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Directors Report of Sequent Scientific Ltd.

Mar 31, 2016

Dear Members,

We hereby present the 31st Annual Report of your Company along with the Audited Financial Statements of the Company for the financial year ended March 31, 2016.

1. FINANCIAL SUMMARY

The Financial Performance of the Company (Standalone) for the Financial Year ended March 31, 2016 is given below:

(Rs. in mn)

Particulars

2015-16 -

2014-15

Revenue from Operations

3967.74

4,448.16

Other Income

115.77

32.21

Total Income

4,083.51

4,480.37

Profit/ (Loss) before Interest, Depreciation Tax & Exceptional Items

484.22

638.37

Less: Interest

164.42

474.56

: Depreciation and amortization expenses

242.89

263.75

Profit/(Loss) Before Tax & Exceptional Items

76.91

(99.94)

Exceptional Items

(5.40)

529.99

Profit/(Loss) Before Tax

71.51

430.05

Provision for - Current Tax

-

16.98

- Deferred Tax

0.69

-

Profit/(Loss) after Tax

70.82

413.07

2. BUSINESS PERFORMANCE REVIEW

During the financial year 2015-16, on a standalone basis, your Company''s revenues stood at Rs. 4,083.51 mn as against Rs. 4,480.37 mn in 2014-15. The Company posted an EBITDA of Rs. 484.22 mn in the year as against Rs. 638.37 mn in 2014-15. The Company made a net profit of Rs. 70.82 mn.

On a consolidated basis, your Company''s revenue for the year 2015-16 stood at Rs. 6,451.22 mn as against Rs. 4,753.23 mn in 2014-15. The Company posted an EBITDA of Rs. 735.17 mn for the year 2015-16 as against Rs. 304.56 mn in 2014-15. On a consolidated level, the Company made a loss of Rs. 197.85 mn.

A detailed analysis on the Company''s operational and financial performance for the year is covered under ''Management''s Discussion and Analysis Report'' which forms part of the Annual Report.

Business Overview

Human API

-. Registered a growth of 69.8% during the year 2015-16 as against previous year 2014-15 k. Received an Establishment Inspection Report from US FDA for the API facility at Mangalore

Animal Health

-. Strategic progression from API driven model to formulation led business

-. Expansion to new geographies globally and strengthened presence in existing markets

Analytical Services

-. Inauguration of GLP (Good Laboratory Practices) compliant Analytical Services Centre at Bengaluru

-. Successful completion of USFDA Audit at Mangalore Centre

R&D

-. Filing of 7 USDMFs and 4 CEPs/ EDMFs

-. Initiation of formulation development program in animal health business

- Acquisition of IP in US and EU for 3 products -Felbamate, Mefenamic acid and Cetirizine

Corporate Actions

Human Health Business

-. Acquisition of controlling stake in Indo Phyto Chemicals Private Limited for foraying into niche female healthcare segment with specific focus on steroids and hormones

Animal Health Business

-. Acquisition of animal health business division of Lyka, an initiative to strengthen the Company''s cattle and dairy business in India.

- Fortification of Company''s positioning in Turkey''s animal health market by acquiring Topkim Ilag

Premiks San. ve Tic. A.S making Alivira Turkey''s largest animal health company in Turkey. k. Foray into European veterinary market through acquisition of N-Vet AB and Fendigo. These Companies have established a strong front-end presence for Alivira in the European markets.

There was no change in the nature of the business of the Company during the year ended March 31, 2016.

Material changes and commitments affecting the financial position of the Company, which have occurred between the end of financial year and the date of this report

The following transactions/ proposed transactions occurred between the end of financial year i.e., March 31, 2016 and the date of this report:

-. Acquisition of 60% stake in Karizoo Group, Spain, one of the leading animal health groups in Spain and European markets on July 1, 2016. k. Acquisition of 70% stake in Interchange

Veterinaria Industria E Comercio S.A., Brazil on August 1, 2016, which will provide a foothold in the hugely attractive and fast growing Brazilian market.

During the year ended March 31, 2016, the Company has allotted equity shares as under:

Date of allotment

No. of Shares

Allottee category

Remarks

Issue price

April 15, 2015

1,200,000

Promoter Group Entities

On conversion of convertible warrants

Rs. 222.15

May 26, 2015

7,476,635

Qualified Institutional Buyers

Qualified Institutions Placement

Rs. 535.00

June 10, 2015

800,000

Promoter Group Entity

On conversion of convertible warrants

Rs. 222.15

June 10, 2015

200,000

Promoter Group Entity

On conversion of convertible warrants

Rs. 236.00

June 10, 2015

1,100,000

Public

On conversion of convertible warrants

Rs. 475.00

August 13, 2015

757,734

Promoter Group Entity

Preferential issue for consideration other than cash (Issue of equity shares against acquisition of equity shares of Alivira Animal Health Limited, India)

Rs. 669.10

November 16, 2015

2,800,000

Promoter Group Entities

On conversion of convertible warrants

Rs. 236.00

December 1, 2015

2,827,679

Public

Preferential issue for consideration other than cash (Issue of equity shares against acquisition of equity shares of Alivira Animal Health Limited, India)

Rs. 669.10

3. DIVIDEND

The Board of Directors of the Company has not recommended any dividend for the financial year ended March 31, 2016.

The Company is not proposing to carry any amount to reserves.

During the year 2015-16, the Company has transferred unclaimed dividend of Rs. 8,827/- to Investor Education and Protection Fund, as per Investor Education and Protection Fund (Awareness and Protection of Investor) Rules, 2001.

4. SHARE CAPITAL

As on date, the authorized share capital of the Company is Rs. 500,000,000/- divided into 250,000,000 equity shares of Rs. 2/- each.

The issued, subscribed and paid up equity capital of the Company as on date is Rs. 476,472,390 divided into 238,236,195 equity shares of Rs. 2/- each.

The Company has not allotted equity shares after the balance sheet date i.e. March 31, 2016.

Sub-division of equity shares of the Company

The Company sub-divided its equity shares from 1 (One) Equity share of Rs. 10 each into 5 (Five) Equity shares of Rs. 2/- each on February 26, 2016 with an intent to improve the liquidity of the Company''s shares in the stock market and also to encourage the participation of small investors in the equity shares of the Company.

Issue of Warrants on preferential basis

As on date, 5,500,000 warrants which were issued on preferential basis to promoter group entity are outstanding.

The Company had originally issued 1,100,000 convertible warrants on April 11, 2015 which can be converted into equivalent number of equity shares of the Company having face value of Rs. 10 each for a consideration of Rs. 475 each. Pursuant to sub-division of 1 (One) equity share of Rs. 10 each into 5 (Five) equity shares of Rs. 2 each, the outstanding warrants have been adjusted proportionately.

The Company raised Rs. 1,674.8 mn through preferential issue to promoters/Non-promoters during the year.

Qualified Institutional Placement

The Company raised Rs. 4,000 mn through Qualified Institutional Placement, which was subscribed by quality, long-term investors who endorsed the vision of the Company of being a Power House in the Global Animal Health Space.

5. LISTING OF EQUITY SHARES OF THE COMPANY ON NATIONAL STOCK EXCHANGE OF INDIA LIMITED

The equity shares of the Company were listed with National Stock Exchange of India Limited on March 8, 2016 under the trading symbol “SEQUENT” and admitted for trading on March 10, 2016.

6. SUBSIDIARIES

As at March 31, 2016, the Company has 17 subsidiaries, out of which 9 Companies are wholly owned Subsidiaries and the Company does not have any Joint Ventures/ Associate Companies.

Changes in subsidiaries during the financial year ended March 31, 2016: Buyout of entire minority interest in Alivira Animal Health Limited, India ("Alivira")

Pursuant to the approval of Board of Directors of the Company on June 30, 2015, the Company acquired the entire shareholding by buying out the minority shareholding (i.e., 9,997,941 equity shares) in Alivira held by Unit Trust of India Investment Advisory Services Limited A/c Ascent India Fund III (“Ascent”) and Devicam Capital LLP (''''Devicam”) together. The consideration towards such acquisition was paid by way of issue of 2,827,679 equity shares of Rs. 10/each to Ascent and 757,734 equity shares of Rs. 10/- each to Devicam at a price of Rs. 669.10 per equity share through preferential issue in compliance with relevant provisions of the Companies Act,

2013 and Chapter VII of the Securities & Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (“SEBI (ICDR) Regulations”). Post the acquisition of equity shares held by Devicam (on August 12, 2015) and Ascent (on December 1, 2015), Alivira has become a wholly owned subsidiary of the Company with effect from December 1, 2015.

Acquisition of 60% stake in Topkim Ila? Premiks San. ve Tic. A.S, Turkey ("Topkim")

Alivira Animal Health Limited, India, a wholly owned subsidiary of the Company acquired 60% stake in Topkim on December 11, 2015 through its subsidiary Provet Veteriner Urunleri San. ve Tic. A. S., Turkey (“Provet”). Topkim is one of the oldest and reputable manufacturer of Turkey, has close to 50 years of business presence with over 67 registered products mainly comprising of Ectoparasiticides, Endectocides, and Injectable Antibiotics. It has wide distribution capabilities with presence in almost every sales point at Turkey.

Acquisition of 85% stake in N-Vet AB, Fendigo SA and Fendigo BV

Alivira Animal Health Limited, India, Wholly owned subsidiary of the Company has forayed into the European Veterinary Pharmaceutical markets through acquisition of 85% stake in three companies

- N-Vet AB, Sweden, Fendigo SA, Belgium and Fendigo BV, Netherland on December 3, 2015.

