Your Directors are pleased to present the 38th Annual Report together withthe Audited Financial Statements of the Company for the financial year ended March 312017.
(Rs. in Million)
|Particulars ||2016-17 ||2015-16 |
|Sales and Other Income ||5592 ||5705 |
|Profit/(Loss) before Tax ||332 ||58 |
|Provision for Taxation || || |
|- Income Tax ||88 ||5 |
|- Adjustment for Deferred Tax ||- ||- |
|Total Tax ||88 ||5 |
|Profit/(Loss) after Taxation ||244 ||53 |
|Surplus brought forward from the previous year ||255 ||203 |
|Total amount available for appropriation ||500 ||255 |
|Appropriation made by Directors || || |
|Transfer to General Reserve ||- ||- |
|Appropriation recommended by Directors || || |
|Dividend ||- ||- |
|Tax on proposed Dividend ||- ||- |
|Surplus carried over ||500 ||255 |
Though the Company made significant progress during the year in terms of its businessperformance considering its overall financial position the Directors are notrecommending any dividend for the year 2016-17.
Sales and Marketing
The Company registered sales of Rs. 5047 million with a de-growth of 2.3% achieving aNet Profit of Rs. 244 million during the year. The Company aligned its portfolio toAstraZeneca's Global Therapeutic Focus which is in core areas of Cardio-MetabolismOncology and Respiratory. Accordingly certain brands were divested globally and locallyin therapy areas of Antibiotics Local Anaesthesia Maternal Health Care and otherProducts. This resulted in de-growth in financial year 2016-17 sales however theunderlying growth of the company for 2016-17 for non-divested brands was at 15.8%. TheCompany's Growth Platform including the innovative drugs Brilinta Forxiga SymbicortOnglyza and Kombiglyze now constitutes 54% of total sales and grew by 30%.
In the last Board's Report members were informed that the Company had entered intoDistribution Services Agreement with Dr. Reddy's Laboratories to distribute Saxagliptinand with Sun Pharma to distribute Dapaglifiozin and Ticagrelor under different brandnames. During the year these partnerships have enabled us to increase our access to awider reach of health care professionals thereby benefitting more patients.
Brilinta (Ticagrelor) prescribed for treatment in Acute Coronary Syndrome (ACS)disease continued to register rapid growth. This franchise crossed the Rs. 1000 millionmilestone within 5 years of launch and as per IMS Health Ticagrelor franchise enjoyed 22%market share (MAT Mar 2017). Brilinta continues to be the #1 Oral Antiplatelet brand andwon the prestigious award from AWACS for "Brand of the Year" in chroniccategory.
Forxiga which is part of a newer class of anti-diabetic known as SGLT2 (Sodium GlucoseCotransporter 2) inhibitors also experienced a robust growth. Forxiga won the "NewIntroduction of the Year" award for the best launch in chronic category byAIOCD-AWACS. As per IMS Health the Dapaglifiozin franchise enjoyed a 32 % market sharewithin SGLT2 class (MAT Mar 2017).
Manufacturing Operations in India continue to progress and develop. Several quality andcompliance programs have been launched at the plant during last 3 years and have beeninstrumental in propagating the cGMP culture at the plant. The plant has successfullycompleted the Worldwide Audit Group audit this year and also passed inspections from thestate drug authorities. The plant has undertaken several initiatives around Safety Health& Environment Engineering Efficiencies and achieved overall productivityimprovements. The overall capacity utilization of the plant has been a specific area offocus and initiatives were undertaken to assess opportunities.
Material changes and commitment if any affecting financial position of the Companyfrom the end of the Financial Year and till the date of this Report
There has been no material change or commitment affecting the financial performance ofthe Company between the end of the financial year of the Company to which the financialstatements relate and the date of this Report.
During the year under review the Company has neither accepted nor renewed any depositsfrom public within the meaning of Section 73 of the Companies Act 2013 and The Companies(Acceptance of Deposits) Rules 2014.
