You are here » Home » Companies » Company Overview » Shilpa Medicare Ltd

Shilpa Medicare Ltd.

BSE: 530549 Sector: Health care
NSE: SHILPAMED ISIN Code: INE790G01031
BSE LIVE 19:40 | 19 Oct 667.90 2.00
(0.30%)
OPEN

670.00

HIGH

674.00

LOW

661.00

NSE 19:31 | 19 Oct 663.75 -3.75
(-0.56%)
OPEN

671.80

HIGH

672.80

LOW

659.55

OPEN 670.00
PREVIOUS CLOSE 665.90
VOLUME 797
52-Week high 786.75
52-Week low 525.00
P/E 39.64
Mkt Cap.(Rs cr) 5,350
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 670.00
CLOSE 665.90
VOLUME 797
52-Week high 786.75
52-Week low 525.00
P/E 39.64
Mkt Cap.(Rs cr) 5,350
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Shilpa Medicare Ltd. (SHILPAMED) - Director Report

Company director report

To

The Shareholders

Your Directors have pleasure in presenting herewith the 29th Annual Report on thebusiness of your Company together with the Audited Accounts for the financial year ended31st March 2016.

FINANCIAL SUMMARY (Rs. in lakhs)

Financial Year

Financial Year
PARTICULARS

2015-16

2014-15
Standalone Consolidated Standalone Consolidated
Operating Revenue (Net of ED) 67579.06 71936.62 56540.21 61379.91
Other Income 680.52 464.21 545.34 479.89
Profit before Interest Depreciation & Tax 16928.75 15759.66 14189.78 13330.24
Interest 327.19 686.48 387.98 405.03
Depreciation 2119.03 2862.91 1908.50 2141.16
Net Profit Before Tax 14482.53 12210.27 11893.30 10784.05
Provision for taxation
a. Current Tax 3035.51 3054.08 2455.69 2487.11
b. Less: MAT credit entitlement (501.29) (501.30) (154.65) (154.65)
c. Deferred tax 915.40 214.02 1182.49 1189.12
Profit after Tax 11032.92 9871.50 8409.77 7262.48
Add: Minority Share of Loss - (506.83) - (106.64)
Profit After Tax net of Minority Interest 11032.92 10378.34 8409.77 7369.12

REVIEW OF OPERATIONS:

During the year under review the Company reported gross revenues of Rs.682.59 Cr asagainst Rs.570.85 Cr and a Net Profit of Rs.110.32 Cr as against Rs.84.09 Cr registeringgrowth of 31% and 4% respectively as against in the previous year. Out of the current yearprofits after tax Rs.5.00 Cr has been transferred to General Reserve and Rs.5.55 Cr hasbeen paid as interim dividend and the balance has been carried forwarded to balance sheet.

Continuous focus of the management on new line of products research & developmentand strategic expansion of production/ development facilities has been yielding goodresults in terms of high margins. Expansion of production facilities is as per schedule.Considering the fast developments in the pharma industry the Company has started focusingon development of new process and new products.

API R&D FACILITIES

With more than two decades of presence in the industry Shilpa Medicare Ltd has createda niche for itself in very competitive domain of oncology products. The state of the artfacilities in Raichur and Vishakhapattanam R&D centers with latest equipment's whichcreates backbone of making complex molecules in oncology as well as non-oncology activepharmaceutical ingredients. These R&D center are separate from production and qualitycontrol. These facilities are approved by DSIR Government of India

The activity in R&D centers includes chemical route evaluation keeping in mind theIPR protection identification of key process parameters and optimization of processesAnalytical method development and validation Documentation for DMF filling Synthesis ofimpurities and reference standards. The world class facilities have capability of makingAPI from gram to kilo scale synthesis and supply of API for formulation development andclinical studies. These facilities are capable enough to handle complex reactions likealkylation acetylation bromination chlorination hydrogenation high pressure reactionsand various named synthesis.

