Your Directors submit to you the 34thAnnual Report on the business & operations of the Company and Audited Statement of Accounts for the year ended 31st March, 2024 along with the Auditor's Report thereon.
Financial Results
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Particulars
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Standalone
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Consolidated
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2023-24
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2022-23
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2023-24
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2022-23
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Total Income
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41.76
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23.05
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41.76
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23.05
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Operational, Administration and other expenses
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85.16
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110.57
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85.16
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110.76
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Gross Operating Profit
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(43.4)
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(87.52)
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(43.4)
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(87.71)
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Interest and Financial Charges
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12.91
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18.14
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12.91
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18.14
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Forex Gain/Loss
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-
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-
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-
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-
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Depreciation
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9.23
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495.01
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9.23
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495.01
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Profit before Tax/Loss
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(65.55)
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(600.67)
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(65.55)
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(600.86)
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Provision for Tax
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0.00
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0.00
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0.00
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0.00
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Net Profit/Loss
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(65.55)
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(600.67)
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(65.55)
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(600.86)
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OPERATIONS
The company is faced with multiple challenges and notices with demands for payment. Following are the list of such notices:
1. Income Tax department dated 26/09/2024 - Demand for payment of Rs. 6,78,76,946.
Appropriate response was submitted along with a copy of the CIT(A) Order dated 29.09.2023. Accordingly, we filed a letter for rectification of demand in view of allowing our Appeal by Hon'ble ITAT and passage of Order u/s 250 of the CIT(A). When the rectification is done in accordance with the request, the demand will come down to Rs. NIL.
2. Notice from Commissioner of Customs dated 22/10/2024 - Demand for payment of Rs.25,24,803.
This is a demand pertaining to the import of certain equipment during 1992-93 and Customs duty of Rs.44,99,803/-. An amount of Rs. 33,75,000/- was already paid at the time of filing an appeal at CESTAT. The currently demanded amount of Rs.25,24,803/- includes an amount of Rs.11,24,803 while the remaining amount is said to be towards penalty. We have taken appropriate legal steps for a speedy resolution on this matter.
3. Legal Notice from Biotechnology Industry Research Assistance Council (BIRAC) dated 11/10/2024 for the payment of Rs. 7,57,81,871.23 that includes an amount of Rs. 3,87,00,000 towards the Principal amount while the rest towards interest.
The management plans to resolve this matter as a matter of urgency due to initiation of CIRP proceedings by BIRAC and plans to raise funds through available options that include secured or unsecured debt among others.
Revenues — Standalone
During the year under review, the Company on a standalone basis has recorded an income of Rs.41.76 Lakhs and incurred a loss of Rs. 65.55 Lakhs as against the income of Rs. 23.05 Lakhs and Loss of Rs. 600.67 respectively in the previous financial year ending 31.03.2023.
Revenues — Consolidated
During the year under review, the Company on a consolidated basis has recorded an income of Rs. 41.76 and incurred a loss of Rs. 65.55 Lakhs as against the income of Rs. 23.05 Lakhs and Loss of Rs. 600.86 Lakhs respectively in the previous financial year ending 31.03.2023.
AUDITORS' COMMENTS
As reported last year too, there were no activities at the subsidiary company, Transgene Biotek HK Ltd, since financial year 2015-16.
The consolidated financial statements were authorized for issue by the Company's Board of Directors at the board meeting held on 12thNovember, 2024.
Review and results of operations
Although there are no further restrictions imposed by SEBI, there is an adverse impact in raising required funds in view of penalties imposed by SEBI which has been challenged at the Appellate Securities Tribunal. However, it has been difficult to continue with the operations at the company in the absence of required funds to advance the product and technology development programs with a potential to lose their value on further delays.
Transgene's exploration for an alternative
The management and board of Directors believe that the basic foundation for all IPRs has been laid at Transgene by Dr Rao and the scientific team so far. Transgene has been funded, mostly through unsecured loans from Dr Rao, with that objective over the past two decades and it's present architecture of IPRs are a testament to the resolute will of the promoter backed by the shareholders. However, end results in bringing those technologies and inherent IPRs towards successful monetization have been illuding. Therefore, Dr Rao and rest of the management sought to unlock the potential through strategic associations and verticals all with a specific purpose to benefit the TBL shareholders and restore the pristine glory of TBL as a cutting-edge Biotech company.
