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Transgene Biotek Ltd.

BSE: 526139 Sector: Health care
NSE: N.A. ISIN Code: INE773D01018
BSE 00:00 | 22 Mar 3.98 0.06
(1.53%)
OPEN

3.99

HIGH

3.99

LOW

3.85

NSE 05:30 | 01 Jan Transgene Biotek Ltd
OPEN 3.99
PREVIOUS CLOSE 3.92
VOLUME 34566
52-Week high 6.08
52-Week low 1.81
P/E
Mkt Cap.(Rs cr) 30
Buy Price 3.97
Buy Qty 500.00
Sell Price 3.98
Sell Qty 3950.00
OPEN 3.99
CLOSE 3.92
VOLUME 34566
52-Week high 6.08
52-Week low 1.81
P/E
Mkt Cap.(Rs cr) 30
Buy Price 3.97
Buy Qty 500.00
Sell Price 3.98
Sell Qty 3950.00

Transgene Biotek Ltd. (TRANSGENEBIOTEK) - Director Report

Company director report

Dear Shareholders

Your Directors submit to you the 28th Annual Report on the business & operations ofthe Company and Audited Statement of Accounts for the year ended 31st March 2018 alongwith the Auditor's Report thereon.

Financial Results

(Rs. in Lakhs)

Particulars 2017-2018 2016-2017
Total Income 749.09 93.84
Operational Administration and other expenses 222.34 284.19
Gross Operating Profit 526.75 (190.34)
Interest and Financial Charges 102.82 43.00
Forex Gain/Loss 0.0132 0.00
Depreciation 989.14 1752.71
Profit before Tax/Loss (565.22) (1986.06)
Provision for Tax 78.61 0.00
Net Profit/Loss (643.83) (1986.06)

OPERATIONS

The total income of the company for the year ended 31st March 2018 amounted to Rs.749.09 Lakhs as against Rs- 93.84 Lakhs in the previous year. The company incurred a netLoss of Rs. 643.83 Lakhs for the year as against a loss of Rs. 1986.06 Lakhs in theprevious year. As can be noticed the management started the exercise to revise books ofaccounts and has written off certain accounts after following the standard accountingpolicies of India and in consultation with the auditors. This revision has resulted inincreased operational profit as compared to operational loss in the previous year.

Review and results of operations

The unfortunate incidence of fraud in the form of GDRs and subsequent SEBI order hasadversely impacted on the company’s operations. However with prudence andcommitment the management continues to keep the technologies moving forward. Moniesraised from sale of unused assets are being utilized to continue the said operations.

It is indeed heartening and provides a boost to the morale of the scientists and themanagement in general on various and important patents received during the recent past atestimony of the strengths of technologies that your company possesses.

Transgene is currently working on two technology platforms – Oral delivery ofproteins and peptides and AAV.

Although Transgene demonstrated excellent glucose reduction following oral delivery ofInsulin certain technical issues have been noted and these are being addressed in the oraldelivery of Insulin and its analogues.

The technology has also demonstrated excellent results in the animal studies on oraldelivery of Tetanus and other vaccines hitherto possible only though injections.

AAV technology is progressing well and we expect to reach some important milestonesduring the next one year.

GDR issue

The management hopes that SEBI passes a final order soon giving relief from allsanctions it imposed in the interim order.

On the aspect of GDR funds being siphoned out illegally from the company’saccounts the legal teams in London and Singapore are still in pursuit of recovery ofthose funds. The management hopes a final resolution may be forthcoming in the next fewmonths.

Intellectual property and patents: We are indeed pleased with receipt and approvals ofpatents from countries such as USA UK France Germany and Italy etc during the last fewmonths on our flagship oral delivery technology.

Although we believe that our patents provide certain protection from competitionwe caution that such patents may not be of substantial protection or of commercial benefitto us and they may not afford us adequate protection from competing products or they willnot be challenged or declared invalid in future.

Employee: With limitation of funding sources the management has been judicious inmaintaining optimal strength of the employees to continue its operations without anyinterruption.

DIVIDEND

Your Directors are unable to recommend any dividend since the company has not made anyprofits.

STRATEGIC FOCUS AND FUTURE ORIENTATION:

It is an undeniable fact that GDR issue and the consequent SEBI order has crippled theoperations of the company at a most crucial time of the company few years ago. Howeverundeterred with such challenges the management continued to fight on all fronts whilemaking sure that the core of the company i.e. its technologies do not get derailedcompletely. It is particularly noteworthy that various patents filed in variousprestigious countries have now been approved even though such patent filings and approvalsrequired significant funds.

