SCIENCE OF JUBILANT PARTNERSHIPS
ScienceActive
ScienceActive
Works
Bhartiagram, Gajraula
Distt. Jyotiba Phoolay Nagar - 244 223
Uttar Pradesh, India
Tel. : +91 5924 252353-60
Fax. : +91 5924 252352
56, Industrial Area,
Nanjangud, Distt. Mysore - 571 302
Karnataka, India
Tel. : +91 8221 228402-08
Fax. : +91 8221 228410-11
Block 133, Village Samlaya
Taluka Savli, Distt. Vadodara - 391 520
Gujarat, India
Tel. : +91 2667 251361, 251306, 251563-4
Fax. : +91 2667 251633, 251305
Village Nimbut, Rly Stn. Nira
Distt. Pune - 412 102
Maharashtra, India
Tel. : +91 2112 269155,67
Fax. : +91 2112 268154
Jubilant Pharmaceuticals Inc.
207 Kinley Drive, Salisbury, MD, 21801
Tel. : +1 410 860 8500
ANNUAL REPORT
2 0 0 5 - 2 0 0 6
To find out more on what we can do for you, visit us at www.jubl.com
or call us at 91-120-2516601
Corporate Office
1A, Sector 16A, Noida - 201 301
Uttar Pradesh, India
Tel : +91 120 2516601,11
Fax. : +91 120 2516628-30
International Subsidiaries Indian Subsidiaries
Jubilant Organosys (USA) Inc. Jubilant Biosys Ltd.
700, Canal Street, 5th Floor, Stamford, CT 06902, USA #17, Industrial Suburb,
Tel. : +1 203 3247200; Fax. : +1 203 3247211 2nd Stage, Industrial Area,
Yeshwantpur, ANNUAL REPORT
Jubilant Organosys (Shanghai) Ltd. Bangalore - 560022, India
G/16F, Jui She Fuxing Masion, 918 Huai Hai Zhong Road, Tel. : 91 80 66628400
Shanghai PC 200 020, China Fax. : 91 80 66628333
Tel. : +86 21 64159378; Fax. : +86 21 64152793
Jubilant Chemsys Ltd.
Pharmaceuticals Services Inc. SA-NV D-12, Sector 59, Noida - 201 301
Kraanlei 27, B9000, Gent, Belgium Uttar Pradesh, India
Tel. : +32 9 2331404; Fax. : +32 9 2330016 Tel. : 91 120 2580309
Fax. : 91 120 2580310
PSI supply SA-NV
Kraanlei 27, B9000, Gent, Belgium Clinsys India Ltd.
Tel. : +32 9 2331404; Fax. : +32 9 2330016 C-46, Sector 62, Noida - 201 301
Uttar Pradesh, India
Jubilant Pharmaceuticals Inc. Tel. : +91 120 2404332-35
207 Kiley Drive, Salisbury, MD, 21801 Fax. : +91 120 2404336
Tel. : +1 410 860 8500
2005-2006
Clinsys, Inc.
1 Connell Drive, Suite 3000
Scienceof Jubilant
Thomson Press
Berkeley Heights, New Jersey, NJ 07922
Partnerships
Tel. : +1 908 464 7500
1800 JFK Boulevard, Suite 1540
Philadelphia, PA 19103
Tel. : +1 215 972 1530
Financials at a glance Contents
Net Sales (Rs. Million) International Sales (Rs. Million)

39.5%
28.6%
Net Sales-Growth% International Sales /Net Sales%
5951

35.9%
36.2%

15054
20.4%

11703 4202
19.9%

26.6%
27.7%
9.5%

8592

19.9%
7134 2287
5949 1973
1183

2002 2003 2004 2005 2006 2002 2003 2004 2005 2006

51.9
16.0

Promoters
Institutional Investors
32.1
Public/Others

Shareholding Pattern Market Capitalization as on 31st March 2006 –Rs. 34,621 Million

EBITDA (Rs. Million) PBT (Rs. Million)

11.2%
Corporate Information 2
15.7%
19.2%

14%

EBITDA Margin % PBT Margin %

1641 1681 Chairmen’s Message 4
2367
19.2%

2243
11.2%

Executive Directors’ Messages 7

18%

1650
Directors 11
14.8%

966
1281
9%

880 642 Management Discussion and Analysis 13

3.6%

213 Directors’ Report 44

2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 Report on Corporate Governance 58
Auditor’s Report & Annexure to Auditor’s Report 69
Balance Sheet and Profit & Loss Account 72
14.1%

Cash Flow Statement 74

PAT (Rs. Million) Capital Employed (Rs. Million)
10.2%

8.6%

PAT Margin % Return on Capital Employed % 13171 Schedules 75

1192 1297
22.2%

Notes to Accounts 86
9.1%

20.0%
19.0%

8380 Auditor’s Report to Consolidated Accounts 103

12.7%

782
6.7%

6632
4925 5503 Consolidated Balance Sheet and Profit & Loss Accounts 104
3.9%

481

232 Consolidated Cash Flow Statement 106

Schedules to Consolidated Accounts 107
2002 2003 2004 2005 2006 2002 2003 2004 2005 2006
Notes to Consolidated Accounts 118
Financials at a glance Contents
Net Sales (Rs. Million) International Sales (Rs. Million)

39.5%
28.6%
Net Sales-Growth% International Sales /Net Sales%
5951

35.9%
36.2%

15054
20.4%

11703 4202
19.9%

26.6%
27.7%
9.5%

8592

19.9%
7134 2287
5949 1973
1183

2002 2003 2004 2005 2006 2002 2003 2004 2005 2006

51.9
16.0

Promoters
Institutional Investors
32.1
Public/Others

Shareholding Pattern Market Capitalization as on 31st March 2006 –Rs. 34,621 Million

EBITDA (Rs. Million) PBT (Rs. Million)

11.2%
Corporate Information 2
15.7%
19.2%

14%

EBITDA Margin % PBT Margin %

1641 1681 Chairmen’s Message 4
2367
19.2%

2243
11.2%

Executive Directors’ Messages 7

18%

1650
Directors 11
14.8%

966
1281
9%

880 642 Management Discussion and Analysis 13

3.6%

213 Directors’ Report 44

2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 Report on Corporate Governance 58
Auditor’s Report & Annexure to Auditor’s Report 69
Balance Sheet and Profit & Loss Account 72
14.1%

Cash Flow Statement 74

PAT (Rs. Million) Capital Employed (Rs. Million)
10.2%

8.6%

PAT Margin % Return on Capital Employed % 13171 Schedules 75

1192 1297
22.2%

Notes to Accounts 86
9.1%

20.0%
19.0%

8380 Auditor’s Report to Consolidated Accounts 103

12.7%

782
6.7%

6632
4925 5503 Consolidated Balance Sheet and Profit & Loss Accounts 104
3.9%

481

232 Consolidated Cash Flow Statement 106

Schedules to Consolidated Accounts 107
2002 2003 2004 2005 2006 2002 2003 2004 2005 2006
Notes to Consolidated Accounts 118
Corporate Information
Registered Office
Corporate Office
Statutory Auditors
US GAAP Auditors
Cost Auditors
Internal Auditors
Company Secretary
Registrars & Transfer Agents
Bankers
JUBILANT ORGANOSYS LIMITED
Board of Directors
Bhartiagram, Gajraula, Distt. Jyotiba Phoolay Nagar 244 223, Chairman and Managing Director Shyam S Bhartia
Uttar Pradesh, India
Co-Chairman and Managing Director Hari S Bhartia
1A, Sector 16A, Noida 201 301, Uttar Pradesh, India
Executive Directors Dr. J M Khanna
K N Gutgutia & Co. S N Singh
11K Gopala Tower, 25, Rajendra Place S Bang
New Delhi 110 048, India
Directors Arabinda Ray
KPMG, 4B, DLF Corporate Park, DLF City Phase III, Bodhishwar Rai
Gurgaon 122 002, India Surendra Singh
H K Khan
J K Kabra & Co., 552/1B, Arjun Street, Main Viswas Road,
Dr. Naresh Trehan
Viswas Nagar, Delhi 110 032, India
Ajay Relan
Ernst & Young Pvt. Ltd., Ernst & Young Tower, Abhay Havaldar
B-26, Qutab Institutional Area, New Delhi 110 016, India
Lalit Jain
Alankit Assignments Ltd., Alankit House, 2E/21,
Executive Director – Finance R Sankaraiah
Jhandewalan Extension, New Delhi 110055, India
Tel.: +91-11-23541234, 42541234
ICICI Bank Ltd.
State Bank of India
Export Import Bank of India
Punjab National Bank
Corporation Bank
Canara Bank
ABN AMRO Bank N.V.
Standard Chartered Bank
ING Vysya Bank Ltd.
ANNUAL REPORT - 2005-2006 JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006
2 3
Corporate Information
Registered Office
Corporate Office
Statutory Auditors
US GAAP Auditors
Cost Auditors
Internal Auditors
Company Secretary
Registrars & Transfer Agents
Bankers
JUBILANT ORGANOSYS LIMITED
Board of Directors
Bhartiagram, Gajraula, Distt. Jyotiba Phoolay Nagar 244 223, Chairman and Managing Director Shyam S Bhartia
Uttar Pradesh, India
Co-Chairman and Managing Director Hari S Bhartia
1A, Sector 16A, Noida 201 301, Uttar Pradesh, India
Executive Directors Dr. J M Khanna
K N Gutgutia & Co. S N Singh
11K Gopala Tower, 25, Rajendra Place S Bang
New Delhi 110 048, India
Directors Arabinda Ray
KPMG, 4B, DLF Corporate Park, DLF City Phase III, Bodhishwar Rai
Gurgaon 122 002, India Surendra Singh
H K Khan
J K Kabra & Co., 552/1B, Arjun Street, Main Viswas Road,
Dr. Naresh Trehan
Viswas Nagar, Delhi 110 032, India
Ajay Relan
Ernst & Young Pvt. Ltd., Ernst & Young Tower, Abhay Havaldar
B-26, Qutab Institutional Area, New Delhi 110 016, India
Lalit Jain
Alankit Assignments Ltd., Alankit House, 2E/21,
Executive Director – Finance R Sankaraiah
Jhandewalan Extension, New Delhi 110055, India
Tel.: +91-11-23541234, 42541234
ICICI Bank Ltd.
State Bank of India
Export Import Bank of India
Punjab National Bank
Corporation Bank
Canara Bank
ABN AMRO Bank N.V.
Standard Chartered Bank
ING Vysya Bank Ltd.
ANNUAL REPORT - 2005-2006 JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006
2 3
Chairmen’s Message
“Jubilant is today well positioned to participate in the global outsourcing
opportunity in pharmaceuticals sector and become a partner of choice to the life
sciences industry. We have already made considerable progress in that direction,
having signed several annual CRAMS contracts with global life sciences
customers. ”
Dear shareholders,
We are pleased to have this opportunity to discuss our perspectives on
Jubilant's operating environment and outlook with you in view of the
recently concluded financial year and the emerging sector trends.
The economy: continued robustness
The financial year under review has been good for the Indian economy,
which maintained its status as one the fastest growing economies in the
world. The global economy too fared relatively better compared to previous
years, despite the impact of oil-price driven inflationary pressures. The
global pharmaceuticals and life sciences sector continues to grow at a
healthy pace and we believe that this sector is likely to be among the
better performing segments of the global economy, with substantial
opportunities unfolding for high quality, cost-competitive players
in India.
The pharmaceuticals and life sciences industry: outsourcing leads
the way
Within the pharma and life sciences sector, the generic
pharmaceuticals segment is displaying great potential, as
increasing cost pressures on both generic and innovator pharma
companies in the regulated Western markets prod them to
explore avenues that reduce cost without
ANNUAL REPORT - 2005-2006
XX
compromising on quality. Indeed, in recent months, the dynamics within the generic drugs market has been playing an
increasingly important role in defining the overall direction for the pharmaceuticals industry globally. We see two distinct
trends emerge with regard to the global pharma and life sciences sector. First, the generic pharma market has attained a size
lucrative enough for even innovator companies consider participating in it, and secondly, as in any high potential segment,
some consolidation on a global basis has already begun. This wave of consolidation has also witnessed active participation by
Indian players, including Jubilant Organosys, that have the scale and capabilities to
leverage such initiatives to create better value.
“Jubilant The emphasis on reducing costs and maintaining quality levels is also driving
Organosys has outsourcing in the pharma and life sciences sector, with large global players partnering
with high quality companies in low cost regions, such as India, for their requirements.
always believed in Jubilant is today well positioned to participate in this global outsourcing opportunity and
partnership become a partner of choice to the global life sciences industry. We have already made
approach. Our considerable progress in that direction, having signed annual CRAMS contracts amounting
to about US$70 million with global life sciences customers.
partnerships with Jubilant Organosys: Science of Jubilant Partnership
various Jubilant Organosys has always believed in par tnership
stakeholders are approach. Our partnerships with various stakeholders are based
on a solid platform of trust, transparency and mutually beneficial
based on a solid decision-making. Over the years, we have laid an emphasis on
platform of trust, understanding the needs of our customers and offering them
transparency and solutions specially developed to cater to their requirements. This
has led to Jubilant Partnerships – Partnerships based on firm
mutually understanding of science and the science of mutually
beneficial rewarding relationships.
decision-making.” Our rapid growth over the past several years has been
innovation-led, enabling us to extend our presence beyond Indian
shores to encompass some of the largest, most successful pharma and
life science majors as our customers. Continually investing in R&D and fostering an organizational
culture that promotes innovation, we have today been able to carve a niche for ourselves
as an outsourcing partner of choice for the global pharma and life sciences industry
across the value chain, from research services to contract manufacturing including
collaboration on high-end drug discovery and clinical research. We have engaged
with innovator pharmaceutical companies in the area of drug discovery which
demonstrates our ability to engage with demanding global customers and
provide them with knowledge-driven services at competitive cost while
matching their high standards for quality and precision. We are offering
functional discovery services to global pharmaceuticals and biotech
companies by forging integrated portfolio partnerships.
Another potentially high growth area for outsourcing is clinical research
where Jubilant has uniquely positioned itself through acquisition of a CRO
in USA. We are in the process of building a global clinical research
organization with multi-centric facilities in USA, Europe and India.
We intend to leverage the multiple India-specific advantages as
well as our own skills in the area of clinical trials
and data management to ramp up our clinical
research operations.
It is our firm belief that as the
regulatory framework in India improves
JUBILANT ORGANOSYS LIMITED
Chairmen’s Message
“Jubilant is today well positioned to participate in the global outsourcing
opportunity in pharmaceuticals sector and become a partner of choice to the life
sciences industry. We have already made considerable progress in that direction,
having signed several annual CRAMS contracts with global life sciences
customers. ”
Dear shareholders,
We are pleased to have this opportunity to discuss our perspectives on
Jubilant's operating environment and outlook with you in view of the
recently concluded financial year and the emerging sector trends.
The economy: continued robustness
The financial year under review has been good for the Indian economy,
which maintained its status as one the fastest growing economies in the
world. The global economy too fared relatively better compared to previous
years, despite the impact of oil-price driven inflationary pressures. The
global pharmaceuticals and life sciences sector continues to grow at a
healthy pace and we believe that this sector is likely to be among the
better performing segments of the global economy, with substantial
opportunities unfolding for high quality, cost-competitive players
in India.
The pharmaceuticals and life sciences industry: outsourcing leads
the way
Within the pharma and life sciences sector, the generic
pharmaceuticals segment is displaying great potential, as
increasing cost pressures on both generic and innovator pharma
companies in the regulated Western markets prod them to
explore avenues that reduce cost without
ANNUAL REPORT - 2005-2006
XX
compromising on quality. Indeed, in recent months, the dynamics within the generic drugs market has been playing an
increasingly important role in defining the overall direction for the pharmaceuticals industry globally. We see two distinct
trends emerge with regard to the global pharma and life sciences sector. First, the generic pharma market has attained a size
lucrative enough for even innovator companies consider participating in it, and secondly, as in any high potential segment,
some consolidation on a global basis has already begun. This wave of consolidation has also witnessed active participation by
Indian players, including Jubilant Organosys, that have the scale and capabilities to
leverage such initiatives to create better value.
“Jubilant The emphasis on reducing costs and maintaining quality levels is also driving
Organosys has outsourcing in the pharma and life sciences sector, with large global players partnering
with high quality companies in low cost regions, such as India, for their requirements.
always believed in Jubilant is today well positioned to participate in this global outsourcing opportunity and
partnership become a partner of choice to the global life sciences industry. We have already made
approach. Our considerable progress in that direction, having signed annual CRAMS contracts amounting
to about US$70 million with global life sciences customers.
partnerships with Jubilant Organosys: Science of Jubilant Partnership
various Jubilant Organosys has always believed in par tnership
stakeholders are approach. Our partnerships with various stakeholders are based
on a solid platform of trust, transparency and mutually beneficial
based on a solid decision-making. Over the years, we have laid an emphasis on
platform of trust, understanding the needs of our customers and offering them
transparency and solutions specially developed to cater to their requirements. This
has led to Jubilant Partnerships – Partnerships based on firm
mutually understanding of science and the science of mutually
beneficial rewarding relationships.
decision-making.” Our rapid growth over the past several years has been
innovation-led, enabling us to extend our presence beyond Indian
shores to encompass some of the largest, most successful pharma and
life science majors as our customers. Continually investing in R&D and fostering an organizational
culture that promotes innovation, we have today been able to carve a niche for ourselves
as an outsourcing partner of choice for the global pharma and life sciences industry
across the value chain, from research services to contract manufacturing including
collaboration on high-end drug discovery and clinical research. We have engaged
with innovator pharmaceutical companies in the area of drug discovery which
demonstrates our ability to engage with demanding global customers and
provide them with knowledge-driven services at competitive cost while
matching their high standards for quality and precision. We are offering
functional discovery services to global pharmaceuticals and biotech
companies by forging integrated portfolio partnerships.
Another potentially high growth area for outsourcing is clinical research
where Jubilant has uniquely positioned itself through acquisition of a CRO
in USA. We are in the process of building a global clinical research
organization with multi-centric facilities in USA, Europe and India.
We intend to leverage the multiple India-specific advantages as
well as our own skills in the area of clinical trials
and data management to ramp up our clinical
research operations.
It is our firm belief that as the
regulatory framework in India improves
JUBILANT ORGANOSYS LIMITED

to meet the needs of an industry where IPR safeguards are essential, Indian players such as Jubilant will be able to capture an
even larger slice of the global life sciences outsourcing business.
We, at our end, remain committed to better ourselves, find better ways to do things, innovate and effectively leverage our
growing knowledge.
The outlook: growth-oriented and strong
Our performance in FY 2006, which is discussed in greater details elsewhere in this Annual Report, has been in line with
our strategy, where we have made significant progress in meeting our long-term objectives. During the year under review, we
continued to undertake inorganic and organic initiatives, such as the acquisition of Trigen Laboratories and Target Research
Associates and investments in CRAMS and API capacity expansions that provide us with a strong platform for growth. As we
now enter one of the most exciting and promising phases of our growth, cognizant of the changes in the global marketplace
and the opportunities it offers, we are confident that we have the resources and the resolve to successfully convert our internal
capabilities into business and operational achievements. We are today an innovation-led organization with capabilities that
act as natural competitive advantages. This gives us confidence in our outlook for the future, which we believe is growth-
oriented and strong.
Going forward, we are confident of delivering higher sales growth than achieved in the year under review, as many of our
growth initiatives in the pharmaceuticals and life sciences segment implemented over the last 2-3 years begin contributing to
performance. We also expect an expansion in operating margins as we continue to move up the value chain into higher value
added business areas.
Before concluding, we would like to express our appreciation to all our stakeholders who have supported us over the
years. Specifically, we would like to thank our independent Board members for their support and guidance, both on the Board
and as members of various committees. We would also like to acknowledge the continued support of our customers, vendors,
employees, bankers, lenders, investors and shareholders in our quest to create a truly global organization with knowledge and
innovation at its core.
Shyam S Bhartia Hari S Bhartia
Chairman and Managing Director Co-Chairman and Managing Director
JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006
6 7
Executive Directors’ Messages
Dr. J M Khanna
Our Pharma and Life Science business continues to be the driver of our corporate growth. A key component of our strategy
to further grow this business is to firmly establish ourselves as a reliable partner to both innovator and generic companies in
the pharmaceuticals and life sciences industry worldwide, backed by a robust R&D infrastructure and knowledge bank
created over the years. In our APIs business, we are fostering long-term partnerships with generic pharmaceutical companies
in the regulated markets of USA, Europe and Japan. Our partnership-based, innovation-led strategy has been delivering
results, with about 80% of our API export revenues coming from these regulated markets. We have also been expanding our
global footprint in the APIs market, and during the past year we successfully entered the new market of Latin America and
forged new partnerships with generic pharmaceutical companies.
“A key component of our strategy to further grow
this business is to firmly establish ourselves as a
reliable partner to both innovator and generic
companies in the pharmaceuticals and life sciences
industry worldwide, backed by a robust R&D
infrastructure and knowledge bank created
over the years.”
Our focus in APIs continues to be in the tapeutic herareas of Central Nervous System, Cardio
Vascular System, Gastro Intestinal, Respiratory and Anti-infectives. Targeting these
therapeutic areas, we today have a strong portfolio of products in APIs. In addition to
targeting blockbuster APIs in select therapeutic categories, we are also developing niche
APIs in areas such as oncology and APIs based on pyridine chemistry where we have global
leadership.
A couple of years ago, we initiated our further ascension up the value chain by
leveraging our strong presence in the APIs business to emerge as a player with an
integrated offering of APIs and dosage forms. We have made noteworthy progress in that
direction during the year under review. In dosage forms our focus is on the North
American and European markets, which we will cater to through manufacturing
facilities both in India and USA. We have a clear strategy of cooperation with innovator
pharmaceutical companies. This strategy is in line with our strategic objective to be a
partner of choice to global pharmaceutical and biotech innovator companies.
A key success enabler for us in the pharma business is our strong R&D and
manufacturing skills, which results in the development of cost efficient processes. Our
commitment to protect and respect IPRs too has helped – and I believe will continue to
help us deepen our relationships with global pharma majors. I am confident that our
investments in R&D and manufacturing will help us drive significant growth in this
business going forward.
JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006

to meet the needs of an industry where IPR safeguards are essential, Indian players such as Jubilant will be able to capture an
even larger slice of the global life sciences outsourcing business.
We, at our end, remain committed to better ourselves, find better ways to do things, innovate and effectively leverage our
growing knowledge.
The outlook: growth-oriented and strong
Our performance in FY 2006, which is discussed in greater details elsewhere in this Annual Report, has been in line with
our strategy, where we have made significant progress in meeting our long-term objectives. During the year under review, we
continued to undertake inorganic and organic initiatives, such as the acquisition of Trigen Laboratories and Target Research
Associates and investments in CRAMS and API capacity expansions that provide us with a strong platform for growth. As we
now enter one of the most exciting and promising phases of our growth, cognizant of the changes in the global marketplace
and the opportunities it offers, we are confident that we have the resources and the resolve to successfully convert our internal
capabilities into business and operational achievements. We are today an innovation-led organization with capabilities that
act as natural competitive advantages. This gives us confidence in our outlook for the future, which we believe is growth-
oriented and strong.
Going forward, we are confident of delivering higher sales growth than achieved in the year under review, as many of our
growth initiatives in the pharmaceuticals and life sciences segment implemented over the last 2-3 years begin contributing to
performance. We also expect an expansion in operating margins as we continue to move up the value chain into higher value
added business areas.
Before concluding, we would like to express our appreciation to all our stakeholders who have supported us over the
years. Specifically, we would like to thank our independent Board members for their support and guidance, both on the Board
and as members of various committees. We would also like to acknowledge the continued support of our customers, vendors,
employees, bankers, lenders, investors and shareholders in our quest to create a truly global organization with knowledge and
innovation at its core.
Shyam S Bhartia Hari S Bhartia
Chairman and Managing Director Co-Chairman and Managing Director
JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006
6 7
Executive Directors’ Messages
Dr. J M Khanna
Our Pharma and Life Science business continues to be the driver of our corporate growth. A key component of our strategy
to further grow this business is to firmly establish ourselves as a reliable partner to both innovator and generic companies in
the pharmaceuticals and life sciences industry worldwide, backed by a robust R&D infrastructure and knowledge bank
created over the years. In our APIs business, we are fostering long-term partnerships with generic pharmaceutical companies
in the regulated markets of USA, Europe and Japan. Our partnership-based, innovation-led strategy has been delivering
results, with about 80% of our API export revenues coming from these regulated markets. We have also been expanding our
global footprint in the APIs market, and during the past year we successfully entered the new market of Latin America and
forged new partnerships with generic pharmaceutical companies.
“A key component of our strategy to further grow
this business is to firmly establish ourselves as a
reliable partner to both innovator and generic
companies in the pharmaceuticals and life sciences
industry worldwide, backed by a robust R&D
infrastructure and knowledge bank created
over the years.”
Our focus in APIs continues to be in the tapeutic herareas of Central Nervous System, Cardio
Vascular System, Gastro Intestinal, Respiratory and Anti-infectives. Targeting these
therapeutic areas, we today have a strong portfolio of products in APIs. In addition to
targeting blockbuster APIs in select therapeutic categories, we are also developing niche
APIs in areas such as oncology and APIs based on pyridine chemistry where we have global
leadership.
A couple of years ago, we initiated our further ascension up the value chain by
leveraging our strong presence in the APIs business to emerge as a player with an
integrated offering of APIs and dosage forms. We have made noteworthy progress in that
direction during the year under review. In dosage forms our focus is on the North
American and European markets, which we will cater to through manufacturing
facilities both in India and USA. We have a clear strategy of cooperation with innovator
pharmaceutical companies. This strategy is in line with our strategic objective to be a
partner of choice to global pharmaceutical and biotech innovator companies.
A key success enabler for us in the pharma business is our strong R&D and
manufacturing skills, which results in the development of cost efficient processes. Our
commitment to protect and respect IPRs too has helped – and I believe will continue to
help us deepen our relationships with global pharma majors. I am confident that our
investments in R&D and manufacturing will help us drive significant growth in this
business going forward.
JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006
 Mr. S N Singh
Innovation has been the key to our growth since we began operations. We have,
over the years, provided innovative solutions to our customers in India and abroad
through our accumulated knowledge and by leveraging our integrated operations, with
our industrial products business acting as a strong platform from which we deliver
value added Custom Research and Manufacturing Services (CRAMS).
CRAMS, like the rest of our pharma and life science operations, is a very important
growth area for us. I am glad to report that during the financial year under review, we
maintained our leadership status in this business as the largest CRAMS company in India having the integrated capability to
manufacture intermediates and fine chemicals right from milligram quantity at the lab scale to metric tonne quantities through
our commercial scale multi-purpose plants.
The cornerstone of our CRAMS strategy is our thrust on reinforcing the strong relationships we enjoy with global life
sciences companies. We continue to work closely with these companies with the objective of entrenching ourselves as their
outsourcing partner of choice and supplying customized products throughout their product development and
commercialization process.
During the year under review, we continued to enhance operational excellence in our CRAMS business through ongoing
improvements in cost, quality, and service. At the same time, we have also de-risked our business by diversifying our
customer base and introducing new products, thereby reducing our dependence on a few customers or products.
During the year, the Industrial Chemicals business witnessed high input costs for the major part of the year and stable
sales price which resulted in margin pressure. With lower raw material cost now, we are confident of improved profitability in
this business. We expanded our acetyls portfolio by adding a new product during the year under review. The Performance
Chemicals business witnessed significant improvement in performance due to improved product mix and market presence. In
both these businesses, the Company is focusing on expanding its presence in the international markets.
I firmly believe that our leadership position and scale of operations, combined with our ability to augment our product
portfolio through our R&D base, will allow us to offer cost efficient solutions to our customers on a long-term basis.
JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006
8 9
Mr. S Bang
Jubilant Organosys, within a span of a few years, has been able to achieve what very few organizations in the world can
claim to have achieved in a similar timeframe. Transforming itself into a knowledge-driven company with a global clientele
that includes some of the most prestigious names in the international pharmaceuticals and life sciences industry, Jubilant
today has an outstanding reputation as a proven partner for the world's pharma and life sciences industry.
Our ability to deliver high quality products and services at competitive costs is the result of a clear, focused strategy to
make sound investments in modern technologies, adopt new and superior processes, keep a tight control over our supply
chain, and continually learn from our past experiences. This approach continues to yield dividends in terms of better
“Our ability to deliver high quality products and services at competitive
costs is the result of a clear, focused strategy to make sound
investments in modern technologies, adopt new and superior
processes, keep a tight control over our supply chain,
and continually learn from our past experiences.”
operational metrics and increased manufacturing efficiency.
During the year under review, we continued to concentrate on enhancing our
productivity and raising the bar on quality through ongoing initiatives such as
Velocity, our six-sigma programme. The company-wide Velocity initiative, now in its
third year of implementation, focuses on monitoring operational performance across
all aspects of our business and identifying ways to enhance performance, quality, and
productivity leading to operational excellence. We now have 10 master black belts,
40 black belts and 100 green belts in manufacturing and R&D.
As a responsible corporate that understands the long term benefits of pursuing a
sustainable growth path, we have over the years made efforts to minimize the impact
of our operations on the environment and make a positive contribution to the society
in general while concurrently delivering financial growth.
We have benchmarked our processes and practices across all manufacturing
locations with established international standards, and have initiated intensive
training programmes using international consultants for our people and partners
aimed at aligning our safety standards and systems with some of the best known
companies in the world.
Given our manufacturing strengths, operating efficiencies, and world-class
quality, coupled with our thrust on corporate sustainability, I believe we are well
poised to continue to chart a high growth trajectory in the coming years.
JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006
 Mr. S N Singh
Innovation has been the key to our growth since we began operations. We have,
over the years, provided innovative solutions to our customers in India and abroad
through our accumulated knowledge and by leveraging our integrated operations, with
our industrial products business acting as a strong platform from which we deliver
value added Custom Research and Manufacturing Services (CRAMS).
CRAMS, like the rest of our pharma and life science operations, is a very important
growth area for us. I am glad to report that during the financial year under review, we
maintained our leadership status in this business as the largest CRAMS company in India having the integrated capability to
manufacture intermediates and fine chemicals right from milligram quantity at the lab scale to metric tonne quantities through
our commercial scale multi-purpose plants.
The cornerstone of our CRAMS strategy is our thrust on reinforcing the strong relationships we enjoy with global life
sciences companies. We continue to work closely with these companies with the objective of entrenching ourselves as their
outsourcing partner of choice and supplying customized products throughout their product development and
commercialization process.
During the year under review, we continued to enhance operational excellence in our CRAMS business through ongoing
improvements in cost, quality, and service. At the same time, we have also de-risked our business by diversifying our
customer base and introducing new products, thereby reducing our dependence on a few customers or products.
During the year, the Industrial Chemicals business witnessed high input costs for the major part of the year and stable
sales price which resulted in margin pressure. With lower raw material cost now, we are confident of improved profitability in
this business. We expanded our acetyls portfolio by adding a new product during the year under review. The Performance
Chemicals business witnessed significant improvement in performance due to improved product mix and market presence. In
both these businesses, the Company is focusing on expanding its presence in the international markets.
I firmly believe that our leadership position and scale of operations, combined with our ability to augment our product
portfolio through our R&D base, will allow us to offer cost efficient solutions to our customers on a long-term basis.
JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006
8 9
Mr. S Bang
Jubilant Organosys, within a span of a few years, has been able to achieve what very few organizations in the world can
claim to have achieved in a similar timeframe. Transforming itself into a knowledge-driven company with a global clientele
that includes some of the most prestigious names in the international pharmaceuticals and life sciences industry, Jubilant
today has an outstanding reputation as a proven partner for the world's pharma and life sciences industry.
Our ability to deliver high quality products and services at competitive costs is the result of a clear, focused strategy to
make sound investments in modern technologies, adopt new and superior processes, keep a tight control over our supply
chain, and continually learn from our past experiences. This approach continues to yield dividends in terms of better
“Our ability to deliver high quality products and services at competitive
costs is the result of a clear, focused strategy to make sound
investments in modern technologies, adopt new and superior
processes, keep a tight control over our supply chain,
and continually learn from our past experiences.”
operational metrics and increased manufacturing efficiency.
During the year under review, we continued to concentrate on enhancing our
productivity and raising the bar on quality through ongoing initiatives such as
Velocity, our six-sigma programme. The company-wide Velocity initiative, now in its
third year of implementation, focuses on monitoring operational performance across
all aspects of our business and identifying ways to enhance performance, quality, and
productivity leading to operational excellence. We now have 10 master black belts,
40 black belts and 100 green belts in manufacturing and R&D.
As a responsible corporate that understands the long term benefits of pursuing a
sustainable growth path, we have over the years made efforts to minimize the impact
of our operations on the environment and make a positive contribution to the society
in general while concurrently delivering financial growth.
We have benchmarked our processes and practices across all manufacturing
locations with established international standards, and have initiated intensive
training programmes using international consultants for our people and partners
aimed at aligning our safety standards and systems with some of the best known
companies in the world.
Given our manufacturing strengths, operating efficiencies, and world-class
quality, coupled with our thrust on corporate sustainability, I believe we are well
poised to continue to chart a high growth trajectory in the coming years.
JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006
 Directors
Mr. R Sankaraiah
Jubilant's growth strategy is built on the philosophy of sharing knowledge, Mr. Arabinda Ray
exploring new ideas, products and processes, and turning dreams into commercial Mr. Abhay Havaldar
reality. We are in a position to continue to execute this strategy because Jubilant Mr. H K Khan Mr. Ajay Relan
remains a financially strong company, fully capable of making the investments
necessary to drive future growth.
As an organization we have always laid great emphasis on financial prudence and
astute utilization of all resources at our disposal, including financial resources.

“As an organization we have always laid great emphasis on

financial prudence and astute utilization of all resources at our
disposal, including financial resources. Resultantly, our investment
decisions have always been well evaluated and we have ensured
that our growth is not stymied by the lack of capital.”

Resultantly, our investment decisions have always been well evaluated and we have ensured that our growth is not stymied by
the lack of capital. At the same time, it has been – and will always remain – our endeavour to minimize our cost of capital and
maximize the returns on the capital employed into our business initiatives.
We incurred a capital expenditure of Rs 2.3 billion in FY 2006 as we made investments in initiatives encompassing a
range of strategic improvements, including expansion of our CRAMS and APIs manufacturing capacity to improve our
revenues, lower our operating costs, and deliver progressive performance in the years to come.
During FY 2006, we invested US$34.5 million to acquire Clinsys, Inc. (formerly Target Research Associates), a US-based
full service clinical research organization, and US$14.25 million to acquire 66.61% equity stake in Trinity Laboratories and
its wholly owned subsidiary Trigen Laboratories. These investments are in line with our strategic focus on consolidating our
status as a preferred outsourcing partner for the global life sciences industry and enhancing our footprint in the global
marketplace.
The organic and inorganic initiatives have resulted in Jubilant becoming an integrated pharmaceutical industry player
offering products and services across the value chain to global pharmaceuticals and life science industry.
We were able to fund our capital expenditure and investment activities during the year through a judicious mix of internal
accruals, debt, and fresh capital raised through equity placement, including US$75 million raised through FCCB issue to
international investors and another US$25 million through private equity placement to General Atlantic Partners, one of the
largest international private equity investors.
I am glad to report that as a result of these initiatives, we today have a strong balance sheet, with a healthy debt-to-equity
ratio of 0.87 at the end of FY 2006. In view of our robust operations and synergies arising from integration of acquired Mr. Bodhishwar Rai
subsidiaries along with expected returns from domestic investments, we expect to maintain our strong financial position with Dr. Naresh Trehan
Mr. Surendra Singh
better returns on capital and healthy cash balances.

JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006 JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006
10 11
 Directors
Mr. R Sankaraiah
Jubilant's growth strategy is built on the philosophy of sharing knowledge, Mr. Arabinda Ray
exploring new ideas, products and processes, and turning dreams into commercial Mr. Abhay Havaldar
reality. We are in a position to continue to execute this strategy because Jubilant Mr. H K Khan Mr. Ajay Relan
remains a financially strong company, fully capable of making the investments
necessary to drive future growth.
As an organization we have always laid great emphasis on financial prudence and
astute utilization of all resources at our disposal, including financial resources.

“As an organization we have always laid great emphasis on

financial prudence and astute utilization of all resources at our
disposal, including financial resources. Resultantly, our investment
decisions have always been well evaluated and we have ensured
that our growth is not stymied by the lack of capital.”

Resultantly, our investment decisions have always been well evaluated and we have ensured that our growth is not stymied by
the lack of capital. At the same time, it has been – and will always remain – our endeavour to minimize our cost of capital and
maximize the returns on the capital employed into our business initiatives.
We incurred a capital expenditure of Rs 2.3 billion in FY 2006 as we made investments in initiatives encompassing a
range of strategic improvements, including expansion of our CRAMS and APIs manufacturing capacity to improve our
revenues, lower our operating costs, and deliver progressive performance in the years to come.
During FY 2006, we invested US$34.5 million to acquire Clinsys, Inc. (formerly Target Research Associates), a US-based
full service clinical research organization, and US$14.25 million to acquire 66.61% equity stake in Trinity Laboratories and
its wholly owned subsidiary Trigen Laboratories. These investments are in line with our strategic focus on consolidating our
status as a preferred outsourcing partner for the global life sciences industry and enhancing our footprint in the global
marketplace.
The organic and inorganic initiatives have resulted in Jubilant becoming an integrated pharmaceutical industry player
offering products and services across the value chain to global pharmaceuticals and life science industry.
We were able to fund our capital expenditure and investment activities during the year through a judicious mix of internal
accruals, debt, and fresh capital raised through equity placement, including US$75 million raised through FCCB issue to
international investors and another US$25 million through private equity placement to General Atlantic Partners, one of the
largest international private equity investors.
I am glad to report that as a result of these initiatives, we today have a strong balance sheet, with a healthy debt-to-equity
ratio of 0.87 at the end of FY 2006. In view of our robust operations and synergies arising from integration of acquired Mr. Bodhishwar Rai
subsidiaries along with expected returns from domestic investments, we expect to maintain our strong financial position with Dr. Naresh Trehan
Mr. Surendra Singh
better returns on capital and healthy cash balances.

JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006 JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006
10 11
Management Discussion & Analysis
The Indian economy registered a real GDP growth rate of 8.4% in FY 2006
compared to 6.9% in FY 2005 and continues to maintain its growth
momentum. Improved performance across all the sectors of the economy has
been the key enabler of this growth, with a well-spread and healthy monsoon
proving to be a catalyst for agricultural growth.

OVERVIEW OF THE BUSINESS ENVIRONMENT,
INDUSTRY STRUCTURE AND DEVELOPMENTS
Buoyant economic outlook
Industrial activity continued to grow at a fast pace,
supported by the growing presence of Indian companies
in the global marketplace. During FY 2006, the
industrial sector recorded a growth of 8.9%, second only
to the services sector that grew by 9.4% in the same
period. The unabated growth trajectory of the country's
services sector demonstrates the inherent advantages
India enjoys on account of its immense human and
intellectual capital.
It is encouraging to note that despite a significant
increase in global oil prices, the Indian economy
witnessed only a marginal inflation. This reflects the
underlying strengths and maturity of the country's
economy. Continued growth with acceptable levels of
inflation reflects the ability of the Indian economy to
continue to be one of the fastest growing economies in
the world.
Globally, some of the key economies such as the US
and Europe, which are also Jubilant's focus markets,
have shown positive growth during the year under
review and indications are that these markets should
continue to witness superior growth compared to the
past few years.
Global pharmaceuticals sector – transition and
consolidation phase
The global pharmaceuticals and life sciences sector is
passing through a phase of significant transition and
consolidation. This is likely to bring in a structural change
in the profile of the sector. It is very probable that the
pharmaceutical and life sciences sector will emerge as
one large market from the operational perspective, as
regulatory changes across nations will result in most of
the key markets possessing similar market dynamics.
The process of change, early phases of which we have
witnessed over the last one year or so, is expected to
drive towards a radical change in the profile of the global
pharmaceuticals and life sciences market over the
next decade.

JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006

13
Management Discussion & Analysis
The Indian economy registered a real GDP growth rate of 8.4% in FY 2006
compared to 6.9% in FY 2005 and continues to maintain its growth
momentum. Improved performance across all the sectors of the economy has
been the key enabler of this growth, with a well-spread and healthy monsoon
proving to be a catalyst for agricultural growth.

OVERVIEW OF THE BUSINESS ENVIRONMENT,
INDUSTRY STRUCTURE AND DEVELOPMENTS
Buoyant economic outlook
Industrial activity continued to grow at a fast pace,
supported by the growing presence of Indian companies
in the global marketplace. During FY 2006, the
industrial sector recorded a growth of 8.9%, second only
to the services sector that grew by 9.4% in the same
period. The unabated growth trajectory of the country's
services sector demonstrates the inherent advantages
India enjoys on account of its immense human and
intellectual capital.
It is encouraging to note that despite a significant
increase in global oil prices, the Indian economy
witnessed only a marginal inflation. This reflects the
underlying strengths and maturity of the country's
economy. Continued growth with acceptable levels of
inflation reflects the ability of the Indian economy to
continue to be one of the fastest growing economies in
the world.
Globally, some of the key economies such as the US
and Europe, which are also Jubilant's focus markets,
have shown positive growth during the year under
review and indications are that these markets should
continue to witness superior growth compared to the
past few years.
Global pharmaceuticals sector – transition and
consolidation phase
The global pharmaceuticals and life sciences sector is
passing through a phase of significant transition and
consolidation. This is likely to bring in a structural change
in the profile of the sector. It is very probable that the
pharmaceutical and life sciences sector will emerge as
one large market from the operational perspective, as
regulatory changes across nations will result in most of
the key markets possessing similar market dynamics.
The process of change, early phases of which we have
witnessed over the last one year or so, is expected to
drive towards a radical change in the profile of the global
pharmaceuticals and life sciences market over the
next decade.

JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006

13
 The increasing occurrence of mergers and acqui-
sitions worldwide within this sector has created larger
organizations, and may result in the formation of large
corporates with diverse capabilities. Concurrently, it
would increase the intensity of competition in an already
active global market. In recent times, Indian companies
too have participated noticeably in this process of global
consolidation, with many of them acquiring and merging
with other entities in various geographies, emerging with
“There is increasing realization among European and US pharma majors that partnering
with companies in emerging economies such as India offers a much better alternative
that allows cost savings without compromising on quality.”
global-scale size and capability. These developments
appear to be precursor to the emergence of many more
truly multinational Indian corporations with global
footprints across all continents in the next decade.
Ongoing worldwide emphasis on accelerating product
development and reducing healthcare costs, which are to
a large extent governed by the cost structure of new drug
development and manufacturing processes, is driving
greater collaborative efforts in generic as well as new
product development. Regulatory pressures too are
bearing upon global pharma majors to innovate faster
while containing drug costs and related expenditures.
The European Union, for example, has witnessed
noticeable changes in the regulatory framework, with
environmental regulations becoming much more
stringent on one hand and generic pharmaceuticals
related regulations pushing for lower cost of medication
on the other. In the US also, while the pharma market
continues to expand, the strongest growth is being seen
in unbranded generics as the overall industry there is
facing cost containment pressures with regard to new
drug development.
JUBILANT ORGANOSYS LIMITED
14
Such changes are creating a new set of outsourcing
opportunities across the entire value chain, from advance
intermediates and fine chemicals to APIs and Dosage
Forms. There is increasing realization among European
and US pharma majors that partnering with companies
in emerging economies such as India offers a much
better alternative that allows cost savings without
compromising on quality. This, in turn, has created, and
continues to create, multifold business opportunities for
Indian pharmaceuticals and life sciences companies.
India, with its inherent strengths of a vast and skilled
scientific talent pool, a large and diverse multiethnic
population, a cost effective business environment, and a
regulator y framework in place, has all the right
ingredients to successfully participate in these growing
outsourcing and collaborative efforts. Over the past
several years, India has already established itself as a
leading source of bulk actives and dosage forms in the
generics market. Following a change in the country's
patent laws in early 2005, there has also begun an
increased participation of Indian companies in the global
drug discover y ser vices business. Large global
pharmaceutical companies realize that Indian
companies, especially those with a strong R&D base and
competence in manufacturing, can be highly effective
partners in drug discovery and development work. Given
Jubilant's own experience and recent successes, drug
discovery outsourcing has the potential to become the
fastest growth opportunity for India in the years to come.
ANNUAL REPORT - 2005-2006
Jubilant Organosys – singularly positioned to be a
partner of choice
The opportunities and possibilities emerging
consequent to the significant and long-term changes
in the global pharmaceuticals and life sciences
industr y are of special significance to Indian
companies with a presence in the relevant segments.
Jubilant Organosys, with a strong presence in all
major segments of the pharma value chain, is in a
Jubilant Organosys: presence across the value chain
Discovery Clinical
Research CRAMS
Development
unique position to meet the outsourcing and
collaborative needs of global customers both in the
area of new drug discovery as well as in generic drug
development.
Jubilant Organosys, along with its subsidiaries, is
arguably exceptional in its capabilities emanating from
its solid R&D base, presence at multiple points in the
life sciences value chain, strong chemistry and bio-
sciences exper tise, world-class manufacturing
infrastructure, and robust relationships with
international customers.
Our own operating strengths, accumulated over
more than two decades of consistent innovation,
combined with the India specific advantages we
enjoy, give us an unique competitive advantage as a
partner of choice to the worldwide pharma and life
sciences industry.
STRATEGY AND BUSINESS MODEL
Jubilant Organosys is an integrated pharma-
ceuticals industry player offering products and
JUBILANT ORGANOSYS LIMITED
15
services to global life sciences sector by continuously
moving up the value chain through innovation, cost
leadership and wise investment decisions.
Keeping an eye on the future, and guided by
evolving market trends worldwide, our strategy is to
consistently capitalize on growth opportunities as they
unravel and continually move up the value chain as
partner to global pharma majors by leveraging upon its
long standing and unique strengths in R&D,
APIs Dosage Forms
manufacturing, and customer relationships.
The Jubilant strategy follows a clear and focused
approach: partnership approach, create incremental
value by moving up the value chain; differentiate
through innovation and relentless pursuit of new
ideas; and create a formidable presence in the
marketplace that assures customers and generates
advantages of enhanced scale and footprint.
Partner of choice to the global life sciences
industry has been the guiding principle for our
company. We understand the requirements of our
customers and leverage our strengths to offer them
customized solutions. We have strong customer
relationships with global pharmaceutical and
agrochemical companies. We will further strengthen
these customer relationships by enhancing our range
of offerings to each one of them and engage with them
at ever y step of their drug development and
commercialization programme.
ANNUAL REPORT - 2005-2006
 The increasing occurrence of mergers and acqui-
sitions worldwide within this sector has created larger
organizations, and may result in the formation of large
corporates with diverse capabilities. Concurrently, it
would increase the intensity of competition in an already
active global market. In recent times, Indian companies
too have participated noticeably in this process of global
consolidation, with many of them acquiring and merging
with other entities in various geographies, emerging with
“There is increasing realization among European and US pharma majors that partnering
with companies in emerging economies such as India offers a much better alternative
that allows cost savings without compromising on quality.”
global-scale size and capability. These developments
appear to be precursor to the emergence of many more
truly multinational Indian corporations with global
footprints across all continents in the next decade.
Ongoing worldwide emphasis on accelerating product
development and reducing healthcare costs, which are to
a large extent governed by the cost structure of new drug
development and manufacturing processes, is driving
greater collaborative efforts in generic as well as new
product development. Regulatory pressures too are
bearing upon global pharma majors to innovate faster
while containing drug costs and related expenditures.
The European Union, for example, has witnessed
noticeable changes in the regulatory framework, with
environmental regulations becoming much more
stringent on one hand and generic pharmaceuticals
related regulations pushing for lower cost of medication
on the other. In the US also, while the pharma market
continues to expand, the strongest growth is being seen
in unbranded generics as the overall industry there is
facing cost containment pressures with regard to new
drug development.
JUBILANT ORGANOSYS LIMITED
14
Such changes are creating a new set of outsourcing
opportunities across the entire value chain, from advance
intermediates and fine chemicals to APIs and Dosage
Forms. There is increasing realization among European
and US pharma majors that partnering with companies
in emerging economies such as India offers a much
better alternative that allows cost savings without
compromising on quality. This, in turn, has created, and
continues to create, multifold business opportunities for
Indian pharmaceuticals and life sciences companies.
India, with its inherent strengths of a vast and skilled
scientific talent pool, a large and diverse multiethnic
population, a cost effective business environment, and a
regulator y framework in place, has all the right
ingredients to successfully participate in these growing
outsourcing and collaborative efforts. Over the past
several years, India has already established itself as a
leading source of bulk actives and dosage forms in the
generics market. Following a change in the country's
patent laws in early 2005, there has also begun an
increased participation of Indian companies in the global
drug discover y ser vices business. Large global
pharmaceutical companies realize that Indian
companies, especially those with a strong R&D base and
competence in manufacturing, can be highly effective
partners in drug discovery and development work. Given
Jubilant's own experience and recent successes, drug
discovery outsourcing has the potential to become the
fastest growth opportunity for India in the years to come.
ANNUAL REPORT - 2005-2006
Jubilant Organosys – singularly positioned to be a
partner of choice
The opportunities and possibilities emerging
consequent to the significant and long-term changes
in the global pharmaceuticals and life sciences
industr y are of special significance to Indian
companies with a presence in the relevant segments.
Jubilant Organosys, with a strong presence in all
major segments of the pharma value chain, is in a
Jubilant Organosys: presence across the value chain
Discovery Clinical
Research CRAMS
Development
unique position to meet the outsourcing and
collaborative needs of global customers both in the
area of new drug discovery as well as in generic drug
development.
Jubilant Organosys, along with its subsidiaries, is
arguably exceptional in its capabilities emanating from
its solid R&D base, presence at multiple points in the
life sciences value chain, strong chemistry and bio-
sciences exper tise, world-class manufacturing
infrastructure, and robust relationships with
international customers.
Our own operating strengths, accumulated over
more than two decades of consistent innovation,
combined with the India specific advantages we
enjoy, give us an unique competitive advantage as a
partner of choice to the worldwide pharma and life
sciences industry.
STRATEGY AND BUSINESS MODEL
Jubilant Organosys is an integrated pharma-
ceuticals industry player offering products and
JUBILANT ORGANOSYS LIMITED
15
services to global life sciences sector by continuously
moving up the value chain through innovation, cost
leadership and wise investment decisions.
Keeping an eye on the future, and guided by
evolving market trends worldwide, our strategy is to
consistently capitalize on growth opportunities as they
unravel and continually move up the value chain as
partner to global pharma majors by leveraging upon its
long standing and unique strengths in R&D,
APIs Dosage Forms
manufacturing, and customer relationships.
The Jubilant strategy follows a clear and focused
approach: partnership approach, create incremental
value by moving up the value chain; differentiate
through innovation and relentless pursuit of new
ideas; and create a formidable presence in the
marketplace that assures customers and generates
advantages of enhanced scale and footprint.
Partner of choice to the global life sciences
industry has been the guiding principle for our
company. We understand the requirements of our
customers and leverage our strengths to offer them
customized solutions. We have strong customer
relationships with global pharmaceutical and
agrochemical companies. We will further strengthen
these customer relationships by enhancing our range
of offerings to each one of them and engage with them
at ever y step of their drug development and
commercialization programme.
ANNUAL REPORT - 2005-2006
 Moving up the value chain has been the guiding
principle for Jubilant's growth strategy since inception.
Driven by its strong product and process capabilities
acquired over the past 27 years, we have constantly
moved up the value chain in the pharmaceuticals and life
sciences chemicals business. From an advance
intermediates manufacturer, Jubilant ascended to
Custom Research and Manufacturing Services (CRAMS),
expanding into the area of Active Pharmaceutical
“From an advance intermediates manufacturer, Jubilant ascended to Custom Research
and Manufacturing Ser vices (CRAMS), expanding into the area of Active
Pharmaceutical Ingredients (APIs) and later entering the high potential segment of drug
discovery and development services and dosage forms.”
Ingredients (APIs), and later entering the high potential
segment of drug discovery and development services and
dosage forms. Jubilant today has a comprehensive
service offering encompassing the entire spectrum from
early stage lead generation and optimization to
development of formulations and clinical research
operations from phase I to IV.
Innovation through the application of accumulated
scientific knowledge has been one of the key enablers in
Jubilant's transformation into a Science Active
organization catering to the highly demanding
requirements of discerning customers in a ver y
competitive global marketplace. The Company's
knowledge-driven, innovation-led approach pervades all
functional areas, reaching beyond product R&D and
allowing it to provide on-time, customer-specific
solutions and services at competitive cost on a consistent
basis. This in turn has helped us forge long sustaining
relationships with global pharmaceutical, biotech and
agrochemical companies. We will leverage these
relationships to expand its business with these customers
JUBILANT ORGANOSYS LIMITED
16
across the entire value chain. Our accent on collaborating
with global customers at every stage of the value chain
without competing with them in the marketplace
distinguishes it as a reliable and long-term partner for our
customers.
Organic and inorganic initiatives aimed at creating a
more robust platform for faster growth have been
implemented by Jubilant in the past, enabling us to get
“The CRAMS business which is the largest component of Pharma & Life Sciences business
segment continued to enhance its position in international markets.”
ahead on the learning curve and enhance our global
footprint. We have been able to make well-evaluated
acquisitions both in India and abroad that have
augmented our offerings portfolio and helped us quickly
gain a strong foothold in key Western markets. At the
same time, timely investments in expansion of existing
capacities and creation of fresh capacities across
businesses from CRAMS and APIs to clinical research are
enabling Jubilant to meet the ever increasing
requirements of its customers across more than 50
countries. We continued to undertake such initiatives
during the financial year under review, and it is our intent
to continually evaluate inorganic growth opportunities
that hold attractive long term promise and also invest,
whenever necessary, in organic initiatives that are likely
to strengthen our operating profile.
Jubilant's business model, in its own definitive
manner, supports and reinforces our business strategy.
Our operations are integrated, but organized in three
business segments that reflect different market dynamics
which in turn drive their respective strategic directions.
ANNUAL REPORT - 2005-2006 JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006
17
 Moving up the value chain has been the guiding
principle for Jubilant's growth strategy since inception.
Driven by its strong product and process capabilities
acquired over the past 27 years, we have constantly
moved up the value chain in the pharmaceuticals and life
sciences chemicals business. From an advance
intermediates manufacturer, Jubilant ascended to
Custom Research and Manufacturing Services (CRAMS),
expanding into the area of Active Pharmaceutical
“From an advance intermediates manufacturer, Jubilant ascended to Custom Research
and Manufacturing Ser vices (CRAMS), expanding into the area of Active
Pharmaceutical Ingredients (APIs) and later entering the high potential segment of drug
discovery and development services and dosage forms.”
Ingredients (APIs), and later entering the high potential
segment of drug discovery and development services and
dosage forms. Jubilant today has a comprehensive
service offering encompassing the entire spectrum from
early stage lead generation and optimization to
development of formulations and clinical research
operations from phase I to IV.
Innovation through the application of accumulated
scientific knowledge has been one of the key enablers in
Jubilant's transformation into a Science Active
organization catering to the highly demanding
requirements of discerning customers in a ver y
competitive global marketplace. The Company's
knowledge-driven, innovation-led approach pervades all
functional areas, reaching beyond product R&D and
allowing it to provide on-time, customer-specific
solutions and services at competitive cost on a consistent
basis. This in turn has helped us forge long sustaining
relationships with global pharmaceutical, biotech and
agrochemical companies. We will leverage these
relationships to expand its business with these customers
JUBILANT ORGANOSYS LIMITED
16
across the entire value chain. Our accent on collaborating
with global customers at every stage of the value chain
without competing with them in the marketplace
distinguishes it as a reliable and long-term partner for our
customers.
Organic and inorganic initiatives aimed at creating a
more robust platform for faster growth have been
implemented by Jubilant in the past, enabling us to get
“The CRAMS business which is the largest component of Pharma & Life Sciences business
segment continued to enhance its position in international markets.”
ahead on the learning curve and enhance our global
footprint. We have been able to make well-evaluated
acquisitions both in India and abroad that have
augmented our offerings portfolio and helped us quickly
gain a strong foothold in key Western markets. At the
same time, timely investments in expansion of existing
capacities and creation of fresh capacities across
businesses from CRAMS and APIs to clinical research are
enabling Jubilant to meet the ever increasing
requirements of its customers across more than 50
countries. We continued to undertake such initiatives
during the financial year under review, and it is our intent
to continually evaluate inorganic growth opportunities
that hold attractive long term promise and also invest,
whenever necessary, in organic initiatives that are likely
to strengthen our operating profile.
Jubilant's business model, in its own definitive
manner, supports and reinforces our business strategy.
Our operations are integrated, but organized in three
business segments that reflect different market dynamics
which in turn drive their respective strategic directions.
ANNUAL REPORT - 2005-2006 JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006
17
Each of these business segments, however, are
interlinked due to the roles they play at various stages of
the product value chain and help the Company derive
more value out of its operations.
The Pharmaceuticals and Life Science Chemicals
business, which is the focus business area for Jubilant
Organosys, is the key growth driver. We have invested in
capital expenditure to strengthen our R&D and
manufacturing capabilities and have acquired
businesses in India and overseas to fuel growth in this
business segment. The Industrial Chemicals business
provides steady cash flows without necessitating any
significant investment of management time and capital.
The surplus cash from this business enables investments
in high growth businesses. At the same time, the
Industrial Chemicals business also provides us with
many of our key raw materials, providing competitive
edge to Pharmaceuticals and Life Science Chemicals

“At Jubilant, innovation is a core business process and a

sustainable route to long-term growth.”

business. The Performance Chemicals business, which
allows us to maximize asset utilization and leverage our
manufacturing expertise, is undergoing a transformation
to make the Company more profitable. Some benefits of
that have already been visible in FY 2006 and we intend
to further enhance our market presence in select product
segments while rationalizing the current product profile
to expand this business.
This business model is expected to enable Jubilant to
significantly increase the contribution of
Pharmaceuticals and Life Science Chemicals business to
overall revenues and earnings over the next 2-3 years,
while allowing us to maintain cost leadership position
across all of the businesses.
COMPETITIVE STRENGTHS
The multiple competitive strengths that Jubilant
Organosys enjoys are aided by a robust business model,
an organizational culture that encourages innovation and
promotes quality-consciousness, and professional
management that remains focused on long-term value
creation. All of our competitive strengths have either
arisen out of the way we manage our operations or been
acquired over the years.
Thrust on innovation
At Jubilant, innovation is a core business process
and a sustainable route to long-term growth. We have a
well-established and successful R&D function that plays
a vital role in driving our strategies to become a high
value and trusted partner to the global pharma and life
sciences industr y. Jubilant invests about 6% of
pharmaceuticals & life sciences revenues on R&D, which
is in line with the industry average in the country.
Jubilant's multi-pronged R&D initiatives are aimed at
enabling market expansion by introducing new
products, creating customized solutions and thereby
strengthening customer engagements, and enhancing
manufacturing processes which result in greater
competitiveness. Our R&D laboratories and facilities are
spread over 4 locations with around 295,000 sq. ft.
dedicated to this activity.

JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006

19
Each of these business segments, however, are
interlinked due to the roles they play at various stages of
the product value chain and help the Company derive
more value out of its operations.
The Pharmaceuticals and Life Science Chemicals
business, which is the focus business area for Jubilant
Organosys, is the key growth driver. We have invested in
capital expenditure to strengthen our R&D and
manufacturing capabilities and have acquired
businesses in India and overseas to fuel growth in this
business segment. The Industrial Chemicals business
provides steady cash flows without necessitating any
significant investment of management time and capital.
The surplus cash from this business enables investments
in high growth businesses. At the same time, the
Industrial Chemicals business also provides us with
many of our key raw materials, providing competitive
edge to Pharmaceuticals and Life Science Chemicals

“At Jubilant, innovation is a core business process and a

sustainable route to long-term growth.”

business. The Performance Chemicals business, which
allows us to maximize asset utilization and leverage our
manufacturing expertise, is undergoing a transformation
to make the Company more profitable. Some benefits of
that have already been visible in FY 2006 and we intend
to further enhance our market presence in select product
segments while rationalizing the current product profile
to expand this business.
This business model is expected to enable Jubilant to
significantly increase the contribution of
Pharmaceuticals and Life Science Chemicals business to
overall revenues and earnings over the next 2-3 years,
while allowing us to maintain cost leadership position
across all of the businesses.
COMPETITIVE STRENGTHS
The multiple competitive strengths that Jubilant
Organosys enjoys are aided by a robust business model,
an organizational culture that encourages innovation and
promotes quality-consciousness, and professional
management that remains focused on long-term value
creation. All of our competitive strengths have either
arisen out of the way we manage our operations or been
acquired over the years.
Thrust on innovation
At Jubilant, innovation is a core business process
and a sustainable route to long-term growth. We have a
well-established and successful R&D function that plays
a vital role in driving our strategies to become a high
value and trusted partner to the global pharma and life
sciences industr y. Jubilant invests about 6% of
pharmaceuticals & life sciences revenues on R&D, which
is in line with the industry average in the country.
Jubilant's multi-pronged R&D initiatives are aimed at
enabling market expansion by introducing new
products, creating customized solutions and thereby
strengthening customer engagements, and enhancing
manufacturing processes which result in greater
competitiveness. Our R&D laboratories and facilities are
spread over 4 locations with around 295,000 sq. ft.
dedicated to this activity.

JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006

19
Global scale in manufacturing
Jubilant has created efficient, vertically integrated
manufacturing facilities with global scale of operations in
all its key products. This allows us to optimally map
market trends and cater to specific customer
requirements, which in turn provides us the stability of
business and economies of scale. Our six sigma based
quality initiatives and the efficient logistics and supply
chain management systems contribute significant cost
savings, increasing operating efficiencies across the
organization and fostering a quality-oriented mindset
among employees.
Strong customer relationships
Jubilant Organosys is well entrenched in the global
marketplace, with strong relationships with almost all the
large players in the life sciences industry worldwide. This
has been enabled by the Company's history of providing
products and ser vices to pharmaceutical and
agrochemical companies and our early investments in
R&D. Resultantly, today 15 of the top 20 pharmaceutical
companies and 7 of the top 10 agrochemical companies
in the world are Jubilant customers. These customers,
spread over more than 50 countries across the globe,
have come to expect the best of quality and customer
service from Jubilant Organosys. We leverage our
knowledge and technical skills to engage with and
expand the breadth of our relationships with these
customers, providing them with the quality and
JUBILANT ORGANOSYS LIMITED
20
standards they demand at all times.
Global footprint with presence
Complementing Jubilant's focus on innovation and
customer relationships is our equally important strategy
of strengthening and expanding our geographic footprint.
During FY 2006, the Company acquired Clinsys, Inc.
(earlier known as Target Research Associates) which is a
clinical research organization (CRO) in the US, and
Jubilant Pharmaceuticals, Inc. (earlier known as Trigen
Laboratories), a US-based generic pharma company.
This follows the acquisition of two Europe-based pharma
companies by us in the preceding fiscal year. These
initiatives, combined with the Company’s deep-rooted
relationships with customers in more than 50 countries
that it exports to, provide it with a powerful competitive
advantage that now acts as a key differentiator.
Best-of-class corporate governance practices and
professional management
The rapid and significant success that Jubilant has
achieved so far in its operations has been the collective
outcome of various initiatives and policies adopted by us,
with adherence to high standards in corporate
governance being one of them. Jubilant was among the
first few Indian companies to voluntarily disclose US
GAAP accounts. It is among a handful of progressive
companies that issue a Corporate Sustainability Report
annually that follows GRI standards, the international
standards on such reporting.
ANNUAL REPORT - 2005-2006
Always driven by our strong set of corporate values
and the intent to benchmark itself with the best globally,
Jubilant Organosys ensured compliance with Clause 49
requirements of SEBI on corporate governance much
ahead of the deadline during the year under review, and
went a step further by also completing necessary
documentation as per Sarbanes-Oxley Act of USA.
While, our Board of Directors represents a balanced
mix of executive and independent directors, our
management team is characterised by highly experienced
and capable professionals. Cognizant of the fact that
without a highly capable and talented management
team, it would be impossible for us to achieve our long
term strategic objectives, We have an ongoing
programme to recruit and retain key talent to consistently
deliver outstanding performance.
OVERVIEW OF SEGMENT WISE BUSINESS
PERFORMANCE
The financial year 2006 has been a year of
consolidation. We entered some new businesses and
further strengthened our existing businesses which has
created a strong foundation for future growth. The
pharmaceuticals and life science chemicals business,
which is our future growth driver, was the primary driver
of growth in both the net sales and profit of the Company.
Financial Performance
Net sales of the Company on the consolidated basis
recorded a growth of 28.6% to Rs.15.05 billion. The
JUBILANT ORGANOSYS LIMITED
21
revenue from international markets increased 41.7% to
Rs.5.95 billion contributing to 39.5% of the net sales of
the Company. The sales to regulated markets had 64.9%
share of international sales.
Earnings before Interest, Depreciation, Tax and
Amortisation (EBITDA) increased by 5.6% to Rs.2.37
billion. This growth was achieved despite a sharp
increase in input material cost, especially in Industrial
Chemicals segment, without a commensurate increase in
prices of finished products during the first eight months
of the financial year. This has resulted in a decline in
EBITDA margin to 15.7%. The pharmaceuticals and life
science chemicals business had an EBITDA margin
of 23%.
Earnings before Depreciation and Tax (EBDT)
increased by 8.5% to Rs.2.19 billion due to growth in
pharmaceuticals and life sciences business. Interest cost
reduced by 21.4% to Rs.173 million despite increase in
debt to support growth.
Earning before Interest and Tax (EBIT) was
mar g inally lower b y 0.3% a t R s . 1 . 8 5 m il l io n.
Depreciation increased by 34.6% to Rs.513 million due
to significant capital expenditure during the year.
Pharmaceuticals and Life Science Chemicals business
recorded 13.6% increase in EBIT due to improved
performance in CRAMS and Drug Discovery business.
Industrial Chemicals witnessed a decline in EBIT by 24%
to Rs. 631 million due to higher input costs.
ANNUAL REPORT - 2005-2006
Global scale in manufacturing
Jubilant has created efficient, vertically integrated
manufacturing facilities with global scale of operations in
all its key products. This allows us to optimally map
market trends and cater to specific customer
requirements, which in turn provides us the stability of
business and economies of scale. Our six sigma based
quality initiatives and the efficient logistics and supply
chain management systems contribute significant cost
savings, increasing operating efficiencies across the
organization and fostering a quality-oriented mindset
among employees.
Strong customer relationships
Jubilant Organosys is well entrenched in the global
marketplace, with strong relationships with almost all the
large players in the life sciences industry worldwide. This
has been enabled by the Company's history of providing
products and ser vices to pharmaceutical and
agrochemical companies and our early investments in
R&D. Resultantly, today 15 of the top 20 pharmaceutical
companies and 7 of the top 10 agrochemical companies
in the world are Jubilant customers. These customers,
spread over more than 50 countries across the globe,
have come to expect the best of quality and customer
service from Jubilant Organosys. We leverage our
knowledge and technical skills to engage with and
expand the breadth of our relationships with these
customers, providing them with the quality and
JUBILANT ORGANOSYS LIMITED
20
standards they demand at all times.
Global footprint with presence
Complementing Jubilant's focus on innovation and
customer relationships is our equally important strategy
of strengthening and expanding our geographic footprint.
During FY 2006, the Company acquired Clinsys, Inc.
(earlier known as Target Research Associates) which is a
clinical research organization (CRO) in the US, and
Jubilant Pharmaceuticals, Inc. (earlier known as Trigen
Laboratories), a US-based generic pharma company.
This follows the acquisition of two Europe-based pharma
companies by us in the preceding fiscal year. These
initiatives, combined with the Company’s deep-rooted
relationships with customers in more than 50 countries
that it exports to, provide it with a powerful competitive
advantage that now acts as a key differentiator.
Best-of-class corporate governance practices and
professional management
The rapid and significant success that Jubilant has
achieved so far in its operations has been the collective
outcome of various initiatives and policies adopted by us,
with adherence to high standards in corporate
governance being one of them. Jubilant was among the
first few Indian companies to voluntarily disclose US
GAAP accounts. It is among a handful of progressive
companies that issue a Corporate Sustainability Report
annually that follows GRI standards, the international
standards on such reporting.
ANNUAL REPORT - 2005-2006
Always driven by our strong set of corporate values
and the intent to benchmark itself with the best globally,
Jubilant Organosys ensured compliance with Clause 49
requirements of SEBI on corporate governance much
ahead of the deadline during the year under review, and
went a step further by also completing necessary
documentation as per Sarbanes-Oxley Act of USA.
While, our Board of Directors represents a balanced
mix of executive and independent directors, our
management team is characterised by highly experienced
and capable professionals. Cognizant of the fact that
without a highly capable and talented management
team, it would be impossible for us to achieve our long
term strategic objectives, We have an ongoing
programme to recruit and retain key talent to consistently
deliver outstanding performance.
OVERVIEW OF SEGMENT WISE BUSINESS
PERFORMANCE
The financial year 2006 has been a year of
consolidation. We entered some new businesses and
further strengthened our existing businesses which has
created a strong foundation for future growth. The
pharmaceuticals and life science chemicals business,
which is our future growth driver, was the primary driver
of growth in both the net sales and profit of the Company.
Financial Performance
Net sales of the Company on the consolidated basis
recorded a growth of 28.6% to Rs.15.05 billion. The
JUBILANT ORGANOSYS LIMITED
21
revenue from international markets increased 41.7% to
Rs.5.95 billion contributing to 39.5% of the net sales of
the Company. The sales to regulated markets had 64.9%
share of international sales.
Earnings before Interest, Depreciation, Tax and
Amortisation (EBITDA) increased by 5.6% to Rs.2.37
billion. This growth was achieved despite a sharp
increase in input material cost, especially in Industrial
Chemicals segment, without a commensurate increase in
prices of finished products during the first eight months
of the financial year. This has resulted in a decline in
EBITDA margin to 15.7%. The pharmaceuticals and life
science chemicals business had an EBITDA margin
of 23%.
Earnings before Depreciation and Tax (EBDT)
increased by 8.5% to Rs.2.19 billion due to growth in
pharmaceuticals and life sciences business. Interest cost
reduced by 21.4% to Rs.173 million despite increase in
debt to support growth.
Earning before Interest and Tax (EBIT) was
mar g inally lower b y 0.3% a t R s . 1 . 8 5 m il l io n.
Depreciation increased by 34.6% to Rs.513 million due
to significant capital expenditure during the year.
Pharmaceuticals and Life Science Chemicals business
recorded 13.6% increase in EBIT due to improved
performance in CRAMS and Drug Discovery business.
Industrial Chemicals witnessed a decline in EBIT by 24%
to Rs. 631 million due to higher input costs.
ANNUAL REPORT - 2005-2006
The Performance Chemicals business recorded five
fold EBIT increase to Rs. 122 million.
The Profit before Tax (PBT) increased by 2.4% to
Rs. 1.68 billion whereas the Profit after Tax (PAT)
increased by 8.8% to Rs. 1.3 billion resulting in an
EPS of Rs. 8.58 on a fully diluted basis for a
Re. 1 Share.
Operational Performance
The business of Jubilant Organosys is divided into
“The financial year 2006 has been a year of consolidation. We entered some
new businesses and further strengthened our existing businesses which has
created a strong foundation for future growth.”
three main business segments based on the nature of
their end-use industries and product application.
These business segments are:
. Pharmaceuticals & Life Science Chemicals
. Industrial Chemicals and
. Performance Chemicals
Pharmaceuticals & Life Science Chemicals
business is the key growth driver for the Company.
Jubilant has made significant investment in this
business area in terms of capital expenditure to
enhance manufacturing and R&D capabilities and
investments to acquire a generic pharmaceuticals
company and CRO in the US. Industrial Chemicals
business provides steady cash flow and the
Performance Chemicals has recorded encouraging
performance in select product categories.
The profile, performance and accomplishments of
each of these businesses are discussed on the
following pages.
JUBILANT ORGANOSYS LIMITED
Pharmaceuticals and Life Science Chemicals
Our Pharmaceuticals and Life Science Chemicals
business is the focus business segment and would drive the
growth of the Company. This business segment is the fastest
growing segment today recording a growth of 41.2% during
FY 2006 to achieve net sales of Rs. 6.84 billion. This
business contributed 45.4% of the net sales of the Company
in FY 2006 as compared to 41.4% in FY 2005. In terms of
EBIT, Pharma & Life Sciences business had 62.6% share of
the total EBIT of the Company. With the growth in this
“Our Pharmaceuticals and Life Science Chemicals business is the focus business
segment and would drive the growth of the Company”
business during the FY 2006, the Company is on course to
achieve its target of 70% of its net sales coming from this
business over the next 2-3 years.
International markets especially the regulated markets
are the key drivers of growth for this business. During the
year, International sales contributed 76% of the net sales of
this business. Sales to regulated markets of North America,
Europe and Japan contributed 51%, sales in India 23.3%,
sales to China 20.7% and other unregulated markets 5%.
The sales to China more than doubled in FY 2006 due to
strong demand for advance intermediates and fine
chemicals.
Jubilant strengthened its presence across the value
chain during the year by entering the generic
pharmaceutical market of USA through acquisition of Trinity
Laboratories, Inc. (renamed Trigen Laboratories, Inc.) and
its wholly owned subsidiary Trigen Laboratories, Inc.
(renamed Jubilant Pharmaceuticals, Inc.). Jubilant
Pharmaceuticals has US FDA approved solid dosage forms
manufacturing facility at Maryland, USA which will help us
ANNUAL REPORT - 2005-2006 JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006
22 23
The Performance Chemicals business recorded five
fold EBIT increase to Rs. 122 million.
The Profit before Tax (PBT) increased by 2.4% to
Rs. 1.68 billion whereas the Profit after Tax (PAT)
increased by 8.8% to Rs. 1.3 billion resulting in an
EPS of Rs. 8.58 on a fully diluted basis for a
Re. 1 Share.
Operational Performance
The business of Jubilant Organosys is divided into
“The financial year 2006 has been a year of consolidation. We entered some
new businesses and further strengthened our existing businesses which has
created a strong foundation for future growth.”
three main business segments based on the nature of
their end-use industries and product application.
These business segments are:
. Pharmaceuticals & Life Science Chemicals
. Industrial Chemicals and
. Performance Chemicals
Pharmaceuticals & Life Science Chemicals
business is the key growth driver for the Company.
Jubilant has made significant investment in this
business area in terms of capital expenditure to
enhance manufacturing and R&D capabilities and
investments to acquire a generic pharmaceuticals
company and CRO in the US. Industrial Chemicals
business provides steady cash flow and the
Performance Chemicals has recorded encouraging
performance in select product categories.
The profile, performance and accomplishments of
each of these businesses are discussed on the
following pages.
JUBILANT ORGANOSYS LIMITED
Pharmaceuticals and Life Science Chemicals
Our Pharmaceuticals and Life Science Chemicals
business is the focus business segment and would drive the
growth of the Company. This business segment is the fastest
growing segment today recording a growth of 41.2% during
FY 2006 to achieve net sales of Rs. 6.84 billion. This
business contributed 45.4% of the net sales of the Company
in FY 2006 as compared to 41.4% in FY 2005. In terms of
EBIT, Pharma & Life Sciences business had 62.6% share of
the total EBIT of the Company. With the growth in this
“Our Pharmaceuticals and Life Science Chemicals business is the focus business
segment and would drive the growth of the Company”
business during the FY 2006, the Company is on course to
achieve its target of 70% of its net sales coming from this
business over the next 2-3 years.
International markets especially the regulated markets
are the key drivers of growth for this business. During the
year, International sales contributed 76% of the net sales of
this business. Sales to regulated markets of North America,
Europe and Japan contributed 51%, sales in India 23.3%,
sales to China 20.7% and other unregulated markets 5%.
The sales to China more than doubled in FY 2006 due to
strong demand for advance intermediates and fine
chemicals.
Jubilant strengthened its presence across the value
chain during the year by entering the generic
pharmaceutical market of USA through acquisition of Trinity
Laboratories, Inc. (renamed Trigen Laboratories, Inc.) and
its wholly owned subsidiary Trigen Laboratories, Inc.
(renamed Jubilant Pharmaceuticals, Inc.). Jubilant
Pharmaceuticals has US FDA approved solid dosage forms
manufacturing facility at Maryland, USA which will help us
ANNUAL REPORT - 2005-2006 JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006
22 23
access the growing market of supply to US Federal
Government. The Company through its subsidiary,
Jubilant Biosys, entered into collaborative Drug
Discovery business. Jubilant in one of its kind deal
acquired 100% equity in US based Clinical Research
Organization, Target Research Associates, Inc.
(renamed Clinsys, Inc.). This acquisition provides the
Company strong customer relationships with large
global pharmaceutical companies and would help
optimally utilize the strength of India in the area of
clinical research and clinical data management.
Jubilant today has a presence across the value
chain which makes it the ideal partners for both drug
discovery and generic pharmaceuticals companies.
The Pharmaceuticals and Life Science Chemicals
business is divided into five main business areas –
Custom Research and Manufacturing Services for
advance intermediates and fine chemicals; Active
Pharmaceutical Ingredients; Dosage Forms; Food
Polymers; and Drug Discover y & Development
Services. The developments in each of the business
areas are detailed in the following paragraphs.
CUSTOM RESEARCH AND MANUFACTURING
SERVICES (CRAMS)
The CRAMS business which is the largest
component of Pharma & Life Sciences business
segment continued to enhance its position in the
international markets. Our customer relationships in
JUBILANT ORGANOSYS LIMITED
this business which have been built over the last decade
and have stood the test of time, enhanced further with
expansion in size of the contracts for existing relationship
and entry into new areas of business. We further enhanced
our capabilities by setting up new multi purpose plants for
commercial supplies in large quantities and expanding our
existing kilo lab facility.
During the year under review, this business recorded a
growth of 33.6% and contributed 61% to the net sales of
pharmaceuticals and life sciences business segment. The
sales to international markets increased by 52.5%. While
sales to regulated markets increased by 13%, sales to China
went up by 93.4%. This is the true reflection of the
strengths of this business i.e. the cost effectiveness to
expand in the Chinese market and high standards on quality
and timeliness of delivery to strengthen our relationships in
regulated markets.
. Custom manufacturing, where we supply advance
intermediates and fine chemicals in large quantities for in-
market pharmaceutical and agrochemical actives,
witnessed a surge in demand in some of the key markets.
The demand from the existing customers also increased
over the last one year.
Jubilant further consolidated its global position in
pyridine and its derivatives where the Company has the
distinction of being globally the second largest manufacturer
and the fastest growing player. The manufacturing capacity
for pyridine and its derivatives was increased to 28,000 tpa
ANNUAL REPORT - 2005-2006
24
during the year under review. During the year, the
formaldehyde capacity was also increased by
64,000 tpa.
Jubilant's vitamin business where we make niacin
and niacinamide both for human pharma and cosmetic
consumption and animal feed, witnessed a robust
growth. The demand for our high quality products in this
product categor y increased significantly from the
regulated markets. With backward integration to Beta
picoline which is the basic building block for our vitamins
products, Jubilant is well placed to utilize the synergies
and capture larger market share in the global market.
In the fine chemicals business, our existing capacities
being fully booked, necessitating setting up of new
plants. During the year, we commercialized two new
multi-purpose plants which would be utilized for supply
of new fine chemicals which we have developed.
In Aminopyridines with 65% market share and
Collidines and Lutidines 35% market share, Jubilant is
JUBILANT ORGANOSYS LIMITED
25
now globally the largest manufacturer. We are confident
that in a few other fine chemicals, the Company will
achieve global leadership during the next few years.
. Custom research business where we focus on
developing advance intermediates and fine chemicals in
small quantities at the lab scale on FTE or molecule basis
and seamlessly scaling it up to commercial quantities is
the fast growing business in CRAMS. Our strong
chemistry knowledge helps us in undertaking the process
development and optimization for these products. During
the year, we have signed up with large US and European
pharmaceuticals companies for such projects. In view of
the strong demand from our customers, we expanded the
capacity of our kilo lab to 4500lt / reactor vol..
R&D is the key growth driver for our CRAMS business
as the Company differentiates itself as a custom research
and manufacturing company where we develop our own
manufacturing processes rather than taking the
technology from our customers. This focus on developing
our own processes to manufacture the products and to
ANNUAL REPORT - 2005-2006
access the growing market of supply to US Federal
Government. The Company through its subsidiary,
Jubilant Biosys, entered into collaborative Drug
Discovery business. Jubilant in one of its kind deal
acquired 100% equity in US based Clinical Research
Organization, Target Research Associates, Inc.
(renamed Clinsys, Inc.). This acquisition provides the
Company strong customer relationships with large
global pharmaceutical companies and would help
optimally utilize the strength of India in the area of
clinical research and clinical data management.
Jubilant today has a presence across the value
chain which makes it the ideal partners for both drug
discovery and generic pharmaceuticals companies.
The Pharmaceuticals and Life Science Chemicals
business is divided into five main business areas –
Custom Research and Manufacturing Services for
advance intermediates and fine chemicals; Active
Pharmaceutical Ingredients; Dosage Forms; Food
Polymers; and Drug Discover y & Development
Services. The developments in each of the business
areas are detailed in the following paragraphs.
CUSTOM RESEARCH AND MANUFACTURING
SERVICES (CRAMS)
The CRAMS business which is the largest
component of Pharma & Life Sciences business
segment continued to enhance its position in the
international markets. Our customer relationships in
JUBILANT ORGANOSYS LIMITED
this business which have been built over the last decade
and have stood the test of time, enhanced further with
expansion in size of the contracts for existing relationship
and entry into new areas of business. We further enhanced
our capabilities by setting up new multi purpose plants for
commercial supplies in large quantities and expanding our
existing kilo lab facility.
During the year under review, this business recorded a
growth of 33.6% and contributed 61% to the net sales of
pharmaceuticals and life sciences business segment. The
sales to international markets increased by 52.5%. While
sales to regulated markets increased by 13%, sales to China
went up by 93.4%. This is the true reflection of the
strengths of this business i.e. the cost effectiveness to
expand in the Chinese market and high standards on quality
and timeliness of delivery to strengthen our relationships in
regulated markets.
. Custom manufacturing, where we supply advance
intermediates and fine chemicals in large quantities for in-
market pharmaceutical and agrochemical actives,
witnessed a surge in demand in some of the key markets.
The demand from the existing customers also increased
over the last one year.
Jubilant further consolidated its global position in
pyridine and its derivatives where the Company has the
distinction of being globally the second largest manufacturer
and the fastest growing player. The manufacturing capacity
for pyridine and its derivatives was increased to 28,000 tpa
ANNUAL REPORT - 2005-2006
24
during the year under review. During the year, the
formaldehyde capacity was also increased by
64,000 tpa.
Jubilant's vitamin business where we make niacin
and niacinamide both for human pharma and cosmetic
consumption and animal feed, witnessed a robust
growth. The demand for our high quality products in this
product categor y increased significantly from the
regulated markets. With backward integration to Beta
picoline which is the basic building block for our vitamins
products, Jubilant is well placed to utilize the synergies
and capture larger market share in the global market.
In the fine chemicals business, our existing capacities
being fully booked, necessitating setting up of new
plants. During the year, we commercialized two new
multi-purpose plants which would be utilized for supply
of new fine chemicals which we have developed.
In Aminopyridines with 65% market share and
Collidines and Lutidines 35% market share, Jubilant is
JUBILANT ORGANOSYS LIMITED
25
now globally the largest manufacturer. We are confident
that in a few other fine chemicals, the Company will
achieve global leadership during the next few years.
. Custom research business where we focus on
developing advance intermediates and fine chemicals in
small quantities at the lab scale on FTE or molecule basis
and seamlessly scaling it up to commercial quantities is
the fast growing business in CRAMS. Our strong
chemistry knowledge helps us in undertaking the process
development and optimization for these products. During
the year, we have signed up with large US and European
pharmaceuticals companies for such projects. In view of
the strong demand from our customers, we expanded the
capacity of our kilo lab to 4500lt / reactor vol..
R&D is the key growth driver for our CRAMS business
as the Company differentiates itself as a custom research
and manufacturing company where we develop our own
manufacturing processes rather than taking the
technology from our customers. This focus on developing
our own processes to manufacture the products and to
ANNUAL REPORT - 2005-2006
 “Jubilant today has a presence across the value chain which makes it the ideal
partners for both drug discovery and generic pharmaceuticals companies. ”
continuously improve those processes ensures high
standards in quality and cost. As the technology is
proprietary to Jubilant, we are able to service many
customers and thus reduce the risk of dependence on
few customers.
During the year, the development work undertaken
to enter the Japanese market yielded results and we
achieved some good breakthroughs in this market.
Japan being one of the largest pharmaceuticals
markets, which has only recently started opening up
to outsourcing, is a high potential market for our
CRAMS business.
Our strong chemistry skills, ability to seamlessly
scale up from mg / g quantities at the lab scale to MT
quantities through commercial scale multi purpose
plants, a strong R&D team and long standing
customer relationships based on our commitment to
quality and timeliness of delivery, makes Jubilant
Organosys the outsourcing partner of choice to global
pharmaceutical and agrochemical companies.
JUBILANT ORGANOSYS LIMITED
Outlook
This business is expected to continue its high growth
trajectory due to strong customer relationships, which will
be fully suppor ted by skilled manufacturing and
experienced R&D teams. The confidence of our customers
in our ability to consistently deliver quality products and
offer customized solutions by leveraging our robust R&D
and manufacturing platform is reflected in several long term
contracts that they have signed with us. The annual
contracts we have already signed with our global customers
are worth approximately US$70 million. In addition to such
annual contracts, we also execute half yearly and quarterly
contracts for supply of materials. We propose to capitalize
on our existing customer relationships by expanding the
quantum of business with them and expand our presence in
high potential markets such as Japan. To support these
growth initiatives, we plan to develop several new products,
expand our manufacturing capacities in CRAMS business
significantly and further strengthen our R&D to be the
preferred partner with all our customers.
ANNUAL REPORT - 2005-2006
26
“With backward integration to basic building blocks, Jubilant is well placed to
utilize the synergies and capture larger market share in the global market.”
Active Pharmaceutical Ingredients (APIs)
APIs business recorded steady growth during
financial year 2006. The net sales recorded a growth
of 17.8% in FY 2006. During the year under review,
Jubilant Organosys filed 5 DMFs in the US market and
9 EDMFs for the European market. At present,
15 products are available at the commercial scale,
11 products can be supplied from our semi-
commercial plant and another 19 products are under
development in R&D. The strong pipeline of products
for which patents are going to expire over the next five
years, puts Jubilant in a position of strength in APIs
market and specially in therapeutic segments of CNS,
CVS, Gastro Intestinal, Diabetics and Anti-infective.
The Company launched a CNS drug in the
European market after the expiry of patent in May
2005 and the product is now exported to 23 countries
in Europe. Our efforts to expand the market for
another CNS drug yielded results during the year with
exports to the US market gaining momentum. The
JUBILANT ORGANOSYS LIMITED
market witnessed a decline in the prices of some of our
APIs during the year, but we were able to increase the sales
volume to compensate for decline in prices. The improved
manufacturing process adopted by us also helped maintain
profitability in such products.
The Company has a position of strength in the global
market as API supplier to generic companies in the CNS
category. This is expected to be further reinforced with the
launch, during FY 2007, of another generic drug which
witnessed a delay in launch due to granting of pediatric
exclusivity in USA. During the last quarter of FY 2006 the
initial quantities for building the pipelines were exported by
Jubilant Organosys.
Our APIs business continued to have focus on the
regulated markets of USA, Europe and Japan. Our exports
to USA and European market recorded healthy growth
during the year. International sales contributed 72.5% of
the net sales of this business of which 43.4% of the sales
comes from regulated markets and balance 29.1% from
other international markets. Jubilant also entered the Latin
ANNUAL REPORT - 2005-2006
27
 “Jubilant today has a presence across the value chain which makes it the ideal
partners for both drug discovery and generic pharmaceuticals companies. ”
continuously improve those processes ensures high
standards in quality and cost. As the technology is
proprietary to Jubilant, we are able to service many
customers and thus reduce the risk of dependence on
few customers.
During the year, the development work undertaken
to enter the Japanese market yielded results and we
achieved some good breakthroughs in this market.
Japan being one of the largest pharmaceuticals
markets, which has only recently started opening up
to outsourcing, is a high potential market for our
CRAMS business.
Our strong chemistry skills, ability to seamlessly
scale up from mg / g quantities at the lab scale to MT
quantities through commercial scale multi purpose
plants, a strong R&D team and long standing
customer relationships based on our commitment to
quality and timeliness of delivery, makes Jubilant
Organosys the outsourcing partner of choice to global
pharmaceutical and agrochemical companies.
JUBILANT ORGANOSYS LIMITED
Outlook
This business is expected to continue its high growth
trajectory due to strong customer relationships, which will
be fully suppor ted by skilled manufacturing and
experienced R&D teams. The confidence of our customers
in our ability to consistently deliver quality products and
offer customized solutions by leveraging our robust R&D
and manufacturing platform is reflected in several long term
contracts that they have signed with us. The annual
contracts we have already signed with our global customers
are worth approximately US$70 million. In addition to such
annual contracts, we also execute half yearly and quarterly
contracts for supply of materials. We propose to capitalize
on our existing customer relationships by expanding the
quantum of business with them and expand our presence in
high potential markets such as Japan. To support these
growth initiatives, we plan to develop several new products,
expand our manufacturing capacities in CRAMS business
significantly and further strengthen our R&D to be the
preferred partner with all our customers.
ANNUAL REPORT - 2005-2006
26
“With backward integration to basic building blocks, Jubilant is well placed to
utilize the synergies and capture larger market share in the global market.”
Active Pharmaceutical Ingredients (APIs)
APIs business recorded steady growth during
financial year 2006. The net sales recorded a growth
of 17.8% in FY 2006. During the year under review,
Jubilant Organosys filed 5 DMFs in the US market and
9 EDMFs for the European market. At present,
15 products are available at the commercial scale,
11 products can be supplied from our semi-
commercial plant and another 19 products are under
development in R&D. The strong pipeline of products
for which patents are going to expire over the next five
years, puts Jubilant in a position of strength in APIs
market and specially in therapeutic segments of CNS,
CVS, Gastro Intestinal, Diabetics and Anti-infective.
The Company launched a CNS drug in the
European market after the expiry of patent in May
2005 and the product is now exported to 23 countries
in Europe. Our efforts to expand the market for
another CNS drug yielded results during the year with
exports to the US market gaining momentum. The
JUBILANT ORGANOSYS LIMITED
market witnessed a decline in the prices of some of our
APIs during the year, but we were able to increase the sales
volume to compensate for decline in prices. The improved
manufacturing process adopted by us also helped maintain
profitability in such products.
The Company has a position of strength in the global
market as API supplier to generic companies in the CNS
category. This is expected to be further reinforced with the
launch, during FY 2007, of another generic drug which
witnessed a delay in launch due to granting of pediatric
exclusivity in USA. During the last quarter of FY 2006 the
initial quantities for building the pipelines were exported by
Jubilant Organosys.
Our APIs business continued to have focus on the
regulated markets of USA, Europe and Japan. Our exports
to USA and European market recorded healthy growth
during the year. International sales contributed 72.5% of
the net sales of this business of which 43.4% of the sales
comes from regulated markets and balance 29.1% from
other international markets. Jubilant also entered the Latin
ANNUAL REPORT - 2005-2006
27
American market, which has vast potential in some of
our key products. We expect these markets to witness
high growth during the current financial year
Keeping in view the large pipeline of products,
Jubilant Organosys set up two new commercial scale
manufacturing units at Nanjangud. A new plant for
Oxcarbazepine has been set up to support the growth
plans for this product over the next couple of years.
The Company also set up a new multi purpose plant
for the commercial production of new products which
will be launched during FY 2007. Our plant for
Lamotrigine is the first plant to get US FDA approval
outside of USA and Europe. This will help us start with
a position of strength in the US market where the
patent for Lamotrigine is expiring in October 2007. A
state of the art pilot plant has also been set up which
will help speed up APIs commercialization.
R&D and IPR are of prime importance for the API
business. We currently have 96 scientists dedicated to
API development and an IPR team of 6 employees.
Outook
With the enhanced product portfolio, the APIs
business is expected to record higher growth in sales
during FY 2007. Innovation will help maintain cost
leadership and launch of new products in the market.
The Company plans to file 8-10 DMFs every year over
the next few years. We currently have a pipeline of 11
products available through semi commercial plants
and 19 products in various stages of R&D which will
JUBILANT ORGANOSYS LIMITED
drive our future growth. The APIs R&D has initiated
development work for a range of niche APIs also.
DOSAGE FORMS
Dosage Forms is the logical step up the value chain for
Jubilant Organosys after establishing its presence as a
leading API player in India in focus therapeutic categories.
As part of the strategy, in 2004, the Company acquired
80% stake in PSI and PSI Supply to have a presence in
dosage forms market of Europe.
“Our exports to USA and European
markets recorded healthy growth
during the year. International sales
contributed 72.5% of the net sales
of APIs business.”
Jubilant Organosys expanded its presence in the
regulated markets in the Dosage Forms business by
acquiring a US based generic pharmaceuticals company. In
June 2005, the Company acquired 66.61% equity stake in
Trinity Laboratories, Inc. (renamed Trigen Laboratories, Inc.)
and its wholly owned subsidiary Trigen Laboratories, Inc.
(renamed Jubilant Pharmaceuticals, Inc.). Jubilant
Pharmaceuticals has a US FDA approved manufacturing
facility for solid dosage forms in Maryland, USA. This plant
has the capacity to manufacture 650 million tablets and 47
million capsules per shift per year. The Company paid
US$14.25 million of which US$8.25 million has been paid
to the existing shareholders and the balance of US$6
million has been utilized as growth capital. Jubilant
Organosys will invest another US$6 million during this
calendar year in growth capital which will increase the
Company's holding in Trigen Laboratories to 75%. Jubilant
Pharmaceuticals currently has 7 approved ANDAs and
another 2 ANDAs are pending approval and another 8-10
ANDAs are expected to be filed during the current year. With
the manufacturing facility in USA, Jubilant Pharmaceuticals
ANNUAL REPORT - 2005-2006
28
will be able to utilize the fast growing demand from US expect this will help overcome the temporary decline in
Federal Government. It has signed a 5-year contract with the performance.
the US Veterans Administration for supply of a drug.
The Dosage Forms development center in Noida
Jubilant Pharmaceutical already has distribution tie-ups
undertakes development of products for the US and
with two distribution companies in US and would expand
European markets. We have a dedicated team of 66
its distribution network further to strengthen its position
scientists for Dosage Forms to develop immediate release
as a generic pharmaceutical company. The Dosage Form
and modified release products. This strong pipeline of
business recorded a sales of Rs. 409 million in FY 2006.
products will help us expand our product portfolio
PSI & PSI Supply witnessed a decline in business significantly over the next couple of years.
during the FY 2006. The business of PSI was impacted
Outlook
by the macro changes in the pharmaceuticals business
The acquired US generic company is being integrated
environment in Europe. Europe witnessed several mega
and supported by a strong pipeline of products from
mergers, Indian companies becoming more active in this
India. This business is expected to record robust growth
market and changes in regulations in some of the key
at the back of our signing 5 years contract with Veterans
markets resulting in pricing pressure. Due to these
administration of US Federal Government and doubling
factors, the sales and profitability of PSI witnessed a dip.
of the manufacturing capacity in Maryland, USA.
To overcome these problems, we have developed several
new products for the European market with backward In Europe we plan to expand the geographic presence
integration to APIs and have strengthened the to several new markets which will help enhance our
management team to better service these markets. We revenue base and improve the bottomline.
JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006
29
American market, which has vast potential in some of
our key products. We expect these markets to witness
high growth during the current financial year
Keeping in view the large pipeline of products,
Jubilant Organosys set up two new commercial scale
manufacturing units at Nanjangud. A new plant for
Oxcarbazepine has been set up to support the growth
plans for this product over the next couple of years.
The Company also set up a new multi purpose plant
for the commercial production of new products which
will be launched during FY 2007. Our plant for
Lamotrigine is the first plant to get US FDA approval
outside of USA and Europe. This will help us start with
a position of strength in the US market where the
patent for Lamotrigine is expiring in October 2007. A
state of the art pilot plant has also been set up which
will help speed up APIs commercialization.
R&D and IPR are of prime importance for the API
business. We currently have 96 scientists dedicated to
API development and an IPR team of 6 employees.
Outook
With the enhanced product portfolio, the APIs
business is expected to record higher growth in sales
during FY 2007. Innovation will help maintain cost
leadership and launch of new products in the market.
The Company plans to file 8-10 DMFs every year over
the next few years. We currently have a pipeline of 11
products available through semi commercial plants
and 19 products in various stages of R&D which will
JUBILANT ORGANOSYS LIMITED
drive our future growth. The APIs R&D has initiated
development work for a range of niche APIs also.
DOSAGE FORMS
Dosage Forms is the logical step up the value chain for
Jubilant Organosys after establishing its presence as a
leading API player in India in focus therapeutic categories.
As part of the strategy, in 2004, the Company acquired
80% stake in PSI and PSI Supply to have a presence in
dosage forms market of Europe.
“Our exports to USA and European
markets recorded healthy growth
during the year. International sales
contributed 72.5% of the net sales
of APIs business.”
Jubilant Organosys expanded its presence in the
regulated markets in the Dosage Forms business by
acquiring a US based generic pharmaceuticals company. In
June 2005, the Company acquired 66.61% equity stake in
Trinity Laboratories, Inc. (renamed Trigen Laboratories, Inc.)
and its wholly owned subsidiary Trigen Laboratories, Inc.
(renamed Jubilant Pharmaceuticals, Inc.). Jubilant
Pharmaceuticals has a US FDA approved manufacturing
facility for solid dosage forms in Maryland, USA. This plant
has the capacity to manufacture 650 million tablets and 47
million capsules per shift per year. The Company paid
US$14.25 million of which US$8.25 million has been paid
to the existing shareholders and the balance of US$6
million has been utilized as growth capital. Jubilant
Organosys will invest another US$6 million during this
calendar year in growth capital which will increase the
Company's holding in Trigen Laboratories to 75%. Jubilant
Pharmaceuticals currently has 7 approved ANDAs and
another 2 ANDAs are pending approval and another 8-10
ANDAs are expected to be filed during the current year. With
the manufacturing facility in USA, Jubilant Pharmaceuticals
ANNUAL REPORT - 2005-2006
28
will be able to utilize the fast growing demand from US expect this will help overcome the temporary decline in
Federal Government. It has signed a 5-year contract with the performance.
the US Veterans Administration for supply of a drug.
The Dosage Forms development center in Noida
Jubilant Pharmaceutical already has distribution tie-ups
undertakes development of products for the US and
with two distribution companies in US and would expand
European markets. We have a dedicated team of 66
its distribution network further to strengthen its position
scientists for Dosage Forms to develop immediate release
as a generic pharmaceutical company. The Dosage Form
and modified release products. This strong pipeline of
business recorded a sales of Rs. 409 million in FY 2006.
products will help us expand our product portfolio
PSI & PSI Supply witnessed a decline in business significantly over the next couple of years.
during the FY 2006. The business of PSI was impacted
Outlook
by the macro changes in the pharmaceuticals business
The acquired US generic company is being integrated
environment in Europe. Europe witnessed several mega
and supported by a strong pipeline of products from
mergers, Indian companies becoming more active in this
India. This business is expected to record robust growth
market and changes in regulations in some of the key
at the back of our signing 5 years contract with Veterans
markets resulting in pricing pressure. Due to these
administration of US Federal Government and doubling
factors, the sales and profitability of PSI witnessed a dip.
of the manufacturing capacity in Maryland, USA.
To overcome these problems, we have developed several
new products for the European market with backward In Europe we plan to expand the geographic presence
integration to APIs and have strengthened the to several new markets which will help enhance our
management team to better service these markets. We revenue base and improve the bottomline.
JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006
29
With backward integration to APIs and in-house
BA/BE facility, Jubilant will be able to develop and
launch the new products at a faster pace as compared
to its competitors both in the US and European
markets.
The new dosage form facility being set up in
Uttaranchal and expected to star t commercial
production during FY 2007 will initially support our
European foray and after necessary approvals from US
authorities will initiate supplies for the US market.
FOOD POLYMERS
A small part of our pharmaceuticals and life
science chemicals portfolio, we manufacture and
market solid PVA, which is used for multiple purposes.
However, Jubilant Organosys supplies solid PVA
mainly to global confectionery companies for chewing
gum and bubble gum.
During the year under review, Jubilant entered into a
long term contract with a large confectionery company for
supply of solid PVA for their plants in USA and Europe. To
enter into this contract, the Company had to forego sales to
smaller players for the part of the year. This resulted in a
marginal decline in sales and profit during the year under
review. The Company recorded net sales of Rs. 300 million
in this business.
Jubilant has backward integration to basic raw materials
in this product and is internationally the only company
producing solid PVA through replenishable bio-mass. This
unique process makes us the lowest cost producer in the
world.
Outlook
Food polymers business is expected to witness steady
growth during financial year 2007 since we have contracts
with large confectionery companies in place. To leverage our

strong relationships with these companies, our R&D has
developed some new products for food industr y
which are expected to be launched during the current
financial year.
DRUG DISCOVERY & DEVELOPMENT SERVICES
Jubilant entered the services business in 2002 by
setting up Jubilant Biosys to provide bio / chemo
informatics databases to drug discovery companies for
their early stage lead generation programme. Moving up
the value chain in drug discovery services business,
Jubilant set up Jubilant Chemsys Ltd. to provide
medicinal chemistry services for lead optimization in new
chemical entities development. We are working with
more than 50 global pharmaceuticals and biotech
companies today providing them bio chemo informatics
databases and medicinal chemistry services on FTE or
molecule basis.
The next logical step for the Company was to provide
clinical research services for development of new drugs.
During the financial year under review, Clinsys India Ltd.
(earlier Jubilant Clinsys Ltd.), a 100% subsidiary of
Jubilant Organosys, was set up to under take
bioavailability / bioequivalence (BA/BE) studies for
generic drug development. A 54 bed facility with in-
house analytical facilities was set up at Noida to
conduct BA/BE studies and phase 1 clinical trials for new
drug development.
In the current scenario, majority of drug discovery
work is concentrated in the US. With an emphasis on
speeding up the process of drug development, these drug
discovery companies are collaborating with CROs to
outsource part of the drug development work. Keeping in
view this growing outsourcing of services, Jubilant
acquired 100% stake in a US based clinical research
organization, Target Research Associates, Inc. (renamed
Clinsys, Inc.) in October 2005 for US$33.5 million and
working capital which is estimated to be US$1.07
million. This acquisition provides us access to around 20
existing customer relationships with US based

JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006

31
With backward integration to APIs and in-house
BA/BE facility, Jubilant will be able to develop and
launch the new products at a faster pace as compared
to its competitors both in the US and European
markets.
The new dosage form facility being set up in
Uttaranchal and expected to star t commercial
production during FY 2007 will initially support our
European foray and after necessary approvals from US
authorities will initiate supplies for the US market.
FOOD POLYMERS
A small part of our pharmaceuticals and life
science chemicals portfolio, we manufacture and
market solid PVA, which is used for multiple purposes.
However, Jubilant Organosys supplies solid PVA
mainly to global confectionery companies for chewing
gum and bubble gum.
During the year under review, Jubilant entered into a
long term contract with a large confectionery company for
supply of solid PVA for their plants in USA and Europe. To
enter into this contract, the Company had to forego sales to
smaller players for the part of the year. This resulted in a
marginal decline in sales and profit during the year under
review. The Company recorded net sales of Rs. 300 million
in this business.
Jubilant has backward integration to basic raw materials
in this product and is internationally the only company
producing solid PVA through replenishable bio-mass. This
unique process makes us the lowest cost producer in the
world.
Outlook
Food polymers business is expected to witness steady
growth during financial year 2007 since we have contracts
with large confectionery companies in place. To leverage our

strong relationships with these companies, our R&D has
developed some new products for food industr y
which are expected to be launched during the current
financial year.
DRUG DISCOVERY & DEVELOPMENT SERVICES
Jubilant entered the services business in 2002 by
setting up Jubilant Biosys to provide bio / chemo
informatics databases to drug discovery companies for
their early stage lead generation programme. Moving up
the value chain in drug discovery services business,
Jubilant set up Jubilant Chemsys Ltd. to provide
medicinal chemistry services for lead optimization in new
chemical entities development. We are working with
more than 50 global pharmaceuticals and biotech
companies today providing them bio chemo informatics
databases and medicinal chemistry services on FTE or
molecule basis.
The next logical step for the Company was to provide
clinical research services for development of new drugs.
During the financial year under review, Clinsys India Ltd.
(earlier Jubilant Clinsys Ltd.), a 100% subsidiary of
Jubilant Organosys, was set up to under take
bioavailability / bioequivalence (BA/BE) studies for
generic drug development. A 54 bed facility with in-
house analytical facilities was set up at Noida to
conduct BA/BE studies and phase 1 clinical trials for new
drug development.
In the current scenario, majority of drug discovery
work is concentrated in the US. With an emphasis on
speeding up the process of drug development, these drug
discovery companies are collaborating with CROs to
outsource part of the drug development work. Keeping in
view this growing outsourcing of services, Jubilant
acquired 100% stake in a US based clinical research
organization, Target Research Associates, Inc. (renamed
Clinsys, Inc.) in October 2005 for US$33.5 million and
working capital which is estimated to be US$1.07
million. This acquisition provides us access to around 20
existing customer relationships with US based

JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006

31
pharmaceuticals and biotech companies. Clinsys is
the preferred par tner to a few large global
pharmaceutical companies for clinical research.
Drug Discovery & Development Services business
offers vast opportunities to Jubilant Organosys Ltd.
The new chemical entities pipeline has reduced over
the last one decade, the approval process of US FDA is
taking longer time and the costs of new drug discovery
“Jubilant Biosys provides services and products to more than 50 innovator
pharmaceutical and biotech companies. During the year, we expanded our customer
base and enhanced our presence in both the US and Japanese markets.”
& development has spiralled over the last many years.
These factors have resulted in increasing pressure on
the global pharmaceutical companies to outsource
part of the discovery and development work to
accelerate the launch of new drugs at a lower cost.
Jubilant Organosys through its subsidiaries – Jubilant
Biosys, Jubilant Chemsys, Clinsys Inc. and Clinsys
India – is well positioned to partner with innovator
pharmaceutical and biotech companies.
Drug Discovery & Development Services business
is sub-divided in four segments:
. Discovery Informatics
. Discovery Research
. Drug Development Services
. Clinical Research
Discovery Informatics business is looked after by
Jubilant Biosys Ltd. . Jubilant Biosys has 385
scientists from multiple disciplines of Biology,
Biochemistry, Chemistry, Clinical Pharmacology and
JUBILANT ORGANOSYS LIMITED
IT. These scientists work as a team to conceptualize,
develop, curate and implement bio and chemo informatics
content based solutions that help drive the drug discovery
process. We offer a combination of ready to use knowledge
bases as well as customized services to create exclusive
informatics knowledge solutions. We provide niche and
customized IT solutions that range from portal services for
scientific content management to customized and
specialized integration of scientific content supporting
“Discovery Research is driven by our concept of Structure Directed Drug Design (SDDD).
We offer flexible functional solutions in computational science, structural biology,
medicinal chemistry, in-vitro biology, PK/ADME and Discovery Biomarkers.”
discovery and development informatics.
Jubilant Biosys provides services and products to more
than 50 innovator pharmaceutical and biotech companies.
During the year, we expanded our customer base and
enhanced our presence in both the US and Japanese
m a r k e t s . We c u r r e n t l y h a v e 8 p r o d u c t s a n d t h e
development work is on to expand this product portfolio to
around 20 products over the next few years.
Discover y Research which involves informatics,
medicinal chemistry and biology is looked after by Jubilant
Biosys and Jubilant Chemsys. Discovery Research is driven
by our concept of Structure Directed Drug Design (SDDD).
Jubilant Chemsys completed 40 medicinal chemistry
projects for 20 partner companies in FY 2006.
We offer flexible functional solutions in computational
science, structural biology, medicinal chemistry, in-vitro
biology, PK/ADME and Discovery Biomarkers.
Given our capabilities in Jubilant Biosys and Jubilant
Chemsys, we entered into early stage lead generation
collaboration business during the year. Jubilant Organosys,
ANNUAL REPORT - 2005-2006 JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006
32 33
pharmaceuticals and biotech companies. Clinsys is
the preferred par tner to a few large global
pharmaceutical companies for clinical research.
Drug Discovery & Development Services business
offers vast opportunities to Jubilant Organosys Ltd.
The new chemical entities pipeline has reduced over
the last one decade, the approval process of US FDA is
taking longer time and the costs of new drug discovery
“Jubilant Biosys provides services and products to more than 50 innovator
pharmaceutical and biotech companies. During the year, we expanded our customer
base and enhanced our presence in both the US and Japanese markets.”
& development has spiralled over the last many years.
These factors have resulted in increasing pressure on
the global pharmaceutical companies to outsource
part of the discovery and development work to
accelerate the launch of new drugs at a lower cost.
Jubilant Organosys through its subsidiaries – Jubilant
Biosys, Jubilant Chemsys, Clinsys Inc. and Clinsys
India – is well positioned to partner with innovator
pharmaceutical and biotech companies.
Drug Discovery & Development Services business
is sub-divided in four segments:
. Discovery Informatics
. Discovery Research
. Drug Development Services
. Clinical Research
Discovery Informatics business is looked after by
Jubilant Biosys Ltd. . Jubilant Biosys has 385
scientists from multiple disciplines of Biology,
Biochemistry, Chemistry, Clinical Pharmacology and
JUBILANT ORGANOSYS LIMITED
IT. These scientists work as a team to conceptualize,
develop, curate and implement bio and chemo informatics
content based solutions that help drive the drug discovery
process. We offer a combination of ready to use knowledge
bases as well as customized services to create exclusive
informatics knowledge solutions. We provide niche and
customized IT solutions that range from portal services for
scientific content management to customized and
specialized integration of scientific content supporting
“Discovery Research is driven by our concept of Structure Directed Drug Design (SDDD).
We offer flexible functional solutions in computational science, structural biology,
medicinal chemistry, in-vitro biology, PK/ADME and Discovery Biomarkers.”
discovery and development informatics.
Jubilant Biosys provides services and products to more
than 50 innovator pharmaceutical and biotech companies.
During the year, we expanded our customer base and
enhanced our presence in both the US and Japanese
m a r k e t s . We c u r r e n t l y h a v e 8 p r o d u c t s a n d t h e
development work is on to expand this product portfolio to
around 20 products over the next few years.
Discover y Research which involves informatics,
medicinal chemistry and biology is looked after by Jubilant
Biosys and Jubilant Chemsys. Discovery Research is driven
by our concept of Structure Directed Drug Design (SDDD).
Jubilant Chemsys completed 40 medicinal chemistry
projects for 20 partner companies in FY 2006.
We offer flexible functional solutions in computational
science, structural biology, medicinal chemistry, in-vitro
biology, PK/ADME and Discovery Biomarkers.
Given our capabilities in Jubilant Biosys and Jubilant
Chemsys, we entered into early stage lead generation
collaboration business during the year. Jubilant Organosys,
ANNUAL REPORT - 2005-2006 JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006
32 33
along with its subsidiaries – Jubilant Biosys and
Jubilant Chemsys – entered into a 5 year multi targets
agreement with Eli Lilly for drug discovery services.
This is the first of its kind contract for drug discovery
and will pave the way for similar contracts for Indian
companies. We are also in discussion with 2
pharmaceutical and 3 biotech companies for similar
collaborative drug discovery services contracts.
Jubilant Organosys is uniquely placed in this business
segment as we have the rare combination of strong
informatics databases and long standing chemistry
knowledge.
Jubilant Biosys has created an independent
team of professionals to under take Discover y
Research work.
Drug Development Services is another new area of
business for Jubilant. In this business area the four
subsidiaries – Jubilant Biosys, Jubilant Chemsys,
Clinsys India and Clinsys Inc. – combine together to
partner with academia, biotech and pharmaceutical
companies to accelerate the process of drug
development. We undertake pre-clinical animal
models, formulation development, material supply
that includes process development and manufacturing
to support pre-clinical and clinical requirement, and
clinical research services.
Jubilant Biosys is in the process of setting up a
new state of the art Drug Discovery Centre at
Bangalore. This centre spread in 155,000 sq. ft area
JUBILANT ORGANOSYS LIMITED
has bio/chemo informatics labs and wet labs to undertake
drug development work.
During the FY 2006, Jubilant Biosys recorded net sales
of Rs. 232 million, an increase of 128%. The majority of
sales of Jubilant Biosys came from Discovery Informatics
business during the year under review. However, during
FY 2007, the drug development and discovery research
services are expected to contribute a larger share in the
“Jubilant Organosys, along with
its subsidiaries – Jubilant Biosys
and Jubilant Chemsys – entered
into a 5 year multi targets
agreement with Eli Lilly for drug
discovery services.”
revenues of Jubilant Biosys. Jubilant Chemsys recorded net
sales of Rs. 50 million.
Clinical Research is the last step in drug discovery and
development and Jubilant Organosys through its
subsidiaries Clinsys Inc. and Clinsys India Ltd., is well
placed to be a major Indian player in this segment. Besides
Clincial Research Operations, Jubilant also provides
Biometrics studies for phase I-IV, Clinical Data Management
and Targeted Clinical Staffing Solutions. The Company, has
set up a clinical data management centre in Bangalore and
would expand this facility over the financial year 2007.
Jubilant will enjoy the India advantages of large multi-
ethnic drug-naïve patient population, trained medical
professionals and well organized private healthcare network
especially in urban India.
Outlook
Drug Discovery & Development Services business is the
growth driver for Jubilant Biosys. We are the early entrant in
this business and have the width of services across the
value chain to offer end-to-end solutions for innovator
ANNUAL REPORT - 2005-2006
34
pharmaceutical companies. We have a unique
business proposition to offer to innovator
pharmaceutical companies where we can partner with
them across their drug discovery and development
programme.
We expect this business to record exponential
growth over the next many years.
Industrial Chemicals
The Industrial Chemicals business is the
traditional business which was the starting point for
the Company 25 years ago. This business has strong
fundamentals and we enjoy the leadership in organic
intermediates business in India. This business has
steady growth and provides a steady cash flow for
growth businesses.
During the year under review, this business
contributed 41.4% of the net sales and 31.3% of
EBIT of the Company. The Industrial Chemicals
business had net sales of Rs. 6.23 billion recording a
growth of 20%. The EBIT declined by 24% to
Rs. 631 million as compared to Rs. 830 million in
FY 2005 mainly due to high input material cost in
acetyls business.
The Industrial Chemicals business is organized in
two growth units – Organic Intermediates and Agrovet.
JUBILANT ORGANOSYS LIMITED
Organic Intermediates
Jubilant Organosys' range of acetyls includes Acetic
Acid, Monochloro Acetic Acid, Acetic Anhydride, Ethyl
Acetate and VAM. We are the market leaders in India in
Acetyls business and enjoy the global leadership in some of
the product categories.
Jubilant Organosys produces these products through
molasses route. We produce ethanol from molasses which
in turn is used to produce acetaldehyde, the basic building
block for our acetyls range. For the first eight months of the
year under review, the molasses prices were at a new
historical peak due to severe drought in Maharashtra, one of
the largest sugarcane belt in India. The prices of finished
products, which follow import parity, remained stable. This
resulted in severe pressure on EBIT for this business during
the first nine months of the year. During the last quarter
with a fresh crop of sugarcane, the molasses prices started
coming down which resulted in improved bottomline that
will continue for the major part of the financial year 2007.
We expect the molasses prices to remain stable over the
next few years especially in Uttar Pradesh, where our largest
plant for acetyls is based, due to increase in sugarcane
crushing capacity by sugar mills.
During FY 2006, we increased the capacity of Acetic
Acid by 23180 tpa by debottlenecking to meet the growing
demand in the North Indian market. Jubilant Organosys is
closest to a new facility for textile intermediate which has
come up in Northern India and thus best placed to be the
preferred supplier.
ANNUAL REPORT - 2005-2006
35
along with its subsidiaries – Jubilant Biosys and
Jubilant Chemsys – entered into a 5 year multi targets
agreement with Eli Lilly for drug discovery services.
This is the first of its kind contract for drug discovery
and will pave the way for similar contracts for Indian
companies. We are also in discussion with 2
pharmaceutical and 3 biotech companies for similar
collaborative drug discovery services contracts.
Jubilant Organosys is uniquely placed in this business
segment as we have the rare combination of strong
informatics databases and long standing chemistry
knowledge.
Jubilant Biosys has created an independent
team of professionals to under take Discover y
Research work.
Drug Development Services is another new area of
business for Jubilant. In this business area the four
subsidiaries – Jubilant Biosys, Jubilant Chemsys,
Clinsys India and Clinsys Inc. – combine together to
partner with academia, biotech and pharmaceutical
companies to accelerate the process of drug
development. We undertake pre-clinical animal
models, formulation development, material supply
that includes process development and manufacturing
to support pre-clinical and clinical requirement, and
clinical research services.
Jubilant Biosys is in the process of setting up a
new state of the art Drug Discovery Centre at
Bangalore. This centre spread in 155,000 sq. ft area
JUBILANT ORGANOSYS LIMITED
has bio/chemo informatics labs and wet labs to undertake
drug development work.
During the FY 2006, Jubilant Biosys recorded net sales
of Rs. 232 million, an increase of 128%. The majority of
sales of Jubilant Biosys came from Discovery Informatics
business during the year under review. However, during
FY 2007, the drug development and discovery research
services are expected to contribute a larger share in the
“Jubilant Organosys, along with
its subsidiaries – Jubilant Biosys
and Jubilant Chemsys – entered
into a 5 year multi targets
agreement with Eli Lilly for drug
discovery services.”
revenues of Jubilant Biosys. Jubilant Chemsys recorded net
sales of Rs. 50 million.
Clinical Research is the last step in drug discovery and
development and Jubilant Organosys through its
subsidiaries Clinsys Inc. and Clinsys India Ltd., is well
placed to be a major Indian player in this segment. Besides
Clincial Research Operations, Jubilant also provides
Biometrics studies for phase I-IV, Clinical Data Management
and Targeted Clinical Staffing Solutions. The Company, has
set up a clinical data management centre in Bangalore and
would expand this facility over the financial year 2007.
Jubilant will enjoy the India advantages of large multi-
ethnic drug-naïve patient population, trained medical
professionals and well organized private healthcare network
especially in urban India.
Outlook
Drug Discovery & Development Services business is the
growth driver for Jubilant Biosys. We are the early entrant in
this business and have the width of services across the
value chain to offer end-to-end solutions for innovator
ANNUAL REPORT - 2005-2006
34
pharmaceutical companies. We have a unique
business proposition to offer to innovator
pharmaceutical companies where we can partner with
them across their drug discovery and development
programme.
We expect this business to record exponential
growth over the next many years.
Industrial Chemicals
The Industrial Chemicals business is the
traditional business which was the starting point for
the Company 25 years ago. This business has strong
fundamentals and we enjoy the leadership in organic
intermediates business in India. This business has
steady growth and provides a steady cash flow for
growth businesses.
During the year under review, this business
contributed 41.4% of the net sales and 31.3% of
EBIT of the Company. The Industrial Chemicals
business had net sales of Rs. 6.23 billion recording a
growth of 20%. The EBIT declined by 24% to
Rs. 631 million as compared to Rs. 830 million in
FY 2005 mainly due to high input material cost in
acetyls business.
The Industrial Chemicals business is organized in
two growth units – Organic Intermediates and Agrovet.
JUBILANT ORGANOSYS LIMITED
Organic Intermediates
Jubilant Organosys' range of acetyls includes Acetic
Acid, Monochloro Acetic Acid, Acetic Anhydride, Ethyl
Acetate and VAM. We are the market leaders in India in
Acetyls business and enjoy the global leadership in some of
the product categories.
Jubilant Organosys produces these products through
molasses route. We produce ethanol from molasses which
in turn is used to produce acetaldehyde, the basic building
block for our acetyls range. For the first eight months of the
year under review, the molasses prices were at a new
historical peak due to severe drought in Maharashtra, one of
the largest sugarcane belt in India. The prices of finished
products, which follow import parity, remained stable. This
resulted in severe pressure on EBIT for this business during
the first nine months of the year. During the last quarter
with a fresh crop of sugarcane, the molasses prices started
coming down which resulted in improved bottomline that
will continue for the major part of the financial year 2007.
We expect the molasses prices to remain stable over the
next few years especially in Uttar Pradesh, where our largest
plant for acetyls is based, due to increase in sugarcane
crushing capacity by sugar mills.
During FY 2006, we increased the capacity of Acetic
Acid by 23180 tpa by debottlenecking to meet the growing
demand in the North Indian market. Jubilant Organosys is
closest to a new facility for textile intermediate which has
come up in Northern India and thus best placed to be the
preferred supplier.
ANNUAL REPORT - 2005-2006
35
 During the year, Jubilant Organosys added to its
portfolio Monochloro Acetic Acid (MCAA) which is a
value addition to Acetic Acid and provides us the
opportunity to capture the value addition within our
business. We have tied up with couple of manufacturing
units in Gujarat for dedicated manufacturing of these
products as per our quality standards.
Outlook
We expect our organic intermediates business to
record revenue growth through volume growth in a
steady to buoyant product price scenario. The margins
are expected to improve during FY 2007 due to
favourable raw material prices. We are exploring
opportunities for exporting our organic intermediates to
Far East, Middle East and Europe.
Agrovet
The Agrovet growth unit is a niche business, focusing
on plant and animal nutrition products. We are the
largest manufacturer of Single Super Phosphate which
we market in Uttar Pradesh and nearby states under the
brand name Ramban. Jubilant is also the largest
producer of organic manure, which helps in better
utilization of chemical fertilizers as it provides bio mass
to the soil to hold chemical nutrients. Jubilant also
markets a range of agrochemicals.
We are the largest manufacturer of Choline Chloride
and globally sixth largest producer. We have an
JUBILANT ORGANOSYS LIMITED
36
integrated facility to produce different grades of Choline
Chloride, which is used as a nutrient in animal feed
mainly for poultry and cattle.
During the year under review, this business segment
grew in line with management expectations.
Outlook
The Agrovet business will continue to record steady
growth as we plan to expand our presence to new
markets for Single Super Phosphate. SSP along with
organic manure offers comprehensive solutions for soil
enrichment. The Company will explore further export
opportunities for animal nutrition products.
Performance Chemicals
The Performance Chemicals business witnessed a
significant improvement in its financial performance. The
net sales increased by 19% to Rs.1.99 billion
contributing 13.2% of the overall net sales of the
Company. The EBIT improved to Rs.122 million resulting
in an EBIT margin of 6.1% as compared to 1.5% in
financial year 2005.
During the year, this business division rationalized
the product portfolio to focus on products where Jubilant
can offer product differentiation through quality of
product and post sales ser vice. Both application
polymers and consumer products business witnessed a
turnaround.
Our woodworking solutions – adhesives and wood
ANNUAL REPORT - 2005-2006
polishes – marketed under the brand name Jivanjor,
established strong brand equity with its applicators i.e.
carpenters and polishers, and the ultimate consumer
through some high intensity below the line advertising.
Outlook
We believe this business has the potential to grow in
topline and at the same time improve its profitability. The
product rationalization process that began last year will
continue during the current year, aimed to enable us to
offer a range of differentiated products to our customers
where entry barriers for the competitors are high. We
intend to leverage our strong brand equity to further
enhance our market shares in focus product segments.
STRENGTHENING THE BALANCE SHEET
Foreign Currency Convertible Bonds (FCCB)
Jubilant Organosys issued Zero Coupon Foreign
Currency Convertible Bonds due 2010 (FCCB 2010) for
an aggregate value of US$ 75 million in May 2005.
These FCCBs are convertible into shares of Rs. 5 each or
Global Depository Shares, each GDS representing one
equity share at the conversion price of Rs. 1365.324 per
share. On sub-division of each equity share of Rs. 5 into
5 equity shares of Re. 1 each, the conversion price of
FCCB 2010 stands reduced from Rs. 1365.324 to
Rs. 273.0648 per share and the number of shares to be
allotted on conversion will be 5 times the initially agreed
number. The proceeds have been partly utilized for
acquisition of US generic company, US CRO and for
JUBILANT ORGANOSYS LIMITED
37
capital expenditure mainly for pharmaceuticals and life
science chemicals business. US$ 20 million of these
proceeds is not utilized and is available as cash in the
books of accounts. The full conversion of these FCCBs
will result in issuance of 11,906,515 shares of
Re. 1 each.
Of the US$ 35 million FCCBs issued in May 2004,
US$ 5.55 million worth of FCCBs are outstanding as on
31st March 2006. The balance of US$ 29.45 million
FCCBs have been converted into 8,063,180 shares.
Private Placement of Shares
The Company allotted 990,000 equity shares of
Rs.5 each totaling to Rs.1.09 billion on private
placement basis to GA European Investment Ltd. at a
price of Rs.1100 per share.
During the year, with the expanding business profile,
the gross debt of the company increased to Rs.7.2 billion
including the outstanding FCCBs and loans taken by
subsidiar y companies. Despite this increase, the
Company has a Debt:Equity ratio of 0.87:1 as on
March 31, 2006.
CORPORATE SUSTAINABILITY MANAGEMENT
As an organization, our operations have always been
guided by an explicit promise of “Caring, Sharing, and
Growing”, as articulated in our corporate vision. Jubilant
Organosys continues to focus on objectives beyond short-
term economic returns, extending the band of interest to
ANNUAL REPORT - 2005-2006
 During the year, Jubilant Organosys added to its
portfolio Monochloro Acetic Acid (MCAA) which is a
value addition to Acetic Acid and provides us the
opportunity to capture the value addition within our
business. We have tied up with couple of manufacturing
units in Gujarat for dedicated manufacturing of these
products as per our quality standards.
Outlook
We expect our organic intermediates business to
record revenue growth through volume growth in a
steady to buoyant product price scenario. The margins
are expected to improve during FY 2007 due to
favourable raw material prices. We are exploring
opportunities for exporting our organic intermediates to
Far East, Middle East and Europe.
Agrovet
The Agrovet growth unit is a niche business, focusing
on plant and animal nutrition products. We are the
largest manufacturer of Single Super Phosphate which
we market in Uttar Pradesh and nearby states under the
brand name Ramban. Jubilant is also the largest
producer of organic manure, which helps in better
utilization of chemical fertilizers as it provides bio mass
to the soil to hold chemical nutrients. Jubilant also
markets a range of agrochemicals.
We are the largest manufacturer of Choline Chloride
and globally sixth largest producer. We have an
JUBILANT ORGANOSYS LIMITED
36
integrated facility to produce different grades of Choline
Chloride, which is used as a nutrient in animal feed
mainly for poultry and cattle.
During the year under review, this business segment
grew in line with management expectations.
Outlook
The Agrovet business will continue to record steady
growth as we plan to expand our presence to new
markets for Single Super Phosphate. SSP along with
organic manure offers comprehensive solutions for soil
enrichment. The Company will explore further export
opportunities for animal nutrition products.
Performance Chemicals
The Performance Chemicals business witnessed a
significant improvement in its financial performance. The
net sales increased by 19% to Rs.1.99 billion
contributing 13.2% of the overall net sales of the
Company. The EBIT improved to Rs.122 million resulting
in an EBIT margin of 6.1% as compared to 1.5% in
financial year 2005.
During the year, this business division rationalized
the product portfolio to focus on products where Jubilant
can offer product differentiation through quality of
product and post sales ser vice. Both application
polymers and consumer products business witnessed a
turnaround.
Our woodworking solutions – adhesives and wood
ANNUAL REPORT - 2005-2006
polishes – marketed under the brand name Jivanjor,
established strong brand equity with its applicators i.e.
carpenters and polishers, and the ultimate consumer
through some high intensity below the line advertising.
Outlook
We believe this business has the potential to grow in
topline and at the same time improve its profitability. The
product rationalization process that began last year will
continue during the current year, aimed to enable us to
offer a range of differentiated products to our customers
where entry barriers for the competitors are high. We
intend to leverage our strong brand equity to further
enhance our market shares in focus product segments.
STRENGTHENING THE BALANCE SHEET
Foreign Currency Convertible Bonds (FCCB)
Jubilant Organosys issued Zero Coupon Foreign
Currency Convertible Bonds due 2010 (FCCB 2010) for
an aggregate value of US$ 75 million in May 2005.
These FCCBs are convertible into shares of Rs. 5 each or
Global Depository Shares, each GDS representing one
equity share at the conversion price of Rs. 1365.324 per
share. On sub-division of each equity share of Rs. 5 into
5 equity shares of Re. 1 each, the conversion price of
FCCB 2010 stands reduced from Rs. 1365.324 to
Rs. 273.0648 per share and the number of shares to be
allotted on conversion will be 5 times the initially agreed
number. The proceeds have been partly utilized for
acquisition of US generic company, US CRO and for
JUBILANT ORGANOSYS LIMITED
37
capital expenditure mainly for pharmaceuticals and life
science chemicals business. US$ 20 million of these
proceeds is not utilized and is available as cash in the
books of accounts. The full conversion of these FCCBs
will result in issuance of 11,906,515 shares of
Re. 1 each.
Of the US$ 35 million FCCBs issued in May 2004,
US$ 5.55 million worth of FCCBs are outstanding as on
31st March 2006. The balance of US$ 29.45 million
FCCBs have been converted into 8,063,180 shares.
Private Placement of Shares
The Company allotted 990,000 equity shares of
Rs.5 each totaling to Rs.1.09 billion on private
placement basis to GA European Investment Ltd. at a
price of Rs.1100 per share.
During the year, with the expanding business profile,
the gross debt of the company increased to Rs.7.2 billion
including the outstanding FCCBs and loans taken by
subsidiar y companies. Despite this increase, the
Company has a Debt:Equity ratio of 0.87:1 as on
March 31, 2006.
CORPORATE SUSTAINABILITY MANAGEMENT
As an organization, our operations have always been
guided by an explicit promise of “Caring, Sharing, and
Growing”, as articulated in our corporate vision. Jubilant
Organosys continues to focus on objectives beyond short-
term economic returns, extending the band of interest to
ANNUAL REPORT - 2005-2006
“At Jubilant, employees' career development begins with the selection of highly talented
individuals and is reinforced by offering them growth opportunities and support.”
include longer term per formance with regard to
economic, social, and environmental bottomlines. This
triple-bottomline approach, which forms the backbone of
our commitment to long term corporate sustainability,
has been institutionalized within Jubilant, with support
and involvement of the entire team including top
management and workers.
Over the past several years, we have implemented
numerous initiatives to minimize the impact of our
operations on the environment and the communities
surrounding our facilities even as we made efforts to
drive financial and business growth. During the year
under review too, we continued to strive to maximize
value from our operations while delivering on our
sustainability goals across multiple parameters. Our
strategy for corporate sustainability, our initiatives, and
the progress made is discussed in greater detail in our
Report on Corporate Sustainability 2005-06, which is
being sent along with this Annual Report to shareholders.
When we published our first Corporate Sustainability
JUBILANT ORGANOSYS LIMITED
38
Report in 2003, we made a formal commitment to the
management of long term sustainability for all our
stakeholders. This was not a new direction for us, but it
set the stage for comprehensive and organization-wide
sustainability progress that today is an integral part of our
overall growth strategy. We have made significant
advances in establishing a sustainable business model at
Jubilant that complements our focus on moving up the
value chain, as discussed in our Corporate Sustainability
Report for FY 2006, the fourth such report in as many
years, prepared in accordance with Global Reporting
Initiative (GRI) guidelines and duly verified by
Ernst & Young.
During the year under review, our emphasis on safety
at the workplace resulted in the number of fatal incidents
reducing from two in FY2005 to nil in FY2006. This was
the result of our bringing in international expertise on
safety and increasing employee training. Given our large
manufacturing operations, prudent utilization of natural
resources is also an important thrust area. During
ANNUAL REPORT - 2005-2006
“As an organisation, we promote strong ethical values and high levels of integrity
in all our activities, which in itself is a significant risk mitigator.”
FY 2006, we were able to reduce our use of both direct
and indirect energy as well as consumption of water
despite growth in overall product volumes and business
revenues. We also succeeded in taking a tangible step
forward in our attempts to better manage and dispose
hazardous waste by acquiring our own landfill area. This,
combined with our practice of drawing energy from waste
incineration, should go a long way in enabling us to limit
the impact of our operations on the environment. With
regard to our social development agenda, our medical
centre at Gajraula was accorded the status of DOTS by
the World Health Organization (WHO) and the
Government of India, making it the only privately
managed centre in the area to receive such recognition.
We already have multiple social upliftment programmes
being implemented in the areas surrounding our facilities
where we are making a positive difference to the lives of
our neighbouring communities through better healthcare,
education, and access to expert advice and assistance on
agricultural and financial issues.
JUBILANT ORGANOSYS LIMITED
39
It is our intent to continue leveraging our financial,
human, and technological resources to assess and
minimize the environmental and social impact of our
operations on an ongoing basis, searching out ways to
conduct business in a socially responsible way while
creating superior shareholder value.
Our people: Driven by knowledge, Inspired to innovate
Our people come from diverse backgrounds and have
many different skills, but we all share the same objective:
to create an innovation-led world-class organization with
unparalleled quality, cost leadership, and a large and
satisfied global customer profile. In order to facilitate the
realization of our corporate objectives, we have created
an environment that allows our employees to effectively
contribute to our overall growth, and at the same time
fulfills their personal goals.
Our industry has always been fast moving and ever-
evolving. Players such as Jubilant, with demonstrated
flexibility to adapt and capability to quickly respond to
ANNUAL REPORT - 2005-2006
“At Jubilant, employees' career development begins with the selection of highly talented
individuals and is reinforced by offering them growth opportunities and support.”
include longer term per formance with regard to
economic, social, and environmental bottomlines. This
triple-bottomline approach, which forms the backbone of
our commitment to long term corporate sustainability,
has been institutionalized within Jubilant, with support
and involvement of the entire team including top
management and workers.
Over the past several years, we have implemented
numerous initiatives to minimize the impact of our
operations on the environment and the communities
surrounding our facilities even as we made efforts to
drive financial and business growth. During the year
under review too, we continued to strive to maximize
value from our operations while delivering on our
sustainability goals across multiple parameters. Our
strategy for corporate sustainability, our initiatives, and
the progress made is discussed in greater detail in our
Report on Corporate Sustainability 2005-06, which is
being sent along with this Annual Report to shareholders.
When we published our first Corporate Sustainability
JUBILANT ORGANOSYS LIMITED
38
Report in 2003, we made a formal commitment to the
management of long term sustainability for all our
stakeholders. This was not a new direction for us, but it
set the stage for comprehensive and organization-wide
sustainability progress that today is an integral part of our
overall growth strategy. We have made significant
advances in establishing a sustainable business model at
Jubilant that complements our focus on moving up the
value chain, as discussed in our Corporate Sustainability
Report for FY 2006, the fourth such report in as many
years, prepared in accordance with Global Reporting
Initiative (GRI) guidelines and duly verified by
Ernst & Young.
During the year under review, our emphasis on safety
at the workplace resulted in the number of fatal incidents
reducing from two in FY2005 to nil in FY2006. This was
the result of our bringing in international expertise on
safety and increasing employee training. Given our large
manufacturing operations, prudent utilization of natural
resources is also an important thrust area. During
ANNUAL REPORT - 2005-2006
“As an organisation, we promote strong ethical values and high levels of integrity
in all our activities, which in itself is a significant risk mitigator.”
FY 2006, we were able to reduce our use of both direct
and indirect energy as well as consumption of water
despite growth in overall product volumes and business
revenues. We also succeeded in taking a tangible step
forward in our attempts to better manage and dispose
hazardous waste by acquiring our own landfill area. This,
combined with our practice of drawing energy from waste
incineration, should go a long way in enabling us to limit
the impact of our operations on the environment. With
regard to our social development agenda, our medical
centre at Gajraula was accorded the status of DOTS by
the World Health Organization (WHO) and the
Government of India, making it the only privately
managed centre in the area to receive such recognition.
We already have multiple social upliftment programmes
being implemented in the areas surrounding our facilities
where we are making a positive difference to the lives of
our neighbouring communities through better healthcare,
education, and access to expert advice and assistance on
agricultural and financial issues.
JUBILANT ORGANOSYS LIMITED
39
It is our intent to continue leveraging our financial,
human, and technological resources to assess and
minimize the environmental and social impact of our
operations on an ongoing basis, searching out ways to
conduct business in a socially responsible way while
creating superior shareholder value.
Our people: Driven by knowledge, Inspired to innovate
Our people come from diverse backgrounds and have
many different skills, but we all share the same objective:
to create an innovation-led world-class organization with
unparalleled quality, cost leadership, and a large and
satisfied global customer profile. In order to facilitate the
realization of our corporate objectives, we have created
an environment that allows our employees to effectively
contribute to our overall growth, and at the same time
fulfills their personal goals.
Our industry has always been fast moving and ever-
evolving. Players such as Jubilant, with demonstrated
flexibility to adapt and capability to quickly respond to
ANNUAL REPORT - 2005-2006
change are the ones that ultimately realize superior
performance. Our ability to capitalize on emerging
market trends, grow our operations beyond Indian shores
into Europe and North America, and establish ourselves
as the outsourcing partner of choice to the world's
pharma and life sciences industry is to a large extent due
to our team of dedicated and highly motivated
professionals, scientists, engineers, and workers.
“In order to comply with Clause 49 requirements and to meet the global standards of
documentation requirement as specified in Sarbanes Oxley Act of USA, the Company
launched “Project Beehive” in consultation with Ernst & Young and successfully
completed the project during the year under review.”
We know that a workforce committed to achieving the
corporate goals is our greatest competitive advantage,
and have multiple programmes in place to address their
learning, training, and personal growth requirements.
Over the past few years, we have launched initiatives
aimed at creating an organization culture that fosters
creativity and enables efficient sharing of knowledge –
the two critical prerequisites for sustained innovation.
These initiatives, combined with our continued
investments in R&D, have yielded encouraging results
with new products commercialized by us contributing an
increasing quantum of revenues.
At Jubilant, employees' career development begins
with the selection of highly talented individuals and is
reinforced by offering them growth opportunities and
support. Our compensation and reward policies reflect
our value-based system of working. Through a set of
processes, policies, programmes, and services that
maximize our employees' capacity to contribute, we have
been able to grow rapidly and move up the pharma and
life sciences value chain over the years. During the year
JUBILANT ORGANOSYS LIMITED
40
under review, we continued to nurture our organization's
talent pool, and intend to continue adopting best
practices that enable greater innovation, better
productivity, and high quality at all times.
As on 31st March 2006, Jubilant Organosys Ltd. and
its subsidiaries had 3258 employees of which 880
ie. 27% of our total employee strength, are engaged in
research & development.
INTERNAL CONTROL SYSTEMS AND RISK
MANAGEMENT
We have in place several sophisticated mechanisms
aimed at establishing and maintaining adequate internal
controls over all operational and financial functions,
which enable us to adhere to procedures, guidelines and
regulations, as applicable, in a transparent manner. Our
systems for internal control and risk management go
beyond what is mandatory requirement to cover best
practice reporting matrices and to identify opportunities
and risks with regard to our business.
Internal control systems
With the growing business profile of the Company,
and globally enhanced presence with 11 subsidiary
companies, we believe that it is imperative to have strong
internal control systems.
Some of the significant features of our existing internal
control systems include:
. Well-defined processes for formulating and reviewing
quarterly, annual and longer term business plans;
ANNUAL REPORT - 2005-2006
. Committees (audit committee, supply chain
committee, purchase committee, credit committee
and capex committee) to oversee audit and
operational activities and assess the effectiveness
of internal controls and risk management systems
on a regular basis;
. An integrated ERP system to enable IT system-
based checks and controls;
Jubilant was among the few companies that began
reporting their financial performance as per both
Indian and US GAAP. During FY2006, we continued
to take new initiatives to meet and exceed statutory
and regulatory requirements in order to maintain our
track record as a company that benchmarks its
processes and systems with global standards. In the
year under review, the Securities & Exchange Board of
India (SEBI) introduced a revised Clause 49 for Listing
Agreements, which required a certification by the CEO
and the CFO on accuracy of financial statements and
on the adequacy of internal controls and risk
JUBILANT ORGANOSYS LIMITED
41
management. In order to comply with Clause 49
requirements and to meet the global standards of
documentation requirements as specified in Sarbanes
Oxley Act of USA, we launched “Project Beehive” in
consultation with Ernst & Young and successfully
completed this project during the year under review.
Under “Project Beehive”, we first identified all
significant accounting units and all significant
business processes, which materially impact our
financial reporting. Detailed Risk and Control Matrices
were then prepared or each process as per the
following procedure:
. Each process was spilt into sub-processes
. For each sub-process,
. Control objectives were identified along with
“What can go wrong?”
. Controls were described sequentially through
the sub-process covering the entire accounting
interface
ANNUAL REPORT - 2005-2006
change are the ones that ultimately realize superior
performance. Our ability to capitalize on emerging
market trends, grow our operations beyond Indian shores
into Europe and North America, and establish ourselves
as the outsourcing partner of choice to the world's
pharma and life sciences industry is to a large extent due
to our team of dedicated and highly motivated
professionals, scientists, engineers, and workers.
“In order to comply with Clause 49 requirements and to meet the global standards of
documentation requirement as specified in Sarbanes Oxley Act of USA, the Company
launched “Project Beehive” in consultation with Ernst & Young and successfully
completed the project during the year under review.”
We know that a workforce committed to achieving the
corporate goals is our greatest competitive advantage,
and have multiple programmes in place to address their
learning, training, and personal growth requirements.
Over the past few years, we have launched initiatives
aimed at creating an organization culture that fosters
creativity and enables efficient sharing of knowledge –
the two critical prerequisites for sustained innovation.
These initiatives, combined with our continued
investments in R&D, have yielded encouraging results
with new products commercialized by us contributing an
increasing quantum of revenues.
At Jubilant, employees' career development begins
with the selection of highly talented individuals and is
reinforced by offering them growth opportunities and
support. Our compensation and reward policies reflect
our value-based system of working. Through a set of
processes, policies, programmes, and services that
maximize our employees' capacity to contribute, we have
been able to grow rapidly and move up the pharma and
life sciences value chain over the years. During the year
JUBILANT ORGANOSYS LIMITED
40
under review, we continued to nurture our organization's
talent pool, and intend to continue adopting best
practices that enable greater innovation, better
productivity, and high quality at all times.
As on 31st March 2006, Jubilant Organosys Ltd. and
its subsidiaries had 3258 employees of which 880
ie. 27% of our total employee strength, are engaged in
research & development.
INTERNAL CONTROL SYSTEMS AND RISK
MANAGEMENT
We have in place several sophisticated mechanisms
aimed at establishing and maintaining adequate internal
controls over all operational and financial functions,
which enable us to adhere to procedures, guidelines and
regulations, as applicable, in a transparent manner. Our
systems for internal control and risk management go
beyond what is mandatory requirement to cover best
practice reporting matrices and to identify opportunities
and risks with regard to our business.
Internal control systems
With the growing business profile of the Company,
and globally enhanced presence with 11 subsidiary
companies, we believe that it is imperative to have strong
internal control systems.
Some of the significant features of our existing internal
control systems include:
. Well-defined processes for formulating and reviewing
quarterly, annual and longer term business plans;
ANNUAL REPORT - 2005-2006
. Committees (audit committee, supply chain
committee, purchase committee, credit committee
and capex committee) to oversee audit and
operational activities and assess the effectiveness
of internal controls and risk management systems
on a regular basis;
. An integrated ERP system to enable IT system-
based checks and controls;
Jubilant was among the few companies that began
reporting their financial performance as per both
Indian and US GAAP. During FY2006, we continued
to take new initiatives to meet and exceed statutory
and regulatory requirements in order to maintain our
track record as a company that benchmarks its
processes and systems with global standards. In the
year under review, the Securities & Exchange Board of
India (SEBI) introduced a revised Clause 49 for Listing
Agreements, which required a certification by the CEO
and the CFO on accuracy of financial statements and
on the adequacy of internal controls and risk
JUBILANT ORGANOSYS LIMITED
41
management. In order to comply with Clause 49
requirements and to meet the global standards of
documentation requirements as specified in Sarbanes
Oxley Act of USA, we launched “Project Beehive” in
consultation with Ernst & Young and successfully
completed this project during the year under review.
Under “Project Beehive”, we first identified all
significant accounting units and all significant
business processes, which materially impact our
financial reporting. Detailed Risk and Control Matrices
were then prepared or each process as per the
following procedure:
. Each process was spilt into sub-processes
. For each sub-process,
. Control objectives were identified along with
“What can go wrong?”
. Controls were described sequentially through
the sub-process covering the entire accounting
interface
ANNUAL REPORT - 2005-2006
 . Controls were classified as “ Prevent /Detect” and
“Manual/IT enabled”
. Responsibility was identified for each control along
with their effectiveness rating
. For all ineffective controls, a mitigation plan was
identified to address control gaps
Trained
manpower
risk factors pertaining to our product portfolio, raw
material supplies, customer profile, environmental
issues, foreign exchange and interest rate volatility which
enable us to take appropriate measures on an ongoing
basis. In addition to that, we also maintain adequate
property, product, public and casualty insurance cover at
our manufacturing facilities as per industry practices.
Environmental
Issues
risks. We have laid down procedures to inform Board
Members about the risk assessment and minimization
procedure. We also trained the Board Members on the
business model and risk profile of its business
parameters. A periodical review to ensure that Executive
Management controls risks through a properly defined
framework is being followed. We also held a one-day
seminar on “Fraud Risk Assessment” to sensitize
participants drawn from Commercial and Finance
functions with a framework to identify and pre-empt
frauds with appropriate internal controls.
As an organization, we promote strong ethical values
and high levels of integrity in all our activities, which in
itself is a significant risk mitigator. We have a strong
Board and a competent set of professional managers who
attempt to identify risks at an early stage and take
appropriate steps to preempt or mitigate the same. Given
the established processes and guidelines we already have
in place, combined with a robust oversight and
monitoring system at the Board and senior management
levels, we believe, we have a robust risk management
strategy in place.

Raw
Material Promote Strong Ethical Values
RISK “As an organization, we promote strong ethical values and high levels of integrity in all
Supplies And High Levels Of Integrity Customer
MANAGEMENT our activities, which in itself is a significant risk mitigator.”
In All Our Activities Profile

Research
& Development
Delays
Jubilant has also identified these controls as per the
requirements of Sarbanes-Oxley Act of USA. We believes
that this exercise has considerably strengthened the
internal controls within the Company alongwith clear
documentation of existing control points. We have also
identified entity level controls across the organization,
which cover integrity and ethical values, adequacy of
internal audit and internal control mechanisms and
effectiveness of internal and external communication.
RISK MANAGEMENT
Foreign
Exchange
& Interest Rate
Volatility
Recent Developments
Our global scale of operations and business dynamics During the 1st quarter of FY 2007, Jubilant Organosys initial conversion price of Rs.413.4498 per share. The
both within the Company as well as in the external issued Zero Coupon Foreign Currency Convertible Bonds net proceeds of the issue are to be used for organic
environment have necessitated enhanced focus on due 2011 (FCCB 2011) for an aggregate value of capital expenditure, acquisitions and any use as may be
'Business Risks'. During FY 2006, additional initiatives US$200 million, convertible into fully paid equity shares permitted under the applicable regulations. The net
were undertaken to enhance our risk management of Re.1 each of the Company or Global Depositary Shares proceeds of the issue are currently placed in bank
capabilities. We launched a risk management project (GDS), each GDS representing one equity share at an deposits overseas, pending utilization.
focused on identifying and building effective risk
identification and management systems in consultation
with Ernst & Young. For this project, key businesses as
well as core / support functions were covered. We

Jubilant Organosys has a strong risk management

framework that enables active monitoring of the business
environment and identification, assessment and
preemption or mitigation of potential internal or external
risks. Our senior management team sets the overall tone
and risk culture of the organization through defined and
communicated corporate values, clearly assigned risk
responsibilities, appropriately delegated authority, and a
set of processes and guidelines. We monitor all perceived
undertook a comprehensive exercise to identify, measure
and develop mitigation plans for all major categories of
Cautionary statement
risks. The identified risks were reviewed by a senior
In this annual repor t, statements describing the the company’s operations include global and domestic
management group who individually rated each risk on a
company’s objectives, projections, estimates and demand and supply conditions, raw material pricing and
scale for “Significance of Consequence” and “Probability
expectations may be ‘forward-looking’ statements with in availability, foreign exchange rate fluctuations and
of Occurrence” and classified them as critical, high,
the meaning of applicable laws and regulations. Actual significant changes in the politics, economics and
medium and low. Out of the risks which emerged from
results may differ materially or substantially from those environment in India or key markets abroad and
this bottom up approach, the highest prioritized risks
expressed or implied. Important factor that could affect any litigations.
were segregated as “Corporate Risks” and mitigation
plans were developed to address and manage these

JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006 JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006
42 43
 . Controls were classified as “ Prevent /Detect” and
“Manual/IT enabled”
. Responsibility was identified for each control along
with their effectiveness rating
. For all ineffective controls, a mitigation plan was
identified to address control gaps
Trained
manpower
risk factors pertaining to our product portfolio, raw
material supplies, customer profile, environmental
issues, foreign exchange and interest rate volatility which
enable us to take appropriate measures on an ongoing
basis. In addition to that, we also maintain adequate
property, product, public and casualty insurance cover at
our manufacturing facilities as per industry practices.
Environmental
Issues
risks. We have laid down procedures to inform Board
Members about the risk assessment and minimization
procedure. We also trained the Board Members on the
business model and risk profile of its business
parameters. A periodical review to ensure that Executive
Management controls risks through a properly defined
framework is being followed. We also held a one-day
seminar on “Fraud Risk Assessment” to sensitize
participants drawn from Commercial and Finance
functions with a framework to identify and pre-empt
frauds with appropriate internal controls.
As an organization, we promote strong ethical values
and high levels of integrity in all our activities, which in
itself is a significant risk mitigator. We have a strong
Board and a competent set of professional managers who
attempt to identify risks at an early stage and take
appropriate steps to preempt or mitigate the same. Given
the established processes and guidelines we already have
in place, combined with a robust oversight and
monitoring system at the Board and senior management
levels, we believe, we have a robust risk management
strategy in place.

Raw
Material Promote Strong Ethical Values
RISK “As an organization, we promote strong ethical values and high levels of integrity in all
Supplies And High Levels Of Integrity Customer
MANAGEMENT our activities, which in itself is a significant risk mitigator.”
In All Our Activities Profile

Research
& Development
Delays
Jubilant has also identified these controls as per the
requirements of Sarbanes-Oxley Act of USA. We believes
that this exercise has considerably strengthened the
internal controls within the Company alongwith clear
documentation of existing control points. We have also
identified entity level controls across the organization,
which cover integrity and ethical values, adequacy of
internal audit and internal control mechanisms and
effectiveness of internal and external communication.
RISK MANAGEMENT
Foreign
Exchange
& Interest Rate
Volatility
Recent Developments
Our global scale of operations and business dynamics During the 1st quarter of FY 2007, Jubilant Organosys initial conversion price of Rs.413.4498 per share. The
both within the Company as well as in the external issued Zero Coupon Foreign Currency Convertible Bonds net proceeds of the issue are to be used for organic
environment have necessitated enhanced focus on due 2011 (FCCB 2011) for an aggregate value of capital expenditure, acquisitions and any use as may be
'Business Risks'. During FY 2006, additional initiatives US$200 million, convertible into fully paid equity shares permitted under the applicable regulations. The net
were undertaken to enhance our risk management of Re.1 each of the Company or Global Depositary Shares proceeds of the issue are currently placed in bank
capabilities. We launched a risk management project (GDS), each GDS representing one equity share at an deposits overseas, pending utilization.
focused on identifying and building effective risk
identification and management systems in consultation
with Ernst & Young. For this project, key businesses as
well as core / support functions were covered. We

Jubilant Organosys has a strong risk management

framework that enables active monitoring of the business
environment and identification, assessment and
preemption or mitigation of potential internal or external
risks. Our senior management team sets the overall tone
and risk culture of the organization through defined and
communicated corporate values, clearly assigned risk
responsibilities, appropriately delegated authority, and a
set of processes and guidelines. We monitor all perceived
undertook a comprehensive exercise to identify, measure
and develop mitigation plans for all major categories of
Cautionary statement
risks. The identified risks were reviewed by a senior
In this annual repor t, statements describing the the company’s operations include global and domestic
management group who individually rated each risk on a
company’s objectives, projections, estimates and demand and supply conditions, raw material pricing and
scale for “Significance of Consequence” and “Probability
expectations may be ‘forward-looking’ statements with in availability, foreign exchange rate fluctuations and
of Occurrence” and classified them as critical, high,
the meaning of applicable laws and regulations. Actual significant changes in the politics, economics and
medium and low. Out of the risks which emerged from
results may differ materially or substantially from those environment in India or key markets abroad and
this bottom up approach, the highest prioritized risks
expressed or implied. Important factor that could affect any litigations.
were segregated as “Corporate Risks” and mitigation
plans were developed to address and manage these

JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006 JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006
42 43
 Directors’ Report

Your Directors have pleasure in presenting the Twenty Eighth Annual Report and Audited Accounts for the year ended 31st
March, 2006, reporting a progressive financial performance in line with the management expectations. Your Company has
taken various initiatives during the year to strengthen its position as an integrated pharmaceutical industry player delivering
products and services to the global life sciences industry across the value chain.
FINANCIAL RESULTS

Year ended Year ended

31st March 2006 31st March 2005
[Rs./Million] [Rs./Million]
Sales and Other Income 15226 12318
Net Sales 13860 11145
EBITDA 2380 2064
Interest 147 213
PBDT 2233 1851
Depreciation 442 348
PBT 1791 1503
Provision for Taxation 403 370
PAT 1388 1133
Profit brought forward from previous year 1662 1064
PROFIT AVAILABLE FOR APPROPRIATION 3050 2197
Which the Directors have appropriated as follows:
- Proposed Dividend on Equity shares 183 * 162
- Tax on Dividend on Equity Shares 26 23
- Transfer to General Reserve 400 350
Balance to be carried forward 2441 1662
* Includes Rs. 5.72 million (inclusive of Dividend Tax) in respect of shares allotted between 31st March, 2005 and the
record date for dividend payment.

