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Indoco Remedies Ltd.

BSE: 532612 Sector: Health care
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OPEN 192.25
52-Week high 360.35
52-Week low 179.00
P/E 50.21
Mkt Cap.(Rs cr) 1,804
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 192.25
CLOSE 192.50
52-Week high 360.35
52-Week low 179.00
P/E 50.21
Mkt Cap.(Rs cr) 1,804
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Indoco Remedies Ltd. (INDOCO) - Director Report

Company director report

Directors’ Report

Dear Members

Your Directors are pleased to present the Sixty-Ninth Annual Report on the businessoperations together with the Audited Accounts for the Financial Year ended March 31 2016and on the state of affairs of the Company

Financial Performance

The highlights of the performance of the Company for the year ended March 31 2016 issummarized below:

( Rs. crores)


Financial Year ended March 31 2016

Financial Year ended March 31 2015

Sales & Operations 1010.43 864.85
Less: Excise Duty 10.03 11.21
Net Sales 1000.40 853.64
Add: Other Income 1.23 1.74
Total Income 1001.63 855.38
Profit Before Interest Depreciation & Tax 173.54 166.93
Less: Finance Cost 12.27 10.34
Less: Depreciation & amortisation 60.34 47.11
Profit Before Tax 100.93 109.48
Less: Provision for Taxation
- Current 22.33 30.61
- Deferred (2.90) (3.51)
- Earlier Years 0.05 2.56
- MAT credit Entitlement (1.87) (2.99)
Net Profit After Tax 83.32 82.81
Balance bought forward 207.28 161.92
Amount available for appropriation 290.59 244.73
- Interim Dividend 12.90 -
- Proposed Dividend 1.84 14.74
- Dividend Tax 3.00 3.00
- Adjustment relating to Fixed Assets - 4.71
- Transfer to General Reserve 15.00 15.00
- Balance carried forward 257.85 207.28
290.59 244.73

Results from Operations

During the Year the Company achieved Turnover of Rs. 1000 crore. Contribution ofInternational Business has gone up to 43% of the Total Turnover. On the domestic front aspate of price controls and products listed in the National List of Essential Medicines(NLEM) and Government Notification which banned 344 fixed dose combinations adverselyaffected the Pharma Industry. The ban will affect some of the company’s products butwill not have a substantial impact on the overall Turnover. Your company has filed a writpetition in the Delhi High court seeking a stay over the ban.

During the year 2015-16 the total income of the Company amounted to Rs. 1001.63 croreas compared to Rs. 855.38 crores in the previous year. This represents a 17.1% growth. TheProfit before tax (PBT) at

Rs. 100.93 crores as compared to Rs. 109.48 crores in the previous year represents adecline of 7.8%. After providing for Tax and MAT the Net Profit (PAT) amounted to Rs.83.32 crores as against Rs. 82.81 crores in the previous year. The decrease in PBT andmarginal increase in PAT is mainly due to increase in input and other costs.

In December 2015 the Company incorporated Indoco Remedies Singapore Pte Limited a100% subsidiary. The subsidiary will be used for the expansion of the company’sambitious plans to extend its activities in the European and US markets. A detaileddiscussion on the business performance and future outlook is included in ManagementDiscussion & Analysis which forms part of the Directors’ Report.

Dividend & Reserves

The Board has recommended a Final Dividend of 10% ( Rs. 0.20 per share) i.e. Rs. 1.84crores for the year 2015-16. An interim dividend of 70% ( Rs. 1.40 per share) i.e. Rs.12.90 crores has already been paid for the year 2015-16. Thus the total dividend for theyear 2015-16 is 80% ( Rs. 1.60 per share) i.e. Rs. 14.74 crores as against 80% ( Rs. 1.60per share) i.e. Rs. 14.74 crores paid in the previous year. Provision of Rs. 0.37 croreshas been made for corporate dividend tax on the final dividend proposed. Corporatedividend tax of Rs. 2.63 crores has already been paid on the interim dividend paid for theyear 2015-16. The total Tax on distributed profits payable by the Company would amount toRs. 3.00 crores as against Rs. 3.00 crores paid in the previous year.

The Directors have recommended transfer of an amount of Rs. 15.00 crores to GeneralReserves (Previous year Rs. 15.00 crores).

Energy Conservation/Technology Absorption and Foreign Exchange Earnings and Outgo

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of The Companies (Accounts) Rules 2014 is annexed herewith as "AnnexureA".

