SHASUN CHEMICALS AND

DRUGS LIMITED

SUBMITTED TO SUBMITTED BY
SUKHWINDER MAM PANKAJ SINGH
RT1002A10
Company Background
Shasun Chemicals and Drugs Limited was incorporated in 1976 and is
headquartered in Chennai, India. It manufactures activepharmaceutical
ingredients (APIs) and their
intermediaries. Shasun has also emerged as a key player in various
service segments
in the pharmaceutical field besides APIs and intermediaries.The
company’s APIs are sourced to reputed companies such as Boots Company
Co.,
GlaxoSmithKline and Reliant Pharma. Its productsare exported to more
than 40 countries acrossNorth America , Europe, Asia and Latin America.
The company’s revenues for FY 2006 were EUR 68.8 million, which
registered a growth
of 11 per cent over the previous year’%
223%96
acquisition has facilitated Shasun in catering to the requirements of the
majority of pharma players and emerging pharma companies.
Shasun has created a strong product portfolio, building on its R & D
Expertise, regulatory capabilities and multi scale production
capacities.

Shasun has also emerged as a key player in various service

segments in the pharmaceutical field besides APIs and
intermediaries, and is strengthening its offer of contract research,
custom synthesis, contract manufacturing and contract formulation
services to clients.

Shasun is one of the largest producers of Ibuprofen worldwide. The

company offers derivatives of Ibuprofen like Ibuprofen Sodium,
Ibuprofen Lysinate and S+Ibuprofen. It is also one of the major
producers of Ranitidine and Nizatidine in the world. Its products are
exported to countries across North America, Europe, Asia and Latin
America.
Shasun in its endeavour to become a true one-stop shop for global
pharma companies, is evolving its business model to become a
complete service provider, offering services right from the discovery
stage to manufacturing formulations.

The company has recently added finished formulations capability as

forward integration, and has invested in large facility to cater to the
international regulated market. It has tied up with multinational
companies in the formulations space wherein it will be developing
and supplying products for the US market.

Product range of the company includes:

• Ibuprofen
• Ibuprofen Derivatives
• Ranitidine base
• Ranitidine
• Nizatidine
• Methoxital
• Isradipine
• Gabapentine
• Olanzapine
• Quinapril HCl
• Meprobamate

Shasun Chemicals and Drugs in the EU

Shasun’s business model of ‘Non competing and Non conflicting’ has
ensured that it provides quality business services to various pharma
companies. Matured API’s are the major contributor to Shasun’s overall
revenues. The company has identified that the future growth in the EU
would primarily depend on its ability to cater to the requirements of its
pharma client

Shasun in the United Kingdom

Shasun Chemicals and Drugs Ltd has operations in the UK since 2000.The company has
been
catering to the API demand in the market. It has a warehouse at Felixstowe to cater to the
demand of its various UK and European customers. Shasun has recently purchased the
assets of Rhodia Pharma Solutions, a leading player in the Contract Research
Manufacturing Services (CRAMS) domain.The acquisition was made through the UK
subsidiary. Shasun has acquired Rhodia's development and custom manufacturing
services,
which cater to innovator and emerging pharmaceutical clients in the US, Europe and Asia
Shasun Pharma Solutions Limited is a fully owned subsidiary of Shasun in the UK. It has a
42 acre manufacturing site in the Dudley.
Synergy of Operations
Shasun has been able to synergise its various operations. It offers its customers advantage
of
outsourcing from both its UK and Indian plants. It can carry out research in India,
development
both in India and the UK, and manufacturing the final product in the UK.The company
works out an optimal mix on the basis of regulations, intellectual property and cost.

