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Directors Report of Vivimed Labs Ltd.

Mar 31, 2015

The Directors are pleased to present 27th Annual Report and the Company's audited financial statements for the financial year ended March 31, 2015.

Financial Results

The Company's financial performance, both standalone and consolidated, for the year ended March 31, 2015 is summarised below:

(Rs. in million) Particulars Standalone Consolidated

Year ended Year ended Year ended Year ended March 31, 2015 March 31, 2014 March 31, 2015 March 31, 2014

Revenue from Operations 4,301.48 4,319.93 13,800.99 13,508.33

Other Income 14.34 15.50 58.66 82.15

Total Income 4,315.82 4,335.43 13,859.65 13,590.48

Total operating expenditure 3,244.31 3,323.28 11,632.13 11,457.79

Operating Profit (EBITDA) 1,071.51 1,012.15 2,227.52 2,132.69

Finance cost 623.35 443.44 790.37 602.91

Depreciation and Amortisation 205.60 180.64 661.78 661.16

Profit Before Tax 242.55 388.08 775.37 868.62

Current Tax 48.53 77.64 152.80 199.81

Deferred Tax 4.67 44.14 (97.93) 4.86

Profit After Tax 189.35 266.30 720.50 663.94

Basic EPS 11.69 16.43 44.47 40.97

Diluted EPS 11.69 16.43 44.47 40.97

Review of Operations

Consolidated Financials

During the period under review, the Company has earned revenue of Rs.13,859.65 million.

The Company - has reported - sales of Rs.13800.99 million in the FY 2014-15 compared to net sales of Rs.13,508.33 million in FY 2013- 14, registering growth of 2.17% in the current financial year. The Company's growth was driven by strong performance across all manufacturing facilities.

The EBITDA stood at Rs.2227.52 million for FY 2014-15 compared to Rs.2,132.69 million for FY 2013-14, registering a growth of 4.45%. The profit after tax for FY 2014-15 stood at Rs.720.50 million compared to Rs.663.94 million for FY 2013-14, registering a growth of 8.52% in the current financial year.

Standalone Financials

During the period under review, the Company has earned revenue of Rs.4,315.82 million.

The Company - has reported - sales of Rs.4,301.48 million in the FY 2014-15 compared to net sales of Rs.4319.93 million in FY 2013-14.

The EBITDA stood at Rs.1071.49 million for FY 2014-15 compared to Rs.1012.17 million for FY 2013-14, registering a growth of 5.86 %.

Dividend

Due to proposed investment in expansions and developments in future and to conserve the available resources for the same, the board of directors of the Company have not recommend any dividend for the year 2014-15

Transfer to General Reserves

The Company proposes not to transfer funds to general reserves for the FY 2014-15. The total Reserves & Surplus (including Capital Reserve, Securities Premium Reserve, Central Subsidy, General Reserve and Surplus) as on March 31, 2015 is Rs.3577.45 million as against the Paid up Capital of Rs.162.04 million.

Share Capital

The Authorised Share Capital of the Company is Rs.111,00,00,000/- (Rupees One Hundred Eleven Crores only) comprising 4,00,00,000 (Four Crores) Equity Shares of Rs.10/- (Rupees Ten Only) each, and 71,00,00 (Seven Lakh Ten Thousand only) Preference Shares of the Company with a par value of Rs.1,000/- (Rupees One Thousand only) each,. The Paid Up Share Capital of the Company is Rs.162037830 (rupees sixteen crores twenty lakhs thirty seven thousand eight hundred and thirty only) divided into 162,03,783 equity shares of Rs.10/- each as on March 31, 2015.

Management's Discussion and Analysis Statement

Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, is presented in a separate section forming part of the Annual Report

Subsidiaries, Joint Ventures and Associate Companies

Subsidiary Companies:

The Company has five Indian Subsidiaries – Creative Healthcare Private Limited, Klar Sehen Private Limited, Octtantis Nobel Labs Private Limited, Finoso Pharma Private Limited and Vivimed Labs (Alathur) Private Limited.

Hong Kong based Vivimed Holdings Limited a 100% subsidiary of the Company is a 100% holding Company of Vivimed Labs Europe Limited, UK.

Vivimed Labs USA Inc. is a 100% subsidiary of Vivimed Labs Limited.

Mauritius based Vivimed Labs Mauritius Limited, a 100% subsidiary of Vivimed Labs Limited is the holding company of the 5 downstream subsidiaries as under:

1. Vivimed Labs UK Limited, UK

2. Vivimed Labs Spain S. L., Spain

3. Union Quimico Farmaceutica S.A.U, Spain

4. Holliday International Limited, UK

5. Uquifa Mexico S.A. de C.V., Mexico

In totality, as on March 31, 2015, the Company has 5 Indian and 9 foreign direct/step down wholly owned subsidiaries.

Subsidiary Companies:

- Creative Healthcare Private Limited (CHCPL)

Creative Health Care Pvt Ltd. is a company specialised in mfg pharmaceutical formulations under CMO catering to Pharma majors like Wockhardt, Cipla, Abbott, Lupin etc. The relationship with these companies ranges from 3 years to 10 years and the product range is ever increasing. The capacity utilisation is around 90%. CHCPL has recently acquired Some pharma brands from Noel Pharma and started marketing the products from sept., 14 onwards and showing good growth. CHCPL is dealing in Pharmaceutical business. The Share Capital of the Company as on March 31, 2015 isRs.25.00 million. During FY 2014-15, the Company achieved a turnover Rs.861.10 million against the turnover of Rs.704.77 million of FY 2013-14 and the proft after tax is Rs.6448 million against Rs.39.00 million of FY 2013-14.

- Klar Sehen Private Limited (Klar Sehen)

Klar Sehen, , a niche ophthalmic formulations Company in India has started its journey beyond India to reach a global market, starting with the US OTC (OPHTHALMOLOGY PRODUCTS) market, and has launched 4 products which are now stocked in the top 3 retail chains in USA.

Klar Sehen has an enviable track record of providing eye care products for over 3 decades. Our strict adherence to quality and service has helped in winning the trust of million of satisfied consumers.

The Company is dedicated towards providing eye care products in all the relevant segments - Tears Substitutes, Antibiotics, Antiviral, Mydriatics, NSAIDS, Anti allergens, Operative and so on. Klar Sehen's products like RENICOL, DEXACORT-N, IRIGAN, etc. are trusted by Ophthalmologists across India.

Klar Sehen is dealing in Pharmaceutical business, it is a wholly owned subsidiary of the Company. The Share Capital of the Company as on March 31, 2015 is Rs.6.99 million. During FY 2014- 15, the Company achieved a turnover of Rs.313.68 million against the turnover of Rs.269.88 million of FY 2013-14 and the profit after tax is Rs.38.14 million against Rs.21.80 million of FY 2013-14

- Finoso Pharma Pvt Ltd (FINOSO)

FINOSO.,Is a contract research organisation into FR&D, AR&D, quality assurance, regulatory affairs, project management and stability studies and other works related to flings for USA, Canada, Australia and other regulatory marketscountries.

Finoso specialises in the development of formulations in Solid oral dosage forms like tablets, capsules, and liquid orals like syrups and suspensions. Also does stability studies as per ICH guidelines for Canada which is approved by Health Canada, a regulatory body in Canada.

The team consisting of 35 technical core team of scientists, capable of delivering controlled release, modified release, sustained release formulations and ODT (oral dispersible technology) and MUPS (multi unit particulate system) in the form of pellets and other technologies.

The clientele includes Aurobindo, DRL, and companies from USA and Europe. The Share Capital of the Company as on March 31, 2015 isRs.30.15 million. During FY 2014-15, the Company achieved a turnover of Rs.63.43 million against the turnover of Rs.34.95 million of FY 2013-14 and the profit after tax is Rs.0.23 million against Rs.2.53 million of FY 2013-14

- Vivimed Labs Alathur Pvt Ltd

In August 2013, as part of its global business strategy to complete its presence across the entire health care value chain, Vivimed completed the acquisition of a US FDA inspected Rs.1.2 billion SOD per annum manufacturing facility at Alathur near Chennai, Tamilnadu. This facility earlier belonged to the US pharma MNC Actavis (Watson) and has received US FDA approval 4 times in April 2007, April 2009, Oct 2011 and most recently in Feb 2015. The plant manufacturing capacity can be expanded to 5 billion SOD per annum. This eliminates 3 to 4 years of lead time to build a green field project of this quality and getting the regulatory approvals.

This strategic acquisition gives Vivimed immediate access to regulated markets such as US and European union. US is the largest generic market in the world. This also enables Vivimed to complete the health care value chain by providing forward integration synergies for Vivimed's existing API business.

With the acquisition of the Alathur facility and Finoso, Vivimed will now develop its own formulation dossiers, DMFs and ANDAs and start building a fling pipeline with the Alathur facility as the manufacturing site.

Vivimed Labs (Alathur) Pvt Ltd is dealing in Pharmaceutica business,. The Share Capital of the Company as on March 31, 2015 is Rs.501.70 million. During FY 2014-15, the Company achieved a turnover of Rs.281.30 million against the turnover of Rs.329.06 million of FY 2013-14 and the profit after tax is Rs.(55.29) million lakhs against Rs.(117.08) million of FY 2013-14

- Octtantis Nobel Labs Private Limited (ONPL)

Octtantis Nobel Labs Pvt. Ltd., is incorporated in April 2011 with the vision of becoming the key player in Pharmaceutica Formulations Ethical marketing in Indian Pharmaceutical industry.

M/s. Vivimed labs Limited has acquired the stake in M/s. Octtantis Nobel Labs. Pvt. Ltd to make foray into Pharmaceutica formulations marketing.

The Company has started its operations from September 2011 under the leader ship of the directors having good experience in manufacturing and Ethical marketing of Pharmaceutica Formulations.

The Company launched with 25 products consisting of Antibiotics, Antidiarrhoeals, Anti infammatory, Analgesics, Dietary supplements and Nutraceuticals etc. Out of which few brands were acquired from M/s. Hezen Inc. - Hyderabad having a sale turnover of Rs. 7 Crores .

The Company started its marketing operations in Andhra Pradesh, Bihar, Jharkhand, Assam, Arunachal Pradesh, Manipur, Meghalaya, Tripura, Nagaland and Mizoram with a feld strength of 130 members marketing team.

However, The Company transferred its business to its co- companies and is currently not undertaking marketing of ethica formulations to save on marketing costs to the group as a whole.

Under the leader ship of experienced Directors M/s. Octtantis Nobel Labs Pvt. Ltd has acquired the fully operational manufacturing facility located in Plot. No: 41 & 44 A&B in Anrich industrial Estate, Bollaram, Jinnaram Mandal, Medak district A P. Having the manufacturing capacity of Tablets, Capsules, Liquid Orals and Powder etc. under cGMP norms.

Such plant has been leased out to Vivimed Labs Ltd., for leveraging the CMO experience of Vivimed labs Ltd., who entered into a manufacturing agreement with M/s. Wockhardt Limited for some of their products.

