Vista Pharmaceuticals Ltd Directors Report.

To

The Members,

Vista Pharmaceuticals Limited.

Your Directors have pleasure in presenting the 28th Annual Report together with the audited statements of account for the year ended 31st March, 2019.

Financial summary or highlights/Performance of the Company

The financial results of the company are as follows:

(Amount in Rs in Lakhs)

Particulars 31-03-2019 31-03-2018
Revenue from Operations 3107.28 2891.78
Other Income 294.85 39.68
Total Revenue 3402.13 2931.46
Expenses 3151.02 2515.21
Depreciation 136.40 133.56
Total Expenses 3287.42 2648.77
Profit Before exceptional and extraordinary items and Tax 114.71 282.69
Less: exceptional and extraordinary items 0.00 0.00
Profit Before Taxation 114.71 282.69
Less: - Current Tax 23.62 57.64
- Income Tax (Earlier years) 0.00 0.00
- Deferred Tax 2.84 6.41
Profit After Tax 93.94 218.65

Brief description of the Companys working during the year/State of Companys affair

During the financial year, your Company has achieved a turnover of Rs. 3107.28/- Lakhs as against Rs. 2891.78/- Lakhs in the previous year. The Company earned the profit after tax of Rs. 93.94 lakhs as against the profit in the previous year of Rs. 218.65 lakhs.

During the period under review the revenue from operations of the company has increased by Rs. 215.50 Lakhs. However the profit after tax from the year has reduced by Rs. 124.71 due to increase in the expenses of the company.

Company has prepared its financial Statements in accordance with Indian accounting standards notified under section 133 of the Companies Act, 2013 read with paragraph 7 of Companies (Accounts) Rules 2014.

Material Changes and Commitments, if any, affecting the Financial Position of the Company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report.

There are no other Material Changes and Commitments affecting the financial position of the Company which occurred between the end of the financial year to which the financial statements relate and the date of this Report.

Dividend

No dividend has been recommended by Board of Directors for the financial year 2018-19.

Transfer to reserve

There were no transfers to Reserves during the financial year 2018-19.

Share Capital

The authorized share capital of the Company as on March 31, 2019 is Rs. 15,00,00,000/- divided into 7,50,00,000 equity shares of Rs. 2/- each.

Issued, subscribed and paid up capital of the Company as on March 31, 2019 is Rs. 6,07,30,674/- divided into 3,03,65,337 equity shares of Rs.2/- each.

The Company has not issued any shares with differential rights and hence no information as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.

During the period under review, there was increase in share capital of the company from 5,82,94,384 to 6,07,30,674, As the Company has allotted 12,18,145 equity shares upon conversion of 12,18,145 compulsorily convertible warrants of Rs. 2.00/- issued at premium of Rs. 48.00/- to Promoter on Preferential basis .

In pursuance of Securities Exchange Board of India (Issue of and Disclosure Requirements) Regulations, 2008, Company has forfeited the upfront money received on 26,02,808 compulsorily convertible warrants issued to promoters on preferential basis in the extra ordinary general meeting held on 30.03.2017, as the tenure of 18 months for converting the warrants into equity shares was lapsed on 12.10.2018.

Further the Company in pursuance of Securities Exchange Board of India (Issue of and Disclosure Requirements) Regulations, 2018, has forfeited the upfront money received on 12,81,855 and 7,00,000 compulsorily convertible warrants issued to promoters and Non Promoters on preferential basis in the extra ordinary general meeting held on 24.10.2017, as the tenure of 18 months for converting the warrants into equity shares was lapsed on 27.05.2019 & 06.06.2019 respectively.

Listing

The Company shares are listed on BSE Limited and Company confirms that it has paid the Annual Listing Fees for the year 2018-2019 to BSE.

Directors and Key Managerial Personnel:

Proposed Reappointment:

As per the provision of the Companies Act, 2013, Dr. Stanley Prabhakar Reddy, (DIN: 07614532) Director of the Company, who has been longest in the office, retires by rotation at the ensuing Annual General Meeting of the Company and being eligible to offer himself for re-appointment in accordance with the provisions of the Companies Act and pursuant to Articles of Association of the Company. The Board recommends his reappointment.

