To,
The Members,
The Directors are pleased to present the 35th Annual Report
with the Audited Accounts for the financial year ended 31 March 2023.
1. FINANCIAL RESULTS
H in million
|
2022-23 |
2021-22 |
Total Revenue |
20,284 |
19,476 |
Profit before interest & depreciation |
2,625 |
3,454 |
Interest |
481 |
312 |
Profit before depreciation |
2,144 |
3,142 |
Depreciation |
1,090 |
957 |
Profit before taxation |
1,054 |
2,185 |
Provision for taxation |
|
|
- Current tax |
305 |
596 |
- Deferred tax |
(35) |
(16) |
Profit after tax |
784 |
1,605 |
Reserves and surplus |
11,088 |
10,433 |
Dividend on equity share |
123 |
271 |
2. COMPANY PERFORMANCE
The Company achieved revenue of H20,284 million in
2022-23, against H19,476 million in the previous year, recording a
growth of 4%. The sales of the pharmaceutical business recorded a decline of 1% to H11,152
million, while the sales of the Crop Protection saw a growth of 12% to H9,079 million.
The EBIDTA margins stood at around 12.9%, decreased from H3,454 million
in the previous year to H 2,625 million in 2022-23. Absolute EBITDA also decreased by H
829 million (24.0%). The Profit before Tax (PBT) reduced by 52% from H2,185 million in the
previous year to H1,054 million in 2022-23. Profit After Tax (PAT) witnessed a decline of
51% from H1,605 million in the previous year to H784 million in 2022-23. The Earning per
Share (EPS) also decreased from H13.02 in the previous year to H6.36 in 2022-23.
The Company is incurring substantial capital expenditure for growth in
the Pharmaceutical and Crop Protection businesses to augment capacities for existing
products and to create capacities for new products, as well as investments in Research
& Technology.
The Company has prudently been funding the growth Capex with a mix
between internal accruals and long-term loans. In doing so, the Company ensures that it
maintains a healthy liquidity position and that its financial gearing and debt service
coverage are at comfortable levels. The Current Ratio of the Company is at 1.42 for 2022-23,
as against 1.25 in the previous year. The net Debt to Equity Ratio slightly increase from
0.59 in the previous year to 0.61 in 2022-23, while the Debt
Service Coverage Ratio (DSCR) declined from 1.96 in the previous
year to 1.77 in 2022-23.
3. EXPORTS
Exports for the year 2022-23 were H13,684 million (68% of total sales)
as compared to H14,141.98 million (73% of total sales) in the previous year. The decrease
in exports can be attributed to a larger market share gained by our Indian customers
selling in global markets, primarily in the US and Europe.
4. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis on the Company's operations
is provided in a separate section and forms part of this Annual Report.
5. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
The Company's Business Responsibility and Sustainability Report,
in terms of Regulation 34 of SEBI (Listing Obligations & Disclosure Requirements)
Regulations, 2015, (Listing Regulations), is provided in a separate section and forms part
of this Annual Report.
6. DIVIDEND
The Board declared an interim dividend of 30% (H0.60 per share), which
was paid to shareholders in February 2023, and recommended a final dividend of 30%
(H0.60 per share) for the year 2022-23. If approved by the shareholders, the dividend for
the financial year 2022-23 shall aggregate to 60% (previous year: 80%).
7. SHARE CAPITAL
There has been no change in the Company's paid-up share capital
during the current financial year. The paid-up equity share capital as on 31 March 2023,
stood at H246.60 million. During the financial year, the Company did not issue shares with
differential voting rights nor granted any stock options or sweat equity. As on 31 March
2023, none of the Company's Directors held instruments convertible into equity shares
of the Company.
8. ANNUAL RETURN
The Annual Return of the Company, as required under Section 92 of the
Companies Act, 2013 (the Act), read with the Rules framed thereunder, in the prescribed
Form MGT-7, is available on the website of the Company at www.hikal.com/documents/agm.
