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Surya Pharmaceutical Ltd.

BSE: 532516 Sector: Health care
NSE: SURYAPHARM ISIN Code: INE249G01020
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VOLUME 234695
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52-Week low 0.00
P/E 0.01
Mkt Cap.(Rs cr) 3
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.16
Sell Qty 749508.00
OPEN 0.16
CLOSE 0.17
VOLUME 234695
52-Week high 0.16
52-Week low 0.00
P/E 0.01
Mkt Cap.(Rs cr) 3
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.16
Sell Qty 749508.00

Surya Pharmaceutical Ltd. (SURYAPHARM) - Director Report

Company director report

Director

Dear Shareholders

We are pleased to present the 21st Annual Report on the business andoperations of Surya Pharmaceutical Limited along with the Annual Accounts and theAuditors' Report thereon for the financial year ended 31st March 2013. The financialhighlights for the year under review are given below:-

CORPORATE RESULTS

(Rs. in Crores)
PARTICULARS 2012-2013 2011-2012
Revenue From operations 60.33 1622.95
Profit (loss) before Interest Depreciation & Taxes (174.62) (192.75)
Profit (loss) before Depreciation & Taxes (378.31) (358.60)
Depreciation 62.46 34.62
Profit (loss) before Tax (440.78) (393.22)
Provision for Taxation
Current - -
Deferred Tax 144.19 120.72
MAT Asset Appropriation - -
Net Profit (loss) after Tax (314.52) (272.50)
Opening balance of General Reserve 227.20 494.12
Appropriations:
Proposed Dividend - -
Other Appropriations 12.71 (0.65)
Transfer to General Reserves (301.81) (273.15)
Closing Balance of General Reserves (74.60) 227.20

During the year 2012-13 the net revenue of your Company was Rs. 60.33 crores ascompared to Rs. 1622.95 crores during the previous year.

Loss before interest depreciation and taxes was Rs. (174.62) crores as compared toloss of Rs. (192.75) crores during the previous year. Further the Company reported a NetLoss of Rs. (314.52) crores after tax as compared to Net Loss after tax of Rs. (272.50)crores in the previous year.

DIVIDEND

In lieu of the current financial condition of your Company the Board of Directorsregret their inability to declare any Dividend for the Financial Year 2012-2013.

MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion & Analysis of financial condition and results of operation ofthe Company for the year under review is included in the Management Discussion &Analysis section of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY

Your company is an integrity driven organization that focuses on traditional valuescoupled with innovative management and broad social vision. Today society expectscorporates to go beyond statutory compliances and contributing towards the society for itsdevelopment. In sync with this giving back to society' has always been a key mandate foryour Company and as a company its role stretches into demonstrating serious corporatesocial commitment.

Your Company is committed to developing its business towards ecological social andeconomic sustainability. All activities and initiatives are planned specific to the needsof the target stakeholders. The ultimate objective is to see that each business decisiontakes into account its social impact and accordingly plans an intervention to mitigate theadverse impacts arising out of that decision. Accordingly your Company installed the mostadvanced anti-pollution devices to keep the environment in and around the manufacturingfacilities clean and green.

SUBSIDIARY COMPANIES

As approved by the Board of Directors of the Company the reports and accounts of thesubsidiary Companies are not annexed to this Report. A statement pursuant to Section 212of the Companies Act 1956 however is annexed.

Annual accounts of the subsidiary Companies are kept at the Registered Office of theCompany for scrutiny by any Member. Members interested in obtaining a copy of the accountsof the subsidiaries may write to the Company.

The Ministry of Corporate Affairs Government of India vide its circular no. 2/2011dated February 8 2011 provided an exemption to Companies from complying with theprovisions of Section 212 of the Companies Act 1956 of the provisions of attaching theDirectors Report Balance Sheet and Profit and Loss Account of subsidiary Companies withthe Annual Report provided the Companies publish the audited consolidated financialstatements in the Annual Report. Accordingly the Annual Report 2012-13 does not containthe financial statements of the subsidiary Companies. The audited annual accounts andrelated information of the subsidiary Companies are available for viewing at your Companys website at www.suryapharma.com. Relevant information of the subsidiary Companies asrequired to be furnished by the aforesaid circular forms part of the Annual Report.

