Directors Report of Elder Pharmaceuticals Ltd.
Jun 30, 2014
Dear Members,
The Directors are pleased to present the Thirty-first Annual Report of
the Company together with the audited Accounts for the year ended 30th
June 2014. The working results of the Company for the year ended 30th
June 2014 vis-a-vis those of the previous year are summarized below:
Year ended Fifteen months
30.06.2014 Period ended
30.06.2013
(Rs. In Crores) (Rs. In Crores)
1. Operating Income 483.47 1233.10
2. Other Income 15.13 26.22
3. Profit before Tax 17.85 115.71
4. Less: Provision for Tax
Current Year - 24.50
Deferred Tax 0.67 (2.53)
5. Profit after Tax 17.18 93.74
6. Less: Prior year Tax 9.26 -
adjustments
7. Add: Profit as per the last 216.62 192.88
Balance Sheet
8. Profit available for 224.54 286.62
appropriation Out of which
Directors recommend
Appropriation as under:
a) Proposed Dividend - -
b) Tax on Dividend - -
c) Transfer to General Reserve 30.00 30.00
d) Transfer to Debenture 40.00 40.00
Redemption Reserve
e) Surplus carried forward to 154.54 216.62
Balance Sheet
OPERATIONS AND PERFORMANCE:
During the year ended 30th June 2014, your company''s Operating Income
was Rs.483.47 Crores for the year as compared to Rs. 1233.10 Crores for
the fifteen months period ended 30th June, 2013. This represents an
decrease of Rs.749.63 Crores over the previous year mainly on account
of constraints of working capital. Profit before Tax was Rs. 17.85
Crores as against Rs. 115.71 Crores, for the previous year and Net
Profit after providing for taxes was Rs. 17.18 Crores as against
Rs.93.74 Crores for the previous year.
For the year ended 30th June 2014 financial results showed Exceptional
Item accounted of Rs. 380.04 Crores (net) which is comprising of Profit
from Slump sale of Rs. 1734.3 1 Crores (net of Tax) after writing off
Trade receivables Rs. 322.71 Crores and advances Rs. 1031.56 Crores.
GLOBAL DEPOSITORY RECEIPTS:
The Company had made an issue of Global Depository Receipts (GDRs)
during the year 2004-05. All the issued GDRs have been converted into
equity shares and no GDRs are outstanding as on 30th June 2014. The
Company''s listing for the GDRs, however, continues on the Luxembourg
Stock Exchange and as on 30th June 2014 the same were quoted at
RS. 7.243.
DIVIDEND:
In view of the severe financial constraints faced by the Company the
Directors at their meeting held on 27th August 2014 have decided to
skip dividend for the accounting year under review.
DIRECTORS:
Mrs. Urvashi Saxena who retires by rotation has resigned w.e.f. 28th
November 2014 with an intent not to be re-appointed and company
resolved not to fill in the vacancy.
Dr. S. Jayaram who retires by rotation has resigned w.e.f. 1st December
2014 with an intent not to be re-appointed and company resolved not to
fill in the vacancy.
The Board of Directors of the Company ("the Board") under Section 161
of the Companies Act, 2013 and the Clause 120 of Articles of
Association of the Company, appointed Mr. Farid Gulmohamed as
Additional Director of the Company with effect from 14th February 2014.
In terms of Section 161 of the Companies Act, 2013, and Clause 120 of
Articles of Association of the Company Mr. Farid Gulmohamed holds
office upto the date of this Annual General Meeting has resigned w.e.f.
14th November 2014 with an intent not to be re-appointed and company
resolved not to fill in the vacancy.
There is no re-appointment of any director who are retire by rotation.
Therefore as required under Clause 49 of the Listing Agreement, details
are not given in the report on Corporate Governance,forming part of
this Annual Report.
Mr. Edoardo Carlo Richter, the Director of the Company has resigned as
Director of the Company with effect from 14th February, 2014, Mr. James
McEuen has resigned as Director of the Company with effect froml4th May
2014, Dr. R. Srinivasan the Director of the Company has resigned as
Director of the Company with effect from 5th June 2014 and Mr. Michael
Bastain the Director of the Company has resigned as Director of the
Company with effect from 9th August, 2014. The Board accepted their
resignations and place on record their appreciation for the valuable
guidance and advice provided by Mr. Edoardo Carlo Richter , Mr. James
McEuen, Dr. R. Srinivasan and Mr. Michael Bastain during their tenure
as Directors of the Company.
AUDITORS:
M/s. S. S. Khandelwal & Co., Chartered Accountants, Mumbai retire as
the Auditors of the Company at the conclusion of the ensuing Annual
General Meeting. They have signified their willingness to get
re-appointed and have confirmed their eligibility in terms of the
provisions of Section 141 of the Companies Act, 2013 and Rule 4 of
Companies (Audit and Auditors) Rules, 2014. On the recommendation of
the Audit Committee, the Board proposes for consideration of the
Shareholders pursuant to the provisions of Section l39, l42 and other
applicable provisions, if any, of the Companies Act, 2013, as Statutory
Auditors of the Company, to hold office from the conclusion of the 31st
Annual General Meeting up to the conclusion of the 34th consecutive
Annual General Meeting. You are requested to appoint Auditors and fix
their remuneration.
COST AUDITORS:
With the resignation of M/s. Sevakari, Khare and Associates, Cost
Accountants, Mumbai having registration No. 00084, on the
recommendation of the Audit Committee at its meeting held on November,
14th, 2014, the Board has, considered and approved the appointment of
T.M. Rathi, Mumbai having Registration No10079 as the cost auditor for
the Bulk Drugs and Formulations for the financial year 2014-2015.
The Cost Audit Reports for bulk drugs and formulations for fifteen
months period ended on 30th June 2013 will be filed with the Central
Government in due course of time. The Cost Audit Report for the
accounting period for the year ended 30th June 2014 would be submitted
to the Central Government in due course of time.
JOINT VENTURES / SUBSIDIARIES / INVESTMENTS:
''ELDER INTERNATIONAL FZCO'' the wholly owned subsidiary of the Company
in Jebel Ali, Dubai, United Arab Emirates (Dubai WOS), continues to
hold 100% stake in the U. K. based NeutraHealth Limited.
Dubai WOS also continues to hold 100% interest in Elder Biomeda EAD,
Bulgaria which in turn continues to hold 100% stake in downstream
Bulgarian entities, namely, Elder Bulgaria EOOD, the manufacturing
company and Biomeda 2000 EOOD, the distribution company. Bulgaria,
being a part of the European Union, offers an excellent opportunity for
the Company to enter the Eastern European as well as CIS countries. The
manufacturing unit in Bulgaria is being upgraded and once upgradation
is completed it is expected that there will be a lot of opportunities
for manufacturing products for the Eastern European, CIS and other
markets. The distribution business has a lot of potential and during
the year under review it has received a number of registrations which
will help the distribution company to widen its scope. The distribution
company which used to be operating only in the Bulgarian market has now
started exporting some of its products to nearby countries.
The Dubai WOS continues to hold 100% interest in NutraHealth Ltd., the
U.K. subsidiary. The U. K. operations have shown very encouraging
results despite the slowing down of the U. K. economy. The said U. K.
subsidiary has, in a cashless transaction, acquired Max Healthcare
Ltd., U.K. to re-enter the OTC pharmaceutical category and extend and
enhance its product range.
The Company continues to hold it''s investment in the Nepal Joint
Venture. During recent period there have been certain issues on
unilateral decisions taken by the Nepalese partner whereby the
Company''s stake in terms of percentage to total capital was reduced
from earlier 40% to 30.6%. The Company has notified its dissent to the
action taken by the partner and has written to the Ministry of
Industry, Government of Nepal seeking an amicable solution in the
matter. The discussions were held with the Nepalese partner as directed
by the Director of Industry, Government of Nepal for arriving at an
acceptable solution, however no settlement could be reached so far.
Efforts are being made to work out an amicable settlement to resolve
the matter.
BANKERS AND FINANCIAL INSTITUTIONS:
The Directors wish to place on record their sincere gratitude to the
consortium of Banks for working capital lead by State Bank of India for
their continued and timely support to the Company.
The Directors also wish to place on record their sincere gratitude to
the various term lenders and NCD holders for their continued and timely
support to the Company. During the year under review, the company has
been defaulting in the repayment of NCD and Interest thereon. The
company is working on Short Term and Medium Term plan for
regularization of default.
EXPORT HOUSE STATUS:
The Company continues to enjoy ''Export House'' status. The Company''s
products are exported to certain African and South East Asian markets.
The registration procedures are presently going on in a number of
countries and once their formalities are completed, the Company''s
exports are expected to increase.
ISO / WHO GMP ACCREDITATION:
The Company continues to be certified as conforming to ISO 9001 : 2000
for development, manufacturing and marketing of pharmaceutical
products. The Company''s bulk drug manufacturing plant at Patalganga was
upgraded according to ICH Q7A guidelines for manufacturing products for
the European markets. The said bulk drug plant as well as formulation
plants of the Company are now approved by WHO GMP and certified as
conforming to ISO 9001 : 2008 standards relating to Quality Management
Systems. While the Selaqui formulations plant of the Company has been
accredited for WHO GMP the said plant is being upgraded for UK MHRA
accreditation. The formulation plants at Nerul, Paonta Sahib have been
accredited for WHO GMP standards. The formulations plant at Langha Road
near Dehradun is designed as per USFDA compliance requirements and is
also accredited for WHO GMP
DIRECTORS'' RESPONSIBILITY STATEMENT:
Pursuant to Section 217(2AA) of the Companies Act, 1956 the Directors,
on the basis of compliance certificate received from Managing Director,
CFO and other executives of the Company and subject to disclosures in
annual accounts as on 30th June 2014 and on the basis of discussions
with the Statutory Auditors of the Company from time to time, declare
and confirm:
a) that in preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
b) that the Directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end year ended on 30th June 2014 and the profit
of the Company for that year.
c) That the Directors had taken proper and sufficient care for
maintenance of adequate accounting records for the year ended 30th June
2014 in accordance with the provisions of the Companies Act, 1956 for
safeguarding the assets of the Company and for prevention and detection
of fraud and other irregularities.
d) That the Directors had prepared the accounts for the year ended 30th
June 2014 on a ''going concern basis''.
CORPORATE GOVERNANCE:
In pursuance of the system of Corporate Governance instituted by SEBI
and forming part of the Listing Agreement with the Stock Exchanges, a
report thereon is separately attached to this report.
RESEARCH AND DEVELOPMENT ACTIVITY:
The Research and Development activities of the Company continue to be
recognized by the Department of Science and Technology, Government of
India. The Research and Development laboratory of the Company has
successfully developed certain import substitute molecules /
intermediates and has been working on development of a number of other
molecules. It has also been continuously working on process
developments of the molecules already developed by it. It has been
engaged in development of new products and their improvement in terms
of delivery, absorption and efficacy. The Company has applied for
seventeen Indian patents with seven PCT applications. Out of these one
PCT application has been entered in the USA, Europe and Japan.
INSURANCE OF ASSETS:
The Company is in the process of renewing the insurance cover for all
the fixed assets, finished goods, semi-finished goods, raw materials,
packing materials and other goods and assets of the Company lying at
different locations against fire, burglary, transit, riots, strike,
malicious damage and allied risks as well as goods in transit.
CAPITALISATION:
During the year under review the Company has added fixed assets worth
Rs. 3.48 Crores whereas disposal and adjustment of fixed assets
amounted to Rs. 46.66 Crores. The Company had capital work in progress
amounting to Rs. 304.26 Crores as at 30th June 2014 at various project
sites.
