Arvind Remedies Ltd Directors Report

Your Directors have pleasure in presenting the Twenty-seventh Annual Report together with the Audited Statement of Accounts for the 15 months period ended 30th June 2015

1.STANDALONE FINANCIAL RESULTS		(Rs. in Crores)
Particulars	2014-2015	2013-2014
	(15 months period ended 30.6.2015)	(Financial year ended 31.3.2014)
Gross Income	792.93	967.01
Profit before tax	(327.35)	86.39
Profit after tax	(322.10)	58.90
Profit available for appropriation (after considering the balance b/f from previous year and deferred tax liability)	(207.76)	131.61
APPROPRIATIONS
Dividend of current year	Nil	5.450
Corporate Dividend Tax	-	0.926
Transfer to General Reserve	-	10.000
Surplus carried to Balance Sheet	(207.76)

2. OPERATIONS AND BUSINESS PERFORMANCE

During the 15 months period ended 30th June 2015 the net sales stood at 787.07 Crores with a reported loss of Rs 320.03 Crores as against the sales of Rs.967.01 Crores and profit before tax of Rs 86.39 Crore in the previous financial year.

3. DIVIDEND

Your Directors have not recommended any dividend for the financial year in view of the losses incurred and the need to conserve resources of the company.

4. MANAGEMENT DISCUSSION AND ANALYSIS (MDA)

The Management Discussion and Analysis Report for the period under review, as stipulated under Clause49 of the Listing Agreement is presented in a separate section forming part of this report.

5. MATERIAL CHANGES AND COMMITMENTS AFTER THE END OF THE FINANCIAL YEAR

No material changes or commitments affecting the financial position of the company have occurred between the end of the financial year to which financial statements in this report relate and the date of this report.

During the period under report, the companys operations were affected adversely due strike and liquidity problem.

During the period under report, the Companys Bank accounts became NPA since the company could not pay the interest and installment with the limited source of funds, and the Companys Bankers have filed petition before Debt Recovery Tribunal for recovery of their dues during the current year. The company is attending the same. During the current year, the Bankers have also issued notice under SARFAESI Regulations for recovery of dues. The company is in process of identifying strategic investors to meet with the funds requirements, and to put into operations the Unit II at Irrungatukottai.

In view of losses for the year which has wiped out the reserves and of more than 50% of the net worth of the company the provisions of BIFR are applicable and accordingly the company is required to file necessary application for reference.

6. SHARE CAPITAL

The paid up equity share capital of the company as at 30th June 2015 was Rs.68.13 Crores. The company currently has no outstanding shares issued with differential rights, sweat equity or ESOS

7. CONSOLIDATED ACCOUNTS

Due to change in financial year and consequently different financial years, the Consolidated financial statements have not been prepared by the company in accordance with the requirements of Accounting Standards 21 issued by the Institute of Chartered Accountants of India (ICAI) and as per the provisions of Section 129(3) of Companies Act 20133. As per the provisions of Section 136 of the Companies Act 2013, the Company will place separately, the audited accounts of its subsidiaries in its website www.arvindremedies.com and copy of audited financial statements of its subsidiaries will be provided to the members on request. There are three subsidiaries, viz. Arvind Wellness Ltd., Arvind Remedies LLc US and Arvind Remedies Inc US.

During the financial year M/s. Coronet Labs P Ltd. ceased to be the subsidiary with effect from 1st October 2014.

There has been no material change in the nature of the business of the subsidiaries. The company has no subsidiary which can be considered as material within the meaning of Clause 49(V)(E) of Listing Agreement.

In accordance with the provisions of Section 136(1) of the Companies Act 2013, the following will be placed on the website of the company www arvindremedies.com

a) Annual report of the company, containing therein its standalone financial statements; and

b) audited annual accounts of the subsidiary companies will be placed on receipt.

9. HUMAN RESOURCE DEVELOPMENT

Your company has the necessary managerial band width to navigate the growth opportunities. The company has ensured that it has a strong team in manufacturing facilities, research labs, supply-chain management and in every functional area. However, considering the potential opportunities and the organisational growth targets, there is a constant review being done to be ahead of the curve. Talent acquisition and talent retention are being given considerable emphasis in human resource management.

