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Sakar Healthcare Ltd.

BSE: 538377 Sector: Health care
NSE: SAKAR ISIN Code: INE732S01012
BSE 05:30 | 01 Jan Sakar Healthcare Ltd
NSE 00:00 | 04 Aug 191.45 -11.25
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Sakar Healthcare Ltd. (SAKAR) - Director Report

Company director report

The Members

Sakar Healthcare Limited

Your Directors have pleasure in presenting the 16TH ANNUAL REPORT togetherwith the Audited Financial Statements for the Financial Year 2019-20 ended 31st March2020.

1. FINANCIAL RESULTS AND OPERATIONS:

(Rs. in lakh)
Particulars 2019-20 2018-19
Sales and other Income 8499.71 6893.04
Profit before Interest and Depreciation 2155.93 1753.98
Less: Interest 225.26 226.55
Profit before Depreciation 1930.67 1527.42
Less: Depreciation 707.98 603.97
Less: Exceptional Item - -
Profit before Taxation 1222.69 923.45
Less: Provision for Taxation - Current 251.00 250.00
Less/ (Add): Provision for Taxation - Deferred (2.74) (5.24)
Less: Provision for Taxation - Previous year 12.15 9.41
Profit for the year 962.28 669.28

There are no material changes and commitment affecting the financial position of theCompany which have occurred between 1st April 2020 and date of this report.

During the year under review the Company achieved turnover of Rs.8499.71 lakh comparedto Rs. 6893.04 lakh during 2018-19. The Company earned profit before interestdepreciation and tax of Rs. 2155.93 lakh during 2019-20 compared to Rs. 1753.98 lakhduring 2018-19. After providing for interest depreciation and taxes the net profit forthe year under review stood at Rs. 962.28 lakh as compared to Rs. 669.28 lakh during2018-19.

2. DIVIDEND:

With view to conserve the financial resources for the future requirement of theCompany the Board of Directors has not recommended any dividend for the year.

3. AWARDS AND RECOGNITIONS:

3.1 Winner of Best Pharmaceutical Products Manufacturer – 2020 India by AIGlobal Staffordshire UK and awarded with Certificate and a Bespoke Crustal Trophy.

3.2 The Company has been honoured under BS 10 Leading Players in Healthcare Industry2019 by Business Sight Magazine.

4. MIGRATION OF LISTING / TRADING OF EQUITY SHARES AT NATIONAL STOCK EXCHANGE(CAPITAL MARKET SEGMENT – MAIN BOARD):

The Equity Shares of the Company were listed/traded on SME Emerge Platform of NationalStock Exchange of India Limited till 10th April 2019.

The Company approached its shareholders via Postal Ballot Process and then got itslisting migrated to the National Stock Exchange (Capital Market Segment – Main Board)w.e.f. 11th April 2019 vide NSE Approval Letter NSE/LIST/ 78594 dated 9thApril 2019.

The Company is regular in payment of Annual Listing Fees. The Company has paid Listingfees up to the year 2020-21.

5. SAKAR ONCOLOGY PRIVATE LIMITED:

The Company has incorporated a Wholly Owned Subsidiary (WOS) of the Company in the nameof ‘Sakar Oncology Private Limited' registered with the Registrar of CompaniesGujarat vide certificate of Incorporation dated 29th March 2020. The said WOShas been incorporated for the new project of Oncology products. The Authorised EquityShare Capital &Paid up Equity Share Capital of Sakar Oncology Private Limited is Rs.50000000/- and Rs. 100000/- respectively.

6. COVID-19 PANDEMIC:

Global Pandemic Covid – 19 has started to surface significantly by mid-March 2020forcing government to take decisive rules including lockdown. Pharmaceutical Industry hasgot categorized under Essential Services and hence has been exempted from day – 1 oflockdown i.e. 25th March 2020. Therefore the manufacturing plant functioning and businessoperations could be maintained all through this phase of back to back lockdowns thoughthere were few disturbances due to restricted manpower and material movement due tologistic irregularities and increased freight charges due to limited scope. The plantoperations were smooth adhering to proper screening and social distancing once thedirective has been delivered by the government health authorities. The Company has adoptedwell to this changing business environment and as there has been no restrictions inbusiness due to categorization under Essential Services. The Company could continueexports to multiple countries following government guidelines.