DEPOSITS:
The Company is irregular in repayment of principal and payment of
interest and has defaulted therein. The Company has made application to
the Company Law Board for the extension of time in repayment of
Deposits and approval is yet to be received. The Company has been
complying with the provisions of Section 58A and other applicable
provisions, if any, of the Companies Act, 1956 and the rules made
thereunder. As at 30th June 2014 the fixed deposits outstanding under
the public deposit schemes were Rs.143.38 Crores. The Company has
discontinued acceptance of deposits from public.
AUDITORS'' REPORT:
The comments / observations of the Auditors, if any, are self
explanatory and do not call for any further explanations or
clarifications except the following :
As regards Point No. 1 of the basis for qualified opinion of the
Auditor, the Company is of the view that the Plant concerned has
intrinsic value which is higher than the values carried in the books of
accounts as capitalization as well as capital Work in progress. As
regards Point No.2 (i) & (ii), the management had reviewed all the
balances carried in the accounts and taking a conservative view decided
to write off those carrying amounts where no further economic benefit
will be realizable from those pertinent assets, & management decided
that it is now imperative that the same should get appropriately
reflected in the Profit & Loss Account of the financial year ended 30th
June, 2014. Our efforts for recovery to write off shall continue and
recoveries will be accounted in the year of realization on cash basis.
Point No. 3 & 4 of the qualified opinion of the Auditor are self
explanatory.
As regards the comments of the Auditors in serial no. 1 & 2 under the
''Emphasis of matter'', the Company has completed first round of
re-structuring by divesting some of its brands to M/s. Torrent
Pharmaceuticals Ltd., for a consideration of Rs. 2004 crores during the
year. The Company is further exploring the possibilities of divestment
of some of its non-core assets and infusion of long term equity capital
/ debt funds for the revival of the company. The management has
initiated efforts to pursue business plan involving existing products
and launching of new products with effective marketing strategy and
extending contract manufacturing activites. As regards the comments of
the Auditors in Serial no. 3 the Company seized of the matter and in
the process of completing reconciliation / confirmation of Trade
receivables, inter-divisional balances, loans and advances and in
certain cases of few bank accounts. The effect of the same shall be
given in the accounts for the next financial year. However, management
does not expect any significant impact of the same on the results of
the Company. As regards Serial No.4, the company is seized of the
matter and shall take appropriate steps in due course.
As regards non-depositing or investment of a sum of not less than 15%
of the amount of debentures maturing during the period ended 30th June,
2014, the company is seized of the matter and said amount will be
deposited / invested in due course.
PARTICULARS OF EMPLOYEES:
Information as per Section 217(2A) of the Companies Act, 1956, read
with Companies (Particulars of Employees) Rules, 1975 as amended is
available at the registered office of the Company. As per the
provisions of Section 219(i)(b)(iv) of the Companies Act, 1956 this
Report and Accounts are being sent to all Shareholders of the Company
and others entitled to it excluding the aforesaid information. Any
Shareholder interested in obtaining a copy of the statement under
Section 217(2A) of the Companies Act, 1956 may write to the Company
Secretary at the address of the registered office of the Company.
EMPLOYER / EMPLOYEE RELATIONS:
The relationship with the workers of the Company''s manufacturing units
and other staff continues to be cordial. The Directors wish to place on
record their sincere appreciation and gratitude for the services
rendered by the workers and staff at all levels.
EMPLOYEE STOCK OPTION PLAN:
The Shareholders at the 21st Annual General Meeting of the Company
passed a resolution approving the Employee Stock Option Plan called
''Elder ESOP 2004''. A total of 1,439,274 equity shares of the Company
are available under Elder ESOP 2004 for grant of Options at an exercise
price of15% discount to the market rate. The Company had granted
Options in respect of 399,250 shares which were to be exercised in four
equal parts ending on 27th March 2008 at an exercise price of Rs. 209/-
per share inclusive of a premium of Rs. 199/- per share. Out of the
Options granted 285,748 were exercised during the accounting year under
review. Options that were not exercised within the stipulated period
have lapsed. There are 1,153,526 shares for which Options can still be
granted to Employees under Elder ESOP 2004.
CORPORATE SOCIAL RESPONSIBILITY
The Board of Directors constituted a Corporate Social Responsibility
(CSR) Committee in terms of the provisions of Section 135(1) of the
Companies Act, 2013 on 21st August, 2014 with the strong belief in the
principle of Trusteeship to serve the community
This CSR Committee shall review and restate the Company''s CSR policy in
order to make it more comprehensive and aligned with the activities
specified in Schedule VII of the Companies Act, 2013.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO:
In accordance with Rule 2 of the Companies (Disclosure of Particulars
in the Report of the Board of Directors) Rules, 1988 as applicable, the
particulars relating to conservation of energy and technology
absorption are given in Annexure 1 to this Report.
The foreign exchange outgoings during the year under review was Rs.
4.31 Crores for imports of raw materials / finished goods and Rs. 0.34
Crores for foreign travel. The Company also paid Rs. 6.56 Crores in
foreign exchange as interest on the External Commercial Borrowing and
other expenses of Rs. 1.3 1 Crores. The foreign exchange earnings
during the year were Rs. 30.66 Crores on account of exports on FOB
basis.
For and on behalf of the Board
Alok Jagdish Saxena
Managing Director & CEO
Mumbai, 13th February, 2015
Jun 30, 2013
The Directors are pleased to present the Thirtieth Annual Report of the
Company together with the audited Accounts for the fifteen months
period ended 30th June 2013. The working results of the Company for the
fifteen months period ended 30th June 2013 vis-a-vis those of the
previous year are summarized below:
Fifteen months Year ended
Period ended 31.03.2012
30.06.2013
(Rs.In Crores) (Rs.In Crores)
1. Operating Income 1,233.10 984.69
2. Other Income 26.22 24.31
3. Profit before Tax 115.71 103.51
4. Less: Provision for Tax
Current Year 24.50 21.00
Deferred Tax (2.53) (1.65)
5. Profit after Tax 93.74 84.16
6. Less: Prior year Tax 0.09
adjustments
7. Add: Profit as per the last 192.88 185.97
Balance Sheet
8. Profit available for 286.62 270.04
appropriation Out of which
Directors recommend Appropriation as under:
a) Proposed Dividend 6.16
b) Tax on Dividend 1.00
c) Transfer to General Reserve 30.00 30.00
d) Transfer to Debenture 40.00 40.00
Redemption Reserve
e) Surplus carried forward to 216.62 192.88
Balance Sheet
OPERATIONS AND PERFORMANCE:
The Indian economy has been passing through a very difficult phase and
uncertainties which has impacted businesses across all sectors with
industrial production slowing down, Indian Rupee depreciating in value,
making the imported inputs costlier. The Indian GDP growth has been
below expectation and with high interest rates, the already high
inflation is having cascading effect. All these factors have put a lot
of pressure on both operating costs and margins of the Company. Your
Company''s Operating Income during the period under review was Tl2.33.10
crores as against Rs. 984.69 crores in the previous year. This represents
an increase of Rs. 248.41 crores over the previous year. However, in view
of increase in all round input costs, increased finance costs, etc.
have brought the pre and post tax profits under tremendous pressure.
During the period under review with a view to reducing the debt of the
Company the Board of Directors has approved the proposal for carrying
out restructuring of the Company''s business involving either raising of
capital, hiving off of assets or other strategic options and have
appointed advisors for the same for the purpose.
All the products of the Company continue to be well accepted by the
medical fraternity in India. The main therapeutic areas of interest to
the Company continue to be Women''s healthcare, Wound care and Pain
Management, Neutraceuticals / Vitamin Supplements, Life Style &
Diabetes, and Antibiotics.
EXTENSION OF FINANCIAL YEAR:
The Board had by a resolution passed by circulation on 8th March 2013
decided to extend the Financial Year of the Company by three months so
as to end on 30th June 2013. Accordingly, the Financial Statements have
been prepared for 15 months covering a period from Ist April 2012 to
30th June 2013.
DEMISE OF CHAIRMAN & MANAGING DIRECTOR:
The Board regretfully reports the sad demise of its Founder Chairman &
Managing Director, Mr. Jagdish Saxena after a prolonged illness. The
Board further expresses its heartfelt condolences for Mr. Saxena''s
untimely death and wishes to place on record its sincere and deep
appreciation for his invaluable guidance and contribution from time to
time in building the Company and its growth.
Late Mr. Jagdish Saxena was a great visionary and had highest business
acumen. He was able to feel the pulse and need of the Pharmaceutical
market in India and introduced many ''first of its kind'' formulations
into India. He always believed in creating asset for the Company and
was successful in creating facilities of international standards for
various dosage presentations. His policy of non-infringement of patents
was comforting for the foreign pharma research companies of repute to
work with the Company.
MERGER OF ELDER HEALTH CARE LIMITED WITH ELDER PHARMACEUTICALS LIMITED:
In view of the recent developments the Board of Directors of the
Company had at its meeting held on 14th May 2013 decided not to proceed
with the merger of Efder Health Care Ltd. with the Company and to
withdraw the application(s) filed by the Company in the High Court at
Mumbai. Accordingly, the Company has withdrawn its application.
GLOBAL DEPOSITORY RECEIPTS:
The Company had made an issue of Global Depository Receipts (GDRs)
during the year 2004-05. All the issued GDRs have been converted into
equity shares and no GDRs are outstanding as on 30th June 2013. The
Company''s listing for the GDRs, however, continues on the Luxembourg
Stock Exchange and as on 28th June 2013 the same were quoted at U.S. $
10.95.
DIVIDEND:
In view of the severe financial constraints faced by the Company the
Directors at their meeting held on 29th August 2013 have decided to
skip dividend for the accounting period under review.
DIRECTORS:
Dr. Joginder Singh Juneja, Director, is due to retire by rotation at
the ensuing Annual General Meeting of the Company. He however, being
eligible, has offered himself for re-appointment.
Dr. Sailendra Narain, Director, is due to retire by rotation at the
ensuing Annual General Meeting of the Company. He, however, being
eligible, has offered himself for re-appointment.
Mr. Saleem Shervani, Director, is due to retire by rotation at the
ensuing Annual General Meeting of the Company. He, however, being
eligible, has offered himself for re-appointment.
As required under Clause 49 of the Listing Agreement, the particulars
of Dr. Joginder Singh Juneja, Dr. Sailendra Narain and Mr. Saleem
Shervani, Directors who are due to retire by rotation at the ensuing
Annual General Meeting but having offered for their re-appointment, are
given in the Report on Corporate Governance, forming part of this
Annual Report.
Mr. James McEuen was appointed as the Additional Director by the Board
w.e.f. 2nd November 2012 to hold office up to the date of the ensuing
Annual General Meeting. The Company has received notices from some
shareholders proposing his candidature to the office of Director liable
to retirement by rotation. You are requested to appoint Mr. James
McEuen as Director.
In view of sad demise of Mr. Jagdish Saxena on 10th October 2013, the
Board of Directors at their meeting held on I Ith October 2013
appointed Mr. Alok Jagdish Saxena as Managing Director & Chief
Executive Officer of the Company w.e.f. I Ith October 2013 for a period
of five years subject to approval of shareholders and governmental
authorities, if any. Mr. Alok Jagdish Saxena was earlier holding the
office of Joint Managing Director of the Company.
