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Directors Report of Shilpa Medicare Ltd.

Mar 31, 2016

The Directors have pleasure in presenting herewith the 29th Annual Report on the business of your Company together with the Audited Accounts for the financial year ended 31st March, 2016.

FINANCIAL SUMMARY (Rs. in lakhs)

Financial Year Financial Year

PARTICULARS 2015-16 2014-15

Standalone Consolidated Standalone Consolidated

Operating Revenue (Net of ED) 67579.06 71936.62 56540.21 61379.91

Other Income 680.52 464.21 545.34 479.89

Profit before Interest, Depreciation & Tax 16928.75 15759.66 14189.78 13330.24

Interest 327.19 686.48 387.98 405.03

Depreciation 2119.03 2862.91 1908.50 2141.16

Net Profit Before Tax 14482.53 12210.27 11893.30 10784.05

Provision for taxation

a. Current Tax 3035.51 3054.08 2455.69 2487.11

b. Less: MAT credit entitlement (501.29) (501.30) (154.65) (154.65)

c. Deferred tax 915.40 214.02 1182.49 1189.12

Profit after Tax 11032.92 9871.50 8409.77 7262.48

Add: Minority Share of Loss - (506.83) - (106.64)

Profit After Tax net of Minority Interest 11032.92 10378.34 8409.77 7369.12

REVIEW OF OPERATIONS:

During the year under review the Company reported gross revenues of Rs.682.59 Cr as against Rs.570.85 Cr and a Net Profit of Rs.110.32 Cr as against Rs.84.09 Cr registering growth of 31% and 4% respectively as against in the previous year. Out of the current year profits after tax Rs.5.00 Cr has been transferred to General Reserve and Rs.5.55 Cr has been paid as interim dividend and the balance has been carried forwarded to balance sheet.

Continuous focus of the management on new line of products, research & development and strategic expansion of production/ development facilities has been yielding good results in terms of high margins. Expansion of production facilities is as per schedule. Considering the fast developments in the pharma industry the Company has started focusing on development of new process and new products.

API R&D FACILITIES

With more than two decades of presence in the industry, Shilpa Medicare Ltd has created a niche for itself in very competitive domain of oncology products. The state of the art facilities in Raichur and Vishakhapattanam R&D centers with latest equipment''s which creates backbone of making complex molecules in oncology as well as non-oncology active pharmaceutical ingredients. These R&D center are separate from production and quality control. These facilities are approved by DSIR, Government of India

The activity in R&D centers includes chemical route evaluation keeping in mind the IPR protection, identification of key process parameters and optimization of processes, Analytical method development and validation, Documentation for DMF filling, Synthesis of impurities and reference standards. The world class facilities have capability of making API from gram to kilo scale synthesis and supply of API for formulation development and clinical studies. These facilities are capable enough to handle complex reactions like alkylation, acetylation, bromination, chlorination, hydrogenation, high pressure reactions and various named synthesis.

Many complex viruses have been discovered over the past few years for which new drugs have been tried and tested all over the world. We are glad to have helped in the fight against these life taking diseases. Some of the drugs developed by these R&D centers for diseases like multiple myeloma, mental cell lymphoma, breast cancer, non-small cell lung cancer, proteasome inhibitor, chronic lymphomatic leukemia, immune modulatory agent and non-cancerous diseases like multiple sclerosis, idiopathic pulmonary fibrosis, chronic intestinal pseudo obstruction and pulmonary arterial hypertension.

As many as 11 oncology API''s and 4 non-oncology APIs have been developed in R&D and successfully transferred the technology to plant for commercial production this year another set of 18 new oncology drugs are currently under development.

Shilpa Medicare has compliance with government norms like cGMP and have got approvals from various FDA authorities from countries across the world. Maintaining high standards of quality has helped Shilpa develop trust with its partners and puts them in a favorable position amongst the top API manufacturers.

FORMULATION R&D

Formulation research Centre is concentrated in developing generic equivalents to reference listed drugs for Global Markets like USA, Europe and RoW for injectable and oral formulations used for the treatment of cancer and other indications like Multiple sclerosis, liver diseases, HIV etc.

The research centre also concentrates in the development of new formulations leading to reduced costing and enhanced stability of the drug products. Also the R&D works on converting the existing Lyophilized products to Ready to Use (RTU''s) liquid. Also R&D concentrates on development of ready to fill powders for injectable administrations.

The oral department of R&D is concentrated in developing the generic equivalents for Global Markets. The R&D team is concentrated in developing the products as Para IV and 505 ((b)2). R&D is concentrated in working on products to reduce drug product administrations for Geriatric patients.

R&D is working on development of products with target filing as First to File and Para IV filing to US FDA.

API FACILITIES

Shilpa Medicare Ltd is strong player in global markets because of its inherent strength in R&D, IPR & GMP Compliance Active Pharmaceutical Manufacturing Facilities approved by USFDA in the segments of Oncology, amino acids & non Oncology Products.

The Company has commercialized the following API Technologies & the following patents have been granted and having more than 10 API Production Blocks approved BY USFDA at its two Raichur sites.

The Investment in the robust and adequate facilities with latest technologies the Company is generating revenue of Rs.58356.48 Lacs from its API Operations.

The Company is investing consistently in R&D, R&D Facilities, personnel, IPR, across south India in the segments of Oncology, Non Oncology, Bio-similar & working on the molecules of importance down the coming years to sustain it''s growth in the API segment.

INTELLECTUAL PROPERTY MANAGEMENT (IPM) GROUP

Shilpa Medicare Limited Intellectual Property Management (IPM) Group is responsible for building Shilpa''s global generic product pipeline as well as creating, managing and protecting its high value patent estate. Shilpa has a dedicated IPM Group which provides stage wise IP-clearances during product/process development activities and also provides frequent updates and alerts on relevant IP (patent, trademark etc) to R&D scientists for products/process and suggests remedial measures to deal with IP issues. Shilpa IPM Group is involved in product selection activity to ensure that right products are selected for development.

Highlights FY 15-16:

- In FY 15-16, Shilpa filed two ANDA with paragraph IV certifications and out of which one ANDA did not received any notice from brand company.

- In FY 15-16, Shilpa has filed 45 patent applications taking the cumulative total to 189 patent applications in India and other countries. Shilpa received grants for 13 patents.

Future plan FY 16-17

- Planned to file 3 ANDA with paragraph IV certification with US FDA, out of which one could be a first-to-file ANDA.

REGULATORY FILINGS: API RAICHUR UNIT-1, UNIT-II & UNIT-IV (FORMULATION UNIT-SEZ)

US DMFs

- 7 (Seven) - All are with CA status available.

- 19 ANDA filed as on 31.03.2016 out of which 6 ANDA on Shilpa and balance 13 were on behalf of Customer using our facility. Two DMFs approved in support of ANDA review.

Europe DMFs approvals:

- 6 MAs were filed as on 31st March, 2016 out of which 4 (Four DMFs, Bortezomib, Bendamustine, Pemetrexed and Gemcitabine) were approved in support of various MAs (Bortezomib, Bendamustine, Pemetrexed and Gemcitabine).

Regulatory Approvals: PMDA-Japan, GMP clearance from TGA-Australia and USFDA.

SUB-DIVISION OF EQUITY SHARES FROM Rs.2/- TO Re.1/-

During the year under review, the Company after obtaining the approval of members at the 28th Annual General Meeting held on 28th September, 2015, divided the face value of existing equity share of Rs.2/- into two equity shares of Re.1/- each fully paid-up, with effect from the Record Date specified. Members holding shares in demat form as on the Record Date, were directly given credit to their respective beneficiary accounts and member(s) holding share(s) in physical form, was/were issued new share certificates.

DIVIDEND:

During the financial year under review your Company declared and paid an interim dividend of Re. 0.60 per share and the Directors recommended the same as dividend for the F.Y 2015-16 keeping in view the fund requirements for the on-going expansion plans. An amount of Rs.555.12 lacs inclusive of dividend distribution tax was absorbed towards the dividend for the F.Y 2015-16.

TRANSFER TO RESERVES:

We propose to transfer Rs.500 Lacs to the general reserve. An amount of Rs.9,977.79 Lacs is proposed to be retained in the P&L account.

