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Natural Capsules Ltd.

BSE: 524654 Sector: Health care
NSE: N.A. ISIN Code: INE936B01015
BSE 00:00 | 03 Oct 534.75 -11.60
(-2.12%)
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NSE 05:30 | 01 Jan Natural Capsules Ltd
OPEN 548.00
PREVIOUS CLOSE 546.35
VOLUME 7902
52-Week high 679.00
52-Week low 120.74
P/E 19.50
Mkt Cap.(Rs cr) 333
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 548.00
CLOSE 546.35
VOLUME 7902
52-Week high 679.00
52-Week low 120.74
P/E 19.50
Mkt Cap.(Rs cr) 333
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Natural Capsules Ltd. (NATURALCAPSULES) - Director Report

Company director report

To

The Members:

Your Directors have pleasure in presenting their 28th Twenty Eight AnnualReport together with the AuditedAccounts of the company for the year ended 31st March2021.

Financial results:

The Company's financial performance for the year ended is 31st March 2021.Summarized below:

(Rs. In Lakhs) (Rs. In Lakhs)
Particulars 31st March 2021 31st March 2020
Gross Sales 9711.68 7073.11
Less : GST 1760.34 917.62
Net Sales 7951.34 6155.49
Other Income 72.70 95.30
Total 8024.04 6250.79
Profit before depreciation & taxation 1349.64 549.14
Less : Depreciation 430.63 412.07
Less : Provision for taxation 222.16 65.73
Less: Prior period adjustment (Taxation) 0 0
Add: Deferred Tax withdrawn 2.14 -14.41
Profit after taxation 694.70 85.75
Add: Balance brought forward from previous year/Other Equity 5589.75 4938.86
Surplus available for appropriation 0 0
Appropriations 0 0
General Reserve 0 0
Proposed Dividend 62.33 37.40
Tax on Dividend 12.69 0
Additional depreciation on fixed asset as per Companies Act 2013 0 0
Balance carried to Balance sheet 5589.75 4938.86
Total 5589.75 4938.86

The Change in the Nature of Business if any:

There was no change in nature of business for the period under review.

Transfer to reserves:

The company does not propose to transfer any amount to the General Reserves.

Dividend:

Based on the performance of the Company and the need for conservation of internalaccruals while maintaining the dividend for the shareholders your Directors are pleasedto recommend a final dividend of Rs.1.00 per equity share at the rate of 10%subject to theapproval of members. The dividend if approved by the Members will result in the out flowof rs.62.33 lakhs from the company in addition to Rs. 12.69 lakhs. Dividend if declaredwill be paid to the Members whose names appear in the Register of Members as on the recorddate as on 7th July 2021.

Transfer of Unclaimed Dividend to Investor Education and Protection Fund & Transferof Shares

To Investor Education And Protection Fund

In terms of the Companies Act any unclaimed or unpaid Dividend relating to thefinancial year 2013-14 will be transferred to the Investor Education and Protection Fundestablished by the Central Government after the conclusion of 28th AnnualGeneral Meeting.

Pursuant to Section 124(6) of the Companies Act 2013 all shares in respect of whichDividend has not been paid or claimed for seven consecutive years or more has beentransferred to IEPF. Further shares required to be transferred to IEPF for the financialyear 2013-14 to 2020-21 will be transferred as per the provisions of the Act.

The details of the said shares transferred are provided on the website of the Companyat http://www.naturalcapsules.com/pages/bes-compliance.html

Share capital:

During the year under consideration there was no change in the paid up capital.However 62500 stock options equity shares were issued to employee as per the statutoryprovisions for which in-principle approval has been obtained from the exchange. Thepresent share capital stands at Rs. 62327000 Comprising of 6232700 Equity Shares ofRs.10/- only each. Further the company has not made any fresh issue of shares for theFinancial Year 2020-21.

COVID Impact:

Indian economy as a whole has been severely affected due to the pandemic and as perestimates released by RBI Indian GDP might contract by 5% during financial year 2021.However pharma and healthcare industry is supposed to be one of the few segments whichhave not been adversely affected but for limited impact due to sudden lockdown lack ofavailability of labour drop in retail sales of medicines during initial phases oflockdown. At time pharma industry is expected to recover quickly with growth of around 5to 6 % by the end of year.

