fulford india ltd Directors report

The Directors hereby present the Seventy-First Annual Report together with the Audited Financial Statements of the Company for the Financial Year ended March 31, 2019.

FINANCIAL SUMMARY

(INR in Million)

	Standalone		Consolidated
	April 1, 2018 to March 31, 2019	April 1, 2017 to March 31, 2018	April 1, 2018 to March 31, 2019	April 1, 2017 to March 31, 2018
Sales (Net)	997	1231	997	1231
Other Income	190	70	190	70
Total Income	1187	1301	1187	1301
Profit before tax	395	290	395	290
Less: Tax Expense
(Current Tax & Deferred Tax) - Net	117	112	117	112
Profit after Tax	278	178	278	178
Balance in Profit & Loss Account	589	416	589	416
Amount available for appropriation	867	594	867	594
Out of which the following sums have been appropriated:
Final Dividend	3.9	3.9	3.9	3.9
Corporate Tax on Dividend	0.8	0.8	0.8	0.8
General Reserve		—		—
Balance carried to Balance Sheet	862	589	862	589

DIVIDEND

The Board of Directors has recommended a dividend of INR 1/- per equity share of INR 10/- each on 39,00,000 shares. The dividend payment if approved by the shareholders ("Members") at the ensuing Annual General Meeting would beINR 4,701,840/- including dividend distribution tax.

TRANSFER TO RESERVES

No amount was transferred to the General Reserve during the year.

TOTAL INCOME

Your Companys total income during the year reduced to INR 1187 million from INR 1301 million in the previous Financial Year, at a negative growth rate of 8.76%.

PROFIT/LOSS

The operating profit before depreciation amounted to INR 398 million (33.53% of revenue) as against profit of INR 294 million (22.60% of revenue) in the previous Financial Year. The net profit after tax was INR 278 million (23.41% of revenue) as against profit of INR 178 million (13.70% of revenue) in the previous Financial Year.

LIQUIDITY

Your Company continues to be debt-free and maintain sufficient cash to meet its objectives. As on March 31, 2019, we had cash and bank balance of INR 1,259 million as against INR 1,118 million in the previous Financial Year.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

An amount of INR 1,18,374/- (Rupees One Lakh Eighteen Thousand Three Hundred Seventy-Four) lying to the credit of the Companys Unpaid Dividend Account 2011 was transferred to Investor Education and Protection Fund ("IEPF") in the month of June 2019.

In accordance with the provisions of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, as amended ("IEPF Rules"), 3170 equity shares of INR 10 each held by 38 shareholders were transferred to the Demat Account of Investor Education and Protection Fund Authority ("IEPF Account") during the year 2018-19. 403 equity shares held by 9 shareholders were transferred to IEPF Account pursuant to the provisions of IEPF Rules in the month of July 2019. The shares transferred to the IEPF Account including all the benefits accruing on such shares, if any, can be claimed from the IEPF Authority by following the procedure prescribed under IEPF Rules.

CHANGE IN THE NATURE OF BUSINESS

There was no change in Business of the Company during the year under review.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, 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 THE REPORT

During the year, there are 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 the report.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE

During the period under review, there are no orders passed by the regulators or courts or tribunals against the Company impacting its status as a going concern and its operations.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

Compliance with integrity is a core value of your Company. Your Company has been following a comprehensive internal control system and has well defined Standard Operating Procedures and Policies for identifying and mitigating the risk across various divisions within the Company. The Companys funds/ expenses are effectively regulated by appropriate Grants of Authority Policy. The Grant of Authority based execution management ensures compliance with the aforesaid procedures and policies on an ongoing basis in the operations of your Company.

Your Company has designed such internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and preparation of the financial statements for external purposes in accordance with Generally Accepted Accounting Principles (GAAP) in India.

An external agency conducts the Internal Audit Program for the Company, covering all key areas on periodic basis in order to assess and ensure conformity to applicable laws, Accounting Standards, Companys Policies and protection of the Companys assets and interest. This audit is supplemented by an internal global audit which is conducted as a part of the internal compliance program. There were no deficiencies in the design or operation of internal controls, that could adversely affect the Companys ability to record, process, summarize and report financial data, and there have been no material weaknesses in internal controls over financial reporting including any corrective actions with regard to deficiencies. There were no significant changes in internal controls during the year.

