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Phaarmasia Ltd.

BSE: 523620 Sector: Health care
NSE: N.A. ISIN Code: INE486I01016
BSE LIVE 13:18 | 25 Sep 21.00 -1.10
(-4.98%)
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NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 22.10
PREVIOUS CLOSE 22.10
VOLUME 72
52-Week high 33.50
52-Week low 13.50
P/E 80.77
Mkt Cap.(Rs cr) 14
Buy Price 21.00
Buy Qty 29.00
Sell Price 23.20
Sell Qty 250.00
OPEN 22.10
CLOSE 22.10
VOLUME 72
52-Week high 33.50
52-Week low 13.50
P/E 80.77
Mkt Cap.(Rs cr) 14
Buy Price 21.00
Buy Qty 29.00
Sell Price 23.20
Sell Qty 250.00

Phaarmasia Ltd. (PHAARMASIA) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting the 35th Annual Report and the AuditedStatement of Accounts for the year ended 31st March 2016.

FINANCIAL RESULTS:

The performance during the period ended 31st March 2016 has been as under:

(Rs. In Lakhs)
Particulars 31st March 2016 31st March 2015
Sales & Other Income 2214.00 1880.67
Operating profit before
Financial Charges & Depreciation 75.12 102.43
Financial Charges 1.06 3.34
Profit before Depreciation 74.06 99.09
Depreciation 49.56 75.71
Profit / (Loss) before taxes 24.49 36.37
Prior Period Expenses 0.00 0.00
Provision for Taxation of Current Year 14.49 22.42
Deferred Tax for the Current Year 0.00 0.00
Net profit after taxes 4.17 13.96
Profit/(Loss) brought forward from previous year 13.96 35.27
Dividend (including tax on Dividend) 0.00 0.00
Balance of profit brought forward 4.17 13.96

STATE OF COMPANY’S AFFAIRS:

During the year under review the gross revenue of the Company increased to Rs.2214.00Lakhs compared to Rs.1880.67 Lakhs in the previous year. However Profit after tax for theyear remained at Rs. 4.17 Lakhs as compared to Rs. 13.96 Lakhs in the previous year.

FUTURE OUTLOOK:

The pharmaceutical industry in India ranks 3rd in the world in terms of volume and 13thin terms of value India is the largest provider of generic drugs globally with the Indiangenerics accounting for 20 per cent of global exports in terms of volume. Looking at thisscope of Pharmaceutical sector we expect a healthy growth in the upcoming financialyears.

SHARE CAPITAL:

During the year under review the authorised capital of the company was Rs.100000000/- (Rupees Ten Crores) the Issued Subscribed and Paid up Capital of theCompany as on March 31 2016 is Rs.68269600/- (Rupees Six Crores Eighty Two Lakhs SixtyNine Thousand and Six Hundred) divided into 6826960 equity shares of Rs.10/- (RupeesTen) each.

DIVIDEND:

The company has not declared the dividend during the financial year under review.

TRANSFERS TO RESERVES:

An amount of Rs. 417537/- has been transferred to the Reserves being the profitearned during the financial year 2015-16.

NUMBER OF MEETING OF THE BOARD:

The Board of Directors duly met 5 (Five) times on 29-05-2015 14-08-2015 26-09-201514-11-2015 and 12-02-2016 in respect of which meetings proper notices were given and theproceedings were properly recorded and signed in the Minutes Book maintained for thepurpose.

DIRECTORS AND KEY MANAGERIAL PERSONNEL.

Mr. Rashmi V. Sapte Director retires by rotation at the forthcoming Annual GeneralMeeting and being eligible offer herself for reappointment. Mr. N.E.V Prasad Rao wasappointed as the Chief Financial Officer of the Company w.e.f 12th February 2016.

