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Gufic BioSciences Ltd.

BSE: 509079 Sector: Health care
NSE: GUFICBIO ISIN Code: INE742B01025
BSE LIVE 15:40 | 18 Aug 70.95 -1.05
(-1.46%)
OPEN

71.15

HIGH

71.85

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70.55

NSE 15:49 | 18 Aug 70.80 -1.05
(-1.46%)
OPEN

71.85

HIGH

71.95

LOW

69.85

OPEN 71.15
PREVIOUS CLOSE 72.00
VOLUME 14614
52-Week high 79.55
52-Week low 33.30
P/E 48.27
Mkt Cap.(Rs cr) 549
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 71.15
CLOSE 72.00
VOLUME 14614
52-Week high 79.55
52-Week low 33.30
P/E 48.27
Mkt Cap.(Rs cr) 549
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Gufic BioSciences Ltd. (GUFICBIO) - Director Report

Company director report

The Members

Your Directors have pleasure in presenting the 32nd Annual Report of the Companytogether with the Audited Accounts for the financial year ended 31st March 2016.

FINANCIAL SUMMARY :

Rs in Lacs

Particulars 2015-16 2014-15
Total Revenues 20286.01 15212.32
Profit Before Interest Tax Depreciation and Amortization (PBITDA) 2034.62 1483.89
Profit After Tax (PBT) 732.42 415.75
Transfer to General Res. 134.71 134.71
Earning Per Share (EPS) 0.95 0.54

FINANCIAL HIGHLIGHTS :

During the year under review the total revenue increased to Rs. 20286.01 Lacs incomparison to previous year's Rs. 15212.32 Lacs and net profit after tax increased to Rs.732.43 from Rs. 415.75 lacs in previous year.

The increase in revenue was due to many factors viz. launch of a new segment calledCRITICARE the sales of which during the financial year 2015-16 was more than Rs. 20.00crores the pharma segment also experienced a growth of 56.45 % thus making the revenue ofmore than Rs. 11.00 crores and the growth in Ayurveda segment was recorded at 53.88 %.Overall the performance of the Company was satisfactory.

TRANSFER TO RESERVES:

During the financial year 2015-16 Rs. 134.71 was transferred to General Reserve.

DIVIDEND :

Your Directors are pleased to recommend a Dividend of 0.05 paise (5%) per equity shareof Rs.1 each for the financial year ended March 31 2016.

The dividend payout for the year under review has been formulated in accordance withthe Company's policy to pay sustainable dividend linked to long term growth objectives ofthe Company to be met by internal cash accruals.

SHARE CAPITAL:

The paid up equity capital as on March 31 2016 was Rs . 773.50 Lakhs. During the yearunder review the company has not issued shares with differential voting rights norgranted stock options nor sweat equity nor made any provision of money for purchase of itsown shares by employees or by trustees for the benefit of employees.

FINANCE:

Cash and cash equivalents as at March 31 2016 was Rs . 615.90 lakhs. The companycontinues to focus on judicious management of its working capital Receivablesinventories and other working capital parameters were kept under strict check throughcontinuous monitoring.

MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY:

There have been no material changes affecting the financial position of the Companybetween the end of the financial year of the Company to which the financial statementsrelate and the date of the report. There has also been no change in the nature of businessof the Company.

FIXED DEPOSITS :

Your Company has not accepted any deposits within the meaning of Section 73 of theCompanies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:

The particulars of loans guarantees and investments covered under section 186 of theCompanies act 2013 have been disclosed in the Notes to the financial statements formingpart of the Annual Report.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has an adequate Internal Control System commensurate with the size scaleand complexity of its operations. The Internal Financial Control are adequate and areoperating effectively so as to ensure orderly and efficient conduct of BIOSCIENCES LIMITEDbusiness operations. The Company has a process in place to continuously monitor the sameand identify gaps if any and implement new and/or improved controls whenever the effectof such gaps would have a material effect on the Company's operations.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:

Your Company's vision is to set a global benchmark in value creation and corporatecitizenship and the Company's long-term Corporate Social Responsibility (CSR) objective isto improve the quality of life of the country. The Company has in the financial year2015-16 have mainly contributed towards the education growth and research factor thedetails of which is annexed herewith as Annexure 'A' and in the upcoming years it aims tocontribute to the society at large.

