Your Directors are pleased to present the 23rd Annual Report on thebusiness and operations of LINCOLN PHARMACEUTICALS LIMITED (hereafter referred to as 'TheCompany) together with Audited Financial Statements for the Financial Year ended on March31 2017.
The Financial performance of your Company for the year ended on March 31 2017 issummarized below:
|PARTICULARS ||MARCH 31 2017 ||MARCH 31 2016 |
|Profit Before Depreciation and Taxation ||3809.01 ||3327.16 |
|Less: Depreciation & Amortisation ||387.33 ||321.44 |
|Less: Provision For Taxation - Current/F.B.T ||718.55 ||631.22 |
|Less: Deferred Tax ||174.77 ||199.88 |
|Profit afterTaxation ||2528.36 ||2174.62 |
|Add: Balance brought forward ||7050.18 ||5121.88 |
|Profit available for appropriation ||9578.54 ||7296.50 |
|APPROPRIATION || || |
|1. Proposed Dividend ||- ||163.11 |
|2. Dividend Tax ||- ||33.21 |
|3. General Reserve ||50.00 ||50.00 |
|4. Reduction in Carrying Value of Fixed Assets as per Schedule II of Companies Act 2013. ||0.00 ||0.00 |
|Net Balance carried to Balance Sheet ||9528.54 ||7050.18 |
STATE OF COMPANY'S AFFAIRS/OPERATIONS:
During the year under review the Company has performed well. The Company has alsolaunched few new products in the market and the response for it is noteworthy. Theturnover of the Company during the year under review was ' 30593.49 Lakhs as against '31710.19 Lakhs in the previous year. The profit aftertax has increased to ' 2528.36Lakhs as against profit aftertax of? 2174.62 Lakhs in previous year representing growthrate of 16.27% during the Financial Year 2016-17. The Company is expecting more from thenew products launched by it in the coming years. Detailed operational working of yourCompany is provided in the Management Discussion and Analysis Report forming part ofannual report.
TRANSFER TO RESERVES:
The Company has transferred a sum of ' 50.00 Lakhs to the general reserve out of theamount available for appropriation for the current year (Previous Year transferred asumof' 50.00 Lakhs).
Your Directors have recommended a dividend of ' 1.20 (@ 12%) per equity share (PreviousYear Re. 1.00/- @10%) for the year ended on March 31 2017. This is subject to approval ofthe Members at the forthcoming Annual General Meeting. During the year the un-claimeddividend pertaining to Financial Year 2008-09 were transferred to Investor Education andProtection Fund.
1. Director liable to retire by rotation:
In accordance with the provisions of Section 152 of the Companies Act 2013 and theRules framed there under Shri Aashish R. Patel [DIN: 01309017] Whole Time Director andShri Arvind G. Patel [DIN: 00104885] Director retires by rotation at this Annual GeneralMeeting and they being eligible offers themselves for re-appointment. The Board recommendstheir re-appointment.
2. Re-appointment and Revision in Remuneration:
Shri Mahendra G. Patel [DIN: 00104706] and Shri Rajnikant G. Patel [DIN: 00104786] werere-appointed as Managing Directors of the Company and Shri Hashmukh I. Patel [DIN:00104834] as Whole Time Director of the Company for the period of three years w.e.f.October 1 2016 subject to the approval of members at the ensuing Annual General Meeting.
The remuneration of Shri Munjal M. Patel [DIN: 02319308] and Shri Aashish R. Patel[DIN: 01309017] are also revised w.e.f. April 1 2017 considering their increasedresponsibility scope of work and work performance.
The resolutions proposing the re-appointments and revision in remuneration o the abovesated Directors are set out in the notice. Your Directors recommend passingofthe proposedresolutions.
3. Independent Directors:
The Independent Directors of the Company have given the declaration to the Company thatthey meet the criteria of independence as provided in of Section 149 (6) of the CompaniesAct 2013 and the Regulation 16 (1) (b) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
4. Board Evaluation:
Pursuant to the provisions of the Companies Act 2013 and Rules framed thereunder readwith the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 formalannual evaluation is to be made by the Board of its own performance and that of itsCommittees and Individual Directors. The Board after taking into consideration thecriteria of evaluation laid down by the Nomination and Remuneration Committee in itspolicy such as Board Composition level of involvement performance of duties attendanceetc. evaluated its own performance the performance of its committees and IndependentDirectors (excluding the Director being evaluated).
