. Another initiative that had a significant impact was your Companys efforts in the OTC space. Innovative customer centric activities like cash counter displays, multi level trade programs in clinic activities, direct to consumer activities, etc., were carried out to increase penetration and consumer awareness for our largest OTC brand, Gelusil. A special initiative of setting up childrens play corners at clinics of leading pediatricians was undertaken for top of mind recall among doctors, mothers and their children for our popular pediatric brand Ferradol.

Your Company won prestigious awards for its continued pursuit of launching value added programs / services, science based education and gaining leadership position in represented markets. In its quest to become the market leader and the most prescribed brand in the Vitamins market, Becosules has scaled greater heights in the year 2008. Becosules won the Frost and Sullivan Brand Strategy Development Award in the Indian Dietary Supplement Category for the Frost & Sullivan Best Practices Awards that recognizes companies in a variety of regional and global markets for demonstrating outstanding achievement and superior performance in areas such as leadership, technology innovation, customer service, and strategic product development. Field Operations Your Company has taken several well defined strategic steps to ensure complete alignment of the sales and marketing activities resulting in higher productivity per person, higher returns per input and best in class performance at all levels. One such initiative was Efficiency and Effectiveness (EnE). Initiated in 2007, it was rolled out across the country in phases. The Field Force reporting tool OPTIMA was relaunched with new features and was rolled out to the entire sales force across the country. This tool will facilitate better planning, execution and reporting thereby giving the sales force a competitive advantage, improving their productivity and improving customer focus. Project Sanjeevani, another initiative of your Company seeks to expand the companys reach to Tier II cities and beyond for the mature portfolio, thus extending the product life cycle of these well known brands. Launched in 2007, the project has been rolled out across the country. A cross functional initiative to identify opportunities and chalk out strategies to aggressively enter the institutional segment and increase your Companys presence in this ever growing segment is currently underway. Your Company has rolled out the Retail Initiative across four states, to improve coverage of the ever growing retail chemist segment and increase sales in uncovered markets. BUSINESS SEGMENT: ANIMAL HEALTH DIVISION India has one of the largest livestock populations in the world, contributing 4% to GDP and 27% to agricultural GDP. The Indian animal health market is estimated to be growing at 6% per annum with dairy, poultry and companion animal being the major business segments and accounting for 95% of the animal health industry. India continues to maintain its position as the largest producer of milk in the world, 4th largest producer of eggs and 5th largest broiler producer. There is a direct correlation between agricultural growth and animal health industry. Milk is the largest contributor to agricultural GDP providing a stable stream of income to millions of small farmers. The governments focus on improving the rural economy coupled with the implementation of national dairy plan augurs well for your Company. Though we are witnessing the consolidation of the dairy industry, the speed of change has 9

been slow and a large quantity of milk continues to be supplied by backyard farms. Per capita poultry meat consumption has also seen an increase in the last decade from less than 500 gms in 1991 to almost 2 kg in 2006 with a CAGR of 10%. With the economic growth, companion animal business has grown rapidly over the last decade and has emerged as the fastest growing segment in animal health business. Pfizer Animal Health division has continued its strong performance in 2008, growing faster than the market (driven by new products), double digit growth of key brands and improved operational efficiencies leading to a strong financial performance. Your Company has launched three new brands in the year under review viz., CIDR, Vitamix and Neftin-T. A favourable external environment coupled with internal preparedness to take advantage of the opportunity gives us the confidence for the future. Dairy Business The Indian dairy population and milk production continues to be highest in the world. It is envisaged that the milk production will continue to grow by 4% per annum over the next decade. Major issues facing the dairy industry are, per animal productivity, dependence on agrarian economy, unorganized nature of the customer base limiting the reach and high price sensitivity. The shift towards organized dairy farms with increased holding per farm has been gradual but is an important directional change which will lead to better management practices and productivity. Our dairy business is well positioned to take advantage of the opportunity with a well trained field force, increased reach and presence in all major product segments viz., parasiticide, antiinfectives, nutritionals and reproductives. Poultry Business A large segment of Indian poultry industry is in the organized sector with a couple of national players vertically integrated across the value chain. The poultry industry was adversely affected by the Avian Influenza in the early part of the year followed by higher input costs but the long term future looks promising as indicated by a high rate of growth in poultry meat consumption in India. Pfizer poultry teams conscious effort to focus on bio security has paid rich dividends and we plan to scale up our success. Companion Animal Business The Companion Animal (CA) business has witnessed a positive impact of GDP growth and has grown by 20% per annum. The growth is fuelled by higher disposable income and increasing awareness led by effective campaigns by pet food companies. The Pfizer CA team has maintained its leading position in the market and has consolidated its position in the polyvalent bios 10

segment. We are well positioned to seize the opportunity in the CA business by expanding our product portfolio and maintaining our position in polyvalent bios segment. Our focus by species coupled with innovative marketing strategies was the performance driver that led to recognition in the Asia Pacific region for an outstanding performance in 2008. BUSINESS SEGMENT: SERVICES MEDICAL & RESEARCH DIVISION The Pfizer India Medical & Research Division is responsible for all scientific support for the Pfizer portfolio of products. This division is responsible for, regulatory and medical support to Pfizers operations in India. The group is organized under the following four departments: Medical Affairs & Research, Clinical Research, Regulatory Affairs, and Quality Standards and Training. Medical Affairs & Research Medical Affairs & Research (MAR) Team of 17 Medical doctors governs the medical conscience. The team consists of product physicians and medical research specialists and is responsible for scientific communications with various stakeholders including internal (marketing & sales) and external (physicians, medical institutes, professional medical associations). These communications range from product training of sales force, new product evaluations, scientific presentations to medical community, scientific support for investigator initiated research, medical information, design of local clinical programs and scientific engagements with physicians. The medical team is responsible for ensuring compliance of promotional practices to international and local industry as well as regulatory requirements. The MAR team also provides medical support to regulatory registration as well as safety review and labeling activities Notable contributions have been the development and dissemination of information on the value of our medicines emphasizing the uniqueness of our products. As part of the Pfizer Education And Research League (PEARL), nine workshops on clinical research and Continuing Medical Education (CME) topics have been conducted at key institutes. The MAR team has also commenced the partnership for health initiative by partnering with NGOs, thought leaders and public health institutions to identify collaborative opportunities in public health. Clinical Research The Clinical Research group is responsible for all clinical research conducted by the Company within the country. The Clinical Research group comprises of three organizational segments: Study Management; India Regional Monitoring Group; and Support Services. About four-fifths of the clinical research portfolio relates to phase II and phase III studies executed for Pfizer Global Research and Development (PGRD) worldwide development teams while the rest are phase IIIb, phase IV comparative, post-marketing surveillance and other studies to

support local registration, launch and marketing. Your Company has contributed greatly to the development of clinical research in the country and holds a position of leadership in this area. Initiatives such as the establishment of preferred research centers (at Nizams Institute of Medical Sciences and Amrita Institute of Medical Sciences) are key to Pfizers commitment to develop research capacity. Your Company has partnered with other pharmaceutical companies, contract research organizations and investigators through the Indian Society for Clinical Research (ISCR) a professional society aimed at raising the standards of clinical research in the country as well as Academy for Clinical Excellence. Regulatory Affairs Regulatory Affairs is responsible for registration of new products, obtaining clinical trial approvals, regulatory clearance of imports, safety reporting, labeling, fulfiling regulatory and safety obligations. Apart from responsibilities relating to the Indian market, the Regulatory Affairs group is also responsible for support to operations and product commercialization in neighboring countries including Nepal, Bangladesh and Sri Lanka. Quality Standards & Training (QST) The QST is responsible for ensuring quality across all medical functions through coordination of training roll outs as well as periodic reviews of activities of the three functions.
How Rupee Earned is spent
21% 19%

processes and the final appraisal rating and payout) were revisited and reviewed extensively by HR and the leadership team. Goal alignment workshops were held for all business divisions. These workshops had the involvement and support of other divisions in order to get the necessary alignment required to meet the objectives. Performance management workshops were held to reinforce the understanding and philosophy of the performance management process. A key area identified for improvement was the skill in performance coaching and counseling. Skill enhancement workshops by an external faculty were conducted for people managers in the organization. Your Company has been successful in bringing about a more normally distributed performance rating across the organization, which focuses on differentiating between High and Low Performance levels. Talent Planning Process The Leadership Team spent considerable time in reviewing profiles of colleagues in the organization and identified talent in three pipelines viz., strategic, functional and execution. Colleagues from the talent pool are involved in the high level projects identified by the organization. Great emphasis was placed on formulating Individual Developmental Plans. Management development programs by premier institutions (like the Indian Institute of Management, Ahmedabad and Narsee Monjee Institute of Management Studies, Mumbai) in the country were conducted to hone our colleagues skills and knowledge. Differential compensation was given to colleagues in the talent pool (colleagues identified as key performers and high potential across the organization) and these colleagues received an additional payout towards their performance bonus. This has resulted in clear differentiation of talent and impacted colleagues directly. This is a shift from mere succession planning / submissions, to a dialogue based review to identify talent across all divisions within Pfizer India. Since 2007, we have focused on inducting new talent (Management Trainees) sourced from well-respected Indian business schools and integrating them into critical projects and roles. Their development has been supported by a structured one-year programme (Assignments, Exposure and Mentoring). Reward and Recognition The Reward and Recognition initiative with four distinct programmes was developed and rolled out in 2006 and we have consequently run this cycle annually. It was important that extraordinary contributions by colleagues should be recognized and rewarded in a very distinct manner. These contributions are linked to predetermined organizational goals and their impact on business performance. In the beginning of 2008, we had an R & R Nite to felicitate such colleagues. 11

Material Cost Personnel costs Manufacturing and Other expenses Interest & Depreciation Exceptional items - net

4%

9%

10% 18% 18% 1%

Taxes Shareholders Reserves

HUMAN RESOURCES DIVISION The Human Resources (HR) division played a key role during 2008 to drive the aspirational and transformational goals across the organization. The pillars for people processes revolve around two critical imperatives viz., building a high performance culture and best in class talent. The present employee strength in the organization stands at 1950. During 2008 the focus was on the following initiatives: Performance Management System The Performance Management process has been used as a strong lever to change the performance culture in the organization. All the key areas (i.e., objective setting process, review mechanisms, rating distribution, coaching and counseling

The Upjohn Award process, run by Pfizer Inc., USA, is used to recognize and reward the Value Champions in the organization. This initiative helps in creating a value driven culture across the organization. This year three colleagues received the Upjohn Award. In addition to the annual recognition, we also have monthly recognition programs such as Pfish, a simple and effective way to transmit and rollout peer appreciation amongst colleagues. This online system has generated a lot of enthusiasm. Lucky winners who have appreciated colleagues are picked in a draw and felicitated. On an overall basis, the entire Reward and Recognition program has had a very positive impact on Pfizer India and will continue to be a strong tool to build colleague engagement. Colleague Engagement This was the second year of the Pfizer Engagement Survey and there was a marked improvement in the scores obtained. The results of last years Pfizer Engagement Survey reinforced our need to make engaging each other an urgent and enduring priority. Teams were encouraged to review the results and to act on the opportunities identified to improve engagement. Improving engagement is not a one-time event at Pfizer India its an enduring priority. DIWA (Diversity through Women Allies) Recent studies and industry experience demonstrate that there is a distinct difference in woman leaders and that they bring a complimentary set of skills. Some of these being multitasking, creativity in problem solving, a diverse viewpoint, eye for detail, the ability to facilitate consensus and bringing people together. It is in recognizing this that Pfizer India launched DIWA an initiative that aims to increase the number of women colleagues through recruitment and retention initiatives while providing opportunities to nurture and groom women colleagues for leadership roles. As part of this initiative various forums were created online where colleagues could exchange ideas and share views. A workshop was also held to engage women colleagues on what the organization could do to make Pfizer India a better working place for women. PeopleSoft PeopleSoft, a central database repository for all Pfizer processes, is picked up by both global as well as local systems/processes. A new version of PeopleSoft has been implemented this year with enhanced capabilities and applications. A lot of focus is given to ensure the data integrity in the PeopleSoft system as it provides data for all people processes in the organization. Field Force As part of the sourcing strategy Pfizer made its presence felt in some of the elite pharmacy colleges. In the Pharma division 12

approximately 17% of the recruitment was through campus placements. In view of this success, campus recruitment will be one of the sourcing strategies for the Field Force. In order to address retention issues in the field, the Retention Project was launched with a focus on addressing the attrition and retention challenges in the Field. There were a number of initiatives which were planned and implemented by the Team resulting in a strong downward trend in attrition. This year many career opportunities were provided to the Field Force through promotions in First Line and Second Line Managerial positions. These processes were well received by the Field Force. Employee Relations The overall Employee Relations environment was healthy and worked well towards aligning colleagues across the organization, with the Companys business goals and mission. CORPORATE AFFAIRS Your Company has made consistent efforts to create a favourable policy regime for a business environment conducive to new products and markets across the country. This promotes government policies that encourage innovation and ensure Intellectual Property Rights (IPR) enforcement. Your Company and industry associations have held several meetings with concerned ministries for sensitization and continuous dialogue leading to positive engagement. In view of the governments policies that propose to increase the span of price control, your Company along with industry associations have undertaken a series of meetings with the government to present your Companys perspective on the matter. The government has great concern on securing access to medicines for the masses. There is a continuous dialogue between the industry and the government for developing a sustainable model on pricing and access. Your Company continues to work through industry associations to ensure that the spirit of the law is upheld and transparent processes and procedures are implemented to interpret the law. The Corporate Communications department has provided support to the colleague engagement initiatives in the organisation. They have partnered with marketing and medical teams to drive campaigns on awareness of various diseases or conditions such as Erectile Dysfunction and Quit Smoking initiative. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY Your Company has clearly laid down policies, guidelines and procedures that form part of internal control systems, which provide for automatic checks and balances. Your Company has maintained a proper and adequate system of internal controls. This is to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition, and that

transactions are authorized, recorded and reported diligently. Your Companys internal control systems are commensurate with the nature and size of its business operations. An extensive program of Risk Assurance further supplements the Companys internal control systems. This is done by the Risk Assurance Department, which is supported by independent firms of chartered accountants, who review the effectiveness and efficiency of these systems and procedures. The management periodically reviews reports of internal auditors. All significant Internal Audit observations and follow-up actions thereon are brought to the notice of the Audit Committee of the Board and corrective steps recommended for implementation. The Audit Committee of the Board addresses significant issues raised by the Risk Assurance Department, Cost Auditors and Statutory Auditors. Your Company has a well defined Standard Operating Procedure for identifying and mitigating risks across all divisions of the Company. The Company periodically identifies all risks, prioritizes the major risks and develops appropriate plans for its mitigation. The senior management has ownership of the major risks, its management and mitigation plans. The internal control system is designed to ensure that all financial and other records are reliable for preparing financial statements and other data, and for maintaining accountability of assets. MANUFACTURING OPERATIONS Pfizer Global Manufacturing (PGM) will continue to forge ahead to accomplish our Mission of being the worlds leading supply organization and an innovative and powerful competitive advantage for Pfizer. In line with our Mission Statement, PGM India is committed to being a value-driven competitive advantage for Pfizer. With its passion for Quality, a strong customer focus and a foundation based on our vision and mission elements that is fundamental to our organization, PGM India continually strives to create a work environment based on mutual respect, open and candid communication and commitment to shared values, aligning across Pfizer in its quest for a better quality of life and healthcare to the community. PGM Indias manufacturing facility is located at Thane on the outskirts of Mumbai and additionally outsources requirements through contract manufacturers located in other parts of the country. Specialized products viz., Minipress XL, Vfend, Viagra, Caduet, Lyrica, Champix, Cyclokapron for human health and Dectomax, canine vaccines for Animal Health business are imported from Global Pfizer sites. The manufacturing facility at Thane produces non sterile formulations of oral liquids, tablets and capsules. The plant had been upgraded to be current with cGMP and has WHO certification. Alternative sources of supply from locally approved

Active Pharmaceutical Ingredient (API) manufacturers and Pfizer audited sources has ensured quality supplies. PGM India also has a pharmaceutical development role, as the demand for India specific formulations needs to be fulfilled on a continuous basis. These are developed as line extensions and new products at the Product Development Laboratory (PRD) at Thane Plant. Recently, as an exercise in local import substitution and subsequent global sourcing, formulation stability studies were successfully completed with locally manufactured Gemfibrozil, Clarithromycin and Azithromycin (Trulimax). PGM India has had an impressive track record of performance, achieving operational and manufacturing efficiencies coupled with process capabilities leveraging Global initiatives viz. Right First Time (RFT), Process Analytical Technology (PAT) and effective process improvement initiatives such as Kaizens. The RFT phenomena has the potential to transform and have a dramatic impact on quality, assurance of regulatory compliance, customer service and cost improvement, while significantly improving the job satisfaction for PGM colleagues, thereby establishing PGM as the benchmark and taking us Beyond # 1. RFT has now become an inseparable part of PGM India and is now a way of life, yielding cost improvements with sustained product quality and process robustness resulting in elimination of non value added activities throughout the process. Colleagues across various functions have been exposed to programmes ranging from orientation to an intensive green belt and a much extensive black belt training. A number of site specific projects on the anvil are expected to yield further cost savings. Strategic sourcing, exports and competitive procurement has also led to significant product cost reductions. This has proved to be a financial advantage to our business for some Active Pharmaceutical Ingredients (APIs). Our key strengths emphasize employee productivity and continuous efficiency improvements as well as optimized inventories, short cycle times and consistently high customer services levels; simultaneously achieving inventory reduction goals. Quality people and products has always been part of the Pfizer legacy. PGM has always recognized Quality as a Value, defining it as: our customers and regulators hold us in the highest regard for the quality of our products, operations and people. PGM India ensures compliance with the highest standards of quality while at the same time maintaining a competitive edge with concurrent reduction in product costs achieved through continuous improvement in efficiency and productivity. PGM India has also demonstrated commitment to the Pfizer value Community by consistently and proactively organizing various environmental, social and health related initiatives in and around our Thane site. Community outreach programs were conducted 13

involving several schools in the vicinity on environment. A vigorous tree plantation program has contributed to enhanced levels of environment protection awareness in the community. A recent innovation was the eco-friendly Bagasse-Briquette firing system for the plant boiler, replacing the conventional furnace oil system. This is cited as a technological innovation and is a demonstration of PGM Indias commitment to the environment as there has been a significant reduction in atmospheric emissions. The usage of Bagasse as an alternate source of Boiler fuel has enabled the site to secure the coveted Carbon Credits. The use of Bagasse (sugarcane residue) as a fuel source has a far reaching social implication in terms of generating job opportunities in rural areas. The Thane manufacturing site successfully sustained ISO 14001:2004 and OHSAS 18001:2007 for the year 2007- 2008 by maintaining a high standard of EHS (Environment Health & Safety) performance that went beyond mere compliance. Several noteworthy achievements were recorded by the site: No LTI (Lost Time Incidents) during the entire year which translates to safe work practices being followed by the entire work force; No accountable emissions / pollutants were released to the atmosphere or surroundings; Strict adherence and high level compliance by all employees at the site on all aspects of EHS legislations; Continuous reviews and coaching programs were conducted by site colleagues to inculcate and nurture EHS Culture at all external contract manufacturing sites; Change in Thane site consent category recorded by the Maharashtra Pollution Control Board (MPCB) from category Red to category Orange which means from High risk to Medium risk. PGM India continues to march ahead in its endeavour to make a qualitative difference to the healthcare of the community by producing products of the highest quality and with the speed and flexibility to meet the needs of our business partners with good levels of customer satisfaction. PGM remains committed to being a lean and agile organization that proactively embraces change. As we enter 2009, we will look to synergize our efforts to maximize and sustain operational excellence. DUCHEM LABORATORIES LIMITED The Net Sales of the Company for the year under review is Rs.399 Lakhs as compared to Rs.403 Lakhs for the previous year. The operations for the period reflect a Net Profit of Rs.86 Lakhs as against Net Profit of Rs.108 Lakhs for the previous year. 14

DIRECTORS In accordance with the Articles of Association of the Company, Mr. Pradip Shah retires by rotation as Director at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. Mr. Yugesh Goutam, Executive Director, Human Resources resigned with effect from the close of business on 28th April, 2008. Your Directors wish to place on record their appreciation for the valuable contributions made by Mr. Goutam during his tenure as a Director. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to Section 217 (2AA) of the Companies Act, 1956 (the Act) your Directors confirm the following: i. In the preparation of the Annual Accounts, the applicable accounting standards have been followed. ii. Your Directors have selected such accounting policies and applied them consistently and made judgments 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 period. iii. Your Directors have 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. Your Directors have prepared the attached Statement of Accounts for the year ended November 30, 2008 on a going concern basis. CORPORATE GOVERNANCE The Company has taken requisite steps to comply with the recommendations concerning the Corporate Governance. A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of this Report. A separate report on Corporate Governance forms part of this Annual Report. OTHER INFORMATION As required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, information pertaining to Conservation of Energy, Technology Absorption and Exports is given as Annexure to this Report. The information required under Section 217(2A) of the Companies Act, 1956 (the Act) read with the Rules framed thereunder forms part of this Report. However, as per provision of Section 219 (1)(b)(iv) of the Act, the Report and Accounts

are being sent to all shareholders excluding the statement of particulars of employees under Section 217(2A) of the Act. Any shareholder interested in obtaining a copy of the statement may write to the Company Secretary at the Companys Registered Office. AUDITORS M/s. B S R & Co., the Companys Auditors will retire at the conclusion of the ensuing Annual General Meeting. They have given their consent to continue to act as Auditors of the Company for the current year, if re-appointed. COST AUDITORS Pursuant to the provisions of Section 233B of the Companies Act, 1956 necessary applications have been submitted to the Department of Company Affairs for the appointment of M/s. N.I. Mehta & Co. as Cost Auditors to audit the cost accounts maintained by the Company in respect of Formulations for the year ending November 30, 2009.

ACKNOWLEDGEMENTS Your Directors place on record their sincere appreciation for the support and assistance extended by the Companys suppliers and business associates. Your Directors are thankful to the esteemed shareholders for their continued support and the confidence reposed in the Company and its Management. Your Directors wish to place on record their appreciation for the support and guidance provided by its Parent Company, Pfizer Inc., U.S.A.

For and on behalf of the Board of Directors

Mumbai, January 30, 2009.

R.A. SHAH Chairman

Corporate Social Responsibility

Your Company strives to be a trusted and responsible member of the community in which it works. We do this by going beyond the business of discovering and developing medicines to give back to our communities through urban revitalization initiatives, school partnerships and support for healthcare in rural and urban India. We help to foster forward-thinking, community-based approaches within the organization which manifests itself through the involvement of our colleagues in the various social initiatives that we have embarked on in 2008. The sustained efforts to give back to society have resulted in communities continuing to benefit from them. The philanthropic initiatives led by the Corporate Communications team of your Company in 2008 are: Product Donations Your Company supported activities that tackled diseases through product donation. Significant product donations were made to deserving voluntary organizations. Your Company also provided the urgent supply of medicines required by Indian Red Cross Society for patients in the flood affected districts of Bihar. Your Companys medicines were donated to over 10 NGOs that serve across the country. Running for a cause Your Company also participated in the Mumbai Marathon and ran in support of V Care - an NGO that works towards helping cancer patients and their families cope with the crisis in their lives. V Care is an emotional support group, providing assistance for financial aid, counseling and gives information to patients and their families in addition to other activities. Enhancing patient education & awareness of glaucoma - an audio and visual media center Pfizer has partnered with Aarvind Eye Hospital to increase awareness about Glaucoma. The aim of this project is to enhance the information needed to educate the patient on various aspects of Glaucoma, such as the disease, diagnostic tests, importance of anti-glaucoma medications, laser and surgical procedures and importance of follow up with the doctor.

15

ANNEXURE TO DIRECTORS REPORT

CONSERVATION OF ENERGY: a) Energy Conservation continues to receive top priority in the Company. Energy audits are carried out, consumption monitored, maintenance systems improved and distribution losses are reduced. Specific Energy Conservation Measures are: i) Installation of Heat Recovery System for Boiler. ii) Replacement of Furnace Oil by Bagasse Briquette as fuel for Boiler. b) Additional proposals or activities if any i) Variable Frequency Drives for additional Equipment. ii) Installation of new Aeration System. iii) Revamping of Electrical Distribution System. c) Impact of measures taken Energy conservation measures stated above have resulted in gradual savings. Total energy consumption and energy conservation per unit of production: As per Form A of the Annexure hereunder:

FORM A:
FORM FOR DISCLOSURE OF PARTICULARS WITH REGARD TO CONSUMPTION OF ENERGY: A. POWER AND FUEL CONSUMPTION: Current Year 1-12-2007 to 30-11-2008 1. Electricity: Purchased Unit (000s) Total Amount (000s) Rate / Unit 2. Own Generation Through Diesel Generators (000s) Units / Litre of H.S.D. Marginal cost / unit (considering only H.S.D. Price) 3. Bagasse Quantity Total Amount (000s) Avg. Rate / MT 4. Furnace Oil Quantity Total Amount (000s) Avg. Rate/KL Consumption per Unit of production: Electricity (Units) Furnace Oil (Litres) KWH Rs. Rs. KWH Rs./KWH MT Rs. Rs. KL Rs. Rs. 6156 28502 4.63 59 2.58 15.02 2602 8976 3450 356 13752 38630 KWH Rs. Rs. KWH Rs./KWH MT Rs. Rs. KL Rs. Rs. Previous Year 1-12-2006 to 30-11-2007 6936 32253 4.65 118 3.09 11.08 4160 13728 3300 177 4201 23732

I. II.

Standard There is no specific standard as the consumption per unit depends on the product mix of basic drugs (from chemical and biochemical processes) and formulations (capsules, tablets, ointments, liquids and injectibles) ENERGY CONSERVATION MEASURES TAKEN 1. Lighting controls for Utility areas ADDITIONAL PROPOSALS BEING IMPLEMENTED FOR REDUCTION OF ENERGY CONSUMPTION 1. Modifications in Bagasse furnace to achieve reduction in fuel consumption 2. Utilisation of used purified water in washing machines as cooling tower make up water Impact of measures taken Energy conservation measures of the types mentioned above have resulted in savings, which have been reflected gradually in the cost of production.

