Your Directors take pleasure in presenting the Twenty-Fourth Annual Report and AuditedFinancial Statements for the year ended 31st March 2016.
(Rs. in million except dividend per share and book value)
| ||Standalone ||Consolidated |
|Particulars ||Year ended 31st March 2016 ||Year ended 31st March 2015 ||Year ended 31st March 2016 ||Year ended 31st March 2015 |
|Total Revenue ||80462.8 ||82400.2 ||288866.8 ||279396.7 |
|(Loss) / Profit after tax ||(10733.6) ||(14741.3) ||47159.1 ||45393.8 |
|Dividend on Equity Shares ||2406.8 ||7219.5 ||2406.8 ||7219.5 |
|Corporate Dividend tax ||74.7 ||1469.7 ||490.0 ||1469.7 |
|Transfer to various Reserves ||- ||- ||1230.8 ||1.9 |
|Amount of dividend per equity share of Rs. 1/- each ||1.0 ||3.0 ||1.0 ||3.0 |
|Book value per equity share Rs. 1/- each* ||89 ||95 ||130 ||107 |
* Including Share Suspense Account for 2014-15.
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 theapproval of the shareholders at the ensuing Annual General Meeting.
CHANGES IN CAPITAL STRUCTURE
Pursuant to allotment of shares consequent upon merger of erstwhile RanbaxyLaboratories Limited ("erstwhile Ranbaxy") into the Company the paid-up sharecapital of the Company has increased from Rs. 2071163910/- to Rs. 2406120674/- andconsequent to allotment of shares under the Employee Stock Option Schemes of the Companypaid up share capital of the Company increased from Rs. 2406120674/- to Rs.2406728499/- during the year ended 31st March 2016.
Post the financial year the Company has also allotted 25460 equity shares under SunEmployee Stock Option Scheme - 2015 on 2nd May 2016 and paid up share capital of theCompany increased from Rs. 2406728499/- to Rs. 2406753959/-.
REDEMPTION OF NONCONVERTIBLE DEBENTURES
The Company has made payment of redemption amount and interest pertaining to 5000Secured Rated Redeemable Non-Convertible Debentures (NCDs) of the face value of Rs.1000000/- each aggregating to Rs. 500 Crores (listed on National Stock Exchange of IndiaLtd) on 23rd November 2015 to the NCD holders of the Company whose names were registeredon the Register of beneficial owners maintained by depositories in respect of the NCDsheld 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 theCompanies 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 theCompanys subsidiaries/ joint ventures/ associate companies of the Company is givenin Form AOC 1 which forms a part of this Annual Report. Details pertaining tocompanies that became subsidiaries/ joint ventures /associates and those that ceased to bethe subsidiaries/ joint ventures /associates of the Company during the year are providedin 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 beingeligible offers himself for reappointment 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) yearsand their appointment was approved by the shareholders at the 22nd Annual General Meetingof the Company. Their tenure expires at the conclusion of the ensuing 24th Annual GeneralMeeting of the Company. The Nomination and Remuneration Committee at their meeting held on30th May 2016 has recommended a second term for all the Independent Directors. The Boardof 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 theconclusion 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 tothe 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 Companyconfirming that they meet with the criteria of independence as prescribed undersub-section (6) of Section 149 of the Act and as per SEBI (Listing Obligations andDisclosure 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 & RemunerationCommittee identifies persons of integrity who possess relevant expertise experience andleadership qualities required for the position. The Committee also ensures that theincumbent fulfills such other criteria with regard to age and other qualifications as laiddown under the Act Listing Regulations 2015 or other applicable laws. The Board has onthe recommendation of the Nomination & Remuneration Committee framed a policy forselection appointment and remuneration of Directors & Senior Management. The summaryof Remuneration Policy of the Company is disclosed in the Corporate Governance Reportwhich 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 Agreementand as per Regulation 25(7) of the Listing Regulations 2015 the Company has put in placea Familiarization Programme for the Independent Directors to familiarize them with theCompany their roles rights responsibilities in the Company nature of the industry inwhich the Company operates business model etc. The details of the FamiliarizationProgramme is available on the website of the Company www.sunpharma.com and may be accessedthrough 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 financialyear on 29th May 2015 11th August 2015 31st October 2015 7th November 2015 and 12thFebruary 2016. The particulars of attendance of the Directors at the said meetings aredetailed in the Corporate Governance Report of the Company which forms a part of thisReport. The intervening gap between the Meetings was within the period prescribed underthe 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 evaluationof its own performance its various Committees and individual directors pursuant to theprovisions of the Act and relevant Rules and the Corporate Governance requirements asprescribed under Clause 49 of the erstwhile Listing Agreement which are in compliance withRegulation 17 of Listing Regulations 2015. The performance of the Board was evaluated bythe Board after seeking inputs from all the Directors on the basis of various criteriasuch as Board Composition process dynamics quality of deliberations strategicdiscussions effective reviews committee participation governance reviews etc. Theperformance of the Committees was evaluated by the Board after seeking inputs from theCommittee members on the basis of criteria such as Committee composition processdynamics deliberation strategic discussions effective reviews etc. The Nomination andRemuneration Committee reviewed the performance of the individual Directors on the basisof the criteria such as Transparency Analytical Capabilities Performance LeadershipEthics and ability to take balanced decisions regarding stakeholders etc.
