the Directors are happy in presenting the Thirty Ninth Annual Report together with the Audited Standalone and Consolidated Financial Statements for the year ended March 31, 2017.
Jubilant Life Sciences Limited (‘the Company’ or ‘Jubilant’) is an integrated global Pharmaceutical and Life Sciences company engaged in Pharmaceuticals, Life Science Ingredients and Drug Discovery Solutions. The Pharmaceuticals segment, through its wholly-owned subsidiary Jubilant Pharma Limited, is engaged in manufacture and supply of Active Pharmaceutical Ingredients (‘APIs’), Solid Dosage Formulations, Radiopharmaceuticals, Allergy Therapy Products and
RESULTS OF OPERATIONS AND STATE OF COMPANY''''S AFFAIRS FINANCIAL RESULTS
('''' / Million)
Year ended March 31, 2017
Year ended March 31, 2016
Year ended March 31, 2017
Year ended March 31, 2016
Total Revenue from Operations
Total Operating Expenditure
EBITDA including Other Income
Depreciation and Amortisation Expense
Profit after Depreciation and Finance Cost but before Exceptional Items
Exceptional Item - (Gain)/ Loss
Reported Net Profit After Tax
Shareholders of the Company
Other Comprehensive Income
Total Comprehensive Income for the period
Retained Earnings brought forward from previous year
Transfer on account of sale of Equity Instruments
Adjustment on account of consolidation of Jubilant Employees Welfare Trust
Retained Earnings available for appropriation which the Directors have appropriated as follows:
- Dividend on Equity Shares
- Tax on Dividend on Equity Shares
- Transfer to Debenture Redemption Reserve
- Transfer to Legal Reserve
Retained Earnings to be carried forward
Contract Manufacturing of Sterile and Non-sterile products through 6 USFDA approved manufacturing facilities in India, USA and Canada. The Life Science Ingredients segment, is engaged in Specialty Intermediates, Nutritional Products and Life Science Chemicals through 5 manufacturing facilities in India. The Drug Discovery Solutions segment provides proprietary in-house innovation and collaborative research and partnership for out-licensing through 3 world class research centres in India and USA. Jubilant Life Sciences Limited has a team of over 6,500 multicultural people across the globe and is committed to deliver value to its customers across over 100 countries. The Company is well recognized as a ‘Partner of Choice’ by leading pharmaceuticals and life sciences companies globally. For more information, please visit the Company’s website www.jubl.com.
Wter reversal of dividend distribution tax of '''' 39 Million (March 31, 2016: '''' 60 Million), on account of dividend received during the year from a subsidiary company.
(i) Standalone Financials Revenue from Operations
In the Financial Year 2016-17, on standalone basis, the Company recorded total Revenue from operations of Rs, 26,230 Million.
International business contributed 40% to the Net Revenue from operations at Rs, 10,365 Million.
For the year ended March 31, 2017, Earnings before Interest, Taxes, Depreciation and Amortization (‘EBITDA’) stood at Rs, 3,699 Million with EBITDA margins at 14%.
Reported Net Profit/ Loss after Tax and EPS
Reported Net Profit after Tax was Rs, 792 Million in the Financial Year 2016-17. Basic Earnings Per Share (‘EPS’) stood at Rs, 4.97.
(ii) Consolidated Financials
The Consolidated Financial Statements, prepared in accordance with the provisions of the Companies Act, 2013 (the ‘Act’), SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the ‘Listing Regulations’) and Ind-AS 110 ''''Consolidated Financial Statements'''' prescribed under Section 133 of the Act, form part of the Annual Report.
Our strong performance continued in the Financial Year 2016-17 and the Company reported highest ever revenue and profits during the year. The differentiated business model focusing on Specialty Pharmaceuticals (Injectables) has enabled us to deliver exceptional results and build a strong base for growth going forward in our Pharma business. The Company has generated strong operating cash flow which enabled reduction of debt and is expected to deliver better results going forward. Our focus is to strengthen the Balance Sheet, invest in strategic opportunities without increasing debt levels and build strong pipeline of products across our businesses.
Revenue from operations was the highest ever at Rs, 60,063 Million, up 2% YoY, with International revenue at Rs, 42,468 Million, contributing 71% of the total revenue. Pharmaceuticals revenues were at Rs, 31,167 Million, up 8% YoY and contributing 52% to the revenues. Within this segment, Specialty Pharmaceuticals (Injectables) displayed a growth of 11% YoY. The Company believe that, this growth is a testimony to our strategy and the business model wherein we have been able to build multiple levers of exciting and differentiated businesses which have helped the business deliver robust performance. This has been aptly demonstrated in the consistent growth witnessed in Specialty Pharmaceuticals (Injectables) despite strong headwinds in the US Generics business from supply chain consolidation. Life
Science Ingredients revenue stood at Rs, 27,076 Million and contributed 45% to the revenue. Drug Discovery Solutions revenue improved 45% YoY to Rs, 1,821 Million contributing 3% of the revenue.
EBITDA was 9% higher YoY at record Rs, 13,701 Million, translating to margin improvement of 143 basis points at 22.8% as against 21.4% in the Financial Year 2015-16. This was led by the Pharmaceuticals segment which reported EBITDA of Rs, 9,751 Million, a growth of 9% YoY with a margin of 31.3% as against the margin of 30.9% achieved last year. The Pharmaceuticals segment now contributes about 68% to the overall EBITDA.
Life Science Ingredients reported EBITDA of Rs, 4,338 Million translating to EBITDA margin of 16%, an improvement from 15% in the Financial Year 2015-16. Drug Discovery Solutions EBITDA was at Rs, 258 Million translating to EBITDA margin of 14.2%. Depreciation and amortization in the Financial Year 2016-17 was at Rs, 2,914 Million as compared to Rs, 3,467 Million in the Financial Year 2015-16. Finance cost stood at Rs, 3,411 Million, lower by 8% YoY.
Net profit attributable to shareholders improved by 47% YoY at Rs, 5,756 Million as compared to Rs, 3,918 Million in the Financial Year
2015-16 with a Basic EPS of Rs, 36.93 as compared to Rs, 25.10 in the Financial Year 2015-16.
