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Directors Report of FDC Ltd.

Mar 31, 2014

Dear Members,

The Directors are pleased to present their report on the business and operations of your Company for the year ended March 31, 2014.

1. FINANCIAL PERFORMANCE

Your Company''s net sales have increased by 9.2% as compared to the last financial year. Your Company continues its efforts to deliver long term sustainable profitable growth by initiating various steps. The various measures undertaken by the Company has helped in maintaining working capital cycle and efforts for improving the same is an ongoing exercise. Cost controls across all levels of functions are a continuous exercise.

2013-2014 2012-2013 Rupees in lacs Rupees in lacs

Revenue from operations (Net) 83,701.84 76,459.51

Other income 3,816.37 4,756.08

Profit (before finance costs & depreciation/amortisation) 24,454.87 23,007.86

Finance costs 301.38 151.05

Depreciation and amortisation 2,454.35 2,751.19

Profit Before Tax 21,699.14 20,105.62

Less: Taxation

- Current Tax 6,000.00 4,100.00

- Deferred Tax 7.11 163.15

- MAT credit entitlement - -

- Tax adjustments for earlier years (current tax) 2,250.00 9.30

Profit After Tax 13,442.03 15,833.17

Balance of profit from prior years 40,568.18 34,460.00

Surplus available for appropriation 54,010.21 50,293.17

Appropriations:

Transfer to general reserve 5,000.00 5,000.00

Final dividend proposed 4,001.24 4,038.63

Tax on dividend 680.01 686.36

Reversal of excess provision of dividend (43.71) -

Balance carried to Balance Sheet 44,372.67 40,568.18

54,010.21 50,293.17

Previous year''s figures have been re-grouped/re-classified, wherever necessary to conform to this year''s classification.

2. DIVIDEND

Your Board of Directors are pleased to recommend a final dividend of Rs. 2.25/- (225%) per equity share of Re.1 each for the financial year ended March 31, 2014. The same, if declared at this annual general meeting will be paid to those shareholders'' whose names stand registered in the register of members as on August 09, 2014. This dividend is tax free in the hands of the shareholders.

3. SOCIAL RESPONSIBILITIES

Your Company has always been a socially responsible corporate citizen who is well aware and sensitive to the needs of the underprivileged people around it.

Your Company has been contributing towards the development of society through various charitable trusts helping the needy people for their education, medical, healthcare etc. Your Company''s Education initiatives include scholarships for deserving and needy students, and allowing greater access to quality education.

4. DIRECTORS

Mr. Mohan A. Chandavarkar has been re-appointed as the Managing Director of the Company for a period of five years with effect from April 01, 2014 and Mr. Nandan M. Chandavarkar has been re-appointed as the Joint Managing Director of the Company for a period of five years with effect from March 01, 2014, subject to the approval of the shareholders at the ensuing Annual General Meeting.

At the Board meeting held on May 29, 2014, Ms. Nomita R. Chandavarkar is appointed as an Additional Director of the Company with effect from June 02, 2014, to hold office upto the ensuing annual general meeting, at which she shall be eligible for appointment as a Director, liable to retire by rotation.

In terms of the Articles of Association of the Company and the relevant provisions of the Companies Act, 2013, Mr. Ameya A. Chandavarkar, Director will retire by rotation in the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Pursuant to Sections 149 and 152 of the Companies Act, 2013 and the Rules made thereunder, your Board of Directors seek appointment of CA Girish C. Sharedalal, Dr. Rahim H. Muljiani, Dr. Nagam H. Atthreya, Dr. Satish S. Ugrankar and CA Vinod G. Yennemadi, as Independent and Non Executive Directors, at the ensuing Annual General Meeting for a term of five consecutive years. Details of the proposal for their appointment are mentioned in the Explanatory statement of the Notice of the 74th Annual General Meeting. Further, these Independent Directors will not be liable to retire by rotation.

5. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors based on the information and documents made available to them, confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed;

b. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the financial year ended March 31, 2014 and of the Statement of Profit and Loss for that period;

c. they have 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;

d. they have prepared the annual accounts on a going concern basis.

6. CORPORATE GOVERNANCE

As required by the existing clause 49 of the listing agreements entered into with the stock exchanges, a separate report on corporate governance is given as a part of the annual report alongwith the auditors'' statement on its compliance.