16

B. TECHNOLOGY ABSORPTION :

FORM B
DISCLOSURE OF PARTICULARS WITH REGARD TO ABSORPTION: Research And Development (R & D): 1. Specific areas in which R&D is carried out by the Company. R&D is carried out in Pharmaceutical, Clinical and Formulation Development areas. 2. Benefits derived as a result of the above R&D. (a) Product improvements, process development, import substitution, standardization of quality control of formulations. (b) New application for drugs researched abroad, better dosage recommendations and improvements. 3. Future plan of action: (a) Import substitution and resolving process problems encountered in formulation manufacturing for quality and productivity. (b) Optimization of process parameters with emphasis on cost control and rationalization. (c) Studying feasibility of using new manufacturing technology in existing dosage forms. (d) Development of new dosage formulations, Pharmaceutical and Animal Health. 4. Expenditure on R&D Rs. In Lakhs (i) Capital 26.91 (ii) Revenue 2808.29 (iii) Total (iv) Total R&D expenditure as percentage of total turnover 2835.20 4.18%

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION: 1. Efforts in brief made towards technology absorption, adaptation and innovation. a) The Company is allowed to use the patents and technical know-how of Pfizer Inc., U.S.A. Continuous adaptive research and development of products and processes with the objective of import substitution and cost containment in an inflationary environment is carried out. b) Clinical research to introduce new products researched abroad and to find their new applications, better dosage recommendations and improvements under Indian conditions is carried out. c) Development of ancillary technology, for packaging materials and machinery is undertaken. 2. Benefits derived as a result of the above efforts : Product improvement, cost reduction, import substitution, standardized analytical methods which are reflected in the productivity of resources and better quality and stability of products. 3. Technology imported during the last 5 years reckoned from the beginning of the financial year is given below : Technology Imported Year of Import Has technology been fully absorbed Manufacture of various 2003-2004 Being absorbed formulations from Active Pharmaceutical Ingredients Manufacture of formulation 2004-2005 Being absorbed -BronCorex

C. FOREIGN EXCHANGE EARNINGS AND OUTGOINGS:

1. Activities relating to exports: Initiatives taken to increase exports, development of new export markets for products and services and export plans. The Company is at present exporting bulk drugs to Belgium and finished formulations to Sri Lanka, South Africa and Bangladesh. The Company is continuously exploring possibilities of exporting more of its products to different markets. During the period under review : a) The foreign exchange earnings by the Company was Rs.2298.23 Lakhs. b) The foreign exchange expenditure (which includes import of raw materials, spares and remittance of dividends etc.) was Rs.9656.96 Lakhs. For and on behalf of the Board of Directors R. A. SHAH Chairman 17

2.

Mumbai, January 30, 2009

Report on Corporate Governance

I. PFIZERS PHILOSOPHY ON CODE OF CORPORATE GOVERNANCE Corporate Governance at Pfizer is not just adherence to mandatory rules and guidelines. It lies in observing the spirit behind the letter. Pfizers mission is to become the worlds most valued company to patients, customers, colleagues, investors, business partners and the community it works and operates in. We are guided by 9 Core Values in our day-to-day decision-making which reflect the enduring character of Pfizer and its people. They appear in order as follows: INTEGRITY We demand of ourselves and others the highest ethical standards, and our products and processes will be of the highest quality. The Pfizer name is a source of pride to us and should inspire trust in all whom we come in contact. RESPECT FOR PEOPLE We recognize that people are the cornerstone of Pfizers success. We come from many different countries and cultures, speak many languages, and value this diversity as a source of strength. We are proud of Pfizers history of treating employees with respect and dignity, and we are committed to building upon this tradition. CUSTOMER FOCUS We are deeply committed to meeting the needs of our customers, and we constantly focus on customer satisfaction. We take genuine interest in the welfare of our customers, both internal and external. COMMUNITY We play an active role in making every country and community in which we operate a better place to live and work, knowing that the ongoing vitality of our host nations and local communities has a direct impact on the long-term health of our business. INNOVATION Innovation is the key to improving health, sustaining Pfizers growth, and enhancing our contribution to society. The quest for innovative solutions should invigorate all of our core businesses and the Pfizer community worldwide. TEAMWORK We know that to be a successful company we must work together, frequently transcending organizational and geographic boundaries to meet the changing needs of customers. PERFORMANCE We strive for continuous improvement in our performance, measuring results carefully, and ensuring that integrity and respect for people are never compromised. When we commit to doing something, we will do it in the best, most timely way possible. Then we will try to think of ways to do it better the next time. 18 LEADERSHIP We believe that leaders lead by establishing clarity of purpose, a shared sense of goals, and commitment to excellence. Leaders demonstrate courage, pursuing actions based on a well-defined sense of what is right and a view to long-term success. Leaders empower those around them by sharing knowledge and rewarding outstanding individual effort. We encourage leadership at all levels of the organization and are dedicated to providing opportunities for leaders to grow and develop. QUALITY Since 1849, the Pfizer name has been synonymous with the trust and reliability inherent in the word Quality. Quality is ingrained in the work of our colleagues and all our Values. We are dedicated to the delivery of quality healthcare around the world. Our business practices and processes are designed to achieve quality results that exceed the expectations of patients, customers, colleagues, investors, business partners and regulators. We have a relentless passion for Quality in everything we do. The Company had adopted the above 9 Core Values of its Parent Company, Pfizer Inc. USA. This approach has helped the Company earn the trust of all its stakeholders over its long history. II. BOARD OF DIRECTORS (a) Composition of the Board of Directors The Company is fully compliant with the revised Corporate Governance norms in terms of constitution of the Board. The Board at Pfizer represents an optimum mix of professionalism, knowledge and experience. The Board comprises of 3 NonExecutive Directors out of the total strength of 5 Directors as on date. Mr. R.A.Shah and Mr. Pradip Shah, Non-Executive Directors are Independent Directors. The Chairman of the Board is a Non-Executive Independent Director. The table set below will explain the details: Name Category No. of No.of other No. of other of other Committees Committees Directorship* Directorships of which of which held Member Chairman NED (I) 14 5 4 WTD WTD NED (I) NED WTD 2 1 14 Nil Nil 1 Nil 4 Nil Nil Nil Nil 3 Nil Nil

Mr. R. A. Shah (Chairman) Mr. Kewal Handa (Managing Director) Dr. Bomi M. Gagrat Mr. Pradip Shah Mr. Richard Gane Mr. Yugesh Goutam #

* NED (I) Non-Executive Director, Independent WTD Whole-time Director NED Non-Executive Director # Resigned w.e.f. April 28, 2008

Notes: 1) Number of directorships/memberships held in other companies excludes directorships/memberships in private limited companies, foreign companies, membership of managing committees of various chambers/bodies and alternate directorships. 2) The necessary disclosures regarding committee positions have been made by all the Directors. None of the Directors is a Member of more than 10 committees and Chairman of more than 5 committees across all Indian public limited companies in which he is a Director. (b) Board Meetings The Board of Directors (the Board) meets at least once every quarter to review the quarterly results and other items of the Agenda and, if necessary, additional meetings are held. The Board meets at least 4 times in a year and the gap between two Board Meetings is not more than four months as per Clause 49 of the Listing Agreement. The Board is apprised and informed of all the important information relating to the business of the Company including those listed in Annexure-1A of Clause 49 of the Listing Agreement. The Chairman of the Board, the Managing Director and the Company Secretary discuss the items to be included in the Agenda and the Agenda is sent in advance to the Directors along with the draft of the relevant documents and explanatory notes wherever required, to enable the Board to discharge its responsibilities effectively and take informed decisions. Six Board Meetings were held during the period December 1, 2007 to November 30, 2008. These were held on December 31, 2007, February 25, 2008, March 31, 2008, April 15, 2008, June 30, 2008 and September 30, 2008. The following table gives attendance of the Directors of the Company in the Board Meetings: Name Number Number Whether of Board of Board last Annual Meetings Meetings General held attended Meeting attended Mr. R.A. Shah 6 6 Yes Mr. Pradip Shah 6 5 No Mr. Kewal Handa 6 6 Yes Dr. Bomi M. Gagrat 6 6 Yes Mr. Richard Gane * 6 No Mr. Yugesh Goutam # 4 4 Yes
* Leave of Absence was granted to Mr. Gane # Resigned w.e.f. April 28, 2008

AUDIT COMMITTEE The Audit Committee comprises of Mr. R.A. Shah, as Chairman, Mr. Pradip Shah and Dr. Bomi M. Gagrat. Mr. Pradip Shah is a Chartered Accountant by profession. Mr. R.A. Shah is a Solicitor by profession. Dr. Bomi M. Gagrat is the head of the Technical Operations of the Company. All the members of the Committee are professionals and are also financially literate within the meaning of Sub-clause (ii) Explanation 1 of Clause 49 II (A) of the Listing Agreement. Mr. Prajeet Nair, the Company Secretary, acts as the Secretary to the Committee. The terms of reference of the Audit Committee include the matters specified under Sub-clauses D and E of Clause 49 II and Disclosures under Clause 49 IV (A) of the Listing Agreement. Thus, the terms of reference of the Audit Committee are wide enough covering the matters specified below: 1. 2. Oversight of the Companys financial reporting process and the disclosure of financial information; Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor and the fixation of audit fees; Approval of payment to statutory auditors for any other services rendered by the statutory auditors; Reviewing, with the management, the annual financial statements before submission to the Board for approval, with particular reference to: a) Matters required to be included in the Directors Responsibility Statement to be included in the Boards report in terms of Clause (2AA) of Section 217 of the Companies Act,1956; Changes, if any, in accounting policies and practices and reasons for the same; Major accounting entries involving estimates based on the exercise of judgement by management; Significant adjustments made in the financial statements arising out of audit findings; Compliance with listing and other legal requirements relating to financial statements; Disclosure of any related party transactions; Qualifications in the draft audit report.

3. 4.

b) c) d) e) f) g) 5. 6.

Reviewing, with the management, the quarterly financial statements before submission to the Board for approval; Reviewing, with the management, performance of statutory and internal auditors, and adequacy of the internal control systems; Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit; 19

III. BOARD COMMITTEES Currently, the Board has two Committees viz., the Audit Committee and the Shareholders Grievance Committee. The Board decides the terms of reference of these Committees and the assignment of its Members thereof.

7.

8. 9.

Discussion with internal auditors any significant findings and follow up thereon;

Mr. Yugesh Goutam, Executive Director, Human Resources, member of the Committee, resigned w.e.f. April 28, 2008. Mr. Prajeet Nair, the Company Secretary, acts as the Secretary to the Committee and as the Compliance Officer. One Shareholders Grievance Committee Meeting was held on September 30, 2008. The details of complaints received, cleared/pending during the financial year 2007-08 are given below: Nature of Complaints No. of Received Cleared/ Pending Complaints during the attended at the at the year during end of beginning the year the year of the year Nil 333 333 Nil

Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board; 10. Discussion with statutory auditors before the audit commences about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern; 11. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors; 12. To review the functioning of the Whistle Blower mechanism of the Company; 13. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee. The Audit Committee also reviews the following information: 1. Management discussion and analysis of financial condition and results of operations; 2. Statement of significant related party transactions (as defined by the Audit Committee), submitted by management; 3. Management letters/letters of internal control weaknesses issued by the statutory auditors; 4. Internal audit reports relating to internal control weaknesses; and 5. The appointment, removal and terms of remuneration of the chief internal auditor. Four Audit Committee Meetings were held during the financial year under review and the gap between two Meetings did not exceed four months. These were held on February 25, 2008, March 31, 2008, June 30, 2008 and September 30, 2008. The following table gives attendance of the Members in the Audit Committee Meeting: Name Number of Number of Meetings held Meetings attended Mr. R.A. Shah 4 4 Mr. Pradip Shah 4 4 Dr. Bomi M. Gagrat 4 4 The Minutes of the Audit Committee Meetings were noted at the Board Meetings. The Chairman of the Audit Committee was present at the 57th Annual General Meeting held on April 15, 2008. The Finance Director, the Internal Auditor, the Statutory Auditors and the Cost Auditor are invitees to the Meeting. SHAREHOLDERS GRIEVANCE COMMITTEE The Shareholders Grievance Committee comprises of Mr. Pradip Shah, Independent Director as its Chairman and Mr. Kewal Handa, Managing Director. 20

Non-receipt of dividend Non-receipt of share certificates after transfer/ consolidation/transmission/ exchange/split/merger Non-receipt of Annual Report Total

Nil Nil Nil

117 76 526

117 76 526

Nil Nil Nil

526 complaints were received during the financial year and all of them have been redressed/answered to the satisfaction of the shareholders. No investor grievance remained unattended/pending for more than 30 days and no request for share transfers and dematerialisation received during the financial year was pending for more than 30 days and 15 days respectively. REMUNERATION TO DIRECTORS Remuneration Committee being a non-mandatory requirement has not been formed. There has been no materially significant related party transactions, pecuniary relationships or transactions between Pfizer Ltd. and its Directors for the year ended November 30, 2008 that may have a potential conflict in the interest of the Company at large. Remuneration of Directors, Sitting Fees, Salary, Benefits, Perquisites and Commission: The following table gives details of remuneration paid to all directors during the financial year 2007-08: (a) Executive Directors Rs. in lakhs Name Remuneration Salary, Performance Benefits and Linked Perquisites Incentives Mr. Kewal Handa Dr. Bomi M. Gagrat Mr. Yugesh Goutam Total 184.94 63.46 47.35 295.75 32.93 15.84 10.37 59.14 Total

217.87 79.30 57.72 354.89

Notes: (i) Service Contracts, Severance Fees and Notice Period The appointment of the Managing Director and Whole-time Director is governed by the Articles of Association of the Company and the Resolutions passed by the Board of Directors and the members of the Company. These cover the terms and conditions of such appointment read with the service rules of the Company. A separate Service Contract is not entered into by the Company with the Managing Director and with those elevated to the Board from the management cadre, who already have a prior Service Contract with the Company. In terms of the Articles of Association, resignation of a Director becomes effective upon its acceptance by the Board. There is no separate provision for payment of severance fee under the resolutions governing the appointment of Managing Director and Whole-time Directors. (ii) Employee Stock Option Scheme The Company does not have any Employee Stock Option Scheme. (iii) Performance Linked Incentive criteria The Company has internal norms for assessing the performance of its senior executives including Whole-time Directors. (b) Non-Executive Directors The Resident Non-Executive Directors are paid remuneration by way of Commission and Sitting Fees, the details of which are as under: Rs. in lakhs Name Sitting Fees Commission Total Number of shares held Mr. R.A. Shah Mr. Pradip Shah Mr. Richard Gane 1.00 1.00 5.00 5.00 6.00 6.00 3400 Nil Nil

Total 2.00 10.00 12.00 Notes: (i) The Commission payable to Resident Non-Executive Directors is decided by the Board of Directors of the Company within the limits stipulated by the Special Resolution passed at the 53rd Annual General Meeting held on April 29, 2004. The payment of commission to Non-Executive Director is made on an ad-hoc basis. The amount of Commission payable to each of the Resident Non-Executive Directors is decided by the Board on the following basis: The role and responsibility as Chairman/Member of the Board; The role and responsibility as Chairman/Member of the Committee(s); The number of various Board and Committee Meetings attended.

(ii) Mr. R.A. Shah is a senior partner of M/s. Crawford Bayley & Co., Solicitors & Advocates, who have a professional relationship with the Company. The fees earned by M/s. Crawford Bayley & Co. from Pfizer Ltd. constitutes less than 1% of the total revenue of M/s. Crawford Bayley & Co. in each year during the last three Financial Years. As per the view of the Board of Directors and also as per the legal opinion sought on the subject of Independence of Mr. R.A. Shah, the legal firm M/s. Crawford Bayley & Co. does not have a material association with the Company. The professional fees of Rs.28.27 Lakhs that was paid to them during the year is not considered material enough to impinge on the independence of Mr. R. A. Shah. (iii) Besides payment of commission and sitting fees, and dividend on ordinary shares held, if any, by the Directors, no other payments have been made or transactions of a pecuniary nature entered into by the Company with the Directors. IV. SUBSIDIARY COMPANY The Company does not have a material non-listed Indian subsidiary whose turnover or networth (i.e., Paid-up Capital and Free Reserves) exceeds 20% of the consolidated turnover or networth respectively of the Company and its subsidiary in the immediately preceding accounting year. The Company monitors the performance of its 100% subsidiary, Duchem Laboratories Limited, inter-alia, by the following means: The Financial Statements, in particular, the investments, if any, made by the unlisted subsidiary company, are reviewed by the Audit Committee of the Company. The Minutes of the Board Meetings of the subsidiary company are noted at the Board Meetings of the Company. Details of significant transactions and arrangements entered into by the unlisted subsidiary company are placed before the Board of the Company as and when applicable. V. CHIEF EXECUTIVE OFFICER (CEO) / CHIEF FINANCIAL OFFICER (CFO) CERTIFICATION As required under Clause 49(V) of the Listing Agreement, the CEO and CFO Certification of the Financial Statements, the Cash Flow Statement and the Internal Control Systems for financial reporting is enclosed to this Report. VI. GENERAL BODY MEETINGS (a) The details of the last 3 Annual General Meetings held: AGM 57th 56th 55th Financial Year 2006-2007 2005-2006 2004-2005 Date and Time April 15, 2008 at 3.00 p.m. March 22, 2007 at 3.00 pm. April 21, 2006 at 3.00 p.m. Venue of AGM Y. B. Chavan Auditorium, General Jagannath Bhosale Marg, Next to Sachivalaya Gymkhana, Mumbai - 400 021.

21

(b) Special Resolutions passed at the last three Annual General Meetings: There were no Special Resolutions passed at the last three Annual General Meetings. (c) Passing of Special Resolutions by Postal Ballot: There were no Special Resolutions required to be passed through Postal Ballot at the last three Annual General Meetings. None of the Resolutions proposed for the ensuing Annual General Meeting need to be passed by Postal Ballot. VII. DISCLOSURES (a) Related party transactions The Company has not entered into any materially significant related party transactions with its Promoters, Directors, or Management, their subsidiaries or relatives, etc. that may have potential conflict with the interests of the Company at large. The Company has received disclosures from the senior managerial personnel confirming that they have not entered into any financial and commercial transactions in which they or their relatives may have a personal interest. Transactions with the related parties as per requirements of Accounting Standard 18 are disclosed in Note 15 of Schedule 19 to the financial statements in the Annual Report and they are not in conflict with the interest of the Company at large. The Audit Committee has reviewed the related party transactions as mandatorily required under Clause 49 of the Listing Agreement and found them to be not materially significant. (b) Compliances by the Company The Company has complied with the requirements of the Stock Exchanges, SEBI and other statutory authorities on all matters relating to capital markets during the last three years. No penalties or strictures have been imposed on the Company by the Stock Exchanges, SEBI or other statutory authorities relating to the above. (c) Code of Conduct The Company is committed to conducting its business in conformity with ethical standards and applicable laws and regulations. This commitment stands evidenced by Model Code of Conduct adopted by the Board of Directors at their meeting held on December 30, 2004 which is applicable to each member of the Board of Directors and Senior Management of the Company. The Company has received confirmations from all the Directors and Senior Management of the Company regarding compliance with the said Code for the year ended November 30, 2008. A certificate from Mr. Kewal Handa, Managing Director to 22

this effect forms part of this Report. The said Code is also posted on the website of the Company www.pfizerindia.com. (d) Whistle Blower Policy The Company has already put in place a mechanism for employees to report to the Management, concerns about unethical behaviour, actual or suspected fraud or violation of the Companys Code of Conduct or Ethics Policy. The said Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the higher levels of supervisors including the Audit Committee. (e) Risk Management framework The Company has in place a mechanism to inform the Board about the risk assessment and minimization procedures and periodical review to ensure that management controls risk through means of a properly defined framework. (f) The Company has complied with all the mandatory requirements under the revised Code of Corporate Governance and has also adopted certain non-mandatory requirements under Clause 49 of the Listing Agreement, details of which are given at the end of this Report. VIII. MEANS OF COMMUNICATION Quarterly Results The quarterly results are generally published in Business Standard and Sakal. The results are also displayed on the website of the Company www.pfizerindia.com shortly after its submission to the Stock Exchanges. The official news releases are also displayed on the website of the Company. Presentation to Institutional Investors/Analysts Four conferences were held with Institutional Investors/Analysts, on March 5, 2008, April 9, 2008, July 7, 2008 and October 3, 2008. The transcript of the same were put on the Companys website www.pfizerindia.com. EDIFAR Filing As per the requirements of Clause 51 of the Listing Agreement, all the data relating to quarterly financial results, shareholding pattern, etc., are electronically filed on the EDIFAR website www.sebiedifar.nic.in within the timeframe prescribed in this regard. Management Discussion and Analysis Report The Management Discussion and Analysis Report forms a part of the Directors Report. All matters pertaining to industry structure and developments, opportunities and threats, segment-wise/ product-wise performance, outlook, risks and concerns, internal control systems and adequacy, discussion on financial and operational performance and material developments in human resources are discussed in the said Report.

IX. GENERAL SHAREHOLDER INFORMATION Date, time and venue of the Annual General Meeting: Date : April 15, 2009 Time : 3.00 p.m. Venue : Y.B. Chavan Auditorium General Jagannath Bhosale Marg, Near Sachivalaya Gymkhana, Mumbai 400 021. Date of Book Closure April 6, 2009 to April 15, 2009 (both days inclusive). Dividend Payment Date The dividend recommended by the Board of Directors, if declared at the ensuing Annual General Meeting, shall be deposited in a separate bank account within 5 days of its declaration and shall be paid/credited on April 30, 2009 to the account mandated by the shareholders. Listing on Stock Exchanges The Company is listed on the Bombay Stock Exchange Limited and The National Stock Exchange of India Limited. The annual listing fees have been paid and there is no outstanding payment towards the Exchanges, as on date. Stock Code Bombay Stock Exchange Ltd. - 500680 The National Stock Exchange of India Ltd. - PFIZER EQ Financial Year The Company observes 1st December to 30th November as its financial year. Financial Calendar (tentative) First Quarter Results Fourth week of March, 2009 Second Quarter Results Fourth week of June, 2009 Third Quarter Results Fourth week of September, 2009 Fourth Quarter and Annual Results Fourth week of January, 2010 Address for Correspondence All Shareholders Correspondence should be forwarded to Karvy Computershare Pvt. Ltd., the Registrar and Transfer Agents of the Company or to the Secretarial Department of the Company at the following addresses. Registered Office Pfizer Limited Pfizer Centre, Patel Estate, Off S.V. Road, Jogeshwari (W), Mumbai 400 102. Tel. : 022 6693 2000 Fax : 022 6693 2377 E-mail : prajeet.nair@pfizer.com; contactus.india@pfizer.com Homepage: www.pfizerindia.com Registrar and Transfer Agents Karvy Computershare Pvt. Ltd. UNIT : Pfizer Limited Plot No. 17 24, Vittalrao Nagar, Near Image Hospital, Madhapur, Hyderabad 500 081. Tel.: 040 23420815 - 28 Fax: 040 23420814, 23420857 Email: einward.ris@karvy.com

Share Transfer System The Company Secretary has been empowered by the Board for approving transfers/transmissions of shares, split/consolidation, issue of duplicate share certificates and other allied matters up to a limit of 1000 shares of individual items. At each meeting, the Board is apprised of the details of transfer/transmission/ issue of duplicate shares certificates. The Companys Registrars, Karvy Computershare Pvt. Ltd. have adequate infrastructure to process the share transfers. The share transfers received are processed within 15 days from the date of receipt, subject to the transfer instrument being valid and complete in all respects. Demat requests are processed within 15 days from the date of receipt, to give credit of the shares through the Depositories. In compliance with the Listing guidelines, every six months, a Practising Company Secretary audits the system of share transfers and other related matters and a Certificate to that effect is issued. International Securities Identification Number (ISIN) The Companys scrip forms part of the SEBIs Compulsory demat segment bearing ISIN No. INE182A01018. Corporate Identity Number (CIN) The Companys CIN, allotted by the Ministry of Corporate Affairs, Government of India, is L24231MH1950PLC008311. The Company is registered at Mumbai in the State of Maharashtra, India. MARKET PRICE DATA* The High and Low prices of the Companys share (of the face value of Rs.10/- each) from December, 2007 till November, 2008 are as below: Month Bombay Stock Exchange Ltd. High (Rs.) Low (Rs.) Dec. 2007 Jan. 2008 Feb. 2008 Mar. 2008 Apr. 2008 May 2008 Jun. 2008 July. 2008 Aug. 2008 Sep. 2008 Oct. 2008 Nov. 2008 850.00 817.90 689.00 699.00 716.00 671.00 664.95 599.90 623.95 590.00 581.00 520.00 645.00 581.00 587.00 580.00 644.00 606.75 556.75 526.20 560.00 513.00 436.25 441.00 The National Stock Exchange of India Ltd. High (Rs.) Low (Rs.) 877.00 824.00 699.00 694.00 720.00 674.80 680.00 624.90 625.00 590.00 583.65 530.00 652.00 505.65 581.00 571.00 650.05 610.00 550.05 536.00 551.50 501.00 436.00 435.00

*Source : BSE & NSE Website

23

DISTRIBUTION OF SHAREHOLDING
(a). Class-wise Distribution of Equity Shares as on November 30, 2008: Number of Equity Number of Percentage of Number of Percentage of Share Holding Shareholders Shareholders Shares Shareholding 1 - 50 51 - 100 101 - 500 501 - 1000 1001 - 5000 5001 - 10000 10001 & ABOVE Total 46266 12726 12987 1074 498 23 75 73649 62.82 17.28 17.63 1.46 0.68 0.03 0.10 100.00 1052891 1036523 2650237 766423 940939 154906 23239521 29841440 3.53 3.47 8.88 2.57 3.15 0.52 77.88 100.00 (b). Shareholding Pattern as on November 30, 2008: Category Foreign Collaborator (Pfizer & Associates) Banks Financial Institutions Foreign Institutional Investors Mutual Funds Domestic Companies Non-Domestic Companies Non-Residents Others (Resident Individuals) Total No. of Shares 12302937 81022 4567001 727234 4801328 959347 12108 176404 6214059 29841440 Percentage 41.23 0.27 15.30 2.44 16.09 3.21 0.04 0.59 20.83 100.00

130 120 110 100 90 80 70 60 50 40 30

PERFORMANCE OF PFIZER SHARE PRICE TO BROAD BASED INDEX, BSE SENSEX, NIFTY (Indexed)

Dec-07

Jan-08

Feb-08

Mar-08

Apr-08

May-08

Jun-08

Jul-08

Aug-08

Sep-08

Oct-08

Nov-08

24

Dematerialization of Shares and Liquidity The shares of the Company form part of the compulsory demat segment. The Company has established connectivity with both the Depositories viz., National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) through its Registrars, Karvy Computershare Pvt. Ltd. As on November 30, 2008, 56.18 % {representing 95.58 % of the widely held shares} of the paid-up share capital of the Company representing 16763863 shares has been dematerialized. Outstanding GDRs/ADRs/Warrants or any convertible instruments, etc. As of date, the Company has not issued these types of securities. Plant Location: Pfizer Limited Thane Belapur Road, KU Bazar Post, Navi Mumbai-400 705 Tel : 022 6791 6161, Fax : 022 6791 6160 Bank details for dividend payment Shareholders desirous of receiving their dividend directly in their bank account through Electronic Clearing System (ECS) are requested to inform their ECS mandate to the Registrars and Transfer Agent of the Company, Karvy Computershare Pvt. Ltd. Beneficiaries holding the scrip of the Company in the

dematerialized form may intimate the change in their bank details to their Depository Participant (DP) furnishing their details with the correct 9 digit MICR code of their bank along with blank cancelled cheque. X. NON-MANDATORY REQUIREMENTS Chairmans Office The Chairman, Mr. R.A. Shah, Solicitor is a Senior Partner of Crawford Bayley & Co. His office is located in Mumbai and, therefore, he has not sought maintenance of the Chairmans Office at the Registered Office premises of the Company. Shareholders Rights The half-yearly financial results are published in the newspapers as mentioned above and also they are displayed on the website of the Company. Therefore, the results were not separately circulated to all shareholders.

