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Cadila Healthcare
BSE: 532321 | NSE: CADILAHC | ISIN: INE010B01019 | Pharmaceuticals
- Directors Report
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| Directors Report | Year End : Mar '08 |
The Directors take pleasure in presenting the 13th Annual Report on
the business and operations of the Company together with the Audited
Accounts for the year ended 31st March 2008.
Financial Results
INR MILLION
Particulars Year Ended March 31 Growth
2008 2007 (%)
Sales and Other Income 17815 15141 17.66
Profit before Interest, Depreciation,
Extra-ordinary items and Tax (PBIDET) 3720 3162 17.65
Less: Depreciation 734 667 10.04
Profit Before Interest, Extra-ordinary
Items and Tax (PBIET) 2986 2495 19.68
Less: lnterest 201 176 14.20
Less: Extraordinary Expenses 48 0
Profit Before Tax 2737 2319 18.03
Less: Provision for tax 375 272 37.87
Profit After Tax 2362 2047 15.39
Add: Profit brought forward from the
previous year 841 2381
Total 3203 4428
Profit available for appropriation,
which is appropriated as follows:
Proposed Dividend 565 502
Corporate Dividend Tax on Proposed Dividend 96 85
Transferred to General Reserve 914 3000
Balance Carried to Balance Sheet 1628 841
Total 3203 4428
Earnings per share (EPS of FV Rs. 5/-)
in Rs.
- Before Extraordinary items 19.19 16.30
- After Extraordinary items 18.80 16.36
Operations and Business Peformance
During the year under review, the Company achieved sales of Rs. 17191
mn, showing a growth of 14.50% compared to the previous year. The
PBIDET increased by 17.65 % to Rs. 3720 mn. The Profit before Tax was
higher by 18.03% to Rs. 2737 mn. The Profit after Tax increased to Rs.
2362 mn up by 15.39% compared to Rs. 2047 mn in 2006-07. The Company
achieved EPS (After Extraordinary items) of Rs.18.80 compared to Rs.
16.30 in 2006-07, calculated on the enhanced capital after bonus shares
of 1:1 issued in the year 2006-07.
Your Directors are pleased to recommend a dividend of Rs. 4.50 [
Previous year - Rs. 4.00 ] per equity share on 125,613,708 equity
shares of Rs. 5/- each for the financial year ended 31st March 2008.
The dividend, if approved by the shareholders, will be paid to the
eligible shareholders within the period stipulated by the Companies
Act, 1956. The Dividend Payout ratio for the current year (inclusive of
corporate tax on dividend distribution) is 27.98%.
The performance of subsidiaries and joint ventures as per the audited
accounts of the respective subsidiary / joint venture companies are
summarized hereunder. The audited accounts for the foreign subsidiaries
are as at December 31, 2007 / February 29, 2008. The 1st January to
29th February / 31st March 2008 accounts are subjected to limited
review.
Sr. Name of Subsidary % holding Main Business
No.
1 Zydus Phannaceuticals 100 Distribution of
Limited, India pharmaceuticals.
