The Members of
Biofil Chemicals and Pharmaceuticals Limited
Your Directors are pleased to present the 32nd Annual Report on the business andoperation of the Company together with the Audited Financial Statements for the year endedMarch 31 2017.
1. STATE OF AFFAIRS FINANCIAL PERFORMANCE AND FUTURE OUTLOOK:
1.1 FINANCIAL HIGHLIGHTS AND SUMMARY
The performance highlights and summarized financial results of the Company are givenbelow:
|PARTICULARS ||Year ended 31st March 2017 ||Year ended 31st March 2016 |
|Total Income ||1359.23 ||1369.84 |
|Total Expenditure ||1128.20 ||1271.77 |
|Profit/(Loss) before Exceptional & Extraordinary Items & Tax ||231.03 ||98.07 |
|Exceptional Items ||0.00 ||0.00 |
|Extraordinary Items ||0.00 ||0.00 |
|Profit/(Loss) before tax ||231.03 ||98.07 |
|Provision for Tax || || |
|- Current Tax ||50.00 ||18.69 |
|- Deferred Tax ||0.00 ||0.00 |
|- Earlier year Tax ||1.62 ||1.12 |
|Profit/Loss after tax ||179.41 ||78.26 |
|Surplus Carried to Balance Sheet ||179.41 ||78.26 |
|Paid up Equity Share Capital ||1627.38 ||1627.38 |
|Earning per share (Rs.10/- each) Basic & Diluted (in Rs.) ||1.10 ||0.48 |
1.2 OPERATIONAL AND STATE OF COMPANY'S AFFAIR AND OUTLOOK:
During the financial year your company has achieved the turnover of Rs.1359.23 Lacs incomparison to previous year's turnover of Rs. 1369.84 Lacs and net profit of the companyis Rs. 179.41 lacs in comparison to previous year net profit of Rs.78.26 lacs. Furtherincome from Job Work/Conversion Charges received during the year is Rs. 427.00 Lacs incomparison to previous year Labour income of Rs. 231.50 Lacs raised up the net profit ofthe company.
Government has amended Drugs and Cosmetic Rules to ensure availability of drugs atreasonable prices and promote the use of generic medicines with a view that the marketingcosts of companies will reduce if drugs are marketed as generic but no expected reliefwas given to domestic drug industry.
As per the fiscal reports on Pharmaceutical Industry it was said that by 2020 India islikely to be among the top three pharmaceutical markets by incremental growth and sixthlargest market globally in absolute size as because India's cost of production issignificantly lower than that of the US and almost half of that of Europe. It gives acompetitive edge to India over others. On the basis of this vision the sector had highexpectations from the budget 2017 not only from the point of view of tax incentives butalso from a regulatory point of view but no specific impetus was given to the sector.However Board of directors is putting its full effort to grow the business activities.
Further your company shall continue to grow its business with leading pharmaceuticalCentral Public Sector Enterprises Bengal Chemicals and Pharmaceuticals Limited forproviding C&F facility and HLL Lifecare Limited for providing job work facility.
1.3 CHANGE IN NATURE OF BUSINESS
Company is dealing in Pharmaceuticals and Chemicals and it has also diversified itsbusiness activity and is dealing in Plastic and Allied Products. During the year there wasno change in business activity of the company.
1.4 SHARE CAPITAL
The Paid-Up Equity Share Capital as at 31st March 2017 stood at Rs. 162738000/-.During the year under review the company has not issued shares with differential votingrights nor has granted any stock option or sweat equity shares. As on 31st March 2017none of the Directors of the company hold instruments convertible into equity shares ofthe Company.
2. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT-9 as requiredunder Section 92 of the
Companies Act 2013 is annexed as Annexure - A and forms an integral part of thisReport.
3. NUMBER OF MEETINGS OF THE BOARD ITS COMMITTEES & AGM
The details of the number of meetings of the Board and its committee held during theFinancial Year 2016-17 forms part of the Corporate Governance Report. Further AnnualGeneral Meeting of the Company for financial year 2015-16 was held on 28th September2016.
Due to inadequate profit & accumulated losses in earlier years your Directors havenot recommended any dividend for the year under review.
5. AMOUNTS TRANSFERRED TO RESERVES
During the year under review no amount was transferred to reserve.
The Company has not accepted any deposits within the meaning of Section 73 of theCompanies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014.
