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Ajanta Pharma Ltd.

BSE: 532331 Sector: Health care
BSE 00:00 | 24 Feb 1410.15 -35.90






NSE 00:00 | 24 Feb 1413.10 -32.30






OPEN 1446.00
VOLUME 25965
52-Week high 1485.00
52-Week low 840.00
P/E 31.15
Mkt Cap.(Rs cr) 12,304
Buy Price 1405.40
Buy Qty 25.00
Sell Price 1410.15
Sell Qty 104.00
OPEN 1446.00
CLOSE 1446.05
VOLUME 25965
52-Week high 1485.00
52-Week low 840.00
P/E 31.15
Mkt Cap.(Rs cr) 12,304
Buy Price 1405.40
Buy Qty 25.00
Sell Price 1410.15
Sell Qty 104.00

Ajanta Pharma Ltd. (AJANTPHARM) - Director Report

Company director report

Dear Shareholders

Your Directors present their Fortieth Annual Report and AuditedFinancial Statements for the Year ended 31st March 2019.

1. Financial performance

(र in cr. except EPS)

Particulars Standalone Consolidated
Year ended 31st March 2019 2018 2019 2018
Revenue from operations 1773 1830 2055 2131
Other Income 102 73 21 24
Profit/Loss before Depreciation Finance Costs and Tax expenses 583 620 588 683
Profit after Tax 392 428 387 469
Total Comprehensive Income 390 426 384 472
Earning Per Share (EPS) (र) (Basic) 44.51 48.59 43.97 53.26

2. Performance Review

Company continues to operate only in one segment i.e. pharmaceuticalsand there is no change in the nature of business of the company.

Revenue from operations has seen marginal decline mainly on account ofreduced anti-malaria institution business which was partially compensated by othermarkets. Operating cost of 2 new manufacturing facilities at Dahej & Guwahati impactedthe EBIDTA margins. Dahej plant is in the process of product registrations in differentmarkets and Guwahati plant had been stabilizing the production line. Major events occurredduring the year and state of company's affiars has been discussed in the ManagementDiscussion and Analysis Report which forms part of this report.

3. Dividend

After considering the company's dividend distribution policy the Boardhad declared and paid interim dividend of र 9/- (450%) per equity share of the facevalue of र 2/- each. Total dividend payout was र 79.22 cr. An amount ofर 37 Lakhs has been paid as dividend distribution tax on the interim dividend. Boardrecommends interim dividend to be considered as final.

The Dividend Distribution Policy is placed on the website of thecompany and its weblink is http://

4. Transfer to Reserves

The Company proposes to keep the entire retained earnings in Profit& Loss account.

5. Subsidiaries Associates and Joint Ventures

During the year company's wholly owned subsidiary viz. Ajanta PharmaUK Limited was dissolved on 18th December 2018.

Post that the company has five operating subsidiaries overseasincluding one step down subsidiary. Financials of subsidiaries are disclosed in theconsolidated financial statements which forms part of this Annual Report. The Company doesnot have any Associate company or Joint Venture.

All the subsidiaries have contributed positively in the growth andprofitability of the company. The performance of subsidiaries in Philippines and USA hadbeen outstanding with continued growth in sales and profits. US performance was driven bynew launches during the year. Mauritius subsidiaries performance was little lower thanprevious year but was part of a conscious strategy of realignment of inventory levels inAfrica. Performance of our subsidiary in Nigeria was on expected lines as major businesshas now been routed through the local distributor directly.

There have been no material change in the nature of business ofsubsidiaries.

Statement containing salient features of financial statements ofsubsidiaries pursuant to section 129 of the Companies Act 2013 (“Act”) readwith Rule 5 of the Companies (Accounts) Rules 2014 is annexed to this Report in theprescribed Form AOC-1 as “Annexure A”. The Audited Financial Statementsof Company's subsidiaries are available on the Company's website at www.ajantapharma.comand the same are also available for inspection at the Registered Office of the Company asper the details mentioned in notice of the 40th Annual General Meeting. YourCompany will also make available these documents upon request by any Member of the Companyinterested in obtaining the same.

The Company has laid down policy on material subsidiaries and placed onthe website of the Company and its weblink is PolicyonMaterialSubsidiaries2019.pdf

6. Consolidated Financial Statements

The Annual Audited Consolidated Financial Statements together with theReport of Auditors' thereon forms part of this annual report.

