dishman pharmaceuticals and chemicals ltdmerged Management discussions

ECONOMIC OUTLOOK

Global Economy

As per the forecast by the International Monetary Fund (IMF), global economic growth is likely to witness a slowdown citing persistent weakness in the Eurozone and a broad slowdown in several major emerging markets. Global growth is forecast to rise, albeit moderately. From 3.5% in 2015, it is projected to rise to 3.7% in 2016, which is lower by 0.3% of the forecast. The downside could broadly be asserted to the decline in oil prices, Geopolitical tensions in countries such as Russia and disruptive shifts in asset prices. For 2015, the U.S. economic growth has been revised up to 3.6%, largely due to robust domestic demand, cheap oil pricing - boosting real incomes and consumer sentiment and accommodative monetary policy, despite a rise in interest rates. Growth projections for Eurozone are likely to weigh down to 1.2%, despite support from lower oil prices, continued monetary policy easing, neutral fiscal policy stance and recent euro depreciation. Growth in Japan has been revised downwards to 0.6%, with an expected depreciation in Yen.

Growth for emerging markets is projected to remain largely stable at 4.3% in 2015 and will increase to 4.7% in 2016, still at a weaker pace as per the forecast in 2014. China is likely to witness lower growth on the back of a slowdown in investment growth and changes in policy reforms,, affecting the rest of Asia. With the transition in sentiments drifting to emerging markets, we can assume some volatility in markets impacting the global outlook.

Fall in oil prices have increased external and balance sheet vulnerabilities for oil exporters and declined in oil importers. However, in advanced economies,the fall in oil prices has triggered demand, thereby lowering inflation expectations. In the emerging markets, lowering oil prices can alleviate inflation pressure giving room to central banks to delay raising policy interest rates. Oil exporters, with sizable share offiscal revenues, have been most affected compared to those with substantial funds from past higher prices, allowing for a more gradual adjustment of public spending to the lower prices. Others can resort to substantial exchange rate depreciation to cushion the impact of oil shock on their economies.

Source: http://www.imf.org/external/pubs/ft/survey/ so/2015/NEW012015A-B.jpg Indian Economy

The Indian economy is likely to be stable in 2015, with the Reserve Bank of India (RBI) unlikely to cut policy rates to tackle rising inflation and curb overspending. This will lead to anticipated growth and minimum risk oflarge fiscal deficit to GDP ratio. As per IMF projections, Indias Gross Domestic Product is likely to clock a 7.4% growth in FY2014-15, crossing the $2.1-trillion mark as compared to 6.9% in FY2013-14. With improved political governance creating a positive stance for the overall democracy, bettered policy reforms, pick-up in investment and lowering crude oil prices, we can witness a rise in real incomes thereby dimming inflationary concerns.

IMF projections on global economic growth

	2013	2014	2015	2016
World Output	3.3	3.3	3.5	3.7
Advanced Economies	1.2	1.8	2.4	2.4
United States	2.2	2.4	3.6	3.3
Euro Area	-0.5	0.8	1.2	1.4
Germany	0.2	1.5	1.3	1.5
France	0.3	0.4	0.9	1.3
Italy	-1.9	-0.4	0.4	0.8
Spain	-1.2	1.4	2	1.8
Japan	1.6	0.1	0.6	0.8
United Kingdom	1.7	2.6	2.7	2.4
Canada	2	2.4	2.3	2.1
Other Advanced Economies	2.2	2.8	3	3.2
Emerging Market and Developing Economies	4.7	4.4	4.3	4.7
Common Wealth of Independent States	2.2	0.9	-1.4	0.8
Russia	1.3	0.6	-3	-1
Excluding Russia	4.3	1.5	2.4	4.4
Emerging and Developing Asia	6.6	6.5	6.4	6.2
China	7.8	7.4	6.8	6.3
India	5	5.8	6.3	6.5
ASEAN 5	5.2	4.5	5.2	5.3
Emerging and Developing Europe	2.8	2.7	2.9	3.1
Latin America and the Carribean	2.8	1.2	1.3	2.3
Brazil	2.5	0.1	0.3	1.5
Mexico	1.4	2.1	3.2	3.5
Middle East, North Africa, Afghanistan and Pakistan	2.2	2.8	3.3	3.9
Saudi Arabia	2.7	3.6	2.8	2.7
Sub Saharan Africa	5.2	4.8	4.9	5.2
Nigeria	5.4	6.1	4.8	5.2
South Africa	2.2	1.4	2.1	2.5

Source: IMF, World Economic Outlook Update, January 2015

The narrowing of Indias fiscal deficit is further attributed to falling crude oil prices. Inflation,too, has come down significantly from double digits in 2013 to 5.1% in January 2015 on the back of lower oil prices. With political reforms, fall in oil prices,and reducing deficit,growth projections are strong vis-a-vis a slowing of global growth economic scenario.

INDUSTRY OVERVIEW

Global Pharmaceutical Industry

The pharmaceutical industry is majorly dominant in the U.S.and Asia Pacific. Led bythese markets, total world consumption in sales of pharmaceutical products has displayed strong growth and is expected to grow further with expanding populations in emerging markets. Global pharma continues to remain attractive due to various cost efficiency measurements, de-consolidation, acguisition of high value targeted assets, management efforts on restructuring of entire business model, share repurchase program and dividend policy. In the recent years, several new therapies have been approved in the area of diabetes (SGLT-2,GLP-1 agonists), multiple sclerosis, HCV, melanoma and breast cancer from major pharmaceutical companies. These are expected to reach multi-billion dollars sales in the near-term and will compensate the patent expiry loss in top-line revenue of pharma companies. Novel mechanisms such as anti-PD1,anti-PCSK9 and CDK inhibitors have also received the exclusive attention of large-cap pharma companies. Most companies are in race to acquire assets in these hot therapy areas. Companies who already have these assets are investing heavily in clinical development programs. The interest in pursuing opportunities in Oncology therapy is unhindered for major companies. Research investments in oncology are likely to continue for several more years due to the significant unmet need existing in this area.

For a few companies, patent expiry impact continues to haunt top-line as theyfind it difficult to replace declining sales with Proprietary pipeline products. Beyond 2013, the impact of patent loss will further aggravate revenue decline. These companies have chosen strategies of prioritisation pipeline assets,cost efficiency measures, divestment of non-core assets which yield poor margins and increased focus on therapy areas where they have already proven their mettle.Gain in financial strength through divestment of non-core assets (OTC, Animal Health, Consumer health, Diagnostics) will be utilised for pursuing opportunities in high margin therapy areas.