From Balance Sheet perspective, in the Financial Year 2016-17, the Company repaid Rs, 5,056 Million of Debt and the Net Debt stood at Rs, 36,844 Million on a constant currency basis.
The Board is pleased to recommend a dividend of 300% i.e. 3 per fully paid up equity share of Rs, 1 for the year ended March 31, 2017. Total dividend payout of Rs, 536 Million includes tax on dividend of Rs, 58 Million (net of reversal of dividend distribution tax of Rs, 39 Million for the year ended March 31, 2016, on account of dividend received during the year from a subsidiary company). The payment of dividend is subject to approval of the shareholders at the forthcoming Annual General Meeting (‘AGM’) of the Company.
(a) Share Capital
During the year, there has been no change in the authorized, subscribed and paid-up share capital of the Company. As on March 31, 2017, the paid-up share capital stood at Rs, 159,281,139 comprising of 159,281,139 equity shares of Rs, 1 each.
(b) Employees Stock Option Plans (ESOPs)
The Company has two employees stock option plans namely Jubilant Employees Stock Option Plan 2005 (''''Plan 2005'''') and JLL Employees Stock Option Plan 2011 (''''Plan 2011''''). During the year, there was no material change in Plan 2005 and Plan 2011 and both the plans are in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014 (the ''''SEBI ESOP Regulations'''').
Plan 2005: During the year, 3,700 Options were exercised by the option holders. As on March 31, 2017, 2,867 Options were outstanding under the Plan 2005. Each Option entitles the holder to acquire five equity shares of Rs, 1 each of the Company at the exercise price fixed at the time of grant, being the market value as per the erstwhile SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (the ‘SEBI Guidelines’).
Plan 2011: During the year, 337,075 Options were exercised by the option holders. As on March 31, 2017, 71,185 Options were outstanding under the Plan 2011. Each Option entitles the holder to acquire one equity share of Rs, 1 of the Company at the exercise price fixed at the time of grant, being the market value as per the SEBI Guidelines.
No dilution of paid-up capital is expected due to exercise of Options as it is envisaged to transfer the shares held by Jubilant Employees Welfare Trust to the employees on exercise of Options.
During the year, the Company has offered, issued and allotted Secured Redeemable Non-Convertible Debentures (‘NCDs’) of Rs, 4,950 Million on a private placement basis. NCDs are listed on Whole-sale Debt Market Segment of National Stock Exchange of India Limited (‘NSE’). The net proceeds of the funds raised have primarily been used to refinance the existing debt of the Company.
As on March 31, 2017, the Company had 49 subsidiaries. Brief particulars of the principal subsidiaries are given below:
Jubilant Pharma Limited
Jubilant Pharma Limited, Singapore (‘Jubilant Pharma’) is a wholly-owned subsidiary of your Company. Jubilant Pharma holds the global pharmaceutical business of the Company through its subsidiaries in USA, Canada, Europe, India and rest of the world. These subsidiaries of Jubilant Pharma are engaged in manufacturing and marketing of various pharmaceutical products and services like APIs, oral dosage forms (tablets and capsules), contract manufacturing of sterile injectables, ointment, creams and liquids, allergy therapy products and radiopharmaceutical products. Revenue of the company during the Financial Year 2016-17 was '''' 833.18 Million as compared to '''' 521.90 Million during the Financial Year 2015-16.
During the year, Jubilant Pharma has, through its debut issue, raised US$ 300 Million by offering 4.875% Rated Unsecured High Yield Bonds (''''Notes'''') under Regulation S of the US Securities Act of 1933. The Notes are listed on the Singapore Exchange Securities Trading Limited. The net proceeds of the funds raised have primarily been used to refinance the existing debt of the Company and its subsidiaries.
Jubilant Generics Limited
Jubilant Generics Limited (''''JGL'''') is a wholly-owned subsidiary of the Company through Jubilant Pharma. JGL owns two manufacturing facilities; one at Nanjangud, Karnataka and another at Roorkee, Uttarakhand which are engaged in APIs and Dosage Forms business, respectively.
The manufacturing location at Nanjangud spread on 69 acres is engaged in manufacturing of APIs and caters to the sales worldwide. API portfolio is focused on Lifestyle driven Therapeutic Areas (CVS, CNS) and also targets complex and newly approved molecules. The company is market leader in four APIs and is amongst the top 3 players for another three APIs in its portfolio helping it maintain a high contribution margin. The manufacturing location at Roorkee, Uttarakhand with 5 acres of infrastructure is USFDA, Japan PMDA, UK MHRA, TGA, WHO and Brazil ANVISA audited and approved. This business focusses on B2B model for EU, Canada and emerging markets. It has capabilities to develop multiple dosage forms including Oral solid, injectable and ophthalmic dosage forms. Revenue of the company during the Financial Year 2016-17 was '''' 10,726.09 Million as compared to '''' 9,197.82 Million during the Financial Year 2015-16.
Jubilant Pharma Trading Inc.
This corporation incorporated in Delaware, USA is a wholly-owned subsidiary of Jubilant Pharma. It undertakes sales and distribution of APIs in North America. Revenue of the company during the Financial Year 2016-17 was '''' 1,232.63 Million as compared to '''' 1,296.41 Million during the Financial Year 2015-16.
Cadista Holdings Inc. and Jubilant Cadista Pharmaceuticals Inc.
(i) Cadista Holdings Inc. (''''Cadista''''), a corporation incorporated in Delaware, USA is a wholly-owned subsidiary of Jubilant Pharma Holdings Inc.
(ii) Jubilant Cadista Pharmaceuticals Inc., a corporation incorporated in Delaware, USA is a wholly-owned subsidiary of Cadista. This company is in the business of manufacturing solid dosage forms of generic pharmaceuticals at its U.S. Food and Drug Administration (‘USFDA’) approved manufacturing facility in Salisbury, Maryland, USA. Its customer base includes all the large wholesalers, retail and grocery chains. Besides manufacturing its own label products, it also provides product development and contract manufacturing services. As on March 31, 2017, there were 29 products marketed in the US with focus in the therapeutic areas of CVS, CNS, Anti Allergic, Steroids, etc. Revenue of the company during the Financial Year 2016-17 was '''' 5,374.65 Million as compared to '''' 5,822.31 Million during the Financial Year 2015-16.