10. RESEARCH & DEVELOPMENT (R&D)

The company has always considered R&D as crucial for the sustained growth fo the company. The company has spent Rs.27.03 lacs on R&D as expenditure (0.03% of its turnover) in the previous year to Rs. in the year under report.

Apart from development of new dosage forms and drug delivery systems, improvement in process and yield as well as cost reduction are also focus areas.

11. WHISTLE BLOWER POLICY/ GIVIL MECHANISM

There is a whistle blower policy in the company and that no personnel has been denied access to the Chairman of the Audit Committee The policy provides for adequate safeguards against victimisation of persons who use vigil mechanism. The whistle blower policy is posted on the web site of the company.

12. POLCY ON SEXUAL HARASSMENT

The company has a policy n prevention & prohibition of sexual harassment at workplace . However the company is in the process of constituting a committee for the same. The policy provides for protection against sexual harassment of women at workplace and for prevention and redressal of such complaints. During the year, no complaints have been received under the policy.

13. MEETINGS OF THE BOARD AND COMMITTEES THEREOF

The Board and Committee meetings are pre-scheduled and a tentative calendar of the meetings finalized in consultation with the Directors to facilitate them to plan their schedule. However in case of special and urgent business needs, approval is taken by passing resolutions through circulation. The information has been furnished under Report on Corporate Governance, which is annexed.

14. DIRECTORS

During the current year the term of Managing Director Dr B Arvind Shah is getting over and he is eligible for reappointment pursuant to Section 196 and other applicable provisions of the Companies Act 2013. His reappointment is taken at item No.5 of the Notice of AGM.

During the year under report, following directors resigned due to their preoccupations/ age/ health conditions

Mr. Ankur Agarwal from 14th November 2014

Mr. R Rajamohan from 7th November 2014

Mr. VR Mehta from 21st March 2015

During the current year Dr. C M K Reddy resigned on 3rd October 2015 and Mr. Sudhir Chandra resigned on 5th November 2015

The Board places on record its sincere appreciation for the services rendered to the Company by them during their tenure as Directors of the Company.

In the meeting of the Board of Directors of the Company held on 4th November 2015 Mr. Madhavyadav was appointed as an Additional/ independent Director of the company effective from 1st October 2015. He holds the office of directorship till the conclusion of the ensuing annual general meeting. Being eligible he has offered himself for appointment as an Independent director of the company. Pursuant to the provisions of Section 149 of the Companies Act 2013, Mr. Madhavyadav has been appointed as Independent Director for a period of five years till 30th September 2020 and the same is to be approved at the ensuing annual general meeting

Mr. MadhavYadav who are independent director, has submitted a declaration that he meets the criteria of independence as provided in Section 149(6) of the companies Act 2013 and there has been no change in the circumstances which may affect his status as independent director during the year.

In the opinion of the Board, the independent director possesses appropriate balance of skills, experience and knowledge, as required.

Mrs. Chandra Ravindran retires by rotation at the ensuing annual general meeting and being eligible offer herself for reappointment.

A brief note on Directors retiring by rotation and eligible for re-appointment as well as independent director being appointed is furnished in the Report on Corporate Governance.

15. KEY MANAGERIAL PERSONNEL

During the year under report, Mr. Selven Daniel CFO resigned and in his place Mr. S Raghavan has been appointed. During the year under report, the company has appointed the following persons as Key Managerial Persons

Dr. B Arvind Shah	Managing Director
Mr. S Raghavan	CFO
Mr. P R Krishnan	Company Secretary

16. BOARD EVALUATION

The Nomination and Remuneration Committee lays down the criteria for performance evaluation of independent directors, Board of Directors and Committees of the Board. The criteria for performance evaluation is based on the various parameters like attendance and participation at meetings of the Board and Committees thereof, contribution o strategic decision making, review of risk assessment and risk mitigation, review of financial statements, business performance and contribution to the enhancement of brand image of the company.

