ANKUR DRUGS AND PHARMA LIMITED
ANNUAL REPORT 2011-2012
Your Directors present before you the Eighteenth Annual Report on the
business and operations along with the Audited Statement of Accounts of the
Company for the year ended March 31, 2012.
I. FINANCIAL RESULTS: [Rs. in Lacs]
Particulars For the Year ended For the Year ended
March 31, 2012 March 31, 2011
Revenue from Operations [Net] 15,148.99 82,484.95
[Loss]/Earnings before interest,
depreciation and tax [2,781.87] 13,482.84
[Add]/Less: Finance Costs [5,835.57] 12,079.69
[Add]/Less: Depreciation &
Amortisation [6,603.08] 6,079.70
Profit/[Loss] before tax [15,210.52] [4,676.54]
Add: Exceptional Items [13,636.71] -
Add: Provision for earlier
year Taxation [282.15] [141.07]
Add: Provision for Deferred Tax [1,620.01] [2,063.18]
Profit/[Loss] after tax [30,749.39] [6,880.80]
The Ministry of Corporate Affairs [MCA] vide notification no. S.O.447[E]
dated February 28, 2011 amended the existing schedule VI to the Companies
Act, 1956. The Revised Schedule VI is applicable from financial year
commencing from April 1, 2011. The Financial Statements of your Company for
the year ended March 31, 2012 have been prepared in accordance with the
Revised Schedule VI and accordingly the company has regrouped/
reclassified/recasted the previous year figures in accordance with the
requirement for the current period.
OVERVIEW OF OPERATIONS:
The year under review was the toughest in the history of the company. The
last four years of the last decade saw the business expanding with huge
opportunities on the horizon. The Company incurred huge Capex for capacity
expansion mainly by short term borrowings and leveraged its strengths with
focus on the future. The Company was on an inflexion point by the end of
2010 and had sincerely taken up the challenge of high growth. With a view
to complete the expansion project at Baddi within the regulatory timeline;
the Company funded the last two stages of project with short term funds at
high rate of interest. It also had to restrategise the on going and future
activities in tune with money, efforts and manpower to avail the various
tax benefits available, but the circumstances proved to be otherwise and as
a result situations was difficult in 2011 and detoriated in 2012.
As a consequence of downsizing the business, the total income of the
Company for the reporting year was Rs. 15,167.59 Lacs which is not
comparable with that of last year. The Net loss for the year was
The lull of the last two years and may be one more year has made us more
So what down we are, but not out. We believe that being focused towards
growth, nothing is difficult. We are determined and geared to succeed
again. A good range of products for contract manufacturing has been
developed and validation of MNC pharma companies has been pursued.
The proposal for restructuring of debts under Corporate Debt Restructuring
[CDR] mechanism was approved by the CDR Empowered Group at their meeting
held on June 30, 2011 and August 30, 2011. The critical conditions as put
forth in the letter of approval of CDR have been complied with by the
Management and a sum of Rs. 1,500 Lacs has been brought in by the
promoters. Majority of the bankers have restructured their loans.
During the year special resolutions to raise the authorised share capital
from Rs. 2,800 Lacs to Rs. 18,500 Lacs were passed vide Postal Ballots on
March 13, 2012 and July 06, 2012 respectively.
ISSUE OF OPTIONALLY CONVERTIBLE CUMULATIVE REDEEMABLE PREFERENCE SHARES
[OCCRPS] AND EQUITY SHARES:
Pursuant to the scheme of CDR, the Company passed a resolution through
Postal Ballot to issue 1,32,19,790, 0.001% Optionally Convertible
Cumulative Redeemable Preference Shares of Rs. 100/- each and to convert
unsecured loans of Promoters into Equity Share Capital by issue of
3,13,63,000 Equity Shares of Rs. 10/- each at a premium of Rs. 36/- per
share . However the company has not made any allotment in respect thereof
during the year under review.
In view of the loss for the year and the accumulated losses of the previous
year, your Directors are unable to recommend any dividend for the year
ended March 31, 2012.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
Pursuant to clause 49[VI] of the Listing Agreement with the BSE Limited,
Management Discusssion and Analysis Report is given below and a Report on
Corporate Governance is annexed to this report. A declaration in regard to
compliance with the Code of Conduct by the Directors and Senior Management
Personnel signed by the Managing Director forms part of the Annual Report.
A certificate from the Statutory Auditors of the Company regarding
compliance with the conditions of Corporate Governance is also annexed.
