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Shilpa Medicare Ltd.

BSE: 530549 Sector: Health care
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OPEN 227.50
52-Week high 515.00
52-Week low 190.80
P/E 20.16
Mkt Cap.(Rs cr) 2,039
Buy Price 250.15
Buy Qty 5.00
Sell Price 250.15
Sell Qty 10.00
OPEN 227.50
CLOSE 238.25
52-Week high 515.00
52-Week low 190.80
P/E 20.16
Mkt Cap.(Rs cr) 2,039
Buy Price 250.15
Buy Qty 5.00
Sell Price 250.15
Sell Qty 10.00

Shilpa Medicare Ltd. (SHILPAMED) - Director Report

Company director report


The Shareholders

Your Directors have pleasure in presenting herewith the 31st Annual Reporton the business of your Company together with the AuditedAccounts for the financial yearended 31st March 2018.


(Rupees in Lakhs)


Financial Year 2017-18

Financial Year 2016-17

Standalone Consolidated Standalone Consolidated
Operating Revenue 74394.60 79153.39 73789.90 78381.25
Other Income 2331.53 2167.76 1988.32 1967.13
Profit before Interest Depreciation & Tax after exceptional items 20238.43 18384.11 19798.86 18641.00
Interest 212.69 266.12 279.46 313.47
Depreciation 3277.70 3722.21 2665.52 3064.49
Net Profit Before Tax 16748.51 14395.78 16853.48 15263.04
Provision for taxation
a. Current Tax 3494.19 3495.73 3535.05 3579.93
b. Less: MAT credit entitlement (757.51) (757.51) (664.20) (664.20)
c. Deferred tax 687.95 652.34 1237.80 1288.14
Profit after Tax 13323.90 11005.22 12744.83 11059.17
Share of Profit/(Loss) in Associate/Joint Venture - (719.03) - (613.81)
Share of profit (Loss) in Non-Controlling Interest - 238.08 - 312.46
Other comprehensive income (Expenses) (Net of taxes) 108.29 109.55 (182.60) (182.60)
Total Comprehensive income 13432.19 10633.74 12562.23 10575.23


During the year under review the Company reported standalone operating revenues of Rs.74394.60 lakhs as against Rs. 73789.90 lakhs and Net Profit of Rs.13432.16 lakhs asagainst Rs. 12562.20 lakhs in the previous year.

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.


Shilpa Medicare has two API plants with world class state of art facilities at Raichursupported by strong R&D team backed with IPM intellectuals and efficiently managed bycompetent operational team involving production engineering Quality Control QualityAssurance & Regulatory Functions. The units are cGMP compliant and are approved bynational & international regulatory bodies like USFDA EU Korean

FDA Cofepris-Mexico TPD-Canada PMDA-Japan and TGA-Australia.

The company is having 19 multiple API Products and intermediates manufacturing blocksproducing latest Oncology and handle in a highly precised isolators and taking care ofpersons environment & non oncology drug substances.

The Company units are also certified by ISO9001-2015 for Quality systems ISO14001-2015for Environmental Management systems & OSHAS18001-2007 for Occupational Health &Safety Management systems. Also our R&D is certified by DSIR Govt of India.

The Company has developed novel and innovative technologies for the manufacture of thelife saving Oncology and nononcology drug substances validated and commercialised thesame and made available at an affordable prices. This strength provides us with tremendousopportunities to enhance competitiveness to improve our position in the market place& find the new markets.

The Company has invested in containment technologies for manufacture of oncology drugsubstances and made our manufacturing process sustainable. The Company has invested inlatest available technologies like Bipolar system fromjapan first in India to manufactureone of our products there by reduced the water consumption by about 10 fold in thatproduct.

In this process the company has invested in developing continuous flow processes forits products wherever suitable. The company supports its customers by a way of providingall the necessary data for complying with their regulatory. The organizational structureensures sharp focus on accountability especially in areas such as quality and compliancestandards. Our strengths provide us with tremendous opportunities to enhancecompetitiveness to improve our position in the market place.

Accelerating access to affordable and innovative medicines is at the core of our workat Shilpa Medicare. The belief that Good Health needs of patients around the world and doall that it takes to fulfill them. Even as our medicines ensure good health for millionsof people around the world every day we are aware that there are millions more indifferent countries for which high quality affordable medicines continue to be out ofreach. Developing products where affordable alternatives exists or don't exist workingwith all stakeholders in the healthcare systems across different countries to enablemarket access manufacturing medicines of the highest quality in full adherence to thebest global manufacturing practices and ensuring their availability at all times througha robust efficient and seamless supply chain.

