Jupiter Bioscience Ltd Directors Report

JUPITER BIOSCIENCE LIMITED ANNUAL REPORT 2010-2011 DIRECTORS REPORT Dear Members, Your Directors have pleasure in presenting herewith the 26th ANNUAL REPORT together with the Audited Statement of Accounts of the Company for the year ended March 31, 2011. FINANCIAL HIGHLIGHTS: The Financial Results for the year ended March 31, 2011 are as under: (Rupees in Lakhs) Year ended Year ended 31.03.2011 31.03.2010 Sales 25310.82 18394.31 Other Income 14.71 6.13 Operating Profit 10992.42 9563.70 (Before Interest 2550.15 2314.83 and Depreciation) Interest and pre-payment Premium Depreciation 4448.08 3520.70 Profit before Taxation 3994.19 3728.17 Provision for Taxation 796.06 633.79 Provision for Taxation 0 0 Earlier Years MAT Credit Entitlement (796.06) (633.79) Provision for Fringe 0 0 Benefit Tax Provision for Deferred 234.65 413.94 Tax Profit after Taxation 3759.54 3314.23 Appropriations: General Reserve 750.00 750.00 Dividend 624.33 322.67 Dividend Tax 106.14 54.85 Surplus Carried to 17452.14 12205.65 Balance Sheet During the year under review your company recorded growth in sales in-spite of tough economic environment. The sale has risen by over 37.60% and the profit after taxation has gone up by 13.44% as compared to the previous year. This was achieved in spite of a difficult business environment in the last financial year. The Companys long term strategy with focus on R&D and product development has enabled it to withstand the pressures of the recession and achieve growth in sales during the last financial year. The company introduced a range of new products in the peptide business the significant one being the launch of Generic peptides APIs. Your Company is consistently working towards improving the yields in its manufacturing processes. During the last year, the focus was also directed towards improving the yields and process optimization for manufacturing many of the existing products which have provided us significant savings in our manufacturing costs. Your companys Research platform is directed towards process innovation and development to arrive at cost effective processes for manufacture of advanced organic intermediates/penultimate intermediates and generic APIs where cost is the major driving force. Within these technology platforms the company has multi-process capabilities. With its R&D focus your company is able to not only develop products quickly but also able to bring down the costs significantly and remain competitive. DIVIDEND: Your Directors have recommended dividend after achieving a good growth in profit during the year. A Dividend @10% per Equity Share (Re.1/- on the Paid-up Equity Share of Rs.10/- each) for the financial year 2010-2011. The dividend payout will aggregate to Rs.624.33 Lakhs and the dividend will be paid to all eligible equity shareholders subject to approval by the Shareholders/Banks/Financial Institutions. TECHNOLOGY FOCUS OF THE COMPANY: The Research and Development (R&D) projects of the company are directed towards supporting the medium and long term business plan of the Company. The Company has experienced and qualified R&D staff with background in organic chemistry, peptide chemistry, microbiology, biochemistry to supports its R&D projects. The company scans for business opportunities in the global pharmaceutical industry for: 1. Products/Intermediates which are not covered under patent 2. Products where patents have expired and price competitiveness post patent expiry is the key driver 3. Products protected by process patents for developing non infringing manufacturing processes. 4. New Products under development (New Chemical Entities) of drug discovery companies for partnership in developing manufacturing process from bench scale to the clinical scale The long term business plan provides direction for building the competence on the technology platform while the medium term plan focuses on developing the products and reducing the time to market. The company is also expanding its business and technological focus on non- peptide generic drug and intermediates based on organic and chiral chemistry by adding products to its existing list. INTERNATIONAL MARKETING AND SALES EFFORTS: During the year the company participated in several trade shows to show case its capabilities and products. The list of the shows participated is mentioned in the table below. The company participated in various trade shows across the globe and has received significant leads which can be converted into prospective business in the near future Name of the Exhibition Date & Place The Peptide Cambridge Conference 2010 United Kingdom March 30-31, 2010 CPHI Japan 2010 Tokyo Bigsight Exhibition Centre Tokyo, Japan April 21-23, 2010 BIO 2010 McCormick Place, Chicago