Vivimed Labs Ltd Directors Report.
Your Directors have pleasure in presenting the 31st Annual Report of your Company for the financial year ended 31st March, 2019.
The financial performance of your Company for the year ended 31st March, 2019 is summarized below:
|(र in million)|
|Year ended 31.03.2019||Year ended 31.03.2018||Year ended 31.03.2019||Year ended 31.03.2018|
|Earnings Before Interest, Tax,||757.92||787.97||2,000.97||2,216.14|
|Depreciation and Amortization (EBITDA)||524.03||518.02||672.62||794.83|
|Net Profit Before Tax||51.30||88.52||660.45||857.10|
|Provision for Tax||(10.55)||(10.15)||86.79||96.21|
|Net Profit After Tax carried to Balance Sheet||61.86||98.67||573.66||760.89|
|Proposed Dividend amount||-||32.79||-||-|
|Proposed Dividend Tax amount||-||6.68||-||-|
Due to proposed investment in expansions and developments in future and to conserve the available resources for the same, the board of directors of the Company have not recommend any dividend for the year FY2019. The Company has not paid the dividend for FY 2017-2018 declared at the Annual General Meeting held on 27.09.2019 with in time as per Companies Act, 2013.
The Authorised Share Capital of the Company is र 111,00,00,000/- (Rupees One Hundred Eleven Crores only) comprising 20,00,00,000 (Twenty crores) Equity Shares of र 2/- (Rupees Two Only) each, and 7,10,000 (Seven Lakh Ten Thousand only) Preference Shares of the Company with a par value of र 1,000/- (Rupees One Thousand only) each. The paid-up share capital of the Company is र 16,50,27,830/- (Rupees Sixteen Crores Fifty lakhs Twenty seven thousand Eight hundred and thirty only) comprising 8,25,23,915 (Eight crores Twenty five lakhs twenty three thousand nine hundred and fifteen only) Equity Shares of र 2/- (Rupees Two Only) each.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Extract of Annual Return as on 31st March, 2019 in Form MGT- 9 in accordance with Section 92(3) of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014, are set out herewith as Annexure-1 to this report.
SUBSIDIARIES/ JOINT VENTURES/ ASSOCIATE COMPANIES
The statement containing the salient features of the Financial Statements of the Companys subsidiaries/ joint ventures/ associate companies is given in Form AOC-1, provided in Notes to the Consolidated Financial Statements, forming part of the Annual Report.
The highlights of performance of subsidiaries, joint ventures and associate companies and their contribution to the overall performance of the Company during the financial year is given under Annexure 2 to the Consolidated Financial Statements forming part of the Annual Report.
During the year the Companys step down subsidiary acquired 100% stake of Soneas Chemicals Ltd and Soneas Research Ltd. The company sold its 50% stake held in Vivimed Life Sciences Pvt Ltd and Strides Vivimed Pte. Ltd
DIRECTORS AND KEY MANAGERIAL PERSONNEL:
Retirement by Rotation and Subsequent ReAppointment:
Shri. Sandeep Varalwar and Shri. S.Raghunandan, Whole Time Directors, are liable to retire by rotation at the ensuing AGM pursuant to the provisions of Section 152 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the Articles of Association of your Company and being eligible have offered themselves for re-appointment. Prof. Bhagvanth Mamidpalli Rao (00117862) and Mr. Nixon Patel (01717281), has been appointed as Independent Directors of the Company at the 26th Annual General Meeting held on September 30, 2014 for a period of 5 years up to 31st Annual General Meeting to be held in calendar year 2019. As per the provisions of Section 149 of the Companies Act, 2013, an Independent Director shall hold office for a term upto five consecutive years on the Board of a Company but shall be eligible for re-appointment, for another term of upto five years, on passing of a special resolution by shareholders. Hence the Board proposes re-appointment of Prof. Bhagvanth Mamidpalli Rao (00117862) and Mr. Nixon Patel (01717281) as an Independent Directors of the Company commencing from 31st Annual General Meeting to be held in calendar year 2019 up to 36th Annual General Meeting to be held in calendar year 2024. Your Directors recommend their re-appointment as Directors of your Company.