Further, the Audit Committee appointed by the Board of Directors of your Company reviews the findings and recommendations of internal auditors as well as the auditors appointed by the Members. It also reviews the action plan to identify and address areas of improvement, thereby focusing on strengthening the system.

DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES

The Company has a wholly owned subsidiary company viz., Schering-Plough (India) Private Limited as on March 31, 2019.

The Statement containing the salient features of the financial statements of subsidiary company, in the prescribed Form AOC 1 is appended as Annexure 1 to the Directors Report. The Annual Accounts for the year ended March 31, 2019 as also the Auditors Report in respect of Schering-Plough (India) Private Limited are attached to the Accounts of the Company and forming part of this Annual Report. The consolidated financial statements of the Company with its subsidiary are also enclosed.

FIXED DEPOSITS

The Company has not accepted any deposits from the public within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.

RISK MANAGEMENT

The Company has in place, risk assessment and mitigation procedures which are periodically reviewed by the Audit Committee and the Board of Directors of the Company. These procedures ensure that Management controls risk through an efficiently defined framework.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

The particulars of loans, guarantees and investments have been disclosed in the standalone financial statements.

TRANSACTIONS WITH RELATED PARTIES

All related party transactions are reported to and approved by the Audit Committee and the Board of Directors in accordance with the provisions of the Companies Act, 2013. All related party transactions entered into by the Company during the Financial Year were at an arms length and were so entered in the ordinary course of business of the Company and were accordingly approved by the Board of Directors. The Board has adopted a policy on related party transactions which is available on the Companys website at: www.fulfordindia.com All details of the related party transactions entered into by the Company during the year are provided in Form AOC-2 appended as Annexure 2 to this report.

OPERATIONAL PERFORMANCE

Your Company recorded sales of INR 937 million with a decline of 18.98% during the year ended March 31, 2019 as compared to the last year. The sales decline was on account of non-availability of two finished products for large part of the year along with decline in the dermatology market. The supply challenges faced by your Company have been successfully resolved now and normal supplies are restored for existing products. Your Company has earned a profit of INR 278 million during the year ended March 31, 2019 as compared to profit of INR 179 million during last year. The profits have improved due to robust expense management and improved cost efficiencies.

STATUTORY AUDITORS

Lovelock & Lewes, Chartered Accountants (Firm Registration No.: 301056E) were appointed as Statutory Auditors to hold office for a period of five years which commenced from the Financial Year 2015-16 at the Annual General Meeting of the Company held on August 10, 2015 ("said AGM"), subject to ratification of appointment by Members at every Annual General Meeting ("AGM") held after the said AGM.

However, pursuant to the notification dated May 7, 2018 issued by the Ministry of Corporate Affairs, the appointment of Statutory Auditors is not mandated to be ratified at every AGM. A resolution for the ratification of term of appointment of Statutory Auditors is accordingly not considered in the Notice of AGM.

Lovelock & Lewes, Chartered Accountants continues as Statutory Auditors till the conclusion of the next AGM for the Financial Year ended March 31, 2020 at such remuneration as may be mutually agreed between the Board of Directors of the Company and Lovelock & Lewes.

AUDITORS REPORT

There are no qualifications, reservations, adverse remarks and disclaimers in the Audit Report issued by the Statutory Auditors of the Company.

SECRETARIAL AUDIT REPORT

A requirement of attaching Secretarial Audit Report with the Boards Report is not applicable to your Company as your Company is not falling within the criteria prescribed by the provisions of Section 204 of the Companies Act, 2013 as well as Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, 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) the directors had 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 of the Company for that period; (c) the directors had 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) the directors had prepared the annual accounts on a going concern basis; and (e) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

SECRETARIAL STANDARDS

The Board of Directors state that the applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to ‘Meetings of the Board of Directors and ‘General Meetings, respectively, have been duly followed by the Company.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Vivek Vasudev Kamath, has tendered his resignation from the office of Managing Director of the Company followed by his resignation from the services of the Company, effective end of August 31, 2019. The resignation was accepted by the Nomination and Remuneration Committee Meeting and the Board of Directors. Pursuant to the provisions of Section 149 of the Companies Act, 2013, which came into force on April 1, 2014, Dr. Ajit Dangi was appointed as an Independent Director for five (5) consecutive years at the Annual General Meeting of the Company held on August 7, 2014. Dr. Ajit Dangi accordingly got retired as the Chairman and Independent Director of the Company effective April 1, 2019.

