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SMS Lifesciences India Ltd.

BSE: 540679 Sector: Health care
NSE: SMSLIFE ISIN Code: INE320X01016
BSE 00:00 | 26 Oct 848.65 31.00
(3.79%)
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807.00

NSE 00:00 | 26 Oct 845.60 26.85
(3.28%)
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818.70

HIGH

850.00

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OPEN 807.00
PREVIOUS CLOSE 817.65
VOLUME 1088
52-Week high 885.80
52-Week low 470.10
P/E 18.93
Mkt Cap.(Rs cr) 256
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 807.00
CLOSE 817.65
VOLUME 1088
52-Week high 885.80
52-Week low 470.10
P/E 18.93
Mkt Cap.(Rs cr) 256
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

SMS Lifesciences India Ltd. (SMSLIFE) - Director Report

Company director report

Dear Shareholders

The Board of Directors have pleasure in presenting the 13th Annual Report of theCompany together with the Standalone and Consolidated audited financial statements for thefinancial year ended 31st March 2019.

Financial Results:

Standalone

(Rs. in Lakhs)

Particulars 2019 2018
Gross Sales 37096.99 22618.30
Net sales 33944.87 20449.83
Other Operating income 463.25 413.94
Net Revenue from Operations 34415.16 21748.17
Other Income 252.87 307.72
Finance Cost 546.22 417.92
Depreciation 576.98 570.36
Profit Before Tax 2375.83 639.66
Taxation 712.50 (10.47)
Profit After Tax 1663.33 650.13
Earnings per share (In Rupees) Basic/Diluted 55.02 21.50

STATE OF COMPANY AFFAIRS

During the year 2018-19 the Company had achieved production of 2040 M.T of APIs andtheir Intermediaries in comparison with 1729 M.T for the FY 2017-18. The net sales of theCompany for the year 2018-19 have reached 33944.87 lakhs as against Rs.20449.83 lakhsfor the year 2017-18.

USFDA INSPECTION

The Company takes pride in informing that it has successfully completed USFDA auditduring April 2018 of Unit 1 Khazipally Hyderabad. This is the 1st FDA audit of thisunit in 30 years of its operations. This will help in enhancing sale of intermediates toregulated markets and API in key markets. Also this unit has approval from Japan PMDAKorea FDA COFEPRIS Mexico and WHO GMP.

SHARE CAPITAL:

The Authorized Share Capital of the Company is Rs. 35000000/- (Rupees Three CroreFifty lakh only) divided into 3500000 Equity Shares of Rs. 10/- (Rupees Ten) each andthe paid-up Share Capital is 30232870 divided into 3023287 Equity Shares of Rs. 10/-(Rupees Ten) each.

Listing of Shares:

The equity shares of the Company are listed in National Stock Exchange of India Limited(NSE) and BSE Limited (BSE) with effect from 17th August 2017.

TRANSFER TO RESERVES:

During the year Your Company has not transferred any amount to General Reserve.

DIVIDEND:

The Board of Directors has in their meeting held on 29th May 2019 recommended thedividend @15% i.e Re. 1.50 per share of equity share of Rs.10/- each amounting to Rs.45.35 Lakhs.

CHANGE IN NAME AND NATURE OF BUSINESS OF THE COMPANY:

During the year under review there is no change in the nature of business of theCompany.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Directors:

In pursuance of Section 152 of the Companies Act 2013 and the rules framed thereunder Mr. Ramesh Babu Potluri Director is liable to retire by rotation at the ensuingAnnual General Meeting and being eligible offered himself for reappointment.

During the year Mr. Shravan Kudaravalli was appointed as independent w.e.f 28.05.2018in terms of section 149(10) of the Companies Act 2013 for a continuous period of 5 (five)years.

Directors' Appointment and Remuneration Policy

The Nomination and Remuneration Committee is responsible to set the skills/ expertise/competencies of the Board Members based on the industry and strategy of the Company and toformulate the criteria for determining qualifications positive attributes andindependence of Directors in terms of provisions of Section 178 (3) of the Act and theListing Regulations. The Board has on the recommendations of the Nomination &Remuneration Committee framed a policy for Remuneration of the Directors and KeyManagerial Personnel. A copy of the Nomination & Remuneration Policy is available onthe website of the company https:// www.smslife.in/policies.php. The objective of theCompany's remuneration policy is to attract motivate and retain qualified and expertindividuals that the Company needs in order to achieve it's strategic and operationalobjectives whilst acknowledging the societal context around remuneration and recognizingthe interests of Company's stakeholders. The Non-Executive Directors (NED) are remuneratedby way of sitting fee for each meeting attended and are also reimbursed out of pocketexpenses incurred by them in connection with the attendance of the Company's Meetings.

