MANAGEMENT DISCUSSION AND ANALYSIS REPORT INDUSTRY STRUCTURE & DEVELOPMENT The Indian pharmaceutical market is estimated to INR1,584 billion as on November, 2014 with expected growth at 12-15 percent. The new Government's "Make in India" campaign is further expected to propel domestic pharmaceutical manufacturing, moving a step closer to India's vision of being a global manufacturing hub. The Indian Pharmaceutical industry has been growing at a compound annual growth rate (CAGR) of more than 15% over the last 5 years and has significant growth opportunities. India rank forth in terms of total Pharma market share in Asia Pacific. India has achieved an eminent global position in pharmaceutical sector. The pharmaceutical industry in India is an expected to grow to US$85 billion by 2020 at 20% compound annual growth rate (CAGR) over the next five years. DISCUSSION ON FINANCIAL PERFORMANCE W.R.T. OPERATIONAL PERFORMANCE This year the Company had managed to achieve a turnover of Rs. 7800.33 lacs moreover this year the Company had been able to generate a profit after tax of Rs. 44.06 lacs. During the year 2010-11 Company had suffered huge losses for want of working capital because of which it has paid higher cost for raw material and packing material. Now the Banks have come to rescue and they have sanctioned a corporate loan which has resulted in ease of cash flow with decrease in prices of raw material and packing Material. SEGMENTWISE / PRODUCTWISE PERFORMANCE In order to improve the bottom line of the Company it has change the product mix and more and more lifestyle diseases are now covered in product range. Earlier the company was concentrated in Africa only but now it has reached LATAM countries, ware product mix all together different and margins are quite comfortable. The company is least interested in Anti-Biotics range and has shifted it's focus more to anti malarial and Anti-Diabetic products etc. OPPORTUNITIES AND THREATS The pharmaceutical industry meets around 70% of the Country's demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals & injectable. The domestic pharmaceutical market is expected to register a strong double digit growth of 15% on the back of increasing sales of generic medicines, continued growth in chronic therapies and a greater penetration in rural markets. Similarly today the country is exporting worth 1,00,000 Crore medicine to international market where again the growth rate is in vicinity 15-20% and every third tablet/capsule is made in India. The country is the 3rd largest of manufacturing of pharmaceutical as far as volume is concerned at the 13th in ladder. 2/3 of medicines consumed in the world are made in India. The company has started constructing its separate block for manufacturing of Cephalosporin, it is in the process of WHO certification which is mandatory as per the guidelines. The demand for Cephalosporin in Africa has started picking up and your company sees a big opportunity in getting contract work for export which will help in reap great dividend time to come because many small players have not opted for manufacturing of Cephalosporin due to finance involved in construction of new block. In Haridwar plant the Company is going to get its WHO certification in current financial year and intended to export ointment and lotions beside iron and folic acid tablets which will give big boost to the Company from next financial year onward. OUTLOOK In view of the governments long term vision of ensuring universal access to health care and "Health for all" it is the utmost importance that the government lays equal focus on the pharmaceutical sector. With the addition of 2 new blocks the Company can produce goods worth Rs.500 crores per year. The Company is planning to automatise its machinery so that the manufacturing cost is reduced to a great extent and the profitability is improved. oncentration is also on expansion of the product portfolio along with stricter credit policy and cost control through long term contracts with suppliers and tightening of expenses so as to improve margins. The Company is striving hard to discover new markets abroad and concentrating on the domestic business with high margins. The Company intends to have focused and continuous innovation in Research and Development which will help secure a sound future. RISKS & CONCERN As explained above the companies situated in Non Tax Free Zone has also established in Tax Free Zone of all are striving to enter the export business and giving a tough fight to your Company in the international market which may further affect the profitability and business quantum of the Company. The Company's senior management keep on monitoring foreign exchange rates and this year exchange rate variation has not much effect on the Company as compared to early years. The Company has Quality Management System that defines corporate quality standards and system for the Company as a whole to meet requirements globally and support delivery of consistent and reliable products. Factors which would make a significant difference to the Company's operations include achievement of better quality and good market price in domestic and overseas market, changes in Government regulations and tax laws, economic conditions affecting demand / supplies and other environmental factors over which the Company does not have any control. Increase in cost of power & fuel and increase in other fixed / semi variable cost due to overall inflationary brssure are also the matter of concerns. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY The Company has initiated adequate internal control procedure commensurate with the nature of its business and size of its operations. An Audit committee consisting of three independent, nonexecutive directors is in place; internal Audit is conducted by independent audit firm on quarterly basis, which covers all the key areas of operations. All significant audit observations and follow up actions thereon are reported to the audit committee. The Audit committee met four times during the financial year under review. HUMAN RESOURCES Your Company's industrial relations continued to be harmonious during the year under review. Your Company is striving hard to retain the skilled manpower since the turnover has increased manifold in the industry. Your Company conducts regular in-house training programs for employees at all levels. The focus is on maintaining employee motivation at a high level with stress on leadership development CAUTIONARY STATEMENT Estimate and expectations stated in this Management Discussion and Analysis may be "forward-looking statement" within the meaning of applicable securities, laws and regulations. Actual result could differ materially from those exbrssed or implied. Important factors that could make difference to your Company's operations include economic conditions in the government regulations, tax laws, other statutes and other incidental factors. |