7. Share capital

7.1. Buyback of equity shares

With an objective to enhance long term shareholder value and improvethe Company's return on equity in March 2019 the Company bought back 769230 (Sevenlakhs sixty-nine thousand two hundred and thirty only) fully paid-up equity shares of theface value of र 2/- each representing 0.87% of the total number of equity shares inthe subscribed and paid-up equity share capital of the Company from the existingshareholders / beneficial owners of equity shares of the Company on a proportionate basisthrough “Tender Offer” route at a price of र 1300/- (Rupees One thousandthree hundred only) per equity share for an aggregate amount of र 100 cr. only. PostBuyback the paid-up share capital has reduced from 88023000 to 87253770 equityshares of र 2/- each. Details of the shareholding pattern post buyback is given inthe Corporate Governance Report.

7.2. Employee Stock Option Scheme

During the year 8500 shares were issued against the options exercisedand 7000 new options were granted under the Company's ESOP scheme ESOS - 2011.Disclosures with regard to Employees' Stock Options Scheme are put up on the Company'swebsite and can be accessed at AnnualReports.aspx

8. New projects & CAPEX

Company proactively builds infrastructure for meeting its growing needsin manufacturing R&D office space etc. Currently the work on third phase ofGuwahati plant is at an advanced stage of completion which will be operational during FY2020. Further another manufacturing facility is being setup in Pithampur SEZ DistrictDhar Madhya Pradesh which will also be operational by FY 2020. During the year anamount of र 355 cr. was incurred on Capex.

9. Directors and Key Managerial Personnel

9.1. Cessation

During the year Mr. Purushottam B. Agrawal relinquished hisdirectorship w.e.f. 11th August 2018. Further Dr. Anil Kumar resigned asDirector of the Company w.e.f. 3rd April 2019.

The Board places on record its appreciation for the valuablecontribution made by Mr. Purushottam B. Agrawal since company's inception and for theservices rendered by Dr. Anil Kumar during his long association with the Company. Therewere no other changes in Directors and Key Managerial Personnel during the year.

9.2. Appointment

Mr. Chandrakant Khetan Mr. K H. Viswanathan Mr. Prabhakar Dalal andDr. Anjana Grewal were appointed as Independent Directors at the 35th AnnualGeneral Meeting held on 5th August 2014 for a period of five years andaccordingly they hold office upto the ensuing Annual General Meeting. Considering theirknowledge experience and skillset in respective fields as also significant contributionmade by them during last five years the Board has on the recommendations of theNomination and Remuneration Committee and subject to approval of members at the ensuingAnnual General Meeting re-appointed them as Independent Directors for another term of 5years not liable to retire by rotation.

Mr. Chandrakant Khetan Mr. K H. Viswanathan Mr. Prabhakar Dalal andDr. Anjana Grewal have given declarations that they continue to meet the criteria ofindependence as laid down under Section 149(6) of the Act and Rules made thereunder andunder the Securities and Exchange Board of India (Listing Obligation and DisclosureRequirements) Regulation 2015 (“Listing Regulations”). Based on disclosuresprovided by these Directors none of them are disqualified from being appointed asDirectors under section 164 of the Act and are independent from the management. In termsof Section 160 (1) of the Companies Act 2013 the Company has received notice in writingfrom member signifying his intention to propose the candidature for the re-appointment ofMr. Chandrakant Khetan Mr. K H. Viswanathan Mr. Prabhakar Dalal and Dr. Anjana Grewal asIndependent Directors at the ensuing Annual General Meeting for another term of 5 years.

Resolutions for aforementioned re-appointments alongwith brief profileof the directors proposed to be re-appointed form part of the Notice of the 40thAGM and respective resolutions are recommended for your approval.

Independent Directors are compliant with the Code of IndependantDirectors as per schedule IV of the Act.

9.3. Retirement by rotation

Mr. Madhusudan B. Agrawal and Mr. Rajesh M. Agrawal retire by rotationat the ensuing Annual General Meeting and being eligible offer themselves forre-appointment. The Board recommends their re-appointment.

9.4. Policy on appointment and remuneration of Directors

The Nomination and Remuneration committee of directors has approved apolicy for the selection appointment and remuneration of directors. Criteria forappointment of Directors (http://www. Policy fordetermining qualifications of Directors. pdf) and policy on remuneration of Directors( PolicyCodes/Policyforremuneration2018.pdf) isgiven in the Corporate Governance Report.

