BOARD'S REPORT

To

The Members of VIMTA LABS LIMITED

Your Directors have pleasure in presenting the 25th Annual Report and audited accounts of your Company for the year ended March 31, 2015

STATE OF THE COMPANY'S AFFAIRS

Net Revenue from operations got reduced by 9.33% for the year 2014-15 compared to previous year 2013-14.

Decline in revenues was due to revised United States Food and Drugs Administration guidelines seeking additional data from industry's abbreviated new drug applications, thus reducing the total number of clinical research projects awarded during the year under review.

Earnings before interest, depreciation, taxes and amortization (EBIDTA) for the year are Rs. 1846.03 lakhs as compared to the previous year earnings of Rs. 2938.27 lakhs. Profit after tax (including deferred tax) stood at Rs. 506.23 lakhs as against a profit of Rs. 1323.94 lakhs in the previous  year.

Pursuant to enactment of the Companies Act, 2013 the useful lives of fixed assets have been revised in accordance with Schedule II to the Act effective from April 1, 2014 and as a result an additional depreciation provision of Rs. 49.61 Lakhs was made for the year. Further, in line with transitional provision made under Note 7(b) of Schedule II to the Act an amount of Rs. 38.45 Lakhs (net of deferred tax asset) has been adjusted to retained earnings in respect of assets having no useful life as on April 1, 2014.

MATERIAL CHANGES AND COMMITMENTS

There were no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this report.

APPROPRIATIONS

Dividend

Your Directors are pleased to recommend a dividend of Rs. 1/- per equity share of Rs. 2/- each for the financial year 2014-15.

Transfer to Reserves

Out of the current year's profits your Directors propose to transfer Rs. 51 Lakhs to General Rese rves.

BOARD

Particulars of Board of Directors and its Committees

The particulars of Board of Directors, its Committees along with terms of reference and meetings held during the year under review are given in detail in the report on corporate governance.

Particulars of changes in Directorship

In accordance with the provisions of Section 152 (6) of the Companies Act, 2013 read with Articles of Association of the Company, V V Prasad, Director of the Company would retire by rotation at the ensuring Annual General Meeting, and is eligible for reappointment. The Directors recommend the re-appointment of V V Prasad as Director of the Company, subject to retirement by rotation.

Except V V Prasad none of the appointments of other whole-time Directors and the Independent Directors are due for re-appointment.

Further, during the year under review there were no new appointments to the Directorship, except reappointment of Directors who retire by rotation. There were no cessations from the Directorship.

Particulars of changes in Key Managerial Personnel

P Sankaraiah, Chief Financial Officer (CFO) of the Company has retired from the services on June 30, 2015. The Board has appointed M Murali Mohana Rao as CFO effective from July 1, 2015.

The Board would like to take this opportunity to thank P Sankaraiah, outgoing CFO for his leadership and commitment since 2006, and welcome the new CFO M Murali Mohana Rao.

Directors' Responsibility Statement

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013 the Board of Directors states that:

(a) In the preparation of annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss for that period;

(c) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) They have prepared the annual accounts on a going concern basis;

(e) They have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively and

(f) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Declaration by Independent Directors

The Independent Directors of the Company have submitted their declarations as required under Section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as per sub-section (6) of Section 149 of the Act.

Particulars of Contracts & Arrangements with Related Parties

All transactions entered by the Company with Related Parties were in the Ordinary course of Business and are at Arm's Length pricing basis. The Audit Committee granted approvals for the transactions and the same were reviewed by the Committee and the Board of Directors.

There were no materially significant transactions with Related Parties during the financial year 2014-15 which were in conflict with the interest of the Company. The details of contracts and arrangements with related parties as referred to in Section 188(1) of the Companies Act, 2013 were given as Annexure-I to the Board's Report in form No: AOC-2 pursuant to Section 134 (3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules 2014.

Particulars of Loans, Guarantees or Investments

During the financial year 2014-15 the Company neither has, directly or indirectly, given any loan to its Directors nor extended any guarantee or provided any security in connection with any loan taken by them. Further, the Company has neither given any inter-corporate loan / advance nor made any investments in other companies.

Nomination and Remuneration policy

In compliance to the provisions of Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement entered into with the Stock Exchanges, the Nomination and Remuneration Committee has recommended to the Board a Nomination and Remuneration policy with respect to appointment / nomination and remuneration payable for the Directors, Key Managerial Personnel and senior level employees of the Company. The said policy has been adopted by the Board and the same will form part of the Annual Report as Annexure-II to the Board's Report.