OPERATIONS
Financial Year 2005-06 has been a year of significant achievements in the key focus business areas of Pharmaceuticals
and Life Science Chemicals. Custom Research and Manufacturing Services (CRAMS) and Active Pharmaceutical
Ingredients (API), the major contributors to this business segment continued to record robust growth. The API business
filed 5 Drug Master Files (DMFs) in USA and 9 European Drug Master Files (EDMFs) in Europe during the financial year.
Your Company has made significant capital expenditure to increase manufacturing capacity and the R&D capabilities in
these businesses. The capacity of pyridine plant has been increased by 20% and a new multipurpose plant became
operational for fine chemicals during FY 06. In view of the increased demand from the market, the Kilo labs facility at
Gajraula was further expanded. In APIs, the plant for Oxcarbazepine, an anti epileptic drug and a new multi purpose
plant have been commissioned.
Your Company entered the dosage forms market of USA by acquiring Trinity Laboratories, Inc. (renamed Trigen Laboratories,
Inc.) along with its wholly owned subsidiary - Trigen Laboratories, Inc. (renamed Jubilant Pharmaceuticals, Inc.)
Jubilant Pharmaceuticals, Inc. has a US FDA approved manufacturing facility for solid dosage forms and has 7 approved
Abbreviated New Drug Application in its portfolio. During the financial year, the dosage forms R&D became operational
and the work has been initiated for setting up a new solid dosage forms plant near Roorkee in Uttaranchal.
Your Company also acquired Target Research Associates, Inc. (renamed Clinsys, Inc.), a US based Clinical Research
Organization (CRO) involved in clinical operations for phase II to IV, clinical data management, bio statistics, QA and
regulatory services and contract staffing. The business profile of Clinsys, Inc. forms perfect synergy with Jubilant
Clinsys Ltd. involved in Bio availability (BA)/ Bio equivalence (BE) and Clinical Trials phase I studies. This acquisition
made Jubilant the only Indian CRO having presence in the US market.
During FY 06, the Company has filed 7 new patents and currently 56 patent applications are pending whereas 9
patents have been granted. Net Sales recorded a growth of 24.3% to Rs.13.86 billion as compared to Rs.11.15 billion in
the previous year. Export revenues increased by 30.6% to Rs.4.76 billion from Rs.3.64 billion. This increase in exports
was mainly due to high growth in Pharma and Life Sciences business in regulated markets of USA, Europe and China.
The Industrial Chemicals business witnessed 20% growth in sales to Rs.6.23 billion. The Performance Chemicals
JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
44

44-48.p65 44 8/11/2006, 4:17 PM

 business also recorded a robust growth of 19.2% to Rs.1.99 billion as compared to Rs.1.67 billion in FY 05. EBITDA
at Rs.2.38 billion recorded a growth of 15.3% as compared to Rs.2.06 billion in the previous year. The operating
margin was lower due to the impact of high input material cost mainly in Industrial Chemicals business.
Profit before tax (PBT) improved to Rs.1.79 billion (12.9% of net sales) from Rs.1.50 billion (13.5% of net sales), an
increase of 19.2%.
Profit after tax (PAT) increased to Rs.1.39 billion (10% of net sales) from Rs.1.13 billion (10.2% of net sales), an
increase of 22.5%.
CONSOLIDATED FINANCIALS
On a consolidated basis, Net Sales recorded a growth of 28.6% to Rs.15.05 billion as compared to Rs.11.70 billion in
the previous year. Export revenues increased 41.6% to Rs.5.95 billion from Rs.4.20 billion. EBITDA at Rs.2.37 billion
recorded a growth of 5.5% as compared to Rs.2.24 billion in the previous year.
PBT improved to Rs.1.68 billion (11.2% of net sales) from Rs.1.64 billion (14.0% of net sales), an increase of 2.44%.
PAT increased to Rs.1.30 billion (8.61% of net sales) from Rs.1.19 billion (10.2% of net sales), an increase of 8.79%.
DIVIDEND
Your Directors recommend a dividend of 125%, i.e. Rs.1.25 on each fully paid up equity share of Re.1, for the year
ended 31st March, 2006. This will absorb Rs. 203 million (inclusive of tax) based on existing capital. The final outgo
might increase if the paid up capital increases due to conversion of FCCBs or otherwise.
APPROPRIATIONS
It is proposed to transfer Rs. 400 million to General Reserve. An amount of Rs. 2.44 billion is proposed to be retained
in Profit and Loss Account.
CAPITAL STRUCTURE
(a) SUB-DIVISION
As approved by the members through Postal Ballot, each equity share of Rs.5 of the Company was sub-divided into 5
equity shares of Re.1 each on March 24, 2006. Accordingly, credit was given to the shareholders holding shares in
electronic segment on March 25, 2006 and new certificates were sent to other shareholders who surrendered existing
share certificates. Any member who has not received the sub-divided shares, may write to the Registrar & Share
Transfer Agent of the Company.
(b) FCCB 2010 ISSUE
During the year under review, the Company issued Zero Coupon Foreign Currency Convertible Bonds due 2010 (FCCB
2010) for an aggregate value of US$75 million, convertible any time between July 3, 2005 and May 14, 2010 by
holders into fully paid equity shares of Rs.5 each of the Company or Global Depositary Shares (GDS), each GDS
representing one equity share at an initial conversion price of Rs.1365.324 per share with a fixed rate of exchange of
Rs.43.35 = US$1. The conversion price is subject to adjustment in certain circumstances. The Bonds may also be
redeemed, in whole but not in part, at the option of the Company at any time on or after May 23, 2008, subject to
satisfaction of certain conditions. Unless previously converted, redeemed or purchased and cancelled, the Bonds will
be redeemed on May 24, 2010 at 138.383% of their principal amount. The FCCBs are listed on Singapore Stock
Exchange. The GDSs arising out of conversion of FCCBs are listed on Luxembourg Stock Exchange.
Upon sub-division of each equity share of Rs.5 into 5 equity shares of Re.1 each, the conversion price for FCCB 2010
stands reduced from Rs.1365.324 to Rs.273.0648 per share and the number of shares to be allotted on conversion
will be 5 times the initially agreed number.
(c) FCCB 2009 CONVERSIONS
The Company had issued 1.5% Foreign Currency Convertible Bonds due 2009 (FCCB 2009) aggregating US $ 35
million, in the year 2004-05.
The Bonds are convertible at any time between June 14, 2004 and April 15, 2009 by holders into fully paid equity
shares of Rs.5 each of the Company or GDS, each GDS representing one equity Share at an initial conversion price of
Rs.818.23 per share with a fixed rate of exchange on conversion of Rs. 44.805 = US $1. The conversion price is
subject to adjustment in certain circumstances. The Bonds may also be redeemed, in whole but not in part, at the
option of the Company at any time on or after May 14, 2007 and prior to May 8, 2009, subject to satisfaction of certain
conditions. The outstanding Bonds remaining after conversion will be redeemed on May 15, 2009 at 113.70% of their
principal amount. The FCCB 2009 are listed on Singapore Stock Exchange. The GDS arising out of conversion of FCCBs
are listed on Luxembourg Stock Exchange.

JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
45

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 As on 31st March, 2006, FCCB 2009 of US $ 5.55 million were outstanding.
Upon sub-division of each equity share of Rs.5 into 5 equity shares of Re.1 each, the conversion price for FCCB 2009
stands reduced from Rs.818.23 to Rs.163.646 per share and the number of shares to be allotted on conversion will be
5 times the initially agreed number.
(d) PRIVATE EQUITY PLACEMENT
During the year under review, the Company allotted 990,000 fully paid up Equity Shares of Rs.5 each, at a premium
of Rs.1,095 per share aggregating to Rs.1.09 billion, on private placement basis to GA European Investments Limited,
a Foreign Financial Investor, in accordance with SEBI Guidelines.
(e) EMPLOYEES STOCK OPTIONS
At the last Annual General Meeting, members had approved grant of upto 717,500 Stock Options (each Option
convertible into one equity share of Rs.5 to eligible Directors (other than promoter directors) and other employees of the
Company/ subsidiaries, as per the Jubilant Employees Stock Option Plan, 2005.
During the year, 594,391 Stock Options were granted. As a result of sub division of shares into shares of Re.1 each, the
number of shares to be allotted on exercise of options would be five times the earlier agreed number and the exercise
price would be one-fifth of earlier agreed price.
The details as required under Regulation 12 of SEBI (ESOP & ESPS) Guidelines, 1999 are given in Annexure-A.
(f) PAID-UP CAPITAL
The Paid-up Capital as at March 31, 2006 stands at Rs.142.44 million, comprising of 142,442,995 equity shares of
Re.1 each.
The impact of conversion of FCCB 2009 and FCCB 2010 into equity shares and exercise of Employees Stock Options
by employees on the share capital assuming full conversion/ exercise would be as follows:

No. of Shares of Re.1 each

Paid-up Share Capital as on March 31, 2006 142,442,995
Add : Conversion of balance FCCB 2009 1,519,546
Add : Conversion of FCCB 2010 11,906,514
Add : Exercise of Employees Stock Options (717,500 options) 3,587,500*
Eventual Paid-up Capital 159,456,555
* Assuming grant of all the Stock Options approved by the members, i.e. 717,500 Stock Options.
SUBSIDIARIES
Brief particulars of each of the subsidiaries are given below:.
1. Jubilant Biosys Ltd. – A subsidiary of your Company since 2003-04, Jubilant Biosys provides Discovery Informatics
products and services and collaborative drug discovery services that include pre-clinical, in-vivo and formulation
services. It also provides Discovery Research Services which is driven by the concept of Structure Directed Drug
Design. During the year, Jubilant Biosys signed a 5 year collaborative drug discovery services contract with Eli Lilly.
Your Company currently holds 66.98% of the equity of Jubilant Biosys.
2. Jubilant Chemsys Ltd. – A wholly owned subsidiary of your Company since September 2004, Jubilant Chemsys
continues to offer medicinal chemistry services to drug discovery companies on Full Time Equivalent or molecule
basis. It also works closely with Jubilant Biosys in collaborative drug discovery and discovery research services
areas.
3. Jubilant Clinsys Ltd. – A wholly owned subsidiary of your Company since September 2004, Jubilant Clinsys
provides Bio Availability and Bio Equivalence studies and clinical trials management services. It conducted some
of the BA/BE studies for product development for European and US market for your Company and its other
subsidiaries. It has a 54 bed facility along with analytical laboratory facility at Noida to conduct phase I clinical
trials for New Chemical Entity.
4. Clinsys Holdings, Inc. - This Company was incorporated in Delaware, USA as wholly owned subsidiary of your
Company. This holding company was incorporated for acquisition of 100% equity in Clinsys, Inc. (earlier Target
Research Associates, Inc.), during the year.

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 5. Clinsys, Inc. (earlier Target Research Associates, Inc.) - This Company became a subsidiary of Jubilant Organosys
Ltd. by virtue of its becoming a wholly owned subsidiary of Clinsys Holdings, Inc. during the year. Clinsys, Inc. is
involved in Clinical Operation for phase II to IV, bio statistics, clinical data management, (QA) and regulatory
services and contract staffing services.
6. Jubilant Pharma Pte Ltd. – This wholly owned subsidiary was incorporated during the year, to make investments
in Trigen Laboratories, Inc.
7. Trigen Laboratories, Inc. – This Company, earlier known as Trinity Laboratories, Inc., became a subsidiary of
Jubilant Organosys Ltd. by virtue of its becoming a subsidiary of Jubilant Pharma Pte. Ltd. during the year. Jubilant
Pharma Pte Ltd. holds 66.61% equity stake in this company.
8. Jubilant Pharmaceuticals, Inc. – This company, earlier known as Trigen Laboratories, Inc., became a subsidiary of
Jubilant Organosys Ltd. by virtue of it being a wholly owned subsidiary of Trigen Laboratories, Inc. Jubilant
Pharmaceuticals is a generic pharmaceutical company located in the US having US FDA approved manufacturing
facility in Maryland, USA.
9. Jubilant Organosys (USA) Inc. – A wholly owned subsidiary of your Company since January 2000, it undertakes
sales and distribution of advance intermediates, fine chemicals and APIs in Northern America.
10. Jubilant Organosys (Shanghai) Limited –This is a wholly owned subsidiary of your Company that undertakes sales
and distribution of products in China. This subsidiary is also a sourcing hub for raw materials for your Company.
11. Jubilant Pharma NV – This company is a wholly owned subsidiary of your Company. This company holds 80%
equity of Pharmaceutical Services Inc. NV and PSI Supply NV.
12. Pharmaceutical Services Inc. NV – This Belgian company offers regulatory affairs services to generic pharmaceutical
companies for the diverse European market. Jubilant Pharma NV holds 80% stake in this company.
13. PSI Supply NV – This Belgian company undertakes development and supply of generic dosage forms to European
markets. Jubilant Pharma NV holds 80% equity stake in this company.
The Company has received exemption from Central Govt. under Section 212(8) of the Companies Act, 1956 from
attaching Balance Sheets and other particulars of subsidiaries vide letter dated April 05, 2006.
ACQUISITIONS
During the year, your Company made two acquisitions in USA. In June 2005, your Company through its wholly owned
subsidiary, Jubilant Pharma Pte Ltd., acquired Trinity Laboratories, Inc. (renamed as Trigen Laboratories, Inc.) and its
wholly owned subsidiary Trigen Laboratories, Inc. (renamed as Jubilant Pharmaceuticals, Inc.), a generic pharmaceuticals
company having US FDA approved manufacturing facility for solid dosage forms in Maryland, USA. Your Company has
invested US$ 14.25 million to acquire 66.61% equity in Trigen of which US$ 8.25 million has been paid to the
shareholders of Trigen and balance US$ 6 million has been invested as growth capital.
In October 2005, your Company, through its wholly owned subsidiary, Clinsys Holdings, Inc. acquired 100% equity
stake in Clinsys, Inc. at a price of US$ 33.5 million subject to adjustment in case of change in net working capital from
zero. The net working capital is currently assessed at US$ 1.07 million. Clinsys Holdings, Inc. raised a debt of US$ 20
million and your Company has infused equity of US$ 15.5 million in Clinsys Holdings, Inc. to fund the acquisitions.
Clinsys is a clinical research organization based in New Jersey having 161 employees and around 20 customer
relationships. Clinsys is the preferred partner to some of the large global pharmaceutical companies.
ADDITIONAL INFORMATION TO SHAREHOLDERS
In keeping with its commitment to high standards of Corporate Governance, your Company continued voluntarily to
compile and present financial statements that conform to US GAAP.
Your Company believes that a sustainable growth is possible only through the partnership approach with all the
stakeholders of the Company. We identify the stakeholders, take their feedback with a mechanism of action on that
feedback. We have published the Corporate Sustainability Report as per the Global Reporting Initiatives (GRI) standards.
This report has been duly audited by Ernst & Young and is being mailed to all our shareholders.
FIXED DEPOSITS
Your Company is no more accepting fixed deposits from the public. The existing fixed deposits are being paid on
maturity. The total amount of Fixed Deposits held as on 31st March, 2006 was Rs.65.30 million. There were no
overdue deposits. There were, however, 390 unclaimed deposits amounting to Rs. 6.07 million. Of these, 65 deposits
amounting to Rs.0.97 million have since been repaid/claimed.

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 DIRECTORS
During the year, pursuant to issue of shares to GA European Investments Ltd. (GA) and in accordance with the Investment
Agreement, Mr. Abhay Havaldar, nominee of GA, joined the Board as an Additional Director and holds office upto the
ensuing Annual General Meeting. Notice under section 257 of the Companies Act, 1956, has been received from a
member, proposing Mr. Havaldar’s candidature as Director.
Mr. Sanjeev Kapur resigned as Alternate Director to Mr. Ajay Relan. In his place, Mr. Vishal Marwaha was appointed as
Alternate Director to Mr. Ajay Relan.
Mr. Hari S. Bhartia, Mr. S.N. Singh, Mr. Shyam Bang and Mr. H.K. Khan, Directors of the Company, retire by rotation at
the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The Report required to be made pursuant to section 217(1)(e) of the Companies Act, 1956 read with Companies
[Disclosure of Particulars in the Report of Board of Directors] Rules, 1988 is attached as Annexure – B.
EMPLOYEES
As required under the provisions of section 217(2A) of the Companies Act 1956 read with the Companies (Particulars
of Employees) Rules, 1975, a Statement of employees in receipt of remuneration in excess of the prescribed limits, is
attached as Annexure - C.
MANAGEMENT DISCUSSION & ANALYSIS
Notes on Management Discussion & Analysis have been given in preceding pages.
AUDITORS
K N Gutgutia & Co, Chartered Accountants, Auditors of the Company retire at the ensuing Annual General Meeting and
offer themselves for re-appointment. They have confirmed that their re-appointment, if made, shall be within the limits
laid down in Section 224 (1B) of the Companies Act, 1956.
CORPORATE GOVERNANCE
A Section on 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 Agreements with Stock Exchanges, and a certificate
from the Chairman & Managing Director that all Board members and senior management personnel have affirmed
compliance with the Code of Conduct for the year ended March 31, 2006, are attached to this Report as Annexures D,
E and F respectively .
AWARDS
The efforts of your Company to be the best in each and every area of its business and functions have been recognized
by various organizations.
During the year, your company was given the following awards:
• Golden Peacock Environment Management award 2005 (Gajraula plant)
• Greentech Foundation’s award for Outstanding achievement in Safety Management (Awarded Gold) - (Nira plant)
• Greentech Foundation’s award for Outstanding achievement in Environment Management (Awarded Silver) (Nira
plant)
INVESTOR SERVICES
With a view to improving investor services, the following steps have been taken :
• A shareholders’ feedback survey was conducted so as to identify the areas of improvement. Based on responses
received, the Company is taking requisite steps.
• A dedicated e-mail investors@jubl.com has been made effective. Members may lodge their complaints or suggestions
on this e-mail.
• The Investor Section on the website of the Company www.jubl.com has been revamped and covers Code of
Conduct, press releases, financial results and frequently asked questions.

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 MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY AFTER 31ST
MARCH, 2006
Your Company is proposing to raise up to US$ 325 million in the global markets through issue of equity shares or equity
related instruments including Foreign Currency Convertible Bonds/ Global Depository Shares/ American Depository
Shares, subject to members’ and other requisite approvals. For this, an Extra-ordinary General Meeting has been
convened on 16th May, 2006. These funds would be utilized for making acquisitions, direct investments in joint
venture/subsidiary companies, new projects, capital expenditure, general corporate purposes and other permitted uses.
DIRECTORS’ RESPONSIBILITY STATEMENT
In compliance of Section 217 (2AA) of the Companies Act, 1956, the Directors of your Company confirm:
• that in the preparation of annual accounts, the applicable accounting standards had been followed along with
proper explanation relating to material departures.
• that the Directors had 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 as
on 31st March, 2006 and of the profit and loss of the Company for the year ended 31st March, 2006.
• that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in
accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
• that the Directors had prepared the annual accounts on a going concern basis.
ACKNOWLEDGMENTS
Your Directors acknowledge with gratitude the co-operation and assistance received from the Central and State Government
Authorities, Financial Institutions, Banks and other Lenders. Your Directors thank the Shareholders, Depositors, Customers,
Vendors and other business associates for their continued support. The Board wishes to place on record its appreciation
of the contribution made by the employees at all levels.
FOR AND ON BEHALF OF THE BOARD

NOIDA Shyam S. Bhartia

April 18, 2006 Chairman & Managing Director

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 Annexure to the Directors’ Report
Annexure

Annexure-A
Details as per Regulation 12 of SEBI (ESOP & ESPS) Guidelines, 1999

a) Options granted 594,391

b) Pricing formula Market price of share as on the date of grant, as per SEBI Guidelines.*
c) Options vested Nil
d) Options exercised Nil
e) Total number of shares arising as a results of exercise of options 594,391 equity shares of Rs. 5 each. However, due to sub-division
of shares, 2,971,955 Equity Shares of Re.1/- each will arise.
f) Options lapsed 32,913
g) Variation of terms of options Nil
h) Money realized by exercise of options Nil
i) Total number of options in force 561,478
j) Employee-wise details of options granted to :–
i) senior management personnel; Dr. Jag Mohan Khanna 38,747
Mr. S N Singh 36,878
Mr. S Bang 30,305
Mr. R Sankaraiah 36,695
Mr. Promod Yadav 19,386
Mr. Rajesh Srivastava 18,504
Mr. Pankaj Kapoor 14,360
Mr. Raju Kapoor 12,490
Mr. Ananda Mukherjee 11,615
Dr. Ashutosh Agrawal 19,847
Mr. Dilip Roy 14,750
Mr. Bundla Venkat Kamlakar 12,185
Dr. Sukhbir Puri 11,405
Dr. Anjan Ray 10,022
Mr. Satya Dev Adurti 12,939
Mr. A P Srivastava 16,169
ii) any other employee who received a grant in any one year of options Mr. Lloyd Baroody 30,000
amounting to 5% or more of options granted during that year;

iii) identified employees who are granted options, during any one year,
equal to or exceeding 1% of the issued capital (excluding outstanding
warrants and conversions) of the company at the time of grant
k) Diluted earning per share pursuant to issue of shares on exercise of option
calculated in accordance with Accounting Standard AS-20.
l) Where the company has calculated the employee compensation cost
using the intrinsic value of the stock options, the difference between
the employee compensation cost so computed and the employee
compensation cost that shall have been recognized if it had used
the fair value of the options, shall be disclosed.
The impact of this difference on profits and on EPS of the
company shall also be disclosed
Nil
The Company has calculated the employee compensation cost using
the intrinsic value method of accounting to account for options issued under
“Jubilant Employees Stock Option Plan 2005”. The stock based
compensation cost as per the intrinsic value method for the financial
year 2005-06 is Nil.
If the employee compensation cost was calculated as per the fair value
of options based on Black Scholes methodology, read with Guidance
Note on “Accounting for Employee Share-based Payments” issued by
Institute of Chartered Accountants of India, the total cost to be
recognized in the financial statements for the year 2005-06 would be
Rs.43.57 million. The effect of adopting the fair value method on the
net income and earnings per share is presented below.
Pro Forma Adjusted Net Income and Earnings Per Share:

Particulars Rs. Millions

Net Income
As Reported 1387.90
Add: Intrinsic Value Compensation Cost Nil
Less: Fair Value Compensation Cost 43.57
Adjusted Pro Forma Net Income 1344.33
Earnings Per Share of Re. 1 each:
Basic (In Rupees)
As reported 10.15
Adjusted Proforma 9.83
Earnings Per Share of Re.1 each:
Diluted (In Rupees)
As reported 9.17
Adjusted Proforma 8.88
m) Weighted-average exercise prices and weighted-average fair values of (i) Where exercise price equals the market
options shall be disclosed separately for options whose exercise price price of the stock options:
either equals or exceeds or is less than the market price of the stock
options - Weighted average of exercise prices of options: 201.26
- Weighted average of fair values of options: Rs. 100.26
(ii) Where exercise price exceeds the market price of the stock
options: Not applicable
(iii) Where exercise price is less than the market price of the stock
options: Not applicable
n) A description of the method and significant assumptions used during The fair value has been calculated using the Black Scholes Option Pricing
the year to estimate the fair values of options, including the following Model.
weighted-average information :–
i) risk-free interest rate, 7.52%
ii) expected life, 6.75 years
iii) expected volatility, 40%
iv) expected dividends, and 0.90%
v) the price of the underlying share in market at the time of option grant. 201.33
* The grant price was Rs. 1006.65 for 564,391 Options and Rs. 1002.05 for 30,000 Options. As a result of sub-division, the exercise price for the two tranches
shall be reduced to Rs. 201.33 and Rs. 200.41 per share (Re. 1 paid up) respectively and the number of shares to be allotted on conversion would be 5 times the
original entitlement.
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 Annexure - B

DISCLOSURE UNDER SECTION 217(1) (e) OF THE COMPANIES ACT, 1956 READ WITH COMPANIES (DISCLOSURE
OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988.

A. CONSERVATION OF ENERGY

(a) Energy Conservation measures taken:

• Commissioning of new boiler with higher efficiency resulting in lower steam generation cost
• Commissioning of new turbine with higher efficiency resulting in lower power generation cost
• Phasing out of inefficient old diesel fired generator
• Reduction of power consumption in Distillery by improving pumping efficiency
• Reduction in power consumption in Acetaldehyde and Acetic Anhydride plants by installation of lower head main
cooling water pumps & providing booster pumps for higher elevation
• Reduction in steam consumption in Acetaldehyde plant by recovering heat available in waste stream
• Reduction in power consumption in Acetic Acid and Ethyl Acetate plants by improving cooling water pumping efficiency
• Reduction in steam consumption in Acetic Anhydride plant by recovering heat of distillation column vapours
• Reduction in steam consumption in Ethyl Acetate plant by reducing the size of reboiler of distillation column
• Reduction in steam consumption norms for 3 Cyno-Pyridine by recovering heat from column vapours
• Reduction of Light Diesel Oil (LDO) consumption for 3 Cyno-Pyridine production by recovering heat from exothermic
reaction in reactors
• Reduction in power consumption in Pyridine plant by installation of matching capacity compressors for process air
• Reduction of LDO consumption in Lutidine plant by improving hot oil piping insulation and replacing nozzles
• Replacement of existing electric heater with steam heater for raw furnance oil heating at Separator & Booster unit
• Installation of Oxygen Analyser for improving boiler efficiency
• Utilization of flash steam in 3 Cyno-Pyridine plant
• Reduction in steam/condensate losses and utilization of Pyridine plant flash steam for deareator by right sizing of
condensate pumping and flash steam recovery system
• Installation of dual speed motors and temperature control on Cooling Tower fans
• Installation of photo sensors on streetlight network, conversion of existing MV lamp to CFL
• Replacement of 75 MVA transformers with 500 KVA on UPSEB power
• Reduction of furnace oil consumption in Dry Choline Chloride Plant by optimizing dryer outlet temperature and
improving insulation in the plant
• Reduction of electricity consumption in Liquid Choline plant
• Installation of biogas boiler to reduce consumption of coal and LDO for steam generation
• Enhanced biogas generation from biogas reactor by process improvement resulting in reduction of coal and LDO
consumption
• Reduction in specific consumption of power is achieved by replacing higher size motor with optimum size motor as
well as better capacity utilization
• Recovery of flash steam from condensate tank by installing scrubber over condensate tank
• Replaced 2 higher sized pump and motor with optimum size pump and motor to reduce power consumption
• Compressed air in fermentation section replaced by purge Co2 gas thus reducing the power consumption of air
compressors
• Reduction in steam consumption by optimizing waste water and wash column
• Installed variable frequency drive on various electric motors which has resulted in substantial power saving

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 Annexure to the Directors’ Report
Annexure

(b) Additional investment and proposals, if any, being implemented for reduction of consumption of energy:

1. Improving the recovery of condensate in process plants.

2. To increase heat recovery in Sulphuric Acid plant.

3. Recovery of flash steam from condensate in Acetic Anhydride plant.

4. Reduction in chilled water pumping power.

5. Reduction in cost of refrigeration by revamping/ replacement of chiller unit and brine unit.

6. Reduction in cooling water pumping cost.

7. Reduction of steam consumption in Pyridine plant by pyridine column heat utilisation.

8. Utilisation of waste steam for steam tracing / storage tank in place of steam from boiler.

9. Reduction of steam and power consumption in 3 Cyno-Pyridine plant.

10. Provision of high pressure/ low pressure cooling water system in Acetic Acid plant.

11. Installation of booster pumps for cooling water in Acetic Acid plant.

12. To convert hot oil unit from LDO firing to biogas firing system at polyurethane plant.

13. Rerouting of high pressure steam for additional power generation using 8 Kg/cm2 steam instead of
15Kg/cm2 in Pyridine plant.

14. Use flue gas analyser for monitoring O2 level in boiler.

15. Recovery of condensate from Latex plant and Liquid Choline plant.

16. Reduction in steam consumption by heat recovery.

17. Conservation of energy by increasing condensate recovery.

18. Rationalization of cooling water distribution in Acetic Acid plant.

19. Installation of VFD on electric motors to save power.

20. Maintenance of steam traps and valves to reduce steam loss.

Rs.36.79 million is expected to be invested in the above proposals.

(c) Impact of measures at (a) & (b) above for reduction of energy consumption and consequent impact on the cost of
production of goods.
• Reduction in steam and power consumption norms in all plants
• Reduction in coal/LDO/furnace oil consumption
• Reduction in steam and power generation cost
• Improved consistency in production.
1. Saving due to Conservation of energy : Rs.32 million per annum approx.
2. Saving due to the proposal b (1) to b (20) : Rs.25 million per annum approx.

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 (d) Total Energy Consumption and energy consumption per unit of production
FORM A
A. Power & Fuel Consumption
2005-06 2004-05
1. ELECTRICITY
A. Purchased
i) Units KWH 42,760,732 37,915,701
ii) Total Amount Rs./million 161.07 142.51
iii) Rate / unit Rs./KWH 3.77 3.76
B. Own Generation
Through DG
i) Units KWH 67,123,599 81,140,593
ii) Unit per litre of RFO/LDO KWH/LTR 3.72 3.70
iii) Cost / unit Rs./KWH 3.68 2.96
Through Steam Turbine Generator *
i) Units KWH 78,594,560 46,915,940
ii) Units per MT of Steam KWH/MT 481.27 328.85
iii) Cost / unit Rs./KWH 1.56 1.93
2. Coal**
Quantity MT 264,478.17 222,602.25
Total Cost Rs./million 621.67 490.58
Average Rate Rs./MT 2,350.53 2,203.85
3. Furnace Oil
Quantity KL 27,052 32,125
Total Cost Rs./million 408.41 386.39
Average Rate Rs./KL 15,097.26 12,027.61
4. Others/Internal Generation
Internal Generation - Biogas
Quantity NM3 47,644,554 41,235,094
Total Cost *** Rs./million 18.13 21.39
Average Rate Rs./NM3 0.38 0.52
* Steam is produced in boilers using coal, fuel and gas.
** E grade coal is used for power generation and C/D grade is used for steam generation.
*** No raw material cost as it is produced from waste water only.
B. Consumption per Unit of Production
2005-06 2004-05
Pharmaceuticals & Life Science Chemicals
Electricity KWH/MT 565.75 842.65
Steam MT/MT 5.45 6.09
Furnace Oil LT/MT 43.24 59.73
Bio Gas NM3/MT 261.14 465.31
Performance Chemicals
Electricity KWH/MT 217.07 207.84
Steam MT/MT 0.12 0.12
Furnace Oil L/MT 4.09 4.75
Bio Gas NM3/MT - -
Industrial Chemicals
Electricity KWH/MT 124.92 130.71
Steam MT/MT 1.19 1.13
Furnace Oil L/MT 1.34 2.14
Bio Gas NM3/MT 9.04 8.45

Reason for variation in consumption of power and fuel from standard of previous year :
1. In Pharma & Life Science segment consumption reduced due to higher production of formaldehyde wherein only
power is consumed.
2. Reduction in power & fuel due to various process improvements undertaken under six sigma velocity initiatives.
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 Annexure to the Directors’ Report
Annexure

B. TECHNOLOGY ABSORPTION
(a) Research and Development (R & D)
The Company has R&D Centres at Noida, Gajraula, Nanjangud and Samlaya. The Company has 242 R&D employees
out of which 81 are doctorates and others are post graduates and graduates. R&D supports the activities of various
bussineses through new product development, diversification, process development, absorption of technology and
establishing the technology on plant scale.
1. Specific areas in which R&D carried out by the company:
(i) Active Pharmaceutical Ingredients and Dosage Forms
• Process development of Active Pharmaceutical Ingredients (APIs)
• Improvements in the processes for the manufacture of APIs
• Creation of intellectual property through development of new synthetic routes
(ii) Biotechnology
• Microbial processes for the treatment of industrial effluents
• Bio composting
• Processes for the manufacture of speciality and fine chemicals using bio-conversion routes
• A special emphasis is laid down to create collaborative approach with leading institutions to fast track
development of biocatalytic processes for synthesis of organic compounds
(iii) CRAMS
• Product/process developments in the field of pyridine and its derivatives and heterocyclic chemistry
• Chemistry skill diversification to non-heterocyclic compounds leveraging skills while handling heteroafalic
chemistry.
• Process improvements in the manufacture of key products
• Chiral compounds
(iv) Contract Research
• Advance intermediates for pharmaceuticals and agrochemicals
• Synthesis of new compounds for drug discovery, pre-clinical and clinical studies
(v) Performance Chemicals
• Development of speciality polymers
• Development of ethoxylates & emulsifiers
• Development of new latexes based on Butadiene chemistry
• Development of animal healthcare products
2. Benefits derived as a result of the above R&D
• Strong position in knowledge based businesses
• Partners of choice for global pharmaceuticals and agrochemical companies
• Global leadership in select segments of our business
• Development of new products
• Generation of own Intellectual Property Rights to provide competitive edge
• Major growth in export of our products
• Competitiveness in cost and quality
• Pollution control

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 3. Future action plan
• Process development for identified active pharmaceutical ingredients
• Process development for identified dosage forms
• Process development of new derivatives of Pyridine and other heterocyclic chemicals
• Process development for non-heterocyclic chemicals leaveraging on skill already developed while handling
heterocyclic chemistry
• New Drug Delivery System research
• Bio transformations for the manufacture of fine and speciality chemicals
• Synthesis of chiral compounds
• Improvement in the fermentation technology and effluent treatment
• Development of new products in the field of polymers and adhesives for application in coating, textile, footwear,
paper, auto, electronic and other industries
4. Expenditure on R&D
(Rs./million)
2005-06 2004-05
(a) Capital 291.95 226.36
(b) Recurring 101.78 119.69
(c) Total 393.73 346.03
(d) Total R & D expenditure as a percentage of total turnover 2.84% 3.10%
(e) R & D expenditure as a percentage of Pharmaceuticals & Life Science
Chemicals turnover 6.98% 8.08%
(b) Technology absorption, adaptation and innovation:
1. Efforts, in brief, made towards technology absorption, adaptation and innovation
Research & Development plays a vital role in developing and adopting new technologies to enhance our operational
efficiencies. We develop new technologies at the lab scale and the scientists and manufacturing engineers work in
close co-ordination to seamlessly scale-up the processes to commercial scale without losing on the efficiency of the
process. Six Sigma initiatives at plants and R&D support the adoption of new technologies and enhancing the
efficiencies of our manufacturing plants to provide better services to our customers.
2. Benefits derived as a result of the above efforts, e.g. product improvement, cost reduction, product development,
import substitution etc.
The innovation in all the areas of our business results in new and more efficient products, which helps in improvement
of the performance of our customers. Our R&D is grounded in business reality and we measure the performance of
our R&D through the new product launches over the last five years and their contribution to the net sales of your
Company. Over the last five years your Company developed 80 products which contribute 16% of the net sales.
These continuous efforts result in improvement in cost and our service to the customers.
3. In case of imported technology (imported during the last 5 years reckoned from the beginning of the financial
year): Not Applicable
Technology Imported Year of import Has technology been If not fully absorbed, areas where
fully absorbed? this has not taken place, reasons
therefor and future plans of action.
—————————— NIL ———————————-

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 Annexure to the Directors’ Report
Annexure

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

a) Activities relating to exports, initiatives taken to increase exports, development of new export markets for products
and services
• Activities relating to exports
Exports is the focus area of growth for your company. During FY 2006, exports were Rs. 4.8 billion as compared
to Rs. 3.6 billion in the previous year, recording a growth of 30.5%. Exports contributed 34.3% of the net sales of
the Company during FY 2006 as compared to 32.7% in FY 2005.
With pharmaceuticals and life science chemicals business as the growth driver, exports to regulated markets of
USA, Europe and Japan have grown significantly over the last one year. Exports to regulated markets contributed
53.1% of the total exports of the Company. China is another key growth market for Jubilant Organosys with sales
growing by 87.7% during the financial year 2006.
Your Company exports around 60 products to more than 50 countries worldwide. The API division has opened up
new market of Latin America whereas CRAMS business has expanded its presence in Japanese market.
• Initiatives taken to increase exports
Exports is the focus area for growth for all the businesses of your Company. In pharmaceuticals and life science
chemicals business, where the Company already has more than 150 global customer relationships, the focus was
on expanding the presence in the existing markets and providing more products and services to meet our customers
demand. New markets were also added during the year. Your company will continue to leverage strong customer
relationships with global pharmaceutical, biotech, agrochemicals and food & feed companies.
To further enhance the quality of services to our customers, your Company increased the staff in its existing
subsidiaries. Jubilant Organosys also acquired companies in USA in generic pharmaceuticals and clinical research
businesses which will further enhance the Company’s presence as an outsourcing partner of choice for global life
sciences companies.
• Development of new export markets for products and services
Your Company added new international markets during FY 2006 which include Latin American countries for API,
Japan for Advance Intermediates and Fine Chemicals and Russia for organic intermediates.
Performance Chemicals business enhanced its presence in Middle East and Indian sub-continents.
• Export Plans
Your Company will continue to focus on exports for all its business divisions. In pharmaceuticals and life science
chemicals focus would be on increasing the high growth regulated markets and select opportunities in other
markets in Latin America and Africa. Industrial Chemicals and Performance Chemicals will continue to focus on
Asian markets with exports to Europe whenever opportunities exist.
International subsidiaries will further enhance the Company’s presence in international markets.
• Approach towards Foreign Exchange Risk Management
Your Company actively manages foreign exchange risk on its exposures. The objective is to protect foreign exchange
exposures from the risk of unfavourable market trends. When exchange rate movements reveal a trend which
adversely affects the value of the Company’s exposures, forward contracts or derivatives are evaluated and
implemented to ensure that there is a high degree of certainty about the exchange rates at which actual transactions
will be recorded. When market exchange rate trends are in favour of the Company’s exposures, such exposures
are kept unhedged to benefit from these movements.
Your Company also entered into Interest Rate Swaps in FY 2006 to protect the Company’s interest cost on USD
liabilities.
(b) Total foreign exchange used and earned
(Rs. million)
2005-06 2004-05
Foreign exchange used 2729.03 2157.72
Foreign exchange earned 4653.94 3396.95

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56
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49-68.p65
Annexure - C
STATEMENT U/S 217 2(A) OF THE COMPANIES ACT, 1956 READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975 AND FORMING PART OF DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2006
S.No. Employee Name Designation & Qualification Total Working Date of Age Remuneration Previous employment held
Nature of Duties Experience Commencement (Rs.)
(Years) of Employment Designation Company Name

A. EMPLOYED FOR FULL YEAR AND IN RECEIPT OF REMUNERATION FOR THE YEAR WHICH IN AGGREGATE WAS NOT LESS THAN Rs. 24,00,000 p.a.
1 Adurti Satyadev Chief Of Information B.E, PGD in Plng.Mgmt. 17 3-Feb-01 40 2,891,242 Information Management Bausch & Laumb India Ltd.
Technology & Technology Manager
2 Agarwal Dr Ashutosh Head Of R&D (Org) Dphil. Synthetic 25 20-Aug-98 48 3,250,621 DGM - Organic Chemical Ballarpur Industries
Organic Chemistry Business
3 Agrawal Neeraj GU Head - API Business B.Tech (Elect.)’95, MBA 11 2-Jun-03 33 3,184,465 Business Stretegy Mckinsey & Company India

57
4 Bang S * Executive Director M.Tech(Chem Engg.) 33 1-Feb-97 55 4,680,229 President Enpro India Limited
(Manufacturing & Supply
Chain Operations)
5 Bhaskar Rajesh Head-R&D M Pharma - 20 26-Jul-04 45 3,746,151 Sr.Sales Executive Amitex Polymers Pvt. Ltd.

JUBILANT ORGANOSYS LIMITED

Dosage Forms Pharmaceuticals
6 Dubey Dr Sushil Kumar Head - Pharma R&D M.Sc 24 24-Feb-03 51 3,186,108 Vice President Zydus Cadila Healthcare Ltd.
7 Kamalakar Bundla Venkat Business Unit Head - M.Sc, Phd 18 24-May-04 43 3,661,775 Director Of Operations Niche Gtenerics Ltd.
Dosage Forms (Organic Chemistry)
8 Kapoor Pankaj Chief Of Supply Chain PGDM 19 26-Mar-99 43 3,571,417 National Marketing Advanta India Ltd.
Manager
9 Kapoor Raju Business Unit Head MBA 24 4-Mar-99 45 2,404,956 Vice President Fungicides (India)Ltd.
- Agrovet (Agribusiness Division)
10 Khanna Dr J M * Executive Director & Msc, Phd 40 16-Aug-02 65 8,136,746 President (R & D) Ranbaxy Laboratories Ltd.
President (Life Sciences)
11 Mathur Puneet GU Head - Msc, MBA 19 20-Dec-01 45 2,512,582 National CSS Manager Coca Cola India
Solid PVA & Latex
12 Puri Dr Sukhbir Business Unit Head B.Sc.(Chem Eng.) 26 1-Apr-04 56 3,398,972 Director Supply Chain U D V India Ltd.
13 Ray Dr Anjan Chief Of MS, Phd 25 1-Nov-02 43 2,749,127 Business Manager ICI India Ltd.

57
Strategic Business
Development
(Chemicals & Polymers)
14 Sankaraiah R Executive Director (Finance) Bsc, FCA 22 9-Sep-02 47 6,821,882 GM Finance SRF Limited
15 Singh S N * Executive Director B.Sc. (Chem Eng.) 45 14-Dec-81 68 6,349,790 General Manager I D P Limited
(Chemicals)
16 Srivastava A P Senior Vice President- BA 38 17-Nov-90 60 2,620,456 Manager Reliance Industries Ltd.
Corporate Affairs
17 Srivastava Rajesh Kumar President - Fine B.Sc. (Tech), 19 19-Aug-00 41 3,005,843 Marketing Manager Ranbaxy Fine Chemicals Ltd.
Chemicals & CRAMS Master In Marketing
Management
18 Yadav Pramod President - Advanced B.Sc. (Tech), Master 19 4-Sep-95 43 3,173,685 Marketing Manager Bhansali Engg.Polymers Ltd.
Intermidiates, Speciality In Marketing (North)
Gases & Vitamins Management

8/11/2006, 1:44 PM
B. EMPLOYED FOR PART OF THE YEAR AND IN RECEIPT OF REMUNERATION WHICH IN AGGREGATE WAS NOT LESS THAN Rs. 2,00,000 p.m.
1 Gupta Kulbhushan Head Corp Quality PGD - Marketing 12 18-Aug-03 34 3,175,416 Quality Leader IGE Ltd.
Training Devlopment
2 Kumar Anil President- Projects B.Tech (Chemical Engg.) 31 24-Jan-06 53 536,470 President-Technical Bajaj Hindustan Ltd.
3 Kumar R Kiran Vice President B.Tech 19 5-Sep-05 43 1,699,123 Sr.Director (Works) Dr.Reddy’S Laboratories Ltd.
- Operations (Chemical), M.Tech
(Transfer Process)
4 Mukherjee Ananda Business B.E (Mech), 23 6-May-05 47 3,247,677 Vice President- Havell’S India Ltd.
Unit Head - CPD PGDM (Mktg) International Business
5 Roy Dilip Chief of HR BA (Eco-H) ,PGD- 24 6-Apr-05 46 3,804,641 Director - Corporate HR Ranbaxy Laboratories Ltd.
HR&IR (XLRI)
NOTES
1 * Employment of these are contractual. Employments of others are governed by the rules and regulations of the Company from time to time.
2 All above persons are/were full time employees of the Company.
3 None of the above employees is related to any directors of the Company.
4 No employee out of above, falls within the meaning of section 217 (2A)(a)(iii) of the Companies Act, 1956.
5 Remuneration comprises salary, allowances and taxable value of perquisites.

ANNUAL REPORT - 2005-2006

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 Report on Corporate Governance

ANNEXURE-D
REPORT ON CORPORATE GOVERNANCE
a) Company’s Philosophy
The Company is driven by the fundamental objective of maximising value by employing its assets and resources in
opportunities that generate the greatest returns and position it for sustained growth, guided by the promise of
“Caring, Sharing, Growing”.

“We will with utmost care for the environment, continue to enhance value; for our customers by providing innovative
products and economically efficient solutions; and for our shareholders through sales growth, cost effectiveness and
wise investment of resources.”

In line with the aforementioned promise, your Company has adopted a comprehensive Corporate Sustainability
Management System that focuses on triple bottom-line reporting on economic, environment and society as per
Global Reporting Initiatives standards. This was put in place in fiscal 2003 and the Company has reported on
progress made, in the subsequent years.

The Company has a stated policy on sustainability which clearly articulates its approach towards sustainable
development through a well laid process for identification of stakeholders and a formal programme for interaction
with them to take their feedback and take action to mitigate the risks indicated through such interactions. This will
not only ensure long term sustainability of the Company but would also help in enhancing shareholder value.

Jubilant’s commitment to high standards of corporate governance practices is reflected in the well-balanced and
independent structure of the Company’s eminent and well-represented Board of Directors. The Board has a fair
representation of executive, non-executive and independent directors, and this emphasis on an independent perspective
of the Board is further reinforced by the fact that more than three-fourths of the board members are non-promoters.
Your Company met all the standards of revised Clause 49 of the Listing Agreement and has proactively completed
the documentation required as per Sarbanes Oxley Act. This reflects the Company’s philosophy to meet international
standards in corporate governance and reporting even more than what is statutorily required.

The Company recognises the importance of sustained and constructive communication with all stakeholders including
investors, lenders, vendors, customers and the community surrounding its operating facilities as a key element in its
overall Corporate Governance framework. Jubilant Organosys, through multiple forms of corporate and financial
communication such as Annual Reports, Corporate Sustainability Reports, Quarterly and Annual Results,
Announcements, Media Releases, implements continuous, efficient and relevant communication to all its stakeholders,
research analysts and business associates.

b) Board of Directors

The Board comprises of twelve directors out of which seven are Non-Executive Independent Directors, two Managing
Directors and three Executive Directors. During the year under review, 6 Board Meetings were held on April 4,
2005, April 16, 2005, July 30, 2005, September 6, 2005, October 28, 2005 and January 14, 2006. The
composition of the Board of Directors and attendance of directors at the Board meetings, Annual General Meeting as
also number of other directorships/committee memberships in Indian public limited companies are as follows:

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 Name of the Director Attendance No. of Category of Other Committee
at last Board Meetings Director Director- memberships
AGM attended ships^ (including
Chairman-ship) **^
Mr. Shyam S Bhartia Yes 6 CMD (Promoter) 12 1(1)
Mr. Hari S Bhartia Yes 6 CCMD (Promoter) 12 2
Dr. J M Khanna No 6 ED 3 2
Mr. S N Singh No 6 ED 2 1
Mr. Shyam Bang Yes 6 ED 1 -
Mr. Bodhishwar Rai Yes 5 NED/ID 13 10 (5)
Mr. Arabinda Ray No 6 NED/ID 2 1
Mr. Surendra Singh Yes 6 NED/ID 6 8 (3)
Dr. Naresh Trehan No 4 NED/ID 6 1 (1)
Mr. H K Khan No 6 NED/ID 2 3 (1)
Mr. Ajay Relan # No 4 NED/ID 9 3
Mr. Abhay Havaldar * Not applicable 3 NED/ID 4 5
Mr. Sanjiv Kapur #
(Alternate Director to Mr. Ajay
Relan till October 28, 2005) No — NED/ID N/A N/A
Mr. Vishal Marwaha #
(Alternate Director to Mr Ajay
Relan from October 28, 2005) Not applicable — NED/ID 1 -

CMD - Chairman & Managing Director; CCMD - Co-Chairman & Managing Director NED - Non Executive Director;
ED- Executive Director; ID - Independent Director
# Nominee of Citicorp International Finance Corporation and HPC Mauritius Ltd. – Equity Investors.
* Nominee of GA European Investments Limited – Equity Investors, appointed w.e.f. September 6, 2005.
** Committees for this purpose include Audit Committee and Investors Grievance Committee only.
^ Excluding private companies and foreign companies
c) Committees of the Board
The Board of Directors have constituted Committees of Directors with adequate delegation of powers to discharge
urgent business of the Company. The Committees under the Corporate Governance are (a) Audit Committee (b)
Investors Grievance Committee (c) Remuneration Committee. The Committees meet as often as required.
1) Audit Committee
(i) Terms of reference:
The terms of reference of Audit Committee are the reviewing of all matters specified in revised clause 49
of the Listing Agreement and section 292A of the Companies Act, 1956, which inter-alia include the
following:

Oversight of financial reporting process and disclosure of financial information

Reviewing the performance of statutory auditors and recommendation of their appointment/re-
appointment/ replacement/removal and fixing of their remuneration

Reviewing the quarterly and yearly financial statements before submission to the Board

Reviewing the adequacy of internal control systems and internal audit functions

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

Reviewing Management Discussion and Analysis of financial condition and results of operations

Reviewing internal audit reports relating to internal control weaknesses

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 Report on Corporate Governance

Reviewing financial statements of subsidiaries, in particular, the investments made by the unlisted
subsidiary companies

Reviewing related party transactions
(ii) Composition
The Committee comprises of 6 Non-Executive Independent Directors. The Company Secretary is the
Secretary of the Committee. The Internal Auditors and External Auditors are also invited to attend the
meetings of the Committee. The Committee met 5 times during the year on April 15, 2005, July 26,
2005, September 20, 2005, October 28, 2005 and January 13, 2006. The attendance of members at
the meetings was as follows:
Name of the Member Status No. of meetings attended
Mr. Bodhishwar Rai Chairman 5
Mr. Arabinda Ray Member 5
Mr. Surendra Singh Member 3
Mr. Ajay Relan Member —
Mr. Abhay Havaldar (w.e.f. September 6, 2005) Member 1
Mr. H K Khan (w.e.f. October 28, 2005) Member 1

2) Investors Grievance Committee

(i) Terms of reference:
The Committee has been formed to approve the matters relating to transfer/transmission of shares, issue
of duplicate certificates, non-receipt of balance sheet, non-receipt of dividend, review / redressal of
investors’ grievances etc.
ii) Composition
The Committee comprises of 2 Non Executive Directors viz. Mr. H K Khan and Mr. Bodhishwar Rai and
one Executive Director- Mr. S N Singh. Mr. H K Khan is the Chairman of the Committee.
The Board has designated Mr. Lalit Jain, Company Secretary as the “Compliance Officer”.
iii) Investors’ Complaints received and resolved during the year
During the year the Company received 261 complaints, which were resolved. No complaint was pending
as on March 31, 2006.
The Company had 19,335 investors as on 31.03.2006. During the year under review, the Company
received 66,526 (61,361 shares of Rs. 5 each and 5165 shares of Re. 1 each) shares for transfer/
transmission/transposition out of which 39,443 (35,578 shares of Rs. 5 each and 3,865 shares of
Re. 1 each) were transferred and the rest rejected for technical reasons.
3) Remuneration Committee
(i) Terms of reference
The Committee is empowered to decide and approve the remuneration of the Executive Board Members
of the Company.
(ii) Composition
The Committee comprises of 3 Non-Executive Independent Directors namely, Mr. Arabinda Ray,
Mr. Bodhishwar Rai and Mr. Surendra Singh. Mr. Arabinda Ray is the Chairman of the Committee. The
Company Secretary is the Secretary of the Committee.
During the year, one meeting of the Committee was held on September 6, 2005 which was attended by
Mr. Arabinda Ray, Chairman and Mr. Bodhishwar Rai and Mr. Surendra Singh, Members.
(iii) Remuneration Policy
Remuneration policy aims at encouraging and rewarding good performance/contribution to the Company
objectives.

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 d) Details of remuneration paid to directors for the year 2005-06
i) Remuneration to Managing/Whole-Time Directors
Mr. Shyam S Bhartia, Chairman & Managing Director and Mr. Hari S Bhartia, Co-Chairman & Managing
Director were re-appointed for a period of five years each w.e.f. April 01, 2002. Mr. S N Singh and
Mr. Shyam Bang, Executive Directors were re-appointed for a period of five years each w.e.f. November 01,
2003. Dr. J M Khanna, was appointed on August 16, 2002 as Executive Director for a period of five years.
Remuneration including perquisites, commission and retirement benefits paid to directors for the year 2005-
06 was as follows:
(Amount in Rupees)
Mr. Shyam Mr. Hari Mr. S N Mr. Shyam Bang Dr. J M
S Bhartia S Bhartia Singh Khanna
Salary 1,500,000 1,500,000 3,270,150 2,574,075 4,140,300
Commission 16,500,000 16,500,000 Nil Nil Nil
Perquisites 1,270,184 2,682,822 2,589,117 2,106,154 3,375,401
Bonus/ Exgratia Nil Nil Nil Nil Nil
Contribution to
Superannuation Fund 225,000 225,000 490,523 386,111 621,045
Contribution to
Provident Fund 180,000 180,000 392,418 308,889 496,836
TOTAL 19,675,184 21,087,822 6,742,208 5,375,229 8,633,582
Stock Options (Number) Nil Nil 36,878* 30,305* 38,747*
The above excludes the provision for gratuity as the same is calculated on overall Company basis.
* Stock Options were granted on September 6, 2005. The holder of each Stock Option has a right to subscribe to one
equity share of Rs.5 at an exercise price of Rs.1,006.65 per share (market price as at the date of grant). The Options vest
in the holders in stages, over five years from the date of grant. However, as a result of sub-division of equity shares, the
holder of each Stock Option has a right to subscribe to five equity shares of Re.1 each at an exercise price of Rs.201.33 per
equity share.