9. SUBSIDIARIES
The Company has two subsidiaries viz. Acoris Research Limited and Hikal
LLC, USA. A statement containing the salient features of the Financial Statements of
Subsidiaries in the prescribed Form AOC-1, is attached as Annexure A to
this Report. The Company will provide the Financial Statements of the subsidiaries and the
related information to any member of the Company who may be interested in obtaining the
same. The financial statements of the subsidiaries will also be available for inspection
in electronic mode. Members who wish to inspect the same are requested to write to the
Company by sending an email to secretarial_agm@hikal.com. The Consolidated Financial
Statements of the Company, forming part of this Annual Report, include the Financial
Statements of Subsidiaries. The Financial Statements of Subsidiaries are also hosted on
the website of the Company at www.hikal.com/documents/annual-reports.
10. DIRECTORS
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
Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements)
Regulations, 2015. In the opinion of the Board, the Independent Directors appointed during
the year possess the integrity, expertise and experience (including proficiency) required
to contribute to the quality and better governance of the Board processes.
In accordance with the provisions of Section 152 of the Companies Act,
2013, and the Company's Articles of Association, Mr. Amit Kalyani (DIN - 00089430),
Director, retires by rotation at the forthcoming Annual General Meeting (AGM), and being
eligible, offers himself for re-appointment.
Based on the recommendation of the Nomination and Remuneration
Committee, the Board has, in its meeting held on 16 August 2023, approved the appointment
of Mr. Berjis Minoo Desai (DIN: 00153675) and Mr. Ramachandra Kaundinya Vinnakota (DIN:
00043067) as Independent Directors for respective terms of 5 (Five) years each, with
effect from 1 October 2023, subject to the approval of the members of the Company at the
35th Annual General Meeting.
Details of the number of Board meetings, held during the financial year
2022-23, are mentioned in the Corporate Governance Report, which forms part of this Annual
Report.
11. BOARD EVALUATION
Pursuant to the provisions of the Companies Act, 2013, and Securities
and Exchange Board of India (Listing Obligations & Disclosure Requirements)
Regulations, 2015, a structured questionnaire was prepared after taking into consideration
the various aspects of the Board's functioning, like composition of the Board and its
Committees, culture, execution and performance of specific duties, obligations and
governance.
The performance evaluation of the Independent Directors was completed.
In a separate meeting of Independent Directors, performance of Non-Independent Directors,
the Board as a whole and the Chairman of the Company was evaluated, taking into account
the views of Executive Directors and Non-Executive Directors. The Board of Directors
expressed their satisfaction with the evaluation process.
12. WHISTLE BLOWER POLICY
The Company has a Whistle Blower policy to report genuine concerns or
grievances. The Whistle Blower Policy is posted on the Company's website www.hikal.
com/uploads/documents/whistle-blower-policy.pdf.
13. REMUNERATION POLICY
The Company has a policy which lays down a framework in relation to
remuneration of Directors, Key Managerial Personnel and Senior Management of the Company.
The Remuneration and Nomination Policy of the Company is attached as Annexure
B to this Report. This policy also lays down criterion for selection and
appointment of Board members. The details of this policy are explained in the Corporate
Governance Report and uploaded on the Company's website
www.hikal.com/uploads/documents/ remuneration-policy.pdf.
14. RELATED PARTY TRANSACTIONS
All related party transactions entered during the financial year, were
at an arm's length basis and in the ordinary course of business. There were no
materially significant related party transactions made by the Company with Promoters,
Directors, Key Managerial Personnel or other designated persons, which may have a
potential conflict with the Company's interest at large. The disclosure of Related
Party Transactions as required under Section 134(3)(h) of the Act in Form AOC-2 is
attached as Annexure C.
All related party transactions were placed before the Audit Committee
for approval.
The policy on Related Party Transactions, as approved by the Board, is
uploaded on the Company's website https://www.hikal.com/uploads/documents/
RelatedPartyTransactionPolicy.pdf.
15. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
In connection with a newspaper report published on 7 January
2022 in the daily Indian Express titled Gujarat: At least 06 dead, 20
sick after gas leak at industrial area in Surat, the Hon'ble Principle Bench of
National Green Tribunal (NGT) took suo-moto cognizance of the said incident and vide its
order dated 18 January 2022, the Hon'ble Principal Bench of NGT at New Delhi
constituted a nine-member joint Committee headed by Retired Chief Justice of Hon'ble
Delhi High court, to investigate the incident and submit its report.
