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Directors Report of FDC Ltd.

Mar 31, 2017

DIRECTORS'' REPORT

To,

The Members

The Directors have pleasure in presenting the 77th Annual Report together with the Audited Accounts for the year ended March 31, 2017.

1. STANDALONE FINANCIAL RESULTS (Rupees in lakhs)

Particulars

2016-2017

2015-2016

Revenue from operations

(Net)

1,04,602.34

1,00,989.33

Other income

4,964.51

3,997.54

Profit (before finance

costs and depreciation /

amortization)

28,571.39

29,694.49

Finance costs

140.71

139.68

Depreciation and

amortization

3,452.33

3,361.14

Profit Before Tax

24,978.35

23,193.67

Less: Taxation

- Current Tax

6,800.00

6,717.20

- Deferred Tax

(334.41)

(413.75)

- Tax adjustments for

earlier years

(Current Tax)

(193.98)

-

Profit After Tax

18,706.74

16,890.22

Other Comprehensive

Income/(Loss)

for the year

(19.26)

(32.49)

Balance of Profit from

prior years

61,906.36

59,680.29

Surplus available for

appropriation

80,593.84

76,538.02

The previous year''s figures have been re-grouped/reclassified, wherever necessary to conform to this year''s financial statements prepared in accordance with Ind AS (Indian Accounting Standards).

2. DIVIDEND

Your Board of Directors are pleased to recommend the payment of a final dividend of Rs. 2.25/- (225%) per equity share of Re.1 each, for the financial year ended March 31, 2017. The dividend, if approved by the Shareholders at the 77th Annual General Meeting will be paid to all the Shareholders of the Company whose names appear in the Register of Members as on the date of Book Closure.

As per Regulation 43A of the SEBI Listing Regulations, the Company has formulated a Dividend Distribution Policy which is annexed as Annexure A and is also

uploaded on the website of the Company i.e. www.fdcindia.com.

3. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

(A) Industry structure & developments

The Indian Pharmaceutical Market (IPM) grew by 10.3% to reach the market size of Rs. 1,11,135 Crores, during the year ended March 31, 2017. Around 3,297 products were introduced during the year (Source: AIOCD Pharmas ofttech AWACS Private Limited- Moving Annual Total Turnover-March 2017).

The Cardiac, Gastrointestinal and Ant diabetics segments have grown significantly and would continue to do so due to changing lifestyles and rising disposable incomes. Whereas, the anti-infective, the ruling segment in the Industry, has been growing at a slower pace due to antibiotic resistance awareness, banning of fixed dose combinations by the Government and absence of new molecules on the horizon.

Due to various emerging changes in the Industry, it is likely that there would be notable trends in the Healthcare sector such as :

- Shift from communicable to lifestyle diseases-

With increasing urbanization and problems related to modern-day living in urban settings, currently, about 50 per cent of spending on in-patient beds is for lifestyle diseases; this has increased the demand for specialized care.

- Expansion of Tier II & Tier III cities - There is substantial demand for high-quality & specialist healthcare services in Tier-II & Tier-III cities. In order to encourage the Private sector to establish hospitals in these cities, the Government has relaxed the taxes on these hospitals for the First 5 (Five) years.

- Emergence of Telemedicine - Telemedicine is a fast-emerging sector in India. It can bridge the rural-urban divide in terms of medical facilities, extending low-cost consultation & diagnosis facilities to the remotest of areas via high-speed internet & telecommunication.

- Technological Initiatives (e-Prescriptions) - Digital Health Knowledge Resources, Electronic Medical Record, Mobile Healthcare, Electronic Health Record, Hospital Information System, Technology-enabled care, and Hospital Management Information Systems are some of the technologies gaining wide acceptance in the sector.

(B) Outlook, Risks and Concerns

The year 2016-2017 was full of challenges & chaos in terms of fixed dose combination ban, Price erosion (downward price revisions) for a couple of products, Non supply of codeine based formulations, Impact of demonetization - impact on purchasing behavior and Seasonal impact on acute therapies.

Your Company has undertaken various measures to minimize the risk impact to the best possible extent.

(C) Financial performance and Operations review

During the year under review, your Company registered a Standalone total income of Rs.1,09,566.85 lakhs as against Rs.1,04,986.87 lakhs in the previous year, thereby registering a growth of 4.36%.

The Earnings before interest and depreciation amounted to Rs. 28,571.39 lakhs as against Rs. 29,694.49 lakhs in the previous year. The Net Profit after taxation stood at Rs. 18,706.74 lakhs as against Rs. 16,890.22 lakhs in the previous year.

During the year under review, your Company registered a consolidated total income of Rs.1,10,120.14 lakhs as against Rs.1,05,640.48 lakhs in the previous year, thereby registering a growth of 4.24%.

Your Company has been able to maintain a steady profitable growth, through its increase in operations, cost control measures and a healthy working capital cycle.

(D) Segment-wise or product-wise performance

(i) Marketing

FDC as a Corporate is ranked at 26th position, recording a growth of 3.7% and attaining a market share of 0.89% (Source: AIOCD Pharmasofttech AWACS Private Limited- Moving Annual Total Turnover- March 2017).

Your Company''s top brands namely “ELECTRAL” and “ZIFI” continues to feature in the list of Top 300 brands.

During the year under review, your Company has launched various Products in the market such as Ten DC & Ten DCM, Vitcofol Hb, Zocon KZ Shampoo, etc. Your Company has also aligned itself in terms of portfolios & priorities, in order to maintain its finest performance.

(ii) Research and Development

The Research & Development (R & D) Centres located at Jogeshwari & Kandivali (Mumbai), Goa Unit III and Roha (Dist. Raigad) are duly recognized by the Department of Science and Technology. Your Company carries out its various R & D activities in the following areas:

- Formulations

The Research & Development (R & D) centers located at Jogeshwari (Mumbai) and Goa Unit III cater to the design and development of a diverse variety of dosage forms. The laboratories are equipped with state of the art instruments and equipments to enable development of conventional and complex products. A team of dedicated scientists works to develop formulations for various geographical markets viz. India, ROW and the regulated markets of US and Europe. Our R & D centers are also actively involved in capability building and transferring the technical knowhow of novel drug delivery systems at the Plants, accredited by World Regulatory Authorities such as US-FDA, UK-MHRA, Medsafe New Zealand, TGA Australia, PICs Malaysia, and other rest of the world authorities like MCAZ Zimbabwe, PPB Kenya, NDA Uganda, TFDA (Tanzania), etc. Our ANDA''s, MA''s and our manufacturing Plant accreditations enable us to take care of sizable world exports.

- Synthetics

The Research and development centers located at Kandivali (Mumbai) and Roha (Dist. Raigad) are engaged in process development of niche products, particularly in area of Ophthalmic, Antihypertensive, Antifungal and New Chemical entity (NCE). The work on life cycle management of existing drug products is also being carried out with the aim of Cost effectiveness, backward integration and meeting regulatory requirement from drug authorities, which enables to attain accreditation from various World Regulatory Authorities. The other highlights of the process developments of new molecules are No infringing processes, Usage of environment friendly chemicals, Development of desired polymorphs, Usage of classical chemistry for development of chiral drugs, etc.

The main highlights of R&D process development are Process development of Bimatoprost, Scale up of Latanoprost process and filling of USDMF, Process development of Polymorph II and III for Flucanazole and commercial batches at plant, achievements in cost reduction of existing drug products, Filling of CEP for Flucanazole, work on New Chemical Entities (NCE) in the area of Antifungal.

- Nutraceuticals

During the year, your Company has launched the Enerzal 500 ml in pet bottle as well as 1 Litre in Tetrapak with Orange and Apple flavour.

To extend the product categories of Infant Milk Substitute (IMS), the division is working on development for range of Simyl MCT with some added micro nutrients like Nucleotides, Amino Acids and Omega3,O6 and also has developed MUM MUM 2 as a follow up formula which is under stability study.

Trials and validation of IMS at Sinnar Plant is successfully completed, which completes the commissioning activity at Sinnar Plant. With this, we will be ready to supply current market requirement of IMS with spare capacity, which shall help us in launching new range of products under IMS and complimentary foods for infants.

- Biotechnology

With regards to recombinant Granulocyte Colony Stimulating Factor, inspection was conducted by Central Drugs Standard Control Organization (CDSCO) along with Local Food, Drug and Authority (FDA) in consideration to our application to grant No objection Certificate for manufacturing the clinical grade material. Your Company is undertaking all the necessary actions, for complying with FDA/CDSCO observations.

With reference to your Company''s Project on the development of Third Generation Thrombolytic, your Company has obtained the Test License from Local FDA. Downstream processing, Purification and validation trials of the said molecule is being performed at an external party and once the purification strategy is finalized the technology shall be transferred to the Company.

(iii) Exports

Your Company''s annual export turnover for the financial year ended March 31, 2017 of API and Finished formulations was Rs 15,576.50 lakhs as compared to Rs. 14,524.60 lakhs for the financial year ended March 31, 2016.

FDC is a fully integrated, research-oriented pharmaceutical company engaged in the manufacturing and marketing of Formulations (Finished Dosage Forms) and Active Pharmaceutical Ingredients (APIs).

Your Company has built a visible presence in the Regulated and Emerging markets. It is striving to place itself on a strong promising path by expanding its business strategically, strengthening its manufacturing facilities and enhancing capabilities across the organization.

Your Company is looking at various opportunities in untapped markets and association with business partners in the global markets to boost its revenues.

The Annual sale of FDC International Limited, a wholly owned subsidiary of FDC Limited, India for the financial year ended March 31, 2017 was GBP 15.00 lakhs as compared to GBP 15.93 lakhs of the previous financial year.

The Annual sale of FDC SA Pty Limited, a Joint Venture Company of FDC Limited, India for the financial year ended March 31, 2017 was ZAR 113.34 lakhs compared to ZAR 59.36 lakhs of the previous financial year.

(E) Internal Financial Controls and their adequacy

Your Company has in place a robust internal financial control commensurate with the size, scale and complexity of its operations. These controls ensure that the transactions are recorded and reported diligently, adhere to the Company''s policies & systems, safeguard the assets, prevent and detect the frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information.

Your Company has an internal audit department which carries out audits throughout the year and appropriate actions are taken by the management based on their recommendations.

(F) Human Resources

Your Company strongly believes that our quality process, systems, compliance and business performance are due to the competent Human resources of the organization. Our Human Resource policies and practices are aligned to meet our business objectives.

