Elder Pharmaceuticals
BSE: 532322 | NSE: ELDERPHARM | ISIN: INE975A01015 | Pharmaceuticals
- Directors Report
- Chairman's Speech
- Auditors Report
- Notes To Accounts
- Accounting Policy
- Finished Products
- Raw Materials
| Directors Report | Year End : Mar '08 |
The Directors are pleased to present this the Twenty Fifth Annual
Report of the Company together with the audited Accounts for the year
ended 31st March 2008. The working results of the Company for the year
ended 31st March 2008 vis-a-vis those of the previous year are
summarized below:
FINANCIAL RESULTS Year ended Year ended
31.03.2008 31.03.2007
(Rs. In Lacs) (Rs. In Lacs)
1. Sales and other Income 55636.33 45395.92
2. Profit before Tax 7857.89 6109.56
3. Less: Provision for Tax
Current Year 875.00 625.00
Deferred Tax (31.69) 57.55
Fringe Benefit Tax 150.00 150.00
4. Profit after Tax 6864.58 5277.01
5. Less: Prior year Tax adjustments (105.19) 354.10
6. Add: Profit as per the last
Balance Sheet 10073.30 6195.87
7. Profit available for appropriation 17043.07 11118.78
Out of which Directors recommend
Appropriation as under:
a) Proposed Dividend 471.44 464.24
b) Tax on Dividend 80.12 79.24
c) Transfer to General Reserve 500.00 500.00
d) Surplus carried forward to
Balance Sheet 15991.51 10073.30
Your Company reached Sales Turnover of Rs. 55636.33 lacs during the
year under review which represents increase of Rs. 10240.41 lacs over
the previous year which increase is equivalent to 22.56%. The pre and
post tax profits were also higher at Rs.7857.89 lacs and Rs. 6864.58
lacs marking an increase of 28.62 and 30.08% respectively over the
previous year.
During the year under review the Company got associated with Cymbiotics
of California, USA for marketing six of their patented products for
Diabetes, Chronic pain, Skin Care, etc. and GNOSIS of Italy for
marketing of SAMPURE an anti-arthritic product. Additionally, the
products in the therapeutic categories of anti- osteoporotic,
antioxidant and cardiac care have also been licenced by GNOSIS to the
Company.
The Company, in January 2008, launched an in-licensed product HIBOR,
a low molecular weight heparin for thromboembolic diseases, Deep Vein
Thrombosis and prevention of clotting during hemodialysis. HIBOR is a
research product of M/s. Rovi Pharmaceutical Laboratories of Spain and
has received global acceptance.
Another product called SHELCAL CT was launched by the Company in
January 2008. A line extension of SHELCAL, it is indicated for patients
with severe established osteoporosis with a pre-existing fracture with
low levels of calcitriol.
In February 2008, the Company launched another in-licensed product
Phytomega, a patented conjugation of Phytosterols, Eicosapentaenoic
Acid and Decosahexaenoic Acid for lifestyle changes in cases with risk
factors for Coronary Heart Disease like Diabetes, Hypertension,
Obesity, Metabolic Syndrome and symptomatic Carotid Artery Disease. It
is also used as an adjunct to Statin or Fibrate therapy. It is worth
noting that Phytomega has been given a new ingredient status by US FDA
and has also won the Excellence award for its efficacy, safety,
innovativeness and scientific merit.
All the products of the Company including new introductions have been
well accepted by the medical fraternity in India. The main therapeutic
areas of interest to the Company continue to be Womens healthcare,
Wound care, Neutraceuticals / Vitamin Supplements, Cardiology,
Diabetes, Dermatology, Antibiotics and CNS.
The Company has carried out expansion in its new manufacturing unit at
Sela Qui near Dehradun in Uttarakhand. This plant is equipped for the
manufacture of tablets and capsules. The said plant is now being
upgraded as per UK MHRA specifications. Another plant for manufacture
of topical formulations at Paonta Sahib in Himachal Pradesh has
commenced commercial production during the accounting year under
review. However, the completion of the other unit in Uttarakhand at
village Charba, Langha Road, near Dehradun for manufacture of
formulations in injectibles in liquid ampoules form, oral liquids,
tablets and Soft Gelatin dosage forms, is delayed because of lack of
clarity to pollution clearance authorities in the state of Uttarakhand
on special provisions applicable to the industries in Doon Valley and
therefore, the work on the project was required to be stopped midway.
The Company eventually had to obtain environmental clearances for the
said unit from the Central Government and only thereafter the project
work could be resumed after considerable lapse of time. The said plant
is now being completed at additional costs as the same is also being
made US FDA compliant. This plant is likely to be commissioned during
the current financial year. Central Governments excise and income tax
incentives continue to be available to all these units in the States of
Uttarakhand and Himachal Pradesh.
