The directors submit annual report of Krebs Biochemicals& Industries Limited (theCompany) along with the audited financial statements for the financial year ended 31stMarch 2019.
1. Financial Summary
| || ||(Rs. in lacs) |
|Particulars ||2018-19 ||2017-18 |
|Net Sales ||3713.27 ||2538.24 |
|Other Income ||1095.59 ||860.28 |
|Total Income ||4808.86 ||3398.52 |
|Expenditure ||5757.07 ||4128.09 |
|P(L)BDIT ||(948.21) ||(729.57) |
|Loss on sale of Assets ||Nil ||Nil |
|PBDIT (After Extra Ordinary Items) ||(948.21) ||(729.57) |
|Finance Charges ||623.80 ||516.52 |
|Depreciation ||440.23 ||414.97 |
|Profit/(Loss) Before Tax ||(2012.24) ||(1661.06) |
|Exceptional Items ||11.09 ||(121.43) |
|Deferred Tax Asset ||Nil ||Nil |
|Taxes of earlier years ||Nil ||Nil |
|Net profit/(Loss) after Tax ||(2001.15) ||(1782.49) |
|Other Comprehensive Income ||(132.06) ||(143.12) |
|Total comprehensive income for the period (comprising Profit/(loss) and other comprehensive income for the year) ||(2133.22) ||(1925.41) |
|Add: balance brought Forward ||(10158.60) ||(8233.19) |
|Less: Depreciation ||Nil ||Nil |
|Add: Transferred from Profit & Loss Account ||(2133.22) ||(1925.41) |
|Balance Carried to Balance Sheet ||(12291.82) ||(10158.60) |
2. Financial Performance
During the year under review the Company has posted net sales of Rs.3713.27 lakhs andRs. 1095.59 lakhs as other income. For the FY 2018-19 the company has incurred a loss ofRs. 2133.22 lakhs as against loss of Rs. 1925.41 lakhs of the previous year ended 31stMarch 2018. Detailed Performance of the Company is given in the Management and Discussionanalysis forming part of the Corporate Governance report.
3. Change in nature of business
During the year under review there is no change in the nature of business of thecompany.
On account of losses during the year no dividend is proposed to be declared for thefinancial year 2018-19.
5. Operations (Subject to revision)
During the FY 2018-19 one new product got commercialized and was released into themarket. A total of four products were being produced in our plant which includePhenylephrine HCl Simvastatin Serratiopeptidase and RSS."
Modernization works are under progress in the FY 2018-19 to meet the latest pollutioncontrol norms and safety regulations. All relevant licenses were renewed. All the pendingstatutory requirements were addressed.
6. Material changes and commitments affecting the financial position of thecompany.
During the year under review there were no material changes occurred and commitmentsmade that affect the financial position of the company.
The Company had received stop production order from the Andhra Pradesh PollutionControl Board citing "Non-compliance of Board directions and consent Orderdirections". The Company believes in following the directions of the Board and allthe necessary steps have been taken by the management of the company to comply with theobservations made by the Board. The revocation order from the Pollution Board has beenreceived by the Company on 1st August 2019 and the Company has started productionaccordingly.
7. Rights Issue :
At the 145th Meeting held on 30th July 2018 the Board of Directors has approved theproposal of raising of funds by way of offer and issue of equity shares to the members ofthe Company on rights basis (Rights Issue) for an amount of upto Rs. 25 crores. Furtherat the 148th meeting held on 11th January 2019 the Board of Directors approved the issueof 2886300 Equity Shares at Rs. 86/- each (including premium of Rs. 76/- per share) andsubsequently the necessary approvals/consents under the provisions of SEBI (ICDR)Regulations 2009 SEBI (LODR) Regulations 2015 and the Companies Act 2013 wereobtained.
8. Issue of Equity Shares
During the year under review the company has issued and allotted 2886300 equityshares of Rs. 10/- each at a premium of Rs. 76/- per share under Rights Issue. As on 31stMarch 2019 the paid up equity share capital of the Company is Rs. 166305860/-comprising of 16630586 equity shares of Rs. 10/- each.
Apart from the above the Company has not issued and allotted any other shares.
9. Investor Education and Protection Fund
No amounts and/or shares were transferred to the Investor Education and Protection Fundduring the year under review.
10. Statutory Auditors
At the 21st Annual General Meeting held on 31st December 2014 the members of theCompany approved the appointment of M/s Pavuluri & Co. Chartered Accountants (FirmRegistration No. 012194S) Hyderabad as the Statutory Auditors of the Company to holdoffice till the conclusion of the 27th Annual General Meeting pursuant to Sec139 of theCompanies Act 2013 as they have completed 10 (ten) years term.