Many complex viruses have been discovered over the past few years for which new drugshave been tried and tested all over the world. We are glad to have helped in the fightagainst these life taking diseases. Some of the drugs developed by these R&D centersfor diseases like multiple myeloma mental cell lymphoma breast cancer non-small celllung cancer proteasome inhibitor chronic lymphomatic leukemia immune modulatory agentand non-cancerous diseases like multiple sclerosis idiopathic pulmonary fibrosis chronicintestinal pseudo obstruction and pulmonary arterial hypertension. As many as 11 oncologyAPI's and 4 non-oncology APIs have been developed in R&D and successfully transferredthe technology to plant for commercial production this year another set of 18 new oncologydrugs are currently under development.

Shilpa Medicare has compliance with government norms like cGMP and have got approvalsfrom various FDA authorities from countries across the world. Maintaining high standardsof quality has helped Shilpa develop trust with its partners and puts them in a favorableposition amongst the top API manufacturers.

FORMULATION R&D

Formulation research Centre is concentrated in developing generic equivalents toreference listed drugs for Global Markets like USA Europe and RoW for injectable and oralformulations used for the treatment of cancer and other indications like Multiplesclerosis liver diseases HIV etc.

The research centre also concentrates in the development of new formulations leading toreduced costing and enhanced stability of the drug products. Also the R&D works onconverting the existing Lyophilized products to Ready to Use (RTU's) liquid. Also R&Dconcentrates on development of ready to fill powders for injectable administrations.

The oral department of R&D is concentrated in developing the generic equivalentsfor Global Markets. The R&D team is concentrated in developing the products as Para IVand 505 ((b)2). R&D is concentrated in working on products to reduce drug productadministrations for Geriatric patients. R&D is working on development of products withtarget filing as First to File and Para IV filing to US FDA.

API FACILITIES

Shilpa Medicare Ltd is strong player in global markets because of its inherent strengthin R&D IPR & GMP Compliance Active Pharmaceutical Manufacturing Facilitiesapproved by USFDA in the segments of Oncology amino acids & non Oncology Products.

The Company has commercialized the following API Technologies & the followingpatents have been granted and having more than 10 API Production Blocks approved BY USFDAat its two Raichur sites.

The Investment in the robust and adequate facilities with latest technologies theCompany is generating revenue of Rs.58356.48 Lacs from its API Operations.

The Company is investing consistently in R&D R&D Facilities personnel IPRacross south India in the segments of Oncology Non Oncology Bio-similar & working onthe molecules of importance down the coming years to sustain it's growth in the APIsegment.

INTELLECTUAL PROPERTY MANAGEMENT (IPM) GROUP

Shilpa Medicare Limited Intellectual Property Management (IPM) Group is responsible forbuilding Shilpa's global generic product pipeline as well as creating managing andprotecting its high value patent estate. Shilpa has a dedicated IPM Group which providesstage wise IP-clearances during product/process development activities and also providesfrequent updates and alerts on relevant IP (patent trademark etc) to R&D scientistsfor products/process and suggests remedial measures to deal with IP issues. Shilpa IPMGroup is involved in product selection activity to ensure that right products are selectedfor development.

Highlights FY 15-16: In FY 15-16 Shilpa filed two ANDA with paragraph IVcertifications and out of which one ANDA did not received any notice from brand company. In FY 15-16 Shilpa has filed 45 patent applications taking the cumulative total to189 patent applications in India and other countries. Shilpa received grants for 13patents. Future plan FY 16-17 Planned to file 3 ANDA with paragraph IVcertification with US FDA out of which one could be a first-to-file ANDA.

REGULATORY FILINGS: API RAICHUR UNIT-1 UNIT-II & UNIT-IV (FORMULATION UNIT-SEZ) USDMFs 7 (Seven) - All are with CA status available. 19 ANDAfiled as on 31.03.2016 out of which 6 ANDA on Shilpa and balance 13 were on behalf ofCustomer using our facility. Two DMFs approved in support of ANDA review.