IL, USA May 3-6, 2010 31st EPS 2010 Bella Centre, Denmark September 5-9, 2010 CPhi World Wide Paris Exp Porte 2010 De Versailles Paris, France October 5-7, 2010 Peptide Formulation Austria and Product December 2-3, 2010 Development Forum 47th Japanese Peptide Kyoto International Symposium 2010 Conference Centre Kyoto, Japan December 4-9, 2010 Company is focussed on high end, high quality business, in domestic and International markets, with big pharma companies in India and Mutlinational companies overseas. This will result in profiling the Company in International market ensuring higher margins and assured cash flows. BUSINESS OUTLOOK FOR COMING YEAR: Visionary in the founder Sri K.S. Sarma who has always thinking ahead and initiated with Jupiter family. The company continued to focus on organic-chemistry to be in the Niche market of the high-end intermediates for the generic and research pharmaceutical market globally. The company today achieved the positioning of only of its kind business model based on technology in peptide pharmaceuticals. The companys future R&D will be to augment capability high-end Peptide Building Blocks, Specialty, Organic Intermediates and Chiral intermediates. To achieve the above Jupiter will continue to collaborate with Universities and Academic Institutions, Research Institutions and Researchers. The company continues to associate with the following Institutions: * Indian Institute of Science Bangalore -Process Development for Peptides * Singapore University, Singapore - Novel Peptides * University of California - Diagnostic kit for H. Pylori * M S University Baroda - Drug Delivery Solutions * ICGEB, New Delhi - Human Diagnostic Kit * Deccan Hospitals, Hyderabad - Clinical Trials * Sristek - Clinical Research Services * University of Massachusetts, USA under the leadership of Dr. Louis Carpino who is considered father of Peptide chemistry. CORPORATE SOCIAL RESPONSIBILITY: Jupiter Group actively participates in the welfare of the local community. Our Company in India makes a difference through various Corporate Social Responsibility (CSR) Schemes / efforts which will make a positive difference to the people at large in the various walks of life. STATEMENT PURSUANT TO LISTING AGREEMENT: The Equity Shares of the Company are listed with The Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE) (permitted to trade). Your Company has paid the respective Annual Listing Fees up-to- date. The Company has provided Corporate Governance Report and Cash Flow Statement in this Annual Report and other required details. SAFETY AND ENVIRONMENT PROTECTION: Your Company has been following strict environmental protection standards and ensured that employees health and safety measures are maintained and monitored throughout the plant. CONSERVATION OF ENERGY, TECHNOLOGY, ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: The Companys operations do not involve high consumption of energy. But the Company is taking all the necessary steps for the optimum utilization of energy. The necessary particulars to be furnished under 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are furnished in the annexure to this Report. The particulars to be furnished with regard to Technology Absorption and Research and Development are given in the Annexure-1 to this Report. FOREIGN EXCHANGE EARNINGS AND OUTGO: Your Company has earned Foreign Exchange of Rs. 328.98 Lakhs on account of direct exports during the year 2010-2011. The Company has expended Rs.34,836.09 Lakhs in Foreign Exchange on account of Investment in Jupiter Bioscience Inc., U.S.A., Jupiter Biosicence (HK) Limited Hong Kong, imports of raw materials International travel, and on expenses related to business development during the year 2010-11. The Management has made an extensive survey of foreign markets for the Companys products and several orders are in pipeline and there will be substantial earnings in Foreign Exchange in the coming year. ACTIVITIES RELATING TO EXPORTS; INITIATIVES TAKEN TO INCREASE EXPORTS ETC.,: The company has marketing offices in USA, Switzerland, Japan. The Company has established representative offices and business development offices in Germany, Singapore, Middle East, Denmark and Spain. The company is planning to expand marketing and business development operations during the next six months in the following countries viz. Latin America, Central America, Malaysia, UK, France, Korea. The above initiatives will definitely result in higher foreign exchange earnings in the coming years. The following markets are planned to be focused for different product groups: Peptide Building Blocks: * US, Europe, Japan, Singapore, Canada, UK Peptide APIs: * South East Asia, Latin America, Middle East, India and Neighboring Countries Organic