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Directors Report of Unichem Laboratories Ltd.

Mar 31, 2016

Dear Members,

The Directors take pleasure in presenting the 53rd Annual Report on the business and operations of your Company for the financial year ended March 31,2016.

Financial Highlights

The table below gives the financial highlights of the Company on Standalone basis for the year ended March 31,2016 as compared to the previous financial year.

For the year ended (Rs. in lacs)

Particulars March 31, 2016 March 31, 2015

Sales / Income from operations (Net of Excise Duty) 1,22,241.14 1,09,098.46

Other Income 2,265.50 1,996.77

Total Income 1,24,506.64 1,11,095.23

Profit before Tax and Exceptional items 12,778.84 8,149.77

Exceptional Items 353.00 -

Profit before tax 12,425.84 8,149.77

Tax expenses (including deferred Tax and short/excess provision 2,368.97 1,710.05

pertaining to previous years)

Profit after Tax and Exceptional items 10,056.87 6,439.72

Note: Previous year''s figures have been re-grouped/re-classified wherever necessary.

Review of Operations

During the year under review, Stand alone Sales/Income from operations (Net) increased to Rs. 1,22,241.14 lacs from Rs.1,09,098.46 lacs in 2014-2015, registering a growth of 12.05%. Consolidated Sales/Income from Operations (Net) stood at Rs. 1,33,456.38 lacs in 2015-2016 as compared to Rs. 1,20,179.34 lacs for the year ended March 31,2015, registering an increase of 11.05%.

Appropriations

An amount of Rs. 74,071.11 lacs is proposed to be carried forward in the Profit & Loss Account. During the year under review, no amount was transferred to General Reserve.

Dividend

The Board of Directors at its Meeting held on March 9, 2016 declared an Interim Dividend of Rs. 2/-(100%) per equity share of Rs. 2/- each. The Dividend was paid to the shareholders on March 28, 2016. The said Interim Dividend has been confirmed by the Board as Final Dividend for the financial year ended March 31,2016.

Employees Stock Option Scheme

During the year under review, 6,74,451 options having a face value of Rs. 2/- were exercised and the same were allotted (on pari passu basis) under the Employees Stock Option Scheme - 2008. Details of the Employees Stock Option Scheme - 2008 are set out as Annexure A to this Report.

Research and Development (R&D)

Kindly refer to the write up in the section, Management Discussion and Analysis.

Management Discussion and Analysis

A detailed review on the operations and performance of the Company is given in the Management Discussion and Analysis, which forms part of this Annual Report.

Corporate Governance

A detailed report on Corporate Governance as required under Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), forms part of this Annual Report. The Auditors'' Certificate on compliance with the conditions of Corporate Governance requirements by the Company is attached to the Report on Corporate Governance.

Consolidated Financial Statements

In accordance with the Accounting Standards AS - 21 on Consolidated Financial Statements, and the Listing Regulations, your Directors provide the Audited Consolidated Financial Statements in the Annual Report.

Review of Subsidiaries and Associates

Your Company has five Subsidiaries and one Associate Company. Financials of the Subsidiaries and Associate Company are disclosed in the Consolidated Financial Statements, which form part of this Annual Report.

A statement containing salient features of the Financial Statements of the Subsidiaries and Associate Company, pursuant to Section 129 of the Companies Act, 2013 and Rules made thereunder is annexed to this Report as Annexure B in the prescribed Form AOC -1 and hence not repeated here for the sake of brevity.

Synchron Research Services Private Limited (Synchron) is an Associate Company in terms of Section 2 (6) of the Companies Act, 2013. Synchron is a leading contract research organization in India which offers competitive and high quality clinical trial services to domestic and international pharmaceutical and bio-pharmaceutical companies. Your Company avails such services from Synchron from time to time, on competitive terms.

On internal assessment of long term strategic investments made by the Company in its Wholly Owned Subsidiary, Unichem Farmaceutica Do Brazil Ltda., considering its past performance, results, assets, expected cash flows, projections and having confidence in the business model and strategy of the said Subsidiary achieving its goals given favourable business opportunities, the management has determined an amount of Rs. 2,277.63 lacs as diminution for the year (previous year Rs. 434.55 lacs) taking the accumulated provision to Rs. 3,581.41 lacs (previous year : Rs. 1,303.77 lacs) on total investment ofRs. 5,695.88 lacs made therein and the same is considered adequate by the Board of Directors as at the balance sheet date.

Particulars of Loans, Guarantees and Investments

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

Deposits

The Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.

Risk Management

The Company has formulated a policy on Risk Management. Risks are classified in different categories such as Financial, Operational, Legal and Strategic risks. A risk register is prepared for identification of risk and formulating mitigating plans.

Credit Rating

ICRA has re-affirmed your Company''s A1 rating for short- term debt (including Commercial Paper) Programme of Rs. 1,500 lacs. The rating indicates strong degree of safety regarding timely payment of financial obligations.

Directors and Key Managerial Personnel

At the Annual General Meeting of the Company held on July 11, 2015, theshareholders approved the appointment of Dr. (Mrs.) B. KinneraMurthy as an I ndependent Director to hold office for a period of three (3) consecutive years upto March 20,2018.

All the Independent Directors have furnished declarations that they meet the criteria of independence as laid down under Section 149 (6) of the Companies Act, 2013 and the Listing Regulations.

Dr. Prakash A. Mody retires by rotation at the ensuing Annual General Meeting in terms of the provisions of Section 152 of the Companies Act, 2013 (the Act). The Act provides that Independent Directors are not subject to retirement by rotation and two thirds of the remaining Directors shall be subject to retirement by rotation. Since all the Directors except Dr. Mody are Independent Directors, Dr. Mody will retire by rotation and being eligible offers himself for re-appointment.

Dr. Mody is the Chairman & Managing Director of the Company. Upon his re-appointment as a Director, he shall continue to hold office as the Chairman & Managing Director of the Company.

Attention of the Members is invited to the relevant item in the Notice of the Annual General Meeting seeking your approval to the aforesaid re-appointment. The information required under Regulation 36 of the Listing Regulations is provided in the Notice of the 53rd Annual General Meeting and the statement annexed thereto.

Dr. Prakash A. Mody, Chairman & Managing Director, Mr. Rakesh Parikh, Chief Finance & Compliance Officer and Mrs. Neema Thakore, Head - Legal & Company Secretary were the Key Managerial Personnel during the financial year.

Directors'' Responsibility Statement

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134 (3) (c) of the Companies Act, 2013, (the Act):

1. that in preparation of annual accounts for the year ended March 31, 2016, the applicable accounting standards have been followed and no material departures, have been made from the same;

2. that such accounting policies have been selected and applied consistently and made judgements 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 at March 31, 2016 and profit for the year ended on that date;

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

4. that the annual accounts have been prepared on a going concern basis;

5. that the internal financial controls were in place and that they were adequate and operating effectively and;

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

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and the Listing Regulations, performance evaluation of the Board, it''s Committees, the Chairman & Managing Director and the Independent Directors was carried out. The manner in which the evaluation is carried out has been explained in the Corporate Governance Report.

Remuneration Policy

The Board on the recommendation of the Nomination and Remuneration Committee has adopted a policy for selection, appointment and remuneration of Directors, Key Managerial Personnel and Senior Management. The details of this Policy are provided in the Corporate Governance Report.

Meetings

During the year, 5 (five) Board Meetings were held, the details of which are given in the Corporate Governance Report.

Audit Committee

The constitution of the Audit Committee, its scope, role and terms of reference are as per the provisions of the Companies Act, 2013, the Rules made thereunder and the Listing Regulations. All the recommendations made by the Audit Committee were accepted by the Board of Directors.

Whistle Blower Policy

The Company has in place a Whistle Blower/Vigil Mechanism through which its Stakeholders, Directors and Employees can report their genuine concerns about unethical behaviour and actual or suspected fraud or violation of the Company''s ''Code of Business Conduct and Ethics''. The said Policy provides for adequate safeguards against victimization and also direct access to the Audit Committee. The e-mail id for reportinggenuine concerns is whistleblower@unichemabs.com Significantand Material orders passed by the Regulators/Courts/Tribunals No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the Company''s going concern status and its operations in the future.

