Directors Report of Smruthi Organics Ltd.

Mar 31, 2018

Dear Members,

The Directors are pleased to present the 29th Annual Report and the Audited Financial Statements for the financial year ended 31st March, 2018.

(Rs. in Lakhs)

Financial Results	Current Year 2017-2018	Previous Year 2016-2017
Net Sales & Other Income	9755.12	8032.97
Profit before Interest & Depreciation and Tax	346.87	1093.42
Interest	408.71	437.41
Depreciation	406.58	396.60
Profit / (Loss) before tax	(468.41)	259.33
Less : Provision for Tax (Net) DTA / (DTL)	(147.07)	100.84
Profit / (Loss) After Tax	(321.33)	158.49
Other Comprehensive Income (Net of Tax)	NA	NA
Total Comprehensive Income for the year	NA	NA

Operational Performance/ State of Company’s Affairs

During the year under review, total income of the Company was Rs. 9755.12 Lakhs as compared to Rs. 8033.97 Lakhs during previous year, registering a increase of 21.43%. However, inspite of achieving operational profit of Rs. 308 Lakhs. Company has posted net loss of Rs. 321.33 Lakhs on account of write off of irrecoverable net receivables of Rs 794 Lakhs consequent upon cancellation of regulatory approvals of the company.

A detailed overview has been provided under Management Discussion and Analysis Report.

During the year under review there was no change in the Share Capital Structure.

Dividend

In view of losses, Directors do not recommend any dividend.

Reserves

During the year under the review in view of losses, no amount has been transferred to reserves.

Deposits

During the year under review, your Company neither accepted nor renewed any fixed deposits falling within the ambit under provisions of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014. Outstanding amount of deposits accepted by the company from it’s Directors :- Mr. E. Purushotham Rs. 98 Lakhs, Mrs. E. Vaishnavi Rs. 36 Lakhs

HUMAN RESOURCE DEVELOPMENT (HRD) & INDUSTRIAL RELATIONS:

The Company continues to have cordial and harmonious relations with its employees. Your Directors place on record their appreciation for the commitment, dedication and hard work put in by the employees of the Company during testing times.

The Company is in the process of implementing a revised HRD program for developing better labour relationships. The company has adopted new policies to recruit, develop and retain skilled manpower. With an aim to expand product range and operations, the Company has made several new appointments to its existing team in various departments.

Quality, Safety & Environment:

The Company has appointed an experienced and accomplished professional to head the Quality Assurance function. Under his supervision, the quality team is actively working towards starting registrations in regulatory markets. The company is taking steps in the right direction to resume its supplies to regulated markets.

An experienced veteran of ETP has been recruited to improve environmental compliance and reduce environmental load. Through his initiatives, the company has invested substantial amounts in upgrading effluent treatment facilities in this financial year. The company has substantially reduced waste water generation through efficient recycling of water, which has not only reduced costs of treatment but also reduced energy consumption and environmental load. In addition, the company has implemented several initiatives to engage and train employees to continuously improve working practices and achieve zero accident level.

Research and Development (R&D)

The company made marginal investments in R&D in FY 2017-2018 primarily for process improvement and cost reduction of existing products. However, as the company’s financial performance is improving, the company is increasing its R&D spends in the next financial year. The company is opening a new R&D facility with an aim to develop 4 - 5 new products every year. The focus of the R&D will be create economic value through the development of intellectual property.

LISTING OF SHARES:

Besides Metropolitan Stock Exchange of India Ltd, the company also secured listing of its equity shares on BSE Limited w.e.f August 29, 2017 (Scrip Code: 540686).

CORPORATE GOVERNANCE

The Company has complied with the mandatory requirements of the code of Corporate Governance as detailed in clause 17 to 27 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Corporate Governance Report is enclosed as a part of the Annual Report along with the certificate from the Statutory Auditors, M/s. N. R. Waghchaure & Associates, Chartered Accountants, Solapur confirming compliance of the code of Corporate Governance as stipulated Para E of schedule V of the Securities and Exchange Board of India (Listing obligations and Disclosure requirements) Regulations, 2015.

Management Discussion and Analysis

Business of the Company and Future Outlook:

The company posted great growth in top line in FY 17 - 18 over the previous financial year owing to the operational strategies initiated in the previous year. This was primarily driven by our efforts to add more customers for our existing products thus increasing volume. 3 of our key products have grown by over 70% in volume year on year contribution to majority of the growth in top line.

Although, low operating margins have been reported on account of a one-time write off of bad debts of receivables of year FY 12-13 amounting to Rs. 7.97 crore. Adjusting for the same, the company has generated healthy EBITDA margins for FY 2017 - 18. Despite competitive pressure on finished product prices and rise in input prices, the company has been able to improve its operational margins due to various cost cutting and productivity improvement measures undertaken during the year.

The company has repaid its entire term loan of Axis Bank & portion of other long term loan in FY 2017 - 18. Efficient capital management has reduced the financial cost to the company in FY 2017 - 18 compared to the previous financial year.

In FY 2018 - 19, the company has secured several long term supply contracts with customers, which are contributing to top line growth and capacity utilization. Going forward, in addition to pursuing volume growth of existing products, the company is launching 2 - 3 new high margin products in FY 2018 - 19, which will build a platform for future growth. Our API R&D expansion, undertaken in FY 2018 - 19, will ensure delivery of 4 - 5 new API every year while generating valuable intellectual property. The company is also working on developing a formulations marketing business in FY 2018 - 19. The focus will be on creating intellectual property of novel formulations and build a niche market for them subsequently. Our efforts are aimed at making the company a vertically integrated pharmaceutical company driven by innovation.

Risk Management, Opportunities & Threats

Raw Material Supply Risk

The Indian API industry is currently facing a threat of reliable and low cost supply of raw materials from China, due to initiatives taken by the Chinese Government to tackle pollution amongst others. The pressure of rising raw material prices is continuing in addition to sudden supply shocks. The company is also facing this situation and is integrating backward by developing in house raw material manufacturing capability or developing manufacturing processes involving alternative raw materials.

However, this is a great opportunity for Indian API companies to regain market share lost to Chinese API manufacturers by going for backward integration. In addition, the industry can develop capabilities for manufacturing various raw materials domestically reducing dependency on China. The company is evaluating products for R&D development, which will leverage the opportunity created by the supply uncertainty of Chinese products.

Industry & Competition Risk

The API industry is a highly competitive industry with downward pressure on prices. The company has approached the risk of slowing growth and reduced margins by focusing on three things:

1. Cost Reduction: The company continuously works on reducing manufacturing and other costs through various employee led initiatives. In addition, the management focuses on optimizing capacity utilization to get optimum cost structure.

2. New Product Development: Launch of newer higher margin products ensures the company can manage product portfolio in favor of optimizing margins. Our increased R&D efforts are aimed at achieving a consistent flow of new products.

3. Vertical Integration: The management envisions the company being a niche player in the business of complex formulations. Our initiatives of launching the formulations business will not only add significantly to revenue and margin growth but also reduce the dependency on API business.

Foreign Exchange Risk

Being a net exporter and net earner of foreign exchange (forex), we do not see significant risk from foreign exchange fluctuations. Any downward pressure on Indian rupee will be beneficial for the company, with very little downside in case of a potentially stronger rupee.

Internal Control Systems:

The Company has adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. However, to improve these systems, the company is planning to implement a suitable ERP system in FY 2018-2019.

Cautionary Statement:

Certain statements, estimates and expectations stated in this Management Discussion and Analysis are based on the current perceptions, data and information available with the Company and may be ‘forward -looking statements’ within the meaning of applicable securities, laws and regulations.

They reflect the company’s current views of future events which are subject to risks and uncertainties, Important factors such as change in the competition scenario in the Company’s areas of operations, economic conditions affecting demand/supply and prices situation in the domestic and international market, changes in government regulations, tax laws and other incidental factors may cause actual results to be materially different. The company assumes no responsibility to publicly amend, modify or revise any forward looking statements on the basis of any subsequent development, information or events.

Directors:

Company’s applications for waiver of excess remuneration paid to Mr. E Purushotham, Managing Director for the financial years from 2010-2011 to 2013-2014 are still pending with the Central Government.

Mr. E. Purushotham, Managing Director of the Company was re- appointed for a period of 5 (Five) years with effect from 1st April 2017 at AGM held on 04th September, 2017.

Mr. E. Swapnil, Executive Director and Chief Financial Officer (CFO) of the Company was re- appointed for a period of 5 (Five) years with effect from 1st June, 2017 at AGM held on 04th September, 2017.

Mr. E. Swapnil is retiring by rotation and being eligible offers himself for reappointment. You are requested to appoint him.

As required under the SEBI Regulations, particulars of Directors seeking reappointment at the ensuing Annual General Meeting have been given under Corporate Governance Report.

None of the Directors are disqualified from being appointed as Directors, as specified in Section 164 of the Companies Act, 2013.

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 their confirmation to adherence to Code of Conduct .

Board Evaluation:

Pursuant to the provisions of the Companies Act, 2013, the Board has carried out annual performance evaluation of its own performance and of other Committees on the basis of participation of directors, quality of information available, quality of discussions, contributions and decision making etc. The overall performance of the members of the Board was found satisfactory. The performance evaluation of Independent Directors was done by the entire Board of Directors and Directors subject to evaluation had not participated in the same. The Independent Directors evaluated performance of non independent Directors and board as a whole.

Nomination and Remuneration policy and evaluation criteria of Independent Directors:

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Key Managerial Personnel, Senior Management and their remuneration and evaluation criteria for performance evaluation of Independent Directors. The Nomination and Remuneration Policy and evaluation criteria of Independent Directors have been provided under Corporate Governance Report.

Audit Committee:

Composition of Audit Committee and terms of reference are given in the Corporate Governance Report.

Details in Respect of Adequacy of Internal Financial Controls with reference to the Financial Statements:

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Auditor reports to the Chairman of the Audit Committee of the Board.

