The Board is pleased to present the Thirty-Sixth Annual Report on the business andoperations of the Company together with the Audited Financial Statements for the yearended 31st March 2019.
Your company is a vertically integrated pharmaceutical company having presence inmultiple speciality therapeutic segments. Over the years the Company has developed aninnate ability to deliver molecules which are complex and hard to manufacture. TheCompany has constantly innovated and manufactured speciality medicines and nichepharmaceutical products. The Company has its corporate headquarters at Hyderabad.
A summary of the Company's financial results for the Financial Year 2018-19 is asunder:
| || || || ||(Rs. in Million) |
| ||Standalone || ||Consolidated || |
| ||Year ended 31st March 2019 ||Year ended 31st March 2018 ||Year ended 31st March 2019 ||Year ended 31st March 2018 |
|Net Revenue /Income ||21161 ||21479 ||22247 ||22424 |
|Gross profit before interest and depreciation ||9463 ||9678 ||9250 ||9688 |
|Finance Cost ||188 ||147 ||193 ||154 |
|Profit before depreciation and amortisation - (Cash Profit) ||9275 ||9531 ||9057 ||9534 |
|Depreciation and Amortisation ||801 ||655 ||810 ||662 |
|PBT before exceptional items ||8474 ||8876 ||8247 ||8872 |
|Exceptional items ||- ||- ||- ||- |
|Profit before Tax (PBT) ||8474 ||8876 ||8247 ||8872 |
|Provision for Tax Current ||1863 ||2173 ||1883 ||2199 |
|Provision for Tax Deferred ||(60) ||(279) ||(60) ||(279) |
|Profit after Tax ||6671 ||6982 ||6424 ||6952 |
|Other comprehensive income (OCI) ||(91) ||(47) ||(76) ||(52) |
|Total Comprehensive income for the period ||6580 ||6935 ||6348 ||6900 |
The Company declared three interim dividends for the FY 2018-2019 the details of whichare as follows:
|S. No. ||Date of Board Meeting ||Date of payment ||Interim Dividend Declared per equity share of face valueRs. 2/- each in ` |
|1. ||8th August 2018 ||20th August 2018 ||1.50 |
|2. ||12th February 2019 ||21th February 2019 ||3.50 |
|3. ||27th May 2019 ||On or before 14th June 2019 ||1.25 |
| ||Total || ||6.25 |
The dividend pay-out for the 1st and 2nd Interim dividend amounted toRs. 919million and dividend distribution tax amounted to rs. 189 million. Thus the 1stand 2nd Interim dividend resulted in total pay-out of 16.61% of the standalone profitafter tax of the Company for the year under review.
The two Interim Dividends have been paid to all eligible shareholders and the thirdinterim dividend is declared on 27th May 2019 which is due for payment on orbefore 14th June 2019. The pay-out proposed for 3rd interim dividendamounts toRs. 227 million and dividend distribution tax ofRs. 47 million. The aggregate ofthree interim dividends amounts to rs. 1382 million including dividend distribution taxofRs. 236 million and it results in a pay-out of 20.72% of Standalone Profit after tax ofthe company for F.Y. 2018-19.
Accordingly your Directors recommend that the above three interim dividends be treatedas the final dividend the Company for the Financial Year 2018-19. The DividendDistribution Policy of the company is annexed to this report as "Annexure VIII"and is also available on the Company's website www.natcopharma.co.in.
Transfer to Reserves
The Board has decided to retain the entire amount of profits in the profit and lossaccount for the year under review.
During the year under review 268735 equity shares were issued and allotted underEmployee Stock Option Schemes (ESOP- NATSOP 2015 NATSOP 2016 & NATSOP 2017) and atotal of 2015656 shares were bought back by the Company through open market route underthe SEBI (Buy-back of Securities) Regulations 2018 out of which 1877640 shares wereextinguished before 31st March 2019. Accordingly the issued and subscribedshare capital of the company as on 31st March 2019 stood atRs. 365million divided into 182746479 equity shares ofRs. 2/- each as againstRs. 369 milliondivided into 184493400 equity shares ofRs. 2/- each as on 31st March 2018.
During the year under review the company announced buyback of shares commencing from19th November 2018 for a sum ofRs. 250 crores through open market for a price notexceeding rs. 1000 per share. During the year ended 31st March 2019 theCompany bought back 2015656 equity shares ofRs. 2 each for an aggregate purchase valueof rs. 1329 million excluding transaction costs. Out of the total shares bought back1877640 equity shares ofRs. 2 each were extinguished before 31st March 2019and the balance 138016 equity shares were extinguished in two tranches on 5thApril 2019 and 22nd April 2019.
