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Alkem Laboratories Ltd.

BSE: 539523 Sector: Health care
NSE: ALKEM ISIN Code: INE540L01014
BSE LIVE 15:53 | 24 Nov 1978.15 1.35
(0.07%)
OPEN

1958.80

HIGH

1989.00

LOW

1953.00

NSE 15:31 | 24 Nov 1987.90 13.45
(0.68%)
OPEN

1969.50

HIGH

1995.00

LOW

1950.00

OPEN 1958.80
PREVIOUS CLOSE 1976.80
VOLUME 810
52-Week high 2238.00
52-Week low 1535.00
P/E 30.34
Mkt Cap.(Rs cr) 23,649
Buy Price 1978.15
Buy Qty 1.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1958.80
CLOSE 1976.80
VOLUME 810
52-Week high 2238.00
52-Week low 1535.00
P/E 30.34
Mkt Cap.(Rs cr) 23,649
Buy Price 1978.15
Buy Qty 1.00
Sell Price 0.00
Sell Qty 0.00

Alkem Laboratories Ltd. (ALKEM) - Director Report

Company director report

Dear Members

Alkem Laboratories Limited

Your Directors are pleased to present their 43rd Annual Report on the business andoperations together with the Audited Financial Statements of the Company for the yearended 31st March 2017. Consolidated performance of the Company and its subsidiaries hasbeen referred to wherever required.

FINANCIAL PERFORMANCE

(Rs in Million)

Standalone Consolidated
Particulars Year ended 31st March 2017 Year ended 31st March 2016 Year ended 31st March 2017 Year ended 31st March 2016
Income from Operations 46684.5 39510.4 58525.0 50479.3
Other Income 1166.0 2512.8 1120.1 2397.1
Total Revenue 47850.5 42023.2 59645.1 52876.4
Profit before Interest Depreciation and Tax 9945.9 9710.5 11109.6 10929.6
Less: Interest 236.8 586.7 451.6 712.4
Less: Depreciation 764.8 735.3 1011.7 933.1
Profit before tax 8944.3 8388.5 9646.3 9284.1
Less: Provision for Taxation (net) 112.7 1386.6 599.6 1761.8
Profit after tax and before Non-controlling Interest 8831.6 7001.9 9046.7 7522.3
Less: Non-controlling Interest - - 126.4 106.4
Profit for the year 8831.6 7001.9 8920.3 7415.9
Other comprehensive income (36.7) 0.5 (231.6) 147.8
Other Comprehensive income attributable to - - 2.4 (1.6)
Non-Controlling Interest
Total comprehensive income attributable to owners of the Company 8794.9 7002.4 8691.1 7562.1
Balance of other equity attributable to owners of the 35755.9 30581.0 36680.5 30947.6
Company / Parent - opening balance
Less: Interim Dividend 717.4 1518.5 717.4 1518.4
Less: Dividend Distribution Tax 146.0 309.1 146.0 311.0
Employee Compensation Expenses - - 3.7 0.2
- -
Less: Decrease in equity on Acquisition of additional stake in subsidiary - 76.6
Capital Receipts - - 2.0 -
Balance of other equity attributable to owners of the 43687.4 35755.9 44437.3 36680.5
Company / Parent - closing balance

ADOPTION OF INDIAN ACCOUNTING STANDARDS IND AS

Beginning 1st April 2016 the Company has for the first time adopted IndianAccounting Standard (Ind AS) with a transition date of 1st April 2015. Accordingly thefinancial statements have been prepared in compliance with Ind AS as notified by theMinistry of Corporate Affairs and prescribed under Section 133 of the Companies Act 2013(hereinafter referred to as "the Act") read with relevant rules made thereunderand other accounting pronouncements generally accepted in India. Accordingly the figuresfor the corresponding year ended 31st March 2016 have also been presented afterincorporating the applicable Ind AS adjustments.

OVERVIEW OF FINANCIAL PERFORMANCE

During the financial year ended 31st March 2017 the Company's total revenue includingother income was Rs 47850.5 million on standalone basis as against Rs 42023.2million achieved in the previous year registering a growth of 13.87%.

The export turnover of the Company during the financial year 2016-17 was Rs 7242.0million as against Rs 6472.3 million achieved in the previous year registering a growthof 11.89%.

During the financial year ended 31st March 2017 the Company achieved total revenueincluding other income of Rs 59645.1 million on consolidated basis as against a turnoverof Rs 52876.4 million achieved in the previous year registering a growth of12.80%.

During the financial year ended 31st March 2017 Standalone Profit before interestdepreciation and tax increased by 2.42% at Rs 9945.9 as against Rs 9710.5 million in theprevious year whereas Consolidated Profit before interest depreciation and tax increasedby 1.65% at Rs 11109.6 million as against Rs 10929.6 million in the previousyear.

During the financial year 2015-16 the Company had higher Other Income on account ofInd AS adjustment of real estate investments and consideration received from sale of somebrands and trademarks.

Standalone Profit before tax was Rs 8944.3 million higher by 6.63% over the previousyear and Consolidated Profit before tax was Rs 9646.3 million higher by 3.9 % over theprevious year.

After providing for taxes standalone net profit was Rs 8831.6 million higher by 26.13% over the previous year while the consolidated net profit after tax was Rs 8920.3million higher by 20.29% over the previous year.

DIVIDEND

During the financial year 2016-17 your Company declared and paid an interim dividendat Rs 6/- (Rupees Six only) per Equity Share of Rs 2/- (Rupees Two only) each being 300%of paid up share capital on 11th November 2016. In addition your Directors are pleasedto recommend payment of Rs 9/- (Rupees Nine only) per equity share of the face value of Rs2/- (Rupees Two only) each as final dividend for the financial year 2016-17 for theapproval of the shareholders at the ensuing Annual General Meeting (AGM). If approved thetotal dividend (interim and final dividend) for the financial year 2016-17 will be

Rs 15/- (Rupees Fifteen only) per equity share of the face value of

Rs 2/- (Rupees Two only) each as against the total dividend of

Rs 12.7/- (Rupees Twelve and Paisa Seven only) per equity share of the face value of Rs2/- (Rupees Two only) each paid for the previous financial year.