Intermediates: * US, Europe, Japan, Singapore, Canada, UK, India, South East Asia Organic APIs: * South East Asia, Latin America, Middle East, India and Neighboring Countries Chiral Intermediates: * US, Europe, Japan, Singapore, Canada New Initiative: The company will be adding a team of executives in business development in South East Asia, Europe, US and Japan during the next six months time. Strategic Business: The company is also currently discussing with a major contract manufacturing companies in USA and Europe to discuss business opportunities covering the entire expertise of Jupiter. Contract Research: The company has initiated business development effort of contract research business. DIRECTORS: Dr. M.C. Srinivasan retires by rotation in this Annual General Meeting and is eligible for re-appointment. Your Directors recommend his re- appointment. AUDITORS: M/s. A.G.V. Reddy & Co., Chartered Accountants, the Statutory Auditors of the Company retire at the ensuing Annual General Meeting and is eligible for re-appointment. They have furnished a certificate pursuant to Sec 224(1-B) of the Companies Act, 1956 regarding their eligibility for re- appointment and your Directors recommended their re-appointment. SUBSIDIARIES: A. Sven Genetech Limited: Subsidiary of your Company Sven Genetech Limited during the year made rapid strides in synthesis of specialty peptides, launch of new formulations and development of its capabilities in the diagnostics and enzymes areas. Sven proposes to enter new business segments in the coming years. These include * Formulations - Oncology * Biopharmaceuticals * Biosimilars * Enzymes * Neutraceutical APIs B. Jupiter Bioscience Inc. USA: The Companys 100% subsidiary in USA, Jupiter Bioscience Inc. is gearing up for manufacture of custom peptides and generic peptide APIs by the solid phase peptide synthesis. The results of the Subsidiary Companies are attached to this Report along with the statement pursuant to Section 212 of the Companies Act, 1956. C. Jupiter Bioscience (HK) Limited, Hong Kong: The Companys 100% subsidiary in Hong Kong, Jupiter Bioscience (HK) Limited. is established to strengthen its base and presence in South East Asian Countries and other semi regulated markets. The results of the Subsidiary Companies are attached to this Report along with the statement pursuant to Section 212 of the Companies Act, 1956. RESEARCH & DEVELOPMENT (R&D): The company incurred an expenditure of Rs. 1358.55 Lakhs in 2010-11 on R& D. This expenditure was incurred in developing the cost effective route for synthesis of several new peptide building blocks and development of non- peptide generic drug intermediates and APIs. GDR ISSUE: The Company has raised an amount of USD 89.72 Millions through issue of GDRs The company proposes to utilize the GDR issue proceeds for the following purposes. * Setting up/acquisition of new manufacturing facilities. * Upgradation / Modernisation of existing manufacturing facilities. * Investment in subsidiaries * Augmenting long term working capital needs * Part retirement of high cost debt * To meet the capital requirements of ongoing aquisition of companies, new technologies, research and process development. * Any other use, as may be decided by the management for the purpose of expanding its business and increasing the top line and bottom line by introducing the new products. INDUSTRIAL RELATIONS: Your Directors are pleased to inform you that the relations with employees including workmen at all levels continue to be warm and cordial. The Directors place on record their appreciation of the devoted services rendered by the employees. PERSONNEL: The Board of Directors would like to place on record its deep appreciation for rendering impeccable services to every constituent of the Company by the employees at all levels. Industrial Relations continued to be cordial throughout the year at all locations. Particulars of employees required to be furnished u/s 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 are given in the annexure attached and forms part of the report. DEPOSITS: The Company has not accepted any deposits during the year within the meaning under Section 58A of the Companies Act, 1956. CORPORATE GOVERNANCE-Clause 49 of the Listing Agreement.: Your Company has complied with all the recommendations of the Corporate governance code as provided in Clause 49 of the Listing Agreement. The compliance report as recommended, is provided elsewhere in this Annual Report along with a Certificate of Compliance from the Practicing Company Secretary. DIRECTORS RESPONSIBILITY STATEMENT AS PER SECTION 217(2AA) OF THE COMPANIES ACT, 1956: In accordance with Section 217 (2AA) of the Companies Act, 1956 the Directors of the Company hereby state that: * That