ANU’S
ANU’S LABORATORIES LIMITED
ANU’S
Anu’s Laboratories Limited
A-49, Madhura Nagar, Vengalrao Nagar, Hyderabad - 500 038
www.anulabs.com
Customer
Plan & organise
Bench
mark performa
nce
Me
et expectatio
ns
Deliv
er competen
cie
s
Forward Looking Statements
This communication contains statements that constitute “forward looking statements” including, without limitation, statements relating to the implementation of strategic initiatives and other statements relating to our future business developments and economic performance.
While these forward looking statements represent our judgements and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations.
These factors include, but are not limited to, general market, macro-economic, governmental and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with us, legislative developments, and other key factors that we have indicated could adversely affect our business and financial performance.
Anu’s Laboratories undertakes no obligation to publicly revise any forward looking statements to reflect future events or circumstances.
Concept, Research, Design & Production
C
APRICORN2
A Preview
Provides a quick overview of the business, a high level description and key facts (including non-financial details).
6
Laid the
foundation for a
successful future
Letter to shareholders from the Managing Director: reviews the Company's performance and strategic developments in the year, and provides prospects for the year ahead.
8
Managed growth
despite market
pressures
Gives a comprehensive overview of our performance against the prior year including key ratios.
10
R&D - the link
between our
products and the
customer
Sets out the developmental role that research plays in the growth of the Company together with customer interface.
11
Calibrated
approach to
accelerate growth
Outlines the management's new strategic emphasis and sets out the growth drivers for the years ahead.
12
Maintaining
strict EHS
parameters
Incorporates the principles of environmental care into our every day business practices by developing a culture of compliance.
14
An empowered
team of achievers
Summarises the high energy people power in the Company.
15
Risk
Management
Lists some of the risks that the Company faces, and steps to mitigate them.
17
Notice of the
Annual General
Meeting.
19
Directors'
Report
24
Management
Discussion and
Analysis
26
Report on
Corporate
Governance
35
Auditors'
Report
38
Balance Sheet
as at March 31, 2009
39
Profit and Loss
Account for the
year ended
March 31, 2009
40
Cash Flow
Statement for the
year ended
March 31, 2009
41
Schedules
to the financial
statements
54
Board of
Directors
55
Admission slip
for the Annual
General Meeting
Customer
Plan & organise Benchmark performance
Me et expectations Deliver competencies
Everything you wanted to know about Anu Labs
Ask our customers: they would tell you. In the following pages, we will also tell you.
Anu Labs develops and manufactures
intermediates for the pharmaceutical
industry for the benefit of customers, to
do so in partnership, to do so with profit.
Our objective is to maximize added value
for our customers with their businesses,
and our people with their careers.
Customers have always been central to
our business. We plan, address their
needs, tailor products and services for
them, and ensure we are a dependable
resource. We identify with them, align
with them and stay focused on them.
We benchmark and perform to deliver
competencies. We know, they count on
us. We shall continue to help our
customers succeed.
Anu Labs - a preview
Anu Laboratories was promoted in
1996 by a select group of highly
committed professionals with
industry experience of over three
decades.
The Board consists of
pharmaceutical industry experts,
Chartered Accountants, medical
professional and an agriculturist.
The combined experience of the
Board Members in the
pharmaceutical industry and
medical profession exceeds more
100 man years.
P
ARENTAGE
Vision
Be a high quality producer and
service provider in the pharmaceutical
industry for developing and
manufacturing new molecules,
intermediates and active pharmaceutical
ingredients combining the power of
intellect and understanding of science to
meet the needs of customers and other
stakeholders.
Mission
Anticipate the needs of
customers and develop and manufacture
quality drug intermediates and
pharmaceutical ingredients and be the
first choice supplier to international
customers.
P
HILOSOPHY
The Company went into
commercial production in 1998
and soon emerged as a key
supplier of intermediates for the
domestic and international API
manufacturing customers.
Products are manufactured to
cater to the specific needs of the
pharmaceutical industry, their
manufacturing needs and assist
them to sell to their customers.
The products are supported by
service - customers get what they
want, when they want.
Anu Labs has become the market
leader in the country with over
75% share in its major product
lines.
Anu Labs has the skill and
competence to identify potential
products of drug manufacturers
and be a market leader in its
chosen segments.
The Company has a dedicated
research and development center
that works on new product
launches, strives to improve the
processes of the existing products
as well as backward integration
into fine chemicals.
The large basket of products
include wide range of
intermediates, advanced
intermediates and fine chemicals
that cater to the manufacturers of
active pharmaceutical ingredients.
The product range addresses
therapeutic segments of fluoro
choloro quinolone class of
antibiotics, hypertensives,
intermittent claudication (blood
circulation), antihistamines
(treatment of allergies),
antidepressants, etc.
P
RODUCTS
Customers first. Anu works with
them. For them.
Some of the best names in the
domestic pharmaceutical industry
have preferred to transact with
Anu Labs: they include Dr. Reddy's
Laboratories, Hiran Orgochem,
Sun Pharmaceuticals, Sreepathi
Pharmaceuticals,
Matrix Laboratories,
Neuland Laboratories,
Hetero Laboratories, Aurobindo
Pharma, Divis Laboratories,
Jubilant Organosys, Orchid
Chemicals, Rallis India, Aarti
Drugs, Hikal, and others.
The major international clients
include Teva, Mitsui & Co., ABIC,
Polpharma, Sanofi Aventis,
Tradecom Services, Tanabe and
Chemagis.
P
ARTNERS IN PROGRESS
Over the years, close working
association with all the customers
has created a partnership approach
which prompts the Company to
commercialise what the
pharmaceutical industry needs.
The technology development
capabilities for different product
launches are tailored to the emerging
needs of large customers.
Anu Labs takes care to launch
products that have growing demand
and have long-term sustainability.
The manufacturing facility at
Shadnagar, about an hour's drive
from Hyderabad International
Airport, holds ISO 9001:2000
Certificate of Assessment with a
scope of design development,
manufacture and supply of organic
and inorganic intermediates.
Anu Labs has supplemented its
own manufacturing capacity by a
contract with another manufacturer
for carrying out conversion jobs,
on long term basis.
Demand for the Company's products
is growing and customers have
shown considerable interest in the
newer products being launched.
