The Board of Directors hereby submits the report of the business andoperations of your company for the financial year ended 31 March 2018.
Financial results of the company for the financial year under reportare given below: (` in crore)
|Particulars || |
Year ended 31 March 2018
Year ended 31 March 2017
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Your company has shown excellent results in the year under review andcrossed landmark of ` 1000 crore. The company has achieved total revenue `1002.86 crore during the year under review in comparison to ` 774.44 crore duringthe previous year registering an increase of 29.49 %. The profit after tax is `27.70 crore during the year against
` 4.67 crore during the previous year mainly due to increase insales of the company and improved operational efficiencies during the year. The EBITDAduring financial year ended 31 March 2018 went up to
` 125.86 crore as against ` 103.45 crore during previousfinancial year ended 31 March 2017.
The company continues to give more focus to increase the pharma sharein its total business and is able to increase pharma share to 63% during the year underreview against 56% during the previous year.
Cash Flow Statement
A Cash Flow Statement for the financial year 2017-18 is included in theannexed statement of accounts.
The Board of Directors has not recommended any dividend due toinadequate profit during the year under review.
The paid up equity share capital of the company is `562055020/- consisting of 56205502 equity shares of ` 10/- each as on 31March 2018.
Holding & Subsidiary Company
The company has neither a holding company nor any subsidiary company.
Internal financial control systems and their adequacy
The details in respect of internal financial controls and theiradequacy are included in the Management Discussion & Analysis Report which formspart of this report.
Loan guarantees or investment under Section 186 of the Companies Act2013
The particulars of loans guarantees and investments have been providedin the notes of the financial statements.
During the year 2017-18 your company has setup Unit III to manufactureFenofibrate Clopidogrel and Lamotrigine with project cost of ` 16.48 crore metthrough internal accruals. The company has also setup Unit IV for manufacturing Metforminan anti-diabetic drug with a capacity of 3000 MT per annum with project cost of `10.02 crore which was financed through internal accruals. The company has also enhancedinstalled capacity of Ibuprofen from 7200 TPA to 10000 TPA by debottlenecking andre-engineering the plant in the month of August 2018.
Research and Development
Research and Development (R&D) capabilities have enabled yourcompany to produce technology-intensive products enhancing its presence in local &international markets. The company's R&D strength is in developing processes forAPIs and intermediates with substantial backward integration to minimize its dependency onexternal forces and to be a leader in highly competitive world of generic APIs. Currentlythe company has five APIs and three intermediates in its pipeline which are either on theverge of development or are ready for commercialization. Going forward the company'sR&D is targeting to develop at-least 4-5 APIs every year. The company employs about 50research scientists working in R&D centre equipped with cutting-edge technologies forresearch.
The CARE Ratings Limited has revised the credit rating for long termbank facilities to CARE BBB-; Stable' (Triple B Minus; Outlook:Stable) from CARE BB; Stable' (Double B; Outlook: Stable) and the creditrating for short term bank facilities to CARE A3'(A Three) fromCARE A4 Stable' (A Four).
Composition and Number of Meetings of the Board
The Board comprises of well qualified and experienced persons havingexpertise in their respective areas. It has appropriate combination of Executive NonExecutive and Independent Directors. During the financial year 2017-18 the Board met 4(four) times on 27 May 2017 18 August 2017 13 November 2017 and 12 February 2018.
Directors /Key Managerial Personnel
In accordance with the provisions of the Companies Act 2013 and theArticles of Association of the company Mr Vijay Garg and Mr Vikas Gupta will retire inthe ensuing Annual General Meeting and being eligible has offered themselves forre-appointment. The Board has recommended their re-election to the members.
During the current year Mr Vijay Singla Director (Works) has resignedfrom directorship with effect from 27 May 2017 however remains in the company asPresident (Chemicals).The Board places on record their appreciation for the servicesrendered by him during his tenure as director of the company.
The Board has carried out an annual evaluation of its own performanceboard committees and independent directors pursuant to the provisions of the CompaniesAct 2013 and the corporate governance requirements as prescribed under Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 (hereinafter referred as SEBI Listing Regulations). The Board has evaluated theperformance of independent directors mainly on the basis of their constructiveparticipation in the board/ committee proceedings their ability to monitor the managementperformance providing guidance in the key issue in the best interest of the company andtheir commitment to the ethical and to fulfilment of fiduciary and other duties assignedby the act regulations and rules by the Government. The performance evaluation of thechairman and the non-Independent directors was carried out by the Committee of IndependentDirectors.