On behalf of the Board of Directors R. A. Shah Chairman

Mumbai, January 30, 2009

25

Certificate of Compliance with the Corporate Governance requirements under Clause 49 of Listing Agreement To the Members of Pfizer Limited We have examined the compliance of conditions of Corporate Governance by Pfizer Limited (the Company) for the year ended 30 November 2008 as stipulated in Clause 49 of the Listing Agreement of the Company with Stock Exchanges in India. The compliance of the conditions of Corporate Governance is the responsibility of the Companys management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. 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 above mentioned Listing Agreement. 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 B S R & Co. Chartered Accountants Bhavesh Dhupelia Partner Membership No: 042070

Mumbai, January 30, 2009

Certification by Chief Executive Officer (CEO) and Chief Financial Officer (CFO) pursuant to Clause 49 of the Listing Agreement. We, Kewal Handa, Managing Director and S. Sridhar, Finance Director, in our capacity as Chief Executive Officer (CEO) and Chief Financial Officer (CFO) respectively of the Company hereby certify that a. We have reviewed the financial statements and the cash flow statement for the year ended November 30, 2008 and that to the best of our knowledge and belief: i). these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; ii). these statements together present a true and fair view of the Companys affairs and are in compliance with existing accounting standards, applicable laws and regulations. b. There are, to the best of our knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or violative of the Companys code of conduct. c. We accept responsibility for establishing and maintaining internal controls for financial reporting and that we have evaluated the effectiveness of internal control systems of the Company pertaining to financial reporting and we have disclosed to the Auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which we are aware and the steps we have taken or propose to take to rectify these deficiencies. We have indicated to the Auditors and the Audit Committee that there are no i). significant changes in internal control over financial reporting during the year; ii). significant changes in accounting policies during the year and that the same have been disclosed in the notes to the financial statements; and iii). instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a significant role in the Companys internal control system over financial reporting. For Pfizer Limited S. Sridhar Finance Director (Chief Financial Officer)

d.

Kewal Handa Managing Director (Chief Executive Officer) Mumbai, January 30, 2009

Declaration by the Managing Director under Clause 49 of the Listing Agreement regarding compliance with Code of Conduct
In accordance with Clause 49 I (D) of the Listing Agreement with the Stock Exchanges, I hereby confirm that, all the Directors and the Senior Management personnel of the Company have affirmed compliance with the Code of Conduct, as applicable to them, for the financial year ended November 30, 2008. For PFIZER LIMITED Kewal Handa Managing Director

Mumbai, January 30, 2009 26

Auditors Report
To the Members of Pfizer Limited We have audited the attached balance sheet of Pfizer Limited (the Company) as at 30 November 2008 and also the related profit and loss account and cash flow statement of the Company 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. 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. As required by the Companies (Auditors Report) Order, 2003 (the Order) issued by the Central Government of India in terms of subsection (4A) of Section 227 of the Companies Act, 1956, (the Act) we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to above, we report that: a) b) c) d) e) 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; 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; the balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account; in our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Act; on the basis of written representations received from directors of the Company as at 30 November 2008 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 30 November 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act; and 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 Act, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: i) ii) in the case of the balance sheet, of the state of affairs of the Company as at 30 November 2008; in the case of the profit and loss account, of the profit for the year ended on that date; and

f)

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

For B S R & Co. Chartered Accountants Mumbai 30 January 2009 Bhavesh Dhupelia Partner Membership No: 042070

27

Annexure to the Auditors Report 30 November 2008

Annexure to the Auditors Report 30 November 2008 (Referred to in our report of even date) (i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) The Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this program, certain fixed assets were physically verified by the management during the year. The discrepancies noticed during physical verification were not material and have been adjusted in the books of account. (c) Fixed assets disposed off during the year were not substantial and therefore do not affect the going concern assumption. (ii) (a) The inventory, except goods-in-transit and stocks lying with third parties, has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. Majority of stocks lying with third parties at the year-end have been confirmed. (b) The procedures for the 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 during the physical verification of inventories as compared to book records were not material and have been dealt with in the books of account. (iii) According to the information and explanations given to us, we are of the opinion that there are no companies, firms or other parties covered in the register required under Section 301 of the Act. Accordingly, paragraph 4(iii) of the Order is not applicable. In our opinion, and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories are for the Companys specialized requirements and suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and with regard to the sale of goods and services. In our opinion and according to the information and explanations given to us, there is no continuing failure to correct major weaknesses in internal controls. In our opinion, and according to the information and explanations given to us, there are no contracts and arrangements the particulars of which need to be entered into the register required to be maintained under Section 301 of the Act. The Company has not accepted any deposits from the public. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 209(1)(d) of the Act in relation to products manufactured, and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records for determining whether they are accurate or complete.

(iv)

(v) (vi) (vii) (viii)

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the books of account of the Company, undisputed statutory dues including Provident fund, Investor Education and Protection fund, Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise duty and other material statutory dues have generally been regularly deposited with the appropriate authorities though there has been a slight delay in a few cases. As explained to us, the Company did not have any dues on account of Employees State Insurance. There were no dues on account of Cess under Section 441A of the Act since the date from which the aforesaid section comes into force has not yet been notified by the Central Government. According to the information and explanations given to us, no undisputed amounts payable in respect of Provident fund, Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise duty and other material statutory dues were in arrears as at 30 November 2008 for a period of more than six months from the date they became payable. 28

Annexure to the Auditors Report 30 November 2008 (Continued)

(b) According to the information and explanations given to us, the dues set out in Appendix 1 in respect of Income-tax, Sales tax, Service tax, Customs duty and Excise duty have not been deposited by the Company with the appropriate authorities on account of disputes. (x) (xi) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the current financial year and in the immediately preceding financial year. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to its bankers. The Company did not have any outstanding debentures or any outstanding loans from financial institution during the year. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. In our opinion and According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. The Company did not have any term loans outstanding during the year. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment. As stated in paragraph (iii) above, there are no companies/firms/parties covered in the register required to be maintained under Section 301 of the Act. The Company did not have any outstanding debentures during the year The Company has not raised any money by public issues during the year. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

(xii) (xiii) (xiv) (xv) (xvi) (xvii) (xviii) (xix) (xx) (xxi)

For B S R & Co. Chartered Accountants Mumbai 30 January 2009 Bhavesh Dhupelia Partner Membership No: 042070

29

Appendix 1 as referred to in paragraph ix(b) of Annexure to the Auditors Report

Name of the Statute Nature of Dues Amount ( In Lakhs) 68.54 76.09 22.32 40.49 14.49 75.00 36.83 3.17 90.97 The Central Excise Act, 1944 6.06 1.04 8.70 1.20 1.02 4.37 The Act, The Act, Central Excise 1944 Central Excise 1944 Duty and penalty on classification/ valuation. Duty and penalty on imports and other disputes Duty & Penalty Duty & Penalty Tax and penalty on expenditure disallowed 12.62 6.93 14.55 41.92 1.06 193.11 1576.23 Period to which the amount relates 1996-2003 1998-2000 1998-2003 1998-2001 1999-2000 1999-2003 2001-2003 2005-2006 2002-2003 1990-1992 1994 2005-2007 2003-2004 2004-2005 2004-2005 1985-1988 2000-2001 1998 1996-1997 1995 1997-2001 1994-1995 1996-1997 1997-1998 1998-1999 1999-2000 2002-2003 2003-2004 Commissioner of appeals Commissioner of appeals Forum where dispute is pending Customs, Excise, Service tax Appellate Tribunal

The Central Excise Act, 1944

Duty and penalty on classification/ valuation and other disputes

Commissioner of appeals Assistant Commissioner Supreme Court The Supreme Court Commissioner of appeals The Bombay High Court Commissioner of Income Tax (Appeal)

Customs Act, 1962 Customs Act, 1962 Service Tax The Income Tax Act, 1961

30

Name of the Statue State and Central Sales Tax Acts

Nature of Dues Tax interest and penalty for non submission of forms and other disallowances

Amount ( In Lakhs) 10.27 0.56 6.54 2.81 1.92 8.05 0.45 0.69 42.02 87.41 125.50 20.71 126.83 24.70 4.56 4.00 2.97 0.62 7.87 3.32 2.18 1.46 9.47 3.57 14.31 54.76 17.10 1.92 1.54 3.05

Period to which the amount relates 1992-1993 1983-1984 1985-1986 1986-1987 1993-1994 1994-1995 1995-1996 1996-1997 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 1993-1994 1994-1995 1995-1996 1996-1997 1997-1998 1998-1999 1994-1996 1996-1997 1998-1999 1998-1999 2002-2003 2002-2003 2001-2002 2002-2003 1986-1987 1998-1999 1993-1994

Forum where dispute is pending Supreme Court Deputy Commissioner (Appeal)

Additional Commissioner

Tribunal

Deputy Commissioner (Appeal)

Joint Commissioner

Assistant Commissioner

31

Balance Sheet as at 30th November, 2008

Rupees in Lakhs Schedule Ref. As at 30th Nov 2008 Rupees in Lakhs As at 30th Nov 2007

Sources of Funds

Shareholders funds Share capital Reserves and surplus

1 2

2984.32 86972.16 89956.48 89956.48

2984.32 61880.14 64864.46 64864.46

TOTAL

Application of Funds

Fixed assets Gross block Accumulated depreciation Net block Capital work-in-progress at cost, including advances

3 13989.94 (8913.82) 5076.12 3229.82 4 5 6 7 8 9 10 12468.32 5972.65 54306.08 1449.41 24795.18 98991.64 8305.94 50.25 2267.15 9506.26 6136.55 47979.17 817.11 13536.94 77976.03 (10627.98) (11165.48) (19658.50) (21793.46) 79333.14 89956.48 18 19 56182.57 293.00 64864.46 14161.14 (8144.80) 6016.34 1024.38 7040.72 50.25 1297.92

Investments Deferred tax asset ( Net ) Current assets, loans and advances Inventories Sundry debtors Cash and bank balances Other current assets Loans and advances Current liabilities and provisions Current liabilities Provisions Net current assets Miscellaneous expenditure (to the extent not written off or adjusted) Voluntary retirement scheme TOTAL Significant accounting policies Notes to the accounts

11 12

(12214.08) (7444.42)

The schedules referred to above form an integral part of this Balance Sheet. As per our report attached. For B S R & Co. Chartered Accountants For and on behalf of the Board R A SHAH KEWAL HANDA BHAVESH DHUPELIA Partner Membership No: 042070 Mumbai, 30th January, 2009 32 P SHAH B M GAGRAT (Dr) Chairman Managing Director Directors

PRAJEET NAIR Company Secretary Mumbai, 30th January, 2009

Profit And Loss Account for the year ended 30th November, 2008
Rupees in Lakhs Schedule Ref. Year ended 30th Nov 2008 Rupees in Lakhs Year ended 30th Nov 2007

Income
Gross sales Less: Excise duty Less: Sales tax Net sales Operating and other income 76482.09 5408.79 3302.69 13 14 15 16 3 67770.61 9342.15 77112.76 23758.82 10209.66 20966.34 1112.19 56047.01 21065.75 20790.68 41856.43 12450.99 228.00 (734.58) 29912.02 44988.68 74900.70 2991.20 3730.18 634.13 7355.51 67545.19 Rs. 100.24 10.00 18 19 3400.00 8206.40 1394.68 13001.08 44988.68 Rs. 113.58 10.00 23147.72 10169.76 20510.30 1.52 958.46 54787.76 46747.76 (1735.04) 45012.72 10740.00 242.02 138.16 33892.54 24097.22 57989.76 77301.06 6199.28 3835.94 67265.84 34269.68 101535.52

Expenditure
Material cost Personnel cost Manufacturing and other expenses Interest on short term loans Depreciation

Profit Before Taxation And Exceptional Items

Exceptional items - Net 17

Profit Before Taxation

Less: Taxation Current tax Fringe benefits tax Deferred tax charge / (credit)

Profit After Taxation

Balance brought forward

Total Available for Appropriation

Transfer to general reserve Proposed dividend Tax on dividend

Balance Carried To Balance Sheet Earnings Per Share (Basic And Diluted)
(Refer Note 10 in the Notes to the accounts - Schedule 19)

Nominal Value Per Share

Significant accounting policies Notes to the accounts

The schedules referred to above form an integral part of this Profit and Loss Account. As per our report attached. For B S R & Co. Chartered Accountants For and on behalf of the Board R A SHAH BHAVESH DHUPELIA Partner Membership No: 042070 Mumbai, 30th January, 2009 KEWAL HANDA P SHAH B M GAGRAT (Dr) Chairman Managing Director Directors

PRAJEET NAIR Company Secretary Mumbai, 30th January, 2009 33

Cash Flow Statement for the year ended 30th November, 2008
Rupees in Lakhs 30th Nov 2008 A Cash Flow from Operating Activities : Net profit before taxation and exceptional items Adjustments for Depreciation Unrealised foreign exchange (gain) / loss ( Net ) Interest income Profit on fixed assets sold / discarded Profit on sale of assets held for disposal Interest expenses Provision for doubtful debts and advances Provisions no longer required written back Provision for dimunition in the value of investment Operating profit before working capital changes Adjustments for Trade and other receivables Inventories Trade and other payables Provisions (excluding proposed dividend,tax on distributed profits, income tax provision) Cash generated from operations Direct taxes paid ( Net ) Net cash from operating activities before exceptional items Exceptional Items VRS paid Proceeds from sale of brands ( Net ) Net cash from operating activities after exceptional items ( A ) B Cash Flow from Investing Activities : Purchase of fixed assets Proceeds from sale of fixed assets Purchase of investments / Inter corporate deposits ( Net ) Interest received Net cash from / (used) in investing activities ( B ) C Cash Flow from Financing Activities :Dividend paid ( including tax on distributed profits) Interest paid Net cash used in financing activities ( C ) Net Increase / (Decrease) in Cash & Cash Equivalents (A)+(B)+(C) Opening cash and cash equivalents (Note 1) Closing cash and cash equivalents (Note 1) 21065.75 1112.19 (0.71) (5989.36) (16.84) 330.89 (430.37) 16071.55 (672.74) (2962.06) 2062.80 819.40 15318.95 (12673.03) 2645.92 (11.55) 21095.23 23729.60 (2667.80) 173.39 (10750.00) 5357.06 (7887.35) (9519.58) (9519.58) 6322.67 47979.17 54301.84 6322.67 Rupees in Lakhs 30th Nov 2007 46747.76 958.46 10.03 (3680.20) (92.38) (27369.29) 1.52 510.32 (160.00) 0.11 16926.33 188.94 338.46 (3804.51) 37.36 13686.58 (11297.00) 2389.58 (694.50) 1695.08 (1367.09) 27966.70 (6700.00) 3335.21 23234.82 (7588.04) (1.52) (7589.56) 17340.34 30638.83 47979.17 17340.34

34

Cash Flow Statement for the year ended 30th November, 2008
Rupees in Lakhs 30th Nov 2008 Notes : 1 Cash and cash equivalents include : Cash on hand With scheduled banks On current accounts (including accounts with overdraft facility) On margin money accounts On time deposit accounts Cheques on hand / in transit Unrealised translation gain on foreign currency cash & cash equivalents Rupees in Lakhs 30th Nov 2007

5.03 2158.89 3.48 52003.40 135.28 (4.24) 54301.84

4.30 1871.20 3.48 46090.40 9.79 47979.17

2 Interest income on delayed payments from customers and rental income have been shown under Cash flow from operating activities as according to the Company these form an integral part of the operating activities. 3 The above Cash Flow Statement has been prepared under the indirect method as set out in Accounting Standard 3 on Cash Flow Statement. As per our report attached. For B S R & Co. Chartered Accountants For and on behalf of the Board R A SHAH KEWAL HANDA BHAVESH DHUPELIA Partner Membership No: 042070 Mumbai,30th January, 2009 P SHAH B M GAGRAT (Dr) Chairman Managing Director

Directors

PRAJEET NAIR Company Secretary Mumbai, 30th January, 2009

35

Schedules to the Financial Statements

Rupees in Lakhs 30th Nov 2008 Rupees in Lakhs 30th Nov 2007

Schedule 1: Share capital

Authorised 2,98,44,080 (Nov 2007: 2,98,44,080) Equity shares of Rs. 10 each 1,01,55,920 (Nov 2007: 1,01,55,920) Unclassified shares of Rs. 10 each Issued 2,98,44,080 (Nov 2007: 2,98,44,080) Equity shares of Rs. 10 each Subscribed and paid up 2,98,41,440 (Nov 2007: 2,98,41,440) Equity shares of Rs. 10 each fully paid-up Of the above - 1,91,08,636 (Nov 2007: 1,91,08,636) Equity shares of Rs. 10 each were allotted as fully paid - up bonus shares by capitalisation of general reserve Rs. 1776.92 lakhs and share premium account Rs. 133.94 lakhs. - 93,76,100 (Nov 2007: 93,76,100) Equity shares of Rs. 10 each fully paidup are held by Pfizer Corporation, Panama. - 21,42,896 (Nov 2007: 21,42,896) Equity shares of Rs. 10 each in aggregate are held by Warner-Lambert LLC, USA and Parke-Davis & Company LLC, USA. - 53,57,244 (Nov 2007: 53,57,244) Equity shares of Rs. 10 each were issued as fully paid-up to the shareholders of erstwhile Parke-Davis (India) Limited (pursuant to the Scheme of Amalgamation of Parke-Davis (India) Limited with the company). - 10,43,900 (Nov 2007: 10,43,900) Equity shares of Rs. 10 each were issued as fully paid-up to the shareholders of erstwhile Pharmacia Healthcare Limited (pursuant to the Scheme of Amalgamation of Pharmacia Healthcare Limited with the company) including 7,83,941 Equity shares issued to Pharmacia Corporation, USA. Add: Forfeited share capital Amount paid up on 2,640 (Nov 2007: 2,640) Equity shares of Rs. 10 each forfeited TOTAL 2984.41 2984.14 2984.41 2984.14 2984.41 1015.59 4000.00 2984.41 1015.59 4000.00

0.18 2984.32

0.18 2984.32

Schedule 2: Reserves and surplus

Share premium Per last balance sheet General reserve Per last balance sheet Add : Transfer from profit and loss account Less : Adjustment on account of adoption of AS 15 (revised) (Refer Note 21 of the Notes to the accounts, Schedule 19 ) Balance as per profit and loss account TOTAL 2277.70 14613.76 2991.20 (455.69) 17149.27 67545.19 86972.16 11213.76 3400.00 14613.76 44988.68 61880.14 2277.70

36

Schedule 3 : Fixed assets

Rupees in Lakhs COST For the As at As at As at year Deductions 30.11.2008 30.11.2008 30.11.2007 DEPRECIATION / AMORTISATION NET BOOK VALUE

As at As at As at 01.12.2007 Additions Deductions 30.11.2008 01.12.2007

Intangible Assets 15.51 15.51 15.51 15.51 -

Trademarks

Tangible Assets

Land : 32.57 32.57 14.19 0.33 14.52 18.05 18.38

Leasehold

Buildings : 787.38 787.38 1367.71 1397.53 5548.94 2572.43 571.06 1013.53 118.44 293.48 43.30 14.45 73.71 2.69 155.25 12.88 1443.27 1503.42 5502.82 48.81 2.69 10.10 115.99 39.85 115.41 168.13 322.33 1058.26 3140.80 619.25 1045.38 339.27 2408.14 632.13 1149.79 489.89 2930.39

On freehold land @

Schedules to the Financial Statements

On leasehold land

Leasehold improvements

Machinery & equipment

Office equipment, 4214.62 4212.20 628.10 13989.94 14161.14 502.67 8144.80 8170.77 3577.74 661.55 328.52 533.61 1058.75 499.72 93.84 127.29 135.92 138.34 272.01 94.17 1112.19 958.46* 134.45 117.87 343.17 984.43 3715.30 478.97 8913.82 8144.80 496.90 149.13 5076.12 6016.34 3229.82 8305.94 1024.38 7040.72 636.88 158.88 6016.34

Furniture & fixtures

Vehicles

TOTAL

14161.14

Previous year

14686.28

Capital work-in-progress including capital advances

GRAND TOTAL

@ Buildings include investment in share application money of Rs. 500 (Nov 2007: Rs. 500) in a co-operative housing society, representing ownership of two residential flats.

Rs.Nil (Nov 2007: Rs.146.64 lakhs) being reversal of excess depreciation provided in the prior years.

37

Schedules to the Financial Statements

Rupees in Lakhs 30th Nov 2008 Rupees in Lakhs 30th Nov 2007

Schedule 4: Investments
(At cost except where otherwise stated) Long Term Investments Non-Trade (unquoted) Government securities Rural Electrification Corporation of India 500 (Nov 2007: 500) Bonds of Rs. 10,000 each fully paid-up Gold Sovereign (Actual cost Rs. 61) The Shamrao Vithal Co-operative Bank Limited 1,000 (Nov 2007: 1,000) shares of Rs. 25 each, fully paid-up Other securities Bharuch Eco-Aqua Infrastructure Limited 72,935 (Nov 2007: 72,935) Equity Shares of Rs. 10 each, fully paid-up Bharuch Enviro Infrastructure Limited 175 (Nov 2007: 175) Equity Shares of Rs. 10 each, fully paid-up Shares in the subsidiary company Duchem Laboratories Limited (100% holding) 3,24,000 (Nov 2007: 3,24,000) Equity Shares of Rs. 100 each, fully paid-up Provision for diminution in value of investments TOTAL

0.11 50.00 0.25

0.11 50.00 0.25

7.29 0.02

7.29 0.02

324.00 (331.42) 50.25

324.00 (331.42) 50.25

Schedule 5: Deferred tax asset ( Net )

Deferred tax asset Arising on account of timing differences in : Provision for doubtful debts and advances Provision for leave encashment Provision for excise duty, custom duty and sales tax Amortisation of voluntary retirement costs Others Deferred tax liability Arising on account of timing difference in: Depreciation TOTAL 775.59 458.85 130.52 142.72 1060.67 2568.35 301.20 2267.15 669.97 163.20 107.64 178.51 629.01 1748.33 450.41 1297.92

Schedule 6: Inventories
Stores and maintenance spares Packing materials Stock-in-trade Raw materials Work-in-process Finished goods TOTAL 204.27 610.15 3220.24 574.14 7859.52 12468.32 177.50 395.25 2458.82 546.49 5928.20 9506.26

38

Schedules to the Financial Statements

Rupees in Lakhs 30th Nov 2008 Rupees in Lakhs 30th Nov 2007

Schedule 7: Sundry debtors (unsecured)

Debts outstanding Over six months Other debts of which Considered good Considered doubtful Provision for doubtful debts TOTAL Bad debts written off Rs. 20.81 lakhs (Nov 2007: Rs. 237.49 lakhs) out of the provision for doubtful debts. 2143.00 5777.77 7920.77 5972.65 1948.12 7920.77 (1948.12) 5972.65 1683.61 6123.94 7807.55 6136.55 1671.00 7807.55 (1671.00) 6136.55

Schedule 8: Cash and bank balances

Cash on hand With scheduled banks In current accounts In margin money accounts (under lien) In time deposit accounts Cheques on hand / in transit TOTAL 5.03 2158.89 3.48 52003.40 135.28 54306.08 1399.79 49.62 1449.41 4.30 1871.20 3.48 46090.40 9.79 47979.17 767.49 49.62 817.11

Schedule 9: Other current assets

Interest accrued but not due on bank deposits Fixed assets held for sale ** (at book value or estimated net realisable value / salvage, whichever is lower) * TOTAL * Realisable value / Salvage value is based on valuation reports of approved valuers, where applicable ** Refer Note 12 of the Notes to the accounts, Schedule 19

Schedule 10: Loans and advances (unsecured)

Advances recoverable in cash or in kind or for value to be received Considered good Considered doubtful Provision for doubtful advances Amounts recoverable from Pfizer Pharmaceutical India Private Limited * Amounts recoverable from Pfizer Products India Private Limited * Amounts receivable from Duchem Laboratories Limited * Deposits Balances with Customs, Port Trust and Excise on current accounts TOTAL 2510.54 333.04 2843.58 (333.04) 2294.61 300.08 2594.69 (300.08)

2510.54 15206.43 2853.05 4015.30 209.86 24795.18

2294.61 5796.18 1269.12 44.23 3954.50 178.30 13536.94

Advances written off Rs. Nil (Nov 2007: Rs. 45.41 lakhs) out of the provision for doubtful advances. * Refer Note 3 of the Notes to the accounts, Schedule 19

39

Schedules to the Financial Statements

Rupees in Lakhs 30th Nov 2008 Rupees in Lakhs 30th Nov 2007

Schedule 11: Current liabilities

Sundry creditors Due to Micro, Small and Medium Enterprises (Refer Note 14 of the Notes to the accounts, Schedule 19) Others Security deposits Dividends - unclaimed * Amount payable to Duchem Laboratories Limited Other liabilities TOTAL * Investor education and protection fund is being credited by the amount of unclaimed dividend after seven years from the due date. 172.76 10554.08 363.35 342.54 36.81 744.54 12214.08 105.36 9105.53 415.10 261.04 740.95 10627.98

Schedule 12: Provisions

Proposed dividend Tax on distributed profits Gratuity Leave encashment Provident Fund Provision for contingencies (Net) Income tax provisions [Net of taxes paid Rs. 71785.63 lakhs (Nov 2007: Rs. 59371.60 lakhs)] Fringe benefits tax provisions [Net of taxes paid Rs. 885.00 lakhs (Nov 2007: Rs. 626.00 lakhs)] Wealth tax provisions (Net) TOTAL 3730.18 634.13 411.52 1349.52 638.16 103.87 427.31 93.14 56.59 7444.42 2191.41 19.91 4733.92 1256.06 633.30 16.84 43.57 430.37 16.77 9342.15 8206.40 1394.68 451.76 480.15 66.60 390.35 124.14 51.40 11165.48 2126.39 18.03 3150.17 530.03 612.76 27369.29 92.38 133.65 51.07 160.00 25.91 34269.68

Schedule 13: Operating and other income

Service income Interest (Gross) On staff loans On deposits with banks [Tax deducted at source - Rs. 949.40 lakhs (Nov 2007: Rs. 651.03 lakhs)] On others [Tax deducted at source - Rs. 264.04 lakhs (Nov 2007: Rs. 114.86 lakhs)] Rental income (Gross) [Tax deducted at source - Rs. 148.16 lakhs (Nov 2007: Rs. 139.21 lakhs)] Profit on sale of assets held for disposal Profit on fixed assets sold (Net) Other insurance claims Exchange gain ( Net ) Provision / liability no longer required written back Others TOTAL

