Bafna Pharmaceuticals Ltd Directors Report.

To

The Shareholders

Your Directors have pleasure in presenting the Twenty First Annual Report of your Company together with Audited Accounts for the Financial Year ended 31st March, 2016.

Financial Performance

The summarized Audited Financial Results for the year ended 31st March, 2016 along with comparative figures for the previous year is as under:

Standalone

Consolidated

Particulars 31st March, 2016 31st March, 2015 31st March, 2016 31st March, 2015
Total Income 8,65,596.35 14,36,553.02 8,72,970.56 1,436,815.13
Total Expenditure 9,49,750.21 12,96,506.57 977,576.25 1,287,946.12
Profit before Depreciation & 84,153.86 140,046.45 104,605.69 148,869.01
Taxation
Less: Depreciation 41,121.33 52,375.87 48,586.04 59,854.65
Less: Exceptional Items - 26,880.92 - 28,342.57
Profit before Tax (125,275.19) 60,789.66 (153,191.73 60,671.79
Less: Provision for Taxation - (22,587.38) - (22,587.38)
Less: Provision for Deferred Tax 3,430.83 22,871.05 1,777.59 24,113.06
Minority Interest (Loss) 11,144.85 (423.68)
Profit after Tax for the year (121,844.36) 61,073.34 (140,269.29) 61,773.78

Consolidated Operating Results

The consolidated sales and operating income decreased to Rs. 87.30 Cr from Rs. 143.68 Cr in the previous year yielding a decline in growth of 60.76% due to sale of Brand happened during the year 2014. The consolidated operating profit for the year was Rs. 10.46 Cr as against Rs. 14.89 Cr in the previous year. The consolidated net loss for the year 2016 was Rs.14.02 Cr as against FY 2015 of Rs. 6.18 Cr.

Standalone Operating Results

The sales and operating income decreased to Rs. 86.56 Cr from Rs. 143.66 Cr in the previous year decline rate of 60.26%. The operating profit for the year under review is Rs. 14.00 Cr as against Rs. 10.55 Cr in the previous year. The loss after tax for the year under review is Rs.121.84 Cr as against Rs. 6.11 Cr in the previous year. The company is in growth/expansion mode requiring further investment; your company is therefore evaluating various options to raise additional funds for which shareholders approval may be sought as and when things are finalized.

Subsidiary Company & Consolidated Financial Results

The consolidated financial results comprise of M/s. Bafna Pharmaceuticals Limited and its subsidiary M/s. Bafna Lifestyles Remedies Limited. Consolidated Financial Statements for the year ended 31st March, 2016 forms part of the Annual Report. As required under the Listing Agreements entered into with the Stock Exchanges, consolidated financial statements of the Company and its subsidiary are attached. The consolidated financial statements have been prepared in accordance with the relevant accounting standards as prescribed under Section 133 of the Companies Act, 2013. The consolidated financial statements disclose the assets, liabilities, income, expenses and other details of the Company and its subsidiaries. Material/significant changes in subsidiary, during the year the subsidiary company has discontinued the marketing activities. A statement pursuant to Section 129 of the Companies Act, 2013, relating to subsidiary companies is attached and forms part of the report.

Change in Capital Structure

(Rs. In 000)

Particulars 31st March, 2016 31st March, 2015
Authorized Capital 400,000.00 400,000.00
Issued, Subscribed & Paid up Capital 186,563.35 186,563.35

Fixed Deposits

The company has not accepted / invited any deposits from the public in terms of Section 73 of the Companies Act, 2013

Dividend

The Company wishes to conserve the resources, hence your directors do not recommend any dividend for the Financial Year.

Directors

The Composition of Board and number of meetings attended by them are given in the corporate governance report. Pursuant to Section 149, 152 and other applicable provisions of the Companies Act, 2013 read with Rules thereon, Shri V. Rajamani, Shri R. Dwarakanathan, Shri B. Kamlesh Kumar & Shri Sunil Bafna were appointed as Independent Directors for five consecutive years in the Nineteenth AGM held on 10.09.2014 upto 09.09.2019. Accordingly all the Independent Directors were appointed in the last AGM to align with the requirement of the Companies Act, 2013. The necessary declarations were also obtained from the Independent Directors regularly on yearly basis.

Directors Liable to Retire by Rotation

Shri. Bafna Mahaveer Chand, Chairman & Managing Director and Shri. Paras Bafna, Whole Time Director are not liable to retire by rotation as per their terms of appointment / Articles of Association of the company. However, they are subject to retire by rotation as per the provisions of Section 149 & 152 of the Companies Act, 2013. All Directors in the Board are Independent except Shri. Bafna Mahaveer Chand and Shri. Paras Bafna, and as Independent Directors are not liable to retire by rotation, Shri. Bafna Mahaveer Chand & Shri. Paras Bafna will retire by rotation in terms of Section 152 of the Companies Act, 2013 and being eligible they have offered themselves for re-appointment. Upon re-appointment as Director Shri. Bafna Mahaveer Chand shall continue to hold office as the Chairman and Managing Director of the Company. The brief resume of the Directors seeking appointment / reappointment and other information have been detailed in the Notice. Your Board recommends the above appointments /reappointment of Directors in the best interest of the Company.

