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Bafna Pharmaceuticals Ltd.

BSE: 532989 Sector: Health care
NSE: BAFNAPHARM ISIN Code: INE878I01014
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VOLUME 24748
52-Week high 35.80
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Bafna Pharmaceuticals Ltd. (BAFNAPHARM) - Director Report

Company director report

To

The Shareholders

Your Directors have pleasure in presenting the Twenty First Annual Report of yourCompany together with Audited Accounts for the Financial Year ended 31st March 2016.

Financial Performance

The summarized Audited Financial Results for the year ended 31st March 2016 along withcomparative figures for the previous year is as under:

Standalone

Consolidated

Particulars 31st March 2016 31st March 2015 31st March 2016 31st March 2015
Total Income 865596.35 1436553.02 872970.56 1436815.13
Total Expenditure 949750.21 1296506.57 977576.25 1287946.12
Profit before Depreciation & 84153.86 140046.45 104605.69 148869.01
Taxation
Less: Depreciation 41121.33 52375.87 48586.04 59854.65
Less: Exceptional Items - 26880.92 - 28342.57
Profit before Tax (125275.19) 60789.66 (153191.73 60671.79
Less: Provision for Taxation - (22587.38) - (22587.38)
Less: Provision for Deferred Tax 3430.83 22871.05 1777.59 24113.06
Minority Interest (Loss) 11144.85 (423.68)
Profit after Tax for the year (121844.36) 61073.34 (140269.29) 61773.78

Consolidated Operating Results

The consolidated sales and operating income decreased to Rs. 87.30 Cr from Rs. 143.68Cr in the previous year yielding a decline in growth of 60.76% due to sale of Brandhappened during the year 2014. The consolidated operating profit for the year was Rs.10.46 Cr as against Rs. 14.89 Cr in the previous year. The consolidated net loss for theyear 2016 was Rs.14.02 Cr as against FY 2015 of Rs. 6.18 Cr.

Standalone Operating Results

The sales and operating income decreased to Rs. 86.56 Cr from Rs. 143.66 Cr in theprevious year decline rate of 60.26%. The operating profit for the year under review isRs. 14.00 Cr as against Rs. 10.55 Cr in the previous year. The loss after tax for the yearunder review is Rs.121.84 Cr as against Rs. 6.11 Cr in the previous year. The company isin growth/expansion mode requiring further investment; your company is thereforeevaluating various options to raise additional funds for which shareholders approval maybe 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 2016 forms part of the Annual Report. As required under theListing Agreements entered into with the Stock Exchanges consolidated financialstatements of the Company and its subsidiary are attached. The consolidated financialstatements have been prepared in accordance with the relevant accounting standards asprescribed under Section 133 of the Companies Act 2013. The consolidated financialstatements disclose the assets liabilities income expenses and other details of theCompany and its subsidiaries. Material/significant changes in subsidiary during the yearthe subsidiary company has discontinued the marketing activities. A statement pursuant toSection 129 of the Companies Act 2013 relating to subsidiary companies is attached andforms part of the report.

Change in Capital Structure

(Rs. In 000)

Particulars 31st March 2016 31st March 2015
Authorized Capital 400000.00 400000.00
Issued Subscribed & Paid up Capital 186563.35 186563.35

Fixed Deposits

The company has not accepted / invited any deposits from the public in terms of Section73 of the Companies Act 2013

Dividend

The Company wishes to conserve the resources hence your directors do not recommend anydividend for the Financial Year.

Directors

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 provisionsof the Companies Act 2013 read with Rules thereon Shri V. Rajamani Shri R.Dwarakanathan Shri B. Kamlesh Kumar & Shri Sunil Bafna were appointed as IndependentDirectors for five consecutive years in the Nineteenth AGM held on 10.09.2014 upto09.09.2019. Accordingly all the Independent Directors were appointed in the last AGM toalign with the requirement of the Companies Act 2013. The necessary declarations werealso obtained from the Independent Directors regularly on yearly basis.

Directors Liable to Retire by Rotation

Shri. Bafna Mahaveer Chand Chairman & Managing Director and Shri. Paras BafnaWhole Time Director are not liable to retire by rotation as per their terms of appointment/ Articles of Association of the company. However they are subject to retire by rotationas per the provisions of Section 149 & 152 of the Companies Act 2013. All Directorsin the Board are Independent except Shri. Bafna Mahaveer Chand and Shri. Paras Bafna andas Independent Directors are not liable to retire by rotation Shri. Bafna Mahaveer Chand& Shri. Paras Bafna will retire by rotation in terms of Section 152 of the CompaniesAct 2013 and being eligible they have offered themselves for re-appointment. Uponre-appointment as Director Shri. Bafna Mahaveer Chand shall continue to hold office as theChairman and Managing Director of the Company. The brief resume of the Directors seekingappointment / reappointment and other information have been detailed in the Notice. YourBoard recommends the above appointments /reappointment of Directors in the best interestof the Company.

