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Ambalal Sarabhai Enterprises Ltd.

BSE: 500009 Sector: Health care
NSE: AMBASARABH ISIN Code: INE432A01017
BSE LIVE 15:44 | 02 Dec 8.12 -0.16
(-1.93%)
OPEN

8.62

HIGH

8.62

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NSE LIVE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 8.62
PREVIOUS CLOSE 8.28
VOLUME 29256
52-Week high 11.15
52-Week low 4.15
P/E
Mkt Cap.(Rs cr) 62.22
Buy Price 8.12
Buy Qty 70.00
Sell Price 0.00
Sell Qty 0.00
OPEN 8.62
CLOSE 8.28
VOLUME 29256
52-Week high 11.15
52-Week low 4.15
P/E
Mkt Cap.(Rs cr) 62.22
Buy Price 8.12
Buy Qty 70.00
Sell Price 0.00
Sell Qty 0.00

Ambalal Sarabhai Enterprises Ltd. (AMBASARABH) - Director Report

Company director report

To

The Shareholders

The Directors hereby present their 37th Annual Report together with the AuditedStatement of Accounts of the Company for the year ended March 31 2015.

(Rs.lakh)
2014-15 2013-2014
Turnover(Net) 1524 1567
Other Income 1417 494
Total Income 2941 2061
Financial Cost 791 912
Depreciation 336 152
Loss before Extra Ordinary Income (915) (2057)
Net Profit/ (Loss) before taxation (915) (2057)
Net Profit / (Loss) (915) (2057)

Your Directors regret their inability to recommend payment of any dividend in view ofloss during the year.

Consolidated Results :

The Company's Operations are organised through 7 Subsidiaries and a joint venturecompany each of which represents a focused area of Business Strategy which led to bettergrowth and consolidation of operations. The combined revenue from operations gone up from10465 lakhs to 12450 lakhs showing a growth of nearly 20% consequently the loss beforetax reduced from nearly 2021 lakhs to 667 lakhs.

Operations:

Pharma Formulations:

The Company continues to manufacture formulations under license and market thesethrough established companies in the market. The Company also manufactures and sells awide range of Formulation through its distributors. The Company has discontinued itsGenerics Marketing business in 2015 .

Sarabhai Chemicals (India) Pvt. Ltd. (SCPL)

Sarabhai Chemicals Specialties a division of SCPL markets speciality pharmaceuticalproducts for Oncology and Infertility . Inspite of adverse market scenario the turn-overhas increased by 13.5% during the year under review. SCPL has launched a new division viz.Uro - Gynaec in January 2015 which has received good response from the market.

Asence Inc.

Asence Inc. a wholly-owned subsidiary of the Company incorporated in US specializesin the supply of quality pharmaceuticals preparations (Finished Dosage Forms and ActivePharmaceutical Ingredients) to international markets.

Asence Pharma Pvt.Ltd.(Asence)

Asencea wholly owned subsidiary of Asence Inc. has grown significantly during the year. It has achieved gross turnover of Rs.3755.17 lakhs with a net profit of Rs.103.90 lakhsfor the year ended 31st March 2015. Asence has made inroads into growth related projectsthrough investment and partnerships in group companies as well as external manufacturingsites. This has shown increase in sales and relatively high impact on profitability. TheCompany is expected to grow well in the current year .

Asence is making full efforts to boost up the international activities as well asdomestic sales and endeavours to improve the performance of all its products.

Vovantis Laboratories Pvt. Ltd. (Vovantis)

During the yearVovantis a joint venture company has observed noteworthy growth inthe operations as compared to previous years. Many new products in the form ofEffervescent Tablets and powder packed in sachet have been developed and these productsare very well accepted by the market. As a result Vovantis could achieve considerableorders from market and booked significant increase in sales. The gross sales increased toRs 1732 Lakhs as compared to Rs. 961 Lakhs in last year. Profit before tax increased toRs.190 Lakhs as against Rs. 116 Lakhs in last year.

In view of expecting much more demand in future from the existing as well as newcustomers Vovantis is planning to enhance its production capacity by creating additionalplant facilities near the existing plant. The project evaluation is under finalizationconsidering alternative sources of investment. Vovantis is confident to create itsdistinguished presence in the international market by ensuring upward graphs in itsgrowth.

