Your Directors are pleased to present their report and financial statements for theyear ended March 312019.
1 . Financial Results:
| || ||(Rs. In Lakhs) |
|Particulars ||For the financial year ended 31.03.2019 ||For the financial year ended 31.03.2018 |
|Income from Business Operations ||9540.70 ||5806.73 |
|Other Income ||199.60 ||164.35 |
|Total Income ||9740.30 ||5971.08 |
|Profit / Loss before Interest Depreciation and Taxes ||1058.8 ||586.42 |
|Finance Cost ||309.62 ||193.75 |
|Depreciation / Amortization ||133.00 ||128.50 |
|Profit/Loss Before tax ||616.18 ||264.17 |
|Exceptional Income / Expenses ||00 ||00 |
|Prior Period adjustments ||00 ||00 |
|Profit / Loss before Tax ||616.18 ||264.17 |
|Income Tax ||170.18 ||89.08 |
|Profit/Loss after Tax ||446.00 ||175.09 |
2. Financial Performance:
Your Company earned a total income of Rs. 9740.30 lakhs compared to the income of Rs.5971.08 lakhs for the previous year and the net profit of Rs. 446 lakhs compared to thenet profit of Rs 175.09 lakhs for the previous year i.e. there was 63% hike in the totalincome of the Company.
The turnover of the Company has increased manifold due to the right strategy adopted bythe Directors since last 3 years. Emphasis was put on increasing the infrastructure of themanufacturing unit at Palghar and installing high speed automatic machines for bothproduction and packing departments. This helped the Company in strengthening the coreoperations and managing the overall cost structure. A very important aspect of regulatorycompliance was indirectly met with due to the installation of the latest machines havingcomputerized data assurance and transparency in the manufacturing processes. Thus byupgrading the manufacturing unit as per the latest regulatory framework your Companyexpects new drug approvals at a much faster pace in the countries we already export to andalso in other countries where health is considered a priority and where a substantialamount of GDP is spent on health.
3. State of Affairs of the Company:
Your Companies' entire focus is on providing quality medicines at affordable prices. Areview of the Indian Pharma Companies for the F.Y. 2018-19 shows that the Companies haveto compete on low cost generics so rationalisation of cost of production and marketingare very important factors.
As per our current Government Policies health awareness is given the utmost prioritythrough "Aayushman Bharat Scheme" for the poor and the underprivileged. Thisaccounts for about 25 crores of Indians and will create a voluminous market and willdefinitely boost the requirements for generics. Your Company to ensure competitiveness inthe market has started participating in Government Tender Business and has already beensuccessful in winning some tenders which would yield higher growth in the future.
Further the licenses of 1wo new departments of ointments / gels / creams and pelletsmanufacturing of different APis have been obtained and the validation processes of some ofthe products are also over so your Company looks ahead to achieve more revenue throughconsumer health products in the ointments and creams market.
The Board of Directors have recommended a Dividend of 6.5% on the paid-up Equity Sharesof the Company payable to those shareholders of the Company whose names appear in theRegister of Members as on the Record date.
5. Share Capital:
The paid-up Share Capital of the Company as on March 31 2019 was Rs. 39896340consisting of 3989634 Equity Shares having Face Value of Rs. 10 each. The Equity Sharesof the Company are listed on the BSE Limited since March 212016.
During the F.Y. 2018 - 2019; there was an increase In the capital structure of theCompany. Considering the Business expansion and requirement of funds; the Company hadissued 564500 Equity Shares having Face Value of Rs. 10/- each under the PreferentialGuidelines of Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009 at Rs. 225/- each including premium of Rs. 215/- each tothe Eligible Investors and Promoters. The details of the Issue is available on the websiteof the Company via the Postal Ballot notice dated May 24 2018.