Your Company attracts competent professionals, who are committed to deliver exceptional performance and also explores ways for hiring and retaining the best talents. We strive to provide our employees the freedom to excel in their professional and personal goals along with a focus on a healthy work-life balance. We also ensure that our employees are aligned with the organizational culture and values.

The Training & Development initiatives undertaken by the Company help our employees to learn the latest developments, which helps to maximize their potential both individually and collectively as a team, to deliver the business objectives. Your Company would be providing an e-learning platform to the sales employees on Medical and product knowledge in order to facilitate self paced learning through interactive ways.

Your Company believes in healthy cordial industrial relations and has continued to maintain and strengthens it. As on March 31, 2017, there were 5,338 permanent employees, out of which 3,732 employees are engaged in the sales and marketing activities.

(G) Cautionary Statement

Certain statements in respect to Management Discussion and Analysis Report may be forward looking and are stated as required by the applicable laws and regulations. The future results of the Company may be affected by many factors, which could be different from what the Directors envisage in the terms of future performance and outlook.

4. MATERIAL CHANGES AND COMMITMENTS AFTER THE END OF THE FINANCIAL YEAR

No material changes and commitments affecting the financial position of the Company have occurred between the end of the financial year to which financial statements in this report relates and the date of this report.

5. AUDITORS REPORT

The Report given by S R B C & CO LLP, Statutory Auditors on the financial statements of the Company for the year ended March 31, 2017 is a part of the Annual Report. There has been no qualification, reservation or adverse remark or disclaimer in the said audit Report.

6. CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company form part of this Annual Report. These statements have been prepared on the basis of audited financial statements received from the subsidiary companies as approved by their respective Board of Directors.

7. SUBSIDIARIES / JOINT VENTURE AND ITS OPERATIONS

Your Company has 2 (Two) wholly owned Subsidiaries namely FDC Inc., USA and FDC International Ltd, UK and 1 (One) Joint Venture business, namely Fair Deal Corporation Pharmaceutical SA (Pty) Ltd. at South Africa. The Financials of the Subsidiaries and Joint Venture Company are disclosed in the Consolidated Financial Statements, which forms a part of this Annual Report.

A statement containing salient features of the financial statements of Subsidiary Companies/ Joint Ventures, is annexed to this Report as Annexure B pursuant to the provisions of Section 129 of the Companies Act, 2013 and the Rules made there under in the prescribed Form No. AOC-1 and hence, the same is not repeated for the sake of brevity.

In accordance with the provisions of Section 136 (1) of the Companies Act, 2013, the following information has been uploaded on the website of the Company i.e. www.fdcindia.com:

(a) Annual Report of the Company, containing therein its Standalone and the Consolidated Financial Statement; and

(b) Audited Annual Accounts of each of the subsidiary companies.

8. BUSINESS RESPONSIBILITY REPORT

As per Regulation 34 of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Business Responsibility Report is annexed as Annexure C.

9. DIRECTORS'' RESPONSIBILITY STATEMENT

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

(a) in the preparation of annual accounts for the year ended March 31, 2017, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2017 and of the profit of the Company for the year ended on that date;

(c) they 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) they have prepared the annual accounts on a going concern basis;

(e) they have laid down proper internal financial controls to be followed by the Company and they were adequate and operating effectively; and

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

10. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Details of Loans, Guarantees and Investments made by the Company are given in the notes to the Financial State ments.

Your Company has not given any Loans or Guarantees or Investments in contravention of the provisions of Section 186 of the Companies Act, 2013.

11. PUBLIC DEPOSITS

During the year under review, your Company has not accepted any deposits from the Public and as such no amount of principal or interest on deposits from Public was outstanding as on the date of the balance sheet.

12. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS ANDOUTGO

The information relating to energy conservation, technology absorption, foreign exchange earnings and outgo, pursuant to Section 134 of the Companies Act, 2013 and the Rules made there under, is annexed as Annexure D to this Report.

13. DIRECTORS AND KEY MANAGERIAL PERSONNEL

At the Annual General Meeting of the Company held on September 17, 2016, CA. Uday Kumar Gurkar was appointed as an Non-Executive and Independent Director of the Company in terms of Section 149 of the Companies Act, 2013, to hold office for a period of 5 (Five) years with effect from April 01, 2016.

CA. Girish C. Sharedalal has resigned as a Director of the Company with effect from April 01, 2017. The Board of Directors wishes to place on record its appreciation for the valuable guidance received through him, from time to time.

In accordance with provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Ameya A. Chandavarkar, Whole time Director, retires by rotation at the 77th Annual General Meeting and being eligible, has offered himself for re-appointment. The Profile of Director seeking reappointment pursuant to Regulation 36 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is included in the Notice of the 77th Annual General Meeting and the statement annexed thereto.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

During the year under review, the following persons were the Key Managerial Personnel:

1. Mr. Mohan A. Chandavarkar, Chairman and Managing Director

2. Mr. Nandan M. Chandavarkar, Joint Managing Director

3. Mr. Ashok A. Chandavarkar, Wholetime Director

4. Mr. Ameya A. Chandavarkar, Wholetime Director

5. Ms. Nomita R. Chandavarkar, Wholetime Director

6. Mr. Sanjay B. Jain, Chief Financial Officer

7. Ms. Varsharani Katre, Company Secretary

14. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The information required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, in respect of employees of the Company forms part of this Annual Report. In terms of Section 136 of the Act, the Annual Report excluding the aforesaid information is being sent to the Members and others entitled thereto. The said information is available for inspection at the Registered Office of the Company during working hours up to the date of the forthcoming Annual General Meeting. Any Member interested in obtaining a copy of the same may write to the Company Secretary in this regard.

15. CORPORATE GOVERNANCE

In terms of Regulation 34 of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Report on Corporate

Governance along with a Compliance Certificate issued by the Statutory Auditors of the Company, forms part of the Annual Report.

16. RISK MANAGEMENT

The Risk Management Committee identifies and evaluates the business risks, in addition to overseeing the Risk Management Policy of the Company, from time to time. The details of the Risk Management Committee are included in the Corporate Governance Report.

17. NOMINATION AND REMUNERATION POLICY

Your Company has in place, a Nomination and Remuneration Policy for selection, appointment and remuneration of Directors, Key Managerial Personnel and Senior Management Team. The details of this Policy are provided in the Corporate Governance Report.

18. MEETINGS OF THE BOARD AND COMMITTEES THEREOF

The information has been furnished in the Corporate Governance Report.

19. AUDIT COMMITTEE

The Audit Committee comprises of comprises of 3 (Three) Independent Non-Executive Directors and 1 (One) Executive Director. CA. Swati S. Mayekar is the Chairperson of the Committee. Dr. Rahim H. Muljiani, CA Vinod G. Yennemadi and Mr. Mohan A. Chandavarkar are the other members of the Committee.

The Powers and Role of the Audit Committee are provided in the Corporate Governance Report. All recommendations made by the Audit Committee were accepted by the Board of Directors.

20. BOARD & DIRECTORS EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out the annual performance, evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit, Nomination and Remuneration and Compliance Committees, based on the evaluation parameters formulated by the Nomination and Remuneration Committee. The manner in which the evaluation was carried out has been explained in the Corporate Governance Report.

21. FAMILIARISATION PROGRAM FOR INDEPENDENT DIRECTORS

The Independent Directors are familiarized with their roles, rights, responsibilities of the Company, the business model of the Company, etc., through various programmes on a continuous basis. Details of the familiarization program of Independent Directors are disclosed on the website of the Company i.e. http://www.fdcindia.com/familiarisation-programme.php

22. VIGIL MECHANISM/ WHISTLE BLOWER POLICY

Your Company has in place a Whistle Blower Policy for reporting genuine concerns or grievances on fraud and mismanagement. The said Policy is explained in detail in the Corporate Governance Report.

The Company has not denied any person from accessing the Audit Committee. There were no allegations/ disclosures/concerns received during the year under review, in terms of the vigil mechanism established by the Company. The said Policy is also uploaded on the website of the Company i.e. http://www.fdcindia.com/admin /images/Whistler_Blower_Policy.pdf

23. CODE OF CONDUCT

Your Company has in place a Code of Conduct for Board Members and Senior Management Personnel of the Company. The Code of Conduct lays down the standard of conduct which is expected to be followed by the Directors and the Senior Management Personnel and the duties of Independent Directors towards the Company.

The Directors and Senior Management Personnel have affirmed compliance with the Code of Conduct applicable to them, during the year ended March 31, 2017. A Certificate duly signed by the Managing Director, on the compliance with the Code of Conduct is given in the Corporate Governance Report. The said Code is available on the website of the company i.e. http://www.fdcindia.com/admin/images/Code_of_ Conduct_of_FDC_Limited.pdf

24. PREVENTION OF INSIDER TRADING

Your Company has in place a Policy on the Code of Conduct for Prevention of Insider Trading with a view to regulate the trading in securities by the Promoters, Directors and the Designated Employees of the Company.

The same has also been uploaded on the website of the Company i.e. http://www.fdcindia.com/admin/images/ CODE_OF_CONDUCT_FOR_PREVENTION_OF_INSI DER_TRADING.pdf

The Promoters, Directors and the Designated Employees have affirmed compliance with the Company''s Code of Conduct for Prevention of Insider Trading.

25. RELATED PARTY TRANSACTIONS

During the year under review, all Related Party Transactions entered into by the Company were on an arm''s length basis and in the ordinary course of business. Your Company has not entered into any contract, arrangement or transaction with any Related Party which would be considered as the material under SEBI (Listing Obligations and Disclosure Requirements) Regulations,

2015.

The Board has also approved a policy on related party transactions and the same has been uploaded on the website of the Company i.e. http://www.fdcindia.com/ admin/images/Policy_on_Related_Party_Transactions. pdf

All the Related Party Transactions are placed before the Audit Committee as well as the Board for their approval. Omnibus approval was also obtained from the Audit Committee and the Board on an annual basis for repetitive transactions.

Related Party Transactions are disclosed in the notes to the financial statements. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC 2 is not applicable to your Company.

26. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN OF WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place a Policy on the Prevention, Prohibition and Redressal of Sexual harassment at workplace in line with the requirements of The Sexual Harassment of Women of Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The said Policy is available on the website of the Company i.e. http://www.fdcindia.com/admin/ images/Sexual_Harassment_Policy.pdf

An internal Sexual Harassment Committee has also been set up to redress the complaints received regarding sexual harassment. The Company has not received any complaints during the year under review.

