Directors
Your directors are pleased to present their report for the financial year ended March
31,2014, along with the Balance Sheet, Statement of Profit and Loss, Cash flow statement
and a summary of significant accounting policies and other explanatory information.
Financial Results
The financial performance of your Company on both a stand-alone and a consolidated
basis for the financial year ended March 31, 2014 is summarised below:
( Rs. Million)
| Particulars |
Stand-alone basis |
Consolidated basis |
|
2013-14 |
2012-13 |
2013-14 |
2012-13 |
| Net sales |
69,372.60 |
53,693.80 |
69,399.27 |
55,933.83 |
| Profit before interest, depreciation, tax and exceptional items |
14,228.50 |
12,035.01 |
14,117.09 |
12,287.70 |
| Interest |
2,484.62 |
630.16 |
2,552.72 |
765.87 |
| Depreciation and amortization |
3,461.79 |
964.65 |
3,665.19 |
1,280.71 |
| Profit before tax and exceptional items |
8,282.09 |
10,440.20 |
7,899.18 |
10,241.12 |
| Exceptional items |
2,983.77 |
(1,914.80) |
5,615.95 |
(2,107.73) |
| Tax expense |
(2,816.78) |
(3,329.97) |
(2,752.37) |
(3,399.59) |
| Minority interest and share of loss in associate |
- |
- |
48.32 |
(36.80) |
| Net profit for the year |
8,449.08 |
5,195.43 |
10,811.08 |
4,697.00 |
Review of Operations
Your Company posted yet another impressive year of performance. During the year under
review, the turnover, on a standalone basis, increased by 29.20%, while on a consolidated
basis, the sales increased by 24.07% over the previous year. The increase in sales was
mainly due to the increase in the sales of Active Pharmaceutical Ingredients (APIs) and
Finished Dosage Form (FDF) products and also due to amalgamation of Agila Specialities
Private Limited ("ASPL") and its subsidiary with your Company with effect from
December 6, 2013. The net profit for the year also showed an impressive growth of 62.63 %
on a standalone basis, while on a consolidated basis, the increase was 130.17% over the
previous year.
During the year, your Company has raised funds through a mix of equity and debt from
Mylan Luxembourg 2 S.a.r.l. (a promoter group entity) by way of issue of equity shares to
the tune of Rs. 9,520.05 million and compulsory convertible debentures to the tune of Rs.
50,266.90 million aggregating to Rs. 59,786.95 million, for acquisition of the business of
ASPL from Strides Acrolab Limited.
Your Company is in compliance with the regulations relating to downstream investment as
laid down in the Foreign Exchange Management Regulations for the financial year 2013-14
and the same is certified by the auditors of the Company.
During the year, as part of group restructuring exercise, your Company has sold Matrix
Laboratories (Singapore) Pte Limited along with its subsidiaries for a consideration of
Rs. 3,495.29 million (EUR 40.9 million) to a fellow subsidiary. Consequent to the sale,
the earlier provision made for diminution in the value of investment has been written back
and profit on sale of Rs. 2,983.77 million and Rs. 5,615.15 million has been recognised in
stand-alone financials and in consolidated financials respectively.
During the year under review, your Company filed 15 U.S. Drug Master Files (DMFs) and
16 EU DMFs / Certificates of Suitability to European Pharmacopoeia (CEPs). With these
filings, as on March 31, 2014, the cumulative number of DMFs filed by your Company,
together with its subsidiaries and associates is 189 U.S. DMFs and 194 EU DMFs / CEPs.
During the year, your Company has filed 24 Abbreviated New Drug Applications (ANDAs)
with the U.S. Food and Drug Administration (USFDA), 11 with European regulatory agencies,
7 with the World Health Organisation (WHO), 7 with Canada regulatory agencies, 3 withapan
Pharmaceuticals and Medical Devices Agency (PMDA), 8 with Australian regulatory agencies,
6 with New Zealand regulatory agencies and 17 with South Africa regulatory agencies.
Aggregate filings covering FDFs during the year were 83 in numbers.
Cumulatively, your Company made the filings of 175 ANDAs with the USFDA, 110 regulatory
filings with European regulatory agencies, 48 filings with the WHO, 65 with Canadian
regulatory agencies, 58 with Australian regulatory agencies, 37 with New Zealand and 91
with South Africa regulatory agencies aggregating to 584 regulatory submissions. During
the year under review, your Company secured 13 approvals from the European regulatory
agencies, 10 from Australian regulatory agencies, 5 from New Zealand regulatory agencies
and 18 from South Africa regulatory agencies.
