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Your Directors have pleasure in presenting the 31st Annual Report of the Company together with the Audited Financial Statements for the Financial Year ended 31st March 2017.
The Accounting year of the Company in previous year has been changed from January, 2015 -December, 2015 to January, 2015-March, 2016 in line with the provision of the Companies Act, 2013, which prescribe a uniform financial year. Accordingly, previous years Annual Accounts and Report of the Company are for a period of fifteen months from January 1, 2015 to March 31, 2016. The figures for the previous year of 15 months ended on 31 March 2016, therefore, are not comparable with current year of 12 months ended on March 31, 2017.
FINANCIAL RESULTS FOR THE ENDED ON 31st MARCH, 2017
(Rs. in Lacs)
|Particulars||Year ended on March 31, 2017||15 Months ended on March 31, 2016|
|EBIDTA from Operation||1,655.05||7,230.56|
|Profit/(Loss) before Tax and Extraordinary item||(61,679.50)||(68,762.11)|
|Profit/(Loss) before Tax||(61,679.50)||(68,762.11)|
|Provision for Current Tax||-||-|
|Provision for Deferred Tax||(20,434.00)||(23,715.00)|
|Profit/(Loss) after Tax||(41,245.50)||(45,047.11)|
Note: The Company has prepared the financial statements in accordance with the Companies (Indian Accounting Standards) Rules, 2015 prescribed under Section 133 of the Companies Act, 2013. The Company has adopted the Indian Accounting Standards (Ind AS) from 1st April, 2016. The comparative financial information of the Company for a period of fifteen months from January 1, 2015 to March 31, 2016 has also been restated to comply with Ind AS.
The total income of the Company in the current year has been Rs.40,416.64 Lacs and in the previous year it was Rs.56,838.08 Lacs. The finance cost has been Rs.36,979.77 Lacs and in the previous year it was 41,478.19 Lacs. The Loss before Tax has been Rs.61,679.50 Lacs as and in the previous year it was Rs.68,762.11 Lacs. The loss after tax in the current year has been Rs.41,245.50 Lacs and in the previous year it was Rs.45,047.11 Lacs.
REASONS OF REDUCTION IN PROFITABILITY :
The major reasons for reduction in profitability are, Increase in Effluent Treatment cost due to increase in standards, global economic slowdown, increase in the cost of raw materials, the selling prices have remained stable thereby the increase in cost could not be passed on to buyer and non-availability of raw material due to restriction on slaughtering activity.
CORRECTIVE STEPS TAKEN BY MANAGEMENT:
1. Company has taken action like thorough study on the effluent discharge issue, tightening of quality norms for effluent discharge from the plant, evaluation of requirement of modification of existing effluent discharge problem and the necessary CAPEX has also been incurred by the company.
2. The Company has put in place the cost control measures like hard negotiation with the material suppliers, improvement in and tightening up of cost control system etc. Company expects that the combined effect of all these factors would be favorable for overall operations.
DIVIDEND & TRANSFER TO RESERVE :
In view of the loss for the year ended on March 31, 2017 no amount is proposed to be transferred to the reserve(s) and your Directors have not recommended payment of any dividend for the year under review.
The paid up Equity Share Capital of the Company as on March 31, 2017 was Rs.272,170,388 divided into 272,170,388 Equity Shares of Rs.1/- each and Preference Share Capital as on that date was Rs.19,125,850,000 divided into 1,912,585,000 number of Unlisted 8% Redeemable Cumulative Non-Participating Non-Convertible Preference Shares of Rs.10/- each having no voting rights.
ISSUE OF PREFERENCE SHARES:
During the year, with a view to mitigate the financial crunch, promoters have funded Rs.701,350,000 by subscribing to preference shares and the Company has issued and allotted 701,135,000 Unlisted 8% Redeemable Cumulative Non- Participating Non-Convertible Preference Shares carrying no voting rights of face value of Rs.10/- each at par to entities in which promoters are interested.
