AND MANAGEMENT DISCUSSION AND ANALYS
TO THE MEMBERS
Your Directors have pleasure in presenting their Seventy-second Annual Report and theAudited Financial Statements of the Company for the financial year 2015-16.
FINANCIAL HIGHLIGHTS :
| || ||(Rs. in Lakhs) |
| ||For the year ended March 31 2016 ||For the year ended March 31 2015 |
|Sales ||258022.97 ||223760.25 |
|Profit Before Tax ||40172.46 ||34436.08 |
|Profit After Tax ||25962.77 ||22895.93 |
|Balance brought forward ||66613.00 ||53934.96 |
|Profit available for appropriation ||92575.77 ||76830.89 |
|Appropriations : || || |
|Dividend (Proposed) ||7437.26 ||6587.28 |
|Corporate Dividend Tax ||1514.05 ||1341.02 |
|Transfer to Reserves ||2596.28 ||2289.59 |
|Balance carried forward ||81028.18 ||66613.00 |
Your Directors have pleasure in recommending a dividend of ' 35 per share on21249302 fully paid-up Equity Shares of ' 10 each of the Company for the year endedMarch 31 2016. The proposed dividend if approved at the Annual General Meeting willabsorb a sum of ' 7437.26 Lakhs (Previous year : ' 6587.28 Lakhs) and Corporate DividendTax of ' 1514.05 Lakhs (Previous year : ' 1341.02 Lakhs). The Corporate Dividend Tax isprovided at the rate applicable on the day on which the Accounts were approved by theBoard of Directors.
During the year ' 2596.28 Lakhs was transferred to General Reserve. The totalReserves as on March 31 2016 amounted to ' 108639.29 Lakhs comprising of AmalgamationReserve ' 37.82 Lakhs Capital Reserve ' 522.62 Lakhs Capital Redemption Reserve '252.48 Lakhs General Reserve ' 26798.19 Lakhs and Surplus as per Statement of Profit& Loss amounting to ' 81028.18 Lakhs.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Indian economy with GDP in excess of USD 2 trillion is amongst the top 10 economiesin the world. The World Economic Outlook 2016 published by the International Monetary Fund(IMF) suggests that the Indian economy is expected to outperform other emerging marketslike China Russia and Brazil. The growth will be driven by private consumption which hasbenefited from lower oil prices and pick up in industrial activity.
IMS Health Market Prognosis Report suggests that economic growth in the medium termwill be driven by rapid growth in the workforce an expanding middle class urbanizationand shift away from low-productivity agriculture to manufacturing and services. Forsustaining long term economic growth fiscal consolidation reduction in subsidies labourreforms and dismantling bottlenecks in infrastructure will be required.
According to Asian Development Bank the all-round India growth story continues withGDP growth of 7.6% for 2015-16 and expected to grow at 7.8% during 2016-17.
INDIAN HEALTHCARE ENVIRONMENT
The Indian Healthcare environment is characterized by a peculiar mix of accountabilitystructure policy interventions and evolving demographics. The Constitution of India makeshealth in India the responsibility of State Governments rather than the CentralGovernment. This puts the onus of implementation of various healthcare initiatives on thestates. Different studies have shown uneven achievement of Indian states on varioushealthcare parameters. Given this background the public expenditure on healthcare isexpected to remain low compared to international standards and patients ending up payingmajority of the expenses out-of-pocket.
The developments in the last year suggest that a key policy goal will be improvingaccess to a broad range of primary care services including availability of drugs. Thiswill require investment in the primary health infrastructure and recruiting and trainingof personnel. Expansion of initiatives like Jan Aushadhi will lead to increased allocationof resources for purchase of essential medicines by the Government.
Finally the changes in demographics will have a long term impact on the healthcareenvironment. By 2019 India will be home to more than 8 crore senior citizens above theage of 65 years. This will be the fastest growing demographic. Thus chronicnon-communicable diseases (NCDs) are being diagnosed with increasing frequency whileincidence of most communicable diseases is falling. The concern is that onset of seriouschronic conditions is being recorded at a much earlier age in Indian patients than thosein many developed countries.
INDUSTRY STRUCTURE AND DEVELOPMENTS
The Indian Pharmaceuticals Market (IPM) registered a growth of ' 104633 crores growingat 14.4% over prior year. In line with the demographic changes the chronic therapiessegment is the fastest growing sector. Chronic therapy market contribution has nowincreased to 33% from 27% at the beginning of this decade. This trend is more acutelyobserved in urban areas. For example in Metros chronic therapy share of pharmaceuticalmarket is 37% compared to 26% in rural areas.
