Your Directors are pleased to present the 21st Annual Report and theFinancial Statements for the financial year ended on March 312016.
The standalone financial performance of the Company for the year ended on March312016 is summarized below:
|Particulars ||For the year ended on march 31 2016 ||For the year ended on march 31 2015 |
|Sales and Other Income ||71694 ||54696 |
|Profit before Finance Costs Depreciation Impairment and Amortization and Tax Expense (PBIDT) ||26771 ||17193 |
|Less: Depreciation Impairment and Amortization ||2212 ||2119 |
|Profit Before Finance Costs and Tax Expense (PBIT) ||24559 ||15074 |
|Less: Finance Costs ||224 ||428 |
|Profit Before Tax [PBT] ||24335 ||14646 |
|Less: Tax Expense ||4562 ||1935 |
|Profit After Tax ||19773 ||12711 |
|Add: Profit brought forward from the previous year ||26921 ||17366 |
|Less: Additional depreciation upon revision in useful lives of tangible assets ||- ||249 |
|profit available for appropriation which is appropriated as follows: ||46694 ||29828 |
|Interim Dividend ||3276 ||- |
|Proposed Dividend ||- ||2457 |
|Corporate Dividend Tax on Dividend [Net of CDT Credit] ||608 ||450 |
|Balance carried to Balance Sheet ||42810 ||26921 |
|Total ||46694 ||29828 |
|Earnings per share [EPS] [Face Value of shares of Rs. 1 each] ||19.31 ||12.42 |
The Company proposes to retain an amount of Rs. 46694 millions in the Statement ofProfit and Loss.
RESULTS OF OPERATiONS:
During the year under review the consolidated gross sales grew by 11.6%. On standalonebasis the Company has achieved gross sales of Rs. 65329 millions showing a growth of37.14% compared to the previous year. The PBIDT increased by 55.7% to Rs. 26771 millionsand the Profit Before Tax increased by 66.2% to Rs. 24335 millions. The Profit After Taxhas increased to Rs. 19773 millions as compared to Rs. 12711 millions in the previousyear and the EPS has increased from Rs. 12.42 in the previous year to Rs. 19.31. Adetailed analysis of performance for the year has been covered in the ManagementDiscussion and Analysis which forms part of the Annual Report.
During the year under review your Directors had declared and paid an interim dividendof Rs. 3.20 per equity share of face value Rs. 1 each to the shareholders holding sharesin physical form and whose names were listed on the Register of Members of the Company ason March 18 2016 being the Record Date fixed for the purpose. Those shareholders holdingshares in electronic form were paid dividend as per the beneficiary data provided by theDepositories.
Your Directors did not recommend final dividend. The dividend payout ratio for thecurrent year [inclusive of corporate dividend tax on dividend distribution] is 19.6%.
During the year the unclaimed dividend pertaining to the dividend for the year endedMarch 31 2008 was transferred to Investors Education and Protection Fund after givingnotice to the Members to claim their unpaid/unclaimed dividend.
SUB-DIVISION OF EQUITY SHARES:
The Board of Directors at its meeting held on August 12 2015 approved a proposal tosub-divide the face value of equity shares of the Company from Rs. 5 to Rs.1 per share.The Company received approval of the shareholders through postal ballot for sub-divisionof shares on September 22 2015.
The record date fixed for sub-division of shares was October 8 2015. Shareholders withequity shares of Rs. 5 each of the Company in electronic form received direct credit ofthe sub-divided shares of Rs.1 each of the Company to their depository account. TheCompany issued new composite share certificate of Rs.1 each in place of the old sharecertificates for shareholders holding shares in physical form. 204748520 equity sharesof face value Rs. 5 each were sub-divided into 1023742600 equity shares of face value
Rs.1 each and there is no change in the paid-up share capital of the Company consequentupon sub-division of the face value of the equity shares.
MANAGEMENT DISCUSSION AND ANALYSIS (MDA):
MDA for the year under review as stipulated under clause 49 of the Listing Agreement/ the Listing Regulations 2015 with the Stock Exchanges is presented in a separatesection which forms a part of the Annual Report.
CONSOLIDATED FINANCIAL STATEMENTS:
In accordance with the Accounting Standard - AS-21 on Consolidation of FinancialStatements read with Accounting Standard - AS-23 on Accounting for Investments inAssociates and Accounting Standard - AS-27 on Financial Reporting of Interest in JointVentures and as provided under the provisions of the Companies Act 2013 [hereinafterreferred to as "Act"] read with Schedule III to the Act and Rules madethereunder and the Listing Agreement/the Listing Regulations 2015 the auditedConsolidated Financial Statements are provided in the Annual Report which show thefinancial resources assets liabilities income profits and other details of theCompany its associate companies and its subsidiaries after elimination of minorityinterest as a single entity.
