Dear Shareholders,
Your Directors have pleasure in presenting the 31st Annual Report of the
Company together with the Audited Financial Statements for the Financial Year ended 31st
March 2017.
The Accounting year of the Company in previous year has been changed from January, 2015
-December, 2015 to January, 2015-March, 2016 in line with the provision of the Companies
Act, 2013, which prescribe a uniform financial year. Accordingly, previous year's Annual
Accounts and Report of the Company are for a period of fifteen months from January 1, 2015
to March 31, 2016. The figures for the previous year of 15 months ended on 31 March 2016,
therefore, are not comparable with current year of 12 months ended on March 31, 2017.
FINANCIAL RESULTS FOR THE ENDED ON 31st MARCH, 2017
(Rs. in Lacs)
| Particulars |
Year ended on March 31, 2017 |
15 Months ended on March 31, 2016 |
| Sales |
40,018.95 |
56,053.13 |
| Total Income |
40,416.64 |
56,838.08 |
| EBIDTA from Operation |
1,655.05 |
7,230.56 |
| Interest |
36,979.77 |
41,478.19 |
| Depreciation |
26,354.78 |
34,514.48 |
| Profit/(Loss) before Tax and Extraordinary item |
(61,679.50) |
(68,762.11) |
| Extraordinary items |
- |
- |
| Profit/(Loss) before Tax |
(61,679.50) |
(68,762.11) |
| Provision for Current Tax |
- |
- |
| Provision for Deferred Tax |
(20,434.00) |
(23,715.00) |
| Profit/(Loss) after Tax |
(41,245.50) |
(45,047.11) |
Note: The Company has prepared the financial statements in accordance with the
Companies (Indian Accounting Standards) Rules, 2015 prescribed under Section 133 of the
Companies Act, 2013. The Company has adopted the Indian Accounting Standards (Ind AS) from
1st April, 2016. The comparative financial information of the Company for a period of
fifteen months from January 1, 2015 to March 31, 2016 has also been restated to comply
with Ind AS.
OPERATIONS :
The total income of the Company in the current year has been Rs.40,416.64 Lacs and in
the previous year it was Rs.56,838.08 Lacs. The finance cost has been Rs.36,979.77 Lacs
and in the previous year it was '41,478.19 Lacs. The Loss before Tax has been Rs.61,679.50
Lacs as and in the previous year it was Rs.68,762.11 Lacs. The loss after tax in the
current year has been Rs.41,245.50 Lacs and in the previous year it was Rs.45,047.11 Lacs.
REASONS OF REDUCTION IN PROFITABILITY :
The major reasons for reduction in profitability are, Increase in Effluent Treatment
cost due to increase in standards, global economic slowdown, increase in the cost of raw
materials, the selling prices have remained stable thereby the increase in cost could not
be passed on to buyer and non-availability of raw material due to restriction on
slaughtering activity.
CORRECTIVE STEPS TAKEN BY MANAGEMENT:
1. Company has taken action like thorough study on the effluent discharge issue,
tightening of quality norms for effluent discharge from the plant, evaluation of
requirement of modification of existing effluent discharge problem and the necessary CAPEX
has also been incurred by the company.
2. The Company has put in place the cost control measures like hard negotiation with
the material suppliers, improvement in and tightening up of cost control system etc.
Company expects that the combined effect of all these factors would be favorable for
overall operations.
DIVIDEND & TRANSFER TO RESERVE :
In view of the loss for the year ended on March 31, 2017 no amount is proposed to be
transferred to the reserve(s) and your Directors have not recommended payment of any
dividend for the year under review.
SHARE CAPITAL:
The paid up Equity Share Capital of the Company as on March 31, 2017 was Rs.272,170,388
divided into 272,170,388 Equity Shares of Rs.1/- each and Preference Share Capital as on
that date was Rs.19,125,850,000 divided into 1,912,585,000 number of Unlisted 8%
Redeemable Cumulative Non-Participating Non-Convertible Preference Shares of Rs.10/- each
having no voting rights.
ISSUE OF PREFERENCE SHARES:
During the year, with a view to mitigate the financial crunch, promoters have funded
Rs.701,350,000 by subscribing to preference shares and the Company has issued and allotted
701,135,000 Unlisted 8% Redeemable Cumulative Non- Participating Non-Convertible
Preference Shares carrying no voting rights of face value of Rs.10/- each at par to
entities in which promoters are interested.
FCCB CONVERSION INTO EQUITY SHARES OR GDRs :
The FCCBs are convertible into equity shares of the Company. During the year no
conversion request was received and the outstanding FCCBs as on 31 March 2017 are USD
201,082,000.
