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Directors Report of Aarti Drugs Ltd.

Mar 31, 2017

TO THE MEMBERS OF AARTI DRUGS LIMITED

The Directors have pleasure in presenting the Thirty Second Annual Report together with the Audited Financial Statements along with the Report of the Auditors for the year ended 31st March, 2017.

COMPANY’S FINANCIAL RESULTS

(Rs.in Lakhs)

Particulars

Standalone

Consolidated

2016-2017

2015-2016

2016-2017

2015-2016

Net Sales/ Income from Operations

108872

107073

119517

113488

Other Operating Income

353

476

400

496

Total Income from Operations

109226

107550

119917

113984

Total Expenditure

91455

90379

100952

96415

Profit Before Depreciation, Amortization, Interest and Tax Expenses

17771

17171

18965

17569

Less: Interest

3448

4328

3642

4389

Depreciation & Amortization

3669

3558

3846

3653

Profit/(Loss) before other income

10654

9284

11477

9527

Other Income

-

-

-

-

Profit/(Loss) Before Tax

10654

9284

11477

9527

Less: Provision for taxation - Current

2753

2115

2913

2115

- Earlier Year

(203)

-

(203)

-

- Deferred

680

540

711

540

Profit After Tax

7424

6629

8056

6872

Add: Surplus brought forward

27059

23068

27314

23033

Profit available for appropriation

34483

29697

35371

29906

Appropriations:

Transfer to General Reserve

-

670

-

670

Proposed Dividend

-

-

-

-

1st Interim Dividend

-

545

-

545

2nd Interim Dividend

-

363

-

363

3rd Interim Dividend

-

727

-

727

Tax on Dividend

-

333

-

333

Balance carried to Balance Sheet

34483

27059

35371

27314

SHARE CAPITAL

During the financial year 2016-17, the Company has bought back 3,60,000 (Three Lacs Sixty Thousand) fully paid - up Equity shares of face value of Rs.10/- (Rupees Ten only) each representing up to 1.49% of the total no. of Equity shares at a price of Rs.750/- per Equity share (including premium of Rs.740/- per share) for an aggregate amount of Rs.27,00,00,000/- (Rupees Twenty Seven Crores only), on a proportionate basis through the tender offer using stock exchange mechanism in accordance with the provisions of the Companies Act, 2013 and the SEBI (Buyback of Securities) Regulations, 1998. Post Buy-back of shares, the paid-up Equity Share Capital as on 31st March, 2017 was Rs.23,85,71,000/-.

The Company has neither issued shares with differential rights as to dividend, voting or otherwise nor issued sweat equity shares. There is no scheme for employee stock option or provision of money for shares of the Company to employees or Directors of the Company.

DIVIDEND

Your Directors recommend a dividend of 10% i.e. Re. 1/- per Equity Share of Face Value of Rs.10/- each aggregating to Rs.2,38,57,100/-.

As per Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, top five hundred listed entities based on the market capitalization are required to formulate Dividend Distribution Policy. The listed entities other than top five hundred listed entities based on market capitalization may formulate their Dividend Distribution Policies on a voluntary basis. Accordingly, the Company has formulated its Dividend Distribution Policy and the details of which are available on the Company’s website www.aartidrugs.com.

OPERATIONS REVIEW

During the year under review, Gross Sales of the Company is Rs.1185.93 Crores (Previous Year: Rs.1166.10 Crores) registering a growth of 1.70%.

The Company has achieved Export Sales of Rs.422.95 Crores as against Rs.389.19 Crores for the last year, registering a growth of 8.67%.

EBITDA has been Rs.177.71 Crores (Previous Year: Rs.171.70 Crores), registering a growth of 3.50%. PAT has been Rs.74.24 Crores (Previous Year Rs.66.29 Crores), registering a growth of 11.99%.

INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY

Your Company’s internal control systems commensurate with the nature and size of its business operations. Your Company has maintained a proper and adequate system of internal controls. This ensures that all Assets are safeguarded and protected against loss from unauthorized use or disposition and that the transactions are authorized, recorded and reported diligently.

The Audit Committee and M/s. Raman S. Shah & Associates, Chartered Accountants, Independent Internal Auditors, regularly review internal financial controls and operating systems and procedures for efficiency and effectiveness. The Internal Auditor’s Reports are regularly reviewed by the Audit Committee of the Board.

DIRECTORS’ RESPONSIBILITY STATEMENT

As required u/s. 134(3)(c) of the Companies Act, 2013, your Directors hereby state that-

a) in the preparation of the Annual Accounts for the financial year ended 31st March, 2017, the applicable accounting standards have been followed. There are no material departures from the applicable accounting standards;

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 on 31st March, 2017 and of the profit 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 had prepared Annual Accounts on a going concern basis;

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

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

BOARD OF DIRECTORS

Composition

Aarti Drugs Limited (ADL) Board presently consists of 12 Directors out of which 7 (Seven) are Non-Executive. Out of 7 (Seven) Nonexecutive Directors 6 (Six) Directors are Independent Directors.

Retirement by Rotation

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Shri Harshit M. Savla (DIN: 00005340), Jt. Managing Director and Shri Prakash M. Patil (DIN: 00005618), Chairman, Managing Director & CEO of the Company retires by rotation and being eligible have offered themselves for re-appointment as Directors.

Independent Directors

The Independent Directors hold office for a fixed term up to 31st March, 2019 and are not liable to retire by rotation. In accordance with Section 149(7) of the Companies Act, 2013, each Independent Director has given a written declaration to the Company confirming that he/she meets the criteria of independence as mentioned under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

Number of Meetings of the Board

The Board of Directors met 5 (Five) times in the year 2016 - 17. The details of Board and Committee Meeting and the attendance of the Directors at such meetings are provided in the Corporate Governance Report.

BOARD EVALUATION

During the year, the Board evaluated its performance and as well as that of its Committees and Individual Directors, including the Chairman of the Board. Separate exercise was carried out to evaluate the performance of Non-Independent Directors including the

Chairman of the Board who were evaluated on parameters such as Key achievements, Short term and long term targets, challenges faced, Implementation of Strategic decisions, organizational success, participation and attendance in Board and Committee Meetings etc.

The evaluation of the Independent Directors was carried out by the entire Board and that of the Chairman and Non-Independent Directors was carried out by the Independent Directors.

Independent Directors were evaluated on the parameters such as attendance and participations in the meetings and timely inputs on the minutes of the meetings, adherence to ethical standards & code of conduct of the Company, disclosure of non-independence, as and when exists and disclosure of interest, interpersonal relations with other Directors and Management, understanding of the Company and the external environment in which it operates and contribution to strategic direction, safeguarding interest of whistleblowers under vigil mechanism and safeguard of confidential information.

The Directors were satisfied with the evaluation results, which reflected the overall engagement of the Board and its Committees with the Company.

FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS

The Chairman and Managing Director have one to one discussion with all Directors to familiarize them with the Company’s operations. Further the Company has put in place a system to familiarize the Independent Directors about the Company, its products, business and on-going events relating to the Company. The details of such familiarization programmes for Independent Directors are posted on the website of the Company viz. www.aartidrugs.co.in/images/stories/details%20of%20familirisation%20programme.pdf.

KEY MANAGERIAL PERSONNEL

Shri Prakash M. Patil, Chairman, Managing Director & Chief Executive Officer, Shri Rashesh C. Gogri, Managing Director, Shri Harshit M. Savla, Jt. Managing Director, Shri Harit P. Shah, Whole-time Director, Shri Uday M. Patil, Whole-time Director, Shri Adhish P. Patil, Chief Financial Officer and Shri Vibhav S. Ranade, Company Secretary & Compliance Officer of the Company are the Key Managerial Personnel of the Company as on the date of this report.

