DIRECTOR'S REPORT TO THE SHAREHOLDERS Your Directors have pleasure in presenting the Twentieth Annual Report of your Company together with Audited Accounts for the Financial Year ended 31st March, 2015. Consolidated Operating Results The consolidated sales and operating income decreased to Rs. 143.68 Cr from Rs. 187.19 Cr in the previous year yielding a decline in growth of 23.24% due to sale of Brand happened during the year. The consolidated operating profit for the year was Rs. 14.89 Cr as against Rs. 11.49 Cr in the previous year. The consolidated net profit for the year 2015 was Rs. 6.18 Cr as against FY 2014 of Rs. 1.40 Cr. Standalone Operating Results The sales and operating income decreased to Rs. 143.66 Cr from Rs. 178.94 Cr in the previous year decline rate of 19.72%. The operating profit for the year under review is Rs. 14.00 Cr as against Rs. 10.55 Cr in the previous year. The profit after tax for the year under review is Rs. 6.11 Cr as against Rs. 1.34 Cr in the previous year. The company is in growth/expansion mode requiring further investment; your company is therefore evaluating various options to raise additional funds for which shareholders approval may be sought as and when things are finalized. Subsidiary Company & Consolidated Financial Results The consolidated financial results comprise of M/s. Bafna Pharmaceuticals Limited and its subsidiary M/s. Bafna Lifestyles Remedies Limited. Consolidated Financial Statements for the year ended 31st March, 2015 forms part of the Annual Report. As required under the Listing Agreements entered into with the Stock Exchanges, consolidated financial statements of the Company and its subsidiary are attached. The consolidated financial statements have been prepared in accordance with the relevant accounting standards as prescribed under section 133 of the Companies Act, 2013. The consolidated financial statements disclose the assets, liabilities, income, expenses and other details of the Company and its subsidiaries. Material/significant changes in subsidiary, during the year the subsidiary company has discontinued the marketing activities. A statement pursuant to Section 129 of the Companies Act, 2013, relating to subsidiary companies is attached and forms part of the report. Fixed Deposits The company has not accepted / invited any deposits from the public in terms of Section 73 of the Companies Act, 2013 Dividend The Company wishes to conserve the resources, hence your directors do not recommend any dividend for the Financial Year. Directors During the year Ms. K.Sabitha was appointed as an Additional director / women director in the Board meeting held on 27th March 2015. Your Board recommends for appointment of Ms. K. Sabitha as a Director. The Composition of Board and number of meetings attended by them are given in the corporate governance report. Pursuant to Section 149, 152 and other applicable provisions of the Companies Act, 2013 read with Rules thereon, Shri V. Rajamani, Shri R. Dwarakanathan, Shri B. Kamlesh Kumar & Shri Sunil Bafna were appointed as Independent Directors for five consecutive years in the Nineteenth AGM held on 10.09.2014 upto 09.09.2019. Accordingly all the Independent Directors were appointed in the last AGM to align with the requirement of the Companies Act, 2013. The necessary declarations were also obtained from the Independent Directors on yearly Directors liable to retire by rotation Shri. Bafna Mahaveer Chand, Chairman & Managing Director & Shri. Paras Bafna, Whole Time Director are not liable to retire by rotation as per their terms of appointment / Articles Of Association of the company. However, they are subject to retire by rotation as per the provisions of Section 149 & 152 of the Companies Act, 2013. All Directors in the Board are Independent except Shri. Bafna Mahaveer Chand & Shri. Paras Bafna and as Independent Directors are not liable to retire by rotation, Shri. Bafna Mahaveer Chand & Shri. Paras Bafna will retire by rotation in terms of Section 152 of the Companies Act, 2013 and being eligible they have offered themselves for re-appointment. Upon re-appointment as Director Shri. Bafna Mahaveer Chand shall continue to hold office as the Chairman and Managing Director of the Company. The brief resume of the Directors seeking appointment / reappointment and other information have been detailed in the Notice. Your Board recommends the above appointments /reappointment of Directors in the best interest of the Company. Auditors M/s. Abhay Jain & Co., Chartered Accountants, Chennai who are the statutory auditors of the Company, were re-appointed for a period of 3 years ( from 2014 to 2017), subject to ratification by the members at every AGM. Hence, ratification has been sought for, from the members as per the terms of appointment made during 2014. M/s. Abhay Jain & Co., Chartered Accountants, Chennai have given their consent for re-appointment and also confirmed that their appointment would be within the prescribed limits under Section 141 of the Companies Act, 2013. Accordingly, the ratification of re-appointment of M/s. Abhay Jain & Co., Chartered Accountants, Chennai, as the Statutory Auditors, is being proposed as an Ordinary Resolution. The Board recommends ratification of re-appointment as Statutory Auditors