Safety Health and Environment
Safety as well as Health and Wellbeing of employees is an important issue for theCompany. During the year the Company's field force was trained in defensive drivingtechniques to enhance their on-road safety. This led to a significant reduction in thenumber of road accidents in the field. Further new initiatives were introduced onbuilding a safe working environment for our women employees. Many health awarenessactivities too were carried out throughout the year.
Human Resources and Employee Relations
The Company is committed to provide career opportunities for its employees and enabletheir growth and development. Further there is a focus on hiring science and pharmacygraduates to strengthen the scientific orientation in the workforce. There continues to bea focus on building gender diversity in the workforce. Training programs to strengthenscientific and technical knowledge of the employees were extensively implemented acrossthe business. We continued our strong focus on cost optimization and controls. Measureswere undertaken to reduce unproductive discretionary and non-customer facing spendsdevelop simple and more efficient processes and encourage higher accountability to improvedecision making and communication. The Company continued to provide career development andlearning opportunities for its employees. During the year the India Development
Week was conducted to enable employees to develop capabilities to further theirdevelopment within AstraZeneca to enable them to be ready for the focus on newerchallenges and portfolio. We also continued to focus on building a diverse organizationwith employees from different backgrounds and cultures.
Number of Employees
The total number of employees of the Company as on March 31 2017 was 1141 as against1587 as on March 31 2016.
In the last year's Board's Report members were informed about the following pendingmatters:
(a) Arbitration proceedings with National Highway Authority of India (NHAI) in respectof first and second acquisition of land made by NHAI in the year 2004 and 2011respectively.
(b) Writ Petition before the High Court of Karnataka challenging the notice receivedfrom Bruhat Bangalore Mahanagar Palike dated August 7 2014 and the interim stay againstthe demand notice granted by the High Court of Karnataka.
(c) Appeal filed by two shareholders of the Company before Securities AppellateTribunal against part of the Order of Securities and Exchange Board of India (SEBI) datedJune 24 2014 in relation to delisting proposal of AstraZeneca Pharmaceuticals ABSweden.
During the year under review there has been no reportable developments on the abovematters.
Transfer to Investor Education and Protection Fund
As required under the Companies Act 1956/2013 the unclaimed dividend amountaggregating Rs. 1931580 lying with the Company for a period of seven years pertaining tothe financial year ended December 2008 was transferred during July 2016 to theInvestor Education and Protection Fund established by the Central Government.
Directors' Responsibility Statement
To the best of our knowledge and belief and according to the information andexplanations obtained by us the Directors state in terms of Section 134 (5) of theCompanies Act 2013 (the Act):
(a) that in the preparation of the annual financial statements for the year ended March31 2017 the applicable accounting standards have been followed along with properexplanation relating to material departures if any.
(b) that they had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Companyas at March 31 2017 and of the profit of the Company for the year ended on thatdate.
(c) that they had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act forsafeguarding the assets of the Company and for preventing and detecting fraud andother irregularities.
(d) that they had prepared the annual financial statements on a going concernbasis.
(e) that they had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.
(f) that they had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
The details in respect of internal financial controls and their adequacy are includedin the Management Discussion and Analysis Report which forms part of this Report.
Disclosure as required under Section 22 of Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013
The Company is committed to provide a healthy environment to all its employees. Thereis zero tolerance of discrimination and/or harassment in any form. The Company has inplace a Prevention of Sexual Harassment Policy and an Internal Complaints Committee as perthe requirements of the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013. During the year under review the Internal Complaints Committeereceived two complaints. In respect of one complaint the recommendations of the InternalComplaints Committee have been implemented by the management. The other complaint is underreview.
During the year five meetings of the Board of Directors were held. For details of themeetings of the Board please refer to the Corporate Governance Report which forms partof this Report.
