DIRECTORS REPORT Dear Shareholders Your Directors invite you to the 25th Annual Report on the business & operations of the company and Audited Statement of Accounts for the year ended 31st March, 2015 along with the Auditor's Report thereon. OPERATIONS The total turnover of the company for the year ended 31st March, 2015 amounted to Rs. 33.27 Lakhs as against Rs.178.11 Lakhs in the previous year. The company incurred a net Loss of Rs. 1913.55 Lakhs for the year as against a loss of Rs.1819.10 Lakhs in the previous year. Review and results of operations As can be seen, although we started the production of DHA at the purpose built cGMP compliant biologics manufacturing facility at our partner's plant in our vicinity, we are facing tough challenges in pushing the product into markets in spite of the quality of the product produced being consistently good, possibly due to our inability to campaign and undertake certain strategic marketing activities. We are hampered by our inability to raise any finances for marketing operations due to adverse impact from the unfortunate SEBI order passed last year on the Directors and promoters. The operations of the company have been severely impacted to a significant level due to lack of financial support following the SEBI interim order on the Directors and promoters of the company in November 2014. This matter is being addressed through available legal channels. Likewise, operations of the company have been impacted due to lack of sufficient financial support from banks and institutions as a result of adverse impact from SEBI order. The management is trying hard to overcome such challenges through available means at its disposal. The management has been continuing its efforts to probe further into the GDR issue and making lot of efforts to recover the funds transferred illegally from its accounts at Investec bank, Zurich and from the account of its subsidiary Transgene Biotek HK Ltd at Standard Chartered Bank, Singapore. These are in addition to the steps taken to recover from the Indian entities who organized the creation of forged documents used in the said illegal transfer of funds from its accounts. Projects and products DHA: As reported already, production of DHA is continuing but at a much lower pace at our partner's facility Rampex Labs Pvt Ltd. Other projects: All other projects in this division are put on hold till the prevailing adverse impact from SEBI order and working capital problems are overcome. BIO-INNOVATIONS The entire division of bio-innovations has been adversely impacted in its progress due to the company's inability to raise financial resources at this crucial period of the product and technology development. TrabiORAL™ - Oral delivery of protein and peptide drugs TrabiORALTM technology continues to hold tremendous opportunity and continues to advance albeit on a much slower pace due to prevailing financial challenges. ONCOLOGY The entire oncology division has been adversely impacted due to lack of sufficient financial support at this crucial juncture of product development. TBL-0306 a monoclonal antibody drug has almost come to a standstill due to lack of funding support for advancing to the next stage of studies. RNAi DRUGS As in the case of monoclonal antibody drugs, there has been a real challenge to push through RNAi drugs although these molecules hold a tremendous potential. It requires continuous funding support which is lacking at present to exploit such a potential. TBL-0404 Liver Cancer Drug Transgene's patented and proprietary AAV genetically modified delivery system.TBL-0404 Intellectual property and patents: All the patents filed so far are reaching national level stages. The management is happy to report that siRNA drug against Liver cancer is tentatively approved for USA patent and the management is taking steps to conclude the final steps in securing it. As reported regularly, Transgene as a research-based biotechnology company, we continue to focus on innovation and shall continue to priortise the available sparse resources in developing innovative drugs. Though Al we believe that our patents provide certain protection from competition, we caution that such patents may not be of substantial protection or of commercial benefit to us and they may not afford us adequate protection from competing products, or they will not be challenged or declared invalid in future. Employee: The management is trying to manage the available financial resources consolidating the strength of existing employees with a view to create value that benefits the company and employees alike. DIVIDEND Your Directors are unable to recommend any dividend since the company has not made any profits. GROWTH PLANS AND OUTLOOK AT TRANSGENE The adverse impact of SEBI order on the board of Directors and promoters of the company has put your company in a challenging position and the management is trying hard to overcome all those challenges and rediscover the path of development. The management is exploring various opportunities and possibilities in overcoming those challenges and put the strong product development cycle on a sound footing so as to complete the development of each product to its objective. Since the data generated is getting more robust as more studies are conducted, it only reinforces the novelty, inventiveness and value accrued in each product as we move into future with the company. Your management is exploring various possibilities to 'reinvent' the progress on various products under development with significant inherent value. Subsidiary Company There are no activities undertaken at the subsidiary during the year 2014-15. As on March 31, 2015, TBL HK Limited remains as the wholly owned subsidiary of the Company. In terms of the Section129 of the Companies Act, 2013 the Balance Sheet, Profit and Loss Account and other documents of this company is attached with the Balance Sheet of the Company. A statement pursuant to Section 129, read with Rule 5 of the Companies (Accounts) Rules, 2014 in Form AOC-1 is attached as "Annexure - A" Regarding the