Award & Recognition:

• Entrepreneur Award -S.Abhaya Kumar, Joint Managing Director, Shasun received
an award, for being nominated as one of the Finalist for the Ernst & Young
• Entrepreneur of the Year 2003, from L.K.Advani, Deputy Prime Minister of India,
at New Delhi.
• Four Star Safety Award -British Safety Council after conducting an audit awarded
4 Star rating for Puducherry facility for the year 2002.
• IDMA Award 2002 -Shasun Cuddalore facility has been recognised for its Quality
Excellence by Indian Drug Manufacturer's Association in 2002.
• First Award -First Award by Chemexcil for the year 1998 - 1999 for Outstanding
Export performance. IDMA Award 2000
• Shasun has been recognized for its Quality Excellence by the Indian Drug
Manufacturers Association in 2000.
•
• Top Award -Top Award for Outstanding Export performance from Chemexcil for
the year 1999 - 2000.
• Trishul Award -Shasun has been recognized for its export achievements by the
Government of India in the form of the Trishul Award in 1993 and Certificate of
Merit in 1996.
Shasun
chemicals
and drugs
ltd.
Company profile
Date of Establishment 1976

Revenue 125.798 ( USD in Millions )

Market Cap
Corporate Address
Management Details
Business Operation
Background
4092.3354915 ( Rs. in Millions )
Shasun House No-3,Doraiswamy Road ,T Nagar Chennai-
600017, Tamil Nadu
www.shasun.com
Chairperson - A Mahendran
MD - S Vimal Kumar
Directors - A Mahendran, C M Tolia, Dinesh Bhutda, N
Govindarajan, S Abhaya Kumar, S Devendra, S Krishnan, S
Vimal Kumar, Tapan Ray
Pharmaceuticals & Drugs
Shasun Chemicals and Drugs Limited (SCDL) were
incorporated in 1976 and is headquartered in Chennai, India.

Shasun Chemicals and Drugs manufactures active

pharmaceutical ingredients (APIs), their intermediates and
enteric coating excipients with a significant presence in some
key generics. Shasun has created a strong product portfolio,
building on its R & D Expertise, regulatory capabilities and
multi
Financials Total Income - Rs. 5567.54 Million ( year ending Mar 2010)
Net Profit - Rs. 220.63 Million ( year ending Mar 2010)
Company Secretary Dinesh Bhutda
Bankers
Auditors Jagdisan & Co
Future Plans
Shasun is looking at growth opportunities in the EU and accordingly planning its
strategies.The
company wants to partner with companies for marketing its select generic formulations in
the
EU. Shasun would pursue the role of a contract manufacturer for its customers. It has
plans to
develop products and formulations for its customers on exclusive basis. With API
manufacturing capabilities and a non competing business model, Shasun has plans to
leverage these strengths to form comprehensive partnerships with various clients and
provide them enhanced services. It has plans to expand itspresence in generics market in
the EU through inorganic means. It has a fully integrated development facility and highly
flexible pilot plant. There is also a development centre in here which accommodates 45
scientists with significant experience in route identification, process development, process
industrialisation and analytical method development.

Shasun in Scotland
Shasun Pharma Solutions Limited also has a plant in Annan, South West Scotland.The
plant has a total area of 27 acre and has four production facilities which manufacture APIs
and a range of intermediaries. It has one of the best-equipped cGMPmanufacturing
facilities in the world.Both the facilities in Dudley, UK and Annan, Scotland are
complimentary to each other.

Factors for Success

Acquisition of Rhodia Pharma Solutions
Through the acquisition of Rhodia, Shasun has gained access to an additional technology
platform. It now has access to patented technologies such as HKR,ABF and
Trifluoromethylation.This has enhanced the company’s position in CRAMS, in which it is
already among the leaders. The key benefits to the company from this acquisition are:
• The acquisition will expand company’s
manufacturing and customer base.
• Facilitate in integration of various operations.
• Provide existing customers of Shasun with
efficient processes