Economies of Scale to impact Margins

Going forward, economies of scale will also play a major role in swapping non-core business among major pharma, inclusive of vaccines, OTC and animal health, to improve margins.One field which is poised to bring a paradigm shift in the way diseases will be treated in the next decades is Stem Cell therapy/Regenerative Medicine space. The number of companies and products in the clinic has reached a critical mass warranting a close watch for those interested in keeping pace with development of new medicines. The universe of regenerative medicine is large and new companies are getting added rapidly. However, in recent times, austerity measures across the world have hit the pharmaceutical industry. Furthermore, the loss of patent for many blockbuster drugs during 2010-2015 is also going to have a big impact on the global pharmaceutical industry. However, generic manufacturers are likely to benefit as they remain poised to capture a substantial portion of revenues with generic versions of these drugs.

Factors driving growth in the global pharmaceutical industry include the emergence of new product lines, opportunities in various CNS disorders and oncology research, ongoing commercialisation of dormant compounds, along with a look at the role of bio-similars in the industry.

Global Medicine Spend

Total global spending on medicines is projected to touch $1.3 trillion in 2018, an increase of $290-320 billion from 2013, driven by population growth, an aging population, and improved access in pharmerging markets. The U. S. will see the largest per capita spending increase from 2013 to 2018, while other developed countries such as France and Spain will see a decrease due to implementation of policies to control spending growth. Global spending growth is seen peaking in 2014-15 and moderating through 2018, due to fewer patent expiries, launches of more innovative medicines and price increases. Off-invoice rebates and discounts will help decrease net sales growth in developed and pharmerging markets through 2018.

Growth in global spending will stabilize between 4-7% through 2018. The global population aged 65 and over will grow faster than any other age segment, and will account for almost 30% of the overall population growth in next five years. Demographic trends will act as a significant driver of global demand for pharmaceuticals. Increase in diagnosis and treatment of chronic conditions and an aging population will drive developed markets, while population growth coupled with improved access to healthcare will drive growth in the emerging markets. However,significant downside risks remain,due to an uneven economic recovery in Europe, political tensions in Russia and recent events in Africa and the Middle East. Most countries will experience an increase in pharmaceutical spending per capita by 2018. The highest growth is anticipated in China, as its per capita spending is projected to rise by over 70% in next five years. As the second-largest world market, Chinas spend is expected to be just 9% per capita of that in the U. S.

Patent Expiry

Patent expiry for small molecules peaked in 2012 and is likely to remain moderate through 2018. The value of small molecule products totalled $154 billion in developed markets,facing the loss ofexclusivity in last five years.The patent cliff peaked in 2011-12 in the U. S. with competition amongst major players in the generic segment. Global brands in medicine are further lined up for patent expiry in next five years, but will result in lesser impact than in

small molecules due to the evolution of the bio-similar regulations and rising competition in that space.

Developed Markets:

Developed markets are defined as the U.S., Japan,Top 5 Europe countries (Germany, France, Italy, Spain, U.K.), Canada and South Korea

The developed markets are likely to witness strong growth in 2014, driven pre-dominantly by the U. S. market, which is forecast to grow 11-13% in 2014 before moderating to 5-8% CAGR through 2018. The growth in developed markets will be led by fewer patent expiries, launch of innovative medicines and price increases. Moderation in growth through 2018 will be contributed by the U. S. and Japan, with EU5 (Germany, France, Italy, Spain and U.K.) maintaining relatively low levels ofgrowth.Cost containment policies in developed and pharmerging markets alike are increasingly driving price concessions, often through off-invoice discounts and rebates. Increases in negotiated discounts are counteracting list price increases and populations aging into public increases and populations aging into public pay systems may have higher level ofnegotiated rebates. Influencing this trend are government-mandated rebates and new caps instituted on total levels of public drug spend, combined with manufacturer payback arrangements in some countries. Price concessions for branded products are expected to increase through 2018; those for generics also are expected to grow as these companies compete with increasing intensity.

Price increases also contribute to the U.S. market growth. Implementation of the Affordable Care Act and the resulting expansion of access will result in slightly higher levels of growth, though impact of other structural changes of healthcare payment and delivery will be more significant. Higher spending can be expected on specialty medicines over the next five years, particularly in developed markets. This segment will be a larger driver of spending growth in North America and Europe than in the pharmerging markets.

Across the major markets in Europe, economic austerity- led efforts to constrain growth in healthcare spending, especially medicines, have resulted in spending declines or very low growth. This is seen continuing through 2018. In the EU5 countries, growth will be fiat following recovery from recession and will be infiuenced greatly by changes to discounts and price cuts in certain countries. Japan, similarly, is forecast to see growth in the 1-4% range even as its population over the age of 65 exceeds 27%, 5% higher than other developed countries, and is expected to increase demand for medicines. Growth there will peak early and moderate further by price reductions due to competition in post-expiry branded drugs.

Pharmerging Markets:

Tier 1: China; Tier 2: Brazil, India, Russia;

Tier 3: Mexico,Turkey, Venezuela, Poland, Argentina, Saudi Arabia, Indonesia, Colombia, Thailand, Ukraine, South Africa, Egypt, Romania, Algeria,Vietnam, Pakistan and Nigeria.

The pharmerging markets will expand at a compounded annual growth rate of 8-11% through 2018, an increasing share ofglobal market. Largely driven by China, which represents 46% of the pharmerging market, growth will continue to be driven by improved access and population increases, but will moderate in the latter years of the forecast. The growth, though at slower pace compared to past five years, averaged at 13.6% and will be driven by rise in population, increased access to new medicines, health care, and government funded economic stimulus programs. Growth in pharmerging countries will be majorly driven by generic and non-branded products, growing at double the rate of branded growth. With the rise in incomes, growth in demand for medicines can be seen. The slowed growth in the other regions will also cause a rise in global sales for pharmerging markets. Increasing global demand and expanding global export marketwill benefitpharmerging countries.However,these economies remain vulnerable to downside risks from advanced nations and may be notably affected by slower European growth. Government stimulus and investment projects across pharmerging economies will contribute to domestic demand overall with downstream effects on the demand for medicines.

Growth in pharmerging markets comprises 83% rise in sale of non-brand medicine, driven mostly by generics. China demonstrates 75% growth in next five years, driven by both brands (70%) and non-brands (75%). While some pharmerging markets have robust domestic generic industries, typically smaller countries rely more on import of medicines and tend to have higher branded medicine spending as a share of their total spend. As a percentage of total growth in pharmerging markets, brand growth remains steady at 30% growth, while non-brand sharply increases at 61%. Brand growth comprises 23% of total growth for Tier 3 pharmerging markets, primarily due to significant importation ofmedicines and pricing policies that promote competition. Government pricing policies are typically restrictive, including price controls, driving brand prices to competitive levels and limiting price growth.

