KWALITY PHARMACEUTICALS LIMITED.
Your Directors have pleasure in presenting the 36th Annual Report of KWALITYPHARMACEUTICALS LIMITED along with the Audited Financial Statements for the year ended31st March 2019.
Our Companys financial performance for the year under review has been encouragingand is summarized below:
(Rupees In Lacs)
| ||STANDALONE ||CONSOLIDATED |
|Particulars ||2018-19 ||2017-18 ||2018-19 ||2017-18 |
|Total Income ||16607.85 ||13792.82 ||16689.94 ||13829.65 |
|Less: Expenditure & Depreciation ||15518.21 ||13037.81 ||15598.91 ||13100.08 |
|Profit before Tax (PBT) ||1089.64 ||755.01 ||1091.03 ||729.57 |
|Less: Tax (including deferred tax) ||334.92 ||287.42 ||335.34 ||287.42 |
|Profit After Tax (PAT) ||754.72 ||467.59 ||755.69 ||442.15 |
During the year under review on standalone basis revenue of the company wasRs.16607.85 Lakhs as compared to Rs. 13792.82 Lakhs in the corresponding previous year.The Company earned a profit after tax of Rs.754.72 Lakhs as compared to Rs. 467.59 Lakhsin the previous year.
On consolidated basis revenue of the company was Rs.16689.94 Lakhs as compared to Rs.13829.65 Lakhs in the corresponding previous year. The Company earned a profit after taxof Rs. 755.69 Lakhs as compared to Rs. 442.15 Lakhs in the previous year.
CHANGES IN NATURE OF BUSINESS
There was no change in the nature of the business during the year.
In order to conserve the resources the Board of Directors does not recommend anydividend for the financial year 2018-19.
During the financial year under review your Company has not transferred any amount tothe general reserve.
STATEMENT PURSUANT TO LISTING AGREEMENT
The Companys equity shares are listed at Bombay Stock Exchange Limited (SMESegment). The Annual Listing Fee for the year 2019-20 has been paid.
EXTRACT OF THE ANNUAL RETURN
The extract of the annual return in Form No. MGT 9 is attached in AnnexureA.
PARTICULARS OF EMPLOYEES REMUNERATION
The information pertaining to Section 197(12) read with Rule 5 (1) of the Companies(Appointment and
Remuneration of Managerial Personnel) Rules 2014 is annexed herewith as AnnexureB. There is no employee drawing a salary exceeding the limit prescribed underSection 197(12) read with Rule 5 (2) of The Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014.
NON APPLICABILITY OF THE INDIAN ACCOUNTING STANDARDS (IND-AS)
As per proviso to regulation Rule 4(1) of the Companies (Indian Accounting Standards)Rules 2015 notified vide Notification No. G.S.R.111 (E) on 16th Feb. 2015 Companieswhose shares are listed on SME exchange as referred to in Chapter XB of SEBI (Issue ofCapital and Disclosure Requirements) Regulations 2009 are exempted from the compulsoryrequirement of adoption of IND-AS w.e.f. 1stApril 2017. As your Company isalso listed on SME Platform of BSE Limited is covered under the exempted category and isnot required to comply with IND-AS for preparation of financial statements beginning withperiod on or after 1st April 2017.
CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL
There was no change in the Directors and KMPs during the Year.
RETIREMENT BY ROTATION
In accordance with the provisions of section 152 of the Companies Act 2013 and theArticles of Association of the Company Mr. Ramesh Arora & Mrs. Anju Arora directorsretire by rotation at the ensuing Annual General Meeting and offer themselves forreappointment.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
During the Financial Year 2018-19 9 meetings of the Board of Directors of the companywere held and the details of which are given in the Corporate Governance Report which isenclosed with directors report as "Annexure E". The intervening gapbetween the Meetings was within the period prescribed under the Companies Act 2013 andSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
COMMITTEES OF THE BOARD
The Board has constituted various committees to support the Board in discharging itsresponsibilities. The following three committees are constituted by the Board:
The Audit Committee comprises of Sh. Pankaj Takkar as Chairman and Sh. Kiran KumarVerma and Sh. Aditya Arora as members. The details of term of reference of the AuditCommittee members dates of meetings held and attendance of the Directors are givenseparately in the Corporate Governance Report.