Directors’ Responsibility Statement:

Pursuant to the requirement under Section 134 (5) of the Companies Act, 2013 (the "Act") with respect to Directors’ Responsibility Statement, it is hereby confirmed that:

(a) in the preparation of the annual accounts for the financial year ended 31st March, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year ended 31st March, 2018 and of the loss of the company for the year ended on that date;

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

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

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

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

Meeting of Board and Committees of Directors

During the year 6 Board Meetings and 6 Audit Committee Meetings were convened and held. The details of the same along with other Committee’s of Board are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

Auditors

In the 28th Annual General Meeting held on 04th September, 2017, M/s. N. R. Waghchaure & Associates., Chartered Accountants, Solapur (Reg.No.: 114999W) have been appointed Statutory Auditors of the Company for a period of 5 years .

Although under Companies (Amendment) Act, 2017, ratification of the members has been dispensed with, company has obtained confirmation from the said Auditors about their eligibility to continue to hold the office during the current financial year.

Auditors’ Report

There are no adverse remarks/ modified opinions in the Auditors Report.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. H. R. Thakur, Practicing Company Secretary, Mumbai to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as "Annexure I". The findings of Secretarial Audit were satisfactory.

Cost Audit

For Financial Year 2017-2018, the Company had re-appointed M/s. Shrinivas Diddi and Associates, Cost Accountants, Solapur for conducting cost audit.

Members are requested to confirm the appointment and remuneration of the Cost Auditor for the Financial Year 2018-19.

Particulars of Employees:

The information required pursuant to Section 197 read with Rule 5 (1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is given below.

Disclosures required with respect to Section 197(12) of the Companies Act, 2013:-

The ratio of the remuneration of each director to the median employee’s remuneration (MRE) and such other details in terms of Section 197(12) read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

a. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:

Name of the Directors	Ratio to median remuneration
Non- executive Directors
Mrs. E. Vaishnavi	Nil
Mr. J.H. Ranade	Nil
Dr. K. Ramaswamy	Nil
Mr. Kashinath Revappa Dhole	Nil
Exective Directors
Mr. E. Purushotham	57.11
Mr. E. Swapnil	38.07

*Sitting fees paid to Non Executive Directors not considered as remuneration.

b. The percentage increase in remuneration of each director, chief executive officer, chief financial officer, company secretary in the financial year:

Directors Chief Executive officer, Chief Financial Officer	% Increase in remuneration
& Company Secretary	in Financial Year
Mr. E. Purushotham	—
Mr. E. Swapnil	55.55%

c. The percentage increase in the median remuneration of employees in the financial year: 13.31%

d. The number of permanent employees on the rolls of Company: 152

e. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: NA

f. Affirmation that the remuneration is as per the remuneration policy of the Company: The Company affirms remuneration is as per the remuneration policy of the Company.

The information required pursuant to Section 197 read with Rule 5 (2) and 5 (3) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not applicable as the Company had no employees who were in receipt of remuneration of not less than Rs. 1,02,00,000/- per annum, if employed for full year or not less than Rs. 8,50,000/- per month during any part of the Financial Year .

Corporate Social Responsibility (CSR)

The Company has adopted CSR Policy upon recommendations of CSR Committee as per provisions of the Act. In view of past losses, Company was not required to spend on CSR during the financial year 2015 - 2016 ,2016-2017 and 2017-2018.

The Annual Report on CSR activities forming part of this Board’s report is annexed herewith as "Annexure-II"

Highlights of the CSR Policy:

Company will operate CSR Policy in the areas of education, healthcare, sanitation and hygiene. Arising from this the focus areas that have emerged are Education, Health care, Sustainable livelihood and espousing social causes, projects shall be identified and adopted as per the activities included and amended from time to time in Schedule VII of the Companies Act, 2013.

Code of Ethics / Vigil Mechanism / Whistle Blower Policy

The Company has a vigil mechanism named Whistle Blower Policy to deal with instances of fraud and mismanagement, if any. The objective of the Policy is to explain and encourage the directors and employees to raise any concern about the Company’s operations and working environment, including possible breaches of Company’s policies and standards or values or any laws within the country or elsewhere, without fear of adverse managerial action being taken against such employees.

Particulars of Loans, Guarantees or Investments

Company did not give any loans, guarantees and make any Investment covered under the provisions of Section 186 of the Companies Act, 2013.

Related Party Transactions:

All related party transactions that were entered into during the financial year were on an arm’s length basis and were in the ordinary course of business. There were no materially significant related party transactions made by the Company during the financial year with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval.

The policy on related party transactions as approved by the Board is uploaded on the Company’s website www.smruthiorganics.com.

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

As required by the Companies (Accounts) Rules, 2014, the relevant information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgoings respectively, is given in the "Annexure III" to this report.

Risk Management Policy

The Company is aware of the risks associated with the business. It regularly analyses and takes corrective actions for managing / mitigating the same. Your Company’s Risk management framework ensures compliance with the provisions of Regulation 21 of Securities and Exchange board of India (Listing obligations and disclosure requirements) Regulations, 2015.

Corporate Governance

A detailed Report on Corporate Governance is given as a part of Annual Report. The Company is in full compliance with the requirements and disclosures that have to be made in this regard. The Certificate of the compliance with Corporate Governance requirements by the Company issued by the Statutory Auditors attached to the Report on Corporate Governance.

Extract of the Annual Return

Pursuant to Section 92(3) of the Companies Act, 2013, the extract of the Annual Return in Form No. MGT-9 forms part of this Board’s Report and is enclosed as "Annexure IV".

Significant and Material Orders passed by the Regulators/ Courts, if any

No significant or material orders were passed by the regulators or courts which impact the going concern status of the Company’s operations in future.

Acknowledgment

The Board wishes to place on record its appreciation of sincere efforts put in by the employees of the Company, in helping it reach its current growth levels. Your Directors place on record their appreciation for the support and assistance received from the investors, customers, vendors, bankers, financial institutions, business associates, regulatory and governmental authorities.

For & on behalf of the Board

Place : Solapur (E. Purushotham)

Date : 19th May 2018 Chairman & Managing Director

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Mar 31, 2016

Dear Members,

The Directors are pleased to present the 27th Annual Report and the Audited Financial Statements for the financial year ended 31st March, 2016.

(Rs. in Lacs)

Financial Results	Current Year 2015-2016	Previous Year 2014-2015
Net Sales & Other Income	7302.97	7496.95
Profit before Interest & Depreciation	1104.31	479.79
Interest	512.27	565.07
Depreciation	432.99	480.38
Profit / (Loss) before tax	159.05	(565.66)
Less : Provision for Tax (Net) DTA / (DTL)	(86.71)	184.30
Profit / (Loss) After Tax	72.34	(381.36)
Balance bought forward from last year	Nil	Nil
Balance available for Appropriation	Nil	Nil
Appropriations :
Corporate Dividend Tax	Nil	Nil
General Reserve	Nil	Nil
Balance Carried Forward	Nil	Nil
Balance profit carried forward to next year	Nil	Nil

Operational Performance/State of Company''s Affairs

During the year under review, total income of the Company was Rs. 7302.97 Lacs as compared to Rs.7496.95 Lacs during previous year, registering a marginal decrease of 2.59%. The company stopped manufacturing and marketing of one low-margin product, which has resulted in loss in top line. However, the other products registered growth and compensated for the loss in revenue. In spite of this decrease in revenue the Company posted net profit of Rs. 72.34 lacs as against loss of Rs.381.36 lacs in the previous year. In addition, at an operating level, the company''s performance improved substantially primarily on account of reduction in prices of raw materials and overall improvement in plant productivity and efficiencies.

A detailed overview has been provided under Management Discussion and Analysis Report.

During the year under review there was no change in the Share Capital Structure.

Dividend

In view of inadequate profits, Directors do not recommend any dividend.

Reserves

During the year under the review, entire net profit of Rs. 72.34 lacs has been carried forward to the next year as surplus.

Deposits

During the year under review, your Company neither accepted nor renewed any fixed deposits falling under provision of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014.

HUMAN RESOURCE DEVELOPMENT (HRD) & INDUSTRIAL RELATIONS:

In April 2015 a small group of workmen resorted to illegal strike, which resulted in minor production disruption for about a week. However, the majority of the workers continued to work and streamlined production in the shortest period. Since then the production is continuing smoothly. Barring this incident and except a small section of workmen who are still non-cooperative to the management, the Company continues to have cordial and harmonious relations with its employees. Your Directors place on record their appreciation for the commitment, dedication and hard work put in by the employees of the Company during testing times.

The Company is in the process of implementing a revised HRD program for developing better labour relationships. The company has adopted new policies to recruit, develop and retain skilled manpower. With an aim to expand product range and operations, the Company has made several new appointments to its existing team in various departments.

QUALITY, SAFETY & ENVIRONMENT:

The Company has appointed an experienced and accomplished professional to head the Quality Assurance function. Under his supervision, the quality team is actively engaged in overhauling quality systems and procedures to improve regulatory compliance. The company has also initiated efforts to register its products in regulated markets. The company is taking steps in the right direction to resume its supplies to regulated markets.

The company has successfully completed the expansion of effluent treatment facilities in FY 2014 - 15. The company is working continuously to reduce waste generation and environmental load. In addition, the company is engaging and training employees to continuously improve working practices to meet zero accident level.

RESEARCH AND DEVELOPMENT (R&D)

R&D investment was higher in FY 2015 - 16 in comparison to the previous financial year. However, as the company''s financial performance is improving, the company is increasing its R&D spends in the next financial year to develop new products and improve processes of existing products.

CORPORATE GOVERNANCE

The Company has complied with the mandatory requirements of the code of Corporate Governance as detailed in clause 17 to 27 of the SEBI (Listing Obligations And Disclosure Requirements) Regulations, 2015.

Corporate Governance Report is enclosed as a part of the Annual Report along with the certificate from the Statutory Auditors, M/s. Ashok Madgundi & Co, Chartered Accountants, Solapur confirming compliance of the code of Corporate Governance as stipulated para E of schedule V of the Securities and Exchange Board of India (Listing obligations and Disclosure requirements) Regulations, 2015.