DIRECTORS OR KEY MANAGERIAL PERSONNEL

Mr. Omprakash Inani, Director will retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

The term of all the Independent Directors of the Company shall come to an end at the ensuing Annual General Meeting, the entire Board of Directors excluding the Director being evaluated, evaluated their performance and recommends to the members to consider their re-appointment. The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under the Act.

During the period under review the Company Secretary Mr. Vemuri Ajay has resigned from the services w.e.f 19.10.2015 and Mrs. Sujani Vasireddi has been appointed as Company Secretary of the Company w.e.f 01-11-2015.

STATEMENT OF DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SUB- SECTION (6) OF SECTION 149:

The Independent Directors have submitted the declaration of independence, as required under Section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in Section 149(6) and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

AUDITORS STATUTORY AUDITORS

At the Annual General Meeting (AGM) held on September 20, 2014, M/s. Bohara Bhandari Bung and Associates LLP, Chartered Accountants, were appointed as Statutory Auditors of the Company to hold office till the conclusion of the Annual General Meeting to be held in the calendar year 2017. In terms of the first provison to Section 139 of the Companies Act, 2013, the appointment of the auditor shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s. Bohara Bhandari Bung and Associates LLP, Chartered Accountants, as statutory auditors of the Company, is placed for ratification by the shareholders. In this regard, the Company has received a certificate from the auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013 read with Rule 4 of Companies (Audit & Auditors) Rules 2014.

Cost Auditors:

The Board has appointed M/s. VJ Talati &Co., Cost Accountants for conducting the audit of cost records of the Company for various segments for the financial year 2016-17 as recommended by the Audit Committee. As required under Section 148 and Rule 14 of the Companies (Audit and Auditors) Rules, 2014 a resolution is being placed at the ensuing AGM for ratification of remuneration payable to said Cost Auditors.

Secretarial Auditors:

M/s P.S.Rao & Associates, Practicing Company Secretaries were appointed to conduct the Secretarial Audit of the Company for the financial year 2015-16, as required under Section 204 of the Companies Act, 2013 and Rule 9 there-under. The Secretarial Audit Report for FY 2015-16 forms part of this Report as Annexure - 9.

The Board has appointed M/s P.S.Rao & Associates, Practicing Company Secretaries, as Secretarial Auditors of the Company for the financial year 2016-17.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE OUTGO

Information required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is enclosed herewith as Annexure - 8.

RISK MANAGEMENT POLICY

Pursuant to Regulation 21 (4) of SEBI (LODR) Regulations, 2015, the Company has formulated a policy on the Risk Management. The Risk Management Policy of the Company is posted on the Company''s website:www.vbshilpa.com. The Board formulated and implemented Risk Management Policy for the Company which identifies various elements of risks which in its opinion may threaten the existence of the Company and measures to contain and migrate risks. Major risk to the Company apart from the general business risks related to pharmaceutical industry, is supplies at low cost countries like China and other unregulated suppliers.

CONSOLIDATED FINANCIAL STATEMENT

In accordance with the provisions of Section 129 (3) of the Companies Act, 2013, the Consolidated Financial Statements, drawn up in accordance with the applicable Accounting Standards, forms part of this Annual Report. A separate statement containing the salient features of the financial statements of Subsidiaries, Associates and Joint Ventures in Form AOC-1, is annexed herewith as Annexure - 5.

Further, the annual accounts of all the subsidiary companies shall be posted on Company''s website - www.vbshilpa.com.

Annual accounts of the Subsidiary Companies and related detailed information will be available for inspection by the members, at the registered office of the Company and will also be made available to the members upon request.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS:

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations.

Various Audit Systems in the Company monitor and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the audit reports the units undertake corrective action in their respective areas and strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board periodically.

The Board of Directors of the Company have adopted various policies like Related Party Transactions policy, Whistle Blower Policy, Policy to determine material subsidiaries and such other procedures for ensuring the orderly and efficient conduct of its business for safeguarding its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.

SUBSIDIARIES, ASSOCIATES & JOINT VENTURES RAICHEM MEDICARE PVT LIMITED 100% EOU.

RAICHEM MEDICARE PVT LIMITED is a Subsidiary of SHILPA MEDICARE LTD and joint venture of ICE.SPA and PCA.SPA.

Raichem completed installation of all machineries during 2015- 2016 and Recruited all the key personnel, also commenced trial production in aug-2015 after the Audit by External consultant from ITALY and started commercial production in Dec-2015.

Raichem has obtained the Drug Manufacturing license and GMP certificate and consent from pollution control board for operating the plant.

Raichem will be initially manufacturing intermediates for UDCA (Ursodeoxycholic acid) until ICE SPA and PCA SPA obtain the Import License by Dec-2016.

Raichem has completed validation batches of Raw UDCA and already exported to ICE.SPA and PCA.SPA, also registration of Raichem site with PMDA-JAPAN.

Raichem will carry out New Validation batches during Oct/ Nov-2016 for improved process and yields.

INM TECHNOLOGIES PVT LTD (NANOTECHNOLOGY DIVISION)

Innovative Nano & Micro Technologies Private Limited Incorporated in the FY 2014-2015 a Subsidiary of Shilpa Medicare Ltd, Raichur. Company has a vision to serve the humanity using Nano technology products. Company drives with Strategic intent "Innovations for All Generations". Company Business Portfolio includes Nanomaterial manufacturing, Research & development in the field of Nano science & Nano (chemical and Bio) technology and Nanoformulations for pharmaceutical technology applications. State of the art facility for synthesis, characterization and analytical testing of Nano products, trained manpower for process design & monitoring has been established and includes 9 departments in the company involving major disciplines namely Biotechnology, Bio-medical, Analytical and Pharmaceutical, Chemical, Polymer, Coatings, Electronics and Smart materials.

In the area of Bio-medical sector, INM Technologies presently working on dental products with new Nanoformulation to avoid toxicity of the existing filling material, dental hemostatic gels formulation with enhanced blood clotting, and immediate release of the drug, temporary filling materials based on nano zinc oxide formulations for improved efficacy.

INM Technologies plans at launch these dental products in the first quarter of 2018. Nanoemulsions with no side effects and improved efficacy, for ocular delivery have been undertaken Nanoformulations for ophthalmic applications have global market approx. 12 billion USD and approx. Rs. 500 Crores Indian market.

Department of Coatings working towards nanostructured coatings based on simple and cost effective process. These include: hydrophilic coatings, hydrophobic coatings, self cleaning, anti reflective, UV- absorbing coatings, Heat absorbing coatings, Transparent conductive coatings, Electrochromic coatings. These nanostructured coatings for automobile, building, domestic applications have global market approx. 15 Billion USD and approx. Rs. 5,000 Crores Indian market. INM Technologies plans at launch some of these nanostructured coatings into Indian and global market by first quarter of 2018.

In the area of Pharmaceutical division, INM Technologies presently working on different pharmaceutical dosage form, namely Ophathalmics, NDDS (Novel drug delivery system), SR oral thin film, Parenteral and Dermatological formulations. We have also identifying new technologies in designing new technology based formulation.

During this financial year, we have selected three to four formulations and initiated the development of those formulations at INM Technologies. This year, we focused on conducting confirmative animal studies of these formulations. Along with we have developed two high value formulations in opthalmics and we are planning to scale up ophthalmic formulation using contract manufacturing facilities. This year, we have identified nanofibres technology to design Rapid Oral Film formulations.

The future plan of Pharmaceutical division of INM Technologies,

1. Identification of new technologies to improve constrains with existing formulations.

2. Developed formulation using new design adopting nano and micro technology.

3. Identification of portfolio, for Rapid Oral thin Film and Parenteral products.

4. Adding new products in the area of NDDS, Ophthalmic and Dermatology.

5. Focusing on improved formulation in Oral dosage formulation.

SHILPA THERAPEUTICS PVT. LTD. (FORMERLY KNOWN AS NU THERAPEUTICS PVT. LTD.)

Situated at Hyderabad, India, a progressive novel drug delivery company with an international outlook is dedicated to the development and commercialization of innovative and patient compliant novel drug delivery systems such as fast disintegrating oral strips.

Shilpa Therapeutics Pvt. Ltd. is the first company to commercialize prescription products as oral thin strips/films in India.