DETAILS RELATING TO DEPOSITS COVERED UNDER CHAPTER V OF COMAPANIES ACT, 2013

Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 and no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

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

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions made during the financial year 2016-17 were on arm’s length basis and were in the ordinary course of business. All transactions with related parties are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are specifically certified by Statutory Auditors and statement specifying the nature, value and terms & conditions of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis. The statement is supported by a certification from the Jt. Managing Director and the Chief Financial Officer (CFO). The details of related party transactions are provided in the accompanying financial statements.

The Policy on Related Party Transactions as approved by the Board is available on the Company’s website and can be accessed through www.aartidrugs.com

All transactions entered into with related parties during the year were on an arm’s length basis and were in the ordinary course of business. Accordingly, there are no transactions that are required to be reported in Form AOC-2.

EXTRACT OF ANNUAL RETURN

As required by Section 92(3) of the Companies Act, 2013 and rules framed there under, the extract of the Annual Return in Form MGT-9 is enclosed as "Annexure- A”.

SUBSIDIARY

The Company has one non - material subsidiary, namely, Pinnacle Life Science Private Limited. The Company has attached along with its financial statement, a separate statement containing the salient features of the financial statement of the said subsidiary in ”Form AOC-1” which is annexed as "Annexure - B”.

CONSOLIDATED FINANCIAL STATEMENTS

As stipulated under the provisions of the SEBI (Listing Obligations & Disclosure Requirement), Regulations, 2015, the Consolidated Financial Statements have been prepared by the Company in accordance with the applicable Accounting Standards. The Audited Consolidated Financial Statement together with Auditors’ Report form part of the Annual Report.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION

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

BUSINESS RISK MANAGEMENT

During the year under review, the Company has identified and evaluated elements of business risk. Business risk, inter-alia, further includes fluctuations in foreign exchange, Raw Material Procurement risk, Environmental & Safety Risk, Working Capital Risk, Market Risk and Business Operations Risk. The risk management framework defines the risk management approach of the Company and includes periodic review of such risk and also documentation, mitigating controls and reporting mechanism of such risks. The Board of Directors and senior management team currently assess the operations and operating environment to identify potential risks and take necessary mitigation actions.

DISCLOSURES RELATED TO COMMITTEES & POLICIES

1. Audit Committee

The Audit Committee of Directors is constituted as per the provisions of Section 177 of the Companies Act, 2013. The Composition of the Audit Committee is in conformity with the provisions of the said section and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The composition & terms of reference of Audit Committee of the Board of Directors of the Company is disclosed in the report of Corporate Governance, which forms part of this report.

During the year under review, the Board of Directors of the Company had accepted all the recommendations of the Audit Committee.

2. Nomination & Remuneration Committee

The Nomination & Remuneration Committee of Directors is constituted in accordance with the requirements of Section 178 of the Companies Act, 2013.

The Company strives to maintain an appropriate combination of executive, non-executive and Independent Directors. In terms of provisions of Section 178 of the Companies Act, 2013, the Nomination and Remuneration Committee considers and recommends the Board on appointment and remuneration of Directors and Key Managerial Personnel and the Company’s Nomination and Remuneration Policy is enclosed as "Annexure - C”.

3. Stakeholders Relationship Committee

Pursuant to Section 178 of the Companies Act, 2013, the Board of Directors has constituted the Stakeholders Relationship Committee, details of which are given in the Corporate Governance Report.

The Company Secretary acts as the secretary to the Committee.

4. Corporate Social Responsibility Committee

As per the provisions of Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors has constituted a Corporate Social Responsibility (CSR) Committee and the Board of Directors of the Company has approved CSR Policy based on the recommendations of the CSR Committee.

The CSR Policy is available on the Company’s website and can be accessed through www.aartidrugs.com.

Your Company actively contributes to the following segments-

i. Education & Skill Development

ii. Health

iii. Environment

iv. Social Welfare

v. Promotion of Sports and allied trainings

i. Education & Skill Development

Your Company through Aarti Foundation and various other NGO’s has been doing work in this segments. In this year, the Company has provided furniture to School located in the state of Maharashtra. The Company has also actively contributed towards Literacy Education Programmes during the year under review.

ii. Health

Your Company through Aarti Foundation is in process of developing Medical College in the State of Gujarat. Also the Company has provided various infrastructure facilities to the Hospitals in the State of Maharashtra.

iii. Environment

Your Company has entered into an agreement with The Governor, Government of Maharashtra through Deputy Conservator of Forest, Dahanu Forest Division, Dahanu through local NGO M/s. Sudha Pratishthan, Masvan, Palghar to participate and assist Government in implementing Afforestation Programme in the degraded forest land of Dahanu Forest Division spread over 100 Hectares Government Land over a period of 7 years. During the year under review, the Company has successfully completed plantation programme of 60,000 trees in the Palghar District.

iv. Social Welfare

During the year under review, your Company has actively contributed for issues pertaining to Social Welfare in the District Palghar, Maharashtra.

v. Promotion of Sports and allied trainings

In order to impart trainings to promote rural sports, the Company has conducted various sports activities in the State of Sikkim during the year under review.

In addition to above, your Company participates into a spectrum of CSR activities evolving around the general up-liftment of the economically backward class of people. Your Company also makes active contribution to various local NGOs to assist in the relief measures in the affected areas.

During the year under review, the Company was required to spend Rs.185.11 Lakhs on CSR activities. However, the Company has spent Rs.185.07 Lakhs on CSR activities. There was a slight difference between estimated expenditure and actual expenditure on account of change in project’s cost estimation. The Company is constantly evaluating various projects to fulfill its obligations towards the society.

The Annual Report on CSR activities is annexed as "Annexure - D” and forms an integral part of the Report.

5. Vigil Mechanism / Whistle Blower Policy

The Company has a vigil mechanism/whistle blower policy to deal with instance of fraud and mismanagement. The details of the said policy is explained in the Corporate Governance Report and also posted on the website of the Company, viz. www. aartidrugs.com

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators/Courts which would impact the going concern status of the Company and its future operations.

CORPORATE GOVERNANCE

A separate section on Corporate Governance practices followed by the Company, together with a certificate from the Company’s Auditors confirming compliance, forms a part of this Annual Report, as per SEBI (Listing Obligations & Disclosure Requirements), Regulations, 2015.

MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis Report as required under the provisions of SEBI Regulations, 2015 is annexed hereto forming part of this Report.

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

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated in Section 134(3)(m) of the Companies Act, 2013 and rules framed there under is enclosed herewith as "Annexure - E”.

STATUTORY AUDITORS

At the Annual General Meeting held on 11th July, 2014, M/s. Gokhale & Sathe, Chartered Accountants (Firm Regn. No. 103264W) was appointed as Statutory Auditors of the Company to hold office till the conclusion of the Thirty Second Annual General Meeting. Hence, M/s. Gokhale & Sathe will retire as Company’s Auditors at the conclusion of the ensuing 32nd Annual General Meeting.