The Board of Directors took note of the resignation of Mr. Vivek Vasudev Kamath as the Managing Director as well as the retirement of Dr. Ajit Dangi as the Chairman and Independent Director of the Company with deep regret and expressed its sincere appreciation and gratitude for the valuable contribution made by them during their respective tenures. Pursuant to the provisions of Section 149 of the Companies Act, 2013, Mr. Pramod Lele was appointed as an Independent Director for five (5) consecutive years at the Annual General Meeting of the Company held on September 25, 2017. His term of appointment is valid up to August 17, 2022.

The Board of Directors of the Company appointed Mrs. Latika Pradhan as an Additional Independent Director of the Company w.e.f. August 14, 2019 subject to approval of Members at the ensuing Annual General Meeting of the Company.

Mrs. Pradhan is a qualified Chartered Accountant, Cost and Management Accountant, Company Secretary and Bachelor of Laws having over three decades of rich experience across various industries, heading Finance, Legal & Secretarial, Internal Audit and Information Technology functions. Mrs. Pradhan is currently serving as an Independent Director on the Board of Mafatlal Industries Limited and Teamlease Services Limited. In the past, she has been associated with Voltas Limited, Blue Star Limited, Cummins Group, Park-Davis India Limited and Pidilite Industries Limited in various capacities.

The Board welcomes Mrs. Latika Pradhan and is confident that she will help bring energy and enthusiasm to the Companys operations and under her valuable guidance, the Company will benefit immensely.

Terms and conditions of appointment of Independent Directors are as per Schedule IV of the Companies Act, 2013. Independent Directors have submitted a declaration that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and there has been no change in the circumstances which may affect their status as Independent Director during the year.

Pursuant to Article 110 of the Articles of Association of the Company, Mr. Sameer Tamhane, Mr. Muralidhar Karanam and Mr. Rajesh Tendolkar retire and being eligible, offer themselves for re-appointment at the ensuing Annual General Meeting of the Company.

POLICY ON PREVENTION OF SEXUAL HARASSMENT

The Company has in place a policy on ‘Prevention and Redressal of Sexual Harassment at Workplace, which is in line with the requirements of law on ‘The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013.

The Company has complied with the provisions relating to the constitution of Internal Committee under ‘The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013 for redressal of complaints pertaining to sexual harassment. During the year under review, no complaints were received.

PROCESS OF AGENDA CIRCULATION

A detailed agenda for the meeting of the Board of Directors and its Committees is usually prepared and circulated in electronic form to the Board of Directors.

BOARD OF DIRECTORS

The Board has a balanced composition, with representation of relevant areas of experience, types of expertise and backgrounds. The Board has an optimal constitution of executive, non-executive and Independent Directors having an in-depth knowledge of the pharmaceutical industry with expertise in their respective areas of specialization.

• The Board meets at regular intervals to review the performance of the Company. During the year ended March 31, 2019, five Board Meetings were held on June 19, 2018, August 7, 2018, August 21, 2018, December 17, 2018 and March 22, 2019.

• Attendance at the Board Meeting:

Name of Director	Number of meetingsentitled to attend	Number ofmeetings attended
1. Dr. Ajit Dangi	5	5
2. Mr. Pramod Lele	5	5
3. Mr. Vivek Vasudev Kamath	5	5
4. Ms. Hwee Ping Chua*	1	0
5. Mr. Sameer Tamhane	5	5
6. Mr. Rajesh Tendolkar	5	5
7. Mr. Muralidhar Karanam**	3	3

* Resigned w.e.f. August 7, 2018

** Ceased to be an Alternate Director to Ms. Hwee Ping Chua effective August 7, 2018 and appointed as an Additional Director effective August 21, 2018

BOARD EVALUATION

A separate meeting of Independent Directors was held on December 17, 2018 to evaluate the performance of Non-Independent Directors and the Board of Directors as a whole. Evaluation was done on the basis of attendance, quality of discussion in the meetings, content and timeliness of flow of information between the Management and the Board that is necessary for the Board to effectively and reasonably perform its duties.

