DIRECTORS
The Directors are pleased to present the Thirty-first Annual Report of the Company
together with the audited Accounts for the year ended 30th June 2014. The
working results of the Company for the year ended 30th June 2014 vis--vis
those of the previous year are summarized below:
|
Year ended 30.06.2014 |
Fifteen months Period ended 30.06.2013 |
|
(Rs. In Crores) |
(Rs. In Crores) |
| 1. Operating Income |
483.47 |
1233.10 |
| 2. Other Income |
15.13 |
26.22 |
| 3. Profit before Tax |
17.85 |
115.71 |
| 4. Less: Provision for Tax |
|
|
| Current Year |
- |
24.50 |
| Deferred Tax |
0.67 |
(2.53) |
| 5. Profit after Tax |
17.18 |
93.74 |
| 6. Less: Prior year Tax adjustments |
9.26 |
- |
| 7. Add: Profit as per the last Balance Sheet |
216.62 |
192.88 |
| 8. Profit available for appropriation Out of which Directors recommend |
224.54 |
286.62 |
| Appropriation as under: |
|
|
| a) Proposed Dividend |
- |
- |
| b) Tax on Dividend |
- |
- |
| c) Transfer to General Reserve |
30.00 |
30.00 |
| d) Transfer to Debenture Redemption Reserve |
40.00 |
40.00 |
| e) Surplus carried forward to Balance Sheet |
154.54 |
216.62 |
OPERATIONS AND PERFORMANCE:
During the year ended 30th June 2014, your company’s Operating Income was
Rs.483.47 Crores for the year as compared to Rs.1233.10 Crores for the fifteen months
period ended 30th June, 2013. This represents an decrease of Rs.749.63 Crores over the
previous year mainly on account of constraints of working capital. Profit before Tax was
Rs. 17.85 Crores as against Rs. 115.71 Crores, for the previous year and Net Profit after
providing for taxes was Rs. 17.18 Crores as against Rs.93.74 Crores for the previous year.
For the year ended 30th June 2014 financial results showed Exceptional Item
accounted of Rs. 380.04 Crores (net) which is comprising of Profit from Slump sale of Rs.
1734.31 Crores (net of Tax) after writing off Trade receivables Rs. 322.71 Crores and
advances Rs. 1031.56 Crores.
GLOBAL DEPOSITORY RECEIPTS:
The Company had made an issue of Global Depository Receipts (GDRs) during the year
2004-05. All the issued GDRs have been converted into equity shares and no GDRs are
outstanding as on 30th June 2014. The Company’s listing for the GDRs,
however, continues on the Luxembourg Stock Exchange and as on 30th June 2014
the same were quoted at $ 7.243.
DIVIDEND:
In view of the severe financial constraints faced by the Company the Directors at their
meeting held on 27th August 2014 have decided to skip dividend for the
accounting year under review.
DIRECTORS:
Mrs. Urvashi Saxena who retires by rotation has resigned w.e.f. 28th November 2014 with
an intent not to be re-appointed and company resolved not to fill in the vacancy.
Dr. S. Jayaram who retires by rotation has resigned w.e.f. 1st December 2014 with an
intent not to be re-appointed and company resolved not to fill in the vacancy.
The Board of Directors of the Company ("the Board") under Section 161 of the
Companies Act, 2013 and the Clause 120 of Articles of Association of the Company,
appointed Mr. Farid Gulmohamed as Additional Director of the Company with effect from 14th
February 2014. In terms of Section 161 of the Companies Act, 2013, and Clause 120 of
Articles of Association of the Company Mr. Farid Gulmohamed holds office upto the date of
this Annual General Meeting has resigned w.e.f. 14th November 2014 with an
intent not to be re-appointed and company resolved not to fill in the vacancy.
There is no re-appointment of any director who are retire by rotation. Therefore as
required under Clause 49 of the Listing Agreement, details are not given in the report on
Corporate Governance,forming part of this Annual Report.
