To The Members
Lyka Labs Limited
Your Directors are pleased to present their Fortieth Annual Report and the Audited Financial Statements of the Company for the Financial Year ended 31st March 2019.
1. FINANCIAL RESULTS
|(Rs. in Lakhs)|
|Particulars||For the Year ended 31.03.2019||For the Year ended 31.03.2018|
|Profit/(loss) before Interest provision for depreciation & Taxes and Write offs||359.7||(24.96)|
|Operational Profit before Depreciation||(213.53)||(638.43)|
|Exceptional Items (Net)||(52.68)||147.12|
|Less: Tax Expenses||(883.37)||(38.26)|
|Less: Other Comprehensive Income||8.71||29.71|
|Profit/(loss) for the year||182||(1113.65)|
No Dividend was declared for the financial year ended 31 st March 2019 as the Company wants to plough back the profit for its working capital requirements.
Rs. 182 Lakhs was transferred to Reserves during the financial year ended 31 st March 2019.
During the year under review the total revenue earned by the Company was Rs. 4376.09 lakhs as against total revenue of Rs. 4438.30 lakhs of previous year ended 31st March 2018. The Company has reported Net Profit of Rs. 182 lakhs for the year ended 31 st March 2019 as against Net Loss of Rs. 1113.65 lakhs for the previous year ended 31st March 2018.
5. KEY FEATURES
a. The Company is engaged in the research manufacturing and marketing of formulations. Company also manufactures formulations on P to P basis.
b. Highest standards of principles and practices are followed in production and testing of formulations.
c. The Company manufactures Products of various categories including cosmeceuticals external preparations dry powder injections liquid and lyophilized injectable preparations.
d. The Production of lyophilized injections including lyophilized bulk with outstanding output has been one of the important key features of the company.
6. FUTURE OUTLOOK
a. With overall growth of lyophilized product market demand for lyophilized injectables are expected to increase. Company proposes to enhance and improve it's existing infrastructure in order to cater the increased requirement for lyophilized products.
b. During the year under review the Company has received GMP approval from Philippines. The Company plans to initiate further international GMP approvals from PICS and EU for its current manufacturing facility. With these GMP approvals Company looks forward to expand it's global business.
c. The Company tends to grow its business by entering into new business relationship with large and medium scale pharmaceutical companies in the cosmeceuticals dermatology and injectables segment.
A. BOARD DIVERSITY
The Company recognize and embrace the importance of a diverse board in its success. Diverse Board comprising of professionalsfromvariousfieldshelps in guiding the Company from time to time.
B. BOARD MEETING
During the year Seven Board Meetings were held. The particulars of meetings held and attended by each Director are detailed in the Corporate Governance Report.
C. POLICY ON APPOINTMENT AND REMUNERATION POLICY
The Company has appropriate mix of Executive Non- Executive and Independent Directors. As on 31st March 2019 the Board consist of 6 Directors two are Executive Directors one is Non- Executive Director and three are Independent Directors.
D. DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each of Independent Directors under Section 149(7) of the Companies Act 2013 that they meet the criteria laid down under Section 149(6) of the Companies Act 2013 and Regulation 16(b) of the SEBI (Listing Obligation and Disclosure Requirement) Regulations 2015 (Listing Regulations 2015).
E. RETIREMENT BY ROTATION
In accordance with the provisions of Section 152 of the Companies Act 2013 Smt. Nehal N. Gandhi (DIN: 00021580) will retire by rotation at the ensuing Annual General Meeting and being eligible offers herself for re-appointment. Brief resume of the Director seeking re-appointment alongwith other details are disclosed in the Notice convening the Annual General Meeting.
F. INDEPENDENT DIRECTORS FAMILIARIZATION PROGRAMME
The Company has framed policy on familiarization programme. The Independent Directors are familiarized with company's operation. They are provided with financial and other information in the Board Meeting. They are also appraised about their role and function. This will help them to effectively discharge their responsibilities. Independent Directors have visited our factory/plant located at Ankleshwar Gujarat and they were also familiarised with production operations of the Company.
