ANNUAL REPORT 2011-2012
MANAGEMENT DISCUSSION AND ANALYSIS
FINANCIAL RESULTS 2011-2012 2010-2011
Rupees in lacs Rupees in lacs
Revenue from operations (Net) 69,924.16 70,036.26
Other income 2,782.00 2,783.78
Profit (before finance costs and
depreciation/amortisation) 18,954.99 19,119.35
Finance costs 132.35 133.98
Depreciation and amortisation 1,805.00 1,698.54
Profit before tax 17,017.64 17,286.83
- Current tax 3,450.00 3,450.00
- Deferred tax 328.15 120.38
- MAT credit entitlement - (1,330.00)
- Tax adjustments for earlier years
(current tax) (29.56) 171.86
Profit after tax 13,269.05 14,874.59
Balance of profit from prior years 28,430.05 20,842.48
Surplus available for appropriation 41,699.10 35,717.07
Transfer to general reserve 3,000.00 3,000.00
Final dividend proposed 3,658.41 3,688.63
Tax on dividend 593.48 598.39
Reversal of excess provision of dividend (12.79) -
Balance carried to Balance Sheet 34,460.00 28,430.05
Previous year's figures have been re-grouped/re-classified, wherever
necessary to conform to this year's classification.
The Indian Pharmaceutical Market (IPM) is destined to be one of the fastest
growing Industry. It has been the front runner in a wide range of
specialties involving complex drugs manufacture, development and
technology. The IPM is on the threshold of becoming a major global market
by 2020. The IPM grew by 16% to touch the market size of Rs.62,904.12
crores, during the year ended March 2012. Around 2,638 products were
introduced during the year (Source: AIOCD AWACS).
The key drivers have been increase in household income level, increase in
lifestyle related diseases, growing population, improving healthcare
infrastructure/ delivery systems and rising penetration in smaller towns
and rural areas, have contributed to the long term growth of the Industry.
The life style segments such as cardiovascular, anti-diabetes, anti-
depressants and anti-cancers have continued to be lucrative and fast
growing owing to increased urbanisation and changing lifestyle patterns.
After the anti-diabetic segment, the cardiac segment is considered to be
the 2nd largest in the chronic therapy which has a CAGR of 19%. This is
further boosted due to the rise in affluent consumers demanding innovative
drugs for the treatment of chronic illness associated with their changing
life styles. High growth in domestic sales in the future will depend on the
growing chronic disease segment.
A large untapped opportunity is seen in the rural markets. However, these
markets have their own share of challenges like awareness, modern health
care facilities, affordability and investments in infrastructure. The MNC's
too are augmenting their portfolio in these rural areas. Even though
challenges are manifold to penetrate in these markets, host of
opportunities are available which can be achieved by adopting untraditional
methods like tying up with Government organisations, insurance, diagnostic
providers, NGOs, increasing patient awareness and literacy campaigns.
The IPM is adopting various strategies for their R&D efforts like entering
into collaboration and partnership agreements with innovator companies and
out-licensing their molecules for milestone payments.
Over the last five years focus, investments are seen in the emerging
markets namely China, India, Brazil and Russia. Due to India's
demographics, rising income levels and changing attitude towards health and
lifestyle, India will increasingly become an important market.
Mergers & Acquisitions, collaborations and in-licensing will continue to
see significant activities, mainly due to expert technical staff, excellent
infrastructure in terms of clinical trial laboratories, contract
manufacturing and readily available world class accredited state of the art
manufacturing facilities in India.
The new price control policy is still pending review by the Government.
Compulsory licensing, patent oppositions and litigations, increasing
regulatory requirements and compliances, infrastructure development and
menace of counterfeit drugs are seen as major hurdles in the Industry.
Against the above market background, we give below a brief review of
various functions of your Company:
Your Company registered a market growth of 3.2% in the financial year April
2011 to March 2012. Your Company is ranked at 26th position, attaining a
market share of 1.20% (Source: AIOCD AWACS March 2012).
Your Company does not find this performance satisfactory. However,
following steps have been taken to improve the performance:
i. Online reporting system is under implementation in the field to monitor
the work carried out in the field.
ii. Web based online sales information system is introduced to enable the
managers to follow-up on sales growth and targets on day to day basis.
iii. Appraisal systems at field have been improvised to reward good
performance and identify the areas of improvement.
iv. Training of field has been intensified to improve the performance,
particularly of 1st and 2nd line managers. This is expected to reduce the
impact of attrition in territories under the managers.
v. Incentive and salary levels in the field are substantially revised to
reduce attrition, considering current opportunities in the industry.
vi. Territory rationalisation and introduction of specialised marketing
field force is on cards to avail various opportunities.
vii. Number of new innovative products are in the R&D pipeline.
viii. Your Company is in the process of finalising innovative products for
The above steps are expected to yield results over a period of time.
b. Financial Performance:
Your Company's sales & profit stagnated due to attrition in the field and
increased employees' cost respectively. The treasury income has been
moderate due to fluctuating markets. The Company continues its efforts to
improve the performance through operational efficiencies and incremental
business. Cost controls across all levels of functions are a continuous and
ongoing exercise. The Company's internal control procedures commensurate to
the extent and nature of its operations.