FCCB CONVERSION INTO EQUITY SHARES OR GDRs :
The FCCBs are convertible into equity shares of the Company. During the year no conversion request was received and the outstanding FCCBs as on 31 March 2017 are USD 201,082,000.
Meeting the stringent quality standards required by our international clientele, our facilities have earned certifications including:
Hazardous Analysis and Critical Control Point Certification (HACCP)
European Directorate For Quality of Medicine Certification (EDQM)
IFANCA Halal Certificate
MEETINGS OF THE BOARD:
Ten (10) Board Meetings were held during the financial year ended 31st March, 2017. The details of the Board Meetings with regard to their dates and attendance of each of the Directors thereat have been provided in the Corporate Governance Report.
COMMITTEES OF THE BOARD OF DIRECTORS :
The Board has constituted following committees of Directors to deal with matters and monitor the activities falling within the respective terms of reference:
Nomination and Remuneration Committee
Stakeholders Relationship Committee
Corporate Social Responsibility Committee
The details of the membership, terms of reference and attendance at the meetings of the above Committees of the Board are provided in the Corporate Governance Report forming a part of this Annual Report. There has been no instance where the Board has not accepted the recommendations of the Audit Committee.
Pursuant to Section 152 of the Companies Act, 2013, Mr. Nitin Sandesara, Managing Director of the Company, retires by rotation and being eligible, offers himself for re-appointment at the ensuing Annual General Meeting. The Board recommends his reappointment.
DECLARATION OF INDEPENDENCE BY DIRECTOR:
Pursuant to the provisions under Section 134(3)(d) of the Companies Act, 2013, with respect to statement on declaration given by Independent Directors under Section 149(6) of the Companies Act, 2013, the Board hereby confirm that all the Independent Directors of the Company have given a declaration and have confirmed that they meet the criteria of independence as provided in the said Section 149(6) read with Regulation 16 of Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015.
During the year ended on March 31, 2017 your Company has not accepted any fixed deposits from the public falling under Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014. Thus, as on March 31, 2017, there were no deposits which were unpaid or unclaimed and due for repayment.
As per the provisions of the Act, the period of office of M/s. H. S. Hathi & Co., Chartered Accountants, Statutory Auditors of the Company, expires at the conclusion of the ensuing Annual General Meeting.
It is proposed to appoint M/s. Mukesh & Associates, Chartered Accountants, as Statutory Auditors of the Company, for a term of 5 (five) consecutive year. M/s. Mukesh & Associates, Chartered Accountants, have confirmed their eligibility and qualification required under the Act for holding the office, as Statutory Auditors of the Company.
The observations and comments given by Auditors in their report read together with notes to Accounts are selfexplanatory and hence do not call for any further comments under Section 134 of the Act. The Auditors Report does not contain any qualification, reservation or adverse remark.
A Secretarial Audit was conducted for the year ended on March 31, 2017 by the Secretarial Auditor M/s. Ramesh Kheradia a Company Secretary in Practice. The Report of Secretarial Audit in form of MR-3 for the year ended on March 31 2017 is attached as Annexure 2 to the Report. Secretarial Auditor gave observation in his report.
The industrial relations of the Company continued to remain cordial. The Directors wish to place on record their sincere appreciation for the co-operation extended and the valuable contribution made by the employees at all levels.
RELATED PARTY TRANSACTIONS:
All contract(s)/arrangement(s)/transaction(s) entered into by your Company with its related parties, during the year under review, were:
in "ordinary course of business" of the Company;
on "an arms length basis"; and
As per the provisions of Section 188(1) of the Act read with Companies (Meetings of Board and its Powers) Rules, 2014. Accordingly, Form AOC-2, prescribed under the provisions of Section 134(3)(h) of the Act and Rule 8 of the Companies (Accounts) Rules, 2014, for disclosure of details of Related Party Transactions, which are "not at arms length basis" and also, which are "material & at arms length basis", is not provided as an annexure of the Directors Report.