The Audit Committee of the Company has proposed and the Board of Directors of the Company has recommended appointment of M/s. GBCA & Associates (Firm Registration No. 103142W) as the new Statutory Auditors of the Company to hold office as such from the conclusion of 32nd Annual General Meeting to the conclusion of 33rd Annual General Meeting in terms of provisions of Section 139(2) of the Companies act, 2013. M/s. GBCA & Associates are proposed to be appointed for a period of one year i.e. from the conclusion of 32nd Annual General Meeting till the conclusion of 33rd Annual General Meeting of the Company. M/s. GBCA & Associates have informed the Company that their appointment, if made, would be within the limits prescribed under Section 141 of the Companies Act, 2013. M/s. GBCA & Associates have confirmed that they have subjected themselves to the peer review process of the Institute of Chartered Accountants of India (ICAI) and hold valid certificates issued by the Peer Review Board of the ICAI. M/s. GBCA & Associates have also furnished a declaration in terms of Section 141 of the Companies Act, 2013 that they are eligible to be appointed as auditors and that they have not incurred any disqualification under the Companies Act, 2013.

There are no qualifications, reservation or adverse remarks or disclaimers made by the Statutory Auditors in their Audit Report.

COST AUDIT

Mr. Girikrishna S. Maniar, the Cost Auditor was re-appointed by the Company under Section 148 of the Companies Act, 2013. The due date for filing the Cost Audit Reports in XBRL mode for the financial year ended 31st March, 2016 was 30th September, 2016 and the Cost Audit Report was filed on 3rd November, 2016. The due date for filing the Cost Audit Reports for the financial year ended 31st March, 2017 is 27th September, 2017.

On the recommendation of Audit Committee, the Board of Directors in its meeting held on 23rd May, 2017 has appointed GMVP & Associates LLP, Cost Accountants as Cost Auditor of the Company for the Financial Year 2017 - 18. The Company is seeking the ratification of the remuneration to be paid to GMVP & Associates LLP, Cost Auditor of the Company in respect of Cost Audit for the financial year ended 31st March, 2018 as mentioned in the Notice convening AGM.

SECRETARIAL AUDITOR

The Secretarial Audit Report for the financial year ended 31st March, 2017 issued by CS Sunil M. Dedhia of Sunil M. Dedhia & Co., Practicing Company Secretaries, Secretarial Auditor is annexed as "Annexure - F”. In connection with the auditor’s observation in the report, it is clarified that the non - filing of e-forms for board resolutions and changes in shareholding with Ministry of Corporate Affairs (MCA) are technical lapses that occurred inadvertently and necessary steps are being taken to file the same.

PARTICULARS OF EMPLOYEES

Disclosure pertaining to the remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as "Annexure - G”. However, as per the provisions of the section 136(1) of the Companies Act, 2013, this Report is sent to the shareholders excluding the said information. Any shareholder interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

HUMAN RESOURCES ENVIRONMENT & SAFETY

Your Company recognizes its human resources as one of its prime & critical resources. The relations between the Management and the Staff Members remained very cordial throughout the year under review. As on 31st March, 2017 the Company had 1181 permanent employees at its manufacturing plants and administrative office.

The Company has constituted an Internal Complaint Committee pursuant to the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 for prevention, prohibition or redressal of complaints/grievances on the sexual harassment of women at work places.

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

GREEN INITIATIVE

Your Company has adopted green initiative to minimize the impact on the environment. The Company has been circulating the copy of the Annual Report in electronic format to all those members whose email addresses are available with the Company. Your Company appeals other Members also to register themselves for receiving Annual Report in electronic form.

ACKNOWLEDGEMENT

We place on record our sincere Green appreciation to the employees of the Company at all levels for their co-operation and dedicated services. We also thank all our customers and suppliers who are always co-operative.

We also express our sincere thanks to Bankers, Financial Institutions and the Shareholders for their continued support.

For and on behalf of the Board of Directors

of Aarti Drugs Limited

Sd/-

Prakash M. Patil

Place: Mumbai Chairman & Managing Director

Date: 23rd May, 2017 DIN: 00005618


Mar 31, 2016

The Directors have pleasure in presenting the Thirty First Annual Report together with the Audited Financial Statements along with the Report of the Auditors for the year ended 31st March, 2016.

COMPANY''S FINANCIAL RESULTS

(Rs. in Lakhs)

Standalone Consolidated

Particulars 2015-2016 2014-2015 2015-2016 2014-2015

Net Sales/Income from Operations 107073 108448 113488 109427

Other Operating Income 476 274 496 261

Total Income from Operations 107550 108722 113984 109688

Total Expenditure 90379 91827 96415 92786

Profit Before Depreciation, Amortization, Interest and Tax Expenses 17170 16895 17569 16902

Less: Interest 4328 3888 4389 3893

Depreciation & Amortization 3558 3066 3653 3102

Profit/(Loss) before other income 9284 9941 9527 9907

Other Income - 65 - 65

Profit/(Loss) Before Tax 9284 10006 9527 9972

Less: Provision for taxation

- Current 2115 2000 2115 2000

- Earlier Year - (154) - (154)

- Deferred 540 400 540 400

Profit After Tax 6629 7760 6872 7725

Add: Surplus brought forward 23068 19626 23033 19626

Profit available for appropriation 29697 27386 29906 27351 Appropriations:

Transfer to General Reserve 670 780 670 780

Proposed Dividend - 727 - 727

1st Interim Dividend 545 605 545 605

2nd Interim Dividend 363 605 363 605

3rd Interim Dividend 727 - 727 -

Tax on Dividend 333 390 333 390

Bonus Share Issued - *1211 - *1211

Balance carried to Balance Sheet 27059 23068 27314 23033

* The Company has allotted 1,21,08,550 fully paid-up equity shares pursuant to a bonus issue in the ratio of 1:1.

SHARE CAPITAL

The paid-up Equity Share Capital as on 31st March, 2016 was Rs. 24,21,71,000/-. The Company has neither issued shares with differential rights as to dividend, voting or otherwise nor issued sweat equity shares. There is no scheme for employee stock option or provision of money for shares of the Company to employees or Directors of the Company.

DIVIDEND

During the year under review, your Company had declared and paid three interim dividends aggregating to Rs. 6.75/- per equity share of Rs. 10/- each (Previous Year: Rs. 8/- per share ex-bonus including two interim and final dividends). Keeping in view the three interim dividends already declared by the Company, the Board have not recommended any further dividend.

Total cash outflow on account of dividend payments including dividend distribution tax will be Rs. 1967.43 Lakhs for the financial year 2015-16 (Previous Year: Rs. 2327 Lakhs).

OPERATIONS REVIEW

During the year under review, Gross Sales of the Company is Rs. 1166.10 Crores (Previous Rs. 1169.94 Crores) registering a decline of 0.33%.

The Company has achieved Export Sales of Rs. 389.19 Crores as against Rs. 411.71 Crores for the last year, registering a decline of 5.47%.

EBITDA has been Rs. 171.70 Crores (Previous Year: Rs. 168.96 Crores), registering a growth of 1.62%. PAT has been Rs. 66.29 Crores (Previous Year Rs. 77.60 Crores), registering a decline of 14.57%.

INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY

Your Company''s internal control systems commensurate with the nature and size of its business operations. Your Company has maintained a proper and adequate system of internal controls. This ensures that all Assets are safeguarded and protected against loss from unauthorized use or disposition and that the transactions are authorised, recorded and reported diligently.

The Audit Committee and M/s. Raman S. Shah & Associates, Chartered Accountants, Independent Internal Auditors, regularly review internal financial controls and operating systems and procedures for efficiency and effectiveness. The Internal Auditor''s Reports are regularly reviewed by the Audit Committee of the Board.

