Sunil Healthcare Ltd Management Discussions.

1. OVERVIEW:

Sunil Healthcare limited, having plant atAlwar; Rajasthan for manufacture of Empty Hard Gelatin capsules shell, HPMCand Pullulan Capsules shell. The company has commenced its manufacturing operationintheyear 1976 with installed capacity of 200 million Hard Gelatin Capsule Shell, with gradual expansion, recently in the 4 quarter of financial year 2017-18, the total installed capacity is raised 13 billion capsules p.a. Your company is also in food division since 2013 and during the financial year 2018-19, the food division had contributed 0.36% in total revenueof theCompany.

2. INDUSTRY OUTLOOK:

The product of the Company Hard Gelatin Capsule Shell is used by Pharmaceutical and Food supplement Companies as a container for administering medicines and food supplements. Therefore, the growth of the industry is dependent on the growth of pharmaceutical and food supplement companies domestically and globally.

The committee set up in March 2017 under the Chairmanship of Mr. C.K. Kokate, submitted its report in December 2017 and recommended against the labelling byuseofgreen/red dots to indicate its origin for information of the patients, as it commented that drugs is taken because of compulsion and not because of choice, hence proposal to compulsory switch over to HPMC capsules from The Gelatin capsule was rejected.

So, the scope of growth of marketfor both gelatin and HPMC capsules are tremendous.

As per estimates the pharma industry currently employs about 5.5-5.7 lakh people. In spite of prevailing challenges in the Indian pharma sector, 58,000 additional job opportunities are likely to be created as the industry is expected to grow up to 45 percent by 2025.

Executive Summary

Indian pharma industry is expected to grow at 11-13 percent in financial year 2019-20. The Huge opportunity forjobs in pharma sector is visible as Indian Pharma Sector is expected to grow up to 45% by end ofyear 2025. The exports are expected to reach US$ 20 billion by 2020.

India is benefited with blockbuster drugs companies going off patent and exclusive marketing right which aided the growth for Indian Export formulation period during 2011-12 to 2015-16, however due to wholesale consolidation in US market and rising competition, it had impacted substantially the formulation export players in the financial year 2016-17 and 2017-18 as well, leading to a flat growth rate during the fiscal year 2017-18.

Further, As per CRISL Research, Indian Pharmaceutical sector is expected the growth to recover to 6-6.5% CAGR during FY18 to FY23, aided by new launches by large players in the conventional generics segment. Though pricing pressure in the base business is expected to continue in the US market, it is expected to be less severe from 2019 onwards. Competitive intensity in the US market has peaked out in 2017 and the situation is seen improving.

As per CRISIL Research, Indian Pharmaceutical industry to register growth of 12-13% as rising lifestyle-related diseases and expansion in healthcare penetration due to Ayushman Bharat would boost volume growth. However, the government is likely to continue to keep a hold on pricing. The chronic segment would see faster growth than the acute segment. However, high numbers of cancer related drugs being introduced under NLEM would offset an incremental growth in the segment

Indian companies received 304 Abbreviated New Drug Application (ANDA) approvals from the US Food and Drug Administration (USFDA) in 2017. The country accounts for around 30 per cent (by volume) and about 10 percent (value) in the US$ 70-80 billion US generics market.

Indias biotechnology industry comprising bio-pharmaceuticals, bio-services, bio-agriculture, bio-industry and bioinformatics is expected grow atan average growth rate of around 30 percenta year and reach US$100 billion by 2025.

Indias pharmaceutical exports stood at US$ 17.27 billion in FY18 and have reached US$ 19.14 billion in FY19. Pharmaceutical exports include bulk drugs, intermediates, drug formulations, biologicals, Ayush & herbal products and surgicals.

Introduction

Indian pharma industry is expected to grow at 11-13 percent in financial year 2019-20. The Huge opportunity forjobs in pharma sector is visible as Indian Pharma Sector is expected to grow up to 45% by end ofyear 2025. The exports are expected to reach US$ 20 billion by 2020.

