Management Discussion and Analysis

a) Industry Structure and Development

The global pharmaceutical market is now estimated to be US $ 1 trillion and is growing at a rate of about 4-5 % per annum. North America, Japan and Europe constitute about 70% of the global pharmaceutical market. Increased penetration of specialized drugs and continued rise of emerging markets are key trends that will shape the global pharmaceutical markets in the coming years.

Thanks to advances in science and technology, the research based pharmaceutical industry is entering an exciting new era in medicine development. The research methods are evolving and the innovative pharmaceutical industry aims to turn fundamental research into innovative treatments that are widely available and accessible to patients.

A move to value based outcomes in drug research, increased penetration of specialty drugs, greater patient access to medicines, the reduced impact from patent expiries and continued rise of emerging markets will be primary drivers behind increase in global medicine spending through 2018.

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 13*.Branded generics constitute 70% of Indian pharmaceutical market. Indian pharmaceutical market is considered to be a highly fragmented and consolidation has become an important feature of this industry. Indian pharmaceuticals exports have increased from US$ 2 billion in 2006 to about US$ 10 billion in 2014. India has a huge pool of scientists and engineers who have potential to take this industry to a very high level of growth.

Indian pharmaceutical industry is estimated to grow at nearly 20% over the next 5 years. The Government of India has unveiled 'Pharma Vision 2020' aiming at making India a global leader in end-to-end drug manufacturing. Many Indian companies are focusing on global generic and API business, R&D activities and contract research and 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 in developed markets 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. However, poor public healthcare funding and infrastructure, low per capita consumption of medicines in developing and underdeveloped countries including India, currency fluctuations, regulatory issues, inflation and resultant all round increase in input costs are few causes of concern.

During the year under report, there was no change in the nature of Company's business.

c) Financial Performance and Operations Review

During the financial year under report, the Company registered a total income of Rs. 4231.20 Lacs against Rs. 4208.56 Lacs in the brvious year, a modest growth. The year under report has been a challenging year for the Company.

These regulatory issues adversely impacted the Company's business. The Company's business in the emerging markets also suffered due to significant currency fluctuations. The Company is implementing combrhensive remedial measures at all its manufacturing sites to ensure quality and regulatory compliances. These remedial measures included review of all processes and procedures, revamping of training system, recruitment of senior quality personnel as well as automation of quality control laboratories. Your Company is committed in resolving these issues at the earliest. The Company is also committed to its philosophy of highest quality in manufacturing, operations, systems, integrity and GMP culture. Your management is confident that implementation of remedial measures will ensure that the Company will regain all its regulatory approvals.

During the financial year under report, the Earnings before interest, debrciation and tax amounted to Rs. 690.15 lacs as against Rs. 715.40 lacs in the brvious financial year. The operations have resulted in a net profit of Rs. 331.34 lacs during the financial year under report as against Rs. 322.16 lacs in the brvious financial year registering modest growth.

During the financial year under report, the domestics sales of products of the Company amounted to Rs. 3516.24 lacs as against Rs. 2991.88 lacs in the brvious year which reflect increase by 17.53% to Rs. 524.36 lacs. Whereas the international business (export) amounted to Rs. 777.33 lacs as against Rs. 1250.40 lacs in the brvious year which was decreased by 61 % to Rs. 473.07 lacs.

e) Internal Control Systems and its adequacy

The Company has adequate internal control systems including suitable monitoring procedures commensurate with its size and the nature of the business. The internal control systems provide for all documented policies, guidelines, authorisation and approval procedures. The Company has an internal audit department which carries out audits throughout the year. The statutory auditors while conducting the statutory audit, review and evaluate the internal controls and their observations are discussed with the Audit committee of the Board.

f) Human Resources

The human resource plays a vital role in the growth and success of an organization. The Company has maintained cordial and harmonious relations with employees across various locations.

During the year under review, various training and development workshops were conducted to improve the competency level of employees with an objective to improve the operational performance of individuals. The Company has built a competent team to handle challenging assignments. The Company strives to enhance the technical, work related and general skills of employees through dedicated training programs on a continuous basis.

The Company has 367 permanent employees as on 31"' March, 2015 out of which 219 employees are engaged in the marketing and distribution activities.

g) Research & Development (R&D)

The Company has always considered Research and Development (R&D) as crucial for the sustained growth of the Company. The Company has stepped-up investments in R&D to keep pace with the changing domestic and global scenario.

With qualified and experienced research chemists manning the research and development activities, the Company has focused its thrust on new and innovative process and product development for the manufacture of various formulations related to mother and child care segment.

h) Cautionary Statement

Certain statement in the management discussion and analysis may be forward looking within the meaning of applicable securities law and regulations and actual results may differ materially from those exbrssed or implied. Factors that would make differences to Company's operations include competition, price realisation, currency fluctuations, regulatory issues, changes in government policies and regulations, tax regimes, economic development within India and the countries in which the Company conducts business and other incidental factors.