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Indoco Remedies Directors Report, Indoco Remedies Reports by Directors
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Indoco Remedies

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Directors Report Year End : Mar '18    Mar 17

Dear Members,

The Directors are pleased to present the Seventy First Annual Report on the business operations together with the Audited Financial Statements for the Financial Year ended March 31, 2018 and on the state of affairs of the Company

Financial Performance:

The highlights of the performance of the Company for the year ended March 31, 2018 are summarized below:

(Rs. crores)

Particulars

Financial Year ended March 31, 2018

Financial Year ended March 31, 2017

Revenue from Operations (Gross)

1,041.58

1,094.06

Add: Other Income

4.79

4.13

Total Income

1,046.37

1,098.19

Profit Before Interest, Depreciation & Tax

139.65

160.76

Less: Finance Cost

23.51

6.16

Less: Depreciation & Amortisation

67.71

63.27

Profit Before Tax

48.43

91.33

Less: Provision for Taxation - Current

11.07

19.62

- Deferred

(10.06)

8.35

- Mat Credit Adjustments

6.22

(14.09)

Net Profit After Tax

41.20

77.45

Other Comprehensive Income

0.23

0.13

Total Comprehensive Income

41.43

77.58

Balance brought forward

309.95

249.59

Amount available for appropriation

351.38

327.1 7

Appropriation:

- Final Dividend Paid

14.74

1.84

- Dividend Tax

3.00

0.38

- Transfer to General Reserve

-

15.00

- Balance carried forward

333.64

309.95

351.38

327.1 7

Results from Operations:

The total revenues for the year stands at Rs.1,046.37 crore as compared to Rs.1,098.20 crores in the previous year. The Profit Before Tax (PBT) was Rs.48.43 crores as compared to Rs.91.33 crores in the previous year. After providing for Tax, the Profit After Tax (PAT) is Rs.41.20 crores as against Rs.77.45 crores in the previous year.

Implementation of the GST during the first quarter of the Financial Year affected the Domestic business of the Company, resulting in lower PBT and PAT. The profit margins were further affected due to increase in input and other costs.

The Company sees a lot of potential in its International Business. Keeping this in mind the Company undertook capacity expansion at its Sterile Formulation Plant in Goa and its API unit at Patalganga. The increased capacity will also greatly help in meeting the demands of the Domestic business.

During the year, the company received the European GMP certification from the Regulatory Authority of Hungary for its manufacturing facility for non - sterile products (Goa - Plant III), located at L-32,33,34, Verna Industrial Estate, Goa.

The Company’s API plant at Patalganga received accreditation renewal from the Japanese Regulatory Authorities. The Accreditation is valid until May 21, 2023.

The Company’s API manufacturing facility at Patalganga and Kilo Lab facility at Rabale successfully completed USFDA inspection.

The Medicines and Healthcare Products Regulatory Agency (UK-MHRA) inspected the Company’s manufacturing facility (Plant I at L -14, Verna Industrial Estate, Verna, Goa) from March 14, 2018 to March 16, 2018. Goa Plant I manufactures Solid Dosages, Liquid Orals and External Preparations. Subsequent to the inspection, the UK-MHRA issued observations, which include 3 critical and 4 major and issued a restricted GMP certificate permitting continued manufacture and testing of products considered to be medically critical or to ensure continuity of supply, as determined by the competent authority. The Company is fully committed in resolving the issue and is addressing the matter on top priority.

A detailed discussion on the business performance and future outlook is included in the Management Discussion & Analysis, which forms part of the Directors’ Report.

Dividend & Reserves:

The Board has recommended a Final Dividend of 50% (Rs.1/- per share) i.e. Rs.9.21 crores for the year 2017-2018. Dividend for the FY 2016 - 2017 was 80% (Rs.1.60 per share) i.e. Rs.14.74 crores.

Energy Conservation/Technology Absorption and Foreign Exchange Earnings and Outgo:

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed herewith as “Annexure A”.

