Management Discussion & Analysis Report_ Industry Overview, Opportunity and Outlook PHARMACEUTICALS I. Industry overview In 2014-15, the global pharmaceutical industry registered revenues of US$1.23 trillion, up from US$1.15 trillion in 2013-14 and US$1.13 trillion in 2012-13. Oncology was the top contributor among therapeutic areas (more than US$90 billion). The North America region accounted for the largest share of the estimated 2014 global pharma market (Figure 1) at 41.9%, followed by Asia/Australia at 26.8%, Western Europe at 19.8 %, Latin America, and other transition economies. We saw a distinct shift in the market share across the globe, with the US and Europe share of global spending declining and high growth emerging markets (pharmerging) including China, India, Brazil, Russia and Mexico contributing 28% of total spending in 2014, up from only 12% in 2005. The FDA approved 41 novel new drugs in 2014, more than any other year during this period. From 2005 through 2013, FDA averaged 25 novel new drug approvals per year While the trends are encouraging, global pharmaceutical companies are affected by blockbuster drug patent expirations, increased competition from generics manufacturers, and government and healthcare industry efforts to regulate costs in terms of price controls, pro-generics policies, and patent challenges. Some breakthrough branded specialty drugs (e.g., for cancer treatment and Hepatitis C treatment) still warrant brmium prices. However, manufacturers are facing growing brssure by governments and healthcare authorities to justify pricing of drugs. It was a challenging year for the generic business since several plants in India were inspected and manufacturers were banned for non-regulatory compliance. Data integrity was a focus area with pharmaceutical companies receiving notices for plant shutdowns, leading to significant financial losses. On a regional basis, healthcare spending in North America is expected to increase, at an average of 4.9% during 20152018. Growth is being driven, in part, by increasing consumer access to healthcare in the United States through the 2010 Patient Protection and Affordable Care Act (ACA). Growth in healthcare spending in West Europe is expected to be sluggish, at 2.4% annually, as countries recover from the eurozone crisis. Across Latin America, healthcare spending is projected to increase an average of 4.6% annually over 2015-2018. Several governments seek to improve public healthcare systems despite budget constraints. In Asia and Australasia, public healthcare programs combined with discretionary consumer income is expected to boost healthcare spending at an average of 8.1% in 2015-2018. Robust growth is expected in the Middle East and Africa, which could grow at an annual average of 8.7% over 2015-2018 — due to population growth and efforts to increase healthcare access. Overall, the global market is expected to grow and emerging markets are likely to drive growth. Hikal is well positioned to grow given its robust brsence in the US and the European Union. II. Operational Performance Hikal's pharmaceuticals division grew by 13% to Rs. 5,375 million compared to Rs. 4,754 million in the brvious year. The growth was driven by an increased offtake in volume of contract manufactured active ingredients as well as higher sales of products in our generic portfolio. Although pricing brssure and a weak euro affected our sales towards the end of the financial year, Hikal increased its sales with new client agreements and a wider geographical footprint. Market penetration of our key APIs improved and sales of old APIs revived with better capacity utilization. Custom Development and Manufacturing Business The business registered robust growth of 35% year-on-year due to increased volumes of existing products as well as new development projects from key innovator clients. Hikal has an impeccable quality and regulatory track record which helps us attract and retain clients. Our past performance will help us increase our profit margins since cost alone will not be the sole reason to outsource for life science companies. Hikal increased its global footprint by appointing dedicated personnel for different regions and undertaking marketing restructuring effort to serve our customers better. We identified several opportunities for custom development and manufacturing of intermediates and APIs. These initiatives are in various stages of development and semi-commercialization. We actively pursued opportunities for clinical molecules in Phase II and III as well as lifecycle extension projects for innovator companies. It enabled us to provide a compelling value proposition as products reach patent expiration. Several mid-size and biotech clients for early stage molecules have been added for custom development projects. Projects are in various stages of clinical trials where some clinical development quantities have been supplied by Hikal. While the process of a new molecule approval is time-consuming and unbrdictable, we continue to diversify with more products in the pipeline for new clients. Our long-term contract manufacturing agreement with a European innovator client to exclusively manufacture molecules commercially