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Ind-Swift Laboratories

BSE: 532305|NSE: INDSWFTLAB|ISIN: INE915B01019|SECTOR: Pharmaceuticals
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Directors Report Year End : Mar '18    Mar 16

Dear Shareowners,

The Directors have great pleasure in presenting the 23rd Annual Report together with audited statement of accounts for the year ended 31st March, 2018.

FINANCIAL RESULTS

Summary of your Company’s financial performance, both standalone and consolidated, for the year ended March 31, 2018 is tabulated below:

(Rs. in mn)

PARTICULARS

Year Ending 31st March 2018

Year Ending 31st March 2017

Sales (net of excise) and other income

7496.72

7144.26

Less Expenses

Cost of Materials Consumed

3520.13

3592.81

Purchase of Stock in Trade

3.43

30.56

Change in Inventories of FG/WIP/Stock in trade

227.05

334.73

Employee Benefit Expense

893.05

716.12

Other Expenses

1398.57

1212.54

Total Expenses

6042.23

5823.76

Profit before Interest, Depreciation, Tax & Amortisation

1454.49

1257.12

Less: - Interest

283.14

883.44

- Depreciation

866.16

882.56

- Extra Ordinary Item

10.36

53.39

Profit / Loss before Tax

285.83

(561.19)

Less: - Provision for Deferred Tax

(109.57)

164.64

Profit / Loss after Tax (A)

176.26

(397.25)

Amount B/F from Previous year (B)

(1015.14)

(617.89)

Profit / Loss after Tax available for Appropriations (A B)

(838.88)

(1015.14)

Balance carried forward to Balance sheet

(838.88)

(1015.14)

OPERATIONS AND BUSINESS PERFORMANCE

During the financial year 2017-18, the Company has achieved a turnover of Rs.7312.97 Millions against the turnover of Rs. 6937.10 millions during financial year 2016-17. The Company has achieved Net profit of Rs.163.61 millions in 2017-18 against loss of Rs. 397.51 millions in 2016-17. The Company’s export has increased to Rs. 5025.28 Millions during 2017-18 as compared to 4509.30 Millions in 2016-17. There has been no change in the nature of business of the company during the year under review. Kindly refer to Management Discussion & Analysis & Corporate Governance Report which forms part of this report.

CONSOLIDATED FINANCIAL PERFORMANCE

Your company recorded a consolidated turnover of Rs.7654.83 Millions during 2017-18 against the turnover of Rs.7162.25 Millions during 2016-17. In consolidated terms, the Company earned a Net Profit of Rs. 206.57 Millions during 2017-18, against loss of Rs.391.61 Millions in 2016-17. The Consolidated financial figures include the respective financial figures of the company’s three subsidiaries and one associate company. As required under the provisions of the Companies Act 2013 and SEBI (LODR) Regulations, 2015, Audited Consolidated Financial Statements form part of the Annual Report and the same are annexed to this Report.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY .

The material changes and commitments affecting the financial position of the company that occurred between the end of the financial year of the company i.e March 31,2018 and the date of the Directors Report i.e 14th August, 2018 are as under:

i) Company raised a sum of Rs.424.50 crores from the private placement of the 4245, 10% Secured, Listed, Rated, Non-Convertible Debentures of Rs.10,00,000/- each through the Electronic Book Building mechanism of the Bombay Stock Exchange. These NCDs are listed at Bombay Stock Exchange.

ii) Company also raised a sum of Rs.75.44 crores through the allotment of 10% Optionally convertible Debentures ( OCDs) to the Private investors.

iii) The Proceeds from the issue of the NCDs and OCDs were utilized mainly for the settlement of the outstanding debt of the Company.

iv) Company also allotted 1771949 equity shares at PAR to various Trusts managed by Edelweiss Assets Reconstruction Company limited ( EARCL ) towards the conversion of the existing Debt to the tune of Rs.11.60 crores and the restructuring of the balance debt.

DIRECTORS

During the year the Company lost Sh. K.M.S. Nambiar, an Independent Director who had been associated with the Company since 2001. He was also the Chairman of the Audit Committee of the Company. The Board will miss his presence as the key contributor to the activities of the Audit Committee and the Board.