27. CHANGE IN CORPORATE OFFICE OF THE COMPANY

Your Company is intending to carry out development activities in the presently occupied Corporate Office situated at Jogeshwari (West), Mumbai, after demolishing the existing structure. The Building wherein the Corporate Office is situated is an old structure and needs to be re- developed.

Accordingly, your Company has taken a Premises situated at C-3 SKYVISTAS, Near Versova Police Station, 106A, J.P. Road, Andheri (West), Mumbai - 400 053 on Leave and License basis for a period of 5 (Five) years, until the existing Corporate Office is fully developed and ready for occupation.

28. STATUTORY AUDITORS

As per Section 139 of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, the 10 (Ten) year term of S R B C & CO LLP (ICAI Firm Registration No. 301003E),Chartered Accountants, Mumbai, as the Statutory Auditors of the Company expires at the conclusion of the 77th Annual General Meeting of the Company.

The Board of Directors of the Company, on the recommendation of the Audit Committee, has proposed the appointment of B S R & Co. LLP, Chartered Accountants (ICAI Firm Registration No. 101248W/W-100022), as the Statutory Auditors of the Company by the Members at the 77th Annual General Meeting of the Company for an initial term of 5(Five) years. Your Company has received their written consent and a certificate that they satisfy the criteria provided under Section 141 of the Act and that the appointment, if made, shall be in accordance with the applicable provisions of the Companies Act, 2013 and the Rules made there under.

Accordingly, a resolution proposing the appointment of B S R & Co. LLP, Chartered Accountants, as the Statutory Auditors of the Company for a term of 5 (Five) consecutive years i.e. from the conclusion of the 77th Annual General Meeting till the conclusion of the 82nd Annual General Meeting of the Company pursuant to Section 139 of the Companies Act, 2013, forms part of the Notice of the 77th Annual General Meeting of the Company.

29. COST AUDITORS

Pursuant to Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audits) Rules, 2014, the Board of Directors on the recommendation of the Audit Committee have re-appointed M/s. Sevekari Khare & Associates (Firm Registration No. 000084) Cost Accountants, Mumbai, as Cost Auditors of the Company, to carry out the audit of cost records of the Company. The said Auditors have confirmed their eligibility for appointment as Cost Auditors.

As required under the Companies Act, 2013 and Rules made there under, the requisite resolution for ratification of remuneration of Cost Auditors by the Members has been set out in the Notice of the 77th Annual General Meeting of your Company.

The Cost Audit Report for the year ended March 31, 2016 was filed with the Ministry of Corporate Affairs on August 30, 2016.

30. SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Rules made there under, the Company has appointed M/s. Sanjay Dholakia and Associates (PCS No.1798), Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the year ended March 31, 2017. The Secretarial Audit Report is annexed as Annexure E to this Report. There is no qualification, reservation, adverse remark or disclaimer in the sand Report.

31. EXTRACT OF ANNUAL RETURN

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

32. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company has always been a socially responsible corporate citizen who is well aware and sensitive to the needs of the underprivileged people around it. During the year under review, the Company has undertaken various socio-economic activities such as Nutritional Programmes, environmental awareness through supply of cloth bags through Non-Governmental Organisation, improving water resources/ structure in the villages surrounding our Plants, Construction of Toilets at Schools/ Backward regions, Rehabilitation programmes for street children, etc.

Your Company is doing its best to undertake various needs based activities in compliance with Schedule VII to the Companies Act, 2013.

The CSR policy is available on the website of the Company i.e. http://www.fdcindia.com/admin/images/ Corporate_Social_Responsibility_Policy.pdf

In accordance with the provisions of Section 135 of the Companies Act, 2013, an abstract on the Company''s CSR activities is appended as Annexure G to this report.

33. TRANSFER OF UNPAID AND UNCLAIMED AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to the provisions of the Companies Act, 2013, read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, as amended, declared dividends which remained unpaid or unclaimed for a period of 7 (Seven) years have been transferred by the Company to the IEPF, which has been established by the Central Government.

The above referred rules now mandate the transfer of dividends lying unpaid and unclaimed for a period of 7 (Seven) years as well as the underlying equity shares to IEPF. Your Company has published the requisite advertisement in the newspaper and issued individual notices to the shareholders, whose equity shares are liable to be transferred to IEPF, advising them to claim their dividend on or before 31st May 2017.

The Company has uploaded the details of unpaid and unclaimed dividend on the website of the Company i.e. www.fdcindia.com.

34. ENVIRONMENT, HEALTH AND SAFETY

Environment, Health and Safety are a part of the Management responsibilities and concerns. Your

Company has been providing various kinds of medical assistance to the families of its employees. Periodic health checkups are also carried out for all the employees. Employees are also educated on safety and precautionary measures to be undertaken on their job.

35. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant or material orders passed by any regulatory, tribunal or court that would impact the going concern status of the Company and its future operations.

36. ACKNOWLEDGEMENTS

Your Directors would like to express and place on record their sincere appreciation for the continued co-operation and support received from the Medical fraternity, Government Authorities and Agencies, Stock Exchanges, Financial Institutions, Investors, Bankers, Consumers, Vendors and Members, during the year under review. Your Directors also place on record their appreciation for the hard work and contribution of all the employees of the Company.

For and on behalf of the Board

Place: Mumbai MOHAN A. CHANDAVARKAR

Date : May 26, 2017 Chairman and Managing Director


Mar 31, 2014

Dear Members,

The Directors are pleased to present their report on the business and operations of your Company for the year ended March 31, 2014.

1. FINANCIAL PERFORMANCE

Your Company''s net sales have increased by 9.2% as compared to the last financial year. Your Company continues its efforts to deliver long term sustainable profitable growth by initiating various steps. The various measures undertaken by the Company has helped in maintaining working capital cycle and efforts for improving the same is an ongoing exercise. Cost controls across all levels of functions are a continuous exercise.

2013-2014 2012-2013 Rupees in lacs Rupees in lacs

Revenue from operations (Net) 83,701.84 76,459.51

Other income 3,816.37 4,756.08

Profit (before finance costs & depreciation/amortisation) 24,454.87 23,007.86

Finance costs 301.38 151.05

Depreciation and amortisation 2,454.35 2,751.19

Profit Before Tax 21,699.14 20,105.62

Less: Taxation

- Current Tax 6,000.00 4,100.00

- Deferred Tax 7.11 163.15

- MAT credit entitlement - -

- Tax adjustments for earlier years (current tax) 2,250.00 9.30

Profit After Tax 13,442.03 15,833.17

Balance of profit from prior years 40,568.18 34,460.00

Surplus available for appropriation 54,010.21 50,293.17

Appropriations:

Transfer to general reserve 5,000.00 5,000.00

Final dividend proposed 4,001.24 4,038.63

Tax on dividend 680.01 686.36

Reversal of excess provision of dividend (43.71) -

Balance carried to Balance Sheet 44,372.67 40,568.18

54,010.21 50,293.17

Previous year''s figures have been re-grouped/re-classified, wherever necessary to conform to this year''s classification.

2. DIVIDEND

Your Board of Directors are pleased to recommend a final dividend of Rs. 2.25/- (225%) per equity share of Re.1 each for the financial year ended March 31, 2014. The same, if declared at this annual general meeting will be paid to those shareholders'' whose names stand registered in the register of members as on August 09, 2014. This dividend is tax free in the hands of the shareholders.

3. SOCIAL RESPONSIBILITIES

Your Company has always been a socially responsible corporate citizen who is well aware and sensitive to the needs of the underprivileged people around it.

Your Company has been contributing towards the development of society through various charitable trusts helping the needy people for their education, medical, healthcare etc. Your Company''s Education initiatives include scholarships for deserving and needy students, and allowing greater access to quality education.

4. DIRECTORS

Mr. Mohan A. Chandavarkar has been re-appointed as the Managing Director of the Company for a period of five years with effect from April 01, 2014 and Mr. Nandan M. Chandavarkar has been re-appointed as the Joint Managing Director of the Company for a period of five years with effect from March 01, 2014, subject to the approval of the shareholders at the ensuing Annual General Meeting.

At the Board meeting held on May 29, 2014, Ms. Nomita R. Chandavarkar is appointed as an Additional Director of the Company with effect from June 02, 2014, to hold office upto the ensuing annual general meeting, at which she shall be eligible for appointment as a Director, liable to retire by rotation.

In terms of the Articles of Association of the Company and the relevant provisions of the Companies Act, 2013, Mr. Ameya A. Chandavarkar, Director will retire by rotation in the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Pursuant to Sections 149 and 152 of the Companies Act, 2013 and the Rules made thereunder, your Board of Directors seek appointment of CA Girish C. Sharedalal, Dr. Rahim H. Muljiani, Dr. Nagam H. Atthreya, Dr. Satish S. Ugrankar and CA Vinod G. Yennemadi, as Independent and Non Executive Directors, at the ensuing Annual General Meeting for a term of five consecutive years. Details of the proposal for their appointment are mentioned in the Explanatory statement of the Notice of the 74th Annual General Meeting. Further, these Independent Directors will not be liable to retire by rotation.

5. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors based on the information and documents made available to them, confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed;

b. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the financial year ended March 31, 2014 and of the Statement of Profit and Loss for that period;

c. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

6. CORPORATE GOVERNANCE

As required by the existing clause 49 of the listing agreements entered into with the stock exchanges, a separate report on corporate governance is given as a part of the annual report alongwith the auditors'' statement on its compliance.

7. AUDITORS REPORT

With reference to Point no. (vii) in the Annexure of the Companies (Auditors Report) Order, 2003, the Company is taking effective steps for enlarging the scope and coverage of internal audit activities to make it commensurate with the size and nature of the business of the Company.

8. STATUTORY AUDITORS

The existing statutory auditors of the Company, M/s.S.R. Batliboi & Co. LLP, Chartered Accountants, Mumbai have communicated to the Company their unwillingness to be re-appointed as the statutory auditors of the Company and hence are not offering themselves for re-appointment at the ensuing Annual General Meeting.

The Board of Directors recommend the appointment of M/s. S R B C & Co. LLP, Chartered Accountants, as the statutory auditors of the Company in place of the retiring auditors, from the conclusion of the ensuing Annual General Meeting.

The Company has also received a certificate pursuant to provisions of Section 139 and 141 of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules 2014, from M/s. S R B C & Co. LLP, certifying their eligibility for appointment as statutory auditors of the Company.

Both, M/s. S R B C & Co. LLP and M/s. S.R.Batliboi & Co. LLP are part of the same network of firms.

