The Directors present their 28th Annual Report on the business andoperations of the Company and the accounts for the financial year ended March 31 2019
|Financial Highlights || || || || |
| || || ||Rs. In Lakhs except EPS |
|Financial Results ||Standalone ||Consolidated |
|Particulars ||2018-19 ||2017-18 ||2018-19 ||2017-18 |
|Revenue from Operations ||53690.57 ||42657.39 ||64869.09 ||53984.20 |
|Other Income ||3540.13 ||2331.33 ||1902.89 ||1266.52 |
|Total Income ||57230.70 ||44988.72 ||66771.98 ||55250.72 |
|Profit Before Interest Depreciation and Tax ||22355.68 ||16510.20 ||25036.12 ||20743.45 |
|Less: Finance cost ||5.98 ||6.12 ||6.00 ||6.12 |
|Less : Depreciation and amortisation expenses ||2084.32 ||1898.78 ||2342.50 ||1899.50 |
|Profit Before Tax ||20265.38 ||14605.30 ||22687.62 ||18837.83 |
|Less: Tax Expenses ||5448.73 ||4374.21 ||5032.08 ||4374.33 |
|Net Profit ||14816.65 ||10231.09 ||17655.54 ||14463.50 |
|Less : Non-controlling Interest ||- ||- ||(1.16) ||(15.27) |
|Net Profit attributable to the shareholders of the Company ||14816.65 ||10231.09 ||17656.70 ||14478.77 |
OPERATIONAL REVIEW / PERFORMANCE
During the year under review the Company has transferred its regulatedmarkets injectable business which inter-alia includes US FDA approved injectable plantand Department of Science and Industrial Research (DSIR) recognised R& D Units CP4 andCP 5 to Caplin Steriles Limited a Wholly Owned Subsidiary Company for which the approvalwas granted by the members of the Company by way of Special Resolution through PostalBallot on December 31 2018.
The Company is in constant endeavour to create a sustainable marketshare in the injectable business in US and other regulated markets. In order to achievethis a focused and dedicated approach is required in the regulated markets for injectablebusiness. Keeping this in view this business has been hived off into a Wholly OwnedSubsidiary Company. This would facilitate the following :
Further capitalization for additional investment in plant andmachinery building and capacity expansion.
Unlocking the value for the Company's Regulated MarketsInjectable Business as it is uniquely positioned to be run as a dedicated entitytargeted towards US and other regulated markets
Exploring opportunities to attract "Capital plusKnow-how" type of strategic partnerships for Regulated Markets Injectable Businesswithout any dilution in the Company.
Separate business entity with focused strategic and growth path.
Inorder to expand the injectable business in a global scenario theCompany has attracted investments in Caplin Steriles Limited from Eight Roads VenturesIndia Ill LP and F-Prime Capital P artners Life Sciences Fund VI LP in the form ofCompulsorily Convertible Preference Shares ("CCPS") which shall be convertedinto equity shares of Caplin Steriles Limited based on the agreed terms.
JOINT VENTURE WITH HAINAN JOINTOWN PHARMACEUTICAL COMPANY LIMITEDCHINA
The Company has formed a Joint Venture Hainan Jointown CaplinpointPharmaceutical Company Limited in Hainan Province of China which will be focusing oninternational trade of medicines and establishment of marketing team in India and Chinafor export of composite formulations to customers in China India Europe and LatinAmerica.
ACTIVE PHARMACEUTICAL INGREDIENTS
The Company is in the process of setting up Research and Developmentwing for Intermediaries and Active Pharmaceutical Ingredients with focus on the Chinesemarket which is currently facing supply constraints.
CLINICAL RESEARCH ORGANIZATION
The Company has set up Amaris Clinical a Clinical Research divisionwhich will be targeting the regulatory approvals for USA China Brazil Chile andColombia. It is expected to commence activities in the second half of 2019-20.
The Company has on standalone basis registered total operating revenueof Rs. 53690.57 Lakhs (Total Income Rs. 57230.70 Lakhs) during the year under review asagainst Rs. 42657.39 Lakhs (Total Income Rs.44988.72 Lakhs) in the previous financialyear. The Profit after tax was Rs.14816.65 Lakhs during the year under review as againstRs. 10231.09 Lakhs in the previous financial year.
The Company has on consolidated basis registered total operatingrevenue of Rs. 64869.09 Lakhs (Total Income Rs. 66771.98) during the current financialyear as against Rs. 53984.20 Lakhs (Total Income Rs. 55250.72 Lakhs) in the previousfinancial year .
