The Members of
Gennex Laboratories Limited
Your Directors are pleased to present the 33rd Annual Report and the Audited FinancialStatements for the Financial Year ended 31st March 2018.
1. Financial Results
|PARTICULARS || |
| ||March 31 2018 ||March 31 2017 ||March 31 2018 ||March 31 2017 |
|Total Revenue ||4468.24 ||4202.61 ||4468.24 ||4202.61 |
|Profit before finance cost depreciation and tax expense ||310.62 ||464.56 ||310.62 ||464.56 |
|Finance cost ||73.11 ||70.54 ||73.11 ||70.54 |
|Profit before depreciation and tax expense ||236.520 ||394.02 ||236.520 ||394.02 |
|Depreciation ||92.18 ||83.94 ||92.18 ||83.94 |
|Profit before tax expense ||145.33 ||310.08 ||145.33 ||310.08 |
|Tax expense (Net) ||61.76 ||39.64 ||61.76 ||39.64 |
|Net Profit for the year ||83.58 ||270.44 ||83.58 ||270.44 |
|Profit brought forward from earlier year ||1078.44 ||808.00 ||1078.44 ||808.00 |
|Profit available for appropriation ||1162.01 ||1078.44 ||1162.01 ||1078.44 |
State of the Company's Affairs
Your Directors wish to present the details of Business operations done during the yearunder review:
During the year under review your Company has recorded a total Revenue of Rs. 4468.24lakhs as against Rs.4202.61 lakhs in the previous year and the company has recorded theProfit before Finance Cost Depreciation and Tax Expenses of Rs.310.62 lakhs (2017-18) asagainst Rs.464.56 lakhs (2016-17). In the current year the Net profit is Rs.83.58 Lakhsagainst the previous year Rs.270.44 lakhs. There is a decrease in the Profit during theyear under review and all efforts are being made to make the Company to be reckoned within the Pharma Arena and your Directors are hopeful of the our Company would be makingbetter performances with profits in the coming years.
The Management of the Company is making all its efforts for adding additional APIs formanufacturing by enhancing the production capacities and increased R & D efforts forwhich the Management is also exploring the possibilities of various options to raise therequired funds.
Kothur Unit: The Management of the Company is making all its efforts in bringingthe unit at Kothur near Zaheerabad into operation by end June 2019 and in the processthe Company is pleased to inform that its application for Environmental Clearance fromMinistry of Environment & Forest has been approved and the unit has been grantedEnvironment Clearance by MoEF New Delhi. Further its application for CFE approval fromPollution Control Board has been processed and is confident of getting PCB approval forthe same.
The Management is looking for establishing an US (FDA) approved Plant with alsoapprovals from EDQM and TGA for manufacturing High Value Low Volume and Low Volume HighValue Active
Pharmaceutical Ingredients (APIs) at Kothur near Zaheerabad and as soon as the unitbecomes operational the Management is confident of giving Gennex an Internationalpresence. The management is exploring various options to raise the required funds to makethe unit operational.
Authorized Share Capital
During the year under review there was no change in authorized share capital of theCompany. Authorized share capital of the company as on March 31 2018 wasRs.160000000/- comprising of 160000000 equity shares of Rs.1/- each.
Paid-up Share Capital
During the year under review there was no change in paid up share capital of theCompany. Paid up share capital of the company as on March 31 2018 was Rs.126503000/-comprising of 126503000 Equity Shares of Rs.1/- each.
Buy Back of Securities
The Company has not bought back any of its securities during the year under review.
The Company has not issued any Sweat Equity Shares during the year under review.
The Company has not issued any bonus shares during the year under review.
Employees Stock Option
The Company has not provided any Stock Option Scheme to the employees.
Your Directors have not recommended any dividend on Equity Shares for the year underreview.
Transfers to Reserves
Your Board of Directors does not appropriate any amount to be transferred to GeneralReserves during the year under review.
