Home  »  Company  »  Marksans Pharma  »  Quotes  »  Directors Report
Enter the first few characters of Company and click 'Go'

Directors Report of Marksans Pharma Ltd.

Mar 31, 2015

The Directors take pleasure in presenting the Twenty Third Report along with the financial statements for the year ended 31st March 2015.

Financial Highlights

(Rs.in Million)

2014-15 2013-14 Particulars

Turnover 4055.94 3149.45

Profit before Depreciation & Amortization expenses, Non-recurring expenses and 1057.16 719.15 Tax expenses

Less: Depreciation & Amortization Expenses 90.31 86.56

Non-recurring expenses - -

Tax expenses 295.76 77.02

Profit after Tax 671.09 555.57

Operations/State of Affairs of the Company

During the year ended 31st March, 2015, total turnover achieved by your Company was H4055.94 Mn as compared to H3149.45 Mn in the previous year. During the year under review, your Company has registered a net profit of H671.09 Mn as compared to H555.57 Mn in the previous year. This is mainly due to strong business and improved financial performances, and also due to better realization on account of currency movement.

Consolidated Financial Statements

In compliance with the Accounting Standard - 21 on Consolidated Financial Statements, this Annual Report also includes Consolidated Financial Statements for the financial year under review. From the Consolidated Statement of Profit and Loss, it may be observed that the turnover for the year under review has increased to H7966.68 Mn from H6299.97

Mn in the previous financial year. During the year under review, your company registered a consolidated net profit of H1093.96 Mn as compared to net profit of H719.08 Mn during the previous financial year.

Management Discussion and Analysis

A report on Management Discussion and Analysis covering industry structure and developments, financial and operational performance of the Company, risks, concerns, opportunities, threats and outlook forms a part of this Report.

Dividend

Your Directors have recommended subject to the approval of the members in the ensuing Annual General Meeting dividend of H0.12 (12%) per equity share of H1/- each and dividend of H7/- (7%) per preference share of H100/- each for the financial year ended 31st March, 2015.

Total cash outflow on account of dividend payment including dividend distribution tax will be H69.72 Mn for the financial year ended 31st March, 2015.

Reserves

During the year under review, your Company transferred a sum of H10.00 Mn to Capital Redemption Reserve on account of redemption of 100,000 Preference Shares of H100/- each face value.

During the year under review, no amount was transferred to General Reserve.

Share Capital

Your Company has, on 30th March, 2015, issued and allotted 240,06,494 equity shares of H1/- each to qualified institutional buyers under QIP for cash at H54.67 (including premium) per Equity Share.

In accordance to the terms of the issue, your Directors at their meeting held on 7th February, 2015 has decided to redeem the entire 13,50,000 7% Redeemable Cumulative Preference Shares of face value of H100/- per share at par out of the profits in tranches before the due date of redemption i.e 27th March, 2018. Accordingly, on 7th February, 2015, your Directors have redeemed 1,00,000 preference shares at par.

Consequently, the Issued, Subscribed and Paid-up Equity Share Capital stands increased to H409.31 Mn. and the Issued, Subscribed and Paid-up Preference Share Capital stands reduced to H125.00 Mn. as on 31st March, 2015.

Foreign Currency Convertible Bonds (Bonds)

Your Company had issued 50,000 Bonds of USD 1,000 each in principal value during the financial year. As on the date of this report, your Company has bought back and extinguished 49,939 Bonds. As on the date of this report, only 61 Bonds of USD 1,000 each in principal value (out of total 50,000 Bonds issued) remained outstanding as the same are not traceable and adequate provision has been made in the book of accounts therefore.

Number of Meetings of the Board

The Board met 8 (Eight) times in financial year 2014-15 viz., 29.05.14, 26.06.14, 15.07.14, 12.08.14, 25.09.14, 31.10.14, 23.12.14 and 07.02.15.

Particulars Regarding Conversation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

As required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, the relevant information and data are annexed to this report as Annexure A.

Research and Development (R&D)

Your Company is committed to continuously fund its R&D capabilities. One of the Company's biggest strength lies in vibrant and productive R&D function that has continuously placed your Company ahead through consistent development of niche technology, processes and products. Your Company will continue to invest in R&D to keep pace with the changing domestic and global scenario. During the year, your company invested 4.26 % of its total revenue in R&D and related spends amounting to H174.11 Mn with continued product development and dossier filing in US, Europe and other emerging markets.

Details Relating to Deposits, Covered under Chapter V of the Companies Act 2013

The Company has not accepted any public deposits and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

Subsidiaries, Joint Ventures and Associate Companies

i. Performance of Marksans Pharma (UK) Limited, which operates in the European market has improved.

ii. Nova Pharmaceuticals Australasia Pty Ltd (your company holds 60% of the share capital) which operates mainly in Australia is doing well with consistent growth.

Pursuant to a Central Government's Circular dated 8th February, 2011, the audited accounts together with Director's Report and Auditor's Report of the subsidiaries namely M/s. Nova Pharmaceuticals Australasia Pty Limited and M/s. Marksans Pharma (U.K.) Limited are not being appended to the Annual Report. However, a statement giving information in aggregate for each subsidiary including subsidiaries of subsidiaries are attached to the Consolidated Balance Sheet.

iii. Your company has acquired 100% share capital of Time- Cap Laboratories Inc., New York through a wholly owned subsidiary Marksans Pharma Inc. Time-Cap was founded in 1979 and is a leading manufacturer and marketer of solid dose generic pharmaceuticals, including private label over-the-counter ("OTC") medications, generic prescription drugs ("Rx"), and nutritional supplements. Time-Cap manufactures over 50 unique products from its facility in Farmingdale, New York, including tablets, caplets, capsules and pellets. Time-Cap will be an ideal platform for your Company to expand its operation in the US. This strategic acquisition will help Marksans to expand its manufacturing capabilities along with product portfolio and penetration into the US. Time-Cap is a zero debt company.

Your Company has no Joint Ventures and Associate Companies

Loans, Guarantees or Investments

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

Internal Financial Control Systems and Their Adequacy

Your company has in place adequate system of internal control and management information systems which covers all financial and operating functions. These systems are designed in a manner which provides assurance with regard to maintenance of strict accounting control, optimum efficiency in operations and utilization of resources as well as financial reporting, protection of Company's tangible and intangible assets and compliance with policies, applicable laws, rules and regulations. Your Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. The Audit Committee has a process for timely check for compliance with the operating systems, accounting procedures and policies. Major risks identified by the businesses and functions are systematically addressed through mitigating action on continuing basis.

Information Technology

Your company continues to make required investments in the Information Technology area to cope up with the growing information needs necessary to manage operations efficiently.

Health, Safety & Environment

Your company is committed to ensure sound Safety, Health and Environment performance related to its activities, products and services. Your company is also committed to strengthen pollution prevention and waste management practices and to provide a safe and healthy environment.

Related Party Transactions

There are no material related party transactions during the year under review with the Promoters, Directors or Key Managerial Personnel or their relatives.

All Related Party Transactions that were entered into during the financial year were in the ordinary course of business on arm's length basis and repetitive in nature. All Related Party Transactions were placed before the Audit Committee of the Board of Directors for information and are entered in the Register maintained under Section 189 of the Companies Act, 2013. The Audit Committee has granted omnibus (ad hoc) approval for Related Party Transactions as per the provisions and restrictions contained in the policy framed under Clause 49 of the Listing Agreement. The policy is available on the Company's website www.marksanspharma.com

Evaluation of Performance of Board, Committee, and Directors

Performance evaluation of the Board as a whole, the Committees of Directors and all individual Directors during the year under review has been carried out in accordance with the criteria framed pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The Board of Directors has expressed its satisfaction over the evaluation process.

All the independent directors of your Company also had a separate meeting without the attendance of executive directors and management personnel and reviewed the performance of the Board of Directors as a whole, the Chairman of the Board and the executive non-independent directors and have expressed their satisfaction over the same. The independent directors have also reviewed and expressed their satisfaction over the quality, quantity and timeliness of flow of information between the company management and the Board that was necessary for the Board to effectively and reasonably perform their duties.