Jubilant HollisterStier LLC
This subsidiary is based in Spokane, State of Washington, USA. It is a wholly-owned subsidiary of HSL Holdings Inc.
This subsidiary has 2 businesses; Contract Manufacturing (CMO) and Allergenic Extracts.
In the contract manufacturing business of sterile injectables, this company provides a complete range of services to support drug manufacturing in the pharmaceutical and biopharmaceutical industries. Its contract manufacturing capabilities include aseptic liquid fill/ finishing and lyophilisation of small lot parenteral for commercial and clinical requirements. Its capabilities can be applied to a variety of projects from pre-clinical through commercial scale across a multitude of dosage forms including microspheres, suspensions, WFI/ diluents, biologics (proteins), lyophilized products and liposomes. Jubilant HollisterStier is approved across global regulated markets including FDA (both CDER and CBER), Europe, Japan, Brazil and Canada. Its contract manufacturing business serves customers including innovators ranging from small biotechnology to large pharmaceutical companies.
Additionally, it is an innovator, manufacturer and distributor of allergenic extracts, targeted primarily at treating allergies and asthma. With nearly 100 years of leadership in research, extract production and immunotherapy products, the organization is respected worldwide in the field of allergy. Currently, the business is comprised of allergenic extracts and mixes, along with specialized skin test diagnostic devices. The business lays special emphasis on innovation towards introducing new products to treat and cure allergies. Revenue of the company during the Financial Year 2016-17 was '''' 7,133.07 Million as compared to '''' 6,709.53 Million during the Financial Year 2015-16.
Jubilant DraxImage Inc.
Jubilant DraxImage Inc. (‘JDI'''') is a wholly-owned subsidiary of the Company through Jubilant Pharma. JDI develops, manufactures and markets radiopharmaceuticals used in Nuclear Medicine for the diagnosis, treatment and monitoring of various diseases. It serves hospital-based customers (Nuclear Medicine Physicians and Technologists) in addition to specialized radiopharmacies and through them patients, globally with high quality and reliable specialty products. The business is backed by a dedicated research and development team, specialized manufacturing, strong regulatory affairs and commercial operations. The areas of specialization include cardiac, lung, bone and thyroid diseases. JDI employs about 160 skilled professionals and is based in Montreal, Canada, where it operates a manufacturing facility approved by USFDA and Health Canada.
JDI has earned and maintained market leadership in North America in several specialty niche products including I-131 Therapeutic & Diagnostic capsules for imaging and treatment of thyroid diseases and thyroid cancer, Methylene-Diphosphonate (MDP) for bone imaging, Macro-Aggregated Albumin (MAA) for lung imaging and Diethylene Triamine Penta-acetic Acid (DTPA) for renal and brain imaging. Recently, JDI received approval from USFDA for RubyFill®, a cutting edge technology for PET myocardial perfusion imaging (MPI) under rest and pharmacological stress conditions to evaluate regional myocardial perfusion in adult patients with suspected or existing coronary artery disease. Revenue of the company during the Financial Year 2016-17 was '''' 8,112.66 Million as compared to '''' 7,049.54 Million during the Financial Year 2015-16.
Jubilant DraxImage Limited
This is a wholly-owned subsidiary of the Company through Jubilant Pharma. Jubilant Draximage Limited (‘JDI, India’) has been set up with a vision to cater to the Radiopharmaceutical and Nuclear Medicine field in India which lacks a structured focus from Pharmaceutical Industry. This company is engaged in marketing of innovative diagnostic imaging, radiopharmaceutical solution and therapeutic radiopharmaceutical products. Presently, JDI, India is marketing Lyophilized kits like Sestamibi, DTPA MDP and MAA in rest of the world. It is also involved in distribution of wide range of radioisotopes which include Tc-99m Generator (used in the diagnosis of Bone Cancer, Renal Imaging, Cerebral Perfusion Imaging and Myocardial Perfusion Imaging), Thallium-201 and Iodine-131 (Ranked 2nd in market share value wise in India) capsules and solution (for the diagnosis and treatment of Thyroid and its related disease), Lutetium-177 and Gallium-68 generator (Ranked 2nd in market share value wise in India) via various partnerships across South Asia. The target customers are Nuclear Medicine physicians, Cardiologists and Oncologists of various hospitals and imaging labs. Revenue of the company during the Financial Year 2016-17 was '''' 112.97 Million as compared to '''' 99.23 Million during the Financial Year 2015-16.
Jubilant Pharma NV
This is a wholly-owned subsidiary of the Company through JGL and Jubilant Pharma. This company holds shares of Jubilant Pharmaceuticals NV (99.8%) and PSI Supply NV (99.5%) along with Jubilant Pharma which holds the balance shares.
Jubilant Pharmaceuticals NV
This is a wholly-owned subsidiary of the Company through Jubilant Pharma NV, Belgium, which holds 99.8% of its shares and Jubilant Pharma holds the balance shares. This company is engaged in the business of licensing generic dosage forms and providing regulatory services to generic pharmaceutical companies. Revenue of the company during the Financial Year 2016-17 was '''' 35.12 Million as compared to '''' 43.85 Million during the Financial Year 2015-16.
PSI Supply NV
This is a wholly-owned subsidiary of the Company. 99.5% of its shares are held by Jubilant Pharma NV and the balance by Jubilant Pharma. It is engaged in the supply of generic dosage forms to the European markets. Revenue of the company during the Financial Year 2016-17 was '''' 219.50 Million as compared to '''' 239.03 Million during the Financial Year 2015-16.
Jubilant Life Sciences NV
This is a wholly-owned subsidiary of the Company. 99.99% of its shares are held by the Company and the balance by Jubilant Infrastructure Limited. It is engaged in the supply of bulk chemicals such as ethyl acetate, acetic anhydride, etc. and vitamins (feed and food grade) to the European markets.
