Your Directors take pleasure in presenting the Thirteenth Annual Report and AuditedFinancial Statements for the financial year ended 31st March 2018.
| || ||( Rs in Lakhs) |
|Particulars ||Year ended 31st March 2018 ||Year ended 31st March 2017 |
|Total Income ||8320.15 ||19474.49 |
|Profit/(Loss) before Interest Depreciation & Tax ||(23766.58) ||(10897.89) |
|Interest ||12.33 ||181.98 |
|Depreciation ||818.46 ||823.97 |
|Profit/(Loss) before Tax ||(24597.37) ||(11903.84) |
|Exceptional Item ||4897.58 ||- |
|Tax Expense ||- ||- |
|Profit/(Loss) after Tax ||(19699.79) ||(11903.84) |
|Other Comprehensive Income ||(143.39) ||(45.94) |
|Total Comprehensive Income ||(19843.18) ||(11949.78) |
|Balance brought forward from Previous Year ||(34247.71) ||(22297.93) |
|Balance carried to Balance Sheet ||(54090.89) ||(34247.71) |
The Company has adopted Indian Accounting Standard (Ind AS) with effect from 1stApril 2017 and accordingly these financial results along with the comparatives have beenprepared in accordance with the recognition and measurement principles stated therein.
In view of loss incurred during the year your Directors do not recommend any dividendfor the year under review.
DIVIDEND DISTRIBUTION POLICY
In compliance with the requirements of regulation 43A of the Securities and ExchangeBoard of India (Listing Obligation & Disclosure Requirements) Regulations 2015(hereinafter referred to as SEBI (LODR) Regulations') the Board of Directors of theCompany has formulated a Dividend Distribution Policy which is available on the websiteof the company www.sparc. life and may be accessed through the web link https://www.sparc.life/policies-and-codes. The Dividend Distribution Policy is also enclosed as AnnexureA to this Report.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return as provided under sub-section (3) of section 92 of theCompanies Act 2013 in prescribed form MGT-9 is enclosed as Annexure 1 to thisReport.
SUBSIDIARY/ JOINT VENTURE/ ASSOCIATE COMPANY
The Company does not have any subsidiary joint venture or associate company. TheCompany is a subsidiary of Shanghvi Finance Pvt. Ltd.
SHARE CAPITAL & PREFERENTIAL ISSUE
The Board of Directors in their meeting held on 5th May 2017 approved the issue andallotment of up to 15151515 warrants each convertible into one fully paid equity shareof the Company at a price of Rs 330 each to certain entities on preferential basissubject to receipt of necessary approvals including that of shareholders.
Subsequently the approval of the members by way of a Special Resolution was obtainedat an Extra-Ordinary General Meeting of the Company held on 2nd June 2017 and consequentto the receipt of in-principal approval of the Stock Exchanges for issue of convertiblewarrants on Preferential Basis the Securities Allotment Committee of the Board in itsmeeting held on 14th July 2017 issued & allotted 15151515 warrants eachconvertible into or exchangeable for one fully paid equity share of Rs 1 of the Company tosuch entities.
Out of the above 4040404 warrants held by certain entities were converted intoequivalent number of fully paid equity shares of the Company on exercise of option by theconcerned warrant holders on 15th December 2017. Accordingly there were 11111111warrants outstanding as on 31st March 2018.
Also the Board of Directors in their meeting held on 5th August 2017 annulledthe forfeiture of 14 shares on receipt of applications along with the unpaid amount &interest for delayed payment from the concerned shareholder.
Consequent to the aforesaid allotment & annulment of forfeiture of shares thepaid-up share capital of the Company have increased from Rs 246895977 to Rs250936395 during the year.
SHARES LYING IN UNCLAIMED SUSPENSE ACCOUNT
In compliance with the requirements of regulation 39 (4) of the Securities and ExchangeBoard of India Listing Obligation & Disclosure Requirements Regulations 2015(hereinafter referred to as SEBI (LODR) Regulations') the Company had transferred1620 shares belonging to 14 shareholders to "SPARC Unclaimed Suspense Account"after sending three reminders to the concerned shareholders and following the procedureslaid down under Schedule VI of the aforesaid Regulations.
As on 31st March 2018 1584 shares belonging to 13 shareholders were lying unclaimedin the aforesaid account.
In compliance with the requirements of the SEBI (LODR) Regulations all corporatebenefits declared by the Company in future in respect of the aforesaid shares shall betransferred to the aforesaid account until the rightful shareholders claim for theaforesaid shares. The voting rights on the aforesaid shares shall also remain frozen tillthe rightful owners claim the shares.
DIRECTORS & KEY MANAGERIAL PERSONNEL
Mr. Sudhir V. Valia (DIN:00005561) retires by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for re-appointment.