7. AUDITORS REPORT

With reference to Point no. (vii) in the Annexure of the Companies (Auditors Report) Order, 2003, the Company is taking effective steps for enlarging the scope and coverage of internal audit activities to make it commensurate with the size and nature of the business of the Company.

8. STATUTORY AUDITORS

The existing statutory auditors of the Company, M/s.S.R. Batliboi & Co. LLP, Chartered Accountants, Mumbai have communicated to the Company their unwillingness to be re-appointed as the statutory auditors of the Company and hence are not offering themselves for re-appointment at the ensuing Annual General Meeting.

The Board of Directors recommend the appointment of M/s. S R B C & Co. LLP, Chartered Accountants, as the statutory auditors of the Company in place of the retiring auditors, from the conclusion of the ensuing Annual General Meeting.

The Company has also received a certificate pursuant to provisions of Section 139 and 141 of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules 2014, from M/s. S R B C & Co. LLP, certifying their eligibility for appointment as statutory auditors of the Company.

Both, M/s. S R B C & Co. LLP and M/s. S.R.Batliboi & Co. LLP are part of the same network of firms.

9. COST AUDITORS

The Audit Committee has recommended and the Board of Directors have appointed Shri. Prakash A. Sevekari, Cost Auditor, to conduct the Cost Audit for any of the Products covered under Cost Audit for the financial year ending March 31, 2015, subject to the approval of Central Government. The requisite applications for approval of his appointment will be submitted to the Central Government.

10. PUBLIC DEPOSITS

During the year under review, the Company has not accepted any fixed deposits.

11. SUBSIDIARIES AND ITS OPERATIONS

Your Company''s wholly owned subsidiary Anand Synthochem Limited has reported a loss of Rs.4.66 lacs.

Your Company''s wholly owned subsidiary at USA, namely FDC Inc., reported a loss of USD 1,510 (i.e. profit of Rs. 4.28 lacs on account of exchange gain on currency translation).

Your Company''s wholly owned subsidiary at UK, namely FDC International Ltd., has reported a profit of £ 171,828 (Rs. 219.25 lacs).

Your Company''s joint venture business at South Africa namely Fair Deal Corporation Pharmaceutical SA (Pty) Ltd., has reported a loss of ZAR 22,81,820 (i.e. loss of Rs. 140.02 lacs on account of difference in rates taken for Stock & Deferred tax).

As per the directions of the Central Government vide its general notification dated February 08, 2011, the financial data of the subsidiaries have been furnished under “Notes to the Consolidated Financial Statements”.

Also, as directed by the Central Government, annual accounts of the subsidiaries and the related detailed information will be made available to the holding and subsidiary company investors, on request and the same is available for inspection by the members at the registered office of the Company, between 10.00 a.m. to 12.00 noon on all days except Friday and holidays, till this Annual General Meeting and will also be placed before the said meeting.

Any shareholder interested in obtaining a copy of the annual accounts of the subsidiary companies may write to the secretarial department at the corporate office of the Company. The annual accounts of the individual subsidiary companies are also available on the Company''s website-www.fdcindia.com.

12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO

The information pursuant to Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is annexed as Annexure A to this report.

13. ACKNOWLEDGEMENTS

Your Directors take this opportunity to place on record their gratitude for the continued support and co-operation extended to the Company by the medical fraternity, trade, Government agencies, financial institutions, investors, bankers, consumers and employees.

For and on behalf of the Board

Place: Mumbai

MOHAN A. CHANDAVARKAR

Date : May 29, 2014 Chairman and Managing Director


Mar 31, 2013

The directors are pleased to present their report on the business and operations of your Company for the year ended March 31, 2013.

1. FINANCIAL RESULTS

2012-2013 2011-2012 Rupees in lacs Rupees in lacs

Revenue from operations (Net) 76,459.51 69,924.16

Other income 4,756.08 2,782.00

Profit (before finance costs and depreciation / amortisation) 23,007.86 18,954.99

Finance costs 151.05 132.35

Depreciation and amortisation 2,751.19 1,805.00

Profit before tax 20,105.62 17,017.64

Less: Taxation

- Current tax 4,100.00 3,450.00

- Deferred tax 163.15 328.15

- Tax adjustments for earlier years (current tax) 9.30 (29.56)

Profit after tax 15,833.17 13,269.05

Balance of profit from prior years 34,460.00 28,430.05

Surplus available for 50,293.17 41,699.10 appropriation

Appropriations:

Transfer to general reserve 5,000.00 3,000.00

Final dividend proposed 4,038.63 3,658.41

Tax on dividend 686.36 593.48

Reversal of excess provision of dividend - (12.79)

Balance carried to Balance Sheet 40,568.18 34,460.00

50,293.17 41,699.10

Previous year''s figures have been re-grouped/re-classified, wherever necessary to confirm to this year''s classification.

