| The Directors have pleasure in presenting the Twenty-seventh Annual
Report together with the Audited Statement of Accounts for the 15
months period ended 30th June 2015
1.STANDALONE FINANCIAL RESULTS (Rs. in Crores)
Particulars 2014-2015 2013-2014
(15 months period (Financial
year ended
ended 30.6.2015) 31.3.2014)
Gross Income 792.93 967.01
Profit before tax (327.35) 86.39
Profit after tax (322.10) 58.90
Profit available for
appropriation (after (207.76) 131.61
considering the balance
b/f from previous
year and deferred tax liability)
APPROPRIATIONS
Dividend of current year Nil 5.450
Corporate Dividend Tax - 0.926
Transfer to General Reserve - 10.000
Surplus carried to Balance Sheet (207.76)
2. OPERATIONS AND BUSINESS PERFORMANCE
During the 15 months period ended 30th June 2015 the net sales stood at
787.07 Crores with a reported loss of Rs 320.03 Crores as against the
sales of Rs.967.01 Crores and profit before tax of Rs 86.39 Crore in
the previous financial year.
3. DIVIDEND
Your Directors have not recommended any dividend for the financial year
in view of the losses incurred and the need to conserve resources of
the company.
4. MANAGEMENT DISCUSSION AND ANALYSIS (MDA)
The Management Discussion and Analysis Report for the period under
review, as stipulated under Clause49 of the Listing Agreement is
presented in a separate section forming part of this report.
5. MATERIAL CHANGES AND COMMITMENTS AFTER THE END OF THE FINANCIAL YEAR
No material changes or commitments affecting the financial position of
the company have occurred between the end of the financial year to
which financial statements in this report relate and the date of this
report.
During the period under report, the company's operations were affected
adversely due strike and liquidity problem.
During the period under report, the Company's Bank accounts became NPA
since the company could not pay the interest and installment with the
limited source of funds, and the Company's Bankers have filed petition
before Debt Recovery Tribunal for recovery of their dues during the
current year. The company is attending the same. During the current
year, the Bankers have also issued notice under SARFAESI Regulations
for recovery of dues. The company is in process of identifying
strategic investors to meet with the funds requirements, and to put
into operations the Unit II at Irrungatukottai.
In view of losses for the year which has wiped out the reserves and of
more than 50% of the net worth of the company the provisions of BIFR
are applicable and accordingly the company is required to file
necessary application for reference.
6. SHARE CAPITAL
The paid up equity share capital of the company as at 30th June 2015
was Rs.68.13 Crores. The company currently has no outstanding shares
issued with differential rights, sweat equity or ESOS
7. CONSOLIDATED ACCOUNTS
Due to change in financial year and consequently different financial
years, the Consolidated financial statements have not been prepared by
the company in accordance with the requirements of Accounting Standards
21 issued by the Institute of Chartered Accountants of India (ICAI) and
as per the provisions of Section 129(3) of Companies Act 20133. As per
the provisions of Section 136 of the Companies Act 2013, the Company
will place separately, the audited accounts of its subsidiaries in its
website www.arvindremedies.com and copy of audited financial statements
of its subsidiaries will be provided to the members on request. There
are three subsidiaries, viz. Arvind Wellness Ltd., Arvind Remedies LLc
US and Arvind Remedies Inc US.
During the financial year M/s. Coronet Labs P Ltd. ceased to be the
subsidiary with effect from 1st October 2014.
There has been no material change in the nature of the business of the
subsidiaries. The company has no subsidiary which can be considered as
material within the meaning of Clause 49(V)(E) of Listing Agreement.
In accordance with the provisions of Section 136(1) of the Companies
Act 2013, the following will be placed on the website of the company
www arvindremedies.com
a)Annual report of the company, containing therein its standalone
financial statements; and
b)audited annual accounts of the subsidiary companies will be placed on
receipt.
9. HUMAN RESOURCE DEVELOPMENT
Your company has the necessary managerial band width to navigate the
growth opportunities. The company has ensured that it has a strong team
in manufacturing facilities, research labs, supply-chain management and
in every functional area. However, considering the potential
opportunities and the organizational growth targets, there is a
constant review being done to be ahead of the curve. Talent acquisition
and talent retention are being given considerable emphasis in human
resource management.