Suvik HItek Private Limited (Suvik)

Suvik a wholly owned subsidiary of the Company has started new business activities ofGenerics marketing with effect from 1st January 2015. Suvik has already entered intonecessary agreements with Manufacturers and Distributors and started generics marketing.Suvik would market these under the brand name of "Sarabhai" and its logo forwhich Suvik has executed license agreement with the company. Suvik expects to achievebetter results in the current year due to increase in turnover from Generics business.

In the year under review Suvik achieved a turnover of Rs 399 lakhs in comparision toRs 52 lakhs in last year .The net loss has also come down to Rs 30.81 lakhs in the year.

Bulk Drugs:

SYNBIOTICS LIMITED (Synbiotics)

During the year under report there has been an increase of about 50% in the turnoverof Synbiotics another wholly owned subsidiary of the Company. This has been mainly due toincreased demand of product- Amphotericin Oral grade and Lyophilized grade in the overseasmarket. Increased off take by overseas parties has also helped in stabilizing the demandfor the products.

Synbiotics has successfully passed the audit inspection from various international anddomestic companies. Synbiotics manufacturing facilities have got recognition from overseasauthorities and also received approval from PMDA [Japan] WHO-GMP EU and USFDA.Synbiotics R &D department is constantly working for improving yield of EP Gradeproduct for which there is a good potential market both at domestic and internationallevel. Synbiotics has planned to invest about Rs. 100 lakhs in setting up facilities toincrease yield efficiency of the product securing high productivity. Synbiotics achieved aturnover of Rs.1203.41 lacs for the year ended 31st March 2015.

ELECTRONICS:

Systronics( India) Limited: (Systronics)

During the year under report the turnover of Systronics a wholly owned subsidiary ofthe Company has decreased from Rs 5172 lakhs to Rs 4793 lakhs . Systronics is exploringthe possibilities of expansion /diversification to achieve better results and expecting tomake progress in the forthcoming years.

Corporate Governance:

Pursuant to clause 49 of the Listing Agreement with the BSE Ltd Management Discussionand Analysis Report Corporate Governance Report and Auditors’ Certificate regardingCompliance of Conditions of Corporate Governance are made as a part of the Annual Report.

Subsidiaries:

A statement pursuant to Section 129 of the Companies Act 2013 in respect of Subsidiarycompanies is appended to the balance sheet. The report and the accounts of the Company maybe treated as abridged accounts as contemplated under Section 136 of the

Companies Act 2013. Those shareholders who are desirous of receiving full reports andaccounts including the report and the accounts of the Subsidiaries of the Company will beprovided the same on receipt of written request / requisition in this regard. This willhelp to save considerable cost in connection with printing and mailing of the report andaccounts in respect of the various subsidiaries of the company.

In order to ease the distribution of Annual Report shareholders are requested toregister their email address with the Company or its STA to get the Annual Report throughemail.

Consolidated Financial Statement:

In compliance of the Accounting Standard AS-21 on Consolidated Financial Statementsthe Consolidated Financial Statements which form part of the Annual Report and Accountsare attached herewith.

Directorate:

Pursuant to the provisions of Section 152 of the Companies Act 2013 Mr. K. Mohandaswho retires by rotation and being eligible offers himself for reappointment.

Declaration by Independent Directors

The Independent Directors have submitted the declaration of independence as requiredpursuant to Section 149 (7) of the Companies Act 2013 stating that they meet the criteriaof independence as provided in sub-section (6).

Board Evaluation

The Board of Directors has carried out an Annual Evaluation of its own performanceBoard Committees and individual Directors pursuant to the provisions of the Act and theCorporate Governance requirements as prescribed by Securities and Exchange Board of India(SEBI) under clause 49 of the Listing Agreements ("Clause 49") .

The performance of the Board was evaluated by the Board after seeking inputs from allthe Directors on the basis of the criteria such as the Board composition and structureeffectiveness of board processes information and functioning etc.

The performance of the Committees was evaluated by the Board after seeking inputs fromthe Committee members on the basis of the criteria such as the composition of committeeseffectiveness of committee meetings etc.

The Board and the Nomination and Remuneration Committee ("NRC") reviewed theperformance of the individual Directors on the basis of the criteria such as thecontribution of the individual Director to the Board and Committee Meetings likepreparedness on the issue to be discussed meaningful and constructive contribution andinputs in meetings etc. In addition the Chairman was also evaluated on the key aspects ofhis role.

Particulars of Loans Guarantees or Investments

Information regarding Loans guarantees and investments covered under the provisions ofSection 186 of the Companies Act 2013 are detailed in the financial statements.

