zenotech laboratories ltd Directors report


Your Directors take pleasure in presenting the 33rd Annual Report and Companys Audited Financial Statements for the financial year ended March 31, 2022 (‘FY 2021-22?).

Financial Results

Rs in Lakhs

S.No Particulars 2021-22 2020-21
(i) Revenue from operations 3,249.37 1,937.33
(ii) Other Operating Income 407.14 301.54
(iii) Other income 62.93 46.49
(iv) Total Revenue (i+ii+iii) 3,719.44 2,285.36
(v) Depreciation 697.35 645.60
(vi) Finance cost 121.52 154.75
(vii) Other expenses 1,910.44 1,606.52
(viii) Total Expenses (v+vi+vii) 2,729.31 2,406.87
(ix) Profit/(Loss) before exceptional items and tax (iv-viii) 990.13 (121.51)
(x) Deferred tax (1,227.46) -
(xi) Profit/(Loss)after tax(ix-x) 2,217.59 (121.51)
(xii) Other Comprehensive Income 5.60 (0.57)
(xiii) Total Comprehensive Income for the period (xi+xii) 2,223.19 (122.08)
(xiv) Loss brought forward from previous year (22,216.55) (22,094.47)
(xiv) Profit/(Loss) carried forward to Balance Sheet (xiii+xiv) (19,993.36) (22,216.55)

Performance review and the state of Company?s affairs

During the year under review, the Company recorded revenue of Rs 3,249.37 Lakhs (Previous year Rs 1,937.33 Lakhs) from its operations, over 68% more than the corresponding previous year. The Company reported profit of Rs 990.13 Lakhs as against previous year reported loss of Rs 121.51 Lakhs. The Earnings per Share (EPS) of your Company grown up to Rs 3.63 per share from Rs (0.20) per share in the previous year. All the dosage forms that the Company manufactures currently, performed better in comparison with the sluggish market demand suffered in the year 2020-21. Based on the projected business plans for the current and forthcoming years, the Company believes that it can maintain its positive performance by utilizing its resources to its maximum.

Your Company is constantly striving to optimize its operational capacities, restricting costs to remain competitive which would help to improve the operational efficiency.

Transfer to Reserves

The Board of Directors do not propose any transfer to reserve Dividend

Considering carried forward losses and to conserve resources, the Board of Directors of your Company has decided that it would be prudent not to recommend any dividend for the year under review.

Subsidiaries/ Joint Ventures/ Associates

All three overseas subsidiaries are reported defunct and no information with regard to their operations is available with the Company. During the year 2019-20, pursuant to the approval of members of Zenotech Laboratories Nigeria Limited, Nigeria (Zenotech Nigeria) the Corporate Affairs Commission, Nigeria (CAC) has approved the members voluntary winding up of the entity and the entity is no more in existence. The Company has engaged a consultant in Brazil to initiate necessary steps for winding up of Zenotech Pharmaceutical Do Brasil Ltda, Brazil and the process is on-going. The Company has evaluated and concluded that it is not controlling Zenotech Inc., a US subsidiary. Accordingly, the Company is of the view that it does not have subsidiaries within the definition of IndAS 110. The Company does not have any joint venture or associates. For more information on subsidiaries, please refer to section "Consolidated financial statements" in this Report.

Annual Return:

Section 92 of the Companies Act, 2013 (the Act) in form MGT-7 is made available on the website of the Company and can be accessed at http://zenotechlab.com/annual-report/.

Internal Controls

The Company believes that internal controls are the prerequisite of governance and that action emanating out of agreed business plans should be exercised within a framework of checks and balances. The Company has a well-established internal controls framework, which is designed to continuously assess the adequacy, effectiveness and efficiency of internal controls. The management is committed to ensuring an effective internal controls environment, commensurate with the size and complexity of the business, which provides an assurance on compliance with internal policies, applicable laws, regulations, ensures accuracy of records, promotes operational efficiency, protects resources and assets and overall minimize the risks.

Internal Financial Controls

The Company has a well-established internal financial controls framework, which is designed to continuously assess the adequacy, effectiveness and efficiency of internal financial controls. The management is committed to ensuring an effective internal financial controls environment, commensurate with the size and complexity of the business, which provides an assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Human Resources & Industrial Relations

The Company believes that Human Resource is its most valuable resource which has to be nurtured well and equipped to meet the challenges in the Industry the Company operates. The staff is highly motivated with good work culture, training, remuneration packages and the values.