Nomination and Remuneration Policy
The Nomination and Remuneration Policy on directors' appointmentand remuneration including criteria for determining qualifications positive attributesindependence of a director and other matters as required under Section 178 of theCompanies Act 2013 is available on our website www.iolcp.com. There has been nochange in the policy since the last fiscal year.
Directors' Responsibility Statement
Pursuant to the provisions of Section 134(5) of the Companies Act2013 the Directors of your company confirm that: a) in the preparation of the annualaccounts the applicable accounting standards had been followed along with properexplanation relating to material departures. b) they have selected such accountingpolicies and applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of thecompany at the end of the financial year and of the profit or loss of the company for thatperiod; c) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities. d)they have prepared the annual accounts on a going concern basis. e) they have laid downinternal financial controls to be followed by the company and that such internal financialcontrols are adequate and operating properly; and f) they have devised proper systems toensure compliance with the provisions of all applicable laws and that such systems wereadequate and operating effectively.
Declaration by Independent Directors
The company has received necessary declaration from each of independentdirector under Section 149(7) of the Companies Act 2013 that he/she meets the criteria ofindependence as laid down in Section 149(6) of the Companies Act 2013 and Regulation 16of the SEBI Listing Regulations 2015.
The company has in place a system of Corporate Governance. A separatereport on Corporate Governance along with auditors' certificate regarding complianceof conditions of corporate governance set out by the SEBI Listing Regulations is annexedto this Report.
Management Discussion and Analysis Report
Management Discussion and Analysis Report is given separately in thisReport.
Audit and Risk Management Committee
The Composition and role of the Committee has been provided in theCorporate Governance Report annexed with this report.
The Board has formed Audit and Risk Management Committee inter alia toframe implement and monitor the risk management plan for the company. The Committee isresponsible for reviewing the risk management plan and ensuring its effectiveness. It hasbeen covered in the Management Discussion and Analysis Report which forms part of thisreport.
Related Party Transactions
All related party transactions that were entered into during thefinancial year were on arm's length and were in the ordinary course of business.During the year the company had not entered into any contract / arrangement / transactionwith related parties which could be considered material in accordance with the provisionsof Policy on Materiality of and dealing with Related Party Transactions. The disclosuresof related party transactions are provided in notes to financial statements. The companyhas formulated a Policy on Materiality of and dealing with Related Party Transactions. Thepolicy is available on the company's website www.iolcp.com.
The company has not accepted any fixed deposits from the public/members during the year under review.
Your company is committed to provide its best services to theshareholders/ investors. M/s Alankit Assignments Limited New Delhi is working asRegistrars and Share Transfer Agents (RTA) of the company for transfer dematerializationof shares and other investor related services. No correspondence /enquiry from anyshareholder/ investor is pending with the company for reply.
Listing of Shares
The equity shares of the company continued to be listed and traded onNational Stock Exchange of India Limited (Script code; IOLCP) and BSE Limited (Scriptcode; 524164). The company has made all compliances of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 including payment of annual listing fee.
Energy Conservation / Technology Absorption and Foreign ExchangeEarnings and Outgo
Energy conservation continues to be an area of major emphasis in thecompany. A statement giving details of conservation of energy technology absorptionforeign exchange earnings and outgo in accordance with Section 134 of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is annexed hereto as AnnexureI and forms part of this report.
M/s SCV & Co. LLP Chartered Accountants New Delhi (formerly knownas M/s S C Vasudeva & Co.) Statutory Auditors of the company have submittedAuditors' Report on the financial statements of the company for the financial yearended on 31 March 2018. The Auditors' Report for the year is self-explanatory &does not contain any modified opinion hence no comment is required.
Pursuant to the provisions of Section 139 of the Companies Act 2013and the Rules framed thereunder M/s SCV & Co. LLP Chartered Accountants New Delhi(formerly known as M/s S C Vasudeva & Co.) will mandatorily retire at the conclusionof the ensuing Annual General Meeting.
The Board of Directors based on the recommendations of the Audit andRisk Management Committee has recommended the appointment of M/s Ashwani & Associates(Firm Registration No: 000497N) Chartered Accountants Ludhiana as Statutory Auditors ofthe company in place of M/s SCV & Co LLP. Chartered Accountants New Delhi for a termof five consecutive years from the conclusion of ensuing 31st Annual General Meetinguntil the conclusion of the 36th Annual General Meeting of the company for the approval ofshareholders of the company in the ensuing 31st Annual General Meeting of the company.