Mr. Edoardo Carlo Richter, the Director of the Company has resigned as Director of the
Company with effect from 14th February, 2014, Mr. James McEuen has resigned as
Director of the Company with effect from14th May 2014, Dr. R. Srinivasan the Director of
the Company has resigned as Director of the Company with effect from 5th June
2014 and Mr. Michael Bastain the Director of the Company has resigned as Director of the
Company with effect from 9th August, 2014. The Board accepted their resignations and place
on record their appreciation for the valuable guidance and advice provided by Mr. Edoardo
Carlo Richter , Mr. James McEuen, Dr. R. Srinivasan and Mr. Michael Bastain during their
tenure as Directors of the Company.
AUDITORS:
M/s. S. S. Khandelwal & Co., Chartered Accountants, Mumbai retire as the Auditors
of the Company at the conclusion of the ensuing Annual General Meeting. They have
signified their willingness to get re-appointed and have confirmed their eligibility in
terms of the provisions of Section 141 of the Companies Act, 2013 and Rule 4 of Companies
(Audit and Auditors) Rules, 2014. On the recommendation of the Audit Committee, the Board
proposes for consideration of the Shareholders pursuant to the provisions of Section 139,
142 and other applicable provisions, if any, of the Companies Act, 2013, as Statutory
Auditors of the Company, to hold office from the conclusion of the 31st Annual General
Meeting up to the conclusion of the 34th consecutive Annual General Meeting. You are
requested to appoint Auditors and fix their remuneration.
COST AUDITORS:
With the resignation of M/s. Sevakari, Khare and Associates, Cost Accountants, Mumbai
having registration No. 00084, on the recommendation of the Audit Committee at its meeting
held on November, 14th, 2014, the Board has, considered and approved the appointment of
T.M. Rathi, Mumbai having Registration No10079 as the cost auditor for the Bulk Drugs and
Formulations for the financial year 2014-2015.
The Cost Audit Reports for bulk drugs and formulations for fifteen months period ended
on 30th June 2013 will be filed with the Central Government in due course of time. The
Cost Audit Report for the accounting period for the year ended 30th June 2014
would be submitted to the Central Government in due course of time.
JOINT VENTURES / SUBSIDIARIES / INVESTMENTS:
‘ELDER INTERNATIONAL FZCO’ the wholly owned subsidiary of the Company
in Jebel Ali, Dubai, United Arab Emirates (Dubai WOS), continues to hold 100% stake
in the U. K. based NeutraHealth Limited.
Dubai WOS also continues to hold 100% interest in Elder Biomeda EAD, Bulgaria which in
turn continues to hold 100% stake in downstream Bulgarian entities, namely, Elder Bulgaria
EOOD, the manufacturing company and Biomeda 2000 EOOD, the distribution company. Bulgaria,
being a part of the European Union, offers an excellent opportunity for the Company to
enter the Eastern European as well as CIS countries. The manufacturing unit in Bulgaria is
being upgraded and once upgradation is completed it is expected that there will be a lot
of opportunities for manufacturing products for the Eastern European, CIS and other
markets. The distribution business has a lot of potential and during the year under review
it has received a number of registrations which will help the distribution company to
widen its scope. The distribution company which used to be operating only in the Bulgarian
market has now started exporting some of its products to nearby countries.
The Dubai WOS continues to hold 100% interest in NutraHealth Ltd., the U.K. subsidiary.
The U. K. operations have shown very encouraging results despite the slowing down of the
U. K. economy. The said U. K. subsidiary has, in a cashless transaction, acquired Max
Healthcare Ltd., U.K. to re-enter the OTC pharmaceutical category and extend and enhance
its product range.
The Company continues to hold it’s investment in the Nepal Joint Venture. During
recent period there have been certain issues on unilateral decisions taken by the Nepalese
partner whereby the Company’s stake in terms of percentage to total capital was
reduced from earlier 40% to 30.6%. The Company has notified its dissent to the action
taken by the partner and has written to the Ministry of Industry, Government of Nepal
seeking an amicable solution in the matter. The discussions were held with the Nepalese
partner as directed by the Director of Industry, Government of Nepal for arriving at an
acceptable solution, however no settlement could be reached so far. Efforts are being made
to work out an amicable settlement to resolve the matter.
