Directors Report of Unichem Laboratories Ltd.
Mar 31, 2022
Your Directors have the pleasure of presenting the audited accounts of your Company for the financial year ended 31st March, 2022.
The table below gives the financial highlights of the Company for the year ended 31st March, 2022 on a standalone and consolidated basis as compared to the previous financial year.
|
('' in lakhs) |
||||
|
Particulars |
Standalone (Audited) |
Consolidated (Audited) |
||
|
For the year ended |
For the year ended |
|||
|
31st March, 2022 |
31st March, 2021 |
31st March, 2022 |
31st March, 2021 |
|
|
Revenue from operations |
94,292.66 |
1,12,397.28 |
1,26,983.22 |
1,23,513.53 |
|
Other Income |
4,206.79 |
4,737.11 |
4,750.94 |
5,018.76 |
|
Total Income |
98,499.45 |
1,17,134.39 |
1,31,734.16 |
1,28,532.29 |
|
Profit/(Loss) before tax |
(8,674.77) |
6,564.55 |
2,196.89 |
5,147.94 |
|
Current tax |
- |
- |
1,050.83 |
1,668.26 |
|
Deferred tax |
(3,155.51) |
1,094.30 |
(2,183.81) |
(14.82) |
|
Short/(Excess) provision for tax (earlier years) |
23.70 |
62.02 |
23.70 |
62.02 |
|
Profit/(Loss) for the year |
(5,542.96) |
5,408.23 |
3,306.17 |
3,432.48 |
|
Other Comprehensive Income |
5,537.20 |
2,130.49 |
5,375.05 |
1,639.47 |
|
Total Comprehensive Income |
(5.76) |
7,538.72 |
8,681.22 |
5,071.95 |
Management Discussion and Analysis
As required by Regulation 34(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), a Management Discussion and Analysis Report is part of this Report as Annexure A.
The state of the affairs of the business along with the financial and operational developments has been given in this Report.
A loss of '' (8,359.19) lakhs after considering dividend paid during the year is proposed to be carried forward in the Profit & Loss Account. Your Company does not propose to transfer any amount in the General Reserves of the Company.
The Board has recommended a Dividend of '' 4/- (200%) per equity share of '' 2/- each for the year ended 31st March, 2022. The Dividend will be paid after approval of Members at the ensuing Annual General Meeting (AGM) of the Company which will result in a cash outflow of '' 2,816.23 lakhs.
The Register of Members and Share Transfer Books shall remain closed from Wednesday, 3rd August, 2022, to Tuesday, 9th August, 2022 (both days inclusive) for AGM and, Dividend, if approved by the Members.
Pursuant to Finance Act, 2020, Dividend income will be taxable in the hands of Shareholders with effect from 1 st April, 2020 and the Company shall deduct tax at source from Dividends paid to the Shareholders at the prescribed rates. A detailed communication on this shall be separately sent to the Shareholders.
The Company has a Dividend Distribution Policy in place and the same is available on the website of the Company at https://www.unichemlabs.com/dividend-distribution-policy.php.
Employees Stock Options Scheme
The Company has implemented the âUnichem Employee Stock Option Scheme, 2018â (Scheme) which was duly approved by the Shareholders vide a Special Resolution passed through Postal Ballot Meeting held on 15th May, 2018. Under the said Scheme 52,75,275 Options were approved, out of which 15,12,224 Options were granted to the eligible employees of the Company and its subsidiary in August 2018. 50% of the options granted i.e. 7,56,112 Options became vested on to them on 1st April,2022 and are exercisable in terms of the said Scheme. As on date none of the eligible employees have yet exercised these options.
The certificate from the Secretarial Auditor of the Company on the implementation of the said Scheme in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (including any statutory modification(s) and/or re-enactment(s) thereof for the time being in force) has been duly obtained.
Details of this scheme form part of the Directorâs Report and are available on the Companyâs website at https://www.unichemlabs.com/annual-report.php.
Research and Development (R&D)
Kindly refer to the write-up in the Section, Management Discussion and Analysis Report.
As required under Regulation 34 of the Listing Regulations, a Report on Corporate Governance along with a Certificate of Compliance from the Auditors is given in Annexure B of this Report.
Corporate Social Responsibility (CSR)
The Board has constituted a Corporate Social Responsibility (CSR) Committee to monitor the implementation of CSR activities of your Company. The Annual Report on CSR activities as amended in terms of Section 135 of the Act and the Rules made thereunder, is annexed as Annexure C to this Report.
During the year under review, there was no mandatory requirement to spend towards CSR. However, the Company has voluntarily spent '' 63.22 lakhs for the year under review which includes an amount of '' 2.60 lakhs which has remained unutilized with an implementing agency as on 31st March, 2022. This is expected to be utilized in the subsequent financial year.
Consolidated Financial Statements
The annual consolidated financial statements together with the report of the Auditors thereon form part of this Annual Report.
Review of Subsidiaries and Associates
Your Company has 6(six) subsidiaries and 1(one) associate company. A statement containing salient features of the financial statements of the subsidiaries and associate company, pursuant to Section 129 of the Companies Act, 2013 (the Act), and the Rules made thereunder, is annexed to this Report as Annexure D in the prescribed Form AOC -1 and hence not repeated here for the sake of brevity.
Synchron Research Services Private Limited (Synchron) is an associate company in terms of Section 2(6) of the Act. Synchron is a contract research organization in India which offers clinical trial services to pharmaceutical companies. The Company has made a provision towards impairment of its equity investment in Synchron as per the note appearing under 6.2 of the notes to the accounts under standalone financial statements.
Particulars of Loans, Guarantees and Investments
Details of Loans, Guarantees, and Investments covered under the provisions of Section 186 of the Act are given in the notes to the financial statements.
The Company has not accepted any deposits within the meaning of Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014.
Your Company considers risk management as a key element of its business operations and has put in place effective systems to identify, monitor, and mitigate risks to ensure sustained operations. Your Company has constituted a Risk Management Committee, details of which are disclosed in the Corporate Governance Report. A section on Risk Management practices of the Company is included in the Management Discussion and Analysis Report.
Directors and Key Managerial Personnel
All Independent Directors have declared that they meet the criteria of Independence as laid down under Section 149(6) of the Act and Regulation 16(b) of the Listing Regulations. All Independent Directors have given declarations stating compliance with the Code of Ethics and Business Conduct. There has been no change in the circumstances affecting their status as Independent Directors of the Company. In the opinion of the Board, the Independent Directors fulfill the conditions specified in these Regulations and are independent of the management.
During the year under review, the Non-Executive Independent Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees and reimbursement of expenses incurred by them for attending Meetings of the Board/Committee of the Company and the dividend paid on the equity shares held by them.
In terms of Section 203 of the Act, Dr. Prakash A. Mody, Chairman & Managing Director, (DIN: 00001285), Mr. Dilip Kunkolienkar, Director Technical, (DIN: 02666678), Mr. Sandip Ghume, Deputy Chief Financial Officer, and Mr. Pradeep Bhandari, Head-Legal & Company Secretary are the Key Managerial Personnel of the Company. Mr. Kunkolienkar retires by rotation and being eligible has offered himself for re-appointment.
Directors'' Responsibility Statement
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134 (3) (c) of the Companies Act, 2013 (Act):
1. that in preparation of annual accounts for the year ended 31st March, 2022, the applicable accounting standards have been followed and no material departures, have been made from the same;
2. that such accounting policies have been selected and applied 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 as at the end of the financial year and Profit /Loss for that year;
3. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for
Committee and as approved by the Board of Directors, subject to the approval of the Shareholders within the limits stipulated by the Act and the Rules made thereunder. The remuneration paid to the Whole Time Directors is determined keeping in view the industry benchmark and the relative performance of the Company compared to the industry performance.
Non-Executive Directors
Non-Executive Directors receive sitting fees for attending Meetings of the Board and its Committees as per the provisions of the Act and the Rules made thereunder. Besides payment of sitting fees and Dividends on equity shares, if any, held by the Directors, no other remuneration is paid to the Non-Executive Directors.
Key Managerial Personnel (KMP) and Senior Management
The remuneration of KMP other than the Executive Directors and other Senior Managerial Employees largely consists of basic salary, perquisites, allowances and performance incentives (wherever paid). Perquisites and retirement benefits are paid according to the Companyâs policy. The components of the total remuneration vary for different grades and are governed by the industry pattern, qualification and experience, merits, and performance of each employee. The Company while deciding the remuneration package takes into consideration the current employment scenario and remuneration package prevalent in the industry and peer group companies.
Board Meetings
During the year, 5 (five) Board Meetings were held, the details of which are given in the Corporate Governance Report.
Audit Committee
The Company has an Audit Committee pursuant to the requirements of the Act read with the Rules framed thereunder and Listing Regulations. The details relating to the same are given in the report on Corporate Governance forming part of this Report. During the financial year 2021-22, the recommendations of the Audit Committee were duly accepted by the Board.
Whistle Blower Policy
The Company has in place a Whistle Blower/Vigil Mechanism through which its Stakeholders, Directors, and Employees can report genuine concerns about unethical behaviour and actual or suspected fraud or violation of the Companyâs Code of Business Conduct and Ethics. The said policy provides for adequate safeguards against victimization and direct access to the Audit Committee. The e-mail id for reporting genuine concerns is [email protected]. No complaints were received during the year.
Significant and Material Orders passed by the Regulators /Courts/Tribunals
No significant or material orders were passed by the regulators or courts or, tribunals which impact the Companyâs going concern status and its operations in the future.
preventing and detecting fraud and other irregularities;
4. that the annual accounts have been prepared on a going concern basis;
5. that the internal financial controls were in place and that they were adequate and operating effectively; and
6. that systems to ensure compliance with the provisions of all applicable laws were devised and such systems were adequate and operating effectively.
Board performance and evaluation
Pursuant to the provisions of the Act and the Listing Regulations, the Board has carried out an annual performance evaluation of the working of its performance, its Committees, and the Directors individually. The performance evaluation of Independent Directors was done by the entire Board of Directors and in the evaluation, the Directors who were subject to evaluation did not participate. A structured questionnaire was prepared after taking into consideration inputs received from the Directors covering various aspects of the functioning of the Board and its Committees.
The evaluation of the Directors was done on various parameters such as vision and strategy, Board participation, Board disclosures of interests, review of management policies, budget concerning the risk and return, and leadership skills. The Directors expressed their satisfaction with the evaluation process.
Salient features of the Nomination and Remuneration Policy
The Board, on the recommendation of the Nomination and Remuneration Committee, has adopted a policy for selection, appointment, and remuneration of Directors, Key Managerial Personnel, and Senior Management. The policy is available on the Companyâs website at
https://www.unichemlabs.com/nomination-and-remunerationpolicv.php.
The Company considers human resources as its invaluable assets. The Nomination and Remuneration Policy aims to pay equitable remuneration to all Directors, Key Managerial Personnel (KMP), and employees of the Company and is linked to the overall individual performance. The Remuneration policy for all employees is designed to attract talented personnel and remunerate them fairly and responsibly, this being a continuous, ongoing exercise at each level in the organization.
The Company pays remuneration by way of salary, perquisites, and allowances (fixed component) and commission (variable components wherever applicable as per terms of appointment) to its Whole-time Directors. A proper balance between fixed and variable components is aimed at. Salary is paid based on the recommendation of the Nomination and Remuneration
Further, as per the management the future business outlook and projections of the subsidiary are sufficient so as not to warrant any impairment on the investments in subsidiary (Niche) unless the outcome of EU matter is not in favour of the subsidiary.
Consolidated financials - Note no. 39
The management has obtained the counsel view on this matter and they have stated that there has not been any formal change in position after the last hearing and the uncertainty as in the past continues. Considering the status quo, in view of the management, no provision for the aforesaid fine is considered necessary and fine imposed by the EU of Euro 13.96 million (equivalent to '' 11,818.62 lakhs) is continued to disclose the matter under contingent liability.
On the above matter, the auditors of the Niche have given qualified opinion in their audit report and the statutory auditor of Company have reported the said qualification in their audit report on consolidated financial statement for the year ended 31st March, 2022.
Material changes and commitment, if any, affecting the financial position of the Company from the end of the financial year till the date of this Report
In November 2018, the Company had made a strategic investment in two Hyderabad based Active Pharmaceutical Ingredients (APIs) manufacturing company namely Optimus Drugs Private Limited (âODPLâ) and Optrix Laboratories Limited (âOptirxâ) for a total consideration of '' 120 crs (Rupees One hundred twenty crores) by acquiring 19.99% of the issued and paid-up share capital of each of the said companies. Optrix was later merged into ODPL which no change in the overall shareholdings of the Company in the merged entity. Unichem held 19.99% of the equity share capital of ODPL.
Subsequent to the financial year ended 31st March, 2022, the Company has entered into binding Share Purchase Agreement (âSPAâ) dated 10th May, 2022 with Sekhmet Pharmaventures Private Limited (âPurchaserâ) and Optimus Drugs Private Limited (âOptimusâ) to sell its entire shareholding in Optimus to the Purchaser (âTransactionâ). As per the SPA, the Company will sell 19.97% equity shares on a fully diluted basis in the first tranche and remaining 0.02% equity shares in the second tranche. For the first tranche, total consideration is '' 27,098.99 lakhs and for the second tranche for a price to be determined as per the said SPA after satisfaction of necessary conditions precedent. Fair value gain of '' 7,646.40 lakhs was recognized in Other Comprehensive Income in the current quarter and year ended 31st March, 2022 based on independent valuation report and carrying value of such investment as at balance sheet date is '' 22,595.23 lakhs. The additional fair value gain will be recognized in the subsequent period as per SPA. The Transaction is expected to complete in the subsequent period after satisfaction of necessary condition precedents as mutually agreed between the parties under the SPA.
However on 9th July, 2014, the European Commission (âEUâ) decided to impose an unjustified fine of Euro 13.96 million, jointly and severally on the Company and its subsidiary Niche Generics Ltd (âNicheâ) contending that they had acted in breach of EU competition law as Niche Generics Ltd had, in early 2005 (when the Company was only a part owner and financial investor in Niche) had agreed to settle a financially crippling patent litigation with Laboratories Servier. The Company vehemently denies any wrongdoing on the part of either itself or Niche. Both the Company & Niche had submitted appeals in September 2014 to the General Court of the EU seeking appropriate relief in the matter. The General Court of the EU has rejected the appeals vide Order dated 12th December, 2018 and confirmed the fine of Euro 13.96 million. The Company and its subsidiary based on legal advice and merits, have filed appeals against the decision of General Court before the Court of Justice of the EU and outcome of the appeals are awaited.
Audit qualification and Response of the Management on the above matter.Standalone financials - Note no. 38
In this regard, the statutory auditors of Niche have given qualified audit opinion on the financial statement of Niche for the year ended 31st March, 2022. They have stated that previously the outcome of the appeal was sufficiently uncertain that a contingent liability was deemed sufficient, however following the hearing in October 2021, and their review of the available documentation, their opinion is that it is more likely than not that Niche will be liable for the fine of Euro 13.96 million (equivalent to '' 11,818.62 lakhs) and hence they believe that this should be provided for in the financial statements of Niche. As per the Board of Directors of Niche, there remains an inherent uncertainty as to the outcome of the appeal and therefore the Directors are of the opinion that no provision should be made at this point of time. The management has obtained the counsel view on this matter and they have stated that there has not been any formal change in position after the last hearing and the uncertainty as in the past continues. Considering the status quo, in view of the management, no provision for the aforesaid fine is considered necessary and continued to disclose the matter under contingent liability.
As at Balance Sheet date, the Company has aggregate financial exposure of '' 12,267.33 lakhs in Niche comprising of investment, trade receivable and corporate guarantee given to bank for loan availed by Niche. Considering the impact of on-going litigation as elaborated in the above para and accumulated losses in Niche as at Balance Sheet date, the statutory auditor of the Company are of the view that the Company would need to provide for impairment on the exposure involved of '' 12,267.33 lakhs. However, the Company is of the view that such provision for impairment on exposure would be required only in the event of unfavourable outcome of the appeal which itself is uncertain. On the above matter, the auditors of the Company have given qualified opinion in their audit report on standalone financial statement for the year ended 31st March, 2022.
Other than the above, there have been no material changes and commitments, affecting the financial position of the Company between the end of the financial year to which the financial statements relate and the date of this Report.
During the year under review, approval of the Audit Committee and Board of Directors was sought for Related Party Transactions wherever required.
The Audit Committee has given prior approval for all Related Party Transactions wherever applicable. The policy on Related Party Transactions as approved by the Board is uploaded on the Companyâs website and the weblink is https://www.unichemlabs.com/related-party-transactions-policy.php. The particulars of contracts or arrangements with Related Parties referred to in Section 188(1) of the Act are provided, in the prescribed Form AOC-2 annexed as Annexure E to this Report.
Except to the extent of the shares held in the Company and the remuneration drawn from the Company, none of the Directors and Key Managerial Personnel have any pecuniary relationships or transactions vis-a-vis the Company.
Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Company has in place a policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. The policy has set guidelines on the redressal and inquiry process that is to be followed by complainants and the ICC, whilst dealing with issues related to sexual harassment at the workplace. All women employees (permanent, temporary, contractual, and trainees) are covered under this policy. The policy also provides for the requisite checks, balances, and safeguards to ensure that no employee is victimized or harassed for reporting and bringing up such incidents in the interest of the Company. The ICC received 1 (one) compliant which was addressed during the year.
Pursuant to the provisions of Section 139 of the Act read with applicable Rules framed thereunder, M/s. N. A. Shah Associates LLP, Chartered Accountants the existing Statutory Auditors of the Company will complete their first term of 5 (five) years as Statutory Auditors of the Company at the concl usion of this 59th Annual General Meeting (âAGMâ). In view of the same, M/s. N. A. Shah Associates LLP, Chartered Accountants (Firm Registration 1 16560W/W100149) based on the recommendation of the Audit Committee, have been reappointed by the Board as the Statutory Auditors of the Company for a second term of 5 (five) consecutive years to hold office from the conclusion of the 59th AGM till the conclusion of
the 64th AGM subject to the approval of the Members of the Company at the ensuing Annual General Meeting on such remuneration plus applicable taxes and out-of-pocket expenses incurred in connection with the Audit as may be decided by the Board and the said auditors.
The said Auditors have given their eligibility certificate and willingness to be appointed as statutory auditors for a second term of 5 (five) years from the conclusion of the 59th AGM till the conclusion of the 64th AGM.
The said Auditors have confirmed that their firm has been subjected to the peer-review process of the Institute of Chartered Accountants of India (ICAI) and they hold a valid certificate issued by the Peer Review Board of the ICAI.
During the year under review, the Auditors have not reported any matter under Section 143 (12) of the Act and therefore no details are disclosed under Section 134 (3) (ca) of the Act.
The Company is required to maintain cost records as specified by the Central Government under sub-section (1) of Section 148 of the Act, accordingly such accounts and records are made and maintained by the Company.
The Board of Directors at its Meeting held on 27th May, 2022, based on the recommendation of the Audit Committee, appointed Kishore Bhatia & Associates, Cost Accountants, (Firm Registration No. 00294); as Cost Auditors for undertaking Cost Audit of the Cost Accounting Records maintained by the Company for the financial year 2022-23 at a remuneration not exceeding '' 9.00 lakhs (Rupees Nine Lakhs Only Only) plus applicable taxes and out-of-pocket expenses at actuals. The said Auditors have confirmed their eligibility for appointment as Cost Auditors. The remuneration payable to the said Cost Auditors is required to be placed before the Members at the ensuing AGM for ratification and a suitable Resolution has been set out in the Notice of this AGM. The Cost Audit Report for the year ended 31st March, 2021 was filed with the Ministry of Corporate Affairs on 4th August, 2021.
During the year under review, the Cost Auditors have not reported any matter under Section 143 (12) of the Act, and therefore no details are disclosed under Section 134(3) (ca) of the Act.
Pursuant to the provisions of Section 204 of the Act and the Rules made thereunder, the Company has appointed Alwyn Jay & Co., Company Secretaries in practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed as Annexure F to this Report. There is no qualification, reservation, adverse remark, or disclaimer in the said Report.
During the year under review, the Secretarial Auditors have not reported any matter under Section 143 (12) of the Act, and therefore no details are disclosed under Section 134(3) (ca) of the Act.
Compliance with Secretarial Standards
The Company has complied with the Secretarial Standards issued by The Institute of Company Secretaries of I ndia about Board Meetings (SS-1) and General Meetings (SS-2).
Internal control systems and their adequacy
The Company has in place adequate internal financial controls concerning its financial statements. These controls ensure the accuracy and completeness of the accounting records and the preparation of reliable financial statements. The details of the same are included in the Management Discussion and Analysis Report.
Energy Conservation, Technology Absorption, and Foreign Exchange Earnings and Outgo
The particulars as prescribed under Section 134(3)(m) of the Act and Rules made thereunder are set out in Annexure G to this Report.
Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated a Dividend Distribution Policy and is available on the Companyâs website https://www.unichemlabs.com/dividend-distribution-policy.php.
Particulars of Employees and related disclosures
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended, are annexed as Annexure H to this Report.
In terms of the provisions of Section 197(12) of the Act and Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended, details of employeeâs remuneration, form part of this Report. However, as per the provisions of Sections, 134 and 136 of the Act, the Report and financial statements are being sent to the Members and others entitled thereto, excluding the information on employeesâ particulars. Any Member interested in obtaining a copy of the same may write to the Company Secretary at [email protected].
In accordance with the provisions of Section 92(3) and Section 134 of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014 of the Act, Annual Return of the Company is hosted on the website of the Company at https://www.unichemlabs.com/annual-report.php.
Business Responsibility Report
In compliance with Regulation 34(2) of the Listing Regulations, the Business Responsibility Report for the financial year 2021-22 is set out in Annexure I of this Annual Report.
Human Resources and Employee Relations
The Board of Directors commends the continued dedication of all its employees. Details of Human Resources and Employee Relations and matters incidental thereto are provided in the Management Discussion and Analysis Report.
Your Directors acknowledge the support and wise counsel extended to the Company by investors, analysts, bankers, government agencies, shareholders, suppliers, and others associated with the Company as its business partners. Your Directors also acknowledge the trust reposed in the Company by the medical fraternity and patients. We look forward to having the same support in our mission to enhance health through quality products.
Statements in this Directorsâ Report and Management Discussion and Analysis Report describing the Companyâs objectives, projections, estimates, expectations, or predictions may be âforward-looking statementsâ within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companyâs operations include raw material availability and prices, cyclical demand, pricing and changes in government regulations, tax regimes, economic developments among the countries in which the Company conducts business, and other ancillary factors.
For and on behalf of the Board of Directors,
Mumbai Chairman & Managing Director
27th May, 2022 (DIN: 00001285)
Mar 31, 2019
Directors'' Report
Dear Members,
The Directors take pleasure in presenting the 56th Annual Report on the business and operations of your Company for the financial year ended March 31, 2019.
