BSE: 532488 | NSE: DIVISLAB | ISIN: INE361B01024
Market Cap: [Rs.Cr.] 22,415.50 | Face Value: [Rs.] 2
Industry: Pharmaceuticals - Indian - Bulk Drugs
Your Directors have pleasure in placing before you the Twenty Fourth Annual Report ofthe Company together with the Audited Accounts for the year ended 31st March 2014.
The Companys financial performance, for the year ended 31st March, 2014 issummarized below:
(Rs. in lakhs)
|Other Operating Income||679||494||679||494|
|Profit before tax (PBT)||100864||79158||99092||78124|
|Provision for tax:|
|MAT Credit (Entitlement)/ Utilisation||(2367)||790||(2367)||790|
|Profit after tax (PAT)||79172||61142||77334||60201|
|Earnings per Share (EPS) (Rs.)|
RESULTS OF OPERATIONS
Your company has achieved a sales growth of 18% for the year, on the back of a growthof 15% achieved during the last year. PBDIT increased by 27% at Rs. 110276 lakhs.
Profit after Tax for the year amounted to Rs.79172 lakhs, reflecting a growth of 29%.Earnings Per Share of Rs.2/-each works out to Rs. 59.65 for the year as against Rs. 46.06last year.
Out of the total revenue, 44% came from North America, 37% from Europe, 6% from Asia,9% from India and 4% from Rest of the World.
There has been a wide fluctuation in the exchange rates of currencies worldwide. Gainfor the current and previous year is given below:
(Rs. in lakhs)
Provision has been made for Rs. 18180 lakhs towards Income-tax for the current year(net of MAT credit entitlement of Rs.2367 lakhs). Provision for last year amounted toRs.16090 lakhs including a MAT credit utilization of Rs.790 lakhs. An amount of Rs. 3512lakhs has been provided towards Deferred Tax Liability for the year as against Rs. 1926lakhs during the previous year.
Our total income on consolidated basis increased to Rs. 252535 lakhs from Rs. 213990lakhs in the previous year, recording a growth rate of 18%. PBDIT amounted to Rs. 108510lakhs as against Rs. 85997 lakhs in the previous year. Profit after Tax for the yearincreased by 28% at Rs. 77334 lakhs as against Rs. 60201 lakhs in the previous year.
Your Directors are pleased to recommend a dividend of Rs.20 per equity share of Rs.2/-each, i.e., 1000% (last year Rs. 15 per equity share) for the financial year ended 31stMarch, 2014, subject to approval of members at the ensuing Annual General Meeting.
The total dividend payout for the current year amounts to Rs. 31059 lakhs (inclusive oftax of Rs.4512 lakhs) as against Rs. 23294 lakhs in the previous year. Dividend (includingdividend tax) as a percentage of profits is 39% as compared to 38% in the previous year.
The dividend on equity shares, if declared at the AGM, will be paid to members whosenames appear in the Register of Members as on 2nd August, 2014. In respect of shares heldin dematerialised form, it will be paid to members whose names are furnished byDepositories as beneficial owners as on that date.
Our subsidiaries viz., M/s. Divis Laboratories (USA) Inc., in USA and M/s. DivisLaboratories Europe AG in Switzerland are engaged in marketing/distribution ofnutraceutical products and to provide a greater reach to customers within these regions.During the year, the subsidiaries have achieved aggregate sales of Rs.12618 lakhs asagainst sales of Rs. 9078 lakhs previous year resulting in growth of 39% for thenutraceutical products in North America and Europe.
Brief operations of the subsidiaries are as under:
(Rs. in lakhs)
|Particulars||Divis Laboratories (USA) Inc.,||Divi's Laboratories Europe AG|
|Salaries & Wages||528||518||176||134|
|Loss before tax||182||491||774||93|
Subsidiaries have achieved good growth in operating profit. Loss on forex currencytranslation for the year accounted to Rs.632 lakhs for US subsidiary and Rs.698 for Europesubsidiary.