BANKERS AND FINANCIAL INSTITUTIONS:
The Directors wish to place on record their sincere gratitude to the consortium of
Banks for working capital lead by State Bank of India for their continued and timely
support to the Company.
The Directors also wish to place on record their sincere gratitude to the various term
lenders and NCD holders for their continued and timely support to the Company. During the
year under review, the company has been defaulting in the repayment of NCD and Interest
thereon. The company is working on Short Term and Medium Term plan for regularization of
default.
EXPORT HOUSE STATUS:
The Company continues to enjoy ‘Export House’ status. The Company’s
products are exported to certain African and South East Asian markets. The registration
procedures are presently going on in a number of countries and once their formalities are
completed, the Company’s exports are expected to increase.
ISO / WHO GMP ACCREDITATION:
The Company continues to be certified as conforming to ISO 9001 : 2000 for development,
manufacturing and marketing of pharmaceutical products. The Company’s bulk drug
manufacturing plant at Patalganga was upgraded according to ICH Q7A guidelines for
manufacturing products for the European markets. The said bulk drug plant as well as
formulation plants of the Company are now approved by WHO GMP and certified as conforming
to ISO 9001 : 2008 standards relating to Quality Management Systems. While the Selaqui
formulations plant of the Company has been accredited for WHO GMP the said plant is being
upgraded for UK MHRA accreditation. The formulation plants at Nerul, Paonta Sahib have
been accredited for WHO GMP standards. The formulations plant at Langha Road near Dehradun
is designed as per USFDA compliance requirements and is also accredited for WHO GMP
DIRECTORS’ RESPONSIBILITY STATEMENT:
Pursuant to Section 217(2AA) of the Companies Act, 1956 the Directors, on the basis of
compliance certificate received from Managing Director, CFO and other executives of the
Company and subject to disclosures in annual accounts as on 30th June 2014 and on the
basis of discussions with the Statutory Auditors of the Company from time to time, declare
and confirm:
a) that in preparation of the annual accounts, the applicable accounting standards have
been followed along with proper explanation relating to material departures;
b) that 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 at the end year ended on
30th June 2014 and the profit of the Company for that year.
c) That the Directors had taken proper and sufficient care for maintenance of adequate
accounting records for the year ended 30th June 2014 in accordance with the provisions of
the Companies Act, 1956 for safeguarding the assets of the Company and for prevention and
detection of fraud and other irregularities.
d) That the Directors had prepared the accounts for the year ended 30th June 2014 on a
‘going concern basis’.
CORPORATE GOVERNANCE:
In pursuance of the system of Corporate Governance instituted by SEBI and forming part
of the Listing Agreement with the Stock Exchanges, a report thereon is separately attached
to this report.
RESEARCH AND DEVELOPMENT ACTIVITY:
The Research and Development activities of the Company continue to be recognized by the
Department of Science and Technology, Government of India. The Research and Development
laboratory of the Company has successfully developed certain import substitute molecules /
intermediates and has been working on development of a number of other molecules. It has
also been continuously working on process developments of the molecules already developed
by it. It has been engaged in development of new products and their improvement in terms
of delivery, absorption and efficacy. The Company has applied for seventeen Indian patents
with seven PCT applications. Out of these one PCT application has been entered in the USA,
Europe and Japan.
INSURANCE OF ASSETS:
The Company is in the process of renewing the insurance cover for all the fixed assets,
finished goods, semi-finished goods, raw materials, packing materials and other goods and
assets of the Company lying at different locations against fire, burglary, transit, riots,
strike, malicious damage and allied risks as well as goods in transit.
CAPITALISATION:
During the year under review the Company has added fixed assets worth Rs. 3.48 Crores
whereas disposal and adjustment of fixed assets amounted to Rs. 46.66 Crores. The Company
had capital work in progress amounting to Rs. 304.26 Crores as at 30th June 2014 at
various project sites.