irregularities identified in the earlier years pertaining to GDRs and the monies routed through Transgene Biotek HK, the management has appointed a law firm in Singapore for recovery of funds routed through the subsidiary but not accounted for properly. MANAGEMENT DISCUSSION AND ANALYSIS REPORT Management Discussion and Analysis Report, pursuant to Clause 49 of the Listing Agreement, forms part of this Report and is annexed hereto as "Annexure B". CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION Your Company has taken adequate steps to adhere to all the stipulations laid down in Clause 49 of the Listing Agreement. A report on Corporate Governance is included as part of this Annual Report as "Annexure - C". Certificate from the Statutory Auditors of the company M/s. Gopal & Rajan, Chartered Accountants confirming the compliance with the conditions of Corporate Governance as Stipulated under Clause 49 of the Listing Agreement is included as part of this report as "Annexure D" LISTING WITH STOCK EXCHANGES The Company confirms that it has paid the Annual Listing Fee for the year 2014-15 to BSE where the Company Shares are listed. DEMATERIALISATION OF SHARES 85.75% of the company's paid up Equity Share Capital is in dematerialized form as on 31st March, 2015 and balance 14.25 % is in physical form. The Company's Registrars are M/S Big Share Services Pvt Ltd, 306, Right Wing, 3rd Floor, Amrutha Ville, Opp. Yashoda Hospital, Raj Bhavan Rd, Somajiguda, Hyderabad, Telangana-500 082. Number of Board Meetings held The Board of Directors duly met 6 times during the financial year from 1st April, 2014 to 31st March the details of which are furnished in the report on Corporate Governance. Board evaluation The Board of Directors has carried out an annual evaluation of its own performance, Board committees and individual directors 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 was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc. The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, 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, taking into account the views of executive directors and non-executive directors. 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. Appointment of Independent Directors Your Directors state that Ms. Sujana Kadiam who has been appointed as Independent Woman Director possesses appropriate balance of skills, expertise and knowledge and is qualified for appointment as Independent Director. All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. DIRECTORS RESPONSIBILITY STATEMENT : Pursuant to Section 134(5) of the Companies Act, 2013, Directors of your Company hereby state and confirm that: a) In the preparation of the annual accounts for the year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures; b) 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 profit of the company for the same period; c) The directors 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; d) They have prepared the annual accounts on a going concern basis; e) They have laid down internal financial controls in the company that are adequate and were operating effectively. f) They have devised proper systems to ensure compliance with the provisions of all applicable laws and these are adequate and are operating effectively. Deposits from public The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet. RISK MANAGEMENT POLICY OF THE COMPANY The Company has formulated and adopted a risk management policy at its Board Meeting. As per the policy, the management continues to review and assess the risk and also the steps for mitigating the same. CORPORATE SOCIAL RESPONSIBILITY The provisions of Section 135 of the Companies Act, 2013 relating to Corporate Social Responsibility does not apply to the company. 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. Internal financial control systems and their adequacy 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' report and Secretarial auditors' report: The auditors' report and Secretarial auditors' report contain certain any qualifications, reservations or adverse remarks. Report of the secretarial auditor is given as an annexure which forms part of this report - "Annexure - E" CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO (A) The operations of the company are not power intensive nevertheless the company continues its efforts to minimize energy wherever practicable by economizing on the use of power at the offices (B) Technology absorption NIL (C) Foreign exchange earning NIL (D) Foreign exchange outflow NIL RELATED PARTY TRANSACTIONS There were no transactions which have been entered into with related parties of the Directors or the Key Managerial Personnel of the company. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as "Annexure - F" Particulars of loans, guarantees and investments The particulars of loans, guarantees and investments have been disclosed in the financial statements. REMUNERATION RATIO OF THE DIRECTORS / KEY MANAGERIAL PERSONNEL (KMP) / EMPLOYEES The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Companies (Particulars of Employees) Rules, 1975 are not applicable since the directors are not drawing any salary from the company as the company do not have any operations. Further the directors are provided sitting fee only for attending board meetings. The details of the sitting fee and other perks are mentioned in the corporate governance report. ACKNOWLEDGEMENT Your Directors take this opportunity to express their sincere thanks and place on record their appreciation of the continued assistance and co-operation extended to the company by its bankers, government and semi government departments, customers, marketing agents and suppliers and in particular Shareholders for the confidence reposed in the company Your directors also thank all the employees of the company for their dedicated service without which your company would not have achieved those results. By the Order Of the Board For TRANSGENE BIOTEK LIMITED Sd/- Dr. K. KOTESWARA RAO CHAIRMAN & MANAGING DIRECTOR PLACE: HYDERABAD DATE: 04.09.2015 |