PANCHSHEEL ORGANICS LIMITED
Your Directors take pleasure in presenting the Thirty-First Annual Report together withthe Audited Statements of Account of the Company for the Financial Year ended 31stMarch 2020.
| ||Current Year Rupees ||Previous Year Rupees |
|Total Income || || |
|Sales & income from Operation || || |
|Domestic ||485366186 ||471116000 |
|Export ||19611219 ||11229000 |
| ||504977405 ||482345000 |
|Less: Excise Duty ||0 ||0 |
|Add: Other Income || || |
|Other operation Income ||1881318 ||2787000 |
|TOTAL ||506858723 ||485132000 |
|Expenditure || || |
|Operating Expenditure ||359720737 ||367956000 |
|Administrative and other expenditure ||68660790 ||46079000 |
|Finance Charges ||3067284 ||3874000 |
|(Increase)/ Decrease in stocks ||(8830593) ||(1002000) |
|Depreciation for the Year ||11126878 ||11646000 |
|TOTAL ||433745095 ||428553000 |
|Profit Before Tax ||73113628 ||56580000 |
|Less: Current tax ||(22670568) ||(18264000) |
|Excess or short income tax provision ||1113513 ||- |
|Deferred Tax ||1337885 ||2053000 |
|Profit after Tax ||52894458 ||40369000 |
During the year 2019-20 under review your Company achieved turnover of Rs.504977405 as compared to the previous year 2018-19 of Rs. 482345000 registering aincrease.
Your Directors have not recommended any Dividend for the Financial Year 2019-20 toconserve the resources for future requirements.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
Your Company has no subsidiaries joint ventures and associate Companies.
MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
A report on Management Discussion and Analysis covering industry structure anddevelopments financial and operational performance of the Company risks concernsopportunities threats and outlook forms a part of this Report.
Your Company has not transferred any amount out of the profit of the year to theGeneral Reserve. SHARE CAPITAL
During the year under review there was no change in the Equity Share Capital of theCompany.
The Company has not issued any equity shares with differential rights as to dividendvoting or otherwise during the year under review.
The Company has not issued ESOP or sweat equity shares to Directors or employeesduring the year under review.
According to the IMF global economic growth slowed down from 3.6% in 2018 to 2.9% in2019 (Source: IMF). Rising trade tensions between the US and China possibility of ano-deal' Brexit and a slowdown in China were some of the pressure points. Post thepandemic breakout globally in the first quarter of 2020 world economies were forced tolockdown. Consequently global economic output is likely to decline by 3% in 2020.
In India the pharmaceutical industry remained on firm footing during the year.Improved accessibility to medicines better purchasing power and rising diagnosis ofchronic diseases aided prospects of the domestic industry.
The Company's operations continue to be mainly focused in the areas of manufacture andexporter of Active Pharma Ingredients(APIs) Intermediates & Finished Formulations(both Human & Veterinary) having a wide experience of more than four decades in thehealthcare field.
Your company having rich experience expertise and a proven track-record in the fieldof Pharma Export-Import trading dealing in a wide range of globally sourced as well asindigenously manufactured best-in-their-class life-saving medicines covering APIsIntermediates Specialty Chemicals Hormones steroids etc.
In the business of pharmaceutical manufacture and marketing there is a premium to bepaid for product and process integrity derived from the highest manufacturing standards.In line with this priority Panchsheel established world-class formulation manufacturingfacilities. These facilities leveraged state of-the-art technologies best practices andstringent regulatory compliances. These Centers of Excellence periodically reinforcedtheir commitment to create products of the highest quality.
RISK AND CONCERN
The Company has a robust Business Risk Management framework to identify evaluatebusiness risk and opportunities. This framework seeks to create transparency minimizeadverse impact on the business objectives and enhance the Company's competitive advantage.The framework defines the risk management approach across the enterprise at various levelsincluding documentation and reporting. The framework has different risk models which helpin identifying risks trends exposure and potential impact analysis at a Company level asalso separately for business. The Company has adopted risk management policy.
