Benzo Petro International Ltd Management Discussions

BENZO PETRO INTERNATIONAL LIMITED ANNUAL REPORT 2011-2012 MANAGEMENT DISCUSSION AND ANALYSIS INDUSTRY STRUCTURE AND DEVELOPMENT, GLOBAL AND DOMESTIC: The global pharmaceutical market is changing rapidly and growing more complex. Annual global spending on medicines is expected to rise from $956 billion in 2011 to nearly $1.2 trillion in 2016as per the IMS Institute for Healthcare Informatics report, According to a study by IMS Healthcare, the global pharmaceutical market has grown at a 7% CAGR over the past six years to reach a size of USD $880 million. Agrowth rate of 5% has been forecasted by IMS Health over the next four years to reach a size of USD $ 1,100mn by 2015E. Generics market has been the key player in this growth story for pharmaceuticals on a global basis. The generics market has grown at a much faster pace of 13.8% CAGR over the period, driven by large-scale patent expiries and global demand for lower-cost drugs. The recent spate of turbulence experienced in the Indian market has resulted in high inflation levels, volatile industrial output and escalated interest rates and have collectively caused a downward revision in the GDP growth rates from 8% to 6.9%. India, being the third largest market in the world pharmaceutical scenario, in terms of volume, it is gaining its position as a global leader clearly topping the charts among the Indian science based industries with significant expertise in the complex field of drug manufacture and technology. Indias pharmaceutical market has registered a strong growth of 16% in 2012. This has been the highest growth in the past three years (Source: Edelweiss Monthly, April 2012). PERFORMANCE AND OPERATIONS OVERVIEW: During the period under review, the operations of the Company witnessed increase in Operational Revenue to Rs. 9278.83 Lakhs from Rs. 7187.54 Lakhs. There has been a sharp decline in Other income amounting to Rs. 487.83 Lakhs in the last financial year to Rs. 162.01 Lakhs in the current financial year. During the year the Company has registered a Loss of Rs. 738.02 Lakhs against a Profit before Tax amounting to Rs. 95.64 Lakhs in the last financial year. RISKS AND CONCERNS: The Pharmaceutical industry works in a dynamic environment. Compared with other industries, the risk and compliance profile span the full pharmaceutical product life cycle. Your Company lays emphasis on risk management and has an enterprise wide approach to risk management, which plays a key role in identifying and managing key operational and strategic risks. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: The Company has a widespread system of internal controls with the objective of safeguarding the Companys assets, ensuring that transactions are properly authorized, and provide significant assurance at reasonable cost, of the integrity, objectivity and reliability of financial information. HUMAN RESOURCES/INDUSTRIAL RELATIONS: The Company continues to focus on its core values of knowledge, action and care, which are also reflected in the behavior of the employees. There has been no other material development in the Company, as far Human Resources are concerned. CAVEAT: Shareholders are cautioned that certain data and information external to the company is included in this section. Though these data and information are based on sources believed to be reliable, no representation is made on their accuracy or comprehensiveness. The management of the Company has prepared and is responsible for the financial statements that appear in this report. These financial statements are in conformity with accounting principles generally accepted in India and therefore include amounts based on informed judgments and estimates. The management also accepts responsibility for the preparation of other financial information that is included in this report. The management has based these forward-looking statements on its current expectations and projections about future events. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. These factors include, but are not limited to, changes in local and global economic conditions, the Companys ability to successfully implement its strategy, the markets acceptance of and demand for its products, growth and expansion, technological change and exposure to market risks. By their nature, these expectations and projections are only estimates and could be materially different from actual results in the future. The Company undertakes no obligation to publicly update or revise any of the opinions or forward-looking statements expressed in this section, consequent to new information, future events or otherwise.