| Dear Shareholders,
The Board presents below the report on the business and operations of
the Company for the financial year ended 31st March 2013.
FINANCIAL PERFORMANCE
Key aspects of Company's financial performance for the financial year
ended 31st March 2013 are summarized below:
Rs. in lacs
Particulars For the For the
year ended year ended
31st March 31st March
2013 2012
Turnover 59,810.09 52,967.09
(including other income)
Profit before Tax and 12,161.86 2,721.32
Extraordinary Item
Extraordinary Income/(Loss) (680.64) 4,448.28
Profit before Tax 11,481.22 7,169.60
Less: Provision for 2,451.00 1,480.91
Taxation (Current)
Provision for 971.35 593.61
Taxation (Deferred)
Profit after Tax 8,058.87 5,095.08
Add: Balance of Profit 6,410.07 26,314.99
brought forward from previous year
Profit available for 14,468.94 31,410.07
Appropriation Appropriation to:
General Reserve 9,000.00 25,000.00
Balance Carried over to 5,468.94 6,410.07
the Balance Sheet
DIVIDEND
Considering the ongoing capacity expansion projects and future growth
plans, the Directors have decided to plough back the profits of the
Company for financial year 2012-13.
Accordingly, the Board does not recommend any dividend payment for the
financial year ended 31st March 2013.
BUSINESS PERFORMANCE AND OPERATIONS
The Company's operations, performance, industry trends and other
material changes with respect to the Company, during the year are
exhaustively discussed in "Management Discussion and Analysis Report"
which forms part of this Annual Report.
COMPLIANCE WITH MINIMUM PUBLIC SHAREHOLDING REQUIREMENTS / DELISTING
As per the requirements of Securities Contracts (Regulation) Rules,
1957 ("SCRR"), every listed company in India is required to maintain a
minimum public shareholding of at least 25% for the purposes of
continuous listing, and has been given time until 3rd June 2013, in
order to achieve compliance with the same.
In order to comply with these requirements, Fresenius Kabi (Singapore)
Pte. Ltd., ("FKSL") the promoter of the Company, sold 14,240,489
equity shares of the Company on 12th October 2012, representing 9% of
the total paid up equity share capital of the Company, through an Offer
for Sale mechanism, pursuant to which its shareholding in the Company
came down from 90% to 81% of the total share capital.
However, on 16th April 2013, the Company received a letter from FKSL,
notifying the Company of its intention to make a voluntary delisting
offer to the public shareholders of the Company to acquire the entire
public shareholding of the Company (i.e. 30,063,255 equity shares of
Re. 1 each, representing 19% of the share capital of the Company) and
delist the equity shares of the Company from the stock exchanges on
which the equity shares of the Company are presently listed, i.e., BSE
Limited and the National Stock Exchange of India Limited, in accordance
with the SEBI (Delisting of Equity Shares) Regulations, 2009.
The Promoters proposed to initiate a voluntary delisting offer in order
to delist the equity shares of the Company from the stock exchange(s),
as there was a change in its India strategy for the following reasons:
a. Fresenius Kabi Oncology Limited is the only listed entity in the
Fresenius global healthcare group, besides the two global holding
entities, i.e. Fresenius SE & Co. KGaA and Fresenius Medical Care AG &
Co. KGaA. On account of the Company being a listed entity, events of
rather minor importance for the global group (such as the recent U.S.
Food and Drug Administration observations relating to the Kalyani
plant), have to be disclosed through the stock exchanges in India
causing harm to the interests of the Fresenius group as a whole.
b. During a routine inspection conducted by the U.S. Food and Drug
Administration ("US FDA'1) at the Company's API plant located at
Kalyani (West Bengal, India), the US FDA made certain observations
relating to GMP non-conformities in relation to manufacturing,
documentation practices and product testing. The Company took immediate
steps to implement remedial measures and has voluntarily put the
production on hold in February, 2013. Given the GMP non- conformity
issues observed at the Kalyani plant, FKSL needs to focus on the
operations of the Company as opposed to maintaining investor relations.
c. Delisting of the Company will be a step towards FKSL obtaining full
ownership of the Company and enable integration of the Company into the
Fresenius global operations.
d. Delisting will enable the Fresenius group to increase its
investments in the Company and provide greater operational control and
flexibility to support its business and meet the needs of its
customers.
Accordingly, post approval of its Board of Directors, the Company
sought the approval of its shareholders by way of a Special Resolution
passed through Postal Ballot in accordance with SEBI (Delisting of
Equity Shares) Regulations, 2009 ("Delisting Regulations").
In terms of Delisting Regulations, the special resolution could be
acted upon, only if the votes cast by public shareholders in favour of
the proposal amount to at least two times the number of votes cast by
the public shareholders against it.
The delisting proposal was approved as a special resolution by way of
postal ballot by the requisite majority of the public shareholders of
the Company on 25th May 2013, as mandated under Delisting Regulations.
