Sharon Bio-Medicine Ltd.
|BSE: 532908||Sector: Health care|
|NSE: SHARONBIO||ISIN Code: INE028B01029|
|BSE 00:00 | 28 Mar||Sharon Bio-Medicine Ltd|
|NSE 05:30 | 01 Jan||Sharon Bio-Medicine Ltd|
|BSE: 532908||Sector: Health care|
|NSE: SHARONBIO||ISIN Code: INE028B01029|
|BSE 00:00 | 28 Mar||Sharon Bio-Medicine Ltd|
|NSE 05:30 | 01 Jan||Sharon Bio-Medicine Ltd|
Your Directors hereby present their 27th Annual Report on the Standalone andConsolidated Audited Statement of Accounts of theSharon Bio-Medicine Limited["Company"] forthe nine months period ended March 312016.
The Company has changed its financial period from existing 'July - June' to 'April -March' pursuant to provisions of Section 2(41) of the Companies Act 2014. Hence thecurrent financial period of the Company consists of period of nine months starting from1stJuly 2015 and ending on 31st March 2016.
The summarized financial performance of the Company for the nine months period ended2015-16 and FY 2014-15 is given below:
(Rs. in Lacs)
REVIEW OF OPERATIONS
During the period under review the Company has posted total Income of Rs. 25540.41Lacs (9 Months)as against Rs.84109.69 Lacs(12 Months) forthe previous year..
Net Loss after Tax for the period under review was Rs. (30026.60) Lacs as against NetProfit Loss after Tax of Rs. (23920.21) Lacs in the previous year.
STATE OFAFFAIRSAND FUTURE OUTLOOK
As we have been communicating during the quarterly results updates the Company'sprofitability has been impacted substantially due to outbreak of fire in the plant in 2014which had its impact on meeting the demands of the market hence we had to out source themanufacturing of products. During the process quality of products got hampered and thisled to rejection of goods from customers subsequently trailed by cancellation of our orderbooks. Relationship with many of our customers were stressed due to quality issues andinability to execute orders on time. This had adversely affected ourtop line and operatingmargin resulting into heavy losses.
The Indian pharmaceuticals market is the third largest in terms of volume andthirteenth largest in terms of value. The country accounts for the second largest numberof Abbreviated New Drug Applications (ANDAs) and is the world's leader in Drug MasterFiles (DMFs) applications with the US as per a pharmaceuticals sector analysis report byequity master. The domestic formulations market valued at approximately '88000 crore hasgrown steadily at a CAGR of 10% overthe past five years.
We have already received approval from the US FDA for our Formulation Unit based on theANDA filing of "Memantine". Company is focusing to introduce more profitableproducts in the regulated markets specifically US market. This will help company toachieve better growth with improved margins.
CONSOLIDATED FINANCIAL STATEMENTS:
The company has one Wholly-Owned Subsidiaryin UAE in the name of "YusurInternational FZE".
The audited consolidated accounts and cash flow statements comprising of the companyand all its subsidiary companies appear in this annual report together with the auditors'report on the consolidated accounts. The consolidated accounts have been prepared inaccordance with the accounting standard prescribed by the Institute of CharteredAccountant of India.
As per clause 32 of the Listing Agreement / Regulation 34 of SEBI (LODR) Regulations2015 the consolidated financial statements of the company with its subsidiaries form partof the annual report. The copies of the audited annual accounts of the company'ssubsidiaries and other related documents can also be sought by any members of the Companyor its subsidiaries on making a written request to the Company in this regard. The annualaccounts of the subsidiary companies are also available for inspection by any member atthe company's and/or the concerned subsidiaries' registered office.
