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Directors Report of Vimta Labs Ltd.

Mar 31, 2015

The Members of VIMTA LABS LIMITED

The Directors have pleasure in presenting the 25th Annual Report and audited accounts of your Company for the year ended March 31, 2015. FINANCIAL RESULTS

Financial Results for the year under review are as follows : (Rs in lakhs) For the Year 2014 - 2015

1. Profit before interest, depreciation & 1846.03 taxes (EBIDTA)

Less : Finance charges & Interest 72.14

Depreciation 1109.90 1182.04

2. Profit /(Loss) before Amortization, 663.99 Prior year adjustments & Taxes

Less : Amortization of Preliminary Expenses - -

Less/(Add) : Prior year adjustments - -

3. Profit /(Loss) before tax 663.99

4. Less : a) Current Tax 139.20

b) Prior year Tax Liability / (Credits) (0.08)

c) Deferred Tax Liability/(Asset) 18.64 157.76

5. Profit /(Loss) after Tax 506.23

6. Add / (Less) : Surplus brought forward from previous years 3064.64

Amount available for appropriations 3570.87

APPROPRIATIONS :

Transfer to General Reserve 51.00

Proposed dividend 221.08

Provision for tax on proposed dividend 44.20

Surplus carried to Balance Sheet 3254.59

3570.87

(Rs in lakhs)

For the Year 2013-2014

1. Profit before interest, depreciation & 2938.27 taxes (EBIDTA)

Less : Finance charges & Interest 233.51

Depreciation 938.49 1172.00

2. Profit /(Loss) before Amortization, - 1766.27 Prior year adjustments & Taxes

Less : Amortization of Preliminary Expenses - -

Less/(Add) : Prior year adjustments

3. Profit /(Loss) before tax 1766.27

4. Less : a) Current Tax 370.30

b) Prior year Tax Liability / (Credits) -

c) Deferred Tax Liability/(Asset) 72.03 442.33

5. Profit /(Loss) after Tax 1323.94

6. Add / (Less) : Surplus brought forward 2439.69 from previous years

Amount available for appropriations 3763.63

APPROPRIATIONS :

Transfer to General Reserve 135.00

Proposed dividend 442.16

Provision for tax on proposed dividend 75.14

Surplus carried to Balance Sheet 3111.33

3763.63

After adjustment of depreciation on assets whose useful life was expired as per the new Companies Act 201

STATE OF THE COMPANY'S AFFAIRS

Net Revenue from operations got reduced by 9.33% for the year 2014-15 compared to previous year 2013-14.

Decline in revenues was due to revised United States Food and Drugs Administration guidelines seeking additional data from industry's abbreviated new drug applications, thus reducing the total number of clinical research projects awarded during the year under review.

Earnings before interest, depreciation, taxes and amortization (EBIDTA) for the year are Rs. 1846.03 lakhs as compared to the previous year earnings of Rs. 2938.27 lakhs. Profit after tax (including deferred tax) stood at Rs. 506.23 lakhs as against a profit of Rs. 1323.94 lakhs in the previous year.

Pursuant to enactment of the Companies Act, 2013 the useful lives of fixed assets have been revised in accordance with Schedule II to the Act effective from April 1, 2014 and as a result an additional depreciation provision of Rs. 49.61 Lakhs was made for the year. Further, in line with transitional provision made under Note 7(b) of Schedule II to the Act an amount of Rs. 38.45 Lakhs (net of deferred tax asset) has been adjusted to retained earnings in respect of assets having no useful life as on April 1, 2014.

MATERIAL CHANGES AND COMMITMENTS

There were no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this report.

APPROPRIATIONS

Dividend

Your Directors are pleased to recommend a dividend of Rs. 1/- per equity share of Rs. 2/- each for the financial year 2014-15.

Transfer to Reserves

Out of the current year's profits your Directors propose to transfer Rs. 51 Lakhs to General Reserves.

BOARD

Particulars of Board of Directors and its Committees

The particulars of Board of Directors, its Committees along with terms of reference and meetings held during the year under review are given in detail in the report on corporate governance.

Particulars of changes in Directorship

In accordance with the provisions of Section 152 (6) of the Companies Act, 2013 read with Articles of Association of the Company, V V Prasad, Director of the Company would retire by rotation at the ensuring Annual General Meeting, and is eligible for reappointment. The Directors recommend the re-appointment of V V Prasad as Director of the Company, subject to retirement by rotation.

Except V V Prasad none of the appointments of other whole-time Directors and the Independent Directors are due for re-appointment.

Further, during the year under review there were no new appointments to the Directorship, except reappointment of Directors who retire by rotation. There were no cessations from the Directorship.

Particulars of changes in Key Managerial Personnel

P Sankaraiah, Chief Financial Officer (CFO) of the Company has retired from the services on June 30, 2015. The Board has appointed M Murali Mohana Rao as CFO effective from July 1, 2015.

The Board would like to take this opportunity to thank P Sankaraiah, outgoing CFO for his leadership and commitment since 2006, and welcome the new CFO M Murali Mohana Rao.

Directors' Responsibility Statement

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013 the Board of Directors states that:

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

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

(c) 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;

(d) They have prepared the annual accounts on a going concern basis;

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

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

Declaration by Independent Directors

The Independent Directors of the Company have submitted their declarations as required under Section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as per sub-section (6) of Section 149 of the Act.

Particulars of Contracts & Arrangements with Related Parties

All transactions entered by the Company with Related Parties were in the Ordinary course of Business and are at Arm's Length pricing basis. The Audit Committee granted approvals for the transactions and the same were reviewed by the Committee and the Board of Directors.

There were no materially significant transactions with Related Parties during the financial year 2014-15 which were in conflict with the interest of the Company. The details of contracts and arrangements with related parties as referred to in Section 188(1) of the Companies Act, 2013 were given as Annexure-I to the Board's Report in form No: AOC-2 pursuant to Section 134 (3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules 2014.

Particulars of Loans, Guarantees or Investments

During the financial year 2014-15 the Company neither has, directly or indirectly, given any loan to its Directors nor extended any guarantee or provided any security in connection with any loan taken by them. Further, the Company has neither given any inter-corporate loan / advance nor made any investments in other companies.

Nomination and Remuneration policy

In compliance to the provisions of Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement entered into with the Stock Exchanges, the Nomination and Remuneration Committee has recommended to the Board a Nomination and Remuneration policy with respect to appointment / nomination and remuneration payable for the Directors, Key Managerial Personnel and senior level employees of the Company. The said policy has been adopted by the Board and the same will form part of the Annual Report as Annexure-II to the Board's Report.

Evaluation

The Companies Act, 2013 mandates that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual Directors. The performance evaluation of Independent Directors shall be done by the entire Board of Directors, as per the provisions of Schedule IV to the Act. Similarly, the Independent Directors in their separate meeting shall carry out the performance evaluation of Non-Independent Directors and the Board as a whole. Accordingly, the Board and the Independent Directors have carried out respective evaluations for the year 2014- 15 and the evaluation reports are meeting the expectations of the Board.