DEPOSITS:
The Company is irregular in repayment of principal and payment of interest and has
defaulted therein. The Company has made application to the Company Law Board for the
extension of time in repayment of Deposits and approval is yet to be received. The Company
has been complying with the provisions of Section 58A and other applicable provisions, if
any, of the Companies Act, 1956 and the rules made thereunder. As at 30th June 2014 the
fixed deposits outstanding under the public deposit schemes were Rs.143.38 Crores. The
Company has discontinued acceptance of deposits from public.
AUDITORS’ REPORT:
The comments / observations of the Auditors, if any, are self explanatory and do not
call for any further explanations or clarifications except the following :
As regards Point No.1 of the basis for qualified opinion of the Auditor, the Company is
of the view that the Plant concerned has intrinsic value which is higher than the values
carried in the books of accounts as capitalization as well as capital Work in progress.
As regards Point No.2 (i) & (ii), the management had reviewed all the balances
carried in the accounts and taking a conservative view decided to write off those carrying
amounts where no further economic benefit will be realizable from those pertinent assets,
& management decided that it is now imperative that the same should get appropriately
reflected in the Profit & Loss Account of the financial year ended 30th June, 2014.
Our efforts for recovery to write off shall continue and recoveries will be accounted in
the year of realization on cash basis. Point No. 3 & 4 of the qualified opinion of the
Auditor are self explanatory.
As regards the comments of the Auditors in serial no. 1 & 2 under the
‘Emphasis of matter’, the Company has completed first round of re-structuring by
divesting some of its brands to M/s. Torrent Pharmaceuticals Ltd., for a consideration of
Rs. 2004 crores during the year. The Company is further exploring the possibilities of
divestment of some of its non-core assets and infusion of long term equity capital / debt
funds for the revival of the company. The management has initiated efforts to pursue
business plan involving existing products and launching of new products with effective
marketing strategy and extending contract manufacturing activites. As regards the comments
of the Auditors in Serial no. 3 the Company seized of the matter and in the process of
completing reconciliation / confirmation of Trade receivables, inter-divisional balances,
loans and advances and in certain cases of few bank accounts. The effect of the same shall
be given in the accounts for the next financial year. However, management does not expect
any significant impact of the same on the results of the Company. As regards Serial No.4,
the company is seized of the matter and shall take appropriate steps in due course.
As regards non-depositing or investment of a sum of not less than 15% of the amount of
debentures maturing during the period ended 30th June, 2014, the company is
seized of the matter and said amount will be deposited / invested in due course.
PARTICULARS OF EMPLOYEES:
Information as per Section 217(2A) of the Companies Act, 1956, read with Companies
(Particulars of Employees) Rules, 1975 as amended is available at the registered office of
the Company. As per the provisions of Section 219(i)(b)(iv) of the Companies Act, 1956
this Report and Accounts are being sent to all Shareholders of the Company and others
entitled to it excluding the aforesaid information. Any Shareholder interested in
obtaining a copy of the statement under Section 217(2A) of the Companies Act, 1956 may
write to the Company Secretary at the address of the registered office of the Company.
EMPLOYER / EMPLOYEE RELATIONS:
The relationship with the workers of the Company’s manufacturing units and other
staff continues to be cordial. The Directors wish to place on record their sincere
appreciation and gratitude for the services rendered by the workers and staff at all
levels.
EMPLOYEE STOCK OPTION PLAN:
The Shareholders at the 21st Annual General Meeting of the Company passed a
resolution approving the Employee Stock Option Plan called ‘Elder ESOP 2004’. A
total of 1,439,274 equity shares of the Company are available under Elder ESOP 2004 for
grant of Options at an exercise price of 15% discount to the market rate. The Company had
granted Options in respect of 399,250 shares which were to be exercised in four equal
parts ending on 27th March 2008 at an exercise price of Rs. 209/- per share
inclusive of a premium of Rs. 199/- per share. Out of the Options granted 285,748 were
exercised during the accounting year under review. Options that were not exercised within
the stipulated period have lapsed. There are 1,153,526 shares for which Options can still
be granted to Employees under Elder ESOP 2004.
