Directors Report

Dear Members,

Your Directors have pleasure in presenting their 56th Annual Report together with the Audited Statement of Accounts for the year ended on 31st March, 2015.

1. FINANCIAL PERFORMANCE A) Standalone

The company achieved total revenue of Rs. 33,207 Lacs in the current year as against total revenue of Rs. 30,330 Lacs in the previous year. During the year, the company earned net profit of Rs. 1,548 Lacs (Previous Year: Rs. 1,704 Lacs), decline in profits is 9.15%.

Divestment

The Company during the Financial Year has sold the Active Pharmaceuticals Ingredients (API) business on slump sale basis to its subsidiary Kopran Research Laboratories Ltd. at a consideration of Rs. 11,000 Lacs. The sale transaction has been completed on 30th March, 2015.

B) Consolidated

Consolidated revenue for the year was Rs. 33,227 Lacs as against consolidated revenue of Rs. 30,481 Lacs in the previous year. Consolidated net loss for the year was Rs. 3,912 Lacs due to loss in exceptional item of Rs. 5,449 Lacs against a profit of Rs. 1,718 Lacs in Previous Year.

During the year, the Formulations (Finished Dosage form) Division showed a growth of 5.97% and the Active Pharmaceuticals Ingredients (API) segment showed a growth of 8.73% in local sales and 16.03% in an Export sale. The Consumer Care segment is at nascent stage.

3. Dividend:

In view of the past losses the Board of Directors do not recommend any dividend on equity or preference shares.

4. Management Discussion and Analysis Report:

The Report on Management Discussion and Analysis as required under Clause 49 of the Listing Agreement is provided as a separate section in Annexure A of Annual Report.

5. Subsidiaries, Associates and Joint Ventures:

Kopran Research Laboratories Ltd., Kopran (H.K.) Ltd., and Kopran Lifesciences Ltd. are the existing wholly owned subsidiaries of the company. Salient features and financial summary is provided as a separate section in Annexure B of Annual Report.

During the year your company has subscribed the Right Issue of Kopran Research Laboratories Ltd. amounting to k 40 Crores.

As required under Rule 8(1) of the Companies (Accounts) Rules, 2014, the Board's Report has been prepared on standalone financial statements and a report on performance and financial position of each of the subsidiaries and associates included in the consolidated financial statements.

In accordance with third proviso of Section 136(1) of the Companies Act, 2013, the Annual Report of the Company, containing therein its standalone and consolidated financial statements has been placed on the website of the Company, www.kopran.com . Shareholders interested in obtaining a copy of the subsidiary companies may write to the Company Secretary at the Company's registered office.

6. Share Capital:

During the Financial Year the company has allotted Equity Shares and warrants to promoters on preferential basis aggregating to 2050000 Equity Shares of face value of Rs. 10/- at a premium of Rs.  56/-and 2150000 Warrants at a rate of Rs.  66/- per warrant fully paid. The warrant is convertible within 18 months from the date of allotment. Accordingly, the paid up Equity shares of the company as on 31st March, 2015 stands increased from 39.05 crores to 41.10 crores. The warrants can be exercised and converted in to fully paid Equity Shares on or before 25th May, 2016. The proceeds of Rs. 2,772 Lacs of the preferential issue were utilized against adjustment of loan from the promoter group company.

7. Directors:

In accordance with the provisions of Companies Act, 2013 and the Articles of Association of the Company, Mr. Amit Rajan, Director of the Company will retire by rotation at the ensuing Annual General Meeting (AGM) and is eligible and offers himself for re-appointment.

Mr. Vijay Kumar Bhandari, Independent Director of the Company has completed his first term and eligible for re-appointment has express his willingness act as an Independent Director for a term of 5 years.

During the year under review the Board has appointed Dr. Siddhan Subramanian and Dr. Sunita Banerji as Additional Director (Independent) w.e.f. 29th September, 2014. They will hold Office up to the ensuing AGM of the Company. The Company has received a notice together with requisite Deposit of k 1 lac each under section 160 of the Companies Act, 2013 from a member of the Company proposing their candidature for the office of the Independent Directors for terms of 5 consecutive years commencing from the ensuing AGM.

