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373.90
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Updated:24 May, 2019, 15:48 PM IST

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Updated:24 May, 2019, 16:01 PM IST

Disclosure in board of directors report explanatory

DIRECTORS’ REPORT

 

Your directors have pleasure in presenting the Company’s 9th annual report along with the audited financial statements, for the year ended 31 March 2014.

 

Financials

(Rs. in Million)

 

2013–14

2012–13

Revenue (Net)

11,597

7,185

EBITDA

2,206

1,499

Interest

639

412

Depreciation

329

226

Profit before tax

1,238

861

Profit after tax

991

882

 

Business Operations

 

During the year the Company achieved:

      Growth of  61 % revenue, 47 % EBITDA and 44 % PBT over previous year

      Development of 8 API Products totaling to 45 commercialised Products

      Filing of 1 drug master file totaling to 24 products and validated 3 drug master files owned by customers

      Filing of 25 patents totaling to 93 patents

      Expansion of 3 additional production blocks with a capex of around Rs.1.30 Billion in the existing manufacturing facility situated in JNPC, Visakhapatnam

      Construction of another large scale manufacturing facility in JNPC, Visakhapatnam, which will be operational from June 2014

      Acquisition of two pieces of land admeasuring 45.00 and 44.30 acres in Acthuthapuram, Visakhapatnam for future expansion.

      Infusion of equity of Rs.3.00 Billion into the Company by one of the world renowned private equity firm and the same is going to be completed shortly

      Acquisition of Viziphar Biosciences Private Limited as wholly owned subsidiary in order to enter into natural Ingredients business

 

Outlook

 

Business prospects remaining positive because of the growing global demand for generics and opportunities provided by patent expires in developed markets. 

 

The business proportions and synergies forms part of growth prospects detailed in the Management’s Discussion and Analysis (MDA), which forms part of this Annual Report.

 

 

 

 

Human resources

 

The management believes that the competent and committed human resources are vitally important to attain success in the organization.  In line with this philosophy, utmost care is being exercised to attract quality resources and suitable training is imparted on various skill–sets and behavior.  Annual sports and games were conducted across the organization to enhance the competitive spirit and encourage bonding teamwork among the employees. 

 

 

Employee Stock Options

 

During the year the Company has allotted 139,125 equity shares of Rs.10 each to the eligible employees.  Further 38,500 stock options were granted to the eligible employees at an exercise price of Rs.10 each (Refer Nos.4 and 29 of Notes to financial statements) pursuant to the Employee Stock Option Plan 2011.

 

 

Shifting of Registered Office

 

The registered office of the Company shifted from ‘2nd Floor, Serene Chambers, Road No.7, Banjara Hills, Hyderabad 500034’ to ‘Plot No.21, JN Pharma City, Parawada, Visakhapatnam 531021’ for operational convenience because most of the manufacturing facilities are located in the region of proposed new state of Andhra Pradesh.

 

 

Directors

 

Mr. Amal Ganguli, Independent Director retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment.

 

 

Auditors

 

S.R.Batliboi Associates LLP, Chartered Accountants, the auditors of the Company retire at the ensuing Annual General Meeting and have confirmed their eligibility and willingness to accept office, if reappointed.

 

 

Fixed deposits

 

The Company did not accept any fixed deposits.

 

 

 

Director’s Responsibility Statement

 

In accordance with the requirements of Section 217(2AA) of the Companies Act, 1956, the Directors of the Company declare that:

 

·         All applicable accounting standards were followed in the preparation of financial statements.

·         Such accounting policies were selected and applied consistently and judgments and estimates were made that were 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 2014.

·         Proper and sufficient care was taken to maintain adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

·         The annual accounts have been prepared on a going concern concept.

 

Particulars of employees

 

In accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 the list of employees drawing remuneration exceeding Rs.5.00 Lakhs per month is given in the Annexure 2 and appended hereto and forms part of this Report.

 

 

Conservation of energy, technology absorption and foreign exchange earnings/outgo

 

The information required under Section 217 (1) (e) of The Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is appended hereto and forms part of this Report.

 

 

 

 

Acknowledgements

 

Your Directors would like to place on record their sincere appreciation to customers, business associates, bankers, vendors, government agencies and shareholders for their continued support.

 

Your Directors are also happy to place on record their sincere appreciation to the co–operation, commitment and contribution extended by all the employees of the Laurus family and look forward to enjoying their continued support and cooperation.

 

Hyderabad

29th April 2014

For and on behalf of the Board

 

Dr. C. Satyanarayana

Chief Executive Officer

 

 

V. V. Ravi Kumar

Executive Director


ANNEXURE – 1

 

FORM A – Particulars with respect to Conservation of Energy

Power and Fuel Consumption

Particulars

2013–14

2012–13

1.            Electricity

 

 

                a. Purchases

 

 

                    Units                    

 27,370,892

 15,138,270

                    Total Amount – (Rs. in millions) 

              180

          83.39

                     Rate/Unit– Rs.