Europe DMFs approvals:

• 6 MAs were filed as on 31st March 2016 out of which 4 (Four DMFs BortezomibBendamustine Pemetrexed and Gemcitabine) were approved in support of various MAs(Bortezomib Bendamustine Pemetrexed and Gemcitabine).

Regulatory Approvals: PMDA-Japan GMP clearance from TGA-Australia and USFDA.

SUB-DIVISION OF EQUITY SHARES FROM Rs.2/- TO Re.1/-

During the year under review the Company after obtaining the approval of members atthe 28th Annual General Meeting held on 28th September 2015 divided the face value ofexisting equity share of Rs.2/- into two equity shares of Re.1/- each fully paid-up witheffect from the Record Date specified. Members holding shares in demat form as on theRecord Date were directly given credit to their respective beneficiary accounts andmember(s) holding share(s) in physical form was/were issued new share certificates.

DIVIDEND:

During the financial year under review your Company declared and paid an interimdividend of Re. 0.60 per share and the Directors recommended the same as dividend for theF.Y 2015-16 keeping in view the fund requirements for the on-going expansion plans. Anamount of Rs.555.12 lacs inclusive of dividend distribution tax was absorbed towards thedividend for the F.Y 2015-16.

TRANSFER TO RESERVES:

We propose to transfer Rs.500 Lacs to the general reserve. An amount of Rs.9977.79Lacs is proposed to be retained in the P&L account.

DIRECTORS OR KEY MANAGERIAL PERSONNEL

Mr. Omprakash Inani Director will retire by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for re-appointment.

The term of all the Independent Directors of the Company shall come to an end at theensuing Annual General Meeting the entire Board of Directors excluding the Director beingevaluated evaluated their performance and recommends to the members to consider theirre-appointment. The Company has received declarations from all the Independent Directorsof the Company confirming that they meet the criteria of independence as prescribed underthe Act.

During the period under review the Company Secretary Mr. Vemuri Ajay has resigned fromthe services w.e.f 19.10.2015 and Mrs. Sujani Vasireddi has been appointed as CompanySecretary of the Company w.e.f 01-11-2015.

STATEMENT OF DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SUBSECTION (6) OF SECTION149:

The Independent Directors have submitted the declaration of independence as requiredunder Section 149(7) of the Companies Act 2013 stating that they meet the criteria ofindependence as provided in Section 149(6) and Regulation 25 of SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015.

AUDITORS

STATUTORY AUDITORS

At the Annual General Meeting (AGM) held on September 20 2014 M/s. Bohara BhandariBung and Associates LLP Chartered Accountants were appointed as Statutory Auditors ofthe Company to hold office till the conclusion of the Annual General Meeting to be held inthe calendar year 2017. In terms of the first provison to Section 139 of the CompaniesAct 2013 the appointment of the auditor shall be placed for ratification at every AnnualGeneral Meeting. Accordingly the appointment of M/s. Bohara Bhandari Bung and AssociatesLLP Chartered Accountants as statutory auditors of the Company is placed forratification by the shareholders. In this regard the Company has received a certificatefrom the auditors to the effect that if they are reappointed it would be in accordancewith the provisions of Section 141 of the Companies Act 2013 read with Rule 4 ofCompanies (Audit & Auditors) Rules 2014.

Cost Auditors:

The Board has appointed M/s. V.J Talati &Co. Cost Accountants for conducting theaudit of cost records of the Company for various segments for the financial year 2016-17as recommended by the Audit Committee. As required under Section 148 and Rule 14 of theCompanies (Audit and Auditors) Rules 2014 a resolution is being placed at the ensuing AGMfor ratification of remuneration payable to said Cost Auditors.

Secretarial Auditors:

M/s P.S.Rao & Associates Practicing Company Secretaries were appointed to conductthe Secretarial Audit of the Company for the financial year 2015-16 as required underSection 204 of the Companies Act 2013 and Rule 9 there-under. The Secretarial AuditReport for FY 2015-16 forms part of this Report as Annexure - 9.