The evaluation mechanism has been explained in the report on corporate governance appended to the Board's report.

Training of Independent Directors

Every new Independent Director of the Board attends an orientation program in order to get familiarize with the strategy, operations and functions of the Company. The Executive Directors / senior personnel make presentations to the inductees about the Company's strategy, operations, service offerings, markets, organization structure, finances, human resources, technology, facilities, risk management, etc.

Further, at the time of appointment of an Independent Director the Company issues a formal letter of appointment outlining his / her role, functions, duties and responsibilities as an Independent Director. The contents of the letter of appointment is available on Company's website www.vimta.com

Statement of particulars of Appointment and Remuneration of Managerial personnel & Particulars of employees:

Pursuant to Section 197 (12) read with Rule 5(1) and 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 details of remuneration of managerial personnel and particulars of employees are appended as Annexure-III to the Board's report and form part of the Annual Report.

Replacement of Articles of Association

The existing regulations of the Articles of Association (AoA) were framed at the time of incorporation in 1991 based on then Companies Act, 1956 and several regulations contains with reference to specific provisions of 1956 Act. Since most of the regulations are not consistent with the revised Companies Act, 2013 the Board of Directors considered that it is expedient to replace the full set of the existing regulations of the AoA with new regulations and seeks the approval of the shareholders for the same.

The proposed draft regulations of the AoA are placed on the Company's website for perusal by the shareholders. Any shareholder who would like to have a copy of the same may write to the Company.

Vigil Mechanism / Whistle Blower Policy

Pursuant to Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Clause 49 of the Listing Agreement, the Board has adopted Whistle Blower Policy. This policy aims for conducting the affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behavior.

A mechanism has been established for employees to report concerns about unethical behavior, actual or suspected fraud or violation of Code of Conduct and Ethics. The policy also provided adequate safeguards against the victimization of employees who avail of the mechanism and allows direct access to the Chairman of the Audit Committee in exceptional cases.

Your Company hereby affirms that during the year no Director / employee have been denied access to the Chairman of the Audit Committee and that no complaints were received.

SCIENTIFIC ADVISORY BOARD

VIMTA in pursuing its goal to continuously invent and innovate its services has constituted a Scientific Advisory Board (SAB) in year 2014. The purpose of SAB is to assist the Company with scientific strategy and direction to realize its vision. SAB will advise on new services and research programs for expansion and diversification by providing expert opinion on changing global industry requirements, and new scientific and technological advancements.

SAB is chaired by Prof. D. Balasubramanian, one of the Independent Directors of Vimta. Dr. KANURY V.S .RAO, founder of Drug Discovery Research Center (DDRC) and Dr. PANKAJ SHAH, Executive Director Bristol-Myers Squibb are the other independent members. The Executive Chairman, Managing Director and Executive Director Operations of Vimta are the internal members.

AUDITORS Statutory Auditors

At the Annual General Meeting held on July 07, 2014, M/s J V S L & Associates, Chartered Accountants (Firm Reg. No: 15002S), were appointed as Statutory Auditors of the Company to hold office for a period of three years i.e., till the conclusion of the Annual General Meeting to be held in the calendar year 2017. In terms of the first proviso to Section 139 of the Companies Act, 2013 the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the said appointment of M/s J V S L & Associates, 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 their appointment is ratified, it would be in accordance with the provisions of Section 141 of the Act. The Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

The Statutory Auditor's Report does not contain any qualifications, reservation or adverse remarks. This report form part of the Annual Report.

Internal Auditors

In pursuance of Section 138 of the Companies Act, 2013 read with rules made there under, the Board has appointed M/s Gattamaneni & Co., Chartered Accountants as Internal Auditors of the Company to carry out internal auditing of books of accounts periodically.

Cost Auditors

In pursuance of Section 148 of the Companies Act, 2013 read with rules made there under, the Board has appointed M/s U S Rao & Co (Registration No. 102629), Cost Accountants as Cost Auditors of the Company to carry out the audit of cost records maintained by the Company for the financial year 2014-15.

In pursuance of rule14 (a) (ii) of Companies (Audit and Auditors) rules 2014 the remuneration fixed by the Board of Directors which is payable to Cost Auditors needs a ratification by the shareholders of the Company. Accordingly, remuneration fixed by the Board is placed for ratification before the shareholders.

Secretarial Auditors

In pursuance of Section 204 of the Companies Act, 2013 read with rules made thereunder, the Board has appointed M/s D Hanumanta Raju & Co, Practicing Company Secretaries as Secretarial Auditors of the Company to carry out the secretarial audit.

The Secretarial Auditor's Report does not contain any qualifications, reservation or adverse remarks. The Secretarial Audit Report forms part of the Annual Report as Annexure-IV to the Board's Report.

OTHER INFORMATION IN PURSUANCE OF RULE 5 OF COMPANIES (ACCOUNTS) RULES, 2014

- The financial summary and the changes in Directors and Key Managerial Personnel were given supra.

- During the year under review, there is no change in the nature of business of the Company.

- During the year under review, the Company has no Subsidiaries, joint ventures or associate companies.

- During the year under review, the Company has not accepted any deposits in terms of Section 73 of the Companies Act, 2013 and the rules made there under and hence compliance with respect to the provisions of Chapter V of the Act is not applicable .

- During the year under review, there are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.

- Following are the details in respect of adequacy of internal financial controls with reference to the Financial Statements:

The Company maintains its books of accounts in SAP system and the work flow and approvals are routed through SAP. Further, the Company has set internal control systems to maintain accurate and complete accounting records, to safeguard its assets, to prevent and detect any frauds and errors.

The Company has internal audit department and also appointed Internal Auditors in compliance to the provisions of the Companies Act, 2013 who in turn observe the set internal controls and the financial transactions of the Company. The internal audit department reviews the set controls and the financial transactions periodically and reports to the Management. On quarterly basis the Internal Auditors will present their report to the Audit Committee and the Management comments on the Internal Auditor's observations and gives its replies to the Committee. Based on the reports, the Management will take up necessary steps to mitigate the short falls, if any.

The Audit Committee periodically reviews the adequacy of internal controls with respect to financial transactions and suggests the changes, if any required to the said controls.

RISK MANAGEMENT

The Risk Management Committee duly constituted by the Board had formulated a Risk Management Policy for dealing with different kinds of risks attributable to the operations of the Company. Risk Management Policy of the Company outlines different kinds of risks and risk mitigating measures to be adopted by the Board. The Company has adequate internal control systems and procedures to combat the risk. The Risk Management procedure will be reviewed periodically by the Audit Committee and the Board.

ANTI SEXUAL HARASSMENT

A Committee was framed in compliance to the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 in order to curb sexual harassment, if any, at work place of the Company. There were no complaints received by the Company during the year under review

EXTRACT OF ANNUAL RETURN

In accordance with the provisions of Section 134(3(a) of the Companies Act, 2013, an extract of the Annual Return in the prescribed format is appended as Annexure-V to the Board's Report.