in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any; * That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so to give a true and fair view of the state of affairs the Company at the end of the financial year and of the profit of the Company for that year; * That Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and * That the Directors have prepared the accounts for the financial year ended March 31, 2011 on a going concern basis. ACKNOWLEDGEMENTS: Your Company wishes to place on record the strong support and interest from all the Shareholders in both retail and the institutional segment. Your Company wishes to place on record the appreciation of continued cooperation support and patronage received from all other stakeholders including government, bankers, suppliers and customers. Your Directors also wish to place on record their appreciation of the service rendered by all employees of the Company. Cautionary note: The statements forming part of the Directors report may contain certain forward looking remarks within the meaning of applicable securities laws and regulations. Many factors could cause the actual results, performances or achievements of the Company to be materially different from any future results, performances or achievements that may be expressed or implied by such forward looking statements. By Order of the Board for JUPITER BIOSCIENCE LIMITED Venkat R. Kalavakolanu Chairman & Managing Director Place: Bidar Date : September 5, 2011 ANNEXURE TO DIRECTORS REPORT: (Information under section 217(1)(e) of the Companies Act, 1956): ANNEXURE-I: FORM - A: CONSERVATION OF ENERGY: (Form for disclosure of Particulars with respect to Conservation of Energy) 2010-2011 2009-2010 1. Power & Fuel Consumption: a. Electricity: Purchased Units 989,549 13,59,912 Total Amount (Rs. in lakhs) 62.11 61.74 Rate per Unit (Rs.) 6.28 4.54 b. Own generation through Diesel Generator: Units 391,786 4,52,500 Total Amount (Rs. in lakhs) 21.94 25.34 Cost per Unit (Rs.) 5.60 5.60 c. Coal: Quantity in Tonnes 4,764 5,453 Total Cost (Rs. in lakhs) 153.19 152.69 d. Furnace Oil - - 2. Consumption per unit of Production Electricity (Rs.) 16.69 26.49 Coal (Rs.) 30.79 46.45 FORM-B: RESEARCH AND DEVELOPMENT (New product development and process development) 1. Specified areas in which R & D is carried out by the Company: The company has focused its R&D in the following areas for the products in its focus segments: i. Process Development ii. Process Optimization iii. New Drug Development iv. Novel Technology Platforms 2. Benefits derived as a result of the above R & D: The entire product range and turnover of the company is a result of the R&D investments made by the company in developing these products. Thus the business growth and addition of products is derived from the investment made in R&D. 3. Future Plan of Action: Apart from peptides R&D activities are focused in following areas: * Chiral Chemistry * Biotechnology * Organic Chemistry Current Focus: Synthesis of Building Blocks for DNA, PNA and RNA: The building blocks for DNA, RNA and PNA are manufactured by the synthetic chemistry. The manufacturing process for these building blocks is similar to that of peptide building blocks because of which Jupiter can get into this business segment. The company has already commenced work on synthesis of these building blocks recently. DNA, RNA and PNA are macromolecules i.e. made up of large number of molecules. Just like peptides are synthesized from 20 basic amino acids these molecules are synthesized from 4 types of nucleotides. The building blocks synthesized from these 4 types of nucleotides are known as oligo nucleotides. DEOXYRIBONUCLEIC ACID (DNA): Deoxyribonucleic acid is a nucleic acid that contains the genetic instructions used in the development and functioning of all known living organisms. The main role of DNA molecules is the long-term storage of information and DNA is often compared to a set of blueprints, since it contains the instructions needed to construct other components of cells, such as proteins and RNA molecules. The DNA segments that carry this genetic information are called genes, but other DNA sequences have structural purposes, or are involved in regulating the use of this genetic information. Simply put the main purpose of DNA is to carry genetic information from generation to generation. DNA is double helical in structure RIBONUCLEIC ACID (RNA): Ribonucleic acid, or RNA, is a nucleic acid polymer consisting of nucleotide monomers, which plays several important roles in the processes of transcribing genetic information from deoxyribonucleic acid (DNA) into proteins. RNA acts as a messenger between DNA and the protein synthesis complexes known as ribosomes, forms vital portions of ribosomes, and serves as