Hikal Ltd Management Discussions.

Pharmaceuticals:

An lndustryOverview

The global pharmaceutical sector is at a crossroads. The marketplace is heavily disrupted, characterized by the shifting payer attitudes and patient empowerment. Severa I undercurrents a re shaping the industry. The first shift is the balance of power across the healthcare value chain as governments and insurers take the centre-stage, pressuring pharma companies to reduce prices and demonstrate greater value from their therapies. The second shift is emerging from treatments linked to prevention, diagnostics and cure which is the direct result of innovation. The growth resulting from these shifts will be driven by ground-breaking new therapies.advances in technology and the consu merization of hea Ith through increased access to data by patients.

The Global Pharma Industry which was poised for a healthy growth rate in 2017, only grew at a marginal 1.2% as compared to 2016. The worldwide prescription drug market grew from $814 bn in 2016 to $825 bn in 2017 due to the depreciation of the US dollar against most other currencies, especially Asian countries, as the US is the largest outlet for foreign medicines with a world market share of 39%. This was supported by political uncertainty and several government initiatives linked to tightening costs over drug prices, especially of the olderdrugs.1

While prescription drug sales for 2011 through 2017 grew at a CAGR of only +l.2%, 2018 through 2024 is expected to show a growth of 6.4% CAGR The growth will be driven by the launch of novel therapies addressing unmet needs, coupled with an increasing access to medicines globally. Sales losses from genericization and biosimilar competition could potentially put the brakes on the forecasted growth.2

Prescription drug sales are expected to reach $1.2 trillion in 2024 due to novel therapies addressing key unmet needs as well as increasing access to medicines globally. We believe this is a huge opportunity for our company to capitalise on with our product portfolio presently under development.

Worldwide Prescription Drug Sales 2018-24 in figures2

Highlightsfor20171

•The US market which has been an important contributor to growth, grew 1.8% from $319bn in 2016 to $325bn in 2017 and currently represents 39% of the g loba I market

• Companies are continuing to invest heavily in their futures (building in-house technology or acquiring technology-driven companies) although the cost of bringing an asset to market reached record levels in 2017

•Within the overall global prescription market, drugs classified as biopharmaceuticals (ca.130 + vaccines) reported sales of $197bn in 2017 and now represent 24% of the entire market

*In 2017, drugs derived from mAbwere the fastest-growing sub-segment of the Rx market with growth ofl6.6% to ca.$99.Sbn, representing 12% of the entire market

*2017wasa record year for the FDA approval of New Molecular Entities (NM Es). with 46approvals, up 109% and beating the previous record of45 set in 2015. 34 of them (74%) were traditional small molecules and 12 (26%) were novel biopharmaceuticals.

20180utlookfortheAPI lndustry4

2018 is expected to be a tra nsformative year for the API industry. Over the last two decades, China has become the central, global source of APls and intermediates to the global pharmaceutical industry. This is beginning to change. The prices of APls and intermediates have increased and are on an upward trend. Supply chain security and sustainability can and are no longer being taken for granted by all manufacturers.

While the industry has been focused primarily on low-cost sourcing solutions, the absence of assured supply is something companies need to start preparing foras interrupted supplywill lead to a loss of marketsharethatcompanieswill find difficult to regain.

2018 will also witness the impact of two landmark regulations - new regulations on elemental impurities, and continued enforcement of ICH Qll guidelines. The elemental impurity regulation focusses on the contamination of metals in products and this is often a direct result of the state of the equipment used by a factory. The ability to comply will require manufacturing companies to invest capital wherever necessary. The ICH Qll guideline, on the other hand, mandates manufacturers to have a far wider control of their manufacturing processes, and in some cases that of their starting material suppliers, more than what was required in the previous years. Together, these two regulations are going to put additional pressure on suppliers to comply with the growing expectations of the regulators which will result in increased costs.

In order to create a manufacturing supply chain for APls and key intermediates that reduces dependence on China, companies will have to focus on streamlining costs, creating surplus capacity, intellectual property protection, good history of GMP inspection compliance (ICH Q7 Compliance), obtaining regulatory affairs specialists, infrastructure at the manufacturing sites to ensure environmental, health and safety compliance and identifying skilled project managers to oversee projects for timely execution. Taking into account all the proposed changes, at Hikal, we follow a risk-based approach and have undertaken measures to ensure that we a re prepared for the future.

2018Global lndustry0utlook5

Despite political uncertainties regarding general healthcare, the U.S. is likely to record the largest growth in terms of value, while the so-called emerging markets will require about two-thirds of the entiredrugvolume.

The reasons are obvious: the global population is expected to increase by l.24 percent per year until 2030 and to age at the same time. Increasing urbanization and a growing middle class are making drugs available and affordable for more people and leading to a higher demand for medication.

Pharmaceutical Drugs Growth - On the heels of a slow recovery, global prescription drug sales are forecasted to grow at an impressive annual compound rate of 6.5 percent in the next five years. Worldwide sales are expected to be US$l.06trillion in2022.The industrywill continue to look to emerging markets for growth, albeit not as aggressively as in the past. Among the top 20 pharmaceutical markets in theworld,eightareemerging countries supported by an increasing middle class.

R&D 2 -Worldwide pharmaceutical and biotech R&D is forecasted to grow at 3.1% CAGR to 2024, slightly lower than the 3.6% CAGR from 2010 to 2017. This reduction signals expectations that either companies will be improving R&D efficiencies or less revenue will be directed towards replenishing pipelines. Significant innovation is coming from small niche companies focused on discovering new drugs. Less than a quarter of drugs discovered are brought to market by the big pharmaceutical companies.

Orphan drugs on Rise - The orphan drug market is expected to almost double in the next five years, reaching US$209 billion in 2022. According to the US Food & Drug Administration (FDA). 75 orphan drugs were approved in the United States in 2017, compared to a total of 27 in 2016 and 56 in 2015.

Biologics and biosimilars - Biologics are predicted to comprise more than a quarter of the pharmaceutical market by 2020. The Asia-Pacific region has more biosimilars in development than anywhere else in the world, led by China. China has the potential to become the frontier market for biosimilar drugs. The growth of biosimilars could push the industry into an innovative phase by increasing the use of biologics.

Therapeutics Focus Trends-Oncology leads therapy areas in sales and is likely to accountforl7.5 percent of prescription drug and OTC sales by 2022, more than the next three highest therapy areas combined. In addition to oncology, the largest CAGR growth in the top 15 therapy categories will come from immunosuppressants, dermatologicals, and anti-coagulants.

M&A Investment Trends - 2017 saw a further decline in deal value from 2016, resulting from global economic and political uncertainty. However, 2018 is likely to see an uptick in deal volume as well as value, and an increase in mega deals as the passage of tax reform in the US, the progress of the Brexit negotiations, and the maturation of policy with respect to outbound deal-making from China clears up some of the uncertainty that was constraining M&A in 2017.

Embracing Exponential Changes in Technology - We are in an era of exponential change - a fourth industrial revolution. Emerging technologies are creating a transformative opportunity for life sciences. Demographic and economic changes, increased patient expectations and the growth of personalized medicine are disrupting health care worldwide. Al and cognitive technologies, automation, and computing power are advancing at an accelerating rate. Continuous manufacturing technology and Robotic Process Automation (RPA) are shortening production times and increasing process efficiencies.

Challenges for the Cilobal Pharmaceutical lndustry6

The huge shift of the population to urban areas and the increased accessibility of people to healthcare services has opened doors to a wider target market for the pharmaceutical industry players. These emerging markets are becoming increasingly important for pharma companies. However, to be successful in the market, it becomes essential for companies in the pharmaceutical industry to shift from a marketing and sales-focused model to an access-driven commercial model. Add itiona I ly, with the governments of severa I countries making hea Ith ca re a priority in their policies, the future looks bright for pharma companies. But on the flipside, the market conditions and several other factors might not entirely be in favor of pharma companies. There are several challenges lying ahead for pharmaceutical industry players, which they need to combat before heading on the road to success:

*Healthcare Policy Reforms

The US is the top player in the global pharmaceutical market. However, the changing healthcare reforms are affecting the pharmaceutical industry players in a big way. The Patient Protection and Affordable Care Act (PPACA), which is also known as Obamacare, is expected to undergo some significant reforms under the new government. Though healthcare policy reforms are on the top of the priority list forthe new presidential administration, we are yet to see how these policies are going to affect the pharmaceutica I industry in the longer run.

*Impact of New Technologies on Pharma

Players in the pharmaceutical industry are still unsure about how new digital technologies are going to impact drug development and commercialization. Several industrial experts feel that emerging technologies such as Al and 3D Printing will cause radical changes in the business models, operations, workforce, and cybersecurity. The adoption of these technologies would also have additional benefits such as the ability to establish a digital supply chain in reducing manufacturing costs.

*Increased Focus on Patient-Centric Healthcare

One of the most popular trends in the healthcare industry in recent times is the shift towards a patient-centric care model. Bringing the spotlight to the quality of care given to patients and making them active participants in the treatment process has put immense pressure on the pharmaceutical industry players. Furthermore, increasing regulatory measures are forcing pharma companies to deliver the best quality of services to prevent any regulatory actions.

*Slower Orowth Rate in Emerging Markets

Companies in the pharmaceutical industry have been reaping significant benefits from the emerging markets, but their recent economic slowdown has had a negative impact on the profit potential. The reduction in the GDP of these low-income countries with high pharmaceutical growth prospects has triggered a corresponding reduction in volume growth. Unless these emerging markets pick up on their economic growth, the development of pharma companies in these markets will prove to be difficult.

Indian Pharma Market Scenario 7

The Indian pharmaceutical sector is estimated to account for 3.1 - 3.6 percent of the global pharmaceutical industry in value terms and 10 percent in volume terms. It is expected to grow to US$100 billion by2025. The market is expected to grow to US$ 55 billion by2020, thereby emerging as the sixth largest pharmaceutica I market g loba I ly by absolute size.

The Indian pharmaceuticals market witnessed a growth of7.4%with the market increasing from US$ 27.57 billion in FY16 to US$ 29.6 billion in FY17.