The market continues to be fragmented and intensely competitive with top 10 playershaving 43% market share and only three multinational companies in top 10. Typically thereare 25-30 brands competing for prescriptions of a molecule.
The new product pipelines have shrunk substantially. In 2015 Indian regulatorsapproved the lowest number of new products since 2001. Also in March 2016 the Governmentbanned over 300 fixed dose combinations some of which had DCGI approvals. Thesedevelopments indicate increased challenges on pipeline of new products.
OPPORTUNITIES AND THREATS
IMS Health (IMS) has forecasted a Compounded Annual Growth Rate (CAGR) of 11%-12% for2015 to 2020 period. Economic expansion population growth and epidemiological trends willall continue to drive up demand for medicines. The following trends are expected to impactthe IPM :
More stringent regulatory standards : In order to preserve India's status aspre-eminent supplier of generic medicines Indian regulators are expected to pursue anumber of initiatives for improving quality of medicines. Amongst these will be changes inmanufacturing standards alignment of norms to global standards and increased monitoring.
Increased collaboration between different stakeholders : Partnerships alliancesbetween Indian and multinational companies are expected to increase. This will be drivenby complementary requirements of companies. For multinational companies thesepartnerships will provide increased reach to customers whereas Indian companies will getaccess to new products and technologies.
Emergence of large product brands and brand building :
As per IMS Health 2015 was the first year when a pharmaceutical brand generated annualsales in excess of ' 500 crores. Today 117 brands have annual sales in excess of ' 100crores. In the absence of robust new product pipelines companies will focus on drivinggrowth through existing brands which will lead to more brand building efforts.
Lack of Awareness : Despite significant improvements over the years India continues tolag in terms of healthcare outcomes. Part of the challenge lies in lack of diseaseawareness. This is expected to improve with different stakeholders coming together forimproved screening early diagnosis health education and prevention in disease areas thathave significant gaps.
Evolving Over The Counter (OTC) market : Enhanced implementation of dispensingguidelines of prescription products has started to limit unsupervised patient access tothese products. Moreover patients are increasingly aware of perils of self-medication dueto rising education levels and access to information through digital media. Finallyincreased affordability due to rising income levels are expected to drive stronger andmore defined evolution of the OTC market.
Increased consolidation across the value chain :
Intensified pressure on costs and prices is expected to drive consolidation in themanufacturing sector. In addition to the roll out of harmonized GST emergence of internetpharmacies will lead to structural changes in the distribution and retail markets.
REVIEW OF OPERATIONS
Financial Performance Sales :
Net Sales for the year ended March 31 2016 amounted to ' 258022.97 Lakhs registeringa growth of 15.3% over the previous year mainly driven by volumes.
Material Cost :
Material Cost has reduced marginally from 58.6% in 2014-15 to 58.4% of Net Sales in thecurrent year.
Employee Benefit Expenses :
During the year under review the Company increased its people strength by 3.1% to2956. The increase of 10.3% in employee cost is mainly on account of merit increase andstatutory pronouncements.
Other Expenses :
Other expenses including depreciation and finance cost increased by 15.2% over theprior year mainly on account of inflation marketing spend to support volume growthmarket research projects and new vaccine division launch. The spend as a percentage ofNet Sales was 16.7% compared to 16.8% for the year 2014-15.
Other Income :
During the year Other Income grew by 6.1% mainly due to increase in Interest Incomefrom Bank Deposits.
The Company continued to invest in Bank Deposits with a view to safeguarding theprincipal and maintaining liquidity. Income from Bank Deposits grew by 10.6%.
Investment strategy is reviewed periodically by the Finance Committee.
Profit Before Tax and Dividend :
Profit Before Tax for the year ended March 31 2016 stood at ' 40172.46 Lakhs being15.6% of Net Sales as compared to 15.4% in the previous year.
The Board of Directors has recommended a dividend of ' 35 per equity share.
The Company operates in a single reportable business segment i.e."pharmaceuticals". The Company's business operations are divided into fourbusiness divisions i.e. (i) Women's Health & Gastrointestine Gastroenterology andHepatic Care (ii) Specialty Care (iii) GenNext & Vaccines and (iv) Consumer Care.