2. DIVIDEND

Your board of directors recommend a final dividend of Rs. 2.25 (225%) per equity share of Re.1 each for the financial year ended March 31, 2013. The same, if declared at this annual general meeting will be paid to those shareholders whose names stand registered in the register of members as on August 31, 2013. This dividend is tax free in the hands of the shareholders.

3. BUYBACK OF EQUITY SHARES

Pursuant to the approval of shareholders for buyback of its fully paid-up equity shares of Re. 1 each upto a quantity not exceeding 6,250,000 at a price not exceeding Rs. 110 per equity share vide postal ballot voting on August 17, 2012, the Company has bought back 2,087,432 equity shares of Re.1 each upto March 31, 2013 and all the shares bought back in the buyback offer upto March 31, 2013 have been extinguished as on date. Further 1,338,538 equity shares of Re.1 each were bought back as on date of this report.

4. BUSINESS REVIEW

The Indian Pharmaceutical Market grew by 11.9% to touch the market size of Rs. 70,529 crores, during the year ended March 31, 2013. Around 2,194 products were introduced during the year (Source: AIOCD Pharmasofttech AWACS Private Limited).

The Indian Pharmaceutical Market is well poised for growth and is projected to grow at a Compounded Annual Growth Rate of 12% to 14%. Service oriented segments such as hospitals and medical insurance are slowly gaining prominence. The key drivers have been increase in household income level, increase in lifestyle related diseases, growing population, improving healthcare infrastructure, delivery systems, rapid urbanization and growth in the rural markets.

Pharma emerging markets such as China, Brazil, India & Russia to name a few, have a prominent role to play in the global pharmaceutical market. India is seen as the third largest pharma market in the world. This market is expected to further strengthen by more drugs going off patent by the year 2015.

The much awaited The National Pharmaceuticals Pricing Policy, 2012 (NPPP-2012) is notified by the Government. The policy aims at having a regulatory framework for pricing of 348 drugs, to ensure availability of essential drugs at reasonable prices.

As per the policy, all medicines and dosages specified in the National List of Essential Medicines, 2011 will be under price control. The Drugs (Prices Control) Order 2013 has been notified on May 15, 2013. The National Pharmaceuticals Pricing Policy, 2012 is expected to impact the logistics, sales and profitability of many pharmaceutical companies including yours. Your Company would be taking effective steps to reduce the impact of the same.

Compulsory licensing, patent oppositions and litigations, increasing regulations and compliances, infrastructure development and menace of counterfeit drugs are seen as major hurdles in the Industry.

Against the above market background, we give below a brief review of various functions of your Company:

a. Marketing:

Total revenue from operations of your Company has increased by 9.35% as compared to the last year. Your Company is ranked at 25th position, attaining a market share of 1.12% (Source: AIOCD Pharmasofttech AWACS Private Limited- Moving Annual Turnover- March 2013).

Your Company has initiated various steps to improve its performance. The same is witnessed by growth and profit, your Company has achieved, which is given under the head financial performance. The steps initiated are expected to yield results over a period of time and this year''s performance is a beginning towards the above goal.

Your Company launched an extension of its well established ophthalmic brand "IOTIM-B", with unique drop assist application strips for the first time in Indian market. The above uniqueness of the brand will help your Company to regain its lost strong foothold in ophthalmology segment and will reinforce the world class quality standard products of the Company.

"ZIFI AZ", a brand extension product of your Company''s flagship brand "ZIFI", has become the fastest growing brand in the antibiotic segment. Another extension to the brand "ZIFI", namely "ZIFI TURBO" has achieved the accolade of being "The Best Launch of the Year 2012-13".