However the Board of Directors would like to inform that on July 9, 2014, the European Commission decided to impose an unjustified fine of € 13.97 million, jointly and severally on the Company and its subsidiary Niche Generics Ltd., (Niche) contending that they have acted in breach of EU competition law as Niche had, in early 2005 (when the Company was only a part owner and financial investor in Niche) agreed to settle a financially crippling patent litigation with Laboratories Servier. The Company vehemently denies any wrongdoing on the part of either itself or Niche. Both the Company and Niche have submitted appeals in September 2014, to the EU General Court seeking appropriate relief in the matter.Your Company has challenged this order and the proceedings are currently ongoing.

Material changes and commitment, if any, affecting the financial position of the Company from the end of the financial year till the date of this Report

There have been no material changes and commitments, if any affecting the financial position of the Company between the end of the financial year of the Company to which the Financial Statements relate and the date of this Report.

Related Party Transactions

All Related Party Transactions entered during thefinancial year under review were in the ordinary course of business and on arm''s length basis, except for increase in remuneration payable to Ms. Supriya Mody, daughter of Dr. Prakash A. Mody, Chairman & Managing Director of the Company upto a sum not exceeding Rs. 65 lacs (Rupees Sixty Five Lacs Only) in a financial year starting from April 1, 2015 inclusive of perquisites ("Maximum Remuneration"). The said transaction, not being an arm''s length transaction, but a transaction in the ordinary course of business was duly approved by the shareholders at the Annual General Meeting held on July 11,2015.

All other Related Party Transactions that were entered into during the year under review were on an arm''s length basis and in the ordinary course of business. The Audit Committee has given prior approval for Related Party Transactions. The Policy on Related Party Transactions (Policy) as approved by the Board is uploaded on the Company''s website and the weblink is provided in the Corporate Governance Report. The Board of Directors of the Company has approved the criteria for omnibus approval of Related Party Transactions by the Audit Committee within the overall framework of the Policy.

Details of Related Party Transactions not on arm''s length basis but in the ordinary course of business for which prior approval of the Audit Committee and shareholders'' approval has been sought and details of Material Related Party Transactions which are on arm''s length basis and in the ordinary course of business entered during the financial year under review as required under Section 134(3)(h) of the Companies Act, 2013 are annexed as Annexure C in the prescribed format, Form AOC 2, forming an integral part of this Report.

Except to the extent of the shares held in the Company and the remuneration if any, drawn from the Company none of the Directors and the Key Managerial Personnel have any pecuniary relationships or transactions vis-a-vis the Company.

Disclosure under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has in place a policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. The policy has set guidelines on the redressal and enquiry process that is to be followed by complainants and the ICC, whilst dealing with issues related to sexual harassment at the work place. All women employees (permanent, temporary, contractual and trainees) are covered under this Policy. The Company has not received any complaints during the year under review.

Auditors

B. D. Jokhakar & Co., were appointed as Statutory Auditors to hold office from the conclusion of the 51 st Annual General Meeting (AGM) to the conclusion of the fourth consecutive AGM, (subject to ratification of the appointment by the Members at every AGM held after the 51st AGM). A proposal for ratification of the appointment of the Statutory Auditors for the financial year 2016-2017 is placed before the Members at the ensuing AGM. The said Auditors have confirmed their eligibility for appointment in terms of Section 139 of the Companies Act, 2013.

During the year under review, the Auditors have not reported any matter under Section 143 (12) of the Companies Act, 2013 and therefore no details are disclosed under Section 134 (3)(ca) of the Act.

A Resolution seeking ratification of their appointment, forms part of the Notice convening the 53rd Annual General Meeting and the same is recommended for your consideration and approval.

Cost Auditors

The Board of Directors at its Meeting held on May 20, 2016, based on the recommendation of the Audit Committee, appointed Y. R. Doshi & Co., (Firm Registration No. 000003) Cost Accountants, Mumbai, as Cost Auditors for undertaking Cost Audit of the Cost Accounting Records maintained by the Company for the financial year 2016-2017 at a remuneration not exceeding Rs. 6.50 lacs (Rupees Six Lacs Fifty Thousand Only) plus service tax as may be applicable and out of pocket expenses at actuals. The said Auditors have confirmed their eligibility for appointment as Cost Auditors. The remuneration payable to the said Cost Auditors is required to be placed before the Members at the ensuing Annual General Meeting for ratification and a suitable Resolution has been set out in the Notice of the 53rd Annual General Meeting of your Company. The Cost Audit Report for the year ended March 31, 2015 was filed with the Ministry of Corporate Affairs on September 29,2015.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Rules made thereunder, the Company has appointed Alwyn Jay & Co., Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed as Annexure D to this Report. There is no qualification, reservation, adverse remark or disclaimer in the said Report. During the year under review, theSecretarial Auditors have not reported any matter under Section 143 (12) of the Act, and therefore no details are disclosed under Section 134 (3)(ca) of the Act.

Internal control systems and their adequacy

Kindly refer to the write up in the section Management Discussion and Analysis.

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

The particulars as prescribed under Section 134 (3)(m) of the Companies Act, 2013 and Rules made thereunder are set out in Annexure E to this Report.

Extract of Annual Return

Form MGT-9 providing an extract of the Annual Return in terms of Section 92 of the Companies Act, 2013 and the Rules made thereunder is annexed as Annexure F to this Report.

Particulars of Employees and related disclosures

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are annexed as Annexure G to this Report.

In terms of the provisions of Section 197(12) of the Companies Act, 2013 and Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, in respect of employees of the Company, forms part of this Report. However, as per the provisions of Sections 134 and 136 of the Act, the Report and Financial Statements are being sent to the Members and others entitled thereto, excluding the information on employees particulars, which is available for inspection at the Registered Office of the Company as per details mentioned in the Notice of the 53rd Annual General Meeting on any working day of the Company upto the date of the 53rd Annual General Meeting. Any Member interested in obtaining a copy of the same may write to the Company Secretary at the Company''s Registered Office.

Human Resources and Employee Relations

Kindly refer to the write up in the section Management Discussion and Analysis.

Quality and Environment

Your Company''s mission envisages a strong sense of commitment to work towards being a caring pharmaceutical company, which will continuously strive to enhance health through quality products. Your Company aims at consistently providing products that meet customer needs as well as national and international regulatory requirements as may be applicable. It has been steadily raising the bar, setting higher goals for incremental performance and enlarging the scope of its initiatives. The environmental policy of your Company emphasizes at being a caring company, which shall protect and promote the environment by complying with applicable environmental regulations and preventing pollution in all its operations.

With a view to meet this challenge, our manufacturing facilities plant trees and saplings in the Company premises. Our employees spread awareness amongst the locals about planting more trees and making less use of plastic bags. Similarly, various initiatives are taken at our manufacturing locations to reduce waste across the plants and reduce usage of paper by recycling waste paper. Training programmes are organised from time to time to create environmental awareness amongst the employees. To conserve water, the Company has devised various water saving methods which are monitored on day to day basis.

Your Company continues to strive for energy saving and conservation of natural resources. In some of our Active Pharmaceutical Ingredients (API) Plants your Company has installed online effluent monitoring equipment which is connected to the system of the Central Pollution Control Board.

At the manufacturing units, several green initiatives have been undertaken, most significant being soil conservation, recycling of treated effluent water and using solar energy for street lighting.

Corporate Social Responsibility (CSR)

Your Company believes in the philosophy of giving back. Being in the pharmaceutical industry your Company''s primary focus is healthcare. Education and development of needy sections of the Society especially the economically backward section are the other areas in which your Company concentrates its CSR activities. While the focus of CSR efforts will be in the areas around Company operations, the Company may also undertake projects looking into other societal needs. The CSR policy is available on the website of the Company and the Annual Report on CSR activities, as required under Section 135 of the Companies Act, 2013, is annexed as Annexure H to this Report. The Company would also undertake other need based initiatives in compliance with Schedule VII to the Companies Act, 2013.

