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Morepen Laboratories Ltd.

BSE: 500288 Sector: Health care
NSE: MOREPENLAB ISIN Code: INE083A01026
BSE 00:00 | 25 May 27.90 0.95
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NSE 00:00 | 25 May 27.90 1.05
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OPEN 26.95
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VOLUME 224773
52-Week high 44.35
52-Week low 14.80
P/E 48.10
Mkt Cap.(Rs cr) 1,255
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 26.95
CLOSE 26.95
VOLUME 224773
52-Week high 44.35
52-Week low 14.80
P/E 48.10
Mkt Cap.(Rs cr) 1,255
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Morepen Laboratories Ltd. (MOREPENLAB) - Director Report

Company director report

Dear Shareholders

Your Directors have pleasure in presenting the 32 Annual Report on business operationsand achievements of the Company together with the Audited Financial Statements for thefinancial year ended March 31 2017.

FINANCIAL HIGHLIGHTS (Rs. in Lakhs)
Particulars 2016-17 2015-16
Total Revenue 54073.08 45363.54
Operating Surplus 6358.95 6537.57
Finance Cost 698.60 1041.29
Cash Surplus 5660.35 5496.28
Non-Cash Items :
Depreciation & Amortisation 3356.17 3492.18
Profit/(Loss) before Extra-ordinary items and Tax 2304.18 2004.10
Extra ordinary items Income/(Expense) (Net) (440.00)
Profit/(Loss) Before Tax 2304.18 1564.10
Tax Expense:
Current Tax (MAT) (337.68)
MAT Credit Entitlement 337.68
Earlier Years 13.70
Profit/(Loss) After Tax 2304.18 1577.80
EPS (Basic/Diluted) 0.50 0.35

REVIEW OF PERFORMANCE

With revenues of Rs. 54073.08 Lakhs during the year your Company has registered agrowth of 19% over the last year revenues of Rs. 45363.54 Lakhs. The growth in operatingrevenues has been quite impressive with current year operating revenues touching Rs.53703.54 Lakhs against preceding year revenues of Rs. 45246.30 Lakhs.

The Company's consistent focus on backward integration research and process innovationhas helped it secure a better foothold in both domestic & export markets. Theinvestments in the new markets have started bearing fruit in the form of decent results.

Active Pharmaceutical Ingredients (API) and Home Diagnostics businesses have beenshowing great potential and have recorded revenue growth of 23% during the currentfinancial year. Product Contract Manufacturing and Brand Sharing business has registered ahealthy growth of 16% during the year. The Branded Formulation business has alsoregistered a steady growth of 10% during the current year.

Net Profit after Tax for the year at Rs. 2304.18 Lakhs is up by 46% over previous yearprofits of Rs. 1577.80 Lakhs.

The Finance cost at Rs. 698.60 Lakhs has come down by 33% against previous year cost ofRs. 1041.29 Lakhs.

During the year cash surplus has been at Rs. 5660.35 Lakhs as against the precedingyear's cash surplus of Rs. 5496.28 Lakhs.

DIVIDEND

For the year under review the Directors do not recommend any dividend due to absenceof distributable surplus.

RESERVES

Net Profit after tax of Rs. 2304.18 Lakhs is proposed to be carried forward to theSurplus/(Deficit) Account. During the year under review no amount was transferred to theGeneral Reserve.

DEPOSITS

Your Company has not accepted any deposits from the public within the meaning ofSection 73 of the Companies Act 2013 ('the Act') read with the Companies (Acceptance ofDeposits) Rules 2014 and no amount of principal or interest on deposits from the publicwas outstanding as on the date of Balance Sheet.

FINANCES

The management is putting its best efforts to expand its business by introduction ofnew products cost reduction process improvement and investments in the new marketswhile keeping its commitment of profitable growth.

The Company has been servicing its debts regularly as per the terms approved by itslenders. Despite the unavailability of any institutional working capital support theCompany has recorded handsome growth both in its revenues as well as in profits.