At an estimated cost of Rs.550.9
million, the Company is setting
up a new facility at Jawaharlal
Nehru Pharma City at
Visakhapatnam to manufacture a
wide range of intermediates
-basic and advanced ones - and
active ingredients.
P
RODUCTION FACILITIES
The top three products of the Company
constitute 75% of the annual revenues.
The Company sold 17,383 MT of bulk
drugs and intermediates.
The Company has shown robust growth
with revenues growing from Rs.281
million in FY04 to Rs.1761.16 million in
FY09, a compounded annual growth rate
of 44.3% in 5 years.
Profit after Tax in the same period
climbed to Rs.163.19 million from
Rs.0.46 million, demonstrating a growth
of 224% per annum.
P
ERFORMANCE
The in-house knowledge, skills,
experience and wealth of human
talent is being leveraged to widen
the scope of the business and
foray into Contract Research and
Manufacturing (CRAM) and partner
with some of the best names in
the pharmaceutical industry.
A pilot plant is also being set up
at a cost of Rs.83.4 million at the
Pharma City to further strengthen
product research and
development.
P
ROPOSED PROJECT
The Initial Public Offering in May
2008 has widened the family of
shareholders.
Public share holding is 49% of the
equity and the scrip is traded in
large volume on the Bombay
Stock Exchange.
The Equity Shares of the Company
with a face value of Rs.10 were
split into 10 shares of Re.1 each.
The Company issued bonus shares
in July 2009 in the ratio of one
new share for every share held.
If you subscribed to the IPO and
were allotted 100 shares of Rs.10
each, you would now hold 2000
shares of Re.1 each.
P
UBLICLY HELD
Leadership in chosen product lines
and be recognized as the best in
the business.
Rising volume of business and
cost competitive leadership in
most products of the Company.
30% rise in revenues year-on-year
with profitability.
Earnings per Share to increase by
25% year-on-year.
P
ERSPECTIVE PLAN
Anu Labs has talented
professionals who are enthusiastic
in delivering results.
The Company is committed to
recruiting high caliber employees
and providing them with the work
environment they need to perform
to their potential.
Employees at every level are
encouraged to align the work
practices to the needs of the
business and our customers.
P
EOPLE
The Company is structured to be a
long-term player with sustainable
business and deliver on the
expectations of stakeholders and
the demands of the market place.
The team often strives to exceed
expectations.
Be recognized as a pharmaceutical
company in the business of selling
competencies.
Dear friends,
We had a satisfactory year in 2008-09
with steady progress in our business
with rising revenues. We managed to
hold our margins, although the net
profit was shaded due to the
non-recurring deferred revenue expenditure
incurred for the IPO. We also reached a
significant milestone when we made a
successful IPO and welcomed a large
number of shareholders into the Anu
Labs family.
It is remarkable that we maintained
growth when the economic environment
contracted. Our progress is a testimony
to our belief that if you are soundly
organized, growth opportunities can be
converted even in difficult
circumstances. Anu Labs has built a
business that is capable of weathering
economic cycles. Our disciplined
approach to operations and our customer
focus, make it possible to continue
delivering steady earnings growth.
Laid the foundation for a successful future
From the Desk of the Managing DirectorWe have a simple approach to our
business. We deliver what our customers
want. Our mission is to have customers
in the competitive pharmaceutical
industry choose us first and always for
our product lines. And, they have been.
We shall retain this advantage.
We recognize that our customers have a
highly complex and challenging market.
Our job is to make it simple for them. We
analyse their requirements, supply the
products and support them with
necessary service interface and help
them find solutions. At Anu, we utilize
our competence cost efficiently in
enhancing their competitiveness.
Whatever be the environment, past
success will create higher expectations
and despite the many challenges ahead
of us, we shall strive to achieve a marked
increase in revenues, operating profit,
net income and improved cash flow.
Seen on a broad canvas, we will continue
It is remarkable that we maintained
growth when the economic
environment contracted. Our
progress is a testimony to our belief
that if you are soundly organized,
growth opportunities can be
converted even in difficult
circumstances.
to exceed customer expectations, while
meeting our own demanding goals.
To achieve our corporate goals, we shall
rely on key value drivers such as focusing
on effective management, developing
potential winners, aligning with the
customers, strengthening future
competitiveness, maximizing value,
benchmarking the internal and external
processes, accelerating profitability and
managing risk. We have worked on all of
them and have strived to be systematic
and prudent in our approach. We have in
fact laid the foundation for a successful
future of the Company by investing in
growth segments and by optimizing on
our internal processes and systems. All
these would serve to create sustainable
value for the benefit of our customers,
employees and investors.
Yet, we believe we would satisfy
expectations with the increasing product
offers, by retrofitting with our backward
integration program, commissioning of
the large manufacturing capacity at
Vizag and our foray into active
ingredients. Anu Labs would not only
leverage on the relationships built with
the customers, but shall explore new
markets to launch the value added
products and services.
We have powerful headlights which are
providing clearer visibility in business
and earnings. Indeed, we at Anu Labs
have a 3600 view of our industry and our
business, and we know what we want to
do, and where we want to go. We are a
conservative team with aggressive plans
and will take calibrated strides in the
short and medium term to achieve
greater advances. We have entered the
financial year 2009-10 confident in our
team, our plans, our targets, our
customers, our vendors and our combined
ability to deliver another year of earnings
growth. The progress is reassuring.
Anu Labs is fortunate to have a
combination of supportive customers and
vendors and energetic staff and
employees. I am grateful to all of them
and deem it a privilege to be part of this
large Anu Labs family and together, we
look forward to another year of
sustained growth.
Warm regards
K. Hari Babu
Anu Lab’s Business Strategy
Profitability
– Revenue Growth of 30% year-on-year
– Ensure cost competitiveness
– Earnings to rise by 25% year-on-year
Growth
– Introduce new products and services
– Cater to newer markets
– Rise in volume on existing products
Stability
– Leadership in product lines
– Be a partner to all customers
Improve cashflow
Enhance
shareholder
value
Global economic slowdown affected the
pharmaceutical industry though less
than other sectors, both in India and
overseas. The growth across the industry
was lower than other years, with impact
on order book, volumes, revenues,
margins, cash flow, receivables and
inventory. Anu Labs managed to contain
the impact with better coordination with
customers, cost control and better
management of working capital.