ONPL is dealing in Pharmaceutical business. The Share Capital of the Company as on March 31, 2015 is Rs.23.00 million.

- Vivimed Holdings Limited (VHL)

The Company was incorporated in Hong Kong as an wholly owned subsidiary of Vivimed Labs Ltd. It is a holding company to Vivimed Labs Europe Limited. The Share Capital of the Company as on March 31, 2015 is Rs.0.06 million.

- Vivimed Labs Europe Limited

The Company is a wholly owned subsidiary of VHL.. The Share Capital of the Company as on March 31, 2015 is Rs.8.17 million. During FY 2014-15, the Company achieved a turnover of Rs.1153.91 million against the turnover of Rs.1397.29 million of FY 2013-14 and the profit after tax is Rs.146.05 million against Rs.120.20 million of FY 2013-14

- Vivimed Labs USA INC. (VL USA)

VL USA is dealing in Pharmaceutical business,.. During FY 2014-15, the Company achieved a turnover of 484.05 million against the turnover of Rs.408.57 million of FY 2013-14 and the profit after tax is Rs.6.92 million against Rs.(5.01) million of FY 2013-14

- Vivimed Labs Mauritius Limited (VML)

VML was incorporated in Mauritius. It is a holding company to Vivimed Labs UK Limited. The Share Capital of the Company as on March 31, 2015 comprises of Rs.46041 million in the form of Equity Share Capital and . Preference share capital of Rs.639.45 million.

- Vivimed Labs UK Limited (VL UK)

VL UK was incorporated in UK as an wholly owned subsidiary of VML. It is a holding company to Vivimed Labs Spain S.L. The Share Capital of the Company as on March 31, 2015 is Rs.639.45 million.

- Vivimed Labs Spain S.L(VL Spain)

VL Spain was incorporated in Spain as an wholly owned subsidiary of VL UK . It is a holding company to Union Quimico Farmaceutica S.A.U

The Share Capital of the Company as on March 31, 2015 isRs.642.78 million.

- Union Quimico Farmaceutica S.A.U (UQUIFA Spain)

Uquifa Spain is a well-established manufacturer of pharma API's and intermediates with global coverage operating cGMP sites out of Spain. Uquifa sells to more than 70 countries worldwide and has more than 150 active DMF´s fled and 20 COS approved. Uquifal counts amongst its customers the major Generic and Ethica companies operating in the Industry and continues to invest in personnel and facilities to maintain a arrow technology offering to both the Generic Industry and the Ethical Pharmaceutica Industry.

The Share Capital of the Company as on March 31, 2015 isRs.209.87 million. During FY 2014-15, the Company achieved a turnover of Rs.5240.73 million against the turnover of Rs.5106.08 million of FY 2013-14 and the profit after tax is Rs.319.10 million against Rs.205.61 million of FY 2013-14

- Holiday International Limited (HIL)

HIL was incorporated in UK as an wholly owned subsidiary of VL Spain . It is a holding company to Uquifa Mexico S.A. de C.V

The Share Capital of the Company as on March 31, 2015 is Rs.0.00 million.

- Uquifa Mexico S.A. de C.V. (Uquifa)

The Share Capital of the Company as on March 31, 2015 is Rs.133.79 million. During FY 2014-15, the Company achieved a turnover of Rs.1806.97 million against the turnover of Rs.2103.58 million of FY 2013-14 and the profit after tax is Rs.75.96 million against Rs.78.59 million of FY 2013-14

Associate Companies :

Yantra Green Power Pvt Ltd:

Yantra Green Power (P) Ltd.,is extremely focus driven in setting up a Captive Solar Power Plant in Telangana and wants to define the goals and objectives in achieving the Phase I requirements of the project under REC. This is a Grid interactive Power plant based on Solar Photovoltaic technology using Polycrystalline modules. The power purchase agreement has been signed with M/s Vivmed Labs Ltd for the supply of power. The synchronisation of the plant was completed on 17/07/2015 and commercial date of operation will start on completion of Long Term Open Access Agreement (LTOA) between Yantra Green Power, Vivimed labs and TSCPDCL

The Policy for determining material subsidiaries as approved by the Board may be accessed on the Company's website at the link: www. vivimedlabs.com

However, as per the provisions of section 129 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, a separate statement containing the salient features of the financial statements of the subsidiary Companies is prepared in Form AOC-1 and it forms part of the consolidated financial statements.

Consolidated Financial Statements

The consolidated financial statements, in terms of Section 129 of the Companies Act, 2013 and Clause 32 of the Listing Agreement and prepared in accordance with Accounting Standard 21 as specified in the Companies (Accounting Standards) Rules, 2006 forms a part of this annual report. As per the provisions of Section 136 of the Companies Act, 2013, the Company has placed separate audited accounts of its Subsidiaries on its website www.vivimedlabs.com and copy of separate audited accounts of its Subsidiaries will be provided to the members at their request

Director's Responsibility Statement

Pursuant to the requirement of Section 134(5) of the Companies Act, 2013 and based on the representations received from the operating management, the Directors hereby confirm that:

a. in the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

b. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the profit of the Company for the year ended on that date;

c. the Directors have taken proper 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) the Directors have prepared the annual accounts on a 'going concern' basis for the financial year ended March 31, 2015;

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

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively

Corporate Governance Report

The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The report on Corporate Governance as stipulated under the Listing Agreement forms an integral part of this Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance is attached to the report on Corporate Governance.

Corporate Social Responsibility (CSR)

The Corporate Social Responsibility Committee (CSR Committee) has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board.

The Composition of the Committee is provided below.

Name Category

Prof. M. Bhagvant Rao Independent, Non- Executive

Dr. V. Peesapati Independent, Non- Executive

Dr. V. Manohar Rao Non Independent, Executive

Mr. Santosh Varalwar Non Independent, Executive

The CSR Policy may be accessed on the Company's website at the link: www.vivimedlabs.com

The Company would undertake CSR initiatives in compliance with Schedule VII to the Act. During the year, the Company has not spent on CSR activities. The Company is evaluating various proposals to ensure CSR funds are optimally utilised (Annexure I).

Nomination and Remuneration Committee

The Company's Nomination and Remuneration committee consists Independent Directors which ensures transparency in determining the remuneration of Directors, KMPs and other employees of the Company.

During the FY 2014-15, the composition of Nomination and Remuneration Committee is provided below.

Name Category

Prof. M. Bhagvant Rao Independent, Non-Executive

Mr. P. V. Ratnam Independent, Non-Executive

Dr.V.Peesapati Independent, Non-Executive

Mr. Nixon Patel Independent, Non -Executive

The Performance Evaluation and Remuneration Policy framed by the Committee and approved by the Board is directed towards rewarding performance of Executive and Non- Executive Directors, Key Managerial Personnel and Senior Management Personnel of the Company based on review of achievements periodically.

Risk Management

During the year, your Directors have constituted a Risk Management Committee which has been entrusted with the responsibility to assist the Board in (a) Overseeing and approving the Company's enterprise wide risk management framework; and (b) Overseeing that all the risks that the organisation faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. Your Company has proper process for Risk Management.

Internal Audit & Controls

Your Company continues to engage M/s Price Waterhouse Coopers Pvt. Ltd as its Internal Auditors. During the year, your Company continued to implement their suggestions and recommendations to improve the internal controls. Their scope of work includes review of operational deficiency, effectiveness of systems & processes, compliances and assessing the internal control strengths in all areas. Internal Auditors observations are discussed and suitable corrective actions are taken as per the directions of Audit Committee on an on-going basis to improve efficiency in operations.

The Company's internal control systems are well established and commensurate with the nature of its business and the size and complexity of its operations. The Audit Committee reviews adequacy and effectiveness of the Company's internal control environment and monitors the implementation of audit recommendations. The recommendations/suggestions of the internal auditors are discussed in the Audit Committee meetings periodically.

Directors and Key Managerial Personnel

In accordance with the provisions of Section 152 of the Companies Act, 2013, Mr. Srinivas Chidambaram(Non-Executive, Non- Independent Director), Mr Sandeep Varalwar (Non Independent, Executive Director) and Mr S Raghunandan (Non Independent, Executive Director) of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible offers themselves for re- appointment.

Mr. Santosh Varalwar was re-appointed as Managing Director & CEO of the Company with effect from August 14, 2010 by the Shareholders at the 22nd Annual General Meeting of the Company held on September 18, 2010. The current term of Mr. Santosh Varalwar as Managing Director & CEO of the Company expires on August 13, 2015. Mr. Manohar Rao Varalwar, Mr. Subhash Varalwar, Mr. Sandeep Varalwar and Mr S. Raghunandan were re-appointed as whole time Directors of the Company with effect from August 14, 2010 by the Shareholders at the 22nd Annual General Meeting of the Company held on September 18, 2010. The current term of them as whole Time Directors of the Company expires on August 13, 2015. In view of their consistent efforts which have contributed to the growth of the organisation and the sincere service rendered for the better performance of the organisation during their tenure as Managing Director & CEO and whole time Directors, the Board of Directors on the recommendation of the Nomination and Remuneration Committee, has decided to re-appoint Mr. Santosh Varalwar as Managing Director & CEO and Mr. Manohar Rao Varalwar ,Mr. Subhash Varalwar, Mr. Sandeep Varalwar and Mr S. Raghunandan as whole time Directors of the Company for a further period of 5 (five) years effective from August 14, 2015 under Section 196, 197, 203 read with Schedule V of the Companies Act, 2013 and rules made thereunder. The approval of the members is being sought to the terms, conditions and stipulations for the re-appointment of Mr. Santosh Varalwar as Managing Director & CEO and Mr. Manohar Rao Varalwar, Mr. Subhash Varalwar, Mr. Sandeep Varalwar and Mr S. Raghunandan as whole time Directors and the remuneration payable to them and resolution pertaining to the same is contained in the notice calling Annual General Meeting.

During the year under review, the members approved the appointments of Prof. V. Bhagvant Rao ,Dr V Peesapati, Mr. Nixon Patel and Mr P V Rathnam as Independent Directors of the Company who are not liable to retire by rotation.

To broad base the Board and in compliance with Companies Act 2013 & Listing agreements with stock exchanges, the Board of Directors have appointed Mrs. Umanath Varhabotla as an Additional Director (Woman Director) on the Board. Resolution pertaining to the appointing Ms. Umanath Varhabotla as an Independent director is contained in the notice calling Annual General Meeting.

During the year under review, the Company appointed Mr N M Vaidyanathan as CFO of the Company and due to personnel reasons he resigned on 18/3/2015.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under the Act and Clause 49 of the Listing Agreement with the Stock Exchanges.

The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which include criteria for performance evaluation of the non-executive directors and executive directors.