template molecule in protein synthesis. RNAs are single standard chains PEPTIDE NUCLEIC ACID (PNA): Peptide nucleic acid (PNA) is an artificially synthesized polymer similar to DNA or RNA and is used in biological research and medical treatments. PNA is not known to occur naturally. DNA and RNA have a deoxyribose and ribose sugar backbone, respectively, whereas the backbone of PNA is composed of repeating N-(2-aminoethyl)- glycine units linked by peptide bonds. The various purine and pyrimidine bases are linked to the backbone by methylene carbonyl bonds. PNAs are depicted like peptides, with the N-terminus at the first (left) position and the C-terminus at the right Synthetic PNA oligomers have been used in recent years in molecular biology procedures, diagnostic assays and antisense therapies. PNA oligomers show greater specificity in binding to complementary DNAs and RNAs. PNAs are not easily recognized by either nucleases or proteases, making them resistant to enzyme degradation. PNAs are also stable over a wide pH range. SYNTHESIS OF PNA: PNA monomers are easily synthesized into oligomers of 20 mer length using the protocols for standard peptide synthesis. Generation of PNA oligomer is carried out by solid phase synthesis process. The purification of the oligomer is similar to peptipes and is carried out by reverse phase HPLC. Expenditure on R & D, Technology Absorption, Adaptation and Innovation a. Efforts in brief, made towards technology absorption, adaptation and innovation.: Technology involved in manufacturing products is completely in-house. Our R&D expenditure is primarily towards process innovation or process development aimed to evolve processes for manufacture of higher value added products. We have built a significant R&D infrastructure over the years and in the process established a long experience in process innovation and process improvement across wide range of technology platforms. b. Benefits derived as a Result of the above efforts: A large number of new products have been introduced by the company, with quality and at a cost which make it very competitive in the market place. Expenditure on R & D: Amount Rs. in Lakhs Particulars 2010-2011 2009-2010 a. Capital 1.19 28.59 b. Revenue 1358.55 1009.83 Total 1359.74 1038.42 FORM - C: FOREIGN EXCHANGE EARNINGS AND OUTGO: Current Year Previous Year 01.04.2010 to 01.04.2009 to 31.03.2011 31.03.2010 Rs. in Lakhs Rs. in Lakhs Foreign Exchange Earnings 9902.55 402.87 Foreign Exchange Outgo 6830.74 1376.70 Net Foreign Exchange Earnings 3071.81 -973.83 FORM-D: ANNEXURE TO DIRECTORS REPORT: Sri Venkat R. Kalavakolanu has been re-appointed as Chairman and Managing Director of the Company on 4th October, 2010, on the following terms and conditions. a. The nature of employment is contractual. b. The remuneration includes all the payments, benefits made to him. MANAGEMENT DISCUSSION AND ANALYSIS: 1. INDUSTRY STRUCTURE AND DEVELOPMENT: Outlook on Peptide Therapeutics: The market for peptides continues to grow in-spite of the prevailing recession due to progress of several peptide based new drug development projects particularly in identification and targeting specific peptide receptors and innovative formulation methods. Some of them are in market and many are in various clinical phases covering a range of diseases such as infections and cancer etc. Pharmaceutical companies are developing more complex peptides with defined structural characteristics designed to achieve a specific biological function. Producing these sophisticated therapeutics requires expertise beyond conventional peptide synthesis capabilities. Similarly, value-added technology will be the key to survival in the highly competitive non-GMP peptide industry. Peptides play an important role in fundamental physiological and biochemical functions in the body. Peptide is a molecule formed by joining two or more amino acids. When the number of amino acids is 50 or less than 50 these molecules are named as peptides while larger sequences are referred as proteins. Peptides are key molecules in the human system and exist as hormones, chemical mediators, and structural components are responsible for maintaining the structure and function of the cell and on the whole entire system. During the past year, some companies have demonstrated success in using its CLIPS (chemically linked peptides on scaffolds)-based peptide mimics of discontinuous protein domains as immunogens in synthetic vaccines. Peptide Manufacturing companies in US & Europe are having multiple synthesis projects under way for peptides in various phases of clinical development, including in Phase III testing. The market for peptides continues to grow in spite of the prevailing recession due to progress of several peptide based new drug