TO THE MEMBERS
Your Directors have pleasure in presenting the 35th Annual Report andFinancial Statements for the year ended 31st March 2020.
FINANCIAL RESULTS / PERFORMANCE
| ||For the year ended 31.3.2020 ||For the year ended 31.3.2019 |
| ||(Rs. Lacs) ||(Rs. Lacs) |
|Total Income ||5162.21 ||4919.67 |
|Profit before finance cost depreciation and taxation ||293.96 ||477.31 |
|Less : Finance Cost ||70.31 ||25.41 |
|Depreciation & Amortisation ||198.75 ||150.28 |
|Profit before tax ||24.90 ||301.62 |
|Provision for taxation || || |
|Current tax ||3.82 ||76.70 |
|Deferred tax liability / (asset) ||33.46 ||(19.96) |
|Net Profit/(Loss) after Tax ||(12.38) ||244.88 |
TRANSFER TO RESERVES
The Company does not propose to transfer any amount to the general reserve out of theamount available for appropriation.
The financial statements are prepared in accordance with the Indian AccountingStandards (Ind-AS) as prescribed under Section 133 of the Companies Act 2013 readwith Rule 3 of the Companies (Indian Accounting Standards) Rules 2015 andCompanies (Indian Accounting Standards) Amendment Rules 2016.
CARE Ratings has assigned the following ratings to the Company's long term bankfacilities of Rs. 12.50 crores - CARE BBB+; Stable (Triple B Plus; Outlook: Stable)
COVID 19 PANDEMIC
In the last quarter of the financial year 2019-20 the coronavirus disease emerged as aglobal pandemic resulting in many governments declaring lockdowns forcing citizens to stayindoors and disruption of economic activities globally. Being manufacturers and marketersof generic pharmaceuticals and hence provider of essential services and exempted fromlockdown the manufacturing facility and marketing activities of your Company continuedwith the manufacturing and marketing operations with initial challenges such as shortageof manpower availability of raw materials packing materials and disruptions in thelogistics and supply chain. Your Company is continuously monitoring the situation closelyand has taken/continue to take all the measures to comply with the guidelines issued bythe local authorities from time to time to ensure the safety of its workforce atmanufacturing plants and offices. However the extent to which the Covid-19 pandemic mayimpact the Company its operations and financials will depend on future developments inthis regard which as on date are uncertain.
MANAGEMENT DISCUSSION AND ANALYSIS
(a) Financial Performance and Operations Review
Sales and other income for the financial year under report amounted to Rs. 5162.21 lacsas compared with Rs. 4919.67 lacs for the previous year a growth of 5%.
The operations of the Company have resulted in a net loss of Rs. 12.38 lacs as comparedto a net profit of Rs. 244.88 lacs in the previous financial year.
Your Company markets generic formulations which are mainly used by the dispensingdoctors nursing homes and hospitals. The Company's business volume margins andprofitability were impacted during the financial year under report due to severecompetition in the market place as well as increase in the input costs mainly of ActivePharmaceutical Ingredients which could not be entirely passed on due to competition andprice control regime. The lock down announced in the month of March 2020 due to Covid-19pandemic resulted in the disruption of economic activities including that of healthcaresystem and impacted the Company's business.
During the year the Company added few generic formulations in the market place as wellas increased its geographical coverage through appointment of new distributors.
The Company is in the process of commercializing its ophthalmic / eye dropsmanufacturing unit at GIDC Naroda Ahmedabad set-up with a capital outlay of about Rs.15.23 crores within the next few months. The manufacturing facility is ready and thevalidation batches of the ophthalmic eye drops are currently being manufactured. Themanufacturing of ophthalmic eye drops for commercial sale is expected to take place in thenext couple of months.
Key Financial Ratios
| ||31st March 2020 ||31st March 2019 |
|1. Debtors Turnover Ratio ||6.80 ||9.28 |
|2. Inventory Turnover Ratio ||4.74 ||3.94 |
|3. Interest Coverage Ratio ||4.18 ||18.78 |
|4. Current Ratio ||1.23 ||2.02 |
|5. Debt Equity Ratio ||0.18 ||0.14 |
|6. Operating Profit Margin (%) ||1.32% ||1.38% |
|7. Net Profit Margin (%) ||-0.24% ||4.98% |
|8. Return on Net Worth ||-0.28% ||5.87% |
However for the reasons stated hereinabove there was impact on the business volumeand sales which resulted into reduced operating margins and net loss in the financial yearand deterioration in the most of the above key financial ratios.
(b) Opportunities Threats Risk and Concerns
The Indian generic formulations market is currently in the growth phase. It is expectedthat use of generic formulations will gradually increase in India. However cut throatcompetition quality issues of generics manufactured in the country and non existence oforganised generic formulations distribution and retailing system are the few causes ofconcern that is hampering the growth of generic formulations market in the country.
