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Directors Report of Ipca Laboratories Ltd.

Mar 31, 2016

The Directors have pleasure in presenting the 66th Annual Report and Audited Financial Statements for the year ended 31st March, 2016.

(Rs, crores)

For the year ended For the year ended

31.3.2016 31.3.2015

Sales and other Income (net of Excise duty) 2838.92 3120.40

Profit before finance cost, depreciation & Foreign Exchange (Gain) / Loss 347.13 556.27

Less: Finance cost 29.67 25.62

Depreciation and Amortisation 169.72 177.17

Foreign Exchange (Gain)/Loss 39.22 (4.25)

Profit before tax 108.52 357.73

Less: Provision for taxation

Current Tax 22.00 74.50

Deferred Tax (4.93) 27.12

Net Profit 91.45 256.11

YOUR DIRECTORS RECOMMENDTHE FOLLOWING APPROPRIATIONS

Surplus in Profit & Loss Account as per last Balance Sheet 825.90 627.48

Net Profit for the year 91.45 256.11

Less:

Transfer to General Reserve - 42.50 Proposed dividend - 12.62

Tax on Proposed Dividend - 2.57

Balance as at year end 917.35 825.90

TRANSFERTO RESERVES

The Company does not propose to transfer any amount to the general reserve out of the amount available for appropriation and the entire amount of Rs, 917.35 crores available for appropriation is proposed to be retained in the statement of profit and loss.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with Accounting Standard AS-21,the audited consolidated financial statements are provided in the Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS

a) Industry Structure and Development

The global pharmaceutical market is now estimated to be US $ 1.1 trillion and is expected to grow at a CAGRof about 5% over next few years. A move to value based outcomes in drug research, increased penetration of specialty drugs, greater patient access to medicines and continued rise of emerging markets will be primary drivers behind increase in global medicine spending through 2020.

Thanks to advances in science and technology, the research based pharmaceutical industry is entering an exciting new era in medicine development. The research methods are evolving and the innovative pharmaceutical industry aims to turn fundamental research into innovative treatments that are widely available and accessible to patients.

b) Outlook, Risks and Concerns

The outlook for the pharmaceuticals industry remains positive. The pharma industry growth will be driven mainly by population growth, ageing population and increased healthcare spending in pharmerging countries.

Though in the world pharmaceutical market, India is ranked 3rd in volume terms, it has a negligible 1.4% share by value terms. Branded generics constitute 70% of Indian domestic pharmaceutical market. Indian pharmaceutical market is considered to be highly fragmented and consolidation has become an important feature of this industry. Indian pharma industry is today diversified into various spheres of pharma activities including manufacturing of branded and generics formulations and APIs, Research & Development, clinical research and laboratory testing.

Indian pharmaceuticals exports have significantly increased from US$ 2 billion in 2006 to about US$ 14 billion in 2015. USA with 28% is India''s largest pharma export destination followed by European Union. It is estimated that 40% of the generics drugs sold in the USA are manufactured in India. Indian pharmaceuticals manufacturing facilities registered with US FDA at 500 plus is also highest for any country outside USA.

Indian companies are focusing on global generic and API business, R&D activities and contract research and manufacturing alliances. India is also fast emerging as a preferred pharmaceuticals manufacturing location.

Increasing use of pharmaceutical generics in developed markets to reduce healthcare cost will provide attractive growth opportunities to generics manufacturers and thus Indian pharmaceutical industry is poised for an accelerated growth in the coming years.

However, poor public healthcare funding and infrastructure, low per capita consumption of medicines in developing and under developed countries including India, currency fluctuations, regulatory issues, government mandated price controls, inflation and resultant all round increase in input costs are few causes of concern.

During the year under report, there was no change in the nature of Company''s business.

c) Financial Performance and Operations Review

During the financial year under report, the Company registered a total income of Rs, 2838.92 crores as againstRs, 3120.40 crores in the previous year, a degrowth of 9%.

The ongoing US FDA regulatory issues adversely impacted the Company''s business. The Company''s branded formulations business in the emerging markets also suffered due to significant currency fluctuations.

The Company is in the process of implementing comprehensive remedial measures at all its manufacturing sites to ensure quality and regulatory compliances. These remedial measures included review of all processes and procedures, revamping of training system, recruitment of senior quality personnel as well as automation of quality control laboratories. Your Company is committed in resolving the regulatory challenges faced at the earliest. The Company is also committed to its philosophy of highest quality in manufacturing, operations, systems, integrity and cGMP culture. Your management is confident that implementation of remedial measures will ensure that the Company will regain all its regulatory approvals in due course of time.

During the financial year under report, the Earnings before interest, depreciation and foreign exchange loss amounted to Rs, 347.13 crores as against Rs, 556.27 crores in the previous financial year. The operations have resulted in a net profit of Rs, 91.45 crores during the financial year under report as against Rs, 256.11 crores in the previous financial year, a de-growth of 64%. The reduction in the net profit is mainly on account of lower sales due to regulatory issues in North America, lower institutional business and also lower branded formulations business in the emerging markets due to significant currency fluctuations.

Break up of sales (Rs.Cros) (net of excise duty& sales tax)

2015-16

Domestic Exports Total Growth

Formulations 1206.70 922.05 2128.75 -10%

APIs & Intermediates 140.66 506.67 647.33 -6%

Net Total Sales 1347.36 1428.72 2776.08 -9%

Growth 3% -18% -9% -

Break up of Sales 2014-15

Domestic Exports Total Growth

Formulations 1128.73 1239.21 2367.94 -3%

APIs & Intermediates 178.32 513.65 691.97 -10%

Net Total Sales 1307.05 1752.86 3059.91 -4%

Growth 15% -15% -4%

d) International Business

The products of the Company are now exported to nearly 120 countries across the globe. During the financial year under report, the international business amounted to Rs, 1428.72 crores as against Rs, 1752.86 crores in the previous year. Formulation exports of the Company decreased by 26% toRs, 922.05 crores and exports of APIs and Drug Intermediates decreased by 1% toRs, 506.67 crores.

(Rs.Crores)

2015-16

Continent wise Formulations APIsand Total % to exports exports Intermediates

Europe 373.50 175.10 548.60 38%

Africa 198.82 20.10 218.92 15%

Americas 113.30 151.96 265.26 19%

Asia 55.87 148.03 203.90 14%

CIS 92.99 6.63 99.62 7%

Australasia 87.57 4.85 92.42 7%

Total 922.05 506.67 1428.72 100%

Continent-wise Exports 2014-15

Formulation APIS And Total % to Intermediates exports

Europe 469.32 175.70 645.02 37%

Africa 32899 20.00 348.99 20%

Americas 154.60 149.77 304.37 17%

Asia 56.98 157.36 214.34 12%

CIS 146.59 7.18 153.77 9%

Australasia 82,73 3.64 86.37 5%

Total 1239.21 513.65 1752.86 100%



Therapeutic Group 2015-16 2014-15

Cardiovascular & Anti-diabetics 31% 30%

No steroidal Anti-inflammatory drugs (NSAID) 25% 21%

Anti-malaria''s 17% 24%

Anti-bacterial 12% 11%

Central Nervous System (CNS) products 5% 3%

Anthelmintics 3% 5%

Gastrointestinal (G.I) products 3% 2%

Cough Preparations 2% 2%

Others 2% 2%

TOTAL 100% 100

Domestic Branded Formulation



Europe

The Company achieved European export sales of Rs, 548.60 crores during the financial year under report as against sales of Rs, 645.02 crores in the previous year, a de-growth of 15% from this continent.

The Company has developed and submitted 61 generic formulation dossiers for registration in Europe out of which 59 dossiers are registered. The Company has also obtained certificate of suitability (COS) of 44 APIs from European Directorate for Quality Medicines.

Africa

The Company achieved export sales of Rs, 218.92 crores to Africa during the financial year under report as againstRs, 348.99 crores in the previous year.

The Company exports branded and generic formulations as well as APIs to many African countries. The Company markets branded formulations in countries like Uganda, Ghana, Ivory Coast, Burkina Faso, Sudan, Tanzania, Kenya, Ethiopia and Nigeria through dedicated field force.The Company also supplies generics formulations to South Africa.