Auditors

M/s. Abhay Jain & Co., Chartered Accountants, Chennai who are the statutory auditors of the Company, were reappointed for a period of 3 years (from 2014 to 2017), subject to ratification by the members at every AGM. Hence, ratification has been sought for, from the members as per the terms of appointment made during 2014. M/s. Abhay Jain & Co., Chartered Accountants, Chennai have given their consent for re-appointment and also confirmed that their appointment would be within the prescribed limits under Section 141 of the Companies Act, 2013. Accordingly, the ratification of re-appointment of M/s. Abhay Jain & Co., Chartered Accountants, Chennai, as the Statutory Auditors, is being proposed as an Ordinary Resolution.

The Board recommends ratification of re-appointment as Statutory Auditors of the Company. The report of Auditors and notes forming part of the Accounts are attached along with the Annual Report. There were some observation were made in the Auditors Report for the period and the management reply to the observations made by the Statutory Auditor under Section 134 of the Companies Act, 2013 have been provided in some part of the report for the benefit of the shareholders.

Cost Audit

The Board of Directors of the Company appointed M/s Thanigaimani & Associates, Cost Accountants (FRN No.101899) as the Cost Auditor of the Company for audit of cost accounts relating to formulations for the year ended 31st March 2016. The Cost Audit report for the year ended 31st March 2015 was filed on 26.09.2015 and the Cost Audit Compliance Report was filed on 26.09.2015. The Cost Audit Report & Cost Audit Compliance Report for the year ended 31st March, 2016 shall be submitted to the Central Government in due course.

As per Section 148 read with Companies (Audit and Audit) Rules, 2014 and other applicable provisions if any of the Companies Act, 2013, the Board of Directors of the Company has appointed M/s Thanigaimani & Associates, Cost Accountants as Cost Auditor of the Company for the financial year 2015 16. The remuneration proposed to be paid to the Cost Auditors, subject to the ratification by the members at the ensuing Annual General Meeting, would be Rs. 45,000/- (Rupees Forty Five Thousand Only) plus applicable taxes and out of pocket expenses.

Listing

The Company‘s shares are listed at (i) Bombay Stock Exchange Limited (BSE) with Scrip Code No. 532989 and at (ii) National Stock Exchange of India Limited with Scrip symbol BAFNAPHARM; the necessary Listing Fees have been paid to the stock exchanges.

Particulars of Employees a) Details of employees, employed throughout the financial year, was in receipt of remuneration for that financial year, in the aggregate, was not less than Rs.1.02 Crores. Nil- b) Details of employees, employed for a part of the financial year, was in receipt of remuneration for any part of that year, at a rate which, in the aggregate, was not less than Rs. Eight Lakhs and Fifty Thousand per month -Nil - c) Details of employees, if employed throughout the financial year or part thereof, was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the company. Nil -

Foreign Exchange Earnings and Outgo

The particulars in respect of Foreign Exchange Earnings and Outgo as required under Section 134) of the Companies Act, 2013 and Rule 8(3) of the Companies (Accounts) Rules 2014, are given as in Annexure to this report.

Human Resource, Industrial Relations, Environment, Occupational Health and Safety

The Company is continuously focusing on managing talent and increasingly systematizing the HR processes. We have excellent industrial relations across all facilities including corporate office and strongly believe that the workers will continue to work towards profitable and productive company. The number of employees as on 31st March, 2016 was 242 as against 251 during FY 2014-15, a net decrease of 9 employees.

Conservation of Energy, Technology Absorption & Research and Development (R & D)

The company is conscious of its responsibility to conserve the energy and has taken measures in relation to conservation of energy and technology absorption. The particulars in respect to conservation of energy,

Technology Absorption & Research and Development were given in the annexure to the Board‘s Report.

Insider Trading Regulations

Based on the requirements under SEBI (Prohibition of Insider Trading) Regulations, 2005, as amended from time to time, the code of conduct for prevention of insider trading and the code for corporate disclosures are in force. The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated persons of the Company, as per SEBI (Prohibition of Insider Trading) Regulations, 2015.

Corporate Governance

Report on Corporate Governance and Certificate of the Auditors of your Company regarding compliance of the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges, are enclosed elsewhere in the Annual Report and forms part of this report.

Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Board of Directors has approved policy as per the said Act. And an Internal Complaints Committee was constituted, with following members:

(i) Ms. Hemalatha, Asst General Manager - Chairperson
(ii) Ms. Shunmugasundari, HR Executive - Member
(iii) Ms. Rajalakshmi, HR Executive - Member

The committee placed certificate before the Board of Directors on the status of compliance of the Act. As per the certificate provided by the said committee no complaints were received during the year & that there are no complaints pending as on 31st March, 2016.

Corporate Social Responsibility

The applicability of Corporate Social Responsibility under Sec 135 of the Companies Act, 2013 is not applicable to the Company. But however, Company is committed to improve the quality of life of the workforce and their families and also the community and society at large. The Company believes in undertaking business in such a way that it leads to overall development of all stake holders and society.