In terms of revenue, Anu Labs continued
to maintain growth despite the economic
slowdown in 2008-09 and the revenues
rose to Rs.1761.16 million, an increase
of 5.24% compared to the previous year.
However, the net profit fell by 9.2% to
163.19 million primarily due to
amortisation of miscellaneous
expenditure incurred for IPO. The profit
margins were maintained, with pressures
of the first half being neutralized by the
savings made in the latter part of the
year. As said, earlier, the non-recurring
expenditure shaded the bottom line.
While these figures displayed resilience
in the face of difficult economic
conditions, there were two other
indicators that showed deceleration.
Exports during the year were lower by
30.09% at Rs.178.99 million and volume
sold at 17,383 MT was 8.4% lower when
compared to the previous year. The lower
off-take by several of our customers is a
reflection of their liquidating their
inventories in a bid to manage the
difficult market conditions.
The impact of high crude prices affected
costs of several of our key raw materials
including solvents in the early part of
the year, while the gains from crash in
Managed growth despite market pressures
Review of operations
Our focus on operational excellence
during the year under review enabled the
Company to remain financially strong.
We at Anu Labs built a foundation for
continued success with a disciplined
approach and are on-course to emerge as
a recognized leader in intermediates and
be known for our customer-centric
solutions.
the crude oil market smoothened the
cost curve. Anu Labs preferred to pass on
the benefits to its customers by lowering
the selling prices, while the customers
were accommodative in bearing the
pressures of the initial period.
Our focus on operational excellence
during the year under review enabled the
Company to remain financially strong.
We at Anu Labs built a foundation for
continued success with a disciplined
approach and are on-course to emerge as
a recognized leader in intermediates and
be known for our customer-centric
solutions.
The Company revisited its processes and
implemented its backward integration
program with fine chemicals and is
working on its building blocks to widen
product range and improve the
manufacturing economics. More
significant, the operating team was
strengthened by recruiting skilled and
experienced staff. Overall, the year saw
growth strategies being set in motion.
The greenfield manufacturing facility at
Vizag is nearing completion and is
expected to go into commercial
production in the third quarter of the
financial year 2009-10. The Initial Public
Offer received encouraging response and
the funds raised would add to the
manufacturing and marketing muscle of
the Company. The new investments
made would improve business streams
and revenue visibility in the
As an intermediates manufacturer and
service provider to the pharmaceutical
industry, we recognize that research and
development i.e. the on-going efforts to
introduce new products, improve existing
products and services and enhance
production processes is key to our
sustainable growth. R&D initiatives at
Anu Labs take into account
environmental as well as technical and
economic factors.
One of our business challenges involves
creating the proper framework including
the appropriate corporate culture to
promote R&D throughout the
organization. Very often, our R&D
projects are carried out as joint
initiatives with our key customers. Our
R&D center works as a link between our
products and the customer; as well as
the link between our manufacturing and
our marketing. R&D projects at Anu Labs
are market oriented and add a cutting
edge to the value chain.
So far, we have created basic
intermediates stemming from
quasi-petrochemical processes; advanced
building blocks, requiring multistage
synthesis and often produced on an
exclusive basis for a single customer; and
the current plans are to work on bulk
actives on a commercial scale, ready to
be formulated and not requiring any
additional chemical processing steps. We
at Anu Labs have succeeded in
converting opportunities for profitable
participation, since we appreciate
business imperatives of our customers.
The Company's objective in the next few
years is to expand and modernize its
portfolio in accordance with the
perceived needs, whilst maintaining the
highest manufacturing standards. We
recognize that time-to-market is critical
to the success of our customers. We have
hence put systems in place which ensure
a quick and smooth introduction of new
products.
Our ability to introduce products,
including foray into backward
integration, and succeed in most of our
projects in the market is a clear sign of
our scientific and technological prowess.
The creative potential of Anu's
employees is encouraged through
targeted programs for continuous process
improvements.
Looking ahead, Anu Labs plans to get
into newer technologies to facilitate
backward integration. Activities have
commenced and lab level results have
been positive and reassuring. The
Company may enlarge and develop on
the venture after testing the market for
new opportunities as well as maximize
value for customers. R&D efforts now on
the table are also expected to impact
cost of manufacture favorably.
R&D - the link between
our products and the
customer
Calibrated approach to accelerate growth
Anu Labs believes in creating value that
transcends financial indicators, requiring
a fine tuning between strategic vision,
processes, resources and overall
organisation. We are determined to
maintain a strong company through our
commitment to customer, operational
excellence and disciplined financial
management.
The Company will build on its core
competence and continue to be a cost
effective manufacturer that combines
R&D capabilities from early stage fine
chemicals to produce intermediates and
active ingredients. Our business of
manufacture of intermediates and active
ingredients must meet the challenges of
the competitive market characterized by
production infrastructure, new product
launches, customer approaches and
pricing dynamics. We will manage the
pressures of the market.
The growth drivers would be,
✓
focus on backward integration to
develop fine chemicals and
intermediates and enhance
competitiveness with innovative
technologies;
✓
forthcoming commissioning of the
production capacity at Vizag;
✓entry into manufacture of active
ingredients to move up the value
chain;
✓
develop contract manufacturing
revenue stream to favorably impact
profitability;
✓
broad base products and improve
product mix with focus on niche
products that have high entry
barriers; and,
✓
widen the product base using the
new reaction specialisations being
developed.
A calibrated approach is being taken to
accelerate growth. As per current plans,
the Vizag unit would go on stream in the
third quarter of the financial year 2009-10.
While the first invoice from the new unit is
likely to be in that quarter, Vizag unit is
expected to report cash profit in the first
quarter of the financial year 2010-11. The
forward plans target a topline growth of
30% in 2010-11 over that of 2009-10,
with corresponding rise in margins.
We are well positioned to capitalize on
the growth in our addressable markets.
We will maintain and enhance our
competitive position, optimize our
product portfolio and secure a growing
share of continuing increased demand for
our products.
Im
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ve
Co
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Selling
competencies
Anal
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Fo
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Def
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Anu Labs is aware that pharmaceutical
industry uses natural resources and does
discharge effluents at the end of the
manufacturing stream. It is inherent in the
manufacture of intermediates and active
ingredients and such discharges need to be
treated at the production facilities to avoid
polluting the air, water and soil.
