DIRECTORS' REPORT

To,

The Members,

KILITCH DRUGS (INDIA) LIMITED

1. Your Directors have pleasure in presenting their 23rd Annual Report on the Audited Statement of Accounts of the Kilitch Drugs (India) Limited ["Company"] for the Financial Year ended March 31, 2015.

2. REVIEW OF OPERATIONS

During the year under review, the Company has posted total Income of Rs. 2171.76 Lacs as against Rs. 2118.92 Lacs for the corresponding previous year.

Further, Net Loss after tax for the year under review was Rs. (18.55) Lacs as against a Net Profit of Rs. 117.64 Lacs for the corresponding previous year.

3. DIVIDEND AND RESERVES

In order to conserve the resources for the further growth of the Company, your Directors think fit not to recommend any dividend for the financial year under review.

4 FUTURE OUTLOOK:

As we look ahead, we have set clear goals and aspirations for our next set of milestones. In the medium term, building on proven results, we are leveraging the power of our carefully developed product portfolio, relationships built over a long period and a diversified customer mix. Further, we have an optimized cost structure, robust balance sheet and a highly seasoned professional management.

With the ongoing projects of 2 new manufacturing units at Ethiopia & Burkina Faso & incorporation of latest technology and capacity expansion at our Thane factory, we expect speedy positive growth rates. Our Company is well placed to capitalize on the opportunities arising out of such upcoming markets worldwide. Combined with new marketing and branding concepts and improved product portfolio, we will see increased momentum in the coming years. Innovation & Quality remains at the core of all Kilitch initiatives and hence we shall continue to invest in R&D. Even though the economy remains subdued now, we believe it can grow faster, due to the expansion of its international presence and innovative product portfolio. Our company is well positioned to leverage on opportunities worldwide. Focus on Global Business

Our company sets the pace when it comes to providing innovative and customer-centric services to the world's emerging markets having footprints across the globe. Our strength is defined by our major presence in most of the West African countries along with few other African countries. We are now one of the major suppliers for many of the Ministry of Health in Francophone countries particularly, Burkina Faso. Our innovative product offerings have made us to enter successfully in new emerging markets like South East Asia , CIS countries & Gulf countries. A strong entrepreneurial spirit of our international alliance remains one of our quickest & surest routes to success in the years ahead.

HUMAN RESOURCE

Personal and professional employee development is crucial for any growing business and Kilitch is a company that gets it all! Our HR department served as a strategic partner in the transition, keeping its eye on the ball during a sensitive time by focusing on delivering HR fundamentals and, in so doing, helping preserve and strengthen the company's brand, culture and business objectives. During the year, the department focused on delivering HR programs that built on the company's existing foundations. These included a recruitment program involving leaders and peers in the hiring process, employee engagement programs, learning and development programs reflecting established values and competencies. As a part of Orientation Package for all new hires of kilitch we have introduced a KCB (Kilitch Cultural Book) this year, which helped us a lot to understand the views ,ideas and also Grievance (if any) of the employees. We have received a very good response and we are trying to work in the areas where we are lacking.

4. SHARE CAPITAL

The Paid-up Equity Share Capital of the Company as on 31st March, 2015 is Rs. 1323.18 Lacs, comprising of 13231828 shares of Rs. 10/- each. During the year under review, the Company has not issued any equity shares.

5. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Mukund Mehta, Managing Director of the Company, retires by rotation being eligible; offers himself for reappointment at the forthcoming Annual General Meeting. The Companies Act, 2013 (the Act) provides for appointment of independent Directors. Sub section (10) of Section 149 of the Companies Act, 2013 (effective from April 1, 2014) provides that independent directors shall hold office for a term of up to five consecutive years on the Board of a Company, but shall be eligible for re-appointment on passing of a special resolution by the company in the Annual General Meeting and disclosure of such appointment in the Board's report. Sub-section (11) states that no independent director shall be eligible to hold office for more than two consecutive terms of five years. Sub- section (13) states that the provisions of retirement by rotation as defined in sub-section (6) and (7) of Section 152 of the Act shall not apply to such independent director.

Accordingly, Mr. Ramesh Modi has been appointed as an Independent Director with effect from 31st March, 2015, for term of 5 years.

