DIRECTORS' REPORT Your Directors take immense pleasure in presenting the 20th Annual Report on the business and operations of the Company along with the Audited Financial Statements for the year ended 31st March, 2015. Share Capital During the year, the paid-up share capital of your Company has been increased by Rs. 2,35,090 due to the allotment of 23,509 equity shares of Rs. 10 each on exercise of stock options by the eligible employees under ESOP Scheme 2011. The paid up Equity Share Capital as on 31st March, 2015 was Rs. 22.06 crores comprising of 4,41,13,440 Shares of Rs. 5 each. During the year, the Equity Shares of the Company was subdivided from the face value of Rs. 10 to Rs. 5 per share after obtaining the consent from the members of the Company by way of E-voting/Postal Ballot. ESOP issuance The Company has framed an ESOP Scheme 2011 for the benefit of its employees under which it has issued 23,509 equity shares. Pursuant to the provisions of the Securities & Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended from time to time, the details of Stock Options as on March, 2015 under the "Amended Employee Stock Option Scheme, 2011" ("Scheme") are set out as Annexure- 1. Dividend You will be happy to know that your Directors proposed a Dividend of Rs. 2.50 per equity share for the financial year 2014-15. The proposed dividend, subject to approval of Shareholders in the ensuing Annual General Meeting of the Company, would involve an outflow of Rs. 1,102.84 lacs towards dividend and Rs. 224.51 lacs towards dividend distribution tax, resulting in a total outflow of Rs. 1,327.35 lacs. The dividend would be payable to all Shareholders whose names appear in the Register of Members and in respect of shares held in dematerialized form, the dividend will be paid to members whose names are furnished by the National Securities Depository Limited and Central Depository Services (India) Limited to the eligible shareholders on book closure date. Transfer to Reserves The Board of Directors has proposed to transfer Rs. 2,000.00 lacs to General Reserves out of the amount available after appropriations and balance of Rs. 8,144.85 lacs is being carried to the Balance Sheet. Subsidiaries and Associate The subsidiary companies performed as follows: • Poly Medicure (Laiyang) Co. Ltd, China - The wholly owned subsidiary Company has achieved a turnover of Rs. 1,665.86 lacs for the year ending March, 2015 against Rs. 951.50 lacs in the previous year ending March, 2014. • US Safety Syringes Co., LLC, USA - The subsidiary company could not do any business activities due to non-viability and therefore action is being taken for the winding up of the Company. The Company has one Associate in Egypt, viz. Ultra for Medical Products, Egypt - The Associate is performing well and has achieved sales of Rs. 4,611.95 lacs during the year ending December 2014, against Rs. 3,930.91 lacs in the previous year ending December 2013. Transfer of Unpaid/Unclaimed Dividend Amounts to Investor Education and Protection Fund During the Year under review, the Company has transferred Rs. 93,705 lying in the unpaid/unclaimed dividend account, to the Investor Education and Protection fund (IEPF) in compliance with Section 205C of the Companies Act, 1956, read with Investor Education & Protection Fund (Awareness and Protection of Investors) Rules, 2001. The said amount represents the dividend for the year 2006-07 which remained unclaimed by the shareholders of the Company for a period of seven years from due date of payment. Directors In view of the provisions of the Companies Act, 2013, Smt. Mukulika Baid is liable to retire by rotation at the ensuing Annual General Meeting, and she offers herself for re-appointment. The information as required to be disclosed under Clause 49 of the Listing Agreement, in case of re-appointment of directors is provided in the Notice of the ensuing Annual General Meeting of the Company. Pursuant to Section 149(4) of the Companies Act, 2013, every Listed Company is required to appoint one third of its Directors as Independent Directors. The Board has five Independent Directors in terms of the provisions of Clause 49 of the Listing Agreement. Necessary details in respect of the directors are given in the Corporate Governance Report. The Independent Directors have submitted their respective declarations of Independence, as required pursuant to Section 149(7) of the Companies Act, 2013 confirming that they meet the criteria of Independence specified in the Act and the Rules made thereunder as also under new Clause 49 of the Listing Agreement. Directors' Responsibility Statement Pursuant to Section 134(3)(c) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge hereby state and confirm that: a) in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures. b) the 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 and of the profit of the company for that period. c) the directors 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) the directors have