As per the provisions of Regulation 43A of the SEBI (Listing Obligation and DisclosureRequirements) Regulations 2015 (hereinafter referred to as "SEBI LODRRegulations") top 500 listed companies based on the market capitalization arerequired to formulate Dividend Distribution Policy. In compliance with the saidrequirement the Company has formulated its Dividend Distribution Policy which isavailable on the Company's website at http://www.alkemlabs.com/admin/Photos/Policies/977928327Dividend distribution policy.pdf. The said Policy is also annexedto this Report as Annexure A.

TRANSFER TO RESERVES

The Company has not transferred any amount to the General Reserve for the financialyear 2016-17.

SHARE CAPITAL

The paid up Equity Share Capital of the Company as on 31st March 2017 was Rs239.1 million. The Company has neither issued shares with differential rights as todividend voting or otherwise nor issued shares to the employees or Directors of theCompany under any Scheme (including sweat equity shares).

DEPOSITS

The Company has not accepted any deposits from the public/ members under Section 73 ofthe Act read with Companies (Acceptance of Deposits) Rules 2014 during the year. Thereare no deposits which are outstanding as on 31st March 2017. The Company has no depositswhich are not in compliance with the requirements of Chapter V of the Act .

SUBSIDIARIES

As on 31st March 2017 the Company had 18 subsidiaries. The Company does not have anyjoint venture / associate company (ies) within the meaning of Section 2(6) of the Act.

None of the companies have become or ceased to be subsidiary associates and jointventures of the Company during the year under review.

Pursuant to the first proviso to Section 129(3) of the Act and Rule 5 and Rule 8(1) ofthe Companies (Accounts) Rules 2014 the salient features of financial statementsperformance and financial position of each subsidiary is given in Form AOC-1 as Annexure Bto this Report.

The Audited Financial Statements of the subsidiaries are available on the Company'swebsite at www.alkemlabs.com and are available for inspection by the Members at theRegistered Office of the Company during business hours on all working days as requiredunder Section 136 of the Act. Any Member desirous of obtaining a copy of the saidfinancial statements may write to the Company Secretary at the Registered Office of theCompany.

MANAGEMENT DISCUSSION AND ANALYSIS

A detailed report on the Management Discussion and Analysis is provided as a separatesection forming part of this Report.

CORPORATE GOVERNANCE

A detailed report on the Corporate Governance systems and practices of the Company isprovided as a separate section along with a certificate from the Statutory Auditorsconforming the Company's compliance with the conditions of Corporate Governance formingpart of this Report.

BUSINESS RESPONSIBILITY REPORT

As stipulated under the SEBI LODR Regulations the Business Responsibility Reportdescribing the initiatives taken by the Company from an environmental social andgovernance perspective is provided as a separate section forming part of this Report.

CORPORATE SOCIAL RESPONSIBILITY

The Company continues with its belief in operating and growing its business in asocially responsible way. The Company's CSR framework drives its strategies and actionstowards wider social concerns with focus on holistic development of its host community andimmediate social and environmental surroundings qualitatively. During the financial yearunder review the Company continued its efforts towards communities near its manufacturingfacilities through its CSR initiatives in areas like education vocational training forskill building and health & hygiene thereby contributing towards the social andeconomic development of the communities in areas in which it operates.

Details about the Company's CSR Policy and initiatives undertaken by the Company duringfinancial year 2016-17 are outlined in the Report on CSR Activities annexed to this Reportas Annexure C.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Appointments

As per the provisions of Section 161 read with Section 149 of the Act and the Articlesof Association of the Company Dr. Dheeraj Sharma (DIN 07683375) was appointed asan Additional Director designated as Independent Director of the Company w.e.f. 26th May2017. Dr. Dheeraj Sharma shall hold office upto the date of the ensuing AGM. The Companyhas received notice in writing with requisite deposit from a member proposing thecandidature of Dr. Dheeraj Sharma as an Independent Director of the Company.

Appropriate resolution for his appointment is included in the Notice of AGM for seekingapproval of Members. The Directors recommend his appointment for your approval.

A brief resume and particulars relating to him are given in the Notice of AGM.

Resignations/Retirements

Mr. Mangaldas Chhaganlal Shah (DIN 01353574) resigned from the Board with effect from17th May 2017. The Board places on record its appreciation for his valuable contributionduring his tenure as a Director of the Company.

Directors liable to Retirement by Rotation

Mr. Balmiki Prasad Singh (DIN 00739856) is liable to retire by rotation at the ensuingAGM pursuant to the provisions of Section 152 of the Act read with the Companies(Appointment and Qualification of Directors) Rules 2014 and the Articles of Associationof the Company and being eligible he has offered himself for re-appointment. Appropriateresolution for his re-appointment is included in the Notice of AGM for seeking approval ofMembers. The Directors recommend his re-appointment for your approval.

A brief resume and particulars relating to him are given in the Notice of AGM.

Key Managerial Personnel

Mr. Prabhat Agrawal Chief Executive Officer Mr. Rajesh Dubey President and ChiefFinancial Officer and Mr. Manish Narang President - Legal Company Secretary andCompliance Officer are the Key Managerial Personnel of the Company in accordance with theprovisions of Sections 2(51) and 203 of the Act read with Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014.

There has been no change in the Key Managerial Personnel during the financial year2016-17.