Revenue of the company during the Financial Year 2016-17 was '''' 3,018.02 Million as compared to '''' 3,341.75 Million during the Financial Year 2015-16.
Jubilant Biosys Limited
This company is a subsidiary of the Company through Jubilant Biosys (Singapore) Pte. Ltd. (a wholly-owned subsidiary of the Company). Jubilant Biosys (Singapore) Pte. Ltd. holds 66.98% equity of this company.
This company provides Drug Discovery Services to global pharmaceutical and biotech companies in:
- Standalone Service Model including functional services in the areas of In Vitro Biology, In Vivo Biology, Structural Biology, DMPK, Toxicology and Discovery Informatics, on Full Time Equivalent (FTE) or Fee For Service (FFS) based model;
- Collaborative/Partnership Model with integrated discovery program across a single or a portfolio of molecules;
- In house proprietary model to develop assets that can be out-licensed under terms including research funding, payments for scientific milestones achieved through Discovery and Development phase and royalties on successful commercialization of drugs.
Revenue of the company during the Financial Year 201617 was '''' 887.26 Million as compared to '''' 588.47 Million during the Financial Year 2015-16.
During the Financial Year 2016-17, the Company acquired
186,620,000 12% Optionally Convertible Non-cumulative Redeemable Preference Shares of '''' 10 each of Jubilant Biosys Limited at par aggregating to '''' 1,866.20 Million. The loans granted earlier by the Company have been applied towards subscription money for the Preference Shares.
Jubilant Chemsys Limited
This company is a wholly-owned subsidiary of the Company through Jubilant Drug Development Pte. Ltd., Singapore. This company offers services in Synthetic Organic Chemistry, Combinatorial Chemistry, Medicinal Chemistry, Process Research & Development and Manufacturing, Scale up services and GMP Manufacturing-Clinical Supply to drug discovery companies of US, Europe and rest of the world on Full Time Equivalent, Fee For Service and Hybrid Model.
It also works closely with Jubilant Biosys Limited in collaborative drug discovery research. Revenue of the company during the Financial Year 2016-17 was '''' 988.78 Million as compared to '''' 662.42 Million during the Financial Year 2015-16.
Jubilant Clinsys Limited
Jubilant Clinsys Limited (‘JCL’) is a wholly-owned subsidiary of the Company through Jubilant Drug Development Pte. Ltd., Singapore. Revenue of the company during the Financial Year 2016-17 was '''' 35.06 Million as compared to '''' 25.54 Million during the Financial Year 2015-16.
During the year, JCL made an application to the National Company Law Tribunal (‘NCLT’) to extinguish its preference share capital of '''' 270.50 Million held by the Company and payment of equivalent amount to the Company. The order of NCLT is awaited.
Jubilant Clinsys Inc.
This New Jersey based USA Corporation is a wholly-owned subsidiary of Jubilant Pharma Holdings Inc. This company provides Clinical Research Data Management services through TrialStat platform. Revenue of the company during the Financial Year 2016-17 was '''' 17.40 Million as compared to '''' 37.62 Million during the Financial Year 2015-16.
Jubilant Discovery Services Inc.
This Delaware based USA Corporation is a wholly-owned subsidiary of Jubilant Biosys Limited.Thiscompanyis providing Ion channel screening services using electrophysiology. It also performs Assay development, medium-high-throughput screening, comprehensive cell-culture services under FTE and FFS business models. Apart from these services, it also provides sales, marketing and liaising services to Jubilant Biosys Limited and Jubilant Chemsys Limited. Revenue of the company during the Financial Year 2016-17 was '''' 176.04 Million as compared to '''' 133.21 Million during the Financial Year 2015-16.
Jubilant Infrastructure Limited
This wholly-owned subsidiary of the Company had entered into a Memorandum of Understanding (''''MOU'''') with the Government of Gujarat during the ''''Vibrant Gujarat'''' conference in 2007 for development of Sector Specific Special Economic Zone (''''SEZ'''') for Chemicals in Gujarat. About 107 hectares land was taken on lease from Gujarat Industrial Development Corporation (''''GIDC'''') in Bharuch District, Gujarat.
This SEZ became operational in October 2011 with the best in class infrastructure facilities and utility plants like Boiler, Gas Turbine, Effluent Treatment, Incinerator and DM Water.
The Company has two units in this SEZ. The finished products of Unit-1 and Unit-2 are fully backward integrated and are using in-house developed innovative technologies.
The global scale plants of Vitamin B3 and 3-Cyanopyridine at SEZ make your Company the largest producer of Vitamin B3 in India and the second largest globally. Revenue of the company during the Financial Year 2016-17 was '''' 715.99 Million as compared to '''' 889.10 Million during the Financial Year 2015-16.
Jubilant Life Sciences (USA) Inc.
This corporation incorporated in Delaware, USA is a wholly-owned subsidiary of the Company. It undertakes sales and distribution of advance intermediates, nutrition ingredients and fine chemicals in North America. Revenue of the company during the Financial Year 2016-17 was '''' 1,508.07 Million as compared to '''' 1,506.87 Million during the Financial Year 2015-16.
Jubilant Life Sciences (Shanghai) Limited
This wholly-owned subsidiary of the Company is held through Jubilant Life Sciences International Pte. Limited. It undertakes sales and distribution of products in China. This company is engaged in trading of advance intermediates (pyridine and its derivatives), specialty ingredients and nutrition products. It is catering to pharmaceutical, animal feed and agrochemical industries in China. This subsidiary is also a sourcing hub of raw materials for your Company. Revenue of the company during the Financial Year 2016-17 was '''' 1,036.30 Million as compared to '''' 1,325.07 Million during the Financial Year 2015-16.
Jubilant DraxImage Radiopharmacies Inc.
During the year, Jubilant DraxImage Radiopharmacies Inc. (‘JDRI’) was incorporated as a wholly-owned subsidiary of the Company through Jubilant Pharma Holdings Inc. to undertake speciality pharma business in the United States.
