Mar 31, 2015
The Shareholders of Dishman Pharmaceuticals and Chemicals Limited
The Directors have pleasure in presenting their Report along with the
Audited Accounts of the Company for the year ended March 31, 2015.
(Rs. in Lacs)
FINANCIAL RESULTS
Standalone Consolidated
Particulars 2014-2015 2013-2014 2014-2015 2013-2014
Net Sales 47869.31 47328.11 157518.77 138532.00
Profit before tax & other
adjustments 10382.59 11883.64 15924.71 15640.24
Net current tax expenses 2701.64 2528.05 4088.38 3766.24
Deferred tax liability 1833.12 676.93 (144.57) 946.76
Profit After Tax 5847.83 8678.66 11980.90 10927.24
Balance of profit
brought forward 11853.28 5807.56 42114.18 33819.88
Amount available for
appropriation 17701.11 14486.22 54095.08 44747.12
Adjustment of Depreciation (110.69) - (131.89) -
Appropriations:
Transfer to debenture
redemption reserve - - - -
Transfer to general reserve 1500.00 1500.00 1500.00 1500.00
Proposed dividend 1613.94 968.37 1613.94 968.37
Tax on proposed dividend 328.56 164.57 328.56 164.57
Balance carried to
balance sheet 14147.92 11853.28 50520.69 42114.18
PERFORMANCE AND OPERATION REVIEW
Standalone Financial Results
In FY2014-15, your Company achieved a turnover of Rs. 47869.31 lacs as
compared to Rs. 47328.11 lacs in FY2013-14. Profit before tax stood at
Rs. 10382.59 lacs in FY2014-15 as against Rs. 11883.64 lacs in
FY2013-14. Profit after tax for the year remain at Rs. 5847.83 lacs in
FY2014-15 as compared to Rs. 8678.66 lacs in FY2013-14.
Earning per share for the FY2014-15 remains at Rs. 7.25 per share as
against Rs. 10.75 per share in FY 2013-14.
Consolidated Financial Results
In FY2014-15, your Company achieved a turnover of Rs. 157518.77 lacs as
compared to Rs. 138532.00 lacs in FY2013-14. Profit before tax stood at
Rs. 15924.71 lacs in FY2014-15 as against Rs. 15640.24 lacs in
FY2013-14. Profit after tax for the year remain at Rs. 11980.90 lacs in
FY2014-15 as compared to Rs. 10927.24 lacs in FY2013-14.
Earning per share for the FY2014-15 remains at Rs. 14.85 per share as
against Rs. 13.54 per share in FY 2013-14.
A detail analysis of the performance of the company, its subsidiaries
and financial results is given in the Management Discussion and
Analysis Report, which forms part of this report.
DIVIDEND
For the financial year 2014-2015, the Board of Directors of your
Company have decided to increase dividend for higher return on
investment made by the shareholders of the Company. Your Directors are
pleased to recommend a final dividend of 100% on the paid-up equity
share capital of Rs. 1613.94 lacs (Rs. 2.00/- per equity share of Rs.
2/- each) (previous year 60% on the paid-up equity share capital of Rs.
1613.94 lacs, i.e. Rs. 1.20/- per equity share of Rs. 2/- each),
subject to approval of shareholder at ensuing Annual General Meeting
and will be paid out of the profits of the Company for the year to all
those equity shareholders whose names appear in the Register of Members
on the close of business hours as on 11th September, 2015.
TRANSFER TO RESERVES
The Company proposes to transfer Rs. 15.00 crores (previous year Rs.
15.00 crores) to the General Reserves out of the amount available for
appropriation.
DEPOSIT
The Company has neither accepted nor invited any deposit from public,
falling within the ambit of Section 73 of the Companies Act, 2013 and
The Companies (Acceptance of Deposits) Rules, 2014.
NON CONVERTIBLE DEBENTURES (NCDs)
- As you are aware, in February, 2010 your Company has issued Secured
Redeemable Non Convertible Debentures of Rs. 75.00 crores in the form
of Separately Transferable Redeemable Principle Parts ("STRPPs") of Rs.
10 lacs each fully paid-up on private placement basis and the said NCDs
has been listed on the Bombay Stock Exchange Ltd. (BSE) in the list of
securities of F Group - Debt Instrument w.e.f. 13th May, 2010. These
NCDs will be redeemed at par at the end of 4th, 5th, 6th & 7th year in
ratio of 20:20:30:30, respectively from the date of issue.
During the year, as per the terms of said NCD, on 18th February, 2015,
the Company has redeem 20% of the Non convertible Debenture (first
Trenched) issued by the Company in February, 2010 and accordingly;
Company has paid Rs. 22.76 Cr. towards principal payment and interest
thereon to the Debenture holders. Now, as on 31st March, 2015, there is
an outstanding NCD -I (first trenched) amounting to Rs. 45.00 crores.
- In June, 2010, the Company has issued second trenched of its Secured
Redeemable Non- convertible Debentures (NCD) of Rs. 75.00 crores in the
form of Separately Transferable Redeemable Principle Parts ("STRPPs")
of Rs. 1.00 lac each fully paid-up on private placement basis and the
said NCDs have also been listed on the Bombay Stock Exchange Ltd. (BSE)
in the list of securities of F Group - Debt Instruments w.e.f. 17th
September, 2010. These NCDs will be redeemed at par at the end of 4th &
5th year in the ratio of 50:50, respectively from the date of issue.
During the year, as per the terms of said NCD, on 16th June, 2014, the
Company has redeemed 50% of the NCD-II (second tranche) issued by the
Company in June, 2010 and accordingly; Company has paid Rs. 38.25
crores towards principal payment and interest thereon to the Debenture
holders. Now, as on 31st March, 2015, there is an outstanding NCD-II
(second tranche) amounting to Rs. 37.50 crores.
The Company is paying interest on the said NCDs regularly on the due
dates. As per the Circular No. 04/2013 dated 11th February, 2013 issued
by Ministry of Corporate Affairs, Government of India, Company had
created Debenture Redemption Reserve (DRR), in respect of both trenches
of NCDs issued by the Company. The Company has deposited an amount of
Rs. 9.00 Crores, by way of fixed deposit with Corporation Bank, being
15% of the maturing amount of Rs. 60.00 Crores, which is going to be
matured during the Financial Year 2015-2016.
OPERATIONS
During the year, most of the key business verticals of the Company and
also all major subsidiaries of the Company have performed reasonably
well.
CRAMS
For the "CRAMS" segment of Dishman India, as you are aware, since the
last three years, your Company has modified its focus and is now
concentrating on a larger number of midsize contracts, instead of
concentrating only on a few large MNCs. Your Company's strategy has
started yielding fruits since last 2 years whereby apart from the big
pharma companies your Company has been getting many orders from small
and big and mid-sized pharma companies which has resulted into
diversified portfolios in this segment in India and has also helped
your Company in having a greater degree of predictability of the
revenues. Your Company's 100% wholly owned subsidiary - CARBOGEN AMCIS
AG Switzerland(CAAG), which is also operating in the CRAMS segment
through its plant located in Switzerland and UK has done quite well
during the year under review. In fact, CAAG's order book is almost full,
and as a strategic measure, during the year under review, the China
facility has been now put under the management of CAAG to cater to
their gap of not having large volume manufacturing. We are happy to
note that CAAG has expanded its markets significantly and also improved
the product basket between Dishman India and Carbogen Amcis or Dishman
Group, your Company now has the capability of offering complete
solutions in the organic chemistry space in the CRAMS segment. Further,
the performance of CARBOGEN AMCIS UK has also remained very
satisfactory during the year under review.
We are also delighted to inform the members that during FY 2014-15,
Dishman Group has also made remarkable progress specifically in terms
of the Oncology space, thanks to the focused hard work in the
development process by partnering with many Oncology companies over
last few years. Thus Dishman Group bagged a prestigious order for
supply of high value added Oncology API for a highly effective Lung
Cancer drug to a leading mid size Oncology Formulation company based
out of US. Further, many such products are in pipeline.
Your Company is confident of achieving a steady and sustainable growth
in this segment in the coming years.
Hi-Po Unit
The state-of-the-art Hi-Potency (Hi-Po unit) - Unit 9 at Bavla has
performed well during the year under review. Your Company has started
receiving regular as well as repeated orders from major global pharma
MNCs who are very excited about the type of the facility and
infrastructure created in this unit. Again noteworthy is the fact that,
apart from the on going projects, your Company has successfully
completed a few technology transfer projects from CARBOGEN AMCIS to
this unit which implies a significant scaling up of the production of
such high value-added and extremely potent pharma APIs mainly in the
oncology category. As you are aware, this is one of its kind facility
not only in India, but in the entire world, which is capable of
handling extremely high potency molecules in large volumes with a
specific focus on the therapeutic segments of oncology, steroids, among
others. Regular business has started coming in steadily from leading
Global MNCs. For the current year, your Company has already an order
book/ visibility of around US$ 12 million for this unit with only 2 of
the possible 5 cells fitted and at its optimum capacity the target is
to achieve a top line of around US$ 25-30 million over next 2 to 3
years for which a good visibility exists. Again, this is a high-margin
segment which will also help in improving the bottom line of your
Company and more importantly, the products when launched, will improve
the life expectancy of many unfortunate people affected with such
deadly diseases.
Vitamin D3
During the year under review, the Vitamin D3 Business has also
performed satisfactorily. This Business is of the WOS namely Dishman
Netherland B.V., which is having its plant in Netherlands producing
cholesterol, the key raw material for Vitamin D3. During the year under
review, the said company has changed its strategy for this Business and
is now concentrating on selective business, which has yielded good
results in the form of increased profitability.
Generic API Business
The growth of Generic API business during the year has been slightly
subdued, but still satisfactory. The idea is to take the advantage of
several products already developed by the Company in the form of around
25 to 30 potential good generic APIs for which the Company has enough
data available to immediately file the DMFs in the regulated market.
The key focus will be only on the regulated markets where the Company
would be in a position to get a better value addition and comfortable
profit margin.
Performance of China WOS
As indicated earlier, during the year under review, post taking over of
the operations of china plant by CAAG, its performance has improved and
the losses have considerably reduced. In FY 2014-15. Your Company is
fairly confident of turning around Dishman China in the fiscal year
FY2015-16.
Performance of Major Subsidiaries
The major subsidiary Companies have performed quite satisfactorily
during the year under review. CARBOGEN AMCIS AG., Switzerland has
reported a healthy revenue of Rs. 786.91 crores as against Rs. 621.28
crores in the previous year and PBT of Rs. 67.42 crores as against Rs.
56.12 crores. CAROGEN AMCIS Ltd., UK has also reported a healthy
revenue of Rs. 80.22 crores as against Rs. 52.27 crores in the previous
year and PBT of Rs. 13.65 crores as against Rs. 8.34 crores.
The other marketing subsidiaries viz. Dishman Europe Ltd., reported a
revenue of Rs. 257.93 crores and PBT of Rs. 1.76 crores as compared to
Rs. 274.36 crores and PBT of Rs. 8.72 crores in the previous year.
Dishman USA reported a revenue of Rs. 95.87 crores and PBT of Rs. 1.89
crores showing growth of 8.58% and 43.18%, respectively, as compared to
last year.
Dishman Netherland BV., (DNBV) perform well during the year, revenue of
DNBV increased by 10.94% during FY 2014-15, which stood at Rs. 196.52
crores and PBT has been increased to Rs. 31.89 crores from Rs. 6.66
crores in the previous year. Other subsidiaries has also performed
reasonably well during the year under review.
RESEARCH AND DEVELOPMENT
We continue to focus on Research & Development as our core strength.
Our research is the foundation upon which our strategy of manufacturing
and marketing of Bulk Drugs, Intermediates (including contract
manufacturing), Fine Chemicals, Quats & Specialty chemicals stands.
We offer process development and optimisation services from our
Ahmedabad-based state-of-the-art R&D centre and from other locations
outside of India. At the Ahmedabad R&D centre which is in operation
since 2005, our Process R&D scientists work in well- equipped
laboratories, with an excellent analytical set-up for monitoring the
reactions. Our development programs are designed to meet diverse
customer expectations varying from project to project. We are
considering refurbishment of the R&D laboratories.
A majority of our process development activities are aimed towards
optimising our existing processes. Our prime objective is to make these
processes economically and environmentally viable. During the period of
development, safety and efficiency parameters of these processes is
assumed most significance.
Amidst the ongoing changing regulatory scenario on drug design, we
develop processes capable of producing pure APIs, with impurities well
below the acceptable levels. Currently, there are 25 NCE Molecules
under the laboratory to pilot scale production and some also at
commercial scale due to the high volume requirement to supply material
for multiple clinical trials for various indications.. The IPR of a few
of these have been given to customers against "agreed-upon payments".
Many of these IPR are owned by the Company.
In the Generic API segment, we are focusing on new and niche
therapeutic areas in the segment of generic APIs. For developmental
activities, our research scientists have access to online databases for
all types of information requirement.
In this year, about 150 projects are at different stages of development
of these, 100 CRAMS projects, 25 Generic APIs, about 25 NCE Molecules
are currently under laboratory/pilot scale and commercial production
IPR for some of them are given to customers against agree-upon payments
but for many of them IPR is owned by Dishman.
QUALITY, HEALTH, SAFETY & ENVIRONMENT (QHSE)
Your company is committed to ensuring that those working with the
Company are safe at work, and that everyone takes responsibility for
achieving this. We include EHS and climate change-related
considerations in our business decisions and strive to minimize the
environmental impact of our operations on the environment. Measuring,
appraising and reporting on environmental, health and safety
performance is an important part of continuous improvement in our EHS
performance.
Dishman's Environment, Health and Safety (EHS) organization conducts
strategic planning to establish long-term EHS goals, assess resources
required to achieve specific goals, and ensure critical business
alignment. Dishman considers feedback from internal and external
stakeholders in proposing and establishing its long-term goals in
manufacturing operations.
Dishman's products and processes are developed in accordance with
strictly defined local and international rules to ensure safety and
Health of workers as well as the environment. This is achieved by
conducting the Risk Assessment, Process Hazard Assessment,
identification of significant environmental aspects, Safety Audits,
customer audits, HAZOP study and Environment audits. Safety &
Environment Management Program are being taken to reduce the
Significant Risk & Environment Aspects.
The Company's QHSE policy is being implemented, among others, through
(i) Maintaining the "Zero Discharge" of waste water by series of
treatment; (ii)Stripper system, Multiple effect evaporator and ATFD for
concentrated effluent stream; (iii) Practicing On- site emergency plan
by conducting mock-drills; (iv) Replacement of hazardous process /
chemical to non-hazardous process for converting to low hazards; (v)
Fire detection and protection system available at site; (vi) Conducting
intensive QHSE training programs including contractor employees; (vii)
Participation of employees in Safety committee meetings at all levels
and celebrating the National Safety Day, Fire Service Day, World
Environment Day and World Earth Day; (viii) Independent safety and
environment audits at regular intervals by third party and also
in-house; (ix) In-house medical and health facility at site for
pre-employment & periodical medical check-up of all employees including
contract employees; (x) Blood Donation Camp at site for social cause;
(xi) Participation and paper presentation on good practices adopted by
dishman on SHE management in National and International Conferences.
