ABL Bio-Technologies Ltd Directors Report

ABL BIOTECHNOLOGIES LIMITED ANNUAL REPORT 2011-2012 DIRECTORS REPORT Your Directors present the 20th Annual Report, together with the Audited Accounts for the year ended on March 31st, 2012. Financials During the year under review, the Company did not have any revenue generating business. All its efforts are now concentrated on its research activities, from which, it is hoped that its revival will commence. The Company recorded a loss of Rs.17.92 lakhs on account of Depreciation charges Rs. 6.77 lakhs, Misc. Expenses written off Rs. 499 lakhs and other overhead expenses of Rs. 537 lakhs. Operations Your Company has not conducted any business during last year but has focused itself at restructuring its operations and objectives, so as to take advantage of its experience and Intellectual property and become a full fledged technology provider. * R&D Division The research operations of the Company have been relocated successfully in leased premises at Bangalore. With the induction of qualified personnel and re-initiation of a few select programs, it is hoped that technology development efforts will lead the Company to greater success. The R & D activities were transferred to its 100% subsidiary ABL Research Pvt.Ltd, located in Bangalore. The DHA Project Your Directors are happy to inform that the Companys 22 litre pilot fermenter is operating well in the new Research Facility under a new team and fine tuning of various processes for the production of fatty acids is underway. Your Directors are also happy to inform that its efforts in pursuing Intellectual Property and filing patent applications in the USA, Europe and India have been successful. The Company hopes to attract partnerships in establishing commercial scale facilities for a number of Fatty Acids, in the days to come. * Formation of Special Purpose Vehicles Your Company has chosen a strategy of incorporating three new wholly owned subsidiaries of ABL Biotechnologies Ltd, in order to facilitate focus on activity and invite investments in the respective business segments. Accordingly three wholly owned subsidiaries were formed on 30th March 2011 as under: ABL Research Pvt.Ltd, (R & D segment) a wholly owned subsidiary of ABL will now focus on select technologies and developmental objectives, with a view to market requirements and commercialisation objectives. As mentioned before it is functioning in full swing at Bangalore. ABL Healthcare Pvt. Ltd (Formulation segment) a wholly owned subsidiary of ABL, will focus on formulation development and manufacture of various types of contract manufacturing businesses. It will seek to successfully commercialise over 450 formulations developed and enhanced them, in the days to come. It has not been activated yet. ABL Lipids Ltd, (Fatty acids DHA Segment) a wholly owned subsidiary of ABL, will now focus on commercialisation and manufacture of a variety of Fatty Acids and derivatives for the international nutrition and pharmaceutical industry. Initially, major efforts are being focused at either Technology sale or Joint Ventures in the area of Lipids. Listing The shares of the Company are listed in the Mumbai and Luxemburg stock exchanges. The shares of the Company are traded in the demat form. Corporate Governance The Company continues to follow the code of Corporate Governance during the year under review. A separate report on the same is attached. Deposits Your Company has not accepted any deposits from public during the year under review. Directors Mr. K. O. Isaac, Managing Directors term expires and Company has received a notice in writing from a member under section 257 of the Act proposing his candidature for the office of the Managing Director of the Company. Auditors M/s. Pratapkaran Paul & Co., Chartered Accountants, Chennai, Auditors of the Company retire at the ensuing annual general meeting and are eligible for reappointment. A notice has been received under section 224(1 B) of the Companies Act, 1956 from them confirming their eligibility for reappointment Employees Your Directors place on record their appreciation of the sincere and dedicated services rendered by all the employees during the year under review. None of the employees have received remuneration in excess of the sum prescribed u/s 217(2A) of the companies Act 1956. Directors Responsibility Statement The Directors confirm that: * in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed. * they 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 as on 31st March, 2012 and of the Profit and Loss of the Company for that period. * proper and sufficient care has been taken 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. * the annual accounts are prepared on a going concern basis Energy, Technology Absorption & Foreign Exchange Information in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 regarding conservation of energy, Technology absorption and Foreign Exchange earnings and outgo are given below: Conservation of Energy Energy conservation is not applicable to the biotechnology industry. Technology Absorption The technology for microbial metabolites is developed indigenously and hence absorption of foreign technology does not arise. Foreign Exchange Earnings & Outgo There were neither any earnings nor any expenditure in foreign exchange during the year. Acknowledgement The Board of Directors wishes to place on record its gratitude to the Department of Science and Technology, Department of Bio-Technology and the other Institutions/Organizations/Agencies who have supported the company during the year. For and on behalf of the Board of Directors Date : 03/09/2012 K. O. Isaac Place: Chennai Chairman and Managing Director MANAGEMENT DISCUSSION AND ANALYSIS Industries Structure, Development and outlook Indian Pharmaceutical industry is the worlds second largest by volume and likely to lead the countrys manufacturing sector. Indias Bio - tech industry clocked a 17% growth in the fiscal 2009 -10. Association of Biotechnology-led Enterprises (ABLE) estimates the industry to grow to $ 5 billion in revenue in near future. Indian Bio-tech market is dominated by Bio-pharmaceuticals which registered a growth of 30% in 2009 - 10 and contributed 60% of the industrys growth. Out look of the industry is prospective but there are challenges to be faced by the industry. Your company being primarily a technology development company is in the process of re- structuring its business model to focus on converting technologies and marketing them to industry. Thus the years ahead will be focused at completing development of selected projects and working on out licensing them to industry. Financial performance As mentioned earlier in the report that the company as a strategy is currently not pursuing the formulation segment of the business. Hence there was no sale recorded during the year. Company incurred a loss of Rs. 17.92 lakh on account of fixed expenses during the year under review. Internal control system and adequacy The system of internal control has been established to provide reasonable assurance of safeguarding assets, maintenance of proper accounting records in compliance with applicable Laws and Regulations to ensure reliability of financial statements and reports. The Statutory Auditors and the Audit Committee review all financial statements and ensure adequacy of internal control systems. Risks Management Risk evaluation and management of risk is an ongoing process in the company. Human Resources Since your Company is in the Biotechnology Industry, the criticality of talented man-power and their retention needs no emphasis. Your company is in the process of working out a comprehensive plan to attract, motivate and retain highly skilled and technically competent man-power. Cautionary Statement Statements in the Management discussion and analysis describing the companys objectives, projections, estimates and expectations may be forward looking statements within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the companys operations include economic conditions affecting demand/supply and prices conditions in the domestic and overseas markets in which the company operates/ going to operate, changes in government regulations, tax laws and other statutes and other incidental factors. Place: Chennai for ABL Biotechnologies Limited Date : 03/09/2012 K O Isaac Chairman and Managing Director