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Morepen Laboratories Ltd.

BSE: 500288 Sector: Health care
BSE 09:06 | 21 Oct 52.45 0.30






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OPEN 0.00
52-Week high 75.00
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P/E 27.61
Mkt Cap.(Rs cr) 2,929
Buy Price 50.50
Buy Qty 80.00
Sell Price 50.50
Sell Qty 500.00
OPEN 0.00
CLOSE 52.15
52-Week high 75.00
52-Week low 0.00
P/E 27.61
Mkt Cap.(Rs cr) 2,929
Buy Price 50.50
Buy Qty 80.00
Sell Price 50.50
Sell Qty 500.00

Morepen Laboratories Ltd. (MOREPENLAB) - Director Report

Company director report

Dear Shareholders

Your Directors have pleasure in presenting the 35 th AnnualReport on business operations and achievements of the company together with the auditedfinancial statements for the financial year ended 31st March 2020.





2019-20 2018-19 2019-20 2018-19
Sales 77985.88 70597.21 83960.26 75621.44
Other Operating Income 1212.86 1127.08 1346.43 1232.40
Other Income 941.72 367.18 948.35 367.18
Total Income 80140.46 72091.47 86255.04 77221.02
Operating Surplus 7388.32 6869.22 7799.81 7118.96
Finance cost 196.75 207.08 198.45 211.00
Cash Surplus 7191.57 6662.14 7601.36 6907.96
Non-Cash Items:
Depreciation & Amortisation 3443.39 3800.78 3690.60 3990.29
Profit before Tax 3748.18 2861.36 3910.76 2917.67
Tax - Current Year - (212.70) (37.40) (246.33)
Tax credit entitlement - 212.70 - 212.70
Tax (Earlier Years) (514.87) - (515.47) -
Profit before non-controlling interest 3233.31 2861.36 3357.89 2884.04
Less : Non - controlling interest - - (0.03) (0.89)
Profit after non-controlling interest 3233.31 2861.36 3357.92 2884.93
Other Comprehensive Income (Net of Tax) (254.28) (171.82) (261.09) (169.81)
Total Comprehensive Income 2979.03 2689.54 3096.83 2715.12
EPS (Basic/Diluted) 0.72 0.64 0.75 0.64


On the strength of substantial growth in revenues of ActivePharmaceutical Ingredients (API) business Devices business Branded Formulation businessas well as OTC (over the counter) business of the company a revenue growth of 12% wasrecorded at Rs 86255.04 Lakhs during the current year against previous year's revenues ofRs 77221.02 Lakhs. The exports revenues jumped by 10% during the current year.

The Company was able to pass on some of the cost increase to itscustomers and maintain its margins. The addition to capacities and investment in newprocesses and systems was continued during the year.

API business with its current year revenues of Rs 47394.72 Lakhsregistered a growth of 15% during the year and constitutes 61% of standalone revenue ofthe company whereas at consolidated level it stands at 56% of the total revenues. Thedevices business continued to score new heights with current year revenues of Rs 16834.79Lakhs registering a growth of 20% over the previous year revenues of Rs 13975.04 Lakhs.OTC business with current year revenues of Rs 6462.64 Lakhs clocked a growth of 19% overprevious year revenues of Rs 5438.08. Though the branded formulations business recorded agrowth of 19% at Rs 4063.62 Lakhs prescription business recorded a fall of 10% over lastyear revenues of Rs 15317.43 Lakhs.

COVID-19: Response & Impact

COVID-19 pandemic advanced swiftly into a global crisis in the month ofMarch 2020 forcing the government authorities to enforce lockdown in the Country. Due tothis the Company had instantly shifted its focus on minimizing disruption to services forall our domestic and international customers and on the health and well-being of allemployees. The workforce of the Company have settled into the new ways of working and theCompany is also tracking employee welfare productivity and product delivery progressthrough the use of various tools. We are collaborating with our customers for efficientlydelivering our commitments.

The financials for the year ended 2019-20 were marginally affected dueto the impact of novel Coronavirus and the consequential lockdown imposed by theGovernment of India. However the positive momentum gained in the last quarter offinancial year 2019-20 the strong balance sheet position profitability and inherentresilience of the business model may allow the Company well to navigate the challengesahead and gain market share.

Financial Performance:


The consolidated sales revenues for the current year at Rs 83960.26Lakhs have logged a handsome growth of 11.03% against previous year sales revenues of Rs75621.44 Lakhs. The current year total revenues of Rs 86255.04 Lakhs are up by 11.70 %over the previous year revenues of Rs 77221.02 Lakhs. The export business contributingover 41% of the consolidated sales revenues of the company have registered a growth of 10%during the current year.

On standalone basis the company registered sales revenues of Rs77985.88 Lakhs as compared to Rs 70597.21 Lakhs during previous financial year a growthof 10.47%.