The Board of Directors has complete access to the information within the Company. Independent Directors have the freedom to interact with the Company's management. Interactions happen during Board / Committee meetings, when CXOs are asked to make presentations about performance of the Company to the Board. Apart from this, they also have independent interactions with the Statutory Auditors, the Internal Auditors and external advisors appointed from time to time. Further, they meet without the presence of any management personnel and their meetings are conducted informally to enable the Independent Directors to discuss matters pertaining to the Company's affairs and put forth their combined views to the Board of Directors of the Company.

Employee Stock Option Plan (ESOP)

The Nomination and Remuneration Committee of the Board of Directors of the Company, inter alia, administers and monitors the Employees' Stock Option Plan of the Company in accordance with the applicable SEBI Guidelines.

The applicable disclosures as stipulated under the SEBI Guidelines as on March 31, 2015 (cumulative position) with regard to the Employees' Stock Option Scheme (ESOS) are herein under provided.

Pursuant to clause 14 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, certificate from M/s. P. Murali & Co, Statutory Auditors is given as Annexure II to this report.

The details of the stock options granted / vested / exercised under the Vivimed Labs Employee Stock Option Plan 2010 approved by the members in 22nd AGM, are given below:

Sl. no. Description Details

(a) Options granted till date under the scheme 500000

(b) Pricing formula More than 50% price calculated as per SEBI guidelines . on National Stock Exchange (where there was highest trading volume)

(c) Options vested during the year 100000

(d) Options exercised during the year Nil

(e) Total number of shares arising as a result of exercise of options Nil

(f) Options lapsed during the year Nil

(g) Options lapsed till date under the scheme Nil

(h) Variation in terms of options Nil

(i) Money realised by exercise of options during the year Nil

(j) Total number of options in force 500000

(k) Employee wise details of options granted to:

(i) Senior managerial personnel

Name No. of options 1. Suresh Mishra 25000

2. Ramesh Challa 25000

3. S. P. Jain 50000

4. Paaritosh Kumar. V. 25000

5. Vivekananda 25000

6. Phanindernath 85000

7. Dayasagar Vaidya 25000

8. Kalyan 30000

9. Ravi Kiran V. 50000

10. D. Satish Chandra 25000

11. Satish Chandra Mudgade 25000

12. Ram Caesar 20000

13. Talikunda Sreekant 20000

14. Gotimukal Girish 20000

15. Sheshi Reddy 10000

16. Govardhan 10000

17. A. Raghu Ramulu 10000

18. A. S. Lahari 20000

(ii) Any other employee who receives a grant in any one year of options amounting to Nil 5% or more of options granted during the year.

(iii) Identified employees who were granted option, during any one year, equal to Nil or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant.

(l) Diluted Earnings per share (EPS) pursuant to issue of shares on exercise of options Not Applicable calculated in accordance with Accounting Standard (AS) 20 – Earning per share.

(m) Where the Company has calculated the employee compensation cost using the intrinsic Not Applicable value of the stock options, the difference between the employee compensation cost that shall have been recognised if it had used the fair value of the options.

(n) Weighted-average exercise prices and weighted-average fair values of options, whose Not Applicable exercise price either equals or exceeds or is less than the market price of the stock

(o) Description of the method and significant assumptions used during the year to estimate Not Applicable the fair values of options.

Auditors & their Report

Statutory Auditors

Pursuant to the provisions of Sections 139, 141 & 142 and other applicable provisions, if any, of the Companies Act, 2013 and rules thereon, M/s. P.Murali &Co, Chartered Accountants, Hyderabad was re-appointed for 1 year in the last Annual General meeting. The Company has received a certificate from the auditors to the effect that their re-appointment if made, would be in accordance with the conditions as specified under Section 141 of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014. The Directors recommend for re- appointment of M/s. P.Murali &Co,, Chartered Accountants as Statutory Auditors for the FY 2015-16 & FY 2016-17 subject to ratification in next Annual General Meeting. A resolution proposing re-appointment of M/s. P.Murali & Co, Chartered Accountants as the Statutory Auditors of the Company for the FY 2015-16 & FY 2016-17 pursuant to section 139 of the Companies Act, 2013 forms part of the Notice.

Comments of the Auditors in their report and the notes forming part of the accounts are self-explanatory and need no comments. However, the Auditors have not made any adverse qualifications in their report on the accounts of the Company under review.

Cost auditors

In pursuance of Section 233B of the Companies Act, 1956 the Central Government has ordered Cost Audit for pharma sector Accordingly, M/s M/s. A.S. Rao & Co, Cost Accountants were appointed as Cost Auditors to render reports to the Central Government. resolution pertaining to the ratification of remuneration of cost auditors is contained in the notice calling Annual General Meeting.

Secretarial Auditor

The Board has appointed M/s. N V S S S Rao, Company Secretary in practice , to conduct Secretarial Audit for the FY 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed herewith marked as Annexure III to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Contracts and Arrangements with Related Parties

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. During the year, except with the wholly owned subsidiary, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company's website at the link: www.vivimedlabs.com.

The particulars of contracts or arrangements with related parties referred to in section 188(1) are prepared in Form No. AOC-2 pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 and the same is enclosed as Annexure IV to this Report.

Disclosures

Audit Committee

The Audit Committee comprises majority Independent Directors namely Mr. P. V. Ratnam (Chairman), Prof. V. Bhagvant Rao and Mr. Srinivas Chidambaram as other members. All the recommendations made by the Audit Committee were accepted by the Board.

Vigil Mechanism

The Company has a Vigil mechanism and Whistle blower policy in terms of the Listing Agreement, under which the employees are free to report violations of applicable laws and regulations and the Code of Conduct. Protected disclosures can be made by a whistle blower through a dedicated e-mail, or a letter to the Chairman of the Audit Committee.

The Policy on vigil mechanism and whistle blower policy may be accessed on the Company's website at the link: www. vivimedlabs.com

Meetings of the Board

five meetings of the Board of Directors were held during the year under review. For further details, please refer report on Corporate Governance of this Annual Report.

Code of Conduct

A declaration regarding compliance with the code of conduct signed by the Company's Managing Director & CEO is published in the Corporate Governance Report which forms part of the annual report.

Particulars of loans given, investments made, guarantees given and securities provided are provided in the standalone financial statement (Please refer Notes to the standalone financial statement).

Conservation of energy, technology absorption and foreign exchange earnings and outgo:

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act, are provided in Annexure V to this Report.

Extract of Annual Return

Extract of Annual Return of the Company is annexed herewith as Annexure VI to this Report.

Particulars of Employees and related disclosures

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, no employee of the Company except executive directors and Key Managerial persons are drawing remuneration in excess of the limits set out in the said rules forms part of this Report.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are also forms part of this Report.

Your Directors further state that, the remuneration paid to the Key managerial Personnel and others is as per the Remuneration Policy of the Company.

Policy on Sexual Harassment

The Company has adopted policy on Prevention of Sexual Harassment of women at Workplace in accordance with The Sexual Harassment of women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the year under review, the Company has not received any complaints pertaining to Sexual Harassment.

General

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

1. Details relating to deposits covered under Chapter V of the Act.

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

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOP referred to in this Report.

4. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

6. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. (Except Rs.10 lakhs imposed by SEBI vide its order dated 24.7.2014 for not intimating the Exact date of dividend (for FY 2012-13) payment to stock exchanges).

Cautionary statement

The management of Vivimed Labs has prepared and is responsible for the financial statements that appear in this report. These are in conformity with accounting principles generally accepted in India and, therefore, may include amounts based on informed judgements and estimates. The management also accepts responsibility for the preparation of other financial information that is included in this report. Statements in this Management Discussion and Analysis describing the Company's objectives, projections, estimates and expectations may be 'forward looking statements' within the meaning of applicable laws and regulations. Management has based these forward looking statements on its current expectations and projections about future events. Such statements involve known and unknown risks, significant changes in political and economic environment in India or key markets abroad, tax laws, litigation, labour relations, exchange rate fluctuations, interest and other costs may cause actual results to differ materially

Appreciation and Acknowledgement

Your Directors would like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Company's executives, staff and workers.

For and on Behalf of Board of Directors

Sd/- Sd/-

Date : August 14, 2015 Dr. V. Manohar Rao Santosh Varalwar

Place : Hyderabad Whole Time Director Managing Director & CEO


Mar 31, 2014

To the Members,

The Directors are pleased to present their Twenty Sixth Annual Report on business and operations of the Company and the accounts for the financial year ended March 31, 2014.

The year in retrospect

The consolidated net revenue of the Company during 2013- 14 grew by 21.8% at H13,508.33 million as compared to H11,087.96 million last year. The Company has achieved a standalone net revenue of H4,319.93 million during the year under review, as compared with H4,231.25 million during the previous year, a rise of 2.1%

Consolidated profit before tax decreased to H868.62 million, as compared with H978.76 million in the previous year, a decrease of (11.25)% over the last year. Standalone profit before tax decreased to H388.07 million from H513.81 million, a decline of (2.47)% over last year.

Consolidated profit after tax decreased to H663.94 million as compared with H835.84 million in the previous year, a decease of (20.56)% over the last year. The Company recorded a Standalone profit after tax of H266.30, a decrease (27.50)%as compared with last year''s H367.36 million.

A detailed review of operations and performance of the Company is contained in the Management Discussion and Analysis Report, which is given as a separate chapter in the Annual Report.

Detailed summary of financial performance is given in table below:

H in millions

Particulars Standalone Consolidated Year ended Year ended Year ended Year ended 31.03.2014 31.03.2013 31.03.2014 31.03.2013

Revenue from 4,319.93 4231,25 13,508.33 11,087.96 Operations

Other Income 15.50 33.79 82.15 118.74

Change in Inventory 14.10 75.53 73.84 241.59

Total Income 4,349.53 4,340.57 13,664.32 11,448.29

Total operating expenditure 3,337.39 3,370.32 11,531.63 9,472.09

Operating Profit (EBIDTA) 1,012.17 970.25 2,132.69 1,976.20

Finance Cost 443.44 284.38 602.91 409.32

Depreciation and 180.63 172.07 661.16 588.11 Amortisation

Profit Before Tax 388.08 513.81 868.62 978.76

Current Tax 77.64 102.53 199.81 183.01

Deferred Tax 44.14 103.24 4.86 19.22

Profit After Tax 266.30 367.36 663.94 835.84

Basic EPS 16.43 22.87 40.97 52.04

Diluted EPS 16.43 22.87 40.97 52.04

Standalone financials

The Ministry of Corporate Affairs (MCA) vide notification no. S.o. 447(E) dated February 28, 2011 amended the existing Schedule vI to the Companies Act, 1956. The revised Schedule vI is applicable from financial year commencing from April 1, 2011. The financial statements of our Company for the year ended March 31, 2014 have been prepared in accordance with the revised Schedule vI and accordingly, the previous year''s figures have been reclassified/ regrouped to conform to this year''s classification.

