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Laurel Organics Ltd.

BSE: 530313 Sector: Health care
NSE: N.A. ISIN Code: INE285U01017
BSE LIVE 14:10 | 21 Aug 22.05 0
(0.00%)
OPEN

22.05

HIGH

22.05

LOW

22.05

NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 22.05
PREVIOUS CLOSE 22.05
VOLUME 100
52-Week high 22.05
52-Week low 6.67
P/E
Mkt Cap.(Rs cr) 16
Buy Price 22.05
Buy Qty 1900.00
Sell Price 0.00
Sell Qty 0.00
OPEN 22.05
CLOSE 22.05
VOLUME 100
52-Week high 22.05
52-Week low 6.67
P/E
Mkt Cap.(Rs cr) 16
Buy Price 22.05
Buy Qty 1900.00
Sell Price 0.00
Sell Qty 0.00

Laurel Organics Ltd. (LAURELORGANICS) - Director Report

Company director report

LAUREL ORGANICS LIMITED ANNUAL REPORT 2011-2012 DIRECTOR'S REPORT To, The Members, Your Directors have pleasure in presenting the Nineteenth Annual Report on the business and operations of the Company together with the Audited Statements of Accounts along with the Report of the Auditors for the year ended 31st March, 2012. Financial Results 2011-12 2010-11 (Rs. in lacs) (Rs. in lacs) Net sales/income from operation 869.27 784.49 Other Income 4.15 7.01 Total Income 873.42 791.50 Total expenditure 764.78 620.39 Depreciation 38.00 36.28 Finance Charges 25.47 33.46 828.25 690.13 Profit/(Loss) for the year 45.17 101.37 Add/(Less): Deferred Tax (5.28) (2.91) Balance carried to Balance Sheet 38.89 98.46 Operational Results The Company recorded income from operation of Rs. 869.27 lacs against Rs.784.49 lacs in the previous year, registering a growth of about 10.8%. The growth in turnover was mainly on account of revenues from reimbursement of store consumables. However, Profit before exceptional items and tax stood at Rs. 45.17 lacs against Rs. 101.37 lacs for the previous year due to overall price rise in input cost. Earlier, during 2010-11, the company was working on fixed monthly revenue model in which even during lower plant capacity utilization, fixed monthly charges were payable. During the current year the company moved to variable job work charges based on per kg output as per the requirement of Ranbaxy, hence the advantage of lower utilization, but fixed revenue was no more available to us. This has resulted in he lower profitability during the current year temporarily. In view of management, however, this model will be more beneficial as compared to fixed model in long run corresponding increasingly with better capacity utilisation. Your company has incurred Repair & Maintenance expenditure of Rs 64.67 lacs and Laboratory Expenditure of Rs 28.53 lacs as compared to last year of Rs 41.65 lacs and Rs. 20.03 lacs to fulfill additional requirement & stabilization of new products manufactured for Ranbaxy. This increase in maintenance cost has also affected the profitability of the company. Future Outlook The global pharmaceutical industry has been growing at the rate of 7%. While R&D and innovations within the industry are still mainly dominated by MNCs based in the western world, the manufacturing focus has been shifting to Asian giants - China and India. China continues to remain the biggest manufacturing centre followed by Italy and India, and it is estimated that India will emerge as the second largest manufacturing hub in 2012, overtaking Italy. With more and more reputed companies shifting manufacturing focus to India, our company will tend to gain in terms of more outsourced business from these companies directly or indirectly. Your Company has never believed in waiting for favorable tailwinds to achieve its goals. We have always believed in seizing opportunities and pursuing aggressive plans to capture them. This phase of our growth will be no different. We are moving ahead with a well thought out strategy. The vision, objectives and detailed road- map for the businesses have been defined and strategic initiatives have been identified along with an execution plan. The only threat is requirement of working capital, which will be arranged through financing. Contract Manufacturing The Company is carrying out contract manufacturing activity for M/s Ranbaxy Laboratories Ltd, (a wholly owned subsidiary of the Japanese giant M/S Daichi Sankyo) a reputed pharmaceutical company for the past 10 years. Taking advantage of this growing segment, your company is exploring all possibilities to expand further and intends to enter into such agreement with other companies within and outside India. The experience of your company in efficiently manufacturing and supplying about 35 different products to M/S RLL during the past several years. Since last year we are also focusing on written standard operating procedures in all working of the departments and focusing on Good Manufacturing Practice (GMP). This gives your company a sense of confidence that it would be able to handle the offshore