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Krebs Biochemicals & Industries Ltd.

BSE: 524518 | NSE: KREBSBIO |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE268B01013 | SECTOR: Pharmaceuticals

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Annual Report

For Year :
2018 2016 2015 2014 2012 2011 2010 2009 2008

Director’s Report

To,

The Members,

The directors submit annual report of Krebs Biochemicals & Industries Limited (the Company) along with the audited financial statements for the financial year ended 31st March 2018.

1. Financial Summary (Rs. in lakhs)

Particulars

2017-18

2016-17

Net Sales

2538.24

197.02

Other Income

860.28

163.52

Total Income

3398.52

360.54

Expenditure

4128.09

1153.02

P(L)BDIT

(729.57)

(792.48)

Loss on sale of Assets

Nil

Nil

PBDIT (After Extra Ordinary Items)

(729.57)

(792.47)

Finance Charges

516.52

348.85

Depreciation

414.97

423.37

Profit/(Loss) Before Tax

(1661.06)

(1564.70)

Exceptional Items

(121.43)

(40.24)

Deferred Tax Asset

Nil

Nil

Taxes of earlier years

Nil

Nil

Net profit/(Loss) after Tax

(1782.49)

(1604.94)

Other Comprehensive Income

(143.12)

451.26

Total comprehensive income for the period

(1925.61)

(1153.68)

(comprising Profit/(loss) and other comprehensive income for the year)

Add: balance brought Forward

(7127.49)

(5973.81)

Less: Depreciation

Nil

Nil

Add: Transferred from Profit & Loss Account

(1925.61)

(1153.68)

Balance Carried to Balance Sheet

(9053.10)

(7127.49)

2. Financial Performance

During the year under review, the Company has posted net sales of Rs. 2538.24 lakhs and Rs. 860.28 lakhs as other income. For the FY 2017-18 the company has incurred a loss of Rs. 1925.61 lakhs as against loss of Rs. 1153.68 lakhs of the previous year ended 31st March 2017.

3. Change in nature of business

During the year under review, there is no change in the nature of business of the company.

4. Dividend

On account of losses during the year, no dividend is proposed to be declared for the financial year 2017-18.

5. Operations

During the FY 2017-18, three products were commercialized and were released into the market. Some of the products are in development stage and will start commercial production within few months down the line.

Some modernization works were also undertaken to meet the latest pollution control norms and safety regulations. All relevant licenses were renewed. All the pending statutory requirements were addressed.

6. Material changes and commitments affecting the financial position of the company. During the year under review, there were no material changes occurred and commitments made, that affect the financial position of the company.

7. Rights Issue :

At the 145th Meeting held on 30th July 2018, the Board of Directors has approved the proposal of raising of funds by way of offer and issue of equity shares to the members of the Company on rights basis (Rights Issue) for an amount of upto Rs. 25 crores, subject to necessary approvals/consents under the provisions of SEBI (ICDR) Regulations, 2009, SEBI (LODR) Regulations, 2015 and the Companies Act, 2013.

8. Issue of Equity Shares

During the year under review, the company has not issued any shares.

9. Statutory Auditors

At the 21st Annual General Meeting held on 31st December 2014, the members of the Company approved the appointment of M/s Pavuluri & Co., Chartered Accountants (Firm Registration No. 012194S) Hyderabad as the Statutory Auditors of the Company to hold office till the conclusion of the 27th Annual General Meeting.

In terms of first proviso of Section 139 of the Companies Act, 2013, the appointment of the Auditors shall be placed for ratification at every Annual General Meeting. Since then, provision to sub-section (1) of Section 139 of the Companies Act, 2013, which provided for ratification every year has been deleted. However, since the resolution passed on 31st December 2014 contains such requirement, it has been decided, as a measure of abundant caution, to have ratification of appointment Statutory Auditors, done by the members for the entire unexpired period.

The Statutory Auditors have confirmed their compliance with the provisions of the Companies Act, 2013.

10. Internal Auditors:

The Board of Directors based on the recommendation of Audit Committee has re-appointed M/s Suryanarayana& Suresh, Chartered Accountants, Hyderabad, as Internal Auditors of the Company for the Financial Year 2018-19 at their meeting held on 30th July 2018. The internal auditors submit their reports at quarterly intervals to the Audit Committee and the Board.

