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Gujarat Themis Biosyn Ltd.

BSE: 506879 | NSE: GUJTHEMIS | Series: NA | ISIN: INE942C01029 | SECTOR: Pharmaceuticals

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Annual Report

For Year :
2018 2016 2015 2014 2013 2012 2011 2010 2009

Director’s Report

The Directors have pleasure in presenting herewith the 37th Annual Report together with the Audited Accounts of the Company for the Financial Year ended 31st March, 2018.

1. FINANCIAL STATEMENTS & RESULTS:

a. FINANCIAL RESULTS:

The Company''s performance during the year ended 31st March, 2018 as compared to the previous financial year, is summarized below:

(Rs. in Lakhs)

Particular

For the financial year ended 31st March, 2018

For the financial year ended 31st March, 2017

Income

3,896.50

3,605.63

Less: Expenses

3,412.68

3,117.14

Profit/ (Loss) before tax

483.82

488.49

Current Tax

102.99

45.44

Deferred tax

-5.89

5.30

Profit after Tax

386.72

437.75

b. OPERATIONS:

Your Company''s performance during the year in terms of Turnover was better than the previous year, as the Company is doing Job Work for other Pharma Company with fixed contracted price. However, the Net Profit after Tax reduced by 11.66% compared to previous year. The production capacity was utilized to the maximum level during both the years. Your Company has generated profit during the year under review as well as in the previous year.

Your Company''s major operations were from Job Work. During the period conversion charges recorded at Rs. 3680.85 Lacs (previous year Rs. 3442.3.9 Lacs). The operating Profit for the year is Rs. 623.93 Lacs as compared to operating Profit of Rs. 604.82 Lacs for the previous year. The Net Profit recorded by the Company for the year is Rs. 389.93 Lacs as compared to net profit of Rs. 437.24 Lacs in the previous year.

There are no material changes and commitments affecting the financial position of the Company between the end of the financial year and as on the date of the report which affect the Balance Sheet.

c. BIFR

In view of Company''s net worth turning positive during the financial year 2015-16, the Company had filed a miscellaneous application before the Honorable Board for Industrial and Financial Reconstruction (BIFR) on February 5, 2016 for deregistration of the Company from BIFR under Sick Industrial Companies Act, 1985 (SICA). The Company has been legally advised that the requirement of deregistration was under SICA and since SICA has been repealed, the application technically becomes infructuous and the very fact that Company''s net worth has become positive, no further action is required to be taken.

Your Company''s performance for the year was far exceeding the Scheme approved by the BIFR order dated 12th January, 2012.

d. SUBSIDIARIES

The Company does not have any subsidiary.

e. ASSOCIATES

The Company has no associate Company.

f. DIVIDEND:

With a view to conserve the resources, your Directors have not recommended any dividend for the financial year under consideration.

g. TRANSFER TO RESERVES:

Your Board has not recommended transfer of any amount of profit to reserves during the year under review.

h. REVISION OF FINANCIAL STATEMENT:

There was no revision of the financial statements for the year under review.

i. FIXED DEPOSITS:

Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 (the Act) and the Companies (Acceptance of Deposits) Rules, 2014.

2. DISCLOSURES UNDER SECTION 134(3)(l) OF THE COMPANIES ACT, 2013:

Except as disclosed elsewhere in this report, no material changes and commitments which could affect the Company''s financial position have occurred between the end of the financial year of the Company and date of this report.

3. STATEMENT ON DECLARATION UNDER SECTION 149(6) OF THE COMPANIES ACT, 2013:

The Board has received declaration from the Independent Directors under section 149(6) of the Companies Act, 2013 that they are not otherwise disqualified to be Independent Directors. The Board further States that all the Independent Directors are persons of integrity and possesses relevant expertise and experience to discharge their duties and roles as Independent Directors of the Company.

4. STATEMENT UNDER SECTION 178

Your Company has Constituted Nomination and Remuneration Committee as well as Stakeholders Relationship Committee as contemplated under section 178(1) of the Companies Act, 2013. The Nomination and Remuneration Committee consider that the Qualifications, Experience and positive attributes of the Directors on the Board of the Company are sufficient enough to discharge their duties as such.

