Your Directors have pleasure in presenting the Twenty Second Annual Report of yourCompany together with Audited Accounts for the Financial Year ended 31st March2017.
The summarized Audited Financial Results for the year ended 31st March 2017along with comparative figures for the previous year is as under:
(Rs. In '000)
| || |
|Particulars ||31" March 2017 ||31" March. 2016 ||31" March 2017 ||31" March. 2016 |
|Total Income ||661016.75 ||865596.35 ||661016.75 ||872970.56 |
|Total Expenditure ||815.157.84 ||949.750.21 ||822449.06 ||9.77576.25 |
|Profit before Depreciation & Taxation ||(154141.09) ||84153.86 ||(161432.31) ||104605.69 |
|Less: Depreciation ||38913.03 ||41121.33 ||42194.98 ||48586.04 |
|Less: Exceptional Items ||- ||- ||- ||- |
|Profit before Tax ||(193054.12) ||(1.25275.19) ||(203.627.29) ||(153191.73 |
|Less: Provision for Taxation || ||- || ||- |
|Less: Provision for Deferred Tax ||8352.03 ||3430.83 ||9029.93 ||1777.59 |
|Minority Interest (Loss) || || || ||11144.85 |
|Profit after Tax for the year ||(1.84.702.09) ||(1.21.844.36) ||(1.90.867.84) ||(1.40.269.29) |
Consolidated Operating Results
The consolidated sales and operating income decreased to Rs. 66.10 Cr from Rs.87.30 Crin the previous year yielding a decline in growth of 32% due to the financial constraints.The consolidated net loss for the year 2017 was Rs. 19.08 Cr as against FY 2016 ofRs.14.02 Cr.
Standalone Operating Results
The sales and operating income decreased to Rs.66.10 Cr from Rs. 86.56 Cr in theprevious year at a decline rate of 31%. The operating Loss for the year under review isRs.9.10 Cr as against Rs.1.29 Cr in the previous year due to decline in revenue. The lossafter tax for the year under review is Rs.18.47 Cr as against Rs.12.18 Cr in the previousyear. The company is in growth/expansion mode requiring further investment; your companyis therefore evaluating various options to raise additional funds for which shareholdersapproval may be sought as and when things are finalized.
Subsidiary Company & Consolidated Financial Results
The consolidated financial results comprise of M/s. Bafna Pharmaceuticals Limited andits subsidiary M/s. Bafna Lifestyles Remedies Limited. Consolidated Financial Statementsfor the year ended 31st March 2017 forms part of the Annual Report.
As required under the SEBI (Listing Obligations and Disclosure Requirement) Regulation2015 the consolidated financial statements of the Company and its subsidiary areattached. The consolidated financial statements have been prepared in accordance with therelevant accounting standards as prescribed under Section 133 of the Companies Act 2013.The consolidated financial statements disclose the assets liabilities income expensesand other details of the Company and its subsidiaries.
Material/significant changes in subsidiary: During the year the subsidiary companyhas discontinued the marketing activities.
A statement pursuant to Section 129 of the Companies Act 2013 relating to subsidiarycompanies is attached and forms part of the report.
|Change in Capital Structure || ||(Rs. In 000) |
|Particulars ||31s* March 2017 ||31st March 2016 |
|Authorized Capital ||400000.00 ||400000.00 |
|Issued Subscribed & Paid up Capital ||186563.35 ||186563.35 |
Your Company pursuant to 62 (1) (c) read with Section 42 of Companies Act 2013 andChapter VII of the Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009 had passed Special resolution by way of postal ballot on02.08.2016 for issue of 4000000 (Forty Lakh only) Warrants carrying an option/entitlement to subscribe to Equity shares of Rs.10/- each. Subsequently the entirepreferential issue of 4000000 Warrants and in-principle application filed with the StockExchanges had been withdrawn by the Board of Directors of the Company on 04.01.2017.
Further the Company pursuant to 62 (1) (c) read with Section 42 of Companies Act2013 and Chapter VII of the Securities and Exchange Board of India (Issue of Capital andDisclosure Requirements) Regulations 2009 had passed Special resolution by way of postalballot on 09.02.2017 for issue of 8000000 (Eighty Lakh only) Warrants carrying an option/entitlement to subscribe to Equity shares of Rs.10/- each.
The company has not accepted / invited any deposits from the public in terms of Section73 of the Companies Act 2013
Due to losses the Company has not declared any dividend for the Financial Year.
The Company has not transferred any amount to the general reserves during the year.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY:
There have been no material changes and commitments if any affecting the financialposition of the Company which have occurred between the end of the financial year of theCompany to which the financial statements relate and the date of the report. '
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE;
The Hon'ble High Court of Madras in CP.NO. 201 of 2015 filed by M/s. Wanbury Limitedagainst the Company under Section 443 of Companies Act 1956 had issued an order on 11thNovember 2016 approving the repayment schedule for the outstanding amount of Rs.4346262/- at an interest of 9% p.a. If the order is received against the Company thesame will affect the going concern of the Company.
