Avon Organics Ltd Annual Report 2013-14 13 12 2014 · AVON ORGANICS LIMITED (AN ARCH ENTERPRISE) In Tune with Technology Annual Report 2013-2014 21st

AVONORGANICS LIMITED(AN ARCH ENTERPRISE)

In Tune with Technology

Annual Report

2013-2014

21st

Contents

1. Corporate Information

2. Notice -----------------------------------------------------------------------------------------------------------------------------

3. Directors’ Report ---------------------------------------------------------------------------------------------------------------

4. Annexure to Directors’ Report ----------------------------------------------------------------------------------------------

5. Management Discussion and Analysis Report -------------------------------------------------------------------------

6. Report on Corporate Governance -----------------------------------------------------------------------------------------

Standalone Financials

7. Auditors’ Report ----------------------------------------------------------------------------------------------------------------

8. Annexure to Auditors’ Report ----------------------------------------------------------------------------------------------

9. Balance Sheet -----------------------------------------------------------------------------------------------------------------

10. Statement of Profit & Loss --------------------------------------------------------------------------------------------------

11. Notes to Financial Statements ---------------------------------------------------------------------------------------------

12. Notes to Accounts ------------------------------------------------------------------------------------------------------------

13. Statement of Cash Flow ----------------------------------------------------------------------------------------------------

14. Auditors’ Certificate on Cash Flow

Consolidated Financials

15. Statement pursuant to Section 212 relating to subsidiaries --------------------------------------------------------

22. Proxy Form ---------------------------------------------------------------------------------------------------------------------

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16. Auditors’ Report ----------------------------------------------------------------------------------------------------------------

17. Balance Sheet -----------------------------------------------------------------------------------------------------------------

18. Statement of Profit & Loss --------------------------------------------------------------------------------------------------

19. Notes to Financial Statements ---------------------------------------------------------------------------------------------

20. Notes to Accounts -------------------------------------------------------------------------------------------------------------

21. Statement of Cash Flow ----------------------------------------------------------------------------------------------------

23. Attendance Slip ----------------------------------------------------------------------------------------------------------------

24. Assent / Dissent Form for voting on AGM Resolutions --------------------------------------------------------------

CONTENTS

Page No

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10

12

14

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24

26

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28

34

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51

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59

60

61

CORPORATE INFORMATION

Board of Directors Mr. Ajit Kamath, Non Executive Chairman & Managing DirectorMr. Manoj Jain, DirectorMr. Rajendra Kaimal, DirectorDr. Sunil Pitroda, Additional Director

Company Secretary Mr. Jignesh Patel

Registered Office Survey No.18, Yawapur Village, Sadasivpet, Medak Dist., Tel : 9949828084; Fax: 040-23404438

Corporate Office H.No.8-3-1010/32, Flat No.401, Sahiti Vijaya Enclave, Beside Andhra Bank, Srinagar Colony, Hyderabad – 500 073

H Wing, 4th Floor, Tex Centre, Off Saki Vihar Road, Chandivali, Andheri (East), Mumbai – 400 072.

Plant Locations Survey No.18, Yawapur Village, Sadasivpeth, Medak Dist, * (non-operational)

Plot No. E-2, Chincholi Industrial Area, Solapur, Maharashtra.

Auditors M/s. Mukesh Mehta & Associates,Chartered Accountants3/4A, Hammersmith Ind. Premises, Narayan Pathare Marg, Off Sitladevi Temple Road, Mahim (W), Mumbai – 400 016

Registrars and Share Transfer Agents 3, Sagar Society, Road No. 2,

Banjara Hills, Hyderabad- 500 034.Phone no. (040)23545913, 14, 15

XL Softech Systems Limited,

Avon Organics Limited 01

NOTICE IS HEREBY GIVEN THAT the 21st Annual General Meeting of Avon Organics Limited will be held on Tuesday, 30th December, 2014 at 10 a.m. at Hotel Daspalla, Road No. 37, Jubilee Hills, Hyderabad – 500033, Andhra Pradesh to transact the following business:

ORDINARY BUSINESS:

1. To receive, consider and adopt the Audited Balance Sheet as at 31st March, 2014 and the Profit and Loss Account for the financial year ended 31st March, 2014 alongwith the Report of the Directors and Auditors thereon.

2. To appoint a Director in place of Mr. Rajendra Kaimal (DIN: 00032839), who retires by rotation and is eligible for re-appointment.

3. To appoint a Director in place of Mr. Manoj Jain (DIN: 00034727), who retires by rotation and is eligible for re-appointment.

4. Appointment of Statutory Auditors

To consider and if thought fit, to pass with or without modification(s) the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Section 139 of the Companies Act, 2013 (Act) and other applicable provisions if any of the Act and the Rules made thereunder (including any statutory modification(s) or re-enactment thereof for the time being in force), M/s. Mukesh Mehta & Associates, Chartered Accountants (Registration No. 116309W), the retiring Auditors of the Company, be and are hereby re-appointed as Auditors of the Company to hold office from the conclusion of this 21st Annual General Meeting till the conclusion of 24th Annual General Meeting, i.e. for a period of 3 (three) years ,subject to ratification of their appointment by the Shareholders at every Annual General Meeting , at such remuneration plus service tax and out of pocket expenses as may be mutually agreed between the Board of Directors and M/s. Mukesh Mehta & Associates, Chartered Accountants respectively.”

SPECIAL BUSINESS:

5. Appointment of Dr. Sunil Pitroda as an Independent Director of the Company.

To consider and if thought fit, to pass with or without modification, the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Section 149, 152, 160 and other applicable provisions of the Companies Act, 2013 and the Companies (Appointment and Qualification of Directors) Rules, 2014 read with Schedule IV to the said act,(including any statutory modification(s) or re-enactment thereof for the time being in force), Dr. Sunil Pitroda (DIN: 07028212), who was appointed as an Additional Director by the Board of Directors and who holds office up to the date of this Annual General Meeting) and who is eligible for appointment, has submitted a declaration that he meets the criteria for independence as provided under Section 149(6) of the Act and in respect of whom the Company has received a notice in writing from a

member under Section 160 of the Act, proposing his candidature for the office of Independent Director, be and is hereby appointed as an Independent Director of the Company, not liable by rotation, to hold office for the period of 5 year from 30th December, 2014 to 29th December, 2019.

“RESOLVED FURTHER THAT for the purpose of giving effect to this resolution, any of the Director of the Company be and is hereby severally authorized to do all such acts, deeds and things as it may be deemed necessary in this regard, including filing of necessary statutory forms with Registrar of Companies, Ministry of Corporate Affairs, as may be required from time to time”.

6. Authorization to borrow under section 180 (1) (c) of the Companies Act, 2013

To consider and, if thought fit, to pass with or without modification, the following resolution as a Special Resolution:-

“RESOLVED THAT in supersession of Resolution No.7 passed at the Annual General Meeting of the Company held on 29th July, 2011 and pursuant to Section 180(1)(c) and other applicable provisions, if any, of the Companies Act, 2013 and the Rules made thereunder, as amended from time to time, consent of the Company be and is hereby accorded to the Board of Directors of the Company (hereinafter referred to as the “Board”, which term shall be deemed to include any Committee of the Board constituted to exercise its powers, conferred by this Resolution), for borrowing/ availing financial assistance of any sum or sums of money from time to time, from any one or more Banks, Financial Institutions, Investors, Lenders or Refinance Lenders, any other persons, firms, Bodies Corporate, Pension Funds, Hedge Funds or any other Funds, either Indian or foreign (hereinafter referred as ‘Lenders’ or ‘Investor’), whether by way of cash credit, advances or deposits, loans or working capital, bill discounting or Bonds, Notes or any other debt, debt instrument, financial assistance / facilities and whether unsecured or secured by mortgage, charge, hypothecation or lien or pledge of the Company’s investment, assets and/or other properties whether movable or immovable or stock in trade (including raw materials, stores, spares parts and components in stock in transit) and work in progress and all or any of the undertakings of the Company, notwithstanding that the money to be borrowed by the Company, apart from temporary loans obtained from the Company’s bankers in the ordinary course of business may exceed the aggregate of the paid up share capital of the Company and its free reserves, provided that the total amount upto which the money(ies) may be borrowed by the Board of Directors outstanding at any time shall not exceed the sum of Rs. 1,000 Crore (Rupees One Thousand Crore only)”.

