The Directors have pleasure in presenting the fifty eight Annual Report
and Audited Accounts for the eleven months ended November 30, 2003.
Rs. in Lakhs
Particulars Eleven Months ended Nine Months ended
Nov 30, 2003 Dec 31, 2005
Sales net of Excise Duty 3042 4229
[Loss] before Taxation and Exceptional Item (875) (169)
Less: Taxation (103) 31
[Loss] after Tax (before exceptional Item) (772) (200)
Exceptional Item 399 51
Net Profit/(Loss) (1171) (251)
Add: Balance brought forward from
the previous year 218 469
Amount Available for Disposal (953) 218
Equity dividend NIL NIL
Distribution Tax on Dividend NIL NIL
General Reserve 873 NIL
Profit/(Loss) Carried Forward (280) 218
CHANGE IN ACCOUNTING YEAR
The Company's Accounting Year has been changed to end on November 30.
The prior year's figures in the financial statements have been
regrouped/rearranged where necessary and are not strictly comparable
with those of the current period which are for eleven months ended
November 30, 2003.
The directors do not recommend the payment of any dividend for the
period under review in view of the operating losses and due to
exceptional costs incurred on account of implementation of voluntary
THE PHARMACEUTICAL INDUSTRY
The pharmaceutical market posted single digit growth for the third
successive year, growing by 5.1% in 2003 to end at Rs.19,229 crores
(Source: ORG Retail Audit). Growth continued to be driven primarily by
volume (3.5%) and new launches (2.3%), while price declined by 0.7%.
Trade issues such as implementation of VAT and the trucker's strike
during the first half of the year contributed to the low growth. IMS
Market Prognosis predicts growth at a CAGR of 10.5% during the
five-year period 2003-2007.
Therapeutic segments like Cardiovasculars, Anti-diabetics,
Neuro-Psychiatry, Respiratory and NSAIDs grew at 13% compared to acute
therapeutic segments like Anti-Infectives, Cough-Cold,
Gastro-Intestinals, Pain and Fever, which grew by 1%. Market is
gradually shifting towards the life-style related segment due to
increasing awareness, detection and treatment of these ailments. Higher
growth was observed in urban markets as compared to rural markets, and
an increase in prescriptions from specialists segment compared to
general practitioners was also seen.
Announcement of the much awaited new Drug (Prices Control) Order (DPCO)
continued to be delayed on account of legal issues. The new DPCO and
National Health Policy is expected to encourage more domestic and
foreign investment in new drug research. The clamp down on
manufacturers of spurious drugs, by imposing stringent penalties for
offenders, is expected to result in patients getting legitimate and
high quality pharmaceutical products in the future.
FINANCIAL AND OPERATIONAL PERFORMANCE
Following the merger of your Company's overseas parent Pharmacia
Corporation with Pfizer Inc., USA, the operational alignment of your
Company with Pfizer Limited (Pfizer) has been successfully completed.
This has necessitated significant changes in your Company's operations.
(i) As per the new agreement with Abbott USA, SurbexT, Pentothal Bulk
and Pentothal Sodium have been transferred to Abbott India Limited and
Abbott Healthcare Private Limited along with transfer of the
inventories of these products at cost.
(ii) Rationalisation of the company's product portfolio in favour of
products in attractive markets, with the aim of sustaining long term
growth of the portfolio.
(iii) Redeployment of the company's products through appropriate
marketing arms of Pfizer Limited.
(a) Selsun, Citrosoda, Rashfree and Pedialyte, which have potential
opportunity in OTC segment are promoted by specialized Consumer Health
Products Division of Pfizer.
(b) Key brands like Erythrocin, and others are promoted through Pfizer
(c) To provide increased focus to Claribid, the brand is promoted by
Innovex, a globally reputed contract Sales Force organization. We
expect this initiative to help sustain the growth and leadership of
2003 revenues of your Company have been impacted by this organizational
restructuring, together with several external factors like trade
apprehension of VAT implementation, transporters strike and sluggish
Three key products Selsun, Claribid and Rashfree have out performed
their respective market segments, in terms of growth.
RISKS AND CONCERNS
The amendment to the Drugs and Cosmetics Act, 1940 was also introduced
in Parliament in December, 2003 and since no vote was taken on the
same, it has now lapsed. The bill proposes to introduce the death
penalty for spurious drug manufacturers and a central drug regulatory
authority to administer the introduction of new drugs. The bill has the
strong support of the health ministry and the industry.
