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Plethico Pharmaceuticals Directors Report, Plethico Pharma Reports by Directors
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Plethico Pharmaceuticals
BSE: 532739|NSE: PLETHICO|ISIN: INE491H01018|SECTOR: Pharmaceuticals
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Download Annual Report PDF Format 2014
Directors Report Year End : Mar '14    « Dec 12
Dear Members
 
 The Directors are pleased to present Twenty First Annual Report of the
 Company together with the audited Accounts for the 15 months period
 ended 31st March, 2014. The working results of the Company for the 15
 months period ended 31st March, 2014 vis-ŕ-vis those of the previous 
 year are summarized below:
 
                                                        Rs. in Million
 
 Particulars           CONSOLIDATED                    STANDALONE
                    Period ended Year ended    Period ended Year ended 
                    31st March,  31st December 31st March,  31st December 
 
 Sales                 20597.99      16315.41     5312.97        4753.15
 
 Other Income            386.34        304.69      373.07         171.01
 
 Sales and Other 
 Income                20984.33      16620.10     5686.04        4924.16
 
 Total Expenditure 
 excluding Interest,   17780.34      14735.71     5037.33        4787.35
 
 depreciation, 
 amortization & tax
 
 Profit before 
 Interest, 
 Depreciation,          3203.99       1884.39      648.71         136.81
 Amortization & Tax
 
 Interest (Net)         1593.23        614.32      627.67         499.26
 
 Depreciation and 
 Amortization            642.28        177.30      103.98          83.01
 
 Profit before Tax, 
 Exceptional and         968.48       1092.77     (82.94)       (445.47)
 Extraordinary Item
 
 Exceptional Item          0.00          0.00        0.00           0.00
 
 Extraordinary Item        0.00          0.00        0.00           0.00
 
 Provision for 
 Taxatio               (138.38)         77.90        4.38           8.40
 
 Profit After Tax       1106.86       1014.87     (87.32)        (78.92)
 
 
 Change in Financial  Year
 
 The Board of Directors of the Company approved change in the financial
 year of the Company from January-December to April-March effective 24th
 January, 2014. In view of this, the current financial year is for a
 period of 15 months i.e. 1st January, 2013 to 31st March, 2014.
 
 Overview
 
 Although there was slight improvement in the global economy in 2012,
 the challenging business environment and moderation in economic growth
 did continue in fiscal 2013-14 as well. Although manufacturing and
 industrial growth remained weak, there were some positive policy
 responses that alleviated the immediate pressure. The pharmaceutical
 industry continued to face tough milieu throughout the globe. Emerging
 markets including India had to face multiple challenges of fluctuations
 in local currency, banking fragility, fiscal tightening and additional
 pressure due to capital outflow.
 
 Despite numerous global and domestic challenges, we not only sustained
 but further improved performance during fiscal 2013-14. The results
 under review is for 15 months period however if annualized, the sales
 on consolidated basis has grown up by 1.52% to Rs.16787.46 million (for
 15 months Rs.20984.33 million). The net profit after tax on consolidated
 basis has however declined by 12.75% to Rs.885.49 million (for 15 months
 Rs.1106.86 million). On standalone basis, there is slight decline both in
 turnover and profitability. This has happened because of more focus on
 subsidiaries abroad performing extremely well despite numerous
 constraints and challenging environment.
 
 At Plethico, we believe that sustainable transformation can be achieved
 only through enhancing profits, exploring new possibilities, empowering
 people and investing in the innovation of products and processes.
 During FY 2013-14, we undertook several initiatives in key areas that
 will drive our growth and also create better outcomes for the company.
 Innovation has always been a corner stone of our operations. It has
 enabled us to make significant technological–driven break throughs that
 add significant value to the company''s business.
 
 We focused on further strengthening on our business, network,
 technological capabilities and operating and financial parameters. At
 the same time, we were cognizant of the risks in the business and
 calibrated our approaches accordingly. Our strong and diversified
 manufacturing base coupled with excellent technical skills give us the
 ability to leverage opportunities for sustainable growth. Our outlook
 for the future is positive.
 
