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To,
The Members,
The directors submit the 31st annual report of Krebs
Biochemicals & Industries Limited (the Company) along with the audited financial
statements for the financial year ended 31st March 2023.
1. Financial Summary
| Particulars |
2022-23 |
2021-22 |
| Net Sales |
5213.44 |
5970.31 |
| Other Income |
62.01 |
115.58 |
| Total Income |
5275.46 |
6085.89 |
| Expenditure |
6791.48 |
9369.80 |
| Profit /(Loss) before Interest, |
(1516.02) |
(3283.92) |
| Depreciation and Taxes |
|
|
| Finance Cost |
297.32 |
539.10 |
| Depreciation & Amortisation |
655.85 |
629.67 |
| Profit/(Loss) Before Tax |
(2469.19) |
(4452.68) |
| Net profit/(Loss) after Tax |
(2469.19) |
(4452.68) |
| Other Comprehensive Income |
32.28 |
(34.64) |
| Total comprehensive income for the period |
(2436.91) |
(4487.32) |
| (comprising Profit/(loss) and other |
|
|
| comprehensive income for the year) |
|
|
| Add: Balance brought Forward |
(22611.60) |
(18124.26) |
| Add: Transferred from Profit & Loss Account |
(2436.91) |
(4487.32) |
| Balance Carried to Balance Sheet |
(25048.51) |
(22611.60) |
2. Financial Performance and Operations
During the financial year under review, the Company has posted total
income of Rs. 5275.46 lakhs as against total income of Rs. 6085.89 lakhs in the previous
financial year. During the year under report, operations of the Company have resulted in a
loss of Rs. 2469.19 lakhs as against loss of Rs. 4452.68 lakhs of the previous financial
year. Detailed Performance of the Company is given in the Management and Discussion
analysis forming part of this Annual Report.
Operationally, it was one more difficult financial year for the
Company. Increasing overhead cost such as coal prices, energy and solvent costs as well as
repairs and maintenance cost and effluent treatment cost put pressure on the margins and
the operations during the financial year under report.
The Vizag manufacturing facility of your Company has since started
manufacturing few drug intermediates having good volumes on job work basis so that the
manufacturing operations can be sustained. Manufacturing process of these drug
intermediates does not need operation of fermenters hence reduced energy cost for
production.These Drug intermediates production have been since validated and stabilised
and production volume of these intermediaries shall gradually increase. At the same time,
your Company is also in discussion with potential customers for manufacturing tie up for
fermentation based products so as to optimally utilise the Company's Vizag
manufacturing facility. The Nellore manufacturing facility of the Company is currently
manufacturing and selling an API having good volume and more or less stabilized its
operations and is recovering its costs. Few more products are also currently under various
stages of development for manufacturing at this manufacturing facility. Product
development, validation and regulatory approval is a lengthy and time consuming process
which every manufacturer has to go through as a new product development cycle in the
Pharma Industry. The Company's current year income is majorly out of the job work
charges as against the previous year income which was more from sale of products.
Therefore, though quantity produced and dispatched from Company's manufacturing
facilities have increased substantially, the same is not getting reflected in total
income.
3. Change in nature of business
During the year under review, there is no change in the nature of
business of the Company.
4. Dividend
On account of losses incurred during the year, no dividend is proposed
to be declared for the financial year 2022-23.
5. Material changes and commitments affecting the financial
position of the Company:
No material changes or commitments affecting the financial position of
the Company have occurred between the end of the financial year to which financial
statement in this report relate and date of this report.
6. Share Capital
There is no change in the share capital of the Company during the
financial year under report.
7. Investor Education and Protection Fund
No amounts and/or shares were transferred to the Investor Education and
Protection Fund during the year under review.
8. Statutory Auditors, Audit Report and Audited Accounts
At the twenty-seventh AGM held on September 25, 2019 the Members
approved appointment of Bhavani& Co, Chartered Accountants (Firm Registration No.
012139S) as Statutory Auditors of the Company to hold office for a period of five years
from the conclusion of that AGM till the conclusion of the Thirty Second AGM. The
requirement to place the matter relating to appointment of auditors for ratification by
the Members at every AGM has been done away by the Companies (Amendment) Act, 2017 with
effect from May 7, 2018. Accordingly, no resolution is being proposed for ratification of
appointment of statutory auditors at this AGM.
