DIRECTOR'S REPORT TO THE MEMBERS, Your Directors are pleased to present the 28th Annual Report and the Audited Statements of Account for the year ended 31 March 2015. Results of Operations and the State of Company's Affairs The highlights of the Company's performance are as under: The Company's Standalone revenue for the year FY 2015 stood at Rs. 335.60 Crores as against Rs.394.47 Crores of FY 2014. The decline is mainly due to working capital shortage which resulted in a loss of execution of the sales orders in hand. The Company has already initiated the process of realigning the entire structure to ensure optimum utilization of resources as well as capital reorganization. Consolidated Financial Statements In accordance with the Companies Act, 2013 ("the Act") and Accounting Standard (AS) - 21 on Consolidated Financial Statements read with AS - 23 on Accounting for Investments in Associates and AS - 27 on Financial Reporting of Interests in Joint Ventures, the audited consolidated financial statement is provided in the Annual Report. These consolidated financial statements provide financial information about the Company and its subsidiaries as a single economic entity and form part of this Annual Report. For the year ended 31 March 2015, the consolidated revenue stood at Rs.2,737.88 Crores against Rs. 3,075.65 Crores of previous year. EXTRACT OF ANNUAL RETURN The extract of the Annual Return of the Company in Form MGT-9 is annexed herewith as Annexure "A" to this report. NUMBER OF MEETINGS OF THE BOARD During the Financial Year 2014-15, Five (5) Board Meetings were held. The details of which are given in Corporate Governance Report. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirement under the Section 134(5) of the Companies Act 2013, with respect to the Directors' Responsibility Statement, it is hereby confirmed that : a. in the preparation of the annual accounts for the financial year ended 31 March 2015, the applicable accounting standards had been followed and there are no material departures from the same. b. the directors had 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 as at 31 March 2015 and of the loss of the Company for the year ended on that date; c. the directors had 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 accounts for the financial year ended 31 March 2015 have been prepared on a 'going concern' basis. e. 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. f. the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. NOMINATION AND REMUNERATION POLICY The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy for selection and appointment of Directors, Key Managerial Personnel and Senior Management Personnel and their remuneration. The Nomination and Remuneration policy is available on the Company's website at www.bilcare.com PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013 Particulars of Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statement provided in this Annual Report. These loans/guarantees are primarily granted for the furtherance of business of the borrowing companies. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. Such transactions form part of the notes to the financial statements provided in this Annual Report. 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 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.bilcare.com Pursuant to Section 134 of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014, the particulars of such transactions are provided in Form AOC-2 which is annexed herewith as Annexure "B" to this report. DIVIDEND In absence of profits, your Directors are unable to recommend Dividend for the financial year ended 31 March 2015. SHARE CAPITAL The paid-up Equity Share Capital as on 31 March 2015 stood at Rs. 235,452,310. During the year under review, the Company has not issued shares with differential voting rights nor has granted any stock options or sweat equity. As on 31 March 2015, none of the Directors of the Company hold instruments convertible into equity shares of the Company. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY No material changes and commitments affecting the financial position of the Company occurred from the end of the financial year 2014-15 till the date of this report. Further there was no change in the nature of business of the Company. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO A. Conservation of Energy i. Steps taken for Conservation of Energy: The quest for savings in electrical cost which is one of the key components in the cost of the product has not stopped. The never tiring effort to maintain the electrical power factor to unity was sustained and this has resulted in savings of Rs 42.00 Lacs per annum for the year 2014-15. The upgradation of heating system from hot air generator to thermic fluid system for foils coating has resulted in savings of Rs. 17.00 Lacs (from August 2014 to March 2015). The implementation of LED lighting system in phases has resulted in savings of Rs 1.00 Lac (from Oct 14 to Mar 15) in the first phase. ii. The Capital investment on energy conservation equipment: Your Company made capital investments amounting to Rs. 14.16 Lacs during the Financial Year 2014-15 on energy conservation equipments, which will result in saving of approx. Rs. 20.00 Lacs annually. B. Technology Absorption, Adaptation and Innovation Bilcare continues to invest on R&D activities and effectively utilize its investments made on creation of research sites resulting in successful addition of newer products, processes services and technologies to its innovation portfolio. Benefits derived as a result of the R&D efforts not only comprise newer innovative products and technologies but also has yielded significant improvement in existing products and realization of cost reduction measures in the manufacturing processes. i. The efforts made towards technology absorption include: 1. Bilcare adopted pin hole detection system from HPF Elektronik Germany and installed on cold from machine to detect pin holes in CFB film. this helps in assuring pin hole free film for packing highly sensitive medicines. 