With the foresight of the management and with approval from the shareholders themanagement managed to overcome such challenges on the financial front with the moniesraised from the sale of unused assets of the company.

It is with that kind of support your company manages to continue with technologies moreparticularly on oral anti-diabetic molecules and oral delivery of vaccines. As you mayrealise oral delivery of Insulin or its analogues and oral delivery of vaccines hithertopossible only through injections have the potential on the global front. Unfortunately asmentioned elsewhere our operations have been severely curtailed by GDR issue and SEBIorder not only in terms of advancing our exciting technologies but also in terms ofgetting strategic partners. The management sincerely hopes that SEBI will relent on itsearlier interim order based on the strength and voluminous evidence presented to it. Oncethis order is vacated we sincerely hope that it will provide the momentum required tobring in the expected results on the technology front which has been eluding the companyfor many years.

Subsidiary Company - Transgene Biotek HK Limited

Although no activities have been undertaken at the subsidiary during the last few yearsincluding the year 2017-18 the management feels that with the ongoing investigation bythe serious fraud investigation team in Singapore and Hong Kong it is better and prudentto wait for some more period before deciding for its closure. With no operations carriedout in the year 2017-18 the management has not found it relevant to have this subsidiaryaudited.

However the focus has not been lost regarding the irregularities committed through theaccount at Standard Chartered Bank Singapore with efforts continuing for the recovery offunds transferred illegally from its account. A Statement pursuant to Section 129 readwith Rule 5 of the Companies (Accounts) Rules 2014 in Form AOC – 1 is attached as"Annexure –A"

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report pursuant to SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 forms part of this Report and is annexedhereto as "Annexure B".

CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION

Your Company has taken adequate steps to adhere to all the stipulations laid down inunder SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. A reporton Corporate Governance is included as part of this Annual Report as "Annexure –C".

Certificate from the Statutory Auditors of the company M/s. Lakshmi & AssociatesChartered Accountants confirming the compliance with the conditions of CorporateGovernance as Stipulated under SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is included as part of this report as "Annexure D"

DEMATERIALISATION OF SHARES

86.80% of the company’s paid up Equity Share Capital is in dematerialized form ason 31st March 2018 and balance 13.02 % is in physical form. The Company’s Registrarsare M/s. Big Share Services Pvt Ltd 306 Right Wing 3rd Floor Amrutha Ville Opp.Yashoda Hospital Raj Bhavan Rd Somajiguda Hyderabad Telangana-500 082.

Number of Board Meetings held

The Board of Directors duly met 5 (Five) times during the financial year from 1stApril 2017 to 31st March 2018 the details of which are furnished in the report onCorporate Governance.

Board evaluation

The Board of Directors has carried out an annual evaluation of its own performanceBoard committees and individual directors pursuant to the provisions of the Act and thecorporate governance requirements as prescribed by SEBI under Regulation 17 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015).

The performance of the Board was evaluated by the Board after seeking inputs from allthe directors on the basis of the criteria such as the Board composition and structureeffectiveness of board processes information and functioning etc.

The performance of the committees was evaluated by the board after seeking inputs fromthe committee members on the basis of the criteria such as the composition of committeeseffectiveness of committee meetings etc.

The Board and the Nomination and Remuneration Committee ("NRC") reviewed theperformance of the individual directors on the basis of the criteria such as thecontribution of the individual director to the Board and committee meetings likepreparedness on the issues to be discussed meaningful and constructive contribution andinputs in meetings etc. In addition the Chairman was also evaluated on the key aspectsof his role.

In a separate meeting of independent Directors performance of non-independentdirectors performance of the board as a whole and performance of the Chairman wasevaluated taking into account the views of executive directors and non-executivedirectors. The same was discussed in the board meeting that followed the meeting of theindependent Directors at which the performance of the Board its committees andindividual directors was also discussed.