Explanation or Comments on Qualification, Reservation or Adverse Remark
or Disclaimer made by the Auditors
| We draw your attention to note no. 2.20.2 to the financial
statements, which states that the Company has incurred loss before tax of Rs. 693.97 lakhs
for the quarter ended 31st March 2023 and Rs. 2,469.19 lakhs for the year
ending 31st March 2023. As of 31st March 2023, the total liabilities
exceeded it's total assets by Rs. 9,946.23 lakhs as compared to Rs. 7,509.32 lakhs as
at 31st March 2022. These factors indicate that material uncertainty exists
that may cast significant doubt on the Company's ability to continue as going concern
and, therefore, the Company may be unable to realise it's assets and discharge
it's liabilities in the normal course of business. The Company's management has
carried out an assessment of the Company's financial performance and has obtained a
confirmation providing comfort of financial support from the Holding Company, if required
to meet its obligations. There has been continued improvement in production during the
current year and the Company has prepared strategic plan for continuous growth. Pursuant
to the said plan, the Company continues to focus on various initiatives including cost
optimisation through operational efficiency, improvement initiatives, rationalisation of
existing operations and increase in sales volumes from the existing and new customers.
With continued efforts, the Company expects to address the material uncertainty in future. |
The Company has prepared turnaround strategy and is also in
the process of developing new products for manufacturing. It is essential for the Company
to increase production level to optimally utilise the available capacity so as to make the
Company's operations financially viable. The Company is also exploring the
opportunity to manufacturing additional fermentation based products so as to optimally
utilise the Company's Vizag manu- facturing unit. |
9. Internal Auditors
The Board of Directors based on the recommendation of Audit Committee
have re-appointed M/s. Suryanarayana & Suresh, Chartered Accountants, Hyderabad, as
Internal Auditors of the Company for the Financial Year 2023-24 at their meeting held on
24th May, 2023.
The internal auditors have submitted their reports at quarterly
intervals to the Audit Committee and the Board during the financial year ended 31st
March, 2023.
10. Directors and Key Managerial Personnel
During the year, the Non-Executive Directors of the Company had no
pecuniary relationship or transactions with the Company, other than sitting fees and
reimbursement of expenses incurred by them for the purpose of attending meetings of the
Board and Committees.
The Board of Directors at their Meeting held on 9th August,
2023, appointed Mr. Jitendra Shah (DIN–09377846) as Managing Director/CEO of the
Company effective from 10th August, 2023 for term of 3 years subject to
approval by shareholders at ensuing Annual General Meeting. The Board of Directors also
noted the resignation of Mr. Pabitrakumar Kalipada Bhattacharya (DIN- 07131152) as the
Managing Director of the Company w.e.f 9th August, 2023 after the closure of
business hours. They further noted that he shall continue as Non-Executive Director on the
Board of the Company w.e.f 10th August, 2023, liable to retire by rotation.
Key Managerial Personnel
The Board of Directors at its meeting held on 3rd February,
2023, appointed Mr. Ritesh Jain as Chief Financial Officer (CFO) and Mr. Rohit Taparia as
Company Secretary & Compliance Officer.
Pursuant to the provisions of Section 203 of the Companies Act, 2013,
the Key Managerial Personnel of the Company as on the date of this report are: Mr.
Pabitrakumar Kalipada Bhattacharya-Managing Director (upto 9th August, 2023)
Mr. Jitendra Shah – Managing Director (w.e.f 10th August, 2023) Mr. Ritesh
Jain - Chief Financial Officer Mr. Rohit Taparia- Company Secretary Ms. Taruni Banda,
resigned as Company Secretary with effect from 6th August, 2022 due to her
personal reason and has not indicated any other material reason for her resignation.
Mr. R. Ravi Babu has resigned as Chief Financial Officer with effect
from 3rd February, 2023 due to his personal reasons and has not indicated any
other material reason for his resignation.
Retirement by Rotation
Mr. Jitendra Shah (DIN-09377846) and Mr. Avinash Ravi (DIN-01616152)
retire by rotation as a Directors at the ensuing Annual General Meeting and have offered
themselves for re-appointment.
11. Declaration of Independence
The Company has received the declarations under section149(6) of the
Companies Act, 2013, from the Independent Directors that each of them meets the criteria
of independence and there has been no change in the circumstances which may affect their
status as Independent Directors during the year.
