The directors submit annual report of Krebs Biochemicals& Industries Limited (theCompany) along with the audited financial statements for the financial year ended 31stMarch 2020.
1. Financial Summary
(Rs. in lacs)
|Particulars ||2019-20 ||2018-19 |
|Net Sales ||2358.38 ||3713.27 |
|Other Income ||1019.35 ||1095.59 |
|Total Income ||3377.73 ||4808.86 |
|Expenditure ||5204.25 ||5757.07 |
|P(L)BDIT ||(1826.52) ||(948.21) |
|Loss on sale of Assets ||Nil ||Nil |
|PBDIT(After Extra Ordinary Items) ||(1826.52) ||(948.21) |
|Finance Charges ||592.78 ||623.80 |
|Depreciation ||467.90 ||440.23 |
|Profit/(Loss) Before Tax ||(2887.20) ||(2012.24) |
|Exceptional Items ||Nil ||11.09 |
|Deferred Tax Asset ||Nil ||Nil |
|Taxes of earlier years ||Nil ||Nil |
|Net profit/(Loss) after Tax ||(2887.20) ||(2001.15) |
|Other Comprehensive Income ||(127.08) ||(132.07) |
|Total comprehensive income for the period (comprising Profit/(loss) and other comprehensive income for the year) ||(3014.28) ||(2133.22) |
|Add: balance brought Forward ||(12292.01) ||(10158.60) |
|Less: Depreciation ||Nil ||Nil |
|Add: Transferred from Profit & Loss Account ||(3013.67) ||(2133.22) |
|Balance Carried to Balance Sheet ||(15305.68) ||(12291.82) |
3. Financial Performance
During the year under review the Company has posted net sales of Rs. 2358.38 lakhs andRs. 1019.35 lakhs as other income. For the FY 2019-20 the company has incurred a loss ofRs.(3014.28) lakhs as against loss of Rs. (2133.22) lakhs of the previous year ended 31stMarch 2019. Detailed Performance of the Company is given in the Management Discussion andanalysis forming part of the Corporate Governance report.
4. 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 2019-20.
During the FY 2019-20 A total of four products are being produced in our plant whichinclude Phenylephrine HCl Simvastatin Serratiopeptidase and RSS. Backward integarationfor one of the current products and new product development is on going. Significantinvestment has been made into upgrading the effulent and waste management system and alsosafety systems to comply with the latest regulations. All statutory licensing and legalrequirements are being continuously complied by your company.
7. Material changes and commitments affecting the financial position of thecompany.
a. Covid-19 In the last month of FY 2020 the COVID-19 pandemic developed rapidly intoa global crisis forcing governments to enforce lock-downs thereby stalling of alleconomic activity. The Company immediately focused and ensured the health and well-beingof all employees and on minimizing disruption of production by the Company. As of March31 2020 work from home was enabled to employees who could accommodate the same and towork remotely and securely. Although there are uncertainties due to the pandemic theCompany has engaged in the best practises to continue the manufacturing operations.
b. Andhra Pradesh Pollution Control Board The Andhra Pradesh Pollution Control Boardhas on 9th May 2019 issued an Stop-Production order for the plant of the company locatedat Kasimkota Mandal Anakapalli Vishakapatnam for non-compliance with Board Directionsand Consent Order Directions.
However on 1st August 2019 the Pollution Control Board has issued temporaryrevocation of the stop production order.
Subsequently on 20th September 2019 the Pollution Control Board has issued aStop-production order due to non-compliance of the orders issued by the Board on 1stAugust 2019.
On 4th November 2019 the Pollution Control Board has issued a temporary revocation ofthe stop production order for a period of 3 months. Subsequently on 11th March 2020 thePollution Control Board has issued permanent revocation of the stop production order withcertain directions.