DISCLOSURE OF UNSECURED LOAN RECEIVED FROM DIRECTORS.
Pursuant to Section 2(31) of Companies Act 2013 Read with Rule 2(1)(viii) of Companies(Acceptance of Deposits) Rules 2014 (including any statutory modification orre-enactment thereof for the time being in force) the Company has not received anyunsecured loan from director during the financial year.
7. DETAILS OF SUBSIDIARY JOINT VENTURE OR ASSOCIATES COMPANIES
During the financial year ended on 31st March 2017 the Company did not have anysubsidiary joint venture or associate company.
8. DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with the provisions of Section 152 of the Companies Act 2013 and theCompany's Articles of Association Mr. Romil Shah Director retires by rotation at theforthcoming Annual General Meeting and being eligible offers himself for re-appointment.The Board recommends his re-appointment for the consideration of the Members of theCompany at the ensuing Annual General Meeting.
During the year there was no change in the constitution of the Board of the Directorsof the Company.
The following have been designated as the Key Managerial Personnel of the Companypursuant to sections 2(51) and 203 of the Companies Act 2013 read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014:
1. Mr. Ramesh Shah Managing Director
2. Ms. Shikha Khilwani Company Secretary and Compliance Officer
3. Mr. Jitendra Kumar Sahu Chief Financial Officer DISQUALIFICATIONS OF DIRECTORS
During the year declarations were received from the Directors of the Company pursuantto Section 164 of the Companies Act 2013. Board appraised the same and found that none ofthe director is disqualified for holding office as director.
9. DECLARATION BY INDEPENDENT DIRECTOR
The Company has received declarations from all the Independent Directors of the Companyconfirming that they fulfil the criteria of independence as prescribed under sub-section(6) of section 149 of the Companies Act 2013 and the Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015.
10. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and ability confirm that:
i. in the preparation of the annual accounts the applicable accounting standards havebeen followed and there are no material departures in adoption of these standards;
ii. the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit of the Company for that period;
iii. 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 and detecting fraud and other irregularities;
iv. the Directors have prepared the annual accounts on a going concern basis;
v. the Directors have laid down internal financial controls to be followed by theCompany and such internal financial controls are adequate and operating effectively;
vi. the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
11. FAMILIARIZATION OF INDEPENDENT DIRECTORS
The details of familiarization programme for Independent Directors is given in reportof corporate governance and have been disclosed on website of the Company at weblink:- http://www.biofilgroup.net/Appointment%20letter% 20Independent%20Director/Familiarization%20Programme% 20of%20Indepedent%20Directors%20during%202016- 17.pdf
12. MEETING OF INDEPENDENT DIRECTORS
The Independent Directors met once during the year as on 31st March 2017. The Meetingwas conducted in an informal manner without the presence of the Chairman the Whole TimeDirector the Non-Executive Non-Independent Directors and the Chief Financial Officer.
13. COMMITTEES OF THE BOARD OF DIRECTORS
The Company has various committees which have been constituted as a part of the goodcorporate governance practices and the same are in compliance with the requirements of therelevant provisions of applicable laws and statutes. Your Company has an adequatelyqualified and experienced Audit Committee with Mrs. Shaila Jain (Chairperson) Mr. RomilShah and Mr. Subhash Chandra Swarnkar as Members. The recommendations of the AuditCommittee were duly approved and accepted by the Board during the year under review.
The other Committees of the Board are:
(i) Nomination and Remuneration Committee
(ii) Stakeholders Relationship Committee
The details with respect to the composition powers roles terms of referenceMeetings held and attendance of the Directors at such Meetings of the relevant Committeesare given in detail in the Report on Corporate Governance of the Company which forms partof this Report.
14. STATEMENT INDICATING THE MANNER IN WHICH FORMAL ANNUAL EVALUATION HAS BEEN MADE BYTHE BOARD OF ITS OWN PERFORMANCE ITS DIRECTORS AND THAT OF ITS COMMITTEES
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(Listing Obligations and Disclosure Requirements) Regulations 2015 ("SEBI ListingRegulations").
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 remunerationcommittee reviewed the performance of the individual directors on the basis of thecriteria such as the contribution of the individual director to the board and committeemeetings like preparedness on the issues to be discussed meaningful and constructivecontribution and inputs in meetings etc. In addition the chairperson was also evaluatedon the key aspects of his/her role.