Acquisition of 51% stake in Indo Phyto Chemicals Private Limited, India (“IPC”)

The Company acquired 51% stake in IPC on January 27, 2016. IPC is a fully integrated company with a portfolio of steroids and hormonal APIs and having its manufacturing base in Uttarakhand.

The Company has capabilities in both fermentation and chemical synthesis, giving it a unique ability to produce APIs from the basic starting materials that are extracted from plants.

Incorporation of other subsidiaries

Alivira Animal Health Australia Pty Limited, Australia was incorporated as a wholly owned subsidiary of Alivira Animal Health Limited, Ireland, a wholly owned subsidiary of the Company.

Sequent Scientific Pte. Limited, Singapore was incorporated as a wholly owned subsidiary of the Company.

Change in shareholding of below mentioned subsidiaries during the financial year ended March 31, 2016:

1. Alivira Animal Health Limited, Ireland became a wholly owned subsidiary of the Company pursuant to acquisition of entire shareholding in Alivira Animal Health Limited, India

2. Shareholding in Provet has increased from 55.15% to 60% of total equity capital pursuant to acquisition of entire shareholding in Alivira Animal Health Limited, India

Accounts of Subsidiaries

In accordance with Section 129(3) of the Companies Act, 2013, the Company has prepared a consolidated financial statement of the Company and all its subsidiary companies, which is forming part of the Annual Report. Statement containing salient features of the financial statements of Company''s subsidiaries, joint ventures and associate companies as required in Form AOC-1 is enclosed as Annexure 1 to this Report.

Further financial statements together with related reports and information of each of the subsidiary companies of the Company have been placed on the website of the Company www.sequent.in.

7. EXTRACT OF ANNUAL RETURN

Extract of Annual Return in terms of Section 92(3) of the Companies Act, 2013 in Form MGT- 9 is enclosed as Annexure 2 to the Directors'' Report.

8. PUBLIC DEPOSIT

During the financial year 2015-16, the Company has not accepted or renewed any public deposits in terms of Sections 73 and 74 of the Companies Act, 2013 and rules framed there under.

9. BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL

Board Composition

As on August 12, 2016, the Board comprises of 7 Directors consisting of 2 Executive Directors, 2 Nonexecutive Directors and 3 Independent Directors. Chairman of the Board is an Independent Director.

Mr. Narendra Mairpady (DIN: 00536905) was appointed as an Additional and Independent Director on the Board of Directors of the Company w.e.f August 1, 2015 and members have approved his appointment as a Director and Independent Director at their Annual General Meeting held on September 24, 2015.

Mr. Kannan Ramanujam (DIN: 00190637) resigned from the directorship of the Company with effect from the closing of business hours of February 11, 2016. The Directors place on record their sincere appreciation and recognition of the valuable contribution and services rendered by Mr. Kannan Ramanujam during his tenure as a Director of the Company.

Dr. S Devendra Kumar (DIN: 00050440) and Mr. K E C Rajakumar (DIN: 00044539) were appointed as Additional Directors with effect from October 29, 2015 and February 11, 2016 respectively.

As per Section 161 of the Companies Act, 2013 (“the Act”), an Additional Director shall hold office up to the date of next Annual General Meeting or the last date on which the Annual General Meeting should have been held, whichever is earlier and his/ her appointment as a Director of the Company has to be approved by the members of the Company. In this regard a proposal will be placed before the members at the ensuing Annual General Meeting for the appointment of Dr. S Devendra Kumar and Mr. K E C Rajakumar, as Directors of the Company.

Mr. Manish Gupta, Managing Director (DIN: 06805265) retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Brief profiles of Mr. Manish Gupta, Dr. S Devendra Kumar and Mr. K E C Rajakumar are given in the corporate governance report which forms part of this report.

Your directors recommend their appointment/ reappointment to the members of the Company.

As on date the Company has the following Key Managerial Personnel:

- Mr. Manish Gupta - Managing Director (DIN: 06805265)

- Dr. Gautam Kumar Das - Joint Managing Director (DIN: 02920990)

- Mr. Kannan P R - Chief Financial Officer

- Mr. Preetham Hebbar - Company Secretary

There is no change in Key Managerial Personnel of the Company during the year 2015-16.

The Company has received necessary declarations from each Independent Director that they meet the criteria of independence laid down in Section 149 (6) of the Companies Act, 2013.

10. MEETINGS OF THE BOARD

During the year ended March 31, 2016, 11 (Eleven) Board Meetings were held. These meetings were held on April 15, 2015, April 24, 2015, June 10, 2015, June 30, 2015, July 8, 2015, July 30, 2015, August 13, 2015, October 29, 2015, December 7, 2015, January 11, 2016 and February 11, 2016.

11. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

The Directors of the Company are appointed by members at the General Meetings of the Company.

As regards the appointment and tenure of Independent Directors, the Company has adopted the provisions of the Companies Act, 2013 read with Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), 2015.

The Nomination and Remuneration Committee at its meeting held on July 30, 2015 has adopted a policy namely Sequent Policy on Nomination and Remuneration (“the Policy”) in adherence to Section 178(3) of the Companies Act, 2013 and Clause 49 (IV) (B) (4) of the Listing Agreement as entered with stock exchange (till November 30, 2015)/ provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)

Regulations, 2015 (w.e.f. December 1, 2015). The policy shall act as a guideline on matters relating to the remuneration, appointment, removal and evaluation of performance of the Directors, Key Managerial Personnel and other employees of the Company. The policy is given as Annexure 3 in this report.

12. EVALUATION OF BOARD OF DIRECTORS

Pursuant to provisions of Schedule IV of the Companies Act, 2013 and Clause 49 of the Listing Agreement as entered with stock exchange (till November 30, 2015)/ provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (w.e.f. December 1, 2015), the Company has formulated a policy called as Sequent Board Performance Evaluation Policy (“the Policy”). Based on this the Company has prepared a questionnaire to carry out the evaluation of performance of every Director including the Independent Directors at regular intervals and at least on an annual basis.

The questionnaire is structured to embed various parameters based on which the performance of a Board can be evaluated. Customized questionnaires are formulated for evaluating Independent Directors, Non-Executive Directors, Whole-time Directors, Chairperson of the Board and the Board, as a whole.

Based on the policy the evaluation was conducted by the Company.

Detailed data on composition of Board of Directors, Committees of Board of Directors, Meeting details, charter for each committee and attendance details forms part of the Corporate Governance Report.

13. AUDIT COMMITTEE

The Composition of Audit Committee of the Company as on August 12, 2016 is given below:

- Dr. Gopakumar G Nair - Chairman

- Dr. Kausalya Santhanam - Member

- Mr. Narendra Mairpady- Member

Board of the Company has accepted all recommendations given by the Audit Committee.

14. SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 (1) of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. BG & Associates, Practicing Company Secretaries

(Certificate of Practice No: 4221) to carry out the Secretarial Audit for the financial year 2015-16. The Secretarial Audit Report is annexed as Annexure 4 to the Directors'' Report. There are no qualifications, observations or adverse remarks in the Secretarial Audit Report.

15. AUDITORS

Statutory Auditors

At the Annual General Meeting held on September 29, 2014, M/s. Deloitte Haskins & Sells, Chartered Accountants (Firm''s Registration Number:

008072S) were appointed as Statutory Auditors of the Company for a period of 5 years from 29th Annual General Meeting till the conclusion of 34th Annual General Meeting. In terms of the first proviso to Section 139 of the Companies Act,

2013, the appointment of auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants, as Statutory Auditors of the Company, is placed for ratification by the members in the ensuing Annual General Meeting of the Company.

Cost Auditor

Pursuant to Section 148(3) and Companies (Cost records and audit) Rules, 2014, Mr. Girish Kambadaraya, Cost Accountant, was appointed as the Cost Auditor for the financial year 2015-16. The due date for filing the Cost Audit Reports in XBRL mode for the financial year ended March 31, 2015 was September 30, 2015 and the Cost Audit reports were filed by the Cost Auditor on September 29, 2015.

The due date for filing the Cost Audit Reports for the financial year ended March 31, 2016 is September 30, 2016.

The Board at its meeting held on August 12, 2016 on recommendation of Audit Committee has appointed M/s. Kirit Mehta & Associates, Cost Accountants, as the Cost Auditor for the financial year 2016-17 in terms of Section 148(3) and Companies (Cost records and audit) Rules, 2014 as amended. As per the requirement of Companies Act, 2013 the remuneration payable to Cost Auditors shall be placed for ratification of at the ensuing Annual General Meeting of the Company.

A proposal will be placed before the members for the ratification of remuneration payable to M/s. Kirit Mehta & Associates, Cost Accountants as a Cost Auditor of the Company for the financial year 2016-17.

16. AUDIT REPORT

There are no qualifications, observations or adverse remarks in the Audit Report issued by the Statutory Auditors of the Company for financial year ended March 31, 2016.

17. PARTICULARS OF EMPLOYEES

The statement containing particulars of employees as required under 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 provided as an Annexure

5 forming part of this report except the report as per Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. In terms of Section 136 of the Companies Act, 2013, the said report is open for inspection at the Registered Office of the Company during working hours and any member interested in obtaining a copy of the same may write to the Company Secretary at the registered office of the Company.

18. VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Board of Directors of the Company at its meeting held on May 28, 2014 has approved the implementation of Whistle Blower Policy namely “Sequent Whistle Blower Policy” throughout the Company in order to curb the unethical or improper behavior/ practices or alleged wrongful conduct or violation of Code of Conduct of the Company or applicable laws, frauds, bribery, corruption, employee misconduct, illegality, health, safety & environmental issues or misappropriation of Company funds or assets within the Company or by the Company. This policy helps in providing a mechanism for personnel to report to the Authority concerns about unethical behavior, actual or suspected fraud or violation of the company''s code of conduct or ethics policy.

The Policy ensures that strict confidentiality is maintained whilst dealing with concerns and also that no discrimination will be meted out to any person for a genuinely raised concern.

20. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

19. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY THE COMPANY

Particulars of investments made, loans given and guarantees provided is as per details given below:

Name of the entity

Relationship

Investment (Amount in Rs.)

Loan (Amount in Rs.)

Guarantee (Amount in Rs.)

Alivira Animal Health Limited, India

Wholly Owned Subsidiary

3,348,999,758

589,589,872

-

Indo Phyto Chemicals Private Limited, India

Subsidiary

68,500,000

-

-

Strides Shasun Limited, India (Investment made in Shasun Pharmaceuticals Limited prior to merger with Strides Shasun Limited, formerly known as Strides Arcolab Limited)

781,000,000

All the transactions entered with related parties are in the ordinary course of business and on arm''s length basis.

Further, there are no materially significant related party transactions with its promoters, the directors or the management, their subsidiaries or relatives etc. that may have potential conflict with the interests of the Company at large.

The particulars of material contracts or arrangements with related parties referred to in Section 188(1), as prescribed in Form AOC-2 of the rule 8(2) of Companies (Accounts) Rules, 2014 is given as an Annexure 6.

All transactions with the related parties are disclosed in Note 28.2 to the financial statements in the Annual Report.

21. CORPORATE SOCIAL RESPONSIBILITY

As per section 135(1), the Company has constituted a Corporate Social Responsibility Committee comprising of Mr. Manish Gupta, Dr. Gopakumar G Nair and Dr. Kausalya Santhanam as its members. The Company adopted a policy on Corporate Social Responsibility on May 14, 2016.

The disclosure as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out in Annexure 7 of this report.

22. RISK MANAGEMENT

The Company has a risk management framework for identifying and managing risks. Additional details are provided in the ''Management Discussion and Analysis'' report forming part of this Report.

23. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

There are no significant and material orders passed by the Regulators, Courts or Tribunals that would impact the going concern status of the Company and its future operations.

24. DIRECTORS'' RESPONSIBILITY STATEMENT

In accordance with Section 134(5) of the Companies Act, 2013, the Directors of your Company to the best of their knowledge and ability confirm that:

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

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the annual accounts of the Company have been prepared on a going concern basis;

(e) they have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

25. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS/ OUTGO AND RESEARCH & DEVELOPMENT

The particulars as prescribed under Section 134(3)(m) of the Companies Act, 2013 read with rule 8(3) of the Companies (Accounts) Rules, 2014 is enclosed as an Annexure 8 to the Directors'' Report.

Detailed write-up on Research and Development activity forms part of the annexure to the Directors'' Report.

26. CORPORATE GOVERNANCE

The Company has complied with all the mandatory requirements of Corporate Governance specified by the Securities and Exchange Board of India (“SEBI”) through and Clause 49 of the Listing Agreement as entered with stock exchange (till November 30, 2015)/ provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (w.e.f. December 1, 2015) (“Regulations”). As per Regulation 34(3) and Schedule V of the Regulations, a separate Report on Corporate Governance forms part of the Annual Report of the Company. A certificate from the Statutory Auditors of the Company regarding compliance with Corporate Governance requirements as stipulated in the regulations and listing agreement entered with Stock Exchange also forms part of the Annual Report.

27. MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Regulation 34 (3) and Schedule V of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, Management Discussion and Analysis Report forms part of this Report.

28. EMPLOYEE STOCK OPTION SCHEME

The Company has formulated an employee stock option plan titled “SSL ESOP Scheme 2010” (the “ESOP 2010”) in accordance with the provisions of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (the “SEBI ESOP Guidelines”) and the scheme is administered through a trust. As on date 3,500,000 shares have been issued to the trust. During the year the Nomination and Remuneration Committee has granted 500,000 options to identified employees and 225,000 options lapsed due to resignation of employees. As at March 31, 2016, 3,545,000 Stock options are outstanding.

The ESOP scheme of the Company is in Compliance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.

Further disclosure under Section 62 of the Companies Act, 2013 read with Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 and SEBI (Share Based Employee Benefits) Regulations, 2014 given as an Annexure 9 to this Report.

29. APPRECIATION

Your Directors would like to express their grateful appreciation for the excellent support and cooperation received from the Members, Customers, Financial Institutions, Banks, Government Authorities, Reserve Bank of India, Securities and Exchange Board of India, Stock Exchanges, Manufacturers and Suppliers to the Company.

We would like to place on record our sincere appreciation for the total commitment, dedication, untiring efforts and hard work put in by the employee members at all levels of the Company in realization of the corporate goals in the years ahead.

For and on behalf of the Board of Directors

Place: Bengaluru Dr. Gopakumar G Nair

Date: August 12, 2016 Chairman


Mar 31, 2014

Dear Members,

We hereby present the 29th Annual Report of your Company along with the Audited Financial Statements for the financial year ended 31 March 2014.

1. FINANCIAL RESULTS

The Financial performance of the Company (Standalone) for the Financial Year ended 31 March 2014 is given below:

(Rs. In Million) Particulars 2013-14 2012-13 Total operations

Total revenue 4,450.84 3,140.50

Other Income 52.52 24.90

Profit/ (Loss) before Interest, Depreciation, Tax & Exceptional Items 125.26 (40.23)

Less : Interest 387.39 320.45 : Depreciation and amortisation expenses 271.26 267.43

Profit/ (Loss) Before Tax & Exceptional Items (533.39) (628.11)

Exceptional Items (610.77) -

Profit/(Loss) Before Tax (1,144.16) (628.11)

Provision for - Current Tax - - - Deferred [Net] Charge (Credit) - (83.10)

Profit after Tax (1,144.16) (545.01)

Add: Balance brought forward from previous Year (159.77) 385.24

Surplus/ (Deficit) carried to Balance Sheet (1,303.93) (159.77)

2. BUSINESS PERFORMANCE REVIEW

During the financial year 2013-14, on a standalone basis, your Company''s revenues stood at Rs. 4,503.36 Million as against Rs. 3,165.40 Million in 2012- 13. The Company posted an EBITDA of Rs. 125.26 Million in the year as against Rs. (40.23) Million in 2012-13. The Company made a loss of Rs. 1,144.16 Million.

On a consolidated basis, your Company''s revenue for the financial year 2013-14 stood at Rs. 4,593.06 Million as against Rs. 3,294.26 Million in 2012-13. The Company posted an EBITDA of Rs. 206.30 Million as against Rs. (106.97) Million in 2012-13. On a consolidated level, the Company made a loss of Rs. 1,104.93 Million.

While the consolidated Revenue and EBITDA grew substantially, profit after Tax was impacted by exceptional/ non-recurring items to the tune of Rs. 589.11 Million resulting in a loss of Rs. 1,104.93 Million for the year (against Rs. 646.94 Million in the previous year). The Exceptional items are predominately on account of strategic decisions to discontinue penems project and exiting Africa/ Vietnam operations.

The Company had decided to discontinue the penems project due to delays in environmental approval from Government of India and the additional investment requirements to complete the project. pursuant to this, the Company has written off the related investments and cost of Rs. 482.01 Million which is included in exceptional items for the year ended 31 March 2014 of standalone results and Rs. 539.11 Million in consolidated results.

The Company exited Africa / Vietnam operations which were started for backward integration of a key product of the Company, which is no longer viable.

A detailed analysis on the Company''s operational and financial performance for the year is covered under ''Management''s Discussion and Analysis Report'' which forms part of the Annual Report.

Business Outlook

During the year, the Company initiated a set of corporate actions with a long- term vision of becoming a power-house in global animal health business with a portfolio of niche human APIs.

ANIMAL HEALTH BUSINESS - Create a valuable, independent, integrated, global Animal Health Business

* Set up a Joint Venture with Shasun Pharmaceuticals Limited named ''Alivira Animal Health Limited'' with a vision to create a Best-In- Class, Integrated Platform from APIs to Formulations in the Hugely Attractive Global Animal Health Market.

* To create a global brand under the name ''Alivira'', the name derived out of Elvira, Latin word for ''white, pure, clean'' and Alleviare, Latin word for ''relief''.

* Launched 18 new products in formulations business and 4 new APIs.

HUMAN API BUSINESS - Accelerate growth in Human API with focus on profitability

* Investments made to enhance capacities and achieve critical mass in business with increased focus on regulated markets.

* 6 new filings and 6 new approvals in the regulated markets.

* Entered into an agreement to acquire the manufacturing assets and business of Arvee Syntthesis Private Limited, Arvee would serve as a site for key intermediates for the Company''s Human API business. The site has all necessary approvals and infrastructure with space for future expansion of Company''s rapidly expanding business.

* The Company also acquired a land admeasuring approx. 3 acres, adjacent to its existing FDA approved facility in Mangalore.

