The Board of Directors are pleased to present the Company's ThirtySeventh Annual Report and the Company's audited financial statements (standalone andconsolidated) for the financial year ended March 312021.
The Company's financial performance (standalone) for the year endedMarch 312021 is summarised below:
(Rs. in lakhs)
|Particulars ||2020-21 ||2019-20 |
|Total Income ||95300.80 ||76659.65 |
|Profit before Finance Costs Depreciation Amortisation and Tax ||16253.81 ||10534.35 |
|Finance costs ||1789.75 ||2157.14 |
|Profit before Depreciation Amortisation and Tax ||14464.06 ||8377.21 |
|Less: Depreciation & Amortisation ||3967.85 ||3127.63 |
|Profit before Tax ||10496.21 ||5249.58 |
|Less: Current tax ||1248.29 ||- |
|Deferred tax ||1218.43 ||3661.57 |
|Profit after Tax ||8029.49 ||1588.01 |
|Add: Other comprehensive income ||(139.25) ||(78.74) |
|Total comprehensive income for the year ||7890.24 ||1509.27 |
For the financial year ended March 31 2021 a Total Income of Rs.95300.80 lakhs as against Rs. 76659.65 lakhs in the previous year.
For the year ended on March 31 2021 the Company has reported EarningsBefore Interest Finance Cost Depreciation & Amortization and Tax (EBIDTA) of Rs.16253.81 lakhs as against the EBIDTA of Rs. 10534.35 lakhs during the previous year.
The Net Profit of the Company for the year 2020-21 was Rs. 7890.24lakhs compared to Rs. 1509.27 lakhs during the previous year.
During the year under review your Company continued to grow its topline with both business verticals of GDS (Generic Drug Substances) and CMS (CustomManufacturing Solutions) contributing to performance. Significant progress was made insome of the key CMS projects that were added to the pipeline in the past eighteen months.In the GDS business the development of generic peptide APIs is advancing at a steadypace. In a year marked by unprecedented challenges due to the pandemic your Company'sstrong focus has been on ensuring operational continuity and meeting customer commitmentsas per timelines. The changed circumstances have also accentuated the management effortstowards planning for sustainable growth.
Your directors are pleased to recommend a final dividend of Rs.3/-(30%) per equity share on face value of Rs. 10/- each of the Company for the financialyear 2020-21. The dividend if approved at the 37th Annual General Meeting (AGM) will bepaid to those members whose names appear on the register of members of the company as ofend of the day on 7 July 2021.
The Board of Directors had earlier approved payment of an InterimDividend of Rs. 2.00 per equity share (20% Interim Dividend) on the equity share capitalof the Company for the financial year 2020-21 amounting to Rs. 25659778/- which waspaid on November 27 2020. The outflow on account of Dividend (including interim dividendpaid) is estimated to be Rs. 64149445/-.
DIVIDEND DISTRIBUTION POLICY
In accordance with Regulation 43A of the Securities and Exchange Boardof India (Listing Obligations and Disclosure Requirements) Regulations 2015 as amendedyour Company has adopted a Dividend Distribution Policy formulated by the Board specifyingthe financial parameters factors and circumstances to be considered in determining thedistribution of dividend to shareholders and/or retaining profits earned by the Company.The policy aims to protect the interest of investors by ensuring transparency.
The Dividend Distribution Policy in terms of Regulation 43A of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 as amended is available on the Company's website onwww.neulandlabs.com.
The equity shares of your Company continue to be listed and traded onthe BSE Limited and National Stock Exchange of India Limited. The paid-up equity sharecapital of the Company as on March 312021 is Rs. 1290.05 lakhs. During the year underreview the Company has not issued any shares with differential voting rights nor grantedstock options nor sweat equity.
Both business verticals of Generic Drug Substance (GDS) and CustomManufacturing Solutions (CMS) will continue to be pivotal to the growth of your Company.Highest focus will be maintained on quality technological excellence and transparentpartnerships for deepening existing customer relationships as well as attracting newcustomers. With several steps being taken to strengthen the organisation internally andenhance customer focus Neuland is confident of being one of the leading API companies notonly in the GDS space where it is a matured player but also in the CMS space where itis a relatively newer player.