It was with the above background necessitated by the zeal to sail through adverse circumstances, a strategic alliance with a company by name NiedlFree Technologies Pvt Ltd has been decided as a viable move forward. It is understood that NiedlFree is composed of members with vast experience, possessing deep knowledge and expertise not only in developing different biologics and bio-similars but also in the commercial production of those. NiedlFree assured to set-up relevant infrastructure for the development of biologics and formulations through its own sources of funding.
The said alliance between NiedlFree and Transgene would compose of key accruals from NiedlFree to Transgene as listed below:
- Rs.5 Crores payable as milestones
- 28% of the equity in NiedlFree
- 25% of any lumpsum payments received by NiedlFree
- 6% of the net sales carried out by NiedlFree
- 15% received as non-royalty payments through sub-licensees.
As such, TBL has served as an incubator of valuable technologies set to be up scaled one after the other, hereafter. What has not been transferred to NiedlFree are all other technologies and IP assets such as patented Gene Therapy technologies involving AAV delivered miR-101targeted against Liver and Breast cancers, technology for the treatment of multiple Sclerosis etc. The sum of parts at present is to serve larger than the whole but the eventual merged entity within Transgene, will be even better and bigger, straddling the entire value chain.
NiedlFree is reported to have developed, after several modifications to thet echnology transferred from Transgene, a very efficient and effective oral and nasal delivery technology platform with demonstrable results on oral and nasal Insulin, first among many others in the pipeline.
With successful development of one of its kind delivery echnologiesafter several modifications, the management of NiedlFree is reported to be in active discussions with few companies for monetizing the oral Insulin and also, with few others to formulate their molecules, two different arms of revenue generation among others.
With an excellent pilot scale and R&D infrastructure created by NiedlFree for biologicals, with Transgene holding a substantial equity in addition to various other benefits, the board has approved the licensing agreement between Transgene and NiedlFree while taking note of Dr. K. Koteswara Rao, Managing Director of Transgene Biotek Ltd holding an interest in NiedlFree Technologies Pvt Ltd also.
Subsequently, it was informed by the management of NiedlFree that necessary steps have been initiated to seek regulatory approvals for conducting appropriate studies including human clinical studies on nasal and oral delivery of different molecules.
PerORAL Bio Pvt Ltd
With no useful purpose served by the presence of PerORAL Bio Pvt Ltd, it was felt by the management that it would be better to close the company. Accordingly, an appropriate resolution was passed by the board for its closure and steps have been taken on that.
SEBI Order and recovery of lost GDR funds
During period since the last AGM, efforts have been intensified with the help from London and Swiss Lawyers for the recovery of lost GDR funds from the entities involved in the GDR fraud.
SEBI Adjudication hearing
SEBI in its Adjudication order dated 27th June 2022, delivered at our offices on 10th October 2022, has imposed penalties of Rs.38 lacs on the company apart from imposing penalties of different amounts on others named in the adjudication order. Aggrieved by the unjust order, Transgene has filed an appeal at the Securities Appellate Tribunal.
SBIRI / BIRAC
Legal Notice from Biotechnology Industry Research Assistance Council (BIRAC) dated 11/10/2024 was received for the payment of Rs. 7,57,81,871.23 that includes an amount of Rs. 3,87,00,000 towards the principal amount while the rest towards interest.
The management plans to resolve this matter as a matter of urgency due to the threat of initiation of CIRP proceedings and plans to raise funds through available options that include secured or unsecured debt among others.
DIVIDEND
Your Directors are unable to recommend any dividend since the company has not made any profits.
SUCCESION, STRATEGIC FOCUS AND FUTURE ORIENTATION:
Drawing strength from its strategic alliance with NiedlFree gaining significant results from the delivery technology platform, the management of Transgene expects rapid progress in commercialization of some technologies with resultant benefits accruing to it.
SUCCESSION PLANNING
With Dr. Koteswara Rao having past the age of 82 years, the succession planning policy has been initiated to identify and nominate suitable candidates for the Board's approval. Further it has initiated a program to identify the competency requirements of critical and key positions, assess potential candidates and develop required competency through planned development and learning initiatives. It is to ensure the systematic and long-term development of individuals in the senior management level to replace the individuals when the need arises due to deaths, disabilities, retirements and other unexpected occurrences.
