BOARD REPORT

The Board of Directors of your company has the pleasure in presenting the Board Report pursuant to Sec. 217 of the Companies Act, in respect of the year ended on 31.03.2014 as follows: -

PERFORMANCE DURING THE YEAR:

(Rs. in Lacs)

WORKING RESULTS:-

The Net sales for the financial year under review were Rs. 22709.63 lacs as against Rs.18500.37 lacs for the previous financial year registering an increase of 22.75% over the previous year. The profit before tax has decreased from Rs.1549.26 lacs to Rs. 1369.34 lacs because of capital loss of Rs. 116.00 Lacs written off during the year.

PRESENT OUTLOOK:

1)    Export Business:

The exports and the domestic business streams continued to post satisfactory progress. The Company's efforts in entering new markets in the CIS countries, Latin America and parts of South East Asia are seeing initial traction. The Company increased its penetration into the High0growth Latin American market focusing on countries such as Cuba, Columbia, Peru and Ecuador.

Amongst CIS countries, the company is making initial inroads into Armenia and Russia. The Company continued to build its base in Iran, Cuba, Congo, CIS and SEA markets which are expected to give excellent dividends in the coming few years.

The demand for registration of several products in these markets has picked up which show promise for an entry strategy in the near future. Several clients were contacted. Agreement signed and preliminary orders have been negotiated.

2)  Domestic Business:

The Company was able to post good growth in the domestic business. The institutional Business in spite of sudden and drastic changes in the purchasing system of various Indian Institutional buyers as against the largely institutional distributors led rate contract participation model. The cephalosporin business of the Company registered excellent growth after completion of cephalosporin facility.

3)  New delivery platform: Oral Thin Fim ("OTF"):

The completion of OTF plant and its WHO GMP accreditation enable the company to not only enhance its image as a Technology Innovator Company but also the plant started its commercial operations on Schedule. At least four agreements were signed with reputed pharmaceutical companies for exploiting this exciting dosage form using a development cum Exclusive Manufacturing business model using ZIM capabilities.

PROJECTION:

1)   R&D and new product pipeline:

Alongside the completion of the Research centre building, a well-planned strategy for developing a pipeline of Novel Drug Delievery system formulations is being put into execution which will enhance the Company's performance not only in its existing markets but also enable it to tap the more regulated market through use of non-infringing manufacturing processes for newly off patent products.                                                                                          

2)   Manufacturing Infrastructure and Accreditation: 

While the current WHO GMP accreditation provides a good base for for soliciting export business from emerging markets, the Company has taken a strategic to leverage on its expertise and product range to start marketing efforts in the developed markets in the near futute.

To support this strategic initiative, achieving EU GMP certification for its sxisting plant, strengthening manufacturing processes, attracting experienced talent across various departments and improving Qulaity Assurance will be key focus areas for the company in the current fiscal.

The Company has already commenced efforts across various areas to mame the above strategic initiative a success.

The Company also intends to stengthen its Business Development Department, R & D and Quality Assurance teams and on succesful completion of its expansion of existing OSD facilities, shall apply for EU GMP certification in an effort to enter more evolved markets.

DIVIDEND:

Your Directors are pleased to recommend a Dividend of 10% for the financial Year 2013-14.  The Dividend, if approved at the ensuing Annual General Meeting, will be paid to those shareholders whose names appear on the register of members of the Company as on 28th September, 2014 within the period as prescribed under the Companies Act.

CAPITAL:

The Company has not issued any further equity shares during the year under review.

PARTICULARS OF EMPLOYEES PURSUANT TO SEC. 217 (2A) OF THE COMPANIES ACT:

No employee of the company has drawn remuneration not less than Rs. 60.00 lacs per annum if employed for the whole year or @ Rs. 5.00 lacs per month if employed for part of the year and, therefore no particulars are required to be reported.

TECHNOLOGY ABSORPTION, CONSERVATION OF ENERGY, FOREIGN EXCHANGE EARNINGS AND OUTGO AND POLLUTION CONTROL MEASURES:

Information pursuant to Sec. 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in Report of Board of Directors) Rules, 1988 is given in Annexure ?I? attached hereto and forming part of this Report.

DIRECTORS:

Mr. Raghav Kapoor, Nominee Director who is appointed in the casual vacancy caused by the resignation of Mr. Rahul Deshpande, Nominee Director and who is due to retire by rotation is retiring at this Annual General Meeting and being eligible and willing for reappointment, the Board recommedns his reappointment.