Independent Directors

The Independent Directors hold office for a fixed term of 5 (Five) years and are notliable to retire by rotation.

In accordance with the Section 149(7) of the Act each Independent Director has given awritten declaration to the Company confirming that he/she meets the criteria ofIndependence as mentioned under Section 149(6) of the Act and SEBI LODR Regulations.

The terms and conditions of the appointment of the Independent Directors are posted onCompany's website.

Familiarization Program

In compliance with the requirements of SEBI LODR Regulations the Company has put inplace a framework for Directors' Familiarization Programme to familiarize them with theirroles rights and responsibilities as Directors the working of the Company nature of theindustry in which the Company operates business model etc. The details of thefamiliarization programmes conducted / sponsored during the year are explained in theCorporate Governance Report. The same are also available on the Company website athttp://www.alkemlabs. com/corporate-governance.

Annual Evaluation of Board's Performance

Pursuant to the provisions of the Act and the SEBI LODR Regulations the Board hascarried out the annual performance evaluation of its own performance the Directorsindividually as well as the evaluation of the working of its Committees. The criteriaapplied in the evaluation process is explained in the Corporate Governance Report.

The Independent Directors at a separate meeting held on 29th March 2017 evaluatedperformance of non-independent directors performance of the Board as a whole andperformance of the Chairpersons of the Company.

Remuneration Policy

The Company follows a policy for selection and appointment of Directors SeniorManagement and their remuneration which is available on the Company's website athttp://www.alkemlabs. com/admin/Photos/Policies/516234455Nomination and RemunerationPolicy.pdf. The said policy is annexed to this Report as Annexure D.

PARTICULARS OF EMPLOYEES

The disclosure pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed to this Report as Annexure E.

Further a statement showing the names and other particulars of top ten employees interms of remuneration drawn and of employees drawing remuneration in excess of the limitsspecified in Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 forms part of this Report. However in terms of firstproviso to Section 136(1) of the Act the Annual Report and annual financial statementsare being sent to the Members and others entitled thereto excluding the aforesaidinformation. The said information is available for inspection for the Members at theRegistered Office of the Company during the business hours on working days and also shallbe provided to any Member on a written request to the Company Secretary.

NUMBER OF MEETINGS OF THE BOARD

The Board of Directors met 6 (Six) times during the financial year 2016-17. The detailsof the Board meetings and the attendance of Directors thereat are provided in theCorporate Governance Report forming part of this Report.

In terms of requirements of Schedule IV of the Act a separate meeting of IndependentDirectors was also held on 29th March 2017 to review the performance of Non-IndependentDirectors (including the Chairpersons) the entire Board and quality quantity andtimelines of the flow of information between the Management and the Board.

COMMITTEES OF THE BOARD

Audit Committee

The Audit Committee comprises of Mr. Ranjal Laxmana Shenoy Chairman and Mr. MritunjayKumar Singh Ms. Sudha Ravi and Ms. Sangeeta Singh as Members. The terms of reference ofthe Audit Committee and the particulars of meetings held and attendance thereat arementioned in the Corporate Governance Report forming part of the Annual Report.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee comprises of Mr. Arun Kumar Purwar Chairmanand Mr. Basudeo N. Singh Mr. Akhouri Maheshwar Prasad and Ms. Sangeeta Singh as Members.The terms of reference of the Nomination and Remuneration Committee and the particulars ofmeetings held and attendance thereat are mentioned in the Corporate Governance Reportforming part of the Annual Report.

Corporate Social Responsibility Committee

The Corporate Social Responsibility Committee comprises of Mr. Ranjal Laxmana ShenoyChairman and Mr. Dhananjay Kumar Singh Mr. Sandeep Singh and Mr. Balmiki Prasad Singh asMembers. The terms of reference of the Corporate Social Responsibility Committee and theparticulars of meetings held and attendance thereat are mentioned in the CorporateGovernance Report forming part of the Annual Report.

Stakeholders' Relationship Committee

The Stakeholders' Relationship Committee comprises of Mr. Ranjal Laxmana ShenoyChairman and Mr. Dhananjay Kumar Singh Mr. Sandeep Singh and Mr. Akhouri Maheshwar Prasadas Members. The terms of reference of the Stakeholders' Relationship Committee and theparticulars of meetings held and attendance thereat are mentioned in the CorporateGovernance Report forming part of the Annual Report.

Risk Management Committee

The Risk Management Committee comprises of Mr. Dhananjay Kumar Singh Chairman and Mr.Mritunjay Kumar Singh Mr. Sandeep Singh Ms. Sudha Ravi and Dr. Dheeraj Sharma asMembers. The terms of reference of the Risk Management Committee are mentioned in theCorporate Governance Report forming part of the Annual Report.

BUSINESS RISKS AND OPPORTUNITIES

The Company has framed Risk Management Policy to identify and assess the key riskareas monitor and report compliance and effectiveness of the policy and procedure.

The Company has implemented an integrated Enterprise-wide Risk Management (ERM)function which helps the management and the Board to periodically identify review andmanage the business risks and timely and suitably address them depending on whether therisks are internal strategic or external. An independent risk-focused audit is carriedout across all functions of the business which actively identifies areas where businessprocess controls are ine ective or may need improvement.

DIRECTORS' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief the Directors pursuant to the requirementof Section 134(3) (c) of the Act confirm that:

(a) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures if any;

(b) they have selected such accounting policies and applied consistently and madejudgements and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at 31st March 2017 and of the profit ofthe Company for the year ended on that date;

(c) they have taken proper and sufficient care for themaintenanceofadequateaccountingrecordsinaccordance with the provisions of the Act forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

(d) they have prepared the annual financial statements on a going concern basis;

(e) they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and operating effectively;

(f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

AUDITORS AND AUDITORS' REPORT

Statutory Auditors

Pursuant to the provisions of Section 139 of the Act and the Companies (Audit andAuditors) Rules 2014 M/s BSR & Co. LLP (Firm Registration No:101248W/W-100022) Chartered Accountants the Statutory Auditors of the Company holdoffice upto the conclusion of the Forty Fifth (45th) AGM. However their appointment asStatutory Auditors of the Company is subject to rati cation by the Members at every AGM.The Company has received a certificate from the said Auditors that they are eligible tohold office as the Auditors of the Company and are not disqualified from being soappointed.