7. SHARE CAPITAL:

The paid up Share Capital of the Company as on 31st March 2020 was Rs.14.96 Crore. As on 31st March 2020 the Company has not issued shares withdifferential voting rights nor granted stock options nor sweat equity and none of theDirectors of the Company hold any convertible instruments.

8. RESERVES:

The Company does not propose to transfer any amount to General Reserves.

9. DEMATERIALISATION OF EQUITY SHARES:

All the Equity Shares of the Company are in dematerialised form with either of thedepository viz. NSDL and CDSL. The ISIN allotted to the Company is INE732S01012.

10. DIRECTORS & KEY MANAGERIAL PERSONNEL:

10.1 One of your Directors viz. Mr. Aarsh S. Shah retires by rotation in terms of theArticles of Association of the Company. However being eligible offers himself forreappointment.

10.2 Based on the recommendations of the Nomination and Remuneration Committee it isproposed to re-appoint Mr. Shailesh B. Patel and Mr. Prashant C. Srivastav as IndependentDirectors of the Company for a second consecutive term of 5 years from the conclusion ofthis 16th AGM up to the conclusion of the 21stAGM respectively andthey will not be liable to retire by rotation.

10.3 The Company has received necessary declaration from each Independent Director ofthe Company under Section 149(7) of the Companies Act 2013 (the Act) that they meet withthe criteria of their independence laid down in Section 149(6) of the Act.

10.4 Brief profile of the Director who is being re-appointed as required underRegulations 36(3) of Listing Regulations 2015 and Secretarial Standard on GeneralMeetings is provided in the notice for the forthcoming AGM of the Company.

10.5 The Board of Directors duly met 14 times during the financial year under review.

10.6 Formal Annual Evaluation:

The Nomination and Remuneration Committee adopted a formal mechanism for evaluating theperformance of the Board of Directors as well as that of its Committees and individualDirectors including Chairman of the Board Key Managerial Personnel/ Senior Managementetc. The exercise was carried out through an evaluation process covering aspects such ascomposition of the Board experience competencies governance issues etc.

10.7 DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirement of Section 134 of the Companies Act 2013 it is herebyconfirmed:

(i) that in the preparation of the annual accounts the applicable accounting standardshad been followed along with proper explanation relating to material departures;

(ii) that the Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at 31st March2020 being end of the financial year 2019-20 and of the profit of the Company for theyear;

(iii) that the Directors had taken proper and sufficient care for maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

(iv) that the Directors had prepared the annual accounts on a going concern basis.

(v) the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.

(vi) the Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

11. INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY:

The Board has adopted policies and procedures for ensuring the orderly and efficientconduct of its business including adherence to the Company's policies safeguarding ofassets prevention and detection of frauds and errors accuracy and completeness of theaccounting records and the timely preparation of reliable financial disclosures.

12. MANAGERIAL REMUNERATION:

Sr. No. Name of the Director & Designation Remuneration for the year 2019-20 % increase over last year Parameters Median of Employees Remuneration Ratio Commission received from Holding/ Subsidiary
1 Sanjay S. Shah Managing Director 22.75 3.64 Higher responsibility and time involvement 360000 15.82 times -
2 Rita S. Shah Executive Director 6.50 - N.A. 360000 55.38 times -
3 Aarsh S. Shah Joint Managing Director 22.75 3.88 Higher responsibility and time involvement 360000 15.82 times -

The Board of Directors has framed a Remuneration Policy that assures the level andcomposition of remuneration is reasonable and sufficient to attract retain and motivateDirectors Key Managerial Personnel and Senior Management to enhance the quality requiredto run the Company successfully. The Relationship of remuneration to performance is clearand meets appropriate performance benchmarks. All the Board Members and Senior Managementpersonnel have affirmed time to time implementation of the said Remuneration policy.