The Independent Directors of the Company viz. Mr. Naresh Gaikwad, Dr. V.V. Parashar and Mr. S.S Chakravarty were liable to retire by rotation in terms of the provisions of the Companies act, 1956. However, as per Section 149(13) of the Companies Act, 2013, the independent directors shall not be liable to retire by rotation. Accordingly, it is proposed to appoint them for a term of three consecutive years at a remuneration of Rs. 60,000/- by way of commission for each year.

AUDITORS:

S.R. Batliboi & Co. LLP., who are due to retire at the conclusion of the ensuing Annual General Meeting have changed their name to S R B C & Co. LLP and have therefore, given in their new name, their willingness for reappointment and have also confirmed that if re-appointed, the appointment would be within the limit prescribed under the relevant provisions of Chapter X of the Companies Act, 2013. As per section 139 of  the Companies Act, 2013 the Auditors have to be appointed for a term not exceeding five years. Since they were already Auditors for the last two years as Rule 6 of Companies (Audit & Auditors) Rules, 2014 they can be appointed for three years being the balance period of the term of five years. In view of this provision the Board recommends appointment of S R B C & Co. LLP for a period of three years i.e. till the conclusion of the Anuual General Meeting for the year 2016-2017.

DIRECTORS? RESPONSIBILITY STATEMENT:

Pursuant to Section 217(2AA) of the companies Act,1956 your Directors hereby state :-

1)    that in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures.

2)    that the Directors had selected such accounting policies and applied them consistently and made judgements 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 the end of the financial year and of the profit of the  company for that period.

3)    that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

4)     that the Directors had prepared the annual accounts on a going concerns basis.

ACKNOWLEDGEMENTS

The Board wishes to place on record its sincere appreciation of the significant contribution made by the employees through their dedication and hard work.

The Board also expresses its gratitude to the analysts, bankers, shareholders and government agencies for their guidance and co-operation.

For and on behalf of the Board of Directors

(Anwar Siraj Daud)                                   

Chairman

Nagpur

Dated :21.08.2013

ANNEXURE - I

PARTICULARS REQUIRED TO BE GIVEN IN THE BOARD REPORT UNDER THE COMPANIES (DISCLOSURE OF PARTICULARS) RULES, 1988.

a)    CONSERVATION OF ENERGY :

1.    Your company is striving continuously to conserve every form of energy by adopting innovative measures to reduce wastage and optimize consumption. Notable measures for energy conservation were as follows:

? Unwanted lighting kept off

? Optimised the efficiency of HVAC by PM

? Replaced high voltage motors with low voltage motors

? Power consumption by using TEMP. Controller

2.    Additional investment and proposal for reduction in consumption of Energy :   Nil.

                i)      The impact of Measures (1) and (2) :

Adoption of above energy conservation measures have helped to curtail the cost of total energy usage. This has helped to optimize cost of production.

               ii)      Total energy consumption and energy consumption per unit :

The total consumption and consumption per unit, of energy are given in attached ?Form A?.

b)    TECHNOLOGY ABSORPTION :

The company has no collaboration for technology and hence the question of technology absorption does not arise. However, details of efforts made to upgrade and innovate the technology adopted are given under Research & Development in Form - ?B?.

c)    FOREIGN EXCHANGE EARNING AND OUTGO :                        (figure in lac)

1.    Foreign Exchange earned during the year       :                       Rs.6285.34

2.    Expenditure in Foreign Exchange                    :                       Rs. 900.87   

d)    POLLUTION CONTROL MEASURES :

The company being engaged in manufacturing pharmaceuticals, extreme care is taken to ensure that no pollutant enters the process or escapes to the environment and the production is carried out in well-controlled conditions. Further, meticulous care is taken to maintain hygienic conditions both inside the plant and in the surroundings. 

FORM ?A?

Power and Fuel Consumption

1.        Electricity :-

(a)      Purchased

(b)      Own generation ? through Diesel Generator Set

2.        Coal (used in Boiler) :- 

3.        Fuel (used in Boiler) :- 

?FORM B?