Auditors

M/s. Abhay Jain & Co. Chartered Accountants Chennai who are the statutoryauditors of the Company were reappointed for a period of 3 years (from 2014 to 2017)subject to ratification by the members at every AGM. Hence ratification has been soughtfor from the members as per the terms of appointment made during 2014. M/s. Abhay Jain& Co. Chartered Accountants Chennai have given their consent for re-appointment andalso confirmed that their appointment would be within the prescribed limits under Section141 of the Companies Act 2013. Accordingly the ratification of re-appointment of M/s.Abhay Jain & Co. Chartered Accountants Chennai as the Statutory Auditors is beingproposed as an Ordinary Resolution.

The Board recommends ratification of re-appointment as Statutory Auditors of theCompany. The report of Auditors and notes forming part of the Accounts are attached alongwith the Annual Report. There were some observation were made in the Auditors' Report forthe period and the management reply to the observations made by the Statutory Auditorunder Section 134 of the Companies Act 2013 have been provided in some part of the reportfor the benefit of the shareholders.

Cost Audit

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 2016. The Cost Audit report for theyear ended 31st March 2015 was filed on 26.09.2015 and the Cost Audit Compliance Reportwas filed on 26.09.2015. The Cost Audit Report & Cost Audit Compliance Report for theyear ended 31st March 2016 shall 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 financial year 2015 16. The remuneration proposed to be paid to theCost Auditors subject to the ratification by the members at the ensuing Annual GeneralMeeting would be Rs. 45000/- (Rupees Forty Five Thousand Only) plus applicable taxes andout of pocket expenses.

Listing

The Company‘s shares are listed at (i) Bombay Stock Exchange Limited (BSE) withScrip Code No. 532989 and at (ii) National Stock Exchange of India Limited withScrip symbol BAFNAPHARM; the necessary Listing Fees have been paid to the stockexchanges.

Particulars of Employees a) Details of employees employed throughout the financialyear was in receipt of remuneration for that financial year in the aggregate was notless than Rs.1.02 Crores. Nil- b) Details of employees employed for a part of thefinancial year was in receipt of remuneration for any part of that year at a rate whichin the aggregate was not less than Rs. Eight Lakhs and Fifty Thousand per month -Nil - c)Details of employees if employed throughout the financial year or part thereof was inreceipt of remuneration in that year which in the aggregate or as the case may be at arate 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 -

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 2016 was 242as against 251 during FY 2014-15 a net decrease of 9 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 & Research and Development were given in the annexure to theBoard‘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.

Corporate Governance

Report on Corporate Governance and Certificate of the Auditors of your Companyregarding compliance of the conditions of Corporate Governance as stipulated in Clause 49of the Listing Agreement with the Stock Exchanges are enclosed elsewhere in the AnnualReport and forms part of this report.

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) Ms. Hemalatha Asst General Manager - Chairperson
(ii) Ms. Shunmugasundari HR Executive - Member
(iii) Ms. Rajalakshmi 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 31st March2016.

Corporate Social Responsibility

The applicability of Corporate Social Responsibility under Sec 135 of the CompaniesAct 2013 is not applicable to the Company. But however Company is committed to improvethe quality of life of the workforce and their families and also the community and societyat large. The Company believes in undertaking business in such a way that it leads tooverall development of all stake holders and society.

Secretarial Audit for the FY 2016-17

In terms of Section 204 of the Companies Act 2013 the rules made thereunder &other applicable provisions if any the company is required to appoint SecretarialAuditor to carry out Secretarial Audit of the Company. Your Board of Directors hasappointed M/s. A.K. Jain & Associates Practicing Company Secretaries Chennai forpurpose of Secretarial Audit for the FY 2016-17 at the Board Meeting held on 30.05.2016.

As required under section 204 (1) of the Companies Act 2013 the Company has obtained asecretarial audit report which contains qualification for non-appointment of CFO andnon-ratification of appointment of Mrs. Sabitha Executive Director of the Company. Thecopy of the Secretarial Audit report in MGT 3 is attached as an annexure to theDirector‘s Report.

Reply to the Qualification: The Company is taking necessary steps to appoint theChief Financial Officer. Ratification of appointment and terms of remuneration of Mrs.Sabitha is proposed in the ensuing general meeting.

Re-appointment of Mr. Gaurav Jain Chartered Accountant Chennai as Internal 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 30.05.2016 has appointed Mr.Gaurav Jain Chartered Accountant and Chennai as Internal Auditors and further approvedtheir Scope Functions and Periodicity & Methodology.

Audit Committee

In terms of Section 177 of the Companies Act 2013 and other applicable provisions ifany and as per the clause 49 of the Listing agreement the Audit committee comprises of 4Directors out of which 3 are Non-Executive Independent Directors. The terms of referenceof Audit Committee includes matters specified in section 177 of the Companies Act 2013 andClause 49 of the Listing Agreement (as revised with effect from 1.10.2014). The Board hasaccepted all the recommendations of the audit committee 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 ?Nomination &Remuneration Committee . There was no change in the members of the Committee. The Policyof Nomination & remuneration committee were given in the corporate governance 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 ?Stakeholders Relationship Committee.