A resolution for rati cation of appointment of the said Auditors is included in theNotice of AGM for seeking approval of Members.

The Auditors' Report for financial year ended 31st March 2017 does not contain anyqualification reservation or adverse remark.

Cost Auditor

Pursuant to the provisions of Section 148 of the Act and the Rules made thereunder readwith notifications/ circulars issued by the Ministry of Corporate Affairs from time totime and as per the recommendation of the Audit Committee the Board of Directors at itsmeeting dated 12th August 2016 appointed Mr. Suresh D. Shenoy Cost Accountant(Membership No. 8318) as the Cost Auditor of the Company for the financial year 2016-17to conduct the audit of the cost records of the Company. The Company had also receivedcertificate from the Cost Auditor certifying his independence and arm's lengthrelationship with the Company. A resolution for rati cation of the remuneration payable tothe Cost Auditor is included in the Notice of AGM for seeking approval of Members. TheCost Audit Report will be filed within the period stipulated under the Act.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Act read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board of Directorshad appointed M/s. Manish Ghia & Associates Practicing Company Secretaries(Membership No. F6252 COP No. 3531) to conduct the Secretarial Audit of the Company forthe financial year 2016-17. The

Secretarial Audit Report is annexed to this Report as Annexure F. The said Report doesnot contain any qualification reservation or adverse remark.

EXTRACT OF ANNUAL RETURN

As required under Section 92(3) of the Act and the Rules made thereunder extract ofthe Annual Return in Form MGT-9 is annexed to this Report as Annexure G.

RELATED PARTY TRANSACTIONS

All the Related Party Transactions are entered into by the Company at arm's lengthbasis in the ordinary course of business and are in compliance with the applicableprovisions of the Act and the SEBI LODR Regulations and the Company's Policy on RelatedParty Transactions. During the financial year 2016-17 the Company did not enter into anymaterial related party transactions i.e. transactions exceeding ten percent of theconsolidated turnover as per the last audited financial statements. Accordingly thedisclosure of related party transactions as required under Section 134(3) (h) of the Actin Form AOC-2 is not applicable.

The Related Party Transactions Policy as approved by the Board is uploaded on theCompany's website at http://www.alkemlabs. com/admin/Photos/Policies/84051713915915Policyon Related Party Transactions.pdf

PARTICULARS OF LOANS / GUARANTEES AND INVESTMENTS

The particulars of loans guarantees and investments covered under the provisions ofSection 186 of the Act have been disclosed in the Notes to the financial statementsforming part of the Annual Report.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

Pursuant to the provisions of Section 177(9) of the Act the Board of Directors of theCompany has framed the Vigil Mechanism / Whistle Blower Policy for Directors and employeesof the Company. Under the said policy provisions have been made to safeguard persons whouse this mechanism from victimization. The policy also provides access to the Chairpersonof the Audit Committee under certain circumstances. The Whistle Blower Policy is uploadedon the website of the Company at http://www.alkemlabs.com/admin/Photos/Policies/8503638853592Whistle Blower Policy.pdf

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

The Company has adopted a policy in line with the provisions of Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013 and the Rules madethereunder. An Internal Complaints Committee has also been set up to redress complaintsreceived on sexual harassment. During the financial year 2016-17 the Company had receivedone complaint with allegations of sexual harassment and the same was investigated andresolved.

DISCLOSURES UNDER THE ACT

Change in Nature of Business if any:

During the financial year 2016-17 there was no change in the nature of business of theCompany.

Material Changes and Commitments affecting the financial position of the Company:

There are no material changes and commitments which have occurred between the end ofthe financial year and the date of the Report which have affected the financial positionof the Company.

Significant and Material Orders:

There are no significant and material orders passed by the regulators or courts ortribunals during the year impacting the going concern status and Company's operations infuture.

Reporting of Frauds by Auditors:

There were no frauds reported by Auditors under Section 143(12) of the Act.

DETAILS ON INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS

During the year the Internal Financial Controls were reviewed and tested by an outsideconsulting firm and no reportable material weaknesses in design or operations wereobserved.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE DETAILS

The information on conservation of energy technology absorption and foreign earningsand outgo as stipulated under Section 134(3)(m) of the Act and the Rules made thereunderis annexed to this Report as Annexure H.

ACKNOWLEDGEMENT

Your Directors are thankful to the Central and State Government DepartmentsOrganizations and Agencies for their continued guidance and co-operation. The Directorsare grateful to all valuable stakeholders of the Company viz. our customers shareholdersdealers vendors banks medical fraternity patients and other business associates fortheir excellent support and help rendered during the financial year. The Directors alsoplace on record their sincere appreciation for the significant contribution made by ouremployees through their dedication hard work and unstinted commitment.

For and on behalf of the Board
Alkem Laboratories Limited
Samprada Singh
Date: 26th May 2017 Chairman Emeritus
Place: Mumbai DIN: 00760279

Annexure A

DIVIDEND DISTRIBUTION POLICY OF ALKEM LABORATORIES LIMITED

PREAMBLE

As per Regulation 43A of SEBI (LODR) Regulations 2015 the top five hundred listedentities based on market capitalization (calculated as on March 31 of every financialyear) shall formulate a dividend distribution policy which shall be disclosed in theirannual reports and on their websites. Alkem Laboratories being one of the top five hundredlisted companies as per the market capitalization frames this policy to comply with theSEBI (LODR) Regulations 2015.