Research and Development (R & D) 2012 - 2013

(1)    Specific area in which R & D carried out by the company :

a)    Development of new pharmaceutical formulations.

b)    Development, evaluation and standardisation of product.

c)    Process development of new bulk drugs and intermediates.

d)    Establishing the standards, specification and analytical procedure of new products and intermediates.

(2)    Benefit derived as a result of the above R & D :

a)    More efficient process for manufacture of formulations.

b)    Economy in product packaging.

c)    Substitution of Imported ingredients with indigenous ones.

d)    Optimum utilisation of resources.

e)    Development of new products and process for manufacture of formulations.

(3)    Future plan of action :

(i)    Development of new pharmaceutical formulations.

(ii)   Clinical trials of new drugs.

(iii)  Design and development of novel delivery systems for imported drugs.

(iv)  Study the bio-availability and effect of various bio-pharmaceuticals parameters on availability of drugs.

Annexure - II

CORPORATE GOVERNANCE REPORT

The Company?s shares are listed with OTC Exchange of India. Therefore, pursuant to Clause 49 of the Listing Conditions, the company?s Corporate Governance Report is presented as follows :-

I)     Company?s philosophy on code of governance :-

The company being a Listed Company, the philosophy permeating the management of the affairs of the company is aimed at transparency and taking care of the interest of all stake holders namely; members, creditors, clients, employees etc. equitably.

II)    Board of Directors :

     I)        The company?s Board of Directors consists of Promoter Directors and other Non-Executive and Independent Directors. The composition of the Board of Directors is given below :

(1)    Mr. Anwar S. Daud                                   :           Chairman & Managing Director

(Promoter Director)

(2)    Mr. Riaz K. Kamal                                     :           Executive Director

(3)    Mr. Zulfiquar M. Kamal                             :           Executive Director

(4)    Dr. V.V. Parashar                                      :           Independent Director

(5)    Mr. Naresh Gaikwad                                 :           Independent Director

(6)    Mr. Gautam Saigal                                    :           Independent Nominee  Director

(19.10.2012 to 18.07.2013)

(7)    Mr. Rahul Deshpande                               :           Independent Nominee Director

(8)    Mr. S.S. Chakravarty                                 :           Independent Director

    II)        Attendance of each Director at the Board of Directors Meeting and the last Annual General Meeting. 

Attendance record of the Directors at the Board Meetings :-

04.05.2012, 31.5.2012, 13.06.2012, 29.06.2012, 14.07.2012, 21.07.2012, 11.08.2012, 23.08.2012, 22.09.2012, 26.09.2012, 19.10.2012, 06.11.2012, 21.12.2012, 18.01.2013, 18.02.2013 and 28th Annual General Meeting held on 28.09.2012 are given below:-

 III)      Number of Board meetings held and date on which held.

The company has held fifteen meetings of the Board of Directors, as against statutory requirement of four meetings, on the following dates :-

III)       Audit Committee :

i)      Brief description of terms of reference.

The terms of reference include the powers as stipulated in Clause 49II(C), the role of the Audit Committee as laid down in Clause 49II (D) and review of information pursuant to Clause 49II (E) of the Listing Agreement with the Stock Exchange. The terms of reference also fully conform to the requirements of Section 292A of the Companies Act, 1956.           

ii)     Composition :

The Audit Committee was reconstituted on 12.12.2012 consisting of the following members and Chairman.

IV)                 Audit Committee Meetings :

During the year ended 31st March, 2013 the Audit Committee meetings were held on 09.04.2011,  25.06.2011, 10.07.2012 and 06.01.2012, The Annual Accounts for the year ended 31.03.2013 was considered by the Committee at its meeting held on 21.08.2013  and recommended for its approval by the Board of Directors.

?         The Audit Committee meetings were also attended by the Managing Director.

?         The Company Secretary acts as Secretary to the Audit Committee.

?         The Chairman of the Audit Committee attended the last Annual General Meeting held on 28.09.2012.

  V)                 Remuneration Committee :

The Company has not constituted Remuneration Committee because the occasions are very few and the Board itself considers the subject as and when need arises.

VI)                 Remuneration Policy :

The remuneration for Executive Directors is decided by the Board subject to approval by the shareholders, the terms complying with the terms & conditions of the Schedule XIII of the Companies Act, 1956 pursuant to Section 269 (2) of the Companies Act.