gained momentum last year. The molecules are performing well in the market and volumes have increased substantially. These products are expected to grow in the future according to the positive indications received from our client. The specialized product that we manufacture for a US specialty food ingredient client is performing well in the market. Several approvals are expected in 2015-16 for new clients using the products manufactured at our facilities. In addition to our kilo lab facility at Pune and Bangalore, Hikal has commissioned a new development and launch plant for our new products in the R&D pipeline. The GMP plant was made operational in September 2014 and we have been able to seed new opportunities and new projects. Our future plans include expanding and converting the plant into a full scale API manufacturing facility for niche high value smaller volume products. We are also building a project management team to execute projects smoothly and service our clients better. Generic APIs During the year, our generic API business registered a marginal growth of 2%. It was due to pricing brssure on some of our key products. Despite lower prices, our volume growth was approximately 200 tons as compared to last year. While pricing brssure is expected to continue, we plan to mitigate risks with cost rationalization in the areas of raw materials, lower inventories, streamlining the supply chain, improving processes and reducing utility costs. Hikal has devised a strategy to become a formidable generic API supplier. We identify products early in the pipeline for clients, use technology and innovative chemistry for a cost advantage in molecules that go off patent in the next 3-5 years and explore products for the long term. Hikal filed two Drug Master Files (DMFs) for products including Pregabalin with a novel enzymatic route. Our approach has given us a superior cost position and will help differentiate us from other API suppliers. Although the product is expected to go off-patent in December 2018, we are exploring early launch opportunities in certain markets where the product is already off-patent. Hikal will file DMFs with novel processes having identified 8-10 new products for generic development. We will file 5-6 DMFs to develop a healthy pipeline of commercial API's every year. The products selected will be a combination of client requirements and niche molecules where we have a definitive technology capability to gain market share backed by our expertise in advanced chemistry and backward integration. Hikal has invested significantly in the generic API business both in terms of personnel and manufacturing capabilities. We have strengthened our R&D infrastructure by hiring experienced scientists and chemists at our Pune facility and commissioning four new chemical synthesis labs to accelerate our pipeline development work. Several projects were completed for debottlenecking capacity in two of our API blocks at Jigani, Bangalore. The capacity can be further debottlenecked when our client's requirements increase. The capacity was expanded for key starting raw materials being manufactured at Panoli, our advanced intermediate plant. Several cost rationalization initiatives were undertaken at our pharmaceutical manufacturing plants. We have undertaken process innovation for our legacy lifecycle extension products that are facing pricing brssure while we continue to consolidate our market share. As part of our sustainability initiatives, we commissioned a large bio-mass boiler and co-generation plant at our Bangalore facility. We are increasingly using renewable energy to substantially reduce overheads and mitigate the risk of interrupted power supplies. We are evaluating the expansion of our Panoli facility for API manufacturing. It will help de-risk our Bangalore plant for manufacturing final APIs. Our strategy of a two-site production base will enable us to cater to increased volumes and offer a wider range of products. III. Regulatory and Compliance Issues Several regulatory issues faced by Indian drug makers in the US and Europe have been identified as being part of data documentation and maintenance. Data integrity issues such as inappropriate manufacturing practices and overlooking results while testing medicines resulted in several Indian companies getting heavily penalized. The US FDA initiated action against several big generic pharmaceutical companies. In cases where the issue was not resolved satisfactorily by the company, it resulted in a ban on drugs exported from the plant. The United States is the largest market for domestic generic pharmaceutical companies, contributing in most cases between 25-55% of revenues for some of the larger companies. Several domestic companies under scrutiny by the US FDA have been identified as having data integrity issues. The US FDA notices and import alerts issued will be a huge setback to these companies affecting their revenues and reputation. The US FDA has a rigorous process and stringent checks and balances to maintain quality standards at drug manufacturing facilities for approval. The focus areas include drug labeling, marketing, manufacturing and product quality, compliance, security and integrity