DIRECTORS' REPORT TO THE MEMBERS OF ORTIN LABORATORIES LIMITED, We have pleasure in presenting the 28th Annual report together with Audited accounts for the year ended 31st March, 2015. PERFORMANCE REVIEW: The Company has recorded a turnover of Rs. 6041.26 Lakhs and the Profit of Rs. 89.79 Lakhs in the current year against the turnover of Rs. 6713.64 Lakhs and the profit of Rs. 118.64 Lakhs in the previous financial year ending 31.03.2014. EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS: There were no material changes and commitments affecting financial position of the company between 31st March and the date of Board's Report. CHANGE IN THE NATURE OF BUSINESS: During the year the Company has not changed its business activities. DIVIDEND: Keeping the Company's expansion and growth plans in mind, your Directors have decided not to recommend dividend for the year. BOARD MEETINGS: The Board of Directors met 7 times during the year on 30.05.2014, 01.06.2014, 14.08.2014, 01.09.2014, 14.11.2014, 14.02.2015 and 31.03.2015 and the maximum gap between any two meetings was less than four months, as stipulated under Clause 49. DIRECTORS AND KEY MANAGERIAL PERSONNEL: Mr. D. Jagannadha Raju has resigned from the office of Directorship citing personal reasons during the year. The Board placed on record its sincere appreciation for the valuable services rendered by them during their tenure as directors of the Company. In accordance with the Companies Act, 2013 read with Articles of Association of the company the Director namely Mr. S. Mohan Krishna Murthy and Mr. S. Balaji Venkateswarlu retires by rotation and being eligible, offers themselves for re-appointment at this ensuing Annual General Meeting. Your Directors recommend their re-appointment. During the year, Ms. Lakshmi Sravani Dasari was appointed as additional director of the Company and Ms. Sharvari Suhas Khadke was appointed as Company Secretary. POLICY FOR SELECTION OF DIRECTORS AND DETERMINING DIRECTORS' INDEPENDENCE: 1. Scope: This policy sets out the guiding principles for the Nomination & Remuneration Committee for identifying persons who are qualified to become Directors and to determine the independence of Directors, in case of their appointment as independent Directors of the Company. 2. Terms and References: 2.1 "Director" means a director appointed to the Board of a Company. 2.2 "Nomination and Remuneration Committee means the committee constituted in accordance with the provisions of Section 178 of the Companies Act, 2013 and clause 49 of the Equity Listing Agreement. 2.3 "Independent Director" means a director referred to in sub-section (6) of Section 149 of the Companies Act, 2013 and Clause 49(II)(B) of the Equity Listing Agreement. 3. Policy: Qualifications and criteria 3.1.1 The Nomination and Remuneration Committee, and the Board, shall review on annual basis, appropriate skills, knowledge and experience required of the Board as a whole and its individual members. The objective is to have a board with diverse background and experience that are relevant for the Company's operations. 3.1.2 In evaluating the suitability of individual Board member the Nomination and Remuneration Committee may take into account factors, such as: 0 General understanding of the company's business dynamics, global business and social perspective; 0 Educational and professional background 0 Standing in the profession; 0 Personal and professional ethics, integrity and values; 0 Willingness to devote sufficient time and energy in carrying out their duties and responsibilities effectively. 3.1.3 The proposed appointee shall also fulfill the following requirements: 0 shall possess a Director Identification Number; 0 shall not be disqualified under the companies Act, 2013; 0 shall Endeavour to attend all Board Meeting and Wherever he is appointed as a Committee Member, the Committee Meeting; 0 shall abide by the code of Conduct established by the company for Directors and senior Management personnel; 0 shall disclose his concern or interest in any company or companies or bodies corporate, firms, or other association of individuals including his shareholding at the first meeting of the Board in every financial year and thereafter whenever there is a change in the disclosures already made; 0 Such other requirements as any be prescribed, from time to time, under the companies Act, 2013, Equity listing Agreements and other relevant laws. 3.1.4 The Nomination & Remuneration Committee shall evaluate each individual with the objective of having a group that best enables the success of the company's business. 3.2 Criteria of independence 3.2.1 The Nomination & Remuneration Committee shall assess the independence of Directors at time of appointment/ re-appointment and the Board shall assess the same annually. The Board shall re-assess determinations of independence when any new interest or relationships are disclosed by a Director. 3.2.2 The criteria of independence shall be in accordance with the guidelines as laid down in companies Act, 2013 and Clause 49 of the Equity Listing Agreement. 