During FY 2018-19 the Company did not accept any fixed deposit within the meaning ofSections 73 and 74 of the Companies Act 2013 read together with the Companies (Acceptanceof Deposits) Rules 2014 and therefore no amount of principal or interest was outstandingas on the date of balance sheet.
Change in the nature of Business if any
During the year the company has taken approval from shareholders to venture into agrochemical business.
The Consolidated Financial Statements of the Company are prepared in accordance withrelevant Indian Accounting Standards (Ind AS) issued by the Institute of Chartered
Accountants of India and forms an integral part of this Report.
During the period under review NATCO Life sciences Philippines Inc. was added as asubsidiary of the company
Pursuant to Section 129 (3) of the Companies Act 2013 read with Rule 5 of theCompanies (Accounts) Rules 2014 a statement containing the salient features of thefinancial statements of our Subsidiaries is given in Form AOC-1 which is attached as"Annexure I" to the Board's Report.
Particulars of Loans Guarantees and Investments
The Company provides investments loans and guarantees to its subsidiaries for itsbusiness purpose. Details of investments loans and guarantees covered under Section 186of the Companies Act 2013 form part of the notes to the financial statements provided inthis annual report.
Corporate Governance and additional Share holders Information
Pursuant to the SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015("Listing Regulations") a detailed report on the corporate governance systemsand practices of the Company is given under Corporate Governance Report which is part ofthis Annual Report. Similarly other detailed information for shareholders is provided inthe chapter Additional Shareholders' Information.
A certificate from CS P Renuka Company Secretary in Practice (C.P.No. 3460) on thecompliance with the conditions of corporate governance is part of the Corporate GovernanceReport. A certificate from her that none of the Directors on the Board of the company aredisqualified from being appointed or continuing as a Directors of company by the Ministryof Corporate Affairs or any statutory authority is attached to this Annual Report.
Management Discussion and Analysis
A detailed report on the Management Discussion and Analysis is provided as a separatechapter in the annual report.
Board of Directors
In accordance with the provisions of the Companies Act 2013 Mr Rajeev Nannapaneni(DIN: 00183872) is liable to retire by rotation and being eligible offers himself forreappointment at the ensuing Annual General Meeting of the Company.
Board in its meeting held on 23rd May 2018 appointed Mr. Sridhar Sankararaman(DIN: 06794418) as an additional director and his appointment as a Non-Executive and
Non-Independent Director of the Company who is liable to retire by rotation wasapproved by the shareholders in their meeting held on 15th September 2018. Mr.Vivek Chhachhi (DIN: 00496620) resigned as a Non-executive and Non-independent directorw.e.f from 23rd May 2018 due to his professional obligations and other pre-occupations.
As per provisions of the Companies Act 2013 and the Listing Regulations as amendedfrom time to time an evaluation of the performance of the Board was undertaken. Thecontribution and impact of individual Directors were reviewed through a peer evaluation onparameters such as level of engagement and participation in board/committee meetings flowof information independence of judgment conflicts resolution managing relationshipswithin the Board and their contribution in enhancing the Board's overall effectiveness.The feedback obtained from interventions was discussed in detail and where requiredindependent and collective action points for improvement put in place.
Appointment of Directors and Remuneration Policy
The assessment and appointment of members to the Board is based on a combination ofcriterion that includes ethics personal and professional stature domain expertisegender diversity and specific qualification required for position. The independent Boardmember is also assessed on the basis of independence criteria defined in Section 149(6) ofthe Companies Act 2013 and Regulation 16(1)(b) of the Listing Regulations
In accordance with Section 178(3) of the Companies Act 2013 and on recommendations ofNomination and Remuneration Committee the Board adopted a remuneration policy forDirectors Key Management Personnel (KMPs) and Senior Management which is available on thewebsite of the Company www.natcopharma.co.in.
Upon recommendation of the Nomination and Remuneration Committee the Board ofDirectors at their meeting held on 27th May 2019 approved the re-appointmentof the following Independent Directors for a further term of five (5) years i.e up to 41stAnnual general Meeting to be held in the Calendar year 2024 in terms of the provisions ofthe Companies Act 2013 subject to the consent of the Members of the Company at theirensuing Annual General Meeting:
1. Mr. G.S. Murthy (DIN: 00122454)
2. Mr. D.G. Prasad (DIN: 00160408)
3. Mr. T.V. Rao (DIN: 05273533)
4. Dr. Mrs. Leela Digumarti (DIN: 06980440)
Declaration by Independent Directors
All Independent Directors of the Company have submitted requisite declarationsconfirming that they continue to meet the criteria of independence as prescribed undersection 149(6) of the Companies Act 2013 and Regulation . 16(1) (b) of the SEBI ListingRegulations. The Independent Directors have also confirmed that they have complied withthe Company's Code of Conduct.
