BDH Industries Ltd Directors Report.

To,

The Members,

BDH Industries Limited

Your Directors have pleasure in presenting 30th Annual Report and Audited Financial Statements for the year ended 31st March, 2020.

FINANCIAL RESULTS :

The financial performance of the Company is summarized below:-

(Rs in Lakhs)
Particulars 2019-20 2018-19
Sales (Net) 5947.73 5169.12
Other Income 79.56 88.55
Total Income 6027.29 5257.67
Profit before Interest and Depreciation 977.16 788.89
Less : Interest 68.90 51.79
Depreciation 96.24 82.77
Profit before tax 812.02 654.33
Less : Provision for Taxation 227.39 158.64
Deferred Taxation (9.61) 12.70
Net Profit After Tax 594.24 482.99

The standalone financial statements are prepared in accordance with Indian Accounting Standards (Ind-AS) as prescribed under section 133 of the Companies Act , 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and the Companies (Indian Accounting Standards) Amendment Rules, 2016.

REVIEW OF OPERATIONS :

During the year 2019-20 Company achieved Sales (Net) of Rs 5947.73 Lakhs as compared to Rs 5169.12 Lakhs in the previous year registering growth of 15% over previous year. The Operating Profit of the Company i.e. Profit before Interest and Depreciation has increased from Rs 788.89 lakhs in previous year to Rs 977.16 lakhs in 2019-20. The Company earned Net Profit after Tax of Rs 594.24 lakhs during the year as against Rs 482.99 lakhs as in previous year, a growth of 23% over previous year. An amount of Rs 89.14 Lakhs is transferred to the General Reserve from the net profit of the financial year 2019-20.

COVID-19 PANDEMIC RESPONSE

The Government of India enforced lockdown in March 2020 to contain the spread of COVID 19 pandemic in the country. Since then the Management of the Company is continuously monitoring the evolving COVID 19 pandemic situation. As the Company is manufacturing pharmaceutical formulations covered under essential services, the operations were permitted to continue (barring few days) with limited manpower in public interest by Food and Development Authority, Maharashtra and Municipal Corporation of Greater Mumbai. Hence there was no major disruption in the business operations of the Company. However impact assessment of COVID 19 pandemic is a continuing process given the uncertainties associated with its nature, spread & duration resulting into prolonged lockdown situation, restrictions in mobility, Government actions, impact on financial markets and overall economy.

MATERIAL CHANGES AND COMMITMENTS AFTER THE END OF THE FINANCIAL YEAR:

No material changes or commitments affecting the financial position of the Company have occurred between the end of the financial year to which financial statements in this report relate and the date of the report.

CHANGE IN THE NATURE OF BUSINESS, IF ANY:

The Company continues to operate in one segment i.e. pharmaceuticals and there is no change in the nature of business of the Company.

DIVIDEND:

Your Directors are pleased to recommend dividend of Rs 2.50/- per equity share of face value Rs 10/- each (previous year Rs 2.75/- per share) for the financial year ended on 31st March, 2020. The dividend on Equity Shares is subject to the approval of the shareholders at the 30th Annual General Meeting. The total cash outflow on account of dividend payment will be Rs 143.93 lakhs

DIRECTORS AND KEY MANAGERIAL PERSONNEL :

The Board of Directors at present has six members Ms. Jayashree Nair, is the Chairperson and Managing Director of the Company. Mr. S. C. Kachhara is the Joint Managing Director and Chief Financial Officer of the Company. There are three independent directors on the Board of the Company, Dr. Dinesh Variar, Mr. Bhagirath Singh and Mr. Kairav Trivedi. There is one Non-Executive Director on the Board of the Company - Ms. Karthika Nair, who retires by rotation at the forthcoming Annual General Meeting, being eligible and offers herself for re-appointment. Accordingly, the Board recommends her re-appointment. Ms. Jayashree Nair, Managing Director, Mr. S. C. Kachhara, Joint Managing Director and Chief Financial Officer and Ms. Nikita Phatak, Company Secretary of the Company are the Key Managerial Personnel of the Company. During the year five Board meetings were held, details of which are given in the Corporate Governance Report.

DECLARATION BY INDEPENDENT DIRECTORS:

The Independent Directors of the Company - Dr. Dinesh Variar, Mr. Bhagirath Singh and Mr. Kairav Trivedi have submitted declaration complying with the criteria of independence as provided in Section 149(6) of the Companies Act, 2013.

