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Directors Report of Wintac Ltd.

Mar 31, 2015

Dear Members,

Your Directors have pleasure in presenting the Twenty Fifth Annual Report together with the Audited Accounts for

the Financial Year ended March 31,2015.

1. Financial Summary and Performance of the Company

Rs. Lakhs

For the For the year ended year ended 31st March 31st March 2014 2015

Gross Sales 3269.95 3058.08

Excise Duty 222.19 110.84

Net Sales 3047.76 2947.24

Other Income 58.45 13.66

Total Revenue 3106.21 2960.90

Total Expenditure 3188.23 3146.87

Operating Profit/(Loss) (82.02) (185.97)

Interest 27.87 6.73

Profit/(Loss)before Depreciation (PBDT) (109.89) (192.70)

Depreciation 187.97 363.70

Loss before exceptional expenditure (297.86) (556.40)

Exceptional expenditure 349.16 311.73

Extraordinary Income - 101.60

Profit/(Loss) before Tax (647.02) (766.53)

Deferred tax 52.42 151.05

Net Profit/(Loss) after Tax (699.44) (615.48)

2. Dividend & Transfer to Reserves

In view of the operating losses, no dividend is considered during the year under review and no amount is transferred to reserves.

3. Brief description of the Company's working during the year

The total revenue from the operations during the current year was Rs. 2960.90 lakhs as compared to Rs. 3106.21 lakhs during the previous year, a decline of 4.67%. The net loss before exceptional and extraordinary items during the current year was Rs. 556.40 lakhs as against the loss of Rs. 297.86 lakhs during the previous year. The increase in the depreciation expenses by Rs. 175 lakhs as compared to the previous year, was one of the reason for the increase in the operating losses and this increase was due to change in method of computing the depreciation as per the New Companies Act, 2013. Further the delay in commencement of export sales subsequent to the revocation of warning letter by USFDA, was also another reason for the continued losses. The total net loss, after the exceptional expense (Rs. 312 lakhs) and extraordinary income of Rs. 101 lakhs, during the year was Rs. 766.53 lakhs as compares to Rs. 647.02 lakhs during the previous year. The major exceptional expense during year was write off of inventory of Rs. 200 lakhs and depreciation of fixed assets of Rs. 100 lakhs which have completed the useful life prior to 01.04.2014 as per the provisions of new Companies Act 2013. The extraordinary profit of Rs. 101.60 lakhs was on sale of Oncology Business during the year. The net loss for the year, after the recognition of the deferred tax asset, was Rs. 615.48 lakhs as compared to Rs. 699.44 lakhs during the previous year. Your Directors are hopeful of commencement of export business to US Market during the current year and turn around the operations.

There are no material changes and commitments affecting the financial position between the end of the financial year and the date of the report.

4. The Company during the year has not provided any loans, guarantees or investments in terms section 186 of the Companies Act 2013.

5. There are no material orders by any Regulators or Courts or Tribunals impacting the going concern status and company's operations in future during the year.

6. The Company has no subsidiary/Joint Ventures/Associate Companies.

7. The Company has developed and implemented a risk management policy for identification of elements of risk, if any.

8. Details in respect of adequacy of internal financial controls with reference to the Financial Statements.

The Company has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business including adherence to the Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial disclosures.

9. Fixed Deposits

The details relating to fixed deposits, covered under Chapter V of the Companies Act, 2013 :-

a. accepted during the year; : Nil

b. remained unpaid or unclaimed as at : Nil the end of the year;

c. whether there has been any default in : No repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved-

d. at the beginning of the year; : Rs. 96.76 lakhs

e. maximum during the year; : Rs. 96.76 lakhs

f. at the end of the year; : Rs. 33.55 lakhs

The Company has not accepted or renewed any deposits during the year which are not in compliance with the requirements of Chapter V of the Act.

10. Share Capital : During the year the Company has not issued any (i) equity shares with differential rights, (ii) Sweat Equity Shares (iii) Employee Stock Options and (iv) during the year the company has not provided money for purchase of its own shares by employees or by trustees for the benefit of employees.