6.57

5.51

                b. Private Purchases:

 

 

                    Units                    

 9,579,883

                   Total Amount – (Rs. in millions) 

54

                   Rate/Unit – Rs.                                        

5.66

                c. Own generation through Diesel Generator

 

 

                    Units                    

   2,685,538

7,581,347

                    Total Amount – (Rs. in millions)                   

45.52

96.43

                     Rate/Unit – Rs.               

16.95

12.72

2.            Coal (D/C grade)

 

 

                Quantity (Kgs)     

6,638,930

6,824,130

                Total Cost – (Rs. in millions)

32.66

40.23

                Average rate /Kg – Rs.  

4.92

5.90

 

 

 

3.            Steam  Bought out

 

 

               Quantity (M.T.)                                                    

26,227

19,794

               Total Cost – (Rs. in millions)

18.78

10.47

               Average rate /MT – Rs.  

716.21

528.93

 

Expenditure on R&D                                                                        

 

Particulars

2013–14

2012–13

a. Capital

34.51

32.96

b. Recurring

389.89

332.54

Total

424.40

 365.50

 

 

 

 

 

Form – B Particulars with respect to technology absorption – Research and Development (R&D)

 

1.      Specific areas in which R&D is carried out by the Company    

Process Development for Active Pharmaceutical Ingredients and Intermediates.

Development of Nutraceutical Ingredients and Fine Chemicals.

Process optimization for new chemical entities, intermediates thereof  developed by International Pharma companies as Contract Research and Manufacturing services

Development of Process for Drug Product as Contract Research Services

2.      Benefits derived as a result of the above R&D

Developed novel processes and achieved cost and process efficiencies on existing products. 

Developed the process for new products.  Developed Polyphenolic Nutraceutical Ingredients.

3.      Future plan of action

To develop novel processes for additional Active Pharmaceutical Ingredients and intermediates. 

To develop the processes using alternate technologies for Active Pharmaceutical Ingredients, Nutraceutical Ingredients to reduce the costs by improving the process efficiencies

Expand the portfolio of Nutraceutical Ingredients and Fine Chemicals

Continue to expand Contract Research and Manufacturing Services.

Technology absorption, adaptation and innovation

1.      Efforts in brief, made towards technology absorption & adoption

No technology absorption is involved. The Company has its own R&D center which has been developing and improving processes for manufacture of active pharmaceutical ingredients and drug intermediates.

2.      Benefits derived as a result of the above efforts

Processes for several active pharmaceutical ingredients have been developed. Process optimisation was achieved in production, which resulted in lower cost of production and substantial exports.

3.      Information regards import of technology during the last 5 years

There was no import of technology.

 

Form – C

Foreign exchange earnings and outgo

Please refer information given in the Notes to Financial Statements of the Company in item nos. 38 to 40

 

 

ANNEXURE 2 – Information as per Section 217 (2A) of the Companies Act, 1956

 

Name and Designation of the Employee

Qualification

Age

Date of Joining

Experience

Remuneration                 (Rs in Million)

Previous

Employer

Dr Satyanarayana C

M Sc, Ph D

51

1 Sep 05

28

45.73

Matrix  Laboratories, India

Dr Raju S Kalidindi

M Sc, Ph D

51

3 Apr 06

28

14.24

Mayne Pharma, Australia

Ravi Kumar VV

M Com, FCMA

49

30 Nov 06

25

14.24

Matrix  Laboratories, India

Martyn Oliver James Peck

B Sc

45

18 Aug 08

25

14.80

Mayne Pharma, Australia

Dr Anjaneyulu GSR

M Sc, Ph D

52

5–Feb–07

29

8.48

Matrix  Laboratories, India

Dr Venkata Lakshmana Rao C

M Sc, Ph D

51

7–Feb–07

26

6.45

Mayne Pharma, Australia

 

Notes: Remuneration includes basic salary, allowances, taxable value of perquisites, etc. The term remuneration has the meaning assigned to it in the Explanation to Section 198 of the Companies Act, 1956.

            None of the above employees are relatives to any director of the Company.

            None of the above employees own more than 2% of the outstanding shares of the Company as on March 31, 2014 except Dr Satyanarayana, Dr Raju S Kalidindi and Ravi Kumar VV.

The nature of employment is contractual in all the above cases.