During the year under review the total amount to be spent was Rs. 291.33 lacs. The Company spent Rs. 253 lacs on CSR which is 1.74% of the average profits, for the last three financial years. Balance amount of Rs. 38.33 lacs remained unspent.

The Company has plans to scale up its CSR activities in areas of education and health in a structured manner to meet the objectives of its CSR Policy in the coming years. Further certain funds even though allocated to approved educational projects by the CSR committee, were not disbursed since there was no requirement for these funds from the organizations/institutions during the year under review.

Health and Safety

Health and Safety issues are addressed systematically, effectively and proactively. Your Company takes pride in providing various forms of medical assistance to the families of its employees and also to all those living in surrounding villages. Periodic health check ups are carried out for all employees and regular training programmes are organised on safety and precautionary measures. Fire fighting training programmes and first aid training camps are organised regularly to educate workers and employees at the plant locations and corporate office.

Acknowledgement

Your Directors acknowledge the support and wise counsel extended to the Company by analysts, bankers, Government agencies, shareholders, investors, suppliers, distributors, stockists and others associated with the Company as its business partners. Your Directors also acknowledge the trust reposed in the Company by the medical fraternity and patients. We look forward to having the same support in our mission to enhance health through quality products.

Cautionary Statement

Statements in this Directors'' Report and Management Discussion and Analysis describing the Company''s objectives, projections, estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference

to the Company''s operations include raw material availability and its prices, cyclical demand and pricing in the Company''s principle markets, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other ancillary factors.

For and on behalf of the Board of Directors,

Mumbai Dr. Prakash A. Mody

May 20, 2016 Chairman & Managing Director


Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting the 52nd Annual Report on the business and operations of the Company for the Financial Year ended March 31, 2015.

Financial Highlights

The table given below gives the financial highlights of the Company on Standalone basis for the year ended March 31, 2015 as compared to the previous Financial Year .

For the year ended (Rs. in lacs) Particulars March 31, 2015 March 31, 2014

Sales / Income from operations (Net of Excise Duty) 1,09,098.46 1,04,417.50

Other Income 1,996.77 4,283.91

Total Income 1,11,095.23 1,08,701.41

Profit before Tax and Exceptional items 8,149.77 17,882.38

Tax expenses (including deferred Tax & short/excess

provision pertaining to previous years) 1,710.05 4,300.11

Profit after Tax and before Exceptional items 6,439.72 13,582.27

Exceptional items - 4,114.55

Profit after Tax and Exceptional items 6,439.72 17,696.82

Note: Previous year’s figures have been re-grouped/re-classified wherever necessary.

Review of Operations

During the year under review, Standalone Sales/Income from operations (Net) increased to Rs. 109,098.46 lacs from Rs. 104,417.50 lacs in 2013-2014, registering a growth of 4.48%. Consolidated Sales/Income from Operations (Net) stood at Rs. 120,179.34 lacs in 2014-2015 as compared to Rs. 113,344.79 lacs for the year ended March 31, 2014, registering an increase of 6.03%.

Appropriations

An amount of Rs. 66,200.97 lacs is proposed to be carried forward in the Profit & Loss Account. During the year under review, no amount was transferred to General Reserve.

Dividend

The Board has recommended a dividend of Rs. 2/- (100%) per equity share of Rs. 2/- each for the approval of the shareholders at the ensuing Annual General Meeting (AGM) for the year ended March 31, 2015. The Register of Members and Share Transfer Books shall remain closed from July 6, 2015 to July 11, 2015 (both days inclusive) for the purpose of AGM and dividend, if approved by the shareholders. The AGM of the Company is scheduled for July 11, 2015.

Employees’ Stock Options Scheme

During the year under review, 141,399 options having a face value of Rs. 2/- each were exercised and the same were allotted (on pari passu basis) under the Employees’ Stock Options Scheme – 2008. Details of the Employees’ Stock Options Scheme – 2008, are set out as Annexure A to this Report.

Research and Development (R&D)

Kindly refer to the write up in the section Management Discussion and Analysis.

Management Discussion and Analysis

A detailed review on the operations and performance of the Company and its business is given in the Management Discussion and Analysis, which forms part of this Annual Report.

Corporate Governance

A detailed report on Corporate Governance forms part of this Annual Report. The Auditors’ Certificate on compliance with Corporate Governance requirements by the Company is attached to the Report on Corporate Governance.

Consolidated Financial Statements

In accordance with the Accounting Standards AS – 21 on Consolidated Financial Statements, your Directors provide the Audited Consolidated Financial Statements in the Annual Report.

Review of Subsidiaries and Associates

Your Company has five Subsidiaries and one Associate Company. Financials of the Subsidiaries and Associate Company are disclosed in the Consolidated Financial Statements, which form part of this Annual Report. A statement containing salient features of the Financial Statements of the Subsidiaries and Associate Company, is annexed to this Report as Annexure ‘B’ pursuant to Section 129 of the Companies Act, 2013 and Rules made thereunder in the prescribed Form, AOC -1 and hence not repeated here for the sake of brevity.

During the year, Synchron Research Services Private Limited (Synchron) became an Associate in terms of Section 2(6) of the Companies Act, 2013. Synchron is a leading contract research organization in India which offers competitive and high quality clinical trial services to domestic and international pharmaceutical and bio- pharmaceutical companies. Your Company avails such services from Synchron from time to time .

European Commission matter

On July 9, 2014, the European Commission decided to impose an unjustified fine of € 13.97 million, jointly and severally on the Company and its subsidiary Niche Generics Limited, (Niche) contending that they have acted in breach of EU competition law as Niche had, in early 2005 (when the Company was only a part owner and financial investor in Niche) agreed to settle a financially crippling patent litigation with Laboratories Servier. The Company vehemently denies any wrongdoing on the part of either itself or Niche. Both the Company and Niche have submitted appeals in September 2014, to the EU General Court seeking appropriate relief in the matter.

Directors'' Responsibility Statement

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

1. in preparation of annual accounts for the year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

2. they have selected such accounting policies and applied them consistently and made judgements 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 at March 31, 2015 and profit for the year ended on that date;

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

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

5. they have laid down proper internal financial controls to be followed by the Company and they were adequate and operating effectively and

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

Particulars of Loans, Guarantees and Investments

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

Deposits

The Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.

Risk Management

The Company has formulated a policy on Risk Management and constituted a Risk Management Committee and the same is detailed in the Corporate Governance Report. Risks are classified in different categories such as Financial, Operational, Legal and Strategic risks. These risks are reviewed from time to time and controls are put in place with specific responsibility of the concerned officer of the Company.

Credit Rating

ICRA has reaffirmed your Company’s A1 rating for short-term debt (including Commercial Paper) Programme of Rs. 1500 lacs. The rating indicates strong degree of safety regarding timely payment of financial obligations.

Directors

The Board of Directors had on the recommendation of the Nomination and Remuneration Committee appointed Dr. (Mrs.) B. Kinnera Murthy as an Additional Director of the Company in the category of Independent Directors with effect from March 21, 2015 to hold office upto the ensuing Annual General Meeting. It is now proposed to appoint her as an Independent Director of the Company for a period of three consecutive years upto March 20, 2018.

During the year under review Mr. Nasser Munjee, resigned as a Director of the Company with effect from September 26, 2014, since the revised Clause 49 of the Listing Agreement (effective from October 1, 2014), places restrictions on the number of directorships that an individual can hold as Independent Director in listed Companies. The Board places on record its deep appreciation of the services rendered by Mr. Nasser Munjee during his tenure as a Director.

All the Independent Directors have furnished declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

Dr Prakash A Mody retires by rotation at the ensuing Annual General Meeting in terms of the provisions of Section 152 of the Companies Act, 2013 ("The Act"). The Act provides that Independent Directors are not subject to retirement by rotation. Since all the Directors except Dr. Mody are Independent Directors, Dr. Mody will retire by rotation and being eligible offers himself for re-appointment. Dr. Mody is the Chairman and Managing Director of the Company. As per the clarification issued by the Department of Company Affairs (Int. Circular No. 3(No.8/16(1)/61-PR, dated 9th May 1961) in relation to appointment of Managing Director: "a MD’s office as a MD does not suffer any break if he retires as a Director under Section 255 of the erstwhile Companies Act, 1956 and is re-elected as Director in the same meeting."