Consolidated financials

The Ministry of Corporate Affairs (MCA) by General Circular No. 2/2011 dated February 8, 2011, had granted an exemption to companies from complying with Section 212 of the Companies Act, 1956, provided such companies fulfill conditions mentioned in the said circular. Accordingly, the Board of Directors of our Company at its meeting held on May 29, 2014, approved the Audited Consolidated Financial Statements for the financial year 2013-14 in accordance with the Accounting Standard (AS–21) and other Accounting Standards issued by the Institute of Chartered Accountants of India as well as Clause 32 of the Listing Agreement, which include financial information of all its subsidiaries, and forms part of this report. The Consolidated Financial Statements of your Company for the financial year 2013-14, have been prepared in compliance with the applicable Accounting Standards and where applicable the Listing Agreement as prescribed by the Securities and Exchange Board of India.

Changes to share capital

During the year under review the Issued, Subscribed and Paid up Capital has increased by an amount of H160.6 million to H162.0 million. This change in Issued, Subscribed and Paid Up Shares Capital is attributed to allotment of Equity Shares against Acquisition of Finoso Pharama, to its shares holders. The Authorised Share Capital of the Company Stands at H1,110 million.

Dividend

The Board recommended a dividend of H3/- on fully paid equity shares of H10 each for the FY 2013-14 for your approval. There will be no tax deduction at source on Dividend Payments, but the Company will have to bear tax on dividend @ 15.45%, inclusive of surcharge.

The dividend if approved, shall be payable to the shareholders registered in the books of the Company to those Members, holding shares in physical form, whose names shall appear on the Company''s Register of Members on close of business hours on Thursday, September 25, 2014; in respect of the shares held in dematerialised form, the dividend will be paid to the Members whose names are furnished by the National Securities Depository Limited and the Central Depository Services (India) Limited as the beneficial owners as at the close of business hours on Thursday, September 25, 2014. (the book closure from 26th September 2014 to 30th September 2014 (both days inclusive).

Transfer to general reserves

The General Reserves, on a standalone basis, at the beginning the year was H40.30 million. General Reserves at the end of the year are H80.71 million. our Board has decided to transfer an amount of H40.41 million to General Reserves.

Directors

In accordance with the New Companies Act 2013 and other applicable provisions /rules, Mr. Nixon Patel, Mr. M. Bhagvant Rao, Dr. v. Peesapati and Mr. P. v. Ratnam are required to be appointed as Independent Directors not liable to retire by rotation. Mr. Manohar Rao varalwar and Mr. Subhash varalwar, whole Time Directors of the Company being eligible, offer themselves for reappointment as directors liable to retire by rotation.

Subsidiary companies

The Company has five Indian Subsidiaries – Creative Healthcare Private Limited, klar Sehen Private Limited, octtantis Nobel Labs Private Limited, Finoso Pharma Private Limted and vivimed Labs (Alathur) Private Limited.

Hong kong based vivimed Holdings Limited a 100% subsidiary of the Company is a 100% holding Company of vivimed Labs Europe Limited, Uk.

Vivimed Labs USA Inc. is a 100% subsidiary of vivimed Labs Limited.

Mauritius based vivimed Labs Mauritius Limited, a 100% subsidiary vivimed Labs Limited is the holding company of the 5 downstream subsidiaries as under:

vivimed Labs Uk Limited, Uk

vivimed Labs Spain S. L., Spain

Union Quimico Farmaceutica S.A.U, Spain

Holliday International Limited, Uk

Uquifa Mexico S.A. de C.v., Mexico

In totality, as on March 31, 2014, the Company has 5 Indian and 9 foreign subsidiaries.

Pursuant to a general exemption granted by the Ministry of Corporate Affairs under Section 212 of the Companies Act, 1956, vide its General Circular No. 2/2011 dated February 8, 2011, the Company is not required to annex to this Report, the Annual Reports of the above mentioned 5 Indian Subsidiaries and 9 foreign subsidiaries, for the year ended March 31, 2014.

However if any member of the Company or its subsidiaries so desires, the Company will make available the Annual Accounts of subsidiaries to them on request.

Statement pursuant to Section 212 of the Companies Act, 1956, relating to Subsidiary Companies for the financial year ended March 31, 2014 and details of each subsidiary with respect to capital, reserves, total liabilities, details of investment, turnover, profit before taxation, provision for taxation, profit after taxation and proposed dividend are given in Annexure - A of this Report.

Conservation of energy, technology absorption and foreign exchange earnigs and outgo As required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the relevant data pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo is given in the prescribed format a s Annexure - B to this Report.

Particulars of employees

Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) (Amendment) Rules, 2011, is not applicable to the Company, hence is not being furnished with the directors report.

Human resource

our Company believes that competent human resources are the driving force for any organisation that enables a company to grow in leaps and bounds. The Company has been able to create a favourable work environment that encourages continuous learning and thereby leading to innovation. our Company has put in place a scalable recruitment and human resources plan, devised to attract and retain high calibre personnel.

Vivimed Labs has been fortunate in having a set of committed employees at all levels and looks forward to nurture them and retain their loyalty. our Company recognises the value of the committed employees and efforts are being made to enhance the bonding between the Company and the committed employees.

Risk management

Our Company views risk management as a value creating function, responsible for bringing about a culture change and preparing the organisation to face uncertain events. with this perspective, FY 2014 saw a more comprehensive risk management policy being re-launched in vivimed which is still being implemented across all divisions and branches, both in India and abroad. This policy strengthens ability to better visualise enterprise, process and compliance risks, and to proactively undertake mitigation actions to minimise such risks – and thus increase the likelihood of business success. The policy recognises that risk is not just about downsides or things going wrong; and that it should be equally focused on missing out the upside or added value that opportunities present.

Audit Committee of the Board of Directors conducts quarterly reviews regarding adequacy of risk management.

Internal controls and their adequacy our Company believes that a strong internal controls framework is an essential pre-requisite of growing businesses. It has well documented policies, procedures and authorisation guidelines commensurate with the size of the organisation, as well as an independent internal audit system to conduct audits of various divisions, corporate headquarters and overseas operations.

Audit Committee of the Board is updated on significant internal audit observations, compliance with statutes, progress of risk management and effectiveness of working of the control systems every quarter.

Auditors

The Company''s Statutory Auditors, M/s P. Murali & Co., Chartered Accountants, hold office up to the conclusion of the forthcoming Annual General Meeting.

It is proposed to appoint P. Murali & Co., Chartered Accountants, Hyderabad, as Statutory Auditors of the Company to hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting of the Company. The necessary resolution seeking approval of Statutory Auditors has been incorporated in the notice convening the Annual General Meeting.

Cost auditors

In pursuance of Section 233B of the Companies Act, 1956 the Central Government has ordered Cost Audit for pharma sector Accordingly, M/s Bharthula & Associates, Cost Accountants were appointed as Cost Auditors to render reports to the Central Government.

Fixed deposits

our Company has not accepted any fixed deposits under Section 58A of the Companies Act, 1956 hence no amount of principal or interest was outstanding as of the Balance Sheet Date.

Management discussion & analysis report The Management Discussion & Analysis Report highlighting the industry structure and developments, opportunities and threats, future outlook, risks and concerns is furnished separately and forms part of this report.

Corporate governance report and general shareholders information

As required by clause 49(vi) of the Listing Agreement entered into by the Company with the Stock Exchanges a detailed report on Corporate Governance is provided in Annexure of the Directors Report. The General Shareholders Information has been provided as Annexure which forms part of the Directors Report. The Company is in 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 Corporate Governance Report and forms part of the Directors Report.

Directors responsibility statement The Directors would like to assure the members that the financial statements for the year under review conform in their entirely to the requirement of the Companies Act, 1956.

The Directors confirm that :

The Annual Accounts have been prepared in conformity with the applicable Accounting Standards;

The Accounting policies selected and applied on a consistent basis, give a true and fair view of the affairs of the Company and of the profit for the financial year;

Significant care has been taken that adequate accounting records have been maintained for safeguarding the assets of the Company, and for prevention and detection of fraud and other irregularities;

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

Outlook

The Company has blended aggression with stability. we

would like to assure shareholders that investments in projects, products and markets will reinforce our competitive position. vivimed''s strategic blueprint will unfold in a phased manner and as it does, it is confident of enhancing shareholder value on a sustained basis over the medium to long-term.

Cautionary statement

The management of vivimed Labs has prepared and is responsible for the financial statements that appear in this report. These are in conformity with accounting principles generally accepted in India and, therefore, may include amounts based on informed judgements and estimates. The management also accepts responsibility for the preparation of other financial information that is included in this report. Statements in this Management Discussion and Analysis describing the Company''s objectives, projections, estimates and expectations may be ''forward looking statements'' within the meaning of applicable laws and regulations. Management has based these forward looking statements on its current expectations and projections about future events. Such statements involve known and unknown risks, significant changes in political and economic environment in India or key markets abroad, tax laws, litigation, labour relations, exchange rate fluctuations, interest and other costs may cause actual results to differ materially.

Acknowledgement

our Directors place on record their sincere appreciation for significant contribution made by the employees through their dedication, hard work and commitment and of the customers for the trust reposed on the Company. we also acknowledge the support extended to us by bankers, government agencies, shareholders and investors at large. we look forward to have the same support in our endeavour to attain our vision.

For and on Behalf of Board of Directors

Sd/- Date : 13/08/2014 Dr. V. Manohar Rao Santosh Varalwar Place : Hyderabad Whole Time Director Managing Director & CEO


Mar 31, 2013

To the Members,

The Directors are pleased to present their Twenty Fifth Annual Report on business and operations of the Company and the accounts for the financial year ended March 31, 2013.

The year in retrospect

The consolidated net revenues of the Company during 2012-13 grew by 65.91% at Rs.11,087.96 million as compared to Rs.6,683.14 million last year. The Company has achieved a standalone net revenue of Rs.4,231.25 million during the year under review, as compared with Rs.3,829.00 million during the previous year, a rise of 10.51%.

Consolidated profit before tax increased to Rs.978.76 million, as compared with Rs.778.21 million in the previous year, an increase of 25.77% over the last year. Stand alone profit before tax increased from Rs.513.40 million to Rs.513.81 million an increase of 0.08% over last year.

Consolidated profit after tax increased to Rs.835.84 million as compared with Rs.631.42 million in the previous year, an increase of 32.37% over the last year. The Company recorded a Stand alone profit after tax of Rs.367.36 million, a Decrease 9.10% as compared with last year''s Rs.404.15 million.

A detailed review of operations and performance of the Company is contained in the Management Discussion and Analysis Report, which is given as a separate chapter in the Annual Report.