Auditors of these subsidiaries have observed that the subsidiaries have sufferedrecurring losses, lack sufficient liquidity to continue operations and to continue as agoing-concern depends on the temporary funding by the parent and successful realization oftheir business plans.
In accordance with the general circular issued by the Ministry of Corporate Affairs,Government of India, the Balance Sheet, Statement of Profit and Loss and other documentsof the subsidiary companies are not being attached with the Balance Sheet of the Company.Shareholders who wish to have a copy of the full report and accounts of the subsidiarieswill be provided the same on receipt of a written request from them. These documents willbe available for inspection at the Registered Office of the Company and that of therespective subsidiary companies on any working day during business hours. The ConsolidatedFinancial Statements presented by the Company include the financial results of itssubsidiary companies.
EMPHASIS OF MATTER
Our Auditors have observed that the networth of the subsidiaries has eroded andconsequent possibility of any temporary impairment of investment by way of equity insubsidiaries amounting to Rs.281.61 lakhs and non-recovery of loans of Rs.4796.31 lakhsgiven to the subsidiaries.
Over the last few years, we have made significant progress in terms of implementing thenutra facility and stabilising operations. Approvals have since been received from severalmajor users and the outlook now looks very positive.
During the year, the subsidiaries have achieved good growth of business and haveachieved operating profit. Net loss could have reduced significantly, but for the loss onaccount of foreign currency translation. With the significant efforts having been madetowards optimizing operations and cost efficiency, the company is confident of achievingprofitability at the subsidiaries and recovery of the loans given in the foreseeablefuture.
As stipulated in the listing agreement with the stock exchanges, the consolidatedfinancial statements have been prepared by the Company in accordance with the relevantaccounting standards under the Companies Act, 1956. The audited consolidated financialstatements together with Auditors Report thereon form part of the Annual report.
Pursuant to the provisions of Section 161(1) of the Companies Act, 2013 and theArticles of Association of the Company, Mr. K.V.K. Seshavataram and Smt. S. Sridevi havebeen appointed as Additional Directors designated as Independent Directors w.e.f. 23rdJune, 2014 and they shall hold office up to the date of the ensuing Annual GeneralMeeting. The Company has received requisite notice in writing from a member proposing Mr.K.V.K. Seshavataram and Smt. S. Sridevi for appointment as Independent Directors.
Impending notification of Section 149 and other applicable provisions of the CompaniesAct, 2013, your Directors are seeking appointment of Dr. G. Suresh Kumar and Mr. R. RangaRao as Independent Directors for a term of five consecutive years upto 31st March, 2019.Details of the proposal for appointment of Mr. K. V. K. Seshavataram, Smt. S. Sridevi, Dr.G. Suresh Kumar and Mr. R. Ranga Rao are mentioned in the Explanatory Statement underSection 102 of the Companies Act, 2013 of the Notice of the Annual General Meeting.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet with the criteria of independence as prescribed both undersub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of theListing Agreement with the Stock Exchanges.
As per the provisions of the Companies Act, 2013 Mr. Kiran S. Divi will retire byrotation at the ensuing Annual General Meeting and, being eligible, offer himself forre-appointment.
The Board of Directors at its meeting held on June 23, 2014, subject to the approval ofthe shareholders, reappointed Dr. Murali K. Divi as the Chairman & Managing Directorof the Company for a further period of five years from October 10, 2014 and Mr. N. V.Ramana as Executive Director of the company for a further period of five years fromDecember 26, 2014.
Prof. C. Ayyanna has resigned as a Director of the company with effect from 20th May,2013 due to personal reasons and other pre-occupations. The Directors place on recordtheir appreciation for the contribution made by Prof. C. Ayyanna during his long tenure onthe Board since 10.03.2001.
Dr. K. Satyanarayana, Independent Director has resigned from the Board with effect from23rd June, 2014. Dr. K. Satyanarayana joined the Board on 08.08.1995 and has been part ofDivis journey for 19 years. The Board would like to thank him for his long associationwith the company.