As a responsible corporate citizen, Anu Labs
has been committed to being a positive and
creative force in the protection and
enhancement of the environment. This is
evident through the minimization of
hazardous materials and the continuous
efforts to reduce consumption of natural
resources throughout the production facilities.
The fundamental principle of the
environmental policy at Anu Labs is to
minimize any negative impact to the
environment while conserving natural
resources. As a routine, by administrative
controls, the operating managers
continuously assess the processes and
practices to identify areas for reduction in
energy, waste and emissions.
Anu Labs has been cautious from the
beginning and has been recognized and
rewarded by the Andhra Pradesh Pollution
Maintaining strict EHS parameters
Control Board, the state regulatory authority,
in 2000-01 with a cash incentive of Rs.0.79
million for implementing projects for
recovery of by-products and for
demonstrating commitment towards
'Cleaner Production.'
The Company has installed equipments and
systems in production process that are geared
to face stricter environmental norms and cater
to future needs. The Company continues to
further increase its resource efficiency for
environmental reasons on the tactical
consideration that even minor improvement
has a large economic impact, since raw
materials account for between 60% and 65% of
the revenue.
In the process industry, technology is often
coordinated to achieve a high level of
material usage or even repeated use of
resource. The Company reduces distillation
and filter waste to control costs. Similarly
recycling of water and solvents enables better
usage and lower costs.
The process emissions are let out into the
atmosphere after the pollutants are scrubbed
in well-designed scrubbers. The solvent used
in the process as a medium is recovered and
recycled into the process.
The Company has installed water treatment
systems, equalization and neutralization
facilities and forced evaporation system
where the effluent is evaporated, condensed
and reused as cooling tower make-up water
and for gardening. The solids separated after
evaporation is sent to a common effluent
treatment plant to be further treated by a
professional ETP company.
Continuous efforts are made to minimize the
generation of waste water and air emissions,
thereby preventing the pollution at source by
adopting cleaner technologies, reducing the
use of natural resources and recovering and
recycling wastes.
Strict operational parameters are maintained
to keep the plant and machinery in good
working condition to prevent pollution.
Worldwide most customers are keen that
their vendors meet global norms. Anu Labs
has upgraded its systems to leverage newer
business opportunities. Good environmental
protection adds to sustainability of the
business.
Anu Labs will take all reasonable measures to
meet the following targets:
✓
Minimize generation of waste through
reduction, reuse and recycling;
✓
Efficient use and conservation of energy
and water through control and routine
practices;
✓
Minimize, and where possible, eliminate
noise and odor pollution;
✓
Minimize, substitute, and where possible,
eliminate the use of hazardous chemicals
in processes and operations; and,
✓Be accountable to the neighborhood and
society.
Anu Labs considers it a matter of course to
care for employees and comply with all
national regulations for occupational safety
and health. Several initiatives have been
made in the design architecture of the
facility, systems and processes to prevent
occupational illness. For instance, the
manufacturing facility has closed systems (to
ensure the raw materials are in covered
tanks), sound insulation to encapsulate
moving parts and machinery, process
controls that ensure that acid smell is near
zero anywhere inside or in the vicinity of the
plant, adequate ventilation and fume
exhaust systems and use of lifting aids to
move heavy loads.
The Company has Health & Safety policy for
the workmen, which includes:
✓
Compliance with safety and statutory
regulations and rules, both in letter
and spirit;
✓
Maintenance of safe, healthy and
congenial working atmosphere by
constant monitoring of the work place
environment;
✓
Ensuring cleanliness and hygiene at
work place;
✓
Providing workforce with appropriate
tools, including ongoing knowledge/
instructions on work procedures and
safety precautions;
✓
Conducting classes on safety, first aid
training, fire fighting, mock drills,
safety audit, and risk analysis studies
etc;
✓
Encouraging every employee to believe
that he has the obligation and
responsibility to perform tasks ensuring
complete safety.
Anu Labs is keen to ensure that workers'
safety is paramount. Company employees are
encouraged to look after themselves and
each other. The testimony to this belief is
the fact that there has been no accident or
incident for over 36 months in the
The value system at Anu Labs has
become the corporate culture. Employees
of the Company at all levels conduct
their actions guided by such values as
respect for people, open communication,
delegation of authority and customer
satisfaction.
We are in people business and employee
skills add the cutting edge to the
corporate performance. We communicate
in an open manner, share information
and operate proactively. Employees are
encouraged to trust each other and each
others' competencies, experience and
knowledge. There is a participative
culture that targets and works for the
Company's objectives and success.
Each employee believes that he/she is
equally accountable to the customer
and strives to improve the reliability
quotient. They are an empowered
team, and are proactive to achieve.
At Anu Labs we have very ambitious,
An empowered team of achievers
measurable and realistic objectives.
We want to be the best and the largest
producer in our line of intermediates and
active ingredients. Employees are
recognized and achievers are rewarded
for their results. The professional work
environment is continuously monitored
to ensure that performance levels remain
high. For over a decade, the Company
has done well so far as can be seen from
the compounded annual growth in
volumes, revenues and earnings. Yet, the
human assets of the Company are the
only assets that do not feature in the
Balance Sheet.
The organizations that win in these
challenging times are those that have
inspiring and focused vision and have a
single minded approach to flawless
execution. Our direction is to set
ourselves apart and define ourselves in
new terms. It is an energized team that
is endeavoring to achieve what it has set
out to perform.
The organizations that win in these
challenging times are those that have
inspiring and focused vision and have a
single minded approach to flawless
execution. Our direction is to set
ourselves apart and define ourselves in
new terms. It is an energized team that
is endeavoring to achieve what it has set
out to perform.
For a company manufacturing pharmaceutical
intermediates, avoiding risk is neither possible nor is it a
defined objective. Anu handles risks by maintaining a
prudent balance between operational management and
value generating initiatives. Over the years, the Company
has benefited from long-term customer contracts and
improved awareness of the employees within the
Company which have partially reduced the inherent risks.
The Company is systematic in monitoring, identifying
and acting on several of the known risks. Practical
routines and procedures are in place for day-to-day risk
management.