Globally as well as in India, the pharmaceutical industry is rapidly undergoing changes. The Indian pharmaceuticals market is the third largest in terms of volume and thirteenth largest in terms of value. India enjoys an important position in the global pharmaceuticals sector.

Installed capacity of Empty Hard Gelatin Capsule in India is 100 billion capsule p.a.

India is largest exporter of pharma formulation globally by volume of 14% market share and 12lh in export value.

Advantagefor Indian Pharmaceutical Industry:

In India, manufacturing cost is very much competitive as compared to western countries Pharmaceutical Industry. The advantage to Indian Pharmaceutical Industry is shown as underwith the help of chart:

The country also has a large pool of scientists and engineers who have the potential to steer the industry ahead to an even higher level. Presently over 80 per cent of the antiretroviral drugs used globally to combat AIDS (Acquired Immuno Deficiency Syndrome) are supplied by Indian pharmaceutical firms. The UN-backed Medicines Patent Pool has signed six sub-licences with Aurobindo, Cipla, Desano, Emcure, Hetero Labs and Laurus Labs, allowing them to make generic anti-AIDS medicine Tenofovir Alafenamide (TAF) for 112 developing countries.

MarketSize

India is the largest provider of generic drugs globally. Indian pharmaceutical sector industry supplies over 50 per cent of global demand forvarious vaccines, 40 per cent of generic demand in the US and 25 percentof all medicine in UK India enjoys an important position in the global pharmaceuticals sector. The country also has a large pool of scientists and engineers who have the potential to steer the industry ahead to an even higher level. Presently over 80 per cent of the antiretroviral drugs used globally to combat AIDS (Acquired Immune Deficiency Syndrome) are supplied by Indian pharmaceutical firms.

The pharmaceutical sector was valued at US$ 33 billion in 2017. The countrys pharmaceutical industry is expected to expand at a CAGR of 22.4 per cent over 2015-20 to reach US$55 billion. Indias pharmaceutical exports stood atUS$ 17.27 billion in FY18 and have reached US$ 19.14 billion in FY19. Pharmaceutical exports include bulk drugs, intermediates, drug formulations, biologicals, Ayush & herbal products and surgicals.

The Pharmaceutical sector is expected to generate 58,000 additional job opportunities by the year 2025.

Indian companies received 304 Abbreviated New Drug Application (ANDA) approvals from the US Food and Drug Administration (USFDA) in 2017. The country accounts for around 30 per cent (by volume) and about 10 per cent (value) in the US$ 70-80 billion US generics market.

Indias biotechnology industry comprising bio-pharmaceuticals, bio-services, bio-agriculture, bio-industry and bioinformatics is expected grow atan average growth rate of around 30 percenta year and reach US$100 billion by 2025

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 up to 100 per cent under the automatic route for manufacturing of medical devices subject to certain conditions.

The drugs and pharmaceuticals sector attracted cumulative FDI inflows worth US$ 15.98 billion between April 2000 and March 2019, according to data released by the Department of Industrial Policy and Promotion (DIPP).

Some of the recentdevelopments/investments in the Indian pharmaceutical sector are as follows:

• Between Jul-Sep 2018, Indian pharma sector witnessed 39 PE investment deals worth US$ 217 million.

• Investment (as % of sales) in research & development by Indian pharma companies* increased from 5.3 per cent in FY12 to 8.5 percent in FY18.

• In 2017, Indian pharmaceutical sectorwitnessed 46 merger& acquisition (M&A) deals worth US$ 1.47 billion

• The exports of Indian pharmaceutical industry to the US will get a boost, as branded drugs worth US$55 billion will become off- patentduring 2017-2019.

Government Initiatives

Some of the initiatives taken by thegovernment to promote the pharmaceutical sector in India are asfollows:

• In October 2018, the Uttar Pradesh Government announced that it will set up six pharma parks in the state and has received investment commitments of more than Rs 5,000-6,000 crore (US$ 712-855 million) for the same.

