The Directors have pleasure in presenting the Twenty-Sixth Annual Report together with the Audited Financial Statements for the financial year ended 31st March, 2017.
1. Financial Summary (Standalone)
(Figures in Millions)
March 31, 2017
1.1 Financial Results
Operating Profit (EBIDTA)
Net Profit (PAT)
Reserves and Surplus
Operating Profit (EBIDTA)
Depreciation & Amortization
Exceptional items incl AS 30
Profit before tax
Less Tax Expenses
Current tax expenses
Current tax expense relating to prior years
Deferred tax expenses
MAT credit entitlement
Profit after tax
Other comprehensive income
Items that will not be reclassified to profit or loss
Items that may be reclassified to profit or loss
Total Other Comprehensive Income (net of tax)
Total Comprehensive Income for the period
Opening balance of Profit and Loss
Pursuant to the Scheme of Amalgamation
Available for appropriation
Depreciation on transition to Schedule II of the Companies Act, 2013 on tangible fixed assets
Dividend on Equity Shares
Interim Dividend Paid
On Interim Dividend
On proposed Dividend
Balance carried to Balance Sheet
Note * 1 US$ = '''' 64.86 (Exchange Rate as on March 31, 2017),
* 1 US$ = '''' 66.26 (Exchange Rate as on March 31, 2016)
Previous year figures have been regrouped/ restated wherever necessary to make them comparable with those of the current year
2. Business Overview
During the year under review, your Company registered 23% growth in headline revenues on the back of a strong performance in the regulated markets. EBITDA margin expanded 600 bps growing from 17% in Q1 to 23% in Q4, registering sequential growth quarter on quarter.
Performance in the regulated markets was especially gratifying in the face of headwinds being faced by the industry, especially in the US. Your Company is largely unaffected by these factors and infact has increased market share of its key products. In Australia, good progress has been achieved in consolidating our market position as one of the top 3 players, with expanding distribution base and a fuller product portfolio.
As you are aware, the Company is executing its Strides
2.0 strategy, transforming itself into a focused B2C player with a diversified portfolio. Over the past couple of years, your Company has gained scale and size as an integrated, diversified and customer facing Company with a wider international footprint.
During the year, important strategic decisions were taken to execute this strategy. Your Company exited non-strategic business, viz., the CRAMS business and the Africa Generics business. It also stepped away from management control of the biotech business and announced a decision to spin off the commodity API business. This has helped your Company sharpen its focus on building a B2C model under pinned by the highest level of quality compliance, source security of vertical integration, a differentiated R&D pipeline and front end presence in all key markets.
Performance of the Company during the year across various Markets:
Regulated Markets - Driven by North America and Australia
* Revenues stood at '''' 17,762 Million, registering 56% growth over the last year.
- The business contributed to 51% of the Group revenue for the period ended March 31, 2017.
* North America delivered steady performance in FY''''17 with sequential improvement in market share for key products including Dutasteride, Ergocalciferol, Methoxsalen.
* Pharmaceutical Benefit Scheme (PBS) impact, slower compliance and delay in backward integration impacted the performance during the year.
- Revenues stood at '''' 6,330 Million, registering 65% growth over the later year.
- The business contribution stood at 18% of Group revenue for the period ended March 31, 2017.
- During the year, the Company exited from the Generic manufacturing business in Africa.
- The branded generics business and Universal Corporation business in Africa delivered a steady performance despite volatile currency environment. Added approx. 50 medical representatives in Africa for the branded business during FY''''17.
- FY''''18 is to focus on adding new products, expanding distribution network and improving field force productivity in Africa.
- India brands business reported tepid performance due to overall slowdown in the Indian Pharmaceutical Market including the impact of demonetization. Currently witnessing a trend towards lower stocking level in the channel ahead of the GST roll out.
- Focus on leveraging a pan India distribution network across the product portfolio and improving field force productivity.
- Revenues stood at '''' 5,677 Million, a decline of 5% over the previous year.
