Abbott India Ltd


BSE: 500488 | NSE: ABBOTINDIA | ISIN: INE358A01014 
Market Cap: [Rs.Cr.] 3,778 | Face Value: [Rs.] 10
Industry: Pharmaceuticals - Multinational

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Director's Report

REPORT OF THE DIRECTORS

TO THE MEMBERS

Your Directors have pleasure in presenting the Sixty-Ninth Annual Report and AuditedAccounts of the Company for the year ended December 31, 2012.

Financial Results

Rs. in Lakhs
Year ended December 31, 2012 Year ended December 31, 2011
Sales 1613,09.30 1445,57.29
Profit Before Tax 214,99.29 180,15.83
Profit After Tax 144,70.05 120,39.30
Balance brought forward 329,95.61 263,44.69
Profit available for appropriation 474,65.66 383,83.99
Appropriations :
Dividend (Proposed) 36,12.38 36,12.38
Corporate Dividend Tax 5,86.02 # 5,72.07
Transfer to Reserves 14,47.01 12,03.93
Balance carried forward 418,20.25 329,95.61

# Includes credit of Corporate Dividend Tax Rs. 13.95 Lakhs for period December 1, 2009to December 31, 2010

Dividend

Your Directors recommend a dividend of Rs. 17 per share for the year ended December 31,2012. The proposed dividend, if approved at the Annual General Meeting, will absorb a sumof Rs. 36,12.38 Lakhs (Previous year: Rs. 36,12.38 Lakhs) and Corporate Dividend Tax ofRs. 5,86.02 Lakhs (Previous year: Rs. 5,86.02 Lakhs). The Corporate Dividend Tax isprovided at the rate applicable on the day on which the Accounts were approved by theBoard of Directors.

Reserves

Reserves as on December 31, 2012 were Rs. 625,60.98 Lakhs comprising of AmalgamationReserve Rs. 37.82 Lakhs, Capital Reserve Rs. 5,22.62 Lakhs, Capital Redemption Reserve Rs.2,52.48 Lakhs, General Reserve Rs. 199,27.81 Lakhs and Surplus in Statement of Profit andLoss Rs. 418,20.25 Lakhs.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956 (the Act) your Directors statethat :

1. In the preparation of the Annual Accounts, the applicable accounting standards havebeen followed.

2. They have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company for the year ended December 31, 2012, and of theProfit of the Company for the year.

3. They have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.

4. They have prepared the accompanying Annual Accounts for the year ended December 31,2012, on a going concern basis.

FIXED DEPOSITS

No fixed deposits were accepted during the year.

INFORMATION PURSUANT TO SECTION 217 OF THE COMPANIES ACT, 1956

The information required to be disclosed under Section 217(1)(e) of the Companies Act,1956 read with the Companies (Disclosure of Particulars in the Report of the Board ofDirectors) Rules, 1988 with respect to conservation of energy, technology absorption andforeign exchange earnings/ outgo is given in Annexure I and forms part of this Report.

The information required under Section 217(2A) of the Companies Act, 1956, read withthe Companies (Particulars of Employees) Rules, 1975 is given in Annexure II and formspart of this Report. As per the provisions of Section 219(1)(b)(iv) of the Companies Act,1956, the Report and Accounts is being sent to the shareholders of the Company, excludingthe statement of particulars of employees under Section 217(2A) of the Companies Act,1956. Any shareholder interested in obtaining a copy of the said statement may write tothe Company at its Registered Office.

DIRECTORS

Mr Laurent Van Lerberghe and Mr Ramon F Neira Hoyos resigned as Directors of theCompany effective February 20, 2013. The Board placed on record its sincere appreciationfor the valuable support rendered by them.

Mr Bhasker Iyer and Mr Sachin Dharap have been appointed as Additional Directors by theBoard with effect from February 20, 2013, subject to approval of the shareholders of theCompany at the ensuing Annual General Meeting.

Mr Munir Shaikh and Mr R. A. Shah retire by rotation at the forthcoming Annual GeneralMeeting and being eligible, offer themselves for re-appointment.

Your Directors have pleasure in recommending their appointment.

STATUTORY AUDITORS

Messrs Deloitte Haskins & Sells, Chartered Accountants, the Statutory Auditors,retire at this Annual General Meeting and are eligible for re-appointment.

