BOARD'S REPORT Dear Members The Board is pleased to present the Twenty-Eighth Annual Report and Audited Accounts for the financial year ended 31 March 2015 Performance review Net revenue and other income for the year ended 31 March 2015 was at Rs. 386.04 crore against Rs. 564.81 crore during the previous year representing decrease of 31.65 % over the previous year. Loss before tax for the year ended 31 March 2015 was at Rs. 75.44 crore against profit before tax Rs. 5.08 crore for the year ended 31 March 2014. Loss is mainly due to decrease in gross sales and other income which decreased from Rs. 626.04 crore to Rs. 427.02 crore during the year under review. Overall performance of the Company lower than that of previous year due to mis-match in input and output prices in chemical business and Company was not able to pass on the increased price of raw materials to its customers because of subdued sentiments in overall economy. Now Company continues to maintain strategic focus on grabbing more share in market, improvement in the product mix so as to increase the share of pharma business, capitalizing product level opportunities for which regulatory approvals have been received, product rationalization, cost effectiveness throughout the organization. Cash Flow Statement A Cash Flow Statement for the financial year 2014-15 is included in the annexed Statement of Accounts. Dividend The Board has not recommended any dividend due to inadequate profits during the year under review. Share Capital The paid up equity share capital of the Company has been increased from Rs. 28,81,51,640/- consisting of 2,88,15,164 equity shares of Rs. 10/-each to Rs. 47,65,55,020/- consisting of 4,76,55,502 equity shares of Rs. 10/- each due to allotment of 1,88,40,338 equity share of face value of Rs. 10/- each on the conversion of Preference Shares, Foreign Currency Convertible Bonds and Share Warrants and allotment on preferential basis during the year ended 31 March 2015. During the current year, the Company has allotted 33,00,000 equity share of face value of Rs. 10/- each on the conversion of Share Warrants resulting in total equity paid up capital of Rs. 50,95,55,020/- consisting of 5,09,55,502 equity shares of face value of Rs. 10/- each and still 52,50,000 Share Warrants are outstanding for conversion. Debt Restructuring The Joint Lender Forum (JLF) has sanctioned the comprehensive restructuring of all debts of the Company with cut-off date as 01 September 2014. The restructuring of facilities included restructuring of repayment schedule, interest funding, reduction in interest rates, sanction of working capital term loans. The Company is complying the provisions of debt restructuring approved by Joint Lender Forum (JLF) .There is no default in repayment of debts and interest thereon. Holding & subsidiary Company The Company has neither any holding company nor a subsidiary company. Internal financial control systems and their adequacy The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis Report, which forms part of this report. Loan, guarantees or investment under section 186 of the Companies Act, 2013 The particulars of loans, guarantees and investments have been disclosed in the financial statements. Awards The Company has been awarded with "2nd prize in National Energy Conservation Award" by the Ministry of Power, Government of India in chemical sector. The Company has been awarded the prize consecutively for nine years by the Ministry of Power, Government of India. Recognitions Following recognitions were received by the Company during the year under review: o Approval of US Food and Drug Administration (USFDA) in July 2015 to launch API business in US Market o Company has got "Two Star Export House" certificate from Joint Director General of Foreign Trade on 24 June 2015. o Company has got renewal of "HALAL CERTIFICATE" from Halal Committee, Jamiat Ulama - E - Maharashtra for Ibuprofen, Iso Butyl Benezene, Ethyl Acetate and other products of the Company for the year 2015-2016. o The Company has been awarded with CEP certification (Certificates of Suitability) dated 17 April 2015 for its product Metformin Hydrochloride by European Directorate for the Quality of Medicines & HealthCare (EDQM) authorities, Council of Europe, France. The certificate is valid for a period of five years from the date of issue. Now, the Company is able to sell Metformin Hydrochloride in Europe resulting into increase in higher value added export turnover and margin. The Company has already holding valid CEP certification (Certificates of Suitability) for its products Ibuprofen & Lamotrigine from European Directorate for the Quality of Medicines & HealthCare (EDQM) authorities, Council of Europe, France and selling these products in Europe Credit Rating The Credit Analysis & Research Ltd (CARE) has rated Company as "CARE BB-" (pronounced " Double B Minus") for Long Term Facilities and "CARE A4" (pronounced "A Four") for Short Term Facilities. Composition and Number of Meetings of the Board The Board comprises of well qualified and experienced persons having expertise in their respective areas. It has appropriate combination of Executive, Non Executive and Independent Directors. During the financial year 2014-15, the Board met 9 (nine) times on 21 May 2014, 30 May 2014, 20 June 2014, 14 August 2014, 22 August 2014, 29 October 2014, 28 November 2014, 31 December 2014 and 13 