DIRECTORSYour Directors have pleasure in presenting the Twenty-Second Annual Report togetherwith the Audited Accounts of the Company for the year ended on 31st March, 2010.
FINANCIAL HIGHLIGHTS:
| | (Rs. in Lacs) |
| For the Year ended on 31.03.2010 | For the 6 months period ended on 31.03.2009 |
| Turnover | 35,475.00 | 17,196.76 |
| Less: Excise Duty & Sales Tax | 364.18 | 431.20 |
| Net Sales | 35,110.82 | 16,765.56 |
| Other Income | 2,476.65 | 439.67 |
| Total Income | 37,587.47 | 17,205.23 |
| Total Expenditure | 34,433.24 | 20,308.56 |
| Profit / (Loss) before Taxation | 3,154.23 | (3,103.33) |
| Provision for Taxation: | | |
| - Current Tax | 573.77 | 0.58 |
| - Mat Credit Entitlement | (536.06) | - |
| - Fringe Benefit Tax | - | 28.52 |
| - Income Tax of earlier years | 124.37 | (3.93) |
| Net Profit after Tax | 2,992.15 | (3,128.50) |
| Balance b/f from Previous Year | 3,110.82 | 6,239.33 |
| Amount available for Appropriation | 6,102.97 | 3,110.83 |
| APPROPRIATION | | |
| Proposed Dividend | 146.89 | - |
| Tax on Dividend | 24.40 | - |
| Short Provision of Dividend of Earlier Year | - | 0.01 |
| Balance Carried to Balance Sheet | 5,931.68 | 3,110.82 |
OPERATIONAL REVIEW:
The figures given above are not strictly comparable because the current financial yearcovers12 months against the previous financial year of 6 months. However the highlightsare as under:
The Total Income for the financial year under review was Rs. 37,587.47 Lac as againstRs. 17,205.23 Lac in the previous year. The Total Expenditure was Rs. 34,433.24 Lac asagainst Rs. 20,308.56 Lac.
The Profit before Tax for the Financial Year under review was Rs.3,154.23 Lac asagainst a loss of Rs.3,103.33 Lac.
The Profit after Tax for the Financial Year under review was Rs.2,992.15 Lac as againsta loss of Rs.3,128.50 Lac.
Exports of the Company during the year under review were Rs. 13,938.84 Lac and were Rs.8,750.60 Lac for the 6 Months period ended as on 31st March, 2009. The Company has beenexporting its products to approx. 50 Countries.
DIVIDEND
Your Company’s Directors are pleased to recommend dividend @ 10 % i.e. Rs. 1/- perequity share for the year ended on 31st
March, 2010. Total cash outflow on account of dividend payment will be Rs. 146.89 Lacexcluding dividend tax. If the shareholders of the Company approve the proposed dividendin their forthcoming Annual General Meeting, the same will be paid to the eligibleshareholders after 12th August, 2010.
MERGER OF THE PHARMACEUTICAL PRODUCTS OF INDIA LIMITED (PPIL) WITH THE COMPANY:
The Hon’ble Board for Industrial and Financial Reconstruction (BIFR) isconsidering the Rehabilitation and Revival cum Merger of the Pharmaceutical Products ofIndia Limited (PPIL) with the Company afresh, pursuant to the Order of Hon’bleSupreme Court of India dated 16th May, 2008.
The PPIL has submitted proposal for rehabilitation cum merger of PPIL with WanburyLimited, with Operating Agency, IDBI and after considering the same in the joint meetingof all concern, Operating Agency, IDBI has submitted "Draft RehabilitationProposal" with Hon’ble BIFR for their consideration. The Hon’ble BIFR isconsidering the "Draft Rehabilitation Proposal" submitted by the IDBI, OperatingAgency and we expect that the "Draft Rehabilitation Proposal" will be circulatedby Hon’ble BIFR shortly for the consideration of the all concerns.
FOREIGN CURRENCY CONVERTIBLE BONDS ISSUE:
Your Company had issued Foreign Currency Convertible Bonds (FCCB) aggregating EURO 15Million (EURO Fifteen Million only) on 20th April, 2007, in two parts. First part consistsof 800 nos. Foreign Currency Convertible "A" Bonds {FCCB(A)} of face value ofEURO 10,000 each i.e. size of Bond A was EURO 8 Million and second part consists of 700nos. Foreign Currency Convertible "B" Bonds {FCCB(B)} of face value of EURO10,000 each i.e. size of Bond B was EURO 7 Million, in accordance with the terms andconditions mentioned in the offering circular dated 25th April, 2007.