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 performance evaluation exercise was carriedout for evaluation of the performance of the Board as a Whole the Chairman IndependentDirectors and the non-independent Directors. The Company has formulated a questionnaire tocarry out the evaluation exercise. The questionnaire is structured to embed variousparameters based on identified criteria and framework to carry out the evaluationeffectively.
Remuneration Policy of the Company
The Remuneration Policy of the Company for appointment and payment of remuneration tothe Directors Key Managerial Personnel and Senior Executives of the Company is annexedherewith as Annexure - I which forms part of this Report.
Vigil Mechanism / Whistle Blower Policy
The Company has a disclosure mechanism for Directors and Employees to report anyconcerns about unethical behavior actual or suspected fraud or violation of the Company'scode of conduct. The mechanism provides adequate safeguards for victimization of Directors/ Employees. In exceptional cases Directors and Employees have direct access to theChairman of the Audit Committee. The Whistle Blowing Policy is available on the Company'swebsite www.astrazeneca.com/india.
Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outflow
The information on Conservation of Energy Technology Absorption and Foreign Exchangeearnings and outgo stipulated under Section 134 (3) (m) of the Companies Act 2013 readwith Rule 8 of The Companies (Accounts) Rules 2014 is annexed herewith as Annexure - II.
Related Party Transactions
There are no materially significant related party transactions made by the Company withPromoters Directors Key Managerial Personnel and Senior Management which may have apotential confiict with the interest of the Company.
All related party transactions are placed before the Audit Committee for priorapproval. Omnibus approval of the Audit Committee is obtained for transactions which arerepetitive in nature or when the need for them cannot be foreseen in advance. The Companyhas adopted a Policy for dealing with Related Party Transactions. The Policy as approvedby the Board is uploaded on the Company's website and can be accessed atwww.astrazeneca.com/ india.
The related party transactions which are of material nature as defined in the ListingRegulations require to be approved by the Members by way of an Ordinary Resolution. Inthis connection the material related party transactions requiring Members' approval aredealt with at Item No.12 of the Notice read with the Explanatory Statement.
Details of the related party transactions as required under Section 134(3)(h) read withRule 8 of the Companies (Accounts) Rules 2014 are attached as Annexure III.
The Company has a mechanism to inform the Board on the risk assessment and minimizationprocedures and a periodical review is carried out to ensure that executive managementcontrols are appraised by means of a properly defined framework.
Corporate Social Responsibility (CSR)
Since the average net profit of the Company during the three immediately precedingfinancial years was negative the Company was not required to spend on CSR activitiesduring the financial year 2016-17. Founded in partnership with John Hopkins School ofPublic Health and Plan International AstraZeneca global had introduced its signatureglobal community initiative the Young Health Programme' (YHP) in the year 2010-11 infive resettlement colonies in Delhi. The overall aim of YHP is to make a meaningfuldifference to the health and well-being of marginalized and disadvantaged adolescent boysand girls by helping them to make informed choices to protect their health now and in thefuture. YHP focuses on prevention of Non Communicable Diseases (NCDs) during adolescencebecause that is when risk behaviours such as tobacco use alcohol abuse and unhealthyeating usually start. Scientific research has shown that these behaviours once formedare hard to change and can lead to major NCDs like type 2 diabetes cancer heart andrespiratory disease later in life.
YHP India is funded and supported by AstraZeneca global and the Company's contributionto YHP India includes employee engagement and disease awareness initiatives in thecommunities.
The Programme completed five successful years in 2015. AstraZeneca global launched thethird phase of YHP in 2016 extending the Programme to additional five communities in NorthWest Delhi till 2020. YHP India has directly reached out to 199387 adolescents (114539girls) and has influenced 119770 wider community members including health professionalseducators and policy makers. Close to 2200 young people have been trained to be educatorsin their local communities (1135 girls). 15 Health Information Centres providepreventive promotive health and counselling services and special health clinics foradolescents have been initiated across 5 project communities. In the third phase YHPexpects to reach over 130000 adolescent girls and boys directly and indirectly influenceat least 80000 people in the wider community including parents policy makers educatorsand health professionals.
