The Directors present the 27th Annual Report of the Company along with theStandalone and Consolidated Audited Accounts for the year ended 31st March2015.
|All figures are ' in lacs ||Standalone ||Consolidated ||Standalone ||Consolidated |
| || |
Year Ended 31st March 2015
Year Ended 31st March 2014
|Gross total revenue ||6018.20 ||6018.20 ||5727.61 ||5727.61 |
|Profit/(Loss) before tax ||(271.08) ||(271.17) ||(495.12) ||(495.12) |
|Profit/(Loss) after tax ||(139.68) ||(139.77) ||(515.48) ||(515.48) |
|Balance Brought Forward From Previous Year ||1230.46 ||1230.46 ||1745.94 ||1745.94 |
|Profit carried to Balance Sheet ||1090.78 ||1090.69 ||1230.46 ||1230.46 |
MANAGEMENT DISCUSSION AND ANALYSIS
a) Industry: The global pharmaceutical market is now estimated to be US $ 1trillion and is growing at an annual rate of about 45 %. Even though North America Japanand Europe constitute about 70% of the global pharmaceutical market continued rise ofemerging markets is a key trend that will shape the Indian pharmaceutical industry in thecoming years.
b) Outlook Risks and Concerns: Though in the world pharmaceutical market India isranked 3rd in volume it has a negligible share by value and ranks 13th. Branded generics constitute 70% of Indian pharmaceutical market. Indian pharmaceuticalsexports have increased from US$ 2 billion in 2006 to about US$ 10 billion in 2014. Indiancompanies are focusing on global generic and contract manufacturing alliances. India isalso fast emerging as a preferred pharmaceuticals manufacturing location. Several largeselling drugs going off patent over next few years and increasing use of pharmaceuticalgenerics to reduce healthcare cost will provide attractive growth opportunities togenerics manufacturers and thus Indian pharmaceutical industry is poised for anaccelerated growth in the coming years. The Government of India has unveiled PharmaVision 2020 aiming at making India a global leader in end-to-end drug manufacturing.However the growing ambit of drug price control also poses serious concerns for theindustry. Further poor public healthcare funding and infrastructure low per capitaconsumption of medicines in developing and under developed countries including Indiacurrency fluctuations regulatory issues inflation and resultant all round increase ininput costs are other causes of concern.
c) Financial Performance and Operations Review: The Company generated a revenue of'6018.20 lacs for the Financial Year and incurred a loss of '139.68 lacs after taxes. Thelast few years have been tough for the Company with the added operational expenses ofUnit-II. The performance of Unit-I has been steady but Unit-II required substantialadditional resources for product registrations in the regulated markets and marketdevelopment. Increasing debt compounded with heightened finance/ interest cost wascreating additional pressure on the resources of the Company and jeopardizing the wellestablished steady business of Unit-I. Further sky-rocketing cost of compliance inregulated markets which is the target for Unit-II had created substantial uncertaintiesfor the long term interest of the Company and other stakeholders. With these factors inmind the Company passed one Resolution by way of postal ballot vide notice dated 12thFebruary 2014 to enable the sale of the loss generating Unit-II of the Company and theResolution was declared passed by the Chairman on 04th April 2014. Subsequentlyvarious offers were evaluated and the Company sold its Unit-II manufacturing unit situatedat Sector III Pithampur Dhar MP together with its employees by way of a slump saleduring the financial year. This sale of the loss generating Unit-II of the Company hassubstantially reduced the strains on the resources of the Company and the future prospectsof the Company look brighter than ever. No material changes or commitments affecting thefinancial position have occurred after the end of the financial year till the date of thisreport.
d) Forward Looking Statements: Forward looking statements are based on certainassumptions and expectations of future events. The Company cannot guarantee that theseassumptions and expectations are accurate or will be realized. The Companys actualresults performance or achievements could thus differ materially from those projected inany such forward-looking statements. The Company assumes no responsibility to publiclyamend modify or revise any forward looking statements on the basis of any subsequentdevelopments information or events.
e) Manufacturing Facilities: The Company has a state of the art WHO-GMP certifiedmanufacturing facilities at Pigdamber Indore that manufactures a wide range of dosageforms like Injections Tablets Ointments and Capsules. At present the Company is tappingthe domestic market export markets like East & West Africa Latin America South EastAsia and domestic and international Government Tender business from this facility. TheCompany also has a state of the art testing laboratory at this site.
f) Subsidiaries. Associates and Joint Ventures: During the financial year the Companyacquired 100% of the shares of Norfolk Mercantile Private Limited making it a wholly ownedsubsidiary. In accordance with the provisions of Section 136(1) of the Companies Act2013 Annual Report of the Company containing therein its standalone and the consolidatedfinancial statements and audited annual accounts of each of the subsidiary companies havebeen placed on the website of the Company. Further as required the financial data of thesubsidiaries joint venture and associate companies is furnished in the prescribed FormAOC-1 attached to the consolidated financial statements. Pursuant to the provisions ofSection 129(3) of the Companies Act 2013 and Accounting Standard AS-21 read withAccounting Standard AS-23 the audited consolidated financial statements of the Companyare also attached.