Your company is continuously ensuring that it is complying with all the necessarydirections issued by Andhra Pradesh Pollution control board. c. Warrants Conversion TheCompany has obtained the in-principle approval from NSE and BSE for the issue andallotment of 3560000 Convertible Warrants to IPCA Laboratories Limited and hasaccordingly allotted Convertible warrants to IPCA
ABORATORIES LIMITED on February 5th 2020. The Company has on 20th May 2020 convertedWarrants to an extent of 1620000 and allotted Equity Shares to an extent of 1620000for a price of Rs.10/- each and at a premium of Rs.76/- amounting to Rs.139320000/- thesame has been listed on NSE and BSE after obtaining the listing and trading approvals. d.Settlement of Cases Some of the Vendors have filed winding up cases against the companyfor the outstanding dues in the various legal forum. The Company has paid all the debtsdue to the Vendors by entering into a Memorandum of Understanding with them.
8. Share Capital
a Preferential Issue :
At the Meeting held on 23rd October 2019 the Board of Directors has approved theproposal of raising of funds by way of offer and issue of equity shares throughpreferential issue of 1705000 Equity shares (200000 Equity shares to Mrs. HemalataRavi and 1505000 Equity shares to IPCA Laboratories Limited part of the promoter groupof the company) of Rs.10/- each at a premium of Rs 76/- per share aggregating to Rs.156630000 on preferential basis and 3635000 Convertible warrants of Rs.86/- each toIPCA Laboratories Limited. Pursuant to the same approval of members was obtained at theExtra Ordinary General Meeting held on 22nd November 2019. The Company has obtained thein-principle approval for the proposed issue as mentioned above from National stockExchange of India Limited. However BSE Limited has not accorded its' in-principleapproval for the same raising objection that 1000 shares held by Mrs. Hemalatha Ravi werenot in demat form even though it was clarified that the subject 1000 shares are underpending legal case.
It was decided by the Board of Directors to revise the proposed Preferential issue andobtain the approval of members.
The Board of Directors of the Company has at the Meeting held on 2nd January 2020approved the proposal of raising funds by way of offer and issue of equity shares throughpreferential issue of 1370000 equity shares of Rs.10/- each at a premium of Rs 76/- pershare aggregating to Rs.117820000/- on preferential basis only to IPCA LaboratoriesLimited and also 3560000 of Convertible warrants at a conversion price of Rs.86/- pershare to IPCA Laboratories Limited. Pursuant to the same approval of members was obtainedat the Extra Ordinary General Meeting held on 1st February 2020.
The Company has obtained the in-principle approval and also listing and tradingapprovals from NSE and BSE for the issue and allotment of 1370000 Equity Shares and3560000 Convertible Warrants to IPCA Laboratories Limited and has allotted Equity sharesand convertible warrants respective to IPCA Laboratories Limited. b. Issue of PreferenceShares During the year under review the company has issued and allotted 3000000 9%Redeemable Non-Convertible Non-cumulative Preference Shares (RNNCPS) (of Rs.300000000/- (Rupees Thirty Crores Only) on a private placement basis to IpcaLaboratories Limited a promoter group company. As on 31st March 2019 the paid uppreference share capital of the Company is Rs. 300000000/- comprising of 3000000preference shares of Rs. 100/- each.
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 twenty-seventh AGM held on September 25 2019 the Members approved appointmentof Bhavani & Co Chartered Accountants (Firm Registration No. 012139S) as StatutoryAuditors of the Company to hold office for a period of five years from the conclusion ofthat AGM till the conclusion of the Thirty Second AGM. The requirement to place the matterrelating to appointment of auditors for ratification by Members at every AGM has been doneaway by the Companies (Amendment) Act 2017 with effect from May 7 2018. Accordingly noresolution is being proposed for ratification of appointment of statutory auditors at thisAGM.
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 Dr. R T Ravi has retired by rotation and being eligiblefor re-appointment at the 27th Annual General Meeting held on 25th September 2019 he hadbeen re-appointed as Director.
Key Managerial Personnel
During the year under review Mr. Phani Srinath Sondur has resigned and ceased to beChief Financial Officer of the Company and the Board of Directors at their meeting held on2nd November 2019 had approved his resignation. The Board of Directors at its meetingheld on 30th April 2020 appointed Mr. Ravi Babu as Chief Financial Officer of theCompany.
Ms. Haritha Varanasi Ceased to be Company Secretary w.e.f from 9-08-2019 due toresignation.
