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Gufic BioSciences Ltd.

BSE: 509079 Sector: Health care
NSE: GUFICBIO ISIN Code: INE742B01025
BSE 00:00 | 18 May 186.95 -12.95
(-6.48%)
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200.95

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201.50

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185.90

NSE 00:00 | 18 May 186.90 -12.95
(-6.48%)
OPEN

199.00

HIGH

201.50

LOW

186.00

OPEN 200.95
PREVIOUS CLOSE 199.90
VOLUME 215348
52-Week high 215.45
52-Week low 50.45
P/E 47.69
Mkt Cap.(Rs cr) 1,454
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 200.95
CLOSE 199.90
VOLUME 215348
52-Week high 215.45
52-Week low 50.45
P/E 47.69
Mkt Cap.(Rs cr) 1,454
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Gufic BioSciences Ltd. (GUFICBIO) - Director Report

Company director report

The Members

Your Directors have pleasure in presenting the 36 Annual Report of the Company and theStandalone Audited Financial Statements for the financial year ended March 31 2020.

FINANCIAL SUMMARY :

The financial performance of the Company for the year ended March 31 2020 issummarized below :

` in Lakhs

Particulars 2019-20 2018-19
Total Revenue from Operations 35775.13 35076.96
Other Income 681.50 417.22
Total Income 36456.63 35494.18
Profit / (Loss) before Depreciation Finance Cost Exceptional items & tax Expenses 5139.84 5015.69
(Less): Depreciation and Amortization expense 835.00 464.66
Profit / (Loss) before Finance Costs/ Exceptional items & Tax Expense 4304.84 4551.03
(Less): Finance Costs 1271.83 1016.12
Profit / (Loss) before Exceptional items and Tax Expense 3033.01 3534.91
Add /(Less) Exceptional items - -
Profit / (Loss) before tax Expense 3033.01 3534.91
(Less): Tax Expense (Current) 831.00 1152.82
Deferred Tax 91.98 182.07
(Excess)/ Short Tax Provision of Earlier Years (175.64) 5.94
Profit / Loss for the year (1) 2285.67 2194.08
Other Comprehensive Income / (Loss) (2) (197.96) (2.24)
Total (1+2) 2087.71 2191.84

The Company has prepared the Standalone Financial Statements in accordance with theCompanies (Indian Accounting Standards) Rules 2015 prescribed under Section 133 of theCompanies Act 2013.

PERFORMANCE REVIEW:

The Company 's total revenue for the financial year under review was Rs. 36456.63lakhs as compared to Rs. 35494.18 lakhs in the previous year thus making an increase ofabout 2.71%.The turnover of the Company from the domestic market is around 88% and fromexports is around 12%.

During the year under review the Net Profit after tax of the Company increased to Rs.2285.67 lakhs as against Rs. 2194.07 Lakhs in the previous year thus registering agrowth of about 4.17%. The increase in the Net Profit is mainly due to the increase in theoperational revenue of the Company in the financial year 2019-20.

The Company has made a significant progress in the export market by making a growth of38.50%.

There is no change in the nature of business of the Company and it continues to operateonly in one segment i.e. Pharmaceutical.

The financial results and the results of operations including major developments havebeen further discussed in detail in the Management Discussion and Analysis section.

TRANSFER TO RESERVES:

The Board of Directors of the Company has decided not to transfer any amount to theReserves for the year under review.

DIVIDEND:

Your Directors are pleased to recommend a dividend of Rs. 0.05/- on every equity shareof face value Rs. 1/- each (5%) for the financial year ended March 31 2020. The dividendif approved at the 36 Annual General Meeting (AGM) will be paid to those shareholderswhose name appear on the Register of Members of the Company as on the Book Closure date asspecified in the Notice to the AGM.

The total dividend pay-outwould amount to approximately Rs. 3891500.In view of thechanges made under the Income-tax Act 1961 by the Finance Act 2020 dividends paid ordistributed by the Company shall be taxable in the hands of the Shareholders. Accordinglyyour Company shall make the payment of the Final Dividend after deduction of tax atsource.

The dividend payout for the year under review has been formulated in accordance withthe Company 's policy to pay sustainable dividend linked with long-term growth objectivesof the Company to be met by internal cash accruals.

SCHEME OF AMALGAMATION

The Board of Directors of the Company at its Meeting held on March 25 2019 approvedthe Scheme of Amalgamation of Gufic Lifesciences Private Limited with the Company andtheir respective shareholders and creditors (“Scheme”). The Company has alsoreceived No Objection from BSE Limited and National Stock Exchange of India Limited videtheir Observation letters both dated April 15 2020 for the said Scheme.