YHP was recognized as a Corporate CSR Best Practice' at the National HumanResources Development Conference held in Bangalore in 2016.
The Annual Report on CSR activities in terms of the requirements of Companies(Corporate Social Responsibility Policy) Rules 2014 is annexed herewith as Annexure - IVwhich forms part of this Report.
Extract of Annual Return
In terms of the requirements of Section 92(3) of the Act and Rule 12 of the Companies(Management and Administration) Rules 2014 the extract of the Annual Return in theprescribed form i.e. MGT - 9 is annexed herewith as Annexure - V which forms part ofthis Report.
Details of remuneration of Directors / Key Managerial Personnel
The information relating to remuneration of Directors/Key Managerial Personnel asrequired under Section 197(12) read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 of the Act is given in Annexure - VIwhich forms part of this Report.
Particulars of Employees
The statement under Rule 5(2) and 5(3) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 are set out in Annexure - VII which forms part ofthis Report.
However the said Annexure shall be provided to Members on a specific request made inwriting to the Company. The said information is available for inspection by the Members atthe Registered Office of the Company on any working day of the Company up to the date ofthe 38th Annual General Meeting.
Management Discussion and Analysis
Management Discussion and Analysis Report as required under the SEBI (ListingObligations and Disclousure Requirements) Regulations 2015 ('the Listing Regulations') isannexed as Annexure - VIII which forms part of this Report.
A detailed report on corporate governance as required under the Listing Regulations isannexed as Annexure - IX. Certificate of the Practicing Company Secretary regardingcompliance with the conditions stipulated in the Listing Regulations forms part of theReport on Corporate Governance which forms part of this Report.
Reporting of Frauds
There was no instance of fraud during the year under review which required theStatutory Auditors to report to the Audit Committee and / or the Board as required underSection 143(12) of the Act and Rules framed thereunder.
Particulars of Loans Guarantees or Investments
During the year under review the Company has not granted any Loan Guarantees or madeInvestments within the meaning of Section 186 of the Companies Act 2013.
Significant and material orders passed by the Regulators or Courts or Tribunals
During the year under review there was no significant and material orders passed bythe Regulators or Courts or Tribunals impacting the going concern status of the Company.
Pursuant to Section 178 of the Companies Act 2013 and the rules made thereunder theBoard of Directors at its meeting held on May 30 2014 had constituted the Nomination& Remuneration Committee and the Stakeholders' Relationship Committee. Furtherpursuant to Section 135 of the Companies Act 2013 and the rules made thereunder theBoard of Directors at its meeting held on August 12 2014 constituted the Corporate SocialResponsibility Committee. Details of these Committees including the Audit Committee aregiven in the Corporate Governance Report.
Directors and Key Managerial Personnel
The Companies Act 2013 provides for the appointment of Independent Directors whoshall hold office for a term of up to five consecutive years on the Board of the Companyand shall be eligible for re-appointment on passing of a special resolution by theCompany. Further the provisions of retirement by rotation as envisaged under Section 152of the Companies Act 2013 shall not apply to such Independent Directors. The IndependentDirectors of your Company Mr. Narayan K Seshadri Ms. Revathy Ashok and Ms. KimsukaNarsimhan have furnished the required declaration under Section 149 of the Companies Act2013 affirming that they meet the criteria of independence.
Changes to the Board of Directors:
The following Directorship changes occurred and the Board during the year and up to thedate of this report:
Resignations from the Board:
(a) Mr. D.E. Udwadia (Chairman and Independent Director) Mr. K.S. Shah(Independent Director) and Ms. Claire-Marie O' Grady (Non-executive Director)resigned w.e.f December 2 2016
(b) Mr. Ian Brimicombe (Non-executive Director) resigned w.e.f May 31 2017
(c) Mr. Sanjay Murdeshwar (Managing Director) resigned w.e.f June 30 2017
Appointments to the Board:
(a) Ms. Revathy Ashok (Independent Director) Mr. Gregory David Emil Mueller(Non executive Director) and Mr. Rajesh Marwaha (Whole-time Director) wereappointed as Additional Directors of the Company at the meeting of the Boardheld on December 2 2016.
