parabolic drugs fy12.pdf

7/27/2019 parabolic drugs fy12.pdf

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Parabolic Drugs Limited | Annual Report, 2011-12

Sustaining Growth, Integrating Value


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DisclaimerIn this annual report we have disclosed forward-looking

information to enable investors to comprehend our prospects

and take informed investment decisions. This report and other

statements written and oral that we periodically make

contain forward-looking statements that set out anticipated

results based on the managements plans and assumptions.

We have tried wherever possible to identify such statements

by using words such as anticipates, estimates, expects,

projects, intends, plans, believes and words of similar

substance in connection with any discussion of futureperformance.

We cannot guarantee that these forward-looking statements

will be realised, although we believe we have been prudent in

assumptions. The achievement of results is subject to risks,

uncertainties and even inaccurate assumptions. Should

known or unknown risks or uncertainties materialise, or should

underlying assumptions prove inaccurate, actual results could

vary materially from those anticipated, estimated or projected.

We undertake no obligation to publicly update any forward-

looking statements, whether as a result of new information,future events or otherwise.


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VisionTo become a globally acceptable API

and pharmaceutical manufacturing

company by providing quality

products that exceed customer

expectations and are produced in asafe working environment

MissionTo be the chosen strategic partner of the worlds top ten

pharmaceutical companies

To grow consistently by entering Custom Synthesis and Contract

Manufacturing relationships with large Generic and innovator companies

To leverage our cost efficiencies in manufacturing to penetrate world

markets across therapeutic segments, including oncology,

cardiovascular and anti-hypertensive, among others


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Parabolic Drugs - One of the leading Pharmaceutical Companies

Well positioned to sustain its growth, to build the Value to the stake holders

Growth driven by:

- research capabilities

- robust chemistry skills

- world class facilities with regulatory approvals

- integrated growth - horizontal and vertical- Strong foothold in over 50 countries

Net Worth(Million)

March 31, 2012

3039

Gross Block(Million)

March 31, 2012

4076

Turnover(Million)

5 years CAGR35%

` 10123

PAT(Million)

5 years CAGR30%

` 512

EBIDTA(Million)

` 1614March 31, 2012


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Legacy Facilities

Certifications

1996 by first generationentrepreneurs - Mr. Pranav Gupta &Mr. Vineet Gupta.

In 2012, the Company has facilities,across four locations, two state of theart manufacturing plants at Derabassiand Panchkula for APIs, one CustomSynthesis and R&D centre at Barwalaand one lifestyle drug manufacturingsite at Chachhrauli.

Employs over 1400 multi skilledprofessionals.

Listed with BSE & NSE on July 1,2010.

Parabolic Drugs Ltd was founded in

Derabassi (Punjab):This facility hasseven units manufacturing the oraland sterile range of cephalosporin

APIs and intermediates.

Panchkula (Haryana): This facility hastwo units manufacturing SSPs andAPI intermediates such as 6-APA.

Barwala (Haryana):The research anddevelopment centre develops andscales new APIs and API intermediatesin all therapeutic segments includingnon-antibiotic products. It also providescontract research services to innovatorcompanies.

Chhachrauli (Punjab): Multi block builtin a 27 acre site for drugs formanufacturing non-antibiotic APIs inthe new therapies such as CVS, CNS,

oncology, antithrombotic, anti-diabeticand pain management.

Regulatory strength

As on date, PDL has filed 23 processpatent applications with Indian PatentOffice, New Delhi and 43 Drug MasterFiles across US, EU, Korea, Japan andCanada

ISO 14001-2004

OHSAS 18001-2007

WHO-GMP

European GMP from EDQM,European Union

US FDA (for 6-APA at Panchkula)

Japanese PMDA

Korean FDA

Business ProductsPresence

Headquartered in Chandigarh.

Operational in 50+ countries(including regulated markets).

Listed on the National Stock

Exchange (PARABDRUGS) and theBombay Stock Exchange (533211).

Engaged in the manufacture including contract manufacture of

APIs and API intermediates for salesin India and abroad.

In the FY 12, moved up the value

chain by foraying into theformulations space.

Manufactures over 50 APIs (ActivePharmaceutical Ingredients - sold toformulators to make capsules,tablets, liquids, injections and otherdosage forms).

Diversifying its product basket withover 20 molecules across 10therapies in the FY 13-14.

Parabolic Drugs Limited | Annual Report 2011-12 3

Geographical Spread

Exporting to 50 countries & counting...


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EBIDTA(Rs.Million)

2010

2011

2012

923.24

1,271.45

1,614.31

TotalRevenue(Rs.Million

)

2010

2011

2012

5,590.10

6,752.97

10,123.08

ProfitAfterTax(Rs.Million

)

2010

2011

2012

341.99

528.73

512.12

Networth

(Rs.Million)

2010

2011

2012

1,210.55

2,879.35

3,039.00

43Drug MastersFiled across

US, EUand Canada

till date

23Process

Patents andone PCTfiled with

Indian Patents

Office, New Delhi

49%Sales to

regulatedmarkets

50+Markets

penetratedacross

the globe

120+Scientistsincluding

P.hDs.

1400+Employees

workingtowards the

common vision

SpentonR&D

(InMillion)

2010

2011

2012

412.01

689.68

943.39

CapexSpent(InMillion)

2010

2011

2012

600.30

1,125.36

997.88

Performance

Highlights2011-12

Performance

Highlights2011-12


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The Value Matrix

Spreading to the new

geographies

Attaining the highest

levels of QualityGrowing with R&D

Headway in the CMOand CRO space

The horizontal growthThe vertical integration

for value maximization



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Milestones

Commenced commercial operaof PDL I at unit in Derabassi forPenicillin API and API intermed

1997

-98

2000

-02

2003

-05

2005

-06

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

Commenced contract manufacture

for DSM and Ranbaxy

Commenced commercial operationof PDL II plant at Panchkula

Filed COS for two Penicillin APIs inthe European Union

Diversified into Cephalosporinproduction

Filed three US DMFs

Established a sterile facility

Commissioned a dedicated

R&D wing

Diversified into custom synthesis

for innovator companiesCommissioned two plants foradditional Cephalosporin APIcapacities

Filed eight DMFs in the EU / US

Filed nine patent applications

Received ISO 14001-2004certification for environmentand safety management atDerabassi

Commissioned new R&Dat HSIIDC, Barwala

Cen

Filed six Drug Master Files inthe US and Europe

Certified by WHO-GMP for theDerabassi facility

Listing of company on the stock exchanges

Received accreditation for compliance with European Good Manufacturing

Practices standards

18 regulatory filings

Received 'Certificate of Suitability' (COS) for Cefixime

Received DNV's certificate for OHSAS 18001-2007 standards

Commencements of commercial operations in the Multipurpose block 2 at

Derabassi that added 325 TPA Cephalosporin capacities

Recognized as a Star Export house by the Ministry of Commerce

Filed 7 patents applications in FY 11

Foray into herbal nutraceuticals

Commissioning of multi-purpose block 3 & New SterileFacility

Approval from Korean FDA

Filing of 7 DMFs across US, Korea and JapanEntry into finished dosage space

Diversification into non antibiotics


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Creating a responsible enterprise that delivers "Value"

Managing Director's review

At the outset, I would thank you for being with us and reposing your confidence on the management. The company has consolidated its

position during the last financial year and has set drivers in place for laying a strong foundation for the future. I do believe strongly that the

strategic decisions taken by management over the last couple of years will yield positive results in the coming year.

The year 2011-12 has been a tough one in the face of the tightened liquidity scenario, high interest rates, the euro zone debt crisis and

the depreciation of Indian currency. Despite the fiscal challenges affecting the operating environment, the company has achieved a

gross turnover of INR 10123 million for the year 2011-12. This represents a growth of 50% over the last year. Net Profits came in at INR

512 million, which represents a margin of 6%. The fall in net profit margins by 250 bps was on account of high interest rates and rising

cost of imported raw material.

Amongst the operational achievements and developments, at the Derabassi site, your company has successfully commissioned the

Multi-Purpose Block that augments the amorphous capacities. In the sterile space, with the commissioning of new sterile block, thecompany has doubled its capacity to 20 tons per annum for the manufacturing of the sterile range of products. With the expansion the

stage is set for the company to build on its accomplishments during the coming year. The current fiscal was also significant as the

company diversified horizontally to minimize its dependence on a single segment for growth. From being a standalone antibiotic

manufacturer, your company is becoming a differentiated antibiotic and non-antibiotic API manufacturer. The company has activated

production for the life style drugs from its new facility in Lalru. The company has been working in over 10 different therapies covering

cardiovascular, hypertensive, diabetes, oncology, osteoporosis and central nervous system. The company looks to build revenues and

growth on the new range of products that would not only bolster the top-line, but more importantly, concentrate on expanding margins.

