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Plethico Pharmaceuticals
BSE: 532739|NSE: PLETHICO|ISIN: INE491H01018|SECTOR: Pharmaceuticals
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Directors Report Year End : Dec '12    Dec 11
Dear Members
 
 The Directors are pleased to present this the 20th Annual Report of the
 Company together with the Audited Accounts for the year ended 31st
 December, 2012. The working results of the Company for the year ended
 31st December, 2012 vis-a-vis those of the previous year are summarized
 below:
 
                                                          Rs. in Million
 
 Particulars            Consolidated              Standalone
 
                      Current 
                      year ended   Previous 
                                   year ended   Current  
                                                year ended   Previous
                                                             year ended
                      31st 
                      December, 
                      2012         31st 
                                   December, 
                                   2011         31st 
                                                December, 
                                                2012         31st
                                                             December,
                                                             2011
 
 Sales                 16315.41     15570.41      4750.60       4120.09
 
 Other Income            365.29       843.39       357.59        812.70
 
 Sales and Other 
 Income                16680.70     16413.80      5108.19       4932.79
 
 Total Expenditure
 excluding Interest,
 depreciation, 
 amortization & tax    14735.71     13460.20      4829.64       3722.96
 
 Profit before 
 Interest, 
 Depreciation,
 Amortization & Tax     1944.99      2953.59       278.55       1209.83
 
 Interest (Net)          614.32       835.43       499.26        771.88
 
 Depreciation and 
 Amortization            177.29       176.27        83.01         82.38 
 
 Profit Before Tax, 
 Exceptional and
 Extraordinary Item     1153.38      1941.89      (303.72)       355.57
 
 Exceptional Item         81.15            -       374.95             -
 
 Extraordinary Item     (141.75)     (630.00)     (141.75)      (630.00)
 
 Provision for Taxation   77.90       282.78         8.40        101.95
 
 Profit After Tax       1014.88      1029.11       (78.92)      (376.38)
 
 Profit bought forward  7604.53      6575.40      2610.28       2986.67 
 
 Profit available
 and carried to
 General Reserves       8622.38      7604.53      2531.36       2610.28
 
 Overview
 
 The Global economy in 2012 improved slightly but was short of
 expectations. Several key countries'' economy experienced recession due
 to high unemployment, banking fragility, fiscal tightening and sluggish
 growth. The year 2012 proved to be challenging year amidst global
 economic uncertainties and disturbances in many parts of the world.
 Despite these constraints and challenging environment, the company
 performed reasonably well.
 
 During the year under review, the sales on consolidated basis has grown
 up slightly by 4.78% to Rs. 16315.41 mn. whilst Net profit has declined
 to Rs. 1153.38 mn. However, on standalone basis sales has grown up to
 Rs. 4750.60 Mn. against Rs. 4120.09 Mn. in the previous year
 registering a growth of 15.29% but there was dip in the profitability.
 This happened because of strategic shifting of business during the year
 to subsidiaries abroad reflecting growth in consolidated performance.
 
 The Global meltdown, turbulent economy, high foreign currency
 volatility, increasing debt cost are the major factors amidst others
 that severally affected Company''s overall performance during 2012.
 However, our aim through the year was to provide world-class healthcare
 services to all the customers throughout the world while increasing
 both our customer base and ability to provide blockbuster products at
 affordable prices to this growing customer base. Along the way, we
 received accolades for our work from within the country an
 internationally. We are proud to say that company''s Kandla SEZ Unit has
 been awarded highest export award consecutively for the fifth year.
 
 Today, company has transformed business globally to leverage Plethico''s
 financial and technical skills, open new vistas for the enterprise and
 the energetic talent and to create new values worldwide. And during
 this process, Plethico has nurtured relationship across the entire
 range of customers, business partners, techno- economic consultants,
 stakeholders, which helps the company to understand pertinent issues,
 develop business, enhance shareholders values and manage risks better.
 It is the relationship and trust that make the Plethico more robust,
 resilient and sustainable.
 
 Dividend
 
 In view of the loss in the standalone accounts, no dividend has been
 proposed for the year ended 31st December, 2012 (Previous Year Nil).
 
 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 recent 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.,
 Netherlands (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. PIL has setup an ultra
 modern medicated lozenges and solid doses formulation unit in UAE.
 
