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Plethico Pharmaceuticals
BSE: 532739|NSE: PLETHICO|ISIN: INE491H01018|SECTOR: Pharmaceuticals
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« Dec 12
Chairman's Speech (Plethico Pharmaceuticals) Year : Mar '14
Dear Shareholders,
 
 The year 2013-14 gave numerous booster injections to the overall
 pharmaceutical industry. There were significant developments during the
 year that impacted the industry for the good, but also brought forward
 several challenges to be met. On the regulatory front, the two major
 developments were regarding the pricing policy and foreign direct
 investment (FDI) in the pharma sector.
 
 The implementation of the new pricing policy led to drugs becoming
 cheaper in India. However, on the other hand, the deep price cuts were
 also one of the prime reasons for the restricted growth (9.8% in 2013
 from 16.6% in 2012) of the Indian Pharmaceutical sector during the yea.
 Another major decision was from the Government, of not lowering the
 existing 100% FDI policy in the pharmaceutical companies to 49% despite
 the concern hovering from past few quarters over the increased
 takeovers of Indian firms by foreign companies. Besides these, the
 other regulatory challenges included delays in clinical trial
 approvals, uniform code for sales and marketing practices and
 compulsory licensing that were to be dealt by various companies as per
 the impact. All of these did put up a challenging environment for all
 the companies and definitely called for are vamp in the way business is
 done today.
 
 Going forward, quality and regulatory concerns would lead to greater US
 FDA scrutiny''s in future, demanding companies to step up their quality
 and manufacturing compliances in line with the global guidelines. Also,
 regular updation with the changing regulatory requirements in order to
 maintain the governance and compliance framework robust is a
 pre-requisite. Focused approach is required to achieve a sustainable
 and compliant long term growth.
 
 We as a company have strived during the year to gear up the undertaken
 financial restructuring coupled with working capital management. This
 has been strenuous as the ongoing difficult global economic scenario
 has negatively impacted the demand of the wellness products
 manufactured and marketed by the company. However, the company has been
 taking measures to combat the prevalent conditions and tap the markets
 with the new and existing range of products in order to maintain its
 market share.
 
 Unprecedented foreign exchange fluctuation and depreciation of emerging
 market currencies across the globe vis-a-vis the dollar has further
 aggravated the liquidity issue for the company. Major customers of the
 company are from the emerging markets such as CIS, South America, Asia
 and Africa. It has also led to increase in the debtors'' realization
 period over the last 6 - 9 months; though in dollar terms, debtors have
 actually come down due to the continuous efforts made by the company in
 their realization. This is where the efforts are being made, as it is
 the core of running the business.
 
 The downgrade in ratings by ICRA to D backed by the decline in
 company''s share price and resultant inability of the company to convert
 or redeem FCCBs, has created a negative sentiment due to which the
 company was unable to raise any fresh working capital debt from new
 banks, over the last two and half years. However, the company is
 dedicatedly putting in efforts for a solution that would be in the
 benefit of both the sides; company as well as the bond holders.
 
 The faith of the investor fraternity in the company is reflected
 through the corpus under the fixed deposits of the company. The
 company had maintained a track record of timely repayments as FD''s were
 always considered as a debt taken for the growth of the company.
 However, in the past couple of months there have been delays in the
 repayments to the fixed deposit holders due to a strong cash flow
 mismatch largely due to the reasons chalked above. We very well
 acknowledge the anxiety of the investors and are taking all measures
 towards rationalizing this situation; considering it as our top
 priority as we have always valued our investors who have been
 with us through thick and thin.
 
 The various factors elaborated above led to a challenging year for the
 Company with the major setback being the cash flow mismatch that messed
 the targets set, diverting attention towards the rectification of the
 same. This was however in tandem with continued focus on business
 development to achieve differentiation, accelerating product
 development to the optimum level, creating tangible values for
 customers, identifying core activities, applying game-changing
 strategies, creating new business models and pursuing opportunitic
 investments. We stand by our capability to capture the demand growth
 from our key emerging markets; expecting gradual turn around in the
 overall macro environment which would be a challenge to sustainability
 and growth but definitely not unachievable.
 
 Our motive continues to be the sustainability and overall growth of the
 company in the benefit of its shareholders and the stakeholders. We as
 a company are confident that we shall ha ve your trust and co-operation
 reposed in us. As always I retain my gratitude toward the Board of
 Directors for their steady support and guidance.
 
 Your''s truly
 
 Shashikant Patel 
 Chairman & Managing Director
Source : Dion Global Solutions Limited
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