Performance Evaluation Criteria for Independent Directors:
The performance evaluation criteria for independent directors are determined by theNomination and Remuneration committee. An indicative list of factors that may be evaluatedinclude participation and contribution by a director commitment effective deployment ofknowledge and expertise effective management of relationship with stakeholders integrityand maintenance of confidentiality and independence of behavior and judgments
15. PARTICULARS OF LOAN GUARANTEES AND INVESTMENTS U/S 186
The Company has not provided any loans and guarantees pursuant to Section 186 of theCompanies Act 2013.
16. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All transactions entered with Related Parties for the year under review were on arm'slength basis and in the ordinary course of business pursuant to the provisions of Section188 of the Companies Act 2013 and the Rules made there under. Further disclosure in formAOC-2 in terms of Section 134 of the Companies Act 2013 read with Companies (Accounts)Rules 2014 is set out as Annexure B.
The Details of the related party transactions as required under Accounting Standard -18are set out in Note No. 9 to the financial statement forming part of this Annual Report.
All Related Party Transactions are placed before the Audit Committee and the Board forreview and approval on a quarterly basis. Omnibus approval was obtained on a quarterlybasis for transactions which are of repetitive nature. The policy on Related PartyTransactions as approved by the Board of Directors has been uploaded on the website of theCompany. The web-link of the same has been provided in the Corporate Governance Report.None of the Directors has any pecuniary relationship or transactions vis-a-vis theCompany.
17. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars in respect of conservation of energy technology absorption and foreignexchange earnings and outgo as required under sub-section (3)(m) of Section 134 of theCompanies Act 2013 read with Rule (8)(3) of the Companies
(Accounts) Rules 2014 are given as under :
(A) Conservation of Energy
(i) Adequate measures have been initiated to reduce energy consumption wherevernecessary.
(ii) The company makes ongoing study to identify and implement energy saving system toreduce energy consumption and cost of production.
(iii) Maintenance of machines as per schedule.
(iv) Energy conservation is ongoing process in our company. Continues monitoringplanning development and modification for energy conservation are done at the plant.
(v) The capital investment on energy conservation equipment's: Nil
(B) Technology Absorption :
(i) The efforts made towards technology absorption: Not Applicable.
(ii) The benefits derived like product improvement cost reduction product developmentor import substitution
(iii) In case of imported technology (imported during the last three years reckonedfrom the beginning of the Financial Year): Not Applicable.
(iv) Company has not incurred any expenditure on Research and Development during theyear under review.
Further there was neither inflow nor outflow of foreign exchange during the year.
18. STATEMENT IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROL WITH REFERENCE TOTHE FINANCIAL STATEMENTS
Your company has an effective internal control and risk mitigation system which areconstantly assessed and strengthened with new/revised standard operating procedures. Thecompany's internal control system is commensurate with its size scale and complexities ofits operations; the internal and operational audit is entrusted to M/s. Sethiya Khandelwal& Co. Chartered Accountants. The main thrust of internal audit is to test and reviewcontrols appraisal of risks and business processes besides benchmarking controls withbest practices in the industry.
The audit committee of the board of directors actively reviews the adequacy andeffectiveness of the internal control systems and suggests improvements to strengthen thesame. The company has a robust management information system which is an integral part ofthe control mechanism.
The audit committee of the board of directors statutory auditors and the businessheads are periodically apprised of the internal audit findings and corrective actionstaken. Audit plays a key role in providing assurance to the Board of Directors.Significant audit observations and corrective actions taken by the management arepresented to the audit committee of the board. To maintain its objectivity andindependence the internal audit function reports to the chairman of the audit committee.Report of statutory auditors for internal financial control system is part of AuditReport.
19. CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY
Provisions of section 135 of the Companies Act 2013 does not apply to the Companytherefore Company has not constituted Corporate Social responsibility (CSR) committee asrequired under the Act.
20. REMUNERATION POLICY / DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS KEYMANAGERIAL PERSONNEL AND PARTICULARS OF EMPLOYEES:
In accordance with Section 178 and other applicable provisions if any of the CompaniesAct 2013 read with the Rules issued there under and the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board of Directors formulated theNomination and Remuneration Policy of your Company on the recommendations of theNomination and Remuneration Committee. The Nomination and Remuneration Policy of thecompany is annexed as Annexure-C and forms an integral part of this report.