* The facility at Mysore and land at Mangalore to be used for meeting the growing demand for the Company''s key products in the USFDA and WHO regulated markets.

3. DIVIDEND

The Board of Directors of the Company has not recommended any Dividend for the financial year ended 31 March 2014.

4. SHARE CAPITAL

As on date, the authorised capital of the Company is Rs. 500,000,000/- divided into 50,000,000 equity shares of Rs. 10/- each.

The issued, subscribed and paid up equity capital of the Company as on date is Rs. 273,351,910/- divided into 27,335,191 equity shares of Rs. 10/- each.

During the period, the Company allotted 2,750,000 equity shares of Rs. 10/- each at a premium of Rs. 162/- per equity share and 550,000 equity shares of Rs. 10/- each at a premium of Rs. 125.25 per equity share upon conversion of equal number of warrants which were allotted to Promoter Group Companies on preferential basis.

Pursuant to this, the issued, subscribed and paid up equity capital of the Company increased from Rs. 240,351,910/- to Rs. 273,351,910/- during the year.

Issue of Warrants on preferential basis

On 28 January 2014, the Company allotted 3,700,000 warrants convertible into equivalent number of equity shares at a price of Rs. 135.25 per warrant (including a premium of Rs. 125.25 per warrant) to promoter group entities. Out of which 550,000 warrants were converted into equal number of equity shares of Rs. 10 each at a premium of Rs. 125.25 per equity share. Company also issued 2,000,000 warrants at a price of Rs. 222.15 per warrant (including a premium of Rs. 212.15 per warrant) and 3,000,000 warrants at a price of Rs. 236/- per warrant (including a premium of Rs. 226/- per warrant) on 28 May 2014 and 11 July 2014 respectively to promoter group entities.

As on date, 8,150,000 warrants are outstanding.

5. SUBSIDIARIES

As at 31 March 2014, the Company had 10 subsidiaries, out of which 8 companies are wholly owned Subsidiaries.

On 30 September 2013, M/s. Alivira Animal Health Limited ("Alivira") was incorporated as a wholly owned Subsidiary of the Company to develop, manufacture and sell veterinary products inclusive of both Active Pharmaceutical Ingredients (APIs) and formulations in the global market.

The Company has entered into a Joint Venture Agreement with Shasun Pharmaceuticals Limited ("Shasun") on 07 March 2014. Subsequently, on 11 April 2014 Alivira became a Joint venture of the Company and Shasun.

6. CONSOLIDATED ACCOUNTS

In accordance with Accounting Standard 21 on Consolidated financial statements, the audited consolidated financial statements are provided in this Annual report.

In terms of the General Circular 2 of 2011 dated 8 February 2011 issued by the Ministry of Corporate affairs, the audited Financial Statements of the Company''s subsidiaries have not been attached to this Report. The Financial Statements of the said subsidiaries will be kept for inspection by any investor at the registered office of the Company during business hours.

7. STRATEGIC/ OPERATIONAL INITIATIVES

a. Joint Venture with shasun Pharmaceuticals Limited

The Company has set up a Joint Venture with Shasun Pharmaceuticals Limited named ''Alivira Animal Health Limited'' with a vision to create a Best-In- Class, Integrated Platform from APIs to Formulations in the Hugely Attractive Global Animal Health Market.

b. Hiving off of Specialty Chemicals Division

In order to focus the Company''s efforts and resources towards expansion of the Active Pharmaceuticals Ingredients and Veterinary Formulations Business, the Company decided to hive off the specialty chemicals division of the Company and the Company has obtained members'' approval through postal ballot. On 15 April 2014, the Company entered into an agreement with Songwon Industrial Group,

Korea to sell the Company''s specialty chemicals division. On 01 August 2014 the Company completed the sale of this division for a total cash consideration of Rs. 1,200 Million.

c. Acquisition of Business of Arvee Syntthesis Private Limited

The Company has entered into a definitive agreement to acquire the manufacturing assets and business of Arvee Syntthesis private Limited, Mysore (''''Arvee'''') on 22 May 2014 and completed the acquisition on 9 June 2014. The Company will be using the facility of Arvee for key intermediates for the Company''s Human API business. This will help for future expansion of Company''s rapidly expanding business.

d. hiving off of veterinary Formulations Division

The Company has obtained the approval of members of the Company to hive off the Veterinary Formulations Division including the manufacturing facility located at Additional Ambernath to Alivira Animal Health Limited ("Alivira"), a Joint Venture Company between the Company and Shasun pharmaceuticals Limited. This will help the Company to focus independently on high growth potential animal health market and to become a significant player in the market.

8. PUBLIC DEPOSIT

The Company has not accepted or renewed any public deposits under section 58A of the Companies Act, 1956.

9. DIRECTORS

Dr. Gautam Kumar Das, Joint Managing Director retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. A brief profile of Dr. Gautam Kumar Das is given in the corporate governance report which forms part of this report.

Mr. K R Ravishankar, Chairman of the Company who is liable to retire by rotation at the ensuing Annual General Meeting and is not seeking re-appointment.

The Company had, pursuant to the provisions of clause 49 of the Listing Agreement as entered with the Stock Exchange, appointed Dr. Gopakumar G Nair as an Independent Director on the Board of the Company.

As per the provisions of Section 149 (4) of the Companies Act, 2013 (the Act), which came in to effect from 1 April 2014, every listed public company is required to have at least one-third of the total number of directors as independent directors, who are not liable to retire by rotation.

As per Section 149 (4) of the Act read with amended Clause 49 of the Listing Agreement, the Company proposes to appoint Dr. Gopakumar G Nair as an Independent Director to hold the office for a term upto 5 consecutive years from the date of his appointment i.e.,ensuing Annual General Meeting.

Board is of the opinion that Dr. Nair fulfills the criteria of independence as provided under section 149(6) of the Act and the Rules framed thereunder and is independent of the management. The Company has received a declaration from him that he meets the criteria of independence as prescribed under sub-section (6) of Section 149 of the Act.

A proposal will be placed before the members at the ensuing Annual General Meeting for their appointment/re-appointment.

10. DIRECTOR''S RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956 as amended by the Companies (Amendment) Act, 2000, the director confirms that:

1. In the preparation of annual accounts, the applicable accounting standards have been followed along with proper explanation relating to the material departures.

2. Appropriate Accounting Policies have been selected and applied consistently and have made adjustments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as on 31 March 2014 and of the loss of the Company for the year ended 31 March 2014.

3. 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.

4. The Annual Accounts have been prepared on a going concern basis.

11. AUDITORS

The Statutory Auditors viz., M/s. Deloitte Haskins & Sells, Chartered Accountants, Bangalore (Registration No. 008072S) ("DHS") retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Pursuant to provisions of section 139 of the Companies Act, 2013 and the rules framed thereunder, the company proposes to re-appoint DHS from the conclusion of ensuing Annual General Meeting of the Company for a term of 5 years which is subject to ratification by members at every Annual General Meeting of the Company. Your directors recommend their re-appointment.

Pursuant to Companies (cost records and audit) Rules, 2014, Mr. Girish Kambadaraya, Cost Accountant, has been appointed as the Cost Auditor for the financial year 2014-15. The due date for filing the Cost Audit Reports in XBRL mode for the financial year ended 31 March 2013 was 30 September 2013 and the Cost Audit reports were filed by the Cost Auditor on 25 September 2013. The due date for filing the Cost Audit Reports for the financial year ended 31 March 2014 is 30 September 2014.

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

The particulars as prescribed under 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 are set out in the Annexure to the Directors'' Report.

13. CORPORATE GOVERNANCE

The Company has complied with all mandatory requirements of Corporate Governance specified by the Securities and Exchange Board of India through Clause 49 of the Listing Agreement. As required by the said clause, a separate Report on Corporate Governance forms part of the Annual Report of the Company. A certificate from the Statutory Auditors of the Company regarding compliance with Corporate Governance requirements as stipulated in Clause 49 of the Listing Agreement entered with Stock Exchange also forms part of the Annual Report.

Board also confirms that the Company has devised proper systems to ensure compliance of all laws applicable to the Company.

14. MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Clause 49 of the Listing Agreement entered into with the Stock Exchanges, Management Discussion and Analysis Report forms part of this Report.

15. RESEARCH AND DEVELOPMENT

Detailed write-up on Research and Development activity forms part of the annexure to the Directors'' Report.

16. EMPLOYEE STOCK OPTION SCHEME

The Company has formulated an Employee Stock Option plan titled ''SSL ESOP Scheme 2010'' and the scheme is administered through a trust. As on date 700,000 shares have been issued to the trust. During the year the Compensation Committee has granted 640,000 options to identified employees, out of which 70,000 options were lapsed due to resignation of employees. As at 31 March 2014, 570,000 Stock options are outstanding.

Further, Statement giving additional information in terms of Regulation 12 of Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock purchase Scheme) Guidelines, 1999 is annexed to this report.

17. PARTICULARS OF EMPLOYEES U/S 217 OF THE COMPANIES ACT, 1956

Any shareholder interested in obtaining a copy of the statement of particulars of employees referred to in section 217 (2A) of the Companies Act, 1956, may write to the Company Secretary at the Registered Office of the Company.

18. APPRECIATION

Your Directors would like to express their grateful appreciation for the excellent support and co-operation received from the Shareholders, Customers, Financial Institutions, Banks, Government Authorities, Reserve Bank of India, Securities and Exchange Board of India, Stock Exchanges, Manufacturers and Suppliers to the Company.