CORPORATE SOCIAL RESPONSIBILITY
The Board of Directors constituted a Corporate Social Responsibility (CSR) Committee in
terms of the provisions of Section 135(1) of the Companies Act, 2013 on 21st
August, 2014 with the strong belief in the principle of Trusteeship to serve the community
This CSR Committee shall review and restate the Company’s CSR policy in order to
make it more comprehensive and aligned with the activities specified in Schedule VII of
the Companies Act, 2013.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:
In accordance with Rule 2 of the Companies (Disclosure of Particulars in the Report of
the Board of Directors) Rules, 1988 as applicable, the particulars relating to
conservation of energy and technology absorption are given in Annexure 1 to this Report.
The foreign exchange outgoings during the year under review was Rs. 4.31 Crores for
imports of raw materials / finished goods and Rs. 0.34 Crores for foreign travel. The
Company also paid Rs. 6.56 Crores in foreign exchange as interest on the External
Commercial Borrowing and other expenses of Rs. 1.31 Crores. The foreign exchange earnings
during the year were Rs. 30.66 Crores on account of exports on FOB basis.
|
For and on behalf of the Board |
|
Alok Jagdish Saxena |
|
Managing Director & CEO |
| Mumbai, 13th February, 2015 |
|
Annexure – I
| A. POWER & FUEL CONSUMPTION |
2013-14 |
2012-13 |
|
(12 months) |
(15 months) |
| 1. ELECTRICY PURCHASED: |
|
|
| Units |
5927252 |
9,596,764 |
| Total Amount |
Rs. 368,92,965 |
Rs. 55,949,947 |
| Rate/Unit |
Rs. 6.22 |
Rs. 5.83 |
| 2. COAL |
Not Applicable |
Not Applicable |
| 3. FURNACE OIL (L.D.O): |
|
|
| Quantity (Ltrs) |
27739 |
90,769 |
| Total Amount |
Rs. 20,89,339 |
Rs. 6,297,544 |
| Average Rate |
Rs. 75.32 |
Rs. 69.38 |
| 4. FURNACE OIL: |
|
|
| Quantity (Ltrs) |
148117 |
186,323 |
| Total Amount |
Rs. 70,34,160 |
Rs. 7,727,538 |
| Average Rate |
Rs. 47.49 |
Rs. 41.47 |
| 5. FURNACE OIL (DIESEL) |
|
|
| Quantity (Ltrs) |
7300 |
10,681 |
| Total Amount |
Rs. 392608 |
Rs. 466,039 |
| Average Rate |
Rs. 53.78 |
Rs. 43.63 |
| 6. Liquified Petroleum Gas (LPG): |
|
|
| Quantity (Kgs) |
183719 |
389,483 |
| Total Amount |
Rs. 173, 36,580 |
Rs. 31,806,083 |
| Average Rate |
Rs. 94.36 |
Rs. 81.66 |
| 7. OTHER/INTERNAL GENERATION |
|
|
| Units |
282393 |
904,970 |
| Quantity H.S.D. (Ltrs) |
75047 |
289,514 |
| Total Amount |
Rs. 41, 68,687 |
Rs. 13,289,720 |
| Rate/Unit |
Rs. 14.76 |
Rs. 14.69 |
CONSUMPTION PER UNIT OF PRODUCTION:
For finished Packed Production per lac packs of formulations/per Kg. of Bulk Drug
| Item |
2013-14 |
2012-13 |
|
(12 months) |
(15 months) |
| 1. Electricity: |
|
|
| For Formulations |
Rs. 34122.50 |
Rs. 37,516.39 |
| For Bulk Drugs |
Rs. 242.44 |
Rs. 151.78 |
| 2. L.D.O. |
|
|
| For Formulations |
Rs. 2290.12 |
Rs. 12,434.31 |
| For Bulk Drugs |
- |
Rs. 8.46 |
| 3. Furnace Oil |
|
|
| For Bulk Drugs |
Rs. 295.96 |
Rs. 132.49 |
| 4. Furnace Oil (Diesel) |
|
|
| For Formulations |
Rs. 430.34 |
Rs. 39,787.98 |
| 5. Liquified Petroleum Gas: |
|
|
| For Formulations |
Rs. 37493.62 |
Rs. 29,111.81 |
| 6. Coal: |
Not Applicable |
Not Applicable |
| 7. a) LSHS |
Not Applicable |
Not Applicable |
| b) HSD |
Not Applicable |
Not Applicable |
Form ‘B’
Elder pharmaceuticals Ltd., a multicrore company dealing in APIs & various dosage
forms has focused on modifying it APIs operations required for its branded dosage forms
and has created facility in Patalganga which is approved by EDQM. With a view to targeting
niche molecules, the Company has established its Research and Development Centre (R &