Your Company''s paediatric segment was further strengthened by the introduction of a unique combination of calcium and phosphorous for healthy bones and teeth along with yummy peppermint and lemon flavour under the brand name "CALYUMM-P".

b. Financial Performance:

Your Company''s profits have increased by 19.32%. Various steps initiated by the Company have started yielding results which is evident from current year''s performance. Your Company continues its efforts to improve the performance through operational efficiencies and incremental business. Cost controls across all levels of functions are a continuous and ongoing exercise. The Company''s internal control procedures are commensurate with the nature of its operations.

c. Exports:

The annual export turnover for the year ended March 31, 2013 was Rs. 9,541.05 lacs with a marginal growth of 9.88% as compared to the year ended March 31, 2012 which stood at Rs. 8,682.93 lacs. Although, FDC continues to supply APIs worldwide to its esteemed customers, the improved export performance resulted from sales of finished dosage forms mainly Oral Rehydration Salts range to Africa and Ophthalmic range to UK and US.

The Company''s manufacturing facilities of Ophthalmic/ liquids/ powders and tablet dosage forms at Waluj and Goa are approved by international authorities namely US FDA and UK MHRA respectively. In view of the Company''s core capabilities, number of opportunities in European and US markets are opening up, for out-licensing of dossiers/ANDA''s/ DMF/COS.

5. RESEARCH & DEVELOPMENT

a. Formulations:

Your Company''s main focus has been on development of value added drug products at affordable price and development of niche generic products for export to highly regulated markets of US and Europe. A state of art research facility for development and validation of nano-technology based formulation has been made functional. Three nano-technology based products were developed for Ophthalmic and otic use. To protect the novel drug delivery technologies, both India and PCT applications were filed. Four generic products got approval from European regulatory agencies.

b. Synthetics:

Your Company''s main focus is on the development of cost effective processes for generic APIs, based on patent expiry. A non infringing new process for Rupatadine Fumarate, an antihistamine and a PAF antagonist, to treat allergies was developed. The process was successfully transferred to Roha Pilot Plant where the process has been validated and commercialised.

Process developed at R&D for Olopatadine hydrochloride, antihistamine and mast cell stabilizer was transferred to the Roha plant where the process has been validated and commercialised.

c. Nutraceuticals:

Your Company''s balanced ideal energy drink namely "ENERZAL" became the drink provider for the Mumbai Marathon 2013. Your Company is aggressively promoting this product through various sports events held across major metros of India. In addition, your Company has partnered with a local football club which scouts for talent in Mumbai schools wherein your Company aims to promote its product "ENERZAL".

d. Biotechnology:

As reported to you earlier, with regard to the license technology agreement signed by your Company with an Israel based company, for production and purification of recombinant protein licensed to FDC, we are now awaiting a reply from Department of Biotechnology, granting us permission for going ahead with human clinical trails.

6. PERSONNEL

The overall industrial and employee relations remained healthy. Information as per Section 217(2A) of the Companies Act, 1956, read with Companies (Statement of Particulars of Employees) Rules, 1975, forms a part of this report. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, this report and the accounts are being sent to all shareholders excluding the particulars of employees under Section 217(2A). Any shareholder interested in obtaining a copy of the statement may write to the secretarial department at the corporate office of the Company.

7. SOCIAL RESPONSIBILITIES

In discharge of its social obligations, your Company regularly contributes to trusts formed for charitable purposes. FDC also assists several organisations in medical camps conducted all over the Country.

8. DIRECTORS

In accordance with Article 60 of the Articles of Association and the relevant provisions of the Companies Act, 1956, Dr. Satish S. Ugrankar and Dr. Rahim H. Muljiani, retire by rotation at this annual general meeting and being eligible, offer themselves for re-appointment.

9. DIRECTORS'' RESPONSIBILITY STATEMENT

Your directors confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed;

b. the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the financial year ended March 31, 2013 and of the Statement of Profit and Loss for that period;

c. the directors have 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;

d. the directors have prepared the annual accounts on a going concern basis.

10. CORPORATE GOVERNANCE

As required by the existing clause 49 of the listing agreements entered into with the stock exchanges, a separate report on corporate governance is given as a part of the annual report alongwith the auditors'' statement on its compliance.

11. AUDITORS

The auditors of your Company S.R. Batliboi & Co. LLP (Formerly known as M/s. S.R.Batliboi & Co.) Chartered Accountants, Mumbai, retire at the ensuing annual general meeting and have confirmed their eligibility and willingness to accept office, if re-appointed.

12. COST AUDITORS

The directors have appointed Shri. Prakash A. Sevekari, Cost Auditor, to conduct the cost audit for any of the products covered under cost audit for the financial year ending March 31, 2014. The requisite applications for approval of his appointment will be submitted to the Central Government.