Management Discussion and Analysis Report

Management Discussion and Analysis Report as required under the Listing Agreement withthe Stock Exchange is enclosed elsewhere in the Annual Report and forms part of thisReport. Certain Statements in the report may be forward-looking. Many factors may affectthe actual results which could be different from what the Directors envisage in terms offuture performance & outlook.

Extract of Annual Return:

The details forming part of the extract of the Annual Return in form MGT-9 is annexedalong with the

Director‘s Report.

Particulars of Employees:

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 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 themembers at the Registered office of the company during business hours on working days ofthe company up to the date of ensuing Annual General Meeting. If any member is interestedin inspecting the same such member may write to the Company Secretary inadvance.

Directors Responsibility Statement

Your Directors wish to inform that the Audited Accounts contains Financial Statementsfor the financial year ended 31st March 2016 are in full conformity with the requirementsof the Companies Act 2013. They believe that the Financial Statements reflect fairly theform and substance of transaction carried out during the year and reasonably present yourCompany‘s financial conditions and result of operations. Your Directors furtherconfirm that in preparation of the Annual Accounts:

• The applicable accounting standards had been followed and wherever requiredproper explanations relating to material departures have been given;

• The Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent to give atrue and fair view of the state of affairs of the Company at the end of the financial yearand of the loss of the Company for that period;

• Proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

• The Accounts have been prepared on a ?going concern basis.

• The directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

• The directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively

Acknowledgement and Appreciation

Your Directors would like to thank Company‘s Bankers SBI EXIM DBS DCB BOC& IDBI for their continued support and they would also like to express their gratitudefor the co-operation and assistance extended to the Company by its Customers SuppliersTechnical Consultants Contractors Government and Local Authorities etc. The Directorsalso wish to thank all its Shareholders for their unstinted support. The Directors wouldlike to sincerely thank and place on record their appreciation of the consistent anddedicated services of the employees at all levels who have immensely contributed to theperformance of the Company during the period under review.

On behalf of the Board of Directors
Place: Chennai For BAFNA PHARMACEUTICALS LIMITED
Date: 30.05.2016 (CIN L24294TN1995PLC030698)
Paras Bafna Bafna Mahaveer Chand
(DIN: 01933663) (DIN: 01458211)
Whole Time Director Chairman & Managing Director

ANNEXURE TO THE DIRECTOR S REPORT

Information pursuant to Section 134 of the Companies Act 2013 read with the Companies(Accounts) Rules2014. FORM - A Disclosure of particulars with respect to Conservation ofEnergy A. Conservation of Energy Power & Fuel Consumption

SI No Particulars 2016 2015
1. Purchased:
Units(Lakhs) Units 19.07Lakhs Units 16.61Lakhs
Total Amount (Rs. In lakhs) Rs.184.90 Lakhs Rs.135.44 Lakhs
Rate / Unit (Rs.) Rs.9.70 per Unit Rs.8.15 per Unit
2. Own Generation
Through Diesel Generator
Units (KSH) in lakhs) Units 2.08 lakhs Units 1.71 lakhs
Unit per Lt. of Diesel Unit 2 per litre Unit 2 per litre
Cost/Unit (Rs.) Rs 25.34 per unit Rs 29.04 per unit

The company is conscious of its responsibility to conserve the energy and has takenmeasures in relation to conservation of energy and technology absorption. No additionalinvestments have been made during the year.

B. Consumption per Unit of Production:

In view of number of products with different sizes shapes & other parametersbeing manufactured by the company it is not practicable to give information onconsumption of fuel per unit of production.

FORM B

DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION I. RESEARCH ANDDEVELOPMENT (R&D) (a) Specific areas in which R&D is carried out by your company

R&D is a process intended to create new or improved technology that can provide acompetitive advantage to our business. Also focusing on process development for improvingoperational efficiency. During the year the company has received prestigious DSIR(Department of Science and Industrial Research) certification for our R & D centre.DSIR is a department under the Ministry of Science and Technology Government of India.

• Product Development and report of new formulations.

