MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Operations review
During FY 2013-14 revenue from operations for the year nominally declined to Rs. 7866
Lacs ( Rs. 7897 lacs in 2012-13) over previous year.
The reason for reduction in profit are the higher capital expenditure towards expansion
and up-gradation of the current manufacturing facility and rise in raw material cost and
aggressive competition, which compelled company not to reflect the cost escalation in
sales price , in some of the fast moving products. However this is expected to be a
temporary phenomenon.
During FY 2013-14 as planned, Company has made significant investments in building
world class facilities capable of meeting with international regulatory requirements. This
will enable the company to participate in global procurement programs. This up-gradation
will also improve overall manufacturing capacity, efficiency, productivity and process
control which will lead to increase in business.
There is an ever increasing competition in the in-vitro diagnostics market, in India
and also globally, as most of the multi-national companies are manufacturing their
products in low cost production ecosystems. This has increased their competitiveness
tremendously. There is also significant change in the global regulatory landscape in this
segment for selling products in markets outside India. Evaluations and benchmarking has
become very important to enter markets outside India, putting additional financial burden
on the company. It had become imperative for the Company to upgrade its technical
capabilities to bring out newer technologies and devote adequate resources for domestic as
well as overseas market development. With limited resources and declining profit margins,
the Company has had to fund its routine operations as well as expansion plans using funds
borrowed from banks at significantly high interest rate prevailing in India. Heavy
investment in projects coupled with high inflationary pressures resulted in further
pressure on funding and it became increasingly difficult to provide the impetus required
for sustainable growth.
After detailed consideration, the Company in its Board Meeting held on 23 January, 2014
decided to propose transfer of its business of In-Vitro Diagnostics, (more particularly
described as "In-Vitro Diagnostics Undertaking") along with all employees,
assets, liabilities including all licenses, leases, permits, consents and approvals
thereto as a going concern by way of a slump sale to M/s. Arkray Healthcare Private
Limited and also subsequently obtained approval of Shareholders of the Company through
postal ballot. The transaction is expected to become effective upon fulfilment of
conditions of the said transactions. In the interregnum the company faced major challenges
in focusing exclusive attention on the existing operations due to the formalities required
for consummation of the transaction relating to the slump sale.
In view of all the above factors the company was not able to mitigate the losses
in-spite of best of efforts.
In due course of time, the Company shall take up for consideration the potential use of
the amount that would be received pursuant to the completion of the proposed transaction
and the finalisation of the consideration including the investment of such proceeds in
various new lines of business as well as the distribution of a reasonable portion of the
proceeds to the shareholders.
Industry Structure, Development & outlook
During the year under review, Company has decided to transfer its In Vitro Diagnostics
undertaking to M/S. Arkray Healthcare Private Limited. Consequently Span is evaluating
alternative structures for future lines of business. At an appropriate stage these
business plans will be shared.
Research & Development
Company is working on R&D with diverse approach such as R&D with in-house team,
with special purpose subsidiary ventures, outsourcing by contract research, tie-ups with
various institutions of repute in India and abroad by forming Public Private Partnership
and technology acquisition. Company is developing products in the area of Immunology,
Hybridoma, Biochemistry, Molecular biology, Instrumentation and development of bio
materials. Company is committed to offer affordable and innovative diagnostic products by
developing / acquiring newer technologies and manufacturing products indigenously using
its state-of-the-art manufacturing infrastructure.
Internal Control system and their adequacy
Management is committed to continue strengthening of Companys internal control system
and the same has been improved to a great extent with very valuable inputs from the
independent directors and by engaging renowned independent firm of Chartered Accountants,
both as internal as well as statutory auditors. Their vast experience and knowledge base
has contributed tremendously in betterment of systems and processes, resulting in better
control over many functional areas throughout the company. Internal control system is
further supported by periodic review by management and the Audit Committee.