Service Contracts, Notice Period, Severance Fees

The appointments of Managing Directors and Whole time Directors are contractual. The appointments of the
Whole time Directors are terminable by the Company by giving 3 months notice or salary in lieu thereof.
ii) Remuneration to Non-Executive Directors
Sitting fees for Board Meetings/ Committee Meetings, commission and stock options paid/granted to
the Non-Executive Directors for year ended March 31, 2006 were as under :
Sitting Fees (Rs.) Commission* (Rs.) Stock Options#
Mr. Bodhishwar Rai 212,500 200,000 5,000
Mr. Arabinda Ray 165,000 200,000 5,000
Mr. Surendra Singh 155,000 200,000 5,000
Mr. H K Khan 182,500 200,000 5,000
Dr. Naresh Trehan 70,000 200,000 5,000
Mr. Ajay Relan Nil Nil Nil
Mr. Abhay Havaldar Nil Nil Nil
Mr. Sanjeev Kapoor Nil Nil Nil
Mr. Vishal Marwah Nil Nil Nil
Total 785,000 1,000,000 25,000
* Commission to the Non-Executive Directors is payable in terms of approval obtained from the Central Government.
# Stock Options were granted on September 6, 2005. The holder of each Stock Option has a right to subscribe to
one equity share of Rs.5 at an exercise price of Rs.1,006.65 per share (market price as at the date of grant). The

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 Report on Corporate Governance

Options vest in the holders in stages, over five years from the date of grant. However, as a result of sub-division of
equity shares, the holder of each Stock Option has a right to subscribe to five equity shares of Re.1 each at an
exercise price of Rs.201.33 per equity share.
Number of Equity Shares in the Company held by Non-Executive Directors as on March 31, 2006
Name Shares of Re.1 each held
Mr. Bodhishwar Rai Nil
Mr. Arabinda Ray 1,740
Mr. Surendra Singh Nil
Mr. H K Khan Nil
Dr. Naresh Trehan Nil
Mr. Ajay Relan Nil
Mr. Abhay Havaldar Nil
Mr. Vishal Marwah Nil
Other than holding shares/options as above and remuneration indicated above, the Non-Executive Directors did not
have any pecuniary relationship or transactions with the Company.
iii) Criteria for making payment to Non-Executive Directors
The Company considers the time and efforts put in by the Non-Executive Directors in deliberations at Board/
Committee meetings. They are compensated through sitting fees for attending the meetings and also through
commission as approved by Central Govt.
e) General Body Meetings
(i) The last three Annual General Meetings of the Company were held as under:
Financial Year Date Time Location
2004-05 29-08-2005 11.30 a.m. Registered Office: Bhartiagram,
Gajraula, District Jyotiba Phoolay
Nagar, U.P.
2003-04 15-09-2004 11.30 a.m. Same as above
2002-03 26-09-2003 11.30 a.m. Same as above
(ii) Special resolutions passed during last 3 AGMs
AGM Date of AGM Subject matter of Special Resolutions Passed
th
27 AGM August 29, 2005 1. Payment of commission to Non-Executive Directors
not exceeding 1% p.a. of the net profits of the
Company, subject to a maximum of Rs.2 Lacs p.a.
to each such Non-Executive Director.
2. Permitting one or more Foreign Institutional Investors
to invest and hold in the aggregate, upto 45% of the
paid-up capital of the Company.
3. Preferential issue of 990,000 equity shares of Rs.5
each, at a price of Rs.1,100 per equity share to GA
European Investments Ltd.
4. Issue of upto 717,500 Stock Options to employees.
5. Issue of Stock Options to employees of subsidiary
companies.
th
26 AGM September 15, 2004 NIL
th
25 AGM September 26, 2003 NIL

(iii) Special resolutions passed through Postal Ballot last year

During the year under review, 2 special resolutions, both for alteration of Objects Clause of Memorandum of
Association, were passed through Postal Ballot on September 6, 2005 and March 7, 2006 respectively.
Mr. Tanuj Vohra, Practising Company Secretary, conducted the postal ballot exercise on both the occasions, as
Scrutinizer. Details of voting pattern for both the resolutions are as under :
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 September 6, 2005 March 7, 2006
(Alteration of Objects Clause of the Memorandum (Alteration of Objects Clause of
of Association covering ‘Research & Development’, the Memorandum of
‘Pharmaceuticals and Life Sciences Products’ and Association for insertion of SEZ Objects)
‘Alcohol and Alcohol Related Products’)
Particulars No. of Postal No. of % age of No. of No. of % age of
Ballot Forms Votes total valid Ballot Forms Votes total valid
received votes cast received votes cast
1. Total Postal Ballot Forms received 76 14,714,690 N/A 245 14,254,945 N/A
2. Less : Defaced and Mutilated
Postal Ballot Forms received Nil Nil N/A Nil Nil N/A
3. Less : Invalid Postal Ballot
Forms 3 280 N/A 22 2,152 N/A
4. Net Valid Postal Ballots 73 14,714,410 100% 223 14,252,793 100%
5. Postal Ballots assenting
to the resolution 73 14,714,410 100% 221 14,252,623 99.999%
6. Postal Ballots dissenting
from the resolution Nil Nil Nil 2 170 0.001%

(iv) Whether any Special resolutions are proposed to be passed through Postal Ballot
No
(v) Procedure for Postal Ballot
The notices containing the proposed resolutions and explanatory statements thereto were sent to the registered
addresses of every shareholder of the Company alongwith a Postal Ballot Form and a postage pre-paid envelope
containing the address of the Scrutinizer. Mr. Tanuj Vohra, Practising Company Secretary, was appointed by the
Board as the Scrutinizer for carrying out postal ballot process on both the occasions. The Postal Ballot Forms
received within 30 days of despatch were considered by the Scrutinizer, who submitted his report to the Chairman
& Managing Director of the Company, who on the basis of the report, announced the resolutions to be passed
with requisite majority.
f) Disclosures
(i) There are no materially significant transactions with the related parties viz. promoters, directors or the
management, their subsidiaries or relatives, etc. that may have a potential conflict with the interests of the
Company at large. Related party transactions are given at Note No. 19(a) of Schedule ‘O’ to the accounts.
(ii) No non- compliances have taken place nor have any penalties or strictures been imposed on the Company by the
Stock Exchanges or SEBI or any statutory authority on any matter related to capital markets during the last three
years.
(iii) The Company does not have a whistle-blower policy which is non-mandatory.
g) Means of Communication
(i) The quarterly results of the Company are sent to the Stock Exchanges immediately after they are approved by
the Board. The results are published in leading Business Newspapers of the country like The Economic Times
and The Hindu Business Line, general interest national newspapers like The Times of India, Hindustan Times
and The Pioneer and the regional newspapers like Amar Ujala and Dainik Jagran in accordance with the
guidelines of Stock Exchanges.
(ii) The results are also posted on the website of the Company at http://www.jubl.com. The website also displays
official news release. The results are also posted on the official website of SEBI http://www.sebiedifar.com.
(iii) Your Company has well laid out plans for communication to institutional shareholders and brokers. A detailed
investors communication is sent through e-mail to all the leading Indian and international analysts on both buy
and sell side and fund managers. During the financial year the company organised Earnings Calls after every
quarterly results which were well attended by the analysts and fund managers. The Company also organised
one to one meetings with investors in Mumbai post the announcement of quarterly results.
To keep the international investors informed on the developments in the Company, your Company made
investor presentations during the company roadshows and investor conferences in USA, Europe, Singapore
and Hong Kong.

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 Report on Corporate Governance

h) General Shareholders’ Information

th
(i) Date, time and venue for 28th Annual General Meeting : As per notice of 28 Annual General Meeting.
(ii) Tentative Financial Calendar- 2006-07
(Subject to change)
First Quarter Results Last week of July, 2006
Half Yearly Results Last week of October, 2006
Third Quarter Results Last week of January, 2007
Audited Annual Results for the year Last week of May, 2007
(iii) Book Closure & Dividend Payment Dates
th
As per Notice of 28 Annual General Meeting, the Dividend, if declared, will be paid within 30 days from the
date of the Annual General Meeting. Book closure dates as per Notice of 28th Annual General Meeting.
(iv) Listing on Stock Exchange and Stock codes
The names of the Stock Exchanges at which the equity shares of the Company are listed and the respective
stock codes are as under:
S.No. Name of the Stock Exchange Stock Code
1. Bombay Stock Exchange Limited 530019
2. National Stock Exchange of India Ltd. JUBILANT
(v) Market price data
High/low of market price of the Company’s equity shares traded on the Stock Exchanges during 2005-06 was as
follows:
(Equity Shares of Rs.5/- each)
Month NSE BSE
High (Rs.) Low (Rs.) High (Rs.) Low (Rs.)
April, 2005 960.00 860.00 940.00 845.05
May, 2005 939.70 884.10 950.00 880.00
June, 2005 955.00 901.20 1000.00 900.00
July, 2005 977.00 920.40 974.00 930.00
August, 2005 1015.00 931.80 1010.00 940.25
September, 2005 1054.90 917.50 1054.00 985.00
October, 2005 1089.90 947.55 1089.90 950.00
November, 2005 1019.90 962.50 1043.00 965.00
December, 2005 1080.00 985.00 1090.00 989.00
January, 2006 1210.00 1025.00 1209.90 1055.00
February, 2006 1100.00 989.00 1094.00 1030.00
March, 2006* 1295.00* 1002.75* 1267.50* 1080.05*
* During March, 2006, the equity shares of Rs.5/- were sub-divided into equity shares of Re.1/- each.
However, for proper comparison the above high/low share prices have been adjusted at Rs. 5 per share.
(vi) Performance of the Company’s equity shares in comparison to BSE Sensex

The above chart is based on the monthly closing prices of the shares of the Company and monthly closing BSE Sensex.
During March, 2006, the equity shares of Rs.5 were sub-divided into equity shares of Re.1 each. However, for proper
comparison the above high/low share prices have been adjusted at Rs. 5 per share.
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 (vii) Registrar and Transfer Agent
The Company has appointed M/s Alankit Assignments Limited, Alankit House, 2E/21, Jhandewalan Extension,
New Delhi 110 055 as Registrar and Share Transfer Agent for physical as well as electronic connectivity with
the depositories for dematerialised shares.
(viii) Share Transfer System
Investor Grievance Committee is authorised to approve transfers of securities. Share transfers which are received
in physical form are processed and the share certificates are normally returned within a period of 15 days from
the date of receipt subject to the documents being valid and complete in all respects. The dematerialised
shares are transferred directly to the beneficiaries by the depositories.
(ix) Disclosures
In accordance with the SEBI (Prohibition of Insider Trading) Regulations, 1992 and subsequent amendments,
the Company has implemented a Code of Conduct for Prevention of Insider Trading in Equity Shares of the
Company for observance by its Directors and other identified persons.
The Company Secretary is the Compliance Officer in this regard.
(x) Unclaimed Dividends
Dividends pertaining to the financial years upto and including 1993-94 remaining unclaimed have been
transferred to the General Revenue Account of the Central Govt. Shareholders having valid claims of unpaid
dividend for any of these financial years may approach the Registrar of Companies, U.P. & Uttaranchal,
Kanpur.
Dividends pertaining to the financial years 1994-95 to 1997-98 remaining unpaid have been transferred to
the Investor Education and Protection Fund (the Fund) established under Section 205C of the Companies Act,
1956 (the Act). As per said Section, no claims are allowed from the Fund.
In respect of unpaid/unclaimed dividends for the year 1998-99 onwards, the shareholders are requested to
write to the Company. Dividends remaining unclaimed for seven years from the date of transfer to unpaid
dividend account will be transferred as per Section 205A(5) of the Act to the Fund or the Company.
(xi) Information pursuant to Clause 49 IV (G) (i) of the Listing Agreement
Information pertaining to particulars of Directors to be appointed and re-appointed at the forthcoming Annual
General Meeting is being included in the Notice convening the Annual General Meeting.
(xii) Compliance Certificate of the Auditors
The Company has obtained a Certificate from the Statutory Auditors regarding compliance of conditions of
Corporate Governance as stipulated in Clause 49 of the Listing Agreement. The Certificate is attached as
Annexure E.
(xiii) Distribution of Shareholding as on 31st March, 2006

(xiv) (a) Dematerialisation of Shares

The shares of the Company fall under the category of compulsory delivery in dematerialised mode by all
categories of investors. The Company has signed agreements with National Securities Depository Limited
st
(NSDL) and Central Depositories Services (India) Limited (CDSL). As on 31 March, 2006, 129,085,995
equity shares of the Company (90.62% of the paid-up capital) were in dematerialised form.
(b) Liquidity
The Equity Shares of the company are frequently traded on the National Stock Exchange as well as on the
Bombay Stock Exchange Limited (in Group B1).

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 Report on Corporate Governance

(xv) Outstanding GDRs/ADRs/Warrants or any Convertible Instruments, conversion date and likely impact on
equity
(a) FCCB 2009
The Company had issued 1.5% Foreign Currency Convertible Bonds due 2009 (FCCB 2009 ) aggregating
US $ 35 million, in the year 2004-05.
The Bonds are convertible at any time between June 14, 2004 and April 15, 2009 by holders into fully
paid equity shares of Rs.5 each of the Company or Global Depository Shares (GDS), each GDS representing
one equity Share at an initial conversion price of Rs. 818.23 per share with a fixed rate of exchange on
conversion of Rs. 44.805 = US$ 1. The conversion price is subject to adjustment in certain circumstances.
The Bonds may also be redeemed, in whole but not in part, at the option of the Company at any time on
or after May 14, 2007 and prior to May 8, 2009, subject to satisfaction of certain conditions. The
outstanding Bonds remaining after conversion will be redeemed on May 15, 2009 at 113.70% of their
principal amount. The FCCB 2009 are listed on Singapore Stock Exchange. The GDSs arising out of
conversion of FCCB’s are listed on Luxembourg Stock Exchange.
As on 31st March, 2006, FCCB 2009 of US$ 5.55 million were outstanding.
Upon sub-division of each equity share of Rs.5 into 5 equity shares of Re.1 each, the conversion price for
FCCB 2009 stands reduced from Rs. 818.23 to Rs.163.646 per share and the number of shares to be
allotted on conversion will be 5 times the initially agreed number.
(b) FCCB 2010
During the year under review, the Company issued Zero Coupon Foreign Currency Convertible Bonds due
2010 (FCCB 2010) for an aggregate value of US$ 75 million, convertible any time between July 3, 2005
and May 14, 2010 by holders into fully paid equity shares of Rs.5 each of the Company or Global
Depository Shares (GDS), each GDS representing one equity share at an initial conversion price of
Rs.1365.324 per share with a fixed rate of exchange of Rs.43.35 = US$ 1. The conversion price is
subject to adjustment in certain circumstances. The Bonds may also be redeemed, in whole but not in
part, at the option of the Company at any time on or after May 23, 2008, subject to satisfaction of certain
conditions. Unless previously converted, redeemed or purchased and cancelled, the Bonds will be redeemed
on May 24, 2010 at 138.383% of their principal amount. The FCCBs are listed on Singapore Stock
Exchange. The GDSs arising out of conversion of FCCBs are listed on Luxembourg Stock Exchange.
Upon sub-division of each equity share of Rs.5 into 5 equity shares of Re.1 each, the conversion price for
FCCB 2010 stands reduced from Rs.1365.324 to Rs.273.0648 per share and the number of shares to
be allotted on conversion will be 5 times the initially agreed number.
(c) EMPLOYEES STOCK OPTIONS
During the year 594,391 Stock Options (each option convertible into one equity share of Re.5 each of the
Company) as per the Jubilant Employees Stock Option Plan, 2005 were granted to eligible Directors (other
than promoter directors) and other employees of the Company/subsidiaries. Out of the above, 564,391
Stock Options were granted at an exercise price of Rs.1,006.65 per share on September 06, 2005 and
30,000 Stock Options were granted at an exercise price of Rs.1,002.05 on October 28, 2005.
st
32,913 options lapsed upto 31 March, 2006. As per the plan, the Options vest in the holders over a
period of five years from the date of grant. As a result of sub-division of equity shares, the holder of each
Stock Option has a right to subscribe to five equity shares of Re.1 each at an exercise price of Rs.201.33
or Rs. 200.41 per equity share, as the case may be.
(d) PAID-UP CAPITAL
The Paid-up Capital as at March 31, 2006 stands at 142,442,995 equity shares of Re.1 each.
The impact of conversion of FCCB 2009 and FCCB 2010 into equity shares and exercise of Employees
Stock Options by employees on the share capital assuming full conversion/exercise would be as follows :–
No. of Shares of Re.1 each
Paid-up Share Capital as on March 31, 2006 142,442,995
Add : Conversion of balance FCCB 2009 1,519,546
Add : Conversion of FCCB 2010 11,906,514
Add : Exercise of Employees Stock Options* 3,587,500
Eventual Paid-up Capital 159,456,555
* Assuming grant of all the Stock Options approved by the members, i.e. 717,500 Stock Options.

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 (xvi) Location of the Plants
(a) Bhartiagram, Gajraula,
District Jyotiba Phoolay Nagar, U.P
(b) Block 133, Village Samlaya, Taluka Savli,
District Vadodara, Gujarat
(c) Village Nimbut, Nira, District Pune,
Maharashtra
(d) 51-56 KIADB Industrial Area, Nanjangud,
Mysore, Karnataka
(xvii) R & D Centres
Central R & D C-26, Sector –59, Noida, U.P.
D-12, Sector 59, Noida, U.P.
Gajraula R & D Bhartiagram, Gajraula,
District Jyotiba Phoolay Nagar, U.P.
Nanjangud R & D 51-56 KIADB Industrial Area, Nanjangud,
Mysore, Karnataka
(xviii) Address for Correspondence
Jubilant Organosys Limited
Plot No.1A, Sector-16-A
Noida, U.P. 201 301
Tel: +91 120 2516601/ 2516611
Fax: +91 120 2516629
e-mail : investors@jubl.com
Website : http://www.jubl.com
Extent to which Non-Mandatory Requirements have been adopted :
1. The Board
- Non Executive Chairman’s Office
Not applicable as Chairman is executive.
- Tenure of independent directors not to exceed 9 years
Not adopted
2. Remuneration Committee
The Company has set up a Remuneration Committee. The composition, terms of reference and other details of the
same are given in preceding pages.
3. Shareholders’ Rights
Not adopted.
4. Audit Qualifications
The financial statements of the Company contain no audit qualifications.
5. Training of Board Members
The Board of Directors is periodically updated on the business model, company profile, entry into new products and
markets.
6. Mechanism for Evaluating Non-Executive Board Members
Not adopted.
7. Whistle Blower Policy
The Company has not yet framed a Whistle Blower Policy.
Compliance with Code of Conduct
A declaration by the Chairman & Managing Director that all directors and senior management personnel have affirmed
compliance with the Code of Conduct of the Company for the year ended March 31, 2006 is attached as Annexure F.

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 Annexure-E
AUDITORS’ CERTIFICATE ON COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE AS PER CLAUSE 49
OF THE LISTING AGREEMENT WITH THE STOCK EXCHANGES

To the Members of Jubilant Organosys Limited

We have examined the compliance of conditions of corporate governance by Jubilant Organosys Limited (“the Company”)
st
for the year ended on 31 March, 2006, as stipulated in clause 49 of the Listing Agreement of the Company with the stock
exchanges, with the relevant records and documents maintained by the Company and the Report on Corporate Governance
as approved by the Board of Directors.
The compliance of conditions of corporate governance is the responsibility of the management. Our examination was
limited to procedures and implementations 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.
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.
We certify that the Company has complied with, in all material respects, the mandatory conditions of Corporate Governance
as stipulated in the above mentioned Listing Agreements.
We have been explained that no investor grievances are pending for a period exceeding one month against the Company as
per the records maintained by the Company and put before the Investors Grievance Committee.

For K.N. Gutgutia & Co.

Chartered Accountants

Place : Noida B.R. Goyal

th
Date : 18 April, 2006 Partner

Annexure-F
TO WHOM IT MAY CONCERN
This is to confirm that all the Board members and senior management personnel have affirmed compliance with the Code
of Conduct of the Company in respect of the financial year ended March 31, 2006.

For JUBILANT ORGANOSYS LIMITED

th
Date : 18 April, 2006 (SHYAM S BHARTIA)
Place : Noida CHAIRMAN & MANAGING DIRECTOR

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 Auditors’ Report

To the members of Jubilant Organosys Limited

1. We have audited the attached Balance Sheet of Jubilant Organosys Limited as at 31st March 2006, the related Profit and Loss
Account for the year ended on that date annexed thereto, and the Cash Flow Statement of the Company for the period ended on that
date, which we have signed under reference to this report. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditors’ Report) Order, 2003 issued by the Central Government in terms of Section 227 (4A) of the
Companies Act, 1956, and on the basis of such checks as considered appropriate and according to the information and explanation
given to us during the course of our audit, we enclose in the Annexure hereto a statement on the matters specified in paragraphs 4
and 5 of the said Order.
4. Further to our comments mentioned in the Annexure referred to in above paragraph we report that:
a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the
purposes of our audit.
b) In our opinion proper books of account as required by law have been kept by the Company so far as appears from our
examination of the books of the Company.
c) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by the report are in agreement with the
Books of Account of the Company.
d) In our opinion, the Profit & Loss Account, Balance Sheet and Cash Flow Statement comply with the mandatory Accounting
Standards referred to in Sub-Section 3 (c) of Section 211 of the Companies Act, 1956.
e) According to the information and explanation given to us and on the basis of written representations received from the Directors
as on 31st March 2006 of the Company and taken on record by the Board of Directors, we report that none of the Directors is
disqualified as on 31st March 2006, from being appointed as a Director in terms of clause (g) of Sub Section (1) of Section 274
of the Companies Act, 1956.
f) The Company has received proper returns from branches not visited by us.
g) In our opinion and to the best of our information and according to the explanations given to us, the said Accounts, and read
with the notes thereon and Significant Accounting Policies, there on give the information required by the Companies Act, 1956
in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2006;
(ii) In the case of the Profit and Loss Account, of the Profit of the Company for the year ended on that date; and
(iii) In the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

For K.N. Gutgutia & Company

Chartered Accountants

Place : Noida B R Goyal

Date : 18th April, 2006 Partner
Membership No. 12172

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JUBILANT-2.p65 69 8/7/2006, 6:47 PM

 Annexure to the A
Annexure uditors’ Report
Auditors’

Re: Jubilant Organosys Limited

Referred to in paragraph 3 of 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) As per the information and explanation given to us, physical verification of fixed assets has been carried out in terms of the
phased programme of verification of its fixed assets adopted by the Company and no material discrepancies were noticed
on such verification. In our opinion the frequency of verification is reasonable, having regard to the size of the Company and
nature of its business.
(c) During the year the Company has not disposed off any substantial/major part of fixed assets.
ii) (a) As per the information furnished, the inventories have been physically verified during the year by the management. In our
opinion, having regard to the nature and location of stock, the frequency of the physical verification is reasonable.
(b) In our opinion and according to the information and explanations given to us, procedures of physical verification of inventory
followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its
business.
(c) The Company is maintaining proper records of inventory. In our opinion, discrepancies noticed on physical verification of
stocks were not material in relation to the operations of the Company and the same have been properly dealt with in the
books of account.
iii) (a) There was only one Company covered in the register maintained under section 301 of the Companies Act, 1956 to which
the Company has granted loan. The maximum amount involved during the year was Rs. 105.20 million and the year end
balance of loan granted to such party was Rs. 100.20 million.
(b) In our opinion the rate of interest and other terms and condition on which loan has been granted to the said Company listed
in register maintained under section 301 of the Companies Act, 1956 are not prima facie, prejudicial to the interest of the
Company.
(c) The said party has repaid a part of principal amount on demand and has been regular in the payment of interest.
(d) There is no overdue amount of loan granted to the said Company.
(e) The Company had not taken any loan from any Company covered in the register maintained under section 301 of the
Companies Act, 1956. Accordingly, paragraph 4 (iii) (e), (f) & (g) of the Order are not applicable.
iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems
commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets
and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major
weakness in internal control system.
v) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management,
we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 have been
so entered.
(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of
contracts or arrangements entered in the register under Section 301 have been made at prices which are reasonable having
regard to prevailing market prices, wherever comparable prices are available, at the relevant time.
vi) In the case of public deposits received by the Company, the directives issued by the Reserve Bank of India and the provisions of
Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposit)
Rules 1975 have been compiled with. No order has been passed by the Company Law Board or National Company Law Tribunal
or Reserve Bank of India or any Court or any other Tribunal.
vii) In our opinion, the Company has an internal audit system commensurate with the size of the Company and the nature of its
business.
viii) The Central Government has prescribed maintenance of the Cost Records under section 209(1)(d) of the Companies Act, 1956 in
respect to the Companies’ certain products. We have broadly reviewed the books of account maintained by the Company pursuant
to the Order made by the Central Government for the maintenance of the cost records for certain products of the Company and are
of the opinion that prima facie the prescribed accounts and records have been maintained. We are, however, not required to and
have not carried out any detailed examination of such accounts and records.
ix) (a) According to the informations and explanations given to us and records examined by us, the Company is regular in depositing
with appropriate authorities undisputed statutory dues including provident fund, investors education and protection fund,
employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other statutory
dues wherever applicable. According to the information and explanations given to us, no undisputed arrears of statutory
dues were outstanding as at 31st March, 2006 for a period of more than six months from the date they became payable.

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 (b) According to the records of the Company, the dues of sales tax, income tax, customs, wealth tax, service tax, excise duty,
cess which have not been deposited on account of disputes and the forum where the dispute is pending are as under:

Name of the Nature of the Amount Period to which Forum where

statute Dues Rs./million the amount relates dispute is pending
1. Central Excise Act Excise Duty 0.27 September 1998- Tribunal
October 1999
Excise Duty 0.18 August 1999 Tribunal
Excise Duty 1.26 April 2001-March 2002 Joint Commissioner
Excise Duty 1.31 November 2001-
April 2004 Joint Commissioner
Excise Duty 1.28 April 2004-March 2005 Joint Commissioner
Excise Duty 0.22 March 1997 Commissioner (Appeal)
Penalty 0.55 March 1997 Commissioner (Appeal)
2. Service Tax Service Tax 0.35 April 2003-March 2004 Assistant Commissioner
3. Sales Tax Act Sales Tax Demand 0.24 1983-1984 Supreme Court
Sales Tax Demand 3.06 1996-2001 Tribunal
Sales Tax Demand 0.16 2003-2004 Joint commissioner
(Appeals)
Sales Tax Demand 0.09 1993-1994 Assistant Commissioner
(Appeals)
Sales Tax Demand 0.70 1997-2003 Deputy Commissioner
(Appeals)
Penalty 0.03 2004 Deputy Commissioner
(Appeals)
Sales Tax Demand 6.74 1995-2003 Assessing Authorities
4. Zila Panchayat Damages 47.20 2000-2001 High Court
Act
Penalty 230.00 2000-2001 High Court
Taxes 0.20 2000-2001 High Court
Recovery Charges 27.74 2000-2001 High Court

x) There are no accumulated losses of the Company as on 31st March 2006. The Company has not incurred any cash losses during
the financial year covered by our audit and in the immediately preceding financial year.
xi) Based on our audit procedures and the information given by the management, we are of the opinion that the Company has not
defaulted in repayment of dues to any financial institution, bank or debenture holders.
xii) Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans
and/or advances on the basis of security by way of pledge of shares, debentures and other securities.
xiii) Clause (xiii) of the Order is not applicable to the Company as the Company is not a chit fund Company or nidhi /mutual benefit
fund/society.
xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures, and other investments. Accordingly, the
provisions of clause 4 (xiv) of the Companies (Auditor’s Report ) Order, 2003 are not applicable to the Company.
xv) According to the information and explanations given to us, the Company has not given guarantees for loans taken by others from
bank except one guarantee given in respect of loan availed by an overseas subsidiary Company and the terms of such guarantees
are not prejudicial to the interest of the Company.
xvi) According to the information and explanations given to us, the term loans raised during the year have been applied for the purpose
for which they were raised.
xvii) According to the information and explanation given to us and on an overall examination of the Balance Sheet of the Company, we
report that the no funds raised on short-term basis have been used for long term investment.
xviii) The Company has not made any preferential allotment of shares during the year to parties/companies covered in the register
maintained under section 301 of the Companies Act, 1956.
xix) During the year covered by our audit report the Company has not issued secured debentures.
xx) The Company has raised money through public issues (Foreign Currency Convertible Bonds) during the year covered by our report.
The management has disclosed the end use of money so raised (Note 9 schedule O) and we have verified the same.
xxi) Based upon the audit procedures performed and the information and explanations given to us, by the management, we report that
no fraud on or by the Company has been noticed or reported during the course of our audit.
For K.N. Gutgutia & Company
Chartered Accountants
B R Goyal
Place : Noida Partner
Date : 18th April, 2006 Membership No. 12172

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JUBILANT-2.p65 71 8/7/2006, 6:47 PM

 Balance Sheet
(Rs./million)

As at 31st March, Schedules 2006 2005

SOURCES OF FUNDS
Shareholders’ funds
Share Capital A 142.46 129.58
Reserves & Surplus B 8,102.10 4,830.52
8,244.56 4,960.10
Loan Funds C
Secured Loans 2,385.34 2,038.15
Unsecured Loans 3,854.54 1,619.73
6,239.88 3,657.88
Deferred Tax Liabilities (Net) D 1,056.35 857.70
15,540.79 9,475.68
APPLICATION OF FUNDS
Fixed Assets E
Gross Block 10,516.37 8,359.50
Less: Depreciation 3,529.86 3,083.57
Net Block 6,986.51 5,275.93
Capital Work-in-Progress 1,168.97 929.70
8,155.48 6,205.63
Investments F 2,415.44 990.23
Current Assets, Loans and Advances G
Inventories 2,818.04 1,762.05
Sundry Debtors 2,462.06 1,784.38
Cash & Bank Balances 1,082.28 159.62
Loans and Advances 1,950.66 1,249.01
8,313.04 4,955.06
Less: Current Liabilities & Provisions H
Liabilities 2,281.00 2,039.53
Provisions 1,094.37 691.29
3,375.37 2,730.82
Net Current Assets 4,937.67 2,224.24
Miscellaneous Expenditure I 32.20 55.58
(To the extent not written off or adjusted)
15,540.79 9,475.68

Notes to Accounts & Significant Accounting Policies O

Schedule “A” to “I” and “O” referred above form an integral part of the Balance Sheet.

In terms of our report of even date attached. For and on behalf of the Board
For K.N. Gutgutia & Co.
Chartered Accountants
B R Goyal Shyam S Bhartia
Partner Chairman & Managing Director
Membership No. 12172

Noida Lalit Jain R Sankaraiah Hari S Bhartia

Date : 18th April, 2006 Company Secretary Executive Director - Finance Co-Chairman & Managing Director

JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006

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 Profit and Loss A
Profit ccount
Account
(Rs./million)

For the year ended 31st March, Schedules 2006 2005

INCOME
Sales & Services J 15,048.87 12,179.63
Less: Excise Duty on Sales (1,189.35) (1,034.31)
Net Sales & Services 13,859.52 11,145.32
Other Income K 177.37 138.61
Increase/(Decrease) in Stocks L 118.58 248.63
14,155.47 11,532.56
EXPENDITURE
Manufacturing & Other Expenses M 11,776.37 9,468.63
Depreciation & Amortization (Net) 450.62 356.85
Less: Transferred from Revaluation Reserve for Depreciation
on Revalued Amounts (Refer Note 1 (B) (v) of Schedule “O”) (9.07) (9.15)
441.55 347.70
Interest N 146.63 213.19
12,364.55 10,029.52
Profit Before Tax 1,790.92 1,503.04
Current Tax provision including Wealth Tax 228.40 256.16
Deferred Tax Liability 153.20 116.08
Tax adjustments for earlier years (Net) - (2.13)
Fringe Benefit Tax 21.42 -
403.02 370.11
Profit After Tax 1,387.90 1,132.93
Balance Brought Forward from Previous Year 1,662.16 1,063.98
Balance Available for Appropriation 3,050.06 2,196.91
APPROPRIATIONS
Dividend on Equity Shares 183.07 161.96
Tax on Distributed Profits on Equity Shares 25.68 22.79
208.75 184.75
Transfer to General Reserve 400.00 350.00
Balance Carried to Balance Sheet 2,441.31 1,662.16
Basic Earnings Per Share of Re 1 each (In Rupees) O 10.15 9.39
Diluted Earnings Per Share of Re 1 each (In Rupees) O 9.17 8.90
Notes to Accounts & Significant Accounting Policies O
Schedule “J” to “O” referred above form an integral part of the Profit & Loss Account.

In terms of our report of even date attached. For and on behalf of the Board
For K.N. Gutgutia & Co.
Chartered Accountants
B R Goyal Shyam S Bhartia
Partner Chairman & Managing Director
Membership No. 12172

Noida Lalit Jain R Sankaraiah Hari S Bhartia

Date : 18th April, 2006 Company Secretary Executive Director - Finance Co-Chairman & Managing Director

JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006

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 Cash Flow Statement
(Rs./million)
For the year ended 31st March, 2006 2005

A. Cash flow arising from Operating Activities :

Net profit before tax 1,790.92 1,503.04
Adjustment for : i) Depreciation & Amortization 441.55 347.70
ii) Loss/(Profit) on Sale of Fixed Assets (Net) (10.53) 0.94
iii) Interest (Net) 146.63 213.19
iv) Amortization/Write off (VRS Expenses) 23.51 13.42
v) Provision for Gratuity & Leave Encashment 19.96 24.49
vi) Bad Debts/Irrecoverable Advances written off 1.17 13.04
vii) Unrealized Exchange Difference 64.63 (61.49)
viii) Interest Income as shown in Schedule “K” (47.02) (2.96)
ix) Profit on Sale of Current Investments (Non-Trade) - (0.05)
x) Extraordinary Items - (88.74)
xi) Income from Current Investment (Non Trade) - Dividend (2.34) (3.19)
637.56 456.35
Operating Profit before Working Capital Changes 2,428.48 1,959.39
Adjustment for : i) Trade and other Receivables 1,085.39 578.51
ii) Inventories 1,055.99 479.25
iii) Miscellaneous Expenditure 0.13 47.09
2,141.51 1,104.85
286.97 854.54
i) Current Liabilities & Provision 253.71 591.48
Cash inflow from Operations 540.68 1,446.02
Deduct : i) Interest Paid 157.47 235.66
ii) Direct taxes Paid (net of refunds) 261.74 174.51
419.21 410.17
Add : i) Interest Income as shown in Schedule “K” 47.02 2.96
Net Cash Inflow/(Outflow) in course of Operating Activities 168.49 1,038.81
B. Cash Flow arising from Investing Activities
Outflow i) Acquisition/Purchase of Fixed Assets/CWIP 2,393.30 1,763.58
ii) Purchase/(Sale) of Investments (net) (Including in Subsidiaries) 1,425.21 841.29
iii) Loans to other Companies (net) 49.00 1.20
(Including to Subsidaries) 3,867.51 2,606.07
Deduct :
Inflow i) Sale Proceeds of Fixed Assets 30.11 10.24
ii) Interest Received 6.38 11.39
iii) Dividend Received 2.34 3.19
38.83 24.82
Net Cash Inflow/(Outflow) in course of Investing Activities (3,828.68) (2,581.25)
C. Cash flow arising from Financing Activities
Inflow i) Proceeds from Issue of Privately Placed Share Capital
{Net of Share Issue Expenses- Rs.0.72 million
(Previous Year Rs.12.03 million)} 1,088.28 1,988.00
{Including Share Premium of Rs. 1084.05 million
(Previous year Rs.1987.90 million)}
ii) Proceeds from Long Term & Short term Borrowings 490.22 (1,968.70)
{after adjustment of Rs.Nil (Previous year -Rs.88.74 million)
in relation to remission of liability}
iii) Proceeds from issue of Foreign Currency
Convertible Bonds {net of expenses-Rs.82.14 million
(Previous year Rs.59.32 million)} 3,169.11 1,508.86
4,747.61 1,528.16
Deduct :
Outflow i) Dividend Paid (including Corporate Dividend Tax & Education Cess) 189.43 34.45
189.43 34.45
Net Cash Inflow/(Outflow) in course of Financing Activities 4,558.18 1,493.71
Net Increase in Cash & Cash equivalents (A+B+C) 897.99 (48.73)
Add: Cash & Cash Equivalents at the beginning of Year 159.62 208.35
(Including Balance in Dividend Accounts)
Cash & Cash Equivalents at the close of the Year 1,057.61 159.62
(Including Balance in Dividend Accounts)
Cash & Cash Equivalents Comprise:
Cash and Bank Balances 1,082.28 159.62
Unrealized Exchange Difference on Foreign Currency Cash and Cash Equivalents (24.67) 1,057.61 – 159.62
Notes
1) Cash flow statement has been prepared under the indirect method as set out in the Accounting Standard 3 (AS-3)-”Cash Flow statements”, issued by the Institute of Chartered
Accountants of India.
2) Purchase of fixed assets includes movement of Capital Work-in-Progress during the year.
3 Closing Cash & Cash Equivalents includes Rs. 1009.31 million which can be utilized for specific purposes.
4) Previous Year’s figures have been regrouped/rearranged wherever found necessary to conform to this year’s classification.

In terms of our report of even date attached. For and on behalf of the Board

For K.N. Gutgutia & Co.

Chartered Accountants
B R Goyal Shyam S Bhartia
Partner Chairman & Managing Director
Membership No. 12172
Noida Lalit Jain R Sankaraiah Hari S Bhartia
Date : 18th April, 2006 Company Secretary Executive Director - Finance Co-Chairman & Managing Director

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 Schedules forming part of the Balance Sheet
(Rs./million)

As at 31st March, 2006 2005

A. SHARE CAPITAL
Authorised
300,000,000 Equity Shares of Re. 1 each 300.00 300.00
(Previous Year 60,000,000 Equity Shares of Rs. 5 each)
2,500,000 Redeemable Cumulative Preference Shares of Rs. 100 each. 250.00 250.00
(Previous Year 2,500,000 Redeemable Cumulative
Preference Shares of Rs. 100 each.)
550.00 550.00
Issued & Subscribed
142,474,995 Equity Shares of Re. 1 each 142.48 129.60
(Previous Year 25,919,755 Equity Shares of Rs. 5 each) 142.48 129.60
Paid up
142,442,995 Equity Shares of Re. 1 each 142.44 129.56
(Previous Year 25,913,355 Equity Shares of Rs. 5 each)
Add: Equity Shares Forfeited (paid up) 0.02 0.02
142.46 129.58

Notes:
1) During March 2006, each equity share of Rs. 5 was sub-divided into 5 equity shares of Re. 1 each.
2) During the year 2005-06, the Company allotted in accordance with SEBI Guidelines, 990,000 fully paid up equity shares of Rs. 5
each, at a premium of Rs.1095 per share, (equivalent to 4,950,000 equity shares of Re. 1 each at a premium of Rs. 219 per
share) on private placement basis to GA European Investments Limited.
3) During the year 2005-06, the Company issued Zero Coupon Foreign Currency Convertible Bonds due 2010 (FCCB 2010) for an
aggregate value of US$75 million, convertible any time between July 3, 2005 to May 14, 2010 by holders into fully paid equity
shares of Re. 5 each of the Company or Global Depositary Shares (“GDSs”) each representing one equity share at an initial
conversion price of Rs.1,365.324 per share with a fixed rate of exchange of Rs. 43.35 = US$1. The conversion price is subject to
adjustment in certain circumstances. The Bonds may also be redeemed, in whole but not in part, at the option of the Company at
any time on or after May 23, 2008, subject to satisfaction of certain conditions. Unless previously converted, redeemed or purchased
and cancelled, the Bonds will be redeemed on May 24, 2010 at 138.383% of their principal amount. The FCCBs are listed on
Singapore Stock Exchange. The GDSs arising out of conversion of FCCBs are listed on Luxembourg Stock Exchange. Upon sub-
division of each equity share of Rs. 5 into 5 equity shares of Re. 1 each, the conversion price for FCCB 2010 stands reduced from
Rs. 1,365.324 to Rs. 273.065 per share and the number of shares to be allotted on conversion will be 5 times the initially agreed
number. Assuming full conversion of these FCCBs, 11,906,514 equity shares of Re. 1 each would be allotted.
4) The Company had issued 1.5% Foreign Currency Convertible Bonds due 2009 (FCCB 2009) aggregating US$ 35 million, in the
year 2004-05. The Bonds are convertible at any time between June 14, 2004 and April 15, 2009 by holders into fully paid equity
shares of Rs. 5 each of the Company or Global Depositary Shares (“GDSs”) each representing one equity share at an initial
conversion price of Rs. 818.23 per share with a fixed rate of exchange on conversion of Rs. 44.805 = U.S.$1. The conversion price
is subject to adjustment in certain circumstances. The Bonds may also be redeemed, in whole but not in part, at the option of the
Company at any time on or after May 14, 2007 and prior to May 8, 2009, subject to satisfaction of certain conditions. Unless
previously converted, redeemed or purchased and cancelled, the Bonds will be redeemed on May 15, 2009 at 113.70% of their
principal amount. The FCCBs are listed on Singapore Stock Exchange. The GDSs arising out of conversion of FCCBs are listed on
Luxembourg Stock Exchange. Out of these FCCB 2009, US$ 29.45 million were converted upto 31st March 2006 into equity
shares and this represents 8,063,115 shares of Re.1 each as on 31st March, 2006. Upon sub-division of each equity share of
Rs.5 into 5 equity shares of Re.1 each, the conversion price for FCCB 2009 stands reduced from Rs. 818.23 to Rs.163.646 per
share and the number of shares to be allotted on conversion will be 5 times the initially agreed number. The outstanding balance of
FCCB 2009 - US$ 5.55 million, on conversion would result in allotment of 1,519,546 equity shares of Re 1 each.
5) During the year, as per Jubilant Employees Stock Option Plan, 2005, 594,391 options were granted to specified categories of
employees and directors of the Company and its subsidiaries. Each option, upon vesting, shall entitle the holder to subscribe to one
equity share of Rs. 5 each. During the year 32,913 options were forfeited. As a result of sub-division of each Rs. 5 equity share into
5 equity shares of Re.1 each, 2,807,390 equity shares of Re.1 each would be allotted, assuming full exercise of the balance
options.

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 Schedules forming part of the Balance Sheet

6) Paid up capital includes :

a) 8,798,139 equity shares of Rs. 5 each (equivalent to 43,990,695 equity shares of Re. 1 each) fully paid were allotted and
issued as bonus shares by capitalization of Capital Redemption Reserve in accordance with the resolution passed by the
shareholders dated February 28, 2004.
b) 328,804 equity shares of Rs. 5 each (equivalent to 1,644,020 equity shares of Re. 1 each) allotted and issued pursuant to the
Scheme of Amalgamation of erstwhile Ramganga Fertilizers Ltd. with the Company for consideration other than cash {152,356
equity shares of Rs. 5 each ( equivalent to 761,780 equity shares of Re. 1 each ) allotted to Vam Investments Ltd. and 31,884
equity shares of Rs. 5 each (equivalent to 159,420 equity shares of Re. 1 each) allotted to Vam Leasing Ltd. were cancelled
during the year 2002-03 - refer note no 7 below}.
c) 1,012,800 equity shares of Rs. 5 each (equivalent to 5,064,000 equity shares of Re. 1 each) allotted and issued pursuant to
the Scheme of Amalgamation to shareholders of erstwhile Anichem India Ltd. and of erstwhile Enpro Specialty Chemicals Ltd.
with the Company for consideration other than cash {324,194 equity shares of Rs. 5 each (equivalent to 1,620,970 equity
share of Re.1 each) allotted to Vam Investment Ltd. and 342,800 equity shares of Rs. 5 each (equivalent to 1,714,000 equity
shares of Re. 1 each) allotted to Vam Leasing Ltd. were cancelled during the year 2002-03 -refer note no. 7 below}.
7) Pursuant to the Scheme of Amalgamation approved by the Hon’ble High Court of Judicature, Allahabad and Hon’ble High Court of
Delhi, Delhi, and as contained in the Opening Reference Balance Sheet annexed to the Scheme, the paid up share capital of the
Company reduced during the year 2002-03 by cancellation of 476,550 equity shares and 374,684 equity shares of Rs. 5 each
(equivalent to 2,382,750 and 1,873,420 equity shares of Re. 1 each respectively) fully paid up held by erst while Vam Investments
Ltd. and Vam Leasing Ltd. respectively as investments in the Company.

(Rs./million)
As at 31st Additions/Created Deductions As at 31st
March, 2005 during the year March, 2006

B. RESERVES AND SURPLUS

Capital Reserve 22.82 22.82
Capital Redemption Reserve 9.86 9.86
Amalgamation Reserve 13.21 13.21
Securities Premium Account (1) 1,993.00 2,373.22 252.92 4,113.30
Revaluation Reserve (2) 27.87 27.87 -
Debenture Redemption Reserve 99.90 99.90
General Reserve 1,001.70 400.00 1,401.70
3,168.36 5,660.79
Add : Surplus as per Profit & Loss Account 1,662.16 1,387.90 608.75 2,441.31
Total 4,830.52 4,161.12 889.54 8,102.10
Previous Year 1,996.38 3,493.10 658.96 4,830.52

Notes :
(1) a) Additions denote premium on issue of shares on preferential basis and on conversion of FCCB.
b) Deductions denote an amount of Rs. 82.14 million towards Foreign Currency Convertible Bond Issue Expenses,
Rs. 170.06 million (net of write in of Rs. 21.59 million) being pro-rata provision of premium on redemption of FCCB and
Rs. 0.72 million towards Share Issue Expenses in respect of preferential issue of shares during the year.
(2) Refer Note 1B(v) of Schedule “O”.

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 (Rs./million)

As at 31st March, 2006 2005

C. LOANS
Secured
A) Loans From Bank
-Term Loans 892.30 740.60
[Including Rs. 892.30 million (Previous year Rs. 240.60 million) in foreign currency]
-Working Capital 808.75 359.58
[Including Rs. Nil (Previous year Rs. 322.98 million) in foreign currency]
-Vehicle Loans 3.13 5.45
B) Loans From Others
-Term Loans 681.16 845.03
[Including Rs. 83.88 million (Previous year Rs. 136.70 million) in foreign currency]
-Working Capital - 87.49
[Including Rs. Nil (Previous year Rs. 87.49 million) in foreign currency]
2,385.34 2,038.15
Unsecured

1.5% Foreign Currency Convertible Bonds -FCCB 2009

(Refer Note 9A of Schedule “O”) 247.61 1,509.20
Zero Coupon Foreign Currency Convertible Bonds -FCCB 2010
(Refer Note 9A of Schedule “O”) 3,346.13 -
Fixed Deposits 59.24 105.14
Deferred Sales Tax Credits 1.56 5.39
Short Term Loan from Bank 200.00 -
3,854.54 1,619.73

Notes :

1) Term Loans (in Indian Currency) from Export Import Bank of India and Long Term Foreign Currency Loan of
US$ 5 million from Export Import Bank of India and External Commercial Borrowing of US$ 20 million from State Bank of India-
New York Branch are secured by a first charge by way of:

a) Mortgage of the immovable assets and charge by way of hypothecation on the movable assets, both present and future [Save
& except Book debts and Bankers Goods as per Note 2 below and specified exclusions listed in notes i to iv below] pertaining
to the Company’s manufacturing facilities located at Bhartiagram, District Jyotiba Phoolay Nagar, Uttar Pradesh and at Village
Samlaya, Taluka Savli, District Vadodara, Gujarat.

i. Specified land and buildings situated at Bhartiagram, District Jyotiba Phoolay Nagar, Uttar Pradesh and constructed out
of the financial assistance granted by HDFC.
ii. Land and Building located at Plot No 1A, Sector 16A, Noida, Uttar Pradesh.
iii. Land & Building of Active Pharmaceutical Ingredients Unit located at Nanjangud, Mysore, Karnataka.
iv. Immovable assets of the Company situated at Nimbut Village, Nira, District Pune, Maharashtara.

b) Hypothecation of fixed assets [other than Land and Building as mentioned in 1a (iii) above] both present and future pertaining
to the Company’s manufacturing unit situated at Nanjangud, Mysore, Karnataka;

c) Such charges to rank pari-passu amongst the said chargeholders;

d) Mortgage in respect of External Commercial Borrowing of US$ 20 million from State Bank of India is pending creation.

2) i) Working Capital Facilities sanctioned by Consortium of Banks and notified Financial Institutions comprising of ICICI Bank
Limited, Corporation Bank, Punjab National Bank, State Bank of India, Canara Bank, Export Import Bank of India, ING Vysya
Bank Ltd., ABN Amro Bank and Standard Chartered Bank are secured by a first charge by way of hypothecation, ranking pari
passu inter-se Banks, of the entire book debts and receivables of the Company and moveable inventories both present and
future at the manufacturing facilities at Bhartiagram, District Jyotiba Phoolay Nagar, Uttar Pradesh, at Nimbut Village, Nira,

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 Schedules forming part of the Balance Sheet

District Pune, Maharashtra and at Village Samlaya, Taluka Savli, District Vadodara, Gujarat and at Nanjangud, Mysore, Karnataka
(save and except book debts and inventories related to IMFL business at Nimbut Village, Nira, District Pune, Maharashtra).

ii) The Company also has a Commercial Paper Programme aggregating Rs. 1500 million and Short-term debt programme of
Rs. 500 million within the overall Working Capital Limits sanctioned to it by the Working Capital Consortium. As on 31.03.06,
there was Rs. Nil loan outstanding against the same. The Company has availed Rs. 1800 million against the said facility
during the year (Previous year Rs. 550 million).

3) Loans availed for financing purchase of vehicles are secured by a first charge by way of an exclusive hypothecation of the vehicles
purchased out of the loan proceeds in favour of the lender.

4) Secured Loans includes loans of Rs. 224.50 million (Previous year Rs. 281.30 million) repayable within one year.