11. RIGHTS ISSUE : Pursuant to the approval of Shareholders on 9th May 2014 through the Postal Ballot for the Rights Issue of Shares up to Rs. 35 crores, the Company had filed the draft Offer Document with SEBI and has received the final observations. The Board of Directors are yet to take a final decision on the Rights Issue pending the finalisation of new Project Proposal.

12. Directors:

A. Changes in Directors and Key Managerial Personnel

During the year Dr.K.Paranjothy, an Independent Director, resigned as a Director of the Company due to personal reasons w.e.f. 23.08.2014

The Board appointed Ms.Kavitha Krishnamoorthy as a Non-Executive Independent Director of the Company w.e.f.13.10.2014 who shall hold office till the conclusion of this Annual General Meeting. Ms.Kavitha Krishnamoorthy is also proposed to be appointed as Independent Director of the Company pursuant to the Provisions of the Companies Act 2013.

Sri.S.T.Raghavendra Mady retires by rotation and being eligible offers himself for re-appointment.

Mr.V.S.Krupendra was appointed as the Chief Financial Officer of the Company with effect from 01.02.2015.

B. Declaration by Independent Director(s):

The Company has received necessary declaration from each independent director under Section 149(7) of the Companies Act, 2013 that she meets the criteria of independence laid down in Section 149(6) of the Companies Act 2013.

C. Policy on Directors' appointment and remuneration:

The Company's policy is to have an appropriate mix of executive and independent Directors to maintain the independence of the Board, and separate its functions of governance and management. As on March 31, 2015, the Board consists of 5 Members, one of whom is the Managing Director and three are independent directors.

D. Formal Annual Evaluation

The Board, in the process of annual evaluation of the performance of the Board of Directors and Committees and individual Directors, has considered the (i) Issues considered in the Board Meeting including the review of operations/business, budgets, capex requirements, financial statements, funding options, (ii) the decisions of the Board, (iii) number of meetings, (iv) level of Compliances with various Regulations, (v) the attendance of Directors and participation of individual Directors in forming the opinion/decisions of the Board, etc.

13. The Board met six times during the financial year, the details of which are provided in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act 2013.

14. Audit Committee : The Board has constituted an Audit Committee as required under Section 177 of the Companies Act 2013 and under the Listing Agreement with stock exchange.

The composition of the Audit Committee is as under:

i. Mr.Arun Eashwar - Chairman (Independent and non-executive Director)

ii. Mr.R.A.Thirumoorti - Member (Independent and non-executive Director)

iii. Ms.Kavitha Krishnamoorthy - Member (Independent and non-executive Director)

iv. Mr.S.T.R.Mady - Member (Non-executive Chairman)

The Company has established a vigil mechanism (Whistle Blower policy & Vigil Mechanism) for Directors and employees to report concerns of unethical behaviour, actual or suspected, fraud or violation of the Company's code of conduct. The Whistle Blower Policy & Vigil Mechanism is disclosed on the Company's website.

15. Nomination and Remuneration Committee and Stakeholders Relationship Committee

The Board has constituted a Nomination and Remuneration Committee. This Committee consists of four nonexecutive Directors and three of them are Independent Directors. The Chairman of the Committee is an Independent Director. The role of the Committee is to identify persons who are qualified to become Directors, recommend to the Board their appointment and carry out evaluation of every director's performance. The Committee also recommends to the Board a policy relating to the remuneration for the Directors and Key Managerial personnel. The policy provides that (i) the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate senior management personnel required to run the operations successfully, (ii) remuneration is commensurate with the performance and efficiency and meets performance benchmarks.

The Stakeholders Relationship Committee constituted by the Board reviews and ensures redresal of investor grievances. The Committee consists of four non-executive directors and the Chairman is an Independent Director.

16. During the year the Company has not given any loans (other than loans to employees as per the policy of the Company), Guarantee, Security, Investments under section 186 of the Companies Act 2013.