Mr. S. Vasudev, Independent Director has resigned from the Board with effect from 23rdJune, 2014. Sri S. Vasudev has been part of the Board from 09.08.2004. The Board sincerelyappreciates his contribution to the company during his tenure as member of the Board.
DIRECTORS RESPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act, 1956, Directors of yourcompany hereby state and confirm that:
a) the applicable accounting standards have been followed in the preparation of theannual accounts;
b) the accounting policies selected were applied consistently and the judgements andestimates made are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at 31st March, 2014 and its profit for the year ended on thatdate;
c) proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;
d) the annual accounts have been prepared on a going concern basis.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
During the year, your directors have constituted the Corporate Social ResponsibilityCommittee (CSR Committee). The said Committee has formulated and recommended to the Board,a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to beundertaken by the Company, monitoring the implementation of the framework of the CSRPolicy and recommending the amount to be spent on CSR activities.
The Auditors, M/s. P.V.R.K. Nageswara Rao & Co., Chartered Accountants, Hyderabadretire at the ensuing Annual General meeting and, being eligible, offer themselves forreappointment.
The Company has received letter from the auditors to the effect that theirre-appointment, if made, would be within the prescribed limits under Section 141(3)(g) ofthe Companies Act, 2013 and that they are not disqualified for re-appointment.
Pursuant to Section 233B of the Companies Act, 1956, the Central Government hasprescribed Cost Audit for the company. Based on recommendations of the audit committee andsubject to approval of the Central Government, M/s. EVS & Associates, CostAccountants, Hyderabad have been appointed as Cost Auditors for the year 2013-14.
The relevant cost audit report for the financial year 2012-13 has been filed within thedue date on 3rd September, 2013. The due date for filing the report was 30th September,2013.
MANAGEMENT DISCUSSION AND ANALYSIS
A report on Management Discussion & Analysis for the year under review is providedin a separate section forming part of this Annual Report.
CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION
A report on Corporate Governance is included as a part of this Annual Report.Certificate from the Practicing Company Secretary Mr. V. Bhaskara Rao confirming thecompliance with the conditions of Corporate Governance as stipulated under Clause 49 ofthe Listing Agreement is attached to this report.
TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the provisions of Section 205A(5) and 205C of the Companies Act, 1956,relevant amounts which remained unpaid or unclaimed for a period of seven years have beentransferred by the Company, from to time to time on due dates, to the Investor Educationand Protection Fund.
Pursuant to the provisions of Investor Education and Protection Fund (Uploading ofinformation regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, theCompany has uploaded the details of unpaid and unclaimed amounts lying with the Company ason August 05, 2013 (date of last Annual General Meeting) on the websites of the Companyand Ministry of Corporate Affairs.
RELATED PARTY TRANSACTIONS
As a matter of policy, your Company carries out transactions with related parties on anarms-length basis. Statement of these transactions is given in other explanatoryinformation attached in compliance of Accounting Standard No.AS-18.
Your Directors wish to inform that the Company has not accepted any deposits frompublic covered by provisions of Section 58A of the Companies Act, 1956.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO
Particulars required under Section 217 (1) (e) of the Companies Act, 1956 read withRule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors)Rules, 1988 is given in the Annexure I to this report.
Particulars of employees required to be furnished under Section 217 (2A) of theCompanies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 aregiven in the Annexure - II attached and forms part of this Report.
The Board expresses its gratefully appreciation for the continued assistance andco-operation received from Government authorities, Financial Institutions, Banks,customers, suppliers and investors. The Board also wishes to place on record itsappreciation for the dedication and commitment extended by its employees at all levels andtheir contribution to the growth and progress of the company.
For and on behalf of the Board of Directors
Dr. Murali K. Divi
Chairman & Managing Director
23rd June 2014
Annexure - I
Information pursuant to Section 217(1)(e) of the Companies Act 1956 read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.
