Your Directors have pleasure in presenting the 37 Annual Report of Span DivergentLimited (the Company) on the business and operations of the Company together with theaudited financial statements for the year ended on March 31 2017.
1. FINANCIAL SUMMARY/PERFORMANCE OF THE COMPANY
The financial performance of the Company for the financial year ended March 31 2017along with figures of previous financial year is summarized below:
|Particulars ||Amount (Rs. In Lacs) |
| ||2016 - 17 ||2015 - 16 |
|Total Income ||464.21 ||274.27 |
|Profit/(Loss) before tax Depreciation and interest (Excluding extraordinary income/(Loss)) ||(194.33) ||(250.91) |
|Interest ||16.54 ||0.00 |
|Profit/(Loss) before Depreciation ||(210.87) ||(250.91) |
|Depreciation ||34.27 ||16.65 |
|Profit/(Loss) before tax ||(245.14) ||(267.56) |
|Exceptional Item ||0.00 ||742.04 |
|Profit/(Loss) before tax ||(245.14) ||474.48 |
|Income Tax Expense ||8.50 ||121.20 |
|Profit/(Loss) after tax ||(236.64) ||353.28 |
|Profit/(Loss) after tax for the year ||(236.64) ||353.28 |
|Balance brought forward ||4283.37 ||4248.67 |
|Amount available for appropriation ||4046.73 ||4601.95 |
|Proposed Dividend ||Nil ||Nil |
|Dividend Distribution tax ||Nil ||Nil |
|Dividend for earlier year (including distribution tax) ||Nil ||Nil |
|Transfer to General Reserve ||Nil ||Nil |
|Utilization towards Buy Back of Equity Shares ||Nil ||(137.15) |
|Transfer to Capital Redemption Reserve ||Nil ||(181.42) |
|Balance carried forward ||4067.27 ||4283.37 |
Board after detailed deliberation and considering loss during the year under reviewdecided not to recommend any dividend for the financial Year 2016-17.
3. TRANSFER TO RESERVES:
No amount has been transfer to Reserves for the financial year ended on March 31 2017.
4. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
During the Financial Year 2016-17 the Company has incurred losses and the reason forsuch loss is that the Company is into initial phase of investments in two businessverticals. After sale of in-vitro Diagnostics Business to Japanese Company theCompany has started exploring various business opportunities available in FoodAgriculture and Health Care related activities.
Your Board has decided too operate in two business verticals namely Food andAgriculture Business (FAB) and Healthcare and Life Sciences (HCLS). Company will beoperating in all the businesses through specific subsidiary firm for each business.
The Details of firm where Company is actively pursing the business development are asfollow: FAB Verticals: Dryfruit Factory LLP;
Company is in process of setting up Dry Fruit processing plant near Ahmedabad Gujaratfor processing of Raw Cashew Nuts (RCNs) into finished cashews and commercial productionis likely to begin from first quarter of FY2018.
Aranya Agri Biotech LLP:
Company is venturing into Plant Tissue culture business by setting up a business in andaround Vadodara Gujarat. The Company has already acquired an assets of an existingnon-operative unit which was in business of Plant Tissue Culture and the Company isplanning to make it operational by FY2018.
BioSpan Scientific LLP
Company will be with a niche and selective product portfolio to service indiancustomers in Pharmaceuticals Bio-Pharmaceuticals and Academia Segments. BioSpanScientific's portfolio focuses on the areas of clean room and contamination controlMicrobiology Protein Research and Scientific Laboratories Products. The commercialoperation may start in second quarter of FY 2017-18.
Apart from these abovc mentioned ventures the Company is also working on consolidatingit's presence in the field of Food Agriculture and Healthcare which will be shared withall stakeholders from time to time.
Industry Structure Development & outlook
The Company has by slump sale transferred its in-vitro Diagnostics Businessundertaking to M/S. Arkray Healthcare Private Limited. Consequently Span is in the processof implementing alternative structures for future lines of businesses. The Company hasidentified and currently exploring the business in FAB and HCLS verticals.