10. RESEARCH & DEVELOPMENT (R&D)
The company has always considered R&D as crucial for the sustained
growth fo the company.
The company has spent Rs.27.03 lacs on R&D as expenditure (0.03% of its
turnover) in the previous year to Rs. in the year under report.
Apart from development of new dosage forms and drug delivery systems,
improvement in process and yield as well as cost reduction are also
focus areas.
11. WHISTLE BLOWER POLICY/ GIVIL MECHANISM
There is a whistle blower policy in the company and that no personnel
has been denied access to the Chairman of the Audit Committee The
policy provides for adequate safeguards against victimization of
persons who use vigil mechanism. The whistle blower policy is posted on
the web site of the company.
12. POLCY ON SEXUAL HARASSMENT
The company has a policy n prevention & prohibition of sexual
harassment at workplace However the company is in the process of
constituting a committee for the same. The policy provides for
protection against sexual harassment of women at workplace and for
prevention and redressal of such complaints. During the year, no
complaints have been received under the policy.
13. MEETINGS OF THE BOARD AND COMMITTEES THEREOF
The Board and Committee meetings are pre-scheduled and a tentative
calendar of the meetings finalized in consultation with the Directors
to facilitate them to plan their schedule. However in case of special
and urgent business needs, approval is taken by passing resolutions
through circulation. The information has been furnished under Report on
Corporate Governance, which is annexed.
14. DIRECTORS
During the current year the term of Managing Director Dr B Arvind Shah
is getting over and he is eligible for reappointment pursuant to
Section 196 and other applicable provisions of the Companies Act 2013.
His reappointment is taken at item No.5 of the Notice of AGM.
During the year under report, following directors resigned due to their
preoccupations/ age/ health conditions
Mr. Ankur Agarwal from 14th November 2014 Mr. R Rajamohan from 7th
November 2014 Mr. VR Mehta from 21st March 2015
During the current year Dr. C M K Reddy resigned on 3rd October 2015
and Mr. Sudhir Chandra resigned on 5th November 2015
The Board places on record its sincere appreciation for the services
rendered to the Company by them during their tenure as Directors of the
Company.
In the meeting of the Board of Directors of the Company held on 4th
November 2015 Mr. Madhavyadav was appointed as an Additional/
independent Director of the company effective from 1st October 2015. He
holds the office of directorship till the conclusion of the ensuing
annual general meeting. Being eligible he has offered himself for
appointment as an Independent director of the company. Pursuant to the
provisions of Section 149 of the Companies Act 2013, Mr. Madhavyadav
has been appointed as Independent Director for a period of five years
till 30th September 2020 and the same is to be approved at the ensuing
annual general meeting
Mr. MadhavYadav who are independent director, has submitted a
declaration that he meets the criteria of independence as provided in
Section 149(6) of the companies Act 2013 and there has been no change
in the circumstances which may affect his status as independent
director during the year.
In the opinion of the Board, the independent director possesses
appropriate balance of skills, experience and knowledge, as required.
Mrs. Chandra Ravindran retires by rotation at the ensuing annual
general meeting and being eligible offer herself for reappointment.
A brief note on Directors retiring by rotation and eligible for
re-appointment as well as independent director being appointed is
furnished in the Report on Corporate Governance.
15. KEY MANAGERIAL PERSONNEL
During the year under report, Mr. Selven Daniel CFO resigned and in his
place Mr. S Raghavan has been appointed. During the year under report,
the company has appointed the following persons as Key Managerial
Persons
Dr. B Arvind Shah Managing Director
Mr. S Raghavan CFO
Mr. P R Krishnan Company Secretary
16. 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 various parameters like attendance and participation at
meetings of the Board and Committees thereof, contribution o strategic
decision making, review of risk assessment and risk mitigation, review
of financial statements, business performance and contribution to the
enhancement of brand image of the company.
The Board has carried out evaluation of its own performance as well as
that of the Committees of the Board and all the Directors. The annual
evaluation was carried out in the following manner:
Sr Performance evaluation of Performance evaluation performed by
No.