DIRECTORS RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 134(5) OF THE COMPANIESACT 2013:

In compliance of section 134 (5) of the Companies Act 2013 your directors confirm:

a) That in the preparation of the annual accounts the applicable accounting standardshave been followed along with proper explanation relating to material departures;

b) That the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that were reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit or loss of the company for the year under review;

c) that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the company and for preventing and detecting fraud andother irregularities;

d) that the Directors had laid down internal financial controls to be followed by thecompany and that such internal financial control to be followed by the company areadequate and were operating effectively.

e) that the Directors has devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

DECLARATION GIVEN BY INDEPENDENT DIRECTORS:

The Company has received necessary declarations from each Independent Director of theCompany under Section 149(7) of the Companies Act 2013 that the Independent Directors ofthe Company meet the criteria of their independence as laid down in Section 149(6) of theCompanies Act 2013.

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 as under. Further there were no employees who were drawing salary ofmore than INR 5 Lakhs per month or INR 60 Lakhs per annum.

a. The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year:

Executive Directors Ratio to Median remuneration
Yallapragada Naga Bhaskara Rao 6.639:1
Maneesh Ramakant Sapte Nil

b. The percentage increase in remuneration of each directors Chief Executive OfficerChief Financial Officer Company Secretary in the financial year:

Directors CEO CFO and Company Secretary % increase in Remuneration in the Financial Year.
Maneesh Ramakant Sapte Nil
Y.N. Bhaskara Rao 25%
Vinay Ramakant Sapte Nil
Bharat Merchant Bachubai Nil
Bhupinder Narendra Garg Nil
Rashmi Vinay Sapte Nil
N.E.V. Prasad Rao Nil

c. The percentage increase in the median remuneration of employees in the financialyear: 12 %

d. The number of permanent employees on the rolls of Company: 49 Employees

e. Variations in the market capitalization of the Company price earnings ratio as atthe closing date of the current financial year and previous financial year and percentageincrease over decrease in the market quotations of the shares of the Company in comparisonto the rate at which the Company came out with the last public offer in case of listedcompanies and in case of unlisted companies the variations in the net worth of theCompany as at the close of the current financial year and previous financial year.

Sr. No PARTICULARS As at March 31st2016 As at March 31st 2015
1. Market Capitalization 215049240 84586034
2. Price Earnings Ratio 525:1 61.95:1

f. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:

Average percentile increase in the salaries of the employees other than the managerialpersonnel in the last financial year is 12% Average percentile increase in the Managerialremuneration in the last financial year is 25 %

g. Comparison of each remuneration of the key managerial personnel against theperformance of the Company:

Particulars Maneesh R. Sapte Managing Director Y.N. Bhaskara Rao Whole-Time Director
Remuneration in FY 2015-16 1120000/-
Revenue 136890832/-
Remuneration as % of revenues No Remuneration paid 0.81%
Profit before Tax (PBT) 2449409/-
Remuneration (as % of PBT) 45.73%

POLICY ON DIRECTOR’S APPOINTMENT AND REMUNERATION:

The Company has framed policy on Directors’ appointment and remuneration and othermatters provided in section 178(3) of the Act and is referred to while taking decisionsunder its purview.

BOARD EVALUATION

The Board of Directors has carried out an annual evaluation of its own performanceboard committees and individual directors pursuant to the provisions of the applicableAct rules and guidelines.

The performance of the Board was evaluated by the Board after seeking inputs from allthe directors on the basis of the criteria such as the board composition and structureeffectiveness of board processes information and functioning etc.

The performance of the committees was evaluated by the board after seeking inputs fromthe committee members on the basis of the criteria such as the composition of committeeseffectiveness of committee meetings etc.

The Board and the Nomination and Remuneration committee reviewed the performance of theindividual directors on the basis of the criteria such as the contribution of theindividual director to the board and committee meetings like preparedness on the issues tobe discussed meaningful and constructive contribution and inputs in meetings etc. Inaddition the chairman was also evaluated on the key aspects of 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 taking into account the views of executive directors and non-executivedirectors. The same was discussed in the board meeting that followed the meeting of theindependent directors at which the performance of the Board its committees andindividual directors was also discussed. Performance evaluation of independent directorswas done by the entire board excluding the independent director being evaluated.

The overall performance of the Chairman Executive Directors and Non-ExecutiveDirectors of the company is satisfactory. The review of performance was based on thecriteria of performance knowledge analysis quality of decision making etc.

MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICHTHE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

There are no material changes and commitments affecting the financial position of theCompany which have occurred between the End of the Financial Year and the date of thereport.

