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Dishman Pharmaceuticals and Chemicals Ltd(Merged).

BSE: 532526 Sector: Health care
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OPEN 293.00
VOLUME 460499
52-Week high 346.25
52-Week low 196.20
P/E 200.70
Mkt Cap.(Rs cr) 4,859
Buy Price 0.00
Buy Qty 0.00
Sell Price 301.05
Sell Qty 375.00
OPEN 293.00
CLOSE 292.65
VOLUME 460499
52-Week high 346.25
52-Week low 196.20
P/E 200.70
Mkt Cap.(Rs cr) 4,859
Buy Price 0.00
Buy Qty 0.00
Sell Price 301.05
Sell Qty 375.00

Dishman Pharmaceuticals and Chemicals Ltd(Merged). (DISHMAN) - Director Report

Company director report


The Shareholders of

Dishman Pharmaceuticals and Chemicals Limited

Your Directors have pleasure in presenting their Report along with the Audited Accountsof the Company for the year ended March 31 2016.


(Rs. in Crores)

Standalone Consolidated
Particulars 2015-2016


2015-2016 2014-2015
Net Sales 510.39


1596.05 1575.19
Profit before tax & other adjustments 120.25


233.35 159.20
Net current tax expenses 20.89


48.02 40.88
Deferred tax liability / (Assets) 12.21


14.33 (1.45)
Profit for the year 87.15


171.11 119.81
Balance of profit brought forward 141.48


505.21 421.14
Amount available for appropriation 228.63


676.32 540.95
Adjustment of Depreciation -


- (1.32)
Transfer to debenture redemption Reserve
Transfer to general reserve 15.00


15.00 15.00
Interim Dividend 16.14


16.14 -
Proposed dividend -


- 16.14
Tax on proposed dividend (3.29)


(3.29) 3.29
Balance carried to balance sheet 200.77


648.47 505.21


In FY2015-16 your Company achieved revenue of Rs. 510.39 crores as compared to Rs.492.24 crores in FY2014-15. Profit before tax stood at Rs. 120.25 crores in FY2015-16 asagainst Rs. 103.83 crores in FY2014-15. Profit for the year remains at Rs. 87.15 crores inFY2015-16 as compared to Rs. 58.48 crores in FY2014-15.

Earning per share for the FY2015-16 remains at Rs. 10.80 per share as against Rs. 7.25per share in FY2014-15.

Consolidated Financial Results

In FY2015-16 your Company achieved revenue of Rs. 1596.05 crores as compared to Rs.1575.19 crores in FY2014-15. Profit before tax stood at Rs. 233.35 crores in FY2015-16 asagainst Rs. 159.20 crores in FY2014-15. Profit for the year remains at Rs. 171.11 croresin FY2015- 16 as compared to Rs. 119.81 crores in FY2014-15.

Earning per share for the FY2015-16 remains at Rs. 21.20 per share as against Rs. 14.85per share in FY2014-15.

A detail analysis of the performance of the company its subsidiaries and financialresults is given in the Management Discussion and Analysis Report which forms part ofthis report.


On March 10 2016 the Board of Directors of the Company has declared an interimdividend of Rs. 2.00 (i.e. @ 100%) per equity share on 80697136 Equity Shares of Rs.2.00 each amounting to Rs. 16.14 crores and paid to the members whose names appeared onthe Register of Members of the Company on March 18 2016. Your Directors have consideredit financially prudent in the long-term interests of the Company to reinvest the profitsinto the business of the Company to build a strong reserve base and grow the business ofthe Company and therefore no final dividend has been recommended and the interim dividenddeclared is the dividend on equity shares of the Company for the financial year endedMarch 31 2016.


The Company proposes to transfer Rs. 15.00 crores (previous year Rs. 15.00 crores) tothe General Reserves out of the amount available for appropriation


The Company has neither accepted nor invited any deposit from public falling withinthe ambit of Section 73 of the Companies Act 2013 and The Companies (Acceptance ofDeposits) Rules 2014.


During the year your company's focus was on improvement of profitability parameters byachieving operational efficiencies reduction in costs and consciously reducing the salesof low-margin products. You company has been able to achieve this objective due to whichthe operating margin has improved significantly from 20% in FY 2015 to 26% in FY 2016. Allkey business verticals of the Company and also all major subsidiaries of the Company haveperformed exceedingly well.


The CRAMS segment across India Switzerland France UK and China manufacturingfacilities has performed very well during the year under review on account of addition ofnew clients not just big pharma companies but also lot of midsize and small size globalpharma companies. This has resulted in diversified portfolio of customers in this segmentin the CRAMS segment diversified the customer concentration for the company and hencemitigated the risks associated with dependency on a few large customers. Moreover theclose integration between the Swiss India and China operations has yielded rich dividendsas your company has been able to successfully transfer molecules from the company's whollyowned subsidiary Carbogen Amcis AG to the parent and the company's other wholly ownedsubsidiary Carbogen Amcis (Shanghai) Co. Limited to cater to high volume business in theproduct development and commercial stage of production. This strategy has helped thecompany's Shanghai subsidiary to turn profitable for the first time in the history of thecompany. The Shanghai subsidiary has been put under the management of Carbogen Amcis AGthe company's wholly owned Swiss subsidiary and it has become strategically a veryimportant subsidiary of the company. The company's wholly owned subsidiary Carbogen AmcisFrance which develops and manufactures injectable drugs in small quantities has alsoperformed quite well in terms of profitability and is expected to see some good tractionin revenues going forward.