In a separate meeting of Independent Directors performance of Non IndependentDirectors performance of the Board as a whole and performance of the Chairman wasevaluated taking into account the views of the Executive Directors and Non-executiveDirectors. The same was discussed in the Board Meeting that followed the meeting ofIndependent Directors at which the performance of the Board its Committee and individualDirectors was also discussed.
Your Company considers its employees as most valuable resource and ensures strategicalignment of Human Resource practices to business priorities and objectives. Globally theCompany (including subsidiary and associate companies) has a dedicated human capital ofover 30000 employees at various locations across our Corporate Office R & D Centers& more than 45 Manufacturing locations dedicated Sales Professionals across variousgeographies. Our constant endeavor is to invest in people and people processes to improvehuman capital for the organisation and service delivery to our customers. Attractingdeveloping and retaining the right talent will continue to be a key strategic imperativeand the organisation continues its undivided attention towards that. Your Company strivesto provide a conducive and competitive work environment to help the employees excel andcreate new benchmarks of productivity efficiency and customer delight. Your Directorswould also like to take this opportunity to express their appreciation for the hard workand commitment of the employees of the Company and look forward to their continuedcontribution. Information as per Section 197 (12) of the Act read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is providedin "Annexure - B" to this report. Further the information pertaining to 5(2)& 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 pertaining to the names and other particulars of employees is available forinspection at the Registered office of the Company and pursuant to the proviso to Section136 (1) of the Act the report and the accounts are being sent to the members excludingthis. Any shareholder interested in obtaining a copy of the same may write to the CompanySecretary/Compliance Officer at Corporate office or Registered office address of theCompany.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE PREVENTION PROHIBITIONAND REDRESSAL ACT 2013
Your Company strongly believes in providing a safe and harassment free workplace foreach and every individual working for the Company through various interventions andpractices. It is the continuous endeavor of the Management of the Company to create andprovide an environment to all its employees that is free from discrimination andharassment including sexual harassment. The Company has adopted a policy on preventionprohibition and redressal of sexual harassment at workplace in line with the provisions ofthe Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013 and the Rules thereunder for prevention and redressal of complaints of sexualharassment at workplace. During the year ended 31st March 2016 no complaints pertainingto sexual harassment was received by the Company.
The Companys Auditors Messrs. Deloitte Haskins & Sells LLP CharteredAccountants (Firms Regn No. 117366W/W-100018) were appointed as the StatutoryAuditors of the Company for a period of three years at the 22nd Annual General Meeting ofthe Company upto the conclusion of the 25th Annual General Meeting of the Companysubject to ratification by members at every Annual General Meeting of the Company. Theyhave confirmed their eligibility under Section 141 of the Act and the Rules framedthereunder for reappointment as Auditors of the Company. As required under Regulation 33of the Listing Regulations 2015 the auditors have also confirmed that they hold a validcertificate issued by the Peer Review Board of the Institute of Chartered Accountants ofIndia.
The Auditors' Report for the financial year ended 31st March 2016 has been issued withan unmodified opinion.
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 hasappointed Messrs C. J. Goswami & Associates Practicing Company Secretaries Mumbai toundertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexedherewith 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 filing of disclosure under Regulation 30of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 2011 fordisclosing 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 inthe English language newspaper but not published in the regional language newspaper wherethe registered office of the Company is situated as per the requirement of Clause 41 ofthe Listing Agreement / Regulation 47 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
The Boards 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 andGujarati Edition. However on account of change in newspaper for publication from onedaily to another daily (which does not have a Gujarati Edition) the publication ofresults in the regional language newspaper was missed due to inadvertence.
The Company has appointed Messrs. Kailash Sankhlecha & Associates CostAccountants Vadodara as Cost Auditors of our Company for conducting Cost Audit in respectof 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 thefinancial statements.
RELATED PARTY TRANSACTIONS
The policy on Related Party Transactions as approved by the Board is available on thewebsite of the Company and can be accessed through the web linkhttp://www.sunpharma.com/policies. All contracts/ arrangements entered by the Companyduring the previous financial year with the related parties were in the ordinary course ofbusiness and on arms length basis.