The terms and conditions of appointment of Independent Directors are as per Schedule IV of the Act. Declaration for meeting the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement entered into with Stock Exchanges has been received.

Further, Ms. Nilima Waingankar has resigned as Director of the Company w.e.f. 1st March, 2015.

Mr. Nirmal Kumar has been appointed as Company Secretary w.e.f. 1st October, 2014 and Mr. C.S. Krishnan has been appointed as Chief Financial Officer w.e.f. 31st March, 2015.

6. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) & 134(5) of the Companies Act, 2103, the Board of Directors of the Company hereby confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) 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 at the end of the financial year and of the profit and loss of the company for that period;

(c) the directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors have prepared the annual accounts on a going concern basis; and

(e) the directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

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

7. PARTICULARS OF MANAGERIAL REMUNERATION

The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, is enclosed as Annexure I and forms part of this Report.

Further, as per the provisions specified in Chapter XIII of Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 none of the employees of the Company are in receipt of remuneration exceeding Rs. 60,00,000/- per annum, if employed for whole of the year or Rs. 5,00,000/- per month if employed for part of the year.

8. NUMBER OF BOARD MEETINGS

A calendar of meetings is prepared and circulated in advance to the Directors. During the year, 12 Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and the Listing Agreement.

9. BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Committees. The Directors expressed satisfaction with the evaluation process. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

10. INDEPENDENT DIRECTORS

The Independent Directors have submitted their disclosure to the Board that they fulfill all the requirements as to qualify for their appointment as Independent Director, under the provisions of section 149 of the Companies Act, 2013 as well as Clause 49 of the Listing Agreement.

11. NOMINATION AND REMUNERATION POLICY

The Board of Directors has framed a policy which lays down a framework in relation to remuneration of Directors. This policy also lays down criteria for selection and appointment of Board Members. The details of this policy are provided on the website of the Company on the given link: www.kilitch.com  

12. DETAILS OF SUBSIDIARY/JOINT VENTURES/ ASSOCIATE COMPANIES

The Statement AOC-1 pursuant to the provisions of Section 129 (3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014 regarding Subsidiary Company is enclosed as Annexure IVto this Report.

13. STATUTORY AUDIT

At the Annual General Meeting held on September 30th, 2014, M/s A.M. Ghelani & Co, Chartered Accountant were appointed as Statutory Auditors of the Company to hold office till the conclusion of the Annual General Meeting to be held in Calendar year 2017. In the terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the Auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s A.M. Ghelani & Co, Chartered Accountants, as Statutory Auditors of the Company, is placed for Ratification by the Shareholders. In regard to the Company has received a Certificate from the Auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.

Auditors Report as issued by M/s A.M. Ghelani & Co, Chartered Accountants, Auditors of the Company is self explanatory and need not call for any explanation by your Board.

14. COST AUDIT

As per the Cost Audit Orders and in terms of the provisions of Section 148 and all other applicable provisions of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, Cost Audit is not applicable to our Company.

15. SECRETARIAL AUDIT

In terms of Section 204 of the Act and Rules made there under, M/s. Deep Shukla & Associates, Practicing Company Secretary, have been appointed Secretarial Auditors of the Company. The Secretarial Audit Report is enclosed as Annexure V to this report.

Report as issued by M/s Deep Shukla & Associates, Practicing Company Secretary, Secretarial Auditors of the Company is self explanatory and need not call for any explanation by your Board.

16. INTERNAL AUDIT & CONTROLS

The Company has in place adequate internal financial controls with reference to the financial statement. The Audit Committee of the Board periodically reviews the internal control systems with the management, Statutory Auditors. Significant internal audit findings are discussed and follow-ups are taken thereon. Further, M/s. Rishi Sekhri & Associates, Chartered Accountants, M.No.126656 were appointed as Internal Auditors of the Company w.e.f. 12/02/2015

17. COMPOSITION OF AUDIT COMMITTEE

The Audit Committee of the Company as on 31st March, 2015 comprised of four Independent Directors, namely Mr. Mukesh Shah, Mr. Shailesh Chheda, Mr. Hemang Engineer and Mr. Pankaj Kamdar. Mr. Mukesh Shah is the Chairman of the Committee. All members of the Audit Committee possess strong knowledge of accounting and financial management. The Managing Director, Executive Director and Director (Finance) are regularly invited to attend the Audit Committee meetings. The Company Secretary is the Secretary to the Committee. The other details of the Audit Committee are given in the Corporate Governance Report, appearing as a separate section in this Annual Report.