(xii) Rated low risk facility by various international Customer by
conducting EHS audit in depth.
Dishman continues to pursue world class operational excellence on
Process Safety Management (PSM). Dishman has established the
capabilities within the Company and developed in-house experts in
various facets of PSM. Process Hazard Analysis (PHA) at various plants
is being carried out to reduce process safety risks.
In its pursuit of excellence towards sustainable development and to go
beyond compliance, Dishman integrated its ISO:14001 EMS, ISO:9001 QMS
and ISO:18001 OSHA management systems and certified for HACCP and
FAMI-Qs for Vitamin D3 plant. The company is in process of getting the
ISO 13485 Certification for Medical Disinfectant Products.
Your Company's efforts are recognized by State Level, National Level
and International level Awards from time to time. This year Company has
been awarded the most prestigious award by way of Certificate of
Appreciation for Naroda Site from National Safety Council.
Indian chemical Council (ICC) has authorized Dishman Pharmaceuticals
for use of Responsible Care Logo.
LISTING
The equity shares of the Company are listed on the National Stock
Exchange of India Ltd., Mumbai (NSE) and Bombay Stock Exchange Ltd.,
Mumbai (BSE). Annual listing fees for the FY 2015-2016, as applicable,
have been paid before due date to the concerned Stock Exchanges.
The Secured Redeemable Non-Convertible Debentures (NCDs) of Rs. 150
crores issued by the Company in two trenches is also listed at Bombay
Stock Exchange Ltd., Mumbai (BSE). Annual listing fees for the FY
2015-2016, as applicable, have also been paid before due date to the
BSE.
FORMATION OF VARIOUS COMMITTEES
Your Company has several Committees which have been established as part
of the best Corporate Governance practices and are in compliance with
the requirements of the relevant provisions of applicable laws and
statutes.
The Company has following Committees of the Board:
- Audit Committee
- Stakeholder Relationship Committee
- Nomination and Remuneration Committee
- Corporate Social Responsibility Committee
- Management Committee
During the year, the Board has accepted all the recommendations made by
various committees including Audit Committee. The details with respect
to the compositions, powers, terms of reference etc of relevant
committees are given in details in the Corporate Governance Report
which forms part of this Annual Report.
DISCLOSURES UNDER THE COMPANIES ACT, 2013
i) Extract of Annual Return
The extracts of Annual Return pursuant to the provisions of sub-section
3(a) of Section 134 and sub-section (3) of Section 92 of the Companies
Act, 2013 read with Rule 12 of the Companies (Management and
administration) Rules, 2014 is annexed herewith as Annexure A to this
Report.
ii) Board Meetings
Regular meetings of the Board are held inter-alia, to review the
quarterly results of the Company. Additional Board meetings are
convened to discuss and decide on various business policies, strategies
and other businesses. Due to business exigencies, certain business
decisions are taken by the board through circulation from time to time.
During the FY 2014-15, the Board met Five (5) times i.e. 16th May,
2014, 28th May, 2014, 13th August 2014, 13th November, 2014 and 13th
February, 2015. Detailed information on the meetings of the Board is
included in the report on Corporate Governance, which forms part of
this Annual Report.
iii) Related Party Transactions
Since all the related party transactions entered into during the
financial year were on an arm's length basis and were in the ordinary
course of business. Particulars of contracts or arrangements with
related parties referred to in Section 188(1) of the Companies Act,
2013, in the prescribed Form AOC-2, is appended as Annexure B to this
Board's report. All Related Party Transactions are placed before the
Audit Committee as also the Board for approval. The policy on Related
Party Transactions has been approved by the Board and uploaded on the
website of the Company. The details of the transactions with Related
Party are provided in the accompanying financial statements vide note
no. 27.15 of notes on financial statement as per requirement of
Accounting Standard 18-related party disclosure issued by ICAI. These
transactions are not likely to conflict with the interest of the
Company at large. All significant transaction with related parties is
placed before audit committee periodically.
iv) Particulars of Loans, Guarantees or Investments under Section 186
During the year under review, the Company has made investments, Loan,
guarantee in compliance of Section 186 of the Companies Act, 2013, the
said details are given in the notes to the financial statements.
v) Material Changes and Commitments Affecting the Financial Position of
the Company
There are no significant and material changes and commitments affecting
the financial position of the Company between the end of the financial
year and the date of this report.
vi) Subsidiaries, Joint Ventures and Associate Companies
During the year following changes happened in Subsidiary, Joint
Ventures and Associate Companies:
- Dishman Arabia Ltd. liquidated during the year under review.
- Dishman Japan Ltd. became wholly owned subsidiary of the Company
(earlier Company holds 85%)
- Shanghai Yiqian International Trade Co. Ltd. formed by our wholly
owned subsidiary company Shanghai International Trading Co. Ltd.
In view of the above, the total number of subsidiaries including wholly
owned subsidiaries as on 31 March, 2015 was Eighteen (18), One (1)
Joint Venture and one (1) Associate company.
CONSOLIDATED FINANCIAL STATEMENT
Pursuant to the provisions of Section 129, 134 and 136 of the Companies
Act, 2013 read with rules framed thereunder and pursuant to Clause 41
of the Listing Agreement, your Company had prepared consolidated
financial statements of the company and its subsidiaries and a separate
statement containing the salient features of financial statement of
subsidiaries, joint ventures and associates in Form AOC-1 forms part of
the Annual Report.
The annual financial statements and related detailed information of the
subsidiary companies will be provided on specific request made by any
shareholders and the said financial statements and information of
subsidiary companies are open for inspection at the registered office
of the company during office hours on all working day except Sunday and
holidays between 2 p.m. to 4 p.m. The separate audited financial
statement in respect of each of the subsidiary companies is also
available on the website of the Company.
As required under Clause 32 of Listing Agreement with the stock
exchange(s) and in accordance with the requirements of Accounting
Standard (AS-21) issued by the Institute of Chartered Accountants of
India, the Company has prepared Consolidated Financial Statements of
the Company and its subsidiaries and is included in the Annual Report.
While preparing the consolidated financial statements, Company has
consolidated the accounts of one Joint Venture companies namely Schutz
Dishman Biotech Ltd. (22.33% holding by the Company) and one associate
company namely, Bhadra Raj Holdings Pvt. Ltd. (40% holding by the
Company), as per the requirements of Accounting Standard 27 (AS-27) and
Accounting Standard 23 (AS-23) respectively.
GENERAL DISCLOSURE
i) Issue of Equity Shares with differential rights as to dividend,
voting or otherwise.
During the year 2014-2015, the Company has not issue any of Equity
Shares with differential rights as to dividend, voting or otherwise.
ii) Issue of shares (including sweat equity shares) to employees of the
Company under any scheme save and ESOS. : During the year under review,
the Company has passed enabling resolution for issue of shares under
ESOS to the employee of the company and employee of subsidiary company
by way of postal ballot which was approved by the shareholder on 13th
January, 2015. However, the Company has not issued any shares under
ESOS.
iii) Neither the Managing Director nor the Whole-time Directors of the
Company receive any remuneration or commission from any of its
subsidiaries. : Managing Director and Whole time Director of the
Company has not received any remuneration and commission from any
Indian subsidiaries during the year under review.
iv) No significant or material orders were passed by the Regulators or
Courts or Tribunals which impact the going concern status and Company's
operations in future. There are no significant and material orders
passed by the Regulators or Courts or Tribunals which could impact the
going concern status and the Company's future operations.
DIRECTORS & KMPs
Retire by Rotation
Mr. Arpit Vyas, Managing Director of the Company retire by rotation at
the forthcoming Annual General Meeting and being eligible offer himself
for reappointment.
Reappointment of Director
The term of Ms. Deohooti J. Vyas as whole time Director expires on 2nd
September, 2016. The Board, therefore, recommends their re-appointment
as Whole time director of the Company for the approval of the members
at the ensuing Annual General Meeting.
Appointment of Director
The Board of Directors at their meeting held on 13th August, 2014, have
approved the appointment of Mr. Mark Christopher Griffiths, a Global
CEO of the Company, as an Additional Director of the Company, with the
effect from September 1, 2014, whose term of office is upto the date of
this Annual General Meeting in accordance with the applicable
provisions of the Articles of Association and the Companies Act, 2013.
The matter of appointing him, as regular director, liable to retire by
rotation, appears as Item No. 6 in the Notice of the 32nd Annual
General Meeting.
Mr. Subir Kumar Das and Mr. Rajendra S. Shah were appointed as an
Additional Directors designated as an Independent Director w.e.f. 15th
December, 2014 and 2nd April, 2015, respectively. The approval of
members for their appointment as an Independent Directors is being
sought vide item Nos. 7 & 8 in the Notice of the 32nd Annual General
Meeting.
Statement of Declaration by Independent Directors
The Independent Directors have submitted the Declaration of their
Independence, as required pursuant to Section 149(7) of the Companies
Act, 2013, stating that they meet the criteria of independence as
provided in sub section (6).
Cessation
During the year, Mr. Yagneshkumar B. Desai, resigned as a Director of
the Company with effect from 13th December, 2014. The Directors place
on record their appreciation of the valuable advice and guidance given
by him during his tenure.
Key Managerial Personnel
During the year under review, Mr. Rajashekhar Bhat, Chief Financial
Officer has been appointed as Key Managerial Personnel w.e.f. 1st
April, 2014 in terms of Section 203 of the Companies Act, 2013. Mr.
Rajashekhar Bhat, Chief Financial Officer has resigned from the Company
w.e.f. 20th January, 2015.
Board Evaluation & Criteria
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing Agreement, a structured questionnaire was prepared after
taking into consideration the various aspects of the Board's
functioning, composition of the Board and its committees. The Board
has carried out an annual performance evaluation of its own
performance, the directors individually as well as the evaluation of
the working of its Committees. The Board of Directors expressed their
satisfaction with the evaluation process.
Board diversity
The Company recognizes and embraces the importance of a diverse board
in its success. We believe that a truly diverse board will leverage
differences in thought, perspective, knowledge, skill, regional and
industry experience, cultural and geographical background, age,
ethnicity, race and gender, which will help to retain our competitive
advantage. The Board has adopted the Board Diversity Policy which sets
out the approach to diversity of the Board of Directors. The Board
Diversity Policy is available on our website, www.dishmangroup.com.
Policy on Director's appointment and remuneration
The Company's Policy on Directors' appointment and remuneration of
Directors and other related matters as provided under Section 178(3) of
the Companies Act, 2013 is available on the website of the Company.
DISCLOSURE UNDER RULE 5 OF THE COMPANIES (APPOINTMENT & REMUNERATION)
RULES, 2014
The information required under Section 197 of the Companies Act, 2013
read with Rule 5(1) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 are provided in separate annexure
forming part of this Report as Annexure C.
The statement containing particulars of employees as required under
Section 197 of the Companies Act, 2013 read with Rule 5(2) & (3) of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014, forms part of this report as Annexure D.
FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTOR
The Company undertook various steps to make the Independent Directors
have full understanding about the Company. The details of such
familiarisation programmes have been disclosed on the Company's website
at www.dishmangroup.com.
INDEPENDENT DIRECTORS' MEETING
A Separate meeting of Independent Directors held on 13th February, 2015
without the attendance of Non-Independent Directors and members of the
Management. In the said meeting, Independent Directors reviewed the
followings:
- Performance evaluation of Non Independent Directors and Board of
Directors as a whole;
- Performance evaluation of the Chairperson of the Company taking into
account the views of executive directors and non- executive directors;
- Evaluation of the quality of flow of information between the
Management and Board for effective performance by the Board.
The Board of Directors expressed their satisfaction with the evaluation
process.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act, 2013, the Board of
Directors, to the best of their knowledge and ability, state that :
- that in the preparation of the annual accounts for the financial year
ended 31st March, 2015, the applicable accounting standards have been
followed along with proper explanation relating to material departures;
- that the Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year and of the profit or
loss of the Company for that period;
- that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 2013 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
- the directors have prepared the annual accounts on a going concern
basis;
- the directors, have laid down internal financial controls to be
followed by the company and that such internal financial controls are
adequate and were operating effectively.
- the director have devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
INTERNAL FINANCIAL CONTROL SYSTEM
The details in respect of internal financial control system and their
adequacy are included in Management Discussion and Analysis Report,
which forms part of this report.
INSURANCE
Assets of your Company are adequately insured against various perils.
RISK MANAGEMENT POLICY
As per Clause 49 of the Listing Agreement, the Company has framed
formal Risk Management framework for risk assessment and risk
minimization for Indian operation which is periodically reviewed by the
Board of Directors to ensure smooth operations and effective management
control. The Audit Committee has additional oversight in the area of
financial risks and control.
VIGIL MECHANISM
The Company has adopted a Whistle Blower Policy pursuant to the
requirements of the Companies Act, 2013 and the Listing Agreement. The
Policy empowers all the stakeholders to raise concerns by making
protected disclosures as defined in the Policy.
The policy also provides for adequate safeguards against victimization
of whistle blower who avail of such mechanism and also provides for
direct access to the Chairman of the Audit Committee, in exceptional
cases. The details of the Whistle Blower Policy are explained in the
Report on Corporate Governance and the Policy is available on the
website of the Company at www.dishmangroup.com.
SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
The Company has in place an Anti Sexual Harassment Policy in line with
the requirements of Sexual Harassment of Women at the Workplace
(Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints
Committee (ICC) has been set up to redress complaints received
regarding sexual harassment. All employees (permanent, contractual,
temporary, trainees) are covered under this policy.
There were no incidences of sexual harassment reported during the year
under review, in terms of the provisions of the Sexual Harassment of
Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
AUDITORS AND AUDITORS' REPORT
Statutory Auditors
As members are aware, M/s. Deloitte Haskins & Sells, Chartered
Accountants, Ahmedabad have resigned from the office of Statutory
Auditors of the Company due to unavoidable circumstances, resulting
into a casual vacancy in the office of Statutory Auditors of the
Company and thus, M/s. V. D. Shukla & Co., Chartered Accountants,
Ahmedabad, (Firm Registration No. 110240W) has been appointed as
Statutory Auditors of the Company by the members in their Extra
Ordinary General Meeting held on 14th August, 2015.
The audited financial results have been reviewed by the Audit Committee
and taken on record by the Board of Directors at their meetings held on
22nd August, 2015.
The Notes on Financial Statements referred to in the Auditors' Report
are self-explanatory and do not call for any further comments.
M/s. V. D. Shukla & Co., Chartered Accountants, Ahmedabad, (Firm
Registration No. 110240W) and M/s. Haribhakti & Co., LLP, Chartered
Accountants, Mumbai, (Firm Registration No. 103523W) are proposed to be
appointed as Joint Statutory Auditors of the Company provided that the
appointment of M/s. V. D. Shukla & Co., shall be from the conclusion of
this 32nd Annual General Meeting till the conclusion of 36th Annual
General Meeting and the appointment of M/s. Haribhakti & Co. LLP, shall
be from the conclusion of this 32nd Annual General Meeting till the
conclusion of 37th Annual General Meeting, subject to ratification of
the appointment by the members at every AGM held after the ensuing 32nd
Annual General Meeting.