Brief description of Postal Ballot results is as under:
Particulars Special Resolution
(% In brackets)
Total No. of Postal Ballot Forms/ 983
e-voting received
No. of valid Postal Ballot Forms/ 936
e-voting received
No. of Invalid Postal Ballot Forms/ 47
e-voting received
Votes assenting to the Resolution 13,46,46,729 (98.6321%)
Votes dissenting to the Resolution 18,28,068 (1.3391%)
Post passing of delisting proposal by the shareholders, FKSL has
expressed its intention to make a public announcement in relation to
the Delisting Offer in accordance with Regulation 10(1) of the
Delisting Regulations, subject to requisite regulatory approvals.
KALYANI PLANT (WEST BENGAL, INDIA)
The Company's manufacturing site for Active Pharmaceutical Ingredients
at Kalyani, West Bengal India was inspected by US FDA in the last
quarter of the financial year under review. During the course of this
inspection, the US FDA investigator brought to the attention of the
Company's management certain observations relating to certain GMP
non-conformations related to certain manufacturing, documentation
practices and product testing, which were not in full accordance with
the FDA approved process. The Company immediately engaged some
independent experts to further probe the observations made by US FDA
investigator. Basis the outcome of the said investigation, the Company
also filed its interim replies to the US FDA, and is expected to file
the final reply by the end of June, 2013.
However, so far there is neither any evidence nor any indication that
there is a patient safety risk as a result of the GMP non-
conformations. This has also been confirmed by an assessment of
independent laboratory results obtained at other Fresenius Kabi
facilities which use Kalyani APIs for their finished products and by
analysis performed at external laboratories.
The Company is taking all the remedial and corrective measures to
strengthen its manufacturing and documentation processes. As a
precautionary measure, the Company has also suspended its production at
the Kalyani plant. Upon successful implementation of its corrective
completion, and preventive measures, the Company shall take a call on
resuming the production at its Kalyani Plant.
EXPANSION AND UPGRADATION PROJECTS
During the year, the Company has undertaken several
modernization/upgradation and expansion projects at its plant locations
in Himachal Pradesh and West Bengal (India) in order to fulfill the
local and international regulatory norms and cater to the market demand
for Company's products.
SHARE CAPITAL
During the year, authorised and paid up share capital of the Company
remained unchanged in comparison to previous year.
CORPORATE GOVERNANCE
The Company has adopted the best possible corporate governance norms
and it has been our endeavor to comply and upgrade to the changing
norms.
A separate section on Corporate Governance and a Certificate from the
Auditors of the Company regarding compliance of conditions of Corporate
Governance as stipulated under Clause 49 of the Listing Agreement(s)
with the Stock Exchange(s) forms part of the Annual Report.
In terms of sub-clause (v) of the Clause 49 of the Listing Agreement, a
certificate of the CEO / Head of Finance Function, inter-alia,
confirming the correctness of the financial statements, adequacy of the
internal control measures and reporting of matters to the Audit
Committee in terms of the said clause, is also enclosed as a part of
the Annual Report.
BOARD OF DIRECTORS Resignations
a) Dr. Satish B. Kulkarni was appointed as the Alternate Director to
Mr. Thomas Georg Mechtersheimer in the Board Meeting dated 13th
February 2013. After the conclusion of the meeting, he resigned from
the Directorship.
The Board places on record its sincere appreciation for his valuable
inputs during the meeting.
b) Mr. Nitin Potdar, the Non Executive Independent Director of the
Company, who was due for retiring by rotation in the forthcoming Annual
General Meeting, resigned from the Directorship of the Company w.e.f.
28th May 2013.
The Board has decided not to fill the vacancy of Directorship arising
out of resignation of Mr. Nitin Potdar in the forthcoming Annual
General Meeting.
The Board places on record its sincere appreciation towards the
valuable contribution and guidance provided by Mr. Nitin Potdar during
his tenure as an Independent Director of the Company.
Appointments
Dr. Patricia Grigoleit
The Board in its meeting held on 13th February 2013, appointed Dr.
Patricia Grigoleit as an Additional Director in accordance with the
provisions of section 260 of the Companies Act, 1956, read with Article
117 of the Article of Association of the Company.
Dr. Patricia Grigoleit will hold office up to the date of the ensuing
Annual General Meeting. The Company has received a notice under Section
257 of the Companies Act, 1956 from a member proposing the candidature
of Dr. Patricia Grigoleit for appointment as the Director in the
ensuing Annual General Meeting. She is eligible for appointment as the
Director and the Board recommends her appointment in the ensuing Annual
General Meeting.
Mr. Thomas Georg Mechtersheimer
Mr. Thomas Gerog Mechtersheimer was appointed as a Director in casual
vacancy on 30th May 2012 in place of Mr. Mats Henriksson. He will hold
office till the conclusion of the ensuing Annual General Meeting of the
Company. The Company has received a notice under Section 257 of the
Companies Act, 1956 from a member proposing the candidature of Mr.
