ACE LABORATORIES LIMITED.
To the Members of
ACE LABORATORIES LIMITED
Your Directors have pleasure in presenting the 13th Annual Report of ACE
LABORATORIES LlMlTED together with the audited statement of accounts for
the year ended 30th June, 1998.
YEAR IN RETROSPECT :-
The Indian Economy has been witnessing continuous slowdown for the past few
years due to political changes and economic uncertainties. In tune with
the overall industrial backdrop, there has been a decline in the growth of
pharmaceutical Industry too. However, despite this downward trend, Ace Lab
has been able to maintain an encouraging growth of around 30% in terms of
turnover and 32% in terms of profitability as compared to 16% overall
growth of Indian Pharma Industry. The turnover registered a growth of
29.60% at Rs. 13326.44 lacs and Net Profit stood at Rs. 1174.84 lacs
thereby maintaining a rise of 32.45% over the previous year. The net profit
margin has also improved due to economy of production. On the marketing
front, dedicated efforts being made toward exploring new avenues for
exports. In the domestic market, aggressive efforts are being made to
increase the market share by introducing new products. Brand building
exercise are being strongly followed. Efforts are also on to acquire
existing established brands. The marketing team has been strengthened by
reorganising the entire marketing setup and induction of experienced sales
personnel. The injectable section at Alwar also started production during
the year. The Alwar formulation plant has been suitably modified keeping in
view the WHO and ISO guidelines.
The Directors recommended payment of Dividend on equity shares at the rate
of 18% (previous year 18% on the Paid Up Equity Shares of the Company. The
Dividend, as recommended, if approved by the members will be paid to those
shareholders whose name appears on the Register of Members on the record
date to be fixed for this purpose. It is noteworthy that the company is
maintaining dividend payment for the last 7 years despite the heavy
utilisation of its internal accruals in funding the new projects. The
Dividend on Preference Shares shall be paid in terms of the issue at the
rate of 13%,15% and 16% (prorata where ever applicable).
On the export front, our efforts are aimed at internationalisation of our
base by strategic alliances and establishing subsidiaries, joint ventures,
marketing offices and affiliates in target markets. During the year under
review, the export turnover reached at 21% of total sale by achieving
export of Rs 2803.01 lacs as compared to Rs. 1353.50 lacs in the previous
year. This immense leap has been made possible due to company's strategic
expansion in various parts of the world. It has entered into marketing tie
up in East Africa. An agreement has been entered into for marketing in
whole of Southern Africa. Apart from these markets, Company has also made a
dent in the markets of various West African Countries. The marketing office
set up in Uzbekistan will cater to the Central Asia Region & some CIS
RESEARCH & DEVELOPMENT :-
To meet the challenges of post GATT era, major emphasis is being made in
the R&D arena. The R&D is aimed at development of new product and process
and new technologies for import substitution apart from maintaining high
quality standard, advanced pharmakokinetics and accelerated stability
studies of existing and new products. Your Company has also made major
advancement in commercialisation of new formulations which will be launched
in domestic market after successful clinical tests. The new R & D centre
alongwith a well equipped Pilot Plant is under commissioning at Alwar This
facility would provide major thrust in areas of Developments and
standardization of process for Bulk Drugs and intermediates, custom
synthesis and cost improvement programme for existing range of products.
NEW PROJECT :-
Your Company has acquired the technology for manufacture of Liposomal
Amphotericin-B, from National Research and Development Corporation (A Govt.
enterprise). This is a wonder drug used as most potent systemic antifungal
drug for almost four decades. The manufacturing facility has been set up at
Alwar. Ace Laboratories would be third Company in the world and first in
Asia to manufacture Liposomal Amphotericin-B.
BULK DRUG AND INTERMEDIATE PROJECT :-
Our recently implemented Bulk Drug Project at Alwar is equipped with the
facilities for manufacture of various Bulk Drugs belonging to therapeutic
categories of Antibiotics, Antibacterial and Antimalarials. Some
modification work has been carried out in the intermediate project to
ensure better quality and yields. The Intermediate project has been delayed
and the cost of the project has increased by approx. 10% mainly due to
cost and time escalatinn.
PROSPECTS FOR THE CURRENT YEAR :-
With the Bulk Drug Project including Amphotericin-B and the intermediate
project has been implemented, the Directors are hopeful of maintaining
higher performance in terms of turnover and profitability in the current
Sh. Chiman Lal Agarwal has resigned from the Directorship and also from the
post of Executive Director of the Company w.e.f. 25/04/ 98. The Board
wishes to place on record his services to the Company during his tenure.
