Alkem Laboratories Limited
Your Directors are pleased to present their 42nd Annual Report on the business andoperations together with the audited financial statements of the Company for the yearended 31st March 2016. Consolidated performance of the Company and its subsidiaries hasbeen referred to wherever required.
|FINANCIAL PERFORMANCE || || |
| || || |
(Rs. in Million)
| || |
|Particulars ||Year ended 31st March 2016 ||Year ended 31st March 2015 ||Year ended 31st March 2016 ||Year ended 31st March 2015 |
|Income from Operations ||39246.9 ||31375.6 ||49915.4 ||37433.5 |
|Other Income ||1605.2 ||1821.3 ||1645.1 ||1810.4 |
|Total Revenue ||40852.1 ||33196.9 ||51560.5 ||39243.9 |
|Profit before Interest Depreciation and Tax ||8727.9 ||5276.4 ||10127.4 ||6028.7 |
|Less: Interest ||533.0 ||726.3 ||670.6 ||811.1 |
|Less: Depreciation ||735.3 ||596.8 ||1005.8 ||709.4 |
|Profit before tax ||7459.6 ||3953.3 ||8451.0 ||4508.2 |
|Less: Provision for Taxation (net) ||1075.2 ||276.4 ||1606.0 ||592.3 |
|Profit after tax and before minority interest ||6384.4 ||3676.9 ||6845.0 ||3915.9 |
|Less: Minority Interest ||- ||- ||113.8 ||- |
|Profit for the year ||6384.4 ||3676.9 ||6731.2 ||3915.9 |
|Balance brought forward from previous year ||11385.4 ||8275.3 ||10207.5 ||6858.4 |
|Profit available for appropriations ||17769.8 ||11952.2 ||16938.7 ||10774.3 |
|Appropriations || || || || |
|Dividend on Equity Shares ||1518.5 ||478.3 ||1518.5 ||478.3 |
|Dividend Distribution Tax ||309.1 ||88.5 ||311.1 ||88.5 |
|Transfer to General Reserve ||- ||- ||170.0 ||- |
|Balance carried to the Balance Sheet ||15942.2 ||11385.4 ||14939.1 ||10207.5 |
OVERVIEW OF FINANCIAL PERFORMANCE
During the financial year ended 31st March 2016 the Companys total revenueincluding other income was Rs. 40852.1 million on standalone basis as against Rs.33196.9 million achieved in the previous year registering a growth of 23.1%.
The export turnover of the Company during the financial year 2015-16 was Rs. 6472.3million as against Rs. 3448.2 million achieved in the previous year registering a growthof 87.7%.
During the financial year ended 31st March 2016 the Company achieved total revenueincluding other income of Rs. 51560.5 million on consolidated basis as against aturnover of Rs. 39243.9 million achieved in the previous year registering a growth of31.4%.
During the financial year ended 31st March 2016 Standalone Profit before interestdepreciation and tax increased by 65.4 % at Rs. 8727.9 million as against Rs. 5276.4million in the previous year whereas Consolidated Profit before interest depreciationand tax increased by 68.0 % at Rs. 10127.4 million as against Rs. 6028.7 million in theprevious year.
Standalone Profit before tax wasRs. 7459.6 million higher by 88.7 % over the previousyear and Consolidated Profit before tax was Rs. 8451.0 million higher by 87.5 % over theprevious year.
After providing for taxes standalone net profit Rs. 6384.4 million higher by 73.6 %over the previous year and after providing for taxes and minority interest consolidatednet profit was Rs. 6731.2 million higher by 71.9 % over the previous year.
INITIAL PUBLIC OFFERING
The Directors are pleased to inform that the Companys Initial Public Offering of12853442 Equity Shares of face value Rs. 2/- each through Offer for Sale received anoverwhelming response from the investors. The Issue opened for subscription on 8thDecember 2015 and closed on 10th December 2015. The Company allotted 12853442 equityshares by the way of an offer for sale. The Qualified Institutional Bidder portion(excluding Anchor Investor Portion) was subscribed to the extent of 57.19 times while theNon-Institutional and Retail portion were subscribed to the extent of 129.96 times and3.17 times respectively. The Employee portion was subscribed to the extent of 0.67 time.The issue constituted 10.75% of the post-issue capital of the Company and the same wasoverall subscribed to the extent of 44.29 times. The Equity Shares of the Company arelisted on BSE Limited and the National Stock Exchange of India Limited.
UTILISATION OF IPO PROCEEDS
As the Companys IPO was through an offer for sale the Company did not receiveany proceeds from the offer and the proceeds were paid to the shareholders who offeredtheir shares for sale.