China, already the worlds second largest pharmaceutical market, will reach spending levels of $155-185 billion in 2018. Implementation of health reforms are increasing demand for medicines, while pricing regulations are being used more frequently to manage overall growth levels. Over 80% of growth in pharmerging markets will be attributed to non-branded medicines. About 40% of total global growth will come from these medicines, primarily in oncology, autoimmune, respiratory, anti-virals and immune-suppressants therapy areas. Much of this growth is from medicines bringing new treatment options for patients, including breakthrough therapies or even cures, and often reduced complications or hospitalizations. A growing number of these drugs are also available in oral form, which reduces costs associated with delivering the drug to patients. The pipeline of innovative specialty drugs is also robust, especially in the area of oncology.

The number of new molecular entities to be launched is expected to remain at levels higher than in the past decade, aided by an increasing number of applications subject to accelerated regulatory review.

Over the next five years, advances in therapy areas of oncology, diabetes and Hepatitis C will be ofparticular interest and importance. The surge in cancer drug innovation over recent years will continue and contribute to global spending on all oncology drugs, reaching about $100 billion in 2018, up from $65 billion last year. A number of new immunotherapies will become important parts ofthe cancertreatmentarsenal, including PD-1 and CDK inhibitors. Spending on diabetes treatments will exceed $78 billion globally in 2018 as growth moderates. Although prevalence of diabetes continues to accelerate, particularly in low- and middle-income countries, treatment costs overall will increase more modestly as bio-similar insulins become available and payer pressure on higher-priced treatment options intensifies.The introduction and uptake of potent new medicines for the de facto cure of Hepatitis C are expected to result in about $100 billion in total spending over the five-year period ending 2018.

A large number of individual and combination drugs are already available or in late-stage development, bringing remarkable clinical benefits to those patients able to access them. At the same time, payers struggle with the challenges offinancing the upfront costs ofthese drugs, even though they can bring economic savings over the long term.

Prime Drivers for Medicine Spend

North America continues to contribute the largest proportion to growth in spending, but Asia is also gaining momentum. Generics have been the largest drivers except North America. Increases in low cost Generics will be seen in Asia, including India and Pakistan, as efforts to broaden access to basic health insurance is pursued. Specialty growth in Asia will grow from 21% in previous five years to 24% in the next five, reflecting increased availability in those markets. Widespread poverty and a heavy disease burden add to problems faced by patients in many African countries, focusing much growth on traditional therapies; growth in the AFME region including Egypt and Algeria will be driven by increases in incidence of chronic, age-related conditions driving demand for traditional chronic therapies. Innovative medicines, increased access and advances in treatment will impact developed and pharmerging countries for the next five years.

World Spend on Brands and Generic Medicines

The greatest availability of new medicines continues to be high-income countries, and is increasing for pharmerging countries. Driving the pipeline are oncology drugs, anti-infectives and antivirals, and drugs targeting central nervous system disorders, comprising 46% of the late-stage pipeline. Oncology spending will reach $100 billion globally by 2018, an absolute growth of $30-40 billion, driven by greater numbers of drug approvals and an increase in cancer incidence. Oncology innovation is energised by a number of immunotherapies, many of which have FDA Breakthrough Therapy Designation, with the potential for multiple follow-on indications, deepening an already full pipeline. Diabetes spending growth will be above 10% in both developed and pharmerging regions in the next five years, driven primarily by innovative new therapies and greater diagnosis rates. Diabetes will see a major influx of new technologies and innovations seeking to improve prevention, screening, diagnosis and treatment adherence for both type 1 and type 2 diabetics. Hepatitis C medicines will see greater use oftreatments that cure the disease in next five years, seeking to make dosing easier, shorten courses of treatment and reduce side effects.Treatment for Hepatitis C will cure 9-14% of the HCV-infected population in the U.S.by 2018, with many programs to increase affordability and control cost emerging in both developed and pharmerging regions.

The emergence of new therapies for Hepatitis C have brought that therapy area into top 20 for both developed and pharmerging countries. Oncology continues to be the largest category in developed countries, and the largest speciality area in pharmerging countries. Leading classes in the pharmerging markets are dominated by pain, antibiotics and hypertension. While in the developed markets, oncology and autoimmune diseases are more prominent. Decelerating growth in the developed markets will be linked to the patent expiration for six out of the top 20 classes.

Through October 2014, 31 new molecular entities (NMEs) have been approved globally and 26 launched, 6 of which are classified as orphan either in U.S.or E.U.and 18 are specialty products. In 2014, there have already been 12 drugs approved in U.S. with FDA Breakthrough Therapy Designation, including the first biologic (meningococcal group B vaccine).

The countries with the highest availability of NMEs launched 2008-12 continue to be high income, including the U.S., Germany, U.K.,Canada and Italy. In developed markets, U.K. had the biggestincrease (9%) and Spain the biggest decrease (-14%) in availability over 2012 analysis. Pharmerging markets have a lower percentage of possible NMEs across all medicine classes. Approximately 32% of NMEs launched in at least one country are not available in the U.S., as per the analysis of availability in 2012 of 200711 cohort of NMEs, pharmerging countries all achieved increases in availability.

Global CRAMS Industry

Over the past few years the global pharmaceutical industry has been shifting its focus towards emerging markets like India. The CRAMS segment in India is expected to be one ofthe biggest beneficiaries ofthis wave. The Indian contract research and manufacturing services market comprehends from drug discovery to preclinical toxicology, Active Pharmaceutical Ingredient (API), Formulations and Injectables in India.

According to the global CRAMS market outlook to 2018, India and China present bright prospects of market size by value of CRAMS services globally. The continuing turmoil in fewer developed nations such as EU and North America due to patent cliff and economic recession in past few years have changed the structure of the global CRAMS industry with countries like India and China gaining greater importance in recent years. The increasing need for effective and safe drug discovery and manufacturing has been driving the revenues of global CRAMS industry, which reached USD ~ billion in 2013, representing a CAGR of 13.1% during 2007-2013. The U.S. has been the largest contributor in the global CRAMS industry at 39.8% in 2013, declining from 45.6% in 2007. The fall was due to rising contribution of India and China at 5.4% and 4.0%, respectively. Globally, contract manufacturing services accounted for ~% of the global CRAMS industry, growing at a CAGR of 12.0% during 2007-2013. The global CRAMS industry is highly fragmented with top 13 players contributing ~% in the overall revenues. Indias share in global CRAMS industry is anticipated to reach 8.3% in 2018, up from 5.4% in 2013 with a shift of outsourcing activities from western nations to countries like India.