development projects particularly in identification and targeting specific peptide receptors and innovative formulation methods. Some of them are in market and many are in various clinical phases covering a range of diseases such as infections and cancer etc. Multinational companies with focus on peptides are establishing manufacturing sites for large-scale cGMP peptide production using solid- phase and Solution-phase. Ongoing manufacturing projects range from very small peptides of 3 to 5 amino acids, to the synthesis of long peptides, exceeding 40 amino acids in length Applications of peptides are growing continuously. The outlook on some of the areas is mentioned below: Peptides in Cancer Therapy: Therapeutic peptides have great potential as anticancer agents. This is because of their adaptability and ease for designing as a drug candidate and also their specificity for target. Leading commercially available drugs in the market in this segment are Leuprolide, Goserelin, Triptorelin, Buserelin etc which are administered for treatment of prostate and breast cancers. Many more drugs are in the pipeline for treating various types of cancer. Various radiopharmaceuticals based on peptides are also being used for diagnosis and therapeutic purpose in cancer. Peptides in Diabetes: Diabetes is an important segment for peptide drugs. Some of the drugs in the market include Desmopressin, Exanatide and Pramlinitide. Desmopressin a generic peptide drug is used for treatment of type 2 diabetes associated with frequent urination and bedwetting. Exanatide is approved as an adjunctive therapy to improve glycemic control in patients with type 2 diabetes who have not achieved adequate glycemic control using metformin, sulfonylurea and/or thiazolidinediene which are common oral drugs for type 2 diabetes. Pramlinitide is the first and only approved medicine in a new class of compounds called amylinomimetics. It is approved as an adjunctive therapy to improve glycemic control in patients with either type 2 or type 1 diabetes who are treated with meal time insulin but who have not achieved adequate glycemic control Peptides in Cardiovascular Disorders: Some of the drugs in this category are Lisinopril and Ramipril. These molecules are derivatives of peptide and are used in treatment of hypertension, congestive heart failure, heart attacks and also in preventing renal and retinal complications of diabetes. Peptides as Growth Factors for Tissue Repair: Peptide fragments are being developed for tissue repair process. When there is damage to the tissue due to injury, peptides and peptide fragments play an important role in the tissue repair process and also act as natural analgesic. Peptides as Vaccines: Live attenuated vaccines have limitations that they have to be stored at low temperature to retain their potency. Moreover, live attenuated vaccines are not available for treating pathogenic bacteria. Killed vaccines are less potent, as they can stimulate the immune system to a limited extend. Hence, the pharma industry has turned its attention towards molecular vaccines. Among the various types of molecules, peptides are attractive candidates for vaccines. One of the areas where peptide molecules are being tried as vaccines is for treatment of large variety of cancers such as breast cancer, cervical cancer, gastric cancer, Peptide vaccines are also being developed for infectious diseases such as Tubercolosis, influenza and SARS. Further peptide vaccines are under investigation for prion diseases and also for neurodegenerative disorders such as Alzheimers disease. Peptides as Anti-Infective Agents: Virtually all life forms express short antimicrobial cationic peptides as an important component of their immune defenses. These peptides serve as endogenous antibiotics that are able to rapidly kill an unusually broad range of bacteria, fungi and viruses. Consequently, considerable efforts have been expended to exploit the therapeutic potential of these antimicrobial peptides. In the last couple of years, it has become evident that many of these peptides in addition to their direct antimicrobial activity, also have a wide range of functions of immunity. For one class of antimicrobial peptides, such as the human defensins, their primary role may even be as immuno-modulators. These properties potentially provide entirely new therapeutic approaches to anti-infective therapy. Peptides in Cosmetics: Peptides have great potential in cosmetics which is emerging as an important area for peptides with several companies entering this segment. Skin is made up of mostly collagen which gives the skin its support and thickness. Young people have lot of collagen because of which their skin is taut and smooth. In contrast, older people have much less collagen which leads to thin and wrinkled skin. Collagen is a protein and is made up long chains of amino acids. When it is broken down, short peptides are formed. Application of topical peptide containing creams increases the formation of collagen in the skin thereby reducing wrinkles. Many peptides are being used and new peptides are being developed for such properties. 