ASPL and Onco Therapies Limited ("OTL") have 222 ANDAs with the USFDA, 53
with Canada regulatory agencies and 58 with Africa regulatory agencies. Cumulatively, ASPL
has 333 regulatory submissions.
Share Capital
Authorised Capital
During the year under review, consequent to the amalgamation of ASPL and its subsidiary
OTL with your Company, the authorised share capital of your Company has been increased by
Rs. 250 million. As a result of this, the authorised share capital of your Company is Rs.
650 million divided into 325 million equity shares of Rs. 2 each.
Issued, Subscribed and Paid up Capital
During the year under review, your Company has allotted 28.42 million equity shares of
Rs. 2 each at an issue price of Rs. 335 per equity share to Mylan Luxembourg 2 S.a.r.l.,
an entity belonging to the promoter group. As a result of this, the issued, subscribed and
paid up capital of your Company stands increased to Rs. 369.51 million divided into 184.76
million equity shares of Rs. 2 each.
Manufacturing Facility Acquisition
As informed in the previous financial years report, your Company entered into a
business transfer agreement on March 11, 2013, to purchase an oral solid finished dosage
forms manufacturing facility (the "Facility") from Unichem Laboratories Limited.
The Facility is located in the Pharma Zone of Indore Special Economic Zone in Pithampur
District, Indore, Madhya Pradesh, India. The acquisition of this Facility would support
Mylans continued expansion of its manufacturing footprint as your Company executes on its
plan to double its manufacturing capacity over the next several years. The transaction was
closed on October 24, 2013.
Acquisition of ASPL and its amalgamation with your Company
Your Company acquired the shares of ASPL and indirecdy the ownership of its wholly
owned subsidiary OTL from Strides Arcolab Limited ("SAL") and its promoters,
pursuant to a share purchase agreement on December 5, 2013.
The acquisition of the Injectables and Oncology business of ASPL and OTL, through share
acquisition helped your Company to grow injectables business, expanding and strengthening
Mylan Groups foothold in injectables segment and facilitate its entry into new geographic
regions. The intention of this share acquisition was to seamlessly and rapidly integrate
the businesses (in terms of broad product portfolio, drug applications and approvals,
technical knowhow, employees, customers, etc.) of ASPL and OTL with your Company. Though
the acquisition of ASPL and OTL were through acquisition of shares to facilitate smooth
transition of control and management, the intention of your Company was always to
integrate the businesses of ASPL and OTL with itself once the share acquisition process
was completed.
Accordingly, your Company had filed a scheme of amalgamation of ASPL and OTL with Mylan
Laboratories Limited ("Scheme") under Sections 391 to 394 of the Companies Act,
1956 with the Honble High Court ofudicature at Hyderabad for the State of Telangana and
for the State of Andhra Pradesh ("High Court") with appointed date of December
6, 2013 ("Appointed Date") and the High Court vide its order dated August 25,
2014 approved the said Scheme.
In terms of the Scheme, your Company has accounted for the amalgamation under the
"Purchase Method" referred in Accounting Standard 14 - Accounting for
amalgamation (AS-14). Accordingly, the assets and liabilities of ASPL and OTL have been
taken over at their respective fair values (after making adjustments for adoption of
uniform accounting policies). The excess of investment cancelled by your Company over the
aggregate value of the net assets acquired has been treated as goodwill, to be amortised
over a period of 5 years from the date of amalgamation.
Your Company had filed a copy of the order of the High Court with the Registrar of
Companies, Hyderabad on October 13, 2014 (the "Effective Date"). Consequently,
the amalgamation of ASPL and OTL with your Company became effective on October 13, 2014
with effect from the Appointed Date and ASPL and OTL are dissolved without being wound up.
The financials of ASPL and OTL are forming part of the financials of your Company for the
financial year ended March 31, 2014.
Dividend
Considering the acquisitions made by your Company and keeping in view the capital
expenditure programmes under implementation to augment production capacities of the
facilities, your directors have, after due deliberations, decided to plough back profits
and hence, do not recommend any dividend for the financial year 2013-2014 .
Amalgamation of Astrix Laboratories Limited ("ALL") with your Company and
Reduction of Equity Share Capital represented by Minority Shareholders
To enhance shareholder value, the Board of Directors of your Company at their meeting
held onuly 16, 2014, approved a Composite Scheme of Arrangement between Astrix
Laboratories Limited and Mylan Laboratories Limited and their Respective Shareholders
("Scheme") for amalgamation of Astrix Laboratories Limited with your Company to
achieve operational synergies and great financial integration and flexibility and
reduction of equity share capital, represented by equity shares held by the minority
public shareholders of your Company, by paying cash in lieu of the equity shares held by
them.