The Company is expanding its branded formulations business in this continent through expansion of geographical coverage and increase in the number of branded formulations marketed. The Company is also continuously filing new formulation dossiers for registration in the African countries.

The reduction in sales from this continent is mainly on account of reduced institutional anti-malarial formulations business and lower branded formulations business due to currency fluctuations mainly in the West African markets.

Americas

The Company exports its APIs to USA, Canada, Brazil, Mexico and generic formulations to USA, Canada and branded formulations to Panama, West Indies, Peru and Colombia in this sub-continent.

The Company achieved sales of Rs, 265.26 crores in this continent as against Rs, 304.37 crores in the previous year. As reported earlier, the US formulations and APIs business was impacted due to US FDA import alert for three of the Company''s manufacturing facilities.

The Company has signed agreements with marketing partners for sale / distribution of generic formulations on a profit sharing arrangement in the US market. 42 ANDA applications of generic formulations developed by the Company are filed with US FDA out of which 18 ANDA applications are granted till date. 47 DMFs of the Company are also currently filed with US FDA.

Asia

The Asian business (excluding India) recorded sales of Rs, 203.90 crores as against Rs, 214.34 crores in the previous year. The Company exports formulations as well as APIs to several Asian countries. In countries like Nepal, Srilanka, Myanmar, Philippines and Vietnam, the Company markets its branded formulations through dedicated field force.

Confederation of Independent States (CIS)

The Company''s CIS business recorded sales ofRs, 99.62 crores as againstRs, 153.77 crores in the previous year. Most of the business is from branded formulation sales in Russia, Ukraine, Kazakhstan and Belarus. The Company''s branded formulations are marketed in this continent by its own field force appointed through its non-trading offices.

During the financial year, the Company''s business was impacted in the CIS market due to significant currency fluctuations.

Australasia

The Company exports APIs to Australia and formulations to Australia and New Zealand in this sub-continent. The business from this continent was Rs, 92.42 crores during the financial year under report as against Rs, 86.37 crores in the previous year, a growth of 7%.

The steep depreciation of Australian and New Zealand dollars impacted the business growth of the Company in this market during the financial year under report.

The Company has developed and submitted 67 generic formulation dossiers for registration in this market out of which 57 dossiers are registered.

e) Domestic Formulations Business

The Company''s formulations business in India now comprises of 13 marketing divisions focusing on key therapeutic segments.

During the financial year under report, the domestic formulations business recorded a growth of 7% at Rs, 1206.70 crores as against Rs, 1128.73 crores in the previous year.

The lower growth in the domestic formulations business is mainly on account of reduced anti-malarial formulations business. The Government notification banning marketing of few fixed dose combinations also impacted this business in the month of March, 2016.

2015-16 2014-15

Therapeutic segment % to sales % to Sales Non steroidal anti-inflammatory drugs 39% 36% (NSAID)

Cardiovascular & Anti-diabetics 23% 23%

Anti-malarials 12% 14%

Anti-bacterials 6% 7%

Gastro Intestinal (G I) products 5% 5%

Cough Preparations 4% 4%

Dermatology 4% 4%

Neuro Psychiatry 3% 3%

Urology 2% 2%

Neutraceuticals 1% 1%

Others 1% 1%

Total 100% 100%

f) Active Pharmaceutical Ingredients (APIs) and Intermediates Business During the financial year under report, the APIs and Intermediates business recorded sales ofRs, 647.33 crores as againstRs, 691.97 crores in the previous financial year. Nearly 78% of the APIs and Intermediates business is from exports.

The Company exports its APIs across the globe. Most of the international customers of the Company are end user formulations manufacturers including several multinational companies.

Your Company is in the process of commercializing several new APIs for the global market.

g) Intellectual Property Protection

The Company has created intellectual property management group within the Research and Development centers to deal with management and protection of intellectual property. The Company has filed many patent applications till date in India, USA and other countries. These applications relate to novel and innovative manufacturing processes for the manufacture of APIs and pharmaceutical formulations.

h) Manufacturing Facilities

The green field API manufacturing facility of the Company at Village Ranu, Tehsil Padra, District - Vadodara (Gujarat) commenced manufacturing operations during the financial year under report. This manufacturing unit is currently in the process of developing/scaling-up APIs for commercialization.

i) Internal Control Systems and its adequacy

The Company has adequate internal control systems including suitable monitoring procedures commensurate with its size and the nature of the business. The internal control systems provide for all documented policies, guidelines, authorisation and approval procedures. The Company has an internal audit department which carries out audits throughout the year. The statutory auditors while conducting the statutory audit, review and evaluate the internal controls and their observations are discussed with the Audit committee of the Board.

j) Human Resources

The human resource plays a vital role in the growth and success of an organization. The Company has maintained cordial and harmonious relations with employees across various locations.

During the year under review, various training and development workshops were conducted to improve the competency level of employees with an objective to improve the operational performance of individuals. The Company has built a competent team to handle challenging assignments. The Company strives to enhance the technical, work related and general skills of employees through dedicated training programs on a continuous basis.

The Company has 13132 permanent employees as on 31st March, 2016 out of which 6050 employees are engaged in the marketing and distribution activities.

k) Cautionary Statement

Certain statement in the management discussion and analysis may be forward looking within the meaning of applicable securities law and regulations and actual results may differ materially from those expressed or implied. Factors that would make differences to Company''s operations include competition, price realisation, currency fluctuations, regulatory issues, changes in government policies and regulations, tax regimes, economic development within India and the countries in which the Company conducts business and other incidental factors.

MATERIAL CHANGES AND COMMITMENTS AFTER THE END OF THE FINANCIAL YEAR

No material changes or commitments affecting the financial position of the Company have occurred between the end of the financial year to which financial statements in this report relate and the date of this report.

SHARE CAPITAL

The paid-up equity share capital of the Company as at 31st March, 2016 is Rs, 25.24 crores. The Company currently has no outstanding shares issued with differential rights, sweat equity or ESOS.

SUBSIDIARY, JOINT VENTURE AND ASSOCIATE COMPANIES

During the year under report, the wholly owned subsidiary companies Ipca Pharmaceuticals (Shanghai) Ltd. incorporated in the People''s Republic of China and National Druggists Pty Ltd. incorporated in the Republic of South Africa were voluntarily closed down. Onyx Research Chemicals Limited, U.K. merged with its holding company Ipca Laboratories (UK) Ltd. Consequent to this, Onyx Scientific Ltd. has now become wholly owned subsidiary of Ipca Laboratories (U.K.) Ltd. which in turn is the wholly owned subsidiary of the Company.

There has been no material change in the nature of the business of the subsidiaries. The Company has no subsidiary which can be considered as material within the meaning of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In accordance with the provisions of Section 136(1) of the Companies Act, 2013, the following have been placed on the website of the Company www.ipca.com:

a) Annual Report of the Company containing therein its standalone and the consolidated financial statements; and

b) Audited annual accounts of each of the subsidiary companies.

As required, the financial data of the subsidiaries, joint venture and associate companies is furnished in the prescribed Form AOC-1 as an Annexure to the consolidated financial statements.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, the consolidated financial statements of the Company are attached.

RESEARCH & DEVELOPMENT (R&D)

The Company has always considered Research and Development (R&D) as crucial for the sustained growth of the Company. In the recent years, the Company has stepped-up investments in R&D to keep pace with the changing domestic and global scenario.

The Company has R&D centres at Mumbai, Ratlam,Athal and Ranu duly recognized by the Government of India, Ministry of Science and Technology, Department of Scientific & Industrial Research (DSIR). These R&D centres are also approved by the prescribed authority under Section 35 (2AB) of the Income Tax Act, 1961 for availing weighted tax benefit on the R&D expenditure.

The R&D expenditure of the Company during the financial year wasRs, 137.67 crores (4.97% of the turnover) as againstRs, 157.19crores (5.16% of the turnover) in the previous year.