As required under Section 139 of the Companies Act, 2013, the Company
has received a written consent from M/s. V. D. Shukla & Co., Chartered
Accountants, Ahmedabad, (Firm Registration No. 110240W) and M/s.
Haribhakti & Co., LLP, Chartered Accountants, Mumbai, (Firm
Registration No. 103523W) for such appointment and also a certificate
to the effect that their appointment, if made, would be in accordance
with Section 139(1) of the Companies Act, 2013 and the rules made
thereunder.
The Audit Committee and Board of Directors recommend the appointment of
statutory auditors as mentioned in resolutions no.4 of the accompanying
notice of ensuing Annual General Meeting.
Internal Auditors
M/s. Talati & Talati, Chartered Accountants, Ahmedabad has been
internal auditors of the Company. Internal auditors are appointed by
the Board of Directors of the Company on a yearly basis, based on the
recommendation of the Audit Committee. The Internal Auditor's reports
and their findings on the internal audit, has been reviewed by the
Audit Committee on a quarterly basis. The scope of internal audit is
also reviewed and approved by the Audit Committee.
Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the rules made thereunder, the Company had appointed Mr. Ashok P.
Pathak, Practicing Company Secretary (Membership No. ACS: 9939; CP No:
2662), as Secretarial Auditors to undertake the Secretarial Audit of
the Company. The Secretarial Audit Report is appended in the Annexure E
to the Directors' Report. The observations and comments, if any,
appearing in the Secretarial Audit Report are self-explanatory and do
not call for any further explanation / clarification by the Board of
Directors.
Cost Auditors
M/s. Kiran J. Mehta & Co., Cost Accountants, Ahmedabad has been
reappointed as Cost Auditor by the Board of Directors of the Company
for the financial year 2014-15, which was ratified by the shareholders
in the previous Annual General Meeting held on 4th September, 2014.
Thereafter, Central Government has notified new rules for Cost Audit
and as per new Companies (Cost Records and Audit) Rules, 2014 issued by
Ministry of Corporate Affairs; Company is not falling under the
Industries, which will subject to Cost Audit. Therefore filing of cost
audit report for the FY 2014-15 is not applicable to the Company.
M/s. Kiran J. Mehta & Co., Cost Accountants, Ahmedabad has submitted
their Cost Audit Report for the financial year 2013-14 to the Central
Government on 26th September, 2014. which was within due date for
filing the same.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION ANALYSIS REPORT
As per Clause 49 of the Listing Agreement with the Stock Exchange, a
separate section on corporate governance practices followed by the
Company, as well as "Management Discussion and Analysis confirming
compliance, is set out in the Annexure forming an integral part of this
Report. A certificate from Practicing Company Secretary regarding
compliance with corporate governance norms stipulated in Clause 49 of
the Listing Agreement is annexed to the report on Corporate Governance.
In compliance with one of the Corporate Governance requirements as per
the Clause 49 of the Listing Agreement, the Company has formulated and
implemented a Code of Conduct for all Board members and senior
management personnel of the Company, who have affirmed compliance
thereto.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
Information of conservation of energy, technology absorption and
foreign exchange earnings and outgo as required under Section 134 (3)
(m) of the Companies Act, 2013 read with rule 8 of The Companies
(Accounts) Rules, 2014, is given in the Annexure F and forms part of
this Report.
CORPORATE SOCIAL RESPONSIBILITY
As part of CSR, the Company continued extending help towards social and
economic development of the villages and the communities located close
to its operations and also providing assistance to improving their
quality of life. Company's intention is to ensure that we meet the
development needs of the local community. Dishman has a long and strong
tradition of supporting the larger communities that it connects with -
from health, education etc.
The Company has constituted Corporate Social Responsibility (CSR)
Committee and has framed a CSR Policy. The brief details of CSR
Committee and contents of CSR policy is provided in the Corporate
Governance Report. The details of CSR activities carried out by the
Company are appended in the Annexure G to the Director's Report. The
CSR Policy is available on the website of the Company.
ACKNOWLEDGEMENT
Your Directors would like to express their appreciation for the
assistance and co-operation received from foreign institutions, banks,
associates, Government authorities, customers, supplier, vendors and
members during the year under review. Your Directors also wish to place
on record their deep sense of appreciation for the committed services
and teamwork by the executives, staff members and workers of the
Company for enthusiastic contribution to the growth of Company's
business.
For and on behalf of the Board
Place : Ahmedabad Janmejay R. Vyas
Date : 22nd August, 2015 Chairman & Managing Director
Mar 31, 2013
To The Shareholders of Dishman Pharmaceuticals and Chemicals Limited
The Directors have pleasure in presenting their Report along with the
Audited Accounts of the Company for the year ended March 31, 2013.
FINANCIAL RESULTS:
(Rs.in Lacs)
Particulars 2012-2013 2011-2012
Net Sales 48463.61 46340.06
Profit before Tax &
other Adjustments 9470.00 6751.86
Less: Current tax 2100.75 2096.89
Add:MAT Credit Entitlement 181.70
Less: Deferred Tax Liability 1233.44 171.40
Profit After Tax 6317.51 4483.57
Balance of profit
brought forward 2040.53 2432.45
Amount available
for Appropriation 8358.04 6916.02
Appropriations:
Transfer to Debenture
Redemption Reserve 625.00 1250.00
Transfer to General Reserve 800.00 2500.00
Proposed Dividend 968.37 968.37
Tax on Proposed Dividend 157.09 157.09
Balance Carried to Balance Sheet 5807.58 2040.56
DIVIDEND:
Your Company follows a dividend policy by harmonizing the needs of the
Company as well as the shareholders to have return on investment. For
the financial year 2012-2013, your Directors are pleased to recommend a
final dividend of 60% on the paid-up equity share capital of Rs.1613.94
lacs (Rs.1.20/- per equity share of Rs.2/- each) (previous year 60% on the
paid-up equity share capital of Rs.1613.94 lacs, i.e. Rs.1.20/- per equity
share of Rs.2/- each), which if approved at the forthcoming Annual
General Meeting will be paid out of the profits of the Company for the
year to all those equity shareholders whose names appear in the
Register of Members on the close of business hours as on 19th July,
2013.
PERFORMANCE AND OPERATION REVIEW:
During the year, your Company achieved a turnover of Rs. 48463.61 lacs as
against Rs. 46340.06 lacs during the previous year reflecting a growth of
4.58%. Exports constitute Rs.43326.17 lacs or 89.40% of sales for
2012-2013. Profit before tax improved by about 40.26% (Rs.9470.00 lacs
during the year as against Rs.6751.86 lacs in the previous year). Profit
after tax for the year was Rs. 6317.51 lacs as against Rs.4483.57 Lacs
during previous year.
Earning per share for the year works out to Rs.7.83 per share (previous
year Rs.5.56).
The consolidated turnover, which includes results of all its wholly
owned subsidiaries, proportionate share in the joint ventures (Schutz
Dishman Biotech Ltd., Dishman Arabia Ltd., and Dishman Japan Ltd.) and
associate (Bhadra- Raj Holdings Pvt. Ltd.) reported 13.18% growth in
sales to Rs. 127222.17 lacs for the financial year 2012-2013 compared to
the previous year''s sales of Rs.112411.17 lacs.
Consolidated Profit before tax & other adjustment of the Company for
the financial year 2012-2013 stood at Rs 14528.42 lacs (previous year
Rs.8791.19 lacs), increased by 65.26% on account of improved performance
of subsidiary companies. Consolidated Profit after tax for the
financial year 2012-2013 was Rs. 10029.39 lacs (Previous year Rs.5675.85
lacs), an increase of 76.70%.
The consolidated Earning per share for the year work out to Rs.12.43 per
share (previous year Rs.7.03 per share).
A detailed analysis of the performance of the Company and financial
results is given in the Management Discussion and Analysis Report,
which forms part of this Report.
OPERATIONS:
During the year under review, most of the key business verticals of the
Company and also almost all major subsidiaries of the Company have
performed reasonably well.
In respect of ''CRAMSÂ segment of Dishman India, as you are aware, since
last two years your Company has modified its focus and is now
concentrating on a larger number of midsize contracts rather than
concentrating only on a few large MNCs. The idea is to de-risk the
business model to the maximum extent and also fill up the available
plant capacities so as to effectively improve the capacity utilization
of the plants, which will result into an increase in the ''Return on
Capital EmployedÂ. We are happy to inform you that your Company has
successfully started getting many new orders in this particular segment
and the performance is improving. No doubt the business with the major
pharma MNCs continues but as you are all aware this is a fairly long
gestation business and in most of the cases the timelines are not under
our control. Under this strategy your Company is confident of achieving
a steady and sustainable growth in this segment in the coming years.
The state of the art Hi-Potency (Hi-Po unit) Â Unit 9 at Bavla has come
in operation during the year under review. As you are aware, this is
perhaps the only one of its kind facility not only in India but in the
entire Asian sub-continent and is capable of handling extremely high
potency molecules with a specific focus on the therapeutic segments of
oncology, steroids, etc. three or four major Global Pharma majors have
already completed safety studies, and regular business has started,
with this unit contributing a turnover of around US $ 4 million during
the year under review. For the current year, your Company has already
an order book/visibility of around US $ 10 million for this unit and at
its optimum capacity the target is to achieve a top line of around US $
25 Â 30 million over next 2 to 3 years for which a good visibility
exists. Again this is a high margin segment which will also help in
improving the bottom line of your Company.
Similarly, during the year under review, the Vitamin D3 unit has also
commenced operations. As you may be aware, this is a forward
integration facility and adds value to the Vitamin D3 business that was
acquired by your Company from erstwhile Solvay a few years ago, in the
name of its subsidiary company Dishman Netherland Limited which is
having its plant in Netherlands producing cholesterol, the key raw
material for Vitamin D3. A part of the cholesterol is now being
converted into Vitamin D3 resin in the Bavla, India facility of the
Company and the said resin is sent back to the Netherlands for its
formulation into various end use like value added cattle feed,
cosmetics etc. Currently this plant is operating at around 50% capacity
utilization and the target is to ramp up its capacity utilization in
next couple of years so as to reach the optimum capacity.
As you may be aware, your Company has activated a new vertical viz.
Generic API during the year under review. The idea is to take the
advantage of several products already developed by the Company in the
form of around 25 to 30 potential good generic APIs for which the
Company has enough data available to immediately file the DMFs in the
regulated market. The focus will be only on the regulated markets where
the Company would be in a position to get a better value addition and
comfortable profit margin. The fundamental logic is to ensure that the
Company effectively increases its capacity utilization of the existing
facilities already created and also capitalizes on product portfolio
readily available with the Company to take the opportunity available in
the generic space in the developed/regulated markets. Your Company has
already appointed a separate marketing team for this purpose and has
also filed about 5 DMFs in the regulated markets against specific firm
orders/arrangement entered into with the pharma companies. Going
forward this vertical has the potential of generating an annual
turnover of Rs.250 crores over next 3 to 4 years.
As the members may be aware the non-integral subsidiary Company
Carbogen Amcis Switzerland has started performing quite satisfactorily
during the year under review, thanks to a major business restructuring
exercise successfully completed by your Company. This subsidiary has
reported a healthy revenue of around Rs.508 crores and EBIDTA in the
region of 16% and going forward it is confident of continuing a steady
growth in the top line as well as in the margins.
The other marketing subsidiaries viz. Dishman Europe, Dishman USA as
well as Dishman Japan have operated quite satisfactorily during the
year under review.
In as much as Dishman China is concerned your Company is operating on
two parallel strategies. Thus, on one hand a concrete and effective
business plan has already been chalked out to ensure that the available
capacity is filled up at least to a level where the operations reach a
cash break-even position. Simultaneously your Company is also looking
for a strategic sell out of the said facility to a global interested
party who could either constitute a joint venture for the said
subsidiary or who could effectively takeover the said subsidiary, if we
are offered a reasonable price.
In as much as the land allotted to your Company in the Pharma and
Finechemicals SEZ situated at village Gangad and Kalyangadh, which is
approx. 15 kms. distant from Company''s Bavla Plant developed by the
group company Dishman Infrastructure Limited (DIL) is concerned, your
Company has no plans for any Capex at that location in foreseeable
future. As the members may be aware, the said group Company DIL is
contemplating de-notification/sell out/exit from the SEZ in a viable
manner and if that happens your Company will be cancelling the long
term lease in respect of the leasehold land in the SEZ allotted to it
and will get its amount duly refunded.
RESEARCH AND DEVELOPMENT:
Research is a critical thrust area for the Company because it is the
foundation upon which Company''s strategy of manufacturing and marketing
of Bulk Drugs, Intermediates (including contract manufacturing), Fine
Chemicals, Quats & Specialty chemicals stands. At Bavla facility, your
Company has created a state-of-the-art R & D center comprising three
floors and having total built up area of 4500 Sq. Mtrs.
The R&D center houses a technical library, 8 R&D laboratories, a
formulation development laboratory, an analytical development
department, a kilo lab and a cGMP compliant pilot plant. The technical
library has a rich collection of books and periodicals covering various
chemistry and related topics. It is staffed by competent information
scientists. Many of the searches are now done online using latest
databases to help our scientists in their research with up to date
scientific information.
Your Company offers portfolio of services from process R&D in
state-of-the-art laboratories, kilo and pilot plant trials in well
equipped kilo labs and pilot plants and scale-up to full scale
commercial manufacture in multi purpose production units as well as
dedicated facilities for certain products as per customer requirement.
By offering technical and manufacturing excellence in multiple
locations around the globe, your Company is the global outsourcing
partner for the pharmaceutical industry providing innovative
development and value for money, long term commercial supply.
Your Company Offers R & D services with a specialization in development
process that is truly scalable to commercialization through process
research and development aimed at commercially viable optimized
processes. Your Company''s R & D process is supported by Analytical
Services department which provide support in development of new
analytical methods for products developed in the R&D labs. Analytical
Development Lab is equipped with all modern equipment for the analysis
of R & D products as well as for method validations. We constantly
upgrade the instruments as per the requirements of our
customers/products. The QC supports the analytical requirements
starting from initial raw material releases to release of Final
product. Kilo & Pilot facilities for cGMP production of API are an
integral part of R&D center to facilitate maximum interaction and
ensure seamless process transfer from Laboratory to plant.
The R&D labs work under full Good Laboratory Practices (GLP). Each R&D
lab has a process R&D area and its own analytical section. The R&D labs
are equipped with latest equipment for carrying out diverse reactions.
We continue to add to our knowledge on various reactions as well as try
new technologies. Based on this we have successfully commercialized
enzyme technology as well as irradiation technology.
During the year under review, we have seen healthy growth in CRAMS
projects where we have successfully completed complex projects in time
for customers. Some of these are being scaled up currently and some
have been already commercialized. Many of our existing processes have
been optimized and now perform better giving us the advantage of better
returns.