FORM - A
Form for disclosure of particulars with respect to Conservation of Energy
A. CONSERVATION OF ENERGY
Power and Fuel consumption
|Total Amount - (Rs.lakhs)||10698||9526|
|Rate/Unit - Rs.||6.68||6.60|
|(b) Own generation:|
|Units per Lt. of diesel||3.36||3.41|
|Cost/Unit - Rs.||16.10||13.22|
|2. Coal (D/C grade)|
|Total Cost - (Rs.lakhs)||3944||3068|
|Average rate - Rs.||3.90||3.74|
B. CONSUMPTION PER UNIT OF PRODUCTION:
|Products Electricity (Units) Coal (D/C Grade) Others (Specify) }||Since the Company manufac- tures different types of active pharmaceutical ingredients and intermediates, it is not practicable to give consump- tion per unit of production.|
FORM - B
Form for disclosure of particulars with respect to technology absorption
RESEARCH AND DEVELOPMENT (R&D):
|1. Specific areas in which R&D is carried out by the Company.||: Process development for Active Pharmaceutical Ingredients and inter- mediates.|
|2. Benefits derived as a resultof the above R&D||: Developed new products and achieved cost and process efficiencies on existing products.|
|3. Future plan of action||: To develop processes for newer products and intermediates.|
4. Expenditure on R&D:
(Rs. in lakhs)
|d) Total R&D Expenditure as a percentage of Sales||1.40%||1.33%|
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:
|1. Efforts in brief, made towards technology absorption and adoption. :||The company has its own R&D Centre which develops technologies and processes for Active P h a r m a c e u t i c a l Ingredients and drug intermediates and these technologies are absorb- ed and implemented at the companys Plants.|
|2. Benefits derived as a result of the above efforts :||The company constantly has been executing process developments for its product range. Process optimization has been achieved in Produ- ction, which resulted in lower cost of production and substantial exports. The developments implemented brought more green chemistry by reducing reagents, minimize wastes and increasing recoveries.|
|3. Information regards import of technology during the last 5 years. :||There is no import of technology.|
FORM - C
Foreign Exchange earnings and outgo (on accrual basis)
(Rs. in lakhs)
|(a) Foreign Exchange earnings:|
|i) FOB Value of Exports||225764||186016|
|ii) Service charges||421||1877|
|(b) Foreign Exchange outgo:|
|i) Remittance in Foreign Currency:|
|Dividend (Net of Tax)||0.15||7|
|ii) CIF value of imports:|
(Rs. in lakhs)
|Components & Spares||97||76|
|iii) Expenditure in Foreign Currency towards:|
|Memberships and Subscriptions||60||75|
|Books and Periodicals||14||10|
|Foreign Bank Charges||53||49|
Information pursuant to Section 217 (2A) of the Companies Act, 1956 read with theCompanies (Particulars of Employees) Rules, 1975
|Name||Age (Yrs)||Qualifications||Desig nation||Date of commencement of employment||Expe rience (Yrs)||Gross remune ration (Rs.crores)||Last employment|
|Dr. Murali K. Divi||63||M. Pharm. Ph. D.||Chairman & Managing Director||12-Oct-90||39||33.39||Managing Director, Cheminor Drugs Ltd.|
|Ramana. N.V.||56||B.Sc.(Chem)||Executive Director||26-Dec-94||29||17.18||President, Enmark Exim Services Pvt. Ltd|
|Madhusudana Rao Divi||70||M.E. (Structural Engg.)||Director- Projects||14-Oct-94||45||0.99||Executive Director Sadah General Trading & Const Co., Kuwait|
|Kiran S. Divi||38||M. Pharm.||Director & President- Operations||10-Aug-01||13||11.77||--|