9. COST AUDITORS

The Audit Committee has recommended and the Board of Directors have appointed Shri. Prakash A. Sevekari, Cost Auditor, to conduct the Cost Audit for any of the Products covered under Cost Audit for the financial year ending March 31, 2015, subject to the approval of Central Government. The requisite applications for approval of his appointment will be submitted to the Central Government.

10. PUBLIC DEPOSITS

During the year under review, the Company has not accepted any fixed deposits.

11. SUBSIDIARIES AND ITS OPERATIONS

Your Company''s wholly owned subsidiary Anand Synthochem Limited has reported a loss of Rs.4.66 lacs.

Your Company''s wholly owned subsidiary at USA, namely FDC Inc., reported a loss of USD 1,510 (i.e. profit of Rs. 4.28 lacs on account of exchange gain on currency translation).

Your Company''s wholly owned subsidiary at UK, namely FDC International Ltd., has reported a profit of £ 171,828 (Rs. 219.25 lacs).

Your Company''s joint venture business at South Africa namely Fair Deal Corporation Pharmaceutical SA (Pty) Ltd., has reported a loss of ZAR 22,81,820 (i.e. loss of Rs. 140.02 lacs on account of difference in rates taken for Stock & Deferred tax).

As per the directions of the Central Government vide its general notification dated February 08, 2011, the financial data of the subsidiaries have been furnished under “Notes to the Consolidated Financial Statements”.

Also, as directed by the Central Government, annual accounts of the subsidiaries and the related detailed information will be made available to the holding and subsidiary company investors, on request and the same is available for inspection by the members at the registered office of the Company, between 10.00 a.m. to 12.00 noon on all days except Friday and holidays, till this Annual General Meeting and will also be placed before the said meeting.

Any shareholder interested in obtaining a copy of the annual accounts of the subsidiary companies may write to the secretarial department at the corporate office of the Company. The annual accounts of the individual subsidiary companies are also available on the Company''s website-www.fdcindia.com.

12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO

The information pursuant to Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is annexed as Annexure A to this report.

13. ACKNOWLEDGEMENTS

Your Directors take this opportunity to place on record their gratitude for the continued support and co-operation extended to the Company by the medical fraternity, trade, Government agencies, financial institutions, investors, bankers, consumers and employees.

For and on behalf of the Board

Place: Mumbai

MOHAN A. CHANDAVARKAR

Date : May 29, 2014 Chairman and Managing Director


Mar 31, 2013

The directors are pleased to present their report on the business and operations of your Company for the year ended March 31, 2013.

1. FINANCIAL RESULTS

2012-2013 2011-2012 Rupees in lacs Rupees in lacs

Revenue from operations (Net) 76,459.51 69,924.16

Other income 4,756.08 2,782.00

Profit (before finance costs and depreciation / amortisation) 23,007.86 18,954.99

Finance costs 151.05 132.35

Depreciation and amortisation 2,751.19 1,805.00

Profit before tax 20,105.62 17,017.64

Less: Taxation

- Current tax 4,100.00 3,450.00

- Deferred tax 163.15 328.15

- Tax adjustments for earlier years (current tax) 9.30 (29.56)

Profit after tax 15,833.17 13,269.05

Balance of profit from prior years 34,460.00 28,430.05

Surplus available for 50,293.17 41,699.10 appropriation

Appropriations:

Transfer to general reserve 5,000.00 3,000.00

Final dividend proposed 4,038.63 3,658.41

Tax on dividend 686.36 593.48

Reversal of excess provision of dividend - (12.79)

Balance carried to Balance Sheet 40,568.18 34,460.00

50,293.17 41,699.10

Previous year''s figures have been re-grouped/re-classified, wherever necessary to confirm to this year''s classification.

2. DIVIDEND

Your board of directors recommend a final dividend of Rs. 2.25 (225%) per equity share of Re.1 each for the financial year ended March 31, 2013. The same, if declared at this annual general meeting will be paid to those shareholders whose names stand registered in the register of members as on August 31, 2013. This dividend is tax free in the hands of the shareholders.

3. BUYBACK OF EQUITY SHARES

Pursuant to the approval of shareholders for buyback of its fully paid-up equity shares of Re. 1 each upto a quantity not exceeding 6,250,000 at a price not exceeding Rs. 110 per equity share vide postal ballot voting on August 17, 2012, the Company has bought back 2,087,432 equity shares of Re.1 each upto March 31, 2013 and all the shares bought back in the buyback offer upto March 31, 2013 have been extinguished as on date. Further 1,338,538 equity shares of Re.1 each were bought back as on date of this report.

4. BUSINESS REVIEW

The Indian Pharmaceutical Market grew by 11.9% to touch the market size of Rs. 70,529 crores, during the year ended March 31, 2013. Around 2,194 products were introduced during the year (Source: AIOCD Pharmasofttech AWACS Private Limited).

The Indian Pharmaceutical Market is well poised for growth and is projected to grow at a Compounded Annual Growth Rate of 12% to 14%. Service oriented segments such as hospitals and medical insurance are slowly gaining prominence. The key drivers have been increase in household income level, increase in lifestyle related diseases, growing population, improving healthcare infrastructure, delivery systems, rapid urbanization and growth in the rural markets.

Pharma emerging markets such as China, Brazil, India & Russia to name a few, have a prominent role to play in the global pharmaceutical market. India is seen as the third largest pharma market in the world. This market is expected to further strengthen by more drugs going off patent by the year 2015.

The much awaited The National Pharmaceuticals Pricing Policy, 2012 (NPPP-2012) is notified by the Government. The policy aims at having a regulatory framework for pricing of 348 drugs, to ensure availability of essential drugs at reasonable prices.

As per the policy, all medicines and dosages specified in the National List of Essential Medicines, 2011 will be under price control. The Drugs (Prices Control) Order 2013 has been notified on May 15, 2013. The National Pharmaceuticals Pricing Policy, 2012 is expected to impact the logistics, sales and profitability of many pharmaceutical companies including yours. Your Company would be taking effective steps to reduce the impact of the same.

Compulsory licensing, patent oppositions and litigations, increasing regulations and compliances, infrastructure development and menace of counterfeit drugs are seen as major hurdles in the Industry.

Against the above market background, we give below a brief review of various functions of your Company:

a. Marketing:

Total revenue from operations of your Company has increased by 9.35% as compared to the last year. Your Company is ranked at 25th position, attaining a market share of 1.12% (Source: AIOCD Pharmasofttech AWACS Private Limited- Moving Annual Turnover- March 2013).

Your Company has initiated various steps to improve its performance. The same is witnessed by growth and profit, your Company has achieved, which is given under the head financial performance. The steps initiated are expected to yield results over a period of time and this year''s performance is a beginning towards the above goal.

Your Company launched an extension of its well established ophthalmic brand "IOTIM-B", with unique drop assist application strips for the first time in Indian market. The above uniqueness of the brand will help your Company to regain its lost strong foothold in ophthalmology segment and will reinforce the world class quality standard products of the Company.

"ZIFI AZ", a brand extension product of your Company''s flagship brand "ZIFI", has become the fastest growing brand in the antibiotic segment. Another extension to the brand "ZIFI", namely "ZIFI TURBO" has achieved the accolade of being "The Best Launch of the Year 2012-13".

Your Company''s paediatric segment was further strengthened by the introduction of a unique combination of calcium and phosphorous for healthy bones and teeth along with yummy peppermint and lemon flavour under the brand name "CALYUMM-P".

b. Financial Performance:

Your Company''s profits have increased by 19.32%. Various steps initiated by the Company have started yielding results which is evident from current year''s performance. Your Company continues its efforts to improve the performance through operational efficiencies and incremental business. Cost controls across all levels of functions are a continuous and ongoing exercise. The Company''s internal control procedures are commensurate with the nature of its operations.

c. Exports:

The annual export turnover for the year ended March 31, 2013 was Rs. 9,541.05 lacs with a marginal growth of 9.88% as compared to the year ended March 31, 2012 which stood at Rs. 8,682.93 lacs. Although, FDC continues to supply APIs worldwide to its esteemed customers, the improved export performance resulted from sales of finished dosage forms mainly Oral Rehydration Salts range to Africa and Ophthalmic range to UK and US.

The Company''s manufacturing facilities of Ophthalmic/ liquids/ powders and tablet dosage forms at Waluj and Goa are approved by international authorities namely US FDA and UK MHRA respectively. In view of the Company''s core capabilities, number of opportunities in European and US markets are opening up, for out-licensing of dossiers/ANDA''s/ DMF/COS.

5. RESEARCH & DEVELOPMENT

a. Formulations:

Your Company''s main focus has been on development of value added drug products at affordable price and development of niche generic products for export to highly regulated markets of US and Europe. A state of art research facility for development and validation of nano-technology based formulation has been made functional. Three nano-technology based products were developed for Ophthalmic and otic use. To protect the novel drug delivery technologies, both India and PCT applications were filed. Four generic products got approval from European regulatory agencies.

b. Synthetics:

Your Company''s main focus is on the development of cost effective processes for generic APIs, based on patent expiry. A non infringing new process for Rupatadine Fumarate, an antihistamine and a PAF antagonist, to treat allergies was developed. The process was successfully transferred to Roha Pilot Plant where the process has been validated and commercialised.

Process developed at R&D for Olopatadine hydrochloride, antihistamine and mast cell stabilizer was transferred to the Roha plant where the process has been validated and commercialised.

c. Nutraceuticals:

Your Company''s balanced ideal energy drink namely "ENERZAL" became the drink provider for the Mumbai Marathon 2013. Your Company is aggressively promoting this product through various sports events held across major metros of India. In addition, your Company has partnered with a local football club which scouts for talent in Mumbai schools wherein your Company aims to promote its product "ENERZAL".

d. Biotechnology:

As reported to you earlier, with regard to the license technology agreement signed by your Company with an Israel based company, for production and purification of recombinant protein licensed to FDC, we are now awaiting a reply from Department of Biotechnology, granting us permission for going ahead with human clinical trails.

6. PERSONNEL

The overall industrial and employee relations remained healthy. Information as per Section 217(2A) of the Companies Act, 1956, read with Companies (Statement of Particulars of Employees) Rules, 1975, forms a part of this report. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, this report and the accounts are being sent to all shareholders excluding the particulars of employees under Section 217(2A). Any shareholder interested in obtaining a copy of the statement may write to the secretarial department at the corporate office of the Company.