Upon his re-appointment as a Director, Dr. Prakash A. Mody shall continue to hold office as the Chairman and Managing Director of the Company.

Attention of the Members is invited to the relevant items in the Notice of the Annual General Meeting seeking your approval to the aforesaid appointments. The information required under Clause 49 of the Listing Agreement is provided in the Notice of the 52nd Annual General Meeting and the Statement annexed thereto.

Mr. K. Subharaman, Vice President (Legal & Company Secretary) resigned from the Company and Mrs. Neema Thakore is appointed as Head - Legal & Company Secretary with effect from May 15, 2015.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, performance evaluation of the Board, it’s Committees and the Independent Directors was carried out. The manner in which the evaluation is carried out has been explained in the Corporate Governance Report.

Remuneration Policy

The Board on the recommendation of the Nomination and Remuneration Committee has adopted the policy for selection, appointment and remuneration of Directors, Key Managerial Personnel and Senior Management. The details of this policy are provided in the Corporate Governance Report.

Meetings

During the year five board meetings were held, the details of which are given in the Corporate Governance Report.

Whistle Blower Policy

The Company has a Whistle Blower Policy to report genuine concerns or grievances. The same is explained in the Corporate Governance Report. The details of establishment of the reporting mechanism are disclosed on the website of the Company. No person has been denied access to the Audit Committee.

Related Party Transactions

All Related Party Transactions that were entered into during the year under review were on an arm’s length basis and in the ordinary course of business. The Audit Committee has given prior approval for the Related Party Transactions. The policy on Related Party Transactions as approved by the Board is uploaded on the Company’s website and the weblink is provided in the Corporate Governance Report.

Disclosure under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has in place a policy on Prevention, Prohibition and Redressal of Sexual Harassment at workplace in line with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. The policy has set guidelines on the redressal and enquiry process that is to be followed by complainants and the ICC, whilst dealing with issues related to sexual harassment at the work place. All women employees (permanent, temporary, contractual and trainees) are covered under this policy. The Company has not received any complaints during the year.

Auditors

B. D. Jokhakar & Co., were appointed as Statutory Auditors to hold office from the conclusion of the 51st Annual General Meeting (AGM) to the conclusion of the fourth consecutive AGM, (subject to ratification of the appointment by the members at every AGM held after the 51st AGM). A proposal for ratification of the appointment of the Statutory Auditors for the Financial Year 2015-2016 is placed before the Members at the ensuing AGM. The said Auditors have given their eligibility certificate in terms of Section 139 of the Companies Act, 2013.

Cost Auditors

The Board of Directors at its meeting held on May 9, 2015, based on the recommendation of the Audit Committee, appointed Y. R. Doshi & Co., (Firm Registration No. 000003) Cost Accountants, Mumbai, as Cost Auditors for undertaking Cost Audit of the Cost Records maintained by the Company for the Financial Year 2015-2016 at a remuneration of Rs. 5.50 lacs (Rupees Five Lacs Fifty Thousand Only) plus service tax as may be applicable and out of pocket expenses at actuals. The said Auditors have given their eligibility certificate for appointment as Cost Auditors. The remuneration payable to the said Cost Auditors needs to be ratified by the Shareholders at the ensuing Annual General Meeting. The Cost Audit Report for the year ended March 31, 2014 was filed with the Ministry of Corporate Affairs on September 24, 2014.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Rules made there under, the Company has appointed Alwyn Jay & Co., Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed as Annexure C to this Report.

Internal control systems and their adequacy

Kindly refer to the write-up in the section Management Discussion and Analysis.

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

The particulars as prescribed under Section 134(3)(m) of the Companies Act, 2013 and Rules made thereunder are set out in Annexure D to this Report.

Extract of Annual Return

Form MGT-9 providing an extract of the Annual Return in terms of Section 92 of the Companies Act, 2013 and the Rules made thereunder is annexed as Annexure E to this Report.

Particulars of Employees and related disclosures

In terms of the provisions of Section 197(12) of the Companies Act, 2013 and Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules is annexed as Annexure H to this Report.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are annexed as Annexure F to this Report.

Human Resources and Employee Relations

Kindly refer to the write-up in the section Management Discussion and Analysis.

Quality and Environment

Your Company’s mission envisages a strong sense of commitment to work towards being a caring pharmaceutical company, which will continuously strive to enhance health through quality products. Your Company aims to consistently provide products that meet customer as well as national and international regulatory requirements as may be applicable. It has been steadily raising the bar, setting higher goals for environmental performance and enlarging the scope of initiatives. The environmental policy of your Company emphasizes at being a caring company, which shall protect and promote the environment by complying with applicable environmental regulations and preventing pollution in all its operations.

With a view to meet this challenge, our manufacturing facilities, plant trees and saplings in the Company premises. Our employees spread awareness amongst the locals about planting more trees and making less use of plastic bags. Similarly, various initiatives are taken at our manufacturing locations to reduce waste production across the plant and reduce usage of paper by recycling waste paper. Training programmes are organised from time to time to create environmental awareness amongst the employees. To conserve water, the Company has devised various water saving methods which are monitored on a day-to-day basis.

Your Company continues to strive for energy saving and conservation of natural resources. At our units, several green initiatives have been undertaken, most significant being soil conservation, recycling of treated effluent water and using solar energy for street lighting.

Corporate Social Responsibility(CSR)

Unichem being a pharmaceutical company, is naturally inclined to improve the health of the general public at large and the Company is well known for its Quality and Reliability for over six decades. The present CSR initiatives focus on two main recognized activities mentioned in Schedule VII of the Companies Act, 2013, namely promoting education and promoting preventive health care particularly for scheduled tribes. The CSR policy is available on the website of the Company and the Annual Report on Corporate Social Responsibility (CSR) activities as required under Section 135 of the Companies Act, 2013 is annexed as Annexure G to this Report. The Company would also undertake other need based initiatives in compliance with Schedule VII to the Companies Act, 2013.

During the year under review, the Company spent Rs. 241.75 lacs on CSR which is 1.57 % of the average profits, for the last three Financial Years.

The Company could not spend up to 2 % of the net profits as stipulated in the Companies Act, 2013 as the Company’s profits/ earnings were lesser than the previous Financial Year.

Health and Safety

Health and Safety issues are addressed systematically, effectively and proactively. Your Company takes pride in providing various forms of medical assistance to the families of its employees and also to all those living in surrounding villages. Periodic health checkups are carried out for all employees and regular training programmes are organised on safety and precautionary measures. Fire fighting training programmes and first-aid training camps are organised regularly to educate workers and employees at our plant locations and corporate office.

Acknowledgement

Your Directors acknowledge the support and wise counsel extended to the Company by analysts, bankers, government agencies, shareholders, investors, suppliers, distributors, stockists and others associated with the Company as its business partners. Your Directors also acknowledge the trust reposed in the Company by the medical fraternity and patients. We look forward to having the same support in our mission to enhance health through quality products.

For and on behalf of the Board of Directors, Mumbai Dr. Prakash A. Mody May 9, 2015 Chairman & Managing Director


Mar 31, 2013

Dear Members,

The Directors have pleasure in presenting the 50th Annual Report on the business and operations of the Company for the financial year ended March 31, 2013.

Financial Highlights

The table given below gives the financial highlights of the Company on Standalone basis for the year ended March 31, 2013 as compared to the previous financial year.