Mr. Narendra Gilaka, is the existing Non-Executive Independent Director of the Company who was appointed for a period of five years by the members in the 23rd Annual General Meeting of the Company held on 11th September, 2014 and whose term of office is expiring on 11.09.2019. In terms of Section 149 and other applicable provisions of Companies Act, 2013, the Board of Directors of the Company on recommendation of Nomination Remuneration Committee, has re-appointed Mr. Narendra Gilaka, as NonExecutive Independent Director for a further period of five years commencing from 11.09.2019, in their meeting held on 14.08.2019, subject to approval of members in the ensuing Annual General meeting.

Your Board recommends the re-appointment of the aforesaid Director.

During the period under review Ms. Vani Vatti, Independent Director of the Company has vacated her office as Director on incurring the disqualification pursuant to provision of Section 164(2), 167 of the Companies Act, 2013.

Board of Directors in their meeting held on 10.05.2018 has took note of vacation in office of Mr. Rajendra Prasad Kandikattu, Nominee Director representing on Behlaf of TSIDC, in terms of Section 167 (1) (b) of the Companies Act, 2013.

Board of Directors in their meeting held on 10.05.2018 has Changed the Designation of Mr. Umesh Virupakah Banakar, as Non- Executive Independent Director of the Company.

Board of Directors in their meeting held on 10.05.2018 has Changed the Designation of Mr. Dhananjaya Alli, Chairman Cum Managing Director to Managing Director of the company.

Meetings

During the year under review 9 (Nine) Board Meetings were convened and held. The Board meetings were held on 10.05.2018, 30.05.2018, 29.06.2018, 13.08.2018, 14.11.2018, 26.12.2018, 24.01.2019, 06.02.2019 & 16.03.2019. The intervening gap between the Meetings was not more than 120 days as prescribed under the Companies Act, 2013.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and Stakeholders Relationship Committees.

Declaration by Independent Directors

A declaration has been received by all the Independent Directors of the Company that they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013 and Regulation 25 of SEBI (LODR) Regulations, 2015.

A meeting of the Independent Directors was held on 13.08.2018 which was attended by the Independent Directors. The Independent Directors have evaluated the performance of the Non-Independent Directors, the Board as a whole and the Chairman of the Board. The Board was briefed on the deliberations made at the Independent Directors Meeting.

Directors Responsibility Statement

Pursuant to the requirement of Section 134, in the Companies Act, 2013, the Board of Directors of the Company make the following statements, to the best of their knowledge and belief and according to the information and explanations obtained by them:

a) That in the preparation of the annual financial statements for the year ended March 31, 2019, the applicable accounting standards (IND AS) have been followed and there have been no material departures there from;

b) That the accounting policies mentioned in notes to the Financials Statements have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2019 and of the profits of the Company for the year ended on that date;

c) That 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) That the annual financial statements have been prepared on a going concern basis;

e) That proper internal financial control has been laid down to be followed by the Company and such internal financial controls are adequate and operating effectively.

f) That proper systems are in place to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

Audit Committee

The Audit Committee of the Company is duly constituted as per section 177 of the companies act, 2013 and Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Composition and Scope of Audit Committee is as follows

The following are the members of the Audit Committee as on 31.03.2019:

S. No Name of the Director Designation Category
1. Ms. Ch. Divya Bhavani Chairman Independent, Non-Executive
2. Mr. G. Narendra Member Independent, Non-Executive
3. Mr. Mallem Hanumantha Rao Member Non-Executive

During the period under review Ms. Vani Vatti, Independent Director of the Company has vacated her office as Director on incurring the disqualification pursuant to provision of Section 164(2), 167 of the Companies Act, 2013.

During the Period under review Audit committee has met 5 (Five) times in a year.