7. SOCIAL RESPONSIBILITIES

In discharge of its social obligations, your Company regularly contributes to trusts formed for charitable purposes. FDC also assists several organisations in medical camps conducted all over the Country.

8. DIRECTORS

In accordance with Article 60 of the Articles of Association and the relevant provisions of the Companies Act, 1956, Dr. Satish S. Ugrankar and Dr. Rahim H. Muljiani, retire by rotation at this annual general meeting and being eligible, offer themselves for re-appointment.

9. DIRECTORS'' RESPONSIBILITY STATEMENT

Your directors confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed;

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 for the financial year ended March 31, 2013 and of the Statement of Profit and Loss 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 1956, 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.

10. CORPORATE GOVERNANCE

As required by the existing clause 49 of the listing agreements entered into with the stock exchanges, a separate report on corporate governance is given as a part of the annual report alongwith the auditors'' statement on its compliance.

11. AUDITORS

The auditors of your Company S.R. Batliboi & Co. LLP (Formerly known as M/s. S.R.Batliboi & Co.) Chartered Accountants, Mumbai, retire at the ensuing annual general meeting and have confirmed their eligibility and willingness to accept office, if re-appointed.

12. COST AUDITORS

The directors have appointed Shri. Prakash A. Sevekari, Cost Auditor, to conduct the cost audit for any of the products covered under cost audit for the financial year ending March 31, 2014. The requisite applications for approval of his appointment will be submitted to the Central Government.

13. PUBLIC DEPOSITS

During the year under review, the Company has not accepted any fixed deposits.

14. PARTICULARS OF SUBSIDIARIES AND ITS OPERATIONS

Your Company''s wholly owned subsidiary Anand Synthochem Limited has reported a loss of Rs.4.48 lacs.

Your Company''s wholly owned subsidiary at US, namely FDC Inc., reported a loss of USD 1,517 (i.e. Profit of Rs.2.28 lacs on account of exchange gain on currency translation).

Your Company''s wholly owned subsidiary at UK, namely FDC International Ltd., has reported a loss of £ 103,980 (Rs. 91.72 lacs).

Your Company''s joint venture business at South Africa namely Fair Deal Corporation Pharmaceutical SA (Pty) Ltd., has reported a profit of ZAR 305,627 (i.e. Loss of Rs. 14.94 lacs on account of difference in rates taken for Stock & Deferred tax).

As per the directions of the Central Government vide its general notification dated February 08, 2011, the financial data of the subsidiaries have been furnished under "Notes to the Consolidated Financial Statements".

Also, as directed by the Central Government, annual accounts of the subsidiaries and the related detailed information will be made available to the holding and subsidiary company investors, on request and the same is available for inspection by the members at the registered office of the Company, between 10.00 a.m. to 12.00 noon on all days except Friday and holidays, till this annual general meeting and will also be placed before the said meeting.

Any shareholder interested in obtaining a copy of the annual accounts of the subsidiary companies may write to the secretarial department at the corporate office of the Company. The annual accounts of the individual subsidiary companies are also available on the Company''s website - www.fdcindia.com.

15. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING ANDOUTGO

The information pursuant to Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is annexed as Annexure A to this report.

16. ACKNOWLEDGMENTS

Your Directors take this opportunity to place on record their gratitude for the continued support and co-operation extended to the Company by the medical fraternity, trade, Government agencies, financial institutions, investors, bankers, consumers and employees.

For and on behalf of the board

Place: Mumbai MOHAN A. CHANDAVARKAR

Date : May 24, 2013 Chairman and Managing Director


Mar 31, 2012

The directors are pleased to present their report on the business and operations of your Company for the year ended March 31, 2012.

1. FINANCIAL RESULTS

2011-2012 2010-2011 Rupees in lacs Rupees in lacs

Revenue from operations (Net) 69,924.16 70,036.26

Other income 2,782.00 2,783.78

Profit (before finance costs and depreciation / amortisation) 18,954.99 19,119.35

Finance costs 132.35 133.98

Depreciation and amortisation 1,805.00 1,698.54

Profit before tax 17,017.64 17,286.83

Less: Taxation

- Current tax 3,450.00 3,450.00

- Deferred tax 328.15 120.38

- MAT credit entitlement - (1,330.00)

- Tax adjustments for earlier years (current tax) (29.56) 171.86

Profit after tax 13,269.05 14,874.59

Balance of profit from prior years 28,430.05 20,842.48

Surplus available for 41,699.10 35,717.07 appropriation

Appropriations:

Transfer to general reserve 3,000.00 3,000.00

Final dividend proposed 3,658.41 3,688.63

Tax on dividend 593.48 598.39

Reversal of excess provision of dividend (12.79) -

Balance carried to Balance Sheet 34,460.00 28,430.05

41,699.10 35,717.07

Previous year's figures have been re-grouped/re-classified, wherever necessary to conform to this year's classification.

2. DIVIDEND

Your Board of Directors recommend a final dividend of Rs.2 (200%) per equity share of Re.1 each for the financial year 2011-2012. The same, if declared at this annual general meeting will be paid to those shareholders, whose names stand registered in the register of members as on August 17, 2012. This dividend is tax free in the hands of the shareholders.

3. BUYBACK OF EQUITY SHARES

Your Company concluded the ongoing buyback of it's fully paid-up equity shares of Re.1 each, on January 25, 2012. During the said period, the Company has bought back 3,358,102 equity shares of Re.1 each and the total outlay for the buyback was Rs.3,251.48 lacs. All the equity shares bought back in the buyback offer have been extinguished as on January 31, 2012.

As a continuing effort towards providing liquidity to shareholders, the Board of Directors at its meeting held on May 26, 2012, have approved the buyback of its fully paid-up equity shares of Re.1 each upto a quantity not exceeding 6,250,000 (Maximum Offer Shares) at a price not exceeding Rs.110 per equity share (Maximum Offer Price). The board has earmarked a maximum limit of Rs.5,000 lacs (Maximum Offer Size) for the buyback which is less than 25% of the existing paid-up equity share capital and free reserves. The said buyback will be made through open market operations on the stock exchanges and will be subject to the approval of the shareholders through the postal ballot, the results of which will be announced at the ensuing annual general meeting.

4. BUSINESS REVIEW

The Indian Pharmaceutical Market (IPM) is destined to be one of the fastest growing Industry. It has been the front runner in a wide range of specialties involving complex drugs manufacture, development and technology. The IPM is on the threshold of becoming a major global market by 2020. The IPM grew by 16% to touch the market size of Rs.62,904.12 crores, during the year ended March 2012. Around 2,638 products were introduced during the year (Source: AIOCD AWACS).

The key drivers have been increase in household income level, increase in lifestyle related diseases, growing population, improving healthcare infrastructure/ delivery systems and rising penetration in smaller towns and rural areas, have contributed to the long term growth of the Industry.

The life style segments such as cardiovascular, anti-diabetes, anti-depressants and anti-cancers have continued to be lucrative and fast growing owing to increased urbanisation and changing lifestyle patterns. After the anti-diabetic segment, the cardiac segment is considered to be the 2nd largest in the chronic therapy which has a CAGR of 19%. This is further boosted due to the rise in affluent consumers demanding innovative drugs for the treatment of chronic illness associated with their changing life styles. High growth in domestic sales in the future will depend on the growing chronic disease segment.

A large untapped opportunity is seen in the rural markets. However, these markets have their own share of challenges like awareness, modern health care facilities, affordability and investments in infrastructure. The MNC's too are augmenting their portfolio in these rural areas. Even though challenges are manifold to penetrate in these markets, host of opportunities are available which can be achieved by adopting untraditional methods like tying up with Government organisations, insurance, diagnostic providers, NGOs, increasing patient awareness and literacy campaigns.

The IPM is adopting various strategies for their R&D efforts like entering into collaboration and partnership agreements with innovator companies and out-licensing their molecules for milestone payments.

Over the last five years focus, investments are seen in the emerging markets namely China, India, Brazil and Russia. Due to India's demographics, rising income levels and changing attitude towards health and lifestyle, India will increasingly become an important market.

Mergers & Acquisitions, collaborations and in-licensing will continue to see significant activities, mainly due to expert technical staff, excellent infrastructure in terms of clinical trial laboratories, contract manufacturing and readily available world class accredited state of the art manufacturing facilities in India.

The new price control policy is still pending review by the Government. Compulsory licensing, patent oppositions and litigations, increasing regulatory requirements and compliances, infrastructure development and menace of counterfeit drugs are seen as major hurdles in the Industry.

Against the above market background, we give below a brief review of various functions of your Company:

a. Marketing:

Your Company registered a market growth of 3.2% in the financial year April 2011 to March 2012. Your Company is ranked at 26th position, attaining a market share of 1.20% (Source: AIOCD AWACS March 2012).

Your Company does not find this performance satisfactory. However, following steps have been taken to improve the performance:

i. Online reporting system is under implementation in the field to monitor the work carried out in the field.

ii. Web based online sales information system is introduced to enable the managers to follow-up on sales growth and targets on day to day basis.

iii. Appraisal systems at field have been improvised to reward good performance and identify the areas of improvement.

iv. Training of field has been intensified to improve the performance, particularly of 1st and 2nd line managers. This is expected to reduce the impact of attrition in territories under the managers.

v. Incentive and salary levels in the field are substantially revised to reduce attrition, considering current opportunities in the industry.

vi. Territory rationalisation and introduction of specialised marketing field force is on cards to avail various opportunities.

vii. Number of new innovative products are in the R&D pipeline.

viii. Your Company is in the process of finalising innovative products for in-licensing.

The above steps are expected to yield results over a period of time.

b. Financial Performance:

Your Company's sales & profit stagnated due to attrition in the field and increased employees' cost respectively. The treasury income has been moderate due to fluctuating markets. The Company continues its efforts to improve the performance through operational efficiencies and incremental business. Cost controls across all levels of functions are a continuous and ongoing exercise. The Company's internal control procedures commensurate to the extent and nature of its operations.

c. Exports:

The annual export turnover for the year ended March 31, 2012 was Rs.8,682.93 lacs with a growth of 24% as compared to year ended March 31, 2011 which stood at Rs.7,019.10 lacs. Although FDC continues to supply APIs worldwide to its esteemed customers, the improved export performance resulted from sales of finished dosage forms mainly Ophthalmic & ORS range to UK, USA & Latin America and support of various international NGOs.

The Company's manufacturing facilities of Ophthalmic/ liquids/powders and tablet dosage forms at Waluj and Goa are approved by international authorities namely US FDA and UK MHRA respectively. In view of the Company's core capabilities, number of opportunities in European and US markets are opening up, for out-licensing of dossiers/ANDA's/ DMF/COS.