ALTERATION TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION:
As per the decision of the shareholders at the 24th Annual General
Meeting of the Company held on 27th September 2007 the Authorised Share
Capital of the Company was increased from Rs.20.00 crores to Rs.30.00
crores by creation of one crore new equity shares of a face value of
Rs. 10/- each. Consequent upon this the Memorandum and Articles of
Association of the Company were also amended.
GLOBAL DEPOSITORY RECEIPTS:
The Company had made an issue of Global Depository Receipts (GDRs) in
the year 2004-05. Out of the total GDRs issued most of the GDRs have
been converted into shares leaving only 71300 GDRs to be converted as
on 31st March 2008. These GDRs of the Company continue to be quoted on
the Luxembourg Stock Exchange, their quotation as on 31st March 2008
being US$ 18.51.
FURTHER ISSUE OF SHARE CAPITAL:
At the 21st Annual General Meeting of the Company held on 28th
September 2004 the Shareholders of the Company had approved Employees
Stock Option Scheme called Elder ESOP 2004. On 28th March 2006 the
Compensation Committee allotted 3,99,250 Options to eligible Grantees
entitling them to subscribe for cash to one equity share of Rs.10/-
each per Option granted at an Exercise Price of Rs.209/- per share
inclusive of Rs.199/- per share as premium. These Options were to be
exercised in four equal parts every three months upto 27th March 2008
after initial Vesting Period of one year. Accordingly, Grantees have
exercised their Options in respect of 285,748 equity shares of Rs.10/-
each from 28th March 2007 to 27th March 2008. The paid up share capital
of the Company after the last of the allotments of equity shares under
ESOP made on 30th April 2008 stands increased to Rs.188,574,860/-.
There are no Options outstanding as at 31st March 2008 and the Options
that were granted but were not exercised within the prescribed period
have lapsed. However, Elder ESOP 2004 still has a balance of 1,153,526
shares for which Options can be issued to Employees.
DIVIDEND.
The Directors recommend a dividend of 25% for the year ended 31st March
2008 and the same will be paid on or before 21st October 2008 to those
shareholders whose names appear in the Register of Members as on 22nd
September 2008.
DIRECTORS.
During the year under review the shareholders, at the 24th Annual
General Meeting of the Company held on 27th September 2007, appointed
Mr. Michael Bastian to the Office of Director whose period of office is
liable to retirement by rotation.
During the accounting year under review Mr. V. N. Paranjpe, Jt.
Managing Director of the Company, resigned from the services of the
Company for better prospects. He was relieved from the services of the
Company from the close of business hours on 31st July 2007. The
Directors wish to put no record their appreciation of the services
rendered by Mr. Paranjpe to the Organisation.
Dr. R. Srinivasan, an Independent Director, is due to retire by
rotation at the ensuing Annual General Meeting of the Company but being
eligible has offered himself for re-appointment.
Dr. Joginder Singh Juneja, an Independent Director, is due to retire by
rotation at the ensuing Annual General Meeting of the
Company but being eligible has offered himself for re- appointment.
Mr. Edoardo Richter, an Independent Director, is due to retire by
rotation at the ensuing Annual General Meeting of the Company but being
eligible has offered himself for re-appointment.
As required under Clause 49 of the Listing Agreement the details of Dr.
R. Srinivasan, Dr. Joginder Singh Juneja and Mr. Edoardo Richter,
Directors due to retire by rotation at the ensuing Annual General
Meeting but having offered for their re-appointment are given in the
Report on Corporate Governance.
AUDITORS:
M/s. S. S. Khandelwal & Co., Chartered Accountants, Mumbai retire as
the Auditors of the Company at the conclusion of the ensuing Annual
General Meeting. They have signified their willingness to get
re-appointed and have given a declaration that if re-appointed their
appointment will be within the limits specified under Section 224(1
)(B) of the Companies Act, 1956. On the recommendation of the Audit
Committee, the Board proposes the re-appointment of M/s. S. S.
Khandelwal & Co. as Auditors of the Company for the financial year
2008-09. You are requested to appoint Auditors and fix their
remuneration.
The Directors have appointed M/s. Sevekari, Khare and Associates, Cost
Accountants, Mumbai as Cost Auditors of the Company for the financial
year 2008-09 and their appointment has been approved by the Central
Government.
JOINT VENTURES /SUBSIDIARIES/ INVESTMENTS
The Company has decided to increase its stake from the existing 40% to
49% in the Nepal Joint Venture which will at suitable time be further
increased to 51%. It is proposed to change the name of the Joint
Venture Company from existing Elder Universal Pharmaceuticals (Nepal)
Private Limited to Elder Pharmaceuticals (Nepal) Private Limited.