 We believe that more relevant we become to our customers through
 innovative products, the more meaningful and deep our relationship will
 be. As such, we always strive to achieve higher levels of customer
 satisfaction as well as creation of shareholders value. We are bringing
 significant transformation in the organization to realize the glorious
 future.
 
 Dividend
 
 In view of the loss incurred by the Company during the period under
 review, Your directors regret that they have not recommended any
 dividend on equity shares for the period ended on 31st March, 2014.
 
 Subsidiary and other Business Alliances
 
 The company has adopted a completely different path of acquisition and
 buyouts to carve a unique niche in highly growth-ended regulated and
 semi regulated markets worldwide. The acquisitions enabled the company
 to ride on new opportunities that would have taken years to start from
 scratch. Such acquisitions have begun yielding benefits in different
 ways that go beyond size and scale.
 
 Currently company has two Wholly Owned Subsidiaries namely Plethico
 Global Holdings B.V., Netherland (PGH) and Plethico International
 Limited, UAE (PIL). The PGH is also having subsidiaries and step-down
 subsidiaries in many countries that had given added advantage of rapid
 scaling-up, broad-ended customer base and global footprint.  Apart from
 subsidiaries and step-down subsidiaries, the Rezlov Group of Companies
 in which company currently hold 45% equity stake, also contributed
 significantly in the growth of the organization. Tricon, a Dubai based
 retail pharmacy chain in which company holds 20% stake also
 strengthened Company''s clench in pharmaceutical and nutraceutical
 markets of the CIS.
 
 Aurobindo Pharma emerged as the highest bidder to acquire Natrol Inc.
 USA, subsidiary company of Plethico US Holdings KFT, UAE (PUSH) and
 Plethico Global Holdings BV, Netherlands (PGH) at USD 132.50mn under
 
 a process approved by the US Court for the district of Delaware.  The
 tax-efficient structure of subsidiaries, step-down subsidiaries and
 business alliances created by the company worldwide has given a strong
 foothold to the company across the globe.
 
 Consolidated Financial Statements
 
 As stipulated in the listing agreement with the stock exchanges, the
 consolidated financial statements have been prepared by the company in
 connection with its subsidiaries in accordance with the relevant
 accounting standards issued by the Institute of Chartered Accountants
 of India. The audited consolidated financial statements together with
 auditor''s report thereon form part of annual report. Company''s all the
 subsidiary companies are non-material, non-listed Indian companies as
 defined under clause 49 of the Listing Agreement with the Stock
 Exchanges.
 
 A statement pursuant to Section 212 of the Companies Act, 1956,
 relating to subsidiary companies is attached to the accounts. In terms
 of the general exemption granted by the Ministry of Corporate Affairs
 vide its circular no. 02/2011 dated 8th February, 2011, the audited
 accounts and Reports of Board of Directors and Auditors of the
 Company''s subsidiaries have not been annexed to this Annual Report. The
 Company has complied with the requirements as prescribed under the said
 circular.
 
 Employee Particulars
 
 None of the employees of the Company was in receipt of remuneration in
 excess of the limits prescribed under Section 217(2A) of the Companies
 Act, 1956, read with Companies (Particulars of Employees) Rules, 1975,
 as amended.
 
 Directors
 
 Mr.  Shashikant Patel, Executive Director of the Company retire by
 rotation at the ensuing Annual General Meeting and being eligible offer
 themselves for re-appointment.  The Board recommends his re-
 appointment.  In accordance with the provisions of Section 149 of the
 Companies Act,
 
 2013, Dr.G.N Qazi and CA Pramod Shrivastava, independent directors, are
 proposed to be appointed/reappointed at the ensuing AGM for a term of
 five years.
 
 Mrs. Gauravi Parikh, Executive Director and Mr. Hitesh Thakar,
 Independent Director of the Company has resigned from the directorship
 of the Company w.e.f 1st January, 2014 and 16th January,
 
 2014, respectively.
 
 The Board of Directors of the Company has appointed Mr. Pranav Koshal
 as an Additional Director (Independent Director) of the Company w.e.f
 24th January, 2014, who has also resigned from the directorship of the
 Company w.e.f 13th August, 2014.
 
 The Board expresses its appreciation for the valuable services rendered
 and matured advice provided by Mrs. Gauravi Parikh, Mr. Hitesh Thakar
 and Mr. Pranav Khoshal.
 