Further application for approval of the said Scheme has been filed before the Hon'bleNational Company Law Tribunal Mumbai bench ("NCLT") and as per the directivesof NCLT the meeting of shareholders for approval of the Scheme is scheduled to be held onSeptember 15 2020.

MATERIAL CHANGES & COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OFTHECOMPANY:

There are no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year and the date of thisreport. There has been no change in nature of business of the Company .

CHANGES IN CAPITAL STRUCTURE:

During the year under review neither there have been any change in the authorizedissued subscribed and paid up share capital of the Company nor the Company havere-classified or sub-divided its Share Capital.

Further neither the Company have issued any shares with differential voting rights norgranted any stock options nor sweat equity shares nor made any provision of money forpurchase of its own shares by employees or by trustees for the benefit of employees inthe financial year ending March 31 2020.

DIRECTORS & KEY MANAGERIAL PERSONNEL:

1 KEY MANAGERIAL PERSONNEL:

During the year under review there were no changes in the Key Managerial Personnelof the Company .

2. CESSATION/ EXPIRY OF DIRECTORSHIP TENURE:

Mr. Sharat S. Gandhi tendered his resignation as an Independent Director of theCompany on March 30 2019 effective from April 01 2019. The Board places on record itssincere appreciation for Mr. Gandhi's contribution and guidance provided during his tenureas a Director and a Member on various Committees of the Board.

The term of Mr. Jagdish D. Shah as an Independent Director of the Company ended onSeptember 25 2019 and he had conveyed his unwillingness to be re-appointed as theDirector of the Company. The Board places on record its sincere appreciation for Mr.Shah's contribution and guidance provided during his tenure as a Director and a Member onvarious Committees of the Board.

The term of Mrs. Hemal M. Desai Whole time Director of the Company is expiring onSeptember 30 2020 and she has conveyed her unwillingness to be re-appointed as theDirector of the Company. Accordingly the tenure of Mrs. Hemal M. Desai as Whole TimeDirector of the Company shall end on September 30 2020.

3. RETIREMENT BY ROTATION:

In accordance with the provisions of the Section 152(6) of the Companies Act 2013read with the rules made thereunder and in terms of Articles of Association of the Company Mr. Bal Ram Singh Non-Executive Non-Independent Director of the Company retires byrotation at the ensuing Annual General Meeting and being eligible offers himself forre-appointment. The Board recommends his re-appointment.

4. APPOINTMENT:

The Board of Directors based on the recommendation of the Nomination &Remuneration Committee and after considering the knowledge experience and skill set inthe field of medicine had appointed Mr. Rabi Narayan Sahoo as an Additional IndependentDirector of the Company for a term of three years effective from June 29 2019 subject tothe approval of the shareholders. The shareholders of the Company at its 35 Annual GeneralMeeting held on September 30 2019 approved the said appointment.

The shareholders at its 35 Annual General Meeting held on September 30 2019re-appointed Mr. Jayesh P. Choksi as Chairman & Managing Director and Mr. Pranav J.Choksi as Whole Time Director of the Company for a period of five years each commencingfrom April 01 2020 and Mr. Shreyas K. Patel and Mr. Gopal M. Daptari for a further periodof five years commencing from September 26 2019 and November 23 2019 respectively.

The Board of Directors at its Meeting held on December 23 2019 on the recommendationof the Nomination & Remuneration Committee had appointed Dr. Anu Sanjiv Aurora as anAdditional Independent Director of the Company for a consecutive period of two years withimmediate effect subject to the approval of the shareholders at the ensuing AnnualGeneral Meeting. The Board recommends her appointment.

The term of Mr. Shrirang V. Vaidya as an Independent director and Dr. Bal Ram Singh asa Non-Executive Non Independent director expires on February 11 2021 and May 28 2021respectively. Pursuant to the provisions of section 149 and 152 of the Companies Act 2013and on the recommendation of the Nomination and Remuneration Committee the Boardrecommends re-appointment of the above-mentioned Directors and the details of which arementioned in the Notice to the ensuing General Meeting.

In the opinion of the Board the Independent Directors appointed / re-appointed duringthe year under review are persons of high repute integrity and possess the relevantexpertise and experience (*including the proficiency) in their respective field.

*As per Ministry of Corporate (MCA) Notification dated 22nd October 2019 Companies(Appointment and Qualification of Directors) Fifth Amendment Rules 2019 the IndependentDirector need to give proficiency test online with the Indian Institute of CorporateAffairs within one year from the date of inclusion of his name in the IndependentDirectors data bank. Accordingly your Directors have registered their name in the saiddata bank and they shall be appearing for the online proficiency test within theprescribed timelines.

