KWALITY PHARMACEUTICALS LIMITED.
Your Directors have pleasure in presenting the 35th Annual Report of KWALITYPHARMACEUTICALS LIMITED along with the Audited Financial Statements for the year ended31st March 2018.
Our Company's financial performance for the year under review has been encouraging andis summarized below:
| || || || ||(Rupees In Lacs) |
| ||STANDALONE ||CONSOLIDATED |
|Particulars ||2017-18 ||2016-17 ||2017-18 ||2016-17 |
|Total Income ||13792.82 ||9683.83 ||13829.65 ||9952.41 |
|Less: Expenditure & Depreciation ||13037.81 ||9102.94 ||13100.08 ||9387.54 |
|Profit before Tax (PBT) ||755.01 ||580.89 ||729.57 ||564.87 |
|Less: Tax (including deferred tax) ||287.42 ||236.99 ||287.42 ||236.98 |
|Profit After Tax (PAT) ||467.59 ||343.90 ||442.15 ||327.89 |
During the year under review on standalone basis revenue of the company was Rs.13792.82 Lakhs as compared to Rs. 9683.83 Lakhs in the corresponding previous year. TheCompany earned a profit after tax of Rs. 467.59 Lakhs as compared to Rs. 343.90 Lakhs inthe previous year.
On consolidated basis revenue of the company was Rs. 13829.65 Lakhs as compared to Rs.9952.41 Lakhs in the corresponding previous year. The Company earned a profit after tax ofRs. 442.15 Lakhs as compared to Rs. 327.89 Lakhs in the previous year.
CHANGES IN NATURE OF BUSINESS
There is no change made in the nature of the business of company during the financialyear.
Your directors have decided to deployed back the profits earned during the year andtherefore not recommended any dividend for the current financial year. However theCompany has issued bonus shares in the ratio of 1:1 during October 2017.
The Company does not transfer any amount to general reserves during F.Y. 2017-2018.
STATEMENT PURSUANT TO LISTING AGREEMENT
The Company's equity shares are listed at Bombay Stock Exchange Limited (SME Segment).The Annual Listing Fee for the year 2018-19 has been paid.
EXTRACT OF THE ANNUAL RETURN
The extract of the annual return in Form No. MGT 9 is attached in Annexure A'.
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 asAnnexure B'. There is no employee drawing a salary exceeding the limitprescribed under Section 197(12) read with Rule 5 (2) of The Companies (Appointment andRemuneration of Managerial 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 Companies whoseshares are listed on SME exchange as referred to in Chapter XB of SEBI (Issue of Capitaland Disclosure Requirements) Regulations 2009 are exempted from the compulsoryrequirement of adoption of IND-AS w.e.f. 1st April 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
Mr. Janibhasha Shaik (DIN: 06738842) was appointed as Professional Director ofthe company in the annual general meeting of the company held on 30-09-2017.
Ms. Pallavi Aggarwal (M. No. 23138) Company Secretary KMP and compliance officer ofthe company has resigned from the company with effect from 31st July 2017 andMr. Gaurav Bajaj (M. No. 49505) was appointed as Company Secretary KMP and complianceofficer of the company with effect from 10th August 2017.
RETIREMENT BY ROTATION
In accordance with the provisions of section 152 of the Companies Act 2013 and theArticles of Association of the Company Mr. Aditya Arora & Mr. Ajay 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 2017-18 7 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 member dates of meeting 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 member dates of meeting 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 member dates of meeting 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 2017-18 one Meeting washeld on 03-04-2017. The composition of Committee and attendance of members is as follows:
|Name ||Category ||Meeting held during 2017-18 ||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 2017-18 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 Company's CSR Policy totalamount to be spent under CSR for the financial year amount unspent if any and the reasonfor the unspent amount is set out at Annexure-D forming part of this Report.
MEETINGS OF INDEPENDENT DIRECTORS:
The Company's Independent Directors meet at least once in every financial year withoutthe presence of Executive Directors or management personnel. Such meetings are conductedinformally to enable Independent Directors to discuss matters pertaining to (i) review theperformance of Non Independent Directors and the Board as a whole (ii) review theperformance of the Chairperson of the Company taking into account the views of ExecutiveDirectors and Non-Executive Directors; and (iii) to assess the quality quantity andtimeliness of flow of information between the Company Management and the Board.
One meeting of the Independent Directors was held during the Financial Year on27/02/2018.
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 Company's subsidiaryduring the year at regular intervals. In accordance with section 129(3) of the CompaniesAct 2013 the Company has prepared Consolidated Financial Statements of the Company andits subsidiary which forms part of this Annual Report. Further a statement containingsalient features of the Financial Statements of its subsidiary in Form AOC-1 as given inthe annual report forms part of the Financial Statements.
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 the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Board has carried out an annual performanceevaluation of its own performance the Directors individually as well as the BoardCommittees. The performance of the Board was evaluated by the Board after seeking inputsfrom all the directors on the basis of the criteria such as the Board composition andstructure effectiveness of board processes 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 Company's procedures and practices. TheChairman & Managing Director had one to one discussions with newly appointed Directorsto familiarize them with the Company's operations. Periodic presentations are made at theBoard and Board Committee Meetings on business and performance updates of the Companyglobal business environment business strategy and risks involved. Quarterly updates onrelevant statutory and regulatory changes are circulated to the Directors. Site visits tovarious plant locations are organized for the Directors to enable them to understand theoperations of the Company.
STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS
All independent Directors have given declarations that they meet the criteria ofIndependence as laid down under the provisions of the Companies Act and the SEBI (ListingObligations and Disclosure Requirements) Regulation 2015.
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 Company's Code of Conduct or complaints regarding accountingauditing internal controls or disclosure practices of the Company. It gives a platform tothe whistle blower to report any unethical or improper practice (not necessarily violationof law) and to define processes for receiving and investigating complaints. The mechanismprovides adequate safeguards against victimization of employees and directors who use suchmechanism and makes provision for direct access to the Chairman of the Audit Committee inexceptional 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.
The Statutory Auditors M/s Vijay Mehra & Co. Chartered Accountants (ICAI FirmRegn. No. FRN 001051N) were appointed as statutory auditors in the 31st AGMof the company to hold office until the conclusion of the 36th Annual GeneralMeeting of the company. Their continuation with the Company is to be ratified in theensuing Annual General Meeting of the Company and the Company has received a certificatefrom the auditors to the effect that they are eligible to be reappointed and notdisqualified in accordance with the provisions of the Companies Act 2013.
The observations made in the Auditors' Report read together with relevant notes thereonare self explanatory and hence do not call for any further comments under Section 134 ofthe 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 2017-18 by the Board of Directors and their remuneration wasratified by members at the 34th Annual General Meeting of the Company.
Further the Board of Directors has appointed M/s Verma Khushwinder & Co.as the Cost Auditors of the Company for the financial year 2018-19 and has also fixedtheir remuneration. The Board has recommended the remuneration approved in its meetingfor ratification 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 Year2017-18 forms part of the Annual report as "Annexure C" to the Board'sreport.
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:
As required by Regulation 34 of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 a Management Discussion &Analysis Report forms part of the Annual Report and annexed herewith as "AnnexureF".
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 arm's length basis in the ordinary course of business and were in compliance with theapplicable provisions of the Companies Act 2013 (the Act') and SEBI (ListingObligations and Disclosures Requirements) Regulations 2015 and the provisions of Section188 of the Companies Act 2013 are not attracted. The transactions with the relatedparties have been disclosed in the financial statements. Thus disclosure in Form AOC-2 isnot required.
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
No significant material changes and commitments have occurred between the date of thebalance sheet and the date of the audit 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 Company ismaking continuous effort for energy conservation. Effective measures have been taken tomonitor consumption of energy during the process of manufacture. Continuous monitoring andawareness amongst employees has helped to avoid wastage of energy. Continuously we takenecessary activities to educate and encourage employees to establish energy efficientpractices equipments etc.;
(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 2018 ||Year Ended 31st March 2017 |
| ||( Rs. In Lakhs) ||( Rs. In Lakhs) |
|Earnings || || |
|Export Sales ||5616.81 ||3565.00 |
|Outgo || || |
|Capital Goods ||18.58 ||91.52 |
|Raw Materials ||449.09 ||217.60 |
The company has not accepted any deposits falling within the meaning of Section 73 to76 of the Companies Act 2013 and rules made there under.
CHANGES IN SHARE CAPITAL
The Authorised Share Capital of the Company on 31st March 2018 was Rs1600000000/- (Rupees Sixteen Crore) divided into 16000000 (One Crore Sixty Lacs)Equity shares of Rs 10/- each and the paid up Equity Share Capital of the Company as onMarch 31 2018 was Rs. 103761980. During the year under review the company has issued5188099 bonus equity shares in the ratio of 1:1 i.e. for every one equity shares held inthe Company one bonus equity share was issued.
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 hasan internal audit function which is empowered to examine the adequacy and compliance withpolicies plans and statutory requirements. It is also responsible for assessing andimproving the effectiveness of risk management control and governance process. The scopeof Internal Audit is well defined and documented and the audit committee reviews theobservations of the Internal Audit critically. The composition and working of the auditcommittee forms part of the Corporate Governance Report.
COMPANY SECRETARY AND COMPLIANCE OFFICER
Mr. Gaurav Bajaj (M. No. 49505) is Company Secretary KMP and compliance officer of thecompany.
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. TheCompany has not received any complaints during the year.
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 the requirements under Section 134(5) of the Companies Act 2013 withrespect to the Director's Responsibilities Statement the Directors state and herebyconfirm that:
(a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
(b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period;
(c) The directors had 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) The directors had prepared the annual accounts on a going concern basis; and
(e) 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 workers andemployees at all levels.
The Board of Directors wish to place on record its appreciation for the commitmentdedication and hard work done by the employees of the Company and the cooperation extendedby Banks Government Authorities Customers Shareholders and looks forward to a continuedmutual support and co-operation.
| || ||For and on Behalf of the Board |
| ||Sd/- ||Sd/- |
| ||(RAMESH ARORA) ||(AJAY ARORA) |
|Place: Amritsar ||Managing Director ||Whole Time Director |
|Date:04-09-2018 ||DIN: 00462656 ||DIN: 00462664 |