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As required under Section 134(3)(i) of the Companies Act2013 theState of Affairs of the Company along with the financial and operational performance hasbeen discussed in Management Discussions and Analysis Report which is appended in thisannual report pursuant to Regulation 34(2) of SEBI (Listing Obligations and DisclosureRequirements) Regulations2015.
The Board of Directors at their meeting held on May 222019 haverecommended a dividend of Rs. 2.20 per equity share (110%) of Rs. 2/- each. The saiddividend if approved by the members at the 28th Annual General Meeting which is to be heldon September 12 2019 would absorb a total cash out flow of Rs. 166414050/- excludingDividend Distribution Tax for total number of shares as on the date of the report.
TRANSFER TO RESERVES
The Company has made no transfers to reserves during the financial year2018-19
As on March 312019 the Company has four subsidiaries :
1. Caplin Steriles Limited
2. Argus Salud Pharma LLP
3. Caplin Point Far East Limited Hongkong
4. Caplin Point Laboratories Colombia SAS- Colombia.
Caplin Steriles Limited is a material Wholly Owned subsidiary Companyof Caplin Point Laboratories Limited.
The consolidated financial results/ performance incorporating thefinancial statements of the above subsidiaries are attached to the annual report asrequired under the Accounting Standards and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. Further a statement containing the salient features ofthe financial statements of our subsidiaries pursuant to Section 129(3) of the CompaniesAct 2013 in the prescribed Form AOC-1 is appended as Annexure I to the Board'sreport.
The Company did not accept any deposits from the public within themeaning of Chapter V of the Companies Act 2013 read with the Companies (Acceptance ofDeposits) Rules 2014.
The paid up share capital as on March 312019 stood atRs.151260500/- consisting of 75630250 equity shares at the face value of Rs.2/-each. During the year Company has allotted 26750 equity shares of Rs.2/- each underEmployee Stock Option Plan -2015.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OFTHE COMPANIES ACT 2013
Particulars of loans guarantees and investments as on March 31 2019are given in the Note No. 3 3A 4 & 6 to the standalone financial statements.
NUMBER OF MEETINGS OF THE BOARD
The Board met seven times during the year ended March 31 2019 whichwere held on 28.05.2018 06.08.2018 02.11.2018 19.11.2018 11.01.2019 18.01.2019 and11.02.2019.
As on March 312019 the Board consist of a Non- Executive Chairmantwo Executive Directors six Independent Directors and a Non-Executive - Non- IndependentDirector.
RETIREMENT BY ROTATION
In terms of Section 152 (6) of the Companies Act 2013 Mr C CPaarthipan (DIN :01218784) retires by rotation and being eligible offers himself forre-appointment.
Dr Philip Ashok Karunakaran Whole-time
Director resigned from the Board with effect from April 102019. TheBoard of Directors placed on record their appreciation for the valuable services renderedby Dr Philip Ashok Karunakaran during his tenure as the Whole-time Director.
KEY MANAGERIAL PERSONNEL
Pursuant to section 2 (51) and Section 203 of the Companies Act2013Dr Sridhar Ganesan Managing Director Mr D Muralidharan Chief Financial Officer and MrVinod Kumar S Company Secretary are the Key Managerial personnel of the Company.
DECLARATION BY INDEPENDENT DIRECTORS
All Independent Directors of the Company have submitted theirdeclaration as required pursuant to Section 149(7) of the Companies Act 2013 stating thatthey meet the criteria of independence as stipulated in Section 149(6) of the CompaniesAct 2013.
DIRECTORS RESPONSIBILITY STATEMENT
In terms of Section 134(5) of the Companies Act 2013 the Directorsconfirm that: a. In the preparation of the annual accounts the applicable accountingstandards (Ind AS) had been followed along with proper explanation relating to materialdepartures; b. The Directors had selected such 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 as at March 312019 andof the profit of the Company for that period; c. The Directors had taken proper andsufficient care for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities; d. The Directors had prepared theannual accounts on a going concern basis; e. The Directors had laid down internalfinancial controls to be followed by the Company and that such internal financial controlsare adequate and were operating effectively; f. The Directors had devised proper systemsto ensure compliance with the provisions of all applicable laws and that such systems wereadequate and operating effectively.
