BOARD OF DIRECTORS' REPORT OF NECTAR LIFESCIENCES LIMITED Dear members. Your Directors have pleasure in presenting the 20th Annual Report together with the audited accounts of Nectar Life sciences Limited ('NLL' or 'Neclife' or’ Nectar' or'the Company') for the financial year ended March 31,2015. Note: Pursuant to the enactment of Companies Act 2013, the company has applied the estimated useful lives as specified in Schedule ll/Accounting Standard issued by The Institute of Chartered Accountants of India. Accordingly, the unamortized carrying value is being depreciated/amortized over the revised / remaining useful life. The written down value of Fixed Assets whose lives have expired as at 1st April 2014 (net of deferred tax) has been deducted from the Retained Earnings. Company's performance Overall, Active Pharmaceutical Ingredients (APIs) witnessed a tremendous increase in business. However, compared with steep pharmaceuticals growth curve, Photochemical (Menthol) performance during FY 2014-15 witnessed a roller coaster ride which was consciously attributed to a strategic shift in business option. This de-growth in menthol was primarily owing to the following reasons: • Company's decision to cater to high value Pharmaceutical products • High Market fluctuations led to lower natural menthol demands. Despite the, above, the Gross revenues increased to Rs. 17463.86 Million, a growth of around 1.51% against Rs. 17203.55 Million in the previous year. Profit before depreciation and taxation was Rs. 2869.06 Million against Rs. 3003.96 Million in the previous year. The Profit before Tax increased to Rs. 847.54 Million, a growth of around 8.35% against Rs. 782.23 Million in the previous year, due to effective cost management. The Profit after Tax increased to Rs. 662.64 Million, a growth of around 6.74% against Rs. 620.80 Million in the previous year. The financial results of the company for the quarter ended on June 30, 2015 are available on the website of the company (URL: www.neclife.com). Management Discussion and Analysis Report The details of the Company's various operations and state of affairs and nature of business are discussed under Management Discussion and Analysis Report. The Management Discussion and Analysis of financial condition and result of operations of the Company for the financial year 2014-15 as required under the Clause 49 of the Listing Agreement with the stock exchanges, is given as Annexure 1 and forms and part of this report. Corporate Governance The Company aimed to conduct its affairs in an ethical manner. A separate Report on Corporate Governance is given as Annexure 2 and forms and part of this report. A certificate from the Company's Auditors regarding the Compliance of Conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is given in Annexure 3. Global Depository Receipts (GDRs) The Company has issued and allotted 46,000,000 equity shares of Rs. 1/- each underlying 46,000,000 Global Depository Receipts (GDRs). The GDRs are listed on: Luxembourg Stock Exchange/LuxSE Societe de la Bourse de Luxembourg S.A. B.P. 165, L-2011 Luxembourg Siege social, 11, avde la Porte-Neuve, Telephone: (352) 47 79 36-1, Fax: (352) 47 32 98 Subsidiary companies The company has a wholly owned subsidiary namely Nectar Lifesciences UK Limited, incorporated in United Kingdom. During the year under review, the company has also incorporated Nectar Life sciences US, LLC in United States. There are negligible investments in these subsidiaries and no business activity has been carried out in these subsidiaries in financial year 2014-15 and till date in financial year 2015-16. Therefore, nothing is to report on the performance and financial position of these subsidiaries. Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 (hereinafter referred as 'Act'), a statement containing salient features of financial statements of subsidiaries, associates and joint venture companies in Form AOC-1 is attached to the Accounts. The separate financial statements in respect of each of the subsidiary companies shall be kept open for inspection atthe Registered Office of the Company during working hours for a period of 21 days before the date of the Annual General Meeting. Your Company will also make available these documents upon request by any Member of the Company interested in obtaining the same. The separate audited financial statements in respect of each of the subsidiary companies are also available on the website of your Company at www.neclife.com Consolidated financial results As required under Section 129 of the Act and Listing Agreement with the stock exchanges, a consolidated financial statements for the year ended on March 31,2015 of the Company are attached. Dividend Your Directors are pleased to recommend a Final Dividend @ 10% i.e. Re. 0.10/- per equity shares of face value of Re. 1/- each aggregating to Rs. 22,426,097/- for the year ended 31st March, 2015. The final dividend, subject to the approval by the shareholders in the forthcoming Annual General Meeting and if declared, will be paid on or after October 4,2015, to those members whose names appears in the register of members as on date of book closure. The register of