DIRECTORS'' RESPONSIBILITY STATEMENT

As required u/s. 134(3)(c) of the Companies Act, 2013, your Directors hereby state that -

a) in the preparation of the Annual Accounts for the financial year ended 31st March, 2016, the applicable accounting standards have been followed. There are no material departures from the applicable accounting standards;

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 on 31st March, 2016 and of the profit 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 had prepared Annual Accounts on a going concern basis;

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

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

BOARD OF DIRECTORS

Composition

Aarti Drugs Limited (ADL) Board presently consists of 12 Directors out of which 7 (Seven) are Non-Executive. Out of 7 (Seven) Non-Executive Directors, 6 (Six) Directors are Independent Directors.

Retirement by Rotation

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Shri Rashesh C. Gogri (DIN: 00066291), Managing Director of the Company retires by rotation and being eligible offers his candidature for re-appointment as Director.

Independent Directors

The Independent Directors hold office for a fixed term upto 31st March, 2019 and are not liable to retire by rotation. In accordance with Section 149(7) of the Companies Act, 2013, each Independent Director has given a written declaration to the Company confirming that he/she meets the criteria of independence as mentioned under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

Number of Meetings of the Board

The Board of Directors met 5 (Five) times in the year 2015-16. The details of Board and Committee Meetings and the attendance of the Directors at such meetings are provided in the Corporate Governance Report.

The details regarding the Board Meetings and the attendance of the Directors at the Board Meeting/Committee Meeting during the year are set out in detail in the Corporate Governance Report.

BOARD EVALUATION

During the year, the Board evaluated its performance and as well as that of its Committees and Individual Directors, including the Chairman of the Board. Separate exercise was carried out to evaluate the performance of Non-Independent Directors including the Board Chairman who were evaluated on parameters such as Key achievements, Short term and long term targets, challenges faced, Implementation of Strategic decisions, organizational success, participation and attendance in Board and Committee Meetings etc.

The evaluation of the Independent Directors was carried out by the entire Board and that of the Chairman and Non- Independent Directors was carried out by the Independent Directors.

Independent Directors were evaluated on the parameters such as attendance and participations in the meetings and timely inputs on the minutes of the meetings, adherence to ethical standards & code of conduct of the Company, disclosure of non-independence, as and when exists and disclosure of interest, interpersonal relations with other Directors and Management, understanding of the Company and the external environment in which it operates and contribution to strategic direction, safeguarding interest of whistle-blowers under vigil mechanism and safeguard of confidential information.

The Directors were satisfied with the evaluation results, which reflected the overall engagement of the Board and its Committees with the Company.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

The Chairman and Managing Director have one to one discussion with all Directors to familiarize them with the Company''s operations. Further the Company has put in place a system to familiarize the Independent Directors about the Company, its products, business and on-going events relating to the Company. The details of such familiarization programmes for Independent Directors are posted on the website of the Company viz. www.aartidrugs.com.

KEY MANAGERIAL PERSONNEL

During the year under review, Shri Sunny D. Pagare, Company Secretary & Compliance Officer of the Company resigned w.e.f. 1st December, 2015 and Shri Vibhav S. Ranade has been appointed as Company Secretary & Compliance Officer of the Company w.e.f. 22nd February, 2016.

DETAILS RELATING TO DEPOSITS COVERED UNDER CHAPTER V OF COMPANIES ACT, 2013

Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 and no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

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

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions made during the financial year 2015-16 were on arm''s length basis and were in the ordinary course of business. All transactions with related parties are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement specifying the nature, value and terms & conditions of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis. The statement is supported by a certification from the Jt. Managing Director and the Chief Financial Officer (CFO). The details of related party transactions are provided in the accompanying financial statements.

The Policy on Related Party Transactions as approved by the Board is available on the Company''s website and can be accessed through www.aartidrugs.com.

All transactions entered into with related parties during the year were on an arm''s length basis and were in the ordinary course of business. Accordingly, there are no transactions that are required to be reported in Form AOC-2.

EXTRACT OF ANNUAL RETURN

As required by Section 92(3) of the Companies Act, 2013 and rules framed thereunder, the extract of the Annual Return in Form MGT-9 is enclosed as "Annexure - A".

SUBSIDIARY

The Company has one subsidiary, namely, Pinnacle Life Science Private Limited. The Company has attached along with its financial statement, a separate statement containing the salient features of the financial statement of the said subsidiary in "Form AOC-1" which is annexed as "Annexure - B".

CONSOLIDATED FINANCIAL STATEMENTS

As stipulated under the provisions of the SEBI (Listing Obligations & Disclosure Requirements), Regulations, 2015, the Consolidated Financial Statements have been prepared by the Company in accordance with the applicable Accounting Standards. The audited Consolidated Financial Statements together with Auditors'' Report form part of the Annual Report.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION

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

BUSINESS RISK MANAGEMENT

During the year under review, the Company has identified and evaluated elements of business risk. Business risk, inter alia, further includes fluctuations in foreign exchange, Raw Material Procurement risk, Environmental & Safety Risk, Working Capital Risk, Market Risk and Business Operations Risk. The risk management framework defines the risk management approach of the Company and includes periodic review of such risk and also documentation, mitigating controls and reporting mechanism of such risks. The Board of Directors and senior management team currently assess the operations and operating environment to identify potential risks and take necessary mitigation actions.

DISCLOSURES RELATED TO COMMITTEES & POLICIES

1. Audit Committee

The Audit Committee of Directors is constituted as per the provisions of Section 177 of the Companies Act, 2013. The Composition of the Audit Committee is in conformity with the provisions of the said section and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The composition & terms of reference of Audit Committee of the Board of Directors of the Company is disclosed in the report of Corporate Governance, which forms part of this report.

During the year under review, the Board of Directors of the Company had accepted all the recommendations of the Audit Committee.

2. Nomination & Remuneration Committee

The Nomination & Remuneration Committee of Directors is constituted in accordance with the requirements of Section 178 of the Companies Act, 2013.

The Company strives to maintain an appropriate combination of executive, non-executive and Independent Directors. In terms of provisions of Section 178 of the Companies Act, 2013, the Nomination and Remuneration Committee considers and recommends the Board on appointment and remuneration of Directors and Key Managerial Personnel and the Company''s Nomination and Remuneration Policy is enclosed as "Annexure - C".

3. Stakeholders Relationship Committee

Pursuant to Section 178 of the Companies Act, 2013, the Board of Directors has constituted the Stakeholders Relationship Committee, details of which are given in the Corporate Governance Report.

The Company Secretary acts as the secretary to the Committee.

4. Corporate Social Responsibility Committee

As per the provisions of Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors has constituted a Corporate Social Responsibility (CSR) Committee and the Board of Directors of the Company has approved CSR Policy based on the recommendations of the CSR Committee.

The CSR Policy is available on the Company''s website and can be accessed through www.aartidrugs.com.

Your Company actively contributes to the following segments-

i. Education & Skill Development

ii. Environment

iii. Rehabilitation in Disaster Affected areas

i. Education & Skill Development

Your Company through own trusts Aarti Foundation & Dhanvallabh Charitable Trust and various other NGO''s has been doing work in this segments. In addition to this year Company provides direct help to schools located nearby all its manufacturing facilities by way of constructing schools, grant/aid for fees etc.

ii. Environment

Your Company has entered into an agreement with The Governor, Government of Maharashtra through Deputy Conservator of Forest, Dahanu Forest Division, Dahanu through local NGO M/s. Sudha Pratishthan, Masvan, Palghar to participate and assist Government in implementing Afforestation Programme in the degraded forest land of Dahanu Forest Division spread over 100 Hectares Government Land over a period of 7 years.

iii. Rehabilitation in Disaster Affected areas

Aarti Drugs which holds an expertise of working in collaboration with the government and local NGOs has carried out rehabilitation in drought affected areas of Aurangabad through Shree Siddhivinayak Sevabhavi.