The total remuneration for Non-Executive Directors is paid by way of commission limited to 1% of the net profit of the company approved by the shareholders by Special Resolution pursuant to Section 309 (4) (b) of the Companies Act, 1956.

VII)                   Details of Sitting fees/remuneration :

a)    Sitting Fees :

The Directors are not paid any Sitting Fee.

b)    Remuneration paid to the Executive Directors :

VII) Shareholders Grievance  Committee :

A committee for attending to complaints, if any, from shareholders and to redress their grievance has been constituted consisting of the following:-

Name and designation of Compliance Officer:

Mr. R.A. Parasuraman, Company Secretary acts as the Secretary to the Shareholders Grievance Committee and also as the Compliance Officer.

Status of Shareholders? complaints :

During the year no complaint was received from any shareholder which required Committee?s consideration and therefore, there was no occasion for the Committee to meet. There is no complaint pending for redressal.

VIII)        General Body Meetings :

i)      Location, time and venue of last three Annual General Meetings.

ii)        Whether any Special Resolutions passed  :           Yes

in the previous 3 AGM.                             

iii)    Whether any Special Resolutions passed  :           No

passed last year through postal ballot

iv)   Person who conducted the postal ballot    :           Not applicable

Exercise.                                       

v)    Whether any special resolution is             :           No.

proposed   to be conducted through

postal ballot.                                              

vi)   Procedure for postal ballot                         :          Not applicable 

IX)  Disclosures :

1)      Disclosure 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 :

No such transaction took place during the year ended 31st March, 2013.

2)      Disclosure    by   Senior  Management  in  accordance with  Clause 49-IV(F)(ii) of the Listing Agreement :     

The Senior Management of the Company has confirmed to the Board of Directors that they do not have any personal interest relating to material, financial and commercial transactions with the Company that may have a potential conflict with the interests of the Company at large.

3)      Disclosure on compliance of law :

The company has complied with the mandatory requirements of the Stock Exchanges, SEBI and other statutory authorities on all matters related to capital markets during the last three years. No penalties were imposed by SEBI, Stock Exchanges or any statutory authorities on any matter related to capital markets during the last three years.

4)      Whistle Blower Policy  :

The company does not have any Whistle Blower Policy as of now but no personnel is being denied any access to the Audit Committee.

5)      Details of compliance with mandatory requirements and adoption of non-mandatory requirements :

All mandatory requirements have been complied with and the non-mandatory requirements will be implemented as and when required and/or deemed necessary by the Board.

6)      Certificate from CEO (Managing Director):

Certificate from Mr. Anwar S. Daud, Managing Director in terms of Clause 49(v) of the Listing Agreement for the financial year ended 31.03.2013 was placed before the Board of Directors at its meeting held on 21.08.2013.

7)      Code of Conduct :

The Board has laid down a Code of Conduct for all Board members and Senior Management of the Company which is posted on the website of the Company.

All Board members and Senior Management personnel have affirmed compliance with the code. A declaration to this effect signed by the Managing Director forms part of this Corporate Governance Report is appended at the end of this report. Information and details in all respects are posted on the Company?s website-www.zimlab.in   

X)    General Shareholder information :

?         Annual General Meeting, date, time and venue :

Date : 28.09.2013  at 11.00 a.m. to be held in the Registered Office at

Flat No. 104, Vivek Co-operative Housing Society,

Pipeline Road, Behind Tilak Nagar, Chembur,

Mumbai ? 400 089

?         Financial Year                                :           1st April to 31st March following

?         Date of Book Closure                    :           18.09.2013 to 28.09.2013

(both days inclusive)

?         Dividend Payment date                  :           28.09.2013

?         Listing on Stock Exchange             :           OTC Exchange of India, Mumbai

?         Stock Code                                    :           ZIMLAB E1

?         Market Price Data                          :           The Company?s shares have not

been traded for the last several years hence, not applicable. 

?         Registrar and Share Transfer        :           Link Intime India Pvt.  Limited,

Agent                                                        C-13, Pannalal Silk Mills

Compound, L.B.S. Marg,

Bhandup (W), Mumbai - 400078

Ph. (022) 2596 3838

?         Distribution of Shareholding pattern as on 31.03.2013

?               Shareholding pattern as on 31.03.2013

?               Dematerialisation of Shares :

?               Outstanding GDRs/ADRs/Warrants or  any convertible  

instruments, conversion date and likely impact on equity   :        N I L