Your company along with its subsidiaries had worked on about 400 molecules acrossdifferent stages of development during the year under review and it currently has asignificant pipeline of products in Phase III of which many molecules are expected to gointo commercial manufacturing in the next 2-3 years. Your company had started commercialsupplies of one such molecule in the year under review by entering into a 23 years longterm contract with Johnson & Johnson for a Multi Drug Resistant Tuberculosis moleculewhich would help eradicate the cases of tuberculosis to a large extent.

Your company has identified certain key therapeutic areas for product development andcommercialization focusing on the necessity of these new chemical entities (NCEs) forcuring or combating the critical diseases in the world. Your company also focuses onreducing the cost of manufacturing the molecule to the best extent possible in an attemptto make the final drug affordable for all those who are in need of the same.

Your Company's above mentioned philosophy has resulted in improved product basket andit would improve even further going forward which would help your company in achieving asignificant and sustainable growth in this segment in the coming years.

Hi-Po Unit

The state-of-the-art Hi-Potency (Hi-Po unit) - Unit 9 at Bavla has performed reasonablywell during the year under review. Your Company has started receiving regular as well asrepeated orders from major global pharma MNCs as well as many mid-size and small-sizebiotech companies who are very excited about the type of the facility and infrastructurecreated in this unit. Again noteworthy is the fact that your Company has successfullycompleted a few technology transfer project from Carbogen Amcis to this unit which impliesa significant scaling up of the production of such high value-added and extremelysensitive pharma APIs mainly in the oncology category. As you are aware this is one ofits kind facility not only in India but in the entire Asian sub-continent which iscapable of handling extremely high potency molecules with a specific focus on thetherapeutic segments of oncology steroids among others.

Currently one of the molecule is under validation and some of the molecules are inPhase III while some are under Phase I and Phase II. Your company supplied developmentquantities of the molecules during the year under review. Two out of the four cells inthis plant are completely booked for the next 12 months and the third cell is underimplementation. This unit contributed a turnover of around US$ 10 million during the yearunder review. This plant would be one of the key growth drivers for your company in thecoming years as oncology is one of the major therapeutic focus areas for your company.Moreover the molecules developed and manufactured in this plant are extremely high marginproducts due to the complexities involved which would help significantly in improving theprofitability parameters of your company even further.

Vitamin D3

During the year under review the Vitamin D3 unit has also performed exceedingly wellin terms of the profitability parameters. As you may be aware this is a forwardintegration facility and adds value to the Vitamin D3 business that was acquired by yourCompany from the erstwhile Solvay a few years ago in the name of its subsidiary companyDishman Netherland Limited which is having its plant in Netherlands producingcholesterol the key raw material for Vitamin D3. There was a change in strategy of thecompany in the year under review where the company decided to reduce its focus on the lowmargin Vitamin D3 business and instead concentrate on the high value Vitamin D analoguesand cholesterol business where the margins realization were much higher. Moreover thedistributorship channel was done away with and direct sales to end customer strategy wasimplemented in the year under review. These strategies have worked fantastically well foryour company as the operating profitability margins have improved dramatically from 19%in FY 2014-15 to 30% in FY 2015-16. All of the production is now being done at theNetherlands facility and the renewed strategy should help your company to sustain and evenimprove the profitability margins at Netherlands operations.

Generic API and Disinfectant Business

Your company has changed the strategy around generic APIs during the year where it hasdecided to focus only on niche generic APIs and not run of the mill generics. Since thereis a huge traction in the CRAMS segment where margin realizations are extremely highyour company does not want to utilize its energy in manufacturing generic APIs where themargin realizations are low. The existing and new capacities would be dedicated for CRAMsand niche generic APIs. Your company is already working on three or four niche genericmolecules which are complex to manufacture but would cater to the unmet needs of thesociety and also yield higher profitability for the company.

Your company has a dedicated manufacturing unit for its disinfectant business. Yourcompany currently manufactures certain disinfectant products for some large globalpharmaceutical companies. Your company has entered into a long term contract with one suchpharmaceutical company which would utilize almost 80% of the capacity of this unit. Yourcompany expects the disinfectant business to grow significantly in the next 2-3 years dueto the increased sales of existing products as well as new products that would bedeveloped and manufactured by your company's disinfectant unit. In the year under reviewyour company did a turnover of Rs. 12 crores for the disinfectant business which isexpected to increase to Rs. 100 crores in the next 2-3 years.

Performance of Major Subsidiary Associates

The major subsidiary Companies have performed quite satisfactorily during the yearunder review. Carbogen Amcis AG Switzerland has performed quite satisfactorily during theyear under review. It has reported a healthy revenue of '800.00 crores and Profit aftertax Rs. 78.82 crores. The other marketing subsidiaries viz. Dishman USA reported revenueof Rs. 102.62 crores and Profit after tax of Rs. 2.15 crores. Dishman Europe reported arevenue of Rs. 305.76 crores and Profit after tax of Rs. 51.92 crores during the yearunder review.