The members have approved the Scheme with requisite majority in number and value at the
Court Convened Meeting held on October 17, 2014. Upon the Scheme becoming effective and
with effect from 1 st April, 2014, the entire undertaking of ALL would stand transferred
to your Company as a going concern together with all assets and liabilities of ALL. Upon
the Scheme becoming effective, your Company will issue and allot 2 (two) fully paid up
equity shares of Rs. 2/— each of your Company for every 1 (one) fully paid up equity
share of Rs. 10/— each of ALL to the shareholders of ALL as on the record date.
The proposed reduction of equity share capital represented by minority shareholders in
the equity share capital of your Company will be beneficial to the existing minority
shareholders, as it provides them an exit option. By reducing the equity share capital of
minority shareholders and offering cash i.e. Rs. 387/-(Rupees three hundred and eighty
seven only) per equity share in lieu of the equity shares held by them, and by achieving
the same through a court approved Scheme, the minority public shareholders would be
provided an opportunity to liquidate their shareholding and realize the value of the
equity shares held by them.
Upon the Scheme coming into effect, ALL will be dissolved without being wound up and
minority shareholders would be paid cash in lieu of equity shares held by them. Your
Company and ALL have filed necessary applications/ petitions before the Honble High Court
ofudicature at Hyderabad for the State of Telangana and for the State of Andhra Pradesh
("Honble High Court") and as on date, the Scheme is pending sanction of the
Honble High Court. The Scheme is also subject to receipt of applicable regulatory
approvals.
Restructuring of subsidiaries
During the financial year 2013-2014, after receipt of all the necessary approvals, your
Company has sold its investment in Matrix Laboratories (Singapore) Pte. Ltd., along with
its subsidiaries Matrix Pharma Group (Xiamen) Ltd., Mylan Laboratories Inc., and Matrix
Laboratories (Xiamen) Limited to Mylan Luxembourg 8 S.A.R.L. The transaction was closed on
24th December, 2013.
Notes on Subsidiaries
Your Company had 3 subsidiaries as on March 31, 2014 namely Astrix Laboratories
Limited, ASPL and OTL. The merger of ASPL and OTL with your Company became effective with
appointed date of December 6, 2013 vide the order of Honble High Court ofudicature at
Hyderabad for the State of Telangana and for the State of Andhra Pradesh.
As per Section 212 of the Companies Act, 1956 ("the Act"), your Company is
required to attach Directors Report, Balance Sheet and Statement of Profit and Loss of
each of its subsidiary. The Ministry of Corporate Affairs, Government of India vide its
circular no. 2/2011 dated February 8, 2011 has provided an exemption to companies from
complying with section 212 of the Act, provided such companies publish the audited
consolidated financial statements in the annual report. Accordingly, the annual report
2013-2014 does not contain the financial statements of the subsidiaries. A statement
containing certain particulars of the subsidiaries are attached to the annual report.
Copies of the annual accounts of your Companys subsidiaries can be sought by any investor
of your Company on making a written request to your Company at the registered office of
your Company in this regard. The annual accounts of the subsidiary companies are also
available for inspection to any investor at your Companys registered office.
Consolidated Financial Statements
In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements,
the audited Consolidated Financial Statements are attached to this annual report.
Fixed Deposits
Your Company has not accepted any public deposits and as such, no amount on account of
principal or interest on public deposits was outstanding as on the date of the balance
sheet.
Directors
Appointment of Directors
On October 31,2014, the Board appointed Mr. Rakesh Bamzai and Ms. Sarada Kalyani
Bhagawati as additional directors of your Company effective from November 1, 2014.
The said additional directors will hold office of directorship till the ensuing Annual
General Meeting ("AGM") of your Company. Due notice(s) in writing under the
provisions of Section 160 of the Companies Act, 2013 have been received from members
proposing their appointment as directors of your Company. It is proposed to appoint them
as directors of your Company liable to retire by rotation.
Mr. Rakesh Bamzai was also appointed as Managing Director and Chief Executive Officer
and Ms. Sarada Kalyani Bhagawati as Chief Financial Officer and Executive Director of your
Company effective November 1, 2014.
Cessation of Directors
On October 31,2014, the Board took on record the resignations of Dr. B. Hari Babu, Mr.
Sanjeev Kumar Sethi and Mr. Susanto Banerjee as directors of your Company.
The above resignations are effective from November 1, 2014.
Your Board places on record its appreciation of the valuable services rendered by the
above-mentioned directors, during their tenure as directors of your Company.
