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Directors Report of Sun Pharmaceutical Industries Ltd.
Mar 31, 2025
Your directors take pleasure to present the Board''s Report in line with the Companies Act, 2013 ("Act") and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), this report presents the Audited financial results and other developments in respect of the Company during the financial year ended on March 31, 2025 ("FY25"/"Financial Year") and up to the date of the Board meeting held on May 22, 2025 to approve this report.
Financial Highlights
The Company''s financial performance for the financial year ended March 31, 2025:
|
('' in Million) |
||||
|
Standalone |
Consolidated |
|||
|
Year ended March 31, 2025 |
Year ended March 31, 2024 |
Year ended March 31, 2025 |
Year ended March 31, 2024 |
|
|
Revenue from operations |
230,033.3 |
202,751.7 |
525,784.4 |
484,968.5 |
|
Profit before exceptional item and tax |
50,305.7 |
36,686.7 |
144,299.8 |
115,822.1 |
|
Exceptional Item |
- |
2,190.2 |
6,778.5 |
4,943.2 |
|
Profit before tax but after exceptional item |
50,305.7 |
34,496.5 |
137,521.3 |
110,878.9 |
|
Profit after tax |
42,826.2 |
28,581.8 |
109,801.0 |
96,484.4 |
|
Opening balance in Retained Earnings |
127,310.4 |
127,908.8 |
501,545.5 |
436,102.5 |
|
Closing balance in Retained Earnings |
133,878.2 |
127,310.4 |
578,618.4 |
501,545.5 |
⢠The Company''s performance has been discussed in detail in the ''Management Discussion and Analysis Report''.
⢠The Company is engaged in the business of Pharmaceuticals, and there has been no change in the nature of the business of the Company during the financial year ended March 31, 2025.
Material Changes and Commitments
There have been no material changes and commitments affecting the Company''s financial position between the end of the financial year and the date of this report other than those which have already been disclosed to the Stock Exchanges.
The consolidated financial statements for the year ended March 31, 2025, pursuant to Section 129(3) of the Companies Act, 2013, form part of this Annual Report.
During the year under review, the Board has declared an interim dividend of ''10.50/- (Rupees Ten and Paise Fifty only) per equity share of '' 1/- (Rupee One only) each [previous year '' 8.50/- (Rupees Eight and Paise Fifty only) per equity share of '' 1/- (Rupee One only) each] for the year ended March 31, 2025.
In addition to above, the Board has recommended a final dividend of '' 5.50/- (Rupees five and paise fifty only) per equity share of '' 1/- (Rupee One only) each [previous year '' 5.00/- (Rupees Five only) per equity share of '' 1/- (Rupee One only) each] for the year ended March 31, 2025. The dividend is subject to approval of shareholders at the ensuing Annual General Meeting ("AGM") and shall be subject to deduction of tax at source. The dividend, if approved by the shareholders at the 33rd AGM, would involve a cash outflow of '' 13,196.34 Million. The total dividend pay-out for the FY25 is '' 16/-(Rupees Sixteen only) per equity share of '' 1/- each [previous year '' 13.50/- (Rupees Thirteen and Paise Fifty only) per equity share of '' 1/- (Rupee One only) each].
⢠Processed the dividends remaining unclaimed for previous years based on the analysis carried out for the shareholders whose updated Bank details were available with the Company based on the latest dividend paid electronically.
⢠Used our field force employees to reach out to
unconnected physical shareholders of the Company. The identified shareholders were then contacted to facilitate the completion of their KYC details and the claim of unpaid dividends.
Details pertaining to entities that became subsidiaries/ joint ventures/associates and those that ceased to be the subsidiaries/joint ventures/associates of the Company during the year under review are provided in the notes to the consolidated financial statements, forming part of this Annual Report.
Directors and Key Managerial Personnel
As on March 31, 2025, your Company''s Board has eight members. This includes one Non-Executive Non-Independent Director connected to the Promoter, two Executive Directors, and five Non-Executive Independent Directors, one of whom is a Woman Independent Director. You can find details about the Board and Committee composition, director tenure, and more in the Corporate Governance Report, which is part of this Annual Report.
During the year, the following were the changes in Directors/ Key Managerial Personnel:
1. Mr. Aalok Shanghvi (DIN: 01951829) - Whole-time Director has also been designated as the Chief Operating Officer (COO) of the Company.
2. Mr. Sanjay Asher (DIN: 00008221), Non-Executive -Independent Director, retired on completion of his term of appointment and ceased to be the Director effective from March 31, 2025.
Subsequent to the year end and up to the date of the Report, the following were the changes:
3. Ms. Jayashree Satagopan has been appointed as the Chief Financial Officer and Key Managerial Personnel effective from July 01, 2025.
4. Mr. C S Muralidharan, Chief Financial Officer, shall retire from the Company and cease to be the Chief Financial Officer effective from July 01, 2025.
5. Mr. Sudhir Valia (DIN: 00005561), a Non-Executive, Non-Independent Director of the Company, will retire by rotation at the ensuing AGM, and he has not offered himself for reappointment.
6. Ms. Vidhi Shanghvi (DIN: 06497350) is appointed as Whole-time Director for a period of five years, effective from May 22, 2025, which shall be subject to approval of the shareholders at the ensuing AGM.
The necessary disclosures required under the Act, the Listing Regulations and Secretarial Standards-2 on General Meetings issued by the Institute of Company Secretaries of India ("ICSI"), for the above-mentioned appointment/ re-appointment are provided in the Notice of 33rd AGM of the Company.
This resulted in a reduction in unpaid dividends and a transfer of the amount and underlying shares to the IEPF.
Your Board encourages the shareholders to claim unpaid dividends lying with the Company from time to time.
The information regarding unpaid/unclaimed dividends lying in the unpaid dividend account upto the year and the corresponding shares, which are liable to be transferred along with the due dates for such shares or shares already transferred, and due to be transferred to IEPF Authority, is available on the website of the Company, along with the procedure to claim the same from IEPF Authority and can be accessed at www.sunpharma.com under head "Investors" sub-head >"Shareholders Information"> "Investor Services".
The Board opted not to propose any transfer to reserve at this time, choosing instead to allocate resources toward opportunities that may foster growth and resilience in the future. The decision reflects a careful consideration of our current needs and a strategic approach.
Loans, Guarantees and Investments
We disclose loans, guarantees, and investments to show how the Company manages its finances outside of its main business activities. This transparency helps stakeholders understand the risks involved and how the Company uses its capital. Section 186 of the Act, sets specific rules and limits for these transactions, and our disclosure shows that we follow these regulations.
The particulars of loans, guarantees and investments have been disclosed in the Financial Statements.
The Company did not accept any public deposits during the year under review, as outlined in Chapter V of the Act and the corresponding Rules.
Changes in Capital Structure
During the year under review, there were no changes to the Company''s share capital. The paid-up equity share capital of the Company is '' 2,399,334,970. Throughout the year, the Company did not issue any shares or convertible securities, including sweat equity and stock option plans.
Credit Rating
There has been no change in the credit rating, which is disclosed in the Corporate Governance Report, which forms part of this Annual Report.
Subsidiaries/Joint Ventures/Associates
The statement containing the salient features of the Financial Statements of the Company''s subsidiaries/joint ventures/ associates is given in Form AOC - 1, provided in Notes to the consolidated financial statements, forming part of this Annual Report.
of the Familiarisation Programme are available on the website of the Company at https://sunpharma.com/policies/
Declaration by Independent Directors
The Company has received declarations from all Independent Directors confirming that they meet the criteria of independence as outlined in Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations. Additionally, the Independent Directors have declared their compliance with Rules 6(1) and 6(2) of the Companies (Appointment and Qualification of Directors) Rules, 2014, regarding their inclusion in the data bank of Independent Directors maintained by the Indian Institute of Corporate Affairs.
There have been no changes in the circumstances affecting their status as Independent Directors of the Company. In the opinion of the Board, the Independent Directors meet the conditions specified under the Act and the Listing Regulations, and they remain independent of management.
This requirement highlights how important independent directors are for providing unbiased oversight. They help make sure that the Board''s decisions are not swayed by management or major shareholders.
Familiarisation Programme for the Independent Directors
In compliance with the requirements of Regulation 25(7) of the Listing Regulations, the Company has put in place a Familiarisation Programme for the Independent Directors to familiarise them with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model etc. The details
Board Performance Evaluation Board performance evaluation is carried out under a comprehensive Performance Evaluation Programme ("PEP") every year. PEP is a part of the roles and responsibilities of the Nomination and Remuneration Committee ("NRC"). Every year NRC reviews the performance evaluation criteria for the Board as a whole, the Board committees and individual board members, taking into consideration the SEBI guidelines and the guidance note issued by the ICSI.
The PEP 2024-25 was conducted through a dual approach:
⢠Questionnaire Approach wherein a questionnaire for performance evaluation of the Board as a whole, Board committees and individual Board members was circulated seeking input from each Board member, and
⢠Interaction Approach wherein the Lead Independent Director had one-on-one interactions with each Board member seeking input and suggestions on the effectiveness of the Board processes
Remuneration Policy and Criteria for Appointment of Directors
The Company has in place a process for selection of any Director, wherein the NRC identifies persons of integrity who possess relevant expertise, experience and leadership qualities required for the position and the Committee also ensures that the incumbent fulfils such criteria with regard to qualifications, positive attributes, independence, age and other criteria as laid down under the Act, Listing Regulations or other applicable laws and the diversity attributes as per the Board Diversity Policy of the Company. The Remuneration policy, inter alia, covers guiding principles and components such as fixed or variable, retiral benefits, commission, etc.
The Remuneration Policy as approved by the Board is available on the website of the Company and can be accessed at https:// sunpharma.com/policies.
Information as per Section 197 (12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in ''Annexure -A'' to this Report. Further, the information pertaining to Rule 5(2) & 5(3) of the aforesaid Rules, pertaining to the names and other particulars of employees is available for inspection at the registered office of the Company during business hours and the Annual Report is being sent to the members excluding this. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary and Compliance Officer either at the Registered/Corporate Office address or by email to secretarial@sunpharma.com.
Board Diversity
Your Company recognises and embraces the importance of a diverse board in its success. The Board has adopted the Board Diversity Policy, which sets out the approach to the diversity of the Board of Directors. The said Policy is available on the Company''s website at https://sunpharma.com/policies.
Listing Regulations is provided in a separate section and forms part of this Annual Report which includes the state of affairs of the Company and there has been no change in the nature of business of the Company during the financial year ended March 31, 2025.
Corporate Governance Report
The Corporate Governance Report and the certificate from the Company''s auditors, as stipulated in Schedule V of the Listing Regulations, are provided in a separate section which forms part of this Annual Report.
The Board of Directors of the Company met 7 (seven) times during the year under review. The dates of the Board meetings and the attendance of the Directors at the meetings are provided in the Corporate Governance Report, which forms a part of this Annual Report.
Committees of the Board
As on March 31, 2025, the Board has 6 (six) Committees.
Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Risk Management Committee, Corporate Social Responsibility Committee and Corporate Governance and ESG Committee.
The Corporate Governance Report, which forms part of this Annual Report, includes details about the meetings and composition of the Board''s committees.
With the Company''s global reach, size, and operations, related party transactions are essential for the Company''s core business. As part of various measures for better corporate governance, the Company has constituted a special Committee, the Corporate Governance and ESG Committee ("CGESGC"), which, inter alia, monitors and reviews all related party transactions before recommending them to the Audit Committee for approval. Furthermore, the Company verifies the nature of these transactions, confirming whether they were conducted at arm''s length and in the ordinary course of business, by obtaining a certificate from an Independent consultant. This certificate is then presented to the CGESGC and Audit committee for thorough evaluation, ensuring a robust governance process.
The Policy on Materiality of and Dealing with Related Party Transactions, as approved by the Board, is available on the website of the Company at https://www.sunpharma.com/ policies.
Your company has an effective succession planning mechanism focusing on the orderly succession of Directors, Key Management Personnel and Senior Management.
As required under Section 134(3)(h) of the Act, details of transactions entered with related parties under the Act are given in Form AOC-2, provided as ''Annexure - B'' to this Report.
The N RC implements this mechanism in conjunction with the Board.
Management Discussion and Analysis
The Management Discussion and Analysis as prescribed under Part B of Schedule V read with Regulation 34(3) of the
Board Policies
The various policies that the Board has approved and adopted in accordance with the requirements set forth by the Act and the SEBI Listing Regulations can be accessed at our website at https://www.sunpharma.com/policies.
Internal Controls and Internal Financial Controls
The management team recognises that robust internal controls are foundational to sound governance. Actions derived from consensus-based business strategies should operate within a structured system of oversight and balance. The leadership is dedicated to maintaining an internal control environment proportionate to the business''s scale and intricacy. This environment is designed to ensure adherence to internal protocols, compliance with pertinent laws and regulations, and the integrity and precision of financial records. It also aims to bolster operational efficiency, safeguard company assets, and aid in preventing and detecting fraud, inaccuracies, and anomalies, thereby substantially mitigating risk exposure.
The Company has established a comprehensive internal controls framework. This framework encompasses an array of policies, procedures, and mechanisms that are pivotal in augmenting operational efficiency and effectiveness, curtailing risks and expenditures, and fostering enhanced decision-making and accountability.
The internal financial controls framework, an integral component of the broader internal controls system, is pivotal in guaranteeing the dependability and precision of financial reporting. This framework facilitates the meticulous preparation of financial statements by generally accepted accounting standards.
Whistle-blower Policy/Vigil Mechanism
At Sun Pharma, we are dedicated to upholding high standards of professional integrity and ethical conduct in all our business dealings. A comprehensive Global Code of Conduct ("Code") underpins our reputation as a distinguished global entity. This Code mandates that our employees embody the Company''s core values and engage in business activities with integrity and the utmost ethical standards. Through our Global Whistle-blower Policy, management proactively works to avert any actions that deviate from this Code. This policy establishes a protected avenue for employees to report any infractions of the Code responsibly. The board-sanctioned Global Whistle-blower policy is accessible on our website at https://sunpharma.com/policies. For more in-depth information regarding the Company''s Vigil Mechanism, please refer to the Corporate Governance Report included within this Annual Report.
The Global Internal Audit Function ("GIA") operates with autonomy and authority at the corporate echelon, bolstered by the expertise of a renowned external audit firm. This function conducts comprehensive risk-based audits across the Company''s spectrum of operations. The GIA systematically reviews all business units and support functions on a rotational basis, ensuring the robustness and efficacy of business process controls. These evaluations encompass the architecture of financial and operational controls, their functional effectiveness, and the strategies for risk mitigation.
The GIA team is an assembly of professionals with credentials such as Chartered Accountants, Certified Internal Auditors, Certified Information System Auditors, Certified Fraud Examiners, Company Secretaries, MBAs, and Engineers.
This department is instrumental in providing assurance and strategic counsel to management, aiming to refine the Company''s procedural and systemic efficiency and effectiveness. Governed by the Audit Charter approved by the Board''s Audit Committee, the GIA''s operations are meticulously defined to facilitate audits of the highest standard. The Audit Committee regularly scrutinises pivotal findings, imparts strategic direction, and evaluates the GIA''s performance. The Company''s operational management diligently oversees the internal control milieu, ensuring the swift and thorough implementation of audit recommendations.
The Company implemented the Laser Audit Reporting System (LARS®) effective April 1, 2024. The Laser Audit Reporting System (LARS®) is a web-based solution that controls the complete audit lifecycle by establishing a systematic, disciplined, and uniform process for internal audit management. It provides real-time completion status of ongoing audits at all locations, centrally manages audit planning, audit programs, work papers, and fieldwork, and coordinates information among auditors, auditees, and management at all levels of the organisation.
The mandatory disclosure of a risk management policy underscores the importance of proactive risk management for the Company''s sustainability. Identifying risks that could potentially threaten the Company''s existence emphasises the Board''s responsibility to consider both immediate and long-term threats to the Company''s viability and to implement appropriate mitigation strategies.
In order to comply with the above requirements, the Board of Directors has established a Risk Management Committee to oversee the spectrum of organisational risks diligently.
The Corporate Governance Report, an integral part of this document, provides detailed insights into the committee''s operations. The committee evaluates the effectiveness of risk mitigation strategies, ensuring they are robust and responsive. In line with this, the Board has endorsed a comprehensive Risk Management Policy, a synopsis of which can be accessed on our website at https://sunpharma.com/policies.
Our Company has instituted a holistic Enterprise Risk Management ("ERM") Framework. This framework is instrumental in identifying, evaluating, prioritising, and managing critical risks that could impact our strategic and operational goals. The ERM is pivotal in harmonising the organisation''s risk appetite with its strategic direction, refining risk response decisions, minimising unexpected operational disruptions and losses, and bolstering stakeholder confidence.
The ERM team collaborates with the Business Unit, Regional, or departmental heads to pinpoint potential internal and external events that could impede the Company''s objectives.
It also continuously monitors shifts in the internal and external landscapes that may give rise to new risks. Risks such as financial, operational, sectoral, sustainability, cyber, strategic, compliance, social, geopolitical, third-party, and others are systematically classified. These are meticulously documented in a risk register, which includes comprehensive details like the risk statement, risk category, risk classification, risk mitigation method, control effectiveness status, risk rating, risk owner, contributing factors, mitigation plans/ control details, department responsible, risk champion, mitigation plan/control owner, status of mitigation plan/ control, and target date. This register is updated half-yearly to reflect the evolving risk environment.
The Company implemented the Laser Risk Management System (LerMs®) effective September 1, 2024. The Laser Risk Management System (LERMS®) delivers a central risk management system for identifying risks, evaluating their likelihood and impact, relating them to mitigating controls and tracking their resolution. It establishes a risk management culture across the organisation and helps achieve future goals by avoiding surprises.
Statutory Auditors
Disclosing the details of the Statutory Auditors in the Board''s Report helps ensure transparency and gives shareholders and other stakeholders confidence in the Company''s financial health and adherence to regulations.
S R B C & CO LLP, Chartered Accountants, (Firm''s Registration. No. 324982E/E300003), have been reappointed as the Statutory Auditors of the Company for a period of 5 (five) years at the 30th AGM of the Company to hold office till the conclusion of the 35th AGM of the Company.
The Auditor''s Report for the financial year 2024-25 has been issued with an unmodified opinion.
The Secretarial Audit verifies whether the Company follows various laws and regulations, strengthening its compliance efforts. The Board is responsible for responding to any issues
raised in the audit report, which shows its commitment to making necessary changes and maintaining high compliance standards.
The Board had appointed KJB & CO LLP, Practising Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year ended March 31, 2025. The Secretarial Audit Report in the Form No. MR-3 for the year is provided as ''Annexure - C1'' to this Report.
The Secretarial Audit Report for the year does not contain any qualification or reservation except a remark, as follows,
"During the review period, there was a technical deviation in the timing of execution of a related party transaction involving a wholly owned subsidiary and a 99.99% subsidiary. The transaction, relating to a proposed merger, was approved by the audit committee on 31 March 2025 and was intended to be effective from 1 April 2025. It was subsequently observed that the underlying transaction in relation to the proposed merger was consummated on 26 March 2025. In light of the SEBI LODR (Third Amendment) Regulations, 2024 (effective from 13 December 2024), ratification for transactions beyond '' 1 Crore is not permitted. As such, the matter was assessed as a pure technical non-alignment of four days."
In the opinion of the Board of directors, the remark in the Secretarial Audit Report is self explanatory and the Company has taken appropriate measures to strengthen the process.
In accordance with the provision of Regulation 24A of the Listing Regulations, Secretarial Audit of two material unlisted Indian subsidiaries of the Company namely, Sun Pharma Laboratories Limited (SPLL) and Sun Pharma Distributors Limited (SPDL), was undertaken by KJB & CO LLP, Practicing Company Secretaries, Mumbai and the Secretarial Audit Reports issued by them are provided as ''Annexure - C2'' and ''Annexure - C3'' respectively to this Report. The Secretarial Audit Reports for these material unlisted Indian subsidiaries does not contain any qualification, reservation or adverse remark.
In order to comply with the recent amendments of Listing Regulations Board of Directors of the Company has proposed, to appoint KJB & CO LLP, Practicing Company Secretaries to undertake the Secretarial Audit of the Company for a period of 5 (five) consecutive years, commencing from the 33rd AGM to hold office till the conclusion of the 38th AGM of the Company. Disclosure regarding appointment as required under Listing Regulations is provided in the Notice of the 33rd AGM of the Company and forms part of this Annual Report.
Your Board recommends the appointment of KJB & Co LLP, Practising Company Secretaries, as the Secretarial Auditor of the Company, for a term of five consecutive years.
Sharing information about the Cost Auditors in the Board''s Report promotes transparency and accountability in the Company''s cost accounting practices and the accuracy of cost records. This disclosure shows that the Company meets legal requirements and helps stakeholders understand how it manages costs.
Your Board has appointed K D & Co, Cost Accountants (Firm''s Registration No. 004076) as Cost Auditor of the Company for conducting Cost Audit in respect of Bulk Drugs & Formulations of the Company for the FY25.
The Company has maintained the Cost Records as specified by the Central Government under Section 148(1) of the Act.
Business Responsibility and Sustainability Report
The Business Responsibility and Sustainability Report of the Company for the year ended March 31, 2025 is provided in a separate section and forms part of this Annual Report and is also made available on the website of the Company at https:// sunpharma.com/investors-annual-reports-presentations.
Corporate Social Responsibility (âCSRâ)
In compliance with the requirements of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the CSR Policy of the Company is available on the website of the Company and can be accessed through the web link at https://sunpharma.com/policies.
The Annual report on CSR activities, which contains details of expenditures incurred by the Company and brief details on the CSR activities, is provided in, Annexure - D'' to this Report.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, is provided as ''Annexure - E'' to this Report.
FY25 was an exciting year for us. Our dedicated workforce worked relentlessly to ensure medicines continue to reach patients who rely on us. Driven by Sunology, our employees, who are spread across R&D centres, manufacturing sites, corporate offices and sales offices globally, enabled us in delivering a higher performance and stronger growth. The priority for the Human Resource function continued to provide a work environment which is safe, diverse, inclusive and full of growth opportunities in line with our Employee Value Proposition of Better Everyday, Take Charge, Thrive Together. Going forward, focus will be on further enhancing our employer brand, providing growth & development opportunities to our employees through talent management along with focus on high performance and effectiveness.
Your Board would like to take this opportunity to express their gratitude and appreciation for the passion, dedication and commitment of the employees and look forward to the continued contribution.
Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
Your Board strongly believes in providing a safe and harassment free workplace for each and every individual working for the Company through various interventions and practices. It is the continuous endeavour of the Management of the Company to create and provide an environment to all its employees that is free from discrimination and harassment including sexual harassment. The Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. The Company has arranged various interactive awareness workshops in this regard for the employees at the manufacturing sites, R & D set ups & corporate office during the year under review.
There were 7 (seven) complaints received during the year, out of which, 5 (five) complaints were disposed off and 2 (two) complaints were pending as on the end of March 31, 2025.
The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Prohibition of Insider Trading
The Company has established a Code of Conduct for Prohibition of Insider Training ("Code") to govern, monitor, and report trading in the Company''s shares by designated persons and their immediate relatives, in accordance with the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015.
The Code outlines the procedures that designated persons must follow when trading or dealing in the Company''s shares and sharing Unpublished Price Sensitive Information ("UPSI").
The Sun Compliance Team sends bi-weekly communications to inform the designated person about the compliance do''s and don''ts related to Insider Trading Regulations, ensuring understanding and adherence to the Code. The Code can be accessed at the Company''s website at https://sunpharma. com/policies.
Due to the rise in cyberattacks, we regularly review our cybersecurity practices and improve our processes and technology controls based on new threats. Our company has real-time security monitoring in place, along with necessary controls at different levels, from individual user devices to networks, servers, applications, and data.
Currently, there are no substantial or impactful orders issued by regulatory bodies, courts, or tribunals that could affect the Company''s capacity to continue as a going concern. According to the Listing Regulations, the Company is committed to transparently disclosing any significant events, important information, or regulatory directives it receives, ensuring that stakeholders are kept informed on a regular basis.
The draft Annual Return as required under sub-section (3) of Section 92 of the Act in form MGT-7 is made available on the website of the Company and can be accessed at https:// sunpharma.com/annual-return.
The Company has complied with the applicable Secretarial Standards as amended from time to time.
1. During the year under review, the Statutory Auditor, Cost Auditor and Secretarial Auditor have not reported any instances of fraud committed in the Company by its Officers or Employees to the Audit Committee and/or Board under section 143(12) of the Act.
2. There are no proceedings initiated/pending against your Company under the Insolvency and Bankruptcy Code, 2016, and there is no instance of one-time settlement with any Bank or Financial Institution.
3. Upon receipt of Observations Letters from the Stock Exchanges on the Composite Scheme of Arrangement involving (a) amalgamation of Wholly-owned subsidiary companies viz. Sun Pharmaceutical Medicare Limited, Green Eco Development Centre Limited, Faststone Mercantile Company Private Limited, Realstone Multitrade Private Limited, Skisen Labs Private Limited with the Company and (b) Reclassification of General Reserve of the Company to Retained Earnings, pursuant to the provisions of Sections 230 to 232 of the Companies Act, 2013, application was filed with the National Company Law Tribunal, Ahmedabad ("NCLT").
NCLT passed the order on the application and directed the convening of a meeting of the equity shareholders of the Company. Accordingly, a meeting of equity shareholders of the Company was held on January 21, 2025 via video-conferencing, wherein equity shareholders approved the Composite Scheme of Arrangement by the requisite majority. NCLT dispensed with the meetings of the unsecured creditors of the Company and the meetings of shareholders and unsecured creditors of the Transferor Companies.
Subsequent to the shareholders'' approval, a petition was filed with the NCLT, which is scheduled for hearing on June 12, 2025.
4. The Company has not issued any equity shares with differential rights regarding dividends, voting, or other rights.
Directors'' Responsibility Statement
Pursuant to the requirements under Section 134(5) read with Section 134(3)(c) of the Act, with respect to Directors'' Responsibility Statement, it is hereby confirmed that:
a) in the preparation of the annual accounts for the financial year ended March 31, 2025, the applicable accounting standards have been followed and there are no material departures from the same;
b) 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 as on March 31, 2025 and of the profit of the Company for the year ended on that date;
c) 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;
d) the Directors have prepared the annual accounts on a going concern basis;
e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Acknowledgements
Your Board wish to thank all stakeholders, employees and business partners, Company''s bankers, medical professionals and business associates for their continued support and valuable cooperation.
Your Board also wish to express their gratitude to investors for the faith that they continue to repose in the Company.
Mar 31, 2024
The Directors take pleasure in presenting the Thirty-Second Annual Report and Company''s Audited Financial Statements for the financial year ended March 31, 2024 (âFY24â).
Financial Highlights
The Company''s financial performance for FY24:
|
Rs. in Million) |
||||
|
Standalone |
Consolidated |
|||
|
Year ended March 31, 2024 |
Year ended March 31, 2023 |
Year ended March 31, 2024 |
Year ended March 31, 2023 |
|
|
Revenue from operations |
202,751.7 |
208,121.4 |
484,968.5 |
438,856.8 |
|
Profit before exceptional item and tax |
36,686.7 |
46,788.4 |
115,822.1 |
95,798.8 |
|
Exceptional Item |
2,190.2 |
29,377.9 |
4,943.2 |
1,714.5 |
|
Profit before tax but after exceptional item |
34,496.5 |
17,410.5 |
110,878.9 |
94,084.3 |
|
Profit after tax |
28,581.8 |
16,907.2 |
96,484.4 |
85,608.4 |
|
Opening balance in Retained Earnings |
127,908.8 |
136,120.8 |
436,102.5 |
376,456.5 |
|
Closing balance in Retained Earnings |
127,310.4 |
127,908.8 |
501,545.5 |
436,102.5 |
Material Changes and Commitments
There have been no material changes and commitments affecting the financial position of the Company, between the end of the financial year and the date of this report.
The consolidated financial statements for the year ended March 31, 2024 pursuant to Section 129(3) of the Companies Act, 2013, form part of this Annual Report.
During the year under review, the Directors have declared an interim dividend of ^ 8.50/- (Rupees Eight and Paise Fifty only) per equity share of ^ 1/- (Rupee One only) each [previous year ^ 7.50/- (Rupees Seven and Paise Fifty only) per equity share of ^ 1/- (Rupee One only) each] for the year ended March 31, 2024.
In addition to above, the Directors have recommended a final dividend of ^ 5/- (Rupees Five only) per equity share of ^ 1/- (Rupee One only) each [previous year ^ 4/- (Rupees Four only) per equity share of ^ 1/- (Rupee One only) each] for the year ended March 31, 2024, subject to the approval of the shareholders at the ensuing 32nd Annual General Meeting of the Company.
The total dividend payout for FY24 is ^ 13.50/- (Rupees Thirteen and Paise Fifty only) per equity share of ^ 1/- each [previous year ^ 11.50/- (Rupees Eleven and Paise Fifty only) per equity share of ^ 1/- (Rupee One only) each].
The dividend payout is in accordance with the Company''s Dividend Distribution Policy. The policy is available on the website of the Company at https://sunpharma.com/policies.
Transfer to Reserves
The Directors do not propose any transfer to reserves.
Loans, Guarantees and Investments
The particulars of loans, guarantees and investments have been disclosed in the Financial Statements.
Public Deposits
The Company has not accepted any deposit from the public during the year under review.
Changes in Capital Structure
During the year under review there was no change in the capital structure of the Company.
Credit Rating
There is no change in the credit rating and the same is disclosed in the Corporate Governance Report forming part of this Annual Report.
Subsidiaries/ Joint Ventures/ Associates
The statement containing the salient features of the Financial Statements of the Company''s subsidiaries/ joint ventures/ associates is given in Form AOC - 1, provided in Notes to the consolidated financial statements, forming part of this Annual Report.
Details pertaining to entities that became subsidiaries/ joint ventures/ associates and those that ceased to be the subsidiaries/ joint ventures/ associates of the Company during the year under review are provided in the notes to the consolidated financial statements, forming part of this Annual Report.
Directors and Key Managerial Personnel
During the year, following were the changes in Directors/ Key Managerial Personnel:
1. Mr. Aalok Shanghvi (DIN: 01951829) is appointed as Whole-time Director for a term of five years commencing from June 1, 2023 to May 31, 2028 at the 31st Annual General Meeting held on August 28, 2023.
2. Mr. Rolf Hoffmann (DIN:10200311) is appointed as an Independent Director for a term of five years commencing from June 15, 2023 to June 14, 2028 at the 31st Annual General Meeting.
3. Mr. Sailesh Trambaklal Desai (DIN: 00005443), Whole-time Director retired and ceased to be the Director effective from March 31, 2024.
Subsequent to the year end at the Board Meeting held on May 22, 2024, Mr. Dilip Shanghvi, Managing Director, is also appointed as the Chairman of the Board with immediate effect.
Mr. Dilip Shanghvi, Managing Director of the Company, will retire by rotation at the ensuing Annual General Meeting, and being eligible has offered himself for re-appointment.
The necessary disclosures required under the Companies Act, 2013 (âActâ) and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ) and Secretarial Standards-2 on General Meetings issued by the Institute of Company Secretaries of India, for the above-mentioned re-appointment is provided in the Notice of 32nd Annual General Meeting of the Company.
Declaration by Independent Directors
The Company has received declarations from all the Independent Directors confirming that they meet with the criteria of independence as prescribed under Section 149(6) of the Act and the Regulation 16(1)(b) of the Listing Regulations. There has been no change in the circumstances affecting their status as Independent Directors of the Company and in the opinion of the Board, the Independent Directors fulfil the conditions specified under the Act and the Listing Regulations and are Independent of the management.
Familiarisation Programme for the Independent Directors
In compliance with the requirements of Regulation 25(7) of the Listing Regulations, the Company has put in place a Familiarisation Programme for the Independent Directors to familiarise them with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model etc. The details of the Familiarisation Programme are available on the website of the Company at https://sunpharma.com/policies/
During the year, annual performance evaluation of the Board and Committees of the Board, individual Directors including the Chairman of the Board, was carried out as per the criteria and process approved by Nomination and Remuneration Committee, which is in line with the SEBI Guidance Note on Board Evaluation.
The Board discussed upon the performance evaluation outcome and concluded that they were satisfied with the
overall performance of the Board and Committees of the Board and Directors individually. The Board also assessed the fulfilment of the independence criteria by the Independent Directors of the Company and their independence from the management as specified in the Listing Regulations.
The performance evaluation of the Non-Independent Directors and the performance of the Board as a whole was discussed at the separate meeting of the Independent Directors as well.
Remuneration Policy and Criteria for Appointment of Directors
The Company has in place a process for selection of any Director, wherein the Nomination and Remuneration Committee identifies persons of integrity who possess relevant expertise, experience and leadership qualities required for the position and the Committee also ensures that the incumbent fulfils such criteria with regard to qualifications, positive attributes, independence, age and other criteria as laid down under the Act, Listing Regulations or other applicable laws and the diversity attributes as per the Board Diversity Policy of the Company.
Further, the Company has a Policy on remuneration of Directors, Key Managerial Personnel and other Employees. The salient features of the Remuneration Policy of the Company are as under:
A. Guiding Principles for Remuneration: The Company shall remunerate all its personnel reasonably and sufficiently as per industry benchmarks and standards. The remuneration shall be commensurate to retain and motivate the human resources of the Company.
The compensation package will, inter alia, take
into account the experience of the personnel, the knowledge and skill required including complexity of his/her job, work duration and risks associated with the work, and attitude of the employee like positive outlook, team work, loyalty etc.
B. Components of Remuneration: The following will be the various remuneration components which may be paid to the personnel of the Company based on the designation and class of the personnel.
(a) Fixed compensation
(b) Variable compensation c) Share based payments
(d) Non-monetary benefits
(e) Gratuity/group insurance
(f) Commission
The Remuneration Policy as approved by the Board is available on the website of the Company and can be accessed at https://sunpharma.com/policies.
Information as per Section 197 (12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in âAnnexure - A'' to this Report. Further, the information pertaining to Rule 5(2) & 5(3) of the aforesaid Rules, pertaining to the names and other particulars of employees is available for inspection at the registered office of the Company during business hours and the Annual Report is being sent to the members excluding this. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary and Compliance Officer either at the Registered/ Corporate Office address or by email to secretarial@sunpharma.com.
Management Discussion and Analysis
The Management Discussion and Analysis as prescribed under Part B of Schedule V read with Regulation 34(3) of the Listing Regulations is provided in a separate section and forms part of this Report which includes the state of affairs of the Company and there has been no change in the nature of business of the Company during FY24.
The Corporate Governance Report and the certificate from the Auditors of the Company as stipulated in Schedule V of the Listing Regulations, are provided in a separate section and forming part of this Report.
The Board of Directors of the Company met 6 (six) times during the year under review. The dates of the Board meeting and the attendance of the Directors at the said meetings are provided in the Corporate Governance Report, which forms a part of this Report.
As on March 31, 2024, the Board has 6 (six) Committees. Audit Committee, Nomination and Remuneration Committee Stakeholders Relationship Committee, Risk Management Committee, Corporate Social Responsibility Committee and Corporate Governance and Ethics Committee.
The details pertaining to the meetings and composition of the Committees of the Board are included in the Corporate Governance Report, which forms part of this Report.
The policy on Related Party Transactions as approved by the Board is available on the website of the Company at https://www.sunpharma.com/policies.
All contracts/ arrangements/ transactions entered by the Company during the year under review with the related parties were in the ordinary course of business and on an arm''s length basis.
As required under Section 134(3)(h) of the Act, details of transactions entered with related parties under the Act are given in Form AOC-2, provided as âAnnexure - B'' to this Report.
Internal Controls and Internal Financial Controls
The management team recognises that robust internal controls are foundational to sound governance. Actions derived from consensus-based business strategies should operate within a structured system of oversight and balance. The leadership is dedicated to maintaining an internal control environment proportionate to the business''s scale and intricacy. This environment is designed to ensure adherence to internal protocols, compliance with pertinent laws and regulations, and the integrity and precision of financial records. It also aims to bolster operational efficiency, safeguard company assets, and aid in preventing and detecting fraud, inaccuracies, and anomalies, thereby substantially mitigating risk exposure.
The Company has established a comprehensive internal controls framework. This framework encompasses an array of policies, procedures, and mechanisms that are pivotal in augmenting operational efficiency and effectiveness, curtailing risks and expenditures, and fostering enhanced decision-making and accountability.
The internal financial controls framework, an integral component of the broader internal controls system, is pivotal in guaranteeing the dependability and precision of financial reporting. This framework facilitates the meticulous preparation of financial statements by generally accepted accounting standards.
Whistle-blower Policy / Vigil Mechanism
At Sun Pharma, we are dedicated to upholding the pinnacle of professional integrity and ethical conduct in all our business dealings. A comprehensive Global Code of Conduct underpins our reputation as a distinguished global entity.
This Code mandates that our employees embody the Company''s core values and engage in business activities with unyielding integrity and the utmost ethical standards. Through our Global Whistle-blower Policy, management proactively works to avert any actions that deviate from this Code. This policy establishes a protected avenue for employees to responsibly report any infractions of the Code. The board-sanctioned Global Whistle-blower policy is accessible on our website at https://sunpharma.com/ policies. For more in-depth information regarding the Company''s Vigil Mechanism, please refer to the Corporate Governance Report included within this Annual Report.
The Global Internal Audit Function (GIA) operates with autonomy and authority at the corporate echelon, bolstered by the expertise of renowned external audit firms. This function conducts comprehensive risk-based audits across the Company''s spectrum of operations, governance, risk management, and internal controls as necessitated. The GIA systematically reviews all business units and support functions on a rotational basis, ensuring the robustness and efficacy of business process controls. These evaluations encompass the architecture of financial and operational controls, their functional effectiveness, and the strategies for risk mitigation.
The GIA team is an assembly of professionals with credentials such as Chartered Accountants, Certified Internal Auditors, Certified Information System Auditors, Certified Fraud Examiners, Company Secretaries, MBAs, and Engineers. This department is instrumental in providing assurance and strategic counsel to management, aiming to refine the Company''s procedural and systemic efficiency and effectiveness.
Governed by the Audit Charter sanctioned by the Board''s Committee, the GIA''s operations are meticulously defined to facilitate audits of the highest standard. The Audit Committee regularly scrutinises pivotal findings, imparts strategic direction, and evaluates the GIA''s performance.
The Company''s operational management diligently oversees the internal control milieu, ensuring the swift and thorough implementation of audit recommendations.
The Board of Directors has established a Risk Management Committee to oversee the spectrum of organisational risks diligently. Detailed insights into the committee''s operations are provided in the Corporate Governance Report, an integral part of this document. The committee evaluates the effectiveness of risk mitigation strategies, ensuring they are robust and responsive. In line with this, the Board has endorsed a comprehensive Risk Management Policy, a Synopsis of which can be accessed on our website at https://sunpharma.com/policies/.
Our Company has instituted a holistic Enterprise Risk Management (ERM) Framework. This framework is instrumental in identifying, evaluating, prioritising, and managing critical risks that could impact our strategic and operational goals. The ERM is pivotal in harmonising the organisation''s risk appetite with its strategic direction, refining risk response decisions, minimising unexpected operational disruptions and losses, and bolstering stakeholder confidence.
The ERM team collaborates with department heads to pinpoint potential internal and external events that could
impede the Company''s objectives. It also continuously monitors shifts in the internal and external landscapes that may give rise to new risks. Risks such as financial, operational, sectoral, sustainability, cyber, strategic, compliance, social, geopolitical, third-party, and others are systematically classified. These are meticulously documented in a risk register, which includes comprehensive details like the risk area, description, rating, underlying causes, mitigation strategies, and action plans. This register is updated regularly to reflect the evolving risk environment.
S R B C & CO LLP, Chartered Accountants, (Firm''s Registration. No. 324982E/ E300003), have been re-appointed as the Statutory Auditor of the Company for a period of 5 (five) years at the 30th Annual General Meeting of the Company to hold office till the conclusion of the 35th Annual General Meeting of the Company.
The Auditor''s Report for the financial year 2023-24 has been issued with an unmodified opinion.
The Auditor''s Report contains a comment on the requirement of maintenance of books of account which states that âthe Company has used accounting software for maintaining its books of account which have a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software except that, audit trail feature is not enabled for certain changes made using privileged/ administrative access rights, as described in note 55(11) to the standalone Ind AS financial statements. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with in respect of accounting software where audit trail has been enabled.â
In the opinion of the Board of Directors, the comment in the Auditor''s Report is self-explanatory. Further, the Board of Directors confirms that subsequently the feature of recording audit trail has been enabled in compliance with the relevant legal requirements, as on the date of the Board meeting.
The Board had appointed KJB & CO LLP, Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for FY24. The Secretarial Audit Report in the Form No. MR - 3 for the year is provided as âAnnexure - C1'' to this Report.
The Secretarial Audit Report for the year does not contain any qualification, reservation or adverse remark.
In accordance with the provision of Regulation 24A of the Listing Regulations, Secretarial Audit of two material unlisted Indian subsidiaries of the Company namely, Sun Pharma Laboratories Limited (SPLL) and Sun Pharma Distributors Limited (SPDL), was undertaken by KJB & CO LLP, Practicing Company Secretaries and the Secretarial Audit Reports issued by them are provided as âAnnexure - C2'' and âAnnexure - C3'' respectively to this Report. The Secretarial Audit Reports for these material unlisted Indian subsidiaries do not contain any qualification, reservation or adverse remark.
Cost Auditor
The Board has appointed K D & Co, Cost Accountants, (Firm''s Registration No. 004076) as Cost Auditor of the Company for conducting Cost Audit in respect of Bulk Drugs & Formulations of the Company for FY24.
The Company has maintained the Cost Records as specified by the Central Government under Section 148(1) of the Act.
The Cost Audit Report for the year does not contain any qualification, reservation or adverse remark.
Business Responsibility and Sustainability Report
The Business Responsibility and Sustainability Report of the Company for the year ended March 31, 2024, is provided in a separate section and forms part of this Annual Report and is also made available on the website of the Company at https://sunpharma.com/investors-annual-reports-presentations.
Corporate Social Responsibility ("CSR")
In compliance with the requirements of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the CSR Policy of the Company is available on the website of the Company and can be accessed at https://sunpharma.com/policies.
The Annual Report on CSR activities containing details of expenditure incurred by the Company and brief details on the CSR activities are provided in âAnnexure - D'' to this Report.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, is provided as âAnnexure - E'' to this Report.
FY24 was an exciting year for us. Our dedicated workforce worked relentlessly to ensure medicines continue to reach patients who rely on us. Driven by Sunology, our employees, who are spread across R&D centers, manufacturing sites, corporate offices and sales offices globally, enabled us in delivering a higher performance and stronger growth. The priority for the Human Resource function continued to provide a work environment which is safe, diverse, inclusive and full of growth opportunities. Going forward, focus will be on further enhancing our employer brand, providing growth & development opportunities to our employees along with focus on high performance and effectiveness.
Your Directors would like to take this opportunity to express their gratitude and appreciation for the passion, dedication and commitment of the employees and look forward to the continued contribution.
Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal)
Act, 2013
Your Company strongly believes in providing a safe and harassment free workplace for each and every individual working for the Company through various interventions and practices. It is the continuous endeavour of the Management of the Company to create and provide an environment to all its employees that is free from discrimination and harassment including sexual harassment. The Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. The Company has arranged various interactive awareness workshops in this regard for the employees at the manufacturing sites, R & D set ups & corporate office during the year under review.
There were two complaints received during the year. All the complaints were disposed of and no complaints were pending as on the end of March 31, 2024.
Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
There are no significant and material orders passed by the regulators or courts or tribunals which impact the going concern status.
The draft Annual Return as required under sub-section (3) of Section 92 of the Act in form MGT-7 is made available on the website of the Company and can be accessed at https:// sunpharma.com/annual-return.
The Company has complied with the applicable Secretarial Standards as amended from time to time.
Other Disclosures
1. The Board of Directors of the Company at its meeting held on November 1, 2023 has approved the Composite Scheme of Arrangement for (1) Amalgamation of Sun Pharmaceutical Medicare Limited, Green Eco Development Centre Limited, Faststone Mercantile Company Private Limited, Realstone Multitrade Private Limited, Skisen Labs Private Limited, Wholly-owned Subsidiaries of the Company with the Company and (2) Reclassification of general reserves to retained earnings, subject to necessary approvals required under
the Companies Act, 2013. This Composite Scheme of Arrangement is in supersession of the Scheme of Amalgamation approved by the Board on May 30, 2022.
The Company has made an application to the BSE Limited and National Stock Exchange of India Limited for obtaining NOC of the stock exchanges, upon receipt of NOC, the application shall be filed with the National Company Law Tribunal.
2. During the year under review, the Statutory Auditor, Cost Auditor and Secretarial Auditor have not reported any instances of frauds committed in the Company by its Officers or Employees to the Audit Committee and / or Board under section 143(12) of the Act.
3. There are no proceedings initiated/ pending against your Company under the Insolvency and Bankruptcy Code, 2016 and there is no instance of one-time settlement with any Bank or Financial Institution.
Directorsâ Responsibility Statement
Pursuant to the requirements under Section 134(5) read
with Section 134(3)(c) of the Act, with respect to Directors''
Responsibility Statement, it is hereby confirmed that:
(a) in the preparation of the annual accounts for FY24, the applicable accounting standards have been followed and there are no material departures from the same;
(b) 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 as on March 31, 2024 and of the profit of the Company for the year ended on that date;
(c) 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;
(d) the Directors have prepared the annual accounts on a going concern basis;
(e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
(f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Your Directors wish to thank all stakeholders, employees and business partners, Company''s bankers, medical professionals and business associates for their continued support and valuable cooperation.
The Directors also wish to express their gratitude to investors for the faith that they continue to repose in the Company.
Mar 31, 2023
Your Directors take pleasure in presenting the Thirty-first Annual Report and Company''s Audited Financial Statements for the financial year ended March 31, 2023 (âFY23'').
|
in Million) |
||||
|
Standalone |
Consolidated |
|||
|
Year ended March 31, 2023 |
Year ended March 31, 2022 |
Year ended March 31, 2023 |
Year ended March 31, 2022 |
|
|
Revenue from operations |
208,121.4 |
155,859.8 |
438,856.8 |
386,544.9 |
|
Profit before exceptional item and tax |
46,788.4 |
21,273.9 |
95,798.8 |
90,481.4 |
|
Exceptional Item |
29,377.9 |
18,205.3 |
1,714.5 |
45,668.2 |
|
Profit before tax but after exceptional item |
17,410.5 |
3,068.6 |
94,084.3 |
44,813.2 |
|
Profit after tax |
16,907.2 |
(999.9) |
85,608.4 |
34,058.2 |
|
Opening balance in Retained Earnings |
136,120.8 |
159,645.5 |
376,456.5 |
365,980.9 |
|
Closing balance in Retained Earnings |
127,908.8 |
136,120.8 |
436,102.5 |
376,456.5 |
Material changes and commitments affecting the financial position of the Company, between the end of the financial year and the date of this report
There have been no material changes and commitments affecting the financial position of the Company, between the end of the financial year and the date of this report.
The consolidated financial statements for the year ended March 31, 2023 pursuant to Section 129(3) of the Companies Act, 2013, form part of this Annual Report.
During the year under review, the Directors have declared an interim dividend of ^ 7.50/- (Rupees Seven and Paise Fifty only) per equity share of ^ 1/- (Rupee One only) each [previous year ^ 7.00/- (Rupees Seven only) per equity share of ^ 1/- (Rupee One only) each] for the year ended March 31, 2023.
In addition to above, the Directors have recommended a final dividend of ^ 4.00/- (Rupees Four only) per equity share of ^ 1/- (Rupee One only) each [previous year ^ 3.00/-(Rupees Three only) per equity share of ^ 1/- (Rupee One only) each] for the year ended March 31, 2023, subject to the approval of the shareholders at the ensuing 31st Annual General Meeting of the Company.
The total dividend payout for the FY23 is ^ 11.50/- (Rupees Eleven and paise fifty only) per equity share of ^ 1/- each [previous year ^ 10.0/- (Rupees Ten only) per equity share of ^ 1/- (Rupee One only) each].
The dividend payout is in accordance with the Company''s Dividend Distribution Policy. The policy is available on the website of the Company, https://sunpharma.com/policies.
The Directors do not propose any transfer to reserve.
Loans, Guarantees & Investments
The particulars of loans, guarantees and investments have been disclosed in the Financial Statements.
The Company has not accepted any deposit from the public during the year under review.
During the year under review there was no change in the capital structure of the Company.
The highest credit rating has been reaffirmed by CRISIL and ICRA and the ratings are disclosed in the Corporate Governance Report which forms part of this Annual Report.
Subsidiaries/ Joint Ventures/ Associates
The statement containing the salient features of the Financial Statements of the Company''s subsidiaries/ joint ventures/ associates is given in Form AOC - 1, provided in Notes to the Consolidated Financial Statements, forming part of this Annual Report.
During the year under review, apart from the other acquisitions, the Company has completed the acquisition of Concert Pharmaceuticals, Inc. which was a strategic investment to strengthen global specialty product portfolio of the Company.
Details pertaining to entities that became subsidiaries/ joint ventures/ associates and those that ceased to be the subsidiaries/ joint ventures/ associates of the Company during the year under review are provided in the notes to the Consolidated Financial Statements, forming part of the Annual Report.
Directors and Key Managerial Personnel
During the year, following were the changes in Director/ Key Managerial Personnel:
1. Mr. Dilip Shanghvi (DIN: 00005588) is re-appointed as Managing Director for a further period of 5 years, from April 1, 2023 to March 31, 2028 at the 30th Annual General Meeting held on August 29, 2022.
2. Mr. Gautam Doshi (DIN: 00004612) is re-appointed as an Independent Director for a second term of 5 years, from May 25, 2023 to May 24, 2028 at the 30th Annual General Meeting held on August 29, 2022.
3. Mr. Sanjay Asher (DIN: 00008221) is appointed as an Independent Director for a term commencing from November 1, 2022 till March 31, 2025, by the shareholders vide resolution passed by Postal Ballot on January 27, 2023.
4. Mr. Israel Makov (DIN: 05299764) retired and ceased to be the Chairman and Director upon the conclusion of 30th Annual General Meeting held on August 29, 2022.
5. Mr. Kalyanasundaram Subramanian (DIN: 00179072) retired and ceased to be the Director effective from February 13, 2023.
After the year end and upto the date of the Report, following were the changes:
6. The Board of Directors at its meeting held on May 26, 2023, on the recommendation by Nomination and Remuneration Committee, has approved the appointment of Mr. Rolf Hoffmann as an Independent Director for a term of five years to be effective from the date of allotment of Director Identification Number, subject to approval of the shareholders.
7. The Board of Directors at its meeting held on May 26, 2023, on the recommendation by Nomination and Remuneration Committee, has approved the appointment and remuneration of Mr. Aalok Shanghvi (DIN: 01951829) as a Whole-time Director for a term of five years effective from June 1, 2023, subject to approval of the shareholders.
Mr. Sudhir Valia Director of the Company, retires by rotation at the ensuing 31st Annual General Meeting, and being eligible has offered himself for re-appointment.
The necessary disclosures required under the Companies Act, 2013 (âActâ) and the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ) and Secretarial Standards-2 on General Meetings issued by the Institute of Company Secretaries of India, for the above-mentioned appointments/ re-appointment are provided in the 31st Annual General Meeting Notice of the Company.
Declaration by Independent Directors
The Company has received declarations from all the Independent Directors confirming that they meet with the criteria of independence as prescribed under Section 149(6) of the Act and the Regulation 16(1)(b) of the Listing Regulations. In the opinion of the Board, the Independent Directors fulfil the conditions specified under the Act and the Listing Regulations and are independent of the management.
Familiarisation Programme for the Independent Directors
In compliance with the requirements of Regulation 25(7) of the Listing Regulations, the Company has put in place a Familiarisation Programme for the Independent Directors to familiarise them with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model etc. The details of the Familiarisation Programme conducted are available on the website of the Company: https://sunpharma.com/policies.
Evaluation of performance of the Board, its Committees and Individual Directors
During the year, annual performance evaluation of the Board and Committees of the Board, individual Directors including the Chairman of the Company, was carried out as per the criteria and process approved by Nomination and Remuneration Committee, which is in line with the SEBI Guidance Note on Board Evaluation.
The Board discussed upon the outcome of performance evaluation and concluded that they were satisfied with the overall performance of the Board and Committees of the Board and Directors individually. The Board also assessed the fulfilment of the independence criteria by the Independent Directors of the Company and their independence from the management as specified in the Listing Regulations.
The performance evaluation of the Non-Independent Directors and the performance of the Board as a whole was discussed at the separate meeting of the Independent Directors as well.
Remuneration policy for Directors, Key Managerial Personnel and Other Employees and Criteria for appointment of Directors
The Company has in place a process for selection of any Director, wherein the Nomination and Remuneration Committee identifies persons of integrity who possess relevant expertise, experience and leadership qualities required for the position and the Committee also ensures that the incumbent fulfils such criteria with regard to qualifications, positive attributes, independence, age and other criteria as laid down under the Act, Listing Regulations or other applicable laws and the diversity attributes as per the Board Diversity Policy of the Company.
Further, the Company has a Policy on remuneration of Directors, Key Managerial Personnel and other Employees. The salient features of the Remuneration Policy of the Company are as under:
A. Guiding Principles for remuneration: The Company shall remunerate all its personnel reasonably and sufficiently as per industry benchmarks and standards. The remuneration shall be commensurate to retain and motivate the human resources of the Company. The compensation package will, inter alia, take into account the experience of the personnel, the knowledge & skill required including complexity of his job, work duration and risks associated with the work, and attitude of the employee like positive outlook, team work, loyalty etc.
B. Components of Remuneration: The following will be the various remuneration components which may be paid to the personnel of the Company based on the designation and class of the personnel.
(a) Fixed compensation
(b) Variable compensation
(c) Share based payments
(d) Non-monetary benefits
(e) Gratuity/group insurance
(f) Commission
The Remuneration Policy as approved by the Board is available on the website of the Company and can be accessed through the web link: https://sunpharma.com/policies.
Information as per Section 197 (12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in âAnnexure - A'' to this Report. Further, the information pertaining to Rule 5(2) and 5(3) of the aforesaid Rules, pertaining to the names and other particulars of employees is available for inspection at the Registered office of the Company during business hours and the Annual Report is being sent to the members excluding this. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary and Compliance Officer either at the Registered/ Corporate Office address or by email to secretarial@sunpharma.com.
Management Discussion and Analysis
The Management Discussion and Analysis as prescribed under Part B of Schedule V read with Regulation 34(3) of the Listing Regulations is provided in a separate section and forms part of this Report which includes the state of affairs of the Company.
The Corporate Governance Report and the Certificate from the Auditors of the Company as stipulated in Schedule V of the Listing Regulations, are provided in a separate section and forms part of this Report.
The Board of Directors of the Company met 6 (six) times during the year under review. The dates of the Board meeting and the attendance of the Directors at the said meetings are provided in the Corporate Governance Report, which forms a part of this Report.
Committees of the Board
As on March 31, 2023, the Board has 6 (six) Committees. Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Risk Management Committee, Corporate Social Responsibility Committee and Corporate Governance & Ethics Committee.
The details pertaining to the meetings and composition of the Committees of the Board are included in the Corporate Governance Report, which forms part of this Report.
The policy on Related Party Transactions as approved by the Board is available on the website of the Company, https://www.sunpharma.com/policies. All contracts/ arrangements/ transactions entered by the Company during the year under review with the related parties were in the ordinary course of business and on an arm''s length basis.
As required under Section 134(3)(h) of the Act, details of transactions entered with related parties under the Act are given in Form AOC-2, provided as âAnnexure - B'' to this Report.
Internal Controls and Internal Financial Controls
The management believes that internal controls are the prerequisite of governance and that action emanating from agreed business plans should be exercised within a framework of checks and balances. The management is committed to ensuring adequate internal controls environment commensurate with the size and complexity of the business, which assures compliance with internal policies, applicable laws and regulations, ensures reliability and accuracy of records, promotes operational efficiency, protects resources and assets, helps to prevent and detect fraud, errors and irregularities and overall minimises the risks.
The Company has a well-established internal controls framework comprising a set of policies, procedures and systems, instrumental in enhancing the efficiency and effectiveness of business operations, reducing risks and costs, and improving decision-making and accountability.
Internal financial controls framework, sub-set of internal controls framework assures the reliability and accuracy of financial reporting and the preparation of financial statements for external purposes following generally accepted accounting principles.
Whistle-Blower Policy/Vigil Mechanism
As a Company of repute and global standing, Sun Pharma is committed to conducting its business by adopting the highest standards of professional integrity and ethical behaviour. The organisation has a detailed Global Code of Conduct (âCode'') that directs the Employees to uphold the Company values and urges them to conduct business with integrity and the highest ethical standards. Management intends to prevent the occurrence of any practice not in compliance with this Code through the Global Whistle Blower Policy. This mechanism aims to provide a secure environment to Employees for responsible reporting of Code violations by Employees. The Board approved Global Whistle-blower Policy is available on the website, https://sunpharma.com/policies. Further details on the vigil mechanism of the Company are provided in the Corporate Governance Report, forming part of this Report.
An independent and empowered Global Internal Audit Function (GIA) at the corporate level with support from highly skilled and reputed external audit firms, carries out risk-based internal audits of the Company''s operations, governance, risk management and internal controls wherever required. GIA audits all businesses & support functions on a rotation basis to ensure that business process controls are adequate and functioning effectively. These reviews include financial, operational, and compliance controls'' design and operating effectiveness and risk mitigation plans.
The GIA department comprises qualified Chartered Accountants, Certified Internal Auditors, Certified Information System Auditors, Certified Fraud Examiners, Company Secretaries, MBAs and Engineers. GIA provides assurance and advice to management on improving the effectiveness and efficiency of the Company''s processes and systems.
GIA''s functioning is governed by the Audit Charter, duly approved by the Audit Committee of the Board, which stipulates matters contributing to the proper and effective conduct of the audit. The Audit Committee of the Board periodically reviews key findings, provides strategic guidance, and monitors the performance of the GIA function.
The Company''s operating management closely monitors the internal control environment and ensures that the audit recommendations are effectively implemented.
The Board of Directors has constituted a Risk Management Committee which is entrusted with the responsibility of overseeing various organisational risks. The Corporate Governance Report, which forms part of this Report, contains the details of the Risk Management Committee of the Company. The Risk Management Committee assesses the adequacy of mitigation plans to address such risks.
The Board approved an overarching Risk Management Policy. The Policy synopsis is available on the website at https://sunpharma.com/policies.
The Company has developed and implemented an integrated Enterprise Risk Management (ERM) Framework through which it identifies, assesses, prioritises, mitigates, monitors, reports and manages, critical risks impacting its ability to meet its key strategic and operational objectives. ERM helps to align the risk appetite and strategy of the organisation, enhance risk response decisions, reduce operational surprises and losses, and improve stakeholder confidence and trust.
The ERM team engages with all Functional heads/designees to identify internal and external events that may harm the achievement of the Company''s objectives and periodically monitors changes in both internal and external environments leading to a new threat/risk. Risks are categorised into various categories viz. Financial, Operational, Sectorial, Sustainability, Cyber, Strategic, Compliance, Social, GeoPolitical, Third-Party etc. These risks are captured in a risk register with all the relevant information such as risk area, risk description, risk rating, root cause, mitigation plans, action items etc. The risk register is refreshed periodically.
AUDITORS Statutory Auditors
S R B C & Co. LLP, Chartered Accountants, (Firm''s Regn.
No. 324982E/ E300003), were re-appointed as the Statutory Auditors of the Company for a period of 5 (five) years at the 30th Annual General Meeting of the Company to hold office till the conclusion of the 35th Annual General Meeting of the Company.
The Auditor''s Report for the financial year ended March 31, 2023, has been issued with an unmodified opinion, by the Statutory Auditors. Further, the Statutory Auditors of the Company have not reported any fraud as specified under Section 143(12) of the Companies Act, 2013.
Secretarial Auditor
The Board had appointed KJB & Co. LLP, Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year ended March 31, 2023. The Secretarial Audit Report in the Form No. MR - 3 for the year is provided as âAnnexure - C1'' to this Report.
The Secretarial Audit Report for the year does not contain any qualification, reservation or adverse remark except a comment, as follows, which, in the opinion of the Board is self-explanatory.
âWe report that the UDIN and date of issue of certificate annexed in the Annual Report for FY 2021-22, issued under Regulation 34 read with Schedule V, Para C, Clause 10(i) of SEBI LODR Regulations was incorrectly mentioned. It is clarified that there is no change in the contents of such certificate and such certificate was without any qualifications.ââ
In accordance with the provision of Regulation 24A of the Listing Regulations, Secretarial Audit of two material unlisted Indian subsidiaries of the Company namely, Sun Pharma Laboratories Limited (SPLL) and Sun Pharma Distributors Limited (SPDL), was undertaken by KJB & Co. LLP, Practicing
Company Secretaries, Mumbai and the Secretarial Audit Reports issued by them are provided as âAnnexure - C2'' and âAnnexure - C3'' respectively to this Report. The Secretarial Audit Reports for these material unlisted Indian subsidiaries do not contain any qualification, reservation or adverse remark.
The Board has appointed K D & Co, Cost Accountants, (Firm''s Registration No. 004076) as Cost Auditor of the Company for conducting Cost Audit in respect of Bulk Drugs & Formulations of your Company for the FY23.
The Company has maintained the Cost Records as specified by the Central Government under Section 148(1) of the Act.
Business Responsibility & Sustainability Report
The Business Responsibility and Sustainability Report of the Company for the year ended March 31, 2023, is provided in a separate section and forms part of this Annual Report and is also made available on the website of the Company at https://sunpharma.com/investors-annual-reports-presentations.
Corporate Social Responsibility
In compliance with the requirements of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the CSR Policy of the Company is available on the website of the Company and can be accessed through the web link: https://sunpharma. com/policies.
The Annual Report on CSR activities containing details of expenditure incurred by the Company and brief details on the CSR activities are provided in âAnnexure - D'' to this Report.
Conservation of energy, technology absorption and foreign exchange earnings and outgo
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, is provided as âAnnexure - E'' to this Report.
Human Resources
FY23 was an exciting year for everyone. Our 41,000 strong global workforce worked relentlessly to ensure medicines continue to reach patients who rely on us. Driven by Sunology, our employees spread across manufacturing
sites, distribution centres, R&D centres and sales offices worldwide enabled us in delivering a high performance.
The top priority for the Human Resource function is to provide a work environment which is safe, diverse, inclusive and full of growth opportunities.
Your Directors would like to take this opportunity to express their gratitude and appreciation for the passion, dedication and commitment of the employees and look forward to their continued contribution.
Disclosure under the sexual harassment of women at workplace (Prevention, Prohibition and Redressal) act, 2013
Your Company strongly believes in providing a safe and harassment free workplace for each and every individual working for the Company through various interventions and practices. It is the continuous endeavour of the Management of the Company to create and provide an environment to all its employees that is free from discrimination and harassment including sexual harassment. The Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. The Company has arranged various interactive awareness workshops in this regard for the employees at the manufacturing sites, R & D set ups & corporate office during the year under review.
There were four complaints received during the year. All the complaints were disposed of and no complaints were pending as on the end of March 31, 2023.
Your Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Significant and material orders passed by the regulators or courts or tribunals
There are no significant and material orders passed by the regulators or courts or tribunals which impact the going concern status of the Company.
Annual Return
The Annual Return as required under sub-section (3) of Section 92 of the Companies Act, 2013 (âthe Act'') in form MGT-7 is made available on the website of the Company and can be accessed at https://sunpharma.com/annual-return
The Company has complied with the applicable Secretarial Standards as amended from time to time.
There are no proceedings initiated/ pending against your Company under the Insolvency and Bankruptcy Code, 2016 and there is no instance of one-time settlement with any Bank or Financial Institution.