9.5. Key Managerial Personnel

Mr. Yogesh M. Agrawal Managing Director (DIN: 00073673) Mr. Rajesh M.Agrawal Joint Managing Director (DIN: 00302467) Mr. Arvind Agrawal Chief FinancialOfficer (DIN: 00648589) and Mr. Gaurang Shah Company Secretary (FCS No.: 6696) are theKey Managerial Personnel of the Company as on the date of this Report.

9.6. Independent Director's familiarisation programme

Company continued to familiarise Independent directors with businessoperations important functions and other critical aspects to enable them to contribute onfull informed basis and discharge their responsibilities effectively. During the year theIndependent Directors were familiarised with following aspects/operations: i. Advancementand initiatives on Information Technology; ii. Business operations in India & emergingmarkets; iii. Business in emerging markets; iv. Manufacturing operations; v. Qualitycontrol.

Details of familiarisation programme imparted is placed on thecompany's website and its weblink is Directorsfamilarisationprogramme2019.pdf

9.7. Evaluation of Board's performance

Pursuant to the provisions of the Act and the Listing Regulations theevaluation of performance of the Board individual directors and Board committees for theyear 2018 was carried out by the Board as suggested by the Nomination and RemunerationCommittee. Further Independent Directors at a separate meeting evaluated performance ofthe Non-Independent Directors Board as a whole and of the Chairman of the Board. Board ofDirectors were satisfied with the evaluation process.

Manner in which the evaluation has been carried out and mattersincidental thereto have been detailed in the Corporate Governance Report which formspart of this report.

10. Board meetings

During the year four Board meetings were held details of which aregiven in the Corporate Governance Report.

11. Board Committees

Details of composition of various Board Committees and mattersincidental thereto are provided in the Corporate Governance Report.

12. Related Party Transactions and Policy

All the Related Party transactions (RPTs) affected during the financialyear were on an arm's length basis and in the ordinary course of business and the samewere undertaken after taking approval of the Audit Committee. Omnibus approval of AuditCommittee was obtained for all the transactions which are of repetitive nature. All theRPTs affected during the year are disclosed in the notes to Financial Statements. Exceptto the extent of the shares held in the Company and the remuneration paid if any therewere no materially significant related party transactions made by the company withpromoters directors or key managerial personnel which may have a potential conflict withthe interest of the company at large or which warrants approval of the shareholders drawnfrom the Company.

The Board has approved and adopted Policy on Related Party Transactionsand the same is uploaded on the Company's website and its weblink is Since all the transactions withrelated parties were in the ordinary course of business and at arm's length and therewere no material related party transactions the statement Form AOC-2 is not annexed tothis report.

13. Corporate Social Responsibility (CSR)

Company continues to contribute on CSR front with thrust areas ofHealthcare Education & Community welfare in accordance with company's CSR policy.During the year Company continued several initiatives under the CSR program directly aswell as through agencies permitted under the Act. These included cataract surgery campsfamily welfare camps educational initiatives at schools etc. benefitting thousands ofunderprivileged population in the rural & tribal areas. Details of CSR policy and CSRactivities undertaken during the year in accordance with Section 134 & 135 of the Actread with Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules 2014 andRule 9 of the Companies (Accounts) Rules 2014 is annexed to this report as“Annexure B”.

14. Management Discussion and Analysis

A detailed review of the operations performance and future outlook isgiven in the Management Discussion and Analysis which forms part of this Report.

15. Report on Corporate Governance

Report on Corporate Governance is annexed and forms an integral part ofthis Annual Report together with certificate from the Practicing Company Secretaryregarding compliance of conditions of Report on Corporate Governance.

16. Business Responsibility Report

Business Responsibility Report for FY 2019 forms part of the AnnualReport and as a Green Initiative the same has been hosted on the Company's website whichcan be accessed at http://www. Any Member interestedin obtaining a copy of BRR may write to the Company Secretary.

17. Credit Rating

The Company's bank facilities are rated by Credit Analysis and ResearchLimited (CARE). They have assigned rating Care A1+ for working capital facilities and CareAA for long term borrowings which indicates very strong/high degree of safety regardingtimely payment of financial obligations. Such instruments carry lowest credit risk.