AUDITORS:
M/s. S. S. Khandelwal & Co., Chartered Accountants, Mumbai retire as
the Auditors of the Company at the conclusion of the ensuing Annual
General Meeting. They have signified their willingness to get
re-appointed and have given a declaration that if re-appointed their
appointment will be within the limits specified under Section 224(I)(B)
of the Companies Act, 1956. On the recommendation of the Audit
Committee, the Board proposes for consideration of the Shareholders,
the re-appointment of M/s. S. S. Khandelwal & Co. as Auditors of the
Company for the financial year 2013-14. You are requested to appoint
Auditors and fix their remuneration.
COST AUDITORS:
The Directors have appointed M/s. Sevekari, Khare and Associates, Cost
Accountants, Mumbai, having registration No. 00084, as Cost Auditors
of the Company for the pharmaceuticals (formulations and bulk drugs)
activities of the Company for the financial year 2013-14 and their
appointment has been approved and taken on record by the Central
Government.
The Cost Audit'' Reports for bulk drugs and formulations for the year
ended 31st March 2012 were filed with the Central Government on 18th
January 2013. The Cost Audit Report for the accounting period ended
30th June 2013 would be submitted to the Central Government within the
prescribed time limit.
NON-CONVERTIBLE DEBENTURES:
As mentioned in the Directors'' Report of the last year your Company
made one more issue of Rated Secured Redeemable Non-Convertible
Debentures on a private placement basis called
3rd Tranche during the fifteen months accounting year under review. The
issue size was Rs. 70.00 crores comprising of 700 units of Rs. 10.00 lacs
each and carrying interest @ 12.50% p.a. payable quarterly and
redeemable in sixteen equal quarterly installments of Rs.4.375 crores
starting from the end of the thirteenth quarter from the date of
allotment and ending at the end of the twentieighth quarter from the
date of allotment. The jssue was rated by Credit Analysis and Research
Limited (CARE) who had assigned A '' rating to the said NCD issue of the
Company. The said NCD units have been listed on the WDM Segment of
National Stock Exchange of India Limited (NSE). The issue of NCDs was
made for the purpose of retirement of high cost debt and to augmenting
medium to long term resources of the Company including regular capital
expenditure (not constituting a project). During the year , under
reference CARE has downgraded the rating assigned to ''D'' to the NCDs
issued by the Company.
Attached hereto at Appendix I are the details of funds raised through
issuance of Non-Convertible Debentures in the 3rd Tranche and
utilization of those funds.
The Directors take this opportunity to thank all the investors who have
invested in the NCD issues of the Company and solicit their continued
support.
OPTIONALLY CONVERTIBLE DEBENTURE:
Since the close of the accounting year under review the Company has
made an issue of unrated, unlisted, secured Optionally Convertible
Debentures (OCDs) on a private placement basis of an amount up to X
50.00 crores having a face value of Rs. 100,000/- each per Debenture
unit. The Company has completed allotment of 4055 units of Rs. 10.00 lacs
each aggregating Rs. 40.55 crores carrying coupon of 22% p.a. and which
will have a maturity date of 20th May 2014.
Attached hereto at Appendix II are the details of funds raised through
issuance of Optionally Convertible Debenture and utilization of those
funds.
The Directors take this opportunity to thank all the investors who have
invested in the QCD issue of the Company and solicit their continued
support.
JOINT VENTURES / SUBSIDIARIES / INVESTMENTS:
ELDER INTERNATIONAL FZCO'' the wholly owned subsidiary of the Company in
Jebel Ali, Dubai, United Arab Emirates (Dubai WOS), continues to hold
100% stake in the U.K. based Nutra Health Limited.
The U. K. operations have shown very encouraging results despite the
slowing down of the U.K. economy. The said U. K. subsidiary has, in a
cashless transaction, acquired Max Healthcare Ltd., U.K. to re-enter
the OTC pharmaceutical category and extend and enhance its product
range.
Dubai WOS also continues to hold 100% interest in Elder Biomeda EAD,
Bulgaria which in turn continues to hold 100% stake in downstream
Bulgarian entities, namely, Elder Bulgaria EOOD, the manufacturing
company and Biomeda 2000 EOOD, the distribution company. Bulgaria,
being a part of the European Union, offers an excellent opportunity for
the Company to enter the Eastern European as well as CIS countries. The
manufacturing unit in Bulgaria is being upgraded and once upgradation
is completed it is expected that tfiere will be a lot of opportunities
for manufacturing products for the Eastern European, CIS and other
markets. The distribution business has a lot of potential and during
the period under review it has received a number of registrations which
will help the distribution company to widen its scope. The distribution
company which used to be operating only in the Bulgarian market has now
started exporting some of its products to nearby countries.
The Dubai WOS had entered into a 50 : 50 joint venture in Syncro Health
Limited, Guernsey (Syncro), which was engaged in web marketing of
certain neutraceutical products. Guernsey offered certain tax
concessions and this was the consideration for the business set up by
Syncro Health Limited which provided a competitive edge as compared to
buying neutraceuticals in stores. Since the business of Syncro did not
pick up and the concessions offered were also withdrawn by me U. K.
Government, the said company ended up in insolvent trading. As per the
Guernsey laws, it was voluntarily decided to appoint administrator for
Syncro. The liquidation of die said company has been completed.
The Company continues to hold it''s investment in the Nepal Joint
Venture. During recent period there have been certain issues on
unilateral decisions taken by the Nepalese partner whereby the
Company''s stake in terms of percentage to total capital was reduced
from earlier 40% to 30.6%. The Company has notified its dissent to the
action taken by the partner and has written to the Ministry of
Industry, Government of Nepal seeking an amicable solution in the
matter. The discussions were held with the Nepalese partner as directed
by the Director of Industry, Government of Nepal for arriving at an
acceptable solution, however no settlement could be reached so far.
Efforts are being made to work out an amicable settlement to resolve
the matter.
During the accounting period under review the Company has signed a
Memorandum of Understanding with Holding PharmEco, a Russian company,
for establishing a joint venture in Russia for setting up manufacturing
facility/ies for pharmaceutical formulations / APIs. However, little
progress has been made towards the said joint venture.
During the accounting period under review the Company has entered into
a joint venture agreement with KOSE Corporation of Japan for
establishment of a joint venture company in India for manufacturing,
selling and distribution of cosmetics products in
India.
Pursuant to and in compliance with the General Circular No. 2/ 201 I
being No. 5I/I2/2007-CL-III dated 8th February 2011 issued by
Government of India, Ministry of Corporate Affairs, the Company has
given the required particulars of its subsidiary and subsidiaries of
the subsidiary in a statement forming part of this Annual Report. The
Annual Audited Accounts and related, information of the subsidiary and
subsidiaries of subsidiary has been kept for the inspection at the
registered / head office of your Company as well as at the head office
of subsidiary companies concerned and the shareholders of the Company
and subsidiaries seeking such information shall be provided with the
same at any point of time. The Company shall also furnish a hard copy
of detailed accounts of subsidiaries to any shareholder on demand.
BANKERS AND FINANCIAL INSTITUTIONS:
The Directors wish to place on record their sincere gratitude to the
consortium of Banks for working capital led by State Bank of India for
their continued and timely support to the Company.
The Directors also wish to place on record their sincere gratitude to
the various term lenders and NCD / OCD holders for their continued and
timely support to the Company.
EXPORT HOUSE STATUS:
The Company continues to enjoy ''Export House'' status. The Company''s
products are exported to certain African and South East Asian markets.
The registration procedures are presently going on in a number of
countries and once their formalities are completed, the Company''s
exports are expected to increase.
ISO / WHO GMP ACCREDITATION:
The Company continues to be certified as conforming to ISO 9001 : 2000
for development, manufacturing and marketing of pharmaceutical
products. The Company''s bulk drug manufacturing plant at Patalganga was
upgraded according to ICH Q7A guidelines for manufacturing products for
the US and UK markets. The said bulk drug plant as well as formulation
plants of the Company are now approved by WHO GMP and certified as
conforming to ISO 9001 : 2008 standards relating to Quality Management
Systems. While the Sela Qui formulations plant of the Company has been
accredited for WHO GMP the said plant is being upgraded for UK MHRA
accreditation. The formulation plants at Nerul, Paonta Sahib have been
accredited for WHO GMP standards. The formulations plant at Langha Road
near Dehradun is designed as per USFDA compliance requirements and is
also accredited for WHO GMR
DIRECTORS'' RESPONSIBILITY STATEMENT:
Pursuant to Section 217(2AA) of the Companies Act, 1956 the Directors,
on the basis of compliance certificate received from Managing Director,
CFO and other executives of the Company and subject to disclosures in
annual accounts as on 30th June 2013 and on the basis of-discussions
with the Statutory Auditors of the Company from time to time, declare
and confirm:
a) that in preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
b) that the Directors had selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the fifteen months period ended on 30th
June 2013 and the profit of the Company for that period.
c) That the Directors had taken proper and sufficient care for
maintenance of adequate accounting records for the 15 months period
ended 30th June 2013 in accordance with the provisions of the Companies
Act, 1956 for safeguarding the assets of the Company and for prevention
and detection of fraud and other irregularities.
d) That the Directors had prepared the accounts for the fifteen months
period ended 30th June 2013 on a ''going concern basis''.
CORPORATE GOVERNANCE:
In pursuance of the system of Corporate Governance instituted by SEBI
and forming part of the Listing Agreement with the Stock Exchanges, a
report thereon is separately attached to this report.
RESEARCH AND DEVELOPMENT ACTIVITY:
The Research and Development activities of the Company continue to be
recognized by the Department of Science and Technology, Government of
India. The Research and Development laboratory of the Company has
successfully developed certain import substitute molecules /
intermediates and has been working on development of a number of other
molecules. It has also been continuously working on process
developments of the molecules already developed by it. It has been
engaged in development of new products and their improvement in terms
of delivery, absorption and efficacy. The Company has applied for seven
Indian patents with two in the USA and Japan and the other PCT
applications has been entered in the USA, Europe and Japan.
INSURANCE OF ASSETS:
The Company is in the process of renewing the insurance cover for all
the fixed assets, finished goods, semi-finished goods, raw materials,
packing materials and other goods and assets of the Company lying at
different locations against fire, burglary, transit, riots, strike,
malicious damage and allied risks as well as goods in transit.
CAPITALISATION:
During the year under review the Company has added fixed assets worth Rs.
13.24 crores whereas disposal and adjustment of fixed assets amounted
to Rs. 0.34 crores. The Company had capital work in progress amounting to
Rs. 268.36 crores as at 30th June 2013 at various project sites.
DEPOSITS:
The Company''s public deposit scheme has been receiving good response
from depositors. The Company is regular in repayment of principal and
payment of interest and has not defaulted therein. The Company has
been complying with the provisions of Section 58A and other applicable
provisions, if any, of the Companies Act, 1956 and the rules made
thereunder. As at 30th June 2013 the - fixed deposits outstanding under
the public deposit schemes were Rs. 167.72 crores. The Company has
discontinued acceptance of deposits from public since the close of
accounting period under review.
AUDITORS'' REPORT:
As regards non-depositing or investment of a sum not less than 15% of
the amount of Debentures maturing during the period ended 30th June
2013, the Company is seized of the matter and the said amount will be
deposited / invested in due course.
As regards the comments of the Auditors at Sr. No. I under ''Emphasis of
Matter, the Company is still in the process of restructuring its
business. As regards comments at Sr. Nos. 2 and 3, the Company is
seized of the matter and has been negotiating payment modalities with
the lenders. As regards comment at Sr. No. 4 the matter has been
withdrawn by the lender concerned upon the Company having repaid the
amount in question.
As regards statutory payments the Company has deposited Provident Fund
dues up to 30th June 2013. The Company has also
deposited Income Tax Dues (Tax Deducted at Source - Others) up to March
2013. The outstanding of Employees State Insurance and Service Tax
reported in the Auditors'' Report have also been cleared.