However, details of the Related Party Transactions entered into during the year under review and as on March 31, 2017, are disclosed as part of the financial statements of your Company for the year under review, as Note 26. Further, pursuant to the provisions of the Act and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Board has, approved and adopted a Policy on Related Party Transactions. The said policy is available on your Companys website viz. www.sterlingbiotech.in
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND:
Pursuant to provisions of Section 205A of the Companies Act, 1956 and Section 124 of the Companies Act, 2013 and [pursuant to rule 3 of the Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001] the unpaid/unclaimed dividend pertaining to the year ended on December 31, 2008 amounting to Rs. 40,13,431/- which was lying in the Companys separate unpaid dividend account and remaining unclaimed for a period of seven years, was transferred to the Investor Education and Protection Fund (IEPF).
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS:
Loans, and investments covered under Section 186 of the Companies Act, 2013 form part of the Notes to the financial statements provided in this Annual Report.
The Company has not provided any guarantee as prescribed under section 186 of the Companies Act, 2013.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE:
During the year ended on March 31 2017, there were no such orders passed by the regulators or courts or tribunals impacting the going concern status and companys operations in future.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS:
The Company has adequate internal control procedures commensurate with its size and nature of business. The business control procedures ensure efficient use and protection of Companys resources and compliance with policies, procedures and statutory requirements.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY:
There have been no material changes and commitments, affecting the financial position of the Company which occurred between the end on March 31, 2017 to which the financial statements relate and the date of this report.
NOMINATION AND REMUNERATION POLICY :
The Company follows a policy on nomination and remuneration of Directors and Senior Management Employees. The Policy is approved by the Nomination and Remuneration Committee. The policy on the above is attached as Annexure 3.
CORPORATE SOCIAL RESPONSIBILITY :
CSR is a companys sense of responsibility towards the community and environment in which it operates. It is the continuing commitment by business to behave ethically and contribute to economic development of the society at large and building capacity for sustainable livelihoods. The Company believes in conducting its business responsibly, fairly and in a most transparent manner. It continually seeks ways to bring about an overall positive impact on the society and environment where it operates and as a part of its social objectives.
This policy has been formally formulated and adopted in terms of Section 135 of the Companies Act, 2013 and Rules framed there under to undertake CSR activities.
The responsibilities of the CSR Committee include:
1. Formulating and recommending to the Board of Directors the CSR Policy and indicating activities to be undertaken.
2. Recommending the amount of expenditure for the CSR activities.
3. Monitoring CSR activities from time to time.
In view of the losses for the year under review, your Company was not required to spend any amount towards the CSR activities, as per the applicable provisions of Section 135 of the Companies Act, 2013. Accordingly, the details of the CSR activities during the year under review are not provided in this Report.
The Board of Directors have carried out an annual evaluation of its own performance, board committees and individual Directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 ("SEBI Listing Regulations").
The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.
The board and the nomination and remuneration committee reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the chairman was also evaluated on the key aspects of his role.
In a separate meeting of independent directors, performance of non-independent directors, performance of the board as a whole and performance of the chairman was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent directors, at which the performance of the board, its committees and individual directors was also discussed. Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated.
Corporate governance requirements under the Companies Act, 2013, and as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. A separate section on corporate governance under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, along with the certificate from the Statutory Auditor confirming the compliance, is annexed and forms part of this Annual Report in Annexure-4.
MANAGEMENT DISCUSSION & ANALYSIS:
Management Discussion and Analysis for the year under review, as stipulated under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 Regulation 34(3) read with Schedule V of the Listing Regulations, is presented in a separate section forming part of the Annual Report in Annexure-1.
EXTRACT OF ANNUAL RETURN:
The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure- 5.