With qualified and experienced research scientists and engineers manning the research and development activities, the Company has focused its thrust on new and innovative process and product development for the manufacture of APIs with non-infringing processes. Apart from development of new dosage forms and drug delivery systems, improvement in processes and yield as well as cost reduction are also focus areas.

DIVIDEND

In order to conserve the resources and also having regard to the much lower net profit earned, the Board of Directors do not recommend any dividend for the financial year under report.

DIRECTORS

Mr. A. K. Jain and Mr. Pranay Godha retire by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves for re-appointment.

Mr. Prashant Godha is being re-appointed as the Executive Director of the Company for a further period of 5 years with effect from 16th August, 2016 and the necessary resolution in this regard is being proposed at the ensuing Annual General Meeting for the approval of the members.

Mr. Babulal Jain, Mr. Anand Kusre, Mr. Dev Parkash Yadava, Dr. Ramakanta Panda and Dr. (Mrs.) Manisha Premnath, who are independent directors, have submitted declaration that each of them meets the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and there has been no change in the circumstances which may affect their status as independent directors during the year.

In the opinion of the Board, the independent directors possess appropriate balance of skills, experience and knowledge, as required.

A brief note on Directors retiring by rotation and eligible for re-appointment is furnished in the Report on Corporate Governance.

KEY MANAGERIAL PERSONNEL

During the year under report, the following persons were Key Managerial Personnel of the Company:

Mr. Premchand Godha - Chairman & Managing Director/CEO

Mr. Ajit Kumar Jain - JointManaging Director/CFO

Mr. Pranay Godha - Executive Director

Mr. Prashant God - Executive Director

Mr. Harish P. Kamath - Corporate Counsel & Company Secretary

There was no change in the Key Managerial Personnel during the financial year.

POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION AND OTHER DETAILS

The Nomination and Remuneration Committee has laid down the criteria for Directors ''appointment and remuneration including criteria for determining qualification, positive attributes and independence of a Director. The following attributes/criteria for selection have been laid by the Board on the recommendation of the Committee:

the candidate should possess the positive attributes such as leadership, entrepreneurship, business advisor or such other attributes which in the opinion of the Committee are in the interest of the Company;

the candidate should be free from any disqualification as provided under Sections 164 and 167 of the Companies Act, 2013;

the candidate should meet the conditions of being independent as stipulated under the Companies Act, 2013 and Listing Agreement entered into with Stock Exchanges, in case of appointment as an independent director; and the candidate should possess appropriate educational qualification, skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations, infrastructure, medical, social service, professional teaching or such other areas or disciplines which are relevant for the Company''s business.

BOARD EVALUATION

The Nomination and Remuneration Committee lays down the criteria for performance evaluation of independent directors, Board of Directors and Committees of the Board. The criteria for performance evaluation is based on the various parameters like attendance and participation at meetings of the Board and Committees thereof, contribution to strategic decision making, review of risk assessment and risk mitigation, review of financial statements, business performance and contribution to the enhancement of brand image of the Company.

The Board has carried out evaluation of its own performance as well as that of the Committees of the Board and all the Directors.

The annual evaluation was carried out in the following manner:

Sr. No. Performance evaluation of Performance evaluation performed by

1. Board and individual directors Board after seeking inputs from all directors

2. Board Committees Board seeking inputs from all committee members

3. Individual Directors Nomination and Remuneration committee

4. Non-independent directors, Board as a whole and the Separate meeting of independent directors after taking views Chairman from executive directors

5. Board, its Committees and individual Directors At the board meeting held after the meeting of the independent directors based on evaluation carried out as above.

REMUNERATION POLICY

The objective and broad framework of the Company''s Remuneration Policy is to consider and determine the remuneration based on the fundamental principles of payment for performance, for potential and for growth. The Remuneration Policy reflects on certain guiding principles of the Company such as aligning remuneration with the longer term interests of the Company and its shareholders, promoting a culture of meritocracy and creating a linkage to corporate and individual performance and emphasising on line expertise and market competitiveness so as to attract the best talent. It also ensures the effective recognition of performance and encourages a focus on achieving superior operational results. The Nomination and Remuneration Committee recommends the remuneration of Directors and Key Managerial Personnel which is approved by the Board of Directors, subject to the approval of shareholders, where necessary. The level and composition of remuneration shall be reasonable and sufficient to attract, retain and motivate the directors, key managerial personnel and other employees of the quality required to run the Company successfully. The relationship of remuneration to performance should be clear and meet appropriate performance benchmarks. The remuneration to directors, key managerial personnel and senior management personnel should also involve a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals. The Remuneration Policy is placed on the Company''s website www.ipca.com.

Information about elements of remuneration package of individual directors is provided in the extract of the Annual Return as provided under Section 92(3) of the Companies Act, 2013 which is enclosed.

FAMILIARISATION PROGRAM FOR INDEPENDENT DIRECTORS

Details of the familiarisation program for independent directors is disclosed on the website of the Company www.ipca.com.

MEETINGS OF THE BOARD AND COMMITTEES THEREOF

This information has been furnished under Report on Corporate Governance, which is annexed.

DIRECTORS'' RESPONSIBILITY STATEMENT

Your Directors confirm:

i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) that your Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year March 31,2016 and of the profit of the Company for the financial year;

iii) that your Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) that your Directors have prepared the annual accounts on a going concern basis;

v) that your Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

vi) that your Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

CORPORATE GOVERNANCE

As per the requirement of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has complied with the requirements of Corporate Governance in all material aspects.

A report on Corporate Governance (Annexure 1) together with a certificate of its compliance from a Practising Company Secretary, forms part of this report.

FIXED DEPOSITS

During the year under review, the Company has not accepted any fixed deposits and as such no amount of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

AUDIT COMMITTEE

Details of the Audit Committee along with its constitution and other details are provided in the Report on Corporate Governance.

AUDITORS, AUDIT REPORT AND AUDITED ACCOUNTS

M/s Natvarlal Vepari & Co. (Firm Registration No. 106971W), Chartered Accountants, retire as auditors and being eligible, offer themselves for re-appointment. Under the provisions of Section 139 of the Companies Act, 2013, they are eligible to be appointed as the Statutory Auditors of the Company only till the conclusion of the Annual General Meeting scheduled to be held in the year 2017.

The Auditors'' Report read with the notes to the accounts referred to therein are self-explanatory and, therefore, do not call for any further comments. There are no qualifications, reservations or adverse remarks made by the Auditors.

COST AUDIT

Pursuant to the provisions of Section 148 of the Companies Act, 2013, M/s. ABK & Associates, Cost Accountants (Firm Registration No. 000036) were appointed as the Cost Auditors to conduct audit of cost records of the Company for the financial year 2015-16.

The Cost Audit Report for the financial year 2014-15, which was due to be filed with the Ministry of Corporate Affairs by 27th October, 2015 was filed on 16th October, 2015.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 and other applicable provisions, if any, of the Companies Act, 2013, M/s. Parikh & Associates, Practising Company Secretaries were appointed as the Secretarial Auditors for auditing the secretarial records maintained by the Company for the financial year 2015-16.

The Secretarial Auditors ''Report is annexed hereto. There are no qualifications, reservations or adverse remarks made by the Secretarial Auditors.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company is committed to good corporate citizenship. As a part of its corporate social responsibility, the Company continues to undertake a range of activities including healthcare and education to improve living conditions of the needy people. The CSR policy of the Company is placed on the website of the Company (http://www.ipca.com/pdf/corporate_policy/Corporate_Social_ Responsibility_Policy.pdf).

During the year under report, the Company has also supported healthcare and educational projects undertaken by charitable institutions and organizations.

In accordance with the provisions of Section 135 of the Companies Act, 2013, an abstract on Company''s CSR activities is furnished as Annexure 2 to this report.

SAFETY, ENVIRONMENT AND HEALTH

The Company considers safety, environment and health as the management responsibility. Regular employee training programmes are carried out in the manufacturing facilities on safety, environment and health.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

The Company has not given any loans or guarantees or made any investments in contravention of the provisions of the Section 186 of the Companies Act, 2013. The details of the loans and guarantees given and investments made by the Company are provided in the notes to the financial statements.

RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were on arm''s length basis and were in the ordinary course of Company''s business. The Company has not entered into any contract, arrangement or transaction with any related party which could be considered as material as defined under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Board has approved a policy for related party transactions which has been uploaded on the website of the Company (http://www.ipca.com/pdf/corporate_policy/Related_Party_ Transactions.pdf).

All the related party transactions are placed before the Audit Committee as well as the Board for approval on a quarterly basis. Omnibus approval was also obtained from the Audit Committee and the Board on an annual basis for repetitive transactions.

Related party transactions under Accounting Standard -AS18 are disclosed in the notes to the financial statements. Prescribed Form No. AOC-2 pursuant to clause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 is furnished as Annexure 3 to this report.

EMPLOYEES

Pursuant to the provisions of Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration and other details as set out in the said Rules is furnished under Annexure 4 to this report.

However, having regard to the provisions of the first proviso to Section 136(1) of the Act and as advised, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the registered office of the Company during working hours excluding Saturdays and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request. The full Annual Report including the aforesaid information is available on the Company''s website www.ipca.com.

CODE OF CONDUCT

The Board has laid down a code of conduct for board members and senior management personnel of the Company. The code incorporates the duties of independent directors as laid down in the Companies Act, 2013. The said code of conduct is posted on Company''s website www.ipca.com.The Board members and senior management personnel have affirmed compliance with the said code of conduct. A declaration in this regard signed by the Chairman & Managing Director / CEO is given at the end of the Corporate Governance Report.

WHISTLE BLOWER POLICY /VIGIL MECHANISM

There is a Whistle Blower Policy in the Company and that no personnel has been denied access to the Chairman of the Audit Committee. The policy provides for adequate safeguards against victimization of persons who use vigil mechanism. The Whistle Blower Policy is posted on the website of the Company www.ipca.com.

PREVENTION OF INSIDER TRADING

The Company has also adopted a code of conduct for prevention of insider trading. All the Directors, senior management employees and other employees who have access to the unpublished price sensitive information of the Company are governed by this code. During the year under Report, there has been due compliance with the said code of conduct for prevention of insider trading.

The Board at its meeting held on 30th May 2015 has adopted a revised Code of Prevention of Insider Trading based on the SEBI (Prohibition of Insider Trading) Regulations, 2015. The same has been placed onthewebsiteoftheCompanywww.ipca.com.

BUSINESS RISK MANAGEMENT

Pursuant to the provisions of Section 134 of the Companies Act, 2013, the Company has constituted a Risk Management Committee. The details of the Committee and its terms of reference are provided in the Report on Corporate Governance, which is annexed.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant or material orders passed by any regulator, tribunal or court that would impact the going concern status of the Company and its future operations.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

In accordance with the requirements of Section 134 of the Companies Act, 2013, statement showing particulars with respect to conservation of energy, technology absorption and foreign exchange earnings and outgo is furnished as Annexure 5 to this report.

EXTRACT OF ANNUAL RETURN

In accordance with the requirements of Section 92 (3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of Annual Return in Form MGT-9 is furnished as Annexure 6 to this report.

BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report of the Company for the financial year ended 31st March, 2016 forms part of this Report. The same is also uploaded on the Company''s website www.ipca.com.

ACKNOWLEDGEMENTS

Your Directors place on record their appreciation for the continued co-operation and support extended to the Company by the bankers and financial institutions. Your Directors also thank the medical profession, the trade and consumers for their patronage of the Company''s products. Your Directors also place on record their profound admiration and sincere appreciation of the continued hard work put in by employees at all levels.

For and on behalf of the Board

Mumbai

Premchand Godh

30th May, 2016 Chairman & Managing Director


Mar 31, 2015

TO THE MEMBERS

The Directors have pleasure in presenting the 65th Annual Report and Audited Financial Statements for the year ended 31st March, 2015.

(Rs. crores) For the year ended For the year ended 31.3.2015 31.3.2014

Sales and other Income (net of Excise duty) 3120.91 3256.25

Profit before financial cost, depreciation & Foreign Exchange translations (Gain) / Loss 556.27 826.66

Less : Finance cost 25.62 24.58

Depreciation and Amortisation 177.17 100.89

(Gain) / Loss on foreign exchange translations/transactions (4.25) 72.10

Profit before tax 357.73 629.09

Less : Provision for taxation

Current Tax 74.50 135.00

Deferred Tax 27.12 16.72

Net Profit 256.11 477.37

YOUR DIRECTORS RECOMMEND THE FOLLOWING APPROPRIATIONS

Surplus in Profit & Loss Account as per last Balance Sheet 627.48 373.93

Net Profit for the year 256.11 477.37

Less:

Transfer to General Reserve 42.50 150.00

Interim dividend - 31.55

Tax on Interim dividend - 5.36

Proposed dividend / final dividend 12.62 31.55

Tax on Proposed Dividend 2.57 5.36

Balance as at year end 825.90 627.48

TRANSFER TO RESERVES

The Company proposes to transfer Rs. 42.50 crores to the general reserve out of the amount available for appropriation and an amount of Rs. 825.90 crores is proposed to be retained in the statement of profit and loss.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with Accounting Standard AS-21, the audited consolidated financial statements are provided in the Annual Report.

MATERIAL CHANGES AND COMMITMENTS AFTER THE END OF THE FINANCIAL YEAR

No material changes or commitments affecting the financial position of the Company have occurred between the end of the financial year to which financial statements in this report relate and the date of this report. SHARE CAPITAL

The paid-up equity share capital of the Company as at 31st March, 2015 is Rs. 25.24 crores. The Company currently has no outstanding shares issued with differential rights, sweat equity or ESOS.

SUBSIDIARY, JOINT VENTURE AND ASSOCIATE COMPANIES

During the financial year under report, M/s. Krebs Biochemicals and Industries Ltd. became an associate company. No other company has become / ceased to be subsidiary or joint venture or associate company during the financial year.

During the year, as a part of group re-construction, Ipca Laboratories (UK) Ltd. acquired the entire issued share capital of Onyx Scientific Ltd., UK from its wholly owned subsidiary Onyx Research Chemicals Ltd., U.K. on 25th March, 2015 in lieu of capital dividend declared by the said company. Consequent to this, Onyx Scientific Ltd., UK has become wholly owned subsidiary of Ipca Laboratories (UK) Ltd. from the said date. From the said date, Onyx Research Chemicals Ltd. UK has ceased to trade and is in the process of being dissolved.

The wholly owned subsidiary company, Ipca Pharmaceuticals (Shanghai) Ltd., incorporated in the Peoples Republic of China, is in the process of being voluntarily closed down.

There has been no material change in the nature of the business of the subsidiaries. The Company has no subsidiary which can be considered as material within the meaning of Clause 49 (V) (E) of Listing Agreement.

In accordance with the provisions of Section 136(1) of the Companies Act, 2013, the following have been placed on the website of the Company www.ipca.com:

a) Annual Report of the Company, containing therein its standalone and the consolidated financial statements; and

b) audited annual accounts of each of the subsidiary companies.

As required, the financial data of the subsidiaries, joint venture and associate companies is furnished in the prescribed Form AOC-1 as an Annexure to the consolidated financial statements.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, the consolidated financial statements of the Company are attached.

RESEARCH & DEVELOPMENT (R&D)

The Company has always considered Research and Development (R&D) as crucial for the sustained growth of the Company. The Company has stepped-up investments in R&D to keep pace with the changing domestic and global scenario.

The Company has R&D centers at Mumbai, Ratlam, Athal and Indore, duly recognized by the Government of India, Ministry of Science and Technology, Department of Scientific & Industrial Research (DSIR). These R&D centers are also approved by the prescribed authority under Section 35 (2AB) of the Income Tax Act, 1961 for availing weighted tax benefit on the R&D expenditure.

The Company has set up new R&D Centres at Kandivli, Mumbai for Biotech Research and at Village Ranu (District-Vadodara), Gujarat for Chemicals Research. Both these R&D Centres have commenced their operations in financial year under report.

