Directors Report of Parmax Pharma Ltd.

Mar 31, 1996

Your Directors have pleasure in presenting before you the Second Annual Report together with Audited Accounts of the Company for the year ended on 31st March, 1996.

PROJECT

You are aware that the company is setting up a project costing Rs. 610 lacs to manufacture bulk drugs such as Amoxycillin tri hydrate, Ampicillin tri hydrate, Cephalexin mono hydrate and Nalidixic acid at Hadamtala, Taluka-Kotda Sangani, Dist-Rajkot. For the said project the company is setting up an anti-biotic plant with an installed capacity of 48 Metric Tonnes per annum and a non-anti-biotic plant with an installed capacity of 48 Metric Tonnes per annum. The anti-biotic plant has already been completed and the company has also started the trial run. The company proposes to start the commercial production by the third week of July, 1996. As far as the non-anti-biotic plant is concerned, the same is being implemented expeditiously and the company envisage to complete the same by the end of the September, 1996 and the company proposes to start the commercial production by the end of October, 1996. The common civil work for both the above plants is proposed to be completed by the end of August, 1996. It is noteworthy that due to the cost saving at every stage and vigilant personal attention of the Directors during the implementation of the project, though it is delayed, no cost over-run has been incurred by the Company

Till 31st March, 1996 the company has incurred the following expenditures towards its project under implementation

PARTICULARS

RS. IN LACS

Land & Site development 10.62

Building and Civil work 65.60

Plant & Machinery - Indigenous 139.64

Electrical Installation and other assets 22.92

Preliminary, Pre-operative & Public issue expenses 50.22

Margin money for working capital 148.53

For meeting the part of total cost of the project the company has successfully entered into capital market with a maiden public issue of 30,00,000 Equity Shares of Rs. 10/- each aggregating to Rs. 3 Crores. The issue had received a good response from public and it was oversubscribed by 1.26 times. The company allotted the Equity Shares pursuant to the said public issue on 8th January, 1996. The shares of the company have been listed with Ahmedabad, Rajkot and Mumbai Stock Exchanges. Further for financing the part of the Capital Cost of the Project, GSFC has already sanctioned a term loan of Rs. 100 lacs and till 31-3-1996 the company has availed disbursement of Rs. 48.18 lacs from GSFC.

The company has approached various banks for financing the working capital requirements of the project and finally the company has filed an application with Corporation Bank for financing the working capital requirements of the company, which is under active consideration of the bank.

FINANCIAL RESULTS

During the year under review the project of the Company was under implementation stage. The Company has incurred preliminary expenditure to the tune of Rs.2,30,000/-, preoperative expenditure to the tune of Rs.28,99,000/- and public issue expenditure to the tune of Rs. 18,93,000/- during the year under review. Since the Company has not started its commercial production, the Profit and Loss Account for the year ended on 31st March, 1996 is not prepared. The preliminary and public issue expenses incurred so far will be adjusted against profits in the future years. The expenditure incurred under the head "Pre-Operative Expenses" will be capitalised by allocation to fixed assets on appropriate basis on completion of the Project.

DIRECTORS

Pursuant to Article No. 153 and 154 of the Articles of Association of the Company read with Section 258 of the Companies Act, 1956 Shri Prabhudas D. Hansalpara is due to retire at the ensuing Annual General Meeting and being eligible offers himself for reappointment.

Shri Mansukh B. Thummar resigned as Director of the Company with effect from 01-04-1996 and his resignation was accepted by the Board of Directors at its meeting held on 01-04-1996 after appreciating his valuable support extended to the company during his tenure as Director of Company.

Shri Dhirajlal R Kavathia resigned as Director of the Company with effect from 01-04-1996 and his resignation was accepted by the Board of Directors at its meeting held on 01-04-1996 after appreciating his valuable support extended to the company during his tenure as Director of Company.

FIXED DEPOSITS FROM PUBLIC

The Company has not accepted any fixed deposit during the year under review, which is covered under Section 58A of the Companies Act, 1956.

AUDITORS

The existing Auditors of your Company, M/s. H. B. Kalaria & Associates, Chartered Accountants will retire at the ensuing Annual General Meeting. The retiring Auditors have expressed their intention not to seek reappointment. It is now proposed to appoint M/s. Gadhia Karachiwala & Co., Chartered Accountants, Rajkot as the Auditors of the Company from the conclusion of the ensuing Annual General Meeting. M/s. H. B. Kalaria & Associates have also supported the proposal of the Company. M/s. Gadhia Karachiwala & Co. have also confirmed to the Company that if appointed, their appointment will be in accordance with the provisions of the Companies Act, 1956.

PARTICULARS OF EMPLOYEES

Information pursuant to Section 217 (1-A) of the Companies Act, 1956 read togetherwith the Companies (Particulars of Employees) Rules, 1975 has not been given since there is no employee drawing remuneration in excess of the limit prescribed thereunder.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO

Additional information on conservation of Energy, Technology Absorption & Foreign Exchange Earning and Outgo as required to be disclosed in terms of

Section 217(1)(e) of the Companies Act, 1956 read together with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, has not been given as the company has not started any manufacturing activity.

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Mar 31, 1995

Not available.