“RESOLVED FURTHER THAT for the purpose of giving effect to this resolution, any of the Director of the Company be and is hereby severally authorized to do all such acts, deeds and things as it may be deemed necessary in this regard, including filing of necessary statutory forms with Registrar of Companies, Ministry of Corporate Affairs any other authorities as may be required from time to time”.

NOTICE

st21 Annual Report 2013-14 02

7. Authorization to mortgage the assets of the Company under Section 180 (1) (a) of the Companies Act, 2013

To consider and, if thought fit, to pass with or without modification, the following resolution as a Special Resolution:-

“RESOLVED THAT in supersession of Resolution No.8 passed at the Annual General Meeting of the Company held on 29th July, 2011 and pursuant to Section 180(1)(a) and other applicable provisions, if any, of the Companies Act, 2013 and the Rules made thereunder, as amended from time to time, consent of the Company be and is hereby accorded to the Board of Directors of the Company (hereinafter referred to as the “Board”, which term shall be deemed to include any Committee of the Board constituted to exercise its powers, including the powers conferred by this Resolution) to create such charges, mortgages and hypothecations in addition to the existing charges, mortgages and hypothecations created by the Company, on such movable and immovable properties, both present and future, and in such manner as the Board may deem fit, together with the power to take over the management and concern of the Company in certain events, to or in favour of all or any of the financial institutions/banks/ trustees for banks and financial institutions/ insurance companies/other investing agencies/trustees for holders of debentures/bonds/other instruments which may be issued to and subscribed by all or any of the financial

institutions/banks/insurance companies/other investing agencies or any other person(s)/bodies corporate by way of private placement or otherwise to secure Rupee/foreign currency loans, debentures, bonds or other instruments (hereinafter collectively referred to as “Loans”) provided that the total amount of Loans together with interest thereon at the respective agreed rates, additional interest, compound interest, liquidated damages, commitment charges, premia on pre-payment or on redemption, costs, charges, expenses and all other moneys payable by the Company to the aforesaid parties or any of them under the Agreements/Arrangements entered into/to be entered into by the Company in respect of the said Loans, shall not at any time exceed the limit of Rs.1,000 crore (Rupees One Thousand Crore).

“RESOLVED FURTHER THAT for the purpose of giving effect to this resolution, any of the Director of the Company be and is hereby severally authorized to do all such acts, deeds and things as it may be deemed necessary in this regard, including filing of necessary statutory forms with Registrar of Companies, Ministry of Corporate Affairs any other authorities as may be required from time to time”.

By Order of the Board For Avon Organics Limited

Sd/-Jignesh Patel

Company SecretaryPlace: MumbaiDate: 05.12.2014

1. The relative Explanatory Statement pursuant to Section 102 of the Companies Act, 2013 (the Act), in regard to the business as set out in Item Nos.5 to 7 above are annexed hereto

2. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER. Proxies, in order to be effective, must be received at the Company’s Corporate Office situated at 4th Floor, H Wing, Tex Centre, Chandivali, off. Saki Vihar Road , Andheri (E), Mumbai 400 072 not less than 48 hours before the meeting. Proxies submitted on behalf of companies, societies, partnership firms, etc. must be supported by appropriate resolution/authority, as applicable, issued on behalf of the nominating organisation.

Members are requested to note that a person can act as a proxy on behalf of Members not exceeding 50 and holding in the aggregate not more than 10% of the total share capital of the Company carrying voting rights. In case a proxy is proposed to be appointed by a Member holding more than 10% of the total share capital of the Company carrying voting rights, then such proxy shall not act as a proxy for any other person or shareholder.

3. Corporate Members intending to send their authorised representatives to attend the Annual General Meeting (AGM) are requested to send a certified copy of the Board Resolution authorising their representative to attend and vote in their behalf at the Meeting.

4. In case of joint holders attending the Meeting, only such joint holder who is higher in the order of names will be entitled to vote.

5. Only bonafide members of the Company whose names appear on the Register of Members/Proxy holders, in possession of valid attendance slips duly filled and signed will be permitted to attend the meeting. The Company reserves its right to take all steps as may be deemed necessary to restrict non-members from attending the meeting.

6. Members are requested to bring their copies of Annual Report to the Meeting. In order to enable us to register your attendance at the venue of the Annual General Meeting, we request you to please bring your folio number/demat account number/DP ID-Client ID to enable us to give you a duly filled attendance slip for your signature and participation at the meeting.

7. The Register of Members and the Transfer Books of the Company will remain closed from Friday, 19th December, 2014 to Tuesday, 30th December, 2014, both days inclusive.

8. The Notice of the AGM along with the Annual Report 2013-14 is being sent by electronic mode to those Members whose e-mail addresses are registered with the Company/Depositories, unless any Member has requested for a physical copy of the same. For Members who have not registered their e-mail addresses, physical copies are being sent by the permitted mode.

NOTES


NOTICE

9. To support the ‘Green Initiative’, the Members who have not registered their e-mail addresses are requested to register the same with RTA/Depositories.

10. Voting through Electronic Means

I. In compliance with the provisions of Section 108 of the Act and the Rules framed thereunder, the Members are provided with the facility to cast their vote electronically through the e-voting services provided by Central Depository Services (India) Limited (CDSL), on all resolutions set forth in this Notice.

The instructions for shareholders voting electronically are as under:

i. The voting period begins on Tuesday, 23rd December, 2014 at 09.00 A.M. and ends on Wednesday, 24th December, 2014 at 05.00 P.M. During this period shareholders’ of the Company, holding shares either in physical form or in dematerialized form, as on the cut-off date (record date) of Thursday, 4th December, 2014, may cast their vote electronically. The e-voting module shall be disabled by CDSL for voting thereafter.

ii. The shareholders should log on to the e-voting website www.evotingindia.com.

iii. Click on Shareholders

iv. Now Enter your User ID

a) For CDSL: 16 digits beneficiary ID, b) For NSDL: 8 Character DP ID followed by 8 Digits

Client ID, c) Members holding shares in Physical Form should

enter Folio Number registered with the Company.

v. Next enter the Image Verification as displayed and Click on Login.

vi. If you are holding shares in demat form and had logged on to www.evotingindia.com and voted on an earlier voting of any company, then your existing password is to be used.

vii. If you are a first time user follow the steps given below:

viii. After entering these details appropriately, click on “SUBMIT” tab.

ix. Members holding shares in physical form will then reach directly the Company selection screen. However, members holding shares in demat form will now reach ‘Password Creation’ menu wherein they are required to mandatorily enter their login password in the new password field. Kindly note that this password is to be also used by the demat holders for voting for resolutions of any other company on which they are eligible to vote, provided that company opts for e-voting through CDSL platform. It is strongly recommended not to share your password with any other person and take utmost care to keep your password confidential.

x. For Members holding shares in physical form, the details can be used only for e-voting on the resolutions contained in this Notice.

xi. Click on the EVSN for the relevant “AVON ORGANICS LIMITED” on which you choose to vote.

xii. On the voting page, you will see “RESOLUTION DESCRIPTION” and against the same the option “YES/NO” for voting. Select the option YES or NO as desired. The option YES implies that you assent to the Resolution and option NO implies that you dissent to the Resolution.

xiii. Click on the “RESOLUTIONS FILE LINK” if you wish to view the entire Resolution details.

xiv. After selecting the resolution you have decided to vote on, click on “SUBMIT”. A confirmation box will be displayed. If you wish to confirm your vote, click on “OK”, else to change your vote, click on “CANCEL” and accordingly modify your vote.

xv. Once you “CONFIRM” your vote on the resolution, you will not be allowed to modify your vote.

xvi. You can also take out print of the voting done by you by clicking on “Click here to print” option on the Voting page.

xvii.If Demat account holder has forgotten the changed password then enter the User ID and the image verification code and click on Forgot Password & enter the details as prompted by the system.

xviii.Note for Non – Individual Shareholders and Custodians


For Members holding shares in Demat Form and Physical Form

PAN Enter your 10 digit alpha-numeric *PAN issued by Income Tax Department (Applicable for both demat shareholders as well as physical shareholders)• Members who have not updated their

PAN with the Company/Depository Participant are requested to use the first two letters of their name and the last 8 digits of the demat account/folio number in the PAN field.