LISTING :

Your Company is listed with the Bombay Stock Exchange Limited at P. J. Towers DalalStreet Mumbai 400 001 bearing Scrip Code No. 509079 and with the National StockExchange of India Limited at Exchange Plaza Bandra Kurla Complex Bandra (E) Mumbai 400051 bearing Scrip Code GUFICBIO. The listing fees for the year 2016-20117 hasalready been paid by the Company.

CONSERVATION OF ENERGY:

a. Company ensures that the manufacturing operations are conducted in the mannerwhereby optimum utilization and maximum possible savings of energy is achieved.

b. No specific investment has been made in reduction in energy consumption.

c. As the impact of measures taken for conservation and optimum utilization of energyare not quantitative its impact on cost cannot be stated accurately.

CONSERVATION AND CONSUMPTION OF ENERGY:

I. (A) CONSERVATION OF ENERGY
Details of conservation of energy are as follows:
Power & Fuel Consumption
Year ended Year ended
31.03.16 31.03.15
(a) Electricity
Purchased Units Kwh 4008310 2882290
Total amount Rs in Lacs 230.33 218.9
Rate per unit Rs 5.75 7.59
(average)
(b) Furnace Oil
Quantity Ltrs NIL NIL
Total Cost Rs . In Lacs NIL NIL
Average Cost Rs NIL NIL
(c) Briquettes
Quantity Ltrs1 1802015 1296780
Total Cost Rs . In Lacs 93.72 70.86
Average Cost Rs 5.21 5.47

(B) CONSUMPTION PER UNIT OF PRODUCTION

Since the Company manufactures several formulations and bulk drugs in the same factoryit is not practical to Apportion consumption of Electricity and Furnace Oil to unit ofProduct.

TECHNOLOGY ABSORPTION:

Company's products are manufactured by using in-house know how and no outsidetechnology is being used for manufacturing activities. Therefore no technology absorptionis required. The Company constantly strives for maintenance and improvement in quality ofits products and entire Research & Development activities are directed to achieve theaforesaid goal.

FOREIGN EXCHANGE EARNINGS AND OUT-GO:
Earnings in foreign currency : Rs. 971.13 lacs
Out-go in foreign currency : Rs. 311.98 lacs
DIRECTORS & KEY MANAGERIAL PERSONNEL:

During the year under review Mr. Jayesh P. Choksi (DIN 00001729) was re-appointed asChairman & Managing Director and Mr. Pranav J. Choksi (DIN 00001731) as Whole TimeDirector of the Company w.e.f April 01 2015 and the same was confirmed and approved bythe Members at the 31st Annual General Meeting (AGM) held on September 30 2015. Mrs.Hemal Desai (DIN 07014744) who was appointed as an Additional Director w.e.f November 132014 was regularized and appointed as Whole Time Director by the Members of the Company inthe said AGM.

To comply with the provisions of section 152[6] of the Act and the rules madethereunder Mr. Pankaj J. Gandhi (DIN 00001858 ) Whole Time Director of the Company willretire by rotation at the ensuing Annual General Meeting and being eligible offershimself for re-appointment. The Board recommends his re-appointment

The term of appointment of Mr. Pankaj Gandhi as a Whole Time Director of the Companyexpires on September 06 2016. On the recommendation of Nomination & RemunerationCommittee the Board of Directors has re-appointed Mr. Pankaj J. Gandhi as a Whole TimeDirector of the Company for a further period of five years w.e.f September 07 2016 subject to the approval of the shareholders at the ensuing Annual General Meeting.

All Independent Directors have given declarations that they meet criteria ofIndependence as laid down under Section 149(6) of the Companies act 2013 and that thereis no change in the circumstances which may affect their status as Independent Directorduring the year.