The nature of the industries in which the company operates makes many of its activities
highly regulated by health, safety, and environmental laws. As regulatory standards and
expectations are constantly increasing, the company maintains high focus towards all
regulatory compliances which is regularly reviewed by the Board.
Human resources and industrial relations
The Company has highly motivated employees, totalling 524 persons, comprising of
trained technical, managerial and research personnel. The focus of the Company is to
enrich its employees by promoting learning & development and providing opportunities
for enhancing their knowledge base continuously. During the year, the company has renewed
union settlement agreement for a further tenure of three years.
The Company continues to have cordial and harmonious relations with its employees and
the union.
PARTICULARS OF EMPLOYEES
There is no employee in the Company, whose particulars are required to be given under
Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of
Employees) Rules, 1975 as amended.
SUBSIDIARIES AND JOINT VENTURES
Span Biotronics Private Limited (SBPL)
Span Biotronics Pvt Ltd (SBPL) is a 95.24% Subsidiary of Span Diagnostics Limited
(SPAN) working on analysis, design, development, prototyping, testing and validation of
lab automation need of SPAN and is also engaged in new product development independently.
A multidisciplinary team of engineers and scientists are jointly making efforts to launch
indigenous technologies, which will be used as modules and commercialized in many
products. Two of the products developed by SBPL have been commercialised during the
current year and have received very positive response in the Indian market.
SBPL has closed its books of accounts as at March 31, 2014 with a Profit After Tax
(PAT) of Rs. 44.64 Lacs.
Span Biotherapeutics Pvt Ltd
During the year, Span Biotherapeutics Pvt. Ltd., subsidiary Company ceased to be a
subsidiary Company with effect from May 27, 2013.
Span Diagnostics South Africa (PTY) Limited
To accelerate its future growth, the company has formed a joint venture Company during
year 2011-12 with Reindus Health (Pty) Limited for focusing on market developments of
Spans product in SADC region, covering 14 countries of Southern African continent. The
companys strategy is showing very positive results, with excellent growth in the business
over previous year. The company is contemplating to increase stake in this venture for
enhanced presence in SADC region.
Span Nihon Kohden Diagnostics Private Limited (SNKD)
A joint venture Company between Nihon Kohden Corporation, Japan and Span Diagnostics
Limited, India, started its operation from December 2008 and since then continues to
manufacture high quality reagents for Hematology Analysers for distribution and sale in
India
SUBSIDIARIES
In accordance with the general circular issued by the Ministry of Corporate Affairs,
Government of India, the Balance Sheet, Profit and Loss Account and other documents of the
subsidiary companies are not being attached with the Balance Sheet of the Company. However
the financial information of the subsidiary companies is disclosed in the Annual Report in
compliance with the said circular. The Company will make available the annual accounts of
the subsidiary companies and the related detailed information to any member of the Company
who may be interested in obtaining the same. The annual accounts of the subsidiary
companies will also be kept open for inspection at the Registered Office of the Company
and that of the respective subsidiary companies. The Consolidated Financial Statements
presented by the Company include the financial results of its subsidiary companies.
CORPORATE GOVERNANCE
A report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement
forms part of the Annual Report.
The certificate from the Auditors of the company M/s Haribhakti & Co confirming
compliance with the conditions of Corporate Governance is attached to this Report.
DIRECTORS RESPONSIBILITY STATEMENT
Your Directors confirm that:
1. in the preparation of the annual accounts, the applicable accounting standards have
been followed along with proper explanation relating to material departures;
2. the Directors have 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 ended
March 31, 2014 and of the loss of the Company for that year;
3. the Directors have 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 the Company and for preventing and detecting fraud and other
irregularities;
4. the Directors have prepared the accounts on a going concern basis.
FIXED DEPOSITS
At the close of the year, there were no fixed deposits due for payment that remained
either unclaimed or unpaid. There were no claims as against the deposits outstanding as at
the close of the year and the Company had complied with all the requirements of the
Companies (Acceptance of Deposits) Rules, 1975.