Related Party Transactions

Since all the related party transactions are carried out in the ordinary course ofbusiness on arm's length basis such transactions entered into by the Company during thefinancial year did not attract the provisions of Section 188 of the Companies Act 2013.There being no ‘material’ related party transactions as defined under clause 49of the Listing Agreement there are no details to be disclosed in Form AOC-2 in thatregard.

During the year 2014-15 pursuant to Section 177 of the Companies Act 2013 and clause49 of the Listing Agreement all RPTs were placed before Audit Committee for itsprior/omnibus approval.

Material Changes and Commitments

There have been no material changes and commitments affecting the financial positionof the Company which have occurred between the end of the financial year of the Companyand the date of this Report.

Extract of Annual Return

The extract of Annual Return as provided under subsection (3) of section 92 of theCompanies Act 2013 in the prescribed Form MGT-9 is annexed to this report.

Number of Meetings of the Board

There were 6 meetings of the Board held during the year. Detailed information is givenin the Corporate Governance Report.

Policy on Directors ’ Appointment and Remuneration and other details

The Company’s policy on Directors appointment and remuneration and other mattersprovided in Section 178(3) of the Act has been followed by Nomination and RemunerationCommittee while recommending appointment of Directors or key Managerial Personnel.

They have fixed criteria for appointment of directors and key Managerial Persons. Everyyear their performance is evaluated by the committee and accordingly suitablerecommendation is made .

Internal financial control systems and their adequacy

The company has an Internal control System commensurate with size scale andcomplexity of its operations. During the year the company got its Internal Audit donethrough its own Internal Audit Department. This department works according to policies andrules framed to monitor and control financial transactions within the company. Since theCompany has its own Internal Auditor it has not appointed any outside Auditor forInternal Audit work.

Audit Committee

The details pertaining to composition of Audit Committee are included in the CorporateGovernance Report which forms part of this report.

Auditors’ Report and Secretarial Auditors’ Report

Auditors’ Report does not contain any qualifications reservations or adverseremarks. Report of the Secretarial Auditor is given as an annexure which forms part ofthis report. Regarding appointment of CFO the company had selected one person for thepost of CFO in the last accounting year who did not join for personal reasons. Thereafterthe company is in the process of looking for a right person for appointment of CFO and itis expected that CFO will be appointed soon by the Company.

Risk Management

The Audit Committee of the company is assigned the task to frame implement and monitorthe risk management plan for the Company. The Committee is responsible for reviewing therisk management plan and ensuring its effectiveness. The Audit Committee has additionaloversight in the area of financial risks and controls. Major risks identified by thebusiness and functions are systematically addressed through mitigating actions on acontinuing basis.

Corporate Social Responsibility

Since the company has been incurring losses for last more than three years theprovisions relating to Corporate Social Responsibility are not attracted .

Particulars of Employees

The information required under Section 197 of the Act read with rule 5 (1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 will beprovided upon request.In terms of section 136 of the Act the reports and accounts arebeing sent to the members and others excluding the information on employees’particulars which is available for inspection by members at the registered office of theCompany during 11.00 a.m. to 4.00 p.m. on working days of the Company upto the date ofAGM.If any member is interested in obtaining a copy thereof he/she may write toSecretarial Department of the Company.

Fixed Deposits:

The Company has not accepted any fixed deposit during the year.

Energy Conservation Technology Absorption and Foreign Exchange earnings and outgo:

Particulars of Energy Conservation Technology Absorption and Foreign Exchange Earningsand outgo required to be given are given in the Annexure to this Report in the prescribedformat.

Directors' Responsibility Statement.

As required under Section 134 (5) of the Companies Act 2013 we hereby state:

(i) That in the preparation of the annual accounts the applicable accounting standardshave been followed along with proper explanation relating to material departures if any.

(ii) That the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at 31st March 2015.

(iii) That the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.

(iv) That the Directors have prepared the annual accounts on a going concern basis.

v) That the directors have laid down Internal Financial Controls to be followed by theCompany and that such Internal Financial Controls are adequate and were operatingeffectively.

vi) That the Directors have devised proper systems to ensure compliances with theprovisions of all applicable laws and the systems are adequate and operating effectively.

Insurance:

Building Plant and machinery and stocks have been adequately insured. The Companycarries a risk for certain assets like goods in transit in respect of which any lossresulting from non-insurance is small because of fairly large drop in production andsales.