The joint Committee, without providing the Company an opportunity to
submit its case, submitted its reports dated 31 May 2022 and 4 June 2022. Vide order dated
23 September 2022, the Hon'ble Principal Bench of NGT at New Delhi took the said
reports of the joint committee on record and sought the response of the Company in this
regard. Aggrieved by the said order of NGT, New Delhi, the Company filed a writ petition
bearing number 35496 of 2022, before the Hon'ble Bombay High Court, challenging,
among other matters, the jurisdiction of NGT, New Delhi and to set aside the impugned
reports submitted by the joint Committee. While the writ petition no. 35496 of 2022 was
pending before the Hon'ble Bombay High Court, the Hon'ble Principal Bench of NGT
at New Delhi passed an order dated 24 March 2023 accepting the said reports submitted by
the joint Committee. The Hon'ble Bombay High Court vide its order dated 24 March 2023
directed the authorities not to act on the said order of NGT, New Delhi Bench and the said
direction is still continuing as on the date of this Report.
Further, the Company has received a communication from the Gujarat
Pollution Control Board (GPCB) on 22 July 2023, directing the Company to close
operations of its plant located at GIDC Panoli, Dist. Bharuch, within 15 days from the
order date. This directive comes in light of an alleged technical violation reported to
have occurred in 2021. After considering the clarifications provided by the company in
this regard, GPCB vide communication dated 05 August 2023, revoked the closure direction
dated 21 July 2023 for an initial period of 3 months, as per the procedure. The
Company's Panoli facility continues to operate as normal, with no interruption in
production activities.
There were no significant and material orders passed by the
regulators/courts that could impact the going concern status of the Company and its future
operations, other than what is mentioned above.
16. RISK MANAGEMENT
The Company has a robust business risk management framework in place to
identify and evaluate all business risks. The Company recognises risk management as a
crucial aspect of the Company's management and is aware that identification and
management of risk effectively is instrumental to achieving its corporate objectives. The
Company has identified the business risks, and the business heads, who are termed as risk
owners, to assess, monitor and manage these risks on an ongoing basis. The risk owners
assess the identified risks and continually identify any new risks that can affect the
business. Different risks such as technological, operational, maintenance of quality,
reputational, competition, environmental, foreign exchange, financial, human resource, and
legal compliances, among others, are assessed on a continuous basis. The Risk Management
Committee and Audit Committee review and submit to the Board of Directors their findings
in the form of risk register at regular intervals. At the Board meetings, the members have
a detailed discussion to assess each risk and the measures that are in place to lower them
to acceptable limits.
The strategies are reviewed, discussed and allocation of appropriate
resources is done as and when necessary. The risk management programme, internal control
systems and processes are monitored and updated on an ongoing basis. A built-up mechanism
has been established to identify, measure, control, monitor and report the risks. Business
heads are responsible for rolling out the risk assessment and management plan within the
organisation.
17. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an internal control system, commensurate with the size,
scale and complexity of its operations. To maintain its objectivity and independence, the
Internal Audit function reports to the Chairman of the Audit Committee of the Board.
The Internal Audit Department monitors and evaluates the efficacy and
adequacy of the internal control system in the Company, its compliance with operating
systems, accounting procedures and policies at all locations of the Company and its
subsidiaries. Based on the report of internal audit function, process owners undertake
corrective action in their respective areas and thereby, strengthen the controls.
Significant audit observations and corrective actions thereon are presented to the Audit
Committee.
The Audit Committee actively reviews the adequacy and effectiveness of
the internal control systems and suggests improvements to strengthen them. The Company has
a robust management information system, which is an integral part of the control
mechanism.
During the year, a thorough audit of the internal financial controls
was carried out by an independent firm of chartered accountants.
