of Nectar Lifesciences Limited
Your Directors have pleasure in presenting the 22nd Annual Report together with theaudited accounts of Nectar Lifesciences Limited (NLL or Neclife orNectar or the Company) for the financial year ended March 312017.
(Rs. in millions)
| ||March 31 2017 ||March 31 2016 |
|Gross Sales ||17436.27 ||17932.25 |
|Other Income ||226.57 ||57.78 |
|Profit before interest and depreciation ||2468.97 ||2452.23 |
|Interest ||1174.13 ||1233.06 |
|Depreciation & Amortisation ||622.51 ||573.89 |
|Profit before tax ||672.33 ||645.28 |
|Tax Expenses ||120.79 ||95.85 |
|Profit after tax available for Appropriations ||551.54 ||549.43 |
The overall performance of the company was at par of last year. The Turnover decreasedby 2.77% over last year primarily on account of compression in domestic market on accountof steep decline of Key Starting Raw Materials which is borne out by the fact that therewas volume growth in exports of 5% in value & 10% in volume. There was marginalincrease in profits over last financial year.
The company has adopted Indian Accounting Standards (Ind AS) prescribed under section133 of the Companies Act 2013 read with the relevant rules issued there under fromApril 01 2016 and accordingly standalone and consolidated audited financial statements(including comparative figures for the year ended March 31 2016) had been prepared inaccordance with the recognition and measurement principles laid down in Ind AS 34"Interim Financial Reporting" and the other accounting principles generallyaccepted in India.
The financial results of the company for the quarter ended on June 30 2017 areavailable on the website of the company (URL: www.neclife.com).
Management Discussion and Analysis Report
The details of the Companys various operations and state of affairs and nature ofbusiness are discussed under Management Discussion and Analysis Report. TheManagement Discussion and Analysis of financial condition and result of operations of theCompany for the year under review as required under Securities & Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 ("LODRRegulations") is given as Annexure 1 and forms and part of this report.
The Company aimed to conduct its affairs in an ethical manner. A separate Report onCorporate Governance is given as Annexure 2 and forms and part of this report. Acertificate from the Companys Auditors regarding the Compliance of Conditions ofCorporate Governance as stipulated under LODR Regulations is given in Annexure 3.
Global Depository Receipts (GDRs)
The Company has issued and allotted 46000000 equity shares of Rs. 1/- eachunderlying 46000000 Global Depository Receipts (GDRs). The GDRs are listed on:Luxembourg Stock Exchange/ LuxSE Socit de la Bourse de Luxembourg S.A. B.P. 165L-2011 Luxembourg Sige social 11 av de la Porte-Neuve Telephone: (352) 47 79 36 1 Fax: (352) 47 32 98
The company has a wholly owned subsidiaries namely Nectar Lifesciences UK Limitedincorporated in United Kingdom and Nectar Lifesciences US LLC in United States. There arenegligible investments in Nectar Lifesciences UK Limited and no business activity has beencarried out in it in financial year 2016-17 and till date in financial year 2017-18.Therefore nothing is to report on the performance and financial position of NectarLifesciences UK Limited.
However the Nectar Lifesciences US LLC commenced the business operations of tradingof pharmaceutical products. The companys gained the profit of US$ 16077.72 duringfinancial year 2016-17 as compared to loss of US$ 38455.11 in financial year 2015-16.
Pursuant to the provisions of Section 129(3) of the Companies Act 2013 (hereinafterreferred as Act) a statement containing salient features of financialstatements of subsidiaries associates and joint venture companies in Form AOC-1 isattached to the Financial Statements. The separate financial statements in respect of eachof the subsidiary companies shall be kept open for inspection at the Registered Office ofthe Company during working hours for a period of 21 days before the date of the AnnualGeneral Meeting (AGM). Your Company will also make available these documents upon requestby any Member of the Company interested in obtaining the same. The separate auditedfinancial statements in respect of each of the subsidiary companies are also available onthe website of your Company at www.neclife.com.
Consolidated financial statement
As required under Section 129 of the Act and LODR Regulations a consolidated financialstatements for the year ended on March 31 2017 of the Company are attached.
Your Directors are pleased to recommend a Final Dividend @ 5% i.e. Re. 0.05 per equityshares of face value of Re. 1/- each aggregating to Rs. 11213048.50 for the year ended31st March 2017. The final dividend subject to the approval by the shareholders in theforthcoming Annual General Meeting and if declared will be paid on or after October 32017 to those members whose names appears in the register of members as on date of bookclosure. The register of members and the share transfer books of the Company will remainclosed from September 22 2017 to September 28 2017 (Both days inclusive) for AnnualGeneral Meeting and payment of dividend if declared on equity shares.
Your Directors are not proposing to carry any amount to any reserve.
Directors and Key Managerial Persons
Mr. Harparkash Singh Gill (DIN 06414839) Director will retire by rotation inthe forthcoming Annual General Meeting and being eligible offer himself forreappointment. The Board recommends his reappointment as a Director.
