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Biocon Ltd.

BSE: 532523 Sector: Health care
NSE: BIOCON ISIN Code: INE376G01013
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P/E 35.31
Mkt Cap.(Rs cr) 18270.00
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Sell Qty 90.00
OPEN 934.00
CLOSE 923.00
VOLUME 98533
52-Week high 1020.00
52-Week low 430.80
P/E 35.31
Mkt Cap.(Rs cr) 18270.00
Buy Price 0.00
Buy Qty 0.00
Sell Price 913.50
Sell Qty 90.00

Biocon Ltd. (BIOCON) - Director Report

Company director report

Board’s Report

Dear Shareholders

We present you the Thirty-Eighth Annual Report on business and operations along withthe audited financial statements and the auditor’s report of your Company for thefinancial year ended March 31 2016.

Financial Highlights

In Rs. Million (except EPS)

Standalone Results

Consolidated Results
FY 16 FY 15 FY 16 FY 15
Revenue 25077 23907 35699 31429
Expenses 20162 19406 29179 26239
Profit before tax and exceptional items 4915 4501 6520 5190
Exceptional Items net 5230 (218) 5754 1051
Income Tax 2057 671 2569 957
Minority Interest - - 744 310
Profit after Tax 8088 3612 8961 4974
Earnings per Share (EPS) before exceptional item (Rs.) 19.61 19.15 21.86 20.11
Earnings per Share (EPS) after exceptional item (Rs.) 40.44 18.06 44.81 24.87

Standalone and Consolidated Financial Statements

The financial statements have been prepared in accordance with generally acceptedaccounting principles in India (Indian GAAP). These financial statements comply in allmaterial respects with the Accounting Standards notified under section 133 of theCompanies Act 2013 ("the Act") read together with paragraph 7 of the Companies(Accounts) Rules 2014 to reflect the financial position and results of operations ofBiocon together with its subsidiaries and associate. The financial statements of FY16together with Auditor’s report forms part of this Annual Report.

Further a statement containing the salient features of the financial statements of oursubsidiaries pursuant to subsection 3 of Section 129 of the Companies Act 2013 in theprescribed Form AOC-1 is appended as Annexure 1 to the Board’s report. The statementalso provides the details of performance and financial positions of each of thesubsidiaries.

Performance Overview

The highlights of the Company’s standalone performance are as under:

Revenue from operations grew by 4% to Rs. 23236 mn. Other Income for FY 16 grew to Rs.1841 mn (FY 15 Rs. 1491 mn) due to foreign exchange gain on account of rupeedepreciation. Interest on fixed deposits and dividend on mutual funds increased by Rs. 364mn which was offset by lower dividend from subsidiaries (FY16 Rs. 487mn vs FY15 Rs.997mn).

Core operating margins (EBIDTA excluding R&D Forex and dividend fromsubsidiaries) improved by 100 basis points from previous year due to favourable productmix.

Exceptional items o During the current year the Company recorded gain from sale ofequity shares of Syngene through an IPO net of related expenses and cost of equityshares amounting to Rs. 5131 mn. The tax impact on this gain was Rs. 1042 mn. o Duringthe year Company recorded gain of Rs. 99 mn on sale of its equity investment in BioconSDN. BHD. to its wholly owned subsidiary Biocon Biologics Limited. Tax on such gain wasRs. 21 mn.

Profit after tax (PAT) for the year stood at Rs. 8088 mn up 124% from FY 15. PATexcluding exceptional income net of tax was Rs. 3921 mn (FY 15 Rs. 3830 mn).Effective tax rate for the year was 20% due to minimum alternate tax (MAT) on exceptionalincome.

During the year our consolidated revenues registered a growth of 14% to Rs. 35699 mnfrom Rs. 31429 mn in FY 15. From a segment perspective the core biopharmaceuticalsegment recorded a growth of 7% while the research services business registered a year onyear increase of 29%. While business challenges in branded formulations saw modest growthin the biopharmaceutical segment the performance in the research services segment wasdriven by strong orders and capacity expansion. Consolidated PAT grew by 80% from Rs.4974 mn to Rs. 8961 mn primarily on account of exceptional gain on sale of shares inSyngene through an offer for sale (IPO) and release of amounts from deferred balanceswhich are explained in detail under the section Management Discussion and Analysis.