Ms. Taruni Banda has been appointed as 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 on the date of this report are-
|Mr. Avinash Ravi ||- Managing Director |
|Mr. Ravi Babu ||- Chief Financial Officer |
|Ms. Taruni Banda ||- Company Secretary |
13.1 Retire by Rotation
Mr. Manish Jain retires by rotation as Director and he offers himself for re-appointmenat the ensuing 28th Annual General Meeting to be held on 26th September 2020
13.2 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.
All the Independent Directors have registered themselves under independent directordata bank.
14. Board Meetings
During the financial year 2019-20 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.
15. 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.
16. 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 totallyfocusing to be as an integrated company emerging in the Pharma market by improving andimplementing best-in class methodologies to meet the World class customer requirements fortheir satisfaction with zero complaints and by implementing the ALCOA Practices in theplants.
17. 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.
18. 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 could not be done for theFinancial year 2019-20 due to Covid-19.
19. Familiarisation program for Independent Directors
The Company has conducted familiarisation programs for the independent directors asrequired under the provisions of Companies Act 2013.
20. 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.
21. Secretarial Standards
The company is in due compliance with the applicable secretarial standards.
22. 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. SatishKhivsara ||- Member |
|c) ||Mrs. MalatiTangirala ||- Member |
The details pertaining to meeting role and responsibilities of Audit Committee areprovided in the Corporate Governance Report which forms part of this report.
23. Nomination and Remuneration Committee
Your Company has in place a duly constituted Nomination and Remuneration Committeewhich has
|a) ||Mr. SatishKhivsara ||- Chairman |
|b) ||Mr. G V L Prasad ||- Member |
|c) ||Mrs. MalatiTangirala ||- 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.
24. 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. SatishKhivsara ||- 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.
25. 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.
26. 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 2020.
Details of the remuneration drawn by the Key Managerial Personnel is provided inAnnexure I to the Board's Report.
27. 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 is annexedherewith 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 and the circular given by SEBI vide No SEBI/Cir/ISD/1/2012 dated March 30 2012 gives exemption from 100% promoter(s) holding in demat form. Thus the company stands exempted. |
|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. |
|4. ||Winding up cases against the Company. ||The Company has paid all the debts due to the Vendors by entering into a Memorandum of Understanding with them. |
| || ||Accordingly there are no debts due by the Company to them and the winding up cases shall have to be appropriately withdrawn by the Vendors. |
|5. ||Pursuant to Regulation 13(3) Statement giving the number of investor complaints for quarter ending 30th June 2019 was filed on 30.07.2019. ||There was an inadvertent delay in filing the same to stock exchange |
|6. ||Pursuant to Regulation 25(3) The company has convened Meeting of Independent directors but the same could not be held due to the COVID-19 pandemic. ||The Ministry of corporate affairs has vide General Circular No. 11 /2020 dated 24th March 2020 given relaxation and declared misconduct of independent directors meeting as a no violation. |
28. 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.
29. 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.
30. 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.
31. 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.
32. 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.
33. 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.
34. 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.
35. 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.
36. 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.
37. 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.
38. Significant or material orders passed against 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.
39. Disclosure on Corporate Insolvency Resolution Process initiated under theInsolvency and Bankruptcy Code (IBC).
A Case against the Company has been registered by RR innovative Pvt Ltd in the Nationalcompany law Tribunal Amaravathi Bench invoking the Insolvency proceedings accordingly anorder has been received against the Company from the tribunal on 22nd May 2020 admittingthe application of RR innovative Pvt Ltd and appointing an Insolvency ResolutionProfessional (IRP) Mr.Rajesh Chhaparia Vizag. RR Innovative Private Limited have agreedto mutually settle the claimed debt due as per the order and accordingly a withdrawalpetition has been filed by the IRP based on a settlement acknowlegment given by RRinnovative Private Limited vide which the National Company Law Tribunal has passed anorder on 11th June 2020 suspending it earlier order dated 22nd May 2020.
40. 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 Work place (PreventionProhibition and Redressal) Act 2013. There are no complaints registered during the yearunder 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 : 07.08.2020 || |