During the financial year 2017-18, the Company has paid sitting fees only to the Independent Directors for attending Board and Audit Committee meetings.

Nomination and Remuneration Policy as formulated under Section 178(3) of the Companies Act, 2013 is annexed as Annexure I and forms part of this Report.

5. BOARD’S EXPLANATION ON AUDITORS’ REPORTS:

I. Explanation On Statutory Auditors’ Report

Observations of Statutory Auditors on Accounts for the year ended 31st March, 2018: There are following qualifications made by the Statutory Auditors in respect of financial statement as on and for the year ended 31st March, 2018.

Point No. 1: Regarding confirmation of balances

The Company does not foresee any major impact on the accounts of the Company due to non receipt of balance confirmation from the parties as stated in the auditor''s report

Point No. 2: Determination and identification of significant components of fixed assets

The Company is in the process of determining and identifying significant components of fixed assets as prescribed under the provisions of para 4(a) under the heading Notes after Part C in Schedule II of the Companies Act, 2013. The management expects that this would not have a material impact on depreciation for the quarter and year ended March 31, 2018.

II. Explanation On Secretarial Auditors’ Report

Provisions of Section 204 read with Section 134(3) of the Companies Act, 2013, mandates the Company to obtain Secretarial Audit Report from Practicing Company Secretary. M/s. KRS & Co., Practicing Company Secretaries were appointed to conduct Secretarial Audit and issue Report for the financial year 2017-18.

Secretarial Audit Report issued by M/s. KRS & Co., Practicing Company Secretaries in Form MR-3 for the financial year 2017-18 forms part of this report. The report of the secretarial Auditor is annexed to this report as Annexure II. The report does not contain any qualification.

6. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

The Company has not granted any loans or given guarantees covered under the provisions of section 186 of the Companies Act, 2013.

The details of the investments made by company are given in the notes to the financial statements.

7. PARTICULAR OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES

The Company in the ordinary course of its business, enters into transactions for purchase and sale of goods, materials & services, other obligations from ''Related Parties'' within the meaning of Section 2(76) of the Act and Regulation 23 of the SEBI (LODR), Regulations, 2015.

Contracts/arrangements/transactions entered by the Company during the financial year with related parties were on an arm''s length basis and in the ordinary course of business. All related party transactions were placed for the approval before the Audit Committee / Board / Shareholders wherever necessary in compliance with the provisions of the Act and Listing Regulations. The disclosure of particulars of contracts/arrangements entered into by the company with related parties for the financial year 2017-18 in Form No. AOC-2 is given as Annexure III.

The details of the transactions with related parties are also provided in the accompanying financial statements.

The Company has formulated a policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions.

The policy on materiality of related party transactions and dealing with related party transactions as approved by the Board has been adopted by the Company and uploaded on the Company''s website at the link: http://www.gtbl.in/wp-content/uploads/2015/08/Related-Party-Policy.pdf

8. DISCLOSURE OF INTERNAL FINANCIAL CONTROLS

The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. During the year under review, no material or serious observation has been received from the Internal Auditors of the Company for inefficiency or inadequacy of such controls.

9. DISCLOSURE OF ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL

During the financial year 2017-18 no orders have been passed by any Regulator or Court or Tribunal which can have impact on the going concern status and the Company''s operations in future.

10. DISCLOSURE UNDER SECTION 43(a)(ii) OF THE COMPANIES ACT, 2013:

The Company has not issued any shares with differential rights and hence no information is provided as per provisions of Section 43(a) (ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014.

11. DISCLOSURE UNDER SECTION 54(1)(d) OF THE COMPANIES ACT, 2013

The Company has not issued any sweat equity shares during the year under review and hence no information as per provisions of Section 54(1) (d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.

12. DISCLOSURE UNDER SECTION 62(1)(b) OF THE COMPANIES ACT, 2013:

The Company has not issued any equity shares under Employees Stock Option Scheme during the year under review and hence no information is provided as per provisions of Section 62(1 )(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture) Rules, 2014.