• benefit 100 million poor families in the country by providing a cover of up to Rs 5 lakh (US$ 7,723.2) per family per year for secondary and tertiary care hospitalization. The programme was announced in Union Budget 2018-19.

• In March 2018, the Drug Controller General of India (DCGI) announced its plans to start a single-window facility to provide consents, approvals and other information. The move is aimed atgiving 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 misuse due to easy availability.

• 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.

Road Ahead

Medicine spending in India is projected to grow 9-12 per cent over the next five years, leading India to become one of the top 10 countries in terms of medicine spending.

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 such as cardiovascular, anti-diabetes, anti-depressants and anti-cancers thatare on the rise. The Indian government has taken many steps to reduce costs and bringdown 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 the pharmaceutical companies.

The Indian pharmaceutical market size is expected to grow to US$ 100 billion by 2025, driven by increasing consumer spending, rapid urbanisation, and raising healthcare insurance among others. Pharma sectors revenues are expected to grow by 9 percent year-on-yearthrough fiscal 2020.

The Indian government has taken many steps to reduce costs and bringdown 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 the pharmaceutical companies.

3. OPPORTUNITIES:

Even as the Indian Pharmaceutical Industry is groping with the product patent resume in force the domestic companies could leverage the emerging opportunities in the changed scenario to evolve into the global Pharma outsourcing world capital in the near future. Domestic Pharma Companies will increasingly be looking to consolidate across the value chain by partnership or merging with companies that have complimentary strength. The thrust of the company is to increase its exports to the maximum extent and increase its market share in growing domestic market. Indian pharma companies are capitalizing on export opportunities in regulated and semi-regulated markets. And it is expected that due to patent off of many companies the export from India will grow, new affordable pharmaceutical product will be invented for sustainable growth of Indian Pharmaceutical industry.

4. CHALLENGES:

Competition in the global market is a common phenomenon for any industry. The company is also facing the same but is quite competent to handle the competition successfully. In the domestic the numbers of players are increasing and the capacity is also increasing, but market demand is also gradually increasing. The main challenges is to cope up with price war situation.

5. COMPANY OUTLOOK:

Your company is 2nd largest producer of Empty Hard Gelatin Capsules (EHGC) in India and Pioneer in double lock and triple lock technology for capsules in India. The Company had started production of HPMC Capsule in August 2018 and in short span of time the sales brought in from HPMC have led to better performance. The Company had also started production of Pullulan Capsules. Your Company is a Certified Empty Hard Gelatin capsules shell, HPMC and Pullulan Capsules shell Manufacturer in India providing the premium quality capsules to the clients. Your Company was certified by the WHO-GMP, ISO 9001:2015, IS014001:2015, ISO 18001:2007, ISO 22000:2005, Halal, and Kosher & USFDAfor our quality standards. We manufacture the capsules at our state-of- the-art manufacturing unit under the observation of the scientific experts. The materials that we employ in the production obtained from the authorized vendors of the industry. Our capsules are 100% natural and safe as we have tested them on the predefined industrial international norms. Our quality experts ensure the best locking attributes which make the capsules perfect for any use. Your company have Global Presence with Subsidiaries in USA and Mexico during the year.

The company is WHO-GMP certified Company and recognized Star Export House. With four decades of experience, and a strong brand equity "Sunloc", the company is a preferred vendor for large pharmaceutical companies. The company was the pioneer of double lock and Triple lock technology in India. With a strong focus on R&D, the company is constantly innovating its product line to caterto the industry requirements. The management is optimisticaboutthefuture outlook of the company in short, medium and longterm. The Company deals in Business segment of Manufacturing Empty Hard Capsule Shells and the size available is 00,0SEL, 0EL, 0,1,2,3, 4, 5. This segment the company has reached to installed capacity of 13 million capsules at the existing facility. Our Presence in Over 30 Countries across the Globe. The management of the company Continued focus on achieving cost optimization and yield improvements through Economies of Scale. The company also renewed interest in the business with an aim to become top 3 manufactures of Empty Hard Gelatin Capsules shell in world.