The pharmaceutical policy, 2002, was warmly welcomed by the entire
industry as it sought to reduce the number of drugs under price
control. However the introduction of public interest litigation has
stalled the implementation of the same. The matter is currently pending
before the Supreme Court.
BMP compliance, which was mandated for all players in the industry, too
has received a set back. Owing to the strong lobbying of small-scale
manufacturers, adherence to the same has been postponed till January
OPPORTUNITIES AND FUTURE DEVELOPMENTS
The government's expenditure on healthcare infrastructure, has actually
shrunk over the past few years as a percentage of GDP. This failure of
the government has led to their continued dependence on price controls
of drugs as a means to demonstrate their intervention to the public.
The potential for the private sector to expand healthcare access is
vast. Indeed, in recent times hospital chains, like Apollo group, have
made significant contribution to the establishment of new capacity with
highly specialized treatment capabilities. This coupled with an
emerging health insurance sector, is well poised to significantly
improve the healthcare scenario in India, and thereby increase the
demand for quality medicines
Several of the company's key products are now being promoted by Pfizer
field-force and stand to benefit from its larger reach and presence in
INTERNAL CONTROL SYSTEMS
The Company has a sound system of internal controls that ensures that
all assets are protected against loss from unauthorized use or
disposition and all transactions are recorded and reported in
conformity with generally accepted accounting principles.
The internal control systems and the guidelines for compliance with
stated policies of the Company for conducting business and
communication with the stakeholders, customers and other third parties
are well documented and rigidly implemented.
Clearly defined authority limits and systems have been put in place to
ensure accuracy and reliability of all accounting data, operational
efficiency and adherence to a pragmatic and efficient management
There is periodic review of these systems and policies, which are
scrutinized, by external auditors and other agencies.
HUMAN RESOURCES/INDUSTRIAL RELATIONS
The operational integration of your Company with Pfizer was smoothly
accomplished during the year. The Pharmacia colleagues were inducted
into the new organization through a series of communication exercises
including orientation program on the Culture, practice of Core Values
and Leader Behaviors at Pfizer. Matters related to the administrative
absorption including role clarity, compensation, benefit fitment and
relocation issues were taken care. The number of employees who migrated
to Pfizer was 89.
The entire field force was provided with appropriate training to
familiarize with the product reallocation between the teams.
The Management Team invested significant time and resources to ensure a
A comprehensive plan was developed to handle the non-migration aspects
of colleagues from Pharmacia. Each of the colleagues was met by a team
of Senior Managers and aspects of separation were transparently
communicated and dealt with. The feedback from exit interviews
indicated that despite the difficult circumstances, mutual goodwill was
Closure of Ankleshwar Plant: The Ankleshwar Plant ceased operations
from October 31, 2003. A total of 45 number of colleagues from the
plant availed of the Voluntary Retirement Scheme Package. The Plant
closure was achieved in a smooth manner. The Gurgaon Office facilities
were wound up and migrating colleagues were appropriately relocated.
The total number of employees who availed of the voluntary retirement
scheme was 188. After completion of operational integration with Pfizer
the Company has at present 3 employees on its rolls.
The Industrial Relations Climate continues to be healthy and without
any Industrial disturbances. Core Values and Leader Behaviors:
Significant emphasis is being continuously placed to enhance the
understanding and practice of Core Values and Leader Behaviors amongst
colleagues across the organization through several initiatives. These
- Special sessions and workshops for all migrating colleagues and new
- Wide dissemination of the Guidelines on Ethical Business Conduct
- Sessions on `Open Door Policy' to encourage an inclusive environment
and two way communication processes.
- Holding `Open Forums' where the Management Team addresses concerns,
issues and suggestions raised by the colleagues.
DIRECTORS' RESPONSIBILITY STATEMENT
Your Directors confirm:
(i) that in the preparation of the annual accounts, the applicable
accounting standards have been followed;
(ii) that the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company as on November 30, 2003 and of the loss of
the Company for that period ;
(iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
(iv) that the Directors have prepared the annual accounts on a going
A Report on Corporate Governance along with a certificate from the
Auditors of the Company regarding compliance of the conditions of
Corporate Governance Code is annexed hereto.
Your Directors wish to record their appreciation for the valuable
services rendered by Mr. Rodney Unsworth, Dr. V. S. Sohoni,
Mr. Chandrahas Kutty during their tenure.
