The Directors are pleased to present the Thirty-first Annual Report of
the Company together with the audited Accounts for the year ended 30th
June 2014. The working results of the Company for the year ended 30th
June 2014 vis-a-vis those of the previous year are summarized below:
Year ended Fifteen months
30.06.2014 Period ended
(Rs. In Crores) (Rs. In Crores)
1. Operating Income 483.47 1233.10
2. Other Income 15.13 26.22
3. Profit before Tax 17.85 115.71
4. Less: Provision for Tax
Current Year - 24.50
Deferred Tax 0.67 (2.53)
5. Profit after Tax 17.18 93.74
6. Less: Prior year Tax 9.26 -
7. Add: Profit as per the last 216.62 192.88
8. Profit available for 224.54 286.62
appropriation Out of which
Appropriation as under:
a) Proposed Dividend - -
b) Tax on Dividend - -
c) Transfer to General Reserve 30.00 30.00
d) Transfer to Debenture 40.00 40.00
e) Surplus carried forward to 154.54 216.62
OPERATIONS AND PERFORMANCE:
During the year ended 30th June 2014, your company''s Operating Income
was Rs.483.47 Crores for the year as compared to Rs. 1233.10 Crores for
the fifteen months period ended 30th June, 2013. This represents an
decrease of Rs.749.63 Crores over the previous year mainly on account
of constraints of working capital. Profit before Tax was Rs. 17.85
Crores as against Rs. 115.71 Crores, for the previous year and Net
Profit after providing for taxes was Rs. 17.18 Crores as against
Rs.93.74 Crores for the previous year.
For the year ended 30th June 2014 financial results showed Exceptional
Item accounted of Rs. 380.04 Crores (net) which is comprising of Profit
from Slump sale of Rs. 1734.3 1 Crores (net of Tax) after writing off
Trade receivables Rs. 322.71 Crores and advances Rs. 1031.56 Crores.
GLOBAL DEPOSITORY RECEIPTS:
The Company had made an issue of Global Depository Receipts (GDRs)
during the year 2004-05. All the issued GDRs have been converted into
equity shares and no GDRs are outstanding as on 30th June 2014. The
Company''s listing for the GDRs, however, continues on the Luxembourg
Stock Exchange and as on 30th June 2014 the same were quoted at
In view of the severe financial constraints faced by the Company the
Directors at their meeting held on 27th August 2014 have decided to
skip dividend for the accounting year under review.
Mrs. Urvashi Saxena who retires by rotation has resigned w.e.f. 28th
November 2014 with an intent not to be re-appointed and company
resolved not to fill in the vacancy.
Dr. S. Jayaram who retires by rotation has resigned w.e.f. 1st December
2014 with an intent not to be re-appointed and company resolved not to
fill in the vacancy.
The Board of Directors of the Company (the Board) under Section 161
of the Companies Act, 2013 and the Clause 120 of Articles of
Association of the Company, appointed Mr. Farid Gulmohamed as
Additional Director of the Company with effect from 14th February 2014.
In terms of Section 161 of the Companies Act, 2013, and Clause 120 of
Articles of Association of the Company Mr. Farid Gulmohamed holds
office upto the date of this Annual General Meeting has resigned w.e.f.
14th November 2014 with an intent not to be re-appointed and company
resolved not to fill in the vacancy.
There is no re-appointment of any director who are retire by rotation.
Therefore as required under Clause 49 of the Listing Agreement, details
are not given in the report on Corporate Governance,forming part of
this Annual Report.
Mr. Edoardo Carlo Richter, the Director of the Company has resigned as
Director of the Company with effect from 14th February, 2014, Mr. James
McEuen has resigned as Director of the Company with effect froml4th May
2014, Dr. R. Srinivasan the Director of the Company has resigned as
Director of the Company with effect from 5th June 2014 and Mr. Michael
Bastain the Director of the Company has resigned as Director of the
Company with effect from 9th August, 2014. The Board accepted their
resignations and place on record their appreciation for the valuable
guidance and advice provided by Mr. Edoardo Carlo Richter , Mr. James
McEuen, Dr. R. Srinivasan and Mr. Michael Bastain during their tenure
as Directors of the Company.
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 confirmed their eligibility in terms of the
provisions of Section 141 of the Companies Act, 2013 and Rule 4 of
Companies (Audit and Auditors) Rules, 2014. On the recommendation of
the Audit Committee, the Board proposes for consideration of the
Shareholders pursuant to the provisions of Section l39, l42 and other
applicable provisions, if any, of the Companies Act, 2013, as Statutory
Auditors of the Company, to hold office from the conclusion of the 31st
Annual General Meeting up to the conclusion of the 34th consecutive
Annual General Meeting. You are requested to appoint Auditors and fix
With the resignation of M/s. Sevakari, Khare and Associates, Cost
Accountants, Mumbai having registration No. 00084, on the
recommendation of the Audit Committee at its meeting held on November,
14th, 2014, the Board has, considered and approved the appointment of
T.M. Rathi, Mumbai having Registration No10079 as the cost auditor for
the Bulk Drugs and Formulations for the financial year 2014-2015.