In view of emerging economic markets in CIS countries, your Company is exploring a business alliance for marketing its various products.

5. RESEARCH & DEVELOPMENT

a. Formulations:

Your Company as reported earlier has launched products in the various therapeutic areas. The Company has developed formulations as collaboration projects with overseas Companies and the dossiers of products have been submitted for registration. Cost reduction exercise was completed on products which would result in cost savings besides being environmental friendly and solvent free process.

The Company has developed novel drug delivery technologies and patents for Gastro retention dosage form, multilayer tablets, floating suspensions and matrix system were filed during the current year.

b. Synthetics:

Your Company's main focus is on the development of cost-effective processes for generic APIs, based on patent expiry. Process development and improvement for the existing range of products such as dorzolamide, brimonidine tartrate, fluconazole and famciclovir was undertaken during the year. Non-infringing route for the synthesis of fluconazole was developed and successfully transferred to Roha. QP audit and WHO GMP inspection was performed for latanoprost manufacturing facility at Jogeshwari, Mumbai and the WHO GMP certificate was received.

In collaboration with National Chemical Laboratory, Pune, New Chemical Entities with antifungal activity have been developed. Few of those have shown promising results and are in the process of patenting.

During the year, your Company has filed 4 Patents and 5 Patents have been granted for dorzolamide, duloxetine and NCE Series. Two new DCP's were submitted for Ophthalmic products.

c. Nutraceuticals:

Your Company's reputed energy drink, "Enerzal" powder was introduced in attractive zip-pack pouch. During the year, the Company has also launched Simyl MCT and Prosoyal with milk fat. The formulation of Simyl MCT and Prosoyal has been certified by BIS (Bureau of Indian Standards).

After the successful launch of its infant milk substitute, MUM-MUM 1, your Company is in the process of launching MUM-MUM 2, a specially developed infant milk substitute for infants between six months to one year taking into account the nutritional needs of the infants.

The Company has successfully completed ISO 22000:2005, re-certification audit and HACCP surveillance audit for Roha plant.

d. Biotechnology:

As reported to you earlier, with regard to the license technology agreement signed by your Company with an Israel based company, for production and purification of recombinant protein licensed to FDC, five consistency batch data dossier alongwith animal toxicity studies protocol was submitted to the Department of

Biotechnology (DBT). DBT has granted permission to conduct preclinical toxicity studies of FDC's recombinant product. The results of the efficacy studies are found to be promising and are in consonance with the international standard samples.

On completion of the toxicity trials, the entire pre-clinical study data shall be submitted to DBT for evaluation. Once the permission is granted, FDC will be proceeding with human clinical trials.

6. PERSONNEL

The overall industrial and employee relations remained healthy. Information as per section 217(2A) of the Companies Act, 1956, read with Companies (Statement of Particulars of Employees) Rules, 1975, forms a part of this report. However, as per the provisions of section 219(1)(b)(iv) of the said Act, this report and the accounts are being sent to all shareholders excluding the particulars of employees under section 217(2A). Any shareholder interested in obtaining a copy of the statement may write to the secretarial department at the corporate office of the Company.

7. SOCIAL RESPONSIBILITIES

In discharge of its social obligations, your Company regularly contributes to trusts formed for charitable purposes. FDC also assists several organisations in medical camps conducted all over the Country.

8. DIRECTORS

Mr. Vinod G. Yennemadi is appointed as an additional director of the Company w.e.f. June 08, 2012, to hold office until the ensuing annual general meeting, at which he shall be eligible for appointment as a director retiring by rotation. As required under section 257 of the Companies Act, 1956, the Company has received notice from a member signifying his intention to propose Mr. Vinod G. Yennemadi for the office of director along with a deposit of Rs. 500 with the notice. In accordance with article 60 of the articles of association and the relevant provisions of the Companies Act, 1956, CA Girish C. Sharedalal and Mr. Ashok A. Chandavarkar, retire by rotation at the ensuing annual general meeting and being eligible, offer themselves for re-appointment.

9. DIRECTORS' RESPONSIBILITY STATEMENT

Your directors confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed;

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 for the financial year ended March 31, 2012 and of the statement of profit and loss 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, 1956, 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.

10. CORPORATE GOVERNANCE

As required by the existing clause 49 of the listing agreements entered into with the stock exchanges, a separate report on corporate governance is given as a part of the annual report alongwith the auditors' statement on its compliance.

11. AUDITORS

The existing statutory auditors of the Company, M/s. S.R. Batliboi & Associates, Chartered Accountants, Mumbai, have communicated to the Company their unwillingness to be re-appointed as the statutory auditors of the Company and hence are not offering themselves for re-appointment in the ensuing annual general meeting.

The Company has received a special notice under the provisions of section 225 of the Companies Act, 1956, proposing the appointment of M/s. S.R. Batliboi & Co., Chartered Accountants, as the statutory auditors of the Company in place of the retiring auditors. The Company has also received a certificate pursuant to section 224(1B) of the Companies Act, 1956, from M/s. S.R. Batliboi & Co., certifying their eligibility for appointment as statutory auditors of the Company.

12. COST AUDITORS

The directors have appointed Shri. Prakash A. Sevekari, Cost Auditor, to conduct the cost audit of bulk drugs and formulations for the financial year ending March 31, 2013.The requisite applications for approval of his appointment has already been submitted to the Central Government by this date.

13. PUBLIC DEPOSITS

During the year under review, the Company has not accepted any fixed deposits.

14. PARTICULARS OF SUBSIDIARIES AND ITS OPERATIONS

Based on valuation of independent valuers, the Board of Directors, at its meeting held on October 15, 2011, had resolved to purchase 100% equity shares of Anand Synthochem Limited (ASL), a related, unlisted Public Company, from its erstwhile shareholders, for a total consideration of Rs.644.58 lacs (including a loan of Rs.38.42 lacs), thereby making ASL, a Wholly Owned Subsidiary(WOS) of FDC Limited w.e.f. October 17, 2011. Though ASL does not have any substantial operations, it owns a property at Dombivali, Maharashtra, admeasuring 81,855 sq.ft. which FDC proposes to use for its business operations. ASL has reported a loss of Rs. 2.09 lacs (The loss is during the period October 17, 2011 to March 31, 2012).

Your Company's WOS at USA, namely FDC Inc., reported a loss of USD 1,440 (i.e. Profit of Rs.5.28 lacs on account of exchange gain on currency translation).

Your Company's WOS at UK, namely FDC International Ltd., has reported a profit of £ 230,946 (Rs.196.76 lacs).

Your Company's joint venture business at South Africa namely Fair Deal Corporation Pharmaceutical SA (Pty) Ltd., reported a profit of ZAR 229,912 (Rs.20.94 lacs).

As per the directions of the Central Government vide its general notification dated February 08, 2011, the financial data of the subsidiaries is disclosed in the annual report in compliance with the said circular.

Also, as directed by the Central Government, annual accounts of the subsidiaries and the related detailed information will be made available to the holding and subsidiary company investors, on request and the same is available for inspection by the members at the registered office of the Company, between 10.00 a.m. to 12.00 noon on all days except Friday and holidays, till this annual general meeting and will also be placed before the said meeting.

Any shareholder interested in obtaining a copy of the annual accounts of the subsidiary companies may write to the secretarial department at the corporate office of the Company. The annual accounts of the individual subsidiary companies are also available on the Company's website - www.fdcindia.com.

15. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO

The information pursuant to section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is annexed as Annexure A to this report.

16. ACKNOWLEDGMENTS

Your Directors take this opportunity to place on record their gratitude for the continued support and co-operation extended to the Company by the medical fraternity, trade, Government agencies, financial institutions, investors, bankers, consumers and employees.

For and on behalf of the board

Place: Mumbai MOHAN A. CHANDAVARKAR

Date : June 08, 2012 Chairman and Managing Director


Mar 31, 2011

Dear Members,

The directors are pleased to present their report on the business and operations of your Company for the year ended March 31, 2011.

1. FINANCIAL RESULTS

Year ended Year ended 31.03.2011 31.03.2010 Rupees in lacs Rupees in lacs

Sales (gross) 70,710.49 63,128.66

Other income 3,189.23 3,172.47

Gross profit (before finance expenses & depreciation) 19,119.35 19,559.16

Deductions:

Finance expenses 133.98 131.99

Depreciation 1,698.54 1,448.03

Profit before taxation 17,286.83 17,979.14

Provision for taxation 2,240.38 2,872.43

Provision for taxation - earlier years written off 171.86 224.78

Profit after taxation 14,874.59 14,881.93

Brought forward profit 20,842.48 12,736.11

Amount available for appropriation 35,717.07 27,618.04

Appropriations:

Final dividend - proposed 3,688.63 3,259.87

Dividend tax 598.39 541.42

Transfer to general reserve 3,000.00 3,000.00

Reversal of excess provision of dividend – (25.73)

Balance carried over to next year 28,430.05 20,842.48

35,717.07 27,618.04

Previous year's figures have been re-grouped/ re-classified, wherever necessary to confirm to this year's classification.

2. DIVIDEND

Your board of directors recommend a dividend of Rs.2 (200%) per equity share of Re.1/- each for the year 2010-2011. The same, if declared at the forthcoming annual general meeting will be paid to those shareholders' whose names stand registered in the register of members as on September 24, 2011. This dividend is tax free in the hands of the shareholders.

3. BUYBACK OF EQUITY SHARES

As a policy of constantly rewarding and enhancing the shareholders value, your Company vide a board resolution dated January 27, 2011, has approved the buyback of its fully paid up equity shares from the stock exchange operations, at a price not exceeding Rs. 135/- per share upto an amount of Rs. 50 crores being less than 10% of the total paid up capital and free reserves based on audited accounts for the year ended March 31, 2010. The buyback commenced on February 18, 2011. The Company has bought back 1,708,828 equity shares upto March 31, 2011 and all the shares bought back in the buyback offer upto March 31, 2011 have been extinguished as on date. Further 1,38,062 equity shares were bought back as on the date of this report.

4. BUSINESS REVIEW

The Indian economy remained relatively insulated from the impact of the worst global recession. The Indian Pharmaceutical Market (IPM) grew by 14.8 % to touch the market size of Rs.54,174 crores, during the year ended March 2011 (Source: AIOCD AWACS ). This reflects a robust CAGR of around 15% in the past five years. It is expected that IPM will continue to grow at 15-17% in the next five years. The key drivers have been growth in Gross Domestic Product (GDP), urbanization, increase in health awareness, penetration to smaller towns and wider health insurance coverage. The Government has also shifted its focus on extending healthcare services to the poor and the underprivileged.