JDRI has signed an Asset Purchase Agreement with Triad Isotopes Inc. and its parent, Isotope Holdings, Inc. (‘Triad’) to acquire substantially all of the assets which comprise the radio pharmacy business of Triad. The closing of the transaction is subject to customary closing conditions, including contract, regulatory and other approvals. This is the second largest radio pharmacy network in the US with more than 50 pharmacies, distributing nuclear medicine products to the largest National GPOs, regional health systems, standalone imaging centres, cardiologists and hospitals. The acquisition will provide Jubilant with direct access to hospital networks with ability to deliver more than 3 million patient doses annually through approximately 1,700 customers. The acquisition will facilitate Jubilant forward integrate in the radiopharmaceutical business.
Jubilant Pharma Australia PTY Limited
During the year, Jubilant Pharma Australia PTY Limited (‘JPA’) was incorporated as a wholly-owned subsidiary of the Company through Jubilant Pharma. JPA has been set up to make regulatory filings in its own name in timely and efficient manner. This will enable Jubilant to carry on its pharma business in Australia in an effective manner. JPA will continue to follow a B2B partnership model for marketing its products in Australia.
Other subsidiaries are mentioned below:
Jubilant Innovation Pte. Limited
Jubilant Biosys (Singapore) Pte. Limited
Jubilant Drug Development Pte. Limited
Drug Discovery and Development Solutions Limited
Jubilant Life Sciences International Pte. Limited
Jubilant Innovation (BVI) Limited
Jubilant Life Sciences (BVI) Limited
Jubilant Biosys (BVI) Limited
Jubilant Innovation (USA) Inc.
Jubilant Pharma Holdings Inc.
HSL Holdings Inc.
Draxis Pharma LLC Jubilant DraxImage (USA) Inc.
Draximage LLC (Merged into Jubilant DraxImage (USA) Inc. effective from April 1, 2017)
Deprenyl Inc., USA (Merged into Jubilant DraxImage (USA) Inc. effective from April 1, 2017)
Jubilant HollisterStier Inc.
Draximage Limited, Cyprus Draximage Limited, Ireland 6963196 Canada Inc.
6981364 Canada Inc.
DAHI Animal Health (UK) Limited Draximage (UK) Limited
Jubilant Drug Discovery & Development Services Inc. Jubilant Life Sciences (Switzerland) AG Vanthys Pharmaceutical Development Private Limited Jubilant Innovation (India) Limited Jubilant First Trust Healthcare Limited
PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARIES
The performance and financial position of the subsidiaries are given in Form AOC-1 attached to the Financial Statements for the year ended March 31, 2017.
PARTNERSHIPS Jubilant HollisterStier General Partnership
It is a Canada based partnership managed by two subsidiaries of the Company - Jubilant Hollister tier Inc. and Draxis Pharma LLC. This partnership provides contract manufacturing services. It manufactures products in two categories: sterile products and non-sterile products. Sterile products include liquid and freeze-dried (lyophilized) injectables and sterile ointments and creams. Non-sterile products include non-sterile ointments, creams and liquids.
Draximage General Partnership
It is a partnership based in Canada managed by two Canadian subsidiaries of the Company i.e. Jubilant Draximage Inc. (90%) and 6981364 Canada Inc. (10%).
M/s B S R & Co. LLP, Chartered Accountants (''''BSR'''') were appointed as the Statutory Auditors of the Company at the 36th AGM of the Company to hold office until the conclusion of AGM to be held in the year 2018, subject to ratification by the members at every AGM. BSR has confirmed that ratification of their appointment, if made at the ensuing AGM, shall be in accordance with the conditions specified in the Act.
The Auditors’ Reports for the Financial Year 2016-17 do not contain any qualification, reservation, adverse remark or disclaimer.
Pursuant to Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014, the Central Government has prescribed audit of cost records for certain products. Accordingly, the Company needs to carry out cost audit of its products. Based on the recommendations of the Audit Committee, the Board of Directors has re-appointed M/s J. K. Kabra & Co., Cost Accountants as Cost Auditors of the Company to conduct cost audit for the Financial Year 2016-17.
The Board had appointed M/s Sanjay Grover & Associates, Company Secretaries to conduct Secretarial Audit pursuant to the provisions of Section 204 of the Act for the Financial
Year 2016-17. The Report of the Secretarial Auditors is attached as Annexure-1 to this Report and does not contain any qualification, reservation, adverse remark or disclaimer.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Hari S Bhartia was re-appointed as Co-Chairman and Managing Director of the Company for a period of 5 years effective from April 1, 2017 by the Shareholders at the AGM held on August 30, 2016. Mr. Hari S Bhartia retires by rotation at the forthcoming AGM and being eligible, offers himself for re-appointment.
The Board has appointed Mr. Pramod Yadav as Whole-time Director of the Company for a period of 2 years effective from April 1, 2017 subject to approval of the Shareholders at the ensuing AGM.
The Board has, at its meeting held on May 23, 2017, appointed Mr. Sushil Kumar Roongta and Mr. Vivek Mehra as Additional Directors in the category of Independent Directors and Mr. Priyavrat Bhartia and Mr. Arjun Shanker Bhartia as Additional Directors in the category of Non-Executive Directors.
Mr. Shardul S Shroff resigned from the Board of Directors of the Company effective from May 24, 2016. Mr. Shyamsundar Bang resigned as Executive Director of the Company effective from February 7, 2017 on his superannuation from the services of the Company. He continued as Non-Executive Director of the Company till March 31, 2017.
MEETINGS OF THE BOARD
Four meetings of the Board of Directors of the Company were held during the Financial Year 2016-17.
DECLARATION OF INDEPENDENT DIRECTORS
All Independent Directors have given declaration that they meet the criteria of independence as provided under Section 149 of the Act and Regulation 16 of the Listing Regulations.
APPOINTMENT AND REMUNERATION POLICY
The Company has implemented Appointment and Remuneration Policy pursuant to the provisions of Section 178 of the Act and Regulation 19 read with Schedule II, Part D of the Listing Regulations. The Policy has been disclosed in the Corporate Governance Report attached to this Report.