With infrastructural expansions in place, right set of skills and capabilities in research and chemistry, a diversified basket of products,

your company has all the drivers in place for the next level of growth - the growth that drives the value for each of the stakeholders.



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Our objective towards creating a responsible enterprise will be led by the following actions:-

Your company has a considerable presence in over 50 countries. Historically, our growth in these markets has come throughthe antibiotics orals. With the expansion of sterile basket, addition of new verticals and products, your company looks to

strengthen its presence across the globe, especially the regulated markets. The Regulated markets will also add a thrust tothe margins and profitability.

Your company hasa distinctive recognition of being one of the few pharmaceutical companies certified by the European GMP.

With the audit approvals of over 40 pharmaceutical companies, your company foresees the regulatory approvals throughother international agencies including the Japanese PMDA and the USFDA

The research team at Parabolic continues to drive the business by creating a grid of niche molecules and working on the next

generation of products. Going forward, the in-house R&D team would continue to drive process research and find innovativeways to reduce cost and build competitiveness.

Leveraging on the world class infrastructure with large capacities, a cost arbitrage in respect to competition, your company isgeared to provide integrated solutions from route selection, process development, and optimization to different innovators

and generic companies of the globe. It will continue to develop the competitive advantage it already possesses in the area ofcontract manufacturing and research to be able to grow and add scale to this segment of business.

Our foray into the non-antibiotic space places us in an unique position to be one of the largest API companies with a multiple

range of products across varied therapies. The transition towards becoming a multi-specialty API manufacturer is going tode-risk the company's sizable reliance on antibiotics, where a couple of products have got commoditized and margins have

been affected by competition. We believe that the new life style drugs will drive margins and hence profitability.

The company moved up the value chain by launching its finished dosage business. The company successfully created abasket of over 150 products across multiple therapeutic classes in different dosage forms. The dosage business will

substantially add to the value of the company in the forthcoming years. The thrust for the formulations business would bethrough two verticals - the domestic formulations through our division 'Nucleus' and the International Formulations division.

Parabolic Drugs will strive to continue the consistent growth that it has displayed over the last couple of years with increasedcommitment and focus on the bottom line. The company will achieve to realize this through operational efficiencies, improvements and

innovation across production, marketing, research and other capabilities. The rationale is just not to create an organization of growthand profits, but to create a responsible organization which drives its business with excellence and sustainability. The key focus areas for

the management in the coming year would be to:

Focus on Regulated Markets of US, European Union, Canada, Japan, and Australia- filing of drug master files, certificate of

suitabili ty, and dossiers.

Product basket- Launch of new molecules in the non-antibiotic space and diversify the product basket for a risk freesustainable growth

Diversification into new business verticals- Integration into Finished Dosage formulations, entering into manufacturingalliances for inorganic growth

Investment in R&D- development of new products , improving efficiencies in the existing range, filing of patents and building

IPR wealthHigh GMP Standards- maintaining high GMP standards for seeking regulatory approvals from USFDA, PMDA, TGA amongstothers.

Safety, Health & Environment- safety of our human resource, our manufacturing facilities and our environment, conservation

of resources and to be a responsible social citizen for a greener tomorrow

Development of Human Resource- foster the skills, talent and efficiency of the human minds

I thank you for the faith and conviction you have placed in us and I do believe that the company is poised for greater laurels in the future

with your continued support, motivation and guidance.

Regards

Pranav Gupta

Achieving highest International quality standards

Growth through developments in research and development

Headway in the Contract manufacturing Space

Horizontal growth through the diversified basket

Vertical integration for value maximization

Business Outlook

Taking your company to newer geographies


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Parabolic Drugs with its operational

experience of over 14 years has scaled

its reach to different parts of the world.The company today has its presence in

over 51 countries across the globe. The

accelerated geographic spread has

been driven by the company's

continuous focus on the regulatory

f i l i n g s , c om p l i a n c e w i t h t he

International quality standards, meeting

the stringent customer specifications

and being competitive with the cost.

The company's key presence across

European Union, Turkey, Latin America,

Middle East, Asia Pacific, North Africa

and SAARCfamiliarizes it as India'sleading antibiotic company. However

going forward, the company with its

strategic shift in the product therapies

and its approach to the new countries is

likely to add value to the business.

Over the next years, by way of its

horizontal growth in the product basket,

with the addition of new products in the

non-antibiotic space, the company

looks to strengthen its presence in the

world with a planned approach by:

Entering the new markets of

South East Asia with the new

products that complement the

disease and life style pattern

of the countries.

Responding to the market

dynamics by exploring new

molecules that are off patent

in different countries

Exploring the high growth

markets of China, Korea,

Turkey, Mexico, Argentina andBrazil. These markets are

likely to add impetus to our

growth.

With regulatory approvals in

place, the company aims to

fortune its growth and market

development in the regulated

space. The company is

buoyant on the opportunities

from the markets of Japan,

European Union and of late

the United States of America.

Spreading to the new geographies

Result :

Parabolic Drugs will become a leading pharmaceutical player with strong presence in all major countries of the world

Parabolic Drugs will add value to its revenues and margins by tapping the high margin regulated space

Parabolic looks to capitalize its revenues by yielding growth from the emerging economies including Korea,

Brazil, Mexico and China.



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The Global pharmaceutical market over

these years has undergone a significant

transition from focusing just on GMP to a

complete Quality management System.

The companies in the pharmaceutical

space have a detailed focus on the

customer, their needs and internal

efficiencies. The responsibilities for the

quality systems range across all activities

associated with development and

manufacturing (purchase, storage,

production, quality control, release and

distribution) of APIs.

Quality is just not compliance atParabolic; it is a philosophy, a core belief

of management, its employees and the

processes. As an integrated approach,

the company strives to achieve the

highest level of quality across all functions

and with an objective of continuous

improvement and development. The

dedicated quality control and quality

assurance departments work in line with

the stringent quality guidelines and GMP

framework. The company is committed to

all compliance standards andThe Quality

Function has responsibility for ensuring

that all activities in the system are

conformed with.

Quality Control DepartmentA f u l l y e q u i p p e d Q C

department ensures that all the

inputs are in accordance as per

defined specifications and

standards.

Ensures that every material

entering the premises is

sampled and tested before

use.

Ensures that product is

meeting the required quality

specifications.

Quality Assurance

Quality Assurance Unit is responsible for

fo rmat ion, implementa t ion and

maintenance of the quality system acrossall units of PDL. Quality assurance follows

global guideline of API, ICH Q7A for the

implementation of the system.

Our Quality PolicyTo achieve Customer Satisfaction by

providing High Quality Products through

Continual Improvement in Processes,

Technology Up-gradation, Competent

Employees and Investment in Research &

Development

Result:

cost effectivenessThe company is a preferred supplier to leading generic and innovator companies in India and abroad.

Parabolic classifies itself in the elite list of pharmaceutical companies that focus on the world class quality with

Attaining the highest levels of quality


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For a pharmaceutical company to sustain,

prosper and grow, it must do more than keep upwith its competitors. Moving ahead with

innovation, process research, optimization,

developments, and identifying breakthroughs

are what the researches are about.

Parabolic is aware that tomorrow's growth

depends to a broad extent on the today's

research, and the fact that the investments in

research will generate long term gains for several

years to come.

Development of innovative processes for

latest generation Beta lactam APIs and Non-

Beta Lactam APIs of world class quality

Bring efficiencies in existing products by

optimization and process research

The research activities at Parabolic encompass:

Filing of Drug Master Files and

documents with the regulated markets.

Development of new products and

chemistry for the molecules that areidentified by marketing for supplies across

the globe.

Evaluation of patents, synthetic route study

through non-infringement process before

starting development work

Providing quality documentation to Quality

assurance, Regulatory affairs for filing DMFs

in the regulated space

Process validation activities jointly by Cross

functional teams

Writing of validation protocols as per

regulatory and GMP guidelines

In the longer term, the exports for the company

are likely to be driven by the regulated sales

coming from the markets of Europe, US, Japan,

Korea and Canada. To increase its access to

these markets and to make its productsacceptable, Parabolic Drugs has been filing the

drug master files for its products across these

markets. With the filing of DMFs, the company

spectacles its strong regulatory hold Till date, the

company has filed over 43 Drug master files.

IP Management work is carried by the cell largely

in areas of filing patent applications, patent

prosecution for granting and doing searches like

Novelty, Infringement, Validity & other State of the

Art searches, which support Marketing &Research department to make their strategy on

patents related issues.