• Stability studies of new formulations as per ICH guidelines

• Technology Transfer and Process validation of new formulations

• Technology Transfer and Analytical method validation of new formulations

• Dossier preparation for regulatory approval

• Registration of Products in various countries with respective regulatoryrequirements

• Trouble shooting in existing Products

• Filed patents of Chewable Raricap tablets

• Bioavailability studies to confirm therapeutic efficacy

(b) Benefits derived as a result of the above

• these give us a unique selling point (USP) & then patents can be acquiredfor these products

• R&D is able to build business advantage over its competitors by bringinginnovative products

• Improving Quality of existing drug products in the market to deserve a goodmarket output

• Attracting more customers and scope for new business

(c) Future plan of action

• To enhance the quality and efficacy in all our medical formulations

• To achieve and maintain consistency in quality

• Upgrading of new process and product technology to improve product stability andefficacy

• To upgrade green technology for process and manufacturing operations

• Product development for new customers Product registration for regulated andemerging markets

• Technology transfer and stability studies

(d) Expenditure on R&D (Rs. in 000)
Particulars Current Year Previous Year
Capital 374.00 7540.81
Recurring/Revenue 8169.18 9557.39
TOTAL 8543.18 17098.20
% of R&D expenditure to sales 0.98% 1.19%

II. TECHNOLOGY ABSORPTION ADAPTATION AND INNOVATION a) Efforts in brief made towardstechnology absorption adaptation and innovation:

With latest technology its development & up-gradation enable us to providetechnically superior process efficient and International standards product.

The company has its own R&D centre‘s which have been developing and improvingprocess for manufacture of Delayed release tablets Sustained Release Tablets OrallyDisintegrating Tablets Liquid orals Syrups Suspensions & Dry Syrup formulations.

• The R & D centre has been upgraded and adopted various methods of drugparticle coating with a gastro- resistant polymers of various genre to improve drug safetyand efficacy and technology is absorbed into process scale up of branded generics withinnovative methodologies involving combination with taste masking technology (withIon-Exchange resins) for producing efficacious generics with highly taste masked bitterdrugs.

• The R&D centre also absorbed and adopted innovative techniques ofMulti-layer Coating technology which is subjected to scale up levels to produce stable andeffective dosage forms especially applicable for drug products that are pH sensitive andfor intestinal release and gastric resistance.

• Participating and Collaboration with scientific conferences and researchinstitutions for the development and further research of new drug formulations and noveltechnologies

• Procuring scientific journals and standard pharmacopoeia editions for the R& D library upgrade.

• Collaborations with institutions in providing research related guidance andfacilities to intern scholars.

b) Benefits derived as a result of the above efforts:

• Control of drug therapy is achieved

• Drug administration can be made convenient

• The safety margin of high potency drug can be increased

• Drugs with shorter half-life can be given in less frequent dose with bettercompliance

• Less fluctuating blood plasma concentrations

• Bioavailability enhancement of poorly soluble drugs

• Targeting drug delivery at most absorbing sites to improve bioavailability

• Reduction of adverse effects due to avoidance of dose dumping

• Rapid onset of action can be achieved

• Taste masking of bitter oral liquid drug formulations

c) Details of technology imported during the last 5 years

No technology has been imported during the past five years.

FORM C

(a) Activities relating to exports initiative taken to increase exports developmentsof new export markets for products and services and export plans.

(i) During FY 16 the company got registrations for 38 products as follows: (i) 16 inSri Lanka (ii) 2 in Nepal (iii) 10 in Nigeria (iv) 1 in Tajikistan (v) 1 in Peru (vi) 1in Ethiopia (vii) 3 in Ghana and viii) 4 in Ukraine. (ii) As on date we have more than 188Product registrations and 108 Product applications across globe. (iii) The export turnoverconsists of Rs.31.75 Cr of the total turnover for the FY 16 as against Rs. 32.53 Cr forthe previous year

(b) Foreign Exchange earned and used

(iv) Your Company has earned foreign exchange of Rs. 31.75 Cr (previous year Rs. 32.53Cr) Foreign Exchange

FOREIGN EXCHANGE EARNINGS & OUTGO

(v) outgo was Rs.2.83Cr (previous year Rs. 2.60 Cr) on account of international travel& purchase of foreign currency.

On behalf of the Board of Directors
For BAFNA PHARMACEUTICALS LIMITED
(CIN L24294TN1995PLC030698)
Paras Bafna Bafna Mahaveer Chand
Place: Chennai (DIN: 01933663) (DIN: 01458211)
Date: 30.05.2016 Whole Time Director Chairman & Managing Director

ANNEXURES TO DIRECTOR S REPORT

A Declaration From Independent Directors on Annual Basis

B Details of Subsidiary in Form AOC -1

C. Secretarial Audit Report

D. Extract of Annual Return in MGT 9

A. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS

The Company has obtained declaration from Independent Directors on annual basis tocomply the conditions as laid down Sub Clause 49 read with Sec 149 of the Companies Act2013 and Schedule IV of the Companies Act 2013.