18. EMPLOYEES' STOCK OPTION PLAN

As per Employee stock options Scheme (Kilitch ESOS 2007), each option is convertible into one equity shares Rs. 10/- each at exercise price of Rs. 47.50/- per share. During the year fresh options were not granted and employees did not exercise any options.

The employee compensation cost on account of this grant applicable for the year is ' Nil [P. Y. ' NIL].

19. VIGIL MECHANISM

In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.kilitch.com  The employees of the Company are made aware of the said policy at the time of joining the Company.

20. RISK MANAGEMENT POLICY

The Company has laid down the procedure to inform the Board about the risk assessment and minimization procedures. These procedures are reviewed by the Board annually to ensure that there is timely identification and assessment of risks, measures to mitigate them, and mechanisms for their proper and timely monitoring and reporting.

21. EXTRACT OF ANNUAL RETURN:

The details forming part of the Extract of the Annual Return in Form MGT-9, as required under Section 92 of the Companies Act, 2013 is included in this Report as Annexure II and forms part of this Report.

22. DEPOSITS

The Company has not accepted nor renewed any fixed deposits during the FY 2014-15.

23. LOANS & GUARANTEES

During the year under review, the Company has not provided any loan, guarantee, security or made any investment covered under the provisions of Section 186 of the Companies Act, 2013 to any person or other body corporate. except lien on investment at Kotak Bank for overdraft /letter of credit. Till today none of the facilities is being used.

24. INSURANCE

The properties/assets of the Company are adequately insured.

25. RELATED PARTY TRANSACTIONS

During FY 2014-15, the Company entered into certain Related Party Transactions which are in the ordinary course of business and at arm's length basis, with approval of the Audit Committee. The Audit Committee grants omnibus approval for the transactions which are of foreseen and repetitive nature. A detailed summary of Related Party Transactions is placed before the Audit Committee & the Board of Directors for their review every quarter.

There are no materially significant Related Party Transactions executed between the Company and its Promoters, Directors, key Managerial Personnel or other designated persons, that may have a potential conflict with the interest of the Company at large.

Since all Related Party Transactions entered into by the Company were in ordinary course of business and were on an arm's length basis, Form AOC-2 is applicable to the Company as per Annexure III.

26. CORPORATE GOVERNANCE CERTIFICATE

A Report on Corporate Governance alongwith a certificate from the Practicing Company Secretary regarding the compliance of conditions of corporate governance as stipulated under Clause 49 of the Listing Agreement forms a part of this Annual Report.

28. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

As per the provision of Section 125 of the Companies Act, 2013 read with rule 4 of Companies (Declaration and Payment of Dividend) Rules, 2014, Dividend which remain unclaimed for the period of seven years are required to be transferred to the Investor Education Protection Fund administered by the Central Government. The Company has already filed the necessary form and uploaded the details of unpaid and unclaimed amounts lying with the Company, as on the date of last AGM (i.e. 30th September,2014), with the Ministry of Corporate Affairs.

29. GENERAL

During the year ended 31st March, 2015, there were no cases filed /reported pursuant to the Sexual Harassment of women at workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company confirms that it has paid the Annual Listing Fees for the year 2015-2016 to BSE and NSE where the Company's Shares are listed.

During the year under review, no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and Company's operations.

30. HUMAN RESOURCES

Your Company treats its "human resources" as one of its most important assets.

Your Company continuously invests in attraction, retention and development of talent on an ongoing basis. A number of programs that provide focused people attention are currently underway. Your Company thrust is on the promotion of talent internally through job rotation and job enlargement.

31. ACKNOWLEDGEMENT

The Directors would like to thank all shareholders, customers, bankers, suppliers and everybody else with whose help, cooperation and hard work the Company is able to achieve the results. The Directors would also like to place on record their appreciation of the dedicated efforts put in by the employees of the Company.

Mukund Mehta Managing Director[Din: 00147876]

Bhavin Mehta Whole-Time Director [Din:00147895]

Place: Mumbai

Date: August 14, 2015