The Cost Audit Reports for bulk drugs and formulations for fifteen
months period ended on 30th June 2013 will be filed with the Central
Government in due course of time. The Cost Audit Report for the
accounting period for the year ended 30th June 2014 would be submitted
to the Central Government in due course of time.
JOINT VENTURES / SUBSIDIARIES / INVESTMENTS:
''ELDER INTERNATIONAL FZCO'' the wholly owned subsidiary of the Company
in Jebel Ali, Dubai, United Arab Emirates (Dubai WOS), continues to
hold 100% stake in the U. K. based NeutraHealth Limited.
Dubai WOS also continues to hold 100% interest in Elder Biomeda EAD,
Bulgaria which in turn continues to hold 100% stake in downstream
Bulgarian entities, namely, Elder Bulgaria EOOD, the manufacturing
company and Biomeda 2000 EOOD, the distribution company. Bulgaria,
being a part of the European Union, offers an excellent opportunity for
the Company to enter the Eastern European as well as CIS countries. The
manufacturing unit in Bulgaria is being upgraded and once upgradation
is completed it is expected that there will be a lot of opportunities
for manufacturing products for the Eastern European, CIS and other
markets. The distribution business has a lot of potential and during
the year under review it has received a number of registrations which
will help the distribution company to widen its scope. The distribution
company which used to be operating only in the Bulgarian market has now
started exporting some of its products to nearby countries.
The Dubai WOS continues to hold 100% interest in NutraHealth Ltd., the
U.K. subsidiary. The U. K. operations have shown very encouraging
results despite the slowing down of the U. K. economy. The said U. K.
subsidiary has, in a cashless transaction, acquired Max Healthcare
Ltd., U.K. to re-enter the OTC pharmaceutical category and extend and
enhance its product range.
The Company continues to hold it''s investment in the Nepal Joint
Venture. During recent period there have been certain issues on
unilateral decisions taken by the Nepalese partner whereby the
Company''s stake in terms of percentage to total capital was reduced
from earlier 40% to 30.6%. The Company has notified its dissent to the
action taken by the partner and has written to the Ministry of
Industry, Government of Nepal seeking an amicable solution in the
matter. The discussions were held with the Nepalese partner as directed
by the Director of Industry, Government of Nepal for arriving at an
acceptable solution, however no settlement could be reached so far.
Efforts are being made to work out an amicable settlement to resolve
BANKERS AND FINANCIAL INSTITUTIONS:
The Directors wish to place on record their sincere gratitude to the
consortium of Banks for working capital lead by State Bank of India for
their continued and timely support to the Company.
The Directors also wish to place on record their sincere gratitude to
the various term lenders and NCD holders for their continued and timely
support to the Company. During the year under review, the company has
been defaulting in the repayment of NCD and Interest thereon. The
company is working on Short Term and Medium Term plan for
regularization of default.
EXPORT HOUSE STATUS:
The Company continues to enjoy ''Export House'' status. The Company''s
products are exported to certain African and South East Asian markets.
The registration procedures are presently going on in a number of
countries and once their formalities are completed, the Company''s
exports are expected to increase.
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 Company''s bulk drug manufacturing plant at Patalganga was
upgraded according to ICH Q7A guidelines for manufacturing products for
the European markets. The said bulk drug plant as well as formulation
plants of the Company are now approved by WHO GMP and certified as
conforming to ISO 9001 : 2008 standards relating to Quality Management
Systems. While the Selaqui formulations plant of the Company has been
accredited for WHO GMP the said plant is being upgraded for UK MHRA
accreditation. The formulation plants at Nerul, Paonta Sahib have been
accredited for WHO GMP standards. The formulations plant at Langha Road
near Dehradun is designed as per USFDA compliance requirements and is
also accredited for WHO GMP
DIRECTORS'' RESPONSIBILITY STATEMENT:
Pursuant to Section 217(2AA) of the Companies Act, 1956 the Directors,
on the basis of compliance certificate received from Managing Director,
CFO and other executives of the Company and subject to disclosures in
annual accounts as on 30th June 2014 and on the basis of discussions
with the Statutory Auditors of the Company from time to time, declare
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 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 at the end year ended on 30th June 2014 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 30th June
2014 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 year ended 30th
June 2014 on a ''going concern basis''.
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 /
intermediates 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. It has been
engaged in development of new products and their improvement in terms
of delivery, absorption and efficacy. The Company has applied for
seventeen Indian patents with seven PCT applications. Out of these one
PCT application has been entered in the USA, Europe and Japan.
INSURANCE OF ASSETS:
The Company is in the process of renewing the insurance cover for 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 against fire, burglary, transit, riots, strike,
malicious damage and allied risks as well as goods in transit.