MANAGEMENT DISCUSSION AND ANALYSIS Business of the Company and Future Outlook:

The company continues to be driven by focus on improving profitability. The company''s product portfolio rationalization and marketing focus on high margin products, which was initiated in the previous financial year, has delivered good results at the profitability level in the current financial year. Although product portfolio rationalization has had a slight negative impact on sales, the impact on operating margin and bottom line is significantly positive in the current financial year of 2015 - 16.

The company has also had significant successes in reducing cost through process and operational improvement. The company''s measures to reduce operating costs under taken in the current FY 2015 - 16 have borne fruit, which has directly contributed to the bottom line. The company is increasing its efforts to work on cost reduction and is seeing good progress in this direction.

With the improvement in the company''s financial performance, the company is expecting reduction in its cost of capital. Given no significant plans to raise additional debt, the company is placed in a very strong position to improve its P&L due to reduced cost of capital and balance sheet due to reduced debt.

The company is actively pursuing three key avenues for not only boosting growth in sales but also more importantly accelerating growth in profitability:

1. Volume Push: The addition of new customers over FY 2015 - 16 will enable the company to achieve significant volume growth of key products going forward. Any incremental volume growth over FY 2015 -16 will contribute directly to the bottom line, thus taking the company in the direction of higher profitability.

2. Regulated Markets: The company is applying to European Directorate for Quality of Medicines (EDQM) for Certificate of Suitability (COS) for its key products. Upon successful approval from EDQM, the company shall be able to open up new markets such EU and allied markets such as Turkey and some Middle Eastern countries. The access to these markets will result in realization of higher margins due to premium pricing dynamics of these markets.

3. New Products: The company is developing several new products to be launched this FY 2016 - 17 through investments in internal as well as external R&D. Although the product pipeline has the potential to boost sales in the short to medium term, they are more likely to provide a robust base for long term growth of the company.

Opportunities & Threats:

Regulated markets of EU and allied markets such as Turkey and some Middle Eastern countries offer tremendous opportunity for overall growth of the company. The company is actively pursuing this opportunity by working towards gaining access to these markets. The company is in the process of inviting EU regulatory bodies for granting approval to its facilities, which will allow the company to supply its products to these markets.

The market of Metformin HCl, one of the company''s key product, is showing robust growth year on year. However, increased competition and aggressive marketing push by competitors has put negative pressure of prices of Metformin HCl in current markets catered by the company. The company is de-risking itself by entering new markets such as EU, Latin America, etc., which will not only reduce the threat of lower prices but also boost volume growth.

INTERNAL CONTROL SYSTEMS: The Company has adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. However, to improve these systems, the company is planning to implement a suitable ERP system in FY 2016 - 17.

FINANCIAL PERFORMANCE: The Financial results and performance for the year are elaborated above in this Report.

CAUTIONARY STATEMENT: Certain statements, estimates and expectations stated in this Management Discussion and Analysis are based on the current perceptions, data and information available with the Company and may be ''forward - looking statements'' within the meaning of applicable securities, laws and regulations.

They reflect the company''s current views of future events which are subject to risks and uncertainties, Important factors such as change in the competition scenario in the Company''s areas of operations, economic conditions affecting demand/supply and prices situation in the domestic and international market, changes in government regulations, tax laws and other incidental factors may cause actual results to be materially different. The company assumes no responsibility to publicly amend, modify or revise any forward looking statements on the basis of any subsequent development, information or events.

Directors:

Company''s applications for waiver of excess remuneration paid to Mr. E. Purushotham, Managing Director for the financial years from 2010-11 to 2013-14 are pending with the Central Government. The Company is hopeful of receiving approval of the government during the financial year.

Mr. E. Swapnil is retiring by rotation and being eligible offers himself for reappointment. You are requested to appoint him.

As required under the SEBI Regulations, particulars of Directors seeking reappointment at the ensuing Annual General Meeting have been given under Corporate Governance Report.

None of the Directors are disqualified from being appointed as Directors, as specified in Section 164 of the Companies Act, 2013.

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.

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Key Managerial Personnel, Senior Management and their remuneration and evaluation criteria for performance evaluation of Independent Directors. The Nomination and Remuneration Policy and evaluation criteria of Independent Directors have been provided under Corporate Governance Report.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013, the Board has carried out annual performance evaluation of its own performance and of other Committees on the basis of participation of directors, quality of information available, quality of discussions, contributions and decision making etc. The overall performance of the members of the Board was found satisfactory.

AUDIT COMMITTEE

Composition of Audit Committee and terms of reference are given in the Corporate Governance Report.

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Key Managerial Personnel, Senior Management and their remuneration and evaluation criteria for performance evaluation of Independent Directors. The Nomination and Remuneration Policy and evaluation criteria of Independent Directors have been provided under Corporate Governance Report.

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

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Auditor reports to the Chairman of the Audit Committee of the Board.

Directors'' Responsibility Statement

Pursuant to the requirement Under section 134 (5) of the Companies Act, 2013 (the "Act") with respect to Directors'' Responsibility Statement, it is hereby confirmed that:

(a) in the preparation of the annual accounts for the financial year ended 31st March, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year ended 31st March, 2016 and of the profit and loss of the company for the year ended on that date;

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

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

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

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

Meeting of Board and Committees of Directors

During the year 7 Board Meetings and 5 Audit Committee Meetings were convened and held. The details of the same along with other Committee''s of Board are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

Approval of Resolution through Postal Ballot:-

During the year the Company sought approval of the members for waiver of excess remuneration paid to the Managing Director for Financial Years 2011-12 to 2012-13 through Postal Ballot. The resolution was passed with requisite majority.

Auditors

Ashok Madgundi & Co., Chartered Accountants Solapur (FR No. 100668W), retire as Statutory Auditors at the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received a letter from the retiring Auditors to the effect that their appointment as Statutory Auditors, if made, would be within the limits prescribed u/s 141 of the Companies Act, 2013.

Members are requested to consider and re-appoint Ashok Madgundi & Co., Chartered Accountants Solapur, as the Statutory Auditors of the Company from the ensuing Annual General Meeting till the conclusion of next Annual General Meeting.

Auditors'' Report

The observations made in the Auditors'' Report are self-explanatory and do not call for any further comments Under section 134(3) (f) of the Companies Act, 2013.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. H. R. Thakur, Practicing Company Secretary Mumbai to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as "Annexure I". The findings of Secretarial Audit were satisfactory.

Cost Audit

For Financial Year 2015-2016, the Company had re-appointed M/s. Shrinivas Diddi and Associates, Cost

Accountants, Solapur for conducting cost audit. Cost audit report has been filed with MCA. Members are requested to confirm the appointment and remuneration of the Cost Auditor for the Financial Year 2016-17.

Particulars of employees

The information required pursuant to Section 197 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Financial Statements are being sent to the Members and others entitled hereto, excluding the information on employees'' particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company in this regard.

Corporate Social Responsibility (CSR)

The Company has adopted CSR Policy upon recommendations of CSR Committee. As per provisions of the Act, Company was not required to spend on CSR during the financial year 2015 - 16. However as the Company was continuously making losses for the past 3 years prior to the year under Report and the resultant severe cash crunch, the Company was unable to spend Rs. 22.14 Lacs due on CSR activities for financial year 2014-15.

The Annual Report on CSR activities forming part of this Board''s report is annexed herewith as Annexure- II. Highlights of the CSR policy:

In the initial period, Company will operate CSR Policy in the areas of education, healthcare, sanitation and hygiene. Arising from this the focus areas that have emerged are Education, Health care, Sustainable livelihood and espousing social causes, projects shall be identified and adopted as per the activities included and amended from time to time in Schedule VII of the Companies Act, 2013.

Code of Ethics / Vigil Mechanism / Whistle Blower Policy

The Company has a vigil mechanism named Whistle Blower Policy to deal with instances of fraud and mismanagement, if any. The objective of the Policy is to explain and encourage the directors and employees to raise any concern about the Company''s operations and working environment, including possible breaches of Company''s policies and standards or values or any laws within the country or elsewhere, without fear of adverse managerial action being taken against such employees.

Particulars of Loans, Guarantees or Investments

Company did not give any loans, guarantees and make any Investment covered under the provisions of Section 186 of the Companies Act, 2013.

Related Party Transactions:

All related party transactions that were entered into during the financial year were on an arm''s length basis and were in the ordinary course of business. There were no materially significant related party transactions made by the Company during the financial year with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval.

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

As required by the Companies (Accounts) Rules, 2014, the relevant information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgoings respectively, is given in the Annexure III to this report.

Risk Management Policy

The Company is aware of the risks associated with the business. It regularly analyses and takes corrective actions for managing / mitigating the same. Your Company''s Risk management framework ensures compliance with the provisions of Clause 21 of Securities and Exchange board of India (Listing obligations and disclosure requirements) Regulations, 2015

Corporate Governance

A detailed Report on Corporate Governance is given as a part of Annual Report. The Company is in full compliance with the requirements and disclosures that have to be made in this regard. The Certificate of the compliance with Corporate Governance requirements by the Company issued by the Statutory Auditors attached to the Report on Corporate Governance.

Extract of the Annual Return

Pursuant to section 92(3) of the Companies Act, 2013, the extract of the annual return in Form No. MGT - 9 forms part of this Board''s report and is enclosed as Annexure- IV

General

No significant or material orders were passed by the regulators or courts which impact the going concern status of the Company''s operations in future.

Acknowledgment

The Board wishes to place on record its appreciation of sincere efforts put in by the employees of the Company, in helping it reach its current growth levels. Your Directors place on record their appreciation for the support and assistance received from the investors, customers, vendors, bankers, financial institutions, business associates, regulatory and governmental authorities.

For & on behalf of the Board

Sd/- Sd/-

^{ace :} o apur (e. Purushotham) (E. Swapnil)

Date : 28th April, 2016 Chairman & Managing Director Whole-time Director

and CFO

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Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting their 26th Annual Report and The Audited Financial Statements for the financial year ended 31st March, 2015.