The Board has appointed M/s P.S.Rao & Associates Practicing Company Secretariesas Secretarial Auditors of the Company for the financial year 2016-17.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE OUTGO

Information required under section 134(3)(m) of the Companies Act 2013 read with Rule8 of the Companies (Accounts) Rules 2014 is enclosed herewith as Annexure - 8.

RISK MANAGEMENT POLICY

Pursuant to Regulation 21 (4) of SEBI (LODR) Regulations 2015 the Company hasformulated a policy on the Risk Management. The Risk Management Policy of the Company isposted on the Company's website:www.vbshilpa.com. The Board formulated and implementedRisk Management Policy for the Company which identifies various elements of risks which inits opinion may threaten the existence of the Company and measures to contain and migraterisks. Major risk to the Company apart from the general business risks related topharmaceutical industry is supplies at low cost countries like China and otherunregulated suppliers.

CONSOLIDATED FINANCIAL STATEMENT

In accordance with the provisions of Section 129 (3) of the Companies Act 2013 theConsolidated Financial Statements drawn up in accordance with the applicable AccountingStandards forms part of this Annual Report. A separate statement containing the salientfeatures of the financial statements of Subsidiaries Associates and Joint Ventures inForm AOC-1 is annexed herewith as Annexure - 5.

Further the annual accounts of all the subsidiary companies shall be posted onCompany's website - www.vbshilpa.com.

Annual accounts of the Subsidiary Companies and related detailed information will beavailable for inspection by the members at the registered office of the Company and willalso be made available to the members upon request.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS:

The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. Various Audit Systems in the Company monitor and evaluatesthe efficacy and adequacy of internal control system in the Company its compliance withoperating systems accounting procedures and policies at all locations of the Company.Based on the audit reports the units undertake corrective action in their respective areasand strengthen the controls. Significant audit observations and corrective actions thereonare presented to the Audit Committee of the Board periodically.

The Board of Directors of the Company have adopted various policies like Related PartyTransactions policy Whistle Blower

Policy Policy to determine material subsidiaries and such other procedures forensuring the orderly and efficient conduct of its business for safeguarding its assetsthe prevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information.

SUBSIDIARIES ASSOCIATES & JOINT VENTURES RAICHEM MEDICARE PVT LIMITED 100% EOU.

RAICHEM MEDICARE PVT LIMITED is a Subsidiary of SHILPA MEDICARE LTD and joint ventureof ICE.SPA and PCA.SPA.

Raichem completed installation of all machineries during 2015-2016 and Recruited allthe key personnel also commenced trial production in aug-2015 after the Audit by Externalconsultant from ITALY and started commercial production in Dec-2015. Raichem has obtainedthe Drug Manufacturing license and GMP certificate and consent from pollution controlboard for operating the plant.

Raichem will be initially manufacturing intermediates for UDCA (Ursodeoxycholic acid)until ICE SPA and PCA SPA obtain the Import License by Dec-2016.

Raichem has completed validation batches of Raw UDCA and already exported to ICE.SPAand PCA.SPA also registration of Raichem site with PMDA-JAPAN.

Raichem will carry out New Validation batches during Oct/ Nov-2016 for improved processand yields.

INM TECHNOLOGIES PVT LTD (NANOTECHNOLOGY DIVISION)

Innovative Nano & Micro Technologies Private Limited Incorporated in the FY2014-2015 a Subsidiary of Shilpa Medicare Ltd Raichur. Company has a vision to serve thehumanity using Nano technology products. Company drives with Strategic intent"Innovations for All Generations". Company Business Portfolio includesNanomaterial manufacturing Research & development in the field of Nano science &Nano (chemical and Bio) technology and Nanoformulations for pharmaceutical technologyapplications. State of the art facility for synthesis characterization and analyticaltesting of Nano products trained manpower for process design & monitoring has beenestablished and includes 9 departments in the company involving major disciplines namelyBiotechnology Bio-medical Analytical and Pharmaceutical Chemical Polymer CoatingsElectronics and Smart materials.