We have observed that more and more customers now look at Dishman as
their preferred partner for regulatory market meaning they now have
confidence in Dishman capabilities.
On the generics, R & D has continued optimization of the processes
developed in-house making them more efficient and thus profitable. We
will continue development of new API processes for commercialization
and emerge strongly as a leading generic player in addition to our
already existing CRAMS strength.
QUALITY, HEALTH, SAFETY & ENVIRONMENT (QHSE) & CORPORATE SOCIAL
RESPONSIBILITY:
Dishman is committed to ensuring that those working with the Company
are safe at work, and that everyone takes responsibility for achieving
this. We include Environment, Health and Safety (EHS) and climate
change-related considerations in our business decisions and strive to
minimize the environmental impact of our operations on the environment.
Measuring, appraising and reporting on environmental, health and safety
performance is an important part of continuous improvement in our EHS
performance.
Dishman''s EHS organization sets every year as part of strategic
planning long term EHS goals, assess resources required to achieve
specific goals, and ensure critical business alignment. Dishman
considers feedback from internal and external stakeholders in proposing
and establishing its long-term goals in manufacturing operations.
Dishman''s products and processes are developed in accordance with
strictly defined rules to ensure safety and Health of workers as well
as the environment. This is achieved by conducting the Risk Assessment,
Identification of significant environmental aspects, Safety Audits,
customer audits, HAZOP study and Environment audits. All manufacturing
plants follow Responsible Care and audited by Indian Chemical Council.
The Company''s QHSE policy is being implemented, among others, through
(i) Maintaining the ''Zero Discharge of waste water by series of
treatment; (ii) Stripper system, Multiple effect evaporator and ATFD
for concentrated effluent stream; (iii) Practicing On-site emergency
plan by conducting mock-drills; (iv) Replacement of hazardous process /
chemical to non-hazardous process for converting to low hazards; (v)
Fire detection and protection system available at site; (vi) Conducting
intensive QHSE training programs including contract employees; (vii)
Participation of employees in Safety committee meetings at all levels
and celebrating the National Safety Day, Fire Service Day, World
Environment Day and World Earth Day; (viii) Independent safety and
environment audits at regular intervals by third party and also
in-house; (ix) In-house medical and health facility at site for
pre-employment & periodical medical check-up of all employees including
contract employees; (x) Blood Donation Camp at site for social cause;
(xi) Participation and paper presentation on good practices adopted by
Dishman on SHE management in National and International Conferences.
(xii) International customers conduct in depth EHS audit and have rated
our facility as low risk.
Dishman continues to pursue world class operational excellence on
Process Safety Management (PSM). Dishman has established the
capabilities within the Company and developed in-house expertise in
various facets of PSM. Process Hazard Analysis (PHA) at various plants
is being carried out to reduce process safety risks.
In its pursuit of excellence towards sustainable development. Dishman
had integrated its ISO:14001 EMS, ISO:9001 QMS and ISO:18001 OSHA
management systems. Your Company has also been certified for HACCP and
FAMI-Qs for Vitamin D3 plant.
Your Company''s efforts are recognized at State Level, National Level
and International level. This year, Company has been awarded the
prestigious award as under:
1) ''Shreshtha Suraksha Purashkar for Bavla site from National Safety
Council of India, Mumbai in manufacturing Sector.
2) Winner of Indian Chemical Council''s ICC Award 2011 for Excellence in
management of Health, Safety & Environment.
3) CPhI India Pharma Awards 2012 for Innovation in Health, Safety &
Environment.
4) Winner Safety Award for Bavla plant and Runner up Award for Naroda
plant from Gujarat Safety Council.
CORPORATE SOCIAL RESPONSIBILITY:
The Company aims to maintain good labour management relations though
good labour practices. The Company''s Values include selecting, training
& developing labour to be creative and empower them to take decisions,
so that they respond to all stakeholders with agility, confidence and
teamwork.
The Company continued extending help towards social and economic
development of the villages and the communities located close to its
operations and also providing assistance to improve their quality of
life. Company''s intention is to ensure that we meet the development
needs of the local community. Dishman has a long and strong tradition
of supporting the larger communities that it connects with -education,
health, drinking water. The Company has made investments towards
implementation of various development activities in the areas near
Company''s Plants.
NON CONVERTIBLE DEBENTURE (NCD):
As you are aware, in February, 2010 your Company has issued Secured
Redeemable Non Convertible Debentures of Rs.75 crores in the form of
Separately Transferable Redeemable Principle Parts (''STRPPsÂ) of Rs.10
lacs each fully paid-up on private placement basis and the said NCD has
been listed on the Bombay Stock Exchange Ltd. (BSE) in the list of
securities of F Group  Debt Instrument w.e.f. 13th May, 2010. These
NCDs will be redeemed at par at the end of 4th, 5th, 6th & 7th year in
ratio of 20:20:30:30, respectively.
In June, 2010, the Company has issued second trench of its Secured
Redeemable Non- convertible Debentures (NCD) of Rs.75 crores in the form
of Separately Transferable Redeemable Principle Parts (''STRPPsÂ) of Rs.1
lac each fully paid-up on private placement basis and the said NCDs
have been listed on the Bombay Stock Exchange Ltd. (BSE) in the list of
securities of F Group  Debt Instruments w.e.f. 17th September, 2010.
These NCDs will be redeemed at par at the end of 4th & 5th year in the
ratio of 50: 50, respectively.
The Company is paying interest on the said NCDs regularly on the due
dates. As per the Circular No.04/2013 dated 11th February, 2013 issued
by Ministry of Corporate Affairs, Government of India, Company has
created Debenture Redemption Reserve (DRR) for the year ended 31st
March, 2013, in respect of NCD Â First Trench issued by the Company in
February, 2010 and deposited an amount of Rs.2.25 crores, by way of Fixed
Deposit with Corporation Bank, being 15% of the maturing amount of
Rs.15.00 crores, which is going to be matured during the Financial Year
2013-14.
LISTING ARRANGEMENT:
The equity shares of the Company are listed on the National Stock
Exchange of India Ltd., Mumbai (NSE) and Bombay Stock Exchange Ltd.,
Mumbai (BSE). Annual listing fees for the year 2013-14, as applicable,
have been paid before due date to the concerned Stock Exchanges.
The Secured Redeemable Non-Convertible Debentures (NCD) of Rs.150 crores
issued by the Company in two trenches are also listed at Bombay Stock
Exchange Ltd., Mumbai (BSE). Annual listing fees for the year 2013-14,
as applicable, have also been paid before due date to the BSE.
DEPOSITS:
The Company has not accepted any deposits as defined under Section 58A
of the Companies Act, 1956 read with the Companies (Acceptance of
Deposits) Rules, 1975, as amended, during the year under review.
DIRECTORS:
Mr. Yagneshkumar B. Desai and Mr. Ashok C. Gandhi, Directors of the
Company retire by rotation at the forthcoming Annual General Meeting
and being eligible offer themselves for re-appointment.
Mr. Arpit J. Vyas, Whole-time Director of the Company, has been
appointed as Managing Director of the Company with effect from 28th
May, 2013 by the Board of Directors of the Company at its meeting held
on 28th May, 2013, on the recommendation of the Remuneration Committee
held on the same day and also approved his re-appointment as a Managing
Director of the Company for a further period of five years w.e.f. 1st
June, 2014, subject to approval of the Members in general meeting.
Profiles of these Directors as required under clause 49 of the listing
Agreement are given in the Annexure to the Notice dated 28th May, 2013.
INSURANCE:
The Company has made necessary arrangements for adequately insuring its
insurable interests.
DIRECTORS'' RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors'' Responsibilities Statement, the
Directors, based on the representations received from the Company''s
operating management, hereby confirm:
i. that in the preparation of the accounts for the financial year ended
31st March, 2013, the applicable accounting standards have been
followed along with proper explanation relating to material departures;
ii. that the Directors had adopted such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year and of the profit or
loss of the Company for the year under review;
iii. that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
iv. that the accounts for the financial year ended 31st March, 2013
have been prepared on a ''going concern'' basis.
AUDITORS AND AUDITORS'' REPORT:
M/s. Deloitte Haskins & Sells, Chartered Accountants, Auditors of the
Company hold office until the conclusion of the Thirtieth Annual
General Meeting and are eligible for reappointment. M/s. Deloitte
Haskins & Sells have informed the Company that, if appointed, their
appointment as Auditors will be within the limits prescribed under
Section 224(1B) of the Companies Act, 1956. Accordingly, the members''
approval is being sought for their appointment as the Auditors of the
Company and for fixation of their remuneration for the year 2013-14, at
the ensuing Annual General Meeting.
The Notes on Financial Statements referred to in the Auditors'' Report
are self-explanatory and do not call for any further comments.
COST AUDIT:
M/s. Kiran J. Mehta & Co., Cost Accountants, having been appointed by
the Central Government has conducted the audit of the cost accounts in
respect of Bulk Drugs and Organic Chemicals products of the Company for
the financial year 2011-12 and submitted their report to the Central
Government on 27th December, 2012. For filing the Cost Audit Report in
XBRL format for the financial year 2011-12, the Ministry of Corporate
Affairs has extended the time limit for filing the same with Central
Government, upto 28th February, 2013.
The Central Government has also approved the appointment of M/s. Kiran
J. Mehta & Co., Practicing Cost Accountants, Ahmedabad as Cost Auditors
for conducting cost audit of Bulk Drugs and Organic Chemicals products
of the Company for the financial year 2012-13.
ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE:
Information of conservation of energy, technology absorption and
foreign exchange earnings and outgo as required under Section 217(1)(e)
of the Companies Act, 1956 read with Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988, is given
in the Annexure-I and forms part of this Report.
PARTICULARS OF EMPLOYEES:
Information as per Section 217 (2A) of the Companies Act, 1956 read
with the Companies (Particulars of Employees) Rules, 1975, as amended,
is given in the Annexure-II and forms part of this Report.
SUBSIDIARY COMPANIES & CONSOLIDATED FINANCIAL STATEMENT:
In accordance with the General Circular No.2/2011 dated 8th February,
2011 issued by the Ministry of Corporate Affairs, Government of India,
the Balance Sheet, Profit and Loss Accounts and other documents of the
subsidiary companies are not being attached with the Balance Sheet of
the Company. However, the financial information of the subsidiary
companies is attached along with the consolidated financial statement
in compliance with the said circular. The Company will provide the
annual accounts of its subsidiary companies and the related detailed
information on the specific request made by any Shareholders and the
said annual accounts are open for the inspection at the registered
office of the Company during office hours on all working days, except
Sundays and holidays, between 2.00 p.m. and 4.00 p.m.
As required under Clause 32 of Listing Agreement with the stock
exchange(s) and in accordance with the requirements of Accounting
Standard AS-21 issued by the Institute of Chartered Accountants of
India, the Company has prepared Consolidated Financial Statements of
the Company and its subsidiaries and are included in the Annual Report.
While preparing the consolidated financial statements, Company has
consolidated the accounts of two Joint Venture companies namely Schutz
Dishman Biotech Ltd.(22.33% holding by the Company), and Dishman Arabia
Ltd. (50% holding by the Company), and one associate company namely,
Bhadra Raj Holdings Pvt. Ltd. (40% holding by the Company), as per the
requirements of Accounting Standard 27 (AS-27) and Accounting Standard
23 (AS-23) respectively.
As the members are aware, the Company has established a joint venture
company namely Dishman Arabia Ltd. (50% holding by Company) in Saudi
Arabia. Subsequently, due to non-availability of required
infrastructure and other related issues, the JV could not take off and
decided for voluntary liquidation of the said JV. A Liquidator was
appointed to sell of the assets of the Company. The main assets of the
Company consisted of the piece of land, which was acquired to establish
the production facility. During the year, liquidator has sold JV''s land
and Company will be receiving Rs.1.50 crores (approx.) towards sale
proceeds.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION ANALYSIS REPORT:
Your Company follows the principles of effective corporate governance
and committed to maintain high standard of corporate governance by
adhering to the corporate governance requirements set out by SEBI. The
Company has complied with all the mandatory provisions of Corporate
Governance as prescribed in the Clause 49 of the Listing Agreement with
the Stock Exchanges.
As required by clause 49 of the Listing Agreement, a detailed report on
Corporate Governance compliance and Management Discussion and Analysis
Report forms a part of Annual Report along with the required
Certificate from the Auditors of the Company regarding compliance of
the conditions of Corporate Governance as stipulated in revised Clause
49 of the Listing Agreement.
In compliance with one of the Corporate Governance requirements as per
the revised Clause 49 of the Listing Agreement, the Company has
formulated and implemented a Code of Conduct for all Board members and
senior management personnel of the Company, who have affirmed
compliance thereto.
ACKNOWLEDGEMENT:
Your Directors would like to express their grateful appreciation for
the continued assistance and co-operation received from the Indian and
International Financial Institutions, Banks, Government Authorities,
Shareholders and other stakeholders. Your Directors are also grateful
to the customers, suppliers and business associates of your Company for
their continued co-operation and support. Your Directors wish to place
on record their deep sense of appreciation to all the employees for
their commendable teamwork and enthusiastic contribution to the growth
of Company''s business during the year.
For and on behalf of the Board
Place : Ahmedabad (Janmejay R. Vyas)
Date :28th May, 2013 Chairman & Managing Director
Mar 31, 2012
To The Members of Dishman Pharmaceuticals and Chemicals Limited
The Directors have pleasure in presenting their Report along with the
Audited Accounts of the Company for the year ended March 31, 2012.
FINANCIAL RESULTS:
(Rs. in Lacs)
Particulars 2011-2012 2010-2011
Net Sales 46340.06 42081.79
Profit before Tax & other Adjustments 6751.86 4853.92
Less : Current tax 2096.89 987.18
Add : MAT Credit Entitlement - 408.55
Less : Deferred Tax Liability 171.40 262.80
Profit After Tax 4483.57 4012.49
Balance of profit brought forward 2432.45 5795.42
Amount available for Appropriation 6916.02 9807.91
Appropriations:
Transfer to Debenture Redemption Reserve 1250.00 1250.00
Transfer to General Reserve 2500.00 5000.00
Proposed Dividend 968.37 968.37
Tax on Proposed Dividend 157.09 157.09
Balance Carried to Balance Sheet 2040.56 2432.45
DIVIDEND:
Your Company follows a dividend policy by harmonizing the needs of the
Company as well as the shareholders to have return on investment. For
the financial year 2011-2012, your Directors are pleased to recommend a
final dividend of 60% on the paid-up equity share capital of Rs.1613.94
lacs (Rs.1.20/- per equity share of Rs.2/- each) (previous year 60% on
the paid-up equity share capital of Rs.1613.94 lacs, i.e. Rs.1.20/- per
equity share of Rs.2/- each), which if approved at the forthcoming
Annual General Meeting will be paid out of the profits of the Company
for the year to all those equity shareholders whose names appear in the
Register of Members on the close of business hours as on 14th
September, 2012.