Share Capital

The paid up Equity Share Capital as on March 31 2016 was Rs. 18.43 crore. During theyear under review the Company has not issued shares with differential voting rights norgranted stock options nor sweat equity. As on March 31 2016 other than Mr. Suresh G. Kare- Chairman Ms. Aditi Panandikar Managing Director Mr. Sundeep V. Bambolkar Jt. ManagingDirector none of the other Directors of the Company held shares of the Company


Cash and cash equivalent as at March 31 2016 was Rs. 13.89 crore. The Companycontinues to focus on judicious management of its working capital. Receivablesinventories and other working capital parameters were kept under strict check throughcontinuous monitoring.


The Company has not accepted any Deposit covered under Section 73 of the Companies Act2013 and The Companies (Acceptance of Deposit) Rules 2014.

Particulars of Loans Guarantees and Investments

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.

Credit Rating

ICRA has reaffirmed Company’s long term borrowings rating as AA- and the shortterm borrowing rating as A1+. These ratings are considered to have high degree of safetyregarding timely servicing of financial obligations and carry very low credit risk.

Corporate Social Responsibility (CSR)

As required u/s 135 of the Companies Act 2013 during the year the Company undertooka number of CSR initiatives which is mainly focused on promoting education health andpublic hygiene. In this connection the Company during the year under consideration spentan amount of Rs. 0.89 crore as against an amount of Rs. 1.53 crores required to be spent.A detailed list of the CSR expenditure made is annexed herewith as "AnnexureB". The shortfall of Rs. 0.64 crores is mainly due to the fact that some of theprojects sanctioned are taking time for completion and hence entire amount on thoseProjects has not been spent. The balance amount on those projects will be spent in the FY2016-2017 In addition to fulfilling its CSR obligations the Company during the year madesubstantial donations of free medicines to charitable bodies for distribution among theneedy.

Internal Control Systems and their Adequacy

The Company has an Internal Control System commensurate with the size of itsoperations. The Internal Audit Department monitors and evaluates the efficacy and adequacyof internal control system in the Company its compliance with operating systemsaccounting procedures and policies at all locations of the Company and its subsidiaries.Based on the report significant audit observations and corrective actions thereon arepresented to the Audit Committee of the Board.

The Company’s Internal Auditor also monitors and evaluates the internal controlsystem and submits Quarterly Reports which are also placed before the Audit Committee ofthe Board.

The Risk Management Policy of the Company is available on the Company Website at: Blower Policy

The Company has a Whistle Blower Policy to deal with instance of fraud andmismanagement if any. The details of the Policy is explained in the Corporate GovernanceReport and also posted on the website of the Company at:

Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand 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 contractualtemporary trainees) are covered under this policy. The following is a summary of sexualharassment complaints received and disposed off during the year 2015-16:

- No of complaints received: Nil
- No of complaints disposed off: Nil


The Company has three subsidiary companies:

1. Xtend Industrial Designers and Engineers Private Limited

2. Indoco Pharmchem Limited

3. Indoco Remedies Singapore Pte. Ltd.

The salient financial statements of the subsidiaries are given herein below:

CIN U93000MH1995PTC086174 U33112MH2012PLC232609 201542731W
Name of the Xtend Industrial Designers and Indoco Pharmchem Ltd. Indoco Remedies
Subsidiary Engineers Pvt. Ltd Singapore Pte. Ltd.
Reporting period April 1 2015 - March 31 2016 April 1 2015- March 31 2016 December 9 2015-
for the subsidiary March 31 2016
Reporting INR ( Rs. ) INR ( Rs. ) USD ($)
Currency in lakhs in lakhs in lakhs
Share Capital 202.70 5.00 0.11
Reserve and 32.06 (1.41) (0.08)
Total Assets 525.26 3.82 0.06
Total Liabilities 525.26 3.82 0.06
Investments Nil Nil Nil
Turnover 336.66 Nil Nil
Profit / (Loss) (29.75) (0.41) (0.08)
before Taxation
Provision for 1.55 0 0
Profit/(Loss) after (28.20) (0.41) (0.08)
Proposed 0 0 0
% of shareholding 100% 100% 100%

The Company has one associate LLP: 1. Indoco Analytical Solutions LLP

There was no activity in the associate LLP - Indoco Analytical Solutions LLP. Theextract of the Financial Statement is given herein below:

Name of the Associate Indoco Analytical Solutions LLP
Latest Audited Balance Sheet Date April 1 2015 - March 31 2016
Share of Associate held by the Company as on
March 31 2016
i) Nos NA
ii) Amount of Capital Contributed Rs. 490000
iii) Extent of Holding 98%
Description of how there is significant influence The company holds 98% of the capital of the LLP
Reason why the associate is not consolidated There was no business activity during the Financial
Net worth attributable to Shareholding as per latest
Audited Balance Sheet ( Rs. in Lakhs) 4.02
Profit/(Loss) for the Year
i) Considered in Consolidation 0
ii) Not considered in Consolidation ( Rs. in Lakhs) (0.16)

The audited financial statements the Auditors Report thereon and the Board’sReport for the year ended March 31 2016 for each of the Company’s subsidiaries andFinancial Statement of the Company’s associate LLP are available on the Companywebsite.