CORPORATEGOVERNANCE

The Company, as a policy believes that the corporate governance goes beyond the regulatory requirement and has laid strong emphasis on the transparency, accountability, responsibility, fairness, integrity, consistent value systems and delegation across all of its operations.

A separate section on Corporate Governance along with a Certificate from the Auditors confirming the compliance is appended to the Board's Report and forms part of the Annual Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate Social Responsibility is commitment of the Company to the community and society at large. The Company believes that CSR plays an important role in an organization's existence, sustained growth and for overall development of all stakeholders & the society at large. In line with this, the Board has constituted CSR Committee and adopted a CSR policy on the recommendations of the Committee.

During the year under review the Company has paid an amount of Rs. 404,000/- to Narsingh Swain Memorial Trust, Hyderabad for providing medical aid to the differently abled people on charitable basis who belong to economically weaker sections of the society as a part of their Akar Asha Project. An amount of Rs. 63,236/- is yet to be spent during the current financial year out of the total eligible amount of Rs. 467,236/- to be spent during 2014-15 fiscal.

Report on CSR activity is enclosed as Annexure-VI to the Board's Report in compliance to Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014.

INFORMATION ON CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO

Pursuant to the provisions of Section 134 (3) (m) of the Companies Act, 2013 read with Rule 3 of Companies (Accounts) Rules, 2014, the relevant information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo is appended hereto as Annexure-VII and forms part of the Board's Report.

DISCLOSURES AS PER THE LISTING AGREEMENT & SEBI REGULATIONS

Cash flow statement

In due compliance of the listing agreements and in accordance with the requirements prescribed by SEBI, the cash flow statement is prepared and is appended to this Annual Report.

Stock exchanges

Equity Shares of the Company are listed with Bombay Stock Exchange Limited and National Stock Exchange of India Limited and the listing fee was paid in time and no amount was outstanding.

Share transfer agency

The Company has appointed M/s CIL Securities Ltd, 214, Raghava Ratna Towers, Abids, Hyderabad - 500001 as its share transfer agency for handling both physical and electronic transfers.

Transfer of unclaimed Dividend amount to Investor Education and Protection Fund

The Company has transferred unclaimed dividend for the years 2001-02; 2002-03; 2003-04, 2004-05 (interim & Final), 2005-06 and 2006-07 to Investor Education and Protection Fund. The details of unclaimed dividends and due dates for transfer to the said fund account for other financial years are disclosed in the report on corporate governance.

Code of conduct

The Company has adopted Code of Conduct for the Board and for the Senior level employees of the Company and they are complying with the said code. A declaration by the Managing Director to this effect is furnished as Annexure-VIII to the Board's Report.

ACKNOWLEDGMENTS

The Directors wish to place on record their gratitude to shareholders and thank the customers, vendors, franchisees, bankers and legal advisors for their continued support to the Company's growth. The Directors also wish to place on record, their appreciation for the contribution made by the employees at all levels, for their sincerity, hard work, solidarity and dedicated support to the Company.

For and on behalf of the Board

Place : Hyderabad DR S P VASIREDDI Date : 17.07.2015 EXECUTIVE CHAIRMAN


Mar 31, 2013

The Directors hereby present the 23rd Annual Report and audited accounts of your Company for the year ended March 31, 2013.

FINANCIAL RESULTS

Financial Results for the year under review are as follows :

(Rs. in lakhs)

For the Year For the Year 2012-2013 2011-2012

1. Profit before interest, Depreciation & Taxes (EBIDTA) 2202.64 394.61

Less : Finance Charges & Interest 265.53 406.67

Depreciation 1499.64 1765.17 1586.04 1992.71

2. Profit/(Loss) before Amortization, Prior year 437.47 (1598.10) adjustments & Taxes

Less : Amortization of Preliminary Expenses - -

Less/(Aad): Prior year adjustments - - - -

3. Profit/(Loss) before tax 437.47 (1598.10)

4. Less: a) Current Tax 87.52 -

b) Prior year Tax Liability / (Credits) 3.74 (25.75)

c) Deferred Tax Liability/ (Asset) (75.13) 16.13 (34.71) (60.46)

5. Profit/(Loss) after Tax 421.34 (1537.64)

6. Add / (Less): Surplus brought forward from previous years 2215.02 3752.66

Amount available for appropriations 2636.36 2215.02

APPROPRIATIONS :

Transfer to General Reserve 42.50 -

Proposed dividend 132.65 -

Provision for tax on proposed dividend 21.52 -

Surplus carried to Balance sheet 2439.69 2215.02

2636.36 2215.02

OPERATIONS

Net Revenue from operations has gone up by 25% for the year 2012- 13 compared to previous year 2011-12. Exports have gone up 54%.

Earnings before interest, depreciation, taxes and amortization (EBIDTA) for the year are Rs. 2202.64 Lakhs as compared to the previous year earnings of Rs. 394.61 lakhs. Profit after tax (including deferred tax) stood at Rs. 421.34 lakhs as against a loss ofRs. (1537.64) lakhs in the previous year.

DIVIDEND

Your Directors are pleased to recommend a dividend of 30% i.e. 0.60 Paise per equity share ofRs. 2/-each for the financial year 2012-13.

TRANSFER TO RESERVES

Your Directors propose to transfer Rs. 42.50 Lakhs to General Reserves. An amount of Rs. 2439.69 lakhs is proposed to be retained in Profit & Loss Account.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 read with the Articles of Association of the Company, Dr Subba Rao Pavuluri and Rao P Potharlanka, Directors of the Company would retire by rotation at the ensuing Annual General Meeting, and are eligible for reappointment. Your Directors recommend the re- appointment of Dr Subba Rao Pavuluri and Rao P Potharlanka as Directors subject to retirement by rotation.

AUDITORS

M/s Sarathy & Balu, Chartered Accountants, Auditors of the Company would hold office till the conclusion of the ensuing Annual General Meeting. They have given their consent for reappointment and further stated that they are eligible to take up the appointment within the provisions of Section 224 (1-B) of the Companies Act, 1956. It is proposed to appoint them as auditors of the Company to hold office from the conclusion of the ensuing Annual General Meeting till the conclusion of next Annual General Meeting.

PARTICULARS OF EMPLOYEES

No employee of the Company has received remuneration in excess of the limits specified under Section 217(2A) of the Companies Act, 1956 read with the rules made there under. Hence, the Board confirming nil information to be furnished under this section.

INFORMATION ON ENERGY CONSERVATION & TECHNOLOGY ABSORPTION

Pursuant to the Provisions of Section 217(l)(e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988, the relevant information pertaining to Energy Conservation, Technology Absorption, Foreign Exchange earnings and outgo is enclosed hereto as Annexure and forms part of this report.

DIRECTORS RESPONSIBILITY STATEMENT

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

i. The applicable accounting standards have been followed in preparation of the annual accounts and there are no material departures during the year under review.

ii. They have selected the accounting standards and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year.

iii They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 to safeguard the assets of your Company and for preventing and detecting fraud and other irregularities.