17. Managerial Remuneration:

A. Details of the ratio of the remuneration of each director to the median employee's remuneration and other details as required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

i. Ratio of the remuneration of - 12.80 : 1 Managing Director to the median remuneration of employees of the Company for the financial year

ii. Percentage of increase in the remuneration of:

a. Managing Director - Nil

b. Company Secretary - 8.54%

c. Chief Financial Officer - 26.32%

d. Median Employee - 11.82%

e. No. of employees on the rolls - 235

f. Average increase made in salaries - 23.27 % of employees other than KMP

g. Ratio of highest paid Director to that of employees who are not Directors but received remuneration in - 1 : 1.005 excess of highest paid Director

Although the performance of the company was not satisfactory during the year under review, the increase in remuneration of employees was average and is as per Industry Standards. The average salary increase was essential to retain the efficient employees including the Key Managerial Personnel.

There is no variable component in the remuneration availed by the Director or KMP. The remuneration is as per the remuneration policy of the Company.

Market capitalisation of the Company was increased by 141.86% to Rs. 21953.09 Lakhs as of 31.03.2015 from Rs.9076.95 lakhs as of March 31,2014. The price earning ratio was -35.67 as of March 31,2015 which was a decrease of 175% as compared to March 31,2014. The closing price of the Company's equity shares on the BSE as of March 31,2015 was Rs. 219.00 representing a 563.64% increase over the Rights Issue price.

B. There was no employee employed during the year or part of the year drawing remuneration in excess of the limits specified under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

C. Corporate Governance - Pursuant to Clause 49 of the Listing Agreement with the Stock Exchange, a Management Discussion and Analysis statement, Corporate Governance Report and Auditors' Certificate on the compliance of conditions of Corporate Governance forms part of the Annual Report.

18. Particulars of contracts or arrangements with related parties: The particulars of contract or arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arm's length transactions under third proviso thereto in the prescribed form AOC-2 is appended to the Board's report.

19. Statutory Auditors: M/s.Rao & Swami, Chartered Accountants and the Auditors of the Company retire at the forthcoming Annual General Meeting and being eligible, are recommended for appointment for a period of one year to hold office upto the conclusion of 26th Annual General Meeting pursuant to Section 139 of the Companies Act, 2013.

20. Secretarial Auditor : Parameshwar G Hegde, Practicing Company Secretary was appointed to conduct the secretarial audit of the Company for the financial year 2014-15 as required under Section 204 of the Companies Act, 2013. The Secretarial Audit Report for FY 2014-15 is annexed to the Board's Report and forms part of the Annual Report.

21. Extract of the annual return : In accordance with the provisions of Section 134(3)(a) of the Companies Act, 2013 an extract of the annual return in the prescribed format is enclosed to the Board's Report.

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

The details of conservation of energy, technology absorption, foreign exchange earnings and outgo are as follows:

(A) Conservation of energy:

(i) The steps taken and its impact on conservation of energy;

* Installation of Automatic power factor correction panel.

* Steam condensate recovery with insulated pipelines.

* Rain water harvesting.

* Recycling of purified water from process machineries as infeed water to boiler.

(ii) The steps taken by the company for utilising alternate sources of energy;

* Installation of Bricket fired Boilers which is environmental friendly and uses brickets (agricultural by-product) as fuel instead of Diesel or Furnace Oil.

* Energy efficient motors for Air Handling Units.

(iii) The capital investment on energy conservation equipments: Rs. 9.25 Lakhs

(B) Technology absorption:

(i) the efforts made towards technology absorption;

* Expansion of Formulation development department is done to bring more focus on product development for registering the Products in all Regulated Markets.

* Formulation development activities for Domestic as well as Export market i.e., USA, Canada, Australia and Europe is carried out. ANDA for 20 products developed in house were filed for USA market during last year by our customers.

* Site transfer of two products meant for USA Market is being carried out and will be completed during the current year.

(ii) the benefits derived like product improvement, cost reduction, product development or import substitution;

* More Foreign Exchange revenue since the products are developed for export market.

* After approval of dossiers from respective Regulatory Agencies, regular commercial supplies is expected and ensure good growth in export business.

* Technical capability of the personnel strengthened to handle additional products.

(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)-

(a) the details of technology imported : Nil

(b) the year of import : N.A.

(c) whether the technology been fully absorbed : N.A.