Prof. Dr. Andrea Vasella (DIN: 01653058) Prof. Dr. Goverdhan Mehta (DIN: 00350615) andMr. S. Mohanchand Dadha (DIN: 00087414) retired as Independent Directors of the Companyat the end of the 12th Annual General Meeting of the Company on conclusion of the term oftheir appointment. The Board acknowledges and puts on record its appreciation for thevaluable contributions made by the above members during their tenure as Directors of theCompany.
Dr. Ferzaan Engineer (DIN: 00025758) & Mr. Mark Simon (DIN: 07807378) wereappointed by the Board as Additional Directors of the Company under section 161 of theCompanies Act 2013 to hold office up to the 12th Annual General Meeting of the Companyand were subsequently appointed by the members at the 12th Annual General Meeting asIndependent Directors of the Company for a term of three years to hold office upto theconclusion of 15th Annual General Meeting of the Company.
There were no changes in the Key Managerial Personnel of the Company during the year.
Appropriate resolution for the re-appointment of Director as detailed above is beingplaced for your approval at the ensuing Annual General Meeting.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet with the criteria of independence as prescribed undersub-section (6) of Section 149 of the Companies Act 2013.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
For the purpose of selection of any Director the Nomination & RemunerationCommittee identifies persons of integrity who possess relevant expertise experience andleadership qualities required for the position and also takes into considerationrecommendation if any received from any member of the Board. The Committee also ensuresthat the incumbent fulfils such other criteria with regard to age and other qualificationsas laid down under the Companies Act 2013 or other applicable laws.
The Board on the recommendation of the Nomination & Remuneration Committee hasframed a policy for selection appointment and remuneration of Directors and SeniorManagement.
The summary of Remuneration Policy is disclosed in the Corporate Governance Reportwhich forms a part of this Report.
FAMILIARISATION PROGRAMME FOR THE INDEPENDENT DIRECTORS
In compliance with the requirements of the SEBI (LODR) Regulations the Company has putin place a Familiarisation Programme for the Independent Directors to familiarize themwith the Company their roles rights responsibilities in the Company nature of theindustry in which the Company operates business model etc. The detail of such programmeis available on the website of the company www.sparc.life and may be accessed through theweb link https://www.sparc.life/ announcements-disclosures.
NUMBER OF MEETINGS OF THE BOARD
The Board of Directors of the Company met four times during the year on 5th May 20175th August 2017 27th October 2017 and 29th January 2018. The particulars of attendanceof the Directors at the said meetings are detailed in the Corporate Governance Reportwhich forms a part of this Report. The intervening gaps between the meetings were withinthe period prescribed under the Companies Act 2013 and SEBI (LODR) Regulations.
EVALUATION OF PERFORMANCE OF THE BOARD ITS COMMITTEES AND INDIVIDUAL DIRECTORS
In view of Securities and Exchange Board of India's (SEBI') notification no.SEBI/HO/CFD/CMD/CIR/P/2017/004 dated 5th January 2016 on Guidance Note on BoardEvaluation' the Board of Directors on the recommendation of the Nomination
& Remuneration Committee adopted revised set of criteria aligned with therecommendations of SEBI for evaluation of the Board of Directors of the Companyincluding the individual Directors and the Committees of the Board.
The Board of Directors have also carried out an annual evaluation of its ownperformance its various committees and individual directors pursuant to the provisions ofthe Act and the Corporate Governance requirements as prescribed under regulation 17(10)25(4) and other applicable provisions of the SEBI (LODR) Regulations.
The performance of the Board were evaluated by the Board after seeking inputs from allthe directors on the basis of various criteria such as Structure of the Board Meetings ofthe Board Functions of the Board Board and Management Professional Development etc.
The performance of the committees were evaluated by the board after seeking inputs fromthe committee members on the basis of criteria such as Mandate and compositionEffectiveness of the Committee Structure of the Committee and meetings Independence ofthe Committee from the Board Contribution to decisions of the Board etc.
The Board and the Nomination and Remuneration Committee reviewed the performance of theindividual Non-Independent Directors on the basis of criteria such as qualificationsexperience knowledge & competency fulfilment of functions ability to function as ateam initiative availability and attendance commitment (as a Director) contribution& integrity.
The performance of each individual Independent Director was reviewed based on theadditional criteria of Independence and Independent Views & Judgment. Similarly theperformance of the Chairman was evaluated based on additional criteria such aseffectiveness of leadership and ability to steer the meetings impartiality commitment(as Chairperson) and ability to keep shareholders' interests in mind.
In a separate meeting of Independent Directors performance of non-independentdirectors performance of the various Committees of the Board and the Board as a whole andperformance of the Chairman was evaluated taking into account the views of the executivedirectors and non- executive directors. The same was discussed in the board meeting thatfollowed the meeting of Independent Directors at which the performance of the Board itscommittees and individual Directors were also discussed.