Secretarial Audit for the FY 2016-17

In terms of Section 204 of the Companies Act, 2013, the rules made thereunder & other applicable provisions, if any, the company is required to appoint Secretarial Auditor to carry out Secretarial Audit of the Company. Your Board of Directors has appointed M/s. A.K. Jain & Associates, Practicing Company Secretaries, Chennai for purpose of Secretarial Audit for the FY 2016-17 at the Board Meeting held on 30.05.2016.

As required under section 204 (1) of the Companies Act, 2013 the Company has obtained a secretarial audit report which contains qualification for non-appointment of CFO and non-ratification of appointment of Mrs. Sabitha, Executive Director of the Company. The copy of the Secretarial Audit report in MGT 3 is attached as an annexure to the Director‘s Report.

Reply to the Qualification: The Company is taking necessary steps to appoint the Chief Financial Officer. Ratification of appointment and terms of remuneration of Mrs. Sabitha is proposed in the ensuing general meeting.

Re-appointment of Mr. Gaurav Jain, Chartered Accountant, Chennai as Internal Auditors & approved their Scope, Functions, Periodicity & Methodology

In terms of Section 138 of the Companies Act, 2013 & other applicable provisions, if any, Board of Directors at the Board Meeting held on 30.05.2016 has appointed Mr. Gaurav Jain, Chartered Accountant, and Chennai as Internal Auditors and further approved their Scope, Functions, and Periodicity & Methodology.

Audit Committee

In terms of Section 177 of the Companies Act, 2013 and other applicable provisions if any and as per the clause 49 of the Listing agreement the Audit committee comprises of 4 Directors out of which 3 are Non-Executive Independent Directors. The terms of reference of Audit Committee includes matters specified in section 177 of the Companies Act 2013 and Clause 49 of the Listing Agreement (as revised with effect from 1.10.2014). The Board has accepted all the recommendations of the audit committee made during the year

Nomination & Remuneration Committee

In terms of Section 178 of the Companies Act, 2013 & other applicable provisions, if any, Board of Directors at the Board Meeting held on 30.05.2014 has renamed the existing ?Remuneration Committee of the Board of Directors as ?Nomination & Remuneration Committee . There was no change in the members of the Committee. The Policy of Nomination & remuneration committee were given in the corporate governance report.

Stakeholders Relationship Committee

In terms of Section 178 of the Companies Act, 2013 & other applicable provisions, if any, Board of Directors at their meeting held on 30.05.2014 renamed the existing ?Investor Grievance & Share Transfer Committee as ?Stakeholders Relationship Committee .

Management Discussion and Analysis Report

Management Discussion and Analysis Report, as required under the Listing Agreement with the Stock Exchange is enclosed elsewhere in the Annual Report and forms part of this Report. Certain Statements in the report may be forward-looking. Many factors may affect the actual results, which could be different from what the Directors envisage in terms of future performance & outlook.

Extract of Annual Return:

The details forming part of the extract of the Annual Return in form MGT-9 is annexed along with the

Director‘s Report.

Particulars of Employees:

The information required pursuant to Section 197 read with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the reports and accounts are being sent to the members and others entitled thereto, excluding the information on employees‘ particulars which is available for inspection by the members at the Registered office of the company during business hours on working days of the company up to the date of ensuing Annual General Meeting. If any member is interested in inspecting the same, such member may write to the Company Secretary inadvance.

Directors Responsibility Statement

Your Directors wish to inform that the Audited Accounts contains Financial Statements for the financial year ended 31st March, 2016 are in full conformity with the requirements of the Companies Act, 2013. They believe that the Financial Statements reflect fairly the form and substance of transaction carried out during the year and reasonably present your Company‘s financial conditions and result of operations. Your Directors further confirm that in preparation of the Annual Accounts:

• The applicable accounting standards had been followed and wherever required, proper explanations relating to material departures have been given;

• The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for that period;

• Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

• The Accounts have been prepared on a ?going concern basis.

• The directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

• The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively

Acknowledgement and Appreciation

Your Directors would like to thank Company‘s Bankers SBI, EXIM, DBS, DCB, BOC & IDBI for their continued support and they would also like to express their gratitude for the co-operation and assistance extended to the Company by its Customers, Suppliers, Technical Consultants, Contractors, Government and Local Authorities, etc. The Directors also wish to thank all its Shareholders for their unstinted support. The Directors would like to sincerely thank and place on record their appreciation of the consistent and dedicated services of the employees at all levels who have immensely contributed to the performance of the Company during the period under review.