Indoco Remedies Singapore Pte. Ltd. became a subsidiary Company of Indoco RemediesLtd. during the year under consideration.

No other Company has become or ceased to be a Joint Venture or Associate company ofIndoco Remedies Limited during the year under consideration.

Consolidated Financial Statements

The Consolidated Financial Statements of the Company prepared in accordance withrelevant Accounting Standards (AS) viz. AS 21 AS 23 and AS 27 issued by the Institute ofChartered Accountants of India forms part of this Annual Report.


In terms of provisions of the Section 152(6) of the Companies Act 2013 Ms. AditiPanandikar retires by rotation at the forthcoming Annual General Meeting and beingeligible offers herself for re-appointment. The profile of director seeking reappointmentpursuant to Regulation 36 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is included in the Annual Report.

No Director or Key Managerial Personnel was appointed or has resigned during the yearunder consideration. Mr. Sharad P Upasani was appointed to the Audit committee in themeeting held on May 27 2015.

All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Regulation16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

During the year 5 (Five) Board Meetings were held and the gap between two BoardMeetings did not exceed 120 days. Details of the Board Meeting are given in the Report onCorporate Governance.

Board evaluation

Pursuant to the provisions of the Companies Act 2013 and Regulation 19 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board has carriedout an annual performance evaluation of its own performance the directors individually aswell as the evaluation of the working of its Audit Committee CSR Committee Nomination& Remuneration Committee and Stakeholder Relationship Committee. The manner in whichthe evaluation has been carried out has been explained in the Corporate Governance Report.

Remuneration Policy

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

1. The Board Affirms that the remuneration paid is as per the Remuneration Policy ofthe Company.

2. The percentage increase in the remuneration of Company Secretary in the financialyear was 16.4%.

3. The percentage increase in the median remuneration of employees in the financialyear was 8.9%.

4. Average percentage increase in salaries of non-managerial employees was 13.4% ascompared to average percentage increase in managerial remuneration which was 14.8%.

5. Number of Permanent employees on the rolls of the company as on March 31 2016 was5720 Nos.

6. The Ratio of the remuneration paid to each Director to the median remuneration ofthe employees of the Company during the year under consideration:

Name of Director

Remuneration Paid

Median Remuneration


Mr. Suresh G. Kare 25019600 184302 1:136
(Executive Chairman)
Ms. Aditi Panandikar 15673200 184302 1:85
(Managing Director)
Mr. Sundeep V. Bambolkar 14416646 184302 1:78
(Jt. Managing Director)
Mr. Sharad P. Upasani 180000 184302 1:0.98
(Independent Director)
Mr. D. M. Gavaskar 180000 184302 1:0.98
(Independent Director)
Dr. Anil M. Naik 165000 184302 1:0.90
(Independent Director)
Mr. Rajiv P. Kakodkar 160000 184302 1:0.87
(Independent Director)
Dr. Anand Nadkarni 80000 184302 1:0.43
(Non Executive Director)

7. There has been an increase in the remuneration paid to the Executive Directors.There has been no increase in the sitting fees paid to the Independent Directors and NonExecutive Director. During the year there has been an increase in Sales by 17.10% and anincrease of 0.62% in PAT. 8. Comparison of remuneration of the Key Managerial Personnelagainst the performance of the Company":

i) Change in sales of the Company : 17.10% increase

ii) Change in the PAT of the Company: 0.62% increase

iii) Change in the remuneration of Mr. Sunil D. Joshi (KMP) 16.4%

9. Variation in Market capitalization

2016 : Rs. 2677 crore
2015 : Rs. 3352 crore

Price earning Ratio as on March 31 2016: 32.03

Price earning Ratio as on March 31 2015: 40.47

% Increase in market quotation in the shares of the company in comparison to the rateat which the company came out with the last public issue: 785.22%

Directors’ Responsibility Statement

To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statement in terms ofSection 134(3)(c) of the Companies Act 2013:

i. that in the preparation of annual accounts the applicable accounting standards havebeen followed and no material departures have been made from the same;

ii. that they have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofits of the Company for that year;

iii. that 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;

iv. that the annual accounts have been prepared on a ‘going concern’ basis;

v. that the company has laid down internal financial controls and such internalfinancial controls are adequate and operating effectively;

vi. that proper systems have been devised to ensure compliance with the provisions ofall applicable laws and such systems are adequate and operating effectively;

Related Party Transactions

All related party transactions that were entered into during the financial year were onan arm’s length basis and were in the ordinary course of business. There are nomaterially significant related party transactions made by the Company with PromotersDirectors or Key Managerial Personnel which may have a potential conflict with theinterest of the Company at large.