The meeting was attended by Dr. Ajit Dangi and Mr. Pramod Lele.

AUDIT COMMITTEE

The Board has constituted an Audit Committee of qualified and competent members, in compliance with Section 177 of the Companies Act, 2013. The following directors were serving on Audit Committee of the Board of Directors as on March 31, 2019: (1) Mr. Pramod Lele, Chairman (2) Dr. Ajit Dangi, Alternate Chairman (3) Mr. Vivek Vasudev Kamath The Statutory Auditors and Internal Auditors are invitees at the Audit Committee Meetings. Finance Head and Legal & Compliance Head are also invitees at the Audit Committee Meetings. During the Financial Year 2018-19, four Audit Committee Meetings were held on June 19, 2018, August 7, 2018, December 17, 2018 and March 22, 2019.

• Attendance at the Audit Committee Meetings:

Name of Director	Number of meetings entitled to attend	Number of meetings attended
1. Mr. Pramod Lele	4	4
2. Dr. Ajit Dangi	4	4
3. Mr. Vivek Vasudev Kamath	4	4

NOMINATION AND REMUNERATION COMMITTEE

The Board has constituted a Nomination and Remuneration Committee to consider the criteria regarding qualification and appointment of directors and senior management personnel and such other matters as are provided in Section 178 of the Companies Act, 2013. The following directors were serving on Nomination and Remuneration Committee of the Board of Directors as on March 31, 2019: (1) Mr. Pramod Lele, Chairman (2) Dr. Ajit Dangi (3) Mr. Sameer Tamhane During the Financial Year 2018-19, three meetings of the Nomination and Remuneration Committee were held on June 19, 2018, August 21, 2018 and March 22, 2019.

• Attendance at the Nomination and Remuneration Committee Meetings:

Name of Director	Number of meetings entitled to attend	Number of meetings attended
1. Mr. Pramod Lele	3	3
2. Dr. Ajit Dangi	3	3
3. Mr. Sameer Tamhane	3	3

POLICY ON REMUNERATION

Companys group Compensation Philosophy emphasizes on being competitive with other top - tier organizations in the market, ensuring consistency in earning levels and potential within the Organization and providing a comprehensive package of compensation and benefits that support the needs of its business and its employees.

COMPENSATION PROCESS

The compensation decisions are driven by the Companys overall group Compensation Philosophy. Robust internal systems, tools and processes are used to make pay decisions which are aligned to group compensation policy.

INVESTOR GRIEVANCE AND STAKEHOLDERS RELATIONSHIP COMMITTEE

The Board of Directors has formed the Investors Grievance and Stakeholders Relationship Committee ("IGSR Committee") to look into and ensure redressal of shareholders and investors grievance. The following directors were serving on IGSR Committee of the Board of Directors as on March 31, 2019: (1) Dr. Ajit Dangi, Chairman (2) Mr. Pramod Lele (3) Mr. Vivek Vasudev Kamath During the Financial Year 2018-19, a meeting of IGSR Committee was held on December 17, 2018.

• Attendance at the IGSR Committee Meeting:

Name of Director	Number of meetings entitled to attend	Number of meetings attended
1. Dr. Ajit Dangi	1	1
2. Mr. Pramod Lele	1	1
3. Mr. Vivek Vasudev Kamath	1	1

The Company and its Registrar and Share Transfer Agents (RTA) are making conscious attempts to ensure expeditious redressal of shareholders grievances. Members can address their requests/grievances to the Company at micompliance@merck.com and to its RTA at rnt.helpdesk@linkintime.co.in. Members can also contact our RTA on 022 49186270 in this connection.