PERFORMANCE EVALUATION

Board Evaluation: The annual evaluation framework for assessing the performance ofDirectors comprises of the following key areas:

i) Attendance for the meetings participation and independence during the meetings.

ii) Interaction with Management.

iii) Role and accountability of the Board.

iv) Knowledge and proficiency.

The evaluation involves assessment by the Nomination and Remuneration Committee andBoard of Directors. A member of the Nomination and Remuneration Committee and Board doesnot participate in the discussion of his / her evaluation.

MEETINGS OF THE BOARD OF DIRECTORS

During the year under review the Board of Directors of the Company met Four times viz.28th May 2018 30th July 2018 13th November 2018 and 14th February 2019.

COMMITTEES OF THE BOARD

The details of the Committees of the Board viz. Audit Committee Nomination andRemuneration Committee CSR Committee and Stakeholders Relationship Committee are reportedin the Report on Corporate Governance which forms part of the Board's Report.

DECLARATION BY INDEPENDENT DIRECTORS

The independent directors have submitted the declaration of independence stating thatthey meet the criteria of independence as provided in sub-section (6) of Section 149 ofthe Companies Act 2013.

SUBSIDIARY JOINT VENTURE AND ASSOCIATE COMPANY:

During the year Mahi Drugs Private Limited became wholly owned subsidiary of theCompany with effect from 17th September 2018. The particulars of investments as on 31stMarch 2019 are furnished in Form AOC-1 forming part of this Annual Report as 'Annexure -I'.

MANAGEMENT DISCUSSION & ANALYSIS

Management Discussion and Analysis Report is annexed which forms part of this Reportas Annexure - II.

CORPORATE GOVERNANCE

A separate section on Corporate Governance practices followed by your Company asstipulated under Schedule V(C) of the SEBI (LODR) Regulations 2015 is enclosed formingpart of this report. The certificate of M/s. Rambabu & Co Statutory Auditors withregard to compliance of conditions of corporate governance as stipulated under Schedule V(E) of the SEBI (LODR) Regulations 2015 is annexed to the Report on Corporate Governanceas 'Annexure - III'.

PUBLIC DEPOSITS

During the year under review the Company has not accepted any deposits in terms ofChapter V of the Companies Act 2013 read with the Companies (Acceptance of Deposit)Rules 2014.

EXTRACT OF ANNUAL RETURN:

As required pursuant to section 92(3) of the Companies Act 2013 and rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of annual return inMGT-9 is given as Annexure - IV and forms part of this Report.

LOANS GUARANTEES AND INVESTMENTS:

The Company has acquired 100% of the equity shares of Mahi Drugs Private Limited duringthe year. The Board agreed to provide Corporate Guarantee to Mahi Drugs Private Limited awholly owned subsidiary of the Company. The particulars of investments and CorporateGuarantee as on 31st March 2019 are furnished in financial Statement forming part of thisAnnual Report as 'Annexure - V'

TRANSACTION WITH RELATED PARTIES:

All contracts/arrangements/transactions entered by the Company during the financialyear 2018-19 with related parties were in the ordinary course of business and at an arm'slength basis and are incompliance with the provisions of the Companies Act. There are nomaterially significant related party transactions made by the Company with PromotersDirectors and Key Managerial Personnel etc. which may have potential conflict with theinterest of the Company. A Policy on Related Party Transactions is uploaded on theCompany's website at the web link http://www.smslife.in/investors/policv. The particularsof contracts or arrangements entered by the Company with related parties referred to inSection 188(1) are furnished under Form AOC-2 as 'Annexure - VI'

CORPORATE SOCIAL RESPONSIBILITY:

As per the provisions of Section 135 and Schedule-VII of the Companies Act 2013 andCompanies (Corporate Social Responsibility Policy) Rules 2014 your company had formulateda Corporate Social Responsibility Policy (CSR Policy).https://www.smslife.in/pdf/corporate-social- responsibility-policy.pdf. The said policycontains the scope of CSR Expenditure and provides guidance for way forward for expendingthe same. The composition of CSR committee and other details mentioned under 'CorporateGovernance Report' which forms part of this report.