All Related Party Transactions are placed before the Audit Committee as also the Boardfor approval. Prior approval of the Audit Committee is obtained on a yearly basisspecifying the upper ceiling as to amount for the transactions which are of a foreseen andrepetitive nature. The transactions entered into pursuant to the prior approval so grantedare audited and a statement giving details of all related party transactions is placedbefore the Audit Committee and the Board of Directors for their approval on a quarterlybasis. The particulars as required under the Companies Act 2013 is furnished in AnnexureC to this report.

Significant and Material Orders passed by the Regulators or Courts

There are no significant material orders passed by the Regulators / Courts which wouldimpact the going concern status of the Company and its future operations.

Statutory Auditors

The Members at the Sixty Seventh Annual General Meeting approved the appointment ofM/s. Patkar & Pendse Chartered Accountants (Firm Registration No. 107824W) asStatutory Auditors of the Company under Section 139 of the Companies Act 2013 to holdoffice for a period of 3 years till the conclusion of the Seventieth Annual GeneralMeeting to be held in 2017. M/S Patkar and Pendse have confirmed that they continue to beeligible under Section 141 of the Companies Act 2013 and the Rules framed thereunder forcontinuing as Auditors of the Company. As required by the Companies Act 2013 the Membersare requested to ratify their appointment as Auditors for the FY 2016-2017.

Cost Auditors

In terms of the Order issued by the Central Government under Section 148 of theCompanies Act 2013 the Company was required to appoint Cost Auditors to get the audit ofthe cost records of the Company done by a member of the Institute of Cost & WorksAccountants of India (ICAI). For FY 2015-2016 the Company had appointed M/s SevekariKhare & Associates (Firm Registration No. 000084) to get the audit of the cost recordsdone. They would be required to submit the reports by September 29 2016.

As required under the Companies Act 2013 the remuneration payable to the Cost Auditoris required to be placed before the Members in a general meeting for their ratification.Accordingly a Resolution seeking Member’s ratification for the remuneration payableto M/s Sevekari Khare & Associates Cost Auditors is included at Item No. 5 of theNotice convening the Annual General Meeting.

Secretarial Audit

The Secretarial Audit was carried out by M/s A. Y. Sathe & Co. Company Secretariesin Practice (Registration No.:FCS2899/COP738) for the financial year 2015-2016. The Reportgiven by the Secretarial Auditors is annexed as "Annexure D" and formsintegral part of this Report. There has been no qualification reservation or adverseremark or disclaimer in their Report. During the year under review the SecretarialAuditors had not reported any matter under Section 143 (12) of the Act therefore nodetail is required to be disclosed under Section 134 (3)(ca) of the Act In terms ofSection 204 of the Companies Act 2013 on the recommendation of the Audit Committee theBoard of Directors has appointed CS Ajit Sathe - Proprietor of M/s A. Y. Sathe & Co.Company Secretaries in Practice (Registration No.:FCS2899/COP738) to undertake theSecretarial Audit of the Company for FY 2016-2017.

Corporate Governance

We comply with the Securities and Exchange Board of India (SEBI)’s guidelines oncorporate governance. We have documented our internal policies on corporate governance.Several aspects of the Act such as the Whistleblower Policy and Code of Conduct andEthics have been incorporated into our policies. Our Corporate Governance report for theyear 2015-2016 forms part of this Annual Report. The Report is duly certified by theStatutory Auditors of the Company whose certificate is also annexed.

Extract of the Annual Return

The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as "Annexure E".

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 is provided in the Corporate Governance Report.

Employees Relations

The employees’ relation at all levels and at all units continued to be cordialduring the year.


Your Company has been able to operate efficiently through continuous improvement in allfunctions and areas by efficiently utilizing the Company’s resources. The Directorswish to place on record their appreciation of the services rendered by each and everyemployee without whose whole-hearted efforts the overall satisfactory performance wouldnot have been possible. The Directors also wish to place on record their word of sincereappreciation to the bankers and financial institutions the investors the vendors thecustomers the medical profession and all other business associates for their continuedsupport. Your Directors look forward to the long term future with confidence.

Cautionary Statement

Statements in this Report particularly those which relate to Management Discussion andAnalysis describing the Company’s objectives projections estimates and expectationsmay constitute ‘forward looking statements’ within the meaning of applicablelaws and regulations. Actual results might differ materially from those either expressedor implied in the statement depending on the circumstances.

For and on behalf of the Board of Directors
Mumbai May 27 2016