Growth recorded by CRAMS Players

The Indian Contract Research and Manufacturing Services (Crams) players are expected to register a strong growth rate of 18-20% CAGR to touch $18 billion by 2018, from $7.6-7.8 billion in 2013. This would be achieved on the back of a recovery in the U.S. market and $85 billion off-patent drug opportunity by 2020, according to a report by Care Ratings. Factors like patent cliff, favourable currency and focus on new product development would drive growth for Crams players. Also, patented drugs, worth nearly $85 billion in potential annual sales in the U.S., are expected to go off patent between 2014 and 2020.This is likely to boost the prospects of Indian contract manufacturing segment (CMS) companies. With the Indian crams industry gradually moving up the value chain and players investing in better technology and higher capacities, manufacture of value- added products for biotech and specialty therapy areas may be outsourced to Indian players in future, to grow at approximately 17-18% CAGR till 2018.

Outsourcing Opportunity

India is one of the worlds best known low-cost manufacturing centres, with highest number of US Food and Drug Administration (FDA)-approved manufacturing plants outside the U.S. Going forward, gradual improvement is expected on the back of recovery signs witnessed. Further, global pharma companies are slated to enhance their allocations towards R&D in order to increase their drug pipeline. Increase in fresh orders and new assignments will aid revival of Crams business. The growth would be mostly led by increase in strategic alliances and expanding footprints in major geographies. With the cost of developing new drugs estimated to have reached approximately $5 billion, major pharma companies are witnessing a decline in their R&D productivity on account of diminishing discoveries of path-breaking molecules, fewer new molecules being approved by the US FDA and increasing research costs. As the drug pipeline depletes, the pharmaceutical industry is under pressure to enhance productivity of its R&D functions. Also, many developed economies are trying to curtail their healthcare spends. These factors may enhance outsourcing of manufacturing and research activities by global pharmaceutical companies,thereby benefiting the global Crams industry.

The opening up of global pharma and setting up of supply chains globally has resulted in increased contribution of exports to earnings of domestic crams companies. Exports accounted for more than 75% of revenues in 2014 of Crams industry, up from 62% in 2010. The local industrys share will increase to around 8-9% of global Crams market by2018from about 6% in 2013. However,the growth of the industry may be negatively impacted by regulatory directives. At least 16 regulatory and compliance-related instances have been reported between June 2013 and July 2014. Such notices, import alerts and recalls of drugs may impair the goodwill of the Indian pharma industry globally, adversely impacting the outsourcing of work to the Crams industry, as per the report by CARE Ratings. This might impact Indias position compared with competing countries such as China, Russia, Brazil and Taiwan.

Source: DNA article report by Care Ratings (CRAMS)

THE ONCOLOGY OPPORTUNITY

During the years, oncology has become one of the major focus areas of the pharmaceutical industry and oncology products continue to drive the pipeline. Around 35-40% of clinical trials are in the oncology segment. There has been a massive rise in number of products in oncology by phase and therapy area coherent with the rising demand. Global oncology makes up 31% of the total pipeline, 25% of the late-stage pipeline (Phase II through pre-registration), and is double the size of next highest class. The top three classes in the late-stage pipeline constitute 46% of the total late phase pipeline. Biologics make up 36% of the late-stage pipeline and 45% of the late stage oncology pipeline. The second largest area of development is the treatment of CNS disorders with a focus on mental health, multiple sclerosis and neuropathy indications. Anti- infectives development is focused in large part around HIV and Hepatitis C products.

Oncology Spend

The global spending on oncology is expected to grow by over 50% to exceed $100Bn in 2018, driven by increases in cancer incidence of up to 31% by 2020, and rising rates of melanoma and kidney cancers, as per the IMS market report. Absolute growth is expected to be $2545Bn, compared to $17Bn in the prior five years. High numbers of global drug approvals and launches in 2012 and 2013 and a strong pipeline will drive higher growth in developed markets in the forecast period. Bio-similars will play a greater role in cancer treatment in pharmerging markets but are expected to have limited impact in developed countries over the next five years.

Oncology innovation driving pipeline growth includes new immunotherapies. Immunotherapies are expected to gain many follow-on indications using the immune system to target cancer broadly rather than targeting site-specific tumors.

Spending in Developed Markets

In developed markets, spending on diabetes drugs will rise from $35 billion to $66 billion in 2018. Spending growth in 2014 is driven by rising prices for modern insulin in the U.S. However, this doesnt reflect the effect ofoff- invoice discounts and rebates that may offset these price increases. In developed markets, newer therapies such as GLP-1 antagonists, DPP-IV inhibitors and SGLT2 inhibitors will continue to drive growth. The coming wave of biosimilar insulins will bring about significant commercial changes and cost savings for insulin- dependent patients.

In pharmerging markets, spending on diabetes drugs will increase 10-13%overthe nextfive years.Spending growth in pharmerging countries is largely attributed to rising incidence and diagnosis rates, which have led to greater insulin and metformin use; they have been slower to adopt newer therapies. Eighty percent of people with diabetes live in low- and middle-income countries. Rising obesity rates are fueling the global diabetes epidemic. Thirty percent of diabetics in high-income countries and as many as 90% of diabetics in sub-Saharan Africa are undiagnosed; globally, an estimated 175 million people do not know they have the disease. New approaches to disease management are needed to address swelling patient populations and mounting costs. Apps and devices designed to identify at-risk patients, encourage healthy behaviors, improve adherence and provide better glycemic control will improve the lives of diabetes patients in 2018.

Hepatitis C virus (HCV) medicines has undergone accelerated innovation in the past four years as improvement in drug technology has yielded sustained virologic responses (SVRs) ofnearly 100% in genotype 1 patients from SVRs of30- 50% only three years ago.

Global spending on HCV drugs is expected to exceed $100Bn during 2014-18. The next four years will see combinations of direct-acting antiviral agents (DAA) that are administered without Interferon and Ribavirin, and with increased efficacy in pan-genotypic HCV infections, easier dosing, shorter courses of treatment and reduced side effects. DAAs combined with interferon & ribavirin may remain viable options in pharmerging markets. New HCV medicines will provide patients, providers, payers and governments with more treatment options. Solutions to affordability and public health concerns formed in the HCV market will be applied to adjacent therapeutic areas in the coming years.

The dynamics resulting from changes in the role of medicines in healthcare systems and associated level ofspending differ significantly overtime and across countries. The impact of drivers of the innovation lifecycle, growing focus on outcomes and performance measures in healthcare, and pursuit of universal health coverage are playing out in significant ways around the world.With almost $1.3 trillion in spending on medicines expected in 2018, the focus on value provided by medicines as an integral part of prevention and treatment has never been more important—to patients, healthcare professionals and payers alike.

Conventions:

Developed markets are defined as the U.S., Japan,Top 5 Europe countries (Germany, France, Italy, Spain, U.K.), Canada and South Korea.