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

Response to auditors'' observations

With respect to Auditors observations in their report dated 27.04.2013, under item No. ix(a) the delays in depositing income tax deductions at source (TDS) and service tax in few cases were due to delay in receipt of expected cash inflows in time. However, all the payments were made before the end of the year under review.

With respect to Auditors observations in item No. ix (b) (ii) of their report that the Company has not deposited the demand of Rs.338,181,778/- raised by Service Tax department relating to periods from 2005-06 to 2009-10 & 2010-11, it is informed that the Company has gone for an appeal against the demand and the same is pending before Central Excise & Service Tax Appellate Tribunal, Bangalore. Company''s legal counsel confirmed the validity of the stand taken by the Company in this matter. Out of total demand the Company has deposited an amount of Rs.. 20,000,000 as per the directions of CESTAT at the time of hearing the stay of demand petition With respect to Auditors'' observations in item No. xi (a) of their report, the delay in repayment of term loan installments to the bankers were due to delay in receipt of expected cash inflows in time. However, all the small delays were made good within a couple of weeks'' time from the due dates.

FIXED DEPOSITS

Your Company has not accepted any deposits in terms of Section 58A of the Companies Act, 1956 and the rules made there under and hence compliance with the same is not applicable.

ACKNOWLEDGMENTS

Your Directors wish to place on record their gratitude to shareholders and thank the customers, vendors, franchisees, bankers and legal advisors for their continued support to your Company''s growth. Your Directors wish to place on record, their appreciation for the contribution made by the employees at all levels, who, through their competence, sincerity, hard work, solidarity and dedicated support enabled your Company to make rapid strides.

For and on behalf of the Board

Place : Hyderabad DR S P VASIREDDI

Date : 27.04.2013 CHAIRMAN & MANAGING DIRECTOR


Mar 31, 2012

To The Members of VIMTA LABS LIMITED

The Directors hereby present the 22nd Annual Report and audited accounts of your Company for the year ended March 31, 2012.

FINANCIAL RESULTS

Financial Results for the year under review are as follows :

(Rs. in lakhs)

For the Year 2011-2012

1. Profit before interest, Depreciation & Taxes (EBIDTA) 394.61

Less : Finance Charges & Interest 406.67 Depreciation 1586.04 1992.71

2. Profit/(Loss) before Amortization, Prior year (1598.10) adjustments & Taxes

Less : Amortization of Preliminary Expenses - -

Less/(Add) : Prior year adjustments - -

3. Profit/(Loss) before tax (1598.10)

4. Less : a) Prior year Tax Liability/ (Credits) (25.75)

b) Deferred Tax Liability/(Asset) (34.71) (60.46)

5. Profit/(Loss) after Tax (1537.64)

6. Add/(Less) : Surplus brought forward from previous years 3752.66 Amount available for appropriations 2215.02

APPROPRIATIONS :

Transfer to General Reserve -

Proposed dividend -

Provision for tax on proposed dividend -

Surplus carried to Balance sheet 2215.02 2215.02

For the Year 2010-2011

1. Profit before interest, Depreciation & Taxes (EBIDTA) 1580.53

Less : Finance Charges & Interest 313.08 Depreciation 1652.92 1966.00

2. Profit/(Loss) before Amortization, Prior year (385.47) adjustments & Taxes

Less : Amortization of Preliminary Expenses 40.19

Less/(Add) : Prior year adjustments - 40.19

3. Profit/(Loss) before tax (425.66)

4. Less : a) Prior year Tax Liability/ (Credits) 112.96

b) Deferred Tax Liability/(Asset) (72.11) 40.85

5. Profit/(Loss) after Tax (466.51)

6. Add/(Less) : Surplus brought forward from previous years 4322.29 Amount available for appropriations 3855.78

APPROPRIATIONS :

Transfer to General Reserve -

Proposed dividend 88.43

Provision for tax on proposed dividend 14.69

Surplus carried to Balance sheet 3752.66 3855.78

OPERATIONS

Earnings before interest, depreciation, taxes and amortization (EBIDTA) for the year are Rs. 394.61 lakhs as compared to the previous year earnings of Rs. 1580.53 lakhs. Loss after tax (including deferred tax) stood at Rs. 1537.64 lakhs as against a loss of Rs. 466.51 lakhs in the previous year.

During the year under review a number of Clinical studies got delayed due to unprecedented regulatory developments in Clinical Research industry causing inordinate delays in receiving the approvals. Further, the Company had to accept cancellation of some of the studies due to withdrawal by the Customers as they did not want to proceed further resulting in steep decline in top line. It was an aberration. Added to this, the input costs have gone up significantly resulting in low EBIDTA as compared to previous year.

DIRECTORS

Rao Purnachandra Potharlanka an US national was inducted to the Board of your Company on 30.01.2012 as Additional Director. Your Directors recommend the appointment to be regularized as Director subject to retirement by rotation.

Keeping in view of the Company's requirement and the succession plans, the Board in its meeting held on May 21, 2012 has changed the portfolio of Harita Vasireddi as Joint Managing Director without any change in the other terms of her appointment as approved by the shareholders in their meeting dated 26.03.2010. She resumed her office w.e.f. 25.05.2012.

Your Directors recommend the change in portfolio of Harita Vasireddi.

In accordance with the provisions of the Companies Act, 1956 read with the Articles of Association of the Company, T S Ajai and Prof D Balasubramanian Directors of the Company would retire by rotation at the ensuing Annual General Meeting, and are eligible for re- appointment.

Your Directors recommend the re-appointment of T S Ajai and Prof D Balasubramanian as Directors subject to retirement by rotation.

AUDITORS

M/s Sarathy & Balu, Chartered Accountants, Auditors of the Company would hold office till the conclusion of the ensuing Annual General Meeting. They have given their consent for reappointment and further stated that they are eligible to take up the appointment within the provisions of Section 224 (1-B) of the Companies Act, 1956. It is proposed to appoint them as auditors of the Company to hold office from the conclusion of the ensuing Annual General Meeting till the conclusion of next Annual General Meeting.

PARTICULARS OF EMPLOYEES

No employee of the Company has received remuneration in excess of the limits specified under Section 217(2A) of the Companies Act, 1956 read with the rules made there under. Hence, the Board confirming nil information to be furnished under this section.

INFORMATION ON ENERGY CONSERVATION & TECHNOLOGY ABSORPTION

Pursuant to the Provisions of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988, the relevant information pertaining to Energy Conservation, Technology

Absorption, Foreign Exchange earnings and outgo is enclosed hereto as Annexure and forms part of this report.

DIRECTORS RESPONSIBILITY STATEMENT

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

i. The applicable accounting standards have been followed in preparation of the annual accounts and there are no material departures during the year under review.

ii. They have selected the accounting standards and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year.

iii. They have taken proper and sufficient care for the

maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 to safeguard the assets of your Company and for preventing and detecting fraud and other irregularities.

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

MANAGEMENT DISCUSSION & ANALYSIS

The Management Discussion and Analysis given below discusses the key issues concerning the business carried on by the Company.