The Company has stepped up its R&D expenditure from Rs. 123.24 crores (3.87% of the turnover) in the previous year to Rs. 157.19 crores (5.16% of the turnover) in the year under report.

With qualified and experienced research scientists and engineers manning the research and development activities, the Company has focused its thrust on new and innovative process and product development for the manufacture of APIs with non-infringing processes. Apart from development of new dosage forms and drug delivery systems, improvement in processes and yield as well as cost reduction are also focus areas.

DIVIDEND

Your Directors had not declared any interim equity dividend for the financial year under report. Your directors are now pleased to recommend a equity dividend of Rs. 1/- per share (50%) for the financial year under report as against 250% paid in the previous financial year. The dividend will be tax free in the hands of the shareholders.

The dividend amounting to Rs. 12.62 crores and dividend tax amounting to Rs. 2.57 crores, if approved at the ensuing Annual General Meeting, will be appropriated out of the profits for the year.

DIRECTORS

During the year under report, Mr. Madhukar R. Chandurkar and Dr. V. V. Subba Rao resigned as Directors of the Company on 29th May, 2014 due to their other pre-occupations. The Board place on record its sincere appreciation for the services rendered to the Company by Mr. M. R. Chandurkar and Dr. V. V. Subba Rao during their tenure as Directors of the Company.

Pursuant to the provisions of Section 149 of the Companies Act, 2013, Mr. Babulal Jain, Mr. Anand Kusre, Mr. Dev Parkash Yadava and Dr. Ramakanta Panda have been appointed as Independent Directors for a period of five years till 31st March, 2019 at the annual general meeting held on 31st July, 2014.

At the meeting of the Board of Directors of the Company held on 21st September, 2014, Dr. (Mrs.) Manisha Premnath was appointed as an Additional/Independent Director of the Company. She holds the office of directorship till the conclusion of the ensuing Annual General Meeting. Being eligible, she has offered herself for appointment as an Independent Director of the Company.

Mr. Prashant Godha and Mr. Premchand Godha, retire by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves for re-appointment.

Mr. Babulal Jain, Mr. Anand Kusre, Mr. Dev Parkash Yadava, Dr. Ramakanta Panda and Dr. (Mrs.) Manisha Premnath, who are independent directors, have submitted a declaration that each of them meets the criteria ofindependence as provided in Section149(6) ofthe Companies Act, 2013 and there has been no change in the circumstances which may affect their status as independent director during the year. In the opinion of the Board, the independent directors possess appropriate balance of skills, experience and knowledge, as required. A brief note on Directors retiring by rotation and eligible for re-appointment as well as Independent Director being appointed is furnished in the Report on Corporate Governance.

KEY MANAGERIAL PERSONNEL

During the year under report, the Company has appointed following persons as Key Managerial Personnel:

Mr. Premchand Godha - Chairman & Managing Director/CEO

Mr. Ajit Kumar Jain - Joint Managing Director / CFO

Mr. Harish P. Kamath - Corporate Counsel & Company Secretary

POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION AND OTHER DETAILS

The Nomination and Remuneration Committee has laid down the criteria for Directors'' appointment and remuneration including criteria for determining qualification, positive attributes and independence of a Director. The following attributes/criteria for selection have been laid by the Board on the recommendation of the Committee:

- the candidate should posses the positive attributes such as Leadership, Entrepreneurship, Business Advisor or such other attributes which in the opinion of the Committee are in the interest of the Company;

- the candidate should be free from any disqualifications as provided under Sections 164 and 167 of the Companies Act, 2013;

- the candidate should meet the conditions of being independent as stipulated under the Companies Act, 2013 and Listing Agreement entered into with Stock Exchanges, in case of appointment of an independent director; and

- the candidate should posses appropriate educational qualification, skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations, infrastructure, medical, social service, professional teaching or such other areas or disciplines which are relevant for the Company''s business.

BOARD EVALUATION

The Nomination and Remuneration Committee lays down the criteria for performance evaluation of independent directors, Board of Directors and Committees of the Board. The criteria for performance evaluation is based on the various parameters like attendance and participation at meetings of the Board and Committees thereof, contribution to strategic decision making, review of risk assessment and risk mitigation, review of financial statements, business performance and contribution to the enhancement of brand image of the Company.

The Board has carried out evaluation of its own performance as well as that of the Committees of the Board and all the Directors.

The annual evaluation was carried out in the following manner:

Sr. Performance evaluation of Performance evaluation performed by

1. Board and individual direc Board after seeking inputs from all tors directors

2. Board Committees Board seeking inputs from all committee members

3. Individual Directors Nomination and Remuneration committee

4. Non-independent directors, Separate meeting of independent board as a whole and the directors after taking views Chairman from executive directors

5. Board, its Committees and At the board meeting held after the individual Directors meeting of the independent directors based on evaluation carried out as above.

REMUNERATION POLICY

The objective and broad framework of the Company''s Remuneration Policy is to consider and determine the remuneration based on the fundamental principles of payment for performance, for potential and for growth. The Remuneration Policy reflects on certain guiding principles of the Company such as aligning remuneration with the longer term interests of the Company and its shareholders, promoting a culture of meritocracy and creating a linkage to corporate and individual performance and emphasising on line expertise and market competitiveness so as to attract the best talent. It also ensures the effective recognition of performance and encourages a focus on achieving superior operational results. The Nomination and Remuneration Committee recommends the remuneration of Directors and Key Managerial Personnel which is approved by the Board of Directors, subject to the approval of shareholders, where necessary. The level and composition of remuneration shall be reasonable and sufficient to attract, retain and motivate the directors, key managerial personnel and other employees of the quality required to run the Company successfully. The relationship of remuneration to performance should be clear and meet appropriate performance benchmarks. The remuneration to directors, key managerial personnel and senior management personnel should also involve a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals. The Remuneration Policy is placed on the Company''s website www.ipca.com.

Information about elements of remuneration package of individual directors is provided in the extract of the Annual Return as provided under Section 92(3) of the Companies Act, 2013 which is enclosed.

FAMILIARISATION PROGRAM FOR INDEPENDENT DIRECTORS

Details of the familiarization program of independent directors is disclosed on the website of the Company www.ipca.com. MEETINGS OF THE BOARD AND COMMITTEES THEREOF

This information has been furnished under Report on Corporate Governance, which is annexed.

DIRECTORS'' RESPONSIBILITY STATEMENT

Your Directors confirm:

i) that in the preparation of the annual accounts, the applicable accounting standards have been followed alongwith proper explanation relating to material departures;

ii) that your Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year March 31,2015 and of the profit of the Company for the financial year;

iii) that your Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) that your Directors have prepared the annual accounts on a going concern basis;

v) that your Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

vi) that your Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

CORPORATE GOVERNANCE

As per the requirement of listing agreement with the Stock Exchanges, the Company has complied with the requirements of Corporate Governance in all material aspects.

A report on Corporate Governance (Annexure 1) together with a certificate of its compliance from a Practising Company Secretary, forms part of this report.

FIXED DEPOSITS

During the year under review, the Company has not accepted any fixed deposits and as such no amount of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

AUDIT COMMITTEE

Details of the Audit Committee along with its constitution and other details are provided in the Report on Corporate Governance. AUDITORS, AUDIT REPORT AND AUDITED ACCOUNTS

M/s Natvarlal Vepari & Co. (Firm Registration No. 106971W), Chartered Accountants, retire as auditors and being eligible, offer themselves for re-appointment.

The Auditors'' Report read with the notes to the accounts referred to therein are self-explanatory and, therefore, do not call for any further comments. There are no qualifications, reservations or adverse remarks made by the Auditors.

COST AUDIT

Pursuant to the provisions of Section 148 of the Companies Act, 2013, M/s. ABK & Associates, Cost Accountants (Firm Registration No. 000036) were appointed as the Cost Auditors to conduct audit of cost records for Bulk Drugs and Formulations activities of the Company for the financial year 2014-15.