CONFIRMATION ON INDEPENDENCE OF INDEPENDENT DIRECTORS

The Board of Directors confirm that the independent directors of the Company fulfill the conditions specified in SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and are independent of the management of the company.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to Section 134(5) of the Companies Act, 2013, the Directors state that :-

(a) In the preparation of the annual accounts, the applicable accounting standards have been followed alongwith proper explanation relating to material departures; (b) 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 as at 31st March 2020 and of the Profit of the Company for the year ended 31st March 2020.

(c) The Directors have 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 have prepared the annual accounts on a going concern basis and (e) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

(f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

CORPORATE GOVERNANCE:

The Company has complied with the requirements of Corporate Governance. A report on Corporate Governance together with a certificate from Statutory Auditor forms part of this Annual Report. A declaration from Managing Director under regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is also attached to this report.

LISTING WITH STOCK EXCHANGE:

The equity shares of the Company are listed on BSE (Bombay Stock Exchange). The listing fee for year 2020-2021 has been paid by the Company.

NOMINATION AND REMUNERATION POLICY:

The Board has, on the recommendation of the Nomination & Remuneration Committee, framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The details of the Nomination and Remuneration Policy are covered in the Corporate Governance Report. The said policy is hosted on the Companys website at www.bdhind.com.

RISK MANAGEMENT POLICY :

The Company has adopted a Risk Management Policy to identify and categorize various risks, implement measures to minimize impact of these risks and a process to monitor them on regular basis.

RELATED PARTY TRANSACTIONS :

There were no materially significant related party transactions during the year that have potential conflict with the interests of the Company. The transactions with related parties are disclosed in the notes to the financial statements. Form AOC-2 prescribed under the Companies Act 2013 and Companies (Accounts) Rules, 2014 is furnished as Annexure V to this report. The Policy on Related Party Transactions is also hosted on the website of the Company www.bdhind.com.

VIGIL MECHANISM :

The Company has established a Vigil Mechanism i.e. Whistle Blower Policy to enable the Directors and employees to report to the Audit Committee genuine concerns, unethical behavior and irregularities, if noticed by them, in the Company which could adversely affect Companys operations. The Whistle Blower Policy is also hosted on the website of the Company www.bdhind.com. During the year no concerns or irregularities have been reported by the employees or directors.

FORMAL ANNUAL EVALUATION :

As required under the Schedule IV of the Companies Act 2013 and Clause 49(II) (B)(6) of the Listing Agreement the Independent Directors at their separate meeting held on 18th March 2020 evaluated the performance of the non-independent directors and the Board as a whole. They also reviewed the performance of the Chairperson of the Company, taking into account the views of the Joint Managing Director and also assessed the quality, quantity and timeliness of flow of information between the Company management and the Board that was necessary for the Board to effectively and reasonable perform their duties.

The Board assessed the performance of the independent directors as per the criteria laid down and have recommended their continuation on the Board. The Board of Directors assessed the performance of individual directors on the Board based on parameters such as relevant experience and skills, focus on shareholder value creation, governance standards, knowledge of business, processes and procedures followed, integrity, relationship with Management, impact on key management decisions etc.

INTERNAL FINANCIAL CONTROLS :

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation were observed.

FIXED DEPOSIT :

The Company has not invited / accepted any deposits during the year under review as envisaged under sections 73, 74 and 76 of the Companies Act, 2013.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS :

The Company has not made any loans to any third party as envisaged under section 186 of the Companies Act 2013. The Company has not given any guarantee other than bank guarantee in the normal course of business to meet the contractual obligations. The Board of Directors have authorized the Company to invest the surplus in deposits with Banks.

SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS :

During the year under review, there have been no significant and material orders passed by any regulators / courts / tribunals that could impact the going concern status and the Companys operations in future.

CONSERVATION OF ENERGY AND TECHNOLOGY UPGRADATION AND FOREIGN EXCHANGE EARNINGS AND OUTGO :

Pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 particulars of energy conservation, technology absorption and foreign exchange earnings and outgo are appended hereto as Annexure IV and forms part of the Annual Report.

INSURANCE :

The properties and assets of your Company are adequately insured.