OBJECTIVE

The objective of the policy is to broadly specify the external and internal factorsincluding financial parameters that shall be considered while declaring dividend and thecircumstances under which the shareholders of the Company may or may not expect dividend.

PHILOSOPHY

The Company is deeply committed to driving superior value creation for all itsstakeholders. The Company believes that driving growth creates maximum shareholder valueand thus it would first like to deploy its profits to fund its working capitalrequirements capital expenditure requirements reducing debt allocate reserves forinorganic growth opportunities and thereafter distribute the surplus profits in the formof dividend to the shareholders.

DEFINITIONS

• ‘Company' means Alkem Laboratories Ltd.

• ‘Board' or ‘Board of Directors' means Board of Directors of theCompany

• ‘Dividend' means Dividend as defined under Companies Act 2013

• ‘Policy or this Policy' means the Dividend Distribution Policy

• ‘SEBI (LODR) Regulations' means the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 together with thecirculars issued thereunder including any statutory modification(s) or re-enactment(s)thereof for the time being in force

• ‘Subsidiary' shall mean Subsidiary of the Company as defined under theCompanies Act 2013

PARAMETERS FOR DECLARATION OF DIVIDEND

Internal Factors / Financial Parameters - The Board of Directors of the Company wouldconsider the following financial parameters before declaring or recommending dividend toshareholders

• The Board of Directors of the Company shall declare dividend depending on theconsolidated net profit after tax earned by it during the financial year

• The Board of Directors of the Company would consider its working capitalrequirements R&D expenditure and capital expenditure requirements for future growthbefore declaring the dividend

• The Board of Directors of the Company shall take into account resources requiredto fund acquisitions and / or new businesses and additional investment required in itssubsidiaries/associates of the Company

• The dividend declaration would also depend upon the liquidity position of theCompany Outstanding borrowings and the cash flow required to meet contingencies

• The Board of Directors of the Company shall also take into account past dividendtrends of the Company

External Factors

• Dividend declared would be in compliance with prevailing legal requirementsregulatory conditions or restrictions laid down under the Applicable Laws including taxlaws

• The Board of Directors of the Company would consider dividend pay-out ratios ofcompanies in the same industry

Circumstances under which the shareholders may or may not expect Dividend

The Company shall not recommend dividend if it is of the opinion that it is financiallynot prudent to do so. The shareholders of the Company may not expect Dividend under thefollowing circumstances:

• In case the Company is undertaking significant expansion which would requirehigher allocation of resources

• If the Company requires significant amount of working capital to fund its futuregrowth

• In case the Company proposes to utilise surplus cash for buy-back of securities

• In the event of inadequacy of profits or whenever the Company has incurredlosses

The Company may declare dividend out of the profits of the Company for the year or outof the profits for any previous year or years or out of the free reserves available fordistribution of Dividend after having due regard to the parameters laid down in thisPolicy.

Modi cation of the Policy

The Board is authorised to change/amend this policy from time to time at its solediscretion and/or in pursuance of any amendments made in the Companies Act 2013 theRegulations etc.

Disclosure

The Company shall make appropriate disclosures as required under the SEBI Regulations.

ANNEXURE B

FORM AOC 1

(Pursuant to first proviso to sub-section (3) of Section 129 read with Rule 5 ofCompanies (Accounts) Rules 2014)

STATEMENT CONTAINING SALIENT FEATURES OF THE FINANCIAL STATEMENT OF SUBSIDIARIES PART"A": SUBSIDIARIES

Name of Subsidiaries Date since when subsidiary was acquired / incorporated (became subsidiary)

Reporting period of the subsidiary(if different from the holding company's reporting period)

Reporting Currency

Exchange Rate as on the last date of relevant financial year (in Rs)

Share Capital

Other Equity

Total assets

Total Liabilities

Investments

Turnover

Profit before taxation

Provision for taxation

Profit after taxation

Proposed Dividend

Extent of shareholding (in %)

