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Parabolic Drugs Ltd.

BSE: 533211 Sector: Health care
NSE: PARABDRUGS ISIN Code: INE618H01016
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VOLUME 9194
52-Week high 9.81
52-Week low 3.45
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Mkt Cap.(Rs cr) 22
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Parabolic Drugs Ltd. (PARABDRUGS) - Director Report

Company director report

Dear Members

The Board of Directors of your Company present the Twenty First Annual Report on theaffairs of the Company together with the Audited Accounts of the Company for the yearended 31ST March 2017.

1. FINANCIAL RESULTS:

The Financial Results for the year under review vis--vis the financial results forthe previous year are as under: (Rs. In millions)

Particulars 2016-17 2015-16
Gross Sales 774 831
Profit before Depreciation Interest & Tax (PBDIT) (732) (3507)
Financial Expenses 99 1076
Depreciation 219 225
Profit before Tax (PBT) (1050) (4808)
Provision for Taxation:
-Current Tax
-Deferred Tax 31 44
Profit after Tax (PAT) (1081) (4852)
Profits available for equity shareholders
Appropriation: - -
Proposed Dividend on Equity Shares - -
Corporate Dividend Tax - -
Balance carried to Balance Sheet (1081) (4852)
Earnings per Share (Basic) Rupees (17.46) (78.39)
Earnings per Share (Diluted)Rupees (17.46) (78.39)

FINANCIAL ANALYSIS AND REVIEW OF OPERATIONS

Your Directors are hereby reporting performance of the business operations as follows:-

? Sales and Export: During the year under review your Company achieved aturnover of Rs. 774 million as compared to Rs. 831 million in the previous year with adecrease of 7%. The export of API products has also been lower at Rs. 173 million ascompared to 326 million in the previous year. Total exports including trading of productshave been at Rs. 307 million as compared to Rs. 378 million in previous year. The overalldecrease in both domestic and exports sale has been owing to paucity of adequate workingcapital.

? Profitability: During the period the Earnings before depreciation interestand tax (EBDITA) has been (-) Rs. 732 million as compared to (-) Rs. 3507million duringthe corresponding previous year. The Company incurred a loss before tax (PBT) of Rs. 1050million as compared to a loss of Rs.4808 million during the previous year. After taxadjustment of Rs. 31 million the net loss worked out to Rs. 1081 million as compared to anet loss of Rs. 4852 million in the previous year.

? Assets: The net fixed assets (including work-in-progress) as at 31stMarch2017 were Rs. 3554 million as compared to Rs. 3777 million in the previous year.

2. DIRECTORS:

Pursuant to the provisions of Section 152 of the Companies Act 2013 and in accordancewith the Articles of Association of the Company Mr. Vineet Gupta Director of the Companyretires by rotation at the forthcoming Annual General Meeting and being eligible offerhimself for re-appointment. Notice convening the Annual General Meeting includes theproposal for his re-appointment as the Director. The present term of appointment of Mr.Jagjit Singh Chahal and Mr. Sanjeev Kumar (Independent & Non Executive Director) isexpiring at the ensuring Annual General meeting. The Board of Directors recommend theirappointment for a further term of one year. Mr. Sandeep Sharma the CFO has resigned12.11.2016 and Mr. Ashok Kumar Jindal was appointed as Chief Financial Officer w.e.f.10.05.2017. Pursuant to section 2 (51) and Section 203 of Companies Act 2013 Mr. PranavGupta (Managing Director)Mr. Vineet Gupta (Whole Time Director) Mr. Ashok Kumar Jindal(Chief Financial Officer) and Ms. Ishrat Gill (Company Secretary) are the KMP's of theCompany. Statement on Declaration by Independent Directors

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both under theSection 149(6) of the Companies Act 2013 and Regulation 15 of SEBI (Listing Obligationsand Disclosure Requirements) 2015.

3. SUBSIDIARIES:

The Company has two wholly owned subsidiaries namely M/s. Parabolic Research LabsLimited and M/s. Ziven Life Sciences Limited. The consolidated Financial Statements ofthese subsidiaries and the Company shall be laid before the Annual General Meeting of theCompany.