Detailed summary of financial performance is given in table below:

Rs. in million Particulars Stand alone Consolidated

Year ended Year ended Change Year ended Year ended Change 31.03. 2013 31.03. 2012 in % 31.03. 2013 31.03. 2012 in %

Revenue from 4,231.25 3,829.00 10.51% 11,087.96 6,683.14 65.91% Operations

Other Income 33.79 4.20 706.52% 118.74 26.82 342.71%

Change in (75.53) (15.68) 381.92% (241.59) (183.53) 31.63% Inventory

Total Income 4,189.51 3,817.52 9.74% 10,965.10 6,526.43 68.01%

Total operating 3,370.32 3,004.63 10.85% 9,472.10 5,563.69 70.25% expenditure

Operating 970.26 844.26 14.92% 1,976.19 1,329.80 48.61% Profit (EBIDTA)

Finance Cost 284.38 225.35 26.19% 409.32 283.70 44.28%

Depreciation 172.07 105.51 63.08% 588.11 267.89 119.53% and Amortisation

Profit Before 513.81 513.40 0.08% 978.76 778.21 25.77% Tax

Current Tax 102.53 102.72 (0.19)% 183.01 158.90 15.17%

Deferred Tax 103.24 6.54 1479.62% 19.22 (12.11)(258.73) %

Profit After Tax 367.36 404.14 (9.10)% 835.84 631.42 32.38%

Basic EPS 22.87 29.00 (21.14)% 52.04 45.31 14.85%

Diluted EPS 22.87 25.16 (9.10)% 52.04 39.31 32.38%

Standalone Financials

The Ministry of Corporate Affairs (MCA) vide notification no. S.O. 447(E) dated February 28, 201 1 amended the existing Schedule VI to the Companies Act, 1956. The Revised Schedule VI is applicable from financial year commencing from April 1, 2011. The financial statements of our Company for the year ended March 31, 2013 have been prepared in accordance with the Revised Schedule VI and accordingly, the previous year''s figures have been reclassified/ regrouped to conform to this year''s classification.

Consolidated Financials

The Ministry of Corporate Affairs (MCA) by General Circular No. 2/2011 dated February 8, 2011, had granted an exemption to companies from complying with Section 212 of the Companies Act, 1956, provided such companies fulfill conditions mentioned in the said circular. Accordingly, the Board of Directors of our Company at its meeting held on May 30, 2013, approved the Audited Consolidated Financial Statements for the financial year 2012-13 in accordance with the Accounting Standard-21 and other Accounting Standards issued by the Institute of Chartered Accountants of India as well as Clause 32 of the Listing Agreement, which include financial information of all its subsidiaries, which forms part of this report.

Changes in Share Capital

During the year, the Issued, Subscribed and Paid up Equity Capital has increased from Rs.139.0 million to Rs.160.6 million due to allotment of Equity Shares against Conversion of CCPS. The Authorised Share Capital of the Company Stands at Rs.1110.0 million.

Dividend

The Company paid a pro rata Interim dividend @ 3.50% p.a. on fully paid Compulsorily Convertible and Cumulative Preference Shares (CCPS''s) of Rs.1,000 each which were converted into Equity Shares on 22nd March 2013.

The Board recommended a dividend of Rs.3/- on fully paid equity shares of Rs.10 each for the FY 2012-13 for your approval.

The dividend if approved, shall be payable to the shareholders registered in the books of the Company to those Members, holding shares in physical form,whose names shall appear on the Company''s Register of Members on close of business hours on Wednesday, September 25, 2013; in respect of the shares held in dematerialised form, the dividend will be paid to the Members whose names are furnished by the National Securities Depository Limited and the Central Depository Services (India) Limited as the beneficial owners as at the close of business hours on Wednesday, September 25, 2013 (the book closure from 26th September, 2013 to 30th September, 2013 (both days inclusive).

Directors

In accordance with the Company''s Articles of Association, read with Sections 255, 256 and 262 of the Companies Act, 1956, Mr. Nixon Patel and Mr. M. Bhagvanth Rao are retiring at the ensuing Annual General Meeting. Mr. Nixon Patel and Mr. M. Bhagvanth Rao, being eligible, offer themselves for re- appointment.

Mr. C. Ramakrishna and Mr. R. K. Dhar resigned during the year The Board places on record its sincere appreciation of the services rendered by Mr. C. Ramakrishna and Mr. R. K. Dhar during their tenure of directorship. The Board of Directors appointed Dr. V. Peesapati as an Additional Director effective from May 22, 2013.

Subsidiary Companies

Pursuant to a general exemption granted by the Ministry of Corporate Affairs under Section 212 of the Companies Act, 1956, vide its General Circular No. 2/2011 dated February 8, 2011, the Company is not required to annex to this Report, the Annual Reports of the above mentioned 3 Indian Subsidiaries and 9 foreign subsidiaries, for the year ended March 31, 2013. However if any member of the Company or its subsidiaries so desires, the Company will make available the Annual Accounts of subsidiaries to them on request.

Statement pursuant to Section 212 of the Companies Act, 1956, relating to Subsidiary Companies for the financial year ended March 31, 2013 and details of each subsidiary with respect to capital, reserves, total liabilities, details of investment, turnover, profit before taxation, provision for taxation, profit after taxation and proposed dividend are given in Annexure - A of this Report.

Acquisition & Relevant Date

Acquisition of Finoso Pharma Pvt. Ltd. is in process. However, the Company in its EGM conducted on 12th March, 2013 had mentioned relevant date as 11th February,2013 However as per the instructions/advise of stock exchanges (BSE & NSE) the Company has changed the relevant date as 8th February, 2013 for calculation of minimum price of Equity shares to be issued to the share holders of Finoso Pharma Pvt Ltd.

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

As required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the relevant data pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo is given in the prescribed format as Annexure to this Report.

Particulars of Employees

Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) (Amendment) Rules, 2011, is not applicable to the Company, hence is not being furnished with the Directors Report.

Human Resource

Our Company believes that competent human resources are the driving force for any organisation that enables a Company to grow in leaps and bounds. The Company has been able to create a favourable work environment that encourages continuous learning and thereby leading to innovation. Our Company has put in place a scalable recruitment and human resources plan, devised to attract and retain high calibre personnel.

Vivimed Labs Limited has been fortunate in having a set of committed employees at all levels and looks forward to nurture them and retain their loyalty. Our Company recognises the value of the committed workers and efforts are being made to enhance the bonding between the Company and the committed employees.

Risk Management

Our Company views risk management as a value creating function, responsible for bringing about a culture change and preparing the organisation to face uncertain events. With this perspective, FY 2013 saw a more comprehensive risk management policy being re-launched in Vivimed which is being implemented across all divisions and branches, both in India and abroad. This policy strengthens ability to better visualise enterprise, process and compliance risks, and to proactively undertake mitigation actions to minimise such risks - and thus increase the likelihood of business success. The policy recognises that risk is not just about downsides or things going wrong; and that it should be equally focused on missing out the upside or added value that opportunities present.

Audit Committee of the Board of Directors conducts quarterly reviews regarding adequacy of risk management.

Internal controls and their adequacy

Our Company believes that a strong internal controls framework is an essential pre-requisite of growing businesses. It has well documented policies, procedures and authorisation guidelines to commensurate with the size of the organisation, as well as an independent internal audit system to conduct audits of various divisions, corporate headquarters and overseas operations.

Audit Committee of the Board is updated on significant internal audit observations, compliance with statutes, progress of risk management and effectiveness of working of the control systems every quarter.

Auditors

The Company''s Statutory Auditors M/s P. Murali & Co., Chartered Accountants, hold office up to the conclusion of the forthcoming Annual General Meeting.

It is proposed to appoint P. Murali & Co., Chartered Accountants, Hyderabad, as Statutory Auditors of the Company to hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting of the Company. The necessary resolution seeking approval of Statutory Auditors has been incorporated in the notice convening the Annual General Meeting.

Cost auditors

In pursuance of Section 233B of the Companies Act, 1956 the Central Government has ordered Cost Audit for pharma sector Accordingly, M/s Bharthula & Associates, Cost Accountants were appointed as Cost Auditors to render reports to the Central Government. The Reports for the year 2011-12 were duly submitted on and for the year 2012-13 the reports will be submitted on or before the due date.

Fixed Deposits

Our Company has not accepted any fixed deposits under Section 58A of the Companies Act, 1956 hence no amount of principal or interest was outstanding as of the Balance Sheet Date.

Corporate Governance Report and General Shareholders Information

As required by clause 49(vi) of the listing agreement entered into by the Company with the Stock Exchanges a detailed report on Corporate Governance is provided in Annexure of the Directors Report. The General Shareholders Information has been provided as Annexure which forms part of the Directors Report. The Company is in 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 Corporate Governance Report and forms part of the Directors Report.

Directors Responsibility Statement

The Directors would like to assure the members that the financial statements for the year under review conform in their entirely to the requirement of the Companies Act, 1956.

The Directors Confirm that:

- The Annual Accounts have been prepared in conformity with the applicable Accounting Standards;

- The Accounting policies selected and applied on a consistent basis, give a true and fair view of the affairs of the Company and of the profit for the financial year;

- Significant care has been taken that adequate accounting records have been maintained for safeguarding the assets of the Company, and for prevention and detection of fraud and other irregularities;

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

Outlook

The Company has blended aggression with stability. We would like to assure shareholders that investments in projects, products and markets will reinforce our competitive position. Vivimed''s strategic blueprint will unfold in a phased manner and as it does, it is confident of enhancing shareholdervalue on a sustained basis over the medium to long-term.

Cautionary Statement

The management of Vivimed Labs has prepared and is responsible for the financial statements that appear in this report. These are in conformity with accounting principles generally accepted in India and, therefore, may include amounts based on informed judgements and estimates. The management also accepts responsibility for the preparation of other financial information that is included in this report. Statements in this Management Discussion and Analysis describing the Company''s objectives, projections, estimates and expectations may be ''forward looking statements'' within the meaning of applicable laws and regulations. Management has based these forward looking statements on its current expectations and projections about future events. Such statements involve known and unknown risks, significant changes in political and economic environment in India or key markets abroad, tax laws, litigation, labour relations, exchange rate fluctuations, interest and other costs may cause actual results to differ materially.

Acknowledgement

Our Directors place on record their sincere appreciation for significant contribution made by the employees through their dedication, hard work and commitment and of the customers for the trust reposed on the Company. We also acknowledge the support and wise counsel extended to us by bankers, government agencies, shareholders and investors at large. We look forward to have the same support in our endeavour to attain our vision.

For and on Behalf of Board of Directors

Sd/-

Date : 06.09.2013 Dr. V. Manohar Rao Santosh Varalwar

Place : Hyderabad Director Managing Director & CEO


Mar 31, 2012

The Directors are pleased to present their Twenty Fourth Annual Report on business and operations of the Company and the audited accounts for the financial year ended March 31, 2012.

The year in retrospect

The consolidated net revenue of the Company during 2011- 12 grew to 63.54% to Rs.6,893.49 million as compared to Rs.4,215.25 million last year. The Company has achieved a stand alone net revenue of Rs.3,829.01 million during the year under review, as compared with Rs.3,098.10 million during the previous year, a rise of 23.59% .

Consolidated profit before tax increased to Rs.778.15 million, as compared with Rs.552.62 million in the previous year, an increase of 40.64% over the last year. Stand alone profit before tax increased from Rs.329.69 million to Rs.513.41 million an increase of 55.73% over last year.