The Company has entered into material Related Party Transactions i.e. transactionsexceeding ten percent of the annual consolidated turnover as per the last auditedfinancial statements during the year with Sun Pharma Laboratories Limited a wholly ownedsubsidiary. The transactions entered into between a holding company and its wholly ownedsubsidiary of the Company do not require approval of the shareholders. The disclosure ofRelated Party Transactions as required under Section 134(3)(h) of the Act in Form AOC 2is not applicable.
AUDIT COMMITTEE COMPOSITION
The details pertaining to composition of Audit Committee are included in the CorporateGovernance Report which forms a part of this Report.
The Company has developed & implemented an integrated Enterprise Risk ManagementFramework through which it identifies monitors mitigates & reports key risks thatimpacts its ability to meet the strategic objectives. The Board of Directors haveconstituted a Risk Management Committee which is entrusted with the responsibility ofoverseeing various strategic operational and financial risks that the organization facesalong with the adequacy of mitigation plans to address such risks. There is an overarchingRisk Management Policy in place that was reviewed and approved by the Board. The detailsof Risk Management Committee are mentioned in the Corporate Governance Report which formsa part of this Report.
INTERNAL FINANCIAL CONTROLS
The Company has in place well defined and adequate internal financial controlframework. During the year such controls were tested and no material weaknesses in theirdesign 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 haveconstituted a Corporate Social Responsibility (CSR) Committee. The details of membershipof the Committee & the meetings held are detailed in the Corporate Governance Reportforming part of this Report. The contents of the CSR Policy of the Company as approved bythe Board on the recommendation of the CSR Committee is available on the website of theCompany and can be accessed through the web link: http://www.sunpharma.com/policies. Theaverage net profits of the Company for last three financial years is negative thereforethe Company was not required to spend on CSR activities during the previous year. Howeverthe Company has voluntarily spent on CSR activities and the Annual Report on CSRactivities containing details of voluntary expenditure incurred by the Company includingthat of erstwhile Ranbaxy and brief details on the CSR activities are given in"Annexure D".
The Company has not accepted any deposit from the Public during the year under reviewunder 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 prescribedunder Part B of Schedule V read with regulation 34 (3) of the Listing Regulations 2015 isprovided 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 regardingcompliance of the conditions of Corporate Governance as stipulated in Part C of Schedule Vof the Listing Regulations 2015 with the Stock Exchanges are enclosed as a separatesection 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 exchangeearnings and outgo as stipulated under Section 134(3)(m) of the Act read with Rule 8 ofThe 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 andthe other by Direct Route both inherited from erstwhile Ranbaxy. The scheme throughDirect Route has been named as Sun Pharma Employee Stock Option Scheme 2015 andthe one through Trust Route as Sun Pharma Employee Stock Option Plan 2015. Both theschemes were adopted by the Company with certain amendments consequent upon merger oferstwhile 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 ortribunals which impact the going concern status and Companys operations in future.
WHISTLE BLOWER POLICY/ VIGIL MECHANISM
To create enduring value for all stakeholders and ensure the highest level of honestyintegrity and ethical behaviour in all its operations the Company has a WhistleBlower Policy for Sun Pharmaceutical Industries Limited (SPIL) and its Indiansubsidiaries and a Global Whistle Blower Policy for its Global subsidiariesin addition to the existing Global Code of Conduct that governs the actions of itsemployees. In the Corporate Governance Report forming part of this report further detailsare 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 theAct 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 March2016 the applicable accounting standards have been followed along with proper explanationrelating to material departures;
b) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2016 and of loss of theCompany for the year ended on that date;
c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets 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 theCompany and that such internal financial controls are adequate and were operatingeffectively.
f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
In accordance with the requirements of the Act and Listing Regulations 2015 theConsolidated Accounts of the Company and its subsidiaries form a part of this AnnualReport.
ICRA Ltd. has reaffirmed the highest credit rating of ICRA A1+/ICRAAAA (Stable) for the commercial paper programs and bank facilities of the Company.Further CRISIL Ltd. has also reaffirmed the highest credit rating of CRISILA1+/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 andbank facilities of the Company. The Company had voluntarily requested for such withdrawalsince it has fully repaid the amounts under the said NCD issue and the bank facilitiescontinue 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 2016in 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 andis kept at the Registered office / Corporate office of the Company for inspection. A copyof the aforesaid report shall be made available to such of those shareholders who aredesirous and interested upon receipt of a written request from them.
Your Directors wish to thank all stakeholders employees and business partnersCompanys bankers medical profession and business associates for their continuedsupport and valuable co-operation.
The Directors also wish to express their gratitude to investors for the faith that theycontinue to repose in the Company.
| ||For and on behalf of the Board of Directors |
| ||ISRAEL MAKOV |
| ||Chairman |
|30th May 2016 || |
|Mumbai || |