18. Extract of the Annual Return

In pursuance of Section 92(3) of the Act and Rule 12(1) of theCompanies (Management & Administration) Rules 2014 extracts of Annual Return in FormMGT.9 is annexed to this Report as “Annexure C”. The same is available at AnnualReports.aspx

19. Auditors and Audit reports 19.1. Statutory Auditors

At the 38th Annual General Meeting held on 5thJuly 2017 the shareholders had approved the appointment of B S R & Co. LLP.Chartered Accountants (ICAI Firm's Registration No. 101248W/W-100022) as the StatutoryAuditors for a period of 5 years commencing from the conclusion of the 38thAnnual General Meeting until the conclusion of 43rd Annual General Meetingsubject to ratification by the shareholders every year.

Pursuant to the recent amendment to Section 139 of the Act effective 7thMay 2018 ratification by Shareholders every year for the appointment of the StatutoryAuditors is no longer required and accordingly the notice of ensuing Annual GeneralMeeting does not include the proposal for seeking shareholders' approval for ratificationof Statutory Auditors appointment. In terms of the Listing Regulations the auditors haveconfirmed that they hold a valid certificate issued by the Peer Review Board of the ICAI.Auditor's Report for the year under review forms part of this annual report and does notcontain any qualifications reservations or adverse remarks.

19.2. Secretarial Auditors

Pursuant to the provisions of Section 204 of the Act and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 and Regulation 24A ofthe Listing Regulations Board had appointed M/s. Alwyn Dsouza & Co. CompanySecretaries in Practice to undertake the Secretarial Audit of the Company. TheirSecretarial Audit Report is annexed to this report as “Annexure D”. Thereare no qualifications reservation or adverse remark in the report.

19.3 Cost Auditors

Board has appointed M/s. Sevekari Khare & Associates PracticingCost Accountants to audit the cost records of the Company for the financial year 2019-20.Their remuneration is subject to ratification by shareholders at the ensuing AnnualGeneral Meeting. Accordingly resolution seeking members' ratification of theirremuneration forms part of the Notice convening the 40th Annual GeneralMeeting.

• Cost Audit Report for the FY 2018 has been filed with theMinistry of Corporate Affairs on 24th August 2018.

• The company is required to maintain cost records as specified bythe Central Government under Section 148(1) of the Act and accordingly such accounts andrecords are made and maintained.

During the year under review the statutory auditors secretarialauditors and cost auditors have not reported any instances of fraud committed in theCompany by its officers or employees to the Audit Committee under Section 143(12) of theAct details of which needs to be mentioned in this Report.

20. Internal Control System Risk Management and Compliance Framework

The Company believes that a strong internal control framework is verymuch essential and is part of good corporate governance practices. Company has in placewell defined and adequate internal financial control framework commensurate with the sizeand complexity of its business. During the year such controls were tested and no materialweakness in their design of operations were observed. The Board of Directors of theCompany has formed a Risk Management Committee to frame implement and monitor the riskmanagement plan for the Company. The Committee is responsible for monitoring and reviewingthe risk management plan and ensuring its effectiveness. The Audit Committee hasadditional oversight in the area of financial risks and controls. The major risksidentified by the businesses and functions are systematically addressed through mitigatingactions on a continuing basis. There are no risks identified which may threaten existenceof the company. Risk Management system followed by the Company is detailed in theManagement Discussion and Analysis report.

21. Vigil Mechanism/Whistle Blower policy

Company has set up vigil mechanism viz. Whistle Blower Policy to enablethe employees and Directors to report to the Audit Committee Chairman genuine concernsunethical behavior and irregularities if any noticed by them in the Company which couldadversely affect company's operations. It is posted on the intranet and website of theCompany and the same is available at The policy is reviewed by the Audit Committee fromtime to time. No concerns or irregularities have been reported by employees/directors tilldate.

22. Managerial Remuneration and particulars of employees

There were 6800 permanent employees of the Company as of 31stMarch 2019. The information pursuant to Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is annexed to this report as “AnnexureE”.

Information pursuant to Rule 5(2) & 5(3) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 pertaining to the top10 names and other particulars of employees also form part of this report. However thisinformation is not sent along with this report pursuant to the proviso to Section 136(1)of the Act. Any shareholder interested in obtaining a copy of the same may write to theCompany Secretary at the registered office address of the Company.

