Transgene Biotek Ltd Directors Report.

Dear Shareholders

Your Directors submit to you the 30th Annual Report on the business & operations of the Company and Audited Statement of Accounts for the year ended 31st March, 2020 along with the Auditors Report thereon.

Financial Results

(Rs. in Lakhs)

2019- 2020 2018-2019
Particulars
Total Income 18.25 210.90
Operational, Administration and other expenses 86.72 75.69
Gross Operating Profit -68.47 135.80
Interest and Financial Charges 38.05 25.05
Forex Gain/Loss - -
Depreciation 989.69 989.42
Profit before Tax/Loss (1096.22) (879.27)
Provision for Tax - -
Net Profit/Loss (1096.22) (879.27)

OPERATIONS

The total turnover of the company for the year ended 31st March, 2020 amounted to Rs. 18.25 Lakhs as against Rs. 210.90 Lakhs in the previous year. The company incurred a net Loss of Rs. 1096.22 Lakhs for the year as against a loss of Rs. 879.27 Lakhs in the previous year. As can be noticed, the management continued to revise books of accounts and has written off certain accounts wherever possible after following the standard accounting policies of India and in consultation with the auditors. This revision has resulted in increased operating loss from the previous year.

AUDITORS COMMENTS

The operations in the Subsidiary are being shut down for more than three years (since financial year 2015-16) with no activities of any sort.

The consolidated financial statements were authorized for issue by the Companys Board of Directors on 24th August, 2020.

Review and results of operations

a) TrabiORALTM

The platform TrabiORALTM developed by Transgene over a period of nearly two decades has proven to be sound, safe and effective from various studies conducted so far on different molecules of varying sizes. The architecture of TrabiORALTM is based on its novel ligand and the presence of its receptors.

TrabiORALTM has succeeded in meeting its primary objective of enhancing bioavailability of the chosen molecule. This unique patented technology has demonstrated not only its clinical efficacy but also its uniqueness of bio-availability profile comparable to that of injected route.

TrabiORALTM has unequivocally demonstrated its versatility in the oral delivery of molecules of different sizes ranging between 5.8 kD to 150 kD apart from its versatility in delivering single or multiple protein/peptide moieties simultaneously covering wide ranging clinical applications such as diabetes, Oncology, Vaccines, IBD etc.

TrabiORALTM is protected by a series of patents covering countries such as USA, France, Germany, Britain, Italy, Australia, Japan etc.

b) SEBI order

After a prolonged and a relatively unsuccessful campaign on GDR matter, the company and its Directors past and present have acknowledged an order passed by SEBI dated 28th August 2019 delivered on 13th September 2019.

Aggrieved by some of the terms imposed in the said order with special reference to Item 49 a:

 

"49. In view of the above, I, in exercise of the powers conferred upon me under Sections 11(1), 11(4) and 11B of the SEBI Act, 1992 read with Section 19 of the SEBI Act, 1992, hereby direct as under:

a. Transgene Biotek Limited (Noticee no. 1) shall continue to pursue the measures to recall the outstanding amount of $ 38.5 million and bring the money back into TLBs bank account in India within a period of one year from the date of this order. It is clarified that Noticee Nos. 2, 4 and all other present directors of TBL shall ensure the compliance of this direction by TBL, and furnish a Certificate from a peer reviewed Chartered Accountant of ICAI along with necessary documentary evidences to SEBI, certifying the compliance of this direction."

the management of Transgene has filed an appeal at SAT unsuccessfully.

Not waiting for the outcome of continued efforts at different forums including Honble High

Court of Telangana, efforts have been continuing for recovery of lost GDR funds. A certificate from a peer reviewed Chartered Accountant has been submitted to SEBI in abeyance to the order passed by SEBI delivered to us on 18th September 2019.

c) SEBI Adjudication hearing

The lawyers on behalf of Sri. L. S. Shetty & Associates have presented the case at the hearing of SEBI Adjudication Officer, Mrs. Anita Anoop held on 5th February 2020.

In the meantime, we were informed that our case filed at Honble High Court of Telangana with an appeal for suspension of the proceedings at SEBI adjudication came up for hearing in April 2020 (through on-line video hearing) and the Counsel for SEBI sought time ill the end of May for responding to our claims. The case has not come up for hearing as on this date.

Pertaining to the recovery of GDR funds, the legal teams in London and Switzerland are still pursuing to recover the funds but not yet reached a conclusive stage.

Employee: As stated above, with limited resources the management has been judiciously maintaining required strength of employees to continue its operations without any interruption. It is commendable on the part of our employees for their dedication and hard work throughout the challenging period at the company from different angles.

DIVIDEND

Your Directors are unable to recommend any dividend since the company has not made any profits.