The risks of Anu Labs can be categorized into operational
risks, financial risks and external risks. The purpose of
describing the risk situation is partly to represent the
risk environment of the Company's operations, and partly
to demonstrate the steps being taken to mitigate them.
The description however does not make any claim to
being complete or comprehensive.
Product risk
Our revenues are dependant on a few products, where
three of them account for approximately 75% of the
business.
Mitigation:
While these three products continue to add
to the revenue stream, the Company has been widening
the portfolio by introducing new products and new
customers. This initiative will continue, since three more
products are expected to be launched in 2009-10. When
the Vizag unit goes live later in the year, the Company
would add active ingredients to its product portfolio, as
well as add larger number of intermediates. The reliance
on fewer products would stand reduced.
Quality risk
The Company has multi-stage manufacturing process
conducted at high temperatures and pressures, and any
failure in them can create delivery problems.
Mitigation: Adequate quality assurance checks have been
instituted which ensures that product quality and
delivery are protected. More important, Anu Labs is able
Risk Management
to offer impurity levels better than pharmacopoeia norms
and often better than what the customer wants.
Competition risk
The intermediates product line is inherently competitive,
and the Company could face higher competitive threats.
Mitigation: Anu Labs has selected products that have
higher complexity, manufacturing hazards and therefore
built-in entry barriers. For instance, manufacturing
process of 2,4 Dichloro 5 Fluoro Acetophenone (DCFA)
involves Friedel-Crafts reactions, which need to be done
in highly controlled environment.
The critical processes at the facility include handling
hazardous fine chemicals, chiral resolutions, high vacuum
distillations etc. While these can be sensitive for many
entrants, Anu Labs takes care to manage them well. There
are adequate entry barriers for the business.
More important, Anu Labs has been ensuring that its
product quality and customization aligns the Company
with the customers. They get what they need which helps
manage competitive pressures.
Customer concentration risk
The Company has 35% of revenues from one customer and
75% revenues from 10 customers. Loss of anyone of these
can make an impact on the performance.
Mitigation: The Company has been having long term
relationship with its customers. While the relationships
have been healthy and cordial, the Company is widening
its reach and adding customers for its products to
minimize the risk. This approach is an ongoing process,
given the fact that Anu Labs is a preferred vendor for
most of its customers. As at present, the Company has
built up a sizable customer base.
The Company has been having a dominant position in the
domestic market, where the customers have seen their
own sales growing. Anu Labs is hence expected to
maintain the market leadership and will strive to retain
the confidence of its customers. Indeed, customizing its
products to the specific needs has enhanced the
customer loyalty towards the Company.
Introduction of newer products would also increase the
Company's customer base.
The credit concentration risk that arises due to sale of
goods is reduced by diversifying receivables with credit
worthy customers and trading partners.
Geographic risk
About 90% of the business is from domestic markets, and
the balance from Israel, US, France, Japan, Singapore etc.
Any recession in any market, could affect the business
performance and financial results.
Mitigation: The Company has spread its business with
10% being outside India and with no country having an
overriding position in the portfolio. Efforts are being
made to expand presence in emerging markets and the
investments being made in Pharma City would enable the
Company to compete in the regulated markets and derisk
the business.
Environmental risk
The manufacturing process has high temperature, high
pressures and use of hazardous materials with pollution
discharge. These can have unfavorable impact on the
business.
Mitigation: Anu Labs has taken proactive steps and has
environmental protection systems that take care of the
generation of the waste material on a day to day basis.
Andhra Pradesh Pollution Control Board has paid cash
incentive for implementing projects for recovery of
by-products and for demonstrating commitment towards
'Cleaner Production.' The existing systems in production
process not only meet the present environmental norms
but are also geared up to face stricter norms and cater to
future needs.
People risk
In a growing business, there can be delays in getting
talented and skilled employees.
Mitigation: The Company has commenced recruitment
process for its future needs of skilled employees at the
new facility at Pharma City. They could also be trained, in
the meantime, in the Anu Labs way of doing business.
The best practices of the present manufacturing facilities
could be carried forward at the new facility.
Talented personnel recruited ahead of the needs at
Pharma City are planned to be deployed in research and
development, process improvements and development of
new products.
Liquidity and interest rate risk
In a rising interest regime, it may be difficult to arrange
funds.
Mitigation: Out of the proceeds of the IPO, the Company
has planned and successfully raised funds with the IPO
including the working capital requirements. The
operations of the Company are cash positive, and such
accruals would cushion the corporate needs.
Economic trends
Operations may be negatively affected by sustained
sluggishness in the economy, including lower selling
prices
Mitigation: While every business is subject to changing
trends, pharmaceutical industry is reasonably protected.
Products of the company are essential raw materials of the
pharmaceutical industry and demographic needs sustain
the necessity for these products. Demand elasticity is low
for pharmaceutical products, given the need for
therapeutic drugs to address the needs of patients.
Policy risks
The industry is subject to several regulations. Any
adverse move by policy makers can adversely impact the
business.
Mitigation: The government has been proactive to
support the pharmaceutical industry since it has not only
to meet the needs of a large sub-continental population,
India is strengthening its footprint in US and European
markets. The global approach is towards harmonization
and free trade, while the developed markets have been
keen to take their manufacturing and research to offshore
locations such as India. Risk, if any, appears minimal
with Indian government keen to encourage Indian
pharmaceutical industry.
Notice
Notice is given that the Thirteenth Annual General Meetingof the members of ANU'S LABORATORIES LIMITED will be held on September 30, 2009 at the Nice Conference Hall, 7-1-621/2/3, above ICICI Bank Limited, Srinivasa Nagar East, between SR Nagar & Ameerpet, Hyderabad at 11:00 a.m. to transact the following business:
ORDINARY BUSINESS
1. To receive, consider and adopt the audited Balance Sheet of the Company as at March 31, 2009, the Profit and Loss Account for the year ended on that date together with the Reports of the Board of Directors and Auditors thereon.
2. To declare dividend for the year ended March 31, 2009. 3. To re-appoint Mr. M. Ajaya Kumar, Director of the Company, who retires by rotation and being eligible, offers him for re-appointment.
4. To re-appoint Mr. M.S.S.V. Satyanarayana, Director of the Company, who retires by rotation and being eligible, offers him for re-appointment
5. To re-appoint M/s. Karumanchi & Associates, Chartered Accountants, Hyderabad, as Statutory Auditors of the Company to hold office from the conclusion of this Annual General Meeting until the conclusion of next Annual General Meeting of the Company and authorize the Board to fix their remuneration.