SIGNIFICANT EVENTS DURING PERIOD ENDED 31st MARCH 2016
Company's Debt was restructured under the JLF Mechanism in 2014-15. Meetings anddiscussions with banks took place during the period under review but no major changes wereoccurred.
iii) FOREIGN CURRENCYCONVERTIBLE BONDS :-
The company had issued 165 Nos. of Zero Coupon Foreign Currency Convertible Bonds ofUS$ 1 00000 each aggregating to US$ 16.5 Million on 27 November 2007. These Bonds areconvertible Bonds at the option of bond holders into equity shares of Rs. 10/- each fullypaid at the conversion price of Rs. 315/- per share initially but now conversion price hasbeen reset to Rs. 228.04/- per share subject to the terms of issue with a fixed exchangerate of Rs. 39.15 equal to US$ 1.00 within 5 years and 7 days from the date of issue. Thebondholders have agreed to extend the bonds for the further period of 5 years. Bondholdershave agreed to extend the period between one year to five years and interest to be paidbetween LIBOR + 3.50% - 5% per annum as per the ECB guidelines. The bondholders havegiven their consent as stated above and the company authorize dealer has submitted thedocuments to Reserve Bank of India (RBI) accordingly. The Company is still in process ofissue of new Bonds of US$ 8.046 Million from 30 November 2013. However application forthis B series bonds have been filed to RBI. These Bonds are convertible Bonds at theoption of bond holders into equity share of Rs.2/- each fully paid at the conversion priceof Rs.28.85/- per share subject to the term of issue within 3 years from the date ofissue.
A. Convertible Warrants:
The Company has issued 16111000 convertible warrants of Rs. 2/- each @ premium ofRs. 48/- per warrant during the financial year period ended 30.06.2015. Out of which6715400 warrants were exchanged against 6715400 equity shares of Rs.2/- each @ premiumof Rs. 48/- per share on 30.03.2015. Further 6651300 warrants were exchanged against6651300 equity shares of Rs.2/- each @ of Rs.48/- per share on 10.06.2015. A total ofRs.2744300warrants are still pending for conversion.
B. Employees Stock Option Plan:
During the period under review your Company has not granted any further options to anyemployees / Directors under Sharon ESOS2010 as per AnnexureI attached.
Material changes and commitments if any affecting the financial position of theCompany which have occurred between the end of the financial period to which the financialstatement relates and the date of the report pursuant to Section 134(3)(l)
There have been no material changes and commitments 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.
In view of the loss incurred by the Company your Board of Directors are constrained torecommend any dividend for the period ended 31st March 2016. Further no dividend wasdeclared in the previous financial year also.
DIRECTORSAND KEY MANAGERIAL PERSONNEL
At the 26th Annual General Meeting held on 31st December 2015 Mr. Lalit Misra wasre-appointed as the Director of the Company liable to retire by rotation.
Also Ms. Savita Gowda and Mr. Lalit Misra were re-appointed as the Managing Directorand Whole time Director of the Company at 26th Annual General Meetingheld on 31stDecember 2015.
Further Mr. Mohan P. Kalaand Mr. Madhav Sapre resigned as Directors of the Companyw.e.f. 31st December 2015.
In accordance with section 152(6) of the Companies Act 2013 and in terms of Articlesof Association of the Company Ms. Savita Gowda (DIN: 00042957) Director of the Companyretires by rotation and being eligible; offers herself for re-appointment at theforthcoming 27th Annual General Meeting. The Board recommends the said reappointmentforshareholders' approval.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(3) (c) & 134(5) of the Companies Act 2013 the Board ofDirectors of the Company hereby confirm that:
a) In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
b) the directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year periodand of the profit and loss of the company for that period;
c) the directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
d) the directors had prepared the annual accounts on a going concern basis; and
e) the directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
f) the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
PARTICULARS OF EMPLOYEESAND RELATED DISCLOSURES
The information required pursuant to Section 197 read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Amendment Rules 2016 in respect ofemployees of the Company is enclosed as Annexure II and forms part of this Report.
Further as per the provisions specified in Chapter XIII of Companies (Appointment& Remuneration of Managerial Personnel) Amendment Rules 2016 none of the employees ofthe Company are in receipt of remuneration exceeding Rs. 10200000/- per annum ifemployed for whole of the period or Rs. 850000/- per month if employed for part of theperiod.
Further the names of top ten employees in terms of remuneration drawn are disclosed inAnnexure III and forms part of this Report.
The details forming part of the Extract of the Annual Return in Form MGT-9 as requiredunder Section 92 of the Companies Act 2013 is included in this Report as Annexure IV andforms part of this Report.
