REPORT OF THE BOARD OF DIRECTORS

To

The Members

Fredun Pharmaceuticals Limited

Mumbai.

Your Directors are pleased to present the Twenty Eighth Annual Report of your- Company with the Audited Accounts for the year ended March 31, 2015.

FINANCIAL RESULTS

Your Company posted a total income of Rs. 258,439,642/- compared to the income of Rs. 216, 449,961/- for the previous year and the net profit of Rs.2,556,985/-compared to the net profit of Rs. 2,422,136/- for the previous year. The Turnover of the Company has increased as compared to the previous year on account of increase in the business activities; however the net profit for the year increased only marginally compared to that of the previous year on account of addtional expenses incurred for the expansion of the current manufacturing facilities at Palghar. Your Directors are taking aggressive steps to increase the business activities of the Company and they are sure, that the Company will be able to show better results in the current year.

BUSINESS ACTIVITIES:

Your Directors are now focusing on increasing the production as the expansion of the current manufacturing facilities of the Palghar unit is nearing completion. Three new granulation departments have been added to the existing two departments. This will substantially increase the production and profits of your Company. A new Q.C laboratory has been set up as per the WHO cGMP norms. This will help the process of strengthening the compliance and regulatory systems.

Since a lot of drugs are going to go off-patent in the coming years; Indian pharmaceutical companies are well positioned to get the benefits of the same. Your Company has also the capability and technological expertise to manufacture products of quality and reliability.

DIVIDEND

To conserve the funds your directors do not recommend any dividend for the year ended

March 31 2015.

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

The particulars required to be stated as per the provisions of Section 134(3) (m) of The Companies Act, 2013 relating to conservation of energy and technology absorption is provided as under:

ENVIRONMENT PROTECTION

The Company has been complying with the requirements of the Pollution Control Regulations in the State of Maharashtra.

CONSERVATION OF ENERGY

The Company conducts In-House energy audit at regular intervals with proper monitoring and maintenance of ail the machineries. Low energy lighting and high efficiency meters have been installed to yield significant investment benefits and additional savings.

TECHNOLOGY ABSORPTION & RESEARCH AND DEVELOPMENT

A patented drug is the result of research and innovation and a generic drug is only a continuance of the same at a low price. World Health Organization (WHO) defines a generic drug as "pharmaceutical product, usually intended to be interchangeable with an innovator product that is manufactured without a license from the innovator Company and marketed after the expiry date of the patent or other exclusive rights". Our Company has set up a complete R & D Department to develop new formulations with proper process and analytical method validations. Improvements in existing manufacturing processes are continuously carried out to economize the cost of production and improve the quality of the formulation.

FOREIGN EXCHANGE EARNINGS AND OUTGO:

Foreign Exchange Earnings: Export of Goods - Rs. 1618.01 lakhs

Foreign Exchange Outgo: - Rs. 123.35 lakhs

DEPOSITORY SYSTEM:

Details of the Depository System are given in the section 'Additional Information' which forms a part of the Corporate Governance Report and is attached with the Annual Accounts.

DIRECTORS:

Mr. Fredun Medhora was originally appointed as the Whole Time Director of the Company up to 31 March 2015 and he was subsequently appointed as the Managing Director of the Company for the period of three years.

Mr. Nariman Medhora the Managing Director of the Company had resigned from the Board with effect from 15th October 2014

Dr. Rohinton Kaga and Mr. Nariman Medhora were appointed as the Independent Director and Executive Director respectively on 05th May 2015 and their appointments will be subject to the approval of the members at the Ensuing Annual General Meeting

All the Independent Directors have given declarations that they meet the criteria of Independence as laid down under Section 149 (6) of the Act and Clause 49 of the Listing Agreement entered into with the Stock Exchanges. In the opinion of the Board, they fulfill the conditions of Independence as specified in the Act and the Rules framed there under and are independent of the management.

ANNUAL EVALUATION OF BOARD PERFORMANCEAND PERFORMANCE OF ITS COMMITTEES AND OF INDIVIDUAL DIRECTORS

Pursuant to the provisions of the Act and Clause 49 of the Listing Agreements, the Board of Directors has carried out an annual evaluation of its own performance, Board committees and individual directors.