An increase in the Capital structure of the Company has occurred from the FinancialYear 2017-18 till the Financial Year 2018-19 as shown In the table below:
|No. of Equity Shares ||Issue Price ||Allotment date ||Equity Share Capital before allotment ||Equity Share Capital after allotment |
|572735 ||Rs. 150/- ||September 12017 ||Rs. 23524000/- ||Rs. 29251350/- |
|499999 ||Rs. 150/- ||January 16 2018 ||Rs. 29251350/- ||Rs. 34251340/- |
|564500 ||Rs. 225/- ||12018 ||Rs. 34251340/- ||Rs. 39896340/- |
6. Transfer to Reserves:
The Company proposes to 1ransfer an amount of Rs. 3499.95 Lakhs to reserves for itsfuture growth and diversification.
7. Foreign Exchange Earnings and Outgo:
Foreign Exchange Earnings: Export of Goods - Rs. 407488593.88/- Lakhs ForeignExchange Outgo: Import of Goods - Rs. 19206298/- Lakhs
In compliance with the Reserve Bank of India guidelines the Company proactivelymanages Foreign Exchange Risk to protect value of exposures if any; with an objective tomanage financial statement volatility. Currently the Company has in place appropriaterisk hedging strategy for its Imports and Exports. Foreign Exchange exposures areperiodically reviewed and if necessary hedged while avoiding trading and speculativepositions. The Board periodically reviews Foreign Exchange Exposure.
8. Meetings and Committee Meetings;
Seven (7) Board meetings were held during the Financial Year 2018-19. Thedetails of the Board meetings and the attendance of the Directors are provided in theCorporate Governance Report annexed herewith.
Four (4) Audit Committee Meetings were held during the Financial Year 2018-19.The details of the Audit Committee Meetings and the attendance of the Directors areprovided In the Corporate Governance Report annexed herewith.
Three (3) Nomination & Remuneration Committee Meetings were held during theFinancial Year 2018-19. The details of the Committee Meetings and the attendance of theDirectors are provided in the Corporate Governance Report annexed herewith.
One (1) Independent Director Committee Meeting was held during the FinancialYear 2018-19. The details of the Committee Meeting and the attendance of the Directors areprovided in the Corporate Governance Report annexed herewith.
Three (3) Stakeholder Relationship Committee Meetings were held during theFinancial Year 2018-19. The details of the Committee Meetings and the attendance of theDirectors are provided in the Corporate Governance Report annexed herewith.
9. Directors and Key Managerial Personnel:
During the year the Non-Executive Directors of the Company had no pecuniaryrelationship or transactions with the Company; other than the sitting fees.
10. Director Retiring by Rotation:
In accordance with the provisions of the Companies Act 2013 and in terms of theMemorandum and Articles of Association of the Company; Mr. Nariman Medhora (DIN: 02060357)is liable to retire by rotation at the ensuing 32nd Annual General Meeting and beingeligible has offered himself for re-appointment. His re-appointment is being placed foryour approval at the ensuing Annual General Meeting. The Members of the Company may referto the accompanying Notice of the 32nd Annual General Meeting of the Company for the briefResume of Mr. Nariman Medhora.
11 . Declaration by Independent Directors:
The Company had received declaration from all the Independent Directors under Section149(7) of the Companies Act 2013 in the first Board Meeting of the Financial Year 2018-19held on May 24 2018; stating that they meet the criteria of Independence as laid downunder Section 149(6) of the Companies Act 2013.
12. Annual Evaluation of Board Performance and Performance of its Committees and ofIndividual Directors:
The Board of Directors had carried out an Annual Evaluation of its performance. BoardCommittees and individual Directors pursuant to the provisions of the Companies Act 2013and SEBI Listing Regulations 2015.
The performance of the Board was evaluated by the Board after seeking inputs from allthe Directors on the basis of criteria such as the Board Composition and structureeffectiveness of Board process participation in the long-term strategic planninginformation functioning etc.
The performance of the Committees was evaluated by the Board after seeking inputs fromthe Committee Members on the basis of the criteria such as the Composition of Committeeseffectiveness of Committee meetings etc.