Statutory Auditors:

Pursuant to Section 139 of the Companies Act 2013 and the Rules made thereunder theexisting Auditors M/s. Sorab S. Engineer & Co. Chartered Accountants Mumbai ( Reg.No. 110417W) were appointed by the shareholders at 36th Annual General Meeting to holdoffice until the conclusion of the 38th Annual General Meeting subject to theratification by Shareholders at each Annual General Meeting.

Acknowledgement:

Your Directors would like to take this opportunity to express their deep sense ofgratitude to the Banks Government Authorities Customers and Shareholders for theircontinuous guidance and support. Further they would also like to place on record theirsincere appreciation for the dedication and hard work put in by one and all members ofSarabhai Pariwar including workers.

For and on behalf of the Board
Date : 28.7.2015 Kartikeya V. Sarabhai
Place : Ahmedabad Chairman

ANNEXURE TO THE DIRECTORS’ REPORT

Disclosure of additional particulars as required under the Companies (Disclosure ofparticulars in the Report of Board of Directors) Rules 1988 forming part of theDirectors’ report for the year ended 31st March 2015.

(A) Conservation of Energy &

(B) Technology absorption.

During the year under report there was no production activities carried out in theCompany and therefore details are not required to be given.

(C) Foreign exchange earnings and outgo i) The company is making all efforts toboost up the exports of its various products. In this direction the Company isendeavouring to improve the quality of various products for export market. Company is alsoforging ties with various foreign parties to strengthen the exports.

ii) Total foreign exchange earned and used

Rs. Lakh
Foreign exchange earned -
Foreign exchange used 379.96

Management Discussions and Analysis Report

Overview Of Indian Pharmaceutical Industry

The pharmaceutical industry in India is the world's third-largest in terms of volume.According to the Department of Pharmaceuticals of the Indian Ministry of Chemicals andFertilizers the total turnover of India's pharmaceuticals industry between 2008 andSeptember 2009 was US$21.04 billion. The domestic market was worth US$12.26 billion.

The exports of pharmaceutical products from India increased from US$6.23 billion in2006–07 to US $10.1billion in 2013 (according to India Brand Equity Foundation) acombined annual growth rate of 21.25%. According to Price Waterhouse Coopers (PWC) in2010 India will join the top 10 global pharmaceutical markets in 2020 with turnoversreaching US$50 billion.

Market Size

The Indian pharmaceutical industry is estimated to grow at 20% compound annual growthrate (CAGR) over the next five years as per India Ratings a Fitch Group company.

Government Support

The Government of India has unveiled 'Pharma Vision 2020' aimed at making India aglobal leader in end-to-end drug manufacture. It has reduced approval time for newfacilities to boost investments. Further the government has also put in place mechanismssuch as the Drug Price Control Order and the National Pharmaceutical Pricing Authority toaddress the issues of affordability and availability of medicines.

Challenges

• Greater customer expectations

• Restricted discovery and developing process

• Effective product life-cycle management

• Increase in pricing policies

• Infrastructure challenges

• Talent retention

Road Ahead

Going forward better growth in domestic sales will depend on the ability of companiesto align their product portfolio towards chronic therapies for diseases such ascardiovascular anti-diabetes anti-depressants and anti-cancers are on the rise.

Moreover the government has been taking several cost effective measures in order tobring down healthcare expenses. Thus governments are focusing on speedy introduction ofgeneric drugs into the market. This too will benefit Indian pharma companies. In additionthe thrust on rural health programmes life saving drugs and preventive vaccines alsoaugurs well for the pharma companies.

Performance of your Company:

Your company operates in an area where a large market exists and other ampleopportunities for growth. During the year 2014-15 the Indian pharmaceutical industry hassignificantly exported to regulated markets of US and Europe in Generic Drugs Marketwherein your company has also exported substantially its products through Asence PharmaPrivate Limited a wholly owned subsidiary of the company.

Internal control systems and their adequacy:

The internal control systems are continuously being fine tuned in line with thechanging requirements in the industry.

With regular review of the systems by the Audit Committee of the Board the internalcontrol within the organization continues to be further strengthened.

Human resources/Industrial relations:

The focus of the management is on the organizational development such as imbibing newentrepreneurship team work relating to commitment to achieve targeted growth.

The relations between management and workmen continue to remain cordial.

As on date of the report the total employee strength of the company is 330.

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