Material Cost

Consolidated material cost as a percentage of sales is up at 66.39%against to 65.66% in the previous year on account of various reasons including change ofproduct mix and product markets firming up of raw material prices & others. Thecurrent year sales realizations have taken care part of the increased input costs tomaintain the product margins.

Employee Cost

During the year under review the employee strength of the company hasincreased by 13.01%. The current year's consolidated employee cost is 13.09% of the salesrevenue against 12.61% in the last financial year. The overall increase in employee costfor the current year is both on account of annual merit based increase as well as onaccount of increased manpower.

Other Expenses

The consolidated expenditure on manufacturing sales & marketingand the administrative activities is at 13.96% of sales revenues against 14.43% recordedin the preceding financial year. The company has been able to keep under control amount ofspend on various administrative and sales & marketing activities.

Finance Cost & Depreciation

The annual consolidated finance cost at Rs 198.45 Lakhs is down byaround 6% against previous year cost of Rs 211.00 Lakhs. Annual consolidated depreciation& amortisation charge has come down to Rs 3690.60 Lakhs against Rs 3990.29 Lakhs ofprevious year.

Other Operating Income & Other Income

The consolidated other operating income represents export incentivesincome from foreign operations & others. The export incentives for the current year atRs 1212.86 Lakhs are up by 11% against preceding year incentives at Rs 1093.59 Lakhs.Others - income from foreign operations at Rs 133.57 Lakhs are down by 4% during thecurrent year as against Rs 138.81 Lakhs in the previous year. Consolidated other incomerepresenting currency fluctuations and interest income at Rs 948.35 Lakhs is up fromprevious year of Rs 367.18 Lakhs.

Profit after Tax

The consolidated Profit before interest depreciation and tax is higherat Rs 7799.81 Lakhs as against Rs 7118.96 Lakhs in the previous year. Net profit aftertax but before share of profit from non-controlling interest is at Rs 3357.89 Lakhsagainst Rs 2884.04 Lakhs in last financial year. The consolidated net profit exclusiveof minority share at Rs 3357.92 Lakhs is up by 16.40% over previous years' profit.Total Comprehensive Income for the year is Rs 3096.83 Lakhs vis-a-vis Rs 2715.12 Lakhs ofprevious year a growth of 14.06% over preceding year.

On standalone basis the Net Profits after tax for the year are at Rs3233.31 Lakhs as against Rs 2861.36 Lakhs during previous financial year a growth of13%. Total Comprehensive Income for the year is at Rs 2979.03 Lakhs vis-a-vis Rs 2689.54Lakhs of the preceding year a growth of 10.76%.

Division wise Business Performance:

Active Pharmaceutical Ingredients (API)

API business during the current year has recorded revenue of Rs47394.72 Lakhs against Rs 41304.70 Lakhs of last year a growth of 15%. The exportbusiness forming 72% of API business has recorded a growth of 10% during the currentfinancial year. In most of the products the company has been able to maintain betterprice realisation and the volume growth as well. All the top selling products namelyLoratadine Montelukast Atorvastatin and Rosuvastatin have recorded excellent growth intheir annual revenues in the range of 15-24%.

The Finished API's with current year revenues of Rs 41439.17 Lakhs hasrecorded a growth of 14% during the year. Intermediates with their annual sales revenuesof Rs 3150.10 Lakhs are up by 24%.The sales revenues for new molecules have increased by23% at Rs 2806.18 Lakhs.

Loratadine having registered annual sales revenue of Rs 16558.36 Lakhscontinues to be leading revenue generator for the API business closely followed byMontelukast with sales revenue of Rs 14246.52 Lakhs recorded during the current year.Atorvastatin with its annual revenues of Rs 8341.06 Lakhs registered a growth of 16%during the current year. Rosuvastatin sales revenues at Rs 3775.23 Lakhs have taken aquantum jump of 24% during the year. The current year Fexofenadine revenue at Rs 1680.33Lakhs is down by around 15% against previous year revenues of Rs 1680.33 Lakhs.

API business has recorded a compounded annual growth rate (CAGR) of13.50% during last 5 years.

The Ministry of Environment Forest and Climate Change videnotification dated 27* March 2020 inter-alia expedite the prior environment clearanceso as to ensure drug availability or production to reduce the impact of COVID - 19 therebyconsidered necessary that all projects or activities in respect of bulk drugs andintermediates manufacturing to address ailments such as COVID-19 and those with similarsymptoms are categorized as Rs B2' for a period up to the 30th September 2020 as aninterim measure. The company had applied for and received in-principle approval fromDirectorate of Industries(DOI) Govt. of Himachal Pradesh on 24th July 2020.

On 31st August 2020 the Board of Directors of the companyapproved the expansion of APIs (bulk drugs) i.e. increase in manufacturing capacity by2000 MT per annum in addition to existing capacity of 3000 MT. The expanded capacity islikely to commence commercial production over the next 3 years.