of the Company. The report of Auditors and notes forming part of the Accounts are attached along with the Annual Report. There is no observation made in the Auditors' Report for the period and hence no further comments required under Section 134 of the Companies Act, 2013. Cost Audit The Board of Directors of the Company appointed M/s Thanigaimani & Associates, Cost Accountants (FRN No.101899) as the Cost Auditor of the Company for audit of cost accounts relating to formulations for the year ended 31st March 2015. The Cost Audit report for the year ended 31st March 2014 was filed on 26.11.2014 and the Cost Audit Compliance Report was filed on 26.11.2014. The Cost Audit Report & Cost Audit Compliance Report for the year ended 31st March, 2015 shall be submitted to the Central Government in due course. As per Section 148 read with Companies (Audit and Audit) Rules, 2014 and other applicable provisions if any of the Companies Act, 2013, the Board of Directors of the Company has appointed M/s Thanigaimani & Associates, Cost Accountants as Cost Auditor of the Company for the financial year 2015-16. The remuneration proposed to be paid to the Cost Auditors, subject to the ratification by the members at the ensuing Annual General Meeting, would be Rs. 45,000/- (Rupees Forty Five Thousand Only) plus applicable taxes and out of pocket expenses. Listing The Company's shares are listed at (i) Bombay Stock Exchange Limited (BSE) with Scrip Code No. 532989 and at (ii) National Stock Exchange of India Limited with Scrip symbol BAFNAPHARM; the necessary Listing Fees have been paid to the stock exchanges. Particulars of employees a) Details of employees, employed throughout the financial year, was in receipt of remuneration for that financial year, in the aggregate, was not less than " 60 lakhs. -Nil- b) Details of employees, employed for a part of the financial year, was in receipt of remuneration for any part of that year, at a rate which, in the aggregate, was not less than five lakh rupees per month -Nil - c) Details of employees, if employed throughout the financial year or part thereof, was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the company. - Nil - Foreign Exchange earnings and outgo The particulars in respect of Foreign Exchange Earnings and Outgo as required under Section 134) of the Companies Act, 2013 and Rule 8(3) of the Companies ( Accounts) Rules 2014, are given as in Annexure to this report. Human Resource, Industrial Relations, Environment, Occupational Health and Safety The Company is continuously focusing on managing talent and increasingly systematizing the HR processes. We have excellent industrial relations across all facilities including corporate office and strongly believe that the workers will continue to work towards profitable and productive company. The number of employees as on 31st March, 2015 was 251 as against 677 during FY2013-14, a net decrease of 426 employees. This is was largely due transfer of Domestic Branded division during the year. Conservation of energy, Technology Absorption & Research and Development (R & D) The company is conscious of its responsibility to conserve the energy and has taken measures in relation to conservation of energy and technology absorption. The particulars in respect to conservation of energy, Technology Absorption & Research and Development were given in the annexure to the Board's Report. Insider Trading Regulations Based on the requirements under SEBI (Prohibition of Insider Trading) Regulations, 2005, as amended from time to time, the code of conduct for prevention of insider trading and the code for corporate disclosures are in force. The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated persons of the Company, as per SEBI (Prohibition of Insider Trading) Regulations, 2015. Corporate Governance Report on Corporate Governance and Certificate of the Auditors of your Company regarding compliance of the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges, are enclosed elsewhere in the Annual Report and forms part of this report. Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 The Board of Directors has approved policy as per the said Act. And an Internal Complaints Committee was constituted, with following members: (i) Ms. Hemalatha, Commercial Manager - Chairperson (ii) Mr. Meenakshi Sundaram, HR - Member (iii) Ms. Sundari, HR Executive - Member The committee placed certificate before the Board of Directors on the status of compliance of the Act. As per the certificate provided by the said committee no complaints were received during the year & that there are no complaints pending as on 31st March, 2015. Corporate Social Responsibility The applicability of Corporate Social Responsibility under Sec 135 of the Companies Act, 2013 is not applicable to the Company. But however Company is committed to improve the quality of life of the workforce and their families and also the community and society at large. The Company believes in undertaking business in such a way that it leads to overall development of all stake holders and society. Secretarial Audit for the FY 2015-16 In terms of Section 204 of the Companies Act, 2013, the rules made thereunder & other applicable provisions, if any, the company is required to appoint Secretarial