- The business contributed 16% of Group revenue for the period ended March 31, 2017.
- Decline in institutional business attributed to significantly lower contribution from Anti-Malarial portfolio during Q4 FY''''17. While the Company has been able to maintain its market share, the overall funding to the donor programs has seen a decline. The ARV business continues to witness healthy traction.
- R&D focus on developing next generation products in line with evolving treatment regimens.
Pharmaceutical Services & Active Ingredients (PSAI)
- Revenues stood at '''' 5,336 Million, a decline of 27% over the previous year.
- The business contributed 15% of Group revenue for the period ended March 31, 2017.
- During the year, significant steps were taken to improve the quality of API business including revamping of API facilities in Puducherry and Cuddalore, rationalization of product mix and focusing on improving the customer base.
- Portfolio rationalization and increased captive consumption for the formulations helped deliver superior margins for the API business during the year.
- Scaled up filings for high entry barrier markets like Japan and Korea.
- The R&D set up gained momentum with 9 filings in FY'''' 17.
- Significant scale up in R&D investments during FY''''
17 to build the future product pipeline.
- R&D spend for FY'''' 17 at '''' 1,361 Million against '''' 757 Million in FY'''' 16, up 80 % YoY.
- 32 ANDA filings pending approval from USFDA. Manufacturing Infrastructure
- Four manufacturing facilities - the formulation facilities in Bengaluru and Puducherry, the API facility at Cuddalore and Puducherry, were inspected by the USFDA over the last twelve months and all the facilities were cleared without any observations.
- Singapore formulation facility for regulated markets is expected to go on stream in H2 FY''''18.
- Signed definitive agreements with Vivimed Labs Ltd to enter into 50:50 Joint Ventures for its USFDA formulations facility at Alathur, Chennai. The Joint Venture will provide access to additional capacities to the tune of 1.5 billion tablets/ capsules per annum and a strong product pipeline. This Joint Venture will also help in de-risking of manufacturing base.
During the year under review, your Company has undertaken the following corporate actions:
Acquisitions and Joint Ventures:
1) Acquisition of Pediacare® from Moberg Pharma, Sweden
Strides Arcolab International Limited, UK (“SAIL UK"), the Company''''s wholly owned subsidiary, acquired “Pediacare®" brand and marketing rights from Moberg Pharma AB (publ), Sweden, (“Moberg") for a total consideration of USD 5 Million plus inventory at actuals.
Pediacare® is an established cough, cold and allergy brand with annual sales of approx. USD 6 Million. The brand has about 15 Stock Keeping Units (“SKU") and is registered in 32 countries including US and also under the Madrid Protocol. The acquisition strengthens the OTC segment of the Group and the existing brands portfolio acquired from Moberg during the last year. The transaction achieved closure in December 2016.
2) Acquisition of Strides Chemicals Private Limited (formerly known as ''''Perrigo API India Private Limited'''')
The Company acquired 100% stake in Strides Chemicals Private Limited (“Strides Chemicals"), effective April 6, 2017. Strides Chemicals is a company based out of Ambernath, Maharashtra and has a US FDA approved API manufacturing facility, which will manufacture all strategic APIs primarily used for captive consumption and will augment the Company''''s resources to handle high velocity of new product development and commercial launches in the formulations portfolio. The facility has a potential capacity of 600 tons per year and had zero 483s during its last US FDA inspection in the year 2013.
3) Joint Venture with Vivimed Labs Ltd.
The Company has signed definitive agreements with Vivimed Labs to set up two Joint Venture Companies, which are as under:
- The 50:50 Joint Venture Company in India will own the US FDA approved formulation facility in Alathur, Chennai; and
- The 50:50 Joint Venture Company in Singapore will be held through Strides Pharma Global Pte. Limited, Singapore, a step down wholly owned subsidiary of the Company, which will own intellectual property rights, certain approved ANDAs and product line.
