REPORT OF THE DIRECTORS
TO THE MEMBERS
Your Directors have pleasure in presenting the Sixty-Ninth Annual Report and Audited Accounts of the Company for the year ended December 31, 2012.
|Rs. in Lakhs|
|Year ended December 31, 2012||Year ended December 31, 2011|
|Profit Before Tax||214,99.29||180,15.83|
|Profit After Tax||144,70.05||120,39.30|
|Balance brought forward||329,95.61||263,44.69|
|Profit available for appropriation||474,65.66||383,83.99|
|Corporate Dividend Tax||5,86.02||# 5,72.07|
|Transfer to Reserves||14,47.01||12,03.93|
|Balance carried forward||418,20.25||329,95.61|
# Includes credit of Corporate Dividend Tax Rs. 13.95 Lakhs for period December 1, 2009 to December 31, 2010
Your Directors recommend a dividend of Rs. 17 per share for the year ended December 31, 2012. The proposed dividend, if approved at the Annual General Meeting, will absorb a sum of Rs. 36,12.38 Lakhs (Previous year: Rs. 36,12.38 Lakhs) and Corporate Dividend Tax of Rs. 5,86.02 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.
Reserves as on December 31, 2012 were Rs. 625,60.98 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. 199,27.81 Lakhs and Surplus in Statement of Profit and Loss Rs. 418,20.25 Lakhs.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956 (the Act) your Directors state that :
1. In the preparation of the Annual 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 year ended December 31, 2012, and of the Profit of the Company for the year.
3. They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.
4. They have prepared the accompanying Annual Accounts for the year ended December 31, 2012, on a going concern basis.
No fixed deposits were accepted during the year.
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 is 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 Laurent Van Lerberghe and Mr Ramon F Neira Hoyos resigned as Directors of the Company effective February 20, 2013. The Board placed on record its sincere appreciation for the valuable support rendered by them.
Mr Bhasker Iyer and Mr Sachin Dharap have been appointed as Additional Directors by the Board with effect from February 20, 2013, subject to approval of the shareholders of the Company at the ensuing Annual General Meeting.
Mr Munir Shaikh and Mr R. A. Shah retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.
Your Directors have pleasure in recommending their appointment.
Messrs Deloitte Haskins & Sells, Chartered Accountants, the Statutory Auditors, retire at this Annual General Meeting and are eligible for re-appointment.
M/s N I Mehta & Co, Cost Accountants
Narayan Dabholkar Road
Mumbai - 400 006
The Cost Audit Report for the financial year 2011 was filed with the Central Government on January 30, 2013 (Due date for filing -February 28, 2013).
HEALTH, SAFETY AND ENVIRONMENT
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 considerable focus on improving Health, Safety and Environment during the year by the Company.
The Company continuously endeavors to improve on environmental management to minimise the adverse environmental impact and through all our activities demonstrate commitment to protecting the environment.
The plant has a state of the art activated sludge type waste water treatment plant. The plant is a ZERO discharge plant. The quality of treated water from the waste water treatment plant is well below the norms laid down by pollution control board. The treated water is recycled for horticulture within the site. During the current year water recycling initiatives were taken up.
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 premises.
During the year the plant reduced the carbon footprint by reducing 112 tons of CO2 emission by implementing various electricity saving projects such as, installation of Variable Frequency Drive (VFD), optimisation of light usage, online dissolve oxygen trimming system in effluent treatment plant etc. Further, the plant commissioned briquette fired boiler which reduced furnace oil usage. The anticipated annual CO2 emission reduction is 740 tons and there are no sulphur emissions.
Environmental Key Performance Indicators are shared and discussed with employees to increase awareness and thereby 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. The Employee, Health and Safety (EHS) programme includes EHS & E policy, well defined orgnisational structure, EHS SOP`s and EHS specific programmes.
In the plant we are driving a programme of moving to ZERO EHS incidents with focus on near miss reporting, cultural change and behavioural based safety.
Employees are the key to the success of the EHS Management System as they are responsible for the proper implementation and maintenance of systems.
The site conducts various training programmes related to EHS. The site develops a yearly training schedule (calendar), reviewed quarterly and strictly adheres to it. The topics covered are machine guarding, forklift safety, electrical safety, ergonomics, waste management, first aid, emergency preparedness planning, confined spaces, spill prevention, chemical safety, work permit, biological safety, etc.
Detailed first-aid training by certified agencies like Indian Red Cross Society has also been imparted to the employees.
The plant celebrated the World Environment Day on June 5, 2012. Vehicle emission checking drive was also conducted.
The plant has an in house occupational health centre. The centre is equipped with Phygmo Nanometer, Spirometer, Audiometer, Audiometric Cabin and Otoscope, besides regular first aid equipment. The plant also has a well equipped ambulance.
A cross-functional team for 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. R&D center also carries out evaluation of product dossiers for introduction of new products through insourcing. Effective Life Cycle Management, cost reduction in existing products 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 in 2012, e.g. Adiza, Zilsa, Obimet GX forte and Omacor. The R&D has been instrumental in site to site technology transfers as a result of rationalisation of production sites to improve efficiencies and costs. Notable among them were insourcing of Cremaffin Plus, Udiliv and Duphalac manufacturing to Goa Plant.