Though our Country experienced continued lockdowns during the financial year, our team being part of essential services ensured manufacturing activity continued to operate. We are grateful to our employees who made this happen with a safety-first mind set. The top priority for the Human Resource function was providing a safe work environment to employees. Your Directors would like to take this opportunity to express their gratitude and appreciation for the passion, dedication and commitment of the employees and look forward to their continued contribution.

Remuneration Policy

In terms of the provisions of Section 178(3) of the Act and Regulation 19 read with Schedule II Part D of Listing Regulations, the Nomination and Remuneration Committee is responsible for formulating the criteria for determining qualifications, positive attributes and independence of a Director.

The Nomination and Remuneration Committee is also responsible for recommending to the Board a policy relating to the remuneration of the Directors, Key Managerial Personnel and Senior Management. The purpose of the Remuneration Policy is to establish and govern the procedure applicable:

a) To evaluate the performance of the members of the Board.

b) To ensure remuneration payable to Directors, KMP & other senior Management, strike appropriate balance and commensurate, among others, with the functioning of the Company and its long term objectives.

c) To retain, motivate and promote talent within the Company and to ensure long term sustainability of the managerial persons and create competitive advantage.

The Remuneration Policy is available on the website of the Company http://zenotechlab.com/wp-content/uploads/2015/07/ Remuneration-Policv.pdf

Particulars of Employees

Disclosure pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rules 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed herewith as Annexure-1 to this Report.

Further, the information pertaining to Rule 5(2) and 5(3) of the aforesaid Rules, a statement showing the names and other particulars of the top ten employees in terms of remuneration drawn is available for inspection at the Registered Office of the Company and pursuant to the proviso to Section 136(1) of the Companies Act, 2013, the report and the accounts are being sent to the members of the Company excluding this information. Any shareholder interested in obtaining such information may write to the Company Secretary at the Registered Office address of the Company or email to abdul. gafoor@zenotech.co.in. During the year under review, none of the employees was in receipt of remuneration in excess of the limits as stipulated in the Rule 5(2) of the aforesaid Rules.

Evaluation of performance of the Board, its Committees and individual directors

Pursuant to the provisions of the Companies Act, 2013 and the Corporate Governance requirements as prescribed under Regulation 17(10), 25(4) and other applicable provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of the Board, its Committees and individual Directors.

Performance evaluation of the Board, its Committees and individual Directors is carried out through a questionnaire encompassing upon various areas that provide an insight and feedback into the functioning of the Board, its Committees, individual Directors and areas of development.

The Chairperson of the Company interacted with each Director individually, for evaluation of performance of the individual Directors. The evaluation for the performance of the Board as a whole and of the Committees was conducted by way of questionnaires. The Board also assessed the fulfillment of the independence criteria as specified in Listing Regulations, by the Independent Directors of the Company and their independence from the management.

In a separate meeting of Independent Directors, performance of Non Independent Directors and performance of the Board as a whole was evaluated.

The Board of Directors were satisfied with the overall performance of the Directors individually and that the Directors generally met their expectations of performance.

Familiarization Programme for the Independent Directors

In compliance with the requirements of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has put in place a Familiarisation Programme for the independent Directors to familiarize them with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model etc. The policy and programme details are available on the website of the Company http: //zenotechlab.com/wp-content/uploads/2022/08/Zenotech-Familiarization-Proaramme-FY-2021-22. pdf.

Changes in Capital Structure

During the year under review, there was no change in the Capital Structure of the Company. The Share Capital of the Company stood at Rs 61,03,05,680/- (6,10,30,568 Equity Shares of Rs 10/- each).

Auditors

Statutory Auditors

M/s. PKF Sridhar & Santhanam LLP (Firm registration number- 003990S/S 200018) Chartered Accountants, Hyderabad were re-appointed as the Statutory Auditors of the Company in the 31st Annual General Meeting of the Company held on September 26, 2020 for a further period of five years i. e. till the conclusion of the 36th Annual General Meeting to be held in the year 2025.

The Notes on the financial statements referred to in the Auditors? Report are self-explanatory and do not call for any further comments. The Auditors? Report is unmodified i. e. it does not contain any qualification, reservation or adverse remark or disclaimer.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company had appointed Mr. Mahadev Tirunagari, Company Secretary in Practice, Hyderabad, to undertake the Secretarial Audit of the Company for the financial year 202122. The Secretarial Audit Report for the financial year ended March 31, 2022, is appended herewith as Annexure-2 to this Report. The Secretarial Audit Report does not contain any qualifications, reservation or adverse remark.