Financial Highlights
The table below gives the financial highlights of the Company for the year ended March 31, 2019 on Standalone basis as compared to the previous financial year. _
(Rs, in lakhs)
|
Particulars |
For the year ended |
|
|
March 31, 2019 |
March 31, 2018 |
|
|
Revenue from operations (inclusive of excise duty upto June 2017) |
96,773.89 |
66,646.97 |
|
Other Income |
10,154.23 |
6,288.60 |
|
Total Income |
106,928.12 |
72,935.57 |
|
Profit/(Loss) before tax |
(2,158.02) |
(12,155.04) |
|
Current tax |
- |
- |
|
Deferred tax |
(2,737.77) |
1,257.90 |
|
Short/(Excess) provision for tax (earlier years) |
(124.45) |
(1,271.99) |
|
Profit/(Loss) for the year from continuing operations |
704.20 |
(12,140.95) |
|
Profit/(Loss) from discontinued operations |
||
|
A. Profit/(Loss) from discontinued operations |
246.96 |
15,358.12 |
|
B. Gain on sale of identified business (net) |
- |
321,731.05 |
|
Profit/(Loss) for the year from discontinued operations (A B) |
246.96 |
337,089.17 |
|
Tax on discontinued operations |
71.24 |
69,288.37 |
|
Profit/(Loss) from discontinued operations (after tax) |
175.72 |
267,800.80 |
|
Profit/(Loss) for the year |
879.92 |
255,659.85 |
|
Total Comprehensive Income |
851.43 |
255,479.77 |
Management Discussion and Analysis
As required by Regulation 34 (2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), a Management Discussion and Analysis Report forms part of this Report. The detailed state of the affairs of the business along with the financial and operational developments have been discussed in the Management Discussion and Analysis Report.
Appropriations
An amount of Rs,879.92 lakhs is proposed to be carried forward in the Profit & Loss Account. No amount has been transferred to General Reserve.
Dividend
The Board has recommended a dividend of Rs,4/- (200%) per equity share of Rs,2/- each for the year ended March 31, 2019 for the approval of the Members at the ensuing Annual General Meeting (AGM). An amount of Rs,3,394.16 lakhs would be paid as dividend (including dividend distribution tax). The Register of Members and Share Transfer Books shall remain closed from Monday, July 22, 2019 to Saturday, July 27, 2019 (both days inclusive) for the purpose of AGM and dividend, if approved by the Shareholders. The AGM of the Company is scheduled for Saturday, July 27, 2019. The Company has a dividend distribution policy in place and the same is available on the website of the Company at https://unichemlabs.com/policies-code-of-conduct/dividend-distribution-policy/.
Employees Stock Option Schemes Scheme 2008
During the year under review, 46,250 options were exercised and 46,250 equity shares of Rs,2/- each were allotted (on pari passu basis) under the Employees Stock Option Scheme -2008. As per the requirements of the SEBI (Share Based Employee Benefits) Regulations, 2014, details of stock options exerc ised during the year under review form part of the Directorsâ Report and are available on the Companyâs website at https://unichemlabs.com/investor-information/annual-report/.
Scheme 2018
The Shareholders, vide Special Resolutions dated May 15, 2018, approved the Unichem Employee Stock Option Scheme 2018 (Scheme) for the employees of the Company and its subsidiary company (ies) and setting up of Unichem Employee Welfare Trust (s) for implementing the Scheme. The maximum number of Employee Stock Options that can be granted under the Scheme shall not exceed 52,75,275 (Fifty-Two lakh, Seventy Five thousand Two hundred and Seventy Five), i.e., 7.50% of the issued, subscribed and paid-up equity share capital of the Company as on March 31, 2018 (as adjusted for any corporate action and/or change in the capital structure) at such price or prices and such other terms and conditions as may be determined by the Board or the Nomination and Remuneration Committee from time to time. The Company has received in principle approval from the Stock Exchanges where the Companyâs shares are listed.
During the year under review, 16,88,064 Stock Options were granted to the Senior Management under the Employee Stock Option Scheme 2018. In terms of the requirements specified under the SEBI (Share Based Employee Benefits) Regulations, 2014, details of the Employee Stock Option Scheme 2018, form part of the Directorsâ Report, and are available on the Companyâs website at https://unichemlabs.com/investor-information/annual-report/ .
Research and Development (R&D)
Kindly refer to the write up in the section, Management Discussion and Analysis.
Corporate Governance
A detailed report on Corporate Governance as required under Regulation 34 of the Listing Regulations, forms part of this Annual Report. The Auditorsâ Certificate on compliance with the conditions of Corporate Governance requirements by the Company is attached to the Report on Corporate Governance.
Consolidated Financial Statements
The Annual Audited Consolidated Financial Statements together with the Report of the Auditorsâ thereon, forms part of this Annual Report.
Review of Subsidiaries and Associates
Your Company has five Subsidiaries and one Associate Company. A statement containing salient features of the Financial Statements of the Subsidiaries and Associate Company, pursuant to Section 129 of the Companies Act, 2013 (the Act), and Rules made there under, is annexed to this Report as Annexure A in the prescribed Form AOC -1 and hence not repeated here for the sake of brevity.
Synchron Research Services Pvt. Ltd. (Synchron) is an Associate Company in terms of Section 2 (6) of the Act. Synchron is a leading contract research organization in India which offers competitive and high-quality clinical trial services to domestic and international pharmaceutical and bio-pharmaceutical companies. Your Company avails such services from Synchron from time to time.
On internal assessment of long term strategic investments made by the Company in its Wholly Owned Subsidiary, Unichem Farmaceutica Do Brasil Ltda., considering its past performance, results, assets, expected cash flows, projections and having confidence in the business model and strategy of the said Subsidiary achieving its goals given favourable business opportunities, the management has determined an amount of Rs,302.83 lakhs as diminution for the year (previous year Rs,511.71 lakhs). This has resulted in an aggregate impairment loss of Rs,7,086.72 lakhs (previous year Rs,6,783.89 lakhs) on total investment of Rs,7,086.72 lakhs (previous year Rs,6,783.89 lakhs) made therein.
Particulars of Loans, Guarantees and Investments
Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Act are given in the notes to the Financial Statements.
Deposits
The Company has not accepted any deposits within the meaning of Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014.
Risk Management
The Company has formulated a policy on Risk Management. Risks are classified in different categories such as Financial, Operational, Legal and Strategic risks. A risk register is prepared for identification of risk and formulating mitigation plans.
Directors and Key Managerial Personnel
During the year under review Dr. Prakash A. Mody (DIN 00001285) was re-appointed Chairman & Managing Director for a period of three years w.e.f. July 1, 2018 to June 30, 2021. Mr. Dilip Kunkolienkar (DIN 02666678) was appointed whole time Director, designated as Director Technical for a period of three years w.e.f. April 1, 2018 to March 31, 2021. Mr. Prafull Anubhai (DIN 00040837), Mr. Prafull Sheth (DIN 00184581) and Mr. Anand Mahajan (DIN 00066320) were appointed as Independent Directors for a second term of five consecutive years w.e.f. April 1, 2019 up to March 31, 2024.
Mr. Ramdas Gandhi (DIN 00029437), Independent Director, resigned w.e.f. May 29, 2018 due to advanced age. The Board places on record its deep appreciation for the services rendered by Mr. Ramdas Gandhi during his tenure with the Company.
Mr. Dilip Kunkolienkar, Director Technical retires by rotation and being eligible has offered himself for re-appointment. The Board has recommended his re-appointment for consideration of the shareholders at the 56th AGM.
All Independent Directors have declared that they meet the criteria of independence as laid down under Section 149 (6) of the Companies Act, 2013 and Regulation 16 (b) of the Listing Regulations. All Independent Directors have given declarations stating compliance with the Companyâs Code of Ethics and Business Conduct.
Mr. Rakesh Parikh, Chief Financial Officer of the Company superannuated from the services of the Company on August 31, 2018. Mr. Sandip Ghume was appointed as Deputy Chief Financial Officer w.e.f. October 30, 2018.
In terms of Section 203 of the Companies Act, 2013, Dr. Prakash A. Mody, Chairman & Managing Director, Mr. Dilip Kunkolienkar, Director Technical, Ms. Neema Thakore, Head- Legal & Company Secretary and Mr. Sandip Ghume, Deputy Chief Financial Officer are the Key Managerial Personnel of the Company.
Directors'' Responsibility Statement
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134 (3) (c) of the Act:
1. that in preparation of annual accounts for the year ended March 31, 2019, the applicable accounting standards have been followed and no material departures, have been made from the same;
2. that such accounting policies have been selected and applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2019 and profit / loss for the year ended on that date;
3. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
4. that the annual accounts have been prepared on a going concern basis;
5. that internal financial controls were in place and that they were adequate and operating effectively; and
6. that systems to ensure compliance with the provisions of all applicable laws were devised and such systems were adequate and operating effectively.
Board Evaluation
Pursuant to the provisions of the Act and the Listing Regulations, performance evaluation of the Board, its Committees, the Chairman & Managing Director and the Independent Directors was carried out. The manner in which the evaluation is carried out has been explained in the Corporate Governance Report.
Nomination and Remuneration Policy
The Board, on the recommendation of the Nomination and Remuneration Committee, has adopted a policy for selection, appointment and remuneration of Directors, Key Managerial Personnel and Senior Management. The details of this Policy are given hereunder. The policy is available on the Companyâs website at https://unichemlabs.com/nomination-and-remunerationpolicy/.
The Company considers human resources as its invaluable assets. The Nomination and Remuneration Policy aims to pay equitable remuneration to all Directors, Key Managerial Personnel and employees of the Company, to harmonize the aspirations of human resources consistent with the goals of the Company. The Remuneration Policy for all employees is designed to attract talented personnel and remunerate them fairly and responsibly, this being a continuous, ongoing exercise at each level in the organization.
Whole Time/ Managing Director
The Company pays remuneration by way of salary, perquisites and allowances (fixed component) and commission (variable component) to its Managing Director. A proper balance between fixed and variable component is aimed at. Salary is paid based on the recommendation of the Nomination and Remuneration Committee and as approved by the Board of Directors, subject to the approval of the Shareholders within the limits stipulated by the Act and the Rules made there under. The remuneration paid to the Whole Time Director is determined keeping in view the industry benchmark and the relative performance of the Company compared to the industry performance. The Company pays remuneration by way of salary, perquisites and allowances to its Whole Time Director.
Non-Executive Directors
Non-Executive Directors receive sitting fees for attending Meetings of the Board and its Committees as per the provisions of the Act and the Rules made there under. Besides payment of sitting fees and dividend on equity shares, if any, held by the Directors, no other remuneration is paid to the Non-Executive Directors. The Nomination and Remuneration Committee may recommend to the Board, the payment of commission taking into account the evaluation of the performance of the Directors.
Key Managerial Personnel (KMP) and other Employees
The remuneration of KMP other than the Whole Time Director and other Senior Managerial Employees largely consists of basic salary, perquisites, allowances and performance incentives (wherever paid). Perquisites and retirement benefits are paid according to the Companyâs policy. The components of the total remuneration vary for different grades and are governed by the industry pattern, qualification and experience, merits and performance of each employee. The Company while deciding the remuneration package takes into consideration the current employment scenario and remuneration package prevalent in the industry and peer group companies.
Meetings
During the year, seven Board Meetings were held, the details of which are given in the Corporate Governance Report.
Board Committees
The constitution of the Board Committees, their scope, role and terms of reference are as per the provisions of the Act, the Rules made there under and the Listing Regulations. All the recommendations made by the Audit Committee were accepted by the Board of Directors. The constitution of the Board Committees is provided in the Corporate Governance Report.
Whistle Blower Policy
The Company has in place a Whistle Blower/Vigil Mechanism through which its Stakeholders, Directors and Employees can report genuine concerns about unethical behavior and actual or suspected fraud or violation of the Companyâs âCode of Business Conduct and Ethicsâ. The said Policy provides for adequate safeguards against victimization and also direct access to the Audit Committee. The e-mail id for reporting genuine concerns is [email protected].
Significant and Material orders passed by the Regulators/ Courts / Tribunals
No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the Companyâs going concern status and its operations in the future.
However, the Board of Directors would like to inform that on July 9, 2014, the European Commission decided to impose an unjustified fine of Euro 13.96 million, jointly and severally on the Company and its subsidiary Niche Generics Ltd. (Niche), contending that they have acted in breach of EU competition law as Niche had, in early 2005 (when the Company was only a part owner and financial investor in Niche) agreed to settle a financially crippling patent litigation with Laboratories Servier. The Company vehemently denies any wrongdoing on the part of either itself or Niche. Both the Company and Niche had submitted appeals in September 2014, to the EU General Court seeking appropriate relief in the matter.
The General Court of the European Union has on December
12, 2018 rejected the appeal and confirmed the fine of Euro 13.96 million imposed by the European Commission jointly and severally on the Company and its subsidiary, Niche. The Company has filed an appeal against the decision of the General Court before the Court of Justice of the European Union. The Company awaits the outcome of the appeal.
Material changes and commitment if any, affecting the financial position of the Company from the end of the financial year till the date of this Report
There have been no material changes and commitments affecting the financial position of the Company between the end of the financial year to which the Financial Statements relate and the date of this Report.
Related Party Transactions
During the year under review, approval of the Audit Committee and Board of Directors was sought for Related Party Transactions wherever required.
The Audit Committee has given prior approval for all Related Party Transactions. The Policy on Related Party Transactions as approved by the Board is uploaded on the Companyâs website and the we blink is provided in the Corporate Governance Report.
The particulars of contracts or arrangements with Related Parties referred to in Section 188 (1) of the Act are provided, in the prescribed Form AOC - 2 annexed as Annexure B to this Report.
Except to the extent of the shares held in the Company and the remuneration if any, drawn from the Company, none of the Directors and Key Managerial Personnel have any pecuniary relationships or transactions ws-a-wsthe Company.
Disclosure under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Company has in place a policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace in line with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. The policy has set guidelines on the redressal and enquiry process that is to be followed by complainants and the ICC, whilst dealing with issues related to sexual harassment at the workplace. All women employees (permanent, temporary, contractual and trainees) are covered under this Policy. The ICC received one complaint during the year under review. As on date the same has been redressed in terms of the Policy.
Auditors
Pursuant to the provisions of Section 139 of the Companies Act, 2013 (the Act) read with the Companies (Audit and Auditors) Rules, 2014, N.A. Shah Associates LLP (Firm Registration No. 116560W/W100149), Chartered Accountants, were appointed as Statutory Auditors of the Company, to hold office from the conclusion of 54th Annual General Meeting (AGM) until the conclusion of 59th AGM, subject to ratification by Shareholders at every subsequent AGM.
The provisions of Section 139 of the Act were amended and notified with effect from May 7, 2018. In terms of the said amendment, appointment of the Auditors is no longer required to be ratified by the Members at every subsequent AGM. In view of this, no resolution is proposed for ratification of the appointment of the Auditors at the ensuing AGM.
N.A. Shah Associates LLP, (Firm Registration No. 116560W/W100149), Chartered Accountants, have confirmed that they are not disqualified from continuing as Statutory Auditors of the Company.
During the year under review, the Auditors have not reported any matter under Section 143 (12) of the Act and therefore no details are disclosed under Section 134 (3) (ca) of the Act.
Cost Auditors
The Board of Directors at its Meeting held on May 24, 2019, based on the recommendation of the Audit Committee, appointed Kishore Bhatia & Associates, Cost Accountants, (Firm Registration No. 00294); as Cost Auditors for undertaking Cost Audit of the Cost Accounting Records maintained by the Company for the financial year 2019-2020 at a remuneration not exceeding Rs,7.50 lakhs (Rupees Seven Lakhs Fifty Thousand Only) plus applicable taxes and out of pocket expenses at actuals. The said Auditors have confirmed their eligibility for appointment as Cost Auditors. The remuneration payable to the said Cost Auditors is required to be placed before the Members at the ensuing AGM for ratification and a suitable Resolution has been set out in the Notice of the 56th AGM. The Cost Audit Report for the year ended March 31, 2018 was filed with the Ministry of Corporate Affairs on August 24, 2018.
Secretarial Audit
Pursuant to the provisions of Section 204 of the Act and the Rules made there under, the Company has appointed Alwyn Jay & Co., Company Secretaries in Practice to undertake Secretarial Audit of the Company. The Secretarial Audit Report is annexed as Annexure C to this Report. There is no qualification, reservation, adverse remark or disclaimer in the said Report.
During the year under review, the Secretarial Auditors have not reported any matter under Section 143 (12) of the Act, and therefore no details are disclosed under Section 134 (3) (ca) of the Act.
Compliance with Secretarial Standards
The Company has complied with the applicable Secretarial Standards issued by The Institute of Company Secretaries of India.
Internal control systems and their adequacy
Kindly refer to the write up in the section, Management Discussion and Analysis.
Energy Conservation, Technology Absorption, and Foreign Exchange Earnings and Outgo
The particulars as prescribed under Section 134 (3) (m) of the Act and Rules made thereunder are set out in Annexure D to this Report.
Dividend Distribution Policy
Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated a Dividend Distribution Policy which is available on the Companyâs website https://unichemlabs.com/ policies-code-of-conduct/dividend-distribution-policy/.
Extract of Annual Return
Form MGT-9, providing an extract of the Annual Return in terms of Section 92 of the Act and the Rules made there under, forms part of this Report as Annexure E and the same is available on the website of the Company at https://unichem labs.com/investor-information/annual report.
Particulars of Employees and related disclosures
Disclosures pertaining to remuneration and other details as required under Section 197 (12) of the Act and Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended, are annexed as Annexure F to this Report.
In terms of the provisions of Section 197 (12) of the Act and Rules 5 (2) and 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended, details of employeeâs remuneration, form part of the Directorâs Report. However, as per the provisions of Sections 134 and 136 of the Act, the Report and Financial Statements are being sent to the Members and others entitled thereto, excluding the information on employees particulars, which is available for inspection at the Registered Office of the Company as per details mentioned in the Notice of the 56th AGM. Any Member interested in obtaining a copy of the same may write to the Company Secretary at the Companyâs Registered Office.
Human Resources and Employee Relations
Kindly refer to the write up in the section, Management Discussion and Analysis.
Quality and Environment
Your Companyâs mission envisages a strong sense of commitment to work by being a caring pharmaceutical company, which will continuously strive to enhance health through quality products. Your Company aims at consistently providing products that meet customer needs as well as national and international regulatory requirements, as may be applicable. Your Company has been steadily raising the bar, setting higher goals for incremental performance and enlarging the scope of its initiatives. The environmental policy of your Company emphasizes being a caring Company, which shall protect and promote the environment by complying with applicable environmental regulations and preventing pollution in all its operations.
Various initiatives are taken at your Company''s manufacturing locations to reduce waste across the plants and reduce usage of paper by recycling wastepaper. Training programs are organized from time to time to create environmental awareness amongst the employees. To conserve water, your Company has devised various water saving methods which are monitored on a day to day basis.
Your Company continues to strive for energy saving and conservation of natural resources. In all its Active Pharmaceutical Ingredient (API) plants, your Company has installed online effluent monitoring equipment which is connected to the system of the Central Pollution Control Board.
At the manufacturing units, several green initiatives have been undertaken, most significant being soil conservation, recycling of treated effluent water and using solar energy for street lighting.
Corporate Social Responsibility (CSR)
Your Company believes in the philosophy of giving back. Being in the pharmaceutical industry your Companyâs primary focus is healthcare. Education, sanitation, protection of environment, general welfare and development are the other areas in which your Company concentrates its CSR activities. While the focus of CSR efforts will be in the areas around the Companyâs locations, the Company may also undertake projects looking into other societal needs in compliance with Schedule VII to the Act. The CSR policy is available on the website of the Company and the Annual Report on CSR activities, as required under Section 135 of the Act, is annexed as Annexure G to this Report.
During the year under review, the total amount to be spent on CSR was Rs,226.91 lakhs. The Company spent Rs,156.51 lakhs which is 1.37 % of the average profits for the last three financial years. Balance amount of Rs,70.40 lakhs remained unspent.
The Company could not spend the balance amount since it is in the process of identifying appropriate CSR programs/projects in line with its CSR policy. Further, certain funds even though allocated to approved educational and health projects by the CSR Committee were not disbursed during the year under review since implementation of the projects were delayed or there was no requirement for these funds from the respective organizations/institutions.
The Company plans to scale up its CSR activities in areas of education, health, environment protection, sanitation, general welfare and development activities in a structured manner to meet the objectives of its CSR policy in the coming years.
Business Responsibility Report
Regulation 34 (2) of the Listing Regulations, inter alia, provides that the Annual Report of the Top 500 listed entities based on market capitalization (calculated as on March 31 of every financial year), shall include a Business Responsibility Report ("BRR"). Since your Company, does not feature in the Top 500 listed entities as per market capitalization as on March 31,
2019, the Business Responsibility Report for the financial year 2018-2019 does not form a part of this Annual Report.
Health and Safety
Health and Safety issues are addressed systematically, effectively and proactively. Your Company takes pride in providing various forms of medical assistance to the families of its employees. Periodic health check-ups are carried out for all employees and regular training programs are organized on safety and precautionary measures. Firefighting training programs and first aid training camps are organized regularly to educate workers and employees at the plant locations and corporate office.
Acknowledgement
Your Directors acknowledge the support and wise counsel extended to the Company by analysts, bankers, Government agencies, shareholders, investors, suppliers, distributors, employees and others associated with the Company as its business partners. Your Directors also acknowledge the trust reposed in the Company by the medical fraternity and patients. We look forward to having the same support in our mission to enhance health through quality products.
Cautionary Statement
Statements in this Directorsâ Report and Management Discussion and Analysis describing the Companyâs objectives, projections, estimates, expectations or predictions may be âforward-looking statementsâ within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companyâs operations include raw material availability and prices, cyclical demand and pricing in the Companyâs principle markets, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other ancillary factors.
For and on behalf of the Board of Directors,
Dr. Prakash A. Mody
Mumbai Chairman & Managing Director
May 24, 2019 (DIN 00001285)
Mar 31, 2018
Dear Members,
The Directors take pleasure in presenting the 55th Annual Report on the business and operations of your Company for the financial year ended March 31, 2018.
Financial Highlights
The table below gives the financial highlights of the Company for the year ended March 31, 2018 on Standalone basis as compared to the previous financial year.
(Rs. in Lakhs)
|
Particulars |
For the year ended |
|
|
March 31, 2018 |
March 31, 2017 |
|
|
Revenue from operations (inclusive of excise duty upto June 2017) |
66,973.05 |
57,702.28 |
|
Other Income |
6,288.60 |
719.25 |
|
Total Income |
73,261.65 |
58,421.53 |
|
Profit/(Loss) before tax |
(12,155.04) |
(9,223.46) |
|
Current tax |
- |
(1,408.08) |
|
Deferred tax |
1,257.90 |
(262.25) |
|
Short/(Excess) provision for tax (earlier years) |
(1,271.99) |
- |
|
Profit/(Loss) for the year from continuing operations |
(12,140.95) |
(7,553.13) |
|
Profit/(Loss) from discontinued operations |
||
|
A. Profit/(Loss) from discontinued operations |
15,358.12 |
22,383.15 |
|
B. Gain on sale of identified business (net) |
321,731.05 |
- |
|
Profit/(Loss) for the year from discontinued operations (A B) |
337,089.17 |
22,383.15 |
|
Tax on discontinued operations |
69,288.37 |
4,443.30 |
|
Profit/(Loss) from discontinued operations (after tax) |
267,800.80 |
17,939.85 |
|
Profit/(Loss) for the year |
255,659.85 |
10,386.72 |
|
Total Comprehensive Income |
255,479.77 |
10,263.19 |
Review of Operations
During the year under review, Standalone Sales/Income from operations (Gross) increased to Rs.66,973.05 lakhs (continuing operations) from Rs.57,702.28 lakhs (continuing operations) in 2016-2017, registering a growth of 16.07%. Consolidated Sales/Income from Operations (Gross) stood at Rs.81,839.69 lakhs (continuing operations) in 2017-2018 as compared to Rs.69,866.67 lakhs (continuing operations) in 2016-2017, registering an increase of 17.14%.