Ms. Poonam Maini was appointed as an Independent Women Director on 11.05.2018 in place of Ms. Preetika Chaubey who resigned on 13th February, 2018. Sh. J.S.Ahluwalia was appointed as the independent Director w.e.f. 08.06.2018. The Board has proposed appointment of Ms. Poonam Maini and Sh. J.S. Ahluwalia for approval of shareholders in the ensuing AGM.

The Company has received necessary declaration from all the Independent Directors under Section 149(7) of the Companies Act, 2013 confirming that they meet the criteria of independence as laid down in Section 149(6) of the Companies Act, 2013 and the Listing Regulations.

Pursuant to Section 149, 152 and other applicable provisions of the Companies Act, 2013, one-third of such of the Directors as are liable to retire by rotation, shall retire every year and, if eligible, offer themselves for re-appointment at every AGM. Consequently, Sh. S.R.Mehta (DIN 00005668) and Sh. Rishav Mehta (DIN: 03028663), Directors will retire by rotation at the ensuing AGM and being eligible, offer themselves for re-appointment in accordance with provisions of the Companies Act, 2013.

A brief resume of the Directors proposed to be reappointed, the nature of their expertise in specific functional areas, names of companies in which they have held Directorships, committee memberships/ chairmanships, their shareholding etc., are furnished in the explanatory statement to the notice of the ensuing AGM. The Directors recommend their reappointment at the ensuing AGM.

NUMBER OF MEETINGS OF THE BOARD

During the year, Seven Board meetings were held on 23.05.2017, 21.08.2017, 14.09.2017, 14.12.2017, 13.02.2018, 21.02.2018 & 06.03.2018 . The details regarding the meetings are given in the Corporate Governance Report.

CORPORATE GOVERNANCE

A Report on Corporate Governance forms part of this Annual Report. The Auditors’ certificate certifying compliance with the conditions of Corporate Governance under Regulation 34(3) read with Schedule V of the SEBI (LODR) Regulations, 2015 is annexed as Annexure 1 to this Report.

DIVIDEND

In view of inadequacy of profits, the Board does not recommend any Dividend for the Financial Year 201718.

KEY MANAGERIAL PERSONNEL

Mr. N.R.Munjal, Vice Chairman cum Managing Director, Sh. Himanshu Jain, Jt. Managing Director, Sh. Rishav Mehta, Executive Director and Sh. Pardeep Verma, AVP-Corporate Affairs & Company Secretary are the Key Managerial Personnel of the Company. Mr. N.K. Bansal, CFO ceased to be Key Managerial Personnel w.e.f. 31.03.2018 due to superannuation. The Company is looking for the right replacement for the key post

INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the applicable provisions of the Companies Act, 2013, read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (‘The Rules’), all unpaid or unclaimed dividends are transferred to Investor Education and Protection Fund (IEPF) established by the Central Government, after the completion of seven years. Further, according to the rules, the shares in respect of which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account created by the IEPF Authority. Accordingly, the Company has transferred the unclaimed and unpaid Dividends for the financial year 2009-10 to IEPF. Further, the corresponding shares has also been transferred to IEPF account as per the requirements of IEPF rules, details of which are provided on the Company website www.indswiftlabs. com.

The dividends for following years, which remain unclaimed for seven years from the date it is lying in the unpaid dividend account, will be transferred to IEPF in accordance with the schedule given below. Shareholders who have not encashed their dividend warrants relating to the dividends specified below are requested to immediately send their request for issue of duplicate warrants. The details of unclaimed dividends up to the financial year ended 31.03.2011 are also available on the website of the Company www.indswiftlabs.com. Once unclaimed dividend is transferred to IEPF, no claim shall lie in respect thereof with the Company.

Finan

Type of

Divi

Date of

Due date

cial Year

Divi

dend

declaration

for transfer

dend

Rate %

to IEPF

2010-11

Final

10

26/09/2011

02/12/2018

EMPLOYEE STOCK OPTION SCHEME

During the year, 5,37,631 options were exercised by the employees after vesting. Accordingly, the Company has made the allotment of 5,37,631 equity shares on 21st August, 2017 against the options exercised by the employees.

