The Board of Directors of your Company has pleasure in presenting the 18thAnnual Report on the affairs of the Company together with the Audited Accounts of theCompany for the year ended 31st March 2020.
1. Financial Results
The Financial Results for the year are as under: -
(Rs in lacs)
|PARTICULARS ||2019-20 ||2018-19 |
|Turnover ||6968.85 ||5503.01 |
|Other Income ||40.63 ||287.76 |
|Total Income ||7009.48 ||5790.77 |
|Expenditure ||7361.06 ||6339.34 |
|Profit before Depreciation Interest & Tax (PBDIT) ||(351.58) ||(548.57) |
|Financial Expenses (Interest) ||335.03 ||296.26 |
|Profit before Depreciation and Tax (PBDT) ||(686.61) ||(844.83) |
|Depreciation and Amortization ||664.76 ||649.96 |
|Profit before Tax (PBT) ||(1351.37) ||(1494.79) |
|Extraordinary items (Gain) ||14.73 ||(7.11) |
|Income Tax (net of MAT Credit) ||1086.23 ||14.23 |
|Profit after Tax ||(2422.87) ||(1487.67) |
|Earnings per Share (in Rs.) ||(13.84) ||(9.20) |
2. Performance of the Company
During the year under review your Company has achieved a turnover of Rs.69.69 croresas compared to Rs. 55.03 crores in the previous year showing an increase in turnover ascompare to previous year. The Company has incurred a net Loss after tax and depreciationof Rs. 24.23 Crores as compared to loss of Rs. 14.88 Crores in the previous year.
3. Operations during the year
The company operated the Baddi plant at almost full capacity though the production inunits was more but realization per unit went down due to stiff competition resulting inlower sales in value terms. Also we have gone selective in government tenders due todelayed payment of various government agencies thus reducing our sales realization. Salesat Vadodra facility have started picking up but at low pace due to delays in approvalsfrom regulatory agencies of different countries. With more international approvals incoming year we expect to have multifold increase in sales in Vadodara facility.
4. Disclosure of Utilisation funds raised through
a. Preferential Allotment
The amount of Rs. 81175000 (Rupees Eight Crores Eleven Lakhs and Seventy FiveThousand) raised through Preferential Allotment of Convertible Warrants to the Promotergroup of the Company. The Company received Rs. 55549000 (Rupees Five Crores Fifty FiveLakhs Forty Nine Thousand) in the financial year 2018-19 and balance Rs. 25626000(Rupees Two Crores Fifty Six Lakhs Twenty Six Thousand) is received in the financial year2019-20 is used for Working Capital requirements of the Company.
b. Rights Issue
The amount of Rs. 153327800 (Rupees Fifteen Crore Thirty Three Lakhs Twenty SevenThousand and Eight Hundred) raised through Issue of 7666390 Rights Equity Shares with aface value of Rs. 10/- each at a price of Rs. 20/- per Rights Equity Shares (including apremium of Rs. 10/- per Rights Equity Shares on the rights basis in the ratio of 9 RightsEquity shares for every 20 fully paid up Equity Shares. The amount raised by the Issue ofthe Rights Equity Shares is used for working capital of the Company.
In view of the financial constraints during the year the Board of Directors has notrecommended any dividend for this year.
The Company has not transferred any amount to reserves and not withdrawn any amountfrom the reserves.
During the financial year 2019-20 the Company has not accepted any deposits from thepublic within the provisions of Chapter V of the Companies Act 2013 read with Companies(Acceptance of Deposits) Rules 2014.
8. Joint Venture Agreement
The Company has entered into a joint venture agreement vide the Board resolution passedon July 212020 with a Bengaluru based company Streriscience Private Limited. a companywhose promoters have understanding and international reach and strong track record andpresence in many regulated countries. This will transform company's credibility in thoseterritories and open up more business opportunities. It shall also enhance themanufacturing capabilities of the company with more innovative products as a result offresh investments and richer experience coming in from our Joint Venture partner.