Share Capital:

The paid up Equity Share Capital as on March 31, 2018 is Rs.18.43 crore. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity.

As on March 31, 2018 none of the Directors of the Company held shares of the Company except:

Mr. Suresh G Kare - Chairman

Ms. Aditi Panandikar - Managing Director

Mr. Sundeep V Bambolkar - Jt. Managing Director

Finance:

Cash and cash equivalent as on March 31, 2018 was Rs.7.96 crore. The Company continues to focus on judicious management of its Working Capital. Receivables, Inventories and other working capital parameters were kept under strict check through continuous monitoring.

Deposits:

The Company has not accepted any Deposit covered under Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposit) Rules, 2014.

Particulars of Loans, Guarantees and Investments:

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

Credit Rating:

ICRA has revised the Company’s long term borrowings rating to A (Stable) and reaffirmed the short term borrowing rating as A1 .

These ratings are considered to have high degree of safety regarding timely servicing of financial obligations and carry very low credit risk.

Corporate Social Responsibility (CSR):

As required under Section 135 of the Companies Act, 2013, the Company undertook CSR initiatives, which is mainly focused on promoting education, health and public hygiene. The Company spent an amount of Rs.0.24 crores during the year for CSR as against an amount of Rs.2.31 crores (including an amount Rs.0.31 crores b/f from the previous year). A detailed list of the CSR expenditure is annexed herewith as “Annexure B”. The shortfall is mainly due to the fact that some of the projects sanctioned are taking time for completion and hence entire amount on those Projects has not been spent.

In addition to fulfilling its CSR obligations, the Company during the year made substantial donations of free medicines to charitable institutions for distribution among the needy.

Internal Control Systems and their Adequacy:

The Company has an Internal Control System, commensurate with the size of its operations. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the report, significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

The Company’s Internal Auditor also monitors and evaluates the internal control system and submits Quarterly Reports which are placed before the Audit Committee of the Board.

The Risk Management Policy of the Company is available on the Company Website at: http://www.indoco.com/policies/the_risk_management_policy.pdf

Vigil Mechanism / Whistle Blower Policy:

The Company has a Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The details of the Policy is explained in the Corporate Governance Report and also posted on the website of the Company: http://www.indoco.com/policies/whistle_blowers_policy.pdf

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013.

Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

The following is a summary of sexual harassment complaints received and disposed off during the year 2017-18:

- No. of complaints received: Nil

- No. of complaints disposed off: Nil

Subsidiaries:

The Company has two subsidiaries. A statement containing salient features of the financial statements of subsidiaries in prescribed Form AOC-1 as required under Section 129(3) of the Companies Act, 2013 (“Act”), is furnished in “Annexure C” to this report.

Further, pursuant to Section 136 of the Act, the financial statements of the Company consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries are available on the website of the Company - www.indoco.com. There have been no material changes in the nature of the business of the subsidiaries during the financial year 2017-2018.

As there was no business activity, the Company during the year has applied to the Registrar of Companies for striking off the names of following Companies

- Indoco Pharmchem Limited - 100% subsidiary

- Indoco Analytical Solutions LLP - Associate LLP

Consolidated Financial Statements:

The Consolidated Financial Statements of the Company prepared in accordance with Indian AS notified under Section 133 of the Companies Act, 201 read with Companies (Indian Accounting Standards) Rules, 2015 forms part of this Annual Report.

Directors:

Mr. Suresh G Kare was re-appointed as Chairman of the Company for a period of 5 years from July 1, 2013 to June 30, 2018. The Board is of the view that on account of Mr. Suresh G Kare’s vast experience and knowledge of the Pharmaceutical Industry and his commitment towards business, his re-appointment will immensely benefit the Company. Hence, it is proposed to re-appoint him as the Wholetime Director of the Company, designated as Chairman on fresh terms & conditions, including remuneration. The Board of Directors on the recommendation of the Nomination and Remuneration Committee at its meeting held on May 30, 2018 and subject to the approval of the shareholders at the AGM, approved the re-appointment of Mr. Suresh G Kare for a tenure of 5 years with effect from July 1, 2018 on revised terms and conditions as stated in the explanatory statement annexed to Notice to Annual General Meeting. The members are requested to approve the resolution No.4 in the Notice.