13. PUBLIC DEPOSITS

During the year under review, the Company has not accepted any fixed deposits.

14. PARTICULARS OF SUBSIDIARIES AND ITS OPERATIONS

Your Company''s wholly owned subsidiary Anand Synthochem Limited has reported a loss of Rs.4.48 lacs.

Your Company''s wholly owned subsidiary at US, namely FDC Inc., reported a loss of USD 1,517 (i.e. Profit of Rs.2.28 lacs on account of exchange gain on currency translation).

Your Company''s wholly owned subsidiary at UK, namely FDC International Ltd., has reported a loss of £ 103,980 (Rs. 91.72 lacs).

Your Company''s joint venture business at South Africa namely Fair Deal Corporation Pharmaceutical SA (Pty) Ltd., has reported a profit of ZAR 305,627 (i.e. Loss of Rs. 14.94 lacs on account of difference in rates taken for Stock & Deferred tax).

As per the directions of the Central Government vide its general notification dated February 08, 2011, the financial data of the subsidiaries have been furnished under "Notes to the Consolidated Financial Statements".

Also, as directed by the Central Government, annual accounts of the subsidiaries and the related detailed information will be made available to the holding and subsidiary company investors, on request and the same is available for inspection by the members at the registered office of the Company, between 10.00 a.m. to 12.00 noon on all days except Friday and holidays, till this annual general meeting and will also be placed before the said meeting.

Any shareholder interested in obtaining a copy of the annual accounts of the subsidiary companies may write to the secretarial department at the corporate office of the Company. The annual accounts of the individual subsidiary companies are also available on the Company''s website - www.fdcindia.com.

15. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING ANDOUTGO

The information pursuant to Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is annexed as Annexure A to this report.

16. ACKNOWLEDGMENTS

Your Directors take this opportunity to place on record their gratitude for the continued support and co-operation extended to the Company by the medical fraternity, trade, Government agencies, financial institutions, investors, bankers, consumers and employees.

For and on behalf of the board

Place: Mumbai MOHAN A. CHANDAVARKAR

Date : May 24, 2013 Chairman and Managing Director


Mar 31, 2012

The directors are pleased to present their report on the business and operations of your Company for the year ended March 31, 2012.

1. FINANCIAL RESULTS

2011-2012 2010-2011 Rupees in lacs Rupees in lacs

Revenue from operations (Net) 69,924.16 70,036.26

Other income 2,782.00 2,783.78

Profit (before finance costs and depreciation / amortisation) 18,954.99 19,119.35

Finance costs 132.35 133.98

Depreciation and amortisation 1,805.00 1,698.54

Profit before tax 17,017.64 17,286.83

Less: Taxation

- Current tax 3,450.00 3,450.00

- Deferred tax 328.15 120.38

- MAT credit entitlement - (1,330.00)

- Tax adjustments for earlier years (current tax) (29.56) 171.86

Profit after tax 13,269.05 14,874.59

Balance of profit from prior years 28,430.05 20,842.48

Surplus available for 41,699.10 35,717.07 appropriation

Appropriations:

Transfer to general reserve 3,000.00 3,000.00

Final dividend proposed 3,658.41 3,688.63

Tax on dividend 593.48 598.39

Reversal of excess provision of dividend (12.79) -

Balance carried to Balance Sheet 34,460.00 28,430.05

41,699.10 35,717.07

Previous year's figures have been re-grouped/re-classified, wherever necessary to conform to this year's classification.

2. DIVIDEND

Your Board of Directors recommend a final dividend of Rs.2 (200%) per equity share of Re.1 each for the financial year 2011-2012. The same, if declared at this annual general meeting will be paid to those shareholders, whose names stand registered in the register of members as on August 17, 2012. This dividend is tax free in the hands of the shareholders.

3. BUYBACK OF EQUITY SHARES

Your Company concluded the ongoing buyback of it's fully paid-up equity shares of Re.1 each, on January 25, 2012. During the said period, the Company has bought back 3,358,102 equity shares of Re.1 each and the total outlay for the buyback was Rs.3,251.48 lacs. All the equity shares bought back in the buyback offer have been extinguished as on January 31, 2012.