related to current Good Manufacturing Practices of active pharmaceutical ingredients (raw materials) and finished formulations. Hikal perceives these developments both as risks as well as opportunities. We strive to maintain global standards to ensure that there are no data integrity issues and adhere to the best practices in quality and manufacturing. We adopt a 'zero tolerance' approach to non-compliance across the organization. We continuously train our employees about compliance and the risks of non-compliance. We have an open channel of communication with our team members to voice opinions and concerns directly to senior management without repercussions. We have a mechanism to ensure that all policies and procedures are being followed at all levels across the organization. IV. Hikal Strategy and Future Outlook Hikal will focus on both the generic API and custom manufacturing businesses. We are positioning our company as a leading provider of contract development and commercial manufacturing services as well as a reliable supplier of generic APIs. We offer a wide range of services focused on drug products and APIs backed by advanced technologies. We offer end-to-end solutions to a broad spectrum of companies ranging from large pharmaceutical and biotech companies to specialty pharmaceutical companies, generics and emerging pharmaceutical companies. We partner with clients for the long-term to give them a competitive advantage. Hikal as part of our diversification strategy are pursuing allied niche opportunities in steroids and oncology. We have invested in setting up labs and are in the process of evaluating commercial manufacturing opportunities in steroids. We believe our diversification strategy along with our healthy product pipeline will continue the growth and profitability path for the pharmaceutical division. CROP PROTECTION 2014-15 The global crop protection market grew by 4.5% to US$56 billion in 2014. 'Growth in the crop protection sector is directly linked to support for agriculture, crop commodity and farm income. The annual performance is a story of two halves: one half had rising prices and robust demand while the other half experienced a steep decline. In 2014, the growth was muted by currency fluctuations. However, there was volume growth in emerging markets. Prices for a majority of products were lower combined with lower offtake of products. The global crop protection chemicals market is segmented into regions and further subdivided into key countries. In terms of regions, the market is segmented into North America, Europe, Asia-Pacific, Latin America, and the rest of the world. Asia-Pacific and North America are the top two markets for crop protection chemicals, accounting for nearly 50% of the total market share. Asia-Pacific is the fastest-growing region in terms of revenue. The market is also segmented by herbicides, fungicides and insecticides. Growth is projected around 4.5%-5.5% on an annual basis. Hikal caters to all these product categories. The crop protection chemicals market is driven by limited availability of arable land, high profit margins, modern farming practices, techniques and technology. Several leading companies are investing in the development and manufacturing of crop protection chemicals. Global companies are providing a wide range of crop protection offerings in response to growing demand. The world experienced unbrdictable weather with dryness in South and West US, including Mexico, delay in the corn and soybean planting season; dry weather in early 2014 in Brazil; mild winter but moderate summer in Russia and Ukraine, and a deficient monsoon in India and South Asia. Bayer registered growth of 6.9% followed by BASF with 4.2% and Syngenta with 4.0% compared with the brvious year. Key factors affecting the global crop protection market performance in 20143 o Crop prices were trending upwards in the first half of the year, but then weakened o Rice production process was affected by destocking in Thailand o Decline in glyphosate prices o Unbrdictable weather o Ukraine crisis reduced agrochemical sales in the country and neighboring areas o Brazilian market affected by lower crop processing combined with high inflation o Wet, cool summer affected market growth in central regions o Dry weather in South America II. Crop Protection Operations Hikal's crop protection division had a muted year. Our revenues were affected by a significant decline in volumes in the second half from our multinational clients. We ended the year with revenues of Rs. 3,342 million, 6% lower as compared with the brvious year. Our clients who indicated a larger offtake in the beginning of the year, changed their forecasts as the global crop protection market slowed down. Our clients slashed their inventories, which reduced our sales revenues. Sales of Thiabendazole grew in terms of volume and increased revenues of the division. The product is extremely versatile and used in both crop protection to control mold and other fungal diseases in fruits and vegetables as well as an anti-parasitic to control roundworms. It is also used in the materials protection industry to brvent fungal growth. We expect sales of Thiabendazole to continue to grow in the