The key performance highlights of each business division for the year 2015-16 are asfollows :
Women's Health & Gastrointestine Gastroenterology and Hepatic Care Division
The division has a mix of global and local brands present in the pregnancyconstipation and liver diseases segments. Several of the Company's largest brandsincluding Duphaston (Women's Health Hormone) Duphalac (Laxative) Udiliv (HepaticProtective) Cremaffin (Laxative) Cremaffin Plus (Laxative) and Creon (DigestivesEnzymes) are part of this division.
Women's Health & Gastrointestine :
This segment grew by 18.4% during the year. Some of the key brands like DuphastonUdiliv Duphalac and Creon have shown double digit growth during the year and contributedsignificantly to overall segment growth.
This segment posted a strong growth of 20.7% during the year. This growth was majorlydriven by brands like Cremaffin and Cremaffin Plus.
Hepatic Care :
This segment grew by 42.7% during the year. The growth was majorly driven by newlyintroduced brand Viroclear (Antiviral).
Specialty Care Division
This segment consists of comprehensive range of products in treatment of CentralNervous System and Metabolic disorders. It is present in the therapy areas likehypothyroidism vertigo epilepsy depression and migraine. The key brands are Thyronorm(thyroid preparations) Vertin (antivertigo) Prothiaden (antidepressant) Surbex Gold(multivitamin antioxidants) and Inderal (migraine prophylaxis) which enjoy marketleadership position in their respective therapeutic areas. The segment grew by 10.1% overprevious year.
This segment grew at 13.3% during the year. Thyronorm continues to grow significantlyand retains flagship position* in its segment.
Central Nervous System :
This segment grew by 7.4% during the year. In the vertigo treatment sub-segment Vertincontinues as the market leader*. In the anti-depression sub-segment Prothiaden has showna double digit growth this year.
This segment is present in several therapy areas including pain management vitaminsand pregnancy. It comprises multi-specialty drugs and applications and is primarily aimedat general physicians. Key brands include Brufen (pain killer) Duvadilan (peripheralvasodilator) Zolfresh (sleep management) Arachitol (Vitamin D nano preparations) andDigecaine (antacid anaesthetic). in the market and has grown significantly over the lastyear. This division focuses on building on the brand equity of its legacy brands as wellas scientific promotion to build its newer brands
In the current year the division had a remarkable growth of 14.8%. All the key brandsin the segment like Brufen Digecaine registered sturdy performance. Zolfresh retainsnumber 1* position in its segment.
The Company continues to dominate the Influenza market. During the year the Companyentered into a licensing arangement with Bharat Biotech India Limited to market vaccinesin immunology segment. Influvac (Influenza vaccine) continued a strong performance. Newlyintroduced Enteroshield (typhoid vaccine) and Rotasure (rotavirus diarrhea vaccine)outperformed in the first year of launch. This segment contributed 2.1% of Net Sales forthe year.
Consumer Care Division is present in the Over The Counter (OTC) antacid segment. Thisdivision promotes all variants of Digene (antacid - antiflatulent) brand - tabletsliquids and powders.
The segment focuses on connecting with patients through positioning of its productsmainly through mass media social media and point of sale promotion. New advertisement andmarketing strategies will help sustaining the growth of this portfolio.
New Product Launches
Your Company launched 17 new products during the year in various therapy segmentswhich together contributed 1.9% of the Net Sales of the Company.
In India it is observed that there is a constant need for generating data on theepidemiology of diseases and understanding of the perspectives of physicians and patientsin various disease areas. This has become an important need for Health Care Professionalsto improve patient care based on real life evidence.
Some of the important ways by which the Company has emerged as a scientific leader inthe Indian branded generic space is by generating ethical evidence to support theportfolio creating disease awareness and generating clinical data and evidencespecifically catering to the Indian population in various disease and therapeutic areas.
We conduct approximately 15-20 Medical Research studies in a year.
Details of a few Studies :
Studies supporting Thyroid Portfolio :
Our first study was designed to assess the nationwide prevalence of thyroid disorderparticularly hypothyroidism in adults residing in various cities in India as there waspaucity of data. The study results demonstrated that hypothyroidism was found to be acommon form of thyroid dysfunction affecting 10.9% of the study population. The prevalenceof undetected hypothyroidism was 3.5%. This suggested that a significant proportion ofpatient population might be going undetected and untreated. The results of the study werepublished as an abstract in The American Thyroid Association Journal and the manuscriptwas published in the Indian Journal of Endocrinology and Metabolism in 2013.
As a follow up we are currently conducting a Thyroid Registry which is aimed to studythe disease profile and real world treatment paradigm of hypothyroid patients in India.