Pharmerging countries are defined as those with >$1Bn absolute spending growth over 2014-18 and which have GDP per capita of less than $25,000 at purchasing power parity (PPP). Tier 1: China; Tier 2: Brazil, India, Russia;

Tier 3: Mexico,Turkey, Venezuela, Poland, Argentina, Saudi Arabia, Indonesia, Colombia, Thailand, Ukraine, South Africa, Egypt, Romania, Algeria,Vietnam, Pakistan and Nigeria

BUSINESS OVERVIEW

Head-quartered out oflndia,the Dishman Group is a truly global and integrated CRAMS player with strong capabilities across the value chain. Dishman Pharmaceuticals and Chemicals Limited, the flagship company, includes its Indian and foreign subsidiaries, joint ventures and associate companies across the globe. All these entities are individual and separate. The Group has presence across the world servicing customers from all key advanced markets, including USA, Europe and Asia.

It possesses a wide range of research competencies and manufacturing capacities across multiple continents and countries,including Switzerland,UK,France,China,Japan and India. It operates 9 plants in total - 4 in Switzerland; 2 in lndia;and one each in UK,France and China.

The Group recently witnessed profound organisational and operational restructuring, in which it first added the post of Group CEO and then adding the posts of a Group level Chieflnformation Officerand a Chief Quality Officer with the particular mandate ofintegrating the Groups operations and cross selling its global capabilities to its customers across the world.

End-to-end Service Offering

Chemical Development - Commercial Manufacture - Supply of APIs

Our Product Portfolio

• Phase transfer catalysts

• Vitamin D

• VitaminDanalogues

• Cholesterol

• Laolin related products

• Antiseptic and disinfectant formulations for pharmaceutical, cosmetic and related markets

OUR BUSINESS VERTICALS

CONTRACT RESEARCH AND MANUFACTURING

Our principal line of business is Contract Research and Manufacturing Services (CRAMS) and marketable molecules such as bulk drugs, intermediates, and quaternary ammonium compounds (quats). We are an integrated CRAMS player with strong capabilities across the value chain. Through our CRAMS business, we assist drug innovators in development and optimisation of processes for novel drug molecules in various stages of the development process. The CRAMS unit manufactures drug quantities required for conducting clinical trials.

Once the innovative molecules are approved, this unit explores the possibility of possible large-scale commercial supply tie-ups. We provide end-to-end high-value Asian cost-base CRAMS offerings right from process research and development to late-stage clinical and commercial manufacturing. CRAMS contributes nearly 65% to our total revenues. With an expanded capacity in place, we are strongly placed to benefit from a revival in the global CRAMS industry.

a. CARBOGEN AMCIS

The CARBOGEN AMCIS brand represents the Groups first port ofcall for Pharmaceutical companies across the United States and Europe. Endowed with broad-based skill sets, the operations running under this brand are located in Switzerland, France and UK.The Switzerland-based CRAMS business is the Groups method of being close to its customers and being involved with them from the very early stages of research and manufacturing trials. As a front-end interface for its trans-Atlantic customers, the Company engages with its customers by hand-holding their entire drug development cycle, from initial research to early-stage small-scale commercial productions. Since most small and large Pharmaceutical players prefer to work with partners close by in the early stages of the product development process, CARBOGEN AMCIS represents the Groups gateway for customer acquisition and for maintaining close relations with them throughout a products lifecycle.

b. Dishman India

The Dishman brand represents the Groups second p ort of call for the same Pharmaceutical companies engaged with CARBOGEN AMCIS. Once CARBOGEN AMCIS has satisfied a customer up to a point in terms of research, trials and small scale commercial production, they are able to derive further value with the Group. The Company successfully scales them towards large-scale commercial production using its specialised high capacity operations in India and China. The Indian facilities at Bavla in Gujarat and the Chinese facility in Shanghai are particularly well invested and suited for mid-to-large scale production. Through this method, the Group is able to derive significant value out ofthe research workdone at CARBOGEN AMCIS to commercial production in India and China, thus resulting into an end-to-end Integrated CRAMS offering.

MARKETABLE MOLECULES

a. Specialty Chemicals

Dishman Specialty Chemicals is the global leader in the specialty chemicals segment and the leading manufacturer of Phase Transfer Catalysts.

It manufactures and supplies high-quality intermediates,fine chemicals,and various products for pharmaceutical, cosmetic and related industries. The Company had a long association with the manufacture and supply of Quaternary ammonium compounds (Quats) for use as phase transfer catalysts. We have world-class manufacturing expertise, logistics and competitive pricing. We possess domain expertise in solids handling technology, which has helped us expand our offerings to include ammonium and phosphonium

high-purity solid Quats, Phosphoranes and Wittig reagents. We have also gained expertise in providing tailor-made solutions.

b. Vitamins and Chemicals

Dishman Vitamins & Chemicals manufactures and supplies a range ofVitamin D2,Vitamin D3 and Vitamin D analogues. It also manufactures cholesterol and lanolin related products for pharmaceutical, cosmetic and related markets. After having acguired ourVitamin D3 business in Netherlands. We are the market leaders in the advanced regulated markets in the Vitamin D space. Ourfocus has been to integrate ourVitamins business by way offorward integration at ourVitamin D facility in India.We have recently commenced operations in this segment which will add value to ourVitamin D business.Our cholesterol facilityat Veenendaal,The Netherlands, has also recently commenced operations after renovation. This will add furthervalue to ourVitamin D3 business.

c. Disinfectants

Dishman Care has a range of hand and body wash, sanitisers and antiseptics, apart from its active pharmaceutical ingredients and formulations businesses. We will offer a range of Antiseptics and Disinfectants for application in healthcare and related industries. Our range of products will include bulk drugs, phase transfer catalyst and fine chemicals.We shall have a deep portfolio of next generation innovative antiseptic and disinfectant formulations. Our product pipeline specialises in high quality, cost effective, proven anti-microbial products based on Chlorhexidine Gluconate (CHG) and Octenidine dihydrochloride (OCT). We shall provide specialist products for environmental decontamination based on hydrogen peroxide disinfectant.

OUR COMPETITIVE STRENGTHS

A. Capabilities across the entire CRAMS value chain

Today, the Dishman brand is perceived by global customers as a preferred global outsourcing partner with capabilities across the entire CRAMS value chain, with services ranging from process R&D and pilot supply, to full scale and commercial manufacturing from purpose built and dedicated facilities. The Groups India and Chinese facilities possess strong chemistry skill sets: a large dedicated multiple shift R&D operations; and 26 and dedicated production facilities for APIs, intermediates (India, China) with dedicated API manufacturing capacity at India and China.

