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Vivimed Labs

BSE: 532660|NSE: VIVIMEDLAB|ISIN: INE526G01021|SECTOR: Pharmaceuticals
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Directors Report Year End : Mar '18    Mar 16

The Directors have pleasure in presenting the 30th Annual Report of your Company for the financial year ended 31 March 2018.

FINANCIAL RESULTS

The financial performance of your Company for the year ended 31 March 2018 is summarized below:

(Rs. in million)

Standalone

Consolidated

Year ended 31.03.2018

Year ended 31.03.2017

Year ended 31.03.2018

Year ended 31.03.2017

Gross Income

2,633.16

5,785.85

11,952.70

14,699.99

Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)

787.97

2,590.58

2,216.14

4,106.27

Finance Charges

518.02

588.39

794.83

658.71

Depreciation/Amortization

181.43

268.32

564.20

582.79

Net Profit Before Tax

88.52

1,733.87

857.11

2,864.77

Provision for Tax

(10.15)

470.43

96.21

725.02

Net Profit After Tax carried to

Balance Sheet

98.67

1,263.44

760.90

2,139.75

Proposed Dividend amount

33.01

32.79

-

-

Proposed Dividend Tax amount

6.79

6.68

-

-

OVERVIEW OF COMPANY''S FINANCIAL PERFOMANCE

On a consolidated basis, your Company reported total revenue of Rs.11,952.70 million as against Rs.14,699.99 million. EBITDA for FY2018 was Rs.2,216.14 million compared to Rs.4,106.27 million in the previous year. Net profit after tax for the group for the current year is Rs.760.90 million as against Rs.2,139.75 million in the previous year.

Total revenue from operations on standalone basis stands at Rs.2,633.16 million as against Rs.5,785.85 million in the previous year. FY2018 EBITDA was Rs.787.97 million compared to Rs.2,590.58 million in the previous year. The Profit after Tax for the current year is Rs.98.67 million as against Rs.1263.43 million in the previous year.

There are no material changes and commitments affecting the financial position of your Company which have occurred between the end of the financial year FY2018 and the date of this report.

SHARE CAPITAL

The Authorised Share Capital of the Company is Rs.111,00,00,000/- (Rupees One Hundred Eleven Crores only) comprising 20,00,00,000 (Twenty crores) Equity Shares of Rs.2/- (Rupees Two Only) each, and 71,00,00 (Seven Lakh Ten Thousand only) Preference Shares of the Company with a par value of Rs.1,000/- (Rupees One Thousand only) each.

During the year under review, the Company had allotted 15,05,000 equity shares of ''2/- each to the eligible employees under ESOP Scheme, 2010. Accordingly, the share capital has increased as follows:

Paid Up Capital as on 31 March 2017

Movement during the year 2017-18

Cumulative Paid Up Capital after such movement

8,10,18,915 equity shares of Rs.2/ -each

Allotted 15,05,000 equity shares of Rs.2/- each 8,25,23,915 equity shares of Rs.2/- each in April & November 2017 under ESOP Scheme, 2010


TRANSFER TO GENERAL RESERVE

The Company proposes not to transfer funds to general reserves for the FY2018. The total Reserves & Surplus (including Capital Reserve, Securities Premium Reserve, Central Subsidy, General Reserve and Surplus) as on 31 March 2018 is ''5,509.07 million.

DIVIDEND

Your directors are pleased to recommend a dividend of Rs.0.40/on every equity share of face value Rs.2/- each (20%) for FY2018. The dividend, if approved at the 30th annual general meeting (AGM), will be paid to those shareholders whose names appear on the register of members of the company as of the end of day on 21 September 2018.

PUBLIC DEPOSITS

During the year under review, your Company has not accepted any deposit within the meaning of Sections 73 and 74 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 (including any statutory modification(s) or re-enactment(s) for the time being in force).

LOANS AND INVESTMENTS

Details of loans, guarantees and investments under the provisions of Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014, as on 31 March 2018, are set out in the Standalone Financial Statements forming part of this report.

CONSOLIDATED ACCOUNTS

The Consolidated Financial Statements of your Company for the financial year FY2018 are prepared in compliance with applicable provisions of the Companies Act, 2013 read with the Rules issued thereunder, applicable Accounting Standards and the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as the Listing Regulations”).The consolidated financial statements have been prepared on the basis of audited/ unaudited financial statements of your Company, its subsidiaries and associate companies, as approved by the respective Board of Directors.