The performance evaluation of the Chairman and Non-Independent Directors was alsocarried out by the Independent Directors. The Directors expressed their satisfaction withthe evaluation process and performance ofthe Board as a whole.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION:
Pursuant to the requirements of Section 134 and 178 of the Companies Act 2013 thepolicy on appointment of Board Members and policy on remuneration of the Directors KeyManagerial Personnels and Senior Management is forming a part of Corporate GovernanceReport annexed to this report.
DIRECTORS' RESPONSIBILITY STATEMENT:
In accordance with Section 134 (5) of the Companies Act 2013 and based on therepresentations received from the management the directors hereby confirm to the best oftheir knowledge that:
i. In the preparation of annual accounts the applicable accounting standards have beenfollowed along with proper explanation relating to material departures.
ii. They have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company at the end of the Financial Year and of the Profitof the Company for that period.
iii. They have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
iv. They have prepared the annual financial statements ongoing concern basis.
v. Proper internal financial controls are in place in the Company and that suchinternal financial controls are adequate and are operating effectively and
vi. They have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
NUMBER OF MEETINGS OF THE BOARD:
The Board of Directors during the year met 7 times on (1) April 28 2016 (2) May 302017 (3) August 11 2016 (4) September 30 2016 (5) October 27 2016 (6) November 10 2016and (7) February 9 2017 in respect of which meetings proper notices were given and theproceedings were properly recorded and signed in the Minutes Book maintained for thepurpose.
The details of the attendance of the Directors at the Board Meeting and members at theCommittee Meetings are mentioned in the Corporate Governance Report which is forming partof the Directors' Report.
DELISTING OF EQUITY SHARES:
During the year under review the Company got its Equity Shares Voluntarily Delistedfrom Ahmedabad Stock Exchange Limited under the provisions of SEBI (Delisting of EquityShares) Regulations 2009 for which the intimation letter / Approval letter No. ASEL /2016-17/1 (11) from Ahmedabad Stock Exchange Limited dated November 24 2016 has beenreceived by the Company.
INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY:
The Board of Directors of the Company are responsible for ensuring that InternalFinancial Controls have been laid down in the Company and such controls are adequate andoperating effectively.
The Company has adopted internal control system considering the nature of its businessand the size and complexity of operations. The Board has adopted the policies andprocedures for ensuring the orderly and efficient conduct of its business includingadherence to the Company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial disclosures etc. Systems and proceduresare periodically reviewed to keep pace with the growing size and complexity of yourcompany's operations.
The internal auditor assesses opportunities for improvement of business processessystems and controls to provide recommendations which can add value to the organization.
MATERIAL CHANGES AFFECTING FINANCIAL POSITION OF THE COMPANY:
No material changes or commitments affecting the financial position of the Companyhave occurred between the end of the Financial Year ofthe company to which the FinancialStatements relate i.e. March 31 2017 and the date ofthe Board's Report.
During the year under review the Company has converted its 3689000 Warrants intoequal number of Equity Shares on account of exercise of option of conversion by theWarrants holders. Upon conversion the Company has allotted 3689900 Equity Shares of facevalue of? 10/- each at a price of ' 82/- per Share (including premium of ' 72/- perShare).
The Company has not accepted deposits within the meaning of Section 73 of the CompaniesAct 2013 and the Companies (Acceptance of Deposits) Rules 2014.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
The particulars of loan given investment made and guarantee and security provided bythe Company (if any) during the Financial Year under review and governed by theprovisions ofSection 186 ofthe Companies Act 2013 have been furnished in the Notes to theFinancial Statements. The details of the Loans given during the year under review fallingunder Section 186 of the Companies Act 2013 is given in "Annexure-F" whichforms part of this report.