For the year ended March 31

(Rs. in Lacs)

Particulars 2013 2012

Sales/ Income from operations (Net of Excise Duty) 1,00,521.69 80,318.73

Other Income 1,406.70 939.47

Total Income 1,01,928.39 81,258.20

Profit before tax 16,244.63 10,523.55

Tax Expenses (Including deferred tax & short/excess provision pertaining to previous years) 3,285.03 2,277.22

Profit for the period 12,959.60 8,246.33

Review of Operations

During the year under review, Sales/Income from operations (Net) increased to Rs. 1,00,521.69 Lacs in 2012-13 from Rs. 80,318.73 Lacs in 2011-12, registering a growth of 25.15%. Consolidated Sales/Income from operations (Net) stood at Rs. 1,08,080.28 Lacs as compared to Rs. 87,546.30 Lacs registering an increase of 23.45%.

Appropriations

Your Company has transferred Rs. 1,500 Lacs to the General Reserve during the year under review. An amount of Rs. 54,533.07 Lacs is proposed to be carried forward from the Profit & Loss Account.

Dividend

Your Board of Directors at their meeting held on May 11, 2013 recommended a dividend of Rs. 4.5 (225%) per equity share of Rs. 2/- each fully paid up. The register of members and share transfer books shall remain closed from July 15, 2013 to July 19, 2013, both days inclusive. The Annual General Meeting of the Company is scheduled for July 19, 2013.

Employee Stock Options Scheme

During the year under review, 1,34,937 options of Rs. 2/- were exercised and the same were allotted (on pari passu basis) under the Employees'' Stock Option Scheme - 2004 and Employees'' Stock Option Scheme - 2008.

Details of Employees'' Stock Option Schemes, as required to be disclosed under Clause 12 of the SEBI (Employees Stock Option Scheme and Employees Stock Purchase) Guidelines, 1999 are set out in the Annexure I to this Report.

Management''s Discussion and Analysis

A detailed review on operations and performance of the Company and its business is given in the Management''s Discussion and Analysis, which forms part of this Annual Report.

Corporate Governance

A detailed report on Corporate Governance forms part of this Annual Report. Your Company is in full compliance with the requirements and disclosures that have to be made in this regard. The Auditors'' Certificate on compliance with Corporate Governance requirements by the Company is attached to the report on Corporate Governance.

Information for Shareholders

Additional information pertaining to shareholders like Equity History, Dividend Payment History, Shareholding pattern, etc. is provided in this Annual Report.

Consolidated Financial Statements

In accordance with the Accounting Standards AS - 21 on Consolidated Financial Statements, your Directors provide the audited Consolidated Financial Statements in the Annual Report.

Notes on Subsidiaries

Last year, your Company had incorporated a new subsidiary in Ireland taking the total number of subsidiaries to 5 (five) as on March 31, 2013. Your Directors believe that the Consolidated Financial Statements present a full and fair view of the state of affairs of your Company as a whole. In terms of general approval granted by the Central Government under Section 212(8) of Companies Act, 1956, financial statements pertaining to the subsidiaries have not been attached with the Balance Sheet of the Company. However, for the benefit of the members, we have published a summary of the financials of the subsidiaries in the Annual Report. The financial statements of subsidiaries, along-with related information and reports are available for inspection at the registered office of your Company.

Review of Subsidiaries

Niche Generics Limited

Niche Generics Limited is a wholly-owned subsidiary of your Company. It is engaged in manufacturing formulations and dossier filing in European markets. It recorded sales of GBP 107.68 Lacs for the year ended March 31, 2013 as compared to GBP 103.20 Lacs for the previous year ended March 31, 2012. The profit for the year ended March 31, 2013 stood at GBP 0.99 Lacs compared to the loss of GBP 1.90 lacs for the year ended March 31, 2012.

Unichem Pharmaceuticals (USA) Inc.

Unichem Pharmaceuticals (USA) Inc., a wholly-owned subsidiary of your Company in USA, has been set up for business development, filing of ANDA''s and exploring the opportunities for marketing alliances in North American markets. The subsidiary recorded sales of USD 82.48 Lacs for the year ended March 31, 2013 as compared to USD 52.13 Lacs for the previous year ended March 31, 2012 and incurred loss of USD 6.23 Lacs for the same period compared to the loss of USD 7.48 lacs for the year ended March 31, 2012.

Unichem Farmaceutica Do Brasil Ltda Unichem Farmaceutica Do Brasil Ltda., is a wholly- owned subsidiary of your Company in Brazil. This subsidiary has been set-up to own product registrations, launch generic and branded generics products in the Brazilian market. The subsidiary plans to have marketing alliances for promoting, warehousing and distribution. The entity suffered a loss of Brazilian Reals 29.61 Lacs in the current year as against Brazilian Reals 24.80 lacs during the previous year.

Unichem SA (Proprietary) Limited

Unichem SA (Proprietary) Limited is a wholly-owned subsidiary of your Company in South Africa. This subsidiary has been set-up for business development and to own product registrations. The subsidiary has suffered a marginal loss of SA Rand 72 in the current year as compared to loss of SA Rand 6,113 for the previous year ended March 31, 2012.

Unichem Laboratories Ltd. Ireland

Unichem Laboratories Ltd, Ireland is a wholly-owned subsidiary of your Company in Ireland. This subsidiary was incorporated last year under review for business development and to own product registrations. The subsidiary during the current year has suffered a loss of Euro 2.95 lacs as compared to loss of Euro 0.09 lacs for the previous year ended March 31, 2012.

Directors'' Responsibility Statement

In terms of section 217 (2AA) of the Companies Act, 1956, your Directors confirm that:

1. in preparation of annual accounts for the year ended March 31, 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

2. they have selected such accounting policies and applied them consistently and made judgements 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 2012-13 and profit made by the Company for that period;

3. 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;

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

Credit Rating

ICRA has reaffirmed the A1 rating for short-term debt (including Commercial Paper) Programme of Rs. 1,500 Lacs. The rating indicates highest safety, the prospect of timely repayment of debt/obligation being the best.

Directors

The present term of Dr. Prakash A. Mody as Managing Director & Chairman will expire on June 30, 2013. At the meeting of the Board of Directors held on May 11, 2013, he was re-appointed as Chairman & Managing Director for a further term of 5 years with effect from July 1, 2013, subject to approval of Shareholders at ensuring Annual General Meeting which is to be held on July 19, 2013.

By virtue of Section 255 of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Prafull Anubhai and Mr. Anand Mahajan retire by rotation at the ensuing Annual General Meeting. Attention of the Members is invited to the relevant items in the Notice of the Annual General Meeting for seeking your approval for the aforesaid appointments. The information required under Clause 49 IV (G) of the Listing Agreement is given in the Notice of the Annual General Meeting.

Auditors

The Statutory Auditors of the Company, M/s. B. D. Jokhakar & Co., retire at the conclusion of the ensuing Annual General Meeting and are eligible for re- appointment. Your Company has received intimation to the effect that, proposed re-appointment, if made, would be within the prescribed limit under Section 224(1B) of the Companies Act, 1956.They have confirmed their willingness to accept office, if reappointed. The Board and Audit Committee recommend the re-appointment of M/s. B.D. Jokhakar & Co. as Statutory Auditors of your Company for the financial year 2013-14.

Cost Auditors

Pursuant to Section 233B of the Companies Act, 1956, the Central Government has prescribed Cost Audit of the Company''s Bulk Drugs and Formulations Division. The Board of Directors of your Company has re-appointed Mr. Y. R. Doshi, Cost Accountant, having membership no. 3286, as the Cost Auditor to audit the cost accounts relating to "Bulk Drugs" and "Formulations" for the financial year ending 2013-14. The due date for filing Cost Audit Reports of the financial year 2012-13 for your Company is 25th September, 2013 and the tentative date for filing these reports would be 24th September, 2013.

Energy, Research and Development, Technology Absorption, Foreign Exchange

The particulars as prescribed under Clause (e) of Sub- section (1) of Section 217 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 Annexure II to this Report.

Particulars of Employees

Particulars of employees, as required under 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended from time to time, forms part of this Report. However in pursuance of Section 219(1)(b)(iv) of the Act, this Annual Report is being sent to all shareholders of the Company, excluding the aforesaid information and the said particulars are available at the Registered Office of the Company. The members interested in obtaining such particulars may write to the Secretarial Department at the Registered Office of the Company.