PARTICULARS OF LITIGATIONS:
During the year
a) Winding up petition was filed in Hon'ble High Court of Madras against the Company byM/s. Dalas Biotech Limited a trade creditor of the Company under Section 443 of theCompanies Act 1956 vide C.P. NO. 215 oF 2016.
b) The Hon'ble High Court of Madras in CP.NO.201 of 2015 filed by M/s. WanburyLimited against the Company under Section 443 of Companies Act 1956 had issued an orderon 11th November 2016 approving the repayment schedule for the outstandingamount of Rs. 4346262/- at an interest of 9% p.a.
Due to establishment of National Company Law Tribunal (NCLT) and enactment ofInsolvency and Bankruptcy Code 2016 the above mentioned petitions filed before theHon'ble High Court of Madras were transferred to Hon'ble NCLT Chennai Bench and werenumbered as TCP/96/IB/CB/2017 and TCP/456/IB/2017 respectively and the same are pendingbefore the Hon'ble NCLT Chennai Bench.
Further a criminal case was filed by M/s. Dalas Biotech Limited against all theDirectors of the Company under Section 138 of the Negotiable Instruments Act for dishonorof cheque.
The above cases are pending before respective court / tribunal. Your Board of Directorsof the Company are taking necessary steps to resolve the pending litigations.
CHANGE IN THE NATURE OF BUSINESS
Your Company is engaged in manufacture of pharmaceutical products. There is no changein the nature of business during the year compared to previous year.
RISK MANAGEMENT POLICY:
The Company has in place a mechanism to identify assess monitor and mitigate variousrisks to key business objectives. Major risks identified by the businesses and functionsare systematically addressed through mitigating actions on a continuing basis.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS:
The company has adequate internal financial controls such as defining authority toauthorize financial transactions Internal Audit and review of financial statementmechanism in vogue.
The Composition of Board and number of meetings attended by them are given in thecorporate governance report.
Pursuant to Section 149 152 and other applicable provisions of the Companies Act 2013read with Rules thereon Shri V. Rajamani Shri R. Dwarakanathan Shri B. Kamlesh Kumar& Shri Sunil Bafna were appointed as Independent Directors for five consecutive yearsin the Nineteenth AGM held on 10.09.2014 upto 09.09.2019. The Independent Directors havefurnished necessary declarations as required under Companies Act 2013.
Directors Liable to Retire by Rotation
Shri. Bafna Mahaveer Chand and Shri. Paras Bafna being non independent directors areliable to retire by rotation in terms of Section 152 of the Companies Act 2013 and beingeligible they have offered themselves for reappointment. Upon their re-appointment asDirectors Shri. Bafna Mahaveer Chand and Shri. Paras Bafna shall continue to hold officeas the Chairman cum Managing Director of the Company and Whole time director respectively.
Further the Company had appointed Shri. Bafna Mahaveer Chand and Shri. Paras Bafna asManaging Director and Whole time director respectively in the Board meeting held on08.08.2017 for the period of Three years with effect from 01.10.2017. Pursuant to Section- 196 of Companies Act 2013 they hold the office upto 30.09.2017. The Board recommendstheir continuation as Managing Director and Whole Time Director respectively.
The brief resume of the Directors seeking appointment / reappointment and otherinformation have been detailed in the Notice. Your Board recommends the above appointments/reappointment of Directors in the best interest of the Company.
Details of KMP:
According to section 203 of the Companies Act 2013 Shri. Bafna Mahaveer Chand beinga Managing Director is a key Managerial Personnel of the Company.
During the year under review Shri. R S Gowdhaman resigned from the post of CompanySecretary and subsequently Smt. Sapna Jain was appointed as the Company Secretary on11.11.2016. Shri. Sridhar was appointed as CFO on 27.05.2017. Smt. Sapna Jain resigned asCompany Secretary with effect from 08.08.2017.
In compliance with the mandatory rotation of Auditors as per Companies Act 2013 theAudit Committee and the Board of Directors in their respective meetings recommended theappointment of M/s. R. Sathyanarayanan 8t Co Chartered Accountants Chennai (FRN:003656S) as statutory auditors of the Company.for a period of 5 years from the conclusionof this AGM until the conclusion of 27th Annual General Meeting in place ofthe retiring Statutory Auditors M/s. Abhay Jain & Co. Chartered Accountants Chennai.
M/s. R. Sathyanarayanan & Co Chartered Accountants have given their consent forappointment and also confirmed that their appointment would be within the prescribedlimits under Section 141 of the Companies Act 2013. Accordingly the appointment of M/s.R. Sathyanarayanan 8t Co Chartered Accountants. Chartered Accountants Chennai asthe Statutory Auditors of the Company is being proposed as an Ordinary Resolution.
