The Members of
Gennex Laboratories Limited
Your Directors are pleased to present the 34th Annual Report and the Audited FinancialStatements for the Financial Year ended March 31 2019.
1. Financial Results
|PARTICULARS || |
| ||March 31 2019 ||March 31 2018 ||March 31 2019 ||March 31 2018 |
|Total Revenue ||5658.52 ||4468.24 ||5658.52 ||4468.24 |
|Profit before finance cost depreciation and tax expense ||480.57 ||310.62 ||480.57 ||310.62 |
|Finance cost ||79.38 ||73.11 ||79.38 ||73.11 |
|Profit before depreciation and tax expense ||401.19 ||237.51 ||401.19 ||237.51 |
|Depreciation ||98.47 ||92.18 ||98.47 ||92.18 |
|Profit before tax expense ||302.72 ||145.33 ||302.72 ||145.33 |
|Tax expense (Net) ||80.64 ||61.75 ||80.64 ||61.75 |
|Net Profit for the year ||222.08 ||83.58 ||222.08 ||83.58 |
|Profit brought forward from earlier year ||1162.01 ||1078.43 ||1162.01 ||1078.43 |
|Profit available for appropriation ||1384.09 ||1162.01 ||1384.09 ||1162.01 |
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 '5658.52lakhs as against '4468.24 lakhs in the previous year and the Company has recorded theProfit before Finance Cost Depreciation and Tax Expenses of '480.57 Lakhs (2018-19) asagainst '310.62 Lakhs (2017-18). In the current year the Net profit is '222.08 lakhsagainst the previous year '83.58 Lakhs. There is an increase in the Profit during the yearunder review and the all efforts are being made to make the Company to be reckoned with inthe Pharma Arena and your Directors are hopeful that our Company would be making betterperformances with increased 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 2020 and inthe process the Company is pleased to inform that its application for EnvironmentalClearance from Ministry of Environment & Forest has already been approved and the unithas been granted Environment Clearance by MoEF New Delhi. Further its application forCFE approval from Pollution Control Board has been granted and is confident of getting PCBapproval for the same.
The Management is looking for establishing an US (FDA) approved Plant with approvalsfrom EDQM and TGA for manufacturing High Value Low Volume and Low Volume High Value ActivePharmaceutical Ingredients (APIs) at Kothur near Zaheerabad and as soon as the unitbecomes operational the
Management is confident of giving Gennex an International presence. The management isalso exploring various options to raise the required funds to make the unit profitablyoperational.
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 2019 was ' 160000000comprising of 160000000 equity shares of '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 2019 was ' 126503000comprising of 126503000 Equity Shares of '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.
Subsidiaries Joint Ventures and Associates As on March 31 2019 we have oneAssociate and in this regard a Statement containing the salient features of the FinancialStatement of our Associates in the prescribed format AOC- 1 is appended as Annexure-Ito the Board's report.
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 Parties during thefinancial year 2018-19 which were in conflict with the interest of the Company. Thedetails 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) ofthe Companies (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 2018-19.
Number of Board Meetings held
During the financial year ended March 31 2019 seven Board Meetings were held.
The dates on which the Board Meetings were held are 12.05.2018 30.05.2018 06.07.201814.08.2018 14.11.2018 28.01.2019 and 14.02.2019 the details of which are given in theCorporate Governance Report. The maximum interval between any two meetings did not exceed120 days as prescribed in the Companies Act 2013 and Secretarial Standard-1.
The Board of directors has 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. IndianAccounting 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 year ended March 31 2019 theformats for Unaudited/Audited quarterly financial results i.e. Statement of Profit andLoss and the Unaudited/Audited Half-Yearly Balance Sheet are to be submitted to the stockexchanges shall be as per the formats for revised Balance Sheet and Statement of Profitand Loss as prescribed in Schedule III to the Companies Act 2013.
Extracts 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 https://www.gennexlab.com.
Declaration by Independent Directors
The Independent Directors of the Company have submitted their declarations as requiredunder Section 149(7) of the Companies Act 2013 stating that they meet the criteria ofindependence as per sub-section (6) of Section 149 of the Act.
Familiarization programme 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 Independent Directors met on 14.02.2019 withoutthe attendance of Non-Independent Directors and Members of the Management. The IndependentDirectors reviewed the performance of Non-Independent Directors and the Board as a whole;the performance of the Chairman of the Company taking into account the views of ExecutiveDirector and Non-Executive Directors and assessed the quality quantity and timeliness offlow of information between the Company Management and the Board that is necessary for theBoard to effectively and reasonably 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 2019 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 2019 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.
Mr. Y. Ravinder Reddy (DIN: 00011040) Non Executive Independent Director of theCompany completed his term of 5 years on 30.09.2019. The company proposes to reappoint himfor another term of 5 years and based on the recommendation of the NominationandRemuneration Committee and Board of Directors appointed and recommends there-appointment of Mr. Y Ravinder Reddy as Independent Director of the company by passing aspecial resolution. Ms. Sadhana Bhansali (DIN: 06962425) Non Executive IndependentDirector of the Company completed his term of 5 years on 30.09.2019. The company proposesto reappoint her for another term of 5 years and based on the recommendation of theNomination and Remuneration Committee and Board of Directors appointed and recommends there-appointment of Ms. Sadhana Bhansali as Independent Director of the Company by passing aspecial resolution.