Auditor to carry out Secretarial Audit of the Company. Your Board of Directors has appointed M/s. A.K. Jain & Associates, Practicing Company Secretaries, Chennai for purpose of Secretarial Audit for the FY 2015-16 at the Board Meeting held on 29.05.2015. As required under section 204 (1) of the Companies Act, 2013 the Company has obtained a secretarial audit report and contains one qualification for non-appointment of CFO for the Company. The copy of the Secretarial Audit report in MGT 3 is attached as an annexure to the Director's Report. Reply to the qualification: The Company is taking necessary steps to appoint the Chief Financial Officer. Re-appointment of Mr. Gaurav Jain, Chartered Accountant, Chennai as Internal Auditors & approved their Scope, Functions, Periodicity & Methodology In terms of Section 138 of the Companies Act, 2013 & other applicable provisions, if any, Board of Directors at the Board Meeting held on 29.05.2015 has appointed Mr. Gaurav Jain, Chartered Accountant, and Chennai as Internal Auditors and further approved their Scope, Functions, and Periodicity & Methodology. "Audit Committee" In terms of Section 177 of the Companies Act, 2013 and other applicable provisions if any and as per the clause 49 of the Listing agreement the Audit committee comprises of 4 Directors out of which 3 are Non-Executive Independent Directors. The terms of reference of Audit Committee includes matters specified in section 177 of the Companies Act 2013 and Clause 49 of the Listing Agreement (as revised with effect from 1.10.2014). The Board has accepted all the recommendations of the audit committee made during the year "Nomination & Remuneration Committee" In terms of Section 178 of the Companies Act, 2013 & other applicable provisions, if any, Board of Directors at the Board Meeting held on 30.05.2014 has renamed the existing "Remuneration Committee" of the Board of Directors as "Nomination & Remuneration Committee". There was no change in the members of the Committee. The Policy of Nomination & remuneration committee were given in the corporate governance report. "Stakeholders Relationship Committee" In terms of Section 178 of the Companies Act, 2013 & other applicable provisions, if any, Board of Directors at their meeting held on 30.05.2014 renamed the existing "Investor Grievance & Share Transfer Committee" as "Stakeholders Relationship Committee". Management Discussion and Analysis Report Management Discussion and Analysis Report, as required under the Listing Agreement with the Stock Exchange is enclosed elsewhere in the Annual Report and forms part of this Report. Certain Statements in the report may be forward-looking. Many factors may affect the actual results, which could be different from what the Directors envisage in terms of future performance & outlook. Extract of Annual Return: The details forming part of the extract of the Annual Return in form MGT-9 is annexed along with the Director's 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 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the reports and accounts are being sent to the members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the members at the Registered office of the company during business hours on working days of the company up to the date of ensuing Annual General Meeting. If any member is interested in inspecting the same, such member may write to the company secretary in advance. Directors Responsibility Statement Your Directors wish to inform that the Audited Accounts contains Financial Statements for the financial year ended 31st March, 2015 are in full conformity with the requirements of the Companies Act, 2013. They believe that the Financial Statements reflect fairly the form and substance of transaction carried out during the year and reasonably present your Company's financial conditions and result of operations. Your Directors further confirm that in preparation of the Annual Accounts: The applicable accounting standards had been followed and wherever required, proper explanations relating to material departures have been given; • The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period; 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; • The Accounts have been prepared on a "going concern" basis. The directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively Acknowledgement and Appreciation Your Directors would like to thank Company's Bankers - SBI, EXIM, DBS, DCB, BOC & IDBI for their continued support and they would also like to express their gratitude for the co-operation and assistance extended to the Company by its Customers, Suppliers, Technical Consultants, Contractors, Government and Local Authorities, etc. The Directors also wish to thank all its Shareholders for their unstinted support. The Directors would like to sincerely thank and place on record their appreciation of the consistent and dedicated services of the employees at all levels who have immensely contributed to the performance of the Company during the period under review. On behalf of the Board of Directors For Bafna Pharmaceuticals Limited (CIN L24294TN1995PLC030698) Paras Bafna Whole Time Director (DIN: 01933663) Bafna Mahaveer Chand (DIN: 01458211) Chairman & Managing Director Place : Chennai Date: 29.05.2015 |