B. Form AOC -1

STATEMENT CONTAINING SALIENT FEATURES OF FINANCIAL STATEMENT OF THE SUBSIDIARIES /ASSOCIATE COMPANIES / JOINT VENTURES FORM AOC-1 (Pursuant to first proviso to sub-section(3) of section 129 read with Rule 5 of Companies (Accounts) Rules 2014)

PART A : SUBSIDIARIES ( IN 000 )

S No. 1
Name of the subsidiary Bafna Life Styles Remedies Limited 31st March 2016
Reporting period for the Subsidiary concerned
If different from the holding company's reporting period

( Same as holding Company )

Reporting currency and Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries. NA
31.03.2016 31.03.2015
Share capital 22950.00 22950.00
Reserves & Surplus (24740.69) 1829.09
Total assets 89877.01 159650.81
Total Liabilities 89877.01 159650.81
Investments 0 0
Turnover 7374.21 39157.50
Profit / (Loss) before taxation (27916.55) (117.88)
Provision for taxation NIL NIL
Profit / (Loss) after taxation (29569.79) 1124.12
Proposed Dividend NIL NIL
% of shareholding 62.31% 62.31%
Names of subsidiaries which are yet to commence operations NIL NIL
Names of subsidiaries which have been liquidated or sold during the year NIL NIL

 

PART B: ASSOCIATES AND JOINT VENTURES: NIL
For M/s AABHAY JAIN & Co
Chartered Accountants
FRN No: 000008S
(A.K.JAIN) (BAFNA MAHAVEER CHAND) (PARAS BAFNA)
PARTNER DIN 01458211 DIN 01933663
M.No:70224 Managing Director Whole Time Director
Place: Chennai (R.S.GOWDHAMAN)
Date: 30.05.2016 Company Secretary

Form No. MR-3

SECRETARIAL AUDIT REPORT

FOR THE FINANCIAL YEAR ENDED 31.03.2016

[Pursuant to section 204(1) of the Companies Act 2013 and rule No.9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014]

To

The Members

Bafna Pharmaceuticals Limited

299 Thambu Chetty Street

Chennai - 600 001

We have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by Bafna PharmaceuticalsLimited [CIN: L24294TN1995PLC030698] (hereinafter called as ?the Company ).SecretarialAudit was conducted in a manner that provided us a reasonable basis for evaluating thecorporate conducts/statutory compliances and expressing our opinion thereon.

Based on our verification of the Company‘s books papers minute books forms andreturns filed and other records maintained by the Company and also the informationprovided by the Company its officers agents and authorized representatives during theconduct of secretarial audit We hereby report that in our opinion the company hasduring the audit period covering the financial year ended on March 31 2016 complied withthe statutory provisions listed hereunder and also that the Company has properBoard-processes and compliance-mechanism in place to the extent in the manner and subjectto the reporting made hereinafter:

We have examined the books papers minute books forms and returns filed and otherrecords maintained by the Company for the financial year ended on March 31 2016 accordingto the provisions of:

(i) The Companies Act 2013 (the Act) and the rules made thereunder;

(ii) The Securities Contracts (Regulation) Act 1956 and rules made thereunder;

(iii) The Depositories Act 1996 and regulations and bye-laws framed thereunder;

(iv) Foreign Exchange Management Act 1999 and the rules and regulations made thereunder to the extent of

Foreign Direct Investment Overseas Direct and External Commercial Borrowings; (Notapplicable to the Company during the Audit period)

(v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 ( SEBI Act‘):

(i) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;

(ii) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 1992;

(iii) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009; (Not applicable to the Company during the Auditperiod)

(iv) The Securities and Exchange Board of India (Employees Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999; (Not applicable to the Company duringthe Audit period)

(v) The Securities and Exchange Board of India (Issue and Listing of debt securities)Regulations 2008; (Not applicable to the Company during the Audit period)

(vi) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client;

(vii) The Securities and Exchange Board of India (Delisting of Equity Shares)Regulations 2009; (Not applicable to the Company during the Audit period)

(viii) The Securities and Exchange Board of India (Buyback of Securities) Regulations1998 (Not applicable to the Company during the Audit period). and

(ix) The Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 (effective form 1stDecember 2015).

We have also examined compliance with the applicable clauses of the following:

(i)Secretarial Standards with respect to Meetings of Board of Directors (SS-1) andGeneral Meetings (SS-2) issued by The Institute of Company Secretaries of India (effectivefrom 1stJuly 2015). (ii)The Listing Agreements entered into by the Company with BombayStock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE) (effectiveupto 30th November 2015).

We report that the following are the other laws specifically applicable to the Company:

1. Drug and Cosmetics Act 1940 and Rules made thereunder.

2. Drugs Price Control Order 2013 and notifications made thereunder.

3. The Air (Prevention and Control of Pollution) Act 1981 as amended from time totime.

4. The Water (Prevention and Control of Pollution) Act 1974 as amended from time totime.

We further report that the applicable financial laws such as the Direct and IndirectTax Laws have not been reviewed under our audit as the same falls under the review ofstatutory audit and by other designated professionals.

During the period under review the Company has complied with the provisions of the ActRules Regulations Guidelines Standards etc. subject to the following observations:

1. The Company has not appointed a Chief Financial Officer as required under thefirst proviso of sub-section 1 of Section 203 of the Companies Act 2013 read with Rule 8of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.