Dishman Netherland BV. perform well during the year reported revenue of Rs. 233.32crores and Profit after tax of Rs. 47.82 crores. Carbogen Amcis Ltd.(U.K.) reported arevenue of Rs. 64.01 crores and Profit after tax of Rs. 10.60 crores. Carbogen Amcis(Shanghai) Co. Ltd. (Dishman China) also perform well compared to the previous year itwas reported revenue of Rs. 51.07 crores and Profit after tax of Rs. 3.46 crores. OtherSubsidiaries has also performed reasonably well during the year under review.


Research is a critical thrust area for the Company because it is the foundation uponwhich Company's strategy of manufacturing and marketing stands. As you know your companyoffers process development and optimization services from its Ahmedabad-basedstate-of-the-art R&D centre as well as from other locations outside India.

Company's Process research and development scientists work in well equippedlaboratories. These laboratories have an excellent analytical set up for monitoring thereactions. The development programs are designed to meet customer expectations which varyfrom project to project. Majority of the process development activities are aimed atoptimizing the existing processes with an objective to make them economically andenvironmentally viable. During development the safety and efficiency of the process isgiven the utmost importance.

With the ongoing changing regulatory scenario on drug design we develop processeswhich are capable of producing very pure APIs with impurities well below the acceptablelevels. In this year about 150 projects are at various stages of development. Of these100 are CRAMS 25 are Generic APIs 20 are Niche APIs and 5 NCE molecules are currentlyunder laboratory/pilot scale and commercial production IPR for some of them are given tocustomers against agree-upon payments but for many of them IPR is owned by Dishman.

In generic APIs segment we are focusing on new niche therapeutic areas. For all thedevelopment activities our research scientists have access to online databases for alltypes of information requirement. At present more than 50 Doctorates as senior scientistsand 200 scientists working at the Company's R & D at Bavla Plant.

Like every fiscal year substantial incremental capex was spent on acquiring newer andvery sophisticated analytical instruments for the Bavla site which enables the company toundertake extremely complex and high cost research projects in steroids oncology drugsetc. In addition to this we have equipped our scientific department with latest andcomprehensive databases for research and marketable molecules.

The company's focus continued to remain in improving current processes for betteroperations and productivity which can be visible from continuously improving EBITDAgrowth. In our global unification program we have increased the technical exchangebetween our sites in the Netherlands Switzerland and India. This will certainly go a longway in improving chemistry capabilities world wide.


Dishman is committed towards excellence in Quality Health Safety and EnvironmentManagement and ensures that those working with the Company are safe at work and thateveryone takes responsibility for achieving this. We include EHS and climate change-related considerations in our business decisions and strive to minimize the environmentalimpact of our operations on the environment. Measuring appraising and reporting onenvironmental health and safety performance is an important part of continual improvementin our EHS performance.

Dishman's Environment Health and Safety (EHS) organization conducts strategic planningto establish long-term EHS goals assess resources required to achieve specific goals andensure critical business alignment. Dishman considers feedback from internal and externalstakeholders in proposing and establishing its long-term goals in manufacturingoperations.

Dishman's products and processes are developed in accordance with strictly definedlocal and international rules to ensure safety and Health of workers as well as theenvironment. This is achieved by conducting the Risk Assessment Qualitative RiskAssessment Process Hazard Assessment Identification of significant environmentalaspects Safety Audits customer audits HAZOP study and Environment audits. Safety &Environment Management Program are being taken to reduce the Significant Risk &Environment Aspects.

The Company's QHSE policy is being implemented among others through (i) Maintainingthe "Zero Discharge" of waste water by series of treatment; (ii) Strippersystem Multiple effect evaporator and ATFD for concentrated effluent stream; (iii)Biological Effluent Treatment System (iv) Practicing On-site emergency plan by conductingmock-drills; (v) Replacement of hazardous process / chemical to non-hazardous process forconverting to low hazards; (vi) Fire detection and protection system available at site;(vii) Conducting intensive QHSE Training programs including contractor employees andmonitoring the effectiveness of the same (viii) Participation of employees in Safetycommittee meetings at all levels and celebrating the National Safety Day / Week and WorldEnvironment Day as well as observing Fire Service Day (ix) Tree plantation to increase thegreen cover at site (x) Independent safety and environment audits at regular intervals bythird party and also in-house by cross functional team; (xi) In-house medical and healthfacility at site for preemployment & periodical medical check-up of all employeesincluding contract employees;(xii) Additional health checkup for employees based on theiroccupational needs (xiii) Blood Donation Camp at site in association with the AhmedabadRed Cross Society for social cause; (xiv) Participation and paper presentation on goodpractices adopted by dishman on SHE management in National and International Conferences.(xv) Rated low risk facility by various international Customer by conducting in depth EHSaudit .

Dishman continues to pursue world class operational excellence on Process SafetyManagement (PSM). Dishman has established the capabilities within the Company anddeveloped in-house experts in various facets of PSM. Process Hazard Analysis (PHA) atvarious plants is being carried out to reduce process safety risks.

In its pursuit of excellence towards sustainable development and to go beyondcompliance Dishman integrated its ISO 14001:2004 EMS ISO 9001:2008 QMS and ISO18001:2007 OSHA management systems and certified for HACCP and FAMI-Qs for Vitamin D3plant. The company is also certified EN/ISO 13485:2012 for Medical Disinfectant Products.The adopted systems are being monitored for continual improvements.