As on date, PDL has filed 23 process patent

applications on of its non-infringing processes.

Patents of the non-fringing processes

being developed for Non-antibiotics

and antibiotics

Growing with Research and Development

Result:

The value of the company gets multiplied by the interplay of its intangible assets, filing strengths, broadly its

Intellectual property.

The company , going forward, will be fetching maximum sales from the regulated markets

The domestic foothold of the company will build further with the efficiencies coming in for the existing range of products.

The company has a diversified basket of as many as 20 products to be launched over the next few years.



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Headway in the CRO and CMO spaceBacked by a large support ofinfrastructure, easy to access populationand a cost arbitrage of over 30% incomparison to the regulated world, theIndian CRO market is set to more thandouble by 2016. The Clinical researchmarket is likely to be a USD 1 billionmarket in 2016Parabolic offers CRO and CMO servicesin India with complete integrated R&D,Chemistry, technology and engineeringservices.

PDL has the capability to provideintegrated solutions from route selection,process development, and optimization.Its expertise also entails scalabletechnology development which can bescaled up to multi tones scale.

Our Services

Literature search & novel routescoutingSmall scale synthesis of multi-step &complicated chemicalsCharacterization of molecules &impurities

Route selection & optimization

Method development & validationSynthesis of GMP / non GMPmaterialTechnology transfer

Technology transfer

Small Scale Synthesis

Process R&D

Manufacturing & commercialization

Our Strengths

Non GMP &GMP manufacturing ofintermediates & APISubmission of drug master file /support to clientLong term contract manufacturing

Cost Effectiveness in the services andcommercial scale upOne stop destination for all servicesCompliance with international GMP

and regulatory authoritiesIP protection and confidentialitySupport in the regulatory databaseand documentationCommercial scale up in the largescale facilities

Result:

With all drivers set in place, the company aims to maximize its margins from CRO & CMO Business


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The horizontal growthChanging Lifestyle, an evolving disease pattern and the transition of the global world towards the generics gives an opportunity to ourcompany to grow horizontally- that is to expand our basket of products. From just being an antibiotic company, Parabolic has

diversified into non antibiotic therapies. The company has set up a 27 Acre manufacturing facility dedicated to manufacturing of lifestyle drugs. The company is working on over 15 different therapies for the launch of molecules across the changing disease pattern.

Some of the key therapies that the company is working on :

3

4

To combat the effects of the asthma cascade(bronchoconstriction, inflammation, edema)

To treat diabetes mellitus by lowering glucoselevels in the blood.

The global market for asthma was valued at$34.9 billion in 2011. This figure is projectedto reach $38 billion by the end of 2012 and$47.1 billion in 2017, increasing at a five-year compound annual growth rate (CAGR)of 4.4%.

One of the most lucrative markets in theglobe. Expected to grow over USD 100billion by 2019. Significant growth to beseen from the emerging markets owing totheir changing lifestyle

S.No. TherapeuticCategory

Treatment Market Potential

1 Analgesic To relieve pain The global market for Analgesics is forecastto reach US$34.6 billion by the year 2015.Key factors driving market growth includegraying population, surging number ofsurgical procedures, and increasing numberof cancer and AIDS patients.

2 To suppress abnormal rhythms of the heart(cardiac arrhythmias), such as atrial

fibril lation, atrial flutter, ventriculartachycardia, and ventricular fibrillation.

The global antiarrhythmic market will beworth $3.5 billion in the coming three years

Anti-arrhythmic

Anti-asthmatic

Anti-diabetic



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The vertical integration for value maximizationIn the year 2011, the company scaled up the value chain to the

finished dosage business. While the inhouse manufacturing

facility getsthe commercial nod, the company's formulation

business in the domestic market market has been set in place.

The strategy to penetrate the global markets with a basket of

niche products backed by the inhouse API will the way forward

for the formulations business. The company shall bring a wide

product range covering Tablets, Capsules, Injectables, Dry

Syrups and Respiratory capsules across high value therapeutic

segments like Antibiotics, Anti-diabetics, Anti-Asthmatics, Anti-

hypertensive, Hormones, Nasal sprays and solutions etc.

1. Nucleus- A division of Parabolic Drugs for the

domestic formulations space

2. International Formulations Division for the sales of

niche molecules where PDL has a backward

integration

The strategic initiatives are driven by two divisions across the

different verticals:

Way Forward :

Nucleus

International Formulations division

Nucleus has been able to attain a minimum monthly sales

base of INR 10 mio with 178 products within 15 months of

its launch

Going forward, with a basket of 500 products in two

divisions and geographical reach all over India, the

division looks to touch a topline of INR 1000 million in the

period of five years.

Submission of over 100 dossiers across different

parts of world

Developing IPR with over 60 brands registered

in the name of company

The company is investing and going forward shall build its

own USFDA approvable facilities.


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Board of Directors Report

(` in million)


The Board of Directors of your Company has pleasure in presenting the Sixteenth Annual Report on theaffairs of the Company together with the Audited Accounts of the Company for the year ended 31stMarch, 2012.

The Financial Results for the year under review vis--vis the financial results for the previous year areas under:

1. Financial Results:

2010-2011articulars 2011-2012Gross Sales 10123.08 6752.97Profit before Depreciation, Interest & Tax (PBDIT) 1406.32 1177.03

Financial Expenses 641.37 407.60

Depreciation 100.54 82.61

Profit before Tax (PBT) 664.41 686.82

Provision for Taxation:

- Current Tax 132.88 136.88

- Deferred Tax 19.41 21.21

Less: Taxation Adjustments for earlier years - 8.48

Profit after Tax (PAT) 512.12 520.25

Profits available for equity shareholders 512.12 520.25Appropriation:

Proposed Dividend on Equity Shares 15.47 30.95

Corporate Dividend Tax 2.51 5.14

Surplus carried to Balance Sheet 494.14 484.16

Earnings per Share(Basic) 8.27 9.43

Earnings per Share (Diluted) 8.27 9.43


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Financial Analysis and Review of Operations: 4. Dividend :

5. Subsidiary :

6. Management Discussion and Analysis Report :

7. Corporate Governance Report :

8. Auditors :2. Directors :

3. Share Capital :

Your directors are pleased to report performance of the The Board of Directors of your Company hasbusiness operations as follows:- recommended a dividend of Rs. 0.25 per share on the Fully

Paid-up Equity Share of the Company.

During the year under review, your Company has registered

Gross sales of Rs. 10123.08 million as compared toDuring the year under review, the Company had floated aRs. 6752.97 million in the previous year showing annew subsidiary Company namely M/s. Ziven Lifesciencesincrease of 49.91 percent.Limited to carry on the formulations business. The present

Further, your Company has registered an export of paid-up capital of that Company is Rs. 1,04,00,000/- out ofRs. 1478.17 million as compared to Rs. 2301.99 million in which your Company holds 90.38% share capital of that

the previous year showing a decrease of 35.79 per cent. A Company. Further, your Company holds 98.99% of paid upfall in the exports has been recorded on account of unrest in capital of Rs. 4,95,00,000/- of Parabolic Research Labsthe global markets, the crisis in the Middle East and in Euro Limited, another subsidiary of your Company. A statementzone. under Section 212 of the Companies Act, 1956 of the

subsidiary companies is annexed hereto. Profitability :

The Company earned profit before depreciation, interest

and tax (PBDIT) of Rs.1406.32 million as againstManagement Discussion and Analysis of financialRs. 1177.03 million in the previous year, showing anconditions and result of operations of the Company for theincrease of 19.48 per cent. The Company earned profitfinancial year 2011-12, as required under Clause 49 of thebefore tax (PBT) of Rs. 664.41 million as compared toListing Agreement are annexed hereto as a separateRs. 686.82 million in the previous year, showing a decreasestatement in the Annual Report.

of 3.26 percent. After making provision for tax of Rs. 152.29million (previous year Rs. 158.09 million), net profit worked

out to Rs. 512.12 million as compared to Rs. 520.25 million

in the previous year showing a decrease of 1.56 percentThe Company aimed to conduct its affairs in an ethicalmainly due to increased cost of imported raw material, duemanner. A separate report on Corporate Governance whichto depreciation in rupee value, and higher interest cost.forms a part of the Annual Report is annexed hereto. A

Fixed Assets : certificate from the Statutory Auditors of the Companyregarding the compliance of conditions of Corporate

The net fixed assets (including work-in-progress) as at 31stGovernance as stipulated under Clause 49 of the Listing

March, 2012 were Rs. 3751.81 million as compared toAgreement is annexed to report on corporate governance.