Industry Overview

VIMTA LABS LIMITED is engaged in Contract Research and Testing activities in Analytical, Preclinical, Clinical, Clinical Diagnostics, Cellular & Molecular Biology and Environmental assessments. Like in the previous year, during the year under review, Indian CRO Industry has experienced many more delays in receiving regulatory approvals for contract research projects.

Potential and Outlook

Preclinical, Clinical and Analytical Contract research and testing activity demand is growing due to growth in Biologics and drug discovery projects. Company's benefit however is dependent upon in time approvals from various regulatory bodies. Government of India has issued regulatory guidelines on Bio-similars recently.

Threats

Competition is an inherent threat for any business. More and more players have entered the business verticals Vimta is engaged in. Multinational Contract Testing and Research Organizations are anchoring in India to reduce their service costs. To mitigate the threats Vimta is always looking for continuous innovation of new portfolios thus giving itself a clear lead of 2-3 years.

Risks and Concerns

The increasing demand for Vimta's services has increased the pressure on human resources. Due to high demand and less availability of talented human resources, employee turnover has become a challenge and may continue in the near future. Your Company is doing its best to employ qualified people and impart on the job training to cope with the increasing work loads. Further, steep increase in the input costs due to high inflation and increased manpower cost are major concerns. Vimta is making all efforts to reduce expenditure to offset the effect of this inflation.

Safety, Health and Environment

As a part of Vimta's commitment towards the principles of sustainable development, safety, health and environment continue

to be the priority areas of the Company. Some of the major activities in these areas have been recycling of waste water, training of staff at all levels to the required standards of safety, health and environment.

Foreign exchange fluctuations

The net gain during the year on account of Foreign exchange fluctuations against foreign currency term loan accounts and overseas customer accounts is Rs. 7.42 lakhs. The same is accounted under the heads other Income and Finance costs in the statement of Profit and Loss account.

Segment-wise or Product-wise performance

The Company is primarily engaged in the business of testing and research activities in various disciplines such as Contract Research, Pre-Clinical, Cellular Molecular Biology, Clinical Diagnostics, Analytical Testing, Environmental Monitoring and Impact Assessment studies. Since the inherent nature of all these activities are integrated and governed by the same set of risks and returns and operating in the same economic environment, these have been grouped as a single segment in the financial statements. The said treatment is in accordance with the Accounting Standard (AS)-17 on "Segment Reporting".

Internal Control Systems

The Company has a well-defined internal control system that is adequate and commensurate with the size and nature of its business. Adequate internal controls are established to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and all the transactions are authorized, recorded and reported correctly.

Financial performance

Gross revenue for the year 2011-12 is Rs. 9027.52 lakhs as compared to the previous year of Rs. 9603.82 lakhs. During the year under review, the domestic sales have gone down by 4.94% and exports by 15.14% as compared to the previous year. The Net loss stood at Rs. 1537.64 lakhs as compared to the previous year net loss of Rs. 466.51 lakhs.

Human Resources

Human Resource is one of the strong drivers of the Company. At the end of the financial year, Vimta has 679 employees including 27 Medical Doctors; 19 PhDs and 409 Scientists, Engineers and Technicians.

CORPORATE GOVERNANCE

The Company has complied with the Corporate Governance Code as stipulated under the listing agreement with the Stock Exchanges. A Separate section on Corporate Governance along with a Certificate from the auditors confirming the compliance is annexed to and forms part of this report.

DISCLOSURES AS PER THE LISTING AGREEMENT & SEBI REGULATIONS

Cash flow statement

In due compliance of the listing agreements and in accordance with the requirements prescribed by SEBI, the cash flow statement is prepared and is appended to this Annual Report.

Stock exchanges

Equity Shares of your Company are listed with Bombay Stock Exchange Limited and National Stock Exchange of India Limited and the listing fee was paid in time and no amount was outstanding.

Share transfer agency

The Company has appointed M/s CIL Securities Ltd, 214, Raghava Ratna Towers, Abids, Hyderabad-500001 as its share transfer agency for handling both physical and electronic transfers.

Transfer of unclaimed Dividend amount to Investor Education and Protection Fund

The Company has transferred unclaimed dividend for the years 2001-02; 2002-03; 2003-04, 2004-05 (interim & Final) to Investor Education and Protection Fund. The details of unclaimed dividends and due dates for transfer to the fund account for other financial years are disclosed in the Corporate Governance Report.

Code of conduct

Your Company has adopted Code of Conduct for the Board and the Senior Management of the Company and they are complying with the said code. A declaration by the CEO to this effect is furnished in Annexure to this report.

Response to auditors' qualifications

With respect to Auditors qualification in their report dated 21.05.2011, under item No. ix(b) the delays in depositing income tax deductions at source (TDS) and service tax in few cases were due to delay in receipt of expected cash inflows in time. However, all the payments were made before the end of the year under review.

With respect to Auditors qualification in item No. xi (a) & (b) of their report, the delay in repayment of term loan instalments to the bankers were due to delay in receipt of expected cash inflows in time. However, all the delays were made good before the end of the year under review.

With respect to Auditors qualification in item No. ix (e) of their report that the Company has not deposited the demand of Rs. 27,78,46,538/- raised by Service Tax department relating to periods from 2005-06 to 2009-10, it is informed that the Company has gone for an appeal against the demand and the same is pending before Central Excise & Service Tax Appellate Tribunal, Bangalore. Company's legal counsel confirmed the validity of the stand taken by the Company in this matter.

FIXED DEPOSITS

Your Company has not accepted any deposits in terms of Section 58A of the Companies Act, 1956 and the rules made there under and hence compliance with the same is not applicable.

ACKNOWLEDGMENTS

Your Directors wish to place on record their gratitude to shareholders and thank the customers, vendors, franchisees, bankers, Technology Development Board, merchant bankers and legal advisors for their continued support to your Company's growth. Your Directors wish to place on record, their appreciation for the contribution made by the employees at all levels, who, through their competence, sincerity, hard work, solidarity and dedicated support, enabled your Company to sustain in business.

For and on behalf of the Board

DR S P VASIREDDI CHAIRMAN & MANAGING DIRECTOR

Place : Hyderabad Date : 16.07.2012


Mar 31, 2011

The Members of

VIMTA LABS LIMITED

The Directors have pleasure in presenting the 21st Annual Report and audited accounts of your Company for the year ended March 31, 2011.