The provisions of the Act on account of accumulated losses have placed restrictionson the Company for the redemption of Preference Shares issued to lenders under theCorporate Debt Restructuring (CDR) Scheme and to other entities. As a result the Companyhas not been able to redeem these Preference Shares during the year although they havebeen due for redemption. The Company is analysing various alternatives for the earlyresolution of the matter.

SHARE CAPITAL

The total paid up share capital of the Company as on March 31 2017 was Rs. 20961.06Lakhs comprising of Equity Share Capital of Rs. 8995.86 Lakhs and Preference ShareCapital of Rs. 11965.20 Lakhs. During the year under review there was no change in thepaid-up share capital of the Company.

The Equity Shares issued by Company are listed at following Stock Exchanges as on March31 2017:

1. National Stock Exchange of India Limited (NSE)

2. Bombay Stock Exchange (BSE)

Annual listing fee for the financial year 2017-18 has been paid to both the StockExchanges. The Equity Shares continue to be listed on both NSE and BSE.

The Company has not been able to pay dividends to the Preference Shareholders for morethan two years on account of the statutory restrictions placed by the Act for theCompanies having accumulated losses. Hence the Preference Shareholders are entitled tovote on all resolutions placed before the Company and the proportion of voting rights ofEquity Shareholders to the voting rights of Preference Shareholders shall be in proportionto their paid up capital.

BUSINESS PERFORMANCE

During the year under review sales revenues at Rs. 52917.58 Lakhs have registered agrowth of 21% over previous year sales revenues of Rs. 43669.21 Lakhs as a result ofexpansion across all trade segments of the Company viz; Active Pharmaceutical Ingredients(API) business &

Home Diagnostics business at 23% Branded Formulation business at 10% and ProductContract Manufacturing & Brand Sharing business at 16%.

Net Profit after Tax for the year at Rs. 2304.18 Lakhs has grown by 46% over Rs.1577.80 Lakhs in the previous year. Cash surplus during the year has been at Rs. 5660.35Lakhs as against the preceding year's cash surplus of Rs. 5496.28 Lakhs.

The Company foresees significant improvements in its operating as well financialperformance across all business segments.

Division wise business performance is detailed hereunder:

Active Pharmaceutical Ingredients (API)

Current year API revenue of Rs. 34131.15 Lakhs has registered a growth of 23% over theprevious year revenues of Rs. 27646.29 Lakhs. Exploring new markets with the strongproduct range has led to growth of 36% in the domestic markets while exports business hasalso recorded handsome growth of 19%. Rosuvastatin and Montelukast business recordedgrowth of 84% and 34% respectively. Loratadine Fexofenadine Atorvastatin andSitagliptin revenues are up by 6% - 13% over the previous year.

API business continues to make substantial contribution of 65% of the overall businessof the Company against 63% in the last year.

The Company's consistent focus on research quality of the product offerings andaddition of new products has led to acquisition of new customers apart from generatingadditional demand from the existing customers. Loratadine was the highest grossing productduring the year with sales revenues of Rs. 11318.71 Lakhs while Montelukast andAtorvastatin attained highest ever sales revenues of Rs. 9883.57 Lakhs and Rs. 5879.61Lakhs respectively. Other products like Rosuvastatin Calcium Sitagliptin Phosphate andFexofenadine continue to grow at an impressive pace recording a combined growth of 34%over the previous year with revenues of Rs. 5686.39 Lakhs against Rs. 4255.02 Lakhs inthe previous year.

Home Diagnostics

The Company's Home Diagnostics business registered a growth of 23% during the yearunder review with revenues touching Rs. 7776.19 Lakhs as against previous year revenuesof Rs. 6311.77 Lakhs. Blood Glucose Monitors major product of the Home Diagnosticsbusiness recorded a growth of 40% with annual sales revenues of Rs. 4685.04 Lakhsagainst Rs. 3337.94 Lakhs during the last financial year. During the year Blood PressureMonitors and Nebulizers have grown by 29% & 46% with sales revenue of Rs. 1241.30Lakhs and Rs. 436.56 Lakhs respectively.