All the Independent Directors have registered themselves under
Independent Directors data bank maintained by the Indian Institute of Corporate Affairs
(IICA).
12. Board Meetings
During the financial year 2022-23, Four (4) meetings of the Board were
held. Details of the meetings of the Board and attendance of the Directors have been
provided in the corporate governance report which forms part of this report.
13. Corporate Social Responsibility
The provisions of Section 135 of the Companies Act, 2013 pertaining to
Corporate Social Responsibility (CSR) is not applicable to the Company.
14. Quality Initiatives
The Company is committed to meet the customers Quality requirements and
satisfaction by maintaining high degree of assurance in Quality, Safety, efficacy of the
products manufactured. The Company maintains mutual and beneficial relationship with the
Suppliers, Vendors and Customers.
The Company provide continual training to all the employees working in
the plants for upgrading their knowledge of cGMP practices. Your Company continuously
focus on developing new products with innovative knowledge and robust practices meeting
the Regulatory requirements.
The Company is committed to meet the regulatory standards set by global
regulators and our Unit-II Vizag site has been accredited and certified by EDQM, Europe.
Many customers have audited Unit-I Nellore plant and have approved the plant as qualified
Vendor. Company is totally focusing to be as an integrated Company emerging in the Pharma
market by improving and implementing best-in class methodologies to meet the customer
requirements with zero complaints and by implementing the ALCOA Practices in both the
plants.
15. Policy on directors' appointment and remuneration and other
details
The Nomination and Remuneration Committee has laid down the criteria
for Directors' appointment and remuneration including criteria for determining
qualifications, positive attributes and independence of a Director. The following
attributes/criteria for selection have been laid by the Board onthe recommendation of the
Committee: • the candidate should posses the positive attributes such as leadership,
entrepreneurship, industrialist, business advisor or such other attributes which in the
opinion of the Committee the candidate possess and are in the interest of the Company;
• the candidate should be free from any disqualifications asprovided under sections
164 and 167 of the Companies Act, 2013; • the candidate should meet the conditions of
being independent as stipulated under the Companies Act, 2013 and SEBI (LODR) Regulations,
2015 in case of appointment as an independent director; and • the candidate should
posses appropriate educational qualification, skills, experience and knowledge inone or
more fields of finance, law, management, sales, marketing, administration, research,
corporate governance, technical operations, infrastructure, medical, social service,
professional teaching or such other areas or disciplines which are relevant for the
Company's business.
16. Board Evaluation
The Nomination and Remuneration Committee lays down the criteria for
performance evaluation of Independent Directors, Board of Directors and Committees of the
Board. The criteria for performance evaluation is based on the parameters like attendance
and participation at the meetings of the Board and Committees thereof, contribution to
strategic decision making, review of financial statements, business performance.
The Board has carried out evaluation of its own performance as well as
that of the Committees of the Board and all the Directors.
17. Remuneration Policy
The objective and broad framework of the Company's Remuneration
Policy is to consider and determine the remuneration, based on the fundamental principles
of payment for performance, potential and growth. The Remuneration Policy reflects on
certain guiding principles of the Company such as aligning remuneration with the longer
term interests of the Company and its shareholders, promoting a culture of meritocracy and
creating a linkage to corporate and individual performance and emphasising on line
expertise and market competitiveness so as to attract the talent. The Nomination and
Remuneration Committee recommends the remuneration of Directors and Key Managerial
Personnel, which is approved by the Board of Directors, subject to the approval of
shareholders, where necessary. The level and composition of remuneration shall be
reasonable and sufficient to attract, retain and motivatethe directors, key managerial
personnel and other employees of the quality required to run the Company successfully. The
relationship of remuneration to performance should be clear and meet appropriate
performance bench marks. The remuneration to directors, key managerial personnel and
senior management personnel should also involve a balance between fixed and incentive pay
reflecting short and long term performance objectives appropriate to the working of the
Company and its goals. The Remuneration Policy is placed on the Company's website at
(http:// www.krebsbiochem.com/documents/54405dae0f a8dbfdd493d897deab01b3.pdf).
Information about elements of remuneration package of individual
directors is provided in the Annual Return as provided under Section 92(3) of the
Companies Act, 2013 which is placed on the website of the Company.