9. Capital Structure of the Company
During the year under review the Company has
i. Increased the Authorised Capital from Rs. 200000000/- (Rs. Twenty Crores) dividedin 20000000 (Two Crores) Equity Shares of Rs. 10/-(Rs. Ten) each to Rs. 250000000/-(Rs. Twenty Five crores) divided in 25000000 (Two Crores Fifty Lakhs) Equity Shares ofRs. 10/- (Rs. Ten) each
ii. Increased the paid up Capital from Rs. 161864220/- (Rs. Sixteen Crore EighteenLakh Sixty Four Thousand Two Hundred and Twenty) divided in 16186422 (One Crore SixtyOne Lakh Eighty Six Thousand Four Hundred and Twenty Two) Equity shares of Rs. 10/- (Rs.Ten) each to Rs. 247028120/- (Rupees Twenty Four Crore Seventy Lakh Twenty EightThousand One Hundred and Twenty) divided in 24702812 (Two Crore Forty Seven Lakh TwoThousand Eight Hundred and Twelve) Equity Shares of Rs. 10/- (Rs. Ten).
During the period under review the Company has
iii. Converted 850000 Convertible Warrants into Equity Shares with face value of Rs.10/- each by passing circular resolution dated 09.07.2019 and 26.07.2019 upon receipt oftotal consideration of Rs. 81175000 (Rupees Eight Crore Eleven Lakh Seventy Fivethousand) in several tranches.
iv. Issued 7666390 Rights Equity Shares with face value of Rs. 10/- each at a priceof Rs. 20/- per Equity shares (including premium of Rs. 10/- per Equity shares) for anamount aggregating to Rs. 1533.28 lakhs on Rights basis in the ratio of 9 Rights Equityshares for every 20 fully paid up Equity shares. The Issue was opened on February 19 2020and closed on March 12 2020. Subsequently the allotment was approved by the Board ofDirector in their (10/2019-20) meeting held on March 19 2020.
The present paid up Equity Share Capital of the Company as on 31st March2020 is Rs. 2470.28 lacs.
10. Conversion of Convertible Warrants
In terms of SEBI (Issue of capital and Disclosure Requirements) Regulations 2009 asamended ("ICDR Regulations") the Company upon the Shareholders approval at theAnnual General Meeting of the Company held on 10th August 2018 issued andallotted 850000 Convertible Warrants through Preferential Allotment to the Promotergroup of the Company by passing the circular Resolution dated 6th September2018 and 14th September 2018 at a conversion price of Rs. 95.50 per EquityShares aggregating to Rs. 81175000/-. The Company has received 25% of the considerationalong with the application. These Warrants will be converted into an equivalent number ofEquity shares of face value Rs. 10/- each at a premium of Rs. 85.50 per share in theCompany upon receipt of balance 75% of consideration with in a period of 18 months fromthe date of allotment. The Company received Rs. 55549000 (Rupees Five Crores Fifty FiveLakhs Forty Nine Thousand) in the financial year 2018-19 and balance Rs. 25626000(Rupees Two Crores Fifty Six Lakhs Twenty Six Thousand) is received in the financial year2019-20 upon which the Warrants were converted in to the Equity Shares of the Company bypassing circular resolution dated 09.07.2019 and 26.07.2019.
11. Rights Issue
At the (2/2019-20) Meeting of Board of Directors held on 11th June 2019 theBoard of Directors has approved the proposal of raising of funds by way of offer and issueof equity shares to the members of the Company on rights basis (Rights Issue) for anamount of upto Rs. 25 crores. Further at the (6/2019-20) meeting held on 31stJanuary 2019 the Board of Directors approved the issue of 7666390 Equity Shares at Rs.20/- each (including premium of Rs. 10/- per share) for an amount aggregating upto Rs.15.33 Crores on Rights basis in the ratio of 9 Rights Equity shares for every 20 fullypaid up Equity shares held by the Equity shareholders on the Record date February 122020. Accordingly the issue of shares to be issued on rights basis was opened on February19 2020 and closed on March 12 2020 and subsequently the necessary approvals/consentsunder the provisions of SEBI (ICDR) Regulations 2009 SEBI (LODR) Regulations 2015 andthe Companies Act 2013 were obtained.
12. Change in the nature of business if any
During the period under review there was no change in the nature of business of thecompany.
13. Material changes and commitments if any affecting the financial position of thecompany which have occurred between the end of the financial year of the company to whichthe financial statements relate and the date of the report.