Mr. Harparkash Singh Gill has been re-appointed as Wholetime Director designated asPresident (Operation) & Director by the Board of Directors in their meeting held onAugust 12 2017 w.e.f. November 1 2017 for a period of 2 years. The Board recommends hisreappointment as a Wholetime Director.
Ms. Guljit Chaudhri has been appointed as regular independent director for a periodupto December 28 2020 in Annual General Meeting of your company held on September 302016.
Mr. Sanjiv Goyal Chairman & Managing Director has been reappointed by the Board ofDirectors in their meeting held on May 30 2017 w.e.f. June 1 2017 for a period of 5years. The Board recommends his reappointment.
As on the date of this report the company has right proportionate of IndependentDirectors viz a viz Non-Independent Directors as per applicable provisions of Section 149of the Act and LODR Regulations.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet with the criteria of independence as prescribed both undersub-section (6) of Section 149 of the Act and under LODR Regulations.
Pursuant to the provisions of Section 203 of the Act the key managerial personnel ofthe Company during financial year 2016-17 are as under: Mr. Sanjiv Goyal Chairman &Managing Director Mr. Dinesh Dua Wholetime Director designated as Chief Executive Officer& Director Mr. Harparkash Singh Gill Wholetime Director designated as President(Operations) & Director Mr. Sandeep Goel Chief Financial Officer Mr. Sunder LalCompany Secretary
Number of meetings of the board
Six meetings of the board were held during the year. The details of Directors andmeeting held during the financial year 2016-2017 are provided in Corporate GovernanceReport which forms and part of this report.
Directors responsibility statement
The Directors confirm that:
in the preparation of the annual accounts the applicable accounting standardshave been followed and that no material departures have been made from the same;
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 andfair view of the state of affairs of the Company at the end of the financial year and ofthe profits of the Company for that period;
they have taken proper and sufficient care 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;
they have prepared the annual accounts on a going concern basis;
they have laid down internal financial controls for the Company and suchinternal financial controls are adequate and operating effectively; and
they have devised proper systems to ensure compliance with the provisions of allapplicable laws and such systems are adequate and operating effectively.
Pursuant to the provisions of the Act and the corporate governance requirements asprescribed by LODR Regulations the performance of the Board and committees was evaluatedby the Board after seeking inputs from all the directors/ committee members on the basisof the criteria such as the Board/ committee composition and structure effectiveness ofboard processes information and functioning etc.
The Board and the Nomination and Remuneration Committee ("NRC") reviewed theperformance of the individual directors on the basis of the criteria such as thecontribution of the individual director to the Board and committee meetings likepreparedness on the issues to be discussed meaningful and constructive contribution andinputs in meetings etc. In addition the Chairman was also evaluated on the key aspectsof his role.
In a separate meeting of independent Directors performance of non-independentdirectors performance of the board as a whole and performance of the Chairman wasevaluated. The same was discussed in the board meeting that preceeds the meeting of theindependent Directors at which the performance of the Board its committees andindividual directors was also discussed.
Policy on directors appointment and remuneration and other details
The Companys policy on directors appointment and remuneration and othermatters provided in Section 178(3) of the Act has been disclosed in the corporategovernance report which forms part of the directors report.
Committees of the Board
The Company constituted the Committees as per the provisions of Sections 177 and 178 ofthe Act and LODR Regulations. The composition powers and duties of the Committees duringfinancial year 2016-17 are detailed out in the Corporate Governance Report. The Board ofDirectors accepted all recommendations of the Audit Committee.
Internal financial control systems and their adequacy
The company has adequate financial controls. The details in respect of internalfinancial control and their adequacy are included in the Management Discussion &Analysis which forms part of this report.
Auditors and Auditors Report
In terms of the provisions of the Companies Act 2013 (Act)statutory auditors need to be rotated on completion of two consecutive terms of five yearseach. For those of the companies that have firms audit their accounts for more than tenyears as of April 1 2014 the Act provided such companies a transition period of threeyears to comply with the provisions of the Act. The current statutory auditors M/s DattaSingla & Company Chartered Accountants completed two consecutive terms as of April 12014 and hence the Company availed the benefit of the transition period which came to anend on March 31 2017. Accordingly the Company will need to appoint a new audit firm toaudit its books of account for the year ending March 31 2018 and onwards.
Based on the recommendation of the Audit Committee the Board of Directors in theirmeeting held on August 12 2017 proposed to appoint M/s Ashwani K. Gupta &Associates Chartered Accountants (ICAI Registration No. 003803N) as the statutoryauditors of the Company for a period of five years commencing from the conclusion of theforthcoming 22nd Annual General Meeting till the conclusion of 27th Annual General Meetingof the Company to be held in the year 2022.
