MANAGEMENT DISCUSSION AND ANALYSIS REPORT PHARMACEUTICAL INDUSTRY OVERVIEW The recent spurt in emerging markets has directly impacted the pharmaceutical industry. Rising affordability, enhanced life expectancy and improved standard of living are all providing impetus to the demand for pharmaceuticals. the result of new (and ongoing) research and development activities are yet to show the same flair as their brdecessors, we can be assured that such loss of exclusivities certainly enables new players to enter into the market thereby increasing the potential for sales. with rise labor costs in China are set to change the API landscape. The API industry is expected to witness the rise of second wave emerging markets in countries such as Brazil, Mexico, South Korea and Taiwan. The Taiwanese API producers have gained recognition for high quality and international good manufacturing practices (GMP) compliance. According to report of, "Global API Market Outlook 2018", in the wake of the above developments, the Global API industry is expected to grow at a CAGR of 9.4% from 2013-2018. The market has been divided into four major geographies which comprise Americas, Asia, Europe and the rest of the world. A list of top countries which will be responsible for the majority of API related activities are US, Italy, Japan, China, India and South Korea. As a result of the more and more regulatory compliances requirements and escalating R&D costs, fiscal austerity measures introduced by governments across many developed countries in the past few years have brsented tremendous challenges for both innovator and generic drug makers. INDIAN PHARMACEUTICAL MARKET The Indian Pharma Market ("IPM") is valued at Rs. 903 billion (IMS, MAT March 2015) and is expected to grow at a CAGR of eleven (11) per cent over the next four years. It continues to be a highly fragmented market with a large number of players sbrad across therapeutic segments. According to McKinsey report Indian Pharma 2020. The Indian Pharma industry is poised for expansion and is expected to grow to US$55 billion by 2020 High economic growth, rapid urbanisation resulting in lifestyle diseases, increased government spending on healthcare, improved healthcare facilities and healthcare insurance plans are some of the growth drivers for the pharma industry. Risks and Concerns With a population exceeding 1.2 billion, India is a major market for healthcare companies. According to statistics from the Pharmaceutical Export Promotion Council (or Pharmexcil) on the India Brand Equity Foundation (or IBEF) website, the domestic pharmaceuticals sector in India is experiencing strong growth. This growth is mainly due to increasing penetration into the rural market, which is still largely untapped. Although India exports pharmaceutical products to more than 200 countries, the US remains the major importer of pharmaceutical products from India—accounting for approximately one-fourth of India's exports in this sector. The Indian pharmaceutical industry, which was estimated to be worth $12 billion during 2013, is expected to grow to $100 billion over the next decade. Some of the keys Opportunities available to the Company are as follows: • Huge outsourcing opportunity in Indian APIs industry • One of the few Indian players in a fast growing Veterinary segment • Increased thrust on product partnerships by global pharma companies Some of the keys risks and concerns that are faced by the Company are as follows: • Competition from other Companies operating in similar segments • Lack of proper Infrastructure facilities. • Other key risks related to our business may include loss of key personnel, increased labour costs and uncertainties in terms of regulatory changes • Unavailability of proper health insurance Finance Operational &Financial Performance • Sales: During the year under review, owing to sluggish external factors and various issues at the customers end beyond the control of the Management. The Total income was down from Rs. 5707.04 Lacs to Rs. 2911.48 Lacs during the period of review. Gross Margin (EBIDTA): During the year under review, the Gross margin (Loss) stood at Rs. 939.77 Lakhs as against Gross margin (Loss) of Rs. 427.05Lakhs. • Net Profit/(Loss) : During the year the Net Loss of the Company stood at Rs. 3,025.60 Lakhs as against 3,257.34 Lakhs loss in the last financial year. • Net-worth: The net-worth of the Company decreased to Rs. 1367.12Lakhs from Rs. 4457.02 Lakhs during the brvious year. The decrease has been primarily on account of loss incurred by the company during the year under review. Internal Control Systems The Company has internal control systems in place commensurate with the size and industry it operates in. Its always our endeavor to strictly adheres to the laws, rules and statues of the land, and ensures compliance at all levels and across all divisions and departments. Any concerns raised are immediately address and corrected. There is a proper definition of roles and responsibilities across the organization to ensure information flow and monitoring. The Audit Committee of the Company reviews the statutory audit reports, the quarterly and annual financial statements and discusses all significant audit observations and follow up actions arising from them. Human Resource Development and Industrial Relations Avon's HR function is dedicated to overall growth vision of the Company and continuously works on areas such as recruitment and selection policies, disciplinary procedures, reward/recognition policies, learning and development policies and all round employee development. Avon provides a safe and rewarding environment that attracts and retains a talented team and where employees are engaged in delivering exceptional results to the customers and investors. Cautionary Statement Statements in the Management Discussion and Analysis describing the Company's objectives, projections, estimate, expectations may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those exbrssed or implied. Important factors that could make a difference to the Company's operations include, among others, economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and incidental factors. |