In March 2023, the Company experienced an IT Security Incident that impacted some of the Company''s IT assets and operations. Based on the Company''s investigation, the Company currently believes that the incident''s effects on its IT system include a breach of certain file systems and the theft of Company data and personal data. A ransomware group has claimed responsibility for this incident. As part of the Company''s containment and remediation efforts, the Company has taken various measures, including but not limited to strengthening its cybersecurity infrastructure to safeguard against such risks in the future. The details on the IT Security Incident are also provided in Note 55(11) of the standalone financial statements.
Directorsâ Responsibility Statement
Pursuant to the requirements under Section 134(5) read with Section 134(3)(c) of the Act, with respect to Directors'' Responsibility Statement, it is hereby confirmed that:
(a) in the preparation of the annual accounts for the financial year ended March 31, 2023, the applicable accounting standards have been followed and there are no material departures from the same;
(b) 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 as at March 31, 2023 and of the profit of the Company for the year ended on that date;
(c) 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;
(d) the Directors have prepared the annual accounts on a going concern basis;
(e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
(f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Your Directors wish to thank all stakeholders, employees and business partners, Company''s bankers, medical professionals and business associates for their continued support and valuable cooperation.
The Directors also wish to express their gratitude to investors for the faith that they continue to repose in the Company.
For and on behalf of the Board of Directors
Mr. Dilip Shanghvi Mr. Sailesh Desai
Managing Director Whole-time Director
(DIN: 00005588) (DIN: 00005443)
Place: Mumbai Date: May 26, 2023
Mar 31, 2022
Your Directors take pleasure in presenting the Thirtieth Annual Report and Company''s Audited Financial Statements for the financial year ended March 31, 2022 (âFY2021-22'').
|
('' in Million) |
||||
|
Standalone |
Consolidated |
|||
|
Year ended March 31, 2022 |
*Year ended March 31, 2021 |
Year ended March 31, 2022 |
Year ended March 31, 2021 |
|
|
Revenue from operations |
155,859.8 |
141,160.5 |
386,544.9 |
334,981.4 |
|
Profit before exceptional item and tax |
21,273.9 |
9,451.3 |
90,481.4 |
71,055.1 |
|
Exceptional Item |
18,205.3 |
895.6 |
45,668.2 |
43,061.4 |
|
Profit before tax but after exceptional item |
3,068.6 |
8,555.7 |
44,813.2 |
27,993.7 |
|
Profit/(Loss) after tax |
(999.9) |
8,424.0 |
34,058.2 |
22,846.8 |
|
Opening balance in Retained Earnings |
159,645.5 |
140,052.7 |
365,980.9 |
353,200.5 |
|
Closing balance in Retained Earnings |
136,120.8 |
159,645.5 |
376,456.5 |
365,980.9 |
*Refer Note 54(12) of Standalone Financial Statements
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY, BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THIS REPORT
There have been no material changes and commitments affecting the financial position of the Company, between the end of the financial year and the date of this report.
CONSOLIDATED ACCOUNTS
The consolidated financial statements for the year ended March 31, 2022, have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015.
DIRECTORSâ RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 134(5) read with Section 134(3)(c) of the Companies Act, 2013 (âAct'') with respect to Directors'' Responsibility Statement, it is hereby confirmed that:
a) in the preparation of the annual accounts for the financial year ended March 31, 2022, the applicable accounting standards have been followed and there are no material departures from the same;
b) the Directors 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 as at March 31, 2022, and of the loss of the Company for the year ended on that date;
c) 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;
d) the Directors have prepared the annual accounts on a going concern basis;
e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis as prescribed under Part B of Schedule V read with Regulation 34(3) of the Listing Regulations is provided in a separate section and forms part of this Report.
During the year under review, your Directors at their meeting held on January 31, 2022 declared an interim dividend of '' 7/- (Rupees Seven only) per equity share of '' 1/- (Rupee One only) each [previous year '' 5.50/- (Rupees Five and Paisa Fifty only) per equity share of '' 1/- (Rupee One only) each] for the year ended March 31, 2022. The interim dividend was paid on February 18, 2022 to those shareholders who held shares as on February 10, 2022, being the record date.
In addition to above, your Directors have recommended a final dividend of '' 3/- (Rupees Three only) per equity share of '' 1/- (Rupee One only) each [previous year '' 2/- (Rupees Two only) per equity share of '' 1/- (Rupee One only) each] for the year ended March 31, 2022, subject to the approval of the equity shareholders at the ensuing 30th Annual General Meeting of the Company.
The total dividend payout for FY2021-22 would be '' 10/-(Rupees Ten only) per equity share of '' 1/- (Rupees One only) each [previous year '' 7.50/- (Rupees Seven and Paisa Fifty only) per equity share of '' 1/- (Rupee One only) each].
The dividend payout is in accordance with the Company''s Dividend Distribution Policy. The policy is available on the website of the Company and can be accessed through the web link: https://sunpharma.com/policies/.
The Directors do not propose any transfer to reserve.
During the year under review there was no change in the Capital Structure of the Company.
ICRA Ltd. has reaffirmed the highest credit rating of â[ICRA] A1 ''/ â[ICRA] AAA (Stable)'' for the bank facilities, short term/ long term borrowings and commercial paper programs of the Company.
Further, CRISIL Ltd. has also reaffirmed the highest credit rating of âCRISIL A1 and CRISIL AAA/Stable'' for short term & long term bank facilities and commercial paper programs of the Company.
SUBSIDIARIES/ JOINT VENTURES/ ASSOCIATES
The statement containing the salient features of the Financial Statements of the Company''s subsidiaries/ joint ventures/ associates is given in Form AOC - 1, provided in Notes to the Consolidated Financial Statements, forming part of the Annual Report.
The highlights of performance of subsidiaries, joint ventures and associates and their contribution to the overall performance of the Company during the financial year under review is given under Annexure âA'' to the Consolidated Financial Statements forming part of the Annual Report.
Details pertaining to entities that became subsidiaries/ joint ventures/ associates and those that ceased to be the subsidiaries/ joint ventures/ associates of the Company during the year under review are provided in the notes to the Consolidated Financial Statements, forming part of the Annual Report.
1. National Company Law Tribunal (NCLT) vide its Order dated August 31, 2021, sanctioned the Scheme of Amalgamation and Merger of Sun Pharma Global FZE (âTransferor Companyâ), an indirect wholly owned subsidiary of the Company with Sun Pharmaceutical Industries Limited (âCompanyâ) pursuant to Section 234 read with Sections 230 to 232 of the Companies Act, 2013 and the relevant rules and regulations made
thereunder. The Scheme is effective from October 1, 2021 with appointed date as January 1, 2020 and Sun Pharma Global FZE has been merged with the Company.
2. The Board of Directors of the Company at its meeting held on May 30, 2022 has approved the Scheme of Amalgamation of Sun Pharmaceutical Medicare Limited, Green Eco Development Centre Limited, Faststone Mercantile Company Private Limited, Realstone Multitrade Private Limited, Skisen Labs Private Limited, Wholly-owned Subsidiaries of the Company with the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year, following were the changes in Directors/
Key Managerial Personnel:
1. Dr. Pawan Goenka has been appointed as the Independent Director w.e.f. May 21, 2021 for a period of five years by the shareholders at the 29th Annual General Meeting.
2. Ms. Rama Bijapurkar has been appointed as the Independent Director w.e.f. May 21, 2021 for a period of five years by the shareholders at the 29th Annual General Meeting.
3. Ms. Rekha Sethi retired and ceased to be the Independent Director w.e.f. August 31, 2021 i.e. upon conclusion of the 29th Annual General Meeting.
4. Mr. Vivek Chaand Sehgal resigned as the Independent Director with effect from September 1, 2021.
5. Mr. Sunil Ajmera resigned from the position of Company Secretary and Compliance Officer w.e.f. the close of business hours of January 31, 2022.
6. Mr. Anoop Deshpande has been appointed as Company Secretary and Compliance Officer effective from closure of business hours of January 31, 2022.
After the year end and up to the date of the Report,
following were the changes:
1. The Board of Directors at its meeting held on May
30, 2022, on the recommendation by Nomination and Remuneration Committee, has approved the re-appointment and remuneration of Mr. Dilip Shanghvi as Managing Director for further period of five years with effect from i.e. April 1, 2023 to March
31, 2028, subject to approval of the shareholders at the 30th Annual General Meeting.
2. The Board of Directors at its meeting held on May 30, 2022, on the recommendation by Nomination and Remuneration Committee, has approved the re-appointment of Mr. Gautam Doshi as Independent Director for further period of five years with effect from
i.e. May 25, 2023 to May 24, 2028, subject to approval of the shareholders at the 30th Annual General Meeting.
Mr. Sailesh T. Desai and Mr. Israel Makov Directors of the Company, retire by rotation at the 30th Annual General Meeting.
The necessary disclosures required under the Companies Act, 2013 and the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and Secretarial Standards-2 on General Meetings issued by the Institute of Company Secretaries of India, for the above-mentioned appointments/ re-appointment are provided in the 30th Annual General Meeting Notice of the Company.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Act and under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ).
In the opinion of the Board, the Independent Directors fulfil the conditions specified under the Act and Listing Regulations and are independent of the management. The Board skill/ expertise/ competencies matrix of all the Directors, including the Independent Directors is provided in the Corporate Governance Report forming part of this Annual Report.
FAMILIARISATION PROGRAMME FOR THE INDEPENDENT DIRECTORS
In compliance with the requirements of Regulation 25(7) of the Listing Regulations, the Company has put in place a Familiarisation Programme for the Independent Directors to familiarise them with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model etc. The details of the Familiarisation Programme conducted are available on the website of the Company: https://sunpharma.com/policies/.
EVALUATION OF PERFORMANCE OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS
During the year, annual performance evaluation of the Board and Committees of the Board, individual Directors including the Chairman of the Company, was carried out as per the criteria and process approved by Nomination and Remuneration Committee, which is in line with the SEBI Guidance Note on Board Evaluation.
The Chairman and other members of the Board discussed upon the performance evaluation outcome and concluded that they were satisfied with the overall performance of the Board and Committees of the Board and Directors individually. The Board also assessed the fulfillment of the independence criteria as specified in Listing Regulations, by the Independent Directors of the Company and their independence from the management.
The performance evaluation of the Non-Independent Directors including the Chairman of the Company and performance of the Board as a whole was discussed at the separate meeting of the Independent Directors.
REMUNERATION POLICY FOR DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES AND CRITERIA FOR APPOINTMENT OF DIRECTORS
For the purpose of selection of any Director, the Nomination and Remuneration Committee identifies persons of integrity who possess relevant expertise, experience and leadership qualities required for the position. The Committee also ensures that the incumbent fulfils such criteria with regard to qualifications, positive attributes, independence, age and other criteria as laid down under the Act, Listing Regulations or other applicable laws and the diversity attributes as per the Board Diversity Policy of the Company. The Board has, on the recommendation of the Nomination and Remuneration Committee framed a Policy on remuneration of Directors, Key Managerial Personnel and other Employees.
The salient features of the Remuneration Policy of the Company are as under:
A. Guiding Principles for remuneration: The Company shall remunerate all its personnel reasonably and sufficiently as per industry benchmarks and standards. The remuneration shall be commensurate to retain and motivate the human resources of the Company. The compensation package will, inter alia, take into account the experience of the personnel, the knowledge & skill required including complexity of his job, work duration and risks associated with the work, and attitude of the employee like positive outlook, team work, loyalty etc.
B. Components of Remuneration: The following will be the various remuneration components which may be paid to the personnel of the Company based on the designation and class of the personnel.
a) Fixed compensation: The fixed salaries of the Company''s personnel shall be competitive and based on the individual personnel''s responsibilities and performance.
b) Variable compensation: The personnel of the Company may be paid remuneration by way of variable salaries based on their performance evaluation. Such variable salaries should be based on the performance of the individual against his short and long term performance objectives and the performance of the Company.
c) Share based payments: The Board may, on the recommendation of the Nomination and Remuneration Committee, issue to certain class of personnel a share and share price related incentive program.
d) Non-monetary benefits: Senior management personnel of the Company may, on a case to case basis, be awarded customary non-monetary benefits such as discounted salary advance/ credit facility, rent free accommodation, Company cars with or without chauffer, share and share price related incentive, reimbursement of electricity and telephone bills etc.
e) Gratuity/group insurance: Personnel may also be awarded to group insurance and other key man insurance protection. Further as required by the law necessary gratuity shall be paid to the personnel.
f) Commission: The directors may be paid commission if approved by the shareholders.
The shareholders may authorise the Board to declare commission to be paid to any director of the Board.
The complete Policy as approved by the Board is available on the website of the Company and can be accessed through the web link: https://sunpharma.com/policies/.
Information as per Section 197 (12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in âAnnexure - A'' to this Report. Further, the information pertaining to Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, pertaining to the names and other particulars of employees is available for inspection at the Registered office of the Company during business hours and pursuant to the second proviso to Section 136(1) of the Act, the Report and the accounts are being sent to the members excluding this. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary & Compliance Officer either at the Registered/ Corporate Office address or by email to secretarial@sunpharma.com.
The Board of Directors of the Company met 5 (Five) times during the year under review. The dates of the Board meeting and the attendance of the Directors at the said meetings are provided in detail in the Corporate Governance Report, which forms a part of this Report.
As on March 31, 2022, the Board has 6 (six) Committees. Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Risk Management Committee, Corporate Social Responsibility Committee and Corporate Governance & Ethics Committee.
The details pertaining to the meetings and composition of the Committees of the Board are included in the Corporate Governance Report, which forms part of this Report.
RELATED PARTY TRANSACTIONS
The policy on Related Party Transactions as approved by the Board is available on the website of the Company and can be accessed through the web link: https://www. sunpharma.com/policies. All contracts/ arrangements/ transactions entered by the Company during the year under review with the related parties were in the ordinary course of business and on an arm''s length basis.
As required under Section 134(3)(h) of the Act, details of transactions entered with related parties under the Act exceeding ten percent of the annual consolidated turnover as per the last audited financial statements are given in Form AOC-2 provided as âAnnexure - B'' to this Report.
INTERNAL CONTROLS
The Company believes that internal controls are the prerequisite of governance and that action emanating out of agreed business plans should be exercised within a framework of checks and balances. The Company has a well-established internal controls framework, which is designed to continuously assess the adequacy, effectiveness and efficiency of internal controls. The management is committed to ensuring an effective internal controls environment, commensurate with the size and complexity of the business, which provides an assurance on compliance with internal policies, applicable laws, regulations, ensures accuracy of records, promotes operational efficiency, protects resources and assets and overall minimize the risks.
INTERNAL FINANCIAL CONTROLS
The Company has a well-established internal financial controls framework, which is designed to continuously assess the adequacy, effectiveness and efficiency of internal financial controls. The management is committed to ensuring an effective internal financial controls environment, commensurate with the size and complexity of the business, which provides an assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
GLOBAL INTERNAL AUDIT
An independent and empowered Global Internal Audit Function (GIA) at the corporate level with support from a Big 4/ equally reputed audit firms, wherever required, carries out risk-based audits. GIA audits all businesses to ensure that business process controls are adequate and are functioning effectively. These reviews include financial, operational and compliance controls and risk mitigation plans. The Company''s operating management closely monitors the internal control environment and ensures that the audit recommendations are effectively implemented.
The Audit Committee of the Board monitors performance of the Internal Audit Function, periodically reviews key findings and provides strategic guidance.
GIA''s functioning is governed by the Audit Charter, duly approved by the Audit Committee of the Board, which stipulates matters contributing to the proper and effective conduct of the audit.
The Board of Directors has constituted a Risk Management Committee which is entrusted with the responsibility of overseeing various organizational risks. The Risk Management Committee also assesses the adequacy of mitigation plans to address such risks. The Corporate Governance Report, which forms part of this report, contains the details of Risk Management Committee of the Company. An overarching Risk Management Policy which was approved by the Board is in place.
The Company has developed and implemented an integrated Enterprise Risk Management (ERM) Framework through which it identifies, monitors, mitigates and reports, key risks that impact the Company''s ability to meet its strategic objectives.
The ERM team engages with all Function heads to identify internal and external events that may have an adverse impact on the achievement of Company''s objectives and periodically monitors changes in both internal and external environment leading to emergence of a new threat/risk. These risks are captured in a risk register with all the relevant information such as risk area, risk description, risk rating, root cause and mitigation plans, action items etc. The risk register is refreshed semi-annually. Risks are categorised into various categories viz. Strategic, Financial, Operational, Compliance, Cyber, Geo-Political etc. During FY 21-22, the focus was on reviewing effectiveness of actions taken to mitigate the identified risks as well as to identify the new risks and associated risk-mitigation plans, emerging out of constantly changing geo-political situation across the globe.
Outcome of Enterprise Risk Assessments covering Company''s various businesses and functions, are one of the key input for the annual internal audit plan.
WHISTLE BLOWER POLICY/ VIGIL MECHANISM
To create enduring value for all stakeholders and ensure the highest level of honesty, integrity and ethical behaviour in all its operations, the Company has adopted a âGlobal Whistle Blower Policy'' for Sun Pharmaceutical Industries Limited and all its subsidiaries, in addition to the existing Global Code of Conduct that governs the actions of its employees. Further details on vigil mechanism of the Company are provided in the Corporate Governance Report, forming part of this Report.
S R B C & Co LLP, Chartered Accountants, (Firm''s Regn.
No. 324982E/ E300003), were appointed as the Statutory Auditors of the Company for a period of 5 (five) years at the 25th Annual General Meeting of the Company to hold office till the conclusion of the 30th Annual General Meeting of the Company.
In terms of provisions of sections 139 read with the Companies (Audit and Auditors) Rules, 2014.S R B C & Co LLP, Chartered Accountants are eligible to be re-appointed for a further term of 5 (five) years.
The Company has received the consent, certificate of eligibility and a certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India (ICAI) in accordance with Sections 139, 141 and other applicable provisions of the Act and Rules issued thereunder and as required under the Listing Regulations, from S R B C & Co LLP, chartered Accountants.
Accordingly, the Board of Directors at its meeting held on May 30, 2022, based on the recommendation of the Audit Committee have approved and recommended the reappointment of S R B C & Co LLP, Chartered Accountants, (Firm''s Regn. No. 324982E/ E300003), as the Statutory Auditors, for a further period of 5 (five) years i.e. from the conclusion of the 30th Annual General Meeting till the conclusion of the 35th Annual General Meeting of the Company, for approval of the Shareholders of the Company at the ensuing 30th Annual General Meeting.
The Auditor''s Report for the financial year ended March 31, 2022, has been issued with an unmodified opinion, by the Statutory Auditors.
The Board had appointed KJB & Co. LLP, Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year ended March 31, 2022. The Secretarial Audit Report in the Form No. MR - 3 for the year is provided as âAnnexure - C1'' to this Report.
The Secretarial Audit Report for the year does not contain any qualification, reservation or adverse remark.
In accordance with the provision of Regulation 24A of the Listing Regulations, Secretarial Audit of two material unlisted Indian subsidiaries of the Company namely, Sun Pharma Laboratories Limited (SPLL) and Sun Pharma Distributors Limited (SPDL), was undertaken by KJB &
Co. LLP, Practicing Company Secretaries, Mumbai and the Secretarial Audit Reports issued by them are provided as âAnnexure - C2'' and âAnnexure - C3'' respectively to this Report. The Secretarial Audit Reports for these material unlisted Indian subsidiaries do not contain any qualification, reservation or adverse remark.
The Board has appointed K D & Co, Cost Accountants, (Firm''s Registration No. 004076) as Cost Auditor of the Company for conducting Cost Audit in respect of Bulk Drugs & Formulations of your Company for the financial year 2022-23.
The Company is required to maintain Cost Records as specified by the Central Government under Section 148(1) of the Act and accordingly, such accounts and records are made and maintained by the Company.
CORPORATE SOCIAL RESPONSIBILITY
In compliance with the requirements of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors has constituted a Corporate Social Responsibility (CSR) Committee. The details of membership of the Committee and the meetings held are detailed in the Corporate Governance Report, forming part of this Report. The CSR Policy of the Company is available on the website of the Company and can be accessed through the web link: https://sunpharma.com/policies/.
The annual report on CSR activities containing details of expenditure incurred by the Company and brief details on the CSR activities are provided in âAnnexure - D'' to this Report.
The Board has accorded its consent to set off the excess amount spent by the Company on its CSR Activities against the requirement to spend in terms of Section 135 of the Companies Act, 2013 in any subsequent year(s).
BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT
The Business Responsibility and Sustainability Report of the Company for the year ended March 31, 2022, is provided in a separate section and forms part of this Annual Report and is also made available on the website of the Company at https://sunpharma.com/investors-annual-reports-presentations/.
FY2021-22 was a very challenging year for everyone. Our 38,000 strong global workforce worked relentlessly to ensure medicines continue to reach patients who rely on us. As lockdowns continued across the world, our teams being part of essential services, ensured our 43 manufacturing sites, distribution centres, R&D centres and sales offices worldwide continue to operate. We are grateful to our employees who made this happen with a safety-first mind set. The top priority for the Human Resource function was providing a safe work environment to employees globally.
Your Directors would like to take this opportunity to express their gratitude and appreciation for the passion, dedication and commitment of the employees and look forward to their continued contribution.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
Your Company strongly believes in providing a safe and harassment free workplace for each and every individual working for the Company through various interventions and practices. It is the continuous endeavour of the Management of the Company to create and provide an environment to all its employees that is free from discrimination and harassment including sexual harassment. The Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder.
The Company has arranged various interactive awareness workshops in this regard for the employees at the manufacturing sites, R & D set ups & corporate office during the year under review. The Company has submitted the Annual Returns to the local authorities, as required under the above-mentioned Act.
During the financial year ended March 31, 2022, two complaints pertaining to sexual harassment were received. The complaints were resolved and there are no complaints pending as at the end of the financial year.
Your Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Report on Corporate Governance and Certificate of the Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated in Part C of Schedule V of the Listing Regulations, are provided in a separate section and forms part of this Report.
The Company has complied with the applicable Secretarial Standards as amended from time to time.
LOANS, GUARANTEES & INVESTMENTS
The particulars of loans, guarantees and investments have been disclosed in the Financial Statements.
The Company has not accepted any deposit from the Public during the year under review.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, is provided as âAnnexure - E'' to this Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
There are no significant and material orders passed by the regulators or courts or tribunals which impact the going concern status.
The Annual Return as required under sub-section (3) of Section 92 of the Companies Act, 2013 (âthe Act'') in form MGT-7 is made available on the website of the Company and can be accessed at https://sunpharma.com/investors-annual-reports-presentations.
Your Directors wish to thank all stakeholders, employees and business partners, Company''s bankers, medical professionals and business associates for their continued support and valuable cooperation.
The Directors also wish to express their gratitude to investors for the faith that they continue to repose in the Company.
For and on behalf of the Board of Directors
Dilip Shanghvi Sailesh T. Desai
Place: Mumbai Managing Director Whole-time Director
Date: May 30, 2022 (DIN: 00005588) (DIN: 00005443)
Mar 31, 2021
Your Directors take pleasure in presenting the Twenty-Ninth Annual Report and Company''s Audited Financial Statements for the financial year ended March 31, 2021.
|
FINANCIAL RESULTS |
('' in Million) |
|||
|
Standalone |
Consolidated |
|||
|
Year ended March 31, 2021 |
Year ended March 31, 2020 |
Year ended March 31, 2021 |
Year ended March 31, 2020 |
|
|
Revenue from operations |
128,032.1 |
125,319.3 |
334,981.4 |
328,375.0 |
|
Profit before exceptional item and tax |
22,424.3 |
32,530.0 |
71,055.1 |
52,702.3 |
|
Exceptional Item |
895.6 |
- |
43,061.4 |
2,606.4 |
|
Profit before tax but after exceptional item |
21,528.7 |
32,530.0 |
27,993.7 |
50,095.9 |
|
Tax expense: |
||||
|
- Current Tax |
2,449.1 |
3,864.6 |
9,573.0 |
13,201.4 |
|
- Deferred Tax Charge / (Credit) |
(2,317.4) |
(3,446.0) |
(331.0) |
(4,973.4) |
|
- Deferred Tax - Exceptional |
- |
- |
(4,095.1) |
- |
|
Profit after tax |
21,397.0 |
32,111.4 |
22,846.8 |
41,867.9 |
|
Profit after Tax but before Share in profit / (loss) of associates and joint venture |
- |
- |
22,846.8 |
41,867.9 |
|
Share of profit/(loss) of associates and joint venture [Net] |
- |
- |
(123.3) |
(148.3) |
|
Profit for the year before non-controlling interests |
- |
- |
22,723.5 |
41,719.6 |
|
Non-controlling interests |
- |
- |
(6,314.7) |
4,070.3 |
|
Profit for the year attributable to owners of the Company |
- |
- |
29,038.2 |
37,649.3 |
|
Total other Comprehensive Income |
633.0 |
(808.0) |
(1,460.3) |
21,208.3 |
|
Total Comprehensive Income for the year attributable to: |
22,030.0 |
31,303.4 |
21,263.2 |
62,927.9 |
|
- Owners of the Company |
22,030.0 |
31,303.4 |
28,133.4 |
56,068.4 |
|
- Non-Controlling Interest |
- |
- |
(6,870.2) |
6,859.5 |
|
Opening balance in Retained Earnings |
140,052.7 |
123,846.1 |
353,200.5 |
333,301.9 |
|
Additions: |
||||
|
Amount available for appropriation |
21,324.4 |
31,925.1 |
28,985.5 |
37,377.3 |
|
Less: |
||||
|
Dividend on Equity Shares |
15,590.6 |
13,789.6 |
15,590.6 |
13,789.6 |
|
Dividend Distribution Tax |
- |
1,928.9 |
- |
2,834.5 |
|
Buy-back of equity shares by overseas subsidiaries |
- |
- |
559.5 |
831.6 |
|
Transfer to/from various Reserves: |
||||
|
- Legal reserve |
- |
- |
55.0 |
23.0 |
|
- General reserve |
- |
- |
- |
- |
|
Closing balance in Retained Earnings |
145,786.5 |
140,052.7 |
365,980.9 |
353,200.5 |
DIVIDEND
During the year under review, your Directors at their meeting held on January 29, 2021 had declared an interim dividend of ''5.50 (Rupees Five and paise fifty only) per equity share of ''1/- each [previous year ''3.00 per equity share of ''1/- each] for the year ended March 31, 2021. The interim dividend was paid on February 17, 2021 to those shareholders who held shares as on February 10, 2021, being the record date for payment.
In addition to above, your Directors have recommended a final dividend of ''2/- (Rupees Two only) per equity share
of ''1/- each [previous year ''1/- per equity share of ''1/-each] for the year ended March 31, 2021, subject to the approval of the equity shareholders at the ensuing 29th Annual General Meeting of the Company. Pursuant to the provisions of the Finance Act, 2020, the said final dividend will be liable for deduction of income tax at source.
Therefore, the total dividend payout for the FY21 is ''7.50/-(Rupees Seven and paise fifty only) per equity share of ''1/-each [previous year ''4.00/- per equity share of ''1/- each].
The dividend payout is in accordance with the Company''s Dividend Distribution Policy. The policy is available on the website of the Company and can be accessed through the web link: https://sunpharma.com/policies/.
BUY-BACK OF SHARES
The Board of Directors of the Company at its meeting held on March 17, 2020, had approved the buy-back of Company''s equity shares of face value of ''1/- each (âEquity Sharesâ) from the Open Market through stock exchange mechanism as prescribed under the Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018, at a maximum price of ''425/- (Rupees Four Hundred Twenty Five Only), per Equity Share payable in cash, for an aggregate maximum amount of up to ''1700,00,00,000/-(Rupees One Thousand Seven Hundred Crores Only) (âMaximum Buy-back Sizeâ).
The Buy-back period had opened on and from March 26, 2020 and had closed, during the year under review, effective from closure of trading hours on September 25,
2020 i.e., within 6 months from the date of the opening of Buy-back.
No Equity Shares have been bought back under the Buyback as the volume weighted average market price of Equity Shares of the Company during the Buy-Back period was higher than the Maximum Buy-back Price.
CHANGES IN CAPITAL STRUCTURE
During the year under review there was no change in the paid-up share capital of the Company.
SCHEME OF ARRANGEMENT
During the year, the Board of Directors of the Company at its meeting held on July 31, 2020 had approved the Scheme of Amalgamation and Merger of Sun Pharma Global FZE (âTransferor Companyâ), an indirect wholly owned subsidiary of the Company with Sun Pharmaceutical Industries Limited (âCompanyâ) and their respective members and creditors (âSchemeâ) pursuant to Section 234 read with Sections 230 to 232 of the Companies Act, 2013 and the relevant rules and regulations made thereunder for amalgamation of Transferor Company into the Company.
The Hon''ble National Company Law Tribunal of Gujarat, at Ahmedabad (âNCLTâ) vide its Order dated January 07,
2021 had dispensed with convening of meeting of secured creditor(s) of the Company and had ordered to convene the meeting of equity shareholders and unsecured creditors
of the Company and accordingly separate meetings of the equity shareholders and unsecured creditors were convened on March 16, 2021 by way of Video Conferencing / Other Audio Visual Means to approve the Scheme with appointed date as January 01, 2020 or such subsequent date as may be decided by the Board of Directors as applicable, of the Transferor Company and the Board of
Directors of the Company or such date as may be approved by the Hon''ble NCLT or such other appropriate date as the Appropriate Authority may decide.
At both the meetings namely the meeting of equity shareholders and the meeting of unsecured creditors, the resolution for approval of proposed merger was passed with requisite majority. The approval of NCLT is awaited.
The merger will result synergies of operations, reduction in overheads including administrative, managerial and other expenditure, operational rationalisation, organisational efficiency, competitive advantage and optimal utilisation of resources eventually enhancing the growth and reputation of the group. Pursuant to the Scheme, no consideration shall be paid nor any shares of the Company shall be issued and allotted to the shareholders of the Transferor Company.
ANNUAL RETURN
The Annual Return as required under sub-section (3) of Section 92 of the Companies Act, 2013 (âthe Act'') in form MGT-7 is made available on the website of the Company and can be accessed at https://sunpharma.com/investors-annual-reports-presentations/
SUBSIDIARIES/ JOINT VENTURES/ ASSOCIATES
The statement containing the salient features of the Financial Statements of the Company''s subsidiaries/ joint ventures/ associates is given in Form AOC - 1, provided in Notes to the Consolidated Financial Statements, forming part of the Annual Report.
The highlights of performance of subsidiaries, joint ventures and associates and their contribution to the overall performance of the Company during the financial year under review is given under Annexure âA'' to the Consolidated Financial Statements forming part of the Annual Report.
Details pertaining to entities that became subsidiaries/ joint ventures/associates and those that ceased to be the subsidiaries / joint ventures/associates of the Company during the year under review are provided in Note: 38 of the notes to the Consolidated Financial Statements, forming part of the Annual Report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Dilip S. Shanghvi, Managing Director and Mr. Kalyanasundaram Subramanian, Whole-time Director of the Company retire by rotation at the ensuing 29th Annual General Meeting of the Company and being eligible offer themselves for reappointment.
Further, Mr. Kalyanasundaram Subramanian''s term as Whole-time Director as approved by the members at the 26th Annual General Meeting of the Company held on September 26, 2018, was upto February 13, 2021.
The Board of Directors of the Company at its meeting held on January 29, 2021, on the recommendation of the Nomination and Remuneration Committee, had approved re-appointment and remuneration of Mr. Kalyanasundaram Subramanian as Whole-time Director for a further period of two years with effect from February 14, 2021 till February
13, 2023, subject to the approval of the shareholders of the Company at the 29th Annual General Meeting. The Board of Directors recommend his re-appointment and remuneration for further period of two years with effect from February
14, 2021, for approval of the members at the ensuing 29th Annual General Meeting of the Company.
On the recommendation of the Nomination and Remuneration Committee, the Board of Directors by passing a resolution by circulation have appointed Dr. Pawan Goenka (DIN: 00254502) and Ms. Rama Bijapurkar (DIN: 00001835) as Additional Independent Directors of the Company effective from May 21, 2021 in accordance with the provisions of Section 149 of the Act and in terms of Section 161(1) of the Act, they both hold office upto the date of ensuing 29th Annual General Meeting. In the opinion of the Board, Dr. Pawan Goenka and Ms. Rama Bijapurkar hold highest standards of integrity and possess requisite expertise and experience required to fulfil their duties as Independent Directors and further they are exempted from the requirement to undertake online proficiency self-assessment test conducted by the Indian Institute of Corporate Affairs in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014. The Board recommends appointment of Dr. Pawan Goenka and Ms. Rama Bijapurkar as Independent Directors of the Company for a term of 5 (Five) years effective from May 21,
2021 upto May 20, 2026 for approval of the members at the ensuing 29th Annual General Meeting of the Company.
Mr. Sailesh T. Desai was re-appointed as the Wholetime Director at the 26th Annual General Meeting of the Company held on September 26, 2018 for a period of 5 (five) years effective from April 1, 2019 upto March 31, 2024. However, due to inadequacy of profits at that time, the approval for maximum remuneration to be paid to Mr. Sailesh T. Desai was sought from the members for a period of 3 years with effect from April 1, 2019 to March 31, 2022, including the minimum remuneration to be paid to him in event of loss or inadequacy of profits in any financial year during the aforesaid period of 3 years. The Board of Directors, at its meeting held on May 27, 2021, have considered, approved and recommends to the members, the maximum remuneration to be paid to Mr. Sailesh T. Desai, as recommended by the Nomination and Remuneration Committee, for further period of two years i.e. for the remaining term of his present appointment, from April 1,
2022 till March 31, 2024.
Appropriate resolutions for the appointment, reappointment and remuneration of the Directors are being
placed for your approval at the ensuing 29th Annual General Meeting.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed under Section 149(6) of the Act and under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ).
In the opinion of the Board, the Independent Directors of the Company fulfil the conditions specified under the Act and Listing Regulations and are independent of the management.
REMUNERATION POLICY FOR DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES AND CRITERIA FOR APPOINTMENT OF DIRECTORS
For the purpose of selection of any Director, the Nomination and Remuneration Committee identifies persons of integrity who possess relevant expertise, experience and leadership qualities required for the position. The Committee also ensures that the incumbent fulfils such criteria with regard to qualifications, positive attributes, independence, age and other criteria as laid down under the Act, Listing Regulations or other applicable laws. The Board has, on the recommendation of the Nomination and Remuneration Committee framed a Policy on remuneration of Directors, Key Managerial Personnel and other Employees.
The salient features of the Remuneration Policy of the Company are as under:
A. Guiding Principles for remuneration: The Company shall remunerate all its personnel reasonably and sufficiently as per industry benchmarks and standards. The remuneration shall be commensurate to retain and motivate the human resources of the Company. The compensation package will, inter alia, take into account the experience of the personnel, the knowledge & skill required including complexity of his job, work duration and risks associated with the work, and attitude of the employee like positive outlook, team work, loyalty etc.
B. Components of Remuneration: The following will be the various remuneration components which may be paid to the personnel of the Company based on the designation and class of the personnel.
a) Fixed compensation: The fixed salaries of the Company''s personnel shall be competitive and based on the individual personnel''s responsibilities and performance.
b) Variable compensation: The personnel of the Company may be paid remuneration by way of
variable salaries based on their performance evaluation. Such variable salaries should be based on the performance of the individual against his short and long term performance objectives and the performance of the Company.
c) Share based payments: The Board may, on the recommendation of the Nomination and Remuneration Committee, issue to certain class of personnel a share and share price related incentive program.
d) Non-monetary benefits: Senior management personnel of the Company may, on a case to case basis, be awarded customary non-monetary benefits such as discounted salary advance / credit facility, rent free accommodation, Company cars with or without chauffer, share and share price related incentive, reimbursement of electricity and telephone bills etc.
e) Gratuity/group insurance: Personnel may also be awarded to group insurance and other key man insurance protection. Further as required by the law necessary gratuity shall be paid to the personnel.
f) Commission: The directors may be paid commission if approved by the shareholders. The shareholders may authorise the Board to declare commission to be paid to any director of the Board.
C) Entitlement: The authority to determine the
entitlement to various components as aforesaid for each class and designation of personnel shall be as follows:
|
Designation / Class |
To be determined by |
|
Director |
Board of Directors on the recommendation of the Nomination and Remuneration Committee within the limits approved by the shareholders |
|
Key Managerial Personnel and Senior Management |
Board of Directors on recommendation of the Nomination and Remuneration Committee |
|
Other employees |
Human Resources Head |
Note: For the purpose of this Policy, the term Senior Management'' shall have the same meaning as defined under the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015
The complete Policy as approved by the Board is available on the website of the Company and can be accessed through the web link: https://sunpharma. com/policies/.
FAMILIARISATION PROGRAMME FOR THE INDEPENDENT DIRECTORS
In compliance with the requirements of Regulation 25(7) of the Listing Regulations, the Company has put in place a Familiarisation Programme for the Independent Directors to familiarise them with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model etc. The details of the Familiarisation Programme conducted are available on the website of the Company: www.sunpharma. com and can be accessed through the web link: https:// sunpharma.com/policies/
NUMBER OF MEETINGS OF THE BOARD
The Board of Directors of the Company met 4 (Four) times during the year under review on May 27, 2020;
July 31, 2020; November 03, 2020; and January 29,
2021. The particulars of attendance of the Directors at the said meetings are provided in detail in the Corporate Governance Report, which forms a part of this Report.
The intervening gap between the meetings was within the period prescribed under the Act and Listing Regulations.
EVALUATION OF PERFORMANCE OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS
During the year, the evaluation of the annual performance of individual Directors including the Chairman of the Company and Independent Directors, Board and Committees of the Board was carried out under the provisions of the Act, relevant Rules, and the Corporate Governance requirements as prescribed under Regulation 17 of Listing Regulations and based on the circular issued by SEBI dated January 5, 2017 with respect to Guidance Note on Board Evaluation. The Nomination and Remuneration Committee had approved the criteria for the performance evaluation of the Board, its Committees and individual Directors as per the SEBI Guidance Note on Board Evaluation.
The Chairman of the Company interacted with each Director individually, for evaluation of performance of the individual Directors. The evaluation for the performance of the Board as a whole and of the Committees were conducted by way of questionnaires.
In a separate meeting of Independent Directors, performance of Non Independent Directors and performance of the Board as a whole was evaluated.
Further, they also evaluated the performance of the Chairman of the Company, taking into account the views of the Executive Directors and Non-executive Directors.
The Nomination and Remuneration Committee reviewed the performance of the individual Directors on the basis of the criteria such as qualification, experience, knowledge and competency, fulfilment of functions, availability and attendance, initiative, integrity, contribution and commitment etc., and the Independent Directors were additionally evaluated on the basis of independence,
independent views and judgement etc. Further the evaluation of Chairman of the Board, in addition to the above criteria for individual Directors, also included evaluation based on effectiveness of leadership and ability to steer the meetings, impartiality, etc.
The Chairman and other members of the Board discussed upon the performance evaluation of every Director of the Company and concluded that they were satisfied with the overall performance of the Directors individually and that the Directors generally met their expectations of performance.
The summary of the feedback from the members were thereafter discussed in detail by the members. The respective Director, who was being evaluated, did not participate in the discussion on his/her performance evaluation.
The Chairman additionally interacted with each Director individually, for evaluation of performance of all Individual Directors and Mr. Dilip Shanghvi, along with other Directors had evaluated the performance of Mr. Israel Makov as the Chairman and as an Individual Director. They were satisfied with the overall performance of the Directors individually and that the Directors generally met their expectations of performance.
The Board also assessed the fulfillment of the independence criteria as specified in Listing Regulations, by the Independent Directors of the Company and their independence from the management.
The performance of the Board was evaluated by the Board after seeking inputs from all the Directors on the basis of various criteria such as diversity in the Board, competency of Directors, strategy and performance evaluation, evaluation of performance of the management and feedback, independence of the management from the Board etc. The performance of the Committees was evaluated by the Board after seeking inputs from the Committee members on the basis of criteria such as mandate and composition, effectiveness of the committee, independence of the committee from the Board, contribution to decisions of the Board, etc.
HUMAN RESOURCES
2020 was a very challenging year for everyone. Our 37000 strong global workforce worked relentlessly to ensure medicines continue to reach patients who rely on us. As lockdowns hit across the world, our teams being part of essential services, ensured our 44 manufacturing sites, distribution centres, R&D centres and sales offices worldwide continue to operate. We are grateful to our employees who made this happen with a safety-first mind set. The top priority for the Human Resource function was providing a safe work environment to employees globally.
Your Directors would like to take this opportunity to express their gratitude and appreciation for the passion,
dedication and commitment of the employees and look forward to their continued contribution.
Information as per Section 197 (12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in âAnnexure - A'' to this Report. Further, the information pertaining to Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, pertaining to the names and other particulars of employees is available for inspection at the Registered office of the Company during business hours and pursuant to the second proviso to Section 136(1) of the Act, the Report and the accounts are being sent to the members excluding this. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary/ Compliance Officer either at the Registered/Corporate Office address or by email to secretarial@sunpharma.com.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
Your Company strongly believes in providing a safe and harassment free workplace for each and every individual working for the Company through various interventions and practices. It is the continuous endeavour of the Management of the Company to create and provide an environment to all its employees that is free from discrimination and harassment including sexual harassment. The Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. The Company has arranged various interactive awareness workshops in this regard for the employees at the manufacturing sites, R & D set ups & corporate office during the year under review. The Company has submitted the Annual Returns to the local authorities, as required under the above mentioned Act.
During the financial year ended March 31, 2021, no complaint pertaining to sexual harassment was received by the Company. There are no complaints pending as at the end of the financial year.
Your Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
AUDITORS Statutory Auditors
S R B C & Co LLP, Chartered Accountants, (Firm''s Regn.
No. 324982E/ E300003), were appointed as the Statutory Auditors of the Company for a period of 5 (five) years at the 25th Annual General Meeting of the Company to hold office till the conclusion of the 30th Annual General Meeting of the Company.
As required under Section 134(3)(h) of the Act, details of transactions entered with related parties under the Act exceeding ten percent of the annual consolidated turnover as per the last audited financial statements are given in Form AOC-2 provided as âAnnexure - C'' to this Report.
AUDIT COMMITTEE COMPOSITION
The details pertaining to composition of Audit Committee are included in the Corporate Governance Report, which forms part of this Report.
RISK MANAGEMENT
The Board of Directors has constituted a Risk Management Committee which is entrusted with the responsibility of overseeing various organisational risks (strategic, operational and financial). The Risk Management Committee also assesses the adequacy of mitigation plans to address such risks. The Corporate Governance Report, which forms part of this report, contains the details of Risk Management Committee of the Company. An overarching Risk Management Policy which was approved by the Board is in place.
The Company has developed and implemented an integrated Enterprise Risk Management (ERM) Framework through which it identifies monitors, mitigates & reports key risks that impact the Company''s ability to meet its strategic objectives. The Company''s ERM framework is based on the recommendations by the Committee of Sponsoring Organisations (COSO) to further the organisation''s endeavour to strengthen ERM framework and processes using best practices. The ERM team engages with all Function heads to identify internal and external events that may have an adverse impact on the achievement of Company''s objectives and periodically monitors changes in both internal and external environment leading to emergence of a new threat/risk. These risks are captured in a risk register with all the relevant information such as risk description, root cause and any existing mitigation plans. The risk register is refreshed semi-annually. Risks are categorised into Strategic, Financial, Operational, Compliance & Reputational. ERM risk assessments covering Company''s various businesses and functions are a key input for the annual internal audit program. During FY21, the focus was on reviewing effectiveness of actions taken to mitigate business, cyber security and other operational & Compliance risks.
INTERNAL FINANCIAL CONTROLS
The Company believes that internal control is a prerequisite of governance and that action emanating out of agreed business plans should be exercised within a framework of checks and balances. The Company has a well-established internal control framework, which is designed to continuously assess the adequacy, effectiveness and efficiency of financial and operational controls. The management is committed to ensuring an effective internal control environment, commensurate with the size and complexity of the business, which provides an assurance
The Auditor''s Report for the financial year ended March 31, 2021, has been issued with an unmodified opinion, by the Statutory Auditors.
Secretarial Auditor
The Board had appointed KJB & Co. LLP, Practicing Company Secretaries, Mumbai to undertake the Secretarial Audit of the Company for the financial year ended March 31, 2021. The Secretarial Audit Report in the Form No.
MR - 3 for the year is provided as âAnnexure - B1'' to this Report.
The remarks stated in the Secretarial Audit Report are self explanatory and do not require any further explanation. The Secretarial Audit Report for the year does not contain any other qualification, reservation or adverse remark.
In accordance with the provisions of Regulation 24A of the Listing Regulations, Secretarial Audit of two material unlisted Indian subsidiaries of the Company namely, Sun Pharma Laboratories Limited (SPLL) and Sun Pharma Distributors Limited (SPDL), was undertaken by KJB & Co. LLP, Practicing Company Secretaries, Mumbai and the Secretarial Audit Reports issued by them to the respective Boards of SPLL and SPDL are provided as âAnnexure - B2'' and âAnnexure - B3'' respectively to this Report. The Secretarial Audit Reports for these material unlisted Indian subsidiaries do not contain any qualification, reservation or adverse remark.
Cost Auditor
The Board has appointed Messrs B. M. Sharma & Associates, Cost Accountants, Pune (Firm''s Registration No. 100537) as Cost Auditor of the Company for conducting Cost Audit in respect of Bulk Drugs & Formulations of your Company for the financial year 2021-22.
The Company is required to maintain Cost Records as specified by the Central Government under Section 148(1) of the Act and accordingly, such accounts and records are made and maintained by the Company.
SECRETARIAL STANDARDS
The Company has complied with the applicable Secretarial Standards as amended from time to time.
LOANS, GUARANTEES & INVESTMENTS
The particulars of loans, guarantees and investments have been disclosed in the Financial Statements.
RELATED PARTY TRANSACTIONS
The policy on Related Party Transactions as approved by the Board is available on the website of the Company and can be accessed through the web link: http://www. sunpharma.com/policies. All contracts/ arrangements/ transactions entered by the Company during the year under review with the related parties were in the ordinary course of business and on an arm''s length basis.
on compliance with internal policies, applicable laws, regulations and protection of resources and assets.
Global Internal Audit
An independent and empowered Global Internal Audit Function (GIA) at the corporate level with support from a Big 4 / equally reputed audit firm, wherever required, carries out risk-focused audits. GIA audits all businesses (both in India and overseas) to ensure that business process controls are adequate and are functioning effectively.
These reviews include financial, operational and compliance controls and risk mitigation plans. The Company''s operating management closely monitors the internal control environment and ensures that the recommendations are effectively implemented. The Audit Committee of the Board monitors performance of the Internal Audit Function periodically reviews key findings and provides strategic guidance.
GIA''s functioning is governed by the Audit Charter, duly approved by the Audit Committee of the Board, which stipulates matters contributing to the proper and effective conduct of the audit. The audit processes are fully automated on âSunScience'' tool which integrates Internal Audits, Automated follow-ups for closure of observations, Internal Financial Controls (IFC) and Enterprise Risk Management (ERM) modules. ERM Risk assessments are a key input for the annual audit program.
CORPORATE SOCIAL RESPONSIBILITY
In compliance with the requirements of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors have constituted a Corporate Social Responsibility (CSR) Committee. The details of membership of the Committee and the meetings held are detailed in the Corporate Governance Report, forming part of this Report. On the recommendation of the Corporate Social Responsibility Committee, the Board of Directors at its meeting held on May 27, 2021 has approved and adopted the revised CSR Policy in line with the requirements of the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021. The CSR Policy of the Company is available on the website of the Company and can be accessed through the web link: https://sunpharma.com/policies/
During the year, the Company has spent ''269.504 Million which exceeds 2% of the average net profits of the Company in the three preceding financial years. The annual report on CSR activities containing details of expenditure incurred by the Company and brief details on the CSR activities are provided in âAnnexure - D'' to this Report.
The Board has accorded its consent to set off the excess amount spent by the Company on its CSR Activities against the requirement to spend in any subsequent year(s) in term: of Section 135 of the Act.
PUBLIC DEPOSITS
The Company has not accepted any deposit from the Public during the year under review, under the provisions of the Act and the rules framed thereunder.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis as prescribed under Part B of Schedule V read with Regulation 34(3) of the Listing Regulations is provided in a separate section and forms part of this Report.
CORPORATE GOVERNANCE REPORT
Report on Corporate Governance and Certificate of the Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated in Part C of Schedule V of the Listing Regulations, are provided in a separate section and forms part of this Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, is provided as âAnnexure - E'' to this Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
There are no significant and material orders passed by the regulators or courts or tribunals which impact the going concern status and Company''s operations in future.
WHISTLE BLOWER POLICY / VIGIL MECHANISM
To create enduring value for all stakeholders and ensure the highest level of honesty, integrity and ethical behaviour in all its operations, the Company has adopted a âGlobal Whistle Blower Policy'' for Sun Pharmaceutical Industries Limited and all its subsidiaries, in addition to the existing Global Code of Conduct that governs the actions of its employees. Further details on vigil mechanism of the Company are provided in the Corporate Governance Report, forming part of this Report.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 134(5) read with Section 134(3)(c) of the Act, with respect to Directors'' Responsibility Statement, it is hereby confirmed that:
a) in the preparation of the annual accounts for the financial year ended March 31, 2021, the applicable accounting standards have been followed and there are no material departures from the same;
b) the Directors 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 as at March 31, 2021 and of the profit of the Company for the year ended on that date;
c) 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
d) the Directors have prepared the annual accounts on a going concern basis;
e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
CONSOLIDATED ACCOUNTS
The consolidated financial statements for the year ended
March 31, 2021 have been prepared in accordance with
Indian Accounting Standards (Ind AS) notified under the
Companies (Indian Accounting Standards) Rules, 2015.
CREDIT RATING
ICRA Ltd. has reaffirmed the highest credit rating of â[ICRA]
A1 ''/â[ICRA] AAA(Stable)'' for the bank facilities, long term/
short term borrowings and commercial paper programs of the Company.
Further, CRISIL Ltd. has also reaffirmed the highest credit rating of âCRISIL A1 and CRISIL AAA/Stable'' for short term & long term bank facilities and commercial paper programs of the Company.
BUSINESS RESPONSIBILITY REPORTING
The Business Responsibility Report of the Company for the year ended March 31, 2021, forms part of the Annual Report and is also made available on the website of the Company at https://sunpharma.com/investors-annual-reports-presentations/
ACKNOWLEDGEMENTS
Your Directors wish to thank all stakeholders, employees and business partners, Company''s bankers, medical professionals and business associates for their continued support and valuable cooperation.
The Directors also wish to express their gratitude to investors for the faith that they continue to repose in the Company.
For and on behalf of the Board of Directors
Israel Makov
Place: Israel Chairman
Date: May 27, 2021 (DIN: 05299764)
Mar 31, 2019
Board's Report
The Directors take pleasure in presenting the Twenty-Seventh Annual Report and Company's Audited Financial Statements for the financial year ended March 31, 2019.
Financial Results
|
 |
 |
 |
 |
(Rs in Million) |
|
 |
Standalone |
Consolidated |
||
|
 |
Year ended March 31,2019 |
Year ended March 31, 2018* |
Year ended March 31, 2019 |
Year ended March 31, 2018* |
|
Revenue from operations |
103,032.1 |
90,062.5 |
290,659.1 |
264,894.6 |
|
Profit before exceptional item and tax |
19,338.3 |
12,307.5 |
50,245.8 |
44,294.8 |
|
Exceptional Item |
12,143.8 |
9,505.0 |
12,143.8 |
9,505.0 |
|
Profit before tax but after exceptional item |
7,194.5 |
2,802.5 |
38,102.0 |
34,789.8 |
|
Tax expense: |
 |
 |
 |
 |
|
- Current Tax |
15.5 |
20.2 |
8,039.6 |
6,628.0 |
|
- Deferred Tax Charge / (Credit) |
(987.0) |
(274.1) |
(2,030.8) |
(62.1) |
|
- Deferred tax charge / (Credit) - exceptional |
- |
- |
- |
2,544.5 |
|
Profit after tax |
8,166.0 |
3,056.4 |
32,093.2 |
25,679.4 |
|
Profit after Tax but before Share in profit / (loss) of associates /joint ventures |
- |
- |
32,093.2 |
25,679.4 |
|
Share of (loss) of associates / joint ventures [Net] |
- |
- |
(14.6) |
(254.4) |
|
Profit for the year before non-controlling interests |
 |
 |
32,078.6 |
25,425.0 |
|
Non-controlling interests |
 |
 |
5,424.4 |
4,468.0 |
|
Profit for the year attributable to owners of the Company |
- |
 |
26,654.2 |
20,957.0 |
|
Total other Comprehensive Income |
1,837.4 |
566.9 |
16,799.9 |
5,232.5 |
|
Total Comprehensive Income for the year attributable to: |
10,003.4 |
3,623.3 |
48,878.5 |
30,657.5 |
|
- Owners of the Company |
10,003.4 |
3,623.3 |
42,054.1 |
25,711.8 |
|
- Non-Controlling Interest |
- |
- |
6,824.4 |
4,945.7 |
|
Opening balance in Retained Earnings |
120,370.0 |
124,860.0 |
319,777.0 |
309,250.9 |
|
Additions: |
 |
 |
 |
 |
|
Amount available for appropriation |
8,273.3 |
3,490.8 |
26,804.4 |
21,464.7 |
|
Less: Appropriations |
 |
 |
 |
 |
|
Dividend on Equity Shares |
4,791.6 |
7,977.4 |
4,791.6 |
7,977.4 |
|
Dividend Distribution Tax |
5.6 |
3.4 |
984.9 |
1,624.0 |
|
Transfer to various Reserves: |
||||
|
- Capital redemption Reserve - |
||||
|
- Debenture redemption Reserve |
- |
 |
(1,250.0) |
(833.4) |
|
- Capital reserve |
- |
 |
 |
 |
|
- Buy-back of equity shares by overseas subsidiaries |
- |
 |
2,013.1 |
2,168.1 |
|
- Adjustment on account of Ind AS 115 |
- |
- |
6,493.0 |
- |
|
- Legal reserve |
- |
- |
203.9 |
2.5 |
|
- General reserve |
- |
- |
43.0 |
- |
|
Closing balance in Retained Earnings |
123,846.1 |
120,370.0 |
333,301.9 |
319,777.0 |
*Refer Note 56(11) of Standalone Financial Statements #Refer Note 66 of Consolidated Financial Statements
Dividend
Your Directors have recommended a dividend of Rs.2.75 (Rupees two and paise seventy five only) per equity share of Rs.1/- each [previous year Rs.2.00/- per equity share of Rs.1/- each] for the year ended March 31, 2019, subject to the approval of the equity shareholders at the ensuing 27th Annual General Meeting of the Company.
The dividend payout is in accordance with the Company's Dividend Distribution Policy. The Dividend Distribution Policy of the Company is provided as 'Annexure - A to this Report. The policy is also available on the website of the Company and can be accessed through the web link: http:// www.sunpharma.com/policies.
Changes in Capital Structure
During the year under review, the Company has allotted 11790 equity shares of Rs.1/- each under Sun Employee Stock Option Scheme - 2015 thereby the paid up share capital of the Company increased to Rs.2,399,334,970/- (Rupees Two Billion Three Hundred Ninety Nine Million Three Hundred Thirty Four Thousand Nine Hundred Seventy only) as on March 31, 2019.
Scheme of Arrangements
1. During the year, the Hon'ble National Company Law Tribunal of Gujarat at Ahmedabad had vide its Order dated October 31, 2018 sanctioned the Scheme of Arrangement among the Company and Sun Pharma Global FZE ("Transferor Company"), a wholly owned subsidiary of the Company and their respective members and creditors ("Scheme") whereby the Specified Undertaking (as defined in the Scheme) of Transferor Company stands demerged into the Company w.e.f. December 01, 2018 with appointed date being April 01, 2017. No consideration was paid pursuant to the Scheme.
2. During the year, the Board of Directors at its meeting held on May 25, 2018 had approved a Composite Scheme of Arrangement among the Company and Sun Pharma (Netherlands) B.V. (Transferee Company-1) and Sun Pharmaceutical Holdings USA Inc. (Transferee Company-2), wholly owned subsidiaries of the Company and their respective members and creditors ("Composite Scheme"), for demerger of Specified Investment Undertaking -1 (as defined in the Composite Scheme) of the Company into Sun Pharma (Netherlands) B.V. and Specified Investment Undertaking -2 (as defined in the Composite Scheme) of the Company into Sun Pharmaceutical Holdings USA Inc. The Hon'ble National Company Law Tribunal of Gujarat, at Ahmedabad ("NCLT") has vide its Order dated April 11, 2019 dispensed with convening of meeting of secured creditors of the Company and ordered to convene the meeting of equity shareholders and unsecured creditors of the Company on June 04, 2019 to approve the Composite Scheme with appointed date as April 01, 2017 or such other date as may be agreed between  the Transferee Company-1, Transferee Company-2 and the Company and approved by the NCLT. Pursuant to said Composite Scheme, no consideration shall be paid. This demerger shall enable the Company to address the risks and policies, ability to strategies the remaining business for long term growth, consolidation and creation of shareholder value, etc.
Extract of Annual Return
The extract of Annual Return as required under sub-section (3) of Section 92 of the Companies Act, 2013 ('the Act') in form MGT-9 is provided as 'Annexure - B' to this Report and is also made available on the website of the Company at https://www.sunpharma.com/investors/annualreports.
Subsidiaries/ Joint Ventures/ Associate Companies
The statement containing the salient features of the Financial Statements of the Company's subsidiaries/ joint ventures/ associate companies is given in Form AOC - 1, provided in Notes to the Consolidated Financial Statements, forming part of the Annual Report.
The highlights of performance of subsidiaries, joint ventures and associate companies and their contribution to the overall performance of the Company during the financial year is given under 'Annexure A to the Consolidated Financial Statements forming part of the Annual Report.
Details pertaining to companies that became subsidiaries/ joint ventures/associates and those that ceased to be the subsidiaries / joint ventures/associates of the Company during the year are provided in Note no. 39 of the Notes to the Consolidated Financial Statements, forming part of the Annual Report.
Directors and Key Managerial Personnel
Mr. Sailesh T. Desai and Mr. Kalyanasundaram Subramanian, Whole-time Directors of the Company retire by rotation at the ensuing 27th Annual General Meeting of the Company and being eligible offer themselves for reappointment.
During the year, Mr. Gautam Doshi was appointed as an Additional Independent Director of the Company with effect from May 25, 2018. Mr. Vivek Chaand Sehgal and Mr. Gautam Doshi have been appointed as Independent Directors of the Company for a term of 5 (five) years each effective from November 14, 2017 and May 25, 2018 upto November 13, 2022 and May 24, 2023 respectively by the members at the 26th Annual General Meeting of the Company held on September 26, 2018.
Pursuant to Regulation 17(1A) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") the consent of the members by way of Special Resolution, was obtained at the 26th Annual General Meeting of the Company for continuation as Director beyond the age of seventy five years, of Mr. Israel Makov, Non-Executive Director and the Chairman of the Company, as he had attained an age of 79 years.
Mr. S. Mohanchand Dadha, Mr. Keki Mistry and Mr. Ashwin Dani, Independent Directors having completed second term of 2 (two) years of their respective appointments on the conclusion of the 26th Annual General Meeting of the Company, all the three aforementioned Independent Directors retired and ceased to be Directors of the Company w.e.f. the conclusion of the 26th Annual General Meeting of the Company held on September 26, 2018. The Board of Directors places on record their appreciation for contribution made by Mr. S. Mohanchand Dadha, Mr. Keki Mistry and Mr. Ashwin Dani during their tenure as Independent Directors of the Company.
Mr. Sudhir V. Valia has stepped down from the position of Whole-time Director of the Company w.e.f. May 29, 2019. However, he shall continue as a Non-Executive and Non-independent Director of the Company.
Appropriate resolutions for the re-appointment of the Directors are being placed for your approval at the ensuing 27th Annual General Meeting. Your Directors recommend the same for approval by the members at the ensuing 27th Annual General Meeting of the Company.
Declaration by Independent Directors
The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed under Section 149(6) of the Act and under Listing Regulations.
In the opinion of the Board, the Independent Directors of the Company fulfil the conditions specified in the Act and Listing Regulations and are independent of the management.
Remuneration Policy for Directors, Key Managerial Personnel and Other Employees and Criteria for Appointment of Directors
For the purpose of selection of any Director, the Nomination and Remuneration Committee identifies persons of integrity who possess relevant expertise, experience and leadership qualities required for the position. The Committee also ensures that the incumbent fulfils such criteria with regard to qualifications, positive attributes, independence, age and other criteria as laid down under the Act, Listing Regulations or other applicable laws. The Board has, on the recommendation of the Nomination and Remuneration Committee framed a policy on remuneration of Directors, Key Managerial Personnel and other Employees.
The salient features of the Remuneration Policy of the Company are as under:
(A) Guiding Principles for remuneration: The Company shall remunerate all its personnel reasonably and sufficiently as per industry benchmarks and standards. The remuneration shall be commensurate to retain and motivate the human resources of the Company. The compensation package will, inter alia, take into account the experience of the personnel, the knowledge & skill required including complexity of his job, work duration and risks associated with the work, and attitude of the employee like positive outlook, team work, loyalty etc.
(B) Components of Remuneration: The following will be the various remuneration components which may be paid to the personnel of the Company based on the designation and class of the personnel.
a) Fixed compensation: The fixed salaries of the Company's personnel shall be competitive and based on the individual personnel's responsibilities and performance.
b) Variable compensation: The personnel of the Company may be paid remuneration by way of variable salaries based on their performance evaluation. Such variable salaries should be based on the performance of the individual against his short and long term performance objectives and the performance of the Company.
c) Share based payments: The Board may, on the recommendation of the Nomination and Remuneration Committee, issue to certain class of personnel a share and share price related incentive program.
d) Non-monetary benefits: Senior management personnel of the Company may, on a case to case basis, be awarded customary non-monetary benefits such as discounted salary advance / credit facility, rent free accommodation, Company cars with or without chauffer, share and share price related incentive, reimbursement of electricity and telephone bills etc.
e) Gratuity/group insurance: Personnel may also be awarded to group insurance and other key man insurance protection. Further as required by the law necessary gratuity shall be paid to the personnel.
f) Commission: The directors may be paid commission if approved by the shareholders. The shareholders may authorise the Board to declare commission to be paid to any director of the Board.
C) Entitlement: The authority to determine the entitlement to various components as aforesaid for each class and designation of personnel shall be as follows
|
Designation / Class |
To be determined by |
|
Director |
Board of Directors on the recommendation of the Nomination and Remuneration Committee within the limits approved by the shareholders |
|
Key Managerial Personnel and Senior Management |
Board of Directors on recommendation of the Nomination and Remuneration Committee |
|
Other employees |
Human Resources Head |
Note: For the purpose of this Policy, the term 'Senior Management' shall have the same meaning as defined under the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015
The complete Policy as approved by the Board is available on the website of the Company and can be accessed through the web link: http://www.sunpharma.com/policies.
Familiarisation programme for the Independent Directors
In compliance with the requirements of Regulation 25(7) of the Listing Regulations, the Company has put in place a Familiarisation Programme for the Independent Directors to familiarise them with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model etc. The details of the Familiarisation Programme conducted are available on the website of the Company www.sunpharma. com and can be accessed through the web link: http:// www.sunpharma.com/policies.
Number of meetings of the Board
The Board of Directors of the Company met 5 (Five) times during the year under review on May 25, 2018; August 14, 2018; September 26, 2018; November 13, 2018 and February 12, 2019. The particulars of attendance of the Directors at the said meetings are provided in detail in the Corporate Governance Report, which forms a part of this Report. The intervening gap between the meetings was within the period prescribed under the Act and Listing Regulations.