EXTRACT OF ANNUAL RETURN

As required pursuant to section 92(3) of the Companies Act 2013 and rule 12(1) ofCompanies (Management and Administration) Rules 2014 an extract of annual return in FormMGT-9 as a part of this annual report is annexed as Annexure I.

REPLIES TO AUDITORS REPORT:

With reference to observations made in Auditor’s Report the notes of account areself-explanatory and therefore do not calls for any further comments under section 134(5)of Companies Act 2013.

SECRETARIAL AUDIT REPORT:

In terms of section 204 of the Companies Act and Rules made there under theSecretarial Audit Report as provided by Mr. Manoj Kumar Koyalkar of M/ s. AGR Reddy &Co Practicing Company Secretaries. The Secretarial Audit Report is enclosed as AnnexureII to this report. The Secretarial auditor has highlighted few points in the secretarialaudit report. The Board wants to place before the members its comments on the observationsof the Secretarial auditor which are as below:

a) With respect to the vacancy of Company Secretary the Board wants to mention that ithas appointed Mr. Abhishek Wakchaure a member of the Institute of Company Secretaries ofIndia as the Company Secretary of the Company at its meeting held on 11th August 2016and thus complied with the provisions of the section 203 of the Companies Act 2013 andregulation 6 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

b) The delay mentioned in the secretarial audit report with respect to ESI PF TDS andService Tax were made inadvertently. These were later deposited and filed with interestand penalties. The Company is taking appropriate steps to avoid these in future.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186:

Details of Loans Guarantees and investments covered under the provisions of section186 of the Companies Act 2013 are given in the accompanying Financial Statements.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

The details regarding transaction with related parties covered under section 188 of theCompanies Act 2013 are given in ‘Annexure III’ and forms part of this report.

CONSERVATION OF ENERGY FOREIGN EXCHANGE ETC:

(A) Conservation Of Energy

(i) The steps taken or impact on conservation of energy: Nil

(ii) The steps taken by the company for utilizing alternate sources of energy: Nil

(iii) The capital investment on energy conservation equipments: Nil

(B) Technology absorption

(i) The efforts made towards technology absorption;

(ii) The benefits derived like product improvement cost reduction product developmentor import substitution;

(iii) In case of imported technology (imported during the last three years reckonedfrom the beginning of the financial year)

(a) The details of technology imported;

(b) The year of import;

(c) Whether the technology been fully absorbed;

(d) If not fully absorbed areas where absorption has not taken place and the reasonsthereof;

No technology is imported during financial year 2015-16

(iv) The expenditure incurred on Research and Development: Nil

(C) Foreign exchange earnings and Outgo

Foreign Exchange Inflows: - NIL

Foreign Exchange Outflows: -NIL

Internal Audit & Controls

The Company has a proper and adequate system of internal control to ensure all theassets are safeguarded and protected against loss from unauthorized use or disposition andthe transactions are authorized regarded and reported correctly. The internal control issupplemented by an extensive program of internal audits review by management andprocedures. It is designed to ensure that the financial and other records are reliable forpreparing financial statements and other data and for maintaining accountability ofassets. The Company’s Internal auditor regularly carries out the Audit in all areas.

Internal Financial Control Systems

The Company has adequate Internal Financial Controls consistent with the nature ofbusiness and size of the operations to effectively provide for safety of its assetsreliability of financial transactions with adequate checks and balances adherence toapplicable statues accounting policies approval procedures and to ensure optimum use ofavailable resources. These systems are reviewed and improved on a regular basis. It has acomprehensive budgetary control system to monitor revenue and expenditure against approvedbudget on an ongoing basis.

INSURANCE:

The Properties and assets of your Company are adequately insured.

CORPORATE GOVERNANCE:

As per regulation 15 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Compliance of Corporate Governance norms are not applicable to yourCompany hence the disclosures under the Corporate Governance requirement have not beenmentioned in the Annual Report. Though the provisions of Corporate Governance are notapplicable to the Company the operations and transactions of the Company are done in atransparent manner.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Management Discussion and Analysis Report pursuant to Regulation 34 reads withSchedule V of Securities and Exchange Board of India (Listing Obligation and DisclosureRequirement) Regulations 2015 forms part of this report and the same is annexed.