40

Schedules to the Financial Statements

Rupees in Lakhs 30th Nov 2008 Rupees in Lakhs 30th Nov 2007

Schedule 14: Material cost

(Increase) / decrease in stock of finished goods and work-in-process Stock at commencement 5928.20 Finished goods Work-in-process 546.49 Less : Stocks Transferred to Johnson & Johnson (Refer Note 19 of the Notes to the accounts, Schedule 19) Stock at close Finished goods Work-in-process Raw materials Stock at commencement Purchases ( Net ) Stock at close Packing materials consumed Purchase of traded goods TOTAL 6474.69 (337.58) 7859.52 574.14 8433.66 (2296.55) 2458.82 14745.44 17204.26 (3220.24) 2235.67 9778.80 12014.47 (2458.82) 5928.20 546.49 6474.69 468.77 6623.89 319.57 6943.46 -

13984.02 4781.70 7289.65 23758.82 8553.23 357.43 427.23 871.77 10209.66 151.64 2197.75 667.96 49.34 195.15 1043.51 249.33 244.56 1143.10 1018.67 906.49 2075.73 1453.27 461.56 3413.19 1150.18 330.89 118.86 744.66 362.81 2987.69 20966.34 304.55 (21095.23) (20790.68)

9555.65 4415.07 8708.23 23147.72 7883.93 934.14 598.30 753.39 10169.76 171.18 1945.29 733.25 60.81 269.62 1062.03 244.65 263.77 1075.59 1137.81 792.83 2091.98 1294.85 444.85 3659.39 1059.35 510.32 0.11 707.67 97.55 2887.40 20510.30 1735.04 1735.04 41

Schedule 15: Personnel cost

Salaries, wages and bonus Companys contribution to gratuity fund Companys contribution to provident and other funds Staff welfare expenses TOTAL

Schedule 16: Manufacturing and other expenses

Consumption of stores and maintenance spares Processing charges Power and fuel Water Repairs : Buildings Machinery Rent Rates and taxes Insurance Clinical trials Legal and professional charges Equipment rentals, service charges, low cost assets written off Freight, forwarding and transport Travelling (including boarding, lodging, conveyance and other expenses) Communication expenses Advertising and promotion Commission Provision for doubtful debts and advances ( Net ) Provision for diminution in value of long term investments Exchange loss ( Net ) Royalty Excise duty Miscellaneous expenses TOTAL Exceptional expense Payment / Amortization of compensation paid to employees under VRS Exceptional income Profit on sale of brands (Refer Note 19 of the Notes to the accounts, Schedule 19) TOTAL

38.66 156.49

17.65 251.97

Schedule 17: Exceptional items - Net

Notes to the Financial Statements for the year ended 30th November, 2008
Schedule 18 : Significant accounting policies
(a) Basis of Accounting The financial statements have been prepared and presented under the historical cost convention on an accrual basis of accounting and in accordance with the provisions of the Companies Act, 1956 and accounting principles generally accepted in India and comply with the accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards, to the extent applicable. (b) Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) in India requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods. (c) Fixed Assets and Depreciation Tangible Assets (i) All fixed assets are stated at cost of acquisition less accumulated depreciation and impairment losses. The cost of fixed assets includes taxes (other than those subsequently recoverable from tax authorities), duties, freight and other incidental expenses related to the acquisition and installation of the respective assets. (ii) Assets costing individually upto Rs. 5000 are written off and those costing more than Rs. 5000 but upto US$ 1000 are fully depreciated in the year of purchase except that multiple-like items the cost of which is over US$ 10000 in the aggregate; and unlike items of a capital nature within an asset category for large scale projects the aggregate cost of which exceeds US$ 10000 are considered as one asset and depreciated in accordance with the accounting policy stated in (iii) below. (iii) Depreciation for the year has been provided on straight line method at the higher of the rates determined by the Company based on the estimated useful life of the assets or the rates specified in Schedule XIV to the Companies Act, 1956. Depreciation on additions other than those stated in (ii) above is provided on a pro-rata basis from the month of capitalisation. Depreciation on deletions during the year is provided up to the month in which the asset is sold / discarded. (iv) Depreciation other than on low cost assets is provided at the following rates per annum: Assets Land : Leasehold Rate Amortised over the lease period 3.34% Higher of 3.34% or rate based on lease period Higher of 8% to 10% or Amortised over the lease period 8% to 40% 8% to 33.33% 25%

Buildings : On Freehold land On Leasehold land Leasehold Improvements Machinery & Equipment Office Equipment, Furniture & Fixture Vehicles

(v) In case of assets taken over from erstwhile Pharmacia Healthcare Limited depreciation has been provided at the rates specified in Schedule XIV to the Companies Act, 1956 except the following assets, which are depreciated at the respective rates: Assets Machinery / Equipment Office Equipment, Furniture & Fixtures 42 Rate 4.75% to 8.09% 3.34% to 33.33%

Notes to the Financial Statements for the year ended 30th November, 2008
(vi) Assets that have been retired from active use and held for disposal are stated at the lower of their net book value and net realisable value as estimated by the Company. Intangible Assets (i) Intangible assets comprises of trademarks. Trademarks are recorded at their acquisition cost and are amortised over the lower of their estimated useful life and period of ownership on straight line basis i.e. over a period of 3 years. (ii) Cost of application software not exceeding US$ 1 million is being charged to the Profit and Loss Account. (iii) Revenue expenditure on research and development is expensed as incurred. Capital expenditure on research and development is capitalised as fixed assets and depreciated in accordance with the depreciation policy of the Company. Impairment of Assets In accordance with Accounting Standard 28 (AS 28) on Impairment of Assets where there is an indication of impairment of the Companys assets, the carrying amounts of the Companys assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of the assets (or where applicable that of the cash generating unit to which the asset belongs) is estimated at the higher of its net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the assets and from its disposal at the end of its useful life. An impairment loss is recognised whenever the carrying amount of an asset or a cash-generating unit exceeds its recoverable amount. Impairment loss is recognized in the Profit and Loss Account. (d) Foreign Currency Transactions Transactions in foreign exchange are accounted for at the standard exchange rates as determined by the Company on a monthly basis. The exchange differences arising on foreign exchange transactions settled during the year are recognized in the Profit and Loss Account of the year. Monetary assets and liabilities in foreign exchange, which are outstanding as at the year end, are translated at year end at the closing exchange rate and the resultant exchange differences are recognized in the Profit and Loss Account. The premium or discount on forward exchange contracts is amortized on a straight line method over the period of the contracts. (e) Investments Long-term investments are stated at cost less any other than temporary diminution in value, determined separately for each individual investment. (f) Inventories Raw materials, work-in-process, finished goods and packing materials are valued at the lower of weighted average cost and net realizable value. Cost of finished goods and work-in-process includes cost of materials, direct labour and an appropriate portion of overheads. Stores and maintenance spares are valued at average cost. The net realizable value of work-in-process is determined with reference to the selling price of related finished goods. Raw materials and other supplies held for use in production of inventories are not written down below cost except in cases where material prices have declined, and it is estimated that the cost of the finished products will exceed their net realizable value. Finished goods expiring within 90 days (near-expiry inventory) as at the balance sheet date have been fully provided for. (g) Samples Physicians samples are valued at standard cost, which approximates actual cost. (h) Revenue Recognition Revenue from sale of goods is recognised when significant risks and rewards of ownership are transferred to the customers. Sales are net of sales returns and trade discounts. Revenue from services is recognized as and when services are rendered and related costs are incurred, in accordance with the terms of the specific contracts. Interest income is recognised on time proportionate basis. (i) Employee Benefits Short-term employee benefits: All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. These benefits include compensated absences such as paid annual leave and sickness leave. The undiscounted 43

Notes to the Financial Statements for the year ended 30th November, 2008
amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognized as an expense during the period. Long term employee benefits: i) Defined contribution plan: The Companys contribution towards employees Super Annuation Plan is recognized as an expense during the period. ii) Defined benefit plans: Provident Fund: Provident Fund contributions are made to a Trust administered by the Trustees. Trust makes investments and is settling members claims. Interest payable to the members shall not be at a rate lower than the statutory rate. Liability is recognized for any shortfall in the Plan assets vis--vis actuarially determined liability of the Fund obligation. Gratuity Plan: The Companys gratuity benefit scheme is a defined benefit plan. The Companys net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted. The present value of the obligation under such defined benefit plan is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date. Actuarial gains and losses are recognized immediately in the Profit and Loss Account. iii) Other Long-term employment benefits: Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as a liability at the present value of the defined benefit obligation at the balance sheet date. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date. (j) Leases Lease rentals under an operating lease, are recognized as an expense in the statement of Profit and Loss Account on a straight line basis over the lease term. (k) Voluntary Retirement Scheme (VRS) Liability under the VRS is accrued on the acceptance of the applications of the employees under the VRS scheme issued by the Company. Compensation paid in the earlier years is charged to the Profit and Loss Account over a period of five years. Compensation paid during the current year and previous year under the VRS is charged to the Profit and Loss Account. Taxation Income tax expense comprises current tax, deferred tax charge or credit and fringe benefits tax. Provision for current tax is based on the results for the year ended 30th November, 2008, in accordance with the provisions of the Income Tax Act, 1961. The final tax liability will be determined on the basis of the operations for the year 1st April, 2008 to 31st March, 2009, being the tax year of the Company. The deferred tax charge or credit is recognized using substantially enacted rates. In the case of unabsorbed depreciation or carried forward losses, deferred tax assets are recognised only to the extent there is virtual certainty of realisation of such assets. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future. Such assets are reviewed as at each balance sheet date to reassess realization. Provision for Fringe Benefits Tax is made on the basis of applicable rates on the taxable value of eligible expenses of the Company as prescribed under the Income Tax Act, 1961. 44

(l)

Notes to the Financial Statements for the year ended 30th November, 2008
(m) Earnings per Share Basic and diluted earnings per share are computed by dividing the net profit after tax attributable to equity shareholders for the year, with the weighted number of equity shares outstanding during the year. (n) Provisions and Contingencies The Company creates a provision when there exist a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Schedule 19 : Notes to the accounts

Rupees in Lakhs Rupees in Lakhs 30th Nov 2008 30th Nov 2007 1 2 Estimated amount of contracts on capital account to be executed and not provided for Contingent Liability (a) In respect of the guarantees given to banks on behalf of : (i) Its subsidiary company 2400.00 107.14 2400.00 119.59 (ii) Other guarantees (b) In respect of : (i) Excise duty 420.78 40.54 627.24 193.11 743.62 122.66 Amount Unascertainable 544.82 40.54 3946.78 193.11 743.62 122.66 Amount Unascertainable (ii) Customs duty (iii) Sales tax (iv) Service tax (v) Income tax (vi) Pending labour matters contested in various courts (vii) Claims against the Company not acknowledged as debts (c) DPEA claims (Refer Note 8) 3 Loans and advances include amounts due from: Duchem Laboratories Limited, a subsidiary company [Maximum aggregate amount due during the year Rs. 103.85 lakhs (Nov 2007 Rs. 149.29 lakhs)] Pfizer Pharmaceutical India Private Limited, a company under the same management [Maximum aggregate amount due during the year Rs. 15206.43 lakhs (Nov 2007 Rs. 6783.54 lakhs)] Pfizer Products India Private Limited, a company under the same management [Maximum aggregate amount due during the year Rs. 2853.83 lakhs (Nov 2007- Rs. 2007.10 lakhs)] Advertising and promotion includes cost of samples distributed. Auditors remuneration (including service tax, as applicable): For audit For other attestation services Out of pocket expenses 4177.68 4436.83

44.23

15206.43

5796.18

2853.05 490.52 31.46 26.11 0.51

1269.12 513.44 29.66 42.13 1.15 45

4 5

46
STOCKS AT COMMENCEMENT Unit of Measure Tonnes (-) (-) 5.00 (4.20) 5.00 (4.20) 63.36 (46.37) (-) Quantity Rupees in Lakhs Quantity Quantity Rupees in Lakhs Quantity Rupees in Lakhs (-) PRODUCTION SALES STOCKS AT CLOSE Litres 19429.09 (43850.65) No. in Millions 307.78 (305.08) 882165.06 (1070583.98) 18270.44 (15505.53) 2.16 (371.35) 0.04 (4.72) 65.70 (79.94) 3588.64 (3883.79) 0.10 (12.24) 106.50 (131.22) 0.01 (2.74) 142.14 (92.23) 110531.73 (97923.22) (-) (-) 340.75 (352.16) 1336.35 7598632.01 (1455.39) (7111298.86) 7304632.51 (7013127.30) 101220.01 (93212.48) (14.83) (613.10) (0.01) (0.09) 301.71 (351.81) 1900.75 (2019.03) 2138.91 (2126.31) 2033.27 (2097.32) (170.94) (244924.12) (259598.94) 102.79 269499.00 265231.00 1677.82 (1532.38) 25755.56 (23065.73) 19811.17 (17988.13) 1106.80 (938.73) (0.21) (7.01) (0.03) (0.35) 1073.43 (1115.58) 49424.54 (44633.19) 16307.07 (19429.09) 384.85 (307.78) 1027626.80 (882165.07) 26086.35 (18270.44) (2.16) (0.04) 88.65 (65.70) 85.01 (102.79) 3098.59 (1900.75) 1722.24 (1336.35) 202.30 (142.14) (0.01) (0.10) 303.72 (106.50) 5411.86 (3588.64) Litres Kgs Kgs Tonnes

6 a)

Information required by Paragraph 3 and 4 of Part II of Schedule VI to the Companies Act, 1956. Production, sales and stocks MANUFACTURING ACTIVITIES

Class of Goods

BULK (A)

FORMULATIONS (B) Injectables :

Liquid parentals

Tablets and capsules

Liquids

Solids

Ointments

Food products

Notes to the Financial Statements for the year ended 30th November, 2008

Feed supplements

Tonnes

TOTAL (B)

TRADING ACTIVITIES STOCKS AT COMMENCEMENT Quantity Rupees in Lakhs Quantity Rupees in Lakhs Quantity Rupees in Lakhs Quantity Rupees in Lakhs PURCHASES SALES STOCKS AT CLOSE

Class of Goods

Unit of Measure

FORMULATIONS (C) Injectables :

Liquid parentals

Litres

Powder parentals

Tablets and capsules

Liquids

Solids

Ointments

Feed supplements

Feed supplements

Miscellaneous

12389.30 (9268.13) Kgs 338.73 (322.73) No. in Millions 11.53 (23.41) Litres 383234.19 (488128.87) Kgs 14586.11 (20438.50) Kgs 5297.67 (3576.76) Tonnes 133.79 (86.76) Litres 143798.00 (5615.00) No. in Millions 0.65 (2.33)

37899.28 (32415.62) 2946.04 (2701.61) 43.04 (70.75) 947107.03 (2584947.77) 23638.70 (20543.06) 25011.35 (23430.23) 366.72 (290.34) 1182460.34 (722901.70) 3.15 (3.50)

8880.06 (12389.30) 451.34 (338.73) 18.92 (11.53) 166162.68 (383234.19) 17558.62 (14586.11) 4653.93 (5297.67) 102.27 (133.79) 175890.82 (143798.00) 1.67 (0.65)

TOTAL (C)

Notes to the Financial Statements for the year ended 30th November, 2008

TOTAL (A+B+C)

417.94 35857.04 (320.42) (38642.45) 226.27 3142.15 (217.81) (2767.48) 509.28 53.98 (781.17) (61.95) 763.16 962810.81 (923.43) (2565594.94) 99.54 26506.74 (147.24) (16402.70) 22.21 24860.27 (21.33) (26135.84) 219.90 351.25 (245.24) (360.53) 43.30 1246839.34 (2.04) (880407.00) 37.96 4.37 (81.42) (3.25) 2339.56 (2740.10) 5928.20 (6623.89)

1039.70 (981.63) 1604.23 (1707.43) 1544.38 (983.01) 1904.03 (4002.15) 186.47 (126.52) 100.39 (114.30) 137.63 (143.07) 460.93 (269.74) 311.89 (380.38) 7289.65 (8708.23) 7289.65 (8708.23)

3274.35 (2581.41) 6080.27 (5641.03) 2244.05 (2592.24) 4189.19 (9796.82) 352.09 (311.95) 487.98 (449.31) 370.66 (251.32) 811.98 (432.92) 472.14 (529.29) 18282.71 (22586.28) 67770.61 (67265.84)

323.48 (417.94) 256.33 (226.27) 914.57 (509.28) 489.12 (763.16) 110.97 (99.54) 22.59 (22.21) 133.35 (219.90) 69.12 (43.30) 128.13 (37.96) 2447.66 (2339.56) 7859.52 (5928.20)

Notes: 1. Figures of production are inclusive of production for captive consumption and quantities produced in the factories of third parties on loan licenses. 2. Figures for Production, Purchases and Closing Stock exclude Physicians Sample packs. 3. Stocks are after adjustments of write-offs. 4. Figures in brackets are in respect of the previous year.

47

Notes to the Financial Statements for the year ended 30th November, 2008
6 (b) Raw Materials Consumed Unit of Measure Tonnes Kgs Thousands 30th Nov 2008 Quantity Rupees in Lakhs 468.05 6780.82 69137.53 4773.79 2339.47 1715.44 5155.32 13984.02 30th Nov 2007 Quantity Rupees in Lakhs 471.51 5694.51 53516.82 2874.47 1963.11 1285.66 3432.41 9555.65 3297.00 6258.65 9555.65

Class of Goods Vitamins Codeine Phosphate Minipress Bulk Tablets Others TOTAL Whereof: Imported Indigenous TOTAL

Percentage 31 69 100

Percentage 4400.76 35 9583.26 65 13984.02 100

NOTE: Components and Spare Parts referred to in para 4 D(C) of Part II of Schedules VI to the Companies Act, 1956 are assumed to be those consumed in goods produced and not those used for maintenance of Plant and Machinery. 6 (c) Licensed and Installed Capacities Class of Goods Unit of Measure Installed Capacity 30th Nov 2008 Formulations Tablets & Capsules (Three shift basis) Liquids (Two shift basis) Solids (Two shift basis) Ointments (Single shift basis) Mn. Nos. Litres Kgs Kgs 3624 6960000 162400 232800 30th Nov 2007 3624 6960000 162400 232800

Notes: A. In terms of Press Note No. 4 (1994 series) dated 25th October, 1994 issued by the Department of Industrial Development, Ministry of Industry, Government of India and Notification No. S.O. 137(E) dated 1st March, 1999 issued by the Department of Industrial Policy and Promotion, Ministry of Industry, Government of India, industrial licensing has been abolished in respect of bulk drugs and formulations. B. The installed capacity is as certified by the Management and not verified by the Auditors, this being a technical matter. Rupees in Lakhs Rupees in Lakhs 30th Nov 2008 30th Nov 2007 (d) Value of imports calculated on CIF basis Raw materials Capital goods Finished goods (e) Expenditure in Foreign Currency Travel Royalty Service charges Professional charges Others 3972.64 31.27 1433.64 87.60 499.92 138.52 13.03 97.03 2600.19 12.45 871.33 75.87 506.54 178.32 91.08 169.87

48

Notes to the Financial Statements for the year ended 30th November, 2008
30th Nov 2008 (f) Remittance made on account of dividends in foreign currency Number of shareholders Number of shares held Net amount of dividends remitted in foreign currency Dividend in respect of the year ended 30th November, 2007 Dividend in respect of the year ended 30th November, 2006 4 12,302,937 3383.31 30th Nov 2007 4 12,302,937 2768.16

Rupees in Lakhs Rupees in Lakhs 30th Nov 2008 30th Nov 2007 (g) Earnings in foreign currency Exports (on FOB basis) Service income (Gross) 7 (a) Managerial remuneration under Section 198 of the Companies Act, 1956 Salaries and bonus Contribution to provident fund and other funds Perquisites Sitting fees Commission to Non-Whole-time Directors TOTAL Excludes gratuity, leave encashment and provident fund benefits as the same are based on actuarial valuation. 7 (b) Computation of net profits for commission payable to the Directors Net Profit as per Profit and Loss Account Income-tax Remuneration to Directors Depreciation charged in the accounts Net Profit / (Loss) on sale of fixed assets per Section 349 of the Companies Act, 1956 Provision for doubtful debts / advances Provision for diminution in value of investments Net (Profit) / Loss on sale of fixed assets per accounts Depreciation as computed under Section 350 of the Act(see note below) Bad debts and Doubtful Advances written off against provision Profit on Sale of Asset held for disposal Profit on sale of brands TOTAL 29912.02 11944.41 366.89 1112.19 16.84 330.89 43683.24 (16.84) (1112.19) (20.81) (21095.23) 21438.17 33892.54 11120.18 298.48 958.46 92.38 510.32 0.11 46872.47 (92.38) (958.46) (282.90) (27369.29) 18169.44 141.77 2156.46 284.75 39.62 30.52 2.00 10.00 366.89 46.37 2160.85 219.03 35.40 31.95 2.10 10.00 298.48

Commission to two Directors, who are not in whole time employment and who are resident in India, the aggregate not being in excess of 1% of net profits as computed above, as approved by the members at the 53rd AGM held on 29th April, 2004. 10.00 10.00 Commission approved by the Board of Directors at meeting held on 30th January, 2009 10.00 10.00 The Company depreciates its fixed assets based on estimated useful lives which are lower or equal to the implicit estimated useful lives prescribed by Schedule XIV of the Act. Thus, the depreciation charged in the books is higher than that prescribed as the minimum by the Act. Hence, this higher value has been considered as a deduction for the computation of managerial remuneration above. 49

Notes to the Financial Statements for the year ended 30th November, 2008
8 Drugs Prices Equalisation Account (DPEA) (a) Oxytetracycline and Other Formulations In respect of certain price fixation Orders of 1981 of the Government of India, the Supreme Court vide its Order of 22nd March, 1993 held that, pending disposal of the Companys Writ Petition in the High Court of Mumbai, the Company may deposit 50% of the impugned amount of Rs. 87.61 lakhs, less Rs. 19.90 lakhs already deposited, with the Union of India before 15th May, 1993 which has been done. In the event that the Company succeeds before the High Court of Mumbai, this amount will be returned within one month from the date of the decision of the High Court with interest at the rate of 15% per annum. However, if the Company loses the Writ Petition, the balance amount of Rs. 43.80 lakhs with interest at the rate of 15% per annum will have to be paid to the Government. (b) Multivitamin Formulations In respect of a certain price fixation Orders of 1986 of the Government of India, the Supreme Court vide its Order dated 3rd December, 1992, held that, pending disposal of the Companys Writ Petition in the High Court of Mumbai, the Company may deposit 50% of the impugned amount of Rs. 98.00 lakhs with the Union of India before 31st January, 1993 which has been done. In the event that the Company succeeds before the High Court of Mumbai, this amount will be returned within one month from the date of the decision of the High Court with interest at the rate of 15% per annum. However, if the Company loses the Writ Petition, the balance amount of Rs 49.00 lakhs with interest at the rate of 15% per annum will have to be paid to the Government. (c) Protinex In yet another case, the Company had challenged in 1986 a price fixation Order of the Government of India by a Writ Petition before the High Court of Mumbai. The Honourable Court passed an ad interim and interim order staying the impugned order. The Petition, while it was still pending for hearing and final disposal, was withdrawn in 1989 on redressal of the Companys grievances. After protracted correspondence on the subject, in 1993 the Government raised a demand of Rs 81.83 lakhs on the Company for the period April 1986 to July 1989 and directed the Company to deposit the same into the DPEA. Thereafter, the Drug Prices Liability Review (DPLR) Committee sent a letter dated 15th February, 1996 seeking the Companys submission/ representation against the reduced claim amount of Rs 33.87 lakhs for the period April 1986 to August 1987 as intimated to the DPLR Committee by the Government of India. The Company has made its submissions to the DPLR Committee vide its letter of 29th March, 1996 claiming that no amount whatsoever is due and payable having regard to the facts and relevant material of the case. In the meantime, the Department of Chemicals and Petrochemicals vide their letter dated 11th February, 1997 raised an additional demand of Rs 178.56 lakhs for the earlier period of February 1984 to March 1986 over and above the revised claim of Rs. 33.87 lakhs for the period April 1986 to August 1987. Thus, the total demand raised now stands revised to Rs. 212.43 lakhs. The DPLR Committee had, vide its letter dated 24th February, 1997 invited the Company to make its submissions/ representations against the above said claim. The Company has made its submissions to the DPLR Committee vide its letter dated 14th May, 1997 claiming that no amount whatsoever is due and payable having regard to the facts and relevant material of the case. Pursuant to the submissions made by the Company, the DPLR Committee directed by an Order on 17th November, 1998 that clarifications should be obtained from the Mumbai High Court on whether the Interim Stay granted in the Civil Writ Petition Number 2368 of 1996 is applicable to this matter. (This Writ Petition is filed by OPPI and IDMA jointly against any Notice issued by the Government of India after 25th August, 1987 to any member of the OPPI or IDMA, initiating proceedings for recovery of an amount demanded in respect of a period prior to that date). On a Notice of Motion filed by the Company in the said Writ Petition, the Mumbai High Court has granted ad interim Order that pending the hearing and final disposal of this Notice of Motion, further proceedings in the said Case No 49/1996 pending before the said Drug Prices Liability Review Committee be stayed. (d) Vitamin and Other Formulations The Government has arbitrarily determined the liability of the Company at Rs. 1466 lakhs being the difference in price in respect of Vitamin and other formulations sold by the Company during the years 1983 to 1989. The Company has repudiated 50

Notes to the Financial Statements for the year ended 30th November, 2008
the liability on this account. The Companys Solicitors have advised that the repudiation by the Company is legally sustainable. The Government has pursued the matter. The Company maintains its position that the claim by the Government is not legally sustainable. (e) Chloramphenicol The Government has arbitrarily determined the liability of the Company at Rs 145 lakhs and Rs. 14 lakhs being the difference between the price of bulk drug Chloramphenicol powder and Chloramphenicol Palmitate respectively allowed in the formulation price and actual procurement price for the period 1979 to 1988. The Company has repudiated the liability on this account as advised by the Companys Solicitors. The Company has also obtained a Stay order from the Honourable High Court of Mumbai against the demand. Pursuant to the submissions made by the Company, the DPLR Committee directed by an Order on 17th November, 1998 that clarifications should be obtained from the Mumbai High Court on whether the Interim Stay granted in the Civil Writ Petition Number 2368 of 1996 is applicable to this matter. (This Writ Petition is filed by OPPI and IDMA jointly against any Notice issued by the Government of India after 25th August, 1987 to any member of the OPPI or IDMA, initiating proceedings for recovery of an amount demanded in respect of a period prior to that date). On a Notice of Motion filed by the Company in the said Writ Petition, the Mumbai High Court has granted ad interim Order that pending the hearing and final disposal of this Notice of Motion, further proceedings in the said Case No 23/95 pending before the said Drug Prices Liability Review Committee be stayed. (f) Pursuant to the repeal of DPCO 1970, erstwhile Warner-Hindustan Limited (merged with Parke-Davis (India) Limited in 1988 and Parke Davis (India) Limited merged with Pfizer Limited in 2003) had classified ISOKIN TABLETS, ISOKIN LIQUID AND PYRIDIUM TABLETS as decontrolled products under the DPCO 1979. The categorization was, however, challenged by the Government in 1984 and a demand of Rs. 113 lakhs was raised against the Company. Against this demand an excise duty set off of Rs. 7 lakhs was allowed to the Company and a final demand of Rs. 106 lakhs was raised in 1987. The Company had deposited an amount of Rs.30 lakhs in February 1987 and Rs.25 lakhs in May 1990 totaling to an aggregate of Rs.55 lakhs in full and final settlement of the demand, as per the arguments set forth by the Company. The Government subsequently raised a demand of Rs.117 lakhs towards interest on principal demand. (i.e. interest of Rs. 43 lakhs for Pyridium for the period 1982 to August 1995 and Rs.74 lakhs for Isokin for the period 1982 to June 1997). The Company filed a Writ Petition in the Andhra Pradesh High Court in September 1997 for staying all further proceedings against the Company. The High Court stayed the demand in respect of collection of interest but directed the Company to deposit the balance demand of Rs. 51 lakhs (which amount was deposited in November 1997). (g) Multivitamin Formulations: The Government has arbitrarily raised a demand of Rs.182.38 lakhs on account of alleged overpricing of certain multivitamin formulations marketed by erstwhile Pharmacia Healthcare Limited (merged with Pfizer Limited) for the period 1983 to 1986. The Company has repudiated the liability on this account as advised by its solicitors. The Company filed a Writ Petition No.814 of 1992 in the High Court at Mumbai. The Supreme Court of India, in a Special Leave Petition filed by the Company held that pending disposal of Writ Petition filed before the High Court at Mumbai, the Company shall furnish an undertaking in respect of 50% of its liability and shall deposit the balance 50% aggregating to Rs. 91.19 lakhs. This amount has been deposited with the Government of India and is included under the head Loans and advances. Pursuant to a Transfer Petition (Civil) no 475-496 of 2003 filed under Article 139A(1) of the Constitution of India, all pending writ petitions in respect of DPEA liabilities are now to be transferred to the Supreme Court to be heard and finally decided by the Supreme Court of India. Consequently as a result of the said transfer petition, Writ Petitions referred to in (a), (b), (c), (e), (f) and (g) above will now be heard and disposed off by the Supreme Court. In view of matters (a), (b), (c), (e), (f) and (g) being subjudice, the legal opinion being in favour of the Company, and based on the assessment of the Management, no further provision is considered necessary over and above the sum of Rs.198.37 lakhs which has been paid off in earlier years. The Company would continue to seek legal recourse in all the above matters.