On behalf of the Board of Directors
Place: Chennai For BAFNA PHARMACEUTICALS LIMITED
Date: 30.05.2016 (CIN L24294TN1995PLC030698)
Paras Bafna Bafna Mahaveer Chand
(DIN: 01933663) (DIN: 01458211)
Whole Time Director Chairman & Managing Director

ANNEXURE TO THE DIRECTOR S REPORT

Information pursuant to Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules,2014. FORM - A Disclosure of particulars with respect to Conservation of Energy A. Conservation of Energy Power & Fuel Consumption

SI No Particulars 2016 2015
1. Purchased:
Units(Lakhs) Units 19.07Lakhs Units 16.61Lakhs
Total Amount (Rs. In lakhs) Rs.184.90 Lakhs Rs.135.44 Lakhs
Rate / Unit (Rs.) Rs.9.70 per Unit Rs.8.15 per Unit
2. Own Generation
Through Diesel Generator
Units (KSH) in lakhs) Units 2.08 lakhs Units 1.71 lakhs
Unit per Lt. of Diesel Unit 2 per litre Unit 2 per litre
Cost/Unit (Rs.) Rs 25.34 per unit Rs 29.04 per unit

The company is conscious of its responsibility to conserve the energy and has taken measures in relation to conservation of energy and technology absorption. No additional investments have been made during the year.

B. Consumption per Unit of Production:

In view of number of products with different sizes, shapes & other parameters, being manufactured by the company, it is not practicable to give information on consumption of fuel per unit of production.

FORM B

DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION I. RESEARCH AND DEVELOPMENT (R&D) (a) Specific areas in which R&D is carried out by your company

R&D is a process intended to create new or improved technology that can provide a competitive advantage to our business. Also focusing on process development for improving operational efficiency. During the year the company has received prestigious DSIR (Department of Science and Industrial Research) certification for our R & D centre. DSIR is a department under the Ministry of Science and Technology, Government of India.

• Product Development and report of new formulations.

• Stability studies of new formulations as per ICH guidelines

• Technology Transfer and Process validation of new formulations

• Technology Transfer and Analytical method validation of new formulations

• Dossier preparation for regulatory approval

• Registration of Products in various countries with respective regulatory requirements

• Trouble shooting in existing Products

• Filed patents of Chewable Raricap tablets

• Bioavailability studies to confirm therapeutic efficacy

(b) Benefits derived as a result of the above

• these give us a unique selling point (USP) & then patents can be acquired for these products

• R&D is able to build business advantage over its competitors by bringing innovative products

• Improving Quality of existing drug products in the market to deserve a good market output

• Attracting more customers and scope for new business

(c) Future plan of action

• To enhance the quality and efficacy in all our medical formulations

• To achieve and maintain consistency in quality

• Upgrading of new process and product technology to improve product stability and efficacy

• To upgrade green technology for process and manufacturing operations

• Product development for new customers, Product registration for regulated and emerging markets

• Technology transfer and stability studies

(d) Expenditure on R&D (Rs. in 000)
Particulars Current Year Previous Year
Capital 374.00 7540.81
Recurring/Revenue 8169.18 9557.39
TOTAL 8543.18 17098.20
% of R&D expenditure to sales 0.98% 1.19%

II. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION a) Efforts in brief, made towards technology absorption, adaptation and innovation:

With latest technology, its development & up-gradation enable us to provide technically superior, process efficient and International standards product.

The company has its own R&D centre‘s which have been developing and improving process for manufacture of Delayed release tablets, Sustained Release Tablets, Orally Disintegrating Tablets, Liquid orals, Syrups, Suspensions & Dry Syrup formulations.

• The R & D centre has been upgraded and adopted various methods of drug particle coating with a gastro- resistant polymers of various genre to improve drug safety and efficacy and technology is absorbed into process scale up of branded generics with innovative methodologies involving combination with taste masking technology (with Ion-Exchange resins) for producing efficacious generics with highly taste masked bitter drugs.

• The R&D centre also absorbed and adopted innovative techniques of Multi-layer Coating technology which is subjected to scale up levels to produce stable and effective dosage forms especially applicable for drug products that are pH sensitive and for intestinal release and gastric resistance.

• Participating and Collaboration with scientific conferences and research institutions for the development and further research of new drug formulations and novel technologies

• Procuring scientific journals and standard pharmacopoeia editions for the R & D library upgrade.

• Collaborations with institutions in providing research related guidance and facilities to intern scholars.

b) Benefits derived as a result of the above efforts:

• Control of drug therapy is achieved

• Drug administration can be made convenient

• The safety margin of high potency drug can be increased

• Drugs with shorter half-life can be given in less frequent dose with better compliance

• Less fluctuating blood plasma concentrations

• Bioavailability enhancement of poorly soluble drugs

• Targeting drug delivery at most absorbing sites to improve bioavailability

• Reduction of adverse effects due to avoidance of dose dumping

• Rapid onset of action can be achieved

• Taste masking of bitter oral liquid drug formulations

c) Details of technology imported during the last 5 years

No technology has been imported during the past five years.

FORM C

(a) Activities relating to exports, initiative taken to increase exports, developments of new export markets for products and services and export plans.