During the year under review your Company has not accepted any fixed deposits withinthe meaning of Section 73 of the Companies Act 2013 read with Rules made there under. SubsidiariesJoint Ventures and Associates As on March 31 2018 we have one Associate and in thisregard a Statement containing the salient features of the Financial Statement of ourAssociates in the prescribed format AOC- 1 is appended as Annexure-I to the Board'sreport.
Particulars of Contracts & Arrangements with Related Parties
All transactions entered by the Company with Related Parties were in the Ordinarycourse of Business and are at Arm's Length pricing basis. The Audit Committee grantedapprovals for the transactions and the same were reviewed by the Committee and the Boardof Directors. There were no materially significant transactions with Related Partiesduring the financial year 2017-18 which were in conflict with the interest of the Company.The details of contracts and arrangements with Related Parties as referred to in Section188(1) of the Companies Act 2013 were given as Annexure - II to the Board's Reportin form No: AOC-2 pursuant to Section 134 (3)(h) of the Act read with Rule 8(2) of theCompanies (Accounts) Rules 2014.
Particulars of Loans Guarantees or Investments
Pursuant to Section 186 of Companies Act 2013 and Schedule V of the Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 ("Listing Regulations")the Company neither has directly or indirectlygiven any loan to its Directors nor extended any guarantee or provided any security inconnection with any loan taken by them. Further the Company has neither given anyinter-corporate loan / advance nor made any investments in other companies during thefinancial year 2017-18.
Number of Board Meetings held
During the financial year ended March 31 2018 Five Board Meetings were held.
The dates on which the Board Meetings were held are 30.05.2017 26.08.2017 14.09.201714.12.2017 and 14.02.2018 the details of which are given in the Corporate GovernanceReport. The maximum interval between any two meetings did not exceed 120 days asprescribed in the Companies Act 2013 and Secretarial Standard -1.
The Board of Directors have carried out an evaluation of its own performance and of itsCommittee as well as its individual Directors on the basis of criteria such as Compositionof the Board / Committee Structure effectiveness its process information andfunctioning etc
The conservation of energy technology absorption foreign exchange earnings and outgopursuant to provisions of Section 134(3)(m) of the Companies Act 2013 (Act) read with theCompanies (Accounts) Rules 2014
Information with respect to conservation of energy technology absorption foreignexchange earnings and outgo pursuant to Section 134(3)(m) of the Act read with Companies(Accounts) Rules 2014 is prepared and the same is enclosed as Annexure - III tothis Report.
Remuneration ratio of the Directors / Key Managerial Personnel (KMP) / Employees:
The information required under Section 197 of the Companies Act 2013 read with rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are provided in separate annexure forming part of this Report as Annexure - IV.
INDIAN accounting standards (IND-AS)
Your Company has adopted Indian Accounting Standards (Ind AS) with effect from April 12017 pursuant to the Companies (Indian Accounting Standard) Rules 2015 as notified by theMinistry of Corporate Affairs on February 16 2015. Accordingly your Company has preparedfinancial results on standalone basis as per Ind-AS for the first three quarters of the FY2017-18 and on and from the period ending March 31 2018 the formats forUnaudited/Audited quarterly financial results i.e. Statement of Profit and Loss and theUnaudited/Audited Half-Yearly Balance Sheet are to be submitted to the stock exchangesshall be as per the formats for revised Balance Sheet and Statement of Profit and Loss asprescribed in Schedule III to the Companies Act 2013.
Extract of Annual Return
As required by Section 92(3) of the Act read with Rule 12(1) of the Companies(Management and Administration) Rules 2014 extract of the Annual Return in Form MGT-9 isavailable on the Company's website at http: www.gennexlab.com.
Declaration by Independent Directors The Independent Directors of the Company havesubmitted their declarations as required under Section 149(7) of the Companies Act 2013stating that they meet the criteria of independence as per sub-section (6) of Section 149of the Act.
Familiarization programmer for Independent Directors
The Company proactively keeps its Directors informed of the activities of the Companyits Management and Operations and provides an overall industry perspective as well asissues being faced by the industry. Independent Directors' Meeting The IndependentDirectors met on 14.02.2018 without the attendance of Non-Independent Directors andMembers of the Management. The Independent Directors reviewed the performance ofNon-Independent Directors and the Board as a whole; the performance of the Chairman of theCompany taking into account the views of Executive Director and Non-Executive Directorsand assessed the quality quantity and timeliness of flow of information between theCompany Management and the Board that is necessary for the Board to effectively andreasonably perform their duties.