• In case the folio number is less than 8 digits enter the applicable number of 0’s before the number after the first two characters of the name in CAPITAL letters. Eg. If your name is Ramesh Kumar with folio number 100 then enter RA00000100 in the PAN field.

DOB Enter the Date of Birth as recorded in your demat account or in the company records for the said demat account or folio in dd/mm/yyyy format.

Enter the Dividend Bank Details as recorded in your demat account or in the company records for the said demat account or folio.• Please enter the DOB or Dividend Bank

Details in order to login. If the details are not recorded with the depository or company please enter the number of shares held by you as on the cut off date in the Dividend Bank details field.

DividendBank Details#

NOTICE

• Non-Individual shareholders (i.e. other than Individuals, HUF, NRI etc.) are required to log on to https://www.evotingindia.co.in and register themselves as Corporates.

• They should submit a scanned copy of the Registration Form bearing the stamp and sign of the entity to [email protected].

• After receiving the login details they have to create a user who would be able to link the account(s) which they wish to vote on.

• The list of accounts should be mailed to [email protected] and on approval of the accounts they would be able to cast their vote.

• They should upload a scanned copy of the Board Resolution and Power of Attorney (POA) which they have issued in favour of the Custodian, if any, in PDF format in the system for the scrutinizer to verify the same.

xix. Once the vote on the resolution is cast by the shareholders, they shall not be allowed to change it subsequently.

xx. In case you have any queries or issues regarding e-voting, you may refer the Frequently Asked Questions (“FAQs”) and e-voting manual available at www.evotingindia.com under help section or write an email to [email protected].

xxi. The voting rights of shareholders shall be in proportion to their shares of the paid up equity share Capital of the Company as on the cut-off date of

xxii.You can also update your mobile number and e-mail id in the user profile details of the folio which may be used for sending future communications.

Thursday, 4th December, 2014.

II. Mr. Vidit Narsana ,Company Secretary in Practice ( Membership No. 28344, Certificate of Practice No. 11915), Mumbai has been appointed as the Scrutinizer to scrutinize the e-voting process(including the Physical Assent/ Dissent Form received from Members who do not have access to e-voting) in fair and transparent manner.

III. The Scrutinizer shall within a period of not exceeding three (3) working days from the conclusion of the e-voting period unblock the votes in the presence of at least two (2) witnesses not in the employment of the Company and make a Scrutinizer’s Report of the votes cast in favour or against, if any, forthwith to the Chairman/Director of the Company.

IV. The Results on resolutions shall be declared on or after the AGM of the Company by the Chairman of the Company or any other person duly authorized in this regard. The results declared along with the Scrutinizer’s Report shall be placed on the website of CDSL within two (2) days of passing of the resolutions at the 22nd AGM of the Company on 30th December, 2014 and communicated to the BSE Limited.

11. In case of those members who do not have access to e-voting facility, they can use the assent/dissent form sent herewith and convey their assent/dissent to each one of the items of business to be transacted at the ensuing AGM and send the form in a sealed envelop to reach Mr.Vidit Narsana Scrutinizer appointed by the Company at the Corporate Office of the Company at 4th Floor, H Wing, Tex Centre, Chandivali, off. Saki Vihar Road , Andheri (E), Mumbai 400 072 on or before Wednesday, 24th December, 2014 at (05.00 P.M.).

12. Members who have not registered their e-mail addresses, so far are requested to register their e-mail addresses with the Depository. Members who hold shares in physical form are requested to register their e-mail addresses with the Registrar & Share Transfer Agent (RTA), M/s. XL Softech Systems Limited, 3, Sagar Soceity,Rd No.2, Banjara Hills, Hyderabad- 500034, Telangana.


NOTICE

As required by Section 102 of the Companies Act, 2013 (the Act), the following Explanatory Statement sets out all material facts relating to the business mentioned under Item Nos.5 to 7 of the accompanying Notice:

Item No. 5

Based on recommendation of the of the Board of Directors and after reviewing confirmation of independence received, the Board of Directors of the Company appointed Dr. Sunil Pitroda, as an Additional Director of the Company, in the category of Independent Directors. Pursuant to Section 161(1) of the Companies Act 2013, Dr. Sunil Pitroda holds his office till the date of this Annual General Meeting. Appropriate notice has been received by the Company from a member proposing appointment of Dr. Sunil Pitroda as Director of the Company and requisite consent has been received from Dr. Sunil Pitroda pursuant to provisions of Section 152 of the Companies Act 2013. In the opinion of the Board, Dr. Sunil Pitroda who is proposed to be appointed as an Independent Director of the Company for the period from 30th December, 2014 to 29th December, 2019 fulfils the conditions specified under Section 149(6) and Schedule IV of the Companies Act 2013 and is Independent of the management.

Board recommends the resolution for the approval of members as Ordinary Resolution.

None of the Directors and/or Key Managerial Personnel of the Company or their relatives, except Dr. Sunil Pitroda (whose appointment is proposed in this resolution) are in any way concerned or interested in the resolution

Item No. 6 & 7

The approval of the shareholders was obtained under Section 293(1)(d) of the Companies Act, 1956 for authorizing the Board of Directors to borrow in excess of its paid up share capital and free reserves upto an aggregate amount of Rs.1,000 Crore (Rupees One Thousand Crore Only). The approval of the shareholders was also obtained, under Section 293(1)(a) of the Companies Act, 1956 to

mortgage, hypothecate, create charge and security etc, on the whole of the undertaking or substantially whole of the undertaking as mentioned in the resolution and explanatory statement of the Notice of AGM dated May 19, 2011. Both the above resolutions were passed as Ordinary Resolution, pursuant to the provisions of Section 293(1)(a) and 293(1)(d).

MCA has notified various sections of Companies Act, 2013 and Sections 180 (1)(a) and 180(1)(c) under the New Act, corresponding to Section 293(1)(a) and 293(1)(d) of Companies Act, 1956, are effective from 12th September, 2013, which requires that the approval of the Shareholders is required by way of Special Resolution, instead of Ordinary Resolution.

Further as per MCA General Circular no. 04 /2014 dated March 25, 2014, it has been further clarified that all the resolutions pertaining to Section 293(1)(a) and 293(1)(d) of Companies Act, 1956, passed earlier, will be valid for a period of one year from the date of notification of Section 180 of Companies Act, 2013. It is therefore, necessary for the members to pass an enabling resolution as Special Resolution under Section 180(1)(a) and Section 180(1)(c) and other applicable provisions of the Companies Act, 2013, as set out at Item No. 6 and 7 respectively, to enable the Board of Directors to mortgage, hypothecate or create charge on the undertaking of the Company and to borrow upto Rs. 1,000 crores from time to time, as per the details mentioned in the resolution.

Board recommends the resolution for the approval of members as Special Resolution.

None of the Directors and/or Key Managerial Personnel of the Company or their relatives, are in any way concerned or interested in the resolution


EXPLANATORY STATEMENT

Place: MumbaiDate: 05.12.2014

By Order of the Board For Avon Organics Limited

Sd/-Jignesh Patel

Company Secretary

Name

Date of Birth

Date of Appointment

Nationality

Category

Designation

Qualification / Expertise in Specific Functional Areas

Occupation

Other Directorships/ Directorships held in other companies

Shareholding in the Company

Relationship between directors inter-se

Mr. Manoj Jain

20.03.1970

31.01.2009

Indian

Promoter of Holding Company

Director

Mr. Manoj Jain, aged 44 years, holds a Bachelor’s Degree in Commerce. He is a Chartered Accountant by qualification and has more than 16 years of e x p e r i e n c e i n t h e pharmaceutical industry. He is overa l l in -charge of the a c c o u n t i n g a n d f i n a n c e functions of Arch Pharmalabs Limited, our holding company. He is also responsible for the statutory and secretarial affairs and the audit and taxation re la ted act iv i t ies o f our C o m p a n y . H e i s a l s o instrumental in the formulation of corporate policy, strategic and perspective planning and external relations for our Company.

Business

1. Arch Pharmalabs Limited2. Riverside Farmland Private

Limited3. Rivertouch Farmland

Private Limited4. Riverview Realty Private

Limited5. Arch Pharmalabs FZ-LLC6. Arch Pharmalabs (USA) Inc7. Regal Pharma Pte. Ltd.