Human Resources & Employee Relations

Unichem propagates a philosophy where its human resource continues to be the key focus of its business. We have a talented HR pool of 4,592 employees as on April 2013. We endeavor to align our HR policies to meet our dynamic business needs.

The year 2012-13 has been a year of consolidation and streamlining of activities. We have realigned our business portfolio to have better business synergies. HR supported the initiative to ensure a smooth transition. This year the shift has been towards building a performance culture in the organization. The emphasis has been towards creating a culture that is challenging and rewarding to performers. Evolving and implementing robust processes have been at the core of all organizational initiatives.

Recruitment activities were on the upswing to strengthen the domestic pharma business. Regional recruitment drives provided the additional impetus of fortifying the field force.

Recognizing internal talent and providing them opportunities to excel in leadership roles has always been at the crux of our HR philosophy. This year too, assessments of internal talents and enhancing their capabilities through skill development programmes were undertaken.

In order to have a better focus on our research initiatives we have shifted our Chemical and Formulation Development (PTD) Research Centres to Goa where our new state of the art Centre of Excellence is located.

Employee engagement continued to be a focus and several initiatives across locations were carried out.

Quality and Environment

Your Company''s mission envisages a strong sense of commitment to work towards being a caring pharmaceutical company, which will continuously strive to enhance health through quality products. Your Company aims to consistently provide products that meet customer as well as national and international regulatory requirements as may be applicable. It has been steadily raising the bar, setting higher goals for environmental performance and enlarging the scope of initiatives. The environmental policy of your Company emphasizes at being a caring company, which shall protect and promote the environment by complying with applicable environmental regulations and preventing pollution in all its operations.

With a view to meet this objective, our manufacturing facility at Baddi celebrated Environment Day with great enthusiasm and our employees planted about 100 trees in the Company premises followed by a pledge ceremony wherein all our employees took a pledge to protect the environment. Pollution Prevention Day was celebrated and employees were made aware of the effects of pollution on the environment and on living beings. Our employees spread awareness amongst the locals about planting more trees and making less use of plastic bags.

Similarly, various initiatives were taken at our manufacturing facility at Roha like planting more than 100 saplings in the Company premises, reduce waste consumption across the plant by 5% and reduce usage of paper by recycling waste paper. Training programmes were organized from time to time to create environmental awareness amongst the employees.

To conserve water, the Company has devised various water saving methods which are monitored on day-to- day basis. In this direction, the Company has devised rain-harvesting system at its Ghaziabad and CoE, Goa manufacturing units.

Your Company continues to strive for energy saving and conservation of natural resources. At our unit, several green initiatives have been undertaken, most significant being soil conservation, recycling of treated effluent water, using solar energy for street lighting and limiting the use of Hot water Generation System in the plant by utilizing heat recovery options in Chilling plant.

Corporate Social Responsibility

Good governance demands adherence of social responsibility coupled with creation of value in the larger interest of the general public. Your Company and its dedicated employees continue to contribute towards several worthwhile causes. Your Company aims to enhance the quality of life of the community in general and has a strong sense of social responsibility.

As you are aware, Unichem has undertaken a project for Primary Health Centre in Village Take- Pathar, Shahpur Taluka, Dist. Thane in the name of Mr. Amrut Vithaldas Mody, founder of the Company, and the project is known as Adiwasi Unnati Mandal (AUM). AUM caters to medical needs of adiwasi population of Shahpur taluka of Thane district. AUM conducts regular Medical check-up, Dental check-up camps, Nutrition programmes, arranges distribution of free medicines and provides regular treatment to patients for TB, epilepsy and leprosy at the Centre with the help of dedicated team of doctors and volunteers who have been rendering selfless service. During the year 14,521 patients were treated at OPD camps held at various centres. Your Company donated Tata Sumo and Tata Winger during the year to AUM. This vehicle is utilised for transporting doctors and paramedical volunteers from Mumbai to Shahpur and back where major social activity of the AUM is carried out.

During the year 12 diagnostic camps were held at Taki, 7 at Panchghar and 1 camp at Pivli for cataract surgery and during the year 201 patients cataract surgery were successfully carried at "Bombay City Eye Institute and Research Centre, Babulnath". 540 needy people were provided with the spectacles and dark glasses were provided to patients who had undergone cataract surgery.

Besides Health care programmes AUM also conducts various activities like distribution of notebooks, compass boxes, shoes, books and other articles useful items to school children were distributed amongst more than 2000 students from 35 schools. Other Programmes like free distribution of medicines, bicycles for school girls, umbrellas, clothes and nutrition food were provided to needy people.

Our Company has volunteered to be the chief donor to Ahmedabad University School of Management which is promoted by Ahmedabad Education Society. During the year, the Company donated a sum of Rs. 2 Crores to the Management School. This donation is being given in the memory of founder of the Company, Late Mr. Amrut Vithaldas Mody, who was a pioneer in Indian Pharma Industry and a visionary Technocrat and who was instrumental in supporting and contributing via endowments to educational institutions during his lifetime. Ahmedabad University started Amrut Mody School of Management, the Post Graduate Institute of Management (PGIM). Our Company in this manner helped in shaping many lives in a small but significant way.

Bombay College of Pharmacy (BCP) is one of the premier pharmacy colleges in India, imparting quality pharmaceutical education & training for the last 50 years. BCP was founded in 1957 by the Indian Pharmaceutical Association- Maharashtra State Branch (IPA-MSB) with financial assistance from Government of Maharashtra and several pharmaceutical corporations including Unichem. Unichem contributed 1% of its issued capital to Bombay College of Pharmacy in the form of equity shares as endowment. This College is managed independently without any interference from Unichem.

Our Company is considering donating some of its analytical instruments to BCP and other pharmacy and technology colleges. Our Company has provided industry based training to several pharma and technical students over the years.

Green Initiative

The Ministry of Corporate Affairs (MCA) has taken a "Green Initiative in Corporate Governance" (Circular No. 17/2011 dated 21.04.2011 and Circular No. 18/2011 dated 29.04.2011) allowing paperless compliances by Companies through electronic mode. Companies are now permitted to send various notices /documents to its shareholders through electronic mode to the registered email addresses of shareholders. This move by the Ministry is welcome since it will benefit the society at large through reduction in paper consumption and contribution towards a Greener Environment.

Keeping in view the underlying theme and the circular issued by MCA, we have participated in Green Initiative and sent documents like General Meeting Notices (including AGM), Audited Financial Statements, Directors'' Report, Auditors'' Report etc. to the shareholders in the electronic form, to the e-mail addresses so provided by the shareholder and made available to us by the Depositories, NSDL & CDSL using data maintained by the Depository Participants (DP). Thus we sent Annual Report for the year 2011-12 electronically to more than 6,000 shareholders and contributed in saving paper. We intend to send the current Annual Report for the year 2012-13 to atleast 6,000 shareholders this year again through electronic media.

We have also taken green initiative for the purpose of postal ballot. We have offered e-voting facility along with physical voting for passing the resolution.

Health & Safety

Your Company assiduously endeavours to act in a responsible manner to avoid causing any harm to the health and for safety of its employees, contract personnel and visitors. Health and Safety issues are addressed systematically, effectively and proactively. Mock drills are conducted regularly for different emergency situations for enhancing effectiveness of response plan.

Your Company takes pride in providing various forms of medical assistance to the families of its employees and also to all those living in surrounding villages. Periodic health checkups are carried out for all employees and regular training programmes are organised on safety and precautionary measures. Fire fighting training programmes and first-aid training camps are organised regularly to educate workers and employees at our plant locations and corporate office. Our Pithampur plant officials have developed a Safety Park at the plant where various types of personal protective equipments, informative posters, fire extinguishers, etc are displayed for creating awareness towards safety among all employees.

Acknowledgement

Your Directors acknowledge the support and wise counsel extended to the Company by analysts, bankers, government agencies, shareholders, investors, suppliers, distributors, stockists and others associated with the Company as its business partners. Your Directors also acknowledge the trust reposed in the Company by medical fraternity and patients. We look forward to having the same support in our mission to enhance health through quality products.