SHARE TRANSFER COMMITTEE

In addition to the above, the Board has also formed a Share Transfer Committee. The following directors were serving on Share Transfer Committee of the Board of Directors as on March 31, 2019: (1) Dr. Ajit Dangi, Chairman (2) Mr. Pramod Lele (3) Mr. Vivek Vasudev Kamath A Power of Attorney has been issued to Link Intime India Private Limited, the Registrar and Share Transfer Agents of the Company ("RTA") to deal with matters relating to transfer/transmission/transposition/ consolidation/ split of Folios/issue of Share Certificates in exchange for sub-divided/consolidated/defaced Share Certificates/ re-materialization/issue of duplicate Share Certificates/unclaimed shares etc. The Committee takes a note of the above matters taken care of by the RTA at a regular interval.

The Board of Directors note the Minutes of the Share Transfer Committee Meetings at subsequent Board Meetings.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE:

Pursuant to the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility) Rules 2014, as amended ("CSR Rules"), the Company has constituted a Corporate Social Responsibility Committee ("CSR Committee") and has adopted a CSR Policy. The following directors were serving on CSR Committee of the Board of Directors as on March 31, 2019: (1) Dr. Ajit Dangi, Chairman (2) Mr. Pramod Lele (3) Mr. Vivek Vasudev Kamath

During the Financial Year 2018-19, a meeting of the CSR Committee was held on March 22, 2019.

• Attendance at the CSR Committee Meeting:

Name of Director	Number of meetings entitled to attend	Number of meetings attended
1. Dr. Ajit Dangi	1	1
2. Mr. Pramod Lele	1	1
3. Mr. Vivek Vasudev Kamath	1	1

In accordance with the provisions of the Companies Act, 2013 read with CSR Rules, the Company was required to spend INR 24,36,400/- (Rupees Twenty Four Lakhs Thirty Six Thousand Four Hundred only) on CSR activities. The Company contributed INR 24,36,400/- (Rupees Twenty Four Lakhs Thirty Six Thousand Four Hundred only) to Swachh Bharat Kosh launched by Government of India, during Financial Year 2018-19. A brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure 3 of the report in the format prescribed in the CSR Rules. The policy is available on the website of the Company at www.fulfordindia.com In addition to above, your Companys parent Company ("Parent Company") is committed to doing well for the community at large and has implemented the following projects in India:

MSD for Mothers in India

MSD for Mothers is MSDs $500 million global initiative to create a world where no woman has to die giving life. The Parent Company is working in 48 countries with 160+ partners to deploy MSDs business and scientific expertise to improve the lives of millions of women. The Parent Company is seeing impressive progress and results globally. To date, MSD for Mothers has improved access to quality maternal healthcare and modern contraceptive services for more than 9 million women around the world. They are testing models that empower women to seek quality care, enable health providers to deliver comprehensive care and strengthen health systems so that they are better equipped to deliver high-quality care for the long term.

 

Parent Companys Approach

• Empowering women with the tools and knowledge to take charge of their own health

• Enabling health providers with the skills, tools and technologies they need to deliver high-quality care

• Enhancing health systems by catalyzing structural changes to ensure sustained impact for women and their communities

 

Maternal Mortality in India

According to the recent Government of India SRS Bulletin, there were nearly 12,000 fewer maternal deaths in 2016 as compared to 2013, with the total number of maternal deaths for the first time reducing to 32,000¹. The present maternal mortality rate (MMR) puts India on track to achieve the Sustainable Development Goal (SDG) target of MMR below 70 per 100,000 live births by 2030.

Staying on track to achieve the SDGs means ensuring that women across the country receive high quality maternity care – no matter where they seek care. That is why MSD for Mothers programs and partnerships seek to sustainably improve quality and catalyze broader health sector transformation.

 

Programs and Partnerships

MSD for Mothers has committed $28 million to innovative partnerships in India. These partnerships aim to strengthen the health system in high-need states - Jharkhand, Rajasthan, Madhya Pradesh and Uttar Pradesh – and in MSDs own backyard - Maharashtra and Delhi. The Parent Company has reached over 900,000 women, built capacity among over 43,000 health workers and strengthened over 2,200 facilities.

Source: 1. https://thewire.in/health/maternal-mortality-ratio-india-decline

EXTRACT OF ANNUAL RETURN

As provided under Section 92(3) of the Act, the extract of annual return in the prescribed Form MGT-9 is given in Annexure 4, which forms part of this report.

