Your Directors have pleasure in presenting the 33rd Annual Report of your Company for the financial year ended 31st March, 2021.
The financial performance of your Company for the year ended 31st March, 2021 is summarized below:
( H in million)
|Year ended||Year ended||Year ended||Year ended|
|Earnings Before Interest, Tax,||337.75||388.27||395.14||163.63|
|Depreciation and Amortization (EBITDA)|
|Net Profit Before Tax||(235.13)||(207.4)||(698.57)||(1,094.74)|
|Provision for Tax||(2.34)||(15.7)||20.29||(3.59)|
|Net Profit After Tax carried to Balance Sheet||(232.79)||(191.7)||(718.86)||(1,091.15)|
OVERVIEW OF COMPANYS FINANCIAL PERFOMANCE:
On a consolidated basis, your Company reported total revenue of H8,712.91 million as against H10,670.54 million. EBITDA for FY2021 was H395.14 million compared to H163.63 million in the previous year. Net profit after tax for the group for the current year is H(718.86) million as against H(1,091.15) million in the previous year.
Total revenue from operations on standalone basis decreased to H2,161.20 million as against H2,831.41million in the previous year. FY2021 EBITDA was H337.75 million compared to H388.27 million
in the previous year. The Profit after Tax for the current year is H(232.79) million as against H(191.70) million in the previous year.
Pharmaceutical industry being part of the essential commodities was given special permission by Indian government to operate with minimal manpower and maintaining social distancing. The Company has followed the guidelines issued by the Government to run the operations with complete cautious approach about the health and safety of the employees. There is no material impact on the business of the Company during the year under review due to Covid-19 pandemic.
Business prospects may remain positive because of the growing global demand for generics and opportunities provided by the expiry of patents in developed markets. Post Covid-19, there may be new business opportunities for the pharmaceutical industry, in particular, our company.
MANAGEMENT DISCUSSION & ANALYSIS:
Various business aspects including market conditions, business opportunities, challenges etc. have been discussed at length in the Management Discussion and Analysis (MD&A), which forms part of this Annual Report.
Due to loses, the board of directors of the company have not recommended any dividend for the year FY2021.
TRANSFER TO RESERVES:
Due to loses your Company propose to transfer loses to Reserves.
MATERIAL CHANGES AFFECTING 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. The lead banker of the Company (SBI) has filed petition against the Company for recovery of their dues in DRT & NCLT.
The Authorised Share Capital of the Company is H111,00,00,000/- (Rupees One Hundred Eleven Crores only) comprising 20,00,00,000 (Twenty crores) Equity Shares of H2/- (Rupees Two Only) each, and 7,10,000 (Seven Lakh Ten Thousand only) Preference Shares of the Company with a par value of H1,000/- (Rupees One Thousand only) each. The paid-up share capital of the Company is H16,58,27,830/- (Rupees Sixteen Crores Fifty Eight lakhs Twenty seven thousand Eight hundred and thirty only) comprising 8,29,13,915 (Eight crores Twenty nine lakhs thirteen thousand nine hundred and fifteen only) Equity Shares of H2/- (Rupees Two Only) each.
TRANSFER TO THE INVESTOR EDUCATION & PROTECTION FUND (IEPF):
In terms of Section 124(5) of the Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, unclaimed dividend amounting to H6,49,875/- (Six lakh forty nine thousand eight hundred and seventy five only) for the financial year 2012-13, was transferred during the year under review to the Investor Education and Protection Fund established by the Central Government.
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-1 to the Consolidated Financial Statements forming part of the Annual Report.
During the current financial year the (1) Vivimed Specialty Chemicals Private Limited (Country – India)
(2) UQUIFA Sciences (Mascarene) Ltd. (Country – Mauritius)
(3) Uquifa Sciences UK Ltd (formerly Vivimed Labs UK Ltd. (country - United Kingdom)
(4) UQUIFA S.A (formerly Vimed Labs Spain S.L.), (country - Spain)
(5) Union Quimico Farmaceutica S. A.U (country - Spain)
(6) Holliday International Limited UK (country - United Kingdom)
(7) Uquifa Mexico S.A de. C.V (country - Mexico)
(8) Soneas Chemicals Ltd (country - Hungary) (9) Soneas Research Ltd (country - Hungary)
(10) UQUIFA India Private Ltd (country - India) have ceased to be the subsidiary(ies)/step-down subsidiary(ies) of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL:
In accordance with the provisions of Section 152 of the Companies Act, 2013, Mr. Subhash Varalwar, Non executive Director, Mr. Manohar Rao Varalwar, Executive Director and Mr. Sandeep Varalwar Executive Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible offers themselves for reappointment. The Board of Directors on the recommendation of the Nomination and Remuneration Committee, has decided to re-appoint them as directors of the Company.
Mr. S. Rahunandan, Executive Director of the Company demised on 25-06-2020. The Board expressed its condolences and appreciated and put on record the valuable services rendered by Mr. S. Rahunandan during his tenure of directorship in the Company.
Prof. Bhagvanth Rao Mamidpalli, Non-Executive/ Independent Director of the Company demised on 30-11-2020. The Board expressed its condolences and appreciated and put on record the valuable services rendered by Prof. Bhagvanth Rao Mamidpalli during his tenure of directorship in the Company.
Mr. Santosh Varalwar, Managing Director, Dr. Manohar Rao Varalwar, Whole Time Director, Mr. Sandeep Varalwar, Whole Time Director, Mr. Ramesh Krishnamurthy, CEO cum CFO and Mr. 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 reenactment(s) for the time being in force).
YourCompanyhasreceiveddeclarationsfromalltheIndependent 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.
The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which include criteria for performance evaluation of the non-executive directors and executive directors.