In the area of Bio-medical sector INM Technologies presently working on dentalproducts with new Nanoformulation to avoid toxicity of the existing filling materialdental hemostatic gels formulation with enhanced blood clotting and immediate release ofthe drug temporary filling materials based on nano zinc oxide formulations for improvedefficacy.

INM Technologies plans at launch these dental products in the first quarter of 2018.Nanoemulsions with no side effects and improved efficacy for ocular delivery have beenundertaken Nanoformulations for ophthalmic applications have global market approx. 12billion USD and approx. Rs. 500 Crores Indian market.

Department of Coatings working towards nanostructured coatings based on simple and costeffective process. These include: hydrophilic coatings hydrophobic coatings selfcleaning anti reflective UV- absorbing coatings Heat absorbing coatings Transparentconductive coatings Electrochromic coatings. These nanostructured coatings forautomobile building domestic applications have global market approx. 15 Billion USD andapprox. Rs. 5000 Crores Indian market. INM Technologies plans at launch some of thesenanostructured coatings into Indian and global market by first quarter of 2018.

In the area of Pharmaceutical division INM Technologies presently working on differentpharmaceutical dosage form namely Ophathalmics NDDS (Novel drug delivery system) SRoral thin film Parenteral and Dermatological formulations. We have also identifying newtechnologies in designing new technology based formulation.

During this financial year we have selected three to four formulations and initiatedthe development of those formulations at INM Technologies. This year we focused onconducting confirmative animal studies of these formulations. Along with we have developedtwo high value formulations in opthalmics and we are planning to scale up ophthalmicformulation using contract manufacturing facilities. This year we have identifiednanofibres technology to design Rapid Oral Film formulations.

The future plan of Pharmaceutical division of INM Technologies

1. Identification of new technologies to improve constrains with existing formulations.

2. Developed formulation using new design adopting nano and micro technology.

3. Identification of portfolio for Rapid Oral thin Film and Parenteral products.

4. Adding new products in the area of NDDS Ophthalmic and Dermatology.

5. Focusing on improved formulation in Oral dosage formulation.

SHILPA THERAPEUTICS PVT. LTD. (FORMERLY KNOWN AS NU THERAPEUTICS PVT. LTD.)

Situated at Hyderabad India a progressive novel drug delivery company with aninternational outlook is dedicated to the development and commercialization of innovativeand patient compliant novel drug delivery systems such as fast disintegrating oral strips.

Shilpa Therapeutics Pvt. Ltd. is the first company to commercialize prescriptionproducts as oral thin strips/films in India.

Shilpa Therapeutics is being lead and promoted by highly motivated professionals withextensive experience both in domestic and international pharmaceutical arena and highlyqualified management professionals with a vision to develop and market innovative andpatient compliant novel drug delivery systems.

Shilpa Therapeutics has a strong IP profile. Almost 10 patents has been filed in ODSspace and also approval for its oral disintegrating strip products from regulatoryauthorities of Kenya Uganda along with filing in several other countries at variousstages.

Shilpa Therapeutics with its technical expertise manufacturing capabilities and itsfinished products at various stages of registration in several countries is poised toattain promising business results in the very near future.

KOANAA HEALTHCARE GmbH

Koanaa Healthcare GmbH is 100% subsidiary of Shilpa Medicare Limited. The AGESinspection (Austrian pharmaceutical authority) will take place in Q3 2016 to be compliantin Formulation & Filling Packaging Product Release and Storage and Transport and toget the pharmaceutical trade certificate to go "online" with selling the firstoncology products in Europe.

Koanaa Healthcare GmbH is being managed by a well experienced group of leaders whoshare the passion and dreams of Koanaa Healthcare GmbH vision of "Innovating forAffordable Healthcare". With their vast expertise in diverse sector of pharmabusiness our team brings on board their care creativity enthusiasm and commitment ofachieving 'Affordable Healthcare' for everyone. Our team is dedicated for creating valueto our customers shareholders partners and providing care for employees at all levels inthe organization.