FINANCIAL RESULTS

Financial Results for the year under review are as follows :

(Rs.in lakhs)

For the Year 2010-2011

1. Profit before interest, 1569.43 Depreciation & Taxes Less : Finance Charges & 301.98 Interest Depreciation 1652.92 1954.90

2. Profit /(Loss) before (385.47) Amortization, Prior year adjustments & Taxes Less : Amortization of Prelimi 40.19 nary Expenses Less/(Add) : Prior year adjust 112.96 153.15 ments (538.62) 3. Profit /(Loss) before tax

4. Less : a) Provision for Tax (regular) c) Deferred Tax Liabili (72.11) (72.11) ty/(Asset)

5. Profit /(Loss) after Tax (466.51)

6. Add / (Less) : Surplus brought 4322.29 forward from previous years Amount available for appropri 3855.78 ations

APPROPRIATIONS :

Transfer to General Reserve - -

Proposed dividend 88.43

Provision for tax on proposed 14.69 dividend Surplus carried to Balance sheet 3752.66

3855.78

For the Year 2009-2010

2145.33

1. Profit before interest, Depreciation & Taxes Less : Finance Charges & Interest 262.43 Depreciation 1393.01 1655.44 489.89 2. Profit /(Loss) before Amortization, Prior year adjustments & Taxes Less : Amortization of Preliminary Expense 40.19 Less/(Add) : Prior year adjustments 42.41 82.60

3. Profit /(Loss) before tax 407.29

4. Less : a) Provision for Tax (regular) 133.00 c) Deferred Tax Liability/ 8.43 141.43 (Asset)

5. Profit /(Loss) after Tax 265.86

6. Add / (Less) : Surplus brought forward from previous years 4293.35 Amount available for appropriations 4559.21

APPROPRIATIONS : Transfer to General Reserve 30.00 Proposed dividend 176.86 Provision for tax on proposed dividend 30.06 Surplus carried to Balance sheet 4322.29 4559.21

OPERATIONS

During the first quarter of the year under review, your Company has started commercial activities at its pre-clinical facility. Consequently the costs towards manpower; administrative expenses and depreciation have gone up as compared to the previous fiscal resulting net loss for the year. Further during this year, your Company had to charge off certain non recurring i.e. one time expenses to profit and loss account in line with the applicable Accounting Standards. Your Directors are confident that in the coming years, the Company would make adequate profits. With better control over logistics, the Pathology Testing activities of Noida were moved back to Genome Valley facility during third quarter of the year under review.

Earnings before interest, depreciation, taxes and amortization (EBIDTA) for the year are Rs. 1569.43 lakhs as compared to the previous year earnings of Rs.145.33 lakhs. Loss after tax (including deferred tax) stood at Rs. 466.50 lakhs as against a profit of Rs. 265.86 lakhs in the previous year.

RECOGNITIONS & ACCREDITATIONS :

Your Company received the following recognitions and Accreditations during the year under review.

- USFDA CGMP approval for Drugs Laboratory.

- AAALAC (Association for Assessment and Accreditation of

Laboratory Animal Care) Certification for Pre Clinical Laboratory.

- QCI-NABET Accreditation as Environmental Impact

Assessment (EIA) consultancy organization

- WHO CGMP pre qualification.

DIVIDEND

From the surplus available in the Profit and Loss account, your Directors are pleased to recommend a dividend of 20% i.e. `. 0.40 per each equity share of Rs.2/- each for the financial year 2010-11.

Transfer to Reserves

In the absence of profits for the year under review, no transfer of Profit to General Reserve. After providing `. 103.12 lakhs for payment of dividend and tax, the balance of `. 3752.66 lakhs is proposed to be retained in Profit & Loss Account.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 read with the Articles of Association of the Company, Dr Subba Rao Pavuluri and Prof K Ramachandran, Directors of the Company would retire by rotation at the ensuing Annual General Meeting, and are eligible for re-appointment. While Dr Subba Rao Pavuluri opted himself for re-appointment, Prof K Ramachandran has opted not to be re-appointed due to personal reasons. Your Directors recommend the re-appointment of Dr Subba Rao Pavuluri as Director subject to retirement by rotation. Your Directors express their sincere gratitude to Prof K Ramachandran for his contribution to the Company.

AUDITORS

M/s Sarathy & Balu, Chartered Accountants, Auditors of the Company would hold office till the conclusion of the ensuing Annual General Meeting. They have given their consent for reappointment and further stated that they are eligible to take up the appointment within the provisions of Section 224 (1-B) of the Companies Act, 1956. It is proposed to appoint them as auditors of the Company to hold office from the conclusion of the ensuing Annual General Meeting till the conclusion of next Annual General Meeting.

PARTICULARS OF EMPLOYEES

No employee of the Company has received remuneration in excess of the limits specified under Section 217(2A) of the Companies Act, 1956 read with the rules made there under. Hence, the Board confirming nil information to be furnished under this section.

INFORMATION ON ENERGY CONSERVATION & TECHNOLOGY ABSORPTION

Pursuant to the Provisions of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988, the relevant information pertaining to Energy Conservation, Technology Absorption, Foreign Exchange earnings and outgo is enclosed hereto as Annexure and forms part of this report.

DIRECTORS RESPONSIBILITY STATEMENT

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

i. The applicable accounting standards have been followed

in preparation of the annual accounts and there are no material departures during the year under review.

ii. They have selected the accounting standards and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year.

iii. They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 to safeguard the assets of your Company and for preventing and detecting fraud and other irregularities.

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

Research & Development

Vimta's R & D is registered with Department of Scientific and Industrial Research, Ministry of Science and Technology. 15 new assays for clinical diagnostics and Biologics were developed during 2010-11 fiscal.

During the year your Company has spent Rs.96.46 lakhs on its R & D activities towards manpower and chemicals and consumables.

CORPORATE GOVERNANCE

The Company has complied with the Corporate Governance Code as stipulated under the listing agreement with the Stock Exchanges. A Separate section on Corporate Governance along with a Certificate from the auditors confirming the compliance is annexed to and forms part of this report. The new Corporate Governance guidelines 2009 issued by Ministry of Company Affairs are under consideration for implementation.

DISCLOSURES AS PER THE LISTING AGREEMENT & SEBI REGULATIONS

Cash flow statements

In due compliance of the listing agreements and in accordance with the requirements prescribed by SEBI, the cash flow statement is prepared and is appended to this Annual Report.

Stock exchanges

Equity Shares of your Company are listed with Bombay Stock Exchange Limited and National Stock Exchange of India Limited and the listing fee was paid in time and no amount was outstanding.

Share transfer agency

The Company has appointed M/s CIL Securities Ltd, 214, Raghava Ratna Towers, Abids, Hyderabad - 500001 as its share transfer agency for handling both physical and electronic transfers.

Transfer of unclaimed Dividend amount to Investor Education and Protection Fund

The Company has transferred unclaimed dividend for the years 2001-02; 2002-03 & 2003-04 to Investor Education and Protection Fund. The details of unclaimed dividends and due dates for transfer of other financial years are disclosed in the Corporate Governance Report.

Code of conduct

Your Company has adopted Code of Conduct for the Board and the Senior Management of the Company and they are complying with the said code. A declaration by the CEO to this effect is furnished in Annexure to this report.

Replies on auditors' qualifications

With respect to Auditors qualification in their report dated 13.05.2011, under item No. ix(b) the delays in depositing income tax deductions at source (TDS) and service tax in few cases were due to delay in receipt of expected cash inflows in time. However, all the payments were made before the end of the respective months in which they were payable.

With respect to Auditors qualification in item No. xi (a) of their report, the delay in repayment of term loan instalments to the bankers were due to delay in receipt of expected cash inflows in time. However, all the delays were made good before the end of the year under review.

