GUJARAT TERCE LABORATORIES LIMITED
ANNUAL REPORT 2011-2012
Your Directors present the Twenty Seventh Annual Report together with the
Audited Statement of Accounts of the Company for the year ended on 31st
FINANCIAL RESULTS: 2011-12 2010-11
(Rs. in Lac) (Rs. in Lac)
Gross Income 9870.61 3590.58
Profit before Depreciation & Tax 46.31 90.67
Depreciation 29.25 19.17
Profit after Depreciation 17.07 71.50
Tax- Current 3.36 31.85
Deferred 0.66 (1.78)
Profit after tax 13.05 41.42
Profit brought forward from previous year 104.18 62.76
Balance Carried To Balance Sheet 117.24 104.18
The Company has more than one business segments namely pharmaceutical
formulations and metal recycling division.
During the year under review, the revenue from operations increased from
Rs.1834.29 lacs to Rs 1925.56 lacs and has written off bad debts to the
tune of Rs 16.91 lacs as compared to Rs 88.50 lacs during previous year.
METAL RECYCLING DIVISION:
During the year under review, the revenue from operations increased from
Rs.1776.38 lacs to Rs 7940.40 lacs.
Your Directors are actively considering hiving off Metal Recycling Division
by way of demerger. The demerger will be undertaken subject to the approval
of the Gujarat High Court, BSE, the Securities and Exchange Board of India
and other statutory bodies. The demerger will help the company to continue
to carry on business with greater focus and attention through two separate
companies each having their own management team and administrative set-up.
Once hived off, the resulting Company consisting of Metal unit will offer a
ready platform for induction of Joint venture partner.
The Company has not recommended any dividend and hence the Board has
recommended a transfer of Rs NIL to General Reserve and an amount of
Rs.13.05 Lacs has been retained in Statement of Profit & Loss.
LISTING OF SHARES
The Company's .share continues to remain listed with The Stock Exchange,
Mumbai, where the share is actively traded.
MANAGEMENT DISCUSSION & ANALYSIS
Management Discussion and Analysis have been reviewed by the Audit
Committee and the same is forming a part of this Annual Report.
Pursuant to clause 49 of the listing agreement, a report on corporate
governance along with auditors' certificate of its compliance is included
as part of the annual report.
The Clause 65 of Articles of Association of the Company provides that at
least two-thirds of our Directors shall be subject to retirement by
rotation. One third of these retiring Directors must retire from office at
each Annual General Meeting of the shareholders. A retiring Director is
eligible for re-election.
Mr. Gordhanbhai Patel, Mr. Kanubhai Patel and Mr. S. P. Pareek retire by
rotation at the ensuing Annual General Meeting and, being eligible, Mr.
Gordhanbhai Patel and Mr. Kanubhai Patel offer themselves for
reappointment. Mr. S. P. Pareek does not offer himself for reappointment.
On recommendation of remuneration committee your Directors at its meeting
held on 31/12/2011 recommended for the approval of the Members, re-
appointment of Mr. N. P. Prajapati as Managing Director, not liable to
retire by rotation, of your Company, for a period of five years from
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS
A. Conservation of Energy
I. The company has not made any investment [for energy conservation] and
taken any specific measures to reduce energy cost per unit. However, it
intends to conserve energy for future generation.
II. Part A pertaining to conservation of energy is applicable to the
Company. Power and fuel consumption: [Pharma Division]
I. Electricity Current Year Previous Year
Unit 51370 57165
Total Amount 337990 347078
Average Cost 6.60 6.07
* Own generation: N.A. N.A.
Power and fuel consumption: [Metal Division]
II. Electricity Current Year Previous Year
Unit 105610 13805
Total Amount 1214727 150776
Average Cost 11.50 10.92
* Own generation: N.A. N.A.
NOTE: The Company has not used coal/furnace oil as fuel during the year and
has not generated electricity internally.
B. Technology Absorption
There is no Research and Development activity carried out by the Company.