The Chronic disease segment, namely the cardio-vascular, anti-diabetic, anti-hypertensives and oncology continued to dominate the Pharma market. Acute therapies and chronic therapies are growing at 13.8% and 16.7% respectively (Source: AIOCD AWACS ). Further, increasing population in the ageing group, will boost the demand for the typical age related diseases as stated above.

Around 3,939 products were introduced in the current year April 2010 to March 2011.

India is seen as the third largest generic pharma market in the world. By 2020, it is expected that half of the generic market will be between India, China and USA. Globally the generic market has shown a robust growth and this is expected to further strengthen by more drugs going off patent by the year 2015.

The Indian Pharma Industry still has to face some great challenges. The much awaited Drug Pricing Policy, which is expected to rope in many products under price control, is yet to see the light of the day. Even though the same remains to be an area of uncertainty, it is hoped that the representation from industry associations will help the Government to frame the policy in the best interest of all the concerned.

The Pharma Industry continues to comply with the strict quality regulations set by various international authorities across the world. Failure to comply with these regulations may result in severe consequences leading to prohibition to sale/or export. With many products going off patent, competition and patent litigation is expected to increase. Spurious products continue to remain a major threat to reputed brands.

Against the above market background, we give below a brief review of various functions of your Company:

Marketing:

Your Company registered a market growth of 13.4% in the current year April 2010 to March 2011. Your Company is ranked at the 24th position, attaining a market share of 1.3% (Source: AIOCD AWACS March 2011).

Your Company's flagship antibiotic brand "ZIFI" with all its brand extensions continued to show outstanding performance. ORS leadership continues with your brand "ELECTRAL" in the domestic market. Few openings for the brand are getting good recognition in several countries. Our effort continues aggressively in the chronic segment with the introduction of latest molecules in the market.

We are in the process of building marketing organisation based on knowledge, training and performance of our representatives in the doctors' chambers, specially with the current restrictions and codes introduced by medical council, across the country and accepted by the industry association.

b. Financial Performance:

Your Company's turnover increased by 12%. However, the profits stagnated due to increased employees' cost and higher manufacturing/marketing costs. The treasury income has been moderate due to fluctuating markets. The Company continues its efforts to improve the performance through operational efficiencies and incremental business. Cost controls across all levels of functions is a continuous and ongoing exercise. The Company's internal control procedures commensurate to the extent and nature of its operations.

c. Exports:

The annual export turnover for the year ended March 31, 2011 was Rs. 7,019.10 lacs as compared to year ended March 31, 2010 which stood at Rs. 5,707.54 lacs. The improved export performance resulted from API sales to USA, Japan and from sales of finished dosage forms to CIS, UAE, Cuba & Africa.

Major NGO's continued to endorse their faith in Company's competence & reliability in delivering quality products. The Company is one of the preferred sources for procurement of Oral Rehydration Salts, ReSoMal & Zinc Sulphate dispersible tablets, by the leading NGO's for their emergency procurement plans.

5. RESEARCH & DEVELOPMENT

a. Formulations:

Your Company as reported earlier, has launched products in the various therapeutic groups. Number of new dosages in New Drug Delivery Systems are in R&D pipeline. Cost reduction exercise was completed on products which would result in cost savings besides being environmental friendly and solvent free process.

In the month of April 2011, your Company's active pharmaceutical ingredient facility at Roha, Raigad, Maharashtra, was inspected and awarded US FDA accreditation with no 483. Various patent applications and dossier filings were undertaken during the current year.

b. Synthetics:

Technology for preparation of Polymorph III of Fluconazole has been transferred to Roha Plant successfully. Laboratory development work for various ophthalmic products are under active development and some have reached near completion. In collaboration with National Chemical Laboratory, Pune, several New Chemical Entities with antifungal activity have been developed. Few of those have shown promising results and are in the process of patenting.

c. Nutraceuticals:

The start of the financial year '2010-2011' saw the launch of a bigger 100 gms. sachet of your Company's reputed energy drink, " Enerzal" powder. This gave a significant boost to the Enerzal sales.

Your Company's reputed ORS brand "Electral" as a ready to serve drink, is the only innovative World Health Organisation (WHO) recommended Oral Rehydration Salt (ORS) in tetra pack. Ever since its launch, this brand has shown significant growth and has been well accepted by pediatricians for its rationale osmolarity (245mOsmol/L).

d. Biotechnology:

As reported to you earlier, with regard to the license technology agreement signed by your Company with an Israel based company, for production and purification of recombinant protein licensed to FDC, five consistency batch data dossier from seed to final formulated product is ready for submission to The Department of Biotechnology. These data also includes the protocol for conducting preclinical animal toxicity studies of FDC's recombinant product. Once the permission is granted, FDC will be proceeding with the animal toxicity.

6. PERSONNEL

The overall industrial and employee relations remained healthy. Information as per Section 217(2A) of the Companies Act, 1956, read with Companies (Statement of Particulars of Employees) Rules, 1975, forms a part of this report. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, this report and the accounts are being sent to all shareholders excluding the particulars of employees under Section 217(2A). Any shareholder interested in obtaining a copy of the statement may write to the secretarial department at the corporate office of the Company.

7. SOCIAL RESPONSIBILITIES

In discharge of its social obligations, your Company regularly contributes to trusts formed for charitable purposes. FDC also assists several organisations in medical camps conducted all over the Country.

8. DIRECTORS

In accordance with Article 60 of the Articles of Association and the relevant provisions of the Companies Act, 1956, Mr. Ameya A. Chandavarkar and Dr. Nagam H. Atthreya, retire by rotation at the ensuing annual general meeting and being eligible, offer themselves for re-appointment.

9. DIRECTORS' RESPONSIBILITY STATEMENT

Your directors confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed;

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 for the financial year ended March 31, 2011 and of the Profit and Loss Account 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 1956, 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.

10. CORPORATE GOVERNANCE

As required by the existing clause 49 of the listing agreements entered into with the stock exchanges, a separate report on corporate governance is given as a part of the annual report alongwith the auditors' statement on its compliance.

11. AUDITORS

The auditors of your Company M/s. S.R. Batliboi & Associates, Chartered Accountants, Mumbai, retire at the ensuing annual general meeting and have confirmed their eligibility and willingness to accept office, if re-appointed.

12. COST AUDITORS

The directors have appointed Shri. Prakash Sevekari, Cost Auditor, to conduct the cost audit of bulk drugs and formulations for the financial year ending March 31, 2012. The requisite applications for approval of his appointment will be submitted to the Central Government.

13. PUBLIC DEPOSITS

During the year under review, the Company has not accepted any fixed deposits.

14. PARTICULARS OF SUBSIDIARIES AND ITS OPERATIONS

Your Company's Wholly Owned Subsidiary (WOS) at USA, namely FDC Inc., reported a loss of USD 1,471 (Rs. 1.19 lacs) for the year ended March 31, 2011.

Your Company's WOS at UK, namely FDC International Limited, has reported a profit of £154,434 (Rs. 116.26 lacs) for the year ended March 31, 2011.

Your Company's joint venture business at South Africa namely Fair Deal Corporation Pharmaceutical SA (Pty) Limited, reported a profit of ZAR 1,289,127 (Rs. 88.92 lacs) for the year ended March 31, 2011.

Central Government vide its general notification dated February 08, 2011 has granted general exemption to Companies from attaching the accounts of the subsidiaries. However, as per the directions of the Central Government, in its notification, the financial data of the subsidiaries have been furnished under "Notes to the Consolidated Financial Statements".

Also, as directed by the Central Government, annual accounts of the subsidiaries and the related detailed information will be made available to the holding and subsidiary company investors, on request and the same is available for inspection by the members at the registered office of the Company, between 10.00 a.m. to 12.00 noon on all days except Fridays and holidays, till the date of the forthcoming meeting and will also be placed before the said meeting.

Any shareholder interested in obtaining a copy of the annual accounts of the subsidiary company and the detailed information with the financial statement of the said subsidiaries may write to the secretarial department at the corporate office of the Company. Also details of accounts of the individual subsidiary companies are available on the Company's website www.fdcindia.com

15. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO

The information pursuant to Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is annexed as Annexure A to this Report.

16. ACKNOWLEDGEMENTS

Your Directors take this opportunity to place on record their gratitude for the continued support and co-operation extended to the Company by the medical fraternity, trade, Government agencies, financial institutions, investors, bankers, consumers and employees.

For and on behalf of the board

Place : Mumbai MOHAN A. CHANDAVARKAR

Date : May 26, 2011 Chairman and Managing Director


Mar 31, 2010

The directors are pleased to present their report on the business and operations of your Company for the year ended March 31, 2010.

1. FINANCIAL RESULTS

Year ended Year ended 31.03.2010 31.03.2009 (Rupees in lacs) (Rupees in lacs)

Sales (gross) 65,999.75 59,297.98

Other income 3,172.47 1,164.71

Gross profit (before finance expenses & depreciation) 19,559.16 1,1904.83

Deductions:

Finance expenses 131.99 146.04

Depreciation 1,448.03 1,273.31

Profit before taxation 17,979.14 10,485.48

Provision for taxation - 2,872.43 2,107.56 current year

Provision for taxation - earlier years 224.78 35.00

Profit after taxation 14,881.93 8,342.92

Brought forward profit 12,736.11 9,643.17

Amount available for appropriation 27,618.04 17,986.09

Appropriations:

Final dividend - proposed 3,259.87 2,350.51

Dividend tax 541.42 399.47

Transfer to general reserve 3,000.00 2,500.00

Reversal of excess provision of dividend (25.73) -

Balance carried over to next year 20,842.48 12,736.11

27,618.04 17,986.09



Previous years figures have been re-grouped/re-classified, wherever necessary to confirm to this years classification.

2. DIVIDEND

Your board of directors recommend a dividend of Rs.1.75 (175%) per equity share of Re.1/- each for the year 2009-2010. The same, if declared at the forthcoming annual general meeting will be paid to those shareholders whose names stand registered in the register of members as on August 21, 2010. This dividend is tax free in the hands of the shareholders.