Appointment of Independent Directors

As was the case last year too company is having only one Independent Director for therelevant year 2017-18. Although it is supposed to have at least two Independent Directorskeeping in view of the SEBI’s directive on GDR issues no one is showing interest toserve the Company as Independent Directors however we managed to invite and appoint oneadditional independent Director in May 2018.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to Section 134(5) of the Companies Act 2013 Directors of your Company herebystate and confirm that:

a) In the preparation of the annual accounts for the year ended 31st March 2018 theapplicable accounting standards have been followed along with proper explanation relatingto material departures;

b) They have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company at the end of the financial year and of the loss ofthe company for the same period; c) The directors have taken proper and sufficient carefor the maintenance of adequate accounting records in accordance with the provisions ofthe Companies Act 2013 for safeguarding the assets of the company and for preventing anddetecting fraud and other irregularities;

d) They have prepared the annual accounts on a going concern basis;

e) They have laid down internal financial controls in the company that are adequate andwere operating effectively.

f) They have devised proper systems to ensure compliance with the provisions of allapplicable laws and these are adequate and are operating effectively.

Deposits from public

The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public was outstanding as on the date of thebalance sheet.

RISK MANAGEMENT POLICY OF THE COMPANY

The Company has formulated and adopted a risk management policy at its Board Meeting.As per the policy the management continues to review and assess the risk and also thesteps for mitigating the same.

CORPORATE SOCIAL RESPONSIBILITY

The provisions of Section 135 of the Companies Act 2013 relating to Corporate SocialResponsibility does not apply to the company.

Policy on directors’ appointment and remuneration and other details

The Company’s policy on directors’ appointment and remuneration and othermatters provided in Section 178(3) of the Act has been disclosed in the corporategovernance report which forms part of the directors’ report.

Internal financial control systems and their adequacy

The details in respect of internal financial control and their adequacy are included inthe Management Discussion & Analysis which forms part of this report.

Auditors’ report and Secretarial auditors’ report:

The auditors’ report and Secretarial auditors’ report contain certainqualifications reservations or adverse remarks. Report of the secretarial auditor isgiven as an annexure which forms part of this report – "Annexure – E"

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

(A) The operations of the company are not power intensive nevertheless the companycontinues its efforts to minimize energy wherever practicable by economizing on the use ofpower at the offices

(B) Technology absorption NIL
(C) Foreign exchange earning 11.82 Lakhs
(D) Foreign exchange outflow NIL

RELATED PARTY TRANSACTIONS

There were no transactions which have been entered into with related parties of theDirectors or the Key Managerial Personnel of the company.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9 is annexedherewith as

"Annexure - F"

Particulars of loans guarantees and investments

The particulars of loans guarantees and investments have been disclosed in thefinancial statements.

ACKNOWLEDGEMENT

Your Directors take this opportunity to express their sincere thanks and place onrecord their appreciation of the continued assistance and co-operation extended to thecompany by its bankers government and semi government departments customers marketingagents and suppliers and in particular Shareholders for the confidence reposed in thecompany

Your directors also thank all the employees of the company for their dedicated servicewithout which your company would not have achieved those results.

By the Order Of the Board
For TRANSGENE BIOTEK LIMITED
PLACE : HYDERABAD Sd/-
DATE : 14.11.2018 Dr. K. KOTESWARA RAO
CHAIRMAN & MANAGING DIRECTOR

"Annexure - A"

Form AOC-1

(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 ofCompanies

(Accounts) Rules 2014)

Statement containing salient features of the financial statement of subsidiaries

Part "A": Subsidiaries

(Information in respect of each subsidiary to be presented with amounts in Rs.)

The subsidiary Transgene Biotek HK Ltd has stopped all activities and its accounts havenot been audited since 2014-15. As a result the following information is a follow-up ofits activities as those of the year 2014-15 only. Since the earlier Directors andmanagement of Transgene Biotek HK Ltd are under the investigation by the Hong Kong andSingapore police on receipt of complaint from the management of the parent company nofurther information is provided for the current year 2017-18.

S.No Particulars Details
1 Name of the subsidiary Transgene Biotek HK Ltd
2 Reporting period for the subsidiary concerned if different from the holding company’s reporting period 1st April 2017 to 31st March 2018
3 Reporting currency and Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries US$ 1 US$ = Rs.65.0441
4 Share capital US$16952001
5 Reserves & surplus (US$21069)
6 Total assets US$16948303
7 Total Liabilities US$17371
8 Investments Nil
9 Turnover Nil
10 Profit before taxation 0
11 Provision for taxation 0
12 Profit after taxation 0
13 Proposed Dividend 0
14 % of shareholding 100

Notes : The following information shall be furnished at the end of the statement:

1. Names of subsidiaries which are yet to commence operations - None

2. Names of subsidiaries which have been liquidated or sold during the year. - None