The independent Directors of the Company have given the declaration to the Company that they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013.

The Board considers their association would be immense benefits to the Company and recommends to the members for their appointment.

Further Mr. Susheel G. Somani, Driector of the Company resigned from the Board w.e.f. 29th September, 2014 and the Board acknowledges the contribution made by Mr. Susheel G. Somani during his tenure.

8. Key Managerial Personnel:

Mr. Surendra Somani, Executive Vice Chairman, Mr. Ajit Jain, Director & Chief Operating Officer, Mr. Basant Kumar Soni, Chief Financial Officer and Mr. Sunil Sodhani, Company Secretary & Compliance Officer are the Key Managerial Personnel in the Company.

9. Meetings of the Board:

Five (5) Board Meetings were held during the financial year ended 31st March, 2015. The details of the Board Meetings with regard to their dates and attendance of each of the Directors has been provided in the Corporate Governance Report as a separate section in Annexure C of Annual Report.

10. Performance Evaluation:

Pursuant to the provision of the Companies Act, 2013 and Clause 49 of the Listing Agreements, the Board has carried out the annual Performance Evaluation of the Directors individually as well as evaluation of the working of the Board and of the Committees of the Board, by way of individual and collective feedback from Directors.

The following were the Evaluation Criteria:

a. For Independent Directors

- Knowledge and Skills

- Professional conduct

- Duties, Role and Functions

b. For Executive Directors

- Performance as Team Leader/Member

- New initiative/expansion/innovation

- Achievements in the Key responsibility area.

- Professional Conduct, Integrity

- Sharing of information with the Board

- Customer satisfaction and investor relations

c. For Board and its Committees

- Attendance and participation of the members

- Advising in implementation of good Corporate practices

- Reviewing and guiding corporate strategy, risk policy, annual budgets, overseen major capital expenditure etc.

- Succession planning

- Financial integrity, appropriate systems of control in relation of financial operation and compliances of various laws. The Directors expressed their satisfaction with the evaluation process.

11. Audit Committee:

The Audit Committee consists of two Independent Directors with Dr. Arvind K. Mehta, Chairman and Mr. Vishnu N. Khanna member and Mr. Surendra Somani, Member (Executive Director). The Committee inter alia reviews the Internal Control System and reports of Internal Auditors and compliance of various regulations including related party transactions. The Committee also reviews in detail the Financial Statements before they are placed before the Board.

12. Vigil Mechanism:

Pursuant to the provisions of Section 177(9) and (10) of the Companies Act, 2013 and Listing Agreements, a Vigil Mechanism or 'Whistle Blower Policy' for directors, employees and other stakeholders to report genuine concerns has been established. The same is also placed on the website of the Company.

13. Internal Control Systems:

The Company's internal control procedure which includes internal financial controls, ensure compliance with various policies, practices and statutes in keeping with the organization's size and increasing complexity of operations. The company is in process to implement SAP in its operations for better system control.

14. Fixed Deposits:

During the financial year, the Company has not accepted any deposits from the public and as such, there are no outstanding deposits in terms of the Companies (Acceptance of Deposits) Rules, 2014.

15. Corporate Social Responsibility(CSR):

The company has formed a CSR Committee during the financial year to decide on the CSR policy and projects for the CSR activities. The CSR Committee Chairman is Dr. Sunita Banerji and members are Mr. Ajit Jain and Mr. Surendra Somani. The details of CSR report is attached in Annexure D

16. Policy on Nomination and Remuneration:

The contents of Nomination and Remuneration Policy of the Company prepared in accordance with the provisions of Section 178 of the Companies Act, 2013 and Clause 49 (IV) of the Listing Agreements summary of which is provided in the Corporate Governance Report.

17. Related Party Transactions:

Related Party Transactions that were entered into during the financial year were on arm's length basis and were in ordinary course of business. There are no materially significant related party transactions made by the Company which may have potential conflict with the interest of the Company. Suitable disclosure as required by the accounting standard (AS-18) has been made in the notes to the Financial Statements.