Sale of Domestic Business
The Company, in December 2017, transferred its business of manufacture, sale, marketing and distribution of domestic formulations in India and Nepal, and the manufacturing facility at Sikkim together with all specified tangible and intangible assets, contracts, rights, personnel and employees, data and records, inventory and other assets and liabilities as agreed between the parties in relation to the said business (âIdentified Businessâ) by way of slump sale on a going concern basis, to Torrent Pharmaceuticals Limited on mutually agreed terms and conditions.
The Company received a consideration (net of incidental expenses) of Rs.335,428.62 lakhs subject to tax. Gain on sale of Identified Business (net) amounting to Rs.321,731.05 lakhs was recognized during the financial year 2017-2018. These funds have been utilized for Buyback of the Companyâs shares (as reported in detail below) and for the Companyâs operations. Surplus funds have been invested as per the Companyâs investment policy.
Going forward Unichem will:
. focus attention on all aspects of the international business including finished formulations, API, contract manufacturing and contract research;
. increase investments in R&D in the New Chemical and Biological Entities (NCE & NBE), Bio-similars and complex generics;
. initiate various measures towards achieving organizational and operating efficiencies and strengthening core competencies.
Buyback of equity shares
In March 2018, the Company bought back 2,06,00,000 (two crore six lakhs only) fully paid-up equity shares of the face value of Rs.2/each, representing 22.65% of the total number of equity shares in the issued, subscribed and paid-up equity share capital of the Company, from the existing shareholders / beneficial owners of equity shares of the Company as on the Record Date (February 16, 2018), on a proportionate basis (subject to small shareholder reservation), through the âTender Offerâ route at a price of Rs.430/-(Rupees four hundred and thirty only) per equity share for an aggregate amount of Rs.8,85,80,00,000/- (Rupees eight hundred eighty five crores eighty lakhs only). The buyback offer opened on March 7, 2018 and closed on March 20, 2018. The buyback consideration was paid to the eligible shareholders on March 27, 2018. Post Buyback, the paid-up share capital has reduced from 9,09,37,000 to 7,03,37,000 equity shares having a face value of Rs.2/ each. Details of the shareholding pattern post buyback are given in the Corporate Governance Report.
Appropriations
An amount of Rs.255,659.85 lakhs is proposed to be carried forward in the Profit & Loss Account. An amount of Rs.412 lakhs was transferred to Capital Redemption Reserve. No amount was transferred to General Reserve.
Dividend
The Board has recommended a dividend of Rs.5/- (250 %) per equity share of Rs.2/- each for the year ended March 31, 2018 for the approval of the Members at the ensuing Annual General Meeting (AGM). The Register of Members and Share Transfer Books shall remain closed from Monday, July 23, 2018 to Saturday, July 28, 2018 (both days inclusive) for the purpose of AGM and dividend, if approved by the Shareholders. The AGM of the Company is scheduled for Saturday, July 28, 2018.
Employees Stock Option Scheme 2008
During the year under review, 60,475 options having a face value of Rs.2/- each were exercised and the same were allotted (on pari passu basis) under the Employees Stock Option Scheme - 2008. Details of the Employees Stock Option Scheme - 2008 are set out as Annexure A to this Report.
Employees Stock Option Scheme 2018
The Shareholders vide Special Resolutions dated May 15, 2018 approved the Unichem Employee Stock Option Scheme 2018 (Scheme) for the employees of the Company and of its subsidiary company (ies) and setting up Unichem Employee Welfare Trust(s) for implementing the Scheme. The maximum number of Employee Stock Options that can be granted under the Scheme shall not exceed 52,75,275 equity shares (Fifty two lac, seventy five thousand, two hundred and seventy five), i.e., 7.50% of the issued, subscribed and paid-up equity share capital of the Company as on March 31, 2018 (as adjusted for any corporate action and/or change in the capital structure) at such price or prices and such other terms and conditions as may be determined by the Board or the Nomination and Remuneration Committee from time to time. Process for seeking in principle listing approval from the Stock Exchanges is under way.
Research and Development (R&D)
Kindly refer to the write up in the section, Management Discussion and Analysis.
Management Discussion and Analysis
A detailed review on the operations and performance of the Company is given in the Management Discussion and Analysis, which forms part of this Annual Report.
Corporate Governance
A detailed report on Corporate Governance as required under Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ), forms part of this Annual Report. The Auditorsâ Certificate on compliance with the conditions of Corporate Governance requirements by the Company is attached to the Report on Corporate Governance.
Consolidated Financial Statements
The Annual Audited Consolidated Financial Statements together with the Report of the Auditorsâ thereon, forms part of this Annual Report.
Review of Subsidiaries and Associates
Your Company has 5 (five) Subsidiaries and one Associate Company. A statement containing salient features of the Financial Statements of the Subsidiaries and Associate Company, pursuant to Section 129 of the Companies Act, 2013 (the Act), and Rules made thereunder, is annexed to this Report as Annexure B in the prescribed Form AOC -1 and hence not repeated here for the sake of brevity.
Synchron Research Services Private Limited (Synchron) is an Associate Company in terms of Section 2 (6) of the Act. Synchron is a leading contract research organization in India which offers competitive and high quality clinical trial services to domestic and international pharmaceutical and bio-pharmaceutical companies. Your Company avails such services from Synchron from time to time.
On internal assessment of long term strategic investments made by the Company in its Wholly Owned Subsidiary, Unichem Farmaceutica Do Brazil Ltda., considering its past performance, results, assets, expected cash flows, projections and having confidence in the business model and strategy of the said Subsidiary achieving its goals given favourable business opportunities, the management has determined an amount of Rs.511.71 lakhs as diminution for the year (previous year Rs.2,690.78 lakhs). This has resulted in an aggregate impairment loss of Rs.6,783.89 lakhs (previous year Rs.6,272.19 lakhs) on total investment of Rs.6,783.89 lakhs made therein.
Particulars of Loans, Guarantees and Investments
Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Act are given in the notes to the Financial Statements.
Deposits
The Company has not accepted any deposits within the meaning of Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014.
Risk Management
The Company has formulated a policy on Risk Management. Risks are classified in different categories such as Financial, Operational, Legal and Strategic risks. A risk register is prepared for identification of risk and formulating mitigation plans.
Directors and Key Managerial Personnel
Dr. Prakash A. Mody is the Chairman & Managing Director of the Company.
Dr. Prakash A. Mody (DIN 00001285) was re-appointed as Chairman & Managing Director of the Company for a tenure of five years with effect from July 1, 2013 upto June 30, 2018 and approval of the members of the Company was duly obtained at the Annual General Meeting of the Company held on July 19, 2013. The tenure of his appointment will end on June 30, 2018. In accordance with the recommendation of the Nomination and Remuneration Committee, the Board of Directors of the Company at its meeting held on May 29, 2018, re- appointed Dr. Prakash A. Mody as the Chairman & Managing Director of the Company for a period of five years with effect from July 1, 2018 upto June 30, 2023, subject to the approval of the Members at the ensuing AGM and approval of the Central Government, if required.
The Board of Directors at its meeting held on March 31, 2018, based on the recommendation of the Nomination and Remuneration Committee appointed Mr. Dilip Kunkolienkar, (DIN 02666678) as an Additional Director of the Company with effect from April 1, 2018, to hold office upto the date of the ensuing Annual General Meeting wherein he is proposed to be appointed as a Director of the Company, liable to retire by rotation.
At the said Board meeting Mr. Kunkolienkar was also appointed as a Whole Time Director of the Company designated as Director Technical, for a period of five years with effect from April 1, 2018 upto March 31, 2023, subject to the approval of the Members at the ensuing AGM and approval of the Central Government, if required.
Dr. Prakash A. Mody retires by rotation at the ensuing AGM in terms of the provisions of Section 152 of the Act. The Act provides that Independent Directors are not subject to retirement by rotation and two thirds of the remaining Directors shall be subject to retirement by rotation. Since all the Directors except Dr. Mody and Mr. Kunkolienkar are Independent Directors, Dr. Mody being longest in office will retire by rotation and being eligible offers himself for re-appointment.
Mr. Ramdas Gandhi, Independent Director of the Company resigned with effect from May 29, 2018 due to advanced age. The Board places on record its deep appreciation for the services rendered by Mr. Ramdas Gandhi during his tenure with the Company.
Mr. Prafull Anubhai, Mr. Prafull Sheth and Mr. Anand Mahajanâs first term as Independent Directors of the Company will expire on March 31, 2019. Based on the recommendation of the Nomination and Remuneration Committee and the Board of Directors, it is proposed to re-appoint Mr. Prafull Anubhai, Mr. Prafull Sheth and Mr. Anand Mahajan as Independent Directors, for a second term of five consecutive years with effect from April 1, 2019 upto March 31, 2024.
All Independent Directors have furnished declarations that they meet the criteria of independence as laid down under Section 149 (6) of the Act and the Listing Regulations.
Attention of the Members is invited to the relevant items in the Notice of the AGM seeking your approval to the aforesaid appointment/ re-appointments. The information required under Regulation 36 of the Listing Regulations is provided in the Notice of the 55th AGM and the statement annexed thereto.
Dr. Prakash A. Mody, Chairman & Managing Director, Mr. Rakesh Parikh, Chief Finance & Compliance Officer and Ms. Neema Thakore, Head - Legal & Company Secretary were the Key Managerial Personnel during the financial year.
Directorsâ Responsibility Statement
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134 (3) (c) of the Act:
1. that in preparation of annual accounts for the year ended March 31, 2018, the applicable accounting standards have been followed and no material departures, have been made from the same;
2. that such accounting policies have been selected and applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2018 and profit/loss for the year ended on that date;
3. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
4. that the annual accounts have been prepared on a going concern basis;
5. that the internal financial controls were in place and that they were adequate and operating effectively; and
6. that systems to ensure compliance with the provisions of all applicable laws were devised and such systems were adequate and operating effectively.
Board Evaluation
Pursuant to the provisions of the Act and the Listing Regulations, performance evaluation of the Board, itâs Committees, the Chairman & Managing Director and the Independent Directors was carried out. The manner in which the evaluation is carried out has been explained in the Corporate Governance Report.
Remuneration Policy
The Board, on the recommendation of the Nomination and Remuneration Committee, has adopted a policy for selection, appointment and remuneration of Directors, Key Managerial Personnel and Senior Management. The details of this Policy are provided in the Corporate Governance Report.
Meetings
During the year, eight Board Meetings were held, the details of which are given in the Corporate Governance Report.
Audit Committee
The constitution of the Audit Committee, its scope, role and terms of reference are as per the provisions of the Act, the Rules made thereunder and the Listing Regulations. All the recommendations made by the Audit Committee were accepted by the Board of Directors. Pursuant to the resignation of Mr. Ramdas Gandhi, Independent Director and member of the Audit Committee, with effect from May 29, 2018, the said Committee has been reconstituted, details of which are provided in the Corporate Governance Report.
Whistle Blower Policy
The Company has in place a Whistle Blower/Vigil Mechanism through which its Stakeholders, Directors and Employees can report genuine concerns about unethical behaviour and actual or suspected fraud or violation of the Companyâs âCode of Business Conduct and Ethicsâ. The said Policy provides for adequate safeguards against victimization and also direct access to the Audit Committee. The e-mail id for reporting genuine concerns is [email protected]
Significant and Material orders passed by the Regulators/Courts/Tribunals
No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the Companyâs going concern status and its operations in the future.
However, the Board of Directors would like to inform that on July 9, 2014, the European Commission decided to impose an unjustified fine of ⬠13.97 million, jointly and severally on the Company and its subsidiary Niche Generics Ltd., (Niche) contending that they have acted in breach of EU competition law as Niche had, in early 2005 (when the Company was only a part owner and financial investor in Niche) agreed to settle a financially crippling patent litigation with Laboratories Servier. The Company vehemently denies any wrongdoing on the part of either itself or Niche. Both the Company and Niche have submitted appeals in September 2014, to the EU General Court seeking appropriate relief in the matter. Your Company has challenged this order and the proceedings are currently ongoing.
Material changes and commitment, if any, affecting the financial position of the Company from the end of the financial year till the date of this Report
There have been no material changes and commitments, affecting the financial position of the Company between the end of the financial year to which the Financial Statements relate and the date of this Report.
Related Party Transactions
During the year under review, approval of the Audit Committee and Board of Directors was sought for Related Party Transactions wherever required.
The Audit Committee has given prior approval for all Related Party Transactions. The Policy on Related Party Transactions (Policy) as approved by the Board is uploaded on the Companyâs website and the weblink is provided in the Corporate Governance Report. The Board of Directors of the Company has approved the criteria for omnibus approval of Related Party Transactions by the Audit Committee within the overall framework of the Policy.
The particulars of contracts or arrangements with Related Parties referred to in Section 188(1) of the Act are provided, in the prescribed Form AOC - 2 annexed as Annexure C to this Report.
Except to the extent of the shares held in the Company and the remuneration if any, drawn from the Company, none of the Directors and Key Managerial Personnel have any pecuniary relationships or transactions vis-a-vis the Company.
Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Company has in place a policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. The policy has set guidelines on the redressal and enquiry process that is to be followed by complainants and the ICC, whilst dealing with issues related to sexual harassment at the workplace. All women employees (permanent, temporary, contractual and trainees) are covered under this Policy. The Company had received one complaint during the year under review and the same has been redressed in terms of the Policy.
Auditors
Pursuant to the provisions of Section 139 of the Companies Act, 2013 (the Act) read with the Companies (Audit and Auditors) Rules, 2014, N. A. Shah Associates LLP (Firm Registration No. 116560W/W100149), Chartered Accountants, were appointed as Statutory Auditors of the Company, to hold office from the conclusion of the 54th Annual General Meeting (AGM) until the conclusion of 59th AGM, subject to ratification by Members at every subsequent AGM.
The provisions of Section 139 of the Act have been amended by the Companies (Amendment) Act, 2017 and notified with effect from May 7, 2018. In terms of the said amendment, ratification of the appointment of the Auditors by Members at every subsequent AGM is no longer required. In view of this, no resolution is proposed for ratification of the appointment of the Auditors at the ensuing AGM.
N. A. Shah Associates LLP, (Firm Registration No. 116560W/W100149), Chartered Accountants, have confirmed that they are not disqualifying from continuing as Statutory Auditors of the Company.
During the year under review, the Auditors have not reported any matter under Section 143 (12) of the Act and therefore no details are disclosed under Section 134 (3)(ca) of the Act.
Cost Auditors
The Board of Directors at its Meeting held on May 29, 2018, based on the recommendation of the Audit Committee, appointed Kishore Bhatia & Associates, Cost Accountants, (Firm Registration No. 00294); as Cost Auditors for undertaking Cost Audit of the Cost Accounting Records maintained by the Company for the financial year 2018-2019 at a remuneration not exceeding Rs.7.50 lakhs (Rupees Seven Lakhs Fifty Thousand Only) plus applicable taxes and out of pocket expenses at actuals. The said Auditors have confirmed their eligibility for appointment as Cost Auditors. The remuneration payable to the said Cost Auditors is required to be placed before the Members at the ensuing AGM for ratification and a suitable Resolution has been set out in the Notice of the 55th AGM. The Cost Audit Report for the year ended March 31, 2017 was filed with the Ministry of Corporate Affairs on September 5, 2017.
Secretarial Audit
Pursuant to the provisions of Section 204 of the Act and the Rules made thereunder, the Company has appointed Alwyn Jay & Co., Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed as Annexure D to this Report. There is no qualification, reservation, adverse remark or disclaimer in the said Report.
During the year under review, the Secretarial Auditors have not reported any matter under Section 143 (12) of the Act, and therefore no details are disclosed under Section 134 (3)(ca) of the Act.
Internal control systems and their adequacy
Kindly refer to the write up in the section Management Discussion and Analysis.
Energy Conservation, Technology Absorption, and Foreign Exchange Earnings and Outgo
The particulars as prescribed under Section 134 (3)(m) of the Act and Rules made thereunder are set out in Annexure E to this Report.
Dividend Distribution Policy
Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated a Dividend Distribution Policy which forms part of this Annual Report as Annexure F and is also available on the Companyâs website https://unichemlabs.com/policies-code-of-conduct/dividend-distribution-policy/
Extract of Annual Return
Form MGT-9 providing an extract of the Annual Return in terms of Section 92 of the Act and the Rules made thereunder, is annexed as Annexure G to this Report.
Particulars of Employees and related disclosures
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended, are annexed as Annexure H to this Report.
In terms of the provisions of Section 197(12) of the Act and Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended, containing details of employees remuneration forms part of this Report as Annexure J. However, as per the provisions of Sections 134 and 136 of the Act, the Report and Financial Statements are being sent to the Members and others entitled thereto, excluding the information on employees particulars, which is available for inspection at the Registered Office of the Company as per details mentioned in the Notice of the 55th AGM. Any Member interested in obtaining a copy of the same may write to the Company Secretary at the Companyâs Registered Office.
Human Resources and Employee Relations
Kindly refer to the write up in the section. Management Discussion and Analysis.
Quality and Environment
Your Companyâs mission envisages a strong sense of commitment to work by being a caring pharmaceutical company, which will continuously strive to enhance health through quality products. Your Company aims at consistently providing products that meet customer needs as well as national and international regulatory requirements, as may be applicable. Your Company has been steadily raising the bar, setting higher goals for incremental performance and enlarging the scope of its initiatives. The environmental policy of your Company emphasizes at being a caring Company, which shall protect and promote the environment by complying with applicable environmental regulations and preventing pollution in all its operations.
Various initiatives are taken at your Companyâs manufacturing locations to reduce waste across the plants and reduce usage of paper by recycling waste paper. Training programs are organized from time to time to create environmental awareness amongst the employees. To conserve water, your Company has devised various water saving methods which are monitored on a day to day basis.
Your Company continues to strive for energy saving and conservation of natural resources. In all its Active Pharmaceutical Ingredient (API) Plants your Company has installed online effluent monitoring equipment which is connected to the system of the Central Pollution Control Board.
Your Company is in the process of commissioning advanced Effluent Treatment Systems to control the usage of polluted effluent which will improve quality of effluent discharge. Your Company has initiated a study to install a cleaner form of energy, namely solar energy.
At the manufacturing units, several green initiatives have been undertaken, most significant being soil conservation, recycling of treated effluent water and using solar energy for street lighting.
Corporate Social Responsibility (CSR)
Your Company believes in the philosophy of giving back. Being in the pharmaceutical industry your Companyâs primary focus is healthcare. Education, sanitation, protection of environment, general welfare and development are the other areas in which your Company concentrates its CSR activities. While the focus of CSR efforts will be in the areas around the Companyâs locations, the Company may also undertake projects looking into other societal needs. The CSR policy is available on the website of the Company and the Annual Report on CSR activities, as required under Section 135 of the Act, is annexed as Annexure I to this Report. The Company would also undertake other need based initiatives in compliance with Schedule VII to the Act.
During the year under review, the total amount to be spent on CSR was Rs.272.99 lakhs. The Company spent Rs.92.49 lakhs which is 0.67 % of the average profits, for the last three financial years. Balance amount of Rs.180.50 lakhs remained unspent.
The Company could not spend the balance amount since it is in the process of identifying appropriate CSR programs/projects in line with its CSR policy. Further, certain funds even though allocated to approved educational and health projects by the CSR Committee, were not disbursed since there was no requirement for these funds from the organizations/institutions during the year under review.
The Company plans to scale up its CSR activities in areas of education, health, environment protection, sanitation, general welfare and development activities in a structured manner to meet the objectives of its CSR policy in the coming years.
Business Responsibility Report
Regulation 34(2) of the Listing Regulations, inter alia, provides that the Annual Report of the Top 500 listed entities based on market capitalization (calculated as on March 31 of every financial year), shall include a Business Responsibility Report (âBRRâ). Since your Company, does not feature in the Top 500 listed entities as per market capitalization as on March 31, 2018, the Business Responsibility Report for the financial year 20172018 does not form a part of the Annual Report.
Health and Safety
Health and Safety issues are addressed systematically, effectively and proactively. Your Company takes pride in providing various forms of medical assistance to the families of its employees. Periodic health check-ups are carried out for all employees and regular training programs are organized on safety and precautionary measures. Fire fighting training programs and first aid training camps are organized regularly to educate workers and employees at the plant locations and corporate office.
Acknowledgement
Your Directors acknowledge the support and wise counsel extended to the Company by analysts, bankers, Government agencies, shareholders, investors, suppliers, distributors, stockists, employees and others associated with the Company as its business partners. Your Directors also acknowledge the trust reposed in the Company by the medical fraternity and patients. We look forward to having the same support in our mission to enhance health through quality products.
Cautionary Statement
Statements in this Directorsâ Report and Management Discussion and Analysis describing the Companyâs objectives, projections, estimates, expectations or predictions may be âforward-looking statementsâ within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companyâs operations include raw material availability and prices, cyclical demand and pricing in the Companyâs principle markets, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other ancillary factors.
For and on behalf of the Board of Directors,
Dr. Prakash A. Mody
Mumbai Chairman & Managing Director
May 29, 2018 (DIN 0001285)
Mar 31, 2017
Dear Members,
The Directors take pleasure in presenting the 54th Annual Report on the business and operations of your Company for the financial year ended March 31, 2017.
Financial Highlights
The table below gives the financial highlights of the Company for the year ended March 31, 2017 on Standalone basis as compared to the previous financial year.
For the year ended (Rs. in lacs)
|
Particulars |
March 31, 2017 |
March 31, 2016 |
|
Sales / Income from operations (Including Excise Duty) |
1,41,385.22 |
1,23,614.52 |
|
Other Income |
1,273.54 |
2,270.87 |
|
Total Income |
1,42,658.76 |
1,25,885.39 |
|
Profit before Tax and Exceptional items |
13,159.69 |
12,770.44 |
|
Exceptional Items |
- |
353.00 |
|
Profit before tax |
13,159.69 |
12,417.44 |
|
Tax expenses (including deferred Tax and short/excess provision |
2,772.97 |
2,368.97 |
|
pertaining to previous years) |
|
|
|
Profit after Tax and Exceptional items |
10,386.72 |
10,048.47 |
|
Total Comprehensive Income |
10,263.19 |
10,060.04 |
Note: Previous yearâs figures have been re-grouped/re-classified wherever necessary.
Review of Operations
During the year under review, Standalone Sales/Income from operations (Gross) increased to Rs.1,41,385.22 lacs from Rs.1,23,614.52 lacs in 2015-2016, registering a growth of 14.40%. Consolidated Sales/Income from Operations (Gross) stood at Rs.1,53,549.61 lacs in 2016-2017 as compared to Rs.1,34,828.00 lacs in 2015-2016, registering an increase of 13.90%.
Appropriations
An amount of Rs.84,336.37 lacs is proposed to be carried forward in the Profit & Loss Account. During the year under review, no amount was transferred to General Reserve.
Dividend
The Board has recommended a dividend of Rs.3/- (150 %) per equity share of Rs.2/- each for the year ended March 31, 2017 for the approval of the Shareholders at the ensuing Annual General Meeting (AGM). The Register of Members and Share Transfer Books shall remain closed from Monday, July 17, 2017 to Saturday, July 22, 2017 (both days inclusive) for the purpose of AGM and dividend, if approved by the Shareholders. The AGM of the Company is scheduled for Saturday, July 22, 2017.
