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The Board of Directors hereby submits the report of the business and operations of your company for the financial year ended 31 March 2018.
Financial results of the company for the financial year under report are given below: ( in crore)
Year ended 31 March 2018
Year ended 31 March 2017
|Profit before interest & depreciation||
|Profit before depreciation||
|Profit before tax||
|Provision for tax (including deferred tax)||
|Profit after tax||
|Other comprehensive income||
|Total comprehensive income for the year 2017-18||
Your company has shown excellent results in the year under review and crossed landmark of 1000 crore. The company has achieved total revenue 1002.86 crore during the year under review in comparison to 774.44 crore during the previous year, registering an increase of 29.49 %. The profit after tax is 27.70 crore during the year against
4.67 crore during the previous year, mainly due to increase in sales of the company and improved operational efficiencies during the year. The EBITDA during financial year ended 31 March 2018 went up to
125.86 crore as against 103.45 crore during previous financial year ended 31 March 2017.
The company continues to give more focus to increase the pharma share in its total business and is able to increase pharma share to 63% during the year under review against 56% during the previous year.
Cash Flow Statement
A Cash Flow Statement for the financial year 2017-18 is included in the annexed statement of accounts.
The Board of Directors has not recommended any dividend due to inadequate profit during the year under review.
The paid up equity share capital of the company is 56,20,55,020/- consisting of 5,62,05,502 equity shares of 10/- each as on 31 March 2018.
Holding & Subsidiary Company
The company has neither a holding company nor any subsidiary company.
Internal financial control systems and their adequacy
The details in respect of internal financial controls and their adequacy are included in the Management Discussion & Analysis Report , which forms part of this report.
Loan, guarantees or investment under Section 186 of the Companies Act, 2013
The particulars of loans, guarantees and investments have been provided in the notes of the financial statements.
During the year 2017-18, your company has setup Unit III to manufacture Fenofibrate, Clopidogrel and Lamotrigine with project cost of 16.48 crore met through internal accruals. The company has also setup Unit IV for manufacturing Metformin an anti-diabetic drug with a capacity of 3000 MT per annum with project cost of 10.02 crore which was financed through internal accruals. The company has also enhanced installed capacity of Ibuprofen from 7200 TPA to 10000 TPA by debottlenecking and re-engineering the plant in the month of August 2018.
Research and Development
Research and Development (R&D) capabilities have enabled your company to produce technology-intensive products, enhancing its presence in local & international markets. The companys R&D strength is in developing processes for APIs and intermediates with substantial backward integration to minimize its dependency on external forces and to be a leader in highly competitive world of generic APIs. Currently, the company has five APIs and three intermediates in its pipeline, which are either on the verge of development or are ready for commercialization. Going forward, the companys R&D is targeting to develop at-least 4-5 APIs every year. The company employs about 50 research scientists working in R&D centre equipped with cutting-edge technologies for research.
The CARE Ratings Limited has revised the credit rating for long term bank facilities to CARE BBB-; Stable (Triple B Minus; Outlook: Stable) from CARE BB; Stable (Double B; Outlook: Stable) and the credit rating for short term bank facilities to CARE A3(A Three) from CARE A4 Stable (A Four).
Composition and Number of Meetings of the Board
The Board comprises of well qualified and experienced persons having expertise in their respective areas. It has appropriate combination of Executive, Non Executive and Independent Directors. During the financial year 2017-18, the Board met 4 (four) times on 27 May 2017, 18 August 2017, 13 November 2017 and 12 February 2018.
Directors /Key Managerial Personnel
In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the company, Mr Vijay Garg and Mr Vikas Gupta will retire in the ensuing Annual General Meeting and being eligible has offered themselves for re-appointment. The Board has recommended their re-election to the members.
During the current year, Mr Vijay Singla, Director (Works) has resigned from directorship with effect from 27 May 2017, however remains in the company as President (Chemicals).The Board places on record their appreciation for the services rendered by him during his tenure as director of the company.