1 Board and individual
directors Board after seeking inputs from all
directors
2 Board Committees Board seeking inputs from all
committee members
3 Individual directors Nomination and Remuneration Committee
4 Non-independent
directors, Board Separate meeting of independent
directors
as a whole and the
Chairman after taking views from executive
directors
5 Board, its Committees and At the Board meeting held after the
individual Directors meeting of the independent
directors based on evaluation
carried out as above
17. TRAINING OF INDEPENDENT DIRECTORS
Every new independent director of the Board attends an orientation
program. To familiarize the new inductees with the strategy, operations
and functions of our company, the executive directors/ senior
managerial personnel make presentations to the inductees about the
company's strategy, operations, product and service offerings, markets,
organization structure, finance, human resources, technology, quality,
facilities and risk management.
18. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND OTHER DETAILS
The Nomination and Remuneration Committee has laid down the criteria
for Directors' appointment and remuneration including criteria for
determining qualification, positive attributes and independence of a
Director. The following attributes/ criteria for selection have been
laid by the Board on the recommendation of the Committee
ú the candidate should possess the positive attributes such as
leadership, entrepreneurship, business advisor or such other attributes
which in the opinion of the committee are in the interest of the
company
ú the candidate should be free from any disqualifications as provided
under Section 164 and 167 of the Companies act 2013
ú the candidate should meet the conditions of being independent as
stipulated under the Companies Ac 2013 and Listing Agreement entered
into with Stock Exchanges in case of appointment of an independent
director and
ú the candidate should possess appropriate educational qualification,
skills, experience and knowledge in one or more fields of finance, law,
management, sales, marketing, administration, research, corporate
governance, technical operations, infrastructure medical, social
service, professional teaching or such other areas or disciplines which
are relevant for the company's business.
19. REMUNERATION POLICY
The objective and broad framework of the Company's remuneration policy
is to consider and determine the remuneration based on the fundamental
principles of payment for performance, for potential and for growth.
The Remuneration Policy reflects on certain guiding principles of the
company such as aligning remuneration with the longer term interests of
the company and its shareholders, promoting a culture of meritocracy
and creating a linkage to corporate and individual performance and
emphasizing on line expertise and market competitiveness so as to
attract the best talent. It also ensures the effective recognition of
performance and encourages a focus on achieving superior operational
results. The Nomination and Remuneration Committee recommends the
remuneration of Directors and Key Managerial Personnel which is
approved by the Board of Directors, subject to the approval of
shareholders where necessary. The level and composition of remuneration
shall be reasonable and sufficient to attract, retain and motivate the
directors, key managerial personnel and other employees of the quality
required to run the company successfully. The relationship of
remuneration to performance should be clear and meet appropriate
performance benchmarks. The remuneration to directors, key managerial
personnel and senior management personnel should also involve abalone
between fixed and incentive pay reflecting short and long term
performance objectives appropriate to the working of the company and
its goals The Remuneration Policy is placed on the company's website
www.arvindremedies.com
Information about elements of remuneration package of individual
directors is provided in the extract of the Annual Return as provided
under Section 92(3) of the Companies Act, 2013 which is enclosed.
20. FAMILIARISATION PROGRAM FOR INDEPENDENT DIRECTORS
Details of the familiarization program of independent directors are
kept at the Registered Office of the Company and will be also placed on
the website of the Company.
21. DIRECTORS RESPONSIBILITY STATEMENT
Your Directors confirm:
i) that in the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures
ii) that your 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 the company at the end of the financial year June 30,2015
and of the profit of the company or the financial year;
iii) that your Directors 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) that your Directors have prepared the annual accounts on a going
concern basis
iv) that your directors have laid down internal financial controls to
be followed by the company and that such internal financial controls
are adequate and were operating effectively; and
v) that your directors have devised proper systems to ensure compliance
with the provisions of all applicable laws and that such systems were
adequate and operating effectively.
22. CORPORATE GOVERNANCE
As per the requirement of listing agreement with the Stock Exchanges,
the Company has complied with the requirements of Corporate Governance
in all material aspects
A report on Corporate Governance (Annexure I) together with a
certificate of its compliance from a Practicing Company Secretary is
attached.
23. FIXED DEPOSITS
During the year under review, the company has not accepted any deposits
and as such no amount of principal or interest on deposits from public
was outstanding as on the date of Balance Sheet.
24. AUDIT COMMITTEE
Details of the Audit Committee along with its constitution and other
details are provided in the Report on Corporate Governance.
25. AUDITORS, AUDIT REPORT AND AUDITED ACCOUNTS
M/s. Vivekanandan & Associates (Firm Registration No.0052685),Chartered
Accountants, retire as auditors and being eligible, offer themselves
for re-appointment.