COST AUDITORS

M/s N I Mehta & Co, Cost Accountants

83, Bakhtawar

Narayan Dabholkar Road

Mumbai - 400 006

The Cost Audit Report for the financial year 2011 was filed with the Central Governmenton January 30, 2013 (Due date for filing -February 28, 2013).

HEALTH, SAFETY AND ENVIRONMENT

Compliance with relevant regulations coupled with effective management of these issuesis an integral part of the Company's operating philosophy and we stand committed tocontinually improve on these objectives. There was considerable focus on improving Health,Safety and Environment during the year by the Company.

i. Environment

The Company continuously endeavors to improve on environmental management to minimisethe adverse environmental impact and through all our activities demonstrate commitment toprotecting the environment.

The plant has a state of the art activated sludge type waste water treatment plant. Theplant is a ZERO discharge plant. The quality of treated water from the waste watertreatment plant is well below the norms laid down by pollution control board. The treatedwater is recycled for horticulture within the site. During the current year waterrecycling initiatives were taken up.

The ambient air quality is being monitored on a regular basis to conform to thecompliance of ambient air quality standards.

There is also a vermi-composting unit to convert canteen waste into organic manure,which is used in the lawns and plantation inside the premises.

During the year the plant reduced the carbon footprint by reducing 112 tons of CO2emission by implementing various electricity saving projects such as, installation ofVariable Frequency Drive (VFD), optimisation of light usage, online dissolve oxygentrimming system in effluent treatment plant etc. Further, the plant commissioned briquettefired boiler which reduced furnace oil usage. The anticipated annual CO2emission reduction is 740 tons and there are no sulphur emissions.

Environmental Key Performance Indicators are shared and discussed with employees toincrease awareness and thereby minimise the impact on environment.

ii. Health and Safety

The Company is committed to promoting health and safety of its employees. The Companyhas a dedicated Safety Officer and a Safety Committee in place, which includesrepresentation from workmen and meets regularly to review issues impacting plant safetyand employee health. The Employee, Health and Safety (EHS) programme includes EHS & Epolicy, well defined orgnisational structure, EHS SOP's and EHS specific programmes.

In the plant we are driving a programme of moving to ZERO EHS incidents with focus onnear miss reporting, cultural change and behavioural based safety.

Employees are the key to the success of the EHS Management System as they areresponsible for the proper implementation and maintenance of systems.

The site conducts various training programmes related to EHS. The site develops ayearly training schedule (calendar), reviewed quarterly and strictly adheres to it. Thetopics covered are machine guarding, forklift safety, electrical safety, ergonomics, wastemanagement, first aid, emergency preparedness planning, confined spaces, spill prevention,chemical safety, work permit, biological safety, etc.

Detailed first-aid training by certified agencies like Indian Red Cross Society hasalso been imparted to the employees.

The plant celebrated the World Environment Day on June 5, 2012. Vehicle emissionchecking drive was also conducted.

The plant has an in house occupational health centre. The centre is equipped withPhygmo Nanometer, Spirometer, Audiometer, Audiometric Cabin and Otoscope, besides regularfirst aid equipment. The plant also has a well equipped ambulance.

A cross-functional team for EHS and Emergency Action Plan (EAP) is in place.

Routine audits for Environment, Health and Safety compliance are conducted with theassistance of personnel from Abbott's global corporate team.

TECHNOLOGY ABSORPTION AND DEVELOPMENT

The R&D Centre of the Company at Goa is approved by the Department of Scientificand Industrial Research. It carries out development of new formulations and modificationof existing ones for Life Cycle Management. R&D center also carries out evaluation ofproduct dossiers for introduction of new products through insourcing. Effective Life CycleManagement, cost reduction in existing products and new vendor development are focus areasat the R&D centre.

The R&D centre has played a key role in launching new products in 2012, e.g. Adiza,Zilsa, Obimet GX forte and Omacor. The R&D has been instrumental in site to sitetechnology transfers as a result of rationalisation of production sites to improveefficiencies and costs. Notable among them were insourcing of Cremaffin Plus, Udiliv andDuphalac manufacturing to Goa Plant.

EMPLOYEES

Your Board records its sincere appreciation for the significant contribution made byemployees across the Company through their continued commitment and dedication.

REPORTS ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS

A Report on Corporate Governance along with a certificate from the Auditors of theCompany regarding compliance of the conditions of Corporate Governance and also aManagement Discussion & Analysis Report pursuant to Clause 49 of the Listing Agreementare annexed hereto.