The consolidated financial statements in terms of Clause 32 of the Listing Agreementand prepared in accordance with Accounting Standard 21 as specified in Companies(Accounting Standards) Rules 2006 also forms part of this Annual Report.

REFERENCE TO SICK INDUSTRIES & BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION(BIFR)

As on July 20 2013 at time of adopting the financial statements of your Company forthe year ended/as at March 31 2013 the Board of Directors formed an opinion that theentire net worth of your Company had eroded and in accordance with the provisions of theSick Industrial Companies (Special Provisions) Act 1985 a reference is being filed withthe Honble Board for Industrial and Financial Reconstruction (BIFR).

FIXED DEPOSITS

During the year under review your Company has not accepted any fresh deposits. Therewere no overdue deposits as on 31st March 2013 except an amount of Rs.152554/- whichremained unclaimed.

CAPITAL STRUCTURE

During the year under review there was no change in the Authorized Share Capital andthe Paid up Share Capital of the Company.

DIRECTORS

Mrs. Alka Goyal Director of the Company retires by rotation and being eligible hasoffered herself for reappointment.

Mr. Shiv Kumar Yadav an Independent Director of your Company resigned from the saidoffice with effect from May 25 2013 and Mr. Subhash Chander Marwaha Nominee Director ofSBI also resigned with effect from May 29 2013. Mr. Dharam Pal Singhal anotherIndependent Director of your Company resigned from the said office on June 15 2013.

As a result of the aforesaid resignations the total strength of the Board of Directorsof your Company has reduced to two which is less than the minimum number of Directorsstatutorily required for a Public Limited Company.

The Board of Directors are making efforts to appoint a new person as a Director of yourCompany which act is likely to take time as persons are unwilling to be appointed tooffice of Director of your Company due to actions initiated by certain creditors forwinding up of your Company.

DIRECTOR'S RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217 (2AA) of the Companies Act 1956 withrespect to Director s Responsibility

Statement it is hereby confirmed that:-

(i) In the preparation of the annual accounts the applicable accounting standards havebeen followed;

(ii) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2013 and of the lossincurred for the year ended on that date.

(iii) 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) The Directors have prepared the annual account of the Company on a going concernbasis.

AUDITORS AND THEIR REPORT

M/s. AAD & Associates Chartered Accountants Auditors of the Company haveexpressed their unwillingness to be reappointed to the said office. The Board of Directorsof your Company have held discussions with M/s. MSN & Associates CharteredAccountants who have expressed their willingness to be appointed to the said office. Thesaid M/s. MSN & Associates Chartered Accountants have confirmed that theirappointment if made would be within the limits prescribed in the Companies Act 1956and that they are not otherwise disqualified within the meaning of Section 226 (3) of theCompanies Act 1956 for such appointment.

The point wise Management s reply to Auditors observation contained in the Auditor sReport at Serial Nos.1 to 4 is as under:-

Opinion No. 1

The Provision for employee benefit has been provided on accrual basis and no actuarialvaluation certificate has been obtained as required by AS15. The Directors do not expectthat there would be a material difference between the amount provided for on accrual basisand the amount that may be determined on basis of actuarial valuation.

Opinion No. 2

Managerial Remuneration paid to Directors in FY 2011-12 has exceeded the limit asprescribed in the Companies Act 1956. The Company sought approval from Central Governmentfor condonation of excess remuneration. The same is still pending. Necessary adjustmentif any shall be carried out upon receipt of communication from the Central Government.

Opinion No. 3

Attention is invited to restructuring of facilities carried out by lenders to theCompany in January 2013 followed by recall of loan notice issued by some of the lenders.At this stage it is not possible to evaluate the effect of the outcome of aforesaidnotice of recall. Necessary entries shall be carried out in books of account once the sameare is determined.