Enabling and helping our clients to ensure that our APIs are available wherever andwhenever they needed. Working with clients to help them to succeed. We have set cleargoals and aspirations for our next set of milestones. In the medium term building onproven results we are having the power of our carefully developed product portfoliorelationships built over a long period and a diversified customer mix. Further we have anoptimized cost structure.

The technology involving complex chemistry and tough purification procedures tomanufacture certain necessary drug substances for injectable and OSD products weretransferred. Chemical processes were developed for quite a number of complicated drugsubstances taking them to production stage on a commercial scale.

Every employee has been made aware that being safe and taking care of ourselves andeach other are our highest priority. Our aim is to protect our employees against workrelated hazards. Employees in the manufacturing function are being trained to becomesafety champions. They are being trained to take ownership of production blocks.


Shilpa Medicare views its R&D capabilities as a vital component of its businessstrategy that will provide a sustainable longterm competitive advantage. Shilpa Medicareis among the few Indian pharmaceutical companies in India to have started its researchprogram in support of its global ambitions. The R&D environment reflects itscommitment to be a leader in the

Oncology generics space. Our generics business helps to reduce drug costs forindividuals and governments by bringing generic drugs to market as early as possible andmaking them available to as many patients as possible. We supply pharmaceuticalingredients to pharmaceutical companies which contributes to our goal of providingaffordable medicine.

We will continue to promote affordability in significant ways and work to expand ourproduct offering of generics focusing on increasing access to products with significantbarriers to entry. We will continue to look for new opportunities to take generics to morepatients in collaboration with other companies.

Our research and development centre offers space for the development of genericsmeeting international development standards including difficult to make complex APIprocesses such as those for Oncology/non Oncology molecule.

Shilpa Medicare R&D Centre in Raichur/Vizag has shown good progress in terms of newprojects taken for development and the projects which were successfully transferred toplant.

To enhance the further productivity of the existing molecule we have started new AFRtechnology to reduce the reaction time for the completion of reaction followed byconventional method for workup/crystallization of final molecule.

Almost 55 products (Oncology & non-Oncology) are currently running in development.


Shilpa Medicare Limited — Finished Dosage Formulation Facility is a World ClassGMP compliant Facility engaged in manufacturing of potent drugs- which includes liquid andlyophilized injectables in vials sterile dry powder injectables in vials oral soliddosage form (Tablets and hard gelatine capsules). The facility is designed for handling ofpotent Drug Products (including Oncology products or adjuant therapies) for variousregulatory markets in a highly contained manner. Facility is designed to handle potentmolecules upto OEL 4 level of containment.

The facility is approved by various regulatory agencies including USFDA EUGMP ANVISA& COFEPRIS. This facility consists of Oral Solid Block with two commercial scaletablet manufacturing and one commercial scale capsule manufacturing line approved byUSFDA. Three separate Injectable blocks consists of two liquid-lyophilisation commercialscale manufacturing lines approved by USFDA and 3rd Injectable combi-line forhandling of liquid lyophilized and Dry Powder Injectable under qualification.

Fully automatic packing area is under installation and commissioning. The packagingline is complying with Global Track & Trace (Serialization & Aggregation)regulations including Drug Supply Chain Security Act (DSCSA USA) and Falsified MedicinesDirective (FMD Europe) by Strategizing Planning and Managing Complex Serializationdeployments.


Shilpa Medicare Limited manufactures many products in several types of dosage formssuch as tablets capsules liquid injection (Aseptically and terminally sterilized)Lyophilized Injectable Sterile Dry powder injectables.

All products are manufactured under the same stringent quality Standards for export toUSA EU and RoW market.


Shilpa Medicare Limited Formulation Research and Development Centre is located nearVizianagaram District of Andhra Pradesh.

Formulation Research Centre is concentrating in developing generic equivalents andsuper generics to Reference Listed Drugs for Global Markets like USA Europe and RoW forinjectable and oral formulations used for the treatment of cancer and other indicationslike Multiple sclerosis liver diseases HIV smoking cessation Alopecia Eye disordersetc...

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. Theinjectable department of R&D is developing the anticancer drugs in liquid injectableinfusion bags.

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.

Clinical department of R&D is concentrated in surveillance of safe use of the drugsmanufactured by Shilpa Medicare. Clinical study monitoring. Evaluating the patientrequirements and proposing the development strategy to product development.

R&D is working on development of products with target filing as First to File andPara IV filing to US FDA.


