The invention is directed to Muramyl Dipeptide (MDP) derivative compounds of structural Formula-VIII, a process for synthesis, intermediates used in the synthesis and use thereof: wherein, R can be a linear or branched alkyl, an aryl, a substituted aryl, or an alkoxy alkyl. These compounds possess excellent pharmacological properties, in particular immunomodulating properties for use as adjuvant in vaccine formulations. These compounds are particularly useful as adjuvants in vaccines.