Employees Stock Option Scheme
During the year under review, 7,07,776 options having a face value of Rs.2/- each were exercised and the same were allotted (on pari passu basis) under the Employees Stock Option Scheme - 2008. Details of the Employees Stock Option Scheme - 2008 are set out as Annexure A to this Report.
Research and Development (R&D)
Kindly refer to the write up in the section, Management Discussion and Analysis.
Management Discussion and Analysis
A detailed review on the operations and performance of the Company is given in the Management Discussion and Analysis, which forms part of this Annual Report.
Corporate Governance
A detailed report on Corporate Governance as required under Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ), forms part of this Annual Report. The Auditorsâ Certificate on compliance with the conditions of Corporate Governance requirements by the Company is attached to the Report on Corporate Governance.
Consolidated Financial Statements
The Annual Audited Consolidated Financial Statements together with the Report of the Auditorsâ thereon forms part of this Annual Report.
Review of Subsidiaries and Associates
Your Company has 5 (five) Subsidiaries and one Associate Company. Financials of the Subsidiaries and Associate Company are disclosed in the Consolidated Financial Statements, which form part of this Annual Report.
A statement containing salient features of the Financial Statements of the Subsidiaries and Associate Company, pursuant to Section 129 of the Companies Act, 2013 (the Act), and Rules made there under, is annexed to this Report as Annexure B in the prescribed Form AOC -1 and hence not repeated here for the sake of brevity.
Synchron Research Services Private Limited (Synchron) is an Associate Company in terms of Section 2 (6) of the Act. Synchron is a leading contract research organization in India which offers competitive and high quality clinical trial services to domestic and international pharmaceutical and bio-pharmaceutical companies. Your Company avails such services from Synchron from time to time.
On internal assessment of long term strategic investments made by the Company in its Wholly Owned Subsidiary, Unichem Farmaceutica Do Brazil Ltda., considering its past performance, results, assets, expected cash flows, projections and having confidence in the business model and strategy of the said Subsidiary achieving its goals given favourable business opportunities, the management has determined an amount of Rs.2,690.78 lacs as diminution for the year (previous year Rs.2,277.63 lacs). This has resulted in an aggregate impairment loss of Rs.6,272.19 lacs (previous year Rs.3,581.41lacs) on total investment of Rs.6,272.19 lacs made therein.
Particulars of Loans, Guarantees and Investments
Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Act are given in the notes to the Financial Statements.
Deposits
The Company has not accepted any deposits within the meaning of Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014.
Risk Management
The Company has formulated a policy on Risk Management. Risks are classified in different categories such as Financial, Operational, Legal and Strategic risks. A risk register is prepared for identification of risk and formulating mitigation plans.
Credit Rating
ICRA has re-affirmed your Companyâs A1 rating for short-term debt (including Commercial Paper) Programme of Rs.1,500 lacs. The rating indicates strong degree of safety regarding timely payment of financial obligations.
Directors and Key Managerial Personnel
All the Independent Directors have furnished declarations that they meet the criteria of independence as laid down under Section 149 (6) of the Act and the Listing Regulations.
Dr. Prakash A. Mody retires by rotation at the ensuing AGM in terms of the provisions of Section 152 of the Act. The Act provides that Independent Directors are not subject to retirement by rotation and two thirds of the remaining Directors shall be subject to retirement by rotation. Since all the Directors except Dr. Mody are Independent Directors, Dr. Mody will retire by rotation and being eligible offers himself for re-appointment.
Dr. Mody is the Chairman & Managing Director of the Company. Upon his re-appointment as a Director, he shall continue to hold office as the Chairman & Managing Director of the Company.
Attention of the Members is invited to the relevant item in the Notice of the AGM seeking your approval to the aforesaid re-appointment. The information required under Regulation 36 of the Listing Regulations is provided in the Notice of the 54th AGM and the statement annexed thereto.
Dr. (Mrs.) B. Kinnera Murthyâs first term as an Independent Director of the Company will expire on March 20, 2018. Based on the recommendation of the Nomination and Remuneration Committee and the Board of Directors it is proposed to re-appoint Dr. (Mrs.) B. Kinnera Murthy as an Independent Director, for a second term of 5 (five) years w.e.f. March 21, 2018. Due notice under Section 160 of the Act has been received from a Member of the Company proposing the appointment of Dr. (Mrs.) B. Kinnera Murthy as an Independent Director of the Company at this AGM.
Appropriate Resolution(s) seeking your approval to the appointment/ re-appointment of Directors forms part of the Notice convening the 54th AGM and the same are recommended for your consideration and approval.
Dr. Prakash A. Mody, Chairman & Managing Director, Mr. Rakesh Parikh, Chief Finance & Compliance Officer and Ms. Neema Thakore, Head - Legal & Company Secretary were the Key Managerial Personnel during the financial year.
Directors'' Responsibility Statement
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134 (3) (c) of the Act:
1. that in preparation of annual accounts for the year ended March 31, 2017, the applicable accounting standards have been followed and no material departures, have been made from the same;
2. that such accounting policies have been selected and applied 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 as at March 31, 2017, and profit for the year ended on that date;
3. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
4. that the annual accounts have been prepared on a going concern basis;
5. that the internal financial controls were in place and that they were adequate and operating effectively; and
6. that systems to ensure compliance with the provisions of all applicable laws were devised and such systems were adequate and operating effectively.
Board Evaluation
Pursuant to the provisions of the Act and the Listing Regulations, performance evaluation of the Board, itâs Committees, the Chairman & Managing Director and the Independent Directors was carried out. The manner in which the evaluation is carried out has been explained in the Corporate Governance Report.
Remuneration Policy
The Board, on the recommendation of the Nomination and Remuneration Committee, has adopted a policy for selection, appointment and remuneration of Directors, Key Managerial Personnel and Senior Management. The details of this Policy are provided in the Corporate Governance Report.
Meetings
During the year, 5 (five) Board Meetings were held, the details of which are given in the Corporate Governance Report.
Audit Committee
The constitution of the Audit Committee, its scope, role and terms of reference are as per the provisions of the Act, the Rules made there under and the Listing Regulations. All the recommendations made by the Audit Committee were accepted by the Board of Directors.
Whistle Blower Policy
The Company has in place a Whistle Blower/Vigil Mechanism through which its Stakeholders, Directors and Employees can report genuine concerns about unethical behaviour and actual or suspected fraud or violation of the Companyâs âCode of Business Conduct and Ethicsâ. The said Policy provides for adequate safeguards against victimization and also direct access to the Audit Committee. The e-mail id for reporting genuine concerns is [email protected]
Significant and Material orders passed by the Regulators/Courts/Tribunals
No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the Companyâs going concern status and its operations in the future.
However, the Board of Directors would like to inform that on July 9, 2014, the European Commission decided to impose an unjustified fine of ⬠13.97 million, jointly and severally on the Company and its subsidiary Niche Generics Ltd., (Niche) contending that they have acted in breach of EU competition law as Niche had, in early 2005 (when the Company was only a part owner and financial investor in Niche) agreed to settle a financially crippling patent litigation with Laboratories Servier. The Company vehemently denies any wrongdoing on the part of either itself or Niche. Both the Company and Niche have submitted appeals in September 2014, to the EU General Court seeking appropriate relief in the matter. Your Company has challenged this order and the proceedings are currently ongoing.
Material changes and commitment, if any, affecting the financial position of the Company from the end of the financial year till the date of this Report
There have been no material changes and commitments, affecting the financial position of the Company between the end of the financial year to which the Financial Statements relate and the date of this Report.
Related Party Transactions
During the year under review, approval of the Audit Committee and Board of Directors was sought for Related Party Transactions wherever required; including inter alia for increase in remuneration payable to Ms. Supriya Mody, daughter of Dr. Prakash A. Mody, Chairman & Managing Director of the Company up to a sum not exceeding Rs.65 lacs (Rupees Sixty Five Lacs Only) in a financial year starting from April 1, 2015, inclusive of perquisites (âMaximum Remunerationâ).
The said transaction, not being an armâs length transaction, but a transaction in the ordinary course of business was duly approved by the Shareholders at the AGM held on July 11, 2015.
The Audit Committee has given prior approval for all Related Party Transactions. The Policy on Related Party Transactions (Policy) as approved by the Board is uploaded on the Companyâs website and the weblink is provided in the Corporate Governance Report. The Board of Directors of the Company has approved the criteria for omnibus approval of Related Party Transactions by the Audit Committee within the overall framework of the Policy.
The particulars of contracts or arrangements with Related Parties referred to in Section 188(1) of the Act are provided, in the prescribed Form AOC - 2 annexed as Annexure C to this Report.
Except to the extent of the shares held in the Company and the remuneration if any, drawn from the Company, none of the Directors and Key Managerial Personnel have any pecuniary relationships or transactions vis-a-vis the Company.
Disclosure under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Company has in place a policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. The policy has set guidelines on the redressal and enquiry process that is to be followed by complainants and the ICC, whilst dealing with issues related to sexual harassment at the workplace. All women employees (permanent, temporary, contractual and trainees) are covered under this Policy. The Company has not received any complaints during the year under review.
Auditors
B. D. Jokhakar & Co. (Firm Registration No. 104345W), were appointed as Statutory Auditors of the Company to hold office from the conclusion of the 51st AGM to the conclusion of the 54th AGM, (subject to ratification of the appointment by the Members at every AGM held after the 51st AGM).
As per the provisions of the Act, no listed company shall appoint an audit firm (including its affiliate firms) as auditors for more than 2 (two) terms of 5 (five) consecutive years. The Act also provided for an additional transition period of 3 (three) years from the commencement of the Act i.e. April 1, 2014.
B. D. Jokhakar & Co., have completed the period of 10 (ten) years and will also be completing the additional transition period of 3 (three) years at the conclusion of the forthcoming AGM.
Accordingly, the term of the present Auditors, B. D. Jokhakar & Co., expires at the conclusion of the forthcoming AGM. The Audit Committee and the Board of Directors place on record their appreciation for the professional services rendered by B. D. Jokhakar & Co., during their association with the Company as its Auditors.
Pursuant to Section 139 of the Act, and on the recommendation of the Audit Committee, it is now proposed to appoint, N. A. Shah Associates LLP, Chartered Accountants (Firm Registration No. 116560W/W100149), as Statutory Auditors of the Company for a term of 5 (five) years from the conclusion of the 54th AGM (subject to ratification of such appointment by the Members at every AGM) till the conclusion of the 59th AGM at such remuneration as may be determined by the Board of Directors and the said Auditors from time to time.
The said Auditors have confirmed their eligibility for appointment in terms of Section 139 of the Act.
During the year under review, the retiring Auditors have not reported any matter under Section 143 (12) of the Act and therefore no details are disclosed under Section 134 (3)(ca) of the Act.
A Resolution seeking the appointment of N. A. Shah Associates LLP, forms part of the Notice convening the 54th AGM and the same is recommended for your consideration and approval.
Cost Auditors
The Board of Directors at its Meeting held on May 30, 2017, based on the recommendation of the Audit Committee, appointed Y. R. Doshi & Co., (Firm Registration No. 000003) Cost Accountants, Mumbai, as Cost Auditors for undertaking Cost Audit of the Cost Accounting Records maintained by the Company for the financial year 2017-2018 at a remuneration not exceeding Rs.7.50 lacs (Rupees Seven Lacs Fifty Thousand Only) plus applicable taxes and out of pocket expenses at actuals. The said Auditors have confirmed their eligibility for appointment as Cost Auditors. The remuneration payable to the said Cost Auditors is required to be placed before the Members at the ensuing AGM for ratification and a suitable Resolution has been set out in the Notice of the 54th AGM. The Cost Audit Report for the year ended March 31, 2016 was filed with the Ministry of Corporate Affairs on August 17, 2016.
Secretarial Audit
Pursuant to the provisions of Section 204 of the Act and the Rules made there under, the Company has appointed Alwyn Jay & Co., Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed as Annexure D to this Report. There is no other qualification, reservation, adverse remark or disclaimer in the said Report except that National Stock Exchange of India Limited (NSE) had sought a clarification from the Company on delayed reporting of the proceedings of the 53rd AGM of the Company held on July 23, 2016. The Company had clarified to NSE that the proceedings filed with the Exchange on July 26, 2016, did not contain any material new information and was a mere reiteration of the facts already stated in the voting results of the 53rd AGM given within the stipulated time as required under Regulation 44 of the Listing Regulations. No action has been initiated by NSE against the Company.
During the year under review, the Secretarial Auditors have not reported any matter under Section 143 (12) of the Act, and therefore no details are disclosed under Section 134 (3)(ca) of the Act.
Internal control systems and their adequacy
Kindly refer to the write up in the section Management Discussion and Analysis.
Energy Conservation, Technology Absorption, and Foreign Exchange Earnings and Outgo
The particulars as prescribed under Section 134 (3)(m) of the Act and Rules made there under are set out in Annexure E to this Report.
Dividend Distribution Policy
Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated a Dividend Distribution Policy which forms part of this Annual Report as Annexure F and is also available on the Companyâs website https://unichemlabs.com/policies-code-of-https://unichemlabs.com/policies-code-of-conduct/dividend-distribution-policy/
Extract of Annual Return
Form MGT-9 providing an extract of the Annual Return in terms of Section 92 of the Act and the Rules made there under, is annexed as Annexure G to this Report.
Particulars of Employees and related disclosures
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended, are annexed as Annexure H to this Report.
In terms of the provisions of Section 197(12) of the Act and Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended, containing details of employees remuneration forms part of this Report as Annexure K. However, as per the provisions of Sections 134 and 136 of the Act, the Report and Financial Statements are being sent to the Members and others entitled thereto, excluding the information on employees particulars, which is available for inspection at the Registered Office of the Company as per details mentioned in the Notice of the 54th AGM. Any Member interested in obtaining a copy of the same may write to the Company Secretary at the Companyâs Registered Office.
Human Resources and Employee Relations
Kindly refer to the write up in the section Management Discussion and Analysis.
Quality and Environment
Your Companyâs mission envisages a strong sense of commitment to work by being a caring pharmaceutical company, which will continuously strive to enhance health through quality products. Your Company aims at consistently providing products that meet customer needs as well as national and international regulatory requirements, as may be applicable. Your Company has been steadily raising the bar, setting higher goals for incremental performance and enlarging the scope of its initiatives. The environmental policy of your Company emphasizes at being a caring Company, which shall protect and promote the environment by complying with applicable environmental regulations and preventing pollution in all its operations.
Various initiatives are taken at your Company''s manufacturing locations to reduce waste across the plants and reduce usage of paper by recycling waste paper. Training programs are organized from time to time to create environmental awareness amongst the employees. To conserve water, your Company has devised various water saving methods which are monitored on a day to day basis.
Your Company continues to strive for energy saving and conservation of natural resources. In all its Active Pharmaceutical Ingredient (API) Plants your Company has installed online effluent monitoring equipment which is connected to the system of the Central Pollution Control Board.
Your Company is in the process of commissioning advanced Effluent Treatment Systems to control the usage of polluted effluent which will improve quality of effluent discharge. Your Company has initiated a study to install a cleaner form of energy, namely solar energy.
At the manufacturing units, several green initiatives have been undertaken, most significant being soil conservation, recycling of treated effluent water and using solar energy for street lighting.
Corporate Social Responsibility (CSR)
Your Company believes in the philosophy of giving back. Being in the pharmaceutical industry your Companyâs primary focus is healthcare. Education and development of needy sections of the Society, especially the economically backward sections are the other areas in which your Company concentrates its CSR activities. While the focus of CSR efforts will be in the areas around the Company''s operations, your Company may also undertake project''s looking into other societal needs. The CSR policy is available on the website of the Company and the Annual Report on CSR activities, as required under Section 135 of the Act, is annexed as Annexure I to this Report. The Company would also undertake other need based initiatives in compliance with Schedule VII to the Act.
During the year under review, the total amount to be spent on CSR was Rs.279.32 lacs. The Company spent Rs.122.20 lacs which is 0.87 % of the average profits, for the last three financial years. Balance amount of Rs.157.12 lacs remained unspent.
The Company could not spend the balance amount since it is in the process of identifying appropriate CSR programs/projects in line with its CSR policy. Further, certain funds even though allocated to approved educational and health projects by the CSR Committee, were not disbursed since there was no requirement for these funds from the organizations/institutions during the year under review.
The Company plans to scale up its CSR activities in areas of education, health, environment protection, sanitation, general welfare and development activities in a structured manner to meet the objectives of its CSR policy in the coming years.
Business Responsibility Report
Regulation 34(2) of the Listing Regulations, inter alia, provides that the Annual Report of the top 500 listed entities based on market capitalization (calculated as on March 31 of every financial year), shall include a Business Responsibility Report ("BRR").
Your Company, being one of such 500 listed entities, has included BRR, as part of the Annual Report, describing initiatives taken by the Company from an environmental, social and governance perspective.
The Business Responsibility Report forms part of this Annual Report and is annexed as Annexure J.
Health and Safety
Health and Safety issues are addressed systematically, effectively and proactively. Your Company takes pride in providing various forms of medical assistance to the families of its employees. Periodic health check-ups are carried out for all employees and regular training programs are organized on safety and precautionary measures. Fire fighting training programs and first aid training camps are organized regularly to educate workers and employees at the plant locations and corporate office.
Acknowledgement
Your Directors acknowledge the support and wise counsel extended to the Company by analysts, bankers, Government agencies, shareholders, investors, suppliers, distributors, stockiest, employees and others associated with the Company as its business partners. Your Directors also acknowledge the trust reposed in the Company by the medical fraternity and patients. We look forward to having the same support in our mission to enhance health through quality products.
Cautionary Statement
Statements in this Directorsâ Report and Management Discussion and Analysis describing the Companyâs objectives, projections, estimates, expectations or predictions may be âforward-looking statementsâ within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companyâs operations include raw material availability and prices, cyclical demand and pricing in the Companyâs principle markets, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other ancillary factors.
For and on behalf of the Board of Directors,
Dr. Prakash A. Mody
Mumbai Chairman & Managing Director
May 30, 2017 (DIN No.: 00001285)
Mar 31, 2016
Dear Members,
The Directors take pleasure in presenting the 53rd Annual Report on
the business and operations of your Company for the financial year
ended March 31,2016.
Financial Highlights
The table below gives the financial highlights of the Company on
Standalone basis for the year ended March 31,2016 as compared to the
previous financial year.
For the year ended
(Rs. in lacs)
Particulars March 31, 2016 March 31, 2015
Sales / Income from operations
(Net of Excise Duty) 1,22,241.14
1,09,098.46
Other Income 2,265.50 1,996.77
Total Income 1,24,506.64 1,11,095.23
Profit before Tax and Exceptional
items 12,778.84 8,149.77
Exceptional Items 353.00 -
Profit before tax 12,425.84 8,149.77
Tax expenses (including deferred
Tax and short/excess provision
2,368.97 1,710.05
pertaining to previous years)
Profit after Tax and Exceptional items 10,056.87 6,439.72
Note: Previous year''s figures have been re-grouped/re-classified
wherever necessary.
Review of Operations
During the year under review, Stand alone Sales/Income from operations
(Net) increased to Rs. 1,22,241.14 lacs from Rs.1,09,098.46 lacs in
2014-2015, registering a growth of 12.05%. Consolidated Sales/Income
from Operations (Net) stood at Rs. 1,33,456.38 lacs in 2015-2016 as
compared to Rs. 1,20,179.34 lacs for the year ended March 31,2015,
registering an increase of 11.05%.
Appropriations
An amount of Rs. 74,071.11 lacs is proposed to be carried forward in
the Profit & Loss Account. During the year under review, no amount was
transferred to General Reserve.
Dividend
The Board of Directors at its Meeting held on March 9, 2016 declared an
Interim Dividend of Rs. 2/-(100%) per equity share of Rs. 2/- each. The
Dividend was paid to the shareholders on March 28, 2016. The said
Interim Dividend has been confirmed by the Board as Final Dividend for
the financial year ended March 31,2016.
Employees Stock Option Scheme
During the year under review, 6,74,451 options having a face value of
Rs. 2/- were exercised and the same were allotted (on pari passu basis)
under the Employees Stock Option Scheme - 2008. Details of the
Employees Stock Option Scheme - 2008 are set out as Annexure A to this
Report.
Research and Development (R&D)
Kindly refer to the write up in the section, Management Discussion and
Analysis.
Management Discussion and Analysis
A detailed review on the operations and performance of the Company is
given in the Management Discussion and Analysis, which forms part of
this Annual Report.
Corporate Governance
A detailed report on Corporate Governance as required under Regulation
34 of the Securities and Exchange Board of India (Listing Obligations
and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"),
forms part of this Annual Report. The Auditors'' Certificate on
compliance with the conditions of Corporate Governance requirements by
the Company is attached to the Report on Corporate Governance.
Consolidated Financial Statements
In accordance with the Accounting Standards AS - 21 on Consolidated
Financial Statements, and the Listing Regulations, your Directors
provide the Audited Consolidated Financial Statements in the Annual
Report.
Review of Subsidiaries and Associates
Your Company has five Subsidiaries and one Associate Company.
Financials of the Subsidiaries and Associate Company are disclosed in
the Consolidated Financial Statements, which form part of this Annual
Report.
A statement containing salient features of the Financial Statements of
the Subsidiaries and Associate Company, pursuant to Section 129 of the
Companies Act, 2013 and Rules made thereunder is annexed to this Report
as Annexure B in the prescribed Form AOC -1 and hence not repeated here
for the sake of brevity.
Synchron Research Services Private Limited (Synchron) is an Associate
Company in terms of Section 2 (6) of the Companies Act, 2013. Synchron
is a leading contract research organization in India which offers
competitive and high quality clinical trial services to domestic and
international pharmaceutical and bio-pharmaceutical companies. Your
Company avails such services from Synchron from time to time, on
competitive terms.
On internal assessment of long term strategic investments made by the
Company in its Wholly Owned Subsidiary, Unichem Farmaceutica Do Brazil
Ltda., considering its past performance, results, assets, expected cash
flows, projections and having confidence in the business model and
strategy of the said Subsidiary achieving its goals given favourable
business opportunities, the management has determined an amount of Rs.
2,277.63 lacs as diminution for the year (previous year Rs. 434.55
lacs) taking the accumulated provision to Rs. 3,581.41 lacs (previous
year : Rs. 1,303.77 lacs) on total investment ofRs. 5,695.88 lacs made
therein and the same is considered adequate by the Board of Directors
as at the balance sheet date.
Particulars of Loans, Guarantees and Investments
Details of Loans, Guarantees and Investments covered under the
provisions of Section 186 of the Companies Act, 2013 are given in the
notes to the Financial Statements.
Deposits
The Company has not accepted any deposits within the meaning of Section
73 of the Companies Act, 2013 read with the Companies (Acceptance of
Deposits) Rules, 2014.
Risk Management
The Company has formulated a policy on Risk Management. Risks are
classified in different categories such as Financial, Operational,
Legal and Strategic risks. A risk register is prepared for
identification of risk and formulating mitigating plans.
Credit Rating
ICRA has re-affirmed your Company''s A1 rating for short- term debt
(including Commercial Paper) Programme of Rs. 1,500 lacs. The rating
indicates strong degree of safety regarding timely payment of financial
obligations.