Home Diagnostics - Device Business

The Diagnostics Devices business of the company has been growingsteadily over last many years and has recorded a compounded annual growth rate (CAGR) ofaround 28% during last 5 years. Blood Gluco Monitoring business with current year revenuesof Rs 11954.30 Lakhs has registered a CAGR of 38% during last 5 years. Gluco monitorsinstallations during the current year have been 26% more than the previous year and havecross 3.3 million. The glucose testing strips have registered a staggering growth of 30%during the current year and over 425 million glucose testing strips have been sold tilldate.

Blood Pressure Monitors with current year Sales revenues of Rs 2906.01Lakhs has posted decent growth of 10% over the previous year. It has recorded a CAGR of32% during last 5 years.

Nebulisers with current year sales revenue of Rs 1256.13 Lakhsrecorded a robust growth of around 44% in current year whereas current year sales revenuefor other product category is at of Rs 718.35 Lakhs against Rs 1160.67 lakhs in thepreceding year.

In line with its commitment of delivering good health at home ataffordable prices the company has also started in house manufacturing of Stethoscopealong with Blood Glucose Monitors and strips. The company has become selfreliant in theproduction of glucometers and strips. It has manufactured around 1 million Blood GlucoseMonitors and around 125 million Gluco strips in the current year. This makes Morepen oneof the largest Manufacturer of Blood Glucose Monitors in India and the SAARC region. Thecompany has started adopting state of the art robotic technology in its production processof medical devices to improve quality and efficiency. The company has also startedproduction of Thermometers and Pulse Oximeter and also plans to start production ofNebulizers in the near future. Home Diagnostics business has made remarkable growth everyyear and is fully geared up to achieve many more milestones in the coming years.

The company continue to invest in Glucometers placements in the marketin the current year to expand the customer base. The investment has paid off well inexpanding its customer base for the glucose strips and is also expected to continue in thecoming years.

Finished Formulations

The current year sales revenue for the Finished Dosages at Rs 13756.36Lakhs is down by 10% over previous year revenues of Rs 15317.43 Lakhs due to slow pick upin contract manufacturing and generics business of the company though the brandedformulation business continued to show uptrend over the years. Some of sales were lost onaccount of restriction imposed due to COVID- 19. The Branded Prescription (Rx) productswith annual sales revenues of Rs 4063.62 Lakhs have recorded handsome revenue growth of19% during the period under review. Under the Branded Prescription (Rx) product categorythe top three therapeutic categories namely Antibiotics Gastroenteritis and Vitaminscontributed Rs 3110.32 Lakhs to branded formulation business against Rs 2588.83 Lakhsadded in previous year.


For the year under review the Directors do not recommend any dividenddue to absence of distributable surplus.


Standalone net profit after tax of Rs 3233.31 Lakhs is carried forwardto the Retained Earning. During the year under review no amount was transferred to theGeneral Reserve.


Your Company has not accepted any deposits from the public during theyear under review within the meaning of Section 73 of the Companies Act 2013 ('the Act')read with the Companies (Acceptance of Deposits) Rules 2014 and no amount of principalor interest on deposits from the public was outstanding as on the date of Balance Sheet.

During the financial year ended 31st March 2010 thecompany had allotted 92490413 Equity Shares to the fixed deposit holders in settlementof their fixed deposit dues pursuant to the Scheme of Arrangement & Compromise underSection 391 of the Companies Act 1956 approved by the Hon'ble High Court of HimachalPradesh Shimla vide its order dated 4th August 2009.

The Central Government filed an appeal against the aforesaid order ofthe single judge before Division Bench of Himachal Pradesh High Court at Shimla whichvide its order dated 14.09.2010 allowed the appeal inter-alia set aside the order passedby the single judge dated 04.08.2009 and remanded the matter back to the single judge fordeciding the petition afresh.

The company filed a civil appeal in the Hon'ble Supreme Court of Indiaagainst the order of the Hon'ble High Court dated 14.09.2010. The Hon'ble Supreme Courtdisposed of the aforesaid appeal on 14.01.2011 and remitted the matter to the single judgefor adjudication and requested the single judge to decide the matters within two months.

In the meantime pursuant to Rule 3 of the Companies (Transfer ofPending Proceedings) Rules 2016 the matter was transferred from Hon'ble High Court ofHimachal Pradesh to the National Company Law Tribunal ('NCLT') Chandigarh.

After hearing the matter the NCLT Chandigarh vide its judgment dated12.03.2018 ordered the cancellation of Equity Shares allotted to the fixed deposit (FD)holders (except to those FD holders who have since traded/ transferred their shares) andpay the outstanding fixed deposit dues to such FD holders.

