Your Directors have pleasure in presenting their Twentieth Annual Report on thebusiness and operations of the Company and the Audited Financial Accounts for the yearended 31st March, 2013.
|Particulars ||2012-13 ||2011-12 |
| ||(Rs. in Lakhs) ||(Rs. in Lakhs) |
|Sales & Operational Income ||17015.04 ||16703.34 |
|Gross Profit /(Loss) before Interest, Depreciation and Tax (PBDIT) ||3596.74 ||4175.69 |
|Less. Depreciation ||996.51 ||1086.09 |
|Gross Profit before Interest and Tax (PBIT) ||2600.23 ||3089.60 |
|Less. Financial charges ||1720.82 ||1954.32 |
|Profit 1 (Loss) before Tax (PBT) ||879.41 ||1135.28 |
|Less Provision for Taxation: Provision for tax ||200.00 ||222.00 |
|Add: MAT credit ||(200.00) ||(222.00) |
|: Short provision for Tax for earlier years ||- ||76.76 |
|: Deferred Tax ||51.97 ||51.97 |
|Net Profit / (Loss) after Tax (PAT) ||827.44 ||1006.55 |
Previous Year's figures have been regrouped/ reclassified wherever necessary to conformto the current year's classification.
In order to conserve available financial resources, your Directors do not recommend anydividend on Equity Shares for the year under review.
YEAR IN RETROSPECT
During the year, the Company has achieved Net Sales and Operational income of Rs.17015.04 Lakhs as against Rs. 16703.34 Lakhs in the previous year, registering an increasein sales by 1.87%. The Company has achieved a Net Profit of Rs.827.44 Lakhs as against Rs.1,006.55 Lakhs during the previous fiscal year.
During the year under review the export turnover amounting to Rs.3716.64 Lakhsconstituted 21.84% of the total turnover vis-a-vis Rs. 5202.26 Lakhs, constituting 31.15%achieved in the previous year.
During the year under review, Capital work in progress amounting to Rs. 1349.07 Lakhswas capitalized and in addition Rs. 492.64 Lakhs was incurred on maintenance capex.
The Company continues with its efforts to maintain highest quality standards andcomplies with various regulations as required by laws for supplies of products to variousterritories. The Company currently has following valid certifications:
The Solapur unit of the Company is cGMP compliant and is USFDA inspected.
CONSOLIDATION AND SHIFTING OF ENTIRE MANUFACTURING OPERATIONS OF THE COMPANY TO THESOLAPUR UNIT AND FUTURE EXPANSION
As a defining step in the cost control and operational optimization exercise, theCompany at its Board meeting held on 9th August, 2013, has decided to shiftcomplete manufacturing operations from the unit at Sadasivpet near Hyderabad to Solapurunit, Maharashtra. The consolidation of operations is expected to yield a considerablesavings in operational cost.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 217 (2AA) of the Companies Act, 1956, theDirectors confirm that:
a) In the preparation of the annual accounts for the year ended 31s' March,2013, the applicable accounting standards have been followed along with proper explanationrelating to material departures;
b) Your Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company as at 31st March, 2013 and of the Profitand Loss Account forthe year ended on that date;
c) Your Directors 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 preventing and detecting fraud and other irregularities; and
d) The accounts for the year ended 31s1 March, 2013 have been prepared on agoing concern basis.
The Company strives to ensure that the best corporate governance policies and practicesare consistently followed. It is the continuous endeavour of the Company to sustain suchcorporate governance standards at all levels through the company. The specific report onCorporate Governance, included in this Annual Report, states the exact nature ofcompliances made by the Company during the year under review. A certificate from Chairmanand Managing Director of the Company, inter alia, confirming the correctness of thefinancial statements, compliance with company's code of conduct, adequacy of internalcontrol measures and reporting of the matters to the Audit Committee in terms of Clause 49of the Listing Agreements entered into by the Company with Stock Exchanges, is alsoenclosed as a part of this Annual Report.