Number of Meetings of the Board and its Committees and other Committees
The Board currently has eight (8) committees namely Audit Committee StakeholdersRelationship Committee Nomination and Remuneration Committee Compensation CommitteeAllotment Committee Corporate Social Responsibility Committee Risk Management Committeeand Buy back Committee. the
Other Committees includes Share Transfer Committee Internal Complaints Committee andLand Committee.
A detailed update on the Board its composition detailed charter including terms ofreference of various Board Committees number of Board and Committee meetings held duringFY 2018-19 and attendance of the Directors is provided in the Corporate Governance Reportwhich forms part of the Annual report.
All the recommendations made by the Committees of Board including the Audit Committeewere accepted by the Board. During the year the Board constituted Buyback Committeecomprising of the Chairman and Managing Director Vice Officer Chairman and ChiefExecutive Company Secretary and the Chief Financial Officer for the a purpose of Buyback.
Business Risk Management
The Company has a risk management mechanism in place to manage uncertainties throughidentification analysis assessment implementing and monitoring to reduce the impact ofrisks to the business which is discussed in detail in the Management Discussion andAnalysis section.
Material changes and commitments affecting financial position between end of financialyear and date of report
No material changes and commitments have occurred after the close of the financial yeartill the date of this report which may affect the financial position of the Company.
Business Responsibility Report
As mandated by the Securities and Exchange Board of India (SEBI) the BusinessResponsibility Report (BRR) forms part of this Annual Report. The BRR contains a detailedreport on business responsibilities vis-a-vis the nine principles of the NationalVoluntary Guidelines on Social Environmental and Economic Responsibilities of Businessframed by the Ministry of Corporate Affairs.
Internal Financial Controls
The Company has in place adequate Internal Financial Controls commensurate with thebusiness operations of the Company which are operating effectively. Your Company hasadopted policies and procedures for ensuring the orderly and efficient conduct of itsbusiness including adherence to the Company's policies the safeguarding of its assetsprevention and detection of frauds and errors accuracy and completeness of the accountingrecords and timely preparation of reliable financial disclosure.
Reporting of Frauds
There was no instance of fraud during the year under review which required theStatutory Auditors to report to the Audit Committee and/or Board under section 143(12) ofthe Companies Act 2013 and Rules framed thereunder.
The Company's plant property equipment and stocks are adequately insured against allmajor risks. The Company also has appropriate liability insurance covers particularly forproduct liability and clinical trials. The Company has also taken Directors' and Officers'Liability Policy to provide coverage against the liabilities arising on them.
Directors Responsibility Statement
Pursuant to Section 134(3)(c) of the Companies Act 2013 in relation to financialstatements of the company for the year ended 31st March 2019 the board ofdirectors state that:-
a) The applicable accounting standards have been followed in preparation of thefinancial statements and there are no material departures from the said standards.
b) Reasonable and prudent accounting policies have been used in preparation of thefinancial statements and that they have been consistently applied and that reasonable andprudent judgements and estimates have been made in respect of items not concluded by theyear end so as to give a true and fair view of the state of affairs of the company as at31st March 2019 and of the profit for the year ended on that date. sufficient
c) Proper and care has been taken for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act 2013 for safeguarding the assets ofthe company and for preventing and detecting fraud and other irregularities.
d) The financial statements have been prepared on a going concern basis.
e) Proper internal financial controls were in place and were adequate and operatingeffectively and
f) Proper systems were devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively
Related Party Transactions
In accordance with Section 134(3)(h) of the Companies Act 2013 and Rule 8(2) of theCompanies (Accounts) Rules 2014 the particulars of contract(s) or arrangement(s) enteredinto by the Company with related parties referred to in Section 188(1) in Form AOC-2 isattached as "Annexure II" to this Board's Report.
The details of related party disclosures form part of the notes to the financialstatements provided in this Annual Report.
Vigil Mechanism/Whistle Blower Policy
The Company believes in upholding professional integrity and ethical behaviour in theconduct of its business. To uphold and promote these standards the Company has a VigilMechanism / Whistle Blower Policy which serves as a mechanism for its Directors andemployees to report genuine concerns about unethical behavior actual or suspected fraudor violation of the Code of Conduct without fear of reprisal. The policy also providesemployee(s) access to the Chairperson of the Audit Committee under certain circumstances.The details of the procedures are also available on the website of the Companywww.natcopharma.co.in.
A brief note on the Whistle Blower Policy is also provided in the Report on CorporateGovernance which forms part of this Annual Report.
Internal Complaints Committee
The Company has Internal Complaints Committees in place in all the units in line withthe Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013. A brief note on the same is provided in the Report on Corporate Governance whichforms part of this Annual Report.