Your Company's efforts are recognized by State Level National Level and Internationallevel Awards from time to time. This year Company has been awarded the most prestigiousaward as:

1) Indian Chemical Council (ICC) has authorized the Company for use of Responsible CareLogo.

2) The company is also winner of Safety award for Bavla and Naroda site given byGujarat Safety Council and Department of Health and Safety Government of Gujarat.


• As you are aware in February 2010 your Company has issued Secured RedeemableNon-Convertible Debentures of Rs. 75.00 crores in the form of Separately TransferableRedeemable Principle Parts ("STRPPs") of Rs. 10 lacs each fully paid-up onprivate placement basis and the said NCDs has been listed on the Bombay Stock ExchangeLtd. (BSE) in the list of securities of F Group - Debt Instrument w.e.f. 13th May 2010.These NCDs will be redeemed at par at the end of 4th 5th 6th & 7th year in ratio of20:20:30:30 respectively from the date of issue.

During the year as per the terms of said NCD on 18th February 2016 the Company hasredeem 30% of the Non-convertible Debenture (first Trenche) issued by the Company inFebruary 2010 and accordingly; Company has paid Rs. 27.16 Cr. towards principal paymentand interest thereon to the Debenture holders. Now as on 31 st March 2016 there is anoutstanding NCD -I (first trenche) amounting to Rs. 22.50 crores.

• In June 2010 the Company has issued second trenche of its Secured RedeemableNon- convertible Debentures (NCD) of Rs. 75.00 crores in the form of SeparatelyTransferable Redeemable Principle Parts ("STRPPs") of Rs. 1.00 lac each fullypaid-up on private placement basis and the said NCDs have also been listed on the BombayStock Exchange Ltd. (BSE) in the list of securities of F Group - Debt Instruments w.e.f.17th September 2010. These NCDs will be redeemed at par at the end of 4th & 5th yearin the ratio of 50:50 respectively from the date of issue.

During the year as per the terms of said NCD on 16th June 2015 the Company hasredeemed remaining 50% of the NCD-II (second tranche) issued by the Company in June 2010and accordingly; Company has paid Rs. 38.25 crores towards principal payment and interestthereon to the Debenture holders. Now as on 31st March 2016 there is no outstandingNCD-II (second tranche) and it has been fully repaid as per the terms.

The Company is regularly paying principal and interest on the said NCDs on the duedate. As per the Circular No. 04/2013 dated 11th February 2013 issued by Ministry ofCorporate Affairs Government of India Company had created Debenture Redemption Reserve(DRR) in respect of both trenches of NCDs issued by the Company. The Company ismaintaining requisite DRR and has deposited an amount of Rs. 3.38 Crores by way of fixeddeposit with Corporation Bank being 15% of the maturing amount of Rs. 22.50 Crores whichis going to be matured during the Financial Year 2016-2017.


During the year Board of Directors of the Company in its meeting held on 24thFebruary 2016 recommended a Bonus issue of Equity shares in the ratio of 1 (one) equityshare for every 1 (one) equity share held as on the record date to be determined by theBoard. Subsequent to 31st March 2016 the Company has issued and allotted 80697136equity shares of Rs. 2/- each as fully paid-up bonus shares in the ratio of 1 (one)equity share for every 1 (one) equity share held to those shareholders whose names appearin the Register of Members / List of Beneficial owners as on the Record Date i.e. on May3 2016. With this allotment the total issued and paid-up capital of the Company hasincreased to Rs. 322788544/- and new allotted bonus shares has been listed and admittedto dealings on National Stock Exchange of India Ltd. Mumbai (NSE) and Bombay StockExchange Ltd. Mumbai (BSE) w.e.f. 13th May 2016.


Board of Directors of the Company at their meeting held on 24th February 2016 approveda Scheme of Arrangement and Amalgamation amongst the Company; Carbogen Amcis (India)Limited; Dishman Care Limited and their respective shareholders and Creditors("Scheme"). This Amalgamation will amongst others consolidate the businesswhich will provide a high level of synergistic integration better operational managementand provide value addition. It would re-emphasis the strategy of "One Company TwoBrands" with both "Dishman" and "Carbogen Amcis" brands beingreflected in one company. Synergies arising out of consolidation of business will lead toenhancement of net worth of the combined business and reflection of true net-worth in thefinancial statements improved alignment of debt and enhancement in earnings and cash flow.

The Scheme involves the following subject to the approval of statutoryauthorities/shareholders etc. as required under the Companies Act and Securities andExchange Board of India:

(i) Slump Sale of the Effluent Treatment Plants Undertaking ("ETPUndertaking") from the Company to Carbogen Amcis (India) Ltd ("CAIL") awholly owned subsidiary of the Company as a going concern together with all itsproperties assets liabilities rights benefits and interest therein without assigningvalue to individual assets and liabilities; ("Slump Sale");

(ii) Amalgamation of Dishman Care Ltd ("DCL") a wholly owned subsidiary ofthe Company with the Company and;

(iii) thereafter amalgamation of the Company with CAIL

(iv) change in name of "Carbogen Amcis (India) Limited" to "DishmanCarbogen Amcis Limited"

Upon Amalgamation of the Company into CAIL Shareholders of the Company shall be issued1 (One) fully paid up equity share of CAIL of face value Rs. 2/- (Rupee Two Only) each forevery 1 (One) fully paid up equity share of Rs. 2 (Rupee Two only) each held in theCompany. Pursuant to amalgamation the shareholding of CAIL shall be the mirror image ofthe shareholding of the Company and equity shares issued by CAIL on amalgamation shall belisted and admitted for trading in BSE & NSE in accordance with the prescribed SEBIRegulations.