 Directors'' Responsibility Statement
 
 In terms of provisions of Section 217(2AA) of the Companies Act, 1956
 
 (the Act), your Directors confirm that:
 
 i) In the preparation of annual accounts, the applicable accounting
 
 standards had been followed, along with proper explanation relating to
 material departures, wherever applicable.
 
 ii) The directors have 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 the end of the accounting year and of the losses
 of the Company for the period.
 
 iii) That the directors had taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of this Act for safeguarding the assets of the Company and
 for preventing and detecting fraud and other irregularities;
 
 iv) That the directors have prepared the financial statement and annual
 accounts on a going concern basis.
 
 Fixed Deposits
 
 The Company has accepted deposits u/s 58A and 58AA of the Companies
 Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975
 as amended. The Company has overdue deposits outstanding other than
 those unclaimed deposits of -120.56 Mn as on 31st March, 2014. The
 total balance of Deposits as on 31st March, 2014 stood at 1357.04 Mn.
 In context to the Fixed Deposits, the Company has been consistent in
 its timely repayments of Fixed Deposits. Howeve, owing to the difficult
 global scenario, currency fluctuations leading to the strong cash flow
 mismatch coupled with the company being referred to the CDR, there have
 been delays in the repayments to the fixed deposit holders over the
 last few months. The Company is well aware and acknowledges the anxiety
 of the investors and is taking all measures towards rationalizing this
 situation. With regards to the same, the Company had also sent across
 communications to all the FD holders indicating the current but
 temporary situation that the Company is facing. Furthermore, the
 Company has approached diff erent regulatory authorities to seek
 relaxation/extension in repayment of Fixed Deposits to enable the
 Company to work out an acceptable repayment proposal for
 comprehensively addressing the Fixed Deposits issue.
 
 Corporate Governance Report, Management Discussion & Analysis Report
 As per clause 49 of the Listing Agreements entered into with the Stock
 Exchanges, Corporate Governance Report with auditors'' certificate
 thereon and Management Discussion and Analysis are attached and form
 part of this report.
 
 Auditors
 
 M/s. N. P. Gandhi & Co., Chartered Accountants, Mumbai (F.R.No.
 116574W), who are the Statutory Auditor of the Company, holds office
 till the conclusion of the forthcoming AGM and are eligible for re-
 appointment. Pursuant to the provisions of Section 139 of the Companies
 Act, 2013 and the Rules framed thereunder, it is proposed to appoint
 M/s. N. P. Gandhi & Co., Chartered Accountants, Mumbai (F.R.No.
 116574W) as Statutory Auditors of the Company from the conclusion of
 the forthcoming AGM till the conclusion of the twenty- fourth AGM to be
 held in the year 2017, subject to ratification of their appointment at
 every AGM.
 
 Auditors'' Report
 
 With regard to the comments contained in the Auditors'' Report,
 explanations are given below:-
 
 (i) The Company has accepted deposits from public amounting to
 
 - 86.83 Mllion during the period under review, the Directive issued by
 Reserve Bank of India and the provisions of Section 58A & Section 58AA
 or any other relevant provisions of the Act and the rules framed there
 under are not complied with.
 
 The Company has defaulted in respect of repayment of the said deposits
 from public. The amount of default with respect to princpal amount is ~
 120.56 Mllion and with respect to interest amount is 13.67 Mllion as on
 31st March 2014. (Cause vi of the Annexure to the Auditors'' Report)
 
 (ii) (a) According to the records of the Company and the information
 and explanations provided to us the Company is generally regular in
 depositing undisputed statutory dues including Provident Fund, Investor
 Education and Protection Fund, Employees'' State Insurance, Sales Tax,
 Wealth Tax, Service Tax, Customs Duty, Excise Duty, Professional Tax,
 Cess and other material statutory dues with the appropriate authorities
 except for Income Tax. According to the information and explanation
 given to us, the undisputed amount of Rs. 235.89 Million is outstanding
 as at 31stMarch, 2014 for a period of more than six months from the
 date of becoming payable.  (b) Details of dues of Income Tax which has
 not been deposited on 31st March, 2014 on account of disputes are given
 below:- (Clause ix (a) & (b) of the Annexure to the Auditors'' Report)
 
