TO THE MEMBERS
The Directors have pleasure in presenting before you the THIRTY SECOND AnnualReport of SANDU PHARMACEUTICALS LIMITED together with Audited Balance Sheet and Statementof Profit & Loss for the financial year ended 31st March 2017.
1. FINANCIAL RESULTS:-
The Company's financial performance for the year ended March 31 2017 is summarizedbelow:
| || ||(in Rs.) |
|Particulars ||2016-17 ||2015-16 |
|Revenue from ||514021618 ||467838570 |
|Operation (Gross) || || |
|Less Excise Duty ||(8458647) ||(7303840) |
|Less Trade Discount ||(57381995) ||(50012086) |
|Add Insurance claim ||0 ||261650 |
|received || || |
|Revenue from ||448180976 ||410784293 |
|operations (net) || || |
|Other Income ||3917148 ||1452085 |
|Total revenue ||452098124 ||412236378 |
|Total Expenses ||443812502 ||405177489 |
|Profit before exceptional and extraordinary items and tax ||8285622 ||7058889 |
|Exceptional /Prior period items ||(927933) ||264480 |
|Profit Before Tax ||9213555 ||6794409 |
|Tax Expenses || || |
|Less: Current Tax ||2846989 ||2150000 |
|Deferred Tax ||(1624270) ||(734540) |
|Tax adjustment of earlier year ||3752959 ||- |
|Total Tax ||4975677 ||1415460 |
|Profit after Tax ||4237878 ||5378949 |
|Earnings per share (of ` 10/- each) || || |
|Basic || || |
|Continuing operations ||0.60 ||0.76 |
|Total operations ||0.60 ||0.76 |
REVIEW OF OPERATIONS
In the financial year 2016-17 the company achieved an Income from operations of`514021618 as compared to `467838570 in the previous year.
Profit before tax was `9213555 for the year ending 31st March 2017 as compared toProfit of `6794409 in the previous year.
Profit after tax was `4237878 for the year ended 31st March 2017 as compared to aProfit of `5378949 in the previous year.
There were no material changes and commitments affecting the financial position of theCompany from the end of the financial year till the date of the Directors' Report.
In order to ensure the continued growth of the Company the Management recommends thatfunds should be reinvested in the Company.
3. RISK MANAGEMENT:
The Board has laid down a clear Risk Management Policy to identify potential businessrisks and install effective mitigation processes to protect Company's assets and businessRisks.
Risk assessment and minimization plan are reviewed by the Board on a periodic basis.Risk Management Policy and the details of this policy are available on the website of theCompany under the web link http://www.sandu.in/Risk_ Managment_Policy.pdf
4. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has adequate Internal Financial Control Systems commensurate with thesize scale and complexity of its operations.
The Management evaluates the efficacy and adequacy of internal control system in theCompany its compliance with operating systems accounting procedures and policies of theCompany on an ongoing basis.
5. VIGIL MECHANISM / WHISTLE BLOWER POLICY:
Pursuant to Section 177(9) of the Companies
Act 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules2014 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Board of Directors had approved the Policy on Whistle Blower. ThisPolicy inter-alia provides a direct access to the Chairman of the Audit Committee.
Your Company hereby affirms that no Director/ employee have been denied access to theChairman of the Audit Committee and that no complaints were received during the year.Whistleblower Policy approved and adopted by the Board of Directors which can be accessedin our website http://www.sandu. in/vigil_mechanism_policy.pdf
6. DIRECTORS AND KEY MANAGERIAL PERSONNEL:-
Dr. Mrs. Shubhada Sandu holding DIN:07148834 (Non Executive Director) retires byrotation and being eligible offer herself for re appointment.
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 of the SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015.
6.1 BOARD EVALUATION
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has carried out an annual evaluationof its own performance the directors individually as well as the evaluation of theworking of its Audit Nomination & Remuneration and Stakeholders RelationshipCommittee. The manner in which the evaluation has been carried out has been given in theCorporate Governance Report. The Weblink of familiarization Programme undertaken forIndependent Director is also available on http:// www.sandu.in/Familarisation_Programme_of_the_Independent_Directors.pdf .
The Nomination and Remuneration Committee has defined the evaluation criteria andprocedure for the Performance Evaluation process for the Board its Committees andDirectors. The criteria for Board Evaluation include inter alia Board structure andcomposition establishment and delineation of responsibilities to various Committeeseffectiveness of Board processes information and functioning. Criteria for evaluation ofindividual Directors include aspects such as attendance and contribution at Board/Committee Meetings and guidance/ support to the management outside Board/ CommitteeMeetings. In addition the Chairman was also evaluated on key aspects of his roleincluding setting the strategic agenda of the Board encouraging active engagement by allBoard members and motivating and providing guidance to the Managing Director/ExecutiveDirector. Criteria for evaluation of the Committees of the Board include degree offulfillment of key responsibilities adequacy of Committee composition and effectivenessof meetings.