Successful Partnerships and Collaborations

The company has collaborations with leading companies such as Boots Chemicals Inc,
GlaxoSmithKline, and Reliant Pharma, for which the company provides Active Pharma
Ingredients (APIs).These collaborations helped increase its brand value and revenues. It
also has the advantage of world class manufacturing facilities, competitive and cost
effective manufacturing.
Balance Sheet of Shasun ------------------- in Rs. Cr. -------------------
Pharmaceuticals
Mar '08 Mar '09 Mar '10
12 mths 12 mths 12 mths

Total Share Capital 9.66 9.66 9.66

Equity Share Capital 9.66 9.66 9.66
Share Application Money 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00
Reserves 216.18 182.75 199.08
Revaluation Reserves 0.00 0.00 0.00
Networth 225.84 192.41 208.74
Secured Loans 79.57 180.13 196.89
Unsecured Loans 55.92 29.78 15.41
Total Debt 135.49 209.91 212.30
Total Liabilities 361.33 402.32 421.04
Mar '08 Mar '09 Mar '10
12 mths 12 mths 12 mths

Gross Block 340.08 355.14 360.43

Less: Accum. Depreciation 164.72 191.21 213.23
Net Block 175.36 163.93 147.20
Capital Work in Progress 39.15 29.17 31.28
Investments 43.63 43.61 43.81
Inventories 48.94 45.06 54.57
Sundry Debtors 124.50 183.32 187.28
Cash and Bank Balance 5.65 6.82 6.29
Total Current Assets 179.09 235.20 248.14
Loans and Advances 30.68 55.50 78.41
Fixed Deposits 0.03 0.71 4.00
Total CA, Loans & Advances 209.80 291.41 330.55
Deffered Credit 0.00 0.00 0.00
Current Liabilities 97.59 121.11 122.39
Provisions 9.23 4.74 9.40
Total CL & Provisions 106.82 125.85 131.79
Net Current Assets 102.98 165.56 198.76
Miscellaneous Expenses 0.20 0.06 0.00
Total Assets 361.32 402.33 421.05
Contingent Liabilities 238.60 239.75 267.92
Book Value (Rs) 46.75 39.82 43.20
Profit & Loss account of Shasun Chemicals and Drugs

Mar '08 Mar '09 Mar '10

12 mths 12 mths 12 mths

Sales Turnover 456.41 491.41 564.94

Excise Duty 22.05 19.87 16.55

Net Sales 434.36 471.54 548.39
Other Income 31.09 -53.29 -25.71

Stock Adjustments 6.09 -4.91 11.54

Total Income 471.54 413.34 534.22

Raw Materials 287.74 277.69 312.87

Power & Fuel Cost 28.62 33.10 37.50

Employee Cost 37.70 46.09 49.16

Other Manufacturing Expenses 12.38 14.34 17.39

Selling and Admin Expenses 43.52 34.20 46.83

Miscellaneous Expenses 3.27 4.99 4.91
Preoperative Exp Capitalised 0.00 0.00 0.00
Total Expenses 413.23 410.41 468.6
Mar '08 Mar '09 Mar '10
12 mths 12 mths 12 mths
Operating Profit 27.22 56.22 91.27
PBDIT 58.31 2.93 65.56
Interest 7.50 14.31 20.48
PBDT 50.81 -11.38 45.08
Depreciation 26.53 26.91 26.02
Other Written Off 0.00 0.00 0.00
Profit Before Tax 24.28 -38.29 19.06
Key Financial Ratios of
Shasun Chemicals and ------------------- in Rs. Cr. -------------------
Drugs
Mar '08 Mar '09 Mar '10

Face Value 2.00 2.00 2.00

Dividend Per Share 1.00 -- 1.00
Operating Profit Per Share (Rs) 5.63 11.64 18.89
Net Operating Profit Per Share (Rs) 89.90 97.60 113.50
Free Reserves Per Share (Rs) 43.47 36.59 40.00
Bonus in Equity Capital 56.91 56.91 56.91