In addition to above, your Company participates into a spectrum of CSR activities evolving around the general up-liftment of the economically backward class of people. Your Company also makes active contribution to various local NGOs to assist in the relief measures in the affected areas.

During the year, the Company has spent Rs. 175.38 lakhs on CSR activities.

The Annual Report on CSR activities is annexed as "Annexure - D" and forms an integral part of the Report.

5. Vigil Mechanism/Whistle Blower Policy

The Company has a vigil mechanism/whistle blower policy to deal with instance of fraud and mismanagement. The details of the said policy is explained in the Corporate Governance Report and also posted on the website of the Company, viz. www.aartidrugs.com.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators/Courts which would impact the going concern status of the Company and its future operations.

CORPORATE GOVERNANCE

A separate section on Corporate Governance practices followed by the Company, together with a certificate from the Company''s Auditors confirming compliance, forms a part of this Annual Report, as per SEBI (Listing Obligations & Disclosure Requirements), Regulations, 2015.

MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis Report as required under the provisions of SEBI Regulations, 2015 is annexed hereto forming part of this Report.

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

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated in Section 134(3)(m) of the Companies Act, 2013 and rules framed thereunder is enclosed herewith as "Annexure - E".

STATUTORY AUDITORS

At the Annual General Meeting held on 11th July, 2014, M/s. Gokhale & Sathe, Chartered Accountants (Firm Regn. No. 103264W) were appointed as Statutory Auditors of the Company to hold office till the conclusion of the Thirty Second Annual General Meeting (AGM).

In terms of the provisions of the Companies Act, 2013, it is necessary to get the appointment ratified by the shareholders in every Annual General Meeting until the expiry of the period of original appointment.

In this regard, the Company has received a certificate from the Auditors to the effect that if they are reappointed, it would be in accordance with the provisions of the Section 141 of the Companies Act, 2013.

In view of the above, the Board of Directors recommends your ratification of the appointment of M/s. Gokhale & Sathe, Chartered Accountants (Firm Regn. No. 103264W) as the Statutory Auditors as mentioned in the Notice convening AGM.

There are no qualifications, reservation or adverse remarks or disclaimers made by the Statutory Auditors in their Audit Report.

COST AUDIT

The Cost Auditor Mr. Girikrishna S. Maniar was re-appointed by the Company under Section 148 of the Companies Act, 2013 and he attended the Audit Committee Meeting, where Cost Audit Reports was discussed.

The due date for filing the Cost Audit Reports in XBRL mode for the financial year ended 31st March, 2015 was 30th September, 2015 and the Cost Audit Reports were filed by the Cost Auditor on 15th January, 2016. The due date for filing the Cost Audit Reports for the financial year ended 31st March, 2016 is 30th September, 2016.

The Company is seeking the ratification of the remuneration to be paid to Mr. Girikrishna S. Maniar, Cost Auditor of the Company in respect of Cost Audit for the financial year ending 31st March, 2017 as mentioned in the Notice convening AGM.

SECRETARIAL AUDITOR

The Secretarial Audit Report for the financial year ended 31st March, 2016 issued by CS Sunil M. Dedhia of Sunil M. Dedhia & Co., Practicing Company Secretaries, Secretarial Auditor is annexed as "Annexure - F". The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

PARTICULARS OF EMPLOYEES

Disclosure pertaining to the remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as "Annexure - G". However, as per the provisions of the Section 136(1) of the Companies Act, 2013, this Report is sent to the shareholders excluding the said information. Any shareholder interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

HUMAN RESOURCES ENVIRONMENT & SAFETY

Your Company recognizes its human resources as one of its prime & critical resources. The relations between the Management and the Staff Members remained very cordial throughout the year under review. As on 31st March, 2016 the Company had 1072 permanent employees at its manufacturing plants and administrative office.

The Company has constituted an Internal Complaint Committee pursuant to the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 for prevention, prohibition or redressal of complaints/grievances on the sexual harassment of women at work places.

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

GREEN INITIATIVE

Your Company has adopted green initiative to minimize the impact on the environment. The Company has been circulating the copy of the Annual Report in electronic format to all those members whose email addresses are registered with the Company. Your Company appeals other members also to register themselves for receiving Annual Report in electronic form.

ACKNOWLEDGEMENT

We place on record our sincere Green appreciation to the employees of the Company at all levels for their co-operation and dedicated services. We also thank all our customers and suppliers who are always co-operative.

We also express our sincere thanks to Bankers, Financial Institutions and the Shareholders for their continued support.



For and on behalf of the Board of Directors

of Aarti Drugs Limited





Sd/-

Prakash M. Patil

Place: Mumbai Chairman & Managing Director

Date: 5th May, 2016 DIN: 00005618


Mar 31, 2013

TO THE MEMBERS OF AARTI DRUGS LIMITED

The Directors have pleasure in presenting the Twenty-Eighth Annual Report together with the Audited Statements of Accounts along with the Report of the Auditors for the year ended 31st March, 2013.

COMPANY''S FINANCIAL RESULTS

(Rs.in Lakhs)

2012-2013 2011-2012

Net Sales/Income from Operations 82484 65926

Other Operating Income 91 308

Total Income from Operations 82575 66234

Less: (lncrease)/Decrease in Stock-in-Trade (2259) (91)

Consumption of Raw Materials 57786 45448

Staff Cost 2853 2483

Other Expenditure 12161 10368

Total Expenditure 70541 58208

Profit Before Depreciation, Amortization, Finance Cost and Tax Expenses 12034 8027

Less: Interest 2804 2267

Depreciation & Amortization 20599 2422

Profit before Exceptional items 6631 3338

Less: Exceptional items 44 116

Profit Before Tax 6588 3222

Less: Provision for taxation - Current 1760 800

- Deferred 304 176

Profit After Tax 4524 2246

Add: Surplus brought forward 13253 12506

Profit available for appropriation 777 14278

Appropriations:

Income tax of Earlier Year 86

Transfer to General Reserve 450 236

Proposed Dividend 40% 484 363

1st Interim Dividend 30% 363 242

2nd Interim Dividend 30% 363

Tax on Dividend 201 98

Balance carried to Balance Sheet 15916 13253



DIVIDEND

During the year under review, your Company had declared and paid 1st & 2nd interim dividends (of Rs. 3/- each) @ 60% per equity share of Rs. 10/- each (Previous Year : 20%). Your Directors have recommended a final Dividend of Rs. 4/- @ 40% per equity share for the financial year 2012-13 (Previous Year: 30%). Total cash outflow on account of dividend payments including dividend distribution tax will be Rs. 1,411 Lakhs for the financial year 2012-13 (Previous Year: t 703 Lakhs).

OPERATIONS REVIEW

During the year under review, the Company has achieved Sales Turnover of Rs. 88,575 Lakhs (Previous Year: Rs. 69,918 Lakhs) registering a growth of 26.68%.

Further, the Company has achieved Export Turnover of Rs. 32,220 Lakhs as against Rs. 28,071 Lakhs for the last year, registering a growth of 14.78%.

Operating Profit before Interest, Depreciation, Amortization & Tax, has been Rs. 12,034 Lakhs (Previous Year Rs. 8,027 Lakhs), registering a growth of 49.92%. Profit After Tax has been Rs. 4,524 Lakhs (Previous Year Rs. 2,246 Lakhs), registering a growth of 101.42%.