The Cost Audit Report for the financial year 2013-14, which was due to be filed with the Ministry of Corporate Affairs by 27th September, 2014 was filed on 25th September, 2014.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 and other applicable provisions, if any, of the Companies Act, 2013, M/s. Parikh & Associates, Practising Company Secretaries were appointed as the Secretarial Auditor for auditing the secretarial records of the Company for the financial year 2014-15.

The Secretarial Auditors'' Report is annexed hereto. There are no qualifications, reservations or adverse remarks made by the Secretarial Auditors.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company is committed to good corporate citizenship. As a part of its corporate social responsibility, the Company continues to undertake a range of activities including healthcare and education to improve living conditions of the needy people. The CSR policy of the Company is placed on the website of the Company www.ipca.com (weblink - http://www.ipca.com/pdf/corporate_policy/ Corporate_Social_Resposibility_Policy.pdf).

During the year under report, the Company has also supported healthcare and educational projects undertaken by charitable institutions and organizations.

In accordance with the provisions of Section 135 of the Companies Act, 2013, an abstract on Company''s CSR activities is furnished as Annexure 2 to this report.

SAFETY, ENVIRONMENT AND HEALTH

The Company considers safety, environment and health as the management responsibility. Regular employee training programmes are carried out in the manufacturing facilities on safety, environment and health.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

The Company has not given any loans or guarantees or made investments in contravention of the provisions of the Section 186 of the Companies Act, 2013. The details of the loans and guarantees given and investments made by the Company are provided in the notes to the financial statements.

RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were on arm''s length basis and were in the ordinary course of Company''s business. The Company has not entered into any contract, arrangement or transaction with any related party which could be considered as material within the meaning of clause 49 of the listing agreement.

The Board has approved a policy for related party transactions which has been uploaded on the website of the Company (http://www. ipca.com/pdf/corporate_policy/ Related_Party_Transactions.pdf).

All the related party transactions are placed before the Audit Committee as well as the Board for approval on a quarterly basis. Omnibus approval was also obtained from the Audit Committee and the Board on an annual basis for repetitive transactions.

Related party transactions under Accounting Standard - AS18 are disclosed in the notes to the financial statements. Prescribed Form No. AOC-2 pursuant to clause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 is furnished as Annexure 3 to this report.

EMPLOYEES

Pursuant to the provisions of Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration and other details as set out in the said Rules is furnished as Annexure 4 to this report.

CODE OF CONDUCT

The Board has laid down a code of conduct for board members and senior management personnel of the Company.The code incorporates the duties of independent directors as laid down in the Companies Act, 2013. The said code of conduct is posted on Company''s website www.ipca.com. The Board members and senior management personnel have affirmed compliance with the said code of conduct. A declaration signed by the Chairman & Managing Director / CEO is given at the end of the Corporate Governance Report. WHISTLE BLOWER POLICY / VIGIL MECHANISM

There is a Whistle Blower Policy in the Company and that no personnel has been denied access to the Chairman of the Audit Committee. The policy provides for adequate safeguards against victimization of persons who use vigil mechanism. The Whistle Blower Policy is posted on the website of the Company www.ipca.com.

PREVENTION OF INSIDER TRADING

The Company has also adopted a code of conduct for prevention of insider trading. All the Directors, senior management employees and other employees who have access to the unpublished price sensitive information of the Company are governed by this code. During the year under Report, there has been due compliance with the said code of conduct for prevention of insider trading.

The Board at its meeting held on 30th May 2015 has adopted a revised Code of Prevention of Insider Trading based on the SEBI (Prohibition of Insider Trading) Regulations, 2015. The same has been placed on the website of the Company www.ipca.com. BUSINESS RISK MANAGEMENT

Pursuant to the provisions of Section 134 of the Companies Act, 2013, the Company has constituted a Risk Management Committee. The details of the Committee and its terms of reference are provided in the Report on Corporate Governance, which is annexed. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant or material orders passed by any regulator, tribunal or court that would impact the going concern status of the Company and its future operations.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

In accordance with the requirements of Section 134 of the Companies Act, 2013, statement showing particulars with respect to conservation of energy, technology absorption and foreign exchange earnings and outgo is furnished as Annexure 5 to this report. EXTRACT OF ANNUAL RETURN

In accordance with the requirements of Section 92 (3) of the Companies Act, 2013 and rule 12 (1) of the Companies (Management and Administration) Rules, 2014, an extract of Annual Return in Form MGT-9 is furnished as Annexure 6 to this report.

ACKNOWLEDGEMENTS

Your Directors place on record their appreciation for the continued co-operation and support extended to the Company by the bankers and financial institutions. Your Directors also thank the medical profession, the trade and consumers for their patronage of the Company''s products. Your Directors also place on record their profound admiration and sincere appreciation of the continued hard work put in by employees at all levels.

For and on behalf of the Board

Mumbai Premchand Godha 30th May, 2015 Chairman & Managing Director


Mar 31, 2013

To The Members

The Directors have pleasure in presenting the 63rd Annual Report and Audited Accounts for the year ended 31st March, 2013.

FINANCIAL RESULTS

(Rs. crores)

For the year For the year ended 31.3.2013 ended 31.3.2012

Sales and other Income (net of Excise duty) 2,797.08 2,342.98

Profit before financial cost, depreciation & foreign exchange translations Loss / (Gain) 639.95 526.40

Less : Finance cost 31.30 39.36

Depreciation and Amortisation 84.00 65.31

Loss/(Gain) on foreign exchange translations/transactions 63.28 52.79

Profit before tax 461.37 368.94

Less : Provision for taxation

Current Tax (net of MAT credit entitlement) 92.68 74.65

Deferred Tax 37.30 13.23

Short / (Excess) provision of earlier year - 0.89

Net Profit 331.39 280.17

YOUR DIRECTORS RECOMMEND THE FOLLOWING APPROPRIATIONS

Surplus in Profit & Loss Account as per last Balance Sheet 276.89 146.24

Addition on Amalgamation of Tonira Pharma Ltd. - 4.31

Net Profit for the year 331.39 280.17

Less:

Transfer to General Reserve 175.50 100.00

Transfer to Debenture Redemption Reserve - 7.00

Interim dividend 25.23 25.15

Tax on Interim dividend 4.09 4.08

Proposed final dividend 25.24 15.14

Tax on Proposed Dividend 4.29 2.46

Balance as at year end 373.93 276.89

SUBSIDIARY COMPANIES

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India under section 212 of the Companies Act, 1956, copy of the Balance Sheet, Statement of Profit and Loss, Report of the Board of Directors and Auditors of the Company''s subsidiaries have not been attached with the Balance Sheet of the Company. Any member interested in obtaining the same may write to the Company Secretary at the Corporate Office of the Company. These documents are available for inspection by Members at the registered office of the Company and will also be placed before the Annual General Meeting.

However, as required the financial data of the subsidiaries have been furnished under ''Details of Subsidiaries'' forming part of the Annual Report. The annual accounts of the subsidiaries are also uploaded on the website of the Company.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with Accounting Standard AS-21, the audited consolidated financial statements are provided in the Annual Report.

RESEARCH & DEVELOPMENT (R&D)

The Company has always considered Research and Development (R&D) as crucial for the sustained growth of the Company. The Company has stepped-up investments in R&D to keep pace with the changing domestic and global scenario.

The Company has R&D centers at Mumbai, Ratlam, Athal and Indore, duly recognised by the Government of India, Ministry of Science and Technology, Department of Scientific & Industrial Research (DSIR). These R&D centers are also duly approved by the prescribed authority under Section 35 (2AB) of the Income Tax Act, 1961 for availing weighted tax benefit on the R&D expenditure.

During the year under Report, the Company has set up a new R&D Centre at Plot No. 58DD, Kandivli Industrial Estate, Kandivli (West), Mumbai - 400 067 for expanding its formulations R&D activities.

The Company is in the process of setting up a new Research Centre at Kandivli, Mumbai for biotech research & development activities at Plot No. 125 and 126 of Kandivli Industrial Estate, Kandivli (West), Mumbai - 400 067. The Company is also in the process of setting-up a new R&D Centre at Village Ranu, Tehsil Padra, District-Vadodara , Gujarat.

