REPORT OF THE DIRECTORS
TO THE MEMBERS
Your Directors have pleasure in presenting the Seventieth Annual Report and the Audited Accounts of the Company for 15 months` period ended March 31, 2014.
(Rs. in Lakhs)
|For the period January 1, 2013 to March 31, 2014#||For year ended December 31, 2012|
|Profit Before Tax||294,55.35||214,99.29|
|Profit After Tax||198,45.07||144,70.05|
|Balance brought forward||418,20.25||329,95.61|
|Profit available for appropriation||616,65.32||474,65.66|
|Corporate Dividend Tax||8,58.51*||5,86.02|
|Transfer to Reserves||19,84.51||14,47.01|
|Balance carried forward||539,34.96||418,20.25|
* Includes Corporate Dividend Tax of Rs. 27.91 Lakhs for the year ended December 31, 2012.
#The Company changed its accounting year from year ended December 31 to year ended March 31 effective this year. Accordingly, these financial statements are prepared for 15 months` period from January 1, 2013 to March 31, 2014.
Your Directors recommend a dividend of Rs. 23/- per share on 2,12,49,302 fully paid-up Equity Shares of Rs. 10/- each of the Company for the period ended March 31, 2014. The proposed dividend, if approved at the Annual General Meeting, will absorb a sum of Rs. 48,87.34 Lakhs. (Previous year : Rs. 36,12.38 Lakhs) and Corporate Dividend Tax of Rs. 8,30.60 Lakhs (Previous year : Rs. 5,86.02 Lakhs). The Corporate Dividend Tax is provided at the rate applicable on the day on which the Accounts were approved by the Board of Directors.
The total Reserves as on March 31, 2014 amounted to Rs. 766,60.20 Lakhs comprising of Amalgamation Reserve Rs. 37.82 Lakhs, Capital Reserve Rs. 5,22.62 Lakhs, Capital Redemption Reserve Rs. 2,52.48 Lakhs, General Reserve Rs. 219,12.32 Lakhs and Surplus as per the Statement of Profit & Loss amounting to Rs. 539,34.96 Lakhs.
directors` responsibility statement
Pursuant to Section 217 (2AA) of the Companies Act, 1956, your Directors state that :
1. In the preparation of the Accounts, the applicable accounting standards have been followed.
2. They 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 for the period ended March 31, 2014, and of the profit of the Company for that period.
3. They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.
4. They have prepared the accompanying Accounts for the period ended March 31, 2014, on a going concern basis.
No fixed deposits were accepted during the period.
information pursuant to section 217 of the companies act, 1956
The information required to be disclosed under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 with respect to conservation of energy, technology absorption and foreign exchange earnings/outgo is given in Annexure I and forms part of this Report.
The information required under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 is given in Annexure II and forms part of this Report. As per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to the shareholders of the Company, excluding the statement of particulars of employees under Section 217(2A) of the Companies Act, 1956. Any shareholder interested in obtaining a copy of the said statement may write to the Company at its Registered Office.
Mr Thomas Dee resigned as Director of the Company effective September 30, 2013.
Mr Ashok Dayal, who retires by rotation at the ensuing Annual General Meeting, does not seek re-appointment. The Board proposes not to fill up the vacancy, for the time being.
The Board places on record its sincere appreciation for the valuable support and guidence received from Mr Thomas Dee and Mr Ashok Dayal during their tenure.
Ms Valentine Yien was appointed as an Additional Director of the Company with effect from December 23, 2013, and holds office upto the date of the ensuing Annual General Meeting. The Board recommends appointment of Ms Yien as Director of the Company, liable to retire by rotation.
Mr R. A. Shah and Mr Ranjan Kapur retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The Board proposes to appoint them as Independent Directors, in terms of the provisions of Section 149 of the Companies Act, 2013, for a term upto March 31, 2019, not liable to retire by rotation.
The Company has received declarations from Mr R. A. Shah and Mr Ranjan Kapur, confirming that they meet with the criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013.
Your Directors have pleasure in recommending their appointment.
Deloitte Haskins & Sells LLP Chartered Accountants (ICAI Firm Registration No. : 117366W), the Statutory Auditors, hold office upto the conclusion of the ensuing Annual General Meeting.