Shilpa Therapeutics is being lead and promoted by highly motivated professionals with extensive experience both in domestic and international pharmaceutical arena and highly qualified management professionals with a vision to develop and market innovative and patient compliant novel drug delivery systems.

Shilpa Therapeutics has a strong IP profile. Almost 10 patents has been filed in ODS space and also approval for its oral disintegrating strip products from regulatory authorities of Kenya, Uganda along with filing in several other countries at various stages.

Shilpa Therapeutics with its technical expertise, manufacturing capabilities and its finished products at various stages of registration in several countries is poised to attain promising business results in the very near future.

KOANAA HEALTHCARE GmbH

Koanaa Healthcare GmbH is 100% subsidiary of Shilpa Medicare Limited. The AGES inspection (Austrian pharmaceutical authority) will take place in Q3 2016 to be compliant in Formulation & Filling, Packaging, Product Release and Storage and Transport and to get the pharmaceutical trade certificate to go "online" with selling the first oncology products in Europe.

Koanaa Healthcare GmbH is being managed by a well experienced group of leaders who share the passion and dreams of Koanaa Healthcare GmbH vision of "Innovating for Affordable Healthcare". With their vast expertise in diverse sector of pharma business, our team brings on board their care, creativity, enthusiasm and commitment of achieving ''Affordable Healthcare'' for everyone. Our team is dedicated for creating value to our customers, shareholders, partners and providing care for employees at all levels in the organization.

Koanaa Healthcare GmbH will be positioned as "European Player" with Austrian basis with low prices and high service in the field of oncology. The products will prove highest standards and quality and we will stand for Deliverability and Service for Patients and Physicians.

In terms geographical presence we are starting in Austria (headquarter) and in Germany (with a subsidiary office) with own commercial teams, in other territories like Northern Europe, CEE and Benelux and South Europe we are seeking for partnerships with other pharmaceutical companies.

The vision of Koanaa Healthcare GmbH is to develop as a successful and reliable partner within the pharmaceutical domain.

LOBA FEINCHEMIE GmbH

Dr. Walter Erber took over the responsibility as CEO/Managing director for LOBA Finechemie GmbH from beginning May 2016.

Main strategy of Loba Finechemie GmbH is to enhance the focus in terms of resources on business development and Sales & Marketing within the next business years to support sales- and profit growth. The financial situation of Loba Finechemie GmbH already improved over the last years and will further develop extraordinarily over the next years. Main key of success will be keeping the exceptional quality and momentum for fine chemicals and especially the new orientation of Loba

Finechemie GmbH more towards a "Focus on API business" which is compared to the finechemical business more profitable.

To support the sales expansion strategy for the next years, Loba Finechemie GmbH has developed an investment plan to update the facility, the technical equipment and the capacity of the factory, and especially to invest more in human resources. Overall link in all processes is to comply to the Austrian trade law and environmental law and to have the highest possible quality standards.

REVA PHARMACHEM PVT LTD

The Company is focused and working in regulated and emerging markets. It has gained its foothold in most stringent market (Japan) with domain area contract manufacturing and Generics (Oncology & Cephalosporin''s). The Japan government (MOHLW) Ministry of Health Labour Welfare & PMDA (Japan Regulator) has aligned with DCGI (India FDA) to support facilitation of Pharma investment & generic business. Our customer base has broadened in Japan and projects secured with both Innovator & Generic companies. We are positive that by 2017 we should forge another partnership with a key big pharma co. The countries "Vietnam & Korea" are the front runners in terms of growth and revenue as part of emerging markets for the company.

Contract partnerships for dosage form {Oncology & Women Health} is the next line of operation. We are in discussion and outlying "projects" and this will business will become a key base for the company (mid to long term).

MAKINDUS INC, USA

Makindus is a specialty pharmaceutical development company focused on ophthalmology and rare diseases. Makindus'' lead asset is MI-100, a novel ophthalmic formulation of a legacy compound being developed for Stargardt disease, a rare form of juvenile macular degeneration. The estimated prevalence in the U.S. and Europe is approximately 1 in 10,000 individuals. There is currently no cure or treatments.

Makindus has been granted orphan drug designation for MI- 100 for the treatment of Stargardt Disease in both the United States and Europe. The Company will benefit from a number of incentives related to orphan drug designation including market exclusivity in the US for 7 years and 10 years in Europe.

MI-100 has shown promising results in improving visual acuity for Stargardt patients in an investigator-initiated clinical trial. Makindus has developed MI-100 in a new proprietary sterile and more convenient ophthalmic dosage form that allows for a ready-to-use multi-dose eye dropper for easy administration.

The clinical development program for MI-100 has been reviewed with the Food & Drug Administration (FDA) and European Medicines Agency (EMA). Makindus plans to file a New Drug Application (NDA) in 4Q of 2018 utilizing a streamlined 505(b)(2) regulatory pathway. Makindus is currently in discussions with interested parties to secure the needed financial support to advance MI-100 into Phase 3 clinical trial starting in the 2Q of 2017 with a target launch date of 1Q 2020.

MAIA PHARMACEUTICALS, INC, USA

MAIA Pharmaceuticals, Inc. ("MAIA") is a Princeton, New Jersey, USA based specialty pharmaceutical company founded in 2013.

MAIAs focus is to address an unmet need for a high quality, lower price pharmaceutical drugs used in the hospital that also provide product usability benefits to the end customer. MAIAs product pipeline consists of 15 niche generic and proprietary pharmaceutical products with a portfolio value of $10Bn focused on the US, European and Canadian markets

REVA MEDICARE PRIVATE LIMITED

Reva Medicare Private Limited (Reva) was incorporated on 12-02-2016, is a Joint Venture Company, promoted by your Company along with M/s Akira Pharma Private Limited. As per the understanding your Company holds 50.001% of the total equity in Reva.

CORPORATE SOCIAL RESPONSIBILITY (CSR):

A report on CSR Activities as required under Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 is enclosed herewith as Annexure -4. CSR Policy of the Company and other details as required is placed on the Company''s website at http://vbshilpa.com/CSRPolicy.pdf.

NOMINATION AND REMUENRATION POLICY

A committee of the Board named as "Nomination and Remuneration Committee" has been constituted to comply with the provisions of section 178, Schedule IV of the Companies Act and Regulation 19 of SEBI (LODR) Regulations, 2015. It has been entrusted with the task to recommend a policy of the Company on Directors'' appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a Director and other matters and to frame proper systems for identification, appointment of Directors & KMPs, Payment of Remuneration to them and Evaluation of their performance and to recommend the same to the Board from time to time.

Nomination and Remuneration Policy of the Company is placed on the Company''s website at http://vbshilpa.com/pdf/ NominationRemunerationPolicy.pdf.

FORMAL ANNUAL EVALUATION MADE BY THE BOARD OF ITS OWN PERFORMANCE AND OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS

As required under the provisions of Schedule IV of the Companies Act, 2013 the performance evaluation of Independent Directors has been done by the entire Board of Directors, excluding the director being evaluated. The evaluation of all the Directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board. The Board approved the evaluation results as collated by the Nomination and Remuneration Committee.

All the Independent Directors are due for re-appointment.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 134 (5) of the Companies Act, 2013 Your Directors'' confirm that:

i. In preparation of annual accounts for the financial year ended 31st March, 2016 the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

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

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

iv. The Directors had prepared the annual accounts on a ''going concern'' basis;

v. The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

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

EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure - 1.

OTHER DISCLOSURES:

Board Meetings

During the year under review, Five Board Meetings were held during the year. For further details, please refer Corporate Governance Report which forms part of this Annual Report.

Committees of Board

Your company has the following committees namely:

1. Audit Committee ;

2. Nomination and Remuneration Committee ;

3. Stakeholders Relationship Committee and

4. Corporate Social Responsibility Committee

The constitutions of all the committees are as per the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. The details of the Constitution are mentioned in Corporate Governance Report, which forms part of this Annual Report.

Corporate Governance Report

Regulation 15 of SEBI (LODR) Regulations, 2015 is applicable to your Company, as such the details as specified in Schedule V(C) of SEBI (LODR) Regulations, 2015, with regard to Corporate Governance Report including Auditor''s Certificate on compliance with the code of Corporate Governance specified in Schedule V(E) of SEBI (LODR) Regulations, 2015 forms part of the Annual report.