(i) During FY 16 the company got registrations for 38 products as follows: (i) 16 in Sri Lanka (ii) 2 in Nepal (iii) 10 in Nigeria (iv) 1 in Tajikistan (v) 1 in Peru, (vi) 1 in Ethiopia (vii) 3 in Ghana and viii) 4 in Ukraine. (ii) As on date we have more than 188 Product registrations and 108 Product applications across globe. (iii) The export turnover consists of Rs.31.75 Cr of the total turnover for the FY 16 as against Rs. 32.53 Cr for the previous year

(b) Foreign Exchange earned and used

(iv) Your Company has earned foreign exchange of Rs. 31.75 Cr (previous year Rs. 32.53 Cr) Foreign Exchange

FOREIGN EXCHANGE EARNINGS & OUTGO

(v) outgo was Rs.2.83Cr (previous year Rs. 2.60 Cr) on account of international travel & purchase of foreign currency.

On behalf of the Board of Directors
For BAFNA PHARMACEUTICALS LIMITED
(CIN L24294TN1995PLC030698)
Paras Bafna Bafna Mahaveer Chand
Place: Chennai (DIN: 01933663) (DIN: 01458211)
Date: 30.05.2016 Whole Time Director Chairman & Managing Director

ANNEXURES TO DIRECTOR S REPORT

A Declaration From Independent Directors on Annual Basis

B Details of Subsidiary in Form AOC -1

C. Secretarial Audit Report

D. Extract of Annual Return in MGT 9

A. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS

The Company has obtained declaration from Independent Directors on annual basis to comply the conditions as laid down Sub Clause 49 read with Sec 149 of the Companies Act, 2013 and Schedule IV of the Companies Act, 2013.

B. Form AOC -1

STATEMENT CONTAINING SALIENT FEATURES OF FINANCIAL STATEMENT OF THE SUBSIDIARIES / ASSOCIATE COMPANIES / JOINT VENTURES FORM AOC-1 (Pursuant to first proviso to sub-section (3) of section 129 read with Rule 5 of Companies (Accounts) Rules, 2014)

PART A : SUBSIDIARIES ( IN 000 )

S No. 1
Name of the subsidiary Bafna Life Styles Remedies Limited 31st March 2016
Reporting period for the Subsidiary concerned,
If different from the holding companys reporting period

( Same as holding Company )

Reporting currency and Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries. NA
31.03.2016 31.03.2015
Share capital 22,950.00 22,950.00
Reserves & Surplus (24,740.69) 1,829.09
Total assets 89,877.01 159,650.81
Total Liabilities 89,877.01 159,650.81
Investments 0 0
Turnover 7,374.21 39,157.50
Profit / (Loss) before taxation (27,916.55) (117.88)
Provision for taxation NIL NIL
Profit / (Loss) after taxation (29,569.79) 1,124.12
Proposed Dividend NIL NIL
% of shareholding 62.31% 62.31%
Names of subsidiaries which are yet to commence operations NIL NIL
Names of subsidiaries which have been liquidated or sold during the year NIL NIL

 

PART B: ASSOCIATES AND JOINT VENTURES: NIL
For M/s AABHAY JAIN & Co
Chartered Accountants
FRN No: 000008S
(A.K.JAIN) (BAFNA MAHAVEER CHAND) (PARAS BAFNA)
PARTNER DIN 01458211 DIN 01933663
M.No:70224 Managing Director Whole Time Director
Place: Chennai (R.S.GOWDHAMAN)
Date: 30.05.2016 Company Secretary

Form No. MR-3

SECRETARIAL AUDIT REPORT

FOR THE FINANCIAL YEAR ENDED 31.03.2016

[Pursuant to section 204(1) of the Companies Act, 2013 and rule No.9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]

To,

The Members

Bafna Pharmaceuticals Limited

299, Thambu Chetty Street,

Chennai - 600 001

We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Bafna Pharmaceuticals Limited [CIN: L24294TN1995PLC030698] (hereinafter called as ?the Company ).Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon.

Based on our verification of the Company‘s books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, We hereby report that in our opinion, the company has, during the audit period covering the financial year ended on March 31, 2016 complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:

We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the financial year ended on March 31, 2016 according to the provisions of:

(i) The Companies Act, 2013 (the Act) and the rules made thereunder;

(ii) The Securities Contracts (Regulation) Act, 1956 and rules made thereunder;

(iii) The Depositories Act, 1996 and regulations and bye-laws framed thereunder;

(iv) Foreign Exchange Management Act, 1999 and the rules and regulations made there under to the extent of

Foreign Direct Investment, Overseas Direct and External Commercial Borrowings; (Not applicable to the Company during the Audit period)

(v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 ( SEBI Act‘):

(i) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;

(ii) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992;

(iii) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009; (Not applicable to the Company during the Audit period)

(iv) The Securities and Exchange Board of India (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999; (Not applicable to the Company during the Audit period)

(v) The Securities and Exchange Board of India (Issue and Listing of debt securities) Regulations, 2008; (Not applicable to the Company during the Audit period)

(vi) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client;

(vii) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; (Not applicable to the Company during the Audit period)

(viii) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998 (Not applicable to the Company during the Audit period). and

(ix) The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (effective form 1stDecember, 2015).

We have also examined compliance with the applicable clauses of the following:

(i)Secretarial Standards with respect to Meetings of Board of Directors (SS-1) and General Meetings (SS-2) issued by The Institute of Company Secretaries of India (effective from 1stJuly, 2015). (ii)The Listing Agreements entered into by the Company with Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE) (effective upto 30th November, 2015).