An appeal filed by the company before Hon'ble National Company LawAppellate Tribunal (NCLAT) New Delhi against the aforesaid NCLT order was set asidewhich vide its order dated 23.07.2019 upheld the impugned NCLT order dated 12 thMarch 2018.

In compliance of the Hon'ble NCLT Chandigarh order dated 12.03.2018the company informed all the eligible shareholders (erstwhile FD holders) holding theEquity Shares as originally allotted to them under the 391 Scheme for surrendering theirshares for the cancellation and payment of fixed deposit dues as per the aforesaid NCLTorder.

In response to the individual notice sent to each eligible fixeddeposit holder advertisements placed in the newspapers and notice being placed on thewebsite of the company for tendering of their equity shares with the company for thecancellation and payment of FD dues in lieu thereof.

Out of 31109 fixed deposit holders holding 38565081 Equity Shares228 fixed deposit holders holding 266413 Equity Shares approached the company for thecancellation of equity shares and payment of FD dues in lieu thereof.

After verifying the documents submitted by these FD holders thecompany paid all these FD holders their fixed deposit dues and has approached the stockexchanges and depositaries for the cancellation of these shares against which paymentshas been done till 31st March 2020.

Though the Hon'ble Tribunal had granted three months' time to completeaforesaid process however the Board of Directors ('the Board') of the company taking alenient view has granted a period over ten months for the completion of the process ofcancellation of equity shares and refund of FD dues.

Additionally keeping in view of interest of those FD holders who areeligible for cancellation of equity shares issued and refund of their FD dues along-withinterest due thereon and has not yet surrendered their shares for cancellation the Boardof Directors of the Company in order to conclude the process by 30.09.2020 has decidedto give another opportunity to those eligible FD holders by sending individual letters toFD holders by registered post/ speed post and send letters on their registered e-mailaddress. In this regard a general notice was also published in two newspapers i.e. invernacular and English language on 27.07.2020.


The management team is working diligently for the profitable growth ofthe company so that all its stakeholders are suitably rewarded. The efforts are on tojudiciously and consistently focus on all the business streams by each business lookedafter by different business heads.

Post debt servicing the internal accruals are increasingly being putto fire the growth engines for all the business segments.

However the preference shares are pending for redemption due tounavailability of distributable profits in terms of

Section 55(2) (a) read-with Section 123 of Companies Act 2013 and itsrules made thereunder. The company is exploring suitable options to deal with the matterof redemption of outstanding preference shares including issuance of equity shares subjectto necessary statutory approvals including approvals of preference shareholders. Themajority of preference shareholders comprising of banks and financial institutions whowere issued the preference shares in satisfaction of their outstanding debt underCorporate Debt Restructuring ('CDR') Scheme are agreeable to the company's aforesaidproposal.


During the year under review there was no change in the paid-up equityshare capital of the Company which as on 31st March 2020 was Rs 8995.86Lakhs.

The Equity Shares issued by the Company are listed at following StockExchanges as on 31st March 2020:

1. National Stock Exchange of India Limited (NSE)

2. BSE Limited (BSE)

Annual listing fee for the financial year 2020-21 has been paid to boththe Stock Exchanges. The Equity Shares continue to be listed on both NSE and BSE.

The provisions of the Act have placed statutory restriction on thecompany having accumulated losses from payment of dividends on Preference Shares. As aresult dividends on Preference Shares have not been paid for more than two years therebymaking the holders of these shares entitled to vote on all resolutions placed before thecompany. The proportion of voting rights of Equity Shareholders & PreferenceShareholders shall be in proportion to their paid up capital in the total share capital ofthe company.


The Company has three subsidiaries as on 31st March 2020namely:

1. Dr. Morepen Limited

2. Total Care Ltd. (subsidiary of Dr. Morepen Limited)

3. Morepen Inc. USA

Dr. Morepen Limited

The Over the Counter (OTC) business of the company promoted under brandRs Dr. Morepen' and carried under wholly owned subsidiary viz. Dr. Morepen Limited isgetting traction year after year. It has recorded a CAGR of 17% during last 5 years. Onstandalone basis the company has recorded a topline of Rs 6462.64 Lakhs as against Rs5438.08 Lakhs recorded in the preceding year growth of 19%. The OTC business hasrecorded amazing growth despite loss of sales of regular products in the month of March2020 due to lockdown imposed because of COVID-19.

Many new products were launched in the nutritional and preventivehealthcare segment during the year i.e. Active Smile (Mouthwash) Dr. Morepen Daily(Health Supplement) MTP Kit (Contraception Pills) VCalci (Calcium Tab) Clean & Pure(Intimate Hygiene Wash) Liv Healthy (Liver Tonic) Head-X (Relief from Headache) Dr.Morepen Aid (Adhesive First Aid Dressing) Dr. Morepen Buds (Ear cleaning cotton bud)Cold-EX (Relief from Cold & Cough) Paachan-Arishta (Ayurvedic Digestive Tonic) andAdult Nasal Spray.