The members of the Company at their Annual General Meeting held on 27thSeptember 2014 appointed M/s Walker Chandiok & Co. LLP (Firm Registration No.001076N/N500013) as the statutory auditors of the Company to act as such from theconclusion of the Annual General Meeting (AGM) held for the financial year 2013-14 tillthe conclusion of the AGM to be held for the Financial Year 2018-19. and/or Pursuant toSection 139 of the Companies Act 2013 and the rules made thereunder it is mandatory forthe Company to rotate the current statutory auditors on completion of a maximum term often (10) years permitted thereunder. Accordingly based on the recommendation of the AuditCommittee of the Company the Board of Directors of the Company have appointed M/s. B S R& Associates LLP (ICAI FRN: 116231W/W-100024) as the Statutory Auditors of the Companyto hold office a period of five (5) years i.e. from the conclusion of the ensuing AnnualGeneral Meeting till the conclusion of the 41st Annual General Meeting of the Company tobe held for the financial year 2023-2024 in the place of retiring auditors i.e. M/s.WalkerChandiok & Co. LLP (Firm Registration No.001076N/N500013) subject to the consent ofthe members of the company at the ensuing Annual General Meeting.
Pursuant to Section 204 of the Companies Act 2013 read with Rule 9 of the Companies(Appointment & Remuneration of Managerial Personnel) Rules 2014 CS No.BalachandraSunku with Certificate 12745 a practicing Company Secretary conducted the secretarialaudit of the Company for FY 2018-19. The Secretarial Audit Report in form No. MR-3 isattached as "Annexure III" to this Board's Report.
Upon recommendation of the Audit Committee the Board has appointed CS B. Kiran Kumar(CP No. 15876) M/s BK Associates a practicing Company Secretary as secretarial auditorof the Company for the FY 2019-2020.
Pursuant to Section 148 of the Companies Act 2013 read with the Companies (Audit andAuditors) Rules 2014 and the Companies (Cost Records and Audit) Amendment Rules 2014the Company maintains the cost audit records in respect of its pharmaceutical business.The Board has on the recommendation of the Audit Committee appointed M/s. S.S. Zanwar& Associates (Firm Registration No.:100283) as cost auditors of the Company for FY2018-19. The provisions also require that the remuneration of the cost auditors beratified by the shareholders and accordingly the same is put forward to the shareholdersfor their ratification in the ensuing AGM The cost audit report for the FY 2018-19 will befiled the Central Government within the stipulated timeline and the relevant cost auditreports for FY 2017-18 were filed within the due date to the Central Government.
Significant and Material Orders Passed by the Courts/Regulators
During FY 2018-19 there were no significant orders passed by any Court or Regulatoror Tribunal which may impact the going concern status or the Company's operations infuture.
Corporate Social Responsibility Initiatives
The Board formulated a Corporate Social Responsibility (CSR) Policy which is in fullforce and operation and is subject to monitoring by the CSR Committee of Directors fromtime to time.
The details about the CSR initiatives taken during the FY 2018-19 are discussed in aseparate head which forms a part of this Annual Report.
The Annual Report on CSR activities of the Company is attached as "Annexure IV"to this Board's Report
Transfer of unpaid and unclaimed dividend amounts and shares to Investor Education andProtection Fund
Pursuant to the provisions of Section 124(5) & (6) of the Companies Act 2013 thedividends which remained unclaimed for a continuous period of seven years and the sharespertaining to the shareholders who have not claimed dividend for a continuous period ofseven years were transferred to the Investor Education and Protection Fund (IEPF)established by the Central Government. The details of which are disclosed in the CorporateGovernance Report.
Employees Stock Option Scheme
Details pertaining to the Employee Stock Option Schemes are disclosed in the CorporateGovernance Report which forms a part of this Annual Report.
ICRA Limited has reaffirmedtheir rating "AA" (which means high degree ofsafety regarding timely servicing of financial obligations and has very low credit risk)for various banking facilities enabling your company to avail facilities from banks atattractive interest rates indicating a very strong degree of safety for timely payment offinancial obligations such as payment of interest and repayment of principal ifany.
Particulars of Employees
The information as required under Section 197 of the Act read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are withgiven in Annexure V which forms part of this report.
The information required under Rule 5(2) and (3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is provided in an Annexure forming partof this Report. In terms of the second proviso to Section 136 of the Act the Report andAccounts are being sent to the Members excluding the aforesaid Annexure. The said annexureis open for inspection at the Registered Office of the Company and any member interestedobtaining the same may write to the Company Secretary at the Registered Office of theCompany.
Conservation of Energy Research and Development Technology Absorption ForeignExchange Earnings and Outgo
The details of Energy Conservation Research and Development Technology Absorption andForeign Exchange Earnings and Outgo as required under section 134(3) (m) of the CompaniesAct 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is annexed to thisreport as "Annexure VI".