(Rs. in Lacs) Current Year Previous Year Financial Results 2014-2015 2013-2014

Net Sales & Other Income 7496.95 9233.55

Profit before Interest & Depreciation 479.79 210.57

Interest 565.07 518.68

Depreciation 480.38 598.57

Profit / (Loss) before tax (565.66) (906.68)

Less : Provision for Tax (Net)DTA/(DTL) 184.30 314.29

Profit / (Loss) After Tax (381.36) (615.19)

Balance bought forward from last year Nil Nil

Balance available for Appropriation Nil Nil

Appropriations :

Corporate Dividend Tax Nil Nil

General Reserve Nil Nil

Balance Carried Forward Nil Nil

Balance profit carried forward to next year Nil Nil

Operational Performance/State of Company's Affairs

During the year under review, total income of the Company was Rs. 7496.95 Lacs as compared to Rs. 9233.55 Lacs during previous year, registering a decrease of 19%. There was a substantial loss of sale on account of stoppage of production for 3 months due to labour strike. In addition, Ciprofloxacin manufacturing was discontinued and Norfloxacin output was cut down, which also contributed to drop in sales.

The Company posted net loss of Rs. 381.36 lacs as against Rs. 615.19 lacs in the previous year. At an operating level, the company's performance improved substantially in the last quarter due to boost in volume. For the last quarter, the company also witnessed margin improvement due to discontinuation of loss making products. In addition, recalculation of depreciation as per provisions of Schedule II of the Companies Act 2013 also added to the bottom line.

A detailed overview has been provided under Management Discussion and Analysis Report.

During the year under review there was no change in the Share Capital Structure.

Dividend

In view of losses Directors do not recommend any dividend.

Reserves

During the year under the review, the reserves of the Company have decreased from Rs. 3120.00 lacs to Rs. 2565.15 lacs on account of yearly loss and absorption of arrears of depreciation for a period upto 31st March 2014. As required under provisions of the New Companies Act 2013.

Deposits

During the year under review, your Company neither accepted nor renewed any fixed deposits falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014.

HUMAN RESOURCE DEVELOPMENT (HRD) & INDUSTRIAL RELATIONS:

During the year workmen resorted to illegal strike at both the plants for a period of about 3 months from August 2014 to November 2014. After discussion with management, the workmen called off the strike and resumed their duties. The Company continues to have cordial and harmonious relations with its employees except a small section of workmen who are still non-cooperative to the management. Your Directors place on record their appreciation for the commitment, dedication and hard work put in by the employees of the Company during testing times.

A small group of workmen had called for an illegal strike on April 13, 2015, which was not supported by the majority of the workmen. Most of the workmen have joined their duties gradually and both the management and workmen have entered into a multi-year contract. The company's operations at both plants have improved and reached normalcy. Although, an insignificant minority of workmen continue to remain on strike, there shall be no significant adverse material impact on company's working and financial performance going forward due to labour issues.

The Company has made substantial changes in its HRD Program to develop better labour relationships. The company has also adopted new policies to procure, develop and retain skilled manpower. With an aim to expand product range and operations, the Company has made several new appointments to its existing team in various departments.

QUALITY, SAFETY & ENVIRONMENT:

The Company has appointed an accomplished professional to head the Quality Assurance function. Under

his active participation, the quality team is actively engaged in overhauling quality systems and procedures to improve regulatory compliance. The company has also initiated efforts to register its products in regulated markets. The company is taking steps in the right direction to resume its supplies to regulated markets.

The company has successfully completed the expansion of effluent treatment facilities in FY 2014 - 15. The company is working continuously to reduce waste generation and environmental load. In addition, the company is engaging and training employees to continuously improve working practices to meet zero accident level.

RESEARCH AND DEVELOPMENT (R&D)

R&D investment was cut down in FY 2014 - 15 due to financial constraints. However, as the company's financial performance is improving, the company is increasing its R&D spends in the next financial year to develop new products and improve processes of existing products.

CORPORATE GOVERNANCE

The Company has complied with the mandatory requirements of the code of Corporate Governance as detailed in clause 49 of the Listing Agreement.

Corporate Governance Report is enclosed as a part of the Annual Report along with the certificate from the Statutory Auditors, M/s. Ashok Madgundi & Co, Chartered Accountants, Solapur confirming compliance of the code of Corporate Governance as stipulated in clause 49 of the Listing Agreement.

Directors

At the 25th Annual General Meeting held on 27th September 2014 Mr. J. H. Ranade, Dr. K. Ramaswamy and Mr. K. R. Dhole were appointed as Independent Directors for a period of 5 years. Company has received declarations from the Independent Directors affirming Compliance of provisions of section 149(6) of the Companies Act 2013.

Mr. E. Purushotham Managing Director was appointed on revised terms and conditions for a period of three years from 1st April 2014 to 31st March 2017.

Company had applied to the Central Government for waiver of recovery of excess remuneration paid to Mr. E. Purushotham during financial year 2013-14. The Company has since received a communication from Central Government declining its request for waiver. Company being Confident of the merits of its case it is proposed to approach the Central Government for Waiver once again and accordingly the resolution is proposed for your consideration.

Mr. E Swapnil Executive Director was appointed as Key Managerial Person (KMP) and re-designated as Executive Director and Chief Financial Officer (CFO).

As the present term of appointment of Mr. E. Swapnil, Executive Director ends on 14th Jun 2015, he has been appointed by the Board of Directors on revised terms and conditions upon recommendation of Nomination and Remuneration Committee. Resolution for renewal of his appointment for the period from 01stJune 2015 to 31stMay, 2018 is being placed before the members for approval of the members.

Mrs. E. Vaishnavi is retiring by rotation and being eligible offers herself for reappointment. You are requested to appoint her.

As required under the Listing Agreement, particulars of Directors seeking reappointment at the ensuing Annual General Meeting have been given under Corporate Governance Report.

AUDIT COMMITTEE

Composition of Audit Committee and terms of reference are given in the Corporate Governance Report.

Nomination and Remuneration Policy and Evaluation criteria of Board of Directors including Independent Directors

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Key Managerial Personnel, Senior Management and their remuneration and evaluation criteria for performance evaluation of Independent Directors. The Nomination and Remuneration Policy and evaluation criteria of Independent Directors have been provided under Corporate Governance Report.

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

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Auditor reports to the Chairman of the Audit Committee of the Board.

Directors' Responsibility Statement

Pursuant to the requirement u/s 134(3)(c) of the Companies Act, 2013(the "Act") with respect to Directors' Responsibility Statement, it is hereby confirmed that:

(a) in the preparation of the annual accounts for the financial year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures;

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

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

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

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

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

Meeting of Board and Committees of Directors

During the year 6 Board Meetings and Audit Committee Meetings were convened and held. The details of the same along with other Committee's of Board are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

Auditors

Ashok Madgundi &Co., Chartered Accountants Solapur(FR No. 100668W), retire as Statutory Auditors at the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received a letter from the retiring Auditors to the effect that their appointment as Statutory Auditors, if made, would be within the limits prescribed u/s 141 of the Companies Act, 2013.

Members are requested to consider and re-appoint Ashok Madgundi & Co., Chartered Accountants Solapur, as the Statutory Auditors of the Company from the ensuing Annual General Meeting till the conclusion of next Annual General Meeting.

Auditors' Report

The observations made in the Auditors' Report are self-explanatory and do not call for any further comments u/s 134(3)(f) of the Companies Act, 2013.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. H. R. Thakur, Practicing Company Secretary Mumbai to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as "Annexure I".

As regards remarks of the Secretarial Auditor on non uploading of various policies on the Company's Website, the delay occurred due to technical problems with the vendor and the management is taking urgent steps to have such policies on the website.

Cost Audit

For financial year 2014-2015, the Company had re-appointed Shrinivas Diddi and Associates, Cost Accountants, Solapur for conducting cost audit. Cost audit report has been filed with MCA. Members are requested to confirm the appointment and remuneration of the Cost Auditor for the financial year 2015-16.

Particulars of Employees

The information required pursuant to Section 197 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel)Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Financial Statements are being sent to the Members and others entitled hereto, excluding the information on employees' particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.

Corporate Social Responsibility (CSR)

The Company has adopted CSR Policy upon recommendations of CSR Committee. As per provisions of the Act, Company was required to spend Rs. 22.14 lacs during the financial year 2014 - 15. However as the Company has been continuously making losses for the past 3 years and the resultant severe cash crunch, the Company was unable to spend any amount on CSR activities.

Highlights of the CSR policy:

In the initial period, Company will operate CSR Policy in the areas of education, healthcare, sanitation and hygiene. Arising from this the focus areas that have emerged are Education, Health care, Sustainable livelihood and espousing social causes, projects shall be identified and adopted as per the activities included and amended from time to time in Schedule VII of the Companies Act, 2013.

Code of Ethics / Vigil Mechanism / Whistle Blower Policy

The Company has a vigil mechanism named Whistle Blower Policy to deal with instances of fraud and mismanagement, if any. The objective of the Policy is to explain and encourage the directors and employees to raise any concern about the Company's operations and working environment, including possible breaches of Company's policies and standards or values or any laws within the country or elsewhere, without fear of adverse managerial action being taken against such employees.

Particulars of Loans, Guarantees or Investments

Company did not give any loans, guarantees and make any Investment covered under the provisions of Section 186 of the Companies Act, 2013.

Related Party Transactions:

All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There were no materially significant related party transactions made by the Company during the financial year with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval.

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

As required by the Companies (Accounts) Rules, 2014, the relevant information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgoings respectively, is given in the Annexure II to this report.

Risk Management Policy

The Company is aware of the risks associated with the business. It regularly analyses and takes corrective actions for managing / mitigating the same. Your Company's Risk management framework ensures compliance with the provisions of Clause 49 of the Listing Agreement.