Macro Economic Industry and Development:
Not much has changed from last year in terms of opportunities in the
contract manufacturing space in pharma industry. In fact the scope has
widened. Increase in Input cost and high finance charges are major areas of
risk and concern. The future outlook still remains favourable on comparable
The pharma industry in India is the third largest in terms of volume and
fourteenth in terms of value globally. The industry is growing at a CAGR of
average 6%+ globally and at CAGR 11%+ in the developing countries like
India, China, South Korea, Indonesia and Malaysia.
Threats, Risks and Concerns:
The business and operations of the company are susceptible to specific
risks which are inherent to pharma business. Apart from these, there is
always an exposure to general commercial risks which are common to any
business. In addition to these risks, there are risk of government price
control and regulation [through DPCO] ; foreign exchange fluctuations ;
increase in input cost ; increase in interest rates; Patent regime, etc.
The Company was in preparation to attain the growth in the future years,
however factors beyond the management's control overpowered the situation
in 2011 and 2012. The capex was funded out of short term borrowings at high
rate of interest in anticipation of better leverage and expected
profitability. The Company made a reference to the CDR cell in January 2011
for restructuring of the debts and for sanction of adequate working
capital. The restructuring was approved by CDR EG in its meeting held on
June 30, 2011 and August 30, 2011 and communicated to the Company in
September 2011. Though the existing debt of the Company was restructured,
unfortunately some of the participating banks of the consortium did not
agree to take further exposure not withstanding additional working capital
facilities appraised by lead bank, SBI . Some of the members of the
consortium of bankers who initially agreed to provide relief for our short
term/working capital funding also did not release their share of additional
working capital due to which liquidity problems were aggravated. However,
the Company was given a go ahead signal for raising the residual portion of
the assessed working capital outside the banking system. The Company made
efforts to raise external funds but on account of global economic down turn
particularly economic crises in the Euro Zone, defaults in serving FCCB's
of several Indian Companies, increase in interest rates, paralysis in govt.
policy making etc, it could not raise the necessary funds despite receiving
in principle approval from a foreign fund. As a consequence the Company
suffered production delays at the new plant/s, liquidity crunch and working
capital problems. There was a plethora of problems to be faced all at once.
We are Resilient to overcome the problems and have taken considered
decisions. We visualize the joy of bright future with hope and anticipation
of great things to come and we are working towards it.
The company has initiated various steps to improve its operational
performance and remove the bottlenecks relating to production. The Company
is also exploring various options to raise the resources to raise the
working capital requirement so very essential for overcoming from the
ongoing financial woes of the company. The company is sanguine to raise the
resources and based of the current business plan, the company is confident
that it would be able to meet its financial commitment.
Accordingly, the financial statements has been prepared on a going concern
basis. We are Resilient to overcome the current crises with an improved
performance in the next year.
Internal Control Systems and their Adequacy:
The Company conducts its business with integrity and high standards of
ethical behavior and in compliance with the laws and regulations that
governs its business. It has a well established framework of internal
controls in operation, supported by standard operating procedures, policies
and guidelines. Considering the growing capital expenditure program, the
company continuously reviews the documented approval policy besides the
Capex Budget being approved by the Audit Committee and the Board of
Directors. These controls are constantly reviewed and revised with the
changing business dynamics. The management duly considers and takes
appropriate action on recommendations made by the statutory auditors and
the Audit committee of the Board of Directors.
The Company strongly believes that the growth of the organization can be
sustained through the continuous development of its people who contribute
to the business success. Employees are the key to achievement of the
Company's objectives and growth strategies. The Company provides employees
with a fair and equitable work environment and support to develop their
capabilities. With the added emphasis placed on 'safe operation', the
training given to employees not only covers knowledge and technical skills
but also lays stress on behavioral areas, like creating a 'safety mindset',
and 'attitude building'. A number of HR initiatives have been taken for the
well being and continuous development of the employees. We are continuously
striving in bringing new talent, improving competencies of people in the
organisation and building the existing strength of the employees to
transform the Company to be a key player in the Indian market. The
relations between the employees and the Company continue to be cordial and
healthy at all the three Manufacturing Units. As on March 31, 2012 the
employee strength of your Company was around 1245 [including contract work
Statement in the Management Discussion and Analysis describing the
Company's objectives, projections, expectations and estimates regarding
future performance may be 'forward looking statements' and are based on
currently available information. The Management believes these to be true
to the best of its knowledge at the time of preparation of this report.
However, these statements are subject to certain future events and
uncertainties, which may cause actual results to differ materially from
those indicated in such statements. The Company assumes no responsibility
to publically amend, modify or revise any forward looking statements, on
the basis of any subsequent developments, information or events.
LISTING OF SHARES:
Your Company's Equity Shares are listed on BSE Limited and The National
Stock Exchange of India Limited.