The Board has carried out evaluation of its own performance as well as that of the Committees of the Board and all the Directors. The annual evaluation was carried out in the following manner:

Sr No.	Performance evaluation of	Performance evaluation performed by
1	Board and individual directors	Board after seeking inputs from all directors
2	Board Committees	Board seeking inputs from all committee members
3	Individual directors	Nomination and Remuneration Committee
4	Non-independent directors, Board as a whole and the Chairman	Separate meeting of independent directors after taking views from executive directors
5	Board, its Committees and individual Directors	At the Board meeting held after the meeting of the independent directors based on evaluation carried out as above

17. TRAINING OF INDEPENDENT DIRECTORS

Every new independent director of the Board attends an orientation program. To familiarize the new inductees with the strategy, operations and functions of our company, the executive directors/ senior managerial personnel make presentations to the inductees about the companys strategy, operations, product and service offerings, markets, organization structure, finance, human resources, technology, quality, facilities and risk management.

18. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION AND OTHER DETAILS

The Nomination and Remuneration Committee has laid down the criteria for Directors appointment and remuneration including criteria for determining qualification, positive attributes and independence of a Director. The following attributes/ criteria for selection have been laid by the Board on the recommendation of the Committee

• the candidate should possess the positive attributes such as leadership, entrepreneurship, business advisor or such other attributes which in the opinion of the committee are in the interest of the company

• the candidate should be free from any disqualifications as provided under Section 164 and 167 of the Companies act 2013

• the candidate should meet the conditions of being independent as stipulated under the Companies Ac 2013 and Listing Agreement entered into with Stock Exchanges in case of appointment of an independent director and

• the candidate should possess appropriate educational qualification, skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations, infrastructure medical, social service, professional teaching or such other areas or disciplines which are relevant for the companys business.

19. REMUNERATION POLICY

The objective and broad framework of the Companys remuneration policy is to consider and determine the remuneration based on the fundamental principles of payment for performance, for potential and for growth. The Remuneration Policy reflects on certain guiding principles of the company such as aligning remuneration with the longer term interests of the company and its shareholders, promoting a culture of meritocracy and creating a linkage to corporate and individual performance and emphasizing on line expertise and market competitiveness so as to attract the best talent. It also ensures the effective recognition of performance and encourages a focus on achieving superior operational results. The Nomination and Remuneration Committee recommends the remuneration of Directors and Key Managerial Personnel which is approved by the Board of Directors, subject to the approval of shareholders where necessary. The level and composition of remuneration shall be reasonable and sufficient to attract, retain and motivate the directors, key managerial personnel and other employees of the quality required to run the company successfully. The relationship of remuneration to performance should be clear and meet appropriate performance benchmarks. The remuneration to directors, key managerial personnel and senior management personnel should also involve abalone between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the company and its goals The Remuneration Policy is placed on the companys website www.arvindremedies.com

Information about elements of remuneration package of individual directors is provided in the extract of the Annual Return as provided under Section 92(3) of the Companies Act, 2013 which is enclosed.

20. FAMILIARISATION PROGRAM FOR INDEPENDENT DIRECTORS

Details of the familiarization program of independent directors are kept at the Registered Office of the Company and will be also placed on the website of the Company.

21. DIRECTORS RESPONSIBILITY STATEMENT

Your Directors confirm:

i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures

ii) that your Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year June 30,2015 and of the profit of the company or the financial year;

iii) that your Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

iv) that your Directors have prepared the annual accounts on a going concern basis

iv) that your directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

v) that your directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

22. CORPORATE GOVERNANCE

As per the requirement of listing agreement with the Stock Exchanges, the Company has complied with the requirements of Corporate Governance in all material aspects

A report on Corporate Governance (Annexure I) together with a certificate of its compliance from a Practicing Company Secretary is attached.

23. FIXED DEPOSITS

During the year under review, the company has not accepted any deposits and as such no amount of principal or interest on deposits from public was outstanding as on the date of Balance Sheet.

24. AUDIT COMMITTEE

Details of the Audit Committee along with its constitution and other details are provided in the Report on Corporate Governance.

25. AUDITORS, AUDIT REPORT AND AUDITED ACCOUNTS

M/s. Vivekanandan & Associates (Firm Registration No.0052685),Chartered Accountants, retire as auditors and being eligible, offer themselves for re-appointment.

The Auditors report read with the notes to the accounts referred to therein are self explanatory and therefore do not call for any further comments.