NOMINATION AND REMUNERATION COMMITTEE
The Nomination and Remuneration Committee comprises of Sh. Kiran Kumar Verma asChairman and Sh. Pankaj Takkar and Sh. Ravi Shanker Singh as members. The details of termof reference of the Committee members dates of meetings held and attendance of theDirectors are given in the Corporate Governance Report.
STAKEHOLDERS RELATIONSHIP COMMITTEE
The Stakeholders Relationship Committee comprises of Sh. Ravi Shanker Singh as Chairmanand Smt. Geeta Arora and Smt. Anju Arora as members. The details of term of reference ofthe Committee members dates of meetings held and attendance of the Directors are givenseparately in the Corporate Governance Report.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
The Corporate Social Responsibility Committee is duly constituted in terms of therequirement of Companies Act 2013. During the financial year 2018-19 one Meeting washeld on 30-05-2018. The composition of Committee and attendance of members is as follows:
|Name ||Category ||Meeting held during 2018-19 ||No. of Meeting Attended |
|Geeta Arora ||Chairperson ||1 ||1 |
|Aditya Arora ||Member ||1 ||1 |
|Pankaj Takkar ||Member ||1 ||1 |
DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIALRESPONSIBILITY INITIATIVES
In view of the profits and turnover of the Company your Company was required toundertake CSR projects during the year 2018-19 under the provisions of section 135 of theCompanies Act 2013 and the rules made thereunder. As part of its initiatives underCorporate Social Responsibility (CSR)" the Company has undertaken variousactivities which are in accordance with CSR Policy of the Company and Schedule VII of theCompanies Act 2013.The Board has approved a CSR policy on the recommendations of the CSRCommittee. The Report on CSR activities as required under Companies (Corporate SocialResponsibility) Rules 2014 including a brief outline of the Companys CSR Policytotal amount to be spent under CSR for the financial year amount unspent if any and thereason for the unspent amount is set out at Annexure-D forming part of thisReport.
MEETINGS OF INDEPENDENT DIRECTORS:
The Companys Independent Directors meet at least once in every financial yearwithout the presence of
Executive Directors or management personnel. Such meetings are conducted informally toenable Independent Directors to discuss matters pertaining to (i) review the performanceof Non Independent Directors and the Board as a whole (ii) review the performance of theChairperson of the Company taking into account the views of Executive Directors andNon-Executive Directors; and (iii) to assess the quality quantity and timeliness of flowof information between the Company Management and the Board.
One meeting of the Independent Directors was held during the Financial Year on28/03/2019.
DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES
The Company has one subsidiary company Kwality Pharmaceuticals AfricaLimitada at Maputo Province Mozambique which is mainly engaged in thePharmaceuticals business. The Board reviewed the affairs of the Companys subsidiaryduring the year at regular intervals. In accordance with section
129(3) of the Companies Act 2013 the Company has prepared Consolidated FinancialStatements of the Company and its subsidiary which forms part of this Annual Report.Further a statement containing Salient features of the Financial Statements of itssubsidiary in Form AOC-1 as given in the annual report forms part of the FinancialStatements.
MECHANISM FOR EVALUATING BOARD MEMBERS:
Pursuant to the section 134 (p) of Companies Act 2013 read with Rule 8 (4) ofCompanies Accounts Rules 2014 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Board has carried out an annual performance evaluation of its ownperformance the Directors individually as well as the Board Committees. The performanceof the Board was evaluated by the Board after seeking inputs from all the directors on thebasis of the criteria such as the Board composition and structure effectiveness of boardprocesses information and functioning etc.
The performance of the committees was evaluated by the board after seeking inputs fromthe committee members on the basis of the criteria such as the composition of committeesfrequency of committee meetings their functioning etc.
The evaluation of the Directors were based on their attendance and participationacting in good faith and in the interests of the company as a whole exercising dutieswith due diligence and reasonable care complying with legislations and regulations inletter and spirit and such other factors.
In addition the Chairman was also evaluated on the key aspects of his role. In aseparate meeting of independent Directors performance of non independent directorsperformance of the board as a whole and performance of the Chairman was evaluated takinginto account the views of executive directors and non-executive directors.