Indian companies received 304 Abbreviated New Drug Application (ANDA) approvals from the US Food and Drug Administration (USFDA) in 2017.

Investments

The Union Cabinet has given its nod for the amendment of the existing Foreign Direct Investment (FDI) policy in the pharmaceutical sector in order to allow FDI for upto 100 per cent under the automatic route for manufacturing of medical devicessubjectto certain conditions.

The drugs and pharmaceuticals sector attracted cumulative FDI inflows worth US$15.59 billion between April 2000 and December 2017, according to data released by the Department of Industrial Policy and Promotion (DIPP).

Government Initiatives

Some of the initiatives taken by the government to promote the pharmaceutical sector in India areas follows:

*In March 2018, the Drug Controller General of India (DCGI) announced its plans to start a single-window facility to provide consent, approvals and other information. The move is aimed at giving a push to the Make in India initiative.

• The Government of India is planning to set up an electronic platform to regulate online pharmacies under a new policy, in order to stop any mis use due to easy ava i la bi lity.

*The Government of India unveiled Pharma Vision 2020 aimed at making India a global leader in end-to-end drug manufacture. Approval time for new facilities has been reduced to boost investments.

• The government introduced mechanisms such as the Drug Price Control Order and the National Pharmaceutical Pricing Authority to deal with the issue of affordability and availability of medicines.

The Road Ahead

The Indian pharmaceutical market size is expected to grow to US$100 billion by2025, driven by increasing consumer spending, rapid urbanization, and rising healthcare insurance among others. Going forward, better growth in domestic sales would also depend on the ability of companies to align their product portfolio towards chronic therapies for diseases such as cardiovascular ailments and with anti-diabetes, anti-depressants and anti-cancers that are on the rise.

The Indian Government has taken many steps to reduce costs and bring down healthcare expenses. Speedy introduction of generic drugs into the market has remained in focus and is expected to benefit the Indian pharmaceutical companies. In addition, the thrust on rural health programmes, lifesaving drugs and preventive vaccines also augurs well for pharmaceutical companies.

Hikal is gaining traction by selling products in the domestic market to local formulators and as partofourstrategyweareexpanding our presence by targeting local manufactures who are looking for quality products to sell in the market.

Compliance"

Data integrity and noncompliance was a focus area in the pharmaceuticals industry from 2014 through 2017. The drug regulatoroftheworlds largest pharma market in the world, the US Food and Drug Administration (FDA) believes that its "increased oversight" in markets outside the home country in recent years has allowed it to effectively identify violations, take action and address issues, ultimately leading to a safer drug supply chain.

The US FDA has made significant progress in its oversight of drugs manufactured in India, including "increased risk-based inspection" of pharmaceutical manufacturing facilities to evaluate compliance with good manufacturing practice requirements. Interestingly, non-compliances are not only limited to India and China. While the situation seemed grave for certain Indian and Chinese manufacturers last year, things have vastly improved with most Indian companies having invested in remediation with US FDA consultants to get their operations compliant. This can be seen from the above table which highlights the fall in Warning Letters (WL) to Indian facilities after a tough2017.

Hikal Continues to Maintain its Strong Regulatory Track Record

Safety and compliance are key principles of Hikals operational strength. Ensuring compliance to current regulatory standards and guidelines is critical for Hikal and our customers. Our culture of building quality into all that we do is continuously reinforced at all our sites and across all levels in the organization which enables us to ca pita I ise on new opportunities in the near future.

We continue to invest significantly in resources, training and infrastructure to ensure that we meet all the global regulatory requirements. Furthermore, we work on a continuous basis with leading global regulatory consultants to ensure that the latest standards of compliance are being met with.

Operational Performance

Contract Development and Manufacturing Organization (COMO) Business Market Data 9

The global pharmaceutical contract manufacturing market was valued at US$ 92.3 billion in 2017. This market is expected to reach US$146.4 billion by 2023, at a CAGR of 8.08%. Owing to the growing demand for generic medicines and biologics, capital-intensive nature of the business and complex manufacturing requirements, many pharmaceutical companies have identified the potential profitability in contracting with a CDMO for both clinical and commercial stage manufacturing.

The biggest factor driving the growth of CDMOs in the pharmaceutical industry is the growing need for state-of-the-art processes and production technologies, which have proven highly effective in meeting regulatory requirements. With the demand for pharmaceuticals continuing to rise and pressure from governments to keep costs as low as possible, contract development and manufacturing organisations (CDMOs) are becoming a popular alternative to investing in internal capabilities and capacity. CDMOs constitute a critical resource for pharmaceutical companies to overcome their current challenges, drive down costs, reduce timelines and deliver the necessary expertise to bring new drugs in to the market. Tasks outsou reed to pharmaceutica I companies cover the entire value chain of the drug life-cycle from drug development and pre-clinical and clinical trials to commercial manufacturing.

Hikal COMO Business Overview:

Hikal has developed collaborations with clients across the globe by building strategic partnerships through value addition to their pharmaceutical products and project requirements. Hikals focus on regulatory compliance, reliability, flexibility and value added technical capabilities have helped the company attract and retain new clients across the value chain.

As part of our contract development and manufacturing services, we offer early-stage R&D services such as synthesis, scale-up, API development, stability studies and method development all the way through manufacturing services, ranging from preclinical R&D material for clinical trial purposes and commercial production, Phases I through IV. We augment these services by combining technology and chemical engineering to provide our customers with the entire gamut of our ca pa bi I ities a long the va I ue chain.

The contract development business was up by 14% in terms of value growth as the volumes for several of these projects increased, supported by the strong growth in the pipeline of projects under development and semi-commercialisation.

Our investment in a structured robust proprietary project management system - DAKSH, the strengthening of a pre-sales team to identify new opportunities and enhancing the business development team with dedicated personnel for the US, Europe and Japan have helped us to achieve our growth targets this year.

We have identified several new opportunities for custom development and manufacturing of intermediates and Active Pharmaceutical Ingredients (APls) which are in different stages of development at our R&T Centre. We have added several new biotech and virtual companies as clients for the development of early stage molecules. Our organisation actively pursues opportunities for clinical molecules in different stages of early phase development as well as product I ife-cycle management from innovator companies.

We have provided process development and manufacturing services for high value complex intermediates in clinical trials for leading innovator companies. A high level of customer satisfaction has led to repeat orders showcasing our technical strength and execution skills on these complex projects. We have also delivered advanced intermediates for NCEswhich are in phase3ofclinical trials.

We developed a process and delivered an intermediate to a US-based biotechnology product development company going as food additive for a global FMCG conglomerate. We expect a repeat orderofhigherquantityin FYlS-19.

We delivered another intermediate to a leading US company for one of their APls under development. Nextyearwe expect a repeat order of two intermediates going into a new generation API to be launched in Japan. Additionally, business for the supply of a versatile chiral intermediate going into high-value Prostaglandin API is also expected. We will supply an intermediate going into Phase 1 of the oncology product used for treatment of breast cancer and investigated for different types of cancer developed by a biotech company. As part of our revolving and robust pipeline, we have been contracted by a US company for process development services for a food ingredient.

Our long-term contract manufacturing agreement with a leading European innovator to exclusively manufacture molecules grew significantly in terms of volume and, based on the forecast provided by the client, is expected to grow further in the next year as well. One of these molecules is an anti-epilepsy drug that is widely used to control seizures and the other one is a nootropic drug used for memory enhancement.

We also contract manufacture two large volume molecules, a neuropathic pain reliever and an anti-cholesterol molecule exclusively for a leading US-based innovator company. These products have stringent technical specification requirements. They are for life-cycle extension and the volumes for both these molecules increased this year. The trend is expected to continue in the next year as well.

Hikal is poised to have sustainable growth in the CDMO business through a healthy pipeline of new projects in their early and late stage development, the addition of new clients and growth in the volume of existing products being supplied to global innovator companies.

Capacity Expansion

We believe that significant investment in adding new manufacturing capacities historically has resulted in economies of scale and has helped us in consistently gaining market share for our key products. The company plans to strengthen this further with additional investments both in ca pa city and infrastructure to cater to our customers future needs.

This year we invested to increase the capacity for one of our large products to cater to the increasing demand across the globe. The product itself is growing at a significant rate globally. This will give us a significant boost in revenues for FY 18-19. We also invested in further modifications of existing blocks to de-bottleneck and streamline existing capacities.

We also initiated investment at our intermediate facility (Panoli) and have drawn up plans to convert this facility into an API plant that would cater to both the generic API, and our contract development and manufacturing business.

We also invested further in R&Dwith a separate solid-state chemistrylabthatwould help resolve issues related to physical properties of an API and deliver the product quickly with the right quality. This had been a bottleneck in the past, however with the lab currently in operation, the benefits are already being realised.

Our Development and Launch Plant in Bengaluru is also the beneficiary of a significant investment. Additional reactors have been added and modifications have been made to cater to the increased demand of pipeline products coming from the R&T Centre for our innovator clients. Eventually, we expect the US FDA to audit this facility which would become the centre for all small molecule supply to global innovators. These supplies would be intended for clinical as well as commercial quantities depending on the volumes.

For FY 18-19, we expect to further add new multipurpose manufacturing plants. Based on demand of our existing molecules and the new pipeline that is under development, we will need to add on capacity.

Hikal CenericAPI business

Market Data-API Industry 0

The API market (Captive + Merchant) was valued at US$ 152 billion in 2017 and is projected to reach US$ 219 billion by2023, ata CAGR of6.4%.Although, the industry grew at a healthy rate, it was a tough year for the industry as the prices of raw materials and intermediates moved up substantially. Stable supplies of key raw materials could not be guaranteed as the Chinese Government clamped down on factories which failed to comply with environmental norms.

Although India submitted more than 50 percent of the drug master files (DMFs) for APls to the US Food and Drug Administration (US FDA), many of the APls and key starting materials (building blocks) were sourced from China. In addition, concerns over GMP compliance continue to emerge out of India and China. While the numberofnon-compliancesfor API manufacturing were relatively low in 2017, we expect the US FDA to overcome its staffing challenges this year and increase its inspections in Asia.