The term of office of Statutory Auditors M/s Pavuluri & Co. comes to an end at theconclusion of the ensuing Annual General Meeting.
The Board of Directors based on the recommendation of the Audit Committee at theirmeeting held on 20th May 2019 has appointed M/s Bhavani& Co. Chartered Accountants(Firm Registration No. 012139S) as Statutory Auditors for a period of five years subjectto the approval of members of the Company at the ensuing Annual General Meeting.
The Statutory Auditors have confirmed their compliance with the provisions of theCompanies Act 2013.
11. Internal Auditors:
The Board of Directors based on the recommendation of Audit Committee has re-appointedM/s Suryanarayana& Suresh Chartered Accountants Hyderabad as Internal Auditors ofthe Company for the Financial Year 2019-20 at their meeting held on 9th August 2019.
The internal auditors submit their reports at quarterly intervals to the AuditCommittee and the Board.
12. Directors and Key Managerial Personnel
During the year the non-executive directors of the company had no pecuniaryrelationship or transactions with the company other than sitting fees and reimbursementof expenses incurred by them for the purpose of attending meetings of the Company.
During the year under review Mr. E J Babu has retired by rotation and being eligiblefor re-appointment at the 26th Annual General Meeting held on 10th September 2018 he hadbeen re-appointed as Director.
During the year under review Mr. Avinash Ravi has been re-appointed as ManagingDirector for a period of 3 years at the 26th Annual General Meeting held on 10th September2018.
Key Managerial Personnel
During the year under review Mr. C V R S N Kumar was retired and ceased to be ChiefFinancial Officer of the Company and the Board of Directors at their meeting held on 25thMay 2018 had approved his resignation pursuant to attaining the age of retirement as perthe superannuation rules of the Company.
The Board of Directors at its meeting held on 10th September 2018 appointed Mr. S.Phani Srinath as Chief Financial Officer of the Company.
Ms. Haritha Varanasi Ceased to be Company Secretary w.e.f from 9-08-2019 due toresignation.
Ms. Taruni Banda has been appointed Company Secretary w.e.f from 9-08-2019.
Pursuant to the provisions of Section 203 of the Companies Act 2013 the KeyManagerial Personnel of the Company as on the date of this report are-
Mr. Avinash Ravi - Managing Director
Mr. Phani Srinath - CFO
Ms. Taruni Banda - Company Secretary
Retire by Rotation
Dr R T Ravi retires by rotation as Director and he offers himself for re-appointment atthe ensuing 27th Annual General Meeting to be held on 25th September 2019.
12.2 Re-appointment of Independent Directors
Mr. G V L Prasad was appointed as Independent Director for a period of 5 years at the22nd Annual General Meeting held on 31st December 2014 and Dr Tangirala Malati wasappointed as Independent Director for a period of 5 years at the EGM held on 11th March2015. Their term as Independent Directors expires on 31st December 2019 and 11th March2020 respectively.
Mr. Satish Khivsara was appointed as an Independent Director for a period of 5 years atthe 23rd Annual General Meeting held on 29th September 2015. His terms as IndependentDirector expires on 31st March 2020.
The Nomination and Remuneration Committee of the Board of Directors on the basis ofthe performance evaluation of Independent Directors has recommended the re-appointment ofMr. G V L Prasad Dr Tangirala Malati and Mr. Satish Khivsara as Independent Directors fora further period of five (5) years on the Board of the Company w.e.f. 1st January 2020 and12th March 2020 and 1st April 2020.
The Board based on the performance evaluation of Independent Directors and as perrecommendations of the Nomination and Remuneration Committee considered that given thebackground and experience and contributions made by Mr. G V L Prasad Dr Tangirala Malatiand Mr. Satish Khivsara during their tenure the continued association of Mr. G V LPrasad Dr Tangirala Malati and Mr. Satish Khivsara would be beneficial to the Company andit is desirable to continue and avail their services as Independent Directors.Accordingly it is proposed to re-appoint Mr. G V L Prasad Dr. Tangirala Malati and Mr.Satish Khivsara as Independent Directors of the Company not liable to retire by rotationfor a second term of 5 (five) years on the Board of the Company.
12.3 Declaration of Independence
The Company has received the declarations under Section 149 (6) of the Companies Act2013 from the independent directors that each of them meets the criteria of independenceand there has been no change in the circumstances which may affect their status asindependent directors during the year.
13. Board Meetings
During the financial year 2018-19 Seven (7) meetings of the Board were held. Detailsof the meetings of the board are provided in the corporate governance report which formspart of this report.