The Company has stepped up its R&D expenditure from Rs. 77.96 crores (3.39% of the turnover) in the previous year to Rs. 100.74 crores (3.68% of the turnover) in the year under report.

With qualifi ed and experienced research scientists and engineers manning the research and development activities, the Company has focused its thrust on new and innovative process and product development for the manufacture of APIs with non-infringing processes.

Apart from development of new dosage forms and drug delivery systems, improvement in processes and yield as well as cost reduction are also focus areas.

PAID-UP EQUITY SHARE CAPITAL

During the year under report, the Company allotted 48,750 fully paid up equity shares of Rs. 2/- each at an exercise price of Rs. 63/- per share to the option grantees on exercise of stock options granted on 11th November, 2008. With this allotment, all the stock options granted by the Company under the ESOS have either been exercised or forfeited.

In view of the allotment of equity shares under ESOS and also allotment of equity shares to the shareholders of Tonira Pharma Ltd. upon its merger with the Company, the Company''s paid-up equity share capital increased to Rs. 25,23,98,218/- consisting of 12,61,99,109 equity shares of Rs. 2/- each.

Disclosure pursuant to the provisions of SEBI (ESOS and ESPS) Guidelines, 1999 is annexed to this report as Annexure I. DIVIDEND

Your Directors had declared interim equity dividend of Rs. 2/- per share (100%) at the meeting of the Board of Directors of the Company held on 25th October, 2012. The said interim dividend was paid on 9th November, 2012 to those shareholders, whose names appeared on the register of members of the Company on 2nd November, 2012. Your directors are now pleased to recommend a final equity dividend of Rs. 2/- per share (100%), making the total dividend recommended to Rs. 4/- per share (200%) for the financial year under report as against 160% paid in the previous financial year. The dividend will be tax free in the hands of the shareholders.

The dividend (inclusive of interim dividend already paid) amounting to Rs. 50.47 crores and dividend tax amounting to Rs. 8.38 crores, if approved at the ensuing Annual General Meeting, will be appropriated out of the profits for the year.

DIRECTORS

Mr. Babulal Jain, Mr. Anand Kusre and Dr. V. V. Subba Rao, retire by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves for re-appointment.

Mr. R. S. Hugar, Director of the Company suddenly expired on 30th January, 2013. The Board place on record its sincere appreciation for the services rendered to the Company by Mr. R. S. Hugar during his tenure since 2002 first as the Chairman of the Board and thereafter as an Independent Director.

At the meeting of the Board of Directors of the Company held on 23rd March, 2013, Dr. Ramakanta M. Panda was appointed as an Additional Director of the Company.

Mr. Premchand Godha was re-appointed as the Managing Director of the Company for a further period of 5 years with effect from 1st April, 2013 and the necessary resolution in this regard is being proposed at the ensuing Annual General Meeting for the approval of the members.

A brief note on Directors retiring by rotation and eligible for re-appointment as well as Director appointed is furnished in the Report on Corporate Governance.

DIRECTORS'' RESPONSIBILITY STATEMENT

Your Directors confirm:

i) that in the preparation of the annual accounts, the applicable accounting standards have been followed;

ii) that your Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year March 31, 2013 and of the profit of the Company for the year;

iii) that your 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;

iv) that your Directors have prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

As per the requirement of listing agreement with the Stock Exchanges, the Company has complied with the requirements of Corporate Governance in all material aspects.

A report on Corporate Governance together with a certificate of its compliance from Statutory Auditors, forms part of this report.

FIXED DEPOSITS

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

AUDITORS, AUDIT REPORT AND AUDITED ACCOUNTS

M/s Natvarlal Vepari & Co., Chartered Accountants, retire as auditors and being eligible, offer themselves for re-appointment.

The Auditors'' Report read with the notes to the accounts referred to therein are self-explanatory and, therefore, do not call for any further comments.

COST AUDIT

Pursuant to the provisions of Section 233B of the Companies Act, 1956 and with the prior approval of the Central Government, M/s. ABK & Associates, Cost Accountants (Regn. No. 036) were appointed as the Cost Auditors to conduct audit of cost records for Bulk Drugs and Formulations activities of the Company for the financial year 2012-13.

The Cost Audit Report for the financial year 2011-12, which was due to be filed with the Ministry of Corporate Affairs on or before 28th February, 2013 was filed on 30th January, 2013.

EMPLOYEES

Information under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, forms part of this report. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Report and the Accounts is being sent to all shareholders of the Company excluding the aforesaid information. Shareholders interested in obtaining this information may write to the Company Secretary at the Corporate Office of the Company.

CORPORATE SOCIAL RESPONSIBILITY

The Company is committed to good corporate citizenship. As a part of its corporate social responsibility, the Company continues to undertake a range of activities in respect of healthcare and education to improve living conditions of people living in the neighborhood of its manufacturing facilities.

During the year under report, the Company has also supported healthcare and educational projects undertaken by charitable institutions and organizations.

The Company considers safety, environment and health as the management responsibility. Regular employee training programmes are carried out in the manufacturing facilities on safety and environment.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

In accordance with the requirements of 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, statement showing particulars with respect to conservation of energy, technology absorption and foreign exchange earnings and outgo is given in the enclosed Annexure.

ACKNOWLEDGEMENTS

Your Directors place on record their appreciation for the continued co-operation and support extended to the Company by the Consortium of Banks and Financial Institutions. Your Directors also thank the Medical Profession, the Trade and Consumers for their patronage of the Company''s products. Your Directors also place on record their profound admiration and sincere appreciation of the continued hard work put in by employees at all levels.

For and on behalf of the Board

Mumbai Premchand Godha

30th May, 2013 Chairman & Managing Director


Mar 31, 2012

The Directors have pleasure in presenting the 62nd Annual Report and Audited Accounts for the year ended 31st March, 2012.

Financial Results

Amount in Rupees Crores For the year For the year ended 31.3.2012 ended 31.3.2011

Sales and Other Income (Net of Excise Duty) 2,342.29 1,889.61

Profit before financial cost, depreciation & Foreign Exchange translations Loss / (Gain) 526.40 384.24

Less: Finance cost 39.36 28.45

Depreciation and Amortisation 65.31 55.43

Loss / (Gain) on foreign exchange translations 52.79 (43.34)

Profit before tax 368.94 343.70

Less: Provision for taxation

Current Tax (net of MAT credit entitlement) 74.65 73.25

Deferred Tax 13.23 1.42

Short / (Excess) provision of earlier years 0.89 3.70

Profit after tax (before exceptional item) 280.17 265.33

Exceptional item

Provision for investment in subsidiaries - 9.96

Net Profit 280.17 255.37

YOUR DIRECTORS RECOMMEND THE FOLLOWING APPROPRIATIONS

Surplus in Profit & Loss Account as per last Balance Sheet 146.24 152.70

Addition on Amalgamation of Tonira Pharma Ltd. 4.31 -

Net Profit for the year 280.17 255.37

Less:

Transfer to General Reserve 100.00 200.00

Transfer to Debenture Redemption Reserve 7.00 15.00

Interim dividend 25.15 25.13

Tax on Interim dividend 4.08 4.17

Proposed final dividend 15.14 15.08

Tax on Proposed Dividend 2.46 2.45

Balance as at year end 276.89 146.24

The Company has fixed 31st May, 2012 as the record date for entitlement of 3,22,704 equity shares of the Company to be allotted to the shareholders ofTonira Pharma Ltd. pursuant to this merger.

Subsidiary companies

The Company's wholly owned subsidiary Company Laboratories Ipca Do Brasil Ltda, Brazil has been voluntarily wound-up.

During the year under report, the Company has acquired 100% share capital of Onyx Research Chemicals Ltd., holding Company of Onyx Scientific Ltd. through its wholly owned subsidiary Ipca Laboratories UK Ltd. for UK £4.89 millions. Founded in 2000, Onyx Scientific is one of the well known chemistry services companies in Europe and is a preferred supplier to several large pharma and biotech customers. Onyx offers custom synthesis, solid state chemistry, scale-up and cGMP manufacturing up to a few kilogram levels.This acquisition enables the Company to better serve their customers on a global basis.