Rs. 2752.07 million in the previous year.

M/s. S.K. Bansal & Company, Chartered Accountants,Dr. Ram Kumar and Mr. Inder Bir Singh Passi, Directors of

Chandigarh, the Statutory Auditors, are retiring at theyour Company, retire by rotation at the forthcoming Annual

conclusion of the forthcoming Annual General Meeting andGeneral Meeting and being eligible, offer themselves for re-

being eligible, offer themselves for re-appointment. Theyappointment.

have also given their eligibility in terms of Section 224 (1B) of

the Companies Act, 1956. The Audit Committee and Board

of Directors have recommended their appointment for the

financial year 2012-2013 to the members for their approvalDuring the year under review, there is no change in the

in the ensuing Annual General Meeting.Share Capital of the Company.

Sales and Export:


19/95

17

9. Auditors' Report :

15. Statement of Particulars of Employees :10. Audit Committee :

16. Group :

11. Cost Auditors :

17. Directors' Responsibility Statement :

12. Internal Control System :

13. Fixed Deposits :

14. Human Resources / Industrial Relations : 18. Conser vation of Energy, Techno logyAbsorption, Foreign Exchange Earnings andOutgo :

proactive policies for industrial relations, the industrial

relations between the employees and the managementThe Auditors' Report on the Accounts of the Company for remained peaceful and cordial throughout the year at allthe year under review is self-explanatory and requires no offices and units of the Company.comments.

A Statement of Particulars of Employees pursuant to theDuring the year under review, the Audit Committee was provisions of Section 217(2A) of the Companies Act, 1956reconstituted. The constituent members of the Audit is annexed hereto and forms part of this report.Committee are Mr. Nikhil Goel, Mr. Inder Bir Singh Passi,

Mr. Arun Mathur and Mr. Pranav Gupta. Mr. Nikhil Goel is

the Chairman of the Audit Committee. The Committee met

The Company, inter-alia with the following entities,five times during the year. The detailed information

constitutes a group as defined under the Monopolistic andpertaining to Audit Committee of the Company is given inthe Corporate Governance report. Restrictive Trade Practices Act, 1969:

a) PNG Trading Private Limited

b) Parabolic Infrastructure Private LimitedThe Board of Directors had re-appointed M/s. Anil Sharma

& Co., Cost Accountants, Chandigarh, as the Cost Auditor

of the Company for the financial year 2011-12. The Cost

Auditor's report for the financial year 2011-12 will be Pursuant to Section 217 (2AA) of the Companies Act, 1956,forwarded to the Central Government as required under the Directors confirm that:-Law.

a. in the preparation of the annual accounts, the

applicable accounting standards have been followed;

The Company has well defined internal control system. The b. appropriate accounting policies have been selected

Company takes abundant care to design, review and and applied consistently, and have made judgmentsmonitor the working of internal control system. Internal and estimates that are reasonable and prudent so as

Audit in the organization is an independent appraisal to give a true and fair view of the state of affairs of theactivity and it measures the efficiency, adequacy and Company as at 31st March, 2012 and of the profit ofeffectiveness of other controls in the organization. All the Company for the year ended on 31st March, 2012;significant issues are brought to the attention of the Audit

c. proper and sufficient care has been taken for theCommittee of the Board.maintenance of adequate accounting records in

accordance with the provisions of the Companies

Act,1956 for safeguarding the assets of the CompanyDuring the year 2011-12, the Company has not

and for preventing and detecting fraud and otherinvited/accepted any deposits from the public in terms of

irregularities; andthe provisions of Sections 58 A and 58 AA of the

Companies Act, 1956. d. the annual accounts have been prepared on a going

concern basis.

Your Company continues to lay emphasis on continued

qualitative growth of its human resources by providing a

congenial and conducive work environment in

consonance with its belief that the real strength of itsEnergy conservation continues to be an area of majororganisation lies in its employees. During the year theemphasis in our Company. The Company has adopted theCompany employed over 1000 employees. As pursuit of

Parabolic Drugs Limited | Annual Report 2011-12


20/95

strategy of bringing about a general awareness amongst Your Directors also express their deep appreciation for the

devoted and sincere services rendered by employees at allall regarding energy conservation.

levels of operations of the Company during the year and weParticulars with respect to conservation of energy and are confident that our Company will continue to receiveother areas as per Section 217 (1)(e) of the Companies Act, such co-operation from them in future also.1956, read with the Companies (Disclosure of Particulars in

the Report of Board of Directors) Rules,1988, are annexed

hereto and form part of this report.

19. Acknowledgement :

Your Directors are pleased to place on record their sincere

gratitude to Government, Financial Institutions, Bankers

and Business Constituents for their continued and valuable

co-operation and support to the Company.

For and on behalf of the Board

Pranav GuptaManaging Director

Vineet GuptaWhole Time Director

Place: Chandigarh

Dated: 14th August, 2012


21/95

Annexure to the Board of Directors Report19

INFORMATION AS PER SECTION 217(1) (e) READ WITH COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF

BOARD OF DIRECTORS) RULES, 1988 AND FORMING PART OF THE DIRECTORS' REPORT FOR THE YEAR ENDED 31ST

MARCH, 2012:

1. Conservation of Energy :

Your Company has always been conscious of the need to conserve energy and also reduce the cost of production. We hold regular

meetings in our units for discussions on the various energy conservation measures and implement them. Various energy conservation

measures taken during the year include use of condensate water in boilers, separation of high and low pressure air lines, change of

cooling tower fills, improvement of refrigeration system, provision of PSA system in Amorphous plants and Power trading etc. The

details regarding the present energy consumption are furnished below as per form A of the annexure to the rules.

Form-A

A. Power & Fuel Consumption:

Particulars Unit 2010-2011

1. Electricity

a) Purchased

Units KWH in million 16.20 11.33

Total Amount ` in million 98.04 60.96

Rate per Unit /KWH 6.05 5.38

b) Own Generation

i) Through diesel generatorUnits KWH in million 1.47 0.97

Units per litre of Diesel KWH 3.00 3.00

Cost per Unit /KWH 13.66 12.03

ii) Through steam turbine/generator

Units - -

Units per litre of fuel oil/gas - -

Cost per Unit - -

2. Coal

Quantity Ton - -

Total Cost ` in million - -

Average Rate ` /ton - -

3. Furnace Oil :

Quantity K. Litres 20.00 59.70

Total Cost ` in million 1.15 2.84

Average Rate / litre 57.36 47.60

4. Others /Internal Generation

Quantity (Timber & Husk) Ton 8258.41 7230.61

Total cost ` in million 40.85 31.20

Rate/Unit /ton 4946.71 4315.58

2011-2012



22/95

adoption of latest technology in its all plants. The. Technology Absorption : Company has also created specific R & D and otherEfforts made in technology absorption are furnished in cells for studying and analyzing the existing processForm B as under: for further improvement.Form -B b) Particulars of Imported Technology in last five years:A. Research and Development(R&D) : i) Technology Imported : NILa. Specific areas in which Research & Development is ii) Year of Import : Not Applicablecarried out by the Company :

iii) Has the Technology : Not Applicable& D has been carried out in areas of improvement on been fully absorbedroduct, Process, Cost Reduction, development ofnew products like Montelukast, Bortezomib and Anti 3. Foreign Exchange Earnings and Outgo :iabetic Compounds like Sitagliptin, Vildagliptin etc.and increase in Productivity. a) Activities relating to Exports, Initiative to increase :b. Benefits derived as a result of above R & D : The Company exported Semi Synthetic Penicillin (oral andThe Company was able to improve the quality of sterile) and Cephalosporin (orals and sterile) and nonexisting products like Cefuroxime Axetil and develop antibiotic products to various overseas customers. Ournew products Strontium Ranelate, Febuxostat and was products are being exported to more than 50 countriesalso able to reduce the cost of Production. across the globe. The Company has several internationalc. Further course of action : regulatory approvals giving it an access to major marketsWe intend to develop new product, to further reduce the like EU, Japan, US etc.. The Company has understood thecost and improve capacity utilization. need of customer relationships and identified potential

customers across the globe and initiated visit to meet them. Expenditure on R & D : in order to know more about them and their requirements.( in million) The Company has also participated in various2011-12 2010-11 international/National Business fairs in order to interact withCustomers.apital 10.01 49.52

Recurring 933.38 640.16 b) Total Foreign Exchange used and earned:--------------- -------------- ( in million)Total 943.39 689.68--------------- -------------- 2011-12 2010-11Total R& D expenditure as a percentage of turnover: - 1. Earnings 1212.46 1736.17.32% (FOB Value of exports)B. Technology Absorption, Adaptation and Innovation :

a) Effort made: 2. Outgo (CIF Value of imports 1872.94 2631.11and Expenditure in foreign currency)he Company is continuously making efforts for