The Company has accepted deposits of Rs. 2,941.83 Lacs from public in
pursuance of section 58A of the Companies Act, 1956 and rules framed under
the Companies [Acceptance of Deposits] Rules, 1975. The Company could not
service interest on the deposits from February 2012 and also could not make
payment of matured deposits from October 2011 on account of severe
liquidity constraints. However, the Company intends to service pending
interest as well as matured deposit payments on improvement in financials.
In accordance with the provisions of the Companies Act, 1956 and the
Company's Articles of Association, Mr. Ramesh Batham, retires by rotation
at the ensuing Annual General Meeting, and being eligible offers himself
for re-appointment. His re-appointment forms part of the Notice of the
Annual General Meeting and the resolution is recommended for your approval.
Mr. Anilkumar Khadke, representative of Central Bank of India, has been
appointed as a Nominee Director on the Board with effect from August 14,
M/s. M. G. Vashi & Co, Chartered Accountants, Firm Registration No. 128577W
Statutory Auditors of the Company retires at the ensuing Annual General
Meeting are eligible for re-appointment and have expressed their
willingness to accept office if re-appointed. The Company has received
confirmation from them that their re-appointment, if made, would be within
the limits prescribed under Section 224[1-B] of the Companies Act, 1956,
and that they are not disqualified for such re-appointment within the
meaning of section 226 of the said Act. Your directors' recommend their re-
Qualification 1: The provisions of accrued gratuity liability [amount not
ascertainable in the absence of Actuarial Valuation
report] has not been made. [Auditors Report 'e']
Explanation-Q1 : The provision of gratuity as per AS15 is proposed to be
undertaken from the upcoming Financial Year.
[read along with explanation to Q-2 below]
Qualification 2: Provision has not been made in respect of interest
amounting to Rs. 9,52,77,286/- on some of the unsecured
loans resulting in understatement of the loss and
liability by an equivalent amount. Had the company
provided for the same, the loss for the year would have
been Rs. 3,17,02,15,848/-. [Auditors Report 'f']
Explanation-Q2 : Since the order for winding up has been passed, wherein
the Company was directed by the Hon'ble High Court of
Bombay to file a scheme of arrangement/compromise with
all creditors, the Company has initiated the process of
filling the scheme of arrangement and looking at the
current financial crunch, it appears that the Company
will not be in position to pay the accrued/unpaid interest
and waiver of the same is being requested by the Company
under the scheme of arrangement.
Qualification 3: The company is not regular in depositing with appropriate
authorities undisputed statutory dues including provident
fund, investor education and protection fund, employees'
state insurance fund, income tax, sales tax, wealth tax,
custom duty, excise duty, cess and other material statutory
dues wherever applicable to it. [Annexure to Auditors'
Report ix (a)]
Qualification 4: In our opinion and according to the information and
explanations given to us, the Company has accepted
the deposit from the public to which the directives
issued by the Reserve bank of India, provisions of
sections 58A and 58AA of the Companies Act, 1956 and the
Companies [Acceptance of Deposits] Rules, 1975 are
applicable. However, the Company has not complied with
the provisions of Section 58A of the Companies Act,
1956 and the Companies [Acceptance of Deposits] Rules,
1975 in relation to the following issues:
a. The company has defaulted in repayment of public
deposits and also on payment of interest on the
b. The company has accepted new public deposits after
making default in repayment of earlier deposits.
c. The company has not repaid these new deposits within
30 days of acceptance of such deposits.
d. The company has not filed annual return of deposits
for the year ended on 31.03.2012 with the Registrar of
Companies and Reserve Bank of India, which were required
to be filed on or before 30.06.2012.
e. The fixed deposit receipts with scheduled bank as are
required to be kept as liquid assets in respect of public
deposit maturing on or before 31.03.2012 are not free of
f. As on the Balance Sheet date, proceedings for violation
of provisions of Section 58A and Companies [Acceptance of
Deposit] Rules, 1975 were pending before the Company Law
Board consequent to the complaints filed by the depositors.
An order was passed on 09.04.2012 by the Company Law Board
for repayment of deposits to the extent of Rs. 32,87,000/-
by 30.04.2012. [Annexure to Auditors' Report vi]
Qualification 5: On the basis of our examination and according to the
information and explanation given to us, we are of the
opinion that during the year the company has defaulted
in repayment of dues to the banks and financial
institution. The amount defaulted is Rs. 70,34,76,343
[Term Loans: Rs. 38,75,30,629 and Interest:
Rs. 31,59,45,714]. The company has not obtained any
borrowings by way of debentures. [Annexure to
Auditors' Report xi]
Explanation : The Company is facing severe liquidity problems on
Q3/4/5 account of continued cash losses, which are being
attended to. As soon as the same are eased out, the
outstanding Statutory dues and other defaulted
amounts will be paid.