3. BUYBACK OF EQUITY SHARES

The shareholders vide a postal ballot resolution dated December 21, 2009, approved the buyback of 86,50,000 fully paid up equity shares having a face value of Re. 1/- each, through the stock exchanges, at a price not exceeding Rs. 65/- per share, upto an amount of Rs. 5,600 lacs.

The buyback of shares commenced on April 12, 2010. The Company has however not been able to buyback any shares in the buyback offer, since the current market price is higher than the maximum offer price, stipulated in the buyback offer.

4. BUSINESS REVIEW

The world economy witnessed signs of recovery from one of the worst global recession. Even though India experienced the tremors of the global economic melt down, the impact was not that severe. It is expected that by the year 2015, the Indian Pharmaceutical Market (IPM) will be valued at US $20 billion. Many factors will lead way to a healthy growth in the pharma sector. Generics are seen as the future markets, wherein India and China are expected to play key roles.

The Indian Pharma market looks bright, with loads of opportunities for growth. The increasing disposable income, the growing health awareness, the increase in the lifestyle related diseases, the easy availability of modern medicinal amenities and affordable medical insurance will increase the demand for the domestic and allopathic medicines. Further, the increasing population in the ageing group, will boost the demand for the typical age related diseases such as cardio- vasculars, diabetics, hypertensives and oncology.

The IPM grew by 17.7% to touch the market size of Rs. 41,701 crores during the year ended March 2010. Around 2,100 products were introduced in the current year 2009-2010. Indian Companies continued to lead the IPM as compared to the multinationals. Indian Companies outgrew the market at 15.9%, while multinationals registered a growth of 15%. Acute segment continued to dominate the market.

The Indian Pharma Industry still has to face some great challenges. The new price control policy is still pending review by the Government. Compulsory licensing, patent oppositions and litigations, increasing regulations and compliances, infrastructure development and menace of counterfeit drugs are seen as major hurdles.

Against the above market background, we give below a brief review of various functions of your Company:

a. Marketing

Your Company registered a growth of 12.8% as against the IPM growth of 17.7%. Your Company is ranked at the 23rd position, attaining a market share of 1.68%. [Source: Organisation Research Group (ORG) March, Moving Annual Total (MAT) 2010]

In 2009, the Companys top brand “ELECTRAL” was launched in a ready to serve tetra pack. This brand has registered a robust growth and is the only innovative World Health Organisation (WHO) recommended Oral Rehyderation Salt (ORS) in tetra pack for the first time in the country. This brand has been well accepted by pediatricians for its rationale osmolarity.

Gutrite, with its aggressive performance in the pre- probiotic combination market has done impressively well and has been very well appreciated by pediatricians.

Your Company introduced various products during the year 2009-2010 which are being aggressively promoted in various therapeutic categor ies. The performance of the new products are encouraging.

With a view to improve the doctor coverage, the Company has launched a new division with a primary focus on coverage of pediatricians. The new division will have a pan India presence in the current year.

b. Financial Performance

Your Companys turnover and net profits increased by 11.30% and 78.38% respectively over the previous year.

The measures initiated by the Company in terms of investments in the field / new product pipeline and cost control have resulted in better sales and profitability.

As you are aware, the Companys treasury operations suffered a set back in the previous year due to extreme market volatility. However, with the new Government in place during the current year, the markets have stabilised and have yielded good returns during the current year.

On international front your Company was not much affected by foreign exchange fluctuations, due to less dependence on exports.

Cost controls across all levels of functions is a continuous and ongoing exercise.

The Companys internal control procedures commensurate to the extent and nature of its operations. The internal audit reports are regularly placed before the audit committee for its review.

c. Exports

The annual export turnover of your Company for the year ended March 31, 2010 was Rs. 5,587.74 lacs as compared to Rs. 5,064.39 lacs for the year ended March 31, 2009. The improved performance resulted from products exported to USA, UK, South America, Ukraine, Myanmar and Afghanistan. New product registrations were received in the UK, Ukraine, Malaysia, Vietnam, Kenya, Lithuania, Chile, Ethiopia and Mozambique. Opportunities for markets in USA, UK and rest of the world are being explored.

Major NGOs continued to endorse their faith in Companys competence and reliability in delivering quality products. The Company is a preferred source for procurement of ORS, ReSomal and Zinc Sulphate tablets by the leading NGOs for their emergency procurement plans.

5. RESEARCH & DEVELOPMENT

a. Formulations

Your Company as reported earlier, has launched products in the various therapeutic groups. R&D is in the pipeline for various other products. Cost reduction exercise was completed on products which would result in cost savings besides being environmental friendly and solvent free process.

Your Company recently commissioned NOVEL DRUG DELIVERY RESEARCH LABORATORY,(NDDR) for increasing overall therapeutic and commercial value of commonly prescribed drugs, by enhancing their performance and reducing adverse effect profile, thereby improving patient convenience and compliance. The current focus of the NDDR is on the selected therapeutic segments like anti-infectives, respiratory and anti-inflammatory agents.

Various patent applications and dossier filing were undertaken during the current year.

b. Synthetics

Laboratory process development for the synthesis of Famciclovir was developed and technology was successfully transferred to Roha Plant.

Backward integrated APIs in Dermatology and Ophthalmology segments are under active development. In collaboration with National Chemical Laboratory, Pune, several compounds with antifungal activity have been developed. Few of those compounds have shown promising results.

Seven process patents have been filed. Three Patents have been granted for improved process for Dorzolamide and manufacture of Flurbiprofen, respectively. U.S. Drug Master File submissions for Latanoprost is in the final stage.

c. Nutraceuticals

Your Company successfully launched brand extension to its well established and recognised energy drink “ENERZAL” Orange and Lime flavour.

After the successful launch of its infant milk substitute, MUM-MUM 1, your Company is in the process of launching MUM-MUM 2, a specially developed infant milk substitute for infants between 6 months to 1 year taking into account the nutritional needs of the infants.

d. Biotechnology

As reported to you earlier, with regard to the license technology agreement signed by your Company with an Israel based Company, for production and purification of recombinant protein licensed to FDC, your Company has received the test license from Daman Food and Drug Administration, for containerisation of the recombinant product in the pre-filled syringes from an external party. Compilation of data for consistency batch dossier is underway. The consistency batch data will be submitted to the Department of Bio-technology, for obtaining permission to conduct pre-clinical trials of the recombinant product.

6. PERSONNEL

The overall industrial and employee relations remained healthy. Information as per section 217(2A) of the Companies Act, 1956, read with Companies (Statement of Particulars of Employees) Rules, 1975, forms a part of this report. However, as per the provisions of section 219(1)(b)(iv) of the said Act, this report and the accounts are being sent to all shareholders excluding the particulars of employees under section 217(2A). Any shareholder interested in obtaining a copy of the statement may write to the secretarial department at the corporate office of the Company.

7. SOCIAL RESPONSIBILITIES

In discharge of its social obligations, your Company regularly contributes to trusts formed for charitable purposes. FDC also assists several organisations in conducting medical camps all over the country.

8. DIRECTORS

In accordance with Article 60 of the Articles of Association and the relevant provisions of the Companies Act, 1956, Dr. R.H. Muljiani and Dr. S.S. Ugrankar, retire by rotation at the ensuing annual general meeting and being eligible, offer themselves for re-appointment.

Mr. Ameya A. Chandavarkar was appointed as a whole- time director of the Company for a period of five years, w.e.f. from November 01, 2009, subject to the approval of the Central Government. His appointment was approved by the shareholders vide a postal ballot special resolution dated December 21, 2009. Necessary application for seeking approval of the Central Government is already submitted .

9. DIRECTORS RESPONSIBILITY STATEMENT

Your directors confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed;

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 for the financial year ended March 31, 2010 and of the profit and loss account 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, 1956, 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.

10. CORPORATE GOVERNANCE

As required by the existing clause 49 of the listing agreement entered into with the stock exchanges, a separate report on corporate governance is given as a part of the annual report alongwith the auditors statement on its compliance.

11. AUDITORS

The auditors of your Company M/s. S.R. Batliboi & Associates, Chartered Accountants, Mumbai, retire at the ensuing annual general meeting and have confirmed their eligibility and willingness to accept office, if re-appointed.

12. COST AUDITORS

The directors have appointed Shri. Prakash Sevekari, Cost Auditor, to conduct the cost audit of bulk drugs and formulations for the financial year ending March 31, 2011. The requisite applications for approval of his appointment will be submitted to the Central Government.

13. PUBLIC DEPOSITS

During the year under review, the Company has not accepted any fixed deposits.

14. PARTICULARS OF SUBSIDIARIES AND ITS OPERATIONS

Your Companys Wholly Owned Subsidiary (WOS) at USA, namely FDC Inc., reported a loss of USD 1,260 (Rs. 6.19 lacs) for the year ended March 31, 2010.

Your Companys WOS at UK, namely FDC International Ltd., has reported a profit of GBP 219,748 (Rs.150.16 lacs) for the year ended March 31, 2010.

Your Companys joint venture business at South Africa namely Fair Deal Corporation Pharmaceutical SA (Pty) Ltd., reported a loss of ZAR 1,990,094 (Rs. 118.82 lacs) for the year ended March 31, 2010.

In terms of section 212(8) of the Companies Act, 1956, the Company has received exemption from Government of India, Ministry of Company Affairs, New Delhi, from attaching the accounts of its subsidiaries viz. FDC International Limited, UK and FDC Inc., USA, for the financial year ended March 31, 2010. However, as directed by the Central Government, the financial data of the subsidiaries have been furnished under “Notes to the Consolidated Financial Statements”.

Also, as directed by the Central Government, annual accounts of the subsidiaries and the related detailed

information will be made available to the holding and subsidiary Companys investors, on request and the same is available for inspection by the members at the registered office of the Company, between 10.00 a.m. to 12.00 noon on all days except Fridays and holidays, till the date of the forthcoming meeting and will also be placed before the said meting.

Any shareholder interested in obtaining a copy of the annual accounts of the subsidiaries and the detailed information with the financial statement of the said subsidiaries, may write to the secretarial department at the corporate office of the Company. Also details of accounts of the individual subsidiary companies are available on the Companys website www.fdcindia.com

15. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO

The information pursuant to Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is annexed as Annexure A to this Report.

16. ACKNOWLEDGMENTS

Your Directors take this opportunity to place on record their gratitude for the continued support and co-operation extended to the Company by the medical fraternity, trade, Government agencies, financial institutions, investors, bankers, consumers and employees.

For and on behalf of the board

Place : Mumbai MOHAN A. CHANDAVARKAR

Date : May 29, 2010 Chairman and Managing Director

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