In view of completion of the term prescribed under the provisions of Section 139(2) of the Companies Act, 2013 for Deloitte Haskins & Sells LLF, the Statutory Auditors, your Board proposes rotation of the Auditors of the Company and recommend appointment of S R B C & CO LLFF Chartered Accountants (ICAI Firm Registration No. : 324982E) as the Statutory Auditors for a term of five years i.e. from financial year 2014-15 to financial year 2018-19 and to hold office till the conclusion of the Seventy-fifth Annual General Meeting of the Company (subject to ratification by Members at every Annual General Meeting).
The Board places on record its sincere appreciation for the valuable services rendered by Deloitte Haskins & Sells LLP during its association with the Company over the past 19 years.
M/s N I Mehta & Co., Cost Accountants (Registration No. 000023), having its office at 115, Jolly Maker Chamber - II, Nariman Point, Mumbai - 400 021, are appointed as the Cost Auditors of the Company for the financial year 2014-15 at a remuneration of Rs. 6.05 Lakhs plus applicable taxes and reimbursement of out of pocket expenses.
The said remuneration will be subject to ratification by the shareholders at the ensuing Annual General Meeting.
environment, health and safety
Compliance with relevant regulations coupled with effective management of these issues is an integral part of the Company`s operating philosophy and we stand committed to continually improve on these objectives. There was a considerable focus on improving Environment, Health and Safety during the period under review by the Company.
The Company continuously endeavors to improve on environmental management to minimize the adverse environmental impact and through all activities demonstrate commitment to protecting the environment.
The Goa plant is a "ZERO" discharge plant. The Company has in place a modern state of the art effluent treatment plant at the Goa unit, treating and discharging wastewater with parameters of treated effluent well below the limits set by the local Pollution Control Board. The treated water from waste water treatment plant is recycled for horticulture within the site.
The rain water harvesting project, which was installed last year, resulted in 600 KL of water saving during monsoons. The emissions from boiler and generator stacks are monitored regularly and are well below the limits set by the State Pollution Control Board. The ambient air quality is being monitored on a regular basis to conform to the compliance of ambient air quality standards. There is also a vermi-composting unit to convert canteen waste into organic manure, which is used in the lawns and plantation inside the factory premises. The plant`s briquette (compressed groundnut shells, wastes from crops, etc.) fired boiler eliminates furnace oil usage. The annual CO2 emission reduction is 740 tons and zero sulphur emissions.
The site has been awarded Zero Waste to Landfill certification in purview of waste disposal. 81% of waste generated at the plant goes for recycling, 17% for incineration and 2% for composting.
Environmental Key Performance Indicators are shared and discussed with the employees in order to continuously minimise the impact on environment.
ii. health and Safety
The Company is committed to promoting health and safety of its employees. The Company has a dedicated Safety Officer and a Safety Committee in place, which includes representation from workmen and meets regularly to review issues impacting plant safety and employee health. Our EHS program includes the policy on Environment, Health and Safety, well defined EHS organizational structure, EHS Standard Operating Procedures and EHS specific programs.
Various key measures like conducting training programs on various health and safety issues including dealing with epidemics, ergonomics, machine guarding, work safety, road safety, first-aid, manual handling, etc. have been implemented. Regular health checkup (once a year) of the plant employees is carried out. Detailed first-aid training by certified agencies like Indian Red Cross Society has also been imparted to the employees. The plant celebrated National Safety Week from 4th to 10th of March, 2014. Various activities were planned during the week. Programs like safety quiz, drawing competition, slogan and hazard identification competition were conducted. Training programs by external agencies were also conducted during the week, which included machine safety, guarding and material handling from Green Triangle Society and first aid training from the Indian Red Cross Society.
The plant also celebrated Road Safety Week in the month of January, 2014 in which road safety awareness programs were conducted. A two-wheeler conditioning camp was conducted for employees at the site.
The plant has a well-equipped first aid room with a full-time nurse and Occupational Health Physician catering to employee needs.
The plant also has a full-fledged ambulance van.
A cross-functional team for Employee Health and Safety (EHS) and Emergency Action Plan (EAP) is in place.