Shift from China

Although dependency on China could clearly see the implication in shortage of supply and API prices going up, year 2017 also saw several formulators and API manufacturers looking for alternatives in India, Europe and the US for advanced intermediates and the APls. We expect this to be an opportunity for Hikal as a reliable and compliant company.

Hikal Performance

For FY17-18, our generic API business registered a sales increase of high single digits on a year-to-year basis. This was lower than our budgeted sales as some of the key commercial APls did not pick up in terms of volumes due to pricing pressures in the final market and availability of raw materials from China. Despite higher prices of raw materials, we could increase our total volumes.

During the second half of the year, availability of certain key raw materials and advanced intermediates from China became a major challenge for us which impacted margins. However, we managed to pass on a majority of the price increases to our customers and tried to make up the remaining with process improvements and manufacturing efficiencies. The availability of raw materials and continued pressure on prices is expected to continue. We have already instituted a risk mitigation plan by developing and partnering with multiple vendors locally in India and or making the raw materials in-house through backward integration. We are also taking preliminary measures to increase our capacities, streamlining the supply chain, improving processes and reducing utility costs to maintain our profitability going forward.

We have had several successful audits from our innovator and generic customers, both on quality and environment, health and safety this financial year with no major observations. We believe that our exemplary track record with the global regulatory authorities is likely to have a positive impact on the business prospects of the pharmaceutical division. We have significantly invested in both the sites to ensure thatwecomplywith all the global regulatory standards as partofourcommitmentto quality.

For generic drug companies, we supply several APls for multiple therapeutic indications and work well in advance of drug patent expiration to provide non-infringing processes and support in the filing of Drug Master Files or Certificates of European Pharmacopoeia. This year we filed 3 Drug Master Files (DM Fs) which included both al ready generic and to be generic products.

Our three-pronged strategy for API development (already generic, to be generic and future generic) will help generate revenues in the short-term, as well as build a pipeline from a long-term perspective. We continue to work on newer technologies and develop innovative processes that will differentiate us from other API suppliers. Going forth we will file DMFs with novel processes having identified 6-8 new products for generic development. Furthermore we intend to file 5-6 DMFs to develop a healthy pipeline of commercial APls every year. The products selected will be a combination of client requirements and niche molecules where we have a definitive technology edge, to gain market share backed by our expertise in advanced chemistry and backward integration.

We have invested significantly in the generic API business both in terms of personnel and manufacturing capabilities. We have strengthened our R&D infrastructure by starting a solid-state chemistry laboratory that will help us serve our customers better in terms of getting the right polymorphs and particle sizes of APls. We are also looking to commercialize some of the niche technologies such as flow chemistry and the-already-commercialised biocatalysis technology.

Several cost rationalization initiatives were undertaken at our pharmaceutical manufacturing plants. We have undertaken process innovation for our legacy life-cycle extension products that are facing pricing pressurewhilewecontinuetoconsolidateourmarketshare.

We are in the process of expanding our Panoli facility for API manufacturing. This will help de-risk our Bengaluru plant for manufacturing APls. Our strategy of a two-site production base will enable us to cater to increased volumes and offer a wider range of products.

Animal Health

Market Overview 11

The global animal health market was valued at US$ 32 billion in 2016 and is expected to reach US$ 53 billion by2025expanding ata CAGR of5.6%from2017to2025.

The an i ma I hea Ith market is broadly divided into the below segments:

Animal Health Market, by Animal Type 12

Up-surging demand for animal protein due to increasing consumption of meat is a major growth-rendering factor for the farm animal market size. With the objective to scale up production of healthy animals, the use of various animal healthcare products such as drugs, biologicals and medicated feed additives has been increasing considerably. Along with the ever-growing population, thedemand for animal meat will certainly rise intheyearstocome, resulting in market growth.

The companion animal healthcare market is positioned to expand rapidly over the coming years. Globally, pet adoption rates are soaring as people opt increasingly for animal companionship. With rising disposable incomes of pet owners, spending on pet healthcare should increase more than ever before.

Animal Health Market, by Region

The European animal healthcare market accounted for more than 25% of the industry revenue in 2016. The regional industry participants are significantly spending on R&D activities to develop better animal healthcare solutions. The UK was amongst the leading regional animal healthcare markets in 2016. Restriction on the use of antimicrobials should hamper the industry growth over the forecast period.

Extensive animal husbandry practices fuel Indian market growth. The country is a home to more than 10% of the global livestock population and ranks among the largest producers of cattle, chicken and fish. Rising awareness about animal health should boost demand for animal healthcare products. Many industry players are venturing into this market with an objective to explore and exploit lucrative growth opportunities.

The Chinese market is projected to grow at over 10% CAGR over the next few years. Favourable government initiatives regarding pet keeping, increasing disease awareness among pet owners and advances in new product development shou Id drive reg ion a I industry growth.

Feed additives is the largest product segment. Pharmaceuticals are anticipated to register the fastest growth in the product types. Overall growth in the animal health sector is expected to be driven by the following factors:

•Rising prevalence of animal diseases and their spread to human beings

*Growing demand fora protein-rich diet has resulted into commercial farming of milch and meat

*Increasing trend of adoption of companion animals causing a rise in the number of veterinary diseases

•An i ma I immunization made compulsory by the regulatory authorities

North America held the largest market in the geographical segment

Hikal Performance

As a company, we have put in significant efforts in growing our animal health business. As part of our future strategy, we plan to treat this business as a separate unit as it requires a dedicated and focused effort. We have been able to establish a healthy business relationship with four of the top eight global animal health companies in the world and we are in active discussions with the remaining.

Under an exclusive manufacturing contract with a leading US-based veterinary drug innovator, we manufacture a non-antibiotic veterinary drug API that is used to prevent coccidiosis, a disease that threatens newly arrived cattle that often have a compromised immune system. We had invested significantly last year to expand capacity for this product. This year the volumes increased substantially, and we expect them to remain stable during FYlB-19.

We have also developed twoAPls in this segment. One of them has a dual application and is also used as a human health product. Additionaly we have also filed a US DMF this year and realised revenues for sales of the product in this financial year. For the second product, we will be submitting our first US Vet Master File (VMF) in FYlB-19. We have developed several advanced intermediates for some of the new generation ectoparasitic (Anti-Tick) APls and are already seeing interest from severa I customers globally and expect to com mercia I ise these products in the near future.

Strategy and Future Outlook

Despite a challenging market, where prices for products globally and especially in the US were down, increasing price pressures and regulatory hurdles, we believe we can maintain our course of sustainable growth in the coming years and have already charted our strategy to take the organization to the next level of growth.

We believe the product pipeline for the API business is strong and the focus in the areas of Central Nervous System and the Anti Diabetic portfolio will pay rewards in the future. In order to be successful in the CDMO business, close cooperation and communication between our customers and us is critical. On-time delivery, meeting all parameters of quality and compliance, is imperative. This year, we saw the success of our robust project management system which enabled our customers to keep abreast the developments in their respective projects on a real time basis.

Overa 11, we are confident of the prospects of our pharmaceutica I division in the yea rs to come. We see both areas, of contract development and manufacturing and the generic portfolio, growing in terms of volume and value. We have seen a shift in the trend of enquiries for early-stage molecules from large and midsize innovator companies. Growth in funding for early stage companies with their pipelines of early phase candidates is crucial as nothing in drug development happens without APls, and small-molecule compounds still make up the majority of drug candidates. There has been more willingness of global biopharma companies to outsource more of their small-molecule API requirements. We have increased the penetration of customers on the generic side who are looking for security of supply due to concerns about compliance with some of their API suppliers. We have increased our tech no logy tool box and, combined with our new ca pa city coming onstrea m, we a re extremelywel I-positioned to ca pita I ise on the opportunities in the near term.

Future Areas of Focus:

•Apart from increasing sales, we plan to register sustainable growth by keeping a close look at Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA), and Return on Capital Employed (ROCE)whichwill improve through the introduction of newer niche molecules

•We will continue to invest in increasing capacity and throughput to improve the market share for old products as well as cater to requirements of the new portfolio of products being developed

• Envi ran ment, Hea Ith, Safety and com pl ia nee remain a key priority for ongoing operations *Wewill continue to invest in human resources as skilled manpower remains a key factor in our growth *Our target is tofile4-6 new DMFs in FY18-19 forourgenericAPI portfolio

• Pre-formulation and formulation development as part of Research & Technology is being evaluated asa long-termstrategytoaddvaluetoourcustomers.

• Newer technologies on the process side such as flow reactors, recently commercialised enzymatic processes to improve productivity and throughput are being implemented for the new product portfolio.

Crop Protection

The Olobal Agrochemical Market in 2017

The Global Agrochemical Market in 2017 for both crop and non-crop grew by 0.5% to US$ 61 billion at the ex-manufacturer level. 2017 saw a major bout of industry restructuring which is reshaping the landscape for the crop protection and the seed industry. Two of the three major deals involving the six largest crop protection companies were completed. Those three were: Dows merger with DuPont, ChemChinas acquisition of Syngenta, and Bayers proposed acquisition of Monsanto. The divestments resulting from the deals meant that other players were not directly involved in these deals. These were BASF, FMC, Nufarm and Amvac.

OlobalAgrochemical MarketValue($m.)

Sales ($m.)

Crop Protection

Non-Crop

Total Agrochemical

2012

52,617

6,520

59,137

2013

56,430

6,512

62,942

2014

59,930

6,615

66,545

2015

55,379

6,882

62,261

2016

53,582

7,106

60,688

2017P

53,695

7,331

61,006

TheOlobal Crop Protection Market

In crop protection, a key driver of market growth for 2017 was the increased price of glyphosate and other products emerging from China. The crackdown on production in the country due to environmental reasons and the financial pressures experienced by the increasing number of Chinese companies was a key factor of the price inflation.

On the negative side, crop prices remained low, impacting farmer incomes, while product inventories in some markets, notably Brazil, remained high. Global chemical-based crop protection sales inched up by 0.2% to US$ 53.6 billion at the distributor level in 2017. The market in real terms declined by3% after removing inflation and currency fluctuations.

