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Caplin Point Laboratories

BSE: 524742|NSE: CAPLIPOINT|ISIN: INE475E01026|SECTOR: Pharmaceuticals
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Directors Report Year End : Mar '17    Mar 16

The Directors present their 26th Annual Report on the business and operations of the Company and the accounts for the Financial Year ended March 31, 2017

Financial Highlights

RS, In Lakhs except EPS

Particulars

Standalone For The Period Ended

Consolidated For The Period Ended

Twelve

Months

Nine Months

Twelve

Months

Nine Months

March 31, 2017

March 31, 2016

March 31, 2017

March 31, 2016

Sales (net of excise duty) and other Income

35,394.13

23,476.54

41,148.33

24,238.13

Profit before Finance Costs, Tax, Depreciation & Amortization Expenses

10,608.08

6,578.70

13520.79

6,764.00

Less: Finance Costs

12.75

10.82

12.75

11.02

Depreciation & Amortization Expense

1325.99

729.91

1329.84

747.78

Profit Before Tax

9341.34

5,837.97

12,178.20

6005.20

Less: Tax Expenses

2255.02

1,305.41

2,573.30

1428.28

Profit after Tax

7086.32

4,532.56

9604.90

4,576.92

Less : Minority Interest

-

-

(10.95)

0.43

Add: Surplus at the beginning of the year

9723.21

6,281.81

9723.13

6237.80

Profit available for Appropriation

16809.53

10,814.37

19,338.98

10,814

Interim and final dividend

-

906.60

-

906.60

Dividend Tax - Current Year

-

184.56

-

184.56

Less: Deferred Employee Compensation Expenses.

99.45

153.75

99.45

153.75

Balance carried to Balance Sheet

16710.08

9,569.46

19,239.53

9,569.38

Paid up Capital

1511.53

1511.00

1511.53

1,511.00

Reserves & Surplus

18,443.47

11,302.85

20,908.17

11,302.77

19581.62

12,440.47

22,046.33

12,440.39

Earnings per Share-In Rupees

9.381

29.992

12.73*

30.28**

Performance/Operations Review

The Company has on standalone basis registered total revenue from operations of RS,34436.07 Lakhs (Total income RS,35394.13 Lakhs) during the year under review as against RS,23129.22 Lakhs (Total income RS,23476.54 Lakhs) in the previous financial year of nine months. The Profit after tax was RS,7086.32 Lakhs during the year under review as against RS,4532.56 Lakhs in the previous financial year of nine months .

The Company has on consolidated basis registered total revenue from operations of RS,40164.84 Lakhs (Total income RS,41148.33 Lakhs) during the current financial year as against RS,23872.17 Lakhs (Total income RS,24238.13 Lakhs) in the previous financial year of nine months.

As required under Section 134(3)(i) of the Companies Act,2013 the state of Affairs of the Company and outlook has been discussed in Management Discussions and Analysis which is appended in this annual report pursuant to Regulation 34(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations,2015.

US FDA Approval:

During the year under review, our injectable facility (CP4) near Gummidipoondi, Chennai obtained US FDA approval. This facility is capable of manufacturing Liquid injectables in Vials, Ampoules, Lyophilized Vials and Opthalmic dosages, is also approved by EU-GMP and ANVISA-Brazil.

Dividend

The Board of Directors at their meeting held on May 10,2017 have recommended a dividend of H1.50 per equity share (75%) of H2 /- each . The said dividend if approved by the members at the 26th Annual General meeting which is to be held on September 21,2017 would absorb a total cash out flow of H11,33,65,125/-excluding Dividend Distribution Tax.

Transfer to Reserves

The Company has made no transfers to reserves during the Financial Year 2016-17

Subsidiaries

As on March 31,2017, the Company has three subsidiaries :

(i) Argus Salud Pharma LLP,

(ii) Caplin Point Far East Limited - Hongkong

(iii) Caplin Point Laboratories Colombia SAS-Colombia.

The consolidated financial results/ performance incorporating the financial statements of the above subsidiaries is attached to the annual report as required under the Accounting Standards and SEBI Regulations.