During the financial year 2015-16 your Company declared and paid an Interim dividendat Rs. 3/- per Equity Share being 150% of paid up share capital on 28th September 2015and a Second Interim dividend at Rs. 9.7/- per Equity Share being 485% of paid up sharecapital on 9th March 2016. In view of the payment of interim dividends during the yearthe Directors have not recommended any further dividend for the financial year ended 31stMarch 2016.
TRANSFER TO RESERVES
The Company has not transferred any amount to the general reserve. An amount of Rs.15942.2 million is proposed to be retained in the Statement of Profit and Loss.
The paid up Equity Share Capital as on 31st March 2016 was Rs. 239.1 million. TheCompany has neither issued shares with differential rights as to dividend voting orotherwise nor issued shares to the employees or Directors of the Company under any Scheme(including sweat equity shares).
The Company has not accepted any deposits from the public/members under Section 73 ofthe Companies Act 2013 (hereinafter referred to as the Act) read with Companies(Acceptance of Deposits) Rules 2014 during the year. There are no deposits which areoutstanding as on 31st March 2016. The Company has no deposits which are not incompliance with the requirements of Chapter V of the Companies Act 2013.
As on 31st March 2016 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.
Details of companies which have become or ceased as subsidiary associates and jointventures during the year under review are as under:
|Name ||Details of Change ||Date of Change |
|Alkem Real Estate LLP ||Ceased to be a subsidiary due to liquidation (Strike off) ||11th September 2015 |
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 Ato this Report. The Audited Financial Statements of the subsidiaries are available on theCompanys website at www.alkemlabs.com and are available for inspection by theMembers at the Registered Office the Company during business hours on all working days asrequired under 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.
A detailed report on the corporate governance systems and practices of the Company isprovided as a separate section alongwith acertificate Statutory Auditors confirming thecompliance by the Company with the conditions of Corporate Governance forming part ofthis Report.
CORPORATE SOCIAL RESPONSIBILITY
The Company continues to believe in operating and growing its business in a sociallyresponsible way. This belief forms the core of the CSR policy of the Company that drivesit to focus on holistic development of its host community and immediate social andenvironmental surroundings qualitatively. The Companys CSR Policy framework putsemphasis on social outreach programs in the areas of Education Vocational TrainingHealth Environment and Rural Development.
Details about the Companys CSR Policy and initiatives undertaken by the Companyduring financial year 2015-16 are outlined in the Report on CSR Activities annexed to thisReport as Annexure B.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
As per the provisions of Section 149 and Section 152 of the Act the shareholders atthe Annual General Meeting (AGM) held on 13th July 2015 appointed Mr. Arun Kumar Purwar(DIN 00026383) Ms. Sangeeta Singh (DIN 06920906) and Ms. Sudha Ravi (DIN 06764496) asIndependent Directors of the Company. The terms and conditions of the appointment of theIndependent Directors are posted on Companys website.
Mr. Ennapadam N. Shankar (DIN 02118438) resigned from the Board with effect from 15thJune 2015. The Board places on record its appreciation for his valuable contributionduring his tenure with the Company.
Directors liable to Retirement by Rotation
Mr. Dhananjay Kumar Singh (DIN 00739153) 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 reappointment. 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 is given separately as an annexure tothe AGM Notice.
Key Managerial Personnel
Mr. Prabhat Agrawal Chief Executive Officer Mr. Rajesh Dubey Chief FinancialOfficerand Mr. Manish Narang Senior Vice President Legal Company Secretary and are theKey Managerial Personnel of the ComplianceOfficer 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 year2015-16.
The Independent Directors hold officefor 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 confirmingthat he/she meets the criteria ofIndependence as mentioned under Section 149(6) of the Act and SEBI (Listing Obligation andDisclosure Requirements) Regulations 2015 (hereinafter referred to as "SEBI LODRRegulations").
In compliance with the requirements of SEBI LODR Regulations the Company has put inplace a familiarization programme for the Independent Directors to familiarize them withtheir roles rights and responsibilities as Directors the working of the Company natureof the industry in which the Company operates business model etc. The details of thefamiliarization programme are explained in the Corporate Governance Report. The same isalso available on the Company website at http://www.alkemlabs.com/admin/Photos/Policies/973052158Directors%20 Familiarisation%20Programme.pdf.
Annual Evaluation of Boards 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 evaluated performance ofnon-independent directors performance of the Board as a whole and performance of theChairpersons of the Company.
The Company follows a policy for selection and appointment of Directors SeniorManagement and their remuneration. The said policy is annexed to this Report as AnnexureC.
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 D.