Details of Scheme are available on the Company's website link: .

The Company has received Observation letter without any adverse comments from bothStock Exchanges i.e. National Stock Exchange of India Ltd. and Bombay Stock ExchangeLtd. and Company is in process of filing Draft Scheme with Honorable High Court ofGujarat.


The equity shares of the Company are listed on the National Stock Exchange of IndiaLtd. Mumbai (NSE) and Bombay Stock Exchange Ltd. Mumbai (BSE). Annual listing fees forthe FY 2016-2017 as applicable have been paid before due date to the concerned StockExchanges.

The Secured Redeemable Non-Convertible Debentures (NCDs) issued by the Company is alsolisted at Bombay Stock Exchange Ltd. Mumbai (BSE). Annual listing fees for the FY2016-2017 as applicable have also been paid before due date to the BSE.


Your Company has several Committees which have been established as part of the bestCorporate Governance practices and are in compliance with the requirements of the relevantprovisions of applicable laws and statutes.

The Company has following Committees of the Board:

• Audit Committee

• Stakeholder Relationship Committee

• Nomination and Remuneration Committee

• Corporate Social Responsibility Committee

• Management Committee

• Sexual Harassment Committee

During the year the Board has accepted all the recommendations made by variouscommittees including Audit Committee. The details with respect to the compositionspowers terms of reference etc. of relevant committees are given in details in theCorporate Governance Report which forms part of this Annual Report.


i) Extract of Annual Return

The extracts of Annual Return pursuant to the provisions of sub-section 3(a) of Section134 and sub-section (3) of Section 92 of the Companies Act 2013 read with Rule 12 of theCompanies (Management and administration) Rules 2014 is annexed herewith as Annexure Ato this Report.

ii) Board Meetings

Regular meetings of the Board are held inter-alia to review the quarterly results ofthe Company. Additional Board meetings are convened to discuss and decide on variousbusiness policies strategies and other businesses. Due to business exigencies certainbusiness decisions are taken by the board through circulation from time to time.

During the FY 2015-16 the Board met Eight (8) times i.e. on 28th May 2015 17th July2015 22nd August 2015 31st August 2015 29th October 2015 5th February 2016 24thFebruary 2016 and 10th March 2016. Detailed information on the meetings of the Board isincluded in the report on Corporate Governance which forms part of this Annual Report.

iii) Related Party Transactions

All Related Party Transactions are placed before the Audit Committee as also the Boardfor approval. Since all the related party transactions entered into during the financialyear were on an arm's length basis and were in the ordinary course of business.Particulars of contracts or arrangements with related parties referred to in Section188(1) of the Companies Act 2013 in the prescribed Form AOC-2 is appended as AnnexureB to this Board's report. The policy on Related Party Transactions has been approvedby the Board and uploaded on the website of the Company. The details of the transactionswith Related Party are provided in the accompanying financial statements vide note no.27.16 of notes on financial statement as per requirement of Accounting Standard 18-relatedparty disclosure issued by ICAI. These transactions are not likely to conflict with theinterest of the Company at large. All significant transaction with related parties isplaced before audit committee periodically.

iv) Particulars of Loans Guarantees or Investments under Section 186

During the year under review the Company has made investments Loan guarantee incompliance of Section 186 of the Companies Act 2013 the said details are given in thenotes to the financial statements.

v) Material Changes and Commitments Affecting the Financial Position of the Companyoccurred after the end of Financial year

The Company has increased its Authorised Share Capital vide Ordinary Resolution passedon 21st April 2016 by means of Postal Ballot to Rs. 330000000 (Rupees thirty threecrores only) divided into 165000000 (sixteen crores fifty lacs) equity shares of Rs.2/- (Rupees two only) each from Rs. 200000000 (Rupees twenty crores only) divided into100000000 (ten crores) equity shares of Rs. 2/- (Rupees two only) each by creating anadditional 65000000 (six crores fifty lacs) equity shares of Rs. 2/- (Rupees two only)each aggregating to Rs. 130000000 (Rupees thirteen crores only).

Consequential amendments in Clause V of Memorandum of Association regarding increase inAuthorised Share Capital of the Company from Rs. 20.00 crore to Rs. 33.00 crore has beenmade vide Special Resolution passed on 21st April 2016 by means of Postal Ballot.