Evaluation

The Companies Act, 2013 mandates that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual Directors. The performance evaluation of Independent Directors shall be done by the entire Board of Directors, as per the provisions of Schedule IV to the Act. Similarly, the Independent Directors in their separate meeting shall carry out the performance evaluation of Non-Independent Directors and the Board as a whole. Accordingly, the Board and the Independent Directors have carried out respective evaluations for the year 2014­15 and the evaluation reports are meeting the expectations of the Board. The evaluation mechanism has been explained in the report on corporate governance appended to the Board's report.

Training of Independent Directors

Every new Independent Director of the Board attends an orientation program in order to get familiarize with the strategy, operations and functions of the Company. The Executive Directors / senior personnel make presentations to the inductees about the Company's strategy, operations, service offerings, markets, organization structure, finances, human resources, technology, facilities, risk management, etc.

Further, at the time of appointment of an Independent Director the Company issues a formal letter of appointment outlining his / her role, functions, duties and responsibilities as an Independent Director. The contents of the letter of appointment is available on Company's website www.vimta.com

Statement of particulars of Appointment and Remuneration of Managerial personnel & Particulars of employees:

Pursuant to Section 197 (12) read with Rule 5(1) and 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 details of remuneration of managerial personnel and particulars of employees are appended as Annexure-III to the Board's report and form part of the Annual Report.

Replacement of Articles of Association

The existing regulations of the Articles of Association (AoA) were framed at the time of incorporation in 1991 based on then Companies Act, 1956 and several regulations contains with reference to specific provisions of 1956 Act. Since most of the regulations are not consistent with the revised Companies Act, 2013 the Board of Directors considered that it is expedient to replace the full set of the existing regulations of the AoA with new regulations and seeks the approval of the shareholders for the same.

The proposed draft regulations of the AoA are placed on the Company's website for perusal by the shareholders. Any shareholder who would like to have a copy of the same may write to the Company.

Vigil Mechanism / Whistle Blower Policy

Pursuant to Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Clause 49 of the Listing Agreement, the Board has adopted Whistle Blower Policy. This policy aims for conducting the affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behavior.

A mechanism has been established for employees to report concerns about unethical behavior, actual or suspected fraud or violation of Code of Conduct and Ethics. The policy also provided adequate safeguards against the victimization of employees who avail of the mechanism and allows direct access to the Chairman of the Audit Committee in exceptional cases.

Your Company hereby affirms that during the year no Director / employee have been denied access to the Chairman of the Audit Committee and that no complaints were received.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis given below discusses the key issues concerning the business carried on by the Company.

Industry Overview

Stringent overview by regulators on pharma industry has resulted in demand for quality and integrity of data and that will bring more share of business for dependable CROs such as Vimta in long run. Further, consumer awareness for quality of food and enforcement by Food Safety Standards Authority of India is likely to create a spurt in the demand for food testing services. Growth for organized clinical diagnostics services is increasing with the life style changes and increased disease burden.

Potential and Outlook

Pharma - Service Innovation

Demand for CRO services continues to grow globally. A shift however is happening in the type of work being outsourced by the pharmaceutical industry. More and more pharma Companies are defocusing on their traditional small molecule pipelines and increasing their expenditure on Biopharma and Biologics innovations. The R&D spend from such Companies is propelling the demand for CROs services who now have the challenge of adapting to the complex scientifically and technologically advanced needs of the Biopharma and Biologics Companies.

Maintaining its spirit of adaptability to the ever changing needs of the environment in which it operates, VIMTA has established a Biopharma services division to which the industry has responded very positively.

The synergistic combination of VIMTA services including preclinical, clinical, analytical and the newly established Biopharma services are unique in India and this positions your Company well in the market to attract more customer-partners.

Food - Expansion for growth

VIMTA plans to setup a pan India network of food testing laboratories to cater to the steeply growing demand of the food industry for third party quality testing and certification needs. The Food Safety and  Standards Authority of India (FSSAI) has rolled out its new regulations in 2013 responding to global market needs and growing domestic consumer awareness on food safety and quality. VIMTA during its three decades journey has built for itself a brand synonymous with quality and trust and is well positioned to offer routine as well as highly specialized food testing services. In an earnest attempt to be more closer to the customer to provide quicker service VIMTA plans to set up branch laboratories across the country.

Risks and Concerns

? Predictability of regulatory approvals.

? Volatile currencies.

? Competition from Multinationals.

Safety, Health and Environment

Safety, health and environment continue to be the priority areas of the Company. Some of the major activities in these areas have been recycling of waste water, training of staff at all levels to the required standards of safety, health and environment.

Internal Control Systems

The Company has a well-defined internal control system that is adequate and commensurate with the size and nature of its business. Internal Audit department is put in place and adequate internal controls are established to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and all the transactions are authorized, recorded and reported correctly. SAP based controls are put in place.