Evaluation of performance of the Board, its Committees and Individual Directors
During the year, the evaluation of the annual performance of individual Directors including the Chairman of the Company and Independent Directors, Board and Committees of the Board was carried out under the provisions of the Act, relevant Rules, and the Corporate Governance requirements as prescribed under Regulation 17 of Listing Regulations and based on the circular issued by SEBI dated January 5, 2017 with respect to Guidance Note on Board Evaluation. The Nomination and Remuneration Committee had approved the criteria for the performance evaluation of the Board, its Committees and individual Directors as per the SEBI Guidance Note on Board Evaluation.
The Chairman of the Company interacted with each Director individually, for evaluation of performance of the individual Directors. The evaluation for the performance of the Board as a whole and of the Committees were conducted by way of questionnaires.
In a separate meeting of Independent Directors, performance of Non Independent Directors and performance of the Board as a whole was evaluated. Further, they also evaluated the performance of the Chairman of the Company, taking into account the views of the Executive Directors and Non-executive Directors.
The performance of the Board was evaluated by the Board after seeking inputs from all the Directors on the basis of various criteria such as structure and diversity of the Board, competency of Directors, experience of Director, strategy and performance evaluation, secretarial support, evaluation of risk, evaluation of performance of the management and feedback, independence of the management from the Board etc. The performance of the Committees was evaluated by the Board after seeking inputs from the Committee members on the basis of criteria such as mandate and composition, effectiveness of the committee, structure of the committee and meetings, independence of the committee from the Board and contribution to decisions of the Board. The Nomination and Remuneration Committee reviewed the performance of the individual Directors on the basis of the criteria such as qualification, experience, knowledge and competency, fulfilment of functions, availability and attendance, initiative, integrity, contribution and commitment etc., and the Independent Directors were additionally evaluated on the basis of independence, independent views and judgement etc. Further the evaluation of Chairman of the Board, in addition to the above criteria for individual
Directors, also included evaluation based on effectiveness of leadership and ability to steer the meetings, impartiality, etc.
The Chairman and other members of the Board discussed upon the performance evaluation of every Director of the Company and concluded that they were satisfied with the overall performance of the Directors individually and that the Directors generally met their expectations of performance.
The summary of the feedback from the members were thereafter discussed in detail by the members. The respective Director, who was being evaluated, did not participate in the discussion on his/her performance evaluation and had exited the meeting for the said discussion. During the discussion in respect of performance of Mr. Dilip Shanghvi and Mr. Sudhir Valia, both Mr. Dilip Shanghvi and Mr. Sudhir Valia had exited the meeting.
The Chairman additionally interacted with each Director individually, for evaluation of performance of all Individual Directors and Mr. Dilip Shanghvi, along with other Directors had evaluated the performance of Mr. Israel Makov as the Chairman and as an Individual Director. They were satisfied with the overall performance of the Directors individually and that the Directors generally met their expectations of performance.
Human Resources
We have more than 32,000 talented employee base spread across multiple geographies in various sales offices, R&D centers, 40 + manufacturing locations, Regional offices and Corporate office. We believe our employees are pivotal to all the initiatives that drive us to realise our future plans. Human Resource agenda encourages high performance culture with focus on Employee safety & welfare, Employee development & Productivity. Your Directors would also like to take this opportunity to express their appreciation for the dedication and commitment of the employees of the Company and look forward to their continued contribution.
Information as per Section 197 (12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in 'Annexure - C to this Report. Further, the information pertaining to Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, pertaining to the names and other particulars of employees is available for inspection at the Registered office of the Company during business hours and pursuant to the second proviso to Section 136(1) of the Act, the Report and the accounts are being sent to the members excluding this. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary/Compliance Officer at Corporate office or Registered office address of the Company.
Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
Your Company strongly believes in providing a safe and harassment free workplace for each and every individual working for the Company through various interventions and practices. It is the continuous endeavour of the Management of the Company to create and provide an environment to all its employees that is free from discrimination and harassment including sexual harassment. The Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. The Company has arranged various interactive awareness workshops in this regard for the employees at the manufacturing sites, R & D set ups & corporate office during the year under review. The Company has submitted the Annual Returns to the local authorities, as required under the above mentioned Act.
During the financial year ended March 31, 2019, three complaints pertaining to sexual harassment were received and the same were resolved by the Company. There are no complaints pending as at the end of the financial year.
Your Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
Auditors
Statutory Auditors
S R B C & Co LLP, Chartered Accountants, (Firm's Regn. No. 324982E/ E300003), were appointed as the Statutory Auditors of the Company for a period of 5 (five) years at the 25th Annual General Meeting of the Company to hold office till the conclusion of the 30th Annual General Meeting of the Company.
The Auditor's Report for the financial year ended March 31, 2019, has been issued with an unmodified opinion, by the Statutory Auditors.
Secretarial Auditor
The Board had appointed KJB & Co. LLP, Practicing Company Secretaries, Mumbai to undertake the Secretarial Audit of the Company for the financial year ended March 31, 2019. The Secretarial Audit Report in the Form No. MR - 3 for the year is provided as 'Annexure - D' to this Report. The Secretarial Audit Report for the year does not contain any qualification, reservation or adverse remark.
Cost Auditor
The Board has appointed Messrs B M Sharma & Associates, Cost Accountants, Pune (Firm's Registration No. 100537) as Cost Auditor of the Company for conducting Cost Audit in respect of Bulk Drugs & Formulations of your Company for the financial year 2019-20.
The Company is required to maintain Cost Records as specified by the Central Government under Section 148(1) of the Act and accordingly, such accounts and records are made and maintained by the Company.
Secretarial Standards
The Company has complied with the applicable Secretarial Standards as amended from time to time.
Loans, Guarantees & Investments
The particulars of loans, guarantees and investments have been disclosed in the Financial Statements.
Related Party Transactions
The policy on Related Party Transactions as approved by the Board is available on the website of the Company and can be accessed through the web link http://www.sunpharma.com/ policies. All contracts/arrangements/transactions entered by the Company during the year under review with the related parties were in the ordinary course of business and on an arm's length basis.
As required under Section 134(3)(h) of the Act, details of transactions entered with related parties under the Act exceeding ten percent of the annual consolidated turnover as per the last audited financial statements are given in Form AOC-2 provided as 'Annexure - E' to this Report.
Audit Committee Composition
The details pertaining to composition of Audit Committee are included in the Corporate Governance Report, which forms part of this Report.
Risk Management
The Board of Directors has constituted a Risk Management Committee which is entrusted with the responsibility of overseeing various strategic, operational and financial risks that the organisation faces, along with the adequacy of mitigation plans to address such risks. The Corporate Governance Report, which forms part of this report, contains the details of Risk Management Committee of the Company. There is an overarching Risk Management Policy in place has been reviewed and approved by the Board.
The Company has developed & implemented an integrated Enterprise Risk Management Framework through which it identifies monitors, mitigates & reports key risks that impacts its ability to meet the strategic objectives. The Company's ERM framework is based on the recommendations by the Committee of Sponsoring Organisations (COSO) to further the organisation's endeavor to strengthen ERM framework and processes using best practices. The ERM team engages with all Function heads to identify internal and external events that may have an adverse impact on the achievement of Company's objectives and periodically monitors changes in both internal and external environment leading to emergence of a new threat/risk. These risks are captured in the form of a risk register with all the relevant information such as risk description, root cause and any existing mitigation plans. The risk register is refreshed annually. Risks are categorised into Strategic, Financial, Operational, Compliance& Reputational. ERM risk assessments covering Company's various businesses and functions are a key input for the annual internal audit program. During FY 2018-19, the ERM team focused on reviewing effectiveness of actions taken to mitigate certain business, cyber security and other operational risks.
Internal Financial Controls
The Company believes that internal control is a necessary prerequisite of Governance and that freedom should be exercised within a framework of checks and balances. The Company has a well-established internal control framework, which is designed to continuously assess the adequacy, effectiveness and efficiency of financial and operational controls. The management is committed to ensure an effective internal control environment, commensurate with the size and complexity of the business, which provides an assurance on compliance with internal policies, applicable laws, regulations and protection of resources and assets.
Global Internal Audit
An independent and empowered Global Internal Audit Function (GIA) at the corporate level carries out risk-focused audits across all businesses (both in India and overseas), to ensure that business process controls are adequate and are functioning effectively. These audits include reviewing finance, operations, safeguarding of assets and compliance related controls. Areas requiring specialised knowledge are reviewed in partnership with external subject matter experts.
GIA's functioning is governed by the Audit Charter, duly approved by the Audit Committee of the Board, which stipulates matters contributing to the proper and effective conduct of audit. The audit processes are fully automated on a 'SunScience' tool which integrates audit, Internal Financial Controls (IFC) and Enterprise Risk Management (ERM) modules.
The Company's operating management closely monitors the internal control environment and ensures that the recommendations of GIA are effectively implemented. The Audit Committee of the Board monitors performance of GIA, periodically reviews key findings and provides strategic guidance.
Corporate Social Responsibility
In compliance with the requirements of Section 135 of the Act read with the Companies (Corporate Social Responsibility) Rules, 2014, the Board of Directors have constituted a Corporate Social Responsibility (CSR) Committee. The details of membership of the Committee and the meetings held are detailed in the Corporate Governance Report, forming part of this Report. The contents of the CSR Policy of the Company as approved by the Board on the recommendation of the CSR Committee are available on the website of the Company and can be accessed through the web link: http://www.sunpharma.com/policies. The average net profit of the Company in the three immediately preceding financial years is negative, therefore the Company was not required to spend on CSR activities during the year, however, the Company has voluntarily spent on CSR activities. The annual report on CSR activities containing details of voluntary expenditure incurred by the Company and brief details on the CSR activities are provided in 'Annexure - F' to this Report.
Public Deposits
The Company has not accepted any deposit from the Public during the year under review, under the provisions of the Act and the rules framed thereunder.
Management Discussion and Analysis
The Management Discussion and Analysis as prescribed under Part B of Schedule V read with Regulation 34(3) of the Listing Regulations is provided in a separate section and forms part of this Report.
Corporate Governance Report
Report on Corporate Governance and Certificate of the Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated in Part C of Schedule V of the Listing Regulations, are provided in a separate section and forms part of this Report.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, is provided as 'Annexure - G' to this Report.
Employees' Stock Option Schemes
The Company presently has only one Employees' Stock Option Scheme, which is inherited from erstwhile Ranbaxy Laboratories Limited ("Ranbaxy"). The scheme is through Direct Route and has been named as Sun Pharma Employee Stock Option Scheme - 2015. The scheme was adopted by the Company with certain amendments consequent upon merger of erstwhile Ranbaxy into the Company. The Scheme is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.
Disclosure with respect to the Employees' Stock Option Scheme in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 is available on the Company's website and can be accessed at: http://www.sunpharma.com/pdflist/all-documents.
Significant and Material Orders Passed by the Regulators or Courts or Tribunals
There are no significant and material orders passed by the regulators or courts or tribunals which impact the going concern status and Company's operations in future.
Whistle Blower Policy / Vigil Mechanism
To create enduring value for all stakeholders and ensure the highest level of honesty, integrity and ethical behaviour in all its operations, the Company has adopted a 'Global Whistle Blower Policy' for Sun Pharmaceutical Industries Limited and all its subsidiaries, in addition to the existing Global Code of Conduct that governs the actions of its employees. Further details on vigil mechanism of the Company are provided in the Corporate Governance Report, forming part of this Report.
Directors' Responsibility Statement
Pursuant to the requirements under Section 134(5) read with Section 134(3)(c) of the Act, with respect to Directors' Responsibility Statement, it is hereby confirmed that:
a) in the preparation of the annual accounts for the financial year ended March 31, 2019, the applicable accounting standards have been followed and there are no material departures from the same;
b) the Directors 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 as at March 31, 2019 and of the profit of the Company for the year ended on that date;
c) 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;
d) the Directors have prepared the annual accounts on a going concern basis;
e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Consolidated Accounts
The consolidated financial statements for the year ended March 31, 2019 have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015.
Credit Rating
ICRA Ltd. has reaffirmed the highest credit rating of '[ICRA] A1+'/'[ICRA] AAA(Stable)' for the bank facilities, long term/ short term borrowings and commercial paper programs of the Company.
Further, CRISIL Ltd. has also reaffirmed the highest credit rating of 'CRISIL A1+ and CRISIL AAA/Stable' for short term & long term bank facilities and commercial paper programs of the Company.
Business Responsibility Reporting
The Business Responsibility Report of the Company for the year ended March 31, 2019, forms part of the Annual Report and is also made available on the website of the Company at http://www.sunpharma.com/pdflist/all-documents.
Acknowledgements
Your Directors wish to thank all stakeholders, employees and business partners, Company's bankers, medical professionals and business associates for their continued support and valuable cooperation.
The Directors also wish to express their gratitude to investors for the faith that they continue to repose in the Company.
|
For and on behalf of the Board of Directors |
|
|
Place: Mumbai |
Israel Makov |
|
Date: May 28, 2019 |
Chairman |
DIVIDEND DISTRIBUTION POLICY
Annexure - A
1. Objectives and Scope:
The Board of Directors (the "Board") of the Sun Pharmaceutical Industries Limited (the "Company") recognises the need to lay down a broad framework for considering decisions by the Board of the Company, with regard to distribution of dividend (including any interim dividend) to its equity shareholders and/ or retaining or plough back of its profits.
The Policy sets out the circumstances and different factors for consideration by the Board at the time of taking such decisions of distribution or of retention of profits, in the interest of providing transparency to the equity shareholders. The Policy is not an 'alternative' but a 'Guide' to the decision of the Board for recommending dividend, which may be made after taking into consideration all the relevant circumstances enumerated hereunder and such other factors as may be decided as relevant by the Board.
While recommendation of Dividend shall be guided by this Policy, in extraordinary circumstances, the Board shall have complete liberty to recommend dividend in deviation to this policy, if so deemed necessary in the best interests of the Company and its stakeholders.
The Policy reflects the intent of the Company to reward its equity shareholders by sharing a portion of its profits after adjusting for accumulated losses, if any, and also retaining sufficient funds for future growth of the Company. The Company intends to pay, subject to the circumstances and factors enlisted hereon, dividend, which shall be consistent with the performance of the Company over the years.
Subject to the considerations as provided in the Policy, the Board shall determine the dividend payout in a particular year after taking into consideration the operating and financial performance of the Company, the advice of executive management including the CFO, and other relevant factors.
The Policy shall not apply to:
⢠Determination and declaring dividend on preference shares, if any.
2. Relevant Regulations
The Securities and Exchange Board of India ("SEBI") vide its Notification dated July 08, 2016 has amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the "Listing Regulations") by inserting Regulation 43A in order to make it mandatory to have a Dividend Distribution Policy in place by the top five hundred listed companies based on their market capitalisation calculated as on the 31st day of March of every year.
The Company, being one of the top five hundred listed Companies in India on the basis of market capitalisation, requires to comply with the requirements of Regulation 43A.
3. Effective Date
The Policy shall become effective from the date of its adoption by the Board i.e. November 10, 2016.
4. Category of Dividends
The Board of Directors shall have the power to recommend final dividend to the equity shareholders for their approval in the Annual General Meeting of the Company. Subject to compliance with the provisions of Companies Act, 2013 including the Rules made thereunder and other relevant regulations, if any, the Board of Directors shall also have the absolute power to declare interim dividend during any financial year out of the surplus in the profit and loss account and out of profits of the financial year in which such interim dividend is sought to be declared, as and when they consider it fit in compliance with Companies Act, 2013 and other relevant regulations. Interim Dividend may be paid in order to supplement the annual dividend or in exceptional circumstances.
5. Payment of Dividend from Reserves
Dividend shall normally be declared from the profit earned by the Company during the relevant financial year after adjusting for accumulated losses & unabsorbed depreciation, if any and out of the carried forward profits not transferred to any reserves. However, under special circumstances, Dividend may be declared out of the accumulated profits earned by it in previous years and transferred by it to the free reserves, subject to compliance with the requirements of the relevant provisions of the Companies Act, 2013 including the Rules made thereunder.
6. Circumstances to be Considered While Determining Dividend Pay-Out
The Board shall consider the circumstances provided below before determination of any dividend payout after analysing the prospective opportunities and threats, viability of the options of dividend payout or retention etc. The decision of dividend payout shall, majorly be based on the aforesaid factors considering the balanced interest of the stakeholders and the business requirements of the Company.
⢠Accumulated Losses, if any
The profits earned by the Company during any financial year shall be first utilised to set off the accumulated losses/ unabsorbed depreciation, if any of the Company from the previous financial years.
⢠Operating cash flow of the Company
The Board will consider the impact of proposed dividend on the operating cash flow of the Company and shall satisfy itself of its adequacy before taking a decision on whether to declare dividend or retain its profits.
⢠Transfer to Reserves and other Statutory Requirements
The Board shall examine the implication of relevant statutory requirements including payment of Dividend Distribution Tax, transfer of a certain portion of profits to Reserves etc., if applicable, on the financials of the Company at the time of taking decision with regard to dividend declaration or retention of profit.
⢠Covenants with lenders/ Debenture Trustees, if any
The decision of dividend pay-out shall also be subject to compliance with covenants contained in any agreement entered into by the Company with the Lenders/ Debenture Trustee's, from time to time, if any.
⢠Prudential & Strategic requirements
The Board shall analyse the ongoing and prospective projects and strategic decisions including need for replacement of capital assets, expansion and modernisation etc., before recommending Dividend Pay-out for any financial year with an object to build a healthy reserve of retained earnings to augment long term strength and to build a pool of internally generated funds to provide long-term resources as well as resource-raising potential for the Company.
⢠Expectations of major stakeholders, including small shareholders
The Board, while considering the decision of dividend pay-out or retention of a certain amount or entire profits and/or out of the accumulated profits of the Company, shall, as far as possible, consider the expectations of the major stakeholders including the small shareholders of the Company who generally expect a regular dividend payout.
7. The Financial Parameters that shall be considered while declaring/ recommending Dividend
In addition to the circumstances covered under point 6 above, the Board shall, inter alia, consider the following financial parameters, while taking decisions of a dividend payout during a particular year-
⢠Return on invested capital
The efficiency with which the Company uses its capital will impact the decision of dividend declaration.
⢠Magnitude of earnings of the Company
Since dividend is directly linked with the availability of earning over the long haul, the magnitude of earnings will significantly impact the dividend declaration decisions of the Company.
⢠Cost of borrowings
The Board will analyse the requirement of necessary funds considering the long term or short term projects proposed to be undertaken by the Company and the viability of the options in terms of cost of raising necessary funds from outsiders such as bankers, lending institutions or by issuance of debt securities or plough back its own funds.
⢠Obligations to creditors
The Company should be able to repay its debt obligations without much difficulty over a reasonable period of time. The decision of dividend declaration shall be taken after considering the volume of such obligations and time period of repayment.
⢠Adequacy of profits
If during any financial year, the Board determines that the profits of the Company are inadequate on standalone basis and/or consolidated basis, the Board may decide not to declare dividends for that financial year.
⢠Post dividend Earning Per Share (EPS)
The post dividend EPS can have strong impact on the funds of the Company, thus, impacting the overall operations on day-today basis and therefore, affects the profits and can impact the decision for dividend declaration during a particular year.
8. Factors that may affect Dividend Payout
⢠Internal Factors
Product/ Project expansion plan
The Company's growth oriented decision to conserve cash in the Company for future expansion plan impacts shareholders expectation for the long run which shall have to considered by the Board before taking dividend decision.
General Working capital requirement
In addition to the above, the general working capital requirements within the Company will also impact the decision of dividend declaration.
Past performance/ reputation of the Company
The trend of the performance/ reputation of the Company that has been during the past years determine the expectation of the shareholders.
⢠External Factors Macroeconomic conditions
Considering the state of economy in the Country, the policy decisions that may be formulated by the Government and other similar conditions prevailing in the international market which may have a bearing on or affect the business of the Company, during uncertain or recessionary economic and business conditions, the Board may consider retaining a larger part of the profits to have sufficient reserves to absorb unforeseen circumstances.
Capital Market
When the markets are favourable, dividend pay-out can be liberal. However, in case of unfavorable Capital market conditions, Board may resort to a conservative dividend pay-out in order to conserve cash outflows.
Statutory Restrictions
The Board will keep in mind any restrictions on payment of dividends by virtue of any regulation or loan covenant, as may be applicable to the Company at the time of declaration of dividend.
Tax implications
Dividend distribution tax or any tax deduction at source as required by applicable tax regulations in India, as may be applicable at the time of declaration of dividend shall have bearing on the quantum of Dividend declared by the Company.
9. Range of Dividend Pay-Out
The Company is committed to deliver sustainable value to all its stakeholders. The Company strives to distribute an optimal and appropriate level of the profits earned by it in its business and investing activity, with the equity shareholders, in the form of dividend. As explained in the earlier part of this Policy, determining the dividend pay-out is dependent upon several factors, both internal to a business and external to it. Taking into consideration the aforementioned factors, the Board shall have absolute discretion to determine & recommend appropriate Dividend pay-out for the relevant financial year.
10. Manner of Utilisation of Retained Earnings
The Board may retain its earnings in order to make better utilisation of the available funds and increase the value of the stakeholders in the long run. The retained earnings of the Company may, inter alia, be utilised for the following purposes:
⢠To meet the working capital/ business needs of the Company
⢠To fund the project expansion plans of the Company
⢠To fund the research expenditures of ongoing research projects specifically those in the advanced development stages
⢠Towards replacement/ up-gradation /modernisation of equipment's & plants
⢠Towards investment in long term/ short term strategic joint ventures & / or partnerships and/or subsidiary companies
⢠To fund new acquisitions & investments
⢠Towards diversification of business
⢠Such other manner as the Board may deem fit from time to time
11. Review and Amendment
The Board may review and amend or modify this policy in whole or in part, at any time.
Annexure - B
Form No. MGT-9
EXTRACT OF ANNUAL RETURN Â as on the financial year ended on March 31, 2019
[Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014]
|
I. Registration and Other Details: |
||
|
i) |
CIN |
L24230GJ1993PLC019050 |
|
ii) |
Registration Date |
March 01, 1993 |
|
iii) |
Name of the Company |
Sun Pharmaceutical Industries Limited |
|
iv) |
Category / Sub-Category of the Company |
Company Limited by Shares |
|
v) |
Address of the Registered Office and Contact details |
SPARC, Tandalja, Vadodara 390012, Gujarat Tel No: +91 0265 6615500 |
|
vi) |
Whether listed company |
Yes |
|
vii) |
Name, Address and Contact details of Registrar and Transfer Agent, if any |
Link Intime India Private Limited C 101, 247 Park, L.B.S. Marg, Vikhroli West, Mumbai 400 083 Tel No: +91 22 49186270 |
II. Principal Business Activities of the Company
All the business activities contributing 10% or more of the total turnover of the Company:
|
Sr. No. |
Name and Description of main products/ services |
NIC Code of the Product/ Service |
% to Total turnover of the company |
|
1 |
Pharmaceuticals |
210 |
100 |
III. Particulars of Holding, Subsidiary and Associate Companies as on March 31, 2019
|
Sr. No. |
Name of the Company |
Address of the Company |
CIN/GLN |
Holding/ Subsidiary/ Associate |
% of shares held |
Applicable Section |
|
1. |
2 Independence Way LLC |
USA |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
2. |
3 Skyline LLC |
USA |
Not Applicable |
Subsidiary |
76.54 |
2(87)(ii) |
|
3. |
Aditya Acquisition Company Ltd. |
Israel |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
4. |
Alkaloida Chemical Company Zrt. |
Hungary |
Not Applicable |
Subsidiary |
99.99 |
2(87)(ii) |
|
5. |
AO Ranbaxy |
Russia |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
6. |
Basics GmbH |
Germany |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
7. |
Caraco Pharmaceuticals Private Limited |
India |
U24100MH2012FTC225970 |
Subsidiary |
100.00 |
2(87)(ii) |
|
8. |
Chattem Chemicals Inc. |
USA |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
9. |
Dungan Mutual Associates, LLC |
USA |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
10. |
Dusa Pharmaceuticals, Inc. |
USA |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
11. |
Faststone Mercantile Company Private Limited |
India |
U51900MH2006PTC159266 |
Subsidiary |
100.00 |
2(87)(ii) |
|
12. |
Foundation for Disease Elimination and Control of India |
India |
U85190MH2016NPL286097 |
Subsidiary |
100.00 |
2(87)(ii) |
|
13. |
Green Eco Development Centre Limited |
India |
U90009GJ2010PLC062892 |
Subsidiary |
100.00 |
2(87)(ii) |
|
14. |
Insite Vision Incorporated |
USA |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
15. |
JSC Biosintez |
Russia |
Not Applicable |
Subsidiary |
96.96 |
2(87)(ii) |
|
16. |
Kakayu Co., Ltd. |
Japan |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
17. |
Laboratorios Ranbaxy S.L.U. |
Spain |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
18. |
Morley & Company, Inc. |
USA |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
19. |
Mutual Pharmaceutical Company Inc. |
USA |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
20. |
Neetnav Real Estate Private Limited |
India |
U45200MH2010PTC201611 |
Subsidiary |
100.00 |
2(87)(ii) |
|
21. |
Office Pharmaceutique Industries Et Hospitalier |
France |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
22. |
Ohm Laboratories Inc. |
USA |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
23. |
One Commerce Drive LLC |
USA |
Not Applicable |
Subsidiary |
76.54 |
2(87)(ii) |
|
24. |
OOO "Sun Pharmaceutical Industries" Limited |
Russia |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
25. |
Pharmalucence, Inc. |
USA |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
26. |
PI Real Estate Ventures, LLC |
USA |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
27. |
Pola Pharma Inc. |
Japan |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
28. |
Ranbaxy South Africa (Pty) Ltd. |
South Africa |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
29. |
Ranbaxy (Malaysia) SDN. BHD. |
Malaysia |
Not Applicable |
Subsidiary |
95.67 |
2(87)(ii) |
|
30. |
Ranbaxy (Poland) SP. Z.O.O. |
Poland |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
31. |
Ranbaxy (Thailand) Co., Ltd. |
Thailand |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
32. |
Ranbaxy (U.K.) Limited |
UK |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
33. |
Ranbaxy Farmaceutica Ltda. |
Brazil |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
34. |
Ranbaxy Holdings (U.K.) Limited |
UK |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
35. |
Ranbaxy Inc. |
USA |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
36. |
Ranbaxy Ireland Limited |
Ireland |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
37. |
Ranbaxy Italia S.P.A. |
Italy |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
38. |
Ranbaxy Nigeria Limited |
Nigeria |
Not Applicable |
Subsidiary |
86.16 |
2(87)(ii) |
|
39. |
Ranbaxy Pharmaceuticals (Pty) Ltd. |
South Africa |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
40. |
"Ranbaxy Pharmaceuticals Ukraine" LLC |
Ukraine |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
41. |
Ranbaxy Pharmacie Generiques |
France |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
42. |
Ranbaxy Signature LLC |
USA |
Not Applicable |
Subsidiary |
67.50 |
2(87)(ii) |
|
43. |
Realstone Multitrade Private Limited |
India |
U51900MH2006PTC158889 |
Subsidiary |
100.00 |
2(87)(ii) |
|
44. |
Rexcel Egypt LLC |
Egypt |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
45. |
Terapia SA |
Romania |
Not Applicable |
Subsidiary |
96.81 |
2(87)(ii) |
|
46. |
Skisen Labs Private Limited |
India |
U73100MH2005PTC150606 |
Subsidiary |
100.00 |
2(87)(ii) |
|
47. |
Softdeal Trading Company Private Limited |
India |
U51900MH2006PTC159237 |
Subsidiary |
100.00 |
2(87)(ii) |
|
48. |
Sonke Pharmaceuticals Proprietary Limited |
South Africa |
Not Applicable |
Subsidiary |
70.00 |
2(87)(ii) |
|
49. |
SPIL De Mexico S.A. DE C.V. |
Mexico |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
50. |
Sun Farmaceutica do Brasil Ltda. |
Brazil |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
51. |
Sun Global Canada Pty. Ltd. |
Canada |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
52. |
Sun Global Development FZE |
UAE |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
53. |
Sun Laboratories FZE |
UAE |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
54. |
Sun Pharma Laboratories Limited |
India |
U25200MH1997PLC240268 |
Subsidiary |
100.00 |
2(87)(ii) |
|
55. |
Sun Pharma (Netherlands) B.V. [Formerly known as Ranbaxy (Netherlands) B.V.] |
Netherlands |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
56. |
Sun Pharma ANZ Pty Ltd |
Australia |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
57. |
Sun Pharma Canada Inc. (Formerly known as Ranbaxy Pharmaceuticals Canada Inc.) |
Canada |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
58. |
Sun Pharma DE Mexico S.A. DE C.V. |
Mexico |
Not Applicable |
Subsidiary |
75.00 |
2(87)(ii) |
|
59. |
Sun Pharma DE Venezuela, C.A. |
Venezuela |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
60. |
Sun Pharma Distributors Limited |
India |
U51909MH2019PLC322778 |
Subsidiary |
100.00 |
2(87)(ii) |
|
61. |
Sun Pharma East Africa Limited |
Kenya |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
62. |
Sun Pharma Egypt Limited LLC (Formerly known as Ranbaxy Egypt Ltd) |
Egypt |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
63. |
Sun Pharma Global FZE |
UAE |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
64. |
Sun Pharma Healthcare FZE |
UAE |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
65. |
Sun Pharma Holdings |
Mauritius |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
66. |
Sun Pharma Japan Ltd. |
Japan |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
67. |
Sun Pharma Philippines, Inc. |
Philippines |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
68. |
Sun Pharma Switzerland Ltd. |
Switzerland |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
69. |
Sun Pharmaceutical Industries, Inc. |
USA |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
70. |
Sun Pharmaceutical (Bangladesh) Limited |
Bangladesh |
Not Applicable |
Subsidiary |
72.50 |
2(87)(ii) |
|
71. |
Sun Pharmaceutical Industries (Australia) Pty Limited |
Australia |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
72. |
Sun Pharmaceutical Industries (Europe) B.V. |
Netherlands |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
73. |
Sun Pharmaceutical Industries S.A.C. |
Peru |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
74. |
Sun Pharmaceutical Medicare Limited |
India |
U36900GJ2017PLC095132 |
Subsidiary |
100.00 |
2(87)(ii) |
|
75. |
Sun Pharmaceutical Peru S.A.C. |
Peru |
Not Applicable |
Subsidiary |
99.33 |
2(87)(ii) |
|
76. |
Sun Pharmaceuticals Holdings USA, Inc. |
USA |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
77. |
Sun Pharmaceuticals SA(Pty) Ltd. |
South Africa |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
78. |
Sun Pharmaceuticals France |
France |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
79. |
Sun Pharmaceuticals Germany GmbH |
Germany |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
80. |
Sun Pharmaceuticals Korea Ltd. |
South Korea |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
81. |
Sun Pharmaceuticals Morocco LLC |
Morocco |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
82. |
Taro International Ltd. |
Israel |
Not Applicable |
Subsidiary |
76.54 |
2(87)(ii) |
|
83. |
Taro Pharmaceutical Industries Ltd. |
Israel |
Not Applicable |
Subsidiary |
76.54 |
2(87)(ii) |
|
84. |
Taro Pharmaceutical Laboratories Inc. |
USA |
Not Applicable |
Subsidiary |
76.54 |
2(87)(ii) |
|
85. |
Taro Pharmaceuticals Europe B.V. |
Netherlands |
Not Applicable |
Subsidiary |
76.54 |
2(87)(ii) |
|
86. |
Taro Pharmaceuticals Inc. |
Canada |
Not Applicable |
Subsidiary |
76.54 |
2(87)(ii) |
|
87. |
Taro Pharmaceuticals North America, Inc. |
Cayman Islands, British West Indies |
Not Applicable |
Subsidiary |
76.54 |
2(87)(ii) |
|
88. |
Taro Pharmaceuticals U.S.A., Inc. |
USA |
Not Applicable |
Subsidiary |
76.54 |
2(87)(ii) |
|
89. |
The Taro Development Corporation |
USA |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
90. |
Universal Enterprises Private Limited |
India |
Not Applicable |
Subsidiary |
100.00 |
2{87)(ii) |
|
91. |
URL PharmPro,LLC |
USA |
Not Applicable |
Subsidiary |
100.00 |
2(87)(ii) |
|
92. |
Zenotech Farmaceutica Do Brasil Ltda |
Brazil |
Not Applicable |
Subsidiary |
38.21 |
2(87)(ii) |
|
93. |
Zenotech Inc |
USA |
Not Applicable |
Subsidiary |
57.56 |
2(87)(ii) |
|
94. |
Zenotech Laboratories Limited |
India |
L27100AP1989PLC010122 |
Subsidiary |
57.56 |
2(87)(ii) |
|
95. |
Zenotech Laboratories Nigeria Limited |
Nigeria |
Not Applicable |
Subsidiary |
57.50 |
2(87)(ii) |
|
96. |
ALPS LLC |
USA |
Not Applicable |
Associate |
19.99 |
2(6) |
|
97. |
Artes Biotechnology GmbH |
Germany |
Not Applicable |
Associate |
45.00 |
2(6) |
|
98. |
Composite Power Generation LLP |
India |
Not Applicable |
Associate |
36.90 |
2(6) |
|
99. |
Dr. Py Institute LLC |
USA |
Not Applicable |
Associate |
19.99 |
2(6) |
|
100. |
Generic Solar Power LLP |
India |
Not Applicable |
Associate |
28.76 |
2(6) |
|
101. |
HRE II LLC |
USA |
Not Applicable |
Associate |
19.99 |
2(6) |
|
102. |
HRE III LLC |
USA |
Not Applicable |
Associate |
19.99 |
2(6) |
|
103. |
HRE LLC |
USA |
Not Applicable |
Associate |
19.99 |
2(6) |
|
104. |
Intact Pharmaceuticals LLC |
USA |
Not Applicable |
Associate |
19.99 |
2(6) |
|
105. |
Intact Media LLC (Formerly Intact Skin Care LLC) |
USA |
Not Applicable |
Associate |
19.99 |
2(6) |
|
106. |
Medinstill Development LLC |
USA |
Not Applicable |
Associate |
19.99 |
2(6) |
|
107. |
Medinstill LLC |
USA |
Not Applicable |
Associate |
19.99 |
2(6) |
|
108. |
Trumpcard Advisors and Finvest LLP |
India |
Not Applicable |
Associate |
40.61 |
2(6) |
|
109. |
Vento Power Generation LLP |
India |
Not Applicable |
Associate |
40.55 |
2(6) |
|
110. |
Vintage Power Generation LLP |
India |
Not Applicable |
Associate |
39.41 |
2(6) |
|
111. |
Tarsius Pharma Ltd. |
Israel |
Not Applicable |
Associate |
18.33 |
2(6) |
Â
Â
IV. Share Holding Pattern (Equity Share Capital Breakup as percentage of Total Equity as on March 31, 2019)
 (i) Category-wise Share Holding
|
 |
No. of shares held at the beginning of the year |
No. of shares held at the end of the year |
% Change during the year |
||||||
|
Category of shareholders |
Demat |
Physical |
Total |
% of Total Shares |
Demat |
Physical |
Total |
% of Total Shares |
|
|
A. PROMOTERS* |
 |
 |
 |
 |
 |
 |
 |
 |
 |
|
1) Indian |
 |
 |
 |
 |
 |
 |
 |
 |
 |
|
a) Individual / HUF |
293200513 |
0 |
293200513 |
12.22 |
293200513 |
0 |
293200513 |
12.22 |
0.00 |
|
b) Central Government / State Government |
0 |
0 |
0 |
0.00 |
0 |
0 |
0 |
0.00 |
0.00 |
|
c) Bodies Corporate |
1010366094 |
12000 |
1010378094 |
42.11 |
1010366094 |
12000 |
1010378094 |
42.11 |
0.00 |
|
d) Financial Institutions/ Bank |
0 |
0 |
0 |
0.00 |
0 |
0 |
0 |
0.00 |
0.00 |
|
e) Any Other (Trusts) |
1276774 |
0 |
1276774 |
0.05 |
1276774 |
0 |
1276774 |
0.05 |
0.00 |
|
Sub-total (A) (1):- |
1304843381 |
12000 |
1304855381 |
54.38 |
1304843381 |
12000 |
1304855381 |
54.38 |
0.00 |
|
2) Foreign |
 |
 |
 |
 |
 |
 |
 |
 |
 |
|
a) Individuals (NRIs) |
0 |
0 |
0 |
0.00 |
0 |
0 |
0 |
0.00 |
0.00 |
|
b) Other- Individuals |
0 |
0 |
0 |
0.00 |
0 |
0 |
0 |
0.00 |
0.00 |
|
c) Bodies Corporate |
0 |
0 |
0 |
0.00 |
0 |
0 |
0 |
0.00 |
0.00 |
|
d) Financial Institutions/ Bank |
0 |
0 |
0 |
0.00 |
0 |
0 |
0 |
0.00 |
0.00 |
|
e) Any Other |
0 |
0 |
0 |
0.00 |
0 |
0 |
0 |
0.00 |
0.00 |
|
Sub-total (A)(2):- |
0 |
0 |
0 |
0.00 |
0 |
0 |
0 |
0.00 |
0.00 |
|
Total shareholding of Promoter' (A)=(A)(1)+(A)(2) |
1304843381 |
12000 |
1304855381 |
54.38 |
1304843381 |
12000 |
1304855381 |
54.38 |
0.00 |
|
B. PUBLIC SHAREHOLDING |
 |
 |
 |
 |
 |
 |
 |
 |
 |
|
1. Institutions |
 |
 |
 |
 |
 |
 |
 |
 |
 |
|
a) Mutual Funds |
192509489 |
2500782 |
195010271 |
8.13 |
223325669 |
9342 |
223335011 |
9.31 |
1.18 |
|
b) Financial Institutions /Bank |
22412015 |
3798 |
22415813 |
0.93 |
21068879 |
2293 |
21071172 |
0.88 |
-0.06 |
|
c) Central Government / State Government |
0 |
0 |
0 |
0.00 |
2820 |
0 |
2820 |
0.00 |
0.00 |
|
d) Venture Capital Funds |
0 |
0 |
0 |
0.00 |
0 |
0 |
0 |
0.00 |
0.00 |
|
e) Insurance Companies |
168094940 |
0 |
168094940 |
7.01 |
166138398 |
0 |
166138398 |
6.92 |
-0.08 |
|
f)Flls |
3788557 |
17943 |
3806500 |
0.16 |
677802 |
15248 |
693050 |
0.03 |
-0.13 |
|
g) Foreign Venture Capital |
0 |
0 |
0 |
0.00 |
0 |
0 |
0 |
0.00 |
0.00 |
|
h) Qualified Foreign Investors |
0 |
0 |
0 |
0.00 |
0 |
0 |
0 |
0.00 |
0.00 |
|
(i) Any Other (specify) Foreign Portfolio Investor (Corporate) |
387782873 |
0 |
387782873 |
16.16 |
372261678 |
0.00 |
372261678 |
15.52 |
-0.65 |
|
Foreign Bank |
1504 |
23918 |
25422 |
0.00 |
8928 |
23789 |
32717 |
0.00 |
0.00 |
|
UTI |
2235590 |
1380 |
2236970 |
0.09 |
3626731 |
1380 |
3628111 |
0.15 |
0.06 |
|
Alternate Investment Funds |
1546565 |
0 |
1546565 |
0.06 |
1212911 |
0 |
1212911 |
0.05 |
-0.01 |
|
Sub-total (B)(1):- |
778371533 |
2547821 |
780919354 |
32.55 |
788323816 |
52052 |
788375868 |
32.86 |
0.31 |
|
2. Non-Institutions |
 |
 |
 |
 |
 |
 |
 |
 |
 |
|
a) Bodies Corporate |
 |
 |
 |
 |
 |
 |
 |
 |
 |
|
i) Indian |
102919063 |
153917 |
103072980 |
4.30 |
89415662 |
151840 |
89567502 |
3.73 |
-0.57 |
|
ii) Overseas |
46000 |
0 |
46000 |
0.00 |
46000 |
0 |
46000 |
0.00 |
0.00 |
|
b) Individuals |
 |
 |
 |
 |
 |
 |
 |
 |
 |
|
i) Individual Shareholders holding nominal share capital upto Rs.1 Lakh |
138287020 |
9952424 |
148239444 |
6.18 |
139147990 |
8528636 |
147676626 |
6.15 |
-0.02 |
|
ii) Individual Shareholders holding nominal share capital in excess of Rs.1 Lakh |
27181865 |
125000 |
27306865 |
1.14 |
28686116 |
288000 |
28974116 |
1.21 |
0.07 |
|
c) Qualified Foreign Investors |
0 |
0 |
0 |
0.00 |
0 |
0 |
0 |
0.00 |
0.00 |
|
d) Others (specify) |
 |
 |
 |
 |
 |
 |
 |
 |
 |
|
i) Non Resident Indians(Repat) |
4545204 |
331885 |
4877089 |
0.20 |
5427442 |
279740 |
5707182 |
0.24 |
0.03 |
|
ii) Non Resident lndians(Non Repat) |
2565549 |
0 |
2565549 |
0.11 |
3161429 |
0 |
3161429 |
0.13 |
0.02 |
|
iii ) Foreign Companies |
671865 |
0 |
671865 |
0.03 |
276965 |
0 |
276965 |
0.01 |
-0.02 |
|
iv) Clearing Member |
2695586 |
0 |
2695586 |
0.11 |
2938110 |
0 |
2938110 |
0.12 |
0.01 |
|
v) Other Directors |
3783394 |
0 |
3783394 |
0.16 |
3746747 |
0 |
3746747 |
0.16 |
0.00 |
|
vi) Trusts |
15374984 |
0 |
15374984 |
0.64 |
17502708 |
0 |
17502708 |
0.73 |
0.09 |
|
vii) Foreign Nationals |
21040 |
0 |
21040 |
0.00 |
24636 |
0 |
24636 |
0.00 |
0.00 |
|
viii) Hindu Undivided Family |
4424397 |
0 |
4424397 |
0.18 |
5263150 |
0 |
5263150 |
0.22 |
0.03 |
|
ix) IEPF |
469252 |
0 |
469252 |
0.02 |
1218550 |
0 |
1218550 |
0.05 |
0.03 |
|
Sub-total (B)(2):- |
302985219 |
10563226 |
313548445 |
13.07 |
296855505 |
9248216 |
306103721 |
12.76 |
-0.31 |
|
Total Public Shareholding (B)=(B)(1)+(B)(2) |
1081356752 |
13111047 |
1094467799 |
45.62 |
1085179321 |
9300268 |
1094479589 |
45.62 |
0.00 |
|
C. SHARES HELD BY CUSTODIAN FOR GDRs & ADRs |
 |
 |
 |
 |
 |
 |
 |
 |
 |
|
Employee Benefit Trust under SEBI (Share based employee benefit) Regulations, 2014 |
0 |
0 |
0 |
0.00 |
0 |
0 |
0 |
0.00 |
0.00 |
|
GRAND TOTAL (A+B+C) |
2386200133 |
13123047 |
2399323180 |
100.00 |
2390022702 |
9312268 |
2399334970 |
100.00 |
0.00 |
Â
*includes Promoter Group
(ii) Shareholding of Promoters
|
 |
Shareholding at the beginning of the year |
Shareholding at the end of the year |
% change in share-holding during the year |
|||||
|
Sr. No. |
Shareholder's Name |
No. of shares |
% of total Shares of the company |
% of shares Pledged/ encumbered to total Shares |
No. of shares |
% of total Shares of the company |
% of shares Pledged/ encumbered to total Shares |
|
|
1 |
Dilip S. Shanghvi |
230285690 |
9.60 |
0 |
230285690 |
9.60 |
0 |
0.00 |
(iii) Change in Promoters' Shareholding (please specify, if there is no change)
|
 |
 |
Shareholding at the beginning of the year |
Cumulative shareholding during the year |
||
|
Sr. No. |
 |
No. of shares |
% of total Shares of the company |
No. of shares |
% of total Shares of the company |
|
1. Dilip S. Shanghvi |
At the beginning of the year Increase / Decrease in Shareholding during the year At the end of the year |
230285690 |
9.60 |
230285690 |
9.60 |
|
No Change during the year |
230285690 |
9.60 |
|||
|
 |
230285690 |
9.60 |
230285690 |
9.60 |
|
(iv) Shareholding Pattern of top ten shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):
|
 |
 |
 |
Shareholding at the beginning of the year |
Cumulative shareholding during the year |
||
|
Sr. No. |
For Each of the top 10 shareholders |
 |
No. of shares |
% of total Shares of the company |
No. of shares |
% of total Shares of the company |
|
1. |
Shanghvi Finance Private Limited |
At the beginning of the year |
282603 |
0.01 |
282603 |
0.01 |
|
 |
Increase / Decrease in Share holding* |
October 23, 2018* (Pursuant to merger) |
959489975 |
39.99 |
959772578 |
40.00 |
|
 |
 |
At the end of the year |
959772578 |
40.00 |
959772578 |
40.00 |
|
2. |
Life Insurance Corporation of India |
At the beginning of the year |
145302877 |
6.06 |
145302877 |
6.06 |
|
 |
Increase / Decrease in Share holding |
Various dates during the year* |
(4085319) |
(0.17) |
141217558 |
5.89 |
|
 |
 |
At the end of the year |
141217558 |
5.89 |
141217558 |
5.89 |
|
3. |
ICICI Prudential Value Discovery Fund and various Fund Accounts |
At the beginning of the year |
72006776 |
3.00 |
72006776 |
3.00 |
|
 |
Increase / Decrease in Share holding |
Various dates during the year* |
10086458 |
0.42 |
82093234 |
3.42 |
|
 |
 |
At the end of the year |
82093234 |
3.42 |
82093234 |
3.42 |
|
4. |
Aditya Medisales Limited |
At the beginning of the year |
40153960 |
1.67 |
40153960 |
1.67 |
|
 |
 |
At the end of the year |
40153960 |
1.67 |
40153960 |
1.67 |
|
5. |
Raksha S. Valia |
At the beginning of the year |
33830352 |
1.41 |
33830352 |
1.41 |
|
 |
 |
At the end of the year |
33830352 |
1.41 |
33830352 |
1.41 |
|
6. |
Government of Singapore |
At the beginning of the year |
31322421 |
1.31 |
31322421 |
1.31 |
|
 |
Increase / Decrease in Share holding |
Various dates during the year* |
1702560 |
0.07 |
33024981 |
1.38 |
|
 |
 |
At the end of the year |
33024981 |
1.38 |
33024981 |
1.38 |
|
7. |
Lakshdeep Investments & Finance (P) Ltd. |
At the beginning of the year |
35124907 |
1.46 |
35124907 |
1.46 |
|
 |
Increase / Decrease in Share holding |
Various dates during the year* |
(3740000) |
(0.15) |
31384907 |
1.31 |
|
 |
 |
At the end of the year |
31384907 |
1.31 |
31384907 |
1.31 |
|
8. |
Reliance Capital Trustee Co Ltd.A/C Reliance Large Cap Fund and various Fund Accounts |
At the beginning of the year |
16376928 |
0.68 |
16376928 |
0.68 |
|
 |
Increase / Decrease in Share holding |
Various dates during the year* |
14448920 |
0.60 |
30825848 |
1.28 |
|
 |
 |
At the end of the year |
30825848 |
1.28 |
30825848 |
1.28 |
|
9. |
Matthews Pacific Tiger Fund |
At the beginning of the year |
19254758 |
0.80 |
19254758 |
0.80 |
|
 |
Increase / Decrease in Share holding |
Various dates during the year* |
5032051 |
0.21 |
24286809 |
1.01 |
|
 |
 |
At the end of the year |
24286809 |
1.01 |
24286809 |
1.01 |
|
10. |
UTI - Nifty Exchange Traded Fund |
At the beginning of the year |
16627671 |
0.69 |
16627671 |
0.69 |
|
 |
Increase / Decrease in Share holding |
Various dates during the year* |
3720108 |
0.16 |
20347779 |
0.85 |
|
 |
 |
At the end of the year |
20347779 |
0.85 |
20347779 |
0.85 |
Â
Note: Shareholding has been consolidated on PAN basis.
* Pursuant to Scheme of Amalgamation, Shanghvi Finance Private Limited ("SFPL"), which is a part of the Promoter Group of the Company, has w.e.f. 23.10.2018 acquired 95,94,89,975 Equity Shares of the Company representing 39.99% of the total paid-up equity share capital of the Company from 11 Transferor Companies namely 1) erstwhile Viditi Investment Private Limited; 2) erstwhile Tejaskiran Pharmachem Industries Private Limited; 3) erstwhile Quality Investment Private Limited; 4) erstwhile Family Investment Private Limited; 5) erstwhile Virtuous Share Investments Private Limited; 6) erstwhile Virtuous Finance Private Limited; 7) erstwhile Sholapur Organics Private Limited; 8) erstwhile Jeevanrekha Investrade Private Limited; 9) erstwhile Package Investrade Private Limited; 10) erstwhile Asawari Investment and Finance Private Limited; and 11) erstwhile Nirmit Exports Private Limited, which were forming part of the promoter group of the Company and were collectively holding the aforementioned equity shares of the Company.
The trading has taken place on various dates, therefore the change has been shown on consolidated basis.
(v) Shareholding of Directors and Key Managerial Personnel: (Held singly or jointly as first holder)
|
Sr. No. |
 |
 |
Shareholding at the beginning of the year |
Cumulative shareholding during the year |
||
|
Name of Director / KMP |
 |
No. of shares |
% of total shares of the company |
No. of shares |
% of total Shares of the company |
|
|
1. |
Israel Makov |
At the beginning of the year |
0 |
0 |
0 |
0 |
|
 |
 |
At the end of the year |
0 |
0 |
0 |
0 |
|
2. |
Dilip S. Shanghvi |
At the beginning of the year |
230285690 |
9.60 |
230285690 |
9.60 |
|
 |
 |
At the end of the year |
230285690 |
9.60 |
230285690 |
9.60 |
|
3. |
Sudhir V. Valia |
At the beginning of the year |
14345019 |
0.60 |
14345019 |
0.60 |
|
 |
 |
At the end of the year |
14345019 |
0.60 |
14345019 |
0.60 |
|
4. |
Sailesh T. Desai |
At the beginning of the year® |
3740747 |
0.16 |
3740747 |
0.16 |
|
 |
Increase / Decrease in Share holding |
October 05, 2018 |
(2000) |
(0.00) |
3738747 |
0.16 |
|
 |
 |
At the end of the year® |
3738747 |
0.16 |
3738747 |
0.16 |
|
5. |
Kalyanasundaram Subramanian |
At the beginning of the year |
0 |
0 |
0 |
0 |
|
 |
Increase / Decrease in Share holding |
Various dates during the year* |
201 |
0.00 |
201 |
0.00 |
|
 |
 |
At the end of the year |
201 |
0.00 |
201 |
0.00 |
|
6. |
S. Mohanchand Dadha* |
At the beginning of the year |
0 |
0 |
0 |
0 |
|
 |
 |
As on September 26, 2018 |
0 |
0 |
0 |
0 |
|
7. |
Keki M. Mistry* |
At the beginning of the year |
43270 |
0.00 |
43270 |
0.00 |
|
 |
 |
As on September 26, 2018 |
43270 |
0.00 |
43270 |
0.00 |
|
8. |
Ashwin S. Dani* |
At the beginning of the year |
0 |
0 |
0 |
0 |
|
 |
 |
As on September 26, 2018 |
0 |
0 |
0 |
0 |
|
9. |
Rekha Sethi |
At the beginning of the year |
0 |
0 |
0 |
0 |
|
 |
 |
At the end of the year |
0 |
0 |
0 |
0 |
|
10. |
Vivek Chaand Sehgal |
At the beginning of the year |
0 |
0 |
0 |
0 |
|
 |
 |
At the end of the year |
0 |
0 |
0 |
0 |
|
11. |
Gautam Doshi* |
As on May 25, 2018 |
8000 |
0.00 |
8000 |
0.00 |
|
 |
 |
At the end of the year |
8000 |
0.00 |
8000 |
0.00 |
|
12. |
CS Muralidharan |
At the beginning of the year |
0 |
0 |
0 |
0 |
|
 |
 |
At the end of the year |
0 |
0 |
0 |
0 |
|
13. |
Sunil Ajmera |
At the beginning of the year |
0 |
0 |
0 |
0 |
|
 |
 |
At the end of the year |
0 |
0 |
0 |
0 |
Â
*Was Director upto September 26, 2018,
#appointed as Director w.e.f. May 25, 2018,
@ includes shares transferred as margin, if any
$The trading has taken place on various dates, therefore the change has been shown on consolidated basis.
V. INDEBTEDNESS
Indebtedness of the Company including interest outstanding/accrued but not due for payment
|
 |
 |
 |
 |
(Rs. in Million) |
|
 |
Secured Loans excluding deposits |
Unsecured Loans |
Deposits(1) |
Total Indebtedness |
|
Indebtedness at the beginning of the financial year |
 |
 |
 |
 |
|
i) Principal Amount |
108.2 |
68,731.9 |
118.3 |
68,958.4 |
|
ii) Interest due but not paid |
- |
- |
- |
- |
|
iii) Interest accrued but not due(2) |
9.1 |
40.0 |
- |
49.1 |
|
Total (i+ii+iii) |
117.3 |
68,771.9 |
118.3 |
69,007.5 |
|
Change in Indebtedness during the financial year |
 |
 |
 |
 |
|
Addition: Principal Amount (3) |
 |
173,501.5 |
- |
173,501.5 |
|
Reduction: Principal Amount(3)/(4) |
- |
177,975.2 |
20.9 |
177,996.1 |
|
Change: Addition / (Reduction) in Interest accrued but not Due |
1.1 |
44.2 |
- |
45.3 |
|
Net Change |
1.1 |
(4,429.5) |
(20.9) |
(4,449.3) |
|
Indebtedness at the end of the financial year |
 |
 |
 |
 |
|
i) Principal Amount |
108.2 |
64,258.2 |
97.4 |
64,463.8 |
|
ii) Interest due but not paid |
- |
 |
- |
- |
|
iii) Interest accrued but not due (2) |
10.2 |
84.2 |
- |
94.4 |
|
Total (i+ii+iii) |
118.4 |
64,342.4 |
97.40 |
64,558.2 |
Notes:
(1) Deposits are Security Deposits Received. The change during the year has been shown on net basis.
(2) Interest accrued but not due on borrowings.
(3) Change in the OD & WCDL limit underworking Capital Facility forming part of Unsecured loans, have been shown on net basis.
(4) Ind AS adjustment in the outstanding as on March 31, 2019 of External Commercial Paper & Commercial papers are shown as reduction in principal amount.
VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
A. Remuneration to Managing Director, Whole-time Directors and/or Manager:
|
 |
 |
 |
 |
 |
(Amount in Rs.) |
|
Sr. No. |
Particulars of Remuneration |
Mr. Dilip S. Shanghvi |
Mr. Sudhir V. Valia |
Mr. Sailesh T. Desai |
Total |
|
1. |
Gross salary |
 |
 |
 |
 |
|
 |
(a) Salary as per provisions contained in section 17(1) of the Income- tax Act, 1961 |
1* |
1* |
11855400 |
11855402 |
|
 |
(b) Value of perquisites u/s 17(2) Income-tax Act, 1961 |
262800 |
79200 |
371181 |
713181 |
|
 |
(c) Profits in lieu of salary under section 17(3) Income tax Act, 1961 |
- |
- |
- |
- |
|
2. |
Stock Option |
- |
- |
- |
- |
|
3. |
Sweat Equity |
- |
- |
- |
- |
|
4. |
Commission - as % of profit |
 |
- |
- |
 |
|
5. |
Others, please specify |
 |
- |
- |
 |
|
 |
Total (A) |
262801 |
79201 |
12226581 |
12568583 |
Ceiling as per the Act: Rs. 499.9 Million (10% of Net Profits of the Company calculated as per Section 198 of the Companies Act, 2013) 'Remuneration of Mr. Dilip Shanghvi and Mr. Sudhir V. Valia is Rs. 1/- each for the financial year 2018-19 and the remaining amount of Rs. 262800 and Rs. 79200 respectively pertain to notional value of perquisite as per Income Tax Act.
B. Remuneration to other directors for the year ended March 31, 2019:
(The remuneration to Non-Executive Directors consist only of sitting fees)
|
 |
 |
(Amount in Rs) |
|||||||
|
 |
 |
Name of Directors |
 |
 |
|||||
|
Sr. No. |
Particulars of Remuneration |
Mr. S Mohanchand Dadha* |
Mr. Keki Mistry* |
Mr. Ashwin Dani* |
Ms. Rekha Sethi |
Mr. Vivek Chaand Sehgal |
Mr. Gautam Doshi |
Mr. Israel Makov |
Total Amount |
|
 |
 |
(1) |
(2) |
(3) |
(4) |
(5) |
(6) |
(7) |
(1) to (7) |
|
1. |
Independent |
 |
 |
 |
 |
 |
 |
 |
 |
|
 |
Fee for attending |
1000000 |
600000 |
200000 |
1500000 |
600000 |
1300000 |
- |
5200000 |
|
 |
board / committee meetings |
 |
 |
 |
 |
 |
 |
 |
 |
|
 |
Commission |
 |
- |
 |
- |
- |
 |
- |
 |
|
 |
Others, please specify |
 |
- |
 |
- |
- |
 |
- |
 |
|
 |
Total (1) |
1000000 |
600000 |
200000 |
1500000 |
600000 |
1300000 |
0 |
5200000 |
|
2. |
Other Non-Executive Directors |
 |
 |
 |
 |
 |
 |
 |
 |
|
 |
Fee for attending board / committee meetings |
 |
- |
 |
- |
- |
 |
900000 |
900000 |
|
 |
Commission |
- |
- |
- |
- |
- |
- |
- |
- |
|
 |
Others, please specify |
- |
- |
- |
- |
- |
- |
- |
- |
|
 |
Total (2) |
0 |
0 |
0 |
0 |
0 |
0 |
900000 |
900000 |
|
 |
Total (B) = (1+2) |
1000000 |
600000 |
200000 |
1500000 |
600000 |
1300000 |
900000 |
6100000 |
|
 |
Ceiling as per the Act: |
Not applicable since no commission was paid during the year. Sitting Fee is Rs.1,00,000 for each meeting of the Board /Committee attended by the Director. |
|||||||
|
 |
Total Managerial Remuneration |
(A+B): |
 |
 |
 |
 |
 |
 |
18668583 |
*For part of the year upto September 26, 2018
C Remuneration to Key Managerial Personnel other than MD / Manager / WTD
(As per Form 16, on actual payment basis)
|
 |
 |
Key Managerial Personnel |
 |
(Rs. in Million) |
|
Sr. No. |
Particulars of Remuneration |
Mr. Sunil Ajmera (Company Secretary) |
Mr. C S Muralidharan (Chief Financial Officer) |
Total |
|
1. |
Gross salary |
 |
 |
 |
|
 |
(a) Salary as per provisions contained in section 17(1) of the Income- tax Act, 1961 |
13.39 |
32.02 |
45.41 |
|
 |
(b) Value of perquisites u/s 17(2) Income-tax Act, 1961 |
0.32 |
0.79 |
1.11 |
|
 |
(c) Profits in lieu of salary under section 17(3) Income tax Act, 1961 |
- |
- |
- |
|
2. |
Stock Option |
- |
- |
- |
|
3. |
Sweat Equity |
- |
- |
- |
|
4. |
Commission - as % of profit |
 |
 |
- |
|
5. |
Others, please specify |
 |
 |
- |
|
 |
Total |
13.71 |
32.81 |
46.52 |
VII. Penalties / Punishment / Compounding of Offences Against Company, Directors and Other Officers in Default: NIL
|
 |
For and on behalf of the Board of Directors |
|
Place: Mumbai |
Israel Makov |
|
Date: May 28, 2019 |
Chairman |
Annexure - C
Information required under Section 197 of the Act Read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
(i) Ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year 2018-19 and the percentage increase in remuneration of each Director, Chief Financial Officer and Company Secretary during the financial year 2018-19:
|
Name of Director and Key Managerial Personnel |
Designation |
Ratio of remuneration(1) of each Director to median remuneration of employees |
increase/ (decrease) in Remuneration(1) in the Financial Year 2018-19 |
|
Directors: |
 |
 |
 |
|
Mr. Israel Makov |
Non-executive Chairman |
1.87 |
0.0% |
|
Mr. Dilip S. Shanghvi(2) |
Managing Director |
0.55 |
-99.13% |
|
Mr. Sudhir V. Valia(2) |
Whole-time Director |
0.16 |
-99.74% |
|
Mr. Sailesh T. Desai |
Whole-time Director |
25.44 |
-0.46% |
|
Mr. Kalyanasundaram Subramanian(3) |
Whole-time Director |
N.A |
N.A |
|
Mr. S. Mohanchand Dadha* |
Non-executive Independent Director |
2.08 |
-37.50% |
|
Mr. Keki M. Mistry* |
Non-executive Independent Director |
1.25 |
-25.00% |
|
Mr. Ashwin S. Dani* |
Non-executive Independent Director |
0.42 |
-71.43% |
|
Ms. Rekha Sethi |
Non-executive Independent Director |
3.12 |
15.38% |
|
Mr. Vivek Chaand Sehgal |
Non-executive Independent Director |
1.25 |
100.00% |
|
Mr. Gautam Doshi** |
Non-executive Independent Director |
2.70 |
N.A |
|
Key Managerial Personnel: |
 |
 |
 |
|
Mr. C.S. Muralidharan |
Chief Financial Officer |
Not Applicable |
Refer Note 1 |
|
Mr. Sunil Ajmera |
Company Secretary |
Not Applicable |
2.25% |
*Retired and ceased to be Directors w.e.f. September 26, 2018
"Appointed w.e.f. May 25, 2018
(1) Remuneration to Non-Executive Directors consists only of sitting fees and is based on the number of meetings attended during the year. No commission was paid to Non-Executive Directors for the year 2018-19.
(2) Remuneration of Mr. Dilip Shanghvi and Mr. Sudhir V. Valia is Rs. 1/- each for the financial year 2018-19 and the remaining amount of Rs. 262800 and Rs. 79200 respectively pertain to notional value of perquisite as per Income Tax Act.
(3) Mr. Kalyanasundaram Subramanian, Whole-time Director of the Company, does not receive any remuneration from the Company, however he is receiving remuneration from Sun Pharma Laboratories Limited (SPLL), the wholly owned subsidiary of the Company, where he is also Whole-time Director and Chief Executive Officer.
Note 1 - There was no increase in the overall remuneration as approved by the Board of Directors for the FY 2018-19. However, based on calculation of amounts as per Form 16 for the year 2017-18 (annualised, as he was for the part of the year in 2017-18) and for the year 2018-19, the increase amounts to 12.64%
(ii) The percentage increase in the median remuneration of employees in the financial year 2018-19 (Median -2019/ Median 2018): 5.12%
(iii) The number of permanent employees on the rolls of the Company as on March 31, 2019:17501
(iv) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
Average percentage increase made in the salaries of employees other than the managerial personnel in the financial year ending March 31, 2019 was approximately 9.77% and the average increase/(decrease) in the managerial personnel remuneration was (66.44)%.
(v) It is hereby affirmed that the remuneration paid is as per the Remuneration Policy for Directors, Key Managerial Personnel and other Employees.
(All the details of remuneration given above are as per Form 16 as per Income Tax Act, and the ratios are calculated on that basis)
|
For and on behalf of the Board of Directors |
|
|
Place: Mumbai |
Israel Makov |
|
Date: May 28, 2019 |
Chairman |
Annexure - D
FORM NO. MR-3
SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2019
[Pursuant to section 204(1) of the Companies Act, 2013 and rule No. 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]
To,
The Members,
Sun Pharmaceutical Industries Limited,
Vadodara, Gujarat.