(Rs./million)

As at 31st March, 2006 2005

D. DEFERRED TAX LIABILITY

Deferred Tax Liabilities 1,102.30 911.01
Deferred Tax Assets 45.95 53.31
Deferred Tax Liabilities (Net) 1,056.35 857.70
(Refer Note 15A of Schedule “O”)

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 E. FIXED ASSETS (Rs./million)

JUBILANT-2.p65
GROSS BLOCK-COST/BOOK VALUE D E P R E C I A T I O N/ A M O R T I Z A T I O N NET BLOCK
Total Additions/ Deductions/ Total Total Provided Deductions/ Total As at As at
as at adjustments adjustments as at as at during adjustments as at 31st 31st
Description 31st March during the during the 31st March 31st March the year during the 31st March March March
2005 year year 2006 2005 year 2006 2006 2005

Land

79
(a) Freehold 153.68 68.19 18.80 203.07 203.07 153.68
(b) Leasehold 120.09 12.84 12.84 120.09 120.09 120.09
Buildings

JUBILANT ORGANOSYS LIMITED

(a) Factory 335.07 103.19 438.26 66.57 11.54 78.11 360.15 268.50
(b) Others (1) 377.28 77.57 454.85 61.85 14.67 76.52 378.33 315.43
Plant & Machinery (2) 6,966.24 1,822.14 0.71 8,787.67 2,816.59 373.74 0.68 3,189.65 5,598.02 4,149.65
Vehicles 28.06 10.53 2.60 35.99 5.20 2.81 1.20 6.81 29.18 22.86
Office Equipments 150.73 33.49 5.90 178.32 59.07 19.09 1.72 76.44 101.88 91.66
Furniture & Fixtures 119.22 57.71 1.85 175.08 29.75 10.46 0.73 39.48 135.60 89.47
Intangibles
(a) Internally generated

79
-Patents/product development 64.77 11.51 76.28 19.16 8.96 28.12 48.16 45.61
(b) Other
-Rights 44.36 2.40 46.76 25.38 9.35 34.73 12.03 18.98
TOTAL 8,359.50 2,199.57 (4) 42.70 10,516.37 3,083.57 450.62 4.33 3,529.86 6,986.51 5,275.93
Previous Year 7,137.01 1,317.77 95.28 8,359.50 2,800.69 356.85 73.97 3,083.57
Capital Work in Progress, Capital Advances & Project Expenses Pending Capitalization 1,168.97 929.70
8,155.48 6,205.63
Notes :

8/7/2006, 6:47 PM
(1) Building includes Rs.500 being cost of share in Co-operative Housing Society.
(2) Adjustment/Deduction in Plant & Machinery includes Rs. Nil (Previous year Rs. 10.14 million (Net)) being adjustment on account of write off due to impairment of Assets (in accordance with
AS-28), which has been adjusted to General Reserve.
(3) Capital Work in Progress includes Rs. 195.21 million (Previous year Rs. 36.75 million) being R&D expenses incurred on Product Development (intangibles) pursuant to AS-26.
(4) Includes Rs.309.71 million in respect of R&D Assets.
(5) Capital Research & Development Expenditure aggregating to Rs. 291.95 million incurred during the year are included in Additions to Fixed Assets/Capital work in Progress.

ANNUAL REPORT - 2005-2006

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 Schedules forming part of the Balance Sheet
(Rs./million)

As at 31st March, 2006 2005

F. INVESTMENTS: (LONG TERM)

Number Face value Unquoted (at cost) :
per unit Trade Investments
In Subsidiary Companies
A) Fully paid Equity Shares :
375,000 US$1 - Jubilant Organosys (USA) Inc. 17.11 1.09
(25,000)
200,000 US$1 - Jubilant Organosys (Shanghai) Ltd. 8.80 8.80
(200,000)
13,900,000 EURO 1 - Jubilant Pharma NV. (Belgium) 743.79 743.79
(13,900,000)
1,999,766 Rs.10 - Jubilant Chemsys Ltd. 20.00 20.00
(1,999,766)
1,999,766 Rs.10 - Jubilant Clinsys Ltd. 20.00 20.00
(1,999,766)
295,600 Rs.10 - Jubilant Biosys Ltd. 147.80 147.80
(295,600)
12,700,000 US$1 - Jubilant Pharma Pte Ltd. (Singapore) 552.73 -
(-)
15,500,000 US$1 - Clinsys Holding Inc. (USA) 677.71 -
(-)
B) Preference Shares :
9,250,000 Rs.10 - Jubilant Chemsys Ltd.
(3,000,000) 6% Optionally Convertible Non-Cumulative
Redeemable Preference Shares fully paid. 92.50 30.00
13,500,000 Rs.10 - Jubilant Clinsys Ltd.
(3,750,000) 6% Optionally Convertible Non-Cumulative
Redeemable Preference Shares fully paid up
(Previous year Rs. 5 paid up) 135.00 18.75
2415.44 990.23

Notes:
(1) Figures in ( ) are in respect of previous year.

(2) During the year, the following current investments (Non-Trade) were purchased and sold:

i) 12,222,180 Units of HDFC Cash Management Fund-Saving Plan-at cost of Rs. 130.00 million.

ii) 82,000,000 Units of Standard Chartered Mutual Fund-GCCD Grindlays Cash Fund- at cost of Rs. 820.00 million.

iii) 16,000,000 Units of ABN Amro Cash Fund- Institutional Plus at cost of Rs. 160.00 million.

JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006

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 (Rs./million)

As at 31st March, 2006 2005

G. CURRENT ASSETS, LOANS AND ADVANCES

Current Assets
Inventories : (Including in Transit & with Third Parties)
(at lower of cost or net realisable value)
- Raw Materials 1,426.49 580.32
- Stores, Spares, Process Chemicals, Catalyst, Fuels & Packing Material 478.23 403.00
- Process Stocks 349.57 272.19
- Finished Goods (including Trading Goods) 563.75 506.54
2,818.04 1,762.05
Sundry Debtors
Unsecured
- Over Six Months - Good 200.64 75.20
{Includes Subsidy receivable from State Government Rs. 24.11 million
(Previous Year Rs. 18.34 million)}
- Other Debts - Good 2,261.42 1,709.18
{Includes Subsidy receivable from State Government Rs. 26.25 million 2,462.06 (5) 1,784.38
(Previous Year Rs. 19.50 million)}

Cash & Bank Balances

- Cash in hand and as Imprest 5.80 3.97
- Cheques/Drafts in hand 11.54 -
- With Scheduled Banks
- On Current Accounts 63.52 125.60
- On Dividend Account 6.26 5.30
- On Deposit Accounts (1) 116.87 24.63
- With Non Scheduled Banks (2) 878.29 0.12
1,082.28 159.62
Loans and Advances
(Unsecured, Considered good)
- Loans to Subsidiary (including interest accrued) 106.08 55.73
- Advances recoverable in cash or in kind or 752.84 519.42
for value to be received (3)
- Deposits 95.37 87.68
- Deposits with Excise / Sales Tax Authorities (4) 428.46 258.59
- Advance Payment of Income Tax/Wealth Tax (including TDS) 567.91 327.59
1,950.66 1,249.01
8,313.04 4,955.06

(1) Includes: a) Margin Money - Rs. 1.12 million (Previous Year Rs. 1.33 million) b) Rs. Nil (Previous Year Rs. 1.44 million) being
unutilized money raised from the issue of Foreign Currency Convertible Bonds.
(2) Maximum Balance outstanding during the Year a) Rs. 3,173.33 million with ICICI Bank UK Ltd (Previous Year
Rs. 1,517.43 million) b) Rs. Nil (Previous Year Rs. 0.17 million) with Bank of China c) Rs. 869.99 million (Previous Year Rs. Nil)
with SBI New York in Fixed Deposit Account. d) Rs. 481.58 million (Previous Year Rs. Nil) with ICICI Bank, Singapore
e) Rs. 689.10 million (Previous Year Rs. Nil) with ICICI Bank, Canada.
(3) Includes Rs. 186.96 million (Previous Year Rs. 250.89 million) Export Benefits Receivables.
(4) Deposit against disputed demands - Rs. 86.88 million (Previous Year Rs. 110.58 million)
(5) Debtor includes Rs. 9.50 million being remittance in transit pending receipt in India, from an overseas subsidiary.

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 Schedules forming part of the Balance Sheet
(Rs./million)

As at 31st March, 2006 2005

H. CURRENT LIABILITIES AND PROVISIONS

A) Current Liabilities
Sundry Creditors and Expenses Payable (1) 2,055.03 1,847.76
Trade Deposits & Advances 98.08 86.04
Interest Accrued but not due 21.28 24.55
Other Liabilities 91.65 67.38
Investors Education and Protection Fund shall be credited with the following
amount namely:
- Unclaimed/unpaid Dividends 6.26 5.30
- Unclaimed Fixed Deposits 7.72 7.68
- Interest on Unclaimed Matured Fixed Deposits 0.98 0.82
2,281.00 2,039.53
B) Provisions
For Dividends on Equity Shares 203.03 184.67
For Income Tax & Wealth Tax 558.21 375.26
For Retirement/Post Retirement Employee Benefits 117.75 97.79
For Others (2) 215.38 33.57
1,094.37 691.29
Total (A+B) 3,375.37 2,730.82
Sundry creditors includes, dues to small scale industrial undertakings. 6.87 28.32

(1) Includes Rs. 463.71 million (Previous Year Rs. 600.23 million) being Acceptances.
(2) Includes provision for pro-rata premium on redemption of FCCB -Rs. 203.63 million (Previous Year Rs. 33.57 million)

(Rs./million)

As at 31st March, 2006 2005

I. MISCELLANEOUS EXPENDITURE
(to the extent not written off or adjusted)

Payments under Voluntary Retirement Scheme 32.20 55.58

32.20 55.58

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 Schedules forming part of the Profit and Loss A
Profit ccount
Account
(Rs./million)

For the year ended 31st March, 2006 2005

J. SALES & SERVICES

Sales 14,967.87 12,145.80
Manufacturing Services (Refer Note 16 of Schedule “O” ) 81.00 (1) 33.83
15,048.87 12,179.63
(1) Includes Rs. 52.18 million (Previous Year Rs. 15.76 million)
being value of captively produced ENA used for the said services

K. OTHER INCOME

Income from Current Investments (Non-Trade) - Dividend 2.34 3.19

Insurance / Other Claims (Net) 39.33 1.43
Profit on Sale of Current Investments (Non-Trade) - 0.05
Profit on Sale of Fixed Assets (Net) (2) 10.53 -
Exceptional Item ( Refer Note 6 of Schedule “O”) - 88.74
Miscellaneous Receipts (1) 125.17 45.20
(Includes Sale of unserviceable spares, used drums, residual catalyst, etc.) 177.37 138.61

(1) Includes: a) Income from Utilities provided Rs. 13.96 million (Previous Year Rs. 0.53 million)
(Tax Deducted at source Rs. 0.85 million - Previous Year Rs. 0.09 million)
b) Processing Charges of Rs. Nil (Previous Year Rs. 0.52 million)
(Tax Deducted at source Rs. Nil -Previous Year Rs. 0.01 million)
c) Interest Income of Rs. 47.02 million (Previous Year Rs. 2.96 million)
d) Bad Debts recovered/recoverable Rs. 6.18 million (Previous Year Rs. 5.62 million)
(2) In respect of disposal of land - Rs. 10.99 million
(Rs./million)

For the year ended 31st March, 2006 2005

L. INCREASE/(DECREASE) IN STOCKS
Stock at close -Process 349.57 272.19
Stock at close -Finished 563.75 506.54
913.32 778.73
Stock at commencement -Process 272.19 172.94
Stock at commencement -Finished 506.54 356.25
778.73 529.19
Increase/(Decrease) in Stocks 134.59 249.54
Less: Increase/Decrease of Finished & Process Stock of IMFL Business (16.01) (0.91)
(Refer Note 16 of Schedule “O”) 118.58 248.63

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 Schedules forming part of the Profit and Loss A
Profit ccount
Account
(Rs./million)
For the year ended 31st March, 2006 2005
M. MANUFACTURING AND OTHER EXPENSES
Purchases - Traded Goods 410.77 251.93
Raw & Process Materials Consumed 7,013.34 5,642.48
Power and Fuel 1,162.39 1,022.46
Excise Duty -Net (3) 10.38 25.23
Stores, Spares, Chemicals, Catalyst & Packing Materials consumed 705.70 578.47
Processing Charges 146.88 114.73
Repairs - Plant & Machinery 233.49 197.69
- Buildings 27.25 12.23
Salaries, Wages, Bonus, Gratuity & Allowances 658.23 542.04
Contribution to Provident & Superannuation Fund 54.13 71.02
Staff Welfare Expenses 58.34 58.13
Rent (Net of recoveries) 23.07 30.69
Rates & Taxes 16.14 23.60
Insurance [Net of recoveries -Rs. 8.87 million (PY -Rs. 8.19 million)] 53.79 39.40
Advertisement, Publicity & Sales Promotion 50.44 46.09
Traveling & Other Incidental Expenses 99.69 99.74
Offices Maintenance (including water, electricity & repairs to office equipments) 52.91 41.71
Vehicle Maintenance (Including vehicle taxes, insurance & driver cost) 24.25 25.13
Printing & Stationery 15.95 12.34
Communication Expenses 40.25 38.45
Staff Recruitment & Training 29.98 31.59
Donation (4) 0.17 1.19
Auditors Remuneration (5) - As Auditors 1.03 0.95
- for Taxation Matters 0.28 0.28
- for Certification/Advices/Other Matters 1.52 0.84
- Out of Pocket Expenses 0.11 0.10
Legal, Professional & Consultancy Charges 43.56 48.98
Freight & Forwarding (including Ocean freight) 350.19 215.65
Amortisation/write off - (VRS Expenses) 23.51 13.42
Directors’ Sitting Fees 0.78 0.71
Directors’ Commission 34.00 28.60
Miscellaneous Expenses 10.23 15.54
Financial Charges (incl. Bank Charges, Fixed Deposit expenses & Foreign Exchange 127.46 (39.55)
fluctuations net loss of Rs. 82.13 million (PY net gain of Rs. 120.05 million) (6)
Discounts & Claims to Customer (Net) and Other Selling Expenses 218.53 182.25
Commission on Sales 65.14 58.59
Lease Rentals & Hire Purchase charges 10.03 21.15
Loss on sale/disposal/discard of Fixed Assets - 0.94
Loss on sale of Raw Materials 1.29 0.80
Bad Debts / irrecoverable Advances written off /provided for (Net of write in) 1.17 13.04

11,776.37 9,468.63

(1) The above expenses are Netted off, after taking into account credit of Rs. 1.22 million (Previous year Rs. 10.92 million).
(2) The above total expenditure includes:
a) Expenditure incurred on R&D of Rs. 101.78 million (Previous year Rs. 119.68 million) under various heads of accounts
b) Prior period adjustments determined during the years are adjusted to respective heads of account of Rs. 3.40 million (Previous
year of Rs. 3.69 million)
(3) Excise duty expense denotes provision on closing stock and other claims of the Deptt.
(4) Includes Rs. Nil (Previous year Rs. 1.19 million) as contribution to Prime Minister’s National Relief Fund.
(5) Excluding Rs. 0.79 million (Previous year Rs. 0.97 million), being payment for Certification/Audit of FCCB Documents.
(6) Total foreign exchange gain of Rs. 15.66 million (Previous year Rs. 123.32 million) is adjusted against total foreign exchange losses
of Rs. 97.79 million (Previous year Rs. 3.27 million) as disclosed above. Financial charges includes Rs. Nil (Previous year-
Rs. 24.15 million) being one time charges paid for restructuring of long term loans.

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 Research & Development Expenses Comprises as mentioned here under: (Rs./million)

For the year ended 31st March, 2006 2005

M-1. RESEARCH & DEVELOPMENT EXPENSES

Material Consumption 54.33 35.34
Employee Cost 115.94 94.64
Utilities- Power 13.52 7.82
Others 77.71 66.55
261.50 204.35
Less: Transferred to Intangibles/Capital Work in Progress (159.72) (84.67)
Balance, charged to Revenue 101.78 119.68

N. INTEREST
On Debentures - 0.12
On Term Loans 74.34 144.18
On Deposits 7.52 16.71
On FCCB 9.38 23.05
On Overdrafts & other Borrowings (2) 63.12 45.05
154.36 229.11
Less: Interest Income [Tax deducted at source 7.73 (1) 15.92 (1)
Rs. 0.34 million (Previous year Rs. 1.66 million)] 146.63 (3) 213.19 (3)

(1) Includes Rs. 5.88 million (Previous Year Rs. 4.53 million) charged to Subsidiary Company.
(2) Includes Rs. 19.47 million (Previous Year Rs. 8.99 million) as Discounting Charges on Commercial Papers.
(3) Net of Interest Capitalization

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 Notes to the Accounts
Accounts

O. NOTES TO THE ACCOUNTS & SIGNIFICANT ACCOUNTING POLICIES

Notes to the Balance Sheet as at 31st March, 2006 and Profit and Loss Account for the year ended on that date.

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

A. Basis of Accounting

The Accounts of the Company (except for revaluation of certain fixed assets) are prepared under historical cost convention and in
accordance with the relevant applicable Accounting Standards using the accrual basis of accounting.

B. a. Fixed Assets & Depreciation

i. Fixed Assets are recorded at cost inclusive of such expenses as referred to in (viii) hereunder and/or at the revalued value as
ascertained by approved valuers and at book value in case of assets acquired at the time of amalgamation of certain entities
with the Company and at such fair value as ascertained by the valuer in case of acquisition of manufacturing facilities as a
going concern including the cost incidental to and /or attributable to such acquisition.

ii. Depreciation is provided on Straight Line Method, except in case of Plant & Machinery at Nira & Savli plants which is on
Written Down Value Method, at rates mentioned and in the manner specified in Schedule XIV to the Companies Act, 1956 (as
amended), on the original cost/ acquisition cost of assets and read with the statement as mentioned in iii, v, vi, vii, viii & ix here
in under and on the revalued portion of the assets at the rates suggested by the valuers and/or at such rate arrived at with
reference to residual life. Certain plants were classified as continuous process plants from the financial year ended 31-03-
2000 and such classification has been done on technical assessment, (relied upon by the auditor being a technical matter)
and depreciation on such assets has been provided accordingly.

iii. Depreciation, in respect of assets added/installed up to 15th December, 1993, is provided at the rates applicable at the time
of additions/installations of the assets as per Schedule XIV to the Companies Act, 1956 and depreciation, in respect of assets
added/installed during the subsequent period, is provided at the rates, mentioned in Schedule XIV to the Companies Act,
1956 read with Notification dated 16th December, 1993 issued by Department of Company Affairs, Government of India;

iv. Intangibles Assets consisting of Patents/Rights/ New Product Development (acquired/self generated) are capitalised and are
amortised over a period of 5 years.

v. Freehold Land, Buildings and Plant and Machinery of the Company was last revalued in the year 1991-92 on the basis of report
obtained from an approved valuer and Rs. 245.65 million was added to the Gross Block of such assets and accordingly
depreciation has been provided on the revalued figures. The first revaluation of said assets was done during the year 1987-88.
A sum of Rs. 9.07 million (Previous Year Rs. 9.15 million) has been transferred from Revaluation Reserve to Profit and Loss
Account, and balance of Rs. 18.80 million which represents the difference between the depreciation on the revalued value and
the original cost of the assets and the nominal value remaining in the Revaluation Reserve and revalued portion of cost of assets
so revalued, has been netted off.

vi. Depreciation on assets added/disposed off during the year has been provided on pro-rata basis with reference to the month of
addition/disposal.

vii. Insurance spares/standby equipments are capitalised as part of the mother assets and are depreciated at the applicable rates,
over the remaining useful life of the mother assets.

viii. Interest (including exchange difference considered as cost of borrowings in terms of Accounting Standard Interpretation ASI-
10 issued by ICAI) on loans & other financial charges and preoperative expenses including Trial Run Expenses (Net) for
projects and/or substantial expansion up to the date of commencement of commercial production/ stabilization of the project
are capitalised.

ix. Certain employee perquisite – related assets are depreciated over five years, being the period of the perquisite scheme.

b. Leased Assets: Amortization/charging off

(i) Leasehold Land value is not amortized in view of the long tenure of the un-expired lease period/option of conversion to freehold
at the expiry of lease tenure.

(ii) Other lease assets: Assets, if any, acquired under finance lease from 1st April 2001 are capitalized at the lower of their fair
value and the present value of the minimum lease payment in line with the Accounting Standard 19 (AS-19)-“Leases”, issued
by the Institute of Chartered Accountants of India (ICAI). In respect of other leases, lease rentals are charged to Profit and Loss
Account.

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 C. Valuation of Inventories

Inventories are valued at lower of cost or net realizable value except scrap, which is at net estimated realisable value.

Cost include all direct costs, cost of conversion and appropriate portion of overheads and such other costs incurred as to bring the
inventory to its present location and condition inclusive of excise duty wherever applicable. Cost formula used is based upon
weighted average cost.

D. Investments

Long Term quoted investments (non-trade) if any, are valued at cost unless there is a permanent fall in their value as at the date of
Balance Sheet.

Unquoted investments in subsidiaries being of long term and of strategic in nature are valued at cost and no loss is recognized for
the fall, if any, in their net worth, unless the diminution in value is other than temporary. Investment in foreign subsidiary companies
are expressed in Indian currency at the rates prevailing on the date when the remittance for the purpose was made/ foreign currency
balance abroad was used, as the case may be.

E. Taxation

Current Tax provision is made, taking into consideration the various benefits / concessions to which the Company is entitled to as
well as the normal tax provisions and the contentions of the Company and also the fact that certain expenditure becoming
allowable on payment being made before filing of the return of income.

In accordance with Accounting Standard 22(AS-22) – “Accounting for Taxes on Income”, issued by the ICAI, the deferred tax for
timing differences between the book and tax profits for the year is accounted for using the tax rates and laws that have been
enacted or substantively enacted as of the Balance Sheet date.

Deferred Tax assets (reviewed at each Balance Sheet date) arising from timing differences are recognized to the extent there is
virtual certainty, as the case may be, that such assets are capable of being realized in future.

F. Conversion or translation of Foreign Currency items

Transactions in foreign currency are recorded at the exchange rate prevailing on/or closely approximating to the date of transactions.
Current Assets and Liabilities (other than relating to Fixed Assets) are restated at the rate prevailing at the period end or at the
forward rate where forward cover for specific asset/liability has been taken. The difference between the period end rate and the
exchange rate at the date of the transaction is recognized as income or expense in the Profit and Loss Account, except where such
difference is considered as part of cost of borrowing in terms of Accounting Standard Interpretation ASI-10 issued by ICAI. In
respect of forward exchange contracts, the difference between the contract rate and the rate on the date of transaction is recognized
as income or expense in the Profit and Loss Account over the life of the contract.

In the case of liabilities incurred for the acquisition of imported fixed assets, the loss or gain on conversion (at the rate prevailing at the
period end or at the forward rate where forward covers are taken) is included in the carrying amount of the related fixed assets.

Interest Swaps (in foreign currencies) outstanding at the year-end are marked to market and the resultant gain /loss is recognized
as such.

G. Provisions, Contingent Liability and Contingent Assets

Provision are recognized for liability if the Company has present obligation at the date of accounts as a result of past event and there
is probability of outflow of economic resources and the amount is capable of being estimated reliably. Contingent Liability is
disclosed when the said conditions are not met. Contingent Assets are not recognized/disclosed. Provisions, Contingent Liabilities
and Contingent Assets are reviewed at each Balance Sheet date.

H. Research & Development

Revenue expenditure on Research & Development is included under the natural heads of expenditure. Capital expenditure on
Research & Development are treated in the same manner as expenditure on other Fixed Assets, except for development cost which
relate to the design and testing of new or improved materials, products or processes which are recognized as an intangible assets
to the extent that it is expected that such assets will generate future economic benefit.

I. Retirement Benefits

• Provision for gratuity and leave encashment are made on the basis of actuarial valuation and charged to the Profit & Loss
Account.
• Contributions to Superannuation Fund are given to LIC, (which administers the fund) and are charged to Profit & Loss Account.
• Employer’s contribution to Employees Provident Fund is charged to Profit & Loss Account.
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 Notes to the Accounts
Accounts

J. Borrowing Cost

Borrowing costs attributable to acquisition and construction of qualifying assets are capitalized as a part of the cost of such assets
up-to the date as mentioned in Note No. B (a) viii above. Other borrowing costs are charged as expenses in the year in which they
arise.

K. Revenue Recognition

Revenue from Sales is recognized on dispatch of material and point when risk and reward are transferred to the customers. Sales
include excise duty, export incentives and subsidies but exclude inter divisional transfers and sales tax. In order to comply with the
Accounting Standard Interpretation ASI-14 issued by ICAI, Sales (including excise duty) and Net Sales (excluding excise duty) is
disclosed in Profit & Loss Account.

Export incentives/benefits are accounted for on accrual basis and as per the principles given under AS-9 (Revenue Recognition).

L. Miscellaneous Expenditure/Amortisation

Miscellaneous expenditure consists of expenditure in respect of compensation payable as per the terms of Voluntary Retirement
Scheme of the Company and the same are amortised over a period of thirty six months commencing from the month in which
payment/liability arise.

FCCB and share issue expenses/premium on FCCB are adjusted against Share Premium account.

M. Segment Accounting

The accounting policies adopted for segment reporting are in line with accounting policies of the Company. Revenue, expenses,
assets and liabilities have been identified to segments on the basis of their relationship to operating activities of the segments
(taking in account the nature of products and services and risks and rewards associated with them) and internal management
information systems and the same is reviewed from time to time to realign the same to conform to the Business Units of the
Company. Revenue, expense, assets and liabilities, which are common to the enterprise as a whole and are not allocable to
segments on a reasonable basis, have been treated as “Common Revenue/Expense/Assets/Liabilities”, as the case may be.

N. Impairment of Fixed Assets

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such
indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the
recoverable amount of the cash-generating unit to which the assets belongs is less than the carrying amount, the carrying amount
is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Profit and Loss
Account. If at the Balance Sheet date there is an indication that previously assessed impairment loss no longer exists, the recoverable
amount is reassessed and the asset is reflected at the recoverable amount.

O. Employee Stock Option Schemes

In accordance with the Securities and Exchange Board of India Guidelines, the stock options granted pursuant to the Company’s
Stock Option Scheme, the intrinsic value of the options being the excess of the market price, if any, of shares over the exercise price
of the option, at the date of grant of options, is treated as discount and accounted as employee compensation cost and amortized
on a straight-line basis over the vesting period. The un-amortized portion, if any, is carried forward as deferred employee compensation.

2. Capital Commitments

Estimated amount of Contracts remaining to be executed on Capital Account (Net of Advances) Rs. 279.27 million (Previous Year
Rs. 486.10 million) [Advances Rs. 30.74 million (Previous Year Rs. 84.27 million)].

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 3. Contingent Liabilities

a) Claims/Demands/Disputes against which appeals are pending and not acknowledged as debts on account of:
(Rs./million)

2005-06 2004-05

Central Excise 17.70* 16.73*

Customs 5.16 -
Sales Tax 13.14 10.20
Income Tax 67.90 -
Service Tax 0.35 1.59
Others 6.83 2.53

*Amount deposited Rs. 16.73 million

The Company has been advised that its contentions in the matter of disputed demands are legally tenable and hence the possibility
of these maturing is remote.

b) The Company has challenged the levy of transport fee by State of Maharashtra on consumption of rectified spirit and molasses
in the Nira factory. The order of State imposing the levy was stayed by the Hon’ble Mumbai High Court on 22nd October, 2001.
The Company has been advised that the levy of transport fee on rectified spirit and molasses by State is not tenable. However
the Company has deposited Rs. 6.28 million under protest out of the total transport fee of Rs. 81.64 million.

c) Outstanding guarantees furnished by Banks on behalf of the Company/by the Company including in respect of Letters of Credits/
Bonds/loss make up guarantee is Rs. 521.08 million (Previous Year Rs. 1004.57 million).

d) The Company has given a guarantee to Cooperatieve Centrale Raiffeisen-Boerenleen Bank B.A-Singapore Branch (Rabo Bank,
Nederland) the Lender for providing a loan of US$ 20 million to Clinsys Holdings Inc. a subsidiary of the Company for the
acquisition of Clinsys Inc. (formerly Target Research Associates Inc.). The guarantee shall cover the principal amount along with
interest & other obligations under the agreement between the said Clinsys Holding Inc. and the said lender, Cooperatieve
Centrale Raiffeisen-Boerenleen Bank B.A-Singapore Branch (Rabo Bank, Nederland)

e) Exports obligation undertaken by the Company under EPCG scheme to be completed over a period of five/eight years on account
of import of Capital Goods at concessional import duty remaining outstanding is Rs. 224.79 million (Previous year Rs. 652.51
million). Similarly Export obligation under Advance License Scheme on duty free import of specific raw materials, remaining
outstanding is Rs. 862.71 million (Previous Year Rs. 611.59 million)

f) The Company has challenged the increase in denaturing fee by the state of Uttar Pradesh w.e.f 1st April 2004 on denaturing of
rectified spirit in the Gajraula factory before the Hon’ble Allahabad High Court and the writ petition has been admitted by the
court. The Company has deposited Rs 7.63 million under protest which is shown as deposits.

g) Zila Panchayat at J.P. Nagar (in respect of the Company’s Gajraula plant) served a notice demanding a compensation of
Rs. 277.40 million allegedly for creating lagoons on their lands, percolation of poisonous water stored in lagoons resulting in
loss of crops and cattle of the farmers and for putting poisonous fly ash on national highway which caused loss to the health and
damages to eyes and skin of people.

District Magistrate issued a recover y certificate along with 10% collection charges inflating the demand to
Rs. 305.14 million. In the opinion of the Company, the Zila Panchayat has no justification in raising this demand. The demand
was challenged in Hon’ble Allahabad High Court and the court stayed the demand till further orders.

4. The Hon’ble Supreme Court has quashed the levy of licence fee by State of Uttar Pradesh on captive consumption of denatured spirit
in the Gajraula factory. While passing the judgment, the Hon’ble Court inadvertently recorded that license fee has not been collected
by the State Govt. This has been sought to be corrected by moving rectification application. Consequent to that the Company is
entitled to a refund of Rs. 84.06 million.

5. The Company has challenged the levy of license fees of Rs. 2.87 million by State of UP, for grant of PD-2 license for manufacture of
Ethyl Alcohol for industrial use, before the Hon’ble Allahabad High Court. The writ petition has been admitted and is being listed for
final hearing. Though the amount has been deposited and shown as such. However no provision against this has been made as the
issue is covered by the earlier judgment of the Hon’ble Supreme Court of India.

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 Notes to the Accounts
Accounts

6. Other Income of the previous year includes exceptional item of Rs. 88.74 million being the difference between the amount of
deferred sale tax loans and the amount of payment made (being the Net Present Value of such Deferred Sales Tax Loan) before the
completion of deferred period, pursuant to notification issued by the Government of Maharastra consequent to the scheme of pre
payment.

7. Dividend on equity shares includes Rs. 5.72 million (inclusive of Dividend Tax) in respect of shares allotted between 31st March,
2005 to the record date for dividend.

8. a) Loans repayable on demand to Subsidiary Company including interest accrued thereon, namely, Jubilant Biosys Ltd. – Rs.106.08
million (Previous Year Rs. 55.73 million) {Maximum amount due at any time during the year Rs. 105.20 million (Previous
Year Rs. 82.40 million)}

b) Sundry Debtors as shown in Schedule “G” is net after giving the effect of sale of receivables amounting to
Rs. 108.02 million (Previous Year – Rs. Nil)

9. A. Foreign Currency Convertible Bonds (FCCB)

a) 1.5 % FCCB -US$35 million (FCCB 2009)

The Company had issued 1.5% Foreign Currency Convertible Bonds due 2009 (FCCB 2009) aggregating US$ 35
million, in the year 2004-05. The Bonds are convertible at any time between June 14, 2004 and April 15, 2009 by
holders into fully paid equity shares of Rs. 5 each of the Company or Global Depositary Shares (“GDSs”) each representing
one equity share at an initial conversion price of Rs. 818.23 per share with a fixed rate of exchange on conversion of
Rs. 44.805 = U.S.$1. The conversion price is subject to adjustment in certain circumstances. The Bonds may also be
redeemed, in whole but not in part, at the option of the Company at any time on or after May 14, 2007 and prior to May
8, 2009, subject to satisfaction of certain conditions. Unless previously converted, redeemed or purchased and cancelled,
the Bonds will be redeemed on May 15, 2009 at 113.70% of their principal amount. The FCCBs are listed on Singapore Stock
Exchange. The GDSs arising out of conversion of FCCBs are listed on Luxembourg Stock Exchange. Out of these FCCB 2009,
US$ 29.45 million were converted upto 31st March 2006 into equity shares and this represents 8,063,115 shares of Re. 1
each as on 31st March, 2006. The balance bonds of US$ 5.55 million net of exchange difference, outstanding as of March 31,
2006 are included under ‘ Unsecured Loans’.

Upon sub-division of each equity share of Rs. 5 into 5 equity shares of Re. 1 each, the conversion price for FCCB 2009
stands reduced from Rs. 818.23 to Rs. 163.646 per share and the number of shares to be allotted on conversion will be
5 times the initially agreed number. The outstanding balance of FCCB 2009 - US$ 5.55 million, on conversion would
result in allotment of 1,519,546 equity shares of Re 1 each.

The proceeds were utilised for funding new projects & expansion of existing units – Rs. 795.4 million
(US$ 17.1 million), investment in subsidiar y companies for acquisitions abroad – Rs. 722.0 million
(US$ 16.7 million) and issue expenses – Rs. 50.7 million (US$ 1.1 million).

b) FCCB – US$75 million (FCCB 2010)

During the year 2005-06, the Company issued Zero Coupon Foreign Currency Convertible Bonds due 2010 (FCCB
2010) for an aggregate value of US$ 75 million, convertible any time between July 3, 2005 to May 14, 2010 by holders
into fully paid equity shares of Re. 5 each of the Company or Global Depositary Shares (“GDSs”) each representing one
equity share at an initial conversion price of Rs.1,365.324 per share with a fixed rate of exchange of Rs. 43.35 = US$1.
The conversion price is subject to adjustment in certain circumstances. The Bonds may also be redeemed, in whole but
not in part, at the option of the Company at any time on or after May 23, 2008, subject to satisfaction of certain
conditions. Unless previously converted, redeemed or purchased and cancelled, the Bonds will be redeemed on May 24,
2010 at 138.383% of their principal amount. The FCCBs are listed on Singapore Stock Exchange. The GDSs arising out
of conversion of FCCBs are listed on Luxembourg Stock Exchange. Upon sub-division of each equity share of Rs. 5 into
5 equity shares of Re.1 each, the conversion price for FCCB 2010 stands reduced from Rs. 1,365.324 to
Rs. 273.065 per share and the number of shares to be allotted on conversion will be 5 times the initially agreed number.
Assuming full conversion of these FCCB’s, 11,906,514 equity shares of Re 1 each would be allotted.

The proceeds of FCCB 2010 have been used for funding new projects & expansion of existing units –
Rs. 1384.1 million (US$ 32.2 million), investment in subsidiary companies for acquisitions abroad -
Rs. 929.38 million (US$ 21.5 million), issue expenses – Rs. 78.0 million (US$ 1.8 million) and Balance of Rs. 859.8
million (US$ 19.5 million) has been temporarily deployed as Fixed Deposit with a bank pending utilization. There has
been no conversion during the year in respect of the above FCCBs.

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 B. Preferential Allotment of Privately Placed Equity Shares

During the year 2005-06, the Company allotted 990,000 fully paid up equity shares of Rs. 5 each, at a premium of Rs. 1095
per share, (equivalent to 4,950,000 equity shares of Re. 1 each at a premium of Rs. 219 per share) aggregating Rs. 1089.0
million on private placement basis to GA European Investments Limited, in accordance with SEBI Guidelines.

The proceeds have been used for Investment in Subsidiary Companies for acquisitions – Rs. 87.0 million and repayment of
debt – Rs. 1002.0 million.

10. Employee Stock Option Scheme

In terms of approval of shareholders accorded at the AGM held on 29th August, 2005 and in accordance with SEBI (ESOP & ESPS)
Guidelines, 1999, the Company instituted Jubilant Employees Stock Option Plan, 2005 (“Plan”) for specified categories of employees
and directors of the Company and its subsidiaries. Under the Plan, upto 717,500 Stock Options can be issued to eligible Directors
(other than promoter directors) and other specified categories of employees of the Company/ subsidiaries. The options are to be
granted at market price. As per SEBI Guidelines, the market price is taken as the closing price on the day preceding the date of
grant of options, on the stock exchange where the trading volume is the highest.

Each option, upon vesting, shall entitle the holder to subscribe to one equity share of Rs. 5 each. The vesting takes place on a
staggered basis over a period of 5 years from the date of grant.

The Company has constituted a Compensation Committee comprising of a majority of independent directors. This Committee is
empowered to administer the Scheme.

During the year, the following options were granted to eligible directors/employees:
Date of grant Number of Exercise Price Market Price
options granted (Rupees) (Rupees)
(As per SEBI Guidelines)
6th September, 2005 564,391 1,006.65 1,006.65 *
28th October, 2005 30,000 1,002.05 1,002.05 **

* Based on closing price on 5th September 2005 at NSE where higher turnover was recorded.
** Based on closing price on 27th October 2005 at BSE where higher turnover was recorded.
The movement in the stock options during the year ended March 31, 2006 is set out below:

Numbers

Options outstanding at the beginning of the year -

Granted during the year 594,391
Expired/forfeited during the year (32,913)
Exercised -
Options outstanding at the end of the year 561,478

As a result of sub-division of each Rs. 5 equity share into 5 equity shares of Re. 1 each, 2,807,390 equity shares of Re. 1 each
would be allotted, assuming full exercise of these options.

11. A. Assets aggregating Rs. 49.00 million (Previous Year - Rs. 49.00 million) have been acquired on financial lease during the
earlier years. The obligation for future lease rentals in respect of such assets aggregate to Rs. 1.49 million. (Previous Year -
Rs. 12.10 million) payable within a period of 1 year.

B. The Company’s significant operating leasing arrangements are in respect of premises (residential, offices, godown etc.). These
leasing arrangements, which are cancelable, range between 11 months and 9 years generally and are usually renewable by
mutual agreeable terms. The aggregate lease rentals payable are charged as expenses.

12. Capitalization of Interest, Pre-operative and Trial Run expenses

In line with the applicable Accounting Standards, interest on funds utilized and preoperative expenses including trial run expenses
(net) for projects and/or substantial expansions have been capitalized up to the date of commercial production/stabilization of the
project, amounting to Rs. 211.33 million (Previous Year Rs. 86.29 million). All preoperative expenditure including interest and
foreign exchange fluctuation of Rs. 45.98 million totaling to Rs. 93.77 million (Previous Year Rs. 18.99 million) so capitalized and
Trial Run Expenses (net of trial run receipts) are accumulated as Capital work in progress and have been allocated to respective
Fixed Assets.

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 Notes to the Accounts
Accounts

13. A. The Company, through its wholly owned Subsidiary, Clinsys Holdings Inc. acquired 100% stake in Clinsys Inc. (formerly Target
Research Associates Inc.) in USA, a clinical research organization, for a payment of US $ 33.50 million which is subject to
adjustment in case of change in net working capital from zero. The net working capital is currently assessed at US $ 1.07
million. Clinsys Holding Inc. raised a debt of US $ 20 million and the Company has infused equity of US $ 15.50 million in
Clinsys Holding Inc. to fund the said acquisitions.

B. The Company, through its wholly owned Subsidiary Jubilant Pharma Pte Limited in Singapore, acquired 66.61% equity stake in
Trigen Laboratories Inc. (formerly Trinty laboratories Inc.) Along with its wholly owned subsidiary Jubilant Pharmaceuticals Inc.
(formerly Trigen Laboratories Inc.), a USA based generic pharmaceuticals company having US FDA approved manufacturing
facility for solid dosage forms in Salisbury, USA, for a consideration of US $ 14.25 million. The Company invested US$ 12.20
million as equity share capital in Jubilant Pharma Pte Limited and US$ 2.5 million was invested as Preference Share Capital by
Jubilant Pharma N.V. a WOS of the Company in Belgium. Further the Company is to invest US$ 6 million by December 2006 to
increase its stake to 75%.

C. The Company made, during the year, further Investment of US $ 0.35 million in the Equity of its wholly owned Subsidiary-
Jubilant Organosys (USA) Inc., engaged in trading activities.

D. During the year ended March 31, 2005, the Company acquired 80% equity interest in two Belgium based pharmaceutical
companies namely Pharmaceutical Services Incorporated N.V. and PSI Supply N.V. through its subsidiary namely Jubilant
Pharma N.V. for a consideration of Euro 13.5 million. As per the terms of Share Purchase Agreement, the Company has a Call
Option and the minority shareholder has a put option on the balance 20% equity interest in both the companies. The options
are exercisable at the expiry of period of six years from May 28, 2004.

14. Sundry Creditors include:

i. The Small Scale/ancillary industrial undertaking to whom the amount is outstanding for more than 30 days are:

K & S Packaging Dynamics Kakkar & Company

Sun Synthetics India Hardware & Mills Stores
CMC Enterprises Micro Engineers
Purex Laboratories Niranjan Containers Pvt. Ltd.
A.K Sales Corporation Pious Printer
Alchem Laboratories Silver Tone Gravu-Flex P Ltd.
Pahwa Plastics Pvt. Ltd. Mandar Engineers
Dhatukarm Engineers Span Engineers
Chhaya Packers & Printers Pvt. Ltd Virava Chemicals
D.R Scientific Works Vimal Hi-Tech Pvt. Ltd.
Dhruv Packaging Sunil Kumar & Bros.
Centure Thread Works Jain Mill Store P Ltd

ii. There are no amounts overdue to small scale and/or ancillary industrial suppliers on account of Principal and /or interest as at
the close of the year.

iii. The above disclosures are based on the information/documents available with the Company.

15. A. Deferred Assets and Liabilities are attributable to the following items:
(Rs./million)

As at 31st March, 2006 2005

Deferred Tax Assets

Provision for Leave Encashment and Gratuity 39.99 33.26
Amount disallowed u/s 43 B 1.68 0.84
Deduction allowed under section 35D 2.43 19.21
Payment under Voluntary Retirement scheme 1.85 -
45.95 53.31
Deferred Tax Liabilities
Accelerated Depreciation 1,036.08 909.98
Payment under Voluntary Retirement Scheme - 1.03
Difference in value of CWIP/Intangibles 66.22 -
1,102.30 911.01
Deferred Tax Liabilities (Net) 1,056.35 857.70

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 B. The Company has made an application for the grant of approval by the Department of Scientific and Industrial Research for its
new in-house research and development center at D-12, Sector 59, Noida, earlier approval valid up to 31.03.2005, for
claiming weighted deduction under section 35 (2AB) of the Income Tax Act 1961 and the tax computations have been made
accordingly.

C. A sum of Rs. 36.50 million recognized as income against the claim raised by the Company for breach of contract by the other
party, is treated as non-taxable, based on the legal opinion and upon which auditor has relied upon.

D. Deferred Tax provision is net after adjustment of Rs. 45.45 million consequent upon treating certain items of earlier years as
qualifying for treatment under the Deferred Tax Liability.

E. The profit attributable to the operations under the (EOU) Export Oriented Units Scheme are deductible from income up to 31st
March 2009, and accordingly income from EOU setup at Nanjangud, Mysore plant, has been considered as tax deductable,
and provision for current tax is made accordingly.

16. The bottling unit of the company situated at Nira holds a potable liquor license for Indian Made Foreign Liquor (IMFL) and the same
is bottling IMFL on the order of another company and is charging bottling fee.

The Accounts recognise Revenue and Expenditure, only to the extent the Company enjoys beneficial interest.

In Compliance with the requirements of Schedule VI to the Companies Act, 1956, the following information is given hereunder in
respect of the transactions where the Company does not enjoy beneficial interest.

(Rs./million)
st
For the year ended 31 March, 2006 2005

Sales 804.07 636.33

Excise Duty (528.62) (397.38)
Other Income 2.54 5.58
Increase/(Decrease) in Finished & Process Stocks 16.01 0.91
Raw & Process Materials Consumed (25.32) (49.81)
Stores, Spares, Chemicals, Catalyst & Packing Materials consumed (90.12) (73.90)
Insurance (Net of recoveries) (0.51) (0.45)
Other Expenses (0.41) (0.16)
Freight & Forwarding (including Ocean Freight) (5.84) (5.71)
Discounts & Claims to Customers & Other Selling Expenses (89.30) (77.33)
Purchase of trading material (1.50) (4.25)

17. Disclosure required by Accounting Standard 29 (AS-29) ”Provisions, Contingent Liabilities and Contingent Assets”

Movement in Provisions: (Rs./million)

Class of Provisions
Sr. No. Particulars of disclosure Excise Duty Pro-rata premium Total
on redemption of FCCB.

1 Balance as at April 1, 2005 43.50 33.57 77.07

2 Additional provision during 2005-2006 50.20 191.65 241.85
3 Provision used during 2005-2006 43.50 - 43.50
4 Provision reversed during 2005-2006 - 21.59 21.59
5 Balance as at March 31, 2006 50.20 203.63 253.83
Provision for excise duty represents the excise duty on finished goods

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 Notes to the Accounts
Accounts

18. Segment Reporting :

i) Based on the guiding principles given in Accounting Standard on “Segment Reporting” ((AS-17) Issued by the Institute of
Chartered Accountants of India) the Company’s Primary Business Segments are organized around customers on industry and
product lines as under:
a. Pharmaceuticals & Life Science Chemicals: Active Pharmaceutical Ingredients (APIs), Custom Research & Manufacturing
Services (CRAMS), and Food Polymers.
b. Industrial Chemicals: Organic Intermediates, Agri and Animal Nutrition Products.
c. Performance Chemicals: Industrial products for tyres, textiles and coatings; Specialty Gases and Consumer Products
for woodworking solutions.

ii) Inter Segment Transfer Pricing

Inter Segment transfer prices are based on market prices.

iii) The Financial information about the primary business segments is presented in the table given below:

(Rs./million)

Particulars Pharmaceuticals Industrial Performance Total

& Life Science Chemicals Chemicals Chemicals
2006 2005 2006 2005 2006 2005 2006 2005

1) Revenue 5,884.55 4,462.69 6,960.88 5,995.85 2,271.50 1,902.28 15,116.93 12,360.82

Less: Inter Segment Revenue 68.06 181.19 68.06 181.19
Less: Excise Duty on Sales 245.32 178.84 661.03 620.94 283.00 234.53 1,189.35 1,034.31
Net sales 5,639.23 4,283.85 6,231.79 5,193.72 1,988.50 1,667.75 13,859.52 11,145.32
2) Segment results 1,344.51 965.48 631.09 830.06 122.15 24.71 2,097.75 1,820.25
Less : Interest (Net) 146.63 213.19
Other un-allocable expenditure 160.20 104.02
(net of un-allocable income)
Total Profit Before Tax 1,344.51 965.48 631.09 830.06 122.15 24.71 1,790.92 1,503.04
3) Capital Employed
(Segment Assets - Segment Liabilities)
Segment Assets 7,897.98 5,790.46 5,587.43 3,881.75 877.78 798.10 14,363.19 10,470.31
Add: Common Assets 4,552.97 1,736.19
Total Assets 7,897.98 5,790.46 5,587.43 3,881.75 877.78 798.10 18,916.16 12,206.50
Segment Liabilities 718.07 515.38 1,271.92 1,258.46 324.65 265.50 2,314.64 2,039.34
Add: Common Liabilities 1,060.73 691.48
Total Liabilities 718.07 515.38 1,271.92 1,258.46 324.65 265.50 3,375.37 2,730.82
Segment Capital Employed 7,179.91 5,275.08 4,315.51 2,623.29 553.13 532.60 12,048.55 8,430.97
Add: Common Capital Employed 3,492.24 1,044.71
Total Capital Employed 7,179.91 5,275.08 4,315.51 2,623.29 553.13 532.60 15,540.79 9,475.68
4) Segment Capital Expenditure 1,525.49 892.01 612.90 381.44 19.59 37.13 2,157.98 1,310.58
Add: Common Capital Expenditure 41.59 7.19
Total Capital Expenditure 1,525.49 892.01 612.90 381.44 19.59 37.13 2,199.57 1,317.77
5) Depreciation (Net) 238.84 157.91 170.45 155.17 23.55 25.92 432.84 339.00
Add: Common Depreciation 8.71 8.70
Total Depreciation 238.84 157.91 170.45 155.17 23.55 25.92 441.55 347.70

Notes : 1) The Company has disclosed Business Segment as the Primary segment
2) Segments have been identified and reported taking into account the nature of products and services, the differing risk
and returns, the organization structure and the internal financial reporting systems.
3) The Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segments
and amounts allocated on a reasonable basis.
4) Total Capital Employed excludes Secured Loans, Unsecured Loans, Deferred Tax.

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 iv) Secondary Segment Reporting : Geographical (Rs./million)
Particulars India Americas & Europe China Asia & Others Total
2006 2005 2006 2005 2006 2005 2006 2005 2006 2005
Revenues 10,359.47 8,716.50 2,715.06 2,437.20 1,281.10 682.40 761.30 524.72 15,116.93 12,360.82
Less: Inter
Segment Revenue 68.06 181.19 68.06 181.19
Less: Excise Duty
on Sales 1,189.35 1,034.31 1,189.35 1,034.31
Net sales 9,102.06 7,501.00 2,715.06 2,437.20 1,281.10 682.40 761.30 524.72 13,859.52 11,145.32

19 A. RELATED PARTY TRANSACTIONS

The Company has entered into transactions with the related parties:

a. Related parties where control exists

- Subsidiaries

Jubilant Pharma N.V. Jubilant Organosys (Shanghai) Ltd.

Pharmaceutical Services Incorporated N V. PSI Supply N V.

Jubilant Organosys (USA) Inc. Jubilant Chemsys Ltd.

Jubilant Clinsys Ltd. Jubilant Biosys Ltd.

Jubilant Pharma Pte. Ltd. Clinsys Holding Inc.

Trigen Laboratories, Inc. Clinsys Inc.

Jubilant Pharmaceuticals Inc.

b. Other related parties with whom transactions have taken place during the year

I. Associates

Jubilant Enpro Pvt. Ltd., Jubilant Oil & Gas Pvt. Ltd., Enpro Oil Pvt. Ltd. Domino Pizza India Ltd.

II. Others

Vam Employees Provident Fund Trust

c. I. Key Management Personnel

Mr. Shyam S. Bhartia, Mr. Hari S. Bhartia, Mr. S.N. Singh, Mr. Shyam Bang, Dr. J.M. Khanna, Mr. R. Sankaraiah

II. Relatives of Key Management Personnel

Ms. Shobhana Bhartia, Ms. Sudha Singh, Ms. Shobha Bang, Mr. Ajay Kumar Singh, Ms. Chitra Sankaraiah

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 Notes to the Accounts
Accounts

d. Transactions with related parties during the period (Rs./million)

Particulars Subsidiaries Associates Key Mgmt. Others

Personnel &
Relatives

Expenses recharged to other Companies for

facilities provided 33.78 15.18
(10.40) (8.08)
Services purchased during the year 2.32
(-)
Asset sold during the year - 3.51
(18.84) (-)
Sale of Finished Goods 1653.71
(843.69)
Guarantees on behalf of Subsidiary 892.30
(-)
Company’s Contribution to PF Trust 63.61
(54.99)
Inter-Corporate Deposits Given 106.50
(32.40)
Inter-Corporate Deposits Received Back 57.50
(31.20)
Interest on Inter-Corporate Deposits 5.88
(4.53)
Investments in Equity Share capital 1246.46
(792.59)
Investment in 6% optionally convertible 178.75
Non-cumulative Redeemable preference (48.75)
shares of Rs. 10 each
Remuneration and related expenses 68.67
(58.47)
Fixed Deposits outstanding at the year end 0.76
(0.76)
Interest accrued on Fixed Deposits during the Year 0.08
(0.42)
Rent paid 1.56
(1.62)
Inter-Corporate Deposits Outstanding 106.08
(including interest accrued thereon) (55.73)
Outstanding Receivables (other than ICD’s) 536.85
(255.01)
Outstanding Payables 0.72
(-)
ESOS granted during the year (No. of Shares) 142625 Nos
(-)

Note: (1) Managerial remuneration – Details as per Note 20 of Schedule “O”.

(2) Figures in () indicates in respect of previous year.
(3) Related party relationship is as identified by the Company and relied upon by the Auditors.
19 B. PROMOTOR GROUP
Group companies
The company is controlled by Mr. Shyam S Bhartia/Mr. Hari S Bhartia group (“the promoter group”), being a group as defined in the

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 Monopolies and Restrictive Trade Practices Act, 1969.