|Chandra S. Divi *||45||B.E.||General Manager||19-Oct-94||19||0.75||--|
|Devendra Rao. S.||52||M. Sc.||General Manager||10-Feb-95||31||1.15||Senior Manager (Prod), Natco Pharma Ltd.|
|Hemanth Kumar. G.||54||M. Sc.||General Manager||1-Nov-94||31||1.06||Sr. Prodn. Manager, Sumitra Pharma Ltd.|
|Kishore Babu. L.||62||B.Com, FCMA||Chief Financial Officer||20-Nov-94||41||1.37||Finance Manager, Nagarjuna Fert & Chem Ltd.|
|Prasad. Y.T.S.||46||B.E.||General Manager||1-Nov-90||26||1.15||Engineer (Devpt), Cheminor Drugs Ltd.|
|Ramakrishna. S.||52||M. Sc.||General Manager||15-Feb-95||31||1.06||General Manager (Works), Vera Laboratories Ltd.|
|Ramesh Babu. M.||48||B. Sc.||Chief Technologist||1-Nov-90||28||1.15||R&D Incharge, Cheminor Drugs Ltd.|
|Srinivasa Rao. P||49||M. Pharm||Chief Technologist||1-Nov-90||26||1.15||Sr. Chemist, Cheminor Drugs Ltd.|
|Ramesh Babu. L.||58||M.Com, MBA, LLB||Chief Information Officer & Vice President (Procurement)||20-May-09||25||1.04||Group Captain, Indian Air Force|
|Satya Prakash Divi||37||MS (CIS) B.Tech- (Mechan- ical), MBA||Vice President (Sales & Marketing)||1-Mar-13||12||1.11||VP, Marketing & IT, EF International Academy, Switzerland|
* Employed for part of the year
1) Remuneration includes salary, allowances, company contribution to provident fund,Commission, benefits and value of stock options.
2) All the above appointments are contractual.
3) Dr Murali K Divi, Chairman and Managing Director and Mr. Madhusudana Rao Divi,Director - Projects are related to each other.
4) Dr Murali K Divi, Chairman and Managing Director and Mr. Kiran S Divi, Director& President - Operations are related to each other.
5) Mr. L. Ramesh Babu, Chief Information Officer & Vice President (Procurement) isrelated to Mr. N. V. Ramana, E
|03-Nov-14||Divi's Labs slips 4%|
|31-Oct-14||Divi's Labs at 52-week high ahead of results|
|11-Nov-13||Divis Laboratories stock climbs 8%|
|08-Nov-13||Divis Laboratories Q2 net profit at Rs2049.30 mn|
|07-Aug-13||Divis Lab Q1 FY14 review: IIFL Inst Eq maintains add|
|03-Aug-13||Divis Laboratories Q1 net profit at Rs1747.10 mn|
|17-Dec-14||SpiceJet flounders, plunges 15% from days high|
|17-Dec-14||SpiceJet bounces back as govt lends a helping hand|
|16-Dec-14||Jet Airways bounces back, up 5%|
|24-Nov-14||Spicejet clarifies on stake sale|
|21-Nov-14||Mahindra clarifies on Economic Times article|
|29-Sep-14||Kingfisher Airlines closes up over 5%|
Murali K Divi , Chairman & Managing Director
N V Ramana , Executive Director
Madhusudana Rao Divi , Director (Projects)
Kiran S Divi , President & Director
Company Head Office / Quarters:
7-1-77/E/1/303 Divi Towers,
Dharam Karan Road Ameerpet,
Phone : Andhra Pradesh-91-40-23786300 / Andhra Pradesh-
Fax : Andhra Pradesh-91-40-23786460 / Andhra Pradesh-
E-mail : firstname.lastname@example.org
Web : http://www.divislaboratories.com
Karvy Computershare Pvt Ltd
Plot No 17-24 ,Vittal Rao Nagar ,Madhapur ,Hyderabad-500081
|Scheme Name||No. of Shares|
|Reliance Equity Opportunities Fund (G)||26,04,874|
|Reliance Growth Fund - (G)||12,45,992|
|HDFC Mid-Cap Opportunities Fund (G)||8,75,000|
|ICICI Pru Value Discovery Fund (G)||7,10,897|
|ICICI Pru Focused Bluechip Equity Fund (G)||6,74,797|
Check whether Taxed / Tax free investment avenue is better for you
|Taxed Avenue||Tax-Free Avenue|
|Investment amount (Rs.)|
|Tenure of Investment (years)|
|Interest earned (% p.a)|
|Your tax bracket (%)|