The contribution and impact of individual members is evaluated on a number ofparameters such as level of engagement independence of judgment preparedness on theissues to be discussed conflicts resolution and contributions to enhance the Board'soverall effectiveness. In addition the Chairperson was also evaluated on the key aspectsof her role by other Board members.
A separate meeting of Independent Directors was convened on May 24 2018; to discussthe following aspects:
i Review the performance of Non- Independent Directors and the Board as a whole;
ii Review the performance of the Chairperson of the Company taking into account theviews of Executive and Non-Executive Directors;
iii Assess the quality quantity and timeliness of flow of information between theCompany's Management and the Board that is necessary for the Board to effectively andreasonably perform its duties.
Outcome of evaluation process
Based on inputs received from the Members it emerged that the Board had a good mix ofcompetency experience qualifications and diversity OVerall the Board was functioningvery well in a cohesive and interactive manner.
13. Directors' Responsibility Statement:
Pursuant to Section 134( 3)(c) of the Companies Act 2013; your Directors herebyconfirm that:
i In the preparation of the Annual Accounts the applicable accounting standards havebeen followed and there are no material departures;
ii Appropriate accounting policies have been selected and applied consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the Profitof the Company for that period;
iii Proper and sufficient care had been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theAssets of the Company and for preventing and detecting fraud and other irregularities;
iv The Annual Accounts had been prepared on a Going Concern basis;
v The Internal Financial Controls had been laid down to be followed by the Company andsuch Internal Financial Controls are adequate and were operating effectively; and
vi In order to ensure compliance with the provisions of all applicable laws propersystems has been devised and that such systems were adequate and operating effectively.
14. Particulars of Employees:
None of the employees of the Company fall under the limits laid down in Rule 5(2) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.
15. Extract of the Annual Return:
Pursuant to the provisions of Section 92(3) of the Companies Act 2013 read with Rule12 of the Companies (Management and Administration) Rules 2014; the extract of the AnnualReturn in Form MGT-9 is available on the website of the Company at www. fredungroup.com
16. Training and Human Resource Management:
India is one of the world's biggest supplier of generic drugs and ranks amongst the topfive fastest growing Pharma markets; but the top-line growth is declining along with theprofitabilily. It needs to invest more Capital in R & D which is becoming hard tofind. The only solution is to identify the talent within the organization and developtheir mindset and culture. It requires big changes in organizational thinking as itrelates to their complete lifestyle transformation.
Your Company makes concerted efforts to retain quality people with leadershipcommitments and who can align with the Company ethics. This will ensure checks and doublechecks to maintain the quality of the products and reduce the costs. An outcome- basedapproach was adopted with the trained leaders and a skilled workforce helped the Companygain a competitive edge.
Your Company has continuously focused on development and training programs of its starperformers especially in the regulatory area and R & D. This has yielded good resultsas your Company was successful In manufacturing latest molecules which were out of patentand the In-house processes made them cost effective.
Your Company has already registered some of the products in the ARV segment and arecontinuing to register in different markets. Understanding the importance of the basicstrategy of Human Resource Management your Company believes that it will yield benefitsfor the Company by maintaining good relations with the employees and will help to enable asustainable corporate lifestyle.
Your Company consistently abides by Human Resources Policy that is found on a set ofprinciples of equality of opportunity continuing personnel development fairness mutualtrust and teamwork.
17. Subsidiary Company. Associate Company and JointVenture Company:
Your Company does not have any Subsidiaries or Associates or Joint Venture Companies.
Your Company has not accepted any deposits from public.
19. Particulars of Loans. Guarantees and Investments:
During the year your Company has not given any new loans or made any Investments andhas not provided any Guarantees except those which are already mentioned in the AuditedAccounts of the Company.
20. Statutory Auditors:
The Statutory Auditors of the Company M/s. Savla & Associates CharteredAccountants (ICAI Registration No: 109361W) were appointed at the 31st Annual GeneralMeeting of the Company held on September 27 2018 for a period of 5 years i.e. upto theconclusion of the 36th Annual General Meeting that will be held in the year 2023.