Research & Development
Subsequent to company transferred its in-vitro Diagnostic Business undertakingto M/S. Arkray Healthcare Private Limited currently there is neither any research normanufacturing activity in the Company.
Human resources and industrial relations
As on March 31 2017 Company has 9 employees. The focus of the Company is to enrichits employees by promoting learning & development and providing opportunities forenhancing their knowledge base continuously
During the year Company continues to have cordial and harmonious relations with itsemployees.
5. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There was no significant material order passed by the regulators or courts.
6. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THEFINANCIAL STATEMENTS:
Management is committed to continue maintaining Company's internal control systemwhich is reviewed and monitored critically. Compliance of the same is ensured with veryvaluable inputs from the independent directors Internal Auditors and Statutory Auditors.Their vast experience and knowledge base has contributed tremendously in betterment ofsystems and processes resulting in better internal control. Internal control system isfurther supported by periodic review by management and the Audit Committee. Companymaintains high focus towards all regulatory compliances which is regularly reviewed bythe Board.
7. SUBSIDIARIES AND JOINT VENTURES
Your Company has one wholly owned subsidiary company viz. Span Diagnostics South Africa(Pty) Limited. In terms of proviso to sub-section (3) of the Section (3) of Section 129 ofthe Act the salient features of the financial statement of the subsidiaries is set out inthe prescribed Form AOC 1 which forms part of the Annual Report.
Span Diagnostics South Africa (PTY) Limited
To have significant presence in strategically important region the company has whollyowned overseas subsidiary company in South Africa.
Pursuant to sale of IVD business of Span Divergent Ltd. (Formerly Span DiagnosticsLimited) (SDL) to Arkray Healthcare Private Limited in India the distribution agreementfor the Southern African region (SADC Region) between SDL and Span SA also becameinoperative. However because of its strategic importance and potential of the regionBoard of Directors of SDL decided to continue Span SA as an active entity and it isidentified that Span SA will be strategically important and add value to potential newbusiness of SDL as per the need of new business demand.
Limited Liabilities Partnerships
During the year 2015 - 16 Company had incorporated new LLPs as under to carry out newbusinesses in FAB and HCLS verticals in respective entities.
1. Dryfruit Factory LLP
During the FY2017 Dryfruit Factory LLP has done turnover of Rs. 66.88 Lacs and incurredloss of Rs. 68.60 Lacs during the year. Processing of Raw Cashew
Nuts are likely to start from 2 Quarter of FY2018.
2. Aranya Agri Biotech LLP
During the FY2017 Aranya Agri Biotech LLP has done turnover of Rs. 2.79 Lacs andincurred loss of Rs. 54.33 Lacs during the year. Full-fledge commercial activities goingto start from 2 Quarter of FY2018.
3. Biospan Scientific LLP
During the FY2017 Biospan Scientific LLP has not started any operations and hasincurred loss of Rs. 52.37 Lacs during the year.
4. Span Diagnostics Products LLP
During the FY2017 Span Diagnostics Products LLP has not started any operations and hasincurred loss of Rs. 0.09 Lacs during the year.
The Company is acting as designated partner in all the LLPs through its representative.The above said LLPs have initiated steps to set up the business but are expected to becomeoperational in ensuing year.
8. FIXED DEPOSITS
We have not accepted any fixed deposits and as such no amount of principal or interestwas outstanding as of balance-sheet date.
9. PARTICULARS OF EMPLOYEES
During the financial year 2016-17 none of the employee of the Company has receivedremuneration exceeding the limit as stated in rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014.