At this point, we would like to place on record our sincere appreciation for the total commitment, dedication, untiring efforts and hard work put in by the employee members at all levels of the Company in realisation of the corporate goals in the years ahead.

ANNEXURE TO DIRECTORS'' REPORT

RESEARCH AND DEVELOPMENT:

Core areas of R&D:

Process chemistry aspects of Active Pharmaceuticals Ingredients (APIs) and intermediates which includes:

a. Development of new products for different regulatory filings.

b. Development of non-infringing processes through innovative synthetic routes.

c. Development of green technology to minimise hazardous operations and reagents.

d. Improvement of product life cycle management through alternate approaches.

e. Identification and implementation of cost reduction measures in the commercial scales.

Benefits derived as a result of R&D:

a. Cutting edge technology for niche products.

b. Speedy commercialisation of new products.

c. Tapping potential market through new filing of Drug Master Files (DMFs) using non-infringing processes.

d. Creation of Intellectual Property wealth.

Future plan of Action:

a. In the animal health segment, the company will continue to focus on therapeutic segments of anthelmintic and anti parasiticide.

b. Continued focus on improving quality, cost and operation through process modification as per regulatory norms.

For and on behalf of the Board of Directors

Dr. Gautam Kumar Das Dr. Gopakumar G Nair Joint Managing Director Director

Place : Bangalore Date : 13 August 2014


Mar 31, 2013

Dear Members,

The take pleasure in presenting the 28th Annual Report of your Company along with the Audited Financial Statements for the financial year ended March 31, 2013.

1. FINANCIAL RESULTS

The Financial Performance of the Company (Standalone) for the Financial Year ended March 31, 2013 is given below:

(Rs.In Million) Particulars 2012-13 2011-12

Total revenues 3,140.50 3,324.30

Other Income 24.90 113.27

Earnings before Interest, Depreciation & Tax (40.23) 467.97

Less : Interest (320.45) 282.65

Depreciation and amortisation expenses (267.43) 210.28

Profit/(Loss) Before Tax & Exceptional Items (628.11) (24.96)

Profit/(Loss) Before Tax (628.11) (24.96)

Provision for - Current Tax 0.86

- Deferred Tax [Net] (83.10) (40.50)

Profit after Tax (545.01) 14.68

Add: - Balance brought forward from Previous Year 385.24 370.56

Profit/(Loss) available for appropriation (159.77) 385.24

Surplus/(Deficit) carried to Balance Sheet (159.77) 385.24

2. BUSINESS PERFORMANCE REVIEW

During the financial year 2012-13, on a standalone basis, your Company''s revenues stood at Rs. 3,165.40 Million as against Rs. 3,437.57 in 2011-12. The Company posted an EBITDA of Rs. (40.23) Million in the year as against Rs. 467.97 Million in 2011-2012. The Company registered a net loss of Rs. 545.01 Million.

On a consolidated basis, your Company''s revenues for the year 2012-13 stood at Rs. 3,294.26 Million as against Rs. 3,562.93 Million in 2011-12. The Company posted an EBITDA of Rs. (106.97) Million as against Rs. 475.58 Million in 2011-2012. The Company made a loss of Rs.646.94 Million.

A detailed analysis on the Company''s operational and financial performance for the year is covered under ‘Management''s Discussion and Analysis Report'' which forms part of the Annual Report.

3. DIVIDEND

The Board of Directors of the Company has not recommended any Dividend for the financial year ended March 31, 2013.

4. SHARE CAPITAL

As at March 31, 2013, the authorized capital of the Company stood at Rs.320,000,000.00 divided in to 32,000,000 equity shares of Rs. 10/- each.

The issued, subscribed and paid up equity capital of the Company as at March 31, 2013 is Rs. 240,351,910.00 divided into 24,035,191 equity shares of Rs. 10/- each.

During the year, the Company has allotted 2,100,000 equity shares of Rs. 10 each at a premium of Rs. 110.75 per equity share upon conversion of equal number of warrants which were allotted to Promoter Group entilies on preferential basis.

Pursuant to this, the issued, subscribed and paid up equity capital of the Company increased from Rs. 219. 35 Million to Rs. 240.35 Mio

Issue of Warrants on preferential basis

On September 28, 2012, the Company issued 2,100,000 warrants convertible into equivalent number of equity shares at a price of Rs. 120.75 per warrant (including a premium of Rs. 110.75 per warrant) to promoter group entities. These warrants have already been converted into equity shares in 3 tranches during the year.

On March 30, 2013, the Company issued 2,750,000 warrants convertible into equivalent number of equity shares at a price of Rs. 172.00 per warrant (including a premium of Rs. 162.00 per warrant) to promoter group entities. As at March 31, 2013 these warrants are outstanding.

5. SUBSIDIARIES

During the year ended March 31, 2013 Elysian Life Sciences Private Limited became wholly owned subsidiary of the Company and Elysian Healthcare Private Limited, a step-down subsidiary of the Company, ceased to be a subsidiary of the Company.

6. CONSOLIDATED ACCOUNTS

In accordance with Accounting Standard 21 on consolidated financial statements read with Accounting Standard 27 on Accounting for Joint Ventures, the audited consolidated financial statements are provided in this Annual report.

In terms of the General Circular 2 of 2011 dated February 8, 2011 issued by the Ministry of Corporate affairs, the audited Financial Statements of the Company''s subsidiaries have not been attached to this Report. The Financial Statements of the said subsidiaries will be kept for inspection by any investor at the registered office of the Company during business hours.

7. PUBLIC DEPOSIT

The Company has not accepted or renewed any public deposits under section 58A of the Companies Act, 1956.

8. DIRECTORS

Dr. Gopakumar G Nair retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

A brief profile of Dr. Gopakumar G Nair is given in the corporate governance report which forms part of this report.

Dr. Gautam Kumar Das was re-appointed as an Executive Director w.e.f. January 7, 2013 for a further period of 3 years. Further on May 30, 2013, Dr. Das was re-designated as Joint Managing Director.

9. DIRECTOR''S RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the act, as amended by the companies (amendment) Act, 2000, the director confirms that:

1. In the preparation of annual accounts, the applicable accounting standards have been followed along with proper explanation related to the material departures.

2. Appropriate Accounting Policies have been selected and applied consistently and have made adjustments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as on March 31, 2013 and of the loss of the Company for the year ended March 31, 2013.

3. 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.

4. The Annual Accounts have been prepared on a going concern basis.

10. AUDITORS

The Statutory Auditors viz., M/s. Deloitte Haskins & Sells, Chartered Accountants, Bangalore (Registration No. 008072S) retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Your directors recommend their re- appointment.

Pursuant to the directives of the Central Government under the provisions of Section 233B of the Companies Act, 1956, in respect of the audit of Cost Records of the Company, Girish Kambadaraya, Cost Accountant, has been appointed as the Cost Auditor for the financial year 2013-14. The due date for filing the Cost Audit Reports in XBRL mode for the financial year ended March 31, 2012 was February 28, 2013 and the Cost Audit Reports were filed by the Cost Auditor on January, 31, 2013. The due date for filing the Cost Audit Reports for the financial year ended March 31, 2013 is September 30, 2013.

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

The particulars as prescribed under 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 are given as Annexure to the Directors'' Report.

12. CORPORATE GOVERNANCE

The Company has complied with all the mandatory requirements of Corporate Governance specified by the Securities and Exchange Board of India through clause 49 of the Listing Agreement. As required by the said clause, a separate Report on Corporate Governance forms part of this report. A certificate from the Statutory Auditors of the Company regarding compliance with Corporate Governance requirements as stipulated in Clause 49 of the Listing Agreement entered with Stock Exchange also forms part of the Annual Report.

Board also confirms that the Company has devised proper systems to ensure compliance of all laws applicable to the Company.

13. MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to clause 49 of the Listing Agreement entered into with the Stock Exchanges, Management Discussion and Analysis Report forms part of this Report.

14. RESEARCH AND DEVELOPMENT

Detailed write-up on Research and Development activity is given as an annexure to the Directors'' Report.

15. EMPLOYEE STOCK OPTION SCHEME

The Company has formulated an Employee Stock Option Plan titled ‘SSL ESOP Scheme 2010'' and the scheme is administered through a trust. As on date 700,000 shares have been issued to the trust. However no ESOPs are outstanding as on March 31, 2013.

Further, Statement giving additional information in terms of Regulation 12 of Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 is annexed to this report.

16. PARTICULARS OF EMPLOYEES U/S 217 OF THE COMPANIES ACT, 1956

Any shareholder interested in obtaining a copy of the statement of particulars of employees referred to in section 217 (2A) of the Companies Act, 1956, may write to the Company Secretary at the Registered Office of the Company.

17. APPRECIATION

Your Directors would like to express their grateful appreciation for the excellent support and cooperation received from the Shareholders, Customers, Financial Institutions, Banks, Government Authorities, Reserve Bank of India, Securities and Exchange Board of India, Stock Exchanges, Manufacturers and Suppliers to the Company.

At this point, we would like to place on record our sincere appreciation for the total commitment, dedication, untiring efforts and hard work put in by the employee members at all levels of the Company in realisation of the corporate goals in the years ahead.