Pursuant to Section 129 of the Companies Act 2013 a separate statement containing thesalient features of the financial statements of its subsidiary is attached along with theFinancial Statements of the Company.

4. SHARE CAPITAL:

During the year under review the Authorized Share Capital of the Company remainedunchanged at Rs. 72 Crores (divided into 72000000 Equity Shares of Rs. 10 each). ThePromoters/Promoters' Associates had contributed Rs 260 million as their additionalcontribution towards equity share capital for the allotment of 18055556 equity sharesat a price of Rs. 14.40/-(face value Rs.10 and premium Rs.4.40) per equity share in termsof sanctioned CDR package. The allotment of said shares to proposed allottee (s) has beenpending for want of receipt of in principle approval from the NSE.

5. MANAGEMENT DISCUSSION AND ANALYSIS REPORT: Management Discussion andAnalysis of financial conditions and result of operations of the Company for the FinancialYear 2016-17 as required under Regulation 34 of SEBI (Listing Obligations and DisclosureRequirement) Regulation 2015 are annexed hereto as a separate statement in the AnnualReport.

6. CORPORATE GOVERNANCE REPORT:

The Company aimed to conduct its affairs in ethical manner and has in place a system ofCorporate Governance. A separate report on Corporate Governance forming a part of theAnnual Report is annexed hereto. A certificate from the Statutory Auditors of the Companyregarding the compliance of conditions of Corporate Governance as stipulated underRegulation 27 of SEBI (Listing Obligations and Disclosure Requirement) Regulation 2015 isannexed to the report on Corporate Governance.

7. AUDITORS:

Pursuant to the provisions of Section 139 of the Companies Act 2013 every companyat its first Annual General Meeting has to appoint an individual or a firm as an auditorwho shall hold office from the conclusion of that meeting till the conclusion of its sixthAnnual General Meeting. No listed company or a company belonging to such class or classesof companies as may be prescribed shall appoint or re-appoint an audit firm as auditorsfor more than two terms of five consecutive years. However a time of three years has beengiven for the compliance of the said provisions. The Board had appointed M/s. V.K. Jindal& Company Chartered Accountants Chandigarh for a period of one year who shall holdoffice from the conclusion of this annual general meeting till the conclusion of nextannual general meeting.

8. AUDITORS' REPORT:

The Auditors' Report on the Accounts of the Company for the year under review isself-explanatory and requires no comments. During the year there were no instances offrauds reported by auditors under section 143(12) of the Companies Act 2013

9. SECRETARIAL AUDITORS' REPORT:

Pursuant to section 204 of the Companies Act 2013 M/s M.L. Aggarwal &Associates Practising Company Secretary (COP no 13944) Chandigarh was appointed by theBoard to conduct secretarial audit of the Company for the FY 31st March 2017. TheSecretarial Audit Report is attached as an annexure.

10. APPOINTMENT OF COST AUDITOR:

The Board of Directors has approved the appointment of M/s. Anil Sharma & Co.Cost Accountants Chandigarh as the Cost Auditors of the Company for the Financial Year2017-18 subject to the approval of the Members in the ensuing Annual General Meeting ofthe Company. The cost audit report for the Financial Year 2016-17 will be forwarded to theCentral Government as required under Law.

11. INTERNAL CONTROL SYSTEM:

The company has in place well designed adequate internal controls with reference tofinancial statements. These controls ensure the accuracy and completeness of theaccounting records and preparation of reliable financial statements.

12. FIXED DEPOSITS:

During the year under review the Company has not accepted any deposits from the publicin terms of the provisions of Sections 73 of the Companies Act 2013.

13. DIVIDEND:

In view of the loss incurred by the Company during the year under review the Board ofDirectors has not recommended any dividend for the Financial Year 2016-17.

14. PERSONNEL AND HUMAN RESOURCES:

Your Company continues to lay emphasis on continued qualitative growth of its humanresources by providing a congenial and conducive work environment in consonance with itsbelief that the real strength of its organization lies in its employees.

15. INDUSTRIAL RELATIONS:

The Industrial Relations between the employees and the management remained peacefuland cordial throughout the year at all the units of the Company.

