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Indoco Remedies Ltd.

BSE: 532612 Sector: Health care
BSE 15:14 | 20 Jun 197.70 1.10






NSE 15:04 | 20 Jun 197.10 -0.40






OPEN 196.60
52-Week high 317.00
52-Week low 175.20
P/E 44.23
Mkt Cap.(Rs cr) 1,822
Buy Price 197.00
Buy Qty 50.00
Sell Price 198.50
Sell Qty 112.00
OPEN 196.60
CLOSE 196.60
52-Week high 317.00
52-Week low 175.20
P/E 44.23
Mkt Cap.(Rs cr) 1,822
Buy Price 197.00
Buy Qty 50.00
Sell Price 198.50
Sell Qty 112.00

Indoco Remedies Ltd. (INDOCO) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the Seventieth Annual Report on the businessoperations together with the Audited Financial Statements for the Financial Year endedMarch 31 2017 and on the state of affairs of the Company

Financial Performance:

The highlights of the performance of the Company for the year ended March 31 2017 issummarized below:

(' crores)


Financial Year ended March 31 2017

Financial Year ended March 31 2016

Revenue from Operations (Gross) 1094.06 1004.76
Add: Other Income 4.13 1.67
Total Income 1098.19 1006.43
Profit Before Interest Depreciation & Tax 160.76 172.07
Less: Finance Cost 6.16 12.15
Less: Depreciation & amortisation 63.26 60.63
Profit Before Tax 91.34 99.29
Less: Provision for Taxation
- Current 19.62 21.98
- Deferred (5.74) (5.03)
- Earlier Years - 0.05
Net Profit After Tax 77.46 82.29
Balance bought forward 250.83 216.81
Amount available for appropriation 328.29 299.10
- Interim Dividend Paid - 12.90
- Final Dividend Paid 1.84 14.74
- Dividend Tax 0.39 5.63
- Transfer to General Reserve 15.00 15.00
Balance carried forward 311.06 250.83

Results from Operations:

The Company has prepared its Financial Statement based on the new Indian-AS notifiedunder Section 133 of the Companies Act 2013 read with Companies (Indian AccountingStandard) Rules 2015. The total income of the Company amounted to Rs. 1098.19 crore ascompared to Rs. 1006.43 crores in the previous year. This represents a 9% growth. TheProfit before tax (PBT) was Rs. 91.34 crores as compared to Rs. 99.29 crores in theprevious year. After providing for Tax the Net Profit (PAT) amounted to Rs. 77.45 croresas against Rs. 82.29 crores in the previous year. The decline in PBT and in PAT is mainlydue to increase in input and other costs.

During the Year the Company completed its restructuring exercise in domesticFormulation Business. As a result the composition of prescription from Doctor specialtieshas improved as planned. This helped the Company to achieve growth inspite of headwinds.The domestic business contributes to 55% of total Sales.

The Company sees a lot of potential in its Regulated Markets business in the years tocome and keeping this in mind has taken steps to expand its production capacity. Duringthe year under consideration the Company acquired a manufacturing facility located atBaddi. This facility having a manufacturing capacity to produces 4.3 billion tablets and50 million capsules p.a. will be another manufacturing hub for the Company's solid dosagesbusiness in the regulated markets. With this acquisition Indoco will now have 6facilities for finished dosages and 3 for APIs. In addition to this acquisition theCompany is also carrying out expansion work at its Sterile Formulation Plant in Goa. TheCompany's API plant in Patalganga is also being expanded to substantially increase itsproduction capacity

During the year the Company received United States Food and Drugs Administration(USFDA) approval for its Abbreviated New Drug Application (ANDA) for Allopurinol 100 mgand 300 mg tablets. This Drug is used for the treatment of Gout

AnaCipher CRO- the Clinical Research Division of the Company was audited by USFDAtwice during the year- in January and February 2017. Both the audits were successful withZero 483s.

