Ambalal Sarabhai Enterprises Ltd

To

The Shareholders,

The Directors hereby present their 34th Annual Report together with the AuditedStatement of Accounts of the Company for the year ended March 31,2012.

An extra ordinary income mainly represents surplus on sale of a portion of factory landoccupied by factory building standing thereon.

Your Directors regret their inability to recommend payment of any dividend in view ofloss during the year.

Pharma Formulations:

The Company consolidated its Oncology division and has planned to launch a newInfertility division as part of its specialized formulations. It continues to manufactureformulation under license and market these through established companies in the market.The Company also manufactures and sells a wide range of Formulation through itsdistributors and through Generic channels.

Asence Inc., a wholly-owned subsidiary of the Company, incorporated in US specializesin the supply of quality pharmaceutical preparations (Finished Dosage Forms and ActivePharmaceutical Ingredients) to international markets. Asence Inc., through the company,pursues a multi-layered growth strategy combining internal product development, strategicalliances and collaboration with cGMP manufacturing partners, acquisitions of products andleverage of infrastructure in India and the US.

Effervescent Tables

The Company through the establishment of Joint Venture, Vovantis Laboratories PrivateLimited (VLPL) has established a state of. the art facility for manufacturing Effervescenttablets. Towards the end of the year the Company has successfully established a range ofPharma Products including Paracetamol, Vitamin C, Enzyme and other Effervescent Tablets.These products have been accepted in the market and therefore VLPL could set up domestic /foreign marketing arrangements with various Companies for new products. VLPL has fullyutilized all its potentials in developing work of new products and therefore in additionto Denture Products, VLPL could enhance its production capacity. VLPL has also installedsecond production and packing line. Moreover, VLPL has initiated to install tube andsachet packing facilities which would lead VLPL to compete with international brands.Since this has happened at the eve of the current operational year, the positive effectwould be reflected in the result of VLPL in the next financial year.

Active Pharmaceutical ingredient plant:

The Bulk Drugs plant of Synbiotics Limited (Synbiotics), a Wholly-owned subsidiary ofthe Company, at Luna has already started its production activity. The turnover ofSynbiotics has increased by about 42% as compared to previous year.

The manufacturing facilities of Synbiotics got recognition from overseas authoritiesand also receivod approval from PMDA (Japan), WHO-GMP, India, EU, GMP and precious USFDA.Production activity of Synbiotics is now stabilized.

Other Bulk Drugs products were manufactured on loan license arrangement by AsencePharma Pvt. Ltd., a Wholly-owned subsidiary of the company.

Systronics (India) Limited

Systronics (India) Ltd. (SIL), a wholly owned subsidiary of the Company, have twodivisions viz. Systronics as well as Telerad. Sales performance of both the divisions haveimproved to a satisfactory level and therefore during the year, there was overall increasein revenue from operations of SIL. The turnover of SIL for the year under report increaseto Rs. 4768.86 Lakh.

Corporate Governance:

Pursuant to clause 49 of the Listing Agreement with the Stock Exchange, Mumbai,Management Discussion and Analysis Report, Corporate Governance Report and Auditors'Certificate regarding Compliance of Conditions of Corporate Governance are made as a partof the Annual Report.

Subsidiaries:

A statement pursuant to Section 212 of the Companies Act, 1956 in respect of Subsidiarycompanies is appended to the balance sheet. The report and the accounts of the Company maybe treated as abridged accounts as contemplated under Section 219 of the Companies Act,1956. Those shareholders, who are desirous of receiving full reports and accountsincluding the report and the accounts of the Subsidiaries of the Company, will be providedthe same on receipt of written request / requisition in this regard. This will help tosave considerable cost in connection with printing and mailing of the report and accountsin respect of the various subsidiaries of the company. The shareholders who desire to gettheir Annual Reports through email may register their email address with the Company. Itwill ensure that all shareholders get copy of Annual accounts provided a fairly largenumber of shareholders would opt for email system.

Consolidated Financial Statement:

In compliance of the Accounting Standard AS-21 on Consolidated Financial Statements,the Consolidated Financial Statements, which form part of the Annual Report and Accounts,are attached herewith.

Directorate:

Pursuant to the provisions of Section 256 of the Companies Act, 1956, Mr.B.S. Bohra andMr. Kartikeya V. Sarabhai retire by rotation and being eligible offers themselves forre-appointment.

During the year under report, Dr. V.C. Shah and Dr. O.D. Gulati ceased to be Directorsdue to death on 14.12.2011 and 23.2.2012 respectively. Your Directors have taken note ofthe contribution made by them during their association with the Company.

Fixed Deposits:

The Company has not accepted any fixed deposit during the year.

Energy Conservation, Technology Absorption and Foreign Exchange earnings and utgo:

Particulars of Energy Conservation, Technology Absorption and Foreign Exchange earningsand outgo required to be given by the Companies (Disclosure of Particulars in the Reportof Board of Directors) Rules, 1988, are given in the Annexure to this Report in theprescribed format.

Particulars of Employees:

Information as per Section 217 (2A) of the Companies Act, 1956, read with the Companies(Particulars of Employees Rules 1975) is not given since there was no employee drawingremuneration as prescribed under the said Section.

Directors' Responsibility Statement.

As required under Section 217(2AA) of the Companies Act, 1956, we hereby state:

(i) That in the preparation of the annual accounts, the applicable accounting standardshave been followed along with proper explanation relating to material departures, if any.

(ii) That the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state affairs of the Company as at 31st March, 2012 andits loss for the year ended on that date.

(iii) That the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.

(iv) That the Directors have prepared the annual accounts on a going concern basis.

Insurance:

Building, Plant and machinery and stocks, have been adequately insured. The Companycarries a rich certain assets like goods in transit in respect loss resulting fromnon-insurance is small fairly large drop in production and sales.

Auditors:

M/s. Sorab S. Engineer & Co., Chartered Accountants, Mumbai, retire in theforthcoming Annual General Meeting and being eligible offer themselves for reappointment.

Acknowledgement:

Your Directors would like to take this opportunity to express their deep sense ofgratitude to the Banks, Government Authorities, Customers and Shareholders for theircontinuous guidance and support. Further, they would also like to place on record theirsincere appreciation for the dedication and hard work put in by one and all members ofSarabhai Pariwar.

ANNEXURE TO THE DIRECTORS' REPORT

Disclosure of additional particulars as required under the Companies (Disclosure ofparticulars in the Report of Board of Directors) Rules, 1988, forming part of theDirectors' report for the year ended 31 st March 2012.

(B) Technology absorption.

During the year under report, there was no production activities carried out in thefactory of the Company and therefore, details are not required to be given.

(C) Foreign exchange earnings and outgo:

i) The company is making all efforts to boost up the exports of its various products.In this direction, the Company is endeavoring to improve the quality of various productsfor export market. Company is also forging ties with various foreign parties to strengthenthe exports.

ii) Total foreign exchange earned and used