As a continuing effort towards providing liquidity to shareholders, the Board of Directors at its meeting held on May 26, 2012, have approved the buyback of its fully paid-up equity shares of Re.1 each upto a quantity not exceeding 6,250,000 (Maximum Offer Shares) at a price not exceeding Rs.110 per equity share (Maximum Offer Price). The board has earmarked a maximum limit of Rs.5,000 lacs (Maximum Offer Size) for the buyback which is less than 25% of the existing paid-up equity share capital and free reserves. The said buyback will be made through open market operations on the stock exchanges and will be subject to the approval of the shareholders through the postal ballot, the results of which will be announced at the ensuing annual general meeting.

4. BUSINESS REVIEW

The Indian Pharmaceutical Market (IPM) is destined to be one of the fastest growing Industry. It has been the front runner in a wide range of specialties involving complex drugs manufacture, development and technology. The IPM is on the threshold of becoming a major global market by 2020. The IPM grew by 16% to touch the market size of Rs.62,904.12 crores, during the year ended March 2012. Around 2,638 products were introduced during the year (Source: AIOCD AWACS).

The key drivers have been increase in household income level, increase in lifestyle related diseases, growing population, improving healthcare infrastructure/ delivery systems and rising penetration in smaller towns and rural areas, have contributed to the long term growth of the Industry.

The life style segments such as cardiovascular, anti-diabetes, anti-depressants and anti-cancers have continued to be lucrative and fast growing owing to increased urbanisation and changing lifestyle patterns. After the anti-diabetic segment, the cardiac segment is considered to be the 2nd largest in the chronic therapy which has a CAGR of 19%. This is further boosted due to the rise in affluent consumers demanding innovative drugs for the treatment of chronic illness associated with their changing life styles. High growth in domestic sales in the future will depend on the growing chronic disease segment.

A large untapped opportunity is seen in the rural markets. However, these markets have their own share of challenges like awareness, modern health care facilities, affordability and investments in infrastructure. The MNC's too are augmenting their portfolio in these rural areas. Even though challenges are manifold to penetrate in these markets, host of opportunities are available which can be achieved by adopting untraditional methods like tying up with Government organisations, insurance, diagnostic providers, NGOs, increasing patient awareness and literacy campaigns.

The IPM is adopting various strategies for their R&D efforts like entering into collaboration and partnership agreements with innovator companies and out-licensing their molecules for milestone payments.

Over the last five years focus, investments are seen in the emerging markets namely China, India, Brazil and Russia. Due to India's demographics, rising income levels and changing attitude towards health and lifestyle, India will increasingly become an important market.

Mergers & Acquisitions, collaborations and in-licensing will continue to see significant activities, mainly due to expert technical staff, excellent infrastructure in terms of clinical trial laboratories, contract manufacturing and readily available world class accredited state of the art manufacturing facilities in India.

The new price control policy is still pending review by the Government. Compulsory licensing, patent oppositions and litigations, increasing regulatory requirements and compliances, infrastructure development and menace of counterfeit drugs are seen as major hurdles in the Industry.

Against the above market background, we give below a brief review of various functions of your Company:

a. Marketing:

Your Company registered a market growth of 3.2% in the financial year April 2011 to March 2012. Your Company is ranked at 26th position, attaining a market share of 1.20% (Source: AIOCD AWACS March 2012).

Your Company does not find this performance satisfactory. However, following steps have been taken to improve the performance:

i. Online reporting system is under implementation in the field to monitor the work carried out in the field.

ii. Web based online sales information system is introduced to enable the managers to follow-up on sales growth and targets on day to day basis.

iii. Appraisal systems at field have been improvised to reward good performance and identify the areas of improvement.

iv. Training of field has been intensified to improve the performance, particularly of 1st and 2nd line managers. This is expected to reduce the impact of attrition in territories under the managers.

v. Incentive and salary levels in the field are substantially revised to reduce attrition, considering current opportunities in the industry.

vi. Territory rationalisation and introduction of specialised marketing field force is on cards to avail various opportunities.

vii. Number of new innovative products are in the R&D pipeline.

viii. Your Company is in the process of finalising innovative products for in-licensing.