A detailed performance analysis is provided in the Management Discussion and Analysissegment which is annexed to this report.

Appropriations

Dividend

On March 11 2016 the Board of Directors announced an interim dividend of 5.0 (100%)per equity share for FY16 entailing a pay-out of Rs. 1107 mn (including dividenddistribution tax). The Interim dividend has been subsequently paid to all eligibleshareholders and no further dividends are proposed/recommended by the Board.

Transfer of Unpaid and Unclaimed Amounts to IEPF

Pursuant to the provisions of Section 205C of the Companies Act 1956 and Section124(5) of the Companies Act 2013 dividend which remains unpaid or unclaimed for a periodof seven years from the date of its transfer to unpaid dividend account is required to betransferred by the Company to Investor Education and Protection Fund (IEPF) establishedby the Central Government under the provisions of Section 125 of the Companies Act 2013.The details of any unpaid dividend amounts as per Section 125(2) of the Companies Act2013 have to be identified and uploaded on the website of the Company. Accordinglyunclaimed dividends up to the financial year 2007-08 have been transferred to IEPF by theCompany.

Employee Stock Option Plan (ESOP)

The Company has an Employee Stock Option Plan (‘ESOP’) which is administeredby the Nomination & Remuneration Committee for the benefit of employees of the Groupthrough Biocon India Limited Employees Welfare Trust (‘Trust’). The details ofstock options granted and outstanding are provided in Annexure 2 to the Board’sReport. There is no material change in the Employee Stock Option Schemes during thefinancial year under review and Employee Stock Option Schemes are in compliance withSecurities and Exchange Board of India (Share Based Employee Benefits) Regulation 2014.

The Company propose to roll out new grants under ESOP plan – Grant IX for theeligible new joiners and Grant X for the eligible existing employees and proposes todiscontinue future grants under existing Grants.

Deposits

The Company has not accepted any fixed deposits from public.

Loans Guarantees or Investments

Loans guarantees and investments covered under Section 186 of the Companies Act 2013form part of the notes to the financial statements.

Subsidiaries

The Company has formulated a policy for determining ‘material’ subsidiariespursuant to the provisions of the Listing Agreement. The said policy is available at theCompany website http://www.biocon.com/docs/PolicyDocument_MaterialSubsidiary.pdf TheCompany has 8 subsidiaries and 2 step down subsidiaries as on March 31 2016. BioconFZ-LLC a wholly owned subsidiary was incorporated on June 16 2015 in Dubai. BioconBiologics Limited a wholly owned subsidiary was incorporated on March 2 2016 in theUnited Kingdom. Biocon Pharma Inc was incorporated on July 27 2015 in the United Statesof America as a wholly owned subsidiary of Biocon Pharma Limited.

A report on the performance and financial position of each of the subsidiaries ispresented below. The financial statements of the subsidiaries will be made available onthe website of the Company post approval by the members.

Syngene International Limited

Syngene International Limited ("Syngene") is one of India’s leadingcontract research organisations offering a suite of integrated end-to-end discovery anddevelopment services for novel molecular entities (NMEs) across industrial sectorsincluding pharmaceutical biopharmaceutical and biotechnology amongst others. Syngenehelps its clients in conducting discovery (from hit to candidate selection) development(including pre-clinical and clinical studies analytical and bio-analytical evaluationformulation development and stability studies) and pilot manufacturing (scale-uppre-clinical and clinical supplies) each with distinctive economic advantage. Unlike thetraditional business models these services are offered through flexible business modelsranging from a full-time equivalent ("FTE") to a fee-for-service("FFS") model or a combination customized on the client’s specificrequirement.

During the year ended March 31 2016 Syngene registered a revenue growth of 28% to Rs.11131 mn in FY 16 (FY 15 Rs. 8716 mn). EBIDTA margin for the year was 33% with theoperational margin at Rs. 3639 mn (FY 15 Rs. 2928 mn) a growth of 24%. On August 112015 Syngene’s shares were listed on the NSE and the BSE after a successful InitialPublic Offering (IPO) through an offer for sale by the Company.

