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Bal Pharma Ltd.

BSE: 524824 Sector: Health care
NSE: BALPHARMA ISIN Code: INE083D01012
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OPEN 91.00
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VOLUME 14136
52-Week high 123.30
52-Week low 78.70
P/E 128.80
Mkt Cap.(Rs cr) 129.58
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 91.00
CLOSE 92.55
VOLUME 14136
52-Week high 123.30
52-Week low 78.70
P/E 128.80
Mkt Cap.(Rs cr) 129.58
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Bal Pharma Ltd. (BALPHARMA) - Director Report

Company director report

BOARD’S REPORT

To the Members

Your Directors are pleased to present the Twenty Ninth (29th) Annual Report and theCompany’s Audited Financial Statements for the Financial Year ended 31.03.2016.

FINANCIAL RESULTS

The following is the summary of the Company’s Consolidated financial performanceduring the year under review.

(Rs. in Crores)

Particulars FY 2015-16 FY 2014-15
Total Income from operations 198.32 187.15
Profit from operations before Interest 7.84 10.08
other income and exceptional items.
Tax expense 2.39 1.18
Finance cost 6.48 6.52
Profit After Tax 0.26 3.55
Profit After Taxes and Minority Interest and 1.40 3.62
share of profit /loss of associates
Earnings per Share (in Rupees) 1.09 2.83

Note : Previous year’s expenses have been regrouped wherever necessary toconfirm to this year’s classification.

2. DIVIDEND & APPROPRIATIONS

Your Directors are pleased to recommend dividend of Rs. 1.00/- (i.e 10%) on each EquityShare of Rs. 10/- thereby absorbing an amount of Rs. 1.41 crores excluding DividendDistribution Tax of Rs. 28.85 Lakhs.

3. SHARE CAPITAL:

The Company has made the allotment of 1300000 Equity Shares of Rs. 10/- each onpreferential basis with each share carrying a premium of Rs. 52/-. With this allotmentthe Paid-up Equity Share Capital of the Company has increased to Rs. 141723720/-divided into 14172372 Equity Shares of Rs. 10/- each.

During the period under review the Company has not issued shares with differentialvoting rights nor granted stock options nor Sweat Equity Shares.

4. MANAGEMENT DISCUSSION AND BUSINESS ANALYSIS: Indian Pharmaceutical Industryscenario and opportunities:

India continues to be the global manufacturing hub for the pharmaceuticals during thefinancial year 2015.16. Presently there are 10500 manufacturing units and over 3000Pharmaceutical

Companies in India and still growing at an exceptional rate. India has about 1400 WHOGMP approved manufacturing units.1105 CEP accredit ions more than 950 TGA approvals and584 sites approved by the USFDA. Globally more than 90 per cent of formulations approvalsfor Anti-retroviral (ARVs) Anti-tubercular & Anti-malarial (WHO pre-qualified) havebeen granted to companies present in India. Manufacturing costs in India are approximately35-40 percent less than those in the US due to low installation and manufacturing costs.Qualified manpower availability of raw materials and a huge domestic market for growthare some of the contributing factors for this scenario. India ranks amongst the top globalgeneric formulation exporters in volume terms.

India’s exports of pharma and drugs stood at US$ 16.8 bn. India exports all formsof pharmaceuticals from APIs to formulations both in modern medicine and traditionalIndian medicines. The country’s pharmaceutical industry accounts for about 1.4 percent of the global pharmaceutical industry in value terms and 10 per cent in volume terms.

Bal Pharma Limited during the year under review has aimed at consolidating its positionin Indian market by advancing its project on modernizing and expansion of itsmanufacturing capabilities which is expected to be completed by December 2017. Once theenhanced production capability is made available to the Company it is expected to meetthe demand of its signature products in Cardiology Diabetology Analgesics AntipyreticsAntibiotic Anti histamine IV fluids Nutrition supplements etc both in domestic andinternational markets.

Lifezen healthcare Private Limited an Over The Counter (OTC) products marketingCompany floated by Bal Pharma Limited as its Subsidiary has launched 2 new products inIndian OTC market and the said products has received encouraging response from the market.Even through the Subsidiary is yet to break even in its business; it has made its presencefelt in OTC market and aiming at an profitable business model in near future.

5. BUSINESS OPERATIONS

(i) Turnover and Net profit:

During the Financial Year 2015-16 your Company has achieved a gross standaloneturnover of Rs. 201.82 Crores as against

Rs. 190.67 Crores achieved during the previous Financial Year thus registering a topline growth of 5%. .