14. Corporate Social Responsibility
Your Company regards the wider community in which it operates to be an importantstakeholder and actively contributes towards its welfare. According to the provisions ofSection 135 of the Companies Act 2013 the company doesn't fall under the categories ofthe companies to which the Corporate Social Responsibility is applicable. However yourcompany feels that making a positive contribution to the local community is the rightthing to do and to this end during the year has contributed towards welfare of the poorold aged and differently abled persons.
15. Quality Initiatives
Company is committed to meet the customers Quality requirements and satisfaction bymaintaining high degree of assurance in Quality Safety efficacy and Multi disciplinaryfunctions. We maintain mutual and beneficial relationship with the Suppliers Vendors andCustomers. We provide continual training to the employees working in the plants byupgrading the knowledge of GMP practices enriching the quality of life. We continuallyfocus on developing new products with innovative knowledge and robust practices meeting /fulfilling the Regulatory and statutory requirement.
Company is committed to meet the regulatory standards set by USFDA WHO-GMP & EDQMand our Unit-II Vizag site has been Accredited certified by EDQ. Many customers haveaudited Unit-I Nellore plant and have approved as qualified Vendor.
Company is totally focusing to be as an integrated company emerging in the Pharmamarket by improving and implementing best-in class methodologies to meet the World classcustomer requirements for their satisfaction with zero complaints and by implementing theALCOA Practices in the plants.
16. Policy on directors' appointment and remuneration and other details
The Company's policy on directors' appointment and remuneration and other mattersprovided in Section 178(3) has been disclosed in the Corporate Governance Report whichforms part of this report.
17. Board Evaluation
The Nomination and Remuneration Committee lays down the criteria for performanceevaluation of independent directors Board of Directors and Committees of the Board. Thecriteria for performance evaluation is based on the parameters like attendance andparticipation at the meetings of the Board and Committees thereof contribution tostrategic decision making review of financial statements business performance.
The evaluation of Board of Directors is performed by the Board after seeking all theinputs from the Directors and the Board Committees by seeking inputs from the Committeemembers.
The performance evaluation of the individual directors is done by the Nomination andRemuneration Committee.
The performance evaluation of non-independent directors the Board as a whole and theChairman is done by a separate meeting of Independent directors after taking inputs fromthe Executive directors.
18. Familiarisation program for Independent Directors
The Company has conducted familiarisation programs for the independent directors asrequired under the provisions of Companies Act 2013.
19. Internal Financial Control Systems and their adequacy
The details in respect of internal financial controls and their adequacy are includedin the Management Discussion and Analysis Report which forms part of this report.
20. Secretarial Standards
The company is in due compliance with the applicable secretarial standards.
21. Audit Committee
Your Company has a duly constituted Audit Committee and the Board has accepted all therecommendations of Audit Committee during the year under review. The members of the AuditCommittee are:
|a) Mr. G V L Prasad ||- Chairman |
|b) Mr. Satish Khivsara ||- Member |
|c) Mrs. Malati Tangirala ||- Member |
The details pertaining to meeting role and responsibilities of Audit Committee areprovided in the Corporate Governance Report which forms part of this report.
22. Nomination and Remuneration Committee
Your Company has in place a duly constituted Nomination and Remuneration Committeewhich has
|a) Mr. Satish Khivsara ||- Chairman |
|b) Mr. G V L Prasad ||- Member |
|c) Mrs. Malati Tangirala ||- Member |
|d) Dr R T Ravi ||- Member |
Details pertaining to meetings role and responsibilities of Nomination andRemuneration Committee are provided in the corporate Governance Report which forms part ofthis report.
23. Stakeholders Relationship Committee
Your Company has constituted a Stakeholders Relationship Committee as required underthe provisions of SEBI Listing Regulations and the Companies Act 2013. Members of thecommittee are
|a) Mr. G V L Prasad ||- Chairman |
|b) Mr. Satish Khivsara ||- Member |
|c) Mr. Avinash Ravi ||- Member |
|d) Dr R T Ravi ||- Member |
Details pertaining to meetings role and responsibilities of Stakeholders RelationshipCommittee are provided in the corporate Governance Report which forms part of this report.
24. Loans and Investments
During the year under review the company has not given any loans and not made anyinvestments under the provisions of Section 186 of the Companies Act 2013.
25. Particulars of Employees.
Pursuant to the provisions of Section 197 of the Companies Act 2013 read with Rule 5 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 noemployee of the Company is drawing salary of more than Rs. 1.02 crores (Rupees One CroreTwo Lakhs) per financial year or Rs. 8.5 lakhs (Eight Lakh Fifty Thousand) per month asthe case may be for the year ended 31st March 2019.
Details of the remuneration drawn by the Key Managerial Personnel is provided inAnnexure I to the Board's Report.
26. Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s DSMR and Associates Practicing Company Secretaries as Secretarial Auditorsto undertake the secretarial audit of the Company . The Secretarial Audit Report isannexed herewith as Annexure-II to the Board's Report.