SUBSIDIARIES

A separate statement containing the salient features of financial statements of all subsidiaries of your Company forms part of consolidated financial statements in compliance with Section 129 and other applicable provisions, if any, of the Companies Act, 2013. The financial statements of the subsidiary companies and related information are available for inspection by the members at the Registered Office of your Company during business hours on all days except Saturdays, Sundays and public holidays upto the date of the Annual General Meeting (''AGM'') as required under Section 136 of the Companies Act, 2013. Any member desirous of obtaining a copy of the said financial statements may write to the Company Secretary at the Corporate Office of your Company. The financial statements including the consolidated financial statements, financial statements of subsidiaries and all other documents required to be attached to this report have been uploaded on the website of your Company www.vivimedlabs.com.

The financial performance of each of the subsidiaries and joint venture companies included in the consolidated financial statements of your Company is set out in the Annexure-1 to this Report. Additional details of the performance and operations of the subsidiaries along with details of the investments made by your Company are set out in the Management Discussion and Analysis which also forms part of this report

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis forms an integral part of this report and gives details of the overall industry structure, economic developments, performance and state of affairs of your Company''s various businesses viz., the pharmaceuticals, Specialty chemicals, API''s business, internal controls and their adequacy, risk management systems and other material developments during the financial year FY2018.

CORPORATE GOVERNANCE

A separate section on Corporate Governance practices followed by your Company, as stipulated under Schedule V(C) of the SEBI (LODR) Regulations, 2015 is enclosed forming part of this report. The certificate of the auditors with regard to compliance of conditions of corporate governance as stipulated under Schedule V (E) of the SEBI (LODR) Regulations, 2015 is annexed to the Report on Corporate Governance.

INDUSTRIAL RELATIONS

Your Company has always considered its workforce as its valuable asset and continues to invest in their excellence and development programs. Your Company has taken several initiatives for enhancing employee engagement and satisfaction.

The industrial relations in respect of all manufacturing facilities and divisions of your Company are normal.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Retirement by Rotation and Subsequent Re-Appointment:

Shri. Manohar Rao Varalwar Director, is liable to retire by rotation at the ensuing AGM pursuant to the provisions of Section 152 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the Articles of Association of your Company and being eligible have offered themselves for re-appointment. Mr. Subhash Varalwar who was appointed as a Whole-Time Director of the Company w.e.f. 14 August 2015 by the Board of Directors and Members have ratified his appointment in the AGM held on 30 September 2015 has shown his willingness to act as Non-Executive Director of the company with effect from 31.03.2018. Appropriate resolutions for their re-appointment/ appointment are being placed for your approval at the ensuing AGM. The brief resume of the Directors and other related information has been detailed in the Notice convening the 30th AGM of your Company. Your Directors recommend their re-appointment as Directors of your Company.

The Independent Directors of your Company are not liable to retire by rotation. Mr.Venkata Ratnam Paluri, Director of the Company demised on 01 July 2018. The Board expressed its condolences and appreciated and put on record the valuable services rendered by Mr. Venkata Ratnam Paluri during his tenure of directorship in the Company. Dr.Venkateswarulu Peesapati, has resigned from the Board of Directors of the Company and the same was accepted by the board in its meeting held on 13 August 2018

Shri.Santosh Varalwar, Managing Director, and Shri.K.Yugandhar, Company Secretary, are the Key Managerial Personnel of your Company in accordance with the provisions of Sections 2(51), 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any statutory modification(s) or re-enactment(s) for the time being in force).

DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND PARTICULARS OF EMPLOYEES:

The remuneration paid to the Directors is in accordance with the Nomination and Remuneration Policy formulated in accordance with Section 178 of the Companies Act, 2013 and Regulation 19 of the Listing Regulations (including any statutory modification(s) or re-enactment(s) for the time being in force). The salient aspects covered in the Nomination and Remuneration Policy have been outlined in the Corporate Governance Report which forms part of this report.

The Managing Director of your Company does not receive remuneration from any of the subsidiaries of your Company.

The information required under Section 197 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of Directors/ employees of your Company is set out in Annexure-2 to this report and is also available on the website of your Company (www.vivimedlabs.com).

BOARD MEETINGS:

The Board and Committee meetings are pre-scheduled and a tentative calendar of the meetings shall be finalized in consultation with the Directors to facilitate them to plan their schedule. However, in case of urgent business needs, approval is taken by passing resolutions through circulation. During the year under review, Seven board meetings were held. The details of the meetings including composition of various committees are provided in the Corporate Governance Report.

DECLARATION OF INDEPENDENCE:

Your Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under the provisions of the Companies Act, 2013 read with the Schedules and Rules issued thereunder as well as Regulation 16(1)(b) of Listing Regulations (including any statutory modification(s) or re-enactment(s) for the time being in force).

POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION:

The policy of the Company on directors'' appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters are adopted as per the provisions of the Companies Act, 2013. The remuneration paid to the Directors is as per the terms laid out in the nomination and remuneration policy of the Company.