As on 31st March 2018 your Company had a dedicated team of 424 people of whicharound 350 are highly qualified and experienced scientists. During the previous year theCompany has considerably strengthened its team by attracting top quality scientifictalent with extensive experience in drug research internationally.
In addition to increasing the Company's participation at international Conferences forcontinuous knowledge upgradation the Company have also put in place effective trainingand career progression plans for its employees.
Your Directors recognize the team's valuable contribution and place on record theirappreciation for Team SPARC.
Information as per Section 197 (12) of the Companies Act 2013 read with rule 5(1) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexedas Annexure 2 to this Report. Further pursuant to section 136 (1) of the CompaniesAct 2013 the Annual Report and the accounts are being sent to the members excluding theinformation under rule 5(2) & 5(3) aforesaid. In terms of section 136 of the Act thesaid annexure is available for inspection at the Registered Office of the Company. Anyshareholder interested in obtaining a copy of the same may write to the Company Secretary.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
Your Company strongly believes in providing a safe and harassment-free workplace foreach and every individual working for the Company through various interventions andpractices. It is the continuous endeavour of the Management of the Company to create andprovide an environment to all its employees that is free from discrimination andharassment including sexual harassment.
During the year ended 31st March 2018 no complaint pertaining to sexual harassmentwas received by the Company.
AUDITORS Statutory Auditors
The Company's Auditors M/s. S R B C & Co. LLP Chartered Accountants (ICAI FirmRegn. No. 324982E/E300003) were appointed as the Statutory Auditors of the Company for aterm of five years upto the conclusion of the 17th Annual General Meeting of the Companysubject to ratification by members at every Annual General Meeting of the Company if sorequired under the Law.
The Ministry of Corporate Affairs have vide its Commencement Notification dated 7thMay 2018 inter alia notified the commencement of section 40 of the Companies(Amendment) Act 2017 which omitted the proviso to sub-section (1) of section 139 of theCompanies Act 2013 mandating the requirement of annual ratification for Auditorsappointment by the Members at every Annual General Meeting.
In appreciation of the commendable performance by the Auditors during the year theBoard has decided to discontinue the practice of obtaining annual ratification of theshareholders for appointment of Statutory Auditors in view of the exemption provision inthe resolution passed by the members in the 12th Annual General Meeting and the removal ofthe provision of the law which mandated the requirement.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board hadappointed C. J. Goswami & Associates Company Secretaries to undertake theSecretarial Audit of the Company for the financial year 2017-18.
The Secretarial Audit Report is annexed herewith as Annexure 3.
Neither the Audit Report' issued by S R B C & CO. LLP nor theSecretarial Audit Report' issued by C J Goswami & Associates for the financialyear 2017-18 contain any qualifications observations or comments on financialtransactions or matters which have any adverse effect on the functioning of the Company.
The Secretarial Auditors however have in their report observed as follows:
"The Dividend Distribution Policy is not disclosed in the Annual Report of theCompany for the financial year 2016-17 pursuant to requirement of regulation 43A of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015;"
In respect of above the Board clarifies that the Company is a loss making Company andhas never declared Dividend in the past. As per Regulation 43A of the SEBI (LODR)Regulations 2015 the Board of Directors of the Company in their meeting held on 28thOctober 2016 had approved and adopted a Dividend Distribution Policy.
Since the approved Dividend Policy was already placed on the website of the Company itwas not annexed to the Board's
Report for the FY 2016-17. However the same is annexed to the Board's Report for theFY 2017-18.
The Boards of Directors have in their meeting field on 8th May 2018 appointed M/S. KJB& Co. LLP Practicing Company Secretaries Auditors of the Company for the Financialyear 2018-19.
LOANS GUARANTEES & INVESTMENTS
The particulars of loans guarantees and investments have been disclosed in thefinancial statements.
RELATED PARTY TRANSACTIONS
All contracts/arrangements entered by the Company during the year with the relatedparties were in the Ordinary Course of Business' and on Arm's Length Basis'.
There are no materially significant Related Party Transactions between the Company andthe Directors the management or the relatives except for those disclosed in thefinancial statements and Form AOC-2 (Annexure 4).
All Related Party Transactions were subjected to independent review by Dhruv A. &Co. Chartered Accountants to determine adherence to Arm's Length Price' and byBathiya & Associates LLP Chartered Accountants to establish compliance withOrdinary Course of Business' requirement. All Related Party Transactions along withthe aforesaid certificates were also placed before the Audit Committee for review andapproval. Prior Omnibus approval was obtained for Related Party Transactions which were ofrepetitive nature and were entered in Ordinary Course of Business and at Arm's LengthPrice.
The policy on Related Party Transactions as approved by the Board is available on thewebsite of the company www.sparc. life and may be accessed through the web linkhttps://www. sparc.life/policies-and-codes.