2. The Company has not obtained the consent of the Members for confirmation ofpayment of remuneration to Women / Executive Director in the Annual General Meeting heldon 29.09.2015.

We further report that:

i) the board of directors of the Company is duly constituted with proper balance ofexecutive directors non-executive directors and Independent directors. The changes in thecomposition ofthe Board of Directors that took place during the period under review werecarried out in compliance with the provisions of the Act.

ii) adequate notice is given to all directors to schedule the Board Meetings Agendaand detailed notes on agenda were sent at least seven days in advance and a system existsfor seeking and obtaining further information and clarifications on the agenda itemsbefore the meeting and for meaningful participation at the meeting and other businesswhich are not included in the Agenda are considered vide supplementary agenda subject toconsent of the Board of Directors.

iii) all the decisions at Board meetings and Committee Meetings are carried outunanimously as recorded in the minutes of the meetings of the Board of Directors orCommittee of the Board as the case may be.

iv) there are adequate systems and processes in the Company commensurate with the sizeand operations of the company to monitor and ensure compliance with applicable lawsrules regulations and guidelines.

v) the shareholders of the company have given their consent to borrow money in excessof paid up capital and free reserves and to create charge or mortgage the assets of theCompany to an extent of Rs. 150Crores in the Annual General meeting held on 10.09.2014.

We further report that during the audit period there were no instances of:

(i) Public/Right/Preferential issue of shares / debentures/sweat equity etc.

(ii) Redemption / buy-back of securities.

(iii) Foreign technical collaborations.

(iv) Merger/ Amalgamation / Reconstruction etc.

Place : Chennai For A.K Jain & Associates
Date : 09.08.2016 Company Secretaries
Sd/-
Balu Sridhar
Partner
FCS No. 5869
C. P. No. 3550

D. EXTRACT OF ANNUAL RETURN IN FORM MGT 9

EXTRACT OF ANNUAL RETURN AS ON THE FINANCIAL YEAR ENDED ON 31ST MARCH 2016

[Pursuant to section 92(3) of the Companies Act 2013 and Rule 12(1) of the Companies(Management and Administration) Rules2014]

I. REGISTRATION AND OTHER DETAILS: i) CIN : L24294TN1995PLC030698

ii) Registration Date : 28/03/1995

iii) Name of the Company : BAFNA PHARMACEUTICALS LIMITED

iv) Category / Sub-Category of the Company : Company Limited by Shares

v) Address of the Registered office and contact details: New No: 68 Old No : 299Thambu Chetty Street Chennai - 600001

vi) Whether listed company : Yes

vii) Name Address and Contact details of

Registrar and Transfer Agent : CAMEO CORPORATE SERVICES LIMITED

SUBRAMANIAM BUILDING NO: 1 CLUB HOUSE ROAD

CHENNAI 600002

PHONE: 044- 28460390 (6 LINES)

FAX: 044- 28460129.

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

All the business activities contributing 10 % or more of the total turnover of thecompany shall be stated:-

S No. Name and Description of main products / services NIC Code of the Product/ service % to total turnover of the company
1 PHARMACEUTICALS 3003 100%

III. PARTICULARS OF HOLDING SUBSIDIARY AND ASSOCIATE COMPANIES:

S No. NAME AND ADDRESS OF THE COMPANY CIN/GLN Holding Subsidiary/ Associate % of shares held Applicable Section
BAFNA LIFE STYLE REMEDIES LTD
1 B-22 INDUSTRIAL ESTATE SUBSIDIARY 62.31 2(87)
MOGAPAIR WEST CHENNAI -600037 U52599TN1994PLC027134

IV. SHARE HOLDING PATTERN ( Equity Share Capital Breakup as percentage of Total Equity)

i) Category-wise Share Holding

Category of Shareholders

No. of Shares held at

the beginning of the year

No. of Shares held at

the end of the year
Demat Physical Total % of Total Shares Demat Physical Total % of Total Shares % Change during the year
A. Promoters
a) Individual/HUF

6850769

Nil

6850769

36.72

6182468

Nil

6182468

33.14

3.58

b) Central Govt.

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil
State Govt. (s) Nil Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil
d) Bodies Corp.

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Banks / FI Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil Nil
f) Any Other….

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Sub-total (A) (1):- 6850769 Nil 6850769 36.72 6182468 Nil 6182468 33.14 3.58
(2) Foreign
NRIs - Individuals

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil
a) b) Other

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Individuals Bodies Corp.

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

c) d) Banks / FI

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

e) Any Other….

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Sub-total (A) (2):-

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil
Total shareholding of Promoter (A) = 6850769 Nil 6850769 36.72 6182468 Nil 6182468 33.14 3.58
(A)(1)+(A)(2) B. Public Shareholding
a) Mutual Funds/

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

b) Banks/FI Central Govt.