18. Familiarisation program for Independent Directors
The Company has conducted familiarisation programs for the Independent
Directors as required under the provisions of Companies Act, 2013, the same is uploaded on
the Company's website at www.krebsbiochem.com.
19. Internal Financial Control Systems and their adequacy
The details in respect of internal financial controls and their
adequacy are included in the Management Discussion and Analysis Report which forms part of
this report.
20. Audit Committee
Your Company has a duly constituted Audit Committee and the Board has
accepted all the recommendations of Audit Committee during the year under review. The
members of the Audit Committee are: a) Mr. G V L Prasad - Chairman b) Mr. Satish Khivsara
- Member c) Dr. Malati Tangirala - Member d) Mr. Jitendra Shah - Member (w.e.f. 10th
August, 2023) The details pertaining to meeting, role and responsibilities of Audit
Committee are provided in the Corporate Governance Report, which forms part of this
report.
21. Nomination and Remuneration Committee
Your Company has in place a duly constituted Nomination and
Remuneration Committee which has following members: a) Mr. Satish Khivsara - Chairman b)
Mr. G V L Prasad - Member c) Dr. Malati Tangirala - Member d) Dr. R T Ravi - Member
Details pertaining to meetings, role and responsibilities of Nomination and Remuneration
Committee are provided in the Corporate Governance Report which forms part of this report.
22. Stakeholders Relationship Committee
Your Company has constituted a Stakeholders Relationship Committee as
required under the provisions of SEBI Listing Regulations and the Companies Act, 2013.
Members of the committee are: a) Mr. G V L Prasad - Chairman b) Mr. Satish Khivsara -
Member c) Mr. Avinash Ravi - Member d) Dr. R T Ravi - Member Details pertaining to
meetings, role and responsibilities of Stakeholders Relationship Committee are provided in
the Corporate Governance Report which forms part of this report.
23. Corporate Governance
As per the requirements of SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015, the Company has complied with the requirements of
Corporate Governance in all material aspects.
A report on Corporate Governance together with a certificate of its
compliance from the Statutory Auditors, forms part of this report
24. Loans and Investments
During the year under review, the Company has not given any loans and
not made any investments under the provisions of Section 186 of the Companies Act, 2013.
25. Particulars of Employees
Pursuant to the provisions of Section 197 of the Companies Act 2013
read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014, no employee of the Company is drawing salary of more than Rs. 1.02 crores
(Rupees One Crore Two Lakhs) per financial year or Rs. 8.5 lakhs (Eight Lakh Fifty
Thousand) per month, as the case may be for the year ended 31st March 2023.
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-I
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 may write to the Company Secretary.
26. Cost Audit
Pursuant to the provisions of section 148 of the Companies Act, 2013,
the cost audit of cost records became applicable to the Company from financial year
2022-23. M/s. Bojanapalli & Associates, Cost Accountant (Firm Registration No. 100849)
were appointed as Cost Auditors to conduct audit of cost records of the Company for the
financial year 2022-23.
The Cost Audit Report for financial year 2022-23 shall be filed on or
before due date after approval by the Board of Directors in the Board Meeting.
27. Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as
amended from time to time, the Company has appointed M/s. DSMR and Associates, Practicing
Company Secretaries, as Secretarial Auditors to undertake the secretarial audit of the
Company. The Secretarial Audit Report is annexed herewith as Annexure- II to the
Board's Report.
Qualifications in Secretarial Audit Report:
| Sr. No Observations in Secretarial Audit
Report |
Board's explanation/ comments |
| 1 Non maintenance of 100% promoter shareholding in
dematerialized form |
1000 shares of Mrs. Hemalata Ravi and 19400 shares of Dr R T
Ravi are under legal dispute in the court of law and hence the same could not be
dematerialized. |
| 2 Non filing of Form MSME I for furnishing half yearly return
with the registrar for half year ended September 30, 2022. |
The Company inadvertently missed to file Form MSME – I
for half year ended September 30, 2022. The Management has assured to take care for such
instances not to happen in future. |
| 3 Delay in filing of few Forms with Ministry of Corporate
Affairs (MCA) |
There was an inadvertent delay in filing of few Forms with
the Ministry but the same has been filed before the date of this report. |
28. Annual Secretarial Compliance Report
The Company has undertaken an audit for the financial year 2022-23 for
all applicable compliances as per Securities and Exchange Board of India Regulations and
Circulars/Guidelines issued thereunder. The Annual Secretarial Compliance Report issue by
M/s. DSMR &
Associates, Prop. Mr. DSM Ram, Company Secretary in Whole time
Practice, Hyderabad has been submitted to the Stock Exchanges within the specified time.