The particulars of Related Party Transactions entered into by the Company during theprevious financial year individually or taken together with similar transactions duringthe last financial year which exceeded ten percent of the annual turnover of the Companyduring the financial year 2016-17 are enclosed in prescribed Form AOC-2 as Annexure 4.
Your Directors also draw your attention to "Annexure A" to the Notes on theFinancial Statements which sets out Related Party Disclosures.
AUDIT COMMITTEE COMPOSITION
The details of composition of Audit Committee are included in the Corporate GovernanceReport which forms a part of this Report.
The Board of Directors has developed & implemented an adequate Risk ManagementPolicy which lays down the procedure to identify monitor and mitigate the key elementsof risks that threaten the existence of the Company. The Audit Committee reviews atregular intervals the status of key risks and steps taken by the Company to mitigatesuch risks.
INTERNAL FINANCIAL CONTROLS
The Company has in place a well-defined organizational structure and adequate internalcontrols for efficient operations which is cognizant of applicable laws and regulationsparticularly those related to protection of intellectual properties resources assetsand the accurate reporting of financial transactions in the financial statements. TheCompany continually upgrades these systems. The internal control systems are supplementedby extensive internal audits conducted by an independent firm of chartered accountants.
CORPORATE SOCIAL RESPONSIBILITY
In compliance with the requirements of section 135 of the Companies Act 2013 read withthe Companies (Corporate Social Responsibility) Rules 2014 the Board of Directors hasconstituted a Corporate Social Responsibility Committee. The details of membership of theCommittee & the meetings held are given in the Corporate Governance section of theReport.
The CSR Policy of the Company as approved by the Board on the recommendation of theCorporate Social Responsibility Committee is available on the website of the company www.sparc. life and may be accessed through the web link https://www.sparc.life/policies-and-codes.
Since the Company incurred losses during the three immediately preceding financialyears the Company was not required to spend any money on CSR activities during theprevious financial year. However in compliance with the requirements of Companies(Corporate Social Responsibility) Rules 2014 a Report on CSR Activates' as perprescribed format is enclosed with as Annexure 5.
The Company has not accepted any Public Deposit during the year under the provisionsof the Companies Act 2013 and the rules framed thereunder.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis on the operations of the Company as prescribedunder Schedule V read with regulation 34(3) of the SEBI (LODR) Regulations is provided ina separate section and forms part of this Report.
CORPORATE GOVERNANCE REPORT
Report on Corporate Governance and Certificate of the Auditors of your Companyregarding compliance of the conditions of Corporate Governance as stipulated in Schedule Vread with regulation 34(3) of the SEBI (LODR) Regulations are provided in a separatesection and forms part of this Report.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report of the Company for the year ended 31st March 2018describing the initiatives taken by them from an environmental social and governanceperspective in the format as specified by the Board as required under Clause 34 (2) (f)of the SEBI (LODR) Regulations forms part of this Report and is available on the websiteof the Company www.sparc.life and may be accessed through the web linkhttps://www.sparc.life/annual-reports. The same is also kept at the Registered Office ofthe Company for inspection. Any shareholder interested in obtaining a copy of the same maywrite to the Company Secretary.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 is annexed as Annexure 6.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
No significant or material orders were passed by the Regulators or Courts or Tribunalsduring the year which may impact the Going Concern Status of the Company's futureoperations.
WHISTLE BLOWER POLICY/ VIGIL MECHANISM
To create enduring value for all stakeholders and ensure the highest level of honestyintegrity and ethical behaviour in all its operations the Company has formulated a VigilMechanism named as SPARC Whistle Blower Policy' in addition to the existing Code ofConduct that governs the actions of its employees. This Policy aspires to encourage allemployees to report suspected or actual occurrence of illegal unethical or inappropriateevents (behaviours or practices) that affect Company's interest / image.
The Policy is available on the website of the Company www. sparc.life and may beaccessed through the web link https:// www.sparc.life/policies-and-codes.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements under section 134(5) read with section 134(3) (c) of theCompanies Act 2013 with respect to Directors Responsibility Statement it is herebyconfirmed that:
a) in the preparation of the annual accounts for the financial year ended 31st March2018 the applicable accounting standards have been followed along with proper explanationrelating 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 as at 31st March 2018 and of the loss ofthe Company for the year ended on that date;
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 have 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 such internal financial controls are adequate and operating effectively.
f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and such systems are adequate and operating effectively.
Your Directors wish to thank all stakeholders business partners Company's bankersmedical professionals and business associates for their continued support and valuableco-operation. The Directors also wish to express their gratitude to investors for thefaith that they continue to repose in the Company.
| ||For and on behalf of the Board of Directors |
|Place: Mumbai ||Dilip S. Shanghvi |
|Date: May 8 2018 ||Chairman & Managing Director |