As regards defaults in payment of interest and repayment of
installments due to banks and debenture holders, the Company is making
all out efforts to clear the same at die earliest.
PARTICULARS OF EMPLOYEES:
Information as per Section 217(2A) of the Companies Act, 1956, read
with Companies (Particulars of Employees) Rules, 1975 as amended is
available at the registered office of the Company. As per the
provisions of Section 219(i)(b)(iv) of the Companies Act, 1956 this
Report and Accounts are being sent to all Shareholders of the Company
and others entitled to it excluding the aforesaid information. Any
Shareholder interested in obtaining a copy of the statement under
Section 2I7(2A) of the Companies Act, 1956 may write to the Company
Secretary at the address of the registered office of the Company.
EMPLOYER/ EMPLOYEE RELATIONS:
The relationship with the workers of the Company''s manufacturing units
and other staff continues to be cordial. The Directors wish to place on
record their sincere appreciation and gratitude for the services
rendered by the workers and staff at all levels.
EMPLOYEE STOCK OPTION PLAN:
The Shareholders at the 21st Annual General Meeting of the Company
passed a resolution approving the Employee Stock Option Plan called
''Elder ESOP 2004''. A total of 1,439,274 equity shares of the Company
are available under Elder ESOP 2004 for grant of Options at an exercise
price of 15% discount to the market rate. The Company had granted
Options in respect of 399,250 shares which were to be exercised in four
equal parts ending on 27* March 2008 at an exercise price of Rs. 209/-
per share inclusive of a premium of Rs. 199/- per share. Out of the
Options granted 285,748 were exercised during the accounting year under
review. Options that were not exercised within the stipulated period
have lapsed. There are 1,153,526 shares for which Options can still be
granted to Employees under Elder ESOP 2004.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO:
In accordance with Rule 2 of the Companies (Disclosure of Particulars
in the Report of the Board of Directors) Rules, 1988 as applicable, the
particulars relating to conservation of energy and technology
absorption are given in Annexure I to this Report.
The foreign exchange outgo during the year under review was Rs. 29.76
crores for imports of raw materials / trading, interest and other
items, and Rs. 50.22 lacs for foreign travel. The Company also paid Rs.
5.83 crores in foreign exchange as interest on the External Commercial
Borrowing. The foreign exchange earnings during the year were Rs. 31.77
crores on account of exports on FOB basis.
For and on behalf of die Board
Atok Jagdish Saxena
Mumbai, 13th November 2013 Chairman
Mar 31, 2012
The Directors are pleased to present the Twenty Ninth Annual Report of
the Company together with the audited Accounts for the year ended 31st
March 2012. The working results of the Company for the year ended 31st
March 2012 vis-a-vis those of the previous year are summarized below:
Year ended Year ended
31.03.2012 31.03.2011
(Rs.In Lacs) (Rs.In Lacs)
1. Operating Income 98,468.73 83,858.56
2. Other Income 2,430.75 804.27
3. Profit before Tax 10,351.12 8,906.95
4. Less: Provision for Tax
Current Year 2,100.00 1,800.00
Deferred Tax (164.83) (33.17)
5. Profit after Tax 8,415.95 7,140.12
6. Less: Prior year Tax adjustments (8.62) (61.00)
7. Add: Profit as per the last 18596.86 19,233.78
Balance Sheet
8. Profit available for 27,004.19 26,312.90
appropriation
Out of which Directors recommend
Appropriation as under:
a) Proposed Dividend 616.11 616.09
b) Tax on Dividend 99.95 99.95
c) Transfer to General Reserve 3,000.00 3,000.00
d) Transfer to Debenture 4,000.00 4,000.00
Redemption Reserve
e) Surplus carried forward to 19,288.13 18,596.86
Balance Sheet
OPERATIONS AND PERFORMANCE:
The economy throughout the world witnessed economic and political
turmoil during the year under review with natural and man made
calamities which have impacted businesses across all sectors. The
Indian GDP growth was below expectation and with high interest rates
and monsoon playing truant this season, the already high inflation is
likely to have spiraling effect. Added to this is the depreciating
Rupee against US Dollar making the imported inputs costlier. All these
factors have brought a lot of pressure on both operating costs and
margins of the Company. Your Company's Operating Income during the year
under review was Rs. 98,468.73 lacs as against Rs. 83,858.56 lacs in the
previous year. This represents an increase of Rs. 14,610.17 lacs which is
equivalent to 17.42% increase over the previous year. Ever rising oil
prices and resultant increase in the all round input costs, increased
finance costs, etc. have brought the pre and post tax profits under
pressure. However, there has been slight improvement in the pre tax and
post-tax profit, although in percentage terms it is less than the top
line growth, with profit before tax for the year under review being Rs.
10,351.12 lacs as against profit before tax of Rs. 8,906.95 lacs in the
previous year and profit after tax for the year under review being Rs.
8,415.95 lacs as against profit after tax of Rs. 7,140.12 lacs in the
previous year.
During the year under review the Company introduced a number of new
products. These products were BFX, MENY, MENY Plus, Elpod O and FORMIC
OF in the Anti-infective category, New Zephrol Cold Syrup, New Zephrol
Cold Tablets and New Zephrol DC Syrup in the Cough & Cold category,
Aptirez Syrup in Appetite Stimulant category, Vagisil Range in the
Women's Health Care category, Chymoral AP in Wound Care & Pain
Management category and Gastrochill & Gastrochill D in the G. I.
category.
All the products of the Company including new introductions have been
well accepted by the medical fraternity in India. The main therapeutic
area of interest to the Company continues to be Women's healthcare,
Wound care and Pain Management, Neutraceuticals / Vitamin Supplements,
Life Style & Diabetes, and Antibiotics.
MERGER OF ELDER HEALTH CARE LIMITED WITH ELDER PHARMACEUTICALS LIMITED
The Company has explored and evaluated the various opportunities for
growth and expansion available for the Company. Looking at the
synergies of operations and the benefits that would accrue to the
Company it was decided by the Board of Directors to merge Elder Health
Care Limited into the Company and at its meeting held on 2nd August
2012 has approved the draft Scheme of Arrangement in respect thereof
u/s 391 to 394 of the Companies Act, 1956. The Directors are of the
opinion that the draft Scheme of Arrangement is advantageous and
beneficial to the Shareholders of the Company and the terms thereof are
fair and reasonable. Subject to the approval of the Stock Exchanges,
the Shareholders of both the transferor and transferee companies, the
Registrar of Companies, the Hon'ble High Court of Judicature at Mumbai
and other authorities, if any, the Scheme of Arrangement will come into
effect from 1st April 2012, being the Appointed Date. It is proposed to
allot 100 (One Hundred) equity shares of Rs. 10/- each fully paid up in
the capital of the Company for every 358 (Three Hundred Fifty Eight)
equity shares of Rs. 10/- each fully paid up held by the shareholders of
the transferor company i.e. Elder Health Care Limited, once the Scheme
of Arrangement is approved by all the appropriate authorities.
GLOBAL DEPOSITORY RECEIPTS:
The Company had made an issue of Global Depository Receipts (GDR)
during the year 2004-05. All the issued GDRs have been converted into
equity shares and no GDRs are outstanding as on 31st March 2012. The
Company's listing for the GDRs, however, continues on the Luxembourg
Stock Exchange and as on 31st March 2012 the same were quoted at
$13.31.
DIVIDEND:
The Directors have pleasure in recommending a dividend of 30 % i.e. Rs.
3/- per equity share of Rs. 10/- each for the year ended 31st March 2012
and the same, once approved by the shareholders, will be paid on or
before 23rd October 2012 to those shareholders whose names appear in
the Register of Members as on the close of business on 19th September
2012.
DIRECTORS:
Dr. R. Srinivasan, Director, is due to retire by rotation at the
ensuing Annual General Meeting of the Company. He however, being
eligible, has offered himself for re-appointment.
Dr. S. Jayaram, Director, is due to retire by rotation at the ensuing
Annual General Meeting of the Company. He, however, being eligible, has
offered himself for re-appointment.
Mr. Michael Bastian, Director, is due to retire by rotation at the
ensuing Annual General Meeting of the Company. He, however, being
eligible, has offered himself for re-appointment.
As required under Clause 49 of the Listing Agreement, the details of
Dr. R. Srinivasan, Dr. S. Jayaram and Mr. Michael Bastian, Directors
who are due to retire by rotation at the ensuing Annual General Meeting
but having offered for their re-appointment are given in the Report on
Corporate Governance, forming part of this Annual Report.
The Board of Directors at its meeting held on 9th August 2012, has
subject to provisions of sections 198, 269, 309, 310, 311 and other
applicable provisions, if any, of the Companies Act, 1956 and further
subject to the consent and approval of Shareholders and /or any other
statutory authorities, if any, that may be required, re-appointed Mr.
Yusuf Karim Khan as Executive Director for a period of Five years
effective from 28th August, 2012.
The particulars of Mr. Yusuf Karim Khan are given in the Notice of the
29th Annual General Meeting as well as in the Report on Corporate
Governance.
AUDITORS & AUDITORS' REPORT:
M/s. S. S. Khandelwal & Co., Chartered Accountants, Mumbai retire as
the Auditors of the Company at the conclusion of the ensuing Annual
General Meeting. They have signified their willingness to get
re-appointed and have given a declaration that if re-appointed their
appointment will be within the limits specified under Section 224(1)(B)
of the Companies Act, 1956. On the recommendation of the Audit
Committee, the Board proposes for consideration of the Shareholders,
the re-appointment of M/s. S. S. Khandelwal & Co. as Auditors of the
Company for the financial year 2012-13. You are requested to appoint
Auditors and fix their remuneration.
The Auditors' Report to the Shareholders is self explanatory and does
not contain any reservations, qualifications or adverse remark. Notes
on Accounts as referred to in the Auditors' Report are self explanatory
and do not call for further comments or explanation.
COST AUDITORS AND COST AUDIT REPORT:
The Directors have appointed M/s. Sevekari, Khare and Associates, Cost
Accountants, Mumbai, having registration No. 00084, as Cost Auditors of
the Company for the formulations and bulk drugs activities of the
Company for the financial year 2012-13 and their appointment has been
approved and taken on record by the Central Government. The Cost Audit
Reports would be submitted to the Central Government within the
prescribed time limit.
The Cost Audit Reports for bulk drugs and formulations for the year
ended 31st March 2011 were filed with the Central Government on 11th
October 2011.
NON-CONVERTIBLE DEBENTURES:
Your Company made two issues of Rated Secured Redeemable Non-
Convertible Debentures on a private placement basis during the previous
financial year. The first issue was of 1,188 units of Rs. 10.00 lacs each
aggregating Rs. 118.80 crores carrying interest @ 10.75% p.a. payable
half yearly and redeemable in twelve equal quarterly installments
starting from the end of the 9th quarter from the date of allotment
i.e. 23rc December 2010 & ending at the end of the 20th quarter from
the date of allotment. The installments will commence after two years
of moratorium from the date of allotment. The second issue aggregated Rs.
73.00 crores comprising of 730 units of Rs. 10.00 lacs each having seven
year maturity. This issue carries interest @ 11.25% p.a. which is
payable half yearly from the date of allotment i.e. 30th March 2011 and
is redeemable in ten equal semi annual installments starting from six
months after the end of the second year from the date of allotment &
ending at the end of seventh year from the date of allotment. Both the
issues were rated by Credit Analysis and Research Limited (CARE) who
had assigned 'A ' rating to the said NCD issues of the Company. NCD
units issued under both the issues have been listed with the WDM
Segment of National Stock Exchange of India Limited (NSE). The purpose
of the NCD issue was retirement of high cost debt and to augment the
medium to long term resources of the Company, including regular capital
expenditure (not constituting a project).