Olobal Agrochemical Market($ million)

Market segments

201&•

%Change

2017"

Crop protection

53,582

+0.2

53,695

Non-crop pesticides

7,106

+2.9

7,311

Total agrochemicals

60,688

+0.5

61,006

•includes 2015-16 southern hemisphere season; ••includes 2016-17 southern hemisphere season.

Major factors affecting market performance in 2017:

High distributor inventory in many markets

Improving glyphosate prices

US dollar remained strong against most major currencies

Weak crop commodity prices

Return of more favourable conditions following the El Ni rio weather event Return of normal monsoon benefitted water availability across many parts of Asia High adoption of newtraittechnologies, particularly lntacta soybeans in Brazil

Cilobal Region Wise Sales,

Crop protection sales in the NAFTA region, Asia and the rest of the world are estimated to have increased, while Latin America and Europe experienced declines.

Latin America as a whole and the worlds largest market, Brazil, is estimated to have declined significantly. This decrease can be attributed to: reduced pest and disease pressure, the rise in adoption of genetically modified insect-resistant products which impacted the insecticides market, and the high levels of inventory cou pied with the fi na ncia I and pol itica I tu rmoi I.

The market in Argentina is assessed to have grown slightly, with volume growth surpassing the price decline. However, there is an overhang of product stocks at the dealer level, which is keeping the lid on prices despite the increase in the price of active ingredients originating from China. The Latin American market fell in nominal terms by4.1%,and byB.3% in real terms.

The NAFTA region is estimated to have grown marginally. In the US, cotton performed strongly with planted areas up by around 19%, boosting demand for insecticides and herbicides. The Canadian market is estimated to have performed strongly with large crop areas and favourable rainfall levels. The regional market was up by3.3%and by0.9% in real terms.

The performance in European countries was lower owing to adverse weather conditions, coupled with low pest and disease pressure. The decline was somewhat offset by Russia where the agricultural economy continued to boom despite sanctions imposed by the EU. The regional market fell by2%, falling4.2% in real terms.

Markets in Asia generally performed well. Business in India grew significantly, benefiting from a return to favourable monsoon conditions fol lowing a dry period driven by the El Nino weather event and strong growth in pulse crops.

The markets of South-East Asia a re a Isa estimated to have performed wel I. An import ban on rice and maize in Indonesia boosted domestic crop prices, while Thai product prices increased due to a shortage of supply from China. The Japanese market is estimated to have grown by 2%.

In China. overall volumes were down. but with variations among sectors: insecticides decreased, fungicides and seed treatments were flat, while herbicides and plant growth regulators experienced growth. However, domestic prices increased in value terms and so the market still has potential to have grown byupto4%.

In contrast, the Australian market is estimated to have declined significantly. It suffered from adverse weather. which discouraged farmers to invest. In addition, the Vietnamese market is also estimated to have experienced a fall last year, impacted by a late season, low pest pressure and high product inventories. The entire Asian and Australian market rose by 3.1%, 0.9% in real terms.

Sales for the rest of the world rose in nominal terms by2.5%.

Crop protection product sales by region ($ million)
Region

2016*

% Change

2017**

Asia

17,921

+3.11

16,306

Latin America

13,243

-4.1

12,700

Europe

11,849

-2.0

11.612

NA FT A

10,455

+3.3

10,800

Rest of the World

2,335

-2.5

2,277

Total (World)

53,803

+0.2

53,695

•calculated from 2017 growth/decline figure;•• excluding Mexico. Source: Phillips McDougall.

Future Market Outlook

The crop protection market in 2018 is forecast to grow by 3% with much of the growth dependent on what happens to product prices. If the prices of products coming out of China remain high as they have this past year. the value of the market will increase. If on the other hand, the continued poor state of the global farm economy encourages growers to use more generic products, this will dampen any increases in prices.

Another positive factor to look forward to will be the growth of recently launched products as well as revenues to be achieved from new active ingredient introductions during the year. There is potential for up to nine new active ingredients to be introduced this year. including four insecticides, three fungicides, a nematicide and a herbicide. Any new active ingredient launch in the coming months is likelytodriveoverall growth.

In addition, early forecasts suggest that planted areas of all key crops are to rise in 2018 with soybean acreage predicted to increase most, up by 2.7% to a level approaching 129 million. This in turn, shou Id it beach ieved, can be expected to boost ag rochem ica I usage.

Crop prices remained relatively low in 2017 and are not expected to increase in the short term. Certain forecasts suggest that the total area for the major crops will have grown slightly during the year, and with the generally good harvest estimates forthe2017 season, crop stocks can be expected to maintain historically high levels, exerting continued downward pressure on crop prices. The latest USDA figures on crop inventory levels shows them remaining high and increasing in the case of wheat, soybeans, rice and cotton. Overall, 2018 is expected to be a better year.

Hikal Crop Protection

Hikals crop protection division achieved substantial growth of 29.3% in FY 17-18. We ended the year with revenues of~ 5,473 million as compared to~4.233 million in the previous year. Our growth was achieved even though the global conventional crop protection market decreased in real value terms. Our strong performance can be attributed to the successful commercialization of new products in our crop protection portfolio and our continued diversification into the biocides and specialty chemicals market.

This year we succeeded in significantly growing our top line as well as bottom line in the crop protection division despite a subdued global market. The division sales come from contract manufacturing for global innovators which make up approximately three quarters of our revenue and our niche products which account for the remaining quarter, both of which have grown this year. We had a significant increase in the growth of our existing product volumes and higher margins on our new launches.

Our key focus areas are herbicides, fungicides, and insecticides. These are the three main drivers of the crop protection market globally. Our strategy is to target each segment through our dual-pronged model:

Contract development and manufacturing

Own products

Sales of Thiabendazole, one of our legacy crop protection products showed stable growth this year. The product is extremely versatile and used in both crop protection to control mould and other fungal diseases in fruits and vegetables, as well as an anti-parasitic to control roundworms. It is also used in the materials protection industry to prevent fungal growth. We expect sales of Thiabendazole to grow marginally in the near future.

One ofour biggest success stories in FY17-18 came from our Mahad site which has gone through an incredible transformation over the past several years. This year, we successfully commissioned a new state-of-the-art plant to manufacture an advanced intermediate for a key herbicide for one of our global innovator customers. We executed the full scale commercial manufacture of this complex and large-volume on-patent product to fulfil the customers demand in the first year of commercialization. Our customer who is impressed with the on-time delivery, quality and successful scale up of this product, has increased the forecasted volume demand for the coming year and has a Isa awarded us the exclusive supply contract for making the precursor of th is product. This is an example of how we have utilised our project management, technology, engineering and chemistry skills to create value for our customers by being an integral part of their supply chain. This wi 11 add sustained revenues and profits to the crop protection business in the future.

An on-patent fungicide that is used to prevent late blight and downy mildew on Vine, Potato, fruit and vegetables saw a significant increase in volumes last year. This was mainly due to increased demand from the g loba I innovator for whom we manufacture th is product exclusively. The increase in demand was partially due to the destocking activity of the customer in the previous two years which has led to depleted stock levels at our customers end. In addition, multiple new registrations across various geog ra ph ies and introduction of new com bi nation products which use th is fungicide has led to the increased forecast for the next year.

We also manufacture a broad-spectrum fungicide for a leading Japanese innovator company. This fungicide has preventative, systemic, and curative properties for foliar and soil-borne diseases in almonds, peaches, plums, apricots, other fruits and vegetables, golf courses, professional sports fields and lawns. Sales of this key product took a significant hit this year, mainly due to unavailability of key raw materials due to a volatile supply chain situation involving Chinese suppliers. With the improved and positive change in raw material availability, we expect to grow the volumes significantly this year to fulfil both last years pending orders as well as the fresh orders which may even increase substantially beyond the estimates provided by the customer. We are in discussions with our customer with whom we have a long-term relationship about increasing the portfolio of products that we are going to develop in the near future. Late-stage discussions are on for several new products, which when commercialised, will result in higher turnover and profitability.

A fungicide that is used for control of Oomycete disease, for late blight control in potatoes, tomatoes and for downy mildew in vegetables saw a substantial increase in volume last year. We exclusively manufacture this product under contract for a leading European innovator. Based on the projections given by the them, we expect a significant increase in volume again this year.

The volume for an intermediate that is used in the manufacturing of many fungicides increased multi-fold last year as many clients turned to us due to the irregularity in Chinese supplies as the volatility in the Chinese Chemical industry intensified due to stringent environmental crackdowns. The volumes a re expected to remain stable this year.

On the herbicide front, we started manufacturing two on-patent products for a Japanese innovator company several years ago. These products are used predominantly for controlling broad-leaved weeds in water-seeded rice and for seed treatment in cotton crop. The volume of one of these products increased multi-fold lastyeardue to successful commercialization and scale-up at our end and we expectto achieve a similar growth rate this year.

The volume requirements of a niche fungicide that we manufacture for our Japanese innovator client remained stable. Th is special product is a selective new compound with new modes of action for protection from fungal diseases,especiallyin rice crops. Thisyearwecould not meetthe demand ofourcustomerdue to capacity constraints. We have debottlenecked our plants and will supply the backlogged quantities in addition to the next years requirements in FY18-19.

We manufacture a small-volume, niche plant growth regulator for a leading Japanese company. This product increases coloration of fruits as well as enhances fruit quality by increasing the Citric acid content. Last year, the volume remained constant as it were in previous years. In FY 15-16, we commercialized a similar niche product, an insecticide, for a leading Japanese innovator company. Since the client was in the process of developing the market for this innovative product, we did not have any volume demand for it in the last two years. However as expected, the demand has now resumed and is on track for the next year. The successful development and scale-up of such niche products augurs well for our R&T capabilities. Though low on volumes, these products have significantly high profit margins and help diversify our crop protection product portfolio.

As part of our redefined strategy in the crop protection division, we have entered into the biocides and specialty chemicals businesses in order to diversify into new and allied business areas. We have hired a leading global consultant to assist us in identifying opportunities in this segment which is allied to our current business as we have significant opportunities in diversifying our base business from a customer and product perspective.