Study for Insomnia :
This study was designed to evaluate the prevalence of insomnia among employees ofvarious corporate offices across India. The results demonstrated that the prevalence ofinsomnia in corporate employees was 13.8%. Of the participants with insomnia 96.4% werepreviously undiagnosed/undetected reflecting the large scale of unawareness related toinsomnia. This study was done in smaller corporate settings and needs larger studies forvalidation but it shows a possibility of high prevalence of insomnia which remainundetected in our current urban population.
Study in Women's Health :
The Recurrent Miscarriage Study was conducted in five metropolitan cities across India.The study results demonstrated that 32% of the approximately 2400 participants hadsuffered spontaneous miscarriage and the prevalence of recurrent spontaneous miscarriagewas as high as 7.5% among Indian urban women. This study was published in The Journal ofObstetrics and Gynecology of India in 2015 and the finding of this epidemiological studyhas furnished important information regarding the prevalence of recurrent spontaneousmiscarriages and the associated risk factors in the Indian population.
The studies are part of evidence building and strive to address gaps between treatmentguidelines and real life clinical practice with the overall objective of improvingpatient care.
IMS Health (IMS) has forecasted a Compounded Annual Growth Rate (CAGR) of 11%-12% for2015 to 2020 period. Economic expansion population growth and epidemiological trends willall continue to drive up demand for medicines.
The Company enjoys a strong reputation as a science based organization with keyspecialists and opinion leaders. Leveraging its strengths the Company has identifiedspecific initiatives to gain advantage of market opportunities. Some of these are :
Accelerate growth of existing brands through market shaping initiatives : Several ofthe Company's brands are leaders in their respective segments. The Company is focusing oninitiatives that will expand the market through increased patient awareness and diagnosis.
Strengthen portfolio depth in existing therapy areas:
The Company is evaluating several opportunities to expand its portfolio in existingtherapy areas like hepatology gastroenterology and vaccines.
Use technology to engage different stakeholders :
In the last few years India has seen increasing usage of digital tools targeted towardspatients doctors and diagnostics. The Company plans to leverage the opportunity offeredby digital to enhance engagement with healthcare professionals and patients.
RISKS AND CONCERNS
Indian drug regulatory environment is going through a phase of many changes. TheRegulator's focus is on streamlining of regulatory procedures ease of doing businessskill development digitalization of services and enforcement mechanism along with furtherstrengthening of drug regulatory system in the country. While the Regulators lookcommitted to create an environment
conducive for pharma companies to do business in India policy and operations do notseem to be in sync. This remains a major challenge.
Some of the new initiative and regulations include alignment of data requirements fromanimal toxicity studies for approval of new drugs removal of requirement of obtainingexport NOC for pharmaceutical exports to developed countries; launch of SUGAM portal forsubmission of applications for import & registration of drugs medical devicesregistration of cosmetics & various other applications. These initiatives are expectedto improve the speed and transparency in regulatory review process. On the downside thePricing policy continues to trouble hamper industry with more and more products beingbrought under price control.
Some of the important changes expected in the near future include online submission ofNew Drug & Clinical Trial applications increased vigilance on quality of drugsthrough site inspections for GMP compliance; amendments in Drugs and Cosmetics Act &Rules for clarity ease and operational efficiency revision of 2012 Biosimilarguidelines which seems to dilute the existing guidelines in terms of data requirementsfor approval; changes and clarity in the regulations for food & nutrition relatedproducts.
INTERNAL CONTROL AND ITS ADEQUACY
The internal controls of the Company operate through well documented standard operatingprocedures policies and process guidelines. The Company has an adequate system ofinternal financial control commensurate with its size and nature of business which helpsin ensuring orderly and efficient conduct of its business. These systems provide areasonable assurance in respect of financial and operational information complying withapplicable statutes safeguarding of assets of the Company prevention & detection offrauds accuracy and completeness of accounting records and ensuring compliance withcorporate policies.
Significant internal audit observations and management actions thereon are reported tothe Audit Committee on a quarterly basis. The Audit Committee reviews the observations andassesses the adequacy of the actions proposed as well as monitors their implementation.Internal Auditors conduct a quarterly follow up for implementation / remediation of allaudit recommendations and the status report is presented to the Audit Committee regularly.
