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Sakar Healthcare Ltd.

BSE: 538377 Sector: Health care
NSE: SAKAR ISIN Code: INE732S01012
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Sakar Healthcare Ltd. (SAKAR) - Director Report

Company director report

The Members

Sakar Healthcare Limited

Your Directors have pleasure in presenting the 12TH ANNUAL REPORT togetherwith the Audited Financial Statements for the Financial Year 2015-16 ended 31st March2016.

1. FINANCIAL RESULTS AND OPERATIONS:

(Rs. In lacs)
Particulars 2015-16 2014-15
Sales and other Income 4143.24 3505.27
Profit before Interest and Depreciation 853.03 791.36
Less: Interest 293.61 298.53
Profit before Depreciation 559.42 492.83
Less: Depreciation 273.36 249.63
Profit before Taxation 286.06 243.20
Provision for Taxation - Current 55.00 51.00
Provision for Taxation - Deferred 9.27 176.65
Profit for the year 221.79 186.71
Opening Balance of Profit and Loss Account 736.44 549.73
Balance carried to Balance Sheet 958.23 736.44

There are no material changes and commitment affecting the financial position of theCompany which have occurred between 1st April 2016 and date of this report.

During the year under review the Company achieved turnover of Rs. 4143.24 lacscompared to Rs. 3505.27 lacs during 2014-15. The Company earned profit before interestdepreciation and tax of Rs. 853.03 lacs during 2015-16 compared to Rs. 791.36 lacs during2014-15. After providing for interest depreciation and taxes the net profit for the yearunder review stood at Rs. 221.79 lacs as compared to Rs. 186.71 lacs during 2014-15. TheEPS for the year under review stood at Rs. 2.77 compared to Rs. 2.33 for the year 2014-15.

2. DIVIDEND:

With view to conserve the financial resources for the future requirement of theCompany the Board of Directors has not recommended any dividend for the year.

3. NEW PROJECTS & FUTURE PLANS:

The Company proposes to set up a new Lyophilisation facility to manufacture LyophilizedProducts (Injectable) in existing unit at Changodar Ahmedabad Gujarat having anaggregate capacity of 22000 vials per day which will enhance our existing productportfolio. Lyophilisation process ensures longer shelf life and extended stability of theproducts. Our Company believes that this manufacturing facility will help to increase ourrevenue and profit margins significantly since the products manufactured through thisprocess of freeze drying are used in treating critical care illness.

Freeze drying (Lyophilisation) is a process of removing moisture from the frozen stateof products using process of sublimation to enhance stability and shelf life. Vials arefilled with liquid solution and loaded into the Lyophiliser using automatic loading systemunder class – 100 environment which is protected by open RABS. Lyophiliser is loadedshelf by shelf. Once loading is completed automatic freeze drying cycle starts. Aftercompletion of freeze drying half stoppered vials are fully stoppered and they areunloaded from the machine using automatic unloading system connected to cap sealingmachine protected by open RABS.

Lyophiliser is equipped with automatic CIP (Clean in Place) and SIP (Sterlisation inPlace) arrangement. Integrity of this machine is checked using automatic cycle.

4. EXTRA ORDINARY GENERAL MEETING FOR THE IPO:

The Company had obtained approval of the Shareholders on 6th September 2016for the proposed IPO at the Extra Ordinary General Meeting.

5. INITIAL PUBLIC OFFER (IPO) OF 2961000 EQUITY SHARES ON NSE-SME PLATFORM:

The Company obtained ‘In Principle' approval vide letter no. dated 21stSeptember 2016 from National Stock Exchange of India Limited i.e. SME Platform of NSE-‘NSE Emerge' for the proposed IPO of 2961000 Equity Shares of the face value of Rs.10/- each not exceeding Rs. 20 crores through Book Building Process.

The IPO will open on 30th September 2016 and will close on 5thOctober 2016 having Price Band of Rs. 42 to Rs. 50 per Equity Share. The Bid will be madefor a minimum of a 3000 Equity Shares and in multiples of 3000 Equity Shares thereafter.

The Draft Red Herring Prospectus is also available on the website of NSE-EmergePlatform viz. www.nseindia.com.

The Book Running Lead Manager to the IPO is M/s. Pantomath Capital Advisors PrivateLimited Mumbai.

6. DEMATERIALISATION OF EQUITY SHARES:

All the Equity Shares of the Company are in dematerialised form with either of thedepositories viz. NSDL and CDSL. The ISIN No. allotted is INE732S01012.

7. DIRECTORS & KMP:

7.1 One of your Directors viz. Mr. Aarsh Shah retires by rotation in terms of theArticles of Association of the Company. However being eligible offers himself forreappointment.

7.2 Mr. Hardik P. Mehta has been appointed as Independent Director of the Companyw.e.f. 10th October 2015.

7.3 Mr. Aniruddha Rathod has resigned as Director of the Company w.e.f. 10thOctober 2015.

7.4 The Board of Directors duly met 10 times during the financial year under review.

7.5 The Company has received necessary declaration from each Independent Director ofthe Company under Section 149(7) of the Companies Act 2013 (the Act) that they meet withthe criteria of their independence laid down in Section 149(6) of the Act.

