Brooks Laboratories Ltd Directors Report.

The Board of Directors of your Company has pleasure in presenting the 17th Annual Report on the affairs of the Company together with the Audited Accounts of the Company for the year ended 31st March, 2019.

1. Financial Results

The Financial Results for the year are as under: -

(Rs in lacs)
PARTICULARS 2018-19 2017-18
Turnover 5503.01 5690.42
Other Income 287.76 24.02
Total Income 5790.77 5714.44
Expenditure 6339.34 6579.33
Profit before Depreciation, Interest & Tax (PBDIT) (548.57) (864.89)
Financial Expenses (Interest) 296.26 244.02
Profit before Depreciation and Tax (PBDT) (844.83) (1108.91)
Depreciation and Amortization 649.96 644.51
Profit before Tax (PBT) (1494.79) (1753.42)
Extraordinary items (Gain) (7.11) 0.81
Income Tax (net of MAT Credit) 14.23 372.14
Profit after Tax (1487.67) (1380.47)
Earnings per Share (in Rs.) (9.20) (8.53)

2. Performance of the Company

During the year under review, your Company has achieved a turnover of Rs.55.03 crores as compared to Rs. 56.90 crores in the previous year showing a marginal decline in turnover as compare to previous year. The Company has incurred a net Loss after tax and depreciation of Rs. 14.87 Crores as compared to loss of Rs. 13.80 Crores in the previous year.

3. Operations during the year

The company operated the Baddi plant at almost full capacity, though the production in units was more but realization per unit went down due to stiff competition resulting in lower sales in value terms. Also we have gone selective in government tenders due to delayed payment of various government agencies thus reducing our sales realization. Sales at Vadodra facility have started picking up but at low pace due to delays in approvals from regulatory agencies of different countries. With more international approvals in coming year we expect to have multifold increase in sales in Vadodra facility.

4. General Information

Domestic Pharma industry is passing through new challenges like GST, stringent price control by Government & stringent regulatory requirements, we at Brooks have taken these challenges seriously & are handling these challenges effectively. We hope to come out with much better results in next few years.

Economic outlook at present with tight credit policy of banks is a matter of concern for all whereby we have to be very selective & cautious while giving credit. We are optimistic that our approach of caution in credit will help us in long term in this credit crisis of market.

5. Disclosure of Utilisation funds raised through Preferential Allotment

The amount of Rs. 8,11,75,000 (Rupees Eight Crores Eleven Lakhs and Seventy Five Thousand) raised through Preferential Allotment of Convertible Warrants to the Promoter group of the Company. The Company received Rs. 5,55,49,000 (Rupees Five Crores Fifty Five Lakhs Forty Nine Thousand) in the financial year 2018-19 and balance Rs. 2,56,26,000(Rupees Two Crores Fifty Six Lakhs Twenty Six Thousand) is received in the financial year 2019-20 is used for Working Capital and Capital Investment in Plant & Machinery of the Company.

6. Dividends

In view of the financial constraints during the year, the Board of Directors has not recommended any dividend for this year.

7. Reserves

The Company has not transferred any amount to reserves and not withdrawn any amount from the reserves

8. Deposits

During the financial year 2018-19, the Company has not accepted any deposits from the public within the provisions of Chapter V of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014.

9. Share Capital

The paid up Equity Share Capital of the Company as on 31st March, 2019 was Rs. 1618.64 lacs. During the year under review, there is no change in the Share Capital of the Company.

10. Issue of Convertible Warrants

In terms of SEBI (Issue of capital and Disclosure Requirements) Regulations, 2009 as amended ("ICDR Regulations"), the Company upon the Shareholders approval at the Annual General Meeting of the Company held on 10th August, 2018 issued and allotted 8,50,000 Convertible Warrants through Preferential Allotment to the Promoter group of the Company by passing the circular Resolution dated 6th September, 2018 and 14th September, 2018 at a conversion price of Rs. 95.50 per Equity Shares aggregating to Rs. 8,11,75,000/-. The Company has received 25% of the consideration along with the application. These Warrants to be converted into an equivalent number of Equity shares of face value Rs. 10/- each at a premium of Rs. 85.50 per share in the Company upon receipt of balance 75% of consideration with in a period of 18 months from the date of allotment. The Company received Rs. 5,55,49,000 (Rupees Five Crores Fifty Five Lakhs Forty Nine Thousand) in the financial year 2018-19 and balance Rs. 2,56,26,000(Rupees Two Crores Fifty Six Lakhs Twenty Six Thousand) is received in the financial year 2019-20 upon which the Warrants were converted in to the Equity Shares of the Company by passing circular resolution dated 09.07.2019 and 26.07.2019.

11. Change in the nature of business, if any

During the period under review there was no change in the nature of business of the company.

12. Material changes and commitments, if any, affecting the financial position of the company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report.