NUMBER OF BOARD MEETINGS
A calendar of meetings is prepared and circulated in advance to the Directors. Theintervening gap between the meetings was within the period prescribed under the CompaniesAct 2013 and the Listing Agreement.
During the period 8(Eight) Board Meetings were held during the period ended March2016 the dates which are08th August 2015 29th August 201510th November 2015 5thJanuary 201612th January 201612th February 2016 29th February 2016 and 1st March2016.
*Resigned w.e.f. 31/12/2015
Pursuant to the provisions of the Companies Act 2013 and the Listing Agreement/ SEBI(LODR) Regulations 2015 the Board has carried out an annual performance evaluation ofits own performance the directors individually as well as the evaluation of the workingof its Committees. The Directors expressed satisfaction with the evaluation process.
The Independent Director(s) have submitted their disclosure to the Board that theyfulfill all the requirements as to qualify for their appointment as Independent Directorunder the provisions of section 149 of the Companies Act 2013 as well as Regulation 17 ofthe Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015.
DETAILS OF SUBSIDIARY/JOINTVENTURES/ASSOCIATE COMPANIES
The Statement AOC-1 pursuant to the provisions of Section 129 (3) of the Companies Act2013 read with Rule 5 of the Companies (Accounts) Rules 2014 regarding Subsidiary Companyis enclosed as Annexure V to this Report.
STATUTORY AUDITORS' AND AUDITORS' REPORT
At the 25th Annual General Meeting held on 17th December 2014 M/s. Shyam C. Agrawal& Co. Chartered Accountants were appointed as Statutory Auditors of the Company tohold office till the conclusion of the third consecutive Annual General Meeting to be heldin theyearperiod 2017. In the terms of the first provisiono to Section 139 of theCompanies Act 2013 the appointment of the Auditors shall be placed for ratification atevery Annual General Meeting. Accordingly the appointment of M/s. Shyam C. Agrawal &Co. Chartered Accountants as Statutory Auditors of the Company is placed forratification of the Shareholders. In this regard the Company has received a Certificatefrom the Auditors to the effect that if they are reappointed it would be in accordancewith the provisions of Section 141 of the Companies Act 2013.
The Board has duly reviewed the statutory Auditors' Report on the Accounts. Theobservations and comments appearing in the Auditors' Report are self-explanatory and donot call for any further explanations/comments/ clarification by the Board.
The cost audit records maintained by the Company are required to be audited pursuant tothe provisions of Section 148 of the Act read with the Companies (Cost Records and Audit)Amendment Rules 2014. On the recommendation of the Audit Committee M/s. Kasina &Associates Practicing Cost Accountant was appointed to conduct cost audit forthe yearperiod ended March 312016.
In terms of Section 204 of the Act and Rules made there under Neha Gupta PracticingCompany Secretaries have issued the Secretarial Audit Report and the same is enclosed asAnnexure VI to this report.
Explanation under Section 134(3)(f)(ii) of the Companies Act 2013: The pending eformsas well as the composition of NRCshall be complied with in the current fiscal.
INTERNAL AUDIT & CONTROLS
The Company has in place adequate internal financial controls with reference to thefinancial statement. The Audit Committee of the Board periodically reviews the internalcontrol systems with the management Internal Auditors and Statutory Auditors. Significantinternal audit findings are discussed and follow-ups are taken thereon.
The Company appointed M/s. Kala Deepak & Co. Chartered Accountants as InternalAuditors to conduct internal audit of the operations of the Company.
Your Company has formed an Audit Committee as per the Companies Act 2013 and thelisting agreement/ SEBI (LODR) Regulations 2015. All members of the Audit Committeepossess strong knowledge of accounting and financial management.
COMPOSITION OF NOMINATION & REMUNERATION COMMITTEE
Your Company has formed a Nomination & Remuneration Committee to lay down norms fordetermination of remuneration of the executive as well as non-executive directors andexecutives at all levels of the Company. The Nomination & Remuneration committee hasbeen assigned to approve and settle the remuneration package with optimum blending ofmonetaryand non-monetary outlay.
