DIRECTORS' REPORT TO THE MEMBERS Your Directors have pleasure in presenting the 31st Annual Report and Financial Statements for the year ended 31st March, 2016. TRANSFER TO RESERVES The Company proposes to transfer Rs. 100.00 lacs to the general reserve out of the amount available for appropriation and an amount of Rs. 630.87 lacs is proposed to be retained in the Statement of profit and loss. MANAGEMENT DISCUSSION AND ANALYSIS (a) Financial Performance and Operations Review Sales and other income for the financial year under report amounted to Rs. 6202.84 lacs as compared with Rs. 6537.97 lacs for the previous year, degrowth of 5%. The decrease in the income is mainly on account of reduction in selling prices of few generics products and rationalization of products portfolio and sales territories as well as closure during the year of Company's APIs manufacturing unit situated at A-163, Phase I, MIDC, Dombivli (East) - 421203, District - Thane, Maharashtra. During the financial year under report, the operations of the Company resulted in a net profit of Rs. 230.61 lacs as compared to a net profit of Rs. 235.19 lacs in the previous financial year. During the year under Report, the Company closed down its bulk drugs manufacturing unit situated at A-163, Phase I, MIDC, Dombivli (East) - 421203, District - Thane, Maharashtra due to space constraints in safely handling manufacturing operations and for storage of solvents and materials. This manufacturing unit consisting of leasehold land admeasuring about 750 sq mtrs along with buildings/ sheds standing thereon was sold by the Company in the month of April, 2016 at a consideration of Rs. 130 lacs. The plant and machineries of this manufacturing unit were also sold/scrapped in the month of April, 2016. (b) Opportunities, Threats, Risk and Concerns The Indian generic formulations market is currently in the growth phase. It is expected that use of generic formulations will gradually increase in India. However, cut throat competition, quality issues of generics manufactured in the country and non existence of organised generic formulations distribution and retailing system are a cause of concern and is hampering the growth of generic formulations market. During the year under report, there was no change in the nature of Company's business. (c) Internal Control Systems The Company has an adequate internal control system including suitable monitoring procedures commensurate with its size and the nature of the business. The internal control systems provide for all documented policies, guidelines, authorisation and approval procedures. The statutory auditors while conducting the statutory audit, review and evaluate the internal controls and their observations are discussed with the Audit Committee of the Board. (d) Human Resources Your Company continued to have cordial and harmonious relations with its employees at all levels. Your Company has adopted TQM culture across the organisation in all line and staff functions at all the locations. The TQM culture has helped your Company in achieving productivity improvement, cost reduction and waste elimination through employee involvement at all levels. Your Company has 108 permanent employees as at 31st March, 2016. (e) Cautionary Statement Certain statements in the Management Discussion and Analysis may be forward looking within the meaning of applicable securities law and regulations and actual results may differ materially from those expressed or implied. Factors that would make differences to Company's operations include competition, price realisation, changes in government policies and regulations, tax regimes and economic development within India. 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. SHARE CAPITAL The paid-up equity share capital of the Company as at 31st March, 2016 is Rs. 491.70 lacs. The Company currently has no outstanding shares issued with differential rights, sweat equity or ESOS. SUBSIDIARY, JOINT VENTURE AND ASSOCIATE COMPANIES The Company has no subsidiary or joint venture companies. During the financial year under report, no company has become / ceased to be subsidiary or joint venture company. DIVIDEND Your directors are pleased to recommend a equity dividend of Rs. 1.00 per share (10%) for the financial year under report. The dividend will be tax free in the hands of the shareholders. The dividend amounting to Rs. 49.17 lacs and dividend tax amounting to Rs. 10.01 lacs, if approved at the ensuing Annual General Meeting, will be appropriated out of the profits for the year. DIRECTORS Ms. Purnima Jain retires as director by rotation at the ensuing Annual General Meeting and, being eligible, offers herself for re-appointment. Pursuant to the provisions of Section 149 of the Companies Act, 2013, Mr. K. C. Jain, Mr. S. V. Loyalka and Dr. Rajeshwar Singh have been appointed as Independent Directors for a period of five years till 31st March, 2019 at the annual general meeting held on 28th July, 2014. Mr. K. C. Jain, Mr. S. V. Loyalka and Dr. Rajeshwar Singh, who are independent directors, have submitted a declaration that each of them 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 their status as independent director during the year. In the opinion of the Board, the independent directors possess appropriate balance of skills, experience and knowledge, as required. A brief note on Director retiring by rotation and eligible for re-appointment is furnished in the Report on Corporate Governance. KEY MANAGERIAL PERSONNEL During the year under report, the Company has appointed following persons as Key Managerial Personnel: Mrs. Purnima Jain - Wholetime Director/CEO Mr. Saahil Parikh - Wholetime Director / CFO Ms. Khushbu Thakkar - Company Secretary There was no change in the Key Managerial Personnel during the financial year. 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 qualifications, 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: • the candidate should posses the positive attributes such as Leadership, Industrialist, Business Advisor or such other attributes which in the opinion of the Committee the candidate possess and are in the interest of the Company; • the candidate should be free from any disqualifications as provided under Sections 164 and 167 of the Companies Act, 2013; • the candidate should meet the conditions of being independent as stipulated under the Companies Act, 2013 and Listing Agreement entered into with Stock Exchanges in case of appointment as an independent director; • the candidate should posses 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. 