During the year under review Mr. Santoshkumar Sharma resigned as a Company Secretary& Compliance Officer of the Company w.e.f. December 2 2015. The Board appointed Ms.Ami Shah a member of Institute of Company Secretaries of India as Company Secretaryw.e.f. March 22 2016 and as Compliance Officer as per SEBI Listing Regulation 2015w.e.f. May 30 2016.

FAMILIARIZATION PROGRAMME OF INDEPENDENT DIRECTORS :

In compliance with the requirements of SEBI (Listing Obligations and DisclosureRequirements) Regulations the Company has put in place a familiarization programme forthe Independent Directors to familiarize them with their roles rights andresponsibilities in the Company.

The details of the familiarization programme imparted to Independent Directors havebeen put on the website of the Company. The link can be accessed athttp://gufic.com/wp-content/uploads/2016/08/Familiarisation-of-Independent-Director.pdf

BOARD EVALUATION

The Board of Directors have laid down the manner for carrying out an annual evaluationof its own performance its various Committees and individual Directors pursuant to theprovisions of the Companies Act 2013 read with the applicable Rules and the CorporateGovernance requirements as prescribed by Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 (“SEBI ListingRegulations”).

In a separate meeting of independent directors performance of non-independentdirectors performance of the board as a whole and performance of the chairman wasevaluated.

REMUNERATION POLICY

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Remuneration Policy is stated in the Corporate Governance Report.

MEETINGS

During the year under review four Board Meetings and four Audit Committee Meetingswere convened and held. The details of which are given in the Corporate Governance Report.The intervening gap between the Meetings were within the period prescribed under theCompanies Act 2013.

DIRECTORS' RESPONSIBILITY STATEMENT :

In terms of Section 134 (5) of the Companies Act 2013 the directors would like tostate that:

I. In the preparation of the annual accounts the applicable accounting standards havebeen followed.

ii. The directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that were 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 the year under review.

iii. The directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this 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 had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

vi. The directors had devised proper system to ensure compliance with the provisions ofall applicable laws and that such system were adequate and operating effectively.

RELATED PARTY TRANSACTIONS :

In line with the requirements of the Companies Act 2013 and SEBI Listing Regulationsyour Company has formulated a Policy on Related Party Transactions which is also availableon Company's website athttp://gufic.com/wp-content/uploads/2016/08/POLICY-ON-RELATED-PARTY-TRANSACTIONS.pdf

All Related Party Transactions are placed before the Audit Committee for its review andapproval. Prior omnibus approval is obtained for Related Party Transactions from AuditCommittee at the beginning of the financial year for transactions which are of repetitivenature and / or entered in the Ordinary Course of Business and are at Arm's Length.

The related party transactions entered into by the Company for the financial year2015-16 were within the limits as approved by the members at the last Annual GeneralMeeting held on September 30 2015.

All related party transactions that were entered into during the financial year were onarm's length basis and were in the ordinary course of the business. There were nomaterially significant related party transactions made by the company with Promoters KeyManagerial Personnel or other designated persons which may have potential conflict withinterest of the company at large and thus disclosure in Form AOC-2 is not required.

Your Company for its business transaction have entered or may propose to enter intotransactions relating to purchase transfer or receipt of products goods activepharmaceuticals ingredients materials services other obligations and also leasing ofproperty with some of the Related Party as defined within the meaning of Section 2(76) ofthe Companies Act 2013. The current and future transactions may be deemed to be'material' in nature as defined in Regulation 23 of SEBI (Listing Obligation DisclosureRequirements ) Regulations 2015 as they may exceed 10 % of the annual turnover of theCompany based on future business projections. Thus in terms of Regulation 23(4) of SEBI(Listing Obligation Disclosure Requirement) Regulations 2015 these transactions wouldrequire the approval of the members through Ordinary Resolution. A resolution for approvalof the Related Party Transactions has been included in the Notice convening the ensuingAGM of the Company.