The Company is also vigorously exploring various options to raise funds to
overcome the financial crises.
Pursuant to the provisions of Section 233B of Companies Act, 1956, the
Central Government has prescribed Cost Audit for the industry in which your
Company operates. Based on the recommendation of the Audit Committee, M/s.
Avnesh Jain & Co., Cost Accountants [PROP/00642] were appointed as the Cost
Auditors' of the Company for the Financial Year 2011-12 in accordance with
the requirements of the Companies [Cost Accounting Records] Rules, 2011.
EXTENSION OF AGM DATE:
The Registrar of Companies, Mumbai - 400 002, Maharashtra vide its letter
dated September 03, 2012 has granted permission for holding the Annual
General Meeting of the Company for the Financial Year ended March 31, 2012
up to December 31 2012.
The industrial relations continue to be cordial and harmonious at all the
three manufacturing units of the Company.
RELATED PARTY DISCLOSURES:
The Company has made disclosures in compliance with the Accounting
Standards on related party disclosures as required by Clause 32 of the
listing agreement with the Stock Exchanges.
DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to amended Section 217[2AA] of the Companies Act, 1956, the
Directors of the Company confirm that:
1. in the preparation of Annual Accounts, the applicable Accounting
Standards have been followed and there has been no material departure;
2. they have selected such Accounting Policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company at the end of the financial year under review and for the Profit
and Loss account for that period;
3. they have taken proper and sufficient care for the maintenance of
adequate Accounting Records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and
4. the attached Annual Accounts for the year ended March 31, 2012 are
prepared on going concern basis.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS
[A] Conservation of Energy and Technology Absorption
Particulars as required under Section 217  [e] of the Companies Act,
1956 read with rule 2 of the Companies [Disclosure of Particulars in the
Report of the Board of Directors] Rules, 1988 are given in the Annexure I
to this report.
[B] Foreign Exchange Earned and Used Rs. in Lacs
Particulars 2011-2012 2010-2011
Earned 1.12 -
Used 83.24 500.60
PARTICULARS OF EMPLOYEES
Information as per Section 217[2A][b][II] read with Companies [Particulars
of Employee's] Rule, 1975 None of the employee of the Company are is
receipt of remuneration in excess of the limits prescribed under Section
217 [2A] of the Companies Act, 1956 read with Companies [Particulars of
Employees] Rules, 1975.
The Directors take this opportunity to place on record their appreciation
for the continued trust and confidence reposed in the Company by the
bankers, business associates, regulatory authorities, customers, vendors,
depositors, shareholders and employees at all levels.
C-306, Crystal Plaza,
Andheri Link Road,
Mumbai - 400 053.
For and on behalf of the Board of Directors
Chairman and Managing Director
Date: November 10, 2012
ANNEXURE - I FORMING PART OF THE DIRECTORS' REPORT FOR THE YEAR ENDED MARCH
Information under Section 217  [e] of the Companies Act, 1956 read with
the Companies [Disclosure of Particulars in the Report of Board of
Directors] Rules, 1988 and forming part of the Directors' Report for the
year ended March 31, 2012.
A] ENERGY CONSERVATION MEASURES TAKEN:
I] Power and Fuel Consumption Unit 2011-2012 2010-2011
Consumed KWH 22,985,951 26,339,859
Total Amount in Rs. 1,17,011,585 1,46,939,969
Average rate per unit Rs./KWH 5.09* 5.58
Consumed Ltrs 901,520 1,792,398
Total Amount in Rs. 33,450,328 62,787,731
Average rate per unit Rs./Ltr. 37.10 35.03
* During the Financial Year 2010-11 H.P.S.E.B. has collected additional
charges of Rs. 349.27 Lacs. Therefore average rate per unit of Electricity
consumed for the Financial Year 2010-11 was higher than the Current Year
II] Consumption per unit of Production
Since the Company manufactures various types of pharmaceutical
formulations, it is not practicable to give consumption per unit of
B] TECHNOLOGY ABSORPTION:
At the Quality Control Laboratory maintained by the Company, normal quality
control activities are carried out with reference to quality of raw
materials and finished goods.
The Company continues to run its Plant on Time Tested Standard Technology.
However, no capital expenditure for technology has been incurred except for
some routine and necessary revenue expenditure.
For and on behalf of the Board of Directors
Chairman and Managing Director
C-306, Crystal Plaza, Andheri Link Road,
Andheri [West], Mumbai - 400 053.
Date: November 10, 2012
For M.G. Vashi & Co.
Firm Registration No 128577W
CA. M.G. Vashi
ICAI M. No. 030217
Date : November 10, 2012