The Company has forayed into the Food Business. Sunloc food is a division of Sunil Healthcare Limited. Sunloc foods offer a host of product ranging from food products, procurement of raw and processed Edible Nuts e. g, cashew nuts. During the Financial years 2018-19, the food segment had contributed 0.39% in overall turnover of the Company.

6. RISK CONCERNS:

The Board of Directors of the Company and the Audit Committee shall periodically review and evaluate the risk management system of the Company so that the management controls the risks through properly defined network. Head of Departments shall be responsible for implementation of the risk management system as may be applicable to their respective areas of functioning and report to the Board and Audit Committee. Detailed report on Risk Analysis is a part of this Annual Report. The details of the Risk management policy are available on the website of the company i.e www.sunilhealthcare.com.

7. INTERNAL CONTROL SYSTEM AND ADEQUACY:

The Company maintains adequate internal control system and procedures commensurate with its size and nature of operations. The internal control systems are designed to provide a reasonable assurance over reliability in financial reporting, ensure appropriate authorisation of transactions, safeguarding the assets of the Company and prevent misuse/ losses and legal compliances.

The internal control system includes a well-defined delegation of authority and a comprehensive Management Information System coupled with quarterly reviews of operational and financial performance, a well-structured budgeting process with regular monitoring of expenses and Internal audit. The Internal Audit reports are periodically reviewed by the managementand the Audit Committee and necessary improvements are undertaken, if required.

8. FINANCIAL PERFORMANCE:

Sunil Healthcare reported Gross Revenues from operation 8124.10 lakhs, EBITDA of 1270.52 lakhs, Profit Before Tax (PBT) to Rs. 25.03 and Profit after Tax (PAT) Rs.17.78 Lakhs in the FY 2018-19.

The comparative analysis of financial analysiswith previous financial year are as under:]

(Rs. in Lakh)

Highlights 2018-19 2017-18 % Change
Total Production (Capsules In Millions) 10766 9597 12.18%
Total Sales (Capsules in Millions) 10286 9593 7.22 %
Revenue from Operations 8124.10 9022.48 (9.95%)
Profit before Interest, Dep. & Tax 1270.52 1670.31 (23.93%)
Finance Cost 671.60 503.05 33.50%
Depreciation 573.89 478.25 19.99%
Profit Before Tax 25.03 689.01 (96.37%)
Profit After Tax 17.78 532.39 (96.66%)
Earnings per share (In Rs.) 0.17 5.19 (96.72%)

1. Sales: -There was decrease in the revenue from operation in the current year by 9.95%.

2. Profit Before Interest, Depreciation and Tax: -PBIDT was decreased by 23.93% for the year over the previous financial year.

3. Finance Cost: -Therewas increase in thefinance cost by 33.50% as compared to previous financial year

4. Net Profit: - The net profit decreased by 96.66 % as compared to previousyear.

5. EPS:- The EPS was decreased by 96.72 % as compared to previous financial year

9. HUMAN RESOURCES:

The well-disciplined workforce which has served the company for 44 years lies at the very foundation of the companys major achievements and shall well continue for the years to come. The management has always carried out systematic appraisal of performance and imparted training at periodic intervals. The company has always recognized talent and has judiciously followed the principle of rewarding performance. The Company maintained healthy, cordial and harmonious industrial relations at all levels.

Despite severe competition, the enthusiasm and unstinting efforts of the employee have enabled the Company to remain at the forefrontof the industry.

In todays comparative world where creativity and innovation are increasingly becoming important, development of Human Resource is the call of the day The Company is taking various steps to develop the skills and enhance the knowledge of the human resource which include the following:

a. Comprehensive and userfriendly Performance Management System has been implemented to create a result oriented culture.

b. Development needs have been identified through Performance ManagementSystem.

These needs are being fulfilled through various training programmes and lectures by internal as well as external faculty.

c. RegularTraining programmes are conducted comprising behavioral and technical programme.