Koanaa Healthcare GmbH will be positioned as "European Player" with Austrianbasis with low prices and high service in the field of oncology. The products will provehighest standards and quality and we will stand for Deliverability and Service forPatients and Physicians.

In terms geographical presence we are starting in Austria (headquarter) and in Germany(with a subsidiary office) with own commercial teams in other territories like NorthernEurope CEE and Benelux and South Europe we are seeking for partnerships with otherpharmaceutical companies.

The vision of Koanaa Healthcare GmbH is to develop as a successful and reliable partnerwithin the pharmaceutical domain.

LOBA FEINCHEMIE GmbH

Dr. Walter Erber took over the responsibility as CEO/Managing director for LOBAFinechemie GmbH from beginning May 2016.

Main strategy of Loba Finechemie GmbH is to enhance the focus in terms of resources onbusiness development and Sales & Marketing within the next business years to supportsales-and profit growth. The financial situation of Loba Finechemie GmbH already improvedover the last years and will further develop extraordinarily over the next years. Main keyof success will be keeping the exceptional quality and momentum for fine chemicals andespecially the new orientation of Loba Finechemie GmbH more towards a "Focus on APIbusiness" which is compared to the finechemical business more profitable.

To support the sales expansion strategy for the next years Loba Finechemie GmbH hasdeveloped an investment plan to update the facility the technical equipment and thecapacity of the factory and especially to invest more in human resources. Overall link inall processes is to comply to the Austrian trade law and environmental law and to have thehighest possible quality standards.

REVA PHARMACHEM PVT LTD

The Company is focused and working in regulated and emerging markets. It has gained itsfoothold in most stringent market (Japan) with domain area contract manufacturing andGenerics (Oncology & Cephalosporin's). The Japan government (MOHLW) Ministry of HealthLabour Welfare & PMDA (Japan Regulator) has aligned with DCGI (India FDA) to supportfacilitation of Pharma investment & generic business. Our customer base has broadenedin Japan and projects secured with both Innovator & Generic companies. We are positivethat by 2017 we should forge another partnership with a key big pharma co. The countries"Vietnam & Korea" are the front runners in terms of growth and revenue aspart of emerging markets for the company.

Contract partnerships for dosage form {Oncology & Women Health} is the next line ofoperation. We are in discussion and outlying "projects" and this will businesswill become a key base for the company (mid to long term).

MAKINDUS INC USA

Makindus is a specialty pharmaceutical development company focused on ophthalmology andrare diseases. Makindus' lead asset is MI-100 a novel ophthalmic formulation of a legacycompound being developed for Stargardt disease a rare form of juvenile maculardegeneration. The estimated prevalence in the U.S. and Europe is approximately 1 in 10000individuals. There is currently no cure or treatments.

Makindus has been granted orphan drug designation for MI-100 for the treatment ofStargardt Disease in both the United States and Europe. The Company will benefit from anumber of incentives related to orphan drug designation including market exclusivity inthe US for 7 years and 10 years in Europe.

MI-100 has shown promising results in improving visual acuity for Stargardt patients inan investigator-initiated clinical trial. Makindus has developed MI-100 in a newproprietary sterile and more convenient ophthalmic dosage form that allows for aready-to-use multi-dose eye dropper for easy administration.

The clinical development program for MI-100 has been reviewed with the Food & DrugAdministration (FDA) and European Medicines Agency (EMA). Makindus plans to file a NewDrug Application (NDA) in 4Q of 2018 utilizing a streamlined 505(b)(2) regulatory pathway.Makindus is currently in discussions with interested parties to secure the neededfinancial support to advance MI-100 into Phase 3 clinical trial starting in the 2Q of 2017with a target launch date of 1Q 2020.

MAIA PHARMACEUTICALS INC USA

MAIA Pharmaceuticals Inc. ("MAIA") is a Princeton New Jersey USA basedspecialty pharmaceutical company founded in 2013.