We have conducted the Secretarial Audit of the compliances of applicable statutory provisions and the adherence to good corporate governance practice by Sun Pharmaceutical Industries Limited ("the Company"). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts / statutory compliances and expressing our opinion thereon.
Based on our verification of the Company's books, papers, minutes books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorised representatives during the conduct of secretarial audit, we hereby report that in our opinion, the Company has, during the audit period covering the financial year ended on 31st March 2019, complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:
We have examined the books, papers, minutes books, forms and returns filed and other records maintained by the Company for the financial year ended on 31st March 2019, according to the provisions of:
i. The Companies Act, 2013 (the Act) and the rules made thereunder;
ii. The Securities Contracts (Regulation) Act, 1956 ('SCRA') and the rules made thereunder;
iii. The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;
iv. Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings;
v. The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India ("SEBI") Act, 1992:
a. The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015;
b. The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
c. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;
d. The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014;
e. The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998 - Not applicable to the Company for the year under review;
f. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 - Not applicable to the Company for the year under review;
g. The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 - Not applicable to the Company for the year under review;
h. The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993, regarding the Companies Act and dealing with client -Not applicable to the Company;
i. The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 - Not applicable to the Company for the year under review;
We have also examined compliance with the applicable clauses of Secretarial Standards with respect to meeting of Board of Directors (SS-1) and General Meetings (SS-2) issued by The Institute of Company Secretaries of India under the provisions of Companies Act, 2013;
During the period under review, the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines etc. mentioned above
We further report that:
1. The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors, Independent Directors and Woman Director. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.
2. Adequate notice of at least seven days was given to all directors to schedule the Board Meetings and Meetings of Committees. Agenda and detailed notes on agenda were sent in advance in adequate time before the meetings and a system exists for Directors for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.
3. On verification of minutes, we have not found any dissent/disagreement on any of the agenda items discussed in the Board and Committee meetings from any of the Directors and all the decisions are carried through.
Based on the information received and records maintained, we further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.
We further report that, having regard to the compliance system prevailing in the Company and on examination of the relevant documents and records in pursuance thereof, on the basis of the representations made by the respective plant heads of R&D centers, the Company has identified and complied with the following laws applicable to the Company:
⢠Drugs and Cosmetics Act, 1940 and rules made thereunder;
⢠Factories Act, 1948.
We further report that during the year under review:
⢠The Company had allotted 11,790 Equity Shares of Rs. 1/- each to eligible employees who have exercised their options under Sun Employees Stock Options Scheme - 2015;
⢠Undertaking of Sun Pharma Global FZE was demerged under Sections 230 to 232 and Section 234 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and other applicable provisions of  the Companies Act, 2013 on 1st December 2018 (Effective date), the appointed date for the said demerger being 1st April 2017.
For KJB & CO LLP,
Practicing Company Secretaries
Alpeshkumar J. Panchal
Partner
Mem No. - 49008 C. P. No. â 20120
Date: May 28, 2019
Place: Mumbai.
This report is to be read with our letter of even date which is annexed as Annexure 1 and forms an integral part of this report
ANNEXURE 1 TO SECRETARIAL AUDIT REPORT
To,
The Members,
Sun Pharmaceutical Industries Limited,
Vadodara, Gujarat.
Our report of even date is to be read along with this letter.
1. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the processes and practices we followed provide a reasonable basis for our opinion.
2. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company.
3. Wherever required, we have obtained the Management representation about the compliance of laws, rules and regulations and happening of events etc.
4. The Secretarial Audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.
For KJB & CO LLP,
Practicing Company Secretaries
Alpeshkumar J. Panchal
Partner
Mem No. - 49008 C. P. No. â 20120
Date: May 28, 2019
Place: Mumbai.
Annexure - E
AOC-2
(Pursuant to clause (h) of sub-section (3) of section 134 of the Companies Act, 2013 ("the Act") and Rule 8(2) of the  Companies (Accounts) Rules, 2014)
Disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arm's length transactions under third proviso thereto
1. Details of contracts or arrangements or transactions not at arm's length basis - NIL
2. Details of material contracts or arrangement or transactions (i.e. exceeding ten percent of the annual consolidated turnover as per the last audited financial statements) at arm's length basis
|
Sr. No. |
Name(s) of the related party and nature of relationship |
Nature of contracts/ arrangements/ transactions |
Duration of the contracts / arrangements/ transactions |
Salient terms of the contracts or arrangements or transactions including the value, if any |
Date(s) of approval by the Board, if any: |
Amount paid as advances, as on March 31, 2019 if any: |
|
1. |
Sun Pharma Laboratories Limited (Wholly owned subsidiary) |
Purchase of goods, property, plant & equipment, Revenue from contracts with customers, Sale of property, plant & equipment and investments, Dividend Income, Receiving and Rendering of Service, Reimbursement of expenses paid and expenses received, Loan taken and repaid, Interest on Loans repaid, Interest expense and Rent income |
On-going |
The related party transactions entered during the year were in ordinary course of business and on an arm's length basis. The aggregate amount of transactions for the financial year 2018-19 was Rs. 46,141.8 Million |
Since these transactions are in the ordinary course of business and are at arm's length basis, approval of the Board is not applicable. |
Nil |
|
2. |
Aditya Medisales Limited (Direct Subsidiary of Shanghvi Finance Private Limited w.e.f. October 23, 2018 where Mr. Dilip S. Shanghvi, Promoter and Managing Director of the Company alongwith his spouse holds 100% shares) |
Revenue from contracts with customers, Rent Income and Interest Income |
On-going |
The related party transactions entered during the year were in ordinary course of business and on an arm's length basis. The aggregate amount of transactions for the financial year 2018-19 was Rs. 31,418.1 Million |
Since these transactions are in the ordinary course of business and are at arm's length basis, approval of the Board is not applicable. However the shareholders' approval has been obtained at the 25th Annual General Meeting of the Company held on September 26, 2017 |
Nil 1 |
Â
|
 |
For and on behalf of the Board of Directors |
|
Place: Mumbai |
Israel Makov |
|
Date: May 28, 2019 |
Chairman |
Annexure - F Annual Report on Corporate Social Responsibility (CSR) Activities for the Financial Year 2018-19
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Details |
Particulars |
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1. |
A brief outline of the Company's CSR policy, including overview of projects or programmes proposed to be undertaken |
The CSR policy of the Company encompasses its philosophy towards Corporate Social Responsibility and lays down the guidelines and mechanism for undertaking socially useful programs for welfare & sustainable development of the community at large. The Company has identified health, education & livelihood, environment protection, water management and disaster relief as the areas where assistance is provided on a need-based and case-to-case basis. Your Company persisted with participation in such activities at the local, grass root level during the year. |
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2. |
Reference to the web-link to the CSR policy and projects or programmes |
The contents of CSR policy can be accessed through the web link http://www.sunpharma.com/policies and details on projects and programmes are forming part of this Annual Report |
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3. |
Composition of the CSR Committee |
Mr. Dilip S. Shanghvi, Chairman, Mr. Sudhir V. Valia, Member and Ms. Rekha Sethi, Member |
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4. |
Average net profit of the Company for last three financial years |
The average net profits of the Company for the last three financial years was negative. |
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5. |
Prescribed CSR Expenditure (two percent of the amount as in item 4 above) |
Since, the average net profit of the Company for the last three financial years was negative, the Company was not required to spend on CSR activities during the previous year. However, the Company has voluntarily spent on CSR activities. |
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6. |
Details of CSR spend for the financial year: |
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a) Total amount spent for the financial year |
Rs.39.36 Million |
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b) Amount unspent, if any |
Nil |
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c) Manner in which the amount spent during the Financial year |
Details given below |
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(Rs. in Million) |
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Sr. No. |
CSR Project or Activity Identified |
Sector in which the project is covered |
Projects or Programs 1. Local Area or other 2. Specify the State and District where projects or programs were undertaken |
Amount Outlay (Budget) Project or Program wise |
Amount spent on the projects or programs (Direct Expenditure) |
Overhead Expenditure |
Cumulative expenditure upto to the reporting period |
Amount spent Directly or through implementing agency |
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1 |
Mobile Medical Unit Programme |
Healthcare under Item No.(i) |
Ahmednagar (Ahmednagar, Maharashtra), Halol (Panchmahal, Gujarat), Mohali (SAS Nagar, Punjab), Toansa(SBS Nagar, Punjab), Paonta Sahib (Sirmour, Himachal Pradesh), Dewas (Dewas, Madhya Pradesh), Panoli(Bharuch, Gujarat), Ankleshwar(Bharuch, Gujarat), Karkhadi(Vadodara, Gujarat), Malanpur (Bhind, Madhya Pradesh) and Madurantakam (Kanchipuram, Tamilnadu) |
31.60 |
20.84 |
0.77 |
91.02 |
Implementing Agency: 1. Help Age India 2. Sun Pharma Community Healthcare Society |
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2. |
Education Programme |
Education under Item No.(ii) |
Karkhadi (Vadodara, Gujarat), Malanpur(Bhind, Madhya Pradesh), Ahmednagar (Ahmednagar.Maharashtra), Panoli(Bharuch, Gujarat), Madurantakam (Kanchipuram, Tamilnadu), Dewas (Dewas, Madhya Pradesh), Halol (Panchmahal, Gujarat), Silvassa (UT of Dadra & Nagar Haveli) and Toansa(SBS Nagar, Punjab) |
6.76 |
5.41 |
0.04 |
10.76 |
Directly and Implementing Agency: SVADES |
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3. |
Sanitation Programme |
Healthcare under Item No.(i) |
Ahmednagar (Ahmednagar, Maharashtra), Silvassa, (UT of Dadra & Nagar Haveli), Halol (Panchmahal, Gujarat), Panoli (Bharuch, Gujarat), Toansa (SBS Nagar, Punjab) and Madurantakam (Kanchipuram, Tamilnadu) |
5.29 |
5.17 |
0.25 |
13.82 |
Directly and Implementing Agency: GVT-Dahod |
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4. |
Environment Conservation Programme |
Environment under Item No.(iv) |
Panoli (Bharuch, Gujarat), Ahmednagar (Ahmednagar, Maharashtra), Paonta (Sirmour, Himachal Pradesh), Madurantakam (Kanchipuram, Tamilnadu) and Toansa (SBS Nagar, Punjab) |
2.18 |
1.86 |
0.00 |
2.95 |
Directly |
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5. |
Water Conservation -Pond Deepening Project |
Rural Development Project under Item No. (x) |
Halol (Panchmahal, Gujarat), Panoli (Bharuch, Gujarat), Ankleshwar (Bharuch, Gujarat) and Karkhadi (Vadodara, Gujarat) |
2.10 |
1.62 |
0.00 |
1.62 |
Directly |
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6. |
Rural Development Project |
Rural Development under Item No. (x) |
Dahej (Bharuch, Gujarat), Halol (Panchmahal, Gujarat), Panoli (Bharuch, Gujarat), Ahmednagar (Ahmednagar, Maharashtra), and Madurantakam (Kanchipuram, Tamilnadu) |
1.70 |
1.53 |
0.00 |
4.51 |
Directly and implementing Agency: GVT-Dahod |
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7. |
Disaster Relief Programme |
Disaster Relief under Item No. (i) |
Paonta (Sirmour, Himachal Pradesh) and Madurantakam (Kanchipuram, Tamilnadu) |
1.01 |
1.01 |
0.00 |
1.22 |
Directly |
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8. |
Drinking Water Project |
Drinking Water under Item No. (i) |
Toansa (SBS Nagar, Punjab) and Panoli (Bharuch, Gujarat) |
0.45 |
0.45 |
0.02 |
0.62 |
Directly |
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9. |
Healthcare Programme |
Healthcare under Item No.(i) |
Halol (Panchmahal, Gujarat) and Toansa (SBS Nagar, Punjab) |
0.47 |
0.37 |
0.00 |
1.05 |
Directly |
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Grand Total |
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38.27 |
1.10 |
127.57 |
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The CSR Committee confirms that the implementation and monitoring of CSR Policy, is in compliance with CSR objectives and Policy of the Company.
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For and on behalf of the Board of Directors |
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Dilip S. Shanghvi |
Sudhir V.Valia |
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Place: Mumbai |
Chairman - CSR Committee and |
Member - CSR Committee and |
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Date: May 28, 2019 |
Managing Director |
Whole-Time Director |
CSR ACTIVITIES
Sun Pharmaceutical Industries Limited ("Sun Pharma") has taken-up diversified need-based CSR Projects in rural areas lying in the vicinity of its plant locations and also in remote, unprivileged areas for sustainable development of people as a part of its Social Responsibilities.
Our main objective is to emphasise on social process, quality and ensuring the sustainability, hence our implementation approach is strategic in nature, is more inclined towards the sustainability of the projects, addressing community needs, focussing poorest of the poor, disadvantaged, BPL and weaker sections of society.
All our CSR endeavours originate from our all-around enunciated Corporate Social Responsibility (CSR) Policy and our CSR program aims to address the immediate and long term needs of the community and focus on where we can have the biggest impact. We regularly listen to subject matter experts and gather feedback from all stakeholders.
At Sun Pharma, our CSR programmes mainly focussed upon Health, Education, Sanitation, Drinking water, Environment Conservation, Rural Development and Disaster Relief, which are designed to improve the quality of life of the people.
Mobile Medical Unit Programme
Mobile Medical Unit (MMU) Programme has been designed to meet the primary health needs of the communities residing in rural areas. The main objective of this programme is to provide a range of health care services focused upon maternal and child healthcare for populations living in remote, inaccessible, un-served and underserved areas at the doorsteps of these communities. This programme also emphasises on reduction in Maternal and Infant Mortality rate, improving health of adolescent girls, Prevention and Control of Communicable and Non-communicable diseases, Awareness regarding HIV/AIDS within the community.
The Company has invested Rs. 21.61 Million in this programme during the FY 2018-19. There were 11 locations covered under this project and has served around 147,611 patients with Clinical Treatment, whereas 78,255 beneficiaries were also benefitted under Preventive and Promotive healthcare services.
Education Programme
Education programme includes various different activities such as Infrastructure Upgradation in Schools, Computer literacy programme for students, Model School development Project, Provision of potable drinking water for the students, distribution of stationary/books, etc. These projects were implemented by Sun Pharma in various different locations with an objective to provide quality education to the underserved and under- privileged children of the rural remote areas. The project has covered different schools from Gujarat, Maharashtra, M.P., Punjab, UT of Dadra & Nagar
Haveli and Tamilnadu and the same has benefitted more than 11,821 students with an investment of Rs.5.45 Million during FY 2018-19.
Sanitation Programme
Household toilets are one of the most important aspects of sanitation. Company has constructed 216 individual household toilets for unprivileged communities based at Halol, Silvassa, Ahmednagar and Madurantakam locations with an objective to encourage better health for communities and improved quality of life amongst people living in rural areas. Apart from construction of Individual Household Toilets, Sun Pharma has also emphasised upon IEC (Information, Education and Communication) activities in various locations considering that construction of toilets is not sufficient if there is no proper awareness within the community regarding the use of toilets. Therefore, Company has carried out a Sanitation and Cleanliness drive across all project locations, which has benefitted the communities at large. The project was undertaken with an investment of Rs. 5.42 Million during the FY 2018-19 for the construction of individual household's toilets and its Sanitation and Cleanliness drive programme.
Environment Conservation Programme
The Company has continued this programme implemented towards environment protection and to create awareness within the community regarding the importance of environment conservation.
Some of the activities that were undertaken by the company are:
1. Roadside tree plantation
2. Distribution of saplings
3. Awareness generation programme within the community for the importance of tree plantation
4. Celebration of Environment Day in Schools
The Company has made an investment of Rs.1.86 Million during the FY 2018-19 in various locations like Ahmednagar, Panoli, Toansa, Maduranthakam and Paonta which has benefitted communities at large.
Water Conservation - Pond Deepening Project
Water Conservation - Pond Deepening Project is an initiative undertaken by Sun Pharma as an alignment with flagship Scheme of Gujarat Government, titled as "Sujalam Sufalam Yojana" which focuses on water conservation during rainy season to increase the availability of water in rural areas where local villagers & communities are directly dependent upon local water bodies like ponds and ground water for their survival. This project was implemented in Ankleshwar, Halol, Karkhadi and Panoli with an investment of Rs.1.62 Million during the FY 2018-19.
Rural Development Project
Rural Development projects were implemented to improve the lives of rural population in terms of access to facilities such as healthcare and education. The Company has undertaken various activities such as Installation of Solar lights in Abhetwa Village, Halol Taluka, Gujarat, Installation of Traffic Signal lights in Ahmednagar Taluka, Maharashtra. Construction of Community Kitchen Area in Dahej, Gujarat, Provision of LPG connection and Utensils in Anganbari Centers of rural areas of Madurantakam Taluka, Tamilnadu and Playground development at Panoli, Gujarat.
The company has fulfilled its social responsibility after addressing the needs of rural neighbouring communities in the vicinity of its operational manufacturing sites with an investment of Rs.1.53 Million during the FY 2018-19 and has benefitted 4,132 villagers and other communities through this project.
Disaster Relief Programme
Sun Pharma supported the cause of immediate disaster relief for communities during the flood affected disaster that took place in Himachal Pradesh and Tamilnadu. The programme was taken-up with an investment of Rs 1.01 Million during the FY 2018-19.
Drinking Water Project
Drinking Water Project was implemented in Toansa and Panoli with an aim to provide safe drinking water for neighbouring communities residing in vicinity of our plant areas.
This project was implemented with an investment of Rs.0.47 Million for Community water Project at Bhadi Village, District Bharuch, Gujarat and for running deep bore well at village Toansa in Punjab. 125 Households were provided with clean and potable drinking water in upper and lower Toansa village, whereas in Panoli, this project aimed at benefitting around 2,831 villagers of Bhadi village with the help of WASMO.
Healthcare Programme
Under Healthcare programme, basic health services such as distribution of medicines, mega medical camp and maintenance of Subsidiary health center were undertaken at Toansa, Punjab, whereas the Company has installed medical equipment for Blood Bank development which is benefitting the community of Halol area at large. The project has benefitted more than 2,240 patients in Toansa and under this programme the company has invested Rs. 0.37 Million during the FY 2018-19.
Annexure - G
Particulars of Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo required under the Companies (Accounts) Rules, 2014
A. Conservation of Energy
1. Steps taken or impact on Conservation of Energy
⢠Hot water generation system for process is changed to plate heat exchangers from direct live steam heating.
⢠Conventional light fittings are replaced with LED lighting.
⢠Old natural cooling towers are replaced with forced draft cooling tower to improve the performance of utilities.
⢠Cooling tower centrifugal pumps are replaced with inline energy efficient pumps thereby the motor energy reduced by more than 50%.
⢠Usage of steam with long distribution piping for HVAC hot water demand is replaced by Heat pump.
⢠Steam condensate recovery is improved.
⢠Replaced reciprocating air compressor by energy efficient screw compressor.
⢠New motor procurement higher than 30 kW is done with energy efficient motor.
⢠Power factor is improved at various sites.
⢠Designed pump head is reviewed to meet the actual demand there by substantial saving on Power.
⢠Water Ring Vacuum pumps are replaced with Dry Vacuum Pumps.
2. Steps taken by the Company for utilising alternate sources of energy
In following factories biomass briquettes are used instead of conventional fuel (FO/HSD) - Ahmednagar, Panoli, Mohali, Silvassa, Dadra, Karkhadi, Dewas, MKM Chennai, Paonta Sahib. In MKM Chennai - Partially power is used from the wind mills. In Gurgaon Location - Partially power is used from rooftop solar.
3. Capital investment on energy conservation equipments
Capital investment of Rs.91.1 Million is done on energy conservation equipments.
B. Technology Absorption
(A) Research and Development
Expenditure on R&D
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(Rs. in Million) |
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Year ended March 2019 |
Year ended March 31, 2018 |
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Capital |
590.9 |
1,591.0 |
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Revenue |
9,029.9 |
8,011.5 |
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Total |
9,620.8 |
9,602.5 |
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Total R&D expenditure as % of Total Turnover |
9.8% |
10.9% |
(B) Technology Absorption, Adaptation and Innovation 1. Efforts in brief, made towards technology absorption, adaptation and innovation
The Company continues to invest on R&D, both as revenue expenses as well as capital investments. Part of this spending is for developing complex products, specialty products, generic products, and API technologies that are complex and may require dedicated manufacturing blocks. Investments have been made in creating research sites, employing scientifically skilled and experienced manpower, adding equipment, sponsored research and in accessing world class consultants to continuously upgrade the research understanding of the scientific team in the technologies and therapy areas of our interest.
There has been thrust on the development of novel technologies like use of green reagents for chemical transformations in API synthesis and ultrasonic crystallisation for achieving required particle size, capillary flow reactors for continuous process and safety related studies using reaction calorimetry. Product Life Cycle management has been undertaken for key products. Backward integration is a key strategic objective and many of our products enjoy the benefit of this backward integration.
Process robustness has been implemented for wide range of products with the objective to reduce cost and increase in-process capability.
Novel compact dosage forms having differentiation with regards to improved stability and/or reduced pharmacokinetic variability have been developed for the Indian market. Stable liquid oral formulations of labile products are also being developed.
2. Benefits derived as a result of the above efforts e.g. product improvement, cost reduction, product development, import substitution
(a) Offers complete basket of products under chronic therapeutic classes. Many products are in the pipeline for future introduction in India, emerging markets, as well as US and European generic market. The company has developed an ability to challenge patents in the US market, and earn exclusivity.
(b) Not dependent on imported technology, can make high-end products available at competitive prices by using indigenously developed manufacturing processes and formulation technologies.
(c) Offers technologically advanced differentiated products which are convenient and safe for administration to patients.
(d) We are among the few selected companies that have set up completely integrated manufacturing capability for the production of anticancer, hormones, peptide, immunosuppressant and steroidal drugs.
(e) The Company has benefited from reduction in cost due to import substitution and increased revenue through higher exports.
(f) Clinical studies of some products (complex and difficult to formulate) have been carried out at our in-house clinical pharmacology units. This has helped to maintain R&D quality and regulatory compliance with significantly reduced cost.
3. Your company has not imported technology during the last 5 years reckoned from the beginning of the financial year.
C) Foreign Exchange Earnings and Outgo -
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(Rs. in Million) |
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Year ended March 31, 2019 |
Year ended March 31, 2018 |
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Earnings |
66,025.4 |
51,402.9 |
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Outgo |
38,610.2 |
32,233.0 |
Â
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For and on behalf of the Board of Directors |
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Place: Mumbai |
Israel Makov |
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Date: May 28, 2019 |
Chairman |
Â
Mar 31, 2018
DIVIDEND
Board''s Report
Your Directors take pleasure in presenting the Twenty-Sixth Annual Report and Company''s Audited Financial Statements for the financial year ended March 31, 2018.
FINANCIAL RESULTS
(Rs, in Million)
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Standalone |
Consolidated |
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Particulars |
Year ended 1 |
Year ended |
Year ended |
Year ended |
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March 31, 2018 1 |
March 31, 2017* |
March 31, 2018 1 |
March 31, 2017 |
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Revenue from operations |
79,476.0 |
77,932.0 |
264,894.6 |
315,784.4 |
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Profit / (Loss) before tax but after exceptional item |
(5199.8) |
(168.0) |
34,789.8 |
90,478.7 |
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Tax Expense: |
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-Current Tax |
20.2 |
57.7 |
6,628.0 |
4,046.4 |
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-Deferred Tax Charge / (Credit) |
(274.1) |
2.7 |
(720.6) |
8,069.3 |
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-Deferred tax charge / (Credit) - exceptional |
- |
- |
2,544.5 |
- |
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Profit / (Loss) after tax |
(4,945.9) |
(228.4) |
26,337.9 |
78,363.0 |
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Profit / (Loss) after Tax but before Share in profit / (loss) of |
- |
- |
26,337.9 |
78,363.0 |
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associates / joint ventures |
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Share of Profit/ (loss) of associates / joint ventures (Net) |
- |
- |
(254.4) |
99.3 |
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Profit for the year before non-controlling interests |
- |
- |
26,083.5 |
78,462.3 |
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Non-controlling interests |
- |
- |
4,468.0 |
8,818.6 |
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Profit for the year attributable to owners of the Company |
- |
- |
21,615.5 |
69,643.7 |
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Total other Comprehensive Income |
494.9 |
(634.5) |
5,232.5 |
(14,871.9) |
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Total Comprehensive Income / (Loss) for the year attributable to: |
(4,451.0) |
(862.9) |
31,316.0 |
63,590.4 |
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-Owners of the Company |
(4,451.0) |
(862.9) |
26,370.3 |
56,306.1 |
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-Non-Controlling Interest |
- |
- |
4,945.7 |
7,284.3 |
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Opening balance in Retained Earnings |
124,860.0 |
126,353.4 |
306,456.9 |
2,51,630.4 |
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Additions: |
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Transfer on Merger* |
- |
1,824.8 |
- |
- |
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Amount available for appropriation |
(4,511.5) |
(829.2) |
22,123.2 |
68,933.4 |
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Less: Appropriations |
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Dividend on Equity Shares |
7,977.4 |
2,406.8 |
7,977.4 |
2,406.8 |
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Dividend Distribution Tax |
3.4 |
74.7 |
1,624.0 |
490.0 |
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Transfer to various Reserves: |
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-Capital redemption Reserve |
- |
7.5 |
- |
7.5 |
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-Debenture redemption Reserve |
- |
- |
(833.4) |
1,041.7 |
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-Capital reserve |
- |
- |
- |
50.6 |
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-Buy-back of equity shares by overseas subsidiary |
- |
- |
2,168.1 |
10,110.3 |
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company |
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-Legal reserve |
- |
- |
2.5 |
- |
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-General reserve |
- |
- |
- |
- |
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Closing balance in Retained Earnings |
112,367.7 |
124,860.0 |
317,641.5 |
306,456.9 |
*Refer Note 56(13) of Standalone Financial Statements (Note 18 of Abridged Standalone Financial Statements)
Your Directors have recommended a dividend of Rs, 2.00 (Rupees Two only) per equity share of Rs, 1/- each [previous year Rs, 3.50/- per equity share of Rs, 1/- each] for the year ended March 31, 2018, subject to the approval of the equity shareholders at the ensuing 26th Annual General Meeting of the Company.
The dividend payout is in accordance with the Company''s Dividend Distribution Policy. The Dividend Distribution Policy of the Company is provided as ''Annexure - A'' to this Report. The policy is also available on the website of the Company and can be accessed through the web link: http://www.sunpharma.com/policies.
CHANGES IN CAPITAL STRUCTURE
During the year under review, the Company has allotted 18893 equity shares of Rs, 1/- each under Sun Employee Stock Option Scheme - 2015 and 13106 equity shares of Rs, 1/- each under Sun Employee Stock Option Plan - 2015 thereby the paid up share capital of the Company increased to Rs, 2,399,323,180/- (Rupees Two Billion Three Hundred Ninety-Nine Million Three Hundred Twenty-Three Thousand One Hundred Eighty only) as on March 31, 2018.
Further, on May 24, 2018, the Company has allotted 1314 equity shares of Rs, 1/- each under Sun Employee Stock Option Scheme - 2015.
SCHEME OF ARRANGEMENTS
1. During the year, the Hon''ble National Company Law Tribunal of Gujarat at Ahmedabad had vide its order dated August 11, 2017 sanctioned the Scheme of Arrangement among Sun Pharma Medisales Private Limited, Ranbaxy Drugs Limited, Gufic Pharma Limited, Vidyut Investments Limited (collectively âTransferor Companiesâ) wholly owned subsidiaries of the Company and the Company (âTransferee Companyâ) and their respective members and creditors (âSchemeâ) whereby the Transferor Companies stand amalgamated with the Company w.e.f. September 08, 2017 with appointed date being April 01, 2017. Pursuant to the Scheme no consideration was paid.
2. During the year, the Board of Directors at its meeting held on November 14, 2017 has approved another Scheme of Arrangement among Sun Pharma Global FZE (âTransferor Companyâ), a wholly owned subsidiary of the Company and the Company and their respective members and creditors (âSchemeâ) for demerger of the Specified Undertaking (as defined in the Scheme) of Transferor Company into the Company. The Hon''ble National Company Law Tribunal of Gujarat, at Ahmadabad (âNCLTâ) had dispensed with convening of meeting of secured creditors of the Company and ordered to convene the meeting of equity shareholders and unsecured creditors of the Company on June 01, 2018 to approve the Scheme with appointed date as April 01, 2017 or such other date as may be agreed between the Transferor Company and the Company and approved by the NCLT. Pursuant to said Scheme, no consideration shall be paid and no shares of the Company shall be issued and allotted to the Transferor Company. The Scheme will result in strengthening of the business, synergestic benefits, economies of scale, faster decision making, integration of supply chain, reduction in operating costs, strengthening the focus, increased ability to face the competitive regulatory environment, increasing profitability, higher market share etc.
3. Further the Board of Directors at its meeting held on May 25, 2018 has also approved a Composite Scheme of Arrangement among the Company and Sun Pharma (Netherlands) B.V.
and Sun Pharmaceutical Holdings USA Inc, wholly owned subsidiaries of the Company and their respective members and creditors (âSchemeâ), for demerger of Specified Investment Undertaking -1 (as defined in the Scheme) of the Company into Sun Pharma (Netherlands) B.V. and Specified Investment Undertaking -2 (as defined in the Scheme) of the Company into Sun Pharmaceutical Holdings USA Inc. This demerger shall enable the Company to address the risks and policies, ability to strategize the remaining business for long term growth, strengthening of the investment portfolio, consolidation and creation of shareholder value. The Company shall be making the necessary application to the Hon''ble National Company Law Tribunal of Gujarat, at Ahmedabad and such other authorities as may be required for obtaining necessary approvals for the aforesaid Scheme.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return as required under sub-section (3) of Section 92 of the Companies Act, 2013 (''the Act'') in form MGT-9 is provided as ''Annexure - B'' to this Report.
SUBSIDIARIES/ JOINT VENTURES/ ASSOCIATE COMPANIES
The statement containing the salient features of the Financial Statements of the Company''s subsidiaries/ joint ventures/ associate companies is given in Form AOC - 1, provided in notes to the Consolidated Financial Statements, forming part of the Annual Report.
The highlights of performance of subsidiaries, joint ventures and associate companies and their contribution to the overall performance of the Company during the financial year is given under ''Annexure A of the Consolidated Financial Statements'' forming part of the Annual Report.
Details pertaining to companies that became subsidiaries/ joint ventures/associates and those that ceased to be the subsidiaries/ joint ventures/associates of the Company during the year are provided in Note no. 39 of the notes to the Consolidated Financial Statements, forming part of the Annual Report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Dilip S. Shanghvi, Managing Director and Mr. Sudhir V. Valia, Wholetime Director of the Company retire by rotation and being eligible offer themselves for reappointment at the ensuing 26th Annual General Meeting of the Company.
The present term of appointment of Mr. Sudhir V. Valia and Mr. Sailesh T. Desai as Whole-time Directors will expire on March 31, 2019. They have made significant contributions to the overall growth of the Company''s business. Your Directors recommend the re-appointment of Mr. Sudhir V. Valia and Mr. Sailesh T. Desai for a further period of 5 (Five) years from April 01, 2019 to March 31, 2024, and remuneration for a period of 3 (Three) years from April 01, 2019 to March 31, 2022 due to inadequacy of profits, for approval of the members at the ensuing 26th Annual General Meeting of the Company.
Further the present term of appointment of Mr. Kalyanasundaram Subramanian as Whole-time Director will expire on February 13, 2019. He has made significant contribution to the overall growth of the Company''s business. Your Directors recommend the re-appointment of Mr. Kalyanasundaram Subramanian for a further period of 2 (Two) years from February 14, 2019 to February 13, 2021, without any remuneration, for approval of the members at the ensuing 26th Annual General Meeting of the Company.
Mr. Vivek Chaand Sehgal and Mr. Gautam Doshi were appointed as Additional Independent Directors of the Company w.e.f. November 14, 2017 and May 25, 2018 respectively in accordance with the provisions of Section 149 and 161(1) of the Act and they both hold office upto the date of ensuing 26th Annual General Meeting. The Board recommends appointment of Mr. Vivek Chaand Sehgal and Mr. Gautam Doshi as Independent Directors of the Company for a term of 5(Five) years effective from November 14, 2017 and May 25, 2018 respectively for approval of the members at the ensuing 26th Annual General Meeting of the Company.
Pursuant to Regulation 17(1A) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ) to be effective from April 01, 2019, the consent of the members by way of Special Resolution is required for continuation of a Non-Executive Director of a company beyond the age of seventy five years. Mr. Israel Makov, Non-Executive Director and the Chairman of the Company, having attained an age of 79 years, the Board has recommended his continuation as a Director of the Company for approval of the members at the ensuing 26th Annual General Meeting of the Company.
Mr. Hasmukh Shah had resigned as an Independent Director of the Company effective from November 15, 2017. The Board of Directors places on record their appreciation for contributions made by Mr. Hasmukh Shah during his tenure as an Independent Director of the Company.
Appropriate resolutions for the appointment / re-appointment of the Directors are being placed for your approval at the ensuing 26th Annual General Meeting. Your Directors recommend the appointment/reappointment of the aforesaid Directors by the members at the ensuing 26th Annual General Meeting of the Company.
As informed in the previous year''s Board''s Report, Mr. C.S. Muralidharan has been appointed as Chief Financial Officer of the Company w.e.f June 19, 2017 and Mr. Uday Baldota had resigned as Chief Financial Officer w.e.f. June 19, 2017 to assume office as the Director and Chief Executive Officer of Taro Pharmaceutical Industries Limited, a subsidiary of the Company.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed under sub-section (6) of Section 149 of the Act and under Listing Regulations.
REMUNERATION POLICY FOR DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES AND CRITERIA FOR APPOINTMENT OF DIRECTORS
For the purpose of selection of any Director, the Nomination and Remuneration Committee identifies persons of integrity who possess relevant expertise, experience and leadership qualities required for the position. The Committee also ensures that the incumbent fulfills such criteria with regard to qualifications, positive attributes, independence, age and other criteria as laid down under the Act, Listing Regulations or other applicable laws. The Board has, on the recommendation of the Nomination and Remuneration Committee framed a policy on remuneration of Directors, Key Managerial Personnel and other Employees. The Remuneration Policy of the Company is enclosed as ''Annexure B to Corporate Governance Report'', which forms part of this Report
FAMILIARISATION PROGRAMME FOR THE INDEPENDENT DIRECTORS
In compliance with the requirements of Regulation 25(7) of the Listing Regulations, the Company has put in place a Familiarization Programme for the Independent Directors to familiarise them with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model etc. The details of the Familiarization Programme conducted are available on the website of the Company www.sunpharma.com and may be accessed through the web link: http://www.sunpharma. com/policies.
NUMBER OF MEETINGS OF THE BOARD
The Board of Directors of the Company met 5 (Five) times during the year under review on May 26, 2017; August 11, 2017; September 26, 2017; November 14, 2017; and February 14, 2018. The particulars of attendance of the Directors at the said meetings are detailed in the Corporate Governance Report, which forms a part of this Report. The intervening gap between the meetings was within the period prescribed under the Act and Listing Regulations.
EVALUATION OF PERFORMANCE OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS
During the year, the evaluation of the annual performance of individual Directors including the Chairman of the Company and Independent Directors, Board and Committees of the Board was carried out under the provisions of the Act, relevant Rules, and the Corporate Governance requirements as prescribed under Regulation 17 of Listing Regulations and based on the circular issued by SEBI dated January 5, 2017 with respect to Guidance Note on Board Evaluation. The Nomination and Remuneration Committee had approved the criteria for the performance evaluation of the Board, its Committees and individual Directors as per the SEBI Guidance Note on Board Evaluation.
The Chairman of the Company interacted with each Director individually, for evaluation of performance of the individual Directors. The evaluation for the performance of the Board as a whole and of the Committees were conducted by way of questionnaires.
In a separate meeting of Independent Directors, performance of Non Independent Directors and performance of the Board as a whole was evaluated. Further, they also evaluated the performance of the Chairman of the Company, taking into account the views of the Executive Directors and Non-executive Directors.
The performance of the Board was evaluated by the Board after seeking inputs from all the Directors on the basis of various criteria such as structure and diversity of the Board, competency of Directors, experience of Director, strategy and performance evaluation, secretarial support, evaluation of risk, evaluation of performance of the management and feedback, independence of the management from the Board etc. The performance of the Committees was evaluated by the Board after seeking inputs from the Committee members on the basis of criteria such as mandate and composition, effectiveness of the committee, structure of the committee and meetings, independence of the committee from the Board and contribution to decisions of the Board. The Nomination and Remuneration Committee reviewed the performance of the individual Directors on the basis of the criteria such as qualification, experience, knowledge and competency, fulfillment of functions, availability and attendance, initiative, integrity, contribution and commitment etc, and the Independent Directors were additionally evaluated on the basis of independence, independent views and judgment etc. Further the evaluation of Chairman of the Board, in addition to the above criteria for individual Directors, also included evaluation based on effectiveness of leadership and ability to steer the meetings, impartiality, etc.
HUMAN RESOURCES
We continue to believe that our organizational plans are fuelled by our employees and in an ever-changing business environment, it is critical to have credible and transparent people management practices and policies. The Human Resources agenda focuses on employee welfare, productivity and performance as a priority.
We believe nurturing a high performance culture is imperative.
Your company is proud to have talent which is varied and deep in its experiences and expertise across manufacturing, R & D, sales and other functions. Globally, the Company (including subsidiary and associate companies) has a dedicated human capital of over 30,000 employees at various locations across our various offices, R & D Centers & more than 40 active manufacturing locations and dedicated sales professionals across various geographies. Your Directors would also like to take this opportunity to express their appreciation for the hard work and commitment of the employees of the Company and look forward to their continued contribution.
Information as per Section 197 (12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in ''Annexure - C'' to this Report. Further, the information pertaining to Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, pertaining to the names and other particulars of employees is available for inspection at the Registered office of the Company during business hours and pursuant to the second proviso to Section 136(1) of the Act, the Report and the accounts are being sent to the members excluding this. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary/Compliance Officer at Corporate office or Registered office address of the Company.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
Your Company strongly believes in providing a safe and harassment free workplace for each and every individual working for the Company through various interventions and practices. It is the continuous endeavor of the Management of the Company to create and provide an environment to all its employees that is free from discrimination and harassment including sexual harassment. The Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made there under. The Company has arranged various interactive awareness workshops in this regard for the employees at the manufacturing sites, R & D set ups & corporate office during the year under review. The Company has submitted the Annual Returns to the local authorities under the above mentioned Act. During the financial year ended March 31, 2018, 1 complaint pertaining to sexual harassment was received and the same was resolved by the Company. There are no complaints pending as at the end of the financial year.
AUDITORS Statutory Auditors
S R B C & Co LLP, Chartered Accountants, (Firm''s Regn. No. 324982E/ E300003), were appointed as the Statutory Auditors of the Company for a period of 5 (five) years at the 25th Annual General Meeting of the Company to hold office till 30th Annual General Meeting of the Company.
The Auditor''s Report for the financial year ended March 31, 2018, has been issued with an unmodified opinion, by the Statutory Auditors.
Secretarial Auditor
The Company had appointed Messrs C. J. Goswami & Associates, Practicing Company Secretaries, Mumbai to undertake the Secretarial Audit of the Company for the financial year ended March 31, 2018. The Secretarial Audit Report in the Form No. MR - 3 for the year is provided as ''Annexure - D'' to this Report. The Secretarial Audit Report for the year does not contain any qualification, reservation or adverse remark.
Cost Auditor
The Company has appointed Messrs Kailash Sankhlecha & Associates, Cost Accountants, Vadodara as Cost Auditor of the Company for conducting Cost Audit in respect of Bulk Drugs & Formulations of your Company for the financial year 2018-19.
SECRETARIAL STANDARDS
The Company has complied with the applicable Secretarial Standards as amended from time to time.
LOANS, GUARANTEES & INVESTMENTS
The particulars of loans, guarantees and investments have been disclosed in the Financial Statements.
RELATED PARTY TRANSACTIONS
The policy on Related Party Transactions as approved by the Board is available on the website of the Company and can be accessed through the web link http://www.sunpharma.com/policies. All contracts/arrangements/transactions entered by the Company during the year under review with the related parties were in the ordinary course of business and on an arm''s length basis.
As required under Section 134(3)(h) of the Act, details of transactions entered with Related Parties under the Act exceeding ten percent of the annual consolidated turnover as per the last audited financial statements are given in Form AOC-2 provided as ''Annexure - E'' to this Report.
AUDIT COMMITTEE COMPOSITION
The details pertaining to composition of Audit Committee are included in the Corporate Governance Report, which forms part of this Report.
RISK MANAGEMENT
The Company has developed & implemented an integrated Enterprise Risk Management Framework through which it identifies monitors, mitigates & reports key risks that impacts its ability to meet the strategic objectives. The Board of Directors have constituted a Risk Management Committee which is entrusted with the responsibility of overseeing various strategic, operational and financial risks that the organization faces, along with the adequacy of mitigation plans to address such risks. There is an overarching Risk Management Policy in place that was reviewed and approved by the Board. The Corporate Governance Report, which forms part of this Report, contains the details of Risk Management Committee of the Company.
INTERNAL FINANCIAL CONTROLS
The Company has in place well defined and adequate internal financial control framework. During the year under review, such controls were tested and no material weaknesses were observed both in their design or operations.
CORPORATE SOCIAL RESPONSIBILITY
In compliance with the requirements of Section 135 of the Act read with the Companies (Corporate Social Responsibility) Rules, 2014, the Board of Directors have constituted a Corporate Social Responsibility (CSR) Committee of the Company. The details of membership of the Committee and the meetings held are detailed in the Corporate Governance Report, forming part of this Report. During the year under review, the Board of Directors have approved certain amendments in CSR policy pertaining to the projects and CSR activities to be undertaken by the Company. The contents of the CSR Policy of the Company as approved by the Board on the recommendation of the CSR Committee are available on the website of the Company and can be accessed through the web link: http://www.sunpharma.com/policies. The average net profit of the Company for last three financial years is negative, therefore the Company was not required to spend on CSR activities during the year, however, the Company has voluntarily spent on CSR activities. The annual report on CSR activities containing details of voluntary expenditure incurred by the Company and brief details on the CSR activities are provided in ''Annexure - F'' to this Report.
PUBLIC DEPOSITS
The Company has not accepted any deposit from the Public during the year under review, under the provisions of the Act and the rules framed there under.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis as prescribed under Part B of Schedule V read with Regulation 34(3) of the Listing Regulations is provided in a separate section and forms part of this Report.
CORPORATE GOVERNANCE REPORT
Report on Corporate Governance and Certificate of the Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated in Part C of Schedule V of the Listing Regulations, are provided in a separate section and forms part of this Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, is provided as ''Annexure - G'' to this Report.
EMPLOYEESâ STOCK OPTION SCHEMES
The Company has two Employees'' Stock Option Schemes, one through Trust Route and the other by Direct Route, both inherited from erstwhile Ranbaxy Laboratories Limited (âRanbaxyâ). The scheme through Direct Route has been named as Sun Pharma
Employee Stock Option Scheme - 2015, and the one through Trust Route as Sun Pharma Employee Stock Option Plan - 2015. Both the schemes were adopted by the Company with certain amendments consequent upon merger of erstwhile Ranbaxy into the Company. Both the Schemes are in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014. The Scheme through Trust Route i.e. Sun Pharma Employee Stock Option Plan - 2015 has been completed in August 2017.
Disclosures with respect to the Employees'' Stock Option Schemes in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 are available on the Company''s website and can be accessed at: http://www.sunpharma. com/pdflist/all-documents.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
There are no significant and material orders passed by the regulators or courts or tribunals which impact the going concern status and Company''s operations in future.
WHISTLE BLOWER POLICY/ VIGIL MECHANISM
To create enduring value for all stakeholders and ensure the highest level of honesty, integrity and ethical behavior in all its operations, the Company has adopted a ''Global Whistle Blower Policy'' for Sun Pharmaceutical Industries Limited and all its subsidiaries, in addition to the existing Global Code of Conduct that governs the actions of its employees. Further details on vigil mechanism of the Company are provided in the Corporate Governance Report, forming part of this Report.
DIRECTORSâ RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 134(5) read with Section 134(3)(c) of the Act, with respect to Directors'' Responsibility Statement, it is hereby confirmed that:
a) in the preparation of the annual accounts for the financial year ended March 31, 2018, the applicable accounting standards have been followed and there are no material departures from the same;
b) the Directors 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 as at March 31, 2018 and of the loss of the Company for the year ended on that date;
c) 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;
d) the Directors have prepared the annual accounts on a going concern basis;
e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
CONSOLIDATED ACCOUNTS
The consolidated financial statements for the year ended March 31, 2018 have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015.
CREDIT RATING
ICRA Ltd. has reaffirmed the highest credit rating of ''[ICRA] A1 ''/''[ICRA] AAA(Stable)'' for the bank facilities, long term/short term borrowings and commercial paper programs of the Company.
Further, CRISIL Ltd. has also reaffirmed the highest credit rating of ''CRISIL A1 and CRISIL AAA/Stable'' for short term & long term bank facilities and commercial paper programs of the Company.
BUSINESS RESPONSIBILITY REPORTING
The Business Responsibility Report of the Company for the year ended March 31, 2018, is made available on the website of the Company at http://www.sunpharma.com/pdflist/all-documents and forms part of the Annual Report, and is also available at the Registered office / Corporate office of the Company for inspection.
A copy of the aforesaid report shall be made available to such of those shareholders who are desirous and interested, upon receipt of a written request from them.
ABRIDGED ANNUAL REPORT
In terms of the provision of Section 136(1) of the Act, Rule 10 of Companies (Accounts) Rules, 2014 and Regulation 36 of the Listing
Regulations and to support Green Initiative, the Board of Directors has decided to circulate the physical copy of Abridged Annual Report containing salient features of Financial Statements and other documents for financial year 2017-18 to the members, who have not registered their e-mail ids. All the annexure to the Board''s Report referred herein viz., Annexure - A to Annexure - G and the Corporate Governance Report (including its annexure) have been excluded from the Abridged Annual Report which is being circulated to the members who have not registered their e-mail id.
The members who are desirous of receiving the full version of the Annual Report may write to the Company''s Registrar and Share Transfer Agent for a copy of the same. Full version of the Annual Report can also be accessed from the Company''s website: www.sunpharma.com
ACKNOWLEDGEMENTS
Your Directors wish to thank all stakeholders, employees and business partners, Company''s bankers, medical professionals and business associates for their continued support and valuable cooperation.
The Directors also wish to express their gratitude to investors for the faith that they continue to repose in the Company.
For and on behalf of the Board of Directors
Place: Mumbai Israel Makov
Date: May 25, 2018 Chairman
Mar 31, 2017
The Directors take pleasure in presenting the Twenty-Fifth Annual Report and Companyâs Audited Financial Statements for the financial year ended March 31, 2017.
FINANCIAL RESULTS
(Rs. in Million)
|
Particulars |
Standalone |
Consolidated |
||
|
Year ended March 31, 2017 |
Year ended March 31, 2016 |
Year ended March 31, 2017 |
Year ended March 31, 2016 |
|
|
Total - Revenue |
78,067.0 |
78,636.9 |
315,784.4 |
284,870.3 |
|
Profit Before Tax |
(324.4) |
(10,820.6) |
90,478.7 |
65,706.3 |
|
Tax Expense: |
||||
|
-Current Tax |
25.1 |
54.5 |
4,046.4 |
11,954.1 |
|
-Deferred Tax Charge / Credit |
- |
- |
8,069.3 |
(2,816.4) |
|
(Loss) / Profit after tax |
(349.5) |
(10,875.1) |
78,363.0 |
56,568.6 |
|
Profit after Tax before Share in profit / (loss) of associates and non controlling interests |
- |
- |
78,363.0 |
56,568.6 |
|
Share of Profit of Associates / Joint ventures (Net) Net Profit after taxes and share of profit / (loss) of associates and joint ventures but before non-controlling interests |
99.3 |
14.5 |
||
|
Total Other Comprehensive Income |
(633.8) |
(247.9) |
(14,871.9) |
14,353.4 |
|
Total Comprehensive Income |
(983.3) |
(11,123.0) |
63,590.4 |
70,936.5 |
|
Total Comprehensive Income for the period attributable to: |
||||
|
-Owners of the Company |
(983.3) |
(11,123.0) |
56,306.1 |
58,251.6 |
|
-Non-Controlling Interest |
7,284.3 |
12,684.9 |
||
|
Opening balance in Retained Earnings |
126,353.4 |
146,184.5 |
251,630.4 |
216,743.1 |
|
Amount available for appropriation |
(949.6) |
(11,141.9) |
68,933.4 |
45,109.6 |
|
Dividend on Equity Shares |
(2,406.8) |
(7,219.5) |
(2,406.8) |
(7,219.5) |
|
Corporate Dividend tax |
(74.7) |
(1,469.7) |
(490.0 ) |
(1,469.7) |
|
Transfer to various Reserves: |
||||
|
-Capital redemption Reserve |
(7.5) |
- |
(7.5) |
- |
|
-Debenture redemption Reserve |
- |
- |
(1,041.7) |
(1,041.7) |
|
-Capital reserve |
- |
- |
(50.6) |
(188.9) |
|
-Buy-back of equity shares by overseas subsidiary company |
- |
- |
(10,110.3) |
(302.3) |
|
-Legal reserve |
- |
- |
- |
(0.2) |
|
-General reserve |
- |
- |
- |
- |
|
Closing balance in Retained Earnings |
122,914.8 |
126,353.4 |
306,456.9 |
251,630.4 |
Figures for Financial Year 2015-16 have been restated as per Ind AS and therefore may not be comparable with financials for Financial Year 2015-16 approved by the Directors and disclosed in the Financial Statement of previous year.
DIVIDEND
Your Directors are pleased to recommend an equity dividend of Rs.3.50/-(Rupees Three and Fifty Paise only) per equity share of Rs.1/- each [previous year Rs.1/- per equity share of Rs.1/- each] for the year ended March 31, 2017, subject to the approval of the equity shareholders at the ensuing Annual General Meeting.
CHANGES IN CAPITAL STRUCTURE
The changes in the capital structure of the Company during the year under review, are as follows:
i. The Company allotted 62682 equity shares of Rs.1/- each under Sun Employee Stock Option Scheme-2015.
ii. On October 18, 2016, the Company completed Buyback of 7,500,000 (Seventy Five Lakhs) fully paid-up equity shares of Rs.1/- each (representing about 0.31% of the total outstanding pre Buyback equity shares of our Company) at a price of Rs.900/- (Rupees Nine Hundred only) per equity share for an aggregate amount of Rs.6,750,000,000/- (Rupees Six Billion Seven Fifty Million only) from the equity shareholders/ beneficial owners holding equity shares as on Record Date i.e. July 15, 2016 on proportionate basis through the tender offer route using mechanism for acquisition of shares through Stock Exchange.
Consequent to above changes, the paid up share capital of the Company decreased to Rs.2,399,291,181/- (Rupees Two Billion Three Hundred Ninety-Nine Million Two Hundred Ninety One Thousand One Hundred Eighty-One only) as on March 31, 2017 from Rs.2,406,728,499/- (Rupees Two Billion Four Hundred Six Million Seven Hundred Twenty-Eight Thousand Four Hundred Ninety-Nine only).
Further, on May 26, 2017, the Company alloted 3000 equity shares of Rs.1/- each under Sun Employee Stock Option Scheme - 2015 and 12,000 equity shares of Rs.1/- each under Sun Employee Stock Option Plan - 2015.
SCHEME OF ARRANGEMENT FOR AMALGAMATION
During the year, the Board of Directors at its meeting held on November 10, 2016 approved the Scheme of Arrangement among Sun Pharma Medisales Private Limited, Ranbaxy Drugs Limited, Gufic Pharma Limited, Vidyut Investments Limited (collectively known as âTransferor Companiesâ, which are the wholly owned subsidiaries of the Company) and the Company and their respective members and creditors (âScheme of Arrangementâ). The Honâble National Company Law Tribunal, at Ahmedabad vide its order dated April 18, 2017, dispensed with convening of meeting of secured creditors of the Company and ordered to convene the meeting of equity shareholders and unsecured creditors of the Company on June 20, 2017 to approve the Scheme of Arrangement. The appointed date for the said amalgamation is April 1, 2017 or such other date as may be agreed between the Transferor Companies and the Company and approved by the National Company Law Tribunal. Pursuant to Scheme of Arrangement, no consideration shall be paid and no shares of the Company shall be issued and allotted on amalgamation. The Scheme of Arrangement will enable the Company to consolidate and effectively manage the Transferor Companies and the Company in a single entity, which will provide several benefits including synergy, economies of scale, attain efficiencies and cost competitiveness.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return as provided under sub-section (3) of Section 92 of the Companies Act, 2013 (âthe Actâ) as prescribed in form MGT-9 is enclosed as âAnnexure Aâ to this Report.
SUBSIDIARIES/ JOINT VENTURES/ ASSOCIATE COMPANIES
The statement containing the salient features of the Financial Statements of the Companyâs subsidiaries/ joint ventures/ associate companies of the Company is given in Form AOC - 1, which forms a part of this Annual Report.
The highlights of performance of subsidiaries, joint ventures and associate companies and their contribution to the overall performance of the Company during the financial year is given under Annexure A of the Consolidated Financial Statements forming part of this Annual Report.
Details pertaining to companies that became subsidiaries/ joint ventures /associates and those that ceased to be the subsidiaries/ joint ventures/ associates of the Company during the year are provided in Note 39 of the notes to the Consolidated Financial Statements, forming part of this Annual Report.
DIRECTORS & KEY MANAGERIAL PERSONNEL
Mr. Israel Makov and Mr. Sailesh T. Desai, Directors of the Company retire by rotation and being eligible offer themselves for reappointment at the ensuing Annual General Meeting.
Mr. Kalyanasundaram Subramanian was appointed as an Additional and Whole-time Director of the Company, without remuneration, w.e.f. February 14, 2017 as per the provisions of Section 161(1) of the Act and he shall hold the office upto the date of ensuing Annual General Meeting. The Board recommends appointment of Mr. Kalyanasundaram Subramanian as a Whole-time Director of the Company for a period of 2 (Two) years upto February 13, 2019 without any remuneration, for approval of the members at the ensuing Annual General Meeting.
The term of appointment of Mr. Dilip S. Shanghvi as Managing Director will expire on March 31, 2018. He has made significant contribution to overall growth of the Companyâs business. Your Directors recommend the re-appointment of Mr. Dilip S. Shanghvi for a further period of five years from April 1, 2018 to March 31, 2023, at remuneration as proposed in the resolution.
Appropriate resolutions for the appointment of the Directors are being placed for your approval at the ensuing Annual General Meeting. Your Directors recommend the appointment of the aforesaid Directors by the Members at the ensuing Annual General Meeting.
Mr. Uday Baldota, Chief Financial Officer of the Company, has resigned as Chief Financial Officer w.e.f. June 19, 2017 to assume office as Chief Executive Officer of Taro Pharmaceutical Industries Limited, a subsidiary of the Company and Mr. C.S. Muralidharan has been appointed as Chief Financial Officer w.e.f June 19, 2017 at the Board Meeting held on May 26, 2017.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed under sub-section (6) of Section 149 of the Act and as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulations, 2015â).
REMUNERATION POLICY FOR DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES AND CRITERIA FOR APPOINTMENT OF DIRECTORS
For the purpose of selection of any Director, the Nomination & Remuneration Committee identifies persons of integrity who possess relevant expertise, experience and leadership qualities required for the position. The Committee also ensures that the incumbent fulfills such criteria with regard to qualifications, positive attributes, Independence, age and other criteria as laid down under the Act, Listing Regulations, 2015 or other applicable laws. The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy on remuneration of Directors & Key Managerial Personnel. The Remuneration Policy of the Company is enclosed as Annexure B to Corporate Governance Report, which forms part to this Report.
FAMILIARISATION PROGRAMME FOR THE INDEPENDENT DIRECTORS
In compliance with the requirements of Regulation 25(7) of the Listing Regulations, 2015, the Company has put in place a Familiarisation Programme for the Independent Directors to familiarise them with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model etc. The details of the Familiarisation Programme conducted are available on the website of the Company www.sunpharma.com and may be accessed through the web link: http://www.sunpharma.com/policies.
NUMBER OF MEETINGS OF THE BOARD
The Board of Directors of the Company met 6 (Six) times during the previous financial year on May 30, 2016; June 23, 2016; August 12, 2016; September 17, 2016; November 10, 2016 and February 14, 2017. The particulars of attendance of the Directors at the said meetings are detailed in the Corporate Governance Report of the Company, which forms a part of this Report. The intervening gap between the Meetings was within the period prescribed under the Act and Listing Regulations, 2015.
EVALUATION OF PERFORMANCE OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS
During the year, the evaluation of the annual performance of individual directors including the Chairman of the Company and Independent Directors, Board and Committees of the Board was carried out under the provisions of the Act and relevant Rules and the Corporate Governance requirements as prescribed under Regulation 17 of Listing Regulations, 2015 and the circular issued by SEBI dated January 5, 2017 with respect to Guidance Note on Board Evaluation. The Nomination and Remuneration Committee had approved the indicative criteria for the evaluation based on the SEBI Guidance Note on Board Evaluation.
The Chairman of the Company interacted with each Director individually, for evaluation of performance of the individual directors. The evaluation for the performance of the Board as a whole and of the Committees were conducted by questionnaires.
In a separate meeting of Independent Directors, performance of Non Independent Directors and performance of the Board as a whole was evaluated. Further, they also evaluated the performance of the Chairman of the Company, taking into account the views of the Executive Directors and Non-executive Directors.
The performance of the Board was evaluated by the Board after seeking inputs from all the Directors on the basis of various criteria such as structure and diversity of the Board, experience of Director, strategy and performance evaluation, secretarial support, evaluation of risk, evaluation of performance of the management and feedback, independence of the management from the Board etc.
The performance of the Committees was evaluated by the Board after seeking inputs from the Committee members on the basis of criteria such as mandate and composition, effectiveness of the committee, structure of the committee and meetings, independence of the committee from the Board and contribution to decisions of the Board. The Nomination and Remuneration Committee reviewed the performance of the individual Directors on the basis of the criteria such as knowledge and competency, fulfillment of functions, availability and attendance, initiative integrity contribution and commitment, independence, independent views and judgement etc.
HUMAN RESOURCES
Your Company recognises that employees are the most valuable resource and endeavors to enable its employees to meet business requirements while meeting their career aspirations. The Human Resource agenda continues to support the business in achieving sustainable and responsible growth by building the right capabilities in the organisation. It continues to focus on progressive employee relations policies and building a high-performance culture with a growth mind-set where employees are engaged, productive and efficient. Globally the Company (including subsidiary and associate companies) has a dedicated human capital of over 30,000 employees at various locations across our Corporate Office, R & D Centers & more than 42 active Manufacturing locations, dedicated Sales Professionals across various geographies. Your Directors would also like to take this opportunity to express their appreciation for the hard work and commitment of the employees of the Company and look forward to their continued contribution. Information as per Section 197 (12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in âAnnexure Bâ to this report. Further, the information pertaining to 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, pertaining to the names and other particulars of employees is available for inspection at the Registered office of the Company during business hours and pursuant to the proviso to Section 136 (1) of the Act, the report and the accounts are being sent to the members excluding this. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary/Compliance Officer at Corporate office or Registered office address of the Company.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
Your Company strongly believes in providing a safe and harassment free workplace for each and every individual working for the Company through various interventions and practices. It is the continuous endeavor of the Management of the Company to create and provide an environment to all its employees that is free from discrimination and harassment including sexual harassment. The Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. The Company arranged various interactive awareness workshops in this regard for the employees in the manufacturing sites, R & D set ups & Corporate Office during the financial year. The Company submitted the Annual returns to the local authorities under the above mentioned act . During the financial year ended March 31, 2017, no complaint pertaining to sexual harassment was received by the Company.
AUDITORS
Statutory Auditors
The Companyâs Auditor, Messrs. Deloitte Haskins & Sells LLP, Chartered Accountants, (Firmâs Regn No. 117366W/W-100018), were appointed as the Statutory Auditors of the Company for a period of three years at the 22nd Annual General Meeting of the Company, and they shall retire at the conclusion of the ensuring 25th Annual General Meeting of the Company. The Auditorsâ Report for the financial year ended March 31, 2017, has been issued with an unmodified opinion, by the Statutory Auditors. The Board of Directors placed on record their appreciation for the retiring auditors.
The Board of Directors of the Company had proposed and recommended the appointment of M/s. S R B C & Co LLP, Chartered Accountants, (Firm Registration No. 324982E/E300003) as the statutory auditors of the Company for a period of 5(Five) years from the conclusion of 25th Annual General Meeting of the Company, upto the conclusion of the 30th Annual General Meeting of the Company, subject to approval of members at the ensuing 25th Annual General Meeting and ratification by members at every Annual General Meeting of the Company. M/s. S R B C & Co LLP, Chartered Accountants, have confirmed their eligibility under Section 141 of the Act and the Rules framed thereunder for the appointment as Auditors of the Company and as required under Regulation 33 of the Listing Regulations, 2015.
Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Messrs C. J. Goswami & Associates, Practicing Company Secretaries, Mumbai to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as âAnnexure Câ.
The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
Cost Auditor
The Company has appointed Messrs. Kailash Sankhlecha & Associates, Cost Accountants, Vadodara as Cost Auditor of our Company for conducting Cost Audit in respect of Bulk Drugs & Formulations of your Company for the year 2017-18.
LOANS, GUARANTEES & INVESTMENTS
The particulars of loans, guarantees and investments have been disclosed in the Financial Statements.
RELATED PARTY TRANSACTIONS
The policy on Related Party Transactions as approved by the Board is available on the website of the Company and can be accessed through the web link http://www.sunpharma.com/policies. All contracts/arrangements/transactions entered by the Company during the previous financial year with the related parties were in the ordinary course of business and on armâs length basis.
The Company has entered into material Related Party Transactions, i.e. transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements, during the year with Sun Pharma Laboratories Limited, a wholly owned subsidiary.
The transactions entered into between a holding company and its wholly owned subsidiary do not require approval of the shareholders.
The disclosure of Related Party Transactions as required under Section 134(3)(h) of the Act in Form AOC 2 is not applicable for the current year.
AUDIT COMMITTEE COMPOSITION
The details pertaining to composition of Audit Committee are included in the Corporate Governance Report, which forms a part of this Report.
RISK MANAGEMENT
The Company has developed & implemented an integrated Enterprise Risk Management Framework through which it identifies monitors, mitigates & reports key risks that impacts its ability to meet the strategic objectives. The Board of Directors have constituted a Risk Management Committee which is entrusted with the responsibility of overseeing various strategic, operational and financial risks that the organisation faces, along with the adequacy of mitigation plans to address such risks. There is an overarching Risk Management Policy in place that was reviewed and approved by the Board. The Corporate Governance Report, which forms a part of this Report, contains the details of Risk Management Committee.
INTERNAL FINANCIAL CONTROLS
The Company has in place well defined and adequate internal financial control framework. During the year under review, such controls were tested and no material weaknesses in their design or operations were observed.
CORPORATE SOCIAL RESPONSIBILITY
In compliance with the requirements of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors have constituted a Corporate Social Responsibility (CSR) Committee. The details of membership of the Committee & the meetings held are detailed in the Corporate Governance Report, forming part of this Report. The contents of the CSR Policy of the Company as approved by the Board on the recommendation of the CSR Committee is available on the website of the Company and can be accessed through the web link: http:// www.sunpharma.com/policies. The average net profits of the Company for last three financial years is negative, therefore the
Company was not required to spend on CSR activities during the previous year. However, the Company has voluntarily spent on CSR activities and the annual report on CSR activities containing details of voluntary expenditure incurred by the Company and brief details on the CSR activities are given in âAnnexure Dâ.