The said Joint Venture has one WHO GMP approved manufacturing facility
for Cephalosporin formulations in oral solid form at Bahirawa in Nepal.
Commercial production of the said manufacturing unit has already
commenced and the products are already in the market. It is proposed to
use this manufacturing site for procuring the Companys requirement of
cephalosporin formulations in India. The second WHO GMP compliant
manufacturing unit for general pharmaceutical formulations, also at
Bahirawa adjoining the existing Cephalosporin plant, is ready and trial
runs and mandatory stability studies are being conducted thereat. The
said unit is likely to commence commercial operations in six months
time.
In both the above facilities the Company has apart from financial
participation has also provided technical know-how and support for the
project, WHO GMP procedures & records and for manufacturing and
marketing of the products. While the Company extends its support to the
local sales & marketing of the products in Nepal, export possibilities
to nearby countries is also being explored.
During the last accounting year the Company established a wholly owned
subsidiary in the Jebel Ali Free Trade Zone, Dubai, U.A.E. called
ELDER INTERNATIONAL FZCO. The Company was incorporated in January 2007
and its trading license was issued in March 2007 for para
pharmaceuticals marketing. The Company has, through this subsidiary
acquired 21% stake in NeutraHealth PLC, U.K., made investment in Vincom
Pharmaceuticals Limited, Ghana, a 50% Joint Venture and has floated
Elder Biomeda EAD, Bulgaria, a wholly owned subsidiary.
During the year under review the Company, through its wholly owned
subsidiary in Dubai, has acquired a 21% stake in Neutrahealth PLC, an
AIM London Stock Exchange listed company. The said company has been a
leading provider of neutraceutical products to the UK retail and
practitioner markets. This sector consisted of vitamins, minerals and
supplements, functional foods, organic foods and alternative remedies.
Neutrahealth PLC is a 23 million Sterling Pound turnover Company for
the calendar year 2007. Recently, the said company acquired a
manufacturing unit and has sold its OTC business. The Company expects
a lot of synergy between Neutrahealth and the Company by way of back
end manufacturing of their products, introduction of some of the
Companys major brands in the UK market and opening of some newer
markets for Neutrahealths products through the Companys strategic
partners.
Mr. J. Saxena, Chairman and Managing Director of the Company has been
appointed a Director on the Board of Neutrahealth PLC w.e.f. 20th
August 2007.
The Company has formed a wholly owned subsidiary in Cyprus by the name
Somerta Holdings Co. Limited with a capital of Euro 5,000. During the
year under review there was no activity carried out in the said
subsidiary.
The Company through the Dubai subsidiary has established a wholly owned
subsidiary in Bulgaria by the name Elder Biomeda EAD with the object
of acquiring 100% stake in three Biomeda Group companies for a total
investment of Euro 3.12 million. The Biomeda Group has a manufacturing
company having a unit for manufacture of tablets, a distribution
company for pharmaceutical and allied products and a logistics support
company. The existing owners of Biomeda Group companies will in
exchange be given 49% shares of Elder Biomeda EAD. Bulgaria being a
part of European Union now it offers an excellent opportunity for the
Company to enter Eastern European as well as CIS countries.
BANKERS AND FINANCIAL INSTITUTIONS:
The consortium of banks for working capital comprising State Bank of
India, Axis Bank Ltd., Development Credit Bank Ltd., Syndicate Bank,
Standard Chartered Bank and DBS Bank Ltd. with State Bank of India as
its leader have sanctioned additional working capital facilities to the
Company during the current accounting year.
During the year under review the Company has availed an External
Commercial Borrowing of USD 15 million from DBS Bank Ltd. which amount
has been utilized for lending to Companys Dubai Subsidiary through
which overseas investments and acquisitions are being made.
During the year under review State Bank of India, London Branch, has
sanctioned a loan of USD 15 million to Companys Dubai Subsidiary for
which the Company has given its Corporate Guarantee for an amount of
USD 35 million.
Your Directors are thankful to the Banks and Financial Institutions for
their continued and timely support to the Company.
EXPORT HOUSE STATUS:
The Company continues to enjoy Export House status. The Companys
products are exported to African and South Asian markets. The
registration procedures are presently going on in a number of countries
and once registration formalities are completed, the Companys exports
are expected to increase.
CREDIT RATING BY CARE:
The Commercial Paper (CP) programme of the Company continues to be
rated by Credit Analysis and Research Limited (CARE) and has allotted a
rating as PR1 + (PR One Plus) for an increased amount of Rs.75.00
crores. As at 31st March 2008 the Company had issued CPs to the extent
of Rs.50.00 crores and placed them with investors at the most
competitive rates of interest. The subscription amount of the
Commercial Papers is utilized for earmarking working capital limits.
This has helped your Company to reduce the interest cost.