16. STATEMENT OF PARTICULARS OF EMPLOYEES: A statement of Particulars of Employeespursuant to the provisions of Section 134 of the Companies Act 2013 is enclosed andforms a part of this report.

17. GROUP:

The Company inter-alia with the following entities constitutes a group: a) PNGTrading Private Limited b) Parabolic Infrastructure Private Limited

18. MEETINGS OF BOARD OF DIRECTORS:

The Board of Directors met four times during the financial year. Detail of boardmeeting is given in corporate governance report.

19. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to Section 134(5) of the Companies Act 2013 the Directors confirm that:- a.in the preparation of the annual accounts the applicable accounting standards have beenfollowed along with proper explanation relating to material departures; b. appropriateaccounting policies have been selected and applied consistently and have made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of thestate of affairs of the Company as at 31st March 2017 and of the profit and loss of theCompany for the year ended on 31st March 2017; c. proper and sufficient care has beentaken for the maintenance of adequate accounting records in accordance with the provisionsof the Companies Act2013 for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; and d. the annual accounts have beenprepared on a going concern basis. e. adequate internal financial controls to be followedby the Company have been laid down and such controls were operating effectively. f. properand adequate systems to ensure compliance with the provisions of all applicable laws havebeen devised and such systems were operating effectively.

20. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:Energy conservation continues to be an area of major emphasis in our Company. TheCompany has adopted the strategy of bringing about a general awareness amongst allregarding energy conservation. Particulars with respect to conservation of energy andother areas as per Section 134 (3) (m) of the Companies Act 2013 read with the Companies(Disclosure of Particulars in the Report of Board of Directors) Rules1988are annexedhereto and form part of this report.

21 . MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITIONOF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TOWHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT:

There are no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year of the Company i.e.March 31 2017 and the date of the Directors' Report i.e. August 21 2017.

22. REMUNERATION TO DIRECTORS/EMPLOYEES AND RELATED ANALYSIS:

During the period under review no employee of the Company received salary in excess ofthe limits as prescribed under the Act. Accordingly no particulars of employees are beinggiven pursuant to Section 134 of the Companies Act 2013 read with Rule 5(2) of the

Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014. Thedetails pertaining to the ratio of the remuneration of each director to the medianemployee's remuneration and other prescribed details as required under Section 197(12) ofthe Companies Act 2013 read with Rule 5(1) of the Companies (Appointment And Remunerationof Managerial Personnel) Rules 2014 are annexed herewith and form part of the Directors'Report as Annexure I.

23. EXTRACT OF THE ANNUAL RETURN:

Pursuant to sub-section 3(a) of Section 134 and subsection (3) of Section 92 of theCompanies Act 2013 read with Rule 12 of the Companies (Management and Administration)Rules 2014 the extracts of the Annual Return as at March 31 2017 forms part of thisreport

24 . VIGIL MECHANISM/WHISTLE BLOWER POLICY:

Pursuant to the provisions of Section 177 (9) & (10) of the Companies Act 2013 andRegulation 22 Of SEBI (Listing Obligations and Disclosure Requirements) 2015 a VigilMechanism/Whistle Blower Policy for Directors and employees to report genuine concerns hasbeen established

25. CORPORATE SOCIAL RESPONSIBILITY (CSR):

The provisions of Section 135 of Companies Act 2013 are not applicable to the Company.

26. NOMINATION AND REMUNERATION POLICY: The Company's Nomination andRemuneration Policy formulated by the Nomination and Remuneration Committee deals with theappointment and remuneration of Directors and KMPs of the Company. The policy also coversthe criteria for determining qualifications positive attributes independence of aDirector and KMP. In terms of Section 134(3)(e) of Companies Act 2013 the Nomination and

Remuneration Policy of the Company is annexed herewith and forms part of the Directors'Report.

27. RISK MANAGEMENT POLICY:

Your Company has a Risk Management Policy in place duly approved by the Board ofDirectors wherein all material risks faced by the Company are identified and assessed.For each of the Risks identified corresponding controls are assessed and policies andprocedure are put in place for monitoring mitigating and reporting risk on a periodicbasis.