13. DISCLOSURE UNDER SECTION 67(3) OF THE COMPANIES ACT, 2013:

The provisions of Section 67(3) as well as discloser under Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014 are not applicable.

14. MATTERS RELATED TO DIRECTORS AND KEY MANAGERIAL PERSONNEL BOARD OF DIRECTORS

During the year under review, following changes took place in the Board Composition:

Mr. Vikas P. Tarekar, Company Secretary & Compliance Officer ceased to be associated with the Company on account of his resignation with effect from close of office hours on 12th June, 2017.

Mr. Abhishek D. Buddhadev was appointed as the Company Secretary & Compliance Officer of the Company w.e.f 8th August, 2017. Upon such appointment, Mr. Abhishek D. Buddhadev is the Key Managerial Personnel pursuant to the provisions of Section 203 of the Companies Act, 2013 and also the Compliance Officer of the Company under Regulation 6(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Mr. Abhishek D. Buddhadev, is Qualified Company Secretary with experience of 5 years in Company Secretarial functions.

Mr. Tapas B. Guhathakurata resigned as Chief Executive Officer (CEO) of the Company with effect from 12th December, 2017.

Mr. Jagdish G. Kaujalgi was appointed as Chief Executive Officer of the Company w.e.f 9th May, 2018. Upon such appointment, Mr. Jagdish G. Kaujalgi is the Key Managerial Personnel pursuant to the provisions of Section 203 of the Companies Act, 2013. Mr Jagadisn G. Kaujalgi is a Diploma Mechanical Engineer & having an experience of more than two and half decade in Equipment maintenance and Project in Chemical plant.

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. S S Lee, (DIN: 01933988), Director of the Company, retires by rotation at the ensuing Annual General Meeting (AGM) and being eligible offers himself for re-appointment. The Board recommends to the members the re-appointment of Mr. S S Lee, (DIN: 01933988) as Director in the ensuing Annual General Meeting of the Company.

Necessary resolution for the appointment/reappointment of the aforesaid Directors is included in the Notice convening the ensuing AGM.

BOARD MEETINGS:

The Board of Directors met Five (5) times during the financial year ended 31st March, 2018 in accordance with the provisions of the Companies Act, 2013 and rules made there under.

The Meetings of the Board of Directors are held at regular intervals of not more than four months in Mumbai or at other places in India as per the convenience of the Directors. These are generally scheduled well in advance. The Board meets at least once a Quarter to review the Performance and Financial Results of the Company. All the major decisions are taken at the Board meeting wherein directors are provided with all material information. The Senior Executives of the Company are invited to attend the Board meeting and provide clarifications as and when required.

DIRECTOR’S RESPONSIBILITY STATEMENT:

In terms of Section 134(5) of the Companies Act, 2013, in relation to the audited financial statements of the Company for the year ended 31st March, 2018, the Board of Directors hereby confirms that:

i) in the preparation of the annual accounts, the applicable accounting standards had been followed and there is no material departures according to the accounting standards;

ii) such accounting policies have been selected and applied consistently and the Directors 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 March, 2018 and of the profit of the Company for that year;

iii) proper and sufficient care was taken 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) the annual accounts of the Company have been prepared on a going concern basis;

v) internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

vi) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

COMMITTEES OF THE BOARD OF DIRECTORS

In compliance with the requirement of applicable laws and as part of best governance practices, the Company has following Committees of the Board as on 31st March, 2018:

i. Audit Committee

ii. Stakeholders Relationship Committee

iii. Nomination and Remuneration Committee

The details with respect to the aforesaid Committees forms part of the Corporate Governance Report.

VIGIL MECHANISM POLICY FOR THE DIRECTORS AND EMPLOYEES:

The Board of Directors of the Company has, pursuant to the provisions of Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, framed Vigil Mechanism Policy for Directors and employees of the Company to provide a mechanism which ensures adequate safeguards to employees and Directors from any victimization on raising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any, financial statements and reports, etc.

The employees of the Company have the right/option to report their concern/grievance to the Chairman of the Audit Committee.