Policy on Directors Appointment and Remuneration

Nomination and Remuneration Committee of the Company has formulated a policy relating to nomination and remuneration of directors as well as key managerial personnel and other employees of the Company. The Nomination and Remuneration Policy, inter alia, provides for the following:

The Committee shall identify and ascertain the integrity, qualification, expertise and experience of the person for appointment as Director in terms of Diversity Policy of the Board and recommend to the Board his / her appointment.

For the appointment of KMP (other than Managing / Wholetime Director) or Senior Management, a person should possess adequate qualification, expertise and experience for the position he / she is considered for the appointment. Further, for administrative convenience, the appointment of KMP (other than Managing / Wholetime Director) or Senior Management, the Managing Director is authorised to identify and appoint a suitable person for such position.

The remuneration / compensation / commission, etc., as the case may be, to the Managing / Whole-time Director will be determined by the Committee and recommended to the Board for approval. The remuneration / compensation / commission, etc., as the case may be, shall be subject to the prior / post approval of the shareholders of the Company and shall be in accordance with the provisions of the Companies Act, 2013 and Rules made there under. Further, the Managing Director of the Company is authorised to decide the remuneration of KMP (other than Managing / Whole-time Director) and Senior Management, and which shall be decided by the Managing Director based on the standard market practice and prevailing HR policies of the Company.

The remuneration / commission / sitting fees, as the case may be, to the Non-Executive / Independent Director, shall be in accordance with the provisions of the Companies Act, 2013 and the Rules made there under for the time being in force or as may be decided by the Committee / Board / shareholders.

An Independent Director shall not be entitled to any stock option of the Company unless otherwise permitted in terms of the Act and the Clause 49, as amended from time to time.

Whistle Blower Policy/Vigil Mechanism

Your Company has established a Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. This policy establishes a vigil mechanism for directors and employees to report their genuine concerns actual or suspected fraud or violation of the Company's code of conduct. Details of the Whistle Blower Policy is displayed on the website of the Company www.marksanspharma.com.

The said mechanism also provides for adequate safeguards against victimisation of the persons who use such mechanism and makes provision for direct access to the chairperson of the Audit Committee. We confirm that during the financial year 2014-2015, no employee of the Company was denied access to the Audit Committee.

Risk Management Policy

Your Company is aware of the risks associated with the business. It regularly analyses and takes corrective actions for managing/ mitigating the same. Your Company has institutionalized the policy/process for identifying, minimizing and mitigating risk which is reviewed. The key risks and mitigation actions are placed before the Audit Committee.

Corporate Social Responsibility

Pursuant to Section 135 of the Act, your Company has constituted a Corporate Social Responsibility (CSR) Committee. The CSR Committee provides guidance on various CSR activities to be undertaken by the Company as per the CSR Policy and monitors its progress. Company's CSR Policy is available on the Company's website www.marksanspharma.com. Your company has registered an average net loss for the preceding three financial years amounting to H(3,038.01) Lacs. Hence, the CSR Committee has not recommended any CSR Expenditure for the financial year ended 31st March, 2015.

Directors Responsibility Statement

In terms of provisions of Section 134(3)(c) of the Companies Act, 2013 your Directors confirm that:

- in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

- the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2015 and the Statement of Profit and Loss for the period ended 31st March, 2015;

- proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- the annual accounts have been prepared on a going concern basis.

- Proper internal finance controls were in place and that the financials control were adequate and were operating effectively.

- Had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Declaration from Independent Directors:

The Company has received declarations from all the Independent

Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges.

Familiarization Programme for Independent Directors:

The Company proactively keeps its Directors informed of the activities of the Company, its management and operations and provides an overall industry perspective as well as issues being faced by the industry. Company's policy on the familiarization program for the independent directors is available on the Company's website www.marksanspharma.com.

Disclosure Under Sexual Harassment of Woman at workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has in place a Prevention of Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committees have been set up to redress complaints regarding sexual harassment at Mumbai office as well as Goa plants. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

During the year under review, no complaints were received by the Company related to sexual harassment at both the sites.

Significant and Material orders Passed by the Regulators or Courts or Tribunals

There are no significant material orders passed by the Regulators/ Courts which would impact the going concern status of the Company and its future operations.

Change in the Nature of Business

During the year under review there is no change in the nature of Business of the Company.

Extract of Annual Return

The Extract of Annual Return as provided under Section 92(3) of the Companies Act, 2013 and as prescribed in Form No. MGT- 9 of the Companies (Management and Administration) Rules, 2014 is appended as Annexure B to this Report.

Employees

The ratio of the remuneration of each Director to the median employee's remuneration and other details in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed herewith as Annexure C.

The statement showing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as Annexure D.

Human Resources Development and Industrial Relations:

The guiding principle of HR Policy at your company is that the "Intellectual Capital" and dedication of employees will help the Company emerge as a successful player in this highly competitive scenario.

The recruitment procedure ensures that people with talent and the right skill sets are selected. Nurturing of talent and a Performance Management System (PMS) is in place to ensure that the coordinated efforts of our people lead to achievement of the Business Goals of the company.

Empowerment and a motivational package ensure that employees keep performing at peak levels. The HR Policy is directed towards creating "Ownership of Goals" at levels and synchronizing the efforts of all employees to achieve the company's quality and business goals.

Development of skills through mentoring and training by our seasoned professionals ensures that the talent pool keeps expanding. The Leadership Role played by our senior professionals helps to keep the next rung of leadership ready to take up the challenges thrown up by the global market.

The management helps the process of decision making by decentralizing and empowering professionals to execute tasks in a speedy manner. The management fosters information sharing and free exchange of ideas. Above all, the sense of ownership and empowerment to take decisions helps the Company to adapt and be ahead of the competition in this rapidly changing global environment.

The industrial relation at all the plant sites of your company is cordial.

As on 31st March, 2015, the Company's permanent employee strength was 421(436 as on 31st March, 2014).

Audit Committee of the Company

Your Company's Audit Committee comprises the following 3(Three) Independent Directors and 1(One) Executive Director:

Sr. Name of the Directors Designation No

1. Mr. Seetharama R. Buddharaju Non-Executive & Independent

2. Mr. Naresh B. Wadhwa Non-Executive & Independent

3. Mr. Ajay S. Joshi Non-Executive & Independent

4. Dr. Balwant S. Desai Executive & Non Indepemdent

The composition of the Audit Committee is in compliance with the requirements of Section 177 of the Companies Act, 2013.

Directors & KMP:

In accordance with the provisions of the Section 152(6)(e) of the Companies Act, 2013 read with the Articles of Association of the Company, Dr. Balwant Shankarrao Desai (DIN: 03631170), Director of the Company will retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Mr. Mark Saldanha's term as the Managing Director of the Company will expire on 5th October, 2015. Your directors have proposed to re-appoint him as the Managing Director of the Company for a further period of five years with effect from 6th October, 2015.

Mr. Ajay Shivram Joshi and Mr. Seetharama Raju Buddharaju are being proposed to be re-appointed as Independent Directors.

During the year under review, appointment of Mr. Jitendra Sharma, Chief Financial Officer of the Company was formalized in accordance with the Companies Act, 2013.

Corporate Governance:

Pursuant to Clause 49 of the Listing Agreement, a detailed report on Corporate Governance and a certificate from the Auditors regarding compliance with the conditions of Corporate Governance is annexed herewith as Annexure E.

Auditors:

M/s. N. K. Mittal & Associates, Statutory Auditors of the Company, hold office till the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received letter from them to the effect that they are eligible and are not disqualified for the appointment and that their appointment, if made, would be within the prescribed limits under the provisions of the Companies Act, 2013. The Board recommends their re-appointment as Statutory Auditors of the Company.

There are no qualifications, reservations or adverse remarks or disclaimers made by M/s. N. K. Mittal & Associates, Chartered Accountants Statutory Auditors, in their report.

Cost Audit

Your Company is a 100% export oriented unit and therefore it is exempted from audit of its cost accounting records.

Secretarial Audit

Pursuant to Section 204 of the Companies Act, 2013, the Board of Directors has appointed Ms. Khushboo Bakul Gopani, a practicing company secretary (Membership No.29194) as Secretarial Auditor to undertake the Secretarial Audit of the Company. The report of the Secretarial Auditor is annexed herewith as Annexure F.