Your Company was impacted during first week of lockdown due to non-availability ofmanpower & this lead to loss of production of about 2300 lakhs of capsules duringMarch & April which is almost 3% of Annual production capacity.

Status of Expansion-API Project: Inform about the Govt.

Approval received for Steroid.

During the year Company has installed 2 high speed Capsule making machine at BangaloreUnit resulting in increase of installed capacity from 7.8 Billion to 10.8 BillionCapsules per Annum. API project of the Company is being implemented by its fully ownedSubsidiary Company M/s Natural Biogenex Pvt Ltd. Construction work on this project hadstarted and trial production are likely to start by 1st Quarter of FY 2022-23. M/s NaturalBiogenex Pvt Ltd was selected by Government of India under PLI Scheme for bulk drugs forproduction of Prednisolone Dexamethasone and Betamethasone. Under this scheme M/s NaturalBiogenex Pvt Ltd is likely to receive subsidies of around 65crores over a period of 6yearsstarting from Financial Year 2023-24 subject to fulfillment of approval conditions.

Extract of Annual Return:

Pursuant to Section 92(3) and Section 134(3)(a) of the Act read with Rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of the Annual Return isattached and marked as Annexure 7 to this report and also uploaded on the website of theCompany web link www.naturalcapsules.com

Board Meetings and Its Committees Conducted During The Period Under Review:

Board Meeting No. Date of Board Meeting Board Strength No. of Director's Present
133rd Friday 5th day of June 2020 8 8
134th Friday 7th day of August 2020 8 8
135th Thursday 27th day of August 2020 8 8
136th Saturday 7th day of November 2020 8 8
137th Monday 25th day of January 2021 8 8

Further details of the same have been enumerated in the Corporate Governance Reportannexed in Annexure-5 to this report.

Fixed Deposits:

Company has not accepted any deposits within the meaning of Section 73 of the CompaniesAct 2013 and the Companies (Acceptance of Deposits) Rules 2014.

Particulars of Loans Guarantees or Investments:

The company has not given any loans or guarantees covered under the provisions ofsection 186 of the Companies Act 2013. The details of the investments made by company aregiven in the notes to the financial statements.

Internal control systems and their adequacy:

Internal financial controls means the policies and procedures adopted by the companyfor ensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information; The Company has adequate internal controlsystems to monitor business processes financial reporting and compliance with applicableregulations.

The systems are periodically reviewed for identification of control deficiencies andformulation of time bound action plans to improve efficiency at all the levels. The AuditCommittee of the Board constantly reviews internal control systems and their adequacysignificant risk areas observations made by the internal auditors on control mechanismand the operations of the Company and recommendations made for corrective action throughthe internal audit reports. The Committee reviews the statutory auditors' report internalaudit reports secretarial audit reports project repots quarterly budgets significantprocesses and accounting policies and other key issues from time to time.

Directors' Responsibility Statement

The Directors confirm that

(a) In the preparation of the annual accounts the applicable accounting standards havebeen followed and there are no material departures from those standards.

(b) They have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitof theCompany for that period;

(c) They have taken proper and sufficient care for maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act for safeguarding the assetsof the Company and for preventing and detecting fraud and other irregularities;

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

(e) The directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such system were adequate and operating effectively. Basedon the framework of internal financial controls established and maintained by the Companywork performed by the Internal Statutory and Secretarial Auditors reviews performed bythe management and the relevant Board Committees the Board in concurrence with the AuditCommittee is of the opinion that the Company's internal financial controls were adequateand effective as on March 31 2021.

(f) They have duly complied with Secretarial Standards issued by Institute of CompanySecretaries of India (ICSI) from time to time.

Information Pertaining to Auditors and Other Allied Matters:-

Details In Respect Of Frauds Reported By Auditors under Section 143(12) Other ThanThose Which Are Reportable To the Central Government

There were no instances of frauds identified or reported by the Statutory Auditorsduring the course of their audit pursuant to Section 143(12) of the Companies Act 2013.