There have been no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

13. Changes in Directors and Key Managerial Personnel

In accordance with the provisions of Section 152 of the Companies Act, 2013, Mr. Atul Ranchal, Chairman of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Dr. D.S. Maity, Whole time Director designated as a CEO cum Technical Director of the Company resigned from the Board w.e.f. 26.08.2019 and Mr. Suresh Garg has been appointed as an additional Executive Director to be designated as the Technical Director of the Company w.e.f. 26.08.2019.

Mr.Rajnish Kumar Bedi, lndependent Director, Mr.Deepak Mahajan, Independent Director of the Company whose term is expired on 7th August, 2019 and Mrs. Sonia Gupta, Independent Director of the Company whose term is expiring on 29th September, 2019 has been re-appointed for the second consecutive term of five years vide special Resolution passed by the Shareholders through Postal Ballot on 20th July, 2019.

14. Statement on declaration given by the Independent Directors

As required under Section 149 (7) of the Companies Act, 2013, all the Independent Directors have given their respective declarations that they meet the criteria of independence as specified in Section 149 (6) of the Companies Act, 2013.

The Independent Directors have complied with the Code of Conduct for Independent Directors as prescribed in Schedule IV of the Companies Act, 2013. They have also given the affirmation for complying the Code of Conduct as formulated by the Company for Directors and Senior Management personnel.

The Independent Directors also given their Consent in DIR-2 and declaration as required under Section 149 (7) of the Companies Act, 2013, all the Independent Directors have given their respective declarations that they meet the criteria of independence as specified in Section 149 (6) of the Companies Act, 2013 at the time of reappointment for the 2nd term.

15. Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companys operations in future

There is no significant and material order passed by the regulators or courts or tribunals during the financial year 2018-19 that impacts the going concern status and companys operations in future.

16. Details of Subsidiary/Joint Ventures/Associate Companies

The Company does not have any Subsidiary or Joint Ventures or Associate Companies

17. Corporate Governance Report and Management Discussion & Analysis

Your Company is committed to good corporate governance practices. The Report on Corporate Governance is given in Annexure 1 and Management Discussion & Analysis provided above, as stipulated in Regulation 34 of listing Regulations forms part of this Directors Report.

18. Corporate Social Responsibility

The Company has constituted a Corporate Social Responsibility Committee in accordance with Section 135 of the Companies Act, 2013 and rules framed thereunder.

A report on the CSR activities in the prescribed format as set out in Annexure to the Companies (Social Responsibility Policy) Rules, 2014, is given in Annexure 2 to this Directors Report. The Policy is disclosed on the Companys website: www.brookslabs. net.

19. Human Resources

Harmonious employees relations prevailed throughout the year. Your Directors place on record their appreciation to all employees for their hard work and dedication.

20. Number of Meetings of the Board

The details of the number of meetings of the Board and other Committees are given in the Corporate Governance Report in Annexure 1 which forms a part of this Annual Report.

21. Composition of Committees

The details pertaining to composition of Committees are included in the Corporate Governance Report in Annexure 1, which forms part of this Annual Report.

22. Recommendations of Audit Committee

All the recommendations of Audit Committee were accepted by the Board of Directors.

23. Vigil Mechanism

Pursuant to the requirements of the Companies Act, 2013, the Company has established Vigil mechanism/Whistle Blower Policy for directors and employees to report genuine concerns about unethical behavior, actual or suspended fraud or violation of the Companys Code of Conduct or ethics policy. The vigil mechanism provides for adequate safeguards against victimization of persons who use such mechanism and make provision for direct access to the Chairman of the Audit Committee in appropriate or exceptional cases. The Policy is disclosed on the Companys website: www.brookslabs.net.

24. Directors Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, the Directors confirm that: a. in the preparation of the annual accounts for the year ended 31st March, 2019, the applicable accounting standards had been followed along with proper explanation relating to material departures; b. the Directors had 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, 2019 and of the profit of the Company for that period; c. the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d. the Directors had prepared the annual accounts on a going concern basis; e. the Directors had 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 had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

25. Internal Financial Controls related to financial statement

The Company has in place adequate internal financial controls related to financial statement. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

26. Fraud Reported by Auditor

There is no fraud reported by the Auditor.

27. Extract of Annual Return

Pursuant to Section 134(3)(a) of the Companies Act, 2013, an extract of Annual Return in the prescribed Form MGT 9 is given as Annexure 7 to this Directors Report.The Directors Report as a part of Annual Report is placed on the Companys website: www. brookslabs.net.

28. Statutory Auditors

M/s. SGCO & Co. LLP, Chartered Accountants, Mumbai, were appointed as Statutory Auditors of the Company at the 13th Annual General Meeting held on 29th September, 2015 till the conclusion of 17th Annual General Meeting of the Company. As the term of M/s. SGCO & Co. LLP is expiring, the Board of Directors of the Company on the recommendation of Audit Committee, recommends their re-appointment for the 2nd term of five consecutive years from the conclusion of this Annual General Metting till the conclusion of 22nd Annual General Meeting of the Company. The Report given by the Statutory Auditors on the financial statement of the Company is part of the Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the auditors in their Report.