In its fight against COVID-19 new product categories were introducedwhich included - range of hand sanitisers hand rubs hand wash anti-bacterial spraysdisinfectant solutions masks gloves Vitamin-C gummies for kids to fight COVID-19 atground level .

The sale of newly added COVID-19 products compensated loss of sale ofregular products during the month March 2020. The company's primary brands like Burnol(Burn Cream) Lemolate (Cough & Cold) and Fiber-X (Sat Isabgol) with combined salesrevenues of Rs 1703.65 Lakhs registered a drop of 14% in its annual revenues. Other smalldistribution and reach based brands with sales revenue of Rs 1349.76 Lakhs have recordedmassive growth of 144% during the year.

The grooming business launched in July 2015 carried on under thebrand name Rs GUBB' recorded sales revenue of Rs 1482.41 Lakhs against previous revenuesof Rs 939.82 Lakhs registering a magnificent growth of 58% over the preceding year. Thecompany is confident of the growth potential for this business in the coming years keepingin view the prominence being gained over its 5 years of its launch.

The company is expecting of many fold growth in its revenue in thecoming years as it invests more in this business with the continuous focus on new productadditions entering new markets and increasing product reach and availability.

Total Care Limited

The Company is dealing in OTC & Health Care products. The scale ofCompany's operations continues to be minimal since past few years with no operatingrevenue recorded during the year.

Morepen Inc.

Morepen Inc. is the marketing and distribution interface of the Companyin USA for its API business various OTC & other products. During the year underreview the company has recorded revenue of Rs 133.57 Lakhs ($177155) as against Rs105.32 Lakhs ($153409) of previous year a growth of 21%. The company during the yearhas recorded a profit of Rs 74.46 Lakhs against profit of Rs 18.97 Lakhs recorded in thepreceding year.


The consolidated financial statements for the year ended 31stMarch 2020 has been prepared in accordance with Indian Accounting Standards (Ind AS)notified under the Companies (Indian Accounting Standards) Rules 2015 together with thecomparative period data as at and for the previous year ended 31st March 2020.

In accordance with the Companies Act 2013 and Indian AccountingStandards (Ind AS) 110 on Rs Consolidated Financial Statements' read with Ind AS 112 on RsDisclosure

Interest in other entities' the Audited Consolidated FinancialStatements is provided in the Annual Report.

In accordance with the provisions of Section 129(3) of the Act readwith the Companies (Accounts) Rules 2014 a report on the performance and financialposition of each of the subsidiaries is attached as ANNEXURE Rs A' to this Report in theprescribed form AOC-1.

DIRECTORS & KEY MANAGERIAL PERSONNEL Changes in Directors & KeyManagerial Personnel

The members at 34th Annual General Meeting (AGM) of theCompany held on 13th September 2019 approved the:

I. Re-appointment of Mrs. Anju Suri who was liable to retire byrotation pursuant to the provisions of Section 152 and other applicable provisions of theAct read with Companies (Appointment and Qualification of Directors) Rules 2014 asDirector of the Company.

II. Appointment of Mr. Sanjay Suri as a Whole Time Director of theCompany liable to retire by rotation for a period of three (3) years commencing from 13thAugust 2019 to 12th August 2022.

III. Appointment of Mr. Praveen Kumar Dutt as an Independent Directornot liable to retire by rotation for a term of 5 years commencing from 13 thAugust 2019 to 12th August 2024.

IV. Re-appointment of Mr. Arun Kumar Sinha as a Whole Time Director(i.e. Executive Director) for a term of 3 years commencing from 1st April2019 to 31st March 2022.

V. Re-appointment of Mr. Bhupender Raj Wadhwa Mr. Sukhcharan Singh andMr. Manoj Joshi the Non-Executive Independent Directors of the Company for a second termof 5 years commencing from 13th September 2019 to 12 th September 2024.

Dr. Arun Kumar Sinha Wholetime Director of the Company who is liableto retire by rotation pursuant to the provisions of Section 152 and other applicableprovisions of the Act read with Companies (Appointment and Qualification of Directors)Rules 2014 as amended or re-enacted from time to time has given his consent and beingeligible offered himself for re-appointment in the 35th Annual GeneralMeeting.

