KDL BIOTECH LIMITED
ANNUAL REPORT 2011-2012
MANAGEMENT DISCUSSION AND ANALYSIS
This part of the Report deals with expectations and risk analysis about the
future, which is based on certain assumptions and events. The Company can
not guarantee these assumptions and expectations being accurate or will be
realized nor the risks outlined exhaustive. The Company assumes no
responsibility to publicly amend, modify or revise any of these statements
on the basis of any subsequent developments, information or events.
REVIEW OF OPERATIONS
During the year there is no change in the scenario of Penicillin products.
Active Pharmaceuticals Ingredients (API) suppliers in Europe and United
States are facing increasing pricing pressures due to presence of low cost
providers in developing markets, excess big Pharma capacity, and backward
integration by certain generic companies. China is still controlling the
prices of Penicillins & 6-APA resulting in fluctuations in Amoxicillin
Due to delays in financial restructuring the Company could not start its
own production and continue the Job Work activities for Unimark Remedies
OUTLOOK ON OPPORTUNITY
The domestic bulk drug industry is poised to benefit from the impending
patent expiries in the regulated markets leading to increase in generic
penetration; thereby providing a Significant opportunity for supply of APIs
to manufacturers of such generic drugs coupled with increased outsourcing
of bulk drugs by multinational pharmaceutical companies.
As the site is penicillin based it will be difficult for change in the
product range considering regulatory concerns. Hence, in order to sustain
the competitive Semi Synthetic Penicillin price, company is developing a
cost effective process for the manufacturing of Amoxicillin Trihydrate.
Pilot trials for the same are successfully completed & commercialization
will be start by this year.
Company in co-operation with Unimark Remedies Limited has completed the
pilot trials of biocatalyst in our Biotech facility.
OUTLOOK ON CONCERN
China remains a dominant player in the global bulk drug industry given its
large scale manufacturing capabilities, cost leadership and sufficient
availability of intermediates due to strong technological capabilities in
fermentation. This growing competition from China and from our Indian
counterparts remains a challenge to survive in this business.
SEGMENT WISE PERFORMANCE
The Company has only one segment i.e. Pharmaceuticals.
INTERNAL CONTROL SYSTEMS AND ADEQUACY
The Company has adequate system of internal controls to ensure that all the
assets are safeguarded and are protected. Necessary checks and balances are
in place to ensure that transactions are adequately authorised and reported
correctly. The Internal Auditors of the Company conduct Audits of various
departments to ensure that internal controls are in place. These are being
reviewed by the Audit Committee of the Board and corrective actions are
taken by the Company, when needed. The Company has appointed M/s. Rege &
Thakkar, Chartered Accountants as its Internal Auditors.
We, at KDL are driven by one common philosophy that people are our greatest
assets. This has been and will continue to be the guiding force in
formulating various Human Resources (HR) strategies and policies.
We believe in simplicity and focus on creating strong process driven work
environment and thereby enable our human capital to efficiently partner
Our people philosophy is woven around following tenets -
2. Respect for people
3. Collaboration and leadership
4. Result focus with emphasis on providing customer delight
Our vision is to feature as a Preferred Employer.
The Company has continued the best HR practices to develop their employees.
The Company has also organized in house & external training Programmes on
various subjects. Yearly training calendar, based on the training need
identification, is prepared and followed.
Employees are suitably rewarded for their performance in order to motivate
them. The Company has implemented & continued a system for quarterly review
of performance of employees. Last year, 92 employees were rewarded for
Training awards: Employees are also awarded for their maximum participation
during the training session in Worker cadre, Staff cadre and Management
Company has maintained a harmonious relationship with their employees along
with their family members by organizing various welfare activities &
HEALTH, SAFETY & ENVIRONMENT
The Company has well defined management goals for Health, Safety &
Environment, which are strictly followed. For maintaining the safe
operating practices and healthy working environment, the Company conducted
safety audits, risk analysis, mock drills and Hazop studies regularly.
To improve the Health, Safety and Environment standard company has obtained
the certification of ISO 14001:2004(EMS) and BS OHSAS 18001:2007.
The Company has also organized in house & external Safety training
Programmes on various subjects.
The National Safety week, World environment day & Fire service day are
celebrated with various activities like Mock-drills, Training by external
faculties with Tree plantation
The housekeeping audits are being conducted quarterly & Awards are
distributed to motivate employees regarding the awareness of house keeping
Being a chief coordinator of the Mutual Aid Response Group (MARG) -Raigad,
the Company organized the On-site mock drills with neighbouring industries
and Off-site Drill at Mumbai - Pune Highway with Government Departmant.
During last year company arranged special training programmes for Police
department (Khalapur, Khopoli, Karjat zone) to attend the emergency while
transporting hazardous goods.
It has been a constant endeavour on the part of the company to avail low
cost debt by restructuring process with the banks and others. The response
was slow due to the fact that the company had to depend more on job work
business than its own production which affected the operation of the
company as well as the restructuring process with the banks and others.
The Company is negotiating with the Bankers for One Time Settlement of its
Working Capital facility, which will resolve its issues effectively with
the banks and the Company is hopeful of settling this issue through Onetime
Settlement Scheme (OTS). The Company is a sick Company within the meaning
of Section 3(1)(O) of the Sick Industrial Companies (Special Provisions)
Act, 1985. The Company has made a reference to the Board for Industrial and
Financial Reconstruction (BIFR) under Section 15 (1) of the Sick Industrial
Companies (Special Provisions) Act, 1985 on 6th June, 2011, which has been
registered by BIFR as case No. 35/2011. The case before BIFR is at a
hearing stage and is pending before BIFR for determination of Sickness of
The last hearing was held on 18th July, 2012. The advocate representing
State Bank of India (SBI) stated that they had already filed their written
submission as directed by BIFR, vide their letter dated 13th June, 2012.
The Consultant representing the company stated that they had not received
the copy of the written submission made by SBI. The advocate representing
SBI stated that he will hand over a copy of written submission to the
Company on the same day.
The representative of Canara Bank stated that they had already filed their
objection vide letter dated 3rd May, 2012. He handed over a copy of the
same to the Consultant representing the company, during the course of
The advocate representing Sales Tax Department stated that the total
outstanding due against the company amounts to Rs. 9.27 crores.
Having considered the submissions made and material on record, the
honourable Bench directed that the case be listed for Argument. The next
date of hearing in the case has been fixed on 10th September, 2012.
After a constant follow-up with SBI, the Company has recieved the copy of
written submission from SBI on 22nd August, 2012. The Company has filed
its reply against the submission of SBI & Canara Bank before BIFR.
Further, with the help of Financial Advisors, the Company is also working
on the alternative mode of Finance for funding OTS.
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