29. Cost Auditors

Pursuant to the provisions of section 148(3) of the Companies Act, 2013, the Board has appointed M/s. Balwinder Singh & Associates (Firm Reg. No. 000201), Cost Accountants, F-125, Phase VIII B, Industrial Area, Mohali- 160071, as the Cost Auditors of the Company to conduct an audit of the cost records of bulk drugs and formulations, maintained by the Company for the financial year ending 31st March, 2020. The Board has approved the remuneration payable to the Cost Auditors subject to ratification of the Members at the forthcoming Annual General Meeting.

The Cost Audit Reports would be submitted to the Central Government within the prescribed time.

30. Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company engaged the services of M/s. Sharma Sarin and Associates, Company Secretaries in practice, Chandigarh, to conduct the Secretarial Audit of the Company for the financial year ended 31st March, 2019.

The Secretarial Audit Report (Form MR-3) is given as Annexure 3 to this Directors Report. The said Report does not contain any qualification, reservation or adverse remark or disclaimer.

31. Particulars of Loans, Guarantees or Investments

Details of Investments covered under the provisions of Section 186 of the Companies Act, 2013 is given in the Note No. 5 of the Notes to the Financial Statement.

32. Contracts and arrangements with Related Parties

All transactions of the Company with Related Parties are in the ordinary course of business and at arms length. Information about the transactions with Related Parties is presented in Note No. 31(b) in Notes to the Accounts.

Form AOC – 2 pursuant to the provisions of Section 134 (3) (h) of the Companies Act, 2013, read with Rule 8 (2) of the Companies (Accounts) Rules, 2014 is given as Annexure 5 to this Directors Report.

33. Risk Management Policy

The Company does not have any Risk Management Committee due to the non-applicability of the provisions of Regulation 21 of the Listing Regulations, whereas the Company has Risk Management Plan. Business Continuity Plans are periodically reviewed and tested to enhance their relevance. The Risk Management Framework covering business, operational and financial risk is being continuously reviewed by the Audit Committee. At present, in the opinion of the Board of Directors, there are no risks which may threaten the existence of the Company.

34. Disclosure pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

The information required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure 6 to this Directors Report.

The Statement pursuant to Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not applicable to the Company for the financial year 2018-19.

35. Conservation of Energy, Technology Absorption And Foreign Exchange Earnings And Outgo

The Statement of conservation of energy, technology absorption, foreign exchange earnings and outgo, as required prescribed in Rule 8(3) of the Companies (Accounts) Rules, 2014 is given in Annexure 4 to this Directors Report.

36. Policy on appointment and remuneration of Directors

The Nomination and Remuneration Committee of the Company has recommended to the Board a Policy relating to the remuneration for Directors, Key Managerial Personnel and other employees including the criteria for determining the qualification, positive attributes and independence of a Director, as required under Section 178(1) of the Companies Act, 2013 which was adopted by the Board. A brief detail of the policy is given in the Corporate Governance Report in Annexure 1 which forms a part of this Annual Report. The Policy is disclosed on the Companys website: www.brookslabs.net.

37. Evaluation of Performance of Board, its Committees and Individual directors

During the year, a meeting of the Independent Directors was held to review the performance of the non-independent Directors and the Board as a whole and the Chairman on the parameters of effectiveness and to assess the quality, quantity and timeliness of the flow of information between the Management and the Board. Mr. Deepak Mahajan was appointed as the Lead Director to oversee the evaluation process at the meeting of the Independent Directors.

38. Compliance with Secretarial Standards

In terms of the section 118(10) of the Companies Act, 2013, the Company complies with the Secretarial Standards 1 and 2, relating to the ‘Meetings of the Board of Directors and General Meetings respectively as specified by the Institute of Company Secretaries of India and approved by the Central Government. The Company has also voluntarily adopted the recommendatory Secretarial Standard-4 on ‘Report of the Board of Directors issued by the Institute of Company Secretaries of India.

39. Sexual Harassment of Women at the Workplace(Prevention, Prohibition and Redressal) Act, 2013

The Internal Complaint Committee under the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 has been formed.

There is nil case filed and disposed as required under the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013.

40. Acknowledgement

Your Directors are pleased to place on record their sincere gratitude to the Central Government, State Government(s), Financial Institutions, Bankers and Business Constituents for their continuous and valuable co-operation and support to the Company. They also take this opportunity to express their deep appreciation for the devoted and sincere services rendered by the employees at all levels of the operations of the Company during the year.

For and on Behalf of the Board
For Brooks Laboratories Limited
Place: Mumbai Sd/- Sd/-
Date: 26.08.2019 Rajesh Mahajan Rajnish Kumar Bedi
(Managing Director) (Independent Director)
(DIN:02000634) (DIN:05287369)