Your Board records its sincere appreciation for the significant contribution 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 and also a Management Discussion & Analysis Report pursuant to Clause 49 of the Listing Agreement are annexed hereto.
|For and on behalf of the Board|
|February 20, 2013||Munir Shaikh||Rehan A. Khan|
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 :
1) Installation of briquette fired boiler will result in annual saving of 275 KL of furnace oil. Commissioned in November 2012, resulted in saving of 33 KL of furnace oil for the year 2012.
2) Optimisation of lighting by reducing number of lighting fixtures while maintaining the same illumination level have resulted in electricity saving of 5,118 KWH per year.
3) Installation of VFD for liquid manufacturing ventilation blower have resulted in electricity saving of 2,976 KWH.
4) Implementation of on line dissolved oxygen trimming system in waste water treatment plant aeration system have resulted in electricity saving of 15,190 KWH.
(II) Additional investments and proposals, if any, being implemented for reduction in consumption of energy :
(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 :
Installation of VFD, online dissolved oxygen trimming system in waste water treatement plant and optimisation of lighting have resulted in significant power savings. Installation of briquette fired boiler resulted in significant amount of furnace oil savings.
(IV) Total energy consumption and energy consumption per unit of production :
|Year ended December 31, 2012||Year ended December 31, 2011|
|A. Power & Fuel Consumption :|
|(i) Purchased (Unit Millions)||3.11||3.43|
|Total amount (Rs. Lakhs)||4,62.90||4,65.13|
|(ii) Own Generation in KWH|
|(through Diesel Generator)||88,524||23,095|
|(through Steam turbine/Generator)||N.A.||N.A.|
|b) Biomass Briquets|
|Total amount (Rs. Lakhs)||5.20||N.A.|
|Average Rate/Unit (Rs.)||6.05||N.A.|
|d) Furnace Oil|
|Quantity (kilo ltrs)||216.23||285.10|
|Total amount (Rs. Lakhs)||1,02.60||1,13.50|
|Average rate (Rs.)||47.45||39.81|
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
Efforts made in Technology Absorption
Various Projects were undertaken to internalise products to be manufactured at Goa facility. Internalisation benefits are increased capacity utilisation and gross margin improvement in currently marketed products. During the year, Cremaffin Plus, Udiliv and Duphalac oral liquid manufacturing has been successfully validated and commercial supplies started from Goa plant.
A. Following were the achievements of the Company`s R&D Centre at Goa :
1. Development of new pharmaceutical formulations.
2. Establishing new technical capabilities.
3. Import substitutions and new vendor development.
4. Optimisation, standardisation and improvement of products and manufacturing processes.
5. Technical evaluation of off the shelf products, to ensure quality and stability.
A number of formulations were developed for domestic market either through inhouse development or in collaboration with external laboratories/ CRO`s. The R&D Centre played a vital role in closely working with third party developers to launch products like Adiza, Zilsa, Obimet GX Forte. A reformulated multivitamin liquid Betonin AST was successfully developed inhouse and scaled up.
A number of continuous improvement projects (CI) were undertaken and implemented. Cost improvements were performed on Digene tablets by rationalising the existing excipients in current Digene tablet which was further scaled up to undergo commercialisation. A number of new vendors of API`s and excipients were studied and approved resulting in cost savings.
B. 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. Manufacturing process optimisation helped to bring in improved quality and efficiency. Internalisation projects have potential of significant cost saving and de-risking supply of key products. New vendor development for API`s with cost challenge has helped to reduce cost and to improve the efficiency of supply chain. Development of new products will strengthen the portfolio and will add to life cycle management in areas of Gastroenterology, Neuropsychiatry, Cardiometabolics and Women`s Health.
C. Future plan of action :
Assessments are ongoing to monitor trend analysis of key currently manufactured products, assess the gaps, if any and remediate as a proactive measure. New product development continues to be a key deliverable of the team. Opportunities to expand locally developed products to other geographies are being identified, a significant volume of efforts will be dedicated for this. 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. Identifying opportunities to rationalise costs and improve efficiencies through developing cost efficient and robust processes and products will be an area of focus.
D. Expenditure on R&D :
|Rs. In Lakhs|
|Total R&D expenditure as a Percentage of Total turnover||I 0.11|
E. Technology absorption, adaptation and innovation :
(a) 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.
(b) 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 energy consumption and improvement in product quality are some of the benefits achieved in the current year.
(c) Imported technology (imported during the last five years reckoned from the beginning of the financial year).
Nil 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 year amounted to Rs. 17,92.06 Lakhs, which includes Rs. 12,00.78 Lakhs towards exports and Rs. 5,91.28 Lakhs towards amount recovered from the affiliates.
(II) Total foreign exchange used and earned. A. Total foreign exchange used
|Rs. In Lakhs|
|(a) On import of raw materials, finished goods, consumable stores and capital goods||176,35.25|
|(b) On professional charges, sales promotion expenses, commission on export sales, registration fees, business travel, software, etc.||8.21.24|
|(c) On remittance during the year on account of dividend||27.08.79|
|B. Total foreign exchange earned||17,92.06|
|For and on behalf of the Board|
|February 20, 2013||Munir Shaikh||Rehan A. Khan|