TO THE MEMBERS OF SUNIL HEALTHCARE LIMITED
Your Directors have great pleasure in presenting the 43rd Annual Report on the businessand operations together with the audited financial statement of your Company for the yearended 31st March 2017.
FINANCIAL RESULTS (Rs. in Lacs)
|Particulars || ||Standalone ||Consolidated |
| ||2016-17 ||2015-16 ||2016-17 |
|Revenue from Operation ||10894.62 ||8688.53 ||10848.42 |
|Other Income ||152.29 ||132.55 ||152.28 |
|Total Revenue ||11046.91 ||8821.88 ||11000.70 |
|Total Expenditure (Excluding Depreciations & ||9276.05 ||7254.78 ||9288.94 |
|Interest) || || || |
|Profit before depreciation and Finance Cost ||1770.86 ||1566.29 ||1711.76 |
|Finance Cost ||416.95 ||381.30 ||416.94 |
|Depreciation ||433.58 ||381.95 ||433.58 |
|Profit before tax ||920.33 ||803.05 ||861.24 |
|Less: - Tax Expenses Net ||309.94 ||280.54 ||309.94 |
|Profit after Tax ||610.39 ||522.52 ||551.30 |
|Earning Per Shares ||5.95 ||5.10 ||5.38 |
COMPANY OVERVIEWAND STATE OF COMPANY'SAFFAIRS
The Directors of the Company are glad to inform you that your company is 2nd largestproducer of Empty Hard Gelatin Capsules (EHGC) in India and Pioneer in Double Lock andTriple Lock Capsules in India. Your company also have Global Presence with Subsidiaries inUSA and Mexico during the year. The company is WHO-GMP certified Company and has also beenrecognized as "Star Export House" by GOI. The management is optimistic about thefuture outlook of the company in short medium and long-term. The Company deals inBusiness segment of Manufacturing Hard Gelatin Capsule Shells and the size available is00 OEL 012 4 5. This segment the company has reached to installed capacity of11952 million capsules at the existing facility. Our Presence in Over 30 Countries acrossthe Globe. The management of the company Continued focus on achieving cost optimizationand yield improvements through Economies of Scale. The company also renewed interest inthe business with an aim to become top 3 manufactures of Empty Hard Gelatin Capsules inworld.
The Company has forayed into the Food Business. Sunloc food is a division of SunilHealthcare Limited. Sunloc foods offer a host of product ranging from food productsprocurement of raw and processed Edible Nuts e. g cashew nuts almonds pistachioswalnuts etc. We have earned the reputation of providing excellent quality in all ourproducts and high levels of value for money satisfaction and also strong customer'srelationship. Sunloc foods is equipped to handle a variety of requirements and deliversstraight to customers location anywhere in the world confirming to international qualitystandards.
During the F.Y. 2016-17 (standalone) the performance of Company has improved in allaspect. Revenue from Operation is Rs. 10894.62 Lakhs in 2016-17 against Rs. 8688.53 Lakhsin the F.Y. 2015-16. Revenue increased by 25.39% Profit before depreciationandFinanceCostincreasedby13.06%ProfitbeforeTaxincreasedby14.60%andProfitafterTaxincreasedby16.82%.
On a consolidated basis the total revenue from the operation is Rs. 11000.70 LakhProfit before depreciation and Finance Cost is Rs. 1711.76 Lakh Profit before tax is Rs.861.24 and Profit after Tax is Rs. 551.30 Lakh.
The Management of the Company is committed to further improve the performance in thecoming year to achieve better production sales and profit by using the optimum productmix and explore new avenue to achieve overall growth of the Company. Further there is nochange in the nature of the business of the company.FOREIGN WHOLLY OWNED SUBSIDIARY ANDSUBSIDIARY OF THE COMPANY
During the year the company set up a Wholly Owned Subsidiary namely "SunilHealthcare North America LLC" in the United States of America on 26th July 2016 anda subsidiary namely "Sunil Healthcare Mexico SA DE CV"" in the city of SanLuis Postosi Mexico United Mexican States on 1st February 2017.
DETAILS OF SUBSIDIARIES PERFORMANCES
Pursuant to the provision of Section 129 (3) of the Companies Act 2013 a statementcontaining salient features of financial statement of subsidiaries in FORM AOC-1 isattached herewith and marked Annexure A. In accordance with section 136 of Companies Act2013 the separate audited financial statements in respect of each of the subsidiarycompanies shall be kept open for inspection at the registered office of the Company duringworking hours for period of 21 days before the date of Annual General Meeting. YourCompany will also make available these documents upon request by any member of the Companyinterested in obtaining the same.