10. STATUTORY AUDITORS & THEIR REPORT
At the Annual General Meeting held on September 20 2015 M/s. Haribhakti & CoLLP. Chartered Accountants were appointed as Statutory Auditors of the Company to holdoffice from conclusion of 36 Annual General Meeting till the conclusion of 40 the AnnualGeneral Meeting to be held in the year 2020 subject to ratification of appointment ofstatutory auditor by shareholders at every annual general meeting. Accordingly theratification of appointment of Haribhakti & Co. LLP Chartered Accountants asstatutory auditors of the Company is placed for approval by the Shareholders. In thisregard the Company has received a certificate from the auditors to the effect that ifthey are re-appointed it would be in accordance with the provisions of Section 141 of theCompanies Act 2013.
There are no qualifications or adverse remarks in the Auditors' Report which requireany clarification / explanation. The Notes on financial statements are self-explanatoryand needs no further explanation.
The Notes on accounts referred to in the Auditor's Report are self explanatory andtherefore do not call for any further comments.
11. SHARE CAPITAL
The paid up equity capital of the Company as on March 31 2017 was Rs. 54617470/-divided into 5461747 Equity Shares of Rs. 10/- each. The Company has neither issued anyshares nor granted stock option nor sweat equity.
12. ANNUAL RETURN
In accordance with Section 134(3)(a) of the Companies Act 2013 an extract of theAnnual Return in the prescribed format is appended as "Annexure B" to theBoard's Report.
13. CONSERVATION OF ENERGY
The particulars as prescribed under Sub-section (3)(m) of Section 134 of the CompaniesAct 2013 read with Companies (Accounts) Rules 2014 are not given considering the factthat the Company is in the process of establishing new business after sale of its In-VitroDiagnostics Business and office is an administrative office only and no manufacturingactivity have been carried out during the year. However in the office all the lights usedare LED lights and all air-conditioners are rated 5 star for every efficiency.
14. TECHNOLOGY ABSORPTION RESEARCH & DEVELOPMENT AND FOREIGN EXCHANGE EARNING& OUTGO
The particulars are attached in "Annexure 'A'" of this report.
15. CORPORATE SOCIAL RESPONSIBILTY
As part of Initiative under "Corporate Social Responsibility" the Companyconstituted "Corporate Social Responsibility Committee" under the Chairmanshipof an Independent Director Mr. Kamlesh Patel.
During the year under review Company had contributed funds for medical aid. Thecontribution in this regard has been made to the Registered Trust.
The Annual Report on CSR Activities is annexed as "Annexure C" to the Board'sReport.
16. DIRECTORS/KEY MANAGERIAL PERSONNEL
|Name of the Director ||Designation |
|Sanjay Natwarlal Mehta ||Director |
|Pradipkumar Keshavlal Desai ||Director |
|Lataben Pradipkumar Desai ||Woman Director |
|Pranav Sureshbhai Desai ||Director |
|Viral Pradipkumar Desai ||Managing Director |
|Sushil Kanubhai Shah ||Independent Director |
|Shyamal Ghosh ||Independent Director |
|Kamlesh Maganlal Patel ||Independent Director |
|Needamangalam Gopalaswami ||Independent Director |
|Mr. Pankaj Ajmera ||Company Secretary |
|Mr. Minesh Mohanbhai Patel ||Chief Finance Officer (CFO ) upto January 31 2017 |
|Mr. Samkit Mehta ||Chief Finance Officer (CFO ) w.e.f February 01 2017 |
17. INDEPENDENT DIRECTORS DECLARATION
All independent directors have separately submitted a declaration that each of themmeet the criteria of independence as laid down under section 149(6) of the Companies Act2013. Further there has been no change in the circumstances which may affect their statusas Independent Director during the year.
18. BOARD MEETINGS
An agenda of the meetings is prepared and circulated in advance to the Directors.During the year Five Board Meetings and Four audit committee meetings were convened andheld. The details of which are given in the Corporate Governance Report along with othercommittee meetings. The intervening gap between the meetings was within the periodprescribed under the Companies Act 2013.
19. BOARD EVALUATION
Pursuant to SEBI (Listing Obligations & Disclosures Requirements) Regulations 2015mandates that the Board shall monitor and review the Board evaluation framework. TheCompanies Act 2013 states that a formal annual evaluation needs to be made by the Boardof its own performance and that of its committees and individual directors. Schedule IV ofthe Companies Act 2013 states that performance evaluation of independent directors shallbe done by the entire Board of Directors excluding the Director being evaluated.