The Board of Directors has complete access to the information within the Company. Independent Directors have the freedom to interact with the Companys management. Interactions happen during Board / Committee meetings, when CXOs are asked to make presentations about performance of the Company to the Board. Apart from this, they also have independent interactions with the Statutory Auditors, the Internal Auditors and external advisors appointed from time to time. Further, they meet without the presence of any management personnel and their meetings are conducted informally to enable the Independent Directors to discuss matters pertaining to the Companys affairs and put forth their combined views to the Board of Directors of the Company.
1. Mrs. Umanath Varahabhotla, (Independent Director) resigned on 10-01-2021,
2. Ms. Aparna Bidarkar, (Independent Director) appointed on 14-02-2022
3. Mr. Ramesh Krishnamurthy, (CEO cum CFO) resigned on 15-10-2021
4. Mr. Ramakanta Tripathy (Chief Financial Officer) appointed on 12-04-2022
The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which include criteria for performance evaluation of the Non-Executive Directors and Executive Directors. Pursuant to the provisions of the Companies Act, 2013 read with the Rules issued there under and the Listing Regulations (including any statutory modification(s) or re–enactment(s) for the time being in force), the process for annual evaluation of the performance of the Board, its Committees and individual Directors was carried out in accordance with the policies in force.
The Consolidated Financial Statements of your Company for the financial year FY2021 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.
COMPLIANCE WITH SECRETARIAL STANDARDS:
The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India.
DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to the requirement of Section 134(5) of the Companies Act, 2013, with respect to the Directors Responsibility Statement, the Board of Directors of the Company hereby confirm that: a) in the preparation of the annual accounts for the year ended 31st March, 2021, the applicable accounting standards read with requirements set out under Schedule III to the Act, 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 31st March, 2021 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 for the financial year ended 31st March, 2021; e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
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/ other whole time Directors 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-2 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 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.
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, 2021, are set out in the Standalone Financial Statements forming 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 self-certification 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.
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).
The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by Securities and Exchange Board of India (SEBI). The report on Corporate Governance as stipulated under the Listing Regulations forms an integral part of this Report. The requisite certificate from the Secretarial Auditors of the Company confirming compliance with the conditions of corporate governance is attached to the report on Corporate Governance.
EMPLOYEES STOCK OPTION SCHEMES:
The Company has granted 25,00,000 options to eligible employees under the Vivimed Labs ESOP 2017 at H35/- per option (exercise price) in FY2019. The shares covered by such options are 25,00,000 equity shares of H2/- each (face value).
Pursuant to regulation 13 of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, certificate from M/s. PCN & Associates, Statutory Auditors is given as Annexure-3 to the Boards report.
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.
All properties and insurable interests of the Company including buildings, plant and machinery and stocks have been fully insured.
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 31st March, 2021, has been issued with an unmodified opinion, by the Statutory Auditors.
During the year under review, there was no audit qualification on your Companys financial statements.
(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 2021-22. 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 2020-21. 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 interest on delayed dividend payment is pending (Dividend for the Financial Year 2017-2018 declared at AGM held on 27-09-2018).
Meetings of the Board
Seven meetings of the Board of Directors were held during the year. The particulars of meetings held and attended by each Director are detailed in the Corporate Governance Report, which forms part of this Report.
The Audit Committee comprises majority of Independent Directors namely Mrs. Umanath Varahabhotla (Chairperson), Mr. Sandeep varalwar and Mr. Harigopal Jamalapuram as other members. During the year all the recommendations made by the Audit Committee were accepted by the Board.
The Company has a Vigil mechanism and a Whistle - blower policy in accordance with provisions of the Act and Listing Regulations, under which the employees are free to report violations of applicable laws and regulations and the Code of Conduct. Protected disclosures can be made by a whistle blower through a dedicated e-mail, or a letter to the Chairman of the Audit Committee.
The Policy on vigil mechanism and whistle blower policy may be accessed on the Companys website at: www.vivimedlabs.com
Code of Conduct
A declaration regarding compliance with the code of conduct signed by the Companys Managing Director is published in the Corporate Governance Report which forms part of the annual report.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act, are provided in Annexure-5 to the Boards Report.
Extract of Annual Return
The Extract of Annual Return as per the provisions of Section 92 of the Companies Act, 2013 and Rule 12 of Companies
(Management and Administration) Rules, 2014 in Form MGT-9 is annexed as Annexure-6 to this report.
Particulars of Employees and related disclosures
In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended thereof, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules forms part of this Report.
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 also forms part of this Report.
Maintenance of Cost Records specified
The Company has complied with the provisions relating to maintenance of Cost Records as specified by the Central Government under Section 148 of the Companies Act, 2013 during the year under review.
Policy on Sexual Harassment and Constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Company has a Policy on "Prevention of Sexual Harassment of Women at Workplace" for the matters connected therewith or incidental thereto covering all the aspects as contained under the "The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013" and constituted an Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
During the year under review, the Company has not received any complaints pertaining to Sexual Harassment.
The Company regularly conducts awareness programs for its employees.
Your Directors state that no disclosure or reporting is required in respect of the following matters as there were no transactions on these items during the year under review:
Details relating to deposits covered under Chapter V of the Act.
Issue of equity shares with differential rights as to dividend, voting or otherwise.
Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except Employee Stock Option Scheme referred to in this Report.
The Company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.
No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companys operations in future.
No fraud has been reported by the Auditors to the Audit Committee or the Board.
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-7. The details of related party disclosures as stated in the notes to the financial statements forms part of this annual report.
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-8 and forms part of this Report.
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.
On behalf of the Board of Directors
|For Vivimed Labs Limited|
|Manohar Rao Varalwar||Santosh Varalwar|
Whole time Director