Reply to the disclaimer of opinion in the report:

Disclaimer of Opinion

In our opinion and to the best of our information and according to the explanations given to us, consequent to the possible effects of the matter described in the Basis for our Disclaimer of Opinion paragraph, we are unable to state whether the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at 30th June 2015, and its Profit& Loss and its cash flows for the period ended on that date.

1. The Company has destroyed pharmaceutical raw material, stock-in-process and finished goods of value Rs. 19729.67 lacs during the period under audit under self certification and no external agencies including Drug Control Authorities, Central Excise and Pollution Control Board were involved in the process. We have been informed that there was strike by employees between third week of December 2014 to second week of February 2015.

It is explained that due to strike of employees no person was allowed to go inside the factory premises leading to failure in the environmental conditions, directly affecting the quality, purity and usage of some of the products. Subsequently with the Court order when the management was able to enter the factory, he materials were analysed by high powered technical committee of the company. Based on the assessment inventories valued at Rs.19730.68 Lacs were identified as no longer usable and accordingly such products were destroyed as per standard operating procedure under GMP so as to avoid any possible misuse and/or contamination with good products. Of this Rs.12617.51 Lacs was taken in the December 2014 quarter results and balance Rs.7113.17 Lacs could be ascertained thereafter.

2. During the period under audit, the company has accounted for return for assets of capital expenditure as (part financed by the Banks by way of Term Loan) is set out below. Also, confirmations from the equipment vendors acknowledging receipt of the returned items were not available.

PARTICULARS	AMOUNT IN RS. LAKHS
Assets held under Fixed Assets – capitalized in FY 2013-14 gross block value	4348.83
Held under "Capital Expenditure on New Projects (Pending Allocation) "	5965.61
Total amount of capital assets returned to the supplier	10314.44

In order to make the Kakkalur unit II (which was partially capitalized last year and partly lying in capital work in progress) compliant with international norms (USFDA & European Standards), certain modifications and upgradations were required. To complete this exercise major part of machinery (including items lying under capital work in progress) were dismantled during the period and sent back to the suppliers.

The projects could not be completed for want of upgradation of machinery to meet with the requirement of USFDA guidelines and hence the machinery were returned/ sold, and the profit Rs.219.84 Lacs was adjusted in the books.

3. Letters seeking confirmation of balances were sent to various Debtors aggregating to Rs. 477,49.64 lakhs representing substantial portion of total receivables.

o Replies confirming dues to the Company we received for Rs.381,59.12 lakhs and We have not received replies for the balance.

Also, we observe that Sales and Purchase transactions have been carried out with the same business entities and the receivables and payables thereon are set off against each other with minimum bank/cash transactions. And, we observe that in several debtors accounts (including state owned Enterprises) the receivables are netted with transfers entries to other parties or accounts.

The confirmations received constitute almost 80% of the debtors and management hopes that remaining debtors will also be sending the confirmation.

4. For the Financial year 2013-14, the tax liability has been reported on book profit of Rs. 1847.51 lakhs as against Rs. 8639.43 lakhs, though tax provisioning in accounts was made for book profit of Rs.8639.43 lakhs.

Change in tax liability is yet to be computed and hence the total has been carried forward under provisions.

5. In the absence of audited financial statement of the Companys subsidiary Arvind Remedies Inc, USA and Arvind Remedies LLC, USA we are unable to provide for diminution in the value of investments, should in case such subsidiary company has incurred losses. Consequently, we were unable to determine whether any adjustments to these amounts were necessary.

The financial year ending of 2 subsidiary companies in US is December and currently there is no activity in these companies. Hence their balance sheets are yet to be prepared.

26. COST AUDIT

Pursuant to the provisions of Section 148 of the Companies Act 2013 the company is required to appoint Cost Auditor to conduct audit of cost records of the company for the financial year 2014-15. The company is in the process to appoint new Cost Auditor for the year.

The cost audit report for the financial year 2013-14 was due to be filed with the Ministry of Corporate Affairs by 29th September 2014, was filed on 30th September 2014

27. Management Discussion and Analysis (MDA):

The Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement is presented in a separate section forming part of this Annual Report.

28. SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 and other applicable provisions, of the Companies Act 2013, M/s. Lakshmmi Subramanian & Associates as secretarial Auditor for auditing the secretarial records of the company for the 15 months period ended 30th June 2015 and the report is Annexed hereto.