6.2 NOMINATION AND REMUNERATION POLICY
The policy of the Company on Directors Appointment and remuneration including criteriafor determining qualifications positive attributes independence of a director and othermatter as required under sub section (3) of section 178 of the Companies Act 2013 isavailable on our website http://www. sandu.in/Nomination_and_Remuneration_ Policy_new.pdf.There has been no change in the policy since the last fiscal year. We affirm that theremuneration paid to the directors is as per the terms laid out in the nomination andremuneration policy of the company.
During the year 7 (Seven) Board Meetings and 5 (Five) Audit Committee Meetings wereconvened and held. The details of which are given in the Corporate Governance Report.
The intervening gap between the Meetings was within the period prescribed under theCompanies Act 2013.
6.4 AUDIT COMMITTEE
The details of the composition of the Audit Committee are given in the corporateGovernance Report. During the year all the recommendations of the Audit Committee wereaccepted by the Board.
We seek to promote and follow the highest level of ethical standards in all ourbusiness transactions guided by our value system.
The SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015 mandatedthe formulation of certain policies for all listed companies. All our corporate governancepolicies are available on our website www.sandu.in. The policies are reviewed periodicallyby the Board and updated based on need and new compliance requirement.
In addition to its Code of Conduct and Ethics key policies that have been adopted bythe Company are as follows:
|Name of the Policy ||Brief Description ||Web link |
|Whistleblower Policy ||The Company has adopted the whistleblower mechanism for directors and employees to report concerns about unethical behaviour actual or suspected frauds or violation of the Company's code of conduct and ethics. There has been no change to the Whistleblower Policy adopted by the Company during the fiscal 2016 ||h t t p : // w w w. s a n d u . i n / Whistle_Blower__Policy_ new.pdf |
|Nomination and Remuneration Policy ||This policy formulates the criteria for determining qualifications competencies positive attributes and independence for the appointment of a director (executive/non executive) and also the criteria for determining the remuneration of the directors key managerial personnel and other employees. ||h t t p : / / w w w . s a n d u . i n / N o m i n a t i o n _ a n d _ Remuneration_Policy_new. pdf |
|Related Party Transaction Policy ||The policy regulates all transactions between the company and its related parties ||h t t p : // w w w. s a n d u . i n / Related_Party_Transaction_ Policy-new.pdf |
|Insider Trading Policy ||The Policy provides framework in dealing with securities of the Company ||http://www.sandu.in/Insider_ Trading_Policy_new.pdf |
|Policyfordetermining Materiality of event or Information ||This Policy for Determination of Materiality of Events or Information is aimed at providing guidelines to the management of Sandu Pharmaceuticals Limited to determine the materiality of events or information which could affect investment decisions and ensure timely and adequate dissemination of information to the Stock Exchange(s) (as hereinafter defined). ||h t t p : // w w w. s a n d u . i n / Insider_Trading_Policy_ new.pdf |
|Archival Policy ||The Policy deals archival of corporate records of Sandu Pharmaceuticals Limited ||h t t p : // w w w. s a n d u . i n / Archival__Policy.pdf |
|Board Diversity Policy ||This policy aims to set out the approach to achieve diversity on the Board of Directors ("Board") of Sandu Pharmaceuticals Limited ||h t t p : // w w w. s a n d u . i n / Policy_on_Board_Diversity_ new.pdf |
|Risk Management Policy ||The Risk management policy of Sandu Pharmaceuticals Limited will enable the Company to proactively manage uncertainty and changes in the internal and external environment to limit negative impacts and capitalize on opportunities. ||http://www.sandu.in/Risk_ Managment_Policy_new.pdf |
7. DIRECTORS RESPONSIBILITY STATEMENT:-
In accordance with the provisions of section 134(3) (c) read with section 134(5) of theCompanies Act 2013 your Directors confirm that:
a) In the preparation of annual accounts for the year ended 31st March 2017 theapplicable accounting standards read with the requirements set out under Schedule III tothe Act have been followed and there are no material departures from the same.
b) Appropriate accounting policies have been selected and applied consistently andjudgements and estimates made are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as on 31st March 2017 and of the profit ofthe Company for the year ended on that date.
c) Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities.
d) The annual accounts have been prepared on a going concern basis'.
e) Internal financial controls to be followed by the Company have been laid down andthat such internal financial controls are adequate and are operating effectively and
f) Proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
8. CORPORATE SOCIAL RESPONSIBILTY POLICY:
Section 135 of the Companies Act 2013 relating to Corporate Social Responsibility isnot applicable and hence the Company need not adopt any Corporate Social ResponsibilityPolicy. To keep the spirit of CSR alive The Company has continued its CSR initiative forthe Financial Year. 2016-2017.