(d) if not fully absorbed, areas where : N.A. absorption has not taken place, and the reasons thereof ;

(iv) the expenditure incurred on R & D : Rs. 413.07 lakhs

(C) Foreign exchange earnings and Outgo:

Foreign Exchange Earnings : Rs. 845.63 Lakhs

Foreign Exchange Outflows : Rs. 636.77 Lakhs

23. Directors' Responsibility Statement

The Directors' Responsibility Statement referred to in clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, state that—

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

b. 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 at the end of the financial year, of the profit and loss and cash-flow of the company for that period;

c. The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 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;

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.

24. Acknowledgments

The Board places on record its appreciation of the continued cooperation and support received from the various government authorities, shareholders, business associates, medical profession, employees, depositors and bankers.

For and on behalf of the Board of Directors

Date : 22nd May, 2015 S.T.R.MADY Place : Bengaluru. CHAIRMAN




Mar 31, 2013

To the Shareholders

The Directors have pleasure in presenting the Twenty-third Annual Report together with the Audited Accounts for the year ended 31s1 March, 2013:

Financial Performance Rs.Lakhs

For the year ended For the year ended 31st March 2012 31st March 2013

Gross Sales '' 2593.41 2268.64

Excise Duty 166.53 180.16

Net Sales 2426.88 2088.48

Other Income 16.34 35.11

Total Revenue 2443.22 2123.59

Total Expenditure 2453.70 2393.38

Operating Profit/(Loss) (10.48) (269.79)

Interest 299.91 282.10

Profit/(Loss)before Depreciation (PBDT) (310.39) (551.89)

Depreciation 196.12 194.11

Loss before exceptional expenditure (506.51) (746.00)

Exceptional/Extraordinary expenditure 1.19 1032.38

Profit/(Loss) before Tax (507.70) (1778.38)

Deferred tax 30.64 (58.23)

Net Profit/(Loss) after Tax (538.34) (1720.15)

Operations

The operating results of the Company during the year was not satisfactory due to stoppage of sales to US Market and higher operating expenses. The net sales were lower by about 14% at Rs. 2088.48 lakhs as compared to Rs. 2426.88 lakhs during the previous year. The net loss during the year under review was also higher at Rs. 1720.15 lakhs as compared to a net loss of Rs. 538.34 lakhs during the previous year.

In view of certain Regulatory issues with US Regulatory Authorities (USFDA), the commercial supplies to US Market were suspended and USFDA had issued a Warning Letter. The Company has filed necessary compliance reports and the same has been accepted by the USFDA and inspection is expected to be conducted shortly.

Your Company undertook a major restructuring exercise during the year in view of the higher borrowings, suspension of export supplies due to regulatory issues and consequential higher operating losses. Your Company entered into a strategic alliance with GAVIS Pharma LLC, USA. GAVIS Pharma is a US based Pharmaceutical Company promoted by Dr.Veerappan Subramanian, a person of Indian Origin and based in United States.

Dr.Veerappan Subramanian, promoter of GAVIS Pharma, is a seasoned pharmaceutical scientist and entrepreneur with a track record of starting, developing, managing and turning around pharmaceutical companies in USA. He has over forty years of experience in the generic pharmaceutical industry. GAVIS Group of Companies lead by their executive team have excellent end-to-end expertise in all aspects of pharmaceutical business in the US and all regulated markets. Novel Laboratories, GAVIS''s development and manufacturing arm, has expertise in product identification, formulation development, ANDA Filing, Manufacturing, Quality Control, Compliance and Regulatory affairs. Novel Laboratories has successfully developed and filed more than 50 ANDAs. GAVIS Pharmaceuticals, the marketing arm of GAVIS group markets and distributes products to all channels of trade including chain drug stores, hospitals, long term care facilities, etc practically covering the entire US Market.

GAVIS Pharma''s association would tremendously benefit the Company in the areas of Regulatory Compliances, Product Development and front-end marketing activities apart from infusion of funds as equity capital into the Company. The Company, pursuant to the Shareholders Approval at the EGM held on 20th December 2012 and other Regulatory Approvals allotted 40,00,000 Equity Shares of Rs. 10 each at a price of Rs. 100 per share aggregating to Rs. 40 crores. The equity funds were utilized for the intended purposes i.e., for repayment of debts, redemption of preference shares, capital expenditure and working capital purposes.