Total 187 numbers of Employees are on roll of the company as on March 31,2019.

10. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS, ALONGWITH EXPLANATIONS:

Ratios Variation as compared to previous years with reason
Debtors Turnover No significant changes in Debtor Turnover ratio in FY 2018-19 as compared to FY 2017-18.
Inventory Turnover During the Financial year 2018 -19 InventoryTurnover was less than 41.8 % as compared to Previous financial year 2017 -18 on account of defer red sales from FY 2018-19 to FY 2019-20.
Interest Coverage Ratio During the Financial year 2018-19, Interest coverage ratio is decreased by 56 % as compared to FY2017 -18, on account of increase in cost of raw material by 12% alongwith erosion in sale price by 6%.
Current Ratio No significant changes in Current Ratio in FY2018 -19 as compared to FY2017- 18.
Debt Equity Ratio No significant changes in Debt Equity Ratio in FY2018 -19 as compared to FY 2017-18.
Operating Profit Margin (%) During the Financ ial year 2018 -19, Operating Profit Margin was decreased by 43.6% as compared to FY2017-18, on account of increase in cost of raw material by 12% alongwith erosion in sale price by 6%.
Net Profit Margin (%) During the Financial year 2018-19, Net Profit Margin was decreased by 96.2% as compared to FY2017-18, on account of increase in cost of raw material by 12% alongwith erosion in sale price by 6%.
Return on Net worth During the Financial year 2018-19, Return on Net worth was decreased by 96.7% as compared to FY2017 -18, on account of increase in cost of raw material by 12% alongwith erosion in sale price by 6%.

11. QUALITY INITIATIVE

A) Our Quality policyis:

"We shall produce capsules for customers delight by continual focused improvement plans"

We maintain a consistent quality of our product as per the norms of WHO-GMP. To maintain the stringent quality norms, we have modern quality Control Laboratory equipped with latest equipments and qualified persons operate them. Our Quality Assurance works hand in hand with our production to ensure products of customers requirement

The Company is registered with US FDA, which reflects standard of its quality. The Company has received the following certification in quality which shows further, its quality standards:

B) QUALITY FOCUS:

Your Company had adopted below quality control measures at its plant in overall production process till final disposalfor making its capsules defectfree:

12. INFORMATION TECHNOLOGY

We are using modern technology available for improvement of Business processes across the functions by automating the routine administration tasks and creating various knowledge management databases. The Company also has its web site www.sunilhealthcare.com to provide all the details about the Company and its product. The Company has successfully migrated its operations on the SAP. Through strict vigilance aided by controls and alerts, the Company aims to further improve its operations, bring in greater efficiencies, and further tighten internal controls and systems

13. CAUTIONARY STATEMENT:

Statement in this Report, particularly those which relate to Management Discussion and Analysis, describing the Companys objectives, protections, estimates and expectations may constitute "forward looking statement" within the meaning of applicable laws and regulations. Actual results might differ materiallyfrom those either.

On behalf of the Board Reg. Office:
Anil Kumar Khaitan 38E/252A, Vijay Tower, Shahpurjat, New Delhi - 110049
Chairman cum Managing Director CIN No: L24302DL1973PLC189662
Din-00759951 Phone No: +91-11-49435555/00
Fax no 011-43850087
Place :- New Delhi Email ID: info@sunilhealthcare.com
Dated -30.05.2019 Website:www.sunilhealthcare.com

1. Consolidated FDI Policy Departmentfor Promotion of Industry and Internal Trade (DPIIT), Press Information Bureau (PIB), Media Reports, Pharmaceuticals Export Promotion Council, AIOCD-AWACS, IQVIA.