They have been no material changes and commitments affecting the financial position ofthe Company which have occurred between the end of the financial year of the Company towhich the financial statements relate and the date of the report.
14. Details of revision of Financial Statement or the Report
There was no revision in Financial Statement or the Report in respect of any of thethree preceding financial years.
15. List of all Credit Ratings
|Rating Agency ||Instrument Type ||Rating ||Remarks |
|CARE Rating Limited ||Long Term Bank Facilities ||CARE D (Single D) || |
This rating is as on August 25 2020.
|Short Term Bank Facilities ||CARE D (Single D) |
16. Changes in Directors and Key Managerial Personnel
In accordance with the provisions of Section 152 of the Companies Act 2013 Mr. RajeshMahajan(DIN No. 02000634) Managing Director of the Company retires by rotation at theensuing Annual General Meeting and being eligible offers himself for reappointment.
Dr. D.S. Maity Whole time Director designated as a Technical Director of the Companyresigned from the Board w.e.f. August 26 2019 and Mr. Suresh Garg has been appointed asthe additional whole time Director designated as the Technical Director of the Companyw.e.f. August 26 2019 and regularised on September 2019.
Mr. Anil Kumar Pillai CFO of the Company resigned w.e.f. May 12 2020 and Mr. PrashantRathi has been appointed as the CFO of the Company w.e.f. July 24 2020.
Mr. Rajnish Kumar Bedi (DIN No. 05287369) Independent Director Mr. Deepak Mahajan(DIN No. 06702389) Independent Director of the Company whose term was expired on 7thAugust 2019 has been re-appointed for the second consecutive term of five years from 8thAugust 2019 to 7th August 2024 and Mrs. Sonia Gupta Independent Director ofthe Company whose term was expired on 29th September 2019 has beenre-appointed for the second consecutive term of five years from 30th September2019 to 29th September 2024 vide special Resolution passed by the Shareholdersthrough Postal Ballot on 20th July 2019.
17. Disclosure for Re-appointment of Independent Directors
The continued association of Independent Directors would be of immense benefit to theCompany. Hence Mr. Rajnish Kumar Bedi Mr. Deepak Mahajan and Mrs. Sonia Gupta has beenreappointed for second consecutive term of five years as Independent Directors of theCompany.
18. Statement on declaration given by the Independent Directors
As required under Section 149 (7) of the Companies Act 2013 all the IndependentDirectors have given their respective declarations that they meet the criteria ofindependence as specified in Section 149 (6) of the Companies Act 2013.
The Independent Directors have complied with the Code of Conduct for IndependentDirectors as prescribed in Schedule IV of the Companies Act 2013. They have also giventhe affirmation for complying the Code of Conduct as formulated by the Company forDirectors and Senior Management personnel.
The Independent Directors also given their Consent in DIR-2 and declaration As requiredunder Section 149 (7) of the Companies Act 2013 all the Independent Directors have giventheir respective declarations that they meet the criteria of independence as specified inSection 149 (6) of the Companies Act 2013 at the time of reappointment for the 2ndterm.
19. Details of significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and company's operations in future
There is no significant and material order passed by the regulators or courts ortribunals during the financial year 2019-20 that impacts the going concern status andcompany's operations in future.
20. Details of Subsidiary/Joint Ventures/Associate Companies
The Company does not have any Subsidiary or Joint Ventures or Associate Companies.
21. Corporate Governance Report and Management Discussion & Analysis
Your Company is committed to good corporate governance practices. The Report onCorporate Governance is given in Annexure 1 and Management Discussion & Analysisprovided above as stipulated in Regulation 34 of listing Regulations forms part of thisDirector's Report.
22. Corporate Social Responsibility
The Company has constituted a Corporate Social Responsibility Committee in accordancewith Section 135 of the Companies Act 2013 and rules framed there under.
A report on the CSR activities in the prescribed format as set out in Annexure to theCompanies (Social Responsibility Policy) Rules 2014 is given in Annexure 2 to thisDirectors' Report. The Policy is disclosed on the Company's website: www. brookslabs.net.
23. Human Resources
Harmonious employees' relations prevailed throughout the year. Your Directors place onrecord their appreciation to all employees for their hard work and dedication.
