Arch Pharmalabs Ltd Shares

Annual Report Summary

The document is the 28th Annual Report for Arch Pharmalabs Limited, covering the financial year 2020-2021. It includes corporate information, notices for the Annual General Meeting (AGM), Director's Report, standalone and consolidated financial statements, and auditor's reports.

Corporate Information:

• Lists the Board of Directors as of March 31, 2021 including Mr. Ajit Kamath (Chairman & Managing Director), Mr. Rajendra Kaimal and Mr. Ashish Ujagare (Executive Directors) and Dr. Sunil Pitroda (Independent Director).
• Includes contact information for Banks & Financial Institutions, Statutory Auditors (Taori Sandeep & Associates), and the Registrar & Share Transfer Agent (Link Intime India Pvt. Ltd.).
• Details plant locations of the company across India.

Notice:

• The 28th Annual General Meeting will be held on December 30, 2021, via video conferencing.
• The agenda includes adopting audited financial statements for the year ending March 31, 2021, appointing a director, ratifying the cost auditor's remuneration for the year ending March 31, 2022 (up to ₹1,00,000 to M/s. Santiram Chattopadhyay & Associates), and approving private placement of Non-Convertible Debentures (NCDs) and/or Debt Securities up to ₹100 Crores.
• Approval is sought for the Board to create, offer, issue and allot secured/unsecured redeemable non-convertible debentures (NCDs) and/or subordinated debenture, bonds, instruments and other debt securities, provided that outstanding principal amount of Debt Securities shall not exceed *100 Crores.
• Provides detailed instructions and procedures for shareholders to participate in the AGM via e-voting.

Director's Report:

• Financial performance: Revenue increased to ₹70,601 Lakhs, but the company incurred a loss before tax of ₹(87,669) Lakhs. Net Profit/(Loss) for the Year was ₹1,86,734 Lakhs.
• Discusses the challenges and opportunities in the API manufacturing sector, including dependence on China and the push for domestic manufacturing.
• JM Financial Asset Reconstruction Company Limited (JMF ARC) is aggregating debt from the Lenders and a Restructuring Agreement was executed in Dec 2017. Company has approached JMFARC for further restructuring of its loans to sustainable levels.
• No dividend is recommended. Profit of ₹1,86,735 Lakhs has been transferred to the Balance Sheet.
• The company maintains high-quality standards and has valid certifications, including USFDA inspections.
• Mr. Ashish Ujagare is retiring by rotation and offers himself for reappointment. Dr. Sunil Pitroda has given declaration that they meet the criteria of independence.
• 5 Board meetings were held during the year.
• M/s. Taori Sandeep & Associates are the statutory auditors. M/s. Santiram Chattopadhyay & Associates are the Cost Auditors for the Financial year 2020-21. Ms. Riddhi Shah is the Secretarial Auditor.
• The company has a whistle blower policy and a risk management policy.
• Reports nil information on employee remuneration under Section 197.

Annexures to Director's Report:

• Annexure A: Details conservation of energy, technology absorption and foreign exchange earnings and outgo. Foreign Exchange earned was ₹5,628 lakhs and Foreign Exchange used was ₹3,272 lakhs.
• Annexure B: Secretarial Audit Report which indicates compliance with various laws, however, notes non-compliance with certain provisions such as appointment of an Internal Auditor, Independent Director, woman director and delays in statutory payments and payment of interest. The report includes observations that the Board of Directors is not duly constituted as company has not appointed required number of independent directors and women director.
• Annexure C: Extract of Annual Return, including registration details, principal business activities, and details of holding, subsidiary, and associate companies. Includes shareholding patterns, details of promoters, and information on indebtedness.

Independent Auditor's Report (Standalone & Consolidated):

• The auditor, Taori Sandeep & Associates, expresses a qualified opinion on the standalone and consolidated financial statements due to non-provision of interest on borrowings and contravention of provisions of Section 196 & 197 of The Companies Act, 2013 regarding managerial remuneration. The net effect is an understatement of loss and liabilities.
• Key Audit Matters: Restructuring with JMFARC; Loans/Guarantees to Related party.
• The auditors highlight the company's ongoing efforts to restructure loans with JMF ARC and the potential impact of this restructuring on the company's losses.
• The report includes an annexure providing details on compliance with the Companies (Auditor's Report) Order, 2016 and comments on items such as fixed assets, inventory, loans, deposits, and statutory dues.

Financial Statements (Standalone & Consolidated):

• The balance sheet, statement of profit and loss, and cash flow statement are presented. The figures presented are in Lakhs.
• The total Equity and Liabilities are equal to the Total Assets.
• Revenue from operations for standalone financials is reported at 70,601.12 Lakhs, while loss before tax is (87,668.58) Lakhs.
• The consolidated financial statements shows a similar pattern to that of standalone statements.
• Various notes to the financial statements provide additional details on items such as share capital, reserves, long-term borrowings, short-term borrowings, trade payables, related party transactions, and contingent liabilities.
• Details on related party transactions, including those with Arch Impex Pvt Ltd.
• The company has outstanding receivable as referred in Note No. 27 from related parties amounting ₹467.84 Lacs in respect of loans advances and guarantees given by it to third parties on behalf of related parties amounting ₹15,272.00 Lacs prior to commencement of The Companies Act, 2013.

Overall: The report illustrates a company undergoing financial restructuring with a focus on scaling up operations and emphasizes compliance with regulations while facing challenges related to debt and financial stability. There is a clear emphasis on improving domestic manufacturing capabilities in the pharmaceutical sector and reducing reliance on imports.