2. RESEARCH AND DEVELOPMENT: The company continues to invest in research and development to develop new products, new methods for analysis of these products and improvements in manufacturing process for existing products. Advanced Organic Chemistry: The Advanced Organic Chemistry platform is directed towards process innovation, process development and process optimization to arrive at cost effective processes for manufacture of advanced organic intermediates /penultimate intermediates and generic APIs where cost is the major driving force. During the year the company added special emphasis on process optimization to improve the yields of all the products manufactured by the company Peptide Chemistry: The Peptide Chemistry platform is directed towards developing leadeship across the peptide value chain of peptides starting from peptide building blocks for therapeutics, vaccine and diagnostics for wide range of diseases. Some of the processes were continuous efforts for enhancing the capabilities are as follows: * Friedel crafts reaction * Esterification * Active esters * Mixed anhydrides * Chloro carbonation * Curtious 3. OPPORTUNITIES AND THREATS OPPORTUNITIES: * Market for peptide pharmaceuticals is one of the fastest growing segments in pharmaceuticals * Demand for peptide pharmaceuticals to grow rapidly with large number of molecules in clinical trials * India emerging as a manufacturing base for global pharma * Diversified product range THREATS: * Multi-national companies setting up manufacturing bases in India and China to compete with company * Protectionist policies in Europe, Japan and USA for importing * Increased competition in the industry from entry of new players in both domestic and international markets 4. PRODUCT-WISE OR CATEGORY WISE PERFORMANCE: Sales Rs. in Lakhs Peptides (Peptide Reagents - 11555.04 & Amino Acids) Drug Intermediates - 10581.62 Fine Chemicals - 2690.36 Others - 483.80 Total 25310.82 5. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: Your Company has adequate internal control procedures commensurate with its size and nature of the business. These business control procedures ensure efficient use and protection of the resources and compliance with the policies, procedures and statutes. The internal control systems provide for well-documented policies, guidelines, authorizations and approval procedures. Your company has professional firms on its internal audit panel who review the adequacy and effectiveness of all internal controls laid down by the management and suggest necessary improvements. The senior management reviews on a monthly basis the findings of the internal audit department while the Audit Committee of the Board reviews on a quarterly basis the internal auditors findings and recommendations. 6. HUMAN RESOURCES: Our Philosophy: Your Company attracts and retains qualified, productive and motivated employees. Our Human resource programs are based on the business philosophy and the operational strategy of the Company. Commitment to Excellence: Your Company is committed to multi-skills development of its employees to enhance their performance. Your Companys endeavor is to provide projects which would facilitate the employees to take on a wide range of responsibilities and prepare them with skill sets in broad areas of operations. Commitment to Innovation: Your Company encourage its employees to be innovative and would foster this spirit in all areas of operation particularly R&D. Performance Measurement: Rewards and growth of employees will be based on completely on performance for which the goals will be clearly defined and agreed by the employees. Training and Development: The Training & Development program is designed to provide sufficient training and counseling the employees to successfully perform their jobs and the goals set up for them. In addition your Company also arranges and supports its employees pursue further academic studies such as PhD programmes by post graduate employees. Employee Communication: Employees will receive clear and timely communication on all work related issues. Employee Relations: Employee relations continued to be quite satisfactory. Management never intends to have any bias towards its employees on the basis of race, sex, age and creed. By Order of th Board for JUPITER BIOSCIENCE LIMITED Venkat R. Kalavakolanu Chairman & Managing Director Place: Bidar Date : September 5, 2010