During the year under report there was no change in the nature of Company's business.
(c) Internal Control Systems
The Company has an adequate internal control system including suitable monitoringprocedures commensurate with its size and the nature of the business. The internal controlsystems provide for all documented policies guidelines authorisation and approvalprocedures. The statutory auditors while conducting the statutory audit review andevaluate the internal controls and their observations are discussed with the AuditCommittee of the Board.
(d) Human Resources
Your Company continued to have cordial and harmonious relations with its employees atall levels. Your Company has adopted quality culture across the organisation in all lineand staff functions at all the locations. The quality culture has helped your Company inachieving productivity improvement cost reduction and waste elimination through employeeinvolvement at all levels.
Your Company had 135 permanent employees as at 31st March 2020.
(e) Cautionary Statement
Certain statements in the Management Discussion and Analysis may be forward lookingwithin the meaning of applicable securities laws and regulations and actual results maydiffer materially from those expressed or implied. Factors that would make differences toCompany's operations include competition price realisation changes in governmentpolicies and regulations tax regimes and economic development within India.
MATERIAL CHANGES AND COMMITMENTS AFTER THE END OF THE FINANCIAL YEAR
No material changes or commitments affecting the financial position of the Company haveoccurred between the end of the financial year to which financial statements in thisreport relate and the date of this report.
The paid-up equity share capital of the Company as at 31st March 2020 isRs. 491.70 lacs. The Company currently has no outstanding shares issued with differentialrights sweat equity or ESOS.
SUBSIDIARY JOINT VENTURE AND ASSOCIATE COMPANIES
The Company has no subsidiary or joint venture companies. During the financial yearunder report no company has become / ceased to be subsidiary or joint venture company.
RESEARCH & DEVELOPMENT
During the year under report the Company has spent an amount of Rs. 43.78 lacs asR&D expenditure (0.85% of the turnover) as against Rs. 31.87 lacs spent in theprevious financial year (0.68%of the turnover).
In view of the losses incurred the Board of Directors do not recommend dividend forthe financial year under report.
INVESTORS EDUCATION AND PROTECTION FUND (IEPF)
During the year under report the Company has transferred to the Investors Educationand Protection Fund (IEPF) all the unpaid dividend amount required to be so transferred onor before the due date for such transfer. The Company has also transferred to IEPF suchof the Company's equity shares in respect of which the dividend declared has not been paidor claimed for seven consecutive years. The details of the unpaid / unclaimed dividend forthe last seven financial years are available on the website of the Company(www.makerslabs.com). The Company has appointed the Company Secretary as its nodal officerunder the provisions of IEPF.
Mr. Nilesh Jain retires as director by rotation at the ensuing Annual General Meetingand being eligible offers himself for re-appointment.
Mr. Saahil Parikh is being re-appointed as the Wholetime Director of the Company for afurther period of 3 years with effect from 11th August 2020 and the necessaryresolution in this regard is being proposed at the ensuing Annual General Meeting for theapproval of the members.
Mr. R. K. P. Verma Mr. P. M. Kathariya and Ms. Dipti Shah who are independentdirectors have submitted a declaration that each of them meets the criteria ofindependence as provided in Section 149(6) of the Companies Act 2013 and SEBI (LODR)Regulations and there has been no change in the circumstances which may affect theirstatus as independent directors during the year. None of the directors of the Company aredebarred from holding the office of Director by virtue of any SEBI order or order by anyother competent authority.
In the opinion of the Board the independent directors possess appropriate balance ofskills experience and knowledge as required.
A brief note on Director retiring by rotation and eligible for re-appointment as wellas Wholetime Director being re-appointed is furnished in the Report on CorporateGovernance annexed herewith.
KEY MANAGERIAL PERSONNEL (KMP)
During the financial year under report the following persons are the Key ManagerialPersonnel:
|Mr. Saahil Parikh - ||Wholetime Director / CEO |
|Mr. Nilesh Jain - ||Wholetime Director |
|Mr. Sandeep Kadam - ||Manager Accounts / CFO |
|Ms. Khyati Danani - ||Company Secretary |
There was no change in the KMP during the financial year under report.
POLICY ON DIRECTORS' APPOINTMENT REMUNERATION AND OTHER DETAILS
The Nomination and Remuneration Committee has laid down the criteria for Directors'appointment and remuneration including criteria for determining qualifications positiveattributes and independence of a Director. The following attributes/criteria for selectionhave been laid by the Board on the recommendation of the Committee:
the candidate should posses the positive attributes such as leadershipentrepreneurship industrialist business advisor or such other attributes which in theopinion of the Committee the candidate possess and are in the interest of the Company; -the candidate should be free from any disqualifications as provided under Sections 164 and167 of the Companies Act 2013;
the candidate should meet the conditions of being independent as stipulatedunder the Companies Act 2013 and SEBI (LODR) Regulations 2015 in case of appointment asan independent director; and
the candidate should posses appropriate educational qualification skillsexperience and knowledge in one or more fields of finance law management salesmarketing administration research corporate governance technical operationsinfrastructure medical social service professional teaching or such other areas ordisciplines which are relevant for the Company's business.