Biocon Research Limited

Biocon Research Limited (BRL) a 100% subsidiary of the Company undertakes discoveryand development research work in biologics and provides scientific support for variousdevelopment programmes of the group. BRL’s current business is largely directedtowards the R&D services for Monoclonal antibody molecules and Proteins (mAbs)insulin Tregopil (formally referred to as IN-105) and other insulin products on behalf ofother group companies. The research programs undertaken by BRL have made significantinroads to the next level of global clinical trials. During the year BRL licensed theex-India development and commercialisation rights of its existing mAbs portfolio to BioconBiologics Limited (‘BUK’). BRL continues to hold 0.93% shareholding in Syngene.During FY16 BRL registered a turnover of Rs. 4097 mn which includes licensing ofdevelopment and commercialisation rights of mAbs to BUK for a consideration of Rs. 2820mn and reported a net profit of Rs. 669 mn.

Biocon Pharma Limited

Biocon Pharma Limited ("BPL") is a wholly owned subsidiary of the Company.BPL would be engaged in the development and manufacture of generic formulations for salein global markets especially opportunities in US/EU. BPL is in the process of setting upits formulations manufacturing facility for oral solid dosages at Biocon SEZ Bengaluru.As at March 31 2016 BPL had not commenced commercial operations.

Biocon Academy

Biocon Academy spearheads Biocon’s CSR initiatives in the technical/professionaleducation segment. The academy was established as a Centre of Excellence for AdvancedLearning in Biosciences in 2014. Biocon Academy leverages rich industry experience ofBiocon and subject matter expertise of international Education Partners such as KeckGraduate Institute of Claremont California (USA). The academy is dedicated exclusively toindustry oriented biosciences education. The programs offered by the academy aim toempower the Biotechnology and Engineering graduates with advanced learning and industrialproficiency through job-skills development essential to build a promising career in theBiotech industry.

Biocon SA

Biocon SA a wholly owned subsidiary of the Company is primarily engaged in thebusiness of development and commercialization of generic recombinant human insulin and itsanalogues for global markets under various internal as well as partnered programs. BioconSA also holds the marketing rights for the group’s insulin portfolio. Biocon SA isalso in the business of identifying and developing other novel molecules into commercialproducts or licensable assets through strategic partnerships. For the current year BioconSA registered net profit of Rs. 1229 mn after exceptional items. Net profit excludingexceptional items grew to Rs. 43 mn (FY 15 Net loss of Rs. 124 mn) due to higherlicensing revenues. Exceptional item comprises of

(a) an amount of Rs. 2561 mn released from deferred balance pursuant to contract withLaboratories PiSA S.A. de C.V (PiSA) of Mexico for the co-development andcommercialization of generic recombinant human insulin (rh-insulin) for the US market.

(b) impairment charge of Rs. 1078 mn of the marketing rights of T1H product for US andCanada region (‘Territory’) due to uncertainties over commercialisation of theproducts in the Territory owing to OFAC sanctions. The exceptional items are more fullyexplained in Note 40 of the consolidated financial statements. During the year Biocon SAsold equity shares held in Biocon SDN. BHD. Malaysia to BUK.

Biocon SDN. BHD

Biocon SDN. BHD. Malaysia is a step down subsidiary of the Company wholly owned byBUK. Biocon SDN. BHD. was established with an objective to set up the group’s firstoverseas manufacturing facility at Malaysia. It is located within BioXcell abiotechnology park in Nusajaya Johor which is being promoted by the MalaysianGovernment. The first phase of the facility designed to manufacture recombinant humaninsulin and insulin analogs has been commissioned and a series of operational processes -scale up validation and stability activities were performed in FY 2015-16. Themanufacturing facility received local cGMP certification from the National PharmaceuticalControl Bureau Malaysia and the plant is currently undergoing a series of validationactivities to certify its operational efficiency. Biocon SDN BHD will seek approvals fromleading regulatory agencies across the globe for marketing its products in various RoWduring FY’17. Approval from the developed markets are expected in the later years. Asat March 31 2016 Biocon SDN. BHD. has not commenced commercial operations. The Malaysianfacility is expected to start commercial operations in the second half of FY17. Costincurred in the profit and loss statement for the year was Rs. 94 mn after capitalisationof expenses amounting to Rs. 1027 mn (including foreign exchange loss) to fixed assets.Total debt on balance sheet date is Rs. 10810 mn.