MAIAs focus is to address an unmet need for a high quality lower price pharmaceuticaldrugs used in the hospital that also provide product usability benefits to the endcustomer. MAIAs product pipeline consists of 15 niche generic and proprietarypharmaceutical products with a portfolio value of $10Bn+ focused on the US European andCanadian markets

REVA MEDICARE PRIVATE LIMITED

Reva Medicare Private Limited (Reva) was incorporated on 12-02-2016 is a Joint VentureCompany promoted by your Company along with M/s Akira Pharma Private Limited. As per theunderstanding your Company holds 50.001% of the total equity in Reva.

CORPORATE SOCIAL RESPONSIBILITY (CSR):

A report on CSR Activities as required under Rule 9 of the Companies (Corporate SocialResponsibility) Rules 2014 is enclosed herewith as Annexure -4. CSR Policy of the Companyand other details as required is placed on the Company's website athttp://vbshilpa.com/CSRPolicy.pdf.

NOMINATION AND REMUENRATION POLICY

A committee of the Board named as "Nomination and Remuneration Committee" hasbeen constituted to comply with the provisions of section 178 Schedule IV of theCompanies Act and Regulation 19 of SEBI (LODR) Regulations 2015. It has been entrustedwith the task to recommend a policy of the Company on Directors' appointment andremuneration including criteria for determining qualifications positive attributesindependence of a Directorand other matters and to frame proper systems foridentification appointment of Directors & KMPs Payment of Remuneration to them andEvaluation of their performance and to recommend the same to the Board from time to time.

Nomination and Remuneration Policy of the Company is placed on the Company's website athttp://vbshilpa.com/pdf/ NominationRemunerationPolicy.pdf.

FORMAL ANNUAL EVALUATION MADE BY THE BOARD OF ITS OWN PERFORMANCE AND OF ITS COMMITTEESAND INDIVIDUAL DIRECTORS

As required under the provisions of Schedule IV of the Companies Act 2013 theperformance evaluation of Independent Directors has been done by the entire Board ofDirectors excluding the director being evaluated. The evaluation of all the Directors andthe Board as a whole was conducted based on the criteria and framework adopted by theBoard. The Board approved the evaluation results as collated by the Nomination andRemuneration Committee.

All the Independent Directors are due for re-appointment.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134 (5) of the Companies Act 2013 Your Directors' confirm that: i.In preparation of annual accounts for the financial year ended 31st March 2016 theapplicable Accounting Standards have been followed along with proper explanation relatingto material departures;

ii. The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give true andfair view of the state of affairs of the Company at the end of the financial year ended31st March 2016 and of the profit and loss of the Company for the year;

iii. The Directors have taken proper and sufficient care for their maintenance ofadequate accounting records in accordance with the provisions of the Companies Act forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

iv. The Directors had prepared the annual accounts on a 'going concern' basis;

v. The Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls areadequate and were operatingeffectively; and

vi. The Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operatingeffectively.

EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in Form MGT-9 is annexedherewith as Annexure - 1.

OTHER DISCLOSURES:

Board Meetings

During the year under review Five Board Meetings were held during the year. Forfurther details please refer Corporate Governance Report which forms part of this AnnualReport.

Committees of Board

Your company has the following committees namely:

1. Audit Committee ;

2. Nomination and Remuneration Committee ;

3. Stakeholders Relationship Committee and

4. Corporate Social Responsibility Committee

The constitutions of all the committees are as per the Companies Act 2013 and SEBI(LODR) Regulations 2015. The details of the Constitution are mentioned in CorporateGovernance Report which forms part of this Annual Report.

Corporate Governance Report

Regulation 15 of SEBI (LODR) Regulations 2015 is applicable to your Company as suchthe details as specified in Schedule V(C) of SEBI (LODR) Regulations 2015 with regard toCorporate Governance Report including Auditor's Certificate on compliance with the code ofCorporate Governance specified in Schedule V(E) of SEBI (LODR) Regulations 2015 formspart of the Annual report.