ADEQUACY OF INTERNAL CONTROL
The Company has a proper and adequate system of internal control in all spheres of itsactivities to ensure that all its assets are safeguarded and protected against loss fromunauthorized use or disposition and that the transactions are authorized recorded andreported diligently. The Internal control is supplemented by an effective internal auditbeing carried out by an external firm of Chartered Accountants.
The Company ensures adherence to all internal control policies and procedures as wellas compliances with all regulatory guidelines.
The Audit Committee of the Board of Directors reviews the adequacy of internalcontrols.
Relations remained cordial with employees at all levels during the year.
The Company has complied with applicable provisions of Corporate Governance as providedunder SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. A separatereport on Corporate Governance compliance is included as a part of the Annual Report alongwith the Auditors' Certificate.
Your Company has not accepted any public deposits during the year under review.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 134(5) of the Companies Act 2013 with respectto Directors' Responsibility Statement the Directors confirm that:
1. In the preparation of the annual accounts for the financial year ended 31st March2020 the applicable accounting standards have been followed and that there are nomaterial departures from the same;
2. Accounting policies selected were applied consistently. Reasonable and prudentjudgments and estimates were made so as to give a true and fair view of the state ofaffairs of the Company as at 31st March 2020 and of the profit for the yearended on that date;
3. Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
4. The annual Accounts for the Financial Year ended 31st March 2020 have been preparedon a 'going concern' basis.
5. Proper internal financial controls were in place and that the financial controlswere adequate and were operating effectively.
6. Proper systems devised to ensure compliance with the provisions of all applicablelaws were in place and were adequate and operating effectively.
Your Company always strives to promote and follow the highest level of ethicalstandards in all its business transactions. SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 mandated formulation of certain policies for all listedcompanies. All the policies adopted by your Company are available on the websitewww.panchsheelorganics.com. These policies are reviewed periodically by the Board andupdated based on need and new compliance requirement. Key policies that have been adoptedby the Company are as follows:
1. Code of Conduct for Board of Directors and Senior Managerial Personnel
2. Code to Regulate Monitor and Report on trading by insider
3. Policy on Related Parties Transactions
4. Corporate Social Responsibility (CSR) Policy
5. Whistle Blower Policy (Vigil Mechanism)
6. Policy on Fair Disclosure of Unpublished Price Sensitive Information
7. Policy on Materiality Disclosure
Your Company's Board comprises of 6 (Six) Directors of which 3 (Three) Directors areNon Executive Independent Directors and 3 (Three) are Executive Directors includingManaging Director.
In the financial year 2019-20 Mrs. Paresha Rajesh Turakhia is appointed as ExecutiveDirector. Mr. Rajesh Turakhia holds position of Director till 30th April 2019.
The appointment of Mr. Mahendra Turakhia (DIN: 00006222) Managing Director beingeligible is recommended for appointment for as Managing Director for 5 years.
Mrs. Paresha R Turakhia being eligible has offered herself for reappointment asExecutive Director at the ensuing Annual General Meeting.
KEY MANAGERIAL PERSONNEL
In the Financial Year 2019-20 Mr. Rajesh Turakhia was appointed as Chief FinancialOfficer in place of Mr. Chandrakant Shah. Ms. Alpi Jain CS resigned on 20thDecember 2019. The Company has appointed Mr. Amit Jain Company Secretary and Complianceofficer w.e.f. 24th December 2019.
NUMBER OF MEETINGS OF THE BOARD
During the financial year 2019-20 the Board met 8 (Eight) times on 30.04.201929.05.2019 10.08.2019 31.08.2019 14.11.2019 24.12.2019 21.01.2020 and 14.02.2020.
FAMILIARIZATION PROGRAMME FOR THE INDEPENDENT DIRECTORS
The Board of Directors has adopted a Familiarization Program for Independent Directorsof the Company and posted the same on the website of the Company viz.www.panchsheelorganics.com . The Program aims to provide insights into the Company toenable the Independent Directors to understand and significantly contribute to itsbusiness.