The Company has a formal system of internal control testing which examines both thedesign and operational effectiveness to ensure reliability of financial and operationalinformation and all statutory/regulatory compliances. The Company Management has assessedthe effectiveness of internal control over financial reporting for the year ended March31 2016 and based on the assessment believe that the Company's internal controls areadequate and
working effectively. The Statutory Auditors have issued an audit report on the adequacyand effectiveness of the internal financial control systems over financial reporting.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES
At Abbott India Limited we are committed to building a future-ready organization toensure that the current growth rate is sustainable over the long term. Our team of 2900+colleagues remain our biggest advantage in the highly competitive pharma industry. TheHuman Resource (HR) team has built specific programs to encompass the entire employeelifecycle covering attraction of the best talent both internally and externallyretention via career management and rewards and development across all cadres.
The integrated approach to the Talent Strategy helped to drive focus on two key facetsof people management - attracting the best talent and developing people within theorganization.
Attracting the Best Talent
We have driven differentiated talent hiring from multiple channels including premierbusiness schools in India and Internationally. The team is conscious about the imperativeneed to also organically build a robust field sales force that forms the backbone of theorganization. This has been achieved via hiring from leading graduate colleges in thecountry - 91 hires in the last academic year - as well looking to diverse backgrounds suchas FMCG MBA in addition to peer pharma organisations while onboarding experiencedresources. Over 60% of our Therapy Business Managers come from the said differentiatedbackgrounds.
Robust Career Management : In order to ensure sustained retention and development ofthe workforce in a highly competitive talent market we have continued our focus oncreating a structured career development framework for our employees. This has enabledtransparent and objective cross function and location movements across the Company. 106roles have been closed via internal applications. 63 managerial roles were filled byinternal career progression. In addition to this the team is driving the identificationof roles that are critical and can have a significant impact on the operations of thebusiness with the objective to ensure resource adequacy in terms of capacity andcapability; feeder roles' and internal successors have been identified.
Training and Certification : The HR team continues to partner with the CommercialExcellence function to execute the three tier Field Certification Program' (PrimaMagna and Maxima) to enable transition across the career path for the sales team. Over2000 successful certifications have now been completed across these programs.
Our other key initiatives include :
Extension of our activation capability to Women's Health & Gastrointestineteam through the setting up of dedicated team of 18 employees.
Ehalo Bazaar an initiative in which all Head Office employees took active partand invested a day in field work. This was highly successful is building a deeper sense ofappreciation for the Head Office staff towards the field sales teams.
2015-16 has been a significant step towards building a stronger workforce acrossfunctions and levels at the Company and further consolidating the Company's position as anEmployer of Choice'.
Prevention of Sexual Harassment at Work Place :
The Company had constituted Internal Complaints Committee (ICC) under the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013. Duringthe year HR team also incorporated the training on the facets of this law as part of NewHire Orientation Program.
There were no complaints received by the Company/ICC during the year under theaforesaid Act.
Total Number of Employees :
Total number of employees as on March 31 2016 is 2956.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134 (5) of the Companies Act 2013 your Directors state that :
a. in the preparation of the Annual Accounts for the year ended March 31 2016 theapplicable accounting standards have been followed and there are no material departuresfrom the same;
b. they have selected such accounting Policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as at March 31 2016 and of the profits of theCompany for that year;
c. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d. they have prepared the Annual Accounts of the Company on a going concern basis;
e. they have laid down adequate Internal Financial Controls to be followed by theCompany and that such Internal Financial Controls are adequate and are operatingeffectively;
f. they have devised proper systems to ensure compliance
with the provisions of all applicable laws and that such systems are adequate andoperating effectively.
RELATED PARTY TRANSACTIONS
Policy on dealing with Related Party Transactions and Materiality :
Policy on dealing with Related Party Transactions and Materiality is available on theCompany's website at http://www.abbott.co.in/investor-relations-policies-and-procedures.html As per the said Policy all Related Party Transactions are pre-approved bythe Audit Committee and Board as and when required. The same are also reviewed by theAudit Committee on a quarterly/annual basis.
Details of Related Party Transactions :
All contracts/arrangements/transactions entered into by the Company during thefinancial year 2015-16 with Related Parties were in the ordinary course of business and onarm's length basis. Also there was no contract/arrangement/ transaction with any of theRelated Parties which could be considered material in accordance with the Companies Act2013 Rules framed thereunder and Regulation 30 of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015.
Details of Related Party Transactions entered into by the Company during the financialyear 2015-16 are provided in Note 41 to the Financial Statements.
CORPORATE SOCIAL RESPONSIBILITY
Corporate Social Responsibility (CSR) Policy:
The CSR Policy of the Company is available on its website athttp://www.abbott.co.in/investor-relations-policies-and- procedures.html
CSR initiatives undertaken during the financial year 2015-16 :
During the year the Company spent ' 645.34 Lakhs on various CSR activities.