The Joint venture will provide access to additional capacities to the tune of 1.5 billion tablets/ capsules per annum and a strong product pipeline. This Joint Venture will also help de-risking of manufacturing base.
4) Joint Venture in Mexico
Strides Pharma Global Pte Limited, Singapore (“SPG"), a step down wholly owned subsidiary of the Company entered into definitive agreements with Mr. Mike Padvaiskas, a Partner in Mexico to set up a joint venture company in Mexico (“Mexican Subsidiary") in August 2016, which will focus on branded generics, OTC products and tender business in Mexico and other Latin American territories. SPG shall hold 80% stake in the Mexican Subsidiary and the remaining 20% shall be held by Mr. Mike Padvaiskas.
Divestments/ Hive offs
1) Exit from Probiotic Business
Effective March 31, 2017, the Company exited from the Probiotics Business, which was acquired in December 2015 from Medispan Limited (“Medispan"), through its subsidiary, Strides Biologix Private Limited.
Considering that the business had not been able to achieve the intended strategic objectives and milestones, the Board of Directors of the Company decided to hive off the business.
The business was sold to Higher Pharmatech Private Limited, a Promoter Group entity, for an aggregate consideration of '''' 5.75 Crores.
2) Hive-off of Africa Generics Business
Effective March 30, 2017 the Company has hived off the generic pharmaceutical products manufacturing and distribution business in Africa (“Africa Generics Business") as a Management Buyout to Africure Pharmaceuticals Limited, Mauritius (“Africure"), a company owned by Mr. Sinhue Noronha, the erstwhile CEO of Africa business.
The Company''''s earlier strategy focused on catering the generics business through multiple boutique manufacturing facilities spread across sub Saharan Africa. However, with change in regulatory landscape and growing funding needs for the African markets, the Company decided to hive off the Generics Business in Africa. The said business was conducted through Strides Pharma (Cyprus) Limited, Cyprus (“SPCL"), a second level wholly owned subsidiary of the Company and various African subsidiaries of SPCL. Pursuant to the above transaction:
a) SPCL hived off the said business (including the manufacturing facilities and assets relating to generics business) as a Management Buyout for a total consideration of approx. USD 9.921 Million. The said business was acquired by Africure.
SPCL has agreed to receive the sale consideration for the above transaction in three tranches, the last tranche being March 31, 2018.
The entities which were hived off as part of the above transaction were:
1) Strides Pharma Namibia Pty. Ltd
2) Strides Pharma Cameroon Ltd
3) Strides Vital Nigeria Ltd, excluding the Brand business
4) Strides Pharma Botswana (Pty) Ltd
5) Strides Pharma Mozambique SA
6) Societe De Repartition Pharmaceutique (Sorepharma)
7) African Pharmaceutical Development S.A (APHAD)
8) Congo Pharma SPRL
b) Business sale: Manufacturing Facility situated at Palghar, Mumbai
As part of the Africa Generics Business hive off, the Company also sold the business conducted at the Palghar, manufacturing facility in Mumbai to Africure Pharmaceuticals India Private Limited, India, along with all assets, inventory and employees. The consideration for this transaction was '''' 4.55 Crores and the closure of the transaction was effected on March 31, 2017.
c) Share sale to co-promoter in Sudan entity:
As a part of the Africa Generics Business Divestment, SPCL also divested its 51% stake in Pharmacare Laboratories Co Ltd., Sudan (“Pharmacare Sudan") to Therapeka Limited, which held the balance 49% stake in Pharmacare Sudan for an aggregate consideration of USD 3.125 Million. The said transaction achieved closure on 31st March 2017, and SPCL has agreed to receive the sale consideration for the said transaction in three tranches, the last tranche being March 31, 2018.
3) Hive off of the Commodity Active Pharmaceutical Ingredients (API) Business
The Board of Directors in their meeting held on March 20, 2017 approved the proposal to demerge the Commodity API Business, into SSL Pharma Sciences Limited (subsequently renamed as ''''Solara Active Pharma Sciences Limited'''' (“Solara"), a wholly owned subsidiary of the Company.