Consolidated profit after tax increased to Rs.631.37 million as compared with Rs.488.31 million in the previous year, an increase of 29.30% over the last year. The Company recorded a Stand alone profit after tax of Rs.404.15 million, an increase of 45.57% as compared with last year's Rs.277.64 million.

A detailed review of operations and performance of the company is contained in the Management Discussion and Analysis Report, which is given as a separate chapter in the Annual Report.

Detailed summary of financial performance is given in table below:

(INR in million)

Particulars Stand Alone Consolidated

Year ended Year ended Change in Year ended Year ended Change in 31.03.2012 31.03.2011 % 31.03. 31.03.2011 % 2012

Revenue from Operations 3,829.00 3,098.10 23.59% 6,683.14 4,160.01 60.65%

Other Income 4.20 2.87 46.31% 26.82 10.05 166.86%

Change in Inventory (15.68) (44.50) 64.76% 183.53 45.91 299.72%

Total Income 3,817.52 3,056.47 24.90% 6,893.49 4,215.97 63.51%

Total operating expenditure 3,004.61 2,578.68 16.51% 5,563.69 3,340.33 66.56%

Operating Profit (EBIDTA) 844.27 566.79 48.96% 1,329.80 875.65 51.86%

Finance Cost 225.35 176.31 27.81% 283.75 221.01 28.38%

Depreciation and Amortization 105.51 60.79 73.56% 267.89 102.01 162.61%

Profit Before Tax 513.40 329.69 55.72% 778.15 552.62 40.81%

Current Tax 102.72 66.56 54.32% 158.90 94.00 69.04%

Deferred Tax 6.54 (14.50) 145.10% (12.11) (29.69) 59.21%

Profit After Tax 404.15 277.63 45.57% 631.37 488.31 29.29%

Basic EPS 29.00 27.31 6.18% 45.31 48.04 (5.68%)

Diluted EPS 25.16 23.82 5.62% 39.31 41.09 (6.18%)

Standalone financials

The Ministry of Corporate Affairs (MCA) vide notification no. S.O. 447(E) dated February 28, 2011 amended the existing Schedule VI to the Companies Act, 1956. The Revised Schedule VI is applicable from financial year commencing from April 1, 2011. The financial statements of our Company for the year ended March 31, 2012 have been prepared in accordance with the Revised Schedule VI and accordingly, the previous year's figures have been reclassified/ regrouped to conform to this year's classification.

Consolidated financials

The Ministry of Corporate Affairs (MCA) by General Circular No. 2/2011 dated February 8, 2011, had granted an exemption to companies from complying with Section 212 of the Companies Act, 1956, provided such companies fulfill conditions mentioned in the said circular. Accordingly, the Board of Directors of our Company at its meeting held on May 30, 2012, approved the Audited Consolidated Financial Statements for the financial year 2011-12 in accordance with the Accounting Standard (AS–21) and other Accounting Standards issued by the Institute of Chartered Accountants of India as well as Clause 32 of the Listing Agreement, which include financial information of all its subsidiaries, and forms part of this report. The Consolidated Financial Statements of our Company for the financial year 2011-12, have been prepared in compliance with applicable Accounting Standards and where applicable Listing Agreement as prescribed by the Securities and Exchange Board of India.

Acquisitions

Uquifa acquisition

On November 30, 2011 'Vivimed Labs Limited' acquired Uquifa, a 75-year-old manufacturer of pharma APIs and intermediates with operations in Spain and Mexico. In a move to bring in strategic growth into pharma segment and expand its footprints in Europe and the Americas, the Company has taken a measured stride with the acquisition of Uquifa.

This well considered move would strengthen the Company's current position in pharma APIs and intermediates while significantly improving the cost competitiveness of Uquifa. Complementing each other's needs and growth plans, the acquisition envisages being a healthy, 'two-way opportunity pipeline' for Vivimed. While Uquifa gets the supply side efficiencies and knowledge base of Vivimed in pharma, Vivimed would leverage the preeminent position of Uquifa in APIs and their robust pipeline of filings to accelerate growth across Europe and the Americas in the next five years.

The Company also believes that acquisition of Uquifa will add to its multi-geographical locations, stability in operations and knowledge base. This will fundamentally mean greater comfort levels for customers and channel partners in addressing their needs and logistics. Uquifa acquisition in Europe comes post a successful acquisition and integration of James Robinson, UK ( Now Vivimed Labs Europe Limited) in 2008.

With Uquifa, Vivimed will have a footprint into LATAM and deepen presence into Europe. Indian manufacturing efficiencies and Uquifa's strengths will be seamlessly aligned in the new dispensation. Uquifa's preeminent position in APIs, combined with Vivimed's supply chain efficiencies will enhance competitiveness for Uquifa and swifter broadening of customer base. Uquifa is now forming part of API division of Vivimed group.

Klar Sehen acquisition

On September 29, 2011 Vivimed Labs Limited acquired the entire equity stake in Klar Sehen Private Limited (KSL), a 30 year old Kolkata based Pharmaceutical Company with strong marketing presence in North East, Bihar and Andhra Pradesh. KSL Operates in niche ophthalmic segment leveraging 50 proprietary trademarks. It has well known brands such as

Renicol, Lysicon-V Care Tears, Dexacort etc., in eye care segment.

In a research conducted by C-Marc (India) Private Limited for the period Nov- Feb 2011, KSL for its wide range of Ophthalmic products has bagged rank of an All India corporate No. 1 in the East Zone and bagged a rank of No. 5 in Rest of India ( in Indian, Dist HQ & Extra- Urban and rural markets).

KSL has cGMP compliant manufacturing facilities at Kolkata and Hyderabad and also has arrangements to manufacture some of its products in Uttaranchal.

Vivimed's acquisition of KSL complements its strategy to increase its domestic presence in niche pharmaceutical areas, its extensive knowledge and experience in manufacturing and R&D will help grow this business to new levels.

Dividend

Board of Directors of our Company has recommended a pro rata dividend @ 3.50% on fully paid Compulsorily Convertible and Cumulative Preference Shares (CCPS's) of Rs.1,000 each and a dividend of Rs.3/- on fully paid equity shares of Rs.10 each for the FY 2011-12 for your approval. There will be no tax deduction at source on Dividend Payments, but the Company will have to bear tax on dividend @ 16.97%, inclusive of surcharge.

The dividend if approved, shall be payable to the shareholders registered in the books of the Company as the beneficial owners as per details furnished by the depositories, determined with reference to the book closure from 25th September 2012 to 27th September 2012 (both days inclusive).

Transfer to general reserves

The General Reserves, on a stand alone basis, at the beginning the year was Rs.40.30 million. General Reserves at the end of the year are Rs.80.71 million. Our Board has decided to transfer an amount of Rs.40.41 million to General Reserves.

Board

Affairs of our Company are managed by a competent Board of Directors, which comprises of eminent personalities, who possess skills and expertise in various spheres.

The Details of the Directors being recommended for appointment and re-appointment are contained in the accompanying notice of the forthcoming Annual General Meeting.

Subsidiary companies

The Company has three Indian Subsidiaries – Creative Healthcare Private Limited, Klar Sehen Private Limited and Octtantis Nobel Labs Private Limited.

Vivimed Holdings Limited, based in Hong Kong is a 100% subsidiary of the Company and holds 100% shareholding in Vivimed Labs Europe Limited, UK.

Vivimed Labs USA Inc. is a 100% subsidiary of Vivimed Labs Limited.

Mauritius based Vivimed Labs Mauritius Limited, a 100% subsidiary of Vivimed Labs Limited is the holding company of the:

- Vivimed Labs UK Limited, UK with its step-down subsidiaries:

- Vivimed Labs Spain S.L., Spain

- Union Quimico Farmaceutica S.A.U, Spain

- Holliday International Limited, UK

- Uquifa Mexico S.A. de C.V., Mexico

In all, as on March 31, 2012, the Company has 3 Indian and 9 foreign subsidiaries.

Pursuant to a general exemption granted by the Ministry of Corporate Affairs under Section 212 of the Companies Act, 1956, vide its General Circular No. 2/2011 dated February 8, 2011, the Company is not required to annex to this Report, the Annual Reports of the above mentioned 3 Indian Subsidiaries and 9 foreign subsidiaries, for the year ended March 31, 2012. However if any member of the Company or its subsidiaries so desire, the Company will make available the Annual Accounts of subsidiaries to them on request.

Statement pursuant to Section 212 of the Companies Act, 1956, relating to Subsidiary Companies for the financial year ended March 31, 2012 and details of each subsidiary with respect to capital, reserves, total liabilities, details of investment, turnover, profit before taxation, provision for taxation, profit after taxation and proposed dividend are given in Annexure - A of this Report.

Branch office

Vivimed Labs Europe Limited, subsidiary of Vivimed Labs Limited, has set up a representative office in China. The Standalone financial statements of Vivimed Labs Europe Limited include the financial statements of its China representative office.

Conservation of energy, technology absorption and foreign exchange earnings and outgo

As required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the relevant data pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo is given in the prescribed format as Annexure - B to this Report.

Particulars of employees

Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) (Amendment) Rules, 2011 , is not applicable to the Company. Hence it is not being furnished with the directors report.

Human resource

Our Company believes that competent human resources are the driving force for any organization that enables a Company to grow in leaps and bounds. The Company has always nurtured a favourable work environment that encourages continuous learning and innovation. Our Company has put in place a scalable recruitment and human resources plan, devised to attract and retain high calibre personnel.

Vivimed Labs Limited has been fortunate in having a set of committed employees at all levels and looks forward to nurture them and retain their loyalty. Our Company recognizes the value of the committed workers and the need for bonding between the Company and committed employees.

Risk management

Our Company views risk management as a value creating function, responsible for bringing about a proactive approach to changes in Buiness Environment, a culture change and preparing the organization to face uncertain events. With this perspective, FY2011 saw a more comprehensive risk management policy being re-launched in Vivimed which is being implemented across all divisions and branches, both in India and abroad. This policy strengthens ability to better visualize enterprise, process and compliance risks, and to proactively undertake mitigation actions to minimize such risks — and thus sustain Business profits. The policy recognizes that risk is not just about downsides or things going wrong and that it should be equally focused on missing out the upside or added value that opportunities present.

Audit Committee of the Board of Directors conducts quarterly reviews regarding adequacy of risk management.

Internal controls and their adequacy

Our Company believes that a strong internal controls framework is an essential pre-requisite of growing businesses.

It has well documented policies, procedures and authorization guidelines commensurate with the size of the organization, as well as an independent internal audit system to conduct audits of various divisions, corporate headquarters and overseas operations.

Audit Committee of the Board is updated on significant internal audit observations, compliance with statutes, progress of risk management and effectiveness of working of the control systems every quarter.

AUDITORS

The Company's Statutory Auditors M/s P. Murali & Co., Chartered Accountants, hold office up to the conclusion of the forthcoming Annual General Meeting.