The Annual Report of CSR activities undertaken by the Company during the financial year2015-16 is annexed as "Annexure I" and forms part of this Report.
RISK MANAGEMENT FRAMEWORK
The Company recognizes Risk Management as an integrated forward-looking andprocess-orientated approach. It has developed a Risk Framework that broadly encompasses :aligning risk appetite and strategy; enhancing risk response and reducing operationalsurprises.
During the year Risk Management Core Team comprising of representatives of variousfunctions and business had carried out risk assessment exercise to identify the varioussignificant risks associated with the business operations and mitigation plans to addresssuch risks. Material risks and mitigation plans were reviewed by the Risk ManagementCommittee and then presented to the Board.
Mr Rehan A. Khan resigned as the Managing Director and Director of the Companyeffective April 30 2016. The Board placed on record its sincere appreciation for thesignificant contribution made by Mr Khan in the overall growth of the Company during histenure.
Mr Kaiyomarz Marfatia (DIN : 03449627) ceased as Whole-time Director of the Companyeffective February 29 2016 upon completion of his term. The Board approved hiscontinuation as a Non-Executive Director liable to retire by rotation subject toapproval of the Shareholders at the ensuing Annual General Meeting.
During the year under review Mr R. A. Shah (DIN : 00009851) ceased to be IndependentDirector effective July 31 2015 consequent to his resignation from this position andcontinued as Non-Executive NonIndependent Director of the Company.
Mr Shah vide his letter dated October 12 2015 requested the Company and accordinglywas re-appointed as Independent Director by the Board effective October 28 2015 for aterm upto March 31 2019 subject to approval of the Shareholders at the ensuing AnnualGeneral Meeting as per the provisions of Section 149 and the Securities and Exchange Boardof India (Listing Obligations and Disclosure Requirements) Regulations 2015.
In compliance with provisions of Section 152 of the Companies Act 2013 Mr MunirShaikh (DIN : 00096273) and Ms Nancy Berce (DIN : 07190005) retire by rotation at theensuing Annual General Meeting and being eligible offer themselves for re-appointment.
Based on the recommendation of the Nomination and Remuneration Committee yourDirectors recommend the appointment/re-appointment of Mr Kaiyomarz Marfatia Mr R. A.Shah Mr Munir Shaikh and Ms Nancy Berce on the Board of the Company.
Declaration of Independence :
The Company has received declarations from the Independent Directors confirming thatthey meet with the criteria of independence prescribed under sub-section (6) of Section149 of the Companies Act 2013 and the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015.
Number of Meetings of the Board :
6 Board Meetings were held during the year on May 27 2015; July 29 2015; August 122015; November 6 2015; February 1 2016 and February 29 2016.
Policy on Nomination and Appointment of Directors/ Criteria for appointment of SeniorManagement and the Remuneration Policy :
Policy on Nomination and Appointment of Directors/ Criteria for Appointment of SeniorManagement and Remuneration Policy as formulated under Section 178 (3) of the CompaniesAct 2013 is annexed as "Annexure II" and forms part of this Report.
Performance Evaluation of the Board Board Committees and Directors :
Performance Evaluation of the Board Board Committees and Directors was carried outthrough self-assessment and group discussions in line with Performance EvaluationFramework and Policy adopted by the Company.
KEY MANAGERIAL PERSONNEL
Mr Rajiv Sonalker Chief Financial Officer and Ms Krupa Anandpara Company Secretaryare the Key Managerial Personnel of the Company.
Mr Rehan A. Khan resigned as Managing Director and Director of the Company effectiveApril 30 2016. Mr Kaiyomarz Marfatia ceased to be Whole-time Director on the Boardeffective February 29 2016 upon completion of his term and continued as Director liableto retire by rotation.
The Audit Committee comprises of Mr R. A. Shah (Chairman) Mr Ranjan Kapur Mr KrishnaMohan Sahni and Mr Munir Shaikh. Role of the Committee is provided in the CorporateGovernance Report annexed to this Report. All the recommendations made by the AuditCommittee during the year were accepted by the Board.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Vigil Mechanism/Whistle Blower Policy called "Abbott India Limited - Procedurefor Internal Investigations" lays down a mechanism for reporting and investigationsof all unethical behavior alleged violations or potential violations of laws regulationsor Abbott's Code of Business Conduct policies procedures or other standards.