The evaluation of all the directors and the Board as a whole was conducted based on thecriteria and framework adopted by the Board. The evaluation process has been explained inthe corporate governance report. The Board approved the evaluation results as collated bythe nomination remuneration committee.
None of the independent directors are due for re-appointment.
20. Appointments :
The Companies Act 2013 provides for the appointment of the independent directors.Sub-section 10 of Section 149 of the Companies act 2013 provides that independentdirectors shall hold office for a term of five consecutive years on the Board of aCompany; and shall be eligible for the re-appointment on passing a special resolution bythe shareholders of the company. In compliance with the aforesaid provision and subject toprovision of Securities Exchange Board of India Act 1992 Mr. Kamlesh Patel Mr. N.Gopalaswami Mr. Shyamal Ghosh and Dr. Sushil Shah have been appointed as an IndependentDirectors of the Company for term of 5 (Five) years. None of the Directors will retire atthe ensuing Annual General Meeting.
21. RETIREMENTS RESIGNATIONS AND CHANGE IN THE DESIGNATION :
I. Mr. Sanjay Mehta Director of the Company who retires by rotation at the ensuingAnnual General Meeting and being eligible offers himself for reappointment.
The retirement of Director by rotation at the ensuing Annual General Meeting isdetermined in accordance with the provisions of the Companies Act 2013. II. During theyear Mr. Viral Pradipkumar Desai was reappointed as Managing Director of the Company witheffect from July 01 2016 for a further period of 3 years. III. Mr. Minesh Patel ChiefFinance officer re-designated Senior Office Finance & Accounts with effect fromFebruary 01 2017.
IV. Mr. Samkit Mehta was appointed as Chief Finance Officer of the Company with effectfrom February 01 2017.
22. AUDIT COMMITTEE :
The Audit Committee was reconstituted on May 15 2013. The Committee comprises of threeIndependent Directors namely Mr. Shyamal Ghosh Chairman Mr. N. Gopalaswami Mr. KamleshM. Patel and Mr. Sanjay N. Mehta (Non Executive Directors). Mr. Pankaj Ajmera CompanySecretary acts as the secretary to the Audit Committee. The composition and the Terms ofReference of the Audit Committee meet with the requirements of Section 177 of theCompanies Act 2013 and SEBI (Listing Obligations and Disclosures Requirements)Regulations 2015.
There were four meetings held during the year.
Attendance of each member at the Audit Committee meetings held during the year
|Name of Members ||No. of Meetings held ||No. of Meetings Attended |
|Mr. Shyamal Ghosh Chairman ||4 ||4 |
|Mr. N. Gopalaswami ||4 ||3 |
|Mr. Sanjay N. Mehta ||4 ||4 |
|Mr. Kamlesh M. Patel ||4 ||2 |
23. VIGIL MECHANISM
The Company has established a mechanism for employees to report to the managementconcerns about unethical behaviour actual or suspected fraud or violation of theCompany's code of conduct or ethics policy and the same has been communicated withinorganization.
In staying true to our values of strength performance and passion the Company iscommitted to the high standards of Corporate Governance and Stakeholders Responsibility.
The Company has formulated policy on "Protection of Women's Rights at Workplace'as per the provisions of the Sexual Harassment of women at workplace (PreventionProhibition & Redressal) Act 2013. This has been widely disseminated. There was nocases of sexual harassment complaints received by the Company in the financial year 2016 -17.
24. NOMINATION AND REMUNERATION COMMITTEE
The Nomination and Remuneration Committee was reconstituted on May 23 2014. TheNomination and Remuneration Committee comprises of four directors of which two directorsare independent directors & one Non Executive Director.
There was a two nomination and remuneration committee meeting held during the year.