Operating Profit Margin(%) 6.26 11.92 16.64

Profit Before Interest And Tax
0.15 6.19 11.78
Margin(%)
Gross Profit Margin(%) 0.15 6.21 11.89
Cash Profit Margin(%) 4.30 10.17 14.05
Adjusted Cash Margin(%) 4.30 10.17 14.05
Net Profit Margin(%) 5.11 -7.04 3.98
Adjusted Net Profit Margin(%) 5.11 -7.04 3.98
Return On Capital Employed(%) 0.49 7.77 16.74
Return On Net Worth(%) 9.86 -17.34 10.57
Adjusted Return on Net Worth(%) -3.44 11.06 24.80
Return on Assets Excluding
46.70 39.81 43.20
Revaluations
Return on Assets Including
46.70 39.81 43.20
Revaluations
Return on Long Term Funds(%) 0.56 10.08 24.29

Current Ratio 1.07 0.94 0.84

Quick Ratio 1.50 1.96 2.08
Debt Equity Ratio 0.60 1.09 1.02
Long Term Debt Equity Ratio 0.40 0.61 0.39

Interest Cover 0.26 2.89 3.76

Total Debt to Owners Fund 0.60 1.09 1.02
Financial Charges Coverage Ratio 3.78 4.07 4.71
Financial Charges Coverage Ratio
7.51 0.55 3.35
Post Tax
Inventory Turnover Ratio 9.76 11.40 10.74
Debtors Turnover Ratio 3.56 3.06 2.96
Investments Turnover Ratio 9.76 11.40 10.74
Fixed Assets Turnover Ratio 1.28 1.34 1.54
Total Assets Turnover Ratio 1.21 1.18 1.31
Asset Turnover Ratio 1.28 1.34 1.54

Average Raw Material Holding 26.39 28.23 36.11

Average Finished Goods Held 17.72 5.32 3.39
Number of Days In Working Capital 85.36 126.39 130.47

Material Cost Composition 66.24 58.89 57.05

Imported Composition of Raw
29.57 27.82 27.55
Materials Consumed
Selling Distribution Cost
3.51 3.74 4.46
Composition
Expenses as Composition of Total
66.23 65.78 59.85
Sales

Dividend Payout Ratio Net Profit 25.38 -- 25.61

Dividend Payout Ratio Cash Profit 11.58 -- 11.75
Earning Retention Ratio 172.63 -- 89.09
Cash Earning Retention Ratio 69.86 100.00 92.74
AdjustedCash Flow Times 7.23 4.36 2.73
Mar '08 Mar '09 Mar '10
Earnings Per Share 4.61 -6.91 4.57
Book Value 46.75 39.82 43.20

Report Year End : Mar '10

INTERPRETATION-
The Directors take pleasure in presenting the Thirty Fifth Annual
Report of your company together with the audited statement of accounts
for the year ended March 31, 2010.

Financial Results (consolidated)

Financial Results for the year ending 31.03.2010 31.03.2009

Gross Revenue 8380.96 7982.80

Profit before interest 675.35 (601.97)

Profit before tax 19.88 (1413.87)

Profit after tax 37.42 (1370.86)

Depreciation and Tax

Financial Results (standalone) Rs. in Mn.

Financial Results for the year ending 31.03.2010 31.03.2009

Gross Revenue 5689.86 4930.82

Profit before interest depreciation and Tax 622.11 14.46

Profit before tax 202.74 (376.78)

Profit after tax 220.40 (333.72)

Profit brought forward 1026.62 1360.34

Profit available for appropriation 1247.02 1026.62
Appropriated as follows

Dividend on Equity Shares 48.31 -

Tax on Dividend 8.21 -

Transfer to General Reserve 22.04 -

Balance carried forward 1168.46 1026.62

EPS (diluted) on the basis of Rs. 2/share 4.54 (6.90)