NOTE ON OPERATION OF THE SUBSIDIARY COMPANY IN SINGAPORE
The Company acquired 10% stake from the promoter shareholders to make Regal Pharma Pte.Ltd., a wholly owned subsidiary of Avon Organics Limited. Your company gets assistance inmarketing operations in the overseas market.
CONSOLIDATED FINANCIAL STATEMENT
The Ministry of Corporate affairs vide its General Circular no. 2/2011 dated 8"1February, 2011 has granted a general exemption from appending the balance sheet ofsubsidiary companies to the annual report of the parent company as per Section 212 (8) ofthe Companies Act, 1956. As required under the circular, the Board of Directors of the
Company, has, at its meeting held on 30th May, 2013, passed a resolutionissuing consent for not attaching the Balance Sheet of Subsidiary company to this AnnualReport. Accordingly, the Balance Sheet, Profit & Loss Account and other documents ofthe subsidiary company are not being appended with the Balance Sheet of the Company.
The Company will arrange for the Annual Accounts of the subsidiary company and otherrelevant information in detail, for any shareholder of the Company who may be interestedin obtaining the same.
The consolidated financial statements as prepared in accordance with the requirementsof AS 21 and AS 23 issued by ICAI, and a statement pursuant Section 212 of the CompaniesAct, 1956 are appended to and are forming part of this annual report.
The Board has an optimum combination of Executive and Non-Executive Directors.
As per the requirements of Clause 49 of Listing Agreement, the Non-Executive Chairman,being a Promoter Director of the parent Company, fifty percent of the Board comprises ofIndependent Directors, in compliance with the provisions of Clause 49 of the ListingAgreement.
Details of Directors re-appointed during the year
Mr. Ajit Kamath, Non-Executive Chairman & Managing Director retires by rotation atthe ensuing Annual General Meeting and being eligible, offers himself for re-appointment.
Mr. Manoj Jain, Non-Executive Director retires by rotation at the ensuing AnnualGeneral Meeting and being eligible, offers himself for re-appointment.
Details of Director appointed as Additional Director during the year
Mr. Rajendra Kaimal, appointed as Additional Director at the Meeting of the Board ofDirectors held on 30th May, 2013, is proposed to be confirmed at the Annual GeneralMeeting of the Company.
Brief profiles of the abovementioned Directors are included in a separate Annexureafter the Notice, forming part of this Annual Report.
PARTICULARS OF EMPLOYEES:
The Board of Directors commends the continued dedication of employees at all levels andthe industrial relations continue to be peaceful and cordial. Your Company's dedicated andtalented workforce has enabled it to remain at the forefront of the Industry.
Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars ofEmployees) Rules, 1975 as amended, requires Companies to list out names of the employeesdrawing remuneration of more than Rs. 5 Lakhs per month and/or more than Rs. 60 LakhsPerannum.
However, none of the employees of the Company drew remuneration of Rs. 60 Lakhs orabove per annum and/or Rs. 5 Lakhs or above per month during the year under review.
IWs. Mukesh Mehta & Co., Chartered Accountants, Statutory Auditors of the Company,continue to hold office until conclusion of this Annual General Meeting and arerecommended for re-appointment upto the conclusion of next Annual General Meeting. Interms of Clause 41(1)(h) of the Listing Agreement, the Statutory Auditors of the Companyare subjected to the Peer Review Process of Institute of Chartered Accountants of India(ICAI), and hold a valid certificate issued by Peer Review Board of ICAI.
In compliance with the directives issued by Central Government from time to time and interms of the provisions of Section 233B of the Companies Act, 1956, M/s. D.Z.R. & Co.,Cost Accountants were appointed as Cost Auditors of the Company at the meeting of theBoard of Directors held on 30th May, 2013 for the manufacturing units of the Companylocated at Solapur, Maharashtra and Sadasivpet, Andhra Pradesh, respectively. Acertificate of eligibility has been received from M/s. D.Z. R. &Co., Cost Accountants,to the effect that their appointment is in accordance with the provisions of Section 224(1) ? of the Companies Act, 1956.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information relating to Energy Conservation, Technology Absorption and ForeignExchange Earnings and Outgo as required to be disclosed under Section 217(1) (e) of theCompanies Act, 1956 read with the Companies (Disclosure of Particulars in the Report ofthe Board of Directors) Rules, 1988 are set out as an annexure forming part of thisReport.