The persons constituting the promoter group include individuals and corporate bodies who/which jointly exercise, and are in a
position to exercise, control over the Company. The names of these individuals and bodies corporate are
Mr. Shyam S Bhartia, Mr. Hari S Bhartia, Mrs. Shobhana Bhartia, Mrs. Kavita Bhartia, Mr. Priyavrat Bhartia, Mr. Shamit Bhartia,
Ms. Aashti Bhartia, Master Arjun S Bhartia, Best Luck Vanijya Private Ltd., Enpro Exports Private Ltd., Jaytee Private Ltd., Jubilant
Enpro Private Ltd., Jubilant Securities Private Ltd., Jubilant Capital Private Ltd., Klinton Agencies Private Ltd., Speedage Vinimay
Private Ltd., Rance Investment Holdings Ltd., Cumin Investments Ltd., Torino Overseas Ltd., Vam Holdings Ltd., Westcost Vyapaar
Private Ltd., Nikita Resources Private Ltd., Jubilant Oil & Gas Pvt. Ltd.

20. Details of Remuneration to the Managing Directors, Executive Directors & other Directors under section 198 of the Companies
Act 1956 (Rs./million)

2005-2006 2004-2005

i) Salaries 12.98 11.48

ii) Perquisite Value of Housing Facility 8.47 6.79
iii) Contribution to Provident Fund and Superannuation Fund 3.51 3.10
iv) Perquisite value of other Benefits 3.56 3.18
v) Commission to Managing Directors( Previous year Rs.14.00 million to each) 33.00 ** 28.00**
vi) Commission to other Directors (Excluding Executive Directors) 1.00 0.60

62.52 53.15
The above excludes provision for gratuity where Calculations are on overall Company basis.
Calculation of Profit in accordance with Section 198 of the Companies Act, 1956 for the
purpose of calculation of Commission payable to Directors.
Profit before tax as per Profit & Loss Account 1,790.92 1,503.04
Add: Managerial Remuneration as above 62.52 53.15
Directors Sitting Fees 0.78 0.71
Depreciation(Net) as per Accounts 441.55 347.70
Net Profit 2,295.77 1,904.60
Less: Depreciation under Section 350 of the Companies Act 1956 441.55 347.70
Pro-rata Premium on Redemption of FCCB 170.06 -
Profit on Sale of Assets (Net) 10.53 -
Net Profit in accordance with Section 198 (I) /349 of Companies Act 1956 1,673.63 1,556.90
for calculation of Commission to Directors
Commission @ 1% to each Managing Director (Rounded amount) 33.50 31.00

Restricted to:
**Managing Directors (Previous year Rs. 14.00 million to each) 33.00 28.00
Other Directors (Excluding Executive Directors) Rs. 0.20 million each
(Previous Year Rs. 0.10 million each). 1.00 0.60

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 Notes to the Accounts
Accounts

21. (A) Capacities, Stocks, Production and Turnover

Sr. Class of Goods Quantitative Capacity* Opening Stock Production Turnover Closing Stock
No.
Denomination Installed Quantity Rs/ million Qty @@ Quantity Rs/million Quantity Rs/million
1. Alcohol KBL 157,700 2,544 61.98 102,679 5,951 165.60 1,709 28.12
KBL (157,700) (2,872) (29.72) (82,507) (798) (22.75) (2,544) (61.98)
2. Organic including
Speciality Chemicals & MT 485,108 10,685 276.20 424,583 189,388 10,211.50 10,152 326.90
its Intermediates MT (394,145) (19,356) (227.95) (367,771) (185,799) (8,360.26) (10,685) (276.20)
3. Polymers including
Co-polymers & VP Latex/ MT 32,060 647 45.61 26,493 26,220 1,666.16 1,053 63.29
SBR latex MT (31,100) (498) (24.08) (24,144) (24,000) (1,455.64) (647) (45.61)
4. Single Superphosphate MT 132,000 3,762 10.81 172,822 170,966 718.73 5,618 17.80
MT (132,000) (6,622) (16.50) (118,273) (121,133) (446.17) (3,762) (10.81)
5. Sulphuric Acid MT 57,750 634 1.06 57,585 57,729 78.98 490 0.25
MT (57,750) (264) (0.58) (60,359) (25,041) (79.89) (634) (1.06)
6. Dry & Acqueous Choline MT 22,000 139 5.41 8,968 5,240 245.24 323 15.18
Chloride & Ethyoxylates MT (22,000) (305) (11.38) (8,690) (5,505) (250.78) (139) (5.41)
7. Feed Premixes MT 3,500 244 8.31 1,680 1,735 74.86 177 3.18
MT (3,500) (64) (1.35) (2,188) (2,007) (79.08) (244) (8.31)
8. Agri Chemicals KL - 52 5.30 609 637 38.82 49 6.17
KL (-) (43) (5.27) (480) (471) (31.58) (52) (5.30)
9. Active Pharma MT 293 17 61.75 214 201 1,299.32 28 52.58
Ingredients (API) MT (218) (5) (12.24) (139) (128) (1,098.80) (17) (61.75)
10. IMFL KBL 10,800 149 23.86 4,706 - - 233 38.79
KBL (10,800) (176) (22.26) (3,985) (-) (-) (149) (23.86)

* Under the Industrial Policy Statement dated 24th July,1991 and the notifications issued thereunder,no licensing is required for the Company’s products.
20499.15
@@ Includes products manufactured by contract manufacturers on conversion basis wherever applicable
Notes:
a) Acetaldehyde is also produced which is mainly for captive consumption.
b) Closing Stock has been arrived at after considering captive consumptions.
c) Installed capacities are as certified by the Management, being a technical matter and relied upon by the Auditors accordingly.
d) Formaldehyde is also produced which is mainly used captively as process chemicals.
e) V.P. Latex / SBR Latex installed capacity is on wet basis.
f) Difference in quantitative tally represent materials damaged / obsolete / issue for sample etc.

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 21. (B) Particulars in respect of Trading goods.

Particulars 2005-2006 2004-2005

Quantity Rs/million Quantity Rs/million

i) Opening Stock
Agrochemicals (Ltrs.) 61,444.00 4.95 25,862.00 4.93
Organic Manure(MT) 580.75 1.30 - -
Other Organic Chemicals (MT) - - - -
Others - - -
ii) Purchases
Agrochemicals (Ltrs.) 968,730.00 49.60 835,793.00 29.55
Organic Manure (MT) 2,475.00 4.68 1,537.05 2.11
Other Organic Chemicals (MT) 13,083.03 314.46 5,242.53 166.77
Others 1,312.76 42.03 1,036.09 53.50
iii) Sales
Agrochemicals (Ltrs.) 916,949.00 54.12 800,211.00 38.39
Organic Manure (MT) 2,918.93 9.39 956.30 4.19
Other Organic Chemicals (MT) 13,083.03 355.81 5,242.53 218.57
Others 1,312.76 49.36 1,036.09 59.71
iv) Closing Stock
Agrochemicals (Ltrs.) 113,225.00 11.23 61,444.00 4.95
Organic Manure (MT) 136.82 0.26 580.75 1.30
Other Organic Chemicals (MT) - - - -
Others - - - -

21. (C) Raw Materials Consumed

2005-2006 2004-2005

Items Quantity Rs/million Quantity Rs/million

Molasses (MT) 418,348 1,395.62 343,513 927.80

Alcohol (KL) 118,181 2,170.99 106,360 1,738.84
Process Chemicals (MT) 66,477 2,019.52 71,552 1,808.02
Rock Phosphate (MT) 104,032 319.27 70,465 206.75
Sulphur etc (MT) 51,556 166.48 29,945 113.05
Chemicals for Feed Additive (Kgs) 2,915,540 146.85 2,533,990 120.15
Chemicals for Latex [MT] 2,080 201.10 1,892 171.88
Chemicals for API [MT] 5,375 480.69 5,083 422.24
Others [MT] (none of which individually
account for more than 10% of total - 112.81 - 133.75
consumption)
7,013.34 5,642.48

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 Notes to the Accounts
Accounts

21. (D) Value of imported and indigenous raw materials, stores and spare parts consumed and percentage thereof for the year.

Particulars 2005-2006 2004-2005

Rs/million % Rs/million %

Consumption of Raw Materials

- Imported 2,616.95 37.31 2,542.41 45.06
- Indigenous 4,396.39 62.69 3,100.07 54.94
7,013.34 100.00 5,642.48 100.00
Consumption of Stores, Spares, Chemicals,
Catalyst & Packing Material Consumed
- Imported 99.27 14.07 93.07 16.09
- Indigenous 606.43 85.93 485.40 83.91
705.70 100.00 578.47 100.00

2005-2006 2004-2005

21. (E) Earnings Per Share (EPS)

I. A) Profit Computation for Basic Earnings Per Share of Re 1 each
Net Profit as per Profit and Loss Account available for
Equity Shareholders Rs. million 1,387.90 1,132.93
Adjustments for the purpose of Diluted EPS :-
Interest on Foreign Currency Convertible Bonds Rs. million 9.38 23.05
Less: Tax on above Rs. million (2.11) (8.44)
(B) Profit for Diluted Earnings Per Share of Re 1 each Rs. million 1,395.17 1,147.54
II. Weighted average number of equity shares for
Earnings per Share computation
A) For Basic Earnings per Share Nos 136,728,761 120,668,645
B) For Diluted Earnings per Share:
No. of shares for Basic EPS as per II A Nos 136,728,761 120,668,645
Add: Weighted Average outstanding Option/Shares related to
FCCB & Employee stock options. Nos 15,396,390 8,307,155
No. of shares for Diluted Earnings per Share Nos 152,125,151 128,975,800
III. Earnings per Share (Weighted Average)
Basic Rupees 10.15 9.39
Diluted Rupees 9.17 8.90

Pursuant to the approval of the shareholders ballot, each equity share Rs. 5 has been sub-divided into 5 equity shares of Re. 1 each w.ef.
24th March,2006 on the basis of the face value of Re. 1 each. Accordingly, the paid up equity share capital now comprises 142,442,995
equity shares of Rs.1 each amounting to Rs.142.44 million. The EPS figures disclosed above have been calculated for equity shares of
Re. 1 each . Accordingly, the EPS figure for the previous year has also been restated taking the face value at Re.1 for each equity share.

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 (Rs./million)
2005-2006 2004-2005

21. (F) Expenditure in foreign currency (on remittance basis)

- Technical Knowhow Fee/Services/Royalty/Patent/Consultancy 23.08 13.79
- Travel /Entertainment Expenses 12.43 15.06
- Commission on Export Sales 9.87 20.57
- Overseas Office Expenses - 0.85
- Interest on FCCB 15.77 11.92
- Others 37.51 45.08
(G) Value of Imports on C.I.F. basis
- Raw Materials 2,067.59 1,726.88
- Spare Process Chemicals & Catalyst 114.35 31.58
- Capital Goods 115.54 121.99
- Trading Goods 325.93 168.61
(H) Remittance in Foreign Currency on account of Final Dividend
a) Amount of Dividend Remitted 6.96 1.39
b) Number of Non-Resident Shareholders 3 3
c) Number of Equity Shares held by Non- Resident Shareholders* 1,114,089 1,114,089
d) The Year to which Dividend related 2004-2005 2003-2004
*excluding were Dividend has been paid in Indian currency
(I) Earnings in Foreign Exchange
- Export Sales (FOB Value) 4,614.48 3,393.82
- Interest Income on Bank Deposits (overseas) 39.46 3.13

22. Previous Year’s figures have been regrouped/rearranged wherever found necessary to conform to this year’ s classification.
Signatures to Schedule “A” to “O” forming part of the Balance Sheet and Profit and Loss Account.

In terms of our report of even date attached. For and on behalf of the Board
For K.N. Gutgutia & Co.
Chartered Accountants

B R Goyal Shyam S Bhartia

Partner Chairman & Managing Director
Membership No. 12172
Noida Lalit Jain R Sankaraiah Hari S Bhartia
Date : 18th April, 2006 Company Secretary Executive Director- Finance Co-Chairman & Managing Director

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 Balance Sheet Abstract and Company’s General Business Profile

I. Registration Details
2 0 4 6 2 4
Registration No. State Code 2 0
Balance Sheet Date 3 1 0 3 2 0 0 6
Date Month Year

II. Capital Raised during the year (Amount in Rs. Thousand)

Public Issue* Rights Issue
7 9 2 6 N I L
* consequent upon conversion of FCCB
Bonus Issue Private Placement
N I L 4 9 5 0
III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousand)
Total Liabilities Total Assets
1 5 5 4 0 7 9 7 1 5 5 4 0 7 9 7
Sources of Funds
Paid-up Capital Reserves & Surplus
1 4 2 4 5 9 8 1 0 2 1 1 8
Secured Loans Unsecured Loans
2 3 8 5 3 3 5 3 8 5 4 5 3 5

Deferred Tax Assets & Liability (Net)

1 0 5 6 3 5 0

Application of Funds
Net Fixed Assets Investments
8 1 5 5 4 8 5 2 4 1 5 4 4 0
Net Current Assets Misc. Expenditure
4 9 3 7 6 6 9 3 2 2 0 3
IV. Performance of Company (Amount in Rs. Thousand)
Turnover** Total Expenditure
1 4 0 3 6 9 0 2 1 2 2 4 5 9 7 6
**Includes Other Income

+ – Profit/Loss Before Tax + – Profit/Loss After Tax

1 7 9 0 9 2 6
1 3 8 7 9 0 8
Basic Earning Per Share of Re. 1 each (in Rs.) Dividend Rate %
1 0 . 1 5 1 2 5
V. Generic Names of Principal Products/Services of Company (as per monetary terms)
Item Code (ITC No.) Product Description
2 9 3 3 3 1 . 0 0 P Y R I D I N E
3 0 0 4 9 0 . 8 1 C A R B A M A Z E P I N E
2 9 2 1 5 9 . 9 0 C I T A L O P R A M

In terms of our report of even date attached. For and on behalf of the Board
For K.N. Gutgutia & Co.
Chartered Accountants
B R Goyal Shyam S Bhartia
Partner Chairman & Managing Director
Membership No. 12172
Noida Lalit Jain R Sankaraiah Hari S Bhartia
Date : 18th April, 2006 Company Secretary Executive Director- Finance Co-Chairman & Managing Director

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 Auditors’ Report

AUDITORS’ REPORT TO THE BOARD OF DIRECTORS OF JUBILANT ORGANOSYS LIMITED ON THE CONSOLIDATED FINANCIAL
STATEMENTS OF JUBILANT ORGANOSYS LIMITED AND ITS SUBSIDIARIES.

1 We have examined the attached Consolidated Balance Sheet of Jubilant Organosys Limited (‘the Company’) and its subsidiaries,
namely, Jubilant Organosys (USA) Inc., Jubilant Biosys Ltd., Jubilant Clinsys Ltd., Jubilant Chemsys Ltd., Jubilant Organosys
(Shanghai) Ltd., Jubilant Pharma NV (and its step down subsidiaries namely, Pharmaceutical Services Incorporated NV and PSI
supply NV), Jubilant Pharma Pte Ltd. (and its step down subsidiaries namely, Trigen Laboratories and Jubilant Pharmaceuticals
Inc.). Clinsys Holding Inc. (and its step down subsidiary namely, Clinsys Inc.) {the company and its subsidiaries constitute ‘the
group’} as at 31st March 2006, the Consolidated Profit and Loss Account for the year then ended and annexed thereto and the
Consolidated Cash Flow Statement for the year ended on that date. These financial statements are the responsibility of the Jubilant
Organosys Limited’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
2 We conducted our audit in accordance with generally accepted auditing standards in India. These Standards require that we plan
and perform the audit to obtain reasonable assurance whether the financial statements are prepared, in all material respects, in
accordance with an identified financial reporting framework and are free of material misstatements. An audit includes, examining
on a test basis, evidence supporting the amount and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statements.
We believe that our audit provides a reasonable basis for our opinion.

3 We report that the Consolidated Financial Statements have been prepared by the Company in accordance with the requirements of
Accounting Standard (AS) 21, Consolidated Financial Statements, issued by the Institute of Chartered Accountants of India and on
the basis of the separate audited financial statements of Jubilant Organosys Limited, and its subsidiaries included in the Consolidated
Financial Statements.

4 On the basis of the information and explanation given to us and on consideration of the separate audit report on individual audited
financial statements of Jubilant Organosys Limited, and its aforesaid subsidiaries, in our opinion, the consolidated financial statements
give a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of the Consolidated Balance Sheet, of the consolidated state of affairs of ‘the group’ as at March 31, 2006;

b) In the case of the Consolidated Profit and Loss Account, of the consolidated results of operations of ‘the group’ for the year ended
on that date; and

c) 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 K.N. Gutgutia & Company

Chartered Accountants

B R GOYAL
Place : Noida Partner
Date : 18th April, 2006 Membership No. 12172

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 Consolidated Balance Sheet
(Rs./million)

As at 31st March, Schedules 2006 2005

SOURCES OF FUNDS
Shareholders’ Funds
Share Capital A 142.46 129.58
Reserves & Surplus B 8,114.74 4,915.33
8,257.20 5,044.91
Minority Interest 150.89 50.50
Loan Funds C
Secured Loans 3,344.89 2,056.15
Unsecured Loans 3,875.44 1,662.62
7,220.33 3718.77
Deferred Tax Liabilities (Net) D 1,042.04 857.86
16,670.46 9,672.04
APPLICATION OF FUNDS
Fixed Assets E
Gross Block 14,020.47 9,443.15
Less: Depreciation 3,778.96 3,151.13
Net Block 10,241.51 6,292.02
Capital Work-in-Progress 1,289.75 976.80
11,531.26 7,268.82
Investments F 2.23 2.10
Current Assets, Loans and Advances G
Inventories 3,116.89 1,937.46
Sundry Debtors 2,479.18 1,765.29
Cash & Bank Balances 1,389.57 375.74
Loans and Advances 1,963.46 1,219.89
8,949.10 5,298.38
Less: Current Liabilities & Provisions H
Liabilities 2,692.65 2,222.82
Provisions 1,151.68 730.02
3,844.33 2,952.84
Net Current Assets 5,104.77 2,345.54
Miscellaneous Expenditure I 32.20 55.58
(To the extent not written off or adjusted)
16,670.46 9,672.04
Notes to Accounts & Significant Accounting Policies O
Schedule “A” to “I” and “O” referred above form an integral part of the Consolidated Balance Sheet.

In terms of our report of even date attached. For and on behalf of the Board
For K.N. Gutgutia & Co.
Chartered Accountants
B R Goyal Shyam S Bhartia
Partner Chairman & Managing Director
Membership No. 12172
Noida Lalit Jain R Sankaraiah Hari S Bhartia
Date : 18th April, 2006 Company Secretary Executive Director- Finance Co-Chairman & Managing Director

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 Consolidated Profit and Loss A
Profit ccount
Account
(Rs./million)

For the year ended 31 March, Schedules 2006 2005

INCOME
Sales & Services J 16,242.85 12,736.96
Less: Excise Duty on Sales (1,189.35) (1,034.31)
Net Sales & Services 15,053.50 11,702.65
Other Income K 196.94 166.41
Increase/(Decrease) in Stocks L 194.09 387.81
15,444.53 12,256.87
EXPENDITURE
Manufacturing & Other Expenses M 13,077.13 10,013.87
Depreciation & Amortization (Net) 522.42 390.55
Less: Transferred from Revaluation Reserve for Depreciation
on Revalued Amounts (Refer Note 1 (C) (v) of Schedule “O”) (9.07) (9.15)
513.35 381.40
Interest N 172.66 220.36
13,763.14 10,615.63
Profit Before Tax 1,681.39 1,641.24
Current Tax provision including Wealth Tax 231.20 317.64
Deferred Tax Liability 138.89 116.08
Tax adjustments for earlier years (Net) - (2.13)
Fringe Benefit Tax 22.35 -
392.44 431.59
Profit After Tax 1,288.95 1,209.65
Minority Interests 7.80 (17.72)
Profit After Tax And Minority Interests 1,296.75 1,191.93
Balance Brought Forward from Previous Year 1,702.69 1,048.35
Balance Available For Appropriation 2,999.44 2,240.28
APPROPRIATIONS
Dividend on Equity Shares 183.07 161.96
Tax on Distributed Profits on Equity Shares 25.68 22.79
208.75 184.75
Transfer to General Reserve 400.00 350.00
Transfer to Legal Reserve - 2.84
Balance Carried to Balance Sheet 2,390.69 1,702.69
Basic Earnings Per Share of Re. 1 each (In Rupees) O 9.48 9.88
Diluted Earnings Per Share of Re. 1 each (In Rupees) O 8.57 9.35

Notes to Accounts & Significant Accounting Policies O

Schedule “J” to “O” referred above form an integral part of the Consolidated Profit & Loss Account.

In terms of our report of even date attached. For and on behalf of the Board
For K.N. Gutgutia & Co.
Chartered Accountants
B R Goyal Shyam S Bhartia
Partner Chairman & Managing Director
Membership No. 12172
Noida Lalit Jain R Sankaraiah Hari S Bhartia
Date : 18th April, 2006 Company Secretary Executive Director- Finance Co-Chairman & Managing Director

JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006

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 Consolidated Cash Flow Statement
(Rs/million)
For the year ended 31st March, 2006 2005
A. Cash flow arising from Operating Activities :
Net profit before tax 1,681.39 1,641.24
Adjustment for: i) Depreciation & Amortization 513.35 381.40
ii) Loss/(Profit) on Sale of Fixed Assets (Net) (10.53) 7.95
iii) Interest (Net) 172.66 220.36
iv) Amortization/Write off (VRS Expenses) 23.51 13.42
v) Provision for Gratuity & Leave Encashment 32.23 25.04
vi) Bad Debts/Irrecoverable Advances written off 5.48 12.99
vii) Unrealised Exchange Difference 64.63 (61.49)
viii) Interest Income as shown in Schedule “K” (47.02) (2.96)
ix) Profit on Sale of Current Investments (Non-Trade) - (0.05)
x) Extraordinary Items - (88.74)
xi) Income from Current Investment (Non Trade) -Dividend (2.34) (3.19)
751.97 504.73
Operating Profit before Working Capital Changes 2,433.36 2,145.97
Adjustment for: i) Trade and other Receivables 988.34 480.47
ii) Inventories 1,126.53 623.18
iii) Miscellaneous Expenditure 0.13 47.09
2,115.00 1,150.74
318.36 995.23
i) Current Liabilities & Provision 220.31 557.50
Cash inflow from Operations 538.67 1,552.73
Deduct : i) Interest Paid 172.87 240.76
ii) Direct taxes Paid (net of refunds) 271.00 198.21
443.87 438.97
Add : i) Interest Income as shown in Schedule “K” 47.02 2.96
Net Cash Inflow/(Outflow) in course of Operating Activities 141.82 1,116.72
B. Cash Flow arising from Investing Activities :
Outflow i) Acquisition/Purchase of Fixed Assets/CWIP 2,735.94 1,955.49
ii) Purchase/(Sale) of Investments (net) - (0.05)
iii) Payment for Businsess Acquisitions 1,912.22 734.93
4,648.16 2,690.37
Deduct :
Inflow i) Sale Proceeds of Fixed Assets 30.11 78.36
ii) Interest Received 8.28 13.86
iii) Dividend Received 2.34 3.19
40.73 95.41
Net Cash Inflow/(Outflow) in course of Investing Activities (4,607.43) (2,594.96)
C. Cash flow arising from Financing Activities
Inflow i) Proceeds from Issue of Privately Placed Share Capital
{Net of Share Issue Expenses-Rs.0.72 million
(Previous Year Rs.12.03 million)} 1,088.28 1,988.00
{Including Share Premium of Rs. 1084.05 million
(Previous year Rs.1987.90 million)}
ii) Proceeds from Long Term & Short term Borrowings 1,363.68 (1,952.63)
{after adjustment of Rs.Nil (Previous year -Rs.88.74 million)
in relation to remission of liability}
iii) Proceeds from issue of Foreign Currency Convertible Bonds
{net of expenses-Rs.82.14 million (Previous year Rs.59.32 million)} 3,169.11 1,508.86
iv) Contribution by Minority 8.83 (28.36)
Deduct : Outflow 5,629.90 1,515.87
i) Dividend Paid (including Corporate Dividend Tax & Education Cess) 189.43 34.45
189.43 34.45
Net Cash Inflow/(Outflow) in course of Financing Activities 5,440.47 1,481.42
D. Effect of Exchange differences on translation of foreign
currency cash and cash equivalents (2.13) (3.48)
Net Increase in Cash & Cash equivalents (A+B+C+D) 972.73 (0.30)
Add: Cash & Cash Equivalents at the beginning of Year
(Including Balance in Dividend Accounts) 375.74 227.45
Add: Cash & Cash Equivalents on consolidation of Jubilant Pharma NV - 148.59
Add: Cash & Cash Equivalents on consolidation of
Jubilant Pharma Pte Ltd & Clinsys Holding Inc. 16.43 -
Cash & Cash Equivalents at the close of the Year 1364.90 375.74
(Including Balance in Dividend Accounts)
Cash & Cash Equivalents Comprise:
Cash and Bank Balances 1,389.57 375.74
Unrealized Exchange Difference on Foreign Currency Cash and Cash Equivalents (24.67) 1,364.90 - 375.74
Notes
1) Cash flow statement has been prepared under the indirect method as set out in the Accounting Standard 3 (AS-3)-“Cash Flow Statements”, issued by the Institute of Chartered
Accountants of India.
2) Purchase of fixed assets includes movement of Capital Work-in-Progress during the year.
3) Closing Cash & Cash Equivalents includes Rs. 1009.31 million which can be utilized for specific purposes.
4) Previous Year’s figures have been regrouped/rearranged wherever found necessary to conform to this year’s classification.
In terms of our report of even date attached. For and on behalf of the Board
For K.N. Gutgutia & Co.
Chartered Accountants
B R Goyal Shyam S Bhartia
Partner Chairman & Managing Director
Membership No. 12172
Noida Lalit Jain R Sankaraiah Hari S Bhartia
Date : 18th April, 2006 Company Secretary Executive Director- Finance Co -Chairman & Managing Director

JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006

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 Schedules forming part of the Consolidated Balance Sheet
(Rs/million)

As at 31st March, 2006 2005

A. SHARE CAPITAL
Authorised
300,000,000 Equity Shares of Re. 1 each 300.00 300.00
(Previous Year 60,000,000 Equity Shares of Rs. 5 each)
2,500,000 Redeemable Cumulative Preference Shares of Rs. 100 each. 250.00 250.00
(Previous Year 2,500,000 Redeemable Cumulative
Preference Shares of Rs. 100 each.)
550.00 550.00
Issued & Subscribed
142,474,995 Equity Shares of Re. 1 each 142.48 129.60
(Previous Year 25,919,755 Equity Shares of Rs. 5 each) 142.48 129.60
Paid up
142,442,995 Equity Shares of Re. 1 each 142.44 129.56
(Previous Year 25,913,355 Equity Shares of Rs. 5 each)
Add: Equity Shares Forfeited (paid up) 0.02 0.02

142.46 129.58

Notes:
1) During March 2006, each equity share of Rs. 5 was sub-divided into 5 equity shares of Re. 1 each.
2) During the year 2005-06, the Company allotted in accordance with SEBI Guidelines, 990,000 fully paid up equity shares of Rs. 5
each, at a premium of Rs. 1095 per share, (equivalent to 4,950,000 equity shares of Re. 1 each at a premium of Rs. 219 per
share) on private placement basis to GA European Investments Limited.
3) During the year 2005-06, the Company issued Zero Coupon Foreign Currency Convertible Bonds due 2010 (FCCB 2010) for an
aggregate value of US$75 million, convertible any time between July 3, 2005 to May 14, 2010 by holders into fully paid equity
shares of Re.5 each of the Company or Global Depositary Shares (“GDSs”) each representing one equity share at an initial conversion
price of Rs. 1,365.324 per share with a fixed rate of exchange of Rs. 43.35 = US$1. The conversion price is subject to adjustment
in certain circumstances. The Bonds may also be redeemed, in whole but not in part, at the option of the Company at any time on
or after May 23, 2008, subject to satisfaction of certain conditions. Unless previously converted, redeemed or purchased and
cancelled, the Bonds will be redeemed on May 24, 2010 at 138.383% of their principal amount. The FCCBs are listed on
Singapore Stock Exchange. The GDSs arising out of conversion of FCCBs are listed on Luxembourg Stock Exchange. Upon
sub-division of each equity of Rs. 5 into 5 equity shares of Re. 1 each, the conversion price for FCCB 2010 stands reduced from
Rs. 1,365.324 to Rs. 273.065 per share and the number of shares to be allotted on conversion will be 5 times the initially agreed
number. Assuming full conversion of these FCCBs, 11,906,514 equity shares of Rs. 1 each would be allotted.
4) The Company had issued 1.5% Foreign Currency Convertible Bonds due 2009 (FCCB 2009) aggregating US$ 35 million, in the
year 2004-05. The Bonds are convertible at any time between June 14, 2004 and April 15, 2009 by holders into fully paid
equity shares of Rs. 5 each of the Company or Global Depositary Shares (“GDSs”) each representing one equity share at an initial
conversion price of Rs. 818.23 per share with a fixed rate of exchange on conversion of Rs. 44.805 = U.S.$1. The conversion
price is subject to adjustment in certain circumstances. The Bonds may also be redeemed, in whole but not in part, at the option
of the Company at any time on or after May 14, 2007 and prior to May 8, 2009, subject to satisfaction of certain conditions. Unless
previously converted, redeemed or purchased and cancelled, the Bonds will be redeemed on May 15, 2009 at 113.70% of their
principal amount. The FCCBs are listed on Singapore Stock Exchange. The GDSs arising out of conversion of FCCBs are listed on
Luxembourg Stock Exchange. Out of these FCCB 2009, US$ 29.45 million were converted upto 31st March 2006 into equity
shares and this represents 8,063,115 shares of Re. 1 each as on 31st March., 2006. Upon sub-division of each equity share of Rs.
5 into 5 equity shares of Re.1 each, the conversion price for FCCB 2009 stands reduced from Rs. 818.23 to Rs. 163.646 per
share and the number of shares to be allotted on conversion will be 5 times the initially agreed number. The outstanding balance of
FCCB 2009 - US$ 5.55 million, on conversion would result in allotment of 1,519,546 equity shares of Re. 1 each.
5) During the year, as per Jubilant Employees Stock Option Plan, 2005, 594,391 options were granted to specified categories of
employees and directors of the Company and its subsidiaries. Each option, upon vesting, shall entitle the holder to subscribe to one
equity share of Rs. 5 each. During the year 32,913 options were forfeited. As a result of sub-division of each Rs. 5 equity share into
5 equity shares of Re.1 each, 2,807,390 equity shares of Re.1 each would be allotted, assuming full exercise of the balance
options.

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 Schedules forming part of the Consolidated Balance Sheet

6) Paid up capital includes :

a) 8,798,139 equity shares of Rs. 5 each (equivalent to 43,990,695 equity shares of Re. 1 each) fully paid were allotted and
issued as bonus shares by capitalization of Capital Redemption Reserve in accordance with the resolution passed by the
shareholders dated February 28, 2004.
b) 328,804 equity shares of Rs. 5 each (equivalent to 1,644,020 equity shares of Re. 1 each) allotted and issued pursuant to
the Scheme of Amalgamation of erstwhile Ramganga Fertilizers Ltd. with the Company for consideration other than cash
{152,356 equity shares of Rs. 5 each (equivalent to 761,780 equity shares of Re. 1 each) allotted to Vam Investments Ltd.
and 31,884 equity shares of Rs. 5 each (equivalent to 159,420 equity shares of Re. 1 each) allotted to Vam Leasing Ltd. were
cancelled during the year 2002-03 - refer note no 7 below}.
c) 1,012,800 equity shares of Rs. 5 each (equivalent to 5,064,000 equity shares of Re. 1 each) allotted and issued pursuant
to the Scheme of Amalgamation to shareholders of erstwhile Anichem India Ltd. and of erstwhile Enpro Specialty Chemicals
Ltd. with the Company for consideration other than cash {324,194 equity shares of Rs. 5 each (equivalent to 1,620,970
equity share of Re. 1 each) allotted to Vam Investment Ltd. and 342,800 equity shares of Rs.5 each (equivalent to 1,714,000
equity shares of Re. 1 each) allotted to Vam Leasing Ltd. were cancelled during the year 2002-03 -refer note no. 7 below}.
7) Pursuant to the Scheme of Amalgamation approved by the Hon’ble High Court of Judicature, Allahabad and Hon’ble High Court of
Delhi, Delhi, and as contained in the Opening Reference Balance Sheet annexed to the Scheme, the paid up share capital of the
Company reduced during the year 2002-03 by cancellation of 476,550 equity shares and 374,684 equity shares of Rs. 5 each
(equivalent to 2,382,750 and 1,873,420 equity shares of Re. 1 each respectively) fully paid up held by erstwhile Vam Investments
Ltd and Vam Leasing Ltd respectively as investments in the Company.

(Rs./million)
As at 31st Additions/Created Deductions As at 31st
March, 2005 during the year March, 2006
B. RESERVES AND SURPLUS
Capital Reserve 22.82 22.82
Capital Redemption Reserve 9.86 9.86
Amalgamation Reserve 13.21 13.21
Securities Premium Account (1) 1,993.00 2,373.22 252.92 4,113.30
Revaluation Reserve (2) 27.87 27.87 -
Debenture Redemption Reserve 99.90 99.90
Foreign Currency Translation Reserve 43.12 18.98 62.10
Legal Reserve 2.84 2.84
General Reserve 1,000.02 400.00 1,400.02
3,212.64 5,724.05
Add : Surplus as per Profit & Loss Account 1,702.69 1,296.75 608.75 2,390.69
Total 4915.33 4,088.95 889.54 8114.74
Previous Year 1,980.67 3,596.46 661.80 4,915.33

Notes :
(1) a) Additions denote premium on issue of shares on preferential basis and on conversion of FCCB.
b) Deductions denote an amount of Rs. 82.14 million towards Foreign Currency Convertible Bond Issue Expenses, Rs. 170.06
million (net of write in of Rs. 21.59 million) being pro-rata provision of premium on redemption of FCCB and Rs. 0.72 million
towards Share Issue Expenses in respect of preferential issue of shares during the year.
(2) Refer Note 1 C(v) of Schedule “O”.

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 (Rs./million)

As at 31st March, 2006 2005

C. LOANS
Secured
A) Loans From Bank
-Term Loans 1,851.85 758.60
[Including Rs. 1784.60 million (Previous year Rs. 240.60 million) in foreign currency]
-Working Capital 808.75 359.58
[Including Rs. Nil (Previous year Rs.322.98 million) in foreign currency]
-Vehicle Loans 3.13 5.45
B) Loans From Others
-Term Loans 681.16 845.03
[Including Rs. 83.88 million (Previous year Rs. 136.70 million) in foreign currency]
-Working Capital - 87.49
[Including Rs. Nil (Previous year Rs. 87.49 million) in foreign currency]
3,344.89 2,056.15
Unsecured
1.5% Foreign Currency Convertible Bonds -FCCB 2009
(Refer Note No 9A of Schedule “O”) 247.61 1,509.20
Zero Coupon Foreign Currency Convertible Bonds -FCCB 2010
(Refer Note 9A of Schedule “O”) 3,346.13 -
Short Term Loans From Bank 205.67 14.03
[Including Rs. 5.67 million (Previous year Rs. 14.03 million) in foreign currency]
Other Loans From Bank 15.23 28.86
[Including Rs. 15.23 million (Previous year Rs. 28.86 million) in foreign currency]
Fixed Deposits 59.24 105.14
Deferred Sales Tax Credits 1.56 5.39
3,875.44 1,662.62

Notes :

1. Term Loans (in Indian Currency) from Export Import Bank of India and Long Term Foreign Currency Loan of US$ 5 million from
Export Import Bank of India and External Commercial Borrowing of US$ 20 million from State Bank of India-New York Branch are
secured by a first charge by way of: -

a) Mortgage of the immovable assets and charge by way of hypothecation on the movable assets, both present and future [Save
& except Book Debts and Bankers Goods as per Note 2 below and specified exclusions listed in notes i to iv below] pertaining
to the Company’s Manufacturing Facilities located at Bhartiagram, District Jyotiba Phoolay Nagar, Uttar Pradesh and at Village
Samlaya, Taluka Savli, District Vadodara, Gujarat.
i Specified land and buildings situated at Bhartiagram, District Jyotiba Phoolay Nagar, Uttar Pradesh and constructed out
of the financial assistance granted by HDFC.
ii Land and Building located at Plot No 1A, Sector 16A, Noida, Uttar Pradesh.
iii Land & Building of Active Pharmaceutical Ingredients Unit located at Nanjangud, Mysore, Karnataka.
iv Immovable assets of the Company situated at Nimbut Village, Nira, District Pune, Maharashtra

b) Hypothecation of fixed assets [other than Land and Building as mentioned in 1a (iii) above] both present and future pertaining
to the Company’s manufacturing unit situated at Nanjangud, Mysore, Karnataka;

c) Such charges to rank pari-passu amongst the said charge holders;

d) Mortgage in respect of External Commercial Borrowing of US$ 20 million from State Bank of India is pending creation

2. i) Working Capital Facilities sanctioned by Consortium of Banks and notified Financial Institutions comprising of ICICI Bank
Limited, Corporation Bank, Punjab National Bank, State Bank of India, Canara Bank, Export Import Bank of India, ING Vysya
Bank Ltd., ABN Amro Bank and Standard Chartered Bank are secured by a first charge by way of hypothecation, ranking pari
passu inter-se Banks, of the entire book debts and receivables of the Company and moveable inventories both present and
future at the manufacturing facilities at Bhartiagram, District Jyotiba Phoolay Nagar, Uttar Pradesh, at Nimbut Village, Nira,

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 Schedules forming part of the Consolidated Balance Sheet

C. LOANS (Contd.)
District Pune, Maharashtra and at Village Samlaya, Taluka Savli, District Vadodara, Gujarat and at Nanjangud, Mysore, Karnataka
(save and except Book Debts and Inventories related to IMFL business at Nimbut Village, Nira, District Pune, Maharashtra).

ii) The Company also has a Commercial Paper Programme aggregating Rs. 1500 million and Short-term Debt programme of
Rs. 500 million within the overall Working Capital Limits sanctioned to it by the Working Capital Consortium. As on 31.03.06,
there was Rs. Nil loan outstanding against the same. The Company has availed Rs. 1800 million against the said facility
during the year (Previous year Rs. 550.00 million).

3. Loans availed for financing purchase of vehicles are secured by a first charge by way of an exclusive hypothecation of the vehicles
purchased out of the loan proceeds in favour of the lender.

4. Secured Loan of US$ 20 million from Cooperative Contrale Raiffeisen-Boerenleenbank B.A.(Rabo), Singapore to Clinsys Holdings
Inc. is secured by way of a Guarantee from Jubilant Organosys Limited in respect of the liabilities of the Borrower and by way of
Pledge of shares of acquired entity – Clinsys Inc. (formerly Target Research Associates Inc.).

5. Secured Loan of Rs. 17.25 million from Indian Bank, New Delhi is secured by way of charge on the whole of the moveable
properties of Jubilant Biosys Ltd. situated at Bangalore including its plant & machinery, machinery spares, computers, tools and
accessories and other movables, both present and future, whether installed or not and whether now lying loose or in case or which
are now lying or stored in or about or shall hereafter from time to time.

6. Secured Loan of Rs. 235 million from ING Vysya Bank to Jubilant Biosys Limited is secured by way of an Exclusive Charge on Fixed
Assets to be created out to the proposed term loan.

7. Secured Loans includes loans of Rs. 319.50 million (Previous year Rs. 285.80 million) repayable within one year.

(Rs./million)

As at 31st March, 2006 2005

D. DEFERRED TAX LIABILITY

Deferred Tax Liabilities 1,116.51 911.17
Deferred Tax Assets 74.47 53.31
Deferred Tax Liabilities (Net) 1,042.04 857.86
(Refer Note 13A of Schedule “O”)

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103-132.p65
E. FIXED ASSETS (Rs./million)

GROSS BLOCK-COST/BOOK VALUE D E P R E C I A T I O N/ A M O R T I Z A T I O N NET BLOCK

Total Additions/ Additions/ Deductions/ Total Total Additions/ Provided Deductions/ Total As at As at
as at consequent adjustments adjustments as at as at consequent during adjustments as at 31st 31st
Description 31st March of during the during the 31st March 31st March of the year during the 31st March March March
2005 Consolidation year year 2006 2005 Consolidation year 2006 2006 2005
Land
(a) Freehold 153.68 14.77 68.19 18.80 217.84 217.84 153.68
(b) Leasehold 120.09 12.84 12.84 120.09 120.09 120.09

111
Buildings
(a) Factory 335.07 62.63 103.73 501.43 66.57 16.63 13.12 96.32 405.11 268.50
(b) Others (1) 377.28 77.57 454.85 61.85 14.67 76.52 378.33 315.43

JUBILANT ORGANOSYS LIMITED

Plant & Machinery (2) 7,009.55 112.18 1,972.89 0.71 9,093.92 2,817.15 66.95 385.22 0.68 3,268.65 5,825.27 4,192.40
Vehicles 34.47 10.88 2.60 42.75 8.16 3.54 1.20 10.50 32.25 26.31
Office Equipments 197.97 35.49 64.73 6.00 292.19 81.47 17.23 30.81 1.79 127.72 164.47 116.50
Furniture & Fixtures 148.50 19.00 96.59 1.85 262.24 34.11 7.64 17.19 0.73 58.21 204.03 114.39
Intangibles
a) Internally generated
- Patents/product development 258.69 58.26 1.40 (4) 315.55 56.44 49.85 106.29 209.26 202.25
b) Acquired Patents 22.10 2.24 24.34 0.02 0.02 24.32 22.10
c) Other
- Rights 44.36 2.40 46.76 25.38 9.35 34.73 12.03 18.98
Goodwill on Consolidation 741.39 1,907.12 2,648.51 2,648.51 741.39

111
TOTAL 9,443.15 2,151.19 2,470.32(5) 44.20 14,020.47 3,151.13 108.45 523.77 4.40 3,778.96 10,241.51 6,292.02

Previous Year 7,319.37 814.06 1,502.19 192.48 9,443.15 2,815.08 40.63 391.44 96.03 3,151.13

Capital Work in Progress, Capital Advances & Project Expenses Pending Capitalization 1,289.75 976.80
11,531.26 7,268.82

NOTES :
(1) Building includes Rs. 500 being cost of share in Co-operative Housing Society.
(2) Adjustment/Deduction in Plant & Machinery includes Rs. Nil (Previous year Rs. 10.14 Mn (Net)) being adjustment on account of write off due to impairment of Assets (in accordance with AS-28), which has been adjusted
to General Reserve.
(3) Capital Work in Progress includes Rs. 195.21 million (Previous year Rs. 36.75 million) being expenses incurred on Product Development (intangibles) pursuant to AS-26, in respect of the Holding Company.
(4) Deduction denotes on account of Consolidation effect of Inter-Company transactions.

8/10/2006, 10:10 PM
(5) Includes Rs. 309.71 million in respect of R&D Assets, in respect of Holding Company.
(6) Capital Research & Development Expenditure aggregating to Rs. 291.95 million incurred during the year are including in Additions to Fixed Assets/Capital Work in Progress, in respect of Holding Company.

ANNUAL REPORT - 2005-2006

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 Schedules forming part of the Consolidated Balance Sheet

(Rs./million)

As at 31st March, 2006 2005

F. INVESTMENTS: (LONG TERM)

Number Face value Quoted (at cost)
per unit Non Trade Investments

37 EURO 1000 37 Bonds of KBC Equiplus Digi-Opport 2 Kap 2.10 2.10

(37)
KBC Share Option Plan (11 Options) 0.13 -

2.23 2.10
Aggregate market value of Quoted Investments 2.47 2.33

Notes:
(1) Figures in ( ) are in respect of previous year.
(2) During the year, the following current investments (Non-Trade) were purchased and sold:
i) 12,222,180 Units of HDFC Cash Management Fund-Saving Plan-at cost of Rs. 130.00 million.
ii) 82,000,000 Units of Standard Chartered Mutual Fund-GCCD Grindlays Cash Fund- at cost of Rs. 820.00 million.
iii) 16,000,000 Units of ABN Amro Cash Fund - Institutional Plus at cost of Rs. 160.00 million.

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 (Rs./million)

As at 31st March, 2006 2005

G. CURRENT ASSETS, LOANS AND ADVANCES

Current Assets
Inventories: (Including in Transit & with Third Parties)
(at lower of cost or net realisable value)
- Raw Materials 1,466.45 583.12
- Stores, Spares, Process Chemicals, Catalyst, Fuels & Packing Material 485.55 403.59
- Overseas Traded Goods - 1.36
- Process Stocks 349.57 272.19
- Finished Goods (including Trading Goods) 815.32 677.20
3,116.89 1,937.46
Sundry Debtors
Unsecured
- Over Six Months - Good 286.38 137.83
(Includes Subsidy receivable from State Government
Rs. 24.11 million (Previous Year Rs. 18.34 million)
- Doubtful 2.13 1.16
- Other Debts - Good 2,192.80 1,627.46
(Includes Subsidy receivable from State Government 2,481.31 1,766.45
Rs. 26.25 million (Previous Year Rs. 19.50 million)
Less: Provision for Doubtful Debts 2.13 1.16
2,479.18 1,765.29
Cash & Bank Balances
- Cash in hand and as Imprest 6.30 4.46
- Cheques/Drafts in hand 26.06 0.89
- With Scheduled Banks
- On Current Accounts 86.98 135.25
- On Dividend Account 6.26 5.30
- On Deposit Accounts (1) 118.20 25.46
- With Non Scheduled Banks (2) 1,145.77 204.38
1,389.57 375.74
Loans and Advances
(Unsecured, Considered good)
- Advances recoverable in cash or in kind or 784.24 531.24
for value to be received (3)
- Unbilled Revenues 41.99 0.15
- Deposits 130.99 91.84
- Deposits with Excise / Sales Tax Authorities (4) 430.00 269.03
- Advance Payment of Income Tax/Wealth Tax (including TDS) 576.24 327.63
1,963.46 1,219.89
8,949.10 5,298.38

(1) Includes: a) Margin Money - Rs. 1.12 million (Previous Year Rs. 1.33 million) b) Rs. Nil (Previous Year Rs. 1.44 million) being
unutilized money raised from the issue of Foreign Currency Convertible Bonds.
(2) Includes, Account with Bank of China, Rs. 37.73 million (Previous year Rs. 17.63 million), Bank of Shanghai, Rs. 0.05 million
(Previous year Rs. Nil), Chase operating A/c USA Rs. 0.35 million (Previous year Rs. 8.25 million), J P Money Market A/c USA
Rs. 0.20 million (Previous year Rs. 0.19 million), ICICI UK Ltd Rs. 8.29 million (Previous Year Rs. 0.12 million), ING Brussels
Rs. 28.59 million (Previous Year Rs. 178.19 million), SBI New York Rs. 913.82 million (Previous Year Rs. Nil), PNC Bank New
York Rs. 39.46 million (Previous year Rs. Nil), BBT&T Salisbury, Rs. 101.00 million (Previous Year Rs. Nil) & ICICI Singapore
Rs. 16.28 million (Previous year Rs. Nil)
(3) Includes Rs. 186.96 million (Previous Year Rs. 250.89 million) Export Benefits receivables
(4) Deposit against disputed demands -Rs. 86.88 million (Previous Year Rs. 110.58 million)

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 Schedules forming part of the Consolidated Balance Sheet

(Rs./million)

As at 31st March, 2006 2005

H. CURRENT LIABILITIES AND PROVISIONS

A) Current Liabilities
Sundry Creditors and Expenses Payable (1) 2,268.85 2,006.54
Trade Deposits & Advances (2) 203.00 105.73
Interest Accrued but not due 32.46 24.55
Other Liabilities (3) 173.38 72.20
Investors Education and Protection Fund shall be credited
with the following amount namely:
- Unclaimed/unpaid Dividends 6.26 5.30
- Unclaimed Fixed Deposits 7.72 7.68
- Interest on Unclaimed Matured Fixed Deposits 0.98 0.82
2,692.65 2,222.82
B) Provisions
For Dividends on Equity Shares 203.03 184.67
For Income Tax & Wealth Tax 590.92 411.71
For Retirement/Post retirement Employee Benefits 131.96 99.73
For Others(4) 225.77 33.91
1151.68 730.02
Total (A+B) 3,844.33 2,952.84

(1) Includes Rs. 463.71 million (Previous Year Rs. 600.23 million) being Acceptances.
(2) Includes Rs. 87.94 million towards unearned income in respect of Clinsys Inc. USA .
(3) Includes Rs. 66.31 million towards purchase consideration payable to IPG from whom Clinsys Inc. USA was acquired.
(4) Includes pro-rata provision of premium on redemption of FCCB -Rs.203.63 million (Previous Year Rs.33.57 million)

(Rs./million)

As at 31st March, 2006 2005

I. MISCELLANEOUS EXPENDITURE
(to the extent not written off or adjusted)
Payments under Voluntary Retirement Scheme 32.20 55.58
32.20 55.58

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 Schedules forming part of the Consolidated Profit and Loss A
Profit ccount
Account
(Rs./million)

For the year ended 31st March, 2006 2005

J. SALES & SERVICES

Sales 15,334.91 12,276.50
Licensing & Regulatory Fees 125.28 315.29
Drug Discovery Development Services 701.66 111.34
Manufacturing Services (Refer Note 14 of Schedule “O” ) 81.00 (1) 33.83
16,242.85 12,736.96
(1) Includes Rs.52.18 million (Previous Year Rs.15.76 million)
being value of captively produced ENA used for the said services

K. OTHER INCOME
Income from Current Investments (Non-Trade) - Dividend 2.34 3.19
Insurance / Other Claims (Net) 39.33 1.43
Profit on Sale of Current Investments (Non-Trade) - 0.05
Profit on Sale of Fixed Assets (Net) (2) 10.53 -
Exceptional Item (Refer Note 6 of Schedule “O”) - 88.74
Miscellaneous Receipts (1) 144.74 73.00
(Includes Sale of unserviceable spares, used drums, residual catalyst, etc.) 196.94 166.41

(1) Includes: a) Income from Utilities provided Rs. 13.96 million (Previous Year Rs. 0.53 million)
(Tax Deducted at source Rs. 0.85 million - Previous Year Rs. 0.09 million)
b) Processing Charges of Rs. Nil (Previous year Rs. 0.52 million)
(Tax Deducted at source Rs. Nil -Previous Year Rs. 0.01 million)
c) Interest Income of Rs. 47.02 million (Previous Year Rs. 2.96 million)
d) Bad Debts recovered/recoverable Rs. 6.18 million (Previous Year Rs. 5.62 million)
(2) In respect of disposal of land - Rs. 10.99 million

(Rs./million)

For the year ended 31st March, 2006 2005

L. INCREASE/(DECREASE) IN STOCKS
Stock at close - Process 349.57 272.19
Stock at close - Finished 815.32 677.20
1,164.89 949.39
Stock Adjustment; Pursuant to consolidation of Jubilant Pharmaceuticals Inc., USA 5.40 -
(Subsidiary of Jubilant Pharma Pte. Ltd., Singapore)
Stock at commencement - Process 272.19 172.94
Stock at commencement - Finished 677.20 387.73
954.79 560.67
Increase/(Decrease) in Stocks 210.10 388.72
Less: Increase/Decrease of Finished & Process Stock of IMFL Business
(Refer Note 14 of Schedule “O”) (16.01) (0.91)
194.09 387.81

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 Schedules forming part of the Consolidated Profit and Loss A
Profit ccount
Account
(Rs./million)
For the year ended 31st March, 2006 2005

M. MANUFACTURING AND OTHER EXPENSES

Purchases - Traded Goods 451.19 257.36

Raw & Process Materials Consumed 7,141.62 5,701.21
Power and Fuel 1,162.39 1,022.46
Excise Duty -Net (3) 10.38 25.23
Stores, Spares, Chemicals, Catalyst & Packing Materials consumed 760.16 606.97
Processing Charges 157.04 134.42
Repairs - Plant & Machinery 236.05 197.69
- Buildings 31.17 14.61
Salaries, Wages, Bonus, Gratuity & Allowances 1,225.36 671.78
Contribution to Provident & Superannuation Fund 59.62 74.02
Staff Welfare Expenses 74.49 61.11
Rent (Net of recoveries) 60.87 39.10
Rates & Taxes 37.13 71.44
Insurance [Net of recoveries -Rs. 8.87 million (PY -Rs. 8.19 million)] 67.28 44.47
Advertisement, Publicity & Sales Promotion 56.86 51.64
Traveling & Other Incidental Expenses 136.15 119.08
Offices Maintenance (including water, electricity & repairs to office equipments) 86.34 53.98
Vehicle Maintenance (Including vehicle taxes, insurance & driver cost) 26.33 25.95
Printing & Stationery 24.86 16.33
Communication Expenses 56.03 45.85
Staff Recruitment & Training 52.13 34.98
Donation(4) 0.17 1.26
Auditors Remuneration (5) - As Auditors 1.65 1.72
- for Taxation Matters 0.29 0.31
- for Certification/Advices/Other Matters 1.52 0.84
- Out of Pocket Expenses 0.11 0.10
Legal, Professional & Consultancy Charges 129.48 85.19
Freight & Forwarding (including Ocean freight) 396.13 250.83
Amortisation/write off -(VRS Expenses) 23.51 13.42
Directors’ Sitting Fees 0.78 0.71
Directors’ Commission 34.00 28.60
Miscellaneous Expenses 22.16 24.63
Financial Charges (incl. Bank Charges, Fixed Deposit expenses & Foreign Exchange 126.39 (38.90)
fluctuations net loss of Rs. 82.13 million (PY net gain of Rs. 120.05 million) (6)
Discounts & Claims to Customer (Net) and Other Selling Expenses 323.42 240.78
Commission on Sales 87.27 91.81
Lease Rentals & Hire Purchase charges 10.03 21.15
Loss on sale/disposal/discard of Fixed Assets - 7.95
Loss on sale of Raw Materials 1.29 0.80
Bad Debts/irrecoverable Advances written off /provided for (Net of write in) 5.48 12.99
13,077.13 10,013.87

(1) The above expenses are Netted off, after taking into account credit of Rs. 1.22 million (Previous Year Rs. 10.92 million).
(2) The above total expenditure includes:
a) Expenditure incurred on R&D of Rs. 101.78 million (Previous Year Rs. 119.68 million) under various heads of accounts
b) Prior period adjustments determined during the years are adjusted to respective heads of account of Rs. 3.40 million (Previous
Year of Rs. 3.69 million)
(3) Excise duty expense denotes provision on closing stock and other claims of the Deptt.
(4) Includes Rs. Nil (Previous Year Rs. 1.19 million) as contribution to Prime Minister’s National Relief Fund.
(5) Excluding Rs. 0.79 million (Previous Year Rs. 0.97 million), being payment for Certification/Audit of FCCB Documents.
(6) Total foreign exchange gain of Rs. 15.66 million (Previous Year Rs. 123.32 million) is adjusted against total foreign exchange
losses of Rs. 97.79 million (Previous Year Rs. 3.27 million) as disclosed above. Financial charges includes Rs. Nil (Previous Year-
Rs. 24.15 million) being one time charges paid for restructuring of long term loans.