51

Notes to the Financial Statements for the year ended 30th November, 2008
Rupees in Lakhs Rupees in Lakhs 30th Nov 2008 30th Nov 2007 9 Expenditure on Research and Development during the year Capital expenditure Revenue expenditure charged to the Profit and Loss Account 26.91 2808.29 2835.20 Note: Research and development expenditure includes those incurred while rendering services to group companies. 30th Nov 2008 10 Earnings per Share Earnings per share has been computed as under: (a) Profit after Taxation (Rs. Lakhs) (Net profit attributable to Equity Shareholders) (b) Number of Equity Shares outstanding at the end of the year (c) Earnings per share (Face value Rs. 10/- per share) (a) / (b) (Basic and diluted) 11 Disclosure for operating leases under Accounting Standard 19 Leases (a) Where the Company is a Lessee: The Company has taken various residential/godowns/office premises (including furniture and fittings, therein as applicable) under operating lease or leave and licence agreements. These are generally not non-cancellable and range between 11 months and 3 years under leave and licence, or longer for other leases and are renewable by mutual consent on mutually agreeable terms. The Company has given refundable interest free security deposits in accordance with the agreed terms. (ii) Lease payments are recognized in the Profit and Loss Account under Rent in Schedule 16. (b) Where the Company is a Lessor: (i) The Company has let out its owned property during the year on operating lease. The information in respect of the same is as follows. Rupees in Lakhs Rupees in Lakhs 30th Nov 2008 30th Nov 2007 744.63 744.63 Gross book value Accumulated depreciation 140.81 128.68 12.14 12.14 Depreciation for the lease period 92.29 93.00 Rental income (ii) Lease Income recognised in the Profit and Loss Account for the year in respect of sub-let property is Rs. 541.01 lakhs (Nov 2007 - Rs. 519.76 lakhs) 12 Assets held for disposal The Company has identified the assets situated at Ankleshwar as retired from active use consequent to its ceasing manufacturing operations at this location. These assets are held for disposal and stated at lower of net book value and estimated net realizable value as reported under Other current assets (Schedule 9). Rupees in Lakhs Asset Head Original Cost Accumulated Written Down Value Depreciation 30th Nov 2008 30th Nov 2007 30th Nov 2008 30th Nov 2007 30th Nov 2008 30th Nov 2007 Freehold Land 20.28 20.28 20.28 20.28 Freehold Building 165.82 165.82 136.48 136.48 29.34 29.34 Total 186.10 186.10 136.48 136.48 49.62 49.62 13 Stock of Physicians samples is included under Loans and advances (Schedule 10) Rs. 226.86 lakhs (Nov 2007 Rs. 129.58 lakhs). 52 (i) 30th Nov 2007 27.64 2429.52 2457.16

29912.02 29,841,440 Rs.100.24

33892.54 29,841,440 Rs.113.58

Notes to the Financial Statements for the year ended 30th November, 2008
14 The following disclosures are made for the amounts due to the Micro Small and Medium enterprises: Rupees in Lakhs 30th Nov 2008 172.76 Rupees in Lakhs 30th Nov 2007 105.36

Principal amount payable to suppliers at the year end Amount of interest paid by the Company in terms of section 16 of the MSMED, along with the amount of the payment made to the supplier beyond the appointed day during the accounting year Amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under the MSMED Amount of interest accrued and remaining unpaid at the end of the accounting year 32.17 17.33 On the basis of information and records available with the Company, the above disclosures are made under Current liabilities (Schedule 11) in respect of amounts due to the Micro, Small and Medium enterprises, who have registered with the competent authorities. This has been relied upon by the auditors. 15 Disclosures as required by the Accounting Standard 18 on Related Party Disclosures are given below: I Names of Related Parties and description of Relationships A Parties where control exists: Companies collectively exercising Pfizer Corporation, Panama significant influence Warner-Lambert Company, LLC, USA Parke-Davis & Company, LLC, USA Pharmacia Corporation, USA [Collectively holding 41.23% of the aggregate of equity share capital of the Company] Pfizer Inc., USA (Ultimate holding company) Subsidiary Company: Duchem Laboratories Limited (100% Shares are held by the Company as at the year end) Fellow Subsidiaries: (with whom transactions have taken place during the year) Pfizer Italiana SPA Pfizer Animal Health SA, Belgium Pfizer Asia Manufacturing Pte Limited, Singapore Pfizer Asia Pacific Pte Limited, Singapore Pfizer Australia Pty Limited, Australia Pfizer Corporation Hong Kong Limited, Hong Kong Pfizer Enterprises SARL, Luxembourg Pfizer Export Company, Ireland Pfizer Global Trading, Ireland Pfizer Inc., Philippines Pfizer Italia S.r.l, Italy Pfizer Japan Inc., Japan B Executive Committee Members Mr. Kewal Handa * Dr. B.M. Gagrat * Mr. S. Madhok Ms. Dipali Talwar Mr. Venkat Iyer Mr. S. Venkatesh Dr. Chandrashekhar Potkar * Executive Directors on the Board Pfizer Limited, United Kingdom Pfizer Limited, Taiwan Pfizer Laboratories (Proprietary) Limited, South Africa Pfizer Overseas LLC., USA Pfizer Pharmaceutical India Private Limited, India Pfizer Pharmaceuticals Korea Limited, Korea Pfizer Singapore Trading Pte Limited, Singapore Pfizer Private Limited, Singapore Pfizer Products India Private Limited, India Pfizer International LLC., USA Pfizer Products Inc, USA Pfizer Agricare Sdn Bhd, Malaysia Mr. S. Sridhar (w.e.f. 5th June, 2008) Mr. Partha Ghosh (w.e.f. 1st August, 2008) Mr. Anjan Sen (w.e.f. 1st August, 2008) Ms. Hiroo Mirchandani (w.e.f. 1st August, 2008) Mr. Uday Mohan (w.e.f. 1st October, 2008) Mr. Yugesh Goutam* (resigned w.e.f. 31st May, 2008) Mr. M.G. Rao (resigned w.e.f. 10th November, 2007)

53

Notes to the Financial Statements for the year ended 30th November, 2008
II Transactions during the year and Balances Outstanding as at the year end with the Related Parties are as follows: Rupees in Lakhs Nature of Transactions 30th Nov 2008 Ultimate Companies Subsidiary Fellow Holding exercising Company Subsidiaries Company significant influence 323.44 47.26 25.83 72.49 104.79 3383.31 108.54 0.44 280.54 362.02 36.81 2400.00 95.99 71.56 1738.83 1843.69 1434.43 1411.27 369.30 216.26 20.55 74.88 28150.00 17400.00 1255.44 19159.51 1743.97 30th Nov 2007 Ultimate Companies Subsidiary Fellow Holding exercising Company Subsidiaries Company significant influence 303.58 22.34 29.17 68.72 24.79 164.95 2768.16 169.79 7.27 348.09 434.76 44.23 2400.00 43.19 49.58 1809.99 1821.91 827.40 1051.66 402.11 0.43 273.33 294.17 55.42 16390.52 10075.52 546.54 7691.82 1271.88 -

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Sale of finished goods (net of returns) Sale of bulk materials Service income Recovery of expenses Purchase of finished goods Purchase of raw / bulk materials Royalty expense Write back Expenses reimbursed Dividend in respect of the year ended 30th November, 2007 / 30th November, 2006 Reimbursement of civil work Rental income Loans given Loans repaid Interest received on loans given Short term advances given Short term advances repaid / given Outstanding as at the year end Due from Outstanding as at the year end Due to Guarantees given to banks on behalf of Subsidiary Company, outstanding as at the year end

Executive committee members Nature of Transactions 1 2 3 4 5 III * * Remuneration Rent paid for residential flats Deposits paid Amounts paid on behalf and recovered Deposits outstanding as at the year end 30th Nov 2008 Key Management Personnel 677.00 44.06 1308.75

Rupees in Lakhs 30th Nov 2007 Key Management Personnel 597.40 46.90 298.00 0.26 1317.74

Others Services are rendered to Duchem Laboratories Limited by providing resources like manpower, assets, etc. for which no amount is recovered from Duchem Laboratories Limited. Under the terms of the agreement between Pfizer Inc. (Ultimate Holding Company) and the Company for conducting clinical trials and studies in India, Pfizer Inc., has agreed to indemnify, defend and hold the Company and its directors, employees and agents harmless against any and all liability, loss or damage they may suffer as a result of any claims, demands, costs, penalties, fines or judgments incurred or imposed against it arising out of any clinical trial and study or otherwise pursuant to the agreement.

54

Notes to the Financial Statements for the year ended 30th November, 2008
IV Details of material transactions during the year Rupees in Lakhs 30th Nov 2008 a) Sale of finished goods (Net of returns) Pfizer Laboratories (Proprietary) Limited, South Africa Pfizer Pharmaceutical India Private Limited, India b) Sale of bulk materials Pfizer Global Trading, Ireland c) Service income Pfizer Limited, United Kingdom Pfizer International LLC, USA Pfizer Inc, USA d) Recovery of expenses Pfizer Pharmaceutical India Private Limited, India Pfizer Products India Private Limited, India e) Purchase of finished goods Pfizer Export Company, Ireland Pfizer Overseas LLC., USA Pfizer Global Trading,Ireland Pfizer Singapore Trading Pte Limited, Singapore Pfizer Enterprises SARL, Luxembourg f) Purchase of raw / bulk materials Pfizer Export Company, Ireland g) Royalty expense Warner-Lambert Company LLC, USA Parke-Davis & Company LLC, USA Pfizer Products Inc, USA h) Expenses reimbursed Pfizer International LLC Pfizer Private Limited, Singapore Pfizer Corporation Hong Kong Limited, Hong Kong Pfizer Agricare Sdn Bhd, Malaysia Pfizer Pharmaceutical India Private Limited, India Pfizer Products India Private Limited, India i) Dividend Paid Pfizer Corporation, Panama j) Loans given Pfizer Pharmaceutical India Private Limited, India Pfizer Products India Private Limited, India k) Loans repaid Pfizer Pharmaceutical India Private Limited, India Pfizer Products India Private Limited, India l) Interest received on loans given Pfizer Pharmaceutical India Private Limited, India Pfizer Products India Private Limited, India m) Reimbursement of civil work Pfizer Pharmaceutical India Private Limited, India n) Remuneration to Key Management Personnel Kewal Handa Dr B.M. Gagrat Yugesh Goutam 36.00 59.99 71.56 1298.84 431.89 323.44 1723.07 387.88 195.20 230.70 428.67 160.08 1411.27 87.99 369.30 138.52 21.68 27.60 2578.43 24500.00 3650.00 15100.00 2300.00 1116.66 138.78 20.55 217.87 79.30 57.72 Rupees in Lakhs 30th Nov 2007 43.19 49.58 1606.57 149.25 303.58 54.69 1747.80 144.08 264.05 163.55 133.15 1027.69 73.56 91.39 402.11 100.92 93.46 11.59 23.28 2109.63 11915.00 4475.52 6450.00 3625.52 449.93 96.61 294.17 184.75 68.00 65.59 55

Notes to the Financial Statements for the year ended 30th November, 2008
16 Disclosures as required by the Accounting Standard 17 on Segment Reporting are given below: Business Segments (Refer Note 1 below) Rupees in Lakhs 30th Nov 2008 30th Nov 2007 Pharma- Animal Services Total PharmaAnimal Services Total ceuticals Health ceuticals Health Segment revenue External sales and services 59478.31 8320.03 2163.68 69962.02 60450.41 6840.60 2101.22 69392.23 Total Segment revenue 59478.31 8320.03 2163.68 69962.02 60450.41 6840.60 2101.22 69392.23 Segment results 15841.74 1776.30 770.69 18388.73 17529.85 1094.12 252.27 18876.24 Unallocated corporate (expenses) / income (net) (3096.08) 24416.88 15292.65 43293.12 Operating profit Interest expense and bank charges (236.79) (243.59) Interest income 6009.89 3698.23 Income tax (11944.41) (11120.18) Exceptional Items - net 20790.68 20790.68 (1735.04) (1735.04) Net profit 29912.02 33892.54 Other information Segment assets 22052.84 3808.31 3997.31 29858.46 19920.63 2925.50 790.12 23636.25 Unallocated corporate assets 79756.52 63021.67 Total assets 109614.98 86657.92 Segment liabilities 10521.61 543.73 183.84 11249.18 7875.89 723.01 190.72 8789.62 Unallocated corporate liabilities 8409.32 13003.84 Total liabilities 19658.50 21793.46 Business Segments (Refer Note 1 below) Capital expenditure 109.05 3.89 2236.72 2349.66 437.37 13.42 883.82 1334.61 Depreciation / Amortisation 543.01 10.92 24.08 578.01 468.91 35.78 504.69 Geographical Segments (Refer Note 2 below) 30th Nov 2008 India Other Total Countries 67663.79 2298.23 69962.02 108572.31 1042.67 109614.98 2533.96 - 2533.96 Rupees in Lakhs 30th Nov 2007 India Other Total Countries 67244.65 2147.58 69392.23 85999.30 658.62 86657.92 1397.98 - 1397.98

Segment revenue - external sales & services Carrying amount of segment assets Capital expenditure Notes: 1

Business Segments: The business operations of the Company comprise Pharmaceuticals, Animal Health and Services. The business segments have been identified and reported taking into account, the nature of products and services, the differing risks and returns and the internal financial reporting systems. The Pharmaceuticals business comprises of manufacturing of bulk drugs and formulations, trading of formulations and also includes rendering of marketing services. The Animal Health business has a presence primarily in the large animal health and poultry market segments, and also includes rendering of marketing services. Services - Clinical Development Operations primarily include conducting clinical trials, new product development and undertaking comprehensive data management for new drug development.

Geographical Segments: For the purpose of geographical segments the consolidated sales are divided into two segments - India and other countries.

56

Notes to the Financial Statements for the year ended 30th November, 2008
17 Disclosure relating to provisions Personnel related provisions Personnel related provision at the beginning of the year have been settled based on completion of negotiations and execution of the new contract. The Company has made provision for pending assessments in respect of duties and other levies, the outflow of which would depend on the outcome of the respective events. The movement in the above provisions are summarised as under: Rupees in Lakhs 30th Nov 2008 Contingency Personnel 66.60 201.68 37.43 0.16 103.87 201.68 30th Nov 2007 Contingency Personnel 137.13 360.18 34.00 2.96 101.57 66.60 74.31 232.81 201.68

Opening balance Additions Utilisation / Transfers Reversals Closing balance

18 The Companys international transactions with related parties are at arms length as per the independent accountants report for the year ended 31st March, 2008. Management believes that the Companys international transactions with related parties post 31st March, 2008 continue to be at arms length and that the transfer pricing legislation will not have any impact on these financial statements. 19 The Companys promoters announced the global divestiture of the Consumer Healthcare Business in June 2006 to Johnson & Johnson. Consequently, the global closure was fixed on 20th December, 2006. Pursuant to the approval of the Board of Directors at their meeting held on 31st December, 2007 the Company has transferred its right to use the trademark / license pertaining to Benadryl, Caladryl, Benylin and Listerine and certain assets related thereto, for a total consideration of Rs. 21485.10 lakhs to Johnson & Johnson Limited. All the remaining products under the Consumer Healthcare Portfolio continues to be with the Company. Accordingly, profit on this transfer amounting to Rs. 21095.23 lakhs has been recognized in the current year and accounted under the head Exceptional items Net. 20 The Company uses forward contracts to hedge its risks associated with foreign currency fluctuations having underlying transaction and relating to firm commitments or highly probable forecast transactions. The Company does not enter into any forward contract which is intended for trading or speculative purposes. Currency USD Number of Contracts 1 Buy Amount 500000 Indian Rupees Equivalent 25110000

Foreign currency exposures, not hedged by derivative instruments or otherwise are USD 5.80 (in lakhs) [2007 : USD 7.95 (in lakhs)] equivalent to Rs 291.28 lakhs (2007 : Rs 314.73 lakhs). The break-up of these exposures is tabulated below : 30th Nov 2008 Nature of exposure Accounts receivable Accounts payable Net Foreign Currency (USD in lakhs) 21.30 27.10 5.80 Rs in lakhs 1067.15 1358.43 291.28 30th Nov 2007 Foreign Currency (USD in lakhs) 11.73 19.68 7.95 Rs in lakhs 464.91 779.64 314.73

21 The Company has with effect from 1st December, 2007, adopted Accounting Standard 15, Employee Benefits (revised 2005). Consequently an additional liability for employee benefits based on actuarial valuation as at 1st December, 2007 amounting to Rs 455.69 lakhs (net of deferred tax credit of Rs 234.65 lakhs), has been adjusted against General reserve as at 1st December, 2007. 57

Notes to the Financial Statements for the year ended 30th November, 2008
Defined Benefit Plans: Rupees in Lakhs As at 30th Nov 2008 Compensated Provident Absences Fund

Gratuity

Changes in present value of obligations Projected benefit obligation, at beginning of the year 2863.59 1719.84 9084.11 Current service cost 186.85 191.65 Interest cost 223.43 132.93 Benefits paid (319.86) (232.42) (1228.78) Actuarial (gain) / loss on obligation 345.37 420.61 33.68 Employers contributions 415.66 Plan participants contributions 529.59 Projected benefit obligation, at the end of the year 3299.38 2232.61 8834.26 Changes in fair value of plan assets 2489.64 1434.46 8210.58 Fair value of plan assets at beginning of the year Expected return on plan assets 229.17 122.76 645.50 Contributions Benefits paid (1228.78) Actuarial gain / (loss) on plan assets 169.06 1.97 (376.45) Employers contributions 415.66 Plan participants contributions 529.59 Fair value of plan assets at the end of the year 2887.87 1559.19 8196.10 Net asset / (liability) recognized in the Balance Sheet Projected benefit obligation, at the end of the year (3299.39) (2232.61) (8834.26) Fair value of plan assets at end of the year 2887.87 1559.19 8196.10 Net asset / (liability) recognized in the Balance Sheet (411.52) (673.42) (638.16) Expense recognized in the Profit and Loss Account Current service cost 186.85 191.65 Interest cost 223.43 132.93 61.08 Expected return on plan assets (229.17) (122.76) Net actuarial (gain) / loss recognized 176.32 418.63 (178.29) Expense recognized in the Profit and Loss Account 357.43 620.45 (117.21) Balance Sheet reconciliation Opening net liability 451.76 273.79 117.97 Transition liability adjusted in General Reserve at the beginning of the year (77.81) 11.59 755.56 Expense as above 357.43 620.46 (117.21) Benefits paid (319.86) (232.42) (118.16) Amount recognized in the Balance Sheet 411.52 673.42 638.16 Actuarial assumptions Discount rate 7.50% 7.50% 7.50% Annual increase in compensation 5% to 9.25 % 5% to 9.25 % 5% to 9.25 % Expected rate of return on plan assets 8.00 % 8.00 % The estimates of annual increase in compensation take account of inflation and supply and demand condition in the employment market. This being the first year of adoption of accounting standard AS 15 (Revised), comparative figures for previous year have not been provided. Defined Contribution Plan: During the year, the Company has contributed Rs 22.01 lakhs towards Employees Superannuation Fund. 22 Prior year figures have been regrouped wherever necessary to conform to current years presentation.
For and on behalf of the Board R A SHAH Chairman KEWAL HANDA Managing Director P SHAH B M GAGRAT (Dr) Mumbai, 30th January, 2009 PRAJEET NAIR

Directors Company Secretary

58

Information required as per Part IV of Schedule VI to the Companies Act, 1956

Balance sheet abstract and Companys general business profile I Registration details Registration No 8311 State code 11 Balance sheet date 30 11 2008 II Capital raised during the year (Amount in Rupees thousand) Public issue Rights issue Nil Nil Bonus issue Private placement Nil Nil III Position of mobilisation and deployment of funds (Amount in Rupees thousand) Total liabilities Total assets 8995648 8994648 Source of funds Share Capital Reserves and surplus 298432 8697216 Secured loans Unsecured loans Nil Nil Application of funds Net fixed assets Investments 830594 5025 Deferred tax asset (net) Net current assets 226715 7933314 Miscellaneous expenditure Accumulated losses Nil Nil IV Performance of the Company (Amount in Rupees thousand) Turnover (including other income) Total expenditure 7711276 5604701 Profit before tax and exceptional items + 2106575 Profit before tax + Profit after tax + 4185643 2991202 Earnings per share (Rupees) Dividend rate 100.24 125% V Generic names of three principal products of the Company (as per monetary terms) Item code No (ITC Code) 30044005 Product description Syrup based on codeine phosphate Item code No (ITC Code) 30045005 Product description B group vitamins (B-Complex) with Vitamin C Item code No (ITC Code) 30049011 Product description Other anti-inflammatory (non-steroid) formulations
For and on behalf of the Board R A SHAH KEWAL HANDA P SHAH B M GAGRAT (Dr) Mumbai, 30th January, 2009 PRAJEET NAIR Chairman Managing Director Directors Company Secretary

59

Statement pursuant to Section 212 of the Companies Act, 1956.

Name of the Subsidiary Company Financial year Number of equity ending of the shares held Subsidiary Company For the Financial Year of the Subsidiary Profits/(Losses) Profits/(Losses) so far as it so far as it concerns the concerns the members of members of the Holding the Holding Company and Company and not dealt with dealt with in in the Holding the Holding Companys Companys Accounts(Rs. in Accounts(Rs. in Lakhs) Lakhs) 45.20 41.00 For the Previous Financial Years since it became a Subsidiary Profits/(Losses) Profits/(Losses) so far as it so far as it concerns the concerns the members of members of the Holding the Holding Company and Company and not dealt with dealt with in in the Holding the Holding Companys Companys Accounts(Rs. in Accounts(Rs. in Lakhs) Lakhs) 107.56 (365.00)

Duchem Laboratories Limited

30.11.08

100%

For and on behalf of the Board R A SHAH KEWAL HANDA P SHAH B M GAGRAT (Dr) Mumbai, 30th January, 2009 PRAJEET NAIR Chairman Managing Director

Directors Company Secretary

60

DUCHEM LABORATORIES LIMITED (Annual Accounts of Subsidiary Company) DIRECTORS REPORT

Your Directors have pleasure in presenting this 50th Annual Report together with the audited statement of accounts of the Company for the year ended November 30, 2008. FINANCIAL RESULTS Rupees in Lakhs Year ended Year ended November 30, November 30, 2008 2007 Profit/(Loss) before taxation Less : Current tax Profit/(Loss) after taxation Balance of Loss from previous years Balance of Loss carried to Balance Sheet OPERATIONS The Net Sales of the Company for the year under review is Rs. 399 lakhs as compared to Rs. 403 lakhs for the previous year. The operations for the period reflect a Net Profit of Rs. 86 lakhs as against Net Profit of Rs.108 lakhs for the previous year. DIVIDEND Your Directors do not recommend any dividend for the year ended November 30, 2008. DIRECTORS In accordance with the Articles of Association of the Company, Mr. Uday Mohan, Director will retire by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Since the operations of the Company is restricted to trading, the requirement of Section 217 (1) (e) of the Companies Act, 1956 97 11 86 (257) (171) 122 14 108 (365) (257) 3. 2. read with the Companies (Disclosure of Particulars in the report of the Board of Directors) Rules, 1998 in respect of Conservation of Energy & Technology Absorption are not applicable. The Foreign Exchange earnings and expenditure during the year was Rs. Nil as against Rs. Nil for the previous year. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to section 217 (2AA) of the Companies Act, 1956 (the Act) your Directors confirm the following: 1. In the preparation of the Annual Accounts, the applicable accounting standards have been followed. Your Directors have 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 period. Your Directors have 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. Your Directors have prepared the attached Statement of Accounts for the year ended November 30, 2008 on a going concern basis.

4.

AUDITORS M/s. B S R & Co., the Companys Auditors will retire at the conclusion of the ensuing Annual General Meeting. They have given their consent to continue to act as Auditors of the Company for the current year, if re-appointed.