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 to 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. 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 emphasising on line expertise and market competitiveness so as to attract the talent. 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 a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals. FAMILIARISATION PROGRAM FOR INDEPENDENT DIRECTORS Details of the familiarisation program of independent directors are disclosed on the website of the Company www.makerslabs.com MEETINGS OF THE BOARD AND COMMITTEES THEREOF This information has been furnished under Report on Corporate Governance, which is annexed. 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 March 31, 2016 and of the profit of the Company for 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; v) 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 vi) t hat 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. CORPORATE GOVERNANCE As per the requirement of listing agreement with the Stock Exchanges, your Company has voluntarily complied with the requirements of Corporate Governance in all material aspects, though the requirements of complying with the Corporate Governance provisions were not applicable to the Company since the Company's paid-up equity share capital was less than Rs. 10 crores and the net worth was less than Rs. 25 crores, as on the last day of the previous financial year ended 31st March, 2015. A report on Corporate Governance (Annexure 1) together with a certificate of its compliance from the Statutory Auditors, forms part of this report. FIXED DEPOSITS Your Company has not accepted any deposits from the public during the year under review and as such no amount of principal or interest on deposits from public was outstanding as on the date of the balance sheet. AUDIT COMMITTEE Details of the Audit Committee along with its constitution and other details are provided in the Report on Corporate Governance. AUDITORS, AUDIT REPORT AND AUDITED ACCOUNTS M/s Agarwal & Mangal (Firm Registration No. 100061W), 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. There are no qualifications, reservations or adverse remarks made by the Auditors. COST AUDIT Pursuant to the provisions of Section 148 of the Companies Act, 2013, M/s. Kale & Associates, Cost Accountants (Firm Registration. No. 101144) were appointed as the Cost Auditors to conduct audit of cost records of the Company for the financial year 2015-16. The Cost Audit Report for the financial year 2014-15, which was due to be filed with the Ministry of Corporate Affairs by 27th October, 2015 was filed on 21st October, 2015. SECRETARIAL AUDIT Pursuant to the provisions of Section 204 and other applicable provisions, if any, of the Companies Act, 2013, M/s. Parikh & Associates, Practising Company Secretaries were appointed as the Secretarial Auditors for auditing the secretarial records of the Company for the financial year 2015-16. The Secretarial Auditors' Report is annexed hereto. There are no qualifications, reservations or adverse remarks made by the Secretarial Auditors. CORPORATE SOCIAL RESPONSIBILITY (CSR) The provisions of Section 135 of the Companies Act, 2013 pertaining to Corporate Social Responsibility (CSR) is not applicable to the Company. 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 and environment. 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. 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 Board has approved a policy for related party transactions which has been uploaded on the website of the Company (<http://www.makerslabs.com/pdf/Corporate_Policy> /Related_Party_Transactions.pdf). All the related party transactions are placed before the Audit Committee as well as the Board for approval on a quarterly basis. Omnibus approval was also obtained from the Audit Committee and the Board on an annual basis for repetitive transactions. Related party transactions are disclosed in the notes to the financial statements. Prescribed Form No. AOC-2 pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 is furnished as Annexure 2 to this report. PARTICULARS OF EMPLOYEES The information required pursuant to Section 197 read with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration and other details as set out in the said rules are provided as an Annexure 3 in this annual report. The Company had no employee drawing remuneration in excess of the amount as mentioned under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. CODE OF CONDUCT The Board has laid down a code of conduct for Board members and senior management personnel of the Company. The code incorporates 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.makerslabs.com. The Board members and senior management personnel have affirmed compliance with the said code of conduct. A declaration signed by the Whole time Director / CEO is given at the end of this Report. WHISTLE BLOWER POLICY / VIGIL 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 Blowing Policy is posted on the website of the Company www.makerslabs.com 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. The Board at its meeting held on 29th May, 2015 has adopted a revised Code of Prevention of Insider Trading based on the SEBI (Prohibition of Insider Trading) Regulations, 2015. The same has been placed on the website of the Company www.makerslabs.com 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. 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. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO In accordance with the requirements of Section 134 of the Companies Act, 2013, statement showing particulars with respect to conservation of energy, technology absorption and foreign exchange earnings and outgo is furnished as Annexure 4 to this report. EXTRACT OF ANNUAL RETURN In accordance with the requirements of Section 92 (3) of the Companies Act, 2013 and rule 12 (1) of the Companies (Management and Administration) Rules, 2014, an abstract of Annual Return in Form MGT-9 is furnished as Annexure 5 to this report. ACKNOWLEDGEMENTS Your Directors place on record their appreciation for the co-operation and support extended to the Company by its bankers. Your Directors also place on record their appreciation of the continued hard work put in by employees at all levels. For and on behalf of the Board Purnima Jain Whole time Director Saahil Parikh Whole time Director Place: Mumbai Date ; 27th May, 2016 |