Consolidated Financial Statements
The Audited Consolidated Financial Statements of your Company as onMarch 31 2021 which forms part of the Annual Report have been prepared pursuant to theprovisions of Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 as amended from time to time and also as per theapplicable Indian Accounting Standard (IndAS) on Consolidated Financial Statements(IndAS-110) as notified by the Ministry of Corporate Affairs.
The annual accounts of the subsidiary companies are kept for inspectionby any member at the Registered Office of the Company as well as at the Registered Officeof the respective subsidiary companies and also available on the website of the Companywww.neulandlabs.com. Any member interested in a copy of the accounts of the subsidiariesmay write to the Company Secretary at the Registered Office of the Company.
Your Company has two subsidiaries Neuland Laboratories K.K. Japan andNeuland Laboratories Inc. USA working on market development. Your Company does not haveany joint venture or associate companies. Further there has been no material change in thenature of business of the subsidiaries.
A report on the performance and financial position of the subsidiariesset out in the prescribed form AOC-1 in terms of proviso to sub section (3) of Section 129of the Companies Act 2013 as amended from time to time is provided as Annexure to theconsolidated financial statements and hence not repeated here.
Documents uploaded on the Website
The following documents are available on the website of the Company(www.neulandlabs.com) in compliance with Companies Act 2013 as amended from time totime:
Annual Return as per section 92
Unpaid dividend including interim dividend details as perSection 124(2)
Corporate Social Responsibility Policy as per Section 135(4)(a)
Nomination and Remuneration policy as per Section 178 (3) and(4)
Financial Statements of the Company and Consolidated FinancialStatements along with relevant documents as per third proviso to section 136(1).
Separate audited accounts in respect of subsidiaries as perfourth proviso to section 136(1)
Details of vigil mechanism for directors and employees to reportgenuine concerns as per proviso to section 177(10)
Policy on Material Subsidiaries
The terms and conditions of appointment of independent directorsas per Schedule VI to the Act.
Corporate Governance Report Management Discussion & Analysis andOther Information Required under the Companies Act 2013 and Listing Agreement
As per Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 as amended from time to time CorporateGovernance Report with Certificate from a Practicing Company Secretary thereon andManagement Discussion and Analysis report are attached and form part of this report.
Directors and Key Managerial Personnel
The changes taken place in the key managerial personnel during thefinancial year 2020-21 and as on the date of this report are as under:
|S.No. Name ||Appointment / Cessation ||Designation ||Date of appointment / cessation |
|1 Mr. Davuluri Saharsh Rao1 ||Appointment ||Chief Financial Officer ||August 4 2020 |
|2 Mr. Davuluri Saharsh Rao ||Cessation ||Chief Financial Officer ||September 24 2020 |
|3 Mr. Deepak Gupta ||Appointment ||Chief Financial Officer ||September 24 2020 |
1 Mr.Davuluri Saharsh Rao was appointed as the interim ChiefFinancial Officer in addition to his role of Vice Chairman & Managing Director withno change in the terms and conditions of his appointment.
Dr. Christopher M. Cimarusti retires by rotation at the forthcoming37th Annual General Meeting and being eligible seeks re-appointment. The profile ofDr.Cimarusti is included in the Report on Corporate Governance and the Notice of the AGM.
Dr. Davuluri Rama Mohan Rao Executive Chairman Mr.Davuluri SuchethRao Vice Chairman & Chief Executive Officer Mr.Davuluri Saharsh Rao Vice Chairman& Managing Director Mr.Deepak Gupta Chief Financial Officer and Ms.SaradaBhamidipati
Company Secretary & Compliance Officer are the Key ManagerialPersonnel of the Company as on the date of this Report.
Listing at Stock Exchanges
The equity shares of your Company continue to be listed and traded onthe BSE Limited and National Stock Exchange of India Limited. The Annual Listing fee forthe year 2021-22 has been paid to both the stock exchanges.