PERFORMANCE AND OPERATION REVIEW:
During the year, your company achieved a turnover of Rs.46340.06 lakhs
as against Rs. 42081.79 lakhs during the previous year reflecting a
growth of 10.12%. Exports constitute Rs.40514.23 lakhs or 87.69% of
sales for 2011-12. Profit before tax improved by 39.10% (Rs.6751.86
lakhs during the year as against Rs.4853.94 in the previous year).
Profit after tax for the year was Rs.4483.57 lakhs as against
Rs.4012.52 Lakhs during previous year.
Earning per share for the year works out to Rs.5.56 per share (previous
year Rs.4.97).
The consolidated turnover, which includes results of all its wholly
owned subsidiaries, proportionate share in the joint ventures (Schutz
Dishman Biotech Ltd., Dishman Arabia Ltd., and Dishman Japan Ltd.) and
associate (Bhadra- Raj Holdings Pvt. Ltd.) reported 8.99% growth in
sales to Rs.112411.17 lacs for the financial year 2011-12 compared to
the previous year's sales of Rs.103135.51 lacs.
Consolidated Profit before tax & other adjustment of the Company for
the financial year 2011-12 stood at Rs. 8791.17 lakhs (previous year
Rs. 9077.39 lakhs) marginal reduction due to higher operating costs
arising from change in product mix. Consolidated Profit after tax for
the financial year 2011-12 was Rs. 5675.83 lakhs (previous year Rs.
8001.19 lakhs), the decrease was mainly due to higher tax expenses as
the tax concession available to EOU units in India are not available
from financial year 2011-12 and the tax rabate available on carry
forward loss to one of our subsidiaries is fully adjusted against the
profits.
The consolidated Earning per share for the year work out to Rs.7.03 per
share (previous year Rs.9.92 per share).
A detailed analysis of the performance of the Company and financial
results is given in the Management Discussion and Analysis Report,
which forms part of this Report.
ACQUISITION OF CREAPHARM PARENTERALS:
Your Company's wholly owned subsidiary company, namely Carbogen Amcis
AG, Switzerland has acquired Creapharm Parenterals, a subsidiary of
France based Greapharm Group. Creapharm Parenterals is a contract
development and manufacturing organization specializing in liquid,
semi-solid and injectable aseptic dosage form. As a part of this
acquisition, Creapharm Parenterals has changed its name to Carbogen
Amcis SAS. The Acquisition will extend Carbogen Amcis' comprehensive
range of development and manufacturing services by adding complementary
formulations, lyophilization, services and sterile GMP capabilities for
the fast supply of drug products including highly potents, for
preclinical studies and clinical trials.
US FDA APPROVALS:
In the month of October, 2011 Food and Drug Administration (FDA) has
successfully audited the Veenendaal facility of Dishman Netherlands, a
subsidiary of the company for its two products namely Cholesterol HP
and Calcitriol. Also, during the year, Company's Wholly Owned
Subsidiary company, namely Carbogen Amcis AG., Switzerland has
successfully completed US FDA PAI for a new hi potency drug for a US
multinational.
UNITS AT BAVLA:
During the year three major expansion units viz. Hypo facility (Unit
9), Disinfectant Division (Unit 10) and Vitamin D (Unit 13) were
brought to stream and trial runs have been successfully completed and
validation is going on.
RESEARCH AND DEVELOPMENT:
Imagination, Invention & Innovation are the three main pillars of
Research and Developments. It is the foundation upon which Company's
strategy of manufacturing and marketing of Bulk Drugs, Intermediates
(including contract manufacturing), Fine Chemicals, Quats & Specialty
chemicals stands.
At Bavla facility, your Company has created a state-of-the-art R & D
center comprising three floors and having total built up area of 4500
Sq. Mtrs. The R&D center houses a technical library, 8 R&D
laboratories, a formulation development laboratory, an analytical
development department, a kilo lab and a cGMP compliant pilot plant.
The technical library has a rich collection of books and periodicals
covering various chemistry and related topics. It is staffed by
competent information scientists.
Your Company offers portfolio of services from process R&D in
state-of-the-art laboratories, kilo and pilot plant trials in well
equipped kilo labs and pilot plants and scale-up to full scale
commercial manufacture in multi purpose production units as well as
dedicated facilities for certain products as per customer requirement.
By offering technical and manufacturing excellence in multiple
locations around the globe, your Company is the global outsourcing
partner for the pharmaceutical industry providing innovative
development and value for money, long term commercial supply.
Your Company Offers R & D services with a specialization in development
process that is truly scalable to commercialization through process
research and development aimed at commercially viable optimized
processes. Your Company's R & D process is supported by Analytical
Services department which provide support in development of new
analytical methods for products developed in the R&D labs. Analytical
Development Lab is equipped with all modern equipment for the analysis
of raw materials, intermediates and finished products. We constantly
upgrade the instruments as per the requirements of our
customers/products. The QC supports the analytical requirements
starting from initial raw material releases to release of Final API.
Kilo & Pilot facilities for cGMP production of API are an integral part
of R&D center to facilitate maximum interaction and ensure seamless
process transfer from Laboratory to plant.
The R&D labs work under full Good Laboratory Practices (GLP). Each R&D
lab has a process R&D area and its own analytical section. The R&D labs
are equipped with latest equipment for carrying out diverse reactions.
We continue to add to our knowledge on various reactions as well as try
new technologies. We have now successfully used enzymes at lab scale
and also commercial scale for conversions that involve multiple steps
if done using conventional chemistry. We have concluded lab runs on
irradiation technology for Vitamin D analogues. A small-scale
irradiation equipment has been installed for certain niche products. In
the kilo lab, we have small reactors ranging from 30 L to 100 L
capacity for small scale reactions. The cGMP pilot plant has a range of
equipment which is required for the scale up of reactions developed in
the labs.
As you know, We now have a separate group of scientists working on
generic APIs. This group is involved in developing non-infringing
routes to various generic and soon-to-be generic APIs. Last year,
non-infringing process for about 10 APIs of various therapeutic
categories have been developed in the labs and successfully validated
in the pilot plant.
QUALITY, HEALTH, SAFETY & ENVIRONMENT (QHSE) & CORPORATE SOCIAL
RESPONSIBILITY:
Your Company's products and processes are developed in accordance with
strictly defined rules to ensure safety and Health of workers as well
as the environment. This is achieved by conducting the Risk Assessment,
Identification of significant environmental aspects, Safety Audits,
customer audits, HAZOP study and Environment audits. All manufacturing
plants follow responsible care.
The Company's QHSE policy is being implemented, among others, through
(i) Maintaining the "Zero Discharge" of waste water by series of
treatment; (ii) Incineration of liquid and solid waste at site; (iii)
Practicing On-site emergency plan by conducting mock-drills; (iv)
Replacement of hazardous process / chemical to non-hazardous process
for converting to low hazards; (v) Fire detection and protection system
available at site; (vi) Conducting intensive QHSE training programs
including contractor employees; (vii) Participation of employees in
Safety committee meetings at all levels and celebrating the National
Safety Day, Fire Service Day, World Environment Day and World Earth
Day; (viii) Independent safety and environment audits at regular
intervals by third party and also in-house; (ix) In-house medical and
health facility at site for pre-employment & periodical medical
check-up of all employees including contract employees; (x) Blood
Donation Camp at site for social cause; (xi) Participation and paper
presentation on good practices adopted by dishman on SHE management in
National and International Conferences. (xii) Become the signatory
member of Responsible Care for commitment towards Environment, Health &
Safety (EHS) management system. (xiii) Rated low risk facility by
various international Customer by conducting EHS audit in depth.
Dishman continues to pursue world class operational excellence on
Process Safety Management (PSM). Dishman has established the
capabilities within the Company and developed in-house experts in
various facets of PSM. Process Hazard Analysis (PHA) at various plants
is being carried out to reduce process safety risks.
In its pursuit of excellence towards sustainable development and to go
beyond compliance, Dishman integrated its ISO:14001 EMS, ISO:9001 QMS
and ISO:18001 OSHA management systems and also Company has initiated
the process for certification of HACCP and FAMI- Qs.
Your Company's efforts are recognized by State Level, National Level
and International level Awards from time to time. This year Company has
been awarded the most prestigious award as:
1) "Suraksha Purashkar" for Bavla site and "Prashansha Patra" for
Naroda site from National Safety Council of India, Mumbai in
manufacturing Sector.
2) "Platinum Category" Greentech Environment Excellence Award 2011 from
Greentech Foundation, Delhi.
CORPORATE SOCIAL RESPONSIBILITY:
The Company continued extending help towards social and economic
development of the villages and the communities located close to its
operations and also providing assistance to improving their quality of
life. Company's intention is to ensure that we meet the development
needs of the local community. The company is signatory member of
Responsible Care. Dishman has a long and strong tradition of supporting
the larger communities that it connects with - from education, health,
drinking water. During the year, activities focused on improving the
village infrastructure by Health camps at nearby villages, maintaining
the Street solar Lights, maintaining the Circle, school buildings and
education support etc. The Company has made investments towards
implementation of these development activities in the village area of
Bavla, Lodariyal, Modasar and Daran. Simultaneous to these, the Company
furthered its community development activities as Blood donation camp,
Multi-diagnostic Health camps, etc.
NON CONVERTIBLE DEBENTURE (NCD):
As you are aware, in February, 2010 your company has issued Secured
Redeemable Non Convertible Debentures of Rs.75 crores in the form of
Separately Transferable Redeemable Principle Parts ("STRPPs") of Rs.10
lacs each fully paid-up on private placement basis and the said NCD has
been listed on the Bombay Stock Exchange Ltd. (BSE) in the list of
securities of F Group - Debt Instrument w.e.f. 13th May, 2010. These
NCDs will be redeemed at par at the end of 4th, 5th, 6th & 7th year in
ratio of 20:20:30:30 respectively.
In June, 2010, the Company has issued second trench of its Secured
Redeemable Non- convertible Debentures (NCDs) of Rs.75 crores in the
form of Separately Transferable Redeemable Principal Parts ("STRPPs")
of Rs.1 lac each fully paid-up on private placement basis and the said
NCDs have been listed on the Bombay Stock Exchange Ltd. (BSE) in the
list of securities of F Group - Debt Instruments w.e.f. 17th September,
2010. These NCDs will be redeemed at par at the end of 4th & 5th year
in the ratio of 50: 50 respectively.
LISTING ARRANGEMENT:
The equity shares of the Company are listed at the National Stock
Exchange of India Ltd., Mumbai (NSE) and Bombay Stock Exchange Ltd.,
Mumbai (BSE). Annual listing fees for the year 2012-13, as applicable,
have been paid before due date to the concerned Stock Exchanges.
The Secured Redeemable Non-Convertible Debentures (NCDs) of Rs.150
crores issued by the Company in two trenches are also listed at Bombay
Stock Exchange Ltd., Mumbai (BSE). Annual listing fees for the year
2012-13, as applicable, have also been paid before due date to the BSE.
DEPOSITS:
The Company has not accepted any deposits as defined under Section 58A
of the Companies Act, 1956 read with the Companies (Acceptance of
Deposits) Rules, 1975, as amended, during the year under review.
DIRECTORS:
Mrs. Deohooti J. Vyas and Mr. Sanjay S. Majmudar, Directors of the
Company retire by rotation at the forthcoming Annual General Meeting
and being eligible offer themselves for re-appointment. Profiles of
these Directors as required under clause 49 of the listing Agreement
are given in the Annexure to the Notice dated 31st July, 2012.
INSURANCE:
The Company has made necessary arrangements for adequately insuring its
insurable interests.
DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors' Responsibilities Statement, the
Directors, based on the representations received from the Company's
operating management, hereby confirm:
i. that in the preparation of the accounts for the financial year
ended 31st March, 2012, the applicable accounting standards have been
followed along with proper explanation relating to material departures;
ii. that the Directors had adopted such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
profit or loss of the Company for the year under review;
iii. that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
iv. that the accounts for the financial year ended 31st March, 2012
have been prepared on a 'going concern' basis.
AUDITORS AND AUDITORS' REPORT:
M/s. Deloitte Haskins & Sells, Chartered Accountants, Auditors of the
Company hold office until the conclusion of the Twenty Ninth Annual
General Meeting and are eligible for reappointment. M/s. Deloitte
Haskins & Sells have informed the Company that, if appointed, their
appointment as Auditors will be within the limits prescribed under
Section 224(1B) of the Companies Act, 1956. Accordingly, the members'
approval is being sought for their appointment as the Auditors of the
Company and for fixation of their remuneration for the year 2012-2013,
at the ensuing Annual General Meeting.
The Notes on Financial Statements referred to in the Auditors' Report
are self-explanatory and do not call for any further comments. COST
AUDIT:
M/s. Kiran J. Mehta & Co., Cost Accountants, having been appointed by
the Central Government has conducted the audit of the cost accounts in
respect of Bulk Drugs activity of the Company for the financial year
2010-11 and submitted their report to the Central Government on 27th
September, 2011.
The Central Government has also approved the appointment of M/s. Kiran
J. Mehta & Co., Practicing Cost Accountants, Ahmedabad as Cost Auditors
for conducting cost audit of Bulk Drugs activity of the company for the
financial year 2011-12.
ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE:
Information of conservation of energy, technology absorption and
foreign exchange earnings and outgo as required under Section 217(1)(e)
of the Companies Act, 1956 read with Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988, is given
in the Annexure-I and forms part of this Report.
PARTICULARS OF EMPLOYEES:
Information as per Section 217 (2A) of the Companies Act, 1956 read
with the Companies (Particulars of Employees) Rules, 1975, as amended,
is given in the Annexure-II and forms part of this Report.
SUBSIDIARY COMPANIES & CONSOLIDATED FINANCIAL STATEMENT:
In accordance with the General Circular No.2/2011 dated 8th February,
2011 issued by the Ministry of Corporate Affairs, Government of India,
the Balance Sheet, Profit and Loss Accounts and other documents of the
subsidiary companies are not being attached with the Balance Sheet of
the Company. However the financial information of the subsidiary
companies is attached along with the consolidated financial statement
in compliance with the said circular. The Company will provide the
annual accounts of its subsidiary companies and the related detailed
information on the specific request made by any shareholders and the
said annual accounts are open for the inspection at the registered
office of the Company during office hours on all working days, except
Sundays and holidays, between 2.00 p.m. and 4.00 p.m.
As required under Clause 32 of Listing Agreement with the stock
exchange(s) and in accordance with the requirements of Accounting
Standard AS-21 issued by the Institute of Chartered Accountants of
India, the Company has prepared Consolidated Financial Statements of
the Company and its subsidiaries and are included in the Annual Report.
While preparing the consolidated financial statements, Company has
consolidated the accounts of two Joint Venture companies namely Schutz
Dishman Biotech Ltd.(22.33% holding by the Company), and Dishman Arabia
Ltd. (50% holding by the Company), and one associate company namely,
Bhadra Raj Holdings Pvt. Ltd. (40% holding by the Company), as per the
requirements of Accounting Standard 27 (AS-27) and Accounting Standard
23 (AS-23) respectively.
During the year, Company has invested AED 0.8 million in the share
capital of its wholly owned subsidiary Company namely Dishman Middle
East (FZE).