near future. Sales of a fungicide that we manufacture exclusively for an innovator client declined due to inventory cuts. It is used to protect grapes, potatoes, tobacco and vegetables. We expect volume to pickup and grow further in the future. Sales of the on-patent herbicide that we exclusively manufacture under contract for a global innovator client declined in volume terms. While the product is doing well in the market, destocking of inventory and slower growth has affected revenues of this product. We do not expect it to be a long-term phenomenon and believe that volume will grow in the near term. Our division is focused on contract development and manufacturing for global multinational companies. Almost 90% of our sales revenues are generated from this business. We have refined our strategy: In addition to targeting existing clients for additional molecules in their portfolio, we are focusing on commercializing new molecules to provide them to several clients in existing and new markets. Our clients have traditionally been large innovators in western countries. We plan to de-risk our client and product profile by introducing new molecules in markets where we have limited reach such as emerging markets. It will help us increase our footprint and gain higher revenue realization. The chart below highlights how emerging markets are projected to register robust growth. We have had limited access in these markets and with our growing product portfolio, will enable us to capture additional revenues and profitability We plan to strike a balance between contract manufacturing and selling our own products developed by our R&D. Several of these products were manufactured by us in the past, but for a variety of reasons, we discontinued selling them. Demand for these products remains buoyant and as part of our interim strategy, we have started to manufacture and capitalize on opportunities to sell products such as Quinalphos, Diuron and 3,5DCA. Hikal in the near future plans to register its own products in the export market and focus on growth in turnover and profitability. Another area of focus is our operational excellence initiatives where we are working on waste reduction, energy conservation and better utilization of raw materials and capacity. We successfully completed the validation trials of an intermediate for an innovator client's product. We successfully completed the manufacture of pilot plant batches and have submitted the results. It is a large volume on-patent product which will require dedicated facilities to address the size and complexity of the molecule. We supplied commercial quantities of an on-patent product to a leading Japanese company. The fungicide is scheduled for field trials next year and if successful, the product will be launched in Japan and henceforth supplied globally Another fungicide for a Japanese company was commercialized. Hikal supplied several metric tons and met the specifications and quality parameters of the client. We expect the on-patent fungicide to become a regular product for the company thatwill increase in volume overtime. A niche small volume insecticide was commercialized and supplied to an innovator client. Product volumes are stable yet small, and having completed the commercial scale project successfully, we expect it to increase the revenues of our business. Several projects have reached the development phase and pilot plant level. The clients include Japanese, European and mid-size specialty chemical companies. The products range from advanced intermediates to final actives including herbicides, fungicides and insecticides and small niche products. We expect the pipeline of projects to yield additional revenues and profitability in the years to come. In the past, Hikal has invested significantly in environment, health, safety and quality. Being a 'Responsible Care' certified company, Hikal continues to maintain the highest environmental standards while improving our safety record. Our focus on stringent quality management operations has resulted in zero customer complaints on quality during the year. III. Future Outlook While the crop protection division registered a decline in revenues, we are positive about the future business outlook. The global phenomenon of a growing population results in a higher demand for food. Demand is cyclical in this business with a few years of high growth followed by several years of lower growth. Our new under development product pipeline, both client-specific and proprietary is on track and scheduled to be commercialized by our R&D. This will diversify our business, add revenues and increase profitability in the years to come. RESEARCH & DEVELOPMENT In a competitive environment, companies will differentiate themselves through innovation driven by research and development (R&D). Strategy Hikal has realigned its strategy to strike a balance between the contract development, manufacturing business, and internal product development for both divisions. Our R&D will develop innovative, cost-effective, safe and sustainable processes for launching products in the crop protection and pharmaceutical businesses. We will focus on delivering value to clients, while continuously boosting