M/s. Zullinc Healthcare LLP (WOS) ofthe Company is mainly engaged in the business"Trading of Pharmaceuticals Products" and M/s. Lincoln Parenteral LimitedSubsidiary Company is mainly engaged in the business of "Manufacturing and Trading ofPharmaceuticals Products". There are no associate companies within the meaning ofSection 2 (6) of the Companies Act 2013 ("Act"). Further there has been nomaterial change in the nature of business of the subsidiaries.
In accordance with Section 129(3) ofthe Companies Act 2013 consolidated financialstatements ofthe Company and both its subsidiaries forms part of the Annual Report.Further a statement containing the salient features of the financial statement of oursubsidiaries in the prescribed format AOC-1 is appended as "Annexure-A" to theBoard's report. The statement also provides the details of performance financialpositions ofeach ofthe subsidiaries.
The Company has adequately insured all its property including Plant and MachineryBuildings Stock etc. to mitigate risks arising from third party or customer claimsproperty/casualty etc.
The Equity Shares of the Company are listed on NSE Limited with symbol"LINCOLN" and on BSE Limited with Script code 531633. The Company confirms thatthe annual listing fees of both the stock exchanges for the Financial Year 2017-18 havebeen paid.
RISK MANAGEMENT POLICY:
The Board of Directors ofthe Company has formulated a risk management policy and has awell-defined framework which monitors the risk mitigation plan for the Company. Itidentifies key risk areas periodically reviews the risk management plan and ensures itseffectiveness. The audit committee is also looking after the area offinancial risks andcontrols.
At present in the opinion of the Board there is no identification of Risk element thatmay threaten the existence of the Company.
RELATED PARTY TRANSACTIONS:
During the year under review all the transactions entered into by the Company with therelated parties as defined under Section 2 (76) of the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 were on arm's lengthbasis and in ordinary course of Business.
As there were no materially significant related party transactions entered into by theCompany with the Related Parties which may have potential conflict with the interest ofthe Company at large reporting in Form-AOC-ll is not applicable to the Company.
The Policy on dealing with related party transaction is available on the website of theCompany i.e. www.lincolnpharma.com
CORPORATE SOCIAL RESPONSIBILITY:
The Company has constituted a Corporate Social Responsibility (CSR) Committee inaccordance with provisions of Section 135 of the Companies Act 2013 and Rules framedthere under. The role of the Committee is to formulate the CSR Policy indicate activitiesto be undertaken by the Company towards CSR and formulate a transparent monitoringmechanism to ensure implementation of projects and activities undertaken by the Companytowards CSR.
The report on Corporate Social Responsibility Activities along with the annexure as perthe Rule (8) of The Companies (Corporate Social Responsibility policies) Rules 2014 isannexed to this Report as "Annexure-B".
Many initiatives have been taken to support business through organizational efficiencyprocess change support and various employee orientation programmes which has helped theOrganization to achieve higher productivity levels. A significant effort has also beenundertaken to develop leadership as well as technical/ functional capabilities in order tomeet future talent requirement.
Pursuant to provisions of Section 177 (9) of the Companies Act 2013 read with Rule 7of The Companies (Meetings of Board and its Powers) Rules 2014 and Regulation 22 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Company hasestablished a Vigil Mechanism/ Whistle Blower Policy for Directors Employees or businessassociates for reporting the unethical behavior malpractices wrongful conduct fraudsviolations of the Company's code etc. to the Chairman of the Audit Committee The Policyalso provides for adequate safeguard against victimization of the Directors' /Employeeswho avail the said mechanism. The said Policy is available on the Website ofthe Companywww.lincolnpharma.com.
DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013:
The Company has zero tolerance towards sexual harassment at the workplace and hasadopted a policy on prevention prohibition and redressal of sexual harassment atworkplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and Rules there under (Prevention ofSexual Harassment Act). There were no complaints received from employees or third partyduring the year under review.
PARTICULARS OF EMPLOYEES:
Details pertaining to remuneration and other details as required under Section 197 (12)ofthe Companies Act 2013 read with Rule 5 ofthe Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 is attached as "Annexure-G" to this report.