We report that the following are the other laws specifically applicable to the Company:

1. Drug and Cosmetics Act, 1940 and Rules made thereunder.

2. Drugs Price Control Order, 2013 and notifications made thereunder.

3. The Air (Prevention and Control of Pollution) Act, 1981 as amended from time to time.

4. The Water (Prevention and Control of Pollution) Act, 1974 as amended from time to time.

We further report that the applicable financial laws, such as the Direct and Indirect Tax Laws, have not been reviewed under our audit as the same falls under the review of statutory audit and by other designated professionals.

During the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc., subject to the following observations:

1. The Company has not appointed a Chief Financial Officer as required under the first proviso of sub-section 1 of Section 203 of the Companies Act 2013 read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

2. The Company has not obtained the consent of the Members for confirmation of payment of remuneration to Women / Executive Director, in the Annual General Meeting held on 29.09.2015.

We further report that:

i) the board of directors of the Company is duly constituted with proper balance of executive directors, non-executive directors and Independent directors. The changes in the composition ofthe Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.

ii) adequate notice is given to all directors to schedule the Board Meetings, Agenda and detailed notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting and other business which are not included in the Agenda are considered vide supplementary agenda subject to consent of the Board of Directors.

iii) all the decisions at Board meetings and Committee Meetings are carried out unanimously as recorded in the minutes of the meetings of the Board of Directors or Committee of the Board, as the case may be.

iv) there are adequate systems and processes in the Company commensurate with the size and operations of the company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

v) the shareholders of the company have given their consent to borrow money in excess of paid up capital and free reserves and to create charge or mortgage the assets of the Company to an extent of Rs. 150Crores in the Annual General meeting held on 10.09.2014.

We further report that during the audit period, there were no instances of:

(i) Public/Right/Preferential issue of shares / debentures/sweat equity, etc.

(ii) Redemption / buy-back of securities.

(iii) Foreign technical collaborations.

(iv) Merger/ Amalgamation / Reconstruction, etc.

Place : Chennai For A.K Jain & Associates
Date : 09.08.2016 Company Secretaries
Sd/-
Balu Sridhar
Partner
FCS No. 5869
C. P. No. 3550

D. EXTRACT OF ANNUAL RETURN IN FORM MGT 9

EXTRACT OF ANNUAL RETURN AS ON THE FINANCIAL YEAR ENDED ON 31ST MARCH, 2016

[Pursuant to section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules,2014]

I. REGISTRATION AND OTHER DETAILS: i) CIN : L24294TN1995PLC030698

ii) Registration Date : 28/03/1995

iii) Name of the Company : BAFNA PHARMACEUTICALS LIMITED

iv) Category / Sub-Category of the Company : Company Limited by Shares

v) Address of the Registered office and contact details: New No: 68, Old No : 299, Thambu Chetty Street, Chennai - 600001

vi) Whether listed company : Yes

vii) Name, Address and Contact details of

Registrar and Transfer Agent : CAMEO CORPORATE SERVICES LIMITED,

SUBRAMANIAM BUILDING, NO: 1, CLUB HOUSE ROAD

CHENNAI 600002

PHONE: 044- 28460390 (6 LINES),

FAX: 044- 28460129.

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

All the business activities contributing 10 % or more of the total turnover of the company shall be stated:-

S No. Name and Description of main products / services NIC Code of the Product/ service % to total turnover of the company
1 PHARMACEUTICALS 3003 100%

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES:

S No. NAME AND ADDRESS OF THE COMPANY CIN/GLN Holding Subsidiary/ Associate % of shares held Applicable Section
BAFNA LIFE STYLE REMEDIES LTD
1 B-22, INDUSTRIAL ESTATE, SUBSIDIARY 62.31 2(87)
MOGAPAIR WEST, CHENNAI -600037 U52599TN1994PLC027134

IV. SHARE HOLDING PATTERN ( Equity Share Capital Breakup as percentage of Total Equity)

i) Category-wise Share Holding

Category of Shareholders

No. of Shares held at

the beginning of the year

No. of Shares held at

the end of the year
Demat Physical Total % of Total Shares Demat Physical Total % of Total Shares % Change during the year
A. Promoters
a) Individual/HUF

68,50,769

Nil

68,50,769

36.72

61,82,468

Nil

61,82,468

33.14

3.58

b) Central Govt.

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil
State Govt. (s) Nil Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil
d) Bodies Corp.

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Banks / FI Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil Nil
f) Any Other….

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Sub-total (A) (1):- 68,50,769 Nil 68,50,769 36.72 61,82,468 Nil 61,82,468 33.14 3.58
(2) Foreign
NRIs - Individuals

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil
a) b) Other

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Individuals Bodies Corp.

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

c) d) Banks / FI

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

e) Any Other….

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Sub-total (A) (2):-

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil
Total shareholding of Promoter (A) = 68,50,769 Nil 68,50,769 36.72 61,82,468 Nil 61,82,468 33.14 3.58
(A)(1)+(A)(2) B. Public Shareholding
a) Mutual Funds/

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

b) Banks/FI Central Govt.