Directors and Key Managerial Personnel
At the Annual General Meeting of the Company held on July 11, 2015,
theshareholders approved the appointment of Dr. (Mrs.) B. KinneraMurthy
as an I ndependent Director to hold office for a period of three (3)
consecutive years upto March 20,2018.
All the Independent Directors have furnished declarations that they
meet the criteria of independence as laid down under Section 149 (6) of
the Companies Act, 2013 and the Listing Regulations.
Dr. Prakash A. Mody retires by rotation at the ensuing Annual General
Meeting in terms of the provisions of Section 152 of the Companies Act,
2013 (the Act). The Act provides that Independent Directors are not
subject to retirement by rotation and two thirds of the remaining
Directors shall be subject to retirement by rotation. Since all the
Directors except Dr. Mody are Independent Directors, Dr. Mody will
retire by rotation and being eligible offers himself for
re-appointment.
Dr. Mody is the Chairman & Managing Director of the Company. Upon his
re-appointment as a Director, he shall continue to hold office as the
Chairman & Managing Director of the Company.
Attention of the Members is invited to the relevant item in the Notice
of the Annual General Meeting seeking your approval to the aforesaid
re-appointment. The information required under Regulation 36 of the
Listing Regulations is provided in the Notice of the 53rd Annual
General Meeting and the statement annexed thereto.
Dr. Prakash A. Mody, Chairman & Managing Director, Mr. Rakesh Parikh,
Chief Finance & Compliance Officer and Mrs. Neema Thakore, Head - Legal
& Company Secretary were the Key Managerial Personnel during the
financial year.
Directors'' Responsibility Statement
To the best of their knowledge and belief and according to the
information and explanations obtained by them, your Directors make the
following statements in terms of Section 134 (3) (c) of the Companies
Act, 2013, (the Act):
1. that in preparation of annual accounts for the year ended March 31,
2016, the applicable accounting standards have been followed and no
material departures, have been made from the same;
2. that such accounting policies have been selected and applied
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 as at March 31, 2016 and profit for the year ended on that
date;
3. that proper and sufficient care has been taken for the maintenance
of adequate accounting records in accordance with the provisions
of the Act for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
4. that the annual accounts have been prepared on a going concern
basis;
5. that the internal financial controls were in place and that they
were adequate and operating effectively and;
6. that systems to ensure compliance with the provisions of all
applicable laws were devised and such systems were adequate and
operating effectively.
Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and the Listing
Regulations, performance evaluation of the Board, it''s Committees, the
Chairman & Managing Director and the Independent Directors was carried
out. The manner in which the evaluation is carried out has been
explained in the Corporate Governance Report.
Remuneration Policy
The Board on the recommendation of the Nomination and Remuneration
Committee has adopted a policy for selection, appointment and
remuneration of Directors, Key Managerial Personnel and Senior
Management. The details of this Policy are provided in the Corporate
Governance Report.
Meetings
During the year, 5 (five) Board Meetings were held, the details of
which are given in the Corporate Governance Report.
Audit Committee
The constitution of the Audit Committee, its scope, role and terms of
reference are as per the provisions of the Companies Act, 2013, the
Rules made thereunder and the Listing Regulations. All the
recommendations made by the Audit Committee were accepted by the Board
of Directors.
Whistle Blower Policy
The Company has in place a Whistle Blower/Vigil Mechanism through which
its Stakeholders, Directors and Employees can report their genuine
concerns about unethical behaviour and actual or suspected fraud or
violation of the Company''s ''Code of Business Conduct and Ethics''. The
said Policy provides for adequate safeguards against victimization and
also direct access to the Audit Committee. The e-mail id for
reportinggenuine concerns is [email protected]
Significantand Material orders passed by the
Regulators/Courts/Tribunals No significant or material orders were
passed by the Regulators or Courts or Tribunals which impact the
Company''s going concern status and its operations in the future.
However the Board of Directors would like to inform that on July 9,
2014, the European Commission decided to impose an unjustified fine of
 13.97 million, jointly and severally on the Company and its
subsidiary Niche Generics Ltd., (Niche) contending that they have acted
in breach of EU competition law as Niche had, in early 2005 (when the
Company was only a part owner and financial investor in Niche) agreed
to settle a financially crippling patent litigation with Laboratories
Servier. The Company vehemently denies any wrongdoing on the part of
either itself or Niche. Both the Company and Niche have submitted
appeals in September 2014, to the EU General Court seeking appropriate
relief in the matter.Your Company has challenged this order and the
proceedings are currently ongoing.
Material changes and commitment, if any, affecting the financial
position of the Company from the end of the financial year till the
date of this Report
There have been no material changes and commitments, if any affecting
the financial position of the Company between the end of the financial
year of the Company to which the Financial Statements relate and the
date of this Report.
Related Party Transactions
All Related Party Transactions entered during thefinancial year under
review were in the ordinary course of business and on arm''s length
basis, except for increase in remuneration payable to Ms. Supriya Mody,
daughter of Dr. Prakash A. Mody, Chairman & Managing Director of the
Company upto a sum not exceeding Rs. 65 lacs (Rupees Sixty Five Lacs
Only) in a financial year starting from April 1, 2015 inclusive of
perquisites ("Maximum Remuneration"). The said transaction, not being
an arm''s length transaction, but a transaction in the ordinary course
of business was duly approved by the shareholders at the Annual General
Meeting held on July 11,2015.
All other Related Party Transactions that were entered into during the
year under review were on an arm''s length basis and in the ordinary
course of business. The Audit Committee has given prior approval for
Related Party Transactions. The Policy on Related Party Transactions
(Policy) as approved by the Board is uploaded on the Company''s website
and the weblink is provided in the Corporate Governance Report. The
Board of Directors of the Company has approved the criteria for omnibus
approval of Related Party Transactions by the Audit Committee within
the overall framework of the Policy.
Details of Related Party Transactions not on arm''s length basis but in
the ordinary course of business for which prior approval of the Audit
Committee and shareholders'' approval has been sought and details of
Material Related Party Transactions which are on arm''s length basis and
in the ordinary course of business entered during the financial year
under review as required under Section 134(3)(h) of the Companies Act,
2013 are annexed as Annexure C in the prescribed format, Form AOC 2,
forming an integral part of this Report.
Except to the extent of the shares held in the Company and the
remuneration if any, drawn from the Company none of the Directors and
the Key Managerial Personnel have any pecuniary relationships or
transactions vis-a-vis the Company.
Disclosure under The Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013
The Company has in place a policy on Prevention, Prohibition and
Redressal of Sexual Harassment at the Workplace in line with the
requirements of The Sexual Harassment of Women at the Workplace
(Prevention, Prohibition and Redressal) Act, 2013. An Internal
Complaints Committee (ICC) has been set up to redress complaints
received regarding sexual harassment. The policy has set guidelines on
the redressal and enquiry process that is to be followed by
complainants and the ICC, whilst dealing with issues related to sexual
harassment at the work place. All women employees (permanent,
temporary, contractual and trainees) are covered under this Policy. The
Company has not received any complaints during the year under review.
Auditors
B. D. Jokhakar & Co., were appointed as Statutory Auditors to hold
office from the conclusion of the 51 st Annual General Meeting (AGM) to
the conclusion of the fourth consecutive AGM, (subject to ratification
of the appointment by the Members at every AGM held after the 51st
AGM). A proposal for ratification of the appointment of the Statutory
Auditors for the financial year 2016-2017 is placed before the Members
at the ensuing AGM. The said Auditors have confirmed their eligibility
for appointment in terms of Section 139 of the Companies Act, 2013.
During the year under review, the Auditors have not reported any matter
under Section 143 (12) of the Companies Act, 2013 and therefore no
details are disclosed under Section 134 (3)(ca) of the Act.
A Resolution seeking ratification of their appointment, forms part of
the Notice convening the 53rd Annual General Meeting and the same is
recommended for your consideration and approval.
Cost Auditors
The Board of Directors at its Meeting held on May 20, 2016, based on
the recommendation of the Audit Committee, appointed Y. R. Doshi & Co.,
(Firm Registration No. 000003) Cost Accountants, Mumbai, as Cost
Auditors for undertaking Cost Audit of the Cost Accounting Records
maintained by the Company for the financial year 2016-2017 at a
remuneration not exceeding Rs. 6.50 lacs (Rupees Six Lacs Fifty
Thousand Only) plus service tax as may be applicable and out of pocket
expenses at actuals. The said Auditors have confirmed their eligibility
for appointment as Cost Auditors. The remuneration payable to the said
Cost Auditors is required to be placed before the Members at the
ensuing Annual General Meeting for ratification and a suitable
Resolution has been set out in the Notice of the 53rd Annual General
Meeting of your Company. The Cost Audit Report for the year ended March
31, 2015 was filed with the Ministry of Corporate Affairs on September
29,2015.
Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the Rules made thereunder, the Company has appointed Alwyn Jay &
Co., Company Secretaries in Practice to undertake the Secretarial Audit
of the Company. The Secretarial Audit Report is annexed as Annexure D
to this Report. There is no qualification, reservation, adverse remark
or disclaimer in the said Report. During the year under review,
theSecretarial Auditors have not reported any matter under Section 143
(12) of the Act, and therefore no details are disclosed under Section
134 (3)(ca) of the Act.
Internal control systems and their adequacy
Kindly refer to the write up in the section Management Discussion and
Analysis.
Energy Conservation, Technology Absorption, and Foreign Exchange
Earnings and Outgo
The particulars as prescribed under Section 134 (3)(m) of the Companies
Act, 2013 and Rules made thereunder are set out in Annexure E to this
Report.
Extract of Annual Return
Form MGT-9 providing an extract of the Annual Return in terms of
Section 92 of the Companies Act, 2013 and the Rules made thereunder is
annexed as Annexure F to this Report.
Particulars of Employees and related disclosures
Disclosures pertaining to remuneration and other details as required
under Section 197(12) of the Companies Act, 2013 and Rule 5(1) of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014, are annexed as Annexure G to this Report.
In terms of the provisions of Section 197(12) of the Companies Act,
2013 and Rules 5(2) and 5(3) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, in respect of
employees of the Company, forms part of this Report. However, as per
the provisions of Sections 134 and 136 of the Act, the Report and
Financial Statements are being sent to the Members and others entitled
thereto, excluding the information on employees particulars, which is
available for inspection at the Registered Office of the Company as per
details mentioned in the Notice of the 53rd Annual General Meeting on
any working day of the Company upto the date of the 53rd Annual General
Meeting. Any Member interested in obtaining a copy of the same may
write to the Company Secretary at the Company''s Registered Office.
Human Resources and Employee Relations
Kindly refer to the write up in the section Management Discussion and
Analysis.
Quality and Environment
Your Company''s mission envisages a strong sense of commitment to work
towards being a caring pharmaceutical company, which will continuously
strive to enhance health through quality products. Your Company aims at
consistently providing products that meet customer needs as well as
national and international regulatory requirements as may be
applicable. It has been steadily raising the bar, setting higher goals
for incremental performance and enlarging the scope of its initiatives.
The environmental policy of your Company emphasizes at being a caring
company, which shall protect and promote the environment by complying
with applicable environmental regulations and preventing pollution in
all its operations.
With a view to meet this challenge, our manufacturing facilities plant
trees and saplings in the Company premises. Our employees spread
awareness amongst the locals about planting more trees and making less
use of plastic bags. Similarly, various initiatives are taken at our
manufacturing locations to reduce waste across the plants and reduce
usage of paper by recycling waste paper. Training programmes are
organised from time to time to create environmental awareness amongst
the employees. To conserve water, the Company has devised various water
saving methods which are monitored on day to day basis.
Your Company continues to strive for energy saving and conservation of
natural resources. In some of our Active Pharmaceutical Ingredients
(API) Plants your Company has installed online effluent monitoring
equipment which is connected to the system of the Central Pollution
Control Board.
At the manufacturing units, several green initiatives have been
undertaken, most significant being soil conservation, recycling of
treated effluent water and using solar energy for street lighting.
Corporate Social Responsibility (CSR)
Your Company believes in the philosophy of giving back. Being in the
pharmaceutical industry your Company''s primary focus is healthcare.
Education and development of needy sections of the Society especially
the economically backward section are the other areas in which your
Company concentrates its CSR activities. While the focus of CSR
efforts will be in the areas around Company operations, the Company may
also undertake projects looking into other societal needs. The CSR
policy is available on the website of the Company and the Annual Report
on CSR activities, as required under Section 135 of the Companies Act,
2013, is annexed as Annexure H to this Report. The Company would also
undertake other need based initiatives in compliance with Schedule VII
to the Companies Act, 2013.
During the year under review the total amount to be spent was Rs.
291.33 lacs. The Company spent Rs. 253 lacs on CSR which is 1.74% of
the average profits, for the last three financial years. Balance amount
of Rs. 38.33 lacs remained unspent.
The Company has plans to scale up its CSR activities in areas of
education and health in a structured manner to meet the objectives of
its CSR Policy in the coming years. Further certain funds even though
allocated to approved educational projects by the CSR committee, were
not disbursed since there was no requirement for these funds from the
organizations/institutions during the year under review.
Health and Safety
Health and Safety issues are addressed systematically, effectively and
proactively. Your Company takes pride in providing various forms of
medical assistance to the families of its employees and also to all
those living in surrounding villages. Periodic health check ups are
carried out for all employees and regular training programmes are
organised on safety and precautionary measures. Fire fighting training
programmes and first aid training camps are organised regularly to
educate workers and employees at the plant locations and corporate
office.
Acknowledgement
Your Directors acknowledge the support and wise counsel extended to the
Company by analysts, bankers, Government agencies, shareholders,
investors, suppliers, distributors, stockists and others associated
with the Company as its business partners. Your Directors also
acknowledge the trust reposed in the Company by the
medical fraternity and patients. We look forward to having the same
support in our mission to enhance health through quality products.
Cautionary Statement
Statements in this Directors'' Report and Management Discussion and
Analysis describing the Company''s objectives, projections, estimates,
expectations or predictions may be "forward-looking statements" within
the meaning of applicable securities laws and regulations. Actual
results could differ materially from those expressed or implied.
Important factors that could make a difference
to the Company''s operations include raw material availability and its
prices, cyclical demand and pricing in the Company''s principle markets,
changes in Government regulations, tax regimes, economic developments
within India and the countries in which the Company conducts business
and other ancillary factors.
For and on behalf of the Board of Directors,
Mumbai Dr. Prakash A. Mody
May 20, 2016 Chairman & Managing Director
Mar 31, 2015
Dear Members,
The Directors have pleasure in presenting the 52nd Annual Report on
the business and operations of the Company for the Financial Year ended
March 31, 2015.
Financial Highlights
The table given below gives the financial highlights of the Company on
Standalone basis for the year ended March 31, 2015 as compared to the
previous Financial Year .
For the year ended (Rs. in lacs)
Particulars March 31, 2015 March 31, 2014
Sales / Income from operations (Net
of Excise Duty) 1,09,098.46 1,04,417.50
Other Income 1,996.77 4,283.91
Total Income 1,11,095.23 1,08,701.41
Profit before Tax and Exceptional items 8,149.77 17,882.38
Tax expenses (including deferred Tax &
short/excess
provision pertaining to previous years) 1,710.05 4,300.11
Profit after Tax and before Exceptional
items 6,439.72 13,582.27
Exceptional items - 4,114.55
Profit after Tax and Exceptional items 6,439.72 17,696.82
Note: Previous yearÂs figures have been re-grouped/re-classified
wherever necessary.
Review of Operations
During the year under review, Standalone Sales/Income from operations
(Net) increased to Rs. 109,098.46 lacs from Rs. 104,417.50 lacs in
2013-2014, registering a growth of 4.48%. Consolidated Sales/Income
from Operations (Net) stood at Rs. 120,179.34 lacs in 2014-2015 as
compared to Rs. 113,344.79 lacs for the year ended March 31, 2014,
registering an increase of 6.03%.
Appropriations
An amount of Rs. 66,200.97 lacs is proposed to be carried forward in the
Profit & Loss Account. During the year under review, no amount was
transferred to General Reserve.
Dividend
The Board has recommended a dividend of Rs. 2/- (100%) per equity share
of Rs. 2/- each for the approval of the shareholders at the ensuing
Annual General Meeting (AGM) for the year ended March 31, 2015. The
Register of Members and Share Transfer Books shall remain closed from
July 6, 2015 to July 11, 2015 (both days inclusive) for the purpose of
AGM and dividend, if approved by the shareholders. The AGM of the
Company is scheduled for July 11, 2015.
Employees Stock Options Scheme
During the year under review, 141,399 options having a face value of Rs.
2/- each were exercised and the same were allotted (on pari passu
basis) under the Employees Stock Options Scheme  2008. Details of the
Employees Stock Options Scheme  2008, are set out as Annexure A to
this Report.
Research and Development (R&D)
Kindly refer to the write up in the section Management Discussion and
Analysis.
Management Discussion and Analysis
A detailed review on the operations and performance of the Company and
its business is given in the Management Discussion and Analysis, which
forms part of this Annual Report.
Corporate Governance
A detailed report on Corporate Governance forms part of this Annual
Report. The Auditors Certificate on compliance with Corporate
Governance requirements by the Company is attached to the Report on
Corporate Governance.
Consolidated Financial Statements
In accordance with the Accounting Standards AS Â 21 on Consolidated
Financial Statements, your Directors provide the Audited Consolidated
Financial Statements in the Annual Report.
Review of Subsidiaries and Associates
Your Company has five Subsidiaries and one Associate Company.
Financials of the Subsidiaries and Associate Company are disclosed in
the Consolidated Financial Statements, which form part of this Annual
Report. A statement containing salient features of the Financial
Statements of the Subsidiaries and Associate Company, is annexed to
this Report as Annexure ÂBÂ pursuant to Section 129 of the Companies
Act, 2013 and Rules made thereunder in the prescribed Form, AOC -1 and
hence not repeated here for the sake of brevity.
During the year, Synchron Research Services Private Limited (Synchron)
became an Associate in terms of Section 2(6) of the Companies Act,
2013. Synchron is a leading contract research organization in India
which offers competitive and high quality clinical trial services to
domestic and international pharmaceutical and bio- pharmaceutical
companies. Your Company avails such services from Synchron from time to
time .
European Commission matter
On July 9, 2014, the European Commission decided to impose an
unjustified fine of  13.97 million, jointly and severally on the
Company and its subsidiary Niche Generics Limited, (Niche) contending
that they have acted in breach of EU competition law as Niche had, in
early 2005 (when the Company was only a part owner and financial
investor in Niche) agreed to settle a financially crippling patent
litigation with Laboratories Servier. The Company vehemently denies any
wrongdoing on the part of either itself or Niche. Both the Company and
Niche have submitted appeals in September 2014, to the EU General Court
seeking appropriate relief in the matter.
Directors'' Responsibility Statement
In terms of Section 134 (3) (c) of the Companies Act, 2013, your
Directors state that:
1. in preparation of annual accounts for the year ended March 31,
2015, the applicable accounting standards have been followed along with
proper explanations relating to material departures, if any;
2. they have 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 as at March 31, 2015 and profit for the year ended on that
date;
3. they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Act for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities;
4. they have prepared the annual accounts on a going concern basis;
5. they have laid down proper internal financial controls to be
followed by the Company and they were adequate and operating
effectively and
6. they have devised proper systems to ensure compliance with the
provisions of all applicable laws and such systems were adequate and
operating effectively.
Particulars of Loans, Guarantees and Investments
Details of Loans, Guarantees and Investments covered under the
provisions of Section 186 of the Companies Act, 2013 are given in the
notes to the Financial Statements.
Deposits
The Company has not accepted any deposits within the meaning of Section
73 of the Companies Act, 2013 read with the Companies (Acceptance of
Deposits) Rules, 2014.
Risk Management
The Company has formulated a policy on Risk Management and constituted
a Risk Management Committee and the same is detailed in the Corporate
Governance Report. Risks are classified in different categories such as
Financial, Operational, Legal and Strategic risks. These risks are
reviewed from time to time and controls are put in place with specific
responsibility of the concerned officer of the Company.
Credit Rating
ICRA has reaffirmed your CompanyÂs A1 rating for short-term debt
(including Commercial Paper) Programme of Rs. 1500 lacs. The rating
indicates strong degree of safety regarding timely payment of financial
obligations.
Directors
The Board of Directors had on the recommendation of the Nomination and
Remuneration Committee appointed Dr. (Mrs.) B. Kinnera Murthy as an
Additional Director of the Company in the category of Independent
Directors with effect from March 21, 2015 to hold office upto the
ensuing Annual General Meeting. It is now proposed to appoint her as an
Independent Director of the Company for a period of three consecutive
years upto March 20, 2018.
During the year under review Mr. Nasser Munjee, resigned as a Director
of the Company with effect from September 26, 2014, since the revised
Clause 49 of the Listing Agreement (effective from October 1, 2014),
places restrictions on the number of directorships that an individual
can hold as Independent Director in listed Companies. The Board places
on record its deep appreciation of the services rendered by Mr. Nasser
Munjee during his tenure as a Director.
All the Independent Directors have furnished declarations that they
meet the criteria of independence as laid down under Section 149(6) of
the Companies Act, 2013 and Clause 49 of the Listing Agreement.
Dr Prakash A Mody retires by rotation at the ensuing Annual General
Meeting in terms of the provisions of Section 152 of the Companies Act,
2013 ("The Act"). The Act provides that Independent Directors are not
subject to retirement by rotation. Since all the Directors except Dr.
Mody are Independent Directors, Dr. Mody will retire by rotation and
being eligible offers himself for re-appointment. Dr. Mody is the
Chairman and Managing Director of the Company. As per the clarification
issued by the Department of Company Affairs (Int. Circular No.
3(No.8/16(1)/61-PR, dated 9th May 1961) in relation to appointment of
Managing Director: "a MDÂs office as a MD does not suffer any break if
he retires as a Director under Section 255 of the erstwhile Companies
Act, 1956 and is re-elected as Director in the same meeting."
Upon his re-appointment as a Director, Dr. Prakash A. Mody shall
continue to hold office as the Chairman and Managing Director of the
Company.
Attention of the Members is invited to the relevant items in the Notice
of the Annual General Meeting seeking your approval to the aforesaid
appointments. The information required under Clause 49 of the Listing
Agreement is provided in the Notice of the 52nd Annual General Meeting
and the Statement annexed thereto.
Mr. K. Subharaman, Vice President (Legal & Company Secretary) resigned
from the Company and Mrs. Neema Thakore is appointed as Head - Legal &
Company Secretary with effect from May 15, 2015.
Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing Agreement, performance evaluation of the Board, itÂs
Committees and the Independent Directors was carried out. The manner in
which the evaluation is carried out has been explained in the Corporate
Governance Report.
Remuneration Policy
The Board on the recommendation of the Nomination and Remuneration
Committee has adopted the policy for selection, appointment and
remuneration of Directors, Key Managerial Personnel and Senior
Management. The details of this policy are provided in the Corporate
Governance Report.
Meetings
During the year five board meetings were held, the details of which are
given in the Corporate Governance Report.
Whistle Blower Policy
The Company has a Whistle Blower Policy to report genuine concerns or
grievances. The same is explained in the Corporate Governance Report.
The details of establishment of the reporting mechanism are disclosed
on the website of the Company. No person has been denied access to the
Audit Committee.