Directors' Responsibility Statement-
Pursuant to Section 134(3)(c) of the Companies Act 2013 as amendedfrom time to time your Directors confirm that to the best of their knowledge and beliefand according to the information and explanation obtained by them:
a. i n the preparation of the annual financial statements for the yearended March 31 2021 the applicable accounting standards have been followed along withproper explanation relating to material departures if any;
b. such accounting policies as mentioned in the Notes to the FinancialStatements have been selected and applied consistently and judgement and estimates havebeen made that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at March 312021 and of the profit of the Company for theyear ended on that date;
c. proper and sufficient care has been taken for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013as amended from time to time for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;
d. the annual financial statements have been prepared on a goingconcern basis;
e. proper internal financial controls were in place and that thefinancial controls were adequate and were operating effectively; and
f. systems to ensure compliance with the provisions of all applicablelaws were in place and were adequate and operating effectively.
During the year under review four Board Meetings and four AuditCommittee Meetings were convened and held the details of which are given in the CorporateGovernance Report which forms part of this report. The intervening gap between theMeetings was within the period prescribed under the Companies Act 2013 and Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 as amended from time to time.
Composition of various Committees
Details of various committees constituted by the Board as per theprovisions of Companies Act 2013 as amended from time to time and Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 as amended from time to time and their meetings are given in the CorporateGovernance Report which forms part of this report.
Pursuant to the provisions of the Companies Act 2013 and Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 as amended the annual evaluation of the performance of the Board its Committeesand of individual directors has been carried out by the Board. The process was carried outby circulating questionnaires on the Board and Committees functioning on certainparameters. The performance evaluation of the independent directors was carried out by theentire Board except the director being evaluated. The performance evaluation of thenon-Independent Directors including Executive Directors was carried out by the IndependentDirectors.
The Independent Directors met on February 1 2021 without the presenceof non-Independent Directors and members of the management. The Independent Directorsdiscussed matters pertaining to the Company's affairs and reviewed the performance ofnon-Independent Directors the Chairman and the Board as a whole and assessed thequality quantity and timeliness of flow of information between the Company Management andthe Board that is necessary for the Board to effectively and reasonably perform theirduties.
The Company has received declarations from all the IndependentDirectors of the Company confirming that they meet the criteria of independence prescribedunder the Companies Act 2013 and the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 as amended.
Disclosures by Directors
None of the Directors of your Company is disqualified as per provisionsof Section 164(2) of the Companies Act 2013 as amended from time to time. Your Directorshave made necessary disclosures to this effect as required under Companies Act 2013 asamended from time to time.
The composition of the Audit Committee and its terms of reference areincluded in the Report on Corporate Governance annexed. All the recommendations made bythe Audit Committee were accepted by the Board of Directors.
Nomination and Remuneration Committee
The details of the Nomination and Remuneration Committee are set out inthe Report of Corporate Governance forming part of this Report.
Your Company has a Nomination and Remuneration Policy as required undersection 178 of the Companies Act 2013 as amended from time to time for selection andappointment of Directors Key Managerial Personnel Senior Management and theirremuneration.
The Company has formulated a Nomination & Remuneration Policy whichis available on the website of the Company at www.neulandlabs.com. Your Company's Policyon Directors' appointment and remuneration including criteria for determiningqualifications positive attributes independence of a director and other matters providedunder section 178(3) of the Act are covered in the policy.
Corporate Social Responsibility
The Company has in place a Corporate Social Responsibility Policy whichis available on the website of the Company at www.neulandlabs.com. Further your Companyhas incurred an expenditure of 2.48% ('88.02 lakhs) of the average net profit of thepreceding three years on CSR projects/activities during FY 2020-21.
Annual report on CSR activities as required under Rule 8 of theCompanies (Corporate Social Responsibility Policy) Rules 2014 read with section 134(3)and 135(2) of the Companies Act 2013 as amended from time to time has been appended asAnnexure-1 and forms an integral part of this Report.
Business Responsibility Report
In accordance with regulation 34(2)(f) of the Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015 asamended the Business Responsibility Report (BRR) is forming part of this report asAnnexure-2 describing the detailed report on business responsibilities vis-a-vis the nineprinciples of the National Voluntary Guidelines on Social Environmental and EconomicResponsibilities of Business framed by the Ministry of Corporate Affairs.
Code of Conduct for Board of Directors and Senior Management Personnel
The Directors and members of Senior Management have affirmed compliancewith the Code of Conduct for Board of Directors and Senior Management Personnel of theCompany. A declaration to this effect has been signed by the Executive Chairman and formspart of the Annual Report.