NIL

NIL

Mr. Rajendra Kaimal

23.06.1973

30.05.2013

Indian

Promoter of Holding Company

Director

Mr. Rajendra Kaimal, aged 40 years, holds a Bachelors Degree i n C o m m e r c e f r o m t h e University of Mumbai. He has completed his Masters in Management Studies from Narsee Monjee Institute of Management Studies, Mumbai and is a Cost Accountant from the Institute of Cost and Works Accountants of India. He has over 13 years of experience in the pharmaceutical industry. He i s ove r -a l l i n -cha rge o f overseeing the commercial operations of Arch Pharmalabs Limited, our holding company.

Business

1. Arch Pharmachem Ltd2. Arch Impex Private Limited3. Arch Pharmalabs Limited4. Arch Life Sciences Limited5. A M R Investments Private

Limited6. Arch Finechemicals Limited7. Arch Infra Ventures Limited8. Amra Remedies Limited9. Arch Agro Industries

Private Limited10. Amra Renal Care Limited11. Arch Investment Private

Limited12. Arch Herbals Private

Limited13. Arch Pharmalabs FZ-LLC14. Arch Pharmalabs (USA) Inc15. Regal Pharma Pte. Ltd.

NIL

NIL

Dr. Sunil Pitroda

29.11.1959

05.12.2014

Indian

Independent

Additional Director

Dr. Sunil Pitroda, aged 55 years, holds Bachelor of Medicine, Bachelor of Surgery (MBBS) Degree from the University of Mumbai. He has over 30 years of experience in the Medical and surgical filed. His experience in the field of Medicines and understanding of the healthcare vertical will help our Company grow further.

Business

NIL

NIL

NIL

Details of Directors seeking appointment/reappointment in forthcoming Annual General Meeting:


To

The Members,

Your Directors have pleasure in presenting their Twenty-First Annual Report on the business and operations of the Company and the Audited Financial Accounts for the year ended 31st March, 2014.

FINANCIAL RESULTS (Rs. in Lakhs)

Previous Year’s figures have been regrouped/ reclassified wherever necessary to conform to the current year’s classification.

DIVIDEND

In view of loss incurred during the year, Your Directors do not recommend any dividend on Equity Shares for the year under review.

YEAR IN RETROSPECT

During the year, the Company registered a significant decline in Net Sales and the Operational income for the year was Rs. 5688.67 Lakhs as against 17015.04 Lakhs in the previous year, registering a decrease in sales by 66.57%, primarily the same was on account of Company’s high dependence on certain customers with whom your Company could not do business as compared to previous years and also on account of multiple issues including the one’s at the customers end beyond the control of your company. Also the market remained sluggish for the API & Intermediates players.

CAPITAL EXPENDITURE

During the year under review, Capital work in progress amounting to Rs. 291.90 Lakhs was capitalized and in addition Rs. 261.57 Lakhs was incurred on maintenance capex.

QUALITY SYSTEMS

The Company continues with its efforts to maintain highest quality standards and complies with various regulations as required by laws for supplies of products to various territories. The Company currently has following valid certifications:

• ISO 9001:2008 • The Solapur unit of the Company is cGMP compliant

and is USFDA inspected.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217 (2AA) of the Companies Act, 1956, the Directors confirm that:

a) In the preparation of the annual accounts for the year ended 31st March, 2014, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) Your Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31st March, 2014 and of the Profit and Loss Account for the year ended on that date;

c) Your Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the Assets of the company and preventing and detecting fraud and other irregularities and

d) The accounts for the year ended 31st March, 2014 have been prepared on a going concern basis.

CORPORATE GOVERNANCE

Your company has been proactive in following the principle and practice of good corporate governance. The Company has taken adequate steps to ensure that the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement of the Stock Exchanges are complied with.

A separate statement on corporate governance is annexed as a part of the Annual Report along with the Auditors certificate on its compliance. A report in the form of Management Discussion and Analysis pursuant to clause 49 of the Listing Agreement, as a part of this report is annexed hereto.

DIRECTORS

Mr. Rajendra Kaimal (DIN: 00032839), Non-executive Chairman & Managing Director retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Mr. Manoj Jain (DIN: 00034727), Non-executive Director retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Dr. Sunil Pitroda (DIN: 07028212), was appointed as an Additional Director of the Company, in the category of an Independent Director. Pursuant to Section 161(1) of the Companies Act, 2013, Dr. Sunil Pitroda holds office till the date of this Annual General Meeting and it is proposed to appoint him as an Independent Director of the Company for the period of 5 years from December 30, 2014 to December 29, 2019.


DIRECTORS' REPORT

Revenue from Operations 5,688.67 17,015.04Other Income 18.37 21.65Total Revenue 5,707.04 17,036.69Operating Costs 6,193.19 13,650.55Profit/(Loss) Before Depreciation, Interest, Tax (PBDIT) (486.15) 3,386.14Depreciation 961.88 996.51Profit/(Loss) Before Interest & Tax (PBIT) (1,448.03) 2389.63Profit/(Loss) Before Tax (PBT) (3,202.91) 879.41Taxation: Provision for Income Tax Deferred Tax 54.43 51.97Profit/(Loss) for the year (3,257.34) 827.44

- 200.00

2013-14Particulars 2012-13

Brief profiles of the abovementioned Directors are included in a separate Annexure after the Notice, forming part of this Annual Report.

PARTICULARS OF EMPLOYEES:

The Board of Directors commends the continued dedication & support of employees at all levels. During the year under review the Management has made best efforts to keep the industrial relations peaceful and cordial.

Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended, requires Companies to list out names of the employees drawing remuneration of more than Rs. 5 Lakhs per month and/or more than Rs. 60 Lakhs Per annum.

However, none of the employees of the Company drew remuneration of Rs. 60 Lakhs or above per annum and/or Rs. 5 Lakhs or above per month during the year under review.

STATUTORY AUDITORS

M/s. Mukesh Mehta & Associates, (Registration No. 116309W) Chartered Accountants, Mumbai, the statutory auditor of the Company hold office until the conclusion of the ensuing Annual General Meeting of the Company. The said Auditor have been holding office as Statutory Auditor of the Company for a period of 10 (Ten) consecutive financial years. In terms of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, a listed company cannot appoint or re-appoint an audit firm as an Auditor for more than two terms of five consecutive years. The period for which the firm has held office as Auditor prior to the commencement of the Companies Act, 2013 shall be taken into account for calculating the period of 10 (Ten) consecutive years, as the case may be. Further Section 139 of the Companies Act, 2013 has also provided a period of 3 (Three) years from date of commencement of the Act to comply with this requirement and accordingly

they can be appointed as Auditors for a further period of 3 (three) years only in terms of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014. Accordingly it is proposed to appoint M/s. Mukesh Mehta & Associates, (Registration No. 116309W) Chartered Accountants, Mumbai as statutory auditors of the Company to hold office from the conclusion of the Twenty First Annual General Meeting till the conclusion of the Twenty Fourth Annual General Meeting of the Company, i.e. for a period of 3 (Three) years, subject to ratification of their appointment at every annual general meeting. The statutory auditor has confirmed their eligibility and willingness to accept office, if re-appointed.

E N E R G Y C O N S E R VAT I O N , T E C H N O L O G Y ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information relating to Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo as required to be disclosed under Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are set out as an annexure forming part of this Report.

PUBLIC DEPOSITS During the year under review, the company has neither invited nor received any deposits from the public.

ACKNOWLEDGEMENTS

The Board of Directors take this opportunity to thank the Financial Institutions, Banks, employees, business associates, suppliers, Stock Exchanges, other regulatory authorities and all the stake holders of the Company for valuable sustained support and cooperation in conducting the operations of the Company. The Board also places on record the sustained management support received from M/s. Arch Pharmalabs Limited, the Parent Company.