2. Bulging height determination has been installed from Frank PTI Germany to ensure the quality in coming foils those get consumes in CFB films. this helps in ensuring the right selection of aluminum foils and hence output become robustic in nature. 3. UTM from lloyds USA adopted for ensuring the required bond strength testing for CFB and laminates with their respective COF testing in line. 4. Installed defect detection system from Futec Japan on triplex laminator to ensure final product without any foreign material contamination. 5. Installed advanced slitter from KAMF Germany to slit CFB with in line tag detector that helps once again defect free material supplies to pharma industry. 6. Installed two NDC systems from USA to ensure and monitor required dry weight of adhesive during lamination on triplex laminator 7. Installed UV detection system from BST on Felxo printing machine that enables us to ensure proper registration of security inks in anti counterfeit packaging material manufactured by us. ii. Benefits derived : 1. Successful trails of lamination of PVC and Aclar is conducted on the new duplex machine. 2. Bilcare printed Alpro Venus and Bilcare Alrpo Venus is under approval stage at one of the highest selling brand of customer In India. 3. Improved version of Bilcare Aromour having cost effective solution is developed and properties are comparable, with conventionally available and expensive material. 4. Developed and commercialized paper based peelable type child resistant foil for one of the customer. 5. Developed and commercialized solvent based offline primer system for PVDC coating which results in sparing the additional free capacity for PVDC coating machine without compromising the quality. 6. Developed and successfully conducted the machine trial for image embedded security feature for one of the largest selling brand in Indian market. 7. Developed in-house PVDC coating over paper and incorporated special printed security features as anti-counterfeit solutions and successfully conducted the machine trial at one of the global customer. During the financial year, the company filed 2 new Patent applications related to its innovative products and technologies. During the financial year, 9 Patents applied earlier were granted. iii. Expenditure on Research and Development RISK MANAGEMENT The Company has set up a Risk Management Committee to review the risks faced by the Company and monitor the developments and deployment of risk mitigation action plans. The Committee reports to the Board of Directors and the Audit Committee who provide oversight for the entire risk management framework in the Company. Accordingly, the Committee met during the year and deliberated upon the probable risk areas and took appropriate actions. CORPORATE SOCIAL RESPONSIBILITY (CSR) The Corporate Social Responsibility and Governance Committee (CSR&G Committee) has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board. The CSR Policy may be accessed on the Company's website at the link: www.bilcare.com The Company has identified few focus areas of engagement which are as under: Health: Affordable solutions for healthcare through improved access, awareness and health seeking behaviour. Education: Access to quality education, training and skill enhancement. Environment: Environmental sustainability, ecological balance, conservation of natural resources. Adoption of Villages: For development. The Company would also undertake other need based initiatives in compliance with Schedule VII to the Act. The Annual Report on CSR activities is annexed herewith marked as Annexure "C". AUDIT COMMITTEE The committee comprises of Mr. Avinash S. Joshi (Chairman), Mr. Rajendra B. Tapadia, Mr. Mohan H. Bhandari as other members. All the recommendations made by the committee were accepted by the Board. BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Committees. Performance evaluation has been carried out as per the Nomination and Remuneration Policy. INDEPENDENT DIRECTORS' MEETING In accordance with the provisions of Schedule IV (Code for Independent Directors) of the Companies Act, 2013 and Clause 49 of the Listing Agreement, a meeting of the Independent Directors of the Company was held on 31 March 2015, without the attendance of Non-Independent Directors and Members of the Management. DETAILS OF APPOINTMENT AND RESIGNATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL During the year under review, the Board approved the appointment of Mrs. Nutan M. Bhandari as a Non-Executive Non-Independent Director who is liable to retire by rotation. The requisite resolutions for approval of her appointment as a Non- Executive Non-Independent Director, is being proposed in the notice of the ensuing Annual General Meeting for the approval of the members. The Board also approved the appointment of Dr. Sankarshan Basu as an Independent Directors who is not liable to retire by rotation for a term of 5 consecutive years with effect from the date of ensuing Annual General Meeting, subject to approval of shareholders. The requisite resolutions for approval of his appointment as an Independent Director, is being proposed in the notice of the ensuing Annual General Meeting for the approval of the members. Mr. Pawan G. Chandak resigned from the Board w.e.f. 14 January 2015 and Dr. Praful R. Naik resigned from the Board w.e.f. 28 February 2015. The Board wishes to place on record its appreciation of the valuable service and guidance rendered by them during their tenure. The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under subsection (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges. As required under Clause 49 of the Listing Agreement with the Stock Exchange, the information on the particulars of Directors proposed for appointment/re-appointment has been given in the Report on Corporate Governance. FAMILIARISATION PROGRAMME The details of programmes for familarisation of Independent Directors with the Company has been displayed on the Company's website at www.bilcare.com INFORMATION ABOUT SUBSIDIARY/ JV/ ASSOCIATE COMPANY During the year, Bilcare Research Singapore Pte. Ltd. has become the Subsidiary of the Company. Bilcare Germany GmbH & Co KG ceased to be a subsidiary of the Company by virtue of its merger with Bilcare Germany Management GMBH. Bilcare International ceased to be a subsidiary