Further a statement showing the names and other particulars of employees drawingremuneration in excess of the limits specified in Rule 5(2) and Rule 5(3) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 forms part of thisreport. However in terms of first proviso to Section 136(1) of the Act the Annual Reportand annual financial statements are being sent to the Members and others entitled theretoexcluding the aforesaid information. The said information is available for inspection forthe Members at the Registered Office of the Company during the business hours on workingdays and shall be provided to any Member on a written request to the Company Secretary.
NUMBER OF MEETINGS OF THE BOARD
The Board of Directors met 5 (Five) times during the financial year 2015-16. Thedetails of the Board meetings and the attendance of Directors thereat are provided in theCorporate Governance Report forming part of the Annual Report.
In terms of requirements of Schedule IV of the Act a separate meeting of IndependentDirectors was also held on 9th March 2016 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
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.
Stakeholders Relationship Committee
The Stakeholders Relationship Committee comprises of Mr. Ranjal Laxmana ShenoyChairman and Mr. Dhananjay Kumar Singh Mr. Sandeep Singh and Mr. Mangaldas ChhaganlalShah as Members. The terms of reference of the Stakeholders Relationship Committeeand the particulars of meetings held and attendance thereat are mentioned in the CorporateGovernance Report forming part of the Annual Report.
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 from the Costalong with proper explanation relating to material departuresif any;
(b) they have selected such accounting policies andapplied of the 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 Company for the March 2016 and ofthe profit year ended on that date;
(c) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(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
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 hold office upto theconclusion of the Forty Fifth (45th) Annual General Meeting. However their appointment asStatutory Auditors of the Company is subject to ratification by the Members at everyAnnual General Meeting. The Company has received a certificate from the said Auditors thatthey are eligible to hold office as the Auditors of the Company and are not disqualifiedfrom being so appointed.
A resolution ratificationof appointment of the said for Auditors is included in theNotice of Annual General Meeting for seeking approval of Members.
The Auditors Report for financial year ended 31st March 2016 does not contain anyqualification reservation or adverse remark.
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 28th September 2015 appointed Mr. Suresh D Shenoy Cost Accountant(Membership No. 8318) as the Cost Auditor of the Company for financial year 2015-16 toconduct the audit of the cost records of the Company. The Company had also receivedcertificate certifying his independence and arms length relationship with theCompany. A resolution for ratification payable to the Cost Auditor is included in theNotice of Annual General Meeting for seeking approval of Members. The Cost Audit Reportwill be filed withinthe . period stipulated underthe Act
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. F6253 COP No. 3531) to conduct the Secretarial Audit of the Company forthe financial year 2015-16. The Secretarial Audit Report is annexed to this Report asAnnexure E. The said Report does not contain any qualification reservation or adverseremark.
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 F.
RELATED PARTY TRANSACTIONS
All the Related Party Transactions are entered into by the Company at armslength basis in the ordinary course of business and are in compliance with the applicableprovisions of the Act and the SEBI LODR Regulations and the Companys Policy onRelated Party Transactions. During the financial year 2015-16 the Company did not enterinto any material related party transactions i.e. transactions exceeding ten percent ofthe consolidated 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 theCompanys website at http://www.alkemlabs.com/admin/PhotosPolicies/15915Policy%20on%20Related%20Party%20Transactions.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/3592Whistle%20Blower%20Policy.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 Rulesthereunder. An Internal Complaints Committee hasalsobeen contribution set up to redresscomplaints received on sexual harassment. During the financial year 2015-16 the Companyhad received one complaint with allegations of sexual harassment and the same wasinvestigated and resolved.
BUSINESS RISKS AND OPPORTUNITIES
In line with the new regulatory requirements the Company has formally framed RiskManagement Policy to identify and assess the key risk areas monitor and report complianceand effectiveness of the policy and procedure. A Risk Management Committee under theChairmanship of Mr. Dhananjay Kumar Singh Joint Managing Director has also beenconstituted to oversee the risk management process in the Company.
DISCLOSURES UNDER THE ACT
Change in Nature of Business if Any
During the financial year 2015-16 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 companys operationsin future.
Reporting of Frauds by Auditors
There were no frauds reported by auditors as per Section 134 (3)(ca) and Section143(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.
CONVERSATION 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 framed thereunderis annexed herewith as Annexure G to this report.
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 year. The Directors also place onrecord their sincere appreciation for made thesignificant by our employees through theirdedication hard work and unstinted commitment.
| ||For and on behalf of the Board |
| ||Alkem Laboratories Limited |
| ||Samprada Singh |
| ||Chairman Emeritus |
| ||DIN: 00760279 |
|Date: 27th May 2016 || |
|Place: Mumbai || |