Pursuant to proviso of Regulation 17(1)(a) of SEBI (LODR) Regulations2015 as amended hereinafter "Listing Regulations" the company falling underthe category of top 1000 listed entities on the basis of market capitalisation as on 31stMarch 2020 the Board of Directors has appointed Dr. Savita (DIN: 08764773) as AdditionalDirector categorised as Independent Woman Director with effect from 22n June2020 and subject to approval of members of the company for a term of 5 consecutive yearstill 21st June 2025. In this regard Dr. Savita (DIN: 08764773) has given herconsent to act as an Independent Director of the Company pursuant to Section 149 152 ofCompanies Act 2013 read with Rule 8 of Companies (Appointment and Qualification ofDirectors) Rules 2014 for a term of 5 (five) consecutive years commencing from 22ndJune 2020 to 21st June 2025. Your directors recommended her appointment asIndependent Director on the Board in accordance with the provisions of Section 149 ofCompanies Act 2013 read with Companies (Appointment and Qualification of Directors)Rules 2014 as amended from time to time in the 35 th Annual General Meeting.

Declaration by Independent Director(s)

Pursuant to the provisions of Section 149 of the Act the independentdirectors have submitted declarations that each of them meet the criteria of independenceas provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation16(1)(b) of the Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015. There has been no change in the circumstances affectingtheir status as independent directors of the Company.

Evaluation of Board Committees and Directors

Pursuant to the provisions of the Act and Regulation 17 of ListingRegulations the Board has carried out its own performance evaluation that of theCommittees and the individual performance of its Directors. The manner in which theevaluation has been carried out has been provided in the Rs Corporate Governance Report'.

Familiarization Programme for Independent Directors

The details pertaining to Familiarization Programme for IndependentDirectors has been incorporated in Rs Corporate Governance Report'.

Meetings of Board of Directors

The Board of Directors met Seven (7) times during the year underreview to transact the business of the Company the details of which are given in RsCorporate Governance Report'.

Independent Directors Meeting

During the year under review a separate meeting of the IndependentDirectors of the Company was held on 14th February 2020 without the presenceof NonIndependent Directors and members of the Management. The Independent Directorsreviewed the performance of Non-Independent Directors and the Board as a wholeperformance of chairperson of the company and assessed the quality quantity and timelinesof flow of information between the company management and the Board. All the IndependentDirectors of the company were present in the meeting.


As required under Section 134(3)(c) of the Act your Directors to thebest of their knowledge and belief and according to the information and explanationsobtained by them confirm that:

a) in the preparation of annual accounts the applicable accountingstandards have been followed along with proper explanation relating to materialdepartures wherever applicable; within statutory prescribed timeline.

b) your Directors have selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit and loss of the company for that period;

c) your Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the company and for prevention and detecting of fraud andother irregularities;

d) the annual accounts have been prepared on a going concern basis;

e) internal financial controls to be followed by the company have beenlaid down and such internal financial controls are adequate and were operatingeffectively;

f) proper systems to ensure compliance with the provisions of allapplicable laws have been devised and that such systems were adequate and operatingeffectively.


Disclosure pursuant to Section 197 of the Act read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014:

a) Ratio of the remuneration of each Director to the medianremuneration of the employee's (MRE) and other details pursuant to Section 197 (12) of theAct read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is annexed and forms part of this report as ANNEXURE Rs B'.

b) The Statement containing the particulars of employees as requiredunder section 197(12) of the Companies Act 2013 read with Rule 5(2) and other applicableRules (if any) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is provided in a separate annexure forming part of this report. Further thereport and the accounts are being sent to the members excluding the aforesaid annexure. Interms of Section 136 of the Companies Act 2013 the said annexure is open for inspectionat the Registered and Corporate office of the company during the working hours. Any memberinterested in obtaining a copy of the same may write to the company and obtain the copywithin statutory prescribed timeline.

c) No Director of the Company including its Managing Director or WholeTime Director is in receipt of any commission from the company or its subsidiary company.


Your Company has an Audit Committee in compliance of the provisions ofSection 177 of the Act and Regulation 18 of Listing Regulations. The complete details withrespect to Audit Committee as required to be given under the aforesaid provisions isgiven in the Rs Corporate Governance Report'.


The Company has established a Whistle Blower Policy/Vigil Mechanismthrough which its Directors Employees and Stakeholders can report their genuine concernabout unethical behaviours actual or suspected fraud or violation of the Company's Codeof Conduct or Ethics Policy. The said policy provides for adequate safeguard againstvictimization and also direct access to the higher level of superiors including Chairmanof the Audit Committee in exceptional cases. The same is reviewed by the Audit Committeefrom time to time.


The Company has in place a mechanism to inform the Board about the riskassessment and minimisation procedures and periodical review to ensure that managementcontrols risk through means of a properly defined framework.

The Company has formulated and adopted Risk Management Policy toprescribe risk assessment management reporting and disclosure requirements of theCompany.


Your Company has a Nomination and Remuneration Committee in compliancewith the provisions of Section 178 the Act and Regulation 18 of Listing Regulations. Thecomplete details with respect to the salient features of Nomination and RemunerationCommittee as required to be given under the aforesaid provisions is given in the RsCorporate Governance Report'.