The Board has approved a policy for related party transactions for which has been uploaded on the Company's website. The web-link as required under Listing Agreement is as under www.kopran.com  

18. Corporate Governance:

The Report on corporate governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report given in Annexure C. The requisite certificate from GMJ & Associates, Practicing Company Secretaries of the Company confirming compliance with the conditions of corporate governance as stipulated under the aforesaid Clause 49, is attached to the Report on corporate governance.

19. Listing of Shares:

The Company confirms that the annual listing fees to both the stock exchanges for the financial year 2015-16 have been paid.

20. Loans, Guarantee or Investments:

Details of Loans granted, Guarantee given and Investments made during the year under review covered under the provisions of Section 186 of the Companies Act, 2013 are given as Annexure E.

21. Rating:

The rating issued by CRISIL for Long term is BBB-and short term rating is A3

22. Auditors:

I. Statutory Auditors:

In compliance with the Companies (Audit and Auditors) Rules 2014, M/s. Batliboi & Purohit, Chartered Accountants has been appointed as Statutory Auditors of the Company till the conclusion of next Annual General Meeting. Further, pursuant to the requirement of section 139 of the Companies Act 2013, the appointment of Statutory Auditors is to be ratified by the members at every Annual General Meeting. Members are requested to ratify their appointment for the F.Y. 2015-16.

II Secretarial Auditors:

The Board of Directors of the Company appointed M/s. GMJ & Associates, Practicing Company Secretaries, to conduct Secretarial Audit for the F.Y. 2015-16.

The Secretarial Audit Report of M/s. GMJ & Associates, Practicing Company Secretaries, for the Financial Year ended 31st March, 2015, is annexed as Annexure F

III Cost Auditors:

Mr. Dilip M. Malkar, Cost Accountant, Cost Auditor of the Company for F.Y. 2014-15 have been appointed as Cost Auditor for conducting audit of the cost accounts maintained by the Company.

IV Internal Auditors:

The Board of Directors has appointed M/s. NGS & Co. LLP, Chartered Accountants as Internal Auditor of the Company for the F.Y. 2015-16.

There is no qualification, reservation, adverse remark or disclaimer by the Statutory Auditors in their report or by the Secretarial Auditors in their Secretarial Audit Report and hence no explanations and no comments of the Board is required in this matter.

23. Directors' Responsibility Statement:

In terms of the provisions of the Companies Act, 2013, the Directors state that:

I. In preparation of the annual accounts for the financial year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures;

II. The Directors have selected such accounting policies listed in the financial statements and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give and true and fair view of the state of affairs of the Company at the end of the financial year as on 31st March, 2015 and of the profit of the Company for that period;

III. The directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance of the Company and for preventing and detecting fraud and other irregularities;

IV. The directors have prepared the annual accounts on a going concern basis; and

V. The directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

VI. The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

24. Material changes:

There have been no material changes and commitments affecting the financial position of the Company since the close of financial year i.e. 31st March, 2015. Further, it is hereby confirmed that there has been no change in the nature of the business of the Company.

25. Extracts of Annual Return:

The extract of Annual Return required under Section 134(3)(a) of the Companies Act, 2013, read with the Rule 12(1) of the Companies (Management and Administration) Rules, 2014, forms part of this report as Annexure G.

26. Conservation of Energy, Technology, Absorption, Foreign Exchange Earnings and outgo:

The information required under Section 134(3)(m) of the Companies Act, 2013, read with the Rule 8(3) of the Companies (Accounts) Rules, 2014, is annexed herewith with Annexure H.

27. Particulars of employees and related disclosures:

Disclosures pertaining to remuneration and other details required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as Annexure I.

The Annual Report is being sent to the members of the Company excluding the aforesaid information. The said information is available for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.

On behalf of the Board of Directors

Surendra Somani

Executive Vice

Chairman 28th May, 2015