INDUSTRIAL RELATIONS :

The Company has maintained cordial and harmonious relations with all its employees.

RESEARCH &DEVELOPMENT :

R & D Centre of the Company is recognized and registered with Department of Science and Industrial Research (DSIR), Ministry of Science & Technology, Government of India. The R & D centre is also approved under section 35 (2AB) of the Income Tax Act 1961 for the purpose of weighted tax deduction. Research & Development being useful for the sustained growth of the Company, investments in R&D are carried out to keep pace with changing domestic and global scenario. With qualified and experienced research team, the Company has focused its thrust on development of new dosage forms and drug delivery systems, improvement in processes as well as yield and cost reduction.

ENVIRONMENT, HEALTH &SAFETY :

The Company is committed to environment protection and industrial safety. Our manufacturing facility has been accredited with WHO-GMP and complies with applicable environment regulations of Maharashtra Pollution Control Board. The Company is also accredited with ISO 9001:2015 certification from SGS United Kingdom Limited. The Company conducts annual medical check-up programs, first aid and fire safety sessions for employees.

PROJECTS : a. The Company has entered into power generation business and installation of two units of wind turbines 0.8 MW each has been completed at Jaisalmer district, Rajasthan. Since Power Purchase Agreement (PPA) is not yet signed by State Government of Rajasthan and alternate commercial proposals are being evaluated. b. The Company has also entered into agro products business. The plantation of cashew, mango and coconut grafts has been completed. The existing lease agreement was terminated in July 2019 and the Company has invited applications for lease of the warehouse at MIDC Kudal.

CORPORATE SOCIAL RESPONSIBILITY :

The Company is committed to good corporate citizenship. As a part of Corporate Social Responsibility, the Company has undertaken activities in the field of education. The CSR Policy of the Company is placed on the website of the Company www.bdhind.com. During the year the Company has provided note books and drawing boards to municipal schools. Further the Company has also sponsored a Research Project for translating lab-ideas into market ready products. Pursuant to the provisions of the Section 135(2) of the Companies Act 2013, the Report on CSR initiatives is enclosed as Annexure I of this report.

ANNUAL RETURN :

The Annual Return of the Company as on 31st March 2020 is placed on its website - www.bdhind.com in the Investors Section.

TRANSFER OF UNPAID/UNCLAIMED DIVIDEND AMOUNT AND SHARES TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF) :

Pursuant to sections 124 and 125 of the Companies Act 2013 read with Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016 (IEPF Rules) dividends if not claimed for a consecutive period of 7 years from the date of transfer to unpaid dividend account of the Company are liable to be transferred to the Investor Education and Protection Fund. Further shares in respect of such dividend which have not been claimed for a period of 7 consecutive years are also liable to be transferred to the demat account of the IEPF Authority. As a proactive measure to safeguard the interest of the shareholders, the Company sends reminder to the shareholders to claim their dividends before transferring the same to IEPF Authority. Notices in this regard are also published in the newspapers, uploaded on BSE website and the details of unclaimed dividend of shareholders whose shares are liable to be transferred to the IEPF Authority are uploaded on the Companys website www.bdhind.com The unclaimed dividend and shares transferred to IEPF during the year 2019-20 are as follows :-

Amount of unclaimed Number of shares
Financial Year
dividend transferred transferred
2011-12 Rs 1,01,022/- 8757

The Company has also uploaded the details of abovementioned shares on the website of IEPF Authority www.iepf.gov.in The voting rights on the shares transferred to IEPF Authority shall remain frozen till the rightful owner claims the shares.

Members may note that the shares and unclaimed dividend transferred to IEPF Authority can be claimed by filing online application in prescribed form no. IEPF 5 available on www.iepf.gov.in and sending physical copy of same, duly signed to the Company alongwith requisite documents.

The unpaid/unclaimed dividend for the financial year 2012-13 onwards will be transferred to IEPF as given below :-

Financial Year Date of Declaration Due date for transfer to IEPF
2012-13 30/08/2013 04/10/2020
2013-14 17/09/2014 20/10/2021
2014-15 28/09/2015 02/11/2022
2015-16 22/09/2016 28/10/2023
2016-17 27/09/2017 02/11/2024
2017-18 25/09/2018 31/10/2025
2018-19 18/09/2019 24/10/2026

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

The Management Discussion and Analysis Report as required under Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is included in this Annual Report.