In its commitment of delivering good health at home at affordable prices the Companyhas also started in house manufacture of Blood Glucose Monitors during the year. TheCompany expects the Home Diagnostics business to continue its growth march in view ofincreasing consciousness amongst people about general well-being and the home diagnosticdevices getting affordable with the passage of time.

Finished Formulations

Finished Formulation business of the Company recorded a steady growth of 10% during theyear with total sales revenues of Rs. 11124.75 Lakhs out of which Branded Formulationscontributed Rs. 2658.78 Lakhs. Product Contract Manufacturing and Brand Sharing businessgrew by 16% with current year annual revenues of Rs. 8465.97 Lakhs over preceding yearrevenues of Rs. 7302.68 Lakhs.

SUBSIDIARIES / JOINT VENTURES / ASSOCIATES

The Company has three subsidiaries as on March 31 2017 namely:

1. Dr. Morepen Ltd.

2. Total Care Ltd. (Subsidiary of Dr. Morepen Ltd.)

3. Morepen Inc. USA

Dr. Morepen Limited

Dr. Morepen Limited the wholly owned subsidiary of the Company has been in enviableposition in OTC markets selling and marketing Dr. Morepen range of OTC and other products.During the year the Company's business recorded a growth of 45% with current year revenueof Rs. 4925.16 Lakhs against previous year revenues of Rs. 3390.23 Lakhs.

The Company's OTC business recorded a growth of 44% with revenues of Rs. 2146.58 Lakhsas against Rs. 1493.23 Lakhs in the previous year.

The Brand Sharing business also posted a robust growth of 36% with annual revenue ofRs. 2142.85 Lakhs in comparison to Rs. 1572.62 Lakhs in the last year. The Company's topbrands Lemolate and Burnol have registered tremendous growth at 81% and 45% respectively.The Brand Sharing business has nearly 400 Stock Keeping Units (SKUs) under various productcategories comprising of Cough & Cold Relief General well-being Vitamins &Minerals Skin Hair & Oral Care. The Company expects to continue its growth in theOTC and Brand Sharing business with the continuous addition of fresh products under theexisting or new brands entering new markets and increasing product reach andavailability.

The Grooming business of the Company which was launched during the last fiscal -considering the ever increasing grooming needs of the younger population is showing goodpromise with current year sales revenue of grooming products at Rs. 559.40 Lakhs. TheCompany expects the revenues to increase in the coming years with increase in brandrecognition.

The 'Dr. Morepen - NOW (Nation on Wellness)' business which offers customizedcomprehensive programme on wellness for individuals bringing together Nutrition and'External Counter Pulsation (ECP)' Therapy Yoga Physiotherapy and others to improvecardiovascular fitness & overall health is in the process of making in-roads amongstthe patrons. During the year under review it was able to generate revenue of Rs. 76.31Lakhs. The management is confident of expanding the reach of ECP therapy and relatedprogrammes by opening new NOW centers in the coming years.

Total Care Limited

The Company is dealing in OTC & Health Care products. The scale of Company'soperations was small during the year with the total revenues of Rs. 13.55 Lakhs and lossof Rs. 8.93 Lakhs.

Morepen Inc.

Morepen Inc. is the marketing and distribution interface of the Company in USA forvarious OTC & other products. During the year under review the Company recorded agrowth of 25% with revenue at Rs. 65.25 Lakhs ($101089) as against Rs. 52.20 Lakhs($78999) in the previous year while the current year loss was Rs. 32.62 Lakh againstprofit of Rs. 8.69 Lakhs in the last year.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company pursuant to Section 129 (3) of theAct prepared in accordance with the principles and procedures required for thepreparation and presentation of consolidated financial statements as laid down under theAccounting Standard (AS) 21 - Consolidated Financial Statements forms part of AnnualReport for the year under review.