It is proposed to appoint M/s Grant Thornton, Chartered Accountants, Hyderabad, as Statutory Auditors of the Company to hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting of the Company. The necessary resolution seeking approval of Statutory Auditors has been incorporated in the notice convening the Annual General Meeting.

Cost Auditors

In accordance with Ministry of Corporate Affairs General Circular No. 15/2011[52/5/CAB-2011] dated April 11, 2011 the Company has appointed M/s Bharthula & Associates, Cost Accountants as Cost Auditors for the financial year 2011-12. The due date for filing of Cost Audit Report is September 27, 2012.

Fixed deposits

Our Company has not accepted any fixed deposits under Section 58A of the Companies Act, 1956 and hence no amount of principal or interest was outstanding as of the Balance Sheet Date.

Corporate governance report and general shareholders information

As required by clause 49(vi) of the listing agreement entered into by the Company with the Stock Exchanges a detailed report on Corporate Governance is provided in Annexure –C of the Directors Report. The General Shareholders Information has been provided as Annexure –D which forms part of the Directors Report. The Company is in 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 Corporate Governance Report and forms part of the Directors Report.

Directors responsibility statement

The Directors would like to assure the members that the financial statements for the year under review conform in their entirety to the requirement of the Companies Act, 1956.

The Directors Confirm that :

- The Annual Accounts have been prepared in conformity with the applicable Accounting Standards;

- The Accounting policies selected and applied on a consistent basis, give a true and fair view of the affairs of the Company and of the profit for the financial year;

- Significant care has been taken that adequate accounting records have been maintained for safeguarding the assets of the Company, and for prevention and detection of fraud and other irregularities;

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

Outlook

The outlook for FY 2012-13 is more positive than before. Vivimed sees significant growth in its API business in Europe, as well as in India and the Americas with integration of UQUIFA.

Cautionary statement

The management of Vivimed Labs has prepared and is

responsible for the financial statements that appear in this report. These are in conformity with accounting principles generally accepted in India and, therefore, may include amounts based on informed judgment's and estimates. The management also accepts responsibility for the preparation of other financial information that is included in this report. Statements in this Management Discussion and Analysis describing the Company's objectives, projections, estimates and expectations may be 'forward looking statements' within the meaning of applicable laws and regulations. Management has based these forward looking statements on its current expectations and projections about future events. Such statements involve known and unknown risks, significant changes in political and economic environment in India or key markets abroad, tax laws, litigation, labour relations, exchange rate fluctuations, interest and other costs and may cause actual results to differ materially.

Acknowledgement

Our Directors place on record their sincere appreciation for significant contribution made by the employees through their dedication, hard work and commitment and of the customers for the trust reposed on the Company. We also acknowledge the support and wise counsel extended to us by bankers, government agencies, shareholders and investors at large. We look forward to have the same support in our endeavour to attain our vision.

For and on Behalf of Board of Directors

Sd/- Date : 30.05.2012 Dr. V. Manohar Rao Santosh Varalwar Place : Hyderabad Whole Time Director CEO & Managing Director


Mar 31, 2011

To the members,

The Directors have the pleasure in presenting the twenty third Annual Report together with the Audited Accounts of the financial Year ended on 31st march 2011.

Financial Performance

( Rs.in mn)

Stand Alone Consolidated

Particulars Year Ended Year Ended Year Ended Year Ended Change Change 31.03.2011 31.03.2010 31.03.2011 31.03.2010

net sales 3098.10 2105.89 47.12% 4160.01 3434.86 21.11%

other income 2.87 20.08 (85.71)% 9.33 65.26 (85.70)%

increase / (Decrease) 44.50 15.81 181.46% 45.91 24.55 87.10% in stocks

total income 3145.47 2141.78 46.86% 4215.25 3524.66 19.59%

total operating 2578.69 1723.63 49.62% 3354.65 2819.97 18.96% expenditure

operating profit 566.78 418.15 35.54% 860.60 704.69 22.12% (EBIDTA)

interest 176.31 144.37 22.12% 205.96 212.28 (2.98)%

Depreciation and 60.79 52.54 15.70% 102.01 95.96 6.30%

Amortisation profit Before tax 329.68 221.24 49.01% 552.63 396.45 39.39%

provision for tax 66.55 19.68 238.18% 0.94 56.21 67.23%

Deferred tax (14.50) 36.16(140.10)% (29.69) 30.13 198.54%

profit After tax 277.62 165.40 67.85% 488.32 310.11 57.47%

Add: profit B/f from 786.15 647.74 21.37% 1000.47 717.35 39.47%

previous Year profit available for 1063.77 813.14 30.82% 1488.79 1027.46 44.90%

appropriation Appropriation as under transfer to General 20.82 9.50 119.16 20.82 9.50 119.16

Reserves

proposed Dividend 20.33 14.95 35.99 20.33 14.95 35.99

tax on Dividend 3.45 2.54 35.83 3.45 2.54 35.83

Balance carried 1019.16 786.15 29.64% 1444.18 1000.47 44.35% forward to next Year

Operations Review

During the financial year ended march 31st, 2011, our company has scaled new heights and set new benchmarks in terms of income and profitability.

Stand Alone Highlights

total income increased from Rs. 2141.78 million during the previous year to Rs. 3145.47 million in the year under review registering a growth of 46.86%.

operating profit, before interest and depreciation, amounted to Rs. 566.78 mllion as against Rs. 418.15 million during the previous an increase of 35.54% on year on year basis.

During the year under review. net profit, after providing for interest, depreciation and tax amounted to Rs. 277.62 million as against Rs. 165.40 million during the previous year, registering an increase of 67.85%.

the amount available for appropriations, including surplus from previous year amounted to Rs. 1063.77 million. surplus Rs. 1019.16 million has been carried forward to the Balance sheet after providing for Dividend of Rs. 20.33 million, dividend tax Rs. 3.45 million and General Reserve of Rs. 20.82 million.

Earnings Per Share

eps was at Rs. 27.31 for the year under review as against Rs. 16.60 during the previous year. our company has recorded commendable growth during the year under review.

Consolidated Highlights

the consolidated total income from operations in india, uK and usA amounted to Rs. 4215.25 million and net profit, after providing for interest, depreciation and tax amounted to Rs. 488.32 million recording a growth of 19.59% in total income and 57.47% in net profit respectively.

Capital Structure

changes to share capital

During the year under review the issued, subscribed and paid up capital has increased to Rs. 101.64 million from Rs. 99.65 million as a result of allotment of additional 199,112 equity shares of Rs. 10 each on october 4, 2011. the Authorised share capital of the company stands at 200 million.

Dividend

our Directors recommend a Dividend of Rs. 2.00 on fully paid equity share of Rs. 10 each for the fY2010-11 for your approval. there will be no tax deduction at source on Dividend payments, but the company will have to bear tax on dividend @16.97 %, inclusive of surcharge.

the dividend if approved, shall be payable to the shareholders registered in the books of the company as the beneficial owners as per details furnished by the depositories, determined with reference to the book closure from september 28, 2011 to september 30, 2011 (both days inclusive).

Transfer to Reserves

our Board has decided to transfer an amount of Rs. 20.82 million to General Reserves.

Subsidiaries

our company has four subsidiary companies as on 31st march, 2011

- Creative Health Care Private Limited (India)

- Vivimed Holdings Limited (Hong Kong)

- Vivimed Labs Europe Limited (UK)

- Vivimed Labs USA Inc. (USA)

the consolidated financial statements, in terms of clause 32 of the listing Agreement and in terms of Accounting standard 21 issued by the Institute of Chartered Accountants of India (ICAI) form part of this Annual Report.

pursuant to the provisions of section 212(8) of the companies Act, 1956 Act, the ministry of corporate Affairs vide its General circular no. 2/2011 dated february 8, 2011 has granted a general exemption subject to certain conditions to holding companies from complying with the provisions of section 212 of the Act which requires the attaching of the Balance sheet, profit & loss Account and other documents of its subsidiary companies to its Balance sheet. Accordingly, the said documents are not being included in this Annual Report. the main financial summaries of the subsidiary companies are provided in Annexure A which forms part of Directors Report for further information on these subsidiaries. Annual accounts of the subsidiary companies and the related detailed information will be made available to the holding and subsidiary companies investors seeking such information at any point of time. the annual accounts of the subsidiary companies will also be kept for inspection by any investor at its corporate offce in hyderabad and that of the subsidiary companies concerned.

Energy, Technology And Foreign Exchange

Details of conservation of energy, technology absorption and foreign exchange earnings and outgo in accordance with the provisions of section 217(1)(e) of the companies Act, 1956, read with companies (Disclosure of particulars in the Report of Board of Directors) Rules,1988 is given in Annexure B' of the Directors Report.

Particulars Of Employees

pursuant to the provisions of section 217(2A) of the companies Act, 1956 read with companies (Particulars of Employees) Rules, 1975 as amended; the names and other particulars of the employees are set out in the Annexure c' to the Directors Report.

Human Resource Management

our company believes that competent human Resources are the driving force for any organization that enables a company to grow in leaps and bounds. the company has been able to create a favourable work environment that encourages continuous learning and thereby leading to innovation. with vibrant work atmosphere, our company provides an opportunity to employees to work. our company has put in place a scalable Recruitment and human Resources plan, devised to attract and retain high caliber personnel.

Vivimed labs ltd has been fortunate in having a set of committed employees at all levels and looks forward to nurture them and retain their loyalty. our company recognizes the value of the committed workers and efforts are being made to enhance the bonding between the company and the committed employees.

Risk management

our company is in the process of developing a risk management framework that enables active monitoring of the business environment and identification, assessment and mitigation of potential internal or external risks.

our company promotes strong ethical values and high levels of integrity in all its activities, which in itself is a significant risk mitigator.

Directors

mr. p V Rathnam and mr. D.hanumantha Rao, retire by rotation at the ensuing Annual General meeting scheduled to be held on 30th september, 2011 and being eligible offers himself for reappointment.

Auditors

the statutory Auditors of the company m/s p. murali & co., chartered Accountants, retire at the ensuing Annual General meeting and have confirmed their eligibility and willingness to accept office of Auditors, if reappointed. the Audit committee of the Board of Directors recommended reappointment of m/s p. murali & co. as statutory Auditors of the company for the financial year 2011-12 for shareholders approval.

Group

pursuant to intimations from promoters, names of promoters and companies comprising the Group' as defined in monopolistic and Restrictive trade practices ('mRtp') Act, 1969 have been disclosed in Annexure D' to this report.

Fixed Deposits

our company has not accepted any fixed deposits under section 58A of the companies Act, 1956 hence no amount of principal or interest was outstanding as of the Balance sheet date.

Management Discussion and Analysis

the management Discussion and Analysis Report of the company has been provided in Annexure e' which forms part of the Directors Report.