Corporate Governance

As required under Clause 49 of the Listing Agreement, a detailed Report on Corporate Governance is given as a part of Annual Report. The Company is in full compliance with the requirements and disclosures that have to be made in this regard. The Certificate of the compliance with Corporate Governance requirements by the Company issued by the Statutory Auditors attached to the Report on Corporate Governance.

Extract of the Annual Return

Pursuant to section 92(3) of the Companies Act, 2013, the extract of the annual return in Form No. MGT - 9 forms part of this Board's report and is enclosed as Annexure- III

General

No significant or material orders were passed by the regulators or courts which impact the going concern status of the Company's operations in future.

Acknowledgment

The Board wishes to place on record its appreciation of sincere efforts put in by the employees of the Company, in helping it reach its current growth levels. Your Directors place on record their appreciation for the support and assistance received from the investors, customers, vendors, bankers, financial institutions, business associates, regulatory and governmental authorities.

For & on behalf of the Board Place : Solapur Sd/ (E. Purushotham) Date : 10th June 2015 Chairman & Managing Director

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Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting their 25th Annual Report and Audited Statements of Account for the financial year ended 31st March, 2014.

(Rs. in Lacs)

Current Year Previous Year Financial Results 2013-2014 2012-2013

Gross Sales 10076.02 18558.34

Net Sales & Other Income 9233.55 18046.60

Operating Profit before 210.57 1939.07

Interest & Depreciation

Less : Interest 518.68 401.73

Gross Profit / (Loss) (308.11) 1537.34

Less : Depreciation 598.57 529.07 Profit / (Loss) Before Tax (906.68) 1008.27

Less : Provision for Taxation 0.00 222.00

Less : Deferred Tax Assets / 314.29 151.00 (Liability)

Profit / (Loss) After Tax (592.39) 635.27

Less : Dividend & Dividend Tax 0.00 89.28

Less : Income Tax (12-13) (22.80) 0.00

Add : (Short)/Excess I.T. Provision 0.59 (6.96)

Less : Transfer to General Reserve 0.00 63.53

Add : Balance in Profit & Loss A/c.

Brought forward 3191.18 2715.67

Balance carried to Balance Sheet 2576.58 3191.18

a) Sales:- The Gross Sales for the year amounted to Rs. 10076.02 lacs as against Rs. 18558.34 lacs for the previous year, showing decrease of 46%. The production quantity for the year was 1552 MTs as against 1863 MTs in the previous year showing decrease of about 17%

b) Exports:- Exports for the year stood at Rs.2977 lacs as compared to Rs. 4208 lacs for the year ended on 31st March 2013. The Company has registered decrease of 29.25% compared to the previous year.

c) Profitability :- Due to substantial drop in sales, Company posted net loss of Rs. 615.19 lacs as against net profit of Rs. 635.27 lacs in the previous year. The regulatory issues raised during the audit of our facilities by European Directorate Quality Management (EDQM) and USFDA are being sorted out and management is confident of resuming supplies to European and US markets by end of 3rd quarter of the year. Similar regulatory issues are faced even by other large and reputed Indian pharmaceutical and bulk drug manufacturing Companies. Barring unforeseen circumstances the Company is hopeful of at least breaking even during the current financial year.

DIVIDEND

In view of losses Directors regret their inability to recommend to declaration of any Dividend.

HUMAN RESOURCE DEVELOPMENT (HRD) & INDUSTRIAL RELATIONS :

The Company has evolved its own HRD Program so as to upgrade skills and competencies of its people. Training programs both within the Company and with the help of outside experts are being organized at regular intervals.

The company has adopted effective policies to maintain a constant supply of skilled manpower. With increasing product range and operations, the Company has added several new faces to the team with a view to improve operations.

The Company continues to have cordial and harmonious relations with its employees. Employees have been supportive in the business operations. Your Directors place on record their appreciation for the commitment, dedication and hard work put in by the employees of the Company.

QUALITY, SAFETY & ENVIRONMENT :

The Company is actively engaged continuously in upgrading the quality systems by providing a team of Quality Assurance (QA) headed by Executive Director and C.O.O. (QA) and Sr. Manager (QC). QA monitors day-to-day operations as per SOP and continuously improves the facilities to maintain high product and operational quality at our manufacturing sites.

The company has adopted a vision to reduce waste generation and recycle effluents. The company has undertaken expansion of effluent treatment plant in the current fiscal year to achieve this goal. In addition, the company is motivating employees to continuously improve working environment to meet zero accident level.

RESEARCH AND DEVELOPMENT ( R & D)

R & D has been strengthened further by the recruitment of experienced scientists and upgrading the facilities from bench to production levels. Our dedicated team of scientists is working to develop several new products under contract manufacturing tie-ups with Europe, USA and Japan.

DIRECTORS : Mr. E. Swapnil retires by rotation at the Annual General Meeting and being eligible offers himself for re-appointment. Members are requested to reappoint him as the Director of the Company. Dr. Nagendra Yerram, Independent Director resigned from the Board with effect from 27.03.2014 for professional reasons. Directors wish to place on record their appreciation for the guidance provided by Dr. Nagendra Yerram during his tenure. As per provisions of the new Companies Act 2013, Mr. J.H.Ranade and Dr.K. Ramaswamy being present Independent Directors are proposed to be appointed for a period of 5 years. Similarly Mr. K. R. Dhole is proposed to be appointed as new Independent Director. Being in Company''s interest, Directors recommend appointment of Independent Directors for your approval.

Your approval is also required for waiver of excess remuneration paid to Mr. E. Purushotham during the financial year his appointment for a new term & re-designation of Mr. E. Swapnil as a Executive Director and Cheif Finance Officer of the Company.

With induction of new Director, the Company shall constitute Committees and enlarge their terms of reference as required under the provisions of Companies Act 2013 and Clause 49 of the Listing Agreement.

DIRECTORS'' RESPONSIBILITY STATEMENT:

In accordance with the requirements under Section 217 (2AA) of the Companies Act 1956 with respect to the Directors'' Responsibility Statement, it is hereby confirmed:

i. that in the preparation of accounts for the financial year ended on 31st March 2014, the applicable accounting standards have been followed along with proper explanation relating to material departures ;

ii. that the Directors have selected such accounting policies and applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of financial year and of the Profit of the Company for the year under review;

iii. that 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 the preventing and detecting fraud and other irregularities;

iv. that the directors have prepared the annual accounts for the year under review on a going concern basis.

CORPORATE GOVERNANCE

The Company has complied with the mandatory requirements of the code of Corporate Governance as detailed in clause 49 of the Listing Agreement.

Corporate Governance Report is enclosed as a part of the Annual Report along with the certificate from the Statutory Auditors, M/s. Ashok Madgundi & Co, Chartered Accountants, Solapur confirming compliance of the code of Corporate Governance as stipulated in clause 49 of the Listing Agreement.

PARTICULARS OF EMPLOYEES

Particulars of Employees as required U/s 217 (2A) of the Companies Act, 1956 read with the Company''s (Particulars of Employees) Rules 1975, as amended are given in Annexure and forms part of this Report.

COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 :

Information in accordance with Section 217(1) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in the Annexure and forms part of this Report.

SECRETARIAL COMPLIANCE CERTIFICATE : As required under provisions of Section 383 A of the Companies Act 1956 certificate from Mr. H.R. Thakur , Practicing Company Secretary ,Mumbai is given in the Annexure and forms part of this Report.

DEPOSITS : The Company has not accepted/renewed any Fixed deposits from public during the financial year 2013-2014.

COST AUDIT : The company''s cost records are audited by M/s Shriniwas Diddi, Cost Accountants , Solapur. You are requested to approve his appointment for 2014-2015.

AUDITORS : M/s. Ashok Madgundi & Co., Solapur Statutory Auditors of the Company are due to retire at the ensuing Annual General Meeting. Members are requested to consider reappointing them and fix their remuneration.

They reflect the company''s current views of future events which are subject to risks and uncertainties, Important factors such as change in the competition scenario in the Company''s areas of operations, economic conditions affecting demand/supply and prices situation in the domestic and international market, changes in government regulations , tax laws and other incidental factors may cause actual results to be materially different. The company assumes no responsibility to publicly amend, modify or revise any forward looking statements on the basis of any subsequent development, information or events.

APPRECIATION : The Directors wish to place on record their sincere appreciation to the Company''s employees at all levels for their dedicated hard-work and also to the State Bank of India, and Axis Bank , Customers, Suppliers who have actively lent their support to the Company. The Board also expresses their gratitude to the Shareholders for their continued co-operation and support.

For & on behalf of the Board P|ace . Solapur (e. Purushotham) Date : 09th August 2014

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Mar 31, 2013

Dear Members,

The Directors have pleasure in presenting their 24th Annual Report and Audited Statements of Account for the financial year ended 31st March, 2013.

(Rs. in Lacs) Current Year Previous Year

Financial Results 2012-2013 2011-2012

Gross Sales 18558.34 21062.08

Net Sales & Other Income 18046.60 20537.73

Operating Profit before 1939.07 2597.42

Interest & Depreciation

Less : Interest 401.73 540.08

Gross Profit 1537.34 2057.34

Less : Depreciation 529.07 452.96

Profit Before Tax 1008.27 1604.38

Less : Provision for Taxation 222.00 537.40

Less : Deferred Tax 151.00 3.00

Profit After Tax 635.27 1063.98

Less : Dividend & Dividend Tax 89.28 133.92

Add : Income-Tax Refund as per Computation (AY 09-10) 0.00 9.16

Add : Excess Provision 0.88 1.74

Less : Income Tax 09-10 & 10-11 7.84 6.31

Less : Transfer to General Reserve 63.53 106.40

Add : Balance in Profit & Loss A/c. Brought forward 2715.67 1887.40

Balance carried to Balance Sheet 3191.18 2715.67

As reported earlier, company''s expansion project became commercialized from 21st September 2012.