DECLARATION BY INDEPENDENT DIRECTORS:

The Company have received declaration/confirmation from all the Independent Directorsof the Company confirming that they meet with the criteria of independence as prescribedunder sub-section (6) of Section 149 of the Companies Act 2013 and under SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 (“ListingRegulations”) and that there is no change in the circumstances which may affect theirstatus as Independent Director during the year under review.

The Independent Directors have also confirmed that they have complied with Schedule IVof the Act and the Company 's Code of Conduct.

In the opinion of the Board the Independent Directors of the Company fulfil theconditions specified under the Act and Listing Regulations and are independent of themanagement.

CODE OF CONDUCT:

The Board of Directors has approved a Code of Conduct which is applicable to theMembers of the Board and all employees including the senior management of the Company inthe course of day to day business operations of the Company . The Company believes in“Zero Tolerance” against bribery corruption and unethical dealings / behavioursof any form and the Board has laid down the directives to counter such acts. The Code canbe accessed from the website of the Company i.e.www.gufic.com.

The Code lays down the standard procedure of business conduct which is expected to befollowed by the Directors and the designated employees in their business dealings and inparticular on matters relating to integrity in the work place in business practices andin dealing with stakeholders.

All the Board Members and the Senior Management personnel have confirmed compliancewith the Code. All Management Staff were given appropriate training in this regard.

FAMILIARIZATION PROGRAMME OF INDEPENDENT DIRECTORS:

In compliance with the requirements of Listing Regulations the Company has put inplace a Familiarization Programme for the Independent Directors to familiarize them withtheir roles rights and responsibilities as Directors in the Company .

Through the Familiarization programme the Company apprises the Independent Directorsabout the Company 's operations Corporate strategy business plans regulatory internalcontrol system and critical aspects which would enable them to effectively dischargeresponsibilities and functions conferred on them.

The details of the familiarization programme imparted to Independent Directors havebeen put on the website of the Company . The link can be accessed athttp://gufic.com/wpcontent/uploads/2020/08/Familiarisation%20Programme%20for%20independent%20directors.pdf

Further at the time of the appointment of an Independent Director the Company issuesa formal letter of appointment outlining his / her role function duties andresponsibilities. The format of the letter of appointment is available on our website athttp://gufic.com/investor/Appointment.pdf

NUMBER OF MEETINGS OF THE BOARD

During the year under review Eight Board Meetings were convened and held. The detailsof which are given in the Corporate Governance Report which forms part of this Report.The intervening gaps between the Meetings were within the period prescribed under theCompanies Act 2013 and the Listing Regulations.

COMMITTEES OF THE BOARD

The Board currently has four committees namely the Audit Committee the Nominationand Remuneration Committee the Corporate Social Responsibility Committee and theStakeholders Relationship Committee. All the recommendations made by the Committees ofBoard including the Audit Committee were accepted by the Board. The details of theCommittees along with their composition number of meetings and attendance at the meetingsare provided in the Corporate Governance Report that forms part of this Annual Report.

AUDIT COMMITTEE

The composition of the Audit Committee of the Company is in compliance with theprovisions of Section 177(8) of the Companies Act 2013 and Regulation 18 of the ListingRegulations. The functions performed by the Audit Committee details of meetings held andattendances thereat are given in the Corporate Governance Report which forms part of thisAnnual Report. The Board have accepted all the recommendations made by the AuditCommittee.

POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS

For the purpose of selection of any Director the Nomination & RemunerationCommittee identifies persons of integrity who possess relevant expertise experience andleadership qualities required for the position. The Committee also ensures that theincumbent fulfills such other criteria with regard to age and other qualifications as laiddown under the Companies Act 2013 Listing Regulations and all other applicable laws inforce.

In compliance with the requirements of Section 178 of the Companies Act 2013 andRegulation 19 of the Listing Regulations the Board has on the recommendation of theNomination & Remuneration Committee framed a policy for selection appointment andremuneration of Directors & Senior Management. The details of the Policy are disclosedin the Corporate Governance Report which forms a part of this Report.

The policy lays down the basis for payment of remuneration to Executive andNon-executive Directors (by way of sitting fees and commission if any.) Key ManagerialPersonnel Senior Management and other employees. The policy also provides the criteriafor determining qualifications positive attributes and Independence of Director andcriteria for appointment of Key Managerial Personnel / Senior Management and performanceevaluation which are considered by the Nomination and Remuneration Committee and the Boardof Directors while making selection of the candidates.

The policy can be accessed on the following link:http://gufic.com/wpcontent/uploads/2016/08/Appointment of DirectorsKMP201718.pdf

BOARD EVALUATION:

The Board of Directors have laid down the manner for carrying out an annual evaluationof its own performance its various Committees and individual Directors pursuant to theprovisions of the Companies Act 2013 read with the Rules framed there under and theCorporate Governance requirements as prescribed by Listing Regulations.