As part of the Scheme of Demerger, the Human API business of SeQuent Scientific Limited (a promoter owned listed company) is also proposed to be carved-out into Solara, providing critical size to this business.
This combination will catapult Solara to be one of the largest standalone API companies in the country. It will have a portfolio of DMF filings to start with and will be complimented by 5 manufacturing sites (including 3 US FDA approved facilities) having key global regulatory approvals. Solara will also be listed on the Indian Stock Exchanges.
The appointed date for the Scheme of De-merger will be October 1, 2017.
The transaction has been approved by the Board of all the companies that are party to the Scheme and is further subject to approval from respective Shareholders'''', Regulators and meeting other customary and/ or statutory closing conditions.
The share entitlement ratio for the Scheme of Demerger is as under:
1) For demerger of Commodity API business: 1 equity share of '''' 10/- each of Solara for every 6 fully paid up equity shares of '''' 10/- each held in Strides.
2) For demerger of Human API business: 1 equity share of '''' 10/- each of Solara for every 25 fully paid up equity shares of '''' 2/- each held in Sequent.
4) Capping of Strides Investment in Stelis Biopharma
Stelis Biopharma, which is focused on developing a portfolio of biosimilars, was acquired by the Company in 2012.
The total funding in Stelis, so far, has been USD 32.30 Million, of which the Company has invested USD 22.10 Million and GMS Holdings (“GMS"), a strategic partner, has invested USD 10.20 Million. Consequent to these investments, Company owns a stake of 74.90% and GMS owns 25.10% stake in Stelis.
With the stated intent of the Company to focus on front-end B2C businesses, the Company does not plan to have any further investments in any of its B2B businesses.
Considering the same, after an exhaustive evaluation of various options related to the Biotech business, the Board of Directors of the Company have decided to cap the Company''''s investment in Stelis at USD 22.10 Million (already invested by the Company), which was approved by the Shareholders on March 22, 2017.
Consequent to the above, effective March 31, 2017, the Company has capped its investment in Stelis Biopharma at USD 22.10 Million.
2.1 Nature of Business of the Company
There has been no change in the nature of business of the Company during the year under review.
3. Share Capital
The Authorized Share Capital of the Company as at March 31, 2017 was '''' 1,767,500,000/- divided into 176,750,000 equity shares of '''' 10/- each.
The Issued, Subscribed and Paid-up Share Capital of the Company as at March 31, 2017 was '''' 894,230,060/divided into 89,423,006 equity shares of '''' 10/- each.
During the period under review, there has been an increase in the Paid-up Equity Share Capital of the Company on account of allotment of 77,028 equity shares consequent to exercise of stock options.
Your Directors are pleased to recommend a Dividend of '''' 4.50/- (Rupees Four and Fifty Paisa Only) per equity share of face value of '''' 10/- each for the financial year ended March 31, 2017, subject to the approval of the shareholders at the ensuing Annual General Meeting.
The Company has not accepted any deposits and as such, no amount on account of principal or interest related thereto was outstanding as on the date of the Balance Sheet i.e., March 31, 2017.
6. Subsidiary, JVs and Associate Companies
As at March 31, 2017, the Company had 40 subsidiaries overseas and 7 subsidiaries in India and 4 overseas Joint Ventures and 3 Associate Companies in India. List of subsidiaries/ JVs/ Associates which have become or ceased to be part of the Company is enclosed as Annexure 1.
Accounts of Subsidiaries
In accordance with Section 129 (3) of the Companies Act, 2013, the Company has prepared a consolidated financial statement of the Company and all its subsidiary companies, which is forming part of the Annual Report. Statement containing salient features of the financial statements of the subsidiary companies/ joint venture as required in Form AOC 1 is enclosed as Annexure 2 to this Report.