productivity and profitability. We believe there is no guarantee that our research and development efforts will result in commercially successful products. However, we can mitigate risks by innovating through technology and building a robust pipeline of products. Our R&D activities shape the products that we manufacture and sell in the marketplace. We invest in R&D to enhance our competitiveness and drive growth. Our crop protection research focuses on herbicides, fungicides and insecticides. Our pharmaceutical research focuses on the central nervous system-related diseases and diabetes, while we pursue new opportunities in other therapeutic areas such as steroids. Our R&D strategy is focused on: o Consistency - decision making to meet objectives o Coherence - clearcommunicationaboutgoalsofeachdivision o Alignment - alignmentofgoalswiththebusinessstrategyofeachdivision o Delivery - supply of products and projects on time and within budget We are confident that our revamped R&D will achieve the goals of our businesses. We believe that the success of products manufactured at Hikal will be a combination of several factors, with robust support from the R&D team. R&D Consolidation We consolidated our R&D activities at our facility in the International Biotech Park, Pune. We completed the process of transferring R&D personnel from our Bangalore facility to Pune. The consolidation of our scientific personnel and operations at a single location is yielding results in terms of a more robust development portfolio and increased cost savings. Hikal has invested in R&D infrastructure and intellectual capital this past year. We added four chemical synthesis laboratories including a steroid and high potency laboratory to expand our chemistry portfolio. We recruited an experienced senior leader to manage our generic and custom manufacturing development for the pharmaceutical business. In addition, we recruited several leaders to spearhead our generic API development. We invested in analytical equipment to comply with the latest regulatory standards which will also help reduce bottlenecks. These steps will boost productivity of our R&D division leading to higher revenue and profitability of our crop protection and pharmaceutical divisions. Our R&D center at Pune focuses on: • Crop protection and speciality chemicals • Animal health • Pharmaceuticals (contract &custom manufacturing) • Generics development Operations Our focus has shifted from pure contract development to generating our own product portfolio for our crop protection and pharmaceutical divisions. We are building a pipeline of early development Phase II and Phase III projects where scientists identify safe, effective and economical manufacturing processes using advanced technology as a differentiator. While there is no guarantee that a potential molecule will receive marketing approval, the chances of success are higher for commercial manufacturing when the molecule is at a later stage. We have several sensitive projects under evaluation in various stages ofthe lifecycle in the pharmaceutical division. We have several early stage projects in our crop protection business. A majority of these projects are from innovator clients in Japan and Europe. These molecules are on patent and in these situations we often do not know the target indication or the candidate molecule. In the past, several projects have passed the development phase and reached semi-commercial trials. We expect a 10%-15% success rate of molecules going into commercial production. During the year, we commercialized an insecticide for an innovator company. While volumes are small, this niche product is also used in the veterinary market. We completed process development for an on-patent herbicide for another innovator client. The commercial process optimization is underway and will be completed by the end of the year. We expect that our client will commercialize this product in the years to come. We are steadily developing our animal health portfolio. We completed the development of a topical parasitic used for dogs and cats under contract from a mid-sized European company. The lab validation batches are underway and will be followed by plant validation at the end ofthe year. We expect the product to be commercialized in 2016-17. It is a small volume, high priced product. Process development of another veterinary medication to kill external parasites for pets was completed for the same client. We expect this small volume product to go commercial in 2016-17. We completed the process development and first pilot plant campaign for a regulatory starting material used in oral flea and tick treatment for dogs. The next commercial campaign is expected in 2016. As part of our new R&D initiative and risk diversification strategy, we are working on steroid development. Two products used on livestock to increase muscle growth and appetite and a synthetic opioid analgesic used in cats and dogs are in late stage development. We have already secured a client for these products. On the human health front, we are progressing well. We validated an API product using enzymatic technology developed by our R&D, and we will soon start commercial manufacturing. The novel