2. Information available at https://www.crisil.com/en/home/our-analysis/reports/2017/09/sector-report-pharmaceuticals.html

3. Information available at https://www.ibef.org/industry/pharmaceutical-india.aspx

4. https://www.livemint.com/Industrv/Biiffg6MY8cdkiRREHdsWN/Panel-nixes-proposal-to-use-onlv-vegetarian-capsules-for- dru.html

5. http://employmentnews.gov.in/NewEmp/MoreContentNew.aspx?n=InDepthJobs&k=156

6. Top 10 companies research by HDFC Securities.

RISK ANALYSIS

Risk Identification

Risk Management is a key aspect of the "Corporate Governance Principles and Code of Conduct" which aims to improvise the governance practices across the Companys activities. Risk management policy and processes will enable the Company to proactively manage uncertainty and changes in the internal and external environment to limit negative impacts and capitalize on opportunities. The probable material effects of an uncertain environment (both internal as well as external) on business goals are identified. The factors which could affect the performance vis-a-vis the stated objectives are determined.

Each and every activity is analyzed and the internal and external forces acting on them along with the negative resultant which could possibly surface is identified where internal factors are perceived to be the drivers, adequate policy - procedure checks are installed within the business processes for earlier recognition and corrective measures to overcome the same. In case of external drivers, a continuous cost benefit analysis is done to take a proactive approach and safe guard the business outcome on a substantial basis. Risk Management and Control

It involves prioritization and assessment of risks, which hinder the achievement of the Companys goals and to devise appropriate controls to mitigate these risks, then evaluating and reviewing the control mechanism and redesigning itfrom time to time in the light of its effectiveness. The Company ensures sensitivity to detect risk, ensuring flexibility to respond to risk and ensuring capability of resources to mitigate risk.

Market related Risk Competitors

The Company is expecting to derive a good part of its revenues from outside India, by entering new overseas markets and by expanding its customers base in the countries which it already has its presence.

Within India, the Company have an extensive marketing network and Companys Brand Name SUNLOC have significant goodwill among the customers.

The Company is optimistic that with its quality product and good customer relations will enable it to enhance its presence in its chosen markets.

Concentration Risk Dependence on few customers.

The Company is pursuing a two-pronged risk minimization strategy increasing revenues from key customers on an absolute basis but decreasing their proportion in the Companys overall revenues. Further the Company is trying to add some new customers.

The Company is concentrating on serving a rationalized customer base in the domestic market accompanied by higher satisfaction and retention levels as an effective counter to the newentrant in the business.

In the international market the Company intends to focus on select geographical areas to begin with leading to a disproportionate business concentration. The Company is moving to unserved geographies and would continue to explore new markets across the globe, with wider customer base. The proportion of a particular customer should not be more than 35% of the total revenue from DomesticorExportsbusinessatany pointoftime Business segments

The Company deals in Business segment of Manufacturing Hard Gelatin Capsule Shells. During the year 2017-18, installed capacity was increased to 13 billion capsules per year. The Company has forayed into the Food Business last year and during the year 201718, it has contributed 8% of the total turnover of the company.

Geographical Concentration of business.

During the year total Exports was for about 31.67 % of the Companys revenues which is includes the capsules and food business. During current fiscal the Company is expecting to increase its exports sales share in total companys revenue. During the year the Company is exploring new area for increasing their presence in global market.

Within India, the Company enjoys a major presence in all geographical segments; North and West India contributing a major part of the Companys revenues because of the sheer size of this marketand logistics convenience.

Financial Risk Business Process

The Companys management reviews all the operational data on regular basis to assess and manage risks and controls related to business processes and financial disclosures. The database is regularly updated and data mining and continuous monitoring is done to mitigate the potential risks associated with financial behavior of business.

Foreign currency risk

In the Current year about 50 % of the Companys revenue from capsules and food business is expected from export, any fluctuation in which could have an impact on the Companys top line as well as bottom line. The Company has laid down standard operating procedures to de-risk itself against currency volatility and out sources expert advice whenever required.

Receivables Management Risk

The Company has a defined credit policy duly approved and reviewed by the Management from time to time, which is strictly monitored. The policy categorically stipulates the extension of credit only on a selective basis after a thorough customer evaluation. In most of the cases, dispatch is made after adequate securitisation and any default is not likely to have a significant effect on the companys total profitability.