By the Order of the Board of Directors For ANU'S LABORATORIES LIMITED
K. Hari Babu
Hyderabad, June 29, 2009 Managing Director
NOTES
1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE
MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF/HERSELF AND SUCH PROXY NEED NOT BE A MEMBER OF THE COMPANY. THE INSTRUMENT APPOINTING A PROXY TO BE EFFECTIVE MUST BE DEPOSITED WITH THE COMPANY AT ITS REGISTERED OFFICE NOT LESS THAN 48 HOURS BEFORE THE COMMENCEMENT OF THE MEETING. 2. The Register of Members and Share Transfer books of
the Company will remain closed on September 29, 2009 and September 30, 2009 (both days inclusive) for the purpose of Dividend & Annual General Meeting. The dividend as recommended by the Board of Directors for the year ended 31st March 2009, when declared at the Annual General Meeting will be paid within 30 (thirty) days to the Members whose names appear:
i. As Beneficial Owners as per list to be furnished by the depositories in respect of the shares held in demat form; and
ii. As Members on the Register of Members of the Company on September 30, 2009 after giving effect to all valid share transfers in physical form received by the Company upto end of business hours on September 28, 2009.
3. Members are requested to notify change, if any, in their address to the Registrar and Share Transfer Agent viz., Karvy Computershare Private Limited at Plot No. 17-24, Vittal Rao Nagar, Madhapur, Hyderabad - 500 081. All communications regarding shares are to be addressed
to our Registrars and Share Transfer Agent at the address mentioned above.
4. Information required under Clause 49 of the Listing Agreement with Stock Exchanges in respect of Directors seeking appointment/re-appointment at the Annual General Meeting is provided in the Report on Corporate Governance forming part of this Annual Report. 5. Members/Proxies are requested to hand over the
enclosed Attendance Slip duly filled in, at the venue of the Meeting.
6. Members who hold shares in dematerialised form are requested to mention their Client ID and DP ID and those who hold shares in physical form are requested to mention their Folio Number in the attendance slip for attending the Meeting.
7. 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.
8. A Member desirous of getting any information on the accounts or operations of the Company is requested to forward his/her queries to the Company addressed to the Registered Office at A-49, Madhuranagar, Vengalrao Nagar, Hyderabad - 500038, for attention of Mr. Chinmoy Patnaik, Company Secretary at least 7 days prior to the date of the Meeting.
9. In order to provide protection against fraudulent encashment of the dividend warrants, shareholders holding shares in physical form are requested to intimate the Company under the signature of the sole/first & joint holder, the following information to be incorporated on the dividend warrants:
i. Name of the sole/first & joint holder and the folio number.
ii. Particulars of bank account:
a. Name of the bank, branch and complete address of the bank;
b. Account type, whether savings (SB) or current account (CA);
c. Bank account number allotted by the bank. 10. Shareholders holding shares in electronic form may kindly
note that their bank account details as furnished by their Depositories to the Company will be printed on the dividend warrants and the Company will not entertain any direct request from such shareholders for deletion of/change in such bank account details. Further, instructions, if any, already given by them in respect of shares held in physical form will not be automatically applicable to shares held in electronic mode. Shareholders who wish to change such bank account details are therefore requested to advise their Depository Participants about such change along with details of bank account.
11. Electronic Clearing Service (ECS) Facility
With respect to payment of dividend, the Company provides the facility of ECS to the shareholders residing in the following cities - Agra,Ahmedabad, Allahabad, Amritsar, Asansol, Aurangabad, Bangalore, Baroda, Belgam, Bhilwara, Bhopal, Bhubneshwar, Bijapur, Burdwan, Calicut, Chandigarh, Chennai, Coimbatore, Dehradun, Dhanbad, Durgapur, Erode, Gorakhpur, Guwahati, Gwalior, Haldia, Hubli, Hyderabad, Indore, Jabalpur, Jaipur, Jalandhar, Jammu, Jamnagar, Jamshedpur, Jodhpur, Kakinada, Kanpur, Kochi/ Ernakulam, Kolhapur, Kolkata, Lucknow, Ludhiana, Madurai, Mangalore, Mumbai, Mysore, Nagpur, Nashik, Nellore, New Delhi, Panaji, Patna, Pondicherry, Pune, Raipur, Rajkot, Ranchi, Salem, Shimla, Shimoga, Sholapur, Siliguri, Surat,Thiru’puram, Tirupati, Tirupur, Trichur, Trichy, Udaipur, Udipi, Varanasi, Vijaywada and Visakhapatnam. Shareholders holding shares in physical form, who wish to avail ECS facility, may authorise the Company with their ECS mandate in the prescribed form provided on the Company’s website (www.anulabs.com) and requests for payment of dividend through ECS should be lodged with M/s. Karvy Computershare Private Limited on or before 28th September, 2009.
12. Pursuant to provisions of sub-section (5) of Section 205A the Companies Act, 1956 the dividend, which remain unclaimed for a period of 7 years will be transferred by the Company to the Investor Education and Protection
Fund (IEPF) established by the Central Government pursuant to Section 205C of the Companies Act, 1956. Information in respect of such unclaimed dividend and the last date for claiming the same are given below:
Financial Date of Last date for
year ended declaration of claiming unpaid
Dividend Dividend
2007-08 September September
25, 2008 24, 2015
Shareholders, who have not so far encashed the dividend warrant(s) are requested to seek issue of duplicate warrant(s) by writing to the Company's Registrar and Transfer Agents, M/s. Karvy Computershare Private Limited immediately. Shareholders are requested to note that no claims lie against the Company or the said fund in respect of any amounts which were unclaimed and unpaid for a period of seven years from the date that they first became due for payment and no payment shall be made in respect of any such claims.
13. Non-Resident Indian shareholders are requested to inform M/s. Karvy Computershare Private Limited immediately: i. Change in the residential status on return to India
for permanent settlement; and
ii. Particulars of bank account maintained in India with complete name, branch, account type, account number and address of the bank, if not furnished earlier.
14. Corporate Members intending to send their authorized representatives are requested to furnish a duly certified copy of the Board Resolution authorizing their representatives to attend and vote at the Annual General Meeting.