Normal manufacturing operations have however been affected since last quarter of the year on account of suspension of supplies to European Countries which account for around 25% of sales turnover of the company, as a result of audit observations by the Auditors representing European Department of Quality Management (EDQM). The company has already complied with the observations and sent compliance report to the concerned authorities. Inspection by the audit team is awaited. After satisfactory compliance of the observations, company shall be able to recommence manufacturing for European market. Due to good demand from domestic, U.S. and other markets, the drop in sales turnover was limited to 12% compared to the previous year. The current year performance, is similarly expected to suffer as resumption of European supplies is expected to take place before end of this year

a) Sales:- The Gross Sales for the year amounted to Rs. 18558 lacs as against Rs. 21062 lacs for the previous year, showing decrease of 12%. The production quantity for the year also showing decrease of 1863 MTs as against 1938 MTs in the previous year showing decrease of about 4% .

b) Exports:- Exports for the year stood at Rs.4208 lacs as compared to Rs. 4618 lacs for the year ended on 31st March 2012. The Company has registered decrease of 8.88% compared to the previous year.

c) Profits :- Due to drop in sales having good profit margins and increase in Power and fuel and other overheads company registered negative growth of 37.16% and 40.29% in Profit before and after tax respectively over the previous year.

Dividend:

Having regard to the lower disposable profits and need to conserve resources of the company for financing working capital as well as capital expenditure, your Directors recommend lower dividend @20% i.e. Rupees 2/- per share ( as against 30% in the previous year) for the year ended on 31st March 2013, subject to the approval of the Shareholders in Annual General Meeting. The total amount of dividend outgo (inclusive of dividend distribution tax ) will be Rs.89.28 lacs.

Human Resource Development (HRD) & Industrial Relations:

The Company has evolved its own HRD Program so as to upgrade skills and competencies of its people. Training programs both within the Company and with the help of outside experts are being organized at regular intervals.

The company has adopted effective policies to maintain a constant supply of skilled manpower. With increasing product range and operations, the Company has added several new faces to the team with a view to improve operations.

The Company continues to have cordial and harmonious relations with its employees. Employees have been supportive in the business operations. Your Directors place on record their appreciation for the commitment, dedication and hard work put in by the employees of the Company.

Quality, Safety & Environment:

The Company is actively engaged continuously in upgrading the quality systems by providing a team of Quality Assurance (QA) headed by Associated Vice President (QA) and Sr. Manager (QC). QA monitors day-to-day operations as per SOP and continuously improves the facilities to maintain high product and operational quality at our manufacturing sites.

The company has adopted a vision to reduce waste generation and recycle effluents. The company has undertaken expansion of effluent treatment plant in the current fiscal year to achieve this goal. In addition, the company is motivating employees to continuously improve working environment to meet zero accident level.

Research and Development (R & D)

R & D has been strengthened further by the recruitment of experienced scientists and upgrading the facilities from bench to production levels. Our dedicated team of scientists is working to develop several new products under contract manufacturing tie-ups with Europe, USA and Japan.

Directors:

Mr. J.H.Ranade and Mrs. E.Vaishnavi retire by rotation at the Annual General Meeting and being eligible offer themselves for re-appointment. Members are requested to reappoint them as the Directors of the Company.

Effective from 9th February 2013 Mr. E.Swapnil was re-designated by the Board of Directors as Executive Director and Chief Operating Officer, you are requested to confirm his re-designation

Directors'' Responsibility Statement:

In accordance with the requirements under Section 217 (2AA) of the Companies Act 1956 with respect to the Directors'' Responsibility Statement, it is hereby confirmed:

I. that in the preparation of accounts for the financial year ended on 31st March 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures ;

ii. that the Directors have selected such accounting policies and applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of financial year and of the Profit of the Company for the year under review;

iii. that 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 the preventing and detecting fraud and other irregularities;

iv. that the directors have prepared the annual accounts for the year under review on a going concern basis.

Corporate Governance

The Company has complied with the mandatory requirements of the code of Corporate Governance as detailed in clause 49 of the Listing Agreement.

Corporate Governance Report is enclosed as a part of the Annual Report along with the certificate from the Statutory Auditors, M/s. Ashok Madgundi & Co, Chartered Accountants, Solapur confirming compliance of the code of Corporate Governance as stipulated in clause 49 of the Listing Agreement.

Particulars Of Employees:

Particulars of Employees as required U/s 217 (2A) of the Companies Act, 1956 read with the Company''s (Particulars of Employees) Rules 1975, as amended are given in Annexure and forms part of this Report.

Companies (Disclosure Of Particulars In The Report Of The Board Of Directors) Rules, 1988:

Information in accordance with Section 217(1) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in the Annexure and forms part of this Report.

Secretarial Compliance Certificate

As required under provisions of Section 383 A of the Companies Act 1956 certificate from Mr. H.R. Thakur , Practicing Company Secretary, Mumbai is given in the Annexure and forms part of this Report.

Deposits:

The Company has not accepted/renewed any Fixed deposits from public during the financial year 2012-2013.

Cost Audit

The company''s cost records are audited by M/s Shriniwas Diddi, Cost Accountants , Solapur.

Auditors:

M/s. Ashok Madgundi & Co., Solapur Statutory Auditors of the Company are due to retire at the ensuing Annual General Meeting. Members are requested to consider reappointing them and fix their remuneration.

APPRECIATION:

The Directors wish to place on record their sincere appreciation to the Company''s employees at all levels for their dedicated hard-work and also to the State Bank of India, and other institutions, Customers, Suppliers who have actively lent their support to the Company. The Director also expresses their gratitude to the Shareholders for their continued co-operation and support.

For & on behalf of the Board

sd/-

Place : Solapur (E. Purushotham)

Date : 25th May 2013 Chairman & Managing Director

---

Mar 31, 2012

The Directors have pleasure in presenting their 23rd Annual Report and Audited Statements of Account for the Financial year ended 31st March, 2012.

(Rs. in Lacs)

Current Year Previous Year Financial Results 2011-2012 2010-2011

Gross Sales 21062.08 16229.28

Net Sales & Other Income 20537.73 15757.35

Operating Profit before 2597.42 2201.87 Interest & Depreciation

Less : Interest 540.08 442.51

Gross Profit 2057.34 1759.36

Less : Depreciation 452.96 398.17

Profit Before Tax 1604.38 1361.19

Less : Provision for Taxation 537.40 326.59

Less : Deferred Tax 3.00 64.51

Profit After Tax 1063.98 970.09

Less : Dividend & Dividend Tax 133.92 111.60

Add : Income-Tax Refund as per 9.16 11.70

Computation (AY 09-10)

Add : MAT Set-off (AY 09-10) 00.00 18.53

Add : Excess Provision 1.74 2.94

Less : Income Tax 09-10 & 10-11 6.31 0.00

Less : Transfer to General Reserve 106.40 97.00

Add : Balance in Profit & Loss A/c. Brought forward 1887.40 1092.74

Balance carried to Balance Sheet 2715.65 1887.40

The Company has posted excellent results showing all round increase in sales turnover, production and profitability.

a) Sales: - The Gross Sales for the year amounted to Rs. 21062 Lacs as against Rs. 16229 Lacs for the previous year, showing increase of 30%. The production quantity for the year showing increase of 1938 MTs as against 1437 MTs in the previous year showing increase of 35% .

b) Exports: Exports for the year stood at Rs.4618 Lacs as compared to Rs. 2906 Lacs for the year ended on 31st March 2011. The Company has registered an increase of 59% compared to the previous year.

c) Profits :- Despite increase in Raw material cost and other overheads, Company could register growth of 17.87 % & 9.68% in Profit before & after tax respectively over the previous year.

Directors hope that with ongoing expansion project expected to be commissioned by July 2012, Company shall be able to register substantial growth in production, turnover and profits. Additional capacity shall considerably go to reduce the lead time for delivering new products and also supply the existing products on much larger scale.

DIVIDEND

Having regard to the substantial increase in disposable profits yet need to conserve resources of the Company for financing Working Capital as well as capital expenditure, your Directors recommend dividend @30% i.e. Rupees 3/- per share ( as against 25% in the previous year) for the year ended on 31st March, 2012, subject to the approval of the Shareholders in Annual General Meeting. The total amount of dividend outgo (inclusive of dividend distribution tax ) will be Rs. 133.92 Lacs.

HUMAN RESOURCE DEVELOPMENT (HRD) & INDUSTRIAL RELATIONS

The Company has evolved its own HRD Program so as to upgrade skills and competencies of its people. Training programs both within the Company and with the help of outside experts are being organized at regular intervals.

The Company has adopted effective policies to maintain a constant supply of skilled manpower. With increasing product range and operations, the Company has added several new faces to the team with a view to improve operations.

The Company continues to have cordial and harmonious relations with its employees. Employees have been supportive in the business operations. Your Directors place on record their appreciation for the commitment, dedication and hard work put in by the employees of the Company.

QUALITY, SAFETY & ENVIRONMENT

The Company is actively engaged continuously in upgrading the quality systems by providing a team of Quality Assurance (QA) headed by Associated Vice President (QA) and Sr.Manager QC. QA monitors day-to-day operations as per SOP and continuously improves the facilities to maintain high product and operational quality at our manufacturing sites.

The company has adopted a vision to reduce waste generation and recycle effluents. The company has undertaken expansion of effluent treatment plant in the current fiscal year to achieve this goal. In addition, the company is motivating employees to continuously improve working environment to meet zero accident level.

RESEARCH AND DEVELOPMENT ( R & D)

R & D has been strengthened further by the recruitment of experienced scientists and upgrading the facilities from bench to production levels. Our dedicated team of scientists is working to develop several new products under contract manufacturing tie-ups with Europe, USAand Japan.

DIRECTORS

Dr. Nagendra Yerram and Mr. E. Swapnil , retire by rotation at the Annual General Meeting and being eligible offer themselves for re-appointment. Members are requested to reappoint them as the Directors of the Company.

Dr.K.Ramaswamy well-known Medical Practioner from Hyderabad was appointed as Additional Director on the Board, Audit and Remuneration Committees w.e.f. 9th May, 2012. Since Dr.Rama Swamy holds office up to ensuing General Meeting his appointment as a Director has been proposed by the member of the Company. Members are therefore requested to appoint him as a Director of the Company.