Attendance of each member at the Nomination and Remuneration Committee held during theyear.
|Name of Members ||No. of Meetings held ||No. of Meetings attended ||Designation |
|Mr. Shyamal Ghosh Chairman ||2 ||2 ||Independent Non-Executive Director |
|Mr. N. Gopalaswami ||2 ||2 ||Non Executive Director |
|Mr. Sanjay N. Mehta ||2 ||2 ||Independent & Non-Executive Director |
|Mr. Viral P. Desai ||2 ||2 ||Managing Director |
The main term of reference of Nomination and Remuneration Committee is to review andrecommend the revision in remuneration of managerial personnel to the Board of Directors.The Nomination and Remuneration Committee while reviewing the remuneration considers theindustry remuneration standards educational qualification relevant experience andperformance of the concerned managerial personnel vis--vis the company requirements.
The Board has on recommendation of the Nomination and Remuneration Committee framed apolicy for selection and appointment of Directors Senior Management and theirremuneration. The Nomination and Remuneration Policy is stated in the Corporate GovernanceReport.
25. LOANS GUARANTEES AND INVESTMENTS
The particulars of loans guarantees and investments have been disclosed in thefinancial statements.
26. RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were onarm's length basis were in the ordinary course of business and in compliance of theprovision of Section 188 of the Companies Act 2013 and rules made there under and ListingAgreement & SEBI (Listing Obligations and Disclosures Requirement) Regulation 2015.There were no materially significant related party transactions made by the Company withpromoters Key Managerial Personnel or other designated persons which may have potentialconflict with Interest of the Company at large. All related party transactions are placebefore the Audit Committee as also the Board for approval. You may refer to related partytransactions in note No. 29 of the Stand Alone Financial Statements.
27. MANAGERIAL REMUNERATION :
|Name of the Director ||Designation ||Remuneration in the year 2017 in Rs. ||Remuneration in the year 2016 in Rs. ||Sitting fees in the F.Y. 2017 |
|Sanjay Natwarlal Mehta ||Director ||NIL ||NIL ||45000 |
|Pradipkumar Keshavlal Desai ||Director ||NIL ||NIL ||25000 |
|Lataben Pradipkumar Desai ||Woman Director ||NIL ||NIL ||20000 |
|Pranav Sureshbhai Desai ||Director ||NIL ||NIL ||10000 |
|Viral Pradipkumar Desai ||Managing Director ||7107000 ||5270160 ||NIL |
|Sushil Kanubhai Shah ||Independent Director ||NIL ||NIL ||10000 |
|Shyamal Ghosh ||Independent Director ||NIL ||NIL ||40000 |
|Kamlesh Maganlal Patel ||Independent Director ||NIL ||NIL ||25000 |
|Needamangalam Gopalaswami ||Independent Director ||NIL ||NIL ||30000 |
|Pankaj Ajmera ||Company Secretary ||118032 ||104416 ||NA |
|Mr. Minesh Patel* ||Chief Financial Officer ||249411 ||265628 ||NA |
|Mr. Samkit Mehta* ||Chief Financial Officer ||325383 ||NA ||NA |
*Mr. Minesh Patel was CFO upto January 01 2017 and Mr. Samkit Mehta appointed as CFOw.e.f February 01 2017.
The median remuneration of the employee of the Company for the year 2016 17 isRs. 537635 as compared to Rs. 265628 for the year 2015 16. During the yearmedian remuneration is increased by 50.60%. There were 9 employees on rolls of the Companyat the end of the financial year i.e March 31 2017. The increase in remuneration is inline with the market trends. In order to ensure that remuneration reflects companyperformance the performance pay was linked to organization performance.
|Sr. No. ||Name of Director ||Remuneration ||Ratio of Remuneration to the median remuneration of the employees |
|01. ||Mr. Viral P Desai ||7107000 ||19.85:1 |
During the year under review there was increase in remuneration of the ManagingDirector Mr. Viral P Desai who is reappointed for a further period of 3 years with effectfrom July 01 2016. During the year under review Mr. Samkit Mehta was appointed as ChiefFinance Officer of the Company.