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 various parameters like attendance andparticipation at meetings of the Board and Committees thereof
The Board has carried out evaluation of its own performance as well as that of theCommittees of the Board and all the Directors.
PROFICIENCY OF DIRECTORS
All the Independent Directors of the Company have registered their names in thedatabase maintained by Indian Institute of Corporate Affairs Manesar Haryana. Those ofthe Independent Directors who are not otherwise exempted shall appear for the commonproficiency test conducted by the said institute within the prescribed time.
The objective and broad framework of the Company's Remuneration Policy is to considerand determine the remuneration based on the fundamental principles of payment forperformance potential and growth. The Remuneration Policy reflects on certain guidingprinciples of the Company such as aligning remuneration with the longer term interests ofthe Company and its shareholders promoting a culture of meritocracy and creating alinkage to corporate and individual performance and emphasising on line expertise andmarket competitiveness so as to attract the talent. The Nomination and RemunerationCommittee recommends the remuneration of Directors and Key Managerial Personnel which isapproved by the Board of Directors subject to the approval of shareholders wherenecessary. The level and composition of remuneration shall be reasonable and sufficient toattract retain and motivate the directors key managerial personnel and other employeesof the quality required to run the Company successfully. The relationship of remunerationto performance should be clear and meet appropriate performance benchmarks. Theremuneration to directors key managerial personnel and senior management personnel shouldalso involve a balance between fixed and incentive pay reflecting short and long termperformance objectives appropriate to the working of the Company and its goals. TheRemuneration Policy is placed on the Company's website www.makerslabs.com. Informationabout elements of remuneration package of individual directors is provided in the extractof the Annual Return as provided under Section 92(3) of the Companies Act 2013 which isannexed.
FAMILIARISATION PROGRAM FOR INDEPENDENT DIRECTORS
Details of the familiarisation program of independent directors are disclosed on thewebsite of the Company www.makerslabs.com.
MEETINGS OF THE BOARD AND COMMITTEES THEREOF
This information has been furnished under Report on Corporate Governance which isannexed.
DIRECTORS' RESPONSIBILITY STATEMENT
Your Directors confirm:
i) that in the preparation of the annual accounts the applicable accounting standardshave been followed alongwith proper explanation relating to material departures;
ii) that your Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year March 31 2020 and of the loss of the Company for the financial year;
iii) that your Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud an d otherirregularities;
iv) that your Directors have prepared the annual accounts on a going concern basis;
v) that your Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
vi) that your Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
As per the requirements of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Company has complied with the requirements of Corporate Governancein all material aspects. A report on Corporate Governance (Annexure 1) together with acertificate of its compliance from the Practising Company Secretary forms part of thisreport.
Your Company has not accepted any deposits from the public during the year under reviewand as such no amount of principal or interest on deposits from public was outstanding ason the date of the balance sheet.
Details of the Audit Committee along with its constitution and other details areprovided in the Report on Corporate Governance.
AUDITORS AUDIT REPORT AND AUDITED ACCOUNTS
M/s. Natvarlal Vepari & Co. Chartered Accountants (Firm Registration No. 106971W)were appointed as the Statutory Auditors at the 32nd Annual General Meeting(AGM) of the Company for a term of 5 (Five) years i.e. till the conclusion of 37thAGM and this appointment was ratified by the shareholders of the Company at the 33rdAnnual General Meeting of the Company held on 2nd August 2018.
The Auditors' Report read with the notes to the accounts referred to therein areself-explanatory and therefore do not call for any further comments. There are noqualifications reservations or adverse remarks made by the Auditors.
Pursuant to the provisions of Section 148 of the Companies Act 2013 M/s. Kale &Associates Cost Accountants (Firm Registration. No. 001819) were appointed as the CostAuditors to conduct audit of cost records of the Company for the financial year 2019-20.
The Cost Audit Report for the financial year 2018-19 which was due to be filed withthe Ministry of Corporate Affairs by 23rd October 2019 was filed on 11thOctober 2019.
The Company has maintained the cost accounts and cost records as specified by theCentral Government under sub-section (1) of Section 148 of the Companies Act 2013.
Pursuant to the provisions of Section 204 and other applicable provisions if any ofthe Companies Act 2013 M/s. Parikh & Associates Practising Company Secretaries wereappointed as the Secretarial Auditors for auditing the secretarial records of the Companyfor the financial year 2019-20.