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

c) State Govt.(s)

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

d) Venture Capital funds Insurance

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

e) Companies FIIs

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

g) h) Foreign Venture
Capital Funds Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil Nil
Others (specify) FI

Nil

Nil

Nil

Nil

23491

Nil

23491

0.13

Nil

i) & Banks
Sub-total (B)(1):-

Nil

Nil

Nil

Nil

23491

Nil

23491

0.13

Nil

2. Non-Institutions
a) Bodies Corp.
i) Indian

1828706

5000

1833706

9.83

Nil

Nil

Nil

Nil

Nil

ii) Overseas Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil Nil
b) Individuals
i) Individual shareholders holding nominal share capital upto Rs. 1 lakh 3180112 101275 3281387 17.59 4822005 0 4822005 25.85 11.07
ii) Individual shareholders holding nominal share capital in excess of Rs 1 lakh 4930392 24000 4954392 26.56 4271811 0 4271811 22.90 1.91
17c) Others 658853 Nil 658853 3.53
Clearing Members 741 0 3356560 17.99 0.00
HUF 26727 Nil 26727 0.14
d) NRI s 1077228 Nil 1077228 5.77
Total Public
Shareholding (B)=(B)(1)+ (B)(2) 11675291 130275 11805566 63.42 12473867 66.86 2.53
C. Sharesheld by Custodian for GDRs & ADRs

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Grand Total (A+B+C) 18526060 130275 18656335 100 18526060 130275 18656335 100.00 Nil

(ii) Shareholding of Promoters

S No. Shareholder s Name Shareholding at the beginning of the year Share holding at the end of the year
No. of Shares % of total Shares of the company %of Shares Pledged / encumbered to total shares No. of Shares % of total Shares of the company % of Shares Pledged / encumbered to total shares Shares of % change in share holding During the year
1 Bafna M Chand

2461381

13.19

7.49

992979

532

NIL

7.89

2 Sasikala Bafna

1292941

6.93

NIL

1227572

6.58

NIL

0.35

3 Paras Bafna

912163

4.89

NIL

912163

4.89

NIL

NIL

4 Naveen Bafna

397058

2.13

NIL

397058

2.13

NIL

0.04

5 Chetna Bafna

1132805

6.07

NIL

2132805

11.43 6.07

NIL

5.36

6 Amriai Bafna

654421

3.51

NIL

512891

2.79

NIL

0.72

Total 6850769 36.72 7.49 6182468 33.14 NIL 3.58

iii) Change in Promoters Shareholding (please specify if there is no change)

Sl. No. Shareholding at of the the beginning year Cumulative Shareholding during the year
No. of shares % of total shares of the company No. of shares % of total shares of the company
At the beginning of the year 6850769 36.72%
Please see the Annexure
At the End of the year 6182468 33.14%

(iv) Shareholding Pattern of top ten Shareholders (other than Directors Promoters& Holders of GDRs and ADRs):

Shareholding at the beginning of the year Shareholding at the End of the year
Sl. No. For Each of the Top 10 Shareholders No. of shares of total shares % of the company No. of shares % of total shares of the Company
1 Ramesh Kumar Chopra 383250 2.0542 383250 2.0542
2 Nisha Jignesh Mehta

483000

2.5888

550620

29514

3 Dherendra Somaiya

328200

1.7592

328200

1.7592

4 Lindajeet Kaur Ruprai

667352

3.5770

667352

3.5770

5 India bulls Infrastructure Credit Ltd

268435

1.4388

146447

0.7850

6 Gyan Mal Jain

340000

1.8224

340000

1.8224

7 Kusum Jain

302618

1.6220

302618

1.6220

8 Vishwas Jain

309148

1.6570

309435

1.6586

9 Lindajeet Kaur Ruprai

6.67.352

3.5770

6.67.352

3.5770

10 V V Suryanarayana Raju Bhupathi Raju 197122 1.0565 Nil Nil

(v) Shareholding of Directors and Key Managerial Personnel:

Shareholding at the beginning of the year

Cumulative Shareholding during the year

Sl. No. No. of shares % of total shares of the company No. of shares % of total shares of the company
1 Sri Bafna Mahaveer Chand
Managing Director
At the beginning of the year 2286710 12.26
Please see the annexure for the details 1293731 6.94
At the End of the year

992979

5.32

2 Sri Paras Bafna
Whole time D i rector
At the beginning of the year 912163 4.89 912163 4.89
Date wise Increase /Decrease in Share holdingduring the year specifying the reasons for increase / decrease (e.g. allotment /transfer / bonus/ sweat equity At the End of the etc): year R.S. Gowdhaman 912163 4.89
3 Company Secretary At the beginning of the year

Date wise Increase / Decreasein

Share holding during the year specifying the reasons for increase / decrease (e.g.allotment / transfer / bonus/ At the End of the year

V. INDEBTEDNESS (Rs. In Lakhs)

Indebtedness of the Company including interest outstanding/accrued but not due forpayment