G. EVALUATION OF BOARD COMMITTEES AND DIRECTORS
The Board has carried out performance evaluation of its own the Committee and of the Directors pursuant to the provisions of the Companies Act 2013 and applicable provisions of SEBI (Listing Obligation and Disclosure Requirement) Regulations 2015.
The performance of the Board was evaluated after seeking inputs from all the Directors on the basis of factors which includes Active Participation Financial Literacy contribution by a Director positive Inputs effective deployment of knowledge and expertise integrity and maintenance of confidentiality and independence of behaviour and judgement.
In the meeting of Independent Directors performance of Non-Independent Directors Performance of Board and Performance of the Chairman were evaluated.
H. COMMITTEE OF BOARD
Currently the Board has five Committees namely Audit Committee Nomination and Remuneration Committee Stakeholder Relationship Committee Share Transfer Committee and Risk Management Committee. A detailed note on composition of the Board and its committee is provided in the Corporate Governance Report which forms part of the Board Report.
I. CHANGES IN THE BOARD AND KMP
During the year under review following changes took place at the closure of the Financial Year:
1. Smt. Neha Thakore (DIN No: 00893957) was appointed as an Additional Independent Director w.e.f 5th April 2018 and is appointed as an Independent Director w.e.f 29th September 2018.
2. Shri. Piyush G Hindia Company Secretary and Compliance Officer has retired after closing hours of 5th April 2018.
3. Shri. Dinesh J Darji was appointed as Company Secretary and Compliance Officer w.e.f 6th April 2018 and has resigned w.e.f 30th November 2018.
4. Shri. Vinod Shanbhag (DIN No: 00555709) is appointed as an Additional Independent Director w.e.f 1st November 2018.
5. Shri. Raj T. Trivedi is appointed as the Company Secretary and Compliance Officer of the Company w.e.f. 1st December 2018.
6. Shri Yatin Shah (DIN No: 07155634) Shri Atit Shukla (DIN No: 07238247) and Shri Ajit Bagadia (DIN No: 07229868) completed their tenure as Independent Directors on 29th December 2018.
7. Shri. Kunal Narendra Gandhi (DIN: 01516156) is appointed as Joint Managing Director of the Company w.e.f 12th February 2019.
8. Shri. Atit Shukla (DIN: 07238247) is appointed as an Additional Independent Director of the Company w.e.f 12th February 2019.
A. STATUTORY AUDITOR
The members of the Company had at their 38th Annual General Meeting held on 29th September 2017 appointed M/s. Mehta Chokshi & Shah Chartered Accountants as Statutory Auditors of the Company for a term of 5 years. However M/s. Mehta Chokshi & Shah have resigned with effect from 9th August 2019. In order to fill up such casual vacancy the Board of Directors of the Company at their meeting held on 9th August 2019 appointed M/s. D. Kothary & Co. Chartered Accountants as Statutory Auditors of the Company with effect from 10th August 2019 till the conclusion of 40th Annual General Meeting. Accordingly on the recommendation of the Audit Committee the Board of Directors have proposed the following for the approval of shareholders: i. Appointment of M/s. D. Kothary & Co. Chartered Accountants as Statutory Auditors of the Company from 10th August 2019 till the conclusion of 40th Annual General Meeting; and ii. Appointment of M/s. D. Kothary & Co. Chartered Accountants as Statutory Auditors of the Company for a period of 5 years from the conclusion of 40th Annual General Meeting till the conclusion of 45th Annual General Meeting.
B. BRANCH AUDITOR
M/s. M.I. Shah & Co. Chartered Accountants (Firm Registration No. 119025W) were appointed as Branch Auditor of the Company in 38th Annual GeneralMeetingtoholdofficetill the conclusion of the 43rd Annual General Meeting subject to ratification of their appointment by the Shareholders in each of the subsequent Annual General Meetings.