For and on behalf of the Board of Directors

Dr. Gautam Kumar Das Dr. Gopakumar Nair

Joint Managing Director Director

Place: Bangalore

Date: August 14, 2013


Mar 31, 2012

The take pleasure in presenting the 27th Annual Report together with the Audited Statement of Accounts of the Company for the financial year ended March 31, 2012.

1. FINANCIAL RESULTS

The Highlights of the Performance of the Company during the Financial Year ended March 31, 2012 are appended below:-

(Rs. In Mn)

Particulars 2011-2012 2010-11

Revenue from operations 3,324.30 2,779.80

Other Income 113.27 114.10

Earnings before Interest, Depreciation & Tax 467.97 583.78

Less : Finance Costs (282.65) (200.35)

: Depreciation (210.28) (171.81)

Profit/(Loss) Before Tax & Exceptional Items (24.96) 211.62

Exceptional Items - (10.53)

Profit/(Loss) Before Tax (24.96) 222.15

Tax Expenses - Current Tax 0.86 36.50

- Deferred Tax (40.50) 42.59

- MAT Credit - (16.26)

Profit after Tax 14.68 159.32

Add: Balance brought forward from Previous Year 370.56 296.42

Included on Amalgamation - (38.85)

Profit available for appropriation 385.24 416.89 Which we recommend to appropriate as follows:

Transfer to General Reserve - 7.97

Proposed Dividend - 32.90

Tax on Dividend - 5.46

Surplus carried to Balance Sheet 385.24 370.56

Note:

Previous year figures have been regrouped/restated wherever necessary to make them comparable with those of the current year.

2. BUSINESS PERFORMANCE REVIEW

On standalone basis, the company posted 18.8 per cent growth in the total revenues, from Rs.2,893.90 mn in 2010-11 to Rs.3,437.57 mn in 2011-12. The company posted an EBIDTA of Rs.467.97 mn as against Rs.583.78 mn in 2010-11. On a standalone level, the Company registered a net profit of Rs.14.68 mn.

On consolidated basis, the company posted 11.8 per cent growth in the total revenues, from Rs.3,185.81 mn in 2010-11 to Rs.3,562.93 mn in 2011-12. The company posted an EBIDTA of Rs.475.58 mn as against Rs.521.86 mn in 2010-11. On a consolidated level, the Company made a loss of Rs.14.59 mn.

Detailed analysis of the operational and financial performance for the year is covered under the 'Management Discussion & Analysis' as well as other sections in this Annual Report.

3. DIVIDEND

The Board of Directors of the Company has not recommended any Dividend for the financial year.

4. SHARE CAPITAL

As at March 31, 2012, the authorized capital of the Company stood at Rs.320 mn divided into 32,000,000 equity shares of Rs. 10/- each.

There was no change in the Issued, subscribed and paid up equity capital which stood at Rs. 219.35 mn.

5. MERGER OF FRAXIS LIFE SCIENCES LIMITED WITH THE COMPANY

Fraxis Life Sciences Limited, a promoter group Company merged with the Company conSequent to the scheme of amalgamation ('Scheme') approved by the Hon'ble High Court of Bombay vide its order dated August 20, 2011. Pursuant to the Scheme, the Company on November 21, 2011 allotted 14,865,000 fully paid up New Equity Shares of Rs. 10/- to the shareholders of Fraxis Life Sciences Limited. There would be no change in the paid up capital of the Company as in terms of the scheme, the said shares were issued against the cancellation of equivalent number of shares held by Fraxis Life Sciences Limited in the Company.

6. CONSOLIDATED ACCOUNTS

In accordance with Accounting Standard 21 on

Consolidated Financial Statements, the audited Consolidated financial statements are provided in this Annual report.

In terms of the General Circular 2 of 2011 dated February 8, 2011 issued by the Ministry of Corporate Affairs, the audited Financial Statements of the Company's subsidiaries have not been attached to this Report. The Financial Statements of the subsidiaries shall be made available to the shareholders of the Company / its subsidiaries seeking such information at any point of time and such Financial Statements will also be kept for inspection by any shareholder during business hours at the registered office and the corporate office of your Company.

7. PUBLIC DEPOSIT

The Company has not accepted or renewed any public deposits under section 58A of the Companies Act, 1956.

8. DIRECTOR

Mr. Kannan Ramanujam retires by rotation at the ensuing Annual General Meeting and is proposed for re-appointment. The Board recommends his re-appointment at the ensuing Annual General Meeting.

Further during the financial year Mr. K R N Moorthy, Dy. Managing Director and Mr. Joe Thomas Director of the Company, has resigned from the directorship of the company.

9. DIRECTOR'S RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the act, as amended by the Companies (Amendment) Act, 2000, the director confirms that:

1. In the preparation of annual accounts, the applicable accounting standards have been followed along with proper explanation related to the material departures.

2. Appropriate Accounting Policies have been selected and applied consistently and have made adjustments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as on March 31, 2012 and profit of the Company for the year ended March 31, 2012.

3. 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.

4. The Annual Accounts have been prepared on a going concern basis.

10. AUDITORS

M/s Deloitte Haskins & Sells retire as Statutory Auditors of the Company at the ensuing Annual General Meeting and are eligible for re- appointment.

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

The particulars as prescribed under 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 are set out in the Annexure to the Directors' Report.

12. CORPORATE GOVERNANCE

The Company has complied with all the mandatory requirements of Corporate Governance specified by the Securities and Exchange Board of India through clause 49 of the Listing Agreement. As required by the said clause, a separate Report on Corporate Governance forms part of the Annual Report of the Company. A certificate from the Statutory Auditors of the Company regarding compliance with the conditions of Corporate Governance also forms part of this Report.

13. MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to clause 49 of the Listing Agreement entered into with the Stock Exchange, Management Discussion and Analysis Report forms part of this Report.

14. RESEARCH AND DEVELOPMENT

Detailed write-up on Research and Development activity forms part of the annexure to the Directors' Report.

15. EMPLOYEE STOCK OPTION SCHEME

The Company has formulated a Employee Stock Option Plan titled 'SSL ESOP Scheme 2010 'and the scheme is administered through a trust. As on date, 700,000 shares have been issued to the trust. Details of the ESOPs issued are provided in the corporate governance report.

Further, Statement giving additional information in terms of Regulation 12 of Securities and Exchange Board of India (Employee Stock Guidelines, 1999 is annexed to this Directors' Report.

16. PARTICULARS FOR EMPLOYEES U/S 217 OF THE COMPANIES ACT, 1956

Any shareholder interested in obtaining a copy of the statement of particulars of employees referred to in section 217 (2A) of the Companies Act, 1956, may write to the Company Secretary at the Registered Office of the Company.

17. APPRECIATION

Your Directors would like to express their grateful appreciation for the excellent support and co- operation received from the Financial Institutions, Banks, Government Authorities, Reserve Bank of India, Securities and Exchange Board of India, Stock Exchanges, Customers, Manufacturers, Suppliers, Directors and Shareholders during the year under review.

At this point, we would like to place on record our sincere appreciation for the total commitment, dedication, untiring efforts and hard work put in by the employee members at all levels of the Company in realisation of the corporate goals in the years ahead.

For and on behalf of the Board of Directors

KR Ravishankar

Chairman & Managing Director

Place: Bengaluru Date : August 14, 2012


Mar 31, 2011

Dear Members,

We take pleasure in presenting the 26th Annual Report together with the Audited Statement of Accounts of the Company for the financial year ended March 31, 2011.

1. FINANCIAL RESULTS

The Highlights of the Performance of the Company during the Financial Year ended March 31, 2011 are appended below:-

(Rs. In Million)

Particulars 2010-11 2009-10

Total revenues 2,778 2,463

Other Income 116 73

Earnings before Interest, Depreciation & Tax 596 673

Less : Interest (213) (187)

: Depreciation (172) (125)

Profit Before Tax & Exceptional Items 211 361

Exceptional Items 11 (58)

Profit Before Tax 222 303

Provision for - Current Tax (37) (65)

- Deferred Tax (42) (87)

- MAT Credit Entitlement 16 57

Profit after Tax 159 208

Add: - Balance brought forward from Previous Year 296 129

Included on Amalgamation (38) 25

Profit available for appropriation 417 362 Which we recommend to appropriate as follows:

Transfer to General Reserve 8 16

Proposed Dividend 33 43

Tax on Dividend 5 -

Surplus carried to Balance Sheet 371 296

2. BUSINESS PERFORMANCE REVIEW

On standalone basis, the company posted a 12.8% growth in the total revenues, from Rs.2,463.35 Million in 2009-10 to Rs.2,777.56 Million in 2010-11. The company posted an EBIDTA of Rs.596 Million as against Rs.673 Million in 2009-10. On a standalone level, the Company made a PAT of Rs.159.33 Million.

On consolidated basis, the company posted a 9.6% growth in the total revenues, from Rs.2,844.48 Million in 2009-10 to Rs.3,116.65 Million in 2010-11. The company posted an EBIDTA of Rs.522 Million as against Rs.849 Million in 2009-10. On a consolidated level, the Company made a loss of 40.24 Million.

The company caters to two major segments - Pharmaceuticals Division (consisting of API, CRAMS and Veterinary Formulations businesses) accounted for 85.6 per cent of the company's revenues while the Specialty chemicals divisions accounted for 14.4 per cent.

During the year, the Company forayed in to four new therapeutic segments - Penems, Penicillin, Oncology and Phy to-Pharmaceutical/Herbal Extracts. The company signed a Memorandum of Understanding with Government of Karnataka to set up three new Greenfield facilities in Bangalore, for which it will invest Rs.1500 Million.