Corporate Governance Report and General Shareholders Information

As required by clause 49(Vi) of the listing agreement entered into by the company with the stock exchanges, a detailed report on corporate Governance is provided in Annexure f' of the Directors Report. the General shareholders information has been provided as Annexure G' which forms part of the Directors Report. the company is in 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 corporate Governance Report and forms part of the Directors Report.

Directors Responsibility Statement

pursuant to section 217 (2AA) of the companies Act, 1956, the Directors confirm that -

1. in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

2. they have, in selection of the Accounting policies, consulted the statutory Auditors and have applied them consistently and made judgments and estimates that are reasonable and prudent so that they 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 that period;

3. they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the companies Act, 1956, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

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

Acknowledgement

our Directors place on record their sincere appreciation for significant contribution made by the employees through their dedication, hard work and commitment and of the customers for the trust reposed on the company.

we also acknowledge the support and wise counsel extended to us by bankers, government agencies, shareholders and investors at large. we look forward to have the same support in our endeavor to attain our vision.

for and on Behalf of Board of Directors

sd/-

Santosh Varalwar

ceo & managing Director

Date : 03.09.2011

place : hyderabad


Mar 31, 2010

The Directors have pleasure in presenting twenty second Annual Report together with the Audited Accounts of the Financial year ended on 31st march 2010.

Financial Performance

Rs. million Standalone Consolidated

Particulars

2009-10 2008-09 2009-10 2008-09

Total income 2,141.78 1,570.57 3,524.66 2,904.29

Operating Expenses 1,723.63 1,252.85 2,81997 2,423.33

Operating Profit (EBITDA) 418.15 317.71 704.69 480.96

interest 144.37 95.70 212.28 172.73

Depreciation & Amortisation 52.54 39.08 95.96 77.09

Profit Before tax 221.24 182.93 396.11 231.14

Profit After tax 165.40 145.99 310.11 193.52

Dividend (%) 15% 15% 15% 15%

OPERATIONS REVIEW

During the financial year ended march 31, 2010, your Company has scaled new heights and set new benchmarks in terms of income and profitability.

Standalone Highlights

Total income increased from Rs 1570.57 million during the previous year to Rs 2141.78 million in the year under review, registering a growth of 36.37%.

Operating Profit, before interest and depreciation, amounted to Rs 418.15 million as against Rs 317.71 million during the previous year, an increase of 31.61%.

Net Profit, after providing for interest, depreciation and tax amounted to Rs 165.40 million as against Rs 145.99 million during the previous year, registering an increase of 13.30%.

The amount available for appropriations, including surplus from previous year amounted to Rs 813.14 million. A surplus of Rs 786.15 Million has been carried forward after providing for Dividend of Rs 14.95 Million, dividend tax Rs 2.54 Million and transfer to General Reserve of Rs 9.50 Million.

Consolidated Highlights

The Consolidated total income from operations in India, UK and USA amounted to Rs 3524.66 million and Net Profit, after providing for interest, depreciation and tax amounted to Rs 310.11 Million recording a growth of 21.36% in total income and 60.25% in Net Profit respectively.

The brake up of sales revenues between the two segments is as under:

Specialty Chemicals Rs 2614.88 million (76.13%) Pharma Rs 819.98 Million (23.87%).

Earnings Per Share

EPS: Rs 31.87 for the year under review as against Rs 20.58 during the previous year.

CAPITAL STRUCTURE

Changes to Share Capital

During the year under review the issued, subscribed and Paid up Capital has increased by Rs. 5.64 million due to allotment of Equity shares on Conversion of Foreign Currency Convertible Bonds (FCCB’s). the Authorised share Capital of our Company stands at Rs. 150 million.

Foreign Currency Convertible Bonds

Your Company issued Foreign Currency Convertible Bonds as under:

Year of Number and Size of

Particulars

Issue Denomination of Bonds Issue

1% Coupon Unsecured Foreign Currency 2007 15000 Bonds of Us $ 15 million

Convertible Bonds Due 2012 Us$ 1000 each

CONVERSION AND BUY BACK DETAILS

Particulars Details

Conversion Period 2nd May 2007 to 19th January 2012

Number of Bonds converted during the year 2,500

Conversion Price Per Equity share Rs. 185

Number of Equity shares issued on Conversion 563,918

Number of Bonds Bought and cancelled 12,500

Number of Bonds Outstanding Nil

DIVIDEND

Your Directors recommend a Dividend of Rs 1.50 on fully paid equity share of Rs 10 each for the Fy2009-10 for your approval. there will be no tax deduction at source on Dividend Payments, but our Company will have to bear tax on dividend @16.995%, inclusive of surcharge and cess.

The dividend if approved, shall be payable to the shareholders registered in the books of our Company as the beneficial owners as per details furnished by the depositories, determined with reference to the book closure from September 14, 2010 to September 18, 2010 (both days inclusive).

TRANSFER TO RESERVES

The Board has decided to transfer an amount of Rs 9.50 million to General Reserves.

SUBSIDIARIES

The Company has four subsidiary Companies including one step down subsidiary as on 31st March, 2010

- Creative Health Care Private Limited

- Vivimed Holdings Limited (Hong Kong)

- Vivimed Labs Europe Limited (UK) {Previously Known as James Robinson Limited}

- Vivimed Labs USA Inc. (USA)

The consolidated financial statements, in terms of Clause 32 of the Listing Agreement and in terms of Accounting standard 21 issued by the institute of Chartered Accountants of India (ICAI) form part of Annual Report.

The ministry of Corporate Affairs, Government of India has granted exemption under section 212(8) of the Companies Act, 1956 from attaching the balance sheet, profit and loss account and other documents of subsidiary companies to the balance sheet of the holding Company. the members may refer to the statement under section 212 of the Companies Act, 1956 and summary information on the financials of the subsidiaries, in terms of the said approval of ministry of Corporate Affairs, appended to the above statement under section 212 of the Companies Act, 1956 in Annexure ‘A which forms part of this Report for further information on these subsidiaries. Annual accounts of the subsidiary companies and the related detailed information will be made available to the holding and subsidiary companies investors seeking such information at any point of time. the annual accounts of the subsidiary companies are kept for inspection by any investor at its Corporate Office in Hyderabad.

ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

Details of energy conservation and research and development activities undertaken by our Company along with the information in accordance with the provisions of section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure ‘B’ of this Report.

PARTICULARS OF EMPLOYEES

Pursuant to the provisions of section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended; the names and other particulars of the employees are set out in the Annexure ‘C to this Report.

HUMAN RESOURCE MANAGEMENT

Our Company has a forward looking human resource development strategy, which focuses on talent management and strengthening the talent pool. systems are aligned to foster excellence, empower and enrich employees, recognize creativity, innovation and reward performance.

HRD Strategy focuses on integration of diverse work cultures to strengthen the Vivimed management philosophy and style that Synergizes the skill sets across the board to maximize fulfillment of individual aspirations and value addition to the company.

RISK MANAGEMENT

Our Company is in the process of implementing a risk management framework that enables active monitoring of the business environment and identification, assessment and mitigation of potential internal or external risks.

Our Company promotes strong ethical values and high levels of integrity in all its activities, which in itself is a significant measure of control of risk.

DIRECTORS

Dr. M. Bhagvanth Rao, retires by rotation at the ensuing Annual General meeting scheduled to be held on 18th September, 2010 and being eligible offers himself for reappointment.

Board of Directors appointed Mr. Nixon Patel as an Additional Director on the Board of our Company on 28th June, 2010. he will hold office till the forthcoming Annual General meeting scheduled to be held on 18th September, 2010. Notice under section 257 of the Companies Act, 1956 has been received from a member of our Company proposing his appointment. the resolution for the same has been included in the notice of Annual General meeting scheduled to be held on 18th September, 2010.

Tenure of Appointment of Mr. Santosh Varalwar and Mr. Subhash Varalwar is completed and they being eligible offer themselves for reappointment.

Dr. V. Manohar Rao has been acting as director retiring by rotation, being eligible he offers himself for reappointment as Director who shall not be liable to retire by rotation.

Mr. Sandeep Varalwar, Dr. R.K.Dhar and Mr. S. Raghunandan were appointed as whole time directors at the Annual General meeting of our Company held on 27th September, 2008 their tenure is being further extended for a period of five years and they being eligible offer themselves for reappointment.

AUDITORS

Statutory Auditors of our Company M/s P. Murali & Co., Chartered Accountants, retire at the ensuing Annual General meeting and have confirmed their eligibility and willingness to accept office of Auditors, if reappointed. the Board of Directors recommended reappointment of M/s P. Murali & Co. as statutory Auditors of our Company for the financial year 2010-11 for shareholders approval.

GROUP

Individuals and Companies comprising the ‘Group’ as defined in monopolistic and Restrictive trade Practices (‘mRtP’) Act, 1969 are disclosed in Annexure ‘D’ to this report.

FIXED DEPOSITS

Our Company has not accepted any fixed deposits under section 58A of the Companies Act, 1956 hence no principal or interest was outstanding.

MANAGEMENT DISCUSSION AND ANALYSIS

The management Discussion and Analysis Report of our Company has been provided in Annexure ‘E’ which forms part of this Report.

CORPORATE GOVERNANCE REPORT AND GENERAL SHAREHOLDERS INFORMATION

As required by Clause 49(Vi) of the listing agreement entered into by our Company with the stock exchanges, a detailed report on Corporate Governance is provided in Annexure ‘F’ of this Report. Auditors Certificate on compliance with Corporate Governance requirements is given in Annexure ‘G’ to this report. Declaration of the Managing Director and CEO in terms of Clause 49(1)(d)(iii) of Listing Agreement relating to compliance with code of conduct by Board members is given in Annexure ‘H’ of this Report. the General shareholders information has been provided as Annexure ‘I’ which forms part of this Report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to section 217 (2AA) of the Companies Act, 1956, the Directors Confirm that -

1. They followed applicable accounting standards in preparation of annual accounts and that there are no material departures except elimination of interest on inter Company loans within the group as per As-11 to the tune of Rs. 18.11 million shown under other income and financing charges.

2. They consulted statutory Auditors in selection of the accounting policies and applied policies consistently and made judgments and estimates that are reasonable and prudent so that they give a true and fair view of the state of affairs of our Company at the end of the financial year and of the profit of our Company for that period;

3. They took proper and sufficient care to the best of their knowledge and ability for maintenance of adequate accounting records in accordance with provisions of the Companies Act, 1956, for safeguarding the assets of our Company and for preventing and detecting fraud and other irregularities.

4. They prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENT

Your Directors place on record their sincere appreciation of significant contribution made by our employees through dedication, hard work and commitment and thank our customers for the trust reposed on us.

Your Directors acknowledge the support and wise counsel extended to us by bankers, government agencies, shareholders and stake holders at large and look forward to have the same support in our endeavor to attain our vision.

For and on Behalf of Board of Directors

Sd/-

Date : 14.08.2010 Dr. V. Manohar Rao Santosh Varalwar

Place : Hyderabad Chairman Managing Director & CEO