QUALITY:
Meeting the stringent quality standards required by our international clientele, our
facilities have earned certifications including:
• Hazardous Analysis and Critical Control Point Certification (HACCP)
• ISO 9001
• ISO 14001
• European Directorate For Quality of Medicine Certification (EDQM)
• Kosher Certificate
• IFANCA Halal Certificate
MEETINGS OF THE BOARD:
Ten (10) Board Meetings were held during the financial year ended 31st March, 2017. The
details of the Board Meetings with regard to their dates and attendance of each of the
Directors thereat have been provided in the Corporate Governance Report.
COMMITTEES OF THE BOARD OF DIRECTORS :
The Board has constituted following committees of Directors to deal with matters and
monitor the activities falling within the respective terms of reference:
• Audit Committee
• Nomination and Remuneration Committee
• Stakeholders Relationship Committee
• Corporate Social Responsibility Committee
The details of the membership, terms of reference and attendance at the meetings of the
above Committees of the Board are provided in the Corporate Governance Report forming a
part of this Annual Report. There has been no instance where the Board has not accepted
the recommendations of the Audit Committee.
DIRECTORS:
Pursuant to Section 152 of the Companies Act, 2013, Mr. Nitin Sandesara, Managing
Director of the Company, retires by rotation and being eligible, offers himself for
re-appointment at the ensuing Annual General Meeting. The Board recommends his
reappointment.
DECLARATION OF INDEPENDENCE BY DIRECTOR:
Pursuant to the provisions under Section 134(3)(d) of the Companies Act, 2013, with
respect to statement on declaration given by Independent Directors under Section 149(6) of
the Companies Act, 2013, the Board hereby confirm that all the Independent Directors of
the Company have given a declaration and have confirmed that they meet the criteria of
independence as provided in the said Section 149(6) read with Regulation 16 of Securities
and Exchange Board of India (Listing Obligations & Disclosure Requirements)
Regulations, 2015.
DEPOSITS:
During the year ended on March 31, 2017 your Company has not accepted any fixed
deposits from the public falling under Section 73 of the Companies Act, 2013 read with the
Companies (Acceptance of Deposits) Rules, 2014. Thus, as on March 31, 2017, there were no
deposits which were unpaid or unclaimed and due for repayment.
STATUTORY AUDITORS:
As per the provisions of the Act, the period of office of M/s. H. S. Hathi & Co.,
Chartered Accountants, Statutory Auditors of the Company, expires at the conclusion of the
ensuing Annual General Meeting.
It is proposed to appoint M/s. Mukesh & Associates, Chartered Accountants, as
Statutory Auditors of the Company, for a term of 5 (five) consecutive year. M/s. Mukesh
& Associates, Chartered Accountants, have confirmed their eligibility and
qualification required under the Act for holding the office, as Statutory Auditors of the
Company.
The observations and comments given by Auditors in their report read together with
notes to Accounts are selfexplanatory and hence do not call for any further comments under
Section 134 of the Act. The Auditors' Report does not contain any qualification,
reservation or adverse remark.
SECRETARIAL AUDITOR:
A Secretarial Audit was conducted for the year ended on March 31, 2017 by the
Secretarial Auditor M/s. Ramesh Kheradia a Company Secretary in Practice. The Report of
Secretarial Audit in form of MR-3 for the year ended on March 31 2017 is attached as
Annexure 2 to the Report. Secretarial Auditor gave observation in his report.
INDUSTRIAL RELATIONS:
The industrial relations of the Company continued to remain cordial. The Directors wish
to place on record their sincere appreciation for the co-operation extended and the
valuable contribution made by the employees at all levels.
RELATED PARTY TRANSACTIONS:
All contract(s)/arrangement(s)/transaction(s) entered into by your Company with its
related parties, during the year under review, were:
• in "ordinary course of business" of the Company;
• on "an arm's length basis"; and
• not "material"
As per the provisions of Section 188(1) of the Act read with Companies (Meetings of
Board and its Powers) Rules, 2014. Accordingly, Form AOC-2, prescribed under the
provisions of Section 134(3)(h) of the Act and Rule 8 of the Companies (Accounts) Rules,
2014, for disclosure of details of Related Party Transactions, which are "not at
arm's length basis" and also, which are "material & at arm's length
basis", is not provided as an annexure of the Directors' Report.
However, details of the Related Party Transactions entered into during the year under
review and as on March 31, 2017, are disclosed as part of the financial statements of your
Company for the year under review, as Note 26. Further, pursuant to the provisions of the
Act and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015,
Board has, approved and adopted a Policy on Related Party Transactions. The said policy is
available on your Company's website viz. www.sterlingbiotech.in
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND:
Pursuant to provisions of Section 205A of the Companies Act, 1956 and Section 124 of
the Companies Act, 2013 and [pursuant to rule 3 of the Investor Education and Protection
Fund (Awareness and Protection of Investors) Rules, 2001] the unpaid/unclaimed dividend
pertaining to the year ended on December 31, 2008 amounting to Rs. 40,13,431/- which was
lying in the Company's separate unpaid dividend account and remaining unclaimed for a
period of seven years, was transferred to the Investor Education and Protection Fund
(IEPF).