Routine audits for Environment, Health and Safety compliance are conducted with the assistance of personnel from Abbott`s global corporate team.
technology absorption and development
The R & D Centre of the Company at Goa is approved by the Department of Scientific and Industrial Research. It carries out development of new formulations and modification of existing ones for life cycle management. The R & D Centre also carries out evaluation of product dossiers for introduction of new products through insourcing. Effective life cycle management, cost reduction in existing product and new vendor development are focus areas at the R & D Centre.
The R & D Centre has played a key role in launching new products during the period under review e.g. Vertin OD Tablet (Vertigo), Dufaxamin tablet (Hepatic encephalopathy), Arachitol chewable tablets (Vitamin D3), Brufit tablet (Acute pain) and Titaferon injection (Hepatitis C). It has also been instrumental in site to site technology transfers for rationalization of production sites to improve efficiencies, costs and take care of business exigencies; notable among them were technology transfer of Vertin and Duphaston to alternative manufacturing sites.
Your Board records its sincere appreciation for the significant contributions made by employees across the Company through their continued commitment and dedication.
reports on corporate governance and management discussion and analysis
A Report on Corporate Governance along with a certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance as also a Management Discussion and Analysis Report pursuant to Clause 49 of the Listing Agreement are annexed hereto.
|For and on behalf of the Board|
|Mumbai||R. A. Shah||Rehan A. Khan|
|May 28, 2014||Director||Managing Director|
Information pursuant to the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988.
1. conservation of energy
(I) Energy conservation measures taken :
i. Installed briquette (solid biofuel) fired boiler as replacement of standby furnace oil fired boiler, which will result in cost saving of approximately Rs. 13 Lakhs per annum. Boiler commissioned in February, 2014.
ii. Installed transparent glass view panel in place of aluminium louvers on side walls of utility block, thereby overall 40% of existing louvers area is replaced by transparent glass. This has enabled illumination of the area inside the utility block through natural sunlight thereby avoiding use of electrical light fixtures during daytime from 8 am to 5 pm every day.
Estimated energy saving of approximately 5530 KWH (electrical units) per annum.
Installation completed in January 2014.
iii. Variable Frequency Drive installed for Bottle Decartoning Area Air Handling Unit in December, 2013 to eliminate throttling of dampers to regulate the flow to the area. This will result in electrical energy saving of approximately 6135 KWH per annum.
iv. Electricity source connection changed from Reliance Infra power to Government Electricity Department power in May, 2013 to reduce the energy cost to the plant. This will result in cost saving of approximately Rs. 1,80 Lakhs per annum.
(II) Additional investments and proposals, if any, being implemented for reduction in consumption of energy :
i. Installation of Screw-type Air Compressor of 500 CFM capacity in place of existing Reciprocating-type Air Compressor. Estimated Electrical Units saving of approximately 40000 KWH per annum. Compressor commissioned in May, 2014.
ii. Variable Frequency Drive for Air handling Units for Facility Expansion Project.
iii. Variable Primary Circuit for chilled water system, which will reduce energy cost of air conditioning system.
(iii) impact of the measures at (i) and (ii) above for reduction of energy consumption and consequent impact on the cost of production of goods :
All above Energy and Cost savings benefitted the plant by more than Rs. 1,60 Lakhs during the period under review.
(iv) Total energy consumption and energy consumption per unit of production :
|for the period January 1, 2013 to March 31, 2014||for year ended December 31, 2012|
|A. power & fuel consumption :|
|(i) Purchased (KWH Unit Millions)||4.88||3.11|
|Total amount (Rs. Lakhs)||3,77.87||4,62.90|
|(ii) Own Generation in KWH|
|through Diesel Generator||137,216||88,524|
|through Steam turbine/Generator||NA||NA|
|b) Biomass (Solid Biofuel)|
|Total amount (Rs. Lakhs)||57.75||5.20|
|Rate/ Kg (Rs.)||6.09||6.05|
|d) Furnace oil|
|Purchased (Kilo ltrs)||NIL||216.23|
|Total Amt (Rs. Lakhs)||NIL||1,02.60|
|Rate/ Ltr Rs.||NIL||47.45|
|e) Other/ Internal Generation||NA||NA|
B. consumption per Unit of products :
Since the Goa Plant manufactures different dosage forms, it is not practical to apportion utility cost based on available records.