EVALUATION OF BOARD''S PERFORMANCE:

Pursuant to the provisions of the Companies Act, 2013 read with the Rules issued thereunder and the Listing Regulations (including any statutory modification(s) or re-enactment(s) for the time being in force), the process for evaluation of the annual performance of the Directors/ Board/ Committees was carried out. The criteria applied in the evaluation process are detailed in the Corporate Governance Report which forms part of this report.

NUMBER OF MEETINGS OF THE BOARD AND ITS COMMITTEES

The details of the meetings of the Board of Directors and its Committees, convened during FY2018 are given in the Corporate Governance Report which forms a part of this report.

HUMAN RESOURCES:

The management believes that the competent and committed human resources are vitally important to attain success in the organization. In line with this philosophy, utmost care is being exercised to attract quality resources and suitable training is imparted on various skill-sets and behavior. Annual sports and games were conducted across the organization to enhance the competitive spirit and encourage bonding teamwork among the employees.

EMPLOYEE STOCK OPTIONS:

During the year, the Company has allotted 15,05,000 (Fifteen lakhs five thousand only) equity shares of ''2/- at a price of ''24/- per share to various eligible employees of the Company under Employee Stock Option Schemes-2010 upon exercise of their vesting rights.

The details of stock options details of the stock options stated in the notes to accounts of the financial statements also forms part of this Annual Report.

AUDITORS AND AUDITORS'' REPORT

(I) Statutory Auditors:

The Board of Directors of your Company, on the recommendation of the Audit Committee, have recommended to the members for re-appointed of M/s.P C N & Associates, Chartered Accountants, (Firm Registration No.016016S) as Statutory Auditors of the Company from the conclusion of 30th Annual General Meeting till the conclusion of the 35th Annual General Meeting, subject to ratification by the members at every Annual General Meeting to be held during the said period.

(II) Cost Auditors:

In accordance with Section 148 of the Companies Act, 2013 read with Companies (Audit & Auditors'') Rules, 2014 and the Companies (Cost Records and Audit) Amendments Rules, 2014, the Company maintains the cost records in respect of its business.

Your Board has appointed M/s.A.S.Rao & Co, Cost Accountants, (Firm Registration No.000326), as the Cost Auditors of the Company for the Financial Year 2018

19. As required by the Act, the remuneration of the Cost Auditors has to be ratified by the Members and accordingly the resolution relating to the Cost Auditors is being placed before the Members for their ratification.

(III) Secretarial Auditors & Secretarial Audit Report:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr.N.V.S.S.Suryanarayana Rao, Practicing Company Secretary (Certificate of Practice No.2886), to undertake the Secretarial Audit of the Company for the financial year 2017-18. The Secretarial Audit Report issued in Form MR-3 is in Annexure-3 to this Report. There are no qualifications, reservations or adverse remarks in the Secretarial Audit Report.

AUDITORS'' QUALIFICATIONS /RESERVATIONS /ADVERSE REMARKS/FRAUDS REPORTED:

There are no Auditors'' Qualifications or reservations or adverse remarks on the financial statements of the Company. The Auditors have not reported any frauds to the Audit committee as prescribed under Sec. 143(12) of the Companies Act, 2013.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE COURTS / REGULATORS:

There are no significant and material orders passed by the Courts or Regulators against the Company.

INSURANCE:

All properties and insurable interests of the Company including buildings, plant and machinery and stocks have been fully insured.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Extract of Annual Return as on 31 March 2018 in Form MGT-9 in accordance with Section 92(3) of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014, are set out herewith as Annexure-4 to this report.

RELATED PARTY TRANSACTIONS:

In accordance with Sec 134(h) of the Companies Act, 2013 and Rule 8(2) of Companies (Accounts) Rules, 2014, the particulars of contracts or arrangements entered into by the Company with the Related Parties referred to in Sec.188(1) of the Act, have been provided in Form AOC-2 and attached the same as Annexure-5. The details of related party disclosures as stated in the notes to the financial statements forms part of this annual report.

VIGIL MECHANISM

Your Company is committed to highest standards of ethical, moral and legal business conduct. Accordingly, the Board of Directors have formulated a Whistle Blower Policy which is in compliance with the provisions of Section 177(10) of the Companies Act, 2013 and Regulation 22 of the Listing Regulations. employees can raise concerns regarding any discrimination, harassment, victimization, any other unfair practice being adopted against them or any instances of fraud by or against your Company.

Any incidents that are reported are investigated and suitable action taken in line with the whistle blower policy. The Whistle Blower Policy is also available on your Company''s website www.vivimedlabs.com.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:

Pursuant to the provisions of Section 135 and Schedule VII of the Companies Act, 2013, CSR Committee of the Board of Directors had framed the policy on Corporate Social Responsibility and the Projects and Programs undertaken by the Company during the year under review have been provided in Annexure-6 and forms part of this Report.