Directors Responsibility Statement as required under Section 134 of the Companies Act2013
Pursuant to the requirement under Section 134 of the Companies Act 2013 with respectto the Directors' Responsibility Statement the Board of Directors of the Company herebyconfirms:
i. that in the preparation of the Annual Accounts the applicable accounting standardshave been followed;
ii. that the Directors have 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 31 2018 andof Profit and Loss Account of the Company for that period;
iii. that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
iv. that the Directors have prepared the Annual Accounts for the Financial Year endedMarch 31 2018 on a going concern basis;
v. that the Directors have laid down Internal Financial Controls to be followed by thecompany and that such Internal Financial Controls are adequate and were operatingeffectively; and
vi. that the Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
Details of Directors or Key Managerial Personnel who were appointed or have resignedduring the Year
In terms of Section 152 of the Companies Act 2013 Mr. Tiruvarur MuralidharanGopalakrishnan Director would retire by rotation at the forthcoming AGM and is eligiblefor re-appointment. Mr. Tiruvarur Muralidharan Gopalakrishnan has offered himself forre-appointment.
Re-Appointment of Mr. Arihant Baid as Managing Director and Mr. T.M. Gopalakrishnan asWhole-time Director for the term of 3 Years with effect from May 18th 2018.
Based on the confirmations received from Directors none of the Directors aredisqualified from appointment under Section 164 of the Companies Act 2013. There was noother appointment or cessation of appointment of key managerial personnel during theFinancial Year.
Policy on directors' appointment and remuneration and other details
Under Section 178 (3) of the Companies Act 2013 the Nomination and RemunerationCommittee of the Board has adopted a policy for nomination remuneration and other relatedmatters for Directors and senior management personnel. A gist of the policy is availablein the Corporate Governance Report.
M/s. Vinay Karwa & Associates Chartered Accountant has resigned to his position on25.04.2018 and the same has been approved by the Board of Directors at its Meeting held on12.05.2018. In orderto complete the Audit for 2017-18 as per the provisions of Sec.139(8) of the Companies Act 2013 the Board has appointed M/s. PPKG & Co. CharteredAccountants (Firm Regn. No. 009655S) as Statutory Auditors to fill the casual vacancycaused by the resignation of M/s. Vinay Karwa & Associates.The appointment of M/s.PPKG & Co. as Statutory Auditors is subject to the approval of the shareholders. YourBoard seeks approval of the appointment of Statutory Auditors for the year 2017-18 at theitem No. 3 set out in the Notice of Annual General Meeting.
The company also proposes to appoint M/s. PPKG & Co. Chartered Accountants (FirmRegn. No. 009655S) as Statutory Auditors of the Company from the conclusion of this AnnualGeneral Meeting until the conclusion of 38th Annual General Meeting of theCompany subject to ratification by shareholders at every subsequent Annual GeneralMeeting of the Company.
The written consent and a Certificate to the effect that their appointment if madewould be in accordance with the conditions as prescribed under the Act has been receivedby the company.Your Board recommends appointment of Statutory Auditors for 5 years (from33rd AGM to 38th AGM) as set out in item no.4 in the Notice ofAnnual General Meeting.
Auditors' Report and Secretarial Auditors' Report
Qualifications Reservations or Adverse Remarks:
Information & Explanation in respect of Qualification / Reservation or Adverseremarks contained in Independent Auditor's Report under Paras: Basis for Qualifiedopinion Emphasis of Matter and Other Matter: The Balances of Current Assets OtherNonCurrent Assets Non-Current Liabilities Other Non-Current Liabilities CurrentLiabilities & other Current Liabilities are subject to confirmations/reconciliations.The Impact of the same is unascertained Board's Response: As pointed out by theStatutory Auditors the company has not obtained confirmation of The Balances of CurrentAssets Other Non-Current Assets Non-Current Liabilities Other Non-Current LiabilitiesCurrent Liabilities & other Current Liabilities. The Company has made best of itsefforts to obtain the same before signing the accounts for current financial year as wellas for last financial year. Further the Management of the Company confirms that balancesshown in the Books are true and correct as per their knowledge.