7.6 Formal Annual Evaluation:

The Nomination and Remuneration Committee adopted a formal mechanism for evaluating theperformance of the Board of Directors as well as that of its Committees and individualDirectors including Chairman of the Board Key Managerial Personnel/ Senior Managementetc. The exercise was carried out through an evaluation process covering aspects such ascomposition of the Board experience competencies governance issues etc.

7.7 DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirement of Section 134 of the Companies Act 2013 it is herebyconfirmed:

(i) that in the preparation of the annual accounts the applicable accounting standardshad been followed along with proper explanation relating to material departures;

(ii) that the Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at 31st March2016 being end of the financial year 2015-16 and of the profit of the Company for theyear;

(iii) that the Directors had taken proper and sufficient care for 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;

(iv) that the Directors had prepared the annual accounts on a going concern basis.

(v) the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.

(vi) the Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

7.8 Ms. Pratixa S. Seju has been appointed as Company Secretary and Compliance Officerof the Company w.e.f. 28th December 2015. Ms. Kinjal K. Sheth has resignedCompany Secretary and Compliance Officer of the Company w.e.f. 28th December2015.

8. INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY:

The Board has adopted policies and procedures for ensuring the orderly and efficientconduct of its business including adherence to the Company's policies safeguarding ofassets prevention and detection of frauds and errors accuracy and completeness of theaccounting records and the timely preparation of reliable financial disclosures.

9. MANAGERIAL REMUNERATION:

Sr. No. Name of the Director & Designation Remuneratio n for the year 2015-16 % increase over last year Parameters Median of Employees Remuneration Ratio Commissi on received from Holding/ Subsidiary
1 Sanjay S. Shah Managing Director 1105000 5.24 129900 8.50 times -
2 Rita S. Shah Executive Director 520000 4.00 Higher responsibility and time involvement 129900 4.00 times -
3 Aarsh S. Shah Joint Managing Director 1040000 108.00 129900 8.00 times -

The Board of Directors has framed a Remuneration Policy that assures the level andcomposition of remuneration is reasonable and sufficient to attract retain and motivateDirectors Key Managerial Personnel and Senior Management to enhance the quality requiredto run the Company successfully. The Relationship of remuneration to performance is clearand meets appropriate performance benchmarks. All the Board Members and Senior Managementpersonnel have affirmed time to time implementation of the said Remuneration policy.

10. NET WORTH OF THE COMPANY:

The Net worth as on 31st March 2016 is Rs. 1918.23 lacs compared to Rs.1696.44 Lacs as on 31st March 2015.

11. KEY MANAGERIAL PERSONNEL:

11.1 % INCREASE IN REMUNERATION OF DIRECTORS AND KMP:

Sr. No. Name of the Director & KMP Designation Percentage Increase (If any)
1. Sanjay S. Shah Managing Director 5.24%
2. Ritaben S. Shah Executive Director 4.00%
3. Aarsh S. Shah Joint Managing Director 108.00%
4. Jhony G. Kudill CFO N.A.
5. Pratixa Seju Company Secretary N.A.

11.2 COMPARISON BETWEEN REMUNERATION OF KMP & PERFORMANCE OF THE COMPANY:

As per the Remuneration Policy and based on the Recommendation of Nomination &Remuneration Committee the Relationship of remuneration to KMP & performance ofCompany is clear and meets appropriate performance benchmarks.

12. PERSONNEL AND H. R. D.:

12.1 INDUSTRIAL RELATIONS:

The industrial relations continued to remain cordial and peaceful and your Companycontinued to give ever increasing importance to training at all levels and other aspectsof H. R. D.

The number of Employees of the Company are 243.The relationship between averageincrease in remuneration and Company's performance is as per the appropriate performancebenchmarks and reflects short and long term performance objectives appropriate to theworking of the Company and its goals.

12.2 PARTICULARS OF EMPLOYEES:

There is no Employee drawing remuneration requiring disclosure under Rule 5(2) ofCompanies Appointment & Remuneration of Managerial personnel) Rules 2014.

13. PARTICULARS OF LOANS GUARANTEES INVESTMENT & SECURITIES PROVIDED:

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 respectively are given in the notes to the FinancialStatements attached to the Auditors' Report.

14. RELATED PARTY TRANSACTION AND DETAILS OF LOANS GUARANTEES INVESTMENT &SECURITIES PROVIDED:

Details of Related Party Transactions and Details of Loans Guarantees and Investmentscovered under the provisions of Section 188 and 186 of the Companies Act 2013respectively are given in the notes to the Financial Statements attached to the Auditors'Report.

All transactions entered by the Company during the financial year with related partieswere in the ordinary course of business and on an arm's length basis. During the year theCompany had not entered into any transactions with related parties which could beconsidered as material in accordance with the policy of the Company on materiality ofrelated party transactions.

15. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO:

The information required under Section 134(3)(m) of the Companies Act 2013 and rule8(3) of Companies (Accounts) Rules 2014 relating to the conservation of Energy andTechnology Absorption forms part of this report and is given by way of Annexure- A.

16. CORPORATE GOVERNANCE AND MDA:

As per Regulation 34 (3) read with Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 Report on Corporate Governance ManagementDiscussion and Analysis (MDA) and a certificate regarding compliance with the conditionsof Corporate Governance are appended to the Annual Report as Annexure - B.

17. EXTRACT OF ANNUAL RETURN:

The extract of Annual return in Form – MGT-9 has been attached herewith as Annexure– C.

18. AUDIT COMMITTEE/ NOMINATION AND REMUNERATION COMMITTEE/ STAKEHOLDERS' RELATIONSHIPCOMMITTEE:

The details of constitution/re-constitution of various committees and their functionsare part of Corporate Governance Report.

19. GENERAL:

19.1. STATUTORY AUDITORS:

At the 11th Annual General Meeting held on 30th September 2015M/s. A. L. Thakkar & Co. Chartered Accountants Ahmedabad were appointed as StatutoryAuditors of the Company to hold office till the conclusion of the Annual General Meetingto be held in the year 2020. In terms of the first proviso to Section 139 of the CompaniesAct 2013 the appointment of the auditors shall be placed for ratification at everyAnnual General Meeting. Accordingly the appointment of M/s. A. L. Thakkar & Co.Chartered Accountants as statutory auditors of the Company for the financial year2016-17 is placed for ratification by the shareholders.

The remarks of Auditor are self explanatory and have been explained in Notes onAccounts.

19.2 INSURANCE:

The Company's properties including building plant and machinery stocks stores etc.continue to be adequately insured against risks such as fire riot strike civilcommotion malicious damages machinery breakdown etc.

19.3 DEPOSITS:

The Company has not accepted during the year under review any Deposits and there wereno overdue deposits.

19.4 RISKS MANAGEMENT POLICY:

The Company has a risk management policy which from time to time is reviewed by theAudit Committee of Directors as well as by the Board of Directors. The Policy is reviewedquarterly by assessing the threats and opportunities that will impact the objectives setfor the Company as a whole. The Policy is designed to provide the categorization of riskinto threat and its cause impact treatment and control measures. As part of the RiskManagement policy the relevant parameters for protection of environment safety ofoperations and health of people at work and monitored regularly with reference tostatutory regulations and guidelines defined by the Company.

19.5 SUBSIDIARIES/ ASSOCIATES/ JVS:

The Company does not have any Subsidiaries/ Associates Companies / JVs.

19.6 CODE OF CONDUCT:

The Board of Directors has laid down a Code of Conduct applicable to the Board ofDirectors and Senior Management. All the Board Members and Senior Management personnelhave affirmed compliance with the code of conduct.

19.7 SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:

There has been no significant and material orders passed by any regulators or courts ortribunals impacting the going concern status of the Company and its future operations.

19.8 ENVIRONMENT AND SAFETY:

The Company is conscious of the importance of environmentally clean and safeoperations. The Company's policy requires conduct of operations in such a manner so as toensure safety of all concerned compliances of environmental regulations and preservationof natural resources.

19.9 DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION& REDRESSAL) ACT 2013:

The Company has in place an Anti Sexual Harassment Policy in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. During the year under review the Company did not receive anycomplaint.

19.10 GRATUITY:

The Company has entered in to an agreement with Life Insurance Corporation of India forcovering its Gratuity Liability and has thus provided for the same. A Gratuity Trust Fundhas been created with Life Insurance Corporation of India.

19.11 INSTANCES OF FRAUD IF ANY REPORTED BY THE AUDITORS:

There have been no instances of fraud reported by the Auditors under Section 143(12) ofthe Companies Act 2013.

20. DISCLOSURE OF ACCOUNTING TREATMENT:

In the preparation of the financial statements the Company has followed the AccountingStandards referred to in Section 133 of the Companies Act 2013. The significantaccounting policies which are consistently applied are set out in the Notes to theFinancial Statements.

21. DISCLOSURES:

The Company has not entered into any transaction of material nature with the Promotersthe Directors or the Management that may have any potential conflict with the interest ofthe Company.

22. FINANCE:

The Company has availed financial assistance in form of Term Loans and Working Capitalfrom State Bank of India.

23. ACKNOWLEDGMENT:

Your Directors express their sincere gratitude for the assistance and co-operationextended by Banks Government Authorities Shareholders Suppliers and Customers.

Your Directors also wish to place on record their appreciation of the contribution madeby the employees at their levels towards achievements of the Company's goals.

Registered Office For and on behalf of the Board
Block No. 10-13
Near N. M. Desai Petrol Pump
Sarkhej- Bavla Road
Village: Changodar
District: Ahmedabad -382 213. Sanjay S. Shah Aarsh S. Shah
Date: 22nd September 2016 Managing Director Jt. Managing Director