Mr.R.Ramaswamy expired on 3rd October, 2011 after brief illness. The Board of Directors will always recongnise guidance rendered by him during his tenure and places on record heartfelt condolences to his bereaved family.

Mr. P.K. Kumaran and Mr. E. Niranjan Rao relinquished Directorship for personal reasons. Board of Directors places on record appreciation of the guidance and co-operation given by them during their tenure.

DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the requirements under Section 217 (2AA) of the Companies Act, 1956 with respect to the Directors' Responsibility Statement, it is hereby confirmed:

i. that in the preparation of accounts for the Financial year ended on 31st March, 2012, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

ii. that the Directors have selected such accounting policies and applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of Financial year and of the Profit of the Company for the year under review;

iii. that 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 the preventing and detecting fraud and other irregularities;

iv. that the directors have prepared the annual accounts for the year under review on a going concern basis.

CORPORATE GOVERNANCE

The Company has complied with the mandatory requirements of the code of Corporate Governance as detailed in Clause 49 of the Listing Agreement.

Corporate Governance Report is enclosed as a part of the Annual Report along with the certificate from the Statutory Auditors, M/s. Ashok Madgundi & Co, Chartered Accountants, Solapur confirming compliance of the code of Corporate Governance as stipulated in Clause 49 of the Listing Agreement.

PARTICULARS OF EMPLOYEES

Particulars of Employees as required U/s 217 (2A) of the Companies Act, 1956 read with the Company's (Particulars of Employees) Rules 1975, as amended are given in Annexure and forms part of this Report.

COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988:

Information in accordance with Section 217(1) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in the Annexure and forms part of this Report.

SECRETARIAL COMPLIANCE CERTIFICATE

As required under provisions of Section 383 A of the Companies Act, 1956 certificate from Mr. H.R. Thakur , Practicing Company Secretary, Mumbai is given in the Annexure and forms part of this Report.

DEPOSITS

The Company has not accepted/renewed any Fixed Deposits from public during the Financial year 2011-2012.

COST AUDIT

The Company 's cost records are audited by M/s. Shriniwas Diddi, Cost Accountants , Solapur.

AUDITORS

M/s. Ashok Madgundi & Co., Solapur Statutory Auditors of the Company are due to retire at the ensuing Annual General Meeting. Members are requested to consider reappointing them and fix their remuneration.

APPRECIATION

The Directors wish to place on record their sincere appreciation to the Company's employees at all levels for their dedicated hard-work and also to the State Bank of India, and other institutions, Customers, Suppliers who have actively lent their support to the Company. The Director also expresses their gratitude to the Shareholders for their continued co-operation and support.

For & on behalf of the Board

Place : Solapur

Date : 22nd May, 2012 sd/-

(E. Purushotham)

Chairman & Managing Director

---

Mar 31, 2011

The Directors have pleasure in presenting their 22nd Annual Report and Audited Statements of Account forthe financial yearended 31st March, 2011.

(Rs in lacs)

Financial Results current Year 2010-2011 Previous Year

2009-2010

Gross Sales 16229.28 12649.67

Net Sales & Other Income 15758.92 12078.01

Uperating rrofit before Interest &D epreciation 2162.48 1535.71

Less : Interest 403.12 427.70

Gross Profit 1759.36 1108.01

Less : Depreciation 398.17 382.52

Profit Before Tax 1361.19 725.49

Less : Provision for taxation 326.59 167.11

Less : Deferred Tax 64.51 3.47

Less : Dividend & Dividend lax 111.60 89.28

Add : Income-Tax Refund as per computation (AY 06-07) 11.70 00.00

Add : MAT Set-off of AY 09-10 18.53 00.00

Add : Excess rrovision of IT AY 10-11 2.94 00.00

Less : Transfer to General Reserve 97.00 55.49

Add : Balance in profit & Loss A/c. Brought forward 1092.74 682.59

Balance carried to Balance Sheet 1887.40 1092.74

The Company has posted excellent results showing allround increase in sales turnover, production and profitability.

a) Sales:- The Gross Sales for the year amounted to Rs. 16229 lacs as against Rs. 12650 lacs for the previous year, showing increase of 28.29%. The production quantity forthe year was marginally lower at 1437 MTs as against 1511 MTs in the previous year. However due to production of high value items the sales were higher.

b) Exports:- Exports for the year stood at Rs.2906 lacs as compared to Rs. 2574 lacs for the year ended on 31st March 2010. The Company has registered an increase of 13% compared to the previous year.

Directors hope that with improvement in product-mix, introduction of new products and continued efforts for control over expenses shall yield yet better results in terms of sales turnoverand consequently profitability.

Right given to the Promoters in terms of the members approval at Extra Ordinary General Meeting held on 21.05.2009 for subscribing to 5 lacs non-convertible preference shares of Rs. 10/- each has expired with effect from 21st November 2010 on account of non-subscription by the Promoters.

HUMAN RESOURCE DEVELOPMENT (HRD)& INDUSTRIAL RELATIONS:

The Company has evolved its own HRD Program so as to upgrade skills and competencies of its people. Training programs both within the Company and with the help of outside experts are being organized at regular intervals.

The company has adopted effective policies to maintain a constant supply of skilled manpower. With increasing product range and operations, the Company has added several new faces to the team with a view to improve operations.

The Company continues to have cordial and harmonious relations with its employees. Employees have been supportive in the business operations. Your Directors place on record their appreciation for the commitment, dedication and hard work put in by the employees of the Company.

QUALITY, SAFETY & ENVIRONMENT :

The Company is actively engaged continuously in upgrading the quality systems by providing a team of Quality Assurance (QA) headed by Dy. General Manager (QA) and Manager QC. QA monitors day-to-day operations as per SOP and continuously improves the facilities to maintain highest quality, safety and be environmental friendly activities at our manufacturing sites. Our company is motivating employees by conducting poster, slogan and essay competitions on safety day and encouraging continuous suggestions for improvement of overall environment, health and safety (EHS). Various departments are participating in drive to achieve zero-accident working environment and reduce waste generation.

During the year company has received the approval from US Food & Drug Administration (USFDA) for manufacture of Active Pharmaceutical Ingredients (API). Viz. Amlodipine Besylate, Carbidopa, Metformin Hcl, Norfloxacin and Telmisartan. This approval shall enable the company to export APIs to US, Canada and Eurpoe in a big way.

RESEARCH AND DEVELOPMENT (R&D)

R&D has been strengthened further by the recruitment of experienced scientists and upgrading the facilities from bench to production levels. Our dedicated team of scientists is working to develop several new products under contract manufacturing tie-ups with Europe, USAand Japan.

DIVIDEND:

Having regard to the substantial increase in disposable profits yet need to conserve resources of the company forfinancing working capital as well as capital expenditure, your Directors recommend dividend @25% i.e. Rupees 2.50/- per share (as against 20% in the previous year) for the year ended on 31st March 2011, subject to the approval of the Shareholders in Annual General Meeting. The total amount of dividend outgo (inclusive of dividend distribution tax) will be Rs.111.60 lacs.

DIRECTORS:

Mr.R.Ramaswamy and Mrs. E. Vaishnavi, Directors of the Company retire by rotation at the Annual General Meeting and being eligible offer themselves for re- appointment. Members are requested to reappoint them as the Directors of the Company.

Mr. RK. Kumaran and Mr. E. Niranjan Rao have relinquished Directorship for personal reasons. Board places on record appreciation of the guidance and co-operation given by them during theirtenure.

DIRECTORS RESPONSIBILITY STATEMENT:

In accordance with the requirements under Section 217 (2AA) of the Companies Act 1956 with respect to the Directors Responsibility Statement, it is hereby confirmed:

i. that in the preparation of accounts for the financial year ended on 31st March 2011, the applicable accounting standards have been followed along with proper explanation relating to material departures ;

ii. that the Directors have selected such accounting policies and applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of financial year and ofthe Profit of the Companyfortheyearunder review;

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

iv. that the directors have prepared the annual accounts for the year under review on going concern basis.

CORPORATE GOVERNANCE

The Company has complied with the mandatory requirements of the code of Corporate Governance as detailed in clause 49 of the Listing Agreement.

Corporate Governance Report is enclosed as a part of the Annual Report along with the certificate from the Statutory Auditors, M/s. Ashok Madgundi & Co, Chartered Accountants, Solapur confirming compliance of the code of Corporate Governance as stipulated in clause 49 of the Listing Agreement.

PARTICULARS OF EMPLOYEES:

Particulars of Employees as required U/s 217 (2A) of the Companies Act, 1956 read with the Companys (Particulars of Employees) Rules 1975, as amended are given in Annexure and forms part of this Report.

COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988:

Information in accordance with Section 217(1) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in the Annexure and forms part of this Report.

SECRETARIAL COMPLIANCE CERTIFICATE

As required under provisions of Section 383 A of the Companies Act 1956 certificate from Mr. H.R. Thakur, Practicing Company Secretary Mumbai is given in the Annexure and forms part of this Report.

DEPOSITS:

The Company has not accepted any Fixed deposits from public during the financial year2010-2011.

COST AUDIT

The companys cost records are audited by M/s Shriniwas Diddi, Cost Accountants , Solapur

AUDITORS:

M/s. Ashok Madgundi & Co., Solapur Statutory Auditors of the Company are due to retire at the ensuing Annual General Meeting. Members are requested to consider reappointing them and fix their remuneration.

For & on Behalf of the Board

sd/-

(E.Purushotham) Place : Mumbai Chairman & Mananging Director

Date : 28th April 2011

---

Mar 31, 2010

The Directors have pleasure in presenting their 21st Annual Report and Audited Statements of Account for the financial year ended 31st March, 2010.