Financial performance

Gross revenue for the year 2014-15 is Rs. 10831.91 lakhs as compared to the previous year of Rs. 12174.20 lakhs. During the year under review, the domestic sales have gone up by 6.95% as compared to the previous year. The Net profit stood at Rs. 506.23 lakhs as compared to the previous year net profit of Rs. 1323.93 lakhs. Key reason for the de-growth is decline in clinical research sales which faces the challenges of drying generic pharma pipelines globally and severe price competition domestically.

Foreign exchange fluctuations

The net gain during the year on account of Foreign exchange fluctuations against overseas customer accounts was Rs. 29.36 lakhs. The same was accounted under the head Other Income in the statement of Profit and Loss account.

Segment-wise or Product-wise performance

The Company is providing services of Testing and Contract Research in the fields of Clinical Research and Pre-Clinical Research studies, Clinical Diagnostics, Biopharma services, Analytical Testing & Research and Environmental studies. Since the inherent nature of all these services are inter related and governed by the same set of risks and returns and operating in the same economic environment, segment reporting is not applicable. Accordingly, for reporting purposes all these services are treated as single business and geographical segment. The said treatment is in accordance with Accounting Standard - 17 Segment Reporting.

Human Resources

Human Resource is one of the key strength of the Company. At the end of the financial year, the Company has 785 employees including 24 medical doctors; 22 PhDs and 739 scientists, engineers, technicians and other administrative staff.

SCIENTIFIC ADVISORY BOARD

VIMTA in pursuing its goal to continuously invent and innovate its services has constituted a Scientific Advisory Board (SAB) in year 2014. The purpose of SAB is to assist the Company with scientific strategy and direction to realize its vision. SAB will advise on new services and research programs for expansion and diversification by providing expert opinion on changing global industry requirements, and new scientific and technological advancements.

SAB is chaired by Prof. D. Balasubramanian, one of the Independent Directors of Vimta. Dr. KANURY V.S .RAO, founder of Drug Discovery Research Center (DDRC) and Dr. PANKAJ SHAH, Executive Director Bristol-Myers Squibb are the other independent members. The Executive Chairman, Managing Director and Executive Director Operations of Vimta are the internal members.

AUDITORS

Statutory Auditors

At the Annual General Meeting held on July 07, 2014, M/s J V S L & Associates, Chartered Accountants (Firm Reg. No: 15002S), were appointed as Statutory Auditors of the Company to hold office for a period of three years i.e., till the conclusion of the Annual General Meeting to be held in the calendar year 2017. In terms of the first proviso to Section 139 of the Companies Act, 2013 the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the said appointment of M/s J V S L & Associates, Chartered Accountants, as statutory auditors of the Company is placed for ratification by the Shareholders. In this regard, the Company has received a certificate from the auditors to the effect that if their appointment is ratified, it would be in accordance with the provisions of Section 141 of the Act. The Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

The Statutory Auditor's Report does not contain any qualifications, reservation or adverse remarks. This report form part of the Annual Report.

Internal Auditors

In pursuance of Section 138 of the Companies Act, 2013 read with rules made there under, the Board has appointed M/s Gattamaneni & Co., Chartered Accountants as Internal Auditors of the Company to carry out internal auditing of books of accounts periodically.

Cost Auditors

In pursuance of Section 148 of the Companies Act, 2013 read with rules made there under, the Board has appointed M/s U S Rao & Co (Registration No. 102629), Cost Accountants as Cost Auditors of the Company to carry out the audit of cost records maintained by the Company for the financial year 2014-15.

In pursuance of rule14 (a) (ii) of Companies (Audit and Auditors) rules 2014 the remuneration fixed by the Board of Directors which is payable to Cost Auditors needs a ratification by the shareholders of the Company. Accordingly, remuneration fixed by the Board is placed for ratification before the shareholders.

Secretarial Auditors

In pursuance of Section 204 of the Companies Act, 2013 read with rules made thereunder, the Board has appointed M/s D Hanumanta Raju & Co, Practicing Company Secretaries as Secretarial Auditors of the Company to carry out the secretarial audit.

The Secretarial Auditor's Report does not contain any qualifications, reservation or adverse remarks. The Secretarial Audit Report forms part of the Annual Report as Annexure-IV to the Board's Report.

OTHER INFORMATION IN PURSUANCE OF RULE 5 OF COMPANIES (ACCOUNTS) RULES, 2014

• The financial summary and the changes in Directors and Key Managerial Personnel were given supra.

• During the year under review, there is no change in the nature of business of the Company.

• During the year under review, the Company has no Subsidiaries, joint ventures or associate companies.

• During the year under review, the Company has not accepted any deposits in terms of Section 73 of the Companies Act, 2013 and the rules made there under and hence compliance with respect to the provisions of Chapter V of the Act is n ot a p p l ica b l e .

• During the year under review, there are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.