On behalf of the Board of Directors B M GAGRAT (Dr) Chairman

Mumbai, January 29, 2009

61

Auditors Report
To the Members of Duchem Laboratories Limited We have audited the attached balance sheet of Duchem Laboratories Limited (the Company) as at 30 November 2008, the related profit and loss account and the cash flow statement of the Company 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. 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. As required by the Companies (Auditors Report) Order, 2003 (the Order) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, (the Act) we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to above, we report that: a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; the balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account; in our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Act; on the basis of written representations received from the directors of the Company as at 30 November 2008 and taken on record by the Board of Directors, we report that none of the directors is disqualified as at 30 November 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act; and 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 Act, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: i) in the case of the balance sheet, of the state of affairs of the Company as at 30 November 2008; ii) in the case of the profit and loss account, of the profit for the year ended on that date; and iii) in the case of the cash flow statement, of the cash flows for the year ended on that date. For B S R & Co. Chartered Accountants Mumbai 29 January 2009 Bhavesh Dhupelia Partner Membership No: 042070

Annexure to the Auditors Report 30 November 2008

(Referred to in our report of even date) (i) The Company did not have fixed assets at any time during the year. Accordingly, paragraph 4(i) of the Order is not applicable to the Company. (ii) (a) The inventory, except goods-in-transit and stocks lying with third parties, has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year-end, written confirmations have been obtained. (b) The procedures for the physical verification of inventories 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 verification between the physical stocks and the book records were not material and have been dealt with in the books of account. (iii) According to the information and explanations given to us, we are of the opinion that there are no companies, firms or other parties covered in the register required to be maintained under Section 301 of the Act. (iv) In our opinion, and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories are for the Companys specialized requirements and suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and with regard to the sale of goods. According to the information and explanation provided to us, during

b)

c)

d)

e)

f)

62

the year under audit, the Company neither purchased any fixed assets nor did it provide any services. We have not observed any major weakness in the internal control system during the course of the audit. (v) In our opinion, and according to the information and explanations given to us, there are no contracts and arrangements the particulars of which need to be entered into the register required to be maintained under Section 301 of the Act. The Company has not accepted any deposits from the public. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(x)

The Company has accumulated losses at the end of the financial year aggregating Rs 171.24 lakhs which is in excess of 50% of its net worth. The Company has not incurred cash losses in the financial year and in the immediately preceding financial year. The Company did not have any outstanding dues to any financial institution, banks or debenture holders during the year. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xi)

(vi) (vii)

(xii)

(viii) According to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records under Section 209 (1)(d) of the Act for any of the products of the Company. (ix) (a) According to the information and explanations given to us and on the basis of our examination of the books of account of the Company, the Company has been generally regular in depositing undisputed statutory dues including Income tax, Sales tax and other material statutory dues with the appropriate authorities. As explained to us, the Company did not have any dues on account of Investor Education and Protection Fund, Wealth tax, Service tax, Customs duty and Excise duty. There were no dues on account of Cess under Section 441A of the Act since the date from which the aforesaid section comes into force has not yet been notified by the Central Government. According to the information and explanations given to us, no undisputed amounts payable in respect of Income tax, Sales tax and other material statutory dues were in arrears as at 30 November 2008 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us, the following dues of Income tax have not been deposited by the Company on account of disputes.
Amount Period to (Rs in Lakhs) which the amount relates 66.47 349.63 15.01 15.02 2002-2003 2000-2002 2004-2005 2005-2006 Forum where dispute is pending ITAT ITAT ITAT CIT (Appeal)

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. (xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. (xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) The Company did not have any term loans outstanding during the year. (xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, and having regard to the explanation that funding from the holding company is not on short term basis, the Company did not have any short term borrowings. (xviii) As stated in paragraph (iii) above, there are no companies/ firms/parties covered in the register required to be maintained under Section 301 of the Act. (xix) The Company did not have any outstanding debentures during the year. (xx) The Company has not raised any money by public issues.

Name of the Nature of the Dues Statute

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit. For B S R & Co. Chartered Accountants Mumbai 29 January 2009 Bhavesh Dhupelia Partner Membership No: 042070 63

Income Tax Act

Write off of Stock. Bad debts written off. Write off of Stock. Bad Debts written off. Write off of Stock. Write off of Stock.

Balance Sheet as at 30th November, 2008

Rupees in Lakhs Schedule Ref. Sources of Funds Shareholders funds Share capital TOTAL Application of Funds Current assets, loans and advances Inventories Sundry debtors Cash and bank balances Loans and advances 2 3 4 5 30.45 58.42 58.75 95.87 243.49 Current liabilities and provisions Current liabilities Net current assets Profit and Loss Account TOTAL Significant accounting policies Notes to the accounts 10 11 6 (90.73) 152.76 171.24 324.00 (117.52) 66.56 257.44 324.00 78.32 32.94 12.09 60.73 184.08 1 324.00 324.00 324.00 324.00 As at 30th Nov 2008 Rupees in Lakhs As at 30th Nov 2007

The schedules referred to above form an integral part of this Balance Sheet. As per our report attached. For B S R & Co. Chartered Accountants BHAVESH DHUPELIA Partner Membership No: 042070 Mumbai, 29th January, 2009 For and on behalf of the Board B M GAGRAT (Dr) UDAY MOHAN KAVITA BHAVNANI Mumbai, 29th January, 2009 Chairman

Directors

64

Profit and Loss Account for the year ended 30th November, 2008
Rupees in Lakhs Schedule Ref. Income Gross sales Less : Sales tax Net sales Miscellaneous income Expenditure (Increase)/decrease in stocks of finished goods Purchases Other expenses Profit Before Taxation Less : Taxation Current tax Profit After Taxation Balance of Profit and Loss Account brought forward Balance of Profit and Loss Account carried forward Earnings Per Share of Rs. 100/- each (Basic and Diluted) (Refer Note 3 in the Notes to the accounts - Schedule 11) Significant accounting policies Notes to the accounts 10 11 7 418.20 19.09 399.11 0.01 399.12 Year Ended 30th Nov 2008 429.06 25.57 403.49 37.03 440.52 Rupees in Lakhs Year Ended 30th Nov 2007

8 9

47.87 206.31 47.64 301.82 97.30 11.10 86.20 (257.44) (171.24) Rs. 26.61

8.01 250.43 60.36 318.80 121.72 14.00 107.72 (365.16) (257.44) Rs. 33.25

The schedules referred to above form an integral part of this Profit and Loss Account. As per our report attached. For B S R & Co. Chartered Accountants BHAVESH DHUPELIA Partner Membership No: 042070 Mumbai, 29th January, 2009 For and on behalf of the Board B M GAGRAT (Dr) UDAY MOHAN KAVITA BHAVNANI Mumbai, 29th January, 2009 Chairman

Directors

65

Cash Flow Statement for the year ended 30th November, 2008
Rupees in Lakhs 30th Nov 2008 A Cash Flow from Operating Activities : Net profit before taxation Adjustments for Bad debts Provision for doubtful debts & advances Operating profit before working capital changes Adjustments for Trade and other receivables Inventories Trade and other payables Cash generated/(used) in operations Direct taxes (paid)/refunded (Net) Net cash from/(used in) operating activities (A) B Cash Flow from Investing Activities (B) C Cash Flow from Financing Activities (C) Net Increase/(Decrease) in Cash & Cash Equivalents (A)+(B)+(C) Opening cash and cash equivalents (Note 1) Closing cash and cash equivalents (Note 1) (57.65) 47.87 (26.79) 63.93 (17.27) 46.66 46.66 12.09 58.75 46.66 Notes : 1. Cash and Cash Equivalents include : With scheduled banks On current accounts (including accounts with overdraft facility) 58.75 58.75 12.09 12.09 1.89 8.01 (141.95) 4.52 (36.29) (31.77) (31.77) 43.86 12.09 (31.77) 3.20 100.50 6.11 8.74 136.57 97.30 121.72 Rupees in Lakhs 30th Nov 2007

2. The above Cash Flow Statement has been prepared under the indirect method as set out in Accounting Standard 3 on Cash Flow Statement issued by The Institute of Chartered Accountants of India. As per our report attached. For B S R & Co. Chartered Accountants BHAVESH DHUPELIA Partner Membership No: 042070 Mumbai, 29th January, 2009 66 For and on behalf of the Board B M GAGRAT (Dr) UDAY MOHAN KAVITA BHAVNANI Mumbai, 29th January, 2009 Chairman

Directors

Schedules
Rupees in Lakhs 30th Nov 2008 Schedule 1 : Share capital Authorised 4,76,000 (Nov 2007 : 4,76,000) Equity shares of Rs. 100/- each 24,000 (Nov 2007 : 24,000) Nine per cent non-cumulative Redeemable Preference shares of Rs. 100/- each TOTAL Issued, subscribed and paid up 3,24,000 (Nov 2007 : 3,24,000) Equity shares of Rs. 100/- each fully paid up TOTAL (All the above shares are held by the Holding Company - Pfizer Limited and its nominees) Schedule 2 : Inventories Finished goods TOTAL Schedule 3 : Sundry debtors (unsecured) Debts outstanding for a period exceeding six months Other debts of which - Considered good - Considered doubtful Provision for doubtful debts TOTAL Schedule 4 : Cash and bank balances With scheduled banks On current account TOTAL Schedule 5 : Loans and advances (unsecured) Advances recoverable in cash or in kind or for value to be received Considered good Advances Deposits Considered doubtful Deposits Provision for doubtful deposits 476.00 24.00 500.00 324.00 324.00 30.45 30.45 209.95 62.67 272.62 58.42 214.20 272.62 (214.20) 58.42 58.75 58.75 Rupees in Lakhs 30th Nov 2007 476.00 24.00 500.00 324.00 324.00 78.32 78.32 215.00 28.94 243.94 32.94 211.00 243.94 (211.00) 32.94 12.09 12.09

1.30 2.74 4.04 (2.74) 1.30 36.81 57.76

7.84 1.30 2.74 11.88 (2.74) 9.14 51.59 60.73

Amounts recoverable from Pfizer Limited* Income tax payments (Net of provision Rs. 252.57 lakhs, Nov 2007 Rs. 241.46 lakhs) TOTAL 95.87 * Maximum aggregate amount due to Pfizer Limited during the year Rs. 103.85 lakhs, Nov 2007 Rs. 149.29 lakhs Schedule 6 : Current liabilities Sundry creditors Due to Micro, Small and Medium Enterprises {refer note (5) of Schedule 11} 21.36 Due to the Holding Company - Pfizer Limited Others 69.37 TOTAL 90.73 Schedule 7 : Miscellaneous income Liability no longer required written back Others 0.01 TOTAL 0.01

28.65 44.23 44.64 117.52 33.04 3.99 37.03 67

Schedules
Rupees in Lakhs 30th Nov 2008 Schedule 8 : (Increase)/decrease in stocks of finished goods Stocks at commencement Stocks at close TOTAL Schedule 9 : Other expenses Insurance Rates and taxes Freight, forwarding and transport Commission Bad debts Provision for doubtful debts Provision for doubtful deposits Bank charges Legal and professional fees Sales tax Miscellaneous expenses TOTAL 78.32 30.45 47.87 0.64 0.56 9.31 16.85 3.20 5.41 7.70 3.97 47.64 Rupees in Lakhs 30th Nov 2007 86.33 78.32 8.01 1.18 0.57 4.54 11.89 6.11 6.00 2.74 4.42 9.13 13.60 0.18 60.36

Schedule 10 : Significant accounting policies (a) Basis of accounting The financial statements have been prepared and presented under the historical cost convention on an accrual basis of accounting and in accordance with the provisions of the Companies Act, 1956 and accounting principles generally accepted in India and comply with the accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards, to the extent applicable. (b) Use of estimates The preparation of the financial statements in conformity with generally accepted accounting principles (GAAP) in India requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from these estimates. Any revision to accounting estimate is recognized prospectively in current and future periods. (c) Going concern These financial statements have been prepared on a going concern basis. The management believes that the Company will continue to operate as a going concern and meet all its liabilities as they fall due for payment due to the following reasons : the Companys bank facilities are guaranteed by the Holding Company, and letter of continued financial support received from the Holding Company confirming that they would continue to provide whatever support is necessary, financial or otherwise, to ensure that the Company continues to operate as a going concern; is able to obtain funding from its bankers and is able to meet its liabilities as they fall due for payment. (d) Inventories Inventories are valued at lower of cost and net realisable value. Cost is arrived at using the First-In-First-Out method. Cost includes cost of purchase (net of refundable taxes and levies) and other costs incurred in bringing the inventories to their present location and condition. Finished goods expiring within 90 days (near-expiry inventory) as at the balance sheet date are fully provided for. (e) Revenue recognition Revenue from sale of goods is recognised when significant risks and rewards of ownership are transferred to the customers, co-incides with the despatch of goods to the customers. Sales are net of sales returns and trade discounts. Interest income is recognised on a time proportionate basis. (f) Taxation Income tax expense comprises current tax, deferred tax charge or credit and fringe benefits tax. Provision for current tax is based on the results for the year ended 30 November 2008, in accordance with the provisions of the Income Tax Act, 1961. The final tax liability will be determined on the basis of the operations for the year 1 April 2008 to 31 March 2009, being the tax year of the Company. 68

Notes to the Financial Statements for the year ended 30th November, 2008
The deferred tax charge or credit is recognized using substantially enacted rates. In the case of unabsorbed depreciation or carried forward losses, deferred tax assets are recognised only to the extent there is virtual certainty of realisation of such assets. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future. Such assets are reviewed as at each balance sheet date to reassess realization. Provision for Fringe Benefits Tax is made on the basis of applicable rates on the taxable value of eligible expenses of the Company as prescribed under the Income Tax Act, 1961. (g) Earnings per share Basic and diluted earnings per share is computed by dividing the net profit attributable to equity shareholders for the year, with the weighted number of equity shares outstanding during the year. (h) Provisions and Contingencies The Company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Schedule 11 : Notes to the accounts Rupees in Lakhs Rupees in Lakhs 30th Nov 2008 30th Nov 2007 1 Contingent liabilities (a) In respect of the guarantees given to banks on behalf of third parties (b) In respect of Income Tax 2 Auditors remuneration (including taxes, where applicable) For Audit Out of pocket expenses TOTAL 3 Earnings per share Net profit after tax (Rupees in Lakhs) Weighted average number of equity shares of Rs. 100/- each Basic and Diluted earnings per share (Rs.) 1.00 543.21 543.21

3.37 0.10 3.47 86.20 324,000 26.61

3.37 0.12 3.49 107.72 324,000 33.25

4 Information required by paragraphs 3 and 4 of part II and III of Schedule VI to the Companies Act, 1956 Stocks at Purchases Sales Stocks at close commencement Class of Goods Unit of Quantity Rupees Quantity Rupees Quantity Rupees Quantity Rupees Measure in Lakhs in Lakhs in Lakhs in Lakhs Tablets and capsules No. in Millions 4.71 19.66 29.58 113.41 30.78 202.50 3.13 11.64 (3.97) (27.12) (27.27) (120.09) (26.20) (187.88) (4.71) (19.66) Liquids Litres (-27.60) (-0.03) Injectables : Powder parentals Kgs. 258.45 31.56 647.40 70.73 597.85 114.40 178.86 18.50 (393.32) (49.64) (597.60) (72.24) (689.40) (138.47) (258.45) (31.56) Solids Kgs. 3587.90 27.10 4,734.50 22.17 6,987.95 82.21 40.05 0.31 (1527.25) (9.57) (8712.50) (58.10) (6423.15) (77.17) (3587.90) (27.10) TOTAL 78.32 206.31 399.11 30.45 (86.33) (250.43) (403.49) (78.32) Notes : 1 Stocks are after adjustment of write-offs. 2 Figures in brackets are in respect of the previous year. 69

Notes to the Financial Statements for the year ended 30th November, 2008
5 The following disclosures are made for the amounts due to the Micro, Small and Medium enterprises : Rupees in Lakhs 30th Nov 2008 Principal amount payable to suppliers at the year end Amount of interest paid by the Company in terms of section 16 of the MSMED, along with the amount of the payment made to the supplier beyond the appointed day during the accounting year Amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under the MSMED Amount of interest accrued and remaining unpaid at the end of the accounting year 21.36 Rupees in Lakhs 30th Nov 2007 28.65

On the basis of information and records available with the Company, the above disclosures are made under Current liabilities (Schedule 6) in respect of amounts due to the Micro, Small and Medium enterprises who have registered with the relevant competent authorities. This has been relied upon by the auditors. 6 Disclosures as required by the Accounting Standard 18 on Related Party Disclosures are given below : I Names of Related Parties and description of relationships Parties where control exists Holding Company : Pfizer Limited, India Ultimate Holding Company : Pfizer Inc., USA II Transactions during the year and Balances Outstanding/(Receivable) as at the year end with related parties are as follows : Rupees in Lakhs Rupees in Lakhs Nature of transactions with the Holding Company Expenses reimbursed Short term advances given Short term advances taken Outstanding as at the year end Due to / (from) Guarantees given to Banks by Holding Company, outstanding as at the year end III Others : Services are rendered by the Holding Company by providing resources like manpower, assets etc for which no amount is recovered by the Holding Company. Amount written off or written back in respect of debts due from or to related parties is Rs. Nil. 30th Nov 2008 0.44 362.02 280.54 (36.81) 2400.00 30th Nov 2007 7.27 434.76 348.09 44.23 2400.00

70

Notes to the Financial Statements for the year ended 30th November, 2008
7 Disclosures as required by the Accounting Standard 17 on Segment Reporting are given below : Business segments (Refer Note 1 below) Rupees in Lakhs 30th Nov 2008 Pharma- Animal Total ceuticals Health Segment revenue External sales to customers Total Segment revenue Segment results Unallocated corporate (expenses) / income (Net) Net profit before tax Income tax Net profit after tax Other information Segment assets Unallocated corporate assets Total assets Segment liabilities Unallocated corporate liabilities Total liabilities Geographical segments (Refer Note 2 below) Rupees in Lakhs 30th Nov 2008 India Other Total Countries 399.11 - 399.11 243.49 - 243.49 Rupees in Lakhs 30th Nov 2007 India Other Total Countries 403.49 - 403.49 184.08 - 184.08 202.50 202.50 65.22 196.61 196.61 45.18 399.11 399.11 110.40 (13.10) 97.30 (11.10) 86.20 88.87 154.62 243.49 81.88 8.85 90.73 30th Nov 2007 PharmaAnimal Total ceuticals Health 177.23 177.23 36.53 226.26 226.26 58.22 403.49 403.49 94.75 26.97 121.72 (14.00) 107.72 119.10 64.98 184.08 33.21 84.31 117.52

37.59

51.28

33.54

85.56

61.20

20.68

10.76

22.45

Segment revenue - external sales to customers Carrying amount of segment assets

Notes : 1 Business Segments : The business operations of the Company comprise Pharmaceuticals and Animal Health. The business segregation forms the basis for review of operational performance by the management. The Pharmaceuticals business comprises a portfolio of prescription medicines which are provided to patients through healthcare professionals. The Animal Health business has a presence primarily in the large animal health and poultry market segments. 2 Geographical Segments : For the purpose of geographical segments the consolidated sales are divided into two segments India and other countries. 3 The accounting policies of the segments are the same as those described in the summary of significant accounting policies as referred to in Schedule 10 to the financial statements. 8 9 The position of Company Secretary of the Company has been vacant from 30th December 2006 till date. The figures of the previous year have been regrouped / reclassified wherever necessary to conform to the figures of the current year. For and on behalf of the Board B M GAGRAT (Dr) UDAY MOHAN KAVITA BHAVNANI Chairman

Mumbai, 29th January, 2009

Directors 71

Information required as per Part IV of Schedule VI to the Companies Act, 1956

Balance sheet abstract and Companys general business profile I Registration details Registration no. 1 1 1 1 7 State code 1 1 Balance sheet date 3 0 - 1 1 - 0 8 II Capital raised during the year (amount in rupees thousands) Public issue Rights issue N i l N i l Bonus issue Private placement N i l N i l III Position of mobilisation and deployment of funds (amount in rupees thousands) Total liabilities Total assets 3 2 4 0 0 3 2 Sources of funds Share capital Reserves and surplus 3 2 4 0 0 N i l Secured loans Unsecured loans N i l N i l Application of funds Net fixed assets Investments N i l N i l Deferred tax assets (net) Net current assets N i l 1 5 Miscellaneous expenditure Accumulated losses N i l 1 7 IV Performance of the Company (amount in rupees thousands) Turnover (including other income) Total expenditure 3 9 9 1 2 3 0 Profit before tax + Profit after tax + 9 7 3 0 8 Earnings per share (rupees) Dividend rate % 2 6 . 6 1 N i l V Generic names of three principal products of the Company (as per monetary terms) Item code No. (ITC Code) 30041090 Product description Amoxicilin, Cloxicilin injectable powder Item code No. (ITC Code) 30049039 Product description Cobalt, Iron, Vitamins B1 & B12 & Choline Bolus Item code No. (ITC Code) 30042049 Product description Neomycin, Oxytetracycline and Vitamin, oral soluble powder For and on behalf of the Board B M GAGRAT (Dr) UDAY MOHAN KAVITA BHAVNANI

4 0 0

2 7 6 1 2 4

1 8 2 6 2 0

Mumbai, 29th January, 2009 72

Chairman Directors

Auditors Report
To the Board of Directors of Pfizer Limited We have audited the attached consolidated balance sheet of Pfizer Limited (the Company) and its subsidiary, Duchem Laboratories Limited (collectively referred to as the Group) as at 30 November 2008 and the related consolidated profit and loss account and the consolidated cash flow statement of the Group for the year ended on that date, annexed thereto. These consolidated financial statements are the responsibility of the Groups management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are prepared, in all material respects, in accordance with the financial reporting framework generally accepted in India and are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We report that, the consolidated financial statements have been prepared by the Groups management in accordance with the requirements of Accounting Standard 21 Consolidated Financial Statements, specified in the Companies (Accounting Standards) Rules, 2006 and on the basis of separate audited financial statements of the Company and its subsidiary as listed in paragraph 1 of Significant Accounting Policies included in the consolidated financial statements. In our opinion, and to the best of our information and according to the explanations given to us, the consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India: i) in the case of the consolidated balance sheet, of the consolidated state of affairs of the group as at 30 November 2008; in the case of the consolidated profit and loss account, of the consolidated results of operation of the group for the year ended on that date; and

ii)

iii) in the case of the consolidated cash flow statement, of the consolidated cash flows of the group for the year ended on that date.

For B S R & Co. `Chartered Accountants

Mumbai, 30 January 2009

Bhavesh Dhupelia Partner Membership No: 042070

73

Consolidated Balance Sheet as at 30th November, 2008

Rupees in Lakhs Schedule Ref. As at 30th Nov 2008 Rupees in Lakhs As at 30th Nov 2007

Sources of Funds
Shareholders funds Share capital Reserves and surplus TOTAL 1 2 2984.32 87124.92 90109.24 90109.24 Fixed assets Gross block Accumulated depreciation Net block Capital work-in-progress at cost, including advances Investments Deferred tax asset ( Net ) Current assets, loans and advances Inventories Sundry debtors Cash and bank balances Other current assets Loans and advances Current liabilities and provisions Current liabilities Provisions Net current assets Miscellaneous expenditure (to the extent not written off or adjusted) Voluntary retirement scheme TOTAL Significant accounting policies Notes to the accounts 18 19 3 13989.94 (8913.82) 5076.12 3229.82 4 5 6 7 8 9 10 12498.77 6031.07 54364.83 1449.41 24796.48 99140.56 11 12 (12268.00) (7386.66) (19654.66) 79485.90 90109.24 (10660.28) (11113.89) (21774.17) 56290.12 293.00 64972.01 8305.94 50.25 2267.15 9584.58 6169.49 47991.26 817.11 13501.85 78064.29 14161.14 (8144.80) 6016.34 1024.38 7040.72 50.25 1297.92 2984.32 61987.69 64972.01 64972.01

Application of Funds

The schedules referred to above form an integral part of this Balance Sheet. As per our report attached. For B S R & Co. For and on behalf of the Board Chartered Accountants R A SHAH Chairman KEWAL HANDA BHAVESH DHUPELIA Partner Membership No: 042070 Mumbai, 30th January, 2009 74 P SHAH B M GAGRAT (Dr) Managing Director

Directors

PRAJEET NAIR Company Secretary Mumbai, 30th January, 2009

Consolidated Profit And Loss Account for the year ended 30th November, 2008
Rupees in Lakhs Schedule Ref. Year Ended 30th Nov 2008 76900.29 5408.79 3321.78 13 68169.72 9301.16 77470.88 77730.12 6199.28 3861.51 67669.33 34306.71 101976.04 23406.16 10169.76 20570.66 1.52 958.46 56348.82 55106.56 46869.48 (1735.04) 45134.44 10754.00 242.02 138.16 34000.26 24097.05 58097.31 3400.00 8206.40 1394.68 7355.51 67697.95 Rs. 100.39 10.00 18 19 13001.08 45096.23 Rs. 113.94 10.00 21122.06 20790.68 41912.74 12462.09 228.00 (734.58) 29957.23 45096.23 75053.46 2991.20 3730.18 634.13 Rupees in Lakhs Year Ended 30th Nov 2007

Income
Gross sales Less: Excise duty Less: Sales tax Net sales Operating and other income

Expenditure
Material cost Personnel cost Manufacturing and other expenses Interest on short term loans Depreciation 14 15 16 3 24013.00 10209.66 21013.97 1112.19

Profit Before Taxation and Exceptional Items

Exceptional items - Net 17

Profit Before Taxation

Less: Taxation Current tax Fringe benefits tax Deferred tax charge / (credit)

Profit After Taxation

Balance brought forward

Total Available For Appropriation

Transfer to general reserve Proposed dividend Tax on dividend

Balance Carried To Balance Sheet Earnings Per Share (Basic And Diluted)
(Refer Note 5 in the Notes to the accounts - Schedule 19)

Nominal Value Per Share

Significant accounting policies Notes to the accounts

The schedules referred to above form an integral part of this Profit and Loss Account. As per our report attached. For and on behalf of the Board For B S R & Co. Chartered Accountants R A SHAH Chairman KEWAL HANDA BHAVESH DHUPELIA Partner Membership No: 042070 Mumbai, 30th January, 2009 P SHAH B M GAGRAT (Dr) Managing Director

Directors

PRAJEET NAIR Company Secretary Mumbai, 30th January, 2009 75

Consolidated Cash Flow Statement for the year ended 30th November, 2008
Rupees in Lakhs 30th Nov 2008 A Cash Flow from Operating Activities : Net profit before taxation and exceptional items Adjustments for Depreciation Unrealised foreign exchange (gain) / loss (Net) Interest income Profit on fixed assets sold / discarded Profit on sale of assets held for disposal Interest expenses Provision for doubtful debts and advances Provisions no longer required written back Provision for dimunition in the value of investment Operating profit before working capital changes Adjustments for Trade and other receivables Inventories Trade and other payables Provisions (excluding proposed dividend, tax on distributed profits, income tax provision) Cash generated from operations Direct taxes paid (Net) Net cash from operating activities before exceptional items Exceptional Items VRS paid Proceeds from sale of brands (Net) Net cash from operating activities after exceptional items ( A ) Cash Flow from Investing Activities : Purchase of fixed assets Proceeds from sale of fixed assets Purchase of investments / Inter corporate deposits (Net) Interest received Net cash from / (used) in investing activities ( B ) Cash Flow from Financing Activities :Dividend paid (including tax on distributed profits) Interest paid Net cash used in financing activities ( C ) Net Increase / (Decrease) in Cash & Cash Equivalents (A)+(B)+(C) Opening cash and cash equivalents (Note 1) Closing cash and cash equivalents (Note 1) 21122.06 1112.19 (0.71) (5989.36) (16.84) 334.09 (389.37) 16172.06 (737.82) (2914.19) 2043.43 819.40 15382.88 (12690.30) 2692.58 (11.55) 21095.23 23776.26 (2667.80) 173.39 (10750.00) 5357.06 (7887.35) (9519.58) (9519.58) 6369.33 47991.26 54360.59 6369.33 Rupees in Lakhs 30th Nov 2007 46869.48 958.46 10.03 (3680.20) (92.38) (27369.29) 1.52 525.17 (193.04) 0.11 17029.86 68.47 346.47 (3791.04) 37.37 13691.13 (11333.31) 2357.82 (694.50) 1663.32 (1367.09) 27966.70 (6700.00) 3335.21 23234.82 (7588.04) (1.52) (7589.56) 17308.58 30682.68 47991.26 17308.58