The above steps are expected to yield results over a period of time.

b. Financial Performance:

Your Company's sales & profit stagnated due to attrition in the field and increased employees' cost respectively. The treasury income has been moderate due to fluctuating markets. The Company continues its efforts to improve the performance through operational efficiencies and incremental business. Cost controls across all levels of functions are a continuous and ongoing exercise. The Company's internal control procedures commensurate to the extent and nature of its operations.

c. Exports:

The annual export turnover for the year ended March 31, 2012 was Rs.8,682.93 lacs with a growth of 24% as compared to year ended March 31, 2011 which stood at Rs.7,019.10 lacs. Although FDC continues to supply APIs worldwide to its esteemed customers, the improved export performance resulted from sales of finished dosage forms mainly Ophthalmic & ORS range to UK, USA & Latin America and support of various international NGOs.

The Company's manufacturing facilities of Ophthalmic/ liquids/powders and tablet dosage forms at Waluj and Goa are approved by international authorities namely US FDA and UK MHRA respectively. In view of the Company's core capabilities, number of opportunities in European and US markets are opening up, for out-licensing of dossiers/ANDA's/ DMF/COS.

In view of emerging economic markets in CIS countries, your Company is exploring a business alliance for marketing its various products.

5. RESEARCH & DEVELOPMENT

a. Formulations:

Your Company as reported earlier has launched products in the various therapeutic areas. The Company has developed formulations as collaboration projects with overseas Companies and the dossiers of products have been submitted for registration. Cost reduction exercise was completed on products which would result in cost savings besides being environmental friendly and solvent free process.

The Company has developed novel drug delivery technologies and patents for Gastro retention dosage form, multilayer tablets, floating suspensions and matrix system were filed during the current year.

b. Synthetics:

Your Company's main focus is on the development of cost-effective processes for generic APIs, based on patent expiry. Process development and improvement for the existing range of products such as dorzolamide, brimonidine tartrate, fluconazole and famciclovir was undertaken during the year. Non-infringing route for the synthesis of fluconazole was developed and successfully transferred to Roha. QP audit and WHO GMP inspection was performed for latanoprost manufacturing facility at Jogeshwari, Mumbai and the WHO GMP certificate was received.

In collaboration with National Chemical Laboratory, Pune, New Chemical Entities with antifungal activity have been developed. Few of those have shown promising results and are in the process of patenting.

During the year, your Company has filed 4 Patents and 5 Patents have been granted for dorzolamide, duloxetine and NCE Series. Two new DCP's were submitted for Ophthalmic products.

c. Nutraceuticals:

Your Company's reputed energy drink, "Enerzal" powder was introduced in attractive zip-pack pouch. During the year, the Company has also launched Simyl MCT and Prosoyal with milk fat. The formulation of Simyl MCT and Prosoyal has been certified by BIS (Bureau of Indian Standards).

After the successful launch of its infant milk substitute, MUM-MUM 1, your Company is in the process of launching MUM-MUM 2, a specially developed infant milk substitute for infants between six months to one year taking into account the nutritional needs of the infants.

The Company has successfully completed ISO 22000:2005, re-certification audit and HACCP surveillance audit for Roha plant.

d. Biotechnology:

As reported to you earlier, with regard to the license technology agreement signed by your Company with an Israel based company, for production and purification of recombinant protein licensed to FDC, five consistency batch data dossier alongwith animal toxicity studies protocol was submitted to the Department of

Biotechnology (DBT). DBT has granted permission to conduct preclinical toxicity studies of FDC's recombinant product. The results of the efficacy studies are found to be promising and are in consonance with the international standard samples.

On completion of the toxicity trials, the entire pre-clinical study data shall be submitted to DBT for evaluation. Once the permission is granted, FDC will be proceeding with human clinical trials.

6. PERSONNEL

The overall industrial and employee relations remained healthy. Information as per section 217(2A) of the Companies Act, 1956, read with Companies (Statement of Particulars of Employees) Rules, 1975, forms a part of this report. However, as per the provisions of section 219(1)(b)(iv) of the said Act, this report and the accounts are being sent to all shareholders excluding the particulars of employees under section 217(2A). Any shareholder interested in obtaining a copy of the statement may write to the secretarial department at the corporate office of the Company.

7. SOCIAL RESPONSIBILITIES

In discharge of its social obligations, your Company regularly contributes to trusts formed for charitable purposes. FDC also assists several organisations in medical camps conducted all over the Country.