Audit Committee Meetings

Sl.No. Date of meeting Total No of Directors as on the date of meeting Number of directors attended
1. 10.05.2018 04 02
2. 30.05.2018 04 03
3. 13.08.2018 04 03
4. 14.11.2018 04 03
5. 06.02.2019 04 03

Scope of Committee:

The terms of reference of the Audit Committee include the following:

a. Oversight of the Companys financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible;

b. Recommending the appointment, removal of external auditors, fixation of audit fee, terms of appointment and also approval for payment for any other services.

c. Reviewing with the management, the annual financial statements and auditors report thereon before submission to the Board for approval, focusing primarily on:

• Matters required to be included in the directors responsibility statement to be included in the boards report in terms of clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013;

• Any changes in accounting policies and practices and reasons for the same;

• Major accounting entries involving estimates based on the exercise of judgment by management;

• Qualifications in the draft audit report;

• Significant adjustments made in the financial statements arising out of audit;

• The going concern assumption;

• Compliance with accounting standards;

• Compliance with listing and legal requirements concerning financial statements;

d. Reviewing, with the management and auditors, and the adequacy of internal control systems;

e. Review and monitor the auditors independence and performance, and effectiveness of audit process;

f. Reviewing, with the management, the quarterly financial statements and auditors report before submission to the Board for approval;

g. Reviewing, with the management, the statement of uses/application of funds raised through an issue, the statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the board to take up steps in this matter;

h. Approval or any subsequent modification of transactions of the listed entity with related parties;

i. Scrutiny of inter-corporate loans and investments;

j. Valuation of undertakings or assets of the listed entity, wherever it is necessary;

k. Evaluation of internal financial controls and risk management systems;

l. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;

m. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors;

n. To review the functioning of the whistle blower mechanism;

o. Approval of the appointment of Chief Financial Officer after assessing the qualifications, experience and background, etc. of the candidate.

p. Composition, name of members and Chairperson

Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration.

Nomination and Remuneration Committee:

The Company had constituted the Nomination and Remuneration Committee under section 178 of the Companies Act, 2013.

Composition, Meetings and Attendance during the year

The Nomination and Remuneration Committee comprises of the following members

S.No Name of the Director Designation Category
1. Ms. Ch. Divya Bhavani Chairman Independent, Non-Executive
2. Mr. G. Narendra Member Independent, Non-Executive
3. Mr. Mallem Hanumantha Rao Member Non-Executive

During the period under review Ms. Vani Vatti, Independent Director of the Company has vacated her office as Director on incurring the disqualification pursuant to provision of Section 164(2), 167 of the Companies Act, 2013.

The Committee held 3 (Three) meetings during the year ended March 31st, 2019.

Nomination and Remuneration committee meetings

Sl.No Date of meeting Total number of directors as on date of meeting Directors Attended
1 10.05.2018 04 02
2 29.06.2018 04 03
3 16.03.2019 03 03

(a) Selection and Evaluation of Directors

The Board has bases on recommendations of the nomination and remuneration Committee, laid down following policies;

1. Policy for Determining qualifications, Positive Attributes and Independence of a Director

2. Policy for Board & Independent Directors Evaluation

(b) Performance Evaluation of Board, Committees and Directors

The company believes formal evaluation of the board and of the individual directors, on an annual basis, is a potentially effective way to respond to the demand for greater board accountability and effectiveness. For the company, evaluation provides an ongoing means for directors to assess their individual and collective performance and effectiveness. In addition to greater board accountability, evaluation of board members helps in;

a. More effective board process

b. Better collaboration and communication

c. Greater clarity with regard to members roles and responsibilities

d. Improved chairman - managing directors and board relations

The evaluation process covers the following aspects

- Self evaluation of directors

- Evaluation of the performance and effectiveness of the board

- Evaluation of the performance and effectiveness of the committees

- Feedback from the non executive directors to the chairman

- Feedback on management support to the board.

(c) Remuneration Policy for Directors

a. Ensuring that the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the company successfully;

b. Ensuring that relationship of remuneration to performance is clear and meets the performance benchmarks; and

c. Ensuring that remuneration involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the company and its goals.

Particulars of Employees

Details in respect of remuneration paid to employees as required under Section 197 (12) of the Companies Act, 2013, read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended forms part of this report. In terms of Section 136 of the Companies Act, 2013 the same is open for inspection at the Registered Office of the Company.