Qualifications in Secretarial Audit Report:
|S. No Observations in Secretarial Audit Report ||Board's explanation/ comments |
|1 Delay in payment of annual listing fees to the Stock Exchanges and Depositories ||There was an inadvertent delay in payment of annual listing fees. However the annual listing fees are paid along with the applicable penal interest. |
|2 Non maintenance of 100% promoter shareholding in dematerialized form ||1000 shares of Mrs. Hemalata Ravi and 19400 shares of Dr R T Ravi are under legal dispute in the court of law and hence the same could not be dematerialized. |
|3 Delay in filing of few Forms with Ministry of Corporate Affairs (MCA) ||There was an inadvertent delay in filing of Forms with the Ministry but the same has been filed before the date of this report along with Additional fees. |
27. Transactions with related parties
None of the transactions with related parties are material in nature as per the RelatedParty Transactions policy adopted by the Company. Information on transactions with relatedparties are given in Annexure-III in Form AOC-2 and the same forms the part of thisreport.
28. Fixed Deposits
Your Company has not accepted any fixed deposits and as such no principal or interestwas outstanding as on the date of the Balance Sheet.
29. Extract of Annual Return:
As provided under Section 92(3) of the Act the extract of annual return is given inAnnexure - IV in the prescribed Form MGT-9 which forms part of the report.
30. Directors' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and ability confirm that:
i) In the preparation of the annual accounts the applicable accounting standards havebeen followed and there are no material departures;
ii) They have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a fair and true viewof the state of affairs of the Company at the end of the financial year;
iii) They have 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.
iv) They have prepared the annual accounts on a going concern basis.
v) They have laid down internal financial controls to be followed by the Company andsuch internal financial controls are adequate and operating effectively.
vi) They have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
31. Disclosures relating to Subsidiaries Associates and Joint Ventures
The company doesn't have any subsidiary companies Associate Companies and JointVentures during the year under review.
32. Disclosure Requirements
As per SEBI Listing Regulations Corporate Governance Report with Auditors' Certificatethereon and Management Discussion and Analysis are attached which form part of thisreport.
33. Prevention of Insider Trading
The Company has also adopted a code of conduct for prevention of insider trading. Alldirectors senior management employees and other employees who have access to theunpublished price sensitive information of the company are governed by the Code. Duringthe year under report there has been due compliance with the code of conduct forprevention of insider trading.
The said code is available in the company's website www.krebsbiochem.com.
34. Vigil Mechanism/Whistle Blower Policy
The Company has in place whistle blower policy and no personnel have been deniedaccess to the Chairman of the Audit Committee. The policy also provides for thesafeguarding of whistle blowers. The whistle blower policy is available on website of thecompany www.krebsbiochem.com.
35. Energy conservation technology absorption and foreign exchange earnings outgo.
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo as stipulated under Section 134(3)(m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 is annexed herewith as"Annexure-V" to this report.
36. Safety Environment and Health
The Company considers safety environment and health as the management responsibility.The employees are provided training programs at regular intervals on manufacturingfacilities on safety and environment.
37. Significant or material orders passed against the company.
Several creditors have filed winding up petitions with the High Court of Andhra Pradeshand Telangana. However they don't have a significant impact on the on-going activitiesand operations of the company.
During the year under review there were no significant or material orders passedagainst the company by regulators/ Courts/Tribunals impacting the going concern status andoperations of the company in future.
38. Disclosure on Corporate Insolvency Resolution Process initiated under theInsolvency and Bankruptcy Code (IBC).
No corporate insolvency resolution process was initiated under the Insolvency andBankruptcy Code (IBC) during the year under review.
39. Disclosures pertaining to the Sexual Harassment of Women at the workplace(Prevention Prohibition and Redressal) Act 2013.
The Company has complied with the provision relating to the constitution of InternalComplaints Committee under the Sexual Harassment of Women at the Workplace (PreventionProhibition and Redressal) Act 2013.
There are no complaints registered during the year under review.
Your Directors take this opportunity to express their sincere appreciation to theshareholders customers bankers employees suppliers and other business associates forthe excellent support and co-operation extended by them.
Your Directors gratefully acknowledge the on-going cooperation and support provided bythe Central and State Governments Stock Exchanges and SEBI and other Regulatory Bodies.
| ||For and on behalf of the Board of |
| ||Krebs Biochemicals & Industries Limited |
|Sd/- ||Sd/- |
|Avinash Ravi ||Dr. R T Ravi |
|Managing Director ||Chairman & Director |
|(DIN-01616152) ||(DIN- 00272977) |
|Place : Hyderabad || |
|Date : 09.08.2019 || |