On behalf of the Board of Directors,

For Unichem Laboratories Limited

Dr. Prakash A. Mody

Chairman & Managing Director

Mumbai,

May 11, 2013


Mar 31, 2012

Dear Members,

The Directors have pleasure in presenting the 49th Annual Report on the business and operations of the Company for the financial year ended March 31, 2012.

Financial Highlights

The table given below gives the financial highlights of the Company on Standalone basis for the year ended March 31,

(Rs. in Lacs)

Particulars 2012 2011

Sales/ Income from operations (Net of Excise Duty) 80,318.73 76,473.74

Other Income 939.47 796.22

Total Income 81,258.20 77,269.96

Profit before tax 10,523.55 14,017.99

Tax Expenses (Including deferred tax & short/excess provision pertaining to previous years) 2,277.22 3,168.21

Profit for the period 8,246.33 10,849.78

Review of Operations

During the year under review, Sales/Income from operations (Net) increased to Rs. 80,318.73 Lacs in 2011-12 from Rs. 76,473.74 Lacs in 2010-11, registering a growth of 5.0%. Consolidated Sales/Income from operations (Net) stood at Rs. 87,546.30 Lacs as compared to Rs. 82,403.81 Lacs registering an increase of 6.24%.

Appropriations

Your Company has transferred Rs. 1,500 Lacs to the General Reserve during the year under review. An amount of Rs. 47,836.52 Lacs is proposed to be carried forward from the Profit & Loss Account.

Dividend

Your Board of Directors at their meeting held on August 11, 2012 recommended Rs. 3 (150%) per equity share of Rs. 2/- each fully paid up. The register of members and share transfer books shall remain closed from September 17, 2012 to September 21, 2012, both days inclusive. The Annual General Meeting of the Company is scheduled for September 27, 2012.

Scheme of Arrangement

During the year under review, your Company made an application to the Hon'ble High Court of Judicature at Bombay for approval to a Scheme of Arrangement between AVM Capital Services Private Limited, Chevy Capital Services Private Limited, PM Capital Services Private Limited, Pranit Trading Private Limited and Viramrut Trading Private Limited and Unichem Laboratories Limited. The petition was approved by the Hon'ble High Court vide order dated July 12, 2012 and the Scheme has become effective as on August 6, 2012.

Employee Stock Options Scheme

During the year under review, 82,002 of Rs. 2/- options were exercised and equivalent numbers of equity shares were allotted (on pari passu basis) under the Employees' Stock Option Scheme 2008.

Details of Employees' Stock Option Schemes, as required to be disclosed under Clause 12 of the SEBI (Employees of Stock Option Scheme and Employees Stock Purchase) Guidelines, 1999 are set out in the Annexure I to this Report.

Management's Discussion and Analysis

A detailed review on operations and performance of the Company and its business is given in the Management's Discussion and Analysis, which forms part of this Annual Report.

Corporate Governance

A detailed report on Corporate Governance forms part of this Annual Report. Your Company is in full compliance with the requirements and disclosures that have to be made in this regard. The Auditors' Certificate on compliance with Corporate Governance requirements by the Company is attached to the report on Corporate Governance.

Information for Shareholders

Additional information pertaining to shareholders like Equity History, Dividend Payment History Shareholding pattern, etc. is provided in this Annual Report.

Consolidated Financial Statements

In accordance with the Accounting Standards AS 21 on Consolidated Financial Statements, your Directors provide the audited Consolidated Financial Statements in the Annual Report.

Notes on Subsidiaries

During the year, your Company incorporated a new subsidiary in Ireland taking the total number of subsidiaries to 5 (five) as on March 31, 2012. Your Directors believe that the Consolidated Financial Statements present a full and fair view of the state of affairs of your Company as a whole. In terms of general approval granted by the Central Government under Section 212(8) of Companies Act, 1956, financial statements pertaining to the subsidiaries have not been attached with the Balance Sheet of the Company. However, for the benefit of the members, we have published a summary of the financials of the subsidiaries in the Annual Report. The financial statements of subsidiaries, along-with related information and reports are available for inspection at the registered office of your Company.

Review of Subsidiaries

Niche Generics Limited

Niche Generics Limited is a wholly-owned subsidiary of your Company. It is engaged in manufacturing formulations and dossier filing in European markets. It recorded sales of GBP 103.2 Lacs for the year ended March 31, 2012 as compared to GBP 100.4 Lacs for the previous year ended March 31, 2011. The loss for the year ended March 31, 2012 stood at GBP 1.9 Lacs compared to the loss of GBP 7.9 Lacs for the year ended March 31, 2011.

Unichem Pharmaceuticals (USA) Inc. Unichem Pharmaceuticals (USA) Inc., a wholly-owned subsidiary of your Company in USA, has been set up for business development, filing of ANDAs and exploring the opportunities for marketing alliances in North American markets. The subsidiary recorded sales of USD 54.3 Lacs for the year ended March 31, 2012 and incurred loss of USD 7.5 Lacs for the same period compared to the loss of USD 9.2 Lacs for the year ended March 31, 2011.

Unichem Farmaceutica Do Brasil Ltda

Unichem Farmaceutica Do Brasil Ltda., is a wholly- owned subsidiary of your Company in Brazil. This subsidiary has been set-up to own product registrations, launch generic and branded generics products in the Brazilian market.

The subsidiary plans to have marketing alliances for promoting, warehousing and distribution. The entity suffered a loss of Brazilian Reals 24.8 Lacs in the current year as against Brazilian Reals 14.4 Lacs during the previous year.

Unichem SA (Proprietary) Limited

Unichem SA (Proprietary) Limited is a wholly-owned subsidiary of your Company in South Africa. This subsidiary has been set-up for business development and to own product registrations. The subsidiary has suffered a loss of SA Rand 6,113 in the current year.

Unichem Laboratories Ltd. Ireland

Unichem Laboratories Ltd, Ireland is a wholly-owned subsidiary of your Company in Ireland. This subsidiary was incorporated during the year under review for business development and to own product registrations. The subsidiary suffered a loss of Euro 8,512 during the year ended March 31, 2012.

Directors' Responsibility Statement

In terms of section 217 (2AA) of the Companies Act, 1956, your Directors confirm that:

1. in preparation of annual accounts for the year have ended March 31, 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

2. they have selected such accounting policies and applied them consistently and made judgements 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 2011-12 and profit made by the Company for that period;

3. 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;

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

Credit Rating

ICRA has reaffirmed the A1 rating for short-term debt (including Commercial Paper) Programme of Rs. 1500 Lacs. The rating indicates highest safety, the prospect of timely repayment of debt/obligation being the best.

Directors

By virtue of Section 255 of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Nasser Munjee and Mr. Prafull D. Sheth retire by rotation at the ensuing Annual General Meeting. Attention of the Members is invited to the relevant items in the Notice of the Annual General Meeting for seeking their approval for the aforesaid appointments. The information required under Clause 49 IV (G) of the Listing Agreement is given in the Notice of the Annual General Meeting.

Auditors

The Statutory Auditors of the Company, M/s. B. D. Jokhakar & Co., retire at the conclusion of the ensuing Annual General Meeting and are eligible for re- appointment. Your Company has received intimation to the effect that, proposed re-appointment, if made, would be within the prescribed limit under Section 224(1B) of the Companies Act, 1956.They have confirmed their willingness to accept office, if reappointed. The Board and Audit Committee recommend the re-appointment of M/s. B.D. Jokhakar & Co. as Statutory Auditors of your Company for the financial year 2012-13.

Cost Auditors

Pursuant to Section 233B of the Companies Act, 1956, the Central Government has prescribed Cost Audit of the Company's Bulk Drugs and Formulations Division. The Board of Directors of your Company has re-appointed Mr. Y. R. Doshi, Cost Accountant, having membership no. 3286, as the Cost Auditor to audit the cost accounts relating to "Bulk Drugs" and "Formulations" for the financial year ending 2012-13. The due date for filing Cost Audit Reports of the financial year 2011-12 for your Company is 27th September, 2012 and the tentative date for filing these reports would be 24th September, 2012.