During the financial year 2017-18, there has been no change in the Employees Stock Option Plan (Employee Incentive Scheme, 2014) of the Company. Further, it is confirmed that the ESOP Scheme of the Company is in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014.

The applicable disclosures as stipulated under Regulation 14 of SEBI (Share Based Employee Benefits) Regulations, 2014 with regard to Employees Stock Option Plan of the Company are available on the website of the Company at www.indswiftlabs.com and weblink for the same is: http://www.indswiftlabs. com/pages/Disclosure_regarding_Employee_Stock_ Options.pdf.

CHANGE IN CAPITAL STRUCTURE AND LISTING OF SHARES

The paid up Equity Share Capital as on March 31 ,2018 was Rs. 4522.72 Lacs . During the year under review the Company has not issued any shares with differential voting rights or sweat Equity . The Company however allotted 537631 equity shares upon the conversion of the ESOPs to the eligible employees .

The Company’s shares are listed on the National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE) and are actively traded.

SUBSIDIARY COMPANIES

As on 31.03.2018, your Company had 3 Subsidiaries. The US subsidiary of the Company viz. Ind-Swift Laboratories Inc. achieved net sales of USD 10595896 and recorded a net Profit of USD 659766. The Singapore Subsidiary Viz Meteoric Life Sciences PTE Ltd. has no sales and recorded a net loss of USD 1613. There is no significant transaction in the Company’s Dubai Subsidiary viz. Ind-Swift Middle East FZE during the period under review.

Pursuant to the first proviso to Section 129(3) of the Companies Act, 2013 and Rules 5 and 8(1) of the Companies (Accounts) Rules, 2014, the salient features of the financial statements, performance and financial position of each subsidiary and a joint venture is given in Form AOC - 1 as Annexure 2 to this report. The Company has framed a policy for determining material subsidiaries, which has been uploaded on the Company’s website.

STATUTORY AUDITORS

Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the rules framed thereunder,the Company in its Annual General Meeting held on 26th day of September,2017 has appointed M/s Avishkar Singhal & Associates, Chartered Accountants (Firm Reg. No. 017362N) as the Statutory Auditors of the Company for a period of Five Consecutive years from the conclusion of the 22nd Annual general Meeting, till the conclusion of the 27th Annual General Meeting of the Company to be held in the year 2022. The Companies Amendment Act ,2017 has dispensed the ratification of auditors appointment at every Annual General Meeting . Accordingly the Ordinary Business Agenda item relating to the ratification of the Statutory Auditors appointment is not placed in the AGM notice.

AUDIT REPORT

The Auditor’s Report for the Financial Year 2017-18 does not contain any qualification, reservation or adverse remark. With regard to emphasis of matter contained in the Auditors’ Report, the Board is of the view that the same are self explanatory.

INTERNAL AUDITORS

M/s. Jain and Associates were appointed as Internal Auditors of the Company upto 31st March, 2018. The Board has however approved the re-appointment of M/s. Jain & Associates, Chartered Accountants as Internal Auditors of the Company for the FY 201819 also. They will conduct the Internal Audit of the Company as required under Section 138 of the Companies Act and their reports are reviewed by the Audit committee and the Board from time to time.

COST-AUDITORS AND THEIR REPORT

M/s. V. Kumar & Associates, Cost Accountants have been duly appointed as Cost Auditors of the Company for audit of cost accounting records which are covered under the Cost Audit Rules for financial year ending March 31, 2019.

As required by Section 148 of the Companies Act, 2013, necessary resolution has been included in the Notice convening the Annual General Meeting, seeking ratification by the Members to the remuneration proposed to be paid to the Cost Auditors for the financial year ending March 31, 2019.

The Cost Audit Reports are required to be filed within 180 days from the end of the financial year. The Cost Audit Reports for the financial year 2016-17 issued by M/s V. Kumar and Associates, Cost Auditors, was filed with Ministry of Corporate Affairs within the stipulated time. The Cost Audit Reports for the financial year ended March 31, 2018 will be filed within the prescribed period.