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

The information required under Section 134 (3) (m) of the Companies Act, 2013, read with Rule 8(3) of Companies (Accounts) Rules, 2014, is appended hereto as Annexure-7 and forms part of this Report.

DETAILS ON INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS

Your Company has put in place adequate internal financial controls with reference to the financial statements, some of which are outlined below.

Your Company has adopted accounting policies which are in line with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 that continue to apply under Section 133 and other applicable provisions, if any, of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014. These are in accordance with generally accepted accounting principles in India. Changes in policies, if any, are approved by the Audit Committee in consultation with the Statutory Auditors.

The policies to ensure uniform accounting treatment are prescribed to the subsidiaries of your Company. The accounts of the subsidiary companies are audited and certified by their respective Statutory Auditors for consolidation.

Your Company operates in SAP, an ERP system, and has many of its accounting records stored in an electronic form and backed up periodically. The ERP system is configured to ensure that all transactions are integrated seamlessly with the underlying books of account. Your Company has automated processes to ensure accurate and timely updation of various master data in the underlying ERP system.

Your Company has a robust financial closure self-certification mechanism wherein the line managers certify adherence to various accounting policies, accounting hygiene and accuracy of provisions and other estimates.

Your Company operates a shared service center which handles all payments made by your Company. This center ensures adherence to all policies laid down by the management.

Your Company in preparing its financial statements makes judgments and estimates based on sound policies and uses external agencies to verify/ validate them as and when appropriate. The basis of such judgments and estimates are also approved by the Statutory Auditors and Audit Committee.

The Management periodically reviews the financial performance of your Company against the approved plans across various parameters and takes necessary action, wherever necessary.

Your Company has a code of conduct applicable to all its employees along with a Whistle Blower Policy which requires employees to update accounting information accurately and in a timely manner. Any non-compliance noticed is to be reported and actioned upon in line with the Whistle Blower Policy.

Your Company gets its Standalone accounts limited review every quarter by its Statutory Auditors.

GENERAL

a) Your Company has not issued equity shares with differential rights as to dividend, voting or otherwise; and

b) Your Company have ESOP scheme for its employees/ Directors.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to Section 134(3)(c) of the Companies Act, 2013 (including any statutory modification(s) or re-enactment(s) for the time being in force), the Directors of your Company confirm that:

(a) in the preparation of the annual accounts for the financial year ended 31 March 2018, the applicable Accounting Standards and Schedule III of the Companies Act, 2013 (including any statutory modification(s) or re-enactment(s) for the time being in force), have been followed and there are no material departures from the same;

(b) the Directors 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 your Company as at 31 March 2018 and of the profit and loss of the Company for the financial year ended 31 March 2018;

(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 (including any statutory modification(s) or re-enactment(s) for the time being in force) for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the annual accounts have been prepared on a ''going concern'' basis;

(e) proper internal financial controls laid down by the Directors were followed by your Company and that such internal financial controls are adequate and operating effectively; and proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.

CAUTIONARY STATEMENT

The management of Vivimed Labs has prepared and is responsible for the financial statements that appear in this report. These are in conformity with accounting principles generally accepted in India and, therefore, may include amounts based on informed judgments and estimates. The management also accepts responsibility for the preparation of other financial information that is included in this report. Statements in this Management Discussion and Analysis describing the Company''s objectives, projections, estimates and expectations may be ''forward looking statements'' within the meaning of applicable laws and regulations. Management has based these forward looking statements on its current expectations and projections about future events. Such statements involve known and unknown risks, significant changes in political and economic environment in India or key markets abroad, tax laws, litigation, labour relations, exchange rate fluctuations, interest and other costs may cause actual results to differ materially.

POLICY ON PREVENTION OF SEXUAL HARASSMENT:

The Company has formulated and implemented a policy for Prevention of Sexual Harassment of Women at workplace.

During the year under review, the Company has not received any complaints under the policy.

The Company has many systems, processes and policies to ensure professional ethics and harmonious working environment. We follow Zero Tolerance towards Corruption and unethical conduct. These are ensured through Whistle Blower Policy, Anti-Corruption Policy, Gift Policy, Sexual Harassment Policy and Redressal Guidelines.

APPRECIATION

Your Directors wish to convey their gratitude and place on record their appreciation for all the employees at all levels for their hard work, solidarity, cooperation and dedication during the year.

Your Directors sincerely convey their appreciation to customers, shareholders, vendors, bankers, business associates, regulatory and government authorities for their continued support.

For and on behalf of the Board

Sd/- Sd/-

Place: Hyderabad Manohar Rao Varalwar Santosh Varalwar

Date:13.08.2018 Whole-Time Director ManagingDirector

Source : Dion Global Solutions Limited
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