Secretarial Audit Report As per the provisions of Section 204 of the Companies Act2013 the Board of Directors has appointed M/s. BSS & Associates Company Secretariesas Secretarial Auditors to conduct Secretarial Audit of the company for the Financial Yearended on March 31 2018. Secretarial Audit Report issued by Mr. S. Srikanth Partner ofM/s. BSS & Associates Company Secretaries in Form MR-3 is enclosed as Annexure -V to this Annual Report.
The following qualification was observed by the Secretarial Auditor in his Report towhich the Board has shared the following explanations:
Qualification: The Company has not appointed Company Secretary as required underthe Provisions of section 203 of the Companies Act 2013 and Regulation 6 of the ListingRegulation entered with Stock Exchange(s).
Board's Response: The Company is in the process to appoint a suitable person asCompany Secretary of the company to comply the provisions under Section 203 of theCompanies Act 2013 and the Board has taken the note of adverse qualification made by theSecretarial Auditor and ensure to comply accordingly.
The Board of Directors of the Company appointed Mr. LaxmipatBaid to conduct InternalAudit of the Company for the Financial Year ended March 31 2018.
There is no such incidence where Board has not accepted the recommendation of the AuditCommittee during the year under review. Sub Committees of the Board The Board hasAudit Committee Nomination and Remuneration Committee and Stakeholders' RelationshipCommittee. The composition and other details of these Committees have been given in theReport on the Corporate Governance forming part of the Annual Report
Corporate Social Responsibility (CSR) Initiatives:
Section 135 of the Companies Act 2013 provides the threshold limit for applicabilityof the CSR to a Company ie. (a) net worth of the Company to be Rs.500 crore or more; or(b) turnover of the company to be Rs. 1000 crore or more; or (c) net profit of thecompany to be Rs. 5 crore or more. As the Company does not fall under any of the thresholdlimits given above the provisions of section 135 are not applicable to the Company ManagementDiscussion and Analysis In terms of the provisions of Regulation 34 of the Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 the Management Discussion and Analysis given below discusses the key issuesconcerning the business and carried on by the Company and the same is enclosed as Annexure- VI to this Report.
The Company is committed to good corporate governance in line with the Schedule V ofSEBI (LODR) Regulations 2015 and Provisions Rules and Regulations of the Companies Act2013. The Company is in compliance with the provisions on corporate governance specifiedin the Listing Agreement with BSE. A certificate of compliance from M/ s. PPKG & Co.Chartered Accountants and the report on Corporate Governance form part of this Directors'Report as Annexure - VII.
All properties and insurable interests of the Company including building plant andmachinery and stocks have been fully insured.
The Board of Directors have adopted Whistle Blower Policy. The Whistle Blower Policyaims for conducting the affairs in a fair and transparent manner by adopting higheststandards of professionalism honesty integrity and ethical behavior. All permanentemployees of the Company are covered under the Whistle Blower Policy.
A mechanism has been established for employees to report concerns about unethicalbehavior actual or suspected fraud or violation of Code of Conduct and Ethics. It alsoprovides for adequate safeguards against the victimization of employees who avail of themechanism and allows direct access to the Chairperson of the Audit Committee inexceptional cases.
Details in respect of adequacy of Internal Financial Controls with reference to theFinancial Statements
1. The Company has set Internal Control Systems to maintain accurate and completeaccounting records to safeguard its assets to prevent and detect any frauds and errors.
2. The Company has appointed Internal Auditors to observe the Internal Controlswhether the work flows of organization is being done through the approved policies of theCompany. In every Quarter during the approval of Financial Statements Internal Auditorswill present the Internal Audit Report and Management Comments on the Internal Auditobservations; and
3. The Board of Directors of the Company have adopted various policies like RelatedParty Transactions Policy Fixed Assets
Policy Whistle Blower Policy Policy to determine Material Subsidiaries and such otherprocedures for ensuring the orderly and efficient conduct of its business for safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation.