                                                             Forum where 
 Names of      Nature of    Amount         Period to which   dispute is 
 the Statute   the Dues   (Rs.in Millions)   amount relates    pending
 
                            140.53        A.Y 2005-06
 
                            107.17        A.Y 2006-07
 
                            860.95        A.Y 2007-08       Commissioner
 
 Income Tax   Income Tax    245.14        A.Y 2008-09       of Income
 Act, 1961                                                  Tax (Appeals) 
                            230.23        A.Y 2009-10
 
                            216.19        A.Y 2010-11
 
                            346.65        A.Y 2011-12
 
 (iii) According to the information and explanation provided to us, we
 have been intimated that the company has defaulted in repayment of dues
 to financial institutions or banks. The default pertains to Interest
 amounting to Rs. 35.52 Million and principal amounting to Rs.576.30
 Million. However the Lead Bank has proposed admission of the Company to
 Corporate Debt Restructuring (CDR) forum on March 29, 2014 for
 providing debt restructuring scheme. The proposed debt restructuring
 scheme is pending approval of CDR Empowered Group for admission to the
 CDR forum. (Clause xi of the Annexure to the Auditors'' Report)
 
 The ongoing difficult global scenario has negatively impacted the
 demand for the wellness products that are manufactured and marketed by
 the company. Furthermore the currency fluctuations and depreciation of
 emerging market currencies across the globe vis-a-vis the dollar are
 the other factors that have collectively led to liquidity issues for
 the company. In context to the FDs, the company has maintained a track
 record of timely repayments of FD''s, however in the past couple of
 months there have been delays in the repayments to the fixed deposit
 holders owing to the strong cash flow mismatch largely due to the
 reasons chalked above. The company has approached regulatory
 authorities to seek relaxation in repayment of FD''s to enable the
 Company to work out an acceptable repayment proposal for
 comprehensively addressing the FD''s issue. Also the admission into the
 CDR, a step to the path of financial restructuring, further withheld
 the operations of the company, leading to an overall delay in the
 payments of dues to the banks as well as other statutory dues
 pertaining to income tax. These qualifications indicated are majorly
 due to the cash flow mismatch, which has been identified by the company
 and adequate steps are being taken to rectify the same and get back to
 normal operations towards growth and success.
 
 Cost Auditors
 
 M/s. Rajesh Runwal & Associates, Cost Accountants, were appointed as
 the Cost Auditor of the Company and their Audit report on the Cost
 Accounts of the Company for the 15 months period ended 31st March,
 2014, will be submitted to the Central Government in due course.
 
 Safety, Health and Environment (SHE) and Energy Conservation
 
 Safety, Health and Environment (SHE) management is a non-negotiable
 priority at Plethico. Safety and Health of our people is of paramount
 concern and so is minimization of environmental impact of our industry.
 Our vision is to be a zero-injury organization. Effective
 implementation of the safety and environmental standards is supported
 by your company''s occupational safety program based on the behavioral
 safety management techniques. The company continued to focus on
 behavioral safety aspects of employees and visitors along with
 continual improvements in engineering controls and safety management
 systems.  Your company has been focusing on improving environmental
 performance and has drawn up an ambitious plan to reduce the
 environmental aspects of operations including reduction in the energy
 costs.  nformation on conservation of energy, technology absorption,
 foreign exchange earnings and outgo as required to be given pursuant to
 Section 217(1)(e) of the Companies Act, 1956 read with Companies
 (Disclosure of Particulars in the Report of Board of Directors) Rules,
 1988 is annexed hereto in Annexure and forms part of this report.
 