Vigil Mechanism/ Whistle Blower Policy
Your Company has a Vigil Mechanism / Whistle Blower Policy which servesas a mechanism for its Directors and employees to report genuine concerns about unethicalbehaviour actual or suspected fraud or violation of the Code of Conduct without fear ofreprisal. The policy also provides access to the Chairperson of the Audit Committee undercertain circumstances. The Whistle Blower Policy is available on the website of theCompany www.neulandlabs.com. A brief note on the Whistle Blower Policy is also providedin the Report on Corporate Governance which forms part of this Annual Report.
Prevention of Insider Trading
Pursuant to Securities and Exchange Board of India (Prohibition ofInsider Trading) (Amendment) Regulations 2018 the Company has adopted the Code ofInternal Procedures and Conduct for Regulating Monitoring and Reporting of Trading byDesignated Persons and their Immediate Relatives along with Code of Fair Disclosures.
Disclosure as per Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013
The Company is committed to ensure that there is no scope for sexualharassment at workplace and has adopted a policy on prevention prohibition and redressalof sexual harassment at workplace in line with the provisions of Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013 and the rules framedthereunder. The Company has not received any complaints on sexual harassment during thecalendar year 2020 and as on the date of this report.
Employee Stock Option Scheme
As on March 31 2021 no employee stock options available in theCompany and hence no disclosures are required to be made under Regulation 14 of theSecurities and Exchange Board of India (Share Based Employee Benefits) Regulations 2014.
The financial statements have been audited by M/s. MSKA &Associates (Firm Registration No:105047W) Chartered Accountants Statutory Auditors ofthe Company.
The Statutory Auditors were appointed in the AGM held on July 5 2019to hold office from the conclusion of the thirty fifth Annual General Meeting until theconclusion of the fortieth Annual General Meeting.
There are no qualifications reservations or adverse remarks made byM/s. MSKA & Associates Statutory Auditors in their report for the financial yearended March 312021.
Pursuant to provisions of Section 143(12) of the Companies Act 2013as amended from time to time the Statutory Auditors have not reported any incident offraud to the Audit Committee during the year under review.
Pursuant to the provisions of Section 204 of the Companies Act 2013and the Companies (Appointment and Remuneration of
Managerial Personnel) Rules 2014 as amended from time to time theCompany has appointed M/s. P.S.Rao & Associates a firm of Company Secretaries inPractice to conduct the Secretarial Audit of the Company. The report of the SecretarialAudit for the financial year ended March 312021 is annexed to the Corporate GovernanceReport and forms part of this report. There are no qualifications reservations or adverseremarks made by the Secretarial Auditor in their report.
Pursuant to Section 148 of the Companies Act 2013 read with theCompanies (Cost Records and Audit) Amendment Rules 2014 as amended from time to timesubject to the approval of the Central Government if any required the Audit Committeehas recommended and the Board of Directors had appointed M/s. Nageswara Rao & Co.(Registration No. 000332) Cost Accountants Hyderabad being eligible and having soughtre-appointment as Cost Auditors of the Company to carry out the cost audit of theproducts manufactured by the Company during the financial year 2021-22.
Your Company has taken necessary steps to mitigate risks and obtainedappropriate insurances and the Board is kept appraised of the risk assessment andminimization procedures. The assets of the Company have been adequately covered underinsurance. The policy values have been determined taking into consideration the value ofthe assets of the Company.
There have been no material changes and commitments affecting thefinancial position of the Company between the end of the financial year of the Company towhich the financial statements relate and the date of the report. Further it is herebyconfirmed that there has been no change in the nature of business of the Company.
Energy Conservation Technology Absorption and Foreign ExchangeEarnings and Outgo
The information on conservation of energy technology absorption andforeign exchange earnings and outgo stipulated under Section 134(3)(m) of the CompaniesAct 2013 read with Rule 8 of The Companies (Accounts) Rules 2014 as amended from timeto time is annexed herewith as Annexure-3.
Extract of Annual Return
Pursuant to Section 92 and Section 134 of the Companies Act 2013 asamended from time to time the Annual Return as on March 31 2021 in form MGT-7 isavailable on the website of the Company at www.neulandlabs.com.