DIVIDEND DISTRIBUTION POLICY
In accordance with the Regulation 43A of Listing Regulations, 2015, the Company has formulated Dividend Distribution Policy and the same is annexed herewith as âAnnexure Eâ. The policy is also available on the website of the Company and can be accessed through the web link: http://www.sunpharma.com/policies.
PUBLIC DEPOSITS
The Company has not accepted any deposit from the Public during the year under review, under the provisions of the Act and the rules framed thereunder.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis as prescribed under Part B of Schedule V read with Regulation 34 (3) of the Listing Regulations, 2015 is provided in a separate section and forms a part of this Report.
CORPORATE GOVERNANCE REPORT
Report on Corporate Governance and Certificate of the Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated in Part C of Schedule V of the Listing Regulations, 2015, are enclosed as a separate section and forms a part of this Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed herewith as âAnnexure Fâ.
EMPLOYEESâ STOCK OPTION SCHEMES
The Company has two Employeesâ Stock Option Schemes, one through Trust Route and the other by Direct Route, both inherited from erstwhile Ranbaxy Laboratories Limited (âRanbaxyâ). The scheme through Direct Route has been named as Sun Pharma Employee Stock Option Scheme - 2015, and the one through Trust Route as Sun Pharma Employee Stock Option Plan - 2015. Both the schemes were adopted by the Company with certain amendments consequent upon merger of erstwhile Ranbaxy into the Company. The both the Schemes are in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.
Disclosures with respect to the Employeesâ Stock Option Schemes in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 are available on the Companyâs website and can be accessed at: http://www.sunpharma. com/pdflist/all-documents.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
There are no significant and material orders passed by the regulators or courts or tribunals which impact the going concern status and Companyâs operations in future.
WHISTLE BLOWER POLICY/ VIGIL MECHANISM
To create enduring value for all stakeholders and ensure the highest level of honesty, integrity and ethical behaviour in all its operations, the Company has adopted a âGlobal Whistle Blower Policyâ for Sun Pharmaceutical Industries Limited (SPIL) and all its subsidiaries, in addition to the existing Global Code of Conduct that governs the actions of its employees. Further details on vigil mechanism of the Company are provided in the Corporate Governance Report, forming part of this report.
DIRECTORSâ RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 134(5) read with Section 134(3)(c) of the Act, with respect to Directorsâ Responsibility Statement, it is hereby confirmed that:
a) in the preparation of the annual accounts for the financial year ended March 31, 2017, the applicable accounting standards have been followed and there are no material departures from the same;
b) the Directors 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 as at March 31, 2017 and of loss of the Company for the year ended on that date;
c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) the Directors have prepared the annual accounts on a going concern basis;
e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
CONSOLIDATED ACCOUNTS
The consolidated financial statements for the year ended March 31, 2017 has been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 together with the comparative period data as at and for the previous year ended March 31, 2016. Further, the Company has prepared the opening consolidated balance sheet as at April 1, 2015 (the transition date) in accordance with Ind AS.
CREDIT RATING
ICRA Ltd. has reaffirmed the highest credit rating of â[ICRA] A1 â/â[ICRA] AAA(Stable)â for the bank facilities, long term/short term borrowings and commercial paper programs of the Company. Further, CRISIL Ltd. has also reaffirmed the highest credit rating of âCRISIL A1 and CRISIL AAA/Stableâ for short term and long term bank facilities of the Company.
BUSINESS RESPONSIBILITY REPORTING
The Business Responsibility Report of the Company for the year ended March 31, 2017, in line with Green initiative, is made available on the website of the Company (http://www.sunpharma. com/pdflist/all-documents) and forms part of the Annual Report, and is available at the Registered office / Corporate office of the Company for inspection. A copy of the aforesaid report shall be made available to such of those shareholders who are desirous and interested, upon receipt of a written request from them.
ACKNOWLEDGEMENTS
Your Directors wish to thank all stakeholders, employees and business partners, Companyâs bankers, medical profession and business associates for their continued support and valuable cooperation.
The Directors also wish to express their gratitude to investors for the faith that they continue to repose in the Company.
For and on behalf of the Board of Directors
Israel Makov
Chairman
May 26, 2017
Mumbai
Mar 31, 2016
The Directors take pleasure in presenting the Twenty-Fourth Annual
Report and Audited Financial Statements for the year ended 31st March,
2016.
FINANCIAL RESULTS
(Rs. in million except dividend per share and book value)
Particulars Standalone Consolidated
Year ended Year ended Year ended Year ended
31st March,
2016 31st March,
2015 31st March,
2016 31st March,
2015
Total Revenue 80,462.8 82,400.2 288,866.8 279,396.7
(Loss) / Profit
after tax (10,733.6) (14,741.3) 47,159.1 45,393.8
Dividend on
Equity Shares 2,406.8 7,219.5 2,406.8 7,219.5
Corporate
Dividend tax 74.7 1,469.7 490.0 1,469.7
Transfer to
various Reserves - - 1,230.8 1.9
Amount of
dividend per
equity share of 1.0 3.0 1.0 3.0
Rs. 1/- each
Book value per
equity share
Rs. 1/- each* 89 95 130 107
* Including Share Suspense Account for 2014-15.
DIVIDEND
Your Directors are pleased to recommend an equity dividend of Rs. 1/-
(Rupee One only) per equity share of face value of Rs. 1/- (Rupee One
only) each (previous year Rs. 3/- (Rupees Three only) per equity share)
for the year ended 31st March, 2016, subject to the approval of the
shareholders at the ensuing Annual General Meeting.
CHANGES IN CAPITAL STRUCTURE
Pursuant to allotment of shares consequent upon merger of erstwhile
Ranbaxy Laboratories Limited ("erstwhile Ranbaxy") into the Company,
the paid-up share capital of the Company has increased from Rs.
2,07,11,63,910/- to Rs. 2,40,61,20,674/- and consequent to allotment of
shares under the Employee Stock Option Schemes of the Company, paid up
share capital of the Company increased from Rs. 2,40,61,20,674/- to Rs.
2,40,67,28,499/- during the year ended 31st March, 2016.
Post the financial year, the Company has also allotted 25,460 equity
shares under Sun Employee Stock Option Scheme - 2015 on 2nd May, 2016
and paid up share capital of the Company increased from Rs.
2,40,67,28,499/- to Rs. 2,40,67,53,959/-.
REDEMPTION OF NON-CONVERTIBLE DEBENTURES
The Company has made payment of redemption amount and interest
pertaining to 5,000 Secured Rated Redeemable Non-Convertible Debentures
(NCDs) of the face value of Rs. 10,00,000/- each aggregating to Rs. 500
Crores (listed on National Stock Exchange of India Ltd), on 23rd
November, 2015 to the NCD holders of the Company whose names were
registered on the Register of beneficial owners maintained by
depositories in respect of the NCDs held in electronic form as on
Tuesday, 10th November, 2015.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return as provided under sub-section (3) of
Section 92 of the Companies Act, 2013 (''the Act'') in prescribed form
MGT-9 is enclosed as "Annexure A" to this Report.
SUBSIDIARY/ JOINT VENTURE/ ASSOCIATE COMPANY
The statement containing the salient features of the financial
statements of the Company''s subsidiaries/ joint ventures/ associate
companies of the Company is given in Form AOC Â 1, which forms a part
of this Annual Report. Details pertaining to companies that became
subsidiaries/ joint ventures /associates and those that ceased to be
the subsidiaries/ joint ventures /associates of the Company during the
year are provided in Note 30 of the notes to the Consolidated Financial
Statements.
DIRECTORS & KEY MANAGERIAL PERSONNEL
Mr. Dilip Shanghvi, Managing Director of the Company retires by
rotation and being eligible offers himself for re- appointment at the
ensuing Annual General Meeting.
Mr. Keki Mistry, Mr. S. Mohanchand Dadha, Mr. Ashwin Dani, Mr. Hasmukh
Shah and Ms. Rekha Sethi, Independent Directors of the Company were
appointed for term of 2 (Two) years and their appointment was approved
by the shareholders at the 22nd Annual General Meeting of the Company.
Their tenure expires at the conclusion of the ensuing 24th Annual
General Meeting of the Company. The Nomination and Remuneration
Committee at their meeting held on 30th May, 2016 has recommended a
second term for all the Independent Directors. The Board of Directors
have also recommended appointment for a second term of 2 (Two) years
for Mr. Keki Mistry, Mr. S. Mohanchand Dadha, Mr. Ashwin Dani and Mr.
Hasmukh Shah upto the conclusion of 26th Annual General Meeting of the
Company, and a second term of 5 (Five) years for Ms. Rekha Sethi upto
the conclusion of 29th Annual General Meeting, subject to the approval
of members at the ensuing Annual General Meeting.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declaration from all the Independent Directors
of the Company confirming that they meet with the criteria of
independence as prescribed under sub-section (6) of Section 149 of the
Act and as per SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 ("Listing Regulations, 2015").
REMUNERATION POLICY FOR DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER
EMPLOYEES
For the purpose of selection of any Director, the Nomination &
Remuneration Committee identifies persons of integrity who possess
relevant expertise, experience and leadership qualities required for
the position. The Committee also ensures that the incumbent fulfills
such other criteria with regard to age and other qualifications as laid
down under the Act, Listing Regulations, 2015 or other applicable laws.
The Board has, on the recommendation of the Nomination & Remuneration
Committee framed a policy for selection, appointment and remuneration
of Directors & Senior Management. The summary of Remuneration Policy of
the Company is disclosed in the Corporate Governance Report, which
forms a part of this Report.
FAMILIARIZATION PROGRAMME FOR THE INDEPENDENT DIRECTORS
In compliance with the requirements of the Clause 49 of the erstwhile
Listing Agreement and as per Regulation 25(7) of the Listing
Regulations, 2015 the Company has put in place a Familiarization
Programme for the Independent Directors to familiarize them with the
Company, their roles, rights, responsibilities in the Company, nature
of the industry in which the Company operates, business model etc. The
details of the Familiarization Programme is available on the website of
the Company www.sunpharma.com and may be accessed through the web link:
http://www.sunpharma.com/policies.
NUMBER OF MEETINGS OF THE BOARD
The Board of Directors of the Company met 5 (Five) times during the
previous financial year on 29th May, 2015, 11th August, 2015, 31st
October, 2015, 7th November, 2015 and 12th February, 2016. The
particulars of attendance of the Directors at the said meetings are
detailed in the Corporate Governance Report of the Company, which forms
a part of this Report. The intervening gap between the Meetings was
within the period prescribed under the Act, erstwhile Listing Agreement
and Listing Regulations, 2015.
EVALUATION OF PERFORMANCE OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL
DIRECTORS
The Board of Directors have laid down the manner for carrying out an
annual evaluation of its own performance, its various Committees and
individual directors pursuant to the provisions of the Act and relevant
Rules and the Corporate Governance requirements as prescribed under
Clause 49 of the erstwhile Listing Agreement which are in compliance
with Regulation 17 of Listing Regulations, 2015. The performance of the
Board was evaluated by the Board after seeking inputs from all the
Directors on the basis of various criteria such as Board Composition,
process, dynamics, quality of deliberations, strategic discussions,
effective reviews, committee participation, governance reviews etc. The
performance of the Committees was evaluated by the Board after seeking
inputs from the Committee members on the basis of criteria such as
Committee composition, process, dynamics, deliberation, strategic
discussions, effective reviews etc. The Nomination and Remuneration
Committee reviewed the performance of the individual Directors on the
basis of the criteria such as Transparency, Analytical Capabilities,
Performance, Leadership, Ethics and ability to take balanced decisions
regarding stakeholders etc.
In a separate meeting of Independent Directors, performance of Non
Independent Directors, performance of the Board as a whole and
performance of the Chairman was evaluated, taking into account the
views of the Executive Directors and Non-executive Directors. The same
was discussed in the Board Meeting that followed the meeting of
Independent Directors at which the performance of the Board, its
Committee and individual Directors was also discussed.
HUMAN RESOURCES
Your Company considers its employees as most valuable resource and
ensures strategic alignment of Human Resource practices to business
priorities and objectives. Globally the Company (including subsidiary
and associate companies) has a dedicated human capital of over 30,000
employees at various locations across our Corporate Office, R & D
Centers & more than 45 Manufacturing locations, dedicated Sales
Professionals across various geographies. Our constant endeavor is to
invest in people and people processes to improve human capital for the
organisation and service delivery to our customers. Attracting,
developing and retaining the right talent will continue to be a key
strategic imperative and the organisation continues its undivided
attention towards that. Your Company strives to provide a conducive and
competitive work environment to help the employees excel and create new
benchmarks of productivity, efficiency and customer delight. Your
Directors would also like to take this opportunity to express their
appreciation for the hard work and commitment of the employees of the
Company and look forward to their continued contribution. Information
as per Section 197 (12) of the Act, read with Rule 5(1) of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014 is provided in "Annexure - B" to this report. Further, the
information pertaining to 5(2) & 5(3) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, pertaining to the
names and other particulars of employees is available for inspection at
the Registered office of the Company and pursuant to the proviso to
Section 136 (1) of the Act, the report and the accounts are being sent
to the members excluding this. Any shareholder interested in obtaining
a copy of the same may write to the Company Secretary/Compliance
Officer at Corporate office or Registered office address of the
Company.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
(PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
Your Company strongly believes in providing a safe and harassment free
workplace for each and every individual working for the Company through
various interventions and practices. It is the continuous endeavor of
the Management of the Company to create and provide an environment to
all its employees that is free from discrimination and harassment
including sexual harassment. The Company has adopted a policy on
prevention, prohibition and redressal of sexual harassment at workplace
in line with the provisions of the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the
Rules thereunder for prevention and redressal of complaints of sexual
harassment at workplace. During the year ended 31st March, 2016, no
complaints pertaining to sexual harassment was received by the Company.
AUDITORS
Statutory Auditors
The Company''s Auditors, Messrs. Deloitte Haskins & Sells LLP, Chartered
Accountants, (Firm''s Regn No. 117366W/W- 100018), were appointed as the
Statutory Auditors of the Company for a period of three years at the
22nd Annual General Meeting of the Company, upto the conclusion of the
25th Annual General Meeting of the Company, subject to ratification by
members at every Annual General Meeting of the Company. They have
confirmed their eligibility under Section 141 of the Act and the Rules
framed thereunder for reappointment as Auditors of the Company. As
required under Regulation 33 of the Listing Regulations, 2015 the
auditors have also confirmed that they hold a valid certificate issued
by the Peer Review Board of the Institute of Chartered Accountants of
India.
The Auditors'' Report for the financial year ended 31st March, 2016 has
been issued with an unmodified opinion.
Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Company has appointed Messrs C. J. Goswami
& Associates, Practicing Company Secretaries, Mumbai to undertake the
Secretarial Audit of the Company. The Secretarial Audit Report is
annexed herewith as "Annexure C".
Secretarial Audit Report
There have been observations in the Secretarial Audit Report as
follows:
a) There has been a delay of 3 working days in fling of disclosure
under Regulation 30 of the SEBI (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011 for disclosing the aggregate shareholding
and voting rights in Zenotech Laboratories Limited (Target Company) as
of 31st March, 2015.
b) During the financial year 2015-16, the Company has published
financial results in the English language newspaper but not published
in the regional language newspaper, where the registered office of the
Company is situated as per the requirement of Clause 41 of the Listing
Agreement / Regulation 47 of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015.
The Board''s response to the observations is as follows:
a) There was an inadvertent delay.
b) The results were earlier published in daily newspaper which had a
English and Gujarati Edition. However, on account of change in
newspaper for publication from one daily to another daily (which does
not have a Gujarati Edition), the publication of results in the
regional language newspaper was missed due to inadvertence.
Cost Auditors
The Company has appointed Messrs. Kailash Sankhlecha & Associates, Cost
Accountants, Vadodara as Cost Auditors of our Company for conducting
Cost Audit in respect of Bulk Drugs & Formulations of your Company for
the year 2016-17.
LOANS, GUARANTEES & INVESTMENTS
The particulars of loans, guarantees and investments have been
disclosed in the financial statements.
RELATED PARTY TRANSACTIONS
The policy on Related Party Transactions as approved by the Board is
available on the website of the Company and can be accessed through the
web link http://www.sunpharma.com/policies. All contracts/ arrangements
entered by the Company during the previous financial year with the
related parties were in the ordinary course of business and on arm''s
length basis.
The Company has entered into material Related Party Transactions, i.e.
transactions exceeding ten percent of the annual consolidated turnover
as per the last audited financial statements, during the year with Sun
Pharma Laboratories Limited, a wholly owned subsidiary. The
transactions entered into between a holding company and its wholly
owned subsidiary of the Company do not require approval of the
shareholders. The disclosure of Related Party Transactions as required
under Section 134(3)(h) of the Act, in Form AOC 2 is not applicable.
AUDIT COMMITTEE COMPOSITION
The details pertaining to composition of Audit Committee are included
in the Corporate Governance Report, which forms a part of this Report.
RISK MANAGEMENT
The Company has developed & implemented an integrated Enterprise Risk
Management Framework through which it identifies monitors, mitigates &
reports key risks that impacts its ability to meet the strategic
objectives. The Board of Directors have constituted a Risk Management
Committee which is entrusted with the responsibility of overseeing
various strategic, operational and financial risks that the
organization faces, along with the adequacy of mitigation plans to
address such risks. There is an overarching Risk Management Policy in
place that was reviewed and approved by the Board. The details of Risk
Management Committee are mentioned in the Corporate Governance Report,
which forms a part of this Report.
INTERNAL FINANCIAL CONTROLS
The Company has in place well defined and adequate internal financial
control framework. During the year, such controls were tested and no
material weaknesses in their design or operation were observed.
CORPORATE SOCIAL RESPONSIBILITY
In compliance with the requirements of Section 135 of the Act, read
with the Companies (Corporate Social Responsibility Policy) Rules,
2014, the Board of Directors have constituted a Corporate Social
Responsibility (CSR) Committee. The details of membership of the
Committee & the meetings held are detailed in the Corporate Governance
Report, forming part of this Report. The contents of the CSR Policy of
the Company as approved by the Board on the recommendation of the CSR
Committee is available on the website of the Company and can be
accessed through the web link: http://www.sunpharma.com/policies. The
average net profits of the Company for last three financial years is
negative, therefore the Company was not required to spend on CSR
activities during the previous year. However, the Company has
voluntarily spent on CSR activities and the Annual Report on CSR
activities containing details of voluntary expenditure incurred by the
Company including that of erstwhile Ranbaxy and brief details on the
CSR activities are given in "Annexure D".
PUBLIC DEPOSITS
The Company has not accepted any deposit from the Public during the
year under review, under the provisions of the Act, and the rules
framed thereunder.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis on the operations of the Company
as prescribed under Part B of Schedule V read with regulation 34 (3) of
the Listing Regulations, 2015 is provided in a separate section and
forms a part of this Report.
CORPORATE GOVERNANCE REPORT
Report on Corporate Governance and Certificate of the Auditors of the
Company regarding compliance of the conditions of Corporate Governance
as stipulated in Part C of Schedule V of the Listing Regulations, 2015
with the Stock Exchanges, are enclosed as a separate section and forms
a part of this Report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and
foreign exchange earnings and outgo as stipulated under Section
134(3)(m) of the Act read with Rule 8 of The Companies (Accounts)
Rules, 2014, is annexed herewith as "Annexure E".
EMPLOYEES'' STOCK OPTION SCHEMES
The Company has two Employees'' Stock Option Schemes, one through Trust
Route and the other by Direct Route, both inherited from erstwhile
Ranbaxy. The scheme through Direct Route has been named as Sun Pharma
Employee Stock Option Scheme  2015, and the one through Trust Route as
Sun Pharma Employee Stock Option Plan  2015. Both the schemes were
adopted by the Company with certain amendments consequent upon merger
of erstwhile Ranbaxy into the Company.
Disclosures with respect to the Employees'' Stock Option Schemes are
enclosed in "Annexure F".
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR
TRIBUNALS
There are no significant and material orders passed by the regulators
or courts or tribunals which impact the going concern status and
Company''s operations in future.
WHISTLE BLOWER POLICY/ VIGIL MECHANISM
To create enduring value for all stakeholders and ensure the highest
level of honesty, integrity and ethical behaviour in all its
operations, the Company has a ''Whistle Blower Policy'' for Sun
Pharmaceutical Industries Limited (SPIL) and its Indian subsidiaries
and a ''Global Whistle Blower Policy'' for its Global subsidiaries, in
addition to the existing Global Code of Conduct that governs the
actions of its employees. In the Corporate Governance Report forming
part of this report further details are provided on the vigil mechanism
of the Company.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 134(5) read with Section
134(3)(c) of the Act with respect to Directors'' Responsibility
Statement, it is hereby confirmed that:
a) in the preparation of the annual accounts for the financial year
ended 31st March, 2016, the applicable accounting standards have been
followed along with proper explanation relating to material departures;
b) the Directors 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 as at 31st March, 2016 and of loss of the Company for
the year ended on that date;
c) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
d) the Directors have prepared the annual accounts on a going concern
basis; and
e) the Directors have laid down internal financial controls to be
followed by the Company and that such internal financial controls are
adequate and were operating effectively.
f) the Directors have devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
CONSOLIDATED ACCOUNTS
In accordance with the requirements of the Act and Listing Regulations
2015, the Consolidated Accounts of the Company and its subsidiaries,
form a part of this Annual Report.
CREDIT RATING
ICRA Ltd. has reaffirmed the highest credit rating of ''ICRA A1 ''/''ICRA
AAA (Stable)'' for the commercial paper programs and bank facilities of
the Company. Further, CRISIL Ltd. has also reaffirmed the highest
credit rating of ''CRISIL A1 ''/''CRISIL AAA (Stable)'' for the bank
facilities of the Company.
During the year, at the request of the Company, Credit Analysis &
Research Ltd., (CARE) has withdrawn the ratings assigned to the
Non-Convertible Debenture (NCD) issue and bank facilities of the
Company. The Company had voluntarily requested for such withdrawal
since it has fully repaid the amounts under the said NCD issue and the
bank facilities continue to be rated ''A1 ''/''AAA (Stable)'' by ICRA Ltd.
and CRISIL Ltd.
BUSINESS RESPONSIBILITY REPORTING
The Business Responsibility Report of the Company for the year ended
31st March, 2016, in line with Green initiative, is made available on
the website of the Company
(http://www.sunpharma.com/pdfist/all-documents) and forms part of the
Annual Report, and is kept at the Registered office / Corporate office
of the Company for inspection. A copy of the aforesaid report shall be
made available to such of those shareholders who are desirous and
interested, upon receipt of a written request from them.
ACKNOWLEDGEMENTS
Your Directors wish to thank all stakeholders, employees and business
partners, Company''s bankers, medical profession and business associates
for their continued support and valuable co-operation.
The Directors also wish to express their gratitude to investors for the
faith that they continue to repose in the Company.
For and on behalf of the Board of Directors
ISRAEL MAKOV
Chairman
30th May, 2016
Mumbai
Mar 31, 2015
The Directors take pleasure in presenting the Twenty-Third Annual
Report and Audited Financial Statements for the year ended 31st March,
2015.
FINANCIAL RESULTS
(Rs. in million except dividend per share and book value)
Standalone Consolidated
Year ended Year ended Year ended Year ended
Particulars 31st March,
2015* 31st March,
2014* 31st March,
2015* 31st March,
2014*
Total Revenue 82,287.7 30,065.5 279,811.0 166,325.9
(Loss) / Profit
after tax (14,741.3) (28,285.2) 45,393.8 31,414.7
Dividend on Equity
Shares 7,219.5 3,106.7 7,219.5 3106.7
Corporate Dividend tax 1,469.7 528.0 1,469.7 528.0
Transfer to Various
Reserves 0 0 1.9 0
Amount of dividend
per equity share of
Rs. 1/- each 3.0 1.5 3.0 1.5
Book value per equity
share Rs. 1/- each** 95 36 107 89
*Previous year figures are not comparable, since current year
standalone and consolidated figures include the effect of merger of
erstwhile Ranbaxy Laboratories Ltd into the Company with effect from
1st April, 2014, and current year standalone figures also include
effect of merger of Sun Pharma Global Inc., into the Company with
effect from 1st January, 2015. ** including Share Suspense Account
DIVIDEND
Your Directors are pleased to recommend an equity dividend of Rs. 3.00
per equity share of face value Rs. 1 each (previous year Rs. 1.50 per
equity share) for the year ended 31st March, 2015.
MERGERS
1) Ranbaxy Laboratories Limited ("Ranbaxy")
Pursuant to the approval of Hon''ble High Court of Gujarat, at Ahmedabad
vide its order dated 14th November, 2014, and amended orders dated 28th
November, 2014 and 24th December, 2014 and the approval of the Hon''ble
High Court of Punjab & Haryana at Chandigarh vide its order dated 9th
March, 2015 erstwhile Ranbaxy merged into the Company effective from
24th March, 2015. The appointed date for the merger was 1st April,
2014.
Pursuant to the merger of erstwhile Ranbaxy into the Company,
334,956,764 (Thirty Three Crore Forty Nine Lakh Fify Six Thousand Seven
Hundred and Sixty Four) equity shares of the Company, were allotted on
10th April, 2015 to the shareholders of erstwhile Ranbaxy in the ratio
of 8 (eight) equity shares of Rs. 1 each of the Company for every 10
(ten) equity shares of Rs. 5 each of erstwhile Ranbaxy held by them as
on the record date i.e. 7th April, 2015. After the said allotment the
total number of equity shares of the Company has aggregated to
2,406,120,674 of Rs. 1 each. Further 5,000 (Five Thousand) Secured
Rated Redeemable 9.20% Non-Convertible Debentures (NCD) of the Face
Value of Rs. 1,000,000/- each were allotted to the NCD holders of
erstwhile Ranbaxy in the ratio of 1 (One) NCD of Rs. 1,000,000/- each
of the Company for every 1 (One) NCD of Rs. 1,000,000/- each held in
erstwhile Ranbaxy as on the record date i.e. 7th April, 2015. After
allotment the total number of NCDs of the Company is 5,000 Secured
Rated Redeemable 9.20% Non-Convertible Debentures of the Face Value of
Rs. 1,000,000/- each. For further details on merger, you may refer the
Management Discussion and Analysis Report, which forms a part of this
Report.
Further, the merger of erstwhile Ranbaxy with the Company had resulted
in owning 46.84% of the voting rights held by erstwhile Ranbaxy in
Zenotech Laboratories Ltd. (Zenotech). By virtue of this indirect
acquisition, the Company made an open offer under the provisions of the
Securities and Exchange Board of India (Substantial Acquisition of
Shares and Takeovers) Regulations, 2011 to the shareholders of
Zenotech, except Daiichi Sankyo Company, Ltd., to acquire up to
9,693,332 equity shares of Zenotech (representing 28.16% of the paid-up
equity share capital of Zenotech).
As a part of the open offer process, the Company had issued Detailed
Public Statement (DPS) with respect to the offer on 30th March 2015 and
Letter of Offer on 18th June 2015. The offer was opened on 30th June
2015 and closed on 13th July 2015. The total number of shares that were
tendered in the offer were 785 shares representing 0.002% of voting
share capital of Zenotech.
2) Sun Pharma Global Inc.
The Hon''ble High Court of Gujarat, at Ahmedabad vide its order dated
30th July, 2015 approved the Scheme of Amalgamation of Sun Pharma
Global Inc., wholly-owned subsidiary of the Company, into the Company,
effective from 6th August, 2015. The appointed date for the said
merger was 1st January, 2015.
The Company intended to reorganize, consolidate and integrate Sun
Pharma Global Inc''s operations with the activities of the Company as a
part of group restructuring and hence Sun Pharma Global Inc has been
merged into the Company. Sun Pharma Global Inc., being a wholly owned
subsidiary, it was merged into the Company without any consideration.
CHANGES IN CAPITAL STRUCTURE
Pursuant to merger of erstwhile Ranbaxy Laboratories Limited into the
Company, the Authorized Share Capital of the Company has increased to
5,990,000,000 Equity Shares of Rs. 1/- each amounting to Rs.
5,990,000,000/- and 100,000 Preference Shares of face value of Rs.
100/- each amounting to 10,000,000/- aggregating to Rs.
6,000,000,000/-.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return as provided under sub-section (3) of
Section 92 of the Companies Act, 2013 (''the Act'') in prescribed form
MGT-9 is enclosed as Annexure - A to this Report.
SUBSIDIARY/ JOINT VENTURE/ ASSOCIATE COMPANY
The statement containing salient features of the financial statements
of the Company''s subsidiaries/joint ventures/associate companies is
given in Form AOC-1, which forms part of this Annual Report. Details
pertaining to companies that became subsidiaries/joint ventures/
associates and those that ceased to be subsidiaries/joint ventures/
associate of the Company during the year are provided in Note 31 of the
notes to the Consolidated Financial Statements.
DIRECTORS & KEY MANAGERIAL PERSONNEL
Mr. Sudhir Valia, Whole-time Director of the Company retires by
rotation and being eligible offers himself for re-appointment at the
ensuing Annual General Meeting.
Mr. Uday Baldota was appointed as Chief Financial Officer of the
Company with effect from 12th August, 2014.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declaration from all the Independent Directors
of the Company confirming that they meet with the criteria of
independence as prescribed under sub-section (6) of Section 149 of the
Companies Act, 2013.
REMUNERATION POLICY FOR DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER
EMPLOYEES
For the purpose of selection of any Director, the Nomination &
Remuneration Committee identifies persons of integrity who possess
relevant expertise, experience and leadership qualities required for
the position. The Committee also ensures that the incumbent fulfills
such other criteria with regard to age and other qualifications as laid
down under the Companies Act, 2013 or other applicable laws. The Board
has, on the recommendation of the Nomination & Remuneration Committee
framed a policy for selection, appointment and remuneration of
Directors & Senior Management. The summary of Remuneration Policy of
the Company is disclosed in the Corporate Governance Report, which
forms a part of this Report.
FAMILIARIZATION PROGRAM FOR THE INDEPENDENT DIRECTORS
In compliance with the requirements of the Clause 49 of the Listing
Agreement, the Company has put in place a Familiarization Program for
the Independent Directors to familiarize them with the Company, their
roles, rights, responsibilities in the Company, nature of the industry
in which the Company operates, business model etc. The details of the
Familiarization Program is available on the website of the Company
www.sunpharma.com and may be accessed through the web link
:http://www.sunpharma.com/policies.
NUMBER OF MEETINGS OF THE BOARD
The Board of Directors of the Company met six times during the previous
financial year on 6th April, 2014, 29th May, 2014, 12th August, 2014,
27th September, 2014, 13th November, 2014 and 14th February, 2015. The
particulars of attendance of the Directors at the said meetings are
detailed in the Corporate Governance Report of the Company, which forms
a part of this Report. The intervening gap between the Meetings was
within the period prescribed under the Companies Act, 2013.
EVALUATION OF PERFORMANCE OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL
DIRECTORS
The Board of Directors have laid down the manner for carrying out an
annual evaluation of its own performance, its various Committees and
individual directors pursuant to the provisions of the Act and relevant
Rules and the Corporate Governance requirements as prescribed under
Clause 49 of the Listing Agreement.
The performance of the Board was evaluated by the Board after seeking
inputs from all the Directors on the basis of various criteria such as
Board Composition, process, dynamics, quality of deliberations,
strategic discussions, effective reviews, committee participation,
governance reviews etc.
The performance of the Committees was evaluated by the Board after
seeking inputs from the Committee members on the basis of criteria such
as Committee composition, process, dynamics, deliberation, strategic
discussions, effective reviews etc.
The Nomination and Remuneration Committee reviewed the performance of
the individual Directors on the basis of the criteria such as
Transparency, Analytical Capabilities, Performance, Leadership, Ethics
and ability to take balanced decisions regarding stakeholders etc.
In a separate meeting of Independent Directors, performance of Non-
independent Directors, performance of the Board as a whole and
performance of the Chairman was evaluated, taking into account the
views of the Executive Directors and Non-executive Directors.
HUMAN RESOURCES
Your Company considers its employees as most valuable resource and
ensures strategic alignment of Human Resource practices to meet
business objectives. Spread across globally the Company has a dedicated
resource of over 30,000 employees at various locations across Corporate
Office, R & D Centers & 40 plus manufacturing locations and dedicated
Sales Professionals across the various geographies (including
subsidiary and associate companies). Our constant endeavor is to invest
in people and people processes, building capability and enhance our
quality through key initiative of personal ownership & communication
with an objective to improve our service delivery to the Customers.
Attracting the right talent and engaging them for high performance is
our focus. We strive to provide a great place to work to our human
resources through challenging and learning environment.
Information as per Section 197 (12) of the Companies Act, 2013, read
with Rule 5 of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules 2014 is provided in a separate annexure
forming part of this Report. Further, pursuant to the proviso to
Section 136 (1) of the Companies Act, 2013, 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/Compliance Officer at Corporate office or Registered office
address of the Company.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
(PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
Your Company strongly believes in providing a safe and harassment free
workplace for each and every individual working for the Company through
various interventions and practices. It is the continuous endeavor of
the Management of the Company to create and provide an environment to
all its employees that is free from discrimination and harassment
including sexual harassment. The Company has adopted a policy on
prevention, prohibition and redressal of sexual harassment at workplace
in line with the provisions of the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the
Rules thereunder for prevention and redressal of complaints of sexual
harassment at workplace. During the year ended 31st March, 2015, no
complaints pertaining to sexual harassment was received by the Company.
AUDITORS Statutory Auditors
The Company''s Auditors, Messrs. Deloitte Haskins & Sells LLP Chartered
Accountants (Firm''s Regn No. 117366W/W-100018), at the 22nd Annual
General Meeting of the Company, were appointed as the Statutory
Auditors of the Company for a period of three years, upto the
conclusion of the 25th Annual General Meeting of the Company, subject
to ratification by members at every Annual General Meeting of the
Company. They have confirmed their eligibility under Section 141 of the
Companies Act, 2013 and the Rules framed thereunder for reappointment
as Auditors of the Company. As required under the Listing Agreement,
the Auditors have also confirmed that they hold a valid certificate
issued by the Peer Review Board of the Institute of Chartered
Accountants of India.
Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Company has appointed Messrs C J Goswami &
Associates, Practicing Company Secretaries, Mumbai to undertake the
Secretarial Audit of the Company. The Secretarial Audit Report is
annexed herewith as Annexure - B.
Cost Auditors
The Company has appointed Messrs. Kailash Sankhlecha & Associates, Cost
Accountants, Vadodara as Cost Auditors of the Company for conducting
Cost Audit in respect of Bulk Drugs & Formulations of the Company for
the year 2015-16.
Pursuant to merger of erstwhile Ranbaxy Laboratories Limited with the
Company, the erstwhile Ranbaxy locations being added, the scope of Cost
Audit has increased and therefore on recommendation by the Audit
Committee, the Board has proposed to increase the remuneration to be
paid to Cost Auditors for the financial year ended 31st March, 2015 and
for the financial year ended 31st March, 2016. Accordingly the
resolution for ratification of increase in remuneration has been
proposed for approval of the shareholders at the ensuing Annual General
Meeting. Your Directors recommend the resolution for ratification of
increase in remuneration of the Cost Auditors.
LOANS, GUARANTEES & INVESTMENTS
The particulars of loans, guarantees and investments have been
disclosed in the financial statements.
RELATED PARTY TRANSACTIONS
The policy on Related Party Transactions as approved by the Board is
available on the website of the Company and can be accessed through the
web link http://www.sunpharma.com/ policies. All contracts/arrangements
entered by the Company during the previous financial year with the
related parties were in the ordinary course of business and on arm''s
length basis.
No material Related Party Transactions, i.e. transactions exceeding ten
percent of the annual consolidated turnover as per the last audited
financial statements, were entered during the year by your Company.
Accordingly, the disclosure of Related Party Transactions as required
under Section 134(3) (h) of the Companies Act, 2013 in Form AOC 2 is
not applicable.
AUDIT COMMITTEE COMPOSITION
The details pertaining to composition of Audit Committee are included
in the Corporate Governance Report which forms a part of this Report.
RISK MANAGEMENT
The Company has developed & implemented an integrated Enterprise Risk
Management Framework through which it identifies monitors, mitigates &
reports key risks that impacts its ability to meet the strategic
objectives. During the year, the Board of Directors have constituted a
Risk Management Committee which is entrusted with the responsibility of
overseeing various strategic, operational and financial risks that the
organization faces, along with the adequacy of mitigation plans to
address such risks. A Risk Management Policy was also reviewed and
approved by the Board.
The Company also has a Risk Management Committee and the details are
mentioned in the Corporate Governance Report.
INTERNAL FINANCIAL CONTROLS
The Company has in place well defined and adequate internal financial
control framework. During the year, such controls were tested and no
material weaknesses in their design or operation were observed.
CORPORATE SOCIAL RESPONSIBILITY ("CSR")
In compliance with the requirements of Section 135 of the Companies
Act, 2013 read with the Companies (Corporate Social Responsibility)
Rules, 2014, the Board of Directors have constituted a Corporate Social
Responsibility Committee. The details of membership of the Committee &
the meetings held are detailed in the Corporate Governance Report
forming part of the Annual Report.
The contents of the CSR Policy of the Company as approved by the Board
on the recommendation of the Corporate Social Responsibility Committee
is available on the website of the Company and can be accessed through
the web link: http://www.sunpharma.com/policies.
Consequent to the loss incurred by the Company in the immediately
preceding financial year, the average net profits of the Company for
last three financial years is negative, therefore the Company was not
required to spend on CSR activities during the previous year. However,
the Company has voluntarily spent on CSR activities and the Annual
Report on CSR activities containing details of voluntary expenditure
incurred by the Company including that of erstwhile Ranbaxy and brief
details on the CSR activities are given in Annexure - C.
PUBLIC DEPOSITS
The Company has not accepted any deposit from the Public during the
year under review, under the provisions of the Companies Act, 2013 and
the rules framed thereunder.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis on the operations of the Company
as prescribed under Clause 49 of the Listing Agreement is provided in a
separate section and forms a part of this Report.
CORPORATE GOVERNANCE REPORT
Report on Corporate Governance and Certificate of the Auditors of the
Company regarding compliance of the conditions of Corporate Governance
as stipulated in Clause 49 of the Listing Agreement with the Stock
Exchanges, are enclosed as a separate section which forms a part of
this Report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and
foreign exchange earnings and outgo 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 - D.
EMPLOYEES'' STOCK OPTION SCHEMES
Erstwhile Ranbaxy had two Employees'' Stock Option Schemes, one by
direct allotment and another through Trust route. Pursuant to the
merger of erstwhile Ranbaxy Laboratories Limited into the Company, both
the Schemes were adopted by the Company with requisite amendments and
titled as SUN Employee Stock Option Scheme-2015 and SUN Employee Stock
Option Plan-2015.
These Schemes are applicable only to the employees of erstwhile Ranbaxy
and would continue till the time of expiry/ exercise of all the earlier
granted stock options. No further options would be granted by the
Company under these Schemes. Disclosures with respect to the Employees''
Stock Option Schemes are enclosed as Annexure - E.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR
TRIBUNALS
There are no significant and material orders passed by the regulators
or courts or tribunals which impact the going concern status and
Company''s operations in future.
WHISTLE BLOWER POLICY/ VIGIL MECHANISM
To create enduring value for all stakeholders and ensure the highest
level of honesty, integrity and ethical behaviour in all its
operations, the Company has a ''Whistle Blower Policy'' for Sun
Pharmaceutical Industries Limited (SPIL) and its Indian subsidiaries
and post merger of erstwhile Ranbaxy, the Company has also adopted a
"Global Whistle Blower Policy" for its Global subsidiaries (excluding
listed companies and their subsidiaries), in addition to the existing
code of conduct that governs the actions of its employees. The
Corporate Governance Report contains disclosure on the vigil mechanism
of the Company.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 134(5) read with Section
134(3) (c) of the Companies Act, 2013, with respect to Directors
Responsibility Statement, it is hereby confirmed that:
a) in the preparation of the annual accounts for the financial year
ended 31st March 2015, the applicable accounting standards have been
followed along with proper explanation relating to material departures,
if any;
b) the Directors 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 as at 31st March, 2015 and of the loss of the Company
for the year ended on that date;
c) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
d) the Directors have prepared the annual accounts on a going concern
basis; and
e) the Directors have laid down internal financial controls to be
followed by the Company and that such internal financial controls are
adequate and were operating effectively.
f) the Directors have devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
CONSOLIDATED ACCOUNTS
In accordance with the requirements of the Companies Act, 2013 and
Listing Agreement, the Consolidated Accounts of the Company and its
subsidiaries, form a part of this Annual Report.
CREDIT RATING
ICRA rating agency has reaffirmed the highest credit rating of ''ICRA
A1 '' for the commercial paper programs and bank facilities of the
Company. Further, CARE rating agency has also reaffirmed the highest
credit ratings of ''CARE A1 '' for the bank facilities and ''CARE AAA'' for
the outstanding 9.20% Secured, Redeemable, Non- Convertible Debentures
of the Company.
BUSINESS RESPONSIBILITY REPORTING
The Business Responsibility Report of the Company for the year ended
31st March, 2015, in line with Green initiative, is made available on
the website of the Company (www.sunpharma.com) and forms part of the
Annual Report, and is kept at the Registered office of the Company for
inspection. A copy of the aforesaid report shall be made available to
such of those shareholders who are desirous and interested, upon
receipt of a written request from them.
ACKNOWLEDGEMENTS
Your Directors wish to thank all stakeholders and business partners,
Company''s bankers, medical profession and business associates for their
continued support and valuable co-operation.
The Directors also wish to express their gratitude to investors for the
faith that they continue to repose in the Company.
For and on behalf of the Board of Directors
ISRAEL MAKOV
Chairman
11th August, 2015
Mumbai
Mar 31, 2014
Dear Members,
The Directors take pleasure in presenting the Twenty-Second Annual
Report and Audited Accounts for the year ended 31st March, 2014
FINANCIAL RESULTS
(Rs.in Million except dividend per share and book value)
Standalone Consolidated
Particulars Year ended Year ended Year ended Year ended
31st March, 31st March, 31st March, 31st March,
2014 2013* 2014 2013
Total Income 29,882 26,683 166,326 116,880
(Loss)/Profit
after tax (28,285.2) 5,166 31,415 29,831
Dividend on Equity
Shares 3,107 5,178 3,107 5,178
Corporate Dividend tax 528 880 528 880
Transfer to various
Reserves NIL 520 NIL 520
Amount of dividend per
equity share ofRs.1/-
each 1.50 2.50# 1.50 2.50#
Book value per
equity share Rs. 1/- each 36 38# 89 72#
* Previous year figures for standalone are not comparable, since
current year figures include the effect of merger of the Specified
undertaking of Sun Pharma Global FZE, into the Company with effect from
1st May, 2013.
# Post Bonus Issue
DIVIDEND
Your Directors are pleased to recommend an equity dividend of Rs. 1.50
per equity share of face value Rs. 1/- each (previous year Rs. 2.50 per
equity share) for the year ended 31st March, 2014.
MERGER OF RANBAXY
At Sun Pharma, we have taken a significant initiative to enhance
shareholder value for the future. We are in the process of acquiring
Ranbaxy Laboratories Limited, India''s leading Company in sales, in one
of India''s largest M&A transactions. The deal, an all-stock transaction
valued at US$ 4 billion, is expected to be completed by December 2014.
Ranbaxy shareholders will receive 0.8 share of Sun Pharma for each
Ranbaxy''s share. Further details on the merger, are provided in the
Management Discussion and Analysis report which forms part of this
Report.
BONUS SHARES
The Company had on 3rd August, 2013 allotted 1,035,581,955 Equity
Shares of Rs. 1/- each as Bonus Shares to the Equity Shareholders of the
Company in the ratio of 1 (One) Equity Share of Rs. 1/- each for every
1(One) Equity Share of Rs. 1/- each held on the Record Date, being 30th
July, 2013.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis on the operations of the Company
is provided in a separate section and forms part of this report.
HUMAN RESOURCES
Your Company considers its employees as most valuable resource and
ensures strategic alignment of Human Resource practices to business
priorities and objectives. The Company has a dedicated team of over
14,000 employees at various locations across our corporate office,
various R&D Centers & 25 plant locations (including Associate
Companies) spread across three Continents. Our constant endeavor is to
invest in people and people processes to improve service delivery to
our customers. Attracting the right talent and engaging them for high
performance is our focus, whereas we strive to provide a great place to
work to our human resources through challenging and learning
environment.
Information as per Section 217(2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975 as amended,
is available at the registered office of your Company. However, as per
the provisions of Section 219(1)(b)(iv) of the said Act, the Report and
Accounts are being sent to all shareholders of the Company and others
entitled thereto excluding the aforesaid information. Any shareholder
interested in obtaining a copy of this statement may write to the
Company Secretary/ Compliance Officer at the Corporate Office or
Registered Office address of the Company.
INFORMATION ON CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN
EXCHANGE EARNINGS AND OUTGO
The additional information relating to energy conservation, technology
absorption, foreign exchange earnings and outgo, pursuant to Section
217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the Report of the Board of Directors)
Rules, 1988, is given in Annexure and forms part of this Report.
CORPORATE GOVERNANCE
Report on Corporate Governance and Certificate of the auditors of your
Company regarding compliance of the conditions of Corporate Governance
as stipulated in Clause 49 of the listing agreement with stock
exchanges, are annexed.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report of the Company for the year ended
31st March, 2014, in line with Green initiative, is made available on
the website of the Company (www.sunpharma.com) and forms part of the
Annual Report, and is kept at the Registered Office of the Company for
inspection. A copy of the aforesaid report shall be made available to
such of those shareholders who are desirous and interested, upon
receipt of a written request from them.
CONSOLIDATED ACCOUNTS
In accordance with the requirements of Accounting Standard AS-21
prescribed by the Institute of Chartered Accountants of India, the
Consolidated Accounts of the Company and its subsidiaries is annexed to
this Report.
SUBSIDIARIES
The Ministry of Corporate Affairs, Government of India, New Delhi has
issued direction under Section 212(8) of the Companies Act, 1956 vide
general circular No.2/2011 dated 8th February, 2011 and in accordance
with the same, the Balance Sheet, the Profit and Loss Account and other
documents of the subsidiary companies are not being attached with the
Balance Sheet of the Company. The information relating to each
subsidiary including subsidiaries of subsidiaries, as required by the
aforesaid circular, is disclosed in the Annual Report. The Company will
make available the Annual Accounts of the subsidiary companies and the
related detailed information to any member of the Company and its
subsidiaries who may be interested in obtaining the same. The annual
accounts of the subsidiary companies will also be kept open for
inspection by any investor at the Registered Office & Corporate/ Head
Office of the Company and that of the respective subsidiary companies.
The Consolidated Financial Statements presented by the Company include
financial results of its subsidiary companies also.
FINANCE
CRISIL continued to reaffirm its highest rating of "AAA/ Stable" and
"A1 ", for your Company''s Banking Facilities throughout the year
enabling your Company to avail facilities from banks at attractive
rates. The Company does not offer any Fixed Deposit Scheme.
CORPORATE SOCIAL RESPONSIBILITY
Your Company has identified health, education, livelihood, disaster
relief and civic utilities as the areas where assistance is provided on
a need-based and case-to-case basis. Your Company persisted with
participation in such activities at the local, grassroot level during
the year. In the past, support has been offered towards disaster relief
as well as participation in the facilitation of civic utilities around
the Plants/Research Centers. Your Company remains interested in these
contributions.
DIRECTORS
Mr. Israel Makov, Director retires by rotation and being eligible
offers himself for re-appointment. Ms. Rekha Sethi was appointed as
Additional Independent Director of the Company with effect from 13th
February, 2014 and holds office as a Director up to the ensuing Annual
General Meeting.
In terms of Section 149, and other applicable provisions, if any of the
Companies Act, 2013 read with Companies (Appointment and Qualification
of Directors) Rules, 2014, the Independent Directors of the Company
viz. Mr. S.M Dadha, Mr. Keki Mistry, Mr. Hasmukh Shah, Mr. Ashwin Dani
and Ms. Rekha Sethi are proposed to be appointed as Independent
Directors of the Company in accordance with the requirements of
Companies Act 2013, at the ensuing Annual General Meeting of the
Company.
The Company has received the requisite notice under Section 160 of the
Companies Act, 2013 from members to proposing their name for being
appointed as Independent Directors of the Company.
The Company has received declarations from all the Independent
Directors of the Company confirming that they meet with the criteria of
independence as prescribed under sub-section (6) of Section 149 of the
Companies Act, 2013.
Appropriate resolutions for the appointment/re- appointment of
Directors are being placed for your approval at the ensuing Annual
General Meeting.
Your Directors recommend the appointment/re- appointment of the
aforesaid Directors by the Members at the ensuing Annual General
Meeting.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors'' Responsibility Statement, it is
hereby confirmed:
(i)that in the preparation of the annual accounts for the financial
year ended 31st March, 2014, the applicable accounting standards have
been followed along with proper explanation relating to material
departures;
(ii) that the Directors have selected appropriate accounting policies
and applied them consistently and made judgments and estimates that
were 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 on
the loss of the Company for the year under review;
(iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 and of Companies Act, 2013 to the
extent applicable, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and,
(iv) that the Directors have prepared the annual accounts for the
financial year ended 31st March, 2014 on a ''going concern'' basis.
AUDITORS
Your Company''s auditors, Messrs. Deloitte Haskins & Sells LLP,
Chartered Accountants, Mumbai, retire at the conclusion of the
forthcoming Annual General Meeting. Your Company has received a letter
from them to the effect that their re-appointment, if made, will be in
accordance with the provisions of Section 139 of the Companies Act,
2013.
COST AUDITORS
The Company has appointed Messrs. Kailash Sankhlecha & Associates, Cost
Accountants, Vadodara as Cost Auditors of our Company for conducting
Cost Audit in respect of Bulk Drugs & Formulations of your Company for
the year ended 31st March, 2014.
ACKNOWLEDGEMENTS
Your Directors wish to thank all stakeholders and business partners,
your Company''s bankers, financial institutions, medical profession and
business associates for their continued support and valuable
co-operation. The Directors also wish to express their gratitude to
investors for the faith that they continue to repose in the Company.
For and on behalf of the Board of Directors
ISRAEL MAKOV
Chairman
12th August, 2014
Mumbai
Mar 31, 2013
Dear Members,
The Directors take pleasure in presenting the Twenty-First Annual
Report and Audited accounts for the year ended March 31, 2013
FINANCIAL RESULTS
(Rs. in million except dividend per share and book value)
Year ended Year ended
March 31, 2013* March 31, 2012
Total Income 26,683 43,584
Profit after tax 5,166 16,975
Dividend on Equity Shares 5,178 4,401
Corporate Dividend tax 880 714
Transfer to various Reserves 520 2,000
Amount of dividend per equity share
of Rs.1/- each 2.50 4.25
Book value per equity share of Rs.1/- each 75 76
*Previous year figures are not comparable since they include the
figures with respect to the Domestic Formulation undertaking which got
transferred to and /or vested in Sun Pharma Laboratories Limited , the
Company''s wholly onwed subsidiary company as a going concern as on
March 31, 2012.
DIVIDEND
Your Directors have recommended an equity dividend of Rs.2.50 per
equity share of face value Rs.1/- each (equivalent to Rs.5.00 per
equity share pre-bonus) (previous year Rs.4.25 per equity share) for
the year ended March 31, 2013.
BONUS SHARES
The Company on August 3, 2013 allotted 1,035,581,955 Equity Shares of
Rs.1/- each as Bonus Shares to the Equity Shareholders of the Company
in the ratio of 1 (One) Equity Share of Rs.1/- each for every 1(One)
Equity Share of Rs.1/- each held on the Record Date, July 30, 2013.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis on the operations of the Company
is provided in a separate section and forms part of this report.
HUMAN RESOURCES
Your Company considers its employees as most valuable resource and
ensures strategic alignment of Human Resource practices to business
priorities and objectives. The Company has a dedicated team of over
13000 employees at various locations across our corporate office,
various R&D Centers & 23 plant locations (including associate
companies) spread across three continents. The Company strives to
inculcate the culture where its employees are motivated and their
performance is aligned with values. Your Company has achieved this
present level of excellence through the commitment and dedication
exhibited by its employees. The focus on improving productivity and
adoption of best practices in every area are being pursued
relentlessly. Efforts for active participation, nurturing creativity
and innovation and ensuring a climate of synergy and enthusiasm has
been at the core of Human Resource initiatives and interventions.
Management Development Programmes (MDPs) are organised at regular
intervals in the form of workshops to nurture, enhance and retain the
top talent.
Information as per Section 217(2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975 as amended,
is available at the registered office of your Company. However, as per
the provisions of Section 219(1) (b) (iv) of the said Act, the Report
and Accounts are being sent to all shareholders of the Company and
others entitled thereto excluding the aforesaid information. Any
shareholder interested in obtaining a copy of this statement may write
to the Company Secretary/Compliance Officer at the Corporate Office or
Registered Office address of the Company.
INFORMATION ON CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN
EXCHANGE EARNING AND OUTGO.
The additional information relating to energy conservation, technology
absorption, foreign exchange earnings and outgo, pursuant to Section
217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the Report of the Board of Directors)
Rules, 1988, is given in Annexure and forms part of this Report.
CORPORATE GOVERNANCE
Report on Corporate Governance and Certificate of the auditors of your
Company regarding compliance of the conditions of Corporate Governance
as stipulated in Clause 49 of the listing agreement with stock
exchanges, are annexed.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report of the Company for the year ended
March 31, 2013, in line with Green initiative, is made available on the
website of the Company www.sunpharma.com and forms part of the Annual
Report, and is kept at the Registered Office of the Company for
inspection. A copy of the aforesaid report shall be made available to
such of those shareholders who are desirous and interested, upon
receipt of a written request from them.
CONSOLIDATED ACCOUNTS
In accordance with the requirements of Accounting Standard AS-21
prescribed by the Institute of Chartered Accountants of India, the
Consolidated Accounts of the Company and its subsidiaries is annexed to
this Report.
SUBSIDIARIES
The Ministry of Corporate Affairs, Government of India, New Delhi has
issued direction under Section 212(8) of the Companies Act, 1956 vide
general circular No.2/2011 dated February 8, 2011 and in accordance
with the same, the Balance Sheet, the Profit and Loss Account and other
documents of the subsidiary companies are not being attached with the
Balance Sheet of the Company. The information relating to each
subsidiary including subsidiaries of subsidiaries, as required by the
aforesaid circular, is disclosed in the Annual Report. The Company will
make available the Annual Accounts of the subsidiary companies and the
related detailed information to any member of the Company and its
subsidiaries who may be interested in obtaining the same. The annual
accounts of the subsidiary companies will also be kept open for
inspection by any investor at the Registered Office & Corporate / Head
Office of the Company and that of the respective subsidiary companies.
The Consolidated Financial Statements presented by the Company include
financial results of its subsidiary companies also.
FINANCE
CRISIL continued to reaffirm its highest rating of "AAA/ Stable" and
"A1 ", for your Company''s Banking Facilities throughout the year
enabling your Company to avail facilities from banks at attractive
rates. The Company does not offer any Fixed Deposit Scheme.
CORPORATE SOCIAL RESPONSIBILITY
Your company has identified health, education, disaster relief and
civic utilities as the areas where assistance is provided on a
need-based and case-to-case basis. Your company persisted with
participation in such activities at the local, grassroots level during
the year. In the past, support has been offered towards disaster relief
as well as participation in the facilitation of civic utilities around
the plants/research centers. Your Company remains interested in these
contributions.
DIRECTORS
Shri, Dilip S. Shanghvi, Shri Sailesh T. Desai and Shri Hasmukh S.
Shah retire by rotation and being eligible offer themselves for
re-appointment. The terms of appointment of Shri Sudhir V. Valia and
Shri Sailesh T. Desai as Whole-time Director will expire on March 31,
2014. Both of these Directors have made significant contribution to
overall growth of the Company''s business. Your Directors recommend the
re-appointment of both Directors for a further period of five years
from April 1, 2014.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors'' Responsibility Statement, it is
hereby confirmed:
(i) that in the preparation of the annual accounts for the financial
year ended March 31, 2013, the applicable accounting standards have
been followed along with proper explanation relating to material
departures,
(ii) that the Directors have selected appropriate accounting policies
and applied them consistently and made judgements and estimates that
were 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 on
the profit of the Company for the year under review,
(iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities, and,
(iv) that the Directors have prepared the annual accounts for the
financial year ended March 31, 2013 on a ''going concern'' basis.
AUDITORS
Your Company''s auditors, Messrs. Deloitte Haskins & Sells, Chartered
Accountants, Mumbai, retire at the conclusion of the forthcoming Annual
General Meeting. Your Company has received a letter from them to the
effect that their re-appointment, if made, will be in accordance with
the provisions of Section 224(1-B) of the Companies Act, 1956.
COST AUDITORS
The Company has appointed Messrs.Kailash Sankhlecha & Associates, Cost
Accountants, Vadodara as Cost Auditors of our Company for conducting
Cost Audit in respect of Bulk Drugs & Formulations of your Company for
the year ended March 31, 2013.
ACKNOWLEDGEMENTS
Your Directors wish to thank all stakeholders and business partners,
your Company''s bankers, financial institutions, medical profession and
business associates for their continued support and valuable
co-operation. The Directors also wish to express their gratitude to
investors for the faith that they continue to repose in the Company.
For and on behalf of the Board of Directors
Israel Makov
Chairman
August 9, 2013
Mumbai
Mar 31, 2012
The Directors take pleasure in presenting the Twentieth Annual Report
and Audited Accounts for the year ended March 31, 2012.
Financial Results
(Rs. in million except dividend per share and book value)
Particulars Year ended Year ended
March 31, March 31,
2012 2011
Total Income 43584 33017
Profit after tax 16975 13838
Dividend on Equity Shares 4401 3625
Corporate Dividend tax 714 588
Transfer to various Reserves 2000 5000
Amount of dividend per equity share of
Rs.1/- each 4.25 3.5
Book value per equity share of Rs.1/- each 76 65
Dividend
An interim equity dividend of Rs. 4.25 per equity share of face value
Rs.1/- each (previous year Rs. 3.50 per equity share) for the year
ended March 31, 2012 as recommended by the Board of Directors of the
Company at their Meeting held on August 10, 2012 was paid on August 22,
2012 to the Equity Shareholders of the Company whose names stood on the
Register of Members on August 16, 2012. Yours Directors recommend that
the interim dividend paid as aforesaid be treated as final for the year
ended March 31, 2012.
Management Discussion and Analysis
The Management Discussion and Analysis on the operations of the Company
is provided in a separate section and forms part of this report.
Scheme of Arrangement in the form of spin off and transfer of Domestic
Formulation Division of our Company to Sun Pharma Laboratories Ltd., a
wholly owned subsidiary of our Company with effect from March 31, 2012
As all of us are aware that, your Company had undertaken the Scheme of
Arrangement in the form of spin off and transfer of domestic
formulation undertaking of our Company to Sun Pharma Laboratories Ltd.,
a wholly owned subsidiary of our Company with effect from March 31,
2012. The said spin off has been sanctioned by the Honourable High
Court of Gujarat at Ahmedabad and by the Honourable High Court of
Judicature at Bombay, pursuant to Sections 391 to 394 of the Companies
Act, 1956 on May 3, 2013. On completion of the necessary formalities,
the spin off has been effective from March 31, 2012 and the impact of
the spin off has been incorporated in the Audited Accounts for the year
under review.
Human Resources
Human Resource development continues to be a key focus area at Sun
Pharma and your Company takes great pride in the commitment, competence
and vigor shown by its workforce in all realms of business. You have a
dedicated team of over 13000 employees at various locations across our
corporate office, various R&D Centers & 23 plant locations (including
associate companies) spread across three continents. The Company
continues to take new initiatives to further align its HR policies to
meet the growing needs of its business. Your Directors truly appreciate
the efforts and contribution by Team Sun Pharma for maintaining and
further accelerating the growth pace.
Information as per Section 217(2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975 as amended,
is available at the registered office of your Company. However, as per
the provisions of Section 219(1)(b)(iv) of the said Act, the Report and
Accounts are being sent to all shareholders of the Company and others
entitled thereto excluding the aforesaid information. Any shareholder
interested in obtaining a copy of this statement may write to the
Company Secretary/Compliance Officer at the Corporate Office or
Registered Office address of the Company.
Information on Conservation of Energy, Technology Absorption, Foreign
Exchange Earning and Outgo.
The additional information relating to energy conservation, technology
absorption, foreign exchange earning and outgo, pursuant to Section
217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the Report of the Board of Directors)
Rules, 1988, is given in Annexure and forms part of this Report.
Corporate Governance
Report on Corporate Governance and Certificate of the auditors of your
Company regarding compliance of the conditions of Corporate Governance
as stipulated in Clause 49 of the listing agreement with stock
exchanges, are annexed.
Consolidated Accounts
In accordance with the requirements of Accounting Standard AS-21
prescribed by the Institute of Chartered Accountants of India, the
Consolidated Accounts of the Company and its subsidiaries is annexed to
this Report.
Subsidiaries
The Ministry of Corporate Affairs, Government of India, New Delhi has
issued direction under Section 212(8) of the Companies Act, 1956 vide
general circular No.2/201 1 dated February 8, 2011 and in accordance
with the same, the Balance Sheet, the Profit and Loss Account and other
documents of the subsidiary companies are not being attached with the
Balance Sheet of the Company. The information relating to each
subsidiary including subsidiaries of subsidiaries, as required by the
aforesaid circular, is disclosed in the Annual Report. The Company will
make available the Annual Accounts of the subsidiary companies and the
related detailed information to any member of the Company and its
subsidiaries who may be interested in obtaining the same. The annual
accounts of the subsidiary companies will also be kept open for
inspection by any investor at the Registered Office & Corporate / Head
Office of the Company and that of the respective subsidiary companies.
The Consolidated Financial Statements presented by the Company include
financial results of its subsidiary companies also.
Finance
CRISIL continued to reaffirm its highest rating of "AAA/ Stable"
and "A1 ", for your Company''s Banking Facilities throughout the year
enabling your Company to avail facilities from banks at attractive
rates. The Company does not offer any Fixed Deposit scheme.
Corporate Social Responsibility
At the close of a relatively event-free, disaster-free year, your
Company persisted with participation in activities at the local,
grassroots level across health and education. In the past, support has
been offered towards disaster relief as well as participation in the
facilitation of civic utilities around the plants/research centers.
Your Company remains interested in these contributions.
Directors
Mr. S. Kalyanasundaram, resigned as the Director of the Company with
effect from March 31, 2012 so as to relocate himself to the USA to take
care of the Group''s business interests in North and South America. The
Directors place on record their appreciation of the services rendered
by Shri S. Kalyanasundaram during his tenure of Directorship with the
Company. Mr. Israel Makov was appointed as an Additional Director and
Chairman of the Company and Mr. Dilip Shanghvi stepped down from the
Chairmanship of the Company at Meeting of the Board of Directors held
on May 29, 2012.
At the Twentieth Annual General Meeting of the Company held on November
8, 2012 which was adjourned sine die pending approval of the respective
High Courts of Gujarat and Bombay, Mr. Keki M. Mistry, Mr. Sudhir V.
Valia and Mr. Ashwin Dani retired by rotation and were re-appointed,
the appointment of Mr. Israel Makov as a Director of the Company was
confirmed and Mr. Dilip Shanghvi was reappointed as the Managing
Director of the Company for a further period of 5 years effective from
1st April, 2013.
Directors'' Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors'' Responsibility Statement, it is
hereby confirmed:
(i) that in the preparation of the annual accounts for the financial
year ended March 31, 2012, the applicable accounting standards have
been followed along with proper explanation relating to material
departures;
(ii) that the Directors have selected appropriate accounting policies
and applied them consistently and made judgements and estimates that
were 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 on
the profit of the Company for the year under review;
(iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and,
(iv) that the Directors have prepared the annual accounts for the
financial year ended March 31, 2012 on a ''going concern'' basis.