business opportunities very well in future. Plant Capacity Since the Company has manufactured so may different types of Intermediates of all most all therapeutic groups, it has resulted in building up a capacity which extremely flexible which can handle all type of reactions relevant in the pharmaceutical manufacturing. This has helped the Company being way ahead of its competitors in terms of plant flexibilities which has helped to cater to higher demand, increase in yields and steady costs thus maintaining reasonable steady growth. Dues of unsecured creditors: Your Company owes Rs 125.43 lacs to M/s Ranbaxy Lab as on the Balance Sheet date. The company is regular in repayment of its liability with interest. However, your company could not arrange to make payment of Long Term outstanding dues to ICD lenders. Dividend In view of accumulated losses of the company your directors do not recommend any dividend. Networth The networth of the company has moved in positive direction during the year. However, there remain huge brought forward accumulated losses still to be wiped out. Fixed Deposit Your company has not accepted fixed deposits from the members or public, by public invitation during the year. Directors Three directors namely M;. Sandeep Gupta, Mrs. Shakuntala Prasad & Mr. Binod Roy who retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Auditors M/s AK Jalan & Associates, Chartered Accountants, retires as Auditors of the company at the conclusion of the ensuing Annual General Meeting and ate eligible for re-appointment. The company has received certificate from them under section 224(1 B) of the Companies Act, 1956. Cost Audit The Central Government has notified an audit of the cost accounts maintained by the Company in respect of formulations and bulk drugs businesses. For conducting the cost audit for these activities for the financial year ended March 31,2012, based on the recommendation of Audit Committee, the Board has appointed M/s Mahesh Singh & Co, Cost Accountants and made an application to the Central Government in accordance with MCA Circular dated April 11,2011. The Cost Audit Reports would be submitted to the Central Government within the prescribed time. Corporate Governance Your Company has taken adequate steps to ensure compliance with the provisions of Corporate Governance prescribed under the Listing Agreement with the Stock Exchanges. A separate report on Corporate Governance along with the certificate of the auditors confirming compliance with the conditions of Corporate Governance, as stipulated under Clause 49 of the Listing Agreements entered into with the Stock Exchanges is annexed. Health and Safety The company continues to accord high priority to health and safety of employees. During the year under review, a health & safety week was organized several times in its factory and the training programme and workshop for safety, awareness was also conducted for all employees at the plant. The comprehensive health check up of the employees was also carried out at the plant. Environment The plant is maintained strictly in compliance with the provisions of the Pollution Control Act. All the Effluents either of water or Air being generated during the manufacturing process are released after proper treatment strictly as per the Pollution Control Regulations and Rules. Listing of Shares Your Company equity shares are listed with Bombay Stock Exchange Limited. However, the scrip is under temporary suspension for trading for want of certain compliances. The Company has been putting its best possible efforts to recommence the trading at the earliest. It is worth mentioning that your Company had issued 885,000 equity shares of Rs 107- each at par in payment of dues to IDBI in partial modification of sanctioned rehabilitation scheme by Hon'ble BIFR in March,2004 in view of subsequent OTS reached with the said Financial Institution. However, sanction to the modification of BIFR approved scheme could not be obtained by IDBI in time despite requested for the same. Now, BSE insist for sanction of the Hon'ble BIFR/AA1FR, which is under consideration at their end. Your company has filled an appeal to High Court for seeking direction to BIFR relating to issue of equity shares to IDBI and we hope to get the sanction at an early date and continuation of listing thereafter. Directors' Responsibility Statement In terms of section 217 of the Companies Act, 1956, your directors confirm that: (i) In the preparation of annual accounts the applicable accounting standards have been followed along-with proper explanations, wherever necessary relating to the material departures. (ii) Your directors have selected prudent accounting policies. (iii) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding 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. Statutory Particulars The company had no employee of the category specified in sub section 217(2A) of the Companies Act, 1956 read with the companies (particulars of employees) Rules, 1975. The statement showing particulars of foreign exchanges earning and outgo is annexed hereto and form part of this report. Auditors & their Report With reference to the observation and remarks of the Auditors in their report, which are self-explanatory and have been suitably covered in the notes on accounts. Industrial relations Industrial relations continued to be cordial during the year under review. Acknowledgements Your Directors acknowledge the vital role played by hard working employees of the Company at all levels towards its overall success, other stakeholders, bankers and business associates, who have continued to lend their valuable support to the Company in its efforts to success. The Directors take this opportunity to record their appreciation in this regard. For and on behalf of the Board Place: Bhondsi. Date : August 14, 2012. Sd/- (Abhishek Sahay Varma) (Director) ANNEXURES TO THE DIRECTORS' REPORT: ANNEXURE-1 Particulars as per the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 forming part of the Director's Report for the year ended 31st March, 2012 A. Conservation of energy: a) Energy conservation measure taken - Cold water re-circulation system was adopted to reduce energy loss. - Old Chiller has been replaced with new energy efficient chiller. - Existing one F.O. fired boiler was Modified to permit the use of alternate cheaper fuel in place of F.O. b) Additional investment and proposals, if any, being implemented for reduction -NIL-of consumption of energy c) Impact of measure at (a) & (b) above As a result of the measure at (a) above the consumption of diesel and electricity is minimal. d) Energy consumption particulars FORM-A Form for Disclosure of particulars with respect to conservation of energy A. Power and fuel consumption Current Year Previous Year 2011-12 2010-11 1. Electricity: (a) Purchased: Unit KWH'000 679.330 715.725 Total amount (Rs in lacs) 42.47 39.51 Rate per unit (Rs.) 6.25 5.52 (b) Own generation: Through steam turbine/generator Units KWH'000 644.232 700.043 Unit per Itr of diesel/oil 3.55 3.44 Cost per unit (Rs.) 11.98 11.30 2. Furnace Oil/HSD & Coal/Petcoke/Ors. used in Boiler/Thermopac etc.: Current Year Previous Year F.O./HSD Coal/Petcoke/ors F.O./HSD Coal/Petcoke Quantity (K.ltrs) 58.097 740.987 277.239 - Total cost (Rs in lacs) 21.92 47.45 94.05 - Average rate (Rs.) 37.73 6.40 33.92 - 3. Consumption per unit of Production: Current Year Previous Year 2011-12 2010-11 Production (in MT) 52.191 33.133 Electricity per MT KWH'000 25.36 42.73 Furnace oil/HSD per MT (K. ltrs) 15.31 8.37 Note: Figures for the year are not exactly comparable with last year, since the figures pertain to Jobwork of high power Intensive, multiple products, less/more time consuming and more/less steps to reach the final products too. B. Technology absorption: -NIL-(Previous year-NIL-) C. Foreign exchange earnings and outgo: a) Activities relating to export initiatives taken to increase exports, development of new Products and services, and export plan: NIL. b) Total foreign exchange used and earned: Used Rs. NIL (P.Y. Rs. NIL) Earnings NIL (P.Y - NIL) MANAGEMENT DISCUSSION AND ANALYSIS REPORT Industry Structure & Developments During the year, positive signs had begun to emerge in many countries, signifying recovery from the general recession and economic crisis. However, there is high uncertainty, with one crisis or the other, particularly in Europe, affecting overall sentiments. The developed nations will need to take the initiative to pull the rest of the world back to normalcy. The recovery of the Indian economy seems to be on track with GDP predicted to grow to higher levels. Industrial recovery has also gathered momentum in recent months, The government is expected to adopt a gradual approach while withdrawing policy stimulus measures so that the recovery Is not hampered. The Indian pharmaceutical industry maintained its momentum and registered a growth of about 18 per cent, according to ORG-IMS statistics. The dynamics of the Indian pharmaceutical industry is undergoing significant changes. Multinational corporations are working to entrench themselves as evidenced by the recent buyouts of the domestic business of major Indian pharmaceutical organizations. In the coming years, the industry may witness a significant shift and a consolidation phase. All the major players are trying to reach out to emerging rural markets in order to expand their reach. According to a recent report, the Indian healthcare services industry, which primarily includes hospitals, is growing at an unprecedented rate