D Centre) at Nerul, Navi Mumbai .The basic aim is to synthesize import substituent
required for the dosage forms thus controlling the quality at every stage. This strategy
was further extended to move into the export markets. The R & D Centre is also
recognized by the Department of Scientific & Industrial Research, Ministry of Science
& Technology, New Delhi. Company’s Research and Development is a major part its
business strategy that is giving an advantage for competitiveness in the business. The
Company has filed a total of seventeen Indian patents with PCT applications. One of the
patent is granted in US, Europe & Japan & another one In US & Japan The
objectives of the Research & Development activity are as under:
- Process Development for cost & quality effectiveness;
- Improvements in existing processes;
- Development of analytical method / impurity profiling;
- Customer support.
The R & D activities are focused on therapeutic segments such as urinary tract
infections, non steroidal & anti inflammatory molecules with specific focus on areas
such as wound healing &, woman health care .The Development is continuous and some of
the major APIs that have been developed and commercialized are Amiloride Hydrochloride,
Flavoxate Hydrochloride, Carbocistein, Diosmin , Tolfenamic Acid and Diacerin along with
continuous efforts to modify and improve their processes without compromising quality.
Some of the niche formulations that have been developed and commercialized include
Clopidogrel tablets, Zalain pessaries, Elmecob LC, Repral, Elfi-XL, Hibor, Amifru S,
Eltrodar, Bonviva, Anamol, Elnutrin C, Enzar, CMPH, Flavospas, Somazina, Shelcal, Thrive,
etc.
R&D has also created new portfolio of custom made advanced API intermediates and
have successfully developed some innovative compounds for international customers and have
started exporting them.
BENEFITS DERIVED: a) The creative approach to developed and commercialized
formulations and APIs has opened the extended export market; b) The synthesizing the APIs
from key raw materials has helped the Company to emerge competitive in pharma market; c)
The custom synthesis and intermediate exporting has widened the technological base along
with export market.
d) EXPENDITURE ON R&D:
|
2013-14 |
2012-13 |
|
(Rs. in lacs) |
(Rs. in lacs) |
| a. Capital Expenditure |
0.60 |
10.46 |
| b. Recurring Expenditure |
434.86 |
728.05 |
STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY
COMPANIES:
| Name of the Subsidiary: Financial Year of the |
: Elder International FZCO, Dubai, U.A.E. |
| Subsidiary Company |
: 1st April to 31st March every year |
| Extent of Interest |
: 100% |
| No. of Shares held by Elder Pharmaceuticals Limited |
: 4 Shares of DHS 1,00,000 each held in the name of Elder Pharmaceuticals Limited and
1 Share of DHS 1,00,000 each held in the name of Mr. J. Saxena for the benefit of Elder
Pharmaceuticals Limited |
| Net aggregate amount Profits / (Losses) of the Subsidiary so far as it concerns to the
members of Elder Pharmaceuticals Limited as it is not dealt with the Company’s
Accounts for the year ended 31st March 2014 of the subsidiary |
: Not Applicable |
| Net aggregate amount Profits / (Losses) of the Subsidiary so far as dealt with or
provision is made for those losses in the accounts of Elder Pharmaceuticals Limited for
subsidiary’s Financial Year ended 31st March 2014 |
: The accounts of the Subsidiary were audited for the year ended 31st March 2014. The
loss of Rs.1445.35 lacs has been dealt with in the consolidated accounts of Elder
Pharmaceuticals Limited. |
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