The Auditors report read with the notes to the accounts referred to
therein are self explanatory and therefore do not call for any further
comments.
Reply to the disclaimer of opinion in the report:
Disclaimer of Opinion
In our opinion and to the best of our information and according to the
explanations given to us, consequent to the possible effects of the
matter described in the Basis for our Disclaimer of Opinion paragraph,
we are unable to state whether the aforesaid standalone financial
statements give the information required by the Act in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India of the state of
affairs of the Company as at 30th June 2015, and its Profit& Loss and
its cash flows for the period ended on that date.
1. The Company has destroyed pharmaceutical raw material,
stock-in-process and finished goods of value Rs. 19729.67 lacs during
the period under audit under self certification and no external
agencies including Drug Control Authorities, Central Excise and
Pollution Control Board were involved in the process. We have been
informed that there was strike by employees between third week of
December 2014 to second week of February 2015.
It is explained that due to strike of employees no person was allowed
to go inside the factory premises leading to failure in the
environmental conditions, directly affecting the quality, purity and
usage of some of the products. Subsequently with the Court order when
the management was able to enter the factory, he materials were
analyzed by high powered technical committee of the company. Based on
the assessment inventories valued at Rs.19730.68 Lacs were identified
as no longer usable and accordingly such products were destroyed as per
standard operating procedure under GMP so as to avoid any possible
misuse and/or contamination with good products. Of this Rs.12617.51
Lacs was taken in the December 2014 quarter results and balance
Rs.7113.17 Lacs could be ascertained thereafter.
2. During the period under audit, the company has accounted for return
for assets of capital expenditure as (part financed by the Banks by way
of Term Loan) is set out below. Also, confirmations from the equipment
vendors acknowledging receipt of the returned items were not available.
Particulars Amount in Rs. lakhs
Assets held under Fixed
Assets - capitalized in FY 2013-14 4348.83
gross block value
Held under "Capital Expenditure
on New Projects (Pending 5965.61
Allocation) "
Total amount of capital assets
returned to the supplier 10314.44
In order to make the Kakkalur unit II (which was partially capitalized
last year and partly lying in capital work in progress) compliant with
international norms (USFDA & European Standards), certain modifications
and up gradations were required. To complete this exercise major part
of machinery (including items lying under capital work in progress)
were dismantled during the period and sent back to the suppliers.
The projects could not be completed for want of up gradation of
machinery to meet with the requirement of USFDA guidelines and hence
the machinery were returned/ sold, and the profit Rs.219.84 Lacs was
adjusted in the books.
3. Letters seeking confirmation of balances were sent to various
Debtors aggregating to Rs. 477,49.64 lakhs representing substantial
portion of total receivables.
o Replies confirming dues to the Company we received for Rs.381,59.12
lakhs and We have not received replies for the balance.
Also, we observe that Sales and Purchase transactions have been carried
out with the same business entities and the receivables and payables
thereon are set off against each other with minimum bank/cash
transactions. And, we observe that in several debtors' accounts
(including state owned Enterprises) the receivables are netted with
transfers entries to other parties or accounts.
The confirmations received constitute almost 80% of the debtors and
management hopes that remaining debtors will also be sending the
confirmation.
4. For the Financial year 2013-14, the tax liability has been reported
on book profit of Rs.
1847.51 lakhs as against Rs. 8639.43 lakhs, though tax provisioning in
accounts was made for book profit of Rs.8639.43 lakhs.
Change in tax liability is yet to be computed and hence the total has
been carried forward under provisions.
5. In the absence of audited financial statement of the Company's
subsidiary Arvind Remedies Inc, USA and Arvind Remedies LLC, USA we are
unable to provide for diminution in the value of investments, should in
case such subsidiary company has incurred losses. Consequently, we were
unable to determine whether any adjustments to these amounts were
necessary.
The financial year ending of 2 subsidiary companies in US is December
and currently there is no activity in these companies. Hence their
balance sheets are yet to be prepared.
26. COST AUDIT
Pursuant to the provisions of Section 148 of the Companies Act 2013 the
company is required to appoint Cost Auditor to conduct audit of cost
records of the company for the financial year 2014-15. The company is
in the process to appoint new Cost Auditor for the year.