g) Domestic Markets: The Company has a wide range of pharmaceutical products in itsportfolio. A focused approach and increased marketing efforts has resulted in anincreasingly wider reach. In the coming years the Company would continue to build itsreputation and strong brand equity in order to attain a leadership position. The Companyhas been successfully marketing human products through a generics distribution model andveterinary products through a ethical marketing model.
h) International Markets: The Company continues to lay emphasis on its overseasbusiness. The Company works closely with all its overseas associates to sustain and growits exports. In the last financial year the Company has expanded its operations in SouthEast Asia Africa and Latin America.
i) Business Strategy: The Company has its vision towards optimizing shareholder value.The Company has been consolidating its product range to a more efficient range which hasresulted in a higher profit for most products. The Company is deriving its strength fromdiverse product capability established client relationship location advantage and anexperienced management team.
j) Human Resources and Industrial Relations: The Company has given emphasis toupgrading the skills of its technical and marketing personnel. This is in line with itspolicy of enhancing the individuals growth potential within the framework ofcorporate goals. The HR policy and practices are constantly reshaped to meet newerdemands. Not only better hiring practices but also improved nurturing practices are inplace. Company imparts training towards continuous enhancement of technical and managerialskills. The Directors acknowledge and appreciate the contribution of all employees towardsthe performance of the Company. During the year under review the Company maintainedcordial relationship with all employees and has not laid off any employee in its entirehistory.
k) Internal Control Systems and its adequacy: The Company has reasonable system ofinternal controls in power supervision checks policies and procedures which are beingtested on routine basis by the management. Moreover the Company continuously upgradesthese systems in line with the best accounting practices. The Audit Committee also reviewsthe adequacy of internal controls systems and the compliance thereof. Further the annualfinancial statements of the Company are reviewed and recommended by the Audit Committeefor the consideration and approval of the Board of directors. The Committee also reviewsinternal controls system significant accounting policy major accounting entries relatedparty transactions etc.
l) Adequate Coverage of Risk: The Company's assets are adequately insured against theloss of fire and other risks which are considered necessary by the management from time totime.
m) Regulatory Approvals: The Company continues to enjoy the approval of majorinternational regulatory agencies and several dosage forms are being manufactured forexport. This WHO-GMP certification of the plant has also been renewed.
n) Segment-wise Results: The Company operates in the single segment of Drugs andChemicals which is the Primary Reportable Segment as per Accounting Standard AS-17.Secondary Segment reporting is given in Notes to the financial statements.
There is no change in the Share Capital of Company. The Company has not issued anysecurity during the Financial Year.
The Directors do not recommend any dividend for the financial year in reference with aview to retain internal accruals.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review Mr. Sharad Lunawat Mr. Devendra Baheti and Mr. KrishnaDas Malani were re-appointed as Independent Directors as per provisions of Section 149 ofCompanies Act 2013. The Independent Directors of the Company have declared that they meetthe criteria of Independence in terms of Section 149(6) of the Companies Act 2013 andthat there is no change in their status of Independence.
Mr. P. R. Patel was re-appointed as Managing Director and Mr. M. S. Chawla and Mr. P.C. Shah were re-appointed as Whole Time Directors of the Company.
Mr. P. R. Patel Managing Director Mr. M. S. Chawla & Mr. P. C. Shah Whole TimeDirectors Mr. Jayesh Patel CEO Mr. B. C. Shah CFO and Ms. Monali Patel CompanySecretary are "Key Managerial Personnel" of the Company as per Sections 2(51)and 203 of the Companies Act 2013 read with the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014.
Ms. Shashi Jain was appointed as Additional /Independent Director (Woman) by the Boardof Directors. Your Board has received the proposal to confirm her as regular director inensuing Annual General Meeting.
Mr. P. C. Shah Director retires by rotation at the forthcoming Annual GeneralMeeting and being eligible offers himself for reappointment. A brief note on Directorsretiring by rotation and eligible for re-appointment as well as Independent Directorsbeing appointed is furnished in the annexed Corporate Governance Report.
POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION AND OTHER DETAILS
The Nomination and Remuneration Committee has laid down the criteria forDirectors appointment and remuneration including criteria for determiningqualification positive attributes and independence of a Director.
The Remuneration policy of the Company comprising the appointment and remuneration ofthe Directors Key Managerial Persons and Senior Executives of the Company includingcriteria for determining qualifications positive attributes independence of a Directorand other related matters has been provided in the Corporate Governance Report annexed tothis report.
The Companys philosophy is to align Directors and employees compensation with thelonger term interests of the Company and its shareholders. The Company pays remunerationby way of salary to its Managing Director and Executive Directors. Annual increments aredecided by the Compensation Committee within the salary scale approved by the Board andShareholders. The Remuneration Policy is detailed in the Report on Corporate Governance.Information about elements of remuneration package of directors is provided in the annexedExtract of the Annual Return as provided under Section 92(3) of the Companies Act 2013.
FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS
The Company conducts a familiarization program for the Independent Directors withregards to their role rights and responsibilities. The Independent Directors are alsoregularly briefed on the nature of the pharmaceuticals industry and the Companysbusiness model. The details of the familiarization program has been uploaded on thewebsite of the Company.