ISO / WHO GMP ACCREDITATION:
The Company continues to be certified as conforming to ISO 9001 : 2000
for development, manufacturing and marketing of pharmaceutical
products.
The Companys Bulk Drug plant at Patalganga continues to be accredited
as WHO-GMP compliant.
DIRECTORS RESPONSIBILITY STATEMENT: The Directors declare and confirm:
a) that in preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
b) that the Directors had selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year ended on 31st March
2008 and the profit of the Company for that year.
c) That the Directors had taken proper and sufficient care for
maintenance of adequate accounting records for the year ended 31st3
March 2008 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.
d) That the Directors had prepared the accounts for the financial year
ended 31st march 2008 on a going concern basis.
CORPORATE GOVERNANCE:
In pursuance of the system of Corporate Governance instituted by SEBI
and forming part of the Listing Agreement with the Stock Exchanges, a
report thereon is separately attached to this report.
RESEARCH AND DEVELOPMENT ACTIVITY:
The Research and Development activities of the Company continue to be
recognized by the Department of Science and Technology, Government of
India. The Research and Development laboratory of the Company has
successfully developed certain import substitute molecules and has been
working on development of a number of other molecules. It has also been
continuously working on process developments of the molecules already
developed by it. The Company has applied for five process patents for
various APIs during the year under review. The Company enjoys approval
to its Research & Development Facility from the Secretary, DSIR, u/s 35
(2AB) of the Income Tax Act, 1961 for claiming rebate on the expenses
incurred by the Company on Research and Development.
INSURANCE OF ASSETS:
All the fixed assets, finished goods, semi-finished goods, raw
materials, packing materials and other goods and assets of the Company
lying at different locations and in-transit have been insured against
fire, burglary, transit and allied risks.
CAPITALISATION:
During the year under review the Company has added fixed assets worth
Rs. 3972.18 lacs whereas disposal and adjustment of fixed assets
amounted to Rs. 56.77 lacs. The Company had capital work in progress
amounting to Rs. 16335.57 lacs as at 31st March 2008 at various project
sites.
DEPOSITS:
The Companys public deposit scheme has been receiving good response
from depositors. The Company is regular in repayment of principal and
payment of interest and has not defaulted therein. The Company has
been complying with the provisions of Section 58A of the Companies Act,
1956 and the rules made thereunder. As at 31st March 2008 the fixed
deposits outstanding under the public deposit scheme were Rs. 1148.00
lacs.
AUDITORS REPORT:
Note(s) on accounts as referred to in the Auditors Report is / are
self-explanatory and therefore do not call for further comments or
explanation.
PARTICULARS OF EMPLOYEES:
Particulars of remuneration paid to the employees as required by
Section 217(2A) of the Companies Act, 1956 read with Companies
(Particulars of Employees) Rules, 1975 as amended are set out in a
separate statement attached hereto and forms part of this report for
the year ended 31st March 2008.
EMPLOYER / EMPLOYEE RELATIONS:
The relationship with the workers of the Companys manufacturing units
and other staff continues to be cordial. A new settlement reached with
the workers of the Nerul plant of the Company effective 1st April 2006
is operative for a period of four years. The Directors wish to place on
record their sincere appreciation and gratitude for the services
rendered by the workers and staff at all levels.
EMPLOYEE STOCK OPTION PLAN:
The Shareholders at the 21st Annual General Meeting of the Company
passed a resolution approving the Employee Stock Option Plan called
Elder ESOP 2004. A total of 1,439,274 equity shares of the Company
are available under Elder ESOP 2004 for grant of Options at an exercise
price of 15% discount to the market rate. The Company had granted
Options in respect of 399,250 shares which were to be exercised in four
equal parts every three months ending on 27m March 2008 at an exercise
price of Rs.209/- per share inclusive of a premium of Rs.199/- per
share. Out of the Options so granted 285,748 Options were exercised
during the accounting year under review. Options that were not
exercised within the stipulated period have lapsed. However, there are
1,153,526 shares still available for which Options can be granted to
Employees under Elder ESOP 2004.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO:
In accordance with Rule 2 of the Companies (Disclosure of Particulars
in the Report of the Board of Directors) Rules, 1988 as applicable, the
particulars relating to conservation of energy and technology
absorption are given in Annexure 1 to this Report.
The foreign exchange outgo during the year under review was Rs. 4557.27
lacs for imports of raw materials / trading items, Rs. 22.59 lacs for
foreign travel, Rs.190.92 lacs for interest paid on External Commercial
Borrowing and Rs.40.77 lacs for professional fees. The foreign exchange
earnings during the year were Rs.2330.94 lacs on account of exports.
For and on behalf of the Board
J. Saxena
Mumbai, 26th August, 2008 Chairman |
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| Source : Religare Technova | |
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