NOMINATION AND REMUNERATION POLICY
The Board of Directors has framed a policy which lays down a framework in relation toremuneration of Directors. This policy also lays down criteria for selection andappointment of Board Members. The Board of Directors is authorized to decide Remunerationto Executive Directors. The Remuneration structure comprises of Salary and Perquisites.Salary is paid to Executive Directors within the Salary grade approved by the Members
In pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013a Vigil Mechanism for directors and employees to report genuine concerns has beenestablished. The Vigil Mechanism Policy has been uploaded on the website of the Companyand the employees of the Company are made aware of the said policy at the time of joiningthe Company.
RISK MANAGEMENT POLICY
The Company has laid down the procedure to inform the Board about the risk assessmentand minimization procedures. These procedures are reviewed by the Board annually to ensurethat there is timely identification and assessment of risks measures to mitigate themand mechanisms for their proper and timely monitoring and reporting.
The Company does not fall under the ambit of top 100 listed entities determined on thebasis of market capitalization as at the end of the immediately preceding financial year.Hence compliance under Regulation 21 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is not applicable.
During the period your Company has not accepted any deposits under Section 76 of theAct (herein after referred to as the "Act") and as such no amount on account ofprincipal or interest on public deposits was outstanding as of March 312016.
LOANS & GUARANTEES
During the period under review the Company has not provided any loan guarantee andsecurity or made any investment covered under the provisions of Section 186 of theCompanies Act 2013 to any person or other body corporate.
The properties/assets of the Company are adequately insured.
RELATED PARTY TRANSACTIONS
As no related party transaction was entered into by the Company with PromotersDirectors Key Managerial Personnel or other designated persons pursuant the provisions ofSection 188(1) of the Companies Act 2013 during the period under review the particularsas required in form AOC-2 have not been furnished.
MANAGEMENT DISCUSSION ANDANALYSIS
In compliance with Regulation 34(3) read with Schedule V(B) of the Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 ('Listing Regulations') Management Discussion and Analysis forms part of this AnnualReport.
CORPORATE GOVERNANCE REPORT
In compliance with Regulation 34(3) read with Schedule V(C) of the Listing Regulationsa Report on Corporate Governance forms part of this Annual Report. The Auditors'certificate certifying compliance with the conditions of corporate governance asprescribed under Schedule V(E) of the Listing Regulations is annexed to the CorporateGovernance Report.
CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE
The details of conservation of energy technology absorption foreign exchange earningsand outgo are as follows:
(a) Conservation of Energy:
(i) the steps taken or impact on conservation of energy:
Even though its operations are not energy-intensive significant measures are taken toreduce energy consumption by using energy-efficient equipment. The Company regularlyreviews power consumption patterns across all locations and implement requisiteimprovements/changes in the process in order to optimize energy/ power consumption andthereby achieve cost savings. Energy costs comprise a very small part of the Company'stotal cost of operations. However as a part of the Company's conservation of energyprogramme the management has appealed to all the employees/workers to conserve energy.
(ii) the steps taken by the company for utilisingalternate sources ofenergy;
The Company has not utilised any alternate sources of energy during the period underreview.
(iii) the capital investment on energy conservation equipment's.
There was no capital investment of any energy conservation during the period underreview.
(b) Absorption of Technology:
I. The efforts made towards technology absorption:
The Company values innovation and applies it to every facet of its business. Thisdrives development of distinctive new products ever improving quality standards and moreefficient processes.
The Company has augmented its revenues and per unit price realization by deployinginnovative marketing strategies and offering exciting new products.
II. Benefits derived as a result of the above efforts:
As a result of the above the following benefits have been achieved:
a) Better efficiency in operations
b) Reduced dependence on external sources for technology for developing new productsand upgrading existingproducts
c) Expansion of product range and cost reduction
d) Greater precision
e) Retention of existing customers and expansion of customer base
f) Lower inventory stocks resulting inlow carrying costs.
III. The Company has not imported any technology during the yearperiod under review;
IV. The Company has not expended any expenditure towards Research and Developmentduring the yearperiod under review.
TRANSFER OF AMOUNTSTO INVESTOR EDUCATION AND PROTECTION FUND
The Company did not have any funds lying unpaid or unclaimed for a period of sevenyears. Therefore there were no funds which were required to be transferred to InvestorEducation and Protection Fund (IEPF).