Opinion No. 4

The Board of Directors of the Company since June 15 2013 comprises of 2 persons whichis less than the minimum number of Directors statutorily required in case of PublicCompany and is a contravention of section 252 of the Act. The Whole Time Secretarymandatorily required to hold office under section 383A of the Act is not in office sincefrom May 28 2013 which is a contravention of the said section. As on date there is noperson in employment of the Company except its Managing Director and Executive Director.Your Board is making efforts to appoint Directors as per applicable requirements.

INDUSTRIAL RELATIONS

The Company maintained healthy cordial and harmonious industrial relations at alllevels. The enthusiasm and unstinting efforts of employees have enabled the Company togain present level of growth.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance andadhere to the Corporate Governance requirements set out by SEBI. The Company has compliedwith the applicable provisions of Corporate Governance under clause 49 of the ListingAgreement with the Stock Exchanges. A Report on Corporate Governance as stipulated underClause 49 of the Listing Agreement forms part of the Annual Report. The requisiteCertificate from the Auditors of the Company confirming compliance with the conditions ofCorporate Governance as stipulated under the aforesaid Clause 49 is attached to thisReport.

SECRETARIAL AUDIT

For each quarter of the Financial Year 2012-13 a qualified practicing CompanySecretary carried out audits to reconcile the total admitted Share Capital with NSDL andCDSL total issued and listed Share Capital. The reports confirm that the totalissued/paid up Share Capital is in agreement with the total number of Shares in physicalform and the total number of dematerialized Shares held with NSDL and CDSL.

COST AUDIT

Pursuant to Section 233B of the Companies Act 1956 the Central Government hasprescribed cost audit of the Company s pharmaceutical products. Based on therecommendations of the Audit Committee and subject to the approval of the CentralGovernment the Board of Directors have re-appointed M/s. J. Verma & Associates asCost Auditors of the Company for the Financial Year 2013-14. The Cost Audit Report for theyear 2011-12 is under finalization.

ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information relating to energy conservation technology absorption foreignexchange earnings and outgo required to be disclosed under the Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules 1988 is given in Annexure-Aforming part of this Report.

PARTICULARS OF EMPLOYEES

There were no employees whose particulars are required to be disclosed in accordancewith the provisions of Section 217 (2A) of the Companies Act 1956 read with Companies(Particulars of Employees) Rules 1975.

APPRECIATIONS AND ACKNOWLEDGEMENTS

Your Directors express their gratitude to all Banks and Financial Institutions who havedirectly or indirectly supported the Company for meeting Short Term or Long Term andfinancial needs of the Company s expanding operations.

Your Directors place on record their sincere thanks to the Central and StateGovernments of Punjab Haryana Himachal Pradesh and the state of J&K for theircontinued support to the Company. The Board also places on record the appreciation for thesupport provided by the customers suppliers equipment vendors and others to the Company.Your Directors also wish to place on record their sincere thanks and appreciation for thecontinuing support of the esteemed Shareholders of the Company. The Board expresses itsappreciations of the commitment contribution and support of all employees of the Companyfor attaining the present level of growth.

For & on behalf of the Board

For Surya Pharmaceutical Limited

Sd/-

RAJIV GOYAL

(Chairman & Managing Director)

Place: Chandigarh

Date: 14.08.2013.

ANNEXURE-A TO THE DIRECTORS REPORT

PARTICULARS OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO AS PER SECTION 217(1)(e) OF THE COMPANIES ACT 1956 AND THERULES MADE THEREUNDER AND FORMING PART OF THE DIRECTORS REPORT FOR THE YEAR ENDED MARCH2013.