1 Pharmacor Pty Limited 30.06.2009 N.A. AU$ 49.618 88.1 (15.7) 745.7 673.3 - 1010.5 49.3 18.8 30.6 - 100.00%
2 Cachet Pharmaceuticals 27.03.2015 N.A. INR N.A. 1.8 543.2 1953.0 1408.0 0.1 3019.5 (48.0) (6.6) (41.4) - 58.80%
Private Limited
3 Ascend Laboratories SpA 19.07.2011 N.A. CLP 0.097 133.8 65.9 650.3 450.6 - 609.5 44.0 11.8 32.1 - 100.00%
4 Enzene Biosciences Limited 04.11.2011 N.A. INR N.A. 113.1 733.6 890.0 43.3 - - (346.1) - (346.1) - 100.00%
5 Alkem Pharma GmbH 10.11.2008 N.A. EURO 69.510 1.7 (3.6) 0.6 2.5 - - (0.5) - (0.5) - 100.00%
6 Indchemie Health Specialities Private Limited 30.03.2015 N.A. INR N.A. 2.5 1890.5 2958.6 1065.6 15.6 3501.6 310.2 65.3 244.9 1000% 51.00%
7 The PharmaNetwork LLP 14.08.2012 N.A. TENGE 0.204 157.6 (18.1) 148.0 8.5 - 204.8 22.3 (8.1) 30.4 - 100.00%
8 Alkem Laboratories Korea Inc 07.08.2012 N.A. WON 0.058 0.1 0.0 0.1 - - - - - - - 100.00%
9 Ascend Laboratories Sdn Bhd 13.12.2010 N.A. RM 14.640 0.0 (0.0) 0.0 (0.0) - - - - - - 100.00%
10 S & B Holdings B.V. 17.06.2009 N.A. EURO 69.510 2897.2 (705.6) 2880.1 688.5 2054.6 - (18.0) 454.2 (472.2) - 100.00%
11 Alkem Laboratories (NIG) Limited 17.09.2007 N.A. NAIRA 0.206 9.4 (153.0) 10.7 154.3 - 1.8 (72.9) - (72.9) - 100.00%
12 Pharmacor Limited 15.05.2012 N.A. KES 0.617 0.1 (0.0) 0.0 - - - (0.0) - (0.0) - 100.00%
13 Alkem Laboratories 07.11.2008 N.A. PESO 1.289 139.7 (279.4) 81.1 220.8 - 84.7 (133.7) 29.1 (162.8) - 100.00%
Corporation
14 S & B Pharma Inc. 25.01.2012 N.A. USD 64.747 0.0 1363.6 3584.1 2220.5 - 1450.6 (409.6) - (409.6) - 100.00%
15 Alkem Laboratories (Pty) Limited 26.05.2008 N.A. RAND 4.983 68.8 4.7 90.6 17.1 - 107.3 13.0 0.8 12.1 - 100.00%
16 ThePharmaNetwork LLC 15.07.2010 N.A. USD 64.747 578.9 (1657.7) 1570.7 2649.5 703.1 75.2 (513.3) - (513.3) - 100.00%
17 Ascend Laboratories LLC 15.07.2010 N.A. USD 64.747 703.1 4603.9 5828.4 521.4 - 10404.7 1763.1 - 1763.1 - 100.00%
18 Ascend Laboratories (UK) Limited 06.08.2014 N.A. GBP 80.632 9.9 3.5 55.5 42.1 - 56.6 2.7 (0.2) 2.9 - 100.00%

For and on behalf of the Board of Directors of Alkem Laboratories Limited

CIN: L00305MH1973PLC174201
Samprada Singh B.N. Singh B.P. Singh
Chairman Emeritus Executive Chairman Director
DIN 00760279 DIN 00760310 DIN 00739856
M.K. Singh Prabhat Agrawal Rajesh Dubey
Director Chief Executive Officer Chief Financial Officer
DIN 00881412
Manish Narang P.V.Damodaran Mumbai
President - Legal Company Secretary & Compliance Officer Sr. VP - Business Finance Date : 26 th May 2017

Annexure D

POLICY FOR NOMINATION & REMUNERATION COMMITTEE OF ALKEM LABORATORIES LIMITED

Alkem Laboratories Limited ("Company") has constituted a Nomination andRemuneration Committee ("Committee") in its Board meeting held on 30th January2015 as per the terms and conditions provided in Section 178 of the Companies Act 2013and other applicable provisions. As per the provisions the Company is required to frame apolicy on nomination and remuneration of Directors Key Managerial Personnel (KMP) SeniorManagement and other employees of the Company.

1. OBJECTIVE OF THE POLICY

The policy is framed with the objective(s):

1. That based on the Company's size and financial position and trends and practices onremuneration prevailing in peer companies in the Industry the level and composition ofremuneration is reasonable and sufficient to attract retain and motivate directors andtalented managerial personnel of the quality required to run the Company successfully andto ensure long term sustainability and create competitive advantage.

2. That the remuneration to Directors Key Managerial Personnel (KMP) and otheremployees of the Company involves a balance between fixed and incentive pay reflectingshort and long term performance objectives appropriate to the working of the Company andits goals.

2. FUNCTIONS OF THE NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee shall inter-alia perform the followingfunctions:

1. Identify persons who are qualified to become Directors and employees who may beappointed in key managerial position senior management in accordance with the criterialaid down recommend to the Board their appointment remuneration and removal includingsuccession planning.

2. Ensure that the Board comprises of a balanced combination of Executive Directors andNon-Executive Directors and also the Independent Directors including Board diversity.

3. Devise framework to ensure that Directors are inducted through suitablefamiliarization process alongwith criteria for evaluation of Independent Directors and theBoard and to provide for reward(s) linked directly to their effort performance.

4. Decide / approve details of fixed components and performance linked incentives alongwith the performance criteria.

5. Such other functions as may be decided in accordance with the Companies Act 2013and the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 asamended from time to time.

The Chairman of the Nomination and Remuneration committee could be present at theAnnual General Meeting to answer the shareholders' queries. However it would be up tothe Chairman to decide who should answer the queries.

3. APPLICABILITY

This Policy is applicable to:

1. Directors viz. Executive Non-executive and Independent

2. Key Managerial Personnel ("KMP")

3. Senior Management Personnel

4. Other Employees of the Company

4. MATTERS RELATING TO THE REMUNERATION PERQUISITES FOR THE WHOLE TIME/EXECUTIVE / MANAGING DIRECTOR

1. The remuneration / compensation / profit-linked commission etc. to the Whole-time/Executive/ Managing Directors will be recommended by the Committee and approved by theBoard. The remuneration / compensation / profit-linked commission etc. shall be inaccordance with the percentage / slabs / conditions laid in the Companies Act 2013 andshall be subject to the prior / post approval of the shareholders of the Company andCentral Government wherever required.

2. If in any financial year the Company has no profits or its profits are inadequatethe Company shall pay remuneration to its Whole Time Director(s) in accordance with theprovisions of Schedule V of the Companies Act 2013 and if it is not able to comply withsuch provisions then with the prior approval of the Central Government.

3. Increments to the Whole Time Director(s) should be within the slabs approved by theshareholders. Increments will be effective 1st April in respect of a Whole Time Directoras well as in respect of other employees of the Company unless otherwise decided.

5. REMOVAL

The Committee may recommend to the Board with reasons recorded in writing removal ofa Director KMP or one level below KMP subject to the provisions of the Companies Act2013 and all other applicable Acts Rules and Regulations if any.