of 16 per cent and is already one of the largest service sectors in the country. The Indian pharmaceutical industry will need to realign its strategies to cater to this segment. Opportunities and challenges With the core promoters/management including technocrats, the Company has been healthy on technical side which is reflected in its ability to manufacture wide range of Bulk drug products in a cost effective manner by regularly evaluating alternate processes, inputs, sources etc. Technical competency has also helped the Company to continuously update and upgrade its technology and improvement in processes, increased yields and value additions as also to foresee opportunities in new products and adjust to the dynamics of the market. Wide range of products enables the Company to balance seasonal and cyclical fluctuations in the market. Segment-wise or product-wise performance Since the company's operations are restricted and dependent on contract manufacturing, therefore no product wise or segment wise performance can be provided. However, in the context of Contract manufacturing, the increased revenue from job work reflects the production performance of the company. Outlook Your Company's overall earnings presently depend on the job work of pharmaceutical products. Because pharmaceutical business is global in nature and also the company is doing job work for an Indian MNC(now a global MNC), its volume of business depends on overall global economic outlook & global demand and supply scenario. Risks and concerns Though the pharmaceutical products, and particularly bulk drug intermediates, which can be manufactured by the company, are internationally traded, but at present the company has no production of its own. It is completely dependent on the job work. There are no risk areas like market fluctuations or import tariffs, but the major risk is job order itself. As a part of its overall risk management strategy, the company has carried its operations based on a manufacturing Contract for five years with M/s Ranbaxy Laboratories Ltd., executed in 2008 for manufacturing Bulk Drug intermediates as per their specification and requirements on Fixed minimum monthly Job Charges basis till 28.02.09. With effect from 1st Mach'09, the model of operation has changed in view of Ranbaxy's internal requirements partially on fixed basis and for regular products on per kg. basis. Revenue from this activity for the year has been taken accordingly. From 1st January, 2011 the system of Conversion Charges has been changed to per kg basis in entirety, so your company risk depends on the volume of job work being provided. Internal control system and their adequacy A proper and extensive system of internal control is practiced by your company, to ensure that all its assets are safeguarded and protected, and that transactions are authorized, recorded and reported properly. An adequate programme of internal audits, reviews by management and documented policies, guidelines and procedures, supplements the internal control systems, that are designed to ensure reliability of financial and all other records to prepare financial statements and other data & to maintain accountability of assets. During the year the Company has appointed M/s R.K.Aggarwal & Associates, Chartered Accountant to conduct internal audit of the company. Top management and audit committee of the Board reviews the findings and recommendation of internal audit panel. The company is also following written procedures in all it departments with special emphasis in manufacturing and Quality Assurance activities. Financial Risk: The Company has cleared all dues of Sales Tax Department and dues of unsecured loans reduced to Rs 170.36 lacs. However, dues to unsecured creditors increased to Rs.95.12 lacs. To mitigate this risk, the company is looking forward for working capital finance & term finance from banks and/or other lenders. However the company was able to meet slowly its entire requirements for payment of outstanding statutory dues and unsecured creditors from its operating cash flows. Financial performance with respect to operational performance The Jobwork done by the company for the year 2011-12 is Rs. 873.42 lacs in comparison to the year 201011 which was Rs.791.50 lacs . The details are in below: Your Directors report that in spite of adverse financial position there was excellent performance in contract manufacturing during the year. Material Development in human resources/Industrial relations front, including number of people employed.: In the context of people employed, there have been no significant changes in workforce employed during 2011-12 compared to the previous year. For and on behalf of the Board Place: Bhondsi. Date : August 14, 2012 Sd/- (Abhishek Sahay Varma) (Director)