Neo Biocon FZ LLC

Neo Biocon FZ LLC ("NeoBiocon") a 51% owned subsidiary of the Company is aresearch and marketing pharmaceutical company which was incorporated in January 2008.Operating out of Dubai and Abu Dhabi NeoBiocon helps us reach out to the Middle East andGCC with our veritable portfolio of quality small molecule drugs. For FY16 Neo Bioconearned Rs. 1196 mn in revenues and reported a net profit of Rs. 425 mn a growth of 30%and 22% respectively over FY15.

Biocon FZ -LLC

Biocon FZ LLC is a wholly owned subsidiary of the Company based in Dubai. Incorporatedin June 2015 Biocon FZ LLC has been established as a marketing entity for pharmaceuticalproducts to target markets in the Middle East and GCC. As of March 31 2016 Biocon FZ LLCearned Rs. 11 mn as revenue and reported a net profit of Rs. 3 mn.

Biocon Biologics Limited

Biocon Biologics Limited ("BUK") is a wholly owned subsidiary of the Company.Incorporated in the United Kingdom in March 2016 BUK will house Biocon’s biosimilarbiologics business. During the year BUK acquired the shareholding of Biocon SDN. BHD.from Biocon SA and the Company making Biocon SDN. BHD. a wholly owned subsidiary of BUK.As of March 31 2016 BUK earned Rs. 196 mn as revenue and reported a net profit of Rs. 71mn.

Biocon Pharma Inc.

Biocon Pharma Inc. ("BPI") is a wholly owned subsidiary of Biocon PharmaLimited was incorporated in July 2015 in the United States of America. BPI would beengaged in commercialization of generic formulations in the United States. As of March 312016 BPI had not commenced commercial operations.

Management’s discussion and analysis

Management’s discussion and analysis forms a part of this annual report and isannexed to the Board’s report.

Corporate Governance

We strive to maintain high standards of Corporate Governance in all our interactionswith our stakeholders. The Company has conformed to the Corporate Governance code asstipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. A separate section on Corporate Governance along with a certificate from theauditors confirming the level of compliance is attached and forms a part of theBoard’s Report.

Policy on Directors’ appointment and remuneration

As on March 31 2016 the Board consists of 9 (nine) members of which 5 (five) areindependent and non-executive. An appropriate mix of executive and independent directorsensures greater independence of the Board.

The policy of the Company on director’s appointment and remuneration includingcriteria for determining qualifications independence and other matters as provided undersub-section (3) of Section 178 of the Companies Act 2013 is appended in Annexure 3 to theBoards’ Report.

Board Diversity

A diverse Board enables efficient functioning through differences in perspective andskill and also fosters differentiated thought processes at the back of varied industrialand management expertise gender knowledge and geographical background. The Boardrecognises the importance of a diverse composition and has adopted a Board DiversityPolicy which sets out the approach to diversity. The policy is available athttp://www.biocon.com/docs/PolicyDocument_BoardDiversity.pdf

Declaration by Independent Directors

A declaration of Independence in compliance with Section 149(6) of the Companies Act2013 has been taken on record from all the independent directors of the Company.

Board Evaluation

We at Biocon believe in striving and excelling against contenders not only throughproducts and initiatives but also through effective and efficient Board monitoring. Asrequired under the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 an evaluation of all the directors the Board as a wholeand its committees was conducted based on the criteria and framework adopted by the Board.The details of the said evaluation has been enumerated in the Corporate Governance Reportwhich is annexed to the Boards’ Report.

Inductions

On the recommendation of the Nomination and Remuneration Committee Mr. M. Damodaranwas inducted to the Board as independent members of the Board effective April 26 2016. Abrief profile of Mr. M. Damodaran proposed for appointment is available in the Noticeconvening the Annual General Meeting. The Board recommends his appointment as a Directorat the ensuing Annual General Meeting.

Retirement and Re-appointments

Dr. Arun S. Chandavarkar shall retire by rotation at the ensuing Annual GeneralMeeting and is eligible for re-appointment.