2 German Remedies 100 Marketing services
Limited, India
3 Dialfarhealth India ltd, 100 Operates a chain of retail
India pharmacies
4 Liva Healthcare Limited, 100 Manufacturing and marketing
India of Derma products
5 Zydus Animal Health 100 Manufacturing and marketing
Limited, India of animal health products
6 Dialforhealth Unity 55 Operates a chain of retail
Limited, India pharmacies on
Franchisee basis
7 Carnation Nutra-Analogue 61.56 Manufacturing and marketing
Foods Limited, India of health food products
8 Zydus International 100 Holds Companys Global
Pvt. Ltd, Ireland Investments
9 Zydus Healthcare 100 Marketing of formulations
SA (Pty). Ltd., South Africa in South Africa,
10 Zydus Healthcare 100 Marketing of APIs in USA
(USA) LLC, USA
11 Zydus Pharmaceuticals 70 Marketing of generic
USA Inc., USA formulations in USA
12 Zydus Noveltech Inc., USA 85 Development, Marketing,
Selling and Distribution of
Pharmaceutical dosages
13 Zydus Netherlands BY, 100 Holds investments in fellow
the Netherlands subsidiaries
14 Zydus Healthcare Brasil 100 Operates formulation
Ltda., Brazil business of the Company
in Brazil
15 Quimica e Famiaceutica 100 Manufacturing, marketing
Nikkho Do Brasil Ltda., and distribution of
Brazil Pharmaceutical products
16 Zydus France SAS, France 100 Marketing of generic
Pharmaceuticals in France
17 Zydus Pharmaceuticals 100 Marketing of generic
Inc., Japan formulations and API
18 Nippon Universal 100 Manufacturing, marketing
Pharmaceutical Company and distribution of
Limited, Japan Pharmaceutical products
Year Revenues Profit after
ended (Rs min) (Rs min)
31st March 0 (0.2)
31st March 3.3 2.6
31st March 85.2 (8.4)
31st March 386.3 19.0
31st March 1027.3 117.4
31st March 0.1 (1.0)
31st March 563.3 45.6
31st Dec. 7.6 1.6
29th Feb. 0 (0.1)
31st Dec. 26.1 (0.2)
31st Dec. 2222.6 74.8
31st March 57.8 (44.3)
31st Dec. 0.3 (16.6)
31st Dec. 194.4 (86.1)
31st Dec. 1068.2 60.8
31st Dec. 1750.7 47.0
31st March 0.00 (5.2)
31st March 57.8 (44.3)
As required under the provisions of Section 212.of the Companies Act,
1956, a statement of the holding Companys interest in the subsidiary
companies is attached to this report.
In terms of the approval granted by the Central Government under
Section 212 (8) of the Companies Act, 1956, copy of Annual Report of
the subsidiary companies has not been attached with the Annual Accounts
of the Company. The Company will make these documents/details available
upon request by any shareholder of the Company.
The annual accounts of the subsidiaries are also available for
inspection by the shareholders at the Registered Office of the Company
and also at the registered offices of its subsidiaries. However,
pursuant to Accounting Standard - 21[ AS-21 ], issued by the Institute
of Chartered Accountants of India, Consolidated Financial Statements
presented by the Company includes the financial information of its
subsidiaries. The following information for each subsidiary Company is
also being disclosed in a separate annexure with consolidated Annual
Accounts: (a) Capital (b) Reserves (c) Total assets (d) Total
liabilities (e) Details of investments (except in case of investments
in subsidiaries) (f) Turnover (g) Profit before taxation (h) Provision
for taxation (g) Profit after taxation and 0) Proposed dividend.
Performance of Joint Venture Companies
Detailed discussion of performance of each joint venture [ JV ] Company
is covered in Management Discussion and Analysis Report.
1 Zydus Nycomed Healthcare Private Limited (ZNHPL)
This 50:50 joint venture between the Company and Nycomed GmbH, is a
100% EOU situated at Navi Mumbai. This JV Company achieved turn over of
Rs. 1554 millions for the year ended on 31st December 2007 as against
Rs. 1508 millions in the previous year. The net profit of the Company
was Rs. 1124 millions against Rs. 1227 millions in the previous year.
2 Zydus Pharmaceuticals USA Inc. (ZPUI)
The aforesaid Company though subsidiary of the Company is a Joint
Venture between Zydus International Private Limited, Mr. Joseph Renner
and Dr. Mahendra Patet to market generic products in the US market. The
Company recorded sates of Rs. 2223 mn showing growth of 93.98% for the
year ended on 31st December 2007. The Company earned net profits of Rs.
75 mn as against profit of Rs. 164 mn in the previous year. Most of the
formulations marketed by Company have captured market share exceeding
10% in USA.