7. Corporate Governance
The Company has complied with all the mandatory requirements of Corporate Governance as stipulated in Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. As required by the said regulation, a separate ''''Report on Corporate Governance'''' forms part of the Annual Report of the Company. A certificate from the Statutory Auditors of the Company regarding compliance with the conditions of Corporate Governance also forms part of this Report.
8. Management Discussion and Analysis
Pursuant to Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, ''''Management Discussion and Analysis'''' is given separately and forms part of this Report.
9. Employee Stock Option Scheme
The Company has 3 ESOP Schemes viz., Strides Arcolab eSoP 2011, Strides Arcolab ESOP 2015 and Strides Shasun ESOP 2016 Schemes.
Statement giving detailed information on stock options granted to Employees under the Company''''s Employee Stock Option Schemes as required under the SEBI Regulation is enclosed as Annexure 3 to this Report.
10. Board of Directors & Key Managerial Personnel
The Company has completed several organic and inorganic strategies to put in place pivots for future growth. To guide the management team in rolling out the future strategies predominantly directed towards B2C businesses, the Board was reconstituted as under, effective May 18, 2017:
1. Mr. Arun Kumar, Founder and Executive Vice Chairman moved to a Non-Executive position and as Chairman of the Board. He will continue to provide strategic inputs to the management;
2. Mr. Homi Rustam Khusrokhan was appointed as Independent Director;
3. Mr. Shashank Sinha, Group CEO of the Company was appointed as Managing Director;
4. Mr. Badree Komandur, Group CFO of the Company was appointed as Executive Director; and
5. After long and distinguished association with the Company Mr. M.R. Umarji, Non-Executive Director, Mr. P.M. Thampi and Mr. A. K Nair, Independent Directors of the Company, Mr. Abhaya Kumar, Promoter and Executive Director of the Company relinquished their Board positions.
Post the above reconstitution, the Board Composition effective May 18, 2017 is as under:
Name of the Director
Non-Executive Director & Chairman of the Board
Homi Rustam Khusrokhan
a) Mr. Homi Rustam Khusrokhan has been appointed as an Independent Director (Additional Director) of the Company effective from May 18, 2017, who shall hold office till the conclusion of the ensuing Annual General Meeting of the Company.
Your directors recommend his appointment as an Independent Director of the Company for a period of five consecutive years effective from May 18, 2017, not liable to retire by rotation.
b) Mr. Shashank Sinha has been appointed as Managing Director (Additional Director) of the Company effective from May 18, 2017, who shall hold office until the date of the ensuing Annual General Meeting of the Company.
Your Directors recommend his appointment as Managing Director of the Company for a period of 3 years with effect from May 18, 2017, liable to retire by rotation.
c) Mr. Badree Komandur has been appointed as an Executive Director (Additional Director) of the Company effective from May 18, 2017, who shall hold the office until the date of the ensuing Annual General Meeting of the Company.
Your Directors recommend his appointment as an Executive Director of the Company for a period of 3 years with effect from May 18, 2017, liable to retire by rotation.
The Company has received requisite notices together with necessary deposits from the member proposing the election of Mr. Homi Rustam Khusrokhan, Mr. Shashank Sinha and Mr. Badree Komandur as Directors of the Company pursuant to Section 160 of the Companies Act, 2013.
a) Mr. Abhaya Kumar resigned as Executive Director/ Whole-time Director of the Company with effect from May 18, 2017.
b) Mr. P. M Thampi and Mr. A K Nair resigned as an Independent Directors of the Company with effect from May 18, 2017.
c) Mr. M. R Umarji resigned as Non-Executive Director of the Company with effect from May 18, 2017.
The Board places on record its appreciation for the services rendered by each Directors during their tenure with the Company.
The Board comprises of adequate number of Executive and Non-Executive Directors as required under the Companies Act, 2013 read with Rules made thereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and represents an optimal mix of professionalism, knowledge and experience.
Pursuant to Board reconstitution, as on date of this Report, the Board comprised of 8 Directors comprising of 2 Executive Directors, 4 Independent Directors and 2 Non-Executive Directors. Chairman of the Board is Non-Executive.