28 . LISTING / DE-LISTING OF SHARES:

The Shares of your Company are presently listed on The Bombay Stock Exchange LimitedMumbai (BSE) and National Stock Exchange (NSE).

29 . RELATED PARTY TRANSACTIONS:

Particulars of contracts or arrangements with related parties referred to in Section188 (1) of the Companies Act 2013 in the prescribed Form AOC -2 is appended as Annexure2 to the Board's report. Details of related party disclosures form part of the notes tothe financial statements provided in this annual report.

30. PERFORMANCE EVALUATION OF THE BOARD:

This part is covered under Corporate Governance Report.

31 . ACKNOWLEDGEMENT:

Your Directors are pleased to place on record their sincere gratitude to theGovernment Bankers and Business Constituents and the shareholders for their continuedsupport to and the confidence reposed in the Company. Your Directors also express theirdeep appreciation for the devoted and sincere services rendered by workers staff andexecutives at all levels of the organization and we are confident that our Company willcontinue to receive such co-operation from them in future also.

FOR AND ON BEHALF OF THE BOARD

Sd/-

PRANAV GUPTA

MANAGING DIRECTOR

PLACE: Chandigarh

DATED: 21.08.2017

Annexure to the Board of Directors' Report

INFORMATION AS PER SECTION 134(3) (m) of the COMPANIES ACT 2013 READ WITH COMPANIES(DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES 1988 AND FORMINGPART OF THE DIRECTORS' REPORT FOR THE YEAR ENDED

31 ST MARCH 2017:

1. CONSERVATION OF ENERGY:

Your Company has always been conscious of the need to conserve energy and also reducethe cost of production. We hold regular meetings in our Units for discussion on thevarious energy conservation measures and implement them. Various energy conservationmeasures taken during the year which include Extra heat exchanger of cooling towerprovide before brine heat exchanger to reduce load of chilled brine. This has resulted inreduction in running of chilled brine compressor which consumes very high power. FurtherStringent steam control program made to reduce husk consumption which includes leakagereduction steam controller inspection steam trap inspection hot water tanks inspectioninsulation inspection steam ejectors inspection.

The consequent impact of the above measures on the cost of production is as below:

Power/Fuel Saving Measures Saving in Quantity Saving in Amount (Rs)
1. Power Saving by improvement in piping of cooling tower chilled water/chilled brine compressor and overhauling of cooling tower 72000 KW 576000
2. Saving of husk by improvement in storage facility 36000 KW 288000
Total 864000

The detail regarding the present energy consumption is furnished below as per Form A ofthe annexure to the rules.

Form-A
A. POWER & FUEL CONSUMPTION:
PARTICULARS UNIT 2016-17 2015-16
1. Electricity
a) Purchased
Units KWH in million 9.08 8.93
Total Amount Rs. in million 72.71 78.33
Rate per Unit Rs./KWH 8.01 8.77
b) Own Generation through Diesel Generator
Generator Units KWH in million 1.07 0.51
Units per litre of Diesel KWH 3.40 3.40
Cost per Unit Rs./KWH 15.74 14.19
2. Furnace Oil :
Quantity K. Litres 0.00 0.00
Total Cost Rs. in million 0.00 0.00
Average Rate Rs./ litre 0.00 0.00
3. Others /Internal Generation
Quantity (Timber & Husk) Ton 5065.04 4967.55
Total cost Rs. in million 16.56 21.73
Rate/Unit Rs./ton 3271.28 4375.18
B. CONSUMPTION PER UNIT OF PRODUCTION:
Production of Different Products
Electricity KWH/KG 66.32 9.57
Furnace Oil 0.00 0.00
Furnace Oil (Litres) 0.00 0.00
Others/Internal Generation 0.00 0.00
(*) Variation due to change in product mix

2. TECHNOLOGY ABSORPTION:

Efforts made in technology absorption are furnished in Form – B as under: Form-B

a) Research and Development(R&D): a) Specific areas in which Research &Development is carried out by the Company:

R & D has been carried out in areas of improvement in Product Process CostReduction Development of New Products and Increase in Productivity. b) Benefits derivedas a result of above R & D: The Company was able to improve the quality of existingproducts and develop new products and was also able to reduce the cost of Production. c)Further course of action: We intend to develop new product to further reduce the cost andimprove capacity utilization. d) Expenditure on R & D:

(Rs. in million)
2016-17 2015-16
Capital
Recurring
Total

b) Technology Absorption Adaptation and Innovation: a) Efforts made:

The Company is continuously making efforts for adoption of latest technology in all itsplants. The Company has also created specific R & D and other cells for studying andanalyzing the existing processes for further improvement. b) Particulars of ImportedTechnology in last five years:

i) Technology Imported : NIL
ii) Year of Import : Not Applicable
iii) Has the Technology been fully absorbed : Not Applicable

3. FOREIGN EXCHANGE EARNINGS AND OUTGO: a) Activities relating to ExportsInitiative to increase:

The Company exported Semi Synthetic Penicillin (oral and sterile) and Cephalosporinorals and sterile to various overseas customers. Our products are being exported to around50 countries across the globe. The Company has understood the need of customerrelationships and identified potential customers across the globe and initiated visit tomeet them in order to know more about them and their requirements. The Company has alsoparticipated in various International/National Business fairs in order to interact withcustomers. b) Total Foreign Exchange used and earned:

2016-17 2015-16
1. Earnings (FOB Value of exports) 172.96 326.44
2. Outgo (CIF Value of imports and 103.16 323.18
Expenditure in foreign currency)

STATEMENT OF PARTICULARS OF EMPLOYEES

Information required as per Companies Act read with Rule 5(2) of Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 and forming part ofBoard of Directors' Report for the year ended March 31 2017

A) Persons employed throughout the financial year who were in receipt of remunerationfor the year which in the aggregate was not less than Rs. 10200000 per annum

NONE

B) Persons employed for a part of the financial year who were in receipt ofremuneration for any part of the year at a rate which in the aggregate was not lessthan Rs. 8 50000 per month.

Annexure I

The ratio of the remuneration of each director to the median employee's remunerationand other details in terms of sub-section 12 of Section 197 of the Companies Act 2013read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014:

(Amount in Rs.)

Name of Director/KMP and Designation Remuneration of Director/KMP for financial year 2016-17 % increase in Remuneration in the Financial Year 2016-17 Ratio of remuneration of each Director/ to median remuneration of employees Comparison of the Remuneration of the KMP against the performance of the Company
1 Pranav Gupta Managing Director - - - -
2 Vineet Gupta Whole time Director - - - -
3 Jagjit Singh Chahal Non-Executive Director - - - -
4 Vandana Singla Non-Executive Director - - - -
5 Sanjeev kumar Non-Executive Director - - - -
6 Sandeep Sharma* Chief Financial Officer 178556.00 - - -
7 Ishrat Gill** Company Secretary 201742.00 - - -

* For the period August 2016 to November 2016. Resigned effective 02nd November 2016

** Appointed W.e.f. 13th August 2016

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.

Form for Disclosure of particulars of contracts/arrangements entered into by thecompany with related parties referred to in sub section (1) of section 188 of theCompanies Act 2013 including certain arms length transaction under third proviso thereto.

1. Details of contracts or arrangements or transactions not at Arm's length basis. NIL

Particulars Details
Name (s) of the related party & nature of relationship N.A.
Nature of contracts/arrangements/transaction N.A.
Duration of the contracts/arrangements/transaction N.A.
Salient terms of the contracts or arrangements or transaction including the value if any N.A.
Justification for entering into such contracts or arrangements or transactions' N.A.
Date of approval by the Board N.A.
Amount paid as advances if any N.A.
Date on which the special resolution was passed in General meeting as required under first proviso to section 188 N.A.
Name (s) of the related party & nature of relationship N.A.
Nature of contracts/arrangements/transaction N.A.
Duration of the contracts/arrangements/transaction N.A.
Salient terms of the contracts or arrangements or transaction including the value if any N.A.
Date of approval by the Board N.A.
Amount paid as advances if any N.A.

For and on behalf of the Board For Parabolic Drugs Limited

Sd/- (Pranav Gupta) Director

Place: Chandigarh Dated: 29th May 2017