The said Policy is available on the website of the Company athttp://www.abbott.co.in/investor-relations-policies-and- procedures.html
Employees have numerous ways to voice concerns and are encouraged to report concernsinternally for resolution. The said Policy provides for adequate safeguards againstretaliation and access to the Chairman of the Audit Committee.
Any concerns can be communicated through any sources provided under the said Policy orvia toll free number 0008001001058 or online at http://speakup.abbott.com
5 R B C & CO LLP Chartered Accountants (ICAI Firm Registration No :324982E/E300003) were appointed as the Statutory Auditors for a term of 5 years at the70th Annual General Meeting of the Company held on August 1 2014.
In terms of provisions of Section 139(1) of the Companies Act 2013 the continuationof the appointment of S R B C & CO LLP as Statutory Auditors shall be subject toratification by the Members at the ensuing Annual General Meeting. The Company hasreceived a confirmation from S R B C
6 CO LLP regarding their eligibility and willingness to continue as the StatutoryAuditors.
The Auditors' Report for the financial year 2015-16 does not contain any adverseremarks qualifications or reservation or disclaimer which required explanation/commentsby the Board.
M/s N I Mehta & Co. Cost Accountants (Registration No. : 000023) having itsoffice at 1101 Dalamal Tower B' Wing Nariman Point Mumbai - 400 021 areappointed as the Cost Auditors of the Company for the financial year 2016-17 at aremuneration of ' 6.65 Lakhs plus applicable taxes and reimbursement of out-of-pocketexpenses.
The said remuneration to the Cost Auditors shall be subject to ratification by theMembers at the ensuing Annual General Meeting.
Cost Audit Report along with the Compliance Report for the financial year 2014-15 wasfiled on September 21 2015 (Due date of filing was September 27 2015).
M/s KPMG Chartered Accountants (Registration No. : BA62445) are the Internal Auditorsof the Company.
SECRETARIAL AUDIT REPORT
The Secretarial Audit Report issued by Ms Neena Bhatia Practicing Company Secretary(Membership No. : ACS 11950 and Certificate of Practice No. 2661) for the financial yearended March 31 2016 does not contain any adverse remark qualification or reservation ordeclaimer which requires any explanation/ comments by the Board. The said Report isannexed as "Annexure III" and forms part of this Report.
HEALTH SAFETY AND ENVIRONMENT
At Abbott India we say "Health Safety and Environment First". Each of thethree issues is of equal importance to our operations and our compliance with relevantregulations is intrinsic to our philosophy as a Company. Our commitment to this 3-pointprogram is one that we renew every day through initiatives that are designed to make agenuine and lasting difference.
Health and Safety :
Health and safety of our employees is paramount to us. The Company has a dedicatedSafety Officer and a Safety Committee comprising representatives from the workforce andmanagement which meet regularly to review issues impacting plant safety and employeehealth. The Company's Environment Health Safety (EHS) program includes the policy onsafety health and environment a well-defined EHS organizational structure EHS StandardOperating Procedures and EHS specific programs.
Numerous training programs are conducted at the Plant on health and safety issuesincluding dealing with epidemics ergonomics machine guarding work safety road safetyand so on. Each employee gets an Annual Health Check-up. Mock drills for fire-fighting andrescue operations are conducted to keep the staff in a state of preparedness for anyemergencies.
The Plant has a well-appointed first-aid room with a fulltime nurse and OccupationalHealth Physician catering to employee needs as well as a fully-equipped ambulance van. Across-functional team for Employee Health and Safety (EHS) and Emergency Action Plan (EAP)is also in place.
The Plant celebrated National Safety Week from 4th to 11th of March 2016. Variousactivities were held that week including a training program for e-waste disposalconducted by an external agency and a training program on women's health and relatedissues. Health Training Programs for employees well-being were also conducted during theyear.
An elaborate audit for Environment Health and Safety in accordance with Abbott'sglobal standards and local regulations compliance was conducted by Abbott's globalcorporate team and external consultants.
A responsibility towards the environment is part of our mandate. We continuouslyendeavor to minimize adverse environmental impact and demonstrate our commitment toprotecting the environment through everything we do.
Our Goa plant is a "ZERO" discharge plant. The Company has in place astate-of-the-art effluent treatment plant at the Goa unit with parameters of treatedeffluents well below the limit set by the local Pollution Control Board. The treated waterfrom our waste water treatment plant is recycled for horticulture within the site.
Our rain water harvesting project initiated three years ago was effectively continuedat the Plant this year as well which resulted in 480 KL of water-saving during themonsoons. Emissions from boiler and generator stacks are monitored regularly and are onceagain well below the limits set by the State Pollution Control Board. Ambient air qualityis monitored on a regular basis to conform to ambient air quality standards. There is alsoa vermi-composting unit to convert canteen waste into organic manure which is used in thelawns and plantation inside the factory premises.