The Board has carried out an annual evaluation of its own performance, board committees and independent directors pursuant to the provisions of the Companies Act, 2013 and the corporate governance requirements as prescribed under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, (hereinafter referred as SEBI Listing Regulations). The Board has evaluated the performance of independent directors mainly on the basis of their constructive participation in the board/ committee proceedings, their ability to monitor the management performance, providing guidance in the key issue in the best interest of the company and their commitment to the ethical and to fulfilment of fiduciary and other duties assigned by the act, regulations and rules by the Government. The performance evaluation of the chairman and the non-Independent directors was carried out by the Committee of Independent Directors.
Nomination and Remuneration Policy
The Nomination and Remuneration Policy on directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters, as required under Section 178 of the Companies Act, 2013 is available on our website www.iolcp.com. There has been no change in the policy since the last fiscal year.
Directors Responsibility Statement
Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, the Directors of your company confirm that: a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures. b) 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 at the end of the financial year and of the profit or loss of the company for that period; c) they 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) they have prepared the annual accounts on a going concern basis. e) they have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and operating properly; and f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Declaration by Independent Directors
The company has received necessary declaration from each of independent director under Section 149(7) of the Companies Act, 2013 that he/she meets the criteria of independence as laid down in Section 149(6) of the Companies Act, 2013 and Regulation 16 of the SEBI Listing Regulations, 2015.
The company has in place a system of Corporate Governance. A separate report on Corporate Governance along with auditors certificate regarding compliance of conditions of corporate governance set out by the SEBI Listing Regulations is annexed to this Report.
Management Discussion and Analysis Report
Management Discussion and Analysis Report is given separately in this Report.
Audit and Risk Management Committee
The Composition and role of the Committee has been provided in the Corporate Governance Report annexed with this report.
The Board has formed Audit and Risk Management Committee inter alia to frame, implement and monitor the risk management plan for the company. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. It has been covered in the Management Discussion and Analysis Report, which forms part of this report.
Related Party Transactions
All related party transactions that were entered into during the financial year were on arms length and were in the ordinary course of business. During the year, the company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the provisions of Policy on Materiality of and dealing with Related Party Transactions. The disclosures of related party transactions are provided in notes to financial statements. The company has formulated a Policy on Materiality of and dealing with Related Party Transactions. The policy is available on the companys website www.iolcp.com.
The company has not accepted any fixed deposits from the public/ members during the year under review.
Your company is committed to provide its best services to the shareholders/ investors. M/s Alankit Assignments Limited, New Delhi is working as Registrars and Share Transfer Agents (RTA) of the company for transfer, dematerialization of shares and other investor related services. No correspondence /enquiry from any shareholder/ investor is pending with the company for reply.
Listing of Shares
The equity shares of the company continued to be listed and traded on National Stock Exchange of India Limited (Script code; IOLCP) and BSE Limited (Script code; 524164). The company has made all compliances of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 including payment of annual listing fee.
Energy Conservation / Technology Absorption and Foreign Exchange Earnings and Outgo
Energy conservation continues to be an area of major emphasis in the company. A statement giving details of conservation of energy, technology absorption, foreign exchange earnings and outgo, in accordance with Section 134 of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is annexed hereto as Annexure I and forms part of this report.
M/s SCV & Co. LLP, Chartered Accountants, New Delhi (formerly known as M/s S C Vasudeva & Co.) Statutory Auditors of the company have submitted Auditors Report on the financial statements of the company for the financial year ended on 31 March 2018. The Auditors Report for the year is self-explanatory & does not contain any modified opinion, hence no comment is required.
Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Rules framed thereunder, M/s SCV & Co. LLP, Chartered Accountants, New Delhi (formerly known as M/s S C Vasudeva & Co.) will mandatorily retire at the conclusion of the ensuing Annual General Meeting.