11. Directors and Key Managerial Personnel

During the year there is no change in the Board of Directors of the company.

During the year, the non-executive directors of the company had no pecuniary relationship or transactions with the company, other than sitting fees and reimbursement of expenses incurred by them for the purpose of attending meetings of the Company.

During the year under review, Mr. Manish Jain has retired by rotation and being eligible for re-appointment, at the 25th Annual General Meeting held on 26th September 2017, he had been re-appointed as Director.

Mr. E J Babu retires by rotation as Director and he offers himself for re-appointment at the ensuing 26th Annual General Meeting to be held on 10th September 2018.

Pursuant to the provisions of Section 203 of the Companies Act, 2013, the Key Managerial

Personnel of the Company are-

Mr. Avinash Ravi, Managing Director,

*Mr. C V R S N Kumar - Chief Financial Officer and Ms. Haritha Varanasi - Company Secretary

*Mr. C V R S N Kumar has ceased as the CFO of the Company due to attaining of age of superannuation as per the company rules and the Board at their meeting held on 25th May 2018 has approved the same.

The Board is in the process of selecting a suitable person as CFO for the Company.

12. Declaration of Independence

The Company has received the declarations under Section 149 (6) of the Companies Act, 2013, from the independent directors that each of them meets the criteria of independence and there has been no change in the circumstances which may affect their status as independent directors during the year.

13. Board Meetings

During the financial year 2017-18, Four (4) meetings of the Board were held. Details of the meetings of the board are provided in the corporate governance report which forms part of this report.

14. Corporate Social Responsibility

The Company regards the wider community in which it operates to be an important stakeholder and actively contributes towards its welfare. According to the provisions of Section 135 of the Companies Act, 2013 the company doesn’t fall under the categories of the companies to which the Corporate Social Responsibility is applicable. However, the company feels that making a positive contribution to the local community is the right thing to do and to this end, during the year, has contributed towards welfare of the poor, old aged and differently abled persons.

15. Quality Initiatives

The Company is committed to meet the highest levels of quality to meet the customer satisfaction and robust practices are being implemented and continuous training is being provided to all the employees to achieve the targets set by the company.

The Company is committed to meet the standards set by USFDA, WHO-GMP & EDQM. Our Unit-II site was approved by EDQM in May 2017. Also several customer audits were completed and were approved at Unit-I, Nellore and at Unit-II, Vizag..

The Company is totally focused on improving and implementing best-in class methodologies to meet the customer satisfaction levels with zero complaints.

16. Policy on directors’ appointment and remuneration and other details

The Company’s policy on directors’ appointment and remuneration and other matters provided in Section 178(3) has been disclosed in the Corporate Governance Report, which forms part of this report.

17. Board Evaluation

The Nomination and Remuneration Committee lays down the criteria for performance evaluation of independent directors, Board of Directors and Committees of the Board. The criteria for performance evaluation is based on the parameters like attendance and participation at the meetings of the Board and Committees thereof, contribution to strategic decision making, review of financial statements, business performance.

The evaluation of Board of Directors is performed by the Board after seeking all the inputs from the Directors and the Board Committees by seeking inputs from the Committee members.

The performance evaluation of the individual directors is done by the Nomination and Remuneration Committee.

The performance evaluation of non-independent directors, the Board as a whole and the Chairman is done by a separate meeting of Independent directors after taking inputs from the Executive directors.

18. Familiarisation program for independent Directors

The Company has conducted familiarisation programs for the independent directors as required under the provisions of Companies Act, 2013.

19. Internal Financial Control Systems and their adequacy

The details in respect of internal financial controls and their adequacy are included in the Management Discussion and Analysis Report which forms part of this report.

20. Secretarial Standards

The company is in due compliance with the applicable secretarial standards.

21. Audit Committee

The Company has a duly constituted Audit Committee and the Board has accepted all the recommendations of Audit Committee during the year under review. The members of the Audit Committee are:

a) Mr. G V L Prasad - Chairman

b) Mr. Satish Khivsara - Member

c) Dr. Malati Tangirala - Member

The details pertaining to meeting, role and responsibilities of Audit Committee are provided in the Corporate Governance Report, which forms part of this report.

22. Nomination and Remuneration Committee

The Company has in place a duly constituted Nomination and Remuneration Committee which has

a) Mr. Satish Khivsara as Chairman

b) Mr. G V L Prasad

c) Dr. Malati Tangirala

d) Dr R T Ravi as Members

Details pertaining to meetings, role and responsibilities of Nomination and Remuneration Committee are provided in the corporate Governance Report which forms part of this report.