Re-appointment of Directors retiring by rotation
In accordance with the provisions of the Companies Act, 2013, Mr. Rajiv Malik will
retire by rotation at the ensuing AGM of your Company and, being eligible, seeks
re-appointment.
Your Board of Directors recommend the re-appointment of Mr. Rajiv Malik as a director
of your Company.
Auditors
Deloitte Haskins & Sells ("DHS"), Chartered Accountants, who are the
auditors of your Company, hold office till the conclusion of the forthcoming AGM and your
Company has received a certificate as per the provisions of the Companies Act, 2013,
confirming their eligibility and willingness to accept the office of auditors for the
financial years 2014-2017, if re-appointed. Pursuant to the provisions of section 139 of
the Companies Act, 2013 and the rules framed thereunder, the Audit Committee and the Board
of Directors of your Company recommend to re-appoint DHS as auditors of your Company from
the conclusion of the forthcoming AGM till the conclusion of the thirty second AGM to be
held in the year 2017, subject to ratification of their appointment at every AGM.
Cost Audit
As per the Companies (Cost Records and Audit) Rules, 2014, the requirement of cost
audit is not applicable to your Company as its revenue from exports, in foreign exchange,
exceeds seventy five per cent of its total revenue. However, your Company would continue
to maintain cost records as required under the Companies (Cost Records and Audit) Rules,
2014. The relevant cost audit reports for the financial year 2013-2014 were filed within
the due date.
Annual General Meeting
In view of the amalgamation of ASPL and OTL with your Company, your Company had sought
extension of time from the Registrar of Companies, Hyderabad ("ROC") for holding
the AGM. The ROC has granted your Company, extension of time to hold the AGM upto December
30, 2014. Since the amalgamation of ASPL and OTL became effective in October, 2014, the
Board has decided to hold the AGM on December 26, 2014.
Directors Responsibility Statement
As required under Section 217 (2AA) of the Companies Act, 1956, your directors confirm
having:
i) Followed the applicable accounting standards with proper explanation relating to
material departures in the preparation of the annual accounts
ii) Selected such accounting policies and applied them consistently and madeudgments
and estimates that are reasonable and prudent so as to give a true and fair view of the
state of affairs of your Company at the end of the financial year 2013-2014 and of the
profit of your Company for that period
iii) Taken proper and sufficient care for the maintenance of adequate accounting
records in accordance with the provisions of the Companies Act, 1956 for safeguarding the
assets of your Company and for preventing and detecting fraud and other irregularities and
iv) Prepared the annual accounts on a going-concern basis.
Companies (Disclosure of Particulars in the Report of Board of Directors) Rules,
1988
Information in accordance with the provisions of Section 217(l)(e) of the Companies
Act, 1956, read with Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988 relating to the conservation of energy, technology absorption and
foreign exchange earnings and outgo is given in the annexure I forming part of this
report.
Particulars of employees
The details of the employees drawing remuneration exceeding the limits prescribed under
the provisions of Section 217 (2A) of the Companies Act, 1956 is given in the annexure II
forming part of this report.
Transfer of Unpaid / Unclaimed dividend to Investor Education Protection Fund
Pursuant to the provisions of Section 205A (5) of the Companies Act, 1956, the dividend
declared for the financial year 2005-2006, which remained unclaimed for a period of seven
years has been transferred by your Company to the
Investor Education and Protection Fund established by the Central Government.
Acknowledgements
Your directors wish to express their grateful appreciation for the co-operation and
support received from the Government of India, Governments of Andhra Pradesh, Telangana,
Karnataka, Madhya Pradesh and Maharashtra and Banks. Your Directors also thank the
vendors, customers, consultants, auditors and others who have been assisting your Company
in the various facets of its operations. Your directors also wish to place on record their
sincere appreciation to its parent company Mylan Inc., for its support in implementing the
organizational goals.
Your directors also wish to place on record their sincere appreciation of the employees
at all levels for their dedicated contribution towards the growth of your Company.
For and on behalf of the Board of Directors
| Dr. B. Hari Babu |
Susanto Banerjee |
| Chief Executive Officer & Managing Director |
Executive Director |
| Place : Hyderabad |
|
| Date : October 31, 2014 |
|
Annexure-I to the Directors Report
Information required under the Companies (Disclosure of Particulars in the Report of
the Board of Directors) Rules, 1988.
FORM A
A. CONSERVATION OF ENERGY
Your Company continued periodical auditing of all the installations internally to find
new opportunities to strengthen energy conservation efforts.