The Board of Directors appointed Mr. R. A. Shah as a Director, with
effect from April 29, 2003, to fill the casual vacancy caused by the
resignation of Mr. Rodney Unsworth. Mr. Hocine Sidi and Mr. Harold
Walder have been appointed as non-retiring Directors with effect from
April 29, 2003 in terms of Article 117(a) of the Articles of
Association of the Company. Mr. Hocini Sidi Said was appointed as
Managing Director with effect from April 29, 2003.
Mr. Upendra Mehta retires by rotation and being eligible, offers
himself for re-appointment.
The Auditors Messrs Price Waterhouse, retire at the conclusion of the
forthcoming Annual General Meeting and offer themselves for
The Auditors have made a comment in para 4.1 of their Report on
individual customer account balances. The same has been dealt
adequately in Note no 26 of Schedule 23 of the Notes forming part of
the Statement of Accounts, and is self-explanatory.
Pursuant to the provisions of section 233B of the Companies Act, 1956,
necessary application is being submitted to the Department of Company
Affairs for the appointment of Messrs. S. S. Mani & Company as Cost
Auditors to audit the cost accounts maintained by the Company as Cost
Auditors to audit the cost accounts maintained by the Company in
respect of formulations for the year ending November 30, 2004.
SAFETY AND ENVIRONMENT PROTECTION
The Company's commitment to environment protection is an ongoing
process and high priority is accorded to the health and safety of its
employees. The Company has been following strict standards of
environment protection. There was no loss of time or accident in
Ankleshwar factory during the eleven-month period ended November 30,
During the period under review the company has not accepted any
deposits from the public nor any amount is lying as unclaimed or unpaid
1. Conservation of Energy/Technology Absorption and Foreign Exchange
The information required under Section 217(1)(E) of the Companies Act,
1956 (Disclosure of Particulars in the Report of the Board of
Directors] Rules, 1988 in respect of conservation of energy and other
matters is annexed hereto and marked as Annexure I.
2. Particulars of Employees:
The information as per Section 217(2A) of the Companies Act 1956,read
with the Companies (Particulars of Employees) Rules 1975, forms part of
this Act and is marked as Annexure II.
The Board acknowledges the efforts put in by its employees during the
past year. The Company is grateful to the customers and bankers for
their support and understanding and the shareholders for their faith
and confidence. The Board is also grateful to Abbott Laboratories,
North Chicago, Illinois, USA and Pharmacia Corporation USA and Pfizer
Inc, USA for their support provided to the Company during the year.
For and on behalf of the Board of Directors
R A Shah
Mumbai, March 18, 2004
ANNEXURE TO DIRECTORS' REPORT
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988 and forming part of the Directors' Report for
the financial period ended November 30, 2003.
I. (i) CONSERVATION OF ENERGY
(a) Energy Conservation measures taken:
Various measures taken to improve the efficiency of equipments to
reduce process time.
[b] Additional investments and proposals, if any: NIL
(c) Impact of Measures:
The above measures and tighter control has resulted in lower energy
(d) Total energy consumption and energy consumption per unit of
(ii) TECHNOLOGY ABSORPTION
1. Research & Development (R & D)
Research and Development is an ongoing process and is concentrated in
the improvement of the existing products.
2. The Company has been able to reduce manufacturing cost.
3. Introduce more new line extension products for example
Clarithromycin in Tablet form and improving the presentation and get up
of our products is going on activity of R&D.
4. Expenditure on R & D:
a) Capital NIL
b) Recurring 390
c) Total R & D expenditure as a percentage of total turnover 0.13
Technology Absorption, Adaptation and Innovation:
1. Efforts made:
Continuous efforts being made in developing line extension of new
products and improving existing products.
Reduction in manufacturing costs and improvement in the existing
products and yield
3. Imported technology:
No technology has been imported during last 5 years.
(iii) FOREIGN EXCHANGE EARNINGS AND OUTGO
Export turnover amounted to Rs.Nil during the period as compared to
Rs.101.91 lacs during the previous accounting period.
ii) Total foreign exchange earning and outgo:
The information required under the Companies (Disclosure of Particulars
in the Report of the Board of Directors] Rules, 1988, with regard to
foreign exchange earnings and outgo is contained in the notes to the
accounts, Schedule 23 Note No. 22.
For and on behalf of the Board of Directors
R A Shah
Mumbai, March 18, 2004