In terms of provisions of the Section 152(6) of the Companies Act, 2013, Mr. Sundeep V Bambolkar, retires by rotation at the forthcoming Annual General Meeting, and being eligible offers himself for re-appointment. The profile of Director seeking reappointment pursuant to Regulation 36 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is included in the Annual Report.

No Director was appointed or has resigned during the year under consideration.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

During the year 6 (Six) Board Meetings were held and the gap between two Board Meetings did not exceed 120 days. Details of the Board Meeting are given in the Report on Corporate Governance.

Board Evaluation:

Pursuant to the provisions of the Companies Act, 2013 and Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Board has carried out an annual performance evaluation of its own performance, the directors individually, as well as the evaluation of the working of its Audit Committee, CSR Committee, Nomination & Remuneration Committee and Stakeholder Relationship Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Remuneration Policy:

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, KMP and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

Information Pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rule 2014.

1. The Board Affirms that the remuneration paid is as per the Remuneration Policy of the Company.

2. The percentage increase in the remuneration of Company Secretary in the financial year was 4.8%.

3. The percentage increase in the median remuneration of employees in the financial year: 9.7%.

4. Average percentage increase in salaries of non-managerial employees was 5.6% as compared to average percentage increase in managerial remuneration which was 9.4%.

5. Number of Permanent employees on the rolls of the company as on March 31, 2018: 5455 Nos.

6. The Ratio of the remuneration paid to each Director to the median remuneration of the employees of the Company during the year under consideration:

Name of Director

Remuneration Paid (Rs.)

Median Remuneration (Rs.)

Ratio

Mr. Suresh G Kare (Executive Chairman)

24000000

229956

1:104

Ms. Aditi Panandikar (Managing Director)

17677940

229956

1:77

Mr. Sundeep V Bambolkar (Jt. Managing Director)

162 57500

229956

1:71

Mr. Sharad P Upasani (Independent Director)

430000

229956

1:1.87

Mr. D M Gavaskar (Independent Director)

410000

229956

1:1.78

Mr. Rajiv P Kakodkar (Independent Director)

395000

229956

1:1.72

Dr. Anil M Naik (Independent Director)

355000

229956

1:1.54

Dr. Anand M Nadkarni (Non Executive Director)

240000

229956

1:1.04

Directors’ Responsibility Statement:

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134(3)(c) of the Companies Act, 2013:

i. that in the preparation of annual accounts, the applicable accounting standards have been followed and no material departures have been made from the same;

ii. that they 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 at the end of the financial year and of the profits of the Company for that year;

iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. that the annual accounts have been prepared on a ‘going concern’ basis;

v. that the company has laid down internal financial controls and such internal financial controls are adequate and operating effectively;

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

Related Party Transactions:

All related party transactions that were entered into during the financial year were on an arm’s length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel, which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior approval of the Audit Committee is obtained on a yearly basis specifying the upper ceiling as to amount of the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the prior approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis.

The particulars as required under the Companies Act, 2013 is furnished in “Annexure D” to this report. Significant and Material Orders passed by the Regulators or Courts:

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

Statutory Auditors:

In terms of provisions of Section 139(1) of the Companies Act, 2013, M/s. Gokhale & Sathe, a firm of Chartered Accountants, bearing Firm Registration No. 103264W have been appointed as the Statutory Auditors of the Company for a period of 5 years at the 70th Annual General Meeting of the members of the company held on 09.08.2017 to hold office till the conclusion of the 75th AGM of the Company.