Extract of Annual Return
As required under Sections 92(3) and 134(3)(a) of the Companies Act 2013 read withRule 12 of Companies (Management and Administration) Rules 2014 the extract of AnnualReturn in Form MGT-9 forms part of this report as "Annexure VII".
Compliance with Secretarial Standards
The Company has complied with Secretarial Standards issued by the Institute of CompanySecretaries of India.
The Board wish to place on record their appreciation to shareholders governmentauthorities banks business partners medical practitioners and other stakeholders forthe assistance co-operation and encouragement extended to the Company. The Board alsocommend the continuing commitment and dedication of the employees at all levels which hasbeen critical for the Company's success. The Board look forward to their continuedunstinted support in future also.
|For and on behalf of the Board of Directors |
| ||V.C. Nannapaneni |
|Place: Hyderabad ||Chairman and Managing Director |
|Date: 27th May 2019 ||(DIN:00183315) |
FORM NO. AOC-1
(Pursuant to first proviso to sub-section (3) of Section 129 read with Rule 5 ofCompanies (Accounts Rules 2014)
Statement containing salient features of the financial statement of subsidiaries:
| || || || || || || ||(` in Millions)* |
| ||NATCO Pharma INC ||NATCO Canada Inc ||Time cap Overseas Ltd ||NATCO Do Brasil Ltda ||NATCO Pharma Asia PTE Ltd ||NATCO Pharma Australia Pty Ltd ||NATCO Life sciences Philippines Inc |
|Share Capital ||41.85 ||146.55 ||819.38 ||710.52 ||88.95 ||48.97 ||13.66 |
|Reserves & Surplus ||233.12 ||123.23 ||(41.61) ||(629.93) ||(78.68) ||(48.78) ||(4.49) |
|Total Assets ||402.93 ||520.62 ||1034.97 ||494.79 ||123.04 ||0.86 ||17.35 |
|Total Liabilities ||127.96 ||250.84 ||257.20 ||414.20 ||112.77 ||0.68 ||8.17 |
|Investments ||- ||- ||918.40 ||- ||- ||- ||- |
|Turnover ||- ||959.80 ||- ||314.89 ||12.55 ||- ||0.79 |
|Profit before taxation ||3.34 ||69.38 ||(3.81) ||(266.15) ||(16.55) ||(7.11) ||(6.44) |
|Provision for taxation ||1.07 ||18.42 ||- ||39.91 ||- ||- ||1.93 |
|Profit after taxation ||2.27 ||50.96 ||(3.81) ||(226.24) ||(16.55) ||(7.11) ||(4.51) |
|Proposed Dividend || || || || || || || |
|Report Currency ||USD ||CAD ||USD ||BRL ||SGD ||AUD ||PESO |
|Closing exchange rate ||69.32 ||51.91 ||69.32 ||17.66 ||51.13 ||49.20 ||1.31 |
|Average exchange rate ||69.76 ||53.15 ||69.76 ||18.48 ||51.34 ||50.84 ||1.32 |
|% of Shareholding ||100% ||99.04% ||90.36% ||90.90% ||99.73% ||100% ||100%** |
* all amounts are in rupees millions except closing and average exchange rates
** Includes the shares held by the nominee shareholders of the subsidiaries on behalfof the Company.
Annexure-II to the Board's Report
Form No. AOC 2
(Pursuant to Clause (h) of Sub-Section (3) of section 134 of the Act and Rule 8(2) ofthe companies (Accounts) Rules 2014)
Disclosure of particular of contracts/arrangements entered into by the Company withrelated parties referred to in sub-section (1) of Section 188 of the Companies Act 2013including certain arm's length transactions under third proviso thereto.
1. There are no contracts/arrangements/transactions entered into by the Company withrelated parties referred to in sub-section (1) of Section 188 of the Companies Act 2013which are not at arm's length basis.
2. The following are the contracts/arrangements/transactions entered into by theCompany with related parties referred to in sub-section (1) of Section 188 of theCompanies Act 2013 which are at arm's length basis.