Copies of this statement may be obtained by the members by writing to the Company Secretary at the Registered Office of the Company

Auditors

Statutory Auditors

In terms of Section 139 of the Companies Act, 2013 Board of Directors at their meeting held on 10.05.2018 has Appointed M/ s. Mahesh, Virender & Sriram, Chartered Accountants as Statutory Auditor of the company, in casual vacancy of M/ s. V. Kishore Kumar & Associates, Chartered Accountants. Subsequently, the members of the Company upon recommendation of Board of Directors has appointed M/ s. Mahesh, Virender & Sriram, Chartered Accountants as Statutory Auditor of the company for a period from 2017-18 to 2021-22 in the 27th Annual general meeting of the Company held on 06.08.2018.

The Ministry of Corporate Affairs vide Companies (Amendment) Act, 2017dated 7th May 2018 has dispensed with the requirement of ratification of Auditors appointment by the shareholders, every year. Hence, the resolution relating to ratification of Auditors appointment is not included in the notice of the ensuing Annual General meeting.

Secretarial Auditor

In terms of Section 204 of the Act and Rules made there under, Mr. N.V.S.S. Suryanarayana, Practicing Company Secretary has been appointed as Secretarial Auditor of the Company for the financial year under review.

Auditors Report

The Auditors report for the financial year does not contain any qualifications, reservation or adverse remark. The Auditors report is enclosed with the financial statement in this Annual report.

Secretarial Audit Report

The Secretarial Auditors report for the financial year is enclosed as Annexure to this report.

The following are the managements reply to the Secretarial auditors observations:

Sl. No. Observations of Secretarial Auditor Managements Reply:
1. The Board of Directors at their meeting held on 26.12.2018, 24.01.2019 & 06.02.2019 has allotted 12,18,145 equity shares upon conversion of warrants to NRIs, Company is yet to report the allotment of 12,18,145 shares to RBI. The company has filed the form FC-GPR with RBI, however the same was rejected. The Company will ensure to complete the reporting of allotment with RBI.
2. There was a delay in filing certain forms with Registrar of Companies, Telangana. Company will ensure to file the forms in due time.

As required under the provisions of SEBI LODR Regulations, a certificate confirming that none of the Directors on the Board have been debarred or disqualified by the Board/Ministry of Corporate Affairs or any such statutory authority obtained from M/ s NVSS Suryanarayana Rao., Practicing Company Secretaries is a part of the these report.

Cost Auditors

The provisions of Section 148 of the Companies Act, 2013 does not apply to the Company and hence, no Cost Auditors are appointed.

Reporting of Frauds by auditors

During the year under review, neither the statutory auditors nor the Secretarial auditor has reported to the audit committee, under Section 143 (12) of the Companies Act, 2013, any instance of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Boards report.

Internal Audit & Controls

The Company has adequate Internal Financial Controls consistent with the nature of business and size of the operations, to effectively provide for safety of its assets, reliability of financial transactions with adequate checks and balances, adherence to applicable statues, accounting policies, approval procedures and to ensure optimum use of available resources. These systems are reviewed and improved on a regular basis. It has a comprehensive budgetary control system to monitor revenue and expenditure against approved budget on an ongoing basis.

Vigil Mechanism:

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.

Risk management policy

The Risk Management Policy is in place in the Company enables the Company to proactively take care of the internal and external risks of the Company and ensures smooth business operations.

The Companys risk management policy ensures that all its material risk exposures are properly covered, all compliance risks are covered and the Companys business growth and financial stability are assured. Board of Directors decide the policies and ensure their implementation to ensure protection of Company from any type of risks.

Extract of Annual Return

In accordance with Section 92(3) and 134(3)(a) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in Form MGT- 9 is placed on the website of the Company at www.vistapharmaceuticals.com.

Secretarial Standards

The Company complies with all applicable secretarial standards.

Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companys operations in future

No other significant and material order has been passed by the regulators, courts, tribunals impacting the going concern status and Companys operations in future.

Deposits

The Company has not accepted any deposit from the public under Chapter V of the Act or under the corresponding provisions of Section 73 and 74 of the Companies Act, 2013, and no amount of principal or interest was outstanding as on the Balance Sheet date.

Subsidiary & Associates/Joint Ventures

Company does not have any subsidiary and associate, Joint Venture Company.

Particulars of loans, guarantees or investments under section 186

Details of loans and guarantees given and investments made under Section 186 of the Act are given in the Notes to the Financial Statements.