Cost Auditor

The Company is not required to maintain cost records as specified by the Central Government under Section 148(1) of the Act and accordingly the Cost Audit is not applicable.

Secretarial Standards

The Company has complied with the applicable Secretarial Standards as amended from time to time.

Consolidated financial statements

Books of accounts and other related records/documents of the overseas subsidiaries of the Company were missing and due to non-availability of those records/information, the Company is unable to prepare consolidated accounts and attach the required statements and particulars in terms of the applicable provisions of the Companies Act, 2013 and the SEBI

(Listing Obligations and Disclosure Requirements) Regulations, 2015. The facts of the case had already been reported in earlier years.

Overseas subsidiaries were apparently created; investments and loans were made during the period from 2006-07 to 2010-11 under the erstwhile management headed by Late Dr. Jayaram Chigurupati. Therefore, it was the responsibility of that management to handover those details to the Company during the transition. However, no details on those subsidiaries were made available to your Company. Despite several attempts by the Company to recover them, details concerning those subsidiaries including the documents and certificates related to the foreign exchange transactions which included loans and investments made to those foreign subsidiaries, could not be obtained.

The Company has evaluated and concluded that it is not controlling the US subsidiary. Further the Board had initiated necessary steps for winding up of the defunct subsidiary in Brazil. Accordingly, the Company is of the view that it does not have subsidiaries within the definition of IndAS 110 and hence, it is not required to prepare and present Consolidated Financial Statements.

The Company had filed a complaint before the Hon?ble Economic Offences Court, Nampally, Hyderabad, under the provisions of Section 630 of erstwhile Companies Act, 1956 against the former Managing Director, Late Dr. Jayaram Chigurupati, who was in complete control over the Company affairs during the period of these events. However, due to demise of Dr. Jayaram Chigurupati on January 31, 2019 the case before Economic Offence Court was abated.

Directors Responsibility Statement

Pursuant to the requirements under Section 134 (5) read with Section 134(3)(c) of the Companies Act, 2013 with respect to Directors? Responsibility Statement, it is hereby confirmed that:

(a) in the preparation of the annual accounts for the financial year ended March 31, 2022, the applicable accounting standards have been followed and there are no material departures;

(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, 2022, 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.

Management Discussion and Analysis

The Management Discussion and Analysis as prescribed under Part B of Schedule V read with Regulation 34(3) of the Listing Regulations is provided in a separate section and forms part of this Report.

Corporate Governance Report

Report on Corporate Governance and Compliance Certificate issued by Mr. Mahadev Tirunagari, Company Secretary in Practice, Hyderabad, confirming compliance with the conditions of Corporate Governance as stipulated in Part C of Schedule V of the Listing Regulations, are provided in a separate section and forms part of this Report.

Public Deposits

The Company has not accepted any deposit from the Public during the year under review.

Directors and Key Managerial Personnel

Pursuant to Section 152 of the Companies Act, 2013, Mr. Rakeshchandra Jagdishprasad Sinha (DIN: 07340998), Director, is liable to retire by rotation at the ensuing 33rd Annual General Meeting and being eligible, has offered himself for reappointment. The Board recommends his appointment.

Pursuant to Section 2(51) and Section 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Mr. Devendra Chandrakant Shenvi Kenkre, Chief Executive Officer, Mr. Poly K.V., Chief Financial Officer and Mr. Abdul Gafoor Mohammad, Company Secretary & Compliance Officer continued as the Key Managerial Personnel of the Company.

Declaration by Independent Directors

The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Act and under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations").

In the opinion ofthe Board, the Independent Directors fulfil the conditions specified underthe Act and Listing Regulations and are independent of the management. The Board skill/expertise /competencies matrix of all the Directors, including the Independent Directors is provided in the Corporate Governance Report forming part of this Annual Report.

Board Meetings

The Board of Directors of the Company met 5 (Five) times during the year under review. The dates of the Board meeting and the attendance of the Directors at the said meetings are provided in detail in the Corporate Governance Report, which forms a part of this Report.

Committees of the Board

As on March 31, 2022, the Board has 4 (four) Committees. Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee.

The details pertaining to the meetings and composition of the Committees of the Board are included in the Corporate Governance Report, which forms part of this Report.

Loans, Guarantees & Investments

During the year under review, your Company has not granted any loans or made any investments or provided any guarantees or securities to the parties covered under Section 185 and 186 of the Companies Act, 2013.