The Statement containing the particulars of employees as required under section 197 ofthe companies act 2013 read with rules 5 of companies (appointment and remuneration ofmanagerial personnel) Rules 2014 will be provided upon request. In terms of Section 136ofthe Companies Act 2013 the report & Accounts are being sent to the members andothers entitled there to excluding the information of employee's particulars which isavailable for inspection by members at Registered Office of the Company during businesshours on working days ofthe company upto ensuring AGM. If any members is interested inobtaining a copy then of such member may write to the Company Secretary in this regards.
REPORTING OF FRAUDS:
There have been no instances of fraud reported by the Statutory Auditors under Section143 (12) of the Act and Rules framed there under either to the Company or to the CentralGovernment.
1. COST AUDITOR:
Pursuant to provisions of section 148 (3) of the Companies Act 2013 read with theCompanies (Cost Records and Audit) Amendment Rules 2014 the Company has re-appointedM/s. Kiran J. Mehta & Co. Cost Accountants Ahmedabad as cost auditor of the companyfor the Financial Year 2017-18.
A resolution for ratification of the remuneration payable to the Cost Auditor isincluded in the Notice of the Annual General Meeting for seeking approval of Members ofthe Company.
2. STATUTORY AUDITORS:
Pursuant to the provisions of section 139142 and other applicable provisions if anyof the Companies Act 2013 and The Companies (Audit and Auditors) Rules 2014 includingany Statutory modiflcation(s) or re-enactment(s) thereof for the time being in force M/s.
J.T. Shah & Co. Chartered Accountants [FRN: 109616W] Ahmedabad are the existingStatutory Auditors of the Company who shall hold the office till the conclusion thisAnnual General Meeting and they being eligible offers themselves for re-appointment. TheStatutory Auditors have also given their consent to act as Statutory Auditors of theCompany if they are re-appointed and have also given the confirmation to the effect thattheir re-appointment if made will be within the limits prescribed under Section 139 of theCompanies Act 2013.
Accordingly a resolution seeking the approval of members for their appointment asStatutory Auditors of the Company for the period of 5 consecutive years from theconclusion of this Annual General Meeting till the conclusion of the 28thAnnual General Meeting is proposed. The Board recommends passing of the proposedresolution.
There were no qualifications reservations or adverse remarks in the Audit Report ofM/s. J. T. Shah & Co. which required the comments of the management under Section 134of the Companies Act 2013.
3. SECRETARIAL AUDITOR:
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. Rahul Agarwal & Associates Practicing Company Secretaries toundertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Reportis annexed herewith as "Annexure-C".
With regard to the qualifications in secretarial audit report (MR-3):- The Company isin process of appointing an independent director on the board & also is in process ofappointing CFO in the Company.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:
The particulars as prescribed under Section 134(3) (m) of the Act read with Rule 8 ofthe Companies (Accounts) Rules 2014 are set out in "Annexure-D".
EXTRACT OF ANNUAL RETURN:
Extracts of Annual Return in Form MGT-9 as required under Section 92 (3) of theCompanies Act 2013 read with Rule 12 of the Companies (Management and Administration)Rules 2014 forms part of this Report as "Annexure-E".
CORPORATE GOVERNANCE REPORT & MANAGEMENT DISCUSSION & ANALYSIS:
Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015report on Corporate Governance along with the Secretarial Auditors' Certificate on itsCompliance and Management Discussion and Analysis Report forms part of this report.
The Company has in place Audit Committee in terms of requirements of the Companies Act2013 and the rules framed there under. The details relating to the Audit Committee aregiven in the Corporate Governance Report which is forming part of this report.
SIGNIFICANT OR MATERIAL ORDER PASSED BY THE REGULATORS OR COURTS:
As on the date of this report there were no material significant orders passed by theregulators or courts or tribunals impacting the going concern ofthe Company.
Your Directors places on record their sincere appreciation to the customers membersbankers and all the other stakeholders for their continuous support and co-operation tothe Company and also thanked the concerned Government Departments/Agencies for theircooperation to the Company.
| ||FOR AND ON BEHALF OF THE BOARD || |
| ||FOR LINCOLN PHARMACEUTICALS LIMITED || |
| ||M. G. Patel ||H. I. Patel |
|Place : Ahmedabad ||(Managing Director) ||(Whole-time Director) |
|Date : May 30 2017 ||(DIN: 00104706) ||(DIN: 00104834) |