In order to comply with the SEBI (Listing Obligations and Disclosure Requirements)Regulations on Board composition of Promoter Directors and Independent Directors theBoard appointed Mr. Vinod Choraria as an Additional Director (Independent Director) of theCompany w.e.f. 06.07.2019 at their meeting held on 06.07.2019 under Section 161 of theCompanies Act 2013. The appointment is subject to the approval of the shareholders at theensuing Annual General Meeting. The Company also received
i) consent in writing to act as a Directors in Form DIR-2 pursuant to Rule 8 of theCompanies (Appointment & Qualification of Directors) Rules 2014;
ii) intimation in Form DIR-8 pursuant to terms of the Companies (Appointment &Qualification of Directors) Rules 2014 to the effect that they are not disqualified asper Section 164(2) of the Companies Act 2013; and
iii) a declaration to the effect that he meets the criteria of independence as providedunder Section 149 of the Companies Act 2013.
Mr. Vinod Choraria (DIN: 08497499)
Independent Director shall hold office for a term of 5 years from 30.09.2019 to30.09.2024.
Mr. Dipankar Dasgupta (DIN: 05312364) Independent Director has resigned on12.04.2019.
Key Managerial Personnel (KMP)
Pursuant to the provisions of Section 203 of the Act the Key Managerial Personnel ofthe Company as on March 31 2019 are: Mr. Arihant Baid Managing Director Mr. T.M.Gopalakrishnan Whole Time Director and Mr. Laxmipat Baid CFO of the Company.
Policy on directors' appointment and remuneration and other details Under Section178 (3) of the Companies Act 2013 the Nomination and Remuneration Committee of the Boardhas adopted a policy for nomination remuneration and other related matters for Directorsand senior management personnel. A gist of the policy is available in the CorporateGovernance Report.
M/s. PPKG & Co. Chartered Accountants (Firm Registration No. 009655S) wereappointed as Statutory Auditors of your Company to hold office from the conclusion of the33rd AGM held in the year 2019 until the conclusion of the 38th AGM to be held in theyear 2023. Accordingly M/s. PPKG & Co. Chartered Accountants (Firm Registration No.009655S) Statutory Auditors of the Company will continue till the conclusion of AnnualGeneral Meeting to be held in 2023. In this regard the Company has received a Certificatefrom the Auditors to the effect that their continuation as Statutory Auditors would be inaccordance with the provisions of Section 141 of the Companies Act 2013.
M/s. Sai Krishna & Associates Cost Accountants Hyderabad have been appointed asCost Auditors of the company for the year ending March 31 2020. A resolution seekingshareholders' approval of the remuneration payable to the said Cost Auditors has beenincluded in the notice of the AGM.
Approval of remuneration payable to the cost auditors as detailed in Item No.6 of theNotice of the AGM.
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 Act 2013 the Board of Directorshas appointed M/s. B S S & Associates Company Secretaries as Secretarial Auditors toconduct Secretarial Audit of the company for the Financial Year ended on March 31 2019.Secretarial Audit Report issued by Mr. S. Srikanth Partner of M/s. B S S& AssociatesCompany Secretaries in Form MR-3 is enclosed as Annexure - V to this AnnualReport.
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 theprocess to appoint a suitable person as Company Secretary of the company to comply theprovisions under Section 203 of the Companies Act 2013 and the Board has taken the noteof adverse qualification made by the Secretarial Auditor and ensure to comply accordingly.
The Board of Directors of the Company appointed Mr. Laxmipat Baid to conduct InternalAudit of the Company for the Financial Year ended March 31 2019.
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 i.e. (a) net worth of the Company to be '500 crore or more; or (b)turnover of the company to be '1000 crore or more; or (c) net profit of the company to be'5 crore or more. As the Company does not fall under any of the threshold limits givenabove the provisions of section 135 are not applicable to the Company
Management Discussion and Analysis
In terms of the provisions of Regulation 34 of the Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 the ManagementDiscussion and Analysis given below discusses the key issues concerning the business andcarried 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. Insurance
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 determineMaterial Subsidiaries and such other procedures for ensuring the orderly and efficientconduct of its business for safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information.
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 inthe business operations of the Company from the Financial Year ended March 31 2019 to thedate 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 2019 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 Limited Phiroze JeeJeebhoy Towers Dalal Street Mumbai - 400 001; and the Companyhas paid the Annual Listing Fee to the said Stock Exchanges for the Financial Year2019-20.
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 2019.
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. 1st Floor 7A Beltala RoadNaresh Mitra Sarani Kolkata - 700 026 as its Share Transfer Agency for handling bothPhysical and Electronic Transfers.
Awards and recognition
The Company has been awarded DIN EN ISO 9001:2008 ISO 18001:2007 BS OHSAS 18001:2007and ISO 9001:2015 Certification by TUV NORD Cert GmbH for Management System formanufacture and sale of Active Pharmaceutical Ingredients and intermediates.
The Company has been awarded European Union Written Confirmation (EU-WC) forGuaifenesin & Methocarbamol by the Central Drugs & Standard Control Organization(CDSCO) New Delhi for Sale Statutory 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 |
|August 24 2019 ||DIN: 03137458 |