Arch Pharmalabs Ltd Shares

Annual Report Summary

ARCH Pharmalabs Limited's 29th Annual Report for 2021-2022 includes corporate information, notices, director's report, annexures, and standalone & consolidated financial statements.

Corporate Information: Arch Pharmalabs Limited is a pharmaceutical company manufacturing and selling active pharmaceutical ingredients (APIs) and intermediates. The company has a Board of Directors including Mr. Ajit Kamath (Chairman & Managing Director), Mr. Rajendra Kaimal, Mr. Ashish Ujagare (Executive Directors), and Dr. Sunil Pitroda (Independent Director). The company works with various banks and financial institutions, including JM Financial Asset Reconstruction Co. Ltd., Oriental Bank of Commerce, Corporation Bank, Bank of India, Bank of Baroda, Jammu & Kashmir Bank, and Indian Overseas Bank. Link Intime India Pvt. Ltd. serves as the Registrar & Share Transfer Agent. The Statutory Auditors are M/s. Taori Sandeep & Associates. The company's registered office is located in Mumbai, with plant locations in Haryana, Maharashtra, and Telangana.

Notice: The 29th Annual General Meeting was held on December 30, 2022, via video conferencing. Ordinary business included adopting audited financial statements for the year ending March 31, 2022, reappointing Mr. Rajendrakumar Kaimal as a Director, and appointing M/s. Neha C Shah & Associates as Statutory Auditor for five years, concluding in 2027. Special business included ratifying the cost auditor's remuneration and offering equity shares on a preferential basis by converting financial obligations into equity shares of the company. The board had approached Nipro Pharmapackaging India Private Limited to convert receivables into equity shares, issuing up to 45,57,692 equity shares at Rs.328/- per share, including a premium of Rs.318/- per equity share aggregating up to Rs. 149,49,04,953/-. Dr. Sunil Pitroda was re-appointed as an Independent Director for a term of 5 years, up to December 29, 2027.

Directors' Report: The company's operating revenue increased to Rs. 1,30,898 Lakhs in the year ended March 31, 2022, up from Rs. 70,601 Lakhs in the previous year. A profit before tax of Rs. 5854 lakhs was achieved, compared to a loss before tax of Rs. 87669 Lakhs in the previous year. Net profit was Rs. 5873 lakhs compared to Rs. 186734 lakhs in the previous year. The financial restructuring with JM Financial Asset Reconstruction Co. Ltd. is ongoing. The directors do not recommend any dividend. A profit of Rs. 5,873.22 Lakhs was transferred to Reserves & Surplus. The company maintains high quality standards, with certifications including USFDA inspected Vitalife site (Gurgaon), USFDA inspected Merven site (Telangana), and USFDA & EDQM inspected Dombivli site (Maharashtra). Subsidiaries include Arch Life Sciences Limited, Arch Finechemicals Limited, Arch Pharmalabs FZ LLC, and Vitalife Pharma Ltd. Kobo Biotech Limited is an associate company (44.95% stake). The Board held seven meetings during the year. The Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, and Stakeholders Relationship Committee are active. Taori Sandeep & Associates, the statutory auditors, are not eligible for reappointment. The company has a whistle blower policy and a risk management policy. All related-party transactions were at arm's length and in the ordinary course of business. Details of loans, guarantees, and investments are in Note No. 27 to the standalone financial statements.

Annexure A: The company is committed to reducing energy consumption. It is evaluating the use of alternate energy sources like solar panels. R&D expenditure was Rs. 332.04 lakhs in 2021-22 compared to Rs. 273.41 lakhs in 2020-21. Foreign exchange earned was Rs. 6,342.37 lakhs and used/outgo was Rs. 4,174.91 lakhs.

Annexure B: Riddhi Shah, Company Secretary in Practice, conducted the secretarial audit and stated that Arch Pharmalabs Limited complied with the statutory provisions. However, the company needs to appoint an Internal Auditor, has defaulted in payment of interests on loans and finance facilities and defaulted/delayed in repayment of loans/borrowing availed from Bank and various financial institutions. Additionally, they need to appoint 2 independent directors and a woman director.

Auditor's Report: Taori Sandeep & Associates issued a qualified opinion on the standalone financial statements due to non-provision of interest on borrowings and payment of managerial remuneration in contravention of the Companies Act. There are material uncertainties regarding outstanding receivables from related parties. However, the Company maintained proper records, complied with accounting standards, and properly disclosed pending litigations. The internal financial controls system is adequate. The auditors report that the company has defaulted/delayed in repayment of loans and borrowing to financial institutions, banks. The report also details comments pertaining to specific clauses in the Companies (Auditor’s Report) Order 2020.

Financial Statements (Standalone): The standalone balance sheet as at March 31, 2022, shows a share capital of Rs 15,192.31 Lacs and reserves and surplus of Rs 43,714.71 Lacs. Long-term borrowings amount to Rs 66,898.11 Lacs. Key assets include property, plant and equipment of Rs 87,627.19 Lacs and inventories of Rs 69,890.50 Lacs. The statement of profit and loss shows a revenue from operations of Rs 1,30,897.73 Lacs and a profit for the year of Rs 5,873.22 Lacs.

Financial Statements (Consolidated): The consolidated balance sheet as at March 31, 2022, shows a share capital of Rs 15,192.31 Lacs and reserves and surplus of Rs 43,267.97 Lacs. Long-term borrowings amount to Rs 66,898.11 Lacs. Key assets include property, plant and equipment of Rs 87,627.19 Lacs, goodwill of Rs 741.94 Lacs, and inventories of Rs 69,890.50 Lacs. The statement of profit and loss shows a revenue from operations of Rs 1,30,897.73 Lacs and a profit for the year of Rs 5,186.64 Lacs. The Financial statements also details contingent liabilities and commitments.