3 Zydus Hospira Oncology Private Limited (ZHOPL)
This 50:50 joint venture Company was originally between the Company and
Mayne Pharma, Australia. Subsequent to change in the management of
Mayne Pharma, Australia after takeover by Hospira, U.S.A., the name of
the Company was changed to Zydus Hospira Oncology Private Limited. This
JV has set up a project to manufacture anticancer injectibles near
Ahmedabad and will start its commercial operations in the current year.
At present the Company is working on developing ANDAs for filings in
USA.
4 Zydus BSV Pharma Private Limited (ZBPPL)
This 50:50 joint venture is between the Company and Bharat Serum and
Vaccines Limited. This JV has acquired intellectual property of non
pagylated doxorubicin from Bharat Serum and Vaccines Ltd. The
manufacturing facilities of this JV Company are under construction.
Another JV - Zydus BSV Research and Development Private Limited is
merged with Zydus BSV Pharma Private Limited pursuant to the Scheme of
Amalgamation approved by the Honble High Court of Gujarat.
5 Zydus Noveltech Inc., USA (ZN)
During the year under review, the Company through its wholly owned
Ireland subsidiary Company has entered into Joint Venture with Mr.
Sharad Govil, a technocrat, and established a new subsidiary Company -
Zydus Noveltech Inc., USA wherein the Companys stake is 85%. This JV
will carry out the business of developing, marketing, selling and
distributing of pharmaceutical dosage forms mostly in NDDS forms.
Overseas acquisitions
Zydus Healthcare Brasil Ltda., Brazil, a WOS of the Company has
acquired 100% shareholding of Quimica e Farmaceutica Nikkho Do Brasil
Ltda., a Brazilian Pharmaceutical Company to expand its branded
business in Brazil.
Further, Zydus Pharmaceuticals Inc., Japan, a WOS of the Company has
acquired 100% shareholding of Nippon Universal Pharmaceuticals Co.
Ltd., Japanese Company, carrying out business of manufacturing &
marketing of pharmaceutical products in Japan.
International market initiatives
Your Directors are pleased to inform you that the Company has started
commercial activities in the regulated developed markets like US,
France and Brazil. The initial response in US, France and Brazil is
encouraging. The French subsidiary has reorganized its product
portfolio and disposed off its non-core branded OTC product portfolio
to fully focus on generic formulations. ANDA and DMF filing process in
US is going on successfully. Company filed 18 ANDAs and 8 DMFs during
the year. Thus the Company has created a healthy pipeline of products
to be marketed in USA. In Brazil, the acceptance of the products is
encouraging. A detailed discussion on these initiatives is covered in
Management Discussion and Analysis. In order to have presence in
Russian pharmaceutical markets, the Company is in the process of
setting up a wholly owned subsidiary Company in Russia.
Fixed deposits
The Company has not accepted any fresh deposits from the public. As on
31st March 2008, the Company had no unclaimed fixed deposits. All
deposits that matured and the amount of interest payable on fixed
deposits that remained unclaimed for a period of seven years were
transferred to the Investors Education and Protection Fund as required
under the provisions of the Companies Act, 1956.
Disclosure
As required under Section 217(l)(e) of the Companies Act; 1956 read
with the Companies (Disclosure of particulars in the Report of
Directors) Rules, 1988, the relevant information and data with respect
to the conservation of energy, technology absorption and foreign
exchange earnings/outgo have been provided in Annexure-A, attached to
this report, and forms part of this report.
There have been no material changes and commitments, which may affect
the financial position of the Company between the end of the financial
year and the date of the report.
As required under Section 217(2) of the Companies Act, 1956, the Board
of Directors inform the members that during the financial year there
has been:
* No change in the nature of the Companys business.
* No change in the Companys subsidiaries, except those specifically
stated in this report or in the nature of the business carried out by
them.
* No change in the classes of business in which the company has an
interest.