The annual export turnover for the year ended March 31, 2012 was
Rs.8,682.93 lacs with a growth of 24% as compared to year ended March 31,
2011 which stood at Rs.7,019.10 lacs. Although FDC continues to supply APIs
worldwide to its esteemed customers, the improved export performance
resulted from sales of finished dosage forms mainly Ophthalmic & ORS range
to UK, USA & Latin America and support of various international NGOs.
The Company's manufacturing facilities of Ophthalmic/ liquids/powders and
tablet dosage forms at Waluj and Goa are approved by international
authorities namely US FDA and UK MHRA respectively. In view of the
Company's core capabilities, number of opportunities in European and US
markets are opening up, for out-licensing of dossiers/ANDA's/ DMF/COS.
In view of emerging economic markets in CIS countries, your Company is
exploring a business alliance for marketing its various products.
RESEARCH & DEVELOPMENT
Your Company as reported earlier has launched products in the various
therapeutic areas. The Company has developed formulations as collaboration
projects with overseas Companies and the dossiers of products have been
submitted for registration. Cost reduction exercise was completed on
products which would result in cost savings besides being environmental
friendly and solvent free process.
The Company has developed novel drug delivery technologies and patents for
Gastro retention dosage form, multilayer tablets, floating suspensions and
matrix system were filed during the current year.
Your Company's main focus is on the development of cost-effective processes
for generic APIs, based on patent expiry. Process development and
improvement for the existing range of products such as dorzolamide,
brimonidine tartrate, fluconazole and famciclovir was undertaken during the
year. Non-infringing route for the synthesis of fluconazole was developed
and successfully transferred to Roha. QP audit and WHO GMP inspection was
performed for latanoprost manufacturing facility at Jogeshwari, Mumbai and
the WHO GMP certificate was received.
In collaboration with National Chemical Laboratory, Pune, New Chemical
Entities with antifungal activity have been developed. Few of those have
shown promising results and are in the process of patenting.
During the year, your Company has filed 4 Patents and 5 Patents have been
granted for dorzolamide, duloxetine and NCE Series. Two new DCP's were
submitted for Ophthalmic products.
Your Company's reputed energy drink, 'Enerzal' powder was introduced in
attractive zip-pack pouch. During the year, the Company has also launched
Simyl MCT and Prosoyal with milk fat. The formulation of Simyl MCT and
Prosoyal has been certified by BIS (Bureau of Indian Standards).
After the successful launch of its infant milk substitute, MUM-MUM 1, your
Company is in the process of launching MUM-MUM 2, a specially developed
infant milk substitute for infants between six months to one year taking
into account the nutritional needs of the infants.
The Company has successfully completed ISO 22000:2005, re-certification
audit and HACCP surveillance audit for Roha plant.
As reported to you earlier, with regard to the license technology agreement
signed by your Company with an Israel based company, for production and
purification of recombinant protein licensed to FDC, five consistency batch
data dossier alongwith animal toxicity studies protocol was submitted to
the Department of Biotechnology (DBT). DBT has granted permission to
conduct preclinical toxicity studies of FDC's recombinant product. The
results of the efficacy studies are found to be promising and are in
consonance with the international standard samples.
On completion of the toxicity trials, the entire pre-clinical study data
shall be submitted to DBT for evaluation. Once the permission is granted,
FDC will be proceeding with human clinical trials.
In discharge of its social obligations, your Company regularly contributes
to trusts formed for charitable purposes. FDC also assists several
organisations in medical camps conducted all over the Country.
PARTICULARS OF SUBSIDIARIES AND ITS OPERATIONS
Based on valuation of independent valuers, the Board of Directors, at its
meeting held on October 15, 2011, had resolved to purchase 100% equity
shares of Anand Synthochem Limited (ASL), a related, unlisted Public
Company, from its erstwhile shareholders, for a total consideration of
Rs.644.58 lacs (including a loan of Rs.38.42 lacs), thereby making ASL, a
Wholly Owned Subsidiary(WOS) of FDC Limited w.e.f. October 17, 2011. Though
ASL does not have any substantial operations, it owns a property at
Dombivali, Maharashtra, admeasuring 81,855 sq.ft. which FDC proposes to use
for its business operations. ASL has reported a loss of Rs. 2.09 lacs (The
loss is during the period October 17, 2011 to March 31, 2012).
Your Company's WOS at USA, namely FDC Inc., reported a loss of USD 1,440
(i.e. Profit of Rs.5.28 lacs on account of exchange gain on currency
Your Company's WOS at UK, namely FDC International Ltd., has reported a
profit of Pound 230,946 (Rs.196.76 lacs).
Your Company's joint venture business at South Africa namely Fair Deal
Corporation Pharmaceutical SA (Pty) Ltd., reported a profit of ZAR 229,912
As per the directions of the Central Government vide its general
notification dated February 08, 2011, the financial data of the
subsidiaries is disclosed in the annual report in compliance with the said
Also, as directed by the Central Government, annual accounts of the
subsidiaries and the related detailed information will be made available to
the holding and subsidiary company investors, on request and the same is
available for inspection by the members at the registered office of the
Company, between 10.00 a.m. to 12.00 noon on all days except Friday and
holidays, till this annual general meeting and will also be placed before
the said meeting.
Any shareholder interested in obtaining a copy of the annual accounts of
the subsidiary companies may write to the secretarial department at the
corporate office of the Company. The annual accounts of the individual
subsidiary companies are also available on the Company's website -