EXPANSION OF THE PROJECT
The Company has decided to increase the production capacity of manufacturing of EmptyHard Gelatin Capsule from 11 billion to 13 billion (appox) p.a. in the financial year2017-18.
With a view to finance expansion from internal accrual for the growth of the Companythe directors of the Company do not recommended any dividend for the year ended March 312017.
The paid up Equity Share Capital of the Company as on March 31 2017 was Rs. 10 2547500. During the year under review the Company has neither issued any shares nor grantedany stock options.
DIRECTORSAND KEY MANAGERIAL PERSONAL: CESSATION
The Board of Directors of the Company on behalf of SHL family expressed their deepsorrow for the untimely death of Mr. Joginder Singh on 03.02.2017. The Board Members alsoexpressed their appreciation of the valuable contribution made by Mr. Joginder Singhtowards the operation & growth of the Company in the capacity as an IndependentDirector of the Company. Mr. Rajat Kumar Niyogi Director was associated with the Companyfrom the year 2007 and has played a vital role in the growth of the Company. Howeverowing to his personal reason he expressed to the Board that he shall not be in a positionto devote his full time to manage the affairs of the Company and hence resigned from theposition of Director of the Company w.e.f. 15th June 2016. The Board placed itsappreciation for valuable contributions made by him during his long association as a BoardMember with the Company.
Pursuant to the provisions of Section 152 of Companies Act 2013 Dr. Lata SinghDirector of the Company is liable to retire by rotation at the ensuing Annual GeneralMeeting and being eligible has offered herself for the re-appointment. The Boardrecommended his re-appointment.
Based on recommendation of Nomination and Remuneration Committee Mr. Rakesh Mohan(DIN: 00114067) was appointed as an Independent (Additional) Director on the Board ofyour Company with effect from 11th November 2016. As per the provisions of Companies Act2013 he holds office upto the date of ensuing Annual General Meeting of the Company. YourCompany has received Notice under Section 160 of the Companies Act 2013 together withrequisite deposit from a member proposing appointment of Mr. Rakesh Mohan as IndependentDirector(s) on the Board of your Company. Necessary resolution seeking approval of themembers for appointment of Mr. Rakesh Mohan as Independent Director has been incorporatedin the Notice of the ensuingAnnual General Meeting.
The present term of Mr.Anil Kumar Khaitan is valid upto 31.07.2017. The board ofdirectors of the Company in their meeting held on 11.11.2016 on the recommendation of theNomination and Remuneration Committee of the company re-appointed him as a Chairman CumManaging Director of the Company for further period of five years starting form 1st April2017. Necessary resolution seeking approval of the members for appointment of Mr. AnilKumar Khaitan as a Chairman Cum Managing Director of the Company has been incorporated inthe Notice of the ensuingAnnual General Meeting.
DECLARATION BY INDEPENDENT DIRECTORS
Pursuant to the provisions of Section 149(7) of the Companies Act 2013 allindependent directors have given declaration that they meet the criteria of independenceas laid down under Section 149(6) of the Companies Act 2013 and under Regulation 16(1)(b)of SEBI (Listing Obligation & Disclosure Requirement) Regulation 2015.
NUMBER OF MEETING OF BOARD OF DIRECTORS
During the Financial Year 2016-17 the Board of Directors met out four times on27.05.2016 11.08.2016 11.11.2016 and 13.02.2017. The details of attendance of eachdirector at the Board Meeting are provided in the Corporate Governance Report.
MEETINGAND COMPOSITION OF COMMITTEES OF THE BOARD
The details of meetings composition and attendance of each member of the committee atthe committee meetings are provided in the Corporate Governance Report.
AUDITORANDAUDITOR'S REPORT STATUTORYAUDITOR
Pursuant to Section 139 of the Companies Act 2013 and Rules made thereunder the termsof M/s Singhi & Co. Chartered Accountant registration No. 302049E Statutory Auditorof the company shall expire at the forthcoming Annual General Meeting of the Company.
Accordingly your directors on the recommendation of the Audit Committee at itsmeeting held on August 23 2017 recommended the appointment of M/s Jitendra Kr. Agarwal& Associates Chartered Accountants (registration No. 318086E) as the statutoryauditors of the Company for a period of five years to hold office from the conclusion ofthis Annual General Meeting till the conclusion of the Forty Eight Annual General Meetingof the Company to be held in the calendar year 2022 subject to ratification of theirappointment at everyAnnual General Meeting if so required under theAct.
The Company has received written consent and eligibility certificate from M/s JitendraKr. Agarwal & Associates in terms of Section 141 of the Act that the appointment ifmade shall be in accordance with the applicable provisions of the Act and rules framedthereunder.