Members are requested to note that after completion of seven years no claims shall lieagainst the said fund or companyforthe amounts of dividend so transferred nor shall anypayment be made in respect of such claims.
CORPORATE SOCIAL RESPONSIBILITY
The Company does not meet the criteria of Section 135 of Companies Act 2013 read withthe Companies (Corporate Social Responsibility Policy) Rules 2014; however the Board hasconstituted Corporate Social Responsibility Committee and the details of which aredisclosed in the Corporate Governance Report.
OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013
In order to prevent sexual harassment of women at work place a new act The SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 hasbeen notified on 9th December 2013. Under the said Act every company is required to setup an Internal Complaints Committee to look into complaints relating to sexual harassmentat work place of any women employee.
Company has adopted a policy for prevention of Sexual Harassment of Women at workplaceand has set up Committee for implementation of said policy. During the yearperiod Companyhas not received any complaint of harassment.
LISTING WITH STOCK EXCHANGE:
The Company confirms that ithas paid the Annual Listing Fees for theyearperiod2016-2017 to BSE and NSE where the Company's Shares are listed.
Your Company treats its "human resources" as one of its most importantassets.
Your Company continuously invests in attraction retention and development of talent onan ongoing basis. A number of programs that provide focused people attention are currentlyunderway. Your Company thrust is on the promotion of talent internallythrough job rotationandjob enlargement.
DETAILS OF ANY SIGNIFICANT AND MATERIAL ORDERS PASSED BY ANY REGULATORS OR COURTS ORTRIBUNALS THAT MAY IMPACT THE GOING CONCERN STATUSANDTHE OPERATIONS OF THE COMPANYIN FUTURE
There are no significant and material orders passed by the Regulators / Courts /Tribunals which would impact the going concern status of the Company and its futureoperations.
The Directors would like to thank all shareholders customers bankers financialinstitutions medical professionals business associates suppliers distributors andeverybody else with whose help cooperation and hard work the Company is able to achievethe results. The Directors would also like to place on record their appreciation of thededicated efforts put in by the employees of the Company.
Annexure-I to the Directors' report:
Employee Stock Options Scheme 2010
Note: The number of options and exercise price fair price and closing prices at thetime of grant have been shown on the basis of face value of Rs.10 per share (pre-bonus andsub-division). In actual number of options and exercise price will be modified due to thecorporate action of sub-division of face value and bonus shares.
* to be reworked based on exact PAT figure for Year 2015-16
Information required under Section 197 of the Companies Act 2013 read with Rule 5(1)of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules2016
i. The Ratio of the remuneration of each Director to the median remuneration of theemployees of the Company for the financial period 2015-2016 and
ii. The percentage increase in remuneration of each Director Managing Director ChiefFinancial Officer and Company Secretary of the Company in the financial period 2015-16
*Resigned w.e.f. 31/12/2015
Note: Median remuneration of all the employees of the Company for the financial period2015-16 is Rs.142686/-.
iii. The percentage increase in the median remuneration of employees in the financialperiod 2015-16.
Note: The calculation of % increase in the median remuneration has been done based oncomparable employees for the same period.
iv. The number of permanent employees on the rolls of Company.
There were 525permanent employees on the rolls of Company as on March 312016.
v. Average percentile increase already made in the salaries of employees otherthan themanagerial personnel in the last financial period and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration.
Average percentile increase in the salaries of employee other than the MD in theFinancial Period 2015-16 was 10.12% and there is no increase in the salary of the MD.
The average increase of 10.12% in the salaries of employees was in line with the marketprojection the performance of the Company in the financial period 2015-16 the individualperformance of the employees the criticality of the roles they play and skills set theypossess.
vi. Affirmation that the remuneration is as per the Remuneration Policy of the Company
Pursuant to Rule 5(1)(xii) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 it is affirmed that the remuneration paid to the Directors KMPsSenior Management and other employees of the Company is as per the Remuneration Policy oftheCompany.
Information required under Section 197 of the Companies Act 2013 read with Rule5(2)(a) of the Companies (Appointment and Remuneration of Managerial Personnel) AmendmentRules 2016
The above employees are related to the Directors of the Company. :