During the year under review, the company has neither invited nor received any depositsfrom the public.
The Board of Directors take this opportunity to thank the Financial Institutions,Banks, employees, business associates, suppliers, Stock Exchanges, other regulatoryauthorities and all the stake holders of the Company for valuable sustained support andcooperation in conducting efficient operations of the Company. The Board also places onrecord the sustained management support received from M/s. Arch Pharmalabs Limited, theParent Company.
| ||For and on behalf of the Board |
| ||Sd/- |
|Place: Mumbai ||Ajit Kamath |
|Date: 09.08.2013 ||Chairman & Managing Director |
ANNEXURE - 'A' TO THE DIRECTORS' REPORT
Information under Section 217(1) (e) of the Companies Act, 1956 read with the Companies(Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988
|A. Conservation of Energy: || |
|a. Energy Conservation Measures taken ||: The Company is engaged in continuous process of energy conservation through improved operational and maintenance practices. |
|b. Total energy consumption per unit of Production ||: Details are furnished in Form A |
|B. Technology absorption ||: Details are furnished in Form ? |
?. Foreign Exchange Earnings and Outgo
| ||2012-2013 ||2011-2012 |
|1. Foreign Exchange Earnings (Rs. In Lacs) ||3716.64 ||5202.26 |
|2. Foreign Exchange outgo (Rs.in Lacs) ||1613.67 ||1250.04 |
|3. Net Foreign Exchange Earnings (Rs. In Lacs) ||2102.97 ||3952.22 |
Form for disclosure of particulars with respect to conservation of energy.
| ||2012-2013 ||2011-2012 |
|A. POWER AND FUEL CONSUMPTION: || || |
|1. ELECTRICITY: || || |
|a. Purchased Units: ||6422148 ||8816645 |
|Amount (Rs. In lacs) ||466.28 ||487.78 |
|Rate/Unit (Rs.) ||7.26 ||5.53 |
|b. Own Generation: || || |
|Through D. G. Set Units ||262155 ||837074 |
|Amount (Rs. In lacs) ||40.85 ||121.21 |
|Rate/Unit (Rs.) ||15.58 ||14.48 |
|2. FURNACE & BOILER (Rs. In lacs) ||345.18 ||570.86 |
|B. CONSUMPTION PER UNIT OF PRODUCTION: || || |
|Electricity (Unit/MT)(Rs.) ||392076 ||204565 |
|Furnace & Boiler (Unit /??) (Rs.) ||266868 ||191757 |
A. RESEARCH AND DEVELOPMENT:
1. Specific areas in which R&D was carried out.
CEFDINIR intermediate - Laboratory trials are completed and are ready to be implementedin plant.
2. Benefits derived from above R&D.
CEFDINIR intermediate is being considered for production at a commercial level.
3. Future plan of action.
To achieve maximum production of DEAA (Di ethyl aceto acetamide) and CEFDINIRintermediate.
4. Expenditure on R & D:
| || ||(Rs. In lacs) |
| ||2012-13 ||2011-12 |
|Revenue Expenditure ||32.93 ||39.17 |
|% to Turnover ||0.19% ||0.23% |
B. TECHNOLOGY ABSORPTION:
|1. Efforts in brief made towards technology absorption ||Consistent efforts made towards achieving the required quality of Pseudoephedrine Hydrochloride. |
|2. Benefits derived as a result of the above efforts, e.g. product improvement, cost reduction, product development, import substitution etc. ||Cost reduction in Pseudoephedrine Hydrochloride. |
|3. In case of imported technology (import during the last 5 years reckoned from the beginning of the year); following information may be furnished || |
|a Technology imported ||Nil |
|b Year of import ||Not Applicable |
|? Has technology been fully absorbed ||Not Applicable |