Accordingly the appointment of M/s. M.I. Shah & Co as Branch Auditors of the Company will be placed for ratification of the shareholders at the ensuing Annual General Meeting. Company from the auditors to the effect that they fulfill the eligibility criteria of the hasreceivedacertificate provisions of Section 141 of the Companies Act 2013. The Audit Committee has recommended their ratification as Branch Auditors.
C. COST AUDITOR
Pursuant to Section 148 of the Companies Act 2013 and the Companies (Cost Records and Audit) Rules 2014 as amended from time to time the cost audit records maintained by the Company are required to be audited by cost accountant. The Company has appointed M/s. Kirit Mehta & Associates Cost Accountant (Firm Registration No. 000048) to audit the cost records of the Company for the financialyear 2019-20. The remuneration payable to them is required to be ratified by the Shareholders at the ensuing Annual General Meeting and accordingly a resolution seeking ratification has been included as Item No. 6 of the Notice convening the Annual General Meeting
D. SECRETARIAL AUDITOR
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 had appointed M/s Kaushal Doshi & Associates Practicing Company Secretaries to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed to this report as Annexure A.
9. MATERIAL CHANGES AND COMMITMENT AFTER THE END OF THE FINANCIAL YEAR WHICH HAVE IMPACT ON FINANCIAL POSITION
There are no material changes and commitment after the end of the financial year which have impact on financial position of the Company.
10. EXPLANATION OR COMMENTS ON QUALIFICATIONS RESERVATION OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS IN THEIR REPORT ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2019 AUDITORS QUALIFICATION:
Due to defaults in repayment of temporary Overdraft taken from Bank by a subsidiary i.e. Lyka BDR
International Limited the account of the subsidiary has been classified as Non-performing Asset by the bank due to which the bank has not charged the interest from the date the account has been classifiedas Non-performing. No provision has been made in the books of accounts maintained by the subsidiary for Interest/penal interest if any on this temporary Overdraft amounting to about Rs. 2065581/- (approx.) cost total loss hencetothatextent finance and current financial liabilities is estimated to be understated by about Rs. 2065581/- for the financial year ending March 31 2019.
As the account is classified as NPA the Bank has not debited the interest hence not provided. The NPA account shall be settled as per ongoing negotiation with bank.
11. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The information pertaining to conservation of energy technology absorption foreign exchange earnings and outgo as required under Section 134 (3)(m) of the Companies Act 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is attached to this report and marked as Annexure B. 12.
STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY
The Company has formulated a policy on Risk Management and constituted Risk Management Committee.
13. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT 2013
There were no loans and guarantees given by the Company during the year under review and details of Investment made under Section 186 of the Companies Act 2013 are given in the notes to the Balance Sheet.
14. DETAILS OF ESTABLISHMENT OF WHISTLE BLOWER CUM VIGIL MECHANISM POLICY DIRECTORS AND EMPLOYEES:
The Company has adopted Whistle Blower policy/Vigil Mechanism through which its Stakeholders Directors and Employees can report their genuine concerns about unethical behaviour and actual or suspected fraud or violation of the Company's Code of Business Conduct and Ethics. The said Policy provides for adequate safeguards against victimization and also direct access to the Audit Committee. The details of establishment of such mechanism are disclosed on the website of the Company at www.lykalabs.com
15. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
The Related Party Transactions effected during the financial ordinary course of business. Omnibus approval of Audit Committee is obtained as per Related Party Transactions Policy. The Related Party transactions effected during the financial year are disclosed in the notes to the Financial Statement.
The particulars of Contracts or Arrangements made with related parties pursuant to Section 188 of the Companies Act 2013 is attached to this report as per Annexure C.
The Company has obtained approval from the shareholders for the financial limit of the related party transactions that were entered into during the year under review. The Company has formulated a policy for dealing with `Material Related Party' transaction and `Related Party' transactions.