The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

However, as per the observation made by the Secretarial Auditor in their Report, the Company has not considered re- appointment of two existing Independent Directors as an Independent Director for a specified term, not liable to retire by rotation at their 22nd Annual General Meeting of the Company.

In regard to this, the company hereby clarifies as follows:

As per the provisions of the Companies Act, 2013, every existing company shall appoint an independent director within one year from the date of notification of the rules. The Company already had the requisite number of independent directors as on date of notification of rules. In order to comply with the provisions of the Companies Act, 2013, the Board has appointed Mr. Ajay Joshi and Mr. Seetharama Raju Buddharaju w.e.f. 1st April, 2015 in the Board Meeting held on 7th February, 2015 as the Independent Directors of the Company subject to the approval of members in the ensuing Annual General Meeting.

Appreciation

The directors place on record their appreciation for the contribution made by the employees at all levels enabling the Company to achieve the performance during the year under review.

The directors also appreciate the valuable co-operation and continued support extended by Company's Bankers, Medical Professionals, Business Associates and Investors who have put their faith in the Company.



By order of the Board of Directors

Mark Saldanha

Mumbai Chairman & Managing Director

Dated 8th August, 2015 DIN: 00020983


Mar 31, 2014

Dear Members,

The Directors take pleasure in presenting the 22nd Report together with the Audited Accounts of the Company for the year ended 31st March, 2014.

Financial Results (Rs in Million)

Particulars 2013-14 2012-13

Turnover 3149.45 1922.97

Profit before Depreciation & Amortization expenses, Non-recurringexpenses and 719.15 383.08

Tax expenses Less:

Depreciation & Amortization Expenses 86.56 87.03

Non-recurring expenses - -

Tax expenses 77.02 (99.78)

Profit after Tax 555.57 395.83

OPERATIONS

During the year ended 31st March, 2014, total turnover achieved by your company was H3149.45 Mn as compared to H1922.97 Mn in the previous year. The year under review has registered a net profit of H555.57 Mn as compared to H395.83 Mn in the previous year. This is mainly due to strong business and improved financial performances, new ANDA product licenses in US markets and also due to better realization on account of currency movement.

DIVIDEND

Your Directors have recommended dividend of Rs.0.10 (10%) per equity share of Rs.1/- each face value for the financial year ended 31st March 2014. The Preference Shareholder will also get dividend of Rs.7/- (7 percent ) per preference share of Rs.100/- each face value.

Total cash outflow on account of dividend payment including dividend distribution tax will be Rs.56.13 Mn for the financial year ended 31st March, 2014.

Research and DevelOpment (R&D) The global challenges for the Indian pharma industry at large have increased several folds and to face the challenges, your company has continuously sharpened its focus on R&D, which is the need of the hour and will continue to commit funds to strengthen R&D capabilities. In fact, one of the Company''s biggest strength lies in vibrant and productive R&D function that has continuously placed Marksans Pharma Ltd ahead through consistent development of niche technology, processes and products. Your company will continue to invest in R&D to keep pace with the changing domestic and global scenario. During the year, your company invested 6.33 percent of its total revenue in R&D and related spends amounting to H201.37 Mn with continued product development and dossier filing in US, Europe and other emerging markets.

FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBS)

The Company had signed settlement agreement with few bond holders for settlement of 36,789 Bonds of US$1000 each in principal value representing about 97 percent of the outstanding bonds during February 2013.

One bond holder holding 15,278 Bonds has defaulted in surrendering the third and final tranche bonds as per the settlement terms even though the company was ready to pay the settlement consideration. They had already executed first and second tranche bonds which were subsequently cancelled and extinguished but have defaulted in executing the third and final tranche settlement. The company has, therefore, filed a suit in the High Court of England for specific performance by the bond holder in accordance with the settlement agreement. In the meantime, the English High Court has granted injunction restraining the bond holder from selling or transferring their bonds to or create any interest in such bonds in favour of any person or entity other than the Company until further order of the court.

INTERNAL CONTROL SYSTEMS

Your company has in place adequate system of internal control and management information systems which covers all financial and operating functions. These systems are designed in a manner which provides assurance with regard to maintenance of strict accounting control, optimum efficiency in operations and utilization of resources as well as financial reporting, protection of Company''s tangible and intangible assets and compliance with policies, applicable laws, rules and regulations.

INFORMATION TECHNOLOGY

Your company continues to make required investments in the Information Technology area to cope up with the growing information needs necessary to manage operations efficiently.

Health, safety & envirOnment Your company is committed to ensure sound Safety, Health and Environment performance related to its activities, products and services. Your company is also committed to strengthen pollution prevention and waste management practices and to provide a safe and healthy environment.

FIXED DEPOSITS

During the year under review, your company has not accepted any deposits.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of provisions of Section 217(AA) of the Companies Act, 1956 the Directors confirm that:

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

- appropriate accounting policies have been selected and applied consistently and judgments and estimates made 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 ended 31st March, 2014 and the Statement of Profit and Loss for the period ended 31st March, 2014;

- proper and sufficient care has been taken 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;

- the annual accounts have been prepared on a going concern basis.

CONSOLIDATED FINANCIAL STATEMENTS

In compliance with the Accounting Standard - 21 on Consolidated Financial Statements, this Annual Report also includes Consolidated Financial Statements for the financial year under review. From the Consolidated Statement of Profit and Loss, it may be observed that the turnover for the year under review has increased to H6299.97 Mn from H4384.22 Mn in the previous financial year. During the year under review, your company registered a consolidated net profit of H719.08 Mn as compared to net profit of H458.83 Mn during the previous financial year.

SUBSIDIARIES

Performance of Marksans Pharma (UK) Limited, which operates in the European market has improved.

Nova Pharmaceuticals Australasia Pty Ltd (your company holds 60 percent of the share capital) which operates mainly in Australia is doing well with consistent growth.

Pursuant to a Central Government''s Circular dated 8th February, 2011, the audited accounts together with Director''s Report and Auditor''s Report of the subsidiaries namely M/s. Nova Pharmaceuticals Australasia Pty Ltd and M/s. Marksans Pharma (UK) Limited are not being appended to the Annual Report. However, a statement giving information in aggregate for each subsidiary including subsidiaries of subsidiaries are attached to the Consolidated Balance Sheet.

CONSERVATION OF ENERGY, TECHNOLOGY

ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is annexed hereto and forms part of this Report.

EMPLOYEES

There was no employee drawing remuneration exceeding RS.60 Lacs per annum or Rs.5 Lacs per month during the year ended 31st March, 2014 and therefore, provisions of Section 217(2A) of the Companies Act 1956, read with the Companies (Particulars of Employee) Rules 1975, as amended up to date do not apply.

HUMAN RESOURCES DEVELOPMENT AND INDUSTRIAL RELATIONS

The guiding principle of HR Policy at your company is that the "Intellectual Capital" and dedication of employees will help the Company emerge as a successful player in this highly competitive scenario.

The recruitment procedure ensures that people with talent and the right skill sets are selected. Nurturing of talent and a Performance Management System (PMS) is in place to ensure that the coordinated efforts of our people lead to achievement of the Business Goals of the company.

Empowerment and a motivational package ensure that employees keep performing at peak levels. The HR Policy is directed towards creating "Ownership of Goals" at levels and synchronizing the efforts of all employees to achieve the company''s quality and business goals.

Development of skills through mentoring and training by our seasoned professionals ensures that the talent pool keeps expanding. The Leadership Role played by our senior professionals helps to keep the next rung of leadership ready to take up the challenges thrown up by the global market.

The management helps the process of decision making by decentralizing and empowering professionals to execute tasks in a speedy manner. The management fosters information sharing and free exchange of ideas. Above all, the sense of ownership and empowerment to take decisions helps the Company to adapt and be ahead of the competition in this rapidly changing global environment.

The industrial relation at all the plant sites of your company is cordial.

As on 31st March, 2014, the Company''s permanent employee strength was 436 (388 as on 31st March, 2013).