The company had carried out expansion programmes in the year 2010-11 & 2011 -12 keeping long term view in the mind, inspite of recessionary conditions prevailing globally. The company reaped the benefit of utilization of expanded capacity for the full year which has resulted into increased sales. In addition, last year one of our location at Sarigam suffered loss of production for three months due to general environmental clearance issue in the area. During the year under review, we successfully operated that plant at higher capacity. Due to overall higher capacity utilization across the company, the overheads got spread over increased production which led to reduction in costs and thus increase in the profitability.

Fire incident occurred on 22.03.2013 at one of the Production block of the manufacturing unit located at Plot No. N -198 Tarapur manufacturing MNI, an intermediate which is further processed to manufacture two APIs. Loss / damage caused to stock and fixed assets due to fire incident has been covered under insurance and accounted for appropriately.

The Company could arrange to outsource the said intermediates from outside and supplies of said APIs were restored to customers within a period of a month.

DIRECTORS'' RESPONSIBILITY STATEMENT

As required u/s. 217 (2AA) of the Companies Act, 1956, your Directors hereby state that -

(i) in the preparation of the Annual Accounts for the financial year ended 31st March, 2013, the applicable accounting standards have been followed. There are no material departures from the applicable accounting standards;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give 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 year;

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

(iv) the Directors have prepared Annual Accounts on a going concern basis.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Shri Rashesh C. Gogri, Shri Harshit M. Savla, Shri Navin C. Shah and Shri Rajendra V. Gogri retire by rotation and being eligible, offer themselves for re-appointment.

During the year the Board of Directors have resolved to appoint Shri Rashesh C. Gogri as Executive Director of the Company with effect from 31st October, 2012.

CORPORATE GOVERNANCE

Your Company has complied with the mandatory Corporate Governance requirements stipulated under clause 49 of the Listing Agreement. Report on Corporate Governance is annexed hereto forming part of this report.

MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis Report as required under the Listing Agreement is annexed hereto forming part of this Report.

DISCLOSURE OF PARTICULARS

Pursuant to section 217(2A) of the Companies Act,1956 read with Companies (Particulars of employees) Rules 1975, as amended up to date, the names and other particulars are set out in the Annexure to the Directors'' Report. However, as per the provisions of the section 219(1 )(b)(iv) of the Companies Act,1956, this Report is sent to the shareholders excluding the said information. Any shareholder interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

Particulars required u/s. 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, relating to conservation of energy, research & development, technology absorption, foreign exchange earnings and outgo are given in the annexure to this Report.

AUDITORS

M/s. Parikh Joshi & Kothare, Auditors of the Company retire at the ensuing Annual General Meeting and are eligible for re-appointment. Members are requested to appoint Auditors and to fix their remuneration.

COST AUDIT

The Cost Auditor, Mr. Girish S. Maniar, re-appointed by the Company under Section 233B of the Companies Act, 1956 attended the Audit Committee Meeting, where Cost Audit Report was discussed.

The due date for filing the Cost Audit Reports in XBRL mode for the financial year ended March 31, 2012 was February 28, 2013 and the Cost Audit Reports were filed by the Cost Auditor on February 28, 2013. The due date for filing the Cost Audit Reports for the financial year ended March 31, 2013 is September 30, 2013.

HUMAN RESOURCES

Your Company recognizes its human resources as one of its prime & critical resources. The relations between the Management and the Staff Members remained very cordial throughout the year under review.

In fire incident occurred at unit N-198, casualty of 6 (Six) employees/workers was reported. The victims were covered under insurance and appropriate compensations have been also settled by the Company.

GREEN INITIATIVE

Last year, we started a Green initiative with the aim of being green and minimizing our impact on the environment. This year too we are proposing to send the Annual Report to the registered e-mail addresses of the shareholders.

ACKNOWLEDGEMENT

We place on record our sincere Green appreciation to the employees of the Company at all levels for their co-operation and dedicated services. We also thank all our customers and suppliers who are always co-operative.

We also express our sincere thanks to Bankers, Financial Institutions and the Shareholders for their continued support.

By Order of the Board

Sd/-

Rajendra V. Gogri

Chairman

Place: Mumbai

Date: 16th May, 2013


Mar 31, 2012

TO THE MEMBERS OF AARTI DRUGS LIMITED

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

COMPANY'S FINANCIAL RESULTS

(Rs. in Lakhs)

2011-12 2010-11

Net Sales/ Income from Operations 65926 49642

Other Operating Income 610 8

Total income from operation 66536 49650

Less: (Increase) / Decrease in Stock-in-Trade (92) (1618)

Consumption of Raw Materials 45750 35721

Staff Cost 2483 1787

Other Expenditure 10368 7490

Total Expenditure 58509 43381

Profit/(Loss) Before Depreciation, Amortization, Finance Cost and Tax Expenses 8027 6269

Less: Interest 2267 1348

Depreciation & Amortization 2422 1774

Profit/(Loss) Before Exceptional Items 3338 3147

Less: Exceptional Items 116 -

Profit/(Loss) Before Tax 3222 3147

Less: Provision for taxation - Current 800 650

- Deferred 175 250

Profit/(Loss) After Tax 2246 2247

DIVIDEND

During the year under review, your Company had declared and paid interim dividend of Rs. 2/- @ 20% per equity share of Rs. 10/- each. Your Directors have recommended a final Dividend of Rs. 3/- @ 30% per share for the financial year 2011-12 (Previous Year: 50%). Total cash outflow on account of dividend payment including dividend distribution tax will be Rs. 703 Lakhs for the financial year 2011-12 (Previous Year: Rs. 705 Lakhs).

OPERATIONS REVIEW

During the year under review, the Company has, post merger of its wholly owned subsidiary, namely, Suyash Laboratories Ltd., achieved Sales Turnover of Rs. 69918 lakhs (Previous Year: Rs. 52301 lakhs) registering a growth of 33.68%.

Similarly, the Company has achieved Export Turnover of Rs. 28071 Lakhs as against Rs. 21537 lakhs for the last year, registering a growth of 30.34%.

Operating Profit before Interest, Depreciation, Amortization & Tax, post merger has been Rs. 8027 lakhs (Previous Year Rs. 6269 lakhs)

Profit After Tax, post merger has been Rs. 2246 lakhs (Previous Year Rs. 2247 lakhs).

Figures for the year 2011-12, being post merger, are not comparable with standalone Company figures for 2010-11 to that extent.

AMALGAMATION

Scheme of Amalgamation of Suyash Laboratories Ltd., wholly owned subsidiary of the Company, with the Company has become operative w.e.f. from 1st April, 2011 ("Appointed Date") upon filing of the High Court order sanctioning the said scheme with the Registrar of Companies on 6th July, 2012.

DIRECTORS' RESPONSIBILITY STATEMENT

As required u/s. 217 (2AA) of the Companies Act, 1956, your Directors hereby state that -

(i) in the preparation of the Annual Accounts for the financial year ended 31st March, 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give 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 year;

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

(iv) the Directors have prepared Annual Accounts on a going concern basis.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Dr. Vilas G. Gaikar, Shri Bhavesh R. Vora, Shri Uday M. Patil and Shri Sunil M. Dedhia retire by rotation and being eligible, offer themselves for re-appointment.

Shri Chandrakant V. Gogri, Chairman would retire on his attaining age of 66 years on 16th August, 2012. The Directors acknowledge with great pride his founding contribution to the growth of the Company to its present state. The Board of Directors have also resolved to appoint him as Chairman Emeritus.

As a part of Succession Plan approved by the Board, Shri Rajendra V. Gogri would be Chairman of the Company post retirement of Shri Chandrakant V. Gogri.