Energy, Research and Development, Technology Absorption, Foreign Exchange

The particulars as prescribed under Clause (e) of Sub- section (1) of Section 217 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 Annexure II to this Report.

Particulars of Employees

Particulars of employees, as required under 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended from time to time, forms part of this Report. However in pursuance of Section 219(1)(b)(iv) of the Act, this annual report is being sent to all shareholders of the Company, excluding the aforesaid information and the said particulars are available at the Registered Office of the Company. The members interested in obtaining such particulars may write to the Secretarial Department situated at the Registered Office of the Company.

Human Resources & Employee Relations

Unichem employs over 4,000 employees who are vital to the growth of the Company. Several HR initiatives encompassing development and engagement of employees were conducted in the past financial year.

The Talent Associate Scheme has been launched at Corporate Office in a bid to provide an opportunity to employees to refer their known circle of people for an available requirement and thereby participate in the organization's growth by helping to place the right person in the right job.

Performance Enhancement & Development System (PEDs) is in place whereby the performance of the employees is appraised. As a part of the Talent Development Strategy, workshops were conducted for Management Development.

The attrition of employees and sales staff in sales divisions has been a matter of concern for the management. Your Company's HR & ER team has reviewed its selection and recruitment process and made it more robust. Introduction of new and multiple tools of assessment were introduced in the process. A capsule module of Initial Induction Training' was developed by our Sales Training Team. This module of training emphasized on the need for increased learning and skill building amongst other things before the sales staff went in the field.

Relations with employees across all the offices and manufacturing units continued to be cordial throughout the year. Your Directors place on record, their sincere appreciation of the significant contribution made by the employees at all levels through their dedication, hard work and commitment.

Quality and Environment

Your Company's mission envisages a strong sense of commitment to work towards being a caring pharmaceutical company, which will continuously strive to enhance health through quality products. Your Company aims to consistently provide products that meet customer as well as national and international regulatory requirements as may be applicable. It has been steadily raising the bar, setting higher goals for environmental performance and enlarging the scope of initiatives. The environmental policy of your Company emphasizes at being a caring company which shall protect and promote the environment by complying with applicable environmental regulations and preventing pollution in all its operations.

With a view to meet this objective, our manufacturing facility at Baddi celebrated Environment Day with great enthusiasm and our employees planted about 100 trees in the Company premises followed by a pledge ceremony wherein all our employees took a pledge to protect the environment. Pollution Prevention Day was celebrated and employees were made aware of the effects of pollution on the environment and on living beings. Our employees spread awareness amongst the locals about planting more trees and making less use of plastic bags. Similarly various initiatives were taken at our manufacturing facility at Roha like planting more than 100 saplings in the Company premises, reduce waster consumption across the plant by 5% and reduce usage of paper by recycling waster paper. Training programmes were organized from time to time to create environmental awareness amongst the employees.

To conserve water, the Company has devised various water saving methods which are monitored on day-to- day basis. In this direction, the Company has devised rain-harvesting system at its Ghaziabad and Pithampur (SEZ) manufacturing units.

Your Company continues to strive for energy saving and conservation of natural resources. At our Pithampur SEZ unit, several green initiatives have been undertaken, most significant being soil conservation, recycling of treated effluent water, using solar energy for street lighting and limiting the use of Hot water Generation System in the plant by utilizing heat recovery options in Chilling plant.

Corporate Social Responsibility

Good governance demands adherence of social responsibility coupled with creation of value in the larger interest of the general public. Your Company and its dedicated employees continue to contribute towards several worthwhile causes. Yours Company aims to enhance the quality of life of the community in general and has a strong sense of social responsibility.

As you are aware, our Company has undertaken a project for Primary Health Centre in Village Take- Pathar, Shahpur Taluka, Dist. Thane in the name of Mr. Amrut Mody, founder of the Company, known as Adiwasi Unnati Mandal (AUM). AUM caters to medical needs of adiwasi population of Shahpur taluka of Thane district. AUM conducts regular Medical check-up, Dental check- up camps, Nutrition programmes, arranges distribution of free medicines and provides regular treatment to patients for TB, epilepsy and leprosy at the Centre with the help of dedicated team of doctors and volunteers who have been rendering selfless service. During the year, 191 cataract operations were successfully conducted with the help of "Vision Foundation of India". Besides Health care programmes, notebooks, shoes, books and other articles useful to school children were distributed amongst more than 2000 students over the last few years. The Company has donated TATA SUMO to AUM. This vehicle is utilised for transporting doctors and paramedical volunteers from Mumbai to Shahpur and back.

Our Company has volunteered to be the chief donor to Ahmedabad University School of Management which is promoted by Ahmedabad Education Society. During the year, the Company donated a sum of Rs. 2 Crores to the Management School. This donation is being given in the memory of founder of the Company, Mr. Amrut Mody who was a pioneer in Indian Pharma Industry and a visionary Technocrat and who was instrumental in supporting and contributing via endowments to educational institutions during his lifetime. Ahmedabad University started Amrut Mody School of Management, the Post Graduate Institute of Management (PGIM). Our Company in this manner helped in shaping many lives in a small but significant way.

Bombay College of Pharmacy (BCP) is one of the premier pharmacy colleges in India, imparting quality pharmaceutical education & training for the last 50 years. BCP was founded in 1957 by the Indian Pharmaceutical Association- Maharashtra State Branch (IPA-MSB) with financial assistance from Government of Maharashtra and several pharmaceutical corporations including Unichem. Unichem contributed 1% of its issued capital to Bombay College of Pharmacy in the form of shares. This College is managed independently without any interference from Unichem.

Our Company is considering donating some of its analytical instruments to BCP and other pharmacy and technology colleges. Our Company has provided industry based training to several pharma and technical students over the years.

Green Initiative

The Ministry of Corporate Affairs (MCA) has taken a "Green Initiative in Corporate Governance" (Circular No. 17/2011 dated 21.04.2011 and Circular No. 18/2011 dated 29.04.2011) allowing paperless compliances by Companies through electronic mode. Companies are now permitted to send various notices /documents to its shareholders through electronic mode to the registered email addresses of shareholders. This move by the Ministry is welcome since it will benefit the society at large through reduction in paper consumption and contribution towards a Greener Environment.

Keeping in view the underlying theme and the circular issued by MCA, we have participated in Green Initiative and sent documents like General Meeting Notices (including AGM), Audited Financial Statements, Directors' Report, Auditors' Report etc. to the shareholders in the electronic form, to the e-mail addresses so provided by the shareholder and made available to us by the Depositories, NSDL & CDSL using data maintained by the Depository Participants (DP). Thus we sent Annual Report for year 2010-11 electronically to more than 6,000 shareholders and contributed in saving paper. We intend to continue with this initiative.

Health & Safety

Your Company assiduously endeavours to act in a responsible manner to avoid causing any harm to the health and for safety of its employees, contract personnel and visitors. Health and Safety issues are addressed systematically, effectively and proactively. Mock drills are conducted regularly for different emergency situations for enhancing effectiveness of response plan.

Your Company takes pride in providing various forms of medical assistance to the families of its employees and also to all those living in surrounding villages. Periodic health checkups are carried out of all employees and regular training programmes are organised on safety and precautionary measures. Fire fighting training programmes and first-aid training camps are organised regularly to educate workers and employees at our plant locations and corporate office. Our Pithampur plant officials have developed a Safety Park at the plant where various types of personal protective equipments, informative posters, fire extinguishers, etc are displayed for creating awareness towards safety among all employees.

Acknowledgement

Your Directors acknowledge the support and wise counsel extended to the Company by analysts, bankers, government agencies, shareholders, investors, suppliers, distributors, stockists and others associated with the Company as its business partners. Your Directors also acknowledge the trust reposed in the Company by medical fraternity and patients. We look forward to having the same support in our mission to enhance health through quality products.

On behalf of the Board of Directors,

For Unichem Laboratories Limited

Dr. Prakash A. Mody

Chairman & Managing Director

Mumbai, August 11, 2012



 
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