Particulars of Employees and related disclosures
The information relating to remuneration and other details as requiredpursuant to Section 197 of the Act read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 as amended is provided as anAnnexure-4 to this report.
In terms of the provisions of Section 197 of the Act read with Rules5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 as amended a statement showing the names and other particulars of theemployees drawing remuneration in excess of the limits set out in the said rules areprovided in the Annual Report which forms part of this Report.
Pursuant to the provisions of the first proviso to Section 136(1) ofthe Act the Annual Report is being sent to the members and other persons entitledthereto excluding the information in respect of employees of the Company containing theparticulars as specified in Rule 5 (2) of the said Rules. The said information isavailable for inspection on all working days during business hours at the RegisteredOffice of the Company up to the date of the ensuing Annual General Meeting. Any memberinterested in obtaining such information may write to the Company Secretary and the samewill be furnished on request.
Related Party Transactions
All contracts / arrangements / transactions entered into by the Companyduring the financial year with related parties were in the ordinary course of business andat an arm's length basis.
During the year the Company has not entered into any material contractor arrangements with related parties which could be considered material in accordance withthe policy of the Company on materiality of related party transactions. Further therewere no materially significant related party transactions which could have potentialconflict with interest of the Company at large.
The Policy on Materiality of Related Party Transactions and on dealingwith Related Party Transactions as approved by the Board may be accessed on the Company'swebsite www.neulandlabs.com.
The particulars of transactions with related parties in the prescribedformat is annexed to this report as Annexure-5. Members may refer to Note 37 to thestandalone financial statement which sets out related party disclosures pursuant to IndAS.
Particulars of Loans Guarantees and Investments
The Company has not given any loans and guarantees or made anyinvestments under Section 186 of the Act during the year under review.
Deposits from Public
The Company has not accepted any deposits from the public and as suchno amount of principal or interest on deposits from the public was outstanding as on thedate of the Balance Sheet.
Significant and Material Orders passed by the Regulators or Courts
There are no significant material orders passed by the Regulators /Courts which would impact the going concern status of the Company and its futureoperations.
The Board oversees Company's processes for determining risk toleranceand review management's action and comparison of overall risk tolerance to establishedlevels. The framework is designed to enable risks to be identified assessed and mitigatedappropriately. Major risks identified by the businesses and functions are systematicallyaddressed through appropriate actions on a continuous basis. For details please refer tothe Management Discussion and Analysis report which forms part of this Report.
Internal Financial Controls
Internal Financial Controls are an integral part of the risk managementprocess addressing financial and financial reporting risks. The internal financialcontrols have been embedded and documented in the business processes. The controls inplace include essential components of internal financial controls required under theCompanies Act 2013 as amended from time to time and also the internal financialcontrols over financial reporting as per the Guidance Note on Audit of Internal Controlsover Financial Reporting as issued by Institute of Chartered Accountants of India.
Assurance on the effectiveness of internal financial controls isobtained through management reviews continuous monitoring by functional owners as well astesting of the internal financial control systems by the internal auditors during thecourse of their audits. We believe that these systems provide reasonable assurance thatour internal financial controls are designed effectively and are operating as intended.
The Company has in place adequate internal financial controls withreference to financial statements. During the year under review such controls were testedand no reportable material weakness in the design or operation were observed.
Human Resources & Industrial Relations
Your Company's relations with its employees continue to be cordial.Dedicated work by the workmen supervisors and executives of your Company made it possibleto achieve success under trying and difficult circumstances.
The Board of Directors would like to place on record its sincereappreciation for the continued support and guidance received from the banks financialinstitutions statutory and regulatory authorities Ministry of Corporate Affairs StockExchanges and Depositories for their continued support and guidance. The Board places onrecord its appreciation to the Shareholders of the Company for their continued support andto its valued customers and vendors for their continued patronage. The Board of Directorsalso wish to place on record its deep sense of appreciation for the committed services bythe Company's employees at all levels.
| ||For and on behalf of the Board |
| ||Dr. Davuluri Rama Mohan Rao |
|Place: Hyderabad ||Executive Chairman |
|Date: May 112021 ||(DIN: 00107737) |