Attached hereto at Appendix 1 are the details of funds raised through
Non-Convertible Debentures as above and their utilization.
Since the close of the accounting year under review, the Company has
made another issue of NCDs on private placement basis, called NCD 3rd
Tranche issue amounting to Rs. 100.00 crores for augmenting medium to
long term resources of the Company including regular capital
expenditure (not constituting a project).
The directors take this opportunity to express their sincere thanks to
the investors in NCDs for the confidence reposed by them in the
Company.
JOINT VENTURES / SUBSIDIARIES / INVESTMENTS:
'ELDER INTERNATIONAL FZCO' the wholly owned subsidiary of the Company
in Jebel Ali, Dubai, United Arab Emirates ((Dubai WOS), continues to
hold 100% stake in the U. K. based NeutraHealth Limited. Upon
acquisition of 100% stake in the said company it was delisted from AIMS
Exchange.
Mr. Jagdish Saxena, Chairman and Managing Director of your Company
continues to be a Director on the Board of NeutraHealth Limited.
The Dubai WOS had been holding 92.2% interest in Elder Biomeda AD,
Bulgaria, a step down subsidiary of the Company. During the year under
review the stake in Bulgarian Company was increased to 100%. Thus it
has become a wholly owned subsidiary of Dubai WOS and as a single
shareholder company, it is now known as Elder Biomeda EAD. It continues
to hold 100% interest in Elder Bulgaria EOOD, a pharmaceuticals &
neutraceuticals manufacturing company and Biomeda 2000 EOOD, a
distribution company. Bulgaria, being a part of the European Union,
offers an excellent opportunity for the Company to enter the Eastern
European as well as CIS countries. The manufacturing unit in Bulgaria
is being upgraded and once upgradation is completed it is expected that
there will be a lot of opportunities for manufacturing products for the
Eastern European, CIS and other markets. The distribution business in
Bulgaria has started picking up. The distribution company which used to
be operating only in the Bulgarian market has now started exporting
some of its products to nearby countries. The Company is trying to
promote some of the products manufactured by Elder Bulgaria EOOD in the
export markets in which it has been operating.
The Dubai WOS had entered into a 50 : 50 joint venture in Syncro Health
Limited, Guernsey (Syncro), which was engaged in web marketing of
certain neutraceutical products. Guernsey offered certain tax
concessions and this would have made the products offered by Syncro
Health Limited competitive as compared to buying them in stores. Since
the business of Syncro did not pick up as expected it was voluntarily
decided to liquidate Syncro.
The Company continues to hold it's investment in the Nepal Joint
Venture. During recent period there have been certain issues on
decisions taken by the Nepalese partner whereby the Company's stake in
terms of percentage to total capital was reduced from earlier 40% to
30.6%. The Company has notified its dissent to the action taken by the
Nepalese partner and has written to the Ministry of Industry,
Government of Nepal seeking an amicable solution in the matter. The
discussions are going on with the Nepalese partner as directed by the
Director of Industry, Government of Nepal for arriving at an acceptable
solution.
Pursuant to and in compliance with the General Circular No. 2 / 2011
being No. 51/12/2007-CL-111 dated 8th February 2011 issued by
Government of India, Ministry of Corporate Affairs the Company has
given the required particulars of its subsidiary and subsidiaries of
the subsidiary in a statement forming part of this Annual Report. The
Annual Audited Accounts and related detailed information of the
subsidiary and subsidiaries of subsidiary has been kept for the
inspection at the registered / head office of your Company as well as
the head office of subsidiary companies concerned and the shareholders
of the Company and subsidiaries seeking such information shall be
provided the same at any point of time. The Company shall also furnish
a hard copy of detailed accounts of subsidiaries to any shareholder on
demand.
BANKERS AND FINANCIAL INSTITUTIONS:
The Directors wish to put on record their sincere gratitude to the
consortium of Banks for working capital comprising State Bank of India,
Canara Bank, Bank of India, Axis Bank Ltd., Development Credit Bank
Ltd., , DBS Bank Ltd. and Bank of Baroda for their continued and timely
support to the Company.
The Directors also wish to put on record their sincere gratitude to the
various term lenders for their continued and timely support to the
Company.
EXPORT HOUSE STATUS:
The Company continues to enjoy 'Export House' status. The Company's
products are exported to certain African and South East Asian markets.
The registration procedures are presently going on in a number of
countries and once their formalities are completed, the Company's
exports are expected to increase.
ISO / WHO GMP ACCREDITATION:
The Company continues to be certified as conforming to ISO 9001 : 2000
in the areas of development, manufacturing and marketing of
pharmaceutical products. The Company's bulk drug manufacturing plant at
Patalganga complies with ICH Q7A guidelines for manufacturing products
for international markets including the US and UK markets. The
Company's Sela Qui and Paonta Sahib formulation units are accredited
for WHO GMP apart from these units being certified as conforming to ISO
9001 : 2000. The facility at Paonta Sahib in Himachal Pradesh, which
has been set up as per the highest industry standards, has been
approved by WHO for manufacturing and packing of pharmaceutical
products. The formulations plant at Langha Road in Uttarakhand is
designed as per US FDA requirements for drug products and steriles. The
formulation plant at Nerul, Navi Mumbai is in the process of renewing
its WHO GMP accreditation..
DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to Section 217(2AA) of the Companies Act, 1956 the Directors,
on the basis of compliance certificate received from Managing Director,
CFO and other executives of the Company and subject to disclosures in
annual accounts as on 31st March 2012 and on the basis of discussions
with the Statutory Auditors of the Company from time to time, declare
and confirm:
a) that in preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures if any;
b) that the Directors had selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year ended on 31st March
2012 and the profit of the Company for that year;
c) That the Directors had taken proper and sufficient care for
maintenance of adequate accounting records for the year ended 31st
March 2012 in accordance with the provisions of the Companies Act, 1956
for safeguarding the assets of the Company and for prevention and
detection of fraud and other irregularities; and
d) That the Directors had prepared the accounts for the financial year
ended 31st march 2012 on a 'going concern basis'.
CORPORATE GOVERNANCE:
In pursuance of the system of Corporate Governance instituted by SEBI
and forming part of the Listing Agreement with the Stock Exchanges, a
report thereon is separately attached as a part of to this report.
RESEARCH AND DEVELOPMENT ACTIVITY:
The Research and Development activities of the Company continue to be
recognized by the Department of Science and Technology, Government of
India. The Research and Development laboratory of the Company has
successfully developed certain import substitute molecules /
intermediates and has been working on development of a number of other
molecules. It has also been continuously working on process
developments of the molecules already developed by it. It has been
engaged in development of new products and their improvement in terms
of delivery, absorption and efficacy. The Company has applied for
eighteen Indian patents with seven PCT applications. Out of these one
PCT application has been entered in the USA, Europe and Japan. The
Company enjoys "approved" status for its Research & Development
Facility from the Secretary, DSIR u/s 35 (2AB) of the Income Tax Act,
1961 for claiming rebate on the expenses incurred by the Company on
Research and Development.
INSURANCE OF ASSETS:
All the fixed assets, finished goods, semi-finished goods, raw
materials, packing materials and other goods and assets of the Company
lying at different locations and in-transit have been insured against
fire, burglary, transit, riots, strike, malicious damage and allied
risks.
CAPITALISATION:
During the year under review the Company has added fixed assets worth Rs.
59.84 crores whereas disposal and adjustment of fixed assets amounted
to Rs. 0.72 crores. The Company had capital work in progress amounting to
Rs. 191.01 crores as at 31st March 2012 at various project sites.
DEPOSITS:
The Company's public deposit scheme has been receiving good response
from depositors. The Company is regular in repayment and payment of
interest and has not defaulted therein. The Company has been complying
with the provisions of Section 58A and other applicable provisions, if
any, of the Companies Act, 1956 and the rules made thereunder. As at
31st March 2012 the fixed deposits outstanding under the public deposit
schemes were Rs. 128.55 crores. Bajaj Capitals Limited continue to be the
Managers to the Fixed Deposit Schemes of the Company.
PARTICULARS OF EMPLOYEES:
Information as per Section 217(2A) of the Companies Act, 1956, read
with Companies (Particulars of Employees) Rules, 1975 as amended is
available at the registered office of the Company. As per the
provisions of Section 219(i)(b)(iv) of the Companies Act, 1956 this
Report and Accounts are being sent to all Shareholders of the Company
and others entitled to it excluding the aforesaid information. Any
Shareholder interested in obtaining a copy of the statement under
Section 217(2A) of the Companies Act, 1956 may write to the Company
Secretary at the address of the registered office of the Company.
EMPLOYER / EMPLOYEE RELATIONS:
The relationship with the workers of the Company's manufacturing units
and other staff continues to be cordial. The Directors wish to place on
record their sincere appreciation and gratitude for the services
rendered by the workers and staff at all levels.
EMPLOYEE STOCK OPTION PLAN:
The Shareholders at the 21st Annual General Meeting of the Company
passed a resolution approving the Employee Stock Option Plan called
'Elder ESOP 2004. A total of 1,439,274 equity shares of the Company
are available under Elder ESOP 2004 for grant of Options at an exercise
price of 15% discount to the market rate. The Company had granted
Options in respect of 399,250 shares which were to be exercised in four
equal parts ending on 27th March 2008 at an exercise price of Rs. 209/-
per share inclusive of a premium of Rs. 199/- per share. Out of the
Options granted 285,748 Options were exercised. Options that were not
exercised within the stipulated period have lapsed. There are 1,153,526
shares for which Options can still be granted to Employees under Elder
ESOP 2004.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO:
In accordance with Rule 2 of the Companies (Disclosure of Particulars
in the Report of the Board of Directors) Rules, 1988 as applicable, the
particulars relating to conservation of energy and technology
absorption are given in Annexure 1 to this Report.
The foreign exchange outgo during the year under review was Rs. 30.64
crores for imports of raw materials / trading and other items, and Rs
39.84 lacs for foreign travel. The Company also paid Rs. 1.38 crores in
foreign exchange as interest on the External Commercial Borrowing of
Japanese Yen equivalent of USD 15 million. The foreign exchange
earnings during the year were Rs. 28 crores on account of exports on FOB
basis.
For and on behalf of the Board
Jagdish Saxena
Mumbai, 9th August, 2012 Chairman
Mar 31, 2011
Dear Members,
The Directors are pleased to present the Twenty Eighth Annual Report of
the Company together with the audited Accounts for the year ended 31st
March 2011. The working results of the Company for the year ended 31a
March 2011 vis-a-vis those of the previous year are summarized below:
Year ended Year ended
31.03.2011 31.03.2010
(Rs. In Crores) (Rs. In Crores)
1. Operating Income 832.44 702.79
2. Other Income 8.43 7.63
3. Profit before Tax 89.07 64.68
4. Less: Provision for Tax
Current Year 18.00 10.50
Deferred Tax (10.33) (1.21)
5. Profit after Tax 71.40 55.39
6. Less: Prior year Tax 0.61 -
adjustments
7. Add: Profit as per the 192.34 173.54
Balance Sheet
8. Profit available for 263.13 228.93
Appropriation
Out of which Directors recommend
Appropriation as under:
a) Proposed Dividend 6.16 5.66
b) Tax on Dividend 1.00 0.94
c) Transfer to General 30.00 30.00
Reserve
d) Transfer to Debenture 40.00 -
Redemption Reserve
e) Surplus carried forward 185.97 192.34
to Balance Sheet
OPERATIONS:
Your Company's Operating Income during the year under review was Rs.