During the year under review the Company has not received any application forconversion of FCCB into equity shares of the Company. However till date 5,29,085 fullypaid equity shares of face value of Rs. 10/- each have been issued at a conversion priceof Rs. 138.43 per equity share upon conversion of 128 Foreign Currency Convertible A Bondsof face value of EURO 10,000 each. During the year the Company has bought back 424 ForeignCurrency Convertible "A" Bonds of face value of EURO 10,000 each at 90% of theirface value.
The book value of 424 Foreign Currency Convertible "A" Bonds bought back bythe Company was approx. EURO 5.07 Million, which were bought back by the Company at EURO3.82 Million. Your Company has saved EURO 1.25 Million i.e. approx. Rs. 8.40 Crore bybuying back of aforesaid FCCB.
Total numbers of FCCB(A) outstanding as on 31st March, 2010 were 248 and Total No. ofFCCB(B) outstanding as on 31st March, 2010 were 700.
SUBSIDIARY COMPANIES
The Company does not have a non listed Indian subsidiary.
However, the Company had 5 foreign subsidiaries as on 31st March, 2010. Members maykindly refer to the Statement pursuant to the provisions of Section 212 (1) (e) of theCompanies Act, 1956 and information on the financials of the subsidiary companies appendedthereto, which forms part of this Annual Report. In Compliance with Clause 32 of ListingAgreement, audited consolidated financial statements also form part of this Annual Report.
Pursuant to the exemption given by the Central Government, Ministry of CorporateAffairs, vide its Order dated 6th April, 2010, the Company is not attaching along with itsAnnual Report, detailed financial statement of accounts comprising of Balance Sheet,Profit & Loss Account, reports of Directors & the Auditors and other informationof its subsidiary companies.
Any Shareholder interested in obtaining the Balance Sheet, Profit & Loss Account,Directors’ Report and Auditors’ Report of the subsidiaries of the Company maywrite to the Company Secretary at the Registered Office of the Company.
DIRECTORS:
Mr. K. Chandran and Mr. N. K. Puri Directors of the Company retire by rotation at theensuing Annual General Meeting and being eligible offers themselves for re-appointment.Your Directors recommend their re-appointment.
Your Company has terminated the appointment of Dr. Rajaram Samant as Whole TimeDirector of the Company w.e.f. 20th May, 2010. The Company also has received a specialnotice from a shareholder of the Company to remove Dr. Rajaram Samant as Director of theCompany. The Shareholders are requested to refer Notice of Annual General Meeting for moredetails.
PERSONNEL:
Statement of particulars of employees required under Section 217 (2A) of the CompaniesAct, 1956 read with Companies (Particulars of Employees) Rules, 1975, forms part of thisreport. However, in terms of the provisions of Section 219 (1) (b) (iv) of the CompaniesAct, 1956, the Report and the Accounts are being sent to all shareholders of the Companyexcluding the aforesaid statement of particulars of employees. Any Shareholder interestedin obtaining a copy of the statement may write to the Company Secretary at the RegisteredOffice of the Company.
None of the employee of the Company holds (by himself / herself or along with his / herspouse and dependent children) more than 2% of the Paid-up Equity Share Capital of theCompany.
AUDITORS AND AUDITORS’ REPORT:
M/s. Kapoor & Parekh Associates, Chartered Accountant, retire as Auditor of theCompany at the conclusion of the ensuing Annual General Meeting and have confirmed theireligibility and willingness to accept the office of the Auditors, if re-appointed. YourBoard recommends their re-appointment.
M/s. Brahmayya & Co., Chartered Accountants, Vijayawada, retire as Branch Auditorsof the Company at the conclusion of ensuing Annual General Meeting and have confirmedtheir eligibility and willingness to accept the office of the Branch Auditor, to audit theaccounts of the Company’s Plant situated at Tanaku, West Godavari District, AndhraPradesh, if re-appointed. Your Board recommends their re-appointment.
The observations made in the Auditors’ Report read together with relevant notesthereon are self explanatory & explained in Notes to Accounts and hence do not call,any further comments under Section 217 of the Companies Act, 1956.
COST AUDITOR:
The report of Mr. Hemant V. Shah, Cost Accountant, in respect of audit of cost accountsfor bulk drug business of the Company for the year ended on 31st March, 2010, will besubmitted to the Central Government in due course.