In terms of the Companies (Amendment) Act, 2017 and vide notification no S.O. 1833(E) dt. 7.5.2018, the Ministry of Corporate Affairs have done away with the requirement of ratification of the appointment of auditors, at each subsequent Annual General Meeting, by deleting the 1st Proviso to the sub-section (1) of Section 139 of the Companies act, 2013. Accordingly, the same is now onwards not required to be put up to the members for ratification.

M/s Gokhale & Sathe have confirmed that they continue to be eligible under Section 141 of the Companies Act, 2013 and the Rules framed thereunder for continuing as Auditors of the Company.

Cost Auditors:

In terms of the order issued by the Central Government under Section 148 of the Companies Act, 2013 the Company was required to appoint cost auditors to get the audit of the cost records of the Company done by a member of the Institute of Cost Accountants of India (ICAI).

For FY 2017-2018, the Company had appointed M/s Sevekari Khare & Associates (Firm Registration No. 000084) to get the audit of the cost records done. They would be required to submit the reports by September 29, 2018.

As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in a General Meeting for their ratification. Accordingly, a Resolution seeking Member’s ratification for the remuneration payable to M/s Sevekari Khare & Associates, Cost Auditors for FY 2018-2019 is included at Item No. 6 of the Notice convening the Annual General Meeting.

Secretarial Audit:

The Secretarial Audit was carried out by M/s A Y Sathe & Co., Company Secretaries in Practice (Registration No.: FCS 2899/COP 738) for the financial year 2017-2018. The Report given by the Secretarial Auditors is annexed as “Annexure E” and forms integral part of this Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report. During the year under review, the Secretarial Auditors had not reported any matter under Section 143 (12) of the Act, therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Act.

In terms of Section 204 of the Companies Act, 2013, on the recommendation of the Audit Committee, the Board of Directors has appointed CS Ajit Sathe- Proprietor of M/s A Y Sathe & Co. Company Secretaries in Practice (Registration No.: FCS 2899/COP 738) to undertake the Secretarial Audit of the Company.

Corporate Governance:

The Company complies with the Securities and Exchange Board of India (SEBI) guidelines on Corporate Governance. The Company has documented the internal policies on Corporate Governance. Several aspects of the Act, such as the Whistleblower Policy and Code of Conduct and Business Ethics, have been incorporated into our policies. Our Corporate Governance report for 2017-2018 forms part of this Annual Report. The Report is duly certified by the Statutory Auditors of the Company whose certificate is also annexed.

Extract of the Annual Return:

The details forming part of the extract of the Annual Return in form MGT-9, as required under Section 92 of the Companies Act, 2013, is annexed as Annexure-F and forms an integral part of this Report.

Particulars of Employees:

The information required pursuant to Section 197 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, is provided in the Corporate Governance Report.

Employee Relations:

The employee relations at all levels and at all units continued to be cordial during the year.

Business Responsibility Report:

As mandated by the Securities and Exchange Board of India (SEBI), the Business Responsibility Report of the Company for the year ended March 31, 2018 is annexed as “Annexure G” and forms integral part of this Report.

Acknowledgement:

The Company has been able to operate efficiently through continuous improvement in all functions and areas by efficiently utilizing its resources. The Directors hereby wish to place on record their appreciation of the services rendered by each and every employee, without whose whole-hearted efforts, the overall satisfactory performance would not have been possible. The Directors also wish to place on record their word of sincere appreciation to the bankers & financial institutions, investors, vendors, customers, the medical profession and all other business associates for their continued support.

Cautionary Statement:

Statements in this Report, particularly those which relate to Management Discussion and Analysis, describing the Company’s objectives, projections, estimates and expectations may constitute ‘Forward Looking Statements’ within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied in the statement depending on the circumstances.

For and on behalf of the Board of Directors

SURESH G KARE

Place : Mumbai Chairman

Date : May 30, 2018 DIN:00179220

Source : Dion Global Solutions Limited
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