A broad-spectrum residual herbicide and algaecide that is used in agriculture for pre-emergent and post-emergent control of broad leaf and grass weeds is also used to control weeds and algae in and around water bodies and is a component of marine anti-fouling paints. The demand for this versatile product which has grown multi-fold in the last couple of years is expected to remain at these high levels. We have expanded and debottle necked our capacity to meet the increasing market requirements. However due to unavailability of raw material supplies from China, we were notable to meet the demand of a 11 our customers. We a reworking to develop add itiona I sources for the key raw material in order to deleverage the supply chain risk. We expect this molecule to continue its growth in FYlB-19.

Last year, we successfully commercialized a new insecticide which belongs to a new neonicotinoid class. This product is used to control wide range of insects on rape, maize, fruits and vegetables, and pome fruit and also as a wood preservative to control termites, wood boring beetles and other insects. We expect the volume of this product to increase substantially this year due to the ban on some of the competitor products in the European Union. One more neonicotinoid, that has applications in soil, foliar and seed treatment, is in our development pipeline and we expect to launch it commercially next year.

New Product Development:

Our R&T centre in Pune is at the heart of developing and scaling up new products for our future growth in our crop protection, biocides and specialty chemicals product portfolios. We have several new products in the pipeline, each of which has potential to provide us with significant growth in the years to come. This portfolio is a mix of products for our customers in contract manufacturing and our own development.

We are developing a versatile product that is used as a microbiocides as well as a fungicide. It has a wide range of applications as a preservative in varnishes, adhesives, inks, laundry detergents, stain removers, fabric softeners, leather processing solutions, fluid preservation and in emulsion paints. We expecttoscale up and further commercialise this product in the near future.

We are working on developing a commercially viable process for a complex crop protection product which has recently gone off-patent. This product is used to control a wide range of diseases by pests on soybean, cereals, fruits and vegetables. One more key product in our pipeline is used to control a wide range of pests on cereals, rape and soybean. Both these products involve complex chemistry and technology. We are expecting to complete the complex process development in the next financial year which will enable us to launch them both in the near future.

On the specialty chemicals front, we are working on the development of two products with wide usage in the chemical industry. These products have a wide range of applications including that of an antiseptic disinfectant. We expect to com mercia I ize both these products in the near future.

Future Outlook

This year, our crop protection division showed significant revenue growth despite a lacklustre global market. Market trends for 2018 remain positive. Much will again depend on weather conditions, distributor inventory and farmer confidence in the face of continuing lower crop prices. It is estimated that global market growth in volume terms will be 3% in 2018 however huge uncertainty looms with regard to the availabilityofraw materials from China.

In FY17-18 we continued to add several new products to our portfolio and continued our strategy of diversification. We forayed into new markets and further developed inroads in biocides and specialty chemicals. By focusing on selected products and customers, we have been able to expand our niche portfolio of products. These steps will continue to add to our future revenue growth and profitability.

The development of new products and markets is ongoing and well-established. The complexity of our product portfolios will add value to our customers as we provide them with a secure supply chain. Some of the new products being developed are client-specific while the rest are a part of our own portfolio. We expect these developments and our focused efforts to deliver positive results for our crop protection division.

Our initiative to create data for the registration ofour own product portfolio in several countries is on track. We believe that this will add value to our clients by making it easier for them to register products in global markets and will remove regulatory obstacles to ensure unhindered growth of our products in new markets. This is part of our strategy to increase the value of services and products toourclients in existing and newer geographies.

We see a lot of new market opportunities and are optimistic about the future demand for our existing product base as well as for new products in the pipeline. As per our business diversification strategy, we have already commercialized a few new products where we have a specific technology and sea le advantage.

The growing product portfolio has resulted in a significant amount of capital expenditure. In FY 17-18, we invested substantially in our Mahad site to set up a new automated plant and its supporting infrastructure. That investment has borne fruits. Based on our growth projections, we foresee investment in capital expenditure for setting up new production streams, for debottlenecking the existing production streams and for providing the necessary support in terms of infrastructure and Environment, Health and Safety (EHS) facilities.

As a Responsible Care• certified company, we continue to maintain the highest environmental standards while improving our safety record year-on-year. Furthermore, we invest significantly in quality management infrastructure to ensure the highest quality standards. Waste reduction, energy conservation, and better utilization of raw materials and capacity are also our operational excellence objectives that we targetto achieve everyyear.

Research And Technology

At Hikal, we believe that a robust Research and Technology (R&T) set-up is vital for our organization to differentiate ourselves from the competition. Our business model supports global companies across their value chain: from pre-launch to launch to post-launch lifecycle management, which relies on technology and processes developed by our scientists.

R&D Pharmaceuticals:

Worldwide pharmaceutica I R&D spends tota I led US$165 bi 11 ion in 2017, representing an increase of 3.9% over the previous year. Going forward, R&D spend is forecasted to grow at a CAGR of 3.1% to 2024. This is lower than the CAGR of 3.6% between 2010 and 2017. Similarly, the average annual proportion offorecasted R&Dspend to pharmaceutical revenue is expected to belB.9%, lowerthan the 19.5% observed between 201 O and 2017. Th is reduction sig na Is expectations that companies wi 11 either be proportionally improving R&D efficiencies or that less revenue will be directed towards replenishing pipelines.

The worldwide spend of R&D is expected to go up on a year-on-year basis over the next 5 years, giving us an increased opportunity to capitalise on it as seen in the table below.

Worldwide R&D Spend by Pharma & Biotech Companies (2010-2024) ,

WW Prescription Sales ($bn)

Source: Evaluate, May20l8

Year

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Pharma R&D Spend

128.6

136.5

136.0

138.3

144.4

149.4

158.9

165.l

171.9

177.2

182.6

188.3

193.9

198.8

203.9

Growth per Year

+6.2%

-0.4%

+1.7%

+4.4%

+3.5%

+6.3%

+3.9%

+4.1%

+3.1%

+3.0%

+3.1%

+3.0%

+2.5%

+2.6%

Vl/W Prescription Sales

687

733

720

727

751

743

769

789

830

872

926

997

1,070

1,134

1,204

R&Das%ofWW

18.7%

18.6%

18.9%

19.0%

19.2%

20.1%

20.7%

20.9%

20.7%

20.3%

19.7%

18.9%

18.1%

17.5%

16.9%

Prescription Sales
Generics

60

66

67

70

76

78

80

81

84

89

95

100

104

109

114

Prescription excl. Generics

627

667

653

657

675

666

688

708

746

782

832

898

965

1,025

1,090

R&D as% of Prescription

20.5%

20.5%

20.8%

21.0%

21.4%

22.4%

23.1%

23.3%

23.0%

22.6%

22.0%

21.0%

20.1%

19.4%

18.7%

excl. Generics

R & D Crop Protection:

In the recent past there have been a number of major factors that have affected R&D into the conventional chemical crop protection products. This has been due to a variety of factors, from an increasingly harsh regulatory environment, to the increasing costs of bringing a new product to market. It can take 10 years and cost over US$ 250 million to turn an interesting molecule into a product that farmers can use (from discovery to first sales); on average around 25%, and as much as 40%, of the cost is on researching non-target (including mammalian) toxicology, environmental fate and impacts.

It is clear from the below chart that population growth and greater economic prosperity will drive this demand. Agricultural production will need to increase substantially with limited natural resources. In order to meet this need, it is very clear the rate at which new molecules are being developed and launched is too slow.

Population growth and greater economic prosperity in emerging markets will drive future demand for food and feed production

The above chart and analysis of R&D driven companies in the industry show that of the 42 products currently in development, 10 are herbicides, 18 are insecticides, acaricides or nematicides, and 14 are fungicides.

From 1980 - 2016, 394 new active ingredients have been introduced onto the global market for conventional chemical crop protection products at an average rate of 10.6 products per year. The graph below shows the number of products introduced each year. In 2017, 23 new products were launched by global innovators showing a marked improvement in R&Defforts. 3

Research &Technology-Operational Performance

Our R& T centre at Pu ne focuses on:

Pharmaceuticals (contract manufacturing) Pharmaceutical generics development Animal healthcare molecules

Crop protection,specialitychemicals, and biocides

Our strategy to reduce the dependence on contract development and develop a robust pipeline ofourown products is moving intherightdirection.Weare building a pipeline of Phase II and Phase Ill projects where our scientists identify safe, effective, and economical manufacturing processes using in-house developed advanced technology. We have several projects under evaluation in various stages of lifecycle in the pharmaceuticals division.

As part of our proprietary generics portfolio in the pharmaceuticals division, we filed three US drug master files (DMFs) (Butorphanol,Apixaban & Celecoxib) and 4 certificates of suitability (CEPs) for Europe (Pregabalin, Olmesartan, Celecoxib and Quetiapine). Cost Improvement Projects for many existing Commercial Products was also a strong theme in R&T with second generation processes being developed for several products. This ensures that our company continue to be competitive for several yea rs even after the drugs become generic.

The diabetes epidemic seems to be spreading at an alarming rate amongstthe global populace specially in emerging countries.

At Hikal, we are focusing on developing the Anti-Diabetic Range of Products which holds significant market potentia I as can be seen from the chart below:

In extension of our resolve to develop generic anti-diabetics to beat the growing diabetes epidemic, we have decided to develop a relativelynewclassofdrugs:gliflozins, that has been shown to be more effective than the Gliptins with certain types of patients. This is in addition to two other

Top 5 Anti-Diabetic Products Worldwide in 2024 Source: Evaluate, May2018

WW sales ($ml

CACR

WW Market Share

Cunent
Rank Product Generic Name Company Pharma Class

2017

2024

2017-24

2017

2024

Status
1. Trulicity dulaglutide Ell Liiiy Glucagon-like peptide (GLP) l agonist

2,030

4,622

+12.596

4.496

7.896

Marketed
2. Ozempic semaglutide Novo Nordisk Glucagon-like peptide (GLP) l agonist

4,411

n/a

n/a

7.496

Marketed
3. Jardiance empagliflozin Boehringer lngelheim Sodium glucose co-transporter (SGLl) 2 inhibitor

1,139

3,510

+17.496

2.596

5.996

Marketed
4. Tresiba insulin degludec Novo Nordisk Insulin analogue

1,113

3,387

+17.296

2.496

5.796

Marketed
5. NovoRapid insulin aspart Novo Nordisk Insulin analogue

3,043

2,561

-2.496

6.696

4.396

Marketed

anti-diabetic molecules - Vildaglipitin and Sitaglipitin - that are already a part of the Hikal portfolio.