6. RETIREMENT

The Director KMP and one level below the KMP shall retire as per the applicableprovisions of the Regulations and the prevailing policy of the Company. Employment of theservices of the Director KMP Senior Management Personnel as consultants after theirretirement would be at the sole discretion of the Board.

7. REMUNERATION TO NON EXECUTIVE / INDEPENDENT DIRECTOR

7.1. Sitting Fees

The Resident Non-Executive Independent Directors of the Company shall be paid sittingfees as per the applicable Regulations and no sitting fee is to be paid to Non-residentNon-Executive Directors. The quantum of sitting fees will be determined as per therecommendation of the Nomination and Remuneration Committee and approved by the Board ofDirectors of the Company.

7.2. Profit-linked Commission

The profit-linked Commission shall be paid within the monetary limit approved by theshareholders of the Company subject to the same not exceeding 2% of the net profits of theCompany computed as per the applicable provisions of the Regulations.

7.3. Stock Options

An Independent Director shall not be entitled to any stock option of the Company

8. REMUNERATION TO KMP SENIOR MANAGEMENT PERSONNEL AND OTHER EMPLOYEES

The KMP Senior Management Personnel and other employees of the Company shall be paidmonthly remuneration as per the Company's HR policies and / or as may approved by theCommittee. The break-up of the pay scale and quantum of perquisites including employer'scontribution to PF pension scheme medical expenses club fees etc. shall be as per theCompany's HR policies.

The Chief Executive Officer of the Company will make organisation-wide annualpresentation(s) before the Committee which would have requisite details setting out theproposed performance bonus payouts for the current financial year as well as the proposedincrements for the next financial year. The Committee shall peruse and approve the sameunless required under relevant regulations to refer the same to the Board of Directorsand / or Shareholders of the Company.

If the remuneration of KMPs or any other officer is to be specifically approved by theCommittee and / or the Board of Directors under any Regulations then such approval willbe accordingly sought.

This Remuneration Policy shall apply to all future / continuing employment /engagement(s) with the Company. In other respects the Remuneration Policy shall be ofguidance for the Board. Any departure from the policy shall be recorded and reasoned inthe Committee and Board meeting minutes. The Company reserves its right to amend or modifythis Policy in whole or in part at any time without assigning any reason whatsoever.

Annexure E

STATEMENT OF PARTICULARS AS PER SECTION 197 12 READ WITH RULE 5 1 OF THE COMPANIESAPPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL RULES 2014.

Name of the Director and Designation % increase in the remuneration in the financial year ended 31st March 2017 Ratio of the remuneration of each Director to the median remuneration of the employees
Non-Executive Directors
1. Mr. Samprada Singh 11.51% 566.14
Independent Directors
2. Mr. Mangaldas Chhaganlal Shah 0.00% 4.84
3. Mr. Akhouri Maheshwar Prasad -8.33% 4.59
4. Mr. Ranjal Laxmana Shenoy -13.33% 5.24
5. Mr. Arun Kumar Purwar 9.09% 4.67
6. Ms. Sudha Ravi 0.00% 4.75
7. Ms. Sangeeta Singh 0.00% 5.00
Executive Directors
8. Mr. Basudeo N. Singh 58.92%* 556.27
9. Mr. Dhananjay Kumar Singh -0.29% 140.60
10. Mr. Sandeep Singh 0.92% 133.38
11. Mr. Balmiki Prasad Singh 0.37% 109.59
12. Mr. Mritunjay Kumar Singh 0.63% 129.64

* The % increase in remuneration is mainly due to payment of commission for the FY2016-17.

Name of the Key Managerial Personnel and Designation % increase in the remuneration in the financial year ended 31st March 2017
1 Mr. Prabhat Agrawal Chief Executive Officer -21.98%**
2 Mr. Rajesh Dubey Chief Financial Officer 43.65%**
3 Mr. Manish Narang Company Secretary -35.59%**

** The variation is due to incentive payouts. i) The median remuneration of employeesof the Company during the financial year ended 31st March 2017 was Rs 0.25 Million.

ii) During the financial year ended 31st March 2017 the median remuneration ofemployees increased by 15.65%.

iii) As on 31st March 2017 the Company had 11958 permanent employees on its rolls.

iv) During the financial year 2016-17 there was an average 26.36% increase in thesalaries of employees (other than the KMP) which was directed to make the remuneration ofthe employees as per the industry pay levels. Remuneration to the KMP decreased by 13.96%which was primarily due to incentive payouts. The increase in remuneration of Mr. BasudeoN. Singh Executive Chairman was mainly due to payment of commission for FY 2016-17 asapproved by the shareholders of the Company at the 42nd Annual General Meeting held on 2ndSeptember 2016.

v) We afirm that the remuneration paid is as per the Remuneration Policy of theCompany.

For and on behalf of the Board

Alkem Laboratories Limited

Samprada Singh

Chairman Emeritus

DIN: 00760279

Date: 26th May 2017

Place: Mumbai

‘Annexure A'

To

The Members

Alkem Laboratories Limited

Mumbai

Our report of even date is to be read along with this letter.

1. Maintenance of secretarial record is the responsibility of the management of theCompany. Our responsibility is to express an opinion on these secretarial records based onour audit.

2. We have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the Secretarial records. Theverification was done on test basis to ensure that correct facts are reflected insecretarial records. We believe that the processes and practices we followed provided areasonable basis for our opinion.

3. We have not verified the correctness and appropriateness of financial records andBook of Accounts of the Company.

4. Where ever required we have obtained the Management representation about thecompliance of laws rules and regulations and happening of events etc.

5. The compliance of the provisions of Corporate and other applicable laws rulesregulation standards is the responsibility of management. Our examination was limited tothe verification of procedures on the test basis.