A Statement containing the salient features of the financial statements of Company'sSubsidiaries pursuant to Section 129 of the Act read with the Rule 5 of the Companies

(Accounts) Rules 2014 is annexed to this report as ANNEXURE 'A' in theprescribed form AOC -1.

DIRECTORS & KEY MANAGERIAL PERSONNEL

Changes in Directors & Key Managerial Personnel

The members at the 31 Annual General Meeting (AGM) of the Company held on September 232016 approved the re-appointment of Mr. Sushil Suri Chairman & Managing Director ofthe Company who was liable to retire by rotation pursuant to Section 152 and otherapplicable provisions of the Act read with the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 as amended or re-enacted from time to time.

The Board of Directors of the Company has appointed Ms. Anju Suri (DIN: 00042033) as aNon-Executive Director (Additional Director) pursuant to provisions of Section 149 152161 and other applicable provisions if any of the Act read with the Companies(Appointment and Qualification of Directors) Rules 2014 and Regulation 17 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 ('ListingRegulations') as amended or re-enacted from time to time to fulfill the requirement ofhaving a Woman Director on the Board and to hold office up to the conclusion of theensuing Annual General Meeting. The aforesaid appointment was the result of vacancy causedby Ms. Archana S. Bhargava (DIN: 02505308) ceasing to be a Director at the 31 AGM of theCompany.

Dr. A. K. Sinha Whole-time Director of the Company who is liable to retire byrotation pursuant to the provisions of Section 152 and other applicable provisions of theAct read with Companies (Appointment and Qualification of Directors) Rules 2014 asamended or re-enacted from time to time has given his consent and being eligible hasoffered himself for re-appointment in the ensuing Annual General Meeting.

Your Directors also recommend the appointment of Ms. Anju Suri (DIN: 00042033) who hasgiven her consent and being eligible has offered herself for appointment as aNon-Executive Director (Woman Director) pursuant to the provisions of Section 149 152 andother applicable provisions if any of the Act read with the Companies (Appointment andQualification of Directors) Rules 2014 and Regulation 17 of Listing Regulations asamended or re-enacted from time to time at the ensuing Annual General Meeting.

Declaration by Independent Director(s) and re-appointment

The Company has received necessary declaration from each Independent Director as perthe provisions of Section 149(7) of the Act that he/she meets the criteria of independencelaid down in Section 149(6) of the Act.

Evaluation of Board Committees and Directors

Pursuant to the provisions of the Act and Regulation 17 of Listing Regulations theBoard has carried out its own performance evaluation that of the Committees and theindividual performance of its Directors. The manner in which the evaluation has beencarried out has been detailed in the Corporate Governance Report.

Familiarization Programme for Independent Directors

The details pertaining to Familiarization Programme for Independent Directors have beenincorporated in Corporate Governance Report.

Meetings of Board of Directors

The Board of Directors met 5 (five) times during the year under review to transact thebusiness of the Company the details of which are given in Corporate Governance Report.

Independent Directors Meeting

During the year under review a separate meeting of the Independent Directors of theCompany was held on February 08 2017 without the presence of Non Independent Directorsand members of the Management. The Independent Directors reviewed the performance ofNon-Independent Directors and the Board as a whole performance of Chairperson of theCompany and assessed the quality quantity and time-lines of flow of information betweenthe Company Management and the Board. All the Independent Directors of the Company werepresent in the meeting.

DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 134 (3) (c) of the Act your Directors to the best of theirknowledge and belief and according to the information and explanations obtained by themconfirm that:

a) in the preparation of annual accounts the applicable accounting standards have beenfollowed along with proper explanation relating to material departures whereverapplicable;

b) your Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit and loss of the Company for that period;

c) your Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for prevention and detecting of fraud and other irregularities;d) the annual accounts have been prepared on a going concern basis;

e) internal financial controls to be followed by the Company have been laid down andsuch internal financial controls are adequate and were operating effectively; and

f) proper systems to ensure compliance with the provisions of all applicable laws havebeen devised and that such systems were adequate and operating effectively.