Date: 05.12.2014Place: Mumbai

For and on behalf of the Board

Sd/- Manoj Jain

Director DIN: 00034727

Sd/-Ajit Kamath

Chairman & Managing Director DIN: 00032799


DIRECTORS' REPORT

ANNEXURE – ‘A’ TO THE DIRECTORS’ REPORT

Information under Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988

A. Conservation of Energy :

a. Energy Conservation Measures taken : The Company is engaged in continuous process of energy conservation through improved operational and maintenance practices.

b. Total energy consumption per unit of : Details are furnished in Form A Production

B. Technology absorption : Details are furnished in Form B

C. Foreign Exchange Earnings and Outgo 2013-2014 2012-2013

1. Foreign Exchange Earnings (Rs. In Lacs) 198.79 3716.64

2. Foreign Exchange outgo (Rs.in Lacs)

3. Net Foreign Exchange Earnings (outgo) (Rs. In Lacs)

FORM AForm for disclosure of particulars with respect to conservation of energy.

992.53 1637.40

(793.74) 2,079.24

2013-2014 2012-2013

POWER AND FUEL CONSUMPTION:

1. ELECTRICITY :

a. Purchased Units : (In KWH) 1638640 6422148Amount (Rs. In lacs) 166.14 466.28Rate/Unit (Rs.) 10.14 7.26

b. Own Generation : Through D. G. Set Units (In KWH) 10851 262155Amount (Rs. In lacs) 3.02 40.85Rate/Unit (Rs.) 27.81 15.58

2. FURNACE & BOILER (Rs. In lacs) 39.55 345.18


FORM B

A. RESEARCH AND DEVELOPMENT :

1. Specific areas in which R & D was carried out.

The Company continued its research on CEFDINIR intermediate, which is ready to be implemented at the plant for commercial quantities.

2. Benefits derived from above R & D.

- There would be considerable cost advantage on the manufacture of CEFDINIR intermediate in commercial quantities.

3. Future plan of action.

- To achieve increased production of DEAA (Di ethyl aceto acetamide) and CEFDINIR intermediate.

4. Expenditure on R & D : (Rs. In lacs)2013-14 2012-13

Revenue Expenditure 19.42 32.93 % to Turnover 0.34% 0.19%

B. TECHNOLOGY ABSORPTION :

1 Efforts in brief made towards technology absorption : Consistent efforts made towards achieving the required quality of Pseudoephedrine Hydrochloride.

2 Benefits derived as a result of the above efforts, e.g. product improvement, cost reduction, product development, import substitution etc. : Cost reduction in Pseudoephedrine Hydrochloride.

3 In case of imported technology ( import during the last 5 years reckoned from the beginning of the year); following information may be furnished

a Technology imported

b Year of import

c Has technology been fully absorbed

Nil

Not Applicable

Not Applicable


GLOBAL PHARMACEUTICAL MARKET

Thanks to advances in science and technology, the researchbased pharmaceutical industry is entering an exciting new era in medicines development. Research methods are evolving and we have many promising prospects on the horizon – from the possibilities offered by personalised medicines, to the potential offered by harnessing the power of big data. The innovative pharmaceutical industry is driven by, and drives, medical progress.

The industry is comprised of companies that make, patent and sell drugs that have therapeutic effect. The market is highly competitive and entry is difficult due to a combination of strict regulations and the need for extensive research and development, involving time-consuming clinical trials.

In addition, high research and development costs, lengthy clinical trial processes, expiring patents and difficulty in gaining product approval from the appropriate regulatory bodies all mean that companies must produce blockbuster drugs and continue to do so to remain in good standing.

The market for pharmaceutical goods is increasing due to an aging global population, advances in drug-based treatment research, increased investment in healthcare and consumer-driven private health coverage, and rising numbers of patients suffering from cardiovascular disease, cancer and degenerative diseases. Market growth faces particular challenges such as price pressures, strict regulation, lawsuits and expiring patents.

INDIAN PHARMACEUTICAL MARKET

The Indian pharmaceutical sector is highly knowledge-based and its steady growth is positively affecting the Indian economy. The organised nature of the Indian pharmaceutical industry is attracting several companies that are finding it viable to increase their operations in the country.

The Indian pharmaceutical industry is highly fragmented. The top ten companies make up for more than a third of the market. Indian pharma companies have a large chunk of their revenues coming from exports; India currently exports drug intermediates, Active Pharmaceutical Ingredients (APIs), Finished Dosage Formulations (FDFs), bio-pharmaceuticals, and clinical services across the globe.

India's drugs and pharmaceuticals industry is expected to grow at a compound annual growth rate (CAGR) of 14 per cent to reach a turnover of Rs 2.91 trillion (US$ 47.06 billion) by 2018.

The allowance of foreign direct investment (FDI) in India's pharma sector has been well received by foreign investors. According to data released by the Department of Industrial Policy and Promotion (DIPP), the drugs and pharmaceutical sector attracted FDI worth US$ 12,688.71 million between April 2000 and September 2014.

The Government of India has unveiled 'Pharma Vision 2020' aimed at making India a global leader in end-to-end drug manufacture. It has reduced approval time for new facilities to boost investments. Further, the government has also put in place mechanisms such as the Drug Price

Control Order and the National Pharmaceutical Pricing Authority to address the issue of affordability and availability of medicines.

RISKS AND CONCERNS

All businesses are subject to internal as well as external risks. The internal risks are controllable risks and Avon attempts to identify such risks and formulate actions to mitigate the effect of such risks. The external risks like change in government policies etc are not within the control of the Company. Particularly the global as well as the Indian Pharmaceutical industry continues to be regulated by various regulatory agencies. Stringent regulatory norms, delay in obtaining regulatory approvals for key products, patent litigations, currency fluctuations, pricing guidelines in the domestic market are certain risks that can affect the Company’s business.

Emerging markets are increasingly pivotal in the growth of the pharmaceutical industry. Pharmaceutical companies operating in these markets, whether global or domestic players, are exposed to market-specific social risks that affect public health and may also pose material financial risks.

Finance

a. Operational & Financial Performance

• Sales:

Gross Margin (EBIDTA): During the year under review, the Gross margin (Loss) stood at Rs. 486.15 Lakhs as against Gross profit of Rs. 3,386.14 Lakhs.

• Net Profit/(Loss) : During the year the Net Loss of the Company stood at Rs. 3257.34 Lakhs as against Rs. 827.44 Lakhs profit in the last financial year, due to decrease in sales.

• Net-worth: The net-worth of the Company decreased to Rs. 4457.02 Lakhs from Rs. 7714.36 Lakhs during the previous year. The decrease has been primarily on account of losses incurred by the company during the year under review.

INTERNAL AUDIT AND CONTROL

Avon believes that sound internal control systems are necessary prerequisite to good governance. The management is committed to ensuring an effective internal control environment, commensurate with the size and complexity of the business, which provides assurance on the efficiency of the Company’s operations and the security of its assets.

During the year, the Company registered a significant decline in Net Sales and the Operational income for the year was Rs. 5688.67 Lakhs as against 17015.04 Lakhs in the previous year, registering a decrease in sales by 66.57%, primarily the same was on account of Company’s high dependence on certain customers with whom your Company could not do business as compared to previous years and also on account of multiple issues including the one’s at the customers end beyond the control of your company. Also the market remained sluggish for the API & Intermediates players.


MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Avon’s internal control systems and procedures are designed to enable the reliable reporting of financial statements, reporting timely feedback on the achievement of operational or strategic goals and ensure compliance with laws and regulations. In addition to the statutory audit, the financial and operating controls at various locations of the Company are reviewed by internal auditors who report significant findings to the Audit Committee of the Board. Compliance with various laws and regulations are also monitored.

Human Resource Development and Industrial Relations

Avon’s HR function is aligned with the overall growth vision of the Company and continuously works on areas such as recruitment and selection policies, disciplinary procedures, reward/recognition policies, learning and development policies and all round employee development. Avon provides a safe and rewarding environment that attracts and retains a talented team and where employees are engaged in delivering exceptional results to the customers and investors.

The focus is on maintaining a high level of motivation and on leadership development and the number of employees are maintained according to business development.

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Company’s objectives, projections, estimate, expectations may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company’s operations include, among others, economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and incidental factors.


1. Company’s Philosophy:

Your Company is committed to the principles of fair business practices, transparency in its dealing, compliance of law, adherence to ethical standards and to have a better rapport with the clines and shareholders. However, the year under review has brought about certain unprecedented financial difficulties due to which, certain compliances under the Listing Agreement have not been strictly followed. Further, with the recent applicability of the provisions of Companies Act, 2013 there have been certain compliances yet to be complied by the Company. Pursuant to our commitment in complying with all applicable regulations, we at Avon, are under process of making necessary adjustments to adhere to the compliances.