Our R&T facility in Pune and our Development and Launch Plant (DLP) in Jigani, Bengaluru delivered several contract development and manufacturing projects successfully by ensuring on-time delivery of products. These products consisted of key intermediates for our clients from the US, Europe and Japan. In continuation ofour efforts to develop our DLP further, we have filed a DMF from this site and expect the US FDA to audit it in the near future giving us another flexible asset to ca pita I ise on.

On the animal healthcare front, we have successfully validated a process for manufacturing an opioid analgesic, another very niche high value complex product.

As part of our initiative to improve the cost of goods, we have successfully established a proof of concept for continuous manufacturing of one of our leading Active Pharmaceutical Ingredients (APls) this year. The validation of this concept and manufacturing on a commercial scale are expected to be established next year. When successfully implemented, this batch-to-continuous shift will benefit us in terms of efficiency of the production process, resulting in significant cost reduction which wou Id be a big boost in the fiercely competitive API industry.

In the pharmaceuticals business, our current focus is on introducing better productivity measures and ensuring optimal utilization of all our labs and equipment. We are investing significantly in new technology areas like batch-to-continuous transformation and enzyme-based bio catalysis. R&T infrastructure capabilities such as solid-state lab and particle engineering have been completed this year and are on-stream. DAKSH, our proprietary product management initiative, is providing us bettervisibility and ease of tracking of projects.

In the crop protection business, our R& T team was at the forefront of the successfu I development and commercialization of several new products. They contributed significantly in process optimization, yield improvements and scale-up from lab to commercial scale of these products. We are also working on many new products. Some of these products are on-patent products from innovator companies from Europe and Japan for our contract development and manufacturing business, while others are our proprietary products. These products include herbicides, fungicides, biocides as well as specialty chemicals. Intense process intensification is underway to optimise the processes based on which large volume manufacturing plants would be setup in the medium term.

A laboratory process was developed for a major biocide with significant market potential. This will be scaled up in the pilot plant in the short to medium term.

We are positive that our diversified initiatives in terms of proprietary and contract manufacturing products combined with the R&T consolidation at Pune will deliver significant growth in the near future. We have built reasonable scale and expertise along with agile R&T groups that can deliver sustainable solutions.

We strive to develop new products with cost-effective and sustainable chemistry. Technology Absorption Teams for both the businesses are effectively operating and take on the responsibility to ensure the smooth transfer of process during the scale-up from lab to commercial level. We have enabled access to knowledge and innovation through our Scientific Advisory Board which has several globally renowned scientists.

We continue to invest in developing new catalysts, often working with global leaders in order to substitute existing catalysts that are used on commercial scale as well as to accelerate reactions of new products. Unlike the batch processes, the reactions under study involve gas-solid catalysis and are often continuous.

Cost Improvement projects on existing plant processes are being implemented to reduce raw material consumption thereby maintaining margins.

In line with meeting the increasingly stringent compliance requirement of the pollution-control authorities, it has been decided to start a group in R&T that will focus on the development of effective and innovative processes which will reduce generated effluentsofour products.

On a macro level, China is moving away from manufacturing the low-end and cheaper products that take a significant toll on its environment. This has created severe shortages of basic raw materials, raising costs and impacting the production of some of our major APls and Als. Our R&T has decided to develop processes of many key starting materials and is in the process of developing alternate vendors other than China to secure supplies. To meet these challenges along with the increasing regulatory challenges, our R&T has been increasing its resources (personnel & equipment) in a structured manner.

Research &Technology at Hikal is committed to providing innovative and sustainable chemistry solutions for the industry. We believe that the efforts of our R&T team will create significant growth opportunities for both our crop protection and pha rmaceutica I divisions going forward.

Information Technology

There is a lot oftalk about regarding the potential of digitisation in the chemical industry, just as there is a bout the pervasiveness of dig ita I across society in genera I. We believe that dig ita I wi 11 have a significant impact on many areas of the chemical industry, with the potential to change value chains, lead to higher productivity with more innovation and create new channels to the market. At Hikal, we believe that enabling automation across all levels in the organisation will give us not only an edge over our competitors, but would also de-risk our business when seen as part of our disaster management plan to ensure continuity of business.

We have implemented several IT projects in FY17-18,someofwhich are listed below:

Data Security and Business Availability

Business critical systems and data have been created to be Disaster Recovery (DR) ready

Centralized OS Patch management and monitoring enabled to control Operating System vulnerabilities across all sites

End user data security implemented using encryption tools

Digitalization of all Historical Data

We have created an index-based document storage by scanning all old business documents and transferred these old physical copies in safe custody. This will enable us access to the documents on need basis and wi 11 save us on storage and security.

ERP Upgrade

Our ERP systems add tremendous value to the companys core business functionality. Our ERP is an important business application that coordinates the resources, information and activities required forourcore business processes.

Our orig i na I Oracle ERP (11 i) was implemented in 2005 to manage the busi ness-critica I functions such as Finance, Procurement, Order Management, Enterprise Asset Management and Process Manufacturing. However, as our business has grown multi fold through the yea rs, the old system was not meeting the current and future business needs.

We completed the implementation of the new Oracle R-12 system this year which has addressed several challenges:

GSTCompliances-NewTaxSystem

Streamlining processes across business verticals and introducing best practices through automating key business functions

Improvement planning and supply chain efficiencies to optimize inventory and increase visibilityofstockacross plants

Getting faster and accurate MIS, timely compliance to statutory norms and reporting, group level consolidation

We believe the new system is a strategic tool which will enable us to reduce costs, improve business processes and will help us establish a healthier risk management which is key to real-time information and decision making.

New Hikal Website

In line with our new corporate identity, we have launched our new website to give it a more contemporary look and feel, showcasing our advanced scientific and technical capabilities along with our experience.

Future Strategy

The landscape of chemical manufacturing is changing globally. Greater emphasis is laid on leveraging sophisticated technology to improve productivity of existing plants. As part of our strategy to be a leader in technology, we are evaluating the concept of Industrial Internet of Things (I Ion also known as lndustry4.0.

Transition towards Digital Chemical Plants

The implementation of Industrial Internet of Things (lloD in chemical manufacturing is expected to enable the chemical industry to reach new heights. Through the digital infrastructure, manufacturers such as us will have access to real-time monitoring that helps achieve safety, minimizes product variations and promotes optimal utilization of plant assets. Additionally, lloT supports product development activities through data accessibility that helps understand the nature of chemical composites and materials to develop sustainable and renewable products.

Technology is changing our industry at a rapid pace. We at Hikal are well into the evaluation processofllo Taswe plan to implement several projects in the near future.

Human Capital

Human Resource Management at Hikal plays a strategic role in managing people, processes, and fostering a high-performance work culture in a conducive work environment. Our HR strategy, "Shashwat" has been developed and is fully-aligned with the long-term business goals of both the pharmaceutical and crop protection division. HR at Hikal includes recruiting people, training them, holding performance appraisals, motivating employees as well as workplace communication, workplace safety and driving bottom line performance.

"Shashwat" is the long-term HR Strategy which sets a direction for the complete Human Resources Team and the related stakeholders to align the HR Vision to the Companys strategy, business requirements, goals and mission. The HR Team across all Hikal sites strives towards the accomplishment of business goals and objectives. Every people-process or HR initiative is tested on one basic premise- "Would it help the business or not"

Strategy

To achieve our growth plans, we must have capable people and leaders who are competent and agile. As a company that has grown sustainably in the last few years, we have reached a significant scale in terms of revenue and also in terms of people. Over 1,900 employees work at Hikal across several sites and two business divisions. With this comes several challenges, the main one being how we may ensure that the culture and values of our organisation remain our secure foundation. The aim of our strategy is to support the growth of the business.

As our customers demands are growing, our people must be trained thoroughly to respond effectively. Part of the key to this success is having strong leaders. This year we invested in several leadership initiatives, one being "Lakshya" a training program that we will further integrate across all our sites. To be a market leader, we are utilising technology to identify and map the competencies of all our employees. This will allow us to garner better operational efficiencies and better the use of resources across the company.

We understand that people come with different backgrounds, perspectives, beliefs, abilities, and bring their diversities to the work place. It is universally accepted understanding today that people play an overwhelmingly integral role in building and shaping a business organizations success. At Hikal, we understand that satisfaction, motivation and performance share an intrinsic link among themselves that triggers the individuals abilities to accomplish the desired outcome and contribute to a higher level of success. We are working collectively to establish these characteristics in our organisation.

Key initiatives during the last year have been illustrated below, which played an important role in engaging people effectively.

Values Week

Hikalites across all locations once again came together to celebrate Values Week for the second consecutive year between June 19th and 23rd 2017, to reinforce the Core Va I ues and Culture Pi Ila rs of the organization.

Core Values Culture Piiiars
Customer Oriented Ownership
Innovative Flexible
Quality Focus Reliable
Integrity Team Work
Transparency Sustainability

Hikals Values Week was inaugurated with an address by our Joint MD & CEO. While reiterating the Motto, Vision, Mission, Core Values and Culture Pillars of the organization, the importance of adhering to them at all times while working at Hikal was reinforced. Emphasis was laid on taking ownership, being reliable and practicing teamwork.

Quality Weak

Hikal celebrated its fifth Quality Week from November 27th to December 1st, 2017 with the theme of Quality is everyones responsibility. The week-long celebrations began with an inaugural address by the Joint MD & CEO. Through various real time examples. it was highlighted that as an organization, we have to be quality conscious at all times and must strive to achieve the organizations objectives.