MANAGERIAL REMUNERATION AND OTHER DISCLOSURES

Disclosure pursuant to Section 197 of the Act read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014:

a) Ratio of the remuneration of each Director to the median employee's remuneration andother details pursuant to Section 197 (12) of the Act read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014: The aforesaiddisclosure is annexed and forms part of this report as ANNEXURE 'B'.

b) Detail of every employee of the Company as required pursuant to Rule 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014: Theaforesaid disclosure is annexed and forms part of this report as ANNEXURE 'C'.

c) No Director of the Company including its Managing Director or Whole-Time Directoris in receipt of any commission from the Company or its Subsidiary Company.

AUDIT COMMITTEE

Your Company has an Audit Committee in compliance of the provisions of Section 177 ofthe Act and Regulation 18 of Listing Regulations. The complete details with respect toAudit Committee as required to be given under the aforesaid provisions are given in theCorporate Governance Report.

WHISTLE BLOWER POLICY / VIGIL MECHANISM

The Company has established a Whistle Blower Policy/Vigil Mechanism through which itsDirectors Employees and Stakeholders can report their genuine concern about unethicalbehaviors actual or suspected fraud or violation of the Company's Code of Conduct orEthics Policy. The said policy provides for adequate safeguard against victimization andalso direct access to the higher level of superiors including Chairman of the AuditCommittee in exceptional cases. The same is reviewed by the Audit Committee from time totime.

RISK MANAGEMENT

The Company has in place a mechanism to inform the Board about the risk assessment andminimisation procedures and periodical review to ensure that management controls riskthrough means of a properly defined framework.

The Company has formulated and adopted Risk Management Policy to prescribe riskassessment management reporting and disclosure requirements of the Company.

NOMINATION AND REMUNERATION COMMITTEE

Your Company has a Nomination and Remuneration Committee in compliance to theprovisions of Section 178 of the Act and Regulation 18 of Listing Regulations. Thecomplete details with respect to Nomination and Remuneration Committee as required to begiven under the aforesaid provisions are given in the Corporate Governance Report.

The Company has adopted a Nomination and Remuneration Policy for Directors KeyManagerial Personnel (KMP) and other employees of the Company as formulated by Nominationand Remuneration Committee pursuant to provisions of Section 178 of the Act and Para A ofPart D of Schedule II of Listing Regulations which acts as a guideline for determininginter-alia qualifications positive attributes and independence of a Director mattersrelating to the remuneration appointment removal and evaluation of performance of theDirectors Key Managerial Personnel Senior Management and other employees.

The detailed policy formulated by Nomination and Remuneration Committee is annexed andforms part of this report as ANNEXURE 'D'.

STATUTORY AUDITORS

M/s. M Kamal Mahajan & Co. LLP Chartered Accountants (FRN: 006855N/N500061) theStatutory Auditors of the Company were appointed by the shareholders to hold office tillconclusion of the ensuing Annual General Meeting. M/s. M Kamal Mahajan & Co. LLP wouldretire as Statutory Auditors of the Company at the conclusion of the ensuing AnnualGeneral Meeting and are not eligible to be reappointed pursuant to Section 139 of the Act.

Pursuant to provisions of Section 139 141 142 and other applicable provisions ifany of the Act read with the Companies (Audit and Auditors) Rules 2014 (including anystatutory modification(s) or re-enactment thereof for the time being in force) andsubject to all the applicable laws and regulations the Board of Directors recommend theappointment of M/s. Satinder Goyal & Co. Chartered Accountants (FRN: 027334N) whohave given their consent and confirmed their eligibility under Section 141 of the Act asthe Statutory Auditors of the Company for a term of five (5) consecutive years i.e. tohold office from the conclusion of this Annual General Meeting until the conclusion of 37Annual General Meeting to be held in the year 2022.