Directors

Dr.C.Prakash and Dr.K.Nagarajan resigned as Directors on 31st January 2013. Dr.K.Paranjothy, Mr.Arun Eashwar and Mr.Ra Thirumoorti joined the Board on 6th December 2012, 31st January 2013 and 11th July 2013 respectively. Mr.K.P.Murali joined the Board as Additional Director and resigned on 11th July 2013. The resolutions for the appointment of Dr.K.Paranjothy, Mr.Arun Eashwar and Mr.Ra Thirumoorthi as Directors of the Company have been proposed for approval of the Members.

Mr.S.T.R.Mady, Chairman retires by rotation and being eligible offer himself for re-appointment.

Mr.S.Jayaprakash Mady, Managing Director was re-appointed as the Managing Director of the Company for a further period of three years effective from 1st February 2013.

Corporate Governance

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a Management Discussion and Analysis statement, Corporate Governance Report and Auditors'' Certificate on the compliance of conditions of Corporate Governance are made a part of the Annual Report.

Preferential Issue of Equity Shares

The Company, pursuant to the Shareholders Special Resolution passed at the extra ordinary general meeting held on 20th December 2012 and FIPB approval, allotted 40,00,000 Equity Shares of Rs.10 each at a price of Rs.100 each aggregating to Rs. 40.00 crores to GAVIS Pharma LLC, USA on 31st January 2013. The issue proceeds were utilized for the intended use i.e., (i) Repayment of all bank borrowings, (ii) Redemption of preference Shares, (iii) Procurement of capital assets and (iv) for meeting working capital requirements.

The allotment of 40,00,000 equity shares constitutes 39.90% of the post issue paid-up equity share capital of the Company and thus requiring the allottees, i.e., GAVIS Pharma LLC, USA to make open offer to the public shareholders to acquire 26% cf equity shares held by public shareholders under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations,

2011. Accordingly GAVIS Pharma made an open offer to the public shareholders and acquired a further 15,12,098 Equity Shares. Post public offer the GAVIS Pharma LLC, USA holds 55,12,098 equity shares representing 54.99% of the equity share capital. As stated in the offer document, post public offer GAVIS Pharma LLC, USA would assume the status of Promoters and the existing promoters (prior to public offer by GAVIS) would cease to be the Promoters of the Company and thus changes the Management control of the Company.

Directors'' Responsibility Statement

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

- in the preparation of the annual accounts for the year 2012-13, the applicable accounting standards have been followed along with proper explanation relating to material departures;

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

- they have taken proper and sufficient care 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;

- they have prepared the annua! accounts on a going concern basis.

Personnel

There were no employees drawing remuneration during the year in excess of the limits specified under Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules, 1975.

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

In pursuance of the provisions of Section 217(1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo are annexed to the Report.

Auditors

The Auditors M/s Rao & Swami, Chartered Accountants retire at the forthcoming Annua! General Meeting and being eligible offer for reappointment.

As per the requirement of the Central Government and pursuant to Section 233B of the Companies Act, 1956 your Company carries out an audit of cost records relating to manufacturing of Pharmaceutical Formulations. Subject to the approval of the Central Government, the Company has appointed Mr.Sathyanarayana, Partner - KSS, VKG & Associates to audit the cost accounts of the Company for the financial year 2012-13. The Cost Audit report for the financial year 2011- 12 which was due to filed with the Ministry of Corporate Affairs on or before February 28, 2013 was filed on January 2, 2013.

Observations in Audit Report

The Auditors in the Annexure to their report have highlighted that (i) in respect of inventory with third parties, the inventory systems requires to be strengthened and (ii) Internal Control Systems & Procedures needs to be streamlined. Your Directors are of the view that the Company has adequate Internal Control Systems and procedures for accounting Inventory of all the materials which commensurate with the size of the operations. However, necessary steps would be initiated to further strengthen the Internal Control Systems.

Acknowledgement

The Board places on record its appreciation for the continued cooperation and support received from the Medical Profession, various Government Agencies, Shareholders, Business Associates, Employees, Depositors and Bankers.

For and on behalf of the Board of Directors

Date : 11th July, 2013 S.T.R.MADY

Place : Bangalore CHAIRMAN


Mar 31, 2012

The Directors have pleasure in presenting the Twenty-second Annual Report together with the Audited Accounts for the year ended 31st March, 2012.