In the month of March, 2012, the Company has agreed, subject to
approval of the Dishman FZE's two lenders and compliance to the rules
and regulations of UAE government, to disinvest its shareholding in
Dishman FZE, a 100% wholly owned subsidiary of the Company to Nami
Trading FZ LLC, a UAE based company and received the agreed amount. The
Company has received approval for the said disinvestments from one of
the term lenders of Dishman FZE and for other the request for approval
is in process. Accordingly, the financial results of Dishman FZE, have
been incorporated up to the date of the amount received by the Company
for the said disinvestments, in accordance with the applicable
requirements of Accounting Standard AS-21 on "Consolidated Financial
Statements".
During the year, the Company's holding in JV namely CAD Middle East
Pharmaceuticals Inds., established in Saudi Arabia, has been reduced
from 30% to 14.9%, due to increase in shareholding by other JV
Partners.
Dishman LLP, a limited liability partnership (LLP) incorporated in UK
and subsidiary of the Company, has been dissolved w.e.f. 10th July,
2012, on the application made by the LLP to the Companies House, London
for striking off its name from the Companies Registrar, UK.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION ANALYSIS REPORT:
Your Company follows the principles of effective corporate governance
and committed to maintain highest standard of corporate governance by
adhering to the corporate governance requirements set out by SEBI. The
Company has complied with all the mandatory provisions of Corporate
Governance as prescribed in the revised Clause 49 of the Listing
Agreement with the Stock Exchanges.
As required by clause 49 of the Listing Agreement, a detail report on
Corporate Governance compliance and Management Discussion and Analysis
Report forms a part of Annual Report along with the required
Certificate from the Auditors of the Company regarding compliance of
the conditions of Corporate Governance as stipulated in revised Clause
49 of the Listing Agreement.
In compliance with one of the Corporate Governance requirements as per
the revised Clause 49 of the Listing Agreement, the Company has
formulated and implemented a Code of Conduct for all Board members and
senior management personnel of the Company, who have affirmed
compliance thereto.
ACKNOWLEDGEMENT:
Your Directors would like to express their grateful appreciation for
the continued assistance and cooperation received from the Indian and
International Financial Institutions, Banks, Government Authorities,
Shareholders and other stakeholders. Your Directors are also grateful
to the customers, suppliers and business associates of your Company for
their continued co-operation and support. Your Directors wish to place
on record their deep sense of appreciation to all the employees for
their commendable teamwork and enthusiastic contribution to the growth
of Company's business during the year.
For and on behalf of the Board
Place : Ahmedabad (Janmejay R. Vyas)
Date : 31st July, 2012 Chairman & Managing Director
Mar 31, 2011
The Directors have pleasure in presenting their Report along with the
Audited Accounts of the Company for the year ended March 31, 2011.
FINANCIAL RESULTS:
(Rs. in Lacs)
Particulars 2010-2011 2009-2010
Net Sales 41957.29 35260.88
Profit before Tax & other Adjustments 4855.95 7940.69
Less: Current tax 987.18 1371.32
Add :MAT Credit Entitlement 408.55 1150.75
Less: Deferred Tax Liability 262.80 683.25
Profit After Tax 4014.52 7036.87
Add/(Less): Prior Periods Adjustments (Net) (2.03) 110.00
Less: Short Provision of Income tax for
earlier years à 39.52
Net Profit 4012.49 7107.35
Balance of profit brought forward 5795.42 7942.27
Amount available for Appropriation 9807.91 15049.62
Appropriations:
Transfer to Debenture Redemption Reserve 1250.00 625.00
Transfer to General Reserve 5000.00 7500.00
Proposed Dividend 968.37 968.37
Tax on Proposed Dividend 157.09 160.83
Balance Carried to Balance Sheet 2432.45 5795.42
DIVIDEND:
For the financial year 2010-2011, your Directors are pleased to
recommend a final dividend of 60% on the paid-up equity share capital
of Rs.1613.94 lacs (Rs.1.20/- per equity share of Rs.2/- each)
(previous year 60% on the paid-up equity share capital of Rs.1613.94
lacs, i.e. Rs.1.20/- per equity share of Rs.2/- each), which if
approved at the forthcoming Annual General Meeting will be paid out of
the profits of the Company for the year to all those equity
shareholders whose names appear in the Register of Members on the close
of business hours as on 15th July, 2011.
PERFORMANCE AND OPERATION REVIEW:
During the year, your Company achieved a turnover of Rs.41957.29 lakhs
as against Rs.35260.88 lakhs during the previous year reflecting a
growth of 18.99%. Exports constitute Rs.30029.91 lakhs or 71.57% of
sales for 2010-11. Other income earned during the year stood at
Rs.275.36 lakhs as against Rs.315.28 lakhs in the previous year. Profit
before tax decreased by 38.85% (Rs.4855.95 lakhs during the year as
against Rs.7940.69 lakhs in the previous year). Profit after tax for
the year was Rs.4014.52 lakhs as against Rs.7036.87 lakhs during
previous year.
Earning per share for the year works out to Rs.4.97 per share (previous
year Rs.8.81).
The consolidated turnover, which includes results of all its wholly
owned subsidiaries, proportionate share in the joint ventures (Schutz
Dishman Biotech Ltd., CAD Middle East Pharmaceutical Inds., Dishman
Arabia Ltd. and Dishman Japan Ltd.) and associate (Bhadra- Raj Holdings
Pvt. Ltd.) reported 8.25% growth in sales to Rs.99084.40 lakhs for the
current financial year 2010-11 compared to the previous years sales of
Rs.91535.74 lakhs.
Consolidated Profit before tax & other adjustment of the Company stood
at Rs.9210.63 lakhs (previous year Rs. 13252.88 lakhs) and profit after
tax for the year at Rs.8134.43 lakhs (Previous year Rs.11757.63 lakhs)
for the current financial year 2010-11.
The consolidated Earning per share for the year works out to Rs.9.92
per share (previous year Rs.14.55 per share).
Lower sales and profit during the year is mainly due to global
recession and inventory rationalization at customers end.
A detailed analysis of the performance of the Company and financial
results is given in the Management Discussion and Analysis Report,
which forms part of this Report.
Vitamin D
During the year, your Company started setting up a new unit to
manufacture Vitamin D at Bavla. The unit is expected to be ready for
trail production during the second quarter of FY 2011-12.
Disinfectant Division
Your Company has set up a manufacturing unit at Bavla to manufacture
Antiseptics and Disinfectants for application in healthcare and related
industries. Trial production is expected from the unit by end of June,
2011.
New High-Potency Manufacturing Unit (Unit 9)
Your directors are pleased to inform you that Unit 9 (HYPO facility)
has successfully completed all validation procedures for the
containment of highly active APIs. Unit 9 has smoothly undergone an
in-depth and scientifically rigorous qualification process of our
containment equipment, led by an external consultancy with a strong
reputation and expertise in industrial hygiene. HYPO facility set up
at Bavla completed containment performance validation by VEGA
Environment Consultants Ltd. and ready for trial production in the
first quarter of 2011-12.
RESEARCH AND DEVELOPMENT:
Research and Development is the foundation upon which Companys
strategy of manufacturing and marketing of Bulk Drugs, Intermediates
(including contract manufacturing), Fine Chemicals, Quats & Specialty
chemicals stands. Your Company offers portfolio of services from
process R&D in state-of-the-art laboratories, kilo and pilot plant
trials in well equipped kilo labs and pilot plants and scale-up to full
scale commercial manufacture in multi purpose production units as well
as dedicated facilities for certain products as per customer
requirement. By offering technical and manufacturing excellence in
multiple locations around the globe, your Company is the global
outsourcing partner for the pharmaceutical industry providing
innovative development and value for money, long term commercial
supply.
Your Company Offers R & D services with a specialization in development
process that are truly scalable to commercialization through process
research and development. Your Companys R & D process is supported by
Analytical Services department which provided support in development of
new analytical methods for products developed in the R&D labs.
Analytical Development Lab is equipped with all modern equipment for
the analysis of raw materials, intermediates and finished products. We
continually upgrade the instruments as per the requirements of our
customers/products. The Quality Control (QC) supports the analytical
requirements starting from initial raw material releases to release of
Final API.
Kilo & Pilot facilities for cGMP production of API are an integral part
of R&D center to facilitate maximum interaction and ensure seamless
process transfer from Laboratory to plant.
At Bavla facility, your Company has created a state-of-the-art R & D
center comprising three floors and having total built up area of 4500
Sq. Mtrs. The R&D center houses a technical library, 8 R&D
laboratories, a formulation development laboratory, an analytical
development department, a kilo lab and a cGMP compliant pilot plant.
The technical library has a rich collection of books and periodicals
covering various chemistry and related topics. It is staffed by
competent persons.
The R&D labs work under full Good Laboratory Practices (GLP). Each R&D
lab has a process R&D area and its own analytical section. The R&D labs
are equipped with latest equipment for carrying out diverse reactions.
We continue to add to our knowledge on various reactions as well as try
new technologies. We have now successfully used enzymes at lab scale
and also commercial scale for conversions that involve multiple steps
if done using conventional chemistry. We have concluded lab runs on
irradiation technology for Vitamin D analogues. A small-scale
irradiation equipment has been installed for certain niche products.
In the kilo lab, we have small reactors ranging from 30 L to 100 L
capacity for small scale reactions. The cGMP pilot plant has a range of
equipment which is required for the scale up of reactions developed in
the labs.
We now have a separate group of scientists working on generic APIs.
This group is involved in developing non-infringing routes to various
generic and soon-to-be generic APIs.
In the year 2010-2011, non-infringing process for about 10 APIs of
various therapeutic categories have been developed in the labs and
successfully validated in the pilot plant. Regulatory filing for these
APIs is under progress.
For the year 2011-2012, 10 new target APIs have been identified and
work has already started on some of them with the first few being ready
for pilot validation by the middle of this year.
In addition to APIs, this year 100 R&D CRAMS projects have been
completed at lab and pilot level. Another 80 are in various stages of
development.
During the current year, we have worked on about 140 R&D CRAMS
projects. We added 5 new customers for whom we completed 9 projects at
various scales. Negotiations are underway for repeat manufacturing
campaigns for some of them.
QUALITY, HEALTH, SAFETY & ENVIRONMENT (QHSE) & CORPORATE SOCIAL
RESPONSIBILITY :
Dishmans commitment towards excellence in Health, Safety and
Environment is one of the Companys core values by complying with the
laws and regulations first, and then going beyond the mandate to keep
our planet safe for future generations. Minimizing the environment
impact of our operations assumes utmost priority. The Company is
unwavering in its policy of safety of persons overrides all production
targets, which drives all employees to continuously break new grounds
in safety management for the benefit of the people, property,
environment and the communities in which Dishman operates. Our
comprehensive QHSE policy, as well as dedicated measures by conducting
the Risk Assessment, Identification of significant
environmental aspects, Safety Audits, customer audits, HAZOP study and
Environment audits of all manufacturing plants and signatory commitment
of Responsible Care. Greatest emphasis is given to safety measures for
minimizing accidents and incidents. The year 2010-11 saw significant
steps taken in the direction of building a full-proof and robust
Safety, Health & Environment system in the organization.
While the main focus of occupational health services is on medical
surveillance of employees, they also carry out extensive health
education and awareness sessions, health exhibitions and diagnostic
camps. All employees, irrespective of the nature of their work or
location, undergo regular periodic medical examinations. The medical
check up facility also coveres the Contractors employees engaged at
the manufacturing sites. State-of-the-art Occupational Health Centres
(OHCs) have been established. All employees are subjected to health
risk assessments and appropriate measures are taken to prevent medical
complications. Dishman celebrated the World Environment Day, Earth Day,
Fire day, Safety Day, etc and created environmental awareness among
employees and surrounding communities.
Dishman continues to pursue world class operational excellence on
Process Safety Management (PSM). Dishman has capabilities and has
developed in-house experts in various facets of PSM. Process Hazard
Analysis (PHA) at various plants has been initiated to address and
reduce process safety risks.
In its pursuit of excellence towards sustainable development and to go
beyond compliance, Dishman integrated its ISO:14001 EMS, ISO:9001 QMS
and ISO:18001 OSHA management systems. A management framework with
defined structures, roles and responsibilities, group standards, audits
and training has been further strengthened. Continuing the journey
towards world class environmental performance through systems and
robust processes, covering various environmental aspects were developed
and issued. This was further supported by the development and release
of third party audit protocols for the standards. Dishman strongly
believes that these actions will be the change agent for reducing the
Companys environmental risks and maintaining the "Zero Discharge" for
liquid effluent.
Environment impact assessment and risk analysis have been performed for
all new and major expansion projects. Dishman continues to give top
priority to maintenance and performance improvements of all pollution
abatement facilities like effluent treatment plants, air emission
control. In these improvement efforts, audits play an important role.
Dishman has inculcated a habit to be in harmony with nature and in this
context, afforestation, maintenance of green belts, gardens,
vermi-compost of waste and its use as manure are routine.
Your Companys efforts are recognized by State Level, National Level
and International level Awards from time to time. This year Company has
been awarded the most prestigious awards as:
1. State level winner of Safety Award from Gujarat Safety Council in
Drugs and pharmaceutical, Food and Dairy sector continuous for the
sixth year for Bavla site and Runner award for Fourth year of Naroda
site.
2. "Suraksha Purashkar" for Bavla site and "Prashansha Patra" for
Naroda site from National Safety Council of India, Mumbai in
manufacturing Sector.
3. "Gold Category" Greentech Safety Award 2011 from Greentech
Foundation, Delhi.
CORPORATE SOCIAL RESPONSIBILITY:
Dishman has a long and strong tradition of supporting the larger
communities that it connects with à from education, health, drinking
water.
Our intention is to ensure that we meet the development needs of the
local community. The Company is signatory member of Responsible Care.
The Company continued extending helping hand towards social and
economic development of the villages and the communities located close
to its operations and also providing assistance to improving their
quality of life. During the year, activities focused on improving the
village infrastructure by constructing Road dividers, Health camps at
nearby villages, Solar Street Lights, Developing the Circle, school
buildings, education support etc. The Company has made investments
towards implementation of these development activities in the village
area of Bavla, Lodariyal, Modasar and Daran. Simultaneous to these, the
Company furthered its community development activities as Blood
donation camp, Health camps, etc. The Company also assisted in
repairing of village schools at other nearby villages.
SPECIAL ECONOMIC ZONE [SEZ] PROJECT:
During the year Company has been allotted land admeasuring 299151 sq.
mtrs. by Dishman Infrastructure Ltd. (DIL) in the SEZ developed by
them. An application has been made to the Development Commissioner for
their approval for setting up the units in the said Pharma & Fine
Chemicals SEZ of DIL. Your Company has decided to do the future
expansion in the SEZ. DIL has started the development work at the SEZ
site and first phase of development work will be completed by March,
2012.
FOREIGN CURRENCY CONVERTIBLE BONDS [FCCBs]:
As you are aware, in August, 2005, the Company has issued 0.5% Foreign
Currency Convertible Bonds (FCCBs / Bonds), due 2010 convertible into
equity shares of the Company, for US$50 million. The said FCCBs have
been listed on the Singapore Exchange Securities Trading Ltd. (SGX-ST).