Further in compliance to the Companies (Accounts) Amendment Rules, 2018 dated 31st July,2018 this is to confirm that maintenance of cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013, is required by the Company and accordingly such accounts and records are made and maintained by the Company.

SECRETARIAL AUDITORS AND THEIR REPORT

Mr.Vishal Arora, Practising Company Secretary, was appointed as Secretarial Auditors of the Company for the financial year 2017-18 pursuant to Section 204 of the Companies Act, 2013. The Secretarial Audit Report submitted by them in the prescribed form MR-3 is attached as Annexure 3 and forms part of this report. There are no qualifications or observations or other remarks of the Secretarial Auditors in the Report issued by them for the financial year 2017-18 which call for any explanation from the Board of Directors.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT

The Statutory Auditors, Cost Auditors or Secretarial Auditors of the Company have not reported any frauds to the Audit Committee or to the Board of Directors under Section 143(12) of the Companies Act, 2013, including rules made there under.

DEPOSITS

The aggregate amount of fixed deposit outstanding as on 31st March 2018 was Rs.31.84 crores approx. (previous year Rs. 49.25 crores).

The Hon’ble Company Law Board vide its order No.CP27/01/2013 dated 30th September, 2013 has granted extension of time in repayment of deposits. Now, the Company is making repayment to the fixed deposit holders in terms of the aforesaid order of Hon’ble CLB.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management’s Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 (2) (e) of the SEBI (LODR) Regulations, 2015, is presented in a separate section forming part of the Annual Report

LISTING FEES

The Annual Listing fee for the year under review has been paid to The BSE Limited and The National Stock Exchange of India Ltd.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO

The particulars as prescribed under 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014 relating to conservation of energy, technology absorption and foreign exchange earnings and outgo are given in Annexure 4.

NOMINATION AND REMUNERATION POLICY

The Company has a Nomination and Remuneration Policy. In compliance with the provisions of Sections 134(3)(e) and 178 of the Companies Act, 2013 and Regulation 19 read with Part D of Schedule II of the SEBI (LODR) Regulations, 2015, the Nomination & Remuneration Committee:

i) has formulated criteria for determining qualifications, positive attributes and independence of a director and recommends to the Board, Policy relating to remuneration for directors, KMP and other employees;

ii) has formulated the evaluation criteria for performance evaluation of independent directors and the Board;

iii) has devised a policy on Board diversity.

iv) identifies persons who are qualified to become directors or may be appointed in Senior Management in accordance with criteria laid down and recommend to the Board their appointment and removal;

v) recommends to the Board whether to extend or continue the term of appointment of the independent director, on the basis of the report of performance evaluation of independent directors.

PARTICULARS OF EMPLOYEES

Particulars of remuneration of employees required to be furnished pursuant to the provisions of Section 197 (12) of the Companies Act, 2013 (Act), read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given as Annexure 5 to this Report. Particulars of remuneration of employees required to be furnished in terms of Rules 5(2) and 5(3) of the said Rules, forms part of this Report, which shall be provided to Members upon written request pursuant to the second proviso of Rule 5. Particulars of remuneration of employees are available for inspection by Members at the Registered office of the Company during business hours on all working days up to the date of the forthcoming AGM.

EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of Section 92 (3) of the Companies Act, 2013, extract of the Annual Return in Form MGT-9 is given in ‘Annexure 6’ to this Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013

Pursuant to the provisions of Section 134(3)(g) of the Companies Act, 2013 (Act), particulars of loans/ guarantees/ investments/securities given under Section 186 of the Act are given in the related notes to the Financial Statements forming part of the Annual Report.

RELATED PARTY TRANSACTIONS:

All related party transactions entered into during the financial year were on an arm’s length basis and in the ordinary course of business. No related party transaction was in conflict with the interest of the Company. Material related party transactions were entered into by the Company only with its subsidiaries. No materially significant related party transaction was made by the Company with the Key Managerial Personnel. As prescribed by Section 134(3)(h) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014, particulars of related party transactions are given in Form AOC-2, as “Annexure 7” to this Report. The policy on Related Party Transactions as approved by the Board has been uploaded on the Company’s website www.indswiftlabs.com

RISK MANAGEMENT

Even though the provision of Regulation 21 of the SEBI (LODR) Regulations, 2015 regarding constitution of Risk Management Committee are not applicable on the Company, the Board has constituted a Risk Management Committee. The details of the Committee and its terms of reference are set out in the Corporate Governance Report.

