TO THE MEMBERS
Your Directors have pleasure in presenting the 34th Annual Report andFinancial Statements for the year ended 31st March 2019.
FINANCIAL RESULTS / PERFORMANCE
| ||For the year ended 31.3.2019 ||For the year ended 31.3.2018 |
| ||(र Lacs) ||(र Lacs) |
|Total Income ||4919.67 ||5792.35 |
|Profit before finance cost depreciation and taxation ||477.31 ||616.52 |
|Less : Finance Cost ||25.41 ||35.82 |
|Depreciation & Amortisation ||150.28 ||157.15 |
|Profit before tax ||301.62 ||423.55 |
|Provision for taxation: || || |
|Current tax ||76.70 ||136.17 |
|Deferred tax liability / (asset) ||(19.96) ||(13.03) |
|Tax provision for earlier years ||- ||(5.28) |
|Net Profit after Tax ||244.88 ||305.69 |
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 read withRule 3 of the Companies (Indian Accounting Standards) Rules 2015 and Companies (IndianAccounting Standards) Amendment Rules 2016.
CARE Ratings has assigned the following ratings to the Company's long term bankfacilities of र 12.50 crores - CARE BBB+; Stable (Triple B Plus; Outlook: Stable).
MANAGEMENT DISCUSSION AND ANALYSIS
(a) Financial Performance and Operations Review
Sales and other income for the financial year under report amounted to र 4919.67 lacsas compared with र 5792.35 lacs for the previous year a de-growth of 15%.
The operations of the Company have resulted in a net profit of र 244.88 lacs ascompared to a net profit of र 305.69 lacs in the previous financial year. During theyear your Company added many new generic formulations in the market place as well asincreased its geographical coverage through appointment of new distributors.
The Company is in the process of setting up an ophthalmic / eye drops manufacturingunit at GIDC Naroda Ahmedabad with a capital outlay of about र 12.50 crores. Thismanufacturing unit is expected to commence manufacturing operations in the currentfinancial year. During the year under report pursuant to an order passed by the Hon'ableHigh Court of Judicature at Bombay in the case of one of the loan license manufacturerthe materials belonging to the Company and sent to the said manufacturer to manufacturethe Company's products went into the possession of the official liquidator. The Companypursuant to a petition filed with the said Hon'able High Court and as ordered couldrecover most of the said materials from the said manufacturer. However materials valuedat र 40.54 lacs could not be recovered / were not in usable condition and were writtenoff to the Profit & Loss Account. The Company's business was also impacted during theyear since the said loan license manufacturer could not manufacture the Company's productsand making alternate arrangements for manufacturing those products took some time.
|Key Financial Ratios ||31st March 2019 ||31st March 2018 |
|Debtors Turnover Ratio ||9.28 ||4.99 |
|Inventory Turnover Ratio ||3.94 ||4.00 |
|Interest Coverage Ratio ||18.78 ||17.21 |
|Current Ratio ||2.02 ||1.78 |
|Debt Equity Ratio ||0.14 ||- |
|Operating Profit Margin (%) ||1.38% ||4.81% |
|Net Profit Margin (%) ||4.98% ||5.28% |
|Return on Net Worth ||5.87% ||8.30% |
The tight control and monitoring over sales outstanding have resulted in significantimprovement in the debtors turnover ratio. However for the reasons stated hereinabovethere is substantial deterioration in the operating profit margin and return on net worth.
(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 and is hampering the growth of generic formulations market.
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 114 permanent employees as at 31st March 2019.
(e) Cautionary Statement
Certain statements in the Management Discussion and Analysis may be forward lookingwithin the meaning of applicable securities law 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 2019 isर 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 र 31.87 lacs asR&D expenditure (0.68% of the turnover) as against र 38.49 lacs spent in theprevious financial year (0.69% of the turnover).
Your directors are pleased to recommend a equity dividend of Re.1/- per share (10%) forthe financial year under report. The Dividend recommended is in line with the Company'sdividend distribution policy which is placed on the Company's website(www.makerslabs.com).
The dividend and applicable dividend tax amounting to र 58.83 lacs if approved atthe ensuing Annual General Meeting will be appropriated out of the profits for the yearand will be paid on or before 30th August 2019.
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 dividendsfor the last seven financial years is 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.