FIXED DEPOSITS

Your Company has not accepted any deposits in terms of Section 58A of the Companies Act, 1956 and the rules made there under and hence compliance with the same is not applicable.

ACKNOWLEDGMENTS

Your Directors wish to place on record their gratitude to shareholders and thank the customers, vendors, franchisees, bankers, Technology Development Board, merchant bankers and legal advisors for their continued support to your Company's growth. Your Directors wish to place on record, their appreciation for the contribution made by the employees at all levels, who, through their competence, sincerity, hard work, solidarity and dedicated support, enabled your Company to make rapid strides.

For and on behalf of the Board

DR S P VASIREDDI CHAIRMAN & MANAGING DIRECTOR

Place : Hyderabad Date : 22.07.2011


Mar 31, 2010

The Directors have pleasure in presenting the 20th Annual Report and audited accounts of your Company for the year ended March 31, 2010.

FINANCIAL RESULTS

(Rs.in lakhs)

Financial Results for the year under review are as follows:

For the Year For the Year

2009-2010 2008-2009

1. Profit before interest, Depreciation & Taxes 2145.33 2401.46 Less : Finance Charges & Interest 262.43 262.60

Depreciation 1393.01 1655.44 1483.28 1745.88

2. Profit before Amorti zation, Prior year 489.89 655.58 adjustments & Taxes

Less : Amortization of Preliminary Expenses 40.19 40.18

Less/(Add) : Prior year adjustments 42.41 82.60 (12.53) 27.65

3. Profit before tax 407.29 627.93

4. Less : a) Provision for Tax (regular) 133.00 225.00

b) Fringe Benefit Tax - 15.00

c) Deferred Tax Liability/ (Asset) 8.43 141.43 (16.50) 223.50

5. Profit after Tax 265.86 404.43

6. Add : Surplus brought forward from previous years 4293.35 4137.84 Amount available for appropriations 4559.21 4542.27

APPROPRIATIONS

Transfer to General Reserves 30.00 42.00

Proposed dividend 176.86 176.86

Provision for tax on proposed dividend 30.06 30.06

Surplus carried to Balance sheet 4322.29 4293.35

4559.21 4542.27



OPERATIONS

Earning before interest, taxes, depreciation and amortization (EBIDTA) for the year are Rs. 2145.33 lakhs as compared to the previous year earnings ofRs. 2401.46 lakhs. Profit after tax (including deferred tax) stood at Rs. 265.86 lakhs as against Rs. 404.43 lakhs of previous year. The reduction in profits has been due to added costs on human resources to develop new capabilities for the Company and increased expenditure for meeting developmental activities.

RECOGNITIONS & ACCREDITATIONS

VIMTA has been successful with the following regulatory audits and

accreditations :

- First FDA audit and approval for drug testing as per cGMP at Vimta Life Sciences facility.

- MHRA, UK audit for Bioavailability studies at Cherlapally facility.

- 6th FDA audit for Bioavailability studies

- CAP (College of American Pathologists) accreditation for Clinical laboratory. Vimta happens to be the first and only lab in AP to be accredited by CAP

- Committee for the Purpose of Control and Supervision of Experiments in Animals (CPCSEA) approval to conduct experiments on animals In addition to the above the Company has gone through 58 customer and prospect audits successfully paving way for future business.

DIVIDEND

Your Directors are pleased to recommend a dividend of 40% i.e. 80 Paise per equity share ofRs.2/- each for the financial year 2009-10.

Transfer to Reserves

Your Directors propose to transfer ` 30 Lakhs to General Reserves. An amount of ` 4322.29 lakhs is proposed to be retained in Profit & Loss Account.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 read with the Articles of Association of the Company, T S Ajai and Prof D Balasubramanian, Directors of the Company would retire by rotation at the ensuing Annual General Meeting, and are eligible for re- appointment. T S Ajai and Prof D Balasubramanian have agreed for reappointment.

Your Directors recommend the re-appointment of T S Ajai and Prof D Balasubramanian as Directors subject to retirement by rotation.

AUDITORS

M/s Sarathy & Balu, Chartered Accountants, Auditors of the Company would hold their office till the conclusion of the ensuing Annual General Meeting. They have given their consent for reappointment and further stated that they are eligible to take up the appointment within the provisions of Section 224 (1-B) of the Companies Act, 1956. It is proposed to re-appoint the same auditors to hold the office from the conclusion of the ensuing Annual General Meeting till the conclusion of subsequent Annual General Meeting.

PARTICULARS OF EMPLOYEES

List of employees of the Company who have received remuneration in excess of the limits specified in Section 217(2A) of the Companies Act, 1956 read with the rules made there under is enclosed hereto as Annexure-I and forms part of this report.

INFORMATION ON ENERGY CONSERVATION & TECHNOLOGY ABSORPTION

Pursuant to the Provisions of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988, the relevant information pertaining to Energy Conservation, Technology Absorption, Foreign Exchange earnings and outgo is enclosed hereto as Annexure -II and forms part of this report.

DIRECTORS RESPONSIBILITY STATEMENT

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

I. The applicable accounting standards have been followed in preparation of the annual accounts and there are no material departures during the year under review.

ii. They have selected the accounting standards and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the Company for the period.

iii. They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 to safeguard the assets of the company and for preventing and detecting fraud and other irregularities.

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

MANAGEMENT DISCUSSION & ANALYSIS

The Management Discussion and Analysis given below discusses the key issues concerning the business carried on by the Company.

Industry Overview

VIMTA LABS LIMITED is engaged in Contract Research and Testing activities in the following areas :

i) Advanced Molecular Biology

ii) Analytical testing of Food & Drugs

iii) Clinical Reference Laboratory Services

iv) Clinical Research

v) Environmental Monitoring and Impact Assessment

vi) In-house R&D

vii) Pre-Clinical Research

As seen above your Companys focus is majorly on Pharma and health care industry.

Scope and Potential

Amended drugs and cosmetic act demands GLP/GMP compliant drug testing with effect from September 2010. Your company is well positioned with its cGMP compliant laboratories created at Alexandria Knowledge Park (formerly known as S P Bio-Tech Park) in Genome Valley. FDA approval received recently enhances our opportunity in terms of domestic and international business opportunities.

Your company has started building capabilities to support drug discovery activities from invitro to invivo. Internal Research & Development team has been developing a range of invitro and biologics assays to support the market needs. The newly created pre-clinical invivo (animal house) facility is in the process of seeking AAALAC accreditation and necessary GLP certification during the current fiscal.

The Clinical Research activities of your company have been predominantly Bio-availability and Bio-equivalence studies supporting the generic industry. As generic industry has been going through a process of consolidation globally your company has taken steps to launch Clinical Trial services (Phase II, III and IV) since last one year. Today your company has a wide network of clinical trial sites. This helps your company to compete for its share in the growing clinical trial market.

The recent accreditations of your companys clinical laboratory by College of American Pathologists (CAP) are just in time to support clinical trial sample analysis as a Central Lab for global companies demanding global standards.