DIRECTORS

Dr. Balwant Shankarrao Desai, Whole-time Director of your company will cease to be a Director on the forthcoming Annual General Meeting and accordingly will also cease to be Whole-time Director. Dr. Balwant Shankarrao Desai has offered himself for re-appointment as a Director. Dr. Desai has been associated with your company since 7th March, 2006 looking after quality management systems and regulatory affairs. The Board recommends his re-appointment as a whole-time director of the Company.

Your Directors have proposed that Mrs. Sandra Saldanha be appointed as a Whole-time Director of the Company. Requisite notice has been received from a member proposing Mrs. Sandra Saldanha for appointment as a Director. Mrs. Sandra Saldanha has a vast experience in the field of Human Resource Management, Business Development, Projects and Supply Chain Management. The Board recommends her appointment as a Whole-time Director of the Company.

Mr. Naresh B. Wadhwa, who was appointed as an additional director with effect from 31st October, 2013, will vacate the office from the forthcoming Annual General Meeting. Requisite notice has been received from a member proposing Mr. Naresh B. Wadhwa for appointment as an independent Director. Mr. Wadhwa is a technocrat and has been instrumental in globalization using India as a platform for innovation and benefit of other emerging markets. He has worked in collaboration with Cisco''s Globalization Center and Cisco''s engineering organization (R&D) to develop and deploy disruptive technology and business models that were leveraged across the world. Technology intervention for inclusive growth across emerging countries is a personal passion for Mr. Wadhwa. The Board recommends his appointment as an independent director of the Company.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement, a detailed report on Corporate Governance and Management Discussion and Analysis and a certificate from the Auditors regarding compliance with the conditions of Corporate Governance forms a part of this report.

AUDITORS

M/s. N. K. Mittal & Associates, Statutory Auditors of the Company, hold office till the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received letter from them to the effect that they are eligible and are not disqualified for the appointment and that their appointment, if made, would be within the prescribed limits under the provisions of the Companies Act, 2013. The Board recommends their re-appointment as Statutory Auditors of the Company.

APPRECIATION

The directors place on record their appreciation for the contribution made by the employees at all levels enabling the Company to achieve the performance during the year under review.

The directors also appreciate the valuable co-operation and continued support extended by Company''s Bankers, Medical Professionals, Business Associates and Investors who have put their faith in the Company.

By order of the Board of Directors Place : Mumbai Mark Saldanha Dated : 29th May, 2014 Chairman & Managing Director


Mar 31, 2013

The Directors take pleasure in presenting the 21st Report together with the Audited Accounts of the Company for the year ended 31 March, 2013.

FINANCIAL RESULTS

(Rs./ Lacs) Particulars 2012-13 2011-12

Turnover 19,229.70 15,459.13

Profit before Depreciation & 3,830.84 (2,328.91)

Amortization expenses, Non- recurring expenses and Tax expenses

Less:

Depreciation &

Amortization Expenses 870.33 179812

Non-recurring expenses 14,163.27

Tax expenses (997.77) (183.69)

Profit after Tax 3,958.28 (18,106.61)

OPERATIONS

During the year ended 31 March, 2013, total turnover achieved by your company was Rs. 19229.70 Lacs as compared to Rs. 15459.13 Lacs in the previous year. The year under review has registered a net profit of Rs. 3958.28 Lacs as against net loss of Rs. 18106.61 Lacs in the previous year. This is mainly due to strong business and improved financial performances, new ANDA product licenses in US markets and also due to better realization on account of currency movement.

RESEARCH AND DEVELOPMENT

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 and to face the challenge, your company has continuously sharpened its focus on R & D, which is the need of the hour and will continue to commit funds to strengthen R & D capabilities. In fact, one of the Company''s biggest strength lies in vibrant and productive R & D function that has continuously placed Marksans Pharma Ltd ahead through consistent development of niche technology, processes and products. Your company will continue to invest in R & D to keep pace with the changing domestic and global scenario. During the year, your company continued product development and dossier filing in US, Europe and other emerging markets.

FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs)

Your company has signed settlement agreement with few bond holders for settlement of principal value of USD 36,789,000 worth of Bonds. Under the settlement agreement, the settlement amount is payable over a period of 12 months from the date of signing the respective settlement agreements. Accordingly, the Company has written back the entire amount of USD 36,789,000 Bonds along with redemption premium of USD 16,628,628 (aggregating to USD 53,417,628) and provided for new liability based on the settlement payout in terms of the Settlement Agreements in the books of accounts for the year ended 31 March, 2013.

DE-REGISTRATION FROM BIFR

Due to settlement of a substantial amount of FCCBs and improved financial performance of your company, the Net Worth of your company has turned positive as at 31 March, 2013. Therefore, your company has been de-registered from the purview of SICA and is no longer under BIFR.

INTERNAL CONTROL SYSTEMS

Your company has in place adequate system of internal control and management information systems which covers all financial and operating functions. These systems are designed in a manner which provides assurance with regard to maintenance of strict accounting control, optimum efficiency in operations and utilization of resources as well as financial reporting, protection of Company''s tangible and intangible assets and compliance with policies, applicable laws, rules and regulations.

INFORMATION TECHNOLOGY

Your company continues to make required investments in the Information Technology area to cope up with the growing information needs necessary to manage operations efficiently.

HEALTH, SAFETY & ENVIRONMENT

Your company is committed to ensure sound Safety, Health and Environment performance related to its activities, products and services. Your company is also committed to strengthen pollution prevention and waste management practices and to provide a safe and healthy environment.

DIVIDEND

In view of settlement payout to the Bond holders, the Board of Directors is not recommending any dividend for the financial year ended 31 March, 2013.

FIXED DEPOSITS

During the year under review, your company has not accepted any deposits.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of provisions of Section 217(AA) of the Companies Act, 1956 the Directors confirm that: in the preparation of the annual accounts, the applicable accounting standards have been followed; appropriate accounting policies have been selected and applied consistently and judgments and estimates made 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 ended 31 March, 2013 and the Statement of Profit and Loss for the period ended 31 March, 2013; proper and sufficient care has been taken 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; the annual accounts have been prepared on a going concern basis.

CONSOLIDATED FINANCIAL STATEMENTS

In compliance with the Accounting Standard - 21 on Consolidated Financial Statements, this Annual Report also includes Consolidated Financial Statements for the financial year under review. From the Consolidated Statement of Profit and Loss, it may be observed that the turnover of the year under review has increased to Rs. 43842.23 Lacs from Rs. 35554.87 Lacs in the previous financial year. During the year under review, your company registered a consolidated net profit of Rs. 4882.62 Lacs as against the net loss of Rs. 17607.93 Lacs during the previous financial year.

SUBSIDIARIES

Performance of Marksans Pharma (UK) Limited, which operates in the European market has improved.

Nova Pharmaceuticals Australasia Pty Ltd (your company holds 60% of the share capital) which operates mainly in Australia is doing well with consistent growth.

Pursuant to a Central Government''s Circular dated 8th February, 2011, the audited accounts together with Director''s Report and Auditor''s Report of the subsidiaries namely M/s. Nova Pharmaceuticals Australasia PTY Limited and M/s. Marksans Pharma (U.K.) Limited are not being appended to the Annual Report. However, a statement giving information in aggregate for each subsidiary including subsidiaries of subsidiaries are attached to the Consolidated Balance Sheet.

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

The information required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is annexed hereto and forms part of this Report.

EMPLOYEES

There is no employee drawing remuneration exceeding Rs. 60 Lacs per annum or Rs. 5 Lacs per month during the year ended 31 March, 2013 and therefore, provisions of Section 217(2A) of the Companies Act 1956, read with the Companies (Particulars of Employee) Rules 1975, as amended up to date do not apply.

HUMAN RESOURCES DEVELOPMENT AND INDUSTRIAL RELATIONS

The guiding principle of HR Policy at your company is that the "Intellectual Capital" and dedication of employees will help the Company emerge as a successful player in this highly competitive scenario.

The recruitment procedure ensures that people with talent and the right skill sets are selected. Nurturing of talent and a Performance Management System (PMS) is in place to ensure that the coordinated efforts of our people lead to achievement of the Business Goals of the company.