Financial Performance Rs. Lakhs

For the year ended For the year ended 31-March, 2011 31-March, 2012

Gross Sales 2777.86 2593.41

Excise Duty 111.31 166.53

Net Sales 2666.55 2426.88

Other Income 9.94 16.34

Total Revenue 2676.49 2443.22

Total Expenditure 2177.20 2485.53

Operating Profit/(Loss) 499.29 (42.31)

Interest 249.94 299.91

Profit/(Loss) before Depreciation (PBDT) 249.35 (342.22)

Depreciation 171.22 196.12

Net Profit 78.13 (538.34)

Operations

The operating results of the Company during the year as compared to the previous year are not satisfactory. This is mainly due to (i) Shut down of the Manufacturing Plant for two months for up-gradation of the Plant resulting in loss of revenue of nearly Rs. 300 lakhs and the one time up-gradation cost of approx. Rs.75 lakhs and (ii) stoppage of commercial supplies to US Market. The turnover of the Company during the year under review was Rs. 2426.88 lakhs to as compared to Rs. 2666.55 lakhs during the previous year, a decline of 8.99% over previous year. The net loss during the year was Rs. 538.34 lakhs as compared to a net profit of Rs. 78.13 lakhs during the previous year.

The Manufacturing Plant at Nelamangala was re-inspected by USFDA during September 2011. There were eight observations from the USFDA and consequently we had to suspend the export supplies to US. The Company sent in the compliance report/response to all eight observations during November and December 2011. However, USFDA was not satisfied with our compliance report in respect of three observations and issued a Warning Letter in February 2012. However, USFDA accepted our compliance report in respect of five observations. The Company has appointed a leading US based consultant Lachman Consultants to address the issues raised by USFDA. Until we resolve the issues with USFDA, the commercial supplies to US market cannot be resumed and this will affect our operating results during the current year also. A detailed response to the Warning Letter has been sent to USFDA and we are hopeful of resolving the issues and commence the commercial supplies towards end of the current financial year.

Directors

Dr.C.Prakash, Director retires by rotation and being eligible offers him-self for re-appointment. Corporate Governance

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchange, a Management Discussion and Analysis statement, Corporate Governance Report and Auditors' Certificate on the compliance of conditions of Corporate Governance are made a part of the Annual Report.

Rights Issue

The Company, during the year on 6th July 2011, issued 14,85,342 Equity shares of Rs. 10 each at a price of Rs. 33 per share on Rights issue basis and the total amount raised was Rs. 490.16 Lakhs. The issue proceeds were utilised for the intended use i.e. (I) Repayment of Loans Rs. 375.00 Lakhs, (II) Redemption of perference shares Rs. 100 Lakhs and (III) Meeting the issue expenses of Rs. 15.16 Lakhs.

Directors' Responsibility Statement

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

- in the preparation of the annual accounts for the year 2011 -12, the applicable accounting standards have been followed along with proper explanation relating to material departures;

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

- they have taken proper and sufficient care 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;

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

Personnel

There were no employees drawing remuneration during the year in excess of the limits specified under Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules, 1975.

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

In pursuance of the provisions of Section 217(1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo are annexed to the Report.

Auditors

The Auditors M/s Rao & Swami, Chartered Accountants retire at the forthcoming Annual General Meeting and being eligible offer for reappointment.

Acknowledgement

The Board places on record its appreciation for the continued cooperation and support received from the Medical Profession, various Government Agencies, Shareholders, Business Associates, Employees, Depositors and Bankers.

For and on behalf of the Board of Directors

Date : 11.08.2012 S.T.R.MADY

Place : Bangalore CHAIRMAN


Mar 31, 2010

The Directors have pleasure in presenting the Twentieth Annual Report together with the Audited Accounts for the year ended 31st March, 2010.