2. technology absorption
A. Efforts made in Technology Absorption
Various new projects were undertaken at the Goa facility. Duphalac enema was commercialised during the period, providing customers with a ready enema kit for use. Cremaffin and Cremaffin Plus primary packs were changed from glass bottle to PET bottles. This has resulted in reduction in waste, savings in transportation and reduction in noise levels during manufacturing. Studies are under way to have Digene gel and Duphalac also in PET bottles.
B. Achievements of the Company`s R & D Centre at Goa :
i. Development of new Pharmaceutical Products
ii. Establishing new technical capabilities
iii. Import substitutions and new vendor development
iv. Optimization, standardization and improvement of products and manufacturing processes
v. Technical evaluation of off the shelf products, to ensure quality and stability.
New formulations of Digene tablets and Digene gel were developed with improved flavour profile and commercially launched as part of Digene promotion initiative. The R & D centre played a vital role in closely working with third party developers to launch products like Vertin OD (Vertigo), Dufaxamin (Hepatic encephalopathy), Arachitol chewable tablets (Vitamin D3) and Brufit OD (Acute pain).
A number of process improvement projects were undertaken and implemented. New process train for Digene gel manufacturing improved productivity. A number of new vendors of key Active Pharmaceutical Ingredients and excipients were developed resulting in cost savings of approximately Rs. 1,03 Lakhs, during the period under review.
C. Benefits derived as a result of the above R & D
A well-focused R & D effort has helped the Company in launching a number of new products in the Indian market. Life cycle management of key products have helped in revitalising brands. Manufacturing process optimization helped to bring in improved quality and efficiency. New vendor development of Active Pharmaceutical Ingredients and excipients has helped to reduce cost, improve the efficiency of supply chain and to prevent product stock outs. Development of new products will strengthen the portfolio and add to life cycle management in areas of Gastroenterology, Neuropsychiatry, Cardiometabolics and Women`s Health.
D. Future plan of action
New product development and life cycle management continues to be a key deliverable of the team. Identifying opportunities for process improvements and cost rationalisation will also be areas of focus. Opportunities to insource manufacturing and expand locally developed products to other geographies are being identified. Variants of global products may be developed for improved therapeutic benefit of prevailing molecules. Innovative technologies may be explored for equally efficient, cost effective and quality products.
E. Expenditure on R & D
Rs. in Lakhs
|Total R & D expenditure as a percentage of total turnover||0.08%|
F. Technology absorption, adaptation and innovation
i. Efforts, in brief, made towards technology absorption, adaptation and innovation.
The Company interacts with Abbott Laboratories Intl. Co. USA, on an ongoing basis for technical expertise for products of high technology and pharmaceutical formulations.
ii. Benefits derived as a result of the above efforts, e.g., product improvement, cost reduction, product development, import substitution, etc.
The Company has benefited as a result of the emphasis on innovation. Reduction in waste generation, energy consumption and improvement in product quality are some of the benefits achieved in the current period.
iii. Imported technology (imported during the last five years reckoned from the beginning of the financial period).
3. foreign exchange earnings and outgo
(I) Activities relating to exports; initiatives taken to increase exports; development of new export markets for products and services, and export plans.
The total foreign exchange earned during the period amounted to Rs. 23,96.78 Lakhs, which includes Rs. 14,10.24 Lakhs towards exports, Rs. 9,78.46 Lakhs towards amount recovered from the affiliates and Rs. 8.08 Lakhs towards other earnings.
(II) Details of total foreign exchange used and earned.
Rs. in Lakhs
|A. Total foreign exchange used|
|(a) On import of raw materials, finished goods, consumable stores and capital goods||365,87.96|
|(b) On professional charges, sales promotion expenses, commission on export sales, registration fees, business travel, software, etc.||11,14.45|
|(c) On remittance during the period on account of dividend||27,08.79|
|B. Total foreign exchange earned||23,96.78|
For and on behalf of the Board
|Mumbai||R. A. Shah||Rehan A. Khan|
|May 28, 2014||Director||Managing Director|