The said Policy is available on the website of the Company at http://www.gtbl.in/wp-content/uploads/2015/08/Vigil-Mechanism.pdf

The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations.

RISK MANAGEMENT:

We have an integrated approach to managing risks inherent in various aspect of our business.

CORPORATE SOCIAL RESPONSIBILITY POLICY:

As per the provisions of Section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors has not constituted the Corporate Social Responsibility (CSR) Committee as the Company is not crossing thresh hold limit for CSR spending.

ANNUAL EVALUATION OF DIRECTORS, COMMITTEE AND BOARD:

Provision of the Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, mandates that the Board shall monitor and review the Board evaluation framework. The Schedule IV of the Companies Act, 2013 states that the performance evaluation of the Independent Directors shall be done by the entire Board of Directors, excluding the director being evaluated.

The Board at its meeting held on 5th February, 2018 has carried out an annual evaluation of its own performance, Committees and Individual Directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 (SEBI Listing Regulations).

The performance of the Board and Committees was evaluated by the Board with the help of inputs received from all the Directors and the Committee members on the basis of the criteria such as the Board composition and structure, effectiveness of Board processes, information and functioning, etc.

The Board and the Nomination and Remuneration Committee reviewed the performance of the Individual Directors on the basis of the criteria such as the contribution of the individual director to the Board and Committee meetings like ability to contribute and monitor our corporate governance practices, meaningful and constructive contribution in the issues discussed in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.

In a separate meeting of Independent Directors, performance of Non-Independent Directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views other Non-Executive Directors. The same was discussed in the Board meeting that followed the meeting of the Independent Directors, at which the performance of the Board, its committees and individual directors was also discussed. Performance evaluation of Independent Directors was done by the entire board, excluding the independent director being evaluated.

The Board was overall of the opinion that the Independent Directors have contributed through the process of Board and Committee meeting of which they are members in effective manner as per their expertise in their field and needs of the organization. The suggestions and contributions of the Independent Directors in the working of the Board/Committee were satisfactory and the value addition made by such Independent Directors individually and as a team is commendable.

DISCLOSURE UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 AND OTHER DISCLOSURES AS PER RULE 5 OF COMPANIES (APPOINTMENT & REMUNERATION) RULES, 2014:

The Company has not paid any remuneration to the Directors during the financial year 2017-18 and hence disclosure under this section is not applicable.

However, in respect of Key Managerial Personnel the disclosure is attached as Annexure IV.

15. APPOINTMENT OF AUDITORS:

STATUTORY AUDITORS

M/s. GMJ & Co., Chartered Accountants (Firm Registration No.103429W), the Statutory Auditors of the Company, were appointed by the members at the 36th Annual General Meeting (AGM) to hold such office till conclusion of the 41st AGM subject to ratification of their appointment by the members at every intervening AGM held after 36th AGM.

The Ministry of Corporate Affairs (MCA), vide its commencement Notification No. SO 1833(E) dated 7th May, 2018, has notified and amended the relevant provision of the Companies Act, 2013 relating the requirement of placing the matter relating to ratification of appointment of Statutory Auditors by members at every Annual General Meeting. The said amendment has done away with the requirement of ratification of appointment of the Statutory Auditors. Therefore, M/s. GMJ & Co., Chartered Accountants will continue to hold office till conclusion of the 41st AGM and their appointment will not be subject to ratification by the members at every intervening AGM held after 36th AGM.

COST AUDITORS

As the Company is carrying on Job Work activity, as per the opinion taken on the provisions of Section 148 of the Companies Act, 2013, Cost Audit does not apply to the Company.

16. OTHER DISCLOSURES:

Other disclosures as per provisions of Section 134 of the Act read with Companies (Accounts) Rules, 2014 are furnished as under:

a. EXTRACT OF ANNUAL RETURN:

Pursuant to the provisions of Section 134(3) (a) of the Companies Act, 2013, Extract of the Annual Return for the financial year ended 31st March 2018 made under the provisions of Section 92(3) of the Act is attached as Annexure V which forms part of this Report.

b. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The particulars as required under the provisions of Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo etc. are furnished in Annexure VI which forms part of this Report.

c. CORPORATE GOVERNANCE

Report on Corporate Governance and Certificate of Auditors of your Company regarding compliance of the Conditions of Corporate Governance as stipulated in regulation 17 to 27 and clauses (b) to (i) of sub-regulation (2) of regulation 46 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with the Stock Exchanges, are enclosed as a separate section and a part of this report in Annexure VII.

d. PREVENTION OF SEXUAL HARASSMENT:

During the financial year ended 31st March, 2018 your Company has not received any complaint related to sexual harassment.