On 5th May 2016 the Company has made allotment of 80697136 bonus shares of face valueof Rs. 2/- each in ratio of 1:1 (i.e. one equity share for every one equity share held bythe Members) to the Members. With this allotment the total issued and paid-up capital ofthe Company has increased to Rs. 322788544/- (Rupees Thirty Two Cores Twenty Seven LacsEighty Eight Thousand Five Hundred Forty Four only) comprising of 161394272 (SixteenCrores Thirteen Lacs Ninety Four Thousand Two Hundred Seventy Two) equity shares of facevalue of Rs. 2/- (Rupees Two only) each.

vi) Subsidiaries Joint Ventures and Associate Companies

During the year following changes happened in Subsidiary Joint Ventures and AssociateCompanies:

During the year the Company has acquired further 50% stake in Schutz Dishman BiotechLtd. (SDBL) a Joint Venture Indian Company from the existing JV Partner i.e. SCHUTZ& CO. BETEILIGUNGSGESELLSCHAFT MBH Germany. Earlier Company is holding 22.33% stakein SDBL and after acquisition of further 50% stake SDBL become a subsidiary of theCompany.

In view of the above the total number of subsidiaries including wholly ownedsubsidiaries as on 31 March 2016 was Nineteen (19) and one (1) Associate company.


Pursuant to the provisions of Section 129 134 and 136 of the Companies Act 2013 readwith rules framed thereunder and pursuant to Regulation 33 of SEBI (LODR) Regulations2015 your Company had prepared consolidated financial statements of the company and itssubsidiaries and a separate statement containing the salient features of financialstatement of subsidiaries joint ventures and associates in Form AOC-1 forms part of theAnnual Report.

The annual financial statements and related detailed information of the subsidiarycompanies will be provided on specific request made by any shareholders and the saidfinancial statements and information of subsidiary companies are open for inspection atthe registered office of the company during office hours on all working day except Sundayand holidays between 2 p.m. to 4 p.m. The separate audited financial statement in respectof each of the subsidiary companies is also available on the website of the Company.

As required under Regulation 33 of SEBI (LODR) Regulations 2015 and in accordance withthe requirements of Accounting Standard (AS-21) issued by the Institute of CharteredAccountants of India the Company has prepared Consolidated Financial Statements of theCompany and its subsidiaries and is included in the Annual Report.

While preparing the consolidated financial statements Company has consolidated theaccounts of one Joint Venture company namely Schutz Dishman Biotech Ltd. (22.33% holdingby the Company upto 30th March 2016) and one associate company namely Bhadra RajHoldings Pvt. Ltd. (40% holding by the Company) as per the requirements of AccountingStandard 27 (AS-27) and Accounting Standard 23 (AS-23) respectively.


i) Issue of Equity Shares with differential rights as to dividend voting or otherwise.

During the year 2015-2016 the Company has not issue any of Equity Shares withdifferential rights as to dividend voting or otherwise.

ii) Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and ESOS.:

During the year the Company has not issued any shares under Employee Stock OptionScheme.

iii) Neither the Managing Director nor the Whole-time Directors of the Company receiveany remuneration or commission from any of its subsidiaries. :

Managing Director and Whole time Director of the Company has not received anyremuneration and commission from any Indian subsidiaries during the year under review.

iv) No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.

There are no significant and material orders passed by the Regulators or Courts orTribunals which could impact the going concern status and the Company's future operations.

DIRECTORS & KMPs Retire by Rotation

Mr. Janmejay R. Vyas Chairman & Managing Director of the Company retire byrotation at the forthcoming Annual General Meeting and being eligible offers himself forreappointment.

Statement of Declaration by Independent Directors

The Independent Directors have submitted the Declaration of their Independence asrequired pursuant to Section 149(7) of the Companies Act 2013 stating that they meet thecriteria of independence as provided in sub section (6).

Key Managerial Personnel

During the year under review Mr. Arpit J. Vyas Managing Director of the Company hasalso been appointed as Chief Financial Officer (CFO) of the Company w.e.f. 17th July2015. Mr. Tushar D. Shah Company Secretary has resigned from the Company w.e.f. 26thFebruary 2016.

Board Evaluation & Criteria

Pursuant to the provisions of the Companies Act 2013 and Regulation 17 of SEBI (LODR)Regulations 2015 a structured questionnaire was prepared after taking into considerationthe various aspects of the Board's functioning composition of the Board and itscommittees. The Board has carried out an annual performance evaluation of its ownperformance the directors individually as well as the evaluation of the working of itsCommittees. The Board of Directors expressed their satisfaction with the evaluationprocess.

Board diversity

The Company recognizes and embraces the importance of a diverse board in its success.We believe that a truly diverse board will leverage differences in thought perspectiveknowledge skill regional and industry experience cultural and geographical backgroundage ethnicity race and gender which will help to retain our competitive advantage. TheBoard has adopted the Board Diversity Policy which sets out the approach to diversity ofthe Board of Directors. The Board Diversity Policy is available on our .

Policy on Director's appointment and remuneration

The Company's Policy on Directors' appointment and remuneration of Directors and otherrelated matters as provided under Section 178(3) of the Companies Act 2013 is availableon the website of the Company.


The information required under Section 197 of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are provided in separate annexure forming part of this Report as Annexure C.

The statement containing particulars of employees as required under Section 197 of theCompanies Act 2013 read with Rule 5(2) & (3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 forms part of this report as AnnexureD.


The independent Directors are provided with necessary documents brochures reports andinternal policies to enable them to familiarize with the Company's procedures andpractices. The Company undertook various steps to make the Independent Directors have fullunderstanding about the Company. The details of such familiarisation programmes have beendisclosed on the Company's website at .