The USFDA had inspected our drug manufacturing facilities at Goa (Plant II & PlantIII) from August 31 2016 to September 4 2016. As an outcome of this inspection thefacility received 6 observations in Form 483 none of which pertains to data integrity.However FDA has issued warning letter with respect to Ophthalmic Product leakage. TheCompany has appointed a US based Consultant to help the Company to overcome this issue.The Company is fully committed in resolving the issue and is looking into the matter ontop priority. The Company is also committed to its philosophy of highest quality inmanufacturing operations systems integrity and cGMP culture.

The Goods & Services Tax (GST) is proposed to come into effect from July 12017.The Governing Council of GST has announced the rates applicable across the varioussectors. The rate applicable to Pharma companies will have no major impact on yourCompany. Your Company has completed all the formalities required for the smoothintegration with the new GST laws and rates.

A detailed discussion on the business performance and future outlook is included inManagement Discussion & Analysis which forms part of the Directors' Report.

Dividend & Reserves:

The Board has recommended a Final Dividend of 80% (' 1.60 per share) i.e. Rs. 14.74crores for the year 2016-17. The Company in the FY 201 5-2016 had made a payment of bothInterim Dividend and Final Dividend. The total dividend for the year 2015-16 was 80% ('1.60 per share) i.e. Rs. 14.74 crores.

The Directors have recommended transfer of an amount of Rs. 15.00 crores to GeneralReserve (Previous year Rs. 15.00 crore)

Energy Conservation/Technology Absorption and Foreign Exchange Earnings and Outgo

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of The Companies (Accounts) Rules 2014 is annexed herewith as "AnnexureA".

Share Capital:

The paid up Equity Share Capital as on March 312017 is Rs. 18.43 crore. During theyear under review the Company has not issued shares with differential voting rights norgranted stock options nor sweat equity.

As on March 312017 other than

Mr. Suresh G Kare - Chairman

Ms. Aditi Panandikar - Managing Director

Mr. Sundeep V Bambolkar - Jt. Managing Director

none of the Directors of the Company held shares of the Company


Cash and cash equivalent as at March 31 2017 was Rs. 59.92 crore. The Companycontinues to focus on judicious management of its Working Capital. ReceivablesInventories and other working capital parameters were kept under strict check throughcontinuous monitoring.


The Company has not accepted any Deposit covered under Section 73 of the Companies Act2013 and The Companies (Acceptance of Deposit) Rules 2014.

Particulars of Loans Guarantees and Investments:

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.

Credit Rating:

ICRA has reaffirmed Company's long term borrowings rating as AA- and the short termborrowing rating as A1 +.

These ratings are considered to have high degree of safety regarding timely servicingof financial obligations and carry very low credit risk.

Corporate Social Responsibility (CSR):

As required under Section 135 of the Companies Act 2013 during the year the Companyundertook a number of CSR initiatives which is mainly focused on promoting educationhealth and public hygiene.

In this connection the Company during the year under consideration spent an amount ofRs. 2.22 crores as against an amount of Rs. 2.53 crores (including an amount Rs. 0.64crores b/f from the previous year) required to be spent. A detailed list of the CSRexpenditure made is annexed herewith as "Annexure B". The shortfall ofRs. 0.31 crores is mainly due to the fact that some of the projects sanctioned are takingtime for completion and hence entire amount on those Projects has not been spent. Thebalance amount on those projects will be spent in the FY 2017-2018

In addition to fulfilling its CSR obligations the Company during the year madesubstantial donations of free medicines to charitable bodies for distribution among theneedy.

Internal Control Systems and their Adequacy:

The Company has an Internal Control System commensurate with the size of itsoperations. The Internal Audit Department monitors and evaluates the efficacy and adequacyof internal control system in the Company its compliance with operating systemsaccounting procedures and policies at all locations of the Company and its subsidiaries.Based on the report significant audit observations and corrective actions thereon arepresented to the Audit Committee of the Board.