CONSERVATION OF ENERGY
The particulars are as per Annexure A
TECHNOLOGY ABSORPTION, RESEARCH & DEVELOPMENT AND FOREIGN EXCHANGE EARNING &
OUTGO
The particulars are as per Annexure B
DIRECTORS
Mr. Sanjay N. Mehta, Non Executive Directors and Mr. Kamlesh M. Patel, Independent
Directors of the Company who retires by rotation at the ensuing Annual General Meeting and
being eligible, offers himself for reappointment. The retirement of Director by rotation
at the ensuing Annual General Meeting is determined in accordance with the provisions of
the Companies Act, 1956 and the Companies Act, 2013.
Mr. Kamlesh M. Patel, Mr. Shyamal Ghosh, Mr. N Gopalaswami and Dr. Sushil K. Shah
retire at the ensuing Annual General Meeting. The Company has received requisite notices
in writing from members proposing them as Independent Directors.
Changes during the year
1. Ms. Lataben P. Desai stepped down from Directorship with effect from May 15, 2013.
2. Dr. Madhukanta T. Patel retired from Directorship with effect from July 01, 2013
upon completion of her tenure as Whole Time Director of the Company.
3. Dr. Pradip K. Desai was reappointed as Whole Time Director of the Company with
effect from April 01, 2013 for further period of three years.
4. Mr. Veeral .P Desai was reappointed as Managing Director of the Company with effect
from July 01, 2013 for further period of three years.
5. Mr. S. Sundaresan retired from Directorship with effect from July 27, 2013 upon
completion of his tenure as an independent Director of the Company.
The Board places on record their appreciation of the valuable services rendered by all
directors ceasing their office during their tenure on the Board.
The Board of Directors at its meeting held on March 21, 2014 has decided effect of
increased remuneration of Dr. Pradip K Desai, Whole Time Director and Mr. Veeral P Desai,
Managing Director subsequent to Central Government Approval shall not be given for the
period upto March 31, 2014 and Dr. Pradip K Desai and Mr. Veeral P Desai shall continue to
receive existing salary till March 31, 2014.
CAUTIONARY STATEMENT
Statements in this Report, particularly those which relate to Management Discussion and
Analysis and the Corporate Governance Report, describing the Companys objectives,
projections, estimates and expectations may constitute "forward looking
statement" within the meaning of applicable laws and regulations. Actual results may
differ materially from those either expressed or implied in the statement depending on the
circumstances.
AUDITORS AND AUDITORS REPORT
M/s. Haribhakti & Co, Chartered Accountants , the auditors of the company are
eligible for their reappointment. The directors recommend their reappointment for the
current year.
The Notes on accounts, referred to in the Auditors Report, are self explanatory and
therefore do not call for any further comments.
COST AUDITORS
The Board has appointed Mr. V. M. Patel & Associates, Cost Accountants to carry out
cost audit for the financial year 2014 – 15 subject to approval of the Central
Government.
The Company is required to maintain cost records under Section 209(1)(d) of The
Companies Act, 1956 as per notification of Ministry of Corporate Affairs(MCA) dated
03/06/2011 and 21/01/2012. The Company has submitted Cost Compliance Certificate as well
as Cost Audit Report to Ministry of Corporate affairs on 25/09/2013 for the year 2012
– 13. The Company had appointed M/s. Y. R. Doshi & Associates, Cost Accountants
to conduct cost audit for the year 2013 – 14.
ACKNOWLEDGMENT
Your Directors are happy to place on record their appreciation of the whole-hearted
co-operation and hard work of all members of SPAN family.
The Directors would like to place on record a deep sense of gratitude to the State Bank
of India & IDBI Bank and Government Authorities for their co-operation and assistance
rendered to the Company.
|
For and on behalf of the Board |
| Place: Surat |
N. Gopalaswami |
Veeral P. Desai |
| Dated: May 23, 2014 |
Chairman |
Managing Director |
+91-9892691696