During the year under review the Company has added fixed assets worth
Rs. 3.48 Crores whereas disposal and adjustment of fixed assets
amounted to Rs. 46.66 Crores. The Company had capital work in progress
amounting to Rs. 304.26 Crores as at 30th June 2014 at various project
The Company is irregular in repayment of principal and payment of
interest and has defaulted therein. The Company has made application to
the Company Law Board for the extension of time in repayment of
Deposits and approval is yet to be received. The Company has been
complying with the provisions of Section 58A and other applicable
provisions, if any, of the Companies Act, 1956 and the rules made
thereunder. As at 30th June 2014 the fixed deposits outstanding under
the public deposit schemes were Rs.143.38 Crores. The Company has
discontinued acceptance of deposits from public.
The comments / observations of the Auditors, if any, are self
explanatory and do not call for any further explanations or
clarifications except the following :
As regards Point No. 1 of the basis for qualified opinion of the
Auditor, the Company is of the view that the Plant concerned has
intrinsic value which is higher than the values carried in the books of
accounts as capitalization as well as capital Work in progress. As
regards Point No.2 (i) & (ii), the management had reviewed all the
balances carried in the accounts and taking a conservative view decided
to write off those carrying amounts where no further economic benefit
will be realizable from those pertinent assets, & management decided
that it is now imperative that the same should get appropriately
reflected in the Profit & Loss Account of the financial year ended 30th
June, 2014. Our efforts for recovery to write off shall continue and
recoveries will be accounted in the year of realization on cash basis.
Point No. 3 & 4 of the qualified opinion of the Auditor are self
As regards the comments of the Auditors in serial no. 1 & 2 under the
''Emphasis of matter'', the Company has completed first round of
re-structuring by divesting some of its brands to M/s. Torrent
Pharmaceuticals Ltd., for a consideration of Rs. 2004 crores during the
year. The Company is further exploring the possibilities of divestment
of some of its non-core assets and infusion of long term equity capital
/ debt funds for the revival of the company. The management has
initiated efforts to pursue business plan involving existing products
and launching of new products with effective marketing strategy and
extending contract manufacturing activites. As regards the comments of
the Auditors in Serial no. 3 the Company seized of the matter and in
the process of completing reconciliation / confirmation of Trade
receivables, inter-divisional balances, loans and advances and in
certain cases of few bank accounts. The effect of the same shall be
given in the accounts for the next financial year. However, management
does not expect any significant impact of the same on the results of
the Company. As regards Serial No.4, the company is seized of the
matter and shall take appropriate steps in due course.
As regards non-depositing or investment of a sum of not less than 15%
of the amount of debentures maturing during the period ended 30th June,
2014, the company is seized of the matter and said amount will be
deposited / invested in due course.
PARTICULARS OF EMPLOYEES:
Information as per Section 217(2A) of the Companies Act, 1956, read
with Companies (Particulars of Employees) Rules, 1975 as amended is
available at the registered office of the Company. As per the
provisions of Section 219(i)(b)(iv) of the Companies Act, 1956 this
Report and Accounts are being sent to all Shareholders of the Company
and others entitled to it excluding the aforesaid information. Any
Shareholder interested in obtaining a copy of the statement under
Section 217(2A) of the Companies Act, 1956 may write to the Company
Secretary at the address of the registered office of the Company.
EMPLOYER / EMPLOYEE RELATIONS:
The relationship with the workers of the Company''s manufacturing units
and other staff continues to be cordial. 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 of15% 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 ending on 27th March 2008 at an exercise price of Rs. 209/-
per share inclusive of a premium of Rs. 199/- per share. Out of the
Options granted 285,748 were exercised during the accounting year under
review. Options that were not exercised within the stipulated period
have lapsed. There are 1,153,526 shares for which Options can still be
granted to Employees under Elder ESOP 2004.
CORPORATE SOCIAL RESPONSIBILITY
The Board of Directors constituted a Corporate Social Responsibility
(CSR) Committee in terms of the provisions of Section 135(1) of the
Companies Act, 2013 on 21st August, 2014 with the strong belief in the
principle of Trusteeship to serve the community
This CSR Committee shall review and restate the Company''s CSR policy in
order to make it more comprehensive and aligned with the activities
specified in Schedule VII of the Companies Act, 2013.
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 outgoings during the year under review was Rs.
4.31 Crores for imports of raw materials / finished goods and Rs. 0.34
Crores for foreign travel. The Company also paid Rs. 6.56 Crores in
foreign exchange as interest on the External Commercial Borrowing and
other expenses of Rs. 1.3 1 Crores. The foreign exchange earnings
during the year were Rs. 30.66 Crores on account of exports on FOB
For and on behalf of the Board
Alok Jagdish Saxena
Managing Director & CEO
Mumbai, 13th February, 2015