Safety Week

Hikal celebrated the 47th National Safety Week across all our sites from March 4th to 10th, 2018. The theme for 2018 was set by the National Safety Council as Reinforce Positive Behaviour at Work Place to Achieve Safety and Health Goals. Revolving around the same, various activities were planned throughout the week Our development and launch plant in Jigani, Bengaluru was conferred with the State Level Safety Awa rd for adopting Best Safe Practices in the year 2017.

Daksh: Project Management

DAKSH has become an integral partoflifeatHikal.

Last year, the focus was laid on mapping all projects as per DAKSH and monitoring complete processes, their effectiveness and facilitating decision making to hasten deliveries.

Through DAKSH, allocation of resources by Product Managers (PMs) for each task in all projects helped the management foresee the resource bottlenecks and take proactive measures to counter such scenarios.

DAKSH is now seamlessly integrated with all the culture pillars of Hikal. ln thas significantly helped our customers take decisions faster and has reduced our response time to customers.

New Corporate Identity

Our constant effort to ascertain quality applies to everything that we do: right from our systems and processes, to the tone, look and feel of our communications. Hikals new identity was launched inJuly2017andwasimplemented across the company in a phased manner. We launched theHikal Brand Expression Guidelines in the month of January 2018. These standards have been developed for use as a resource by anyone responsible for the creation or implementation of new communication material.

Uday: Employee Engagement Program

Under Uday, Hikals Employee Engagement Program. we have established systems for performance development, career development, succession planning and employee development fully in Ii ne with future business aspirations.

Considerable time & effort has been invested in technical, managerial and leadership development programs across our plants to enhance the competency level of the employees under the capability building arm of Uday. The trainings ranged from inhouse safety trainings, product and process training, cross functional skills transfer to behavioural safety trainings. Training programs were also conducted for carrying out transportation of hazardous cargo in association with specialized bodies Ii ke ICC.

Special emphasis was laid this year on leadership development across all levels and achieving personal grooming and excellence byvirtue of the following programs with a top-down philosophy:

1) APEX (Achieving Personal Excellence) Residential Workshops were conducted right from the senior management to middle management level which helped create more awareness about ones inner self, ensuring better focus of control thereby helping manage ones self and others in the team. The employees who have attended the APEX workshops have already started putting the learnings into practice and have hugely benefited from this unique program.

2) The Hikal Ambassadors Program was a 2-day comprehensive workshop encompassing areas such as business communications and conversational skill, body language and postures, power dressing for success, fine dining and table etiquette, personal grooming, email and telephone etiquette amongst many other offerings. The program thoroughly covered business etiquettes across geographies and cultures; all participants were exposed to various business scenarios and the ways to deal with the same through case studies and actual participation in business meals and role-playing in business meeting scenarios.

3) Lakshya was a 2-day residential training program rolled out for all employees in leadership roles across corporate and business units. The program is unique as it brought valuable insights from traditional Indian literature which made the participants relate to the concepts and facilitated improved interpersonal relationships making working together easy. Lakshya is a mythology-based leadership development program uniquely designed for Hikal. It is based on a basic premise that "transformational change in business can happen by changing behaviour of individuals" and that "every ind ivid ua I is a catalyst for change". Therefore, the tag Ii ne for the program was a Isa "Catalyst for Change".

These unique training programs have helped align all employees on a common platform and have motivated the leader within each one of us. Our constant focus on capability building and updating the competency levels of employees have led to the improved and enhanced levels of performance and commitment.

Campus to Corporate

We believe in developing a robust talent pool across levels. In order to ensure that the best talent joins the organization from premier institutes, campus placements were conducted at institutes such as the Institute of Chemical Technology (ICT). the Indian Institute of Technology (llT) Bombay and Maharashtra Institute of Technology (MIT) among other leading universities across the country.

We take an active role in supporting aspiring engineers by regularly participating in regional on-campus events. We are always on the lookout for engineering talent to augment our team of chemical specialists. As a part of Hikals campus relationship program, we have been consistently sponsoring llT Bombays "AZeotropy annual Chemical Engineering Symposium."

Hikal Mahad organized an industrial visit for the final year engineering students of MIT Pune. The purpose of the visit was to familiarize the students with application of theoretical concepts to industrial processes, and advanced research and manufacturing facilities. The students learnt about the various initiatives at Hikal and were inspired to work with us in the future.

Employee Communication

CEO Connect

CEO Connect is an informal and open platform for people to interact with the Joint MD and CEO. It has helped people express their views and suggestions to the CEO directly. People expressed their happiness at interacting with our leadership. Also, they talked about the inspiring address and appreciated the time spent talking about business goals, strategies and plans.

Town Hall Meeting and Site Management Committee

Townhall Meetings are organized at the sites for sharing whatwentwell and what could have been done betterduring the month, business performance, expectations and felicitating employees under Parigyaan. It is a forum within which the Site Head discusses about the sites performance for the month and the plan of action for achieving next months target. Information is also shared about the activities which were not productive in that month, challenges faced, alternate solution identified, and the support required from cross-functional teams.

Employee Hour

Employee Hour at manufacturing sites were organized with the Operations Head where suggestions were invited from the employees for increasing productivity and motivation levels in the organisation.

Management Committee (MC) Interaction at Sites

The Management Committee interaction meeting was held at different sites during the year. In these meetings, our Chairman & MD shared his thoughts on the culture and values of our Company and the need to be aligned together to achieve our common business goals.

Parigyaan

Our Rewards and Recognition policy, Parigyaan, creates a culture of recognizing accomplishments, extraordinary efforts and the achievements of all employees. Various awards such as Spot Awards, Spark Awards, Employee of the Month have been implemented under this policy. All awardees are felicitated by the Senior Management in Town Hall Meetings and Site Management Committee meetings and special achievers are invited to make a presentation in front of the Management Committee.

During the year, 374 people were given awards under categories mentioned above. People are known to value it and look forward to these recognitions.

The Prestigious Chairmans Excellence Award was instituted to recognize Individual and Team Excel le nee at work.

l. Team Excel le nee Awa rd, given to the teams whose perform a nee had led to a positive impact on the business and operational efficiency

2. Individual Excellence Award, given in recognition of the outstanding contribution made by the individual to process improvement and productivity enhancement leading to transformational results

3. Best Manufacturing Site Award, given in recognition of the exemplary performance of the Site

As the name suggests, the awardees were felicitated by our Chairman & MD and our Joint MD & CEO in a grand ceremony organized by the company. Four teams with a total of 53 employees were felicitated with Team Excellence Award and 4employeeswerefelicitated with Individual Excellence Awa rd. It has certainly motivated a 11 the employees and pushed the perform a nee level higher.

Hikal Womens Forum

We have created a Womens Forum which meets every month to discuss various topics in their area of interest. International Womens Day was celebrated with great enthusiasm across all Hikal sites on March 8th, 2018. The • • • Chairman and Managing Director addressed the entire organization about his vision for the women at Hikal. He unveiled the theme for the day which was in line with the Global Campaign of #PressforProgress. We were also delighted to have Dr. Anita Shantaram - Head, Ethics and Governance at a leading IT enabled Legal support and service company, with us on that day. She delivered an inspiring talk on gender parity and womens rights and shared some of her personal experiences.

Ojas: Employee Wellness Program

We take conscious efforts towards looking after the health of our employees through our Employee Wellness Program, Ojas, under which we have conducted around 20 health programs covering key lifestyle and chronic diseases. These have included industrial health and hygiene workshops, life management & mind power trainings, yoga and de-addiction sessions, diabetes, hypertension, heart disease, stroke awareness and screening programs, cancer prevention workshops, first-aid training, program on diet and nutrition and swine flu awareness. These sessions were conducted with the help of experts and specialists in their respective fields.

Corporate Social Responsibility- Srijan

Corporate Social Responsibility {CSR) enables us to make impactful contributions to all those that we consider our stakeholders. These include our customers. the environment. and society at large. It was with this sentiment that Srijan was conceived. The word Srijan means creating something new - an action or process of bringing something into existence. Srijan is not just our distinctive CSR program, it is an extension of our business-a working example of how we operate in an ethical and sustainable way in all situations.

It is a program that encompasses a ca refu I consideration of human rights, the community, and of the environment.

Over the past few years, we have been organizing several CSR programs to make a difference in the lives of the less fortunate. We have identified less privileged sections of society including children, women & senior citizens and have placed a special focus on the environment and sustainability. In line with our CSR policy and long-term strategic plan, we adhere to a two-pronged approach for project implementation:

l) Structured program based on societal needs-All of our CSR programs are preceded by an exhaustive need assessment exercise. This is jointly undertaken by our partner Non-Governmental Organisations (NGOs),on-site human resource teams and local site management committees.

2) Alliance with established and leading NGOs - For conducting various programs across all Hikal sites, we have entered into a partnership with leading NGOs. Several activities are also conducted directly by our HR with the direct support of our employees.

In FY 2017-18, we ran several programs that went on to create strategic and positive impact in all spheres. Some of the programs listed below were implemented at all our sites that year.

Anahat for environment & ecology protection

Anahat, which means unhurt, unstruckand unbeaten was specifically aimed at creating a measurable change in the conservation of our ecology. Under the banner of Ana hat, we provided infrastructural support to WWF India by helping them procure 25 Digital Cameras for the State Forest Department. The cameras served as a useful tool for forest guards to immediately document crime scenes, signs of illegal activities and wildlife evidence. This contribution aided in the accurate and efficient monitoring of wildlife and documentation.

We, at Hikal, extended our support to the lsha Yoga Initiative, #RallyForRivers which was spearheaded by Sadhguru. This campaign aimed to consolidate public support in the rejuvenation of Indias rivers by recommending a minimum ofone kilometre tree cover across the banks of our rivers. We screened the #RallyForRivers awareness video at all townhall meetings held on Hikal Sites and urged all our employees to come forward and makea positive contribution.

We completed the development of a community park named

Vish ranti, at the Na nga lwadi Ga npati Ghat Ground near our Ma had site. The • park was built in collaboration with an international NGO, the International )A P Association for Human Values (IAHV). The park has been ergonomically designed with a jogging track and comfortable benches for residents to take a seat and enjoy some quiet time in the midst of nature. A boundary wall was constructed around the park and play equipment such as slides were installed for the sake of the children. Several trees were planted in this park by the Hikal Mahad employees to commemorate World Environment Day on June Sth,2017.