`

`

B. Consumption Per Unit of Production:Production of Different ProductsElectricity KWH/KG 5.65* 5.38*Furnace OilCoal (MT)Furnace Oil (Litres)Others/Internal Generation(*) Variation due to change in product mix


23/95

21

Information required as per Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars ofEmployees) Rules, 1975 and forming part of Board of Directors' Report for the year ended March 31, 2012A) Persons employed throughout the financial year, who were in receipt of remuneration for the year which, in the aggregate, was not

less than Rs. 60,00,000 per annum.S No. Particulars Details as on 31.03.2012

Name Mr. Pranav Gupta Mr. Vineet Gupta Mr. Malcolm Rosenthal1. Designation of Employee Managing Director Whole Time Director Executive Vice President

(Global Business Development)2. Remuneration Received Rs. 96,00,000/- Rs. 84,00,000/- Rs. 106,24,294/-3. Nature of Employment Contractual Contractual Non Contractual4. Nature of Duties Managerial Managerial Business Development5. Qualifications & Experience B. Tech B. Tech (Mechanical) B.Sc., MBA

(Mechanical), M.B.A.6. Date of commencement of Employment 01.11.1997 01.11.1997 24.01.20117. Experience 22 years 21 years 26 years8. Age 45 years 43 years 53 years9. Last Employment held Ford Motor Company N. A Austin Chemical Company, USA

B) Persons employed for a part of the financial year, who were in receipt of remuneration for any part of the year, at a rate which, inthe aggregate, was not less than Rs. 5,00,000 per month.S No. Particulars Details as on 31.03.2012

Name Dr. P B. Deshpande Mr. Seetaraju Gembali1. Designation of Employee Chief Scientific Officer President-Formulation Business2. Remuneration Received Rs. 26,24,398/- Rs. 24,51,386/-3. Nature of Employment Non Contractual Non Contractual4. Nature of Duties Scientific Research Formulation Business5. Qualifications & Experience M.Sc., Phd M.Pharm( Pharmaceutics) and

Diploma in marketing management6. Date of commencement of Employment 02.08.2010 05.12.20117. Experience 27 years 23 years8. Age 57 years 48 years9. Last Employment held Emcure Limited, Pune Mid Pharma and Promed Research, JordanNotes:1. Remuneration includes salary and other perquisites (in case of Mr. Pranav Gupta and Mr. Vineet Gupta)2. Remuneration includes Salary, Other Allowances and Provident Fund ( in cases of rest of the employees)3. Mr. Pranav Gupta and Mr. Vineet Gupta are related to each other.4. Mr. Pranav Gupta and Mr. Vineet Gupta are holding 824,100 and 701,550 Equity Shares of the Company respectively .5. Dr. P B. Deshpande resigned from the Company w.e.f. 14th September, 2011.

Statement of Particulars of EmployeesParabolic Drugs Limited | Annual Report 2011-12


24/95

1 2 3 4 5 6 7 8Parabolic 31.03.2012 2,950,000 98.33% Nil Nil N.A. N.A.

Research ( Rs. 10 each)

Labs

Limited

Ziven 31.03.2012 399,996 79.99% Nil Nil N.A. N.A.

Lifesciences ( Rs.10 each )

Limited*

Statement Pursuant to Section 212 of the Companies Act, 1956 Relating to Subsidiary Companies:Name ofSubsidiaryCompany

FinancialYear endingof theSubsidiary

Number ofShares held( Face Value)

Extent ofHolding

For Financial Year of the Subsidiary For the Previous Financial Years since itbecame a Subsidiary

Profit/(Losses) so far it

concerns the members

of the Holding Company

and not dealt with the

books of Accounts of the

Holding Company

(Except to the extent

dealt within Col.6)




and dealt within the

books of Accounts of the

Holding Company.




and not dealt within the

books of accounts of the

Holding (Except to the

extent dealt within Col. 8)




and dealt within the

books of accounts of the

HoldingCompany

Place: Chandigarh

Dated: 14th August,2012

Note: *The financial year of the Ziven Lifesciences Limited was from 01.11.2011 to 31.03.2012.

For and on behalf of the Board

Vineet GuptaWhole Time Director

Pranav GuptaManaging Director

Vipin GuptaVice President & Company Secretary

R. C. GoyalSenior Vice President (Finance)


25/95

Management Discussionand AnalysisGlobal economy and Indian ScenarioOver the past couple of years, the economic developmentacross the globe has been volatile; it may have been a result ofnatural disasters, a volatile belief of investors, the crisis with theglobal giants or the changing global environment. The year 2011in particular has really been weak. Despite all these adversities,the economic news during the first half of 2012 has beenpositive. Significant structural , fiscal and monetary steps inEurope during the first half of 2012 have contributed toimprovements in the marketing sentiment. On an assumptionthat the conditions in the European Union will not worse further,as per the world bank, global GDP is projected to increase 2.5percent in 2012, with growth accelerating to 3.0 and 3.3 percentin 2013 and 2014.Output in the Euro Area is projected to contractby 0.3 percent in 2012, GDP in developing countries is projectedto expand 5.3 percent in 2012.However, in the global economy, India is projected to see a fastergrowth of 6-7 per cent this fiscal, on the back of higher savingsand investment rates, even as most of the Asia-Pacificeconomies are likely to expand at a slower pace.In the FY 12, India witnessed a tough time to achieve its growthtargets and control on inflation. The Economic growth slightlydeclined to 6.9% in FY 12, although it remained one of the fastgrowing global economies.The Pharma IndustryThe Indian Pharmaceutical space is gaining its position acrossthe globe, as per a report by PWC, the pharma market in India islikely to cross USD 70 billion in sales by 2020(current size of USD11 billion). The country is is likely to bank on the opportunity of

domestic growth. The domestic pharmaceutical market (IPM)

grew 21.9 per cent to record sales of Rs 5,369 crore (US$ 1.01

billion) in March 2012, as compared to the previous year,

according to an analysis by a market research firm. Amongst the

export markets, India is likely to push Japan for further opening of

the pharmaceutical sector. This would help the domestic

industry to leverage Comprehensive Economic Partnership

Agreement (CEPA) and increase its share in the Japanese

market. Indian pharmaceutical industry would gain significantly

from the pact as Japan, the world's second largest market, had

agreed to cut duties on imports of Indian generic drugs. India

has also looked into joint ventures (JV) with Russian

pharmaceutical companies to manufacture 500 drugs in Russia

and to supply them in markets of Russia, Belarus and

Kazakhstan. The growth will also be driven by the largest number

of merger and acquisitions (M&A) in the pharmaceutical and

healthcare sector. The drugs and pharmaceuticals sector has

attracted foreign direct investments (FDI) worth US$ 9,173.50

million between April 2000 to February 2012, according to the

latest data published by Department of Industrial Policy and

Promotion (DIPP).

India tops the world in exporting generic medicines worth US$ 11billion. The Generics will continue to dominate the market while

patent-protected products are likely to constitute 10 per cent of

the pie till 2015, according to McKinsey report 'India Pharma

2015 - Unlocking the potential of Indian Pharmaceuticals

market'.

Indian generics constitute nearly a fifth of global supplies, as per

a press release dated December 28, 2011. India has world

renowned capacity in producing low cost, high quality bulk and

generic drugs.

23Parabolic Drugs Limited | Annual Report 2011-12


26/95

Indian pharma industry in the 1990s, when the rising healthcare

costs in many developed countries forced them to seek the

cheaper generic drug option. Thus, the Indian pharma industry

was able to exploit the enormous generic opportunity that was

spawned.

In the near-term, the generic opportunity will continue to lure

more companies. And, with competition intensifying, generic

drugs will see greater price erosion.

For sustaining growth, Indian drug-makers will look at newer

avenues such as entering niche segments, building

relationships with global pharma for joint research and

development and widening distribution networks through

marketing alliances. Other potential thrust areas include bio-pharmaceuticals, contract research and manufacturing, and

new drug research.

The low cost of manufacturing renders India as an attractive

destination for contract research, and the availability of a

large patents pool makes it appealing for clinical trials, which

contributes the most, in terms of revenue, to the contract

research segment. An increased presence in contract

research will also help them build expertise to move up the

value chain and engage in new drug development.

Indian industry's R&D capabilities currently lie in reverse

engineering drugs and in process chemistry

The high-risk high-return field of new drug research holds

tremendous potential for Indian players.