832.44 crores as against Rs. 702.79 crores in the previous year. This
represents an increase of Rs. 129.65 crores which is equivalent to 18.45%
increase over the previous year. However, in view of ever rising oil
prices and resultant increase in the all round input costs, increased
finance costs, etc. have in effect brought the pre and post tax profits
under pressure. However, there has been slight improvement in the pre
tax and post-tax profit although it is less than the top line growth
with profit before tax for the year under review being Rs. 89.07 crores
and profit after tax of Rs. 71.40 crores.
During the year under review the Company introduced a number of new
products across several therapeutic categories, such as Acebrolin'
capsules and syrup, 'Bronconil' syrup and 'Elfecol' syrup for Cough &
cold, 'Eldocort" and 'Eldoflam MR' for pain management, Plasmorid' as
anti-malarial, Prexan' for
hematinic use, 'Eldervit Plus' tablets, 'l-VIT Plus' and Samplus' as
nutritional supplements, 'Elmecob PG" for neuropathy, 'Shelcal HD'
tablets for Calcium supplementation, 'Shelcal K' tablets for
Osteoporosis and 'Somazina Plus' tablets as neuroprotective.
All the products of the Company including new introductions have been
well accepted by the medical fraternity in India. The main therapeutic
area of interest to the Company continues to be Women's healthcare,
Wound care and Pain Management, Neutraceuticals / Vitamin Supplements,
Life Style Diseases & Diabetes, and Antibiotics.
All the three units of the Company in North India, one at Sela Qui and
the other at Vitlage Charba, Langha Road, near Dehradun in the State of
Uttarakhand and the third at Paonta Sahib in Himachal Pradesh have been
enjoying the Central Government's excise and income tax incentives. The
production capacities have been expanded at the Sela Qui unit in
Uttarakhand. The said unit is also being upgraded to meet UK MHRA
accreditation. This accreditation will help the Company cater to some
of the export markets. The manufacturing units of the Company at Nerul,
Navi Mumbai, Paonta Sahib, Himachal Pradesh and Sela Qui, Uttarakhnad,
are WHO GMP accredited. The bulk drug unit of the Company at Patalganga
in the Raigad district of Maharashtra received accreditation from the
Japanese Health Ministry in January 2011.
GLOBAL DEPOSITORY RECEIPTS:
The Company had made an issue of Global Depository Receipts 1GDR)
during the year 2004-05. All the issued GDRs have been converted into
shares and no GDR is outstanding as on 31s1 March 2011. The Company's
listing for the GDRs. however, continues on the Luxembourg Stock
Exchange and as on 31st March 2011 the quote for Company's GDRs was $
17.51.
DIVIDEND:
The Directors have pleasure in recommending a dividend of 30% i.e. Rs.
3.00 per share of Rs. 10/- each for the year ended 31st March 2011 and
the same, once approved by the shareholders, will be paid on or before
23"' October 2011 to those shareholders whose names appear in the
Register of Members as on 16th September 2011.
DIRECTORS:
During the Accounting year under review Mr. M. V. Thomas, a Founder
Director who was appointed by the General Meeting as an Executive
Director of the Company designated as Director (Finance) and whose
period of office as such Director iFinance) expired on 30th June 2010,
resigned as Director vide his letter dated 1st July 2010. The Board has
accepted his resignation at its meeting held on 27* July 2010. He had,
however, continued as the Company's Chief Financial Officer'*jp to 12*
November 2010.
Dr. J. S. Juneja, Director, is due to retire by rotation at the ensuing
Annual General Meeting of the Company. He, however, being eligible, has
offered himself for re-appointment.
Mr. Edoardo Richter, Director, is due to retire by rotation at the
ensuing Annual General Meeting of the Company. He, however, being
eligible, has offered himself for re-appointment.
Mrs. Urvashi Saxena, Director, is due to retire by rotation at the
ensuing Annual General Meeting of the Company. She, however, being
eligible, has offered herself for re-appointment.
As required under Clause 49 of the Listing Agreement, the details of
Dr. J. SJuneja, Mr. Edoardo Richter and Mrs Urvashi Saxena. Directors
who are due to retire by rotation at the ensuing Annual General Meeting
but having offered for their re-appointment are given in the Report on
Corporate Governance, forming part of this Annual Report.
The Board of Directors at its meeting held on 12th August 2011,
consequent to the approval of the Remuneration Committee, at its
meeting held on 9th August 2011, has subject to provisions of sections
198, 269, 309, 310, 311 and other applicable provisions, if any, of the
Companies Act, 1956 and further subject to the consent and approval of
Shareholders and /or any other statutory approvals, if any, that may be
required, appointed Mr. Alok Saxena as Joint Managing Director for a
period of Five years effective from 12,h August, 2011.
AUDITORS:
M/s. S. S. Khandelwal & Co., Chartered Accountants, Mumbai retire as
the Auditors of the Company at the conclusion of the ensuing Annual
General Meeting. They have signified their willingness to get
re-appointed and have given a declaration that if re-appointed their
appointment will be within the limits specified under Section 224(1
)(B) of the Companies Act, 1956. On the recommendation of the Audit
Committee, the Board proposes, for consideration of the Shareholders,
the re-appointment of M/s. S. S. Khandelwal & Co. as Statutory
Auditors of the Company for the financial year 2011-12. You are
requested to appoint Auditors and fix their remuneration.
COST AUDITOR:
The Directors have appointed M/s. Sevekari, Khare and Associates, Cost
Accountants, Mumbai, having registration No. 00084, as Cost Auditors
of the Company for the formulations and bulk drugs activities of the
Company for the financial year 2011-12 and their appointment has been
approved by the Central Government.
INCREASE IN SHARE CAPITAL:
During the year under review the Company made an issue of its equity
shares to Qualified Institutional Buyers on a private placement basis.
The Company issued 1,679,450 equity shares of Rs. 10/- each at a price
ofRs. 415/- per share including a premium of Rs. 405/- per share. The
paid-up share capital of the Company, therefore, stands increased to Rs.
205,369,360/- divided into 20,536,936 equity shares ofRs. 10/- each.
Attached hereto at Appendix 1 are the details of funds raised through
Qualified Institutional Placement as above and their utilization.
NON-CONVERTIBLE DEBENTURES:
Your Company made two issues of Rated Secured Redeemable
Non-Convertible Debentures on a private placement basis during the year
under review. The first issue was of 1,188 units of Rs. 10.00 lacs each
aggregating Rs. 118.80 crores carrying interest 0 10.75% p.a. payable
half yearly and redeemable in twelve equal quarterly installments
starting from the end of the 9th quarter from the date of allotment
i.e. 23rd December 2010 and ending at the end of the 20th quarter from
the date of attotment. The installments will commence after two years
of moratorium from the date of allotment. The second issue aggregated Rs.
73.00 crores comprising of 730 units of Rs. 10.00 lacs each having seven
year maturity. This issue carries interest 0 11.25% p.a. which is
payable half yearly from the date of allotment i.e. 30th March 2011 and
is redeemable in ten equal semi annual installments starting from six
months after the end of the second year from the date of allotment &
ending at the end of seventh year from the date of allotment. Both the
issues were rated by Credit Analysis and Research Limited (CAREl who
had assigned A ' rating to the said NCD issues of the Company. NCD
units issued under both the issues have been listed with the WDM
Segment of National Stock Exchange of India Limited (NSE). The purpose
of the NCD issue was retirement of high cost debt and to augment the
medium to long term resources of the Company, including regular capital
expenditure [not constituting a project).
Attached hereto at Appendix 2 are the details of funds raised through
Non-Convertible Debentures as above and their utilization.
The directors take this opportunity to express their sincere thanks to
the investors in NCDs for the confidence reposed by them in the
Company.
JOINT VENTURES / SUBSIDIARIES / INVESTMENTS:
ELDER INTERNATIONAL FZCO' the wholly owned subsidiary (WOS) of the
Company in Jebel Ali, Dubai, United Arab Emirates, was holding 21.1%
stake in NeutraHealth PLC, U.K. (Neutra). During the year under review
it acquired 100% stake through a Scheme of Offer (Scheme) recommended
by Directors of Neutra. The Scheme was approved by the High Court of
the United Kingdom and has become effective from 16th November 2010.
The Offer was made 0 6.5 pence per share and the total outlay was
approximatelyRs. 68.50 crores.
Mr. Jagdish Saxena, Chairman and Managing Director of your Company
continues to be a Director on the Board of Neutrahealth PLC.
The Dubai WOS had been holding 61% interest in Elder Biomeda AD,
Bulgaria, a step down subsidiary. During the year under review the
stake was increased to 92.2% by acquiring shares of two shareholders.
Elder Biomeda AD holds 100% interest in Elder Bulgaria EOOD, a
pharmaceuticals & neutraceuticals manufacturing company and Biomeda
2000 EOOD, a distribution company. Bulgaria, being a part of the
European Union, offers an excellent opportunity for the Company to
enter the Eastern
European as well as CIS countries. The manufacturing unit in Bulgaria
is proposed to be upgraded and expanded for manufacturing products for
the Eastern European, CIS and other markets. The distribution business
in Bulgaria has started picking up. It is looking at exporting some
products to nearby countries which hitherto were distributed within
Bulgaria.
The Dubai WOS has also entered into a 50 : 50 joint venture in Syncro
Health Limited, Guernsey, which is engaged in web marketing of certain
neutraceutical products. Guernsey offers certain tax concessions and
this would make the products offered by Syncro Health Limited
competitive as compared to buying them in stores. Your directors expect
that the said joint Venture wilt do well in the years to come..
The Company continues to hold it's investment in the Nepal Joint
Venture. During the recent past there have been certain issues on
decisions taken by the Nepalese partner whereby the Company's stake in
terms of percentage to total capital was reduced from earlier ã0% to
30.6%. The Company has notified its dissent to the action taken by the
partner and has written to the Ministry of Industry, Government of
Nepal, seeking an amicable solution in the matter. The discussions are
going on with the Nepalese partner as directed by the Director of
Industry, Government of Nepal, for arriving at an acceptable solution.
The Company had incorporated a wholly owned subsidiary in Cyprus by the
name 'Somerta Holdings Co. Limited'. Since inception no activity was
carried out in the said subsidiary. Application was made for striking
the name of the company off the Register under the applicable Companies
Law in Cyprus and the company was closed on 28th April 2010.
BANKERS AND FINANCIAL INSTITUTIONS:
The Directors wish to put on record their sincere gratitude to the
consortium of Banks for working capital comprising State Bank of India,
Canara Bank, Syndicate Bank, Axis Bank Ltd., Development Credit Bank
Ltd., DBS Bank Ltd. and Bank of Baroda for their continued and timely
support to the Company.
The Directors also wish to put on record their sincere gratitude to the
various term lenders for their continued and timely support to the
Company.
EXPORT HOUSE STATUS:
The Company continues to enjoy "Export House' status. The Company's
APIs and Formulations are exported to countries like Italy, Bangladesh,
Egypt, Brazil, Mexico, Japan, South Korea, Vietnam, Nigeria, Georgia,
France, Switzerland, Cambodia, Kosovo, Thailand etc. The registration
procedures are presently going on in a number of countries such as
Kenya, Netherlands, Ukraine, Ethiopia, Ghana, Botswana etc. and once
their formalities are completed, the Company's exports are expected to
increase.