Detailed analysis of the operational and financial performance for the year is covered under the Management Discussion & Analysis' section.

3. DIVIDEND

The Board of Directors of the Company has recommended a final dividend of Rs.1.50 (15 per cent) per equity share for the year 2010-11. This, if approved by the shareholders, would result in a cash outflow of Rs.32.90 Million.

4. SHARE CAPITAL

Pursuant to the approval of the Scheme of Amalgamation for merger of Vedic Elements Private Limited, which was a wholly owned subsidiary of the Company with the Company, the Authorised Share Capital of the Company enhanced by Rs.70 Million during the year. As at March 31, 2011, the authorized capital of the Company stood at Rs.320 Million as against Rs.250 Million as at March 31, 2010.

There was no change in the Issued, subscribed and paid up equity capital which stood at Rs.219.35 Million.

5. SUBSIDIARIES

The Company has a total of 11 subsidiaries as at March 31, 2011. They are:

1. SeQuent Global Holdings Limited, Mauritius

2. SeQuent European Holdings Limited, Cyprus

3. SeQuent Research Limited

4. Sanved Research Labs Private Limited

5. Vedic Fanxipang Pharma Chemic Company Limited, Vietnam

6. Galenica B.V., Netherlands

7. Codifar N.V., Belgium

8. SeQuent Anti Biotics Private Limited

9. SeQuent Oncolytics Private Limited

10. Elysian Life Sciences Private Limited

11. Elysian Health Care Private Limited

6. MERGER OF FRAXIS LIFE SCIENCES LIMITED WITH THE COMPANY

The Company is in the process of merging Fraxis Life Sciences Limited, a promoter group Company with that of the Company. The merger was approved by the shareholders at their meeting held on March 15, 2011 and final order from the Hon'ble High Court of Judicature at Bombay is awaited.

On approval, Company will allot 14,865,000 equity shares to the shareholders of Fraxis Life Sciences Limited and the shares held by Fraxis Life Sciences Limited in the Company will stand cancelled.

7. CONSOLIDATED ACCOUNTS

In accordance with Accounting Standard 21 on consolidated financial statements, the audited consolidated financial statements are provided in this Annual report.

In terms of the Central Government approval under Section 212(8) of the Companies Act, 1956, the audited Financial Statements of the Company's subsidiaries have not been attached to this Report. The Financial Statements of the said subsidiaries will be kept for inspection during business hours by any investor at the registered office and at the corporate office of your Company. The Company will also make available the audited annual accounts and related information of the subsidiary companies, upon request by any investor of the Company.

8. PUBLIC DEPOSIT

The Company has not accepted or renewed any public deposits under section 58A of the Companies Act, 1956.

9. DIRECTOR

Dr. Gopakumar Gopalan Nair & Dr. Gautam Kumar Das retire by rotation at the ensuing Annual General Meeting and are proposed for re-appointment. The Board recommends their re-appointment at the ensuing Annual General Meeting.

Mr. Moorthy was appointed as a Deputy Managing Director w.e.f 8th day of September, 2010.

10. DIRECTOR'S RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the act, as amended by the companies (amendment) Act, 2000, the Directors confirms that:

1. In the preparation of annual accounts, the applicable accounting standards have been followed along with proper explanation related to the material departures.

However, the deviation on the accounting standard has been with reference to the scheme of amalgamation sanctioned by the Hon'ble High Court of Karnataka for amalgamation of the company's wholly owned subsidiary, Vedic Elements Private Limited (the Transferor Company) with SeQuent Scientific Limited (the Transferee Company). Refer notes to account for details on the same.

2. Appropriate Accounting Policies have been applied consistently and have made adjustments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as on 31st March 2011 and profit of the Company for the year ended 31st March 2011.

3. 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.

4. The Annual Accounts have been prepared on a going concern basis.

11. AUDITORS

M/s Deloitte Haskins & Sells retire as Statutory Auditors of the Company at the ensuing Annual General Meeting and are eligible for re-appointment.

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

The particulars as prescribed under 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 are set out in the Annexure to the Directors' Report.

13. CORPORATE GOVERNANCE

The Company has complied with all the mandatory requirements of Corporate Governance specified by the Securities and Exchange Board of India through clause 49 of the Listing Agreement. As required by the said clause, a separate Report on Corporate Governance forms part of the Annual Report of the Company. A certificate from the Statutory Auditors of the Company regarding compliance with the conditions of Corporate Governance also forms part of this Report.

14. MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to clause 49 of the Listing Agreement entered into with the Stock Exchanges, Management Discussion and Analysis Report forms part of this Report.

15. RESEARCH AND DEVELOPMENT

A write-up on Research and Development activity forms part of the annexure to the Directors' Report.

16. EMPLOYEE STOCK OPTION SCHEME

The Company has formulated a Employee Stock Option Plan titled 'SSL ESOP Scheme 2010' and the scheme is administered through a trust. As on date, 700,000 shares have been issued to the trust and 1,00,000 options has been granted to the Deputy Managing Director. The Company is in the process of expanding the coverage to other employees. Details of the ESOPs issued are provided in the corporate governance report.

Further, Statement giving additional information in terms of Regulation 12 of Securities and Exchange Board of India (Employee Stock Guidelines, 1999) is annexed to this Directors' Report.

17. PARTICULARS OF EMPLOYEES U/S 217 OF THE COMPANIES ACT OF, 1956

Any shareholder interested in obtaining a copy of the statement of particulars of employees referred to in section 217 (2A) of the Companies Act, 1956, may write to the Company Secretary at the Registered Office of the Company.

18. APPRECIATION

Your Directors would like to express their grateful appreciation for the excellent support and co- operation received from the Financial Institutions, Banks, Government Authorities, Reserve Bank of India, Securities and Exchange Board of India, Stock Exchanges, Customers, Manufacturers, Suppliers, Directors and Shareholders during the year under review.

At this point, we would like to place on record our sincere appreciation for the total commitment, dedication, untiring efforts and hard work put in by the employees at all levels of the Company in realisation of the corporate goals in the years ahead.

For and on behalf of the Board of Directors

K R Ravishankar

Chairman & Managing Director Place: Bangalore

Date: August 12, 2011


Mar 31, 2010

We take pleasure in presenting the 25th Annual Report together with the Audited Statement of Accounts of the Company for the financial year ended 31st March 2010.

1. FINANCIAL RESULTS

The Highlights of the Performance of the Company during the Financial Year ended 31st March 2010 are appended below:-

(Rs. mn)

Particulars 2009-10 2008-09

Total revenues 2463 1061

Other Income 73 18

Earnings before Interest , Depreciation & Tax 673 138

Less : Interest (187) (42)

: Depreciation (125) (41)

Profit Before Tax & Exceptional Items 361 55

Exceptional Items (58) -

Profit Before Tax 303 55

Provision for - Current Tax (65) (18)

- Deferred Tax (87) (1)

- Fringe Benefit Tax (1)

- MAT Credit Entitlement 57 -

Profit after Tax 208 35

Add: - Balance brought forward from Previous Year 129 108

Included on Amalgamation 25 -

Profit available for appropriation 362 143 Which we recommend to appropriate as follows:

Transfer to General Reserve 16 1

Proposed Dividend 43 11

Tax on Dividend 7 2

Surplus carried to Balance Sheet 296 129

2. BUSINESS PERFORMANCE REVIEW

The Company crossed Rs. 2 billion mark, posting total revenue of Rs. 2463.35 mn during 2009-10, up by 132.26 per cent, against Rs. 1060.62 mn in 2008-09. The Company’s EBIDTA increased nearly five-folds from Rs. 138.71 mn in 2008-09 to Rs. 673.72 mn during 2009-10. The EBIDTA margin also doubled from 13 per cent in 2008-09 to 27 per cent in 2009- 10 on account of higher realisation, bigger scale and stronger cost control measures. The Company’s PAT (after minority interest) improved nearly five times from Rs. 35.17 mn in 2008-09 to Rs. 207.93 mn in 2009-10. On an equity of Rs. 212.35 mn, the Company’s EPS for the year stood at Rs. 9.79.

On consolidated basis, the Company posted a 97.5 per cent increase in the total revenues, from Rs. 1440.21 mn in 2008-09 to Rs. 2844.48 mn in 2009- 10. The Company posted an EBIDTA of Rs. 848.85 mn against an operating loss of Rs. 9.68 mn in 2008-09. The PAT for 2009-10 stood at Rs. 374.17 mn against a net loss of Rs. 146.60 mn in 2008-09.

The Company caters to two major segment- Pharmaceuticals division (consisting API, CRAMS and Veterinary Formulations businesses) accounted for 76.3 per cent of the Company’s revenues while the Specialty chemicals divisions accounted for 23.7 per cent.

2009-10 was a year of key developments. The merger of erstwhile SeQuent Scientific Limited with PI Drugs resulted in a bigger entity – both in terms of scale of operations as well as product segment wise. The Company dedicated its efforts towards achieving operational synergies and harnessing the inherent growth potential of each product vertical, under a new name ‘SeQuent Scientific Limited’.

With the outbreak of swine-flu epidemic globally, the demand for antiviral drugs catering to the segment shot up substantially. The Company produced active pharmaceutical ingredient Oseltamivir Phosphate, thereby resulting in improved top line. At the same time, the Company also commercialised seven new products, being Praziquantel, Lumefantrin,

Warfarin, Ketosulfone, Nifuroxazide, Nitroscanate and s-methoprene.