process offers a significant cost advantage to our clients. We plan to file six drug master files (DMFs) during the forthcoming financial year. Some of the products under various stages of development are Sitagliptin, Dabigatran, Lacosamide, Olmesartan and Darunavir. These blockbuster products are coming off patent shortly. We have approached potential clients for these products and have received a positive response from several of them. We generate revenue for R&D through our contract development projects. However, these projects are limited to select customers and projects with commercial manufacturing viability. We started commercial operations at a new development and launch plant for small and medium sized products in Bangalore. This plant will increase the delivery of semi-commercial and commercial quantities being developed at the R&D facility in Pune. It will also serve as a launch facility for products catering to the animal health industry We have a healthy contract development pipeline. We completed the first pilot plant campaign for an intermediate of a non-regulatory starting material used for an oncology product under development. The second pilot plant trials are under discussion with the same biotech company. Our partnership with a leading global biotech company has yielded positive results. Apart from working on several projects, the process development and two pilot plant trials for a regulatory starting material used in the treatment of ventricular systolic heart failure has been completed. The product should receive regulatory approval and is estimated to reach the market in 2017. Process development has been completed for an intermediate in Phase III trials for a Japanese innovator company used for treatment of chronic constipation. We estimate that commercial manufacturing will begin in 2016. We have been successful with several mid-to-late stage development projects that are under regulatory review. The potential for manufacturing these molecules at various stages is high. We are in touch with our clients to monitor developments for each of these products. We are confident that some of these products will progress into commercial manufacturing opportunities for us. Our diversified initiatives combined with the R&D consolidation will spur future growth. Our primary R&D goal is to develop innovative new processes that offer significant benefits to our customers. We have built reasonable scale and expertise along with agile R&D groups that can deliver complete sustainable solutions. Strategy Our R&D division focuses on the development of cost-effective and sustainable processes for new products as well as optimization of technology for existing products. It is imperative for us to develop and utilize best available technology. We will focus on the integration of our supply chain for some of our major products to improve the economics of manufacturing and de-risk the supply chain. We are evaluating the application of continuous and micro reactor technology for some key intermediates and starting materials. Our R&D is focused on long-term manufacturing opportunities and our strategy will be to strike a balance between contract development projects of our clients and proprietary molecules developed internally for our respective divisions. We believe these opportunities will lead to significant growth in the future. RISKS Risk mitigation is a key factor contributing to the long-term success of our business. We are in constant touch with our stakeholders to evaluate and manage dynamic events across our supply chain. We identify risks early and take steps to brvent them. We are focused on creating shareholder value, safeguarding the interests ofthe company while adhering to the principles of quality, safety and sustainability At an operational level, the day-to-day management of risk rests with each business division. Risks are classified into different categories for better management and control. We assign a responsibility to each business division to manage risks, depending on the magnitude of consequences and impact on the organization. Hikal identifies risks and takes measures to mitigate them: Regulatory Risk In today's regulatory environment, non-compliance risk is a major concern for the company. Issues raised by the US FDA and other global regulatory authorities can have a detrimental impact on revenue and profitability. We ensure that the company has regulatory and statutory approvals for conducting business so that operations are not adversely affected. Any change in the law or regulation made by the government or regulatory authorities can substantially increase the cost of operations and reduce profitability. We continue to monitor the legal and regulatory framework on an ongoing basis. Customer and Product Focus Our crop protection and pharmaceuticals businesses are based on long-term contracts with clients. A muted forecast by clients will certainly affect revenues. Based on our experience of such risks, we have expanded our client base and diversified our product portfolio across regions to mitigate this risk. Production and Quality Risk Hikal upholds global quality and regulatory standards in manufacturing and development. We maintain