The Company had received a confirmation from M/s. Savla & Associates to the effectthat their appointment is in compliance with the eligibility criteria in terms of Section141 (3) of the Companies Act 2013.
The requirement of ratification of the Auditors' Appointment each year during thecontinuation of their tenure is waived off by the Ministry of Corporate Affairs and thusthere is no requirement each year to pass a resolution for Ratification of the Auditors'Appointment.
There are no qualifications reservations or adverse remarks or disclaimers made byM/s. Savla & Associates in their Report dated June 10 2019; on the FinancialStatements of the Company for Financial Year 2018-19.
21. Particulars of Contracts or Arrangements with Related Parties:
There were no materially significant Related Party transactions made by the Companyduring the year that would fall under the scope of Section 188 of the Companies Act 2013.Disclosure in form AOC-2 in terms of Section 134(3)(h) of the Companies Act 2013 isannexed as 'Annexure A'.
The policy on materiality of information / documents and dealing with it has beenapproved by the Board and the same is also available on the website of the Company atwwwfredunaroup.com
22. Secretarial Audit Report:
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014; the Board ofDirectors had appointed M/s. Rajendra and Co. Practicing Company Secretaries. toundertake the Secretarial Audit of the Company for the F.Y ended March 31 2019. TheSecretarial Audit Report is annexed as 'Annexure B'.
There are no qualifications reservations or adverse remarks or disclaimers made byM/s. Rajendra and Co. Practicing Company Secretaries in their Secretarial Audit Reportdated June 10 2019 on the Secretarial and other related records of the Company forFinancial Year 2018-19.
23. Cost Audit Report:
Pursuant to Section 148 of the Companies Act 2013 read with the Companies (Cost Recordsand Audit) Amendment Rules 2014; your Company with reference to its Pharma business isrequired to maintain the cost records as specified under Section 148 of the Companies Act2013 and the said cost records are also required to be audited by the Practising CostAccountants. Your Company is maintaining all the cost recordsreferred above.
The Board on the recommendation of the Audit Committee had appointed M/s. Joshi Apte& Associates Practising Cost Accountants as the Cost Auditors for conducting theaudit of cost records of the Company for the Financial Year 2019 - 20.
Further the Cost Auditors are in the process of completing the Cost Audit for theFinancial Year 2018-19 and it will be completed before the due date.
24. Details of Significant Material Orders:
No significant and material orders were passed by the Regulatory Authorities or theCourts or Tribunals that may have an impact on the Going Concern status and Company'sOperations in the future.
25. Internal Financial Control system and their adequacy:
Company has well established Internal Financial Control System for reviewing theFinancial reporting of the Company for the Financial Year 2018-19.
26. Corporate Social Responsibility:
As per Section 135 of the Companies Act 2013 read with Companies (Corporate SocialResponsibility) Rules 2014 and Schedule VII to the Act; the provisions of the CorporateSocial Responsibility shall be applicable to every Company which has during theimmediately preceding Financial Year-
Net worth of Rs. 500 Crore or more or
Turnover of Rs. 1000 Crore or more or
Net Profit of Rs. 5 crore or more.
During the year under review i.e. for the Financial Year 2018-19; your Company hadearned Profit before tax of Rs. 6.16 crores and thus the provisions of the CorporateSocial Responsibility as enumerated under Section 135 of the Companies Act 2013 and rulesmade thereunder are applicable to the Company for the Financial Year 2019-20.
The Company is in the process of constitution of the Committee for the said matterwhich shall look out into this matter take adequate steps and guide the Board toundertake necessary activities under the Corporate Social Responsibility regime. Furtherthe Policy on the Corporate Social Responsibility the corpus to be spend the socialactivity to be undertaken shall be discussed and finalized by the Board of Directors ofthe Company in consultation of the Corporate Social Responsibility Committee and ourstakeholders will be kept informed of every material update on the said matter.