Shri.Santosh Varalwar, Managing Director, Shri.S.Raghunandan, Whole Time Director cum CFO and Shri.K.Yugandhar, Company Secretary, are the Key Managerial Personnel of your Company in accordance with the provisions of Sections 2(51), 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any statutory modification(s) or re- enactment(s) for the time being in force).
Declaration of Independence:
Your Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under the provisions of the Companies Act, 2013 read with the Schedules and Rules issued thereunder as well as Regulation 16(1)(b) of Listing Regulations (including any statutory modification(s) or re-enactment(s) for the time being in force).
In the opinion of the Board, the Independent Directors of the Company fulfil the conditions specified in the Act and Listing Regulations and are independent of the management.
POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION:
The policy of the Company on directors appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters are adopted as per the provisions of the Companies Act, 2013. The remuneration paid to the Directors is as per the terms laid out in the nomination and remuneration policy of the Company.
DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND PARTICULARS OF EMPLOYEES:
The remuneration paid to the Directors is in accordance with the Nomination and Remuneration Policy formulated in accordance with Section 178 of the Companies Act, 2013 and Regulation 19 of the Listing Regulations (including any statutory modification(s) or re-enactment(s) for the time being in force). The salient aspects covered in the Nomination and Remuneration Policy have been outlined in the Corporate Governance Report which forms part of this report.
The Managing Director of your Company does not receive remuneration from any of the subsidiaries of your Company.
The information required under Section 197 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of Directors/ employees of your Company is set out in Annexure-3 to this report and is also available on the website of your Company (www.vivimedlabs. com).
FAMILIARISATION PROGRAMME FOR THE INDEPENDENT DIRECTORS
In compliance with the requirements of Regulation 25(7) of the Listing Regulations, the Company has put in place a Familiarisation Programme for the Independent Directors to familiarise them with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model etc. The details of the Familiarisation Programme conducted are available on the website of the Company www.vivimedlabs.com.
The Board and Committee meetings are pre-scheduled and a tentative calendar of the meetings shall be finalized in consultation with the Directors to facilitate them to plan their schedule. However, in case of urgent business needs, approval is taken by passing resolutions through circulation. During the year under review, 7 (Seven) board meetings were held. The details of the meetings including composition of various committees are provided in the Corporate Governance Report.
EVALUATION OF BOARDS PERFORMANCE:
Pursuant to the provisions of the Companies Act, 2013 read with the Rules issued thereunder and the Listing Regulations (including any statutory modification(s) or re-enactment(s) for the time being in force), the process for evaluation of the annual performance of the Directors/ Board/ Committees was carried out. The criteria applied in the evaluation process are detailed in the Corporate Governance Report which forms part of this report
The management believes that the competent and committed human resources are vitally important to attain success in the organization. In line with this philosophy, utmost care is being exercised to attract quality resources and suitable training is imparted on various skill-sets and behavior. Annual sports and games were conducted across the organization to enhance the competitive spirit and encourage bonding teamwork among the employees.
POLICY ON PREVENTION OF SEXUAL HARASSMENT:
The Company has formulated and implemented a policy for Prevention of Sexual Harassment of Women at workplace. During the year under review, the Company has not received any complaints under the policy.
The Company has many systems, processes and policies to ensure professional ethics and harmonious working environment. We follow Zero Tolerance towards Corruption and unethical conduct. These are ensured through Whistle Blower Policy, Anti-Corruption Policy, Gift Policy, Sexual Harassment Policy and Redressal Guidelines.
AUDITORS AND AUDITORS REPORT
(i) Statutory Auditors:
M/s. PCN & Associates, Chartered Accountants, (Firm Registration No.016016S), were appointed as the Statutory Auditors of the Company for a period of 5 (five) years at the 30th Annual General Meeting till the conclusion of the 35th Annual General Meeting of the Company.