With Dr Rao's retirement being imminent, the management is looking forward to handing over the baton to another person with an ability to infuse vigor and vitality in managing the company and taking forward in realizing the goals and aspirations. The search is continuing though such a goal can be achieved only after the clearance of SEBI issues.
Subsidiary Company - Transgene Biotek HK Limited
The management is exploring the options to close TBL HK while pursuing the subject of illegal transfer of funds that appeared to have taken place, hence no decision could be taken on its closure.
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"
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were on arm's length basis and in the ordinary course of business. The Form AOC-2 pursuant to Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure-B to this report
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
We are basically a bio-pharmaceutical company with a focus on three components - Research & Development of innovative biologic molecules, process to stabilize and develop innovative formulations for delivery through either oral or nasal route thus avoiding the injectable route of administration and finally initiate relevant studies for regulatory approvals for the purposes of strategic monetization of the chosen molecule.
However, in order to overcome various challenges, temporary or otherwise, prevailing in the path of progress on the above three components, well informed strategies need to be put in place to realize the ultimate goal of accruing the benefits from the chosen path, one of those is the transfer of oral delivery technology to NiedlFree Technologies. Annexure-C
CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION
The Directors are collectively responsible for the success of the company. The Board maintains and periodically reviews a list of matters that can only be approved by the Board. Matters that have not been expressly reserved to the Board in this way are delegated to the Managing Director or one of the Board's Committees. The Board's responsibilities include setting our strategy and policies, overseeing risk and corporate governance, and monitoring progress towards meeting our objectives and annual plans. It is accountable to our shareholders for the proper conduct of the business and our long-term success and seeks to represent the interests of all stakeholders.
The Company has a strong legacy of fair, transparent and ethical governance practices and it believes that good Corporate Governance is essential for achieving long-term corporate goals and to enhance stakeholders' value. Annexure-D
DEMATERIALISATION OF SHARES
86.35% of the company's paid up Equity Share Capital is in dematerialized form as on 31st March, 2024 and balance 13.65% 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.
The Board of Directors duly met 4(Four) times during the financial year from 1stApril, 2023 to 31st March 2024 the details of which are furnished in the report on Corporate Governance.
BOARD EVALUATION
The evaluation of all the Directors including the Chairman, the Independent Directors and the Managing Director, Board committees and the Board as a whole was carried out based on the criteria and framework approved by the Nomination and Remuneration Committee pursuant to the provisions of the Act and the corporate governance requirements as prescribed by SEBI under Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015).
The Board of Directors has carried out an annual evaluation of its own performance, Board committees and individual directors.
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 based on 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 based on 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 the board as a whole and performance of the Chairman was evaluated. 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.
INDEPENDENT DIRECTORS AND DECLARATION
Our Independent Directors meet the baseline definition of Independent Directors under the Act and the Listing Regulations. At the beginning of each financial year, the Independent Directors submit a self-declaration confirming their independence and compliance under section 149(6), Schedule IV of the Act and Regulation 16(1)(b) of the Listing Regulations, 2015 [Listing regulations]. All such declarations are placed before the Board for information and noting. Based on the declarations received, the Board also confirms that the Independent Directors fulfil the independence criteria under the Listing Regulations and are independent of the management.
Generally, the Independent Directors meet before each board meeting. During FY 2023-24 the independent Directors met Four (4) times i.e. on 30th May 2023, 05thAugust 2023, 14th November 2023 and 14th February 2024. The Independent Directors inter alia discuss matters arising out of Board and Board Committee agendas, company performance and various other board-related matters, identify areas where they need clarity or information from management and to review the performance of Independent Directors, the Chairman and the Board as a whole and assess the effectiveness and promptness of the information flow.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mrs. Swetha Marri, Independent Director, of the Company retires at the ensuing Annual General Meeting and being eligible, offers herself for re-appointment.
DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to Section 134(5) of the Companies Act, 2013, Directors of your Company hereby state and confirm that:
• In the preparation of the annual accounts for the year ended 31stMarch, 2024, the applicable accounting standards have been followed along with proper explanation relating to material departures;
• 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 loss of the company for the same period;
• 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;
• They have prepared the annual accounts on a going concern basis;
• They have laid down internal financial controls in the company that are adequate and were operating effectively.
• 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 principal or interest on deposit 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 do 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.
PARTICULARS OF EMPLOYEES
The statement showing particulars of employees pursuant to Section 197 of the Companies Act, 2013 (the 'Act') read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not applicable on company.
INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The internal control systems of the Company are adequate and commensurate with the size of operations. These controls ensure that transactions are authorized, recorded and reported on time. They ensure that assets are safe guarded and protected against loss or unauthorized disposal.
The Internal Audit department carried out audits in different areas of the Company's operations. Post-audit reviews were carried out to ensure that audit recommendations were implemented. The Audit Committee of the Board of Directors reviewed the audit program and findings of the Internal Audit department.
Statutory Auditors
The Statutory Auditors, M/s. Vasavi & Co., Chartered Accountants, Hyderabad (Firm Registration No. 020965S), Your directors recommend their appointment as Statutory Auditors of the Company for a period of 5 years, i.e. from Financial year commencing from 2023-24 to 2027-28) to hold office till the conclusion of the Annual General Meeting to be held in the year 2028.
Your Directors propose to appoint the firm M/s Vasavi & Co., chartered Accountants, FRN -006005S as Statutory Auditors for a period of five years from the ensuing Annual General Meeting.
Internal Auditors
Pursuant to provisions of Section 138 read with Rule 13 of the Companies (Accounts) Rules, 2014 and Section 179 read with Rule 8(4) of the Companies (Meetings of Board and its Powers) Rules, 2014; during the year under review the Internal Audit of the functions and activities of the Company was undertaken by the Internal Auditor of the Company on quarterly basis. Deviations are reviewed periodically, and due compliance ensured. Summary of Significant Audit Observations along with recommendations and its implementations are reviewed by the Audit Committee and concerns, if any, are reported to Board. There were no adverse remarks or qualification on accounts of the Company from the Internal Auditor.
Change In the Nature of Business, if Any
During the period under review and the date of Board's Report there was no change in Business.
Material Changes & Commitment Affecting the Financial Position of the Company
There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the Financial Year of the Company to which the financial statements relate and the date of the report.
Revision of Financial Statements
There was no revision of the financial statements for the year under review.
Further Issue of Share Capital
During the year under review, your Company has not made any allotments.
Transfer of Shares and Unpaid or Unclaimed Amounts To Investor Education And Protection Fund (IEPF)
Pursuant to the provisions of Section 124 of the Companies Act 2013, Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules") read with the relevant circulars and amendments thereto, the amount of dividend remaining unpaid or unclaimed for a period of seven years from the due date is required to be transferred to the Investor Education and Protection Fund ("IEPF"), constituted by the Central Government During the Year, no amount of dividend was unpaid or unclaimed for a period of seven years and therefore no amount is required to be transferred to Investor Education and Provident Fund under the Section 125(1) and Section 125(2) of the Act.
During the Year, no amount of dividend was unpaid or unclaimed for a period of seven years and therefore no amount is required to be transferred to Investor Education and Provident Fund under the Section 125(1) and Section 125(2) of the Act.
AUDITORS' REPORT AND SECRETARIAL AUDITORS' REPORT:
The auditors' report and Secretarial auditors' report contain certain qualifications, reservations or adverse remarks. Report of the secretarial auditor is given as an annexure which forms part of this report - "Annexure - D"
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
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as "Annexure - E"
A copy of the annual return as provided under sub-section (3) of section 92 of the Companies Act, 2013 (the 'Act'), in the prescribed form, is hosted on the Company's website and can be accessed at www.transgenebiotek.com.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
The company has not given loans, Guarantees, or made any investments attracting the provisions of Section 186 of the Companies Act, 2013 during the year under review.
FIXED DEPOSITS
The Company has not accepted any fixed deposits during the year and there are no fixed deposits outstanding as on 31.03.2024.
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/-
PLACE: HYDERABAD Dr. K. KOTESWARA RAO
DATE: 12.11.2024 CHAIRMAN & MANAGING DIRECTOR
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