Explanation and Comments on Auditor Reports:

The reports of the Statutory Auditors (annexed elsewhere in the Annual Report) and thatof the Secretarial Auditors (annexed hereto as Annexure 2) and the explanations on theobservations of Secretarial Audit Report is given below:

Comments/Observations of the Secretarial Companyfs Response/Explanations:
Auditor:
Few Shareholders holding 3600 equity share belonging to promoter's group is yet to demat his share/s The Company is in the process of dematerializing the shares of the said promoter.
There were instances of delays in filing of noof E forms with the Registrar of Companies during the FY 2020-21. The said delay was due to inadvertence and people working from home due to covid impact during most par of the year under consideration. Relating to delayed filings the Company has sought immunity under CFSS scheme and obtained Immunity Certificate for the delayed filings upto Dec.2020
The adjudication for default U/s 203(1) read with Rule 8A of Companies (Appointment and Remuneration of Managerial personnel) Rules 2014 regarding Non Appointment of whole time Company Secretary for the earlier period 01/04/2014 to 25/03/2015 was converted into Compounding of offences with RD Hyderabad which has since been Compounded. is pending with ROC The Company & its executive directors have paid Rs. 400000/- compounding fee after hearing oin 24.02.2021) with Regional Director Hyderabad and accordingly the default has been compounded..

Statutory Auditors:

M/s P. Chandrasekar LLP Chartered Accountants were appointed as the StatutoryAuditors of the Company for a term of five consecutive years at the 24th AnnualGeneral Meeting held on 29th August 2017 subject to annual ratification byshareholders. However with the advent of Companies (Amendment) Act 2017 the requirementof annual ratification of the appointment of the Statutory Auditors of the Company by theshareholders at the Annual General meeting has been done away with. Accordingly M/s P.Chandrasekar LLP Chartered Accountants will continue to be the Statutory Auditors of theCompany for the FY 2021-22 and for the remaining tenure.

Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 (as amended from timeto time) the Company has appointed Shri R. Parthasarathy Company Secretary in practice toundertake the Secretarial Audit of the Company. The Secretarial Audit report is annexedherewith as Annexure - 2.

Cost Auditors

The provisions of Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Amendment Rules 2014(as amended from time to time) is currently notapplicable to the company.

Significant and Material Orders Passed By the Regulators or Courts:

There are no significant material orders passed by the Regulators / Courts which wouldimpact the going concern status of the Company and its future operations.

Declaration of Independent Directors:

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as stipulated in Section 149(6) ofthe Companies Act 2013 so as to qualify themselves to act as Independent Directors underthe provisions of the Companies Act 2013 and the relevant rules.

Directors:

Shri. Sushil Kumar Mundra and Mr.Satyanarayana Mundra. Directors retire by rotation andbeing eligible offer themselves for re appointment.

Mr. Laxminarayana Mundraf was re-appointed as Whole-time Director period of 3years.

All independent directors have given declarations that they meet the criteria ofindependence as laid down under section 149 (6) of the Companies Act 2013 and Regulation25(3) of SEBI (Listing Obligations and Disclosure Requirement) Regulations 2015. AllDirectors have given declaration relating to compliance with code of conduct.

Nomination and Remuneration &Compensation Committee and Policy:

As per the requirements of the provisions of the Companies Act 2013 a Nomination andRemuneration & Compensation Committee of Directors was constituted by the Board ofDirectors and the details of the Members of the Committee are disclosed elsewhere in thisAnnual Report. The Board has on the recommendation of the Nomination and RemunerationCommittee framed a policy on Director's appointment and remuneration including criteriafor determining qualification positive attributes independence of a Director and othermatters provided under sub-section (3) of Section 178. The said Policy is available on thewebsite of the Company various web links of the company's policy is detailed under thehead Policy.

Related Party Transactions:

All transactions of the Company with the related parties were in the ordinary course ofbusiness and on an arm's length pricing basis. There were no material significant relatedparty transactions having potential conflict with the interest of company.

The Policy on Related Party Transactions (including the revised policy applicable forrelated party transactions effective April 01 2019) is available on the Company'swebsite and can be accessed athttp://www.naturalcapsules.com/pdf/policy-on-related-party-transactions.pdf

As prescribed by Section 134(3)(h) of the Companies Act 2013 read with Rule 8(2) ofthe Companies (Accounts) Rules 2014 particulars of contracts/arrangements with relatedparties are given in Form AOC-2 annexed as Annexure - 1 to this report.