76

Consolidated Cash Flow Statement for the year ended 30th November, 2008
Rupees in Lakhs 30th Nov 2008 Notes : 1 Cash and cash equivalents include : Cash on hand With scheduled banks On current accounts ( including accounts with overdraft facility ) On margin money accounts On time deposit accounts Cheques on hand / in transit Unrealised translation gain on foreign currency cash & cash equivalents 2 3 Rupees in Lakhs 30th Nov 2007

5.03

4.30

2217.64 1883.29 3.48 3.48 52003.40 46090.40 135.28 9.79 (4.24) 54360.59 47991.26 Interest income on delayed payments from customers and rental income have been shown under Cash flow from operating activities as according to the Company these form an integral part of the operating activities. The above Cash Flow Statement has been prepared under the indirect method as set out in Accounting Standard 3 on Cash Flow Statement. For and on behalf of the Board R A SHAH KEWAL HANDA P SHAH B M GAGRAT (Dr) Chairman Managing Director

As per our report attached. For B S R & Co. Chartered Accountants

BHAVESH DHUPELIA Partner Membership No: 042070 Mumbai, 30th January, 2009

Directors

PRAJEET NAIR Company Secretary Mumbai, 30th January, 2009

77

Schedules to the Consolidated Financial Statements

Rupees in Lakhs 30th Nov 2008 Rupees in Lakhs 30th Nov 2007

Schedule 1: Share capital

Authorised 2,98,44,080 (Nov 2007: 2,98,44,080) Equity shares of Rs. 10 each 1,01,55,920 (Nov 2007: 1,01,55,920) Unclassified shares of Rs. 10 each Issued 2,98,44,080 (Nov 2007: 2,98,44,080) Equity shares of Rs. 10 each Subscribed and paid up 2,98,41,440 (Nov 2007: 2,98,41,440) Equity shares of Rs. 10 each fully paid-up Of the above - 1,91,08,636 (Nov 2007: 1,91,08,636) Equity shares of Rs. 10 each were allotted as fully paid - up bonus shares by capitalisation of general reserve Rs. 1776.92 lakhs and share premium account Rs. 133.94 lakhs. - 93,76,100 (Nov 2007: 93,76,100) Equity shares of Rs. 10 each fully paid-up are held by Pfizer Corporation, Panama. - 21,42,896 (Nov 2007: 21,42,896) Equity shares of Rs. 10 each in aggregate are held by Warner-Lambert LLC, USA and Parke-Davis & Company LLC, USA. - 53,57,244 (Nov 2007: 53,57,244) Equity shares of Rs. 10 each were issued as fully paidup to the shareholders of erstwhile Parke-Davis (India) Limited (pursuant to the Scheme of Amalgamation of Parke-Davis (India) Limited with the company). - 10,43,900 (Nov 2007: 10,43,900) Equity shares of Rs. 10 each were issued as fully paidup to the shareholders of erstwhile Pharmacia Healthcare Limited (pursuant to the Scheme of Amalgamation of Pharmacia Healthcare Limited with the company) including 7,83,941 Equity shares issued to Pharmacia Corporation, USA. Add: Forfeited share capital Amount paid-up on 2,640 (Nov 2007: 2,640) Equity shares of Rs. 10 each forfeited TOTAL 0.18 2984.32 0.18 2984.32 2984.14 2984.14 2984.41 2984.41 2984.41 1015.59 4000.00 2984.41 1015.59 4000.00

Schedule 2: Reserves and surplus

Share premium Per last balance sheet General reserve Per last balance sheet Add : Transfer from profit and loss account Less : Adjustment on account of adoption of AS 15 (Revised) (Refer Note 14 of the Notes to the accounts, Schedule 19) Balance as per profit and loss account TOTAL 78 17149.27 67697.95 87124.92 14613.76 45096.23 61987.69 14613.76 2991.20 (455.69) 2277.70 11213.76 3400.00 2277.70

Schedule 3 : Fixed assets

Rupees in Lakhs COST As at As at As at For the As at As at As at 01.12.2007 Additions Deductions 30.11.2008 01.12.2007 year Deductions 30.11.2008 30.11.2008 30.11.2007 DEPRECIATION / AMORTISATION NET BOOK VALUE

Intangible Assets 15.51 15.51 15.51 15.51 -

Trademarks

Tangible Assets

Land : 32.57 32.57 14.19 0.33 14.52 18.05 18.38

Leasehold

Buildings : 787.38 787.38 1367.71 1397.53 5548.94 2572.43 571.06 1013.53 118.44 293.48 43.30 14.45 73.71 2.69 155.25 12.88 1443.27 1503.42 5502.82 48.81 2.69 10.10 115.99 39.85 115.41 168.13 322.33 1058.26 3140.80 619.25 1045.38 339.27 2408.14 632.13 1149.79 489.89 2930.39

On freehold land @

On leasehold land

Leasehold improvements

Machinery & equipment

Office equipment, 4214.62 4212.20 628.10 13989.94 14161.14 661.55 14161.14 14686.28 533.61 1058.75 328.52 499.72 93.84 127.29 135.92 138.34 3577.74 502.67 272.01 94.17 8144.80 1112.19 8170.77 958.46* 134.45 117.87 343.17 984.43 3715.30 478.97 8913.82 8144.80 496.90 149.13 5076.12 6016.34 3229.82 8305.94 1024.38 7040.72 636.88 158.88 6016.34

Schedules to the Consolidated Financial Statements

Furniture & fixtures

Vehicles

TOTAL

Previous year

Capital work-in-progress including capital advances

GRAND TOTAL

@ Buildings include investment in share application money of Rs. 500 (Nov 2007: Rs. 500) in a co-operative housing society, representing ownership of two residential flats. * Rs.Nil (Nov 2007: Rs.146.64 lakhs) being reversal of excess depreciation provided in the prior years.

79

Schedules to the Consolidated Financial Statements

Rupees in Lakhs 30th Nov 2008 Rupees in Lakhs 30th Nov 2007

Schedule 4: Investments
(At cost except where otherwise stated) Long Term Investments Non-Trade (unquoted) Government securities Rural Electrification Corporation of India 500 (Nov 2007: 500) Bonds of Rs. 10,000 each fully paid-up Gold Sovereign (Actual cost Rs. 61) The Shamrao Vithal Co-operative Bank Limited 1,000 (Nov 2007: 1,000) shares of Rs. 25 each, fully paid-up Other securities Bharuch Eco-Aqua Infrastructure Limited 72,935 (Nov 2007: 72,935) Equity Shares of Rs. 10 each, fully paid-up Bharuch Enviro Infrastructure Limited 175 (Nov 2007: 175) Equity Shares of Rs. 10 each, fully paid-up Provision for diminution in value of investments TOTAL 7.29 0.02 (7.42) 50.25 7.29 0.02 (7.42) 50.25 0.11 50.00 0.25 0.11 50.00 0.25

Schedule 5: Deferred tax asset ( Net )

Deferred tax asset Arising on account of timing differences in : Provision for doubtful debts and advances Provision for leave encashment Provision for excise duty, custom duty and sales tax Amortisation of voluntary retirement costs Others Deferred tax liability Arising on account of timing difference in: Depreciation TOTAL 301.20 2267.15 204.27 610.15 3220.24 574.14 7889.97 12498.77 450.41 1297.92 177.50 395.25 2458.82 546.49 6006.52 9584.58

775.59 458.85 130.52 142.72 1060.67 2568.35

669.97 163.20 107.64 178.51 629.01 1748.33

Schedule 6: Inventories
Stores and maintenance spares Packing materials Stock-in-trade Raw materials Work-in-process Finished goods TOTAL 80

Schedules to the Consolidated Financial Statements

Rupees in Lakhs 30th Nov 2008 Rupees in Lakhs 30th Nov 2007

Schedule 7: Sundry debtors (unsecured)

Debts outstanding - Over six months - Other debts of which - Considered good - Considered doubtful Provision for doubtful debts TOTAL Bad debts written off Rs. 20.81 lakhs (Nov 2007: Rs. 237.49 lakhs) out of the provision for doubtful debts. 2352.95 5840.44 8193.39 6031.07 2162.32 8193.39 (2162.32) 6031.07 1898.61 6152.88 8051.49 6169.49 1882.00 8051.49 (1882.00) 6169.49

Schedule 8: Cash and bank balances

Cash on hand With scheduled banks In current accounts In margin money accounts (under lien) In time deposit accounts Cheques on hand / in transit TOTAL 5.03 2217.64 3.48 52003.40 135.28 54364.83 1399.79 49.62 1449.41 4.30 1883.29 3.48 46090.40 9.79 47991.26 767.49 49.62 817.11

Schedule 9: Other current assets

Interest accrued but not due on bank deposits Fixed assets held for sale ** (at book value or estimated net realisable value / salvage, whichever is lower) * TOTAL * Realisable value / Salvage value is based on valuation reports of approved valuers, where applicable **Refer Note 7 of the Notes to the accounts, Schedule 19

Schedule 10: Loans and advances (unsecured)

Advances recoverable in cash or in kind or for value to be received Considered good Considered doubtful Provision for doubtful advances Amounts recoverable from Pfizer Pharmaceutical India Private Limited Amounts recoverable from Pfizer Products India Private Limited Deposits Considered good Considered doubtful Provision for doubtful deposits 2511.84 333.04 2844.88 (333.04) 2511.84 15206.43 2853.05 4015.30 2.74 4018.04 (2.74) 3954.50 2.74 3957.24 (2.74) 3954.50 178.30 13501.85 2303.75 300.08 2603.83 (300.08) 2303.75 5796.18 1269.12

4015.30 Balances with Customs, Port Trust and Excise on current accounts 209.86 TOTAL 24796.48 Advances written off Rs. Nil (Nov 2007: Rs. 45.41 lakhs) out of the provision for doubtful advances.

81

Schedules to the Consolidated Financial Statements

Rupees in Lakhs 30th Nov 2008 Rupees in Lakhs 30th Nov 2007

Schedule 11: Current liabilities

Sundry creditors Due to Micro, Small and Medium Enterprises Others Security deposits Dividends - unclaimed * Other liabilities TOTAL *Investor education and protection fund is being credited by the amount of unclaimed dividend after seven years from the due date. 194.12 10623.45 363.35 342.54 744.54 12268.00 134.02 9109.17 415.10 261.04 740.95 10660.28

Schedule 12: Provisions

Proposed dividend Tax on distributed profits Gratuity Leave encashment Provident fund Provision for contingencies (Net) Income tax provisions [Net of taxes paid Rs. 72095.95 lakhs (Nov 2007: Rs. 59664.65 lakhs)] Fringe benefits tax provisions [Net of taxes paid Rs. 885.00 lakhs (Nov 2007: Rs. 626.00 lakhs)] Wealth tax provisions (Net) TOTAL 3730.18 634.13 411.52 1349.52 638.16 103.87 369.55 93.14 56.59 7386.66 2191.41 19.91 4733.92 1256.06 633.30 16.84 43.57 389.37 16.78 9301.16 8206.40 1394.68 451.76 480.15 66.60 338.76 124.14 51.40 11113.89 2126.39 18.03 3150.17 530.03 612.76 27369.29 92.38 133.65 51.07 193.04 29.90 34306.71

Schedule 13: Operating and other income

Service income Interest (Gross) On staff loans On deposits with banks [Tax deducted at source - Rs. 949.40 lakhs (Nov 2007: Rs. 651.03 lakhs)] On others [Tax deducted at source - Rs. 264.04 lakhs (Nov 2007: Rs. 114.86 lakhs)] Rental income (Gross) [Tax deducted at source - Rs. 148.16 lakhs (Nov 2007: Rs. 139.21 lakhs)] Profit on sale of assets held for disposal Profit on fixed assets sold (Net) Other insurance claims Exchange gain (Net) Provision / liability no longer required written back Others TOTAL 82

Schedules to the Consolidated Financial Statements

Rupees in Lakhs 30th Nov 2008 Rupees in Lakhs 30th Nov 2007

Schedule 14: Material cost

(Increase) / decrease in stock of finished goods and work-in-process Stock at commencement Finished goods 6006.52 Work-in-process 546.49 Less : Stocks Transferred to Johnson & Johnson (Refer Note 12 of the Notes to the accounts, Schedule 19) Stock at close Finished goods Work-in-process Raw materials Stock at commencement Purchases ( Net ) Stock at close Packing materials consumed Purchase of traded goods TOTAL 6553.01 (337.58) 7889.97 574.14 8464.11 (2248.68) 2458.82 14745.44 17204.26 (3220.24) 13984.02 4781.70 7495.96 24013.00 8553.23 357.43 427.23 871.77 10209.66 151.64 2197.75 667.96 49.34 195.15 1043.51 249.89 245.20 1143.10 1026.37 906.49 2085.04 1453.27 461.56 3413.19 1167.03 334.09 118.86 744.66 362.81 2997.06 21013.97 304.55 (21095.23) (20790.68)

6710.22 319.57 7029.79 6006.52 546.49 6553.01 476.78 2235.67 9778.80 12014.47 (2458.82) 9555.65 4415.07 8958.66 23406.16 7883.93 934.14 598.30 753.39 10169.76 171.18 1945.29 733.25 60.81 269.62 1062.03 245.22 264.95 1075.59 1146.94 792.83 2096.52 1294.85 444.85 3659.39 1071.24 525.17 0.11 707.67 97.55 2905.60 20570.66 1735.04 1735.04 83

Schedule 15: Personnel cost

Salaries, wages and bonus Companys contribution to gratuity fund Companys contribution to provident and other funds Staff welfare expenses TOTAL Consumption of stores and maintenance spares Processing charges Power and fuel Water Repairs : Buildings Machinery Rent Rates and taxes Insurance Clinical trials Legal and professional charges Equipment rentals, service charges, low cost assets written off Freight, forwarding and transport Travelling (including boarding, lodging, conveyance and other expenses) Communication expenses Advertising and promotion Commission Provision for doubtful debts and advances (Net) Provision for diminution in value of long term investments Exchange loss (Net) Royalty Excise duty Miscellaneous expenses TOTAL

Schedule 16: Manufacturing and other expenses

38.66 156.49

17.65 251.97

Schedule 17: Exceptional items - Net

Exceptional expense Payment / Amortization of compensation paid to employees under VRS Exceptional income Profit on sale of brands (Refer Note 12 of the Notes to the accounts, Schedule 19) TOTAL

Notes to the Consolidated Financial Statements for the year ended 30th November, 2008
Schedule 18 : Significant Accounting Policies
1 Basis of Preparation a The Consolidated Financial Statements have been prepared in accordance with Accounting Standard 21 (AS 21) Consolidated Financial Statements. These financial statements comprise Pfizer Limited (The Company) and its wholly owned subsidiary Duchem Laboratories Limited (DLL) collectively referred to as the group. The financial statements of each of these companies are prepared using uniform accounting policies in accordance with the generally accepted accounting principles in India. b The Company has one subsidiary company (which along with Pfizer Limited, the parent, constitutes the Group) which has been considered in the preparation of these consolidated financial statements. The particulars of the subsidiary company are: Name : Duchem Laboratories Limited Country of Incorporation : India Percentage of voting power held as at 30th November, 2008 : 100% Significant Accounting Policies (a) Basis of Accounting The financial statements have been prepared and presented under the historical cost convention on an accrual basis of accounting and in accordance with the provisions of the Companies Act, 1956 and accounting principles generally accepted in India and comply with the accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards, to the extent applicable. (b) Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) in India requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods. (c) Fixed Assets and Depreciation Tangible Assets (i) All fixed assets are stated at cost of acquisition less accumulated depreciation and impairment losses. The cost of fixed assets includes taxes (other than those subsequently recoverable from tax authorities), duties, freight and other incidental expenses related to the acquisition and installation of the respective assets. (ii) Assets costing individually upto Rs. 5000 are written off and those costing more than Rs. 5000 but upto US$ 1000 are fully depreciated in the year of purchase except that multiple-like items the cost of which is over US$ 10000 in the aggregate; and unlike items of a capital nature within an asset category for large scale projects the aggregate cost of which exceeds US$ 10000 are considered as one asset and depreciated in accordance with the accounting policy stated in (iii) below. (iii) Depreciation for the year has been provided on straight line method at the higher of the rates determined by the Company based on the estimated useful life of the assets or the rates specified in Schedule XIV to the Companies Act, 1956. Depreciation on additions other than those stated in (ii) above is provided on a pro-rata basis from the month of capitalisation. Depreciation on deletions during the year is provided up to the month in which the asset is sold / discarded. (iv) Depreciation other than on low cost assets is provided at the following rates per annum Assets Land : Leasehold Buildings : On Freehold land On Leasehold land Leasehold Improvements Machinery & Equipment Office Equipment, Furniture & Fixture Vehicles 84 Rate Amortised over the lease period 3.34% Higher of 3.34% or rate based on lease period Higher of 8% to 10% or Amortised over the lease period 8% to 40% 8% to 33.33% 25%

Notes to the Consolidated Financial Statements for the year ended 30th November, 2008
(v) In case of assets taken over from erstwhile Pharmacia Healthcare Limited depreciation has been provided at the rates specified in Schedule XIV to the Companies Act, 1956 except the following assets, which are depreciated at the respective rates Assets Rate Machinery & Equipment 4.75% to 8.09% Office Equipment, Furniture & Fixture 3.34% to 33.33% (vi) Assets that have been retired from active use and held for disposal are stated at the lower of their net book value and net realisable value as estimated by the Company. Intangible Assets (i) Intangible assets comprises of trademarks. Trademarks are recorded at their acquisition cost and are amortised over the lower of their estimated useful life and period of ownership on straight line basis i.e. over a period of 3 years. (ii) Cost of application software not exceeding US$ 1 million is being charged to the Profit and Loss Account. (iii) Revenue expenditure on research and development is expensed as incurred. Capital expenditure on research and development is capitalised as fixed assets and depreciated in accordance with the depreciation policy of the Company. Impairment of Assets In accordance with Accounting Standard 28 (AS 28) on Impairment of Assets where there is an indication of impairment of the Companys assets, the carrying amounts of the Companys assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of the assets (or where applicable that of the cash generating unit to which the asset belongs) is estimated at the higher of its net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the assets and from its disposal at the end of its useful life. An impairment loss is recognised whenever the carrying amount of an asset or a cashgenerating unit exceeds its recoverable amount. Impairment loss is recognized in the Profit and Loss Account. (d) Foreign Currency Transactions Transactions in foreign exchange are accounted for at the standard exchange rates as determined by the Company on a monthly basis. The exchange differences arising on foreign exchange transactions settled during the year are recognized in the Profit and Loss Account of the year. Monetary assets and liabilities in foreign exchange, which are outstanding as at the year end, are translated at year end at the closing exchange rate and the resultant exchange differences are recognized in the Profit and Loss Account. The premium or discount on forward exchange contracts is amortized on a straight line method over the period of the contracts. (e) Investments Long-term investments are stated at cost less any other than temporary diminution in value, determined separately for each individual investment. (f) Inventories Raw materials, work-in-process, finished goods and packing materials are valued at the lower of weighted average cost and net realizable value. Cost of finished goods and work-in-process includes cost of materials, direct labour and an appropriate portion of overheads. Stores and maintenance spares are valued at average cost. The net realizable value of work-in-process is determined with reference to the selling price of related finished goods. Raw materials and other supplies held for use in production of inventories are not written down below cost except in cases where material prices have declined and it is estimated that the cost of the finished products will exceed their net realizable value. Finished goods expiring within 90 days (near-expiry inventory) as at the balance sheet date have been fully provided for. (g) Samples Physicians samples are valued at standard cost, which approximates actual cost. (h) Revenue Recognition Revenue from sale of goods is recognised when significant risks and rewards of ownership are transferred to the customers. Sales are net of sales returns and trade discounts. Revenue from services is recognized as and when services are rendered and related costs are incurred, in accordance with the terms of the specific contracts. Interest income is recognised on time proportionate basis. (i) Employee Benefits Short-term employee benefits: All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. These benefits include compensated absences such as paid annual leave and sickness leave. The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognized as an expense during the period. 85

Notes to the Consolidated Financial Statements for the year ended 30th November, 2008
Long Term employee benefits: (i) Defined contribution plan: The Companys contribution towards employees Super Annuation Plan is recognized as an expense during the period. (ii) Defined benefit plans: Provident Fund: Provident Fund contributions are made to a Trust administered by the Trustees. Trust makes investments and is settling members claims. Interest payable to the members shall not be at a rate lower than the statutory rate. Liability is recognized for any shortfall in the Plan assets vis--vis actuarially determined liability of the Fund obligation. Gratuity Plan: The Companys gratuity benefit scheme is a defined benefit plan. The Companys net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted. The present value of the obligation under such defined benefit plan is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date. Actuarial gains and losses are recognized immediately in the Profit and Loss Account. (iii) Other Long-term employment benefits: Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as a liability at the present value of the defined benefit obligation at the balance sheet date. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date. (j) Leases Lease rentals under an operating lease, are recognized as an expense in the statement of Profit and Loss Account on a straight line basis over the lease term. (k) Voluntary Retirement Scheme (VRS) Liability under the VRS is accrued on the acceptance of the applications of the employees under the VRS scheme issued by the Company. Compensation paid in the earlier years is charged to the Profit and Loss Account over a period of five years. Compensation paid during the current year and previous year under the VRS is charged to the Profit and Loss Account. (l) Taxation Income tax expense comprises current tax, deferred tax charge or credit and fringe benefits tax. Provision for current tax is based on the results for the year ended 30th November, 2008, in accordance with the provisions of the Income Tax Act, 1961. The final tax liability will be determined on the basis of the operations for the year 1st April, 2008 to 31st March, 2009, being the tax year of the Company. The deferred tax charge or credit is recognized using substantially enacted rates. In the case of unabsorbed depreciation or carried forward losses, deferred tax assets are recognised only to the extent there is virtual certainty of realisation of such assets. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future. Such assets are reviewed as at each balance sheet date to reassess realization. Provision for Fringe Benefits Tax is made on the basis of applicable rates on the taxable value of eligible expenses of the Company as prescribed under the Income Tax Act, 1961. (m) Earnings per Share Basic and diluted earnings per share are computed by dividing the net profit after tax attributable to equity shareholders for the year, with the weighted number of equity shares outstanding during the year. (n) Provisions and Contingencies The Company creates a provision when there exist a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. 86

Notes to the Consolidated Financial Statements for the year ended 30th November, 2008
Schedule 19 Notes to the Accounts Rupees in Lakhs 30th Nov 2008 1 2 Estimated amount of contracts on capital account to be executed and not provided for Contingent Liability (a) In respect of the guarantees given to banks on behalf of third parties (b) In respect of: (i) Excise Duty (ii) Customs Duty (iii) Sales Tax (iv) Service Tax (v) Income Tax (vi) Pending Labour Matters contested in various courts (vii) Claims against the Company not acknowledged as debts (c) DPEA claims (Refer Note 4) 3 Managerial remuneration under Section 198 of the Companies Act, 1956 Salaries, Bonus & Commission Contribution to PF and Other Funds Perquisites Sitting Fees Commission to Non-Whole time Directors Total 4 Drugs Prices Equalisation Account (DPEA) (a) Oxytetracycline & Other Formulations In respect of certain price fixation Orders of 1981 of the Government of India, the Supreme Court vide its Order of 22nd March 1993 held that, pending disposal of the Companys Writ Petition in the High Court of Mumbai, the Company may deposit 50% of the impugned amount of Rs. 87.61 lakhs, less Rs. 19.90 lakhs already deposited, with the Union of India before 15th May 1993 which has been done. In the event that the Company succeeds before the High Court of Mumbai, this amount will be returned within one month from the date of the decision of the High Court with interest at the rate of 15% per annum. However, if the Company loses the Writ Petition, the balance amount of Rs. 43.80 lakhs with interest at the rate of 15% per annum will have to be paid to the Government. (b) Multivitamin Formulations In respect of a certain price fixation Order of 1986 of the Government of India, the Supreme Court vide its Order dated 3rd December 1992 held that, pending disposal of the Companys Writ Petition in the High Court of Mumbai, the Company may deposit 50% of the impugned amount of Rs. 98.00 lakhs with the Union of India before 31st January, 1993 which has been done. In the event that the Company succeeds before the High Court of Mumbai, this amount will be returned within one month from the date of the decision of the High Court with interest at the rate of 15% per annum. However, if the Company loses the Writ Petition, the balance amount of Rs. 49.00 lakhs with interest at the rate of 15% per annum will have to be paid to the Government. (c) Protinex In yet another case, the Company had challenged in 1986 a price fixation Order of the Government of India by a Writ Petition before the High Court of Mumbai. The Honourable Court passed an ad interim and interim order staying the impugned order. 87 284.75 39.62 30.52 2.00 10.00 366.89 219.03 35.40 31.95 2.10 10.00 298.48 4177.68 108.14 420.78 40.54 627.24 193.11 1286.83 122.66 Amount Unascertainable Rupees in Lakhs 30th Nov 2007 4436.83 119.59 544.82 40.54 3946.78 193.11 1286.83 122.66 Amount Unascertainable

Excludes gratuity and leave encashment and provident fund benefits as the same are based on actuarial valuation.