The details of each members of the Board as on the date of this report forms part of Corporate Governance Report.
Retirement by Rotation
Mr. Deepak Vaidya, Non-Executive Director retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment. Your Directors recommend his re-appointment to the Board.
Declaration by Independent Directors
The Company has received necessary declaration from each of the Independent Director that he/ she meets the criteria of independence as laid down in Section 149 (6) of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Meetings of the Board
During the year under review, the Board met 7 times. These meetings were held on May 16, 2016, August 17, 2016, October 28, 2016, November 7, 2016, December 15, 2016, February 3, 2017 and March 20, 2017. For further details, please refer to the Corporate Governance Report, which forms part of this Report.
Policy on Directors Appointment and Remuneration
The Directors of the Company are appointed by shareholders at the General Meetings.
As regards the appointment and tenure of Independent Directors, the Company has adopted the provisions of the Companies Act, 2013 read with Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Company''''s Remuneration Policy for Directors, Key Managerial Personnel and Senior Management is enclosed as Annexure 4.
As stipulated in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Companies Act,
2013, and Schedule IV of the Companies Act, 2013, the evaluation of the Board as a whole and all directors was conducted based on identified criteria and framework.
The performance evaluation of the Chairman, Managing Director and the Non-Independent Directors were carried out by the Independent Directors and the performance evaluation of the Independent Directors was carried out by the entire Board excluding the director being evaluated.
Performance evaluation criteria for each category of the Directors is part of the Board Evaluation Policy.
Key Managerial Personnel''''s (KMPs)
As at March 31, 2017, the following were the KMP''''s of the Company:
- Mr. Arun Kumar, Managing Director
* Mr. Abhaya Kumar, Executive Director
- Mr. Shashank Sinha, Group CEO
- Mr. Badree Komandur, Group CFO & CS
- Ms. Manjula Ramamurthy, Company Secretary (Appointed w.e.f February 3, 2017)
Consequent to the Board Reconstitution of the Company effective May 18, 2017, KMPs of the Company as on the date of this report are as under:
- Mr. Shashank Sinha, Managing Director;
- Mr. Badree Komandur, Executive Director; and
- Ms. Manjula Ramamurthy, Company Secretary
11. Particulars of Employees
The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is enclosed as Annexure 5, forming part of this report. Further, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Companies Act, 2013, 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.
12. Corporate Social Responsibility (CSR)
The Company has undertaken “Corporate Social Responsibility (CSR)", initiatives in areas of Health, Education and Employability which are projects in accordance with Schedule VII of the Companies Act, 2013.
A detailed Annual Report on CSR activities undertaken during the financial year 2016-17 is enclosed as Annexure 6 to this Report.
13. Whistle Blower Policy
The Company has a Whistle Blower Policy in place as part of its vigil mechanism. The Policy provides appropriate avenues to the directors, employees and stakeholders of the Company to make protected disclosures in relations to the matters concerning the Company. Protected Disclosure are appropriately dealt with by the Whistle Officer or the Chairman of the Audit Committee.
The Policy is also available on the Company''''s website at www.stridesarco.com
The assets/ properties of the Company are adequately insured against loss due to fire, riots, earthquake, terrorism, etc., and against other perils that are considered necessary by the management.
15. Adequacy of Internal Financial Controls
The Company has designed and implemented a framework for Internal Financial Controls (“IFC") as required under Section 134 (5) (e) of the Companies Act, 2013.
For the Year ended March 31, 2017, the Board believes that the Company has sound IFC commensurate with the nature and size of its business operations; wherein controls are in place and operating effectively and no material weaknesses exist.
The Company has a process in place to continuously monitor the existing controls and identify gaps, if any, and implement new/ improved controls.
16. Risk Management
The Company has a risk management framework for identification and managing risks. Please refer the ''''Management Discussion and Analysis'''''''' report forming part of the Annual Report for additional details.