Presence along the value chain:

Building Blocks - Commercialisation - Launch Stage

B. High Potency API Capability

The Dishman Group has invested in world class capabilities to address the Anti-Body Conjugates (ADC) market.Coupled with 13 years ofHiPo API experience,the High PotencyAPI business will represent a significant opportunity for step change in the Groups top and bottom line growth. The Group has a strongly differentiated set of capabilities in the HiPo API arena with pre-clinical API, phase 1/phase 2/phase 3 and commercial API and up to clinical Ph2 parenteral dosage form capabilities. All these capabilities remain in house and underwritten by a consolidated project management capability to take customers from pre-clinical stages through to commercial manufacturing of APIs, right through to formulated products up to phase 2.

C. Unparalleled Capabilities in scaled-up Commercial Manufacture

The Dishman Group offers unparalleled capability in scaled-up commercial manufacture of highly potent compounds and vitamins. The Group provides state- of-the-art containment services. All facilities operate to current Good Manufacturing Practice (cGMP) and can produce materials for pre-clinical testing, clinical trials and commercial use.Dishmans HiPo API facility at Bavla, coupled with the capabilities in HiPo API in Switzerland, provide a customer compelling set of assets and technical skills.The new HiPo API facility in Bavla, Unit 9, is world-class, designed and constructed with current state-of-the-art systems and procedures which ensure complete continuity with facilities in Switzerland, thus providing a complete end-to-end API supply chain under one roof.

D. Seamless Integration of our Capabilities

We continue to cross sell our multiple broad-based capabilities across geographies and leverage fresh opportunities wherever possible. Our joint Global Sales team continues to project the Group as "One Company - Two Brands" under the CARBOGEN AMCIS and Dishman brands.Our unified approach in projecting the disparate and wide-spread capabilities is already beginning to have a positive impact. We are currently executing a $20 million order in the nonpotent oncology space, which requires capabilities spread across three of our project sites (Bavla, Shanghai and Switzerland) to be offered in synchrony. As a result of this order, our Shanghai facility was able to get into the profitability mode. Unit 9 is implementing projects that have been successfully transferred to Bavla, after being developed at the Swiss facility in its early stages.

SIGNIFICANT ACHIEVEMENTS OF FY2015

China Facility kick-starting Production

The C ompany recently came into production at its facility in Shanghai, China, which began getting constructed in 2006 with a total investment of $25 million. Since its Swiss subsidiary CARBOGEN AMCIS is falling short of capacity, the facility at China will be utilised for supplying key intermediates to CARBOGEN AMCIS and to India. Some high-potency anti-cancer products and intermediates aimed at the global market will be manufactured here and will be brought into Bavla for making finished products. The products manufactured at Shanghai are profitable and the facility achieved cash break-even point during the year. Chemicals manufactured in our Shanghai factory are in general substantially cheaper than in our corresponding other assets.

Distinctive Marketing Strategy for Vitamin D3

Dishman Netherlands, which was fully commercialised post shutdown and renovation, displayed decent performance following a distinct marketing strategy of focusing on profitability instead ofvolumes.The strategy was directly handled by our Global Chief Executive Officer, Mark Griffiths.The Company, which produces vitamins, earlier sold to about 26-27 distributors and there was no control on pricing. Today, the situation has undergone a distinct change with a key focus on improving margins.

We are optimistic on the outlookforthe overall Vitamin D3 business with a world demand of 400,000 metric tonnes and are looking to expand the Vitamin D analogue part of business. Recently, the plant secured FDA approval to enhance its competitiveness in securing high-value customers.

Prime Growth Drivers in FY2015:

• CRAMS getting back on growth path

• Turnaround of CARBOGEN AMCIS, led by margin improvement, new products, ADC and Unit 9-HiPo

• CRAMS and break-even of China facility

• Vitamin D business moving on trackwith key focus on integrating vitamin business

OUR KEY STRATEGIES IN PLAY

Diversifying our Customer Base

Dishman Pharma was earlier outsourcing services to big pharmaceutical players in US and UK, mainly innovators from biotech to multinational pharma companies. However, it changed its strategy and continues to diversify and widen its existing customer base for India CRAMS business. This tectonic shift is based on a key observation that much of the recent innovation in New Molecule Entities (NMEs) has come from small to mid-sized biopharmaceutical organisations, which has changed the dynamics of this business. Today, medium pharmaceutical and small biotech players form a bulk of its customer base. By diversifying our customer mix, we are ensuring we are not over dependent on our business with large pharmaceutical companies.

We are targeting small and mid-sized pharmaceutical companies active in Research & Development and offering better margins. We added 10-15 small biotech clients under our belt during the year.ln FY2016,a significant portion of our total revenues will be clocked from small and mid-sized biotech companies. Our CRAMS segment is benefitting from a wider customer base. About top 10 of our customers currently contribute 40% to the total revenues, compared with 60-70% earlier.

Increasing Focus on Innovative and Generic APIs

We are significantly enhancing our focus on innovative and generic APIs in a bid to stabilise our business and increase utilisation of spare capacities, without any additional capex. In the past year, we hired a few chemists in this segment.We have already filed ~5 DMFs and are ready with data for another ~20 DMFs. We had a successful FDA scrutiny in Bavla towards the pre-approval inspection of a generic product, of which we are the sole suppliers. We also won a contract to supply APIs for a "soon to be commercialised" oncology product to be executed across Switzerland, Bavla and China.

Strengthening Order Book

Dishman India is currently sitting on a decent order book to be executed over the next couple of years. A key driver for India CRAMS is the HiPo facility for oncology at Bavla. Intermediaries for orders will be manufactured at the China facility, aimed towards derisking manufacturing at a single location.The current HiPo order book translates into 30-35% utilisation rate and the Company plans to ramp up in next 12 months. We also have a strategy of introducing new customers to our R&D capabilities in Bavla, which is expanding with 4 new development customers in FY2015. Repeat orders and a steady stream of new customers give us comfort on future growth.With a significant order book, we continue to focus on efficient and better capacity utilisation of our assets. This is aimed by way of low- volume and high-value niche and complex products in the portfolio mix, resulting into better operating margins.

New Product Launches

We continue to bank on new product launches to increase our revenues. Currently, around 8 of our products are already in the "near commercial" stage. These are scheduled to be ready for launch in FY2016, which will add to our revenue growth. The Octenadine Compound, launched during the year under review, received excellent market response. In addition, we are also exploring various other opportunities with our key customers for new product launches.