Management Discussion and Analysis [ MDA ]
MDA covering details of operations, markets, research and development,
opportunities and threats, etc. for the year under review is given as a
separate statement, which forms part of this Annual Report.
Directors
Mr. Mukesh M. Patel and Mr. Pranlal Bhogilal, Directors of the Company,
retire by rotation at the ensuing Annual General Meeting and are
eligible for re-appointment. The Board of Directors recommend the
re-appointment of Mr. Mukesh M. Patel and Mr. Pranlat Bhogilal who have
offered themselves for re-appointment. In accordance with stipulation
under Clause 49 of the Listing Agreement, brief resume of Mr. Mukesh M.
Patel and Mr. Pranlal Bhogilal, together with nature of their expertise
in specific functional areas and names of the companies in which they
hold office of a Director and/or the Chairman/Member of Committees of
the Board, is given in the notice of the Annual General Meeting.
M/s. Mukesh M. Shah & Co., Chartered Accountants retire as Auditors of
the Company at the forthcoming Annual General Meeting and are eligible
for re-appointment. The Audit Committee of the Board of Directors of
the Company and Board of Directors have recommended that M/s. Mukesh M.
Shah & Co., Chartered Accountants, be appointed as auditors to hold
office until the conclusion of the next Annual General Meeting. The
Company has received confirmation that their appointment will be within
the limits prescribed under Section 224 (IB) of the Companies Act,
1956.
The statement of particulars of employees, providing information as per
section 217(2A) of the Companies Act, 1956 read with Companies
(Particulars of Employees) Rules, 1975, form a part of this report.
However, as per the provisions of Section 219(1) (b) (iv) of the
Companies Act, 1956, the Annual Report excluding this statement is
being sent to all members, Any member interested in obtaining a copy of
this statement may write to the Company Secretary at the registered
office of the Company.
Directors Responsibility Statement
Pursuant to the requirements under Section 217 (2AA) of the Companies
Act, 1956 and to the best of their knowledge and belief, and according
to the information and explanations provided to them, your Directors
hereby state that:
a The Annual Accounts for the year ended 31st March, 2008 are prepared
on going concern basis;
b In preparation of the Annual Accounts, all the applicable accounting
standards have been followed. Necessary explanations are given for
material departures, if any;
c Sound accounting policies have been selected and applied consistently
and judgments and estimates made that are reasonable and prudent so as
to give a true and fair view of the state of affairs of the Company as
on 31st March, 2008 and of the profit of the Company for the year ended
on that date;
d Proper and sufficient care has been taken for maintenance of adequate
accounting records in accordance with the provisions of the Companies
Act, 1956 for safeguarding the assets of the company and for prevention
and detection of fraud and other irregularities.
Corporate Governance
In terms of Clause 49 of the Listing Agreement with the Stock
Exchanges, a Corporate Governance Report is made part of this Annual
Report.
In compliance of Section 292A of the Companies Act, 1956 and with the
Listing Agreement, an Audit Committee consisting of four Independent
Directors has been formed.
A Certificate from the statutory auditors of the Company regarding
compliance of the conditions stipulated for Corporate Governance under
Clause 49 of the Listing Agreement is attached to the Corporate
Governance Report.
The declaration by the Managing Director addressed to the members of
the Company pursuant to Clause 49 of the Listing Agreement regarding
adherence of the Code of Conduct by the Members of the Board and by the
Senior Management Personnel of the Company is also attached to the
Corporate Governance Report.
Acknowledgement
Your Directors wish to place on record their deep sense of appreciation
of the contribution made by the employees at all levels, including that
of subsidiaries and joint ventures for their dedicated services,
enabling the Company to achieve good performance during the year under
review.
Your Directors also take this opportunity to place on record the
valuable co-operation and continued support extended by the financial
institutions, Companys bankers, medical professionals, foreign
collaborators, business associates and investors
By Order of the Board of Directors
Place: Ahmedabad Pankaj R. Patel
Date : 29th April, 2008 Chairman
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