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS:
Loans, and investments covered under Section 186 of the Companies Act, 2013 form part
of the Notes to the financial statements provided in this Annual Report.
The Company has not provided any guarantee as prescribed under section 186 of the
Companies Act, 2013.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE:
During the year ended on March 31 2017, there were no such orders passed by the
regulators or courts or tribunals impacting the going concern status and company's
operations in future.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS:
The Company has adequate internal control procedures commensurate with its size and
nature of business. The business control procedures ensure efficient use and protection of
Company's resources and compliance with policies, procedures and statutory requirements.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY:
There have been no material changes and commitments, affecting the financial position
of the Company which occurred between the end on March 31, 2017 to which the financial
statements relate and the date of this report.
NOMINATION AND REMUNERATION POLICY :
The Company follows a policy on nomination and remuneration of Directors and Senior
Management Employees. The Policy is approved by the Nomination and Remuneration Committee.
The policy on the above is attached as Annexure 3.
CORPORATE SOCIAL RESPONSIBILITY :
CSR is a company's sense of responsibility towards the community and environment in
which it operates. It is the continuing commitment by business to behave ethically and
contribute to economic development of the society at large and building capacity for
sustainable livelihoods. The Company believes in conducting its business responsibly,
fairly and in a most transparent manner. It continually seeks ways to bring about an
overall positive impact on the society and environment where it operates and as a part of
its social objectives.
This policy has been formally formulated and adopted in terms of Section 135 of the
Companies Act, 2013 and Rules framed there under to undertake CSR activities.
The responsibilities of the CSR Committee include:
1. Formulating and recommending to the Board of Directors the CSR Policy and indicating
activities to be undertaken.
2. Recommending the amount of expenditure for the CSR activities.
3. Monitoring CSR activities from time to time.
In view of the losses for the year under review, your Company was not required to spend
any amount towards the CSR activities, as per the applicable provisions of Section 135 of
the Companies Act, 2013. Accordingly, the details of the CSR activities during the year
under review are not provided in this Report.
BOARD EVALUATION:
The Board of Directors have carried out an annual evaluation of its own performance,
board committees and individual Directors pursuant to the provisions of the Act and the
corporate governance requirements as prescribed by Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements), Regulations 2015 ("SEBI Listing
Regulations").
The performance of the committees was evaluated by the board after seeking inputs from
the committee members on the basis of the criteria such as the composition of committees,
effectiveness of committee meetings, etc.
The board and the nomination and remuneration committee reviewed the performance of the
individual directors on the basis of the criteria such as the contribution of the
individual director to the board and committee meetings like preparedness on the issues to
be discussed, meaningful and constructive contribution and inputs in meetings, etc. In
addition, the chairman was also evaluated on the key aspects of his role.
In a separate meeting of independent directors, performance of non-independent
directors, performance of the board as a whole and performance of the chairman was
evaluated, taking into account the views of executive directors and non-executive
directors. The same was discussed in the board meeting that followed the meeting of the
independent directors, at which the performance of the board, its committees and
individual directors was also discussed. Performance evaluation of independent directors
was done by the entire board, excluding the independent director being evaluated.
CORPORATE GOVERNANCE:
Corporate governance requirements under the Companies Act, 2013, and as stipulated
under the Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015. A separate section on corporate governance under the SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015, along with the
certificate from the Statutory Auditor confirming the compliance, is annexed and forms
part of this Annual Report in Annexure-4.
MANAGEMENT DISCUSSION & ANALYSIS:
Management Discussion and Analysis for the year under review, as stipulated under
Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015 Regulation 34(3) read with Schedule V of the Listing Regulations, is
presented in a separate section forming part of the Annual Report in Annexure-1.
EXTRACT OF ANNUAL RETURN:
The details forming part of the extract of the Annual Return in form MGT-9 is annexed
herewith as Annexure- 5.
PARTICULARS OF EMPLOYEES:
There are no employees drawing remuneration of more than One crore and two lacs rupees
limit as specified under provisions of Section 197(12) of the Act and Rule 5(2) & 5(3)
of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
VIGIL MECHANISM:
Your Company has a well-defined 'Whistle Blower Policy' and established Vigil Mechanism
to provide for adequate safeguard against victimisation of Directors and employees who
follow such mechanism and also make provisions for direct access to the chairperson of
Audit Committee in appropriate cases. Details of the Vigil Mechanism policy are made
available on the Company's website at www.sterlingbiotech.in/investors.html.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS:
All new Independent Directors (IDs) inducted into the Board are given an orientation.