Further, a statement containing the salient features of the financial statements of our subsidiary pursuant to Section 129(3) of the Companies Act, 2013, in the prescribed Form AOC-1 is appended as Annexure I to the Board''s report.

Deposits

The Company did not accept any deposits from the public within the meaning of Chapter V of the Companies Act, 2013, read with the Companies (Acceptance of Deposits) Rules, 2014.

Share Capital

In October 2016, the Company had subdivided the shares from the face value of H10/- to H2/- and upon sub-division , the members were issued five equity shares of H2/- each in lieu of one equity share of H10/- each. After sub-division, the paid up capital of H15,11,00,000 was sub- divided into 7,55,50,000 equity shares of H2/- each.

During the year, the Company had allotted 26.750 equity shares at the face value of H2/-each under Caplin Point Employee Stock option Plan -2015.

Thus, as on March 31, 2017, the paid up share capital stood at H15,11,53,500/- consisting of 7.55.76.750 equity shares at the face value of H2/- each

Particulars of Loans, Guarantees or Investments Under Section 186 of The Companies Act, 2013

Particulars of loans, guarantees and investments as on March 31,2017 are given in Note No. 11 of the standalone financial statements.

Number of Meetings of the Board

The Board met four times during the year ended March 31,2017 which were held on 27.05.2016, 05.08.2016, 09.11.2016 and 06.02.2017.

The maxium gap between two meetings did not exceed 120 days.

Directors and Key Managerial Personnel

Dr Sridhar Ganesan''s (DIN : 06819029) present term of office as the Managing Director ends on August 24,2017 and the Board of Directors at their meeting held on August 07, 2017 have decided to re-appoint him for another term of three years commencing from August 25, 2017. The Board of Directors at their meeting held on February 06,2017 re-appointed Mr. M Jayapal (DIN: 01869677) as the Whole- time Director of the Company for another period of one year effective March 28,2017.

Dr Philip Ashok Karunakaran (DIN:06679664) was appointed as Whole-time Director by the Board of Directors at their Board Meeting held on August 07, 2017. The Company has received a notice from a member proposing his candidature for the position of Director.

Mr D Sathyanarayanan (DIN : 07650566) has been appointed as an Additional Director (Non-executive-Independent) of the Company for a period of three consecutive years with effect from November 09,2016. In the opinion of the Board of Directors he is eligible to be appointed as an Independent Director. The Company has received a notice from a member proposing his candidature for the position of Independent Director.

The members of the Company at their Twenty Third Annual General Meeting appointed Dr K C John (DIN: 01067374) as Non-executive-Independent Director for a period of three years effective August 25, 2014 and shall hold office till August 24, 2017. Pursuant to Section 149 (10) of the Companies Act, 2013 an Independent Director shall be eligible for re-appointment for a second term of five years by passing a Special Resolution by the members of the Company. Accordingly, Board of Directors at their meeting held on August 07, 2017 have re-appointed Dr K C John (DIN: 01067374) as an Independent Director for a second term of five consecutive years commencing from August 25,2017 and he is not liable to retire by rotation. In the opinion of the Board of Directors he is eligible to be re- appointed as an Independent Director. The Company has received a notice from a member proposing his candidature for the position of Independent Director.

The above appointments and re-appointments have been recommended by Nomination and Remuneration Committee and are subject to the approval of members at the ensuing Annual General Meeting.

Pursuant to Regulation 36(3) of SEBI (Listing Obligations and disclosure Requirements) Regulations, 2015 the profiles of these Directors seeking appointment / re-appointment are given in the Notice convening the 26th Annual General meeting In terms of Section 152 (6) of the Companies Act, 2013, Mr M Jayapal (DIN: 01869677) retires by rotation and being eligible offers himself for re-appointment.

Pursuant to section 2 (51) and Section 203 of the Companies Act,2013, Dr Sridhar Ganesan, Managing Director, Mr M Jayapal, Wholetime Director, Dr Philip Ashok Karunakaran, Whole-time Director Mr D Muralidharan , Chief Financial Officer and Mr Vinod Kumar

S, Company Secretary are the Key Managerial personnel of the Company.