Shilpa's success depends on the Company's ability in future to obtain patents protectthe proprietary information and operate without infringing on the intellectual propertyrights of other pharma companies. Shilpa's inability to obtain timely ANDA approval thusmissing out on early launch opportunities and litigation outcomes could affect productlaunch date.

Shilpa Medicare Limited Intellectual Property Management (IPM) team is responsible forbuilding Shilpa's global generic product pipeline and 505(b)2 NDA pipeline as well ascreating managing and protecting its high value patent estate. Shilpa has a dedicated IPMTeam which provides stage wise IP- clearances during product/process developmentactivities and also provides frequent updates and alerts on relevant IP (patent trademarketc.) to R&D scientists for products/process and suggests remedial measures to dealwith IP issues. Shilpa IPM team is involved in product selection activity to ensure thatright products are selected for development.

Shilpa's IPM team continues to build its future pipeline of complex products withestablished robust portfolio selection process providing early launch capabilities alongwith intellectual property advantages.

Shilpa's strengths across various molecules including oral Injectable and complexdifferentiated products lie in developing intellectual property in non-infringingprocesses and resolving complex chemistry challenges. In this process Shilpa developsdosage formulations and applies new technologies for better processes. The API Processdevelopment is focused for developing and transferring commercially viable non-infringingand patentable novel API technologies. The development grid selection for API's is baseddifficult-to-make API molecules and novel polymorphic forms of certain API's for creatingvalue addition.

Shilpa's IPM Team is involved in filing of the patent applications of newerprocesses/newer products in India US & EU.

Highlights FY 17-18:

• In FY 17-18 the Company has filed two ANDAs with paragraph IV certification asFirst to File (FTF).

• In FY 17-18 Shilpa and its group companies have filed 34 patent applicationstaking the cumulative total to 247 patent applications in India and other countries.Shilpa received grants for 9 patents.

Future plan FY 18-19

• Shilpa has plans for filing 5 ANDAs with paragraph IV certification with US FDAout of which two could be first-to-file ANDAs.

• Shilpa & it's Partners has plans for filing of two 505(b)2 NDAs.

• Shilpa plans to file at least one NDA for its differentiated product.



• 4 (Four) (Gemcitabine HC1 (route-2) Ibrutinib TeriflunomidePomalidomide)— and are with CA status available.

• 5 (Five) — (Busulfan Irinotecan HC1 Oxaliplatin Imatinib Mesylate andZoledronic Acid) DMFs approved for scientific assessment in support of ANDA reviews.

• Cumulative USDMF filings: 30 Products.


• 2 (Two) (Irinotecan HC1 and Tranexamic Acid) DMFs Filed for grant of CEPs.

• 1 (One) CEP Irinotecan HC1 granted.

• Cumulative CEP's: 11 Products.

Europe DMFs Filed

• 6 (Six) Bortezomib Bendamustine HC1 Pemetrexed Disodium Melphalan HClGemcitabine RTU Clofarabine Filed through DCPs / NPs to support three MAHs for theirMAAs.

• Cumulative EUDMF (DCP/CP procedures): 15 Products. Regulatory Inspections andapprovals

• During the year under review the Company has received EIR from USFDA for theinspection conducted during the period of November 2017 for FDF manufacturing siteJadcherla.

• During the year under review two API facilities located at Raichur and FDFfacility at Jadcherla inspected & approved by European authority from Austria (AGES)for GMP compliance.

• During the year under review two API facilities located at Raichur Karnatakai.e. Unit-1: Deosugur Industrial Area Deosugur Raichur Karnataka India and Unit-2:Raichur Industrial Growth Centre Chicksugur Raichur Karnataka India inspected byUSFDA for PAI. EIR received.


US ANDA's filed: 7 Products.

EU Dossiers filed: 7 Products CumulativeANDA's filings: 15 Products.

Cumulative clients ANDA's filings: 9 Products. Cumulative EU dossier filings: 14Products.

Europe Approvals

Imatinib 100 mg & 400 mg Film Coated Tablets (Czech Republic Finland IrelandNetherlands Sweden) Bortezomib 3.5 mg Powder for Solution for Injection (GermanyIreland Italy & Romania) Irinotecan 20 mg/ml concentrate for solution for infusion(Ireland Malta Netherlands Romania & United Kingdom).

Regulatory Approvals: USFDA

During the assessment year FDF site was inspected by FDA and the EIR received.