For and on behalf of the Board
February 20, 2013 Munir Shaikh Rehan A. Khan
Mumbai Chairman Managing Director

ANNEXURE I

Information pursuant to the Companies (Disclosure of Particulars in the Report of theBoard of Directors) Rules, 1988.

1. CONSERVATION OF ENERGY

(I) Energy conservation measures taken :

1) Installation of briquette fired boiler will result in annual saving of 275 KL offurnace oil. Commissioned in November 2012, resulted in saving of 33 KL of furnace oil forthe year 2012.

2) Optimisation of lighting by reducing number of lighting fixtures while maintainingthe same illumination level have resulted in electricity saving of 5,118 KWH per year.

3) Installation of VFD for liquid manufacturing ventilation blower have resulted inelectricity saving of 2,976 KWH.

4) Implementation of on line dissolved oxygen trimming system in waste water treatmentplant aeration system have resulted in electricity saving of 15,190 KWH.

(II) Additional investments and proposals, if any, being implemented for reduction inconsumption of energy :

None

(III) Impact of the measures at (I) and (II) above for reduction of energy consumptionand consequent impact on the cost of production of goods :

Installation of VFD, online dissolved oxygen trimming system in waste water treatementplant and optimisation of lighting have resulted in significant power savings.Installation of briquette fired boiler resulted in significant amount of furnace oilsavings.

(IV) Total energy consumption and energy consumption per unit of production :

Year ended December 31, 2012 Year ended December 31, 2011
A. Power & Fuel Consumption :
a) Electricity
(i) Purchased (Unit Millions) 3.11 3.43
Total amount (Rs. Lakhs) 4,62.90 4,65.13
Rate/Unit (Rs.) 14.91 13.57
(ii) Own Generation in KWH
(through Diesel Generator) 88,524 23,095
(through Steam turbine/Generator) N.A. N.A.
b) Biomass Briquets
Quantity (Kgs) 85,485 N.A.
Total amount (Rs. Lakhs) 5.20 N.A.
Average Rate/Unit (Rs.) 6.05 N.A.
c) Coal N.A. N.A.
d) Furnace Oil
Quantity (kilo ltrs) 216.23 285.10
Total amount (Rs. Lakhs) 1,02.60 1,13.50
Average rate (Rs.) 47.45 39.81
Others/Internal Generation N.A. N.A.

B. Consumption per Unit of Products :

Since the Goa Plant manufactures different dosage forms it is not practical toapportion utility cost based on available records.

2. TECHNOLOGY ABSORPTION

Efforts made in Technology Absorption

Various Projects were undertaken to internalise products to be manufactured at Goafacility. Internalisation benefits are increased capacity utilisation and gross marginimprovement in currently marketed products. During the year, Cremaffin Plus, Udiliv andDuphalac oral liquid manufacturing has been successfully validated and commercial suppliesstarted from Goa plant.

A. Following were the achievements of the Company's R&D Centre at Goa :

1. Development of new pharmaceutical formulations.

2. Establishing new technical capabilities.

3. Import substitutions and new vendor development.

4. Optimisation, standardisation and improvement of products and manufacturingprocesses.

5. Technical evaluation of off the shelf products, to ensure quality and stability.

A number of formulations were developed for domestic market either through inhousedevelopment or in collaboration with external laboratories/ CRO's. The R&D Centreplayed a vital role in closely working with third party developers to launch products likeAdiza, Zilsa, Obimet GX Forte. A reformulated multivitamin liquid Betonin AST wassuccessfully developed inhouse and scaled up.

A number of continuous improvement projects (CI) were undertaken and implemented. Costimprovements were performed on Digene tablets by rationalising the existing excipients incurrent Digene tablet which was further scaled up to undergo commercialisation. A numberof new vendors of API's and excipients were studied and approved resulting in costsavings.

B. Benefits derived as a result of the above R&D :

A well-focused R&D effort has helped the Company in launching a number of newproducts in the Indian market. Manufacturing process optimisation helped to bring inimproved quality and efficiency. Internalisation projects have potential of significantcost saving and de-risking supply of key products. New vendor development for API's withcost challenge has helped to reduce cost and to improve the efficiency of supply chain.Development of new products will strengthen the portfolio and will add to life cyclemanagement in areas of Gastroenterology, Neuropsychiatry, Cardiometabolics and Women'sHealth.