24. Number of Meetings of the Board
The details of the number of meetings of the Board and other Committees are given inthe Corporate Governance Report in Annexure 1 which forms a part of this Annual Report.
25. Composition of Committees
The details pertaining to composition of Committees are included in the CorporateGovernance Report in Annexure 1 which forms part of this Annual Report.
26. Recommendations of Audit Committee
All the recommendations of Audit Committee were accepted by the Board of Directors.
27. Vigil Mechanism
Pursuant to the requirements of the Companies Act 2013 the Company has establishedVigil mechanism/Whistle Blower Policy for directors and employees to report genuineconcerns about unethical behavior actual or suspended fraud or violation of the Company'sCode of Conduct or ethics policy. The vigil mechanism provides for adequate safeguardsagainst victimization of persons who use such mechanism and make provision for directaccess to the Chairman of the Audit Committee in appropriate or exceptional cases. ThePolicy is disclosed on the Company's website: www.brookslabs.net.
28. Directors' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act 2013 the Directors confirm that:
a. i n the preparation of the annual accounts for the year ended 31st March2020 the applicable accounting standards had been followed along with proper explanationrelating to material departures;
b. the Directors had 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 2020 and ofthe profit of the Company for that period;
c. the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;
d. the Directors had prepared the annual accounts on a going concern basis;
e. the Directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively;
f. t he Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
29. Internal Financial Controls related to financial statement
The Company has in place adequate internal financial controls related to financialstatement. During the year such controls were tested and no reportable materialweaknesses in the design or operation were observed.
30. Fraud Reported by Auditor
There is no fraud reported by the Auditor.
31. Extract of Annual Return
Pursuant to Section 134(3)(a) of the Companies Act 2013 an extract of Annual Returnin the prescribed Form MGT 9 is given as Annexure 7 to this Directors' Report. TheDirectors' Report as a part of Annual Report is placed on the Company's website:www.brookslabs.net.
32. Statutory Auditors
M/s. SGCO & Co. LLP Chartered Accountants Mumbai were re-appointed as theStatutory Auditors of the Company for a second term of 5(five) consecutive years at the 17thAnnual General meeting held on 25th September 2019 to hold office from theconclusion of 17th Annual General Meeting of the Company till the conclusion of22nd Annual General Meeting of the Company.
The Report given by the Statutory Auditors on the financial statement of the Company ispart of the Annual Report. There has been no qualification reservation adverse remark ordisclaimer given by the auditors in their Report.
33. Cost Auditors
Pursuant to the provisions of section 148(3) of the Companies Act 2013 the Board hasappointed M/s. Balwinder Singh & Associates (Firm Reg. No. 000201) Cost AccountantsF-125 Phase VIII B Industrial Area Mohali- 160071 as the Cost Auditors of the Companyto conduct an audit of the cost records of bulk drugs and formulations maintained by theCompany for the financial year ending 31st March 2021. The Board has approvedthe remuneration payable to the Cost Auditors subject to ratification of the Members atthe forthcoming Annual General Meeting.
The Cost Audit Reports would be submitted to the Central Government within theprescribed time.
34. Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act 2013 and Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 your Company engagedthe services of M/s. Sharma Sarin and Associates Company Secretaries in practiceChandigarh to conduct the Secretarial Audit of the Company for the financial year ended31 st March 2020.
The Secretarial Audit Report (Form MR-3) is given as Annexure 3 to this Directors'Report. The said Report does not contain any qualification reservation or adverse remarkor disclaimer.
35. Particulars of Loans Guarantees or Investments
Details of Investments covered under the provisions of Section 186 of the CompaniesAct 2013 is given in the Note No. 5 of the Notes to the Financial Statement.
36. Loan from Directors
During the year under review Loan of Rs. 6800000/- (Rupees Sixty Eight Lakhs)received from Mr. Atul Ranchal (DIN No. 01998361) Chairman of the Company and Rs.3105000/- (Rupees Thirty One Lakh and five thousand only) received from Mr. RajeshMahajan (DIN No. 02000634) Managing Director of the Company were received in severaltranches. The mount is not being given out of funds acquired by him by borrowing oraccepting loans or deposits from others as declaration given by them at the time of givingthe money.