 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.
 
 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. Chirag Patel, the Directors of the Company retire by rotation at
 the ensuing Annual General Meeting and being eligible offers him selves
 for re-appointment. The Board recommends his re-appointment
 
 The Board has appointed CA. Hitesh Thakar as an Additional Director
 pursuant to Section 260 of the Companies Act, 1956 and Articles of
 Association of the Company effective 9th November, 2012 and holds
 office upto the date of this AGM. The Company has received Notice under
 Section 257 of the Companies Act, 1956 proposing the candidature of CA.
 Hitesh Thakar as a Director of the Company.
 
 Mr. Abhay Suhane, the Independent Director has resigned from the
 directorship of the Company with effect from 3rd October, 2012. The
 Board expresses its appreciation for the valuable services rendered and
 matured advice provided by Mr. Abhay Suhane.
 
 Directors'' Responsibility Statement
 
 Pursuant to the provisions of Section 217(2AA) of the Companies Act,
 1956, the Director''s responsibility statement in relation of the
 financial statement for the year ended on 31st December 2012 is
 furnished herein below and state and confirm:
 
 i) that in the preparation of annual accounts, the applicable
 accounting standards had been followed along with proper explanation
 relating to material departures;
 
 ii) 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 as at 31st December 2012 and of the loss of
 the company for the year ended on that date.
 
 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 had prepared the financial statement and annual
 accounts on a going concern basis.
 
 Fixed Deposits
 
 The Company is accepting deposits u/s 58A and 58AA of the Companies
 Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975
 as amended. The company is not having overdue deposits outstanding
 other than those unclaimed deposits of Rs. 4.216 Mn. as on 31st
 December, 2012. The total balance of Deposits as on 31st December, 2012
 stood at Rs. 1466.04 Mn. There is no default in repayment of deposits
 or interest thereon as at 31st December, 2012.
 
 Management Discussions and Analysis Report
 
 Management Discussion and Analysis Report for the year under review, as
 required under Clause 49 of the Listing Agreement with the Stock
 Exchanges in India, is annexed and forming part of this Report.
 
 Corporate Governance
 
 Your company has been practicing the principal of good corporate
 governance over the years and lays strong emphasis on transparency,
 accountability and integrity. Yours directors adhere to the stipulation
 set out in the listing agreement to the Stock Exchanges. As required by
 Clause 49VI of the Listing Agreement, a detailed report on the
 Corporate Governance forms part of this Report. The Auditors''
 Certificate on compliance with Corporate Governance requirements by the
 Company is attached to the Corporate Governance Report.
 
 In terms of sub clause V of Clause 49 of the listing agreement,
 certificate of the CEO and CFO inter alia confirming the correctness of
 the financial statements, adequacy of the internal control measures and
 reporting of matters to the audit committee in terms of the said
 clause, is also enclosed as a part of the report.
 
 Auditors
 
 M/s. N. P. Gandhi & Co., Chartered Accountants, Mumbai (F.R.No.
 116574W), the Statutory Auditors of the Company will retire at the
 ensuing Annual General Meeting and are eligible for re-appointment.
 The Auditor has confirmed that their re-appointment, if made shall be
 within the limits of Section 224 (1B) of the Companies Act, 1956. The
 Board recommends their re-appointment as Auditors and to fix their
 remuneration.
 
 Auditors'' Report
 
 The report of the auditors of the Company and notes to the accounts are
 self-explanatory and therefore do not call for any further comments and
 may be treated as adequate compliance of section 217(3) of the
 Companies Act, 1956.
 
 Cost Auditors
 
 The Board appointed M/s Rajesh Runwal & Associates, Cost Accountants,
 as the Cost Auditors of the Company for the year ended 31st December,
 2012. The Audit report of the Cost Accounts for the year ended 31st
 December, 2012, 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.
 
 Information 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
 customers.
 
 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 uplifting and transforming
 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 are not
 separate objectives.
 
 Listing of Shares
 
 The Equity Shares of the Company continue to be listed on Bombay Stock
 Exchange Limited and The National Stock Exchange of India Limited,
 Mumbai. The annual listing fees for the year 2012-2013 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 and Managing Director
 
 Indore, 1st March, 2013
Source : Dion Global Solutions Limited
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