Management Discussion and Analysis

The Management discussion and analysis Report for the year under review as stipulated under Regulation 34 SEBI (LODR) regulations, 2015 is annexed hereto and forms part of this Report.

Vigil Mechanism:

In pursuant to the provisions of section 117(9)( & (10) of the Companies Act, 2013 and Regulation 22 of SEBI (LODR) Regulations, 2015, a Vigil Mechanism for Directors and employees to report genuine concerns has been established. Protected disclosures can be made by a whistle blower through to the Chairman of the Audit Committee. The Policy on vigil mechanism and whistle blower policy may be accessed on the Company''s website at the link: http://www.vbshilpa.com/pdf/ Whistle_Blower_Policy.pdf.

Remuneration ratio of the Directors/ Key Managerial Personnel/ Employees:

Statement showing disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed herewith as Annexure - 2.

PARTICULARS OF EMPLOYEES

Statement of employees employed throughout the financial year and in receipt of remuneration of Rs. 1,02,00,000/- (Rupees One Crores Two Lakh) or more, or employed for part of the year and in receipt of Rs. 8,50,000/- (Rupees Eight Lakh Fifty Thousand) or more a month, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is enclosed as Annexure-3 to the Board''s report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

Details of the Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 are given in the notes to the financial statements pertaining to the year under review.

DEPOSITS

Your Company has not accepted any fixed deposits and as such no principal or interest was outstanding.

RELATED PARTY TRANSACTIONS:

Related Party Transactions entered during the financial year under review are disclosed in Note No. 41 of the Financial Statements. These transactions entered were at an arm''s length basis and in the ordinary course of business. There were no materially significant related party transactions with the Company''s Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Form AOC-2, containing the note on the aforesaid related party transactions is enclosed herewith as Annexure - 6.

Related Party Disclosure as per Schedule V of SEBI (LODR) Regulations, 2015 is enclosed herewith as Annexure -7.

The policy on materiality of Related Party Transactions and dealing with related party transactions as approved by the Board may be accessed on the Company''s website http:// www.vbshilpa.com/policies.html.

Material Changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the company to which the financial statement relates and the date of the report.

The Board of Directors at their Meeting held on 27th June, 2016 approved the proposal of merger of Navya Biologicals Private Limited with Shilpa Medicare Limited. The Company has filed a scheme of merger with both the Stock Exchanges seeking their No-objection Letter.

All the documents filed to the exchanges pursuant to the approval may be accessed on the Company''s website http:// www.vbshilpa.com/draft-scheme-mergers.html

During the current financial year the Company had an audit conducted by the United States Food & Drug Administration (USFDA) at the SEZ Formulations facility situated at Jadcherla in the state of Telangana has received the approval without 483 for the said facility.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

3. Neither the Managing Director nor the Whole-time Director of the Company received any remuneration or commission from any of its subsidiaries.

4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future.

5. No frauds were reported by the auditors during the year under review

Your Directors further states that during the year under review, there were no cases filed/registeredpursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

ACKNOWLEDGEMENT

Your Directors wish to express their gratitude to the Central and State Governments, investors, analysts, financial institutions, banks, business associates and customers, the medical profession, distributors and suppliers for their whole-hearted support. Your Directors commend all the employees of your Company for their continued dedication, significant contributions, hard work and commitment.



For and on behalf of the Board of Directors

Place : Hyderabad OMPRAKASH INANI

Date : 26-08-2016 CHAIRMAN


Mar 31, 2014

Dear Shareholders,

The Directors have pleasure in presenting herewith the 27th Annual Report on the business of your Company together with the Audited Accounts for the financial year ended 31st March, 2014.

FINANCIAL RESULTS (Rs. In Lakhs) Financial Year PARTICULARS 2013-14 Standalone Consolidated

Sales (Net of ED) 52736.81 57137.62

Other Income 885.33 907.04

Profit before Interest, Depreciation, Income Tax 13214.14 12772.81 & Exchange Fluctuation

Interest 339.74 352.41

Depreciation 2109.20 2321.79

Exchange Fluctuation Loss( )/ Income (-) 557.00 553.41

Net Profit before Tax 10208.20 9545.20

Provision for Taxation

a. Current Tax(Including Previous year) 2102.72 2143.77

b. Less: MAT credit entitlement (614.65) (614.65)

c. Deferred tax 634.45 501.13

Profit after Tax 8085.68 7514.95

Less: Share in Losses of Associates - -

Prior Period adjustment (Loss) - -

Brought forward from previous year 18215.18 17277.51

Profit available for appropriation 26300.87 24792.47

Transfer to General Reserve 810.00 810.00

Provision for proposed Dividend and dividend tax 451.03 451.03

Add: Loss pertaining to Minority Interest NA 51.98

Balance Carried to Balance Sheet 25039.84 23583.42

FINANCIAL RESULTS (Rs. In Lakhs) Financial Year PARTICULARS 2012-13 Standalone Consolidated

Sales (Net of ED) 32819.59 37132.34

Other Income 500.64 501.05

Profit before Interest, Depreciation, Income Tax 6852.32 7272.66 & Exchange Fluctuation

Interest 136.23 143.88

Depreciation 1275.36 1533.99

Exchange Fluctuation Loss( )/ Income (-) (120.40) (104.81)

Net Profit before Tax 5561.13 5699.60

Provision for Taxation

a. Current Tax(Including Previous year) 1061.11 1080.18

b. Less: MAT credit entitlement (248.19) (248.19)

c. Deferred tax 152.25 121.08

Profit after Tax 4595.96 4746.42

Less: Share in Losses of Associates - -

Prior Period adjustment (Loss) -

Brought forward from previous year 14514.76 13438.84

Profit available for appropriation 19110.72 18185.36

Transfer to General Reserve 525.00 525.00

Provision for proposed Dividend and dividend tax 370.53 370.53

Add: Loss pertaining to Minority Interest NA (12.31)

Balance Carried to Balance Sheet 18215.19 17277.51

REVIEW OF OPERATIONS:

During the year under review the Company performed well in all fronts posting good growth over 60% in sales revenues and 76% in profit after tax. Timely decisions of management in taking-up expansion/new projects, launching new products/ processes and maintaining good long-standing relationship with customers have been giving good results and taking- up the Company to next level. The management continues to concentrate on expansion of operations into formulations, high-margin products, invention of new process, maintaining specified standards in production and quality of product and effective financial management to streamline the operations to continue with growth path. Export revenues have also shown good growth by posting of Rs.33470.80 Lakhs (PY Rs. 24517.05 Lakhs) an increase of 36.5% over previous year.

DIVIDEND:

Your Directors recommended a dividend of Rs.1 i.e. 50% per equity share of Rs.2/- each for the financial year under review, absorbing an amount of Rs.451.03 Lakhs inclusive of dividend distribution tax.

During the year under review the Company has issued and allotted 1,22,62,082 bonus shares in the ratio of 1 bonus share for every 2 existing shares.

RAISING OF FUNDS :

During the current financial year i.e. 2014-15 the Company has issued and allotted 17,64,705 equity shares of Rs.2/- each at a premium of Rs.423/- on preferential basis to raise an amount of Rs.75 Crores.

EXPANSION AND NEW PROJECTS

Operations of Formulation unit are expected to commence during the current financial year after completion of testing and validation batches.

Other expansion projects ofthe Company are also progressing as per the schedule including R&D Projects.

CERTIFICATES & AWARDS:

During the year, your Company received following important approvals/awards beside state award for Best Exporter:

1. Karnataka State Export Excellence Award-District Category-2011-12.

2. EOU has completed ISO 14001:2004 surveillance audit successfully.

3. Obtained EU-GMP Compliance from Germany for Unit I & II both for two of its API.

RESEARCH & DEVELOPMENT:

Your Company continues to be committed to Research and Development of new processes/ new materials for medicines that will reduce the cost of drug to make available expensive drugs to common man at affordable price. Your Company initiated various research studies in Oncology drugs.

To strengthen quality of drugs, the Company enhanced its existing quality standards to meet the requirements of various regulatory bodies.