Declaration by Independent Directors

The Independent Directors of the Company have submitted their declaration as required pursuant to Section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as stipulated in Section 149(6) of the Companies Act, 2013.

Extract of Annual Return

As required pursuant to Section 134 (3) (a) of the Companies Act, 2013, an extract of Annual Return in the prescribed Form MGT 9 is given as Annexure II to this Directors'' Report.

Directors Responsibility Statement

In terms of Section 134(5) of the Companies

Act, 2013, the Directors Confirms that:

a. In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b. The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31,2017 and of the Profit of the Company for that period;

c. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. The Directors had prepared the annual accounts on a going concern basis;

e. The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

f. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Nomination and Remuneration Committee (NRC) and its Policy

The Nomination and Remuneration Committee is empowered to authorize and exercise the power as specified in section 178 of the Companies Act, 2013. The Company has a policy on Directors appointment and remuneration including the criteria for determining the qualification, positive attributes and independence of a Director and other matters as provided under section 178(3) of the Companies Act,2013. The Nomination and Remuneration Committee policy is annexed in Annexure III of the Directors report

Material Changes and Commitments

There were no material changes and commitments, affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

Pursuant to Section 134 (3)(m) of the Companies Act,2013 read with in Rule 8 (3) of the Companies (Accounts) Rules, 2014 particulars of conservation of energy, technology absorption, foreign exchange earnings and outgo, as are given as Annexure IV to this Directors'' Report.

Annual Evaluation of The Board, its Committees and Individual Directors

Pursuant to the provisions of Section 134(3) (p)the Companies Act, 2013 and Schedule V of the Companies Act, 2013 the Board had carried out performance evaluation of its own, of the Board Committees and of the Independent directors .Independent Directors at their separate meeting held on February 06,2017 evaluated performance of the Non Independent Directors, Board as a whole and of the Chairman of the Board. The outcome of the evaluation process were satisfactory, which resulted in the active engagement of the Board and committees in the Company.

Further the Directors are regularly informed and familiarized during the Board Meetings about the activities of the Company and its operations, products and its development and latest trends in the pharmaceutical industry and issues faced by the industry.

Corporate Social Responsibility (CSR)

Pursuant to the provisions of section 135 of the Act, read with CSR Rules, the Company has constituted Corporate Social Responsibility Committee and based upon the recommendation of the CSR committee the Board of Directors have approved CSR Policy.

Disclosure under Companies (Corporate social responsibility policy) rules, 2014 is annexed as an Annexure V to this report.

Audit Committee

The Composition of the Audit Committee, meetings of the Audit Committee and their terms of reference of the Audit committee have been disclosed separately in the Corporate Governance Report which is annexed and forms part of this annual report.

Internal Financial Controls

The Company has designed and implemented adequate financial control systems with respect to the financial statements. During the year under review, no serious / adverse observation have been received from the Internal Auditors of the Company with respect to ineffectiveness or inadequacy of such controls.

Vigil Mechanism

The Company has established a vigil mechanism, through a Whistle Blower Policy, where Directors and employees can voice their genuine concerns or grievances about any unethical or unacceptable business practice. A whistle-blowing mechanism not only helps the Company in detection of fraud, but is also used as a corporate governance tool leading to prevention and deterrence of misconduct .It provides direct access to the employees of the Company to approach the Compliance Officer or the Chairman of the Audit Committee, where necessary. The Company ensures that genuine Whistle Blowers are accorded complete protection from any kind of unfair treatment or victimization. The Vigil mechanism policy is disclosed on the website of the Company

i.e(www.caplinpoint.net)

Auditors

Statutory Auditors

Pursuant to Section 139 of the Companies Act, 2013, the initial period of office of the Statutory Auditors, M/s. CNGSN & Associates LLP, Chartered Accountants, Chennai, concludes at the conclusion of 26th Annual General Meeting of the Company.