 Research & Development and Technology
 
 Your Company has a long-standing culture and history of delivering high
 consumer business value through creative ideas and superior technology
 for its brands. Research and Development (R&D) has always been
 considered crucial for the continuous up-gradation & sustained growth
 of the Company. This sustained high performance has helped in building
 a strong foundation for our business and also differentiated our brands
 strongly. The technology drive in your company is a journey that began
 with the great vision of Late Shri Bhaskar Patel (known as Babuji with
 great affection), the former founder, Chairman and Managing Director of
 the Company. The strong research foundation laid by him and its
 expansion over the years have enabled to produce a steadily
 accelerating stream of high-value deliveries to the domestic & global
 customer.  The global challenges faced by the Indian Pharmaceutical
 industry at large have increased several folds in the face of the
 transition from process to product patent regime in India from 2005.
 Your Company has stepped-up investments in R&D to keep pace with the
 changing domestic and global scenario. High quality R&D has been
 pursued to innovate in the area of herbals and nutraceuticals. After
 exploring our country''s vast traditional knowledge base & the latest
 nutraceuticals active elements, the best sustainable offerings are
 identified and refined to provide specific performance benefit to
 consumers in the area of personal healthcare. We firmly believe in the
 philosophy of PREVENTION IS BETTER THAN CURE. By and large the
 society is accepting these thoughts and moving towards better health.
 Our R&D team is thriving to develop products in food and dietary
 supplements. It continues to be focused on providing dietary options
 with the combination of superior aroma and tests with specific
 enhancement in health and nutritional benefits to the consumers at
 large.
 
 Human Resources
 
 Your company believes that today a major HR challenge for any
 organization is capability building aligned to business strategy
 meeting the challenges posed by the changing business scenario. The
 company continued to enhance capability by realigning leadership
 competency frameworks to new business realities and the company''s
 future roadmap.
 
 The company implemented various measures to build a strong, adaptive
 and matured corporate structure, which is flexible, responsive and
 cohesive. Development workshops were organized to improve the overall
 competency level of employees with an objective to improve the
 operational performance of individuals keeping in view stringent
 quality norms of different regulatory authorities. The employee
 training and development function was aligned to add greater thrust on
 building required competencies for meeting the new emerging business
 challenges.  Based on feedback from employees, key initiatives like
 benchmarking and revising of performance management system, reward and
 recognition process and measurement of training effectiveness were
 undertaken.
 
 The involvement of employees at all levels has been achieved through
 continued promotion of TQM activities across the organization with the
 involvement of top management team.
 
 The overall employee relationship and working environment was healthy,
 cordial and harmonious across various locations.
 
 Corporate Social Responsibilities (CSR)
 
 The company continued to involve itself in social welfare activities,
 both through charity and social investment issues like education,
 health, nutrition and over the years serious efforts have been directed
 towards making a meaningful contribution to uplift and transform the
 lives of the underprivileged. The Company is contributing to
 sustainable development by its economic activities combined with the
 fulfillment of its social responsibilities relating to the health,
 safety and environment aspects. The Company took a conscious decision
 to contribute towards its belief that If you educate a boy, you are
 educating a person and If you are educating a girl, you are educating a
 family… Towards this end, the Shri Hari Charitable Trust was setup
 to serve society at large by providing totally free education to the
 poor and needy girls of the rural areas.  Your company is alive to the
 challenges and remains firm in its believe that it is possible to ''do
 good while doing well'' and that running a successful business and
 creating positive social impact as not separate objectives.
 
 Listing of Shares
 
 The Equity Shares of the Company continue to be listed on BSE Ltd. and
 The National Stock Exchange of India Limited. The annual listing fees
 for the year 2013-2014 have been paid to these Exchanges.
 
 Website
 
 The Company has a well designated and updated website www.plethico.com
 containing information about the Company''s products, manufacturing
 facilities, area of specialization, performance overview etc. The
 details with respect to new product developed, new market explored,
 company''s upcoming plans etc. have also been put on the website. The
 parties associated with the organization are welcome to visit the
 website to keep them selves updated on the Company.
 
 Acknowledgement
 
 Your Directors place on record their sincere appreciation for
 significant contribution made by the employees through their
 dedication, hard work and commitment and the trust reposed on us by the
 medical fraternity and the patients.
 
 We also acknowledge the support and wise counsel extended to us by the
 analysts, bankers, government agencies, shareholders and investors at
 large. We look forward to have the same support in our endeavor to help
 people lead healthier lives.
 
                                   On behalf of the Board of Directors
 
                                    Shashikant Patel
                                    Chairman & Managing Director 
 Mumbai, 27th November, 2014
 
 
 
Source : Dion Global Solutions Limited
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