MANAGEMENT DISCUSSION AND ANALYSIS REPORT 

ECONOMIC SCENARIO 

GLOBAL ECONOMIC SCENARIO:

Global growth will receive a boost from lower oil prices, which reflect to an important extent higher supply. But this boost is projected to be more than offset by negative factors, including investment weakness as adjustment to diminished expectations about medium-term growth continues in many advanced and emerging market economies. Global growth in 2015-16 is projected at 3.5 and 3.7 percent, downward revisions of 0.3 percent relative to the October 2014 as per the view of World Economic Outlook (WEO).

The global pharmaceutical sales grew by 8.3% in the year 2014 and key growth drivers continue to be shift towards use of generic medicines accompanied by patent expiries mainly in the regulated market and higher growth in Pharmerging markets. The Pharmerging markets will grow at a compounded annual growth rate of 8-11% through 2018, a slower pace than over the past five years, which averaged 13.6% growth. Implementation of health reforms are increasing demand for medicines, while pricing regulations are being used more frequently to manage overall growth levels. Over 80% of growth in Pharmerging markets will be attributed to non-branded medicines.

INDIAN ECONOMIC AND INDUSTRY SCENARIO :

The improving macro factors have resulted in improvement in the overall growth with GDP growth in 2014-15 estimated at 7.4% against 6.9% in 2013-14. The Indian Pharmaceutical industry is estimated to grow at 20 per cent compound annual growth rate (CAGR) over the next five years. The expected growth of the domestic pharma market is 10-12 per cent in FY15 as compared to 9 per cent in FY14, as per a recent report from Centrum Broking.

The Indian Pharmaceuticals Industry currently tops the chart amongst India's science based industries with wide ranging capabilities in the complex field of drug manufacture & technology.

OPPORTUNITIES

The growth in Indian domestic market will be on back of increasing consumer spending, rapid urbanization, and raising healthcare insurance. The Union Cabinet has given its approval to amend the existing FDI policy in the pharmaceutical sector in order to cover medical devices. The Cabinet has allowed FDI up to 100 per cent under the automatic route for manufacturing of medical devices subject to specified conditions. Government has offered fiscal incentives to R&D units in pharma sector. Government has also come up with two new schemes specially targeted at drugs & pharmaceutical research. These are: 'The New Millennium Indian Technology Leadership Initiative' (NMITLI) and the 'Drugs and Pharmaceuticals Research Programme' (DPRP).

Further, agreement with leading pharmaceutical Central Public Sector Enterprises, Bengal Chemicals and Pharmaceuticals Limited for providing C&F facility and HLL Lifecare Limited for providing job work facility will also benefit company in its growth path. 

THREATS 

Major challenge in front of Indian Pharma market is non availability of raw Material or highly increased cost of available raw material, sudden hike in cost of Major raw material Folic Acid proved as biggest threat for the company as company is mainly dealing in Manufacturing of Iron and Folic Acid Tablets. Further, at brsent 348 bulk drugs and 654 formulations are covered under National List of Essential Medicines (NLEM). It is likely that the government may bring more drugs and formulations under price control or change the mechanism of calculating the ceiling price of the Drugs which are under the ambit of the revised policy, which in turn will affect the net margins of the Company. The Company manages its product portfolio so as to minimize the product weight age of drugs under price control. In certain developed and pharmerging nations, there has been a rise in the use of tariff and non-tariff barriers to support domestic manufacturers against foreign competition and include raising import duties, prohibiting certain imports and creating price differentiation and other interventions to promote locally manufactured products this is also considered as a barrier to competition.

INTERNAL CONTROL SYSTEM

The Companies Internal control/supervisory system is established to ensure that board and management are able to achieve their business objectives in a prudent manner, safeguarding the interest of Companies shareholders and other stakeholders whilst minimizing the key risk such as fraud, misleading financial statements, breach of legal and contractual obligation, unauthorized business activity. The management duly considers and takes appropriate action on recommendations made by the statutory auditors, internal auditors and the independent Audit Committee of the Board of Directors.

HUMAN RESOURCES

Your Company follows a strategy of attracting and retaining the best talent and keep employees engaged, motivated and innovative. The Company continues to have cordial relations with its employees and provide personnel development opportunities for all round exposure to them. 

CAVEAT: 

Some of the Statements in Management discussion and Analysis describing companies objective may be "forward looking statement" within the meaning of applicable Securities law and Regulations. Actual results may differ substantially or materially from those exbrssed or implied. Important factors that could influence companies operation include various global and domestic economic factors. materially from those exbrssed or implied. Important factors that could influence companies operation include various global and domestic economic factors.