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

c) State Govt.(s)

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

d) Venture Capital funds Insurance

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

e) Companies FIIs

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

g) h) Foreign Venture
Capital Funds Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil Nil
Others (specify) FI

Nil

Nil

Nil

Nil

23,491

Nil

23,491

0.13

Nil

i) & Banks
Sub-total (B)(1):-

Nil

Nil

Nil

Nil

23,491

Nil

23,491

0.13

Nil

2. Non-Institutions
a) Bodies Corp.
i) Indian

18,28,706

5,000

18,33,706

9.83

Nil

Nil

Nil

Nil

Nil

ii) Overseas Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil Nil
b) Individuals
i) Individual shareholders holding nominal share capital upto Rs. 1 lakh 31,80,112 1,01,275 32,81,387 17.59 48,22,005 0 48,22,005 25.85 11.07
ii) Individual shareholders holding nominal share capital in excess of Rs 1 lakh 49,30,392 24,000 49,54,392 26.56 42,71,811 0 42,71,811 22.90 1.91
17c) Others 6,58,853 Nil 6,58,853 3.53
Clearing Members 741 0 33,56,560 17.99 0.00
HUF 26,727 Nil 26,727 0.14
d) NRI s 10,77,228 Nil 10,77,228 5.77
Total Public
Shareholding (B)=(B)(1)+ (B)(2) 1,16,75,291 1,30,275 118,05,566 63.42 1,24,73,867 66.86 2.53
C. Sharesheld by Custodian for GDRs & ADRs

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Grand Total (A+B+C) 1,85,26,060 1,30,275 1,86,56,335 100 1,85,26,060 1,30,275 1,86,56,335 100.00 Nil

(ii) Shareholding of Promoters

S No. Shareholder s Name Shareholding at the beginning of the year Share holding at the end of the year
No. of Shares % of total Shares of the company %of Shares Pledged / encumbered to total shares No. of Shares % of total Shares of the company % of Shares Pledged / encumbered to total shares Shares of % change in share holding During the year
1 Bafna M Chand

2461381

13.19

7.49

992979

5,32

NIL

7.89

2 Sasikala Bafna

1292941

6.93

NIL

1227572

6.58

NIL

0.35

3 Paras Bafna

912163

4.89

NIL

912163

4.89

NIL

NIL

4 Naveen Bafna

397058

2.13

NIL

397058

2.13

NIL

0.04

5 Chetna Bafna

1132805

6.07

NIL

2132805

11.43 6.07

NIL

5.36

6 Amriai Bafna

654421

3.51

NIL

512891

2.79

NIL

0.72

Total 6850769 36.72 7.49 6182468 33.14 NIL 3.58

iii) Change in Promoters Shareholding (please specify, if there is no change)

Sl. No. Shareholding at of the the beginning year Cumulative Shareholding during the year
No. of shares % of total shares of the company No. of shares % of total shares of the company
At the beginning of the year 6850769 36.72%
Please see the Annexure
At the End of the year 6182468 33.14%

(iv) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters & Holders of GDRs and ADRs):

Shareholding at the beginning of the year Shareholding at the End of the year
Sl. No. For Each of the Top 10 Shareholders No. of shares of total shares % of the company No. of shares % of total shares of the Company
1 Ramesh Kumar Chopra 3,83,250 2.0542 3,83,250 2.0542
2 Nisha Jignesh Mehta

4,83,000

2.5888

5,50,620

2,9514

3 Dherendra Somaiya

3,28,200

1.7592

3,28,200

1.7592

4 Lindajeet Kaur Ruprai

6,67,352

3.5770

6,67,352

3.5770

5 India bulls Infrastructure Credit Ltd

2,68,435

1.4388

1,46,447

0.7850

6 Gyan Mal Jain

3,40,000

1.8224

3,40,000

1.8224

7 Kusum Jain

3,02,618

1.6220

3,02,618

1.6220

8 Vishwas Jain

3,09,148

1.6570

3,09,435

1.6586

9 Lindajeet Kaur Ruprai

6.67.352

3.5770

6.67.352

3.5770

10 V V Suryanarayana Raju Bhupathi Raju 1,97,122 1.0565 Nil Nil

(v) Shareholding of Directors and Key Managerial Personnel:

Shareholding at the beginning of the year

Cumulative Shareholding during the year

Sl. No. No. of shares % of total shares of the company No. of shares % of total shares of the company
1 Sri Bafna Mahaveer Chand
Managing Director
At the beginning of the year 22,86,710 12.26
Please see the annexure for the details 1293731 6.94
At the End of the year

992979

5.32

2 Sri Paras Bafna
Whole time D i rector
At the beginning of the year 9,12,163 4.89 9,12,163 4.89
Date wise Increase /Decrease in Share holdingduring the year specifying the reasons for increase / decrease (e.g. allotment /transfer / bonus/ sweat equity At the End of the etc): year R.S. Gowdhaman 9,12,163 4.89
3 Company Secretary At the beginning of the year