As provided in section 136 of the Act the Balance Sheet Statement of Profit and Lossand other documents of the subsidiary companies are not being attached with the BalanceSheet of the Company. The Company will make available free of cost the Audited FinancialStatements of the subsidiary companies and the related detailed information to any memberof the Company who may be interested in obtaining the same. The Financial Statements ofthe subsidiary companies will also be kept open for inspection at the Registered Office ofthe Company and that of the respective subsidiary companies. The Consolidated FinancialStatements presented by the Company include financial results of its subsidiary companies.
During the year Zydus Healthcare Sikkim a partnership firm was converted into apublic limited Company in the name of Zydus Healthcare Limited under the provisions of theCompanies Act 2013 and then it was merged into German Remedies Limited a wholly ownedsubsidiary Company pursuant to a Scheme of Amalgamation approved by the Hon'able HighCourt of Gujarat at Ahmedabad and therefore the investment of the Company into ZydusHealthcare a partnership firm and Zydus Healthcare Limited consequent upon conversion wasextinguished and in lieu thereof German Remedies Limited will issue the equity shares tothe Company as per the share exchange ratio determined by an independent valuer.
As provided under section 129 of the Act and Rules made thereunder a statementcontaining the salient features of the financial statements of its subsidiaries in theformat prescribed under the rules is attached to the financial statements. The policyrelating to material subsidiaries as approved by the Board may be accessed on theCompany's website at the link: http://zyduscadila.com/wp/content/uploads/2015/05/Policy-on-Material- Subsidiary.pdf.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS:
Details of loans guarantees and investments covered under section 186 of the Act aregiven in the notes to the financial statements.
RELATED PARTY TRANSACTIONS:
All contracts/arrangements/transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an arm's lengthbasis. As provided under section 134[h] of the Act and Rules made thereunder disclosureof Particulars of material transactions with related parties entered into by the Companyin the prescribed format is annexed to this report as Annexure - A. Disclosures on relatedparty transactions are set out in Note No. 39 to the financial statements.
The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's website at thelink:http://zyduscadila. com/wp-content/uploads/2015/05/Policy-on-Related-Party-Transactions.pdf
i) Appointment of independent Director:
The Board of Directors has appointed Mr. Apurva S. Diwanji [DIN - 00032072] as anIndependent Director of the Company from May 13 2016 to May 12 2021 subject to approvalof the shareholders. Mr. Apurva S. Diwanji was appointed as an Additional Director whoshall hold office upto the ensuing Annual General Meeting.
The Board of Directors at its meeting held on May 13 2016 has also appointed Mr.Apurva S. Diwanji as a member of the Audit Committee and Nomination and RemunerationCommittee.
The terms and conditions of appointment are placed on the website of the Company www.zyduscadila.com.
ii) Retirement by rotation:
In accordance with the provisions of section 152 of the Act and in terms of theArticles of Association of the Company Dr. Sharvil P. Patel Deputy Managing Director[DIN - 00131995] will retire by rotation at the ensuing Annual General Meeting and beingeligible offers himself for re-appointment. The Board recommends his re-appointment.
The Board of Directors of the Company has subject to the approval of the shareholdersat the ensuing Annual General Meeting re-appointed Mr. Pankaj R. Patel as ManagingDirector of the Company for a period of five years with effect from September 12016.
iii) Declaration of independence:
The Company has received declarations of independence as stipulated under section149 of the Act and Regulation 16[b] of the Listing Regulations 2015 from IndependentDirectors confirming that they are not disqualified from appointment/ continuing as anIndependent Director.
iv) Profile of Directors seeking appointment/re-appointment:
As required under Regulation 36  of the Listing Regulations 2015 Particulars ofDirectors seeking appointment/ re-appointment at the ensuing Annual General Meeting areannexed to the notice convening 21st Annual General Meeting.
v) Key Managerial personnel:
The following persons are the Key Managerial Personnel:
1. Mr. Pankaj R. Patel Chairman and Managing Director
2. Dr. Sharvil P. Patel Deputy Managing Director
3. Mr. Nitin D. Parekh Chief Financial Officer and
4. Mr. Upen H. Shah Company Secretary.
There is no change in the Key Managerial Personnel during the year.
vi) Board Evaluation:
Pursuant to provisions of the Act and Rules made thereunder and as provided in ScheduleIV to the Act and the Listing Regulations 2015 the Nomination and RemunerationCommittee/Board has carried out the annual performance evaluation of itself the Directorsindividually as well as the evaluation of its committees. The manner in which theevaluation was carried out has been provided in the Corporate Governance Report which isa part of this Annual Report.
vii) Nomination and Remuneration policy:
The Board has on the recommendation of the Nomination and Remuneration Committee frameda policy on selection and appointment of Directors Senior Management and theirremuneration. The Remuneration Policy is stated in the Corporate Governance Report whichis a part of this Annual Report.
