To the Shareholders
The Directors have pleasure in presenting the Seventeenth Annual Report
together with the Audited Accounts for the year ended 31st December
(Rs in Lakhs)
Net Sales, Services and other Income 33464.92 33975.13
Earnings before Tax 4382.12 3356.49
Tax 1335.00 885.00
Earnings after Tax 3047.12 2471.49
Proposed Dividend 1176.00 882.00
Income Tax on proposed dividend 265.78 105.84
Transfer to General Reserves 800.00 800.00
Balance carried forward 1488.99 683.65
As a result of government mandated price reductions and import tariff
imposition on Hepatitis - B vaccine, the Company has experienced for
the first time in its history a reduction in net sales and other income
albeit by a small margin during 2000. However, the management has taken
steps to ensure that profitability is maintained under the most
difficult circumstances. This is made possible by rigorous scrutiny of
the cost base and working capital management. The post tax profit of
your company has shown a healthy improvement of 23.3%.
The Company continued to lay emphasis on exports and this has resulted
in export earnings of Rs. 2552.07 Lakhs as compared to Rs. 2054.25 Lakhs
in the previous year.
During the last couple of years, the company has taken some major
initiatives to enhance the profitability through efficiency
improvements. This involves streamlining processes, right sizing cost
and managing the trading asset base. ERP systems have been implemented
and were audited for compliance during the year. The Company was
declared the first compliant company in SB International. The company
rolled out a Zero Based Budgeting System (ZBB) to redefine cost basis
in all areas of operations. Steps have been taken to introduce on-line
bidding in the area of procurement and results have been encouraging.
For the year under review, the Directors are pleased to recommend a
dividend of Rs. 4.00 per equity share (40%) amounting to Rs. 1176 Lakhs
on the paid up share capital.
Research & Development
The Company while engaged in in-house Research and Development
activities, plays an active role in helping the SB Group by doing a
part of R&D work in the areas of tropical medicines and clinical data
management in India. It continues to have the benefit of the parent
company's global Research & Development activities.
The Board was reconstituted during the year under review :
Mr. P. C. Roache resigned as the Chairman with effect from 27th April
2000 after the last Annual General Meeting. Mr. John Squires resigned
as the Managing Director of the Company with effect from 22nd January
2001 due to his being relocated to another GlaxoSmithKline group
entity. Mr. Ramon Jacobs and Mr. M. P. Cybulski have also vacated the
offices of Director with effect from 9th February 2001. Mr. N.
Ahmedali, Wholetime Director resigned with effect from the same date.
The Directors place on record their deep appreciation for the yeomen
services rendered by the outgoing Directors towards the growth of the
Mr. P. Murari and Mr. T. R. Satish Chandran were appointed as
Additional Directors during the year under review. Mr. V. Thyagarajan
Managing Director of Glaxo India Ltd. assumed the office of Managing
Director of your Company with effect from 22nd Jan 2001.
Dr. Shailesh Ayyangar was inducted into the Board as Additional
Director and also as Wholetime Director with effect from Feb 9th 2001.
In the casual vacancies caused by the resignations of Mr. Ramon Jacobs,
Mr. M. P. Cybulski and Mr. N. Ahmedali, the Board appointed Mr. S.
Kalyanasundaram, Mr. Simon Scarffand Mr. P.V. Nayak respectively as
Directors with effect from February 9th 2001. The Board further
appointed Mr. N. Ranthi Dev as Additional Director on the same date.
Dr. K. S. Krishnaswamy retires by rotation and is eligible for
reappointment. Approval of the members is sought for the reappointments
/ appointments of Directors as enumerated in the notice convening the
Seventeenth Annual General Meeting.
Notices have been received from members pursuant to section 257 of the
Companies Act, 1956 together with the requisite fee proposing the
candidatures of the Directors whose appointments will be placed before
you at the meeting.
Merger with Glaxo India Ltd.
Glaxo Wellcome plc and SmithKline Beecham pie have merged under an
arrangement, which became effective on 27th December 2000 to form a new
Company called Glaxo SmithKline plc. The new Company is well placed to
respond to the healthcare challenges of twenty-first century with
market leadership in major therapeutic categories. In India, the
Company and Glaxo India Ltd. are now affiliates of Glaxo SmithKline
The process of merging the two Indian Companies has commenced. Based on
the proposal as approved by your Board and Board of Directors ofGlaxo
India Ltd., Glaxo shall issue and allot at par, to the shareholders of
the company, one (1) Equity Share of Rs. 10/- each credited as fully
paid in their capital for every two (2) Equity Shares of Rs. 10/- each
held by the shareholders of SmithKline Beecham Pharmaceuticals (India)
Limited. The Company is proceeding with the procedural requirements
seeking the approval and of the Hon'ble High Court at Bangalore.