Financial Performance Rs.Lakhs

For the year ended For the year ended

31st March, 2009 31st March, 2010

Gross Sales 1645.28 2167.76

Excise Duty 136.27 88.57

Net Sales 1509.01 2079.19

Increase/(Decrease) in stock (43.97) 12.87

Other Income 36.99 60.68

Total Revenue 1502.03 2152.74

Total Expenditure 1443.85 1701.29

Operating Profit/(Loss) 58.18 451.45

Interest 127.78 174.66

Profit/(Loss) before Depreciation (PBDT) (69.60) 276.79

Depreciation 127.29 145.61

Profit before Provisions/Prior period expenses (196.89) 131.18

Provisions/Prior period expenses 6.04 17.37

Provision for Taxation (FBT) 1.50 -

Profit/(Loss) after Tax (204.43) 113.81

Appropriations:

Balance brought down from previous year (283.63) (488.06)

Balance carried forward (488.06) (374.25)

Operations

The operations of the Company during the year turned around. The total income during the year under review was Rs.2153 lakhs as compared to Rs.1502 lakhs, a growth of 43%. The net profit during the year was Rs.113.81 lakhs as against a loss of Rs.204.43 lakhs during the previous year. The increase in sales and higher technical know-how fee contributed to the turn-around of the operations. We are hopeful of further improving the performance during the current year although we are yet to commence the commercial production for the US market.

Exports

We are happy to inform you that the Company has received the formal USFDA approval for the

Manufacturing Plant and approval for ANDA for one injectable Product (Ondansetron 20ml injection through our customer). We expect approval for couple of more ANDAs during the current year and hope to commence the commercial production towards the end of current financial year. We have so far furnished dossiers for ten products to our Customers who have filed the ANDAs. The commercial production for all these products is expected to commence in the financial year 2011-12. We are confident of a substantial growth in sales and profitability with the commencement of commercial supplies for all the products now under development for the US Market. The development work for other products is as per schedule. Your Company is also taking steps to explore the other regulated markets like Europe, Canada, etc and hope to file the dossiers in the near future.

Your Company has entered into an agreement with Mylan Inc, USA through their Indian subsidiary (Matrix Laboratories Ltd.) for development, submission of documents for filing ANDA/Dossiers and world-wide commercial supplies for an Ophthalmic Product. The customer has already filed the ANDA for this product and commercial volumes are very attractive and would contribute substantially to the top line as well as bottom line of the profitability statement. We are also discussing with this company to tie-up for another product.

Your Company has also tied-up with another US based company Ocusoft Inc. for the supply of certain OTC products. The product development work is under progress and we expect the commercial production to commence towards the last quarter of the current financial year.

Directors

Sri.S.TR.Mady, Director retires by rotation and being eligible offers him-self for re-appointment.

Corporate Governance

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchange, a Management Discussion and Analysis statement, Corporate Governance Report and Auditors Certificate on the compliance of conditions of Corporate Governance are made a part of the Annual Report.

Directors Responsibility Statement

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

. in the preparation of the annual accounts for the year 2009-10, the applicable accounting standards have been followed along with proper explanation relating to material departures;

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

. they have taken proper and sufficient care 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;

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

Auditors observation

Auditors have drawn attention to Notes No.6, 7(a), 7(b), 9(a), 10(a) of Schedule-R forming part of the accounts and expressed their reservation on the recoverability of the said loans & advances. The Director are of the opinion that the said Loans and Advances are recoverable and the said notes to accounts are self explanatory.

Personnel

Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 is as under:

Name & Qualifications Age Commencement Remuneration Last Employment

Designation & Experience of employment

Dr.Shiv D Kamat Msc, 60 Years July, 2007 Rs.28,60,000 Strides Acrolab Ltd.,

Executive Vice President Phd.Org. Chemistry Vice President

31 Years 1 year

Dr.Shiv D Kamat is not related to any Director of the Company.

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

In pursuance of the provisions of Section 217(1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo are annexed to the Report.

Auditors

The Auditors M/s Rao & Swami, Chartered Accountants (ICAI Firm Registration No.003105S) retire at the forthcoming Annual General Meeting and being eligible offer for reappointment.

Acknowledgement

The Board places on record its appreciation for the continued cooperation and support received from the Medical Profession, various Government Agencies, Shareholders, Business Associates, Employees, Depositors and Bankers.

For and on behalf of the Board of Directors

Date : 04.08.2010 S.T.R.MADY

Place : Bangalore CHAIRMAN



 
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