The performance evaluation of Individual Directors Committees of the Board and theBoard as a whole was carried out after seeking inputs from all Directors inter-aliacovering different aspects viz. composition and structure of the Board responsibilitiesattendance including participation of the Directors at the Board and Committee meetingsobservance of governance functions and duties quality of deliberations and effectivenessof the procedures adopted by the Board and all other factors based on the criteria andframework approved by the Nomination and Remuneration Committee.

The Board of Directors were satisfied with the evaluation process and expressedsatisfaction over performance of individual directors Board as a whole and of the BoardCommittees as revealed by the evaluation reports.

In a separate meeting of independent directors performance of non-independentdirectors performance of the board as a whole and performance of the chairman wasevaluated.

Manner in which the evaluation has been carried out and matters incidental theretohave been detailed in the Corporate Governance Report which forms part of this report.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is annexed herewith as “Annexure-A”.

Further the information as required under Rules 5(2) & 5(3) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 pertaining to thenames and other particulars of employees is available for inspection at the Corporateoffice of the Company and pursuant to the proviso to Section 136 (1) of the Act thereport and the accounts are being sent to the members excluding this. Any shareholderinterested in obtaining a copy of the same may write to the Company Secretary/ComplianceOfficer at the Corporate office address of the Company .

DIRECTORS' RESPONSIBILITY STATEMENT

In compliance with the provisions of Section 134(3) (c) read with Section 134(5) of theCompanies Act 2013 and to the best of their knowledge and belief and according to theinformation and explanations provided to them your Directors hereby confirm: -

a. In the preparation of the annual accounts/financial statements for the year endedMarch 31 2020 the applicable Indian Accounting Standards have been followed along withproper explanations relating to material departures if any;

b. The Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of your Company at the end of the financial year March31 2020 and of the profit of your Company for that year;

c. The Directors had taken proper and sufficient care 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;

d. The Directors had prepared the annual financial statements on a going concern basis;

e. The Directors had laid down proper internal financial controls and that the same areadequate and were operating effectively; and

f. The Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Board has adopted policies and procedures for ensuring the orderly and efficientconduct of its business including adherence to the Company 's policies safeguarding ofits assets prevention and detection of fraud error reporting mechanisms accuracy andcompleteness of the accounting records and timely preparation of reliable financialdisclosures. The Internal Auditor review the effectiveness and efficiency of these systemsand procedures to ensure that adopted policies and procedures are followed and implementedproperly.

Your Company is committed to ensure an effective internal control environmentcommensurate with the size and complexity of the business which provides an assurance oncompliance with internal policies applicable laws regulations and protection ofresources and assets.

REPORTING OF FRAUDS

During the year under review the statutory auditors internal auditor secretarialauditor and cost auditor have not reported to the Audit committee any instances of fraudcommitted against the Company by its officers or employees under Section 143 (12) of theCompanies Act 2013 the details of which would need to be mentioned in the Board's report

SUBSIDIARY/ JOINT VENTURE /ASSOCIATE COMPANIES

During the year under review the Company did not have any subsidiary joint venture orassociate Company . Hence statement containing salient features of financials ofsubsidiaries pursuant to Section 129 of the Act read with Rule 5 and 8(1) of the Companies(Accounts) Rules 2014 in Form AOC-1 is not applicable to the Company .

DEPOSITS

During the year under review your Company has not accepted any deposits from thepublic falling within the meaning of Section 73 of the Companies Act 2013 and theCompanies (Acceptance of Deposits) Rules 2014.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

During the year under review the Company had not given any loan or provided anyguarantee or given any security with respect to any loan given or invested by way ofsubscription purchase or otherwise the securities of any other body corporate as perSection 186 of the Companies Act 2013.

UNCLAIMED DIVIDEND/SHARES

In pursuance of Regulation 39 read with Schedule VI of the Listing Regulations thedetails of shares lying in unclaimed suspense account and unclaimed shares/dividendtransferred to IEPF are provided in the Corporate Governance Report that forms part ofthis Report.

RELATED PARTY TRANSACTIONS

In lines with the requirement of the Companies Act 2013 and Listing Regulations yourCompany has formulated a Policy on Related Party Transactions which is also available onCompany's website at the link: http://gufic.com/wpcontent/uploads/2016/08/POLICY-ON-RELATED-PARTY-TRANSACTIONS.pdf

Prior omnibus approval was obtained for Related Party Transactions (RPTs) from AuditCommittee at the beginning of the financial year for transactions likely to be enteredwith the related parties. All RPTs were placed before the Audit Committee for review andapproval on quarterly basis. All the RPTs affected during the year are disclosed in thenotes to Financial Statements.