The Nomination and Remuneration Policy is available on the Company's websitewww.sakarhealthcare.com

13. KEY MANAGERIAL PERSONNEL:

13.1 % INCREASE IN REMUNERATION OF DIRECTORS AND KMP:

Sr. No. Name of the Director & KMP Designation Percentage (%)
Increase (If any)
1. Sanjay S. Shah Managing Director 3.64
2. Rita S. Shah Wholetime Director -
3. Aarsh S. Shah Joint Managing Director 3.88
4. Jhonny G. Kudilil CFO 3.93
5. Hema Advani Company Secretary 30.57

13.2 COMPARISON BETWEEN REMUNERATION OF KMP & PERFORMANCE OF THE COMPANY:

As per the Remuneration Policy and based on the Recommendation of Nomination &Remuneration Committee the Relationship of remuneration to KMP & performance ofCompany is clear and meets appropriate performance benchmarks.

14. PERSONNEL AND H. R. D.:

14.1 INDUSTRIAL RELATIONS:

The industrial relations continued to remain cordial and peaceful and your Companycontinued to give ever increasing importance to training at all levels and other aspectsof H.R.D.

The relationship between average increase in remuneration and Company's performance isas The number of Employees of the Company is 243 per the appropriate performancebenchmarks and reflects short and long term performance objectives appropriate to theworking of the Company and its goals.

14.2 PARTICULARS OF EMPLOYEES:

There is no Employee drawing remuneration requiring disclosure under Rule 5(2) ofCompanies Appointment & Remuneration of Managerial personnel) Rules 2014.

15. PARTICULARS OF LOANS GUARANTEES INVESTMENT& SECURITIES PROVIDED:

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 respectively are given in the notes to the FinancialStatements attached to the Auditors' Report.

16. RELATED PARTY TRANSACTION AND DETAILS OF LOANS GUARANTEES INVESTMENT &SECURITIES

PROVIDED:

Details of Related Party Transactions and Details of Loans Guarantees and Investmentscovered under the provisions of Section 188 and 186 of the Companies Act 2013respectively are given in the notes to the Financial Statements attached to the Auditors'Report.

All transactions entered by the Company during the financial year with related partieswere in the ordinary course of business and on an arm's length basis. During the year theCompany had not entered into any transactions with related parties which could beconsidered as material in accordance with the policy of the Company on materiality ofrelated party transactions.

17. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND

OUTGO:

The information required under Section 134(3)(m) of the Companies Act 2013 and rule8(3) of Companies (Accounts) Rules 2014 relating to the conservation of Energy andTechnology Absorption forms part of this report and is given by way of Annexure- A.

18. CORPORATE GOVERNANCE AND MDA:

As per Regulation 34 (3) read with Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 Report on Corporate Governance ManagementDiscussion and Analysis (MDA) and a certificate regarding compliance with the conditionsof Corporate Governance are appended to the Annual Report as Annexure - B.

19. SECRETARIAL AUDIT REPORT:

Your Company has obtained Secretarial Audit Report as required under Section 204(1) ofthe Companies Act 2013 from M/s. Kashyap R. Mehta & Associates Company SecretariesAhmedabad. The said Report is attached with this Report as Annexure – C.

There are no remarks / qualification in the Secretarial Audit Report hence noexplanation has been offered.

20. EXTRACT OF ANNUAL RETURN:

The extract of Annual Return in Form – MGT-9 has been attached herewith as Annexure– D. The same is also available on the Company's website atwww.sakarhealthcare.com.

21. AUDIT COMMITTEE / NOMINATION AND REMUNERATION COMMITTEE / STAKEHOLDERS'RELATIONSHIP

COMMITTEE:

The details of various committees and their functions are part of Corporate GovernanceReport.

22. CORPORATE SOCIAL RESPONSIBILITY (CSR):

As per provisions of 135 of the Companies Act 2013 and Rules made thereunder theCompany has constituted a CSR Committee of Directors consisting of Mr. Sanjay S. ShahChairman Mr. Aarsh S. Shah and Mr. Prashant C. Srivastav as members and has laid down aCSR policy.