FAMILIARISATION PROGRAMMES FOR BOARD MEMBERS:
The Board members are provided with necessary documents/brochures reports and internalpolicies to enable them to familiarize with the Companys procedures and practices.The Chairman & Managing Director had one to one discussions with newly appointedDirectors to familiarize them with the Companys operations. Periodic presentationsare made at the Board and Board Committee Meetings on business and performance updates ofthe Company global business environment business strategy and risks involved. Quarterlyupdates on relevant statutory and regulatory changes are circulated to the Directors. Sitevisits to various plant locations are organized for the Directors to enable them tounderstand the operations of the Company.
STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS
Pursuant to the provisions of Section 149 of the Act the Independent Directors havesubmitted declarations that each of them meet the criteria of independence as provided insection 149(6) of the Act along with rules framed thereunder and Regulation 16(1)(b) ofthe Securities and Exchange Board of
India (Listing Obligations and Disclosure Requirements) Regulations2015 ("SEBIListing Requirements").There has been no change in the circumstances affecting theirstatus as Independent Directors of the Company.
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of the Directors the senior management andtheir remuneration. The remuneration policy is stated in the Corporate Governance Report.
WHISTLE BLOWER POLICY
Pursuant to the Section 177(9) and (10) of the Companies Act 2013 and Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 the Company has formulated Whistle Blower Policy for vigil mechanism for Directorsand Employees to report the management about the unethical behavior fraud improperpractice or violation of the Companys Code of Conduct or complaints regardingaccounting auditing internal controls or disclosure practices of the Company. It gives aplatform to the whistle blower to report any unethical or improper practice (notnecessarily violation of law) and to define processes for receiving and investigatingcomplaints. The mechanism provides adequate safeguards against victimization of employeesand directors who use such mechanism and makes provision for direct access to the Chairmanof the Audit Committee in exceptional cases.
In pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013a Vigil Mechanism for directors and employees to report genuine concerns has beenestablished and Chairman of the Audit Committee is responsible for issue pertaining tosame.
RISK MANAGEMENT POLICY
The Management has devised a Risk Management Policy considering the nature of industryand associated risks pertaining to the industry. The Management is overseeing theimplementation of the Policy on regular basis. Though the various risks associated withthe business cannot be eliminated completely all efforts are made to minimize the impactof such risks on the operations of the Company.
As per section 139 of the Companies Act 2013 read with The Companies (Audit andAuditors) Rules 2014 the tenure of M/s Vijay Mehra & Co. CharteredAccountants (ICAI Firm Regn. No. FRN 001051N) present Statutory Auditors of theCompany expires at the conclusion of the 36th Annual General Meeting.
Upon recommendation of Audit Committee the Board of Directors of the Company at itsmeeting held on 10.08.2019 subject to the approval of shareholders of the Company in theEnsuing Annual General Meeting approved the appointment of M/s ARORA AGGARWAL & COChartered Accountants Amritsar (FRN:021086N) as the Statutory Auditor of theCompany for a term of five consecutive years to hold office from the conclusion of 36thAnnual General Meeting till the conclusion of 41st Annual General Meeting(AGM) of the Company to be held in the year 2024 at an annual remuneration/ fees of Rs.400000/- (Rupees Four Lakh Only) plus outlays and taxes as applicable from time to timefor the purpose of audit of the Companys accounts with the power to the Board/AuditCommittee to alter and vary the terms and conditions of appointment revision includingupward revision in the remuneration during the tenure of appointment in such manner andto such extent as may be mutually agreed with the Statutory Auditors.
M/s ARORA AGGARWAL & CO Chartered Accountants have given their consent andconfirmed their eligibility to the effect that their appointment if made would be withinthe prescribed limits under the Act and that they are not disqualified for appointment.
M/s Vijay Mehra & Co. Chartered Accountants have submitted their Report onthe Financial Statements of the Company for the F.Y 2018-2019 which forms part of theAnnual Report. The observations made in the Auditors' Report read together with relevantnotes thereon are self explanatory and hence do not call for any further comments underSection 134 of the Companies Act 2013.