The Disclosure required under Section 197(12) of the Companies Act 2013 read with theRule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014as amended up to date is annexed as Annexure - D and forms an integral part of thisReport
None of the employee of the company is drawing more than Rs.10200000/- per annum orRs.850000/- per month for the part of the year during the year under review. ThereforeParticulars of the employees as required under Section 197 of Companies Act 2013 readwith rule 5(2) & rule 5(3) of Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are not applicable during the year under review.
Further Company did not have any holding or subsidiary company therefore receipt ofthe commission or remuneration from holding or subsidiary company of the company asprovided under Section 197(14) of Companies Act 2013 is not applicable.
21. REPORTS ON CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION ANALYSIS
As per Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a separate section on corporate governancepractices followed by the Company together with a certificate from the PracticingChartered Accountants confirming compliance forms an integral part of this Report.
22. DISCLOSURE ON ESTABLISHMENT OF A VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company has a whistle blower policy to report genuine concerns or grievances. Thedetails of establishment of the reporting mechanism are disclosed on the website of theCompany at the weblink :-http://www.biofilgroup.net/Policies/Vigil%20Mechanism%20Policy%20BCPL.pdf
23. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALSIMPACTING THE GOING CONCERN STATUS OF THE COMPANY.
There are no significant and material orders passed by the Regulators/Courts that wouldimpact the going concern status of the Company and its future operations.
24. SECRETARIAL AUDIT
Pursuant to the provisions of Section 204 of the Companies Act 2013 and Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the company hasappointed M/s. L. N. Joshi & Co. Practicing Company Secretary to undertake as theSecretarial Auditor of the company. The Secretarial Audit report is included as ANNEXURE-E and forms an integral part of this Report.
EXPLANATION TO SECRETARIAL AUDITOR'S REMARKS
With respect to the observations of the Secretarial Auditor the Board replieshereunder:- Non Payment of Listing Fees with National Stock Exchange of India Limited:
Listing fee for 2017-18 and outstanding listing fee along with interest has been paidto National Stock Exchange of India Limited. Further trading of shares at the NationalStock Exchange of India Limited has been resumed from 27th July 2017.
Listing confirmation and Trading Approval for Reissue of 5712500 Forfeited Shares:
The Company has received in principal approval for reissue of 5712500 forfeited sharesfrom Bombay Stock Exchange Limited subject to approval of National Stock Exchange of IndiaLimited. The Board is in process to get the approval from National Stock Exchange of IndiaLimited and also trading approval from both the stock exchanges.
25. STATUTORY AUDITORS
M/s S.N. Gadia & Co the Statutory Auditors who have been appointed at the AnnualGeneral Meeting held on 23rd September 2014 for a period of 3 years retires at theconclusion of the ensuing Annual General Meeting. The Board places on record theirappreciation for the valuable contribution on the Audit and review made by M/s S.N. Gadia& Co during their long association with the Company.
The Board has consented to recommend to the members the appointment of M/s Maheshwari& Gupta Chartered Accountants Indore (ICAI Firm Registration No. 006179C) as thestatutory auditors of the company for a period of 5 years from the conclusion of 32ndAnnual General Meeting up to the conclusion of the 37th Annual General meeting to be heldin the year 2022 subject to ratification of their reappointment by the members at each AGMto be held between the above periods. M/s Maheshwari & Gupta Chartered Accountantshave given eligibility certificate that they are in compliance with the conditionsprovided in Section 139(1) read with Section 141 of the Companies Act 2013. EXPLANATIONTO AUDITOR'S REMARKS
The Auditors in their report have referred to the notes forming part of the Accountswhich are self-explanatory and does not contain any qualification reservation or adverseremark or disclaimer.
Further there was no fraud in the Company which was required to report by statutoryauditors of the Company under sub-section (12) of section 143 of Companies Act 2013.
26. COST AUDIT
The company does not falls within the provisions of Section 148 of Company's Act 2013read with the Companies (Cost Records & Audit) Rules 2014 therefore no such recordsare required to be maintained and company is not required to appoint cost auditor for thefinancial year 2016-17.
27. INTERNAL AUDITOR
The Board has appointed M/s Sethiya Khandelwal & Company Chartered AccountantsIndore as Internal Auditor of the company and takes his suggestions and recommendationsto improve and strengthen the internal control systems. His scope of work includes reviewof operational efficiency effectiveness of systems & processes compliances andassessing the internal control strengths in all areas.