There are no material related party transactions which are not in ordinary course ofbusiness and which are not on arm's length basis and hence there is no information to beprovided as required under Section 134(3)(h) of the Companies Act 2013 read with Rule8(2) of the Companies (Accounts) Rules 2014.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

In compliance with the requirements of Section 135 of the Companies Act 2013 read withthe Companies (Corporate Social Responsibility Policy) Rules 2014 the Board of Directorshave constituted a Corporate Social Responsibility (CSR) Committee. The details ofmembership of the Committee & the meetings held for the financial year 2019-20 aredetailed in the Corporate Governance Report forming part of this Report. The contents ofthe CSR Policy of the Company as approved by the Board on the recommendation of the CSRCommittee are available on the website of the Company and can be accessed through the weblink: http://gufic.com/wp-content/uploads/2016/09/CorporateSocialResponsibilityPolicy.pdf

Your Company continues to contribute to its CSR activities in accordance with the CSRpolicy. During the year under review the Company continued several initiatives under theCSR program focusing on its thrust areas i.e. Community Healthcare Sanitisation &Hygiene; 2. Education Knowledge &Research and 3. Social Care and Concern throughvarious agencies permitted under the Act.

The details of the CSR activities undertaken by the Company during the year underreview is annexed to this report as “Annexure B”

CONSERVATION OF ENERGY

1. Steps taken by the Company or impact on conservation of energy:

Energy saving being a prime objective for all new procurement and modification i.ethe machines/equipments purchased by the Company are Energy efficient and controlled byVariable Frequency Drive (VFD) so that the power is consumed as per the requirement ofeach equipment. Automisation leads to less human intervention.

Have Energy Management System in place

Uses Online Energy Monitoring System for monitoring day to day energy consumption andan online report is generated in which day to day consumption is being monitored andcompared with production so as to analyse and reduce excess/additional uses of power.

Replaced Conventional CFL lights with LED lights in phased manner. Primarily all newpurchases of lights are done of LED lights.

Installation of Steam Strap on main stream line to improve quality of steam.

Ensured All Air Handling Unit (AHU) system is with Variable frequency drives (VFD) forgetting required consumption of Power.

Improvisation of power factor

Treated high salt content in waste water system Harmonisation of best energyconservation practices. Improvisation of power factor

Energy audit at the factory premises by external agency and measures taken.

2. Steps taken for utilizing alternate source of energy:

a) Conventional fuel like furnace oil /high speed diesel are replaced with biomassbriquettes with Eco-friendly fuel for Steam generation

b) Usage of diesel generator (DG Set) to generate electrical energy.

c) Reduction in energy consumption and cost

3. Capital investment on energy conservation equipment:

During the year under review the Company has not made any specific capitalinvestment on energy conservation.

TECHNOLOGY ABSORPTION:

(I) Efforts made towards technology absorption;

a) New product development using newer formulations as well as new molecules and drugs

b) Updating and improving the processes and systems used for existing products

c) Developing and introducing new technologies for enhancing efficacy bio-availabilityand the potency of the existing as well as new products

d) Developing and launching new drug delivery systems with a special focus onLyophilized products

e) Strategic collaborations with other independent teams for introducing new productsand technologies

f) Filing of appropriate patents and function as a link between the management and theIP lawyers

g) Filed multiple Process Patents for many life saving drug injections

h) Filed Herbal Patents for herbal treatment for chronic ailments

I) Stability testing of the current as well as new products with a focus on quality andbio-availability

j) Development and scale-up of new formulations for existing and newer active drugsubstances using innovative and advanced processing equipment.

(ii) the benefits derived as a Result of R & D:

Launched 8 New products in the market in the financial year 2019-20. About 12 productsare ready to be commercialized.

About 30 New products are in projection & development of many products is alreadystarted. Development of new drug delivery systems and devices to improve patient benefit.

Development of products for import substitution.

(iii) in case of imported technology (imported during the last three years reckonedfrom the beginning of the financial year);

Details of technology imported Year of Import whether the technology been fully absorbed; if not fully absorbed areas where absorption has not taken place and the reasons there of
Botulinum Neurotoxin A EP/BP 2018-19 Yes Product under stability
Botulinum Neurotoxin A for Injection EP/ BP 2018-19 Yes Product under stability
Recombinant FSH 2019-20 No. Under development

(iv) the expenditure incurred on Research and Development :

Rs. in lakhs

Particulars 2019-20 2018-19
Capital 38.36 179.96
Recurring 200.07 207.75
Total 238.43 387.71

FOREIGN EXCHANGE EARNINGS AND OUT-GO:

Earnings in foreign currency: ` 4183.29 lakhs
Out-go in foreign currency: ` 7859.28 lakhs

RISK MANAGEMENT:

Your Company believes that managing risks helps in maximizing returns. The Company 'sapproach to addressing business risks is comprehensive and includes periodic review ofsuch risks and a framework for mitigating controls and reporting mechanism of such risks.The risk management framework is reviewed periodically by the Audit Committee.

