hiran orgochem ltd Management discussions

Cautionary Statement:

Statements in this report on Management Discussion and Analysis describing the companys objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable securities law. Actual results could differ materially from those expressed or implied. Results should be appreciated in the context of unprecedented and unfortunate happening of forfeiture of Fixed Deposit with Euram Bank resulting in substantial erosion of capital. Important factors that could make a difference to the companys future operations include economic conditions, in which the company operates changes in the government regulations, tax laws and other statutes and other incidental factors.

(a) Industry Structure and Developments:

The Indian Pharmaceutical market (IPM) is highly fragmented with about approx. 24,000 players in total. The market is dominated majorly by branded generics which constitutes of nearly 70% to 80% of Indian markets. Lifestyle drugs have become the leading segment of the Indian Pharmaceutical industry. As per the recent study done by institutions the Indian domestic pharmaceutical market size is estimated to touch US$ 20 billion by 2015 from an estimated size of US$11.72 billion in 2009 and is expected to grow at a CAGR of 9.5% as compared to US$ 0.3 billion in 1980. Company is trying to adopt new business models and trying to reach customers by rendering end to end services to stand up to the competitive market. Regulatory interventions are carefully been observed by the ministry and has estimated to have created 2.20 lakh employment opportunities in the pharmaceutical sector in near future.

(b) Opportunities and Threats:

The Indian pharmaceutical industry opportunities lie in increasing demand in generic drugs which gives open market for pharmaceutical companies. The Indian population is also focusing and taking serious on their health lifestyle as compared to past years. Indian industry is also considered as global outsourcing hub for contract research, Biotechnology, Clinical trials and Clinical data management, which shall also support low labor cost benefits. There is enormous potential for developing India as a centre for international clinical trials.

The major threats seen will see rising cost of research & development, the cost of bringing a molecule to market globally is estimated to be from $800 million to $4 billion. The price of drugs is very low, due to intense competition. While India is 10th globally in terms of value, it is 3rd in term of volume of drugs produced.

The Drug Price Control Order 2013 listed 348 bulk drugs under price control and formulations under National List of Essential Medicines (NLEM). The formulation-combinations, which come under NLEM total over 650 now. Price control on drugs, mandated by the 2013 whereby drug Price Control Order (DPCO) has not helped in improving access of these medicines in the country,

The Indian pharmaceutical industry, the most respected amongst the emerging nations, is one of the most sought after sectors from a global collaboration point of view.

Specifically w.r.t. the Company the biggest threat is to manage the huge financial loss due to seizer of retail account by EURAM Bank and closure of its plant by Pollution Control Board. The Company is taking best of its effort and has also filed case against EURAM Bank and on recovery of the amount, sees an opportunity to restart its operations, otherwise it shall be difficult to run the operations smoothly.

(c) Segment-wise or Product-wise Performance

The segment results and other details of bulk drugs and other segment are furnished in the Notes to Accounts.

(d) Outlook

The immediate task in hand is to arrive at an appropriate one time settlement with companys Banker and also to recover the seized amount from EURAM Bank. With this background the future business scenario is difficult to be contrived at the present juncture.

(e) Risks and Concerns

Company is currently focusing to streamline its financial instability of the company, market is currently very tough and competitive. Company is trying its best to adapt the changes in market demand. The Company is presently focusing on debt redemption and business restructuring.

(f) Internal Control Systems and their adequacy

The Company has in place adequate internal control systems and procedures commensurate with the size and nature of its business. These systems and procedures provide reasonable assurance of maintenance of proper accounting records, reliability of financial information, protection of resources and safeguarding of assets against unauthorized use. The management has appointed M/s. Ankita Gandhi and Associates as the Internal Auditor in its meeting held on 13 August 2015 for regular review of the internal control systems and procedures.

(g) Discussion on Financial performance with respect to operational performance

Highlights	2014-15	2013-14
Total quantity of Sales of Own Manufactured Bulk Drugs (in Kgs.)	-	500
Income from Operations	130.48	356.58
(Loss)/Profit before Finance
Cost, Depreciation and Tax	(2769.87)	(552.31)
Finance Cost	0.53	18.26
Depreciation	5.24	150.99
Extra Ordinary Item	-	-
Provision for taxation (Including Deferred Tax)	-	-
Net (Loss)/Profit after Tax	(2775.64)	(721.57)
Earnings per Share (in Rs.)
- Basic	-2.81	-0.73
- Diluted	-2.81	-0.73

(h) Human Resource Development: We recognize the critical role that our people play in the success and growth of the business. It is the skill and the initiative of the workforce that sets the Company apart from its peers in todays technology driven economy. As in the past, the company enjoyed cordial relations with the employees at all levels. Company’s policy is to provide congenial work culture.

Due to closure of the no. of employees as on 31st March, 2015 is 2.

	By Order of the Board
	Sd/-
Place: Mumbai	Kantilal M. Hiran
th
Date: 13 August, 2015	Chairman & Managing
	Director
CIN: L51900MH1983PLC029596	DIN: 00186885
	Address: 103/104, C-wing, Vastu park,
	Evershine Nagar, Malad (W),
	Mumbai, 400064.