Related Party Transactions
All Related Party Transactions that were entered into during the year
under review were on an armÂs length basis and in the ordinary course
of business. The Audit Committee has given prior approval for the
Related Party Transactions. The policy on Related Party Transactions as
approved by the Board is uploaded on the CompanyÂs website and the
weblink is provided in the Corporate Governance Report.
Disclosure under The Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013
The Company has in place a policy on Prevention, Prohibition and
Redressal of Sexual Harassment at workplace in line with the
requirements of The Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013. An Internal
Complaints Committee (ICC) has been set up to redress complaints
received regarding sexual harassment. The policy has set guidelines on
the redressal and enquiry process that is to be followed by
complainants and the ICC, whilst dealing with issues related to sexual
harassment at the work place. All women employees (permanent,
temporary, contractual and trainees) are covered under this policy. The
Company has not received any complaints during the year.
Auditors
B. D. Jokhakar & Co., were appointed as Statutory Auditors to hold
office from the conclusion of the 51st Annual General Meeting (AGM) to
the conclusion of the fourth consecutive AGM, (subject to ratification
of the appointment by the members at every AGM held after the 51st
AGM). A proposal for ratification of the appointment of the Statutory
Auditors for the Financial Year 2015-2016 is placed before the Members
at the ensuing AGM. The said Auditors have given their eligibility
certificate in terms of Section 139 of the Companies Act, 2013.
Cost Auditors
The Board of Directors at its meeting held on May 9, 2015, based on the
recommendation of the Audit Committee, appointed Y. R. Doshi & Co.,
(Firm Registration No. 000003) Cost Accountants, Mumbai, as Cost
Auditors for undertaking Cost Audit of the Cost Records maintained by
the Company for the Financial Year 2015-2016 at a remuneration of Rs.
5.50 lacs (Rupees Five Lacs Fifty Thousand Only) plus service tax as
may be applicable and out of pocket expenses at actuals. The said
Auditors have given their eligibility certificate for appointment as
Cost Auditors. The remuneration payable to the said Cost Auditors needs
to be ratified by the Shareholders at the ensuing Annual General
Meeting. The Cost Audit Report for the year ended March 31, 2014 was
filed with the Ministry of Corporate Affairs on September 24, 2014.
Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the Rules made there under, the Company has appointed Alwyn Jay &
Co., Company Secretaries in Practice to undertake the Secretarial Audit
of the Company. The Secretarial Audit Report is annexed as Annexure C
to this Report.
Internal control systems and their adequacy
Kindly refer to the write-up in the section Management Discussion and
Analysis.
Energy Conservation, Technology Absorption, and Foreign Exchange
Earnings and Outgo
The particulars as prescribed under Section 134(3)(m) of the Companies
Act, 2013 and Rules made thereunder are set out in Annexure D to this
Report.
Extract of Annual Return
Form MGT-9 providing an extract of the Annual Return in terms of
Section 92 of the Companies Act, 2013 and the Rules made thereunder is
annexed as Annexure E to this Report.
Particulars of Employees and related disclosures
In terms of the provisions of Section 197(12) of the Companies Act,
2013 and Rules 5(2) and 5(3) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, a statement showing
the names and other particulars of the employees drawing remuneration
in excess of the limits set out in the said Rules is annexed as
Annexure H to this Report.
Disclosures pertaining to remuneration and other details as required
under Section 197(12) of the Companies Act, 2013 and Rule 5(1) of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014, are annexed as Annexure F to this Report.
Human Resources and Employee Relations
Kindly refer to the write-up in the section Management Discussion and
Analysis.
Quality and Environment
Your CompanyÂs mission envisages a strong sense of commitment to work
towards being a caring pharmaceutical company, which will continuously
strive to enhance health through quality products. Your Company aims to
consistently provide products that meet customer as well as national
and international regulatory requirements as may be applicable. It has
been steadily raising the bar, setting higher goals for environmental
performance and enlarging the scope of initiatives. The environmental
policy of your Company emphasizes at being a caring company, which
shall protect and promote the environment by complying with applicable
environmental regulations and preventing pollution in all its
operations.
With a view to meet this challenge, our manufacturing facilities, plant
trees and saplings in the Company premises. Our employees spread
awareness amongst the locals about planting more trees and making less
use of plastic bags. Similarly, various initiatives are taken at our
manufacturing locations to reduce waste production across the plant and
reduce usage of paper by recycling waste paper. Training programmes are
organised from time to time to create environmental awareness amongst
the employees. To conserve water, the Company has devised various water
saving methods which are monitored on a day-to-day basis.
Your Company continues to strive for energy saving and conservation of
natural resources. At our units, several green initiatives have been
undertaken, most significant being soil conservation, recycling of
treated effluent water and using solar energy for street lighting.
Corporate Social Responsibility(CSR)
Unichem being a pharmaceutical company, is naturally inclined to
improve the health of the general public at large and the Company is
well known for its Quality and Reliability for over six decades. The
present CSR initiatives focus on two main recognized activities
mentioned in Schedule VII of the Companies Act, 2013, namely promoting
education and promoting preventive health care particularly for
scheduled tribes. The CSR policy is available on the website of the
Company and the Annual Report on Corporate Social Responsibility (CSR)
activities as required under Section 135 of the Companies Act, 2013 is
annexed as Annexure G to this Report. The Company would also undertake
other need based initiatives in compliance with Schedule VII to the
Companies Act, 2013.
During the year under review, the Company spent Rs. 241.75 lacs on CSR
which is 1.57 % of the average profits, for the last three Financial
Years.
The Company could not spend up to 2 % of the net profits as stipulated
in the Companies Act, 2013 as the CompanyÂs profits/ earnings were
lesser than the previous Financial Year.
Health and Safety
Health and Safety issues are addressed systematically, effectively and
proactively. Your Company takes pride in providing various forms of
medical assistance to the families of its employees and also to all
those living in surrounding villages. Periodic health checkups are
carried out for all employees and regular training programmes are
organised on safety and precautionary measures. Fire fighting training
programmes and first-aid training camps are organised regularly to
educate workers and employees at our plant locations and corporate
office.
Acknowledgement
Your Directors acknowledge the support and wise counsel extended to the
Company by analysts, bankers, government agencies, shareholders,
investors, suppliers, distributors, stockists and others associated
with the Company as its business partners. Your Directors also
acknowledge the trust reposed in the Company by the medical fraternity
and patients. We look forward to having the same support in our mission
to enhance health through quality products.
For and on behalf of the Board of Directors,
Mumbai Dr. Prakash A. Mody
May 9, 2015 Chairman & Managing Director
Mar 31, 2013
Dear Members,
The Directors have pleasure in presenting the 50th Annual Report on the
business and operations of the Company for the financial year ended
March 31, 2013.
Financial Highlights
The table given below gives the financial highlights of the Company on
Standalone basis for the year ended March 31, 2013 as compared to the
previous financial year.
For the year ended March 31
(Rs. in Lacs)
Particulars 2013 2012
Sales/ Income from operations
(Net of Excise Duty) 1,00,521.69 80,318.73
Other Income 1,406.70 939.47
Total Income 1,01,928.39 81,258.20
Profit before tax 16,244.63 10,523.55
Tax Expenses (Including deferred tax
& short/excess provision
pertaining to previous years) 3,285.03 2,277.22
Profit for the period 12,959.60 8,246.33
Review of Operations
During the year under review, Sales/Income from operations (Net)
increased to Rs. 1,00,521.69 Lacs in 2012-13 from Rs. 80,318.73 Lacs in
2011-12, registering a growth of 25.15%. Consolidated Sales/Income from
operations (Net) stood at Rs. 1,08,080.28 Lacs as compared to Rs.
87,546.30 Lacs registering an increase of 23.45%.
Appropriations
Your Company has transferred Rs. 1,500 Lacs to the General Reserve
during the year under review. An amount of Rs. 54,533.07 Lacs is
proposed to be carried forward from the Profit & Loss Account.
Dividend
Your Board of Directors at their meeting held on May 11, 2013
recommended a dividend of Rs. 4.5 (225%) per equity share of Rs. 2/-
each fully paid up. The register of members and share transfer books
shall remain closed from July 15, 2013 to July 19, 2013, both days
inclusive. The Annual General Meeting of the Company is scheduled for
July 19, 2013.
Employee Stock Options Scheme
During the year under review, 1,34,937 options of Rs. 2/- were
exercised and the same were allotted (on pari passu basis) under the
Employees'' Stock Option Scheme - 2004 and Employees'' Stock Option
Scheme - 2008.
Details of Employees'' Stock Option Schemes, as required to be
disclosed under Clause 12 of the SEBI (Employees Stock Option Scheme
and Employees Stock Purchase) Guidelines, 1999 are set out in the
Annexure I to this Report.
Management''s Discussion and Analysis
A detailed review on operations and performance of the Company and its
business is given in the Management''s Discussion and Analysis, which
forms part of this Annual Report.
Corporate Governance
A detailed report on Corporate Governance forms part of this Annual
Report. Your Company is in full compliance with the requirements and
disclosures that have to be made in this regard. The Auditors''
Certificate on compliance with Corporate Governance requirements by the
Company is attached to the report on Corporate Governance.
Information for Shareholders
Additional information pertaining to shareholders like Equity History,
Dividend Payment History, Shareholding pattern, etc. is provided in
this Annual Report.
Consolidated Financial Statements
In accordance with the Accounting Standards AS - 21 on Consolidated
Financial Statements, your Directors provide the audited Consolidated
Financial Statements in the Annual Report.
Notes on Subsidiaries
Last year, your Company had incorporated a new subsidiary in Ireland
taking the total number of subsidiaries to 5 (five) as on March 31,
2013. Your Directors believe that the Consolidated Financial Statements
present a full and fair view of the state of affairs of your Company as
a whole. In terms of general approval granted by the Central Government
under Section 212(8) of Companies Act, 1956, financial statements
pertaining to the subsidiaries have not been attached with the Balance
Sheet of the Company. However, for the benefit of the members, we have
published a summary of the financials of the subsidiaries in the Annual
Report. The financial statements of subsidiaries, along-with related
information and reports are available for inspection at the registered
office of your Company.
Review of Subsidiaries
Niche Generics Limited
Niche Generics Limited is a wholly-owned subsidiary of your Company. It
is engaged in manufacturing formulations and dossier filing in European
markets. It recorded sales of GBP 107.68 Lacs for the year ended March
31, 2013 as compared to GBP 103.20 Lacs for the previous year ended
March 31, 2012. The profit for the year ended March 31, 2013 stood at
GBP 0.99 Lacs compared to the loss of GBP 1.90 lacs for the year ended
March 31, 2012.
Unichem Pharmaceuticals (USA) Inc.
Unichem Pharmaceuticals (USA) Inc., a wholly-owned subsidiary of your
Company in USA, has been set up for business development, filing of
ANDA''s and exploring the opportunities for marketing alliances in
North American markets. The subsidiary recorded sales of USD 82.48 Lacs
for the year ended March 31, 2013 as compared to USD 52.13 Lacs for the
previous year ended March 31, 2012 and incurred loss of USD 6.23 Lacs
for the same period compared to the loss of USD 7.48 lacs for the year
ended March 31, 2012.
Unichem Farmaceutica Do Brasil Ltda Unichem Farmaceutica Do Brasil
Ltda., is a wholly- owned subsidiary of your Company in Brazil. This
subsidiary has been set-up to own product registrations, launch generic
and branded generics products in the Brazilian market. The subsidiary
plans to have marketing alliances for promoting, warehousing and
distribution. The entity suffered a loss of Brazilian Reals 29.61 Lacs
in the current year as against Brazilian Reals 24.80 lacs during the
previous year.
Unichem SA (Proprietary) Limited
Unichem SA (Proprietary) Limited is a wholly-owned subsidiary of your
Company in South Africa. This subsidiary has been set-up for business
development and to own product registrations. The subsidiary has
suffered a marginal loss of SA Rand 72 in the current year as compared
to loss of SA Rand 6,113 for the previous year ended March 31, 2012.
Unichem Laboratories Ltd. Ireland
Unichem Laboratories Ltd, Ireland is a wholly-owned subsidiary of your
Company in Ireland. This subsidiary was incorporated last year under
review for business development and to own product registrations. The
subsidiary during the current year has suffered a loss of Euro 2.95
lacs as compared to loss of Euro 0.09 lacs for the previous year ended
March 31, 2012.
Directors'' Responsibility Statement
In terms of section 217 (2AA) of the Companies Act, 1956, your
Directors confirm that:
1. in preparation of annual accounts for the year ended March 31,
2013, the applicable accounting standards have been followed along with
proper explanation relating to material departures, if any;
2. they have 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 2012-13 and profit made by
the Company for that period;
3. they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of this
Act for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities;
4. they have prepared the annual accounts on a going concern basis.
Credit Rating
ICRA has reaffirmed the A1 rating for short-term debt (including
Commercial Paper) Programme of Rs. 1,500 Lacs. The rating indicates
highest safety, the prospect of timely repayment of debt/obligation
being the best.
Directors
The present term of Dr. Prakash A. Mody as Managing Director & Chairman
will expire on June 30, 2013. At the meeting of the Board of Directors
held on May 11, 2013, he was re-appointed as Chairman & Managing
Director for a further term of 5 years with effect from July 1, 2013,
subject to approval of Shareholders at ensuring Annual General Meeting
which is to be held on July 19, 2013.
By virtue of Section 255 of the Companies Act, 1956 and the Articles of
Association of the Company, Mr. Prafull Anubhai and Mr. Anand Mahajan
retire by rotation at the ensuing Annual General Meeting. Attention of
the Members is invited to the relevant items in the Notice of the
Annual General Meeting for seeking your approval for the aforesaid
appointments. The information required under Clause 49 IV (G) of the
Listing Agreement is given in the Notice of the Annual General Meeting.
Auditors
The Statutory Auditors of the Company, M/s. B. D. Jokhakar & Co.,
retire at the conclusion of the ensuing Annual General Meeting and are
eligible for re- appointment. Your Company has received intimation to
the effect that, proposed re-appointment, if made, would be within the
prescribed limit under Section 224(1B) of the Companies Act, 1956.They
have confirmed their willingness to accept office, if reappointed. The
Board and Audit Committee recommend the re-appointment of M/s. B.D.
Jokhakar & Co. as Statutory Auditors of your Company for the financial
year 2013-14.
Cost Auditors
Pursuant to Section 233B of the Companies Act, 1956, the Central
Government has prescribed Cost Audit of the Company''s Bulk Drugs and
Formulations Division. The Board of Directors of your Company has
re-appointed Mr. Y. R. Doshi, Cost Accountant, having membership no.
3286, as the Cost Auditor to audit the cost accounts relating to
"Bulk Drugs" and "Formulations" for the financial year ending
2013-14. The due date for filing Cost Audit Reports of the financial
year 2012-13 for your Company is 25th September, 2013 and the tentative
date for filing these reports would be 24th September, 2013.
Energy, Research and Development, Technology Absorption, Foreign
Exchange
The particulars as prescribed under Clause (e) of Sub- section (1) of
Section 217 of the Companies Act, 1956 read with the Companies
(Disclosure of particulars in the Report of Board of Directors) Rule,
1988 are set out in Annexure II to this Report.
Particulars of Employees
Particulars of employees, as required under 217(2A) of the Companies
Act, 1956 read with the Companies (Particulars of Employees) Rules,
1975, as amended from time to time, forms part of this Report. However
in pursuance of Section 219(1)(b)(iv) of the Act, this Annual Report is
being sent to all shareholders of the Company, excluding the aforesaid
information and the said particulars are available at the Registered
Office of the Company. The members interested in obtaining such
particulars may write to the Secretarial Department at the Registered
Office of the Company.
Human Resources & Employee Relations
Unichem propagates a philosophy where its human resource continues to
be the key focus of its business. We have a talented HR pool of 4,592
employees as on April 2013. We endeavor to align our HR policies to
meet our dynamic business needs.
The year 2012-13 has been a year of consolidation and streamlining of
activities. We have realigned our business portfolio to have better
business synergies. HR supported the initiative to ensure a smooth
transition. This year the shift has been towards building a performance
culture in the organization. The emphasis has been towards creating a
culture that is challenging and rewarding to performers. Evolving and
implementing robust processes have been at the core of all
organizational initiatives.
Recruitment activities were on the upswing to strengthen the domestic
pharma business. Regional recruitment drives provided the additional
impetus of fortifying the field force.
Recognizing internal talent and providing them opportunities to excel
in leadership roles has always been at the crux of our HR philosophy.
This year too, assessments of internal talents and enhancing their
capabilities through skill development programmes were undertaken.
In order to have a better focus on our research initiatives we have
shifted our Chemical and Formulation Development (PTD) Research Centres
to Goa where our new state of the art Centre of Excellence is located.
Employee engagement continued to be a focus and several initiatives
across locations were carried out.
Quality and Environment
Your Company''s mission envisages a strong sense of commitment to work
towards being a caring pharmaceutical company, which will continuously
strive to enhance health through quality products. Your Company aims to
consistently provide products that meet customer as well as national
and international regulatory requirements as may be applicable. It has
been steadily raising the bar, setting higher goals for environmental
performance and enlarging the scope of initiatives. The environmental
policy of your Company emphasizes at being a caring company, which
shall protect and promote the environment by complying with applicable
environmental regulations and preventing pollution in all its
operations.
With a view to meet this objective, our manufacturing facility at Baddi
celebrated Environment Day with great enthusiasm and our employees
planted about 100 trees in the Company premises followed by a pledge
ceremony wherein all our employees took a pledge to protect the
environment. Pollution Prevention Day was celebrated and employees were
made aware of the effects of pollution on the environment and on living
beings. Our employees spread awareness amongst the locals about
planting more trees and making less use of plastic bags.
Similarly, various initiatives were taken at our manufacturing facility
at Roha like planting more than 100 saplings in the Company premises,
reduce waste consumption across the plant by 5% and reduce usage of
paper by recycling waste paper. Training programmes were organized from
time to time to create environmental awareness amongst the employees.
To conserve water, the Company has devised various water saving methods
which are monitored on day-to- day basis. In this direction, the
Company has devised rain-harvesting system at its Ghaziabad and CoE,
Goa manufacturing units.
Your Company continues to strive for energy saving and conservation of
natural resources. At our unit, several green initiatives have been
undertaken, most significant being soil conservation, recycling of
treated effluent water, using solar energy for street lighting and
limiting the use of Hot water Generation System in the plant by
utilizing heat recovery options in Chilling plant.
Corporate Social Responsibility
Good governance demands adherence of social responsibility coupled with
creation of value in the larger interest of the general public. Your
Company and its dedicated employees continue to contribute towards
several worthwhile causes. Your Company aims to enhance the quality of
life of the community in general and has a strong sense of social
responsibility.
As you are aware, Unichem has undertaken a project for Primary Health
Centre in Village Take- Pathar, Shahpur Taluka, Dist. Thane in the name
of Mr. Amrut Vithaldas Mody, founder of the Company, and the project is
known as Adiwasi Unnati Mandal (AUM). AUM caters to medical needs of
adiwasi population of Shahpur taluka of Thane district. AUM conducts
regular Medical check-up, Dental check-up camps, Nutrition programmes,
arranges distribution of free medicines and provides regular treatment
to patients for TB, epilepsy and leprosy at the Centre with the help of
dedicated team of doctors and volunteers who have been rendering
selfless service. During the year 14,521 patients were treated at OPD
camps held at various centres. Your Company donated Tata Sumo and Tata
Winger during the year to AUM. This vehicle is utilised for
transporting doctors and paramedical volunteers from Mumbai to Shahpur
and back where major social activity of the AUM is carried out.
During the year 12 diagnostic camps were held at Taki, 7 at Panchghar
and 1 camp at Pivli for cataract surgery and during the year 201
patients cataract surgery were successfully carried at "Bombay City
Eye Institute and Research Centre, Babulnath". 540 needy people were
provided with the spectacles and dark glasses were provided to patients
who had undergone cataract surgery.
Besides Health care programmes AUM also conducts various activities
like distribution of notebooks, compass boxes, shoes, books and other
articles useful items to school children were distributed amongst more
than 2000 students from 35 schools. Other Programmes like free
distribution of medicines, bicycles for school girls, umbrellas,
clothes and nutrition food were provided to needy people.
Our Company has volunteered to be the chief donor to Ahmedabad
University School of Management which is promoted by Ahmedabad
Education Society. During the year, the Company donated a sum of Rs. 2
Crores to the Management School. This donation is being given in the
memory of founder of the Company, Late Mr. Amrut Vithaldas Mody, who
was a pioneer in Indian Pharma Industry and a visionary Technocrat and
who was instrumental in supporting and contributing via endowments to
educational institutions during his lifetime. Ahmedabad University
started Amrut Mody School of Management, the Post Graduate Institute of
Management (PGIM). Our Company in this manner helped in shaping many
lives in a small but significant way.
Bombay College of Pharmacy (BCP) is one of the premier pharmacy
colleges in India, imparting quality pharmaceutical education &
training for the last 50 years. BCP was founded in 1957 by the Indian
Pharmaceutical Association- Maharashtra State Branch (IPA-MSB) with
financial assistance from Government of Maharashtra and several
pharmaceutical corporations including Unichem. Unichem contributed 1%
of its issued capital to Bombay College of Pharmacy in the form of
equity shares as endowment. This College is managed independently
without any interference from Unichem.
Our Company is considering donating some of its analytical instruments
to BCP and other pharmacy and technology colleges. Our Company has
provided industry based training to several pharma and technical
students over the years.
Green Initiative
The Ministry of Corporate Affairs (MCA) has taken a "Green Initiative
in Corporate Governance" (Circular No. 17/2011 dated 21.04.2011 and
Circular No. 18/2011 dated 29.04.2011) allowing paperless compliances
by Companies through electronic mode. Companies are now permitted to
send various notices /documents to its shareholders through electronic
mode to the registered email addresses of shareholders. This move by
the Ministry is welcome since it will benefit the society at large
through reduction in paper consumption and contribution towards a
Greener Environment.
Keeping in view the underlying theme and the circular issued by MCA, we
have participated in Green Initiative and sent documents like General
Meeting Notices (including AGM), Audited Financial Statements,
Directors'' Report, Auditors'' Report etc. to the shareholders in the
electronic form, to the e-mail addresses so provided by the shareholder
and made available to us by the Depositories, NSDL & CDSL using data
maintained by the Depository Participants (DP). Thus we sent Annual
Report for the year 2011-12 electronically to more than 6,000
shareholders and contributed in saving paper. We intend to send the
current Annual Report for the year 2012-13 to atleast 6,000
shareholders this year again through electronic media.
We have also taken green initiative for the purpose of postal ballot.
We have offered e-voting facility along with physical voting for
passing the resolution.
Health & Safety
Your Company assiduously endeavours to act in a responsible manner to
avoid causing any harm to the health and for safety of its employees,
contract personnel and visitors. Health and Safety issues are addressed
systematically, effectively and proactively. Mock drills are conducted
regularly for different emergency situations for enhancing
effectiveness of response plan.
Your Company takes pride in providing various forms of medical
assistance to the families of its employees and also to all those
living in surrounding villages. Periodic health checkups are carried
out for all employees and regular training programmes are organised on
safety and precautionary measures. Fire fighting training programmes
and first-aid training camps are organised regularly to educate workers
and employees at our plant locations and corporate office. Our
Pithampur plant officials have developed a Safety Park at the plant
where various types of personal protective equipments, informative
posters, fire extinguishers, etc are displayed for creating awareness
towards safety among all employees.