Your Company has adopted a risk management policy for identification evaluation andmitigation of business risk and threats. This framework seeks to create transparencyminimize adverse impact on the business objectives and enhance the Company 's competitiveadvantage. Various risk traced by the Company during the financial year 2019-20 wereminimized to its best. The risk management policy adopted by the Company can accessed onthe Company 's website link:http://gufic.com/wp-content/uploads/2016/08/Risk-Management-Policy-2017-18.pdf

VIGIL MECHANISM / WHISTLE BLOWER POLICY

As stipulated by Section 177(9) of the Act read with Rule 7 of the Companies (Meetingsof Board and its Powers) Rules 2014 and Regulation 22 of Listing Regulations the Companyhas established a Vigil Mechanism policy i.e. Whistle Blower Policy that enables theDirectors and employees to report genuine concerns unethical behavior irregularities ifany that would adversely affect the operation of the Company and to provide adequatesafeguards against victimization of persons who may use such mechanism. The VigilMechanism provides for direct access to the Chairperson of the Audit Committee. Thedetails of the policy are made available on the website of the Company at the link:http://gufic.com/wp-content/uploads/2016/08/WHISTLE-BLOWER-POLICY.pdf. The policy isreviewed by the Audit Committee from time to time.

No concerns or irregularities have been reported by employees/directors till date.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

During the year under review there have been no significant and material orders passedby the regulators or courts or tribunals impacting the going concern status and Company 'soperation in future except admission of petition by the Hon'ble National Company LawTribunal Mumbai Bench ('NCLT') filed by one of the Operational creditors for initiatingCorporate Insolvency Resolution Process against the Company and appointment of the InterimResolution Professional in the matter vide its order dated October 22 2019 and October25 2019 respectively. However the said orders were recalled by the NCLT vide its orderdated December 03 2019.

Copy of the said orders is available on the website of the Company . Stage-wisedevelopments in the aforesaid process were duly intimated to the Stock Exchanges from timeto time.

Yours Directors state that the Company was fully solvent during the said period and thepetition filed by the said Operational Creditor was solely due to commercial dispute.

AUDITORS & AUDIT REPORT

(I) STATUTORY AUDITOR:

The Report given by M/s. S H R & Co. Chartered Accountants (FRN: 120491W)Statutory Auditors on the financial statements of the Company for the Financial year2019-20 is part of Annual Report. The Notes on financial statements referred to inAuditor's Report are self explanatory and do not call for any further comments. There hasbeen no qualification reservation or adverse remark in their Report on FinancialStatement for FY 2019-20.

At the 35 Annual General Meeting held on September 30 2019 the shareholders of theCompany had approved re-appointment of M/s. S H R & Co. as the Statutory Auditors fora period of four years commencing from the conclusion of the 35th Annual General Meetinguntil the conclusion of 39th Annual General Meeting. However M/s. SHR & Co. tenderedtheir resignation vide letter dated August 13 2020 effective from the date of approval ofthe Un-Audited financial results for the quarter ending June 30 2020 by the Board ofDirectors and the said resignation was accepted and noted by the Audit Committee and Boardat its respective Meetings held on August 18 2020.

The Board of Directors of the Company at its meeting held on September 14 2020appointed M/s. Mittal Agarwal & Co. Chartered Accountants Mumbai (Registration No.ICAI FRN: 131025W) as Statutory Auditors to fill the casual vacancy caused due toresignation of M/s. S H R & Co. Chartered Accountants as Statutory Auditors of theCompany and to hold office from September 21 2020 till the conclusion of ensuing AnnualGeneral Meeting (AGM) and for a period of 5 years commencing from the conclusion of theensuing AGM till conclusion of the AGM to be held for the financial year 2024-25 subjectto the approval of the shareholders.

M/s. Mittal Agarwal & Co. have provided their consent to act as Statutory Auditorsof the Company and a certificate in accordance with Sections 139 141 and other applicableprovisions of the Act to the effect that their appointment if made shall be inaccordance with the conditions prescribed and that they are eligible to hold office asStatutory Auditors of the Company . Also a confirmation of holding a valid certificateissued by the Peer Review Board of the Institute of Chartered Accountants of India hasbeen received from the proposed Auditor in pursuance of the Listing Regulations.