CREDIT RATING:
Your Company continues to enjoy the topmost rating of "CARE A1 " from
Credit Analysis and Research Limited [CARE) for short term debt
(including Commercial Paper) Programme of Rs. 105 Crores [carved out of
working capital) and standalone Commercial Paper Programme of Rs. 75
crores. Further, CARE has also reaffirmed its "CARE A " rating for long
term debt, Secured NCDs programme, working capital and other banking
facilities (including term loans) of Rs. 486.23 crores signifying
adequate degree of safety regarding the timely servicing of financial
obligations.
ISO / WHO GMP ACCREDITATION:
The Company's Corporate Office continues to be certified as conforming
to ISO 9001 : 2000 as along with the manufacture units at Pawane, Nerul
and Patalganga for development, manufacturing and marketing of
pharmaceutical products. The Company's bulk drug manufacturing plant at
Patalganga was upgraded according to ICH Q7A guidelines for
manufacturing products for the US and UK markets. While the Sela Qui
formulations plant of the Company has been accredited for WHO GMP, the
said plant is being upgraded for UK MHRA accreditation. The
formulations plants at Nerul and Paonta Sahib have also received WHO
GMP accreditation. The upcoming formulations plant at Langha Road near
Dehradun is designed as per US FDA compliance requirements.
DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to Section 217(2AAi of the Companies Act, 1956 the Directors,
on the basis of compliance certificate received from Managing Director,
CFO and other executives of the Company and subject to disclosures in
annual accounts as on 31st March 2011 and on the basis of discussions
with the Statutory Auditors of the Company from time to time, declare
and confirm:
a) that in preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
b) that the Directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year ended on 31st March
2011 and the profit of the Company for that year;
c) That the Directors had taken proper and sufficient care for
maintenance of adequate accounting records for the year ended 31st
March 2011 in accordance with the provisions of the Companies Act, 1956
for safeguarding the assets of the Company and for prevention and
detection of fraud and other irregularities;
d) That the Directors had prepared the accounts for the financial year
ended 31st March 2011 on a 'going concern basis'.
CORPORATE GOVERNANCE:
In pursuance of the system of Corporate Governance instituted by SEBI
and forming part of the Listing Agreement with the Stock Exchanges, a
report thereon is separately attached to this report.
RESEARCH AND DEVELOPMENT ACTIVITY:
The Research and Development activities of the Company continue to be
recognized by the Department of Science and Technology, Government of
India. The Research and Development laboratory of the Company has
successfully developed certain import substitute molecules /
intermediates and has been working on development of a number of other
molecules. It has also been continuously working on process
developments of the molecules already developed by it. It has been
engaged in development of new products and their improvement in terms
of delivery, absorption and efficacy. The Company has applied for
sixteen Indian patents with seven PCT applications. Out of these one
PCT application has been entered in the USA, Europe and Japan. The
Company enjoys "approved" status for its Research & Development
Facility from the Secretary', DSIR u/s 35 (2AB] of the Income Tax Act,
1961 for claiming rebate on the expenses incurred by the Company on
Research and Development.
INSURANCE OF ASSETS:
All the fixed assets, finished goods, semi-finished goods, raw
materials, packing materials and other goods and assets of the Company
lying at different locations and in-transit have been insured against
fire, burglary, transit, riots, strike, malicious damage and allied
risks.
CAPITALISATION:
During the year under review the Company has added fixed assets worth Rs.
37.38 crores whereas disposal and adjustment of fixed assets amounted
toRs. 0.12 crores. The Company had capital work in progress amounting to
Rs. 93.03 crores as at 315' March 2011 at various project sites.
DEPOSITS:
The Company's public deposit scheme has been receiving good response
from depositors. The Company is regular in repayment and payment of
interest and has not defaulted therein. The Company has been complying
with the provisions of Section 58A and other applicable provisions, if
any of the Companies Act, 1956 and the rules made thereunder. As at
31sl March 2011 the fixed deposits outstanding under the public deposit
scheme were Rs. 52.06 crores. During the accounting year under review the
Company has appointed Bajaj Capitals Limited as the Managers to the
Fixed Deposit Schemes of the Company.
AUDITORS' REPORT:
Notels] on accounts as referred to in the Auditors Report is / are
self-explanatory and therefore do not call for further comments or
explanation.
PARTICULARS OF EMPLOYEES:
Information as per Section 217(2A) of the Companies Act, 1956, read
with Companies (Particulars of Employees) Rules, 1975 as amended is
available at the registered office of the Company. As per the
provisions of Section 219(i)(b)(iv) of the Companies Act, 1956, this
Report and Accounts are being sent to all Shareholders of the Company
and others entitled to it excluding the aforesaid information. Any
Shareholder interested in obtaining a copy of the statement under
Section 217(2A) of the Companies Act, 1956 may write to the Company
Secretary at the address of the registered office of the Company.
EMPLOYER / EMPLOYEE RELATIONS:
The relationship with the workers of the Company's manufacturing units
and other staff continues to be cordial. The Directors wish to place on
record their sincere appreciation and gratitude for the services
rendered by the workers and staff at all levels.
EMPLOYEE STOCK OPTION PLAN:
The Shareholders at the 21s' Annual General Meeting of the Company
passed a resolution approving the Employee Stock Option Plan called
'Elder ESOP 2004'. A total of 1,439,274 equity shares of the Company
are available under Elder ESOP 2004 for grant of Options at an exercise
price of 15% discount to the market rate. The Company had granted
Options in respect of 399,250 shares which were to be exercised in four
equal parts ending on 27,h March 2008 at an exercise price of Rs. 209/-
per share inclusive of a premium of Rs. 199/- per share. Out of the
Options granted 285,748 were exercised. Options that were not exercised
within the stipulated period have lapsed. There are 1,153,526 shares
for which Options can still be granted to Employees under Elder ESOP
2004.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO:
In accordance with Rule 2 of the Companies (Disclosure of Particulars
in the Report of the Board of Directors) Rules, 1988 as applicable, the
particulars relating to conservation of energy and technology
absorption are given in Annexure 1 to this Report.
The foreign exchange outgo during the year under review was Rs. 35.66
crores for imports of raw materials / trading and other items, and Rs.
31.46 lacs for foreign travel. The Company also paid Rs. 2.83 crores in
foreign exchange as interest on the External Commercial Borrowing of
Japanese Yen equivalent of USD 15 million. The foreign exchange
earnings during the year were Rs. 22.78 crores on account of exports on
FOB basis.
For and on behalf of the Board
Jagdish Saxena
Mumbai, 12th August, 2011 Chairman
Mar 31, 2010
The Directors are pleased to present this the Twenty seventh Annual
Report of the Company together with the audited Accounts for the year
ended 31st March 2010. The working results of the Company for the year
ended 31st March 2010 vis-ÃÂ -vis those of the previous year are
summarized below:
Year ended Year ended
31.03.2010 31.03.2009
(Rs. in (Rs. in
Crores) Crores)
1. Sales and other Income 710.42 628.16
2. Proft before Tax 64.68 58.59
3. Less: Provision for Tax
Current Year 10.50 6.50
Deferred Tax (1.21) (0.15)
Fringe Beneft Tax - 1.60
4. Proft after Tax 55.39 50.64
5. Less: Prior year Tax adjustments - (1.50)
6. Add: Proft as per the last Balance Sheet 173.54 159.92
7. Proft available for appropriation 228.93 209.06
Out of which Directors recommend
Appropriation as under:
Proposed Dividend 5.66 4.71
Tax on Dividend 0.94 0.80
Transfer to General Reserve 30.00 30.00
Surplus carried forward to Balance Sheet 192.34 173.54
l OPERATIONS:
Your Company achieved Sales Turnover of Rs. 702.79 crores during the
year under review which represents an increase of Rs.82.77 crores
representing 13.35% increase over the previous year. However, in view
of the economic pressures the pre and post tax profts were under
pressure and did not show as much increase as in Sales Turnover. The
proft before tax for the year was Rs.64.68 crores whereas proft after
tax was Rs.55.39 crores.
During the year under review the Company introduced a number of new
products in the market like Pepamino, a research based nutritional
supplement from a Norwegian company, Flavospas à O, for treatment of
Urinary Tract Infections, Tazomust, an Anti- infective having wide
range of indications and applications and Somazina OD for the
management of cerebral strokes. During the current accounting year the
Company has introduced products like NRT Pastilles, a Nicotine
replacement therapy with unique German delivery system and Ecozyne, a
nutritional supplement for management of male infertility.
The Company has plans for launching various new products, both own and
in-licensed, in therapeutic areas where it is already entrenched. These
launches are expected to further strengthen the product portfolio and
enable growth as well as increase market share in niche therapeutic
areas.
All the products of the Company including new introductions have been
well accepted by the medical fraternity in India. The main therapeutic
area of interest to the Company continues to be WomenÃs healthcare,
Wound care, Neutraceuticals / Vitamin Supplements, Life Style &
Diabetes, Dermatology, Antibiotics and CNS.
The Directors are pleased to inform that during the year under review
the formulation facilities of the Company set up as per the US FDA
requirements at Village Charba, Langha Road, Tehsil Vikas Nagar,
District Dehradun, in the State of Uttarakhand for manufacture of
injectibles in liquid ampoule form, oral liquids, tablets and capsules
dosage forms, have commenced commercial production. The said unit is
eligible for incentives such as the Central Excise exemption for a
period of ten years from the year of commencement of commercial
production, Income Tax exemption, Central Subsidy, etc.
The other two units of the Company in North India, one at Sela Qui near
Dehradun in Uttarakhand and the other at Paonta Sahib in Himachal
Pradesh have been enjoying the Central GovernmentÃs excise and income
tax incentives. The production capacities have been expanded at the
Sela Qui unit in Uttarakhand. The said unit is being upgraded to meet
UK MHRA accreditation. This accreditation will help the Company cater
to some of the export markets.
During the previous year the Ministry of Corporate Affairs, New Delhi
(MCA) had commenced an investigation on the Company under Section 235
of the Companies Act, 1956. The investigation report was forwarded to
the Company for its comments thereon. After receipt of CompanyÃs
comments the investigating agency issued a show cause notice to the
Company and some of its Directors / officers relating only to alleged
violations of certain provisions of the Companies Act, 1956 which the
Company has replied. The Company reckons that the matter is concluded
as the investigating agency has since issued the last letter dated 4th
February 2010 in the matter only warning the Company to be particular
in future in complying with the provisions of Section 154 of the
Companies Act, 1956.
l GLOBAL DEPOSITORY RECEIPTS:
The Company had made an issue of Global Depository Receipts (GDR)
during the year 2004-05. All the issued GDRs have been converted into
shares and no GDR is outstanding as on 31st March 2010. The CompanyÃs
listing for the GDRs, however, continues on the Luxembourg Stock
Exchange and as on 31st March 2010 the quote for CompanyÃs GDRs was $
15.985.
l DIVIDEND:
The Directors recommend a dividend of 30% i.e. Rs.3/- per share of
Rs.10/- each for the year ended 31st March 2010 and the same will be
paid on or before 25th October 2010 to those shareholders whose names
appear in the Register of Members as on 20th September 2010.
l DIRECTORS:
During the year under review Mr. Peter Bibby resigned as Director on
health grounds. The Board accepted his resignation at its meeting held
on 29th April 2009. The Directors report with a heavy heart Mr. BibbyÃs
sad demise later on 22nd July 2009. Since the close of the Accounting
year under review Mr. M. V. Thomas, a Founder Director who was
appointed by the General Meeting as an executive director of the
Company designated as Director (Finance) and whose period of office as
such Director (Finance) expired on 30th June 2010, resigned as Director
effective 1st July 2010 vide his letter dated 1st July 2010. He was
appointed as the Chief Financial Officer in terms of the Listing
requirements and will be continuing with the Company in that capacity.