Related Party Transactions

The policy on Related Party Transactions as approved by the Board is available on the website of the Company and can be accessed through the web link: http://zenotechlab.com/wp-content/uploads/2022/08/Zenotech-Policv-on-Related-Partv- Transactions-2022.pdf.

All contracts/ arrangements/transactions entered by the Company during the year under review with the related parties were in the ordinary course of business and on an arms length basis.

As required under Section 134(3)(h) of the Act, details of transactions entered with related parties under the Act exceeding ten percent of the annual consolidated turnover as per the last audited financial statements are given in Form AOC-2 provided as Annexure-3 to this Report.

Risk Management

The Companys policy for Risk Management is to apply best practice in identifying, evaluating and cost-effectively controlling risks to ensure that any residual risks are at an acceptable level. Whilst it is not possible to eliminate the risk absolutely, effort is underway to actively promote and apply best practices at all levels and to all its activities, including its dealing with external partners.

Corporate Social Responsibility

In compliance with the requirements of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors has constituted a Corporate Social Responsibility (CSR) Committee. The details of membership of the Committee and the meetings held are detailed in the Corporate Governance Report, forming part of this Report. The CSR Policy of the Company is available on the website of the Company and can be accessed through the web link: http://zenotechlab.com/wp-content/uploads/2022 /05/Zenotech-CSR-Policy-2022.pdf.

Further, the Company was unable to spend Rs. 4.26 Lakhs liable towards CSR activity during the year under review as proper avenue of utilization was not identified being the first year of CSR spend requirement. However, based on the recommendation of CSR Committee, the Board has decided to transfer the unspent CSR amount of Rs. 4.26 Lakhs to any ofthe funds specified in the Schedule VII of the Companies Act, 2013 within a period of 6 months of expiry of financial year 2021-22. The annual report on CSR activities is appended as Annexure-4 to this Report.

Disclosure under the Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013

Your Company strongly believes in providing a safe and harassment free workplace for each and every individual working for the Company through various interventions and practices. It is the continuous endeavor of the management of the Company to create and provide an environment to all its employees that is free from discrimination and harassment including sexual harassment. The Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. The Company has submitted the Annual Returns to the local authorities, as required under the above-mentioned Act.

During the financial year ended March 31, 2022, no complaint pertaining to sexual harassment was received by the Company. Your Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Environment, Health & Safety

The Companys Environment, Health & Safety (EHS) imperatives are part of its broader sustainability journey. These initiatives focus on reducing the carbon footprint, help enhance well-being of employees and set high safety standards for employees, contractors and visitors. The Company undertakes periodic internal audits to assess the safety practices and procedures in alignment with the EHS management system. As part of the auditing procedure, the Company recognises the critical areas requiring immediate corrective action. Further, as part of the EHS management system, the Company provides safety trainings through modules and safety drill practices to all its employees and workers. The safety training programs enable the development of strong foundation among the workforce, in terms of their ability to identify, mitigate and prevent risks pertaining to Occupational Health and Safety.

The Company continued to ensure that environmental norms were abided by its Formulation units. The operating formulation units have conformed to the regulations for disposal of waste water to Common Effluent Treatment Plants (CETPs), biological waste, e-waste, hazardous waste, used oil, etc., were sent through Pollution Control Board approved vendors for recycling / disposal.

The Companys EHS policy provides framework for compliance with applicable laws and regulations and commitment to the continuous improvement of Environment, personnel skills and conservation of natural resources.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, is provided as Annexure-5 to this Report.

Vigil Mechanism/Whistle Blower Policy

Pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism or Whistle Blower Policy for directors and employees to report genuine concerns has been established. A copy of the Policy is available on the website of the Company www.zenotechlab.com and may be accessed through the web link http://zenotechlab.com/ wp-content/uploads/2015/07/Vigil-Mechanism.pdf.

Significant and Material Orders passed by the Regulators or Courts or Tribunals

No significant or material Orders were passed by the Regulators or Courts or Tribunals during the year under review, which may impact the Going Concern status of the Companys operations in the future.

Credit Rating

No Credit Rating was obtained during the financial year 2021-22.

Material Changes and Commitments Affecting the Financial Position of the Company, between the end of the financial year and the date ofthis Report

There have been no material changes and commitments affecting the financial position of the Company, between the end of the financial year and the date ofthis report. Further, it is hereby confirmed that there has been no change in the nature of business of the Company.

Acknowledgement

Your Directors would like to express their sincere appreciation forthe assistance and co-operation received from the banks, Government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Companys executives, staff and workers.

For and on behalf of the Board of Directors
Place: Delhi
Date: April 29, 2022 Chairperson