DEVELOPMENTS AND ACHIEVEMENTS

Till date your Company has filed about 40 PATENT applications, of which about 15 International Patent Applications(PCT), ~ 20 Indian Patent Applications (IN) and few US Patent Applications. In our endeavor for "Innovating for Affordable Healthcare", the Company successfully crossed mark of 100 patent applications entirely with in- house efforts and has also successfully filed four US-DMFs. At present the Company has 13 Nos of US DMFs available as CA (Complete assessment)

The Company also contributed to the Generic Formulation Development of Finished Dosage Forms (FDFs), both for Regulatory (US & EU) and Rest of World (ROW)markets and all new inventions for making FDFs are captured under 04 International Patent Applications (PCT) and 07 Indian Patent Applications (IN). In order to assist AIDs cure at affordable cost, the Company inked a pact with Medicine Patent Pool/ Gilead for HIV/AIDS drug. Necessary efforts are being made for the development of cost-effective and improved process of making ARVs and affordable FDFs containing ARVs.

During the year following new Projects and Expansion Projects have been taken-up:

1. Completed capacity enhancement / modification for Capacetabine.

2. Registered CDM project "Biomass Based Steam Generation Project at Raichur, India" (3926) and successfully completed the verification of the CERs earned. CDM Registry has been instructed to issue 24,294 CERs .

3. Expansion Projects of Unit-I at Raichur for new Production Block, Onco & Non Onco Ware-house are at an advanced stage of completion.

4. Formulation plant at Raichur is progressing as per schedule and expected to be completed during the current financial year.

OPERATIONS OF SUBSIDIARY COMPANIES:

During the year M/s. LOBA Feinchemie GmbH, Austria and Zatortia Holdings Ltd., has posted a loss of Rs.168.40 Lakhs as against profit of Rs.156.63 Lakhs in the previous year. The management is implementing various options to further improve the sales and turn to profitability taking into consideration the statutory regulations of Austria.

Nu Therapeutics Private Limited (NTPL), a Subsidiary Company has posted a loss of Rs.41.84 Lakhs against Profit of Rs. 3.06 Lakhs in the previous year. Installation of new packing machine has been completed. NTPL is awaiting for the approval of Government for its new products.

Raichem Medicare Private Limited (RMPL), a joint venture Company with Italian Company, has earned a profit of Rs. 62.85 Lakhs from investment of surplus funds. Civil construction works are in the final stage and the installation of plant and machinery is going on at the plant site at Raichur, Karnataka. RMPL may commence its commercial operations by end of this financial year after obtaining the necessary approvals.

DIRECTORS

Mr. Omprakash Inani, Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

According to the provisions of section 149 and 152 of the Companies Act, 2013 all Independent Directors are proposed to be reappointed for a period of 2 years. Necessary resolutions have been incorporated in the notice to ensuing Annual General Meeting.

COMPLIANCE WITH GENERAL CIRCULAR No.2/2011 DATED 8TH FEBRUARY, 2011 ISSUED BY THE MINISTRY OF CORPORATE AFFAIRS UNDER SECTION 212(8) OF THE COMPANIES ACT, 1956

Since the Central Government had issued a general circular No. 2/2011 dated 8th February, 2011 granting general exemption from attaching annual accounts of subsidiary companies subject to fulfillment of few conditions, your Company has duly complied with the respective conditions and opted for exemption. Your Board has passed necessary resolution at its meeting held on August 11, 2011 to comply with the conditions of the circular. Statements pursuant to Section 212 of the Companies Act, 1956 relating to performance/ financials of the subsidiary companies form part of this Annual Report.

Further, the Board undertakes that the annual accounts of the subsidiary companies and the related detailed information shall be made available for inspection by any shareholder at the Registered Office of the Company during business hours and shall be provided to the shareholders who seek such information.

EMPLOYEES INFORMATION U/S 217 (2A) OF THE COMPANIES ACT, 1956 :

Details of employees drawing remuneration exceeding limits prescribed U/s 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 is attached with the report.

DEPOSITS :

The Company has not accepted any deposits which cover under the section 58A of the Companies Act, 1956.

DIRECTORS RESPONSIBILITY STATEMENT :

Pursuant to Section 217 (2AA) of the Companies Act, 1956 your Directors'' confirm that:

i. In preparation of annual accounts for the financial year ended 31st March, 2014 the applicable Accounting Standards have been followed.

ii. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the Company at the end of the financial year ended 31st March, 2014 and of the profit and loss of the Company for the year.

iii. The Directors have taken proper and sufficient care for their 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 and

iv. The Directors have prepared the annual accounts on a ''going concern'' basis.

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

As required under Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the information is given as Annexure to this report.

CORPORATE GOVERNANCE

Your Company has complied with the requirements of Clause 49 of the Listing Agreement entered with the Stock Exchanges. Report on Corporate Governance including Auditor''s Certificate on compliance with the code of Corporate Governance under Clause 49 of the Listing Agreement is enclosed as Annexure to this report.

MANAGEMENT DISCUSSION AND ANALYSIS

A report on the Management Discussion and Analysis for the year under review is annexed hereto and forms part of the Annual Report.

AUDITORS

Pursuant to the provisions of Section 139(2) of the Companies Act, 2013, on rotation of audit firms, and based on the recommendation of the Audit Committee, the Board recommends the re-appointment of M/s. Bohara Bhandari Bung and Associates, Chartered Accountants, as the Statutory Auditors of the Company to hold office from conclusion of this Annual General Meeting for a period of 3 years in accordance with the Act, subject to the ratification of shareholders at every Annual General Meeting. M/s. Bohara Bhandari Bung and Associates, Chartered Accountants, have confirmed that the appointment, if made, would be within the prescribed limits under Section 141 of the Companies Act, 2013. Accordingly, the appointment of M/s. Bohara Bhandari Bung and Associates, Chartered Accountants, as the Statutory Auditors, is being proposed as an Ordinary Resolution.

ACKNOWLEDGEMENTS

Your Directors wish to express their gratitude to the Central and State Governments, investors, analysts, financial institutions, banks, business associates and customers, the medical profession, distributors and suppliers for their whole- hearted support. Your Directors commend all the employees of your Company for their continued dedication, significant contributions, hardwork and commitment.

For and on behalf of the Board of Directors

Place : Raichur OMPRAKASH INANI Date : 14th August,2014 CHAIRMAN


Mar 31, 2013

To, The Shareholders,

The Directors have pleasure in presenting herewith the 26th Annual Report on the business of Your Company together with the Audited Accounts for the financial year ended 31st March, 2013.

FINANCIAL RESULTS (Rs. In Lakhs)

Financial Year Financial Year PARTICULARS 2012-13 2011-12 Stand alone Consoli dated Stand alone Consoli dated

Sales (Net of ED) 32819.59 37132.34 27,975.94 31,818.19

Other Income 500.64 501.05 778.60 828.16

Profit before I nterest, Depreciation, Income Tax & 6852.03 7272.66 6,707.67 7,240.71 Exchange Fluctuation

Interest 135.94 143.60 149.20 167.41

Depreciation 1275.36 1533.99 1,143.85 1,436.24

Exchange Fluctuation Loss( )/ (120.40) (104.81) 285.41 286.26 Income (-)

Net Profit before Tax 5561.13 5699.88 5,129.21 5,350.80

Provision for Taxation

a. Current Tax 1061.11 1080.18 1,080.19 1,090.41

b. Less: MAT credit entitlement (248.19) (248.19) (308.21) (310.80)

c. Deferred tax 152.25 121.08 382.47 442.83

Profit after Tax 4595.96 4746.80 3,974.76 4,128.35

Less: Share in Losses of Associates - - - -

Prior Period adjustment (Loss) - (0.28) - (16.97)

Brought forward from previous year 14514.76 13438.94 11,321.52 10,096.62

Profit available for appropriation 19110.72 18185.46 15296.28 14208.00

Transfer to General Reserve 525.00 525.00 525.00 525.00

Provision for proposed Dividend and dividend tax 370.53 370.53 256.52 256.52

Add: Loss/(Profit) pertaining to Minority rate NA (12.31) NA 12.46

Balance Carried to Balance Sheet 18215.19 17227.52 14514.76 13438.94

Review of Operations:

Your Company maintained its growth with sales registering a growth of 17.31%. Despite competition, material cost increases and significant investments in expansion, Profit before Tax grew by 8.42%, and Profit before Interest, Depreciation, Exchange fluctuation and Tax grew by 2.15% over previous year. Cash generation from Operations continued favorable, driven by business performance and management of working capital. Your Company continues to concentrate on better working capital management and fund raising to meet its future expansion plans.