Presentations are made by Executive Directors (EDs) and Senior Management giving an
overview of the Company's operations, to familiarize the new IDs with the Company's
business operations. The new IDs are given an orientation on our products, group structure
and subsidiary Company, Board constitution and procedures, matters reserved for the Board,
and the Company's major risks and risk management strategy. The Policy on the Company's
Familiarisation Programme for IDs can be accessed at
www.sterlingbiotech.in/investors.html.
INTERNAL CONTROL AND ITS ADEQUACY:
The Company has adequate internal controls and processes in place with respect to its
financial statements which provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements. These controls and
processes are driven through various policies, procedures and certifications. The
processes and controls are reviewed periodically. The Company has a mechanism of testing
the controls at regular intervals for their design and operating effectiveness to
ascertain the reliability and authenticity of financial information.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION
AND REDRESSAL) ACT, 2013 :
The Company has in place a Policy against Sexual Harassment at work place in line with
the requirement of Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013. All employees (permanent, contractual, temporary and trainees) are
covered under this Policy. No complaint received by the Committee during the year.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:
The information required under Section 134(3)(m) of the Companies Act, 2013 read with
Rule 8(3) of the Companies (Accounts) Rules, 2014, is annexed herewith as Annexure-6.
DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuance to the requirement under Section 134(3)(c) of the Companies Act, 2013, your
Directors hereby states that :
a) In the preparation of the annual accounts, the applicable accounting standards have
been followed and there are no material departures from the same;
b) The accounting policies have been selected and these have been applied consistently
and judgments and estimates made thereon are reasonable and prudent, so as to give a true
and fair view of the state of affairs of the Company for the period ended on March 31,
2017 and of the loss of the Company for the aforesaid period;
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 for safeguarding the
assets of the Company and for preventing and detecting fraud and other irregularities;
d) Annual accounts of the Company have been prepared on a 'going concern' basis;
e) Internal financial controls have been laid down and being followed by the Company
and that such internal financial controls are adequate and were operating effectively; and
f) Proper systems to ensure compliance with the provisions of all applicable laws have
been devised.
ACKNOWLEDGEMENT:
Your Directors would like to express their sincere appreciation for the cooperation and
assistance received from shareholders, bankers, financial institutions, regulatory bodies
and other business constituents during the year under review. Your Directors also wish to
place on record their deep sense of appreciation for the commitment displayed by all
executives, officers and staff of the Company during the financial year.
| Place : Mumbai |
For and on behalf of the Board of Directors |
| Date : May 30, 2017 |
Nitin Sandesara |
Chetan Sandesara |
|
Managing Director |
Jt. Managing Director |
|
(DIN:00255496) |
(DIN:00255671) |
(Annexure- 6 to the Director's Report )
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO
Pursuant to Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the
Companies (Accounts) Rules, 2014
A. CONSERVATION OF ENERGY
Energy Conservation Measures taken: The Company has undertaken various measures for
conservation and saving of energy in critical areas including
1. Power factor improvement
2. Quicker heat transfer
3. Monitoring of combustion efficiency of boilers
4. Reuse of Steam condensate as boiler feed water
5. Optimum use of utility depending upon process requirement.
As in earlier years, your Company continued to envisage and implement energy
conservation measures in various manufacturing operations leading to saving of
quantitative consumption of power, fuel and oil etc. The Company is also carrying on
continuous education and awa reness program for its employees for Energy conservation and
optimum use.
B. TECHNOLOGY ABSORPTION
Research & Development (R & D)
1. Specific areas in which R & D carried out by the Company:
• Improvement of product quality
• Process improvements
• Cost effectiveness
• El imination of waste in the systems
2. Benefits derived as a result of the above R & D:
Improvement in yield and product quality, cost effectiveness and reduction in
consumption of raw material and utilities.
3. Future plan of action:
The Company's effort will continue in the areas of product quality, process improvement
technology with the aim of offering better products to meet consumer needs.
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
1. Efforts, in brief, made towards technology absorption, adaptation and innovation:
After full absorption of technology imparted by foreign collaborations, innovations in
process control, cost reduction and quality improvements are being made on a continuous
basis.
2. Benefits derived as a result of the above efforts:
Improvements in productivity cost of manufacturing, quality, waste elimination and
flexibility in manufacturing.
3. Information regarding technology imported during last 5 years : Nil.
C. FOREIGN EXCHANGE EARNED AND USED
(Rs. in Lacs)
a. Earned: Rs.4507.02 million
b. Used: Rs.1,711.9 million
|
For and on behalf of the Board of Directors |
| Place : Mumbai |
Nitin Sandesara |
Chetan Sandesara |
| Date : May 30, 2017 |
Managing Director |
Jt. Managing Director |
|
(DIN:00255496) |
(DIN:00255671) |
|