8. DIRECTORS

Mr. Vinod G. Yennemadi is appointed as an additional director of the Company w.e.f. June 08, 2012, to hold office until the ensuing annual general meeting, at which he shall be eligible for appointment as a director retiring by rotation. As required under section 257 of the Companies Act, 1956, the Company has received notice from a member signifying his intention to propose Mr. Vinod G. Yennemadi for the office of director along with a deposit of Rs. 500 with the notice. In accordance with article 60 of the articles of association and the relevant provisions of the Companies Act, 1956, CA Girish C. Sharedalal and Mr. Ashok A. Chandavarkar, retire by rotation at the ensuing annual general meeting and being eligible, offer themselves for re-appointment.

9. DIRECTORS' RESPONSIBILITY STATEMENT

Your directors confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed;

b. the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the financial year ended March 31, 2012 and of the statement of profit and loss for that period;

c. the directors have 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;

d. the directors have prepared the annual accounts on a going concern basis.

10. CORPORATE GOVERNANCE

As required by the existing clause 49 of the listing agreements entered into with the stock exchanges, a separate report on corporate governance is given as a part of the annual report alongwith the auditors' statement on its compliance.

11. AUDITORS

The existing statutory auditors of the Company, M/s. S.R. Batliboi & Associates, Chartered Accountants, Mumbai, have communicated to the Company their unwillingness to be re-appointed as the statutory auditors of the Company and hence are not offering themselves for re-appointment in the ensuing annual general meeting.

The Company has received a special notice under the provisions of section 225 of the Companies Act, 1956, proposing the appointment of M/s. S.R. Batliboi & Co., Chartered Accountants, as the statutory auditors of the Company in place of the retiring auditors. The Company has also received a certificate pursuant to section 224(1B) of the Companies Act, 1956, from M/s. S.R. Batliboi & Co., certifying their eligibility for appointment as statutory auditors of the Company.

12. COST AUDITORS

The directors have appointed Shri. Prakash A. Sevekari, Cost Auditor, to conduct the cost audit of bulk drugs and formulations for the financial year ending March 31, 2013.The requisite applications for approval of his appointment has already been submitted to the Central Government by this date.

13. PUBLIC DEPOSITS

During the year under review, the Company has not accepted any fixed deposits.

14. PARTICULARS OF SUBSIDIARIES AND ITS OPERATIONS

Based on valuation of independent valuers, the Board of Directors, at its meeting held on October 15, 2011, had resolved to purchase 100% equity shares of Anand Synthochem Limited (ASL), a related, unlisted Public Company, from its erstwhile shareholders, for a total consideration of Rs.644.58 lacs (including a loan of Rs.38.42 lacs), thereby making ASL, a Wholly Owned Subsidiary(WOS) of FDC Limited w.e.f. October 17, 2011. Though ASL does not have any substantial operations, it owns a property at Dombivali, Maharashtra, admeasuring 81,855 sq.ft. which FDC proposes to use for its business operations. ASL has reported a loss of Rs. 2.09 lacs (The loss is during the period October 17, 2011 to March 31, 2012).

Your Company's WOS at USA, namely FDC Inc., reported a loss of USD 1,440 (i.e. Profit of Rs.5.28 lacs on account of exchange gain on currency translation).

Your Company's WOS at UK, namely FDC International Ltd., has reported a profit of £ 230,946 (Rs.196.76 lacs).

Your Company's joint venture business at South Africa namely Fair Deal Corporation Pharmaceutical SA (Pty) Ltd., reported a profit of ZAR 229,912 (Rs.20.94 lacs).

As per the directions of the Central Government vide its general notification dated February 08, 2011, the financial data of the subsidiaries is disclosed in the annual report in compliance with the said circular.

Also, as directed by the Central Government, annual accounts of the subsidiaries and the related detailed information will be made available to the holding and subsidiary company investors, on request and the same is available for inspection by the members at the registered office of the Company, between 10.00 a.m. to 12.00 noon on all days except Friday and holidays, till this annual general meeting and will also be placed before the said meeting.

Any shareholder interested in obtaining a copy of the annual accounts of the subsidiary companies may write to the secretarial department at the corporate office of the Company. The annual accounts of the individual subsidiary companies are also available on the Company's website - www.fdcindia.com.

15. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO

The information pursuant to section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is annexed as Annexure A to this report.

16. ACKNOWLEDGMENTS

Your Directors take this opportunity to place on record their gratitude for the continued support and co-operation extended to the Company by the medical fraternity, trade, Government agencies, financial institutions, investors, bankers, consumers and employees.

For and on behalf of the board

Place: Mumbai MOHAN A. CHANDAVARKAR

Date : June 08, 2012 Chairman and Managing Director

 
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