23. Loans Guarantees or Investments

Details of Loans Guarantees and Investments covered under theprovisions of Section 186 of the Act are given in Notes to the Financial Statements.

24. Deposits

Your Company has not accepted any deposits from the public fallingwithin the purview of Section 73 of the Act read with the Companies (Acceptance ofDeposits) Rules 2014.

25. Directors' Responsibility Statement

To the best of their knowledge and belief and according to theinformation and explanations obtained by them your Directors confirm:

a. that in the preparation of the annual accounts for the year ended 31stMarch 2019 the applicable Accounting Standards had been followed along with properexplanation relating to material departures if any;

b. that the directors had selected 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 ended 31st March 2019 and of the profit of the company for theperiod;

c. that proper and sufficient care has been taken for the maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;

d. that the annual accounts/financial statements have been prepared ona going concern basis;

e. that proper internal financial controls were in place and that thefinancial controls were adequate and were operating effectively; f. that the Directors haddevised proper systems to ensure compliance with the provisions of all applicable lawswere in place and were adequate and operating effectively.

26. Conservation of energy technology absorption foreign exchangeearnings and outgo

Pursuant to Section 134 of the Act read with Companies (Accounts)Rules 2014 details of conservation of energy technology absorption foreign exchangeearnings and outgo are given in “Annexure F” to this report.

27. Unclaimed Dividend/Shares

In pursuance of Regulation 39 read with Schedule VI of the ListingRegulations the details with respect to shares lying in unclaimed suspense account andunclaimed shares/dividend transferred to IEPF are provided in the Corporate GovernanceReport.

28. Compliance with Secretarial Standards

During FY 2018-19 the Company has complied with applicable SecretarialStandards issued by the Institute of The Company Secretaries of India.

29. Material changes & commitment affecting the financial positionof the company

There are no material changes and commitments affecting the financialposition of the company which have occurred between the end of the financial year and thedate of this report.

30. Significant & material orders passed by the Regulators orCourts or Tribunals

The Scheme of Amalgamation and Arrangement of Gabs Investments Pvt.Ltd. with the Company which was filed by the Company with National Company Law Tribunal(NCLT) in the last year was rejected by NCLT on grounds cited in its order. The Companyhad preferred an appeal before the National Company Law Appellate Tribunal (NCLAT)challenging the order of NCLT. However after considering all the pros and cons at lengthit was deemed appropriate to withdraw the appeal. Accordingly the same was withdrawn on 7thDecember 2018.

Save and except above no significant or material orders have beenpassed against the Company by the Regulators Courts or Tribunals which impacts the goingconcern status and company's operations in future.

31. Human Resource Health & Safety

Industrial relations were cordial throughout the year. Health &Safety of our work force is of prime importance to us and we maintain highest standards inall the plants with adoption of best technologies and manufacturing practices which are atpar with global standards.

Zero casualty and zero harm incidences demonstrates our indomitable andimpeccable HSE standards. Recognizing the fact that employees play vital role in growth ofthe organisation Company undertakes various employee engagement programmes andinitiatives to harness the talent pool with the objectives of building highly motivatedteam promoting individual wellness and maintaining work-life balance. Various trainingand grooming programs sports events and fun events like cricket tournament indoor sportstournament singing competition cooking competition hobby classes like nail art guitarlearning calligraphy etc. were conducted during the year as part of employee engagementinitiatives.

32. Policy on sexual harassment of women at work place

The Company has in place policy on Prevention Prohibition andRedressal of Sexual Harassment for women at workplace in accordance with the requirementsof The Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. An Internal Complaints Committee (ICC) has been set up as per the statutoryrequirements to redress complaints regarding sexual harassment. The policy has setguidelines on the redressal and enquiry process that is to be followed by complainants andthe ICC whilst dealing with issues related to sexual harassment at the work place. Allwomen employees (permanent temporary contractual and trainees) are covered under thispolicy. The company has not received any complaints during the year.

33. Gratitude & Acknowledgements

Your Directors place on record their appreciation for the persistentand highly inspired performance by employees across the globe. Your Directors also expresstheir gratitude to all the stakeholders medical professionals business partnersgovernment & other statutory bodies banks financial institutions analysts andshareholders for their continued assistance cooperation and support.

For and on Behalf of the Board of Directors
Mannalal B. Agrawal
Mumbai 30th April 2019 Chairman