(A). Name of the related party and nature of relationship where control exists:

Name of Related Party Nature of Relationship
M/s. Mundra enterprises Entity in which Director or KMP is related:
Mr. Sunil Laxminarayana Mundra- Partner
Mr. Laxminarayana Mundra-His wife is a Partner
Mr. Satyanarayana Mundra- Partner
Mr. Sushil Kumar Mundra- Partner
Mrs. Jyothi Mundra- Her husband is partner

(B) (i) Related Party Transactions:

Name of Related Party Nature of Transaction Amount of Transaction Amount Outstanding at the end of year
Credit (Rs.) Current Debit (Rs.) Current Year\(Previous Year) 2019-20
Year\(Previous Year) 2020- 21
Mr. Sunil Laxminarayana Mundra Directors 4440000 250210 227110
Remuneration Directors 3180000 183470 156270
Mr. Laxminarayana Mundra Remuneration Directors 3180000 186820 180420
Mr. Satyanarayana Mundra Remuneration
Mr. Prasanna Junnarkar Salaries 1068396 74766 65177
Mrs. Shilpa Salaries 496515 42353 37250
Mr. Sushil Kumar Mundra Sitting Fees 75000 - -
Mrs. Jyothi Mundra Sitting Fees 75000 - -
M/s. Mundra Enterprises Operating 0.0 - -
M/s Natural Drug Discoveries Pvt. Ltd Investment In Equity Shares 0.0 0.0 75000
M/s. Natural Biogenex Pvt Ltd. Investment In Equity Shares 100000 0.0 0.0

Material Changes and Commitments Affecting the Financial Position of the Company:

There is no material change or commitments after the closure of the financial year ason 31st March 2020 and till the date of this report except COVID Impact on theperformance of the Company has already been mentioned in this report.

Conservation Of Energy Technology Absorption Foreign Exchange Earnings and Outgo:

The information pertaining to conservation of energy technology absorption ForeignExchange Earnings and Outgo as required under section 134 (3) (m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 (as amended from time totime) is attached herewith as Annexure - 3 to this report.

Risk Management:

The Company follows a comprehensive and integrated risk management process. The riskmanagement process is designed to safeguard the organization from various risks throughadequate and timely actions. It is designed to anticipate evaluate and mitigate risks inorder to minimize its impact on the business. The potential risks are inventoried andintegrated with the management process such that they receive the necessary considerationduring decision making and are periodically reviewed and revised by the Board ofDirectors.

Corporate Social Responsibility:

The present Committee members are Shri Anjan Kumar Roy Shri Sunil L Mundra and ShriSushil Kumar Mundra.

The Annual Report on Company's CSR activities of the Company is furnished in theprescribed format as Annexure - 4 and attached to this report.

Board Evaluation:

The Companies Act 2013 states that a formal annual evaluation needs to be made by theBoard of its own performance and that of its committees and individual directors. ScheduleIV of the Companies act 2013 states that the performance evaluation of independentdirectors shall be done by the entire Board of Directors excluding the director beingevaluated. Pursuant to the provisions of the Act the Board has carried out an annualevaluation of its own performance the individual Directors (including the Chairman) aswell as an evaluation of the working of all Board Committees. The performance evaluationwas carried out on the basis of inputs received from all the Directors / Members of theCommittees as the case may be.

The Independent Directors of the Company have also convened a separate meeting for thispurpose. All the results of evaluation have been communicated to the Chairman of the Boardof Directors.

SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 mandates thatthe Board shall monitor and review the Board evaluation framework. The framework includesthe evaluation of directors on various parameters such as:

• Board dynamics and relationships

• Information flows

• Decision-making

• Relationship with stakeholders

• Company performance and strategy

• Tracking Board and committees effectiveness

• Peer evaluation

The evaluation process has been explained in the corporate governance report. The Boardapproved the evaluation results as collated by the nomination and remuneration committee.

Corporate Governance:

Pursuant to Regulation 34 of the SEBI (LODR) Regulations 2015 Report on CorporateGovernance Management Discussion and Analysis Report and Auditors Certificate regardingcompliance of conditions of Corporate Governance provided in Annexure - 5 in this Reportand the same forms part of the Directors' Report.