The firm has been in existence for the last 34 years and has adequate ProfessionalCompetence and infrastructure. Some of the main activities of the firm are Statutory Auditof Listed Companies and Manufacturing companies in different sectors includingPharmaceuticals Statutory Audits of Scheduled Bank Branches Statutory Audit ofGovernment Companies (CAG Audits) Internal Audit Stock Audit/ Concurrent Audit ofBorrower Companies on behalf of the Bank and Income Tax Consultancy.
The Firm has also obtained Peer Review Certificate from the Institute of CharteredAccountants of India.
M/s Ashwani K. Gupta & Associates Chartered Accountants have consented to the saidappointment and confirmed that their appointment if made would be within the limitsspecified under section 141(3) (g) of the Act and that they are not disqualified to beappointed as statutory auditors in terms of section 143 of the Act. The Board seeks yoursupport in approving the appointment of Ashwani K. Gupta & Associates CharteredAccountants as the new statutory auditor of the Company.
M/s Datta Singla & Company Chartered Accountants are the auditors of the Companyand will hold office until the conclusion of the ensuing AGM. On your behalf and on ourown behalf we place on record our sincere appreciation for the services rendered by themduring their long association with the Company.
Observations made in the Auditors Report are self-explanatory and therefore donot call for any further explanation.
Secretarial Auditor and Secretarial Audit Report
During the year Secretarial Audit was carried out by Mr. Prince Chadha of P. Chadha& Associates. Practicing Company Secretary the Secretarial Auditor of the companyfor the Financial Year 2016-17. There were no qualifications reservation or adverseremarks given by Secretarial Auditors of the Company. The Secretarial Audit Report isappended as an Annexure 4 to this report.
The company has appointed Dr. Vimal Kumar (Membership No. 9982) prop. of M/s V. Kumarand Associates SCO 124-125 Sector 34A Chandigarh Cost and Works Accountants as theCost Auditors of the Company for the financial year 2017-18.
The Cost Audit Reports for the financial year 2015-16 have been filed on September 202016 being within 30 days of date of report i.e. August 23 2016.
The Cost Auditor shall forward the Cost Audit Report for the financial year 2016-17 bySeptember 30 2017. The report will be filed with Ministry of Corporate Affairs within 30days of date of Cost Audit Report.
The development and implementation of risk management policy has been covered in themanagement discussion and analysis which forms part of this report.
The audit committee has additional oversight in the area of financial risks andcontrols. Major risks identified by the businesses and functions are systematicallyaddressed through mitigating actions on a continuing basis.
Particulars of loans guarantees and investments
The company has not given any loan or provide guarantee as per Section 186 of the Act.The investments under section 186 of the Act are given in the Financial Statements formingpart of the Annual Report.
Transactions with related parties
Information on transactions with related parties pursuant to Section 134(3)(h) of theAct read with rule 8(2) of the Companies (Accounts) Rules 2014 are given in Annexure 5 inForm AOC-2 and the same forms part of this report.
Corporate social responsibility
The brief outline of the Corporate Social Responsibility (CSR) Policy of the Companyand the initiatives undertaken by the Company on CSR activities during the year are setout in Annexure 6 of this report in the format prescribed in the Companies (CorporateSocial Responsibility Policy) Rules 2014. The policy is available on the website of theCompany.
Extract of annual return
As provided under Section 92(3) of the Act the extract of annual return is given inAnnexure 7 in the prescribed Form MGT-9 which forms part of this report.
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 attachedas Annexure 8. In terms of first proviso to Section 136 of the Act the Report andAccounts are being sent to the Members and others entitled thereto excluding theinformation on employees particulars as required pursuant to provisions of Rule 5(2)and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014. The said information is available for inspection by the Members at the RegisteredOffice of the Company during business hours on working days of the Company up to the dateof the ensuing AGM. If any Member is interested in obtaining a copy thereof such Membermay write to the Company Secretary in this regard.
During the year under Report your Company did not accept any deposits from the publicin terms the provisions of Companies Act 2013.
As per LODR Regulations corporate governance report with auditorscertificate thereon and management discussion and analysis are attached which form partof this report.
Details of the familiarization programme of the independent directors areavailable on the website of the Company (URL: www.neclife.com).
Policy for determining material subsidiaries of the Company is available on thewebsite of the Company (URL: www.neclife.com).
Policy on dealing with related party transactions is available on the website ofthe Company (URL: www.neclife.com).
The Whistle Blower Policy to provide Vigil Mechanism for employees includingdirectors of the Company (URL: www.neclife.com).
Energy technology and foreign exchange
The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under the Act are provided inAnnexure 9 to this Report.
Your Directors would like to express their sincere and grateful appreciation for theassistance and cooperation received from bankers and government authorities and also thankthe shareholders for the confidence reposed by them in the Company and looks forward totheir valuable support in the future plans of the Company.
Your Directors also thank its agents the medical professionals and its customers fortheir continued patronage to the Companys products.
| ||For and on behalf of the Board of Directors |
| ||of Nectar Lifesciences Limited |
|Place : Chandigarh ||Sanjiv Goyal |
|Dated : 12.08.2017 ||Chairman and Managing Director |