Out of US$ 50.00 million US $ 47.50 million FCCBs were converted into
equity shares of the Company.
The Company has not received any conversion Notice from the Bondholder
for conversion of Bonds into Equity Shares of the Company upto 18th
August, 2010. As per the terms of the said FCCBs outstanding FCCBs of
US$ 2.50 million were redeemed on maturity i.e. on 19th August, 2010.
NON CONVERTIBLE DEBENTURES (NCD):
In February, 2010, your Company has issued Secured Redeemable Non
Convertible Debenture of Rs.75 crores in form of Separately
Transferable Redeemable Principle Parts ("STRPPs") of Rs.10 lacs each
fully paid-up on private placement basis and the said NCD has been
listed on the Bombay Stock Exchange Ltd. (BSE) in the list of
securities of F Group à Debt Instrument w.e.f 13th May, 2010.
In June, 2010, the Company has issued second trench of its Secured
Redeemable Non- convertible Debentures (NCD) of Rs.75 crores in the
form of Separately Transferable Redeemable Principle Parts ("STRPPs")
of Rs.1.00 lac each fully paid-up on private placement basis for
augmenting medium to long term resources of the Company, including
regular capex and retirement of high cost debt. These NCD will be
redeemed at par at the end of 4th & 5th year in the ratio of 50: 50
respectively. The said NCD has been listed on the Bombay Stock
Exchange Ltd. (BSE) and BSE has admitted the said NCD to deal on the
Exchange in the list of securities of F Group à Debt Instruments w.e.f.
17th September, 2010.
LISTING ARRANGEMENT:
The equity shares of the Company are listed at the National Stock
Exchange of India Ltd., Mumbai (NSE) and Bombay Stock Exchange Ltd.,
Mumbai (BSE). Annual listing fees for the year 2011-12, as applicable,
have been paid before due date to the concerned Stock Exchanges.
The Secured Redeemable Non-Convertible Debentures (NCD) of Rs.150.00
crores issued by the Company in two trenches is also listed at Bombay
Stock Exchange Ltd., Mumbai (BSE). Annual listing fees for the year
2011-12, as applicable, have also been paid before due date to the BSE.
DEPOSITS:
The Company has not accepted any deposits as defined under Section 58A
of the Companies Act, 1956 read with the Companies (Acceptance of
Deposits) Rules, 1975, as amended, during the year under review.
DIRECTORS:
Mr Arpit J.Vyas and Mr. Ashok C. Gandhi, Directors of the Company
retire by rotation at the forthcoming Annual General Meeting and being
eligible offer themselves for Re-Appointment.
The terms of appointment of Mrs. Deohooti J. Vyas as Whole-time
Director of the Company expires on 2nd September, 2011. The
Remuneration Committee and Board of Directors have passed the necessary
resolution for re-appointment of Mrs. D. J. Vyas as Whole-time
Director for a period of 5 (Five) years w.e.f. 3rd September, 2011 and
increase in remuneration payable to her to Rs.10.00 lacs (Rupees Ten
Lacs) per month subject to approval of members.
Profiles of these Directors as required under clause 49 of the listing
Agreement are given in the Annexure to the Notice dated 26th May,2011.
INSURANCE:
The Company has made necessary arrangements for adequately insuring its
insurable interests.
DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956 with respect to Directors Responsibilities Statement, the
Directors, based on the representations received from the Companys
operating management, hereby confirm:
i. that in the preparation of the accounts for the financial year ended
31st March, 2011, the applicable accounting standards have been
followed along with proper explanation relating to material departures;
ii. that the Directors had adopted such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year and of the profit or
loss of the Company for the year under review;
iii. that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
iv. that the accounts for the financial year ended 31st March, 2011
have been prepared on a going concern basis.
AUDITORS:
M/s. Deloitte Haskins & Sells, Chartered Accountants, Auditors of the
Company hold office until the conclusion of the Twenty Eighth Annual
General Meeting and are eligible for reappointment. M/s. Deloitte
Haskins & Sells have informed the Company that, if appointed, their
appointment as Auditors will be within the limits prescribed under
Section 224(1B) of the Companies Act, 1956. Accordingly, the members
approval is being sought for their appointment as the Auditors of the
Company and for fixation of their remuneration for the year 2011-2012,
at the ensuing Annual General Meeting.
COST AUDIT:
The Central Government by an order No.52/77/CAB-2010 dated 16th
December, 2010 directed the Company to conduct an audit of the cost
account of the Company in respect of Bulk Drugs activity, for the year
ending 31st March, 2011 and also for every financial year thereafter
continuously, until further orders.
M/s. Kiran J. Mehta & Co., Practicing Cost Accountants, Ahmedabad has
been appointed by the Board of Directors of the Company with the
previous approval of Central Government to conduct the audit of the
cost accounts in respect of Bulk Drugs activity of the Company for the
financial year 2010-11.
ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE:
Information of conservation of energy, technology absorption and
foreign exchange earnings and outgo as required under Section 217(1)(e)
of the Companies Act, 1956 read with Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988, is given
in the Annexure-I and forms part of this Report.
PARTICULARS OF EMPLOYEE:
Information as per Section 217 (2A) of the Companies Act, 1956 read
with the Companies (Particulars of Employees) Rules, 1975, as amended,
is given in the Annexure-II and forms part of this Report.
SUBSIDIARY COMPANIES & CONSOLIDATED FINANCIAL STATEMENT:
The Ministry of Corporate Affairs, Government of India vide its order
No.47/42/2011 CL III dated 21st January, 2011 issued under section
212(8) of the Companies Act, 1956 has granted an exemption to the
Company from attaching the accounts along with the report of the Board
of Directors and Auditors as required by section 212(1) of the
Companies Act, 1956, of its 17 (seventeen) subsidiary companies namely
i) Dishman Europe Limited, ii) Dishman U.S.A. Inc., iii) Dishman
International Trading (Shanghai) Co. Ltd., iv) Dishman FZE, v) Dishman
Switzerland Ltd., vi) Dishman Pharma Solutions AG., vii) Dishman
Pharmaceuticals & Chemicals (Shanghai) Co. Ltd., viii) Carbogen Amcis
AG., ix) Carbogen Amcis Limited (Name was changed from "Synprotec DCR
Limited" w.e.f. 05/07/2007), x) Dishman Care Limited xi) Innovative
Ozone Service Inc. (IO3S), xii) Dishman Netherlands B.V. (Name was
changed from "Pharma Syn. B.V." w.e.f. 08/11/2007), xiii) Cohecie Fine
Chemicals B.V. (Name was changed from "Dishman Holland B.V."
w.e.f.22/09/2010), xiv) Dishman Japan Ltd., xv) Carbogen Amcis (India)
Ltd., xvi) Dishman Australasia Pty. Ltd., and xvii) Dishman LLP, to the
balance sheet of the Company for the financial year ended on 31st
March, 2011.
The Company will provide the annual accounts of its subsidiary
companies and the related detailed information on the specific request
made by any investors and the said annual accounts are open for the
inspection at the registered office of the Company during office hours
on all working days, except Sundays and holidays, between 2.00 p.m. and
4.00 p.m. Particulars relating to the Subsidiary Companies, as per the
condition (iii) of the above mentioned order of the Ministry of
Corporate Affairs, are attached alongwith the consolidated financial
statement.
As required under Clause 32 of Listing Agreement with the stock
exchange(s) and in accordance with the requirements of Accounting
Standard AS-21 issued by the Institute of Chartered Accountants of
India, the Company has prepared Consolidated Financial Statements of
the Company and its subsidiaries and are included in the Annual Report.
While preparing the consolidated financial statements, Company has
consolidated the accounts of three Joint Venture companies namely
Schutz Dishman Biotech Ltd. (22.33% holding by the Company), CAD Middle
East Pharmaceutical Industries (30% holding by the Company), and
Dishman Arabia Ltd. (50% holding by the Company), and one associate
Company namely, Bhadra Raj Holdings Pvt. Ltd. (40% holding by the
Company), as per the requirements of Accounting Standard 27 (AS- 27)
and Accounting Standard 23 (AS-23) respectively.
In the month of April, 2010, Company has invested USD 0.7 million into
the share capital of its wholly owned subsidiary Company namely Dishman
Pharmaceuticals & Chemicals (Shanghai) Co. Ltd., incorporated in China.
During the year, The Company has also invested JPY 42.50 million in the
share capital of the Japanese subsidiary Company namely Dishman Japan
Ltd., in the month of February, 2011.
During the year, the name of Companys stepdown subsidiary Company
namely Dishman Holland B.V. has been changed to Cohecie Fine Chemicals
B.V. w.e.f. 22/09/2010.
During the year, Company has formed wholly owned subsidiary Company,
namely Dishman Middle East (FZE), in Sharjah, U.A.E. and in the month
of April, 2011, Company has invested AED 150,000 (Arab Emirates Dirham
One Hundred Fifty Thousand) into equity shares of Dishman Middle East
(FZE).
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION ANALYSIS REPORT:
Your Company follows the principles of effective corporate governance.
The Company has complied with the mandatory provisions of Corporate
Governance as prescribed in the revised Clause 49 of the Listing
Agreement with the Stock Exchanges.
As required by clause 49 of the Listing Agreement, a detail report on
Corporate Governance compliance and Management Discussion and Analysis
Report forms a part of Annual Report along with the required
Certificate from the Auditors of the Company regarding compliance of
the conditions of Corporate Governance as stipulated in revised Clause
49 of the Listing Agreement.
In compliance with one of the Corporate Governance requirements as per
the revised Clause 49 of the Listing Agreement, the Company has
formulated and implemented a Code of Conduct for all Board members and
senior management personnel of the Company, who have affirmed
compliance thereto.
ACKNOWLEDGEMENT:
Your Directors would like to express their grateful appreciation for
the continued assistance and cooperation received from the Indian and
International Financial Institutions, Banks, Government Authorities and
Shareholders. Your Directors are also grateful to the customers,
suppliers and business associates of your Company for their continued
co-operation and support. Your Directors wish to place on record their
deep sense of appreciation to all the employees for their commendable
teamwork and enthusiastic contribution to the growth of Companys
business during the year.
For and on behalf of the Board
Place: Ahmedabad (Janmejay R. Vyas)
Date: 26th May, 2011 Chairman & Managing Director
Mar 31, 2010
The Directors have pleasure in presenting their Report along with the
Audited Accounts of the Company for the year ended March 31, 2010.
FINANCIAL RESULTS:
(Rs. in Lacs)
Particulars 2009-2010 2008-2009
Net Sales 35260.88 41588.47
Profit before Tax & other Adjustments 7940.69 9505.81
Less : Current tax 1371.32 1075.85
Add : MAT Credit Entitlement 1150.75 1025.69
Less : Deferred Tax Liability 683.25 167.61
Less : Fringe Benefit Tax - 32.41
Profit After Tax 7036.87 9255.63
Add/(Less): Prior Periods Adjustments (Net) 110.00 (12.06)
Less:Short Provision of Income tax for
earlier years 39.52 29.06
Net Profit 7107.35 9214.51
Balance of profit brought forward 7942.27 4860.70
Amount available for Appropriation 15049.62 14075.21
Appropriations:
Transfer to Debenture Redemption Reserve 625.00 -
Transfer to General Reserve 7500.00 5000.00
Proposed Dividend 968.37 968.37
Tax on Proposed Dividend 160.83 164.57
Balance Carried to Balance Sheet 5795.42 7942.27
DIVIDEND:
For the financial year 2009-2010, your Directors are pleased to
recommend a final dividend of 60% on the paid-up equity share capital
of Rs.1613.94 lacs (Rs.1.20/- per equity share of Rs.2/- each)
(previous year 60% on the paid-up equity share capital of Rs.1613.94
lacs, i.e. Rs.1.20/- per equity share of Rs.2/- each), which if
approved at the forthcoming Annual General Meeting will be paid out of
the profits of the Company for the year to all those equity
shareholders whose names appear in the Register of Members on the close
of business hours as on 16th July, 2010.
PERFORMANCE AND OPERATION REVIEW:
During the year, your company achieved a turnover of Rs.35260.88 lakhs
as against Rs. 41588.47 lakhs during the previous year reflecting a
degrowth of 15.21%. Exports constitute Rs.31811 lakhs or 90% of sales
for 2009-Ã10. Other income earned during the year stood at Rs.315.28
lakhs as against Rs.94.16 lakhs in the previous year. Profit before tax
degrown by about 16.46% (Rs.7940.69 lakhs during the year as against
Rs.9505.81 in the previous year). Profit after tax for the year was
Rs.7036.87 lakhs as against Rs.9255.63 Lakhs during previous year.
Earning per share for the year works out to Rs.8.81 per share on
absolute basis and Rs.8.74 on diluted basis as against Rs.11.43 per
share on absolute basis and Rs.11.33 on diluted basis.
The consolidated turnover, which includes results of all its wholly
owned subsidiaries, proportionate share in the joint ventures (Schutz
Dishman Biotech Ltd., CAD Middle East Pharmaceutical Inds., Dishman
Arabia Ltd., and Dishman Japan Ltd.) and associate (Bhadra- Raj
Holdings Pvt. Ltd.) reported 13.84% degrowth in sales to Rs.91535.74
lacs for the current financial year 2009-10 compared to the previous
yearÃs sales of Rs. 106235.78 lacs.
Consolidated Profit before tax & other adjustment of the Company stood
at Rs.13252.88 lakhs (previous year Rs. 15745.56 lakhs) and profit
after tax for the year at Rs.11757.63 lakhs (Previous year Rs. 14673.66
lakhs) for the current financial year 2009-10.
The consolidated Earning per share for the year works out to Rs.14.55
per share as against Rs.18.13 per share on absolute basis and Rs.14.44
per share against Rs.17.98 per share on diluted basis.
Lower sales and profit during the year is mainly due to global
recession and inventory rationalization at customers end.
A detailed analysis of the performance of the company and financial
results is given in the Management Discussion and Analysis Report,
which forms part of this Report.
New High-Potency Manufacturing Unit
Your Directors have pleasure to inform about the commissioning of its
World-class High Containment API facility for manufacture of a range of
Oncology APIs and other related high potency products at its Bavla
complex, near Ahmedabad from January, 2010. This facility has been set
up primarily by the Technical Team of DishmanÃs Swiss Subsidiary namely
Carbogen Amcis AG. with active support of local Dishman team. This
facility is, to the best of our knowledge, the only one of its kind not
only in India, but in the entire Asia and comparable with very few such
facilities in the world. This is a significant milestone in the history
of the company and opens up huge opportunities for manufacture of high
potency oncology APIs for manufacture of High value Oncology APIs and
similar product on Contract Manufacturing Basis for the leading
pharmaceuticals companies in the World.
Vitamin D Analogue manufacturing facility
A new Vitamin-D Analogue manufacturing facility was inaugurated on 27
November 2009 at Veenendaal, the Netherlands. The laboratory consists
of 6 dedicated clean rooms with a scale of operation of up to 1 kg in
addition to all standard laboratory facilities.