MATERIAL CHANGES AND COMMITMENTS
There were no material changes and commitments affecting the financialposition of the Company which have occurred between the end of the financial year of theCompany to which the financial statements relate and the date of the report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGEEARNINGS AND OUTGO
Pursuant to Section 134 (3)(m) of the Companies Act2013 read with inRule 8 (3) of the Companies (Accounts) Rules 2014 particulars of conservation of energytechnology absorption foreign exchange earnings and outgo are given as Annexure II tothis Directors' Report.
ANNUAL EVALUATION OF THE BOARD ITS COMMITTEES AND INDIVIDUAL DIRECTORS
Pursuant to the provisions of Section 134(3) (p)the Companies Act 2013the Board had carried out performance evaluation of its own of the Board Committees andof the Individual Directors. Independent Directors at their separate meeting held onFebruary 112019 evaluated performance of the Non-Independent Directors Board as a wholeand of the Chairman of the Board. The outcomes of the evaluation process weresatisfactory which resulted in the active engagement of the Board and committees in theCompany.
Further the Directors are regularly informed and familiarized duringthe Board Meetings about the activities of the Company and its operations products andits development and latest trends in the pharmaceutical industry and issues faced by theindustry.
The Board has carried out an evaluation of its own performance and thatof its Directors individually and the sub committees of the Board. The manner in which theevaluation has been carried out is explained in the Corporate Governance Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Pursuant to the provisions of section 135 of the Act read with CSRRules the Company has constituted Corporate Social Responsibility Committee and basedupon the recommendation of the CSR committee the Board of Directors have approved CSRPolicy. Disclosure under Companies (Corporate social responsibility policy) rules 2014 isannexed as an Annexure III to this report.
The Composition of the Audit Committee the meetings of Audit Committeeand their terms of reference of the Audit Committee have been disclosed separately in theCorporate Governance Report which is annexed and forms part of this annual report.
NOMINATION AND REMUNERATION COMMITTEE (NRC) AND ITS POLICY
The Nomination and Remuneration Committee is empowered to authorize andexercise the power as specified in section 178 of the Companies Act 2013. The Company hasa policy on Directors appointment and remuneration including the criteria for determiningthe qualification positive attributes and independence of a Director and other matters asprovided under section 178(3) of the Companies Act2013. The Nomination and RemunerationCommittee policy is annexed in Annexure IV of the Director's report
INTERNAL FINANCIAL CONTROLS
The Company has designed and implemented adequate financial controlsystems with respect to the financial statements. During the year under review no serious/ adverse observation have been received from the Internal Auditors of the Company withrespect to effectiveness or adequacy of such controls.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
The Company has established a vigil mechanism through a Whistle BlowerPolicy where Directors and employees can voice their genuine concerns or grievances aboutany unethical or unacceptable business practice. A whistle-blowing mechanism not onlyhelps the Company in detection of fraud but is also used as a corporate governance toolleading to prevention and deterrence of misconduct .It provides direct access to theemployees of the Company to approach the Compliance Officer or the Chairman of the AuditCommittee where necessary. The Company ensures that genuine Whistle Blowers are accordedcomplete protection from any kind of unfair treatment or victimization. The Whistle BlowerPolicy is disclosed on the website of the Company i.e(www.caplinpoint.net)
Pursuant to Section 139 of the Companies Act 2013 M/s. CNGSN &Associates LLP Chartered Accountants Chennai Statutory Auditors of the Company shallhold office till the conclusion of the 31st Annual General Meeting of the Company.
Pursuant to the provisions of Section 204 of the Companies Act 2013read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 the Board of Directors of the Company appointed M/s. G Ramachandran &Associates Company Secretaries Chennai to conduct the secretarial audit of the Company.Secretarial Audit Report (Form MR 3) is given as Annexure V to this Directors'Report.
Pursuant to Regulation 24A of SEBI (Listing Obligations and DisclosureRequirements) Regulations2015 a listed entity shall annex with its Annual Report theSecretarial Audit Report of its material unlisted subsidiary company. Caplin SterilesLimited being material unlisted wholly owned subsidiary of the Company the SecretarialAudit Report(Form MR-3) is annexed as Annexure V-A to this Directors Report.
Pursuant to Regulation 34 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a report on Corporate Governance is given separatelywhich forms a part of this Annual report.
The Board has designed and framed risk management approach throughwhich it identifies and manages the risk parameters. The senior level managementperiodically reviews the risk parameters through which key business risks are identifiedand addressed. A brief report on the Risk Management are referred in the ManagementDiscussion and Analysis Report which forms a part of the Annual Report. The Board ofDirectors of the Company have constituted the Risk Management Committee on March 302019.