consistent product quality across manufacturing processes and comply with Good Manufacturing Practices (GMP). We have dedicated personnel to drive initiatives for adhering to and improving quality standards on an ongoing basis. Environment, Health and Safety and Sustainability Hikal focuses on protecting the interests of the environment, safeguarding the health and safety of employees and ensuring the sustainability of the business in line with company objectives, policies, and laws and regulations. Our dedicated team at each plant continuously monitors performance to ensure adherence to global regulations. Intellectual Property Hikal believes that protecting the intellectual property rights of our clients is integral to our business. We take adequate measures using technology and undertake training to ensure that employees respect intellectual property. Crisis and Continuity of Business Our crisis management efforts focus on our ability to recover and sustain critical operations following a disruption, or to respond to a crisis in a timely manner. Hikal has teams across divisions to assess any crisis and handle it in an efficient manner. Our teams share information and responsibility to ensure continuity management. Supply Chain Continuity A majority of the key raw materials used in our manufacturing operations are available from more than one source. If one of these suppliers is unable to provide the materials or product, Hikal has sufficient inventory until an alternative source is identified. However, in the event of an extended supply failure, we may experience an interruption until we identify new sources or, in some cases, implement alternative processes. We continuously monitor our supply chain to ensure that there is minimum downtime for our production facilities so that the requirements of our clients are met. HUMAN CAPITAL Hikal's journey has been shaped by the dedication of our employees at our plants and our corporate office. Our human capital has contributed to the growth of Hikal over the years. In 2014, we implemented a new Human Resource Management System that transparently assesses and tracks the performance of our employees. It also provides a defined career path for our professionals. Significantly, the system enables employees to view their progress against the key result areas set forth at the beginning of each year. Hikal recruited several new employees from senior managers to trainees from the Indian Institutes of Technology National Institute of Technology and the Indian School of Business. The mix of experience and youth will encourage creativity and innovation at the workplace. Hikal has technical, managerial and leadership development programs across our plants to enhance the competency levels of employees. We are continuously training our team members in best practices and ensuring that compliance across all fields is being adhered to at all times. Enhancing Professional Competencies Training and development is a continuous process to enhance the calibre of our employees. In 2014-15, our renewed focus resulted in increased number of training hours per employee. During the year, the key development programs organized were: • Soft skills training • Effective communication • Safety and fire fighting • Team work games and exercises • cGMP (questions and answers) • Health awareness Performance Management Systems Hikal developed a performance appraisal system to recognize and reward high performing employees after a review process by the Performance Appraisal Review Committee. Succession planning is a br-requisite for business continuity. It is undertaken through systematic review of employees so that high performing employees are rewarded appropriately and grow with the organization. Hikal offers a work environment that encourages collaboration, fosters creativity and provides an adequate work-life balance. Employee Engagement Activities Hikal commenced an initiative called 'Employee Hour' to provide employees with a platform for one-on-one conversations with their managers on a personal as well as professional basis. It has instilled a sense of security among employees and reduced attrition rates at plants and at the corporate office. Events such as sports day, women's day and family day are organized to enhance inter-personal relationships among employees and create a sense of togetherness. Industrial Relations A majority of our plant workers have completed 10 years of service. It bears testimony to the dedication, trust and confidence of these workers in the organization. The vital contribution of our workers has been recognized. They are encouraged to upgrade their skills. Many workers are pursuing higher education so that it offers new opportunities and shapes their career path. Several technicians are rebrsented on employee welfare committees. They also participate in environment, health, safety, quality programs and suggestion schemes. Welfare Measures Hikal has initiated several welfare measures for employees: • Medical insurance coverage and personal accident policy • Food subsidy, free transport and allowances for medicines and education • Loans on relaxed terms for children's education, medical emergencies and housing |