The report of Auditors and notes forming part of the Accounts are attached along withthe Annual Report. Comments on Auditors' Report:
Reply to the qualifications made in Auditor's report:
|Qualification ||Reply |
|The Company is not regular in depositing the undisputed statutory dues including Provident fund employees' state insurance income tax sales tax duty of customs duty of excise value added tax cess and other material statutory dues as applicable with appropriate authorities. ||Your Management is taking necessary steps to comply with the provisions of the Act and to deposit the requisite amount to the appropriate authority. |
The Board of Directors of the Company appointed M/s Thanigaimani & Associates CostAccountants (FRN No.101899) as the Cost Auditor of the Company for audit of cost accountsrelating to formulations for the year ended 31st March 2017. The Cost AuditReport & Cost Audit Compliance Report for the year ended 31st March 2017shall be submitted to the Central Government in due course.
As per Section 148 read with Companies (Audit and Audit) Rules 2014 and otherapplicable provisions if any of the Companies Act 2013 the Board of Directors of theCompany has appointed M/s Thanigaimani & Associates Cost Accountants as Cost Auditorof the Company for the year ended 31st March 2018. The remuneration proposedto be paid to the Cost Auditors subject to the ratification by the members at the ensuingAnnual General Meeting would be Rs. 45000/- (Rupees Forty Five Thousand Only) plusapplicable taxes and out of pocket expenses.
The Company's shares are listed at (i) Bombay Stock Exchange Limited (BSE) with ScripCode No. 532989 and at (ii) National Stock Exchange of India Limited with Scripsymbol BAFNAPHARM; the necessary Listing Fees have been paid to the stockexchanges.
Particulars of Employees
a) Details of employees employed throughout the financial year was in receipt ofremuneration for that financial year in the aggregate was not less than Rs.1.02 Crores.Nil-
b) Details of employees employed for a part of the financial year was in receipt ofremuneration for any part of that year at a rate which in the aggregate was not lessthan Rs. Eight Lakhs and Fifty Thousand per month -Nil -
c) Details of employees if employed throughout the financial year or part thereof wasin receipt of remuneration in that year which in the aggregate or as the case may be ata rate which in the aggregate is in excess of that drawn by the managing director orwhole-time director or manager and holds by himself or along with his spouse and dependentchildren not less than two percent of the equity shares of the company. - Nil -
The information required pursuant to Section 197 read with rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company and Rules 5(2) of
The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 withrespect to the statement showing the names of the top ten employees in terms ofremuneration drawn will be provided upon request. In terms of Section 136 of the Act thereports and accounts are being sent to the members and others entitled thereto excludingthe information on employees' particulars which is available for inspection by the membersat the Registered office of the company during business hours on working days of thecompany up to the date of ensuing Annual General Meeting. If any member is interested ininspecting the same such member may write to the Company Secretary in advance.
Foreign Exchange Earnings and Outgo
The particulars in respect of Foreign Exchange Earnings and Outgo as required underSection 134) of the Companies Act 2013 and Rule 8(3) of the Companies (Accounts) Rules2014 are given as in Annexure to this report.
Human Resource Industrial Relations Environment Occupational Health and Safety
The Company is continuously focusing on managing talent and increasingly systematizingthe HR processes. We have excellent industrial relations across all facilities includingcorporate office and strongly believe that the workers will continue to work towardsprofitable and productive company.
The number of employees as on 31st March 2017 was 230 as against 242 duringFV 2015-16 a net decrease of 12 employees.
Conservation of Energy Technology Absorption & Research and Development (R &D)
The company is conscious of its responsibility to conserve the energy and has takenmeasures in relation to conservation of energy and technology absorption. The particularsin respect to conservation of energy Technology Absorption 8l Research andDevelopment were given in the annexure to the Board's Report.
Insider Trading Regulations
Based on the requirements under SEBI (Prohibition of Insider Trading) Regulations2005 as amended from time to time the code of conduct for prevention of insider tradingand the code for corporate disclosures are in force. The Company has adopted a Code ofConduct for Prevention of Insider Trading with a view to regulate trading in securities bythe Directors and designated persons of the Company as per SEBI (Prohibition of InsiderTrading) Regulations 2015.
Report on Corporate Governance and Certificate of the Auditors of your Companyregarding compliance of'the conditions of Corporate Governance as stipulated in Regulation15 of SEBI ( Listing Obligations and Disclosure Requirements) Regulations 2015 with theStock Exchanges are enclosed elsewhere in the Annual Report and forms part of thisreport.
Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013
The Board of Directors has approved policy as per the said Act. And an InternalComplaints Committee was constituted with following members:
|(i) Smt. Hemalatha Asst General Manager ||- Chairperson |
|(ii) Smt. Shunmugasundari HR Executive ||- Member |
|(iii) Smt. K.Ashitha HR Executive ||- Member |
The committee placed certificate before the Board of Directors on the status ofcompliance of the Act. As per the certificate provided by the said committee no complaintswere received during the year & that there are no complaints pending as on 31stMarch 2017.
Particulars of Loans Guarantee and Investment under Section 186 of Companies Act2013:
During the year under review the investments made the loans advanced guaranteesgiven and securities provided are within the limits prescribed under Section 186 of theCompanies Act 2013. Refer Notes to accounts for the above particulars.
Particulars of contracts or arrangements with Related parties referred to inSub-Section (1) of Section 188:
The transactions entered into by the Company with the related parties were in theordinary course of business and at arm's length basis. The particulars of transactions arementioned in Form AOC 2 and is annexed to this report.
Corporate Social Responsibility
Corporate Social Responsibility prescribed under the provisions of Sec 135 of theCompanies Act 2013 is not applicable to the Company. But however Company is committed toimprove the quality of life of the workforce and their families and also the community andsociety at large. The Company believes in undertaking business in such a way that it leadsto overall development of all stake holders and society.
Secretarial Audit for the FY 2017-18
In terms of Section 204 of the Companies Act 2013 the rules made thereunder 8t otherapplicable provisions if any the company is required to appoint Secretarial Auditor tocarry out Secretarial Audit of the Company. Your Board of Directors has appointed M/s.A.K. Jain & Associates Practicing Company Secretaries Chennai for purpose ofSecretarial Audit for the FY 2017-18 at the Board Meeting held on 28.07.2017.
As required under section 204 (1) of the Companies Act 2013 the Company has obtained asecretarial audit report. The copy of the Secretarial Audit report in MR 3 is attached asan annexure to the Director's Report.
The qualifications made by the Secretarial Auditor and the explanation to theobservations are as follows:
|S.No ||QUALIFICATION ||MANAGEMENT'S EXPLANATION |
|1. ||The Company had not appointed Chief Financial Officer (CFO) within a period of Six months from the date of such vacancy as required under Section 203(4) of Companies Act 2013. ||The Board of directors wishes to state that the Chief Financial Officer has been appointed on 27/05/2017. |
|2. ||During the year the Company did not disclose the material events and has not regularly updated the Stock Exchange as required under Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Requlations 2015 ||The Company has inadvertently omitted to disclose the material events. The Company is taking utmost care to regularize the Company mechanism. The Board assures that the Company will disclose all material events in future. |
|3. ||The Company had not filed e-Form MGT- 14 with the Registrar of Companies for registering the resolutions passed in the meeting of Board of Directors for issue of 4000000 Share Warrants and Special Resolution passed for this same by way of postal ballot as required under Section 117 of Companies Act 2013 ||The Company has inadvertently omitted to file the Form MGT-14. The Company The Company is taking utmost care to regularize the Company mechanism. The. Board assures that the Company will disclose all material events in future. |
Appointment of Shri. Mohamed Safwan & Co. Chartered Accountant Chennai asInternal Auditors & approved their Scope Functions Periodicity & Methodology
In terms of Section 138 of the Companies Act 2013 & other applicable provisionsif any Board of Directors at the Board Meeting held on 08.08.2017 has appointed MohamedSafwan & Co. Chartered Accountant Chennai (FRN: 016260S) as Internal Auditors andfurther approved their Scope Functions and Periodicity 8i Methodology.
In terms of Section 177 of the Companies Act 2013 and other applicable provisions ifany and as per the Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Audit committee comprises of 4 Directors out of which 3 areNon-Executive Independent Directors. The terms of reference of Audit Committee includesmatters specified in section 177 of the Companies Act 2013 and Regulation 18 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 (as revised witheffect from 1.10.2014). The Board has accepted all the recommendations of the auditcommittee made during the year
Nomination & Remuneration Committee
In terms of Section 178 of the Companies Act 2013 & other applicable provisionsif any Board of Directors at the Board Meeting held on 30.05.2014 has renamed theexisting "Remuneration Committee" of the Board of Directors as "Nomination8i Remuneration Committee". There was no change in the members of the Committee. ThePolicy of Nomination & remuneration committee was detailed in the corporate governancereport. The constitution terms and references and other details are elaborated in theCorporate Governance report annexed with this report.
Stakeholders Relationship Committee
In terms of Section 178 of the Companies Act 2013 & other applicable provisionsif any Board of Directors at their meeting held on 30.05.2014 renamed the existing"Investor Grievance & Share Transfer Committee" as "StakeholdersRelationship Committee". The constitution terms and references and other details areelaborated in the Corporate Governance report annexed with this report.