The loan received from the Directors of the Company has been repaid by the Company infull on or before March 312020.
37. Contracts and arrangements with Related Parties
All transactions of the Company with Related Parties are in the ordinary course ofbusiness and at arm's length. Information about the transactions with Related Parties ispresented in Note No. 31(b) in Notes to the Accounts.
Form AOC - 2 pursuant to the provisions of Section 134 (3) (h) of the Companies Act2013 read with Rule 8 (2) of the Companies (Accounts) Rules 2014 is given as Annexure 5to this Directors' Report.
38. Risk Management Policy
The Company does not have any Risk Management Committee due to the non-applicability ofthe provisions of Regulation 21 of the Listing Regulations whereas the Company has RiskManagement Plan. Business Continuity Plans are periodically reviewed and tested to enhancetheir relevance. The Risk Management Framework covering business operational andfinancial risk is being continuously reviewed by the Audit Committee. At present in theopinion of the Board of Directors there are no risks which may threaten the existence ofthe Company.
39. Disclosure pursuant to Section 197 of the Companies Act 2013 read with Rule 5 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.
The information required pursuant to Section 197 of the Companies Act 2013 read withRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is given in Annexure 6 to this Directors' Report.
The Statement pursuant to Rule 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is not applicable to the Company for thefinancial year 2019-20.
40. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo
The Statement of conservation of energy technology absorption foreign exchangeearnings and outgo as required prescribed in Rule 8(3) of the Companies (Accounts) Rules2014 is given in Annexure 4 to this Directors' Report.
41. Policy on appointment and remuneration of Directors
The Nomination and Remuneration Committee of the Company has recommended to the Board aPolicy relating to the remuneration for Directors Key Managerial Personnel and otheremployees including the criteria for determining the qualification positive attributesand independence of a Director as required under Section 178(1) of the Companies Act2013 which was adopted by the Board. A brief detail of the policy is given in theCorporate Governance Report in Annexure 1 which forms a part of this Annual Report. ThePolicy is disclosed on the Company's website: www.brookslabs.net.
42. Evaluation of Performance of Board its Committees and Individual directors
During the year a meeting of the Independent Directors was held to review theperformance of the non-independent Directors and the Board as a whole and the Chairman onthe parameters of effectiveness and to assess the quality quantity and timeliness of theflow of information between the Management and the Board. Mr. Deepak Mahajan was appointedas the Lead Director to oversee the evaluation process at the meeting of the IndependentDirectors.
43. Compliance with Secretarial Standards
The Company has complied the applicable Secretarial Standards as listed below-
a. SS-1 on Meetings of the Board of Directors
b. SS-2 on General Meeting
c. SS-3 on Dividend(Company has not declared any Dividend since 2012)
d. SS-4 on Report of the Board of Directors
44. Corporate Insolvency Resolution Process initiated under the Insolvency andBankruptcy Code 2016 (IBC)
There is no such application filed for corporate insolvency resolution process by afinancial or operational creditor or by the company itself under the IBC before the NCLT.
45. Failure to implement any Corporate Action
The Company has not failed to complete or implement any corporate action within thespecified time limit.
46. Sexual Harassment of Women at the Workplace(Prevention Prohibition and Redressal)Act 2013
The Internal Complaint Committee under the Sexual Harassment of Women at the Workplace(Prevention Prohibition and Redressal) Act 2013 has been formed.
There is nil case filed and disposed as required under the Sexual Harassment of Womenat the Workplace (Prevention Prohibition and Redressal) Act 2013.
Your Directors are pleased to place on record their sincere gratitude to the CentralGovernment State Government(s) Financial Institutions Bankers and Business Constituentsfor their continuous and valuable co-operation and support to the Company. They also takethis opportunity to express their deep appreciation for the devoted and sincere servicesrendered by the employees at all levels of the operations of the Company during the year.
| ||For and on Behalf of the Board |
| ||For Brooks Laboratories Limited |
| ||Sd/- |
| ||Atul Ranchal |
| ||Chairman |
| ||(DIN: 01998361) |
|Place: Mumbai || |
|Date: 03.09.2020 || |