Pursuant to Section 148(3) of the Companies Act 2013 M/s Verma Khushwinder &Co. Cost Accountants Jalandhar were appointed as the Cost Auditors of the Companyfor the financial year 2018-19 by the Board of Directors and their remuneration wasratified by members at the 35th Annual General Meeting of the Company.
Further the Board of Directors has appointed M/s Verma Khushwinder & Co. asthe Cost Auditors of the Company for the financial year 2019-20 and has also fixed theirremuneration. The Board has recommended the remuneration approved in its meeting forratification by the shareholders in the ensuing AGM of the Company.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the board of directorshave appointed M/s Rishi Mittal & Associates Company Secretaries Amritsar as theSecretarial Auditors of the Company.
The Secretarial Audit Report for Financial Year 2018-19 forms part of the Annual reportas "Annexure C" to the Board's report. The Secretarial Audit Report doesnot contain any qualification reservation or adverse remark.
REPORT ON CORPORATE GOVERNANCE:
Corporate Governance Report of the Company regarding Compliance of the Conditions ofCorporate Governance pursuant to SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is annexed herewith as "Annexure E".
MANAGEMENT DISCUSSION AND ANALYSIS:
A detailed review of the operations and performance of the Company is set out in theManagement Discussion and Analysis Report pursuant to Regulation 34 Part-B of Schedule Vof the (Listing Obligations and Disclosure Requirements)Regulations2015 which forms partof the Annual Report for the year under review as "Annexure F".
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
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.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:
All Related Party Transactions that were entered into during the financial year were onan arms length basis in the ordinary course of business and were in compliance withthe applicable provisions of the
Companies Act 2013 (the Act) and SEBI (Listing Obligations and DisclosuresRequirements) Regulations 2015 and do not attract the provisions of Section 188 of theCompanies Act 2013. There were no related party transactions made by the Company with thePromoters Directors and Key Managerial Personnel which may have a potential conflict withthe interest of the Company at large. The transactions with the related parties have beendisclosed in the financial statements. Thus disclosure in Form AOC-2 is not required.
The Company has devised proper systems to ensure compliance with the provisions ofapplicable Secretarial Standards issued by the Institute of Company secretaries of Indiaand that such systems are adequate and effecting.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICHTHE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT
There were no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year of the Company to whichthe financial statements relate and the date of this report.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
The details pursuant to Section 134(3) of the Companies Act 2013 read with Rule 8sub-rule (3) of Companies (Accounts) Rules 2014 relating to Conservation of EnergyTechnology absorption Foreign Exchange earnings and outgo is provided as under :
A) Conservation of energy:
Energy conservation continues to be the key focus area of your Company. The use ofenergy is being optimized through improved operational methods. Continuous efforts arebeing made to optimize and conserve energy by improvement in production process. Yourcompany is striving continuously to conserve every form of energy by adopting innovativemeasures to reduce wastage and optimize consumption. Notable measures for energyconservation taken by company were :- Unwanted lighting kept off Replaced high voltagemotors with low voltage motors Power consumption by using Temperature Controller. Furtherthe Company is using electricity as the main source of energy and is currently notexploring any alternate source of energy.
(B) Technology absorption:
The company always remains aggressive for improvement of quality of product efficientmanufacturing process search of new products or modification in the existing productsintroducing new products by continuously studying the market. Company takes help ofoutside agencies whenever required to improve manufacturing process or method whichultimately benefit to the quality and cost of product.
(C) Foreign exchange earnings and Outgo:(in Rupees Lacs)
|Particulars ||Year ended 31st March 2019 ||Year Ended 31st March 2018 |
| ||( Rs. In Lakhs) ||( Rs. In Lakhs) |
|Earnings || || |
|Export Sales ||8356.79 ||5616.81 |
|Outgo || || |
|Capital Goods ||85.65 ||18.58 |
|Raw Materials ||759.49 ||449.09 |
Your Company has not accepted any deposits from the public during the year underreview within the meaning of Section 73 of the Companies Act2013 (the Act) readwith the Companies (Acceptance of
Deposits) Rules 2014 and no amount of principle or interest on deposits from thepublic is outstanding as on the date of Balance Sheet.
During the year under review there was no change in the paid-up equity share capitalof the Company which is as on 31st March 2019 was Rs. 1037.62 Lakhs.