Medha for education and skill development

Med ha, which means i ntel I igence or merit consisted of the following initiatives.

Prarambh, a word that means initiation concerned itself with our contributions in the field of primary &secondary education

o Every year we extend financial support to the government schools in the Konasandra, Devasandra, Nosenoor, Giddenahalli and Muthrayaswamy Doddi villages near our Jigani, Bengaluru plant. We sponsor the salary of the school teachers for the entire year, undertake a faculty development program, and provide books and school uniforms to about 215 students. This is the fifth consecutive year in which this annual activity has been undertaken. Our contribution has not only been able to raise the standards of education in these government schools but has also directly improved the academic performance of these children leading to more parents willing to admit their children here.

o We continue to support underprivileged children belonging to different schools in Panoli, Gujarat. Over the years, we have funded the provision of school uniforms, tuition fees, stationery, textbooks, and transportation costs to select children and have helped them attain a secondary level of education. The recipients have been selected on the basis of their academic performance, the economic conditions of their families, and a noticeable motivation in the students themselves to persevere in their education.

o In keeping with one of our longstanding traditions, this year we organized Praveshotsav at the Nana Borasara School in Pano Ii to welcome the students into the new academic year. Our representatives distributed notebooks, school bags and stationery to students from the 1st to 5th standards.

Unnati for employability through vocational training and education

o Unnati meanselevation or improvement. In a pursuit to elevate the quality of music education, especially among the less privileged, we partnered with the National Centre for the Performing Arts (NCPA). We helped them step up their education and outreach initiatives by facilitating a higher level of engagement with students from less fortunate backgrounds. Financial aid granted under the Unnati banner. will help the NCPA consolidate its education and outreach program through faculty development and the purchase of professional-level musical instruments. including a Cello. The Symphony Orchestra of India (SOI), belonging to the NCPA, is alreadycollaboratingwith NGOstoaugmenttheir outreach efforts. This programme will initially focus on conducting smaller workshops that will aim at identifying young, gifted artists who may eventually be absorbed in the NCPAs Special

Music Training Programme. The musical programmes of SOI reaches thousands of people every year, and its aim is to cultivate an appreciation for classical music, whilst nurturing young performers, patrons, and audience members.

o We continue to support the Mehli Mehta Music Foundation (MMMF) in Mumbai in their efforts to extend music education to underprivileged children. Our support has assisted the Foundation in reaching out to 768 full-scholarship students from low income municipal schools. The Foundation has partnered with theAseema Charitable Trust, Muktangan and St. Stephens High School. A group of 30 Aseema students are also involved in the MMMFs choral music project through which all these students will gain an opportunity to perform at the NCPA event alongside students from across the city. Eighteen students from the St. Stephens School are in an instrument program and will further be involved in the Foundations choral music project. The students benefit greatly from these programs resulting in improved confidence, ability to focus, listen, and most of all appreciate music and culture. o Our annual support to the Aai Day Care Sanstha in Pen, Raigad District, helped them streamline their training capabilities and nurture children with special needs by training them in various art forms. Forty-nine students are now a part of the vocational training centre and are learning to be self-reliant and productive. This year the Sansthas special students made nearly 9,000 Rakhis. The beautiful creations of these wonderful children were quickly bought out by almost all the primary and high schools located at Pen. These special students are also trained in making Earthen mice and Modaks for the Ganpati festival. This year, the children made 500 large mice, 11,000 smal I mice, 1,000 mice of different varieties and 2,000 mod a ks. Pa per bags made from 600 kgs of paper and 8,500 cloth bags were also crafted by these special children. In addition to this, they were also trained to make 850 office files and 3,800 candles of different varieties. In the Diwali month of October 2017, these children put their best foot forward and made a range of earthen lamps and floating candles. We, at Hikal, bought these from the Sanstha and gifted every employee with this special memento during the festiva I of I ig hts at our Ta loja site. We also support the Sa nstha in their engagement activities such as the Annual Sports Day and distribute trophies and medals to the champions.

Bunlyaad for augmenting Infrastructural needs In the society

o The Hikal Rural Primary School Development Project for the Zilla Parishad School at Sutarkond in Mahad stands completed. This project under our initiative titled Buniyaad, a word meaning foundation, was carried out in collaboration with the International Association for Human Values (IAHV). A brand new two-storied building with 6 spacious classrooms has now become the pride of Sutarkond. This school, which was once written off by the residents of Sutarkond due to its dilapidated condition, is now standing tall as the pride of the community. The new wing has enabled the school to provide classes till the 10th standard when it was previously limited to the 7th standard only. There has been a decrease in the dropout rate and a 15% increase in the number of admissions this year. Students have shown a keen interest in e-learning, which has resulted in improvement of their academic performance by 45%. Safe drinking water facilities have curtailed the spread of water-borne diseases and, in turn, absenteeism. We continue to support the school and soon plan to makea formal handover to the local authorities.

o We undertook the development of the G hot Camp Government School this year and decided to complete the task in three phases. Phase l activities included interior & exterior painting of the building and fixing structural defects. Phase2 &3will be implemented inthe nextfinancialyear.

Kaushalya for enhancing living conditions through health protection and awareness

Under the banner of Kaushalya, a word that means well-being, we completed construction of Household Sanitation Latrines (HSL) in the Umarwada village near Panoli in Gujarat. This project was executed in collaboration with the Shroffs Foundation Trust (SFT), a Vadodara-based NGO. Under this project. 165 HSL units were created and handed over to the villagers in a bid to end open defecation in the village. The Sarpanch along with other Gram Panchayat members have taken the responsibility of overseeing the day-to-day maintenance of the HSL units which will now cater to the sanitation needs of more than 650 vi I lagers.

We also completed the toilet construction project which was executed in alliance with IAHV in the villages of the Anekal Taluk near our Jigani plant. The handover of 71 toilets has been done to the Sarpanch and the beneficiaries have promised to use and maintain the same. This project has solved the problem of open defecation for about 297 vii lagers including aboutlSO women.

We have also collaborated with the Seva Yagna Samiti, a Bharuch-based NGO, to provide emergency hospitalization services for the underprivileged in and around Panoli. This collaboration project has enabled the poor, falling into categories such as farm labour, street vendors, widows and orphans, to have timely access to emergency services and medication in critical conditions. We are happy to report that, during the period between April 2017 and March 2018, our association with Seva Yagna Samiti has facilitated in the medical assistance of 4,600 patients. An additional 4,267 patients have been provided with medical allied services. During the same period, emergency hospitalization services have been provided to 206 patients and meals were provided to 113,961 beneficiaries.

With an aim towards promoting the practice of good dental hygiene, we organized a Dental Check-up Camp on September 18th, 2017 at the Haraggade Government School near the Jigani plant. About 245 students of the school were evaluated by qualified dentists from Sri Sai Dental Care and were made aware of the importance of maintaining good oral hygiene. All the students were given prescriptions from the dentist along with suggestions for treatment, made on a case to case basis. Information was shared about nearby hospitals providing free treatment. Later, a kit containing toothpaste & tooth brushes were distributed to all the students after completing their check-up. This dental camp went on for one full day, gave the students sufficient information about dental hygiene and educated them a bouttheir current denta I status.

We organized an Eye Check-up Camp on December 18th, 2017 for the students and staff of Konasand ra, Devasa nd ra and Noosenoor Government Schools neartheJigani plant. The eye check-up facility was organized at the Noosenoor Government School. Students and faculty from all the three schools were invited for this camp and eye consultation was provided by qualified

Ophthalmologists from Agarwal Hospital fora total ofl45 participants.

We organized Blood Donation Camps across our sites to promote this good practice of blood donation. At Jigani, this camp was organized to commemorate the Kannada Rajyotsava Day on November 17th, 2017. The camp was organized in collaboration with Sparsh Hospitals wherein a total of 75 employees participated. On the occasion of Quality Week, we joined with Janakalyan Blood Bank, in organizing a Blood Donation Camp on November 28th, 2017. Around 50 employees donated blood on this occasion. The list includes some of the employees who donated blood for the first time. The camp conducted at Hikal Taloja on February 9th, 2018, was conducted in association with the MGM Hospital, Panvel and saw 30 Hikalites volunteering to cumulatively donate 11,100 ml of blood.

Aachana for protecting and preserving our countrys rich art, culture & heritage for fUture generations

Under the banner of Rachana, a word that stands for creation, a number of initiatives were carried out. We, at Hikal, extended support to the Deccan Heritage Foundation India (DHFI), a charitable organization with its headquarters in Mumbai. The DHFI is planning to promote educational programs with the Government of Telangana on the Kakatiya monuments of Telangana. These educational programs will help both students and adults interested in learning aboutthei r heritage and also prepare the younger generation for a better understanding of their culture.

With the aim of facilitating Art Education, we supported Jnanapravaha Mumbai to fund their faculty development program for their Yoga and Tantra Art and Heritage Diploma Course. Jnanapravaha aims to provide a neutra I yet stimulating space for the global exchange of creative Indian thought. The course is focused on the increasing popularityofyoga today and itsglobalized and modernized practices.

We supported the March 2018 issue edited by Naman Ahuja and Latika Gupta for Marg, a Mumbai-based not-for-profit publisher whose mission is to promote interest in Indian art and culture. It strives to light up many dark corners in Indias cultural landscape and to spark debate on all aspects of art and culture among academics, critics, cultural connoisseurs and readers.

Sampark: Establishing a connect of employees with society

Under the banner of Sampark, which strives to contact and connect, the employees of Jigani took 24 children of the Adarane Charitable Trust Orphanage and 40 children of the Govt. Higher Primary School. Konasandra to visit the Ba nerg hatta National Park on August 16th, 2017 and January 31st, 2018, respectively.

Employees from the Jigani plant celebrated Indias 69th Republic Day on January 26th, 2018 with the children of Dyavasandra Government School where they participated in the cultural program organized by the students.

Several women employees from Taloja visited the old age home at Ghot Camp which provides shelter to about 48 senior citizens. They spent quality time with the residents in order to make the day special.