of the Company. Consolidated Financial Statements of the Company, which include the results of the said Subsidiary Companies, are included in this Annual Report. Further, a statement containing the particulars for each of the Company's subsidiaries is also enclosed. Copies of Annual Accounts and related detailed information of all the subsidiaries can also be sought by any member of the Company or its Subsidiaries by making a written request to the Company Secretary at the Registered Office of the Company in this regard. The Annual Accounts of the subsidiary companies are also available for inspection at the Registered Office of the Company and that of the respective subsidiary companies. The Company has Three (3) subsidiary companies, namely Bilcare Mauritius Ltd., Mauritius, Bilcare Packaging Limited, Mauritius and Bilcare Singapore Pte. Ltd., Singapore,. Some of these subsidiaries in turn have their respective step down subsidiaries. A statement containing the salient features of the financial statement of our subsidiaries in the prescribed format AOC-1 is presented in a separate section forming part of the financial statement. The Policy for determining 'Material' subsidiaries has been displayed on the Company's website at www.bilcare.com DEPOSIT The following details of deposits, covered under Chapter V of the Companies Act, 2013: I. Deposits Accepted during the year; Nil II. Remained unpaid or unclaimed as at the end of the year; Rs. 10,091,000/- III. Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved- a. At the beginning of the year; Nil b. Maximum during the year; Nil c. At the end of the year; Nil SIGNIFICANT AND MATERIAL ORDERS There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future. INTERNAL FINANCIAL CONTROLS The Company has in place adequate internal financial controls with reference to financial statement. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed. VIGIL MECHANISM The Company has in place Whistle Blower Policy, wherein the Employees/ Directors/ Stakeholders of the Company are free to report any unethical or improper activity, actual or suspected fraud or violation of the Company's Code of Conduct. This mechanism provides safeguards against victimization of Employees, who report under the said mechanism. During the year under review, the Company has not received any complaints under the said mechanism. The Whistle Blower Policy may be accessed on the Company's website at www.bilcare.com CORPORATE GOVERNANCE A report on Corporate Governance is given in this Annual Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance is attached to the report on Corporate Governance. AUDITORS Statutory Auditors At the Annual General Meeting held on 30 September 2014, M/s. R. L. Rathi & Co., Chartered Accountants, were appointed as Statutory Auditors of the Company to hold office till the conclusion of the Annual General Meeting to be held in the year 2017. In terms of the first proviso to 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. R. L. Rathi & Co., Chartered Accountants as Statutory Auditors of the Company, will be placed for ratification by the Shareholders. In this regard, the Company has received a certificate from the Auditors to the effect that if their appointment if ratified, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013. The observations and comments given by the Statutory Auditors in their report read together with notes thereon are self-explanatory and hence, do not call for any further comments. Cost Auditors The Cost Audit Report under The Companies (Cost Audit Report) Rules, 2011 for the year 2013-14 was duly filed with the Ministry of Corporate Affairs on 29 September 2014. Secretarial Auditor The Board has appointed M/s. Shekhar Ghatpande & Co, Company Secretaries, to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended 31 March 2015 is annexed herewith marked as Annexure "D" to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES: In terms of the provisions of Section 197(12) of the Companies Act (herein referred as Act), read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules forms part of the Annual Report. Disclosure pertaining to remuneration and other details as required under Section 197(12) of the Act, read with Rules 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 forms part of the Annual Report. However, as per the provisions of Section 136(1) of the Act, the Report and Accounts are being sent to the members, excluding the aforesaid information. Any member interested in obtaining such particulars may inspect the same at the Registered Office of the Company during working hours upto the date of the Annual General Meeting. For the FY 2015, the compliance report is provided in the Corporate Governance section of this Annual Report. The Auditors' Certificate on compliance with the mandatory recommendations of the committee is annexed to this report. Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: 1. Issue of equity shares with differential rights as to dividend, voting or otherwise. 2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this Report. 3. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries. 4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 In terms of provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has formulated a Policy to prevent Sexual Harassment of Women at Workplace. Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. ACKNOWLEDGEMENT We thank our domestic and international customers, vendors, investors, banking community, investment bankers and rating agencies for their continued support during the year. Your Directors also wish to place on record their deep sense of appreciation for the committed services of the employees at all levels worldwide. We thank the Governments of various countries where we have our operations and also thank Central Government, various State Governments and other Government agencies for their positive co-operation and look forward to their continued support in future. Finally, we wish to express our gratitude to the members and shareholders for their trust and support. For and on behalf of the Board of Directors Mohan H. Bhandari Chairman & Managing Director Place : Pune date : : 29 May 2015 |