The Secretarial Auditors' Report is annexed hereto. There are no qualificationsreservations or adverse remarks made by the Secretarial Auditors.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The provisions of Section 135 of the Companies Act 2013 pertaining to Corporate SocialResponsibility (CSR) is not applicable to the Company.
SAFETY ENVIRONMENT AND HEALTH
The Company considers safety environment and health as the management responsibility.Regular employee training programmes are carried out in the manufacturing facility onsafety and environment.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
The Company has not given any loans or guarantees or made investments in contraventionof the provisions of the Section 186 of the Companies Act 2013. The details of the loansand guarantees given and investments made by the Company are provided in the notes to thefinancial statements.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were onarm's length basis and were in the ordinary course of Company's business. The Board hasapproved a policy for related party transactions which has been uploaded on the website ofthe Company http://www.makerslabs.com/pdf/Corporate_Policy/Related_Party_Transactions.pdf.
All the related party transactions are placed before the Audit Committee as well as theBoard for approval on a quarterly basis. Omnibus approval was also obtained from the AuditCommittee on an annual basis for repetitive transactions. Approval of the shareholders isalso obtained wherever necessary in this regard. Related party transactions aredisclosed in the notes to the financial statements. Prescribed Form No. AOC-2 pursuant toclause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies(Accounts) Rules 2014 is furnished as Annexure 2 to this report.
PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197 read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 a statement showingthe names and other particulars of the employees drawing remuneration and other details asset out in the said rules are provided as an Annexure 3 in this annual report. The Companyhad no employee drawing remuneration in excess of the amount as mentioned under Rule 5 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014. Thenecessary information in respect of top 10 employees of the Company in terms ofremuneration drawn is furnished in Annexure. However having regard to the provisions ofthe first proviso to Section 136(1) of the Act and as advised the Annual Report excludingthe aforesaid information under Explanation (2) to the above Rule is being sent to themembers of the Company. The said information is available for inspection at the registeredoffice of the Company during working hours excluding Saturdays and any member interestedin obtaining such information may write to the Company Secretary and the same will befurnished on request. The full Annual Report including the aforesaid information isavailable on the Company's website www.makerslabs.com.
CODE OF CONDUCT
The Board has laid down a code of conduct for Board members and senior managementpersonnel of the Company. The code also incorporates the duties of independent directorsas laid down in the Companies Act 2013. The said code of conduct is posted on Company'swebsite www.makerslabs.com. The Board members and senior management personnel haveaffirmed compliance with the said code of conduct. A declaration signed by the WholetimeDirector / CEO is given at the end of this Report.
WHISTLE BLOWER POLICY / VIGIL MECHANISM
There is a Whistle Blower Policy in the Company and no personnel has been denied accessto the Chairman of the Audit Committee. The policy provides for adequate safeguardsagainst victimization of persons who use vigil mechanism. The Whistle Blowing Policy isposted on the website of the Company www.makerslabs.com.
PREVENTION OF INSIDER TRADING
The Board has adopted a Code of Prevention of Insider Trading based on the SEBI(Prohibition of Insider Trading) Regulations 2015. The same has been placed on thewebsite of the Company www.makerslabs.com. All the Directors senior management employeesand other employees who have access to the unpublished price sensitive information of theCompany are governed by this code. During the year under Report there has been duecompliance with the said code of conduct for prevention of insider trading.
CONSTITUTION OF COMMITTEE UNDER SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013
The Company has adopted a policy in line with the requirements of Prevention of SexualHarassment of Women at the Workplace and a Committee has been set-up to redress sexualharassment complaints received if any.
BUSINESS RISK MANAGEMENT
Pursuant to the provisions of Section 134 of the Companies Act 2013 the Company hasconstituted a Risk Management Committee. The details of the Committee and its terms ofreference are provided in the Report on Corporate Governance which is annexed.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant or material orders passed by any regulator tribunal or courtthat would impact the going concern status of the Company and its future operations.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
In accordance with the requirements of Section 134 of the Companies Act 2013statement showing particulars with respect to conservation of energy technologyabsorption and foreign exchange earnings and outgo is furnished as Annexure 4 to thisreport.
EXTRACT OF ANNUAL RETURN
In accordance with the requirements of Section 92 (3) of the Companies Act 2013 andRule 12 (1) of the Companies (Management and Administration) Rules 2014 an abstract ofAnnual Return in Form MGT-9 is furnished as Annexure 5 to this report which is placed onthe website of the Company as part of Company's Annual Report 2019-20.
The Company has complied with all the applicable Secretarial Standards.
Your Directors place on record their appreciation for the co-operation and supportextended to the Company by its bankers. Your Directors also place on record theirappreciation of the continued hard work put in by employees at all levels.
| ||For and on behalf of the Board |
|Mumbai ||R. K. P. Verma |
|15th June 2020 ||Chairman |