Acknowledgement
Your Directors acknowledge the support and wise counsel extended to the
Company by analysts, bankers, government agencies, shareholders,
investors, suppliers, distributors, stockists and others associated
with the Company as its business partners. Your Directors also
acknowledge the trust reposed in the Company by medical fraternity and
patients. We look forward to having the same support in our mission to
enhance health through quality products.
On behalf of the Board of Directors,
For Unichem Laboratories Limited
Dr. Prakash A. Mody
Chairman & Managing Director
Mumbai,
May 11, 2013
Mar 31, 2012
Dear Members,
The Directors have pleasure in presenting the 49th Annual Report on
the business and operations of the Company for the financial year ended
March 31, 2012.
Financial Highlights
The table given below gives the financial highlights of the Company on
Standalone basis for the year ended March 31,
(Rs. in Lacs)
Particulars 2012 2011
Sales/ Income from operations
(Net of Excise Duty) 80,318.73 76,473.74
Other Income 939.47 796.22
Total Income 81,258.20 77,269.96
Profit before tax 10,523.55 14,017.99
Tax Expenses (Including deferred tax
& short/excess provision
pertaining to previous years) 2,277.22 3,168.21
Profit for the period 8,246.33 10,849.78
Review of Operations
During the year under review, Sales/Income from operations (Net)
increased to Rs. 80,318.73 Lacs in 2011-12 from Rs. 76,473.74 Lacs in
2010-11, registering a growth of 5.0%. Consolidated Sales/Income from
operations (Net) stood at Rs. 87,546.30 Lacs as compared to Rs. 82,403.81
Lacs registering an increase of 6.24%.
Appropriations
Your Company has transferred Rs. 1,500 Lacs to the General Reserve during
the year under review. An amount of Rs. 47,836.52 Lacs is proposed to be
carried forward from the Profit & Loss Account.
Dividend
Your Board of Directors at their meeting held on August 11, 2012
recommended Rs. 3 (150%) per equity share of Rs. 2/- each fully paid up.
The register of members and share transfer books shall remain closed
from September 17, 2012 to September 21, 2012, both days inclusive. The
Annual General Meeting of the Company is scheduled for September 27,
2012.
Scheme of Arrangement
During the year under review, your Company made an application to the
Hon'ble High Court of Judicature at Bombay for approval to a Scheme of
Arrangement between AVM Capital Services Private Limited, Chevy Capital
Services Private Limited, PM Capital Services Private Limited, Pranit
Trading Private Limited and Viramrut Trading Private Limited and
Unichem Laboratories Limited. The petition was approved by the Hon'ble
High Court vide order dated July 12, 2012 and the Scheme has become
effective as on August 6, 2012.
Employee Stock Options Scheme
During the year under review, 82,002 of Rs. 2/- options were exercised
and equivalent numbers of equity shares were allotted (on pari passu
basis) under the Employees' Stock Option Scheme 2008.
Details of Employees' Stock Option Schemes, as required to be disclosed
under Clause 12 of the SEBI (Employees of Stock Option Scheme and
Employees Stock Purchase) Guidelines, 1999 are set out in the Annexure
I to this Report.
Management's Discussion and Analysis
A detailed review on operations and performance of the Company and its
business is given in the Management's Discussion and Analysis, which
forms part of this Annual Report.
Corporate Governance
A detailed report on Corporate Governance forms part of this Annual
Report. Your Company is in full compliance with the requirements and
disclosures that have to be made in this regard. The Auditors'
Certificate on compliance with Corporate Governance requirements by the
Company is attached to the report on Corporate Governance.
Information for Shareholders
Additional information pertaining to shareholders like Equity History,
Dividend Payment History Shareholding pattern, etc. is provided in this
Annual Report.
Consolidated Financial Statements
In accordance with the Accounting Standards AS 21 on Consolidated
Financial Statements, your Directors provide the audited Consolidated
Financial Statements in the Annual Report.
Notes on Subsidiaries
During the year, your Company incorporated a new subsidiary in Ireland
taking the total number of subsidiaries to 5 (five) as on March 31,
2012. Your Directors believe that the Consolidated Financial Statements
present a full and fair view of the state of affairs of your Company as
a whole. In terms of general approval granted by the Central Government
under Section 212(8) of Companies Act, 1956, financial statements
pertaining to the subsidiaries have not been attached with the Balance
Sheet of the Company. However, for the benefit of the members, we have
published a summary of the financials of the subsidiaries in the Annual
Report. The financial statements of subsidiaries, along-with related
information and reports are available for inspection at the registered
office of your Company.
Review of Subsidiaries
Niche Generics Limited
Niche Generics Limited is a wholly-owned subsidiary of your Company. It
is engaged in manufacturing formulations and dossier filing in European
markets. It recorded sales of GBP 103.2 Lacs for the year ended March
31, 2012 as compared to GBP 100.4 Lacs for the previous year ended
March 31, 2011. The loss for the year ended March 31, 2012 stood at GBP
1.9 Lacs compared to the loss of GBP 7.9 Lacs for the year ended March
31, 2011.
Unichem Pharmaceuticals (USA) Inc. Unichem Pharmaceuticals (USA) Inc.,
a wholly-owned subsidiary of your Company in USA, has been set up for
business development, filing of ANDAs and exploring the opportunities
for marketing alliances in North American markets. The subsidiary
recorded sales of USD 54.3 Lacs for the year ended March 31, 2012 and
incurred loss of USD 7.5 Lacs for the same period compared to the loss
of USD 9.2 Lacs for the year ended March 31, 2011.
Unichem Farmaceutica Do Brasil Ltda
Unichem Farmaceutica Do Brasil Ltda., is a wholly- owned subsidiary of
your Company in Brazil. This subsidiary has been set-up to own product
registrations, launch generic and branded generics products in the
Brazilian market.
The subsidiary plans to have marketing alliances for promoting,
warehousing and distribution. The entity suffered a loss of Brazilian
Reals 24.8 Lacs in the current year as against Brazilian Reals 14.4
Lacs during the previous year.
Unichem SA (Proprietary) Limited
Unichem SA (Proprietary) Limited is a wholly-owned subsidiary of your
Company in South Africa. This subsidiary has been set-up for business
development and to own product registrations. The subsidiary has
suffered a loss of SA Rand 6,113 in the current year.
Unichem Laboratories Ltd. Ireland
Unichem Laboratories Ltd, Ireland is a wholly-owned subsidiary of your
Company in Ireland. This subsidiary was incorporated during the year
under review for business development and to own product registrations.
The subsidiary suffered a loss of Euro 8,512 during the year ended
March 31, 2012.
Directors' Responsibility Statement
In terms of section 217 (2AA) of the Companies Act, 1956, your
Directors confirm that:
1. in preparation of annual accounts for the year have ended March 31,
2012, the applicable accounting standards have been followed along with
proper explanation relating to material departures, if any;
2. they have 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 2011-12 and profit made by
the Company for that period;
3. they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of this
Act for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities;
4. they have prepared the annual accounts on a going concern basis.
Credit Rating
ICRA has reaffirmed the A1 rating for short-term debt (including
Commercial Paper) Programme of Rs. 1500 Lacs. The rating indicates
highest safety, the prospect of timely repayment of debt/obligation
being the best.
Directors
By virtue of Section 255 of the Companies Act, 1956 and the Articles of
Association of the Company, Mr. Nasser Munjee and Mr. Prafull D. Sheth
retire by rotation at the ensuing Annual General Meeting. Attention of
the Members is invited to the relevant items in the Notice of the
Annual General Meeting for seeking their approval for the aforesaid
appointments. The information required under Clause 49 IV (G) of the
Listing Agreement is given in the Notice of the Annual General Meeting.
Auditors
The Statutory Auditors of the Company, M/s. B. D. Jokhakar & Co.,
retire at the conclusion of the ensuing Annual General Meeting and are
eligible for re- appointment. Your Company has received intimation to
the effect that, proposed re-appointment, if made, would be within the
prescribed limit under Section 224(1B) of the Companies Act, 1956.They
have confirmed their willingness to accept office, if reappointed. The
Board and Audit Committee recommend the re-appointment of M/s. B.D.
Jokhakar & Co. as Statutory Auditors of your Company for the financial
year 2012-13.
Cost Auditors
Pursuant to Section 233B of the Companies Act, 1956, the Central
Government has prescribed Cost Audit of the Company's Bulk Drugs and
Formulations Division. The Board of Directors of your Company has
re-appointed Mr. Y. R. Doshi, Cost Accountant, having membership no.
3286, as the Cost Auditor to audit the cost accounts relating to "Bulk
Drugs" and "Formulations" for the financial year ending 2012-13. The
due date for filing Cost Audit Reports of the financial year 2011-12
for your Company is 27th September, 2012 and the tentative date for
filing these reports would be 24th September, 2012.
Energy, Research and Development, Technology Absorption, Foreign
Exchange
The particulars as prescribed under Clause (e) of Sub- section (1) of
Section 217 of the Companies Act, 1956 read with the Companies
(Disclosure of particulars in the Report of Board of Directors) Rule,
1988 are set out in Annexure II to this Report.
Particulars of Employees
Particulars of employees, as required under 217(2A) of the Companies
Act, 1956 read with the Companies (Particulars of Employees) Rules,
1975, as amended from time to time, forms part of this Report. However
in pursuance of Section 219(1)(b)(iv) of the Act, this annual report is
being sent to all shareholders of the Company, excluding the aforesaid
information and the said particulars are available at the Registered
Office of the Company. The members interested in obtaining such
particulars may write to the Secretarial Department situated at the
Registered Office of the Company.
Human Resources & Employee Relations
Unichem employs over 4,000 employees who are vital to the growth of the
Company. Several HR initiatives encompassing development and engagement
of employees were conducted in the past financial year.
The Talent Associate Scheme has been launched at Corporate Office in a
bid to provide an opportunity to employees to refer their known circle
of people for an available requirement and thereby participate in the
organization's growth by helping to place the right person in the right
job.
Performance Enhancement & Development System (PEDs) is in place whereby
the performance of the employees is appraised. As a part of the Talent
Development Strategy, workshops were conducted for Management
Development.
The attrition of employees and sales staff in sales divisions has been
a matter of concern for the management. Your Company's HR & ER team has
reviewed its selection and recruitment process and made it more robust.
Introduction of new and multiple tools of assessment were introduced in
the process. A capsule module of Initial Induction Training' was
developed by our Sales Training Team. This module of training
emphasized on the need for increased learning and skill building
amongst other things before the sales staff went in the field.
Relations with employees across all the offices and manufacturing units
continued to be cordial throughout the year. Your Directors place on
record, their sincere appreciation of the significant contribution made
by the employees at all levels through their dedication, hard work and
commitment.
Quality and Environment
Your Company's mission envisages a strong sense of commitment to work
towards being a caring pharmaceutical company, which will continuously
strive to enhance health through quality products. Your Company aims to
consistently provide products that meet customer as well as national
and international regulatory requirements as may be applicable. It has
been steadily raising the bar, setting higher goals for environmental
performance and enlarging the scope of initiatives. The environmental
policy of your Company emphasizes at being a caring company which shall
protect and promote the environment by complying with applicable
environmental regulations and preventing pollution in all its
operations.
With a view to meet this objective, our manufacturing facility at Baddi
celebrated Environment Day with great enthusiasm and our employees
planted about 100 trees in the Company premises followed by a pledge
ceremony wherein all our employees took a pledge to protect the
environment. Pollution Prevention Day was celebrated and employees were
made aware of the effects of pollution on the environment and on living
beings. Our employees spread awareness amongst the locals about
planting more trees and making less use of plastic bags. Similarly
various initiatives were taken at our manufacturing facility at Roha
like planting more than 100 saplings in the Company premises, reduce
waster consumption across the plant by 5% and reduce usage of paper by
recycling waster paper. Training programmes were organized from time to
time to create environmental awareness amongst the employees.
To conserve water, the Company has devised various water saving methods
which are monitored on day-to- day basis. In this direction, the
Company has devised rain-harvesting system at its Ghaziabad and
Pithampur (SEZ) manufacturing units.
Your Company continues to strive for energy saving and conservation of
natural resources. At our Pithampur SEZ unit, several green initiatives
have been undertaken, most significant being soil conservation,
recycling of treated effluent water, using solar energy for street
lighting and limiting the use of Hot water Generation System in the
plant by utilizing heat recovery options in Chilling plant.
Corporate Social Responsibility
Good governance demands adherence of social responsibility coupled with
creation of value in the larger interest of the general public. Your
Company and its dedicated employees continue to contribute towards
several worthwhile causes. Yours Company aims to enhance the quality of
life of the community in general and has a strong sense of social
responsibility.
As you are aware, our Company has undertaken a project for Primary
Health Centre in Village Take- Pathar, Shahpur Taluka, Dist. Thane in
the name of Mr. Amrut Mody, founder of the Company, known as Adiwasi
Unnati Mandal (AUM). AUM caters to medical needs of adiwasi population
of Shahpur taluka of Thane district. AUM conducts regular Medical
check-up, Dental check- up camps, Nutrition programmes, arranges
distribution of free medicines and provides regular treatment to
patients for TB, epilepsy and leprosy at the Centre with the help of
dedicated team of doctors and volunteers who have been rendering
selfless service. During the year, 191 cataract operations were
successfully conducted with the help of "Vision Foundation of India".
Besides Health care programmes, notebooks, shoes, books and other
articles useful to school children were distributed amongst more than
2000 students over the last few years. The Company has donated TATA
SUMO to AUM. This vehicle is utilised for transporting doctors and
paramedical volunteers from Mumbai to Shahpur and back.
Our Company has volunteered to be the chief donor to Ahmedabad
University School of Management which is promoted by Ahmedabad
Education Society. During the year, the Company donated a sum of Rs. 2
Crores to the Management School. This donation is being given in the
memory of founder of the Company, Mr. Amrut Mody who was a pioneer in
Indian Pharma Industry and a visionary Technocrat and who was
instrumental in supporting and contributing via endowments to
educational institutions during his lifetime. Ahmedabad University
started Amrut Mody School of Management, the Post Graduate Institute of
Management (PGIM). Our Company in this manner helped in shaping many
lives in a small but significant way.
Bombay College of Pharmacy (BCP) is one of the premier pharmacy
colleges in India, imparting quality pharmaceutical education &
training for the last 50 years. BCP was founded in 1957 by the Indian
Pharmaceutical Association- Maharashtra State Branch (IPA-MSB) with
financial assistance from Government of Maharashtra and several
pharmaceutical corporations including Unichem. Unichem contributed 1%
of its issued capital to Bombay College of Pharmacy in the form of
shares. This College is managed independently without any interference
from Unichem.
Our Company is considering donating some of its analytical instruments
to BCP and other pharmacy and technology colleges. Our Company has
provided industry based training to several pharma and technical
students over the years.
Green Initiative
The Ministry of Corporate Affairs (MCA) has taken a "Green Initiative
in Corporate Governance" (Circular No. 17/2011 dated 21.04.2011 and
Circular No. 18/2011 dated 29.04.2011) allowing paperless compliances
by Companies through electronic mode. Companies are now permitted to
send various notices /documents to its shareholders through electronic
mode to the registered email addresses of shareholders. This move by
the Ministry is welcome since it will benefit the society at large
through reduction in paper consumption and contribution towards a
Greener Environment.
Keeping in view the underlying theme and the circular issued by MCA, we
have participated in Green Initiative and sent documents like General
Meeting Notices (including AGM), Audited Financial Statements,
Directors' Report, Auditors' Report etc. to the shareholders in the
electronic form, to the e-mail addresses so provided by the shareholder
and made available to us by the Depositories, NSDL & CDSL using data
maintained by the Depository Participants (DP). Thus we sent Annual
Report for year 2010-11 electronically to more than 6,000 shareholders
and contributed in saving paper. We intend to continue with this
initiative.
Health & Safety
Your Company assiduously endeavours to act in a responsible manner to
avoid causing any harm to the health and for safety of its employees,
contract personnel and visitors. Health and Safety issues are addressed
systematically, effectively and proactively. Mock drills are conducted
regularly for different emergency situations for enhancing
effectiveness of response plan.
Your Company takes pride in providing various forms of medical
assistance to the families of its employees and also to all those
living in surrounding villages. Periodic health checkups are carried
out of all employees and regular training programmes are organised on
safety and precautionary measures. Fire fighting training programmes
and first-aid training camps are organised regularly to educate workers
and employees at our plant locations and corporate office. Our
Pithampur plant officials have developed a Safety Park at the plant
where various types of personal protective equipments, informative
posters, fire extinguishers, etc are displayed for creating awareness
towards safety among all employees.
Acknowledgement
Your Directors acknowledge the support and wise counsel extended to the
Company by analysts, bankers, government agencies, shareholders,
investors, suppliers, distributors, stockists and others associated
with the Company as its business partners. Your Directors also
acknowledge the trust reposed in the Company by medical fraternity and
patients. We look forward to having the same support in our mission to
enhance health through quality products.
On behalf of the Board of Directors,
For Unichem Laboratories Limited
Dr. Prakash A. Mody
Chairman & Managing Director
Mumbai,
August 11, 2012
Mar 31, 2011
The Directors have pleasure in presenting the 48th Annual Report on
the business and operations of the Company for the financial year ended
March 31, 2011.
Financial Highlights
The table given below gives the financial highlights of the Company on
Standalone basis for the year ended March 31, 2011 as compared to the
previous financial year.
For the year ended March 31
(Rs. in lacs)
Particulars 2011 2010
Sales/ Income from operations (Net) 76,473.74 69,059.67
Other Operating Income 660.22 658.36
Total Income 77,133.96 69,718.03
Profit before tax 14,030.30 16,405.66
Tax Expenses (Including deferred tax &
Fringe Benefit tax) 3,159.00 3,043.00
Net profit from ordinary activities after
tax but before Prior period items 10,871.30 13,362.66
Add/(less): Prior period Expenses (1.31) (0.86)
Add/(less): Excess/(Short) provision for
taxation pertaining to previous years (20.21) 32.63
Net Profit for the period 10,849.78 13,394.43
Notes: Previous years figures have been regrouped/reclassified
wherever necessary.
Review of Operations
During the year under review, Sales / Income from operations (Net)
increased to Rs. 76,473.74 Lacs in 2010-11 from Rs. 69,059.67 Lacs in
2009-10, registering a growth of 10.74 %. Consolidated Sales / Income
from operations (Net) stood at Rs. 82,403.81 Lacs as compared to Rs.
74,738.60 Lacs registering an increase of 10.26%.
Appropriations
Your Company has transferred Rs. 1,500.00 Lacs to the General Reserve
during the year under review. An amount of Rs. 44,242 Lacs is proposed to
be carried forward from the Profit & Loss Account.
Dividend
Your Company has consistently paid higher rate of dividend over all
these years. Your Directors at their meeting held on October 16, 2010,
declared Interim Dividend of Rs. 1.20/- (60%) per equity share of Rs. 2/-
each fully paid up (previous year: total interim dividend declared and
paid was Rs. 10/- (200%) equity share of Rs. 5/- each fully paid up). The
total interim dividend payout for year 2010-11 (including dividend
distribution tax) was Rs. 1,262.67 Lacs. The above Interim Dividend
declared and paid is to be confirmed by the Members at the ensuing
Annual General Meeting.
Your Board of Directors at their meeting held on May 14, 2011
recommended Rs. 2.80 (140%) per equity share of Rs. 2/- each fully paid up.
The register of members and share transfer books shall remain closed
from July 18, 2011 to July 22, 2011, both days inclusive. The Annual
General Meeting of the Company is scheduled for July 28, 2011. If the
final dividend is approved by the shareholders at the
annual general meeting it would take the total dividend paid for the
year to Rs. 4/- (200%) per equity share of Rs. 2/- each fully paid-up.
Sub-division of Face Value of Equity shares
As you are aware during the year under review, face value of equity
shares were sub-divided from Rs. 5/- each to Rs. 2/- each. At present, the
issued, subscribed and paid-up Share Capital of the Company stands at Rs.
180,494,000 Crores comprising of 90,247,000 Equity Shares of Rs. 2/- each
fully paid-up.
Scheme of Arrangement
Your Board has considered and approved the valuation report, exchange
ratio and the Scheme of Arrangement between AVM Capital Services
Private Limited, Chevy Capital Services Private Limited, PM Capital
Services Private Limited, Pranit Trading Private Limited and Viramrut
Trading Private Limited and Unichem Laboratories Limited at its meeting
held on May 14, 2011. The above mentioned Transferor Companies are
companies through which the promoters of your Company hold shares in
Unichem Laboratories Ltd. The proposed merger would help in
consolidating and streamlining the Promoter holding in your Company and
bring long term stability in the holding structure of Unichem without
any change in the promoter holdings.
The said Scheme shall be filed with the concerned High Court or such
other competent authority and directions would be sought for
holding/dispensing with meeting of the shareholders/creditors of your
Company to give effect to the Scheme.
Employee Stock Options Scheme
During the year under review, 73,000 of Rs. 2/- options were exercised
and equivalent numbers of equity shares were allotted (on pari passu
basis) under the Employees Stock Option Scheme à 2008.
Details of Employees Stock Option Schemes, as required to be disclosed
under Clause 12 of the SEBI (Employees of Stock Option Scheme and
Employees Stock Purchase) Guidelines, 1999 are set out in the Annexure
I to this Report.
Managements Discussion and Analysis
A detailed review on operations and performance of the Company and its
business is given in the Managements Discussion and Analysis, which
forms part of this Annual Report.
Corporate Governance
A detailed report on Corporate Governance forms part of this Annual
Report. Your Company is in full compliance with the requirements and
disclosures that have to be made in this regard. The Auditors
Certificate on compliance with Corporate Governance requirements by the
Company is attached to the report on Corporate Governance.
Information for Shareholders
Additional information pertaining to shareholders like Equity History,
Dividend Payment History, Shareholding pattern, etc. is provided in
this Annual Report.
Consolidated Financial Statements
In accordance with the Accounting Standards AS Ã 21 on Consolidated
Financial Statements, your Directors provide the audited Consolidated
Financial Statements in the Annual Report.
Notes on Subsidiaries
Your Company has 4 (four) subsidiaries as on March 31, 2011. Your
Company had applied to the Central Government for an exemption from
attaching the Financial Statements of its Subsidiaries, since the
Audited Consolidated Financial Statements are presented in the Annual
Report. Your Directors believe that the Consolidated Financial
Statements present a full and fair view of the state of affairs of your
Company as a whole. In terms of approval granted by the Central
Government under Section 212(8) of Companies Act, 1956, financial
statements pertaining to the subsidiaries have not been attached with
the Balance Sheet of the Company. However, for the benefit of the
members, we have published a summary of the financials of the
subsidiaries in the Annual Report. The financial statements of
subsidiaries, along- with related information and reports are available
for
inspection at the registered office of your Company.
Review of Subsidiaries
Niche Generics Limited
Niche Generics Limited is a wholly-owned subsidiary of your Company. It
is engaged in manufacturing formulations and dossier filing in European
markets. It recorded sales of GBP 100.4 Lacs for the year ended March
31, 2011 as compared to GBP 104.1 Lacs for the previous year ended
March 31, 2010. The loss for the year ended March 31, 2011 stood at GBP
7.9 Lacs compared to the loss of GBP 1.9 Lacs for the year ended March
31, 2010.
Unichem Pharmaceuticals (USA) Inc.