Background -

The global prescription pharmaceutical market is estimated at $811 Billion in 2018 andexpected to grow at 6.5% for the next 5 years. Of this the generics market is estimatedat $90 billion and expected to grow at a similar rate. The above figures hide the newshifting reality — Biologics now constitute about 27% of prescription pharma saleswhile biologics share within the top 100 drugs is ~50% — showcasing the effectivenessof these drugs whose target markets are — oncology Autoimmune disorders hematologyand diabetes.

Opportunity and drivers -

a) Most biologics sales today are driven by 1st and 2nd generationbiologics whose patents expire in the 2014 - 2024 window.

b) All biologics today are injectables — an area which your company understandswell and is well prepared to attack.

c) Price erosion in this segment is not expected to be as high as the chemical genericsdue to complexities in developing and manufacturing of these products.

d) Regulated markets including the USA that remain the main drivers for theseproducts in terms of value - are gradually opening up to biosimilars. While automaticsubstitution is yet to be a reality for biosimilars today and is the single largestbarrier to wide adoption of biosimilars pressure from patient/activist groups inregulated markets coupled with huge advances in analytical technologies andever-increasing safety data from markets that have already taken to biosimilars add to thepressure on governments to come up with automatic substitution legislations in theregulated markets.

e) BRICS markets present the largest volume growth opportunity for biosimilars sincethey have the largest patient populations backed by growth in purchasing power over thelast decade and half. Despite this these markets remain price sensitive.

f) Novel formulations and delivery devices will also help us differentiate ourselvesfrom competitors in these markets.

g) Genericized biologics (biosimilars) growth in the generics market is expected toparallel the growth of innovator biologics above thus presenting the largest opportunityfor growth over the next decade with sales of biosimilars expected to hit $20-23 billionby 2023-24 globally.

Our platform & delivery technologies molecule selection ability to selectmarkets partners will play a key role in our growth in this strategic area.

Where we are -

The amalgamation of Navya Biologicals Pvt Ltd with your company was completed in lateNovember 2017 and now is your company's Biologics Division based out of Hubli-Dharwad inKarnataka. This transaction has enabled your company to save about 5-7 years indevelopment timelines for biosimilars. The company now has 13 biosimilars in its pipelineand is dominated by drugs catering to the autoimmune disorders and oncology segments with7 of the top 10 biologics in its pipeline. The remaining are niche high marginopportunities catering to high unmet clinical needs. The company has also filed 3 platformpatents and is pursuing these in global markets.

The first biosimilar is poised to enter human clinical studies later this year. Theinnovator has a global market of $8 billion pa for this molecule while the biosimilaropportunity is at $3-3.2 billion per annum. Three other molecules are ready to completepreclinical studies this year. Your company expects to commercialize its first biosimilarin 2019 in India with the others following suit in 2020-21. We expect to be in a positionof strength to penetrate the global window of opportunity for global biosimilars throughstrategic partnerships in the global markets while opportunistically continuing to buildour marketing channels in a few strategically important markets.


Your company has taken steps to become a vertically integrated biopharmaceuticalplayer by acquiring 11 acres of industrial land in Belur industrial area Dharwad andinitiating set up a world class biologies manufacturing unit (including fill &finish) employing best in class manufacturing technologies that reduce the footprint ofthe facility by about 40% thereby reducing the capital and operational costssignificantly. Phase 1 of the facility is expected to be commissioned in the first half of2019 and will cater to global biologics markets.

The biologics unit is expected to emerge as the next growth driver for your company inthe coming decade and look forward to an exciting future in biopharmaceuticals.


A transdermal patch is medicated adhesive patch that is placed on the skin to deliver aspecific dose of medication through the skin and into the bloodstream. Transdermal patcheshave made their place in global market in past few decades as an alternative toconventional therapeutic for various disease indications. Transdermal patches are widelyaccepted among physicians and patients due to their non-invasive pain free and easyadministration. In recent years the growth of transdermal patch market has increased andexpected to increase significantly in coming years. Higher investments in research anddevelopment could be attributed to the success of transdermal patch market.

Similarly the thin film drugs were recorded with high market acceptance due to itsease of application and high effectiveness. Moreover developed economies such as the U.S.and countries in Europe recorded significant sale of thin film drugs. Thin film drugsachieve the desired therapeutic results. Therefore they have gained attention in themarket as a potential treatment option.

Looking to the market potential we have planned to build a state of art manufacturingfacility of Transdermal Patch and Oral Films at Dobaspet Bangalore.

The lay outs confirming to cGMP requirements is finalized along with UtilityAdministration and canteen building. The equipment's are designed to cater bothTransdermal Patch and Oral Film Products.