The Board of Directors have resolved to appoint Shri Rashesh C. Gogri as Director to fill casual vacancy upon retirement of Shri Chandrakant V. Gogri with effect from 16th August, 2012.

CORPORATE GOVERNANCE

Your Company has complied with the mandatory Corporate Governance requirements stipulated under clause 49 of the Listing Agreement. Report on Corporate Governance is annexed hereto forming part of this report.

MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis Report as required under the Listing Agreement is annexed hereto forming part of this Report.

DISCLOSURE OF PARTICULARS

Pursuant to section 217(2A) of the Companies Act,1956 read with Companies (Particulars of employees) Rules 1975, as amended up to date, the names and other particulars are set out in the Annexure to the Directors' Report. However, as per the provisions of the section 219(1 )(b)(iv) of the Companies Act,1956, this Report is sent to the shareholders excluding the said information. Any shareholder interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

Particulars required u/s. 21 7(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, relating to conservation of energy, research & development, technology absorption, foreign exchange earnings and outgo are given in the annexure to this Report.

AUDITORS & AUDITORS REPORT

M/s. Parikh Joshi & Kothare, Auditors of the Company retire at the ensuing Annual General Meeting and are eligible for re-appointment. Members are requested to appoint Auditors and to fix their remuneration.

COST AUDIT

The Cost Auditor Mr. Girish S. Maniar re-appointed by the Company under Section 233B of the Companies Act, 1956 attend the Audit Committee Meeting, where Cost Audit Reports are discussed.

The due date for filing the Cost Audit Reports for the financial year ended March 31, 2011 was September 30, 2011 and the Cost Audit Reports were filed by the Cost Auditor on March 14, 2012. The due date for filing the Cost Audit Reports for the financial year ended March 31, 2012 is September 30, 2012.

HUMAN RESOURCES

Your Company recognizes its human resources as one of its prime & critical resources. The relations between the Management and the Staff Members remained very cordial throughout the year under review.

GREEN INITIATIVE

During the previous fiscal, we started a sustainability initiative with the aim of being green and minimizing our impact on the environment. Like last year, this year too we are sending the Annual Report to the registered e-mail addresses of the shareholders.

ACKNOWLEDGEMENT

We place on record our sincere appreciation to the employees of the Company at all levels for their co-operation and dedicated services. We also thank all our associated customers and suppliers for their co-operation.

We also express our sincere thanks to Bankers, Financial Institutions and the Shareholders for their continued support.

By Order of the Board

Sd/-

Chandrakant V. Gogri

Chairman

Place: Mumbai

Date: 9th July, 2012.


Mar 31, 2011

TO THE MEMBERS OF AARTI DRUGS LIMITED

The Directors have pleasure in presenting the Twenty Sixth Annual Report together with the Audited Statements of Accounts along with the Report of the Auditors for the year ended 31st March, 2011.

COMPANY'S STANDALONE FINANCIAL RESULTS

(Rs. in Lakhs) 2010-2011 2009-2010

Gross Sales/ Income from Operations 52301 49695

Less: Excise Duty & Sales Tax 2659 2553

Net Sales/Income from operations 49642 47142

Less: (Increase) / Decrease in Stock-in-Trade (1618) 376

Consumption of Raw Materials 35721 31381

Staff Cost 1646 1362

Other Expenditure 7632 6591

Total Expenditure 43381 39710

Operating Profit Before Interest, Depreciation, Amortization & Tax 6261 7432

Add: Non-operating Income 8 45

Profit before Interest, Depreciation & Tax 6269 7477

Less: Interest 1348 1474

Depreciation & Amortization 1774 1621

Profit Before Tax 3147 4382

Less: Provision for taxation - Current 650 1502

- Deferred 250 270

Profit After Tax 2247 2610

Add: Surplus brought forward 11189 9549

Profit available for appropriation 13436 12159

Appropriations:

Income tax of Earlier Year - 3

Transfer to General Reserve 225 261

Proposed Dividend 25% 303 605

Interim Dividend 25% 302 -

Tax on Dividend 99 101

Balance carried to Balance Sheet 12507 11189

DIVIDEND

During the year under review, your Company had declared and paid interim dividend of Rs. 2.50 ps @ 25% per equity share of Rs.10/- each. Your Directors have recommended a final Dividend of Rs. 2.50 ps (25%) per share for the financial year 2010-11 (Previous Year: 50%). Total cash outflow on account of dividend payment including dividend tax will be Rs. 705 lakhs for the financial year 2010-11(Previous Year: Rs. 706 lakhs).

OPERATIONS REVIEW

During the year under review, the Company has made Sales Turnover of Rs. 52301 lakhs (Previous Year: Rs. 49695 lakhs) registering a growth of 5.24 %.

The Company has achieved Export Turnover of Rs. 21537 lakhs as against Rs.17297 lakhs for the last year, registering a growth of 24.51 %.

Operating Profit before Interest, Depreciation, Amortization & Tax has been Rs. 6261 lakhs (Previous Year Rs. 7432 lakhs)

Profit After Tax has been Rs. 2247 lakhs (Previous Year: Rs. 2610 lakhs).

DIRECTORS' RESPONSIBILITY STATEMENT

As required u/s. 217 (2AA) of the Companies Act, 1956, your Directors hereby state that -

(i) in the preparation of the Annual Accounts for the financial year ended 31st March, 2011, the applicable accounting standards have been followed. There are no material departures from the applicable accounting standards;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give 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 year;

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

(iv) the Directors have prepared Annual Accounts on a going concern basis.

GROUP

Persons and Companies comprising ‘Group' are disclose in the note no. 7A in schedule T, notes to accounts for the purpose of SEBI (Substantial Acquisition of Shares & Takeover) Regulations, 1997 as amended upto date.

SUBSIDIARY COMPANY

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. The Company will make available the Annual Accounts of the subsidiary company and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary will also be kept open for inspection at the Registered Office of the Company as well as at the head office of the subsidiary company. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary company.

CONSOLIDATED STATEMENTS OF ACCOUNTS

The Audited consolidated Accounts and Cash Flow statement, comprising of the Company and its subsidiary, namely, Suyash Laboratories Limited form part of this Report. The Consolidated accounts have been prepared in accordance with Accounting Standards (AS-21), on Consolidated Financial Statements issued by Institute of Chartered Accountants of India.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Rajendra V. Gogri , Mr. Ramdas M. Gandhi, Mr. Harit P. Shah and Prof. Krishnacharya G. Akamanchi retire by rotation and being eligible, offer themselves for re-appointment.

CORPORATE GOVERNANCE

Report on Corporate Governance compliance along with Auditors Certificate thereon is included as a part of this Report.

MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis Report as required under the Listing Agreement is annexed hereto forming part of this Report.

DISCLOSURE OF PARTICULARS

Pursuant to section 217(2A) of the Companies Act,1956 read with Companies (Particulars of employees) Rules 1975, as amended up to date, the names and other particulars are set out in the Annexure to the Directors' Report. However, as per the provisions of the section 219(1)(b)(iv) of the Companies Act,1956, this Report is sent to the shareholders excluding the said information. Any shareholder interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

Particulars required u/s. 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, relating to conservation of energy, research & development, technology absorption, foreign exchange earnings and outgo are given in the annexure to this Report.

AUDITORS & AUDITORS REPORT

M/s. Parikh Joshi & Kothare, Auditors of the Company retire at the ensuing Annual General Meeting and are eligible for reappointment. Members are requested to appoint Auditors and to fix their remuneration.