Committees of the Board

The details of Boards Committees – the Audit & Risk Committee the Nominationand Remuneration Committee Corporate Social Responsibility Committee and the StakeholdersRelationship Committee have been disclosed separately in the Corporate Governance Reportwhich is annexed to and forms a part of this annual report.

Audit & Risk Committee

The Audit & Risk Committee comprises Mr. Russell Walls Chairman Mr. Daniel MBradbury Dr. Jeremy M Levin and Mr. M. Damodaran independent directors. The functionsperformed by the Audit Committee and the particulars of meetings held and attendancethereat are given in the Corporate Governance Report.

Meetings of the Board

The meetings of the Board are scheduled at regular intervals to decide and discuss onbusiness performance policies strategies and other matters of significance. The scheduleof the meetings are circulated in advance to ensure proper planning and effectiveparticipation in meetings. In certain exigencies decisions of the Board are also accordedthrough circulation.

The Board during the financial year 2015-16 met six times. Detailed informationregarding the meetings of the Board are included in the report on Corporate Governancewhich forms part of the Board’s Report.

Related party contracts or arrangements

All transactions entered into with Related Parties as defined under Companies Act 2013during the year were in the ordinary course of business and on an arm’s length basisand did not attract provisions of Section 188 of Companies Act 2013 relating to approvalof shareholders except the transactions as mentioned in the Annexure 4 – Form No.AOC-2 which not being in ordinary course of business has been duly approved by the Boardas required.

The Company has formulated a policy on "materiality of related partytransactions" and the process of dealing with such transaction which are in linewith the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. The same is also available on the website ofthe Company http://www.biocon.com/docs/PolicyDocument_RelatedPartyTransaction_2015.pdfPrior omnibus approval from the Audit Committee are obtained for transactions which arerepetitive and also normal in nature. Further disclosures are made to the Committee andthe Board on a quarterly basis.

There have been no material related party transactions undertaken by the Company underRegulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 and detail of the transaction approved by the Board under Section 188 of theCompanies Act 2013 have been enclosed pursuant to Clause (h) of subsection (3) of Section134 of Companies Act 2013 read with Rule 8(2) of the Companies (Accounts) Rules 2014– as Annexure 4 - ‘Form No. AOC-2’.

Material changes and commitments

No material changes and commitments have occurred after the close of the year till thedate of this report which affect the financial position of the Company.

Change in nature of business

There has been no change in the nature of business of the Company. Your Companycontinues to be a pioneer biopharmaceutical company engaged in manufacturing activepharmaceutical ingredients and formulations including biosimilar drugs for diabeticsoncology and autoimmune diseases with sales in markets across the globe.

Significant events during the year

With effect from October 01 2015 the Company acquired the business assets of thepharmaceutical manufacturing unit of M/s Acacia Lifesciences Private Limited based inVishakhapatnam. The facility presently manufactures advanced intermediates of potent APIsto supply to both our ANDA business and third party customers.

The Company offered for sale 11% of its equity of Syngene International Limited throughinitial public offer and raised Rs. 5500 mn. Syngene’ s equity shares got listed onboth NSE & BSE.

Credit Ratings

CRISIL and ICRA continued to reaffirm their rating of "AA+/ Stable" and"A1+" for various banking facilities throughout the year enabling your Companyto avail facilities from banks at attractive rates indicating a very strong degree ofsafety for timely payment of financial obligations.

Conservation to energy technology absorption foreign exchange earnings & outgo

The particulars as prescribed under sub-section (3)(m) of Section 134 of the CompaniesAct 2013 read with the Companies (Accounts) Rules 2014 are enclosed as Annexure 5 tothe Board’s report.

Auditors

Statutory Auditors

The Shareholders at their 37th Annual General Meeting (AGM) held on July 24 2015approved the re-appointment of M/s. S. R. Batliboi & Associates LLP CharteredAccountants as Statutory Auditors of the Company to hold office from the conclusion of the37th AGM upto the conclusion of the 39th AGM to be held in the financial year 2017.Considering having served for more than a decade and the requirement of rotation ofauditor as per the provisions of the new Companies Act 2013 the statutory auditors haveexpressed their inability to continue post the ensuing AGM to be held in the year 2016.