The plant construction work is already initiated and expected to be completed by end ofyear 2018.The High Quality critical equipment's required for the above formulationsmanufacturing are already ordered from known European vendors and are expected to bereceived at site between Jan to June'19. Capacities are planned looking to all markets infirst phase. A space for future expansion is allocated for capacity increment. Site willbe ready for qualification by September 2019.


We have also planned to have a state of art Research and Development centre along witha pilot plant facility for potent and non-potent formulation. Layouts are under approvalprocess and construction shall be initiated soon. This facility also will be ready bySeptember 2019. Initial discussion initiated with Vendors for equipment finalization.


Shilpa Medicare Limited has been investing in infrastructure and R&D capabilitiesto develop manufacture and submit regulatory applications to the USFDA for marketingapproval. When approved these generic alternatives will offer patients a very much neededaffordable option for their health care needs. The US market is very important to ShilpaMedicare Limited as it represents the largest pharmaceutical market in the world. It hasbeen proven in many markets the use of generic alternatives which have gone throughvigorous testing requirements save healthcare systems money while providing the same levelof high quality safety and effective medicines.

During the past year Shilpa received two product approvals for Azacitidine andCapecitabine. Those products are being commercialized by partners in the US.

Since Shilpa's roots are in developing API. The majority of the formulations comingfrom the company's R&D efforts utilize API from its own plants. This is important toUS customers as it insures greater control over the production process and greatlyenhances continuous supply chain capabilities. Shilpa develops and manufactures differentdosage forms i.e. oral and injectable drugs in the Oncology therapeutic area along withother high potent drugs that require the level of complexity that Shilpa has built intoits R&D and production capabilities.

The US market has seen tremendous consolidation of the customer base. The number ofcustomers for retail based products has decreased as mergers and acquisitions hasincreased in the past years. Similar trends have been observed in the hospital orinstitutional segment where injectable drugs are the primary dosage form. Group purchasingorganizations for hospital/Institutional organizations have undergone similarconsolidation. There are three GPO customers representing a majority of hospitals in theUS. Oncology Clinics are another major customer group for Shilpa's products. They purchaseproducts from specialized distributors. There are two main distributors with a handful ofsmaller ones addressing the clinic market.

In order to address this consolidated and diverse group of customers. Shilpa hired inJanuary 2018 a seasoned Executive Mr. Adam Levitt as CEO (US Market). He has a diversebackground in the generic pharmaceutical business. He is an experienced leader havingworked for global and International generic companies. During his career he has developedstrategies built multiple organizations while creating sustainable value in both retailand Institutional markets. He understands the resources required to build a local presenceto support the company's business development Regulatory and Marketing plans. Shilpaexpects more products to be approved for the US market. The team in the US will beaddressing local business needs around financial reporting business development managingrelationships and preparing the company to operationalize and execute launch strategiesfor its pipeline. The vision for Shilpa's US business is to build a valuable and sizablespecialty pharmaceutical business in the next 5 years capable of taking Shilpa to the nextstage of its evolution. In order to accomplish the US business will create valuablerelationships with the different customer channels by offering them high qualityconsistent supply of cost effective important medicines that will impact patients qualityof life.


During the year under review there is no change in the nature of business carried outby your Company.


During the financial year under review your Company declared and paid an interimdividend of Re. 0.70 per share and the Directors recommended the same as dividend for theFY 2017-18 keeping in view the fund requirements for the on-going expansion plans. Anamount of Rs. 68686700/- (Rupees Six Crores Eighty Six Lakhs Eighty Six Thousand SevenHundred only) inclusive of dividend distribution tax was absorbed towards the dividend forthe F.Y 2017-18.

The Dividend Distribution Policy of the Company is set out as Annexure-10 and the sameis uploaded on the Company's website atHREF=""> html.


The paid up share capital of your Company increased by Rs. 13.99 lakhs to Rs. 815.26lakhs due to allotment of 1399994 Equity Shares to Shareholders of erstwhile NavyaBiologicals Private Limited pursuant to scheme of amalgamation of Navya BiologicalsPrivate Limited with your Company.

Pursuant to the provisions of Section 124 (6) of the Companies Act 2013 read with IEPFRules the Company has transferred 180582 shares whose details are placed in the websiteof the Company.


We propose to transfer Rs. 500 Lakhs to the general reserve. An amount of Rs. 12128.09Lakhs is proposed to be retained in the surplus account.


