Sterling Biotech Limited
We have great pleasure in presenting the 29 Annual Report of the Company together withthe audited statements of accounts for the year ended 31st December 2014.
| || ||(Rs. in Million) |
|Particulars ||Year Ended 31 December 2014 ||Year Ended 31 December 2013 |
|Sales ||6669.51 ||7180.69 |
|Total Income ||6706.33 ||7223.30 |
|EBIDTA from Operation ||1149.19 ||989.41 |
|Interest ||4695.06 ||4377.08 |
|Depreciation ||2765.74 ||2543.17 |
|Profit / (Loss) before Tax and Extraordinary item ||(6311.61) ||(5930.83) |
|Extraordinary items || || |
|Profit / (Loss) before Tax ||(6311.61) ||(5930.83) |
|Provision for Current Tax ||0.00 ||0.00 |
|Provision for Deferred Tax ||(2047.80) ||(1924.30) |
|Profit / (Loss) after Tax ||(4263.81) ||(4006.53) |
Having regard to the loss for the year ended 31st December 2014 your Directors do notrecommend any dividend for the year.
During the year under review the turnover (including other income) of the Companydecreased to Rs. 6706.33 Million as against Rs. 7223.30 Million in the previous year.The finance cost increased to Rs. 4695.06 Million as against Rs. 4377.08 Million in theprevious year. The Loss before tax was Rs. 6311.61 Million as against Rs. 5930.83Million in the previous year. After reducing the deferred tax the loss after tax was Rs.4263.81 Million as against Rs. 4006.53 Million in the previous year.
REASONS OF REDUCTION IN PROFITABILITY
The major reasons for reduction in profitability are Increase in Effluent Treatmentcost due to increase in standards global economic slowdown increase in the cost of rawmaterials the selling prices have remained more or less stable there by the increase incost could not be passed on to the buyer.
CORRECTIVE STEPS TAKEN BY MANAGEMENT
1. Company has taken action like thorough study on the effluent discharge issuetightening of quality norms for effluent discharge from the plant evaluation ofrequirement of modification of existing effluent discharge problem and the necessary CAPEXhas also been incurred by the company.
2. The Company has put in place the cost control measures like hard negotiation withthe material suppliers improvement in and tightening up of cost control system etc.
Company expects that the combined effect of all these factors would be favorable foroverall operations.
The Company has Overseas Subsidiary namely Sterling Fincom Private Limited Mauritiuswhich also has a subsidiary namely Sterling Commercial FZE U.A.E. However there are nobusiness operations in the said subsidiaries.
ISSUE OF PREFERENCE SHARES
During the year with a view to mitigate the financial crunch promoters have fundedRs. 15068265980 by subscribing to preference shares and the Company has issued andallotted 1506826598 Unlisted 8% Redeemable Cumulative Non- ParticipatingNon-Convertible Preference Shares carrying no voting rights of face value of Rs. 10/- eachat par to entities in which promoters are interested.
ISSUE OF FRESH FCCBs IN LIEU OF EXISTING FCCBs
During the year the Company has completed the Cashless Exchange Offer by issue of theZero Coupon Convertible Bonds due 2019 aggregating to US$ 206464000 in exchange ofoutstanding Foreign Currency Convertible Bonds due 2012 of which USD 134500000 inprinciple amount remained outstanding.
As per the terms of the Cashless Exchange Offer Now the Company's obligation to theholders of the Foreign Currency Convertible Bonds due 2012 with respect to payment ofprincipal interest default interest and premium stands discharged in full and no otheramounts shall be payable to the holders of Foreign Currency Convertible Bonds due 2012.The FCCBs due 2019 carry a 0% coupon with a yield of 5.43% per annum calculated onsemi-annual basis and convertible at a conversion price of Rs. 60.00 per share with fixedrate of exchange on conversion of Rs. 48/- per United States Dollar.
Meeting the stringent quality standards required by our international clientele ourfacilities have earned certifications including:
Hazardous Analysis and Critical Control Point Certification (HACCP)
European Directorate For Quality of Medicine Certification (EDQM).
IFANCA Halal Certificate
MANAGEMENT DISCUSSION AND ANALYSIS
A separate report on Management Discussion and Analysis pursuant to Clause 49 of theListing Agreement entered with stock exchanges is enclosed as a part of this Directors'Report.
REPORT ON CORPORATE GOVERNANCE
Pursuant to Clause 49 of the Listing Agreement entered with stock exchanges a separatesection on Corporate Governance is attached to the Annual Report.
It is lamentable and shocking to note the sad demise of Shri N. B. Patel Director ofthe company. Shri N. B. Patel was on the Board of Directors of the company for many years.May his soul rest in peace and may almighty give courage to the members of the bereavedfamily to withstand this irreparable loss to them. The Directors would like to place onrecord their sincere appreciation for his commitment and contribution made by him duringhis tenure on the Board.