ISO 9001- 2008 CERTIFICATION:

Your Company continues to hold ISO 9001 - 2008 Certification by meeting all therequirements of certification from time to time.

EMPLOYEE RELATIONS:

Your Directors are pleased to record their sincere appreciation of the contribution bythe workmen and staff at all levels in the improved performance of the Company.

None of the employees are drawing Rs. 500000/- and above per month or Rs. 6000000/-and above in aggregate per annum as remuneration the limits prescribed under Section 134of the Companies Act 2013.

ACKNOWLEDGEMENTS:

Your Directors wish to place on record their appreciation of the contribution made bythe employees at all levels to the continued growth and prosperity of your Company.

Your Directors also wish to place on record their appreciation of businessconstituents banks and other financial institutions and shareholders of the Company fortheir continued support and patronage.

For and on behalf of the Board of Directors
For Phaarmasia Limited
Sd/- Sd/-
Maneesh R. Sapte Y. N. Bhaskara Rao
Managing Director Whole-time Director
DIN: 00020450 DIN: 00019052
Place: Hyderabad
Date: 11th August 2016

Annexure-II

FORM NO. MR-3

SECRETARIAL AUDIT REPORT

FOR THE FINANCIAL YEAR ENDED MARCH 31 2016

[Pursuant to section 204(1) of the Companies Act 2013 and ruleNo.9 of the Companies(Appointment and Remuneration Personnel) Rules 2014]

To

The Members

M/s PHAARMASIA LIMITED

16 Phase-III IDA Jeedimetla Hyderabad-500055 Telangana

I have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by PHAARMASIA LIMITED(hereinafter called the "Company"). Secretarial Audit was conducted in a mannerthat provided me a reasonable basis for evaluating the corporate conducts/statutorycompliances and expressing my opinion thereon.

Based on my verification of the Company’s books papers minute books forms andreturns filed and other records maintained by the Company and also the informationprovided by the Company its officers agents and authorized representatives during theconduct of Secretarial Audit I hereby report that in my opinion the Company has duringthe audit period covering the financial year ended on March 31st 2016("Audit Period") complied with the statutory provisions listed hereunder andalso that the Company has proper Board-processes and compliance-mechanism in place to theextent in the manner and subject to the reporting made hereinafter:

I have examined the books papers minute books forms and returns filed and otherrecords maintained by the Company for the financial year ended on March 31 2016 accordingto the provisions of:

(i) The Companies Act 2013 (the "Act") and the rules made there under andother applicable provisions of the Companies Act 1956 which are still in force;

(ii) The Securities Contracts (Regulation) Act 1956 (‘SCRA’) and the rulesmade there under;

(iii) The Depositories Act 1996 and the Regulations and Bye-laws framed under thatAct;

(iv) Foreign Exchange Management Act 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment Overseas Direct Investment and ExternalCommercial Borrowings; (Not Applicable to the Company during the Audit Report)

(v) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 2015;

(vi) Other laws applicable to the Company as per the representations made by theManagement.

I have also examined compliance with the applicable clauses of the following:

Secretarial Standard-1 and Secretarial Standard-2 with respect to Board and GeneralMeetings respectively issued by The Institute of Company Secretaries of India

During the period under review the Company has complied with the provisions of the ActRules Regulations Guidelines Standards etc. mentioned above.

I further report that:

The Board of Directors of the Company is duly constituted with proper balance ofExecutive Directors Non-Executive Directors and Independent Directors.

The change in composition of the Board of Directors that took place during the periodunder review were carried out in compliance with the provisions of the Act.

Adequate notice is given to all Directors to schedule the Board Meetings Agenda anddetailed notes on agenda were sent at least seven days in advance and a system exists forseeking and obtaining further information and clarifications on the agenda items beforethe meeting and for meaningful participation at the meeting.

Majority decisions are carried out unanimously and are captured and recorded as part ofthe minutes.

I further report that there are adequate systems and processes in the Companycommensurate with the size and operations of the Company to monitor and ensure compliancewith applicable laws rules regulations and guidelines.