Annual Report 2018-19 containing Form MGT-9 has been uploaded on the website of the Company. It can be viewed by accessing the link http://www.fulfordindia.com/static/pdf/Annual-Report-2018-19.pdf.

COST AUDIT

The Directors have appointed GMVP & Associates LLP as Cost Auditor to conduct the Cost Audit for the Financial Year ended March 31, 2020.

The Company is required to maintain the cost records as specified by the Central Government under subsection (1) of Section 148 of the Companies Act, 2013 and accordingly such accounts and records are made and maintained.

WHISTLE BLOWER POLICY

The Company has formulated a Whistle Blower Policy for Vigil Mechanism for employees including directors of the Company to report genuine concerns. The provisions of this policy are in line with the provisions of Section 177(9) of the Companies Act, 2013. This policy provides an opportunity to the employees and Directors of the Company to approach the Audit Committee in good faith, when they suspect or observe unethical or wrongful practices, malpractices, non-compliance of Company policies etc. No personnel have been denied access to the Audit Committee. The policy is available on the website of the Company at www.fulfordindia.com

MATERIAL DEVELOPMENT IN HUMAN RESOURCES/INDUSTRIAL RELATIONS

One of the Companys strategic priorities is to deliver results by building strong performance culture by engaging and empowering competent employees. The Company focuses on developing diverse talent and fostering innovative thinking to succeed in markets. It continued to strengthen efforts towards development & well-being of the employees. A number of customized interventions were designed to cater to the development needs across various levels.

Starting from the year 2012, the Company has rolled out Summer Internship Program. Through this program, the Company has further strengthened relations with various management institutes and universities. The program continued for the eighth year, wherein management students worked on live industry projects during their summer internship.

Employee engagement was also ensured via periodic communications and connects with employees. Apart from the Company town hall meetings, connect was established with employees on periodic basis through tele-calls and personal meetings. The focus of these sessions was to keep all colleagues informed about key developments and strategy and enhance their participation in driving growth of the organization. Employee feedback is sought at periodic intervals for improving the culture & betterment of the organization. High potential front-line sales employees attend a yearlong program "Ready to Lead" where they are trained for the front-line manager role based on the Emerging Market Front Line Sales Manager based curriculum. The Company continued to invest in employee health & wellbeing under Flagship ‘Live IT program. The Company remained focused on Diversity and Inclusion and maintained its support to MSD Womens Network & Next Generation Leader networks.

The total number of employees as on March 31, 2019 was 73.

CAPITAL REDUCTION UNDER SECTION 66 OF THE COMPANIES ACT, 2013

During the Financial Year 2015-16, Dashtag, a promoter of the Company made a Delisting Offer ("Delisting Offer") to the Public Shareholders of the Company ("Public Shareholders") pursuant to the provisions of the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 ("Delisting Regulations") after seeking approval of the Members of the Company via a postal ballot resolution. Following the closure of the Delisting Offer and in accordance with the Delisting Regulations, the Company applied for delisting of its shares from BSE Limited ("BSE") and pursuant to the same, the shares of the Company were delisted from BSE in the month of August 2015.

Post delisting, Companys equity shares could not be traded on any of the stock exchanges in India. Since there is no trading platform available to the Public Shareholders, the shares of the Company have lost marketability. This prevents the Public Shareholders from realizing the optimal value and returns on their investments in the Company. Further, over a period of time, the managements focus on overall profitability and financial discipline including effective management of net working capital has significantly reduced the capital requirements of the Company.

After detailed deliberations, the Board of Directors of the Company was of the view that the reduction of share capital in accordance with Section 66 of the Companies Act, 2013 is the best available practical approach, considering the interests of the minority shareholders, the need to provide a permanent liquidity option for illiquid shares, paying off the paid-up capital in excess of the Companys requirements and the operational and administrative flexibilities for the Company. During its meeting held on December 17, 2018, the Board of Directors gave an approval for reduction of 1,33,993 equity shares constituting 3.44% of the paid-up equity share capital of the Company held by residual public shareholders by paying a sum of INR 843/- per share subject to approval of the members and confirmation by the Honble National Company Law Tribunal, Mumbai ("NCLT"). At the Extra-Ordinary General Meeting of the Company held on February 18, 2019, a Special Resolution was passed by the shareholders granting an approval for aforesaid reduction of equity share capital of the Company under Section 66 of the Companies Act, 2013 and Rules made thereunder subject to confirmation by the NCLT.