15. Consequent upon the introduction of Section 109A of the Companies Act, 1956, shareholders are entitled to make nomination in respect of share held by them in physical form. Shareholders desirous of making nominations are requested to send their request in Form No. 2B in duplicate to the Company.
16. The Register of Directors' shareholdings shall be open for inspection to any Member of the Company during the period beginning 14 days before the date of Company's Annual General Meeting and ending 3 days after the date of its conclusion. The said register shall also remain open and accessible during the Annual General Meeting to any person having right to attend the Meeting.
By the Order of the Board of Directors ANU'S LABORATORIES LIMITED
Hyderabad K. Hari Babu
1 Net of (increase)/decrease of stock
Rs. Million
March 31, 2009 March 31, 2008
Income from operations 1761.16 1673.49
Excise Duty (164.07) (169.421)
Other Income 26.35 39.89
Total Income 1623.44 1543.98
Expenditure (before interest and depreciation)1 1272.31 1167.60
Profit before Interest and Depreciation and Tax 351.13 376.38
Interest 74.82 83.37
Profit before Depreciation and Tax 276.31 293.01
Depreciation 16.99 14.06
Profit before Tax 259.32 278.95
Provisions for Tax 96.13 98.20
Profit after Tax 163.19 179.76
Add: Balance brought forward from previous year 270.91 148.49
Amount available for appropriation 434.10 328.25
Appropriations
Provision for proposed dividend 19.32 18.11
Provision for Dividend Tax 3.28 3.08
Transfer to General Reserve 32.64 36.15
Balance carried to Balance Sheet 378.86 270.91
Total 434.10 328.25
Operations
Your Company achieved a turnover of Rs.1761.16 million compared to Rs.1673.49 million for the year 2007-2008 representing an increase of around 5.24%. Your Company had earned a net profit after tax of Rs.163.19 million during the year 2008-2009, as compared with the net profit after tax of Rs.179.76 million during the year 2007-2008 resulting in a decrease of 9.22% primarily due to amortisation of miscellaneous expenditure incurred for IPO. Earnings per Share for the year work out to Rs.1.35 per share as against Rs.1.49 last year.
Dear Members,
Your Directors have pleasure in presenting the Thirteenth Annual Report together with the audited annual accounts of the Company for the financial year ended March 31, 2009 and the Auditors Report thereon.
Financial Results
Directors’ Report
Your Company has achieved an export turnover of Rs.178.99 million during the year when compared with the export turnover of Rs.256.02 million in the previous year resulting in a decrease of 30.09%. During the year under review, your Company is striving to consolidate its presence in the global markets. Efforts to widen the depth and penetration of the existing markets are being taken and new markets are being explored.
Your Company proposes to transfer Rs.32.64 million to the General Reserve out of the amount available for appropriations. Initial Public Offer
The Company made an Initial Public Offer in June, 2008 and the shares of the Company were listed on Bombay Stock Exchange Limited. The IPO funds are utilised for forward integration to venture into the production of active pharmaceutical ingredients in a bigger scale to capitalize on the emerging opportunities and to set up a new plant in Pharma City at Vizag which would also include a pilot plant for custom synthesis. This plant would not only enhance the capacity and production levels but would leverage the Company in all dimensions to carry on its strategic objectives..
There was slump in the global economy which has affected all the industries including Pharma. All the companies which are planning for expansion have held on to their plans for the time being, and our Company is no exception. In view of the global economic scenario, the Company has decided to go slow on the proposed project at Vizag.
Research & Development
The Company has incurred an expenditure of Rs.5.07 million on R&D. Dividend
Your Directors are pleased to recommend a dividend of Re.0.08 per share of face value of Re.1 each on the post issue paid up equity share capital in the Company for the financial year ended March 31, 2009. The total outgo on account of dividend inclusive of dividend tax is Rs.22.60 million.
Directors
In terms of the provisions of Sections 255 and 256 of the Companies Act, 1956, Mr. M. Ajaya Kumar and Mr. M.S.S.V. Satyanarayana will retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. Corporate Governance
Your Company is committed to maintain the highest standards of Corporate Governance. As required under Clause 49 of the Listing Agreement with the Stock Exchange, Report on Corporate Governance as well as Certificate of the Auditors on the Compliance of Corporate Governance are annexed and form part of the Annual Report.
Management Discussion and Analysis
A separate section titled 'Management's Discussion and Analysis Report' forms part of this Annual Report. Directors' Responsibility Statement
Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to Directors' Responsibility Statement, it is hereby confirmed by the Directors:
i. that in the preparation of the accounts for the financial year ended March 31, 2009, the applicable accounting standards have been followed and there were no material departures;
ii. that the accounting policies have been selected and applied consistently and judgments and estimates have been made which 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 of the Company for the year under review;
iii. that proper and sufficient care have been taken for the maintenance of adequate accounting records in accordance with the provisions of Companies Act 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. That the accounts have been prepared for the financial year ended March 31, 2009 on a 'going concern' basis. Auditors
The Statutory Auditors of the Company, M/s. Karumanchi & Associates, Chartered Accountants, Hyderabad retire at the conclusion of the ensuing Annual General Meeting and being eligible have offered themselves for re-appointment.
The Company has received a letter from them to the effect that their appointment if made would be within the prescribed limits under Section 224(1-B) of the Companies Act, 1956.
Fixed Deposits
The Company has not invited/accepted deposits from the public within the meaning of Section 58A of the Companies Act, 1956. Particulars of Employees
During the year under review, the Company maintained cordial relations with the employees. The particulars of employees as required to be disclosed in accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 and the Companies (Particulars of Employees) Rules, 1975 as amended is as follows:
Name Designation Salary Nature of Qualification Date of Age Last
Rs. Million duties and commencement Employment
experience of employment
Mr. K. Hari Babu Managing 3.94 Management Chartered Re-appointed as 52 Suven
Director of the Company Accountant Managing Director Pharmaceuticals
and 28 years effective from Limited
of experience April 1, 2007 Additional Information
Information as per Section 217(1)(e) read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and forming part of report for the year ended March 31, 2009 is provided in Annexure - I.