Empowerment and a motivational package ensure that employees keep performing at peak levels. The HR Policy is directed towards creating "Ownership of Goals" at levels and synchronizing the efforts of all employees to achieve the company''s quality and business goals.

Development of skills through mentoring and training by our seasoned professionals ensures that the talent pool keeps expanding. The Leadership Role played by our senior professionals helps to keep the next rung of leadership ready to take up the challenges thrown up by the global market.

The management helps the process of decision making by decentralizing and empowering professionals to execute tasks in a speedy manner. The management fosters information sharing and free exchange of ideas. Above all, the sense of ownership and empowerment to take decisions helps the Company to adapt and be ahead of the competition in this rapidly changing global environment.

The industrial relation at all the plant sites of your company is cordial.

As on 31 March, 2013, the Company''s permanent employee strength was 388.

DIRECTORS

Mr. Seetharama Raju Buddharaju, who was appointed as a Director to fill the casual vacancy caused by the resignation of Mr. M. B. Parikh with effect from 5th October, 2011, will vacate the office from the forthcoming Annual General Meeting. Your company has received notice from a member proposing the appointment of Mr. Seetharama Raju Buddharaju as a Director of the Company. The Board recommends the appointment of Mr. Seetharama Raju Buddharaju as a Director liable to retire by rotation.

CORPORATE GOVERNANCE

Pursuant to the Clause 49 of the Listing Agreement, a detailed report on Corporate Governance and Management Discussion and Analysis and a certificate from the Auditors regarding compliance with the conditions of Corporate Governance forms a part of this report.

AUDITORS

Members of the Company are requested to appoint Auditors for the ensuing year. It is proposed to appoint M/s. N. K. Mittal and Associates, Chartered Accountants, as the Statutory Auditors of the Company. The Company has received letter from them to the effect that their appointment, if made, would be within the prescribed limits Under Section 224 of the Companies Act, 1956. The Board recommends their appointment as Statutory Auditors.

APPRECIATION

The directors place on record their appreciation for the contribution made by the employees at all levels enabling the Company to achieve the performance during the year under review.

The directors also appreciate the valuable co-operation and continued support extended by Company''s Bankers, Medical Professionals, Business Associates and Investors who have put their faith in the Company.

By order of the Board of Directors

Mumbai Mark Saldanha

Dated 16th August, 2013 Chairman & Managing Director


Mar 31, 2012

The Directors take pleasure in presenting the 20th Report together with the Audited Accounts of the Company for the year ended 31st March, 2012.

FINANCIAL RESULTS

(Rs in Lacs)

Particulars 2011-12 2010-11

Turnover 15459.13 15469.77

Profit before Depreciation & (2328.91) (11808.21) Amortization expenses, Non- recurring expenses and Tax expenses

Less:

Depreciation &

Amortization

Expenses 1798.12 1464.39

Non-recurring expenses 14163.27 -

Tax expenses (183.69) 484.63

Profit after Tax (18106.61) (13757.23)

OPERATIONS :

During the year ended 31st March, 2012, total turnover achieved by your company was Rs. 15459.13 Lacs as compared to previous year of Rs. 15469.77 Lacs. Though during the year under review, the sales from formulation business have increased, the comparision with previous year is showing a negligible decrease of Rs. 10.64 Lacs. This is because previous year's turnover also includes sales of the erstwhile API division which was sold during the previous year. This year's turnover consists of formulation business only.

The year under review has registered a net loss of Rs. 18106.62 Lacs as compared to net loss of Rs. 13757.24 Lacs in the previous year. This is mainly due to the charging of the diminution in the value of investment and impairment of assets during the year under review.

RESEARCH AND DEVELOPMENT

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 and to face the challenge, your company has continuously sharpened its focus on R & D, which is the need of the hour and will continue to commit funds to strengthen R & D capabilities. In fact, one of the Company's biggest strength lies in vibrant and productive R & D function that has continuously placed Marksans Pharma Ltd ahead through consistent development of niche technology, processes and products. Your company will continue to invest in R & D to keep pace with the changing domestic and global scenario. During the year, your company continued product development and dossier filing in US, Europe and other emerging markets.

FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs)

The current outstanding of principal value of FCCBs is Rs. 19746.64 Lacs and a further redemption premium of Rs. 8925.48 Lacs. As disclosed in our last reports, the FCCBs have become due for redemption in November 2010 but have not been redeemed on the due date due to financial constraints. Further, due to the redemption default, there will be a default interest payable at 8% p.a. from the due date of redemption. No provision for default interest has yet been made in the books of accounts.

EROSION OF NET WORTH AND REFERENCE TO BIFR

As reported in our last reports, the Net Worth of the Company as on 31st March, 2011 had been completely eroded. Therefore, as required under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985, we have made a reference to the Board for Industrial and Financial Reconstruction for determining measures that will be adopted with respect to the Company. Accordingly, your Company is registered with the Board for Industrial and Financial Reconstruction.

INTERNAL CONTROL SYSTEMS

Your company has in place adequate system of internal control and management information systems which covers all financial and operating functions. These systems are designed in a manner which provides assurance with regard to maintenance of strict accounting control, optimum efficiency in operations and utilization of resources as well as financial reporting, protection of Company's tangible and intangible assets and compliance with policies, applicable laws, rules and regulations.

INFORMATION TECHNOLOGY

Your company continues to make required investments in the Information Technology area to cope up with the growing information needs necessary to manage operations efficiently.

HEALTH, SAFETY & ENVIRONMENT

Your company is committed to ensure sound Safety, Health and Environment performance related to its activities, products and services. Your company is also committed to strengthen pollution prevention and waste management practices and to provide a safe and healthy environment.

DIVIDEND

In view of net loss during the year under review, the Board of Directors is not recommending any dividend for the financial year ended 31st March, 2012.

FIXED DEPOSITS

During the year under review, your company has not accepted any deposits.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of provisions of Section 217(AA) of the Companies Act, 1956 the Directors confirm that:

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

- appropriate accounting policies have been selected and applied consistently and judgments and estimates made 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 ended 31st March, 2012 and the Statement of Profit and Loss for the period ended 31st March, 2012;

- proper and sufficient care has been taken 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;

- the annual accounts have been prepared on a going concern basis.

CONSOLIDATED FINANCIAL STATEMENTS

In compliance with the Accounting Standard - 21 on Consolidated Financial Statements, this Annual Report also includes Consolidated Financial Statements for the financial year under review. From the Consolidated Statement of Profit and Loss, it may be observed that the turnover of the year under review has increased to Rs. 35554.87 Lacs from Rs. 30457.81 Lacs during the previous financial year and net loss after tax has reduced to Rs. 17883.97 from Rs. 22,324.45 Lacs in the previous year.

SUBSIDIARIES

Performance of Mark sans Pharma (UK) Limited, which operate in the European market is satisfactory, though not as expected, considering the adverse economic scenario in that market and changed ownership structure. The business model of the Company has now been changed to secure sustained profitable growth in the years ahead.

Nova Pharmaceuticals Australasia Pty Ltd (your company holds 60% of the share capital) which operates mainly in Australia, is doing well with consistent growth.

Pursuant to a Central Government's Circular dated 8th February, 2011, the audited accounts together with Director's Report and Auditor's Report of the subsidiaries namely M/s. Nova Pharmaceuticals Australasia PTY Limited and M/s. Marksans Pharma (U.K.) Limited are not being appended to the Annual Report. However, a statement giving information in aggregate for each subsidiary including subsidiaries of subsidiaries are attached to the Consolidated Balance Sheet.

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

The information required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is annexed hereto and forms part of this Report.

EMPLOYEES

There is no employee drawing remuneration exceeding Rs. 60 Lacs per annum or Rs. 5 Lacs per month during the year ended 31st March, 2012 and therefore, provision of Section 217(2A) of the Companies Act 1956, read with the Companies (Particulars of Employee) Rules 1975, as amended up to date does not apply.

HUMAN RESOURCES DEVELOPMENT AND INDUSTRIAL RELATIONS

The guiding principle of HR Policy at Marksans is that the "Intellectual Capital" and dedication of employees will help the Company emerge as a successful player in this highly competitive scenario.