Particulars of contracts or arrangements with related parties:

The particulars of every contract or arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto are disclosed in Form No. AOC-2 as Annexure to this report.

There were no material significant related party transactions made by the Company with the Promoters, Directors, Key Managerial Personnel or the Senior Management which may have a potential conflict with the interest of the Company at large. None of the Directors had any pecuniary relationship or transactions with the Company.

Conservation of energy, technology absorption and foreign exchange earnings and outgo

Information on conservation of Energy, Technology absorption, Foreign Exchange earnings and outgo required to be disclosed under Section 134 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2015 are as follows:

(A) Conservation Of Energy

POWER AND FUEL CONSUMPTION 2018-19 2017-18
1. ELECTRICITY
a. Purchased units(KWH) 3,83,610 5,72,805
Total Amount (in Rs.) 40,87,121 56,41,046
Unit Rate (in Rs.) 10.65 9.85
b. Own Generation(Through Diesel Generator) Units 27,199.13 36,537
Unit per litre of diesel oil 5.35 4.58
Cost/Unit(Rs.) 15.1 13.6
2. COAL 0 0
3. FURNANCE OIL(Diesel Oil for Boiler) Quantity (in litres) 6,462 18,240
Total Amount (in Rs.) 4,76,740 11,55,563
Average Rate/Litre (in Rs.) 73.78 63.4

(B) Technology absorption

(i) The efforts made towards technology absorption;

The Company has neither absorbed nor adopted any new technology. The company has also not made any innovation in technology other than the R & D.

(ii) The benefits derived like product improvement, cost reduction, product development or import substitution; No benefits derived in the year under review.

(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year)-

a) The details of technology imported

b) The year of import;

c) Whether the technology been fully absorbed

d) If not fully absorbed, areas where absorption has not taken place, and the reasons thereof. No technology is imported during financial year 2018-19

Foreign Exchange Earnings and Outgo

The Foreign Exchange earned in terms of actual inflows during the year and the Foreign Exchange outgo during the year in terms of actual outflows is as follows;

Foreign Exchange Inflows; Rs.678.78 Lakhs

Foreign Exchange Outflows; Rs.8.58 Lakhs

Human Resources

Your Company treats its "Human Resources" as one of its most important assets. Your Company continuously invests in attraction, retention and development of talent on an ongoing basis. A number of programs that provide focused people attention are currently underway. Your Company thrust is on the promotion of talent internally through job rotation and job enlargement

Corporate Governance

As per Regulation 15 of SEBI (Listing Obligations and Disclosure Requirements), 2015, provisions relating to Corporate governance is not applicable to your company and therefore there is no separate report on corporate governance.

Managements Discussion and Analysis

Management Discussion and Analysis Report, pursuant to Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms part of this report and same is annexed.

Corporate Social Responsibility

The provisions w.r.t. CSR are not applicable to the Company therefore, the Company had not constituted CSR committee during the year 2018-19.

Transfer of Amounts to Investor Education and Protection Fund

Your Company did not have any funds lying unpaid or unclaimed for a period of seven years. Therefore there were no funds which were required to be transferred to Investor Education and Protection Fund (IEPF).

Obligation of Company under The Sexual Harassment Of Women At Workplace (Prevention, Prohibition And Redressal) Act, 2013

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

The following is a summary of sexual harassment complaints received and disposed off during the year 2018-19:

No. of complaints received: -NIL-
No. of complaints disposed off: -NIL-

Personnel

Your Directors place on record their appreciation for the services rendered by the employees. The relation between the management and the employees has been cordial throughout the year.

ACKNOWLEDGEMENTS

The Directors wish to convey their appreciation to business associates for their support and Contribution during the year. The Directors would also like to thank the employees, shareholders, Customers, suppliers, alliance partners and bankers for the continued support given by them to the Company and their confidence reposed in the management.

By order of the Board
for VISTA PHARMACEUTICALS LIMITED
Place: Hyderabad SD/- SD/-
Date: 14.08.2019 Dr. Dhananjaya Alli N.V. Chalapathi Rao
Managing Director Wholetime Director
DIN No. 00610909 DIN No: 03270178