PARTICULARS OF EMPLOYEES:
There are no employees drawing remuneration of more than One crore and two lacs rupees limit as specified under provisions of Section 197(12) of the Act and Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
Your Company has a well-defined Whistle Blower Policy and established Vigil Mechanism to provide for adequate safeguard against victimisation of Directors and employees who follow such mechanism and also make provisions for direct access to the chairperson of Audit Committee in appropriate cases. Details of the Vigil Mechanism policy are made available on the Companys website at www.sterlingbiotech.in/investors.html.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS:
All new Independent Directors (IDs) inducted into the Board are given an orientation. Presentations are made by Executive Directors (EDs) and Senior Management giving an overview of the Companys operations, to familiarize the new IDs with the Companys business operations. The new IDs are given an orientation on our products, group structure and subsidiary Company, Board constitution and procedures, matters reserved for the Board, and the Companys major risks and risk management strategy. The Policy on the Companys Familiarisation Programme for IDs can be accessed at www.sterlingbiotech.in/investors.html.
INTERNAL CONTROL AND ITS ADEQUACY:
The Company has adequate internal controls and processes in place with respect to its financial statements which provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. These controls and processes are driven through various policies, procedures and certifications. The processes and controls are reviewed periodically. The Company has a mechanism of testing the controls at regular intervals for their design and operating effectiveness to ascertain the reliability and authenticity of financial information.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 :
The Company has in place a Policy against Sexual Harassment at work place in line with the requirement of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. All employees (permanent, contractual, temporary and trainees) are covered under this Policy. No complaint received by the Committee during the year.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:
The information required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, is annexed herewith as Annexure-6.
DIRECTORS RESPONSIBILITY STATEMENT:
Pursuance to the requirement under Section 134(3)(c) of the Companies Act, 2013, your Directors hereby states that :
a) In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from the same;
b) The accounting policies have been selected and these have been applied consistently and judgments and estimates made thereon are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company for the period ended on March 31, 2017 and of the loss of the Company for the aforesaid period;
c) Proper and sufficient care has been taken 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) Annual accounts of the Company have been prepared on a going concern basis;
e) Internal financial controls have been laid down and being followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f) Proper systems to ensure compliance with the provisions of all applicable laws have been devised.
Your Directors would like to express their sincere appreciation for the cooperation and assistance received from shareholders, bankers, financial institutions, regulatory bodies and other business constituents during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers and staff of the Company during the financial year.
|Place : Mumbai||
For and on behalf of the Board of Directors
|Date : May 30, 2017||Nitin Sandesara||Chetan Sandesara|
|Managing Director||Jt. Managing Director|
(Annexure- 6 to the Directors Report )
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO
Pursuant to Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014
A. CONSERVATION OF ENERGY
Energy Conservation Measures taken: The Company has undertaken various measures for conservation and saving of energy in critical areas including
1. Power factor improvement
2. Quicker heat transfer
3. Monitoring of combustion efficiency of boilers
4. Reuse of Steam condensate as boiler feed water
5. Optimum use of utility depending upon process requirement.
As in earlier years, your Company continued to envisage and implement energy conservation measures in various manufacturing operations leading to saving of quantitative consumption of power, fuel and oil etc. The Company is also carrying on continuous education and awa reness program for its employees for Energy conservation and optimum use.
B. TECHNOLOGY ABSORPTION
Research & Development (R & D)
1. Specific areas in which R & D carried out by the Company:
Improvement of product quality
El imination of waste in the systems
2. Benefits derived as a result of the above R & D:
Improvement in yield and product quality, cost effectiveness and reduction in consumption of raw material and utilities.
3. Future plan of action:
The Companys effort will continue in the areas of product quality, process improvement technology with the aim of offering better products to meet consumer needs.
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
1. Efforts, in brief, made towards technology absorption, adaptation and innovation:
After full absorption of technology imparted by foreign collaborations, innovations in process control, cost reduction and quality improvements are being made on a continuous basis.
2. Benefits derived as a result of the above efforts:
Improvements in productivity cost of manufacturing, quality, waste elimination and flexibility in manufacturing.
3. Information regarding technology imported during last 5 years : Nil.
C. FOREIGN EXCHANGE EARNED AND USED
(Rs. in Lacs)
a. Earned: Rs.4507.02 million
b. Used: Rs.1,711.9 million
For and on behalf of the Board of Directors
|Place : Mumbai||Nitin Sandesara||Chetan Sandesara|
|Date : May 30, 2017||Managing Director||Jt. Managing Director|