The recruitment procedure ensures that people with talent and the right skill sets are selected. Nurturing of talent and a Performance Management System (PMS) is in place to ensure that the coordinated efforts of our people lead to achievement of the Business Goals of the company.

Empowerment and a motivational package ensure that employees keep performing at peak levels. The HR Policy is directed towards creating "Ownership of Goals" at levels and synchronizing the efforts of all employees to achieve the company's quality and business goals.

Development of skills through mentoring and training by our seasoned professionals ensures that the talent pool keeps expanding. The Leadership Role played by our senior professionals helps to keep the next rung of leadership ready to take up the challenges thrown up by the global market.

The management helps the process of decision making by decentralizing and empowering professionals to execute tasks in a speedy manner. The management fosters information sharing and free exchange of ideas. Above all, the sense of ownership and empowerment to take decisions helps the Company to adapt and be ahead of the competition in this rapidly changing global environment.

The industrial relation at all the plant sites of your company is cordial.

As on 31st March, 2012 the Company's permanent employees strength was 718.

DIRECTORS

Mr. V. Nagaraj, Whole-time Director resigned as Director and Whole-time Director, which the Board accepted effective from 29th June, 2011. Dr. Balwant Shankarrao Desai has been appointed as a Whole-time Director in the last AGM held on 29th September, 2011.

Mr. M. B. Parikh resigned as a Director of the Company effective from 5th October, 2011. The Board of Directors has appointed Mr. Seetharama Raju Buddharaju as a Director to fill the casual vacancy caused by the resignation of Mr. M. B. Parikh with effect from 5th October, 2011.

Mr. Ajay S. Joshi, who was appointed to fill the casual vacancy caused by the resignation of Mr. Kumar Nair, will vacate the office from the forthcoming AGM. Your company has received notice from a member proposing the appointment of Mr. Ajay S. Joshi as a Director of the Company. The Board recommends the appointment of Mr. Ajay S. Joshi as a Director liable to retire by rotation.

CORPORATE GOVERNANCE

Pursuant to the Clause 49 of the Listing Agreement, a detailed report on Corporate Governance and Management Discussion and Analysis and a certificate from the Auditors regarding compliance with the conditions of Corporate Governance forms a part of this report.

AUDITORS

Members of the Company are requested to appoint Auditors for the ensuing year. It is proposed to appoint M/s. N, K. Mittal and Associates, Chartered Accountants, as the Statutory Auditors of the Company. The Company has received letter from them to the effect that their appointment, if made, would be within the prescribed limits Under Section 224 of the Companies Act, 1956. The Board recommends their appointment as Statutory Auditors.

APPRECIATION

The directors place on record their appreciation for the contribution made by the employees at all levels enabling the Company to achieve the performance during the year under review.

The directors also appreciate the valuable co-operation and continued support extended by Company's Bankers, Medical Professionals, Business Associates and Investors who have put their faith in the Company.

By order of the Board of Directors

Mumbai Mark Saldanha

Dated 14th August, 2012 Chairman & Managing Director


Mar 31, 2011

Dear Members,

The Directors take pleasure in presenting the 19th Report together with the Audited Accounts of the Company for the year ended 31st March, 2011.

FINANCIAL RESULTS

(Rs./Lac)

Particulars 2010-11 2009-10

Turnover 15543.76 19956.21

Profit/(Loss) Before (9628.43) 1046.59 Depreciation, Taxation & non recurring items

Less: Depreciation 1464.38 983.92

Provision for Taxation 138.49 8.50

Non Recurring Items 10201.47 -

Deferred Tax 346.14 25.19

Net Profit/(Loss) for the year (21778.91) 28.98

Add: Profit & Loss A/c. Balance 6505.73 6476.75 at the beginning of the year

Balance Carried to Balance (15273.18) 6505.73 Sheet

OPERATIONS:

During the year ended 31st March, 2011, total turnover achieved by your Company was Rs. 15543.76 Lacs as compared to previous year of Rs. 19956.21 Lacs, i.e., a decrease of Rs. 4412.45 Lacs mainly due to sale of the API business. The year under review has registered a net loss of Rs. 21778.91 Lacs as compared to net profit Rs. 28.98 Lacs in the previous year. This is mainly due to loss on the sale of API Business of Rs. 8663.88 Lacs, provision of redemption premium of FCCBs of Rs. 9017.33 Lacs and provision of foreign exchange loss on FCCBs of Rs. 2363.45 Lacs. Baring the aforesaid constraints, operational performance of the Company mainly international formulation business is improving gradually.

RESEARCH AND DEVELOPMENT:

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 and to face the challenge, your company has continuously sharpened its focus on R & D, which is the need of the hour and will continue to commit funds to strengthen R & D capabilities. In fact, one of the Company's biggest strength lies in vibrant and productive R & D function that has continuously placed Marksans Pharma Ltd. ahead through consistent development of niche technology, processes and products. Your company will continue to invest in R & D to keep pace with the changing domestic and global scenario. During the year, your company continued product development and dossier filing in US, Europe and other emerging markets.

DISPOSAL OF API PLANTS

Due to severe pricing pressure, foreign exchange fluctuations and rising raw material prices, Active Pharmaceutical Ingredient (API) division of your company located at Kurkumbh, Pune was not performing well. As a measure of restructuring business model, the Company has, with the approval of the shareholders, hived off this API division and a Business Transfer Agreement signed in this regard with Kores (India) Limited on 28th July, 2010. Consequently, the Company has sold the API business to Kores (India) Limited in July, 2010 on a slump sale basis, resulting into loss of Rs. 8663.88 Lacs.

FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs)

The current outstanding of principal value of FCCBs is USD 43,999,000 (Rs. 19949.85 Lacs) and a further redemption premium of USD 19.89 Mn. (Rs. 9017.33 Lacs). The FCCBs have become due for redemption in November, 2010. The redemption premium of USD 19.89 Mn. (Rs. 9017.33 Lacs) has become payable alongwith the principal amount of USD 43,999,000 (Rs. 19949.85 Lacs) (total due USD 63.89 Mn or Rs. 28967.18 Lacs). However, the FCCBs have not been redeemed on the due date due to financial constraints. The Management was in constant discussion with the bond holders for restructuring of the FCCBs and were offered various options. However, the negotiation has not yielded any result as on the date of this report.

The Company has provided for these liabilities in its books of accounts resulting into further erosion of its net worth. Further, due to the redemption default, there will be a default interest payable at 8% p.a. from the due date of redemption. No provision for default interest has been made in the books of accounts.

EROSION OF NET WORTH AND REFERENCE TO BIFR

After making of provision of loss on the sale of API business amounting to Rs. 8663.88 Lacs, redemption premium on the FCCBs of Rs. 9017.33 Lacs and foreign exchange loss on FCCBs of Rs. 2363.45 Lacs in the books of accounts for the year ended 31st March, 2011, the Net Worth of the Company as on 31st March, 2011 has been completely eroded. Therefore, the Directors have formed an opinion that the Company has become a Sick Industrial Company within the meaning of Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 and it is mandatory under the provisions of the said Act to make a reference to the Board for Industrial and Financial Reconstruction for determining measures that will be adopted with respect to the Company. Under the circumstances, the Directors will make a reference to the Board for Industrial and Financial Reconstruction within the stipulated time after the adoption of the accounts by the Shareholders in the forthcoming AGM.

INTERNAL CONTROL SYSTEMS:

Your company has in place adequate system of internal control and management information systems which covers all financial and operating functions. These systems are designed in a manner which provides assurance with regard to maintenance of strict accounting control, optimum efficiency in operations and utilization of resources as well as financial reporting, protection of Company's tangible and intangible assets and compliance with policies, applicable laws, rules and regulations.

INFORMATION TECHNOLOGY:

Your company continues to make required investments in the Information Technology area to cope up with the growing information needs necessary to manage operations efficiently.

HEALTH, SAFETY & ENVIRONMENT:

Your company is committed to ensure sound Safety, Health and Environment performance related to its activities, products and services. Your company is also committed to strengthen pollution prevention and waste management practices and to provide a safe and healthy environment.