The cost audit report for the financial year 2013-14 was due to be
filed with the Ministry of Corporate Affairs by 29th September 2014,
was filed on 30th September 2014
27. Management Discussion and Analysis (MDA):
The Management Discussion and Analysis Report for the year under
review, as stipulated under Clause 49 of the Listing Agreement is
presented in a separate section forming part of this Annual Report.
28. SECRETARIAL AUDIT
Pursuant to the provisions of Section 204 and other applicable
provisions, of the Companies Act 2013, M/s. Lakshmmi Subramanian &
Associates as secretarial Auditor for auditing the secretarial records
of the company for the 15 months period ended 30th June 2015 and the
report is Annexed hereto.
29. CORPORATE SOCIAL RESPONSIBILITY(CSR)
The company is committed to good corporate citizenship.
During the year under report, the company has constituted a CSR
Committee and framed policy.
In view of losses for the year 2014-15, no provision has been made
towards expenditure to CSR activities.
30. SAFETY ,ENVIRONMENT AND HEALTH
The company considers safety, environment and health as the management
responsibility Regular employee training programmes are carried out in
the manufacturing facilities on safety, environment and health
31. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
The company has not given any loans or guarantees or made investments
in contravention of the provisions of the Section 186 of the Companies
Act 2013. The details of the loans and guarantees given and investments
made by the company are provided in the notes to the financial
statements.
32. RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the
financial year were on arm's length basis and were in the ordinary
course of company's business. The company has not entered into any
contract, arrangement or transaction with any related party which could
be considered as material within the meaning of clause 49 of the
listing agreement.
The Board has approved a policy for related party transactions.
As the related party transactions for the year are nil no details as
per Section 134(3) are furnished in the report.
33. 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, during the year, the Company did not
have any employee drawing remuneration of amounts specified and hence
the details are nil
34. CODE OF CONDUCT
The Board has laid down a code of conduct for board members and senior
management personnel of the company. The code incorporate the duties of
independent directors as laid down in the Companies Act 2013. The said
code of conduct is posted on Company's website www.arvindremedies.com.
The Board members and senior management personnel have affirmed
compliance with the said code of conduct. A declaration signed by the
Managing Director/ CEO is given at the end of the Corporate Governance
Report
35. PREVENTION OF INSIDER TRADING
The company has also adopted a code of conduct for prevention of
insider trading. All the directors, senior management employees and
other employees who have access to the unpublished price sensitive
information of the company are governed by this code. During the year
under report, there has been due compliance with the said code of
conduct for prevention of insider trading based on the SEBI
(Prohibition of Insider Trading) Regulations 2015.
The Board at its meeting held on 28th May 2015 has adopted revised code
of prevention of insider trading based on the SEBI (Prohibition of
Insider Trading) Regulations 2015.
36. BUSINESS RISK MANAGEMENT
Pursuant to the provisions of Section 134 of the Companies Act 2013,
the company has constituted a Risk Management Committee. The details of
the Committee and its terms of reference are provided in the Report on
Corporate Governance, which is annexed.
37. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant or material orders passed by any regulator,
tribunal or court that would impact the going concern status of the
company and its future operations
38. PARTICULARS OF ENERGY CONSERVATION ETC.
The details of energy conservation, technology absorption, foreign
exchange earnings and outgo are furnished in a separate statement
attached to and forming7 part of this report, in accordance with
Section 134 of the Companies Act, 2013, read with The Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988.
39. EXTRACT OF ANNUAL RETURN
The details are attached as MGT-9 form to this report.
40. LISTING:
The Company's shares are presently listed at Bombay Stock Exchange Ltd.
and in National Stock Exchange of India Ltd. The extract of Annual
Return in form MGT9 are annexed herewith.
41. ACKNOWLEDGEMENTS
Your Directors wish to place on record their appreciation for the
continued co-operation of the banks and other financial institutions
associated with the company. Your Directors also thank Medical
fraternity for the trust reposed on the Company and the trade, the
stockiest and consumers for their patronage to the Company's products.
Your Directors also place on record their profound admiration and
sincere appreciation of the continued hard work put in by the employees
at all levels. We look forward to the same support in our future
endeavors.
For and on behalf of the Board
Place : Chennai
Dr. B. ARVIND SHAH Dr. CHANDRA
RAVINDRAN
Date : 11/03.2016 Managing Director Whole time Director |