1. Average Net Profit of the Company for the last three financial years Net Profit of`14477458 during the last three years.
2. Prescribed CSR Expenditure (two per cent of the amount as in item 1 above) Notapplicable as its not exceeding the prescribed limit
3. Details of CSR Spend during the Financial year The prescribed CSR Expenditurerequired to be spent for the FY 2016-2017 as per the Companies Act 2013 ("TheAct") is Nil in view of Turnover/net profits of the Company not exceeding the limitprescribed under Section 135 of the Companies Act 2013 . However to keep the spirit ofCSR Alive the Company has continued its CSR Activities for the FY 2016-2017 as detailedbelow.
a. Total amount spent during the Financial Year: Rs 111000 (Rupees One lakh ElevenThousand)
b. Amount unspent if any: Not Applicable
c. Manner in which the amount is spent: The amount was spend for the purpose of AnnualThyroid Surgical Camp Chikhaldara.
4. Reasons for falling short of the required spend Not applicable
9. THE AMOUNT IF ANY WHICH IT PROPOSES TO CARRY TO ANY RESERVE
The Company has not transferred any amount to reserve and hence it is NIL.
10. RELATED PARTY TRANSACTIONS:
The related party contracts entered into by your Company with Sandu Brothers PrivateLimited do not fall under the ambit of Section 188(1) of the Act.
All the related party transactions entered during the financial year were at arm'slength and in the ordinary course of business. In compliance with the provisions of theCompanies Act 2013 and Regulation 23(2) of the SEBI Regulation 2015 all related partytransactions had been placed before the Audit Committee for prior approval. Pursuant toSection 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules 2014information pertaining to related parties are given in Form AOC-2 as Annexure I of thisReport.
11. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There were no significant material orders passed by the Regulators/Courts which couldimpact the going concern status of the Company and its future operations.
M/s Dileep and Prithvi Statutory Auditor of the Company retires at the conclusion ofthe ensuing Annual General Meeting and has offered themselves to be appointed as StatutoryAuditor of the Company as recommended by Members of Audit Committee and Board ofDirectors. They have confirmed their eligibility to the effect that their appointment ifmade would be within the prescribed limits under the Act and that they are notdisqualified for appointment
Pursuant to provisions of section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the company hasappointed Mr. Swapnil Dixit Company Secretary in practice to undertake the SecretarialAudit of the Company for the Financial Year 2016-17. The Secretarial Audit report for thefinancial year 2016-17 is annexed herewith as "ANNEXURE B".
13. INTERNAL COMPLAINTS COMMITTEE
As per provisions of Section 4 of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 your Company has constituted anInternal Complaints Committee for Redressal of complaints against sexual harassment andthere were no complaints received during the financial year.
14. DISCLOSURE REQUIREMENTS
Your Company has complied with all the mandatory requirements of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.
Management Discussion and Analysis is annexed as "ANNEXURE A" to the report
Secretarial Audit Report as "ANNEXURE B".
As per SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 with theStock Exchanges a separate section on the corporate governance is annexed as "Annexure- C"
Auditors Certificate on Corporate Governance "Annexure D"
Certificate from Managing Director under Reg 17(8) of SEBI (LODR) Regulation
15. CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION FOREIGNEXCHANGE EARNINGS AND OUTGO.
A) CONSERVATION OF ENERGY:
a) Company ensures that the manufacturing operations are conducted in the mannerwhereby optimum utilization and maximum possible savings of energy is achieved.
b) No specific investment has been made in reduction in energy consumption.
c) As the impact of measures taken for conservation and optimum utilization of energyare not quantitative its impact on cost cannot be stated accurately.