29. CORPORATE SOCIAL RESPONSIBILITY(CSR)

The company is committed to good corporate citizenship.

During the year under report, the company has constituted a CSR Committee and framed policy.

In view of losses for the year 2014-15, no provision has been made towards expenditure to CSR activities.

30. SAFETY ,ENVIRONMENT AND HEALTH

The company considers safety, environment and health as the management responsibility Regular employee training programmes are carried out in the manufacturing facilities on safety, environment and health

31. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

The company has not given any loans or guarantees or made investments in contravention of the provisions of the Section 186 of the Companies Act 2013. The details of the loans and guarantees given and investments made by the company are provided in the notes to the financial statements.

32. RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were on arms length basis and were in the ordinary course of companys business. The company has not entered into any contract, arrangement or transaction with any related party which could be considered as material within the meaning of clause 49 of the listing agreement.

The Board has approved a policy for related party transactions.

As the related party transactions for the year are nil no details as per Section 134(3) are furnished in the report.

33. PARTICULARS OF EMPLOYEES

Pursuant to the provisions of Section 197 of the Companies Act 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, during the year, the Company did not have any employee drawing remuneration of amounts specified and hence the details are nil

34. CODE OF CONDUCT

The Board has laid down a code of conduct for board members and senior management personnel of the company. The code incorporate the duties of independent directors as laid down in the Companies Act 2013. The said code of conduct is posted on Companys website www.arvindremedies.com. The Board members and senior management personnel have affirmed compliance with the said code of conduct. A declaration signed by the Managing Director/ CEO is given at the end of the Corporate Governance Report

35. PREVENTION OF INSIDER TRADING

The company has also adopted a code of conduct for prevention of insider trading. All the directors, senior management employees and other employees who have access to the unpublished price sensitive information of the company are governed by this code. During the year under report, there has been due compliance with the said code of conduct for prevention of insider trading based on the SEBI (Prohibition of Insider Trading) Regulations 2015.

The Board at its meeting held on 28th May 2015 has adopted revised code of prevention of insider trading based on the SEBI (Prohibition of Insider Trading) Regulations 2015.

36. BUSINESS RISK MANAGEMENT

Pursuant to the provisions of Section 134 of the Companies Act 2013, the company has constituted a Risk Management Committee. The details of the Committee and its terms of reference are provided in the Report on Corporate Governance, which is annexed.

37. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant or material orders passed by any regulator, tribunal or court that would impact the going concern status of the company and its future operations

38. PARTICULARS OF ENERGY CONSERVATION ETC.

The details of energy conservation, technology absorption, foreign exchange earning and outgo are furnished in a separate statement attached to and forming7 part of this report, in accordance with Section 134 of the Companies Act, 2013, read with The Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

39. EXTRACT OF ANNUAL RETURN

The details are attached as MGT-9 form to this report.

40. LISTING:

The Companys shares are presently listed at Bombay Stock Exchange Ltd. and in National Stock Exchange of India Ltd. The extract of Annual Return in form MGT9 are annexed herewith.

41. ACKNOWLEDGEMENTS

Your Directors wish to place on record their appreciation for the continued co-operation of the banks and other financial institutions associated with the company. Your Directors also thank Medical fraternity for the trust reposed on the Company and the trade, the stockists and consumers for their patronage to the Companys products. Your Directors also place on record their profound admiration and sincere appreciation of the continued hard work put in by the employees at all levels. We look forward to the same support in our future endeavours.

FINANCIAL HIGHLIGHTS

Sales

The gross sales revenue decreased by 18% % to Rs.79293 Lakhs in 2014-15.

Operating expenses

Material cost:

The consumption of materials and finished goods (net after goods destroyed) increased by Rs 85476 Lacs at Rs.74390 Lacs. Total consumption as a % to net sales increased to 83.46% from 76.10% last year.

Personnel costs

The personnel cost decreased by 8.2% y-y to Rs.1598.62 Lacs due to retrenchment of certain employees

Manufacturing, selling, distribution and General Administration expenses

The manufacturing, selling, distribution and other general administration expenses decreased by 27.37% y-y to Rs.2407.03 Lacs. Overall MSGA as % to net sales were at 3.06% compared to 3.64% last year. This is mainly on account of certain measures implemented during the year to compensate the increase in raw material prices.