The Board of Directors of the Company has approved the appointment of Mr. Hemant V.Shah, Cost Accountant in respect of audit of cost accounts for bulk drug business of theCompany for the financial year 2010-2011 i.e. from 1st April, 2010 to 31st March 2011. Anapplication for the approval of Central Government has been made towards the appointmentof Mr. Hemant V. Shah as Cost Auditor for the financial year 2010-2011.
FIXED DEPOSITS:
The Company has not invited / accepted / renewed any fixed deposits as per theprovisions of Section 58 A of the Companies Act, 1956 from the public during the yearunder review.
CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION & ANALYSIS REPORT:
Report on Corporate Governance along with Auditors’ Certificate, confirmingcompliance of the conditions of Corporate Governance as stipulated under Clause 49 of theListing Agreement with the Stock Exchanges forms part of the Annual Report.
Management Discussion and Analysis Report as stipulated under Clause 49 of the ListingAgreement with the Stock Exchanges also forms part of the Annual Report.
DIRECTORS’ RESPONSIBILITY STATEMENT:
In terms of Section 217 (2AA) of the Companies Act, 1956, the directors of the Companywould like to state that: i) In the preparation of the Accounts, the applicable accountingstandards have been followed along with proper explanation relating to materialdepartures; ii) The Directors have selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of theFinancial Year and of the Profit of the Company for the period. iii) The Directors havetaken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities; iv) The Directors haveprepared the Accounts on a going concern basis.
CONSERVATION OF ENERGY, ABSORPTION OF TECHNOLOGY & FOREIGN EXCHANGE EARNINGS ANDOUTGO:
Information relating to Conservation of Energy, Technology Absorption and ForeignExchange Earning and Outgo as stipulated under Section 217 (1) (e) of the Companies Act,1956 read with the Companies (Disclosure of Particulars in the Report of Board ofDirectors) Rules, 1988 is set out in the separate statement, attached to this report &forms part of it.
ACKNOWLEDGEMENTS:
Your Company and its Directors wish to extend their sincere thanks to the Bankers,Central & State Government, Customers, Suppliers, Stakeholders and Staff for theircontinuous co-operation & guidance and also expect the same in the future.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
| K. CHANDRAN | K. R. N. MOORTHY |
| Vice Chairman | Joint Managing Director |
| Mumbai, 28th May, 2010 | | |
ANNEXURE TO DIRECTORS’ REPORT
Information in terms of Section 217 (1) (e) of the Companies Act, 1956 read with theCompanies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988.
(1) (A) CONSERVATION OF ENERGY
Company has taken below mentioned measures for conservation of energy during the yearunder review: -
(1) The Company has installed multiple effect evaporator of the capacity 75,000 Litreper day at Manufacturing Site, Tanaku. It has reduced the consumption of steam by approx.80% as it has very high steam economy 4.16 (per kg water / per kg steam) in comparison to0.80 in conventional water evaporation system.
(2) The Company has optimized process conditions of Metformin, which are giving approx.30% power saving (0.65 KWh now against 0.93 KWh earlier) and approx. 34% Furnace Oilsaving (0.45 Kg now against 0.68 Kg earlier) on per kg of Metformin production.
(3) The Company has implemented condensate water recycling in the boiler atManufacturing Site, Tarapur, which is giving saving of 4.50% of fuel. The condensate waterrecycling in the boiler is being planned at Manufacturing Site, Patalganga and Tanaku.
INFORMATION AS PER PRESCRIBED FORM A:
| For the Year ended on 31.03.2010 | For the 6 months period ended on 31.03.2009 |
| 1. Electricity | | |
| (a) Purchased | | |
| Unit (KWH) | 12,260,269 | 5,828,723 |
| Total Amount (in Rupees) | 49,688,863 | 23,378,280 |
| Rate / Unit (in Rupees) | 4.05 | 4.01 |
| (b) Own Generation | | |
| Unit (KWH) | 1,037,864 | 566,775 |
| Total Amount (in Rupees) | 12,602,047 | 6,669,581 |
| Rate / Unit (in Rupees) | 12.14 | 11.77 |
| 2. Furnace Oil & LDO | | |
| Quantity (Litres) | 2,712,893 | 1,473,829 |
| Total Amount (in Rupees) | 55,134,000 | 26,622,235 |
| Average Rate (Rs. per Litre) | 20.32 | 18.06 |
| 3. Coal | | |
| Quantity (MT) | 4,301 | 2,041 |
| Total Amount (in Rupees) | 17,385,420 | 7,208,507 |
| Average Rate (Rs. per MT) | 4,041.83 | 3,531.23 |
(B) CONSUMPTION PER UNIT OF PRODUCTION
The Company manufactures APIs having varied product cycles. It is therefore,impractical to apportion the consumption and cost of utilities to each product.