Unichem Pharmaceuticals (USA) Inc., a wholly-owned subsidiary of your
Company in USA, has been set up for business development, filing of
ANDAs and exploring the opportunities for marketing alliances in North
American markets. The subsidiary recorded sales of USD 27.7 Lacs for
the year ended March 31, 2011 and incurred loss of USD 9.2 Lacs for the
same period compared to the loss of USD 12.4 Lacs for the year ended
March 31, 2010.
Unichem Farmaceutica Do Brasil Ltda
Unichem Farmaceutica Do Brasil Ltda., is a wholly- owned subsidiary of
your Company in Brazil. This subsidiary has been set-up to own product
registrations, launch generic and branded generics products in the
Brazilian market.
The subsidiary plans to have marketing alliances for promoting,
warehousing and distribution. The entity suffered a loss of Brazilian
Reals 14.4 Lacs in the current year as against Brazilian Reals 9.3 Lacs
during the previous year.
Unichem SA (Proprietary) Limited
Unichem SA (Proprietary) Limited is a wholly-owned subsidiary of your
Company in South Africa. This subsidiary has been set-up for business
development and to own product registrations. The subsidiary has
registered profit of SA Rand 58 in the current year as compared to
profit of SA Rand 197 during the previous year.
Directors Responsibility Statement
In terms of section 217 (2AA) of the Companies Act, 1956, your
Directors confirm that:
1. in preparation of annual accounts for the year ended March 31,
2011, the applicable accounting standards have been followed along with
proper explanation relating to material departures, if any;
2. they have 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 2010- 11 and profit made
by the Company for that period;
3. they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of this
Act for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities;
4. they have prepared the annual accounts on a going concern basis.
Credit Rating
ICRA has reaffirmed the A1+ rating for short-term debt (including
Commercial Paper) Programme of Rs. 1500 Lacs. The rating indicates
highest safety, the prospect of timely repayment of debt/obligation
being the best.
Directors
By virtue of Section 255 of the Companies Act, 1956 and the Articles of
Association of the Company, Mr. Prafull Anubhai and Mr. Ramdas Gandhi
retire by rotation at the ensuing Annual General Meeting. Attention of
the Members is invited to the relevant items in the Notice of the
Annual General Meeting for seeking their approval for the aforesaid
appointments. The information required under Clause 49 IV (G) of the
Listing Agreement is given in the Notice of the Annual General Meeting.
Auditors
The Statutory Auditors of the Company, M/s. B. D. Jokhakar & Co.,
retire at the conclusion of the ensuing Annual General Meeting and are
eligible for re- appointment. Your Company has received intimation to
the effect that, proposed re-appointment, if made, would be within the
prescribed limit under Section 224(1B) of the Companies Act, 1956.They
have confirmed their willingness to accept office, if re-appointed. The
Board and Audit Committee recommend the re-appointment of M/s. B.D.
Jokhakar & Co. as Statutory Auditors of your Company for the financial
year 2011-12.
Cost Auditors
Pursuant to Section 233B of the Companies Act, 1956, the Central
Government has prescribed Cost Audit of the Companys Bulk Drugs and
Formulations Division. The Board of Directors of your Company has
re-appointed Mr. Y. R. Doshi, Cost Accountant, having membership no.
3286, as the Cost Auditor to audit the cost accounts relating to "Bulk
Drugs" and "Formulations" for the financial year ending 2011-12. The
due date for filing Cost Audit Reports of the financial year 2009-10
for your Company was 27th September, 2010 and the reports were filed
well within the due date i.e. on 24th September, 2010. Similarly, the
due date for filing Cost Audit Reports of the financial year 2010-11
for your Company is 27th
September, 2011 and the tentative date for filing these reports is 24th
September, 2011.
Energy, Research and Development, Technology Absorption, Foreign
Exchange
The particulars as prescribed under Clause (e) of Sub- section (1) of
Section 217 of the Companies Act, 1956 read with the Companies
(Disclosure of particulars in the Report of Board of Directors) Rule,
1988 are set out in Annexure II to this Report.
Particulars of Employees
Particulars of employees, as required under 217(2A) of the Companies
Act, 1956 read with the Companies (Particulars of Employees) Rules,
1975, as amended from time to time, forms part of this Report. However
in pursuance of Section 219(1)(b)(iv) of the Act this report is being
sent to all shareholders of the Company, excluding the aforesaid
information and the said particulars are available at the Registered
Office of the Company. The members interested in obtaining such
particulars may write to the Secretarial Department at the Registered
Office of the Company.
Employee Relations
Relations with employees across all the offices and units continued to
be cordial throughout the year. Your Directors place on record, their
sincere appreciation of the significant contribution made by the
employees at all levels through their dedication, hard work and
commitment.
Quality and Environment
Your Companys mission envisages a strong sense of commitment to work
towards being a caring pharmaceutical company, which will continuously
strive to enhance health through quality products. Your Company aims to
consistently provide products that meet customer as well as national
and international regulatory requirements as may be applicable. It has
been steadily raising the bar, setting higher goals for environmental
performance and enlarging the scope of initiatives. The environmental
policy of your Company emphasizes at being a caring company, which
shall protect and promote the environment by complying with applicable
environmental regulations and preventing pollution in all its
operations.
To conserve water, the Company has devised various water savings
methods which are monitored on day-to- day basis. In this direction,
the Company has devised rain-harvesting system at its Ghaziabad
manufacturing unit. Your Company continues to strive for energy saving
and conservation of natural resources.
Corporate Social Responsibility
Good governance demands adherence of social
responsibility coupled with creation of value in the larger interest of
the general public. Your Company and its dedicated employees continue
to contribute towards several worthwhile causes. Your Company aims to
enhance the quality of life of the community in general and has a
strong sense of social responsibility. The range of our activities
begins with organizing fire fighting drills, blood donation camps in
collaboration with Blood Banks, facilitating plantation of trees,
extending educational and on-job training facilities and goes on to
cover vocational guidance and supporting seminars in co-ordination with
Universities, arranging spiritual upliftment programmes, etc. The aim
of these seminars and lectures is to increase the intellectual wealth
of employees, who in turn are expected to go back and spread the
knowledge to build a happy, peaceful and strong nation.
To create awareness about the pollution generated by motor vehicles,
Unichem is rolling out a mandatory check of Pollution Under Control
(PUC) certificates of all vehicles entering Company premises at Goa
manufacturing unit. As a part of Unichems Environmental Awareness
Drive, various programmes by eminent environmentalists are organized on
a regular basis for the benefit of the industrial community in
association with Goa University, Inspectorate of Factories & Boilers,
Government of Goa and Green Triangle Society.
As you are aware, our Company has undertaken a project for Primary
Health Centre in Village Taki-Pathar, Shahpur Taluka, Dist. Thane in
the name of Mr. Amrut Mody, founder of the Company. This Health Centre
was inaugurated in September last year and now shall cater to medical
needs of adiwasi population of Shapur taluka of Thane District. A
dedicated team of doctors provide regular treatment to patients for TB,
epilepsy and leprosy at the Centre. During the financial year under
review, the Centre organized 18 diagnostic, surgery and post operative
camps at Taki, Andad and Shirval Villages of Shapur. Free Cataract
operations were carried out in Mumbai for 205 patients. Educational aid
in the form of notebooks, compass boxes, biscuits, etc was provided to
around 1600 students from 20 schools. General Medical and Dental check
up camp was organized in Khalapur district in Raigad. 180 students took
advantage of the camp.
Our Company has volunteered to be the chief donor to Ahmedabad
University School of Management which is promoted by Ahmedabad
Education Society. During the year the Company donated a sum of Rs. 3
Crores to the Management School. This donation is being given in the
memory of its founder Chairman Mr. Amrut Mody who was a pioneer in
Indian Pharma Industry and a visionary Technocrat and who was
instrumental in supporting and
contributing via endowments to educational institutions during his
lifetime.
Plant Visit
Your Company had organized a plant visit for the shareholders to our
Roha plant. The visit included information about the various functions
and processes taking place at Roha plant. The visit was a grand
success.
Health & Safety
Your Company assiduously endeavours to act in a responsible manner to
avoid causing any harm to the health and for safety of its employees,
contract personnel and visitors. Health and Safety issues are addressed
systematically, effectively and proactively. Mock drills are conducted
regularly for different emergency situations for enhancing
effectiveness of response plan.
Your Company takes pride in providing various forms of medical
assistance to the families of its employees and also to all those
living in surrounding villages. Periodic health checkups are carried
out of all employees and regular training programmes are organised on
safety and precautionary measures. Fire fighting training programs and
first-aid training camps are organised regularly to educate workers and
employees at our plant locations and corporate office. Our Pithampur
plant officials have developed a Safety Park at the plant where various
types of personal protective equipments, informative posters, fire
extinguishers, etc are displayed for creating awareness towards safety
among all employees.
Acknowledgement
Your Directors acknowledge the support and wise counsel extended to the
Company by analysts, bankers, government agencies, shareholders,
investors, suppliers, distributors, stockists and others associated
with the Company as its business partners. Your Directors also
acknowledges the trust reposed in the Company by medical fraternity and
patients. We look forward to having the same support in our mission to
enhance health through quality products.
On behalf of the Board of Directors,
For Unichem Laboratories Limited
Dr. Prakash A. Mody
Chairman & Managing Director
Mumbai,
May 14, 2011
Mar 31, 2010
The Directors have pleasure in presenting the 47th Annual Report on
the business and operations of the Company for the financial year
ended March 31, 2010.
Financial Highlights
The table given below gives the financial highlights of the Company on
Standalone basis for the year ended March 31,
2010 as compared to the previous financial year. For the year ended
March 31
( Rs. in lacs)
Particulars 2010 2009
Sales/ Income from operations (Net) 68,383.54 64,886.79
Other Operating Income 676.13 799.87
Total Income 69,059.67 65,686.66
Profit from Operations before other
income, interest & exceptional items 15,798.27 13,423.02
Profit from ordinary
activities before tax 16,405.66 14,408.96
Tax Expenses (Including deferred tax
& Fringe Benefit tax) 3,043.00 1,920.00
Net profit from ordinary activites
after tax but before
Prior period items 13,362.66 12,488.96
Prior period Expenses 0.86 -
Excess/(Short) provision for taxation
pertaining to earlier years 32.63 (13.81)
Net Profit for the period 13,394.43 12,475.15
Notes: Previous years figures have been regrouped/reclassified
wherever necessary.
Review of Operations
During the year under review, Total Income increased to Rs. 69,059.67
lacs in 2009-10 from Rs. 65,686.66 lacs in 2008-09, registering a
growth of 5.14%. Net Profit after tax for the year stood at Rs.
13,394.43 lacs compared to Rs. 12,475.15 lacs recorded last year, thus
reflecting 7.37% growth. The Global Net Profit for the group for the
year stood at Rs. 12,312.27 lacs as compared to Rs. 10,801.71 lacs in
the previous year registering a growth of 13.98%.
Appropriations
Your Company has transferred Rs. 1,500.00 lacs to the General Reserve
during the year under review. An amount of Rs. 39,091.69 lacs is
proposed to be carried forward from the Profit & Loss Account.
Dividend
Your Directors at their meeting held on October 22, 2009, declared 1st
Interim Dividend of Rs. 3/- (60%) per equity share of Rs. 5/- each.
Subsequently, 2nd Interim Dividend of Rs. 7/- (140%) per equity share
of Rs. 5/- each fully paid up was declared at the meeting held on May
10, 2010, taking the total interim dividend declared for the year to
Rs. 10/- (200%) per share (previous year : total dividend declared Rs.
8/- (160%) per share). The total interim dividend payout for year
2009-10 (including dividend distribution tax) was Rs. 4,209.85 lacs.
The above Interim Dividends declared and paid are to be confirmed by
the Members at the ensuing Annual General Meeting. The Board at their
meeting held on July 22, 2010, has decided to
consider the said interim dividends as final.
The register of members and share transfer books shall remain closed
from September 13, 2010 to September 15, 2010, both days inclusive. The
Annual General Meeting of the Company is scheduled for September 16,
2010.
Sub-division of Face value of Equity shares
The Board of Directors is pleased to recommend the sub-division of face
value of equity shares of Rs.5/- into face value of Rs.2/- each,
subject to approval of shareholders at the forthcoming Annual General
Meeting.
Employee Stock Options Scheme
During the year under review, 8,100 options were exercised and
equivalent numbers of equity shares were allotted (on pari passu basis)
under the Employees Stock Option Scheme à 2004.
Details of Employeesà Stock Option Schemes, as required to be disclosed
under Clause 12 of the SEBI (Employees Stock Option Scheme) Guidelines,
1999 are set out in the Annexure I to this Report.
Information Systems
Your Company has successfully implemented SAP ERP 6.0 thereby enabling
proper planning and company wide efficiency. The modules have been
implemented and stabilized and the system is fully integrated with BaaN
system.
Managements Discussion and Analysis
A detailed review on operations and performance of the Company and its
business is given in the ManagementÃs Discussion and Analysis, which
forms part of this Annual Report.
Corporate Governance
A detailed report on Corporate Governance forms part of this Annual
Report. Your Company is in full compliance with the requirements and
disclosures that have to be made in this regard. The AuditorsÃ
Certificate on compliance with Corporate Governance requirements by the
Company is attached to the report on Corporate Governance.
Information for Shareholders
Additional information pertaining to shareholders like Growth in
Shareholders Fund, Shareholding pattern, Equity History of the Company,
etc. is provided in this Annual Report.
Consolidated Financial Statements
In accordance with the Accounting Standard AS Ã 21 on Consolidated
Financial Statements, your Directors provide the audited Consolidated
Financial Statements in the Annual Report.
Notes on Subsidiaries
Your Company has 4 (four) subsidiaries as on March 31, 2010. Your
Company had applied to the Government of India for an exemption from
attaching the Financial Statements of its Subsidiaries, since the
Audited Consolidated Financial Statements are presented in the Annual
Report. Your Directors believe that the Consolidated Financial
Statements present a full and fair view of the state of affairs of your
Company as a whole. In terms of approval granted by the Central
Government under Section 212(8) of Companies Act, 1956, financial
statements pertaining to the subsidiaries have not been attached with
the Balance Sheet of the Company. However, for the benefit of the
members, we have published a summary of the financials of the
subsidiaries in the Annual Report. The financial statements of
subsidiaries, along-with related information and reports are available
for inspection at the registered office of your Company.
Review of Subsidiaries
Niche Generics Limited
Niche Generics Limited is a wholly-owned subsidiary of your Company. It
is engaged in manufacturing formulations, product development and
dossier filing in European markets. It recorded sales of GBP 104.1 lacs
for the year ended March 31, 2010 as compared to GBP 114.7 lacs for the
previous year ended March 31, 2009. During the year, there is a
considerable improvement in the working of the company and accordingly
the loss for the
year ended March 31, 2010 stood at GBP 1.9 lacs compared to the loss of
GBP 13.1 lacs for the year ended March 31, 2009.
Unichem Pharmaceuticals (USA) Inc.
Unichem Pharmaceuticals (USA) Inc., a wholly-owned subsidiary of your
Company in USA, has been set up for business development, filing of
ANDAÃs and exploring the opportunities for marketing alliances in North
American markets. The subsidiary recorded sales of USD 7.5 lacs for the
year ended March 31, 2010 and incurred loss of USD 12.4 lacs for the
same period compared to the loss of USD 11.7 lacs for the year ended
March 31, 2009.
Unichem Farmaceutica Do Brasil Ltda
Unichem Farmaceutica Do Brasil Ltda., is a wholly-owned subsidiary of
your Company in Brazil. This subsidiary has been set-up to own product
registrations, launch generic and branded generic products in the
Brazilian market.
The subsidiary plans to have its own set-up for sales, marketing,
warehousing and distribution. The entity suffered a loss of Brazilian
Reals 12.6 lacs in the current year as against Brazilian Reals 9.32
lacs during the previous year.
Unichem SA (Proprietary) Limited
Unichem SA (Proprietary) Limited is a wholly-owned subsidiary of your
Company in South Africa. This subsidiary has been set- up for business
development and to own product registrations. The subsidiary has
registered profit of SA Rand 197 in the current year against loss of SA
Rand 28 during the previous year.
Directors Responsibility Statement
In terms of section 217 (2AA) of the Companies Act, 1956, your
Directors confirm that:
1. in preparation of annual accounts for the year ended March 31,
2010, the applicable accounting standards have been followed along with
proper explanation relating to material departures, if any;
2. they have 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 2009-10 and profit made by
the Company for that period;
3. they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of this
Act for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities;
4. they have prepared the annual accounts on a going concern basis.
Fixed Deposits
Your Company discontinued its fixed deposits scheme in financial year
2005. As on March 31, 2010, the total amount of fixed deposits was Rs.
39,000/-, which represents the unclaimed deposits that have matured.
Credit Rating
ICRA has reaffirmed the A1+ rating for short-term debt (including
Commercial Paper) Programme of Rs. 1500 lacs. The rating indicates
highest safety, the prospect of timely repayment of debt/obligation
being the best.
Directors
By virtue of Section 255 of the Companies Act, 1956 and the Articles of
Association of the Company, Mr. Prafull D. Sheth and Mr. Anand Mahajan
retire by rotation at the ensuing Annual General Meeting. Attention of
the Members is invited to the relevant items in the Notice of the
Annual General Meeting for seeking their approval for their
re-appointment. The information required under Clause 49 IV (G) of the
Listing Agreement is given in the Notice of the Annual General Meeting.
Auditors
The Statutory Auditors of the Company, M/s. B. D. Jokhakar & Co.,
retire at the conclusion of the ensuing Annual General Meeting and are
eligible for re-appointment. Your Company has received intimation to
the effect that, proposed re- appointment, if made, would be within the
prescribed limit under Section 224(1B) of the Companies Act, 1956. They
have confirmed their willingness to accept office, if re-appointed.
The Board and Audit Committee recommend the re-appointment of M/s. B.
D. Jokhakar & Co. as Statutory Auditors of your Company for the
financial year 2010-11.
Cost Auditors
Pursuant to Section 233B of the Companies Act, 1956, the Central
Government has prescribed Cost Audit of the CompanyÃs Bulk Drugs and
Formulations Division. The Board of Directors of your Company have
re-appointed Mr. Y. R. Doshi, Cost Accountant as the Cost Auditor to
audit the cost accounts relating to ÃBulk Drugsà and ÃFormulationsà for
the financial year 2010-11.
Energy, Research and Development, Technology Absorption, Foreign
Exchange
The particulars as prescribed under Clause (e) of Sub-section (1) of
Section 217 of the Companies Act, 1956 read with the Companies
(Disclosure of particulars in the Report of Board of Directors) Rule,
1988 are set out in Annexure II to this Report.
Particulars of Employees
Particulars of employees, as required under 217(2A) of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975, as amended from time to time, forms part of this Report.
However in pursuance of Section 219(1)(b)(iv) of the Act this report is
being sent to all shareholders of the Company, excluding the aforesaid
information and the said particulars are available at the Registered
Office of the Company. The members interested in obtaining such
particulars may write to the Secretarial Department at the Registered
Office of the Company.
Employee Relations
Relations with employees across all the offices and units continued to
be cordial throughout the year. Your Directors place on record, their
sincere appreciation of the significant contribution made by the
employees at all levels through their dedication, hard work and
commitment.
Quality and Environment
ISO 9001 and ISO 14001 certificates for Quality and Environmental
Management System enhance the credibility of your Company to increase
process efficiencies, reduce consumption of energy and lower risk of
environmental damage.
Your Companys mission envisages a strong sense of commitment to work
towards being a caring pharmaceutical company, which will continuously
strive to enhance health through quality products. Your Company aims to
consistently provide products that meet customer as well as national
and international regulatory requirements as may be applicable. It has
been steadily raising the bar, setting higher goals for environmental
performance and enlarging the scope of initiatives. The environmental
policy of your Company emphasizes at being a caring company, which
shall protect and promote the environment by complying with applicable
environmental regulations and preventing pollution in all its
operations.
To conserve water, the Company has devised various water savings
methods which are monitored on day-to-day basis. In this direction, the
Company has devised rain-harvesting system at its Ghaziabad
manufacturing unit. Your Company continues to strive for energy saving
and conservation of natural resources.
Corporate Social Responsibility
Good governance demands adherence of social responsibility coupled with
creation of value in the larger interest of the general public. Your
Company and its dedicated employees continue to contribute towards
several worthwhile causes. Your Company aims to enhance the quality of
life of the community in general and has a strong sense of social
responsibility. The range of our activities begins with organizing fire
fighting drills, blood
donation camps in collaboration with Blood Banks, facilitating
plantation of trees, extending educational and on-job training
facilities and goes on to cover vocational guidance and supporting
seminars in co-ordination with Universities, arranging spiritual
upliftment programmes, etc. The aim of these seminars and lectures is
to increase the intellectual wealth of employees, who in turn are
expected to go back and spread the knowledge to build a happy, peaceful
and strong nation.
To create awareness about the pollution generated by motor vehicles,
Unichem is rolling out a mandatory check of Pollution Under Control
(PUC) certificates of all vehicles entering Company premises at Goa
manufacturing unit. As a part of UnichemÃs Environmental Awareness
Drive, various programmes by eminent environmentalists are organized on
a regular basis for the benefit of the industrial community in
association with Goa University, Inspectorate of Factories & Boilers,
Government of Goa and Green Triangle Society.
Besides the aforesaid, your Company has taken two key initiatives in
the fields of healthcare for the under privileged and education in the
fond memory of our founder Mr. Amrut Mody, who was the pioneer of
Indian Pharma industry and a visionary Technocrat and who was
instrumental in supporting the needy and also contributing via
endowments to educational institutions during his lifetime. Firstly,
your Company has undertaken a project for Primary Health Centre in
Village Tanki- Pathar, Shahpur Taluka, Dist. Thane in the name of Mr.
Amrut Mody, founder of the Company. This Health Centre shall cater to
the basic medical needs of the tribals in the vicinity. Secondly, your
Company has volunteered to be the chief donor to Ahmedabad University
School of Management which is promoted by Ahmedabad Education Society.
Health & Safety
Your Company assiduously endeavours to act in a responsible manner to
avoid causing any harm to the health and for safety of its employees,
contract personnel and visitors. Heath and Safety issues are addressed
systematically, effectively and proactively
as per requirements of ISO standards/ OHSAS guidelines. Mock drills are
conducted regularly for different emergency situations for enhancing
effectiveness of response plan.
Your Company takes pride in providing various forms of medical
assistance to the families of its employees and also to all those
living in surrounding villages. Periodic health checkups are carried
out of all employees and regular training programmes are organised on
safety and precautionary measures. Fire fighting training programs and
first-aid training camps are organised regularly to educate the
employees. Our API facility at Roha and Pithampur are accredited with
OHSAS 18001:1999 and OHSAS 18001:2007 respectively which stands for
Occupational Health and Safety Management System.
Acknowledgement
Your Directors acknowledge the support and wise counsel extended to the
Company by analysts, bankers, government agencies, shareholders,
investors, suppliers, distributors, stockists and others associated
with the Company as its business partners. Your Directors also
acknowledge the trust reposed in the Company by medical fraternity and
patients. We look forward to having the same support in our mission to
enhance health through quality products.
On behalf of the Board of Directors,
For Unichem Laboratories Limited
Dr. Prakash A. Mody
Chairman & Managing Director
Mumbai,
July 22, 2010
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