EMPLOYEE STOCK OPTION PLAN
The Company has two stock options in force (i.e) Caplin Point EmployeeStock Option Plan -2015 and Caplin Point Employee Stock Option Plan
2017. The Company has granted 374250 options under CaplinPoint Employee Stock Option Plan -2015 out of which 80250 options had been exercised ason March 312019. The Company has granted 101500 options under Caplin Point EmployeeStock Option Plan-2017 as on March 312019 .The details required under Rule 12 (9) ofCompanies (Share Capital and Debentures) Rules 2014 and as required to be provided underthe SEBI Guidelines as on March 31 2019 are set out in Annexure VI to this Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Particulars pursuant to Section 197(12) of Companies Act 2013 readwith Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is enclosed in the Annexure VII to this Directors report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All related party transactions which were entered into during the yearunder review were on arm's length basis. There were no materially significant relatedparty transactions made by the Company with the Promoters Directors and Key ManagerialPersonnel which may have a potential conflict with the interests of the Company at large.
Particulars of transactions with related parties in prescribed formAOC 2 is enclosed as Annexure VIII
The related party transaction policy and material related partytransactions has been uploaded on the website of the Company. www.caplinpoint.net/investor/companypolicies&codeofconduct/ relatedpartytransactionpolicy.
INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to Section 124 and 125 of the Companies Act2013 the amountof dividends remaining unpaid or unclaimed for a period of seven years from the date oftransfer to the unpaid account is required to be transferred to the Investor Educationand Protection Fund (IEPF) of the Central Government. Accordingly unpaid or unclaimeddividends in respect of the financial year 2010-11 has been transferred to the IEPF.
During the year under review the Company has credited 98500 unclaimedequity shares of Rs.2/- each to Investor Education and Protection Fund of thoseshareholders who have not encashed/claimed their dividends for a period of sevenconsecutive years from the year 2010-11.
Pursuant to Section 124 and 125 of the Companies Act2013 the unpaidor unclaimed dividends for the financial year 2011-12 has to be transferred to IEPF.Members who have not yet en-cashed or claimed the dividends that are yet to betransferred to the IEPF are requested to contact the Company's Registrar and ShareTransfer Agent at the earliest.
Members are requested to take note of the same and claim theirunclaimed dividends immediately to avoid transfer of the underlying shares to the IEPFAccount. The shares transferred to the IEPF Account can be claimed back by the concernedMembers from IEPF Authority after complying with the procedure prescribed under the Rules.
1. There has been no change in the nature of business of the Companyduring the year under review.
2. During the year under review no significant and material orderswere passed by the regulators or courts or tribunals impacting the going concern status ofCompany's operations in future.
3. There were no complaints filed under the Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013
4. Pursuant to Section 197 (14) of the Companies Act2013neither theManaging Director nor the Whole-time Director of the Company did not receive anyremuneration or commission from any of its subsidiaries
5. The Report of the Statutory Auditors (which forms a part of thisAnnual Report) and the Report of the Secretarial Auditor (which is Annexed to thisDirectors Report) are self explanatory having no adverse remarks/ comments or disclaimer.
6. The Company maintains cost records as per Companies ( Cost Recordsand Audit) Rules2014.
7. The Board of the Company has adopted a Dividend Distribution Policywhich is attached as Annexure IX .The Policy is also available on the website of theCompany under the "Investor" section.
8. The Business Responsibility Report as required pursuant toRegulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements)Regulations2015 is attached as Annexure X of this Annual Report.
9. As required under Section 134(3)(a) of the Companies Act 2013 anextract of Annual Return in the prescribed form MGT 9 is given as Annexure XI of theDirectors Report.
10. During the year under review none of the employees were in receiptof remuneration in excess of remuneration prescribed under Section 197(12) of theCompanies Act2013 read with rule 5(2) of the Companies (Appointment and Remuneration ofManagement Personnel)Rules 2014.
The Board of Directors wishes to place on record their sincereappreciation to the customers suppliers business partners and subsidiaries andshareholders for their support. The Directors would like to thank the Bankers andfinancial Institutions as well. The Directors would take this opportunity to express theirappreciation for the dedicated efforts of the employees and their contribution which isdeeply acknowledged
For and on behalf of the Board of Directors
C C Paarthipan
Place : Chennai
Date : August 12 2019