6. The Secretarial Audit Report is neither an assurance as to the future viability ofthe Company nor of the efficiency or effectiveness with which the management has conductedthe affairs of the Company.

For Manish Ghia & Associates
Company Secretaries
Manish L. Ghia
Place : Mumbai Partner
Date: 26th May 2017 M. No. FCS 6252 C.P. No. 3531

Annexure H

INFORMATION ON CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEDETAILS

[Pursuant to the Companies (Accounts) Rules 2014]

A CONVERSATION OF ENERGY:

(1) Energy Conservation Measures taken:

Energy Conservation continues to receive priority within the Company. The continuousmonitoring of the energy consumptions across the Company's locations has resulted inimprovement in maintenance systems and reduction in distribution losses.

Specific Energy Conservation measures taken during financial year 2016-17 are asfollows:

1. Installation of Auto RH (Relative Humidity) & Temperature Controller VariableFrequency Drive (VFD) in Air Handling Units at various plant locations of the Company forpower saving.

2. Installation of temperature sensor to control the temperature of cooling tower forchiller used in Heating Ventilating and Air Conditioning (HVAC) at Samardung plant.

3. Replacing boiler fuel from Furnace Oil to briquette at Baddi plant from wood tobriquette at Daman & from High Speed Diesel to Furnace Oil at Sikkim.

4. Heater banks of dehumidiffers have been replaced with steam coil at Kumrek plant.Due to this the Company is saving huge amount of energy in the form of electricity.

5. Additional Capacitor Bank has been installed at Kumrek plant to increase the powerfactor from 0.92 to 0.99.

6. Replaced CFL lights with LED lights for power saving at all the manufacturinglocations of the Company.

7. Installation of Economiser Steam trap Steam condensate recovery system to increasethe boiler fuel efficiency and reduction in steam consumption at Daman and Mandva plant.

8. Automation of bore-well pump at Samardung plant has resulted in water & energysaving.

(2) Steps taken by the Company for utilizing the alternate sources of energy:

Power generated from Solar system as alternate source of energy at Company's API Plantat Mandva.

(3) The capital investment on Energy Conservation equipment:

(Rs in Million)
Sr. No. Particulars Amount
1. Data Acquisition & Control Sytem 6.9
2. Chiller 250 TR 4.6
3. LED Lights 4.4
4. Variable Frequency drive in AHU 2.9
5. Economiser for briquette boiler 1.1
6. Change in boiler fuel 0.4
7. Steam Straps 0.3
8. Installation of Capacitor Bank 0.3
9. Air compressor in Utility 0.2
10. Steam condensate recovery system 0.1
11. Dehumidiffers steam coil installation 0.1
12. Sensor & controller 0.1
Total 21.4

B TECHNOLOGY ABSORPTION:

1. Eforts in brief made towards technology absorption: i. Development andpatenting of new molecular forms and methods of synthesis.

ii. Development of new drug delivery systems.

2. Benefits derived as a result of the above efforts: i. Improvement in operationalefficiency through reduction in batch hours increase in batch sizes better solventrecovery and simpli cation of processes.

ii. Meeting norms of external regulatory agencies to facilitate more exports.

iii. Improvements in e uent treatment pollution control and all-round safetystandards.

iv. Maximum utilization of indigenous raw materials.

v. Development of products for import substitution.

3. In case of imported technology (imported during the last 3 years reckonedfrom the beginning of the financial year): (i) Granurex GXR-95 (the conical rotor insert):

(a) The details of technology imported:

The Company imported this technology from USA. This equipment is manufactured by FreundVector and is used for the powder layering on pellets. This technology is useful inachieving drug layering at much faster rate as compared to conventional techniques whichin turn increases production efficiency;

(b) The year of import: 2015-16;

(c) Whether the technology has been fully absorbed: Yes

(d) If not areas where absorption has not taken place and the reasons thereof: N.A.

(ii) High Speed Rotary Tablet Press Courtoy Performa™ P with MUPS feeding system:

(a) The details of technology imported:

The Company imported this press to increase process yield and enhance the tabletquality an innovative new MUPS production method which works on a continuous dosingblending and compression system. This technology increases the production efficiency andreduces the product quality risks;

(b) The year of import: 2015-16;

(c) Whether the technology has been fully absorbed: Yes

(d) If not areas where absorption has not taken place and the reasons thereof: N.A.

(iii) Korsch Compression Machine:

(a) The details of technology imported:

Compression Machine which is monolayer as well as bilayer;

(b) The year of import: 2015-16;

(c) Whether the technology has been fully absorbed: Yes

(d) If not areas where absorption has not taken place and the reasons thereof: N.A.

(iv) Gea Compression Machine:

(a) The details of technology imported:

Gea Compression Machine for infusion of micro tablet into capsule for min tablet of 2.2mm diameter;

(b) The year of import: 2015-16;

(c) Whether the technology has been fully absorbed: Yes

(d) If not areas where absorption has not taken place and the reasons thereof: N.A.

4. Expenditure on R & D:

(Rs in Million)
2016-17 2015-16
Particulars
(i) Capital 265.6 207.6
(ii) Recurring 2763.0 1917.4
(excluding depreciation of Rs 123.6 Million) (excluding depreciation of Rs 102.7 Million)
Total 3028.6 2124.9
Total R & D expenditure as percentage to total turnover 6.49% 5.38%

C FOREIGN EXCHANGE EARNING AND OUTGO:

(Rs in Million)
2016-17 2015-16
Foreign Exchange earned 8410.0 6563.3
Foreign Exchange used 1903.2 1471.4

For and on behalf of the Board

Alkem Laboratories Limited

Samprada Singh

Chairman Emeritus

DIN: 00760279

Date: 26th May 2017

Place: Mumbai