February 2015. Directors /Key Managerial Personnel In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr Vijay Singla is liable for retire by rotation at the ensuing Annual General Meeting and being eligible has offered himself for re-appointment. The Board has recommended the re-election to the members. Mr Vikas Gupta appointed as an Additional Director and Executive Director of the Company with effect from 29 May 2015 on the recommendation of Nomination and Remuneration Committee and shall hold office upto the date of ensuing Annual General Meeting. He is BSc (Hons.) in Business Management from Kings College London. The Company has received requisite notice from a member proposing his name for appointment as director of the Company. The Board recommends his appointment as Executive Director for a term of five years. The tenure of Mr Varinder Gupta as Managing Director of the Company is expiring on 31 August 2015. He is re-appointed as Managing Director of the Company for the period of 3 years from 01 September 2015 to 31 August 2018 on the recommendation of Nomination and Remuneration Committee held on 29 May 2015. The Board recommends his re-appointment to the mambers. Mr Pardeep Khanna was appointed as Chief Financial Officer(CFO) of the Company w.e.f. 13 August 2015 in place of Mr Rakesh Mahajan. The Company is enhanced the role of Mr Rakesh Mahajan with higher responsibilities. Woman Director In terms of the provisions of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Company has appointed Dr Sandhya Mehta as Independent Director on the Board since 22 August 2014, who is presently the member of Audit and Risk Management Committee and Nomination and Remuneration Committee. Board Evaluation The Board has carried out an annual evaluation of its own performance, Board Committees and Independent Directors pursuant to the provisions of the Companies Act, 2013 and the corporate governance requirements as prescribed by Securities and Exchange Board of India ("SEBI") under Clause 49 of the Listing Agreements ("Clause 49"). The Board has evaluated the performance of Independent Directors mainly on the basis of their constructive participation in the Board/ Committee proceedings, their ability to monitor the management performance, providing guidance in the key issue in the best interest of the Company and their commitment to the ethical and to fulfillment of fiduciary and other duties assigned by the various act, regulation and rules by the Government. The performance evaluation of the Chairman and the Non-Independent Directors was carried out by the Committee of Independent Directors. Nomination and Remuneration Policy The Nomination and Remuneration Committee has formulated the Nomination and Remuneration Policy on directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director in compliance with Section 178 of the Companies Act, 2013 read along with the applicable rules thereto and Clause 49 of the Listing Agreement. The Nomination and Remuneration Policy is annexed hereto as Annexure I and forms part of the report. Directors' Responsibility statement Pursuant to the provisions of Section 134(5) of the Companies Act, 2013 the Directors of your Company confirm that: a) in the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures. b) they 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 and of the profit or loss of the Company for that period. c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. d) they have prepared the annual accounts on a going concern basis. e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively; and f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Declaration by Independent Directors Every Independent Director, at the first meeting of the Board in which he participates as a Director and thereafter at the first meeting of the Board in every financial year, gives a declaration that he meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Corporate Governance The Company has in place a system of corporate governance. A separate report on corporate governance alongwith Auditors' Certificate regarding compliance with Clause 49 of the Listing Agreement is annexed to this Annual Report. Management Discussion and Analysis Report Management Discussion and Analysis Report is given separately in this Annual Report. Audit and Risk Management Committee The composition and role of the Committee has been provided in the Corporate Governance Report annexed with the report. Risk management The Board has formed a Audit and Risk Management Committee inter alia to frame, implement and monitor the risk management plan for the Company. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The development and implementation of risk management policy has been covered in the Management Discussion and Analysis Report, which forms part of this report. Related Party Transactions All related party transactions that were entered into during the financial year were on arm's length and were in the ordinary course of business. All related party transactions were placed before the Audit and Risk Management Committee of the Board for their approval. The Committee has granted omnibus approval for related party transactions as per the provisions and restrictions contained in the Listing Agreement The Company has formulated a policy on materiality of related party transactions and also on dealing with related party transactions. The policy is available on the Company's website www.iolcp.com Fixed Deposits The Company has not accepted any fixed deposits from the public/ members during the year under review. Investor services The Company is committed to provide the best services to the shareholders/ investors. M/s Alankit Assignments Limited, New Delhi is working as Registrars and Share Transfer Agents (RTA) of the Company for transfer, dematerialization of shares and other investor related services. No correspondence /enquiry from any shareholder/ investor is pending with the Company for reply. Listing of Shares The equity shares of the Company continued to be listed and traded on National Stock Exchange of India Limited (Script code; IOLCP) and BSE Limited (Script code; 524164). The Company has made all compliances of the Listing Agreements including payment of annual listing fee. Change of Industrial Classification Recently NSE and BSE has changed the industrial classification of the Company from specialty chemicals to pharmaceuticals. Auditors Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Rules framed thereunder, M/s S C Vasudeva & Co., Chartered Accountants, New Delhi were appointed as statutory auditors of the Company from the conclusion of the twenty seventh Annual General Meeting of the Company held on 30 September 2014 till the conclusion of the thirty first Annual General Meeting to be held in the year 2018, subject to ratification of their appointment at every Annual General Meeting of the Company. In terms of aforesaid provisions, the appointment of auditors' is placed for rectification by the members. Statutory Auditors' Report Auditors' Report on the accounts is self-explanatory and does not contain any qualifications, reservations or adverse remarks. Secretarial Audit Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed M/s B. K. Gupta & Associates, Practicing Company Secretaries for conducting secretarial audit of the Company for the financial year 2014-2015. The Secretarial Audit Report is annexed hereto as Annexure II and forms part of the report. The Secretarial Audit report does not contain any qualification, reservation or adverse remark. Cost Auditors Pursuant to the provisions of Section 139 of Companies Act, 2013, Company has appointed M/s Ramanath Iyer & Co., Cost Accountants, New Delhi as Cost Auditor to conduct the audit of cost accounts of bulk drugs and chemicals maintained by the Company, for the financial year 2015-16, subject to determination of their remuneration by members of the Company thereto. The Cost Audit Report for the year ended 31 March 2014 has been filed on 03 September 2014 with Ministry of Corporate Affairs, New Delhi. Energy Conservation / Technology Absorption and Foreign Exchange Earnings and Outgo Energy conservation continues to be an area of major emphasis in the Company. A statement giving details of conservation of energy, technology absorption, foreign exchange earnings and outgo, in accordance with Section 134 of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is annexed hereto as Annexure III and forms part of the report. The Company has awarded with "2nd Prize in National Energy Conservation Award" in consecutively for nine years by Ministry of Power, Government of India for its continued efforts towards new technology implementation so as to conserve the energy resources of the country. Extract of Annual Return The details forming part of the extract of the Annual Return in Form MGT 9 is annexed herewith as Annexure IV forming part of the Annual Report. Particulars of remuneration and related disclosures Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annexure V forming part of the Report. In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, there has no employee who was in receipt of remuneration equal to or exceeding Rs. 60 lacs per annum or Rs. 5 lacs per month if employed for part of the year. Industrial Relations Industrial relations remained cordial and harmonious throughout the year under review. Safety, Health and Environment Safety is Company's top priority with regard to employment and it is encouraging safety measures at all levels of operations especially at the floor level. Regular training programmers are being conducted to bring in awareness about the importance of safety at work place. Bi-monthly medical camps are also being organized for welfare of the members in addition to regular medical facilities provided to them. Prevention of Sexual Harassment Policy The Company has in place a Prevention of Sexual Harassment policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the year 2014-2015, no complaints was received by the Company related to sexual harassment. Vigil Mechanism In pursuant to the provisions of Section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.iolcp.com Acknowledgement We are pleased to place on record our sincere gratitude and appreciation for assistance and co-operation received from the Union Government, Punjab Government, Company's Bankers, Members, Customers and Business Constituents. We also place on record our sincere appreciation for contribution made by the employees at all levels. Our consistent growth is made possible by their devout, sincere and unstinted services. For and on behalf of the Board Sd/- Varinder Gupta Managing Director DIN: 00044068 Sd/- Dr M A Zahir Chairman DIN: 00002973 Place : Ludhiana Dated : 13 August 2015 |