chiplun fine chemicals ltd share price Management discussions

CHIPLUN FINE CHEMICALS LIMITED ANNUAL REPORT 2003-2004 MANAGEMENT DISCUSSION AND ANALYSIS: a. Industry Structure and Development The Company is manufacturing Pharmaceutical Active Ingredients arid is part of global pharmaceutical industry. India has emerged as important player in global pharmaceutical market Despite the competition from other countries producing cheaper products, India is making its headway by thrust on quality and timely deliveries. Multinational companies are looking at India for outsourcing their requirements in pharmaceuticals. The pharmaceutical market in India is highly competitive. The present domestic market for pharmaceuticals is estimated to the tune of US $ 4.8 billion. b. Opportunities and threat : In the next 5 years numbers of patented drugs are going off patent drugs in U.S.A. and Europe. This will permit Indian Companies to Market Generic products globally. We need to implement processes against threats of regulatory issues and patent litigation. Competition due to opening up of Global Market has to be reckoned with. c. Segment-wise or Product wise performance: The companys turnover for Pharmaceutical Active Ingredient for the year 2003-2004 was Rs. 318.70 Lacs as against Rs. 310.70 lacs for the previous year. Out of this exports amounted to Rs. 5.40 lacs (US S 11,773.15) as against the export for the previous year at Rs. 147.62 Lacs (US $ 306902.70). d. Out look: The Global Pharmaceutical market has a lot of potential growth in pharmaceutical active ingredient segment. In the next five years number of patented drugs are going off patent in USA and Europe. This will open tremendous opportunities for Indian pharmaceutical industry to share additional global market to the tune of US $ 60 billion. In this contest, the utilised capacity of the companys plant can be profitably deployed and the management is exploring the possibility of maximum utilisation of the plant capacity by approaching multinationals, which are keen on out sourcing their requirements in India. e. Risks and Concerns Generic companies will have to guard themselves against threats of product liability, regulatory issues and patent litigation and will have to ensure product cost competitiveness in the domestic market. f. Internal control system and their adequacy: The company remains committed to maintain internal controls to provide efficiency of operations. The accounting records are adequate for preparation of annual statements and other financial information. The Audit Committee of board revived internal control system and financial disclosures. g. Discussion of financial performance with respect to operational performance: The net Turnover of the-Company was Rs. 318.70 lacs compared to previous year Rs. 310.70 Lacs. Profit before interest depreciation and amortisation was Rs. 35.96 lacs as against previous year profit of Rs. 39.58 Lacs. h. Material developments In Human Resources / Industrial-Relation front, Including number of people employed: Despite pressures on profitability and due to recessionary condition and global competition all efforts are made to appoint and retain qualified personnel and to nurture harmonious industrial relations. The total numbers of employees in the company were 54 as on 31.03.2004.