The Board of Directors based on the recommendations of the Audit and Risk Management Committee has recommended the appointment of M/s Ashwani & Associates (Firm Registration No: 000497N) Chartered Accountants, Ludhiana as Statutory Auditors of the company in place of M/s SCV & Co LLP., Chartered Accountants, New Delhi for a term of five consecutive years, from the conclusion of ensuing 31st Annual General Meeting until the conclusion of the 36th Annual General Meeting of the company for the approval of shareholders of the company in the ensuing 31st Annual General Meeting of the company.
M/s Ashwani & Associates has confirmed its willingness and eligibility, to act as statutory auditors to conduct audit of the companys financial statements from the financial year 2018-19.
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors has appointed M/s B. K. Gupta & Associates, practicing company secretary for conducting secretarial audit of the company for the financial year 2017-18. The Secretarial Audit Report is annexed hereto as Annexure II and forms part of the Report.
The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
Pursuant to the provisions of Section 139 of Companies Act, 2013, the Board of Directors has appointed M/s Ramanath Iyer & Co., Cost Accountants, New Delhi as Cost Auditor to conduct the audit of cost accounts of bulk drugs and chemicals maintained by the company, for the financial year 2018-19, subject to determination of their remuneration by members of the company thereto.
The Cost Audit Report for the year ended 31 March 2017 has been filed on 02 September 2017 with Ministry of Corporate Affairs, New Delhi.
Extract of Annual Return
The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure III forming part of this report.
Industrial relations remained cordial and harmonious throughout the year under review.
Safety, Health and Environment
Safety is companys top priority with regard to employment and it is encouraging safety measures at all levels of operations especially at the floor level. Regular training programmers are being conducted to bring in awareness about the importance of safety at work place.
Prevention of Sexual Harassment Policy
The company has in place a Prevention of Sexual Harassment policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the year 2017-2018, no complaint related to sexual harassment was received by the company.
In pursuant to the provisions of Section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the company at www.iolcp.com.
Particulars of managerial remuneration and related disclosures
Disclosures relating to remuneration and other details as required under Section 197(12) of the Companies Act,2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annual Report, which forms part of this report.
In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in the Annual Report, which forms part of this report.
Having regard to the provisions of the first proviso to Section 136(1) of the Companies Act, 2013 the Annual Report excluding the aforesaid information is being sent to the members of the company. The said information is available for inspection at the registered office of the company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.
Corporate Social Responsibility Committee (CSR Committee)
The Board of Directors have constituted a CSR Committee comprising of Mr Varinder Gupta as Chairman and Dr ( Mrs) Sandhya Mehta, Mr Vijay Garg and Mr Vikas Gupta ,Directors as its members. The CSR Committee is to oversees the companys CSR initiatives under the overall supervision and guidance of the Board of Directors.
The provisions of Section 135 of Companies Act, 2013 and the Rules made thereunder for CSR are applicable to the company for financial year commenced on 01 April 2018.
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend, voting or otherwise.
3. Change in the nature of business of the company.
4. The company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.
5. Neither the Managing Director nor the Whole-time Directors of the company receive any remuneration or commission from any of its subsidiaries.
6. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and companys operations in future.
7. No fraud has been reported by the Auditors to the Audit Committee or the Board.
We are pleased to place on record our sincere gratitude and appreciation for assistance and co-operation received from the Union Government, Punjab Government, bankers, members, customers, vendors and business constituents.
We also place on record our sincere appreciation of the contribution made by the employees at all levels. Our consistent growth is made possible by their devout, sincere and unstinted services.
For and on behalf of the Board
Dr M A Zahir
|Place : Ludhiana||
|Dated : 11 August 2018||
ANNEXURE I TO THE DIRECTORS REPORT
Information as per Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 and forming part of the Directors Report for the financial year ended 31 March 2018.