The Board of Directors of the company is pleased to recommend a dividend of Rs. 1 per
equity share of Rs. 2 each for financial year 2009-10. This dividend, if approved at the
ensuing AGM will be paid to those shareholders whose name appear on the register of
members of the company as on July 30, 2010. The total outflow on account of dividend

2. Directors
In accordance with the Articles of Association of the Company, Mr. S.
Vimal Kumar retires by rotation and is due for election.
Mr. A. Mahendran who had been appointed a Director of the Company with
effect from June 27, 2009 in the casual vacancy caused by the resignation of Dr. Jagdish N
Sheth holds office upto the date of the Annual General Meeting. He is eligible for election.

3. Auditors
The Statutory auditors of the company, M/s. Jagadisan & Company Chartered
Accountants retire at the ensuing Annual General Meeting and are eligible for re-
appointment.
4. Cost Audit
Pursuant to Section 233B of the Companies Act, 1956, the Central Government has
prescribed Cost Audit of the Company.

5. Listing arrangements
The company’s shares are listed at Bombay Stock Exchange and National
Stock Exchange and the annual listing fee have been paid to these exchanges.

6. Subsidiaries
The company has five subsidiary companies as on March 31, 2010. The members may
refer to the Statement under Section 212 of the Companies Act, 1956 and the information
on the financials of the subsidiaries

7. Safety and Environment

At Shasun Chemicals and Drugs Limited, a responsible Environment, Health & Safety
(EHS) commitment is integral to our existence.reflected in the creation of

8 CorporateGovernance and Management

Discussion and Analysis
The Corporate Governance and Management Discussion and Analysis reports
as set out in annexure hereto form an integral part of this report

9. Personnel
 The Directors wish to place on record their appreciation to the employees for the co–
operation extended to the management in harmonious industrial relations at the various
units as well as their notable contributions at the work place.

10. Particulars of Employees

The statement of particulars of employees, providing information as per
Section 217(2A) of the Companies Act, 1956 read with Companies
(Particulars of Employees)

12. Directors’ Responsibility Statement

In terms of the provisions of section 217(2AA) of the Companies
Act, 1956 your Directors confirm as under:

) That in preparation of the annual accounts the applicable accounting

Standards

13. Acknowledgement
On behalf of the Board

Dr. S. Devendra S. Abhaya Kumar S. Vimal Kumar N. Govindarajan

CEO and Managing Wholetime Director Wholetime Director Wholetime Director

Quarterly Results of ------------------- in Rs. Cr. -------------------

Shasun Pharmaceuticals
Jun '10 Sep '10 Dec '10
Sales Turnover 135.30 147.68 147.52
Other Income 0.44 1.85 4.90
Total Income 135.74 149.53 152.42
Total Expenses 131.45 146.47 142.28
Operating Profit 3.85 1.21 5.24
Profit On Sale Of Assets -- -- --
Profit On Sale Of Investments -- -- --
Gain/Loss On Foreign Exchange -- -- --
VRS Adjustment -- -- --
Other Extraordinary
-- -- --
Income/Expenses
Total Extraordinary
-- -- --
Income/Expenses
Tax On Extraordinary Items -- -- --
Net Extra Ordinary Income/Expenses -- -- --
Gross Profit 4.29 3.06 10.14
Interest 3.81 2.61 3.84
PBDT 0.48 0.45 6.30
Depreciation 6.24 5.97 5.93
Depreciation On Revaluation Of
-- -- --
Assets
PBT -5.76 -5.52 0.37
Tax -- -- --
Net Profit -5.76 -5.52 0.37
Prior Years Income/Expenses -- -- --
Depreciation for Previous Years
-- -- --
Written Back/ Provided
Dividend -- -- --
Dividend Tax -- -- --
Dividend (%) -- -- --
Earnings Per Share -- -- 0.08
Book Value -- -- --
Equity 9.70 9.70 9.70
Reserves -- -- --
Face Value 2.00 2.00 2.00