The Net Profit After Tax of the Company during the financial year 2015-16 stands at Rs.2.81 Crores as against the Net Profit of Rs. 4.02 Crores achieved in the previousfinancial year 2014-15.

(ii) Formulations Business:

The Formulations Business of the Company has contributed a total revenue of Rs. 111.03Crores during the F.Y 2015-16 as compared to Rs. 115.40 Crores during F Y 2014-15. Theturnover from export of formulations during the year under review stands at Rs. 61.51Crores as against Rs. 73.51 Crores achieved during the previous financial year. This dropin revenues is due to sluggish economy in overseas markets. In the domestic marketBranded formulations of the Company consisting of mainly Diabetic Gynaecology andCardiac drugs have contributed to revenue of Rs. 36.00 Crores during the year under reviewas against Rs. 22.49 crores achieved during the previous year.

(iii) Bulk Drug Business:

Bulk Drug Business continue to show its momentum in sales with a revenue of Rs. 87.31Crores during the year under review as compared to Rs. 75.13 Crores achieved during theprevious financial year thereby registering a growth of 10.7%. Exports sales of bulkdrugs during the year under review stands at Rs. 53.60 Crores as against Rs. 48.01 croresregistered during the previous financial year. Domestic sales of the bulk drugs haveregistered an revenue of Rs. 33.70 Crores as against the revenue of Rs. 27.24 Croresregistered during the previous financial year.

(iv) Export Performance:

The overall export sales of the Company during the year under review has recorded aturnover of Rs. 115.11 Crores as against revenue of Rs. 121.53 Crores achieved during theprevious financial year.

Revenues from the export sales continue to consistently dominate the Companies overallturnover.

(v) Domestic Performance:

Revenue from domestic sales has registered a turnover of

Rs. 82.76 Crores as compared to Rs. 64.46 Crores achieved during 2014-15 there byregistering an growth of 22% .

Diabetic and Cardiac drugs of the Company continue to prove their dominance in revenueearnings in Indian markets.

7. AUDIT COMMITTEE:

The Audit Committee a sub-Committee of Board consists of Dr. G.S.R Subba RaoIndependent Director Mr. Shrenik Siroya Non-Executive Director Mr. Pramod Kumar SIndependent Director and Mrs. Sarika Bhandari Independent Director. Mr. Pramod Kumar Swas appointed as Chairman of the Committee on 10.02.2016 in place of Dr. G.S.R Subba Raowho resigned from the Chairmanship of the Committee citing personal reasons. The AuditCommittee has been discharging its duties as per the provisions of SEBI (LODR)Regulations 2015 and as per Section 177 of the Companies Act 2013.

8 . AUDITORS AND AUDITORS REPORT :

a. Statutory Auditors:

Messrs T.D Jain and D I Sakaria Chartered Accountants were appointed as StatutoryAuditors of the Company from Financial Year 2015-16 to 2017-18 i.e. for the period of 3years to hold office from the conclusion of 28th Annual General Meeting held on 22ndSeptember 2015 until the conclusion of 31st Annual General Meeting subject toratification of their appointment at every subsequent Annual General Meeting.. There areno qualifications or reservations or adverse remarks by the Statutory Auditors in theirreport.

b. Cost Auditors:

Pursuant to the provisions of Section 148 of the Companies Act 2013 the Company hasappointed Mr. M.R Krishna Murthy Cost Accountant as Cost Auditor for conducting audit ofcost records of the Company for the Financial Year 2015-16.

c. Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhas appointed Mr. Parameshwar G. Bhat Practising Company Secretary to conduct SecretarialAudit of the Company for the Financial Year 2015-16. The Secretarial Audit report for theFinancial Year 2015-16 is annexed to this report as Annexure 2. Certain non materialobservations made by Secretarial Auditor in his report have been suitably addressed by theManagement with corrective actions wherever necessary.

d. Internal Auditors:

Messrs Abhishek Jain and Dheeraj Bafna Chartered Accountants were appointed asInternal Auditors of the Company for the financial year 2015-16 and their Reports onInternal Audit were periodically reviewed by the Audit Committee and recommends to theBoard for its noting. The Internal Audit Reports do not contain any qualificationsreservations or adverse remarks.

9. RISK MANAGEMENT:

The Risk Management Committee of the Company consisting of the Functional heads andCompany Secretary of the Company will submit its periodical report to the Board ofDirectors of the Company on the measures taken for mitigation of potential risk factors.

The Risk Management Policy devised and implemented by the Company is available on thewebsite i.e www.balpharma.com.

10. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

Your Company has an adequate system of internal controls with clearly defined authoritylimits. Internal controls ensure that the Company’s assets are protected against lossfrom unauthorized use or disposition and all transactions are authorized recorded andreported in conformity with Generally Accepted Accounting Principles. These systems aredesigned to ensure accuracy and reliability of accounting data promotion of operationalefficiency and adherence to the prescribed management policies. These policies areperiodically reviewed to meet current business requirements.

11. DIRECTORS’ RESPONSIBILITY STATEMENT

In compliance with the provisions of Section 134(5) of the Companies Act 2013 yourDirectors wish to confirm:

a) that in preparing the Annual Accounts all the applicable Accounting Standards havebeen followed along with proper explanation relating to material departures;

b) that the Directors had selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of theFinancial Year and of the Profit and Loss of the Company for that period.

c) that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing/detecting fraud and other irregularities;

d) that the Directors have prepared the annual accounts on a going concern basis.

e) that the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively.

f) that the Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.

12. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES :

All contracts/arrangements/transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on arm’s lengthbasis. During the year the Company had not entered into any contract/arrangement/transaction with related parties that could be considered material i.e. exceeding 10% ofthe annual consolidated turnover of the Company as defined in SEBI (Listing obligationsand Disclosure Requirements) Regulations 2015.

The Company’s Policy on the Related Party Transactions as approved by the Boardcan be accessed from our website i.e www.balpharma.com.

Please refer to the note #34 to the financial statements which sets out related partydisclosures.

13. SUBSIDIARY JOINT VENTURE AND ASSOCIATE COMPANIES:

During the year under review the following Companies listed below are Company’sSubsidiaries Joint Ventures or Associate

Companies. A report on the performance and financial position of each of theSubsidiaries Associates Joint Venture companies as per Companies Act 2013 is providedas Annexure 1 to the Board’s Report and hence not repeated here for the sake ofbrevity.

Sl. No. Name of the Company/LLP Nature of Business % of stake as on 31.03.2016
01 Lifezen Healthcare Marketing of Over the 50%
Private Limited counter (OTC) products
02 Bal Research Research and 80%
Foundation Development in Pharma
and health care.
03 Balance Clinics LLP Diabetic care clinics 80%

14. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP):

In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of the Company Mr. Shrenik D Siroya Non Executive Director of the Companyretires by rotation at the Annual General Meeting and being eligible offers himself forreappointment.

As per Section 196197 and Schedule V of the Companies Act2013 Dr.S.Prasanna is beingreappointed as the Whole time Director of the Company for a period of 2 years w.e.f1.10.2016 to 30.9.2018. The Company has received declarations from all the IndependentDirectors of the Company confirming that they meet the criteria of independence asprescribed under Section 149(6) of the Companies Act 2013.

The Company has devised a Policy for familiarization of independent Directors with theCompany their roles rights responsibilities in the Company etc and the same is uploadedon the website of the Company i. e www.balpharma.com.

The Company also has in place a Policy for Nomination and remuneration of KMP’sSenior Managerial personnel and Directors of the Company which is in compliance withSection 178 of the Companies Act 2013. The said Policy is available on the website of ourCompany.

15. VIGIL MECHANISAM:

The vigil mechanism of the Company which also incorporates Whistle BlowerPolicy as per the SEBI (LODR) Regulations 2015 includes compliance task force comprisingof Senior Executives of the Company. The complete text on the vigil mechanism and WhistleBlower Policy can be accessed from our website i.e. www.balpharma.com.

16. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS ANDFOREIGN EXCHANGE OUTGO:

As per provisions of Section 134(m) of the Companies Act 2013 read with the rule 8 ofthe Companies (Accounts) Rules 2014 details relating to the Conservation of Energy andTechnology Absorption and Foreign Exchange Earnings and Outflow are given in Annexure-3which forms part of the Board’s Report.

17. PARTICULARS OF EMPLOYEES:

Information as per Rule 5(1) of Chapter XIII of Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 is enclosed as an Annexure - 5 to this report.

18. CORPORATE GOVERNANCE AND ADDITIONAL INFORMATION TO SHARE HOLDERS:

A detailed report on the Corporate Governance System and practices of the Company aregiven in a separate section of this Annual Report. Detailed information for theshareholders is given in Additional Shareholders information section.

19. PARTICULARS OF LOAN GIVEN INVESTMENTS MADE GUARANTEES GIVEN OR SECURITY PROVIDEDBY THE COMPANY:

The Company has not given any loan or guarantees covered under the provisions ofSection 186 of the Companies Act 2013.

20. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANYBETWEEN END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT:

There were no material changes and commitments between the end of the financial yearand the date of the Report which affect the financial position of the Company.

21. EXTRACT OF ANNUAL RETURN:

Extract of the Annual Return of the Company for the Financial Year 2015-16 in FormMGT-9 is annexed to this report as Annexure - 4.

22. CORPORATE SOCIAL RESPONSIBILITY:

The Board has constituted a Corporate Social Responsibility Committee consisting of Dr.G.S.R Subba Rao Mr. Pramod Kumar S Dr. S. Prasanna and Mr. Shailesh Siroya as itsmembers. The Committee has formulated a Corporate Social Responsibility (CSR) Policy andthe Board has approved the Policy for its implementation. The CSR Policy may be accessedfrom our website i.e. www.balpharma.com . Due to delay in suitable planning of the CSRactivities the Company could not spend any amount towards Corporate Social responsibilityfor the year ended 31.03.2016.

23. HUMAN RESOURCES:

The human resources of the Company continue to contribute its share in the growth ofthe Company. Human Resource agenda of the Company for the year continued to focus onbuilding a talent pipeline enhancing individual and organizational capabilities forfuture readiness driving greater employee engagement and strengthening employeerelations through progressive people management.

There was no complaint lodged by any woman employee under Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 with the Company during theperiod under report.

24. ANNUAL BOARD EVALUATION:

Pursuant to the provisions of the Companies Act 2013 and Listing Regulations theBoard has carried out an annual performance evaluation of its own performance itsCommittee’s and the Directors individually. The manner in which the evaluation hasbeen carried out has been explained in the Corporate Governance Report

25. LISTING WITH STOCK EXCHANGES:

The Securities and Exchange Board of India (SEBI) on September

2 2015 issued SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 with the aim to consolidate and streamline the provisions of the Listing Agreementfor different segments of capital markets to ensure better enforceability. The saidregulations were effective December 1 2015. Accordingly all listed entities wererequired to enter into the Listing Agreement within six months from the effective date.The Company entered into revised Listing Agreement with BSE Limited and the National StockExchange of India Limited during November 2015.

The Company has paid the Annual Listing Fees for the year 2016-17 to National Stockexchange of India Limited (NSE) and BSE Limited (BSE) where the Company’s Shares arelisted.

26. CEO & CFO CERTIFICATION:

The Board has acknowledged that Managing Director as the CEO of the Company and DGMFinance and Accounts as the CFO for the purpose of compliance under the ListingRegulations. The CEO and CFO have certified to the Board in terms of Regulation 33(2) ofSEBI (LODR) Regulations 2015 that the financial statements present a true and fair viewof the Company’s affairs and do not omit any material facts which may make thestatements or figures contained therein misleading.

27. INSURANCE COVERAGE:

The Board of Directors reports that your Company has adequate and comprehensiveinsurance cover on all the movable and immovable assets of the Company.

28. CREDIT RATING:

The Company’s financial discipline is reflected in the BBB (stable) rating givenby ICRA for the Companies borrowings both for term loan and working capital for thefinancial year 2015-16 which is a notch above the previous year’s credit rating ofBBB - . The Company looks forward to further improve its credit rating during theFinancial Year 2016-17.

29. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF

WOMEN AT WORKPLACE (PREVENTION PROHIBITION AND REDRESSAL) ACT 2013:

The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees

(permanent contractual temporary trainees) are covered under this policy.

The following is a summary of sexual harassment complaints received and disposed offduring the year 2015-16: No. of complaints received : NIL

No. of complaints disposed off : NIL

30. GENERAL:

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review.

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend voting etc.

3. Issue of shares (including sweat equity shares) to the employees of the Companyunder any scheme.

4. Neither the Managing Director nor the whole time Directors of the Company receiveany remuneration or commission from any of its subsidiaries.

5. No significant or material orders were passed by the regulators or courts ortribunals which impact the going concern status and Company’s operations in thefuture.

31. APPRECIATION:

Your Directors wish to express their sincere appreciation on significant contributionsmade by the employees through their dedication hard work and commitment. Your Directorsalso place on record their sincere thanks on the trust reposed on the Company by themedical fraternity and the patients. We also acknowledge the support extended by CanaraBank Punjab National Bank EXIM Bank Corporation Bank and other financial institutionsgovernment agencies shareholders and investors at large. We look forward to the continuedsupport from all the quarters in our endeavor to help people lead healthier lives.

For and on behalf of the Board of Directors
Bengaluru Dr. S. Prasanna Shailesh D Siroya
10th August 2016 Whole Time Director Managing Director