Date wise Increase / Decreasein

Share holding during the year specifying the reasons for increase / decrease (e.g. allotment / transfer / bonus/ At the End of the year

V. INDEBTEDNESS (Rs. In Lakhs)

Indebtedness of the Company including interest outstanding/accrued but not due for payment

Secured Loans excluding deposits Unsecured Loans Deposits Total Indebtedness
Indebtedness at the beginning of the financial year
i) Principal Amount 6,467.45 Nil Nil 6,467.45
ii) Interest due but not paid

70.0l

Nil

Nil

70.0l
iii) Interest accrued but not due

Nil

Nil

Nil

Nil
Total (i+ii+iii) 6,537.46 Nil Nil 6,537.46
Change in Indebtedness during the financial year
Addition

1,477.04

Nil

Nil

1,477.04

Reduction

Nil

Nil

Nil Nil
Net Change Indebtedness 1,477.04 Nil Nil 1,477.04
At the end of the financial year
i) Principal Amount 8,014.50 Nil Nil 8,014.50
ii) Interest due but not paid 94.79 Nil Nil 94.79
iii) Interest accrued but not due

Nil

Nil

Nil

Nil
Total (i+ii+iii) 8,109.29 Nil Nil 8,109.29

REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. REMUNERATION TO MANAGING DIRECTOR, WHOLE-TIME DIRECTORS AND/OR MANAGER: (RS. IN LAKHS)

S No. Particulars of Remuneration Name of MD/WTD/ Manager
Bafna Mahaveer Chand Managing Director Paras Bafna Whole Time Director Total Amount
1 Gross salary
(a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961 13.80 10.80 24.60
(b) Value of perquisites u/s 17(2)
Income-tax Act, 1961 0.22 0.22 0.44
(c) Profits in lieu of salary under section 17(3) Income-tax Act,

Nil

Nil

Nil

2 Stock Option Nil Nil Nil
3 Sweat Equity

Nil

Nil

Nil

Commission
4 - as % of profit
- others, specify… Nil Nil Nil
5 Others, please specify

Nil

Nil

Nil

Total 14.02 11.02 25.04
Total (A) Remuneration for the purpose of Schedule V 21.60

B. REMUNERATION TO OTHER DIRECTORS: (AMOUNT IN LAKHS)

S No. Particulars of Remuneration

Name of Directors

Total Amount
R. Kamlesh

V. Rajamani

Dwarakanathan

Kumar Sunil Bafna
1 Independent Directors Fee for attending board /committee meetings

0.60

0.60

0.35

0.45

2.00

Commission

Nil

Nil

Nil Nil
Others, please specify

Nil

Nil

Nil

Nil
Total (1) 0.60 0.60 0.35 0.45 2.00
2 Other Non-Executive Directors
Fee for attending board / committee meetings Commission Others, please specify Total (2)
Total (B)=(1+2)Salary of Woman Director 5.73
Total ManagerialRemuneration (A+B) 27.33
(For Remuneration U/s 197) Overall Ceiling asper the Act 66.87

C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD (Rs. In Lakhs)

S No. Particulars of Remuneration Key Managerial Personnel Total Amount
CFO Company Secretary
1 Gross salary
(a) Salary as per provisions contained in section 17(1) ofthe Income-tax Act, 1961 Nil 8.95 8.95
(b) Value of perquisites u/s 17(2)

Nil

Nil

Nil

Income-tax Act, 1961
(c) Profits in lieu of salary under section 17(3) Income-tax Act, 1961

Nil

Nil

Nil

2 Stock Option Nil Nil Nil
3 Sweat Equity

Nil

Nil

Nil

Commission
4 - as % of profit

Nil

Nil

Nil

- others, specify…
5 Others, please specify

Nil

Nil

Nil

Total (C)

Nil

8.95 8.95

PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:

Type Section of the Company Brief Description Details of Penalty / Punishment / Compounding Authority [RD / NCLT / COURT] Appeal made, if any (giveDetails)
A. COMPANY
Penalty
Punishment
Compounding
B. DIRECTORS
Penalty
Punishment
Compounding
C. OTHER OFFICERS IN DEFAULT
Penalty
Punishment
Compounding

Details of Shareholding of the Promoters

Shareholding at the Cumulative beginning of the year Shareholding during the year
1 Mahaveer Chand Bafna- Managing Director No. of shares % of total shares of the company No. of shares % of total shares of the company
At the beginning of the year 2461381 13.19
26-06-2015-Transfer (-)81404 0.44
18-09-2015- Transfer (-)100000 0.54
25-09-2015 - Transfer (-)150000 0.80
27.11.2015 Transfer (-)1073537 5.75
24.01.2016-- Transfer (-) 63461 0.34
At the End of the year -1468402 992979 5.32

 

Shareholding at the beginning of the year Cumulative Shareholding during the year
2 Sasikala Bafna No. of shares % of total shares of the company No. of shares % of total shares of the company
At the beginning of the year 1292941 6.93
25.09.2015 Transfer (-) 42369 0.23
31.03.2015 - Transfer (-) 23000 0.12
At the End of the year (-) 65369 1227572 6.58%