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 Research & Development Expenses Comprises as mentioned here under: (Rs./million)

For the year ended 31st March, 2006 2005

M-1. RESEARCH & DEVELOPMENT EXPENSES**

Material Consumption 54.33 35.34
Employee Cost 115.94 94.64
Utilities- Power 13.52 7.82
Others 77.71 66.55
261.50 204.35
Less: Transferred to Intangibles/Capital Work in Progress (159.72) (84.67)
Balance, charged to Revenue 101.78 119.68

** In respect of Jubilant Organosys Ltd., the Holding Company.

N. INTEREST
On Debentures - 0.12
On Term Loans 99.26 148.96
On Deposits 7.52 16.71
On FCCB 9.38 23.05
On Overdrafts & other Borrowings (1) 64.78 45.33
180.94 234.17
Less: Interest Income [Tax deducted at source 8.28 13.81
Rs. 0.34 million (Previous Year Rs. 1.66 million)] 172.66 (2) 220.36 (2)

(1) Includes Rs. 19.47 million (Previous Year Rs. 8.99 million) as Discounting Charges on Commercial Papers.
(2) Net of Interest Capitalization

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 Notes to the Consolidated Accounts
Accounts

O. NOTES TO THE CONSOLIDATED ACCOUNTS & SIGNIFICANT ACCOUNTING POLICIES

Notes to the Consolidated Balance Sheet as at 31st March, 2006 and Consolidated Profit and Loss Account for the year ended
on that date.
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES:
A. Basis of Accounting/Preparation
The consolidated financial statements (CFS) relate to Jubilant Organosys Ltd. (hereinafter referred to as the “Company “) and its
Subsidiaries (hereinafter referred as the “Group”).
The accounts of the Group (except for revaluation of certain fixed assets) are prepared under historical cost convention and in
accordance with the relevant applicable Accounting Standards using accrual basis of accounting.
B. Principles of Consolidation
The consolidated financial statements have been prepared on the following basis:
i. The financial statements of the Company and its Subsidiary Companies have been combined substantially on a line-by-line
basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-
group balances and intra-group transactions.
ii. The Consolidated Financial Statements have been prepared in accordance with the Accounting Standard 21 (AS-21),
“Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India (ICAI) and using uniform
accounting policies for like transactions and other events in similar circumstances and are presented to the extent possible, in
the same manner as the Company’s separate financial statements.
The Subsidiary Companies considered in the Consolidated Financial Statements are:

Name of the Company Place of Nature of % voting power as on

incorporation Business 31st March 2006
Jubilant Pharma N.V. Belgium Investment 100%
(Consolidated including its Step-down
Subsidiaries with 80 % holding)
-Pharmaceutical Services Belgium Licensing & Regulatory
Incorporated N.V Services
-PSI Supply N.V Belgium Supply of Dosage Forms
Jubilant Pharma Pte. Ltd. Singapore Investment 100%
(Consolidated including its Step-down (Subsidiary with effect from 1st July, 2005)
Subsidiary with 66.61% holding)
-Trigen Laboratories Inc. USA Investment
(Including its wholly owned
Step-down Subsidiary)
-Jubilant Pharmaceuticals Inc. USA Generic-Pharmaceuticals
& Dosage Forms
Clinsys Holding Inc. USA Investment 100%
(Consolidated including its wholly (Subsidiary with effect from 4th October, 2005)
owned Step-down Subsidiary)
-Clinsys Inc. USA Clinical Research
Jubilant Organosys China Trading 100%
(Shanghai) Ltd
Jubilant Organosys USA Trading 100%
(USA) Inc.
Jubilant Biosys Ltd. India Drug Discovery & Development Services 66.98%
Jubilant Chemsys Ltd India Medicinal Chemistry Services 100%
Jubilant Clinsys Ltd. India Clinical Research 100%

iii. For the purpose of consolidation of accounts of foreign subsidiaries, average rate of currencies have been taken for revenue
items and the year-end rates have been applied for Balance Sheet items, (except for fixed assets) which is taken on basis of
original rates of transaction.
iv. The net exchange difference for the translation of items in the financial statement of foreign subsidiaries is taken to Exchange
Fluctuation Reserve, except to that extent adjusted to carrying amount of fixed assets, if any.
v. The excess of cost to the Company of its investments in the subsidiary company over its share of the equity of the subsidiary
company, at the dates on which the investments in the subsidiary company was made, is recognized as ‘goodwill’ being an
asset in the consolidated financial statement.

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 vi. Minority Interest in the net assets of consolidated subsidiaries consist of the amount of equity attributable to the minority
shareholders at the dates on which investments are made by the Company in the subsidiary companies and further movements
in their share in the equity, subsequent to the dates of investments as stated above.
vii. Goodwill in the Balance sheet represents goodwill arising on consolidation of Jubilant Biosys Ltd, India, Jubilant Pharma N.V,
Belgium, Clinsys Holdings, USA and Jubilant Pharma Pte Ltd, Singapore. Such Goodwill have been tested for impairment
using the cash flow projections of the said entities, based on the most recent financial budgets/forecasts approved by the
management and accordingly, no amortization was made during the Year.
C. a. Fixed Assets & Depreciation
i. Fixed Assets are recorded at cost inclusive of such expenses as referred to in (viii) hereunder and/or at the revalued value
as ascertained by approved valuers and at book value in case of assets acquired at the time of amalgamation of certain
entities with the Company and at such fair value as ascertained by the valuer in case of acquisition of manufacturing
facilities as a going concern and the cost incidental to and /or attributable to such acquisition.
ii. Depreciation is provided on Straight Line Method except in case of Plant & Machinery at Nira & Savli plants which is on
Written Down Value Method in terms of rates mentioned and in the manner specified in Schedule XIV to the Companies
Act, 1956 (as amended), on the original cost/ acquisition cost of assets and read with the statement as mentioned in iii,
v, vi, vii & viii hereunder are on the revalued portion of the assets at the rates suggested by the valuers and/or at such rate
arrived at with reference to residual life. Certain plants were classified as continuous process plants from the financial
year ended 31-03-2000 and such classification has been done on technical assessment, (relied upon by the auditor
being a technical matter) and depreciation on such assets has been provided accordingly.
iii. Depreciation, in respect of assets added/installed upto 15th December, 1993, is provided at the rates applicable at the
time of additions/installations of the assets as per Schedule XIV to the Companies Act, 1956 and depreciation, in respect
of assets added/installed during the subsequent period, is provided at the rates, mentioned in Schedule XIV to the
Companies Act, 1956 read with Notification dated 16th December, 1993 issued by Department of Company Affairs,
Government of India.
iv. Intangibles Assets consisting of Patents/Rights/ New Product Development (acquired/self generated) are capitalized and
are amortized over a period of 5 years.
v. Freehold Land, Buildings and Plant and Machinery of the Company was last revalued in the year 1991-92 on the basis
of report obtained from an Approved Valuer and Rs. 245.65 million was added to the Gross Block of such assets and
accordingly depreciation has been provided on the revalued figures. The first revaluation of said assets was done during
the year 1987-88. A sum of Rs. 9.07 million (Previous Year Rs. 9.15 million) has been transferred from Revaluation
Reserve to Profit and Loss Account, and balance of Rs.18.80 million which represents the difference between the
depreciation on the revalued value and the original cost of the assets and the nominal value remaining in the Revaluation
Reserve and revalued portion of cost of assets so revalued, has been netted off.
vi. Depreciation on assets added/disposed off during the year has been provided on pro-rata basis with reference to the
month of addition/disposal.
vii. Insurance spares / standby equipments are capitalised as part of the mother assets and are depreciated at the applicable
rates, over the remaining useful life of the mother assets.
viii. Interest (including exchange difference considered as cost of borrowings in terms of Accounting Standard Interpretation
ASI-10 issued by ICAI) on loans & other financial charges and preoperative expenses including Trial Run Expenses (Net)
for projects and/or substantial expansion upto the date of commencement of commercial production/ stabilization of the
project are capitalized.
ix. Certain employee perquisite – related assets are depreciated over five years, being the period of the perquisite scheme.
x. Depreciation in respect of assets of overseas subsidiaries is provided over the estimated useful life by using the Straight
Line Method (SLM).
However, the said of rate of Depreciation in respect of overseas subsidiaries are higher than the rates prescribed vide
Schedule XIV to the Companies Act, 1956.
b. Leased Assets: Amortization/charging off
i. Leasehold Land value is not amortized in view of the long tenure of the un-expired lease period/option of conversion to
freehold at the expiry of lease tenure.
ii. Other lease assets: Assets, if any, acquired under finance lease, from 1st April 2001 are capitalized at the lower of their
fair value and the present value of the minimum lease payment in line with the Accounting Standard 19 (AS-19)-
“Leases”, issued by the ICAI. In respect of other leases, lease rentals are charged to Profit and Loss Account.
D. Valuation of Inventories
Inventories are valued at lower of cost or net realizable value except scrap, which is at net estimated realizable value.
Cost include all direct costs, cost of conversion and appropriate portion of overheads and such other costs incurred as to bring the

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 Notes to the Consolidated Accounts
Accounts

inventory to its present location and condition inclusive of excise duty wherever applicable. Cost formula used is based upon
weighted average cost except for one of its subsidiary where FIFO method is used.
E. Taxation
Current Tax provision is made, taking into consideration the various benefits/concessions to which the Company is entitled to as
well as the normal tax provisions and the contentions of the Company and also the fact that certain expenditure becoming
allowable on payment being made before filing of the return of income.
In accordance with Accounting Standard 22 (AS-22) – “Accounting for Taxes on Income”, issued by the ICAI, the deferred tax for
timing differences between the book and tax profits for the year is accounted for using the tax rates and laws that have been
enacted or substantively enacted as of the Balance Sheet date.
Deferred Tax assets (reviewed at each Balance Sheet date) arising from timing differences are recognized to the extent there is
virtual certainty, as the case may be, that such assets are capable of being realized in future.
F. Conversion or translation of Foreign Currency items
Transactions in foreign currency are recorded at the exchange rate prevailing on/or closely approximating to the date of transactions.
Current Assets and Liabilities (other than relating to Fixed Assets) are restated at the rate prevailing at the period end or at the
forward rate where forward cover for specific asset/liability has been taken. The difference between the period end rate and the
exchange rate at the date of the transaction is recognized as income or expense in the Profit and Loss Account, except where such
difference is considered as part of cost of borrowing in terms of Accounting Standard Interpretation ASI-10 issued by ICAI. In
respect of forward exchange contracts, the difference between the contract rate and the rate on the date of transaction is recognized
as income or expense in the Profit and Loss Account over the life of the contract.
In the case of liabilities incurred for the acquisition of imported fixed assets, the loss or gain on conversion (at the rate prevailing
at the period end or at the forward rate where forward covers are taken) is included in the carrying amount of the related fixed
assets.
Interest Swaps (in foreign currencies) outstanding at the year-end are marked to market and the resultant gain /loss is recognized
as such.
G. Provisions, Contingent Liability and Contingent Assets
Provisions are recognized for liability if the Company has present obligation at the date of accounts as a result of past event and
there is probability of outflow of economic resources and the amount is capable of being estimated reliably. Contingent Liability is
disclosed when the said conditions are not met. Contingent Assets are not recognized/disclosed. Provisions, Contingent Liabilities
and Contingent Assets are reviewed at each Balance Sheet date. Based on the said policy, service warranty cost in respect of post
software development and implementation phase are accrued at the year-end on the basis of management estimates of the efforts
required on the respective projects as per the terms of the agreements.
H. Research & Development
Revenue expenditure on Research & Development is included under the natural heads of expenditure. Capital expenditure on
Research & Development are treated in the same manner as expenditure on other Fixed Assets, except for development cost which
relate to the design and testing of new or improved materials, products or processes which are recognized as intangible assets to
the extent that it is expected that such assets will generate future economic benefit.
In respect of subsidiaries, Pharmaceuticals Services Incorporated N.V. and PSI Supply N.V., cost of licenses, including incidental
expenses, are capitalized and amortized over a period of five years from the date of registration. Expenses during the period of
development of Dosage Forms, till the final development are capitalized and are amortized over a period of five years. However,
research expenses in respect of Dosage Forms are charged to revenue.
I. Retirement Benefits
• Provision for gratuity and leave encashment are made on the basis of actuarial valuation except in case of foreign subsidiaries
where it is provided on actual basis and charged to the Profit & Loss Account.
• Contributions to Superannuation Fund are given to LIC, (which administers the fund) and are charged to Profit & Loss Account.
However in respect of overseas companies, contributions made towards retirement /employee benefits, in accordance with the
relevant applicable local laws, are charged to Profit and Loss Account.
• Employer’s contribution to Employees Provident Fund is charged to Profit & Loss Account.
J. Borrowing Cost
Borrowing costs attributable to acquisition and construction of qualifying assets are capitalized as a part of the cost of such assets
upto the date as mentioned in Note No. C (a) viii above. Other borrowing costs are charged as expenses in the year in which they
arise.
K. Revenue Recognition
(i) Revenue from Sales is recognized on dispatch of material and point when risk and reward are transferred to the customers.
Sales include excise duty, export incentives and subsidies but exclude Inter Divisional Transfers and Sales Tax. In order to

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 comply with the Accounting Standard Interpretation ASI 14 issued by ICAI, Sales (including excise duty) and Net Sales
(excluding excise duty) is disclosed in Profit & Loss Account.
Export incentives/ benefits are accounted for on accrual basis and as per the principles given under AS-9 (Revenue Recognition).
(ii) For Jubilant Biosys Ltd:
(a) In respect of sales of products, revenue is recognized on delivery/acceptance of products to/by the customers, as the case
may be, and
(b) In respect of projects taken up as per the specification of the customers, revenue is recognized on proportionate completion
method, and
(c) In respect of on site services rendered, revenue is recognized on the basis of billable man-days actually spent.
(iii) For Pharmaceuticals Services Incorporated N.V. and PSI Supply N.V.: Revenue for licensing and regulatory services is recognized
on the basis of milestones achieved as determined in the respective contracts with the clients.
(iv) For Jubilant Chemsys Ltd.
(a) In respect of projects taken up as per the specification of the customers, revenue is recognized on Proportionate Service
Contract method, and
(b) In respect of FTE Contracts, revenue is recognized on the basis of billable man-days actually spent.
(v) For Jubilant Clinsys Ltd., revenue of fixed price contracts, are recognized, based on percentage of completion method (on the
technical estimates made by the management), and in case of service performed on time basis, revenues are recognized as
services are rendered in accordance with terms of the contracts
(vi) For Clinsys Inc., USA, revenue from fixed-price contracts is recorded on a Proportional Performance basis. Revenue from time
and material contracts are recognized as hours are incurred, multiplied by contractual billing rates. Revenue from unit-based
contracts is generally recognized as units are completed.
(vii) For Jubilant Pharmaceuticals Inc., USA, sales is recognized upon delivery of products and point when risk and rewards are
transferred to the customers.
L. Miscellaneous Expenditure/Amortisation
Miscellaneous expenditure consists of expenditure in respect of compensation payable as per the terms of Voluntary Retirement
Scheme of the Company and the same are amortised over a period of thirty six months commencing from the month in which
payment/liability arise.
FCCB and share issue expenses/Premium on FCCB are adjusted against Share Premium account.
M. Segment Accounting
The accounting policies adopted for segment reporting are in line with accounting policies of the Company. Revenue, expenses,
assets and liabilities have been identified to segments on the basis of their relationship to operating activities of the segments
(taking into account the nature of products and services and risks and rewards associated with them) and internal management
information systems, and the same is reviewed from time to time to realign the same to conform to the Business Units of the
Company. Revenue, expense, assets and liabilities, which are common to the enterprise as a whole and are not allocable to
segments on a reasonable basis, have been treated as “Common Revenue/Expense/Assets/Liabilities”, as the case may be.
N. Impairment of Fixed Assets
The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such
indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the
recoverable amount of the cash-generating unit to which the assets belongs is less than the carrying amount, the carrying amount
is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Profit and Loss
Account. If at the Balance Sheet date, there is an indication that previously assessed impairment loss no longer exists, the
recoverable amount is reassessed and the asset is reflected at the recoverable amount.
O. Employee Stock Option Schemes
In accordance with the Securities and Exchange Board of India Guidelines, the stock options granted pursuant to the Company’s
Stock Option Scheme, the intrinsic value of the options being the excess of the market price, if any, of shares over the exercise price
of the option, at the date of grant of options, is treated as discount and accounted as employee compensation cost and amortized
on a straight-line basis over the vesting period. The un-amortized portion, if any, is carried forward as deferred employee compensation.
P. Investments
Long Term quoted investments (non-trade) if any, are valued at cost unless there is a permanent fall in their value as at the date of
Balance Sheet.
2. Commitments
a) Estimated amount of Contracts remaining to be executed on Capital Account (Net of Advances) Rs. 454.07 million (Previous
Year Rs. 543.62 million) [Advances Rs. 75.65 million (Previous Year Rs. 84.77 million)].
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 Notes to the Consolidated Accounts
Accounts

b) The Company is to invest US$ 6 million in its wholly owned subsidiary Jubilant Pharma Pte. Limited by December 2006 to
increase its stake in Trigen Laboratories, Inc. to 75%.
c) As per the terms of Share Purchase Agreement, the Company has a Call Option and the minority shareholder has a put option
on the balance 20% equity interest in Pharmaceutical Services Incorporated N.V. and PSI Supply N.V. The options are
exercisable at the expiry of period of six years form May 28, 2004.
3. Contingent Liabilities
a) Claims/Demands/Disputes against which appeals are pending and not acknowledged as debts on account of:

(Rs./million)
2005-06 2004-05
Central Excise 17.70 * 16.73 *
Customs 5.16 -
Sales Tax 13.14 10.20
Income Tax 67.90 -
Service Tax 0.35 1.59
Others 6.83 2.53

*Amount deposited Rs. 16.73 million

The Company has been advised that its contentions in the matter of disputed demands are legally tenable and hence the possibility
of these maturing is remote.
b) The Company has challenged the levy of transport fee by State of Maharashtra on consumption of rectified spirit and molasses
in the Nira factory. The order of State imposing the levy was stayed by the Hon’ble Mumbai High Court on 22nd October, 2001.
The Company has been advised that the levy of transport fee on rectified spirit and molasses by State is not tenable. However,
the Company has deposited Rs. 6.28 million under protest out of the total transport fee of Rs. 81.64 million.
c) Outstanding guarantees furnished by Banks on behalf of the Company/by the Company including in respect of Letters of
Credits/Bonds/loss make up guarantee is Rs. 539.90 million (Previous Year Rs. 1020.40 million).
d) The Company has given a guarantee to Cooperatieve Centrale Raiffeisen-Boerenleen Bank B.A –Singapore Branch (Rabo
Bank, Nederland) the Lender for providing a loan of US$ 20 million to Clinsys Holdings Inc. a subsidiary of the Company for
the acquisition of Clinsys Inc. (formerly Target Research Associates Inc.).The guarantee shall cover the principal amount along
with interest & other obligations under the agreement between the said Clinsys Holding Inc. and the said lender, Cooperative
Centrale Raiffeisen-Boerenleen Bank B.A Singapore Branch (Rabo Bank, Nederland)
e) Exports obligation undertaken by the Company under EPCG scheme to be completed over a period of five/eight years on
account of import of Capital Goods at concessional import duty remaining outstanding is Rs. 224.79 million (Previous year
Rs. 652.51 million). Similarly Export obligation under Advance License Scheme on duty free import of specific raw materials,
remaining outstanding is Rs. 862.71 million (Previous year Rs. 611.59 million)
f) The Company has challenged the increase in denaturing fee by the State of Uttar Pradesh w.e.f 1st April 2004 on denaturing
of rectified spirit in the Gajraula factory before the Hon’ble Allahabad High Court and the writ petition has been admitted by
the court. The Company has deposited Rs. 7.63 million under protest which is shown as deposits.
g) Zila Panchayat at J.P. Nagar (in respect of the Company’s Gajraula plant) served a notice demanding a compensation of
Rs. 277.40 million allegedly for creating lagoons on their lands, percolation of poisonous water stored in lagoons resulting in
loss of crops and cattle of the farmers and for putting poisonous fly ash on national highway which caused loss to the health
and damages to eyes and skin of people.
District Magistrate issued a recovery certificate along with 10% collection charges inflating the demand to Rs.305.14 million.
In the opinion of the Company, the Zila Panchayat has no justification in raising this demand. The demand was challenged in
Hon’ble Allahabad High Court and the court stayed the demand till further orders.
4. The Hon’ble Supreme Court has quashed the levy of licence fee by State of Uttar Pradesh on captive consumption of denatured
spirit in the Gajraula factory. While passing the judgment, the Hon’ble Court inadvertently recorded that license fee has not been
collected by the State Govt. This has been sought to be corrected by moving rectification application. Consequent to that the
Company is entitled to a refund of Rs. 84.06 million.
5. The Company has challenged the levy of license fees of Rs. 2.87 million by State of UP, for grant of PD-2 license for manufacture
of Ethyl Alcohol for industrial use, before the Hon’ble Allahabad High Court. The writ petition has been admitted and is being listed
for final hearing. Though the amount has been deposited and shown as such. However no provision against this has been made as
the issue is covered by the earlier judgment of the Hon’ble Supreme Court of India.
6. Other Income of the previous year includes exceptional item of Rs. 88.74 million being the difference between the amount of
deferred sale tax loans and the amount of payment made (being the Net Present Value of such Deferred Sales Tax Loan) before the
completion of deferred period, pursuant to notification issued by the Government of Maharastra consequent to the scheme of pre
payment.

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 7. Sundry Debtors as shown in Schedule “G” is net after giving the effect of sale of receivables amounting to Rs. 108.02 million
(Previous year – Rs. Nil).
8. Dividend on equity shares includes Rs. 5.72 million (inclusive of Dividend Tax) in respect of Shares allotted between 31st March,
2005 to the record date for dividend.
9. A. Foreign Currency Convertible Bonds (FCCB)
a) 1.5% FCCB -US$35 million (FCCB 2009)
The Company had issued 1.5% Foreign Currency Convertible Bonds due 2009 (FCCB 2009) aggregating US$ 35
million, in the year 2004-05. The Bonds are convertible at any time between June 14, 2004 and April 15, 2009 by
holders into fully paid equity shares of Rs. 5 each of the Company or Global Depositary Shares (“GDSs”) each represent-
ing one Equity Share at an initial conversion price of Rs. 818.23 per share with a fixed rate of exchange on conversion of
Rs. 44.805 = U.S.$1. The conversion price is subject to adjustment in certain circumstances. The Bonds may also be
redeemed, in whole but not in part, at the option of the Company at any time on or after May 14, 2007 and prior to May
8, 2009, subject to satisfaction of certain conditions. Unless previously converted, redeemed or purchased and can-
celled, these bonds will be redeemed on May 15, 2009 at 113.70% of their principal amount. The FCCBs are listed on
Singapore Stock Exchange. The GDSs arising out of conversion of FCCBs are listed on Luxembourg Stock Exchange. Out
of these FCCB 2009, US$ 29.45 million were converted up to 31st March 2006 into equity shares and this represents
8,063,115 shares of Re.1 each as on 31st March, 2006. The balance bonds of US$ 5.55 million net of exchange
difference, outstanding as of March 31, 2006 are included under ‘Unsecured Loans’.
Upon sub-division of each equity share of Rs. 5 into 5 equity shares of Re. 1 each, the conversion price for FCCB 2009
stands reduced from Rs. 818.23 to Rs. 163.646 per share and the number of shares to be allotted on conversion will be
5 times the initially agreed number. The outstanding balance of FCCB 2009 - US$ 5.55 million, on conversion would
result in allotment of 1,519,546 equity shares of Re. 1 each.
The proceeds were utilised for funding new projects & expansion of existing units – Rs. 795.4 million (US$ 17.1 million),
investment in subsidiary companies for acquisitions abroad - Rs.722.0 million (US$ 16.7 million) and issue expenses –
Rs. 50.7 million (US$ 1.1 million).
b) FCCB – US$75 million (FCCB 2010)
During the year 2005-06, the Company issued Zero Coupon Foreign Currency Convertible Bonds due 2010 (FCCB
2010) for an aggregate value of US$75 million, convertible any time between July 3, 2005 to May 14, 2010 by holders
into fully paid equity shares of Re. 5 each of the Company or Global Depositary Shares (“GDSs”) each representing one
equity share at an initial conversion price of Rs. 1,365.324 per share with a fixed rate of exchange of Rs. 43.35 = US$1.
The conversion price is subject to adjustment in certain circumstances. The Bonds may also be redeemed, in whole but
not in part, at the option of the Company at any time on or after May 23, 2008, subject to satisfaction of certain
conditions. Unless previously converted, redeemed or purchased and cancelled, the Bonds will be redeemed on May 24,
2010 at 138.383% of their principal amount. The FCCBs are listed on Singapore Stock Exchange. The GDSs arising out
of conversion of FCCBs are listed on Luxembourg Stock Exchange. Upon sub-division of each equity share of Rs. 5 into
5 equity shares of Re. 1 each, the conversion price for FCCB 2010 stands reduced from Rs. 1,365.324 to Rs. 273.065
per share and the number of shares to be allotted on conversion will be 5 times the initially agreed number. Assuming full
conversion of these FCCB’s, 11,906,514 equity shares of Re 1 each would be allotted.
The proceeds of FCCB 2010 have been used for funding new projects & expansion of existing units – Rs. 1384.10 million
(US$ 32.2 million), investment in subsidiary companies for acquisitions abroad - Rs.929.38 million (US$21.5 million),
issue expenses – Rs.78.0 million (US$ 1.8 million) and Balance of Rs. 859.8 million (US$19.5 million) has been
temporarily deployed as Fixed Deposit with a bank pending utilization. There has been no conversion during the year in
respect of the above FCCBs.
B. Preferential Allotment of Privately Placed Equity Shares
During the year 2005-06, the Company allotted 990,000 fully paid up equity shares of Rs. 5 each, at a premium of
Rs. 1095 per share, (equivalent to 4,950,000 equity shares of Re. 1 each at a premium of Rs. 219 per share) aggregating
Rs. 1089.0 million on private placement basis to GA European Investments Limited, in accordance with SEBI Guidelines.
The proceeds have been used for Investment in Subsidiary Companies for acquisitions – Rs. 87.0 million and repayment of
debt – Rs. 1002.0 million.
10. Employee Stock Option Scheme
In terms of approval of shareholders accorded at the AGM held on 29th August, 2005 and in accordance with SEBI (ESOP & ESPS)
Guidelines, 1999, the Company instituted Jubilant Employees Stock Option Plan, 2005 (“Plan”) for specified categories of em-
ployees and directors of the Company and its subsidiaries. Under the Plan, upto 717,500 Stock Options can be issued to eligible
Directors (other than promoter directors) and other specified categories of employees of the Company/subsidiaries. The options are
to be granted at market price. As per SEBI Guidelines, the market price is taken as the closing price on the day preceding the date
of grant of options, on the stock exchange where the trading volume is the highest.
Each option, upon vesting, shall entitle the holder to subscribe to one equity share of Rs. 5 each. The vesting takes place on a
staggered basis over a period of 5 years from the date of grant.

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 Notes to the Consolidated Accounts
Accounts

The Company has constituted a Compensation Committee comprising of a majority of independent directors. This Committee is
empowered to administer the Scheme.
During the year, the following options were granted to eligible directors/employees:

Date of grant Number of Exercise Price Market Price

options granted (Rupees) (Rupees)
(As per SEBI Guidelines)
6th September, 2005 564,391 1,006.65 1,006.65 *
28th October, 2005 30,000 1,002.05 1,002.05 **

* Based on closing price on 5th September 2005 at NSE where higher turnover was recorded.
** Based on closing price on 27th October 2005 at BSE where higher turnover was recorded.
The movement in the stock options during the year ended March 31, 2006 is set out below:

Numbers
Options outstanding at the beginning of the year -
Granted during the year 594,391
Expired/forfeited during the year (32,913)
Exercised -
Options outstanding at the end of the year 561,478

As a result of sub-division of each Rs.5 equity share into 5 equity shares of Re.1 each, 2,807,390 equity shares of Re.1 each
would be allotted, assuming full exercise of these options.
11. A. Assets aggregating Rs. 49.00 million (Previous year – Rs. 49.00 million) have been acquired on financial lease during the
earlier years. The obligation for future lease rentals in respect of such assets aggregate to Rs. 1.49 million. (Previous year -
Rs. 12.10 million) payable within a period of 1 year.
B. The Company’s significant operating leasing arrangements are in respect of premises (residential, offices, godown etc.). These
leasing arrangements, which are cancelable, range between 11 months and 9 years generally and are usually renewable by
mutual agreeable terms. The aggregate lease rentals payable are charged as expenses.
12. Capitalization of Interest, Pre-operative and Trial Run expenses
In line with the applicable Accounting Standards, interest on funds utilized and preoperative expenses including trial run expenses
(net) for projects and/or substantial expansions have been capitalized up to the date of commercial production/stabilization of the
project, amounting to Rs. 269.50 million (Previous Year Rs. 93.45 million). All preoperative expenditure including interest and
foreign exchange fluctuation of Rs. 45.98 million totaling to Rs. 93.77 million (Previous Year Rs. 18.99 million) so capitalized and
Trial Run Expenses (net of trial run receipts) are accumulated as Capital work in progress and have been allocated to respective
Fixed Assets.
13. A. Deferred Assets and Liabilities are attributable to the following items:
(Rs./million)
st
As at 31 March, 2006 2005
Deferred Tax Assets
Provision for Leave Encashment and Gratuity 44.36 33.26
Amount disallowed u/s 43 B 1.68 0.84
Deduction allowed under section 35D 2.43 19.21
Payment under Voluntary Retirement scheme 1.85 -
Carry Forward Losses 10.79 -
Unabsorbed Depreciation 13.36 -
74.47 53.31
Deferred Tax Liabilities
Accelerated Depreciation 1,044.96 910.14
Payment under Voluntary Retirement Scheme - 1.03
Difference in value of CWIP/Intangibles 71.55 -
1,116.51 911.17
Deferred Tax Liabilities (Net) 1,042.04 857.86

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 B. The Company has made an application for the grant of approval by the Department of Scientific and Industrial Research for its
new in-house research and development center at D-12, Sector 59, Noida, earlier approval valid up-to 31.03.2005, for
claiming weighted deduction under section 35 (2AB) of the Income Tax Act 1961 and the tax computations have been made
accordingly.
C. A sum of Rs. 36.50 million recognized as income against the claim raised by the Company for breach of contract by the other
party, is treated as non-taxable, based on the legal opinion and upon which auditor has relied upon.
D. Deferred Tax provision is net after adjustment of Rs. 45.45 million consequent upon treating certain items of earlier years as
qualifying for treatment under the Deferred Tax Liability.
E. The profit attributable to the operations under the (EOU) Export Oriented Units Scheme are deductible from income up to 31st
March 2009, and accordingly income from EOU setup at Nanjangud, Mysore plant, has been considered as tax
deductible, and provision for current tax is made accordingly.
F. In respect of Jubilant Biosys Ltd., the subsidiary company, the said company does not anticipate any tax liability as it is
entitled to 100% tax deduction up to ten year and as such there remains no timing difference in respect of book depreciation
and income tax depreciation, hence, no Deferred Tax Liability/Asset was required to be recognized.
G. In respect of Jubilant Chemsys Ltd., the subsidiary company, the company does not anticipate any tax liability as it is entitled
to 100% tax exemption for three assessment years commencing from assessment year 2005-06. The Company has made
provision of MAT on its profits, which are otherwise not taxable by virtue of its recognition under section 80IB(8A) of The
Income Tax Act, 1961.
14. The bottling unit of the company situated at Nira holds a potable liquor license for Indian Made Foreign Liquor (IMFL) and the same
is bottling IMFL on the order of another company and is charging bottling fee.
The Accounts recognise Revenue and Expenditure, only to the extent the Company enjoys beneficial interest.
In Compliance with the requirements of Schedule VI to the Companies Act, 1956, the following information is given hereunder in
respect of the transactions where the Company does not enjoy beneficial interest.

(Rs./million)

For the year ended 31st March, 2006 2005

Sales 804.07 636.33

Excise Duty (528.62) (397.38)
Other Income 2.54 5.58
Increase/(Decrease) in Finished & Process Stocks 16.01 0.91
Raw & Process Materials Consumed (25.32) (49.81)
Stores, Spares, Chemicals, Catalyst & Packing Materials consumed (90.12) (73.90)
Insurance (Net of recoveries) (0.51) (0.45)
Other Expenses (0.41) (0.16)
Freight & Forwarding (including Ocean Freight) (5.84) (5.71)
Discounts & Claims to Customers & other Selling Expenses (89.30) (77.33)
Purchase of trading material (1.50) (4.25)

15. Disclosure required by Accounting Standard 29 (AS-29) ”Provisions, Contingent Liabilities and Contingent Assets”
Movement in Provisions: (Rs./million)

Class of Provisions
Sr. No. Particulars of disclosure Excise Duty Product Pro-rata premium Total
Warranties on redemption of FCCB.
1 Balance as at April 1, 2005 43.50 0.08 33.57 77.15
2 Additional provision during 2005-2006 50.20 5.47 191.65 247.32
3 Provision used during 2005-2006 43.50 - - 43.50
4 Provision reversed during 2005-2006 - 0.08 21.59 21.67
5 Balance as at March 31, 2006 50.20 5.47 203.63 259.30
Provision for excise duty represents the excise duty on finished goods.

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 Notes to the Consolidated Accounts
Accounts

16. Segment Reporting :

i) Based on the guiding principles given in Accounting Standard on “ Segment Reporting” ((AS-17) Issued by the Institute of
Chartered Accountants of India) the Company’s Primary Business Segments are organized around customers on industry and
product lines as under :
a. Pharmaceuticals & Life Science Chemicals : Active Pharmaceuticals Ingredients (APIs), Dosage forms, Regulatory Affairs,
Drug Discovery & Development Services, Chemistry Services, Clinical Research, Customs Research & Manufacturing
Services (CRAMS) and Food Polymers
b. Industrial Chemicals : Organic Intermediates, Agri and Animal Nutrition Products.
c. Performance Chemicals : Industrial products for tyres,textiles and coatings; Specialty Gases and Consumer Products
for woodworking solutions.
ii) Inter Segment Transfer Pricing
Inter segment transfer prices are based on market prices.
iii ) The Financial information about the primary business segments is presented in the table given below:
(Rs./million)
Particulars Pharmaceuticals Industrial Performance Total
& Life Science Chemicals Chemicals Chemicals
2006 2005 2006 2005 2006 2005 2006 2005
1) Revenue 7,082.51 5,020.02 6,960.88 5,995.85 2,267.52 1902.28 16,310.91 12,918.15
Less: Inter Segment Revenue 68.06 181.19 68.06 181.19
Less: Excise Duty on Sales 245.32 178.84 661.03 620.94 283.00 234.53 1,189.35 1,034.31
Net sales 6,837.19 4,841.18 6,231.79 5,193.72 1,984.52 1667.75 15,053.50 11,702.65
2) Segment results 1,261.01 1,110.85 631.09 830.06 122.15 24.71 2,014.25 1,965.62
Less : Interest (Net) 172.66 220.36
Other un-allocable expenditure 160.20 104.02
(net of un-allocable income)
Total Profit Before Tax 1,261.01 1,110.85 631.09 830.06 122.15 24.71 1,681.39 1,641.24
3) Capital Employed
(Segment Assets - Segment Liabilities)
Segment Assets 11,954.47 7,246.50 5,587.43 3,881.75 881.76 798.10 18,423.66 11,926.35
Add: Common Assets 2,091.13 698.53
Total Assets 11,954.47 7,246.50 5,587.43 3,881.75 881.76 798.10 20,514.79 12,624.88
Segment Liabilities 1,108.08 710.24 1,271.92 1,258.46 324.65 265.50 2,704.65 2,234.20
Add: Common Liabilities 1,139.68 718.64
Total Liabilities 1,108.08 710.24 1,271.92 1,258.46 324.65 265.50 3,844.33 2,952.84
Segment Capital Employed 10,846.39 6,536.26 4,315.51 2,623.29 557.11 532.60 15,719.01 9,692.15
Add: Common Capital Employed 951.45 (20.11)
Total Capital Employed 10,846.39 6,536.26 4,315.51 2,623.29 557.11 532.60 16,670.46 9,672.04
4) Segment Capital Expenditure 1,796.24 1,076.43 612.90 381.44 19.59 37.13 2,428.73 1,495.00
Add: Common Capital Expenditure 41.59 7.19
Total Capital Expenditure 1,796.24 1,076.43 612.90 381.44 19.59 37.13 2,470.32 1,502.19
5) Depreciation(Net) 310.64 191.61 170.45 155.17 23.55 25.92 504.64 372.70
Add: Common Depreciation 8.71 8.70
Total Depreciation 310.64 191.61 170.45 155.17 23.55 25.92 513.35 381.40

Notes : 1) The Company has disclosed Business Segment as the Primary segment
2) Segments have been identified and reported taking into account the nature of products and services, the differing
risk and returns, the organization structure and the internal financial reporting systems.
3) The Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the
segments and amounts allocated on a reasonable basis.
4) Total Capital Employed excludes Secured Loans, Unsecured Loans, Deferred Tax & Minority Interests.

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 iv) Secondary Segment Reporting: Geographical (Rs./million)

Particulars India Americas & Europe China Asia & Others Total
2006 2005 2006 2005 2006 2005 2006 2005 2006 2005
Revenues 10,359.47 8,716.50 3,774.84 3,052.40 1,415.30 624.40 761.30 524.85 16,310.91 12,918.15
Less: Inter
Segment Revenue 68.06 181.19 68.06 181.19
Less: Excise
Duty on Sales 1,189.35 1,034.31 1,189.35 1,034.31
Net sales 9,102.06 7,501.00 3,774.84 3,052.40 1,415.30 624.40 761.30 524.85 15,053.50 11,702.65

17 A. RELATED PARTY TRANSACTIONS

The Company has entered into transactions with the related parties:
a) Other related parties with whom transactions have taken place during the year
I. Associates
Jubilant Enpro Pvt. Ltd., Jubilant Oil & Gas Pvt. Ltd., Enpro Oil Pvt. Ltd., Domino Pizza India Ltd.

II. Others
Vam Employees Provident Fund Trust

b) I. Key Management Personnel

Mr. Shyam S. Bhartia, Mr. Hari S. Bhartia, Mr. S.N. Singh, Mr. Shyam Bang, Dr. J.M.Khanna, Mr R Sankaraiah,
Mr. Sridhar Mosur (2), Ms Lieve Vermassen (Remuneration in form of Service Fees), Mr. Christopher Worrell (2),
Mr. Llyood Baroody (2).

II. Relatives of Key Management Personnel

Ms Shobhana Bhartia, Ms Sudha Singh, Ms Shobha Bang, Mr. Ajay Kumar Singh, Ms Chitra Sankaraiah

c) Transactions with related parties during the period (Rs./million)

Particulars Associates Key Mgmt. Others
Personnel &
Relatives
Expenses recharged to other Companies for
facilities provided 15.18
(8.08)
Asset sold during the year 3.51
(-)
Asset purchased during the year 0.29
(-)
Company’s Contribution to PF Trust 63.61
(54.99)
Remuneration and related expenses 101.65
(66.98)
Fixed Deposits outstanding at the year end 0.76
(0.76)
Interest accrued on Fixed Deposits during the year 0.08
(0.42)
Rent paid 4.79
(1.62)
ESOS granted during the year (No. of Shares) 172625 Nos
(-)

(1) Figures in () indicates in respect of previous year.

(2) With effect from fiscal year 2006.
(3) Related party relationship is as identified by the Company and relied upon by the Auditors.

17 B. PROMOTOR GROUP
Group companies
The company is controlled by Mr.Shyam S Bhartia/Mr. Hari S Bhartia group (“the promoter group”), being a group as defined
in the Monopolies and Restrictive Trade Practices Act, 1969.

JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006

127
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103-132.p65 127 8/10/2006, 10:10 PM

 Notes to the Consolidated Accounts
Accounts

The persons constituting the promoter group include individuals and corporate bodies who/which jointly exercise, and are in
a position to exercise, control over the Company. The names of these individuals and bodies corporate are Mr. Shyam S
Bhartia, Mr. Hari S Bhartia, Mrs. Shobhana Bhartia, Mrs. Kavita Bhartia, Mr.Priyavrat Bhartia, Mr.Shamit Bhartia, Ms. Aashti
Bhartia, Master Arjun S Bhartia, Best Luck Vanijya Private Ltd., Enpro Exports Private Ltd., Jaytee Private Ltd., Jubilant Enpro
Private Ltd., Jubilant Securities Private Ltd., Jubilant Capital Private Ltd., Klinton Agencies Private Ltd., Speedage Vinimay
Private Ltd., Rance Investment Holdings Ltd., Cumin Investments Ltd., Torino Overseas Ltd., Vam Holdings Ltd., Westcost
Vyapaar Private Ltd., Nikita Resources Private Ltd., Jubilant Oil & Gas Pvt. Ltd.

2005-2006 2004-2005

18. Earnings Per Share(EPS)

I. A) Profit Computation for Basic Earnings Per Share of Re 1 each
Net Profit as per Profit and Loss Account available for
Equity Shareholders Rs. million 1,296.75 1,191.93
Adjustments for the purpose of Diluted EPS :-
Interest on Foreign Currency Convertible Bonds Rs. million 9.38 23.05
Less: Tax on above Rs. million (2.11) (8.44)
(B) Profit for Diluted Earnings Per Share of Re 1 each Rs. million 1,304.02 1,206.54
II. Weighted average number of equity shares for
Earnings per Share computation
A) For Basic Earnings per Share Nos 136,728,761 120,668,645
B) For Diluted Earnings per Share:
No. of shares for Basic EPS as per II A Nos 136,728,761 120,668,645
Add: Weighted Average outstanding Option/Shares related to
FCCB & Employee stock options. Nos 15,396,390 8,307,155
No. of shares for Diluted Earnings per Share Nos 152,125,151 128,975,800
III. Earnings per Share (Weighted Average)
Basic Rupees 9.48 9.88
Diluted Rupees 8.57 9.35

Pursuant to the approval of the shareholders ballot, each equity share Rs. 5 has been sub-divided into 5 equity shares of Re. 1 each w.ef.
24th March, 2006 on the basis of the face value of Re. 1 each. Accordingly, the paid up equity share capital now comprises 142,442,995
equity shares of Rs. 1 each amounting to Rs. 142.44 million. The EPS figures disclosed above have been calculated for equity shares
of Re. 1 each. Accordingly, the EPS figure for the previous year has also been restated taking the face value at Re.1 for each equity share.

19. Figures pertaining to the subsidiaries, have been reclassified wherever considered necessary to bring them in line with the Company’s
Financial Statements.
20. Previous Year’s figures have been regrouped/rearranged wherever found necessary to conform to this year’s classification.

Signature to Schedule “A” to “O” forming part of the Consolidated Balance Sheet and Consolidated Profit and Loss Account.

In terms of our report of even date attached. For and on behalf of the Board
For K.N. Gutgutia & Co.
Chartered Accountants
B R Goyal Shyam S Bhartia
Partner Chairman & Managing Director
Membership No. 12172
Noida Lalit Jain R Sankaraiah Hari S Bhartia
Date : 18th April, 2006 Company Secretary Executive Director- Finance Co-Chairman & Managing Director

JUBILANT ORGANOSYS LIMITED ANNUAL REPORT - 2005-2006

128
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103-132.p65 128 8/10/2006, 10:10 PM

103-132.p65
DETAILS OF SUBSIDIARY COMPANIES (2005 - 2006)
Jubilant Jubilant Jubilant Jubilant Jubilant Jubilant
Clinsys Chemsys Biosys Organosys Organosys Pharma NV#
Limited Limited Limited (USA) Inc# (Shanghai) Limited#
Rs./Million Rs./Million Rs./Million USD Rs./Million RMB Rs./Million Euro Rs./Million
(a) Capital 155.00 112.50 4.43 375,000 17.11 1,652,837 8.80 13,900,000 743.79
(b) Reserve and Surplus (adjusted
for debit balance in Profit &

129
Loss Account where applicable) (11.57) (8.24) 120.11 (45,819) (2.45) (1,909,871) (10.24) 1,963,334 112.91
(c) Total Assets
(Fixed Assets+Current Assets) 154.73 121.51 337.25 6,835,127 304.93 43,567,667 242.44 60,026 3.24

JUBILANT ORGANOSYS LIMITED

(d) Total Liabilities
(Debts + Current Liabilities) 11.29 17.25 212.71 6,505,946 290.26 43,824,702 243.88 6,100 0.33
(e) Details of Investments (except in
case of Investment in subsidiaries) - - - - - - - 2,074,689 112.04
(f) Turnover (Including Other Income) 29.78 70.35 233.59 11,381,193 503.96 219,320,060 1,193.29 19,927 1.07
(g) Profit/(Loss) before Taxation (11.47) 3.28 27.28 81,970 3.63 (2,359,151) (12.84) (26,258) (1.41)
(h) Provision for Taxation (3.19) 0.37 2.43 - - - - - -
(i) Profit/(Loss) after Taxation (8.42) 2.90 24.84 81,970 3.63 (2,359,151) (12.84) (26,258) (1.41)
(j) Proposed Dividend Nil Nil Nil Nil Nil Nil Nil Nil Nil

129

8/10/2006, 10:10 PM
ANNUAL REPORT - 2005-2006
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103-132.p65
DETAILS OF SUBSIDIARY COMPANIES (2005 - 06) (Contd.)
Pharmaceutical PSI Clinsys Clinsys, Inc.# Jubilant Pte. Trigen Jubilant
Services Supply NV# Holding, Inc.# Phama Laboratories Pharmaceuticals
Incorporated NV# Limited; Inc.# Inc.#
EURO Rs./Million EURO Rs./Million USD Rs. Million USD Rs./Million USD Rs./Million USD Rs./Milliion USD Rs./Million
(a) Capital 500,000 28.34 62,000 3.51 15,500,000 677.71 102 0.01 15,200,000 662.86 22,379,340 998.45 1 -
(b) Reserve and Surplus (adjusted
for debit balance in Profit &

130
Loss Account where applicable) 455,506 25.73 8,074 0.39 (322,808) (0.58) 2,232,651 99.61 20,869 15.90 (5,181,056) (231.15) (9,479,777) (422.94)
(c) Total Assets
(Fixed Assets+Current Assets) 3,552,685 194.33 1,283,803 69.45 1,080,924 48.23 5,539,981 247.16 378,638 16.89 17,287,454 771.28 8,971,427 400.26

JUBILANT ORGANOSYS LIMITED

(d) Total Liabilities
(Debts + Current Liabilities) 2,636,671 142.39 1,213,729 65.55 21,428,527 956.03 3,307,228 147.55 42,532 1.90 89,170 3.98 18,451,203 823.20
(e) Details of Investments (except in
case of Investment in subsidiaries) 39,491 2.13 - - - - - - - - - - - -
(f) Turnover (Including Other Income) 2,433,192 130.71 2,182,791 117.26 190,399 8.55 9,368,128 420.78 22,617 1.01 6,119 0.27 3,971,637 176.75
(g) Profit/(Loss) before Taxation (614,325) (33.04) (25,955) (1.40) (322,808) (14.50) 913,691 41.08 20,869 0.93 5,931 0.26 (673,777) (29.93)
(h) Provision for Taxation (112,873) (6.10) - - - - 383,682 17.12 - - - - - -
(i) Profit/(Loss) after Taxation (501,451) (26.94) (25,955) (1.40) (322,808) (14.50) 530,009 23.96 20,869 0.93 5,931 0.26 (673,777) (29.93)
(j) Proposed Dividend Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil

130
Notes:
# The financial statements of the foreign subsidiaries have been converted into Indian Rupees on the basis of appropriate exchange rates.
The Ministry of Company affairs, Government of India, vide its letter dated 5th April, 2006 has granted approval under Section 212(8) of the Companies Act, 1956 for the financial year ended 31.03.2006
whereby the Balance Sheet, Profit & Loss Account, Directors’ Report and Auditors’ Report of the subsidiaries and other documents required to be attached under section 212(1) of the Act are not required to be
attached to the Company’s Accounts. Hence, the same are not being attached. However, the annual accounts of the subsidiary companies and the related detailed information will be made available to the
members of the holding and subsidiary companies seeking such information at any point of time. The annual accounts of the subsidiary companies will also be kept open for inspection by any investor in its
Head Office and that of the subsidiaries concerned.

8/10/2006, 10:10 PM
ANNUAL REPORT - 2005-2006
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