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of criteria such as the board composition and structure effectiveness of Board process, participation in the long-term strategic planning, information, functioning etc.

The performance of the Committees was evaluated by the Board after seeking inputs from the Committee members on the basis of the criteria such as the composition of committees, effectiveness of Committee meetings, etc The Board reviewed the performance of the Individual Directors on the basis of the criteria such as the contribution of the Individual Director to the Board and committee meetings, preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.

TRAINING AND HUMAN RESOURCE MANAGEMENT:

Morale of our professionals continued to be high. The Company continued to put concerted efforts in recruiting quality people .Development programs and Train the Trainer' programs were other key focus areas during the year. The relationship between management and employees is without any dispute and cordial.

AUDITORS

The Auditors M/s. Savla & Associates Mumbai Chartered Accountants (ICAI Registration No.: 109361W) hold the office until the conclusion of the ensuing Annual General Meeting and they are eligible for reappointment as the Auditors. Members are requested to consider their re-appointment and to fix their remuneration for the year ending on 31 March 2016. Their appointment will be as per the provisions of Section 139 of The Companies Act, 2013

The Company has received a confirmation from M/S. Savla & Associates to the effect that their appointment, if made, will comply with the eligibility criteria in terms of Section 141 (3) of The Companies Act, 2013.

SECRETARIAL AUDIT

In terms of Section 204 of the Act and Rules made thereunder, Mr. Rajendra Vaze of M/s. Rajendra And Co Practicing Company Secretaries, have been appointed as Secretarial Auditors of the Company. The report of the Secretarial Auditors is annexed as Annexure I to this Report. The report is self-explanatory and does not call for any further comments.

DETAILS OF SIGNIFICANT MATERIAL ORDERS

No significant and material orders were passed by the regulators or the courts or tribunals impacting the going concern status and Company's operations in future

EXTRACT OF ANNUAL RETURN:

Pursuant to Section 92(3) of the Act and rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of annual return in Form MGT 9 is annexed as Annexure II to this Report

DIRECTOR'S RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the Internal, Statutory, and Secretarial Auditors and External consultant(s) and the reviews performed by management and the relevant Board committees, including the Audit Committee, the Board is of the opinion that the Company's internal financial controls were adequate and effective during the financial year 2014-15

Accordingly, pursuant to Section 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability, confirm that:

(a) in the preparation of the 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 of the Company for that period;

(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this 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.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS:

The Company has not given any loans or any guarantee and has not done any Investments during the year.

RELATED PARTY TRANSACTIONS

All related party transactions entered into during the financial year were on an arm's length basis, in the ordinary course of business and were in compliance with the applicable provisions of the Act and the Listing Agreement The details of the transactions with related parties are provided in the accompanying financial statements.

There were no materially significant related party transactions made by the Company during the year that would have required members approval under Clause 49 of the Listing Agreement. The policy on materiality of related party transactions and dealing with related party transactions as approved by the Board has been adopted by the Company and uploaded The details of the transactions with related parties are provided in the accompanying financial statements.

VIGIL MECHANISM/ WHISTLEBLOWER POLICY

The Company has adopted a Whistleblower Policy, to provide a formal mechanism to the Directors, employees and its stakeholders to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct or Ethics Policy. The policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee

MANAGEMENT DISCUSSION AND ANALYSIS AND REPORT OF THE DIRECTORS ON CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement, the Management Discussion and Analysis and the Corporate Governance Report, as required under Clause 49 of the Listing Agreement, is presented in a separate section forming part of the Annual Report.

ACKNOWLEDGMENTS :

The Company would like to acknowledge all its stakeholders, Shamrao Vithal Co-operative Bank Ltd and its customers, key partners for their support and all its employees for their dedication and hard work.

The Directors appreciate the continued guidance received from various Regulatory Authorities including RBI, SEBI, Ministry of Corporate Affairs, The Registrar of Companies, The Stock Exchange, Mumbai, Excise Authorities, Income Tax and Sales Tax Authorities.

On Behalf of the Board of Directors

Dr. (Mrs.) D. H. Medhora

Chairperson

Place: Mumbai

Date : 30th May 2015