The Audit Committee reviews adequacy and effectiveness of the Company's internalcontrol environment and monitors the implementation of audit recommendations includingthose relating to strengthening of the Company's risk management policies and systems.
28. CODE OF CONDUCT
The Company has laid down a code of conduct for all Board members and senior managementand independent directors of the Company. All the Board members including independentdirectors and senior management personnel have affirmed compliance with the code ofconduct. Declaration on adherence to the code of conduct is forming part of the CorporateGovernance Report.
29. MD/CFO CERTIFICATION
As required under Regulation 17(8) of the Listing Regulations the Managing Directorand Chief Financial Officer of the Company have certified to the Board regarding theFinancial Statements for the year ended 31st March 2017 and same was reviewed by theBoard of Directors and is annexed to the Corporate Governance Report.
30. CODE FOR PROHIBITION OF INSIDER TRADING PRACTICES:
Your Company has adopted the code as per SEBI (Prohibition of Insider Trading)Regulations 2015 which has been effective from 15th May 2015. The Details of the saidcode is available on website of the Company at the weblink :http://www.biofilgroup.net/PoliciesCode%20for%20fair%20disclosure%20and%20prevention%20of%20insider%20trading%2015%20May%202015.pdf
31. STATEMENT INDICATING DEVELOPMENT & IMPLEMENTATION OF RISK MANAGEMENT POLICY:
The Board of Directors has adopted risk management policy for the Company whichprovides for identification assessment and control of risks which in the opinion of theBoard may threaten the existence of the Company. The Management identifies and controlsrisks through a properly defined framework in terms of the aforesaid policy.
32. MATERIAL CHANGES & COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY
No material changes and commitments affecting the financial position of the companyhave occurred between the end of the financial year to which the financial statementsrelate and at the date of this Board's report.
33. ENVIRONMENT AND SAFETY
The Company is conscious of the importance of environmentally clean and safeoperations. The Company's policy requires conduct of operations in such a manner so as toensure safety of all concerned compliances environmental regulations and preservation ofnatural resources.
34. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION & REDRESSAL)ACT 2013
The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. An Internal Complaints Committee (ICC) has been set up to redress the Complaintreceived regarding sexual harassment. There was no case of sexual harassment reportedduring the year under review.
35. LISTING OF SHARES
Company's shares are listed on Bombay Stock Exchange Limited & National StockExchange of India Ltd. The company has paid annual listing fee for financial year 2017-18to both the Stock Exchanges. Further company had reissued of 5712500 forfeited equityshares on 31.03.2011. The Company has received "in principal approval letter"from Bombay Stock Exchange Ltd. Subject to listing at National Stock Exchange of IndiaLtd.
Further suspension of trading in shares of the company was revoked by the NationalStock Exchange of India Ltd. with effect from 27.07.2017 and company's equity is nowsmoothly traded on both the stock exchanges.
The Company's assets are adequately insured against the loss of fire and other risk asconsidered necessary by the Management from time to time. The Company has also takeninsurance cover for any claims/losses arising out of its core business of Pharmaceuticalsand Chemicals.
37. BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Reporting as required by Regulation 34(2) of the SEBI(Listing Obligations & Disclosure Requirements) Regulations 2015 is not applicableto your Company for the financial year ending March 31 2017.
38. DEPOSITORY SYSTEM
Your Company's shares are tradable compulsorily in electronic form and your Company hasconnectivity with both the Depositaries i.e. National Securities Depository Limited (NSDL)and Central Depository Services (India) Limited (CDSL). In view of the numerous advantageoffered by the Depository System members are requested to avail of the facility ofDematerialization of the Company's shares on either of the Depositories mentioned asaforesaid. The Company has paid the annual custodian fee to both the depositories.
39. INDUSTRIAL RELATIONS
Company's Industrial relations continued to be healthy cordial and harmonious duringthe period under review.
The Board of Directors wish to place on record its appreciation for the extendedco-operation and assistance rendered to the Company and acknowledge with gratitude thecontinued support and cooperation extended by the employee investors stakeholders banksand other regulatory authorities.
| ||On behalf of the Board of Directors |
| ||Biofil Chemicals and Pharmaceuticals Ltd. |
|Place : Indore |
Date : 04th August 2017
|Ramesh Shah ||Romil Shah |
|Managing Director ||Director |
| ||(DIN: 00028819) ||(DIN: 00326110) |