Your Company, in addition to the measures implemented last year, has identified and
commissioned the following energy saving devices / equipment, during the year under
review:
1. Replacement of existing reactor based distillation units in the effluent treatment
plants by energy efficient multiple effect evaporator.
2. Replacement of existing high vaccum steam ejector systems with electrical operated
dry vaccum pumps, there by reducing the operating cost by almost 50%.
3. Recycling of water from the effluent treatment plants into cooling towers thereby
avoiding usage of fresh water. Particulars of Power & Fuel consumption for the year
2013-2014
| A. POWER AND FUEL CONSUMPTION |
Current year 31.03.2014 |
Previous year 31.03.2013 |
| 1. Electricity |
|
|
| a) Purchased |
|
|
| Units (KWH) |
172,160,197 |
113,292,810 |
| Total Amount (Rupees in Million) |
1,130.26 |
807.40 |
| Rate per Unit ( Rs. ) |
6.57 |
7.13 |
| b) Own Generation |
|
|
| (i) Through Diesel Generator |
|
|
| Units (KWH) |
14,831,411 |
31,433,519 |
| Units per Litre of Fuel |
4.37 |
3.40 |
| Cost per Unit ( Rs. ) |
13.32 |
14.69 |
| (ii) Through Steam turbine / Generator |
|
|
| Units (KWH) |
22,944,359 |
18,827,500 |
| Units per unit of Fuel |
0.39 |
0.33 |
| Cost per Unit ( Rs. ) |
4.59 |
1.71 |
| 2. Diesel |
|
|
| Quantity (Litres) |
3,394,647 |
9,249,111 |
| Total Value (Rupees in Million) |
197.63 |
461.85 |
| Average Rate per Litre ( Rs. ) |
58.22 |
49.93 |
| A. POWER AND FUEL CONSUMPTION |
Current year 31.03.2014 |
Previous year 31.03.2013 |
| 3. Coal |
|
|
| Quantity (Tonnes) |
77,456 |
76,786 |
| Total cost (Rupees in Million) |
332.31 |
342.01 |
| Average rate per Tonne( Rs. ) |
4,290 |
4,454 |
| 4. Furnace Oil |
|
|
| Quantity (Litres) |
7,024,237 |
5,795,032 |
| Total Amount (Rupees in Million) |
305.98 |
248.70 |
| Average Rate per Litre( Rs. ) |
43.56 |
42.92 |
| 5. Others/Internal generation Total Cost ( Rs. ) |
70.67 |
44.69 |
| TOTAL |
2,036.85 |
1,904.64 |
B. Consumption per unit of production
| Particulars |
Standard |
Current year |
Previous year |
| Product (with details) Units |
Since the Company manufactures a wide range of APIs, intermediates and
finished dosage forms, it is not practicable to give consumption per unit of production. |
FORM B
Disclosures of particulars with respect to Technology Absorption
A. RESEARCH AND DEVELOPMENT
Mylan has been focusing on intellectual property-based research and development
activity with the objective to develop novel routes and non-infringing processes to
facilitate the Companys first-mover advantage across markets. Mylan is equipped with a
strong API, FDF, Injectables and R&D teams.
B. EXPENDITURE ON RESEARCH & DEVELOPMENT
Rs. Million
|
Current Year 31.03.2014 |
Previous Year 31.03.2013 |
| (a) Capital |
777.67 |
269.36 |
| (b) Recurring |
4,217.08 |
3,793.93 |
| (c) Total |
4,994.75 |
4,063.29 |
| (d) Total R&D expenditure as a % of net sales |
7.20% |
7.57% |
C. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
Efforts, in brief, made towards technology absorption, adaptation and innovation:
a) Technology developed in-house has been scaled up.
b) Various novel processes /products have been developed in-house for some generic drug
molecules, which are different from the existing processes/ products so far patented.
Benefits derived as a result of the above:
Capabilities in developing technology for new products and novel processes / products
have helped entry into advanced markets such as USA, Canada and Europe.
Imported technology:
No technology has been imported
FORM C
D. FOREIGN EXCHANGE EARNINGS AND OUTGO
Rs Million
| Particulars |
Current Year 31.03.2014 |
Previous Year 31.03.2013 |
| Foreign exchange earnings |
59,354.53 |
48,350.42 |
| Foreign exchange outgo |
24,135.81 |
16,045.39 |
| Net foreign exchange earnings |
35,218.72 |
32,305.03 |
For and on behalf of the Board of Directors
| Place : Hyderabad |
Dr. B. Hari Babu |
Susanto Banerjee |
| Date : October 31, 2014 |
Chief Executive Officer |
Executive Director |
|
& Managing Director |
|
+91-9892691696