18. KEY MANAGERIAL PERSONNEL
Pursuant to the provisions of Section 203 of the Act, following were
the Key Managerial Personnel of the Company as on 31 March 2023: Mr. Jai Hiremath,
Executive Chairman (WTD) Mr. Sameer Hiremath, Managing Director Mr. Kuldeep Jain, Chief
Financial Officer Mr. Rajasekhar Reddy, Company Secretary.
19. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS BY THE COMPANY
The details under Section 186 of the Companies Act, 2013, are given in
Note No. 55 to the notes to the financial statements.
20. DIRECTOR'S RESPONSIBILITY STATEMENT
Your Directors state that:
(i) In the preparation of the annual accounts, the applicable
accounting standards read with requirements set out under Schedule III to the Companies
Act, 2013, were followed and there are no material departures from the same; (ii) The
Directors have selected such accounting policies and applied them consistently and made
judgements 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 2022-23, and
of the profits of the Company for that year; (iii) The Directors have taken proper and
sufficient care for the maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities; (iv) The annual accounts have been prepared on a
going concern basis; (v) The Directors have laid down internal financial controls to be
followed by the Company and that such internal financial controls are adequate and are
operating effectively; and (vi) The Directors have devised a proper system to ensure
compliance with the provision of all applicable laws and that such systems are adequate
and are operating effectively.
21. AUDITOR
At the 31st Annual General Meeting held on 1 August 2019, S
R B C & CO. LLP, Chartered Accountants, Mumbai, (FRN: 324982E/E300003), were appointed
as the Statutory Auditors of the Company to hold office from the conclusion of 31st
Annual General Meeting of the Company till the conclusion of the 36th Annual
General Meeting to be held in the year 2024.
The Auditor's report prepared by S R B C & CO. LLP, to the
members on the accounts of the Company for the year ended 31 March 2023, does not contain
any qualifications, adverse or disclaimer remarks. No fraud has been reported by the
Auditors to the Audit Committee or the Board.
22. COST AUDITOR
The Company has re-appointed M/s. V. J. Talati & Co., as the Cost
Auditor to carry out the audit of cost accounts for the financial year 2023-24. The
requisite resolution for ratification, of remuneration payable to Cost Auditors for the
year 2023-24, by the shareholders has been set out in the Notice of AGM. The cost audit
report for the financial year 2021-22 was filed with the Ministry of Corporate Affairs,
Government of India, on 5 September 2022.
23. SECRETARIAL AUDITOR
The Board had appointed Dhrumil M. Shah & Co. LLP, Practicing
Company Secretaries, to conduct the Secretarial Audit for the financial year 2022-23.
The Secretarial Audit Report for the financial year ended 31 March
2023, is annexed to this report as Annexure D. The Secretarial Audit
Report does not contain any qualifications, reservations, or adverse remarks.
24. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Corporate Social Responsibility Committee (CSR 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
www.hikal.com/uploads/documents/corporate-social-responsibility-polic-srijan.pdf.
The Annual Report on CSR activities is annexed herewith marked as Annexure
E.
25. PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
Pursuant to the provisions of the Sexual Harassment of Women at
Workplace (prevention, prohibition and redressal) Act, 2013, (POSH Act), the
Company adopted a Policy on Appropriate Social Conduct at Workplace'. The
policy is applicable for all employees of the organisation, which includes corporate
office and manufacturing units. The policy is applicable to non-employees as well, i.e.
business associates, vendors, and trainees, among others.
A Complaints Committee has also been set up to redress complaints
received on sexual harassment as well as other forms of verbal, physical, written or
visual harassment. During the financial year 2022-23, the Company did not receive any
complaints of sexual harassment and no cases were filed under the POSH Act.
26. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
(IEPF)
Transfer of Unclaimed Dividend to IEPF
During the financial year, dividend, relating to the year ended 31
March 2015, amounting to H337,322/- that had not been claimed by the shareholders, was
transferred to the credit of IEPF as required under Sections 124 and 125 of the Act.
Unclaimed dividend as on 31 March 2023
The Shareholders are requested to lodge their claims with the Registrar
and Share Transfer Agents of the Company i.e. Universal Capital Securities Pvt. Ltd., for
unclaimed dividend.