Acknowledgement
Your Directors wish to place on record their appreciation for the valuable support and co-operation extended by the bankers, financial institutions and State and Central Government agencies. Your Directors sincerely appreciate the contribution made by the employees of the Company and are thankful to the shareholders for their continued support.
For and on behalf of the Board
Hyderabad M. Ajaya Kumar
Annexure to the Directors’ Report
Details as required under Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, read with clause (e) of Subsection (1) of Section 217 of the Companies Act, 1956.
A. Conservation of Energy
The Company is making necessary efforts for conservation of energy. FORM - A
Form for disclosure of particulars with respect to conservation of energy
Particulars 2008 - 2009 2007 - 2008
A. POWER AND FUEL CONSUMPTION 1. Electricity
a. Purchased Units (Nos./Lakhs) 29.96 29.30
Total amount (Rs. Lakhs) 113.03 111.34
Rate/Unit (Rs.) 3.77 3.79
b. Own Generation
i. Through Diesel Generator
Unit (Nos./Lakhs) 4.80 4.99
Unit per Litre of oil 3.68 3.68
Cost/Unit (Rs.) 10.04 9.24
ii. Through Steam Turbine/Generators Unit (Nos.)
Unit per Litre of fuel Oil/Gas
Cost/Unit (Rs.) 2. Coal (C grade used for boiler)
Quantity (MT) 1680.00 1087.30
Total cost (Rs. Lakhs) 39.34 25.94
Average rate (Rs.) 2336.00 2385.67
3. Furnace Oil Quantity (K. Litres) Total cost (Rs.)
4. Other/Internal Generators (Husk)
Quantity (MT) 3673.64 3548.09
Total cost (Rs. Lakhs) 77.50 58.78
Average rate (Rs.) 2109.00 1656.70
B. Consumption per unit of production (Kg.) Consumption per unit of production
Production
Electricity (No. of Units) Furnace oil
Coal (Kg.) Husk
As the Company uses the same manufacturing facilities for various products, it is not practicable to give consumption per unit.
FORM - B
Form for disclosure of particulars with respect to technology absorption, Research and Development (R&D) Research & Development
1. Specific areas in which R&D carried out Development of API, intermediates and fine chemicals by the Company
2. Benefits derived as a result of the above R&D Cost reduction and process optimization
3. Future plan of action Development of new molecules and invention of
new compounds
4. Expenditure on R&D Rs.5.07 million
5. Total R&D expenditure as percentage of sales 0.29 per cent Technology absorption, adaptation and innovation
1. Efforts, in brief, made towards technology Process development of manufacture of intermediates and new chemical entity development whereby achieved cost and process efficiencies on existing products. To develop process for newer chemical products and intermediates. No technology absorption is involved. The Company has its own DSIR recognised R&D Centre which has been developing and improving processes for manufacture of intermediates. 2. Benefits derived as a result of the above efforts Processes for several new chemical entities have been
e.g. product improvement, cost reduction, developed. Process optimization has been achieved
substitution etc. in production, which resulted in lower cost of production.
3. In case of imported technology, (imported There is no import of technology during the 5 years reckoned from the
beginning of the financial year), following information may be furnished
a. Technology imported Nil
b. Year of import N.A.
c. Has technology been fully absorbed N.A.
d. If not fully absorbed, areas where this has not taken place, reasons therefore and
future plans of action N.A.
C. Foreign Exchange Earnings and Outgo Mentioned in the Notes to Accounts
Activities relating to export initiatives
taken to increase exports, development of new export markets for production and service, and export plans
For and on behalf of the Board
Hyderabad M. Ajaya Kumar
June 29, 2009 Chairman
Ongoing initiatives are regularly made to explore new markets and widen the reach of the products, by regular meetings with customers and participation in exhibitions.
Management Discussion and Analysis
Industry Structure and BackgroundIndian pharmaceutical industry is on an exponential growth track with phenomenal opportunities. The scope for the mid-size segment is high, given the rising demand for manufacturers and service providers with infrastructure and technical expertise.
The industry is valued around USD 5.7 billion and is expected to surge to USD 9.48 billion by 2010. Presently, it is the 13th largest individual market by sales, but 4th by volume of products. It has evolved from being almost non-existent in the early 70's, to one of the fastest growing sectors of the Indian economy.
Over the years, the industry is acknowledged as a quality conscious and cost effective manufacturer with efficient process chemistry capabilities. Increasingly, Indian manufacturers are being sought as associates by global leaders for their sourcing needs for products and services. This vibrancy is expected to continue for several years.
The Indian domestic pharma market, which consistently grew at 9.5% CAGR in the past five years, and is estimated to be at approximately USD 5.7 billion, is poised to accelerate at 13.6% between 2006-2010 to touch a market size of USD 9.48 billion by 2010. While this growth will be significant, the global pharmaceutical market size is a staggering USD 550 billion. Domestic market share in the global market is increasing at 10% a year.
Company Perspective
Anu's Laboratories is engaged in the manufacture and supply of superior quality, cost effective intermediates used in the manufacture of active pharmaceutical ingredients (APIs). It also has presence in fine chemicals.
The Company has established itself as one of the low cost
and high quality manufacturer of a range of fine chemicals, advanced intermediates and APIs. The Company is currently one of the leading manufacturers of 2, 4-Dichloro- 5 Fluoro Acetophenone, CIS + Hydroxy Lactam, Chlorohexanone 2-one, Q Acid, Sodium Methoxide solution and powder. The specialized processes include Friedel Crafts reactions, High vacuum fractional distillation and optical resolution. The in-house resources include the ability to carry out special reactions for meeting customer requirements.
The Company is also engaged in contract manufacturing of APIs for select pharma companies and has gained reputation as a dependable supplier to some of the leading industry players, both in India and abroad.
The Company has a strong in-house Research & Development team and this team has been the key to our success. The Company's R&D facility is equipped with the state-of-the-art facilities and is recognized by DSIR, Government of India. The Company's R&D team is engaged in non-infringing synthesis of APIs and intermediates, process development and custom synthesis.
The Company operates with WHO-GMP guidelines as basis for quality assurance. The quality management systems of the Company are certified to ISO 9001-2000 standards. Opportunities and Threats
There is an immense potential for APIs and intermediates with growing domestic market and increasing export potential. Increased focus on contract research and custom synthesis would enable the Company to cater to a wider client base.