ANNUAL PERFORMANCE EVALUATION OF THE BOARD
A statement on annual evaluation by the Board of its performance and performance of its Committees as well as individual Directors forms part of the Corporate Governance Report attached to this Report.
DIRECTORS'''' RESPONSIBILITY STATEMENT
Your Directors, based on the representation received from the management, confirm that:
(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(ii) 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 on March 31, 2017 and of the profits of the Company for the year ended March 31, 2017;
(iii) 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;
(iv) the Directors have prepared the annual accounts on a going concern basis;
(v) 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.
Based on the framework of internal financial controls including the Controls Manager for financial reporting and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and the reviews performed by the management and the relevant Board committees, including the Audit Committee, the Board is of the opinion that the Company’s internal financial controls were adequate and effective during the Financial Year 2016-17;and
(vi) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
COMPOSITION OF AUDIT COMMITTEE
As on date, the Audit Committee comprises Mr. S Sridhar, Chairman, Ms. Sudha Pillai and Dr. Ashok Misra. The Board has accepted all the recommendations made by the Audit Committee.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, required to be disclosed pursuant to Section 134 of the Act read with the Companies (Accounts) Rules, 2014 is given as Annexure-2 and forms part of this Report.
Particulars of Directors and Employees as required under Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, are given as Annexure-3 and form part of this Report.
RISK MANAGEMENT AND INTERNAL CONTROL SYSTEMS
Risk-taking is an inherent trait of any enterprise. However, if risks are not properly managed and controlled, they can affect the Company’s ability to attain its objectives. Risk management and internal financial control systems play a key role in directing and guiding the Company’s activities by continually preventing and managing risks. The Board, Audit Committee and Senior Management team collectively set the overall tone and risk culture of the Company by identifying the risks impacting the Company’s business and documenting the process of risk identification, risk minimization and risk optimization as a part of the risk management policy through defined and communicated corporate values, clearly assigned risk responsibilities, appropriately delegated authority and a set of processes and guidelines.
There exists a critical risk management framework across the Company and the same is reviewed on a periodic basis by the Board. Some of the critical risks identified in various businesses of the Company are:
- Competition, Cost Competitiveness and Pricing
- Dependence on Certain Key Products and Customers
- Foreign Currency and Interest Rate Exposures
- Capacity Planning and Optimization
- Manufacturing Operations
- Dependence on Single Manufacturing facility
- Research & Development Effectiveness
- Supply Interruptions due to Single Source Supplier
- Limited Product Pipeline
- Failure to Supply to Customers
- Human Resources- Acquire and Retain Talent
- Compliance and Regulatory
- Environment, Health and Safety
- Protecting Intellectual Property Rights
- Information Technology
- Risk of changes in Tax Legislation
- Mergers & Acquisitions
- Political or Economic Instability or Acts of Terrorism
- Duties by Export Destination Countries
- Acceptance of Our Products in Market
- Policies regarding returns, allowances and chargeback’s in the United States
- Labour Unions
- Consolidation of Customer Base
The Company promotes strong ethical values and high levels of integrity in all its activities, which in itself is a significant risk mitigator. With the growth strategy in place, risk management holds the key to the success of the Company’s journey of continued competitive sustainability in attaining the desired business objectives.
Implementation of Internal Financial Controls
To compete globally, world class Corporate Governance and Financial Controls over operations are a must for the Company. The Internal Financial Controls as mandated by the Act, not only require a certification from CEO-CFO but also put an obligation on the Board of Directors to ensure that the Internal Financial Controls are adequate and operating effectively. Besides this, the Statutory Auditors are also required to give an opinion on the adequacy and effectiveness of Internal Controls over Financial Reporting (‘ICFR’).
To make the Internal Financial Controls framework robust, the Company has worked on three lines of defense strategy which is as under:
- First Line of Defense: Build internal controls into operating processes - To this end, we have ensured that a detailed Delegation of Authority is issued, Standard Operating Procedures for the processes are created, financial decision making is done through Committees, IT controls are built into the processes, Segregation of Duties is done, strong budgetary control framework exists, the Entity level controls including Code of Conduct, Ombudsman Office are put in place, etc.
- Second Line of Defense: Create an efficient review mechanism - We created a review mechanism under which all the business units and functions are reviewed for performance at least once in a month by the respective CEOs and once in a quarter, by the Corporate team. The formats for these reviews are detailed and finalized with the help of global consulting firms.
- Third Line of Defense: Independent assurance - A Big Four firm has been appointed as our internal auditors to perform systematic independent audit of every aspect of the business to provide independent assurance on the effectiveness of the internal controls and highlight the gaps for continuous improvement.
We have implemented a programme under which more than 2,000 financial controls are established and certified on a quarterly basis by the relevant process owners before the financial results are closed for the quarter. A quarterly certification process is maintained through a work flow based IT tool called ‘Controls Manager’ and this certification is the basis of the CEO-CFO certification stipulated by Regulation 17(8) read with Part B of Schedule II to the Listing Regulations.
The Company regularly updates the controls library and Risk and Control Matrix. The exercise of review of controls was conducted during the year by the in-house process owners with the help of a Big Four firm. The revised control framework after such review was tested for operational effectiveness by the Statutory Auditors and they have given an affirmative opinion about the adequacy and effectiveness of the Internal Controls for Financial Reporting in the Company.
The Company has three business segments namely
(a) Pharmaceuticals (b) Life Science Ingredients and
(c) Drug Discovery Solutions. Each segment has a complete management set up with CEO, CFO and other functional heads who are responsible for running the operations and report to the Chairman/Co-Chairman and Managing Director and the Corporate Committee.
To improve the controls in operations, we have established, for each line of business, the concept of financial decision making through operational committees.
A detailed note on Internal Control Systems and Risk Management is given under ‘Management Discussion and Analysis Report''''.