Some of the core areas identified by the Committee are Education Health Environmentwomen empowerment Animal Welfare Hunger etc. The Company spent Rs. 14.00 lakh towardsCSR for the year 2019-20.

22.1 ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY:

As per Rule 8(1) of Companies (Corporate Social Responsibility Policy) Rules 2014 theAnnual Report on Corporate Social Activities has been attached herewith as Annexure– E.

23. GENERAL:

23.1 AUDITORS:

STATUTORY AUDITORS:

The present Auditors of the Company M/s. A. L. Thakkar & Co. CharteredAccountants Ahmedabad will retire at the ensuing 16th Annual General Meeting.

In terms of Section 139 of the Companies Act 2013 read with Companies (Audit &Auditors) Rules 2014 M/ s. A. L. Thakkar & Co. Chartered Accountants Ahmedabad canbe appointed as Auditors of the Company for a further period of 2 years. The Board ofDirectors has recommended the appointment of M/s. A. L. Thakkar & Co. CharteredAccountants Ahmedabad as Statutory Auditors of the Company for the Financial years2020-21 & 2021-22 to hold office from the conclusion of the ensuing 16thAGM till the conclusion of 18th AGM on remuneration to be decided by the Boardor Committee thereof.

The Company has obtained consent from M/s. A. L. Thakkar & Co. CharteredAccountants Ahmedabad to the effect that their appointment as Statutory Auditors of theCompany for period of 2 years for Financial years 2020-21 & 2021-22 if made will bein accordance with the provisions of Section 139 and 141 of the Companies Act 2013.

The remarks of Auditors are self explanatory and have been explained in Notes onAccounts.

COST AUDITORS:

As per the requirement of Central Government and pursuant to Section 148 of theCompanies Act 2013 read with the Companies (Cost Records and Audit) Rules 2014 asamended from time to time the Company has been carrying out audit of cost records everyyear.

The Board of Directors on the recommendation of Audit Committee has appointed M/s.Dalwadi & Associates Cost Accountants (Firm Registration Number 000338) as CostAuditor to audit the cost accounts of the Company for the financial year 2020-21.

As required under the Companies Act 2013 a resolution seeking Shareholders' approvalfor the remuneration payable to the Cost Auditor forms part of the Notice convening theAnnual General Meeting for their ratification.

23.2 INSURANCE:

The Company's properties including building plant and machinery stocks stores etc.continue to be adequately insured against risks such as fire riot strike civilcommotion malicious damages machinery breakdown etc.

23.3 DEPOSITS:

The Company has not accepted during the year under review any Deposits and there wereno overdue deposits.

23.4 RISK MANAGEMENT POLICY:

The Company has a risk management policy which from time to time is reviewed by theAudit Committee of Directors as well as by the Board of Directors. The Policy is reviewedquarterly by assessing the threats and opportunities that will impact the objectives setfor the Company as a whole. The Policy is designed to provide the categorization of riskinto threat and its cause impact treatment and control measures. As part of the RiskManagement policy the relevant parameters for protection of environment safety ofoperations and health of people at work are monitored regularly with reference tostatutory regulations and guidelines defined by the Company.

23.5 SUBSIDIARIES/ ASSOCIATES/ JVS:

The Company does not have any Associate / JVs.

The Company has a Subsidiary namely Sakar Oncology Private Limited. Further astatement containing the salient feature of the financial statement of Subsidiary companyunder the first proviso to sub-section (3) of section 129 is appended as Annexure - G.Apart from this the Company does not have any Subsidiary.

23.6 CODE OF CONDUCT:

The Board of Directors has laid down a Code of Conduct applicable to the Board ofDirectors and Senior Management. All the Board Members and Senior Management personnelhave affirmed compliance with the code of conduct.

23.7 SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:

There have been no significant and material orders passed by any regulators or courtsor tribunals impacting the going concern status of the Company and its future operations.