A Separate meeting of Independent Directors held on 5th February 2016 without theattendance of Non-Independent Directors and members of the Management. In the saidmeeting Independent Directors reviewed the followings:

• Performance evaluation of Non Independent Directors and Board of Directors as awhole;

• Performance evaluation of the Chairperson of the Company taking into account theviews of executive directors and nonexecutive directors;

• Evaluation of the quality of flow of information between the Management andBoard for effective performance by the Board. The Board of Directors expressed theirsatisfaction with the evaluation process.


Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and ability state that :

• that in the preparation of the annual accounts for the financial year ended 31st March 2016 the applicable accounting standards have been followed along with properexplanation relating to material departures;

• that the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit or loss of the Company for that period;

• that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

• the directors have prepared the annual accounts on a going concern basis;

• the directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

• the director have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.


The details in respect of internal financial control system and their adequacy areincluded in Management Discussion and Analysis Report which forms part of this report.


Assets of your Company are adequately insured against various perils.


As per Regulation 17(9) of SEBI (LODR) 2015 the Company has framed formal RiskManagement framework for risk assessment and risk minimization for Indian operation whichis periodically reviewed by the Board of Directors to ensure smooth operations andeffective management control. The Audit Committee has additional oversight in the area offinancial risks and control.


The Company has adopted a Whistle Blower Policy pursuant to the requirements of theCompanies Act 2013 and the SEBI (LODR) Regulations 2015. The Policy empowers all thestakeholders to raise concerns by making protected disclosures as defined in the Policy.

The policy also provides for adequate safeguards against victimization of whistleblower who avail of such mechanism and also provides for direct access to the Chairman ofthe Audit Committee in exceptional cases. The details of the Whistle Blower Policy areexplained in the Report on Corporate Governance and the Policy is available on the websiteof the Company at .


The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof Sexual Harassment of Women at the Workplace (Prevention Prohibition & Redressal)Act 2013. Internal Complaints Committee (ICC) has been set up to redress complaintsreceived regarding sexual harassment. All employees (permanent contractual temporarytrainees) are covered under this policy.

There were no incidences of sexual harassment reported during the year under review interms of the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013.


Statutory Auditors

As per the provisions of the Act M/s. V. D. Shukla & Co. Chartered AccountantsAhmedabad (Firm Registration No. 110240W) and M/ s. Haribhakti & Co. LLP CharteredAccountants Mumbai (Firm Registration No. 103523W) are proposed to be re-appointed asJoint Statutory Auditors of the Company provided that the appointment of M/s. V. D. Shukla& Co. shall be from the conclusion of this 33rd Annual General Meeting till theconclusion of 36th Annual General Meeting and the appointment of M/s. Haribhakti & Co.LLP shall be from the conclusion of this 33rd Annual General Meeting till the conclusionof 37th Annual General Meeting subject to ratification of the appointment by the membersat every AGM held after the ensuing 33rd Annual General Meeting.

As required under Section 139 of the Companies Act 2013 the Company has received awritten consent from M/s. V. D. Shukla & Co. Chartered Accountants Ahmedabad (FirmRegistration No. 110240W) and M/s. Haribhakti & Co. LLP Chartered AccountantsMumbai (Firm Registration No. 103523W) for such re-appointment and also a certificate tothe effect that their re-appointment if made would be in accordance with Section 139(1)of the Companies Act 2013 and the rules made thereunder.

The Audit Committee and Board of Directors recommend the re-appointment of statutoryauditors as mentioned in item no.4 of the accompanying notice of ensuing Annual GeneralMeeting.

The Notes on Financial Statements referred to in the Auditors' Report areself-explanatory and do not call for any further comments. The Auditor' Report does notcontain any qualification or reservation.

Internal Auditors

M/s. Shah & Shah Associates (Firm Registration No. 113742W) Chartered AccountantsAhmedabad has been internal auditor of the Company. Internal auditors are appointed by theBoard of Directors of the Company on a yearly basis based on the recommendation of theAudit Committee. The Internal Auditor's reports and their findings on the internal audithas been reviewed by the Audit Committee on a quarterly basis. The scope of internal auditis also reviewed and approved by the Audit Committee.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the rules madethereunder the Company had appointed Mr. Ashok P. Pathak Practicing Company Secretary(Membership No. ACS: 9939; CP No: 2662) as Secretarial Auditors to undertake theSecretarial Audit of the Company. The Secretarial Audit Report is appended in the AnnexureE to the Directors' Report. The observations and comments if any appearing in theSecretarial Audit Report are self-explanatory and further explain/clarify in note no.10(b)of Corporate Governance Report attached to the Directors' Report.

Cost Audit

Central Government has notified rules for Cost Audit and as per new Companies (CostRecords and Audit) Rules 2014 issued by Ministry of Corporate Affairs; Company is notfalling under the Industries which will subject to Cost Audit. Therefore filing of costaudit report for the FY 2016-17 is not applicable to the Company.


As per Regulation 34 of SEBI (LODR) Regulations 2015 a separate section on corporategovernance practices followed by the Company as well as "Management Discussion andAnalysis" confirming compliance is set out in the Annexure forming an integral partof this Report. A certificate from Practicing Company Secretary regarding compliance withcorporate governance norms stipulated in Regulation 34 of SEBI (LODR) Regulations 2015 isannexed to the report on Corporate Governance.

