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Cadila Healthcare Directors Report, Cadila Health Reports by Directors

Cadila Healthcare

BSE: 532321  |  NSE: CADILAHC  |  ISIN: INE010B01019  |  Pharmaceuticals

Explore Cadila Health connections « Mar 07
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
Source : Religare Technova

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