members and the share transfer books of the Company will remain closed from September 24, 2015 to September 30, 2015 (Both days inclusive) for Annual General Meeting and payment of dividend, if declared, on equity shares. Your Directors are not proposing to carry any amount to any reserve. Directors and Key Managerial Persons During the year under review, Mr. Aryan Goyal, Executive Director has resigned from Board with effect from November 12, 2014 and Mr. Basant Kumar Goswami IAS (Retd.), Independent Director has resigned from Board with effect from March 30,2015. Members may please note the pursuant to Facility Agreement, the Export and Import Bank of India have appointed Ms. Rima Marphatia as their nominee director on the Board of Directors of the company with effect from August 11, 2014 and withdrawn her nomination with effect from December8,2014. Mr. Sanjiv Goyal, Director will retire by rotation in the forthcoming Annual General Meeting and being eligible, offer himself for reappointment.The Board recommends his reappointment. Further, on February 13, 2015 Mrs. Neena Singh has been appointed as Additional Independent Director and vacates her office atthe ensuing Annual General Meeting. As on the date of this report, the company has right proportionate of Independent Directors viz a viz Non Independent Directors as per applicable provisions of Section 149 of the Act, and clause 49 of the Listing Agreement. 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 sub-section (6) of Section 149 of the Act, and under Clause 49 of the Listing Agreement with the Stock Exchanges. Mr. Sandeep Goel, Vice President (Finance) has been designated as Chief Financial Officer of the Company. Pursuant to the provisions of Section 203 of the Act, which came into effect from April 1, 2014, the key managerial personnel of the Company are as under: Mr. Sanjiv Goyal, Chairman & Managing Director Mr. Dinesh Dua, Wholetime Director designated as Chief Executive Officers Director Mr. Harparkash Singh Gill, Wholetime Director designated as President (Operations) & Director Mr. Sandeep Goel, Chief Financial Officer Mr. Sunder Lai, Company Secretary Number of meetings of the board Four meetings of the board were held during the year. The details of Directors and meeting held during the financial year 2014-2015 are provided in Corporate Governance Report which forms and part of this report. Directors' responsibility statement The Directors confirm that: i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same; ii) they have 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 at the end of the financial year and of the profits of the Company for that period; iii) they 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; iv) they have prepared the annual accounts on a going concern basis; v) they have laid down internal financial controls for the Company and such internal financial controls are adequate and operating effectively; and vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively. Board evaluation Pursuant to the provisions of the Act, and the corporate governance requirements as prescribed by Securities and Exchange Board of India ("SEBI") under Clause 49 of the Listing Agreements ("Clause 49"), the performance of the Board and committees was evaluated by the Board after seeking inputs from all the directors/ committee members on the basis of the criteria such as the Board/ committee composition and structure, effectiveness of board processes, information and functioning, etc. The Board and the Nomination and Remuneration Committee ("NRC") reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role. In a separate meeting of independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated. The same was discussed in the board meeting that followed the meeting of the independent Directors, at which the performance of the Board, its committees and individual directors was also discussed. Policy on directors' appointment and remuneration and other details The Company's policy on directors' appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the corporate governance report, which forms part of the directors' report. Committees of the Board The Company constituted the Committees as per the provisions of Sections 177 and 178 of the Act and Clause 49 of the Listing Agreement. The composition, powers and duties of the Committees, during financial year 2014-15, are detailed out in the Corporate Governance Report. The Board of Directors accepted all recommendations of the Audit Committee. Internal financial control systems and their adequacy The company has adequate financial controls. The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis, which forms part of this report. Auditors and Auditors' Report M/s Datta Singla & Co., Chartered Accountants, Statutory Auditors of the Company, hold office till the conclusion of the ensuing Annual General Meeting (AGM) and are eligible for re-appointment. The Company has received a confirmation from them to the effect that their reappointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Act and the provisions of the Companies (Audit and Auditors) Rules, 2014 and that they are not disqualified for