Company perspective

Established in 1996, Parabolic Drugs started its operations in

1998 as a small manufacturer producing for few of the clients in

the region. From being a pharmaceutical ancillary in the initial

years to a leading pharmaceutical company in 2012,Parabolic

has emerged as a preferred partner and supplier to global

innovators and generic companies in the antibiotic and non-

antibiotic segments.

Over the years, the company has strengthened its competitiveposition in the antibiotics and non-antibiotic APIs, Research and

Development, and CRAMS space. It has registered a five year

CAGR of over 35% while establishing a basket of over 50 APIs

and various intermediates being serviced to about 800

customers. The company has also created a pipeline of 20

generic drugs across the niche therapies.

In the year 2011, the company has stepped up in the value chain

by foraying into the formulations segment. The Company has a

clear vision to be a fully integrated Pharmaceutical Company

The Ministry of Commerce has proposed an ambitious Strategy

Plan to double pharmaceutical exports from US$ 10.4 billion in

2009-10 to US$ 25 billion by 2013-14. The Government has also

planned a 'Pharma India' brand promotion action plan spanning

over a three-year period to give an impetus to generic exports

Key Drivers to Indian Growth

Competent workforce: India has a pool of personnel with high

managerial and technical competence. It has an educated work

force fluent in English. Professional services are easily available.

Cost-effective chemical synthesis: Its track record of

development, particularly in the area of improved cost-beneficial

chemical synthesis for various drug molecules is excellent. It

provides a wide variety of bulk drugs and exports sophisticated

bulk drugs.

Legal & Financial Framework: India has an old democracy and

hence has a solid legal framework and strong financial markets.

There is already an established international industry and

business community.

Consolidation: The international pharmaceutical industry is

finding great opportunities in India. The process of

consolidation, which has become a generalized phenomenon in

the world pharmaceutical industry, has started taking place in

India.

Industry classification

Way forward

The Indian pharmaceutical industry's emergence on the global

landscape as a strong generics player is largely due to the Indian

Patents Act-1970, which allowed only process patents in

pharmaceutical space. The process patent regime has since

then enabled pharmaceutical companies to keep the cost of

medicines at affordable levels, therefore resulting in further cost

reduction by reverse engineering. Although India shifted to the

product patent regime in 2005, the capabilities developed during

the past two decades became a competitive advantage for the

IndianPharmaceuticalIndustry

Market SizeUSD 4.8 Bio Market SizeUSD 2.5 Bio Market SizeUSD 2.3 Bio Market SizeUSD 200 mio

ActivePharmaceuticalIngredients(API)Contract ResearchAndManufacturingService (CRAMS)

Formulations Biosimilars


27/95

2. To develop products and chemistry for the newmolecules

as identified by marketing. This includes the evaluation of

patents, synthetic route study through non-infringement

process before starting development work.

3. To enable the company in sustaining the cost

competitiveness in market by continuous improvement in

the existing processes.

4. To provide quality documentation to Quality assurance,

Regulatory affairs for filing DMFs in the regulated space

5. Process validation activities jointly by Cross functional

teams.

6. Writing of validation protocols as per regulatory and GMPguidelines

Contract research and Manufacturing services at

R&D

PDL offers Contract Research and manufacturing Services

(CRAMS) in India and services to Global science Industry. With

complete integrated R&D infrastructure, Parabolic (PDL)

positions itself as one of the most competitive players.

In CRAMS, PDL has the capability to provide integrated solutions

ranging from route selection, process development, and

optimization to manufacturing. Its expertise also involves

providing Engineering solutions for manufacturing at multi tonscale.

Key achievements in FY 12

- Successful execution of about 35 projects till date

- Alliance with top generic and innovator companies in

Europe, US and Japan.

- Successfully completed the EHS and CGMP audit by

innovator companies from US and Japan.

Intellectual Property Research (IPR)

PDL is fully equipped to encounter the challenges of patent

infringements in Pharmaceutical Industry. PDL has a well-

qualified and experienced team to facilitate the development of

intellectual wealth and support to identify new potential markets

for API & formulations across the globe. So far, the Company has

filed has twenty four Process patents.

IPR Vision of the company

To ensure non-infringing process for the future Grid

molecules in different

providing world class pharmaceutical products and services,

from development of API intermediates to API contract

manufacture to supplying finished formulations, for both generic

and Innovator companies across the globe.

The company is going ahead with the vision of being a fully

integrated pharma company having backward and forward

integration, world class infrastructure, R&D strengths, diversified

product basket across different therapeutic segments and

Intellectual Property Rights in the form of DMFs, and Patents for

novel processes.

Parabolic continues to build on its strengths and is

fundamentally prepared for the challenges from the changing

business and global economics.

Business Model

Research and Development

The Research and development wing performs anessential role

in the sustained growth of the company. Backed by world class

infrastructure and equipped with all modern facilities the R&D

team comprises a strength of around 75 qualified Ph.D and M.Sc

scientists. Their activities range in development of cost efficient

non infringing synthetic process, analytical testing, and

optimization with quality documentation.

Since R&D is considered as the mainstay for the organization,

therefore a significant focus of the management rests on it. In

today's competitive Pharma industry world, the research and

development wing has the following focal points for itsoperation:

1. To bring in efficiencies in the process chemistry by

a. O pt i mi z at i on o f r ea c ti on pa r am ete r s an d

methodologies

b. Optimization by backward integration of the key

intermediates

c. Optimization by recoveries and recycling

d. Down steam processing by products and green

chemistries

25

Active PharmaceuticalIngredients

Finished DosageFormulations

Researchand Development

BusinessModel



28/95

Therapeutic areasIP Generation by filing new process, new

polymorphic form of different molecules

Trace out business potential/market for the Grid molecules

IPR Capabilities

Patent analysis via prior art search

Technology assessment

Patentability assessment

Patent application drafting and filing

Licensing support

IP overlap analysis

Competitor analysis and IP monitoring

Active Pharmaceutical Ingredients

The Active Pharmaceutical Ingredients manufacturing division

for the company plays the fundamental role in the revenues. The

company drives its API business through its large scale

manufacturing facilities dedicated for different verticals and

covering therapeutic segments. Besides, the in-houselocation,

the company also has strategic alliances with different world

class facilities for catering to the demand of its customers.

Over the years, the company has invested in shaping a world

class infrastructure that enables it to produce best in category

products with superior quality and excellence. The company

today operates out of four in-house locations that comply with

international regulatory standards and are duly approved by

International regulatory agencies.

Manufacturing Facilities for APIs

A 27 acre site with nine manufacturing plants that enables it to

produce wide range of latest generation cephalosporin APIs

and intermediates.

A dedicated quality control and quality assurance unit,

Solvent recovery units, three R&D laboratories, a pilot plantfor scale-up of new technologies developed by our in-house

R&D, three boilers and utilities, two warehouses and in house

healthcare centre

Regulated Approvals:EU GMP, WHO GMP, Japanese PMDA,

Korean FDA, OHSAS 18001-2004, ISO 14001-2004

Penicillin Facility at Panchkula(PDL II)

Two dedicated blocks for the manufacturing of wide range of

oral penicillin products including niche penicillin APIs such as

Bacampicillin, Sultamycillin and Pivampicillin

Cephalosporin Facility at Derabassi(PDL I)

Complies with all GMP requirements and has complete utility

support with ETP, an in-house liquid nitrogen tank, and a GMP

compliant water systems and chillers

Regulated Approvals: WHO GMP, USFDA for 6-APA

R&D Centre at Barwala(PDL III)

Equipped with specialized laboratories of International

standard following cGLP

Six chemical research lab, each lab having 12 fuming hood

Dedicated Analytical lab with instruments like HPLC, Prep.

HPLC, XRD, GC with Head space, GC, LC-MS, IR

Spectrophotometer, UV-Visible Spectrophotometer,

Polarimeter, Auto Titrator and Lypholizer

Non- Antibiotic Facility at Chachrauli(PDL IV)

Pilot plant commissioned for manufacturing non-antibiotic

APIs in the new therapies such as CVS, CNS, oncology,

antithrombotic, anti-diabetic and pain management.

Includes QA/QC block, pilot plant, manufacturing plant with

five production streams, separate finished goods processing

section, solvent recovery, utilities, effluent treatment plant,

canteen, stores, warehouses, hazardous reaction block and

engineering and project sections.

SegmentsAntibiotics-Cephalosporin

Parabolic started as a contract manufacturer in the Penicillin

space in 1998 and it has journeyed as a leading antibiotic

manufacturer now. The company in the antibiotic segment has

created a presence in over 50 countries.