3.2.3 The independent Director shall abide by the "code for independent Directors "as specified in Schedule IV to the companies Act, 2013. 3.3 other directorships/committee memberships 3.3.1 The Board members are expected to have adequate time and expertise and experience to contribute to effective Board performance Accordingly, members should voluntarily limit their directorships in other listed public limited companies in such a way that it does not interfere with their role as director of the company. The Nomination and Remuneration Committee shall take into account the nature of, and the time involved in a director service on other Boards, in evaluating the suitability of the individual Director and making its recommendations to the Board. 3.3.2 A Director shall not serve as director in more than 20 companies of which not more than 10 shall be public limited companies. 3.3.3 A Director shall not serve an independent Director in more than 7 listed companies and not more than 3 listed companies in case he is serving as a whole-time Director in any listed company. 3.3.4 A Director shall not be a member in more than 10 committee or act chairman of more than 5 committee across all companies in which he holds directorships. For the purpose of considering the limit of the committee, Audit committee and stakeholder's relationship committee of all public limited companies, whether listed or not, shall be included and all other companies including private limited companies, foreign companies and companies under section 8 of the companies Act, 2013 shall be excluded. Remuneration policy for Directors, key managerial personnel and other employees 1. Scope: 1.1 This policy sets out the guiding principles for the Nomination and Remuneration committee for recommending to the Board the remuneration of the directors, key managerial personnel and other employees of the company. 2. Terms and Reference: In this policy the following terms shall have the following meanings: 2.1 "Director" means a director appointed to the Board of the company. 2.2 "key managerial personnel" means (i) The Chief Executive Officer or the managing director or the manager; (ii) The company secretary; (iii)The whole-time director; (iv)The chief financial Officer; and (v) Such other office as may be prescribed under the companies Act, 2013 2.3 "Nomination and Remuneration committee" means the committee constituted by Board in accordance with the provisions of section 178 of the companies Act, 2013 and clause 49 of the Equity Listing Agreement. 3. Policy: 3.1 Remuneration to Executive Director and key managerial personnel 3.1.1 The Board on the recommendation of the Nomination and Remuneration (NR) committee shall review and approve the remuneration payable to the Executive Director of the company within the overall approved by the shareholders. 3.1.2 The Board on the recommendation of the Nomination and Remuneration committee shall also review and approve the remuneration payable to the key managerial personnel of the company. 3.1.3 The remuneration structure to the Executive Director and key managerial personnel shall include the following components: (i) Basic pay (ii) Perquisites and Allowances iii)Stock Options (iv)Commission (Applicable in case of Executive Directors) (v) Retrial benefits (vi)Annual performance Bonus 3.1.4 The Annual plan and Objectives for Executive committee shall be reviewed by the NR committee and Annual performance Bonus will be approved by the committee based on the achievement against the Annual plan and Objectives. 3.2 Remuneration to Non - Executive Directors 3.2.1 The Board, on the recommendation of the NR Committee, shall review and approve the remuneration payable to the Non - Executive Directors of the Company within the overall limits approved by the shareholders as per the provisions of Companies Act, 2013. 3.2.2 Non - Executive Directors shall be entitled to sitting fees attending the meetings of the Board and the Committees thereof. The Non- Executive Directors shall also be entitled to profit related commission in addition to the sitting fees. 3.3. Remuneration to other employees 3.3.1. Employees shall be assigned grades according to their qualifications and work experience, competencies as well as their roles and responsibilities in the organization. Individual remuneration shall be determined within the appropriate grade and shall be based on various factors such as job profile skill sets, seniority, experience and prevailing remuneration levels for equivalent jobs. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS: The Company has received necessary declarations from Mr. J. R. K. Panduranga Rao, Mr. M. Tippayya, Mr. K. Pradyumna Teja, Mr. T. Seshagiri and Dr. B. Gopal Reddy Independent Directors of the Company under Section 149(7) of the Companies Act, 2013 that they as Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149(6). (Annexure II) VIGIL MECHANISM: Vigil Mechanism Policy has been established by the Company for directors and employees to report genuine concerns pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013. The same has been placed on the website of the Company. DIRECTORS RESPONSIBILITY STATEMENT: Pursuant to the provisions of Sec. 134(5) of the Companies Act, 1956 the Board of Directors of your Company hereby certifies and confirms that: a. In the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; b. The Directors have selected such accounting policies and applied them consistently and made judgment 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 and loss 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 the Companies Act, 2013 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 of the Company had laid down internal financial controls and such internal financial controls are adequate and were operating effectively. f. 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. STATUTORY COMPLIANCE: The Company has complied with the required provisions relating to statutory compliance with regard to the affairs of the Company in all respects. SUBSIDIARY COMPANY: Your Company does not have any subsidiary. EXTRACT OF ANNUAL RETURN: As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 as a part of this Annual Report (ANNEXURE I) AUDITORS: M/s. Mathesh & Ramana, Chartered Accountants, Statutory Auditors of the Company retire at the ensuing Annual General Meeting and being eligible, have expressed their willingness for re-appointment. Your directors propose the appointment of M/s. Mathesh & Ramana, Chartered Accountants, as statutory auditors to hold office until the conclusion of the next Annual General Meeting of the company. INTERNAL AUDITORS: There is no Internal Auditor appointed in the Company. SECRETARIAL AUDIT: Pursuant to the provisions of Section 134(3)(f) & Section 204 of the Companies Act, 2013, Secretarial audit report as provided by M/s. S. S. Reddy & Associates, Practicing Company Secretaries is annexed to this Report as annexure. AUDIT REPORTS: (a) Statutory Auditors Report: The Board has duly reviewed the Statutory Auditor's Report on the Accounts for the year ended March 31, 2015 and has noted that the same does not have any reservation, qualification or adverse remarks. However, the Board decided to further strengthen the existing system and procedures to meet all kinds of challenges and growth in the market expected in view of the robust capital market in the coming years. (b) Secretarial Audit Report: As per the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Board had appointed S. S. Reddy & Associates, Practicing Company Secretaries as Secretarial Auditor to conduct Secretarial audit of the Company for the financial year ended on March 31, 2015. Secretarial Audit Report issued by S. S. Reddy & Associates, Practicing Company Secretaries in form MR-3 is enclosed herewith. Secretarial auditors have observed that, the Company Secretary was appointed on 01.01.2015 and internal auditors were not appointed. CFO was appointed on 31.03.2015. It was also observed that the unsecured loans were taken from the other parties including directors of the Company. The Board has decided to ensure all the compliances scrupulously henceforth. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUT GO: The required information as per Sec.134 of the Companies Act 1956 is provided hereunder: A. Conservation of Energy Adequate measures have been taken to reduce energy consumption, wherever possible. Total energy consumption and energy consumption per unit of production is not applicable as company is not included in the industries specified in the schedule. B. Technology Absorption 1. Research and Development (R&D) : Nil 2. Technology absorption, adoption and innovation : Nil C. Foreign Exchange Earnings and Out Go Foreign Exchange Earnings : Nil Foreign Exchange Outgo : Rs. 23,06,752 PUBLIC DEPOSITS: Your Company has not accepted any deposits falling within the meaning of Sec.73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 during the financial year under review. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS: During the period under review there were no significant and material orders passed by the regulators or Courts or Tribunals impacting the going concern status and the company's operations in future. INSURANCE: The company's properties have been adequately insured against major risks. All the insurable interests of your Company including inventories, buildings, plant and machinery, stock and liabilities under legislative enactments are adequately insured. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS: The company has not given loans, Guarantees or made any investments during the year under review. RISK MANAGEMENT POLICY: Your Company follows a comprehensive system of Risk Management. Your Company has adopted a procedure for assessment and minimization of probable risks. It ensures that all the risks are timely defined and mitigated in accordance with the well structured risk management process. CORPORATE SOCIAL RESPONSIBILITY POLICY: Since your Company does not has the net worth of Rs. 500 crores or more, or turnover of Rs. 1000 crores or more, or a net profit of Rs. 5 crores or more during the financial year, so section 135 of the Companies Act, 2013 relating to Corporate Social Responsibility is not applicable to the Company and hence the Company need not adopt any Corporate Social Responsibility Policy RELATED PARTY TRANSACTIONS: During the year, the Company had entered into the contract/arrangement/transaction with related parties which could be considered material in accordance with the policy of the company on materiality of related party transactions. The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company's website at www.ortinlabsindia.com FORMAL ANNUAL EVALUATION: As per section 149 of the Companies Act, 2013 read with clause VII (1) of the schedule IV and rules made thereunder, the independent directors of the company had a meeting on 31.03.2015 without attendance of non-independent directors and members of management. In the meeting the following issues were taken up: (a) Review of the performance of non-independent directors and the Board as a whole; (b) Review of the performance of the Chairperson of the company, taking into account the views of executive directors and non-executive directors; (c) Assessing the quality, quantity and timeliness of flow of information between the company management and the Board that is necessary for the Board to effectively and reasonably perform their duties. The meeting also reviewed and evaluated the performance of non-independent directors. The company has 7 (Seven) non-independent directors namely: i.) Mr. S. Murali Krishna Murthy ii.) Mr. G. Venkata Ramana iii.) Mr. S. Mohan Krishna Murthy iv.) Mr. Balaji Venkateswarlu v.) Mr. S. Srinivasa Kumar vi.) Mr. B. Satyanarayana Raju vii) Ms. Lakshmi Sravani Dasari The meeting recognized the significant contribution made by non-independent directors in the shaping up of the company and putting the company on accelerated growth path. They devoted more time and attention to bring up the company to the present level. The meeting also reviewed and evaluated the performance of the Board as whole in terms of the following aspects: ¦ Preparedness for Board/Committee meetings ¦ Attendance at the Board/Committee meetings ¦ Guidance on corporate strategy, risk policy, corporate performance and overseeing acquisitions and disinvestments. ¦ Monitoring the effectiveness of the company's governance practices ¦ Ensuring a transparent board nomination process with the diversity of experience, knowledge, perspective in the Board. ¦ Ensuring the integrity of the company's accounting and financial reporting systems, including the independent audit, and that appropriate systems of control are in place, in particular, systems for financial and operational control and compliance with the law and relevant standards. It was noted that the Board Meetings have been conducted with the issuance of proper notice and circulation of the agenda of the meeting with the relevant notes thereon. DISCLOSURE ABOUT COST AUDIT: Cost Audit is applicable to your Company. M/s. KJU & Associates are the Cost Auditors of your Company. INDUSTRY BASED DISCLOSURES AS MANDATED BY THE RESPECTIVE LAWS GOVERNING THE COMPANY: The Company is not a NBFC, Housing Company etc., and hence Industry based disclosures is not required. SECRETARIAL STANDARDS EVENT BASED DISCLOSURES 1. Issue of sweat equity share: NA 2. Issue of shares with differential rights: NA 3. Issue of shares under employee's stock option scheme: NA 4. Disclosure on purchase by company or giving of loans by it for purchase of its shares: NA 5. Buy back shares: NA 6. Disclosure about revision: NA 7. Preferential Allotment : NA EMPLOYEE RELATIONS: Your Directors are pleased to record their sincere appreciation of the contribution by the staff at all levels in the improved performance of the Company. None of the employees is drawing Rs 5,00,000/- and above per month or Rs. 60,00,000/- and above in aggregate per annum, the limits prescribed under Section 134 of the Companies Act, 2013 DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaint Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees are covered under this policy. The following is the summary of sexual harassment complaints received and disposed during the calendar year. No. of complaints received: Nil No. of complaints disposed off: Nil ACKNOWLEDGMENTS: Your directors would like to express their grateful appreciation for assistance and co-operation received from clients, banks, investors, Government, other statutory authorities and all others associated with the company. Your directors also wish to place on record their deep sense of appreciation for the excellent contribution made by the employees at all levels, which enabled the company to achieve sustained growth in the operational performance during the year under review. For and on behalf of the Board of For Ortin Laboratories Limited Sd/- S. Murali Krishna Murthy Managing Director DIN:00540632 Date: 14.08.2015 Place: Hyderabad |