EXPLANATION TO AUDITORS REPORT

The Auditors vide Para (vii) (a) & (viii) of the Annexure-A to the Auditors' Reporthave commented on delay in deposit of Employee's State Insurance (ESI) Provident Fund(PF) Income Tax (TDS) & Value Added Tax (VAT) dues and delay in payment of dues tothe lenders. The Company has however deposited all the dues in respect of ESI PF VATand Income Tax (TDS) for the year under review. The Company is taking requisite steps forthe payment of interest dues to the lenders apart from timely deposit of above noted dues.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Act read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 Mr Praveen DuaCompany Secretary Proprietor of M/s. PD And Associates Company Secretaries wasappointed by Board of Directors of the Company as Secretarial Auditor of the Company forthe financial year 2016-17. The Secretarial Audit Report is annexed and forms part of thisreport as ANNEXURE 'E'.

EXPLANATION TO SECRETARIAL AUDIT REPORT

The Secretarial Auditor has observed that the Company has not redeemed the PreferenceShares due for redemption. The reasons for not redeeming the Preference Shares have beenexplained in Note No. 2(C) to the Financial Statements for the year ended March 31 2017.

COST AUDIT

Pursuant to Section 148 of the Act read with the Companies (Cost Records and Audit)Rules 2014 the Cost Accounting Records maintained by the Company in respect of its BulkDrugs and Formulations activity are required to be audited by Cost Auditors. The Board ofDirectors of the Company has on the recommendation of the Audit Committee appointed M/s.Vijender Sharma & Co. Cost Accountants as the Cost Auditor of the Company for thefinancial year ended March 31 2018 at a remuneration of Rs. 3.00 Lakhs subject to theratification of their remuneration by the shareholders in the ensuing Annual GeneralMeeting.

INTERNAL FINANCIAL CONTROLS

The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The internal financial controls are adequate and areoperating effectively so as to ensure orderly and efficient conduct of businessoperations. The Company's internal financial control procedures ensure that Company'sfinancial statements are reliable and prepared in accordance with the applicable laws.

To maintain its objectivity and independence the Internal Audit team reports to theChairman of the Audit Committee of the Board. Based on the internal audit report processowners undertake corrective action in their respective areas and thereby strengthening thecontrols. Significant audit observations and corrective actions thereon are presented tothe Audit Committee of the Board. Team engaged in internal audit carries out extensiveaudits throughout the year across all functional areas and submits its reports fromtime-to-time to the Audit Committee of the Board of Directors.

CORPORATE SOCIAL RESPONSIBILITY

The Corporate Social Responsibility (CSR) Committee of the Company was constituted bythe Board on May 10 2016 to monitor implementation of CSR activities by the Company inaccordance with Section 135 read with Schedule VII of the Act. Based on the recommendationof the CSR Committee your Board has adopted a CSR Policy indicating the activities to beundertaken by the Company as specified in Schedule VII.

The Report on CSR Activities with details of the composition of CSR Committee CSRPolicy CSR initiatives and activities during the year is annexed and forms part of thisreport as

ANNEXURE 'F'.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013

The Company has in place a policy on Prevention Prohibition and Redressal of SexualHarassment of Women at Workplace pursuant to the requirements of the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013. An InternalComplaints Committee (ICC) has been set up to redress complaints received regarding sexualharassment. The policy has set guidelines on the redressal and enquiry process that is tobe followed by complainants and the ICC while dealing with issues related to sexualharassment at the work place. All women employees whether permanent temporarycontractual and trainees are covered under this policy. The Company has not received anycomplaint during the year.