As per the provisions of the Section 135 of the Act the average net profits of thecompany during the preceding three years stands as Rs. 818.09 lakhs hence the company isrequired to spend a sum of Rs. 16.36 lakhs towards CSR Expenditure in FY 2018-19. Thedetails of it are mentioned under 'CSR Expenditure' in statutory format which forms partof this report as Annexure - VII.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:

[Section 134(3)(m) of the Companies Act 2013 read with Rule 8(3) of the Companies(Accounts) Rules 2014]

i. Conservation of Energy

Steps taken or impact on conservation of energy:

Energy conservation refers to reducing energy consumption through optimal energyutilization technologies enhancing energy availability resource efficiency as also useof renewable energy.

During the year the Company has implemented energy conservation equipment in itsKazipally unit. Some of them are:

• Erected 33 KV power line in the existing 11KV power line. With this reduction inprice for each unit of power consumed decline in diesel consumption by minimizing powerinterruptions.

• Improvement in Fluidization & combustion and Steam Generation efficiency atBoilers by

i) Increased feed water temperature up to 75 deg.C and target 95 deg.C.

ii) Steam control Automation.

iii) Introduced High GCV & low Moisture Imported Coal (Indonasia and South Africa)in place of High Moisture (40%) and lower quality coal and reduced coal consumption.

• Improvement of Brine compressors Capacity further improved cooling efficiencyand Reduced compressors running hours & Reduced Energy consumption from 22570 units to16500 units per day of SERVICE BLOCK.

• Use of RO water to Cooling towers make up.

• Replaced old compressors with new compressors with automation.

• Automation of two nos. 120 TR compressors.

• New Cooling tower 500TR installed and improved total cooling efficiency to brinecondensers.

• Cooling towers Automation.

ii. Technology Absorption

No technology absorption is involved.

iii. Foreign Exchange earnings and outgo

Particulars 2019 2018
Earnings:
FOB value of Exports 16354.54 10720.71
Outgo:
Sales Commission 208.07 116.76
Travelling Expenses 0.55 0.41
CIF value of Imports 9875.97 6906.64

Particulars of Employees and related disclosures:

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 is mentioned under 'Employees Remuneration Report' which forms part of thisreport as Annexure - VIII.

None of the employees is receiving salary of more than Rs 8.50 lakh per month

AUDITORS:

Statutory Auditors:

The appointment of M/s.Rambabu & Co. Chartered Accountants as Statutory Auditorsof the Company for a period of four years was approved by the Shareholders in the 11thAnnual General Meeting held on 10th June 2017 till the conclusion of 15th Annual GeneralMeeting of the Company.

The Audit Report does not contain any qualification reservation adverse remark ordisclaimer.

Internal Auditors:

In terms of Section 138 of the Companies Act 2013 and the relevant Rules the Companyappointed M/s Adusumilli & Associates Chartered Accountants as Internal Auditor. TheInternal Auditor directly reports to the Audit Committee.

Secretarial Auditor:

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s SVVS & Associates Company Secretaries LLP to undertake the secretarialaudit of the company for the Financial Year ended 31st March 2019. The Secretarial AuditReport is annexed herewith as 'Annexure - IX'.

Annual Secretarial Compliance Report:

Pursuant to SEBI circular no. CIR/CFD/CMD1/27/2019 dated 08th February 2019 theCompany has obtained Annual Secretarial Compliance Report forms part of this Report asAnnexure - X from Mr. C. Sudhir Babu Practicing Company Secretary(Proprietor CSBAssociates) and the same was also submitted to the Stock Exchanges where the shares of theCompany are listed.

Certificate of Non disqualification of Director' under Regulation 34(3) of SEBI (LODR)2015:

The Company has obtained a certificate which forms part of this Report as Annexure - XIfrom Mr. C. Sudhir Babu Practicing Company Secretary(Proprietor CSB Associates)confirming that none of the Directors of the Board of the Company have been debarred ordisqualified from being appointed or continuing as directors of companies by theBoard/Ministry of Corporate Affairs or any such statutory authority.

Cost Auditor:

Pursuant to Section 148 of the Companies Act 2013 read with the Companies (Audit andAuditors) Rules 2014 and the Companies (Cost Records & Audit) Amendment Rules 2014the Board in their meeting held on 29th May 2019 has appointed Mr. K.S.N. Sarma(Registration No.102145 and Membership No.6875) as Cost Auditor of the Company for thefinancial year 2019-20. The provisions also require that the remuneration of the CostAuditor is to be approved by the shareholders as mentioned in the AGM Notice.

HUMAN RESOURCES

'Human Resources' are recognised as a key pillar of any successful organisation and sois for SMS Lifesciences. The Company puts constant efforts in recruiting and training theemployees and ensures to bring out the best of them. The Company adopts a HR policy andensures that all the employees are aware of personnel policies. The needs of the employeesare addressed with high importance and efforts are made to provide a highly challengingand healthy environment. Besides all these the Company places high emphasis onprofessional etiquette required of every employee.