Management Discussion and Analysis

The Management discussion and analysis Report for the year under review as stipulatedunder Regulation 34 SEBI (LODR) regulations 2015 is annexed heretoand forms part of thisReport.

Vigil Mechanism:

In pursuant to the provisions of section 117(9)( & (10) of the Companies Act 2013and Regulation 22 of SEBI (LODR) Regulations 2015 a Vigil Mechanism for Directors andemployees to report genuine concerns has been established. Protected disclosures can bemade by a whistle blower through to the Chairman of the Audit Committee. The Policy onvigil mechanism and whistle blower policy may be accessed on the Company's website at thelink: http://www.vbshilpa.com/pdf/ Whistle_Blower_Policy.pdf.

Remuneration ratio of the Directors/ Key Managerial Personnel/ Employees:

Statement showing disclosures pertaining to remuneration and other details as requiredunder Section 197(12) of the Companies Act read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is enclosed herewith asAnnexure - 2.

PARTICULARS OF EMPLOYEES

Statement of employees employed throughout the financial year and in receipt ofremuneration of Rs. 10200000/- (Rupees One Crores Two Lakh) or more or employed forpart of the year and in receipt of Rs. 850000/- (Rupees Eight Lakh Fifty Thousand) ormore a month under Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is enclosed as Annexure-3 to the Board's report.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:

Details of the Loans guarantees and investments covered under Section 186 of theCompanies Act 2013 are given in the notes to the financial statements pertaining to theyear under review.

DEPOSITS

Your Company has not accepted any fixed deposits and as such no principal or interestwas outstanding.

RELATED PARTY TRANSACTIONS:

Related Party Transactions entered during the financial year under review are disclosedin Note No. 41 of the Financial Statements. These transactions entered were at an arm'slength basis and in the ordinary course of business. There were no materially significantrelated party transactions with the Company's Promoters Directors Management or theirrelatives which could have had a potential conflict with the interests of the Company.Form AOC-2 containing the note on the aforesaid related party transactions is enclosedherewith as Annexure - 6.

Related Party Disclosure as per Schedule V of SEBI (LODR) Regulations 2015 is enclosedherewith as Annexure -7. The policy on materiality of Related Party Transactions anddealing with related party transactions as approved by the Board may be accessed on theCompany's website http:// www.vbshilpa.com/policies.html.

Material Changes and commitments if any affecting the financial position of theCompany which have occurred between the end of the financial year of the company to whichthe financial statement relates and the date of the report.

The Board of Directors at their Meeting held on 27th June 2016 approved the proposalof merger of Navya Biologicals Private Limited with Shilpa Medicare Limited. The Companyhas filed a scheme of merger with both the Stock Exchanges seeking their No-objectionLetter.

All the documents filed to the exchanges pursuant to the approval may be accessed onthe Company's website http:// www.vbshilpa.com/draft-scheme-mergers.html During thecurrent financial year the Company had an audit conducted by the United States Food &Drug Administration (USFDA) at the SEZ Formulations facility situated at Jadcherla in thestate of Telangana has received the approval without 483 for the said facility.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend voting or otherwise.

2. Issue of shares (including sweat equity shares) to employees of the Company underany scheme.

3. Neither the Managing Director nor the Whole-time Director of the Company receivedany remuneration or commission from any of its subsidiaries.

4. 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.

5. No frauds were reported by the auditors during the year under review Your Directorsfurther states that during the year under review there were no casesfiled/registeredpursuant to the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013.

ACKNOWLEDGEMENT

Your Directors wish to express their gratitude to the Central and State Governmentsinvestors analysts financial institutions banks business associates and customers themedical profession distributors and suppliers for their whole-hearted support. YourDirectors commend all the employees of your Company for their continued dedicationsignificant contributions hard work and commitment.

For and on behalf of the Board of Directors

Place : Hyderabad OMPRAKASH INANI
Date : 26-08-2016 CHAIRMAN