During the year, your Company has continued to export to various countries and earned valuable foreign exchange of Rs.24517.05 Lacs (PY Rs. 22,791.75 lacs).

Dividend:

Your Directors recommended dividend of Re.1.30 i.e. 65% (Rs.0.90 i.e.45%) per equity share of Rs.2/- each for the financial year under review absorbing an amount of Rs.370.53 lacs (PY 256.52 Lacs) inclusive of dividend tax.

Bonus Shares:

Your Directors recommended a bonus issue in the ratio of 1 (One) bonus share for every 2 (two) existing shares at their meeting held on 29th May, 2013. The Company is in the process of compliance of bonus issue procedures.

Research & Development:

Your Company continues to be committed to Research and Development of new processes/ new materials for medicines that will reduce the cost of drug to make available expensive drugs to common man at affordable price. Your Company initiated various research studies in Oncology drugs.

To strengthen quality of drugs, the Company enhanced its existing quality standards to meet the requirements of various regulatory bodies.

Key Achievements for the Financial Year 2012-13 With Shilpa Medicare Ltd.''s rapid expanding R&D activities in the last few years, Year 2012-13 has generated extensive intangible assets (as patent/ trademark) to align its upcoming

Key Business Strategies in the Pharma domain successfully.

In view of maintaining its leading role in Pharma business, particularly focusing on ONCOLOGY APIs and Formulations, R&D centres at RAICHUR & VIZAG have generated significant amount of patentable work, which expectedly may have meaningful impact on our future business aiming for affordable healthcare.

Patents filed in the FY 2012-2013 :

- 18 Patent Applications —Filed in INDIA

- 02Trademark Applications —Filed in INDIA

- 4 Patent Applications —Filed in USA

- 3 Patent Applications —Filed in Europe (EPO)

- 1 Patent Application —Filed in Japan

- 7 International Patent Applications —Published as PCT

- 2 New International Patent Applications —Filed as PCT DMFs filed in the FY 2012-2013

ImatinibMesylate : China BendamustineHCl : Austria, Cyprus, Denmark,

Finland,Iceland, Ireland, Norway, Poland,Slovakia, Spain Busulfan : TGA-Australia

Irinotecan : Hungery, Romania, Slovania,

Temozolomide : KFDA-Korea, Swedan.

Capecitabine : TGA-Australia, Zoledronic Acid - Swedan.

Product Transfer during from April 2012 to March 2013 for commercial production.

1. Azacytidine

2. Decitabine

3. Letrozole USP

4. Docetaxel (open side chain) EP

5. Gabapentin USP/EP

6. Imatinib Mesylate (New ROS)

The Company has implemented the energy Efficient technologies and utilised renewable energy for its energy requirements and has established biomass based steam Generation unit which has reduced the emission of green house gases per year , that produce Thermal Energy for it''s process Requirements which is qualified as Clean Development Methods ( CDM) Project under Kyoto protocol and Registered this project with UNFCC under CDM, with the project identification No. 3926 on 25th Dec 2010,

The project activity was undertaken as a CDM (Clean Development Mechanism) under Kyoto Protocol in 2008. Reputed validation firm DNV (Det Norske Veritas) was appointed for carrying out the CDM validation and finally the project was finally with UNFCCC on 25th December 2010

The Monitoring Report from ist January 2011 to October 2012 was prepared for Verification and DNV has verified the figures as quoted in the monitoring report and finally the project has been submitted to UNFCCC for issuance of the CER''s .

The Company has earned 24900 CER''s during this period Apart From the above the Company has Implemented other Energy saving Measures and has conserved both Electrical &Thermal Energy as given bellow :

Sl. No Description UOM 2010-11 2011-12

1 Specific Electrical KWH/ 18349 15122 Energy Consumption MT

Specific Thermal MKcal/ 70.30 66 Energy Consumption MT

The Company has Secured National Energy Conservation award -2012, First prize in Pharmaceutical Sector from Government of India, Ministry of Power and the award was conferred by President of India

The Company is committed to being a responsible steward of the environment for the well being our employees, stakeholders and the community at large. In this process the company was certified for ISO14001.

Expansion And New Projects

With the merger of Raichem Life Sciences Private Limited the operations will be expanded into formulations. Testing of machinery and other equipment is in progress and other work is as per the schedule. Commercial operations of formulations plant are expected to be commenced by middle of the current financial year.

Other expansion projects of the Company are also progressing as per the schedule including R&D Projects.

Certificates & AWARDS:

During the year, your Company received following important approvals/awards beside state award for Best Exporter: Shilpa: i) Certificate of GMP compliance of manufacturer from "Freie Und Hansestadt- Hamburg" for Deosugur and EOU sites; ii) National Energy Conservation Award for the year 2012 in "Drugs and Pharmaceuticals Sector".

Loba Feinchemie, Subsidiary Company became one of the 100 Companies of Austria, which were certified for quality as per ISO-9000 Standards for longest period i.e. 20(Twenty) continuous years.

Merger Of Raichem Life Sciences Private Limited

With the approval of High Court of Andhra Pradesh vide its order dated 31st August, 2012 Raichem Life Science Private Limited (RLSPL), a 100% subsidiary Company, has been merged with the Company w.e.f. 01-04-2011 being the appointed date for merger.

Wos Companies'' Operations

During the year M/s. LOBA Feinchemie GmbH, Austria has posted a profit of Rs.161.02 lacs. Slowly the operations are stabilizing and it is expected to improve the margins and sales. Nu Therapeutics Private Limited (NTPL), a subsidiary Company has posted a profit of Rs.3.06 lacs for the year ended 31st March, 2013. Installation of new packing machine has been completed. Land has been acquired for expansion plans. NTPL is awaiting for the approval of Government for its new products. Raichem Medicare Private Limited (RMPL), a joint venture company with Italian Company, has earned a profit of Rs. 22.68 lacs from investment of surplus funds. Company started the civil construction works of plant at Raichur, Karnataka after obtaining the necessary approvals and also placed orders for major equipments and machineries.

Directors

Mr. Rajender Sunki Reddy, Mr. N.P.S.Shinh and Mr. Omprakash Inani Directors, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Compliance With General Circular No.2/2011 Dated 8Th February, 2011 Issued By The Ministry Of Corporate Affairs Under Section 212(8) Of The Companies Act, 1956

Since the Central Government had issued a general circular No. 2/2011 dated 8 th February, 2011 granting general exemption from attaching annual accounts of subsidiary companies subject to fulfillment of few conditions, your Company has duly complied with the respective conditions and opted for exemption. Your Board has passed necessary resolution at its meeting held on August 11, 2011 to comply with the conditions of the circular. Statements pursuant to section 212 of the Companies Act, 1956 relating to performance/ financials of the subsidiary companies form part of this Annual Report. Further, the Board undertakes that the annual accounts of the subsidiary companies and the related detailed information shall be made available for inspection by any shareholder at the Registered Office of the Company during business hours and shall be provided to the shareholders who seek such information.

Employees Information U/S 217 (2A) Of The Companies Act, 1956.

Details of employees drawing remuneration exceeding limits prescribed U/s 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of employees) rules, 1975 is attached with the report.

Deposits

The Company has not accepted any deposits which cover under the section 58A of the Companies Act, 1956.

Directors Responsibility Statement

Pursuant to Section 217 (2AA) of the Companies Act, 1956 Your Directors'' confirm that:

i. In preparation of annual accounts for the financial year ended 31st March, 2013 the applicable Accounting Standards have been followed.

ii. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the Company at the end of the financial year ended 31st March, 2013 and of the profit and loss of the Company for the year.

iii. The Directors have taken proper and sufficient care for their 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 and

iv. The Directors have prepared the annual accounts on a ''going concern'' basis.

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

As required under Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988, the information is given as Annexure to this report.

Corporate Governance

Your Company has complied with the requirements of Clause 49 of the Listing Agreement entered with the Stock Exchanges. Report on Corporate Governance including Auditor''s certificate on compliance with the code of Corporate Governance under Clause 49 of the Listing Agreement is enclosed as Annexure to this report.

Management Discussion And Analysis

A report on the Management Discussion and Analysis for the year under review is annexed hereto and forms part of the Annual Report.