The Company's Internal Auditor also monitors and evaluates the internal control systemand submits Quarterly Reports which are placed before the Audit Committee of the Board.

The Risk Management Policy of the Company is available on the Company Website at:

Vigil Mechanism / Whistle Blower Policy:

The Company has a Whistle Blower Policy to deal with instance of fraud andmismanagement if any. The details of the Policy is explained in the Corporate GovernanceReport and also posted on the website of the Company.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013.

The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013.

Internal Complaints Committee (ICC) has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent contractual temporary trainees)are covered under this policy.

The following is a summary of sexual harassment complaints received and disposed offduring the year 2016-17:

- No of complaints received: Nil

- No of complaints disposed off: Nil


The Company has three subsidiary companies:

1. Xtend Industrial Designers and Engineers Private Limited

2. Indoco Pharmchem Limited

3. Indoco Remedies Singapore Pte. Ltd.

The salient features of the financial statements of the subsidiaries are given hereinbelow:

CIN U93000MH1995PTC086174 U33112MH2012PLC232609 201542731W
Name of the Subsidiary Xtend Industrial Designers and Engineers Pvt. Ltd Indoco Pharmchem Ltd. Indoco Remedies Singapore Pte. Ltd.
Reporting period for the subsidiary April 12016 - March 31 2017 April 12016 - March 31 2017 April 12016 - March 31 2017
Reporting Currency INR (?) (in Lakhs) INR (?) (in Lakhs) USD ($) (in Lakhs)
Equity Share Capital 2.50 5.00 0.21
Preference Share Capital 200.20 - -
Reserves and Surplus 0.98 (1.86) (0.20)
Total Assets 386.64 3.43 0.05
Total Liabilities 386.64 3.43 0.05
Investments Nil Nil Nil
Turnover 276.79 Nil Nil
Profit / (Loss) before Taxation (31.58) (0.46) (0.12)
Provision for Taxation (0.50) - -
Profit/(Loss) after Taxation (31.08) (0.46) (0.12)
Proposed Dividend - - -
% of shareholding 100% 100% 100%

The Company has one associate LLP:

1. Indoco Analytical Solutions LLP

There was no activity in the associate LLP - Indoco Analytical Solutions LLP. TheSalient features of the Financial Statement is given herein below:

Name of the Associate Indoco Analytical Solutions LLP
Latest Audited Balance Sheet Date April 12016 - March 312017
Share of Associate held by the Company as on March 312017
i) Nos NA
ii) Amount of Capital Contributed ' 490000
iii) Extent of Holding 98%
Description of how there is significant influence The Company holds 98% of the capital of the LLP
Reason why the associate is not consolidated NA
Net worth attributable to Shareholding as per latest Audited Balance Sheet (' in Lakhs) 3.91
Profit/(Loss) for the Year
a. Considered in Consolidation (0.12)
b. Not considered in Consolidation -
(' in Lakhs)

The audited financial statements the Auditors Report thereon and the Board's Reportfor the year ended March 312017 for each of the Company's subsidiaries and Company'sassociate LLP are available on the Company website.

No Company has become or ceased to be a Subsidiary Joint Venture or Associate Companyof Indoco Remedies Limited during the year under consideration.

Consolidated Financial Statements

The Consolidated Financial Statements of the Company prepared in accordance withIndian-AS notified under Section 133 of the Companies Act 2013 read with Companies(Indian Accounting Standard) Rules 2015 form part of this Annual Report.


In terms of provisions of the Section 152(6) of the Companies Act 2013 Dr. Anand MNadkarni Director retires by rotation at the forthcoming Annual General Meeting andbeing eligible offers himself for re-appointment. The profile of the Director seekingreappointment pursuant to Regulation 36 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is included in the Annual Report.

No Director or Key Managerial Personnel was appointed or has resigned during the yearunder consideration.