NOTE: There are no specific standards, as the consumption per unit depends upon theproduct mix. Variations in consumption are due to different product mix.
(2) ABSORPTION OF TECHNOLOGY AND RESEARCH & DEVELOPMENT
API DIVISION
Research and Development (R & D) Centre has improved its strength to a team of over40 scientists, who continue to offer dedicated services for R&D projects such asProcess Research, Contract Research & Manufacturing (CRAMS) etc.
During the year, the R & D Center of your Company has developed lab scale processesfor 6 Active Pharmaceutical Ingredients (APIs), completed four cost reduction projects andCRAMs (12 Nos.). In addition to this Drug Master File (DMF) for 2 APIs in US and CommonTechnical Document (CTD) for 2 APIs in Europe have been filed.
The synthesis of APIs today is governed by stringent norms as the process chemistryemployed needs to be cost effective, hazard-free, non-infringing, adhering toPharmacopoeia quality and eco-friendly. R&D Centre has successfully improved theprocess through backward integration for its key API wherein nearly a 10 % cost reductionhas been achieved. It has also improved the yields of another key API of your Company by10%, there-by not only reducing the cost but also minimizing the ecological load.
Our CRAMs business is about customized solutions – providing advanceintermediates, fine chemicals and API to our customers after understanding theirrequirements. Your Company has a very strong pipeline with more than 30 products and 8 outof these have already been on lab development and 10 ready for plant scale.
FORMULATION DIVISION
R&D Centre is working with Canadian Company to develop four ANDA’s for theCanadian market.
R&D Centre has also started work on 4 novel fixed dose combinations and Novel DrugDelivery Systems (NDDS) projects for domestic market.
Many new products with novel technology or compositions have been developed. One suchtechnology of quick release formulation of Lornoxicam has been launched (Lornoxicam isanalgesic drug, normally it starts action after 1 to 2 hours but through quick releasetechnology it starts action only after 15 minutes). Also the formulation having quickrelease part & sustained release part for Lornoxicam has been launched as uniqueBilayered Tablet. Further 2 more Novel formulations have been developed and are awaitinglaunch.
R&D Centre has developed sustained release Direct Compressible Granules (DCGranules) ready for compression of Metformin. The formulation is being supplied toDomestic market and is also exported to Semi Regulated markets.
Meanwhile research work continues in the field of Novel Drug Delivery Systems and manynew concepts are on an exploratory stage.
| Expenditure on R&D | (Rs. in Lacs) |
| Capital | 28.33 |
| Recurring | 576.87 |
| Total | 605.20 |
| Total R&D expenditure as a percentage of net sales | 1.72% |
(3) FOREIGN EXCHANGE EARNINGS AND OUTGO:
| | (Rs. In Lacs) |
| For the Year ended on 31.03.2010 | For the 6 months period ended on 31.03.2009 |
| INCOME: | | |
| Foreign Exchange earned by the Company: | | |
| F.O.B. Value of Exports. | 13,731.94 | 8,642.36 |
| Freight, Insurance etc. | 206.90 | 108.24 |
| Fixed Deposit Interest | - | 0.71 |
| Others | 6.72 | - |
| Total Income | 13,945.56 | 8,751.31 |
| EXPENDITURE: | | |
| C.I.F. Value of Imports | | |
| Raw Material (including High Seas purchases) | 3,243.73 | 2,061.65 |
| Capital Goods | 22.48 | 18.15 |
| Interest | 286.60 | 158.45 |
| Commission Paid | 129.03 | 34.37 |
| Legal & Professional Fees | 92.87 | 27.29 |
| Travelling & Other Expenses | 400.69 | 142.66 |
| Total Expenditure | 4,175.40 | 2,442.57 |
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
| K. CHANDRAN | K. R. N. MOORTHY |
| Vice Chairman | Joint Managing Director |
| Mumbai, 28th May, 2010 | | |