AUDITORS AND AUDITORS REPORT:

STATUTORY AUDIT:

M/s. CLB & Associates, Chartered Accountants (Firm Registration No. 124305W) are the Statutory Auditors of the Company for a period of 5 years till the conclusion of the Companys 32nd Annual General Meeting. The Auditors Report read with the notes to accounts are self-explanatory. There are no qualifications, reservations or adverse remarks made by the Auditors. The Statutory Auditors have submitted No Disqualification Certificate for the financial year 2020-21 to the Board of Directors of the Company.

SECRETARIAL AUDIT:

Pursuant to the provisions of section 204 of the Companies Act 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s JHR & Associates, Practicing Company Secretaries were appointed as the Secretarial Auditors for auditing secretarial records maintained by the Company for the financial year ended on 31st March 2020. The Secretarial Audit Report is annexed herewith to the Directors Report in Annexure II. There are no qualifications, reservations or adverse remarks made by the Secretarial Auditors.

COST AUDIT:

Pursuant to the provisions of section 148 of the Companies Act 2013 and Companies (Audit and Auditors) Rules 2014, M/s. Krishna & Associates, Cost Accountants (Firm Registration No. 100939) were appointed as cost auditors to conduct the audit of the cost records of the Company for the financial year 2019-20.The Cost Audit Report for financial year 2019-20 shall be filed with Ministry of Corporate Affairs within prescribed time.

RATIO OF REMUNERATION:

As required under Section 197(12) of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the required details are given below:

a.
Directors Ratio to Median Remuneration
Ms. Jayashree Nair 34:1
Mr. S. C. Kachhara 34:1
Ms. Karthika Nair 0.34:1
Dr. Dinesh Variar 0.41:1
Mr. Bhagirath Singh 0.54:1
Mr. Kairav Trivedi 0.54:1

b. The percentage increase in remuneration of Ms. Jayashree Nair, Managing Director is 10%, Mr. S. C. Kachhara, Joint Managing Director and Chief Financial Officer is 10% (as approved by members in 26th Annual General Meeting) and Ms. Nikita Phatak, Company Secretary is 9%

c. The median remuneration of employees increased by 9% in the financial year.

d. There are 129 permanent employees on the rolls of the Company.

e. The Companys PAT increased from Rs 482.99 lakhs to Rs 594.24 lakhs, an increase of 23% against which the average increase in remuneration is 9% and this increase is aligned with the Companys Remuneration Policy.

f. The aggregate remuneration of key managerial personnel (KMP) is Rs 178.18 lakhs, revenue of the Company during the year is Rs 6027.29 lakhs and the remuneration of KMP is 3% of revenue.

g. The market capitalization of the Company as on 31st March, 2020 was Rs 30.83 crores and as on 31st March, 2019 it was Rs 42.75 crores. The PE ratio of the Company as on 31st March, 2020 was 5.19 and as on 31st March, 2019 it was 8.84. The Company made public offer of equity shares (of face value Rs 10/- each share) at premium (of Rs 30/- each share) in the year 1995.

h. The average percentile increase in salaries of employees other than managerial personnel is 9% and increase in managerial remuneration is 10% as approved by members at the 26th Annual General Meeting.

i. There is no variable component linked to various parameters - financial and non-financial in the remuneration availed by the directors.

j. During the year, there was no employee, who is not a director of the Company and received remuneration in excess of the highest paid directors.

k. We affirm that the remuneration paid is as per Remuneration Policy of the Company.

GENERAL :

The Company has an internal complaints committee under the Sexual Harassment of Women at Work place (Prevention, Prohibition and Redressal) Act 2013 for prevention and redressal of complaints of sexual harassment at workplace. The Company has not received any complaint during the year ended 31st March 2020 pursuant to the said Act.

APPRECIATION :

The Directors regret the loss of life due to COVID-19 pandemic and are deeply grateful and have immense respect for the entire workforce who risked their life and safety to fight this pandemic.Your Directors thank statutory authorities and bankers for co-operation extended by them to the Company. Your Directors place on record their sincere appreciation of the continued support by the employees and finally thank the shareholders for the trust placed by them with the Company.

FOR AND ON BEHALF OF THE BOARD
Jayashree Nair
Chairperson & Managing Director