The Company has received Responsible Care®14001:2013 certification under the American Chemistry Council’s (ACC) Responsible Care® program for Corporate Office in Noida and Gajraula Manufacturing facility. Implementation of RC14001 and Responsible Care Management System by Jubilant demonstrates its commitment to employee health and safety, community and the environment.
Responsible Care initiative encompasses comprehensive environmental management system, occupational health and safety, product stewardship, security, community outreach and transportation safety and aims at achieving and sustaining high standards of performance.
Gajraula, Nira, Bharuch and Savli Manufacturing facilities are certified under Integrated Management System program for ISO 9001 (Quality Management System), ISO 14001 (Environmental Management System) and OHSAS 18001 (Occupational Health and Safety Management system).
Gajraula Quality Control Laboratory has also been accredited by National Accreditation Board for Testing and Calibration Laboratories in accordance with the ISO/ IEC 17025:2005. The Carbon Dioxide manufacturing facility has been certified for FSSC 22000:2005 and TS 22002-01:2009 (Food Safety System Certification) for production and dispatch of food grade Carbon Dioxide for Beverages. Carbon Dioxide product is approved by Food Safety and Standards Authority of India (FSSAI).
Gajraula manufacturing facility has been Kosher and also Halal Certified for key products going in for human consumption.
Animal Nutrition Unit at Savli is certified for FAMI-QS Code Version 5.1 in Feed Safety Management System.
Ambernath Manufacturing facility is ISO 9001:2008 certified for Quality Management System.
Bharuch Site has received Energy Management System Certification ISO 50001:2011 for energy Conservation programme (ENCON).
Vitamins plant at Bharuch is certified for FAMI-QS Code Version 5.1 in Feed Safety Management System, Kosher, Halal-India, Halal-Malaysia, Halal-Indonesia, FSSC 22000 (Global Food Safety) Compliance, Hazard Analysis and Critical Control Points (''''HACCP'''') and Good Manufacturing Practices (''''GMP'''').
Acetyl manufacturing facility at Nira has been recommended for FSSC/ ISO 22000:2005 (Food Safety System Certification) for production and dispatch of these food grade products. Further, Glacial acetic acid from Nira has been recommended to FSSC /ISO 22000:2005 for storage and supply of food grade acetic acid. Manufacturing facility at Nira has been Kosher approved and Halal certified for the products manufactured at the facility.
Our employees remain at the core of the Company’s growth strategy and play a vital role in ensuring sustainable business growth and future readiness. The Company has been focusing on strengthening its talent management and employee engagement processes through clear role expectations with specific and well defined Key Performance Indicators for each role. We believe in creating a culture of performance and merit that provides all our employees with opportunities to excel, learn and progress. We have been focusing on attracting the best talent from India’s leading campuses to have a steady flow of fresh talent, thereby creating a strong pool of internal talent.
Our well defined Leadership Competency Framework lays tremendous focus on outlining a common leadership culture throughout the organization. All our initiatives are backed by an action oriented development plan. The development initiatives lay the foundation of our talent pipeline.
Last year, we participated in the Great Place to Work survey. The results of the survey has enabled us to re-design our practices and address areas that concern our employees.
As on March 31, 2017, a total of 384 employees at our manufacturing plants at Savli, Nira and Gajraula were either members of unions or had collective bargaining capabilities. During the year, we enjoyed cordial relations with our employees and there have been no instances of labour unrest or disputes at any of the manufacturing sites.
The Company has a Policy on Prevention of Sexual Harassment at workplace and the Company has not received any complaint during the year under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
A detailed note on Human Resource Management is given in the ''''Management Discussion and Analysis Report''''.
With a view to keep its investors well informed of its activities, the Company has taken the following initiatives:
- E-mailing quarterly results and press releases to the Shareholders soon after they are sent to the stock exchanges and e-mailing Annual Reports. Maintaining user friendly Investor Section on the website of the Company www.jubl.com;
- A dedicated e-mail address viz. email@example.com for interacting on various matters with respect to share transfer, transmission, dividends and other related issues with the Company Secretary and Compliance Officer;
- Mailing feedback forms to the investors on an annual basis so as to obtain valuable feedback and suggestions for improvement. The Company has also placed an online Investor Feedback form on its website www.jubl.com under the head ''''Investor Feedback Form'''' to facilitate electronic submission of the Form;
- Earnings Presentation and Release detailing the quarterly results that are uploaded on the website www.jubl.com. Earnings call is typically conducted post announcement of results to the stock exchanges as per the schedule mentioned in the Concall Invite which is also uploaded on the website of the Company. Earnings calls playback is made available on the link shared in the Concall Invite and transcripts are uploaded on the website of the Company;
- Meeting the investors and analysts from time to time at their request;
- The presentation and meeting schedule of Roadshows attended by the Company are uploaded on its website after intimating the same to the Stock Exchanges; and
- Disclosure made to the Stock Exchanges are promptly uploaded on the website of the Company for information of the Investors.
AWARDS AND ACCOLADES
During the year, various awards and accolades were received by the Company like:
- 17th CII National Award for Excellence in Energy conferred under the Chemical/Pharma/Fertilizers category - Gajraula Plant, India;
- Sustainability Award for ‘Best Green Process’ in Chemical sector in FICCI Chemicals & Petrochemicals Awards, 2016 - Gajraula Plant, India;
- ICC Certificate of Merit for continuous efforts of ‘water resources management in chemical industries’- Gajraula Plant, India; and
- One Gold and Three Silver Awards in Kaizen Category at Quality Circle Forum of India, Ankleshwar, Gujarat -Bharuch Plant, India.
The details of Vigil Mechanism (Whistle Blower Policy) adopted by the Company have been disclosed in the Corporate Governance Report attached to this Report and which forms an integral part of this Report.
With the aim of going green and minimizing our impact on the environment, the Company continued with the green initiatives in its operations which include:
- Conducting paperless Board/ Committee Meetings;
- Uploading the Corporate Sustainability Report on the website of the Company (instead of circulating in paper or CD form) and providing its we blink to the Shareholders along with the Annual Report; and
- E-mailing Annual Reports to the Shareholders whose e-mail addresses are provided by the depositories or who have opted for the electronic version.