Notes to the Consolidated Financial Statements for the year ended 30th November, 2008
The Petition, while it was still pending for hearing and final disposal, was withdrawn in 1989 on redressal of the Companys grievances. After protracted correspondence on the subject, in 1993 the Government raised a demand of Rs. 81.83 lakhs on the Company for the period April, 1986 to July, 1989 and directed the Company to deposit the same into the DPEA. Thereafter, the Drug Prices Liability Review (DPLR) Committee sent a letter dated 15th February, 1996 seeking the Companys submission / representation against the reduced claim amount of Rs. 33.87 lakhs for the period April, 1986 to August, 1987 as intimated to the DPLR Committee by the Government of India. The Company has made its submissions to the DPLR Committee vide its letter of 29th March, 1996 claiming that no amount whatsoever is due and payable having regard to the facts and relevant material of the case. In the meantime, the Department of Chemicals and Petrochemicals vide their letter dated 11th February, 1997, raised an additional demand of Rs. 178.56 lakhs for the earlier period of February, 1984 to March, 1986 over and above the revised claim of Rs. 33.87 lakhs for the period April, 1986 to August, 1987. Thus, the total demand raised now stands revised to Rs. 212.43 lakhs. The DPLR Committee had, vide its letter dated 24th February, 1997 invited the Company to make its submissions / representations against the above said claim. The Company has made its submissions to the DPLR Committee vide its letter dated 14th May, 1997 claiming that no amount whatsoever is due and payable having regard to the facts and relevant material of the case. Pursuant to the submissions made by the Company, the DPLR Committee directed by an Order on 17th November, 1998 that clarifications should be obtained from the Mumbai High Court on whether the Interim Stay granted in the Civil Writ Petition Number 2368 of 1996 is applicable to this matter. (This Writ Petition is filed by OPPI and IDMA jointly against any Notice issued by the Government of India after 25th August, 1987 to any member of the OPPI or IDMA, initiating proceedings for recovery of an amount demanded in respect of a period prior to that date). On a Notice of Motion filed by the Company in the said Writ Petition, the Mumbai High Court has granted ad interim Order that pending the hearing and final disposal of this Notice of Motion, further proceedings in the said Case No 49/1996 pending before the said Drug Prices Liability Review Committee be stayed. (d) Vitamin and Other Formulations The Government has arbitrarily determined the liability of the Company at Rs. 1466 lakhs being the difference in price in respect of Vitamin and other formulations sold by the Company during the years 1983 to 1989. The Company has repudiated the liability on this account. The Companys Solicitors have advised that the repudiation by the Company is legally sustainable. The Government has pursued the matter. The Company maintains its position that the claim by the Government is not legally sustainable. (e) Chloramphenicol The Government has arbitrarily determined the liability of the Company at Rs. 145 lakhs and Rs. 14 lakhs being the difference between the price of bulk drug Chloramphenicol powder and Chloramphenicol Palmitate respectively allowed in the formulation price and actual procurement price for the period 1979 to 1988. The Company has repudiated the liability on this account as advised by the Company s Solicitors. The Company has also obtained a Stay order from the Honourable High Court of Mumbai against the demand. Pursuant to the submissions made by the Company, the DPLR Committee directed by an Order on 17th November, 1998 that clarifications should be obtained from the Mumbai High Court on whether the Interim Stay granted in the Civil Writ Petition Number 2368 of 1996 is applicable to this matter. (This Writ Petition is filed by OPPI and IDMA jointly against any Notice issued by the Government of India after 25th August, 1987 to any member of the OPPI or IDMA, initiating proceedings for recovery of an amount demanded in respect of a period prior to that date). On a Notice of Motion filed by the Company in the said Writ Petition, the Mumbai High Court has granted ad interim Order that pending the hearing and final disposal of this Notice of Motion, further proceedings in the said Case No 23/95 pending before the said Drug Prices Liability Review Committee be stayed. (f) Pursuant to the repeal of DPCO 1970, erstwhile Warner-Hindustan Limited (merged with Parke-Davis (India) Limited in 1988 and Parke-Davis (India) Limited merged with Pfizer Limited in 2003) had classified ISOKIN TABLETS, ISOKIN LIQUID AND PYRIDIUM TABLETS as decontrolled products under the DPCO 1979. The categorization was, however, challenged by the Government in 1984 and a demand of Rs. 113 lakhs was raised against the Company. Against this demand an excise duty set off of Rs. 7 lakhs was allowed to the Company and a final demand of Rs. 106 lakhs was raised in 1987. The Company had deposited an amount of Rs. 30 lakhs in February, 1987 and Rs. 25 lakhs in May, 1990 totaling to an aggregate of Rs. 55 lakhs in full and final settlement of the demand, as per the arguments set forth by the Company. The Government subsequently raised a demand of Rs. 117 lakhs towards interest on principal demand. (i.e. interest of Rs. 43 lakhs for Pyridium for the period 1982 to August, 1995 and Rs. 74 lakhs for Isokin for the period 1982 to June, 1997). 88

Notes to the Consolidated Financial Statements for the year ended 30th November, 2008
The Company filed a Writ Petition in the Andhra Pradesh High Court in September, 1997 for staying all further proceedings against the Company. The High Court stayed the demand in respect of collection of interest but directed the Company to deposit the balance demand of Rs. 51 lakhs (which amount was deposited in November, 1997). (g) Multivitamin Formulations The Government has arbitrarily raised a demand of Rs. 182.38 lakhs on account of alleged overpricing of certain multivitamin formulations marketed by erstwhile Pharmacia Healthcare Limited (merged with Pfizer Limited) for the period 1983 to 1986. The Company has repudiated the liability on this account as advised by its solicitors. The Company filed a Writ Petition No.814 of 1992 in the High Court at Mumbai. The Supreme Court of India, in a Special Leave Petition filed by the Company held that pending disposal of Writ Petition filed before the High Court at Mumbai, the Company shall furnish an undertaking in respect of 50% of its liability and shall deposit the balance 50% aggregating to Rs. 91.19 lakhs. This amount has been deposited with the Government of India and is included under the head Loans and Advances. Pursuant to a Transfer Petition (Civil) No. 475-496 of 2003 filed under Article 139A(1) of the Constitution of India, all pending Writ Petitions in respect of DPEA liabilities are now to be transferred to the Supreme Court to be heard and finally decided by the Supreme Court of India. Consequently as a result of the said transfer petition, Writ Petitions referred to in (a), (b), (c), (e), (f) and (g) above will now be heard and disposed off by the Supreme Court. In view of matters (a), (b), (c), (e), (f) and (g) being subjudice, the legal opinion being in favour of the Company, and based on the assessment of the Management, no further provision is considered necessary over and above the sum of Rs.198.37 lakhs which has been paid off in earlier years. The Company would continue to seek legal recourse in all the above matters. 5 Earnings per Share 30th Nov 2008 Earnings per share has been computed as under: (a) Profit after Taxation (Rs. lakhs) (b) Number of Equity Shares outstanding at beginning of the year (c) Earnings per share (Face value Rs. 10/- per share) (a) / (b) (Basic and diluted) 6 Disclosure for operating leases under Accounting Standard 19 Leases (a) Where the Company is a Lessee: (i) The Company has taken various residential / godowns / office premises (including furniture and fittings, therein as applicable) under operating lease or leave and licence agreements. These are generally not non-cancellable and range between 11 months and 3 years under leave and licence, or longer for other leases and are renewable by mutual consent on mutually agreeable terms. The Company has given refundable interest free security deposits in accordance with the agreed terms. 29957.23 2,98,41,440 Rs. 100.39 34000.26 2,98,41,440 Rs. 113.94 30th Nov 2007

(ii) Lease payments are recognized in the Profit and Loss Account under Rent in Schedule 16. (b) Where the Company is a Lessor: (i) The Company has let out its owned property during the year on operating lease. The information in respect of the same is as follows: Rupees in Lakhs 30th Nov 2008 744.63 140.81 12.14 92.29 Rupees in Lakhs 30th Nov 2007 744.63 128.68 12.14 93.00

Gross book value Accumulated depreciation Depreciation for the lease period Rental income

(ii) Lease Income recognised in the Profit and Loss Account for the year in respect of sub-let property is Rs. 541.01 lakhs (Nov 2007 - Rs. 519.76 lakhs).

89

Notes to the Consolidated Financial Statements for the year ended 30th November, 2008
7 Assets held for disposal The Company has identified the assets situated at Ankleshwar as retired from active use consequent to its ceasing manufacturing operations at this location. These assets are held for disposal and stated at lower of net book value and estimated net realizable value as reported under Other current assets (Schedule 9). Rupees in Lakhs Asset Head Original Cost Accumulated Depreciation Written Down Value Freehold Land Freehold Building Total 8 30th Nov 2008 20.28 165.82 186.10 30th Nov 2007 20.28 165.82 186.10 30th Nov 2008 136.48 136.48 30th Nov 2007 136.48 136.48 30th Nov 2008 30th Nov 2007 20.28 20.28 29.34 29.34 49.62 49.62

Disclosures as required by the Accounting Standard - 18 on Related Party Disclosures are given below: I Names of Related Parties and description of Relationships A Parties where control exists: Companies collectively Pfizer Corporation, Panama exercising significant influence Warner-Lambert Company, LLC, USA Parke-Davis & Company, LLC, USA Pharmacia Corporation, USA [Collectively holding 41.23% of the aggregate of equity share capital of the Company] Pfizer Inc., USA (Ultimate holding company) Fellow Subsidiaries :(with whom transactions have taken place during the year) Pfizer Italiana SPA Pfizer Animal Health SA, Belgium Pfizer Asia Manufacturing Pte Limited, Singapore Pfizer Australia Pty Limited, Australia Pfizer Enterprises SARL, Luxembourg Pfizer Global Trading, Ireland Pfizer Italia S.r.l, Italy Pfizer Limited, United Kingdom Pfizer Pfizer Pfizer Pfizer Pfizer B Laboratories (Proprietary) Limited, South Africa Pharmaceutical India Private Limited, India Singapore Trading Pte Limited, Singapore Products India Private Limited, India Products Inc, USA Pfizer Asia Pacific Pte Limited, Singapore Pfizer Corporation Hong Kong Limited, Hong Kong Pfizer Export Company, Ireland Pfizer Inc., Philippines Pfizer Japan Inc., Japan Pfizer Limited, Taiwan Pfizer Overseas LLC., USA Pfizer Pharmaceuticals Korea Limited, Korea Pfizer Private Limited, Singapore Pfizer International LLC., USA Pfizer Agricare Sdn Bhd, Malaysia

Executive Committee Members Mr. Kewal Handa * Dr. B.M. Gagrat * Mr. S. Madhok Ms. Dipali Talwar Mr. Venkat Iyer Mr. S.Venkatesh Dr. Chandrashekhar Potkar * Executive Directors on the Board

Mr. S. Sridhar (w.e.f. 5th June, 2008) Mr. Partha Ghosh (w.e.f. 1st August, 2008) Mr. Anjan Sen (w.e.f. 1st August, 2008) Ms. Hiroo Mirchandani (w.e.f. 1st August, 2008) Mr. Uday Mohan (w.e.f. 1st October, 2008) Mr. Yugesh Goutam* (resigned w.e.f. 31st May, 2008) Mr. M.G. Rao (resigned w.e.f. 10th November, 2007)

90

Notes to the Consolidated Financial Statements for the year ended 30th November, 2008
II Transactions during the year and Balances Outstanding as at the year end with the Related Parties are as follows: Rupees in Lakhs Nature of Transactions 30th Nov 2008 Companies Ultimate Exercising Fellow Holding Significant Subsidiaries Influence 95.99 323.44 47.26 25.83 72.49 104.79 3383.31 108.54 71.56 1738.83 1843.69 1434.43 1411.27 369.30 216.26 20.55 74.88 28150.00 17400.00 1255.44 19159.51 1753.70 30th Nov 2007 Companies Ultimate Excersing Fellow Holding Significant Subsidiaries Influence 43.19 303.58 22.34 29.17 68.72 24.79 164.95 2768.16 169.79 49.58 1809.99 1821.91 827.40 1051.66 402.11 0.43 273.33 294.17 55.42 16390.52 10075.52 546.54 7691.82 1271.88

1 2 3 4 5 6 7 8 9

Sale of finished goods (net of returns) Sale of bulk materials Service income Recovery of expenses Purchase of finished goods Purchase of raw/bulk materials Royalty expense Write Back Expenses reimbursed

10 Dividend in respect of the year ended 30th November, 2007 / 30th November, 2006 11 Reimbursement of Civil work 12 Rental income 13 Loans given 14 Loans Repaid 15 Interest received on loans given 16 Outstanding as at the year end Due from 17 Outstanding as at the year end Due to Executive committee members

Rupees in Lakhs Nature of Transactions 1 2 3 4 5 III Remuneration Rent paid for residential flats Deposits paid Amounts paid on behalf and recovered Deposits outstanding as at the year end Others *Under the terms of the agreement between Pfizer Inc. (Ultimate Holding Company) and the Company for conducting clinical trials and studies in India, Pfizer Inc., has agreed to indemnify, defend and hold the Company and its directors, employees and agents harmless against any and all liability, loss or damage they may suffer as a result of any claims, demands, costs, penalties, fines or judgments incurred or imposed against it arising out of any clinical trial and study or otherwise pursuant to the agreement. 91 30th Nov 2008 Key Management Personnel 677.00 44.06 1308.75 30th Nov 2007 Key Management Personnel 597.40 46.90 298.00 0.26 1317.74

Notes to the Consolidated Financial Statements for the year ended 30th November, 2008
IV Details of material transactions during the year 30th Nov 2008 (a) Sale of finished goods (Net of returns) Pfizer Laboratories (Proprietary) Limited, South Africa Pfizer Pharmaceutical India Private Limited, India (b) Sale of bulk materials Pfizer Global Trading, Ireland (c) Service income Pfizer Limited, United Kingdom Pfizer International LLC, USA Pfizer Inc., USA (d) Recovery of expenses Pfizer Pharmaceutical India Private Limited, India Pfizer Products India Private Limited, India (e) Purchase of finished goods Pfizer Export Company, Ireland Pfizer Overseas LLC., USA Pfizer Global Trading, Ireland Pfizer Singapore Trading Pte Limited, Singapore Pfizer Enterprises SARL, Luxembourg (f) Purchase of raw / bulk materials Pfizer Export Company, Ireland (g) Royalty expense Warner-Lambert Company LLC, USA Parke-Davis & Company LLC, USA Pfizer Products Inc, USA (h) Expenses reimbursed Pfizer International LLC Pfizer Private Limited, Singapore Pfizer Corporation Hong Kong Limited, Hong Kong Pfizer Agricare Sdn Bhd, Malaysia Pfizer Pharmaceutical India Private Limited, India Pfizer Products India Private Limited, India (i) Dividend paid Pfizer Corporation, Panama (j) Loans given Pfizer Pharmaceutical India Private Limited, India Pfizer Products India Private Limited, India (k) Loans repaid Pfizer Pharmaceutical India Private Limited, India Pfizer Products India Private Limited, India (l) Interest received on loans given Pfizer Pharmaceutical India Private Limited, India Pfizer Products India Private Limited, India (m) Reimbursement of civil work Pfizer Pharmaceutical India Private Limited, India (n) Remuneration to Key Management Personnel Kewal Handa Dr B.M. Gagrat Yugesh Goutam 92 36.00 59.99 71.56 1298.84 431.89 323.44 1723.07 387.88 195.20 230.70 428.67 160.08 1411.27 87.99 369.30 138.52 21.68 27.60 2578.43 24500.00 3650.00 15100.00 2300.00 1116.66 138.78 20.55 217.87 79.30 57.72 Rupees in Lakhs 30th Nov 2007 43.19 49.58 1606.57 149.25 303.58 54.69 1747.80 144.08 264.05 163.55 133.15 1027.69 73.56 91.39 402.11 100.92 93.46 11.59 23.28 2109.63 11915.00 4475.52 6450.00 3625.52 449.93 96.61 294.17 184.75 68.00 65.59

Notes to the Consolidated Financial Statements for the year ended 30th November, 2008
9 Disclosures as required by the Accounting Standard 17 on Segment Reporting are given below : Business segments (Refer Note 1 below) 30th Nov 2008 Animal Health Services 8516.64 8516.64 1821.48 2163.68 2163.68 770.69 Rupees in Lakhs 30th Nov 2007 Animal Health Services Total 7066.86 7066.86 1152.34 2101.22 69795.72 2101.22 69795.72 252.27 18970.99 24443.85 43414.84 (243.59) 3698.23 (11134.18) - (1735.04) 34000.26 790.12 23755.35 62990.83 86746.18 190.72 8822.83 12951.34 21774.17 883.82 1334.61 504.69

Pharmaceuticals Segment revenue External sales and services Total Segment revenue Segment results Unallocated corporate (expenses) / income (net) Operating profit Interest expense and bank charges Interest income Income tax Exceptional Items - net Net profit Other information Segment assets Unallocated corporate assets Total assets Segment liabilities Unallocated corporate liabilities Total liabilities Capital expenditure Depreciation/Amortisation 59680.81 59680.81 15906.96

Total 70361.13 70361.13 18499.13

Pharmaceuticals 60627.64 60627.64 17566.38

20790.68

(3150.18) 15348.95 (236.79) 6009.89 (11955.51) - 20790.68 (1735.04) 29957.22 29947.33 79816.57 109763.90 183.84 11331.06 8323.60 19654.66 2236.72 2349.66 24.08 578.01 3997.31 19954.17

22090.43

3859.59

3011.06

10582.81

564.41

7886.65

745.46

109.05 543.01

3.89 10.92

437.37 468.91

13.42 35.78

Geographical segments (Refer Note 2 below) 30th Nov 2008 Other India Countries Total 68062.90 2298.23 70361.13 108721.23 1042.67 109763.90 2533.96 2533.96 30th Nov 2007 Other India Countries Total 67648.14 2147.58 69795.72 86087.56 658.62 86746.18 1397.98 - 1397.98

Segment revenue - external sales & services Carrying amount of segment assets Capital expenditure

Notes: 1 Business Segments : The business operations of the Company comprise Pharmaceuticals, Animal Health and Services. The business segments have been identified and reported taking into account, the nature of products and services, the differing risks and returns and the internal financial reporting systems. The Pharmaceuticals business comprises of manufacturing of bulk drugs and formulations, trading of formulations and also includes rendering of marketing services. The Animal Health business has a presence primarily in the large animal health and poultry market segments and also includes rendering of marketing services. Services - Clinical Development Operations primarily include conducting clinical trials, new product development and undertaking comprehensive data management for new drug development. 2 Geographical Segments : For the purpose of geographical segments the consolidated sales are divided into two segments India and other countries.

93

Notes to the Consolidated Financial Statements for the year ended 30th November, 2008
10 Disclosure relating to provisions Personnel related provisions Personnel related provisions at the beginning of the year have been settled based on completion of negotiations and execution of the new contract. The Company has made provision for pending assessments in respect of duties and other levies, the outflow of which would depend on the outcome of the respective events. The movement in the above provisions are summarised as under: Rupees in Lakhs 30th Nov 2008 Contingency Personnel Opening balance Additions Utilisation / Transfers Reversals Closing balance 66.60 37.43 0.16 103.87 201.68 201.68 30th Nov 2007 Contingency Personnel 137.13 34.00 2.96 101.57 66.60 360.18 74.31 232.81 201.68

11 The Companys international transactions with related parties are at arms length as per the independent accountants report for the year ended 31st March, 2008. Management believes that the Companys international transactions with related parties post 31st March, 2008 continue to be at arms length and that the transfer pricing legislation will not have any impact on these financial statements. 12 The Companys promoters announced the global divestiture of the Consumer Healthcare Business in June, 2006 to Johnson & Johnson. Consequently, the global closure was fixed on 20th December, 2006. Pursuant to the approval of the Board of Directors at their meeting held on 31st December, 2007 the Company has transferred its right to use the trademark/license pertaining to Benadryl, Caladryl, Benylin and Listerine and certain assets related thereto, for a total consideration of Rs. 21485.10 lakhs to Johnson & Johnson Limited. All the remaining products under the Consumer Healthcare Portfolio continues to be with the Company. Accordingly, profit on this transfer amounting to Rs. 21095.23 lakhs has been recognized in the current year and accounted under the head Exceptional items Net. 13 The Company uses forward contracts to hedge its risks associated with foreign currency fluctuations having underlying transaction and relating to firm commitments or highly probable forecast transactions. The Company does not enter into any forward contract which is intended for trading or speculative purposes. Currency USD Number of Contracts 1 Buy Amount 500000 Indian Rupees Equivalent 25110000

Foreign currency exposures, not hedged by derivative instruments or otherwise are USD 5.80 (in lakhs) (2007 : USD 7.95 (in lakhs)) equivalent to Rs. 291.28 lakhs (2007 : Rs. 314.73 lakhs). The break-up of these exposures is tabulated below : 30th Nov 2008 30th Nov 2007 Nature of exposure Foreign Currency Rupees in lakhs Foreign Currency Rupees in lakhs (USD in lakhs) (USD in lakhs) Accounts receivable Accounts payable Net 21.30 27.10 5.80 1067.15 1358.43 291.28 11.73 19.68 7.95 464.91 779.64 314.73

14 The Company has with effect from 1st December, 2007, adopted Accounting Standard 15, Employee Benefits (revised 2005). Consequently an additional liability for employee benefits based on actuarial valuation as at 1st December, 2007 amounting to Rs. 455.69 lakhs (net of deferred tax credit of Rs. 234.65 lakhs), has been adjusted against General reserve as at 1st December, 2007.

94

Notes to the Consolidated Financial Statements for the year ended 30th November, 2008
Defined Benefit Plans: Rupees in Lakhs As at 30th Nov 2008 Compensated Absences 1719.84 191.65 132.93 (232.42) 420.61 2232.61 1434.46 122.76 1.97 1559.19 (2232.61) 1559.19 (673.42) 191.65 132.93 (122.76) 418.63 620.45 273.79 11.59 620.46 (232.42) 673.42 7.50% 5% to 9.25 % 8.00 %

Gratuity Changes in present value of obligations Projected benefit obligation, at beginning of the year 2863.59 Current service cost 186.85 Interest cost 223.43 Benefits paid (319.86) Actuarial (gain) / loss on obligation 345.37 Employers contributions Plan participants contributions Projected benefit obligation, at the end of the year 3299.38 Changes in fair value of plan assets Fair value of plan assets at beginning of the year 2489.64 Expected return on plan assets 229.17 Contributions Benefits paid Actuarial gain / (loss) on plan assets 169.06 Employers contributions Plan participants contributions Fair value of plan assets at end of the year 2887.87 Net asset / (liability) recognized in the Balance Sheet Projected benefit obligation, at the end of the year (3299.39) Fair value of plan assets at end of the year 2887.87 Net asset / (liability) recognized in the Balance Sheet (411.52) Expense recognized in the Profit and Loss Account Current service cost 186.85 Interest cost 223.43 Expected return on plan assets (229.17) Net actuarial (gain) / loss recognized 176.32 Expense recognized in the Profit and Loss Account 357.43 Balance Sheet reconciliation Opening net liability 451.76 Transition liability adjusted in General Reserve at the beginning of the year (77.81) Expense as above 357.43 Benefits paid (319.86) Amount recognized in the Balance Sheet 411.52 Actuarial assumptions Discount rate 7.50% Annual increase in compensation 5% to 9.25 % Expected rate of return on plan assets 8.00 % The estimates of annual increase in compensation take account of inflation and supply and demand condition in the employment market.

Provident Fund 9084.11 (1228.78) 33.68 415.66 529.59 8834.26 8210.58 645.50 (1228.78) (376.45) 415.66 529.59 8196.10 (8834.26) 8196.10 (638.16) 61.08 (178.29) (117.21) 117.97 755.56 (117.21) (118.16) 638.16 7.50% 5% to 9.25 %

95

Notes to the Consolidated Financial Statements for the year ended 30th November, 2008
This being the first year of adoption of Accounting Standard AS 15 (Revised), comparative figures for previous year have not been provided. Defined Contribution Plan: During the year, the Company has contributed Rs. 22.01 lakhs towards Employees Superannuation Fund. 15 Prior year figures have been regrouped wherever necessary to conform to current years presentation. For and on behalf of the Board R A SHAH KEWAL HANDA P SHAH B M GAGRAT (Dr) Mumbai, 30th January, 2009 PRAJEET NAIR Chairman Managing Director

Directors

Company Secretary

96

Pfizer Limited
Regd. Office : Pfizer Centre, Patel Estate, Off S. V. Road, Jogeshwari (West), Mumbai - 400 102.

PROXY
I/We ............................................................................................................................................................................. of ........................................................................................................................................................ in the district of ................................................................................................ being a member/members of Pfizer Limited, hereby appoint ........................................................ of .................................in the district of ............................................... ............................. or failing him/her ................................. of ........................................................... in the district of .................................................................. as my/our proxy to attend and vote for me/us on my/our behalf at the 58th Annual General Meeting of the Company to be held on Wednesday, April 15, 2009 and at any adjournment thereof. Signed this ........................................... day of .............................. 2009. Folio No. / Client ID : No. of Shares
Please Affix Rs.1 Signature................................................ Revenue Stamp

Note: The Proxy form duly completed and signed should be deposited at the Registered Office of the Company shown above, not later than 48 hours before the time of the Meeting.

Pfizer Limited
Regd. Office : Pfizer Centre, Patel Estate, Off S. V. Road, Jogeshwari (West), Mumbai - 400 102.

ATTENDANCE SLIP To be handed over at the entrance of Meeting Hall

I hereby record my presence at the FIFTY-EIGHTH ANNUAL GENERAL MEETING of the Company at Y.B. Chavan Pratishthan Auditorium, General Jagannath Bhosale Marg, Mumbai 400 021 on Wednesday April 15, 2009 at 3.00 P.M.
Name of the Member ........................................................................................................................................................................... Folio / Client ID No. ............................................................................................................................................................................. Name of the Proxy / Representative (In Block Letter) (To be filled in if the Proxy / Representative attends instead of the Member ...........................................................................................................................................................

SIGNATURE OF THE MEMBER OR PROXY / REPRESENTATIVE

Pfizer Limited
Regd. Office : Pfizer Centre, Patel Estate, Off S. V. Road, Jogeshwari (West), Mumbai - 400 102. Tel No. : 022 6693 2000 Fax : 022 6693 2377 APPLICABLE TO SHAREHOLDERS HOLDING SHARES IN PHYSICAL FORM March 1, 2009 Dear Shareholder, Securities & Exchange Board of India vide its Circulars dated 27th April, 2007 and 25th June, 2007 has made it mandatory for every participant in securities/capital market to furnish Income-tax Permanent Account Number (PAN No.). It is also advisable for shareholders who hold their shares in physical form to register their current/latest signature with the Company to avoid any delay/rejections in processing of requests. In view of this, shareholders are requested to kindly fill up and return the Registration Form provided hereunder, along with copy of the PAN Card of all holders (including joint holders), duly attested by Bank Manager under his official seal and stating full name & address and registration number, to the Companys Registrars & Transfer Agents, Karvy Computershare Pvt. Ltd., at the address mentioned below. Thanking you, Yours faithfully, For Pfizer Limited Prajeet Nair Company Secretary

Karvy Computershare Pvt. Ltd. UNIT: Pfizer Limited Plot No.17-24, Vittalrao Nagar, Near Image Hospital, Madhapur, Hyderabad 500 081. REGISTRATION FORM

From Name: Address : __________________________________________________ __________________________________________________ __________________________________________________

Date:

To, Karvy Computershare Pvt. Ltd. UNIT: Pfizer Limited Plot No.17-24, Vittalrao Nagar, Near Image Hospital, Madhapur, Hyderabad 500 081. Dear Sir, Sub: Registration of Permanent Account Number (PAN No.) / Specimen Signature. With reference to the Circular dated March 1, 2009, we give below my/our PAN No. Also enclosed is/are the photocopies of the PAN Card(s), duly attested. I/We request you to kindly register the same and my/our latest signature(s) against my/our folio registered with you. Folio No.:______________________________ Tel. No.:____________________ Email:_________________________________________ Name of the Shareholder(s) (Including joint holders) PAN No. * Signature

*In case of accountholders other than individual, kindly submit an attested copy of the required authorization along with the specimen signatures. Attested by: (Name & Address) ATTESTATION

(To be attested by Nationalized Bank Manager)