23. Stakeholders Relationship Committee

The Company has constituted a Stakeholders Relationship Committee as required under the provisions of SEBI Listing Regulations and the Companies Act, 2013. Members of the committee are

a) Mr. G V L Prasad - Chairman

b) Mr. Satish Khivsara - Member

c) Mr. Avinash Ravi - Member

d) Dr R T Ravi - Member

Details pertaining to meetings, role and responsibilities of Stakeholders Relationship Committee are provided in the corporate Governance Report which forms part of this report.

24. Loans and Investments

During the year under review, the company has not given any loans and not made any investments under the provisions of Section 186 of the Companies Act, 2013.

25. Particulars of Employees.

Pursuant to the provisions of Section 197 of the Companies Act 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, no employee of the Company is drawing salary of more than Rs. 1.04 crores (Rupees One Crore Four Lakhs) per financial year or Rs. 8.5 lakhs (Eight Lakh Fifty Thousand) per month, as the case may be for the year ended 31st March 2018.

Details of the remuneration drawn by the Key Managerial Personnel is provided in Annexure I to the Board’s Report.

26. Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s DSMR and Associates, Practicing Company Secretaries, as Secretarial Auditors to undertake the secretarial audit of the Company . The Secretarial Audit Report is annexed herewith as Annexure- II to the Board’s Report.

Qualifications in Secretarial Audit Report:

27. Transactions with related parties

None of the transactions with related parties are material in nature as per the Related Party Transactions policy adopted by the Company. Information on transactions with related parties are given in Annexure-III in Form AOC-2 and the same forms the part of this report.

28. Fixed Deposits

The Company has not accepted any fixed deposits and as such no principal or interest was outstanding as on the date of the Balance Sheet.

29. Extract of Annual Return:

As provided under Section 92(3) of the Act, the extract of annual return is given in Annexure - IV in the prescribed Form MGT-9 which forms part of the report.

30. Directors’ Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:

i) In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

ii) 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 fair and true view of the state of affairs of the Company at the end of the financial year;

iii) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) They have prepared the annual accounts on a going concern basis.

v) They have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively.

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

31. Disclosure Requirements

As per SEBI Listing Regulations, Corporate Governance Report with Auditors’ Certificate thereon and Management Discussion and Analysis are attached, which form part of this report.

32. Prevention of Insider Trading

The Company has also adopted a code of conduct for prevention of insider trading. All directors, senior management employees and other employees who have access to the unpublished price sensitive information of the company are governed by the Code. During the year under report, there has been due compliance with the code of conduct for prevention of insider trading.

The said code is available in the company’s website www.krebsbiochem.com.

33. Vigil Mechanism/Whistle Blower Policy

The Company has in place, whistle blower policy and no personnel have been denied access to the Chairman of the Audit Committee. The policy also provides for the safeguarding of whistle blowers. The whistle blower policy is available on website of the company www.krebsbiochem.com.

34. Energy conservation, technology absorption and foreign exchange earnings outgo.

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as 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-V” to this report.

35. Safety, Environment and Health

The Company considers safety, environment and health as the management responsibility. The employees are provided training programs at regular intervals on manufacturing facilities on safety and environment.

36. Significant or material orders passed against the company.

Several creditors have filed winding up petitions with the High Court of Andhra Pradesh and Telangana. However, they don’t have a significant impact on the on-going activities and operations of the company.

During the year under review, there were no significant or material orders passed against the company by regulators/ Courts/Tribunals impacting the going concern status and operations of the company in future.

37. Acknowledgments

Your Directors take this opportunity to express their sincere appreciation to the shareholders, customers, bankers, employees, suppliers and other business associates for the excellent support and co-operation extended by them.

Your Directors gratefully acknowledge the on-going co-operation and support provided by the Central and State Governments, Stock Exchanges and SEBI and other Regulatory Bodies.

For and on behalf of the Board of

Krebs Biochemicals& Industries Limited

Sd/- Sd/-

Avinash Ravi Dr. R T Ravi

Managing Director Chairman & Director

(DIN-01616152) (DIN- 00272977)

Place: Hyderabad

Date: 30.07.2018

Director’s Report