The Company has adopted a Nomination and Remuneration Policy forDirectors Key Managerial Personnel (KMP) and other employees of the company as formulatedby Nomination and Remuneration Committee pursuant to provisions of Section 178 of the Actand Para A of Part D of Schedule II of Listing Regulations which acts as a guideline fordetermining inter-alia qualifications positive attributes and independence of aDirector matters relating to the remuneration appointment removal and evaluation ofperformance of the Directors Key Managerial Personnel Senior Management and otheremployees.

The company has made the requisite changes in accordance of theCompanies Act 2013 as amended and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 as amended. The detailed policy formulated by Nominationand Remuneration Committee can be accessed at


M/s. Satinder Goyal & Co. (Chartered Accountants FRN: 027334N) theStatutory Auditors of the Company were appointed by the shareholders in the AGM held on22n September 2017 pursuant to provisions of Section 139 141 142 and otherapplicable provisions if any of the Act read with the Companies (Audit and Auditors)Rules 2014 (including any statutory modification(s) or reenactment thereof for the timebeing in force) and subject to all the applicable laws and regulations for a term of five(5) consecutive years to hold office from the conclusion of the 32n AnnualGeneral Meeting until the conclusion of 37* Annual General Meeting to be held in the year2022 subject to ratification of appointment by the members at every Annual GeneralMeeting.

The requirement to place the matter relating to appointment of auditorsfor ratification by Members at every AGM has been done away by the Companies (Amendment)Act 2017 with effect from 7 th May 2018. Accordingly no resolution is beingproposed for ratification of appointment of Statutory Auditors at the ensuing AnnualGeneral Meeting.


The Auditors vide Para (vii) (a) of the Annexure -A to the Auditors'Report have commented on delay in deposit of Income Tax (FBT) dues. The said dues eventhough are being adjusted by the income tax department against credit of TDS available tothe company; it shall take necessary steps to liquidate the entire dues.

Further vide Para (viii) of the aforesaid annexure the auditors hasobserved that the company has not redeemed the Preference Shares which have been due forredemption since past many years. The grounds for not redeeming the said preference shareshave been explained in Note No. 18 to the Financial Statements for the year ended 31stMarch 2020.


Pursuant to the provisions of Section 204 of the Act read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 Mr. PraveenDua Company Secretary Proprietor of M/s. PD and Associates Company Secretaries wasappointed by Board of Directors of the Company as Secretarial Auditors of the Company forthe financial year 2019-20. The Secretarial Audit Report is annexed and forms part of thisreport as ANNEXURE Rs C'.


The explanation to the observation of the Secretarial Auditor in itsreport are as under:

1. The company has filed an appeal before Hon'ble Securities AppellateTribunal (SAT) which is pending for adjudication.

2. In respect of cancellation of shares the Company has filedrequisite application with Stock Exchanges and the Registrar of Companies.

3. In respect of compliance of directions received from CentralGovernment for appointment of 2 nominee directors necessary explanation is given under RsLegal & Corporate matter' section of this report.

4. In respect of redemption of Preference Shares due for redemptionthe grounds for not redeeming the said Shares have been explained in Note No. 18 to theFinancial Statements for the year ended 31st March 2020.


The Company has devised proper systems to ensure compliance with theprovisions of all applicable Secretarial Standards issued by the Institute of CompanySecretaries of India and that such systems are adequate and operating effectively.


Pursuant to Section 148 of the Act read with the Companies (CostRecords and Audit) Rules 2014 the Cost Accounting Records maintained by the Company inrespect of its Bulk Drugs and Formulations activity are required to be audited by CostAuditors. The Board of Directors of the Company has on the recommendation of the AuditCommittee appointed M/s. Vijender Sharma & Co. Cost Accountants as the Cost Auditorof the Company for the financial year ended 31st March 2020 at a remunerationof Rs 2.00 Lakhs subject to the ratification of their remuneration by the shareholders inthe ensuing Annual General Meeting.


The company has an Internal Control System commensurate with the sizescale and complexity of its operations. The internal financial controls are adequate andare operating effectively so as to ensure orderly and efficient conduct of businessoperations. The company's internal financial control procedures ensure that company'sfinancial statements are reliable and prepared in accordance with the applicable laws.

To maintain its objectivity and independence the Internal Audit Teamreports to the Chairman of the Audit Committee of the Board. Based on the internal auditreport process owners undertake corrective action in their respective areas and therebystrengthening the controls. Significant audit observations and corrective actions thereonare presented to the Audit Committee of the Board. Team engaged in internal audit carriesout extensive audits throughout the year across all functional areas and submits itsreports from time to time to the Audit Committee of the Board of Directors.


The Corporate Social Responsibility (CSR) Committee of the Company wasconstituted by the Board on 10' May 2016 to monitor implementation of CSR activities bythe Company in accordance with Section 135 read with Schedule VII of the Act. Based on therecommendation of the CSR Committee your Board has adopted a CSR Policy indicating theactivities to be undertaken by the Company as specified in Schedule VII.