I CONSERVATION OF ENERGY
1. Step taken or impact on conservation of energy; a) Started using digital electronic relays instead of thermal relays up to 30 HP motors, as thermal relays are depend upon heating of the element and digital relays are depend upon current , so due to this we are saving motor burning and immediate tripping of the motor in case any fault in the pump or in the cable side. b) Electronic light sensors has been installed on the total boundary walls and all terrace lights, so that it will be off and on with the light and it save human work and extra power which has been consumed in delaying on off the lights by electricians c) Current transmitters has been installed on critical reactors of unit - III to keep eye on the reactions of the process. This helps out in avoiding the jamming of the reactor at the critical time . d) Started taking Ro reject and UF reject in the cooling tower to save approximate 250 KLD raw water. e) We have changed the stream of direct and indirect condensate in unit-II and unit-IV to avoid mixing of the two and this has been increased the direct condensate to the boiler and indirect condensate also. f) Replacement of jacket reactors with limpet reactors which are having higher heat transfer co-efficient so reducing the time of reaction to increase the productivity and reduction of fixed losses resulting reduction in energy norms. g) Replacement of old FBDs with new FBDs having advanced technology with automation and high drying efficiency resulting higher output by consuming same energy, so resulting reduction in energy norms. h) Installation of heat recovery wheel in IBU facility HVAC system to reduce the chilled water by 50TR resulting reduction in energy norms. i) Installation of ATFE for the distillation of crude instead of high vacuum distillation reactor which is having improved thermal and process efficiency. j) Installation of distillation setup for the recovery of intermediate product from byproduct, so increasing the yield of intermediate product, so reduction in energy norms. k) Installation of new furnace for heating thermic fl uid having dual burner to use the waste spent gas from IBB as fuel and having high thermal efficiency to reduce the energy cost. l) Installation of separate column for the distillation of dilute ester (byproduct). m) Installation of additional PHE at propyl column to reduce the load on its chiller in summer season. n) Installation of additional heat exchanger at propyl column for heat recovery, thus reducing its steam consumption. o) Increase in the size of crude cooler to decrease the load on chilled water in summer season. p) Installation of valve in the vent line of separator of heat recovery system, to increase the heat recovery.
2. Step taken by company for utilizing alternate sources of energy a) Your company has further increased the consumption of agro based fuel by optimizing the boiler operation and hence reduce the percentage consumption of natural fuel like coal. b) Your company has improved the direct condensate recovery resulted less ground water consumption and reduction in fuel consumption.
3. Capital investment on energy conservation equipments
No major capital investments have been made during the financial year ended 31 March 2018.
II TECHNOLOGY ABSORPTION
1. Efforts made towards technology absorption
Your company has taken various steps in its Research and Development (R&D) centre, the mains are as follows: a) R&D team works on development of new molecules (API/chemical intermediate/bulk chemicals/specialty chemicals/CRAMS molecules) while keeping in mind its impact on environment. b) R&D team is also working on chemical routes whereby it will have minimum dependency on Chinese market for its raw materials. c) Work on development of APIs with idea of filing dossier with US & European regulatory agencies with view to explore US and Europe market for all new APIs. d) Trouble shooting & further cost cutting in existing commercialized products for improved profitability. e) Conversion of byproducts to value added products.
2. Benefits derived like product improvement, cost reduction, product development or import substitution a) R&D has developed single step unique process for Metformin HCl, anti-diabetic drug, which has advantage of minimum processing and zero aqueous effl uent. Process is commissioned in dedicated multi MT capacity plant. b) In its main product, R&D has developed a process which will help company to market its product in US market. c) R&D has also developed one product for its Korean customer which will help customer to shift its sourcing to the company from Chinese market. d) R&D has developed a process for key starting material of a product used in perfumery chemicals in its chemical plant for customer based in Japan. Production for the same in MT quantity has been initiated in current year. e) Development of anti-ulcer API at R&D and pilot plant has been completed & its commercialization in multipurpose plant is expected in current year. f) Your company to launch new molecules in APIs and intermediates in next fiscal year for which R&D has completed initial development work.
3. Imported technology (imported during the last three years reckoned from the beginning of the fifinancial year)- N.A.
4. Expenditure incurred on Research and Development during the financial year ended 31 March 2018:
( in crore)
Foreign Exchange Earnings & Outgo during the financial year ended 31 March 2018:
( in crore)