|Sl. No. ||Name(s) of the related party and nature of relationship ||Nature of Contract / arrangements / transaction ||Duration of the contracts / arrangements/ transactions ||Salient terms of the contracts or arrangements or transactions including the value if any in ` million ||Date(s) of approval by the Board if any: ||Amount paid as advances if any in ` |
|1. ||Mr. V.C. Nannapaneni Chairman & Managing Director ||Renewal of Lease Agreement ||2 years ||To locate western India Marketing Office and accommodation to Senior Executives visiting Mumbai Rent payableRs. 2.1 million p.a. ||6th February 2018 ||Nil |
|2. ||Mr. Rajeev Nannapaneni Vice Chairman & CEO ||Renewal of Lease Agreement ||2 years ||To locate Chennai Marketing Office and Guest House Rent payable rs. 1.2 million p.a. ||6th February 2018 ||Nil |
|3. ||Mr. Rajeev Nannapaneni Vice Chairman & CEO ||Renewal of Lease Agreement ||2 years ||To locate Chemical Division Chennai city office Rent payable -` 0.12 million p.a. ||6th February 2018 ||Nil |
|4. ||M/s. Time Cap Pharma Labs Ltd Shareholding of Mr. V. C. Nannapaneni ||Renewal of Lease Agreement ||2 years ||To locate Delhi office and Guest house Rent payable-` 2.1 million p.a. ||6th February 2018 ||Nil |
|5. ||M/s. Time Cap Pharma Labs Ltd Shareholding of Mr. V. C. Nannapaneni ||Renewal of Lease Agreement ||2 years ||To locate godown at Kothur Rangareddy Dist. Rent payable - rs. 1.2 million p.a. ||23rd May 2018 ||Nil |
|6. ||M/s. Time Cap Pharma Labs Ltd Shareholding Of Mr. V. C. Nannapaneni ||Renewal of Lease Agreement ||2 years ||To locate Company's Solar Panel Production at Kothur Rangareddy Dist. Rent payable - rs. 1.2 million p.a. ||23rd May 2018 ||Nil |
|7. ||M/s. Time Cap Pharma Labs Ltd. Shareholding of Mr. V.C. Nannapaneni ||Lease agreement ||2 year ||To locate Time Cap Pharma Labs Ltd C & F office at Sanathnagar Rent receivedRs. 0.18 million* ||23rd May 2018 ||Nil |
|8. ||M/s. Time Cap Pharma Labs Ltd. Shareholding of Mr. V.C. Nannapaneni ||Sale of raw- materials ||1 year ||Sale of raw materials to Time Cap Pharma Labs Ltd.Rs. 0.07 million ||6th February 2018 ||Nil |
|9. ||Natco Pharma (Canada) Inc. Subsidiary ||Sales ||1 year ||To sell finished goods to Natco Pharma (Canada) Inc. rs. 150 million ||6th February 2018 ||Nil |
|10. ||Natco Pharma Asia Pte. Ltd. Subsidiary ||Sales ||1 year ||To sell finished goods to Natco Pharma Asia Pte Ltd.Rs. 7 million ||6th February 2018 ||Nil |
|11. ||NatcoFarma Do Brasil Step-down Subsidiary ||Sales ||1 year ||To sell finished goods to Natco Pharma Do Brasil LtdaRs. 48 million ||6th February 2018 ||Nil |
|12. ||Time Cap Pharma Labs Ltd. Shareholding of Mr.V.C. Nannapaneni ||Purchase of land ||One time ||Purchase of 23232 sq. yards industrial land from M/s. Time Cap Pharma Limited forRs. 49 million including registration charges ||23rd May2018 ||Nil |
|13. ||Time Cap Pharma Labs Ltd. Shareholding of Mr. V.C. Nannapaneni ||Commission and expenses reimbursement ||1 year ||To pay commission and reimburse expenses related to C&F services provided by M/s. Time Cap Pharma LimitedRs. 6 million* ||6th February 2018 ||Nil |
Note: *Company terminated w.e.f. January 2019 the Clearing & Forwarding Agreementwith Time Cap Pharma Labs Limited and accordingly the transactions pertaining to paymentof commission and reimbursement of expenses to Time Cap Pharma Labs Limited and payment ofrent by Time Cap Pharma Labs Limited for its C&F warehouse located in the Company'spremises reported earlier were not entered into by the Company.
All the above transactions were entered by the Company with Related Parties in theordinary course of business at prevailing market rates.
Annexure-V to the Board's Report
Information required under Section 197 (12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014)
(i) The ratio of the remuneration of each director to the median remuneration of theemployees of the Company the percentage increase in remuneration of each director CEOCFO and CS for FY 2018-19 and comparison of the remuneration of each Key ManagerialPersonnel (KMP) against the performance of the Company:
|Name ||Designation ||Ratio of Remuneration of each Director/KMP to the median remuneration of employees ||% increase in remuneration during FY2019 |
|Mr. V. C. Nannapaneni ||Chairman and Managing Director ||52 ||0 |
|Mr. Rajeev Nannapaneni ||Vice Chairman and CEO ||47 ||0 |
|Mr. P.S.R.K Prasad ||Whole Time Director ||41 ||7 |
|Dr. D Linga Rao ||Whole Time Director ||41 ||7 |
|Mr. M. Adinarayana ||Company Secretary ||12 ||11 |
|Mr. S.V.V.N Apparao ||Chief Financial Officer ||16 ||10 |
Mr. T.V. Rao Mr. G.S. Murthy Mr. D.G. Prasad Dr. Leela Digumarthi and Dr. M.U.R.Naidu Independent Directors were paid only sitting fees for attending the Board /Committee Meetings.