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India under Section 212 of the Companies Act, 1956, copy of the Balance Sheet, Statement of Profit and Loss, Report of the Board of Directors and Auditors of the Company's subsidiaries have not been attached with the Balance Sheet of the Company. Any member interested in obtaining the same may write to the Company Secretary at the Corporate Office of the Company. These documents are available for inspection by Members at the Registered office of the Company and will also be placed before the Annual General Meeting.

However, as required, the financial data of the subsidiaries have been furnished under 'Details of Subsidiaries' forming part of the Annual Report. The annual accounts of the subsidiaries are also uploaded on the website of the Company.

Consolidated financial statements

In accordance with Accounting Standard AS-21, the audited consolidated financial statements are provided in the Annual Report.

Research & Development (R&D)

The Company has always considered Research and Development (R&D) as crucial for the sustained growth of the Company. The global challenges for the Indian pharma industry at large have increased several folds in the face of the transition from process to product patent regime in India from 2005. The Company has stepped-up investments in R&D to keep pace with the changing domestic and global scenario.

The Company has R&D centers at Mumbai, Ratlam, Athal and Indore, duly recognized by the Government of India, Ministry of Science and Technology, Department of Scientific & Industrial Research (DSIR). These R&D centers are also duly approved by the prescribed authority under Section 35 (2AB) of the IncomeTax Act, 1961 for availing weighted tax benefit on the R&D expenditure.

The Company is in the process of setting up a new Research Centre at Kandivli, Mumbai for Biotech research & development activities at plot no. 125 and 126 of Kandivli Industrial Estate, Kandivli (West), Mumbai - 400 067. The Company is also in the process of setting-up a new R&D Centre at Village Ranu,Tehsil Padra, District-Vadodara , Gujarat.

The Company has also acquired a new building situated at plot no. 58DD, Kandivli Industrial Estate, Kandivli (West), Mumbai - 400067 for expanding its formulations R&D activities.

The Company has stepped up its R&D expenditure from Rs. 71.27 Crores (3.82% of the turnover) in the previous year to Rs. 77.96 Crores (3.39% of the turnover) in the year under report.

With qualified and experienced research scientists and engineers manning the research and development activities, the Company has focused its thrust on new and innovative process and product development for the manufacture of APIs with non- infringing processes.

Apart from development of new dosage forms and drug delivery systems, improvement in processes and yield as well as cost reduction are also focus areas.

Employees' Stock Options Scheme (ESOS)

During the year under report, the Company allotted 68,750 fully paid up equity shares of Rs. 2/- each at an exercise price of Rs. 63/- to the option grantees on exercise of stock options granted on 29th October, 2007 and 52,500 fully paid up equity shares of Rs. 2/- each at an exercise price of Rs. 63/- to the option grantees on exercise of stock options granted on 11th November, 2008.

In view of these allotments, the Company's paid-up equity share capital increased to Rs. 25,16,55,310/- consisting of 12,58,27,655 equity shares of Rs. 2/- each.

Disclosure pursuant to the provisions of SEBI (ESOS and ESPS) Guidelines, 1999 is annexed to this report as Annexure I.

Dividend

Your Directors had declared 1st interim equity dividend of Rs. 1/- per share (50%) at the meeting of the Board of Directors of the Company held on 31st October, 2011 and a 2nd Interim equity dividend of Rs. 1/- per share (50%) at the meeting of the Board of Directors of the Company held on 31st January, 2012. The said interim dividend was paid on 11th November, 2011 and 14th February, 2012, respectively, to those shareholders, whose names appeared on the register of members of the Company on 7th November, 2011 and 8th February, 2012. Your directors are now pleased to recommend a final equity dividend of Rs. 1.20 per share (60%), making the total dividend recommended to Rs. 3.20 per share (160%) for the financial year under report as against 160% paid in the previous financial year. The dividend will be tax free in the hands of the shareholders.

The dividend (inclusive of interim dividend already paid) amounting to Rs. 40.29 Crores and dividend tax amounting to Rs. 6.54 Crores, if approved at the ensuing Annual General Meeting, will be appropriated out of the profits for the year.

Directors

Mr. Pranay Godha, Mr. Premchand Godha and Mr. Ramappa S. Hugar, retire by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves for re-appointment.

At the meeting of the Board of Directors of the Company held on 28th July, 2011, Mr. Prashant Godha was appointed as an Additional Director of the Company and designated as the Wholetime Executive Director with effect from 16th August, 2011.

At the meeting of the Board of Directors of the Company held on 31st January, 2012, Mr. Ramappa S. Hugar stepped down as the Chairman of the Board of Directors. In his place, the Board appointed the incumbent Managing Director, Mr. Premchand Godha as the Chairman of the Board of Directors and re-designated him as the Chairman & Managing Director of the Company. The Board places on record its sincere appreciation for the services rendered by Mr. Hugar during his tenure as the Chairman of the Board of Directors of the Company. Mr. Ramappa S. Hugar, however, will continue as a Non-Executive Independent Director on the Board of the Company.

At the meeting of the Board of Directors of the Company held on 13th April, 2012, Mr. Dev Parkash Yadava was appointed as an Additional Director of the Company with immediate effect.

A brief note on Directors retiring by rotation and eligible for re-appointment as well as Directors appointed is furnished in the Report on Corporate Governance.

Directors' Responsibility Statement

Your Directors confirm:

i) that in the preparation of the annual accounts, the applicable accounting standards have been followed;

ii) that your Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year March 31, 2012 and of the profit of the Company for the year;

iii) that your 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;

iv) that your Directors have prepared the annual accounts on a going concern basis.

Corporate Governance

As per the requirement of listing agreement with the stock exchanges, the Company has complied with the requirements of Corporate Governance in all material aspects.

A report on Corporate Governance together with a certificate of its compliance from Statutory Auditors, forms part of this report. Fixed deposits

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

Auditors, Audit Report and Audited Accounts

M/s Natvarlal Vepari & Co., Chartered Accountants, retire as auditors and being eligible, offer themselves for re-appointment.

The Auditors' Report read with the notes to the accounts referred to therein are self-explanatory and, therefore, do not call for any further comments.

Cost Audit

Pursuant to the provisions of Section 233B of the Companies Act, 1956 and with the prior approval of the Central Government, M/s. ABK & Associates, Cost Accountants (Regn. No. 036) were appointed as the Cost Auditors to conduct audit of cost records for Bulk Drugs and Formulations activities of the Company for the financial year 2011-12.

The Cost Audit Report for the financial year 2010-11, which was due to be filed with the Ministry of Corporate Affairs within 180 days from the close of the financial year, was filed on 20th August, 2011.

Employees

Information under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, forms part of this report. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Report and the Accounts is being sent to all shareholders of the Company excluding the aforesaid information. Shareholders interested in obtaining this information may write to the Company Secretary at the Corporate Office of the Company.

Corporate Social Responsibility

The Company is committed to good corporate citizenship. As a part of its Corporate Social Responsibility, the Company continues to undertake a range of activities in respect of healthcare and education to improve living conditions of people living in the neighborhood of its manufacturing facilities.

During the year under report, the Company has also supported healthcare and educational projects undertaken by charitable institutions and organizations.

The Company considers safety, environment and health as the management responsibility. Regular employee training programmes are carried out in the manufacturing facilities on safety and environment.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

In accordance with the requirements of 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, statement showing particulars with respect to conservation of energy, technology absorption and foreign exchange earnings and outgo is given in the enclosed Annexure.

Acknowledgements

Your Directors place on record their appreciation for the continued co-operation and support extended to the Company by the Consortium of Banks and Financial Institutions. Your Directors also thank the Medical Profession, the Trade and Consumers for their patronage of the Company's products. Your Directors also place on record their profound admiration and sincere appreciation of the continued hard work put in by employees at all levels.



For and on behalf of the Board

Mumbai Premchand Godha

29th May, 2012 Chairman & Managing Director

 
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