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THE MEMBERS OF JAGSONPAL PHARMACEUTICALS LIMITED
Your Directors have the pleasure in presenting their 36th Annual Report of the Company and the Audited Accounts, for the period ended 31st March, 2015.
Management Discussions & Analysis Report
The global pharmaceutical market is expected to reach $1 trillion by 2014 and nearly $1.1 trillion by 2015. The market will increase at a compound annual growth rate (CAGR) of 3–6% during the next five years, slowing from the 6.2% annual growth rate for the past five years.
Removing the effect of exchange–rate fluctuations, absolute global–spending growth will be $230–250 billion on a constant dollar basis compared with $228 billion in the previous five years, reckoning that the pharmaceutical market includes all types of biopharmaceuticals, including biologics, over–the–counter drugs and traditional medicines distributed and administered through regulated delivery systems, such as pharmacies, hospitals, clinics, physician offices, and mail order.
Indian Pharma Industry Scenario
The Indian pharmaceutical industry is estimated to register a turnover of around US$ 33.8 billion (Rs. 2,15,000 cr) by 2018, with a CAGR of 10.3 percent for the period 2015 – 2018. An increasing number of diagnoses and treatment of chronic ailments, fueled by an ascending trend in the per capita income, would be the key factors to drive this double–digit growth rate.
In 2013–14, pharma exports of the country with a turnover of US$ 14.84 billion grew at a meager 1.2 percent, which is the slowest growth in nearly the last 15 years. India still stands exposed in this area, unless meaningful corrective measures are taken forthwith. It is worth noting, although India exports drugs to over 200 countries in the world, the United States (US) alone accounts for about 25 percent of India's pharma exports.
Key issues and challenges on 'The Domestic Front':
Though 2015 would also witness the following important issues and challenges, meeting the same should not be difficult with a proper mindset and right strategies:
Drug Price Control Order 2013 (DPCO 2013)
Change in the mechanism of drug price control from earlier 'cost based' to newer 'market based' one and the specified provisions to neutralize inflationary impact of the input costs on the bottom line, based on the WPI, have already been considered as welcoming changes for the industry. As a result, despite implementation of the DPCO 2013, the pharma scripts continued to do well despite doomsayers' predicaments.
It is expected that the DPCO 2013 would not cause any significant negative impact in 2015 on the performance of pharma companies, as the price controlled drugs would in all probability continue to be around 20 percent of the total pharma market. Moreover, now annual price increases are linked to the WPI for the controlled products and the companies can increase prices of remaining 80 percent of decontrolled products, up to 10 percent every year, irrespective of inflationary trend.
However, any mechanism for patented products' pricing, if announced in 2015, would have far–reaching impact, especially on the MNCs marketing such drugs.
Credibility of Clinical Trial Data from India
Credibility of 'Clinical Trial Data' generated by the domestic players in India, has also become a cause of great concern, as the regulators in France, Germany, Belgium and Luxembourg suspended marketing approval for 25 drugs over the genuineness of clinical trial data from India.
Unethical practices in Clinical trial
In the Clinical Trial arena of India, responding to a Public Interest Litigation (PIL), the Supreme Court of the country and separately the Parliamentary Standing Committee had indicted the drug regulator and charted out some action areas.
The company has rolled–out its expansion plans by way of committing to increase the reach of its products, in a major way. The field force is being upped by nearly 50% and this will reflect in increased demand generation, as well as retail availability. The presence in corporate hospitals is also proposed to be increased in 2015–16.
Additionally, specialty–specific divisions have been formed, for focused working upon high–end specialty products.
The following doctor specialties are likely to contribute to the business of the company:
• IVF specialists
• Internal Medicine
• Orthopedic surgeons
• Dental surgeons
Your Directors are pleased to recommend for your consideration a dividend of 2% This will absorb a sum of Rs. 26,19,800/– (Sum for previous period Rs. 1,30,99,000/) exclusive of Corporate tax thereon).
The fixed deposits accepted prior to 1st April, 2014 were repaid in full during the year. No fresh deposits were accepted after April 1, 2014. The Company did not have any unclaimed / overdue deposits as on 31.03.2015
Particulars of Loan, Guarantees or Investments
The Company has neither given any loans nor provided any guarantee to entities as per provisions of Section 186 of the Act.
Mrs. Jasbir Kaur Kochhar, woman director, was appointed as additional director on 13th February, 2015, whose tenure ceases on ensuing annual general meeting, being eligible for appointment, the board recommends her appointment as woman director.
Mr. Rajpal Singh Kochhar is interested director in this appointment. Mrs. Jasbir Kaur Kochhar has inter – se –relationship mother – son.
M/s. P.P. Thukral & Co., Chartered Accountants, retired as auditors at the ensuing Annual General Meeting and are eligible for re–appointment as Auditors.
The Board has subject to approval of Central Government, re–appointed Mr. S. N. Balasubramanian as Cost Auditor for the year 2015–16.
Pursuant to provisions of the Companies Act, 2013, The Company is required to appoint Secretarial Auditors. Mr. Mukesh Arora, Practicing Company Secretary is appointed as Secretarial Auditor of the company.
The secretarial auditors' report for the year 2014–15 has been received from the Secretarial Auditors. The report does not contain any qualification, reservation or adverse remark. The report is annexed herewith as Annexure –C
Energy, Technology & Foreign Exchange
As stipulated under the provisions of the Companies Act, 2013, read with the (disclosure of particulars in the report of Board of Directors) rules, Annexure 'A' contains the particulars pertaining to Conservation of Energy, Technology absorption and Foreign Exchange earning and outgo.
The Company continued to maintain cordial relations with its employees at all levels. No man–days were lost during the period due to industrial strife. The information as required under the Companies Act, 2013, read with the Companies (Particulars of Employees) Rules, is enclosed in Annexure 'B' and forms part of this Report.
The Company is committed to good corporate governance in line with the Listing Agreement. The Company is in compliance with the provisions on corporate governance specified in the Listing Agreement with NSE & BSE.
A certificate of compliance from M/s Mukesh Arora & Co., Practicing Company Secretary and the report on Corporate Governance forms part of this Director's Report.
Directors Responsibility Statement
Pursuant to Section 134 of the Act, your Directors state that:
a In the preparation of the annual accounts for the year ended 31st March, 2015, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;
b the Directors have selected such accounting policies and applied them consistently and have made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the profit of the Company for the year ended on that date;
c the 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;
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 that such internal financial controls are adequate and are operating effectively; and
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.
Risk Management :
The Company has devised and implemented a mechanism for risk management and has developed a Risk Management Policy. The committee will, on quarterly basis, provide status updates to the Board of Directors of the Company.
Corporate Social Responsibility
The provisions of the Companies Act 2013 with respect to corporate responsibilities are not applicable on the Company.
Extract of Annual Return
Extract of Annual Return of the Company is annexed herewith as Annexure D to this report
Contracts And Arrangements With Related Parties
During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transaction.
The Board of Directors would like to record their appreciation and gratitude to all employees of the organisation for their active co–operation and involvement. Thanks are also due, to Jagsonpal customers, dealers, suppliers and bankers.
For and on behalf of the Board of Directors
RAJPAL SINGH KOCHHAR
Chairman & Mg. Director
Dated : 29th May, 2015
Place : New Delhi.