Pursuant to the order dated 24/11/2017 of Hon'ble National

Company Law Tribunal Bangalore Bench the Navya Biologicals Private Limited has beenmerged with the Company we.f 01/04/2016 being the appointed date for merger.


Mr. Omprakash Inani (DIN No. 01301385) Director will retire by rotation at the ensuingAnnual General Meeting and being eligible offers himself for re-appointment.

During the period under review Chief Financial Officer (CFO) Mr. Rajendra Dugar hasresigned from the services we.f 31/10/2017 and Mr. Sushil Bajaj has been appointed as CFOwe.f 13/11/2017.


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.



M/s. Brahmayya & Co Chartered Accountants Registration No. 000513S wereappointed at the 30th Annual General Meeting as the Statutory Auditors of theCompany for five years till the conclusion of the 35th Annual General Meetingof the Company. They have confirmed their eligibility for the FY 2018-19 under Section 141of the Companies Act 2013 and the Rules framed thereunder. The Companies Amendment Act2017 has omitted the requirement of ratification of the appointment of statutory auditorsat every Annual General Meeting.


The Board has appointed M/s. VJ. Talati & Co. Cost Accountants for conducting theaudit of cost records of the Company for various segments for the financial year 2018-19as recommended by the Audit Committee. As required under

Section 148 and Rule 14 of the Companies (Audit and Auditors) Rules 2014 a resolutionis being placed at the ensuing AGM for ratification of remuneration payable to said CostAuditors.


M/s. PS. Rao & Associates Practicing Company Secretaries were appointed to conductthe Secretarial Audit of the Company for the financial year 2017-18 as required underSection 204 of the Companies Act 2013 and Rules there-under. The Secretarial Audit Reportfor Financial Year 2017-18 forms part of this Report as Annexure - 8.

The Board has appointed M/s. P.S. Rao & Associates Practicing Company Secretariesas Secretarial Auditors of the Company for the financial year 2018-19.


As there is no qualification reservation or adverse remark in the reports made by theAuditors your directors need not give their comments on that.


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 — 7.


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 The Board formulated and implemented RiskManagement Policy for the Company which identifies various elements of risks which in itsopinion may threaten the existence of the Company and measures to contain and mitigaterisks. 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.


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 - 4.

Further the annual accounts of all the subsidiary companies shall be posted onCompany's website — Annual accounts of the Subsidiary Companies andrelated detailed information will be available for inspection by the members at theregistered office of the Company and will also be made available to the members uponrequest.


The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations.

Various Audit Systems in the Company monitor and evaluates the efficacy and adequacy ofinternal control system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company. Based on the audit reports theunits undertake corrective action in their respective areas and strengthen the controls.Significant audit observations and corrective actions thereon are presented to the AuditCommittee 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 andsuch other procedures for ensuring the orderly and efficient conduct of its business forsafeguarding its assets the prevention and detection of frauds and errors the accuracyand completeness of the accounting records and the timely preparation of reliablefinancial information.


INM Technologies Private Limited incorporated on 23rd January 2015 issubsidiary of Shilpa Medicare Ltd. The Company has a vision to serve the humanity usingNano technology products. Company drives with Strategic intent "Innovations for AllGenerations". INM Technologies profile mainly contains: High-tech know-howcompetencies and expertise to meet industrial needs and strengthen industrialcompetitiveness in Asia Europe and USA. INM has expertise in the field of the MaterialsEngineering / Pharmaceutical Technology and service in advanced technology and productdevelopment with scale up process for the developed micro/nano materials. Based on ourresearch activity and our experience in the chemical technology materials science andengineering pharmaceutical technology sectors we develop and integrate nano structuredmaterials in the products of our customers of various industrial sectors. INM hasstate-of-the-art facility for synthesis characterization and analytical testing of nanotechnology based products trained manpower for process design & monitoring andcreated 9 departments in the company involving major disciplines namely BiotechnologyBio-Medical Analytical and Pharmaceutical Chemical Polymer Coatings Electronics andSmart materials. After completion of 3 years of establishment i.e. by 2018 January INMTechnologies has received DSIR certification.


STPL situated at Cherlapally IDA Phase-III Hyderabad India a progressive novel drugdelivery company with an international outlook is dedicated to the development andcommercialization of innovative and patient compliant novel drug delivery systems such asfast disintegrating oral strips.

STPL is the first company to commercialize prescription products as oral thinstrips/films in India.

Strong technical expertise to develop thin strips/films for oral/sub-lingual/buccaldelivery

As a result of continued efforts in the research and product development STPL haddeveloped the most sought after novel drug delivery dosage form— orallydisintegrating strip/film and obtained the manufacturing and marketing licenses for thisdosage form in India and abroad.