(b) Ms. Kimsuka Narsimhan (Independent Director) was appointed as AdditionalDirector of the Company at the meeting of the Board held on February 2 2017.
(c) Mr. Gagan Singh Bedi (Managing Director) was appointed as AdditionalDirector of the Company w.e.f July 1 2017 at the meeting of the Board heldon June 29 2017.
(d) Mr. Ian John Parish (Non-executive Director) was appointed a Director of theCompany to fill the casual vacancy arising due to the resignation of Mr. IanBrimicombe at the meeting of the Board held on August 8 2017.
A proposal is placed before the shareholders for the appointment of the aforesaiddirectors at the Annual General Meeting. The Board recommends their appointment to theshareholders.
Mr. Anantha Murthy N resigned as Legal Counsel & Company Secretary effectiveNovember 15 2016. Mr. Pratap Rudra was appointed as the Company Secretary & LegalCounsel effective February 2 2017.
The details of familiarization programme for Directors have been provided in theCorporate Governance Report.
As on date of this report Mr. Gagan Singh Bedi Managing Director Mr. Rajesh MarwahaChief Financial Officer & Director and Mr. Pratap Rudra Company Secretary & LegalCounsel are the Key Managerial Personnel of the Company.
At the Annual General Meeting held on August 11 2016 M/s. Price Waterhouse & Co.Chartered Accountants LLP (Firm Registration No. 304026E/ E-300009) were appointed asstatutory auditors of the Company for a period of 5 years viz. till the conclusion of 42ndAnnual General Meeting. In terms of the first proviso on Section 139 of theCompanies Act 2013 the appointment of the auditors shall be placed for ratification atevery Annual General Meeting. Accordingly the appointment of M/s. Price Waterhouse &Co. Chartered Accountants LLP as statutory auditor of the Company is placed forratification by the shareholders at the Annual General Meeting. The Company has received acertificate from the auditor to the effect that if appointed their appointment would bein acordance with the provisions of section 139 read with section 141 of the CompaniesAct 2013.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and Rule 9 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 andamendments made thereto your Company engaged the services of Mr. Vijayakrishna KTPracticing Company Secretary to conduct the Secretarial Audit of the Company for thefinancial year ended March 31 2017. The Secretarial Audit Report in Form MR-3 is annexedas Annexure X which forms part of this Report.
The Board of Directors of the Company based on recommendation of the Audit Committeehas appointed M/s. Rao Murthy & Associates Cost Accountants Bangalore (holdingRegistration No.000065) as Cost Auditor of the Company for conducting the Cost Audit forthe financial year 2017-18 on a remuneration as mentioned in the Notice convening the 38thAnnual General Meeting.
A Certificate from M/s. Rao Murthy & Associates Cost Accountants has beenreceived to the effect that their appointment as Cost Auditor of the Company if madewould be in accordance with the limits specified under Section 141 of the Act and Rulesframed thereunder.
Cost Audit Report for the year 2015-16 was filed with the Ministry of Corporate Affairson September 1 2016.
Your Directors take this opportunity to thank AstraZeneca Pharmaceuticals AB Swedenand AstraZeneca PLC for their valuable guidance and strong support to the Company'soperations during the year.
Your Directors would also like to thank the Central and the State Governments otherStatutory and Regulatory Authorities the Company's Bankers the Medical Profession andTrade Vendors & Business Associates and the Members for their continued valuablesupport to the Company's operations.
Your Directors place on record their sincere appreciation of the significantcontribution and continued support of the employees at all levels to the Company'soperations during the year.
|Place : Bengaluru ||On behalf of the Board of Directors |
|Date : August 8 2017 ||NARAYAN K SESHADRI |
| ||CHAIRMAN |