Auditors
Your Company''s auditors, Messrs. Deloitte Haskins & Sells, Chartered
Accountants, Mumbai, have already been re-appointed at the Twentieth
Annual General Meeting of the Company held on November 8, 2012.
Cost Auditors
The Company has appointed Messrs Kailash Sankhlecha & Associates, Cost
Accountants, Vadodara as Cost Auditors of our Company for conducting
Cost Audit in respect of Bulk Drugs & Formulations of your Company for
the year ended March 31, 2012.
Acknowledgements
Your Directors wish to thank all stakeholders and business partners,
your Company''s bankers, financial institutions, medical profession and
business associates for their continued support and valuable
co-operation. The Directors also wish to express their gratitude to
investors for the faith that they continue to repose in the Company.
For and on behalf of the Board of Directors
Dilip S. Shanghvi Sudhir V. Valia
Managing Director Whole-time Director
May 28, 2013
Mumbai
Mar 31, 2011
Dear Members,
The Directors take pleasure in presenting the Nineteenth Annual Report
and Audited Accounts for the year ended March 31,2011.
FINANCIAL RESULTS
(Rs. in million except dividend
per share and book value)
Year ended Year ended
March 31, 2011 March 31, 2010
Total Income 32989 26084
Profit aftertax 13838 8987
Dividend on Equity Shares 3625 2848
Corporate Dividend tax 588 473
Transferto General Reserve 5000 3000
Amount of dividend per equity share
ofRs.1/- each (Previous year per equity 3.5 1375
share ofRs. 5/-each)
Book value per equity share ofRs.1/-
each(Previous year per equity share 65 276
ofRs. 57-each)
Dividend
Your Directors are pleased to recommend an equity dividend of Rs. 3.50
per equity share of face value Rs. 1/-each (previous year Rs. 13.75 per
equity share of face value Rs. 5/-each) for the year ended March 31,2011.
Split of Equity Shares
As approved by the Shareholders of the Company by way of postal ballot
conducted during November, 2010, the results of which were announced on
November 12,2010, the Equity Shares of Rs. 5/- each of the Company were
sub- divided into 5 Equity Shares ofRs. 1/-each during the year under
review.
Management Discussion and Analysis
The management discussion and analysis on the operations of the Company
is provided in a separate section and forms part of this report.
Human Resources
Human Resource development continues to be a key focus area at Sun
Pharma and your Company takes great pride in the commitment, competence
and vigor shown by its workforce in all realms of business. You have a
dedicated team of over 11200 employees at various locations across our
corporate office, various R&D Centers & 19 plant locations (including
associate companies) spread across three continents.The Company
continues to take new initiatives to further align its HR policies to
meet the growing needs of its business. A transparent work culture,
quality of work and supportive environment induces discretionary
behavior among employees which gives them the opportunity to personally
succeed in a way that leads to collective organizational success. Your
Directors truly appreciate the efforts and contribution by Team Sun
Pharma for maintaining and further accelerating the growth pace.
Information as per Section 217(2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975 as amended,
is available at the registered office of your Company. However, as per
the provisions of Section 219(1 )(b)(iv) of the said Act, the Report
and Accounts are being sent to all shareholders of the Company and
others entitled thereto excluding the aforesaid information. Any
shareholder interested in obtaining a copy of this statement may write
to the Company Secretary/Compliance Officer at the Corporate Office or
Registered Office address of the Company.
Information on Conservation of Energy, Technology Absorption, Foreign
Exchange Earning and Outgo.
The additional information relating to energy conservation, technology
absorption, foreign exchange earning and outgo, pursuant to Section
217(1) (e) of the Companies Act 1956 read with the Companies
(Disclosure of Particulars in the Report of the Board of Directors)
Rules, 1988, is given in Annexure and forms part of this Report.
Corporate Governance
Report on Corporate Governance and Certificate of the auditors of your
Company regarding compliance of the conditions of Corporate Governance
as stipulated in Clause 49 of the listing agreement with stock
exchanges, are annexed.
Consolidated Accounts
In accordance with the requirements of Accounting Standard AS-21
prescribed by the Institute of Chartered Accountants of India, the
Consolidated Accounts of the Company and its subsidiaries is annexed to
this Report.
Subsidiaries
The Ministry of Corporate Affairs, Government of India, New Delhi has
issued direction under Section 212(8) of the Companies Act, 1956 vide
genera circular No.2/2011 dated February 8, 2011 and in accordance with
the same, the Balance Sheet, the Profit and Loss Account and other
documents of the subsidiary companies are not being attached with the
Balance Sheet of the Company.The information relating to each
subsidiary including subsidiaries of subsidiaries, as required by the
aforesaid circular, is disclosed in the Annual Report. The Company will
make available the Annual Accounts of the subsidiary companies and the
related detailed information to any member of the Company and its
subsidiaries who may be interested in obtaining the same.The annual
accounts of the subsidiary companies will also be kept open for
inspection by any investor at the Registered Office & Corporate / Head
Office of the Company and that of the respective subsidiary companies.
The Consolidated Financial Statements presented by the Company include
financial results of its subsidiary companies also.
Finance
CRISIL continued to reaffirm its highest rating of "AAA/Stable" and
"P1 ", for your Company''s Banking Facilities throughout the year
enabling your Company to avail facilities from banks at attractive
rates. The Company does not offer any Fixed Deposit scheme.
Corporate Social Responsibility
At the close of a relatively event-free, disaster-free year, your
Company persisted with participation in activities at the local,
grassroots level across health and education. In the past, support has
been offered towards disaster relief as well as participation in the
facilitation of civic utilities around the plants/research centers.
Your Company remains interested in these contributions.
Directors
Shri Dilip S. Shanghvi, Shri Sailesh T. Desai and Shri S.Mohanchand
Dadha retire by rotation and being eligible offer themselves for
re-appointment.
Directors'' Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors'' Responsibility Statement, it is
hereby confirmed:
(i) that in the preparation of the annual accounts for the financia
year ended March 31, 2011, the applicable accounting standards have
been followed along with proper explanation relating to material
departures;
(ii) that the Directors have selected appropriate accounting policies
and applied them consistently and made judgements and estimates that
were 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 on
the profit of the Company for the year under review;
(iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and,
(iv) that the Directors have prepared the annual accounts for the
financial year ended March 31,2011 on a ''going concern'' basis.
Auditors
Your Company''s auditors, M/s. Deloitte Haskins & Sells, Chartered
Accountants, Mumbai, retire at the conclusion of the forthcoming Annual
Genera Meeting. Your Company has received a letter from them to the
effect that their re-appointment, if made, will be in accordance with
the provisions of Section 224(1-B) of the Companies Act, 1956.
Cost Auditors
The Company has appointed Messrs. Kailash Sankhlecha & Associates,
Cost Accountants, Vadodara as Cost Auditors of our Company for
conducting Cost Audit in respect of Bulk Drugs & Formulations of your
Company for the year ended March 31, 2011.
Acknowledgements
Your Directors wish to thank all stakeholders and business partners,
your Company''s bankers, financia institutions, medical profession and
business associates for their continued support and valuable
co-operation. The Directors also wish to express their gratitude to
investors for the faith that they continue to repose in the Company.
For and on behalf of the
Board of Directors
Dilip S. Shanghvi
Chairman & Managing Director
May 28, 2011
Mumbai
Mar 31, 2010
The Directors take pleasure in presenting the Eighteenth Annual Report
and Audited Accounts for the year ended March 31, 2010.
Financial Results
(Rs. in million except dividend per share and book value)
Year ended Year ended
March 31, 2010 March 31, 2009
Total Income 26467 40437
Profit after tax 8987 12653
Dividend on Equity Shares 2848 2848
Corporate Dividend tax 473 484
Transfer to various Reserves 3000 4500
Amount of dividend per equity
share of Rs. 5/- each 13.75 13.75
Book value per equity share of
Rs. 5/- each 276 249
Dividend
Your Directors are pleased to recommend an equity dividend of Rs. 13.75
per equity share of face value Rs. 5/- each (previous year Rs. 13.75
per equity share of face value Rs. 5/- each) for the year ended March
31, 2010.
Management Discussion and Analysis
The management discussion and analysis on the operations of the Company
is provided in a separate section and forms part of this report.
Human Resources
A dedicated team of over 8000 multi- cultural employees have been
pushing boundaries of your organisation to maximize opportunities
across our corporate office, Companys various R&D Centres & 19 plants
(including associate companies) spread across three continents. The
potential and ability to deliver consistently is established by our
remarkable team, evident from our consistent growth. The Company
recognises the importance and contribution of our people. Performance
orientation and ethics are high priority areas. The supportive work
environment and opportunities for career advancement within the Company
itself, helps retain talent. Your Directors recognise the teams
valuable contribution and places on record their appreciation for Team
Sun Pharma.
Information as per Section 217(2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975 as amended,
is available at the registered office of your Company. However, as per
the provisions of Section 219(1)(b)(iv) of the said Act, the Report and
Accounts are being sent to all shareholders of the Company and others
entitled thereto excluding the aforesaid information. Any shareholder
interested in obtaining a copy of this statement may write to the
Company Secretary/Compliance Officer at the
Corporate Office or Registered Office address of the Company.
Information on Conservation of Energy, Technology Absorption, Foreign
Exchange Earning and Outgo.
The additional information relating to energy conservation, technology
absorption, foreign exchange earning and outgo, pursuant to Section
217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the Report of the Board of Directors)
Rules, 1988, is given in Annexure and forms part of this Report.
Corporate Governance
Report on Corporate Governance and Certificate of the auditors of your
Company regarding compliance of the conditions of Corporate Governance
as stipulated in Clause 49 of the listing agreement with stock
exchanges, are enclosed.
Consolidated Accounts
In accordance with the requirements of Accounting Standard AS-21
prescribed by the Institute of Chartered Accountants of India, the
Consolidated Accounts of the Company and its subsidiaries is annexed to
this Report.
Subsidiaries
The Ministry of Corporate Affairs, Government of India, has granted
approval that the requirement to attach various documents in respect of
subsidiary companies, as set out in sub-section (1) of Section 212 of
the Companies Act, 1956, shall not apply to the Company. Accordingly,
the Balance Sheet, Profit and Loss Account and other documents of the
subsidiary companies are not being attached with the Balance Sheet of
the Company. Financial information of the subsidiary companies, as
required by the said order, is disclosed in the Annual Report. The
Company will make available the Annual Accounts of the subsidiary
companies and the related detailed information to any member of the
Company and its subsidiaries who may be interested in obtaining the
same. The annual accounts of the subsidiary companies will also be kept
open for inspection by any investor at the Registered Office &
Corporate / Head Office of the Company and that of the respective
subsidiary companies. The Consolidated Financial Statements presented
by the Company include financial results of its subsidiary companies.
Finance
CRISIL continued to reaffirm its highest rating of "AAA/ Stable" and
ÂP1+Â, for your Companys Banking Facilities throughout the year
enabling your Company to avail facilities from banks at attractive
rates. The Company does not offer any Fixed Deposit scheme.
Corporate Social Responsibility
Your organization continued to support activities in two areas-- health
and education. Other areas of support were disaster relief and civic
utilities around the plants and research centers, where assistance was
provided on a need basis.
Directors
Shri Sudhir V. Valia, Shri Hasmukh S. Shah and Shri Ashwin S.Dani
retire by rotation and being eligible offer themselves for
re-appointment.
Shri Subramanian Kalyanasundaram was appointed as an Additional
Director, and Chief Executive Officer & Whole-time Director of the
Company for a period of five years from April 1, 2010 to March 31,
2015, by the Board of Directors by way of circular resolution passed on
March 31, 2010, and holds the office as a director up to the ensuing
Annual General Meeting. The Company has received requisite notice under
Section 257 of the Companies Act, 1956, from a member to propose his
name for being appointed as a Director of the Company.
Directors Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors Responsibility Statement, it is
hereby confirmed:
(i) that in the preparation of the annual accounts for the financial
year ended March 31, 2010, the applicable accounting standards have
been followed along with proper explanation relating to material
departures;
(ii) that the Directors have selected appropriate accounting policies
and applied them consistently and made judgements and estimates that
were 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 on
the profit of the Company for the year under review;
(iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and,
(iv) that the Directors have prepared the annual accounts for the
financial year ended March 31, 2010 on a Âgoing concern basis.
Auditors
Your Companys auditors, M/s. Deloitte Haskins & Sells, Chartered
Accountants, Mumbai, retire at the conclusion of the forthcoming Annual
General Meeting. Your Company has received a letter from them to the
effect that their re-appointment, if made, will be in accordance with
the provisions of Section 224(1-B) of the Companies Act, 1956.
Acknowledgements
Your Directors wish to thank all stakeholders and business partners,
your Companys bankers, financial institutions, medical profession and
business associates for their continued support and valuable
co-operation. The Directors also wish to express their gratitude to
investors for the faith that they continue to repose in the Company.
For and on behalf of the Board of Directors
Dilip S. Shanghvi
Chairman & Managing Director
June 14, 2010
Mumbai
Mar 31, 2009
The Directors take pleasure in presenting the Seventeenth Annual
Report and Audited Accounts for the year ended 31st March, 2009.
(Rs. in million except book value and dividend per share)
Year ended Year ended
Financial Results 31st March, 2009 31st March, 2008
Total Income 40437 32767
Profit after tax 12653 10140
Dividend on Preference Shares 0 1
Dividend on Equity Shares 2848 2175
Corporate Dividend tax 484 372
Transfer to various Reserves 4500 3014
Amount of dividend per equity
share of Rs. 5 each 13.75 10.50
Book value per equity share
of Rs. 5 each 249 203
Dividend
Your Directors are pleased to recommend an equity dividend of Rs.13.75
per equity share of face value Rs.5/- each (previous year Rs.10.50 per
equity share of face value Rs.5/- each) for the year ended 31st March,
2009.
Management Discussionand Analysis
The management discussion and analysisonthe operationsof the Company
isprovidedin a separate section and forms partofthis report.
HumanResources
A committed human capital of over 8000 multi-cultural employees have
been pushing boundaries of your aspirational organisation tomaximize
opportunities across our corporate office, two R&D centres & 19 plants
(including associate companies) spread across three continents. The
potential and ability to deliver consistently is established by our
remarkable team, evident from our consistent growth. The company
recognizes the importance and contribution of human capital and
therefore appreciates and motivates them to pursue excellence. Focused
efforts to develop and nurture human capital through in-house, external
professional development programmes and on-job training are used for
upgrading technical, marketing and management skills. Performance
orientation and ethics are high priority areas. The work environment
and career opportunities help retain talent. Your
Directors recognize the teams valuable contribution and place on
record their appreciation for Team Sun Pharma.
Information as per Section 217(2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975 as amended,
is available at the registered office of your Company. However, as per
the provisions of Section 219(1)(b)(iv) of the said Act, the Report and
Accounts are being sent to all shareholders of the Company and others
entitled thereto excluding the aforesaid information. Any shareholder
interested in obtaining a copy of this statement may write to the
Company Secretary/Compliance Officer at the Corporate Office or
Registered Office address ofthe Company.
Information onConservation of Energy, Technology Absorption, Foreign
ExchangeEarning and Outgo
The additional information relating toenergy conservation, technology
absorption, foreign exchange earning and outgo,
pursuant to Section 217(1)(e) of the Companies Act 1956 read with the
Companies (Disclosure of Particulars in the Report of the Board of
Directors) Rules, 1988, is given inAnnexure and forms part of this
Report.
CorporateGovernance
Report on Corporate Governance and Certificate dated June 20, 2009 of
the auditors of your Company regarding compliance of the conditions of
Corporate Governance as stipulated in Clause 49 of the listing
agreement with stock exchanges, are enclosed.
Consolidated Accounts
In accordance with the requirements of Accounting Standard AS-21
prescribed by the Institute of Chartered Accountants of India, the
Consolidated Accounts of the Company and its subsidiaries is annexed to
this Report.
Subsidiaries
The Ministry of Corporate Affairs, Government of India, vide order No.
47/447/2009-CL-III dated June 18, 2009
has granted approval that the requirement to attach various documents
in respect of subsidiary companies, as set out in sub- section (1) of
Section 212 of the Companies Act, 1956, shall not apply to the Company.
Accordingly, the Balance Sheet, Profit and Loss Account and other
documents of the subsidiary companies are not being attached with the
Balance Sheet of the Company. Financial information of the subsidiary
companies, as required by the said order, is disclosed in the Annual
Report. The Company will make available the Annual Accounts of the
subsidiary companies and the related detailed information to any member
of the Company and its subsidiaries who may be interested in obtaining
the same. The annual accounts of the subsidiary companies will also be
kept open for inspection by any investor at the Registered Office &
Corporate / Head Office of the Company and that of the respective
subsidiary companies. The Consolidated Financial Statements presented
by the Company include financial results ofits subsidiary companies.
Finance
The banks in consortium continue to offer their highest rating to your
Company enabling it to source funds from banks at attractive rates of
interest. CRISIL continued to reaffirm their highest rating of ÂP1+Â,
for your Companys Short Term Borrowing Programme throughout the year.
The Company does not offer any Fixed Deposit scheme.
Corporate Social Responsibility (CSR)
Your organization has identified health, education, disaster relief and
civic utilities around the plants and research centers as areas where
assistance is provided on a need-based and caseto case basis.
Directors
Shri Dilip S. Shanghvi and Shri Keki Minoo Mistry retire by rotation
and being eligible offer themselves for re-appointment.
Directors Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respecttoDirectors Responsibility Statement, it
ishereby confirmed:
(i) that in the preparation of the annual accounts for the financial
year ended 31st March, 2009, the applicable accounting standards have
been followed along with proper explanation relating tomaterial
departures;
(ii) that the Directors have selected appropriate accounting policies
and applied them consistently and made judgements and estimates that
were 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
andonthe profitofthe Company for the year under review;
(iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and,
(iv) that the Directors have prepared the annual accounts for the
financial year ended 31st March, 2009onagoing concern basis.
Auditors
Your Companys auditors, M/s. Deloitte Haskins & Sells, Chartered
Accountants, Mumbai, retire at the conclusion of the forthcoming Annual
General Meeting. Your Company has received a letter from them to the
effect that their re-appointment, if made, will be in accordance with
the provisionsofSection 224(1-B)ofthe CompaniesAct, 1956.
Acknowledgements
Your Directors wish to thank all stakeholders and business partners,
your Companys bankers, financial institutions, medical profession and
business associates for their continued support and valuable
co-operation. The Directors also wish to express their
gratitudetoinvestors for the faith that they continuetoreposein the
Company.
For and on behalfof the Board of Directors
Dilip S. Shanghvi
Chairman&Managing Director
June 20, 2009.
Mumbai
Mar 31, 2008
The Directors take pleasure in presenting the Sixteenth Annual Report
and Audited Accounts for the year ended 31 st March, 2008.
Dividend
An interim preference share dividend on pro-rata basis @ 6% p.a. had
been declared on 25th Oct, 2007 on outstanding preference shares and
was paid on Nov 1, 2007. Your Directors recommend that the interim
dividend on preference paid be treated as final. Your Directors are
pleased to recommend a equity dividend of 210% (previous year 135%) for
the year ended 31st March, 2008 on the equity share capital.
Management Discussion and Analysis
The management discussion and analysis on the operations of the Company
is provided in a separate section and forms part of this report.
Human Resources
At Sun Pharma, we have grown to a committed workforce of over 8000
multi-cultural employees pursuing a shared vision of excellence across
our corporate office, two R&D centres & seventeen plants (including
associate companies) across three continents. Our consistent growth
firmly establishes our remarkable team, their potential and
capabilities to deliver. The company recognizes the importance of human
capital and search for this intellectual capital and to enrich
professional and technical skill is an ongoing process. Relentless
efforts to develop and nurture through in-house, external professional
development programs and on-job training are used to upgrade technical,
marketing and management skills. Performance orientation and ethics are
a high priority area. The work environment and development
opportunities help to retain talent. Your Directors recognize the
teamÂs valuable contribution, nurtures with joy their more than 8000
people and place on record their appreciation for Team Sun Pharma.
Information as per Section 217(2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975 as amended,
is available at the registered office of your Company. However, as per
the provisions of Section 219(1)(b)(iv) of the said Act, the Report and
Accounts are being sent to all shareholders of the Company and others
entitled thereto excluding the aforesaid information. Any shareholder
interested in obtaining a copy of this statement may write to the
Company
(Rs. in million except book value)
Financial Result Year ended Year ended
31st March, 2008 31st March, 2007
Total Income 32767 24067
Profit after tax 10140 6289
Dividend on Preference Shares 1 1
Dividend on Equity Shares - Final 2175 1300
Corporate Dividend tax 372 182
Transfer to various Reserves 3014 2000
Rate of dividend on equity shares 210 135
Book value per equity share
(Rs. 5 paid up) 203 126
Secretary/Compliance Officer at the Corporate office or Registered
office address of the Company.
Information on Conservation of Energy, Technology Absorption, Foreign
Exchange Earning and Outgo.
The additional information relating to energy conservation, technology
absorption, foreign exchange earning and outgo, pursuant to Section
217(1)(e) of the Companies Act 1956 read with the Companies (Disclosure
of Particulars in the Report of the Board of Directors) Rules, 1988, is
given in Annexure and forms part of this Report.
Corporate Governance
Report on Corporate Governance and Certificate dated 30th May, 2008 of
the auditors of your Company regarding compliance of the conditions of
Corporate Governance as stipulated in Clause 49 of the listing
agreement with stock exchanges, are enclosed.
Consolidated Accounts
In accordance with the requirements of Accounting Standard AS-21
prescribed by the Institute of Chartered Accountants of India, the
Consolidated Accounts of the Company and its subsidiaries is annexed to
this Report.
Subsidiaries
Ministry of Corporate Affairs, Government of India, vide order No.
47/461/2008-CL-III dated July 11, 2008 has granted approval that the
requirement to attach various documents in respect of subsidiary
companies, as set out in sub-section (1) of Section 212 of the
Companies Act, 1956, shall not apply to the Company. Accordingly, the
Balance Sheet, Profit and Loss Account and other documents of the
subsidiary companies are not being attached with the Balance Sheet of
the Company. Financial information of the subsidiary companies, as
required by the said order, is disclosed in the Annual Report. The
Company will make available the Annual Accounts of the subsidiary
companies and the related detailed information to any member of the
Company and its subsidiaries who may be interested in obtaining the
same. The annual accounts of the subsidiary companies will also be kept
open for inspection by any investor at the Registered Office &
Corporate / Head Office of the Company and that of the respective
subsidiary companies. The Consolidated Financial Statements presented
by the Company include financial results of its subsidiary companies.
Finance
The banks in consortium continue to offer their highest rating to your
Company enabling it to source funds from banks at attractive rates of
interest. CRISIL continued to reaffirm their highest rating of ÂP1+Â,
for your CompanyÂs Short Term Borrowing Program throughout the year.
The Company does not offer any Fixed Deposit scheme.
Issue of Shares on Full Conversion of FCCB
During the year ended 31st March, 2008, the Company received notices
from Foreign Currency Convertible Bond (FCCB) holders for exercising
the conversion option in respect of full balance 222,214 FCCBs of US$
1000 each (which were outstanding at the beginning of the year) Out of
total of 350,000 FCCBs thus leaving no FCCBs outstanding as on 31st
March, 08. Accordingly, the Company allotted during the year ended 31st
March,2008, 13,714,271 equity shares of Rs.5 each to these Bondholders
at the conversion price of Rs. 729.30 per share.
Corporate Social Responsibility (CSR)
Your organization has identified health, education, disaster relief and
periodically, patient awareness as areas of priority. Our emphasis is
assistance on a need basis and preferably at a local level, working
with a local body, NGO or existing organization.
One personÂs education can make a difference to an entire family. Your
organization continues to support tribal education, at village schools
called ashram pathshalas across several states. We have often stepped
in to support infrastructure in the village schools around our plants
and offices. We helped Adarsh Kanyashala, near our R&D center in
Baroda, with computer facilities. In Ahmednagar, support is extended to
Gramin Vikas Mandal, which runs a primary school in the MIDC area, for
children whose parents are employed in the industrial area. We have
helped the school management in the high school in Karkhadi with
financial assistance for science fair, school day, etc. A mobile van
project has been sponsored for education in the rural and tribal areas
near Panoli and this is organized by Ankleshwar Industrial Development
Society.
Another important activity was assistance at the primary and university
levels, including support to students of the MS University of Baroda.
Last year, we donated a 150-seater hostel for the post graduate
students of SSG Medical College, MS University. For years now, we have
been helping students work towards their doctorates using the
facilities at SPARC. Your company regularly sponsors symposia,
laboratory equipments and some production machines for local colleges.
Amongst important medical support activities was the donation of
machines and medicines to general hospital near our plants. For
instance, the Panoli plant gave financial assistance to Smt. Jayaben
Modi Hospital for its rural and tribal medical checkup programs.
In Bangladesh last year, we helped a group of psychiatrists with the
development of an IQ rating scale. We also assisted health checkup
camps in remote rural areas. We donated a calorimeter to a hospital.
Donations were made to a fund for acid survivors. Spot painting
competitions were organized for school children in different
cities/towns to an enthusiastic response.
At our Silvassa plant, employees volunteered for a blood donation camp.
Lifeline Foundation, working for highway rescue and accident treatment,
continues to be supported with funds for communication.
We have helped the local government with infrastructure development
from time to time, for instance, the Karkhadi panchayat with the
construction of panchayat office, the Dadra gram panchayat for the
construction of a road.
Directors
Shri S. Mohanchand Dadha and Shri Sailesh T. Desai retire by rotation
and being eligible offer themselves for re-appointment.
The terms of appointment of Shri Sudhir V. Valia and Shri Sailesh T.
Desai as Whole-Time Director will expire on 31st March, 2009. Both of
these Directors have contributed well for all round growth of the
Companys business. Your Directors recommend the re-appointment of both
directors for a further period of 5 years.
Directors Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors Responsibility Statement, it is
hereby confirmed:
(i) that in the preparation of the annual accounts for the financial
year ended 31st March, 2008, the applicable accounting standards have
been followed along with proper explanation relating to material
departures;
(ii) that the Directors have selected appropriate accounting policies
and applied them consistently and made judgements and estimates that
were 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 on
the profit of the Company for the year under review;
(iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and,
(iv) that the Directors have prepared the annual accounts for the
financial year ended 31st March, 2008 on a Âgoing concern basis.
Auditors
Your CompanyÂs auditors, M/s. Deloitte Haskins & Sells, Chartered
Accountants, Mumbai, retire at the conclusion of the forthcoming Annual
General Meeting. Your Company has received a letter from them to the
effect that their re-appointment, if made, will be in accordance with
the provisions of Section 224(1-B) of the Companies Act, 1956.
Acknowledgements
Your Directors wish to thank all stakeholders and business partners,
your CompanyÂs bankers, financial institutions, medical profession and
business associates for their continued support and valuable
co-operation. The Directors also wish to express their gratitude to
investors for the faith that they continue to repose in the Company.
For and on behalf of the Board of Directors
Dilip S. Shanghvi
Chairman & Managing Director
14th July, 2008
Mumbai
Mar 31, 2007
The Directors take pleasure in presenting the Fifteenth Annual Report
and Audited Accounts for the year ended 31st March, 2007.
(Rs. Millions except Book value)
Year ended Year ended
FINANCIAL RESULT 31st March, 31st March,
2007 2006
Total Income 24,040 18,069
Profit after tax 6,289 4,613
Dividend on Preference Shares 1 1
Dividend on Equity Shares - Final 1,300 1,023
Corporate Dividend tax 182 144
Transfer to various Reserves 2,000 2,137
Rate of dividend on equity shares 135 110
Book value per equity share 126 79
(Rs.5 paid up)
Dividend
An interim preference share dividend of 6% p.a. (previous year 6% p.a.)
on paid up amount of outstanding preference shares and an interim
equity share dividend of 135% p.a. (previous year 110% p.a.) for the
year ended 31st March, 2007 was paid to the shareholders of the Company
whose names stood on the register of the members on 16th March, 2007.
Your directors recommend that the interim dividend on preference and
equity shares be treated as final.
Management Discussion and Analysis
The management discussion and analysis on the operations of the company
is provided in a separate section and forms part of this report
Demerger of Innovative Research & Development Unit of the Company
As we informed last year, your Company had undertaken Demerger of its
Unit of Innovative Research & Development activities and New Drug
Delivery systems. The said Demerger has been sanctioned by the
Honourable High Court of Gujarat pursuant to Sections 391-394 of the
Companies Act, 1956 on 1st March, 2007 with appointed date as the close
of business hours on 28th February, 2007. On completion of the
necessary formalities, the Demerger has been effective on 28th March,
2007 and the impact of the Demerger has been incorporated in the
Audited Accounts for the year under review.
On the scheme being effective, Sun Pharma Advanced Research Company
Ltd., the Resulting Company ceased to be the subsidiary of the Company.
Human Resources
At Sun, we have grown to a committed workforce of about 6000 (around
7300 including subsidiaries), a strong multi-cultural team pursuing a
shared vision of excellence in our corporate office, two R&D Centres &
15 plants including associate companies across 3 continents. The
consistent growth achieved year after year firmly establishes Sun
Pharma's remarkable team, their potential and capabilities to deliver.
The company recognizes the importance of these resources and keeps it
prepared for new opportunities and challenges. Continuous learning and
development opportunity through in-house, external programmes and
on-job training are employed to upgrade technical, marketing and
management skills. Performance orientation and ethics are viewed as
high priority area. The work environment and opportunities help and
retain talent. Your Directors recognize the team's valuable
contribution and place on record their appreciation for Team Sun
Pharma.
Information as per Section 217(2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975 as amended,
is available at the registered office of your Company. However, as per
the provisions of Section 219(1)(b)(iv) of the said Act, the Report and
Accounts are being sent to all shareholders of the Company and others
entitled thereto excluding the aforesaid information. Any shareholder
interested in obtaining a copy of this statement may write to the
Company Secretary/Compliance Officer at the Corporate office or
Registered office address of the Company.
Information on Conservation of Energy, Technology Absorption, Foreign
Exchange Earning and Outgo
The additional information relating to energy conservation, technology
absorption, foreign exchange earning and outgo, pursuant to Section
217(1)(e) of the Companies Act 1956 read with the Companies (Disclosure
of Particulars in the Report of the Board of Directors) Rules, 1988, is
given in Annexure and forms part of this Report.
Internal Control Systems and their Adequacy
The Company has adequate internal controls for its business processes
across departments to ensure efficiency of operations, compliance with
internal policies and applicable laws and regulations, protection of
resources and assets and accurate reporting of financial transactions.
The Company has also system of internal audit being conducted by the
independent firm of Chartered Accountants so as to cover various areas
of operations on continuous basis. The summarized Internal Audit
Observations/Reports are reviewed by the Audit Committee on a regular
basis. The finance and accounts functions of the Company are well
staffed with qualified and experienced members.
Corporate Governance
Report on Corporate Governance and Certificate dated 27 June, 2007 of
the auditors of your Company regarding compliance of the conditions of
Corporate Governance as stipulated in Clause 49 of the listing
agreement with stock exchanges, are enclosed.
Consolidated Accounts
In accordance with the requirements of Accounting Standard AS-21
prescribed by the Institute of Chartered Accountants of India, the
Consolidated Accounts of the Company and its subsidiaries is annexed to
this Report.
Finance
The banks in consortium continue to offer their highest rating to your
Company enabling it to source funds from banks at attractive rate of
interest. CRISIL continued to reaffirm their highest rating of "P1+",
for your Company's Short Term Borrowing Program throughout the year.
The Company does not offer any Fixed Deposit scheme.
Issue of Shares on Part Conversion of FCCB
During the year ended 31st March,2007, the Company received notices
from Foreign Currency Convertible Bond (FCCB) holders for exercising
the conversion option in respect of 124,286 FCCBs of US $ 1000 each out
of 350,000 (Three Hundred and Fifty Thousand) FCCBs (and out of 346,500
FCCBs at the beginning of the year). Accordingly, the Company allotted
during the year ended 31st March,2007, 7,670,483 equity shares of Rs.5
each to these Bondholders at the conversion price of Rs.729.30 per
share.
Corporate Social Responsibility (CSR)
The organization has identified health, education, disaster relief, and
periodically, patient awareness, as areas of priority. The emphasis has
been assistance on a need basis, and that too, assistance at a local
level.
One person's education can make a difference to an entire family. Your
organization has stepped in with support for tribal education, at
ashram pathshalas, with additional resources, extensive teaching
assistance as well as support for vocational courses.
Assistance at the primary and university levels includes support to
students of the MS University of Baroda to work towards their
doctorates using the facilities at SPARC. A chemistry lab was developed
for post graduate and doctoral work at M.S. University. Your company
regularly sponsors symposia, laboratory equipments and some production
machines for local colleges.
The company set up a modern, 48 room and 20,000 sq, ft hostel for post
graduate medical students of MS University, Baroda, as part of its
commitment to the city.
At the school level, important contributions included that to a program
that works for the education of the girl child at the grassroots level,
Kanya Kelavani Nidhi. In Ahmednagar, support was extended to Gramin
Vikas Mandal, which runs a primary school in the MIDC area, for
children whose parents are employed in the Industrial area. Support was
extended to the Primary School of Municipal Corporation, at Tandalja,
with renovation of the school building and infrastructure facilities.
Amongst important medical support activities were the donation of a
dialysis machine and a reverse osmosis plant to a general hospital,
donations to hospitals near our plants.
Lifeline Foundation, working for highway rescue and accident treatment,
has been supported with funds for communication Your company has in the
past extended a hand in times such as the earthquake, floods, etc. This
generally takes the form of food grain support, utensils and drinking
water supplies to the affected areas.
Directors
Shri Ashwin Dani and Shri Sudhir V Valia retire by rotation and being
eligible offer themselves for reappointment.
Shri Dilip Shanghvi's term of appointment as the Managing Director
expires on 31 st March,2008. Under the leadership of Shri Shanghvi, the
Company has attained all round growth in its business. Your Directors
recommend the reappointment of Shri Shanghvi for a further period of 5
years.
Directors' Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors' Responsibility Statement, it is
hereby confirmed:
(i) that in the preparation of the annual accounts for the financial
year ended 31 st March, 2007, the applicable accounting standards have
been followed along with proper explanation relating to material
departures, if any;
(ii) that the Directors have selected appropriate accounting policies
and applied them consistently and made judgements and estimates that
were 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 on
the profit of the Company for the year under review;
(iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and,
(iv) that the Directors have prepared the annual accounts for the
financial year ended 31st March, 2007 on a `going concern' basis.
Auditors
The Company's auditors, M/s. Deloitte Haskins & Sells, Chartered
Accountants, Mumbai, retire at the conclusion of the forthcoming Annual
General Meeting. Your Company has received a letter from them to the
effect that their re-appointment, if made, will be in accordance with
the provisions of Section 224(1-B) of the Companies Act, 1956.
Acknowledgements
The Directors wish to thank all stakeholders and business partners-your
Company's bankers, financial institutions, medical profession and
business associates for their continued support and valuable
co-operation. The Directors also wish to express their gratitude to
investors for the faith that they continue to repose in the Company.
For and on behalf of the Board of Directors
Mumbai, DILIP S. SHANGHVI
June 27, 2007 Chairman & Managing Director
ANNEXURE TO DIRECTORS' REPORT
Consumption per unit of production
It is not feasible to maintain product category-wise energy consumption
data, since we manufacture a large range of formulations and bulk drugs
having different energy requirements.
Energy conservation measures
1. Improvisation and continuous monitoring of Power Factor and
replacement of weak capacitors by conducting periodical checking of
capacitors. We have been able to maintain the Power Factor near to
unity (above 0.99) and thereby availing the rebate in electricity
charges.
2. Alternative energy sources like Gas & Steam have been used in place
of electricity for heating of De-mineralized water, fluid bed dryers
for producing hot air systems for coating department and for making
starch paste and for drying of Bulk Drugs in tray dryers. Steam from
solvent recovery plant condensate and diverted to Boiler Feed water.
3. Provision of storage tanks with electric Heaters to utilize the
same instead of steam and use of DG set with smaller capacity for
limited use at night or on weekly off/Holiday.
4. Providing air handling unit with variable frequency drives, so that
the system runs at variable speed, and thereby saving in consumption of
electricity.
5. Installation of isolating valve in main airline for preventing air
loss.
6. Installation of Gas based electricity generation set at bulk drug
plants, resulting in significant savings in electricity cost.
7. The Company has endeavored to optimise the use of energy resources
and taken adequate steps to avoid wastage & use latest production
technology & equipments.
TECHNOLOGY ABSORPTION
A. Research and Development
1. Specific areas in which R&D is carried out by the Company
We continue to be one of the most agressive investors and developers of
pharmaceutical research and technology in the country, with research
programs pursued at our state of the art R&D centre in Baroda. Our
expert scientist team is engaged in complex developmental research
projects in process chemistry and dosage forms, as well as innovative
research in new drug discovery, novel drug delivery systems at this
research centre. The research activity supports the short, medium and
long term business needs of the company.
Projects in formulation development and process chemistry help us
introduce a large number of new products to the Indian market including
products with complexity or a technology edge. This helps us maintain
our leadership position in the Indian market with specialty
formulations and derive market and cost advantage from API's developed
and scaled up In-house. Further, it helps us to compete in the
international regulated markets across US/Europe. Your company has a
large pipeline of ANDA filings awaiting approval with the USFDA and an
aggressive ANDA filing program every year.
The team also works on projects involving complex drug delivery systems
for India and some of these are eventually filed with the USFDA and
brought to market after patent expiry. Complex API like steroids, sex
hormones and peptides, which require special technology, are developed
and scaled up both for API and dosage forms, and this complete
integration for some products works to the company's advantage.These
projects may offer higher value addition and sustained revenue streams.
NCE and NDDS projects that have a considerably longer timeframe are one
area that the team works on. These projects address world markets,
however, require larger investments, attention and have uncertain
return horizons. On account of the need for focus, resources and the
uncertainty with these projects, the company has demerged the
innovative business into a new company, SPARC Ltd. This will help us
focus on such longer term projects.
2. Benefits derived as a result of the above R&D
In 2006-07, 39 formulations were introduced across marketing divisions,
(not including line extensions). All of these were based on technology
developed In-house. Technology for more than 29 API was commercialised.
For some of the important API that we already manufacture, technology
was refined so as to have more energy efficient or cost effective or
environment friendly processes. A large part of our API sales is to the
regulated market of US/Europe, and this earns valuable foreign exchange
and also a reputation for quality and dependability. The company's
formulation brands are exported to 26 international markets where a
local field force promotes the same.
The Department of Scientific and Industrial Research, Ministry of
Science and Technology of Government of India has granted approval to
the In-house research and development facility of your Company under
the provision of the Income Tax Act, 1961.
3. Future plan of action
At the end of the year, across the two research centers, close to 350
scientists are at work in the facility spread over 185,000 sq. ft. of
research floor area. A new world class bioequivalence center spanning
on 25,000 sq. ft. and with a 78 bed capacity was built and commissioned
in 2005-06, the same is being expanded to >200 bed capacity by end of
the current year. One NCE has finished Phase 1 of human trial and phase
2 trials are ongoing in US. 2 NDDS projects will enter trials in the
developed/regulated markets. Your company has also demerged the
innovative part of its business into a separate Company whose shares
will be listed.
Financial Statements - 2006-07
4. Expenditure on R&D Year ended Year ended
31st March, 2007 31st March, 2006
Rs in Million Rs in Million
a) Capital 346.5 480.5
b) Revenue 1536.2 1134.4
c) Total 1882.7 1614.9
d) Total R&D expenditure as % of
Total Turnover 11.3% 12.5%
B. Technology Absorption, Adaptation and Innovation
1. Efforts in brief, made towards technology absorption, adaptation and
innovation
The outlay on R & D - revenue as well as capex, has been increasing
year after year, and a large part of the spend is for complex products,
ANDA filings for the US, and API technologies that are complex and
require dedicated manufacturing sites. Investments have been made in
creating research sites, employing scientifically skilled manpower,
adding equipment and upgrading continuously the exposure and research
understanding of the scientific team in the therapy areas of our
interest.
2. Benefits derived as a result of the above efforts e.g. product
improvement, cost reduction, product development, import substitution
(a) Market leader for several complex products, offers complete baskets
of products under a broad spectrum of therapeutic classes. Strong
pipeline of products for future introduction in India as well as in the
US generic market.
(b) Not dependent on imported technology, can make high cost products
available at competitive prices by using indigenously developed
manufacturing processes and formulation technologies.
(c) Offer products which are convenient and safe for administration to
patients, products with a technology advantage.
(d) We are among the few selected companies that have set up completely
integrated manufacturing capability for the production of anticancer,
hormones, peptide, cephalosporins and steroidal drugs.
(e) The Company has benefited from reduction in cost due to import
substitution and increased revenue through higher exports.
3. Your company has not imported technology during the last 8 years
reckoned from the beginning of the financial year.
C. Foreign Exchange Earnings and Outgo
Year ended Year ended
31st March, 2007 31st March, 2006
Rs in Million Rs in Million
1. Earnings 5231.8 4048.5
2. Outgo 3916.9 2832.7
Mar 31, 2006
The Directors take pleasure in presenting the Fourteenth Annual Report
and Audited Accounts for the year ended 31st March, 2006.
(Rs. Million except Book Value)
Financial Result Year ended Year ended
31st March, 2006 31st March, 2005
Total Income 18060 12468
Profit after Tax 4613 3057
Dividend on Preference Shares 1 1
Dividend on Equity Shares - Final 1023 696
Corporate Dividend Tax 144 99
Transfer to various Reserves 2137 1641
Rate of dividend on equity shares 110% 75%
Book value per equity share (Rs. 5 paid up) 79 60
Dividend
The Directors are pleased to recommend a preference share dividend of
6% p.a. on paid up amount of outstanding preference shares which are
still not redeemed, and equity dividend at the rate of 110% (previous
year 75%) for the year ended 31st March, 2006 on the equity share
capital.
Voluntary Delisting of your Company Equity Shares
The Company's shares have been delisted voluntarily from the Calcutta
Stock Exchange, Kolkata. Your Company's equity and preference shares
continue to remain listed on Bombay Stock Exchange Limited (BSE) and
The National Stock Exchange of India Limited (NSE).
Management Discussion and Analysis
The management discussion and analysis of the operations of your
company is provided in a separate section on page one, and forms a part
of this report.
Demerger of Innovative Research & Development
The Company has undertaken demerger of its unit of Innovative Research
& Development activities and New Drug Delivery systems effective from
1st April, 2006, which is presently pending before the Honourable High
Court of Gujarat for its approval.
Human Resources
Over the years we've grown to a company with over 5000 people, 16
plants (including associate companies) across 3 continents. The
consistent growth we've shown year after year is a pointer to the
remarkable team at Sun Pharma-their productivity, potential and
capability to deliver. Your Company recognizes the importance of this
resource and the need to keep it prepared and ready for new
opportunities and challenges. In house, external programs and on the
job training are used to upgrade technical, marketing, management and
related skill levels. The work environment and opportunities help
attract and retain talent.
The Directors recognize the team's valuable contribution and place on
record their appreciation for Team Sun Pharma.
Information as per Section 217(2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975 as amended,
is available at the registered office of your Company. However, as per
the provisions of Section 219(1)(b)(iv) of the said Act, the Report and
Accounts are being sent to all shareholders of the Company and others
entitled thereto excluding the aforesaid information. Any shareholder
interested in obtaining a copy of this statement may write to the
Company Secretary/Compliance Officer at the Corporate office or
Registered office address of the Company.
Energy Conservation, Technology Absorption, Foreign Exchange
The additional information relating to energy conservation, technology
absorption, foreign exchange earning and outgo, pursuant to Section
217(1)(e) of the Companies Act 1956 read with the Companies (Disclosure
of Particulars in the Report of the Board of Directors) Rules, 1988, is
given in Annexure and forms part of this Report.
Internal Control System
The Company has adequate internal controls for its business processes
across departments to ensure efficiency of operations, compliance with
internal policies and applicable laws and regulations, protection of
resources and assets and accurate reporting of financial transactions.
Your Company also has a system of internal audit conducted by an
independent firm of Chartered Accountants so as to cover various areas
of operations on continuous basis. The summarized Internal Audit
Observations/Reports are reviewed by the Audit Committee on a regular
basis. The finance and accounts functions of your Company are well
staffed with qualified and experienced members.
Corporate Governance
Report on Corporate Governance and Certificate dated 26th July, 2006 of
the auditors of your Company regarding compliance of the conditions of
Corporate Governance as stipulated in Clause 49 of the listing
agreement with stock exchanges, are enclosed.
Consolidated Accounts
In accordance with the requirements of Accounting Standard AS-21
prescribed by the Institute of Chartered Accountants of India, the
Consolidated Accounts of your Company and its subsidiaries is annexed
to this Report.
Finance
The banks in consortium continue to offer their highest rating to your
Company enabling it to source funds from banks at attractive rate of
interest. CRISIL continued to reaffirm their highest rating of "P1+",
for your Company's Short Term Borrowing Program throughout the year.
The Company does not offer any Fixed Deposit scheme.
During the year ended 31st March, 2006, your Company received notices
from Foreign Currency Convertible Bond (FCCB) holders for exercising
the conversion option in respect of 3500 FCCBs of US $ 1000 each out of
350,000 (Three Hundred and Fifty Thousand) FCCBs. Accordingly, your
Company allotted during the year ended 31st March, 2006, 216,007 equity
shares of Rs. 5 each to these bondholders at the conversion price of
Rs. 729.30 per share.
CSR
The company has defined health and education as areas of priority with
a local emphasis. It has been periodically assisting organizations,
schools and hospitals near its plants.
Donations in cash and medicines have been made to several hospitals in
Vapi and Silvassa. Lab equipment have been donated to a local pharmacy
college, and a primary school supported with expenses. A mobile van has
been arranged for an NGO that tours villages in South Gujarat with
educational aids. Schools near the plants in Ahmednagar and Panoli have
been assisted with infrastructural support every year, for the last few
years.
The company has also contributed to relief events and camps during
calamities such as the floods in Gujarat and Maharashtra. Donations of
select medicines which could be used in an acute therapy setting, were
handed over to the authorities at the time of the massive quake in
Jammu.
Our idea here is to identify problems on a local level, and step in
with local resources and a practical approach to resolve issues in
education and healthcare.
Directors
Shri Hasmukh S. Shah and Shri Keki M Mistry retire by rotation and
being eligible offer themselves for reappointment.
Directors' Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors' Responsibility Statement, it is
hereby confirmed:
that in the preparation of the annual accounts for the financial year
ended 3 1st March, 2006, the applicable accounting standards have been
followed along with proper explanation relating to material departures;
that the Directors have selected appropriate accounting policies and
applied them consistently and made judgements and estimates that were
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 on the
profit of the Company for the year under review;
that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and,
that the Directors have prepared the annual accounts for the financial
year ended 31st March, 2006 on a `going concern' basis.
Auditors
The Company's auditors, M/s. Deloitte Haskins & Sells, Chartered
Accountants, Mumbai, retire at the conclusion of the forthcoming Annual
General Meeting. Your Company has received a letter from them to the
effect that their re-appointment, if made, will be in accordance with
the provisions of Section 224(1-B) of the Companies Act, 1956.
Acknowledgements
The Directors wish to thank all stakeholders and business partners-your
Company's bankers, financial institutions, medical profession and
business associates for their continued support and valuable
co-operation. The Directors also wish to express their gratitude to
investors for the faith that they continue to repose in the Company.
For and on behalf of the Board of Directors
Mumbai, Dilip S. Shanghvi
26th July, 2006 Chairman & Managing Director
ANNEXURE (1) TO DIRECTORS' REPORT
TECHNOLOGY ABSORPTION
A. Research and Development
1. Specific areas in which R&D is carried out by the Company
Our projects in process chemistry and formulation development address
the company's requirements over three horizons - a short term, medium
term or long term timeframe so as to balance longer term projects with
those that are completed and bring in revenues over the short and
medium term.
Our short term projects are reverse engineering based projects in
formulation development and process chemistry where we work with a
known technology and seek to improve upon it in term of yield or number
of steps. These projects help us introduce new products to the Indian
market soon after international launch, some of these products use
delivery systems which offer patient benefit. Quick new product
introduction helps us maintain our leadership position in the Indian
market with specialty formulations. It helps us compete in the US
generic market with interesting generics. It helps us compete with
speciality API for internal use, as well as in the international
regulated markets across US/Europe.
The projects with a medium term payback are based on new as well as
known drug delivery systems for India and the emerging or less
regulated markets; complex API like steroids and peptides which require
special technology, manufacturing processes and dedicated sites. These
projects offer higher value addition and sustained revenue streams.
Long-term projects are totally new to the world NCE and NDDS projects.
These would address world markets, and the investments are larger with
longer and more uncertain return horizons. On account of the need for
focus, resources and the uncertainty with these projects, the company
has announced plans to demerge this part of the business.
This phased approach to research helps the company use revenues from
projects that mature earlier in order to fund projects that have longer
or more uncertain paybacks, and phase product introduction across
markets.
2. Benefits derived as a result of the above R&D
During 2005-06, over 40 formulations were introduced across marketing
divisions, in addition to several line extensions. All of these were
based on technology developed in house. More than 30 API were scaled
up, some for international filing including bivalirudin and pregabalin,
products that have recently been introduced in the international
marketplace. Technology was refined for a number of processes for drug
master file submissions. For some of the important API that we already
manufacture, more energy efficient or cost effective processes or
environment friendly processes were developed and implemented. This
offers an advantage for our API business. Some of these reverse
engineered products increased our familiarity with new
technologies/areas of development and we would be able to build on this
understanding in order to develop new to the world work. A large part
of our API sales is to the regulated market of US/Europe, and this
earns foreign exchange and earns us a reputation for quality and
dependability. The Company's formulation brands are exported to 26
markets where a local field force promotes these for a prescription
pull.
The Department of Scientific and Industrial Research, Ministry of
Science and Technology of Government of India has granted approval to
the in house research and development facility of your Company under
the provision of the Income Tax Act, 1961.
3. Future plan of action
At the end of the year, across the two research centers, close to 500
scientists are at work in over 170 labs spread about over 300,000 sq ft
of research floor area. A new world class bioequivalence center
spanning on 25000 sq ft and with a 78 bed capacity was built and
commissioned this year. One NCE has finished Phase 1 of human trial,
and 2 NDDS projects will enter trials over the next two quarters in the
developed/regulated markets. Your company has also announced plans to
demerge the innovative part of its business into a separate listed
company.
4. Expenditure on R&D Year ended Year ended
31st March, 2006 31st March, 2005
Rs in Million Rs in Million
a) Capital 480.5 418.4
b) Revenue 1134.4 741.4
C) Total 1614.9 1159.8
d) Total R&D expenditure as % of
Total Turnover 12.5% 11.6%
B. Technology Absorption, Adaptation and Innovation
1. Efforts in brief, made towards technology absorption, adaptation and
innovation
The outlay on R&D - revenue as well as capex, has been increasing year
after year, and a large part of the spend is for the projects in
innovation rather than reverse engineering. Investments have been made
in creating research sites,employing scientifically skilled manpower,
adding equipment and upgrading continuously the exposure and research
understanding of the scientific team in the therapy areas of our
interest.
2. Benefits derived as a result of the above efforts e.g. product
improvement, cost reduction, product development, import substitution
(a) First to market several complex products and offer complete baskets
of products under the various therapeutic classes.
(b) Make high cost imported products available at competitive prices by
indigenously developing the manufacturing processes and formulation
technologies.
(c) Offer products which are convenient for administration to patients.
(d) We are among the few selected companies that have set up
manufacturing facilities for the production of anticancer, hormones,
peptide and steroidal drugs.
(e) The Company has benefited from reduction in cost and increased
revenue through higher exports.
3. Your company has not imported technology during the last 7 years
reckoned from the beginning of the financial year.
C. Foreign Exchange Earnings and Outgo
Year ended Year ended
31st March, 2006 31st March, 2005
Rs in Million Rs in Million
1. Earnings 4048.5 2866.5
2. Outgo 2832.7 1742.8
Mar 31, 2005
The Directors take pleasure in presenting the Thirteenth Annual Report
and Audited Accounts for the year ended 31st March, 2005.
(Rs. Millions)
FINANCIAL RESULTS Year ended Year ended
31st March, 2005 31st March, 2004
Total Income 12468 9598
Profit after tax 3057 2594#
Dividend
Preference Shares 1 9
Equity Shares Final 696 603
Corporate Dividend tax 98 79
Transfer to various Reserves 1500 1003
Rate of dividend on equity shares 75% 65%
Book value per equity share (Rs. 5 paid up) 60 93*
* shown at Post Bonus rote for the purpose of comparison. The Pre-Bonus
Dividend rate is 130%.
* before prior period adjustment.
The current year's results include the figures of erstwhile . Bazley
Finvest Limited,Dhaval Finvest Limited and Manish Finvest Limited which
has merged with the Company with effect from 1st March, 2005.
Acquisition in Europe
The Directors are glad to share a subsequent period event: In August
2005, the company, through its wholly owned subsidiary has acquired a
stake in a Hungary based pharmaceutical company, ICN Company Hungary
Limited, from Valeant Pharmaceuticals International USA.
Dividend
The Directors are pleased to recommend a preference share dividend 6%
p.a. on paid up amount of preference shares to those preference
shareholders of the company whose preference shares are still
outstanding and not redeemed and equity dividend at the rate of 75%
post bonus (previous year 65% post bonus/130% pre bonus) for the year
ended 31st March, 2005 on the equity share capital.
Human Resource
The Directors would like to place on record the continued endeavor of
Team Sun Pharma which is comprising of workforce of above 4000 and its
Human Resources whose collective efforts drive the fast pace of
continuous growth of the Company. Your Company continues to draw
energy from a strong and tenacious team.
As always industrial relations have been harmonious at all our
locations. Relationship with the management, at all levels, continues
to be cordial. Human Resources continues to keep the enthusiasm high
through customized, large scale training and development efforts.
Information as per Section 217(2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975 as amended,
is available at the registered office of your company. The Report and
Accounts are being sent to all shareholders of the Company excluding
the statement of particulars of employees u/s 217(2A) of the said Act.
Any shareholder interested in obtaining a copy of this statement may
write to the Company Secretary at the Corporate office or Registered
office address of the Company.
The additional information pursuant to Section 217(1)(e) of the
Companies Act 1956 read with the Companies (Disclosure of Particulars
in the Report of the Board of Directors) Rules, 1988, is given in
Annexure and forms part of this report.
Corporate Governance
Certificate dated 18th August, 2005 of the auditors of your Company
regarding compliance of the conditions of Corporate Governance as
stipulated in Clause 49 of the listing agreement with stock exchanges,
is enclosed.
Internal control systems and adequacy
Well established, documented operating systems exist for all functions.
The Company also has a system of internal audit being conducted by the
independent firm of Chartered Accountants for all locations so as to
cover various areas of operations on continuous basis. The summarized
Internal Audit Observations/Reports are reviewed by the Audit Committee
on a regular basis. The finance and accounts function of the Company is
well staffed with qualified and experienced members.
Consolidated Accounts
In accordance with the requirements of Accounting Standard AS-21
prescribed by the Institute of Chartered Accountants of India, the
Consolidated Accounts of the Company and its subsidiaries is annexed to
this Report.
Finance
The banks in consortium continue to offer their highest rating to your
company enabling it to source funds from banks at the finest rate of
interest. CRISIL continued to reaffirm their highest rating of "P1+",
for your Company's Commercial Paper Program throughout the year. The
Company does not offer any Fixed Deposit schemes.
Capital
During Nov./Dec., 2004, the Company issued 350,000 (Three Hundred and
Fifty Thousands) Foreign Currency Convertible Bonds (FCCB) of US$ 1,000
each aggregating to US$ 350,000,000 (Three Hundred and Fifty Millions)
(including US$ 75,000,000 allotted on exercise of "Green Shoe Option"),
which are convertible into the equity shares of the Company at the
option of the Bondholder, at a conversion price of Rs. 729.30 per share
of Rs. 5 each (with a fixed rate of exchange on conversion of Rs. 45.01
= US$ 1) which price was fixed at 50% premium over the closing price of
17th November, 2004. While the bonds carry a zero coupon rate, if the
conversion option is not exercised by the bondholders, the bondholders
would be entitled to a redemption premium, which would ensure a 4.61%
per annum yield to maturity on redemption after 5 years on November 26,
2009 or in case of certain defined earlier redemptions. The Company
subject to satisfaction of certain conditions, has an option to redeem
the bonds at any time on or after November 26, 2007 and prior to
November 16, 2009.
Directors
Shri Sailesh T. Desai and Shri Dilip S. Shanghvi retire by rotation and
being eligible offer themselves for reappointment.
The monthly remuneration of Shri Sailesh T. Desai, the Whole-time
Director of the Company, is proposed to be revised upwardly. Your
Directors recommend the approval of the increase in monthly upper
remuneration limit of Shri Desai to be effective from I st April, 2005
for the remaining period of his appointment up to 31st March, 2009.
Directors' Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors' Responsibility Statement, it is
hereby confirmed:
(i) That in the preparation of the annual accounts for the financial
year ended 31st March, 2005, the applicable accounting standards have
been followed along with proper explanation relating to material
departures;
(ii) That the Directors have selected appropriate accounting policies
and applied them consistently and made judgements and estimates that
were 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 on
the profit of the Company for the year under review;
(iii) That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
(iv) That the Directors have prepared the annual accounts for the
financial year ended 31st March, 2005 on a `going concern' basis.
Auditors
The Company's auditors, M/s. Deloitte Haskins & Sells, Chartered
Accountants, Mumbai, retire at the conclusion of the forthcoming Annual
General Meeting. Your Company has received a letter from them to the
effect that their re-appointment, if made, will be in accordance with
the provisions of Section 224(1-B) of the Companies Act, 1956.
Acknowledgements
The Directors wish to thank all stakeholders and business partners-your
Company's bankers, financial institutions, medical profession and
business associates for their continued support and valuable
co-operation. The Directors also wish to express their gratitude to
investors for the faith that they continue to repose in the Company.
For and on behalf of the Board of Directors
Mumbai, DILIP S. SHANGHVI
18th August, 2005 CHAIRMAN & MANAGING DIRECTOR
ANNEXURE (1) TO DIRECTORS' REPORT
TECHNOLOGY ABSORPTION
A. Research and Development
1. Specific areas in which R&D is carried out by the Company
The Company is conducting Research & Development in the areas of
process chemistry and formulation development. Projects with varying
time horizon are undertaken.
Typically, reverse engineering based projects are of shorter durations
with early returns. In such projects, the product and technology is
known and our endeavour is to seek improvements with respect to the
process and yield. Products developed under this approach serve to
further enhance our leadership position in specialty formulations and
bulk actives across geographies and markets, including the regulated
ones.
Novel Drug Delivery System (NDDS) projects focus on delivering known
drugs to the appropriate part of the body through existing and
innovative delivery mechanisms. Such products offer significant
benefits to patients. The company also undertakes significant basic
research to bring a New Chemical Entity (NCE). These initiatives have a
higher element of uncertainty and need large development and testing
resources spanning several years before being brought to global
markets, generally working with a partner. Large investments are
required for such projects, which have higher uncertainty of technical
acceptability and commercial success.
2. Benefits derived as a result of the above R&D
The Company has introduced several new bulk and formulation products in
the market due to its R&D efforts. These products are thoroughly tested
to be safe and effective, and are manufactured in world-class
facilities.
Over 40 new formulation products were launched in India in 2004-05, 22
of these were technically complex or used differentiated delivery
systems. 26 bulk actives were scaled up, of which 18 processes were
developed for international bulk active filings. 8 new products were
launched in the domestic market based on bulk active sourced in house.
As a result of our R&D efforts, today we have received 35 patents and
have 399 more patents filed and awaiting approval.
The Department of Scientific and Industrial Research, Ministry of
Science and Technology of Government of India has granted approval to
the in house research and development facility of your Company under
section 35(2AB) of the Income Tax Act, 1961 and has also recognized the
commercialization of technology developed in house by granting your
company approval under rule 5(2) of the Income Tax Rules.
3. Future plan of action
With the two state of art Research & Development facility with over
250,000 Sq. Ft. of floor area located at Mumbai and Baroda with
scientific strength of over 420 scientists and the required
infrastructure. Our R&D endeavor and future course of action will be to
continue to work on various technologies in NDDS and work on specific
therapy areas for NCE. For products that are differentiated for the
medium term , we would continue to work technologically complex
products such as liposome delivery systems, microspheres based delivery
systems and controlled release technologies that we will try and
register across markets including the developed markets.
4. Expenditure on R&D Year ended Year ended
31st March, 2005 31st March, 2004
Rs in Million Rs in Million
a) Capital 418.4 598.3
b) Revenue 741.4 478.5
c) Total 1159.8 1076.8
d) Total R&D expenditure as % of Total Turnover 11.6% 12.8%
B. Technology Absorption, Adaptation and Innovation
1. Efforts in brief, made towards technology absorption, adaptation and
innovation
The company continues to pursue R&D as a focused and committed
objective. The outlay on R&D revenue as well as capex, at 10-11% is
amongst the highest in the Indian pharma industry, and this has been
increasing year after year, and a large part of the spend is for the
projects in innovation rather than reverse engineering. Investments
have been made in creating modern research sites, employing
scientifically skilled manpower, adding equipment and upgrading
continuously the exposure and research understanding of the scientific
team in the therapy areas of our interest.
2. Benefits derived as a result of the above efforts e.g. product
improvement, cost reduction, product development, import substitution
a) First to market several complex products, several of which are made
based on own bulk active, and offer complete baskets of products under
the various therapeutic classes.
b) Make high cost imported products available at competitive prices by
indigenously developing the manufacturing processes and formulation
technologies. The Company has benefited from reduction in cost due to
import substitution and increased revenue through higher exports.
c) Offer products which are convenient for administration to patients
and bring about improved efficacy, reduction of toxic, improved
stability, reduction in dosing frequency, improved delivery of
insoluble drugs etc.
d) We are among the few selected companies that have set up
manufacturing facilities for the production of peptides, anticancer,
hormones and steroidal drugs.
3. Your company has not imported technology during the last 7 years
reckoned from the beginning of the financial year.
C. Foreign Exchange Earnings and Outgo
Year ended Year ended
31st March, 2005 31st March, 2004
Rs in Million Rs in Million
1. Earning from Exports 2815.3 2057.5
2. Expenditure (CIF basis) 1742.8 1214.9
3. Investment and Loan given 5132.2 2080.8
4. Loan given received back - 606.1
Mar 31, 2004
DIRECTORS' REPORT
The Directors take pleasure in presenting the Eleventh Annual Report
and Audited Accounts for the year ended 31st March, 2003.
FINANCIAL RESULTS:
(Rs. Million except book value)
Year ended Year ended
31st March, 2003 31st March, 2002
Total Income 8732 7590
Profit after tax 2314 1686
Dividend:
Preference Shares 4 14
Equity Shares 465 234
Corporate Dividend tax 60 1
Transfer to various Reserves 1530 1327
Rate of dividend including interim 100% 50%
on equity shares Book value in
Rs. per equity share 73 57
* * (adjusted (or Rs.5 Paid up)
Proposed Dividend:
The Directors are pleased to recommend a preference share dividend 6%
p.a. on pro-rata basis on paid up amount of preference shares to those
preference shareholders of the company whose preference shares are
still outstanding and not redeemed, and equity dividend at the rate of
100% for the year ended 31st March, 2003 (previous year 50%) on the
equity share capital. An extraordinary general meeting of the Members
is being convened to amend the Articles of Association of the Company
so as to enable those Shareholder(s) who wish to waive/forgo his/their
right to receive the dividend (interim or final) for any financial
year, to waive/forgo his/their such right.
Bonus Preference Shares:
The Company on 2nd November, 2002 allotted 1,87,177,232 6% Redeemable
Cumulative Preference Shares of Re.1/- as Bonus Shares to the
Shareholders of the Company as on Record Date, 10th October, 2002 in
the ratio of 4 (four) Preference Shares of Re.1/- each, for every 1
(one) equity share held by the shareholders.