Profits and margins

The EBITDA (earnings before interest, tax, depreciation and amortization excluding non operating income) was loss of Rs. -23665.65 lacs against profit Rs.17739.84 Lacs. The EBITDA margin as % to total operating income has declined to -30.06% compared to previous years level of 19%L

The profit before tax before exceptional items was Rs -32734.81 as agaianst profit of Rs.8639.43 Lacs of previous year. After tax the company slipped to loss of Rs 32003.86 lacs as against profit of Rs.5889.84 Lacs of last year.

Net worth

The net worth as at 30th June2015 stood negative at Rs -4434.58 lacs as against Rs.27947.22 Lacs previous year. From Reserves Rs.21134.13 lacs has been utilised and uncovered loss is Rs. 11076.73 Lacs

The book value per share as at 30th June 2015 was negative Rs.-46.98 as against Rs 41.02 last year.

Fixed assets and capital expenditure

The gross block at the end of 2014-15 was reduced at Rs 28368.20 Lakhs as against last years Rs 42597.73 Lacs, due to return of machinery related to Beta Cepha projects to the suppliers.

Working capital and liquidity

Working capital level at the end of 2014-15 was lower compared to Rs 14067.42 Lakhs of previous year.

Risk identification, Risk Mitigation and Internal Controls.

The companys business comprises of marketing of pharma products . Its presence exposes it to various risks which are explained below:

Risk of fluctuation in prices of key inputs

Prices of the key ingredients used in the products marketed by the company remain volatile due to several market factors, including changes in government policies and fluctuations in the foreign exchange rates. The company has entered into long term contracts with the suppliers of these inputs to minimize the risk of fluctuation in the input prices on its margins.

Risk of competition and price pressure

Though the companys products enjoy a leading position in their respective categories, the risk of entry of newer players in the market always exists. The companys strength in the market place, coupled with its continuous thrust on improving quality of its products and offering newer products in the wellness segment, gives it an edge over the competition. The company has presence in both retail as well as institutional segments. Both segments have their own nuances in terms of customer expectations, competition and pricing. However, the company is well focused in increasing its shares in all segments through balanced approach.

Risk of litigation related to quality of products, intellectual properties and other litigation

Any deviation from prescribed regulations or any variation in quality from standards laid down by regulatory authorities can lead to actions from these authorities or litigation from its customers against the company. The company always strives to ensure highest standards of quality of its products and processes. The company also faces a risk of unauthorized and illegitimate use of its brand name, packing style and other intellectual properties related to its products. The company ensures protection of its intellectual property through appropriate registrations and other legal means

Risk management

The company has established a well defined process of risk management, wherein the identification, analysis and assessment of the various risks, measuring of the probable impact of such risks, formulation of risk mitigation strategy and implementation of the same takes place in a structured manner.

Industrial relationship

Industrial relations at all the works of the Company remained cordial and harmonious during the period under review. Despite severe competition, the enthusiasm and unstinting efforts of the employees have enabled the company to remain at the forefront of the industry.

There is no transaction conflicting with the interest of the Company

Corporate social events

The management of ARL has social consciousness by taking part with the help motive, to the Pinjrapole veterinary hospital & farm, which is shelter for more than 2500 old disabled and abandoned cattle. This institution provide care and free treatment to animals. Also the Mothers hall at Govt. Children Hospital Chennai the maintenance of it is being looked after with the help of NGOs.

MANAGEMENT DISCUSSION AND ANALYSIS

Global trend

The Global Pharma market is estimated to be US $ 1 trillion and is growing at an average rate of 4 to 5% per annum. Increased penetration of specialized drugs and continued rise of emerging markets are key trends that will shape the global pharma markets in the coming years

The research based pharma industry is entering an exciting new era in medicine development. The research methods are evolving and the innovative pharma industry aims to turn fundamental research into innovative treatments that are widely available and accessible to patients, with less side effects directly addressing the site of action.