AUDITORS Statutory Auditors
At the 27th Annual General Meeting M/s Jayesh R. Shah & AssociatesChartered Accountants (Firm Regn. No. 104182W) Mumbai were appointed as the StatutoryAuditors of the Company to hold office from the conclusion of the 27th AGM tothe conclusion of the 32nd AGM.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hadappointed M/s. GMS & Co. a firm of Company Secretaries in Practice to undertake theSecretarial Audit of the Company for the year 2019-20. The Secretarial Audit Report isannexed herewith.
COMMITTEES OF THE COMPANY
Currently the Company has five committees; The Audit Committee The Nomination andRemuneration Committee The Stakeholders' Relationship Committee The Corporate SocialResponsibility Committee and The Risk Management Committee. Details of the composition ofthese committees are given in the Corporate Governance Report which forms part of thisAnnual Report.
In the Board Meeting held on 31st July 2020 the Board of Directors hasdissolved the Risk Management Committee as the is inapplicable.
ANNUAL PERFORMANCE EVALUATION:
In compliance with the provisions of the Act and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the performance evaluation was carried out asunder:
In accordance with the criteria suggested by the Nomination and Remuneration Committeethe Board of Directors evaluated the performance of the Board having regard to variouscriteria such as Board composition Board processes and Board dynamics. The IndependentDirectors at their separate meeting also evaluated the performance of the Board as awhole based on various criteria. The Board and the Independent Directors were of theunanimous view that performance of the Board of Directors as a whole was satisfactory.
Committees of the Board:
The performance of the Audit Committee the Corporate Social Responsibility Committeethe Nomination and Remuneration Committee the Stakeholders Relationship Committee and theRisk Management Committee was evaluated by the Board having regard to various criteriasuch as committee composition committee processes and committee dynamics. The Board wasof the unanimous view that all the committees were performing their functionssatisfactorily and according to the mandate prescribed by the Board under the regulatoryrequirements including the provisions of the Act the Rules framed thereunder and theListing Agreement/SEBI (Listing Obligations and Disclosure Requirements) Regulations2015.
(a) Independent Directors: In accordance with the criteria suggested by the Nominationand Remuneration Committee the performance of each independent director was evaluated bythe entire Board of Directors (excluding the director being evaluated) on variousparameters like qualification experience availability and attendance integritycommitment governance independence communication preparedness participation and valueaddition. The Board was of the unanimous view that each independent director is a reputedprofessional and brought his rich experience to the deliberations of the Board. The Boardalso appreciated the contribution made by all the independent directors in guiding themanagement in achieving higher growth and concluded that continuance of each independentdirector on the Board will be in the interest of the Company.
(b) Non-Independent Directors: The performance of each of the non-independent directors(including the Chairperson) was evaluated by the Independent Directors at their separatemeeting. Further their performance was also evaluated by the Board of Directors. Variouscriteria considered for the purpose of evaluation included qualification experienceavailability and attendance integrity commitment governance communication etc. TheIndependent Directors and the Board were of the unanimous view that each of thenon-independent directors was providing good business and people leadership.
CORPORATE SOCIAL RESPONSIBILITY
In accordance with the provisions of Section 135 of the Companies Act 2013 and therules made there under the Company has constituted a Corporate Social ResponsibilityCommittee of Directors. The role of the Committee is to review the CSR activities of theCompany periodically and recommend the Board the amount of expenditure to be incurred onthe CSR activities annually. Annual Report on CSR activities carried out by the Companyduring F.Y. 2019-20 is enclosed as "Annexure - A" to this report.
The particulars of ratio of remuneration of each director to median remuneration of theemployees of the Company for the financial year under report percentage increase inremuneration of each Director and KMP etc. more particularly described under Section197(12) of the Companies Act 2013 and Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are given in "Annexure B- Part-A" to this Report.
The statement showing particulars of employees as required under Section 197(12) of theCompanies Act 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is annexed to this report asAnnexure - B Part- B.
PARTICULARS OF LOANS AND INVESTMENTS
The details related to Loan Guarantees and Investments as covered under the provisionof Section 186 of the Companies Act 2013 are given in the notes to the FinancialStatements.