US FDA Approval
In the month of February, 2010, US FDA team has successfully completed
inspection of DishmanÃs EOU facility situated at its Naroda works,
Ahmedabad and approved the said facility for API production for US
market.
TGA Approval
Your CompanyÃs Bavla Facilities are approved by Therapeutic Goods
Administration (TGA), Department of Health and Ageing, Australian
Government, Australia, for all Active Pharmaceutical Ingredients (API)
production.
Sratagic alliance with Codexis Inc.
Your Company has finalized a Strategic alliance with California based
biotechnology Company, Codexis Inc, to utilize the Enzymatic
Biocatalysts Technology. As per the Agreement between both the parties
i.e. DISHMAN and CODEXIS, your company use codexis technology to
manufacture building blocks, intermediates and APIÃs for innovator
pharmaceutical companies. This agreement make your Company the only
Indian company to have High Grade Technology in the Indian CRAMS
Segment. It adds another dimension to the already extensive portfolio
of services offered by the Dishman Group.
The technology deals with reduction of chiral Compounds in the APIs and
provides cheaper, cleaner, greener processes of manufacturing at a
lower cost of production. Your Company will be offering these
facilities to its customers and codexis will be offering a wide
selection of enzymes for the pharma synthesis of Chiral Compounds.
This alliance provides considerable benefits to Dishman and put it far
ahead in the race of companies dealing in the CRAMS Business. By
utilizing this biocatalyst Technology, Dishman can reduce the quantity
of Chiral Compound that is mainly used in preparation of drugs in
larger quantity.
Disinfectant Division
As you are aware, your Company through its disinfection division offers
a range of Antiseptics and Disinfectants for application in healthcare
and related industries it has developed a unique position in bulk
actives in the area of disinfectants. Company has established a new
wholly owned subsidiary company in the name of Dishman Care Limited for
the Disinfectant project and invested seed capital of Rs.5.00 lacs in
the month of March, 2010.
RESEARCH AND DEVELOPMENT:
Imagination, Invention & Innovation are the three main pillars of
Research and Developments. It is the foundation upon which CompanyÃs
strategy of manufacturing and marketing of Bulk Drugs & Intermediates
(including contract manufacturing) and Fine Chemicals, Quats &
Specialty chemicals stands. Your company offers portfolio of services
from process of R&D through kilo and pilot supply to full scale &
commercial manufacture by providing built and Dedicated Facilities. By
offering technical and Manufacturing excellence in multiple Locations
around the glob, your Company is the global outsourcing partner for the
pharmaceutical industry providing innovative development to value for
money, long term commercial Supply.
Your company Offers R & D services with a specialization in development
process that are truly scalable to commercialization through Process of
Research, Process of development & optimization. Your CompanyÃs R & D
process is supported by Analytical Services starting from initial Raw
material releases to release of Final API, Kilo & Pilot facilities for
cGMP production of API are an integral part of R&D center to facilitate
maximum interaction and ensure seamless process transfer from
Laboratory to plant.
At Bavla facility, your Company has created a state-of-the-art R & D
center comprising three floors and having total built up area of 4500
Sq. Mtrs. The R&D center houses a technical library, 8 R&D
laboratories, a formulation development laboratory, an analytical
development department, a kilo lab and a cGMP compliant pilot plant.
The technical library has a rich collection of books and periodicals
covering various chemistry and related topics. It is staffed by
competent information scientists.
The R&D labs work under full Good Laboratory Practices (GLP). Each R&D
lab has a process R&D area and its own analytical section. The R&D labs
are equipped with latest equipment for carrying out diverse reactions.
We continue to add to our knowledge on various reactions as well as try
new technologies. As an example, we have successfully run enzymatic
reaction in the laboratories and are now planning scale-up. Also, we
are working on irradiation technology in our labs as well as kilo lab.
For this, small-scale irradiation equipment has been installed for
certain niche products. In the kilo lab, we have small reactors ranging
from 30 L to 100 L capacity for small scale reactions. The cGMP pilot
plant has a range of equipment which is required for the scale up of
reactions developed in the labs.
Analytical Development Lab is equipped with all modern equipments for
the analysis of raw materials, intermediates and finished products. We
continually upgrade the instruments as per the requirements of our
customers/products.
We now have a separate group of scientists working on generic APIs.
This group is involved in developing non-infringing routes to various
generic and soon-to-be generic APIs.
In addition to APIs, this year 120 R&D CRAMS projects have been
completed at lab and pilot level. Another 80 are in various stages of
development.
SPECIAL ECONOMIC ZONE [SEZ] PROJECT:
As you are aware, Pharmaceuticals & Chemicals Special Economic Zone
(SEZ) project of Dishman Infrastructure Ltd. (DIL), in which Company
had invested seed Capital, is notified by the Central Government vide
Notification dated 13th November, 2009.
The said Pharma SEZ of DIL is located close to the CompanyÃs existing
works at Bavla and to avail all the Tax Benefits available to SEZ
Units, Company has decided to invest into the said Pharma SEZ as a part
of CompanyÃs expansion plan. DIL has agreed to allocate the land
approx. 3.00 Lacs Sq. Mtrs. to the Company as per the earlier mutual
agreement entered into with Company. DIL has started the development
work at the SEZ site and first phase of development will be completed
within 15 months.
LISTING ARRANGEMENT:
The equity shares of the Company are listed at the National Stock
Exchange of India Ltd., Mumbai (NSE) and Bombay Stock Exchange Ltd.,
Mumbai (BSE). Annual listing fees for the year 2010-11, as applicable,
have been paid before due date to the concerned Stock Exchanges.
FOREIGN CURRENCY CONVERTIBLE BONDS [FCCBs]:
As you are aware, in August, 2005, the Company accessed the
international financial markets through an offering of 0.5% Foreign
Currency Convertible Bonds (FCCBs / Bonds), due 2010 convertible into
equity shares of the Company, for US $50 million. The FCCBs have been
listed on the Singapore Exchange Securities Trading Ltd. (SGX-ST).
During the year, the Company has not received any conversion Notice
from the Bondholder for conversion of Bonds into Equity Shares of the
Company. As on date 95% of the Bonds were converted into equity shares
of the Company and outstanding FCCB of USD 2.50 million will matured in
August, 2010.
NON CONVERTIBLE DEBENTURE:
In February, 2010, the Company has issued Secured Redeemable
Non-Convertible Debentures (NCD) of Rs.75.00 crores in form of
Separately Transferable Redeemable Principle Parts (ÃSTRPPsÃ) of
Rs.10.00 lacs each fully paid-up, on private placement basis for
augmenting medium to long term resources of the Company, including
regular capex and retirement of high cost debt. These NCDs will be
redeemed at par at the end of 4th, 5th, 6th & 7th year in ratio of
20:20:30:30 respectively. The said NCDs has been listed on the Bombay
Stock Exchange Ltd. (BSE) and BSE has admitted the said NCDs to dealing
on the Exchange in the list of securities of F Group à Debt Instruments
w.e.f. 13th May, 2010.
DEPOSITS:
The Company has not accepted any deposits as defined under Section 58A
of the Companies Act, 1956 read with the Companies (Acceptance of
Deposits) Rules, 1975, as amended, during the year under review.
DIRECTORS:
Mr. Sanjay S. Majmudar and Mr. Yagneshkumar B. Desai, Directors of the
Company retire by rotation at the forthcoming Annual General Meeting
and being eligible offer themselves for Re-Appointment. Profiles of
these Directors as required under clause 49 of the listing Agreement
are given in the Annexure to the Notice dated 29th May, 2010.
As you are aware, Mr. Arpit J. Vyas has been appointed as Whole-time
Director of the Company for a period of five years w.e.f. 1st June,
2009 and his appointment as such and the remuneration of Rs.3.00 lacs
per month with a power to the Board to increase or revise the
remuneration subject to maximum of Rs.10.00 lacs per month during the
tenure of said five years, were approved by the members at the 26th
Annual General Meeting held on 31st July, 2009. Considering the
valuable contribution by Mr. Arpit J. Vyas, his remuneration has been
increased from Rs.3.00 lacs to Rs.10.00 lacs per month w.e.f. 1st June,
2010 by the Board of Directors at its meeting held on 29th May, 2010
upon the recommendation of Remuneration Committee held on 29th May,
2010., which is well within the powers of Board of Directors and
permissible as well as the same is in accordance with the provisions of
Schedule XIII to the Companies Act, 1956 without approval of Members
and Central Government.
INSURANCE:
The Company has made necessary arrangements for adequately insuring its
insurable interests.
DIRECTORSÃ RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956 with respect to Directorsà Responsibilities Statement, the
Directors, based on the representations received from the CompanyÃs
operating management, hereby confirm:
i) that in the preparation of the accounts for the financial year ended
31st March, 2010, the applicable accounting standards have been
followed along with proper explanation relating to material departures;
ii) that the Directors had adopted such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year and of the profit or
loss of the Company for the year under review;
iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
iv) that the accounts for the financial year ended 31st March, 2010
have been prepared on a going concern basis.
AUDITORS:
M/s. Deloitte Haskins & Sells, Chartered Accountants, Auditors of the
Company hold office until the conclusion of the Twenty Seventh Annual
General Meeting and are eligible for reappointment. M/s. Deloitte
Haskins & Sells have informed the Company that, if appointed, their
appointment as Auditors will be within the limits prescribed under
Section 224(1B) of the Companies Act, 1956. Accordingly, the membersÃ
approval is being sought for their appointment as the Auditors of the
Company and for fixation of their remuneration for the year 2010-2011,
at the ensuing Annual General Meeting.
ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE:
Information of conservation of energy, technology absorption and
foreign exchange earnings and outgo as required under Section 217(1)(e)
of the Companies Act, 1956 read with Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988, is given
in the Annexure-I and forms part of this Report.
PARTICULARS OF EMPLOYEE:
Information as per Section 217 (2A) of the Companies Act, 1956 read
with the Companies (Particulars of Employees) Rules, 1975, as amended,
is given in the Annexure-II and forms part of this Report.
SUBSIDIARY COMPANIES & CONSOLIDATED FINANCIAL STATEMENT:
The Ministry of Corporate Affairs, Government of India vide its order
No.47/70/2010-CL-III dated 23rd February, 2010, issued under section
212(8) of the Companies Act, 1956 has granted an exemption to the
Company from attaching the accounts along with the report of the Board
of Directors and Auditors as required by section 212(1) of the
Companies Act, 1956, of its 17 (seventeen) subsidiary companies namely
i) Dishman Europe Limited, ii) Dishman U.S.A. Inc., iii) Dishman
International Trading (Shanghai) Co. Ltd., iv) Dishman FZE, v) Dishman
Switzerland Ltd., vi) Dishman Pharma Solutions AG., vii) Dishman
Pharmaceuticals & Chemicals (Shanghai) Co. Ltd., viii) Carbogen Amcis
AG., ix) Carbogen Amcis Limited (Name was changed from ÃSynprotec DCR
Limitedà w.e.f. 05/07/2007), x) Dishman Africa (Pty.) Ltd., xi)
Innovative Ozone Service Inc. (IO3S), xii) Dishman Netherlands B.V.
(Name was changed from ÃPharma Syn. B.V.Ã w.e.f. 08/11/2007), xiii)
Dishman Holland B.V., xiv) Dishman Japan Ltd., xv) Carbogen Amcis
(India) Ltd., xvi) Dishman Australasia Pty. Ltd., and xvii) Dishman
LLP, to the balance sheet of the Company for the financial year ended
on 31st March, 2010.
The Company will provide the annual accounts of its subsidiary
companies and the related detailed information on the specific request
made by any investors and the said annual accounts are open for the
inspection at the registered office of the Company during office hours
on all working days, except Sundays and holidays, between 2.00 p.m. and
4.00 p.m. Particulars relating to the Subsidiary Companies, as per the
condition (iii) of the above mentioned order of the Ministry of
Corporate Affairs, are attached alongwith the consolidated financial
statement.
As required under Clause 32 of Listing Agreement with the stock
exchange(s) and in accordance with the requirements of Accounting
Standard AS-21 issued by the Institute of Chartered Accountants of
India, the Company has prepared Consolidated Financial Statements of
the Company and its subsidiaries and are included in the Annual Report.
While preparing the consolidated financial statements, Company has
consolidated the accounts of three Joint Venture companies namely
Schutz Dishman Biotech Ltd. (22.33% holding by the Company), CAD Middle
East Pharmaceutical Industries (30% holding by the Company), and
Dishman Arabia Ltd. (50% holding by the Company), and one associate
company namely, Bhadra Raj Holdings Pvt. Ltd. (40% holding by the
Company), as per the requirements of Accounting Standard 27 (AS 27) and
Accounting Standard 23 (AS-23) respectively.
During the year, Company has formed an Indian wholly owned
subsidiaries, namely Dishman Care Ltd. (DCL), and invested Rs.5.00 Lacs
(Rupees Five Lacs only) into equity shares of DCL.
In the month of February, 2010, the Company has invested SAR 6.90
million in the equity of Joint Venture Company namely CAD Middle East
Pharmaceuticals Industries, established in Saudi Arabia. The Company
has also invested JPY 17.50 million in the share capital of the
Japanese subsidiary company namely Dishman Japan Ltd., in the month of
March, 2010.
During the year, Company has invested total amount of USD 3.50 million
into the share capital of its wholly owned subsidiary company namely
Dishman Pharmaceuticals & Chemicals (Shanghai) Co. Ltd. (Dishman
China), incorporated in China. Thus, total investment into share
capital of Dishman China at the year-end stood at USD 8.50 million.
The CompanyÃs step down subsidiary namely Dishman Africa Pty. Ltd.,
which was dormant and inoperative since long, has been wound-up w.e.f.
26th January, 2010, on the application made by the Company.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION ANALYSIS REPORT:
Your Company follows the principles of effective corporate governance.
The Company has complied with the mandatory provisions of Corporate
Governance as prescribed in the revised Clause 49 of the Listing
Agreement with the Stock Exchanges.
As required by clause 49 of the Listing Agreement, a detail report on
Corporate Governance compliance and Management Discussion and Analysis
Report forms a part of Annual Report along with the required
Certificate from the Auditors of the Company regarding compliance of
the conditions of Corporate Governance as stipulated in revised Clause
49 of the Listing Agreement.
In compliance with one of the Corporate Governance requirements as per
the revised Clause 49 of the Listing Agreement, the Company has
formulated and implemented a Code of Conduct for all Board members and
senior management personnel of the Company, who have affirmed
compliance thereto.
ACKNOWLEDGEMENT:
Your Directors would like to express their grateful appreciation for
the continued assistance and cooperation received from the Indian and
International Financial Institutions, Banks, Government Authorities and
Shareholders. Your Directors are also grateful to the customers,
suppliers and business associates of your Company for their continued
co-operation and support. Your Directors wish to place on record their
deep sense of appreciation to all the employees for their commendable
teamwork and enthusiastic contribution to the growth of CompanyÃs
business during the year.
For and on behalf of the Board
Place: Ahmedabad (Janmejay R. Vyas)
Date: 29th May, 2010 Chairman & Managing Director