The Board of Directors is entrusted with the ultimate responsibility of the management, general affairs, direction and performance of the Company and has been vested with the requisite powers, authorities and duties.

This report discusses and analyses the policies and practices for good governance followed in the Company for the financial year ended 31st March, 2014.

2. Board of Directors

a. Composition of the Board

The Board currently comprises of Non-Independent Directors, who represent the holding Company, i.e. Arch Pharmalabs Limited. The composition of the Board is not compliant with requirements of Clause 49 of the Listing Agreement. The procedure for appointment of non-independent, Non-executive directors in order to meet the requirements of the Companies Act, 2013 and the Listing Agreement are currently being evaluated and are in the process of being implemented.

Composition and other Directorship(s) / Committee Membership(s) as on 31st March, 2014:

*Including private companies

# Mr. Upkar Singh Kohli and Mr. Ashit Shah have resigned from the Board of Directors of the Company with effect from 12th November, 2013.

## Mr. Sudhir Ghate has resigned from the Board of Directors of the Company with effect from 19th December, 2013.

b. Board Meetings and Procedure

During the financial year 2013-2014, the Company has held 4 Board Meetings. The meetings are held on 30th May, 2013, 9th August, 2013, 12th November, 2013 and 14th February, 2014.

The Board Meetings are scheduled at least 4 times in a year, with notice and detailed agenda being circulated to the Members of the Board, well in advance. The Managing Director briefs the Board on the overall performance of the Company. The Chairman of the Audit Committee briefs the Board on important matters discussed at the Meetings of the Audit Committee. The statements of shareholders’/ Investors’ Grievances received and resolved are also placed before the Board.

c. Code of Conduct

As provided under Clause 49 of the Listing Agreement the Board of Directors of A Company has laid down Code of Conduct for all Board Members and Senior Management Personnel. A declaration to this effect forms part of this report.

2. Board Committees:

The Board Committees play a crucial role in the governance structure of the Company and have been constituted to deal with specific business items which concern the Company and need a closer review. The Board Committees are set up under the formal approval of the Board to carry out clearly defined roles which are considered to be performed by


REPORT ON CORPORATE GOVERNANCE

Mr. Ajit Kamath Non Executive - Promoter 4 17 1 YesMr. Manoj Jain Non Executive - Promoter 4 19 1 YesMr. Rajendra Kaimal Non Executive - Promoter 4 15 NIL YesMr. Upkar Singh Kohli# Non Executive - Independent 3 3 NIL NoMr. Sudhir Ghate## Non Executive - Independent 3 4 5 Yes

[Chairman of Audit Committees in 2 companies]

Mr. Ashit Shah# Non Executive - Independent 3 2 Nil No

Name ofDirectors

Category No. of Board Meetings

attended out of 4 held

No. of Directorships

of other Companies*

No. of Memberships of Board Sub-Committees /

Chairmanships in other Companies

Attendance at the last AGM held

on 21st September

2013

members of the Board, as a part of good governance practice.

The minutes of the meetings of all Committees are placed before the Board for review. The Board Committees can request special invitees to join the meeting, as appropriate.

The Board has currently established the following Committees.

A. AUDIT COMMITTEE

(a) Composition, Names of Members and Chairman

During the financial year 2013-14, the company held 4 meetings of the audit committee on 30th May, 2013, 9th August, 2013, 12th November, 2013 and 14th February, 2014. The composition of committee and attendance areas under:-

Currently, in absence of Non-Executive, Independent Directors on the Board of the Company, we are unable to comply with the requirements of Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

Ms. Sunipa Ghosh, Company Secretary acted as Secretary to the Audit Committee for the aforementioned meetings.

(b) Brief description of terms of reference

1) Review of Company’s financial reporting process and disclosure of its financial information in a bid to ensure that the financial statements are correct, sufficient and credible.

2) Recommending and reviewing appointment and removal of internal and external auditors and fixation of fees 3) Discussing with the Statutory Auditors, Cost Auditors and Internal Auditors about the scope and coverage of audit in

the Company and ascertaining areas of concern, if any.4) Reviewing with the Management, quarterly and half-yearly financial reports, before submission to the Board;5) Reviewing with the Management, the annual financial statements of the subsidiary companies. 6) Reviewing with the management the annual financial statements before submission to the Board, with particular

reference to:• Major accounting entries involving estimates based on the exercise of judgment by the management;• Significant adjustments made in the financial statement arising out audit findings;• Disclosure of related party transactions;• Changes if any, in the accounting policies;• Qualifications in draft audit report;• Compliance with listing agreement requirements and other regulatory requirements;

7) Reviewing and setting up of internal control systems in the Company and discussing their efficacy.8) Reviewing the internal audit mechanism existing in the Company and putting forward relevant suggestions for

betterment of the internal audit process.9) Reviewing the Company’s financial and risk management policies and compliance with internal control systems.10) Investigating into any matter in relation to the items specified in Section 292A of the Companies Act, 1956 or referred

to it by the Board and for this purpose, shall have full access to information contained in the records of the Company and external professional advice, if any.

B. NOMINATION AND REMUNERATION COMMITTEE

(a) Composition, Names of Members and Chairman

Currently, in absence of Non-Executive, Independent Directors on the Board of the Company, we are unable to comply with the requirements of Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement.


Pursuant to Section 178(1) of the Companies Act 2013, the company renamed the erstwhile Remuneration Committee as the Nomination and Remuneration Committee.

The Remuneration Committee was constituted to review and recommend managerial remuneration, based on their performance and defined assessment criteria.

The Non-Executive, Independent Directors were not receiving any remuneration/commission for attending the Meetings and were eligible for sitting fees for attending the meetings of the Board and Committee, which stand due and payable.

Mr. Manoj Jain Non-Executive Director 4Mr. Sudhir Ghate Non-Executive Independent Director 3Mr. Ashit Shah Non-Executive Independent Director 3Mr. Rajendra Kaimal Non-Executive Director 1Mr. Ajit Kamath Chairman & Managing Director 1

Name Category No. of Meeting attended



The Non-Executive Chairman and Managing Director do not draw any remuneration from the Company.

There were no other pecuniary relationships or transactions between the Non-Executive Directors and the Company.

However, no sittings fees were paid to any Independent Directors of the Company during the year under review due to the financial constraints faced by the Company.

C. STAKEHOLDERS RELATIONSHIP COMMITTEE.

(a) Composition, Names of Members and Chairperson

Currently, in absence of Independent Directors on the Board of the Company, we are unable to comply with the requirements of Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement.


Pursuant to Section 178(5) of the Companies Act 2013, the company renamed the erstwhile Shareholders/ Investors Grievance Committee as the Stakeholders Relationship Committee.

The Shareholders’/Investor Grievance Committee attend to and redress the grievances of the shareholders of the Company, in partnership with the Registrars and Share Transfer Agents of the Company.

The responsibility of the Committee includes the following matters such as:

- Dematerialisation of shares- Issuing duplicate share certificates- Resolving Shareholders’ grievances- Non - receipt of declared Dividend- Dividends, if any applicable;- Non- receipt of Annual Reports- Timely disclosures for shareholders and investors

During the year under review, the Company had not received any complaints from shareholders, which was resolved to the satisfaction of shareholders.

No investor complaints remained unattended / pending for more than 30 days and no request for share transfers or dematerialization received during the financial year was pending for more than 30 days and 15 days, respectively.

3. General Body Meetings

Details of last three Annual General Meetings held are as follows:

All the resolutions set out in the Notices were passed by the shareholders. The Company did not have any proposal to vote through postal ballot during the year under review.

No Extra Ordinary General Meeting of the Members was held during the year 2013-14.

4. INFORMATION IN RESPECT OF DIRECTORS SEEKING APPOINTMENT / RE-APPOINTMENT AS REQUIRED UNDER CLAUSE 49 VI (A) OF THE LISTING AGREEMENT

a. Re-appointment of Mr. Rajendra Kaimal, Non-Executive Director

Mr. Rajendra Kaimal Non-Executive Director retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

b. Re-appointment of Mr. Manoj Jain, Non-Executive Director

Mr. Manoj Jain, Non-Executive Director retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.