PROVISION OF MONEY BY COMPANY FOR PURCHASE OF ITS OWN SHARES BY EMPLOYEES OR BYTRUSTEES FOR THE BENEFIT OF EMPLOYEES
The company has not made any provision of money for purchase of its own shares byemployees or by trustees for the benefit of employees as per Rule 16(4) of Companies(share capital and debentures) Rules 2014.
ISSUE OF SWEAT EQUITY SHARES
The Company has not issued any sweat equity share during the financial year inaccordance with the provisions of Section 54 of Companies Act 2013 read with Rule 8 ofthe Companies (Share Capital and Debentures) Rules 2014.
ISSUE OF EQUITY SHARES WITH DIFFERENTIAL RIGHTS
The Company has not issued any equity shares with differential voting rights during thefinancial year as per Rule 4(4) of Companies (Share capital and debentures) Rules 2014.
ISSUE OF EMPLOYEE STOCK OPTION
The company has not issued any employee stock option during the financial year as perRule 12 of Companies (share capital and debentures) Rules 2014.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The Company has comprehensive and adequate internal financial controls system for allmajor processes including financial statements to ensure reliability of reporting. Thesystem also helps management to have timely data/feedback on various operationalparameters for effective review. It also ensures proper safeguarding of assets across theCompany and its economical use. The internal financial controls system of the Company iscommensurate with the size scale and complexity of its operations. The systems andcontrols are periodically reviewed and modified based on the requirement.
The Company has an internal audit function which is empowered to examine the adequacyand compliance with policies plans and statutory requirements. It is also responsible forassessing and improving the effectiveness of risk management control and governanceprocess. The scope of Internal Audit is well defined and documented and the auditcommittee reviews the observations of the Internal Audit critically. The composition andworking of the audit committee forms part of the Corporate Governance Report.
COMPANY SECRETARY AND COMPLIANCE OFFICER
Due to personal reasons Mr. Gaurav Bajaj (M. No. 49505) Company Secretary KMP andcompliance officer of the company has resigned from the company with effect from Tuesday18th June 2019.
Ms. GURPREET KAUR (Membership No. A52091) appointed as Company Secretary KMP andcompliance officer of the company with effect from 23rd July 2019.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place a policy on Prevention Prohibition and Redressal of SexualHarassment at workplace in line with the requirements of The Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013. The policy has set guidelineson the redressal and enquiry process that is to be followed by complainants whilstdealing with issues related to sexual harassment at the work place. All women employees(permanent temporary contractual and trainees) are covered under this policy. AnInternal Complaints Committee has been set up to redress the complaints received regardingsexual harassment. Your Company did not receive any complaints during the period underreview.
PROHIBITION OF INSIDER TRADING
With a view to regulate trading in securities by the directors and designated personsthe Company has adopted a Code of Conduct for Prohibition of Insider Trading.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant material orders passed by the Regulators / Courts which wouldimpact the going concern status of the Company and its future operations.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134 (5) of the Companies Act 2013 Your Directors confirmthat:
i. In preparation of annual accounts for the financial year ended 31 March 2019 theapplicable Accounting Standards have been followed along with proper explanation relatingto material departures;
ii. The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give true andfair view of the state of affairs of the Company at the end of the financial year ended 31March 2019 and of the profit and loss of the Company for the year;
iii The Directors have taken proper and sufficient care for their maintenance ofadequate accounting records in accordance with the provisions of the Companies Act forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
iv. The Directors had prepared the annual accounts on a going concernbasis;
v. The Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
vi. The Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
During the year under review your Company enjoyed cordial relationship with workersand employees at all levels.
Your directors place on record their appreciation for the committed services by everymember of the company globally whose contribution was significant to the growth andsuccess of the Company. We would like to thank all our clients partners vendorsinvestors bankers and other business associates for their continued support andencouragement during the year.
| ||For and on Behalf of the Board || |
| ||Sd/- ||Sd/- |
| ||(RAMESH ARORA) ||(AJAY KUMAR ARORA) |
|Place: Amritsar ||Managing Director ||Whole Time Director |
|Date: 10th August 2019 ||DIN: 00462656 ||DIN: 00462664 |