All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Regulation16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

During the year 4 (Four) Board Meetings were held and the gap between two BoardMeetings did not exceed 120 days. Details of the Board Meeting are given in the Report onCorporate Governance.

Board evaluation

Pursuant to the provisions of the Companies Act 2013 and Regulation 19 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board has carriedout an annual performance evaluation of its own performance the directors individually aswell as the evaluation of the working of its Audit Committee CSR Committee Nomination& Remuneration Committee and Stakeholder Relationship Committee. The manner in whichthe evaluation has been carried out has been explained in the Corporate Governance Report.

Remuneration Policy

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors KMP and their remuneration.The Remuneration Policy is stated in the Corporate Governance Report.

1. The Board Affirms that the remuneration paid is as per the Remuneration Policy ofthe Company.

2. The percentage increase in the remuneration of Company Secretary in the financialyear was 10%.

3. The percentage increase in the median remuneration of employees in the financialyear: 17%.

4. Average percentage increase in salaries of non-managerial employees was 16% ascompared to average percentage increase in managerial remuneration which was 15%.

5. Number of Permanent employees on the rolls of the Company as on March 312017: 6036Nos.

6. The Ratio of the remuneration paid to each Director to the median remuneration ofthe employees of the Company during the year under consideration:

Name of Director

Remuneration Paid



Remuneration ('


Mr. Suresh G Kare (Executive Chairman) 28711000 215760 1:133
Ms. Aditi Panandikar (Managing Director) 18241529 215760 1:85
Mr. Sundeep V Bambolkar (Jt. Managing Director) 16852188 215760 1:78
Dr. Anil M Naik (Independent Director) 340000 215760 1:1.58
Mr. D M Gavaskar (Independent Director) 280000 215760 1:1.30
Mr. Sharad P Upasani (Independent Director) 260000 215760 1:1.21
Mr. Rajiv P Kakodkar (Independent Director) 205000 215760 1:0.95
Dr. Anand M Nadkarni (Non Executive Director) 160000 215760 1:0.74

Directors' Responsibility Statement

To the best of their knowledge and belief and according to the information andexplanations obtained

by them your Directors make the following statement in terms of Section 134(3)(c) ofthe Companies

Act 2013:

i. that in the preparation of annual accounts the applicable accounting standards havebeen followed and no material departures have been made from the same;

ii. that they have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofits of the Company for that year;

iii. that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

iv. that the annual accounts have been prepared on a 'going concern' basis;

v. that the Company has laid down internal financial controls and such internalfinancial controls are adequate and operating effectively;

vi. that proper systems have been devised to ensure compliance with the provisions ofall applicable laws and such systems are adequate and operating effectively;

Related Party Transactions

All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. There are no materiallysignificant related party transactions made by the Company with Promoters Directors orKey Managerial Personnel which may have a potential conflict with the interest of theCompany at large.

All Related Party Transactions are placed before the Audit Committee as also the Boardfor approval. Prior approval of the Audit Committee is obtained on a yearly basisspecifying the upper ceiling as to amount for the transactions which are of a foreseen andrepetitive nature. The transactions entered into pursuant to the prior approval so grantedare audited and a statement giving details of all related party transactions is placedbefore the Audit Committee and the Board of Directors for their approval on a quarterlybasis.

The particulars as required under the Companies Act 2013 is furnished in "AnnexureC" to this report. Significant and Material Orders passed by the Regulators orCourts

There are no significant material orders passed by the Regulators / Courts which wouldimpact the going concern status of the Company and its future operations.

Statutory Auditors:

M/s. Patkar & Pendse Chartered Accountants hold office as Auditors till theconclusion of the ensuing Annual General Meeting. Pursuant to Section 139(2) of theCompanies Act 2013 and rules made thereunder M/s. Patkar & Pendse CharteredAccountants shall not be eligible for re-appointment due to provisions relating torotation of auditor.