RISK MANAGEMENT

The provisions related to the Risk Management Committee of SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 are not applicable to the Company. TheCompany has a Risk Management framework to identify evaluate business risks andopportunities. This framework seeks to minimise adverse impact on the business objectivesand enhance the Company's competitive advantage. The risk framework defines the riskmanagement approach across the enterprise at various levels.

INTERNAL CONTROLS SYSTEMS AND ADEQUACY

The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The scope of the Internal Audit is decided by the AuditCommittee and the Board. To maintain objectivity and independence the Board has appointedan Internal Auditor which reports to the Audit Committee of the Board on a periodicbasis. The Internal Auditor monitors and evaluates the efficacy and adequacy of internalcontrol systems in the Company its compliance with operating systems accountingprocedures and policies for various functions of the Company. Audit observations andactions taken thereof are presented to the Audit Committee of the Board periodically.

WHISTLE BLOWER POLICY/VIGIL MECHANISM:

The Company has established a mechanism through which all the stakeholders can reportthe suspected frauds and genuine grievances to the appropriate authority. A mechanism hasbeen established for employees to report concerns about unethical behavior actual orsuspected fraud or violation of code of conduct and ethics. It also provides adequatesafeguard against victimization of employees who avail of the mechanism and allows directaccess to the Chairperson of the Audit Committee. The whistle Blower Policy which has beenapproved by the Board of Directors of the Company has been uploaded on the Company'swebsite (http://www. smslife.in/investors/whistle-blower-protection-policy). During theyear under review the Company has not received any complaint(s) under this policy.

PREVENTION OF INSIDER TRADING CODE

As per the SEBI (Prohibition of Insider Trading) Regulation 2015 the Company hasadopted a Code of Conduct of Insider Trading. The Company has appointed Mr. Pavan PiseCompany Secretary of the Company as Compliance Officer for setting forth the proceduresand implementation of the Code for trading in Company's Equity Shares. During the yearunder review there has been a due compliance of the said Code.

BOARD'S RESPONSE ON AUDITORS QUALIFICATIONS OBSERVATIONS RESERVATION OR ADVERSEREMARKS OR DISCLAIMERS MADE:

There are no qualifications observations reservations or adverse remarks made by theStatutory Auditors in their report.

REPORTING ON SEXUAL HARASSMENT:

The Company has zero tolerance for sexual harassment at workplace and has adopted a"Policy on Prevention Prohibition and Redressal of Sexual Harassment of Women atWorkplace" in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules thereunder for preventionand redressal of complaints of sexual harassment at workplace. The Company is committed toprovide equal opportunities without regard to their race caste sex religion colournationality disability etc. All women associates (permanent temporary contractual andtrainees) as well as any women visiting the Company's office premises or women serviceproviders are covered under this policy. All employees are treated with dignity with aview to maintain a work environment free of sexual harassment whether physical verbal orpsychological. During the year under review the Company has not received any complaintson sexual harassments.

DIRECTOR'S RESPONSIBILITY STATEMENT:

The Directors' Responsibility Statement referred to in clause (c) of Sub- section (3)of Section 134 of the Companies Act 2013 shall state that

1) in the preparation of financial statements for the year ending 31st March 2019 theapplicable accounting standards had been followed along with proper explanation relatingto material departures if any;

2) the directors had selected such accounting policies notified and modified by ICAIand applied them consistently and made judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company at theend of the financial year and of the profit and loss of the Company for that period;

3) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act as amended fromtime to time for safeguarding the assets of the Company and for preventing and detectingfraud and other irregularities;

4) the annual accounts of the Company had been prepared on a going concern basis; and

5) they had laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and are operating effectively; and.

6) the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE:

No significant and material orders passed by the regulators or courts or tribunalsimpacting the going concern status and Company's operations in future.

ACKNOWLEDGEMENTS:

The Directors place on record their sincere appreciation for the significantcontribution made by the employees through their dedication hard work and commitments.The Directors gratefully acknowledge and appreciate the support extended by the BanksFinancial Institutions various government authorities customers and shareholders of theCompany for their continued support and confidence reposed in the Company.

For and on behalf of the Board of Directors
(Ramesh Babu Potluri) (TVVSN Murthy)
Director Managing Director
DIN:00166381 DIN: 00465198
Place: Hyderabad
Date: 12th August 2019

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