(I). CONSERVATION OF ENERGY :

Your Company has taken various initiatives for the conservation of energy for costreduction in process to stay competitive by saving on power & fuel cost and resortingto various energy saving methods. Proper suggestions were incorporated as mentionedbelow:-

1. Strict adherence to contract demand of State Electricity Board Power Supply.

2. Separate utilities for each and every production plant to reduce the power &fuel cost.

3. Stabilization & improvements of manufacturing processes for better productivity& yields

4. Emphasis on awareness for energy saving by control & process up gradationbetter house keeping preventing wastages & reuse of ETP water after through treatmentby installing RO plants etc.

5. Preventive maintenance of all equipments at regular intervals.

6. Proper insulation of steam chilled water chilled Brine & condensate lines.

7. Installation of screw chillers by replacing Reciprocating chillers. Screw Chillersare more energy efficient.

8. Installation of VFD on reactors centrifuges Pumps AHUs etc.

9. For proper burning of fuel to achieve better efficiency carbon mono oxide monitoringsystem is installed and condensate is reused by recovery system in boiler.

10. Installation of BMS system for proper control of utilities. 11. To save fuelrepairing of brick work in incinerator was done.

The power and fuel consumption is as under:-

Year Ended March 31 2013 Year Ended March 31 2012
Particulars
1 ELECTRICITY
a) Purchased:
Units 2834010 21210111
Total Amount (Rs. lacs) 299.91 1006.94
Rate per unit (Rupees) 10.58 4.75
b) Own Generation:
Through Diesel Generator:
Units 279173.40 3016828
Units per liter of Diesel Oil 3.03 2.96
Cost per unit (Rupees) 12.96 13.45
2A FURNANCE OIL
Quantity (K liters) NIL 1181.69
Total Cost (Rs. lacs) NIL 434.42
Average rate (Rs. per K liters) NIL 36.76
2B LIGHT DIESEL OIL
Quantity (K liters) NIL NIL
Total Cost (Rs. lacs) NIL NIL
Average rate (Rs. per K liters) NIL NIL
2C HIGH SPEED DIESEL
Quantity (K liters) 155.96 1488.53
Total Cost (Rs. lacs) 60.63 591.61
Average rate (Rs. per K liters) 0.39 39744
3 PETCOKE
Details:
Quantity (In Tons) 216.28 934.27
Rate per Ton (Rs.) 7424.46 7455.83
3A RICE HUSK
Quantity (In Tons) NIL 15502.05
Total Cost (Rs. lacs) NIL 733.58
Rate per Ton (Rs.) NIL 4732.15

(II) TECHNOLOGY ABSORPTION:

Research and Development (R&D)

The R&D Department of your Company has developed & commercialized novel productduring the year 2012-13.

Some of the technologies successfully Commercialized were:-

* Production of CMIC Chloride FCMIC Chloride & DCMIC Chloride.

* Filling of EDQM Drossier for Di-Cloxacillin and Cefadroxil.

* Production of Sumitriptan Succinate: Sumitriptan Succinate was developed bynon-infringing route for cram client of U.K Production achieved and quality was conformingInternational standards.

* Process improvement in Thiocolchiside synthesis

(III) EXPENDITURE ON R&D

The R&D outlay during the year is as follows:

(Rs. In lacs)
Particulars Year ended March 31 2013 Year ended March 31 2012
a) Capital 825.11 6887.21
b) Recurring - 126.50
c) Total 825.11 7013.71
d) Total R&D expenditure as a percentage of total turnover & operating income 13.68 4.29

(IV) TOTAL FOREIGN EXCHANGE EARNINGS & OUTGO:

(Rs. In lacs)
Particulars Year ended March 31 2013 Year ended March 31 2012
1. Earnings in Foreign Exchange during the year (F.O.B. value of Exports)
2 C.I.F. Value of Imports (on cash basis)
Raw Materials 49.41 26994.94
Capital Goods - 21.52
Spare Parts Components and Consumables - -
3 Expenditure in Foreign Currency during the year (on cash basis)
Traveling Expenses 3.60 17.90
Interest and Bank Charges - -
Technical Know-how fees - -
Consultancy Fees 18.72 -
Others 20.32 185.56
4 Total Foreign Exchange used (2+3) 92.05 27219.92