d) The required data with regard to conservation of energy as applicable to our companyis furnished below:
|Particulars ||For the year ended 31.03.2017 ||For the year ended 31.03.2016 |
|1. ELECTRICITY || || |
|Purchased (units) ||258652 Units ||234722 Units |
|Total Amount ` ||`1741199/- ||`1533339/- |
|Rate/Units in ` ||`6.73 / unit ||`6.53 / Unit |
|2. FUEL CONSUMED || || |
|Quantity - || || |
|Furnace Oil ||65970 Ltrs ||56830 Ltrs |
|Diesel ||5773 Ltrs ||5449.66 Ltrs |
|Total amount - || || |
|Furnace Oil ||`1939234/- ||`1482641/- |
|Diesel ||`326300/- ||`310800/- |
|Rate per Ltr - || || |
|Furnace Oil ||`29.40/- ||`26.09 Ltrs |
|Diesel ||`56.52/- ||`57.03L Ltrs |
B) TECHNOLOGY ABSORPTION:
Company's products are manufactured by using in-house know how and no outsidetechnology is being used for manufacturing activities. Therefore no technology absorptionis required. The Company constantly strives for maintenance and improvement in quality ofits products and entire Research & Development activities are directed to achieve theaforesaid goal
C) FOREIGN EXCHANGE EARNINGS AND OUT-GO:
During the period under review there was no foreign exchange earnings or out flow.
16. EXTRACT OF ANNUAL RETURN
As provided under section 92 (3) of the Act the extract of the Annual Return in formMGT- 9 is annexed herewith as "Annexure G" which forms part of this report.
17. STATEMENT OF PARTICULARS OF APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL
The information required under section 197 of the Act read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company and Directors is annexed as "Annexure H" to this report.
18. FIXED DEPOSITS:-
Your Company has not accepted any deposits within the meaning of Section 73 of theCompanies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014 during thefinancial year 2016-17.
19. 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 the Company are given in the notes to thefinancial statements.
20. PARTICULARS OF CONTRACT OR ARRANGMENTS WITH RELATED PARTY
During the year under review the Company had not entered into any contract /arrangement / transaction with the related parties which could be considered as materialas per SEBI (LODR) Regulations 2015.
21. CODE OF CONDUCT:
The Board of Directors has approved a Code of Conduct which is applicable to theMembers of the Board and all employees in the course of day to day business operations ofthe company. The Code of Conduct for Directors has been posted on http://www.sandu.in/Code_of_Conduct_for_Directors-new. pdf and for Senior Management Personnelhttp://www.sandu.in/Code_of_Conduct_for_ Senior_Managment-new.pdf.
The Code lays down the standard procedure of business conduct which is expected to befollowed by the Directors and the designated employees in their business dealings and inparticular on matters relating to integrity in the work place in business practices andin dealing with stakeholders. All the designated employees and personnel have confirmedcompliance with the Code.
The Declaration signed by the Managing Director pursuant to Regulation 26(3) read withSchedule V (Part D) of the SEBI (LODR) Regulation 2015 is published in this report.
22. PREVENTION OF INSIDER TRADING:
The Company has adopted a Code of Conduct for Prohibition of Insider Trading with aview to regulate trading in securities by the Directors and Designated employees of theCompany. The Code requires pre-clearance for dealing in the Company's shares and prohibitsthe purchase or sale of Company shares by the Directors and the designated employees whilein possession of unpublished price sensitive information in relation to the Company andduring the period when the Trading Window is closed. The Board is responsible forimplementation of the Code. All Board of Directors and the designated employees haveconfirmed compliance with the Code. Code of Conduct for Prohibition of Insider Trading isavailable on website of the Company under the web link www.sandu.in
23. PARTICULARS OF EMPLOYEES:
The information required pursuant to Section 197 read with rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company will be provided upon request. In terms of Section 136 of the Act thereports and accounts are being sent to the members and others entitled thereto excludingthe information on employees' particulars which is available for inspection by the membersat the Registered office of the company during business hours on working days of thecompany up to the date of ensuing Annual General Meeting. If any member is interested ininspecting the same such member may write to the company secretary in advance.
24. AUDITORS REPORT AND SECRETARIAL AUDIT REPORT
The Secretarial Auditor's Report does not contain any qualification reservation oradverse remarks. Whereas the Auditors report was subjected to one qualification "TheCompany did not have arrears of undisputed statutory dues which had remained outstandingas at 31st March 2017 for a period of more than six months from the date they becamepayable except dues of Tax Deducted at source aggregating to `632126/- on account ofdefaults pertains to prior years.
25. EXPLANATION TO AUDITORS REMARK AS PER ANNEXURE A (Vii)(a) OF INDEPENDENT AUDITREPORT
According to the Management out of the reported amount tax liability a major portionwill not be due and payable as the rectification of the same is in process.
Your Company and its Directors wish to extend their sincerest thanks to the Members ofthe Company Bankers State Government Local Bodies Customers Suppliers ExecutivesStaff and workers at all levels for their continuous cooperation and assistance.
For and on behalf of Board of Directors
Of Sandu Pharmaceuticals Limited
Bhaskar G Sandu