Industrial relations in the Company were cordial throughout the year
The company recognises the importance of the quality of its employees
and continues to invest significantly in the personal and professional
development of its staff.
The Board of Directors wishes to place on record its sincere
appreciation for the continued support and good work of all the
Information required to be furnished under Section 217(2A) of the
Companies Act, 1956, read with the Companies (Particulars of Employees)
Rules, 1975, as amended, is annexed to the Report.
Although the guidelines prescribed by SEBI on Corporate Governance are
not applicable to the Company for the year under report, effective
steps have been initiated to comply with the guidelines. A report on
this is annexed herewith.
The Auditors Messers. Price Waterhouse retire at the forthcoming Annual
General Meeting and are eligible for appointment.
In respect of para No. 2.2 of the Auditor's Report, attention of the
members is drawn to Note No. 17 in the Notes on Accounts which is self
Conservation of Energy, Technology Absorption and Foreign Exchange
In pursuance of the provisions of Section 217(1)(e) of the Companies
Act, 1956, read with Rule 2 of the Companies (Disclosure of Particulars
in the Report of Board of Directors) Rules, 1988, the particulars
relating to conservation of energy, technology absorption and foreign
exchange earnings and outgo are annexed to the Report.
The Directors wish to place on record their thanks for the continued
support of the Medical Profession, Stockists, Drug Control Authorities,
Government Agencies, Business Associates, our Bankers, Collaborators
For and on behalf of the
Board of Directors
Date : 23rd February 2001 V. Thyagarajan B.S. Shantharaju
Place : Bangalore Managing Director Director-Finance
Annexure to the Directors' Report
Information under Section 217(1)(e) of the Companies Act, 1956 read
with the Companies (Disclosure of Particulars in the Report of the
Board of Directors) Rules, 1988 and forming part of the Directors'
Report for the year ended December 31, 2000.
I. CONSERVATION OF ENERGY
The Company continues to explore measures which will help in
conservation and saving of energy.
II. RESEARCH AND DEVELOPMENT AND TECHNOLOGYABSORPTION
A. Research and Development
1. Besides developing several formulations for the Healthcare Solutions
Africa (HSA) and the Export market, OXIBENDAZOLE (Human Grade)
Suspension has been exclusively developed for SB Tropicals, U.K. This
product is ready for launch and the technology will be transferred to
one of the identified sites in Europe.
2. Benefits derived: Development and subsequent introduction of FEFOL-Z
Capsules with Carbonyl Iron in the form of pellets as a source of
elemental iron is a pioneering contribution to the hematinic product
category in the country. The product has earned a warm welcome from the
prescribing community. In addition, the company has been adequately
poised to comply with all the regulatory amendments (DPCO & NPPA) that
came into force in the later half of the year 2000.
3. Future plan of action: As the business complexity of the
Organisation increased with the advent of new product launches and the
widening of market base - particularly Exports, Product Development
Department has been transformed into a substantially self-reliant unit
in the Technical Operations Division. The department now has a
state-of-the-art infrastructure to handle pilot-scale batches of most
of the oral and topical dosage forms.
Brisk developmental activity was taken up on the new oral anti-diabetic
agent, AVANDIA (Rosiglitazone) - a product of strategic importance
globally. This product has been developed in 3 strengths with
satisfactory results of the stability studies that are in progress.
Another major new product in developmental stage is HIDRASEC a proven
choice-drug for treatment of acute diarrhoea. Capsules for adults and
Flavoured Granules for Paediatric use have been developed and are
undergoing the mandatory accelerated stability studies.
Line-extension products for popular brands such as Crocin and Zevit
have been developed and are in the pipeline for launch during 2001.
Indigenous manufacturers / vendors are being developed and evaluated as
an alternative source for few of the imported raw materials to minimise
the cost of goods supplied. Several projects are underway to implement
environment—friendly manufacturing practices, which is one of the
prominent societal commitments of the Organisation.
4. Expenditure on Research & Development
Rs. in Lakhs
a) Capital 84.38
b) Recurring 223.91
c) Total 308.29
d) Total R & D expenditure as percentage
of total turnover 0.97%
B. Technology absorption, adaptation and innovation
The R&D team is now strengthened and is actively involved in projects
of focussed strategic significance. Several projects have been
undertaken for reductions in cycle time, waste elimination, process
development and validation. These projects will compliment the benefits
to the company to develop and manufacture new bulk drugs and
formulations for domestic and export markets.
III. FOREIGN EXCHANGE EARNINGS AND OUTGO
During the year foreign exchange outgo was Rs. 4273.23 Lacs. The
foreign exchange earned during the year was Rs. 2161.62 Lacs.