27. Vigil Mechanism / Whistle Blower Policy:
The Company has adopted a Whistle Blower Policy to provide a formal mechanism to theDirectors Employees and its Stakeholders to report their concerns about unethicalbehaviour actual or suspected fraud or violation of the Company's Code of Conduct orEthics Policy. The policy provides for adequate safeguards against victimization ofemployees and provides for direct access to the Chairman of the Audit Committee. ThePolicy is also available on the website of the Company at www.fredunaroup.com
28. Conservation of Energy. Technology Absorption:
Companies which take care of their internal structures systems and work culture canonly benefit in the long term. It is must to have a high performing and competent QualityControl and Quality Assurance team which monitors the compliance of all the regulatoryaspects of manufacturing. Conservation of energy in all the departments and its focusedaudit is an ongoing challenge which requires a proactive compliance. Since last two tothree years your Company has heavily invested in latest machineries for both themanufacturing and packing departments. This has helped in speeding up the production withminimum maintenance and smooth running thus reducing the cost of electricity and time.
The upgraded GMP compliant machines are reliable automated and reduces dependence onmanpower and saves operating cost per batch. The other integrated systems with proper datastorage and consistent performance also lowers the cost of production. Continuousmonitoring is done of existing compressors boilers electric heaters pumps etc forenhancing energy efficiency.
Your Company is maintaining an ETP plant and complying with the Pollution ControlRegulations applicable in the State of Maharashtra.
As your Company has a full-fledged R & D department research on manufacturinggeneric versions of just out of patent drugs is continuously going on. Once themanufacturing process is validated it is tested on a pilot scale and thereafter theproducts are sent for registration in the countries as per the market demand. Processimprovements with latest experiments to improve the quality of our fast-moving productsare carried out as a part of technology absorption. This continuous upgradation oftechnology benefits the Company by cutting down the cost time and improving the qualityof the products.
29. Compliance with provisions of Sexual Harassment of Women at Workplace (Prevention.Prohibition and Redressal) Act 2013:
The Company is committed to uphold and maintain the dignity of Women Employees. AnInternal Complaints Committee has been formed for each location of the Company under theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.The Company has a broad and comprehensive policy in place to deal with any such situation.The Policy is available on the website of the Company at www.fredunaroup.com
No case of Sexual harassment was reported to the Internal Complaints Committee duringthe year under review.
30. Receipt of Award:
Your Company continuously endeavours to function in the most efficient manner in orderto accomplish and achieve its targeted goal in the most efficient and effective mannerthus optimizing the available resources / synergies. In the month of December 2018; yourCompany had received a Prestigious and a well-recegnized award in the Pharma Sector"Pharma Leaders Most Promising and Dynamic Company of the Year 2018" at PharmaLeaders Power Brand Awards 2018 organized by Mr. Satya Brahma. Chairman & Editor inChief. Network 7 Media Group. The award was presented by Dr. Sudhakar Shinde CEO of
Mahatma Jyotiba Phule Jan Arogya Yojana and CEO of Aayushman Bharat and Dr. MukeshBhatra CMD of Dr. Batra's Positive Health Clinic Pvt. Ltd. and Mr. Salya Brahma Chairman& Editor in Chief Network 7 Media Group.
31 . Particulars of Directors / Key Managerial Personnel / Employees:
As required under Section 197 of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014; the detailsof the remuneration of Directors Key Managerial Personnel and the employees and thepercentile change in the remuneration; as required under the Rules are furnishedhereunder:
(I) The ratio of the remuneration of each Director to the median remuneration of theemployees of the Company for the Financial Year 2018-19:
|Name ||Designation ||Total Remuneration (in Rs.) ||Ratio of Remuneration of Director to the Median Remuneration of Employees |
|Dr. (Mrs.) Daulat Medhora ||Chairperson & Jt. Managing Director ||1200000 ||6.03:1 |
|Mr. Fredun Medhora ||Director ||2400000 ||12.06:1 |
|Mr. Nariman Medhora ||Executive Director ||1320000 ||6.63:1 |
The Independent-Non-Executive Directors of the Company are only getting sitting fees.