17. Loans, Guarantees or Investments
Particulars of investments made, loans given and guarantees covered under the provisions of Section 186 of the Companies Act, 2013 are provided in Note no. (45) to the Standalone Financial Statements in the Annual Report.
18. Contracts or Arrangements with Related Parties
All the transactions with related parties are in the ordinary course of business and at arm''''s length basis. Hence disclosure under Form AOC - 2 is not part of this report. However, transactions with related parties are disclosed in Note no. (45) to the Standalone Financial Statements in the Annual Report.
The Company has formulated a policy for transacting with Related Parties, which is uploaded on the website of the Company.
Further, there are no materially significant related party transactions with its promoters, the directors or the management, their subsidiaries or relatives etc. that may have potential conflict with the interests of the Company at large.
19. Significant and material orders passed by the Regulators or Courts
There are no significant and material orders passed by the Regulators/ Courts that would impact the going concern status of the Company and its future operations.
20. Extract of Annual Return
Extract of Annual Return in Form MGT 9 is enclosed as Annexure 7 to the Board''''s Report.
21. Conservation of Energy, R&D, Technology Absorption and Foreign Exchange Earnings/ Outgo
Details of Energy Conversation, R&D, Technology Absorption and Foreign Exchange Earnings/ Outgo are enclosed as Annexure 8 to this Report.
22. Secretarial Audit Report
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 M/s Gopalkrishnaraj HH & Associates, a firm of Company Secretaries in Practice (Certificate of Practice No: 4152) to undertake the Secretarial Audit. The Secretarial Audit Report is enclosed as Annexure 9 to the Board''''s Report. There are no qualifications, observations or adverse remarks in the Secretarial Audit Report.
23. Audit Report
There are no qualifications, observations or adverse remarks in the Audit Report issued by the Statutory Auditors of the Company for financial year ended March 31, 2017.
24. Statutory Auditors
In terms of the provisions of Section 139 of the Companies Act, 2013, a listed company shall appoint/ re-appoint an Audit Firm as Statutory Auditor for not more than two terms of 5 consecutive years. At the time of giving effect to the above Section, a transition period of 3 years was granted for the Company and the Audit Firms to comply with these provisions.
M/s. Deloittee Haskins & Sells, Chartered Accountants (“Deloitte") are associated with the Company for about
18 years. In line with the above provisions, Deloitte were appointed as Statutory Auditor for a period of 3 years from FY'''' 2014-15. Deloitte is due for retirement at the ensuing AGM of the Company.
The Board of Directors of the Company had recommended the appointment of M/s B S R & Co. LLP, Chartered Accountants (Firm Registration no. 101248W/ W-100022), Chartered Accountants as Statutory Auditors of the Company for a period of 5 years from the conclusion of the 26th AGM till the conclusion of the 31st AGM of the Company to be held in the Financial Year 2021-22, subject to ratification of appointment at every AGM of the Company.
25. Cost Auditors
The Board of Directors of the Company has appointed M/s. Rao, Murthy & Associates, Cost Accountants, (Firm Registration No.: 000065) as Cost Auditors to audit the cost accounts of the Company for the Financial Year 2016-17.
26. Directors'''' Responsibility Statement
Pursuant to the requirement under clause (c) of subsection (3) of Section 134 of the Companies Act, 2013 with respect to the Directors'''' Responsibility Statement, the Board of Directors of your company state that:
(a) in the preparation of the annual accounts, 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 at the end of the financial year and of the profit and loss of the Company for that period;
(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 of the Company 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 are 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.
Your Directors place on record their sincere appreciation for the significant contribution made by the employees through their dedication, hard work and commitment and the trust and confidence reposed on us by the medical profession and trade.
We also acknowledge the support extended to us by the bankers, financial institutions, Government agencies, analysts, shareholders and investors at large.
For and on behalf of the Board of Directors
Date: August 11, 2017 Shashank Sinha Arun Kumar
Place: Bengaluru Managing Director Chairman