Your company has been successful in building bench mark infrastructure required for Contract Research and testing activities. As can be seen from the financials, your company has been investing appropriately on the human resources during the last two years to build capabilities for a sustainable growth.

Strengths

Quality, Technology and Knowledge have been the three prime drivers for your company. The international accreditations, success at global regulatory audits and partnerships with market leaders confirm that your company is in the right direction.

Threats

Competition is an inherent threat for any business. More and more players are likely to walk into the field of operations, Vimta is engaged in. Multinational Contract Testing and Research organizations are anchoring in India to reduce their service costs. To mitigate the threats Vimta is always looking for continuous innovation of new portfolios thus giving itself a clear lead of 2-3 years.

Outlook

With the pre-clinical facility in place and considering the market potential and increasing intent from Pharma MNCs on outsourcing to Indian CROs, the Company is confident of maintaining higher growth rates in the years to come.

Risks and Concerns

The increasing demand for Vimtas services has been putting a lot of pressure on human resources. Availability of talented and trained manpower is scarce and the Company is doing its best to employ qualified people and impart on job training to cope with the increasing work loads. Further, steep increase in the input costs due to high inflation is a major concern. Vimta is making all its efforts to reduce expenditure to offset the effect of inflation to maintain profitability levels.

Safety, Health and Environment

As a part of Vimtas commitment towards the principles of sustainable development, safety, health and environment continue to be priority areas for the Company. Some of the major activities in these areas have been recycling of waste water; the pre-clinical facility is a gold rated green building, training of staff at all levels in the facility has been created with required standards to monitoring the safety, health and environment.

Foreign exchange fluctuations

Foreign currency transactions pertaining to the invoices raised on customers are accounted at the exchange rates prevailing on dates of the respective transactions. The outstanding receivables as on balance sheet date are translated at year end rates. The exchange differences arising on actual date of receipts from the customers settled during the year resulted in a gain of ` 253.75 lakhs.

Monetary liabilities denominated in foreign currency pertaining to term loan as at balance sheet date is translated at year end exchange rate. The resultant exchange loss during the year is ` 147.58 lakhs.

The net gain during the year on account of the above transactions amounting to ` 106.17 lakhs has been accounted under other income in Profit & Loss Account.

Segment-wise or Product-wise performance

The Company is primarily engaged in the business of testing and research activities in various disciplines such as Contract Research, Clinical Speciality Diagnostics, Analytical Testing, Environmental Monitoring and Impact Assessment studies. Since the inherent nature of all these activities are integrated and governed by the same set of risks and returns and operating in the same economic environment, these have been grouped as a single segment in the financial statements. The said treatment is in accordance with the Accounting Standard (AS) - 17 on "Segment Reporting".

Internal Control Systems

The Company has a well-defined internal control system and the same is adequate and commensurate with the size and nature of its business. Adequate internal controls are established to ensure that all assets are safeguarded, and protected against loss from unauthorized use or disposition, and all the transactions are authorized, recorded and reported correctly. As a part of control systems, Company is in the process of SAP ERP implementation.

The Company monitors and reviews the progress on the basis of internal audit reports and through Audit Committee Meetings regularly.

Financial performance

Gross revenue for the year 2009-10 is ` 8841.56 lakhs as compared to the previous year of ` 8173.07 lakhs. The Export income increased by 35.82% in the year to reach ` 4125.93 lakhs, as compared to the previous year of ` 3037.74 lakhs. The Net Profit stood at ` 265.86 lakhs as compared to the previous year net profit of ` 404.43 lakhs.

Human Resources

Human Resource is one of the strong drivers of the company. At the end of the financial year Vimta had 777 employees including 32 Medical Doctors; 34 PhDs and 425 Scientists, Engineers and Technicians.

Research & Development

The R & D division of your company in addition to development and validation of Molecular diagnostic assays for in house use of Clinical Reference Lab, has developed in-vitro and biologics assays to support pre-clinical activities of the Company. With the development of these assays, your Company has the capability to provide a complete service for drug discovery and pre-clinical testing from in- vitro through to in-vivo.

During the year your company has spent ` 118.02 lakhs in its R & D activities towards manpower and Chemicals & consumables

R & D activities also involve several collaborative efforts for drug discovery and development of diagnostic assays and devices that will enable Vimta to obtain valuable Intellectual Property (IP) rights and enhance its portfolio in the near future.

Corporate Governance

The Company has complied with the Corporate Governance Code as stipulated under the listing agreement with the Stock Exchanges. A Separate section on Corporate Governance along with a Certificate from the auditors confirming the compliance is annexed to and forms part of this report. The Corporate Governance Voluntary Guidelines 2009 issued by Ministry of Corporate Affairs are under consideration for implementation.



DISCLOSURES AS PER THE LISTING AGREEMENT & SEBI REGULATIONS

Cash flow statements

In due compliance of the listing agreements and in accordance with the requirements prescribed by SEBI, the cash flow statement was prepared and appended to this Annual Report.

Stock exchanges

Equity Shares of your Company are listed with Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The listing fee was paid in time and no amount was outstanding.

Share transfer agency

The Company has appointed M/s CIL Securities Ltd, 214, Raghavaratna Towers, Abids, Hyderabad - 500001 as its share transfer agency for handling both physical and electronic transfers.

Transfer of unclaimed Dividend amount to Investor Education and Protection Fund

The Company has transferred unclaimed dividend for the years 2001-02 & 2002-03 to Investor Education and Protection Fund. The details of unclaimed dividends and due dates for transfer to the said fund account for other financial years were disclosed in the Corporate Governance Report.

Code of conduct

Your company has adopted Code of Conduct for the Board and the Senior Management of the Company and they are complying with the said code. A declaration by the CEO to this effect is furnished in Annexure to this report.

Replies on Auditors Qualifications

With respect to Auditors qualification in their report dated 12.05.2010, under item No. ix(b) the delays in depositing income tax deductions at source (TDS) and service tax in few cases were due to delay in receipt of expected cash in flows in time. However, all the payments were made before the end of the respective months in which they are payable. With respect to item No. xi (a), the company had to prioritise its capital requirements out of the current revenues resulting in delay in repayment of term loan installments to the bankers. However, the entire loan was repaid within the stipulated period.

FIXED DEPOSITS

Your Company has not accepted any deposits in terms of Section 58A of the Companies Act, 1956 and the rules made there under and hence compliance with the same is not applicable.

ACKNOWLEDGEMENTS

Your Directors wish to place on record their gratitude to shareholders and thank the customers, vendors, franchisees, bankers, Technology Development Board, merchant bankers and legal advisors for their continued support to your Companys growth. Your Directors wish to place on record, their appreciation for the contribution made by the employees at all levels, who, through their competence, sincerity, hard work, solidarity and dedicated support, enabled your Company to make rapid strides.

For and on behalf of the Board

Place : Hyderabad DR S P VASIREDDI

Date : 28.07.2010 CHAIRMAN & MANAGING DIRECTOR



 
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