Outlook

India is ranked 3rd in volume by value and ranks 13th. Branded generics constitute 70% OF Indian pharma market. Indian exports have increased to US$ 10 billion in 2014. Indian pharma industry is estimated to grow at nearly 20% over next 5 years. There are around 500 indian pharma manufacturing facilities registered with USFDA . Govt. of India has unveiled pharma vision 2020 aiming at making india a global leader in drug manufacturing

Indian companies are focusing on global generic and API business. R&D activities and contract research and manufacturing alliances, is also fast emerging as preferred location. Several large selling drugs going off patent over next few years and reduced health care cost will provide attractive growth opportunities and is poised for accelerated growth in the coming years.

During the year under report, there was no change in the nature of companys business.

Domestic market

The Indian pharma industry during 2014-15 grew by mere 6.1% and reached size of approx Rs.823 bn. However it has been globally ranked third in terms of volume and tenth in terms of value. The market is expected to grow at a compounded Annual Growth Rate of 12% over the next five years.

The key factors influence growth of healthcare sector are growth in population, increasing incidence of diseases, increasing affordability, rise in insurance and government schemes.

Future scope

Increasing investment by MNCs reflect at their renewed interest in the Indian market, with the implementation of the product patent regime and strong growth prospects. Series of major acquisitions, steady growth in new product introductions especially in the branded segment and expansion in field force clearly indicates their renewed interest in the Indian market.

Indian generics to benefit from the ongoing wave of patent expiries. Most of the leading players have significantly expanded their ANDA filings in line with the patent expiration cycle. Hence US generics market has become significant contributor to the revenues of most leading Indian companies.

Keeping the above in mind, ARL can play vital role by going for registration of off patented products for exports and developing the outsourcing market. Key strategy will be to focus on the new and latest molecules approved by the authorities and share with top companies who can market these products, focus on additional dosages - injectible and softjel apart from tablets capsules liquid and ointments. ARL is focusing chronic diseases segments in ayurveda, diabetics, anti arthiritis and obesity segments. This will help to identify the new formulations without side effect. Also these alternate therapies can very well prevent the recurrence by addressing the root cause of the ailment so that the disease is totally eradicated rather than symptomatic elimination.

SWOT ANALYSIS

Strength

The industry has seen growth at CAGR about 15% in the last five years and it is expected that same trend will continue. Investment on R&D has increased. The Asian countries will emerge as fastest growing hub due to low cost and favourable regulatory environment. Sales is expected to grow at faster rate in India, China, and South Korea due to rising disposable income, health insurance scheme, availability of manpower and lower cost competencies. ARL can have its production planning to utilize the above opportunities in the domestic & global markets

Opportunities

Indian pharma has the potential to transform itself over the next decade. If spending in new drug discovery has increased to desired level, domestic firms could corner major share of global generics market in coming years. With highly talented manpower and cost advantage India generic manufacturers are well positioned to seize opportunities arising out of patent. Indian pharma companies are already in the process to get registered for US FDA approval as the size of US drug market is around 45% of global market. Companies who obtain US FDA approval for new drug application will save lot of money and time spent if go for off patented products on development of new drugs.

Threats & weakness

Greatest challenge and threat is too many players focused on similar bio equivalent products in the same market and thereby competition, Government Regulations and price controls, and increasing R&D costs result in providing low margins. There is also risk related to economic and political conditions in the world which in turn limits financial benefit of growth. Another threat is risk related to exposure to the Rupee US$ exchange rate.

Internal control system and their adequacy

The company has adequate system of internal controls, based on well-defined individual roles and responsibilities with their limit of authority at various levels as well as effective feedback flow. The Board of Directors of your Company has constituted a qualified and independent Audit Committee that reviews the adequacy of internal control at regular intervals.

The Company has appointed Cost Auditor as per the requirements of the provisions of Section 233(1B) of the Companies Act, 1956 and for the year 2012-13 the requirements have been complied with.

Human Resources

Human resource, as always, has been the major strength in the consistent development of the Organization. The HR department takes care to understand the work place phenomenon and relationships through comprehensive research. This helps the company to explain the role of work force in the organizational success in minute detail.

ARL has a programme of periodical review of its key employees performance along with their output. This enables them to realize their strengths and further enhances them with their awareness.

This is what enables ARL work together as an interdependent team for enhancing companys productivity and profits.