Split of Equity Shares:
As approved by the Shareholders of the Company at the extraordinary
general meeting of the Company held on 20th December,2002, the equity
shares of Rs. 10/each of the Company were sub-divided into; 2 equity
shares of Rs.5/- each during the year under review.
Buy back of the Company's Equity Shares:
The Company has so far bought back its 8,32,938 equity shares of Rs.5/-
each pursuant to and as authorised by the Shareholders of the Company
at the extra ordinary general meeting of the Company held on 20th
December, 2002.
Voluntary Delisting of Company's Equity Shares from the Stock Exchanges
of Ahmedabad, Delhi, Chennai, Kolkata and Vadodhara:
As you would be aware that the Members at the Company's Ninth Annual
General Meeting held on 28th November, 2001 had approved by way of a
special resolution the Company's proposal for voluntary delisting of
the Company's Equity Shares from the Stock Exchange - Ahmedabad, the
Calcutta Stock Exchange Association Ltd., Madras Stock Exchange Ltd.
and the Delhi Stock Exchange Association Ltd. The Company's equity
shares have been delisted voluntarily from Madras Stock Exchange Ltd.,
the Delhi Stock Exchange Association Ltd. and The Stock Exchange
Ahmedabad with effect from 23rd July, 2002, 26th August, 2002 and 28th
October, 2002 respectively. In spite of complying with all the
formalities for voluntary delisting & constant follow up, the Calcutta
Stock Exchange Association Ltd. has not so far granted its approval.
The Company has also sought the help of the Securities and Exchange
Board of India in this regard. The Company is seeking the approval of
the Members for voluntary delisting of the Company's Equity &
Preference Shares from the Regional Stock Exchange, viz, Vadodara Stock
Exchange at the ensuing Annual General Meeting.
Corporate Governance:
Certificate dated 28 July, 2003 of the auditors of your Company
regarding compliance of the conditions of Corporate Governance as
stipulated in Clause 49 of the listing agreement with stock exchanges,
is enclosed.
Consolidated Accounts:
In accordance with the requirements of Accounting Standard AS-21
prescribed by the Institute of Chartered Accountants of India, the
Consolidated Accounts of the Company and its subsidiaries is annexed to
this Report.
Finance:
All the banks in consortium continued to offer their highest rating to
your company enabling it to source funds from banks at the finest rate
of interest. CRISIL continued to reaffirm its highest rating of "P1+",
for your Company's short term borrowing programme and "AAA" for long
term borrowing.
During the year under review, your Company redeemed 3,01,30,384 Non
Convertible Redeemable Preference Shares of Rs.1/- each as per the
terms of the issue.
The Company does not offer any Fixed Deposit schemes.
Directors:
Shri. Keki M. Mistry was appointed as an additional Director of the
Company, by the Board of Directors with effect from 28th August, 2002
and holds the office upto the ensuing Annual General Meeting. The
Company has received notice from a Member to propose his name for being
appointed as a Director of the Company.
Shri. Hasmukh S. Shah and Shri. Dilip S. Shanghvi retire by rotation
and being eligible offer themselves for reappointment.
Shri. Sudhir V. Valia's & Shri. Sailesh T. Desai's term of appointment
as Wholetime Directors expires on 31st March, 2004. During the tenure
of Shri Valia & Shri. Desai the Company has attained all round growth
in its business. Your Directors recommend the reappointment of Shri.
Valia & Shri. Desai for a further period of 5 years.
Directors' Responsibility Statement:
* Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors' Responsibility Statement, it is
hereby confirmed:
* That in the preparation of the annual accounts for the financial year
ended 31st March, 2003, the applicable accounting standards have been
followed along with proper explanation relating to material departures;
* That the Directors have selected appropriate accounting policies and
applied them consistently and made judgements and estimates that were
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 on the
profit of the Company for the year under review;
* That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the companies Act, 1956 for safeguarding the assets of
the company and for preventing and detecting fraud and other
irregularities;
* That the Directors have prepared the annual accounts for the
financial year ended 31st March, 2003 on a 'going concern' basis.
Auditors:
The Company's auditors, Price Waterhouse, Chartered Accountants,
Mumbai, retire at the conclusion of the forthcoming Annual General
Meeting. Your company has received a letter from them to the effect
that their reappointment, if made, will be in accordance with the
provisions of Section 224(1-B) of the Companies Act, 1956.
Acknowledgements:
The Directors wish to thank all stakeholders and business partners-your
Company's bankers, financial institutions, the medical profession and
business associates for their continued support and valuable
cooperation. Your Directors also wish to express their gratitude to
investors for the faith that they continue to repose in the Company.
For and on behalf of the Board of Directors
Mumbai, DILIP S. SHANGHVI
28th July, 2003 CHAIRMAN & MANAGING DIRECTOR
Consumption per unit of production:
It is not feasible to maintain product category-wise energy consumption
data, since we manufacture a large range of formulations and bulk drugs
having different energy requirements.
C. Energy conservation measures:
1. Improved & maintained power factor of MSEB power supply by which we
are saving Rs.7.8 lacs p.a.
2. We continously monitor Power Factor. We have replaced weak
capacitors by conducting periodical checking of capacitors. Due to
these measures, we have been able to maintain the Power Factor near to
unity (above 0.99) and thereby availing the rebate in electricity
charges.
3. We use Gas & steam in place of electricity for heating of
De-mineralized water, fluid bed dryers for producing hot air systems
for coating department and for making starch paste.
4. Installed isolating valve in main airline for preventing air loss.
TECHNOLOGY ABSORPTION:
A. Research and Development:
1. Specific areas in which R&D is carried out by the Company:
Specific projects, time bound, budgeted and monitored, in Research and
Development help the company bring to market new products (some based
on delivery systems), and new bulks that help the company sustain its
leadership in speciality therapy areas. A majority of the research
budget and management time is invested in new to the world innovation,
across New Chemical Entities (NCE) and Novel Drug Delivery Systems
(NDDS), with clear, specified goals and timelines. Immediate return
projects include formulations (several are delivery system based
projects like Controlled Release/Sustained Release/Dry Powder Inhaler),
immediate/mouth dissolve technology products, speciality bulk actives
and peptides that create a dependable revenue stream that can be then
reinvested in longer time horizon projects.
2. Benefits derived as a result of the above R&D:
During 2002-03, 50 formulations reached market across 11 marketing
divisions, all based on the technology developed in house. 8 bulk
actives were scaled up, based on processes developed in house, taking
our bulk actives list to over 68. For some important bulk actives
developed earlier, more efficient, energy saving and environmentally
friendly processes were developed. This strength in bulk manufacture
enables formulations to be made with a time and cost advantage. Several
dosage forms bearing brand names are exported to international markets,
and speciality bulk actives are sold to large international companies,
where they earn sizable foreign exchange and help build the company's
reputation as a company with solid quality and dependability.
The Department of Scientific and Industrial Research,Ministry of
Science and Technology of Government of India has granted approval to
the in house research and development facility of your Company under
section 35(2AB) of the Income Tax Act, 1961 and has recognized the
commercialization of technology developed in house by granting your
company approval under rule 5(2) of the Income tax rules.
3. Future plan of action:
The company is expanding both the investment size and the scope of
Research and Development work. A 200,000 sq. ft. research floor area
facility spread over 16 acres which will be used entirely for
innovation will become operational this year, and once it is fully
commissioned, 150 additional scientists will be at work here, doubling
current scientific staff. Another 75,000 sq. ft. site in Mumbai will
also be operational shortly, this will concentrate on NDDS and projects
for the US/Europe generic markets. This site has almost double the
floor area of the current site in Mumbai, and when completely
operational, will employ double the current staff.
4. Expenditure on R&D Year ended 31st March, 2003 Year ended 31st
March, 2002:
Rs. in Rs. in
Million Million
(a) Capital 363.4 139.4
(b) Revenue 294.3 197.3
(c) Total 657.7 336.7
(d) Total R&D expenditure as % of
Total Turnover 7.7% 4.5%
B. Technology Absorption, Adaptation and Innovation:
1. Efforts in brief, made towards technology absorption, adaptation and
innovation:
In its continued endeavor to offer new products and better technology,
your company continues to invest large sum on R&D equipment, new
facilities & human resource for innovative R&D projects covering NCE
and NDDS.
2. Benefits derived as a result of the above efforts e.g. product
improvement, cost reduction, product development, import substitution
(a) First to market several complex products and offer complete baskets
of products under the various therapeutic classes.
(b) Make high cost imported products available at competitive prices by
indigenously developing the manufacturing processes and formulation
technologies.
(c) Offer products which are convenient for administration to patients.
(d) We are among the few selected companies that have set up
manufacturing facilities for the production of peptide and steroidal
drugs.
3. The company has not imported technology during the last 7 years
reckoned from the beginning of the financial year.
C. Foreign Exchange Earnings and Outgo:
Year ended Year ended
31st March, 2003 31st March, 2002
Rs. in Million Rs. in Million
1. Earning from Exports 1403.9 1338.82.
Expenditure (CIF basis) 1054.3 650.03.
Investment and Loan given 35.8 255.74.
Loan given received back 12.1 0.0
Mar 31, 2003
Your Directors take pleasure in presenting the Eleventh Annual Report
and Audited Accounts for the year ended 31" March, 2003.
(Rs. Million except book value)
FINANCIAL RESULTS Year ended 31st March,2003 Year ended 31st March,2002
Total Income 8732 7590
Profit after tax 2314 1686
Dividend
Preference Shares 4 14
Equity Shares 465 234
Corporate Dividend tax 60 1
Transfer to various Reserves 1530 1327
Rate of dividend including
interim on equity shares 100% 50%
Book value in Rs. per equity share 73 57*
(adjusted for Rs, 5 paid up)
Proposed Dividend
Your Directors are pleased to recommend a preference share dividend 6%
p.a. on pro-rata basis on paid up amount of preference shares to those
preference shareholders of the company whose preference shares are
still outstanding and not redeemed, and equity dividend at the rate of
100 % for the year ended 31st March, 2003 (previous year 50%) on the
equity share capital. An extraordinary general meeting of the Members
is being convened to amend the Articles of Association of the Company
so as to enable those Shareholder(s) who wish to waive/forgo his/their
right to receive the dividend (interim or final) for any financial
year, to waive/forgo his/their such right.
Bonus Preference Shares
The Company on 2nd November-,2002 allotted 1,87,177,232 6% Redeemable
Cumulative Preference Shares of Re. I /- as Bonus Shares to the
Shareholders of the Company as on Record Date, 10 October, 2002 in the
ratio of 4 (four) Preference Shares of Re. I/-each, for every I (one)
equity share held by the shareholders.
Split of Equity Shares
As approved by the Shareholders of the Company at the extraordinary
general meeting of the Company held on 20th December,2002, the equity
shares of Rs. 10/- each of the Company were sub-divided into 2 equity
shares of Rs.5/- each during the year under review.
Buy Back of the Company's Equity Shares
The Company has so far bought back its 8,32,938 equity shares of Rs.5/-
each pursuant to and as authorised by the Shareholders of the Company
at the extra ordinary general meeting of the Company held on 20th
December,2002.
As you would be aware that the Members at the Company's Ninth Annual
General Meeting held on 28th November, 2001 had approved byway of a
special resolution the Company's proposal for voluntary delisting of
the Company's Equity Shares from the Stock Exchange - Ahmedabad, the
Calcutta Stock Exchange Association Ltd, Madras Stock Exchange Ltd and
the Delhi Stock Exchange Association Ltd. The Company's equity shares
have been delisted voluntarily from Madras Stock Exchange Ltd ,the
Delhi Stock Exchange Association Ltd and The Stock Exchange- Ahmedabad
with effect from 23rd July, 2002, 26th August.2002 and 28th October,
2002 respectively. In spite of complying with all the formalities for
voluntary delisting & constant follow up, the Calcutta Stock Exchange
Association Ltd. has not so far granted its approval. The Company has
also sought the help of the Securities and Exchange Board of India in
this regard. The Company is seeking the approval of the Members for
voluntary delisting of the Company's Equity & Preference Shares  from
the Regional Stock Exchange, viz, Vadodara Stock Exchange at the
ensuing Annual General Meeting.
Corporate Governance
Certificate dated 28 July, 2003 of the auditors of your Company
regarding compliance of the conditions of Corporate Governance as
stipulated in Clause 49 of the listing agreement with stock exchanges,
is enclosed.
Consolidated Accounts
In accordance with the requirements of Accounting Standard AS-21
prescribed by the Institute of Chartered Accountants of India, the
Consolidated Accounts of the Company and its subsidiaries is annexed to
this Report.
Finance
All the banks in consortium continued to offer their highest rating to
your company enabling it to source funds from banks at the finest rate
of interest. CRISIL continued to reaffirm its highest rating of "PI +",
for your Company's short term borrowing programme and "AAA" for long
term borrowing.
During the year under review, your Company redeemed 3,01,30,384 Non
Convertible Redeemable Preference Shares of Rs. I/- each as per the
terms of the issue.
Your Company does not offer any Fixed Deposit schemes.
Shri Keki M. Mistry was appointed as an additional Director of the
Company, by the Board of Directors with effect from 28th August, 2002
and holds the office upto the ensuing Annual General Meeting. The
Company has received notice from a Member to propose his name for being
appointed as a Director of the Company.
Shri Hasmukh S. Shah and Shri Dilip S. Shanghvi retire by rotation and
being eligible offer themselves for reappointment.
Shri Sudhir V Valia's & Shri Sailesh T. Desai's term of appointment as
Wholetime Directors expires on 3 I st March, 2004. During the tenure of
Shri Valia & Shri Desai ,the Company has attained all round growth in
its business. Your Directors recommend the reappointment of Shri Valia
& Shri Desai for a further period of 5 years.
Directors' Responsibility Statement
 Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors' Responsibility Statement, it is
hereby confirmed:
That in the preparation of the annual accounts for the financial year
ended 31st March, 2003, the applicable accounting standards have been
followed along with proper explanation relating to material departures;
 That the Directors have selected appropriate accounting policies and
applied them consistently and made judgements and estimates that were
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 on the
profit of the Company for the year under review;
 That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the companies Act, 1956 for safeguarding the assets of
the company and for preventing and detecting fraud and other
irregularities;
 That the Directors have prepared the annual accounts for the
financial year ended 31 st March, 2003 on a 'going concern' basis.
Auditors
Your Company's auditors, Price Waterhouse, Chartered Accountants,
Mumbai, retire at the conclusion of the forthcoming Annual General
Meeting. Your company has received a letter from them to the effect
that their re- appointment, if made, will be in accordance with the
provisions of Section 224( I-B) of the Companies Act, 1956.
Acknowledgements
Your Directors wish to thank all stakeholders and business
partners-your Company's bankers, financial institutions, the medical
profession and business associates for their continued support and
valuable cooperation. Your Directors also wish to express their
gratitude to investors for the faith that they continue to repose in
the Company.
Energy conservation measures
1. Improved & maintained power factor of MSEB power supply by which we
are saving Rs. 7.8 lacs p.a.
2. We continously monitor Power Factor. We have replaced weak
capacitors by conducting periodical checking of capacitors.Due to these
measures, we have been able to maintain the Power Factor near to unity
(above 0.99) and thereby availing the rebate in electricity charges.
3. We use Gas & steam in place of electricity for heating of
De-mineralized water, fluid bed dryers for producing hot air systems
for coating department and for making starch paste.
4. Installed isolating valve in main airline for preventing air loss.
TECHNOLOGY ABSORPTION
A. Research and Development
1. Specific areas in which R&D is carried out by the Company
Specific projects, time bound, budgeted and monitored, in Research and
Development help the company bring to market new products (some based
on delivery systems), and new bulks that help the company sustain its
leadership in speciality therapy areas.A majority of the research
budget and management time is invested in new to the world innovation,
across New Chemical Entities (NCE) and Novel Drug Delivery Systems
(NDDS), with clear, specified goals and timelines. Immediate return
projects include formulations (several are delivery system based
projects like Controlled Release/ Sustained Release/ Dry Powder
Inhaler) , immediate /mouth dissolve technology products, speciality
bulk actives and peptides that create a dependable revenue stream that
can be then reinvested in longer time horizon projects.
2. Benefits derived as a result of the above R&D
During 2002-03, 50 formulations reached market across 11 marketing
divisions, all based on the technology developed in house.8 bulk
actives were scaled up, based on processes developed in house, taking
our bulk actives list to over 68. For some important bulk actives
developed earlier, more efficient, energy saving and environmentally
friendly processes were developed. This strength in bulk manufacture
enables formulations to be made with a time and cost advantage.Several
dosage forms bearing brand names are exported to international markets,
and speciality bulk actives are sold to large international companies,
where they earn sizable foreign exchange and help build the company's
reputation as a company with solid quality and dependability.
The Department of Scientific and Industrial Research,Ministry of
Science and Technology of Government of India has granted approval to
the in house research and development facility of your Company under
section 35 (2AB) of the Income Tax Act, 1961 and has recognized the
commercialization of technology developed in house by granting your
company approval under rule 5(2) of the Income tax rules.
3. Future plan of action
Your company is expanding both the investment size and the scope of
Research and Development work. A 200,000 sq. ft research floor area
facility spread over 16 acres which will be used entirely for
innovation will become operational this year, and once it is fully
commissioned, 150 additional scientists will be at work here, doubling
current scientific staff. Another 75,000sq. ft site in Mumbai will also
be operational shortly, this will concentrate on NDDS and projects for
the US/Europe generic markets. This site has almost double the floor
area of the current site in Mumbai, and when completely operational,
will employ double the current staff.
4. Expenditure on R&D Year ended 31st March, 2003 Year ended
31st March, 2002
Rs in Million Rs in Million
(a) Capital 363.4 139.4
(b) Revenue 294.3 197.3
(c) Total 657.7 336.7
(d) Total R&D expenditure
as % of Total Turnover 7.7% 4.5%
B. Technology Absorption, Adaptation and Innovation
1. Efforts in brief, made towards technology absorption, adaptation and
innovation
In its continued endeavor to offer new products and better technology,
your company continues to invest large sum on R&D equipment, new
facilities & human resource for innovative R&D projects covering NCE
and NDDS.
2. Benefits derived as a result of the above efforts e.g. product
improvement, cost reduction, product development, import substitution
(a) First to market several complex products and offer complete baskets
of products under the various therapeutic classes.
(b) Make high cost imported products available at competetive prices by
indigenously.deyeloping the manufactur- ing processes and formulation
technologies.
(c) Offer products which are convenient for administration to patients.
(d) We are among the few selected companies that have set up
manufacturing facilities for the production of peptide. and steroidal
drugs.
3. Your company has not imported technology during the last 7 years
reckoned from the beginning of the financial year.
C. Foreign Exchange Earnings and Outgo
Year ended 31 st March, 2003 Year ended 31st March, 2002
Rs in Million Rs in Million
1. Earning from Exports 1403.9 1338.8
2. Expenditure (GIF basis) 1054.3 650.0
3. Investment and Loan given 35.8 255.7
4. Loan given received back 12.1 0
For and on behalf of the Board of Directors
Mumbai, DILIP S. SHANGHVI
28th July, 2003 CHAIRMAN & MANAGING DIRECTOR
Mar 31, 2002
Your Directors take pleasure in presenting the Tenth Annual Report and
Audited Accounts for the year ended 31st March, 2002.
FINANCIAL RESULTS
(Rs. Million)
Year ended Year ended
31st March, 2002 31st March, 2001
Total Income 7590 6211
Profit after tax 1686 1352
Dividend
Preference Shares 14 41
Equity Shares Final (Previous year Interim) 234 234
Corporate Dividend tax 1 33
Transfer to various Reserves 1327 664
Rate of dividend including interim on equity
shares 50% 50%
Book value per equity share (Rs.) 114 93
The current year's results include figures of erstwhile M. J.
Pharmaceuticals Ltd (MJPL), which has been merged with the Company with
effect from January 1, 2002.
DIVIDEND
An interim Dividend of 10.5% (previous year interim dividend 9.5% p.a.)
p. a. was paid to the preference share holders at the Board Meeting
of the Company held on 28th November, 2001. Your Directors are pleased
to recommend an equity dividend at the rate of 50% for the year ended
31st March, 2002 (previous year 50%) on the equity share capital.
MANAGEMENT DISCUSSION AND ANALYSIS
There are two achievements that we'd like to begin this report with:
1. Sun Pharma was rated among the best companies for 2002 worldwide
(turnover less than $500 mill) by the business magazine Forbes Global.
We featured among 10 companies selected from India, and more than 20000
companies featured globally
2. Sun Pharma was also selected as the top rated company among the top
10 Indian companies (Express Pharma Pulse award for overall
excellence-2002, market share over 2.5%).
The pharma industry continues to grow at a healthy 10-12% rate, despite
a drop in growth rates for large therapy areas such as
antibiotics/tonics.
Speciality therapy areas continue to grow at a significantly higher
rate than that for the industry. Some of the factors responsible for
this growth: Increasing awareness of chronic disease areas,
availability of better treatments, switching to newer therapies that
offer discernable advantages in areas like parkinsons, epilepsy and
hypertension. In speciality areas, competition has not only helped
increase awareness, but increased promotion by a large number of
companies has spurred market growth.
As India prepares for the post 2005 years, regulatory and legal
practices and procedures that pertain to intellectual property rights
are being brought in line with those followed internationally.
2 important moves in this direction during the course of the year were
the announcement of the drug policy (including the criteria for the
DPCO), and the Patents bill.
The new DPCO is based on the essential drugs list from the Ministry of
Health and WHO as a starting point, and uses competitive intensity
based on the ORG Retail Chemist Audit as a filter to arrive at a list
of pharmaceuticals. The final screen that was considered in order to
reduce the number of products within the span of control was cost of
therapy less than Rs. 2/- per day. These screening factors seem to
leave room for the market to determine the appropriate price levels for
most products. It is expected that the final version will address the
country's essential healthcare needs while allowing a sensible return
on investment, generating returns that can be ploughed back to
research.
The patent bill was passed by the parliament, with provisions for
checks and balances such as ensuing that patents are not extended to
perpetuity, provision for allowing development work on a patent during
its patent life.
COMPANY PERFORMANCE
Total income increased 22.2%, net profit increased 24.8% over last
year. The domestic formulations business, your company's largest
contributor to turnover, grew by 26% to Rs. 4661 mill. Exports, mainly
speciality bulk actives, grew 18.2%.
Increasing the lead over competition with speciality marketing and
innovative products is the area of the highest priority within the
company. Customer relationships are perhaps the strongest moat one can
create around a business, based on a mix of intangibles that are
definable and concrete but difficult to replicate. We continue to apply
these skills in the core therapy areas of our interest as well as the
newer therapy areas that we have entered in the past few years.
Continuing the thread of discussion from the last annual report, your
company reiterates its commitment to becoming a better company, not
merely a bigger company. We continue to emphasize the importance of
strong brands, research and international markets and have been taking
several steps during the course of the year in order to fortify these
areas.
In the domestic prescription market as per the ORG Retail Chemist Audit
for March 2002 we closed the year at 5th rank with a 20% growth rate
which continues to be well in excess of the growth number of the pharma
industry. Market share was up to 2.80%, from 2.61 % last March. We are
very optimistic about growth opportunities and shall work at adding to
market share.
6 brands continue to gradually move up the list of the most prescribed
300 pharma brands in the country: Monotrate, Glucored, Alzolam,
Encorate, Zeptol, Pantocid.
In all, 48 brands feature among the top 3 by molecule. New products
introduced in the last 4 years accounted for 40% of domestic
formulation sales. Speciality products build over time as prescriptions
are written for new patients, and patients who are inadequately
controlled by older therapies are switched. A speciality product
pipeline generally increases in size over time as versus acute
therapies that tend to have sales spurts.
CMARC'S SPECIALIST LIST
A signal of intensifying competitive interest in speciality therapy
areas was the repetitive price cutting seen with several interesting
molecules that would have, at a sensible cost per day of therapy,
offered good potential. In fact, in several of these brands have
reached blockbuster status for innovator companies in large
international markets.
In terms of rankings with specialists, in core therapy areas, we
continue to hold our ranks while increasing prescription share. In the
newer therapy areas we are gradually making a headway as we earn
customer trust with products and field strategy. Our strategy here is
to continue to introduce products with a technology advantage, apply
the time-tested pharma marketing formula of carefully selected doctor
list/call frequency/repeat coverage to generate prescriptions. Such
"on the ground" strategies tend to have a lasting impact as versus
price based competition. The success that we've had with Susten
(progesterone) in the Spectra division, is a case in point. Spectra,
the division that handles women's health products, was relaunched last
year with a refurbished product line, including brands inherited from
the erstwhile TDPL. Susten's success helped the division gain a degree
of credibility and acceptance with a new class of customers. Several
interesting products are ready for launch to fortify Susten's success.
UPDATE ON CARACO
We continue to be strongly upbeat about the US generic market, with
Caraco now well on track to a profitable future.
The number of prescriptions filled with generics in the US continues to
increase. One significant change which we had briefly mentioned last
year, is the increasing interest that decision-makers and influencers
are beginning to have, in the way that generic law is interpreted in
the US. FTC*, the senate, large businesses, buying houses and
associations such as the AARP** appear to be much more watchful of
company moves than they were a year ago. Laws relating to patent
extensions and out of court settlements (between brand and generic
companies) are coming under close scrutiny. These positive signs are
indicative, on a macro level, of far greater attention to the manner in
which healthcare costs are viewed in the US.
After the first lot of approvals received last year, Caraco continued
to receive new ANDA approvals from the USFDA. The number of ANDAs
received so far now total 6 (these address a $300mill market), 6 more
filings await approval (these address a $390 mill odd market after
generisation). Caraco is expected to file for I or 2 products per
quarter this year, and this will help to build future pipelines. Caraco
currently has a reach encompassing over 50% of the US generic market.
For December 2001, Caraco posted sales of $5.92 mill and a loss of
$5.75 mill (of which R&D related loss was $3.08 mill). On a much more
encouraging note for the first quarter of 2002, Caraco posted its
first operating profit in 12 years of existence and the 5th year after
we took equity in the company. At the net level, for ql, sales were
$3.3 mill and loss $0.52 mill. In the second quarter of 2002, Caraco
raised $1.7 mill through the issuance of fresh equity to a private
investor. This was a reassuring signal of the value that remains
untapped in Caraco, and the opportunity horizon ahead.
As Caraco stabilizes, in addition to a speciality generics strategy
that was being followed so far, the company will also begin to make
complex filings with exclusivity advantages or an innovation advantage.
We are committed to maintain the pace of new opportunities at Caraco.
INTERNATIONAL MARKETS - DOSAGE FORMS
We are immensely excited about opportunities ahead of us in the
international dosage form markets and have been putting in place the
necessary infrastructure and resources to address these markets.
We now have 90 PSR and 35 supervisory/managerial personnel (directly
and through our agents) in place across the 36 markets that we are
present in. These shortlisted countries fall into 3 broad categories
with similar characteristics. Our broad strategy across these markets
is to focus on the top 3 products in each type of market, so that we
eventually reach identification/ownership with the product/therapy area
in that country. As we put our strategy in place, we expect this part
of our business to register exciting growth, partly because the base
itself is so small and the opportunities immense.
INTERNATIONAL MARKETS - SPECIALITY BULK ACTIVES
Several of our bulk active plants have received international
regulatory approvals in the last few years - Ahmednagar received USFDA
approval, ISO 9002 and ISO 14001 certifications, Panoli received
IS09002 certification, and will be offered for USFDA inspection
shortly. Substantial upgradation was also carried out at Ankleshwar
and Chennai, which will now be used for the domestic and neighboring
markets. We have already witnessed an increase in the value addition
for products after they receive US FDA approval. Across plants, 4 US
Drug master files have been filed with the FDA, with 10 dossiers ready
to file. 4 Piles for Europe have been submitted and are awaiting
approval.
The increasing proportion of sales of speciality bulk actives to
customers in regulated markets will offer higher realizations for our
speciality bulk active business.
INNOVATION BASED RESEARCH
Efforts during the course of the year were focused on meeting our
2-year research objective: In innovation based research, to have one
NCE and 3 delivery system products in human trials. To this end, an
increasing proportion of time and resources have been 1 invested in
research, a trend that is expected to gather momentum going ahead. At
4.5% of turnover, investments in research now exceed Rs. 1200 mill.
Like every year, the investments in projects at SPARC enabled more than
35 products (not counting line extensions) and 12 bulk actives to reach
market. Our marketing divisions continue to hold the record for the
number of new products introduced - 4 of these (Edegra, Clopilet,
Mozax, Pioglit) featured among the top 30 launches in the pharma
industry for 2001 (based on ORG data for Dec 2001).
The continual stream of new products helped us meet our objective of
40% sales from products launched in the last 4 years. For several of
these products, we have put bur reverse engineering ski I Is to good
use in order to bring products to the Indian market soon after their
international launch by innovator companies.
To summarize what we've said earlier, over the short term the emphasis
is reverse engineered speciality bulk actives and formulations for
India and traditional markets. This year, as a proportion of the R&D
spend, the allocation to this area has actually decreased, with a
larger proportion now getting spent on medium and long term projects.
Last year, when we wrote to you, we had outlined how across the Indian
pharma industry a change in business mix was being witnessed. Companies
are beginning to receive a small but important part of their revenue
stream from research from early stage licensing deals. International
markets are quickly becoming the fastest growing part of the business.
We believe that this is just the beginning of a trend, but once this
trend is well underway, there is little that can stop it.
Across sections of the Indian pharma industry, understanding of the
legal and regulatory aspects, particularly those related to the US
generic market is getting closer to our understanding of the domestic
market. One reason for this change is perhaps the inflow of revenues
that can follow from an application of the fine print (with deployment
of required resources) from areas of the FDA law relating to
exclusivity, such as para 4 and section 505b2. This only goes to show
that once infrastructure and resources are put into place, Indian
companies have the potential to grow into formidable players in the US
generic market. Our oft-tested reverse engineering skills give us a
headstart.
NDDS projects that we are pursuing offer returns over the medium term,
and projects in the areas of transdermals, DPIs and biodegradable
membranes are progressing satisfactorily.
In the area of NCE, projects in three specific therapy areas of our
interest continue, and we are fairly excited by the progress so far.
Our strategy is based on an analogue drug discovery model, with known
pharmacophores. Our current synthesis and screening capability is to be
increased shortly. Currently we synthesise 14 compounds/week, screen
100 compounds/week invitro, 12/week invivo and 15/day in animal models.
As always, we refrain from sharing more information about our progress
in the area of innovation till we have the requisite intellectual
property rights in place.
Now a word about the new research campus for innovation at Baroda.
Construction work for 150,000 sq.ft of floor area, is progressing. The
site will be made operational in a phased manner, and as it becomes
operational we expect labs to begin and scientists (current staff
working on nce/ndds at SPARC and new recruits) to transfer to this
site. The mammoth task of adding new employees at SPARC is well
underway.
In Mumbai, a new site has been bought and renovation/expansion work has
started for a new product development lab for the international
markets. This will add 50,000 sq. ft floor area to our research
facility, and will be used for filings for US and Europe in addition to
select ndds projects.
The Indian pharma sector is at the threshold of exciting opportunity,
but each step ahead will require work that is absolutely world-class
and knowledge management caliber of a superior level. By our estimates,
Sun Pharma should be committing $ 15 mill every year to research in the
nce/ndds area in the next 2/3 years. The entire team at SPARC is geared
to manage the transition from a process driven to an innovation driven
organization.
FOSTERING TEAM SPIRIT
The proof of our intent and interest in raising the floor on capability
within the team is in implementation this year, a total of 18 programs
covering over 320 participants was completed. 260 internal promotions
were made across the team. Team Sun Pharma now numbers over 3000
employees. The opportunity for career growth and cross-functional
career switches is one reason we have a fairly successful record in
retaining key people. Since the work requirement itself acts as a
screen, the team that thrives and delivers in this fast paced
atmosphere is one that is working towards the same set of ideals. This
spirit-grit, hard work and honest ambition is the most valuable asset
at Sun Pharma. As an intangible, it's one that your directors are hard
placed to attribute a precise number to. Your directors wish to thank
Team Sun Pharma for their enthusiastic effort and winning spirit.
Information as per Section 217(2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975 as amended,
is available at the registered office of your company. As per the
provisions of Section 219(1)(b)(iv) of the said Act, the Report and
Accounts are being sent to all shareholders of the Company excluding
the statement of particulars of employees u/s 217(2A) of the said Act.
Any shareholder interested in obtaining a copy of this statement may
write to the Company Secretary at the Corporate office of the Company.
Additional Information
The additional information pursuant to Section 217(1)(e) of the
Companies Act 1956 read with the Companies (Disclosure of Particulars
in the Report of the Board of Directors) Rules, 1988, is given in
Annexure and forms part of this report.
Corporate Governance
Certificate dated 30th May, 2002 of the auditors of your Company
regarding compliance of the conditions of Corporate Governance as
stipulated in Clause 49 of the listing agreement with stock exchanges,
is enclosed.
Finance
All the banks in consortium continue to offer their highest rating to
your company enabling it to source funds from banks at the finest rate
of interest. CRISIL continued to reaffirm their highest rating of
"PI+", for your Company's Commercial Paper Program throughout the year.
During the year under review, your Company completely redeemed the
outstanding 49,07,500 Non Convertible Redeemable Preference Shares of
Rs. 100 each as per the terms of the issue.
The Company does not offer any Fixed Deposit schemes.
Delisting of Company's Equity Shares from the Stock Exchanges of
Ahmedabad, Delhi, Kolkata and Chennai
As you would be aware that the members at the Company's Ninth Annual
General Meeting held on 28th November, 2001 had approved byway of a
special resolution the Company's proposal for voluntary delisting of
the Company's Equity Shares from the Stock Exchanges - Ahmedabad, the
Calcutta Stock Exchange Association Ltd, Madras Stock Exchange Ltd and
the Delhi Stock Exchange Association Ltd. The Company had proposed
voluntary delisting on account of nil/low volume of trading of
Company's equity shares on such exchanges and ample availability of NSE
and BSE terminals across the whole of the country in all major cities.
The Company's equity shares will remain to be listed at the Stock
Exchange Mumbai, the National Stock Exchange of India Ltd and Vadodara
Stock Exchange Ltd. Shri Dilip S. Shanghvi, the promoter of the Company
made an offer to the shareholders of the Company of the respective
regions viz. Gujarat, West Bengal, Chennai, Pondichery, Delhi and
Haryana as required by SEBI guidelines reference No. SMDRP/CIR. 14/98
dated 29-04-1998. The promoter of the Company has despatched the
consideration for the equity shares tendered to the respective
shareholders and all the required procedures for delisting from the
respective regions shall be completed by 30th June, 2002.
Directors
Shri Sailesh T. Desai and Shri Sudhir V. Valia retire by rotation and
being eligible offer themselves for reappointment.
Shri Dilip S. Shanghvi's term of appointment as Managing Director
expires on 31st March, 2003. Under the leadership of Shri Shanghvi the
Company has attained all round growth in its business. Your Directors
recommend the re-appointment of Shri Shanghvi for a further period of 5
years.
Directors' Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors' Responsibility Statement, it is
hereby confirmed:
That in the preparation of the annual accounts for the financial year
ended 31st March, 2002, the applicable accounting standards have been
followed along with proper explanation relating to material departures;
That the Directors have selected appropriate accounting policies and
applied them consistently and made judgements and estimates that were
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 on the
profit of the Company for the year under review;
That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the companies Act, 1956 for safeguarding the assets of
the company and for preventing and detecting fraud and other
irregularities;
That the Directors have prepared the annual accounts for the financial
year ended 31st March, 2002 on a `going concern' basis.
Auditors
Your Company's auditors. Price Waterhouse, Chartered Accountants,
Mumbai, retire at the conclusion of the forthcoming Annual General
Meeting. Your company has received a letter from them to the effect
that their re-appointment, if made, will be in accordance with the
provisions of Section 224(1-B) of the Companies Act, 1956.
Acknowledgements
Your Directors wish to thank all stakeholders and business
partners-your Company's bankers, financial institutions, medical
profession and business associates for their continued support and
valuable co-operation. The Directors also wish to express their
gratitude to investors for the faith that they continue to repose in
the Company.
ANNEXURE (1) TO DIRECTORS' REPORT
Consumption per unit of production
It is not feasible to maintain product category-wise energy consumption
data, since we manufacture a large range of formulations and bulk drugs
having different energy requirements.
Energy conservation measures
1. At our Panoli plant we have commissioned Vapour Absorption System in
place of Vapour Compression System. This new System is used for
lowering water temperature, which in turn is used in process cooling or
airconditioning. A sum of Rs. 11.3 lacs as direct savings per year has
been envisaged due to the commissioning of the above Additionally the
machine also imparts a benefit of Eco-friendly design. This System does
not use Chlorofluorocarbon (CFC) as refrigerant and hence will
contribute towads the prevention of ozone layer depletion.
2. We use steam in place of electricity for heating of De-mineralized
water, fluid bed dryers for producing hot air systems for coating
department and for making starch paste.
TECHNOLOGY ABSORPTION
A. Research and Development
1. Specific areas in which R&D is carried out by the Company
Specific projects in R & D ensure the company is in a state of
readiness to launch new products and line extensions that enable it to
maintain a position of leadership in chronic therapy areas. A large
part of the research budget and management time is being invested in
innovative R&D projects covering New Chemical Entity (NCE) and Novel
Drug Delivery System (NDDS). Projects that offer a quicker payback viz.
formulations, including controlled/speciality bulk actives, peptides
are also an important area since they generate revenues that can be
reinvested for long term projects.
2. Benefits derived as a result of the above R&D
In the year 2001-02, about 35 formulations reached market based on
technology developed in-house. A select number of bulk actives were
also scaled up, taking the total to over 75. Formulations of the latest
molecules help us maintain or add to our rankings with specialist and
consultants. Bulk actives are used to make formulations that are cost
effective and offer a quicker time to market entry. Bulk actives also
earn valuable foreign exchange and most of these reach large
international customers and help build brand-equity for the Company.
The Department of Scientific and Industrial Research, Ministry of
Science and Technology of Government of India has granted approval to
the in house research and development facility of your Company under
section 35 (2AB) of the Income Tax Act, 1961 and has recognized the
commercialization of technology developed in house by granting your
Company approval under rule 5(2) of the Income tax rules.
3. Future plan of action
Innovation continues to be the area of primary focus and large sums
have been earmarked for research on New Chemical Entity (NCE) and Novel
Drug Delivery System (NDDS). An Innovation Campus is being built in
Baroda, on over a 16 acre site with well designed and equipped labs.
This is expected to become operational over the next V/z-2 years in a
phased manner. A 150 person strong scientist team is expected to be at
work here once the centre is fully operational. A new location for a
large research facility is being constructed in Mumbai to work on NDDS
projects as well as product dossiers for US and Europe with the current
40 strong team to be strengthened as per project requirements.
4. Expenditure on R&D
Year ended 31.3.2002 Year ended 31.3.2001
Rs in Millions Rs in Millions
a) Capital 139.4 71.0
b) Revenue 197.3 178.9
c) Total 336.7 249.9
d) Total R&D expenditure as % of Total
Turnover 4.5% 4.1%
B. Technology Absorption, Adaptation and Innovation
1. Efforts in brief, made towards technology absorption, adaptation and
innovation
In its endeavor to offer new products, better processes and
innovations, your Company continues to invest large sum on R&D
equipment new facility and human resource for innovative R&D projects
covering NCE and NDDS.
2. Benefits derived as a result of the above efforts e.g. product
improvement, cost reduction, product development, import substitution
(a) First to market with several products, helps to capture market
share ahead of competition, specially in newer therapy areas like
gynaecology, dermatology, where the Company is trying to make a
headway,
(b) In market segments such as Asthma where only few Companies have a
large market share, ability to launch complex inhalers and inhalers
with combination has helped differentiate the Company and build a
complete offering (oral and inhalers in Asthma).
(c) Products like Letroz, Oxiplat, Oxetol, Ropark that were so far
being imported in the country at high cost are now made available at
competitive price.
(d) Products like Monosprin DS, Oleanz SR, Rofact RT, Celact MD,
provide the patient a drug which is easier to take.
3. Your Company has not imported technology during the last 7 years
reckoned from the beginning of the financial year.
C. Foreign Exchange Earnings and Outgo
Year ended 31.3.2002 Year ended 31.03.2001
Rs. in Millions Rs. in Millions
1. Earning from Exports 1338.8 1135.20
2. Expenditure (GIF basis) 650.0 908.1
3. Investment and Loan given 255.7 0.1
4. Loan given received back 0.0 2.3
For and on behalf of the Board of Directors
Mumbai, DILIP S. SHANGHVI
30th May, 2002 CHAIRMAN & MANAGING DIRECTOR
Mar 31, 2001
Your Directors take pleasure in presenting the Ninth Annual Report and
Audited Accounts for the year ended 31st March, 2001
(Rs Millions)
Year ended Year ended
31st March, 2001 31st March, 2000
Total Income 6211 4810
Profit after tax 1352 905
Dividend
Preference Shares 41 53
Equity Shares interim 234 154
Corporate Dividend tax 33 23
Transfer to various Reserves 664 513
Rate of dividend including interim on
equity shares @50% 100%
Book value per equity share (Rs) @93 199
@ on increased equity capital after 2:1 bonus
The current year's results include figures of erstwhile Sun
Pharmaceutical Exports Ltd (SPED Sun Pharmaceutical Advanced Research
Centre Ltd (SPARC) and Pradeep Drug Company Ltd (PDCL), which have been
merged with the company with effect from April 1, 2000.
An interim dividend at 9.5% (previous year 10.5%) p a was paid to the
preference shareholders whose names stood on the register of members on
15th March 2001 An interim dividend @ 50% post bonus (previous year
100% pre bonus) was paid to the equity shareholders of the Company
whose names stood on the register of members on 2nd August 2001 Your
Directors recommend that the interim dividend on preference and equity
shares be treated as final.
As the shareholders are aware the audited profit and loss account for
the year ended 31st March 2001 and the balance sheet as at the said
date could not be presented before the shareholders at the Annual
General Meeting (AGM) of the Company held on 28th November 2001 This is
because the accounting effect of the Scheme of Amalgamation/Merger of
Pradeep Drug Company Ltd with the Company wef 1st April 2000 could not
be incorporated in the accounts of the Company for the financial year
2000- 2001, until the Scheme of Amalgamation/Merger was sanctioned by
the Board for Industrial and Financial Reconstruction (BIFR)
Accordingly the said AGM was adjourned sine die for consideration of
the audited accounts, the report of the Directors and the Auditors
thereon for the year ended 31st March, 2001, confirmation of payment of
interim dividend and the re-appointment of statutory auditors until
after the sanction of the scheme by BIFR.
The Scheme of Amalgamation/Merger of Pradeep Drug Company Ltd with your
Company has been duly sanctioned by BIFR at its meeting held on 31st
January 2002.
Against a backdrop of an overall slowdown that impacted both the
economy and the sector, your Company continued to work by its principle
of bottom-line focused, operationally efficient growth. To add to this
was the lasting sense of uncertainty about the drug policy and the new
framework of patent laws compliant with TRIPS. We expect that the new
drug policy, when it does finally get announced, will pay due
cognisance to competitive market realities and cost escalations. As
regards TRIPS the industry has been rather vocal lobbying for certain
safeguards that are in line with the country's long-term healthcare
interests. Some of these are compulsory licensing, parallel imports,
limiting patent life (preventing patent ever greening), not allowing
for import to be equal to the working of a patent, allowing product
development work during patent protection (i.e. Bolar amendment in the
US context). As corporate citizens we expect these issues to be heard
fairly before framing one of the decades' most influential healthcare
legislation within the agreed purview of GATT, of course.
Management discussion and analysis value from consistent revenue
streams
Total income increased by 29% over last year. At the net level, profit
increased by 49% over last year. However, these numbers are not
strictly comparable due to the merger of the three companies as stated
above.
Your Company operates in only one major business segment, namely
pharmaceuticals. The domestic formulation business grew by 22% to Rs
3.70 billion. Export grew by 4% to 1.1 8 billion. (This is after
adjusting for the sales of Sun Pharmaceutical Exports Ltd. in the
previous year ending March 2000.)
Brand building and research continue to be the primary thrust areas
within the Company - as competition across all our speciality segments
intensifies, we continue with the task of building our business around
customer aspirations and abiding business relationships. Your Company
continues to operate by the belief that strong customer relationships
are the most appropriate prescription for long-term, consistent and
dependable growth. Across all our speciality therapy areas - both the
core areas where we hold market leadership, as well as newer therapy
areas where we are working towards attaining market leadership, this
principle remains unchanged.
Our objective is to become a better company - not merely a larger
company. A natural corollary to this aim is improved efficacy, sharper
focus and an emphasis on strong brands, research and international
markets.
Against a competitive framework that witnessed several mergers &
acquisitions as the Indian pharma industry continued to consolidate; we
closed the year at 5th rank, with a growth rate of 24.4%, which is
about more than twice that for the domestic pharma industry. Market
share moved from 2.28% to 2.61% despite continued competitive interest
in our business areas. Competition not only forces companies with the
first mover advantage like us in certain therapy areas to work harder,
it also helps grow markets through increased awareness and appreciation
of treatments for complex diseases.
Continue to feature among the Country's prescription products
6 of our important brands continued to move up the list of the
country's leading prescription brands as the number of prescriptions
for these chronic disease areas, speciality brands continued to build.
Our brand presence in the top 300 now reads: Monotrate (antianginal),
Alzolam (tranquiliser), Zeptol and Encorate (antiepileptics), Glucored
(oral antidiabetic) and Coldact (a prescription medication for colds).
Important new products launched this year replenished product baskets
across these therapy areas for continued leadership. (Fora complete
list of new products please see the later pages, important new products
are discussed in the following section.)
Specialist Preferences
This year too, CMARC's prescription audit ranks have remained a signal
for a subsequent change in prescription trends. This is the reason why
the improvement in customer rankings with the newer customer groups
excites us, and a drop in prescription ranks becomes a cause for
concern.
In orthopedics our rank upswing was largely due to the headway that we
made with Celact, our celecoxib, which rated among the top product
launches for 2001 for the pharma industry.
We continue to move up the rankings in the newer therapy areas of
orthopedics, oncology and chest physicians. A reorganization of our
fertility and gynaecology business with the name "Spectra" and a
distinct identity is expected to translate into a rank change down the
line.
Update on Caraco
We continue to be extremely enthusiastic about the US generics market,
although we recognise that competing in this market requires a more
complex and intense set of skills. According to a report, drugs with
branded sales of over $40 billion would have come off patent in the
period 2000-2005. More heartening - generics accounted for a full 50%
of US sales in 2001, up from 1 8% a decade ago. (FT/ Lex column. Dec 2,
2001) IMS values the current market for generics at $10.26 mi 11 ion,
with 6 of the top 20 prescription drugs coming off patent in a 5-year
period. (Chemical Market Reporter, May 15, 2000)
When we wrote to you last year, we had shared our blueprint to engineer
a turnaround at Caraco, a US-based generic formulations manufacturer.
Sun Pharma holds a 48.54% stake in the company. We update you on the
events in the interim.*
(This report relates to the period upto March 01, and subsequent period
events are linked separately wherever relevant)
Caraco posted sales of $2.38 million and loss of $7.62 million
(includes a $3.30 million loss that was incurred for R&D work related
to product filings) for the year ended Dec 2000, primarily due to an
unforeseen delay in receiving new product approvals, focus of all
management time and resources to secure FDA compliance and a cutback on
contract manufacturing as the company tried to focus on more profitable
business.
(Note: Caraco subsequently received approvals for 3 full ANDAs and the
q3 numbers for Sep-Dec 2001 would be the first full quarter that sales
from these new approvals would be booked. 2 more products were cleared
after September. Currently Caraco has 4 ANDAs awaiting approval, and a
number of interesting new products in the 21-product strong development
pipeline).
Several developments in the US generic market reiterate our long-term
faith in an upside opportunity. For one, Indian companies have begun to
demonstrate concrete revenue streams from the US generic market.
Increasing pressures on cost containment are also making the market for
generics more attractive. In the recent past, several decisive trends
have been pro-generic. Some of these are - increasing public pressure
for less expensive generics fuel led by a strong senior citizen and
consumer lobby, consumer awareness and serious concern about the
tactics used by brand name companies to extend patent life, and
regulatory, federal as well as court action that is viewed as
pro-consumer.
The events that marked the year at Caraco have been a reassuring signal
for better times ahead.
Research
At Sun Pharma, research has been vital to our plans, and increasing
amount of management time and company resources continue to be invested
in research. Current investments in research take the total spend to
over Rs. 80cr, at a steady 4% of the turnover. The work at SPARC has
enabled us to bring a stream of new products to the market. Over 40% of
the current turnover is from products that have been introduced in the
last 5 years.
In the last few years, one has witnessed a change in the business mix
among Indian pharma companies from an entirely reverse engineered
portfolio of brands sold in the domestic and neighbouring markets, to
revenue streams that include an element of research-based products and
international markets.
This change in the business structure necessarily forces an element of
change across operations as skill-sets are refurbished - legal and
regulatory understanding now needs to be made more comprehensive,
quality is now moving towards a mean across markets and becoming
increasingly stringent. To summarise: a virtually unreached opportunity
exists, but is demanding too. Companies that are well prepared, and can
judiciously balance the inevitable troughs in these challenging markets
are the ones that are best placed to succeed.
At Sun Pharma, our conservative policy of timing research in vestments
over the short-term, the medium-term and long-term have helped spread
the associated risk. In the short-term the emphasis continues to be on
process development for speciality bulk actives and development of
formulations for the domestic and traditional markets. Our emphasis for
the medium- term is on novel drug delivery systems and formulation
development for the regulated markets. Ourforay in drug discovery
continues-this had begun in a modest manner 2 years ago with a
40-person team focusing on 3 therapy areas (the names of which we
expect to share only later because of intellectual property right
related reasons).
A better handle on logistics and need for interaction with our existing
scientific team are two reasons why we have changed the location of our
proposed R&D centre from Chennai to Baroda. We expect the centre to
benefit from synergies with our current research base in Baroda. I
expect to share more details about this once the new innovation based
campus commences operations.
We envisage this new research initiative as adding vital elements to
our research matrix. With the continual infusion of new skills, we will
be well placed to make the most of exciting opportunities ahead.
Finance
All the banks in consortium continue to offer their highest rating to
your Company enabling it to source funds from banks at the finest rate
of interest. CRISIL continued to reaffirm their highest rating of
"P1+", for your Company's Commercial Paper Program through out the
year.
During the year under review, your Company redeemed 1/3rd of the
outstanding 49,07,500 Non Convertible Redeemable Preference Shares of
Rs. 100 each as per the terms of the issue. (These preference shares
were redeemed completely by December 2001.)
The Company does not offer any Fixed Deposit schemes.
Directors
Shri Hasmukh S. Shah was appointed as the Company's additional director
by the Board of Directors with effect from 22nd March, 2001 and was
appointed by the members of your Company as the director liable to
retire by rotation a the Annual Genera] Meeting held on 28th November,
2001 (which has now been adjourned to 1 9th March, 2002). The
resignation of Shri S. Mohanchand Dadha as the Executive Director of
the Company was accepted w.e.f. 21st March, 2001 by the Board at its
Board Meeting held on 22nd March, 2001. Shri S. Mohanchand Dadha
continued to be a Director on the Board, liable to retire by rotation.
Shri S. Mohanchand Dadha and Shri Narendra N. Borkar retired by
rotation and were re-appointed as the directors liable to retire by
rotation on 28th November, 2001 when your company's Ninth Annual
General Meeting was convened.
Directors' Responsibility Statement
Pursuant to the requirement under Section 21 7(2AA) of the Companies
Act, 1956, with respect to Directors' Responsibility Statement, it is
hereby confirmed:
* That in the preparation of the annual accounts for the financial year
ended 31st March, 2001 the applicable accounting standards have been
followed along with proper explanation relating to material departures;
* That the Directors have selected appropriate accounting policies and
applied them consistently and made judgements and estimates that were
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 on the
profit of the Company for the year under review;
* That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the company and for preventing and detecting fraud and other
irregularities;
* That the Directors have prepared the annual accounts for the
financial year ended 31st March, 2001 on a 'going concern' basis.
Auditors and Auditor's Report
Your Company s auditors Price Waterhouse Chartered Accountants Mumbai
retire at the conclusion of the forthcoming Annual General Meeting Your
Company has received a letter from them to the effect that their
reappointment if made will be in accordance with the provisions of
Section 224(1B) of the Companies Act 1956 The observations of the
auditors in then report on accounts read with relevant notes are self
explanatory.
Acknowledgments
Your Directors wish to thank all stakeholders and business partners
youi company s bankers financial institutions medical profession and
business associates for their continued support and valuable co-
operation The Directors also wish to express their gratitude to
investors for the faith that they continue to repose in the Company.
For and on behalf of the Board of Director
DILIPS SHANGHVI
Mumbai
15th February 2002 Chairman & Managing Director
Mar 31, 2000
FINANCIAL RESULTS Year ended Year ended
31st March 31st March
2000 1999
(Rs. in Lacs)
Total Income 48100 35967
Profit before depreciation and tax 11011 6966
Depreciation 1294 867
Tax 664 195
Profit after tax 9067 5904
Dividend
Preference Shares 527 186
Equity Shares Interim 1542 925
Equity Shares Final
Corporate Dividend tax 228 154
Transfer to various Reserves 5131 4007
Rate of dividend including interim on
equity shares 100% 80%
Book value per equity share (Rs.) 199 168
The Current year's results include figures of erstwhile Gujarat Lyka
Organics Ltd (GLOL)
An interim Dividend at 10.5% p.a. was paid to the Preference Share
Holders whose name stood on the Register of Members on 15th March 2000.
First and Second Interim Equity Dividends at the rate of 60% & 40% on
the paid up equity share capital were paid to the Members whose name
stood on the Register of Members as on 29th December, 1999 & 23rd March
200 respectively. The Directors recommend that the two interim
dividends on equity shares aggregating 100% (Previous year 80%) be
treated as final.
The Company on 1st April, 2000, allotted 3,08,44,466 Bonus Equity
Shares of Rs.10/- each to the shareholders of the Company as on Record
Date, 23rd March, 2000 in the ratio of 2 (two) shares for every 1 (one)
held by the shareholders which are pari passu with existing equity
shares in all respects. With this, the equity capital increases from
Rs15.42 to Rs46.26 Cr w.e.f. 1-4-2000.
Consolidation, Operation and Future outlook
Total income increased 34% over last year. At the net level profit
increased 54% over last year. As the Company becomes larger, we need
to restate to ourselves that it is more important for us to become a
tightly run, sharply focused company with strong brands that are the
mainstay of therapy rather than simply a larger sized company.
The pivot of our business is meeting customer aspirations. Our
performance this year only affirms our belief in customer service
creating value of consistent, long-term growth.
Over the last 5 years we have made a significant headway in speciality
rankings. Yet there is immense untapped potential: not the least
because the segments themselves are growing. As we stretch to post
increased prescriptions both in new therapy areas and in the therapy
areas where we are already lead, we continue to become a better
company.
Market Ranking
On a cumulative basis since January this year, the Company was ranked
5th by domestic prescription market share, up from 10 rank last year.
According to the retail chemist audit from the research agency
Operations Research Group (ORG, March 1999 and 2000) we are ranked 8th
by moving annual total. This means the company moved up 5 places from
March last year, and by 26 places from our baseline 34th rank at the
time of our IPO in January 1994. Market share is 2.49% cumulative from
January, up from 0.9% in 1994. With a growth rate of 35.6% we continue
to grow at more than three times the rate of growth for the pharma
industry (9.8%)
BCG ranks us among the top value creators
We are glad to share with you another important rating that we consider
as reinforcement of our strategy. In a recent survey, the
international consulting company Boston Consulting group reviewed the
performance of companies listed on the stock exchanges in India over a
5 year period (Corporate Dossier/ The Economic Times, May 12, 2000)
This survey ranked companies by Total Shareholder Return, which
measured the ability to deliver value consistently over time. A key
parameter was year after year quality of growth demonstrated over a 5
year timeframe and not merely "flash in the pan" episodic growth.
BCG rated the company no.1 among all pharma companies, as also no.8
across industries.
Speciality brands rank among the top 300 brands in the country
Encorate, an antiepiletic, entered the list of the top 300 pharma
brands in the country. This fortifies our presence with 6 brands that
span the speciality range. Monotrate (antianginal), Alzolam
(tranquiliser), Zeptol and Encorate (antiepileptics). Glucored (oral
antidiabetic) and Coldact (a prescription medication for colds.) This
affirms our belief that speciality brands build with time, and command
a prescription share that is fairly stable.
CMARC registers specialist preferences
Year after year, CMARC's prescription audit ranks have proven to be a
precursor of likely prescription trends. This is the reason why the
improvement in customer rankings with the newer customer groups excites
us. Such upswing in ranking in a assurance that the strategies which
we have put to work in the newer therapy areas post acquisition, are
bringing results to the table.
In the newer therapy areas of orthopaedics, oncology and chest
physicians we have improved ranks significantly and rank among the top
5. In these segments, a portfolio has been built with a mix of
acquired brands and own brands, new products have been launched,
customer lists refined and coverage made more intensive. We are
confident that this focused approach will help us build on these
rankings going ahead.
Update on Caraco
We continue to be positive about the US generics market. The overall
market for generic drugs was estimated at $27 billion in 1998 and is
expected to reach $43 billion in 2003. Three factors will push this
growth : patent expirations of blockbuster drugs in the US, increasing
presence of management care and cost containment programs , higher
number of prescriptions filled with generic alternatives.
When we wrote to you last year, we had shared our plans about Caraco, a
US based generic formulations manufacturer, in which the company holds
48.54% stake. We continue to work towards using Caraco as an entry
vehicle for the US generic market.
Caraco posted a loss of $9.3 million on sales of $2.89 million for the
year ended Dec 1999. This $9.3 million loss includes $6.3 million that
were incurred for R&D related to product filings. The primary reason
for continuing losses at Caraco is the delay in receiving ANDA
approvals from the USFDA.
Caraco's current range is marketed to large wholesalers, such a
Cardinal, Amerisource and Bergen Brunswick. Efforts are underway to
increase the number of products ordered by these wholesalers from
across Caraco's formulary. In the course of the year some of Caraco's
products have been listed by Federal and State agencies such as the
Veteran Administration.
Caraco currently has 5 ANDAs (abbreviated new drug applications, a
regularly filling for generic drugs) submitted to the USFDA for
approval 3 more products await submission. In all Caraco has 21
products (including the fillings made) under scale up and development.
Caraco is trying to make its mark in a very competitive market with a
differentiated product selection strategy. Our intent is to build a
line of generics where margin erosions are not as steep because of
technical complexity. Over time, Caraco may introduce branded generics
that have a product/technology/delivery advantage.
At Sun Pharma, research has been crucial to our long-term plans, right
from the time we commenced research investments in 1993. The work at
SPARC has enabled us to bring a stream of new products to market. Over
40% of current turnover is from products that have been introduced in
the last 5 years.
In the last two years, we have witnessed the first returns on the
investments Indian companies have made in research over the decade. We
believe the post 2005 years offer tremendous opportunity for well
prepared pharma companies to move up the learning curve. These initial
investments from a platform for innovative technologies with a much
higher scope for value addition.
At Sun Pharma, we have followed a phased approach to research and have
invested over Rs.60cr since 1993. We have invested in projects that
will earn us revenue streams over the three distinct time horizons the
short, medium and long term. In the short term the emphasis has been
on process development for speciality bulk actives and development of
formulations for the Indian market, and other markets similar to India.
The emphasis for the medium term is on novel drug delivery systems and
formulation development for the regulated markets across North America
and Europe. These skills build the platform for drug discovery, where
the value addition is the most and revenue streams can be earned across
markets.
The missing piece in our research strategy so far had been drug
discovery research, with the necessary infrastructure such as molecule
biology, pharmacology, toxicology. Last year, a 40-person team a
Vadodara commenced work in three specific therapy areas in drug
discovery. This group is actively working on interesting approaches
and is screening more than 1 compound/day.
During the course of the year 2000, our research campus in Chennai- our
third research location- will commence operations. This research
campus will focus almost entirely on innovation- Spanning projects
across new chemical entity and novel drug delivery systems. This large
30 acre site will be staffed with a 150 strong team of scientists over
the next 18 months-effectively doubling our research strength.
We envisage this new research initiative as adding vital elements to
our research matrix. With the continual infusion new skills, we will
be well placed to make the most of exciting opportunities ahead.
International markets a presence for the long term
Exports are up 27% largely on account of increased bulk actives sales.
Dosage form sales across Sun Pharma and Sun Pharma Export was flat at
Rs.23.54cr.
In the international markets too, our intention is to move up the value
addition chain. Using the export of speciality bulk active as a
starting point, this value chain extends to higher margin dosage
forms/generics. The market presence, which we build today, can
eventually be a means to register our research-based products.
In the coming year, bulk active sales are expected to continue
increasing as we move from the less regulated markets to the high value
markets. We have begun the process for DMF approvals from the USFDA
and European Certificate of Suitability for our speciality bulk actives
from the EU authorities. These approvals, once received, may result in
much higher value addition for the same bulk actives that we currently
sell.
We are revamping our international formulation products business, and
are reviewing the way we are structured across markets. Our intention
is to focus on building market share for a dependable revenue stream
with year on year growth. Over the long term, we intend to become an
attractive partner for international companies in these markets.
An extensive study that aims to match market potential with appropriate
field structure is now underway. While the completion of this exercise
if likely to take two years, we expect to put corrective measures in
place immediately.
Other developments
This year marked the merger of the bulk cephalosporin manufacturer
Gujarat Lyka Organics Ltd after the requisite approval from BIFR - a
logical next step . GLOL was merged effective 1st April 1999 at a post
bonus swap ratio of 21.33:1 in pursuance of the order from the Board
for Industrial and Financial Reconstruction, New Delhi. Ever since we
took an equity stake in GLOL in 1996, its products were being marketed
internationally by Sun Pharma. This arrangement had given a boost to
the rest of our speciality bulk active business, as is evident from the
increase is bulk export turnover over the last 4 years. After the
merger, functions such as purchase, operations and manufacturing have
been integrated, resulting in substantial cost savings.
Sun Pharmaceutical Exports Ltd, the Company's subsidiary, is proposed
to be merged with the Company, subject to approvals of the shareholders
and High Court.
The Mergers of Gujarat Lyka and Sun Pharma Exports into the company
only strengthen our growth platform further. These moves effectively
complement the framework we've built so far through a judicious mix of
organic growth and acquisitions.
A consistent value system
At the close of 15 years of existences of our business, the principles
on which the growth engine moves remains unchanged. We have always
believed in making the most of resources. We continue to retain this
startup mindset. The enthusiasm with which we approach our business
too, remains undiluted. Integrity, respect for people, a need for high
performance these continue to be the unwritten beliefs that influence
every single thing that we do as a company.
Finance
All the banks in consortium have given their highest rating to the
company enabling it to source funds from the Banks at the finest rate
of Interest. CRISIL continued to reaffirm their highest rating of "P1
+ ", to the Company's Commercial Paper Programme throughout the year.
During the year under review, the company redeemed 1,10,000 Non-
Convertible Redeemable Preference Shares of Rs.100 each. The coupon of
10.5% was reduced to 9.5% on balance Preference shares with effect from
1st April, 2000
No fresh Fixed Deposits were accepted by the company during the year
under review. All deposits matured during the year under review were
either repaid or renewed on time. On fixed deposit amounting to Rs.5000
has not been claimed upto 31/3/2000.
Directors
Mr.S.Mohanchand S.Dadha's term of appointment as Whole-time Director
expired on 1st February, 2000 and has been re-appointed as Whole-time
Director of the Company for a further period of two years from 1st
February, 2000 which has been approved by the Shareholders of the
Company at the Extra Ordinary General Meeting held on 3rd March, 2000.