Auditors

The Statutory Auditors of the Company, M/s Bohara Bhandari Bung and Associates, Chartered Accountants, retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment. The Audit Committee and the Board recommended the re-appointment of M/S Bohara Bhandari Bung and Associates, Chartered Accountants, as Statutory Auditors of your Company.

Acknowledgements

Your Directors wish to express their gratitude to the Central and State Governments, investors, analysts, financial institutions, banks, business associates and customers, the medical profession, distributors and suppliers for their whole- hearted support. Your Directors commend all the employees of your Company for their continued dedication, significant contributions, hardwork and commitment.

For and on behalf of the Board of Directors

Place : Raichur OMPRAKASH INANI

Date : 20-06-2013 CHAIRMAN


Mar 31, 2012

The Shareholders,

The Directors have pleasure in presenting herewith the 25th Annual Report on the business of your Company together with the Audited Accounts for the financial year ended 31st March, 2012.

FINANCIAL RESULTS ( Rs. In Lakhs)

Financial Year Financial Year Particulars 2012 2011

Standalone Consolidated Standalone Consol -idated

Sales (Net of ED) 27,845.48 31,818.19 25,754.35 29,028.57

Other Income 1,015.79 828.16 531.25 515.25

Profit before Interest, Depreciation 7,022.95 7,240.71 7,432.05 7,534.29 Income Tax & Exchange Fluctuation

Interest 148.24 167.41 184.74 205.84

Depreciation 1,142.20 1,436.24 1,042.10 1,295.74

Exchange Fluctuation Loss( )/Income (-) 285.41 286.26 (378.44) (379.96)

Net Profit before Tax 5,447.10 5,350.79 6,583.65 6,412.68

Provision for Taxation

a. Current Tax 1,080.19 1,090.41 1,329.00 1,330.06

b. Less: MAT credit entitlement (308.21) (310.80) - -

c. Deferred tax 380.75 410.73 162.11 129.94

Profit after Tax 4,294.37 4,160.45 5,092.54 4,952.68

Less: Share in Losses of Associates - - - 10.00

Prior Period adjustment (Loss) - (16.97) (4.31) (17.89)

Brought forward from previous year 11,487.03 10,124.42 7,147.92 5,948.66

Profit available for appropriation 15,781.40 14,267.90 12,236.14 10,873.54

Transfer to General Reserve 525.00 525.00 525.00 525.00

Provision for proposed Dividend Tax 256.52 256.52 224.11 224.11

Add: Loss pertaining to Minority Interest NA (12.46) NA (0.09)

Balance carried forward to next year 14,999.88 13,498.84 11,487.03 10,124.42

REVIEW OF OPERATIONS :

Your Company has achieved a turnover of Rs. 278.45 Crs. (Rs.257.54 Crs.) and profit before interest, depreciation and tax (PBDIT) of Rs.70.23 Crs (74.32 Crs) for the year ended March 31, 2012. The net profit is Rs.42.94 Crs as against Rs.50.93 Crs in the previous year. The Company''s policy to maintain quality and consistency has been giving good returns by way of long-standing good customer base for the Company due to which the Company is able to maintain its margins though there was a stiff competition particularly from China and other pharma companies. The net profit in terms of EPS is Rs.17.87 against Rs.22.08 in the previous year.

EXPORTS :

During the year, your Company has continued to export to various countries and earned valuable foreign exchange of Rs. 22,791.75 Lacs ( Rs.19,741.71 Lacs). This has been recognized by the FKCCI, Bangalore and VITC, Bangalore by bestowing the Best District Exporter and Best Exporter in the category respectively.

Your Company has given utmost thrust on filing DMFs in various countries including Canada, EU Countries,USA and China for marketing Company''s products in these Countries.

During the year, your Company received ISO-14001-2004 Certificate from the British Certifications Inc. RESEARCH & DEVELOPMENT :

Your Company attaches utmost importance to Research and Development activities which is essential for survival and future growth of any organization. Company''s continuous efforts in this area only. It invented various APIs in Oncology. Company''s R & D facilities at Vizag has received the recognition by DSIR during the year.

Your Company has made significant investments in generating clean energy by commissioning biomass fired boilers which has also been registered as CDM Project. This project will generate Certified Emmission Reductions (CERs). This is expected to generate more than 3 lacs of CERs in a span of 8 years.

DIVIDEND :

Your Directors have recommended dividend of Rs.0.90 i.e. 45% (Rs.0.80 i.e.40%) per equity share of Rs.2/- each for the financial year under review absorbing an amount of Rs. 256.52 lacs inclusive of Dividend Tax.

SHARE CAPITAL :

During the year the Company has issued and allotted 5,00,000 equity shares of Rs.2/- each at a premium of Rs.348/- to the Promoters and PACs on preferential basis.

WOS COMPANIES'' OPERATIONS :

Raichem Life Sciences Private Limited (RLSPL) a 100% subsidiary Company has posted a net loss of Rs.59.14 lacs for the year ended 31st March, 2012. Efforts are being made to stabilize the marketing network of the Company.

Application for merger of Raichem of Life Sciences Pvt. Ltd. with Shilpa Medicare Ltd. is under consideration of the Hon. High Court of Andhra Pradesh.

STRATEGIC INVESTMENTS :

During the year Nu Therapeutics Private Limited (NTPL) in which your Company had invested, commenced the commercial production and earned cash profit. To enhance the production, Capex plan is drawn and being executed.

During the year, your Company also invested an amount of Rs.164.98 lacs in Raichem Medicare Private Limited (RMPL) a Joint Venture Company. With this investment RMPL has become a subsidiary of the Company as per section 4 of the Companies Act, 1956.

Raichem Medicare Private Limited, a joint venture company has started the civil construction of plant at Raichur, Karnataka after obtaining the necessary approvals and also finalised Civil Work & POs for major machineries of long delivery schedule have been placed. Barring unforeseen eventually, plant''s errection should be completed by March, 2013.

DIRECTORS

Mr. Venugopal Loya and Mr. Pramod Kasat, Directors retires by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

COMPLIANCE WITH GENERAL CIRCULAR No.2/2011 DATED 8th FEBRUARY, 2011 ISSUED BY THE MINISTRY OF CORPORATE AFFAIRS UNDER SECTION 212(8) OF THE COMPANIES ACT, 1956.

Since the Central Government had issued a general circular No. 2/2011 dated 8th February, 2011 granting general exemption from attaching annual accounts of subsidiary companies subject to fulfillment of few conditions, your Company has duly complied with the respective conditions and opted for exemption. Your Board has passed necessary resolution at its meeting held on August 11, 2011 to comply with the conditions of the circular. Statements pursuant to section 212 of the Companies Act, 1956 relating to performance/ financials of the subsidiary companies form part of this Annual Report.

Further, the Board undertakes that the annual accounts of the subsidiary companies and the related detailed information shall be made available for inspection by any shareholders at the Registered Office of the Company during business hours and shall be provided to the shareholders who seek such information.

DIRECTORS INFORMATION U/S 217 (2A) OF THE COMPANIES ACT, 1956.

Details of employees drawing remuneration exceeding limits prescribed U/s 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of employees) rules, 1975 is attached with the report.

FIXED DEPOSITS

The Company has not accepted any deposits which cover under the section 58A of the Companies Act, 1956.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956 your Directors'' confirm that:

i. In preparation of annual accounts for the Financial Year Ended 31st March, 2012 the applicable Accounting Standards have been followed.

ii. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the Company at the end of the financial year ended 31st March, 2012 and of the profit and loss of the Company for the year.

iii. The Directors have taken proper and sufficient care for their 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 and

iv. The Directors have prepared the Annual Accounts on a ''going concern'' basis.

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

As required 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, the information is given as Annexure to this report.

CORPORATE GOVERNANCE

Your Company has complied with the requirements of Clause 49 of the Listing Agreement entered with the Stock Exchanges. Report on Corporate Governance including Auditor''s Certificate on compliance with the Code of Corporate Governance under Clause 49 of the Listing Agreement is enclosed as Annexure to this report.

MANAGEMENT DISCUSSION AND ANALYSIS

A report on the Management Discussion and Analysis for the year under review is annexed hereto and forms part of the Annual Report.