CORPORATE SOCIAL RESPONSIBILITY
Jubilant''''s approach to sustainable development focuses on the triple bottom line of Economic, Environmental and Social performance. Corporate Social Responsibility (''''CSR'''') is an integral part of the social performance of the Company. At Jubilant, CSR is the commitment of the Company to contribute towards inclusive growth. The thrust of CSR initiatives is to create value in the lives of the communities around the area of operations of the Company, which is an important stakeholder. Following are the highlights of CSR at Jubilant:
- During the Financial Year 2016-17, Jubilant continued its CSR initiatives in various sectors;
- Following the approach of ‘triple bottom line’, Jubilant has been publishing its Corporate Sustainability Report every year from 2003 onwards. The report is externally verified and is in accordance with Global Reporting Initiative (‘GRI’) guidelines; and
- Acknowledged application level A by GRI for our Corporate Sustainability Report since 2007 onwards. Latest report is in accordance with GRI G4
- Comprehensive. All our reports are available on the Company’s website www.jubl.com.
CSR initiatives of the Company are conceptualized and implemented through Jubilant Bhartia Foundation (''''JBF''''), the social wing of Jubilant Bhartia Group, established in 2007 as a not-for-profit organization. JBF works on 4P model (Public-Private-People-Partnership) for empowering communities and believes that for sustainable social intervention, participation of communities must be ensured in the Company’s CSR projects/ programmes. Jubilant’s role is to act as a catalyst and facilitate the process. The social initiatives of the Company are in line with the United Nations Sustainable Development Goals.
JBF in partnership with Schwab Foundation for Social Entrepreneurship has been conferring Social Entrepreneur of the Year (SEOY) Award in India since the year 2010. The award celebrates mature-stage social entrepreneurs and their organizations that implement innovative, sustainable and large-scale solutions to address poverty, indignity and lack of basic services and resources in ‘Bottom of the Pyramid’ and ultra-poor communities. They work in areas as diverse as health, education, job creation, water, clean energy, building identity and entitlements and access to information and technology. Whether they set up social businesses, hybrid social ventures or not-for-profit organizations, the primary focus of social entrepreneurs is large-scale, transformational impact.
SEOY does not fall in the purview of CSR activities pursuant to the provisions of Schedule VII to the Act. The Company shall, however, continue to confer the SEOY award over and above CSR budget of the Company in view of the social benefits of the award.
JBF’s detailed activities are available on its website www.jubilantbhartiafoundation.com. Annual Report on CSR including contents of the CSR Policy is attached as Annexure-4 to this Report.
The Listing Regulations have mandated inclusion of the Business Responsibility Report (‘BR Report’) as part of the Annual Report starting from the Financial Year 2016-17 for top 500 listed entities based on market capitalization. In compliance with the Listing Regulations, BR Report forms part of the Annual Report.
During the Financial Year 2015, Jubilant Pharma had taken loan from International Finance Corporation (''''IFC''''). Jubilant Pharma had ensured compliance towards the Environmental and Social Action Plan suggested by IFC post Environment and Social Due Diligence. Jubilant Pharma is also submitting Annual Monitoring Report (''''AMR'''') to IFC containing detailed environment and social performance of the company with respect to the IFC Performance Standards in a timely manner. The AMR also includes the latest compliance status towards the Environmental and Social Action Plan recommended by IFC during their annual E&S supervision visit.
i. Extracts of Annual Return: Pursuant to the provisions of Section 92 of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, extract of the Annual Return is attached as Annexure-5 to this Report.
ii. Public Deposits: No deposits have been accepted by the Company during the year from the public. The Company had no outstanding, overdue, unpaid or unclaimed deposits at the beginning and end of the Financial Year 2016-17.
iii. Loans, Guarantees and Investments: Details of loans, guarantees/ securities and investments along with the purpose for which the loan, guarantee or security is proposed to be utilized by the recipient have been disclosed in Note nos. 5, 6, 11, 40 and 41 to the Standalone Financial Statements.
iv. Particulars of Contracts or Arrangements with the Related Parties: The Company has formulated a policy on Related Party Transactions (‘RPTs’), dealing with the review and approval of RPTs. Prior omnibus approval is obtained for RPTs which are of repetitive nature. All RPTs are placed before the Audit Committee for review and approval.
All RPTs entered into during the Financial Year 2016-17 were in the ordinary course of business and on arm’s length basis. No material RPTs were entered into during the Financial Year 2016-17 by the Company as defined in the Policy on Materiality of Related Party Transactions. Accordingly, the disclosure of RPTs as required under Section 134(3)(h) of the Act in Form aOc-2 is not applicable. Your Directors draw attention of the members to Note no. 37 to the Standalone Financial Statements which sets out the Related Party disclosures.
v. Material Changes in Financial Position: No material change or commitment has occurred after the close of the Financial Year 2016-17 till the date of this Report, which affects the financial position of the Company.
vi. Orders passed by Courts/ Regulators: No significant or material order has been passed by the regulators or courts or tribunals impacting the going concern status of the Company or its future operations.
As a responsible corporate citizen, the Company is committed to maintain the highest standards of Corporate Governance and believes in adhering to the best corporate practices prevalent globally.
A detailed Report on Corporate Governance is attached as Annexure-6 and forms part of this Report. A certificate from a Practicing Company Secretary confirming compliance with the conditions of Corporate Governance, as stipulated in Clause E of Schedule V to the Listing Regulations is attached to the Corporate Governance Report.
The Board Members and Senior Management Personnel have affirmed compliance with the Code of Conduct for Directors and Senior Management for the year ended March 31, 2017. A certificate from the Co-Chairman & Managing Director confirming the same is attached to the Corporate Governance Report.
A certificate from the CEO and CFO confirming correctness of the financial statements, adequacy of internal control measures, etc. is also attached to the Corporate Governance Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report on the operations of the Company as provided under the Listing Regulations has been given separately and forms part of this Report.
Your Directors acknowledge with gratitude the co-operation and assistance received from the Central and State Government authorities. Your Directors thank the sh