M/s Ashwani & Associates has confirmed its willingness andeligibility to act as statutory auditors to conduct audit of the company's financialstatements from the financial year 2018-19.
Pursuant to the provisions of Section 204 of the Companies Act 2013and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theBoard of Directors has appointed M/s B. K. Gupta & Associates practicing companysecretary for conducting secretarial audit of the company for the financial year 2017-18.The Secretarial Audit Report is annexed hereto as Annexure II and forms part of theReport.
The Secretarial Audit Report does not contain any qualificationreservation or adverse remark.
Pursuant to the provisions of Section 139 of Companies Act 2013 theBoard of Directors has appointed M/s Ramanath Iyer & Co. Cost Accountants New Delhias Cost Auditor to conduct the audit of cost accounts of bulk drugs and chemicalsmaintained by the company for the financial year 2018-19 subject to determination oftheir remuneration by members of the company thereto.
The Cost Audit Report for the year ended 31 March 2017 has been filedon 02 September 2017 with Ministry of Corporate Affairs New Delhi.
Extract of Annual Return
The details forming part of the extract of the Annual Return in formMGT-9 is annexed herewith as Annexure III forming part of this report.
Industrial relations remained cordial and harmonious throughout theyear under review.
Safety Health and Environment
Safety is company's top priority with regard to employment and itis encouraging safety measures at all levels of operations especially at the floor level.Regular training programmers are being conducted to bring in awareness about theimportance of safety at work place.
Prevention of Sexual Harassment Policy
The company has in place a Prevention of Sexual Harassment policy inline with the requirements of the Sexual Harassment of Women at the Workplace (PreventionProhibition and Redressal) Act 2013. An Internal Complaints Committee has been set up toredress complaints received regarding sexual harassment. All employees (permanentcontractual temporary trainees) are covered under this policy. During the year2017-2018 no complaint related to sexual harassment was received by the company.
In pursuant to the provisions of Section 177(9) & (10) of theCompanies Act 2013 a Vigil Mechanism for directors and employees to report genuineconcerns has been established. The Vigil Mechanism Policy has been uploaded on the websiteof the company at www.iolcp.com.
Particulars of managerial remuneration and related disclosures
Disclosures relating to remuneration and other details as requiredunder Section 197(12) of the Companies Act2013 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are provided in theAnnual Report which forms part of this report.
In terms of the provisions of Section 197(12) of the Companies Act2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 as amended a statement showing the names and otherparticulars of the employees drawing remuneration in excess of the limits set out in thesaid rules are provided in the Annual Report which forms part of this report.
Having regard to the provisions of the first proviso to Section 136(1)of the Companies Act 2013 the Annual Report excluding the aforesaid information is beingsent to the members of the company. The said information is available for inspection atthe registered office of the company during working hours and any member interested inobtaining such information may write to the Company Secretary and the same will befurnished on request.
Corporate Social Responsibility Committee (CSR Committee)
The Board of Directors have constituted a CSR Committee comprising ofMr Varinder Gupta as Chairman and Dr ( Mrs) Sandhya Mehta Mr Vijay Garg and Mr VikasGupta Directors as its members. The CSR Committee is to oversees the company's CSRinitiatives under the overall supervision and guidance of the Board of Directors.
The provisions of Section 135 of Companies Act 2013 and the Rules madethereunder for CSR are applicable to the company for financial year commenced on 01 April2018.
Your Directors state that no disclosure or reporting is required inrespect of the following items as there were no transactions on these items during theyear under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividendvoting or otherwise.
3. Change in the nature of business of the company.
4. The company does not have any scheme of provision of money for thepurchase of its own shares by employees or by trustees for the benefit of employees.
5. Neither the Managing Director nor the Whole-time Directors of thecompany receive any remuneration or commission from any of its subsidiaries.
6. No significant or material orders were passed by the Regulators orCourts or Tribunals which impact the going concern status and company's operations infuture.
7. No fraud has been reported by the Auditors to the Audit Committee orthe Board.
We are pleased to place on record our sincere gratitude andappreciation for assistance and co-operation received from the Union Government PunjabGovernment bankers members customers vendors and business constituents.
We also place on record our sincere appreciation of the contributionmade by the employees at all levels. Our consistent growth is made possible by theirdevout sincere and unstinted services.
For and on behalf of the Board
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Dr M A Zahir
|Place : Ludhiana || |
|Dated : 11 August 2018 || |
ANNEXURE I TO THE DIRECTORS' REPORT
Information as per Section 134(3)(m) of the Companies Act 2013 readwith Rule 8(3) of the Companies (Accounts) Rules 2014 and forming part of theDirectors' Report for the financial year ended 31 March 2018.