The Company also invested Rs. 210 mn in modernisation of Mangalore plant (compliant with USFDA standards) and capacity expansion of its Mahad unit during the year. During the year, the Company filed 14 DMFs (Drug Master Files), taking the total DMF filing to 20.

POST BALANCE SHEET DEVELOPMENTS

In order to capitalise on the global demand for APIs and formulations, the Company decided to foray into four new therapeutic segments – Penems, Penicillin, Oncology and Phyto-Pharmaceutical/Herbal Extracts. The Company has signed a Memorandum of Understanding with Karnataka Government to set up three new Greenfield facilities in Bangalore, for which it will invest Rs. 1500 mn within the next two years.

OUTLOOK

The Company expects further improvement in its performance during 2010-11 owing to culminating effect of the following internal and external factors. It is estimated that drugs worth more than USD 200 bn are expected to go off-patent in the coming 5 years. This provides an attractive opportunity to the API and CRAMS business verticals of the Company. The Company’s pipeline of 20 DMFs is also expected to result in attractive growth opportunity for the Company going forward. Besides, the Company’s consistent investments in capacity and research are also expected to bear rewarding results in the coming years.

DIVIDEND

The Board of Directors of the Company has recommended a final dividend of Rs. 2 (20 per cent) per equity share for the year 2009-10. This, if approved by the shareholders, would result in a dividend pay-out ratio of 20 per cent and a cash outflow of Rs. 43 mn.

ESOP

With intent to reward its employees for their continuous hard work, dedication and support Company proposed to grant and issue shares to them under ESOP. The main objective of the ESOP Scheme

is to recognise employees, who are performing well, with a certain minimum opportunity to gain from the Company’s performance thereby acting as a retention tool and also to attract best talent available in the market. With this intention, the Company drafted a scheme of ESOP and obtained the approval of shareholders in March 2008. Soon after receiving the approval of shareholders, a plan for merger of erstwhile SeQuent Scientific Limited was considered by the management and in view of proposed changes due to merger, the ESOP was kept on hold. On approval of merger, as the number of employees increased to a large extent and Company also acquired various subsidiaries, the management felt the need to modify the ESOP as approved by the shareholders in March 2008. Shareholders have granted their approval to the revised ESOP on 24.05.2010 by Postal Ballot. The ESOP shall be implemented through SeQuent Scientific Employee Stock Option Scheme Trust. The Compensation committee is in the process of finalisation of list of employees whom shares may be granted under ESOP.

SHARE CAPITAL

The Paid-up Share Capital of the Company increased by Rs. 108.50 mn during the financial year under review to Rs. 219.35 mn as on 31st March, 2010. The increase was on account of the following.

1) Vide Court Order dated the 16th day of June 2009, SeQuent Scientific Limited (“Transferor Company”) was amalgamated into our Company in consideration thereof, the Company allotted seven equity shares for each three equity shares held in the Transferor Company. This resulted in an increase of 10.15 mn equity shares of Rs. 10 each.

2) The Company allotted 0.7 mn equity shares of Rs. 10 each to SeQuent Scientific Employee Stock Option Scheme Trust pursuant to a Scheme of ESOP duly approved by the shareholders’ through postal ballot on the 25th day of March 2008.

SUBSIDIARIES

After the close of financial year 2009-10, the Company has incorporated three new companies namely M/s SeQuent Anti Biotics Private Limited, M/s SeQuent Oncolytics Private Limited and M/s SeQuent Penems Private Limited to venture into the Penems / Penicillins /Oncology products Company is in the process of obtaining approval of Karnataka Udyog Mitra to carry on new projects by the said companies. As on March 31, 2010 the Company has the following subsidiaries.

1. SeQuent Global Holdings Limited

2. SeQuent European Holdings Limited

3. SeQuent IPCO GmbH

4. Vedic Elements Private Limited

5. SeQuent Research Limited

6. Sanved Research Labs Private Limited

7. Vedic Fanxipang Pharma Chemic Company Limited, Vietnam

8. Galenica B.V., Netherland

9. Codifar N.V., Belgium

CONSOLIDATED ACCOUNTS

To save paper and the environment, Company has obtained the approval of Central Government under section 212 for not attaching the Balance Sheet and other documents of the subsidiaries with the Balance Sheet of the Company. However with the requirement of Accounting standard AS 21 prescribed by the Institute of Chartered Accountants of India, the consolidated accounts of the Company and its subsidiaries (including joint ventures) is annexed to this report.

INTERNAL CONTROL SYSTEMS

The Company has always believed that transparency, systems and controls are important factors in the success and growth of any organisation. The Company has an adequate system of internal control supported by an extensive programme of internal control and systems are established to ensure that financial and other records reliable for preparing financial statements. This department assumes great significance given the size, scope and rapid rate of growth of the Company. The team is headed by a Chartered Accountant along with senior officers to ensure that transactions are authorised, recorded and reported appropriately.

HUMAN RESOURCES

The biggest strength of the Company has always been its people. Only with their participation have we managed to achieve a healthy work culture, transparency in working, fair business practices and passion for efficiency. Thus development of human resources at all levels is taken on priority to upgrade knowledge and skill of employees and sensitise them towards productivity, quality, cost reduction, safety and environment protection. The Company’s ultimate objective is to create a strong and cohesive team of employees wherein each link in the resource chain is as strong as the other.

PUBLIC DEPOSIT

The Company has not accepted or renewed any public deposits under section 58A of the Companies Act, 1956.

FOREIGN EXCHANGE EARNINGS & OUTGO

The particulars as prescribed under Section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rule, 1988 are set out in the Annexure – 3 to the Directors’ Report.

DIRECTOR

Mr. Joe Thomas & Mr. R. Kannan retire by rotation at the ensuing Annual General Meeting and are proposed for re-appointment. The Board recommends their re- appointment at the ensuing Annual General Meeting.

Dr. Gautam Kumar Das was appointed as additional Director on the Board in the category of Executive Director with effect from the 7th day of January 2010. The shareholders have confirmed the appointment of Mr. Das as director of the Company by postal ballot on May 24, 2010.

The Company has received an approval from the Central Government on the 25th day of September 2009 to pay a total remuneration of Rs. 12.00 mn to the Managing Director – Mr. K R Ravishankar for a period of three years with effect from the 1st day of November 2008 until the 31st day of October 2011. During 2009-10, as the Company had sufficient profits, the Board approved a total remuneration of Rs. 18 mn to Mr. K R Ravishankar that is within the limit of 5 per cent of profit as prescribed in the Act.

DIRECTOR’S RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the act, as amended by the companies (amendment) Act, 2000, the director confirms that:

1. In the preparation of annual accounts, the applicable accounting standards have been followed along with proper explanation related to the material departures.

2. Appropriate Accounting Policies have been selected and applied consistently and have made adjustments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as on 31st March 2010 and profit of the Company for the year ended 31st March 2010.

3. 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.

4. The Annual Accounts have been prepared on a going concern basis.

AUDITORS

M/s Deloitte Haskins & Sells retire as Auditors of the Company at the ensuing Annual General Meeting and are eligible for re-appointment.

AUDITORS REPORT

The Notes on Account referred in the Auditor’s Report are self explanatory and therefore, do not call for any further clarification.

STATUS OF LISTING IN STOCK EXCHANGES

Your Company’s shares are listed in Bombay Stock Exchange Limited (BSE), P. J. Towers, Dalal Street, 25th Floor, and Mumbai – 400 001 for which listing fees for 2009-10 has been paid.

CORPORATE GOVERNANCE

The Board of Directors of the Company has taken all necessary steps and initiative to ensure compliance

with all the revised requirements of Clauses 49 of the Listing agreement with the Stock Exchanges. A code of conduct as applicable to all the directors and members of the senior management has also been put in place.

A separate section on corporate governance and a certificate from the Auditors of your Company regarding compliance with requirements of corporate governance as stipulated under Clause 49 of the Listing Agreement with Stock Exchanges, form part of Annual Report.

PARTICULARS FOR EMPLOYEES U/S 217 OF THE COMPANIES ACT, 1956

Any shareholder interested in obtaining a copy of the statement of particulars of employees referred to in section 217 (2A) of the Companies Act, 1956, may write to the Company Secretary at the Registered Office of the Company.

DISCLOSURE OF INTEREST BY PROMOTERS

The promoters informed the Board of Directors of their interests in the following new ventures which were incorporated for their other activities.

1. Agnus Capital LLP

2. Chayadeep Ventures LLP

3. Atma Enterprises LLP

4. Triumph Ventures LLP

5. Qualichem Capital LLP

6. Triumph Fincap Holdings Private Limited

APPRECIATION

Your Directors would like to express their grateful appreciation for the excellent support and co- operation received from the Financial Institutions, Banks, Government Authorities, Reserve Bank of India, Securities and Exchange Board of India, Stock Exchanges, Customers, Manufacturers, Suppliers, Directors and Shareholders during the year under review.

At this point, we would like to place on record our sincere appreciation for the total commitment, dedication, untiring efforts and hard work put in by the employee members at all levels of the Company in realisation of the corporate goals in the years ahead.

For and on behalf of the Board of Directors

KR Ravishankar

Chairman & Managing Director

Place: Bangalore

Date: August 13, 2010

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