AUDITORS

The Statutory Auditors of the Company, M/s Bohara Bhandari Bung And Associates, Chartered Accountants, retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment. The Audit committee and the Board recommended the re-appointment of M/s. Bohara Bhandari Bung And Associates, Chartered Accountants, as Statutory Auditors of your Company.

ACKNOWLEDGEMENTS

Your Directors wish to express their gratitude to the Central and State Governments, Investors, Analysts, Financial Institutions, Banks, Business Associates and Customers, the Medical Profession, Distributors and Suppliers for their whole hearted support. Your Directors commend all the employees of your Company for their continued dedication, significant contributions, hardwork and commitment.

By order of the Board of Directors For Shilpa Medicare Limited

Place : Hyderabad Omprakash Inani

Date : 10th August, 2012 Chairman


Mar 31, 2010

The Directors have pleasure in presenting herewith the 23rd Annual Report on the business of Your Company together with the Audited Accounts for the financial year ended 31st March, 2010.

FINANCIAL RESULTS

Financial Year

PARTICULARS 2009-10

Standalone Consolidated

Sales (Net of ED) 23445.97 26491.20

Other Income 111.94 177.45

Profit before Interest,

Depreciation, Income tax

& Exchange Fluctuation 7783.67 7765.41

Interest 504.04 542.29

Depreciation 976.47 1271.61

Exchange Fluctuation Loss

(+)/Income (-) -421.26 417.86

Net profit before tax 6724.43 6369.37

Provision for taxation

a. Current tax 1840.00 1841.46

b. Deferred tax 283.15 268.40

c. Fringe Benefit Tax 0.00 0.00

Profit after tax 4601.28 4259.51

Prior period adjustment (Loss) 10.66 4.68

Brought forward from previous year 3216.35 2364.75

Profit before transfer to

General Reserve 7828.29 6628.94

Transfer to General Reserve 500.00 500.00

Provision for proposed Dividend

and Dividend Tax 180.37 180.37

Add : Loss pertaining to

Minority share - 0.09

Balance carried to Balance Sheet 7147.92 5948.66

(Rs. in lakhs)

PARTICULARS Financial Year

2008-09

Standalone Consolidated

Sales (Net of ED) 13595.51 16643.22

Other Income 74.73 103.64

Profit before Interest,

Depreciation, Income tax

& Exchange Fluctuation 3748.83 3301.14

Interest 499.52 576.75

Depreciation 604.37 941.10

Exchange Fluctuation Loss

(+)/Income (-) 1042.86 1027.26

Net profit before tax 1602.08 756.03

Provision for taxation

a. Current tax 525.00 524.88

b. Deferred tax 332.18 332.18

c. Fringe Benefit Tax 3.20 3.20

Profit after tax 741.70 -104.23

Prior period adjustment (Loss) 14.79 14.79

Brought forward from previous year 2688.69 2682.94

Profit before transfer to General Reserve 3445.18 2593.50

Transfer to General Reserve 100.00 100.00

Provision for proposed Dividend and Dividend Tax 128.84 128.84

Add : Loss pertaining to Minority share - 0.08

Balance carried to Balance Sheet 3216.34 2364.74



FINANCIAL PERFORMANCE

Your Company scaled and recorded newer heights and benchmarks in terms of sales and profits for the year ended March 31, 2010. Your Company recorded all time high net sales of Rs.23445.97 Lacs (Rs.13595.51 Lacs) recording a growth of 72.45 %. It recorded net profit (after tax) of Rs.4601.28 lacs (Rs.741.70 Lacs ) growth of 520.36% over the previous year due to good margins in the oncology products and increase in production of other products. The net profit in terms of EPS is Rs.20.89 against Rs.3.40 in the previous year.

During the year under review the Company has performed very well in all product segments recording new customers from various countries. Operations of EOU stabilized and the Company is expecting better volumes in the future from this unit.

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs.0.70 i.e. 35% (Rs.0.50 i.e. 25%) per equity share of Rs.2/- each for the financial year under review absorbing an amount of Rs.180.37 lacs inclusive of tax on dividend.

SUBSIDIARIES

Operations of M/s. Loba Feinchemie GmbH, Austria are satisfactory and registered cash profit during the financial year. It is expected that it would breakeven during the year.

Raichem Lifesciences Private Limited, a 100% Subsidiary Company started its marketing operations and is receiving good response from the market.

AWARDS & CERTIFICATIONS

During the year under review the Company achieved the following:

Date Details description of Achievements/Certifications (2009-10)

19.03.2009 Non-Oncology APIs registered in Taiwan

24.03.2009 Recognition & ranked 172nd for its superior financial performance during 2007-08 from SMB Awards

(Industry 2.0 Magazine)

23.09.2009 Filed USDMF of Anastrozole with USFDA (23123)

19.10.2009 Ambroxol MF Holder & Site Registered with PMDA, Japan

15.01.2010 Filed USDMF of Temozolomide with USFDA (23479)

21.01.2010 Patent Filed for Novel Polymorphic Form of Bortezomib (160/CHE/2010)

29.01.2010 Filed USDMF of Irinotecan HCl Trihydrate with USFDA (23562)

11.02.2010 Filed USDMF of Oxaliplatin with USFDA (23563)

11.03.2010 Site inspected Effectively by TGA, Australia

Further, during the period April10 to Aug10 following important events have happened:

05.05.2010 Export Excellence Award-2010 received from FKCCI, Bangalore

08.06.2010 Obtained EUGMP Certificate for Gemcitabine HCl EP from AFSSAPS, France

15.06.2010 Obtained ISO 9001:2008 Certification for Raichem Lifesciences Pvt Ltd

16.07.2010 State Export Excellence Award-2007-08 & 2008-09 from VITC,Bangalore

28.07.2010 Obtained EUGMP Certificate for Temozolomide (Unit-1) & Capecitabine (Unit-2) from BSG, Hamburg

29.07.2010 Obtained EUGMP Certificate for Anastrozole, Irinotecan & Oxaliplatin from INFARMED, Portugal

INVESTMENTS

During the year the Company has completed 100% EOU Project and stabilized its operations and total sum of Rs 97.42 Crs till date incurred towards the capital expenses.

Operation of Subsidiaries:

Company has invested Rs 281 lacs in the Raichem Lifesciences Private Limited, a WOS of the Company to meet its capital and operational expenses. During the year this subsidiary has commenced its commercial operations.

Your Company has invested Rs77.25 lacs in Raichem Medicare Private Limited an Associate and proposed joint venture with Italian Company.

During the period the Company also invested Rs.10.00 lac in Reva Pharmachem Private Limited an Associate of the Company in which the Company holds 47.54% of shareholding.

DIRECTORS INFORMATION U/S 217(2A) OF THE COMPANIES ACT, 1956.

Details of employees drawing remuneration exceeding limits prescribed U/s 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 is attached with the report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956 Your Directors confirm that:

i. In preparation of annual accounts for the financial year ended 31st March, 2010 the applicable Accounting Standards have been followed.

ii. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2010 and of the profit and loss of the Company for the year.

iii. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Company Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities and.

iv. The Directors have prepared the annual accounts on a going concern basis.

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

As required under Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988, the information is given as Annexure to this report.

CORPORATE GOVERNANCE

Your Company has complied with the requirements of Clause 49 of the Listing Agreement entered with the Stock Exchanges. Report on Corporate Governance including Auditors Certificate on compliance with the code of Corporate Governance under Clause 49 of the listing agreement is enclosed as Annexure to this report.

MANAGEMENT DISCUSSION AND ANALYSIS

A report on the Management Discussion and Analysis for the year under review is annexed hereto and forms part of the Annul Report.

AUDITORS

The Statutory Auditors of the Company, M/s. Bohara Bhandari Bung And Associates, Chartered Accountants, retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment. The Audit Committee and the Board recommend the re-appointment of M/S. Bohara Bhandari Bung And Associates, Chartered Accountants, as Statutory Auditors of your Company.

ACKNOWLEDGEMENTS

Your Directors wish to express their gratitude to the Central and State Governments, investors, analysts, financial institutions, banks, business associates and customers, the medical profession, distributors and suppliers for their whole-hearted support. Your Directors commend all the employees of your Company for their continued dedication, significant contributions, hard work and commitment.

For and on behalf of the Board of Directors

Sd/-

Place :Raichur Omprakash Inani

Date :01st September, 2010 Chairman





 
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