A petition seeking approval of Capital Reduction under Section 66 of the Act was thereafter filed on March 29, 2019 with the NCLT. The petition was heard and admitted by the NCLT on July 4, 2019. A certified true copy of the order was received on July 16, 2019 ("Said Order"). Further, the NCLT issued following directions in the said order which has been duly complied with by the Company:

1. Serve notice to the Regional Director and Registrar of Companies, Mumbai, Ministry of Corporate Affairs – which was done on July 17, 2019

2. Publish a public note in prescribed format in two newspapers being ‘The Times of India (in English language) and ‘Navshakti (in Marathi language i.e. regional language of the state of Maharashtra where the registered office of the Company is located)- which was done on July 18, 2019

3. Serve notices to unsecured creditors of the Company at their last drawn addresses – which was done on July 17, 2019The Company has duly filed an affidavit with the NCLT providing proof of completion of all the directions on July 23, 2019.

The petition is now scheduled to be heard on October 16, 2019.

REPORTING OF FRAUDS BY AUDITORS

There were no frauds reported by the Auditors of the Company under Section 143(12) of the Act to the Audit Committee.

EMPLOYEE REMUNERATION

The requirement of disclosing the details of employees in receipt of remuneration pursuant to Section 197 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is not applicable to the Company.

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

(A) Conservation of energy-

(i) the steps taken or impact on conservation of energy: Nil

(ii) the steps taken by the company for utilising alternate sources of energy: Nil (iii) the capital investment on energy conservation equipments: Nil

• This Section is not applicable to the Company since the Company does not have its own manufacturing facility.

(B) Technology absorption-

(i) the efforts made towards technology absorption:

The Company on continuous basis interacts with its Parent Company for gaining technical expertise for pharmaceutical formulations. The Company also works hard towards bringing innovation in its operations.

(ii) the benefits derived like product improvement, cost reduction, product development or import substitution: The Company has benefited to a great extent as a result of the above efforts. Product improvement and product development are the major benefits derived as a result of the above efforts. (iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)- N.A.

(a) the details of technology imported: N.A. (b) the year of import: N.A.

(c) whether the technology been fully absorbed: N.A.

(d)if not fully absorbed, areas where absorption has not taken place, and the reasons thereof: N.A. and (iv) the expenditure incurred on Research and Development: Nil

3. FOREIGN EXCHANGE EARNINGS AND OUTGO

(i) Activities relating to exports, initiatives taken to increase exports, development of new export markets for products and services and export plans.

Presently, the Company does not export any of the products and there are no significant foreign exchange earnings.

(ii) Total Foreign exchange earned and used	INR in Million
Total Foreign exchange earned:	4.39
Total Foreign exchange used:	150.63
On import of raw materials/finished goods	146.39
On import of capital goods, spares and components	—
Expenditure in foreign currencies for business travels,
subscription, honorarium, participants and others	0.47
Remittance during the year in foreign currency on account of dividend	3.77
Royalty and Technical know-how	—

OUTLOOK

There are several opportunities being evaluated to strengthen the portfolio with new product launches, out licensing of brands for promotion by strong partners with newer business models, appropriate expense management and prioritizing its resources for better operational performance and shareholder return in the Financial Year 2019-20.

ACKNOWLEDGEMENT

The Directors wish to place on record their appreciation of the contribution made by the employees at all levels and for their dedication and commitment to the Company throughout the year. The Directors would also like to record their thanks to Merck & Co., Inc., Kenilworth, N.J., U.S.A., the Companys shareholders, bankers, medical professionals, hospitals, vendors, distributors, pharmacists and all customers for their valuable support and co-operation.

	For and on behalf of the Board of Directors
	Vivek Vasudev Kamath	Rajesh Tendolkar
	Managing Director	Director
Mumbai, August 16, 2019	DIN: 06606777	DIN: 07978375