DIVIDEND:

In view of net loss during the year under review, The Board of Directors is not recommending any dividend for the financial year ended 31st March, 2011.

FIXED DEPOSITS:

During the year under review, your company has not accepted any deposits.

DIRECTORS RESPONSIBILITY STATEMENT:

In terms of provisions of Section 217(AA) of the Companies Act, 1956 the Directors confirm that:

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

- appropriate accounting policies have been selected and applied consistently and judgments and estimates made 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 ended 31st March, 2011 and the Profit and Loss Account for the period ended 31st March, 2011;

- proper and sufficient care has been taken 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;

- the annual accounts have been prepared on a going concern basis.

CONSOLIDATED FINANCIAL STATEMENTS:

In compliance with the Accounting Standard - 21 on Consolidated Financial Statements, this Annual Report also includes Consolidated Financial Statements for the financial year under review. From the Consolidated Profit and Loss Account, it may be observed that the turnover stands at Rs. 30,531.80 Lacs as compared to Rs. 35,936.58 Lacs during the previous financial year and net loss after tax stands at Rs. 22,324.45 Lacs as compared to Rs. 1,004.35 Lacs in the previous year. This is mainly on account of loss on the sale of API Business, provision of redemption premium of FCCBs and provision of foreign exchange loss on FCCBs of Rs. 2363.45 Lacs.

SUBSIDIARIES:

Performance of Bell, Sons & Co. (Druggists) Limited (wholly owned subsidiaries of Marksans Pharma (UK) Limited), which operate in the European market, has improved in comparison to the previous year so far as sales in concerned. However, profit after tax has reduced mainly due to higher expenses incurred on new product development and interest costs. The performance of Relonchem Limited (wholly owned subsidiaries of Marksans Pharma (UK) Limited), which also operate in the European market is satisfactory, though not as expected, considering the adverse economic scenario in that market and changed ownership structure. Though turnover has reduced, the loss after tax has also reduced. The business model of the Company has now been changed to secure sustained profitable growth in the years ahead.

Nova Pharmaceuticals Australasia Pty Ltd. (your Company holds 60% of the share capital) which operates mainly in Australia, is doing well.

Pursuant to a Central Government's Circular dated 8th February, 2011, the audited accounts together with Director's Report and Auditor's Report of the subsidiaries namely M/s. Nova Pharmaceuticals Australasia PTY Limited and M/s. Marksans Pharma (U.K.) Limited are not being appended to the Annual Report. However, a statement giving information in aggregate for each subsidiary including subsidiaries of subsidiaries are attached to the Consolidated Balance Sheet.

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

The information required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is annexed hereto and forms part of this Report.

EMPLOYEES:

There is no employee drawing remuneration exceeding Rs. 60 Lacs per annum or Rs. 5 Lacs per month during the year ended 31st March, 2011 and therefore, provision of Section 217(2A) of the Companies Act 1956, read with the Companies (Particulars of Employee) Rules 1975, as amended up to date does not apply.

HUMAN RESOURCES DEVELOPMENT AND INDUSTRIAL RELATIONS:

The guiding principle of HR Policy at Marksans is that the "Intellectual Capital" and dedication of employees will help the Company emerge as a successful player in this highly competitive scenario.

The recruitment procedure ensures that people with talent and the right skill sets are selected. Nurturing of talent and a Performance Management System (PMS) is in place to ensure that the coordinated efforts of our people lead to achievement of the Business Goals of the Company.

Empowerment and a motivational package ensure that employees keep performing at peak levels. The HR Policy is directed towards creating "Ownership of Goals" at levels and synchronizing the efforts of all employees to achieve the company's quality and business goals.

Development of skills through mentoring and training by our seasoned professionals ensures that the talent pool keeps expanding. The Leadership Role played by our senior professionals helps to keep the next rung of leadership ready to take up the challenges thrown up by the global market.

The management helps the process of decision making by decentralizing and empowering professionals to execute tasks in a speedy manner. The management fosters information sharing and free exchange of ideas. Above all, the sense of ownership and empowerment to take decisions helps the Company to adapt and be ahead of the competition in this rapidly changing global environment.

The industrial relations at all the plant sites of your Company is cordial.

As on 31st March, 2011 the Company's permanent employees strength was 368 (474 in the previous year).

DIRECTORS:

Mr. Kumar Nair has resigned as a Director of the Company with effect from 2nd November, 2010. The Board of Directors has appointed Mr. Ajoy S. Joshi as a Director to fill the casual vacancy caused by the resignation of Mr. Kumar Nair with effect from 2nd May, 2011.

Mr. M.B. Parikh will be retiring by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for re-appointment.

Mr. V. Nagaraj, Whole-time Director has submitted his resignation as Director and Whole-time Director. The Board has accepted his resignation and he will be relieved from service effective from 29th June, 2011.

Your company has received notice from a member proposing the appointment of Dr. Balwant Shankarrao Desai as a Director of the Company. Dr. Desai has been associated with your company since 7th March, 2006 looking after quality management systems and regulatory affairs. The Board recommends the appointment of Dr. Desai as a Whole-time Director in the forthcoming AGM.

CORPORATE GOVERNANCE:

Pursuant to the Clause 49 of the Listing Agreement, a detailed report on Corporate Governance and Management Discussion and Analysis and a certificate from the Auditors regarding compliance with the conditions of Corporate Governance forms a part of this report.

AUDITORS:

Members of the Company are requested to appoint Auditors for the ensuing year. It is proposed to appoint M/s. N. K. Mittal and Associates, Chartered Accountants, as the Statutory Auditors of the Company. The Company has received letter from them to the effect that their appointment, if made, would be within the prescribed limits Under Section 224 of the Companies Act, 1956. The Board recommends their appointment as Statutory Auditors.

APPRECIATION:

The directors place on record their appreciation for the contribution made by the employees at all levels enabling the Company to achieve the performance during the year under review.

The directors also appreciate the valuable co-operation and continued support extended by Company's Bankers, Medical Professionals, Business Associates and Investors who have put their faith in the Company.

By order of the Board of Directors

Mark Saldanha Chairman & Managing Director

Mumbai Dated 28th June, 2011


Mar 31, 2010

The Directors take pleasure in presenting the 18th Annual Report together with the Audited Accounts of the Company for the year ended 31st March, 2010.

FINANCIAL RESULTS

(RS./LAC) Particulars 2009-10 2008-09

Turnover 19956.21 20356.11

Profit Before Depreciation, Taxation

& non recurring items 1046.59 1212.04

Less: Depreciation 983.92 972.97

Provision for Taxation 8.50 66.01 Non Recurring Items

Deferred Tax 25.19 123.57

Net Profit for the year 28.98 49.49

Add: Profit & Loss A/c. Balance at

the beginning of the year 6476.75 6427.26

Balance Carried to Balance Sheet 6505.73 6476.75

OPERATIONS:

During the year ended 31st March, 2010, total turnover achieved by your company was Rs. 19956.21 Lacs as compared to previous year of Rs 20356.11 Lacs, i.e., a decrease of Rs. 399.9 Lacs and net profit for the year has come down to Rs. 28.98 Lacs as compared to previous year of Rs. 49.49 Lacs. This is mainly due to increased raw material price and stiff competition.

However, the situation is showing some improvement since the last quarter of the year under review. During the quarter ended 31st March, 2010, your company has achieved a turnover of Rs. 5560.18 Lacs as compared to Rs. 3050.34 Lacs during the same quarter of the preceding financial year. Net profit during the quarter was Rs. 507.49 Lacs as compared to net loss of Rs. 1343.13 Lac during the same quarter of the preceding financial year.

RESEARCH AND DEVELOPMENT:

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 and to face the challenge, your company has continuously sharpened its focus on R & D, which is the need of the hour and will continue to commit funds to strengthen R & D capabilities. In fact, one of your companys biggest strength lies in vibrant and productive R & D function that has continuously placed Marksans ahead through consistent development of niche technology, processes and products. Your company will continue to invest in R & D to keep pace with the changing

domestic and global scenario. During the year, your company continued product development and dossier filing in US, Europe and other emerging markets. Drug discovery and new chemical entity development projects needs huge amount of funding. Due to insufficient profits and recessionary market conditions, your company has stopped funding all New Chemical Entity research projects.