The names of companies which have become or ceased to be company's subsidiaries jointventures or associate companies during the year: -NIL-
Change in the nature of business
There is no change in the nature of business of the Company.
The details of significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and company's operations in future
No Significant and material orders passed by the Regulators or Courts or Tribunalsimpacting the going concern status and company's operations in future.
Industrial relations continued to be cordial throughout the year under review.
Material changes and commitments
There are no Material changes and commitments in the business operations of the Companyfrom the Financial Year ended March 31 2018 to the date of signing of the Directors'Report.
Policy on Sexual Harassment The Company has adopted policy on Prevention of SexualHarassment of Women at Workplace in accordance with the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013.
During the Financial Year ended March 31 2018 the Company has not received anyComplaints pertaining to Sexual Harassment.
Listing of Equity Shares
The Company's Equity shares are listed at the following Stock Exchanges: BSE LimitedPhirozeJeeJeebhoy Towers DalalStreet Mumbai - 400 001; and The Company has paid theAnnual Listing Fee to the said Stock Exchanges for the Financial Year 2018-19.
We seek to promote and follow the highest level of ethical standards in all ourbusiness transactions guided by our value system. The SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 mandated the formulation of certain policiesfor all listed companies. The policies are reviewed periodically by the Board and updatedbased on need and new compliance requirement.
i. Whistleblower Policy (Policy on vigil mechanism)
The Company has adopted the whistleblower mechanism for directors and employees toreport concerns about unethical behavior actual or suspected fraud or violation of theCompany's code of conduct and ethics. There has been no change to the Whistleblower Policyadopted by the Company during fiscal 2018.
ii. Policy for Determining Materiality for Disclosures
This policy applies to disclosures of material events affecting. This policy is inaddition to the Company's corporate policy statement on investor relations which dealswith the dissemination of unpublished price-sensitive information.
iii. Policy on Document Retention
The policy deals with the retention and preservation of corporate records of theCompany.
Share transfer agency
The Company has appointed M/s.R&D Infotech Pvt. Ltd. 1stFloor 7ABeltala RoadNaresh MitraSarani Kolkata - 700 026 as its Share Transfer Agency for handlingboth Physical and Electronic Transfers.
Awards and recognition
The Company has been awarded ISO 9001:2008 BS OHSAS 18001:2007 and ISO 14001:2004Certification by TUV NORD Cert GmbH for Management System for manufacture and sale ofActive Pharmaceutical Ingredients and intermediates.
The Company has been awarded European Union Written Confirmation (EU-WC) forGuaifenesin & Methocarbamol by the Central Drugs & Standard Control Organization(C D S CO ) N e w D e l hi fo r S a l e S ta t u tory requirements of the Country.
The Company has been awarded WHO-GMP certification by the State Drug LicensingAuthority.
Your Company treats its "human resources" as one of its most importantassets. Your Company continuously invests in attraction retention and development oftalent on an ongoing basis. A number of programs that provide focused people attention arecurrently underway. Your Company thrust is on the promotion of talent internally throughjob rotation and job enlargement.
Statements in these reports describing company's projections statements expectationsand hopes are forward looking. Though these expectations etc. are based on reasonableassumption the actual results might differ.
The Directors take this opportunity to place on record their sincere thanks to theBanks and Financial Institutions Insurance Companies Central and State GovernmentDepartments and the Shareholders for their support and co-operation extended to theCompany from time to time. Directors are pleased to record their appreciation of thesincere and dedicated services of the employees and workmen at all levels.
| ||On behalf of the Board of Directors |
| ||for Gennex Laboratories Limited |
| ||Arihant Baid |
| ||Managing Director |
| ||DIN: 01171845 |
| ||T.M. Gopalakrishnan |
|Hyderabad ||Whole Time Director |
|July 6 2018 ||DIN: 03137458 |