17. MANAGEMENT DISCUSSION & ANALYSIS:

Operational Overview:

Your Company constantly reviews its product market portfolio with the view to sustain its growth. The Company has driven fiscal growth by focusing on the following areas.

(a) Industry structure and developments:

During the year under review, the pharmaceutical industry in India which was experiencing double digit growth was impacted to some extent due to demonetisation and implementation of Goods and Services (GST) Tax Act.

However, it is expected that the Industry will continue to grow going forward.

In line with the National Health Policy, the Government of India has issued a draft Pharmaceutical Policy and sought opinions from various stakeholders. The draft policy aims to streamline the systems of manufacturing and marketing of pharmaceuticals/medicines to achieve the primary goals of the Health Policy to provide affordable health care to all. The Industry continued to face challenges due to imposition of price controls and bringing many products under the ambit of National List of Essential Medicines.

The Industry consisting of Indian and foreign players is witnessing increased spends on R&D initiatives focusing on expanding traditional generic portfolios.

(b) Opportunities and Threats:

The pharma business related with basic human needs and introduction of innovative and cost effective medicines enjoys maximum opportunities in a densely populated country like India.

Availability of sub-standards and substitute products in the market, fierce competition are major threats to the business stability for a small size Company like ours. However, the management is taking all necessary steps and continuously adopting the strategy not only to stand in the market but to perform impressively under the current scenario.

Indian pharma companies will face competition from big pharma companies, backed by huge financial muscle. Generic drugs offer a cost effective alternative to drugs innovators and significant savings to customers.

(c) Segment-wise or product-wise performance:

The Company operate in single segment i.e. pharmaceuticals. The results of the Company under review depict business growth during the period.

(d) Outlook:

Your Company is fully aware of its capabilities and strengths and is going ahead with hand holding strategy with Pharmaceutical majors. This strategy has paid well in the recent past. The Company is also finding new avenues by expanding its existing production capacity.

(e) Risks and concerns:

The business of your Company is also exposed to few risks. Your Company is subject to various laws including drug pricing and other laws impacting the operations of the Company.

Risks, liabilities and losses are part and parcel of any industry and need to be tackled through well forecasted strategies and actions.

(f) Internal control systems and their adequacy:

The Company ensures the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013. The statutory auditors while conducting the statutory audit, review and evaluate the internal controls and their observations are discussed with the Audit committee of the Board. Other statutory requirements especially, in respect of pharmaceutical business are also vigorously followed in order to have better internal controls over the affairs of the Company.

(g) Discussion on financial performance with respect to operational performance:

Your Company''s performance during the year in terms of Turnover was better than the previous year. The Operating profit during the year was marginally better than previous year. However, Net Profit After Tax during the year under review was reduced by 11.66%. The financial performance is expected due to better margins, control over the cost.

(h) Material developments in Human Resources/Industrial Relations front, including number of people employed:

The core of the Human Resource philosophy at Gujarat Themis is empowering human resources towards achievement of company aspirations. Your Company has a diverse mix of youth and experience which nurtures the business. As on March 31, 2018 the total employee strength was 95.

18. ACKNOWLEDGMENT

Your Directors have pleasure to place on record their sincere appreciation for the continued co-operation and support extended to the Company by Union Bank of India, all the Employees, Yuhan Corporation, Indian promoters, Dept. of Chemical & Petrochemical and various other Government authorities.

For and on behalf of the Board of Directors

Sd/-

Place : Mumbai Dr. Dinesh S Patel

Date : 9th May, 2018 Chairman

DIN:00033273

Director’s Report