The Auditors Report for the financial year ended March 31, 2019, has been issued with an unmodified opinion, by the Statutory Auditors.
(ii) Cost Auditors:
In accordance with Section 148 of the Companies Act, 2013 read with Companies (Audit & Auditors) Rules, 2014 and the Companies (Cost Records and Audit) Amendments Rules, 2014, the Company maintains the cost records in respect of its business.
Your Board has appointed M/s.A.S.Rao & Co, Cost Accountants, (Firm Registration No.000326), as the Cost Auditors of the Company for the Financial Year 2019-20. As required by the Act, the remuneration of the Cost Auditors has to be ratified by the Members and accordingly the resolution relating to the Cost Auditors is being placed before the Members for their ratification.
(iii) Secretarial Auditors & Secretarial Audit Report:
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr.N.V.S.S.Suryanarayana Rao, Practicing Company Secretary (Certificate of Practice No.2886), to undertake the Secretarial Audit of the Company for the financial year 2018-19. The Secretarial Audit Report issued in Form MR-3 is in Annexure -4 to this Report. There are no qualifications, reservations or adverse remarks in the Secretarial Audit Report except non-payment of Dividend for FY 2018.
The Company has complied with the applicable Secretarial Standards as amended from time to time.
LOANS, GUARANTEES & INVESTMENTS
Details of loans, guarantees and investments under the provisions of Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014, as on 31st March, 2019, are set out in the Standalone Financial Statements forming part of this report.
RELATED PARTY TRANSACTIONS:
In accordance with Sec 134(h) of the Companies Act, 2013 and Rule 8(2) of Companies (Accounts) Rules, 2014, the particulars of contracts or arrangements entered into by the Company with the Related Parties referred to in Sec.188 (1) of the Act, have been provided in Form AOC-2 and attached the same as Annexure-5. The details of related party disclosures as stated in the notes to the financial statements forms part of this annual report except non payment of divident for FY 18.
AUDIT COMMITTEE COMPOSITION
The details pertaining to composition of Audit Committee are included in the Corporate Governance Report, which forms part of this Report.
INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS
Your Company has put in place adequate internal financial controls with reference to the financial statements, some of which are outlined below.
Your Company has adopted accounting policies which are in line with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 that continue to apply under Section 133 and other applicable provisions, if any, of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014. These are in accordance with generally accepted accounting principles in India. Changes in policies, if any, are approved by the Audit Committee in consultation with the Statutory Auditors.
The policies to ensure uniform accounting treatment are prescribed to the subsidiaries of your Company. The accounts of the subsidiary companies are audited and certified by their respective Statutory Auditors for consolidation.
Your Company operates in SAP, an ERP system, and has many of its accounting records stored in an electronic form and backed up periodically. The ERP system is configured to ensure that all transactions are integrated seamlessly with the underlying books of account. Your Company has automated processes to ensure accurate and timely updation of various master data in the underlying ERP system.
Your Company has a robust financial closure selfcertification mechanism wherein the line managers certify adherence to various accounting policies, accounting hygiene and accuracy of provisions and other estimates.
Your Company operates a shared service center which handles all payments made by your Company. This center ensures adherence to all policies laid down by the management.
Your Company in preparing its financial statements makes judgments and estimates based on sound policies and uses external agencies to verify/ validate them as and when appropriate. The basis of such judgments and estimates are also approved by the Statutory Auditors and Audit Committee.
The Management periodically reviews the financial performance of your Company against the approved plans across various parameters and takes necessary action, wherever necessary.
Your Company has a code of conduct applicable to all its employees along with a Whistle Blower Policy which requires employees to update accounting information accurately and in a timely manner. Any non-compliance noticed is to be reported and actioned upon in line with the Whistle Blower Policy.
Your Company gets its Standalone accounts limited review every quarter by its Statutory Auditors.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:
Pursuant to the provisions of Section 135 and Schedule VII of the Companies Act, 2013, CSR Committee of the Board of Directors had framed the policy on Corporate Social Responsibility and the Projects and Programs undertaken by the Company during the year under review have been provided in Annexure-6 and forms part of this Report.