(Rs. in Lacs)

Financial Results Current Year Previous Year 2009-2010 2008-2009

Gross Sales

Gross Sales 12649.67 7437.37

Net Sales & Other Income 12078.01 6756.41

Operating Profit before Interest & Depreciation 1535.71 906.38

Less: Interest 427.70 409.00

Gross Profit 1108.01 497.38

Less: Depreciation 382.52 312.10

Profit Before Tax 725.49 185.28

Less: Provision for Taxation (Incl.FBT) 167.11 33.10

Less: Deferred Tax 3.47 3.00

Less: Dividend & Dividend Tax 89.28 44.64

Add : Income-Tax Refund as per Computation (06-07) 0.00 0.00

Less : Short Provision of Dividend Tax Of earlier yr. 00.00 05.05

Less: Transfer to General Reserve 55.49 14.92

Add : Balance in Profit & Loss A/c. Brought forward 682.59 598.02

Balance carried to Balance Sheet 1092.74 682.59

The Company has posted all-round improvement in sales turnover, production and profitability and has achieved an important mile-stone of crossing Rs. 100 Crore mark in sales turnover for the first time in the history of the company.

a) Sales: - The Gross Sales for the year amounted to Rs. 12649.67 lacs as against Rs. 7437.37 lacs for the previous year, showing impressive increase of 70.08 %. The turnover rate per unit quantity was also higher, with 1455 MTs manufactured in 2009-10 as against 1345 MTs in the previous year. This can be attributed to addition of high value products to our product portfolio.

b) Exports: Exports for the year ended on 31st March 2010 stood at Rs.2573.94 lacs as compared to Rs. 2711.73 lacs for the year ended on 31st March 2009. The Company has registered marginal drop of 5.35% in Exports compared to the previous year.

Directors hope that the efforts initiated by the management for improving sales mix and control over expenses shall yield yet better results in terms of sales turnover and consequently profitability.

HUMAN RESOURCE DEVELOPMENT (HRD) & INDUSTRIAL RELATIONS:

The Company has evolved its own HRD Program so as to upgrade skills and competencies of its people. Training programs both within the Company and with the help of outside experts are being organized at regular intervals.

The company has adopted effective policies to maintain a constant supply of skilled manpower. With increasing product range and operations, the Company has added several new faces to the team with a view to improve operations.

The Company continues to have cordial and harmonious relations with its employees. Employees have been supportive in the business operations. Your Directors place on record their appreciation for the commitment, dedication and hard work put in by the employees of the Company.

QUALITY, SAFETY & ENVIRONMENT :

The Company is actively engaged continuously in upgrading the quality systems by providing a team of Quality Assurance (QA) headed by Dy. General Manager (QA) and Manager QC. QA monitors day-to-day operations as per SOP and continuously improves the facilities to maintain highest quality, safety and environmental friendly activities at our manufacturing sites. Our company is motivating employees by conducting poster, slogan and essay competitions on safety day and encouraging continuous suggestions for improvement of overall environment, health and safety (EHS). Various departments are participating in drive to achieve zero-accident working environment and reduce waste generation.

RESEARCH AND DEVELOPMENT (R&D)

R&D has been strengthened further by the recruitment of experienced scientists and upgrading the facilities from bench to production levels. Our dedicated team of scientists is working to develop several new products under contract manufacturing tie-ups with Europe, USA and Japan.

DIVIDEND:

Having regard to the substantial increase in disposable profits yet need to conserve resources of the company for financing working capital as well as capital expenditure, your Directors recommend dividend @20% i.e. Rupees 2/- per share ( as against 10% in the previous year) for the year ended on 31st March 2010, subject to the approval of the Shareholders in Annual General Meeting. The total amount of dividend outgo (inclusive of dividend distribution tax) will be Rs.89.28 lacs.

DIRECTORS:

Mr.J.H.Ranade and Dr.Nagendra Yerram, Directors of the Company retire by rotation at the Annual General Meeting and being eligible offer themselves for re-appointment. Members are requested to reappoint them as the Directors of the Company. Similarly it is proposed to renew appointments of Mr. E.Purushotham on revised terms and conditions for the period of 5 years respectably and Mr. E.Niranjan Rao on revised terms and conditions for the period of 3 years respectably from 1st August 2010 as set out in the Annexure to the Notice. Members are requested to approve their appointments.

DIRECTORS RESPONSIBILITY STATEMENT:

In accordance with the requirements under Section 217 (2AA) of the Companies Act 1956 with respect to the Directors Responsibility Statement, it is hereby confirmed:

i. that in the preparation of accounts for the financial year ended on 31st March 2010, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii. that the Directors have selected such accounting policies and applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of financial year and of the Profit of the Company for the year under review;

iii. that 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 the preventing and detecting fraud and other irregularities;

iv. that the directors have prepared the annual accounts for the year under review on a going concern basis.

CORPORATE GOVERNANCE

The Company has complied with the mandatory requirements of the code of Corporate Governance as detailed in clause 49 of the Listing Agreement.

Corporate Governance Report is enclosed as a part of the Annual Report along with the certificate from the Statutory Auditors, M/s. Ashok Madgundi & Co, Chartered Accountants, Solapur confirming compliance of the code of Corporate Governance as stipulated in clause 49 of the Listing Agreement.

PARTICULARS OF EMPLOYEES:

Particulars of Employees as required U/s 217 (2A) of the Companies Act, 1956 read with the Companys (Particulars of Employees) Rules 1975, as amended are given in Annexure and forms part of this Report.

COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988:

Information in accordance with Section 217(1) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in the Annexure and forms part of this Report.

SECRETARIAL COMPLIANCE CERTIFICATE

As required under provisions of Section 383 A of the Companies Act 1956 certificate from Mr. H.R. Thakur, Practicing Company Secretary Mumbai is given in the Annexure and forms part of this Report.

DEPOSITS:

The Company has not accepted ahy Fixed deposits from public during the financial year 2009-2010.

COSTAUDIT

The companys cost records are audited by M/s Shriniwas Diddi, Cost Accountants , Solapur

AUDITORS:

M/s. Ashok Madgundi & Co., Solapur Statutory Auditors of the Company are due to retire at the ensuing Annual General Meeting. Members are requested to consider reappointing them and fix their remuneration.

APPRECIATION :

The Directors wish to place on record their sincere appreciation to the Companys employees at all levels for their dedicated hard-work and also to the State Bank of India, and other institutions, Customers, Suppliers who have actively lent their support to the Company. The Director also expresses their gratitude to the Shareholders for their continued co-operation and support.

For & on behalf of the Board sd/-

Place: Solapur (E. Purushotham)

Date: 27th April 2010 Chairman & Managing Director

---

Mar 31, 2000

The Directors have pleasure in presenting the 11th Annual Report of the Company alongwith the audited statement of accounts for the year ended 31st March, 2000.

FINANCIAL Cureent Previous RESULTS Year Year 1999-2000 1998-99 (Rs. in lacs)

Gross Sales 2357-10 1928-78

Net Sales 2003-95 1616-05

Operating profit before- Interest & Depreciation 307-95 222-60

Less : Interest 173-29 142-25

Gross Profit 134-66 80-35

Less: Depreciation 58-97 56-09

Profit Before Tax 75-69 24-26

Provision For Taxation 0-00 2-02

Net Profit 75-69 22-24

OPERATIONAL RESULTS

The Companys operational results are very much in progress and performance is better than previous years. The result for the year 1999-2000 shows the increase of 24% in net sales and increase in net profit by more than three times of the previous year. This amounts to 240% increase in profit. The trend of increasing profit is due to the Companys cost reduction policies, efficient working, better management. The ISO-9002 Certificate is a feather in the cap of the Company.

Your directors pleasure to inform you that the Company obtained ISO-9002 Certificate from TUV Rheinland (India) Pvt. Ltd., Bangalore for Unit-ll on 18-03-2000. It is a great achievement for our Company to have worldwide recognition by the consumer. No provision for Income Tax is requuired as unabsorbed depreciation upto last year is available for set off of the net profit of the year. Last year the Company is covered un- der MAT for Income Tax purpose.

CURRENT WORKING :

The Companys first quarter results are in tune with projections with a turnover of Rs. 770-46 lakhs. The current financial results are expected to be better in view of the introduction of new product range and increased market strength and tie-ups with Japanese Companies.

AUDITORS REPORT

The comments of Auditors are dealt with by the notes on accounts which are self explanatory and therefore do not call for any further comments.

DIRECTORS :

Mr. E. Umamaheshwar and Dr. Nagender Yerram both Directors of the company retire by rotation and being eligible offers themselves for re-election.

PARTICULARS OF EMPLOYEES :

Particulars of Employees as required U/s 217 (2A)

S.No. Name Qualification Salary No. of years Drawn wording

1. Mr. E. Purushotham M.Sc (Org) 600000/- 10 yrs.

2. Mr. E. Niranjan Rao M.Sc. 245000/- 10 yrs.

DEPOSITS :

The company has not accepted any Fixed Deposits from public during the financial year 1999-2000 under review :

ADDITIONAL INFORMATION :

Additional information required to be disclosed in terms of Notification No.1029 dated 31/ 12/88 issued by the Department of Company Affairs is annexed hereto about Conserva- tion of energy etc. Other Particulars are not given since they are not applicable.

AUDITORS :

M/s. Ashok Madgundi & Co., Solapur Auditors are of the Company are retiring at the ensuing Annual General Meeting and being eligible for themselves re-appointment. The Board recommends the re-appointment of M/s. Ashok Madgundi & Co.

STATUTORY INFORMATION :

Information on Conservation of Energy, Foreign Exchange Earning and outgo required to be disclosed under section 217 (1) (e) of the Companies Act 1956 is enclosed.

ACKNOWLEDGEMENT :

The Directors wish to place on record their sincere appreciation to the Companys employ- ees at all levels for their dedicated hard-work and also to the State Bank of India, and other institutions, Customers, Suppliers who have actively lent their support to the Com- pany. The Director also express their gratitude to the Shareholders for their continued co- operation and support.

For & on Behalf of the Board PLACE : SOLAPUR Sd/-

(E. PUROSHOTHAM) DATE : 03.07.2000 Managing Director