The Auditors' Report on standalone and consolidated financial statements for the year2016-17 forming part of the Annual Report. The Auditors' Report does not contain anyqualifications reservations adverse remarks disclaimer or emphasis of matter. Notes tothe Financial Statements are self-explanatory and do not call for any further comments.
Pursuant to provisions of section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed JAKS &Associates a firm of Company Secretaries in Practice Jaipur toundertake the Secretarial Audit of the Company. The Secretarial Audit Report for thefinancial year ended March 31 2017 is annexed herewith and marked as Annexure B to thisReport. The Secretarial Audit Report does not contain any qualification reservationdisclaimer or adverse remark. The Board has appointed M/s ATCS & AssociatesPracticing Company Secretary as SecretarialAuditor of the Company for the financial year2017-18.
Pursuant to Section 148 of the Companies Act 2013 read with The Companies (CostRecords and Audit) Amendment Rules 2014 the maintenance of cost audit records is notapplicable on the Company.
Pursuant to Section 138 of the Companies Act 2013 read with The Companies (Accounts)Rules 2014 the Internal Audit Records maintained by the Company. The Board has appointedAgarwal S. Lal & Co. Chartered Accountants as Internal Auditors to undertake theInternalAudit of the Company.
EXTRACT OFANNUAL RETURN
The details forming part of the extract of theAnnual Return in form MGT-9 is annexedherewith and marked asAnnexure C.
There were no frauds found which have been reported to the Audit Committee / Boardmembers as well as to the Central Government.
PARTICULARS OF RELATED PARTY TRANSACTIONS
During the year under review no related party transaction as referred under Section188 of the Companies Act 2013 were entered except the transaction on an arm's lengthbasis and in the ordinary course of business. Particulars of all such contracts andarrangements with Related Parties are given in the prescribed Form AOC-2 as appended asAnnexure D to this Report. There was no related party transaction which is in conflictwith the interest of the Company. The policy on the Related Party Transaction areavailable on the website of the Company i.e. www.sunilhealthcare.com
PARTICULARS OF EMPLOYEES:
Disclosures with respect to the remuneration of Directors KMPs and employees asrequired under section 197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 asAmendmentfrom time to time appended asAnnexure E to this Report.
Details of employee remuneration as required under provisions of section 197(12) of theCompanies Act 2013 read with Rule 5(2) & 5(3) of Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are available at the Registered Officeof the Company during working hours for 21 days before the Annual General Meeting andshall be made available to any Shareholder on request.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION RESEARCH & DEVELOPMENT AND FOREIGNEXCHANGE EARNINGS & OUTGO:
Information on conservation of Energy Technology absorption Foreign Exchange earningsand outgo required to be disclosed under Section 134 of the Companies Act 2013 read withCompanies (Accounts) Rules 2014 are set out in a separate statement given in theAnnexure'F' forming part of this report.
The Regulation 21 (5) of the SEBI (Listing Obligation & Disclosure Requirement)Regulation 2015 relating to constitution of Risk Management Committee is not applicableon the Company but the Company has already constituted a Risk Management Committee inaccordance with the erstwhile Listing Agreement. The Company has in place Risk ManagementSystem which takes care of risk identification assessment and mitigation. There are norisks which in the opinion of the Board threaten the existence of the Company. Riskfactors and its mitigation are covered extensively in the Management Discussion andAnalysis Report forming part of this Board's Report.
CORPORATE SOCIAL RESPONSIBILITY
The main objective of the Companies' CSR policy is to lay down guidelines for theCompany to make CSR a business process for sustainable development of the society atlarge. It aims to enhance and implement the society welfare measures by the Company in awell structural manner on short and long term basis with a vision of making SunilHealthcare Limited to act as Good Corporate Citizen. CSR is an evolving concept at SunilHealthcare Limited it's been there since incorporation we have promised to ourselves totake up the responsibility of ensuring a healthy ecosystem. SHL's CSR program is anchoredon the continuing commitment to improve the quality of living conditions and opportunitiesfor the differently able without regard to their faith origin or gender. The compositionand terms of reference of the CSR Committee are given in the Corporate Governance Report.The details of CSR Policy of the Company also available on the website of the Company i.ewww.sunilhealthcare.com. The Annual Report on CSRActivities is appended asAnnexure G tothis Board's Report.
In terms of Regulation 34 and other applicable regulation of SEBI (LODR) Regulations2015 a report on Corporate Governance along with Statutory Auditors' Certificate asrequired by the Listing Regulation confirming its compliance with the corporate governancerequirement are appended asAnnexure H to this Board's Report.