Thomas Georg Mechtersheimer for appointment as the Director in the
ensuing Annual General Meeting. He is eligible for appointment as the
Director and the Board recommends his appointment in the ensuing Annual
General Meeting.
Mr. Peter F. Nilsson
Mr. Peter F. Nilsson was appointed as the Managing Director & CEO of
the Company w.e.f. 20th October 2011 for a period of two years. His
current term was going to expire on 19th October 2013.
The Board has re-appointed Mr. Nilsson as the Managing Director & CEO
of the Company for a further period of 2 years i.e. from 20th October
2013 to 19th October 2015. The re- appointment is subject to the
approval of shareholders by way of a Special Resolution in the ensuing
Annual General Meeting and the the Board recommends his re-appointment
for a further period of two years w.e.f. 20th October 2013.
Director retiring by rotation
As per Article 130 of the Articles of Association of the Company, Dr.
Michael Schonhofen would retire by rotation at the forthcoming Annual
General Meeting of the Company and being eligible, offers himself for
re-appointment.
Details of Directors required under Clause 49 of the Listing Agreement
Brief resume, expertise and other directorships and Committee
memberships held by the above Directors and other details stipulated
under provisions of Clause 49 of the Listing Agreement forms part of
the Notice convening the tenth Annual General Meeting of the Company.
AUDITORS
The Statutory Auditors of the Company, M/s G. Basu & Co., Chartered
Accountants retire at the conclusion of the ensuing Annual General
Meeting of the Company. They have confirmed their willingness and
eligibility for re-appointment for the financial year 2013-14 and have
also confirmed that their re- appointment, if made, will be within the
limits prescribed under section 224(1B) of the Companies Act, 1956. The
Board of Directors of the Company recommends their re-appointment.
COST AUDITORS
Pursuant to section 233B of the Companies Act, 1956, and "General Cost
Audit Orders" issued by the Ministry of Corporate Affairs, the Central
Government has prescribed cost audit of the Company's manufacturing
activities w.r.t. "Formulations and Bulk Drugs".
Accordingly, the Board of Directors of the Company has appointed M/s
Ramanath Iyer & Co., Cost Accountants, as the Cost Auditors of the
Company for "Formulations and Bulk Drugs" related activities for
financial year 2013-14.
The Company will seek confirmation of Central Government for such
appointment in terms of applicable provisions of the Companies Act,
1956 and rules made there under.
In terms of the requirements of General Circular No. 15/2011, dated
11th April 2011, issued by Ministry of Corporate Affairs, following are
the brief particulars w.r.t. Cost Auditors & Cost Audit Reports:
Financial Name of Cost Auditor Due date of Actual date of
Year filing Cost filing Cost
Audit Report Audit Report
2011 - 12 M/s Ramanath Iyer & Co. 28th February 15th January
2013 2013
2012 - 13 M/s Ramanath Iyer & Co. 27th September Yet to be filed
2013
AUDITORS' REPORT
The Board has duly examined the Statutory Auditor's report to the
accounts and clarifications, wherever necessary, have been included in
the Notes to the Accounts section of the Annual Report.
FIXED DEPOSITS
The Company has not invited/accepted any Fixed Deposits during the year
under review, as such; no amount of principal or interest on fixed
deposits was outstanding on the date of Balance Sheet.
PARTICULARS OF EMPLOYEES
In terms of provisions of section 217(2A) of the Companies Act, 1956,
read with the Companies (Particulars of Employees) Rules, 1975, the
names and other particulars of employees are set out in the
"Annexure-11" to the Directors' Report.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
Information on conservation of energy, technology absorption and
foreign exchange transactions as stipulated under section 217(1)(e) of
the Companies Act, 1956 are set out in the "Annexure-I" to the
Directors' Report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement of section 217(2AA) of the Companies Act,
1956 in relation to Directors' Responsibility Statement, it is
confirmed that:
i) in the preparation of the annual accounts for the financial year
ended 31st March 2013, the applicable accounting standards have been
followed except departures made on the ground of prudence as mentioned
at Note No. 27(iv) of the financials statements.
ii) 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 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 the year under review;
iii) the Directors have taken proper and sufficient care for the
maintenance of 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;
iv) the Directors have prepared the annual accounts for the financial
year ended 31st March 2013 on a going concern basis.
ACKNOWLEDGEMENT / APPRECIATION
We thank our customers, vendors, investors and bankers for their
continued support during the year. We place on record our appreciation
of the contribution made by our employees at all levels. Our consistent
growth was made possible by their hard work, solidarity, cooperation
and support.
We thank the Government of India, particularly the Ministry of
Corporate Affairs, Department of Pharmaceuticals, the Customs and
Excise Departments, the Income Tax Department, the Ministry of
Commerce, the Ministry of Finance, the Reserve Bank of India and other
Government agencies for their support and look forward to their
continued support in the future.
For and on behalf of the Board of Directors
Sd/-
Gurgaon Rakesh Bhargava
25th June 2013 Chairman | 