The orally disintegrating formulation resembling a postage stamp in size and shape is ataste masked fast dissolving convenient and potentially effective dosage form.

Vertically integrated GMP facility from Research to Commercialization

STPL facility is capable of meeting the regular commercial supply demand frommanufacturing to secondary packing with its compliance to meet the latest Schedule‘M' cGMP/WHO GMP compliant systems procedures and practices.

Products available in the Domestic Market

STPL had obtained manufacturing and marketing license from the Drugs Control General(India) New Delhi for the following products and these products have also been launchedin India by well-established national pharmaceutical companies.

Molecule Category
Ondansetron Hydrochloride 2mg 4mg & 8mg Orally Disintegrating Strips For the prevention of chemotherapy induced nausea and vomiting (CINV)
Simethicone 62.5mg Orally Disintegrating Strips Anti-Flatulent.
Sildenafil Citrate 25mg & 50mg Orally Disintegrating Strips For the treatment of erectile dysfunction (ED)
Tadalafil 20mg & 10mg Orally Disintegrating Strips For the treatment of erectile dysfunction (ED)
Methylcobalamin 1500mcg ODS Treatment of various neuropathic conditions and vitamin deficiency
Montelukast 10 mg/5mg/4 mg ODS Treatment of Prophylaxis and Chronic Asthma
Menthol Mouth Freshener ODS Mouth Freshener

Products in the Pipeline

The following formulations are under various stages of Research & ProductDevelopment along with several others in the initiation phase.

Molecule Category
Tadalafil 5mg ODS For Treatment of Erectile Dysfunction
Vitamin D3 (Cholecalciferol) 2000IU ODS Treatment of Vitamin deficiency
Montelukast 10 mg + Levocetirizine 5 mg ODS Treatment of Allergic Rhinitis and Chronic Asthma
Hydroxyapetite 165 mg ODS Treatment of Velopalatal (VP) insufficiency
Paracetamol 120 mg ODS Analgesic and Antipyreic
Sildenafil 100 mg ODS For Treatment of Erectile Dysfunction
Nicotine 1 mg/ 2 mg ODS For Nicotine Replacement Therapy
Loratadine 5 mg/ 10 mg ODS For Treatment of Severe Allergic Rhinitis

Patent granted on "Perforated water-soluble polymer based edible films"

Many other patents are under approval process.

Business Scope

STPL holds bright prospects for its business scope. ODS products of Shilpa Therapeuticshave already been launched in India by prominent pharma companies viz. Mankind DelvinAlkem Leads Pharma and Rx Drugs. Shilpa Therapeutics has also extended its business tothe external markets with its ODS products launched in Kenya Yemen Honduras and manyother countries to follow.

Registration process like dossier submission is under process in many countries likeFrancophone countries Malaysia Thailand Myanmar and Cambodia etc.

STPL with its technical expertise manufacturing capabilities and its finished productsat various stages of registration in several countries is poised to attain promisingbusiness results in the very near future.


Koanaa Healthcare GmbH was funded in July 2016 as 100% subsidiary of Shilpa MedicareLimited and Mr. RK Somani took over the responsibility as CEO. He is initiatingdeveloping and guiding Koanaa Healthcare GmbH as a Start-Up company to a pharmaceuticalcompany which is distributing and selling Shilpa's oncological portfolio in Europe.

Koanaa Healthcare GmbH will be positioned as "European Player" with Austrianbasis with low prices and high service in the field of oncology with the brand"Austrian Quality". The products will prove highest standards and quality andKoanaa Healthcare GmbH will stand for Deliverability and Service for Patients andPhysicians.

Koanaa Healthcare GmbH will act as a regulatory hub here in Austria and is currentlyfocused on getting commercial cooperation's with other pharmaceutical companies. Firstcooperation with Amring is already achieved and intensive discussions to expand theexisting partnership are ongoing. Further discussions with other potential partners are indiscussion and business development activities will broaden the number of partnerships.

With an appropriate regulatory strategy step by step more oncological products will bepart of Koanaa Healthcare GmbH's portfolio.

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


Dr. Walter Erber took over the responsibility as CEO/ Managing director for LOBAFeinchemie GmbH from May 2016 and is leading and guiding and developing the company. Withthe strategic vision to achieve sales of 10 million Euro within the next 5 years aneuphoric and challenging strategic goal is set for Loba Feinchemie GmbH.