HOLDING / SUBSIDIARY / JOINT VENTURE /ASSOCIATE COMPANIES:

The Company does not have any holding subsidiary joint venture and associatecompany. Hence the statement in Form AOC-1 is not applicable to the Company.

CODE OF CONDUCT :

The Board of Directors has approved a Code of Conduct which is applicable to theMembers of the Board and all employees in the course of day to day business operations ofthe company. The Company believes in “Zero Tolerance” against briberycorruption and unethical dealings / behaviors of any form and the Board has laid down thedirectives to counter such acts. The Code has been posted on the Company's websitewww.gufic.com

The Code lays down the standard procedure of business conduct which is expected to befollowed by the Directors and the designated employees in their business dealings and inparticular on matters relating to integrity in the work place in business practices andin dealing with stakeholders.

All the Board Members and the Senior Management personnel have confirmed compliancewith the Code. All Management Staff were given appropriate training in this regard.

VIGIL MECHANISM / WHISTLE BLOWER POLICY:

The Company has established a Vigil Mechanism policy i.e. Whistle Blower Policy thatenables the Directors and employees to report genuine concerns unethical behaviorirregularities if any that would adversely affect the operation of the Company. Thedetails of the policy is made available on the website of the Company i.e. www.gufic.com

The Vigil Mechanism Policy provides for (a) adequate safeguards against victimizationof persons and (b) direct access to the Chairperson of the Audit Committee of the Companyin appropriate or exceptional cases.

During the year under review the Company did not receive any complaint against anyDirector or Senior Management Official.

PREVENTION OF INSIDER TRADING:

The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the Directors and designated employees of theCompany. The Code requires pre-clearance for dealing in the Company's shares and prohibitsthe purchase or sale of Company shares by the Directors and the designated employees whilein possession of unpublished price sensitive information in relation to the Company andduring the period when the Trading Window is closed. The Board is responsible forimplementation of the Code.

All Board Directors and the designated employees have confirmed compliance with theCode.

AUDITORS:

a. STATUTORY AUDITOR :

The Auditors S H R & Co. Chartered Accountants (FRN: 120491W) Mumbai wasappointed at 30th Annual General Meeting of the Members of the Company for a term of fiveyears. In terms of provisions of Section 139 (1) of the Companies Act 2013 thecontinuation of the appointment of S H R & Co. as Statutory Auditors shall be subjectto ratification by the Members at the ensuing Annual General Meeting. The Company hasreceived a confirmation from S H R & Co. regarding their eligibility and willingnessto continue as the Auditor. The Board recommends the ratification of their appointment asStatutory Auditor.

b. COST AUDITOR :

M/s. Kale & Associates Cost Accountants are appointed as the Cost Auditors of theCompany to audit the cost records of the Company for the financial year 2016-17. The Boardrecommends ratification of their remuneration by Members at the ensuing Annual GeneralMeeting.

c. SECRETARIAL AUDITOR :

Pursuant to provisions of section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the company hadappointed M/s. Gajanan D. Athavale a Practicing Company Secretary to undertake theSecretarial Audit of the Company. The Secretarial Audit report is annexed herewith as“Annexure B

d. INTERNAL AUDITOR :

The Board of Director of the Company have appointed M/s. B. Bhushan & AssociatesChartered Accountants to conduct internal audit of the Company for the financial yearended March 31 2017.

AUDITOR'S REPORT/ SECRETARIAL AUDIT REPORT :

The observation made in the Auditors' Report read together with relevant notes thereonexplanation to the same are as below as per Section 134 of the Companies Act 2013.

With refer to point no. 7 of Independent Auditor's Report:-Advances and Debtsrecoverability is a common feature of any running business. The amount mentioned in point7 of the report keeps varying depending on the strategies adopted for the year for growthof company as a whole.

Company has already initiated process of identifying Trade Receivable and Advanceswhich are non-recoverable in nature and will make necessary provision upon completion ofprocess. However during the Financial Year 2015 16 it has made necessary provision ortransferred amount to bad debts in respect of debtors which are not recoverable in natureamounting to Rs. 2837409.30 lacs.