(ii) The median remuneration of employees increased by 14.07% in FY 2018-19.
(iii) The number of permanent employees on the rolls of Company as on 31stMarch 2019 is 4957.
(iv) The average increase in remuneration paid to employees is 15.67 % for FY 2018-19compared to 2017-18.
Compared to FY 2017-18 the standalone revenue in FY 2018-19 fell by 1.50% and profitbefore tax fell by 4.52 % (v) It is hereby affirmed that the remuneration paid during FY2018-19 is as per the remuneration policy of the company
Annexure-VI to the Board's Report
Conservation of Energy Research and Development Technology Absorption ForeignExchange Earnings and Outgo Conservation of Energy Technology Absorption
A) Conservation of Energy a) During the year the Company has implementedenergy conservation projects across its various business units. A few of the keyinitiatives include:
1. Installation of Energy efficient equipment & optimization of processes consumingenergy: Major projects in this category:
saving of Utility equipment during the last fiscal and achieved significant efficiency
a) Installed new high INR 1 million in various utility areas.
b) Conversion of CFL based lighting to LED lighting has been taken up during FY 2018-19and completed the replacement at continuous use area.
2. Identifying cheaper power sources both in-house and external and Utilizing thealternate sources of energy:
a) Installed 1.15 Mw Solar plant at Chemical Division Mekaguda which lead to savingsof approximately INR 0.3 million for part of the year since installation. Expected savingper annum is approximately INR 10 million.
b) Installed 2.1 MW wind mill at Anantapur for captive power use for Vizag plant.Expected saving for FY 2019-20 is INR 20 million.
3. Steps in progress for increasing the utilization of alternate renewable sources ofenergy:
a) Feasibility studies for Wind Power Generation for captive power utilization atChemical Division Mekaguda has been completed and as per data evaluated by consultantthere is low potential for commercial installation of wind mill in this area.
(B) Technology Absorption
Efforts made towards technology absorption: As part of the technologyabsorption the Company engages in in-house development of bulk drugs & formulationsconducts pilot studies for potential scale-up so as to improve efficiency both in terms oftime and productivity of products is positive and can be installed at Chemical plantMekaguda.
|Disclosure of particulars with respect to conservation of energy. || || |
| ||For the year ended 31.03.2019 ||For the year ended 31.03.2018 |
|A: Power and Fuel Consumption || || |
|1. Electricity || || |
|a) Purchased Units ||67600362 ||61998529 |
|Total amount (` million) ||401.12 ||361.89 |
|Rate / Unit (Rs.) ||5.93 ||5.84 |
|b) Own Generation: || || |
|i) Through Diesel || || |
|Generator Units ||1637558 ||1463650 |
|Units / ltr. Of Diesel Oil ||3.51 ||3.52 |
|Cost / Unit (` ) ||20.28 ||17.77 |
|ii) Through Windmill || || |
|Generator Units ||4050102 ||3605733 |
|Total Cost Per Year (` million) ||7.03 ||7.04 |
|Cost / per Unit (Rs.) ||1.74 ||1.95 |
|iii) Through Solar || || |
|Generator Units ||4940174 ||1559907 |
|Total Cost Per Year (` million) ||7.42 ||7.62 |
|Cost / per Unit (Rs.) ||1.50 ||4.88 |
|2. Coal D/C grade || || |
|Quantity (Tonnes) ||5368 ||5511 |
|Total amount (` million) ||42.02 ||49.46 |
|Average rate per tonne (Rs.) ||7828 ||8975 |
|3. Furnace Oil || || |
|Quantity (Ltr) ||2275037 ||726798 |
|Total amount (` million) ||94.15 ||20.35 |
|Average rate per Ltr (Rs.) ||41.38 ||27.99 |
|(B) Expenditure on R&D || || |
| || |
Amount (Rs. in Million)
| ||For the year ended 31.03.2019 ||For the year ended 31.03.2018 |
|a) R&D Expenditure ||1976 ||1665 |
|b) Total R&D Expenditure as percentage of Net Revenue from Operations (Including capital expenditure) ||9.34% ||7.75% |
(C) Foreign Exchange Earnings and Outgo
The Company earned foreign exchange amounting to rs. 11536 million and used foreignexchange amounting toRs. 2939 million during the year ended 31st March2019
Annexure VIII to the Board's Report
NATCO Dividend Distribution Policy
The Board of Directors (the "Board") of NATCO Pharma Limited (the"Company") has adopted the NATCO Dividend Distribution Policy (the"Policy") of the Company as required in terms of Regulation 43A of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 (the "ListingRegulations") in its meeting held on 11 November 2016.
