MANAGEMENT DISCUSSION & ANALYSIS The business operations of the Company comprise only of Pharmaceuticals. Since the Company is going to operate in pharmaceutical segment in 2015-16, the following paragraphs speak on single segment only. INDUSTRY STRUCTURE & DEVELOPMENT The Indian Pharmaceutical industry has been witnessing phenomenal growth in recent years, driven by rising consumption levels in the country and strong demand from export markets. The industry has seen tremendous progress in terms of infrastructure development, technology base and the wide range of products manufactured. Demand from the exports market has been growing rapidly due to the capability of Indian players to produce cost-effective drugs with world class manufacturing facilities. Pharma companies have developed Good Manufacturing Practices (GMP) compliant facilities for the production of different dosage forms. A highly fragmented industry, the Indian pharmaceutical industry is estimated to have over 10,000 manufacturing units, as given by the Organization of Pharmaceutical Producers of India. The organized sector accounts for just 5% of the industry with around 300 players, while a huge 95% is in the unorganized sector. A large number of players in the unorganized segment are small and medium enterprises and this segment contributes 35% of the industry's turnover. OPPORTUNITIES AND OUTLOOK The changing global pharmaceutical industry has transformed prospects of Indian pharmaceutical companies. The leading pharma companies in India have been actively extending the frontiers of scientific knowledge and going global through mergers and acquisitions. Consolidation is inevitable and is expected to bring in economies of scale and provide access to newer geographies to regional players. RISK & CONCERNS Increasing span of price control The price control cover impact the industry margin significantly, especially those players having only local operations. However, to secure the profitability, firms will have to increase their scale of production. Price erosion in generics Indian generics market is witnessing a margin brssure in most of the product categories due to two main reasons: • The stiff competition among domestic players. • The expansion of capacities by certain leading players has also fuelled competition in certain product categories, which restricts margins of the smaller players. Low R&D productivity The introduction of new molecules by Indian players has been limited. It is, in fact, a hit-and-miss situation in the field of discovery and developments of new chemical entity (NCEs), where misses are more than hits. Very few discoveries reach the final stages of approvals, and in most of the cases, the claim for patent gets stuck in legal battles. FINANCIAL PERFORMANCE Net Revenue from Combined Operations of Pharmaceuticals and Metal divisions for the year ended March 31, 2015 was at Rs 26.48 Crores rebrsenting a decline of 8.22 per cent over the brvious year. Profit before tax for the year was at Rs0.29 Crores rebrsenting a decline of 14.71 per cent over the brvious year. The contribution in profits is mainly due to operations of Pharmaceutical division. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company maintains appropriate systems of internal control, including monitoring procedures, to ensure that all assets are safeguarded against loss from unauthorized use or disposition. Company policies, guidelines and procedures provide for adequate checks and balances and are meant to ensure that all transactions are authorised, recorded and reported correctly. The internal audit department together with a firm of Chartered Accountants reviews the effectiveness and efficiency of these systems and procedures to ensure that all assets are protected against loss and that the financial and operational information is accurate and complete in all respects. The Audit Committee approves and reviews audit plans for the year based on internal risk assessment. Audits are conducted on an ongoing basis and significant deviations are brought to the notice of the Audit Committee of the Board following which corrective action is recommended for implementation. All these measures facilitate timely detection of any irregularities and early remedial steps with no monetary loss MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED There are no material developments in human resources and industrial relations are cordial. The Company has employed 281 people. CAUTIONARY NOTE The statements forming part of the Directors' Report may contain certain forward looking remarks within the meaning of applicable securities laws and regulations. Many factors could cause the actual results, performances or achievements of the Company to be materially different from any future results, performances or achievements that may be exbrssed or implied by such forward looking statements. For and on behalf of the Board Shri Natwarbhai P. Prajapati Chairman & Managing Director DIN: 00031187 Registered Office: 122/2, Ravi Estate, Bileshwarpura, Chhatral Dist: Gandhinagar. Place: Ahmedabad Date : 14/08/2015 |