MEETINGS OF THE BOARD AND COMMITTEES THEREOF
The Board met 10 times in the year. Detailed information has been furnished under theannexed Corporate Governance Report. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c) of the Companies Act 2013 it is confirmed that theDirectors have:
i. followed applicable accounting standards in the preparation of the annual accountsalong with proper explanation relating to material departures
ii. selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year ended 31st Mar2015 and of the Profit and Loss of the Company for that period
iii. taken proper and sufficient care for maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities
iv. prepared the annual accounts on a going concern basis
v. laid down internal financial controls to be followed and that such controls areadequate and were operating effectively
vi. devised proper systems to ensure compliance with the provisions of all applicablelaws and that such systems were adequate and operating effectively
The Corporate Governance Report as stipulated under Clause 49 of the Listing Agreementforms part of this report.
The Company has not accepted any fixed deposits from public during the year underreview.
Details of the Audit Committee its constitution and other details are provided in theannexed Corporate Governance Report.
AUDITORS AUDIT REPORT AND AUDITED ACCOUNTS
C. H. Padliya & Co. (FRN 003151C) Chartered Accountants retire as auditors andbeing eligible offer themselves for reappointment. The Auditors Report isself-explanatory and does not contain any qualification reservation or adverse remark.
Pursuant to the provisions of Section 148 of the Companies Act 2013 Sudeep Saxena& Associates (FRN 100980) Cost Accountants were appointed to conduct audit of costrecords for the financial year 2014-15. The Cost Audit Report for the financial year2013-14 was filed with the Ministry of Corporate Affairs on 24th September2014.
The Board had appointed Shilpesh Dalal & Co. Company Secretary in Practice as thesecretarial auditor for the financial year 2014-15. The Secretarial Audit Report (MR-3)for the financial year ending 31st March 2015 is annexed to this report.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
Particulars under Section 186 of the Companies Act 2013 are provided in the Notes tothe Financial Statements.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were onarms length basis and were in the ordinary course of the Companys business.There were no materially significant transactions within the meaning of Clause 49 of thelisting agreement with any Related Parties which were in conflict with the interest of theCompany. Related party transactions under Accounting Standard AS-18 are disclosed in theNotes to the Financial Statements. The Board has approved a policy for related partytransactions which has been uploaded on the website of the Company. Form AOC-2 pursuant toClause (h) of Sub-Section (3) of Section 134 of the Act and Rule 8(2) of the Companies(Accounts) Rules 2014 is annexed to this report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Details of remuneration as required under Section 197(12) of the Companies Act 2013read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is annexed to this report. There were no employees withremuneration in excess of the limits set out under Section 197(12) of the Companies Act2013 read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014.
CODE OF CONDUCT
The Board has laid down a Code of Conduct for Board Members and Key Managerial Personsof the Company. The Code of Conduct is posted on Companys website and the ManagingDirector has declared that all Board Members and Key Managerial Persons have affirmedcompliance with the Code of Conduct of the Company.
CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING
The Company has also adopted a code of conduct for prevention of insider trading. Thisis also posted on Companys website and all Directors Key Managerial Persons andother employees who have access to unpublished price sensitive information of the Companyare governed by this code and have complied with it.
VIGIL MECHANISM /WHISTLE BLOWER POLICY
There is a Whistle Blower Policy in the Company and no personnel has been denied accessto the Chairman of the Audit Committee. The policy provides adequate safeguards againstvictimization of persons who use vigil mechanism. No complaints have been received duringthe year and the Vigil Mechanism /Whistle Blower Policy is posted on the website of theCompany.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place a Policy on Prevention Prohibition and Redressal of SexualHarassment at workplace in line with the requirements of The Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013. An Internal ComplaintsCommittee (ICC) has been set up to redress complaints received regarding sexualharassment. All employees (permanent temporary contractual and trainees) are coveredunder this policy. No cases were reported under the Prevention of Sexual Harassment duringthe year in reference.
Pursuant to the provisions of Section 134 of the Companies Act 2013 and Clause 49 ofthe Listing Agreement the Company has constituted a Risk Management Committee. There areno risks which threaten the existence of your Company.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY ANY REGULATOR TRIBUNAL OR COURT
There are no significant or material orders passed by any regulator tribunal or courtthat would impact the going concern status of the Company and its future operations.
ENERGY CONSERVATION TECH. ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
In accordance with the requirements of Section 134 of the Companies Act 2013statement showing particulars with respect to conservation of energy technologyabsorption and foreign exchange earnings and outgo is annexed to this report.
EXTRACT OF ANNUAL RETURN
An Extract of Annual Return in Form MGT-9 as on 31st March 2015 is annexedto this report.
Your Directors place on record their appreciation of the continued hard work put in byemployees and all stakeholders at all levels. For and on behalf of the Board of Directorsof ALPA LABORATORIES LIMITED
|P. R. Patel ||M. S. Chawla ||P. C. Shah |
|Managing Director ||Director ||Director |
|Pigdamber Rau Indore 08th August 2015 || || |