 

Details regarding energy conservation

Conservation of energy, technology absorption and foreign exchange earnings/outgo The information required under Section 217 (1) (e) of The Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is appended hereto and forms part of this Report. FORM A – Particulars with respect to Conservation of Energy Power and Fuel Consumption Particulars 2013–14 2012–13 1. Electricity a. Purchases Units 27,370,892 15,138,270 Total Amount – (Rs. in millions) 180 83.39 Rate/Unit– Rs. 6.57 5.51 b. Private Purchases: Units 9,579,883 Total Amount – (Rs. in millions) 54 Rate/Unit – Rs. 5.66 c. Own generation through Diesel Generator Units 2,685,538 7,581,347 Total Amount – (Rs. in millions) 45.52 96.43 Rate/Unit – Rs. 16.95 12.72 2. Coal (D/C grade) Quantity (Kgs) 6,638,930 6,824,130 Total Cost – (Rs. in millions) 32.66 40.23 Average rate /Kg – Rs. 4.92 5.90 3. Steam Bought out Quantity (M.T.) 26,227 19,794 Total Cost – (Rs. in millions) 18.78 10.47 Average rate /MT – Rs. 716.21 528.93

Details regarding foreign exchange earnings and outgo

Form – C Foreign exchange earnings and outgo Please refer information given in the Notes to Financial Statements of the Company in item nos. 38 to 40

Particulars of employees as per provisions of section 217

Particulars of employees In accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 the list of employees drawing remuneration exceeding Rs.5.00 Lakhs per month is given in the Annexure 2 and appended hereto and forms part of this Report. ANNEXURE 2 – Information as per Section 217 (2A) of the Companies Act, 1956 Name and Designation of the Employee Qualification Age Date of Joining Experience Remuneration (Rs in Million) Previous Employer Dr Satyanarayana C M Sc, Ph D 51 1 Sep 05 28 45.73 Matrix Laboratories, India Dr Raju S Kalidindi M Sc, Ph D 51 3 Apr 06 28 14.24 Mayne Pharma, Australia Ravi Kumar VV M Com, FCMA 49 30 Nov 06 25 14.24 Matrix Laboratories, India Martyn Oliver James Peck B Sc 45 18 Aug 08 25 14.80 Mayne Pharma, Australia Dr Anjaneyulu GSR M Sc, Ph D 52 5–Feb–07 29 8.48 Matrix Laboratories, India Dr Venkata Lakshmana Rao C M Sc, Ph D 51 7–Feb–07 26 6.45 Mayne Pharma, Australia Notes: Remuneration includes basic salary, allowances, taxable value of perquisites, etc. The term remuneration has the meaning assigned to it in the Explanation to Section 198 of the Companies Act, 1956. None of the above employees are relatives to any director of the Company. None of the above employees own more than 2% of the outstanding shares of the Company as on March 31, 2014 except Dr Satyanarayana, Dr Raju S Kalidindi and Ravi Kumar VV. The nature of employment is contractual in all the above cases.

Disclosures in director’s responsibility statement

Director’s Responsibility Statement In accordance with the requirements of Section 217(2AA) of the Companies Act, 1956, the Directors of the Company declare that: • All applicable accounting standards were followed in the preparation of financial statements. • Such accounting policies were selected and applied consistently and judgments and estimates were made that were 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 2014. • Proper and sufficient care was taken to maintain adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and • The annual accounts have been prepared on a going concern concept.

Disclosures relating to employee stock option scheme explanatory

29. Employees stock option scheme (ESOP 2011 Plan)

The board of directors has approved the Laurus Employees Stock Option Scheme(ESOP) 2011  for issue of shares to eligible employees of the Company effective from September 19, 2011. According to the Scheme, the options granted shall vest within a period of four years, subject to the terms and conditions specified in the scheme.

Exercise period

Grant

Number of options

Year 1 – 25%

Year 2 – 25%

Year 3 –50%

Grant I

553,000

20–Sep–13

20–Sep–14

20–Sep–15

Grant II

             28,000

31–Dec–14

31–Dec–15

31–Dec–16

Grant III

             38,500

19–Sep–15

19–Sep–16

19–Sep–17

Date of Grant

Number of options Granted

Exercise price

Fair value for option at grant date

September 19, 2011

                    553,000

10

105.96

December 31, 2012

                      28,000

10

171.22

September 19, 2013

                      38,500

10

                   183.10

The details of activity under the Scheme ESOP 2011 are summarized below:

PARTICULARS

March 31,2014 (No of Options)

March 31,2013 (No. of Options)

Outstanding at the beginning of the year

                        564,000

                      553,000

Granted during the year

                          38,500

                        28,000

Forfeited during the year

                          10,000

                        17,000

Exercised during the year

                        139,125

                         –

Outstanding at the end of the year

                        453,375

                      564,000

Exercisable at the end of the year

                             –

                         –

The Black Scholes valuation model has been used for computing the weighted average fair value considering the following inputs:

                                                                                            March 31, 2014                                                     March 31, 2013

Particulars

Grant III

Grant II

Grant I

Grant II

Grant I

Dividend yield

0.00%

0.00%

0.00%

0.00%

0.00%

Expected volatility

0.00%

0.00%

0.00%

0.00%

0.00%

Risk–freeinterest rate

8.47%

8.01%

8.34%

8.01%

8.34%

Weighted average share price of Rs.

175.94

171.22

113.15

171.22

113.15

Exercise price

10.00

10.00

10.00

10.00

10.00

Expected life of options granted in years

3.50

3.50

3.51

3.50

3.51

The expected life of the stock is based on the historical data and current expectations and is not necessarily indicative of exercise pattern that may occur.

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