STRATEGIC FOCUS AND FUTURE ORIENTATION:

It is unfortunate that adding an insult to the injury while battling the GDR related issues, Covid has thrown an additional punch in terms of planned pre-clinical studies by different companies in Europe and USA postponing the studies on their molecules using TrabiORAL platform. However, we still managed to conclude one study on two different peptide molecules in the month of July 2020 and results of that study are awaited.

On successful monetization of TrabiORAL, it is planned to reactivate miRNA ad AAV technologies etc that comprises gene therapies also, an area of tremendous opportunities on which Transgene has been working on since 2005 onwards.

It is indeed somewhat disheartening for the managements inability in mobilizing required resources in developing vaccine and a therapeutic drug against Covid-19 competing with the rest in that sector across the globe.

Even in the case of our pursuit for recovery of GDR funds our efforts have been met with major blockade due to global lockdown. However, we are determined not to ease our efforts in that pursuit since the management strongly believes being unfairly treated on the GDR matter apart from severely impacting the opportunities and progress of the company.

Subsidiary Company - Transgene Biotek HK Limited

With revelation of new findings in the GDR fraud from the statements provided by some of those associated with GDR offerings, we have been pursuing on those individuals and entities. It is noteworthy that those revelations of crucial information by one of the persons operating from Singapore to the Monetary Authority of Singapore during the course of investigation lead to Transgene Biotek HK Ltd not being audited for the current year 2019-20 too. However, the management is seeking the opinion of few experts in this regard as to exact course of action to be initiated on the prospects of closing this company altogether.

However, the focus has not been lost regarding the irregularities committed through the account at Standard Chartered Bank, Singapore with efforts continuing for the recovery of funds transferred illegally from its account. A Statement pursuant to Section 129, read with Rule 5 of the Companies (Accounts) Rules, 2014 in Form AOC 1 is attached as Annexure A

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The global economy in Calendar Year (‘CY) 2019 has seen one of the slowest growth rates since the 2008 financial crisis. The biggest calamity was the outbreak of coronavirus in the beginning of CY 2020, which grew from a local problem in China to a global pandemic in a matter of weeks in early CY 2020. Lockdowns in most of the affected countries saved lives but were a huge blow to economic activities and the impact will be felt for a long time to come. To counter the losses and prevent a complete economic breakdown, governments and central banks around the world have unleashed unprecedented amounts of fiscal and monetary support. Nonetheless, warning of a recessionary effect was issued by top analysts. Following the Covid-19 outbreak, India implemented one of the strictest nationwide lockdowns in the world early on, in order to keep the infection numbers under control.

Pursuant to Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, (Listing Regulations) the Management Discussion and Analysis Report for the year under review, is presented in a separate section, forming part of the Annual Report as "Annexure B

CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION

The Company has a strong legacy of fair, transparent and ethical governance practices and it believes that good Corporate Governance is essential for achieving longterm corporate goals and to enhance stakeholders value. In this pursuit, the Companys philosophy on the Code of overnance is based on the belief that effective Corporate Governance practices constitute a strong foundation on which successful commercial enterprises are built to last.

Good Corporate Governance is indispensable to resilient and vibrant capital markets and is, therefore, an important instrument of investor protection. As a good corporate citizen, the Company lays great emphasis on a corporate culture of conscience, integrity, fairness, transparency, accountability and responsibility for efficient and ethical conduct of its business.

The Company has adhered to the requirements stipulated under Regulations 17 to 27 read with Para C and D of Schedule V and clauses (b) to (i) of sub-regulation (2) of Regulation 46 of the Securities and xchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015

(‘Listing Regulations) as applicable [including relaxations granted by the Securities and xchange Board of India (‘SEBI) in the wake of Covid-19], with regard to Corporate Governance and the same is disclosed in this Report.

Your Company has taken adequate steps to adhere to all the stipulations laid down in under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A report on orporate Governance is included as part of this Annual Report as "Annexure C".

Certificate from the Statutory Auditors of the company M/s. Manisha Dubey & Associates, Chartered Accountants confirming the compliance with the conditions of Corporate Governance as Stipulated under SEBI (Listing Obligations and Disclosure Requirements)

Regulations, 2015 is included as part of this report as "Annexure D"

DEMATERIALISATION OF SHARES

86.21% of the companys paid up Equity Share Capital is in dematerialized form as on 31st March, 2020 and balance 13.79% is in physical form. The Companys Registrars are M/s. Big hare Services Pvt Ltd, 306, Right Wing, 3rd Floor, Amrutha Ville, Opp. Yashoda Hospital, Raj Bhavan Rd, Somajiguda, Hyderabad, Telangana-500 082.

NUMBER OF BOARD MEETINGS HELD

The Board of Directors duly met 6 (Six) times during the financial year from 1st April, 2019 to 31st March 2020 the details of which are furnished in the report on Corporate Governance.