C. Foreign Exchange Earnings and Outgo:
The Company has earned total Foreign Exchange of Rs 12.34 Lacs by way of
exports in the year 2011-12 (6.89 Lacs P.Y).
PARTICULARS OF EMPLOYEES:
The information as required under Section 217(2A) of the Companies Act,
1956 read with Companies (Particulars of Employees') Rules, 1975 as amended
from time to time is nil.
The Human Resource plays an important and vital role in the growth and
success of an organization. The Human Resource Development is an integral
part of the Company's Corporate Philosophy. The Company is committed to
provide career oriented training to its employees at all levels with an
added impetus to build leaders. The company continues to have extremely
cordial personnel relations.
DIRECTOR'S RESPONSIBILITY STATEMENT:
Pursuant to sub-Section (2AA) of Section 217 of Companies Act'1956 the
Board of Directors of the Company hereby state and confirm that: '
(i) in preparation of Annual Accounts, the applicable accounting standards
had been followed along with proper explanation relating to material
(ii) We have selected such accounting policies and applied them
consistently and applied them consistently and made judgments and estimates
that are reasonable and prudent so as to give a true and fair view of the
state of affairs of the Company at end of the financial year and of the
profit or loss of the Company for that period;
(iii) We have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of this Act
for safeguarding the assets of the Company and for preventing and detecting
fraud and other irregularities;
(iv) We have prepared the annual accounts on a going concern basis.
A Cash Flow statement for the year ended March 31, 2012 is attached to the
AUDITORS AND AUDITORS' REPORT:
The retiring Auditor M/s Pary & Co, Chartered Accountants, Ahmedabad has
indicated their willingness to continue as auditor of the Company. It is
proposed to reappoint M/s Pary & Co., Chartered Accountants, Ahmedabad as
auditors of the Company till the conclusion of Twenty Seventh Annual
General Meeting. The Company has received certificate from auditor to the
effect that the reappointment if made, would be within prescribed limit
under Section 224 (1-B) of the Companies Act, 1956.
As per the requirement of the Central government and pursuant to Section
233B of the Companies Act, the Audit of the cost accounts relating to
Pharma Sector and Metal Sector is carried out. M/s Koushlya V. Melwani was
appointed as a cost auditor relating to Pharma division and Metal Division
for the year ended on 31-03-2012.
EXPLANATION TO COMMENTS OF AUDITORS' REPORT:
The auditors have qualified their report in respect of delay in payment of
certain statutory dues, it is always our endeavor to pay all statutory dues
within the prescribed time limit. The delay, as reported was not
intentional and was for few days.
The Company has not accepted any deposits from the public.
The Company's assets are adequately insured against major risks.
The Board expresses their appreciation for continued co-operation and
support extended to the Company by Bank of Baroda and customers. The Board
also thanks the Medical Profession, the Trade and Consumers for their
patronage of the Company's products. The Board also records its deep
appreciation of the creditable services rendered by the Company's employees
at all levels.
For and on behalf of the Board of Directors
Registered office:122/2, Mr. N.P. Prajapati
Ravi Estate, Bileshwarpura, Managing Director
Chhatral Dist: Gandhinagar
MANAGEMENT DISCUSSION & ANALYSIS
This Report includes discussion on the following matters within the limits
set by the Company's competitive position:
INDUSTRY STRUCTURE & DEVELOPMENT
The pharmaceutical industry in India is stated to be valued at
approximately US$ 12.26 billion as per industry estimates. This industry is
growing @ 10-11% per annum on compounded growth rate basis. India's
pharmaceutical sector is slated to grow to US $ 55 billion by 2020, based
on projections by a McKinsey report on Pharma 2020.
The Domestic formulations market, valued at Rs. 48,200 crore has grown
steadily at CAGR of 14-15% over the past five years. The strong growth has
been driven by a confluence of factors including - a) rising household
income levels leading to higher expenditure on healthcare, b) increasing
prevalence of life?*yle related diseases, c) improving healthcare
infrastructure/delivery systems and 4) rising penetration in smaller towns
and rural areas.