re-appointment. Since M/s Datta Singla & Co., Chartered Accountants, have been functioning as the auditors of the Company for more than 10 years, in accordance with the aforesaid rules, the Audit Committee and the Board of Directors have recommended the re-appointment of auditors for a period of one year. Observations made in the Auditors' Report are self-explanatory and therefore do not call for any further explanation. Secretarial Auditor and Secretarial Audit Report Duringthe year, Secretarial Audit was carried by Mr. Aseem Chhabra of Aseem Chhabra & Associates., Practicing Company Secretary, the Secretarial Auditor of the company for the Financial Year 2014-15. There were no qualifications, reservation or adverse remarks given by Secretarial Auditors of the Company. The Secretarial Audit Report is appended as an Annexure 4 to this report. Cost Audit The company, with the approval of Central Government, has appointed Dr. Vimal Kumar (Membership No. 9982) prop, of M/s V. Kumar and Associates, SCO, 124-125, Sector 34A, Chandigarh, Cost and Works Accountants as the Cost Auditors of the Company for the financial year 2015-16. The Cost Audit Reports for the financial year 2013-14 have been filed on September 29,2014, being on due date. The Due date for filing of Cost Audit Reports for the financial year 2014-15 is September 13, 2015. The report will be filed before due date. Prevention of Sexual Harassment at Workplace As per the requirement of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and Rules made there under, your Company has constituted Complaints Committees. During the year, No complaint with allegations of sexual harassment was filed with the Company. Risk management The Board of the Company has formed a risk management committee: (a) to formulate and recommend to the Board, a Risk Management Policy which shall indicate the activities such as identification of risks and mitigation strategy thereof; (b) to recommend the Board about risk assessment and minimization procedures; and (c) monitoring and reviewing of the risk management plan to the Board. The audit committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management policy has been covered in the management discussion and analysis, which forms part of this report. Particulars of loans, guarantees and investments The company has not given any loan or provide guarantee as per Section 186 of the Act. The investments under section 186 of the Act are given in the notes to the Financial Statements forming part of the Annual Report. Transactions with related parties Information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure 5 in Form AOC-2 and the same forms part of this report. Corporate social responsibility The brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure 6 of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The policy is available on the website of the Company. Extract of annual return As provided under Section 92(3) of the Act, the extract of annual return is given in Annexure 7 in the prescribed Form MGT-9, which forms part of this report. Employees The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure 8. The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same maywritetothe Company Secretary. Fixed deposits During the year under Report, your Company did not accept any deposits from the public in terms the provisions of Companies Act, 2013. Disclosure requirements As per Clause 49 of the listing agreements entered into with the stock exchanges, corporate governance report with auditors' certificate thereon and management discussion and analysis are attached, which form part of this report. Details of the familiarization programme of the independent directors are available on the website of the Company (URL: www.neclife.com). Policy for determining material subsidiaries of the Company is available on the website of the Company (URL: www.neclife.com). Policy on dealing with related party transactions is available on the website of the Company (URL: www.neclife.com). The Company has formulated and published a Whistle Blower Policy to provide Vigil Mechanism for employees including directors of the Company to report genuine concerns. The provisions ofthis policy are in line with the provisions of the Section 177(9) of the Act and the revised Clause 49 of the Listing Agreements with stock exchanges. The Policy is available on: (URL: www.neclife.com). Energy, technology and foreign exchange The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act, are provided in Annexure 9 to this Report. Acknowledgement Your Directors would like to express their sincere and grateful appreciation for the assistance and cooperation received from bankers and government authorities and also thank the shareholders for the confidence reposed by them in the Company and looks forward to their valuable support in the future plans of the Company. Your Directors also than kits agents, the medical professionals and its customers for their continued patronage to the Company's products. For and on behalf of the Board of Directors of Nectar Lifesciences Limited (Sanjiv Goyal) Chairman and Managing Director Place: Chandigarh Dated: August 14, 2015 |