prepared the annual accounts on a going concern basis. e) the directors have laid down internal financial controls to be followed by the company and such internal financial controls are adequate and are operating effectively. f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. Policy on Directors' Appointment and Remuneration The policy of the Company on directors' appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178 of the Companies Act, 2013, adopted by the Board are covered in Corporate Governance Report which forms part of this Report. Further, the policy also indicates the manner of performance evaluation of Independent Directors, Board committees and other individual Directors which include criteria for performance evaluation of the non-executive and executive directors. The Company's Policy relating to appointment of Directors, payment of Managerial remuneration, Directors' qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 is furnished in Annexure - 2 and forms part of this Report. Extract of the Annual Return The extract of the Annual Return in Form No. MGT-9 forms part of the Boards Report and is annexed herewith as Annexure - 3. Auditors and Auditors' Report Statutory Auditors At the 19th Annual General Meeting held on September 23, 2014 M/s. Doogar & Associates, Chartered Accountants, (Firm Registration No.- 000561N), were appointed as Statutory Auditors of the Company to hold office till the conclusion of the 24th Annual General Meeting of the Company to be held in the year 2019. In terms of the provision of Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly the appointment of M/s. Doogar & Associates, Chartered Accountants, (Firm Registration No.- 000561N), as Statutory Auditors of the Company, is being placed for ratification by the shareholders. The Company has received letters from the auditors to the effect that their re-appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for re-appointment. The observations of the Auditors and the relevant notes on the accounts are self-explanatory and therefore do not call for any comments. The Auditors' Report does not contain any qualification, reservation or adverse remark. Further, during the year, in the course of the performance of their duties as auditor, no frauds were reported by them. Cost Auditor The Board of Directors has appointed M/s. Jai Prakash & Co., Cost Accountants as Cost Auditor for conducting the audit of cost records of the Company for the financial year 2015-16. Secretarial Auditor The Board of Directors has appointed M/s. B.K. Sethi & Company, (Certificate of Practice No.- 913), Company Secretaries in Practice to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed this Report as Annexu re - 4. The Board of Director has appointed M/s. B.K. Sethi & Company, Company Secretaries in Practice to conduct Secretarial Audit for the financial year 2015-16. Particulars of Loans, Guarantees or Investments under Section 186 The Particulars of Loans, Investments and guarantees made/given by the Company, under Section 186 are furnished in Annexure - 5 and forms part of the Report. Particulars of Contracts or Arrangements with Related Parties The particulars of every contract and arrangement entered into by the Company with related parties referred to in subsection (1) of Section 188 of the Companies Act, 2013 including certain arm's length transactions under third proviso thereto are disclosed in Form No. AOC - 2 in Annexure - 6 and form part of this Report. Fixed Deposits Your Company has not accepted/or invited any Fixed Deposits within the meaning of Section 58A of the Companies Act, 1956 and Section 73 of the Companies Act, 2013, and as such, no amount of Principal or interest was outstanding as on the date of the Balance Sheet. Corporate Social Responsibility The Board of Directors of your Company has adopted a CSR Policy of the Company as approved by the Corporate Social Responsibility Committee which is also available on the website of the Company at <http://www.polymedicure.com/wp->content/uploads/2015/03/CSR_Policy_2015.pdf. The Annual Report on CSR as per Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed herewith as Annexure - 7 to this Report in the prescribed format. Details In Respect of Adequacy of Internal financial controls with reference to the financial statements The Risk Management and Governance Department of the Company have certified the existence of various controls in the Company and also tested the key controls towards assurance for compliance for the present fiscal. Further, the testing of such controls shall also be carried out independently by the Statutory Auditors from the financial year 2015-16 onwards as mandated under the provisions of the Companies Act, 2013. In the opinion of the Board, the existing internal control framework is adequate and commensurate with the size and nature of the business of the Company. Details pursuant to Section 197(12) of the Companies Act, 2013 Details pursuant to Section 