MANAGEMENT DISCUSSION AND ANALYSIS

a) Industry: The global pharmaceutical market is now estimated to be US $ 1 trillion and is growing at an annual rate of about 4­5 %. Even though North America, Japan and Europe constitute about 70% of the global pharmaceutical market, continued rise of emerging markets is a key trend that will shape the Indian pharmaceutical industry in the coming years.

b) Outlook, Risks and Concerns: Though in the world pharmaceutical market, India is ranked 3rd in volume, it has a negligible share by value and ranks 13th . Branded generics constitute 70% of Indian pharmaceutical market. Indian pharmaceuticals exports have increased from US$ 2 billion in 2006 to about US$ 10 billion in 2014. Indian companies are focusing on global generic and contract manufacturing alliances. India is also fast emerging as a brferred pharmaceuticals manufacturing location. Several large selling drugs going off patent over next few years and increasing use of pharmaceutical generics to reduce healthcare cost will provide attractive growth opportunities to generics manufacturers and thus Indian pharmaceutical industry is poised for an accelerated growth in the coming years. The Government of India has unveiled 'Pharma Vision 2020' aiming at making India a global leader in end-to-end drug manufacturing. However, the growing ambit of drug price control also poses serious concerns for the industry. Further, poor public healthcare funding and infrastructure, low per capita consumption of medicines in developing and under developed countries including India, currency fluctuations, regulatory issues, inflation and resultant all round increase in input costs are other causes of concern.

c) Financial Performance and Operations Review: The Company generated a revenue of ?6,018.20 lacs for the Financial Year and incurred a loss of ?139.68 lacs after taxes. The last few years have been tough for the Company, with the added operational expenses of Unit-II. The performance of Unit-I has been steady, but Unit-II required substantial additional resources for product registrations in the regulated markets and market development. Increasing debt compounded with heightened finance/ interest cost was creating additional brssure on the resources of the Company and jeopardizing the well established steady business of Unit-I. Further, sky-rocketing cost of compliance in regulated markets which is the target for Unit-II had created substantial uncertainties for the long term interest of the Company and other stakeholders. With these factors in mind, the Company passed one Resolution by way of postal ballot vide notice dated 12th February 2014 to enable the sale of the loss generating Unit-II of the Company and the Resolution was declared passed by the Chairman on 04th April 2014. Subsequently various offers were evaluated and the Company sold its Unit-II manufacturing unit situated at Sector III, Pithampur, Dhar, MP together with its employees by way of a slump sale during the financial year. This sale of the loss generating Unit-II of the Company has substantially reduced the strains on the resources of the Company and the future prospects of the Company look brighter than ever. No material changes or commitments affecting the financial position have occurred after the end of the financial year till the date of this report.

d) Forward Looking Statements: Forward looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Company's actual results, performance or achievements could thus differ materially from those projected in any such forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events.

e) Manufacturing Facilities: The Company has a state of the art WHO-GMP certified manufacturing facilities at Pigdamber, Indore that manufactures a wide range of dosage forms like Injections, Tablets, Ointments and Capsules. At brsent the Company is tapping the domestic market, export markets like East & West Africa, Latin America, South East Asia and domestic and international Government Tender business from this facility. The Company also has a state of the art testing laboratory at this site.

f) Subsidiaries, Associates and Joint Ventures: During the financial year, the Company acquired 100% of the shares of Norfolk Mercantile Private Limited making it a wholly owned subsidiary. In accordance with the provisions of Section 136(1) of the Companies Act, 2013, Annual Report of the Company containing therein its standalone and the consolidated financial statements and audited annual accounts of each of the subsidiary companies have been placed on the website of the Company. Further, as required, the financial data of the subsidiaries, joint venture and associate companies is furnished in the brscribed Form AOC-1 attached to the consolidated financial statements. Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 and Accounting Standard, AS-21 read with Accounting Standard, AS-23, the audited consolidated financial statements of the Company are also attached.

g) Domestic Markets: The Company has a wide range of pharmaceutical products in its portfolio. A focused approach and increased marketing efforts has resulted in an increasingly wider reach. In the coming years, the Company would continue to build its reputation and strong brand equity in order to attain a leadership position. The Company has been successfully marketing human products through a generics distribution model and veterinary products through a ethical marketing model.

h) International Markets: The Company continues to lay emphasis on its overseas business. The Company works closely with all its overseas associates to sustain and grow its exports. In the last financial year, the Company has expanded its operations in South East Asia, Africa and Latin America.

i) Business Strategy: The Company has its vision towards optimizing shareholder value. The Company has been consolidating its product range to a more efficient range which has resulted in a higher profit for most products. The Company is deriving its strength from diverse product capability, established client relationship, location advantage and an experienced management team.

j) Human Resources and Industrial Relations: The Company has given emphasis to upgrading the skills of its technical and marketing personnel. This is in line with its policy of enhancing the individual's growth potential within the framework of corporate goals. The HR policy and practices are constantly reshaped to meet newer demands. Not only better hiring practices, but also improved nurturing practices are in place. Company imparts training towards continuous enhancement of technical and managerial skills. The Directors acknowledge and apbrciate the contribution of all employees towards the performance of the Company. During the year under review the Company, maintained cordial relationship with all employees and has not laid off any employee in its entire history.

k) Internal Control Systems and its adequacy: The Company has reasonable system of internal controls in power, supervision, checks, policies and procedures, which are being tested on routine basis by the management. Moreover, the Company continuously upgrades these systems in line with the best accounting practices. The Audit Committee also reviews the adequacy of internal controls systems and the compliance thereof. Further, the annual financial statements of the Company are reviewed and recommended by the Audit Committee for the consideration and approval of the Board of directors. The Committee also reviews internal controls system, significant accounting policy, major accounting entries, related party transactions, etc.

l) Adequate Coverage of Risk: The Company's assets are adequately insured against the loss of fire and other risks which are considered necessary by the management from time to time.

m) Regulatory Approvals: The Company continues to enjoy the approval of major international regulatory agencies and several dosage forms are being manufactured for export. This WHO-GMP certification of the plant has also been renewed.

n) Segment-wise Results: The Company operates in the single segment of Drugs and Chemicals which is the Primary Reportable Segment as per Accounting Standard, AS-17. Secondary Segment reporting is given in Notes to the financial statements.