During the accounting year under review, Mrs. Urvashi Saxena, who was
appointed as an Additional Director by the Directors at their meeting
held on 29th April 2009, was appointed by the Shareholders at the 26th
Annual General Meeting of the Company held on 29th September 2009 as a
non-executive and independent Director whose period of office is liable
to retirement by rotation.
D r. R. Srinivasan, Director, is due to retire by rotation at the
ensuing Annual General Meeting of the Company but being eligible has
offered himself for re-appointment.
D r. Sailendra Narain, Director, is due to retire by rotation at the
ensuing Annual General Meeting of the Company but being eligible has
offered himself for re-appointment.
M r. Saleem Shervani, Director, is due to retire by rotation at the
ensuing Annual General Meeting of the Company but being eligible has
offered himself for re-appointment.
During the year under review the Shareholders at the 26th Annual
General Meeting of the Company re-appointed Mr. Jagdish Saxena as
Managing Director of the Company for a period of fve years w.e.f. 1st
May 2009.
As required under Clause 49 of the Listing Agreement the details of Dr.
R. Srinivasan, Dr. Sailendra Narain and Mr. Saleem Shervani, Directors
due to retire by rotation at the ensuing Annual General Meeting but
having offered for their re-appointment are given in the Report on
Corporate Governance.
l AUDITORS:
M/s. S. S. Khandelwal & Co., Chartered Accountants, Mumbai retire as
the Auditors of the Company at the conclusion of the ensuing Annual
General Meeting. They have signiifed their willingness to get
re-appointed and have given a declaration that if re-appointed their
appointment will be within the limits specified under Section 224(1)(B)
of the Companies Act, 1956. On the recommendation of the Audit
Committee, the Board proposes the re-appointment of M/s. S. S.
Khandelwal & Co. as Auditors of the Company for the fnancial year
2010-11. You are requested to appoint Auditors and fix their
remuneration.
The Directors have appointed M/s. Sevekari, Khare and Associates, Cost
Accountants, Mumbai as Cost Auditors of the Company for the financial
year 2010-11 and their appointment has been approved by the Central
Government.
JOINT VENTURES / SUBSIDIARIES / INVESTMENTS:
During the accounting year 2006-07 the Company established a wholly
owned subsidiary in the Jebel Ali Free Trade Zone, Dubai, U.A.E. called
ÃELDER INTERNATIONAL FZCOÃ. The Company was issued a trading license in
March 2007 for Ãpara pharmaceuticals marketingÃ. The Company has,
through this Dubai subsidiary made investments in Neutra Health PLC,
U.K., and Elder Biomeda AD, Bulgaria, a step down subsidiary in which
it has 61% interest. Elder Biomeda AD holds 100% interest in Elder
Bulgaria EOOD, a manufacturing company and Biomeda 2000 EOOD, a
distribution company. Bulgaria being a part of European Union now
offers an excellent opportunity for the Company to enter Eastern
European as well as CIS countries. The manufacturing unit in Bulgaria
will soon be upgraded and expanded for manufacturing products for the
Eastern European and CIS markets. The distribution business in Bulgaria
has started picking up and is slowly gaining the lost ground. As
reported in the last yearÃs report the logistic support business has
been merged with the distribution company in Bulgaria during the
accounting year under review.
During the accounting year under review it was decided to withdraw from
Ghana joint venture and the joint venture agreement with Vincom
Pharmaceuticals Limited, Ghana, was terminated. The Company, however,
continues to hold itÃs stake in the Nepal Joint Venture company.
Mr. J. Saxena, Chairman and Managing Director of the Company continues
to be a Director on the Board of Neutrahealth PLC.
The Company had incorporated a wholly owned subsidiary in Cyprus by the
name ÃSomerta Holdings Co. LimitedÃ. From inception no activity was
carried out in the said subsidiary. The Directors in their last report,
had informed the shareholders that the said Cyprus subsidiary would
shortly be closed. Accordingly, application was made for closing the
Cyprus subsidiary. The Directors would like to inform the shareholders
that the Registrar of Companies, Nicosia has issued a Certificate dated
5th May 2010 certifying that the name of Somerta Holdings Co. Limited
has been struck off the Register under the Companies Law Cap. 113,
Section 327 on the 28th April 2010. However, since the closure has
taken place after the close of the accounting year under review the
accounts of the said Cyprus subsidiary are attached as a part of annual
accounts and are included in the Consolidated Accounts of the Company
for the year ended 31st March 2010.
* BANKERS AND FINANCIAL INSTITUTIONS:
The Directors wish to put on record their sincere gratitude to the
consortium of Banks for working capital comprising State Bank of India,
Canara Bank, Syndicate Bank, Development Credit Bank Ltd., Axis Bank
Ltd., DBS Bank Ltd. and Bank of Rajasthan Ltd. for their continued and
timely support to the Company. The Directors are also thankful to and
wish to put on record their sincere gratitude to various term lenders
for their timely support to the Company.
* EXPORT HOUSE STATUS:
The Company continues to enjoy ÃExport Houseà status. The CompanyÃs
products are exported to certain African and South East Asian markets.
The registration procedures are presently going on in a number of
countries and once their formalities are completed, the CompanyÃs
exports are expected to increase.
* CREDIT RATING BY CARE:
The Company continues to enjoy the highest rating of ÃPR1+Ã assigned to
its Commercial Paper programme by Credit Analysis and Research Limited
(CARE) for an amount of Rs.75.00 crores. As at 31st March 2010 the
Company had issued CPs to the extent of Rs.25.00 crores and placed them
with investors at the most competitive rates of interest. The
subscription amount of the Commercial Papers is utilized for earmarking
working capital limits.
During the accounting year under review stand alone Commercial Paper
programme of a value of Rs.50.00 crores was rated by CARE assigning to
it the highest PR1+ (PR One Plus) rating. These Commercial Papers are
being placed by the Company at the most competitive rates of interest.
The Commercial Paper programme of the Company has helped it reduce
interest cost.
* ISO / WHO GMP ACCREDITATION:
The Company continues to be certifed as conforming to ISO 9001 : 2000
for development, manufacturing and marketing of pharmaceutical
products. The CompanyÃs bulk drug manufacturing plant at Patalganga was
upgraded according to ICH Q7A guidelines. The Company has been
upgraded for customers sourcing APIs manufactured in the plant for the
US and European markets. The said plant has been audited by customers
and approved by them. While the Sela Qui formulations plant of the
Company has been accredited for WHO GMP the said plant is being
upgraded for UK MHRA accreditation. The formulations plant at Nerul has
obtained WHO GMP renewal. The plant at Paonta Sahib built as per the
highest standards is in the process of being subjected to inspection
for WHO GMP accreditation. The upcoming formulations plant at Langha
Road near Dehradun is designed as per USFDA requirements.
* DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to Section 217(2AA) of the Companies Act, 1956 the Directors,
on the basis of compliance certificate received from Managing Director,
CFO and other executives of the Company and subject to disclosures in
annual accounts as on 31st March 2010 and on the basis of discussions
with the Statutory Auditors of the Company from time to time, declare
and confirm:
a) that in preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
b) that the Directors had selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year ended on 31st March
2010 and the profit of the Company for that year.
c) That the Directors had taken proper and sufficient care for
maintenance of adequate accounting records for the year ended 31st
March 2010 in accordance with the provisions of the Companies Act, 1956
for safeguarding the assets of the Company and for prevention and
detection of fraud and other irregularities.
d) That the Directors had prepared the accounts for the financial year
ended 31st march 2010 on a Ãgoing concern basisÃ.
* CORPORATE GOVERNANCE:
In pursuance of the system of Corporate Governance instituted by SEBI
and forming part of the Listing Agreement with the Stock Exchanges, a
report thereon is separately attached to this report.
* RESEARCH AND DEVELOPMENT ACTIVITY:
The Research and Development activities of the Company continue to be
recognized by the Department of Science and Technology, Government of
India. The Research and Development laboratory of the Company has
successfully developed certain import substitute molecules and has been
working on development of a number of other molecules. It has also been
continuously working on process developments of the molecules already
developed by it. The Company has fled totally sixteen Indian patents
with seven PCT applications. Out of these one PCT application has been
entered in the USA, Europe and Japan. The Company enjoys approval to
the Research & Development Facility from the Secretary, DSIR u/s 35
(2AB) of the Income Tax Act, 1961 for claiming rebate on the expenses
incurred by the Company on Research and Development.
* INSURANCE OF ASSETS:
All the fixed assets, finished goods, semi-finished goods, raw
materials, packing materials and other goods and assets of the Company
lying at different locations and in-transit have been insured against
fire, burglary, transit, riots, strike, malicious damage and allied
risks.
* CAPITALISATION:
During the year under review the Company has added fixed assets worth
Rs.311.14 crores whereas disposal and adjustment of fixed assets
amounted to Rs.0.60 crores. The Company had capital work in progress
amounting to Rs.65.74 crores as at 31st March 2010 at various project
sites.
* DEPOSITS:
The CompanyÃs public deposit scheme has been receiving good response
from depositors. The Company is regular in repayment and payment of
interest and has not defaulted therein. The Company has been complying
with the provisions of Section 58A and the rules made thereunder. As at
31st March 2010 the fxed deposits outstanding under the public deposit
scheme were Rs.39.88 crores. During the accounting year under review
the Company has appointed Bajaj Capital Limited as the Managers to the
Fixed Deposit Schemes of the Company.
* AUDITORS REPORT:
Note(s) on accounts as referred to in the Auditors Report is / are
self-explanatory and therefore do not call for further comments or
explanation.
* PARTICULARS OF EMPLOYEES:
Information as per Section 217(2A) of the Companies Act, 1956, read
with Companies (Particulars of Employees) Rules, 1975 as amended is
available at the registered office of the Company. As per the
provisions of Section 219(i)(b)(iv) of the Companies Act, 1956 this
Report and Accounts are being sent to all Shareholders of the Company
and others entitled to it excluding the aforesaid information. Any
shareholder interested in obtaining a copy of the statement under
Section 219(2A) of the Companies Act, 1956, may write to the Company
Secretary at the address of the registered office of the Company.
* EMPLOYER / EMPLOYEE RELATIONS:
The relationship with the workers of the CompanyÃs manufacturing units
and other staff continues to be cordial. The Directors wish to place on
record their sincere appreciation and gratitude for the services
rendered by the workers and staff at all levels.
* EMPLOYEE STOCK OPTION PLAN:
The Shareholders at the 21st Annual General Meeting of the Company
passed a resolution approving the Employee Stock Option Plan called
ÃElder ESOP 2004Ã. A total of 1,439,274 equity shares of the Company
are available under Elder ESOP 2004 for grant of Options at an exercise
price of 15% discount to the market rate. No Options were granted to
the Employees during he accounting year under review. As as 31st March
2010 there were 1,153,526 shares for which Options could still be
granted to Employees under Elder ESOP 2004.
* CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO:
In accordance with Rule 2 of the Companies (Disclosure of Particulars
in the Report of the Board of Directors) Rules, 1988 as applicable, the
particulars relating to conservation of energy and technology
absorption are given in Annexure 1 to this Report.
The foreign exchange outgo during the year under review was Rs.30.13
crores for imports of raw materials / trading and other items, and
Rs.0.43 crores for foreign travel. The Company also paid Rs.3.93 crores
in foreign exchange as interest on the External Commercial Borrowing of
Japanese Yen equivalent of USD 15 million. The foreign exchange
earnings during the year were Rs.17.46 crores on account of exports on
FOB basis.
For and on behalf of the Board
J. Saxena
Chairman
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