At the meeting of the Board of Directors of the Company held on 13thFebruary 2019 Mr. R. K. P. Verma and Mr. P. M. Kathariya were appointed as an Additional/ Independent Directors of the Company. They hold the office of directorship till theconclusion of the ensuing Annual General Meeting. Being eligible they have offeredthemselves for appointment as Directors / Independent Directors of the Company. At themeeting of the Board of Directors of the Company held on 13th February 2019Mr. Nilesh Jain was appointed as an Additional Director of the Company and designated asWhole-time Director for a period of 3 years from 13th February 2019 till 12thFebruary 2022 (subject to the approval of shareholders at the ensuing Annual GeneralMeeting). The Board of Directors of the Company at their meeting held on 28thMarch 2019 have appointed Mr. R. K. P. Verma Independent Director as the Non-ExecutiveChairman of the Board of Directors of the Company. During the year under report the termof appointment of Mr. K. C. Jain Mr. S. V. Loyalka and Dr. Rajeshwar Singh as IndependentDirectors came to an end on 31st March 2019. They have informed the Company oftheir inability to continue / re-appointed as Director / Independent Director uponcompletion of their said term on 31st March 2019. Accordingly the Board ofDirectors of the Company at their meeting held on
28th March 2019 have accepted their resignation as Directors / IndependentDirectors and accordingly they cease to be the Directors of the Company with effect from 1stApril 2019. The Board places on record its appreciation for the services rendered by themduring their tenure as Directors of the Company. Mr. Saahil Parikh retires as director byrotation at the ensuing Annual General Meeting and being eligible offers himself forre-appointment.
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. In the opinion of the Board theindependent directors possess appropriate balance of skills experience and knowledge asrequired.
A brief note on Director retiring by rotation and eligible for re-appointment as wellas Directors being appointed is furnished in the Report on Corporate Governance annexedherewith.
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 (appointed w.e.f. 13th February 2019) |
|Mr. Sandeep Kadam ||- ||Manager Accounts / CFO |
|Ms. Khyati Danani ||- ||Company Secretary |
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 underSections 164 and 167 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 contribution to strategicdecision making review of risk assessment and risk mitigation review of financialstatements business performance and contribution to the enhancement of brand image of theCompany. The Board has carried out evaluation of its own performance as well as that ofthe Committees of the Board and all the Directors.
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 for potential and for growth. The Remuneration Policy reflects on certainguiding principles of the Company such as aligning remuneration with the longer terminterests of the Company and its shareholders promoting a culture of meritocracy andcreating a linkage to corporate and individual performance and emphasising on lineexpertise and market competitiveness so as to attract the talent. The Nomination andRemuneration Committee recommends the remuneration of Directors and Key ManagerialPersonnel which is approved by the Board of Directors subject to the approval ofshareholders where necessary. The level and composition of remuneration shall bereasonable and sufficient to attract retain and motivate the directors key managerialpersonnel and other employees of the quality required to run the Company successfully. Therelationship of remuneration to performance should be clear and meet appropriateperformance benchmarks. The remuneration to directors key managerial personnel and seniormanagement personnel should also involve a balance between fixed and incentive payreflecting short and long term performance objectives appropriate to the working of theCompany and its goals. The Remuneration Policy is placed on the Company's websitewww.makerslabs.com. Information about elements of remuneration package of individualdirectors is provided in the extract of the Annual Return as provided under Section 92(3)of the Companies Act 2013 which is enclosed.
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 theapplicable accounting standards have been followed alongwith proper explanation relatingto material departures; ii) that your Directors have selected such accounting policies andapplied them consistently and made judgments and estimates that are reasonable and prudentso as to give a true and fair view of the state of affairs of the Company at the end ofthe financial year March 31 2019 and of the profit 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 and other irregularities;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 compliancewith the provisions of all applicable laws and that such systems were adequate andoperating effectively.
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 annexed.
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 2018-19.
The Cost Audit Report for the financial year 2017-18 which was due to be filed withthe Ministry of Corporate Affairs by 25th October 2018 was filed on 8thOctober 2018.
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 2018-19.
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. Resolution of the shareholdersis also 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 (11.00 am to 1.00 pm) excluding Saturdays andany member interested in obtaining such information may write to the Company Secretary andthe same will be furnished on request. The full Annual Report including the aforesaidinformation is available 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 employees and other employees who have access tothe unpublished price sensitive information of the Company are governed by this code.During the year under Report there has been due compliance with the said code of conductfor 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.
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 also placedon the website of the Company as part of Company's Annual Report 2018-19.
The Company has complied with all the applicable Secretarial Standards issued by theInstitute of Company Secretaries of India.
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 |
|22nd May 2019 ||Chairman |