As regards comment of the Auditors at clause (xv) of the Annexure to their report, it is clarified that short term funds were applied to fund part of ongoing capital expenditure which was to be funded by internal accruals which got affected to some extent due to shut down of certain APIs plants for about one and half month to align these existing facilities for expanded capacity and under performance for major part of the year of Sarigam plants due to environmental issues in the whole Sarigam Industrial Area. The mismatch in application of funds as aforesaid is temporary in nature since expansion made is expected to generate internal accruals in the current year.

COST AUDIT

The Cost Audit Report relating to Bulk Drugs manufactured by the Company for the financial year 2009-10 was submitted to the Central Government on 12th April, 2011 within prescribed time. Mr. Girish S. Maniar, Cost Accountant, was re-appointed as the cost auditor for the financial year 2011-12 and the report thereof will be submitted to the Central Government in due course.

HUMAN RESOURCES

Your Company recognizes human resources as one of its prime & critical resources. The relations between the management and the staff remained very cordial and satisfactory throughout the year under review.

ACKNOWLEDGEMENT

We place on record our sincere appreciation of the employees of the Company at all levels for their co-operation and dedicated services. We also thank all our associated customers and suppliers who are always co-operative.

We also express our sincere thanks to Bankers, Financial Institutions and the Shareholders for their continued support.

By Order of the Board

Sd/- Chandrakant V. Gogri Chairman

Place: Mumbai Date: 25th May, 2011.


Mar 31, 2010

The Directors have pleasure in presenting the 25th Annual Report together with the Audited Statements of Accounts along with the Report of the Auditors for the year ended 31st March, 2010.

COMPANYS STANDALONE FINANCIAL RESULTS

(Rupees in Lakhs)

2009-2010 2008-2009

Gross Sales/ Income from Operations 49695 40969

Less: Excise Duty & Sales Tax 2553 3319

Net Sales/Income from operations 47142 37650

Less: (Increase) / Decrease in Stock-in-Trade 376 695

Consumption of Raw Materials 23179 21077

Staff Cost 1362 1114

Other Expenditure 14793 8950

Total Expenditure 39710 31837

Operating Profit Before Interest, Depreciation, Tax & Amortisation 7432 5814

Add: Non-operating Income 45 17

Profit before Interest, Depreciation, Tax & Amortisation 7477 5831

Less: Interest (previous year interest includes premium on FCCBs redemption) 1474 2272

Depreciation & Amortization 1621 1244

Profit Before Tax 4382 2315

Less: Provision for taxation - Current 1502 555

- Deferred 270 255

Profit After Tax 2610 1505

Add: Surplus brought forward 9549 8607

Profit available for appropriation 12159 10112

Appropriations:

Income tax of Earlier Year 3 0

Transfer to General Reserve 261 151

Proposed Dividend 50% (Previous Year : 30%) 605 351

Tax on Dividend 101 60

Balance carried to Balance Sheet 11189 9549

DIVIDEND

Your Directors have recommended Dividend of Rs.5 A (50%) per share for the year ended 31st March, 2010 (Previous Year:30%). Total cash outflow on account of dividend payment including dividend tax will be Rs.706 lakhs for the financial year 2009-10(Previous Year:Rs.411 lakhs).

OPERATIONS REVIEW

During the year under review, the Company has achieved Sales Turnover of Rs.49695/- lakhs (Previous Year: Rs. 40969/- lakhs) registering a growth of over 21%.

The Company has achieved Export Turnover of Rs.17297/- lakhs as against Rs.15883/- lakhs for the corresponding period last year, registering a growth of 8.90%.

Operating Profit before Interest, Depreciation & Tax has been Rs.7164/- lakhs (Previous Year Rs.5674 lakhs) registering a growth of over 26%.

Profit After Tax has been Rs.2610/- lakhs (Previous Year: Rs.1505 lakhs) registering a growth of over 73%.

PREFERENTIAL ISSUE

The Company has issued and allotted on 20.12.2010, 4,00,000 Equity Shares of Rs.10/- each at a premium of Rs.42.60 ps. per share, upon exercise of option by the holders of Convertible Warrants issued by the Company on preferential basis. Amount raised by issue of the said Equity Shares have been fully used to meet ongoing capital expenditure and long term working capital requirements as proposed.

DIRECTORS RESPONSIBILITY STATEMENT

As required u/s. 217 (2AA) of the Companies Act, 1956, your Directors hereby state that -

(i) in the preparation of the Annual Accounts for the financial year ended 31st March, 2010, the applicable accounting standards have been followed. There are no material departures from the applicable accounting standards;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give 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 year;

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

(iv) the Directors have prepared Annual Accounts on a going concern basis.

SUBSIDIARY COMPANY

Upon an application made by the Company under section 212(8) of the Companies Act,1956, the Central Government, vide its letter dated 17th March,2010, has exempted the Company from attaching the Balance sheet, Profit & Loss Account and other related documents to be attached under section 212(1) of the said Act to the Annual Report of the Company. Accordingly the said documents of the Company are not attached with the Balance sheet of the Company. A gist of the financial performance of the subsidiary company is contained in this Report. The Annual Report of the subsidiary company is open for inspection by any member/investor and the Company will make available these documents at the request of any member or investor of the Company interested in obtaining the same. The Annual accounts of the subsidiary will also be kept at the Registered office of the Company as well as at the head office of the subsidiary Company.

CONSOLIDATED STATEMENTS OF ACCOUNTS

The Audited consolidated Accounts and Cash Flow statement, comprising of the company and its subsidiary, namely, Suyash Laboratories Limited form part of this Report. The Consolidated accounts have been prepared in accordance with Accounting Standards (AS-21), on Consolidated Financial Statements issued by Institute of Chartered accountants of India.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Chandrakant V. Gogri , Mr. Harshit M. Savla, Mr. Sunil M. Dedhia, Mr. Uday M. Patil retire by rotation and being eligible, offer themselves for re-appointment.

CORPORATE GOVERNANCE

Report on Corporate Governance compliance along with Auditors Certificate thereon is included as a part of this Report.

MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis Report as required under the Listing Agreement is annexed hereto forming part of this Report.

DISCLOSURE OF PARTICULARS

Pursuant to section 217(2A) of the Companies Act,1956 read with Companies (Particulars of employees) Rules 1975, as amended up to date, the names and other particulars are set out in the Annexure to the Directors Report. However, as per the provisions of the section 219(1)(b)(iv) of the Companies act,1956, this Report is sent to the shareholders excluding the said information. Any shareholder interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

Particulars required u/s. 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, relating to conservation of energy, research & development, technology absorption, foreign exchange earnings and outgo are given in the annexure to this Report.

AUDITORS

M/s. Parikh Joshi & Kothare, Auditors of the Company retire at the ensuing Annual General Meeting and are eligible for reappointment. Members are requested to appoint Auditors and to fix their remuneration.

COST AUDIT

The Cost Audit Report relating to Bulk Drugs manufactured by the company will be submitted with the Central government in due course. The board of Directors have appointed Mr. Girish S. Maniar, Cost Accountant, for conduct of the cost audit for the year ended 31st March, 2011, subject to the approval of the Central Government.

HUMAN RESOURCES

Your Company recognizes its human resources as one of its prime & critical resources. The relations between the Management and the Staff Members remained very cordial and satisfactory throughout the year under review.

ACKNOWLEDG EMENT

We place on record our sincere appreciation to the employees of the Company at all levels for their co-operation and dedicated services. We also thank all our associated customers and suppliers who are always co-operative.

We also express our sincere thanks to Bankers, Financial Institutions and the Shareholders for their continued support.

By Order of the Board

Sd/-

Chandrakant V. Gogri

Chairman

Place: Mumbai

Date: 26th May, 2010.

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