Consequent to the above the Audit Committee and the Board of Directors recommend theappointment of M/s. B S R & Co. LLP as Statutory Auditors of the Company from theconclusion of this 38th Annual General Meeting for a term of five years till conclusion ofthe 43rd Annual General Meeting to be held in financial year 2021 (subject to ratificationof the appointment by the members at every Annual General Meeting held after this AnnualGeneral Meeting).

Cost Auditors

Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Amendment Rules 2014 cost audit records are maintained by the Companyin respect of its manufacturing activity which are required to be audited. Your directorshad on the recommendation of the Audit Committee appointed M/s. Rao & Murthy toaudit the cost accounts of the Company for FY16. As required under the Companies Act2013 the remuneration payable to the cost auditor is required to be determined by themembers and an approval thereof is being sought at the General Meeting.

Secretarial Auditors

M/s. Sreedharan & Co. was appointed to conduct the secretarial audit of the Companyfor FY 2015-16 as required under section 204 of the Companies Act 2013 and rulesthereunder. The secretarial audit report for FY 2015-16 forms the part of the annualreport as Annexure 6 of the Board’s report.

The Board has appointed M/s. Sreedharan & Co. as secretarial auditor of theCompany for FY 2016-17.

Significant and material orders

There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company’s operations in the future.

Extract of Annual Return

An extract of the Annual return has been annexed as Annexure 9 to the Board’sReport in compliance with Section 92 of the Companies Act 2013 read with applicable Rulesmade thereunder.

Internal Financial Control

The Company has laid down certain guidelines processes and structure which enablesimplementation of appropriate internal financial controls across the organisation. Suchinternal financial controls encompass policies and procedures adopted by the Company forensuring the orderly and efficient conduct of business including adherence to itspolicies safeguarding of its assets prevention and detection of frauds and errors theaccuracy and completeness of accounting records and the timely preparation of reliablefinancial information. These include control processes both on manual and IT applicationsincluding the ERP application wherein the transactions are approved and recorded.Appropriate review and control mechanisms are built in place to ensure that such controlsystems are adequate and are operating effectively. Because of the inherent limitations ofinternal financial controls including the possibility of collusion or improper managementoverride of controls material misstatements in financial reporting due to error or fraudmay occur and not be detected. Also evaluation of the internal financial controls aresubject to the risk that the internal financial control may become inadequate because ofchanges in conditions or that the compliance with the policies or procedures maydeteriorate.

The Company has in all material respects an adequate internal financial controlssystem and such internal financial controls were operating effectively based on theinternal control criteria established by the Company considering the essential componentsof internal control stated in the Guidance Note on Audit of Internal Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India.

Whistle Blower Policy/ Vigil mechanism

The Company has implemented a Whistle Blower Policy whereby employees and otherstakeholders can report matters such as generic grievances corruption misconductillegality and wastage/misappropriation of assets to the Company. The policy safeguardsthe whistle blowers to report concerns or grievances and also provides direct access tothe Chairman of the Audit Committee. The details of the Whistle Blower Policy areavailable on the website of the Company athttp://www.biocon.com/docs/Biocon_Group_Integrity_Whistle_Blower_Policy.pdf

Particulars of Employees

The Statement containing ratio of remuneration paid to each director and the medianemployee remuneration and other details in terms of sub-section 12 of section 197 of theCompanies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is enclosed in Annexure 7. The Statement containingparticulars in terms of subsection 12 of section 197 of the Companies Act 2013 read withrule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 form a part of this report.

Considering the first proviso to Section 136(1) of the Companies Act 2013 the AnnualReport excluding the aforesaid information is being sent to the members of the Companyand others entitled thereto. The said information is available for inspection at theregistered office of the Company during business hours on working days of the Company upto the date of the ensuing Annual General Meeting. Any shareholder interested in obtaininga copy thereof may write to the Company Secretary in this regard.