16. COMPANY'S POLICY
The highest ethical standards are followed by the Company in business transactions. The SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015 and the Companies Act 2013 mandated the formulation of certain policies for all listed Companies. The Company has framed various policies such as Nomination and Remuneration Policy Policy on materiality subsidiaries and related matters Policy on Materiality of events Related Party Transactions Policy Risk Management Policy Whistle Blower Policy Code for Insider Trading etc which are displayed on the Company's Website i.e. www.lykalabs.com.
17. ANNUAL RETURN
The extracts of Annual Return of the Company as on 31st March 2019 in form MGT-9 in accordance with section 92(3) of the Companies Act 2013 read with Companies (Management and Administration) Rules 2014 is available on the website of the Company www.lykalabs.com and is set out in Annexure D to this Report.
18. DIRECTORS' RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134(5) of the Companies Act 2013 the Board hereby submits its responsibility statement:
(a) in the preparation of the annual accounts the applicable accounting standards had been followed along with proper explanation relating to material departures;
(b) the directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and profitand loss of the the company for that year;
(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets 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;
(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; (f) that the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
19. SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
The Company has three subsidiaries namely Lyka BDR International Limited Lyka Exports Limited and Lyka Healthcare Limited. The details of their performance are as under:
LYKA BDR INTERNATIONAL LIMITED (LBDR)
Lyka Labs Ltd is holding 65.22% of the Issued capital of Lyka BDR International Limited. During the period under review the total sales earned by the Company was Rs. 2811.88 Lakhs as against total sales of previous year of Rs. 2186.11 Lakhs. The Company has reported Net Loss of Rs. 128.72 Lakhs as against Net Loss of Rs. 501.34 Lakhs of previous financial year.
LYKA EXPORTS LIMITED (LEL)
Lyka Labs Ltd is holding 72.80% of Issued capital of Lyka Exports Limited. During the year the Company has reported total sales of Rs. 1033.29 Lakhs as against total sales of Rs. 503.23 Lakhs of previous financial year and Net Loss of Rs. 76.38 Lakhs as against Net profit of Rs. 4.95 Lakhs in previous financial year.
LYKA HEALTHCARE LIMITED (LHL) - WHOLLY OWNED SUBSIDIARY
Lyka Labs Limited is holding 100% of Issued Capital of Lyka Healthcare Limited. During the year under review the Company has reported total sales of Rs. 1004.33 Lakhs as against total sales of Rs. 1357.71 Lakhs of previous financialyear and Net Loss after Tax is Rs. 554.39 Lakhs as against Net Loss of Rs. 320.16 Lakhs in previous financial year.
Performance and financial position of each of the above mentioned subsidiaries for the year ended 31st March 2019 is attached in `Annexure E' and forms part of this report.
20. DISCLOSURE OF CORPORATE SOCIAL RESPONSIBILTY STATEMENT:
Corporate Social Responsibilty is not applicable to the Company.
21. SCHEME OF MERGER (BY ABSORPTION)
A. The Board of Directors at their meeting held on 29th May 2017 had approved the Scheme of Merger of Lyka Healthcare Limited Wholly Owned Subsidiary (the transferor) with Lyka Labs Limited Holding Company (the Transferee) and their respective shareholders (The Scheme of Amalgamation). The Scheme was approved by Equity Shareholders Preference Shareholder and Unsecured Creditors at their respective meetings held on 27th March 2018. The meeting of Secured Creditors could not be proceeded with due to lack of quorum.
The Company's management is taking necessary steps to implement the merger.
B. The Board of Directors at their meeting held on 10th March 2016 had resolved to merge Company's Subsidiary i.e. Lyka Exports Limited with it effective from 1st April 2015 (Appointed Date) under the provisions of sections 391 to 394 and other applicable provisions if any of the Companies Act 1956 as amended and the corresponding provisions of the Companies Act 2013 and SEBI circular No. CIR/CFD/CMD/16/2015 dated 30th November 2015. Since then the appointed date of the said merger of Lyka Exports Limited was postponed to 1st April 2017 by the Board of Directors at their meeting held on 30th August 2017. However boards of both the Companies have decided to call off the merger at their meeting held on 15th May 2019 (Lyka Exports Limited) and 18th May 2019.