Shri Vilas Joshi and Shri P. B. Mehta Directors of the Company retire by rotation atthe forthcoming Annual General Meeting and being eligible offer themselves forre-appointment. The Board recommends their re-appointment.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act 1956 the Directors hereby confirm:
i) That in the preparation of the Annual Accounts for the year ended 31st December2014 the applicable Accounting Standards had been followed along with proper explanationrelating 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 the end of thefinancial year and of the loss of the Company for the year under review;
iii) That the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 1956for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; and
iv) That the Directors have prepared the Annual Accounts for the year ended 31stDecember 2014 on a going concern basis.
The Company did not accept any deposits from the Public during the year under review.
M/s. H. S. Hathi & Co. Chartered Accountants Auditors of the Company shall retireat the conclusion of the ensuing Annual General Meeting and having furnished the requiredcertificate pursuant to Section 224(1B) of the Companies Act 1956 are eligible forre-appointment. The Board recommends their re-appointment. In respect of observations madeby the Auditors in their Report your Directors wish to state that the respective notes tothe accounts are self-explanatory and do not call for any further comments.
The industrial relations of the Company continued to remain cordial. The Directors wishto place on record their sincere appreciation for the co-operation extended and thevaluable contribution made by the employees at all levels.
PARTICULARS OF EMPLOYEES
Information in accordance with the provisions of Section 217 (2A) of the Companies Act1956 read with the Companies (Particulars of Employees) Rules 1975 as amended regardingemployees is given in annexure to the Director's Report. However as per the provisions ofSection 219 (1) (b) (iv) of the Companies Act 1956 the Annual Report is being sent toall shareholders of the Company excluding the aforesaid information. Any shareholderinterested in obtaining such information may inspect at or write to the Company'sRegistered Office address.
CHANGE IN ACCOUNTING YEAR
Our Company has financial year ended on December 31 every year. Pursuant to Section2(41) of the Companies Act 2013 we are required to change financial year from Decemberto March. Therefore our next financial statement will be prepared for a period of fifteenmonths starting from 1st January 2015 and ended on 31st March 2016.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Particulars of Energy Conservation Technology Absorption and Foreign Exchange Earningsand Outgo required to be given by the Companies (Disclosure of Particulars in the Reportof Board of Directors) Rules 1988 are given in the Annexure to this Report in theprescribed format under these rules.
We appreciate the valuable co-operation extended by the Central and State GovernmentAuthorities and all other Regulatory Authorities and are extremely grateful to FinancialInstitutions ECB Lenders Facility Agent(s) FCCB Holders and our bankers for theircontinued assistance and guidance. We are also grateful to our employees shareholdersGDR Holders Depositories customers for their co-operation and look forward to theirsupport in the future.
| ||For and on behalf of the Board of Directors |
| ||NITIN J. SANDESARA ||CHETAN J. SANDESARA |
| ||Managing Director ||Jt. Managing Director |
|Place: Mumbai ||DIN: 00255496 ||DIN: 00255671 |
|Date: 28th February 2015 || || |
ANNEXURE TO THE DIRECTORS' REPORT
Particulars pursuant to Companies (Disclosure of Particulars in the Report of Board ofDirectors) Rules 1988 forming part of the Directors' Report for the year ended 31stDecember 2014.
A. CONSERVATION OF ENERGY
Energy Conservation Measures taken: The Company has undertaken various measures forconservation and saving of energy in critical areas including
1. Power factor improvement
2. Quicker heat transfer
3. Monitoring of combustion efficiency of boilers
4. Reuse of Steam condensate as boiler feed water
5. Optimum use of utility depending upon process requirement.
As in earlier years your Company continued to envisage and implement energyconservation measures in various manufacturing operations leading to saving ofquantitative consumption of power fuel and oil etc. The Company is also carrying oncontinuous education and awareness program for its employees for Energy conservation andoptimum use.
B. TECHNOLOGY ABSORPTION
Research & Development (R & D)
1. Specific areas in which R & D carried out by the Company:
Improvement of product quality
Elimination of waste in the systems
2. Benefits derived as a result of the above R & D:
Improvement in yield and product quality cost effectiveness and reduction inconsumption of raw material and utilities.
3. Future plan of action:
The Company's effort will continue in the areas of product quality process improvementtechnology with the aim of offering better products to meet consumer needs.
4. Expenditure on R & D:
|a. Capital ||: ||Rs. 62.17 Million |
|b. Recurring ||: ||Rs. 169.74 Million |
|c. Total ||: ||Rs. 231.91 Million |
d. Total R & D Expenditure as a percentage of total turnover: 3.48 %
TECHNOLOGY ABSORPTION ADAPTATION AND INNOVATION
1. Efforts in brief made towards technology absorption adaptation and innovation:
After full absorption of technology imparted by foreign collaborations innovations inprocess control cost reduction and quality improvements are being made on a continuousbasis.
2. Benefits derived as a result of the above efforts:
Improvements in productivity cost of manufacturing quality waste elimination andflexibility in manufacturing.
3. Information regarding technology imported during last 5 years: Nil.
C. FOREIGN EXCHANGE EARNED AND USED
|a. Earned ||: ||Rs. 795.12 million |
|b. Used ||: ||Rs. 27.16 million |