Sh. K D Jaitly and Sh. Umesh Bal Sharma retires by rotation and being
eligible offers themselves for reappointment. The members are requested to
consider their re-appointment as Director of the Company under Section 255
of the Companies Act, 1956. During the year M/s SICOM Limited Mumbai, has
appointed Mr V. M. Paradkar as its Nominee Director The Board of Directors
welcomes Mr Paradkar as a Member of the Board.
M/s Gyan Chandra & Co, Chartered Accountants the statutory auditors of the
company retires at the conclusion of the Annual General Meeting and being
eligible, offered themselves for re-appointment. Intimation under section
2241B] has been received from them to the effect that their re-appointment
if approved, will be within the prescribed limit.
The Reports of the auditors are self-explanatory and suitably explained in
Notes to the Accountants.
FIXED DEPOSITS :-
The amount of Fixed Deposit from the public & others outstanding as on 30th
June 1998 stood at Rs.384.47 lacs. As on 30.6.98 there is no overdue
deposit. The amount of deposit for which Payment Instruments already been
issued but unclaimed as on 30.6.98 stood at Rs.12.10 Lacs.
Statutory information regarding remunerations paid in excess of limit
prescribed under Companies Act, 1956 are given in Annexure II.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING
AND OUTGO :-
The information relating to conservation of energy, technology, absorption
and foreign exchange earning and outgo are given separately in annexure 1,
which forms part of this report.
INDUSTRIAL RELATION :-
The relations between labour and management continue to be most cordial
during the year under review.
Your directors wish to thank the Government, financial institutions and
banks for their regular assistance and guidance. The directors
also wish to place on record their appreciation of the dedicated services
rendered by the staff and workers with loyalty and sense of belonging as a
family member The Board also acknowledge the cooperation extended by the
stockist, agents, suppliers and distributors.
For and on behalf of the Board
DATED : 28th JULY, 1998. AJIT CHAND SRIMAL
PLACE : New Delhi Chairman & Managing Director
ANNEXURE I TO DIRECTOR'S REPORT
Information as per Section 217[e] of The Companies Act, 1956 read with
the rules framed thereunder.
A. CONSERVATION OF ENERGY
a] Energy conservation measure undertaken: Energy conservation measures
considered as major area of emphasis for the company The company has
modified the plant parameters suitably as per the advice of the
collaborators, technology transferor and company's expertise to increase
efficiency in operation at its new plants at Alwar.
b] Additional investments and proposals, if any. Nil
B. RESEARCH & DEVELOPMENT
The objective of Company's Research & Development ( R&D) efforts have been
explained in the Director's Report. The Company has three Research Unit
situated at Delhi formulation unit, Alwar formulation Unit and Alwar
Intermediate Unit. The R & D unit at Alwar intermediate project is an
integral part of the Intermediate and Bulk Drug project and would be
utilised to develop the process of manufacturing for new molecules. This R
& D Unit is under implementation with total cost of Rs. 420 lacs. The total
expenditure incurred on Research & Development are as follows:-
a) On capital Account :- 22.11 * 62.09
b) On Revenue Account :- 19.56 17.76
c) Total R&D expenditure as 41.67 79.85
percentage of turnover :- 0.31 0.61
[*Amount incurred on Capital work in progress not included]
C. TECHNOLOGY ABSORPTION, ADAPTATION & INNOVATION :-
The manufacturing process for formulations are based on indigenous
technology and the company is working out towards development of new
formulations besides its continuous efforts for development of its existing
technologies and products. Technology for manufacture of EMME & TEOF is
being obtained from China for which company's scientists have been trained
by the collaborator Company has also purchased technology from Korea for
manufacture of Cephelosporin and the absorption of this technology is going
on as per schedule. During the year under review. Your Company has acquired
the technology for manufacture of Liposomal Amphotericin-B, from National
Research and Development Corporation.
D. FOREIGN EXCHANGE EARNINGS AND OUTGO :-
The foreign exchange outgo during the year stand at Rs.554.16 lacs
[previous year 566.72 lacs) on account of Raw materials and Rs. 157.49 lacs
[previous year 87.92 lacs] on other accounts. The foreign exchange earning
are from export business which stand at Rs.2707.44 lacs.[ previous year
1230.85 lacs) The imported raw materials constitute 5.48% of total
consumption [previous year 6.53%). Detail of earning and outgo are given in
Notes to the Account. at point No 5 [H) to [K]
For and on behalf of the Board
DATED : 28th JULY, 1998. (AJIT CHAND SRIMAL)
PLACE : New Delhi Chairman & Managing Director