Mr. Sudhir V. Valia and Mr. Dilip S. Shanghvi retire by rotation and
being eligible, offer themselves for re-appointment
Status of Y2K Compliance
The Company managed to roll over successfully to the new millennium in
a smooth manner without any adverse impact, thanks to intensive efforts
undertaken by the Company.
Auditors and Auditor's Report
The Company auditors, Price Waterhouse, Chartered Accountants, Mumbai,
retire at the conclusion of the forthcoming Annual General Meeting.
The Company has received letter from them to the effect that their
re-appointment, if made, will be in accordance with the provisions of
Section 224(1-B) of the Companies Act, 1956. The observations of the
auditors in their report on accounts read with relevant notes are
self-explanatory.
Human Resources
If Sun Pharma enjoys a "can do" reputation today, the credit for this
goes solely to the team. If is the them that challenges high stretch
targets year after year to place the company forward on a high growth
trajectory. As a campaign slogan from one of the divisions succinctly
put it; "Together we can, together we will". The directors recognise
this commitment and wish to thank the team for their contribution.
Information as per Section 217(2A) of the Companies Act, 1956, read with
the Companies (particulars of Employees) Rules, 1975 as amended, is
available in the Registered office of the Company. As per the
provisions of Section 219(1)(b)(iv) of the said Act, the Report and
Accounts are being sent to all Shareholders of the company excluding
the statement of particulars of employees u/s 217(2A) of the said Act.
Any Shareholder interested in obtaining a coy of this statement may
write of the Company Secretary at the Registered Office of the Company.
Additional Information
The additional information pursuant to Section 217(1)(e) of the
Companies Act 1956 read with the Companies (Disclosure of Particulars
in the Report of the Board of Directors) Rules, 1988, is given in
Annexure and forms part of this report.
Acknowledgments
The Directors wish to thank the Company's bankers, financial
institutions, medical profession and business associates for their
continued support and valuable co-operation. The Directors also wish
to express their gratitude in investors for the faith that they have
reposed in the Company.
B. Consumption per unit of production
It is not feasible to maintain product category-wise energy consumption
data, since we manufacture a large range of formulations and bulk drugs
having different energy requirements.
C. Energy conservation measures
1. We have installed Filter Regulator Lubricator System in airline
wherever required and use only Non-lubricated Air Compressor instead of
using Separate Lubricated Air Compressor.
2. We use steam in place of electricity for heating of Demineralized
water, fluid bed dryers, for producing hot air systems for coating
department and for making starch paste.
3. Conversion of Meg Brine into Methanol Brine. It will reduce the
cost of Brine - Rs 4.00 lacs p.a
4. Regeneration frequency revised after 2.5 microsiems/cm instead of
1.0 microsiems/cm
5. Sanitation of Demineralized water system, frequency revised once in
week instead of every three days. If will help to reduce the cost of
Demineralized water.
TECHNOLOGY ABSORPTION
A. Research and Development
1. Specific areas in which R & D is carried out by the Company
Research & Development has continued to be an important part of growth
and steps were taken to further strengthen it by way of additional
investment during the year. Conventional research areas- speciality
bulk activites, peptides, different dosage forms accounted for about
80% of the investments. Long term research projects in the areas of
analog New Chemical Entity and Novel Drug Delivery System accounted for
the rest Several complex, multiple stage bulk activities were developed
and marketed during the year.
2. Benefits derived as a result of the above R & D
In an increasing competitive scenario, product identification and
designing a product with a differentiation are key factors that help
gain customer share of mind. The Company has for years maintained an
aggressive new product introduction schedule, and these contribute to a
large of the turnover. Such new and differentiated products that have
made Sun Pharmaceutical Industries Ltd. a rated company with its group
of specialists.
The Bulk active of such products is difficult to source. Access to
high quality process development skills in-house has helped cut costs
as well as time to reach the market. All the bulk drugs manufactured by
us are based on technology that is developed in-house at SPARC. Several
of these bulk actives are also sold to large companies abroad.
The Department of Science & Technology, Government of India has granted
approval to In-House Research and Development facility of the company
under section 35 (2AB) of the Income tax Act, 1961 and recognised our
commercialization of technology developed in-house by granting the
company approval under Rule 5(2) of the Income tax rules.
3. Future plan of action
In view of the likely upside should a project succeed in drug discovery
or novel delivery systems, the company is proposing an investments of
about Rs. 35 Crores over the next 2 years. Our team of SPARC. Baroda
is actively pursuing project based on New Chemical Entitles. This
effort will be multiplied several fold once the new research campus at
Chennai becomes operational and meets with success in its projects.
These efforts will complement investments in conventional dosage form
and bulk active synthesis required to maintain an active pipeline.
4. Expenditure on R & D Year ended Year ended
31st March, 2000 31st March, 2000
Rupees in Lacs Rupees in Lacs
(i) Capital 1015.37 449.50
(ii) Revenue /Deferred Revenue 985.03 528.49
(iii) Total 2000.40 977.99
(iv) Total R & D expenses as % of
total turnover. 4.20% 2.75%
(including expenditure of Rs.121.30 lacs incurred by a wholly owned
subsidiary company)
B. Technology Absorption, Adaptation and Innovation
1. Efforts in brief, made towards technology absorption, adaptation and
innovation
Efforts in R & D Centre on developing efficient manufacturing processes
for the products that the Company intends to launch in any of the
markets that it operates in. In bulk drugs, efficient method of
production for imported, difficult to source, costly raw materials are
developed and then commercialized.
2. Benefits derived as a result of the above efforts e.g. product
improvement,cost reduction, product development, import substitution.
a) The company was able to launch a few products at considerably
competitive prices. These products were imported at every high prices
by other companies.
b) Continuous process development of bulk drugs produced in house has
helped to control costs considerably.
c) Several new products including combination were launched for the
first time in the country based on the work done at SPARC.
3. The Company has not imported technology during the last 7 years
reckoned from the beginning of the financial year.
C. Foreign Exchange Earnings and Outgo Year ended Year ended
31st March, 2000 31st March, 1999
Earnings from Exports 5520.01 6196.61
Expenditure in Foreign Currency 4961.78 3875.88
Investment/Loan given in Foreign Currency 3020.56 1342.80
Mar 31, 1999
The Directors present the Seventh Annual Report and Audited Accounts
for the year ended 31st March, 1999.
(Rs. in Lacs)
Year ended Year ended
31st March 31st March
1999 1998
Total income 35946 28172
Profit before depreciation and tax 6966 6311
Depreciation 867 598
Tax 195 101
Profit after tax 5904 5612
Balance brought forward from previous year 6338 5222
Transferred from Amalgamating Company 29 88
Amount available for appropriation 12271 10922
Appropriation :
Dividend
Preference Shares 186
Equity Shares - Interim 925 1420 913
Equity Shares - Final 309
Corporate Dividend tax 154 146
Transfer to various Reserves 4007 3525
Surplus carried to Balance Sheet 6690 6338
Rate of dividend including interim 80% 60%
Book value per share (Rs.) 168 143
The current year's results includes figures of erstwhile Milmet
Laboratories Pvt. Ltd. (MLPL)
DIVIDEND
An interim Dividend at 10.5% p.a. on pro rata basis was paid to the
Preference Share Holders whose names stood on the Register of Members
on 15th March 1999. An Interim Equity Dividend at the rate of 60% on
the paid up equity share capital was paid to the Members whose names
stood on the Register of Members on 18th June 1999. The Directors are
pleased to recommend a final Equity Dividend at the rate of 20% on the
paid up equity share capital taking the total Equity Dividend to 80% on
the paid up equity share capital for the year ended 31st March 1999
(Previous year 60% On paid up Equity Share Capital). The shareholders
of erstwhile Milmet are entitled to the dividend for full year.
Consolidation, Operations and Future Outlook
Operations - Delivering value
Total income continued on an upward trend and has increased by 28% over
last year, and 282% from 1994-95. At the gross level- before taxes and
a one time charge associated with a write-off for our business in
Russia, net profit increased 5.2% over last year.
Since 1996, in addition to a robust domestic growth, the company has
used a series of acquisitions to build a presence in speciality areas
of its interest and formulate a structure appropriate for international
markets.
The year 1998-99 was marked by the merger of Milmet Laboratories Pvt.
Ltd and the acquisition of a range of brands from Natco.
Milmet, a speciality ophthalmology company was merged into Sun Pharma
with a swap ratio of four equity shares of Sun Pharma for every five
equity shares of Milmet. Milmet's ophthalmic brands, several of which
are difficult to make or have a technology advantage, enjoy a high
degree of confidence with practicing ophthalmologists and with reputed
eye institutions both within the country and in neighboring nations.
For a company of its size, Milmet has built up an enviable customer
loyalty and reputation for quality. After the merger, functions such as
purchase, operations and manufacturing have been integrated. Marketing
continues to add value to existing customer relationships and is taken
care of by same team which now functions as a division of Sun Pharma.
An aggressive new product introduction plan with products that offer a
technology or delivery system advantage have been put into place to
refurbish Milmet's portfolio.
A range of speciality brands, largely in the therapy areas of
respiratory, cardiology, gastroenterology were acquired from the
Hyderabad based Natco Pharma Ltd. Increasing pollution and lifestyle
changes are just two of the reasons we witness a leap in the incidence
of respiratory ailments. These products are marketed by a 320 people
strong Solares Pharma.
The company is now well placed for future growth- we now have a
domestic market presence in all the speciality therapy areas of our
interest. Our presence in some of the newer therapy areas is marginal,
but we believe that these areas offer a tremendous opportunity for
growth with the right product mix combining old products and new
therapies and marketing strategies. we are working to make this
penetration possible. An entry at this time ensures that we are best
placed to earn from tomorrow's opportunities.
The company was ranked 10th for the month in March 1999, up 8 places
from March last year. According to the latest ORG retail chemist audit
data for the month of September, Sun Pharma is placed at 9th rank and
continues to grow faster than the average for the pharma industry.
This means the company moved up by 25 places from 34th rank when we
went public in 1994. The company has 5 products within the list of the
top selling 300 pharma brands in the country, up from 2 brands last
year. It is heartening to note that on a much larger base, the company
continues to grow at higher than industry growth rate.
Customer rankings, a key indicator of the customer share of mind
continues to gather momentum in our key therapy areas of neurology,
psychiatry, cardiology, gastroenterology, and diabetology. Remarkable
progress was made in the area of orthopedics, a new therapy area for
the company. The challenge ahead of us is to successfully recreate the
template that we have used so far to create value and earn customer
franchise for prescribers in new speciality therapy areas that we have
entered post acquisition.
Market ranking
Our consistent performance continues to earn us recognition- we entered
the Business world list of India's most respected companies for the
first time, our ranking by market capitalization in the Business Today
'list of the most valuable 500 companies in India moved up 11 places
from 105th rank to 93rd rank, and Business Standard-KPMG survey** of
the top 100 value creators placed us at 47th rank overall on EVA, and
incidentally, 5th among listed pharma companies. We believe these ranks
validate the fact that our focused, speciality strategy delivers
fundamentally sound, lasting value. (*Business Today, Sept 7-21, 1999;
"Business Standard Strategist Quarterly Feb-April 1999)
Investments that build a Future presence
We are very optimistic about the potential of the US generics market
which we commenced investments in starting 1996, with a strategy for
the medium to long term. The US generic market was estimated at $6.5
bill in 1997. Generic drugs account for about 46% of the total
prescription sales, an increase of 9% from last year. (Generic Insight
1998, IMS)
The team at caraco Pharm Labs (caraco) continues to work at effecting a
turnaround - An important part of the turnaround strategy is to ensure
healthy pipeline that is regularly replenished with new molecules that
go off patent. A pipeline of select products for development have been
chosen on parameters such as manufacturing complexities or niche market
size. caraco currently has 6 products awaiting US FDA approval , and
approval for 2 of these is expected in the second half of 1999. caraco
also completed biostudies for 3 generics and these are pending
submission, out of 21 drugs at various stages of development. caraco
expects to launch 4 generic products by this year end, taking the total
number of products in its formulary to 13 drugs.
The Company also posted its fourth consecutive quarterly gross profit
for the quarter ended June 30, 1999. Sales for the second quarter were
up 64% over the second quarter in the previous year, to $ 804812 while
net loss at $ 1.7 mill was slightly higher (last year same quarter $
1.6 mill). The company continues to post a net loss due to costs that
relate to the long term health of the company - R&D expense, expenses
related to regulatory affairs and upgradation.
We continue to be enthusiastic about the opportunities that the North
American generic market offers.
New molecules, deftly channeled through an increasingly complex
developmental process and launched concurrently across high promise
markets drive growth in the pharma industry. These new products offer a
continued quality of life benefit, earn revenue streams and hold
customer share of mind across markets.
We have earnestly believed in, and acted on creating a sound research
base as a cornerstone of our long term plans. In areas where we foresee
a competitive advantage, we have integrated backward across process
development, bulk active and formulation manufacturing. Over the last
5 years we have invested over Rs.43 cr in research projects at about 4%
of turnover at our R & D center SPARC, in Baroda. This center is
recognized by the Department of Science and Technology, Government of
India.
We have been consistently adding both the equipment and capabilities to
enhance our technology base. In 1993 we started with a 30,000 sq. ft
lab area, this area now spans over 37,000 sq.ft. We started with
facilities for process chemistry, tissue culture, formulation
development, analytical support. With time, we've added facilities for
complex delivery systems such as aerosols and added a second analytical
lab. This year, we've added extensive facilities in the area of drug
discovery - facilities for toxicology, pharmacokinetics and new
chemical synthesis are now in place.
The research team at SPARC has been remarkably successful-it has
created the know how that has helped us introduce 70 new dosage forms
and 30 bulk actives over 5 years of sensible work.
Even across a single year, the amount of work done is staggering. Last
year we launched 24 new products. Several complex projects reached
market 3 peptide based products were launched for the first time in
India based on the development work done at our labs. Octride
(octreotide), a complex peptide drug to treat serious cancers
(specially metastatic carcinoid tumours) and to stop intestinal
bleeding, a common symptom with vasoactive intestinal peptide secreting
adenomas, has been well accepted by doctors. D Void (desmopressin),
another peptide, finds use in the treatment of urinary incontinence
both in childhood and postmenopausal cases, this product was formulated
as a new drug delivery system, a nasal spray. Lupride finds use in
prostrate cancer & fertility treatments. Encorate chrono, a long acting
form of the antiepileptic form vaiproic acid/sodium vaiproate was
another such developmental success. Lonazep Injections, used to treat
attacks of repeated uncontrolled epilepsy seizures which is a life
threatening condition, was introduced based on suggestions received
from neurologists. Octride, Lupride, Encorate chrono, Lonazep injection
were among drugs which have been introduced for the first time in the
country. A foray was made in the area of new area of movement disorders
with the dystonia drug Revocon (tetrabenazine), the company is one of
the few manufacturers worldwide of this bulk active. A total of 6 more
such complex bulk actives, including the heart failure treatment
carvedilol and the antihypertensive losartan were commercialized this
year and have met with orders from large customers across markets.
The returns that we have earned over the last 5 years justify several
fold the investments that we have made in SPARC. As much as 40% of our
current turnover is from products introduced in the last 5 years. But
reaching far beyond the hard numbers, are the intangible benefits- we
have built a sound framework from which we'll address tomorrow's
opportunities.
In the last 5 years, we have gradually moved up a learning scale for
both doing and managing research. It is now time for an energetic surge
of activity which will have a lasting multiplier effect.
With this background, we are glad to share with you our plans for
significantly enhancing our current research capability with the
addition of a new 30 acre research campus in Chennai, which will be
dedicated to drug discovery. We expect this campus to be fully
operational by mid-2000. This center will build on the successes at
SPARC and take the learning process several steps further.
A consistent Value system
At the close of 15 years of existence of the companys business, the
vitality and enthusiasm with which we started remains undiluted. As a
Company we have always been committed to integrity, respect for people,
a requirement for high performance and a need to continually innovate.
We reaffirm our faith in these values that Sun Pharma has stood for
over the years. We will relentlessly work to make products that
represent high quality for the customer, make the most of opportunities
that the environment offers and build an organization of lasting
strength and character.
International Markets
Total Exports are up 76%, largely on account of increased bulk active
sales. Dosage form sales was flat, impacted by a slowdown in the South
East Asian economies and continuing uncertainty in Russia. However,
backed by a turnaround in these economies, dosage form sales are now on
an uptrend. The Company now has 676 dossiers registered or under
registration. Bulk active sales are expected to increase sharply on
receipt of DMF approvals from the EU authorities which we expect by
early next year.
Finance
All the banks in consortium have given their highest rating to the
Company enabling it to source funds from the Banks at the finest rate
of interest. CRISIL continued to reaffirm their highest rating of
"P1+", to the Company's Commercial Paper Programme throughout the
year.
During the year under review, the Company raised by way of private
placement Rs. 50.17 crores by way of issue of 50,17,500 Cumulative Non
Convertible Redeemable Preference Shares of Rs. 100 each at a most
competitive coupon of 10.5% p.a.
No fresh Fixed Deposits were accepted by the Company during the year
under review, however, Fixed Deposits of Milmet Laboratories Pvt. Ltd.
on its merger with the Company were added during the year. All deposits
matured during the year under review were either repaid or renewed on
lime. One Fixed Deposit amounting to Rs. 0.05 Lacs has not been claimed
till 31st March, 1999.
Directors
Mr. Dilip S Shanghvi, the Managing Director of the Company was
appointed as the Chairman of the Company and thus re-designated as
Chairman & Managing Director of the Company in March 1999.
Mr. Sudhir V Valia's term of appointment as Whole-time Director expired
on 31st March, 1999. Mr. Sudhir V Valia has provided dedicated and
meritorious services towards the growth of the Company. The Directors
have reappointed him as Whole-time Director of the Company for a
further period of five years from 1st April, 1999, subject to the
approval of the shareholders of the Company.
Mr. Sailesh T Desai was appointed as an additional Director of the
Company, by the Board of Directors with effect from 25th March, 1999
and holds the office upto the ensuing Annual General Meeting. The
Company has received notice from a Member to propose his name for being
appointed as Director of the Company. Considering Mr. Desai's
considerable experience in the pharma industry, the Directors have
appointed him as Whole-time Director of the Company for a period of
five years from 1st April, 1999, subject to the approval of the
shareholders of the Company.
Mr. S.Mohanchand Dadha and Mr. Narendra N. Borkar retire by rotation
and being eligible, offer themselves for re-appointment.
Status of Y2K Compliance
The Company has ensured that all the hardware and software are Y2K
compliant. The Company has also taken all measures to meet any
contingency that may arise.
Auditors
There is a proposal to appoint M/s Price Waterhouse, Chartered
Accountants, Mumbai as auditors of the company in place of the retiring
auditors, M/s Price Waterhouse & Co., Chartered Accountants, Mumbai.
Human Resources
The team at Sun Pharma is responsible both for the reputation and
credibility that the company enjoys in the market and maintaining the
momentum of this consistent growth story. The directors recognise this
commitment and wish to thank the team for its contribution.
Additional Information pursuant to Section 217(1)(e) of the Companies Act 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988.
Consumption per unit of production
It is not feasible to maintain product category-wise energy consumption
data, since we manufacture a large range of formulations and bulk drugs
having different energy requirements.
Energy conservation measures
1. Installation of VAHP (vapour Absorption Heat Pump) in place of
reciprocating type chilling plant, which operates on steam and consumes
less electric power which amounts ro a saving of Rs.300000.00 p.a.
approximately.
2. Installation of auto-cota system for film coating of tablets instead
of conventional pans, which gives higher output in less time.
3. Use of Furnace Oil as fuel for boiler, instead of LDO.
4 D.M.Plant - Circulation through ion exchange column and carbon bed
doing 5 minutes in every four hours, instead of whole day circulation.
Savings per annum = 5.22 * 4.10 * 27 * 12 * (23.0hrs) = Rs 1.6 lacs
5. Revision of regeneration frequency which helps in reducing cost of
D.M. Water without affecting quality of water.
6. Provision of temperature controller for cooling tower water
resulting in reduced cost of cooling tower per ton of refrigeration.
Steam is used in place of electricity for heating D.M. water and
operating Fluid bed Dryer.
TECHNOLOGY ABSORPTION
A. Research and Development
1. Specific areas in which R&D is carried out by the Company
Research has been an important part of the growth at Sun Pharma, and
this year steps were taken to further enhance this capability with
investments in the area of drug discovery. A large number of products
have been launched both in India and abroad based on projects in the
areas of bulk drugs, tissue culture based products, peptides,
conventional as well as extended release dosage forms. The company has
also developed expertise in process synthesis of complex, multiple
stage bulk actives.
2. Benefits derived as a result of the above R&D
The company continued with its practice of being first to bring several
new products for the first time in the Indian market, and capture
market share. The company ranks high in terms of new products
contribution to dosage form turnover. Speciality bulk drugs continue
to be scaled up both at our Ahmednagar and Panoli plants based on the
technology developed by our teams at SPARC, several route improvements
continue to be made. The department of science and technology, govt.
of India, has recognized our successful commercialization of in-house
developed technology by granting The company approval under Rule 5(2)
of the Income tax rules. For several of the bulk actives it has
developed processes for, the company is the only other manufacturer
after the original innovator. This has helped it access several
closely held markets which it would otherwise have not been able to
enter at a sensible cost. Steps continue to be taken to improve
processes in order to reach cost and energy savings. 3 high tech
peptide
3. Future plan of action
The company commenced projects in the area of drug discovery with Rs.
30 crores earmarked for research milestones in three specific therapy
areas. In addition, research funds continue to be committed to
specific projects for a full new product pipeline. In the years since
1993, investments have been directed towards creating the
infrastructure and skillbase required for drug discovery research.
The company will now be focussing on these long term projects that can
earn revenues across multiple markets.
4. Expenditure on R&D Year ended 31st Year ended 31st
March, 1999 March, 1998
Rupees in Lacs Rupees in Lacs
(i) Capital 449.50 434.19
(ii) Revenue/Deferred Revenue 528.49 486.90
(iii) Total 977.99 921.09
(iv) Total R&D Expenses as % of total turnover. 2.75% 3.45%
B. Technology Absorption, Adaptation and innovation
1. Efforts in brief, made towards technology absorption, adaptation and
innovation
Efforts in R & D Centre on developing efficient manufacturing processes
for the products that the Company intends to launch in any of the
markets that it operates in. In bulk drugs, efficient method of
production for imported, difficult to source, costly raw materials are
developed and then commercialized.
2. Benefits derived as a result of the above efforts e.g. product
improvement, cost reduction, product development, import substitution
a) The company was able to launch a few products at considerably
competitive prices. These products were imported at very high prices
by other companies.
b) Continuous process development of bulk drugs produced in house has
helped to control costs considerably.
c) 3 high tech peptides were launched for the first time in the country
based on projects done at SPARC.
3. The company has not imported technology during the last 7 years
reckoned from the beginning of the financial year.
C. Foreign Exchange Earnings and Outgo
Year ended Year ended
31st March, 1999 31st March, 1998
Rupees in Lacs Rupees in Lacs
Earnings from Exports 6196.61 3572.22
Expenditure in Foreign Currency 3875.88 3514.97
Investment in Foreign Currency 3064.16 175.50
Mar 31, 1998
It gives us pleasure to present the Sixth Annual Report and Audited
Accounts for the year ended 31st March, 1998. The current year's
results include figures of erstwhile Tamilnadu Dadha Pharmaceuticals
Limited (TDPL) which has been merged with your Company effective from
1st April, 1997.
Financial Results (Rs. in lakhs)
Year ended Year ended
31st March, 1998 31st March, 1997
Total Income 28172 19090
Profit before depreciation and tax 6310 5456
Depreciation 598 389
Tax 100 160
Profit after tax 5612 4907
Balance brought forward from previous year 5222 2833
Transferred from Amalgamating Company 88 -
Amount available for appropriation 10922 7740
Appropriation :
Proposed Dividend 913 518
Corporate Dividend tax 146 -
Transfer to various Reserves 3525 2000
Surplus carried to Balance Sheet 6338 5222
Rate of Proposed dividend 60% 35%
Earning per share (Rs.) 36.90 33.16
Book value per share (Rs.) 146 116
Dividend
Your Directors are pleased to recommend a dividend at the rate of 60%
for the year ended 31st March, 1998 (Previous year 35%) on the paid up
equity share capital. The shareholders of erstwhile TDPL are entitled
for the dividend for full year.
Consolidation, Operations and Future outlook
We are writing to you at the end of an important year - a year marked
by TDPL merger with Sun Pharma and subsequent consolidation. Legal
formalities related to the merger were completed in an incredibly short
span of seven months. The first tranche of investments in Caraco was
also completed this year. Each of these companies contribute major
strengths to our strategy of competing in key markets worldover as a
speciality pharmaceutical company.
Your Company was ranked 15th in February, 1998 in terms of Indian
prescription retail sales , up 9 places from January, 1997. In the
metros, which continue to be a thrust area in view of its large
speciality prescriber base, we are ranked 6th with a market share of
2.6% (ORG Retail Chemist Audit).
We continue to be the company of choice for key customers - we are
ranked first with psychiatrists and neurologists; and fifth with
cardiologists and gastroenterologists (C MARC July - Oct 1997).
A special metro development programme to enhance our relationships with
key customer groups is a priority area for your company this year.
The most important event this year was the merger of the Chennai based
TDPL with Sun Pharma.
TDPL was merged at a swap ratio of 4:1 effective 1st April, 1997 and
brings to Sun Pharma extensive product strengths across the areas of
gynaecology, fertility, oncology, pain management and anaesthetics. We
are now working towards becoming the company of choice for specialists
and consultants in the new therapeutic areas.
With the merger, marketing at TDPL has been given a new impetus with
speciality based marketing, intensive field force training and a fresh
marketing approach.
TDPL markets products across two divisions - TDPL and Globus, which
have now been integrated into Sun Pharma. 4 new products were launched
in these divisions in order to offer a comprehensive product basket.
Several more products are slated for launch this year.
TDPL enjoys considerable strengths in process development and
speciality bulk manufacture. Drug Master Files have been submitted for
the US and Europe for key high value speciality drugs. Processes for
multistage bulk drugs like Fentanyl, Lacidipine, Gabapentin and
Nicorandil have been scaled up; ability to source these bulk actives
in-house enhances our speed to market.
Acquisitions bring with them their own set of learning. Product ranges
have to be rationalised, manufacturing synchronised, marketing
streamlined and focused, wastage cut and overheads pared-but more than
this, synergy has to be created between disparate philosophies. Which
is why the merger of TDPL and Sun Pharma is placed at a distinct
advantage-it has the benefit of a shared business approach and a common
philosophy.
Your company expects to continue to grow at faster than industry growth
rate with growth accruing from all the speciality areas it operates in.
Update on Caraco
Last year, we had shared with you the urgent need to reach a critical
mass and to equip ourselves to compete effectively in large
international markets. These were the reasons we had complemented
internal growth with acquisitions. Now we should like to briefly touch
upon progress at Caraco.
At Caraco, the first 8 months of the year 1997 were spent in completing
definitive agreements with Sun Pharma as well as other large investors.
Achievements in the subsequent four months reinforces our confidence in
Caraco. Caraco received two ANDAs last year - for Paramomycin (an
antiinfective that finds use in patients with AIDS and with
immuno-deficiency) as well as for Metaprolol tartarate (an
antihypertensive). During 1997, Caraco was restructured to stress on
the areas that are expected to be drivers of growth : new product
development & introduction, manufacturing and support services (quality
control/assurance, regulatory affairs). A lean but experienced
management structure appropriate to the demands of the U.S. generic
industry is now in place. Efforts are being made to position Caraco as
the preferred source of generics for large drug wholesalers.
With the U.S. generic market currently estimated at U.S.$6 billion and
several of the world's largest selling products going off patent,
Caraco foresees a significant opportunity in the generics business over
the next few years. Our partnership with Caraco will allow us to
participate in this growth.
We would like to highlight some of the achievements of the past year
* Total exports (direct exports as well as through Sun Pharma Exports)
crossed Rs. 50 cr. Bulk drugs exports (manufactured in house and at the
GLOL plant) primarily to large end users in Europe and Latin America
accounted for Rs. 21 cr. (42% of export turnover). Formulations
exports, at Rs. 29 cr., were buffered by the fact that we market
prescription brands for chronic disease areas and have a large trade
sale component. This performance was incredible in view of the slow
down in South East Asia and the economic uncertainty in Russia.
* 18 new products were launched across the company's six focused
marketing divisions. 4 more line extensions including drug delivery
systems were also launched.
* Two of your company's products continued to move up the list of the
top ranking 250 products in the country- Monotrate moved 15 places to
113th rank, Alzolam moved up 34 places to 182nd rank. Famocid, which
had featured in the top 250 ranking last year, was brought under price
control and consequently, dropped out of this list this year. (ORG
Retail Chemist Audit; March 1997 and February 1998).
* In September 1997, Business Today rated Sun Pharma amongst the most
profitable pharma companies. It also ranked us 121st on market
capitalisation up from 140th in the previous year.
* Good quality calls for an encore. Our Vapi plant was awarded a
certificate of merit for quality excellence after having won the IDMA
trophy for quality last year.
Research
At Sun Pharma, we have believed in research as imperative for growth.
We invested 4.21% of our turnover in research, with Rs. 11.23 cr.
invested this year.
At SPARC, our research centre in Vadodara, progress continues to be
made in the areas of process development, peptides, conventional and
novel drug delivery systems. Key among bulk drugs that were
commercialised were Nicorandil and Lacidipine. As we commence work on
novel delivery systems and development stage projects we expect
investments in research to increase over the next few years.
Projects
Project team successfully completed several assignments including :
Corporate HQ, Mumbai; the factory and utilities at the new formulations
unit, product processing area in Plant 1A Ahmednagar; a solvent
recovery plant, an intermediate tank, a tank farm, a flameproof
hydrogenation shed in Panoli.
Finance
All the banks in consortium have given their highest rating to your
Company enabling it to source funds from the Banks at the finest rate
of interest. CRISIL continued to reaffirm their highest rating of
"P1 +", to your Company's Commercial Paper Programme throughout
the year.
Fixed deposits accepted by your Company were within the prescribed
limits. All deposits matured during the year under review were either
repaid or renewed on time. Three Fixed Deposits amounting to Rs.
20,000/- have not been claimed as on 31.03.98. The Company has been
regularly sending letters to the fixed deposit holders.
Directors
Mr. Dilip S. Shanghvi's term of appointment as Managing Director
expired on 31st March, 1998. Under the leadership of Mr. Shanghvi, the
Company attained all round growth in its business. Your Directors have
appointed him as Managing Director of the Company for a period of five
years from 1st April, 1998, subject to the approval of the shareholders
of the Company. Mr. Shanghvi also retires by rotation and being
eligible, offers himself for reappointment.
Mr. Shantilal N. Shanghvi's term of appointment as Wholetime Director
expired on 31st March, 1998. In recognition of his continuing
dedicated and meritorious services to the Company, Mr. Shanghvi has
been appointed as Wholetime Director of the Company for a period of
five years from 1st April, 1998, subject to the approval of the
shareholders of the Company.
Mr. Sudhir V. Valia retires by rotation and being eligible, offers
himself for reappointment.
Mr. S. Mohanchand Dadha was appointed as an additional Director of the
Company, by the Board of Directors with effect from 29th May, 1997 and
was appointed as Director of the Company at Annual General Meeting held
on 16th July, 1997. Considering Mr. Dadha's considerable experience in
pharma industry, your Directors have appointed him as Wholetime
Director of the Company for a period of two years from 1st February,
1998, subject to the approval of the shareholders of the Company.
Auditors
There is a proposal to appoint Messrs. Price Waterhouse & Co.,
Chartered Accountants, Mumbai as Auditors of the Company in place of
the retiring Auditors Messrs. Valia & Timbadia, Chartered Accountants,
Mumbai and Messrs. Pravin Doshi & Co., Chartered Accountants, Vadodara.
The retiring auditors have informed the Company that they do not wish
to seek re-appointment as Auditors of the Company at the forthcoming
Annual General Meeting.
The Board of Directors would like to thank Messrs. Valia & Timbadia,
Chartered Accountants and Messrs. Pravin Doshi & Co., Chartered
Accountants the outgoing Auditors, for their services rendered to the
Company during their long association as Statutory Auditors.
Human Resources
The team at Sun Pharma is responsible both for the reputation and
credibility that the company enjoys in the market and the consistent
growth story. Your directors recognise this commitment and wish to
thank the team for its contribution.
As required by the provisions of Section 217(2A) of the Companies Act,
1956, read with the Companies (Particulars of Employees) Rules, 1975,
as amended, the names and other particulars of the employees are set
out in the Annexure (2) to the Directors' Report.
Additional Information
The additional information pursuant to Section 217(1)(e) of the
Companies (Disclosure of Particulars in the Report of the Board of
Directors) Rules, 1988, is given in Annexure (1) and forms part of this
report.
Acknowledgements
Your Directors wish to thank the Company's bankers, financial
institutions, the medical profession and business associates for their
continued support and valuable co-operation. The Directors also wish
to express their gratitude to investors for the faith that they have
reposed in the Company.
B. Consummation per unit of production
It is not feasible to maintain product category-wise energy consumption
data, since we manufacture a large range of formulations and bulk drugs
that have different energy requirements.
C. Energy conservation measures
1. Replaced 100 HP cooling Tower pumps by 50 HP pumps.
2. Chilled water circulation pumps of 40 HP & 15 HP replaced by 15 HP &
5 HP pumps.
3. Compressed air 7.5 HP replaced by 5.0 HP
4. 160 MVL lighting bulb replaced by 11 watt CFL bulbs.
5. Steam is used in place of electricity for heating D. M. water and
operating Fluid bed Dryer.
6. Automatic Power control panel is used for getting correct power
factor of electricity.
7. Installed isolating valve in steam line and used 400 Kg. boiler for
producing.
steam instead of 600 Kg. boiler.
TECHNOLOGY ABSORPTION
A. Research and Development
1. Specific areas in which R & D is being carried out by the Company :
Sun Pharma continues to work towards establishing a strong base in
research with multiple projects in the key areas of bulk drugs, tissue
culture based products, small human use peptides and formulations
across conventional dosages like tablets, capsules, injectables as well
as controlled release/site specific drug delivery systems.
Technologies were developed for high tech products involving multistage
synthesis.
7 2. Benefits derived as a result of the above R & D :
Speciality bulk drug have been scaled up both at our Ahmednagar and
Panoli plants using the technology that has been developed at SPARC.
Several route improvements were also made in the processes developed
earlier with significant cost and energy saving. Sun Pharma continues
to be the company with strong new product introduction based on the
work done at SPARC. The Department of Science and Technology,
Government of India has recognised our successful commercialisation of
inhouse developed technology by granting your company approval under
Rule 5 (2) of the Income Tax Rules.
3. Future plan of action
Your Company continues to commit funding to specific projects in these
research areas in order to ensure a full new product pipeline.
4. Expenditure on R & D
Year ended Year ended
31st March, 1998 31st March, 1997
(Rs. in lakhs) (Rs. in lakhs)
(i) Capital 353.64 448.35
(ii) Revenue/Deferred Revenue 769.68 251.54
(iii) Total 1,123.32 699.89
(iv) Total R&D exp. as % of total
turnover 4.21% 4.13%
B. Technology Absorption, Adaptation and Innovation
1. Efforts in brief, made towards technology absorption, adaptation and
innovation :
Efforts in R & D Centre on developing efficient manufacturing processes
for the products that the Company intends to launch in any of the
markets that it operates in. In bulk drugs, efficient methods of
production for imported, difficult to source, costly raw materials are
developed and then commercialised.
2. Benefits derived as a result of the above efforts e. g. products
improvement, cost reduction, product development, import substitution :
Your Company was able to launch a few products at considerably
competitive prices, these products were imported at very high prices by
other companies. Continuous process development of bulk drugs produced
in house has helped to control costs considerably.
3. Your company has not imported technology during the last 6 years
reckoned from the beginning of the financial year.
C. Foreign Exchange Earnings and Outgo
Year ended Year ended
31st March, 1998 31st March, 1997
(Rs. in lakhs) (Rs. in lakhs)
Earning from Export 3,572.22 870.67
Expenditure in foreign Currency 3,514.97 1,375.54
Investment in foreign Currency 1,869.99 175.50
Mar 31, 1997
At the close of yet another satisfying year, your Directors have
pleasure in presenting their Fifth Annual Report and Audited Accounts
for the year ended 31st March, 1997.
Financial Results (Rs. in lakhs)
Year ended Year ended
31st March, 1997 31st March, 1996
Actual Projected Actual
Total Income 19090 20447 13107
Profit before depreciation and
tax 5456 4612 3978
Depreciation 389 278 280
Tax 160 551 NIL
Profit after tax 4907 3783 3698
Balance brought forward
from previous year 2832 - 1504
Amount available for
appropriation 7739 - 5202
Appropriation:
Proposed Dividend 518 - 370
Transfer to General Reserve 2000 - 2000
surplus carried to Balance
Sheet 5221 - 2832
Rate of Proposed Dividend 35% 20% 25%
Earning per share (Rs.) 33.16 25.58 24.98
Book value (Rs.) 116 86.23 76.24
Dividend
Your Directors are pleased to recommend a dividend (subject to the
deduction of tax at source, if applicable) at the rate of 35% for the
year ended 31st March, 1997 (previous year 25%) on the paid up equity
share capital.
Operations and future outlook
1996 was a year with scope for a great deal of learning as we were
exposed to some activities for the very first time - activities related
to acquisitions, for instance. This year was an important year in more
ways than one.
In a momentous start to our plans for international markets, your
Company actively pursued the route of acquisitions, for the first time
in its history. In a crucial move, we acquired significant stakes in
Gujarat Lyka Organics Ltd. and M J Pharmaceuticals Ltd. and initiated
investments in the Detroit based Caraco Pharmaceutical Laboratories
Ltd. Each of these elements forms a decisive part of our long term
strategy so that we emerge as a much stronger player in the
international marketplace.
Your Company has also put into practice several operative decisions to
ensure it continues to remain one of the fastest growing companies in
the domestic pharma industry. The total income increase (up by 46% to
Rs. 19,090 lakhs) and PBT increase (up by 37% to Rs. 5,067 lakhs) this
year, is a valid proof of our faith in our strategy.
We would like to share with you some of the highlights of the past
year:
* Total exports of Rs. 30 crores (Our direct exports as well as through
Sun Pharma Exports) accounted for 20% of Pharma turnover. These numbers
vouch for increasing acceptance for your Company's brands in important
international markets. Most of your Company's brands are high value
added speciality formulations in niche therapy areas. Their acceptance
by the medical profession points to our high quality standards. Our
speciality bulk drugs have now started moving. We are now beginning to
receive approvals and orders from end users - large manufacturers who
have very stringent acceptance levels but large volume requirements.
* World class quality can only originate from world class plants. This
year, our Vapi plant was awarded the prestigious IDMA trophy for
quality excellence, our Silvassa plant was awarded a certificate of
merit. This prestigious recognition supports our strategy of world
class quality practices and infrastructure to emerge as an important
player in international markets.
* We succeed because we add value to our customer franchise with
products that satisfy unmet needs. During the past year, your Company
continued to add to this strength despite increased competition on
several fronts. At the close of the year, we continue to be the top
ranking company in psychiatry and neurology, ranked fourth with
cardiologists, and now have moved up to third position with
gastroenterologists. In the chronic therapy area of diabetology in
spite of only a year long, two brand presence, we have made a strong
impact and are ranked 6th (C MARC July-October, 1996).
* One more of your Company's brands entered the list of the top selling
250 products in the country. We now have three brands within the top
250 Monotrate at 131st rank, Alzolam at 226th rank, Famocid at 236th
rank. (MAT ranks, ORG Retail Chemist Audit, January 1997)
* Fast new product introductions and a rich new product pipeline based on
a hands-on assessment of unmet therapy needs continues to fuel your
Company's marketing strategy. A brand that reaches the market first has
unmistakable advantages - acceptance and quick customer adaptation.
This year, a total of 12 new brands were introduced. With two products
we reached the market first. With six products we were among the first
three companies to launch. Anti-infectives, a relatively new
therapeutic group for your Company is an important thrust area.
Significant among the new products we launched this year is Sparlox
(Sparfloxacin), with 4 months sales over Rs. 200 lakhs. 19 new
products, including line extensions are ready for launch. 13 of these
products belong to new therapeutic segments and will give us a forceful
entry strategy with an as yet untapped customer base.
* As the nation's commercial capital, Mumbai offers operational
advantages. To sustain this pace of growth, it is vital that we assess
the best quality human resources. Only then can we maximize business
opportunities to our advantage. These are the reasons why we have
decided to shift most corporate functions to Mumbai. We expect to start
operating from new office premises in Andheri (E), Mumbai shortly.
Research
We continue to focus on R & D led innovation for a headstart in the
market. Rs.700 lakhs were invested in research this year, taking the
total investment over the last three years to Rs. 1471 lakhs.
Achievements and headway with projects in difficult areas marked the
progress at SPARC. 12 new formulations were developed and launched.
Several of these were registered in international markets also. Work on
the new delivery system for a cardiac medication is progressing on
schedule. The organic synthesis group helped commercialize 4 new bulk
drugs key among which were Tramadol and Ornidazole. 2 processes are
ready for scale up after this group fine tunes the manufacturing
processes. The group working on biologicals has reached important
milestones in tissue culture and peptides projects, and we hope to
share the news about their scale ups shortly.
Growth through Synergies
In the past, your Company has followed the route of organic growth,
with new markets, new products/therapy areas, more intensive coverage
responsible for our growth year after year. This year we also actively
pursued the route of growth through acquisitions. Each of these
acquisitions brings strengths and new advantages to your Company. We
are now equipped to compete as a much stronger player in the
international marketplace. The Board would now like to share the
advantages that your Company expects to accomplish through these
acquisitions.
In our last report to you, we had sought your clearance for the
acquisition of a stake in Caraco Pharmaceutical Laboratories Ltd. We
are glad to report that this proposal has finally received the
necessary governmental clearances.
The North American generics market is marked by tough competition and
high price sensitivity last year. Product identification, speed to
market, consistent quality and delivery have now emerged as key factors
for success. We believe that on completion, Caraco will offer an
effective and well timed entry into this high potential market.
In November '96, we announced acquisition of a controlling stake in M J
Pharmaceuticals Ltd. In accordance with the SEBI guidelines on
takeovers, an open offer to the shareholders of M J Pharma was
subsequently completed. Only about 1% of equity of M J Pharma was sold
to us through the open offer which is indicative of the investor
confidence in the new management and faith in our strategy for a
turnaround.
M J Pharma is perhaps the only Indian Company to hold both U S FDA and
U K MCA approvals for formulations for its manufacturing site in Halol.
M J Pharma also owns one of the best facilities for the manufacture of
insulin in India, with products made for several multinationals as well
as neighbouring Asian markets. Projects for modifications and
refurbishing of the plant will shortly begin - an essential
prerequisite for international regulatory approvals.
With key approvals already in place, this plant gives us a ready-made
entry strategy for important international markets across Europe,
Africa and North America. Broadbasing of its international business
both directly and as a contract manufacturer, enhancing regulatory
clearances from other key markets, quick new product introduction of
varied dosage forms to utilize capacities across all production lines
are some of the avenues that we are working on, as part of our
turnaround strategy.
Internationally, the market for cephalosporin bulk accounts for over
$9.5 billion. Our alliance with the Ankleshwar based Gujarat Lyka
Organics Ltd. gives us a considerable presence in this market with
several off patent bulks and the technology for important third
generation cephalosporins. Documentation for FDA submission is
underway, an US FDA clearance will allow us to source the bulk
cephalosporins requirements for both Sun Pharma and the M J Pharma
plant. Of course, a captive source offers distinct time, cost and
quality advantages. After clearance of our draft offer document by
SEBI, an offer will be made to the shareholders of GLOL.
Marketing of High Value Biologicals
In order to add marketing muscle to our critical care division, three
biological products are to be sourced from the Korean company, Korea
Green Cross Corporation. These are high value, high technology products
that have an essential or "the only alternative" use. We expect these
products to reach sales of over Rs. 1,500 lakhs over the next two years
and establish Sun Pharma as one of the leaders in this fast growing
segment.
Projects
In August 1996, just two months after taking possession from its
previous owners, Knoll Pharma, we started commercial production of
speciality bulk drugs in the Ahmednagar plant. This plant required
repairs, extensive upgradation and modernization after being shut down
for close to a year. We were able to finish the required work in a
short time, working round the clock. The processes for several bulk
drugs have now been successfully transferred to production by the
organic synthesis team at SPARC. Construction and commissioning of an
effluent treatment plant to enhance safety and environmental practices
to internationally accepted norms has been completed.
Finance
Your Company continued to exhibit sound financial health despite a
general slowing down of the industry. A prudent fund management policy
earned your Company handsome returns, and it could sustain sizable
capital expenditure without recourse to any fund raising. Your Company
has fully deployed the proceeds of the public issue for the objects
stated in the prospectus dated 5th September, 1994.
All the banks in consortium have given a high rating to your Company,
which helped your Company access funds at best lending rate.
CRISIL has rated your Company's commercial paper program as P1 +,
indicating a very strong degree of safety with regard to the timely
payment of interest and principal. Your Company was also rated FAA for
fixed deposits, indicating a high degree of safety with regard to
timely payment of interest and principal. This is the second highest
rating that has been awarded, among all companies in the pharma
industry at this point of time.
B. Consumption per unit of production
It is not feasible to maintain product category-wise energy consumption
data, since there is a large variety of products with different energy
intensities.
C. Energy conservation measures
1. Installed 7.5 hp air compressor instead of 30 hp compressor.
2. Replacement of higher capacity power motor by lower capacity power
motors.
3. Addition of furnace fuel oil additive to improve combustion
efficiency.
4. Running of 2 nos. surface aerators of ETP, each of 10 hp is stopped
by alternate running of second aerator.
5. Reducing boiler steam pressure from 10 kg/sq.cm. to 5 kg/sq.cm.
6. Installation of Auto ON/OFF system for cooling tower fan of 10 hpf
street lights.
7. Introduction of single loop of secondary pump in place of primary
pump for chilling plant.
TECHNOLOGY ABSORPTION
A. Research and Development
1. Specific areas in which R & D is being carried out by the Company :
Sun Pharma continues to work towards establishing a strong base in
research with multiple projects in the key areas of bulk drugs, tissue
culture based products, small human use peptides and formulations
across conventional dosages like tablets, capsules, injectables as well
as controlled release/site specific drug delivery systems.
2. Benefits derived as a result of the above R & D:
Speciality bulk drugs have been scaled up both at our Ahmednagar and
Panoli plants using the technology that has been developed at SPARC.
Several route improvements were also made in the processes developed
earlier with significant cost and energy savings. Sun Pharma continues
to be the company with strong new product introduction based on the
work done at SPARC.
3. Future plan of action:
Your Company continues to commit funding to specific projects in these
research areas in order to ensure a full new product pipeline.
4. Expenditure on R & D:
Year ended Year ended
31st March, 1997 31st March, 1996
Rs. in lakhs Rs. in lakhs
(i) Capital 448.35 254.73
(ii) Revenue/Deferred Revenue 251.54 175.71
(iii) Total 699.89 430.44
(iv) Total R & D exp. as %
of total turnover 4.13% 3.85%
B. Technology Absorption, Adaptation and Innovation
1. Efforts in brief, made towards technology absorption, adaptation and
innovation:
Efforts in R & D Centre on developing efficient manufacturing processes
for the products that the Company intends to launch in any of the
markets that it operates in. In bulk drugs, efficient methods of
production for imported, difficult to source, costly raw materials are
developed and then commercialized.
2. Benefits derived as a result of the above efforts e.g. product
improvement, cost reduction, product development, import substitution:
Your Company was able to launch a few products at considerably
competitive prices, these products were imported at very high prices by
other companies.
Continuous process development of bulk drugs produced in house has
helped control costs considerably.
3. Your Company has not imported technology during the last 5 years
reckoned from the beginning of the financial year. Applications were
filed with Indian Regulatory authorities for patents of five bulk drugs
and four formulation products.
C. Foreign Exchange Earnings and Outgo
Year ended Year ended
31st March, 1997 31st March, 1996
Rs. in lakhs Rs. in lakhs
Earning from export
during the period 870.67 570.77
Expenditure in Foreign
Currency 1375.54 1083.70
Mar 31, 1996
The Directors have pleasure in presenting their 4th Annual Report and Audited Accounts for the year ended 31st March, 1996.
Dividend
The Directors are pleased to recommend a dividend (subject to deduction of tax at source) at the rate of 25% for the year ended 31st March, 1996 (previous year - 20% on pro rata basis) on the paid-up equity share capital.
Operations
The Directors are glad to report that the Company continues to be one of the fastest growing pharma companies with a growth rate twice the average for the Indian pharma industry.
Some of the highlights of the year are listed below:
* Total income of the Company increased by 40% and net profit went up by over 70% as compared to the previous year.
* Market ranking moved up to 28th rank in March 1996 from 34th rank in March 1995 as per the ORG Retail Chemist Audit.
* The Company's performance reaffirms confidence in its focused marketing strategy, with a leadership position in the therapeutic segments that it competes in. We continue to be the top ranking company in psychiatry and neurology, ranked second in cardiology and 4th in gastroenterology segments (source : C MARC Survey, July-Oct. 1995). This reflects the Company's strong franchise and the confidence
that the medical profession has reposed in the Company.
* All 6 brand leaders continued to consolidate market shares. Monotrate as well as Alzolam - two speciality products, continued their march up in the list of best selling 250 products in the country.
* A good start was made with products for large volume segments, with 2 product successes. Carbicef became the fourth most prescribed oral cephalosporin brand in a highly competitive market. Diaba shows signs of growing into a megabrand in the years ahead, with current sales over
Rs.2.5 crores. Several innovative formulations that address currently unmet patient needs are in the development pipeline at SPARC.
* The existing product portfolio in the Synergy division was strengthened with formulations that offer benefits of patient convenience and compliance : Clofranil SR, Syndopa CR.
Research and Development
The Company continues its pursuit of leadership through focused research. Select time bound projects in the areas of process development, tissue culture, peptides and formulations underway at the R & D centre, SPARC, are expected to help the Company meet its goals. In the short term, the focus is on new combinations, formulations and
speciality bulk drugs. In the medium term, novel drug delivery systems are expected to start generating revenues. In the long term, we expect drug discovery to be a key growth driver.
This year, a new analytical wing was added to the research centre, SPARC, and additional instrumentation installed. With key instrumentation in place, we are now equipped to initiate projects in drug discovery. Additional facilities for aerosols, sprays and patches were installed, and products based on this technology are expected to be
introduced over the next two years.
Exports
Exports continue to be a high thrust area. This year, exports of the Company's products crossed Rs. 2747 lacs, an increase of 230% as compared to Rs.829 lacs during the previous year.
Projects
The Company completed expansion at the formulation units at Vapi and Silvassa. The first phase of the expansion at Panoli has been completed and the Company is evaluating further expansion with reference to the MOU signed with Knoll Pharma for acquisition of their Ahmednagar unit. The project for the new office building has been temporarily deferred. The Company, in the meantime, has taken approx.8500 sq.ft. of office space on rent in the adjacent building for meeting immediate needs and for administrative convenience.
Future Outlook
The Company shall continue to consolidate market share in the domestic market, and to make its presence felt in the international markets with proven technical strengths and value added marketing, we are on the threshold of a high growth phase. The Company entered into a Memorandum of Understanding with Knoll Pharmaceutical Ltd. to purchase
their bulk drug facility at Ahmednagar in Maharashtra. Acquisition of this plant allows the Company to enter into interesting market segments in a much lesser time than that required to build a plant from the greenfield stage. The Company expects to make two products that offer high value addition for an entry in high growth therapeutic segments
in major international markets. This technically complex range is close to patent expiry.
Directors
Mr. Jayant S. Sanghvi and Mr. Sudhir V. Valia retire by rotation.
Mr. Jayant S. Sanghvi has expressed his unwillingness to be reappointed. Mr. Sudhir V. Valia, being eligible, offers himself for reappointment.
Auditors
The Company's Auditors, M/s. Valia & Timbadia, and M/s.Pravin Doshi & Company, retire at the conclusion of the forthcoming Annual General Meeting and have offered themselves for reappointment.
Human Resources
The team at Sun Pharma is its critical strength and gives the Company a definite competitive advantage. It is the team that was responsible for this growth; and the Directors wish to place on record their appreciation of our team's valuable contribution.
Particulars of Employees
As required by the provisions of Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the Annexure to the Directors' Report. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to all the shareholders of the Company excluding the aforesaid information. Any shareholder interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.
Additional Information
The additional information pursuant to Section 217(1)(e) of the Company's (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is given in Annexure (1) and forms part of this Report.
Acknowledgements
The Directors wish to thank the Company's bankers, financial institutions, the medical profession, and business associates for their continued support and valuable cooperation. The Directors also wish to express their gratitude to investors for the continued faith reposed by them in the Company.
B. Consumption per unit of production
It is not feasible to maintain product category-wise energy
consumption data, since there is a large variety of
products with different energy intensities.
C. Energy Conservation measures
1. Installation of Busch high vacuum pump for vacuum
service instead of Steam ejectors.
2. Operation of cooling tower on 1 pump instead of 2 pumps.
3. Stopping of Primary circulation pumps of chilled water
and chilled brine systems.
4. Reducing the boiler steam pressure from 17.5 kg/sq.cm.
to 12.0 kg/sq.cm.
5. Meeting requirements of hot water by solar heating system.
6. Use of steam for heating in AHU.
TECHNOLOGY ABSORPTION
A. Research and Development
1. Specific areas in which R & D is being carried out by the Company:
SPARC is carrying out extensive research in the process development of bulk drugs and the development of tissue culture based products, small peptides and formulations.
2. Benefits derived as a result of the above R & D:
Process development for a number of bulk drugs has been completed and the technology has been transferred to our bulk drug plant. Similarly, new formulations have been launched in the market adopting the technology developed at SPARC.
3. Future Plan of Action:
The Company intends to continue its thrust in select research areas.
4. Expenditure on R & D: Year ended Year ended
31st March, 1996 31st March, 1995
Rs. in Lacs Rs. in Lacs
(i) Capital 254.73 242.22
(ii) Revenue/Deferred Revenue 175.71 98.29
(iii) Total 430.44 340.51
(iv) Total R & D exp. as %
of total turnover 3.85% 3.92%
B. Technology Absorption, Adaptation and Innovation
1. Efforts in brief, made towards technology absorption,
adaptation and innovation:
Continuous Research & Development of the products and the processes with the main objective of import substitution and cost reduction in an inflationary environment is carried out.
2. Benefits derived as a result of the above efforts e.g. product improvement, cost reduction, product development, import substitution etc.:
Cost of some formulations was contained by way of substitution of imported raw materials and changes in packaging.
3. The Company has not imported technology (during the last
5 years reckoned from the beginning of the financial year).
4. Four patent applications were filed relating to new bulk
drug intermediates, new formulations and processes.
C. Foreign Exchange Earnings and Outgo
Year ended Year ended
31st March, 1996 31st March, 1995
Rs. in Lacs Rs. in Lacs
Earning from export during
the period 570.77 424.06
Expenditure in Foreign Currency 1083.70 700.35
Mar 31, 1995
Your Directors have pleasure in presenting their 3rd Annual
Report and Audited Accounts for the year ended 31st March,
1995.
Dividend
Your Directors are pleased to recommend a dividend (subject
to deduction of tax at source) at the rate of 20% for the
year ended 31st March, 1995 (previous year-Nil) on prorata
basis on the paid up equity share capital.
Operations
The year under review was an eventful one for your Company.
The major achievements of the year are listed below:
(i) The bulk drug plant at Panoli, which was commissioned
in March, 1994, became fully operational during the year.
(ii) The second formulation plant of the Company at
Silvassa was commissioned in April, 1994 and became
operational within a span of two months. All equipment and
systems are performing satisfactorily at their rated
capacity.
(iii) Total Income of your Company increased by 77% and net
profit went up by 188% over the previous year.
(iv) Your Company's ranking went up from 34th in January,
1994 to 27th in March, 1995, as per the latest available
ORG Retail Chemist Audit Report. All products, including
six brand leaders, continued to consolidate market share
and ensure leadership in select therapeutic areas.
Monotrate and Alzolam continued to move up several
positions in the list of leading 250 pharma products in the
country.
(v) Export of Pharmaceutical products manufactured by your
Company crossed Rs.829 Lakhs during the year with the
combined efforts of your Company and Sun Pharma Exports.
This indicates a satisfactory growth of 142% over the
previous year.
Public Issue
In October, 1994, your Company made its maiden public issue
of 37,00,300 Equity shares of Rs.10 each at a premium of
Rs.140/- aggregating Rs.55.50 crores. The issue met with
tremendous response from investors. Over 5 Lakh
applications were received resulting in oversubscription by
about 55 times. The Equity shares of your Company are
listed and traded on Stock Exchanges at Vadodara,
Ahmedabad, Bombay, Calcutta, Delhi and on National Stock
Exchange of India.
Status of Project Implementation
Your Company raised resources through the Public Issue to
partly fund capital expenditure for increase in capacities
of various manufacturing plants, working capital
requirements and meeting issue expenses as under:
(Rs. in Lakhs)
Capital Expenditure on Projects 4242
Working Capital requirements 4367
Issue Expenses 250
-----
Total 8859
-----
The expansion of capacities at the Company's various plants
is progressing satisfactorily. The capacity of the Bulk
Drug plant has been increased from 62,000 kgs. to 78,100
kgs. in the first phase upto 31.3.95. The capacity of the
Formulation plants has been increased from 1050 million
tablets/capsules to 1650 million tablets/capsules upto
31.3.95. Your Company has acquired land & part of building
for SPARC expansion and land for Sun House. The civil work
for both the buildings will commence soon and is expected
to be completed as per the schedule given in the
Prospectus.
Your Company received Rs.5484 Lakhs out of the total issue
amount of Rs.5550 Lakhs upto 31.3.95. Your Company is
taking necessary steps to realise the balance amount of
allotment money. The expenditure on Public Issue was Rs.145
Lakhs. Your Company incurred a capital expenditure of
Rs.1596 Lakhs and deployed Rs.1063 Lakhs in additional
working capital during the year. The balance amount has
been deployed in short term investments pending utilisation
in projects.
Future Outlook
Your Company shall continue to consolidate and enhance
market share in the domestic market, and to make its
presence felt in the international market. Your Company,
backed by proven technical strengths and value added
marketing, is on the threshold of a high growth phase in
its pursuit of leadership through focussed research.
Exports
Sun Pharma has been marketing speciality ranges of high
value branded formulations in a number of countries across
Asia, Africa and the Middle East. Sun uses a market
specific promotional strategy which is centered around
building strong brand equity. This strategy will ensure
sustained growth in the exports of your Company's products.
Research and Development
SPARC continued to contribute significantly with several
new products. Projects in technically challenging areas of
tissue culture, peptides and new drug delivery systems are
expected to bring forth products with high value addition,
which would give your Company a sustainable competitive
edge in the post GATT business environment.
B. Consumption per unit or production
It is not feasible to maintain product category-wise energy
consumption data, since there is a large variety of
products with different energy intensities.
C. Energy conservation measures
High vacuum pump is being imported & installed in place of
four stage steam jet ejector. The equipment will be used
for high vacuum fractional distillation, significantly
saving energy cost. In the effluent treatment plant, solar
evaporation ponds have been also provided to
treat/evaporate highly concentrated effluent thus saving
energy cost.
TECHNOLOGY ABSORPTION
A. Research and Development
1. Specific areas in which R & D is being carried out by
the Company
SPARC is carrying out extensive research in process
development of bulk drugs and the development of tissue
culture based products, small peptides and formulations.
2. Benefits derived as a result of the above R & D
Process development for a number of bulk drugs has been
completed and the technology has been transferred to our
bulk drug plant. Similarly new formulations have been
launched in the market adopting the technology developed by
SPARC.
3. Future Plan of Action
The Company intends to continue its thrust in select
research areas.
4. Expenditure on R & D Year ended Year ended
31st March, 1995 31st March, 1994
Rs. in Lakhs Rs. in Lakhs
(i) Capital 242.22 340.22
(ii) Deferred Revenue 57.08 39.66
(iii)Revenue 41.21 68.93
(iv) Total 340.51 448.81
(v) Total R & D exp. as %
of total turnover 3.92% 8.34%
B. Technology Absorption, Adaptation and Innovation
1. Efforts in brief, made towards technology absorption,
adaptation and innovation:
Continuous Research & Development of the products and the
processes with the main objective of import substitution
and cost reduction in an inflationary environment is
carried out.
2. Benefits derived as a result of the above efforts e.g.
product improvement, cost reduction, product development,
import substitution etc.
Cost of some formulations was contained by way of
substitution of imported raw materials and changes in
packaging.
3. The Company has not imported technology (during the last
5 years reckoned from the beginning of the financial year).
C. Foreign Exchange Earning and Outgo
Year ended Year ended
31st March, 1995 31st March, 1994
Rs. in Lakhs Rs. in Lakhs
Earning from export during
the period 424.06 252.07
Expenditure in Foreign
Currency 700.35 672.17
Mar 31, 1994
Your Directors have great pleasure in presenting their 2nd Annual Report and audited accounts for the year ended 31/3/1994.
Dividend
In order to conserve resources for funding future growth plans, the Board of Directors does not recommend any dividend for the year.
Operations
The year under review was greatly encouraging since many milestones were surpassed. Sun Pharma improved its ranking from 49th position to 34th position in the retail chemist audit conducted by ORG for the month of February 94.
All our products including newly introduced products continued to consolidate their market share further as several innovative strategies earned prescriber support.
Bulk drugs project at Panoli was commissioned on 21st March 1994. Scale ups of 4 products, the processes for which were developed at SPARC, have been successful and end products conforming to USP standards have been obtained.
Export markets showed encouraging growth at Rs.3.42 crores as against Rs.1.63 crores in the last financial year, and the performance in the current year is expected to be much better. Meeting impeccable international quality standards have enabled us to market our products to a number of countries.
The second formulation unit at Silvassa was also completed, and started commercial production in the third week of April 94.
The Company was accorded the highest credit rating of P1+by CRISIL for commercial paper issue, and has subsequently issued commercial paper for Rs.250 lacs.
Research and Development
Your Company's philosophy of 'Leadership through focussed research' has started reaping results. Its modern and comprehensive R&D centre, SPARC, which was inaugurated by the Hon'ble Vice President of India, Shri K R Narayanan in April last year, became fully operational.
A number of interesting projects with significant commercial potential are progressing satisfactorily and would greatly contribute to the turnover and profitability of the Company in the coming years.
Quality Assurance
Backed by the latest analytical instrumentation and a team of competent technical experts, the Company strives to maintain impeccable quality standards for all its products. All procedures are validated to US FDA standards and stringent manufacturing controls are enforced. Your company intends to apply for US FDA and Canadian HPB approval for its facilities in the coming financial year. This would not only enables us to export to the North American markets but also allow access to other developed markets.
Future Prospects
Your Company, backed by strong R&D base, aggressive marketing strategy and committed human resources, is all set to enter a next phase of enhanced growth. Further expansion and deversification plans totalling Rs.50 crores are being worked out. These assets, and the continuing emphasis on quality and manufacturing facilities of international standards remain our strength.
Fixed Deposits
During the year under review, the company has not accepted deposits from the public/shareholders under the provisions of Section 58 (A) of the Companies Act, 1956 and rules framed thereunder.
Conservation of Energy, Technology absorption and Foreign exchange earnings and outgo
As required under Section 217(1)(e) of the Companies Act 1956, read with Rule 2 of the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988, the particulars relating to the conservation of energy, technology absorption and foreign exchange earnings and outgo are annexed.
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