In the Antibiotics, the company banks on the following strengths:

Two large scale cGMP compliant API manufacturing facilities

Plants audited and approved by leading MNCs and

regulators including EUGMP, KFDA, Japanese PMDA and

WHO

Strong Quality Management systems with Incoming/

Outgoing quality controls

Presence in over 50 countries including the regulated

markets of Europe, Japan and Korea

In-house research and development capabilities for

sustaining market leadership by means of cost, quality and

optimization

Experience and strength to partner the leading innovator

and generic companies across the globe


29/95

In house sterile manufacturing plant built to International

cGMP specifications and conforming to USFDA standards.

The entire operations are in closed condition without human

intervention using manufacturing line of BADO from OMCA,

Italy.

Filed over 39 Drug Master files across Europe, Japan, USA,

Canada, Japan and Korea

World class EHS management system driving EHS practices

Key Achievements in FY 12

Commissioning of multi-purpose block 3 with 120 TPA

capacity and Spray dryer for augmenting Amorphous in

September 2011 Commissioning of New Sterile facility in March 2012 with fully

automated International BADO machinery for World class

quality and compliance. Adds 120TPA capacity to Sterile

basket

Audit from the Japanese companies for inspection from the

Japanese regulators for PMDA

Successful Approval from Korean Food and Drugs

Authority(KFDA) on Cephalosporin

Audit and visit from the European customers for EUGMP

approval of the new Sterile facility

Supply to Large Indian customers for their Finished Dosage

requirement , thereby enabling a trigger for USFDA

inspectionFiling of 7 drug master files across EU, US and

Japan. The total filings till date are 43

Antibiotics- Penicillins

In the penicillin space, the company has successfully cleared

audit and inspection from the European regulator which has a

potential business in FY 13. The company is in negotiations with

different customers in EU for regulatory business in Penicillin

segment.

Non-Antibiotics (Life Style Drugs)

In December, 2011, the company successfully initiated the

production in its green field project for the life style drugs and

non-antibiotics. With a pipeline of over 17 new drugs in different

therapeutic segments, the company is expecting sales in FY 13.

The Lalru facility is spread across 27 acres and includes QA/QC

block, pilot plant, manufacturing plant with different production

streams, separate finished goods processing section, solvent

recovery, utilities, effluent treatment plant, canteen, stores,

warehouses, hazardous reaction block and engineering and

project sections.

Therapies being worked intoa. Anti-Thromboticb. Anti-Osteoporoticc. Anti-Diabeticd. Anti-Hypertensivee. Neuro-Muscular Blocking Agentf. Antineoplasticg. Analgesich. Treatment of Hyperuricemia & chronic gouti. Muscle Relaxant (Skeletal)j. Chelating Agent (iron)

Herbal NutraceuticalsParabolic has been successful in launching its Herbalnutraceutical molecules across different markets in the globe.PDL has a Long term Strategic Tie up with Herbal APIManufacturer for the sales and marketing of herbalNutraceuticalsKey Herbal APIs offered are:

27

ReserpineUsed in Antihypertension, treatment of insanity

10 DAB IIIIt is a precursor of Paclitaxel and Docetaxel, which is usedfor cancer treatment

RaubasineUsed for treatment of high blood pressure and CerebralHypoxia

YouhmbineUsed as both an over the counter dietary supplement inherbal extract.

ColchicineAn Anticancer natural product

ThiocolchicosideUsed as Anti- inflammatory muscle relaxant

Calcium SennosideUsed in the treatment of constipation, working through astimulation of intestinal peristalsis.



30/95

Quality Control and Quality AssuranceAt Parabolic Drugs, Quality is not just a compliance rather it is ahabit. Quality at Parabolic is an integrative philosophy ofmanagement for continuously improving the quality of productsand processes. It functions on the premise that the quality ofproducts and processes is the responsibility of everyone who isinvolved with the work at Parabolic. It is believed that theinvolvement of management, workforce, suppliers, andcustomers, shall enable the company to meet or exceedcustomer expectations. Quality Unit of Parabolic includesQuality Assurance and Quality Control empowered withindependent decision making authority.A dedicated Quality Control and Quality Assurance departmentexists at PDL for all its facilities. PDL is proud to have itsinfrastructure created in line with the stringent quality guidelinesand GMP framework. It is committed to compliance standardsand is focused to meet the norms set by different pharmacopeia,and stringent specifications of clients. There are over twentydifferent MNCs and large formulators that have approved thefacilities of PDL.Environment Health and SafetyPDL engages & encourages its employees to adopt & complywith safety standards, safe practices and safe procedures on thejob to prevent occupational health & safety related problems.At PDL:We strongly believe that working safely is a way of life All our business decisions have inherent consideration for

safety We believe that all our employees shall have an attitude of

responsibility and be willing to work as a team for the benefitof Safety of self and of their co workers.

Corporate Social ResponsibilityParabolic Drugs considers the interests of society by takingresponsibility for the impact of its activities on customers,employees, shareholders, communities and the environment inall aspects of its operations. Its contribution to the community arein the areas of health, education, improving village infrastructure,environment (effluent treatment, tree plantation, treatment ofhazardous waste), and miscellaneous activities such ascontribution to other social development organisations.The employees and management of Parabolic also participatesin the welfare programmes, both at the personal andprofessional level.

Major initiatives

villages across its different locations. Over the years, this hasbeen a regular practice for the company as an initiativetowards society

Towards the noble cause, the employees of the companytake initiative in the form of blood donation.

Towards the greener environment, employees at PDL havetaken the ownership of creating green belts across differentregions

Sponsoring major initiatives and social events to fosterIndia's rich culture and heritage

Human Resource and Intellectual WealthAt Parabolic, it is believed that the future source of sustainablecompetitive advantage is largely through investment in thepeople, through the investment in building their capabilities.The Company emphasizes on continued qualitative growth of itshuman resources by providing a congenial and conducive workenvironment in consonance with its belief that the real strength ofits organisation lies in its employees.HR VisionTo achieve organizational excellence by implementing HRPractices that align Human Capital with Corporate Vision andimprove their satisfaction level and have positive impact onoverall business performance.HR MissionTo create a value based organization by inculcating a culture oflearning, creativity & team work and aligning the aspirations ofour people with the business priorities which will ultimately leadto the development of an empowered, responsive andcompetent human capital.HR Goals1. To formulate and implement sound HR Practices and

Systems.2. To foster an extremely open, congenial, innovative and

enthusiastic work culture.3. To develop and sustain core values and work ethics4. To re-orient attitude of employees to cope with the changes

required to establish an ethos of Quality and HighPerformance.

The company organized several free health checkups for the


31/95

5. To enhance productivity of human resources by developing

efficient and effective systems of manpower planning,

succession planning, selection, placement, training &

Development and effective performance management

system.

During the period under review, there was no incident of work

stoppage or loss of production due to IR related issues

Formulations

FY 12 marks the presence of Parabolic in the formulations space.

The company has a vision of being a vertically integrated

pharmaceutical company.

The strategic initiatives are driven by two divisions across the

different verticals:

1. Nuclues- A division of Parabolic Drugs for the domestic

formulations space

2. International Formulations Division

Developments in NUCLEUS

FY 12 marks the presence of Parabolic in the formulations space.

The company's under its division NUCLEUS has ensured a PAN

India presence with about 500 Stockiest, 20 distributors and

wide basket of 170 products in different dosage form. The

company clocked a topline of about 8 Cr in FY 12. Going forward,FY 13 will further cement Nucleus's presence in the domestic

market.

Developments in the International Formulations

Meanwhile, the company's own plants get commissioned; it has

identified and finalized different WHO GMP approved

manufacturing sites to initiate the business. The focus is on the

therapeutic segments where PDL has backward integration.

Developments in FY 12:

a) Registration of about 50 brands in India and Internationally

b) Submission of about 80 dossiers for registration (FY 13

target of 150)

c) Contracts finalized with key distributors in APAC

d) Loan License agreements with six WHO GMP approved

manufacturing sites

Business outlook for FY 13The company shall drive its topline and bottom-line thoroughits sustainable business model comprising of the activepharmaceuticals, contract research and finished dosage

business. The company shall continue to build growth

momentum through its partner in the strategic alliances

The commissioning of new sterile and amorphous facility

completes the API expansion that was started some years

back. With over 1000 Tons annual capacity, backed by the

international regulatory approvals, the company looks to

build its turnover on exports, preferably the regulated

exports. FY 13 may also bring some achievements to the

company with the approvals from Japanese PMDA and the

USFDA

With a foothold in over 50 countries, the company looks to

develop its market presence and strengthen its revenues

from the markets of Japan, Korea, China, CIS and the

European markets

With over 20 molecules to be launched in the life style space,

the non-antibiotic facility at Lalru is likely to contribute and

add value to the topline and bottomline. This adds to the

The company would continue its research on identified life

style therapies as to expand its basket of products in the new

segments.