LEGAL & CORPORATE MATTERS

During the financial year ending March 31 2010 the Company had allotted 92490413Equity Shares to the fixed deposit holders towards settlement of their dues under theScheme of Arrangement & Compromise under Section 391 of the Companies Act 1956approved by the Hon'ble Shimla High Court vide its order dated August 4 2009. The CentralGovernment preferred an appeal against the aforesaid order before the Hon'ble DivisionBench of Shimla High Court which permitted the implementation of the Scheme subject to thefinal decision in the main appeal vide its interim order dated August 27 2009.Accordingly the entire scheme was implemented in February 2010. The Division Bench videits order dated September 14 2010 remanded the case to the learned Single Judge to decidethe Petition afresh after hearing all the parties and considering the representation ofthe Central Government. The Company filed an appeal against the aforesaid order of theDivision Bench with the Hon'ble Supreme Court of India which remitted the matter to thelearned Single Judge of Hon'ble High Court of Shimla to decide the matter as expeditiouslyas possible. The matter has now been transferred to the Chandigarh Bench of NationalCompany Law Tribunal (NCLT).

The Equity Shares preferentially issued as per the terms of Debt Restructuring Schemeapproved by the CDR cell to two allottees are pending for listing on NSE & BSEwherein certain observations were made by the Stock Exchanges. The Company has taken upthe matter with both the allottees and requested them to take appropriate action in thisregard. The cases filed against the Company on the basis of investigation carried underSection 235 of the Companies Act 1956 and the consequential cases filed by the Registrarof Companies against the Company and its Directors are being defended by the Company.

The Company's appeal with the Hon'ble Supreme Court against the appointment of specialDirectors on the Board of the Company under Section 408 of the Companies Act 1956 ispending for final disposal. Meanwhile a 'Status Quo' ordered by Supreme Court is beingmaintained.

EXTRACT OF ANNUAL RETURN

The detailed extract of Annual Return in Form MGT-9 as required under Section 134(3)(a)of the Act is annexed and forms part of this report as ANNEXURE 'G'.

MATERIAL CHANGES AND COMMITMENTS AFFECTING

THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments affecting the financial positionof the Company which have occurred between the end of the financial year of the Companyand the date of this report.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information relating to Conservation of Energy Technology Absorption and ForeignExchange Earnings and outgo as required under Section 134(3)(m) of the Act read with theCompanies (Accounts) Rules 2014 is annexed and forms part of this report as ANNEXURE'H'.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Act are given in the notes to the Financial Statements.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All the related party transactions that were entered into during the financial yearwere on arm's length basis and in the ordinary course of business. During the year underreview there were no materially significant related party transactions including arm'slength transactions; hence disclosure in Form AOC 2 is not required.

The complete details with respect to contracts or arrangements with related parties asrequired to be given under the Act and Part C of Schedule V of Listing Regulations aregiven in the Corporate Governance Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed review of the operations and performance of the Company is set out in theManagement Discussion and

Analysis Report pursuant to Part B of Schedule V of Listing Regulations which formspart of the Annual Report for the year under review as ANNEXURE 'I'.

HUMAN RESOURCES

A detailed review of Human Resources of the Company is set out in the ManagementDiscussion and Analysis Report.

CORPORATE GOVERNANCE

A Report on Corporate Governance along with a certificate from the Practicing CompanySecretary regarding compliance with conditions of Corporate Governance as stipulated inPart E of Schedule V of Listing Regulations forms part of this report and is annexed as ANNEXURE'J'.

ACKNOWLEDGMENTS

Your Directors place on record their heartfelt appreciation towards the ShareholdersEmployees Customers Suppliers Collaborators Company's GMP Consultants DirectorsAuditors Bankers Financial Institutions Medical & Legal Professionals Drug ControlAuthorities Government Agencies and Business Associates for their continued patronage andtrust in the Company and its Management. Your Directors look forward to your continuedsupport in our efforts to grow together and enhance health through quality products.

For and on behalf of Board of Directors
Sushil Suri
Place: New Delhi (Chairman & Managing Director)
Date: June 12 2017 DIN: 00012028