The Report on CSR Activities with details of the composition of CSRCommittee CSR Policy CSR initiatives and activities during the year is annexed and formspart of this report as ANNEXURE Rs D'.


The Company has in place a policy on Prevention Prohibition andRedressal of Sexual Harassment of Women at Workplace pursuant to the requirements of TheSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.An Internal Complaints Committee (ICC) has been set up to redress complaints receivedregarding sexual harassment. The policy has set guidelines on the redressal and enquiryprocess that is to be followed by complainants and the ICC while dealing with issuesrelated to sexual harassment at the work place. All women employees whether permanenttemporary contractual and trainees are covered under this policy. The Company has notreceived any complaint during the year.


In the matter of Section 408 r/w Section 397/398 of the erstwhileCompanies Act 1956 the Company has received a direction from Central Government i.e.Ministry of Corporate Affairs ('MCA') on 30.07.2019 for the appointment of two nomineedirectors on the Board of Directors of the Company pursuant to the Order passed by theCompany Law Board dated 01.07.2005 read-with order passed by Hon'ble High Court ofHimachal Pradesh at Shimla dated 16.04.2007 and Order of Hon'ble Supreme Court of Indiadated 09.07.2019.

However liberty was granted by Hon'ble Supreme Court while passing theOrder dated 09.07.2019 to place the subsequent developments that have taken place postpassing of Order by Hon'ble CLB before the appropriate forum. In terms of the liberty sogranted the Company has filed an application before the Hon'ble National Company LawTribunal ('NCLT') Chandigarh placing the subsequent developments in the Company with aprayer that the appointment of two Government nominee directors is not required in lightof these developments. The Company also sought an ex-parte ad-interim stay on theappointment of government directors. During the year the Central Government has alsofiled a contempt petition before Hon'ble NCLT Chandigarh for non-compliance of CLB Orderdated 1.7.2005. The matter is pending adjudication.

The Company is defending various prosecutions filed by the Registrar ofCompanies/Central Government against the Company and its directors before the Court undererstwhile Companies Act 1956 and other laws and the matter is sub judice.


The detailed extract of Annual Return in Form MGT-9 as required underSection 134(3)(a) of the Act is annexed and forms part of this report as ANNEXURE Rs E'.The same is available at the website of the Company at


Except from minor liabilities which may arise in respect of payment toFD holders as per order of NCLT dated 12th March 2018 there have been nomaterial changes and commitments affecting the financial position of the company whichhave occurred between the end of the financial year of the Company and the date of thisreport.


The information relating to Conservation of Energy TechnologyAbsorption and Foreign Exchange Earnings and outgo as required under Section 134(3)(m) ofthe Act read with the Companies (Accounts) Rules 2014 is annexed and forms part of thisreport as ANNEXURE Rs F'.


Details of Loans Guarantees and Investments covered under theprovisions of Section 186 of the Act are given in the notes to the Financial Statements.


All the related party transactions that were entered into during thefinancial year were on arm's length basis and in the ordinary course of business. Duringthe year under review there were no materially significant related party transactionsincluding arm's length transactions; hence disclosure in Form AOC - 2 is not required.

The complete details with respect to contracts or arrangements withrelated parties as required to be given under the Act and Part C of Schedule V of ListingRegulations is given in the Rs Corporate Governance Report'.


A detailed review of the operations and performance of the Company isset out in the Management Discussion and Analysis Report pursuant to Part B of Schedule Vof Listing Regulations which forms part of the Annual Report for the year under review asANNEXURE Rs G'.


Business Responsibility Report In compliance with Regulation 34(2)(f)of the Listing Regulations the Business Responsibility Report forms part of this AnnualReport for the year under review as ANNEXURE Rs H'.


A detailed review of Human Resources of the Company is set out in theManagement Discussion and Analysis Report.


A Report on Corporate Governance along with a certificate from thePracticing Company Secretary regarding compliance with conditions of Corporate Governanceas stipulated in Part E of Schedule V of Listing Regulations forms part of this report andis annexed as ANNEXURE Rs I'.


The directors of the company place on record their gratitude to thecentral government state governments drug control authorities company's bankers GMPconsultants auditors medical & legal professionals and business partners for thesupport co-operation and encouragement they have extended to the company. Your directorsalso wish to place on record their sincere thanks and appreciation for the continuingbacking and unwavering efforts of investors vendors dealers business associates andemployees in helping the company to march on growth path year after year.

Your directors look forward to your continued support in theirefforts to grow together and promote health through delivery of quality products ataffordable price.

For and on behalf of Board of Directors
Sushil Suri
Place: New Delhi (Chairman & Managing Director)
Date: 31st August 2020 DIN:00012028