Composition of Audit Committee and Vigil Mechanism / Whistle Blower Policy:

The present Committee members are Mr. CP Rangachar Mr. Pramod Kasat Mr. Anjan KumarRoy & Mr. Sunil L Mundra. The Board has constituted an Audit Committee details ofwhich are enumerated in the Corporate Governance Report. The Company has devised a vigilmechanism in the form of a Whistle Blower Policy in pursuance of provisions of Section177(10) of the Companies Act 2013 and the policy is explained in corporate governancereport. During the year under review there were no complaints received under thismechanism.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013:

The Company has in place a policy on Sexual Harassment of Women at Workplace in linewith the requirements of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013. An Internal Complaint Committee has been set up toredress complaints received. All employees (permanent contractual temporary trainees)are covered under this policy. There were no complaints from any employee pendingresolution during the financial year 2020 - 21. Other Disclosure:

a) details of establishment of vigil mechanism whistle blower policy and affirmationthat no personnel has been denied access to the audit committee;

b) details of compliance with mandatory requirements and adoption of the non-mandatoryrequirements;

c) web link where policy for determining ‘material' subsidiaries is disclosed;

d) web link where policy on dealing with related party transactions;

e) a certificate from a company secretary in practice that none of the directors on theboard of the company have been debarred or disqualified from being appointed or continuingas directors of companies by the Board/Ministry of Corporate Affairs or any such statutoryauthority.

Particulars of Employees:

Disclosures with respect to the remuneration of Directors and employees as requiredunder Section 197 of Companies Act 2013 and Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 has been appended as Annexure - 6 tothis Report.

Employee Stock Option Schemes

Pursuant to Rule 12(9) of the Companies (Share Capital and Debentures) Rules 2014 readwith Regulation 14 of the SEBI (Share Based Employee Benefits) Regulations 2014 TheCompany has implemented ESOP Scheme 2018 to reward and retain the qualified and skilledemployees and to give them an opportunity to participate in the growth of the Company.These Schemes are administered by the Nomination Remuneration and Compensation Committeeof the Company has been appended as Annexure - 7 to this Report

Subsidiaries Joint Ventures and Associate Companies:

Apart from Natural Phyto A wholly owned subsidiary company M/S Natural BiogenexPrivate Limited was incorporated on 23.08.2020. The Details of Subsidiaries are given inAnnexure-AOC-1

Internal Control Systems and Their Adequacy:

The Company has an adequate Internal Control System commensurate with its size andoperations. Management has overall responsibility for the Company's Internal ControlSystem to safeguard the assets and to ensure reliability of financial records. AuditCommittee reviews all financial statements and ensures adequacy of internal controlsystems.

The Company has engaged the services of an Independent Chartered Accountant to carryout the internal audit and ensure that recording and reporting are adequate and properthe internal controls exist in the system and that sufficient measures are taken to updatethe internal control system. The system also ensures that all transaction areappropriately authorized recorded and reported.

Exercises for safeguarding assets and protection against unauthorized use areundertaken from time to time. The company has also installed an extensive CCTVSurveillance system to cover the entire factory premises. All these measures arecontinuously reviewed by the management and as and when necessary improvements areaffected.

Discussions on financial performance with respect to operational performance:

The Net Sales during the year was Rs. 7951.34 lakhs and your Company could make NetProfit of Rs.694.70Lakhs after tax.

No. of Employees:

PLACE REGULAR TRANIEE TOTAL PLACE REGULAR TRANIEE TOTAL
HO 23 0 23 HO 21 0 21
UNIT-1 33 0 33 UNIT-1 34 0 34
UNIT-2 79 1 80 UNIT-2 86 1 87
UNIT-3* 11 0 11 UNIT-3 8 4 12

Acknowledgement;

The Board acknowledges the continued assistance from the Bankers State GovernmentsLocal Bodies Customers Suppliers Executives Staffs workers at all levels and theShareholders for their continuous cooperation and assistance.

For and on Behalf of the Board
Sd/- Sd/-
Sunil L Mundra Satyanarayan Mundra
Managing Director Whole Time Director
Place : Bengaluru
Date : 18.06.2021

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