C. Future plan of action :

Assessments are ongoing to monitor trend analysis of key currently manufacturedproducts, assess the gaps, if any and remediate as a proactive measure. New productdevelopment continues to be a key deliverable of the team. Opportunities to expand locallydeveloped products to other geographies are being identified, a significant volume ofefforts will be dedicated for this. Variants of global products may be developed forimproved therapeutic benefit of prevailing molecules. Innovative technologies may beexplored for equally efficient, cost effective and quality products. Identifyingopportunities to rationalise costs and improve efficiencies through developing costefficient and robust processes and products will be an area of focus.

D. Expenditure on R&D :

Rs. In Lakhs
(a) Capital 34.44
(b) Recurring 144.37
Total 178.81
Total R&D expenditure as a Percentage of Total turnover I 0.11

E. Technology absorption, adaptation and innovation :

(a) Efforts, in brief, made towards technology absorption, adaptation and innovation.

The Company interacts with Abbott Laboratories Intl. Co. USA, on an ongoing basis fortechnical expertise for products of high technology and pharmaceutical formulations.

(b) Benefits derived as a result of the above efforts, e.g., product improvement, costreduction, product development, import substitution, etc.

The Company has benefited as a result of the emphasis on innovation. Reduction inenergy consumption and improvement in product quality are some of the benefits achieved inthe current year.

(c) Imported technology (imported during the last five years reckoned from thebeginning of the financial year).

Nil 3. FOREIGN EXCHANGE EARNINGS AND OUTGO

(I) Activities relating to exports; initiatives taken to increase exports; developmentof new export markets for products and services, and export plans.

The total foreign exchange earned during the year amounted to Rs. 17,92.06 Lakhs, whichincludes Rs. 12,00.78 Lakhs towards exports and Rs. 5,91.28 Lakhs towards amount recoveredfrom the affiliates.

(II) Total foreign exchange used and earned. A. Total foreign exchange used

Rs. In Lakhs
(a) On import of raw materials, finished goods, consumable stores and capital goods 176,35.25
(b) On professional charges, sales promotion expenses, commission on export sales, registration fees, business travel, software, etc. 8.21.24
(c) On remittance during the year on account of dividend 27.08.79
B. Total foreign exchange earned 17,92.06

 

For and on behalf of the Board
February 20, 2013 Munir Shaikh Rehan A. Khan
Mumbai Chairman Managing Director
   

Peer Comparison

Company Market Cap
(Rs. in Cr.)
P/E (TTM)
(x)
P/BV (TTM)
(x)
EV/EBIDTA
(x)
ROE
(%)
ROCE
(%)
D/E
(x)
Glaxosmit Pharma 21,243.61 51.60 10.53 31.13 24.9 32.3 0.00
Sanofi India 6,629.30 29.88 4.96 12.67 21.0 30.2 0.00
Abbott India 3,777.72 23.60 4.90 12.08 24.3 34.8 0.00
Pfizer 3,687.63 16.93 2.18 2.46 13.9 18.8 0.00
Astrazeneca Phar 2,639.25 0.00 26.46 0.00 -62.0 -48.5 0.00
Fres.Kabi Onco. 2,095.36 0.00 3.11 13.43 12.7 14.3 0.23
Wyeth 1,912.23 20.52 3.37 8.27 24.8 35.6 0.00
Novartis India 1,454.18 12.89 1.62 10.82 13.9 19.2 0.00
Merck 1,104.73 20.62 2.11 7.57 11.1 17.1 0.00
Fulford (India) 275.94 48.93 1.84 0.00 -3.4 -4.7 0.00
Organon (India) 159.14 0.00 0.98 0.00 15.3 22.8 0.00

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Key Information

Key Executives:

Munir Shaikh , Chairman  

Rajendra A Shah , Director  

Ashok Dayal , Director  

Ranjan Kapur , Director  


Company Head Office / Quarters:
3-4 Corporate Park,
Sion Trombay Road Chembur,
Mumbai,
Maharashtra-400071
Phone : 91-22-67978888
Fax : 91-22-67978727/8920
E-mail : webmaster@abbott.co.in
Web : http://www.abbott.co.in
Registrars:
Sharepro Services India P Ltd
Samhita Complex
Plot No 13 AB
Saki Naka Andheri(E)
Mumbai-400072

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