Year Day, Date and Time of the Meeting Details of Special Resolutions passed

Venue

2013 Saturday, 21st September, 2013, 10.00 a.m.

Hotel Daspalla, Road no. 37, Jubilee Hills, Hyderabad – 500033

NIL

2012 Friday, 28th September, 2012, 10.00 a.m.


NIL

2011 Friday, 29th July, 2011, 11.30 a.m.


NIL


c. Re-appointment of Dr. Sunil Pitroda appointed as Non-Executive Director during the year

Dr. Sunil Pitroda, appointed as Additional Director by the Board of Directors of the Company, and it is proposed to appoint him as an Independent Director of the Company

5. DISCLOSURES

a. Disclosures on materially significant related party transactions i.e. transactions of the company of material nature, with its promoters, the directors or the management, their subsidiaries or relatives etc. that may have potential conflict with the interest of the company at large.

None of the transactions with any of the related parties were in conflict with the interest of the Company. Details of such transactions are stated in Notes to Accounts that form part of the Balance Sheet.

b. Details of non-compliance by the company, penalties, and strictures imposed on the company by Stock Exchange or SEBI or any Statutory Authorities on any matter related to capital markets during the last three years.

There were no instances of non-compliance of any matter related to the capital markets during the last three years.

No personnel are being denied any access to the Audit Committee.

The financial statements have been prepared following the Accounting Standards.

6. MEANS OF COMMUNICATION

Financial Results: The quarterly, half-yearly and annual results of the Company are published in widely circulated newspapers viz. The Financial Express (a national daily) and Andhra Prabha (a regional daily). These are also submitted to the Stock Exchanges on which the company’s shares are listed in accordance with the Listing Agreement.

Annual Report: Annual Report of the Company containing, inter-alia, Audited Standalone Financial Statements, Consolidated Financial Statements, Directors’ Report, Report on Corporate Governance, Auditors Report and other important information is circulated to the members and others entitled thereto for each financial year. The Management Discussion and Analysis Report forms part of the Annual Report.

7. GENERAL SHAREHOLDERS’ INFORMATION

1. Date, Time and Venue of AGM: Tuesday, 30th December, 2014 at 10 a.m.Hotel Daspalla, Road No. 37, Jubilee Hills, Hyderabad – 500 033, Andhra Pradesh.

2. Financial Calendar 1st April to 31st March

3. Board Meetings for Quarterly Results: (tentative and subject to change)

• Quarter ending June 30, 2014 - On or before 14th August, 2014 • Quarter ending September 30, 2014 - On or before 14th November, 2014• Quarter ending December 31, 2014 - On or before 14th February, 2015• Quarter ending March 31, 2015 - On or before 15th May, 2015• Annual General Meeting for the Financial - On or before September 30, 2015

Year March 31, 2015

4. Book Closure dates Friday, 19th December, 2014 to Tuesday, 30st December, 2014(both days inclusive)

5. Dividend Payment Date No dividend has been recommended by the Board for the financial year 2013-2014.

6. Listing on the stock exchanges The Bombay Stock Exchange Limited (BSE)The Calcutta Stock Exchange Limited (CSE)The Hyderabad Stock Exchange Limited (HSE)

However, the equity shares of the Company are not traded in HSE and CSE.

7. Payment of Listing fees Annual listing fees have been paid as per the requirements of Listing Agreement.

8. International Securities (ISIN) INE881A01015



9. Corporate Identification Number L24110AP1993PLC016112

10. Stock Code: BSE 531541 HSE AVN CSE 11123

11. Registered Office Survey No.18, Yawapur Village, Sadasivpet, Medak Dist., Tel : 9949828084; Fax: 040-23404438

12. Corporate Office H.No.8-3-1010/32, Flat No.401, Sahiti Vijaya Enclave, Beside Andhra Bank, Srinagar Colony, Hyderabad – 500 073

H Wing, 4th Floor, Tex Centre, Off Saki Vihar Road, Chandivali, Andheri (East), Mumbai – 400 072.

Exclusive e-mail Id for investors [email protected]

13. Registrars and Share Transfer Agents XL Softech Systems Limited, 3, Sagar Society, Road No. 2, Banjara Hills, Hyderabad- 500 034.Phone no. (040)23545913, 14, 15.

14. Share Transfer System Shares sent for physical transfer or dematerialization requests are generally registered and returned within a period of 15 days from the date of receipt of completed and validly executed documents.

Bad deliveries are promptly returned to Depository Participants (DPs) under advice to the shareholders.

15. Plant Locations Survey No.18, Yawapur Village, Sadasivpeth, Medak Dist,

Plot No. E-2, Chincholi Industrial Area, Solapur, Maharashtra.

16. Address for Correspondence Shareholder correspondence should be addressed to the Company’s R & T Agent or to the secretarial department of the Company.

17. Dematerialisation of shares And liquidity: Trading in equity shares of the company became mandatory from July, 2001. As on 31st March, 2014, 2,23,55,684 Equity shares equivalent to 99.36 % of the paid up share capital of the company are in dematerialized form. The company’s shares are currently traded in T group on the BSE, Mumbai.

18. Outstanding GDR/ADR/Warrants or any As on date, the Company has not issued any of these types of securities. convertible instruments, conversion date and likely impact of Equity:

19. Stock Market data relating to shares listed

Monthly High and low quotations at the Mumbai Stock Exchange for the year 2013-14


Month Mumbai Stock Exchange (in Rs.)

LowHigh

April 2013 18.77 13.97

May 2013 16.90 13.75

June 2013 14.75 11.55

July 2013 11.85 9.60

August 2013 10.99 8.03

September 2013 15.40 9.46

October 2013 14.90 11.00

November 2013 14.45 10.00

December 2013 14.00 8.70

January 2014 13.40 9.70

February 2014 10.64 8.80

March 2014 9.84 8.50


20. Categories of shareholders as on 31st March, 2014

0.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

Apr-13

May-13

Jun-13

Jul-13

Aug-13

Sep-13

Oct-13

Nov-13

Dec-13

Jan-14

Feb-14

Mar-14

Avon Share Price vs. BSE Sensex

Avon BSE Sensex

Chart showing comparison of Avon Share Price (closing – monthly) with BSE Sensex (closing – monthly):

Categories No. of shares held

Resident Individuals 5479 95.84 7092807 31.52

NRI’s, FII’s, OCB’s 42 0.73 113837 0.51

Bodies Corporate 182 3.18 768616 3.42

Promoters, Directors, Associates 1 0.02 14309100 63.60

Mutual funds, Banks, FI’s 3 0.05 158100 0.70

Others 10 0.17 57540 0.26

Total 5717 100.00 22500000 100.00

No of shareholders

% of Shareholders

% of shares

Resident Individuals31.52%

NRIs. FIIs, OCBs0.51%

Bodies Corporate3.42%

Promoters, Directors, Associates

63.59%

Mutual Funds, Banks, FI is

0.70%

Others0.26%

Resident Individuals

NRIs. FIIs, OCBs

Bodies Corporate

Promoters, Directors, Associates

Mutual Funds, Banks, Fis

Others

Categoriesof

Shareholdersas on

31st March, 2014



CERTIFICATE OF COMPLIANCE WITH THE CODE OF CONDUCT

To,

The Members of AVON ORGANICS LIMITED.

I, Ajit Kamath, Managing Director of Avon Organics Limited, to the best of my knowledge and belief, declare that all the members of the Board and Senior Management Personnel have affirmed compliance with the code of conduct of the Company for the year ended 31st March, 2014.


Sd/-Ajit Kamath

Chairman & Managing DirectorPlace : Mumbai Date :30.05.2014

CERTIFICATE FROM CHAIRMAN AND MANAGING DIRECTOR

I, Ajit Kamath, Chairman & Managing Director of Avon Organics Limited, to the best of my knowledge and belief, certify that:

a. I have reviewed the financial statements and the cash flow statement for the year under review and certify that:

i. these statements do not contain any materially untrue statement or omit any material facts or contain statements that might be misleading.

ii. these statements together present a true and fair view of the company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations.

b. To the best of my knowledge and belief, no transactions entered into by the company during the year are fradulent, illegal or

violate of the company’s code of conduct.

c. I am responsible for establishing and maintaining internal controls for financing reporting and have evaluated the effectiveness and disclosed to the auditors and audit committee, the deficiencies in the design and operation of such internel controls and the steps taken to rectify these deficiencies.

d. I have indicated to the auditors and audit committee that -

i. there are no significant changes in internal control over financial reporting during the year.

ii. there are no significant changes in accounting policies during the year and the same have been disclosed in the notes to the financial statements.

iii there are no frauds of which i was aware, that involves management or other employees who have a significant role in the company’s internel control system.