Necessary resolution and explanation thereto have been provided in the AGM noticeseeking approval of members.

(ii) COST AUDITOR :

Pursuant to provisions of Section 148(3) of the Companies Act 2013 read with theCompanies (Cost Records And Audit) Amendment Rules 2014 the Company is required toappoint a Cost Auditor to audit the cost records maintained by the Company . The Boardhas on recommendation of Audit Committee appointed M/s. Kale & Associates CostAccountants Mumbai (Firm Registration No. 101144) to audit the cost records of theCompany for the financial year 2020-21. As required under the said Act and the Rules madethere under the remuneration payable to the Cost Auditors is required to be ratified bythe shareholders at the ensuing Annual General Meeting. Accordingly a resolution seekingratification by members for their remuneration forms part of the Notice convening 36Annual General Meeting. The Board recommends the same for approval of Members.

The Company is required to maintain Cost Records as specified by the Central Governmentunder Section 148(1) of the Act and accordingly such accounts and records are made andmaintained by the Company .

In compliance with Section 148(6) of the Act and Rule 6(6) of the Companies (CostRecords and Audit) Rules 2014 Cost Audit Report in the Form CRA - 4 (XBRL mode) for thefinancial year ended March 31 2019 was filed by the Company with the Central Governmenton April 11 2020.

(iii) SECRETARIAL AUDITOR

Pursuant to provisions of section 204 of the Companies Act 2013 read with Rule 9 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 andRegulation 24A of SEBI Listing Regulations the Company had appointed Mr. Gajanan D.Athavale a Practicing Company Secretary to undertake the Secretarial Audit of the Companyfor the financial year 2019-20. The Secretarial Audit Report in the prescribed Form No. MR3 is annexed to this Report as 'Annexure C'.

The explanation of the Company on the observation mentioned in the Secretarial AuditReport are as follows:

With regards to delay in submission of financial results by the Company for thefinancial year ended March 31 2019 the same was delayed by one day as the Board Meetingfor approval of said financial results commenced at 7.00 pm on May 30 2019 which was thelast day for submission and concluded on the next day i.e. May 31 2019 at 5.20 a.m

With regards to delay in submission of financial results by the Company for the quarterand half year ended September 30 2019 the same was delayed by the Interim ResolutionProfessional ('IRP') who was appointed in the Company w.e.f. October 25 2019 by theHon'ble National Company Law Tribunal Mumbai bench as he needed time to get acquaintedwith the accounts of the Company . The said financials were approved by the Board ofDirectors on December 03 2019 after the IRP was discharged from his role andresponsibilities and the Management of the Company was restored and continued to be infunction.

With regards to Spending the amount earmarked for Corporate Social Responsibilityactivities outside local area where the Company have its Registered & Corporate officei.e. Mumbai (Maharashtra) and factory i.e. Navsari (Gujarat) the Company operates PANIndia and accordingly the Company have contributed in the CSR activities throughout Indiain the financial year 2019-20

Except as stated above there were no qualification reservation or adverse remark inthe Secretarial Audit Report for the year ending March 31 2020.

(iv) INTERNAL AUDITOR :

As per section 138 of the Companies Act 2013 the Company is required to have InternalAuditor. In this connection the Board of Directors of the Company has on therecommendation of the Audit Committee approved the appointment of Mrs. Shilpa BansalChartered Accountants as the Internal Auditor of the Company for the financial year2020-21.

ANNUAL SECRETARIAL COMPLIANCE REPORT

Mr. Gajanan D. Athavale Practicing Company Secretary have issued Annual SecretarialCompliance Report for the financial year ended March 31 2020 which confirms that theCompany has maintained proper records as stipulated under various Acts Rules andRegulations and that no action has been taken against the Company or promoters/ directorsby the SEBI/Stock Exchanges except as stated in the said Report.

COMPLIANCE WITH SECRETARIAL STANDARDS

During the year under review the Company has complied with the applicable mandatorySecretarial Standards as amended from time to time issued by the Institute of CompanySecretaries of India.

EXTRACT OF ANNUAL RETURN:

The extract of the Annual Return as required under sub-section (3) of Section 92 of theAct in form MGT-9 is annexed herewith as “Annexure D” and is also made availableon the website of the Company at the link:http://gufic.com/investor/Annual%20Return-MGT-9%20of%20FY%202019-20.pdf

MANAGEMENT DISCUSSION & ANALYSIS REPORTS

The Management Discussion and Analysis as prescribed under Part B of Schedule V readwith Regulation 34(3) of the SEBI Listing Regulations is provided in a separate sectionand forms part of this Report.