The Audit Committee of the Board has subject to the approval of the Members at theforthcoming Annual General Meeting recommended the appointment of M/s Gokhale &Sathe Chartered Accountants (Firm Regn.: No. 103264W) as Statutory Auditors of theCompany for a period of 5 (Five) years till the conclusion of the Seventy Fifth AnnualGeneral Meeting to be held in 2022.

M/s Gokhale & Sathe have confirmed their eligibility as required by Section 139 ofthe Companies Act 2013 to act as Auditors of the Company. They have also conveyed theirwillingness to accept the office as Auditors if appointed.

Cost Auditors:

In terms of the Order issued by the Central Government under Section 148 of theCompanies Act 2013 the Company was required to appoint cost auditors to get the audit ofthe cost records of the Company done by a member of the Institute of Cost Accountants ofIndia (ICAI).

For FY 2016-2017 the Company had appointed M/s Sevekari Khare & Associates (FirmRegistration No. 000084) to get the audit of the cost records done. They would be requiredto submit the reports by September 29 2017.

As required under the Companies Act 2013 the remuneration payable to the Cost Auditoris required to be placed before the Members in a general meeting for their ratification.Accordingly a Resolution seeking Member's ratification for the remuneration payable toM/s Sevekari Khare & Associates Cost Auditors for FY 2017-2018 is included at ItemNo. 5 of the Notice convening the Annual General Meeting.

Secretarial Audit

The Secretarial Audit was carried out by M/s A. Y Sathe & Co. Company Secretariesin Practice (Registration No.: FCS 2899/COP 738) for the financial year 2016-2017. TheReport given by the Secretarial Auditors is annexed as "Annexure D" andforms integral part of this Report. There has been no qualification reservation oradverse remark or disclaimer in their Report. During the year under review theSecretarial Auditors had not reported any matter under Section 143 (12) of the Acttherefore no detail is required to be disclosed under Section 134 (3)(ca) of the Act.

In terms of Section 204 of the Companies Act 2013 on the recommendation of the AuditCommittee the Board of Directors has appointed CS Ajit Sathe- Proprietor of M/s A. YSathe & Co. Company Secretaries in Practice (Registration No.: FCS 2899/COP 738) toundertake the Secretarial Audit of the Company.

Corporate Governance

We comply with the Securities and Exchange Board of India (SEBI)'s guidelines onCorporate Governance. We have documented our internal policies on corporate governance.Several aspects of the Act such as the Whistleblower Policy and Code of Conduct andEthics have been incorporated into our policies. Our Corporate governance report forfiscal 2017 forms part of this Annual Report. The Report is duly certified by theStatutory Auditors of the Company whose certificate is also annexed.

Extract of the Annual Return:

The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as "Annexure E".

Particulars of Employees:

The information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company is provided in the Corporate Governance Report.

Employees Relations

The employees' relation at all levels and at all units continued to be cordial duringthe year.

Business Responsibility Report

As mandated by the Securities and Exchange Board of India (SEBI) the BusinessResponsibility Report of the Company for the year ended March 31 2017 is annexed as"Annexure F" and forms integral part of this Report.


Your Company has been able to operate efficiently through continuous improvement in allfunctions and areas by efficiently utilizing the Company's resources. The Directors wishhereby to place on record their appreciation of the services rendered by each and everyemployee without whose whole-hearted efforts the overall satisfactory performance wouldnot have been possible. The Directors also wish to place on record their word of sincereappreciation to the bankers & financial institutions the investors the vendors thecustomers the medical profession and all other business associates for their continuedsupport. Your Directors look forward to the long term future with confidence.

Cautionary Statement

Statements in this Report particularly those which relate to Management Discussion andAnalysis describing the Company's objectives projections estimates and expectations mayconstitute 'forward looking statements' within the meaning of applicable laws andregulations. Actual results might differ materially from those either expressed or impliedin the statement depending on the circumstances.

For and on behalf of the Board of Directors
Place : Mumbai Chairman
Date : May 26 2017 DIN:00179220