The acute therapy segments dominate the market with a share of 73% of the
total market. However, with changing demographics and lifestyle patterns,
the chronic segments such as cardiovascular, anti-diabetic, neurology,
psychiatry have been growing at a faster pace and the market is gradually
shifting towards chronics. In 2010-11, while the market grew by 15%,
chronics grew by 18%. As per IMS health estimates, the chronic therapies
are likely to comprise more than 50% of the market by 2020 with
cardiovascular (second largest segment after anti-infective) and anti-
diabetic will take lead while segments like anti-cancer will also add to
The industry today can boast of producing the entire range of
pharmaceutical formulations, i.e., medicines ready for consumption by
patients and about 350 bulk drugs, i.e., chemicals having therapeutic value
and used for production of pharmaceutical formulations.
The Government allows 100 per cent FDI under the automatic route in the
drugs and pharmaceuticals sector. India has a total of 24,000
pharmaceutical companies, of which around 250 falls under the organized
Recycling of copper and copper alloys is relatively cheap, with small power
consumption, and with minimal losses. The recycling of copper and its
alloys play a significant role in the economics of production. The cost of
the raw material can be considerably reduced if an alloy can be made using
recycled material. If the scrap is high purity copper and has not been
contaminated by other metals, it can be used to make a high quality
product. Likewise, if the scrap is kept segregated and comprises only of
one alloy composition it is easier to remelt to a superior quality product
conforming to industry standards.
The per capita consumption of drugs in India, stands at US$3, is amongst
the lowest in the world, as compared to Japan- US$412, Germany- US$222 and
USA- US$191. Apparently, this huge gap indicates the underlying
opportunities. Majority of the growth of your company will be driven by
expansion in volumes and new product introductions as against prices
While patent expires are expected to peak out in 2012, we betieve that the
growth momentum would sustain from the launch of niche, limited competition
The recycling of copper is primarily market driven across the world and
this will continue to be the case for the foreseeable future, with the
recycling sector consistently gaining strength. This strength, however, is
typically a reflection of consistently increasing consumption of metals and
production of waste. As long as this is the case, the prices of scrap will
remain high and the recycling rates should see at least a marginal
improvement every year.
The competitive pressure in the domestic formulations market has been
rising steadily for some time now. While on one hand, this has been
prompted by significant increase in investments by domestic players in
marketing efforts through expansion in field force, on the other, MNC have
also renewed their focus on India. Some of the smaller players have also
contributed to the competitive intensity by offering huge
discounts/incentives to the distribution network. Potential regulatory
interventions could hurt pricing.
Challenges faced by the trade with regard to the pre-shipment procedures
and problems of the trade in relation to various shipping related matters,
including monopolistics attitude of shipping lines.
SEGMENT WISE REPORTING:
The profit before tax and interest but after writing off bad debts of Rs
16.91 lacs amounted to Rs 51.91 lacs and profit before tax was Rs 8.21
The Employees cost was Rs 515.86 lacs in comparison to 428.50 Lacs in the
previous Year. The increase in employees cost is due to normal
The profit before tax of the division amounted to 8.86 Lacs.
RISK & CONCERNS
The Company has adopted risk management approach with an objective to
balance risk & cost. The policy lays down a detailed structure for risk
management & control in the company. There are few risk factors that are
relevant to the business of your Company. The Company operates in a highly
regulated industry & must comply with a broad range of dynamic regulatory
controls, particularly in the regulated markets.
INTERNAL CONTROL SYSTEM
The Internal Control System of the Company is adequate. The Company has set
up detailed systems & procedure in all-important areas which act as
guideline to its employees. The recommendations of the auditors on the
efficacy of the internal control are implemented. Audit committee
constituted by the Board of Directors continuously reviews the reports of
the internal audit team. The shortcomings observed in the system are
regularly monitored for corrections as well as prevention.
Statement in the Management Discussion & Analysis Report describing the
Company's objective, expectations or predictions may be forward looking
within the meaning of applicable Securities Laws & Regulations. Actual
performance may differ from those expressed or implied depending upon the
economic conditions, the Government Policies & the other incidental/related