BUSINESS RESPONSIBILITY REPORT

As stipulated by Regulation 34(2)(f) of the SEBI Listing Regulations the BusinessResponsibility Report forms part of this Annual Report and the same can also be accessedfrom the website of the Company i.e. www.gufic.com

CERTIFICATE ON COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE

Your Company believes Corporate Governance is at the core of stakeholder satisfaction.As stipulated by Regulation 34(3) read with Schedule V(C) of the SEBI Listing RegulationsCorporate Governance Report forms part of this Annual Report. The Report on CorporateGovernance issued by Mr. Deep Shroff partner of M/s. S H R & Co. CharteredAccountant (FRN: 120491W) as prescribed under Schedule (E) of the SEBI ListingRegulations is annexed to this Annual Report.

PREVENTION OF SEXUAL HARASSEMENT AT WORK PLACE

Your Company has zero tolerance towards sexual harassment at work place and adhere tothe safety of the women employees at the Company . Your Company believes in providingopportunity and key position to women professionals. It is the continuous endeavor of theBoard of Directors to create a discrimination and harassment free environment for all itsemployees.

In compliance with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and Rules framed thereunder the Companyhas formulated and implemented a policy on prevention prohibition and redressal ofcomplaints related to sexual harassment at workplace.

An Internal Complaints Committee (ICC) has been duly constituted by the Company for theemployees of the Company at its Corporate office situated at Mumbai Maharashtra andmanufacturing facility at Navsari Gujarat in compliance with the said Act to redresscomplaints regarding sexual harassment. During the year under review no complaintspertaining to sexual harassment was received by the Company . The Company has submittedthe Annual Returns to the local authorities where the ICC is constituted as requiredunder the above mentioned Act.

GREEN INITIATIVE

The Ministry of Corporate affairs had taken the Green Initiative in CorporateGovernance by allowing paperless compliances by Companies through electronic mode. YourCompany supports the Green Initiative and has accordingly decided to send allcommunications to its shareholders to their respective registered e-mail addresses.

Your Company appeals to you its shareholders who are yet to register your e-mailaddresses that they take necessary steps for registering same so that you can also becomea part of the initiative and contribute towards a Greener environment.

HUMAN RESOURCES

The Company takes pride in the commitment competence and dedication of its employeesin all areas of business. Also we believe the organisation's achievements are an outcomeof efforts dedication and conviction demonstrated by its people. Human Resource agendaencourages high performance culture with focus on Employee Safety and welfare Employeedevelopment and productivity.

The HR processes are continuously evolving and aligning with the changing businessrequirements to create a culture of continuous learning and innovation among ouremployees. Your Company continued to conduct various employee benefit recreational andteam building programs social gatherings to foster team spirit.

Industrial relations were cordial throughout the year. Health and Safety of our workforce is of prime importance to us and we maintain highest standards in all the plantswith adoption of best technologies and manufacturing practices which are at par withglobal standards.

PREVENTION OF INSIDER TRADING

Pursuant to the SEBI (Prohibition of Insider Trading) Regulations 2015 as amendedfrom time to time the Company has formulated a Code of Internal Procedures and Conductfor Regulating Monitoring and Reporting by Designated Person and Immediate Relative(s) ofDesignated Person of the Company to put in place a framework for prohibition of insidertrading in securities and to strengthen the legal framework thereof.The Code includesobligations and responsibilities of Designated Persons maintenance of the digitaldatabase mechanism for preventing insider trading and handling of Unpublished PriceSensitive Information (UPSI) disclosure of UPSI for legitimate purpose; prohibited andpermitted transactions consequence for violation etc.

The code can be accessed on the website of the Company at the web link:http://gufic.com/wp-content/uploads/2016/08/ Code of FairDisclosure.pdf

The Code requires pre-clearance for dealing in the Company 's shares and prohibits thepurchase or sale of Company shares by the Directors and the designated employees while inpossession of unpublished price sensitive information in relation to the Company andduring the period when the Trading Window is closed. The Board is responsible forimplementation of the Code.

All Board Directors and the designated employees have confirmed compliance with theCode.

ACKNOWLEDGEMENTS

Your Directors commend all employees of the Company for their dedication commitmenthard work and contributions. The Board wishes to express their deepest gratitude tovarious regulatory authorities medical professionals suppliers clients businesspartners bankers and other statutory authorities at all levels for their continuousco-operation and assistance.

The Directors also acknowledge the whole-hearted support and faith the investorscontinue to repose in the Company .

Place: Mumbai For and on behalf of the Board of Directors
Date: 14 September 2020
Jayesh Choksi
Chairman & Managing Director
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