During the year under review the Company has not accepted any deposits under Companies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014.
Further the Company has repaid fixed deposits accepted under Companies Act 1956 as per CLB order. As of 31st March 2019 the company has unclaimed fixed deposits of Rs. 4482000/-.
During the year under review the Company has not accepted any Debentures under the Companies Act 2013.
As of 31st March 2019 the Company has unclaimed debentures of Rs. 1300000/-
24. ONE TIME SETTLEMENT/ASSIGNMENT OF BANK LIABILITIES Dena Bank:
Dena Bank has vide assignment agreement dated 4th September 2018 assigned our entire loan account along with all underlying balances rights and securities to International Asset Reconstruction Company Private Limited.
Kapol Co-operative Bank Ltd.
Kapol Co-operative Bank Ltd. has vide assignment agreement dated 26th December 2018 assigned our entire loan account along with all underlying balances rights and securities to International Asset Reconstruction Company Private Limited.
Bank of Maharashtra:
The Company has entered into One Time Settlement with the Bank of Maharashtra and arranged to make upfront payment of Rs. 11.00 Crores as settlement amount and Rs. 6.49 lakh as processing fees to the Bank.
25. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS COURTS AND TRIBUNAL IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE.
During the year under review no order was passed by Regulators or Court or Tribunal which have significant & Material impact on the going concern status and company's operations in future
26. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION AND PROHIBITION AND REDRESSAL) ACT 2013.
The Company is complying with the Provisions of Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013. A Committee has been set up to redress complaints received regarding Sexual harassments. No Complaints have been received by the Committee during the year under review.
27. INTERNAL FINANCIAL CONTROL:
The Company maintains a system of internal control including suitable monitoring procedures in various functional areas. The system is reviewed from time to time to update the same with changing requirement. Internal Audit of Company's financial accounts and related records is conducted by independent firms of
28. PARTICULARS OF EMPLOYEES PURSUANT TO RULE 5(2) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014.
Disclosure with respect to the remuneration of Directors and employees as required under Section 197 of the Companies Act 2013 and read with Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 have been annexed to this report as Annexure F.
Further the information as required under Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 pertaining to the name and other particulars of employees is available for inspection by the members at the Registered Office business hours on working days of the Company up to the date of the ensuing Annual General Meeting. Any member interested in obtaining a copy of such statement may write to the Company Secretary at the Company's Administrative Office at Mumbai.
29. CORPORATE GOVERNANCE
A Report on Corporate Governancealongwithcertificatefrom Practising Company Secretary confirming the Compliance of the condition of Corporate Governance as stipulated in the Listing Regulations 2015 is annexed in Annexure G and forms an integral part of this Annual report.
30. MANAGEMENT DISCUSSION ANALYSIS REPORT
Management Discussion and Analysis Report is attached in Annexure H. 31. GREEN INITIATIVE
The Ministry of Corporate Affairs had taken the Green Initiative in Report of Corporate Governance by allowing paperless compliances by Companies through electronic mode.
The Company supports the Green Initiative and has accordingly decided to send necessary communications to its Shareholders to their respective registered Email address.
The Company appeals to its Shareholders who are yet to register the Email addresses that they take necessary steps for registering the same so that we can also become a part of the initiative and contribute towards Green Initiative.
Your Directors place on record their appreciation of the continued assistance co-operation and support received from various Ministries of the Government of India Government of Maharashtra Government of Gujarat the Company's Bankers Customers Shareholders and loyal & committed Employees for their unstinted support.
|By the order of the Board|
|Kunal N. Gandhi|
|Date: 9th August 2019|