Pursuant to the provisions of Investor Education and Protection Fund
Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (as amended), the Company
has uploaded the details of unpaid and unclaimed amounts lying with the Company as on 31
March, 2022, on the website of the Company www.hikal. com/documents/dividend-shares. The
same are also available on the website of the IEPF Authority www. iepf.gov.in.
Transfer of Equity Shares
As required under Section 124 of the Act, during the financial year,
4970 Equity Shares, in respect of which dividend has not been claimed by the members for
seven consecutive years or more, were transferred by the Company to the IEPF Authority.
Details of such shares transferred have been uploaded on the website of the Company
www.hikal.com/documents/dividend-shares. The same are also available on the website of the
IEPF Authority www.iepf.gov.in.
27. SAFETY AND ENVIRONMENT
The Company continued to maintain the highest standards in environment,
health and safety. The Company has become the first Indian life sciences company to
receive the Responsible Care certification. It is applicable to all manufacturing and
research sites of the Company. Continuous training and awareness programmes for the
employees are undertaken on a frequent basis.
28. DEPOSITS
The Company did not accept any deposits and as such there were no
overdue deposits outstanding as on 31 March 2023.
29. EMPLOYEES
The Company considers its human capital an invaluable asset. The
Company continued to have cordial relationships with all its employees. Management and
employee development programmes and exercises were conducted at all sites. Employees had
various team building exercises and were sponsored for various external seminars and other
developmental programmes to enhance their skill sets. The total workforce of the Company
stood at 3211 as on 31 March 2023, including 2142 permanent employees.
The statement containing particulars of employees as required under
Section 197(12) of the Companies Act, 2013, read with Rule 5 of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014, forms a part of this Report.
Further, the Report and the financial statements are being sent to the members, excluding
the aforesaid statement. In terms of Section 136 of the Companies Act, 2013, the said
statement is open for inspection. Any member interested in obtaining such particulars may
write to the Company Secretary at secretarial_agm@hikal.com.
30. CONSERVATION OF ENERGY, RESEARCH & DEVELOPMENT, TECHNOLOGY
ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
In accordance with the requirements of Section 134(3)(m) of the
Companies Act, 2013, read with Rule 8(3) of the Companies (Accounts) Rules, 2014, a
statement showing particulars with respect to Conservation of Energy, Technology
Absorption and Foreign Exchange Earnings and Outgo, forming a part of the Directors'
Report, is given in the enclosed Annexure F which forms a part of this
Report.
31. CORPORATE GOVERNANCE
A report on Corporate Governance, along with a certificate from Dhrumil
M. Shah & Co. LLP, Practicing Company Secretaries regarding the compliance of the
requirements of Corporate Governance, as stipulated under the provisions of Regulation 34
of the Securities and Exchange Board of India (Listing Obligations & Disclosure
Requirements) Regulations, 2015, is annexed to this Annual Report.
32. SECRETARIAL STANDARDS
The Company has complied with the applicable Secretarial Standards,
issued by the Institute of Company Secretaries of India, during the Financial Year
2022-23.
33. ACKNOWLEDGEMENTS
The Board of Directors place on record their appreciation of the
contribution and sincere support extended to the Company by our bankers, financial
institutions and valued customers and suppliers.
The Board also places on record its appreciation for the impeccable
service and generous efforts rendered by its employees at all levels, across the Board,
towards the overall growth and success of the Company.
34. CAUTIONARY STATEMENT
Statements in the Board's Report and the Management Discussion and
Analysis describing the Company's objectives, expectations or forecasts may be
forward looking within the meaning of applicable securities laws and regulations. Actual
results may differ materially from those expressed in the statement. Important factors
that could influence the Company's operations include global and domestic demand and
supply conditions affecting selling prices of finished goods, input availability and
prices, changes in Government regulations, tax laws, economic developments within the
country and other factors such as litigation and industrial relations.
For and on behalf of the Board of Directors
|
Sd/- |
|
Jai Hiremath |
Date: 16 August 2023 |
Executive Chairman |
Place: Mumbai |
DIN: 00062203 |
|