ARL continues to lay strong emphasis on Sales Training for its field force both at the induction level and through refresher programs to enable front-line medical representatives and managers for availing their field efforts products.

		For and on behalf of the Board
Place : Chennai
	Dr. B. ARVIND SHAH RAVINDRAN	Dr. CHANDRA
Date : 11/03.2016	Managing Director	Whole time
Director

Annexure To The Directors Report Annexure A

Information pursuant to the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988.

A. CONSERVATION OF ENERGY

a) Energy Conservation measures taken:

The company has taken measures wherever possible, to maintain the power factor on an on-going basis.

Steps are being taken by energy audit for cost saving and reduction in energy cost from the current year.

b) Total Energy Consumption and energy consumption per unit of production: given below in Form A

FORM A POWER AND FUEL CONSUMPTION:

	2014-15	2013-14
	(upto June 2015)
1. Electricity
a) Purchase Unit (Nos.)	707402	809933
Total amount (Rs. 000s)	6413.39	7053.81
Rate / Unit (Rs.) average	9.07	8.70
b) Own Generation
i) Through Diesel Generation
Unit (Nos)	4287	334952
Unit per ltr. Of Diesel Oil (Nos)	3.10	9.45
Cost / Unit (Rs.)	19.10	10.70
ii) Through Steam / Wind Turbine / Generator		-
Unit (Nos)		-
Cost / Unit (Rs.)		-
Amount (Rs.)		-
2. Coal	N.A	N.A
Qty. (Tonnes)		-
Total Cost		-
Average Rate		-
3. Furnace Oil	N.A	N.A
Qty. (K.Ltrs.)		-
Total Amount		-
Average Rate (Rs.)
4. Other / Internal Generation Steam by LDO	N.A	N.A
Quantity (in 000 kgs)		-
Total Cost (Rs. 000)		-
Rate per kg. (Rs.)		-

Consumption per unit of production

There is no specific standard as the consumption per unit depends on the product mix of formulations (Capsules, Tablets, Ointments and Liquids) and disclosure of consumption figures per unit of production is insignificant.

B.TECHNOLOGY ABSORPTION

FORM B 1. Research and Development

Specific areas in which R & D carried out by the Company

Ongoing projects

• Development of a drug substance for Arthritis -- Research Associates

• Department Of Science And Technology (Govt. Of India)- DST

• Sri Ramachandra Medical University -SRMU

• And clinical trials at Ayurvedic hospital Bangalore to prove the effect at the human level drug product for Obesity Related Cardiovascular Diseases -- Research

Development of Associates

• Department Of Science And Technology (Govt. Of India)- DST

• Sri Ramachandra Medical University –SRMU

• Initial study to prove its effectiveness at the cellular level.

• SRMC Chief of Cardiology

Development of drug product for Viral Diseases -- Research Associates

• Department Of Science And Technology (Govt. Of India)- DST

• Presidency College -Dept of Microbiology

• Tamil Nadu Veterinary University – initial study to prove its Toxicity

effects.

• Indian Institute Of Integrative Medicine - Jammu

Development of Generic Drug substance ( ANDA )

Selected products for ANDA development

Non steroidal anti inflammatory drug with AA category

Anti hypertensive drug with AB category

Central nervous system drug with AB category

Skeletal muscle relaxant with AB category

Respiratory dieses drug with AB category

2. Benefits derived as a result of the above R & D

• The Company has the advantage to come out with new formulations

• The Company is able to proceed further operations in Phases.

• The Company has new plant at Irrungatukottai which is equipped with facility to manufacture tablets, capsules, liquid, ointment, injectibles and soft jel can be manufactured under one roof.

3. Expenditure on Research and Development

Total R & D expenditure as percentage to the total turnover for the year 2014-115 is Rs.27.03 lacs ( 0.03% of the turnover)

4. Technology Absorption, Adoption and innovation

No new technology has been imported or adopted

5. Foreign Exchange Earnings and outgo

During the year foreign exchange earnings were Rs.360.25 Lacs as against the outgo of Rs Nil.

		For and On behalf of the Board
Place : Chennai	Dr. .B. ARVIND SHAH	Dr. CHANDRA RAVINDRAN
Date : 11/03.2016	Managing Director	Whole-time Director