• Following are the details in respect of adequacy of internal financial controls with reference to the Financial Statements:

The Company maintains its books of accounts in SAP system and the work flow and approvals are routed through SAP. Further, the Company has set internal control systems to maintain accurate and complete accounting records, to safeguard its assets, to prevent and detect any frauds and errors.

The Company has internal audit department and also appointed Internal Auditors in compliance to the provisions of the Companies Act, 2013 who in turn observe the set internal controls and the financial transactions of the Company. The internal audit department reviews the set controls and the financial transactions periodically and reports to the Management. On quarterly basis the Internal Auditors will present their report to the Audit Committee and the Management comments on the Internal Auditor's observations and gives its replies to the Committee. Based on the reports, the Management will take up necessary steps to mitigate the short falls, if any.

The Audit Committee periodically reviews the adequacy of internal controls with respect to financial transactions and suggests the changes, if any required to the said controls.

RISK MANAGEMENT

The Risk Management Committee duly constituted by the Board had formulated a Risk Management Policy for dealing with different kinds of risks attributable to the operations of the Company. Risk Management Policy of the Company outlines different kinds of risks and risk mitigating measures to be adopted by the Board. The Company has adequate internal control systems and procedures to combat the risk. The Risk Management procedure will be reviewed periodically by the Audit Committee and the Board.

ANTI SEXUAL HARASSMENT

A Committee was framed in compliance to the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 in order to curb sexual harassment, if any, at work place of the Company. There were no complaints received by the Company during the year under review

EXTRACT OF ANNUAL RETURN

In accordance with the provisions of Section 134(3(a) of the Companies Act, 2013, an extract of the Annual Return in the prescribed format is appended as Annexure-V to the Board's Report.

CORPORATEGOVERNANCE

The Company, as a policy believes that the corporate governance goes beyond the regulatory requirement and has laid strong emphasis on the transparency, accountability, responsibility, fairness, integrity, consistent value systems and delegation across all of its operations.

A separate section on Corporate Governance along with a Certificate from the Auditors confirming the compliance is appended to the Board's Report and forms part of the Annual Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate Social Responsibility is commitment of the Company to the community and society at large. The Company believes that CSR plays an important role in an organization's existence, sustained growth and for overall development of all stakeholders & the society at large. In line with this, the Board has constituted CSR Committee and adopted a CSR policy on the recommendations of the Committee.

During the year under review the Company has paid an amount of Rs. 404,000/- to Narsingh Swain Memorial Trust, Hyderabad for providing medical aid to the differently abled people on charitable basis who belong to economically weaker sections of the society as a part of their Akar Asha Project. An amount of Rs. 63,236/- is yet to be spent during the current financial year out of the total eligible amount of Rs. 467,236/- to be spent during 2014-15 fiscal.

Report on CSR activity is enclosed as Annexure-VI to the Board's Report in compliance to Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014.

INFORMATION ON CONSERVATION OF ENERGY, TECHNOLOGY  ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO

Pursuant to the provisions of Section 134 (3) (m) of the Companies Act, 2013 read with Rule 3 of Companies (Accounts) Rules, 2014, the relevant information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo is appended hereto as Annexure-VII and forms part of the Board's Report.

DISCLOSURES AS PER THE LISTING AGREEMENT & SEBI  REGULATIONS

Cash flow statement

In due compliance of the listing agreements and in accordance with the requirements prescribed by SEBI, the cash flow statement is prepared and is appended to this Annual Report.

Stock exchanges

Equity Shares of the Company are listed with Bombay Stock Exchange Limited and National Stock Exchange of India Limited and the listing fee was paid in time and no amount was outstanding.

Share transfer agency

The Company has appointed M/s CIL Securities Ltd, 214, Raghava Ratna Towers, Abids, Hyderabad - 500001 as its share transfer agency for handling both physical and electronic transfers.

Transfer of unclaimed Dividend amount to Investor Education and Protection Fund

The Company has transferred unclaimed dividend for the years  2001-02; 2002-03; 2003-04, 2004-05 (interim & Final), 2005-06  and 2006-07 to Investor Education and Protection Fund. The details of unclaimed dividends and due dates for transfer to the said fund account for other financial years are disclosed in the report on corporate governance.

Code of conduct

The Company has adopted Code of Conduct for the Board and for the Senior level employees of the Company and they are complying with the said code. A declaration by the Managing Director to this effect is furnished as Annexure-VIII to the Board's Report.

ACKNOWLEDGMENTS

The Directors wish to place on record their gratitude to shareholders and thank the customers, vendors, franchisees, bankers and legal advisors for their continued support to the Company's growth. The Directors also wish to place on record, their appreciation for the contribution made by the employees at all levels, for their sincerity, hard work, solidarity and dedicated support to the Company.

For and on behalf of the Board

DR S P VASIREDDI

EXECUTIVE CHAIRMAN

Date : 17.07.2015  

 Place : Hyderabad