Payable Management Risk

The Company has defined credit policy duly approved and reviewed by the Management from time to time which is strictly monitored for its suppliers The Company is developing its new supplier/service providers on continuous basis so that for each item or service Company must have more than one supplier/customer to mitigate any risk associated therein. Contractfor supply or material/service isalso in placewith supplier/service providerforshortterm to long term basis.

Strategic Risk

Proprietary risks/contingencies

The Company has initiated adequate insurance covers to hedge against natural risks in the business. These are assessed on a regular basis and the Company takes the best possible coverage of insurance from the well-established public and private sector insurance companies.

Operational Risks Cost Competitiveness

The Company has invested in large, world-class plants to encash economicsofscale to enhancequalityand reduce costs. Short term to long term contracts have been made with its suppliers/service provider to mitigate the risk of increasing inflation.

Manpower related risks

The Company values its employees as main driver of sustainable growth. In view of this, it has instituted defined roles and responsibilities acrossvarious levels accompanied by robust systems toensure appropriate informationflow and better productivity. Skilled manpower for the manufacturing and marketing functions is abundantly available. The Company enjoys a fair blend of youth and experience; it has a prudent mix of a competent and experienced Board as well as young and energetic operational team. Team building and motivation oriented activities are in place to build a highly motivated team with positive mindset.

Inventory Risk

The Company has defined its inventory in three categories - Vital, Essential and Desirable (VED) with minimum inventory level of each item has been defined and duly placed in ERP software commensurate with the above mentioned three categories. Regular monitoring to keep the minimum inventory without effecting the business operation is also in place.

Raw Material & Energy Risk

In the present competitive business scenario the risk of good quality and uninterrupted supply of raw material and energy within reasonable rate is vital. The Company has short term to long term contracts with raw material suppliers to ensure good quality and uninterrupted supply of material within in reasonable rate.

ComplianceRisks Contractual risks

The Company is exposed to possible liabilities that could arise from the non-performance of certain contractual conditions. Presently the Company doesntforesee any such riskas Company has established a review and documentation process for contracts.

Each contract to be executed by or on behalf of the Company requires vetting from the Companys legal and secretarial department before execution. While vetting contracts, the department evaluates the legal risk involved and ascertains legal responsibilities. Complianceand Environmental risks

The Company is committed to being a responsible corporate citizen and respects the laws and regulations of the countries in which it operates. The Company has an informed and proactive legal cell, which ensures compliance with various statutes. Besides, it also takes advice from reputed law firms from time to time. The legal cell advises the Company on various compliance issues and ensures their alignment with the laws of jurisdiction as well as to the territory where the Company operates. The Board reviews the detailed Compliance Report on quarterly basis. The Board reviews the detailed Compliance Report on quarterly basis. The Company has cloud based compliance software where all the compliance related detail are in place to get the timely alert from the software perse to complete the compliance before the due dates.

The Company also recognizes the need for sustainability with a minimal impact on the ecology and environment. In view of this, the Company makes continuous investments in treating effluents. These investments result in compliance with the most progressive global standards.

Cautionary Statement

This report on risk management provides the details of the risk which may be faced by the Company Risks detailed here are not exhaustive but are for information purposes only The actual risks faced by the Company in future may vary substantially from those outlined herein. Some of the statements written herein are forward looking and should not be construed as a guarantee of performance. The readers must exercise their own due diligence before forming any opinion based on this report.

On behalf of the Board Reg. Office:
Anil Kumar Khaitan 38E/252A, Vijay Tower, Shahpurjat, New Delhi - 110049
Chairman cum Managing Director CIN No: L24302DL1973PLC189662
Din-00759951 Phone No: +91-11-49435555/00 Fax no 011-43850087
Place :- New Delhi Email ID: info@sunilhealthcare.com
Dated -30.05.2019 Websiteiwww.sunilhealthcare.com