Sd/-Ajit Kamath

Chairman & Managing DirectorPlace : Mumbai Date :30.05.2014

AUDITOR`S CERTIFICATE ON CORPORATE GOVERNANCE

To, The Members of AVON ORGANICS LIMITED.

We have examined the compliance of conditions of Corporate Governance by AVON ORGANICS LIMITED, for the year ended 31st March, 2014 as stipulated in Cluase-49 of the Listing Agreements of the said Company with the stock exchange in India.

The compliance of conditions of Corporate Governance is the responsibility of the Company's Management. Our examination was Limited to procedures and implementation thereof adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit for nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the listing agreement mentioned above.

We state that in respect of investor grievances received during the year ended 31st March, 2014 no investor grievances are pending for a period more than one month against the Company as per the records maintained by the Company and presented to the Investor Grievance Committee.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the company.

For Mukesh Mehta & Associates Chartered Accountants.

Sd/-Mukesh Mehta

Proprietor Membership No. 100407

FRN:116309WPlace: MumbaiDate: 30.05.2014


AUDITORS' REPORT

ToThe Members of AVON ORGANICS LIMITED

We have audited the attached Balance Sheet of AVON ORGANICS LIMITED, as at 31st March, 2014, and the Profit and Loss Account and also the Cash Flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

MANAGEMENT'S RESPONSIBILITY:

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the company in accordance with the Accounting Standards notified under the Companies Act,1956(the Act) read with General Circular 15/2013 dated 13th September,2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act,2013 and accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AUDITOR'S RESPONSIBILITY:

Our responsibility is to express an opinion on these financial statements based on our audit. We conduct our audit in accordance with Standards on Auditing issued by The Institute of Chartered Accountants of India. Those Standards require that we compile with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether financial statements are free from material misstatements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedure selected depends on auditor's judgment, including the assessment of the risk of material misstatement of the financial statement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the management, as well as evaluating the overall presentation of the financial statement.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINION:

In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the significant Accounting Policies and other notes thereon give the information required by the Companies Act, 1956, in the manner so required, and present a true and fair view in conformity with the accounting principles generally accepted in India:

(i) In so far as it relates to the Balance Sheet, of the state of affairs of the company as at 31st March 2014;

(ii) In so far as it relates to the Profit & Loss Account, the profit of the company for the year ended on that date; and

(iii) In so far as it relates to the cash flow statement, of the cash flow of the company for the year ended on that date.

REPORT ON OTHER LEGAL & REGULATION REQUIREMENTS:

1. As required by the Companies (Auditors Report Order 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to above, we report that:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit.

(ii) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of those books.

(iii) The Balance Sheet, Profit and Loss Account and Cash flow statement dealt with by this report are in agreement with the books of account.


(iv) In our opinion, the Balance Sheet, the Profit & Loss Account and the cash flow statement comply with Accounting Standards notified under the Act read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013.

(v) On the basis of written representations received from the directors as on 31st March 2014 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2014 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

Place: Mumbai,Date: 30.05.2014

For Mukesh Mehta & Associates Chartered Accountants

Sd/-Mukesh Mehta

ProprietorMembership No.100407

FRN:116309W


ANNEXURE TO AUDIT REPORT REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

1 In respect of fixed assests :

a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b) As explained to us, all the Fixed assets have been physically verified by the management at reasonable intervals, which in our opinion, is reasonable having regard to the size of the company and nature of its assets. No material discrepancies were noticed on such verification.

c) During the year, the company has not disposed of any substantial part of its fixed assets during the year and going concern status of the company not affected.

2 In respect of its inventories:

a) The inventory has been physically verified during the year by the management at reasonable intervals. In our opinion, the frequency of verification is reasonable.

b) In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c) On the basis of our examination of records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on physical verification between the physical stocks and the book stocks were not material.

3 In respect of loans, secured or unsecured, granted or taken by the company to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act 1956:

a) company had taken interest free unsecured loans from holding company covered in the register maintained under section 301 of the Companies Act, 1956 and the amount outstanding at the end of the year is Rs. 3171.40 lacs (Previous year Rs. 3171.40 lacs)

b) The loans taken by the company do not have any stipulation for payment of principle and interest; hence no amounts outstanding as at the end of the year and is considered as over due.

c) The company has not granted any loans or advances in the nature of loans to the companies covered in the register maintained under section 301 of the Companies Act, 1956.

d) The company has given interest free loan to wholly owned subsidiary of the company. In respect of the said loans, the maximum amount outstanding at any time during the year is Rs. 51,015/- and the year end balance is Rs. 51,015/-.

4 In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal control system and there is no continuing failure to correct any major weakness in internal control.

5.1 Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions made in pursuance of contracts or arrangements that need to be entered in the register maintained under section 301 of the Act have been so entered.

5.2 In our opinion and according to the information and explanations given to us the transactions made in pursuance of contracts or arrangements, which needs to be entered in the registers maintained under section 301 of the Act, have been so entered. Owing to the unique and specialized nature of the items involved and in the absence of any comparable prices, we are unable to comment as to whether the transactions made in pursuance of such contracts or arrangements have been made at prevalent market price at the relevant time.

6 Based on our audit procedures and according to the information and explanations given to us, the company has not accepted any deposits from the public and hence complying with the provisions of Section 58A and 58AA of the Companies Act, 1956 and the rules framed there under is not applicable.

7 In our opinion the company has an internal audit system commensurate with its size and nature of its business.

8 The Central Government has prescribed maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 to the company and such accounts and records have been made and maintained by the company.


9 According to the records of the company, the company is not regular in depositing the undisputed statutory dues including provident fund, Employees' State Insurance, Income tax, Sales-tax, Wealth-tax, Customs duty, Excise-duty, Service tax, Cess and any other statutory dues with the appropriate authorities., and there are arrears of outstanding statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable.

10 The company has incurred cash loss of Rs. 2241.03 lacs (Previous year cash profi of Rs. 1875.92 lacs) in the current year. The company does not have any accumulated losses in the current year and immediately preceding previous year.

11 Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the company has not defaulted in repayment of dues to any financial institution or bank as at the end of the financial year.

12 In our opinion and according to the information and explanation given to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares and debentures and other securities. Accordingly, the provisions of para 4(xii) of the CARO, 2003 are not applicable to the company.

13 Based on our examination of documents and record, we are of the opinion that the company has not granted any loans and advances on the basis of the security by way of pledge of shares, debentures and the securities.

14 Based on our examination of the records and evaluation of the related internal control, we are of the opinion that the company has not dealt or traded in securities, debentures and other investments during the year. The company's long-term investments in shares have been held by the Company in its own name.

15 According to the records of the company and information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions.

16 According to the records of the company and information and explanations given to us, during the year the company has availed the term loans from Banks / Financial institution and have been applied for the purpose for which they have been obtained.

17 Based on the audit procedures applied and according to the information and explanations furnished to us, the funds raised on short term basis have not been used for long term investment and vice versa.

18 The company has not made any preferential allotment of shares / share warrants to parties and companies covered in the register maintained under Section 301 of the Act.

19 According to the information and explanations furnished to us and based on the records verified by us, during the period covered by our audit report the company has not issued any long term debentures and hence creation of securities for the same is not applicable.

20 According to the information and explanations furnished to us and based on the records verified by us, the company has not raised any money through public issues during the period covered under audit and hence disclosure by the management on the end usage of money raised by public issues and our verification of the same is not applicable.

21 Based upon the audit procedures performed and information and explanations given by the management, no material fraud on or by the company has been noticed or reported during the year.

Place: MumbaiDate: 30.05.2014

For Mukesh Mehta & Associates Chartered Accountants.

Sd/-Mukesh Mehta

ProprietorMembership No.100407

FRN:116309W


BALANCE SHEET

BALANCE SHEET AS AT 31.03.2014

Particulars

Documents

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