In compliance with one of the Corporate Governance requirements as per Regulation 34 ofthe SEBI (LODR) Regulations 2015 the Company has formulated and implemented a Code ofConduct for all Board members and senior management personnel of the Company who haveaffirmed compliance thereto.


Information of conservation of energy technology absorption and foreign exchangeearnings and outgo as required under Section 134 (3) (m) of the Companies Act 2013 readwith rule 8 of The Companies (Accounts) Rules 2014 is given in the Annexure F andforms part of this Report.


Corporate Social Responsibility (CSR) is not just a duty; it is an approach towardsexistence. The Company see CSR as a creative opportunity to fundamentally strengthen theCompany's business while contributing to the society and creating social environmentaland economic impact. The Company's motto is to build a sustainable life for the weaker andunder-privileged sections of the Society. The Company continued extending help towardssocial and economic development of the villages and the communities located close to itsoperations and also providing assistance to improving their quality of life. Company'sintention is to ensure that we meet the development needs of the local community.

The Company has constituted Corporate Social Responsibility (CSR) Committee and hasframed a CSR Policy. The brief details of CSR Committee and contents of CSR policy isprovided in the Corporate Governance Report. The details of CSR activities carried out bythe Company are appended in the Annexure G to the Director's Report. The CSR Policyis available on the website of the Company.


Your Directors would like to express their appreciation for the assistance andco-operation received from foreign institutions banks associates Governmentauthorities customers supplier vendors and members during the year under review. YourDirectors also wish to place on record their deep sense of appreciation for the committedservices and teamwork by the executives staff members and workers of the Company forenthusiastic contribution to the growth of Company's business.

By Order of the Board of Directors
Janmejay R. Vyas
Date : 19th May 2016 Chairman & Managing Director
Place : Ahmedabad DIN - 00004730



The Company has taken all the necessary measures from the beginning for energyconservation as part of maintaining the operating cost to the minimum.

Your Company has become a trading and self clearing member of Power Exchange of IndiaLimited (PXIL) from 2nd April 2012. The Power Trading initiative taken by yourCompany helped in energy conservation and minimize the cost of production.

During the year due to power trading initiative taken by the Company Company has gotbenefit of '150.38 lacs without any capital investment.


a. Purchased
Unit [KWH] 26924543 29873617
Total Amount ['] 217834094 225040582
Rate/ Unit ['] 8.09 7.53
b. Own Generation [through D.G. Unit]
Unit [KWH] 171920 273064
Unit Per ltr. of Diesel oil [KWH] 2.94 3.29
Cost/Unit ['] 17.41 18.52
2. DOC
Quantity [MT ] 12190.44 14099
Total Amount ['] 77692030.94 99674100
Average rate ['/MT ] 6373.19 7069.58
Quantity (LTRs.) 123464 130408
Total amount (') 3539712.88 5176134
Average rate ('/ LTR.) 28.67 39.69
Quantity (KG.) 58470 332382
Total cost (') 2993356 23983945
Average rate/kg. 51.19 72.15
5. Briqquite
Quantity [MT ] 46392 405.915
Total Amount ['] 2681546 21 29977
Average rate ['/MT ] 57.80 5259


Since the Company manufactures several bulk drugs bulk drug intermediates andspecialty chemicals it is not practical to apportion consumption of utilities per unit ofproduction.


Efforts made in Technology absorption - Research & Development (R & D)


The Company has fully equipped R & D facilities with sophisticated instruments andis constantly engaged in developing and updating manufacturing processes of the existingproducts leading to reduction in process time and cost of production and also indeveloping new products.

Based on the R & D activities carried out for the client if the molecule iscommercialized it can be converted into contract manufacturing during the entire lifecycle of the drug.


Your Company has created a state-of-the-art R & D center and cGMP pilot facility atBavla plant. The Company has been investing aggressively in its R & D activities tothe level of 2.32% of its turnover and continues augmenting R & D capabilities &productivity through technological innovations use of modern scientific and technologicaltechniques training and development.

EXPENDITURE ON R & D (Rs. in Crores)
Capital 0.18
Recurring 11.66
Total 11.84
Total R & D Expenditure as a percentage of Total Turnover 2.32%


Last year we successfully scaled up processes using enzyme catalyzed conversion. Theseprocesses were water based reactions which are environment friendly.

Dishman added an ultrafiltration equipment in one of its commercial plant which allowsDishman to undertake projects with special requirement of membrane filtration. One largefilter dryer with special facilities was on site for specific drying requirements ofcertain products.

We have also optimized our current processes in order to make them more energyefficient and also reduce the effluent load.

We are currently working on various other options for our existing products as well asnew ones.



The Exports of the Company has increased to '458.74 Crores during the year from '417.96Crores during the previous year reflecting a growth of 9.76% which constitute 94.71% ofthe total net sales of the Company during financial year 2015-2016. The Company isexporting mainly to USA UK Germany Netherland and Japan. Your Company is makingaggresive efforts to increase exports and develop new export markets.


The particulars have been given under Note nos. "27.05" and "27.08"of Notes Forming Part of the Financial Statements.