(II) The percentage increase in remuneration of each Director. Chief Executive Officer.Chief Financial Officer. Company Secretary in the Financial Year 2018-19:
|Name ||Designation ||Total Remuneration (In Rs.) ||% increase / (decrease) in remuneration in the Financial Year |
|Dr. (Mrs.) Daulat Medhora ||Chairperson & Jt. Managing Director ||1200000 ||NIL |
|Mr. Fredun Medhora ||Managing Director ||2400000 ||NIL |
|Mr. Nariman Medhora ||Executive Director ||1320000 ||NIL |
The Independent - Non-Executive Directors of the Company are only getting sitting fees.
Further the Board of the Company had appointed Ms. Priyanka Chaturvedi as the CompanySecretary Cum Compliance Officer of the Company w.e.f. September 18 2018.
The Company's policy on Directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Act has been disclosed in the Corporate GovernanceReport which forms part of this report.
(iii) The percentage increase in the median remuneration of employees in the FinancialYear:
The percentage increase in the median remuneration of employees in the Financial Year:Nil
Explanation: For calculation of median remuneration the employee count taken for theFinancial Year 2018-19 and 2017-18 comprise employees (including permanent workmen) whohave served for the whole of the respective Financial Years.
(iv) The number of Permanent Employees on the rolls of the Company:
There were 223 permanent employees as on March 31 2019. (inclusive of permanentworkmen)
(v) Average percentile increase already made in the salaries of employees other thanthe Managerial Personnel in the last Financial Year and its comparison with the percentileincrease in the managerial remuneration and justification thereof if there are anyexceptional circumstances for increase in the managerial remuneration:
|Average Percentile Increase for other than Managerial Personnel: ||2. 12 |
|Average Percentile Increase for Managerial Personnel: ||NIL |
The average increase in the salaries of Employees excluding Managerial Personnel duringFinancial Year2018-19was2.12%.
(vi) Affirmation that the remuneration is as per the remuneration policy of theCompany:
It is affirmed that the remuneration paid during the period under review is as per theremuneration policy of the Company.
The Board of Directors appreciate the contribution made by the employees of the Companyand acknowledge their hard work and dedication to ensure that the Company consistentlyperforms well and remains a leading player in the Pharma Industry. The Directorsgratefully acknowledge the support and confidence reposed by the shareholders of yourCompany. Further the Board placed on record their sincere thanks to its Bankers businessassociates consultants and various Government Authorities for their consistent supportextended to your Company during the year under review. acknowledge the support andconfidence reposed by the shareholders of the Company.
| ||By Order of the Board |
| ||For Fredun Pharmaceuticals Limited |
| ||Sd/- |
| ||Daulat Medhora |
|Place: Mumbai ||DIN: 01745277 |
|Date: June 10 2019 ||(Chairperson & Jt. Managing Director) |
[Pursuant to clause (h) of sub-Section (3) of Section 134 of the Act and Rule 8 (2) ofthe Companies (Accounts) Rules 2014]
This Form pertains to the disclosure of particulars of contracts / arrangements enteredinto by the Company with related parties referred to in sub-Section (1) of Section 188 ofthe Companies Act 2013 including certain Arm's Length Transactions under third provisothereto.
1. Details of contracts or arrangements or transactions not at arm's length basis:
No such transactions were entered during the financial year 2018-19.
2. Details of material contracts or arrangement or transactions at arm's length basis:
The contracts or arrangements or transactions entered with the related parties duringthe financial year 2018-19 under review were not material and the same were disclosed inthe notes to accounts forming part of the Financial Statements for the year ended March31 2019.
| ||By Order of the Board |
| ||For Fredun Pharmaceuticals Limited |
| ||Sd/- |
| ||Fredun Medhora |
|Place: Mumbai ||(Managing Director) |
|Date: June 10 2019 ||DIN: 01745348 |