Focusing on Margin Improvement

During the first halfofthe year under review, we worked on development projects with lower margins at CARBOGEN AMCIS. In the second half, we worked on commercial products and development work which will result into a considerable pick-up in margins. Also, there

is stock building in raw material inventory followed by a sizeable project in hand. Revenues of this project will be realised in FY2016. In another case, the unit capacity of Unit 9 (oncology unit) at Bavla has been entirely sold out for next several quarters. Revenue impact of this will be visible in the coming quarters as projects scale higher. Encouraged by customer response, we are evaluating options to add two new cell blocks.

Paring Debts through Cash Accruals

With most capital expansion behind us, we are targeting to use our incremental cash flows to retire debt. During FY2015, we made Rs 183.42 crore debt repayment by utilising our cash accruals. Our consolidated debt levels are currently at a comfortable position at Rs 932.69 crore. We foresee substantial reduction in our debt position and stronger Net Interest Margins in the years ahead.

MANAGEMENT OUTLOOK

We are focusing on high-margin, high-value business and expect a sizeable improvement in the years ahead. We are focusing on contract manufacturing to boost margins over volumes in our Vitamin D business.The outlook for CRAMS and innovative and generic API is positive. We foresee HiPo API and generic API businesses to be our future growth drivers. We are expecting the positive momentum to be maintained due to better performance in CARBOGEN AMCIS, improvement in Vitamin D margins and better realisation in Netherlands facility. About 70% of Dishmans portfolio is geared towards higher-end API supplies with vitamin D3 and bulk drugs accounting for balance 30%. In vitamin D3, the key focus will be on quality rather than volumes, which will protect our EBIDTA margin. With interest cost savings due to debt repayment research ofnew molecules and enterthe specific market with marketing innovation, technology transfer in the developing markets, where technology is licensed to API manufacturer with a stipulation that the intermediates are to be procured from Dishman on a long-term basis.

RESEARCH & DEVELOPMENT

With strong R&D experience and effective relationship developed with MNC Customers, the Company has emerged as a premier contract manufacturing organisation (CMO). The CMO business model was envisaged in the year 1997 and there under set up a modern production facility at Bavla, near Ahmedabad, which is a 100% EOU facility. At present, the Company has eight multi-purpose production units at Bavla. The Company has also manufacturing and R&D facilities in Switzerland, UK and Netherlands.The Company has set up a Greenfield manufacturing facility at Shanghai Chemical Industry Park, Shanghai, China.

Your Company has adopted various marketing strategies to continue the growth, including increase in number of clients to reduce the dependency on any single client, increase the number of products range to reduce product risk; to enter contract manufacturing through contract

FINANCIAL OVERVIEW

Business Highlights (Consolidated)			(Rs. in Crores)
PARTICULARS	2014-2015	2013-2014	GROWTH (%)
Net Sales & Operating Income	1,575.19	1,385.32	13.71%
Other Income	86.04	24.91	245.38%
Total Income	1,661.23	1,410.23	17.80%
EBITDA	399.67	357.02	11.95%
Depreciation	150.71	108.56	38.82%
PBIT	248.96	248.46	0.20%
Interest & other Finance charges	89.71	92.05	-2.55%
Profit Before Tax	159.25	156.40	1.82%
Tax Expense	39.44	47.13	-16.32%
Profit after Tax	119.81	109.27	9.79%

During the year, the turnover has gone up to Rs. 1,575.19 crore compared Rs. 1,385.32 crore resulting a growth of 13.71%. CRAMS segment registered a turnover of Rs. 1,100.93 crore compared to Rs. 933.52 crore during the previous year. Others segment which includes bulk drugs, intermediates, Quats and speciality chemicals and outsourced/traded goods registered growth at 474.26 crore, against Rs. 451.80 crore in the previous year.

CRAMS is our largest business segment which caters to the requirements of multi-national pharmaceutical companies internationally.We develop intermediates/APIs based on our customers request. This business involves significant R&D efforts to develop the products, processes. Our wholly owned subsidiary CARBOGEN AMCIS located in Switzerland is spearheading our R&D efforts. Around 70% of our consolidated turnover is generated from CRAMS segment.

Others segment (which includes bulk drugs, intermediates, speciality chemicals and outsourced/trade goods) contributed around 30% of consolidated turnover in 2014-2015. Out of Rs. 1,575.19 crore sales, CARBOGEN AMCIS has accounted for sales of Rs. 771.25 crore (previous year

611.35 crore),Vitamin D and speciality chemicals business has accounted for sales of Rs. 227.04 crore (previous year Rs. 213.80 crore) and CARBOGEN UK Ltd. accounted for sales of Rs. 85.35 crore (previous year Rs. 50.30 crore). Remaining sales of Rs. 491.55 crore (previous year Rs. 509.87 crore) was accounted by DPCL and its trading subsidiaries.

Material Costs

• Raw material consumption for the year was Rs. 551.72 crore, as against Rs. 395.94 crore in the previous year.

• Inventory of raw materials decreased by Rs. 5.79 crore during the year.

• Work in process increased by Rs. 67.85 crore and finished goods decreased by Rs. 25.36 crore, respectively.

Manufacturing Expenses

• Manufacturing expenses mainly comprise Power & Fuel Rs. 51.38 crore and Repairs & Maintenance Rs. 72.00 crore. This was against Rs. 45.84 crore and Rs. 58.46 crore, respectively, in the previous year.

• Our Manufacturing Expenses accounted for Rs. 8.77% of sales during the year, as against 8.40% during the previous year.

Administrative, Selling and Other Expenses

• Our major components of administrative, selling and other expenses include rent, rates & taxes, legal & professional charges, clearing & forwarding, travelling & conveyance, and insurance premium, among others.

• Administrative, selling and other expenses for the year amounted to Rs. 166.49 crore as against Rs. 140.49 crore during the previous year.

• These expenses accounted for 10.66% sales during the year, as against 10.88% during the previous year.

Employee Emoluments

• Employee emoluments (other than managerial remuneration) increased to Rs. 423.20 crore during the year, as against Rs. 412.33 crore during the previous year.

Interest and Finance Charges

• Interest and Finance charges during the year increased to Rs. 89.71 crore, as against Rs. 92.05 crore during the previous year.

Depreciation

• Depreciation charges for the current year amounted to Rs. 150.71 crore, as against Rs. 108.56 crore during the previous year.

• Addition to fixed assets during the year was 193.16 crore, as against Rs. 138.27 crore during the previous year.

Provision for Tax

• Rs. 40.88 crore (net of MAT entitlement) was provided during the year towards current tax, as against Rs. 37.66 crore during the previous year. The Company also wrote back Rs. 1.45 crore towards deferred tax during the year, as against provision of Rs. 9.47 crore during the previous year.

Profit After Tax

• Net Profit afterTax for the current year was 119.81 crore, as against Rs. 109.27 crore during the previous year.

Earnings Per Share

• Basic Earnings Per Share for the current year works out to Rs. 14.85, as against Rs. 13.54 during the previous year.