The Policy shall become effective from the date of its adoption by the Board i.e. 11November 2016.
To help the investors in taking well informed investment decisions.
Any term used in this policy shall have the meaning ascribed to it in the CompaniesAct 2013 or Rules made thereunder SEBI Act 1992 or Rules and Regulations madethereunder or any other relevant legislation/law applicable to the Company
Chapter VIII of the Companies Act 2013 and rules made there under contain theprovisions pertaining to declaration and payment of dividend. The following points set outthe statutory obligations of a Company with respect to declaration / payment of dividend:
Company shall declare or pay dividend for any financial year only out of theprofits of the Company for that financial year.
Such profits shallbe after providing for depreciation in accordance with theprovisions of the law.
In case of inadequacy or absence of profits in any year a maximum of 10% ofpaid-up capital can be declared as dividend subject to other provisions contained in theCompanies (Declaration and Payment of Dividend) Rules 2014.
The SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 alsospecify certain conditions as to declaration of dividend such as prior intimation to thestock exchanges record date etc.
A. General Policy of the Company and other Considerations as Regards Dividend
The Board shall consider the following while taking decisions of a dividend pay-outduring a particular year
1. Statutory requirements
The Company shall observe the relevant statutory requirements which may be applicableto the Company at the time of taking decision with regard to dividend declaration orretention of profit.
2. Prudential requirements
Prior to declaration / recommendation of any dividend as per this policy the Companymay consider any applicable covenants / conditions or restrictions imposed by any lendersJV partners of the Company or its subsidiaries. The Company may decide to retain earningsin entirety for a particular year(s) for its growth / expansion consequently resulting inshareholders' wealth creation.
3. Extent of realized profits as a part of the IND AS profits of the Company
The extent of realized profits out of its profits calculated as per IND AS affects theBoard's decision of determination of dividend for a particular year. The Board is requiredto consider such factors before taking any dividend or retention decision.
4. Expectations of stakeholders including small shareholders
The Board while considering the decision of dividend pay-out or retention of a certainamount or entire profits of the Company shall as far as possible consider theexpectations of the stakeholders including the small shareholders of the Company whogenerally expects for a regular dividend payout.
B. Other Financial Parameters
In addition to the aforesaid parameters such as realised profits and proposed majorcapital expenditures the decision of dividend payout or retention of profits shall alsobe based the following-
1) Current earnings of the Company
2) Operating cash flow of the Company
3) Dividend History
4) Repayment/Pre-payment of Borrowings
5) Future Earnings Expectation
6) Capital Expenditure Requirements requiring ploughing back of profits i.e. futurecapital expenditure program including
Market expansion plan;
Product expansion plan;
Increase in production capacity;
Diversification of business;
Long-term strategic plans;
Acquiring new businesses/products
7) Crystallization of contingent liabilities if any
8) Exchange Risk
9) Sale of businesses
10) Economic / Geo-political factors / risks
11) Regulatory requirements
C. Interim/Final Dividend Payout
Pursuant to the provisions of applicable laws and the Policy interim dividend approvedby the Board of Directors will be confirmed by the shareholders and final dividend ifany recommended by the Board of Directors will be subject to shareholders approval atthe relevant Annual General Meeting of the Company. The Company shall ensure compliance ofprovisions of Applicable Laws and this Policy in relation to Dividend declared by theCompany.
D. Classes of Shares
At present the issued and paid-up share capital of the Company comprises only ofequity shares. As and when the Company issues any other class(es) of shares the Board ofDirectors may suitably declare dividend on such class(es) in accordance with theprovisions of the Companies Act 2013 and this policy.
Company is required to disclose this policy on its website and also in the AnnualReport of the Company. The Company shall make other appropriate disclosures pertaining todeclaration of dividend as required under the Companies Act 2013 and the rules madethereunder the SEBI Act 1992 or the rules and regulations made thereunder and any otherlaw applicable.
The Board shall have the power to amend any of the provisions of this Policysubstitute any of the provisions with a new provision or replace this Policy entirely witha new Policy in conformity with the provisions of Companies Act 2013 and the rules madethereunder the SEBI Act 1992 or the rules and regulations made thereunder and any otherlaw applicable.
G. Declaration of Dividend on Parameters not Mentioned in the Policy
If the Company proposes to declare dividend on the basis of parameters in addition tothose mentioned in the policy it shall disclose such changes along with the rationale forthe same in its annual report and on its website.
The Policy shall not apply to:
Special dividend if any to be outside the scope of this policy but would begoverned by the provisions under the Companies Act 2013.
Distribution of dividend in kind i.e. by issue of fully or partly paid bonusshares or other securities subject to applicable law.
Buyback of equity shares.