Secured Loans excluding deposits Unsecured Loans Deposits Total Indebtedness
Indebtedness at the beginning of the financial year
i) Principal Amount 6467.45 Nil Nil 6467.45
ii) Interest due but not paid

70.0l

Nil

Nil

70.0l
iii) Interest accrued but not due

Nil

Nil

Nil

Nil
Total (i+ii+iii) 6537.46 Nil Nil 6537.46
Change in Indebtedness during the financial year
Addition

1477.04

Nil

Nil

1477.04

Reduction

Nil

Nil

Nil Nil
Net Change Indebtedness 1477.04 Nil Nil 1477.04
At the end of the financial year
i) Principal Amount 8014.50 Nil Nil 8014.50
ii) Interest due but not paid 94.79 Nil Nil 94.79
iii) Interest accrued but not due

Nil

Nil

Nil

Nil
Total (i+ii+iii) 8109.29 Nil Nil 8109.29

REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. REMUNERATION TO MANAGING DIRECTOR WHOLE-TIME DIRECTORS AND/OR MANAGER: (RS. INLAKHS)

S No. Particulars of Remuneration Name of MD/WTD/ Manager
Bafna Mahaveer Chand Managing Director Paras Bafna Whole Time Director Total Amount
1 Gross salary
(a) Salary as per provisions contained in section 17(1) of the Income-tax Act 1961 13.80 10.80 24.60
(b) Value of perquisites u/s 17(2)
Income-tax Act 1961 0.22 0.22 0.44
(c) Profits in lieu of salary under section 17(3) Income-tax Act

Nil

Nil

Nil

2 Stock Option Nil Nil Nil
3 Sweat Equity

Nil

Nil

Nil

Commission
4 - as % of profit
- others specify… Nil Nil Nil
5 Others please specify

Nil

Nil

Nil

Total 14.02 11.02 25.04
Total (A) Remuneration for the purpose of Schedule V 21.60

B. REMUNERATION TO OTHER DIRECTORS: (AMOUNT IN LAKHS)

S No. Particulars of Remuneration

Name of Directors

Total Amount
R. Kamlesh

V. Rajamani

Dwarakanathan

Kumar Sunil Bafna
1 Independent Directors Fee for attending board /committee meetings

0.60

0.60

0.35

0.45

2.00

Commission

Nil

Nil

Nil Nil
Others please specify

Nil

Nil

Nil

Nil
Total (1) 0.60 0.60 0.35 0.45 2.00
2 Other Non-Executive Directors
Fee for attending board / committee meetings Commission Others please specify Total (2)
Total (B)=(1+2)Salary of Woman Director 5.73
Total ManagerialRemuneration (A+B) 27.33
(For Remuneration U/s 197) Overall Ceiling asper the Act 66.87

C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD (Rs. In Lakhs)

S No. Particulars of Remuneration Key Managerial Personnel Total Amount
CFO Company Secretary
1 Gross salary
(a) Salary as per provisions contained in section 17(1) ofthe Income-tax Act 1961 Nil 8.95 8.95
(b) Value of perquisites u/s 17(2)

Nil

Nil

Nil

Income-tax Act 1961
(c) Profits in lieu of salary under section 17(3) Income-tax Act 1961

Nil

Nil

Nil

2 Stock Option Nil Nil Nil
3 Sweat Equity

Nil

Nil

Nil

Commission
4 - as % of profit

Nil

Nil

Nil

- others specify…
5 Others please specify

Nil

Nil

Nil

Total (C)

Nil

8.95 8.95

PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:

Type Section of the Company Brief Description Details of Penalty / Punishment / Compounding Authority [RD / NCLT / COURT] Appeal made if any (giveDetails)
A. COMPANY
Penalty
Punishment
Compounding
B. DIRECTORS
Penalty
Punishment
Compounding
C. OTHER OFFICERS IN DEFAULT
Penalty
Punishment
Compounding

Details of Shareholding of the Promoters

Shareholding at the Cumulative beginning of the year Shareholding during the year
1 Mahaveer Chand Bafna- Managing Director No. of shares % of total shares of the company No. of shares % of total shares of the company
At the beginning of the year 2461381 13.19
26-06-2015-Transfer (-)81404 0.44
18-09-2015- Transfer (-)100000 0.54
25-09-2015 - Transfer (-)150000 0.80
27.11.2015 Transfer (-)1073537 5.75
24.01.2016-- Transfer (-) 63461 0.34
At the End of the year -1468402 992979 5.32

 

Shareholding at the beginning of the year Cumulative Shareholding during the year
2 Sasikala Bafna No. of shares % of total shares of the company No. of shares % of total shares of the company
At the beginning of the year 1292941 6.93
25.09.2015 Transfer (-) 42369 0.23
31.03.2015 - Transfer (-) 23000 0.12
At the End of the year (-) 65369 1227572 6.58%