The further information required pursuant to Section 197 read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofthe employees of the Company will be provided upon request. In terms of Section 136 of theAct the Reports and Accounts are being sent to the Members and others entitled theretoexcluding the information on employees particulars which is available for inspection bythe members at the registered office of the Company during business hours on working daysof the Company up to the date of the ensuing Annual General Meeting.
28. SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT :
Mitesh Rana & Co. Company Secretaries Vadodara was appointed to conduct theSecretarial Audit of the Company for the Financial Year 2016 - 17 as required underSection 204 of the Companies Act 2013 and the Companies (Appointment and Remuneration)Rules 2014. The Secretarial Audit Report for FY 2016-17 forms part of the Annual Reportas Annexed to the Board's Report.
A Secretarial Audit Report given by Mitesh Rana & Co. a company secretary inpractice shall be annexed with the report.
Secretarial Auditor's Report are self explanatory and therefore do not call for anyfurther comments.
29. AUDITORS' CERTIFICATE ON CORPORATE GOVERNANCE :
A report on Corporate Governance as stipulated under SEBI (Listing Obligations andDisclosures Requirements) Regulations 2015 forms part of the Annual Report.
The certificate from the Auditors of company M/s. Haribhakti & Co LLP. confirmingcompliance with the conditions of Corporate Governance is attached to this Report.
30. COST AUDITORS
During the year under review company have not carried out any operation. In view ofthe same and as confirmed by the cost auditor of the Company cost audit is not applicableto the Company for the year 2017 18.
31. RISK MANAGEMENT
Risks are events situations or circumstances which may lead to negative consequenceson the Company's businesses. Risk management is a structured approach to manageuncertainty. A formal enterprise wide approach to Risk Management is being adopted by theCompany and key risks will now be managed within a unitary framework. As a formalroll-out all business divisions and corporate functions will embrace Risk ManagementPolicy and Guidelines and make use of these in their decision making. Key business risksand their mitigation are considered in the annual/strategic business plans and in periodicmanagement reviews. The risk management process in our multi-business multi-siteoperations over the period of time will become embedded into the Company's businesssystems and processes such that our responses to risks remain current and dynamic.
The Risk Management is overseen by the Audit Committee of the Company on a continuousbasis. The Committee oversees Company's process and policies for determining risktolerance and review management's measurement and comparison of overall risk tolerance toestablished levels. Major risks identified by the businesses and functions aresystematically addressed through mitigating actions on a continuous basis.
32. DIRECTORS' RESPONSIBILITY STATEMENT
In terms of Section 134(5) of the Companies Act 2013 the directors would like tostate that:
a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed.
b) the directors have selected such accounting policies and applied them consistentlyand made judgements 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 and ofthe loss of the Company for the year under review the directors have taken proper andsufficient care for the maintenance of adequate accounting records in accordance with theprovisions of this act for c) safeguarding the assets of the Company and for preventingdetecting fraud and other irregularities
d) the directors have prepared the annual accounts on a going concern basis
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 and
f) the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
33. CAUTIONARY STATEMENT
Statements in this Report particularly those which relate to Management Discussion andAnalysis and the Corporate Governance Report describing the Company's objectivesprojections estimates and expectations may constitute "forward lookingstatement" within the meaning of applicable laws and regulations. Actual results maydiffer substantially or materially from those either expressed or implied in the statementdepending on the circumstances.
Your Directors are happy to place on record their appreciation of the whole-heartedco-operation and hard work of all members of SPAN family.
The Directors would like to place on record a deep sense of gratitude to the HDFC Bankand Government Authorities for their co-operation and assistance rendered to the Company.
|Place: Mumbai || ||For and on behalf of the Board |
|Dated: May 11 2017 ||Mr. Viral P Desai ||Dr. Pradip K Desai |
| ||Managing Director ||Non Executive Director |
| ||DIN: 00029219 ||DIN: 00026451 |