The Audit Committee and Board of Directors have recommended the re-appointment of M/s. CNGSN & Associates LLP, Chartered Accountants, Chennai (Firm reg no. 004915S/2200036) as the statutory auditors of the Company, subject to the approval of the Shareholders of the Company. The Company has received a certificate from the statutory auditors to the effect that ratification of their appointment, if made, would be in compliance with the requirements of the Companies Act, 2013 and the rules made there under.

The Statutory Auditors on appointment will hold office from the conclusion of 26th

Annual General Meeting to 31st Annual general Meeting which is subject to ratification by members at every Annual General Meeting .

A resolution for their re- appointment forms part of the Notice convening the 26th Annual General Meeting and the same is recommended for members approval.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Board of Directors of the Company appointed M/s. G Ramachandran & Associates, Company Secretaries, Chennai to conduct the secretarial audit of the Company. The Secretarial Audit Report (Form MR - 3) is given as Annexure VI to this Directors'' Report.

Corporate Governance

Pursuant to Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations,2015, a Report on Corporate Governance is given separately which forms a part of this Annual report.

Risk Management

The Board has designed and framed risk management approach through which it identifies and manages the risk parameters The senior level management periodically reviews the risk parameters through which key business risk are identified and addressed. A brief report on the Risk Management are referred in the Management Discussion and Analysis Report which forms a part of the Annual Report.

Employee Stock Option Plan

During the year under review , the Company has allotted 26,750 equity shares under Caplin Point Employee stock Option plan -2015 and the details required under Rule 12 (9) of Companies (Share Capital and Debentures)

Rules, 2014 and as required to be provided under the SEBI Guidelines as on March 31, 2017 are set out in Annexure VII to this Report.

The Board of Directors of the Company has proposed to institute new Employee Stock option Plan under the title Caplin Point Employee Stock Option Plan -2017 which is recommended for members approval at the ensuing 26th Annual General Meeting

Particulars of Employees and Related Disclosures

Particulars pursuant to Section 197(12) of Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed in the Annexure VIII to this Directors report.

Particulars of Contracts or Arrangements with Related Parties

All the related party transactions which were entered during the year under review were on arms length basis and in the normal course of Business. There were no material significant related party transactions made by the Company with its promoters, Directors, Key Managerial Personnel which may have potential conflict with the interest of the Company at large. No Material Contract or arrangements with the related party were entered during the year under review. All the related party transactions are reviewed by the Audit Committee . The required disclosures as per Accounting Standards 18 are disclosed in the Notes to Accounts of the Financial Statements. Particulars of Transactions with related parties, In prescribed form AOC -2 is enclosed as an Annexure IX of this Directors Report

The related party transaction policy has been uploaded on the website of the Company (www.caplinpoint.net)

Change In Registrar and Share Transfer Agents

In order to have ease in control and to render better service to the Investors, the Registrar and Share Transfer Agent Service (RTA) was shifted from Karvy Computer Share private Limited, Hyderabad to Integrated Registry Management Services Private Limited, Chennai with effect from July 20,2017.

Disclosures

1. There has been no change in the nature of business of the Company during the year under review.

2. During the year under review, no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future.

3. During the Financial year 2016- 17, none of the employees were in receipt of the remuneration pursuant to Section 197(12) of Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

4. There were no complaints filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

5. Pursuant to Section 197 (14) of the Companies Act,2013,neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries

6. The Report of the Statutory Auditors (which forms a part of this Annual Report) and the Report of the Secretarial Auditor (which is Annexed to this Directors Report) are self explanatory having no adverse remarks/comments or disclaimer.

Acknowledgement

The Board of Directors wishes to place on record their sincere appreciation to the customers, suppliers, business partners and group companies and shareholders for their support. The Directors would like to thank the Bankers and financial Institutions as well. The Directors would take this opportunity to express their appreciation for the dedicated efforts of the employees and their contribution which is deeply acknowledged

For and on behalf of the Board of Directors

Date August 07, 2017 Dr Sridhar Ganesan M Jayapal

Place ChennaiManaging Director Whole-time Director

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