During the year under review, your Company has not accepted any deposit within the meaning of Sections 73 and 74 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 (including any statutory modification(s) or re- enactment(s) for the time being in force).
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis forms an integral part of this report and gives details of the overall industry structure, economic developments, performance and state of affairs of your Companys various businesses viz., the pharmaceuticals, Specialty chemicals, APIs business, internal controls and their adequacy, risk management systems and other material developments during the financial year FY2019.
CORPORATE GOVERNANCE REPORT:
A separate section on Corporate Governance practices followed by your Company, as stipulated under Schedule V(C) of the SEBI (LODR) Regulations, 2015 is enclosed forming part of this report. The certificate of the auditors with regard to compliance of conditions of corporate governance as stipulated under Schedule V (E) of the SEBI (LODR) Regulations, 2015 is annexed to the Report on Corporate Governance Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS/OUTGO:
The information required under Section 134 (3) (m) of the Companies Act, 2013, read with Rule 8(3) of Companies (Accounts) Rules, 2014, is appended hereto as Annexure -7 and forms part of this Report.
EMPLOYEES STOCK OPTION SCHEMES
During the year, the Company has granted 25,00,000 options to eligible employees under the Vivimed Labs ESOP 2017 at र 35/- per option (exercise price). The shares covered by such options are 25,00,000 equity shares of र 2/- each (face value).
Disclosure with respect to the Employees Stock Option Scheme in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 is available on the Companys website.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
There are no significant and material orders passed by the regulators or courts or tribunals which impact the going concern status and Companys operations in future.
WHISTLE BLOWER POLICY/VIGIL MECHANISM
Your Company is committed to highest standards of ethical, moral and legal business conduct. Accordingly, the Board of Directors have formulated a Whistle Blower Policy which is in compliance with the provisions of Section 177(10) of the Companies Act, 2013 and Regulation 22 of the Listing Regulations. employees can raise concerns regarding any discrimination, harassment, victimization, any other unfair practice being adopted against them or any instances of fraud by or against your Company.
Any incidents that are reported are investigated and suitable action taken in line with the whistle blower policy. The Whistle Blower Policy is also available on your Companys website www.vivimedlabs.com.
DIRECTORS RESPONSIBILITY STATEMENT:
a) in the preparation of the annual accounts for the financial year ended March 31, 2019, the applicable accounting standards have been followed and there are no material departures from the same;
b) the Directors 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 as at March 31, 2019 and of the profit of the Company for the year ended on that date;
c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) the Directors have prepared the annual accounts on a going concern basis;
e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
The Consolidated Financial Statements of your Company for the financial year FY2019 are prepared in compliance with applicable provisions of the Companies Act, 2013 read with the Rules issued thereunder, applicable Accounting Standards and the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as the "Listing Regulations"). The consolidated financial statements have been prepared on the basis of audited/ unaudited financial statements of your Company, its subsidiaries and associate companies, as approved by the respective Board of Directors.
MATERIAL CHANGES EFFECTING THE COMPANY:
There have been no material changes and commitments affecting the financial position of the Company between the end of the financial year and date of this report. There has been no change in the nature of business of the Company.
All properties and insurable interests of the Company including buildings, plant and machinery and stocks have been fully insured.
CARE Ratings Limited has reaffirmed the credit rating for the Company as "CARE D", for long-term bank facilities and "CARE D" for short-term bank facilities due to on account of deterioration in the liquidity profile of the company at the back of cash flow mismatches resulting in delays in meeting debt obligations.
Your Directors wish to thank all stakeholders, employees and business partners, Companys bankers, medical professionals and business associates for their continued support and valuable cooperation.
The Directors also wish to express their gratitude to investors for the faith that they continue to repose in the Company.
|For and on behalf of the Board|
|Manohar Rao Varalwar|
|Whole time Director|