WHISTLE BLOWER POLICY/ VISIL MECHANISM
During the year there was no case filed under this policy. The details of this Policyare stated in the Corporate Governance Report and also available on the website of theCompany i e www.sunilhealthcare.com.
PREVENTION OF SEXUAL HARASSMENT OF THE EMPLOYEEAT WORK PLACE:
During the year no complaint has been received by the Company. The details of thisPolicy are stated in the Corporate Governance Report and also available on the website ofthe Company i.e. www.sunilhealthcare.com.
NOMINATION & REMUNERATION POLICY
The Nomination & Remuneration Committee of the Company formulated a criteria's fordetermining qualifications positive attributes and independence of a director and othermatters provided under Sub-section (3) of Section 178 of the CompaniesAct 2013 andrecommended to the Board a policy relating to the remuneration for the directors keymanagerial personnel and other employees. The Nomination & Remuneration Policy isstated in the Corporate Governance Report and also available on the website of the Companyi.e. www.sunilhealthcare.com.
PERFORMANCE EVALUATION OF DIRECTORS
The Nomination and Remuneration Committee of the Company has laid down the criteria ofperformance evaluation of the Board of Directors including Independent Directors. Pursuantto the provisions of the Companies Act 2013 and Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board has carriedout the annual performance evaluation of the entire Board Committees and all theDirectors based on the said criteria as laid down by the Nomination and RemunerationCommittee.
INDEPENDENT DIRECTOR'S MEETING
During the year under review one meeting of the Independent Directors of your Companywas held on 13.02.2017 without the presence of any member of Management. The Meeting areconducted in an informal and flexible manner to enable the Independent Directors todiscuss matters pertaining to inter alia review of performance of Non-IndependentDirectors and the Board as a whole review the performance of the Chairman of the Company(taking into account the views of the Executive and Non-Executive Directors) review theperformance of the Company assess the quality quantity and timeliness of flow ofinformation between the Company Management and the Board that is necessary for the Boardto effectively and reasonably perform their duties.
INTERNAL FINANCIAL CONTROLS WITH RESPECT TO THE FINANCIAL STATEMENTS
The Company maintains adequate internal control system and procedures commensurate withits size and nature of operations. The internal control systems are designed to provide areasonable assurance over reliability in financial reporting ensure appropriateauthorisation of transactions safeguarding the assets of the Company and prevent misuse/losses and legal compliances.
The internal control system includes a well-defined delegation of authority and acomprehensive Management Information System coupled with quarterly reviews of operationaland financial performance a well-structured budgeting process with regular monitoring ofexpenses and Internal audit. The Internal Audit reports are periodically reviewed by themanagement and theAudit Committee and necessary improvements are undertaken if required.
Your Company has not accepted any public deposit within the meaning of provisions ofsection 73 of the Companies Act 2013 read with the Companies (Acceptance of Deposits)Rules 2014 and there is no outstanding deposit due for re-payment.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
The Company has not given any loans or guarantees covered under the provisions ofsection 186 of the Companies Act 2013. Further the Company had invested of Rs. 6000 inthe government Securities I e National Saving Certificate since long time.
SIGNIFICANT MATERIAL CHANGESAFTER BALANCE SHEET DATEAFFECTING FINANCIAL POSITION
There are no change and commitments which affecting the financial position of theCompany which have occurred between the end of the financial year of the Company to whichthe financial statements relate i e 31.03.2017 and the date of report 23rd August 2017.
TRANSFER OFAMOUNTS TO INVESTOR EDUCATIONAND PROTECTION FUND
Pursuant to the provisions of the Section 124 and 125 of the Companies Act 2013 readwith the IEPF Authority (Accounting audit Transfer and Refund) Rule 2016 ("TheRules") are required to be transferred by the Company to Investor Education &Protection fund (The IEPF) established by the Central Government after the completion ofseven years. Further according to the Rules the shares in respect of which dividend hasnot been paid or claimed by the shareholders for seven consecutive years or more shallalso be transferred to the demat account created by the IEPFAuthority.Accordingly theCompany has transferred the unpaid or unclaimed dividend for the financial year 1999-2000to 2008-09 as per the relevant provision of the Companies Act 2013. Further thecorresponding shares will be transferred as per the requirement of IEPF rules details ofwhich are provided on our website at www.sunilhealthcare.com
DIRECTOR'S RESPONSIBILITY STATEMENT:
In terms of Section 134 (5) of the CompaniesAct 2013 the directors would like tostate that:
I. In the preparation of the annual accounts the applicable accounting standards hadbeen followed alongwith the proper explanation relating to material departures.
II. The directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that were 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 profit or loss of the Company for the that period.
III. The directors had 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. 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 system to ensure compliance with the provisions ofall applicable laws and that such system were adequate and operating effectively