INTERNAL CONTROL SYSTEMS:

The Company has in place adequate system of internal control and management information systems which covers all financial and operating functions. These systems are designed in a manner which provides assurance with regard to maintenance of strict accounting control, efficiency of operations, optimum efficiency in operations and utilization of resources as well as financial reporting, protection of Companys tangible and intangible assets and compliance with policies, applicable laws, rules and regulations.

INFORMATION TECHNOLOGY:

Your company continues to make required investments in the Information Technology area to cope up with the growing information needs necessary to manage operations efficiently.

HEALTH, SAFETY & ENVIRONMENT:

Your Company is committed to ensure sound Safety, Health and Environment performance related to its activities, products and services. Your company is committed to strengthen pollution prevention and waste management practices and to provide a safe and healthy environment.

DIVIDEND:

In view of Companys ongoing expansion plans and to support the fund requirements of the Company to stimulate further growth, your Board of Directors is not recommending any dividend for the financial year ended 31st March, 2010.

FIXED DEPOSITS:

During the year under review, your company has not accepted any deposits.

FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBS)

During the year under review, your company has bought back US Dollar 6,000,000 FCCBs in the open market at the price prevailing in the Singapore Stock Exchange where the FCCBs are listed. Further, one holder of FCCB holding 1 FCCB of US Dollar 1000 had given notice for conversion of the FCCB into Equity Shares of the Company. Accordingly, the Company has allotted on 14.04.2010 1,333 Equity Shares of Re. 1/- each on conversion of one FCCB of US Dollar 1000. As on the date of this report, total outstanding FCCBs is US Dollar 43,999,000.

DISPOSAL OF API PLANTS

Due to severe pricing pressure, foreign exchange fluctuations and rising raw material prices, this division was not performing well. As a measure of restructuring business model, your company has, with the approval of the shareholders, hived off the API business located at Kurkumbh, Pune and a Business Transfer Agreement has been signed in this regard with Kores (India) Limited on 28th July, 2010. Since, the Business Transfer Agreement is signed post 31st March, 2010, no impact thereof is shown in the accounts for the year under review.

DIRECTORS RESPONSIBILITY STATEMENT:

In terms of provisions of Section 217(AA) of the Companies Act, 1956 your Directors confirm that:

- in the preparation of the annual accounts, the applicable accounting standards have been followed except AS – 11 (Effects of changes in foreign exchange rates) with proper disclosure made in Note 12 of the Notes forming part of the Accounts for the year ended 31st March, 2010;

- appropriate accounting policies have been selected and applied consistently and judgments and estimates made 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 ended 31st March, 2010 and the Profit and Loss Account for the period ended 31st March, 2010;

- proper and sufficient care has been taken 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;

- the annual accounts have been prepared on a going concern basis.

CONSOLIDATED FINANCIAL STATEMENTS:

In compliance with the Accounting Standard - 21 on Consolidated Financial Statements, this Annual Report also includes Consolidated Financial Statements for the financial year under review. From the Consolidated Profit and Loss Account, it may

be observed that the turnover stands at Rs. 35936.58 Lacs as compared to Rs. 36013 Lacs during the previous financial year and net loss after tax stands at Rs. 962.16 Lacs as compared to Rs. 795.48 Lacs in the previous year. This is mainly on account of payments related to acquisition of a company in Europe, foreign exchange fluctuation and amortization of goodwill on acquisition.

SUBSIDIARIES:

Performance of Bell, Sons & Co. (Druggists) Limited (wholly owned subsidiary of Marksans Pharma (UK) Limited), which operate in the European market, has improved in comparison to the previous year. The performance of Relonchem Limited (wholly owned subsidiary of Marksans Pharma (UK) Limited), which also operate in the European market is satisfactory, though not as expected, considering the adverse economic scenario in that market and changed ownership structure. The Directors expect the performance of this company to be much improved in the coming year.

Nova Pharmaceuticals Australasia Pty Ltd (your company holds 60% of the share capital) which operates mainly in Australia, is doing well.

As required under the provisions of Section 212 of the Companies Act, 1956 the audited accounts together with Directors Report and Auditors Report of the subsidiaries namely M/s. Nova Pharmaceuticals Australasia PTY Limited and M/s. Marksans Pharma (U.K.) Limited, made out in accordance with the requirements of the Companies Act, 1956 are appended to and form part of the Annual Report.

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

The information required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is annexed hereto and forms part of this Report.

EMPLOYEES:

Information under Section 217(2A) of the Companies Act 1956, read with the Companies (Particulars of Employee) Rules 1975, as amended up to date for the year ended 31st March,2010 is given here under :

Name Designation Age Gross Qualification Remuneration

Mr. Anurag Pathak Associate Director - 38 3600970.00 PGDBM -

Global Exports Mktg

Dr. Desai Balwant Director - Quality & 46 3116832.00 Ph.D. Shankarrao Regulatory Affairs

Mr. Arun Kumar Director - R&D 59 2403811.00 M Pharma, Shukla Ph.D

Name Experience Date of Last Employment & Remuneration Appoinment Designation

Mr. Anurag Pathak 14 08/09/2008 Pan India Network Infravest Pvt. Ltd.

Vice President - Sales Dr. Desai Balwant 22 07/03/2006 Alembic Ltd Shankarrao Vice President - Quality &

Regulatory Affairs

Mr. Arun Kumar 31 01/04/2009 Gel Tech Pvt. Ltd. Shukla Director - Operations

DIRECTORS:

Mr. Kumar Nair will be retiring by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for re-appointment.

CORPORATE GOVERNANCE:

Pursuant to the Clause 49 of the Listing Agreement, a detailed report on Corporate Governance and Management Discussion and Analysis and a certificate from the Auditors regarding compliance with the conditions of Corporate Governance form parts of this report.

AUDITORS:

Members of the Company are requested to appoint Auditors for the ensuing year. It is proposed to appoint M/s. N. K. Mittal and Associates, Chartered Accountants, as the Statutory Auditors of the Company. The Company has received letter from them to the effect that his appointment, if made, would be within the prescribed limits Under Section 224 of the Companies Act, 1956. The Board recommends their appointment as Statutory Auditors.

COST AUDITORS:

The Board of Directors has appointed Girish S. Maniar. Cost Accountants, as Cost Auditor for audit of the cost accounting records relating to Bulk Drugs and Formulations for the year ending 31st March, 2011.

HUMAN RESOURCES DEVELOPMENT AND INDUSTRIAL RELATIONS:

The guiding principle of HR Policy at Marksans is that the "Intellectual Capital" and dedication of employees will help the Company emerge as a successful player in this highly competitive scenario.

The recruitment procedure ensures that people with talent and the right skill sets are selected. Nurturing of talent and a Performance Management System (PMS) is in place to ensure that the coordinated efforts of our people lead to achievement of the Business Goals of the company.

Empowerment and a motivational package ensure that employees keep performing at peak levels. The HR Policy

is directed towards creating "Ownership of Goals" at levels and synchronizing the efforts of all employees to achieve the companys quality and business goals.

Development of skills through mentoring and training by our seasoned professionals ensures that the talent pool keeps expanding. The Leadership Role played by our senior professionals helps to keep the next rung of leadership ready to take up the challenges thrown up by the global market.

Your management helps the process of decision making by decentralizing and empowering professionals to execute tasks in a speedy manner. The management fosters information sharing and free exchange of ideas. Above all, the sense of ownership and empowerment to take decisions helps the Company to adapt and be ahead of the competition in this rapidly changing global environment.

The industrial relations at all the plant sites of your company is cordial.

As on 31st March, 2010 the Companys permanent employees strength was 474 (442 in the previous year).

APPRECIATION:

Your directors place on record their appreciation for the contribution made by the employees at all levels enabling the Company to achieve the performance during the year under review.

Your directors also appreciate the valuable co-operation and continued support extended by Companys Bankers, Medical Professionals, Business Associates and Investors who have put their faith in the Company.

By order of the Board of Directors

Mark Saldanha

Chairman & Managing Director

Mumbai

Dated : 12th August, 2010

Find IFSC