29. Transactions with related parties
Information on transactions with related parties are given in Annexure-III
in Form AOC-2 and the same forms the part of this report.
30. Fixed Deposits
Your Company has not accepted any fixed deposits and as such no
principal or interest was outstanding as on the date of the Balance Sheet.
31. Annual Return
In accordance with the requirements of Section 92 (3) of the Companies
Act, 2013 and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, a
copy of Annual Return in Form MGT-7 is placed on the website of the Company at
www.krebsbiochem.com.
32. Directors' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, the Board of
Directors, to the best of their knowledge and ability, confirm that:
i) In the preparation of the annual accounts, the applicable accounting
standards have been followed and there are no material departures;
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 fair and true view of the state of affairs of the Company at the end of the
financial year;
iii) They 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) They have prepared the annual accounts on a going concern basis.
v) They have laid down internal financial controls to be followed by
the Company and such internal financial controls are adequate and operating effectively.
vi) They have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems were adequate and operating
effectively.
33. Disclosures relating to Subsidiaries, Associates and Joint Ventures
The Company does not have any Subsidiary Company, Associate Company or
Joint Venture Company.
34. Disclosure Requirements
As per SEBI Listing Regulations, Corporate Governance Report with
Auditors' Certificate thereon and Management Discussion and Analysis are attached,
which form part of this report.
35. Code of Conduct
The Board has laid down a code of conduct for Board members and senior
management personnel of the Company. The Company has also adopted code of conduct for
Independent Directors incorporating the role and functions, duties as laid down in the
Companies Act, 2013. The said code of conduct is available on the website of the Company
as www.krebsbiochem.com. The Board members and senior management personnel have affirmed
compliance with the said code of conduct. A declaration signed by the Managing Director is
given at the end of this report.
36. Prevention of Insider Trading
The Company has also adopted a code of conduct for prevention of
insider trading. All directors, senior management employees and other employees who have
access to the unpublished price sensitive information of the Company are governed by the
Code. During the year under report, there has been due compliance with the code of conduct
for prevention of insider trading.
The said code is available in the Company's website
www.krebsbiochem.com.
37. Vigil Mechanism/Whistle Blower Policy
The Company has in place, whistle blower policy and no personnel have
been denied access to the Chairman of the Audit Committee. The policy also provides for
the safeguarding of whistle blowers. The whistle blower policy is available on website of
the Company www.krebsbiochem.com.
38. Energy conservation, technology absorption and foreign exchange
earnings outgo
The information on conservation of energy, technology absorption and
foreign exchange earnings and outgo as stipulated under Section 134(3)(m) of the Companies
Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure-IV
to this report.
39. Safety, Environment and Health
The Company considers safety, environment and health as the management
responsibility. The employees are provided training programs at regular intervals on
manufacturing facilities on safety and environment.
40. Significant or material orders passed against the Company
During the year under review, there were no significant or material
orders passed against the Company by regulators/ Courts/Tribunals impacting the going
concern status and operations of the Company in future.
41. Disclosure on Corporate Insolvency Resolution Process initiated
under the Insolvency and Bankruptcy Code (IBC)
During the year under review, there were no IBC proceedings initiated
against the Company.
42. Disclosures pertaining to the Sexual Harassment of Women at the
workplace (Prevention, Prohibition and Redressal) Act, 2013
The Company has complied with the provision relating to the
constitution of Internal Complaints Committee under the Sexual Harassment of Women at the
Workplace (Prevention, Prohibition and Redressal) Act, 2013. There are no complaints
registered in this matter during the year under review.
43. Secretarial Standards
The Company is in due compliance with the applicable secretarial
standards issued by the Institute of the Company Secretaries of India (ICSI).
44. Acknowledgments
Your Directors take this opportunity to express their sincere
appreciation to the shareholders, customers, bankers, employees, suppliers and other
business associates for the excellent support and co-operation extended by them.
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