23.8 ENVIRONMENT AND SAFETY:

The Company is conscious of the importance of environmentally clean and safeoperations. The Company's policy requires conduct of operations in such a manner so as toensure safety of all concerned compliances of environmental regulations and preservationof natural resources.

23.9 DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION& REDRESSAL) ACT 2013:

The Company has in place an Anti Sexual Harassment Policy in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. During the year under review the Company did not receive anycomplaint.

23.10 GRATUITY:

The Company has made necessary provisions for the payment of Gratuity.

23.11 INSTANCES OF FRAUD IF ANY REPORTED BY THE AUDITORS:

There have been no instances of fraud reported by the Auditors under Section 143(12) ofthe Companies Act 2013.

23.12 SECRETARIAL STANDARDS:

The Company complies with the Secretarial Standards issued by the Institute of CompanySecretaries of India which are mandatorily applicable to the Company.

24. DISCLOSURE OF ACCOUNTING TREATMENT:

In the preparation of the financial statements the Company has followed the AccountingStandards referred to in Section 133 of the Companies Act 2013. The significantaccounting policies which are consistently applied are set out in the Notes to theFinancial Statements.

25. DISCLOSURES:

The Company has not entered into any transaction of material nature with the Promotersthe Directors or the Management that may have any potential conflict with the interest ofthe Company.

26. FINANCE:

26.1 The Company has availed financial assistance in form of Term Loans and WorkingCapital from State Bank of India.

26.2 The Company's Income tax Assessment has been completed upto the Assessment Year2017-18.

27. ACKNOWLEDGEMENT:

Your Directors express their sincere gratitude for the assistance and co operationextended by Banks Government Authorities Shareholders Suppliers and Customers.

Your Directors also wish to place on record their appreciation of the contribution madeby the employees at their levels towards achievements of the Company's goals.

For and on behalf of the Board
Sanjay S. Shah Aarsh S. Shah
Chairman & Managing Director Jt. Managing Director
DIN:01515296 DIN: 05294294

Registered Office

Block No. 10/13 Village: Changodar Sarkhej- Bavla Highway Tal: Sanand Dist:Ahmedabad -382 213 Date : 25th July 2020

Disclosure of particulars with respect to Conservation of Energy

(A) CONSERVATION OF ENERGY:

Steps taken or impact on conservation of energy In line with the Company's commitment towards conservation of energy all units continue with their efforts aimed at improving energy efficiency through innovative measures to reduce wastage and optimize consumption
Steps taken by the Company for utilizing alternate sources of energy Company has solar plant installed as alternate source of renewable energy to meet some portion of requirement of power which takes care of upto 30% of the total power requirement of the manufacturing plant.
Capital investment on energy conservation equipments The Company has installed roof top solar power generation System of 425 KVA within its manufacturing facilities.

(B) TECHNOLOGY ABSORPTION:

Efforts made in Research and Development and Technology Absorption prescribed in theRules is as under:

1. Research & Development (R & D)
(a) Specific areas in which R&D carried out by the Company. : R&D is through developing and diversification of products by developing better drug delivery methods.
(b) Benefits derived as a result of the above R&D : More products added to the list of products with improved drug delivery have been to cater to exports markets.
(c) Future plan of action : Improved process development for the products through effective process & quality control.
(d) Expenditure on R&D : During the year under review Rs. 336.55 Lakh has been incurred towards Research and Development.

2. Technology absorption adoption and innovation: The Company does not envisage anytechnology absorption.

(C) FOREIGN EXCHANGE EARNINGS & OUTGO:

(Rs. in Lakh)

Particulars 2019-20 2018-19
Total Foreign exchange earnings 4863.72 3384.30
Total Foreign Exchange used 69.19 95.14
For and on behalf of the Board
Sanjay S. Shah Aarsh S. Shah
Chairman & Managing Director Jt. Managing Director
DIN:01515296 DIN: 05294294

Registered Office

Block No. 10/13 Village: Changodar Sarkhej- Bavla Highway Tal: Sanand Dist:Ahmedabad -382 213 Date : 25th July 2020

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