197(12) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report and are annexed herewith as Annexure- 8. Quality The Company continues its journey of delivering value to its customers. It adopted several significant external benchmarks and certifications. Poly Medicure is certified under various standards to meet the clients' demands & enhanced value delivery. The Company has been accredited with the International Quality Certifications. (ISO) successfully implemented a well-documented QMS (Quality Management System) which has been certified by Det Norske Veritas As (DNV GL) ISO 9001:2008, ISO-13485:2003, EN ISO 13485:2012 and CE mark (Product Certification) thus making the entire product range compliant with International Quality Standards. Credit Rating CRISIL has reviewed the Credit rating of the Company and has upgraded / Re-affirmed, the ratings on the bank facilities of the Company as under: Long-Term Rating CRISIL A+/ Stable (Up-graded from CRISIL A / Positive) Short Term Rating CRISIL A1 (Re-affirmed) Foreign Currency Exposure As a major share of Company's revenue is earned in foreign currencies while major share of expenditure is made in Indian Currency, the Company is obviously exposed to foreign currency Fluctuation risks. The Company has designed a review and control mechanism to minimize/mitigate the risk which is reviewed periodically. Foreign currency exposures are managed through Foreign Risk Management and Hedging policy. The policy is reviewed periodically to ensure that the risk from fluctuating currency exchange is appropriately managed. Corporate Governance Your Company always strives to ensure that best Corporate Governance practices are identified, adopted and consistently followed. Your Company believes that Good Corporate Governance is the basis of sustainable growth of the business and for enhancement of Stakeholders' value. The Corporate Governance Report forms an integral Part of this Report and is set out separately in sections in this Annual Report. The Report on Corporate Governance along with certificate from M/s B.K. Sethi & Co., Practicing Company Secretaries confirming compliance of Corporate Governance as stipulated in the Clause 49 of the Listing Agreement of Stock Exchanges is also annexed and forms part of this Annual Report. All Board Members and Senior Management Personnel have affirmed compliance with Code of Conduct as applicable to them for the year ending on 31st March, 2015. A declaration to this effect as signed by the Managing Director is annexed with this Report. Management Discussion and Analysis Report The Management Discussion and Analysis Report on the operations of the Company, as required under the Listing Agreement with the Stock Exchanges is provided in "Annexure-9" forming part of Directors' Report. Listing The Shares of your Company are listed on the Bombay Stock Exchange Limited (BSE), Mumbai and National Stock Exchange of India Limited, (NSE), Mumbai. The Listing fees to the Stock Exchanges for the year 2015-16 have been paid. Particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo The information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are given in "Annexure 10" and forming an integral part of this Report. Green Initiatives To take part in Green Initiative in the Corporate Governance, we propose to send documents such as Notices of General Meeting(s), Financial Statements, Annual Reports and other shareholders communications including Annual Report for the year ended 31st March 2015 in electronic form, to the email addresses provided by you and/or made available to the Company by the Depositories. The copy of annual report shall be available on the website of the Company and for inspection at the registered office of the Company, during office hours. In case any member wishes to get Annual Report and other communication in physical form, he may write to the company and the same will be provided free of cost. Electronic copies of the Annual Report 2014-15 and Notice of the 20th Annual General Meeting would be sent to all members whose email addresses are registered with the Company/Depository Participant(s). For members who have not registered their email addresses, physical copies of the Annual Report 2015 and the Notice of the 20th Annual General Meeting would be sent in the permitted mode. Acknowledgements & Appreciation Your Directors wish to place on record their sincere appreciation for the continued co-operation and support extended to the Company by customers, vendors, legal advisors, consultants, business associates and all the employees, without whose cooperation the Company would not have achieved the results that have achieved. Yours Directors wish to acknowledge the valuable trust and confidence placed by the Joint Ventures Partners, Banks, Institutions, Investors and customers. The Directors look forward to continued co-operation for the future. For and on behalf of Board D. R. Mehta Himanshu Baid Chairman Managing Director DATE : 31st July, 2015 PLACE : New Delhi |