Main strategy of Loba Feinchemie GmbH is to enhance the focus on business developmentand sales & marketing within the next business years to support sales- and profitgrowth.

In the budget year 2017/2018 beside intensive business activities main challenge wasto increase the level of GMP in all areas which was successfully achieved. Two mainproducts showed unexpected reduction in sales which only partly could be compensated withother products. Nonetheless sales forecast for the next years will show positivedevelopment. In the years 2018/2019 and onwards the sales will further increase and allowLoba Feinchemie GmbH to proceed with the expansion strategy in terms of production and interms of human resources as well as to start with necessary investments in the facility.

Loba philosophy is to be a global company offering its customer a unique product byproviding them a choice of operational excellence and best services with costefficiencies. The mission is to add value to our customers by offering excellent productsthrough continuous innovation and delivering the promises to the customers.


The organization operations have commenced and it has expanded as per its visionset-up. The key verticals are:


As per strategy we have positioned in Emerging Markets by formalizing a consortium(Manufacturing Cos) backing Reva. We have secured the registration approvals in a keymarket and are hopeful to service both Tender (Public) & Private Trade. The license toexport will be under Reva Pharma.

We have adopted module of licensing (Licence In & License Out) for Large Generic& Innovator Cos'. The 1st license out has been completed for the market ofEurope (Medical Device — Women Health Care). We are evaluating positioning of theproduct across Middle East & CEE markets and are optimistic to close in year 2018-19.


The Company has entered into Share Purchase agreement with joint partner ICE SPA Italyto dispose off its entire stake in the Company to the joint partner ICE SPA Italy.According to the terms of agreements the Company has so far disposed off 24% stake in theCompany for which the Consideration has already been received. The Company is in theprocess of disposing the remaining 26% with prior approval of Reserve Bank of India.


A report on CSR Activities as required under Rule 9 of the Companies (Corporate SocialResponsibility) Rules 2014 is enclosed herewith as Annexure — 3.

CSR Policy of the Company and other details as required is placed on the Company'swebsite at HREF=""> CSRPolicy.pdf.


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 Director and 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 at pdf/NominationRemunerationPolicy.pdf.


As required under the provisions of Section 134 of the Companies Act 2013 read withRule 4 of Companies (accounts)

Rules 2014 the performance evaluation of Independent Directors has been done by theentire Board of Directors excluding the director being evaluated. The Company has put inplace a mechanism for evaluation of its own performance its Committees and IndependentDirectors The evaluation of Board Committees and Directors was conducted based on theevaluation of parameters such Board composition structure effectiveness of Boardparticipation at meetings domain knowledge and governance adherence


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 31stMarch 2018 the applicable Accounting Standards have been followed along with properexplanation relating to 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 ended 31stMarch 2018 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 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

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 the Companyand that such internal financial controls are adequate and were operating effectively; and

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


The details forming part of the extract of the Annual Return in Form MGT-9 is placed atwebsite of the Company atHREF=""> Annexure-A of this Directors Report.


Board Meetings

During the year under review 6 (Six) 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 this Annual report.

Management Discussion andAnalysis

The Management discussion and analysis Report for the year under review as stipulatedunder Regulation 34 SEBI (LODR) regulations 2015 is annexed here to and forms part ofthis Annual Report.

Vigil Mechanism:

In pursuance 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: HREF="">

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 — 1.

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 - 2.


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


Your Company has not accepted any fixed deposits under chapter V of the Companies Act2013 and as such no principal or interest was outstanding.


Related Party Transactions entered during the financial year under review are disclosedin Note No. 45 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 - 5.

Related Party Disclosure as per Schedule V of SEBI (LODR) Regulations 2015 is enclosedherewith as Annexure - 6.

The policy on materiality of Related Party Transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's at websiteHREF="http://vbshilpa/">http://vbshilpa . com/pdf/related_party_policy.pdf


Pursuant to Clause 34(2)(f) of the SEBI (LODR) Regulations 2015 BusinessResponsibility Report is applicable to the Company the same forms part of the BoardReport as Annexure - 9.


There are no material changes and commitments affecting the financial position of theCompany occurred between the end of the financial year of the Company to which thefinancial statements relate and the date of the report.


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 Directors further states that during the year under review there were no casesfiled/registered pursuant to the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013.

Your Directors further states that in accordance with the provisions of section 148 (1)of the Companies Act 2013 read rules thereunder the company has maintained cost accountsand records for the financial year 2017-18.


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 wholehearted 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 Sd/-
Omprakash Inani
Place: Raichur Chairman
Date: 13.08.2018 DIN: 01301385