Financial Condition

(i) Secured loans:

Secured loans stood at Rs. 805.96 crore as at 31st March, 2015, as against Rs. 877.74 crore as at 31st March, 2014.

(ii) Unsecured loans:

Unsecured loans as on 31st March, 2015 were at Rs. 126.74 crore, as against Rs. 96.42 crore as on 31st March, 2014.

(iii) Inventories:

Major items of inventories as of 31st March 2015 are as under:

(Rs. in Crores)

Particulars	2014-2015	2013-2014
Raw Materials	145.33	151.11
Work in process	180.07	112.22
Finished goods	97.10	122.36

iv) Debtors:

Debtors as of 31st March, 2015 amounted to Rs. 217.11 crore, as against Rs. 143.97 crore during the previous year.

(C) SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE:

The break-up of Companys total income from the product segments viz. "CRAMS Segment" and "Other Segments" for the last three years is as under:

(Rs. in Crores)

Product Segment	31/03/2013	31/03/2014	31/03/2015
CRAMS	813.25	933.52	1,100.93
Others	458.96	451.80	474.26
Total	1,272.21	1,385.32	1,575.19

The business segments of the Company comprise the following :

Segment	Description of the activity
CRAMS	Contract Research and Manufacturing Segment under long term supply agreements
Others	Bulk Drugs, Intermediates, Quats and Specialty Chemicals and outsourced/traded goods

INTERNAL CONTROL SYSTEMS

Your Company has a well-established system of internal control and internal audit, commensurate with its size and complexity of the business. Your Company has appropriate internal control systems for business processes with regards to efficiency ofoperations,financial reporting, compliance with applicable laws and regulations, among others and with the objective of safeguarding the Companys assets, ensuring that transactions are properly recorded and authorised and providing significant assurance at reasonable cost, of the integrity, objectivity and reliability offinancial information.

All parameters are monitored and controlled at regular intervals. An internal audit is conducted by experienced firm ofchartered accountants in close coordination with finance and account department.The findings ofAudit Team are discussed internally as well as in audit committee meetings. The Audit Committee of the Board of Directors reviews the adequacy and effectiveness of internal control systems and suggests improvement for strengthening them from time to time. The Company is continuously upgrading its internal control system by adding better process control, various audit trails and use of external management assurance services, whenever required.

RISK MANAGEMENT

Our Enterprise Risk Management (ERM) framework encompasses practices relating to identification, assessment, monitoring and mitigating of various risks to key business objectives. ERM at Dishman seeks to minimise adverse impact of risks on our key business objectives and enable the Company to leverage the market opportunity effectively. Global operations and product development for regulated markets pose significant challenges and risks forthe organisation.Such risks, ifnot identified and addressed properly in a timely manner, can adversely impact accomplishment of the overall objectives of the organisation and its sustainability.

An effective risk management framework enhances the organisations ability to pro-actively address its risks and opportunities by determining a risk mitigation strategy and monitoring its progress on continuous basis. Our risk management framework is intended to ensure that risks are identified in a timely manner.We have implemented an integrated risk management framework to identify, assess, prioritise, manage/mitigate, monitor and communicate the risks across the Company.

Senior management personnel are part of our risk management structure. Plant level committees headed by senior management personnel meet at regular intervals to identify various risks, assess, priortise the risks. After risk identification and impactassessment,appropriate strategies are made in line with overall strategic and business planning for managing/mitigating the risks.The Company takes the help of independent professional firms to review the risk management structure and implementation of risk management policies. Audit Committee, on a quarterly basis, reviews the adequacy and effectiveness of the risk management strategies, implementation of risk management/mitigation policies. Audit Committee advises the Board on matters of significant concerns for redressal.

OPPORTUNITIES & THREATS

Major large pharmaceutical companies across the world have been witnessing a significant number of blockbuster drugs going off patent over the last few years. The new drug discovery process is also becoming more difficult with reducing success probabilities and increasing research and development costs. Furthermore, increasing competition from generic drugs is exerting pressure on the margins of the innovator pharmaceutical companies. This has opened up strong outsourcing opportunities to CRAMS players as their advantageous cost structure, shorter development times and incremental consulting expertise allows bigger pharmaceutical and biotech companies to better address future portfolio needs.

In addition to the above, another major development has been on the New Molecule Entities (NMEs) front. Most of the recent innovation in this segment has come from small to mid-sized bio-pharmaceutical organisations. This has changed the dynamics of this business as the large pharmaceutical players are increasingly become mainly marketing and finished dose form organisations.

Dishman has been able to capitalise on both these opportunities. The Company has rightly laid its focus on not only large pharmaceutical companies, but also on the small to medium pharmaceutical and biotech players. The Company continues to remain one of the leading manufacturers ofvarious APIs/Intermediates and specialty chemicals of best quality.

INFORMATION TECHNOLOGY

With the changing scenario, your Company is also adopting the best technology from time to time. This year, your Company has implemented a Disaster Recovery Site. The Company has implemented MRP module for in-time inventory control. The Company also plans to upgrade latest available technology in security. After successfully running the SAP, your Company is now planning to implement SAP Costing Module, Business Intelligent for taking effective decisions. The Company also wants to start its activities on the E-procurement module, upgrade its network from Megabyte to Gigabyte and upgrade its servers from time to time.

INDUSTRIAL RELATIONS & HUMAN RESOURCE MANAGEMENT

The Company has continued with its drive to institutionalise and upgrade its HR Process.The diversified skill sets employees possess add significant worth to a company. Every organisation which values and appreciates its human resource always succeed in their goal and receive positive results as they are Human Capital ofthe Organisation. Dishman always believes in the concept of human empowerment. The Company has focused on improving its process relating to Training, Development and Performance Management. It plays a pivotal role in growth of the organisation. It is not shown in the corporate balance sheet, but influences appreciablythe growth, progress, profits and the shareholdersvalues. Now- a-days workforce is key asset for progress of organisation.

During the year, your Company continued its efforts aimed at refining the HR policies and processes to enhance its performance. The vision and mission of the Company is to create culture and value system and behavioural skills to ensure success of its short and long-term objectives.

As on 31^st March, 2015, the Company has 862 employees on its roll. The Company is committed to attract, retain and develop the talents in the journey of continuous improvement progress both within and outside India. Industrial Relations continue to be cordial.

CAUTIONARY STATEMENT

Statement made in the Management Discussion &

Analysis describing the Companys objectives, projections, estimates, expectations may be "Forward-looking statements" within the meaning of applicable securities laws & regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand supply and price conditions in the domestic & overseas markets in which the Company operates, changes in the government regulations, tax laws & other statutes & other incidental factors.