CORPORATE SOCIAL RESPONSIBILITY

The provisions of the Companies Act, 2013, regarding the Corporate Social Responsibility are applicable on the Company from the current financial year. The Company is however pursuing, as part of its corporate philosophy, an unwritten CSR policy voluntarily which goes much beyond mere philanthropic gestures and integrates interest, welfare and aspirations of the community with those of the Company itself in an environment of partnership for inclusive development.

PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS

Pursuant to applicable provisions of the Companies Act, 2013 and SEBI (LODR) Regulations 2015, the Board, in consultation with its Nomination & Remuneration Committee, has formulated a framework containing, inter-alia, the criteria for performance evaluation of the entire Board of the Company, its Committees and Individual Directors, including Independent Directors.

The Independent Directors had met separately without the presence of Non-Independent Directors and the members of management and discussed, inter-alia, the performance of non- Independent Directors and Board as a whole and the performance of the Chairman of the Company after taking into consideration the views of executive and Non-Executive Directors.

The Nomination and Remuneration Committee has also carried out evaluation of every Director’s performance. The performance evaluation of all the Independent Directors have been done by the entire Board, excluding the Director being evaluated. On the basis of performance evaluation done by the Board, it shall be determined whether to extend or continue their term of appointment, whenever the respective term expires.

The Directors expressed their satisfaction with the evaluation process.

COMPOSITION OF AUDIT COMMITTEE

The Audit Committee comprises of Mr. Prabhat Khurana, Chairman, Dr. J.K. Kakkar, Sh. S.PSharma, Independent directors and Mr. S.V Singh, Nominee Director, Mr. N.R. Munjal, Vice Chairman cum Managing Director of the Company. Mr. K.M.S.Nambiar, Independent Director has ceased to be a member of the Committee due to Untimely Death w.e.f. 11th March, 2018. The functions performed by the Audit Committee and the particulars of meetings held and attendance thereat are given in the Corporate Governance Report.

VIGIL MECHANISM/WHISTLEBLOWER POLICY

In compliance with 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 and SEBI (LODR) Regulations, 2015, your Company has in place a ‘Whistleblower Policy,’ which provides an opportunity to the directors and employees to raise concerns about unethical and improper practices or any other wrongful conduct in or in relation to the Company. The details of the Whistleblower Policy are stated in the Corporate Governance Report and the said Policy has been uploaded on the Company’s website www.indswiftlabs.com.

HUMAN RESOURCE

Your Company is of the firm opinion that efficiency of its employees plays a key role in achieving set goals and building a competitive work environment. The Company regularly conducts various programs at different levels so as to ensure that a vibrant and motivated work-force leads to achievement of the defined goals. Employee relations continued to the harmonious and cordial at all levels and in all the units of the Company.

The Company is committed to provide a protective environment at workplace for all its women employees. To ensure that every woman employee is treated with dignity and respect and as mandated under “The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013” and in its full compliance, the Company has constituted “Internal Complaints Committee” for prevention of sexual harassment of its women employees. During the year, the Committee has not received any complaint related to Sexual harassment.

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 statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a) that in the preparation of the annual financial statements for the year ended March 31, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) that such accounting policies as mentioned in Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2018 and of the profit of the Company for the year ended on that date;

c) 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;

d) that the annual financial statements have been prepared on a going concern basis;

e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

ACKNOWLEDGEMENT

Your Directors thank all the employees for their sincere efforts, active involvement and devoted services rendered.

Your Directors thank the shareholders of the Company for the confidence reposed in the Management of the Company.

Your Directors place on record their gratitude to the Customers, Suppliers, company’s Bankers and Financial Institutions for their support and cooperation during the year under review.

On behalf of the Board of Directors

S.R. Mehta

Chairman

Place: Chandigarh,

Dated: 14th August, 2018

Source : Dion Global Solutions Limited
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