Due to increase in the sale revenue the recoverable amount from the debtors have alsoincreased. The Management is expecting to recover the said amounts by the debtors in thefinancial year 2016-17 and will take strict action against debtors whose amounts arepending for more than one year.

With reference to point no. 8 of Independent Auditors' Report the Company hasunearthed the fraud committed by one of its marketing employee who has misappropriatedamount of Rs. 124.04 lacs in the financial year 2014-15. The said employee is under policecustody. The case is still pending before the Court of law. Company is expecting torecover the amount from the employee and hence in view of the management no provision isrequired.

As required under section 204 (1) of the Companies Act 2013 the Company has obtained asecretarial audit report. Certain observations made in the report with regard tonon-filing of some forms were mainly due to ambiguity and uncertainty of the applicabilityof the same for the relevant period. However the company would ensure in future that allthe provisions are complied to the fullest extent.

EXTRACT OF ANNUAL RETURN :

The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as “Annexure C”.

GREEN INITIATIVE :

The Ministry of Corporate affairs had taken the Green Initiative in CorporateGovernance by allowing paperless compliances by Companies through electronic mode. YourCompany supports the Green Initiative and has accordingly decided to send allcommunications to its shareholders to their respective registered e-mail addresses.

Your Company appeals to you its shareholders who are yet to register your e-mailaddresses that they take necessary steps for registering same so that you can also becomea part of the initiative and contribute towards a Greener environment.

BUSINESS RISK MANAGEMENT :

Your Company has adopted a risk management policy for identification evaluation andmitigation of business risk and threats. This framework seeks to create transparencyminimize adverse impact on the business objectives and enhance the Company's competitiveadvantage. Various risk traced by the Company during the financial year 2015-16 wereminimized to its best.

HUMAN RESOURCES :

At Gufic we value our employees and believe that they play a crucial role in thesuccess and overall growth of the Company.

In today's competitive business world attracting and retaining skilled employees havebecome difficult. Your Company has managed to retain many professional and skilledemployees due to the work culture and environment adopted by the Company. Your Companycontinued to conduct various employee benefit recreational and team building programssocial gatherings to foster team spirit.

During the year under review the employees' strength of your Company increased to 846as compared to 720 in the previous year.

On the Industrial front your Company enjoyed cordial relationship with workers andemployees at all levels.

PARTICULARS OF EMPLOYEES :

The information required under section 197 of the Act read with Rule 5[1] of theCompanies [Appointment and Remuneration of Managerial Personnel] Rules 2014 is given in“Annexure- D”.

CORPORATE GOVERNANCE :

Your Company believes Corporate Governance is at the core of stakeholder satisfaction.Your Company's governance practices are described separately in this annual report. YourCompany has obtained a certification from Mr. Deep Shroff partner of M/s. S H R &Co. Chartered Accountant on our compliance with Listing agreement read with SEBI(Listing obligations and disclosure requirements) regulations 2015. This certificateforms part of this Report.

MANAGEMENT DISCUSSION & ANALYSIS REPORTS :

The Management discussion and analysis report on the operations of the Company asrequired under SEBI (Listing obligations and disclosure requirements) regulations 2015 isprovided in a separate section and forms a part of this report.

PREVENTION OF SEXUAL HARASSEMENT AT WORK PLACE :

Your Company has zero tolerance towards sexual harassment at work place and adhere tothe safety of the women employees at the Company. Your Company believes in providingopportunity and key position to women professionals.

During the year under review no complaints were received by any employee.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There have been no significant and material orders passed by the regulators or courtsor tribunals impacting the going concern status and company's operation in future.

ACKNOWLEDGEMENTS :

Your Company and its Directors wish to extend their sincerest thanks to the Members ofthe Company Bankers Government Local Bodies Customers Suppliers Executives Staffand workers at all levels for their continuous co-operation and assistance.

Place: Mumbai For and on behalf of the Board of Directors
Date: 30th May 2016
Jayesh Choksi
Chairman & Managing Director
DIN 00001729