The custom synthesis, contract research activity based on

literature search, novel route scouting, Small scale synthesis,

characterization of molecules to drive the revenues for

CRAMS

Developments in the process R&D projects related to route

selection and optimization, method Development and

Validation and synthesis of GMP /Non GMP material

Catering to innovators needs of large scale contract

manufacturing

PDL shall continue to explore new opportunities in the off-

patent pharmaceutical regime through its ambitious filing

plans.

In the formulations space, the company looks to add

revenues from the formulations out of its three pronged

strategy of domestic formulations, International formulations

and branded generics(Ziven Life Science)

Risk and its Management

The pharmaceutical industry is exposed to various factors that

may risk the normalcy of business operations. The micro and

macro-economic variables bring various operating challenges

that directly or indirectly affect our pharmaceutical industry. To

eliminate a significantimpact of these factors, a proactive

approach to risk identification and management holds the key to

the sustainability.



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Your company is distinctively placed for risk management and

has set in place key risk management policies. The

managementadministers these policies and ensures that the

operations combat the potential threats and the risk is

minimized.

Within the pharmaceutical space, there are certain risks which

are natural and each company is exposed to it. Some of them

are:

Slowdown in the world economy

Risk: Slowdown in the economy

Impact: The world is experiencing an economic slowdown since

the financial crisis of 2008-2009. Furthermore the prevailing debtcrisis across the EuropeanUnion has exposed the world to

another wave of slowdown. Parabolic Drugs, being a

pharmaceutical exporting company is exposed to this risk

Mitigation Strategy: The Companyhas a basket of diversified

products, and after the launch of its non-antibiotic range of

products, the company's product acceptance is wide, and it can

further expand its presence across new territories. Further, the

company has also received regulatory approvals from the Asian

pharmaceutical giants like Japan and Korea, this would derisk

the company's standalone reliance on the European markets

Volatility in the Indian Currency

Risk: The Indian currency against the US Dollar has depreciated

by about 14% in FY 11-12

Impact: The sharp changes in the valuation of the rupee vis-a-vis

the dollar in the recent times, superimposed on an overall

negative trend of depreciation, negatively impacts the earnings

of the company. A year ago the rupee stood at a strong 44.50 to

a dollar, followed by showing signs of weakness and sliding to a

low of 54/US$. The company is a net importer and a further fall in

Indian Currency will affect the margins and profitability

Mitigation Strategy: The Company has a well-structuredpolicy to

review and mitigate the exchange rate risk. Although the

company uses appropriate hedging tools to diminish the impactof currency risk, in the long term the company looks to expand

the size of exports as to build a natural hedge to set off the

impact.

Erosion of the selling prices

Risk:There has been a substantial fall in the prices of antibiotic

range of molecules. With the increasing pressure of

governments across the world to reduce the health care cost, the

world is moving towards economical alternatives to the branded

products. The Genericization, along with an opportunity to

launch new drugs, also adds to the pressure of falling prices in

old APIs

Impact: Parabolic Drugs has larges capacities in the antibiotic

space, and it has the major reliance on the antibiotic APIs

Mitigation Strategy: As a long term strategy to diversify and

mitigate the individual risk of antibiotics, the company has

forayed into non antibiotic range of molecules. These molecules

will not only derisk the reliance of the company on antibiotics, it

will also give an impetus to the margins

Competitive pressure

Risk: Increasing competition in the pharmaceutical Space

Impact: In 2012-13, CRISIL research expects the pharmaceuticalindustry to grow by 16-18 per cent y-o-y to $36- 37 billion. Such

bright industry prospects would encourage huge competition

not only on the domestic front but also from multinational

companies.Competitive pressure in the domestic market is likely

to be sustained as MNCs become more aggressive and

domestic companies leverage on their expanded field force.

Potential regulatory interventions could further put pressure or

hurt pricing.

Mitigation Strategy: PDL has uniquely positioned itself in the

market with introduction of new and improved molecules,

expansion of the production capacity meeting international

standards and improving the existing product range, thereby

having an edge over the competitors.

Human resource management

Risk: High attrition rate in the pharmaceutical space

Impact: Enhancing productivity, quality and reliability is a result

of highly motivated and professional workforce. Since the

attrition rate in this industry is very high, retaining the pool of

talent is a major challenge.

Mitigation Strategy: PDL has always nurtured a policy to promote

a vibrant work culture based on innovation and capability

building and performance measurement. HR has alwaysemphasized on talent attraction, retention and staff welfare. At

PDL, the individual rewards on performance are aligned to the

organization and business unit performance.

Review of Financial Performance

Owing to thevolatile global economic environment, the year

2011-12 has been challenging for the company. The company

has accomplished the gross turnover of INR 10123.08 million (a

growth of 49.91%) for the year 2011-12. However due to the high


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interest rates, the depreciated Indian rupee, the company

recorded the net profits of INR 512.12 million, short by 150 bps

over previous year. The size of the balance sheet has gone up to

INR 13143.77 million

Sales and Revenue

The revenue figures for the FY '12 stands at INR 10,123.08 million

as against INR 6,752.97 million in the FY'11 which accounts for a

robust 49.9% growth over the previous year . The growth has

largely been achieved by the :

Enhanced production capacity in Antibiotic APIs

Introduction of new molecules in the key regulated and non-

regulated markets.

Entering new vertical space- Herbal APIs and the domestic

formulation

Launch of 4th generation molecules in Turkey.

Cost and expenses

The operational cost of business for the FY'12 stands at INR

7,669.9 million, against the INR 5,080.43 million for FY 11,

thereby an increase of 50.96%.

Material cost for FY'12 has been INR 6,963.15 million, whereas

the same for FY'11 was INR 4,513.07 million thereby showing

54.28% increase over the previous year. Due to volatility in theIndian Rupee, the cost of imported raw material has significantly

gone up leading to inflated material cost.

Personnel expenses for the FY'12 has increased to INR 641.37

million from INR 407.60 million in FY'11 showing an overall

increase of 57.35%. With the commissioning of the new plant at

Lalru, in addition to the new sterile and amorphous facility,

investments in Human resource has significantly gone up.

The remaining expenses including Administration expenses,

selling and distribution expenses for the FY'12 stand at INR

481.59 million against INR 398.06 million in FY'11. The reason

owing to the 20.98% increase has been a result of increased

expenses on manufacturing due to increase power cost,

consumables and spares,rise in general administration

expenses resulting from new plant.

The financial cost of the company has risen significantly to INR

641.37 million in FY'12 from INR 407.60 million in FY'11, showing

a 57% increase. The increase in base rate by the respective

banks has raised the financial cost of the company.

The EBIDTA margins for the company stand at INR 1,614.32

million in the FY'12 as compared to INR 1,271.45 million in the

FY'11 thereby showing an increase of 26.9%.

Profit after tax (PAT) stood at Rs. 512.11 million, which is

marginally (1.5%) less than the previous year of Rs 520.24

million.

Balance Sheet

The size of the balance sheet has grown to INR 13,143.77 million

in FY'12 from INR 10,672.51 million in FY'11 recording a 23.15%

growth. The capital employed in the business is Rs. 8,018.32

million in FY'12

Reserves and surplus have registered a growth of 15.5% from

Rs.3,171.08 million in FY'11 to Rs.3,665.21 million in FY'12.

The long term and short term borrowings of the company has

increased from Rs. 4,513.64 million to Rs. 5,223.88 million in

FY'12 which accounts for a 16% increase.

Gross block of the company increased to Rs. 3,787.46 million in

FY'12 from Rs. 2,808.8 million in FY'11 registering a 34%

increase.

Investments registered a decrease of 37% from Rs. 56.73 million

in FY'11 to Rs. 35.66 million in FY'12.



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Report onCorporate Governance

1. Company's Philosophy on Code of Corporate Governance:This report on Corporate Governance forms part of the Annual Report. Corporate Governance refers to a combination of laws,regulation, procedures, implicit rule and good corporate practices that ensure that a Company meets its obligations to optimizeshareholders' value and fulfill its responsibilities to the community, customers, employees, Government and other segments ofsociety. Parabolic Drugs Limited (Parabolic) is committed on adopting the best practices of Corporate Governance as manifestedin the Company's functioning to achieve the business excellence by enhancing long-term shareholders' value. Parabolic iscommitted to achieve the best standard of Corporate Governance through complete transparency in its dealings with thema

parabolic drugs fy12.pdf

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