The site retains its certification of Zero Waste to landfill in purview of wastedisposal. 81% of our waste goes for recycling 17% for incineration and 2% for composting.
Environmental Key Performance Indicators are shared and discussed with employees on aregular basis in order to continuously minimize the impact on environment.
Installation of a Filter Press System for drying ETP sludge will help in reducing thegeneration of ETP sludge.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as required under the provisions of Section 134 (3) (m) of theCompanies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 in respect ofConservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo etc.are annexed as "Annexure IV" and forms part of this Report.
EXTRACT OF ANNUAL RETURN
Extract of Annual Return as provided under sub-section (3) of Section 92 is annexed as"Annexure V" and forms part of this Report.
DISCLOSURE UNDER SECTION 197 (12) OF THE COMPANIES ACT 2013 AND OTHER DISCLOSURES ASPER RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES2014
Disclosures required in accordance with the provisions of Section 197 (12) of theCompanies Act 2013 read with Rule 5 (1) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 is annexed as "Annexure VI" and forms partof this Report.
Statement containing Particulars of Employees pursuant to Section 197 (12) of theCompanies Act 2013 read with Rule 5 (2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 forms part of this Report. However as per theprovisions of Sections 134 and 136 of the Companies Act 2013 the Report and FinancialStatements are being sent to the Members and others entitled thereto excluding theStatement containing Particulars of Employees which is available for inspection by theMembers at the Registered Office of the Company during business hours on all working days(except Saturdays) upto the date of ensuing Annual General Meeting. Any Member interestedin obtaining a copy of such Statement may write to the Company Secretary at the RegisteredOffice of the Company.
CORPORATE GOVERNANCE REPORT
Corporate Governance Report along with a Certificate from the Auditors of the Companyregarding compliance of the conditions of Corporate Governance pursuant to therequirements of Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 is annexed hereto and forms part of this Report.
DISCLOSURES OF ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL
No orders have been passed by any Regulator or Court or Tribunal which can have impacton the going concern status and the Company's operations in future.
No fixed deposits were accepted during the year.
PARTICULARS OF LOANS INVESTMENTS AND GUARANTEES
During the year the Company granted loan of ' 19000.00 Lakhs to Abbott HealthcarePrivate Limited India (AHPL) a Fellow subsidiary at an interest rate of 10% per annumfor a period of 90 days pursuant to the provisions of Section 186 of the Companies Act2013 and relevant Rules framed thereunder for the purpose of project funding. The saidloan was fully repaid within the said period by AHPL along with interest of ' 291.51Lakhs.
The Company has not provided any guarantees to or invested in securities of any otherbody corporate during the year.
INDIAN ACCOUNTING STANDARDS (IND AS) - IFRS CONVERGED STANDARDS
The Ministry of Corporate Affairs has notified the Companies (Indian AccountingStandard) Rules 2015. In pursuance of this notification the Company will adopt IND ASwith effect from April 1 2016. The implementation of Ind AS is a major change process forfinancial reporting and the Company is dedicating considerable resources for effective andtimely implementation of the same
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions relating to these items during the yearunder review :
1. I ssue of equity shares with differential rights as to dividend voting orotherwise.
2. I ssue of shares (including sweat equity shares) to employees of the Company underany scheme.
3. The Company does not have any joint venture or subsidiaries.
AWARDS AND RECOGNITIONS
Your Company's Annual Report for the year ended March 31 2015 has been awarded themost prestigious "Silver Shield" Award by The Institute of Chartered Accountantsof India for Excellence in Financial Reporting.
The Company received prestigious recognitions such as Best CSR Program of the Year(2014-15) by the Department of Pharmaceuticals and Government of India and Golden PeacockAward by the Institute of Directors for its Corporate Social Responsibility initiativesundertaken during the year 2015-16.
Amongst various other awards and recognitions your Company also won the Porter prizein 2015 and Star MNC of the year Award by the Business Standard.
Your Board places on record its sincere appreciation for the dedication hard work andsignificant contributions made by the employees across the Company.
Your Board sincerely thanks all the business partners institutions banks and inparticular the shareholders for their continued support to and trust in the Company.
For and on behalf of the Board
|Munir Shaikh ||Ranjan Kapur |
|Chairman ||Director |
|DIN : 00096273 ||DIN : 00035113 |