Corporate Social Responsibility

At Biocon CSR has been an integral part of our business since its inception. With theincorporation of Biocon Foundation in 2004 we formally structured our CSR activity. Todaywe span our efforts through Biocon Foundation Biocon Academy and some partnershipprograms with like-minded private organizations and Government. We promote social andeconomic inclusion for the marginalized communities with our integrated system focussinglargely in following areas: Health Care services: We firmly believe that the use oftechnology can make healthcare delivery in rural areas more efficient and therefore wehave developed an integrated and holistic healthcare delivery service which seeks toaddress critical gaps in the delivery of healthcare in rural India. Our efforts aretargeted at enabling last mile reach of preventive and primary health services in ruralareas. Education: While our projects address experiential learning in basic mathscomputer skills and language skills of the underserved young people in rural areas wealso impart advanced training necessary and skills required for gainful employment in thebiopharma sector to young graduates through Biocon Academy.

Promote Art & Culture: India has a rich heritage of art and culture across the landwhich needs to be preserved and promoted. Our various forms of music and dance style ofpaintings and sculptures have intrigued many across the globe yet a large pool of ourartistes have not gained enough recognition. Biocon Foundation believes in creating aplatform to promote art & culture encourage artists and share this knowledge withthe marginalized communities through various initiatives to help them develop a keen senseof appreciating fine arts.

Civic Infrastructure: The civic infrastructure is in deficit in the country especiallythe rural India. At Biocon we are working to build townships schools sanitation andwater supply that can fulfil the basic needs of rural communities. We have adopted atownship in North Karnataka and are also providing support infrastructure includingschool safe drinking water health centre and community hall in nearby villages. Thiscoupled with rain water harvesting system and solar lights we have also built householdand community toilets to enable clean sanitation facilities for the rural communities.

In compliance with the provisions of Section 135 of the Companies Act 2013 the Boardof Directors of the Company have formed a Corporate Social Responsibility Committee whichmonitors and oversees various CSR initiatives and activities of the Company. A detailedreport regarding Corporate Social Responsibility is enclosed in Annexure 8 to theBoard’s Report.

Information under Section 22 of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013

The Company’s policy on prevention of sexual harassment of women provides for theprotection of women employees at the workplace and for prevention and redressal of suchcomplaints.

Workplace _Sexual Harassment compliants received
Number of complaints filed during the financial year 2
Disposed through Conciliation -
Disposed through Disciplinary action 2
Number of cases pending for more than ninety days -
Number of complaints pending as on end of the financial year -
Number of workshops or awareness programme against sexual harassment carried out 3

Director’s Responsibility Statement

In compliance with Section 134(5) of the Companies Act 2013 the Board of Directorshereby confirm the following:

(a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

(b) The directors had selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the Company for that period;

(c) The directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

(d) The directors had prepared the annual accounts on a going concern basis;

(e) The directors have laid down internal financial controls based on internal controlsframework established by the Company which in all material respects were adequate andoperating effectively.

(f) The directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively. TheCompany has substantially complied with material provisions of such acts and regulationsas are relevant for its operations.

Statutory Disclosures

None of the Directors of your Company are disqualified as per provisions of Section164(2) of the Companies Act 2013. Your Directors have made necessary disclosures asrequired under various provisions of the Act and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.

Risk Management Policy

The Company has put in place an enterprise wide Risk Management Framework with anobject of timely identification of risks assessment and evaluation of the same in linewith overall business objectives and define adequate mitigation strategy. On a quarterlybasis the Audit and Risk Committee reviews critical risks on a rotation basis in linewith the mitigation progress/effectiveness and its impact on overall risk exposure of theCompany. Annually all critical risk areas identified are re-evaluated.

Acknowledgement

The Board greatly appreciates the commitment and dedication of its employees across alllevels who have contributed to the growth and sustained success of the Company. We wouldlike to thank all our clients partners vendors investors bankers and other businessassociates for their continued support and encouragement during the year.

We also thank the Government of India Governments of Karnataka and Telangana Ministryof Information Technology and Biotechnology Ministry of Commerce and Industry Ministryof Finance Department of Scientific and Industrial Research Customs and ExciseDepartments Income Tax Department CSEZ LTU Bengaluru and all other Government agenciesfor their support during the year and look forward to the same in the future.

For and on Behalf of the Board
Bengaluru Kiran Mazumdar-Shaw
April 26 2016 Chairperson and Managing Director

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