ADDTION IN OBJECT CLAUSE OF MEMORANDUM OF ASSOCIATION OF THE COMPANY:
In the Meeting of Board of Directors held on 21st January 2020 The Boardhad approved subject to the approval of shareholders which they have assent by passingspecial resolution on 7th March 2020 through postal ballot about addition inthe main object clause of Memorandum of Association of the Company to capitalize thebusiness opportunities created by e-commerce which enable the Company to trade APIs ononline portal.
The details of postal ballot process are provided in General Body Meetingsof Corporate Governance Report.
ADOPTION OF TABLE F OF SCHEDULE I OF THE COMPANIES ACT 2013 BY AMENDING ARTICLES OFASSOCIATION OF THE COMPANY:
The Board of Directors at their meeting held on 21st January 2020 had approved theamendment of Company's Articles of Association so as to bring it in conformity with theCompanies Act 2013 with the approval of shareholders taken on 7th March 2020 by passingSpecial Resolution through Postal ballot.
The details of postal ballot process are provided in General Body Meetingsof Corporate Governance Report.
The reason for this amendment was The Articles of Association of the Company wasoriginally adopted when the Company was incorporated under the Companies Act 1956. Thereferences to specific Sections of the Companies Act 1956 in the earlier Articles ofAssociation may no longer be in conformity with introduction of new provisions of theCompanies Act 2013. It is therefore proposed to amend the Articles of Association toalign it with the provisions of Companies Act
2013 including the Rules framed there under by adoption of Table F of Schedule I to theCompanies Act 2013.
RELATED PARTY TRANSACTIONS
Your Company has not entered into any transaction during the year with any relatedparties which are not at arm's length basis. Further your Company has not entered into anymaterial transaction with any related parties during the year.
All Related Party Transactions that were entered into during the financial year were inthe ordinary course of business on arm's length basis and repetitive in nature. Thesetransactions were placed before the Audit Committee for information and entered in theRegister maintained under Section 189 of the Companies Act 2013. The Audit Committee hasgranted omnibus (ad hoc) approval for Related Party Transactions as per the provisions andrestrictions contained in the policy framed under Regulation 23 of the SEBI (LODR)Regulations 2015. Company's P olicy on Related Party Transactions is available on theCompany's website www.panchsheelorganics.com. Particulars of related party transactionsentered into during the FY 2019-20 have been disclosed under Note No. 35 of the Notes tothe Financial Statement.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGOING
Pursuant to the requirement under Section 134(3) of the Companies Act 2013 read withRule 8 of Companies (Accounts) Rules 2014 a statement giving details of conservation ofenergy technology absorption foreign exchange earnings and outgo is annexed hereto andform part of the report.
Entire staff in the Company is working in a most congenial manner and there are nooccurrences of any incidents of sexual harassment during the year.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
Your Company has in place a Whistle Blower Policy to deal with instance of fraud andmismanagement if any. Under the policy an effective vigil mechanism for directors andemployees has been established to report their genuine concerns actual or suspected fraudor violation of the Company's codes of conduct. Details of the Whistle Blower Policy areavailable on the Company's website www.panchsheelorganics.com.
RISK MANAGEMENT POLICY
The Company has a robust Business Risk Management (BRM) framework to identify evaluatebusiness risks and opportunities. This framework seeks to create transparency minimizeadverse impact on the business objectives and enhance the Company's competitive advantage.The business risk framework defines the risk management approach across the enterprise atvarious levels including documentation and reporting. The framework has different riskmodels which help in identifying risks trend exposure and potential impact analysis at aCompany level as also separately for business. The Company has adopted risk managementpolicy.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return in Form MGT 9 is provided in "Annexure C" tothis Report and the same is also available on the website of the Companywww.panchsheelorganics.com under "Investor Relations" Section.
Your Directors sincerely express their deep appreciation to employees at all levelsbankers customers and shareholders for their sustained support and co-operation and hopethat the same will continue in future.
| ||For and on behalf of the Board |
| ||Mahendra A. Turakhia |
| ||Managing Director |
|Place: Mumbai || |
|Dated: 31st August 2020 || |