BOARD EVALUATION

The evaluation of all the Directors including the Chairman, the Independent Directors and the Managing Director, Board committees and the Board as a whole was carried out based on the criteria and framework approved by the Nomination and Remuneration Committee pursuant to the provisions of the Act and the corporate governance requirements as prescribed by SEBI under Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015).

The Board of Directors has carried out an annual evaluation of its own performance, Board committees and individual directors

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc.

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 ("NRC") reviewed the erformance 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 the board as a whole and performance of the Chairman was evaluated. 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.

INDEPENDENT DIRECTORS AND DECLARATION

Our Independent Directors meet the baseline definition of Independent Directors under the Act and the Listing Regulations. At the beginning of each financial year, the Independent Directors submit a self-declaration confirming their independence and compliance under section 149(6), Schedule IV of the Act and Regulation 16(1)(b) of the Listing Regulations, 2015 [Listing regulations]. All such declarations are placed before the Board for information and noting. Based on the declarations received, the Board also confirms that the Independent Directors fulfil the independence criteria under the Listing Regulations and are independent of the management.

Generally, the Independent Directors meet before each board meeting. During FY 19-20 the independent Directors met Six (6) times i.e. on 24th May 2019, 14th August 2019, 28th August 2019, 12th November 2019, 04th February 2020 and 04th March 2020. The Independent Directors inter alia discuss matters arising out of Board and Board Committee agendas, company performance and various other board-related matters, identify areas where they need clarity or information from management and to review the performance of Independent Directors, the Chairman and the Board as a whole and assess the effectiveness and promptness of the information flow.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Ms Sujana Kadiam, Independent Director, of the Company retires at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Mr Santosh Kumar was appointed as an Additional Independent Director w.e.f. 12th November 2019, and holds office till the date of the ensuing Annual General Meeting and eligible for reappointment as an Independent Director.

Smt. Swetha Marri was appointed as an Additional Independent Director w.e.f. 03rd June 2020, and holds office till the date of the ensuing Annual General Meeting and eligible for reappointment as an Independent Director.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to Section 134(5) of the Companies Act, 2013, Directors of your Company hereby state and confirm that:

• In the preparation of the annual accounts for the year ended 31st March, 2020, the applicable accounting standards have been followed along with proper explanation relating to material departures;

• 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 loss of the company for the same period;

• The directors have 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;

• They have prepared the annual accounts on a going concern basis;

• They have laid down internal financial controls in the company that are adequate and were operating effectively.

• They have devised proper systems to ensure compliance with the provisions of all applicable laws and these are adequate and are operating effectively.

DEPOSITS FROM PUBLIC

The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

RISK MANAGEMENT POLICY OF THE COMPANY

The Company has formulated and adopted a risk management policy at its Board Meeting. As per the policy, the management continues to review and assess the risk and also the steps for mitigating the same.

CORPORATE SOCIAL RESPONSIBILITY

The provisions of Section 135 of the Companies Act, 2013 relating to Corporate Social Responsibility do not apply to the company.

POLICY ON DIRECTORSf APPOINTMENT AND REMUNERATION AND OTHER DETAILS

The Companys policy on directors appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the corporate governance report, which forms part of the directors report.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The internal control systems of the Company are adequate and commensurate with the size of operations. These controls ensure that transactions are authorized, recorded and reported on time. They ensure that assets are safe guarded and protected against loss or unauthorized disposal.

The Internal Audit department carried out audits in different areas of the Companys operations. Post-audit reviews were carried out to ensure that audit recommendations were implemented. The Audit Committee of the Board of Directors reviewed the audit program and findings of the Internal Audit department.

AUDITORS REPORT AND SECRETARIAL AUDITORS REPORT:

The auditors report and Secretarial auditors report contain certain qualifications, reservations or adverse remarks. Report of the secretarial auditor is given as an annexure which forms part of this report "Annexure E

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

(A) The operations of the company are not power intensive nevertheless the company continues its efforts to minimize energy wherever practicable by economizing on the use of power at the offices

(B) Technology absorption NIL
(C) Foreign exchange earning NIL
(D) Foreign exchange outflow NIL

RELATED PARTY TRANSACTIONS

There were no transactions which have been entered into with related parties of the Directors or the Key Managerial Personnel of the company.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as "Annexure - F"

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

The particulars of loans, guarantees and investments have been disclosed in the financial statements.

ACKNOWLEDGEMENT

Your Directors take this opportunity to express their sincere thanks and place on record their appreciation of the continued assistance and co-operation extended to the company by its bankers, government and semi government departments, customers, marketing agents and suppliers and in particular Shareholders for the confidence reposed in the company

Your directors also thank all the employees of the company for their dedicated service without which your company would not have achieved those results.

By the Order Of the Board
For TRANSGENE BIOTEK LIMITED
Sd/-
PLACE: HYDERABAD Dr. K. KOTESWARA RAO
DATE: 24.08.2020 CHAIRMAN & MANAGING DIRECTOR

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