I further report that during the audit period:

(i) There was vacancy in office of Company Secretary thus it was advised to appointcompany secretary at earliest in compliance with provisions of Section 203 of the Act andRegulation 6 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

(ii) There were delay in making employee contribution towards Employee State insurance(ESI) Provident Fund (PF) and delay in filing Tax Deduction at source (TDS) returns whichwas later deposited and filed with interest and penalties.

(iii) There were delay in payments of Service tax by the company which was later paidby the company along with interest and penalty.

I further observed that Internal Auditor for the financial year 2015-16 were appointed however the respective resolution was not registered with Registrar of Companies. Itwas advised to make necessary filings in compliance with provisions of Companies Act2013.

for AGR Reddy & Co.

Company Secretaries

Sd/-

Manoj Kumar Koyalkar

Membership No. : 19445

Certificate of Practice No. 10004

Hyderabad 11th August 2016

Note: This report is to be read with our letter of even date which is annexed as‘Annexure A’ and forms an integral part of this report.

Annexure - A

To

The Members

M/s PHAARMASIA LIMITED 16 Phase-III IDA Jeedimetla Hyderabad-500055. Telangana

My report of even date is to be read with this letter.

a. Maintenance of secretarial records is the responsibility of the management of theCompany. My responsibility is to express an opinion on these secretarial records based onmy audit.

b. I have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of Secretarial records. Theverification was done on test basis to ensure that correct facts are reflected insecretarial records. I believe that the processes and practices I followed provide areasonable basis for my opinion.

c. I have not verified the correctness and appropriateness of financial records andBooks of Accounts of the Company.

d. Where ever required I have obtained Management Representation about the compliancelaws rules and regulations and happening of events etc.

e. The compliance of the provisions of corporate and other applicable laws rulesregulations standards is the responsibility of management.

My examination was limited to the verification of procedures on test basis.

f. The Secretarial Audit Report is neither an assurance as to the future viability ofthe company nor of the efficacy or effectiveness with which the management has conductedthe affairs of the company.

for AGR Reddy & Co.

Company Secretaries

Sd/-

Manoj Kumar Koyalkar

Membership No. : 19445

Certificate of Practice No. 10004

Hyderabad 11th August 2016

Annexure-III

FORM NO. AOC.2

Form for disclosure of particulars of contracts/arrangements entered into by thecompany with related parties referred to in sub-section (1) of section 188 of theCompanies Act 2013 including certain arms length transactions under third proviso thereto(Pursuant to clause (h) of subsection (3)of section 134 of the Act and Rule 8(2) of theCompanies (Accounts) Rules 2014)

1. Details of contracts or arrangements or transactions not at arm's length basis

(a) Name(s) of the related party and nature of relationship – N.A (b) Nature ofcontracts/arrangements/transactions – N.A (c) Duration of thecontracts/arrangements/transactions – N.A

(d) Salient terms of the contracts or arrangements or transactions including the valueif any – N.A

(e) Justification for entering into such contracts or arrangements or transactions– N.A

(f) date(s) of approval by the Board – N.A

(g) Amount paid as advances if any: - N.A

(h) Date on which the special resolution was passed in general meeting as requiredunder first proviso to section 188 – N.A

2. Details of material contracts or arrangement or transactions at arm's length basis

(a) Name(s) of the related party and nature of relationship – ManeeshPharmaceuticals Limited (Holding Company)

(b) Nature of contracts/arrangements/transactions – Sale / Purchase transactions

(c) Duration of the contracts/arrangements/transactions – FY 2015-16

(d) Salient terms of the contracts or arrangements or transactions including the valueif any:

• Goods Sold – Rs. 5457470/-

• Goods purchased – Rs. 17399509/-(e) Date(s) of approval by the Board ifany: N.A (f) Amount paid as advances if any: Nil

For and on behalf of the Board of Directors
For Phaarmasia Limited
Sd/- Sd/-
Maneesh R. Sapte Y. N. Bhaskara Rao
Managing Director Whole-time Director
DIN: 00020450 DIN: 00019052
Place: Hyderabad
Date: 11th August 2016