I CONSERVATION OF ENERGY
1. Step taken or impact on conservation of energy; a)Started using digital electronic relays instead of thermal relays up to 30 HP motors asthermal relays are depend upon heating of the element and digital relays are depend uponcurrent so due to this we are saving motor burning and immediate tripping of the motorin case any fault in the pump or in the cable side. b) Electronic light sensors has beeninstalled on the total boundary walls and all terrace lights so that it will be off andon with the light and it save human work and extra power which has been consumed indelaying on off the lights by electricians c) Current transmitters has been installed oncritical reactors of unit - III to keep eye on the reactions of the process. This helpsout in avoiding the jamming of the reactor at the critical time . d) Started taking Roreject and UF reject in the cooling tower to save approximate 250 KLD raw water. e) Wehave changed the stream of direct and indirect condensate in unit-II and unit-IV to avoidmixing of the two and this has been increased the direct condensate to the boiler andindirect condensate also. f) Replacement of jacket reactors with limpet reactors which arehaving higher heat transfer co-efficient so reducing the time of reaction to increase theproductivity and reduction of fixed losses resulting reduction in energy norms. g)Replacement of old FBD's with new FBD's having advanced technology withautomation and high drying efficiency resulting higher output by consuming same energy soresulting reduction in energy norms. h) Installation of heat recovery wheel in IBUfacility HVAC system to reduce the chilled water by 50TR resulting reduction in energynorms. i) Installation of ATFE for the distillation of crude instead of high vacuumdistillation reactor which is having improved thermal and process efficiency. j)Installation of distillation setup for the recovery of intermediate product frombyproduct so increasing the yield of intermediate product so reduction in energy norms.k) Installation of new furnace for heating thermic fl uid having dual burner to use thewaste spent gas from IBB as fuel and having high thermal efficiency to reduce the energycost. l) Installation of separate column for the distillation of dilute ester (byproduct).m) Installation of additional PHE at propyl column to reduce the load on its chiller insummer season. n) Installation of additional heat exchanger at propyl column for heatrecovery thus reducing its steam consumption. o) Increase in the size of crude cooler todecrease the load on chilled water in summer season. p) Installation of valve in the ventline of separator of heat recovery system to increase the heat recovery.
2. Step taken by company for utilizing alternate sources ofenergy a) Your company has further increased the consumption of agro based fuel byoptimizing the boiler operation and hence reduce the percentage consumption of naturalfuel like coal. b) Your company has improved the direct condensate recovery resulted lessground water consumption and reduction in fuel consumption.
3. Capital investment on energy conservation equipment's
No major capital investments have been made during the financial yearended 31 March 2018.
II TECHNOLOGY ABSORPTION
1. Efforts made towards technology absorption
Your company has taken various steps in its Research and Development(R&D) centre the mains are as follows: a) R&D team works on development of newmolecules (API/chemical intermediate/bulk chemicals/specialty chemicals/CRAMS molecules)while keeping in mind its impact on environment. b) R&D team is also working onchemical routes whereby it will have minimum dependency on Chinese market for its rawmaterials. c) Work on development of APIs with idea of filing dossier with US &European regulatory agencies with view to explore US and Europe market for all new APIs.d) Trouble shooting & further cost cutting in existing commercialized products forimproved profitability. e) Conversion of byproducts to value added products.
2. Benefits derived like product improvement cost reductionproduct development or import substitution a) R&D has developed single step uniqueprocess for Metformin HCl anti-diabetic drug which has advantage of minimum processingand zero aqueous effl uent. Process is commissioned in dedicated multi MT capacity plant.b) In its main product R&D has developed a process which will help company to marketits product in US market. c) R&D has also developed one product for its Koreancustomer which will help customer to shift its sourcing to the company from Chinesemarket. d) R&D has developed a process for key starting material of a product used inperfumery chemicals in its chemical plant for customer based in Japan. Production for thesame in MT quantity has been initiated in current year. e) Development of anti-ulcer APIat R&D and pilot plant has been completed & its commercialization in multipurposeplant is expected in current year. f) Your company to launch new molecules in APIs andintermediates in next fiscal year for which R&D has completed initial developmentwork.
3. Imported technology (imported during the last three yearsreckoned from the beginning of the fifinancial year)- N.A.
4. Expenditure incurred on Research and Development during thefinancial year ended 31 March 2018:
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Foreign Exchange Earnings & Outgo during the financial year ended31 March 2018:
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