Directors' responsibility statement:
In terms of section 134[c] of the Act and to the best of their knowledge and beliefand according to the information and explanations provided to them your Directors herebymake the following statements:
(a) that in preparation of the Financial Statements the applicable accountingstandards have been followed along with proper explanations relating to materialdepartures if any;
(b) that such accounting policies have been selected and applied consistently andjudgments and estimates made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as on March 312016 and of the profit of theCompany for the year ended on that date
(c) that proper and sufficient care has been taken for maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for prevention and detection of fraud and other irregularities
(d) that the annual financial statements have been prepared on going concern basis
(e) that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively; and
(f) that the systems to ensure compliance with the provisions of all applicable lawswere in place and were adequate and operating effectively.
Information of meetings of the Board of Directors is given in Corporate GovernanceReport forming part of this report.
As provided in section 177 of the Act the information about composition of AuditCommittee and other details are given in Corporate Governance Report forming part of thisreport. The Board has accepted the recommendations of the Audit Committee. The AuditCommittee is comprising of Mr. Nitin R. Desai as Chairman and Mr. Humayun Dhanrajgir Mr.Mukesh M. Patel and Ms. Dharmishta N. Rawal as members.
The Company has complied with the Corporate Governance requirements under the Act andas stipulated under clause 49 of the Listing Agreement/Listing Regulations 2015. Aseparate section on detailed report on the Corporate Governance practices followed by theCompany under the Listing Agreement/Listing Regulations 2015 along with a certificatefrom the statutory auditors confirming the compliance forms a part of this Annual Report.
i) Statutory Auditors and Audit Report:
The Company's Auditors M/s. Mukesh M. Shah & Co. Chartered Accountants (FirmRegistration No. 106625W) have completed more than ten years as Statutory Auditors of theCompany. In accordance with the provisions of section 139 of the Act and Rules madethereunder they can continue as Auditors for a further period of one year i.e. upto March31 2017. On the recommendation of the Audit Committee it is proposed to appoint themfrom the conclusion of 21st Annual General Meeting till the conclusion of 22ndAnnual General Meeting.
M/s Mukesh M. Shah & Co. Chartered Accountants have informed to the Company thattheir appointment if made would be within the limits prescribed under section 141 of theAct. They have also furnished a declaration confirming that their independence as well astheir arm's length relationship with the Company and that they have not taken up anyprohibited non-audit assignments for the Company.
The Board has duly reviewed the Statutory Auditor's Report and the observations andcomments appearing in the report are self-explanatory and do not call for any furtherexplanation/ clarification by the Board of Directors as provided under section 134 of theAct.
ii) Cost Auditors:
Pursuant to provisions of section 148 of the Act read with the Companies [CostRecords and Audit] Amendment Rules 2014 the cost audit records maintained by the Companyin respect of the Pharmaceuticals Products are required to be audited. The Board had onthe recommendation of the Audit Committee appointed M/s Dalwadi & Associates CostAccountants to audit the cost records of the Company for the financial year 2016-17 on aremuneration of Rs. 1.20 mio. As required under the Act and Rules made thereunder theremuneration payable to the Cost Auditors is required to be placed before the Members in ageneral meeting for ratification. Accordingly a resolution seeking ratification bymembers for the remuneration payable to M/s Dalwadi & Associates is included at ItemNo. 8 of the Notice convening 21st Annual General Meeting.
iii) Secretarial Auditors and Secretarial Audit Report:
Pursuant to provisions of section 204 of the Act and the Companies [Appointment andRemuneration of Managerial Personnel] Rules 2014 the Board has appointed M/s ManojHurkat and Associates a firm of Company Secretaries in Wholetime Practice to undertakethe Secretarial Audit of the Company for the financial year 2015-16. The Secretarial AuditReport is annexed herewith as Annexure - B. The Board has duly reviewed the SecretarialAuditor's Report and the observations and comments appearing in the report areself-explanatory and do not call for any further explanation/clarification by the Board ofDirectors as provided under section 134 of the Act.
BUSINESS RESPONSIBILITY REPORTING:
As per Regulation 34[f] of the Listing Regulations 2015 a separate section onBusiness Responsibility Reporting forms a part of this Annual Report.
CORPORATE SOCIAL RESPONSIBILITY [CSR]:
Your Company being a Pharmaceutical Company having objective as "Dedicated toLife" has contributed for healthcare education and research in cancer as a part ofinitiatives under "Corporate Social Responsibility" for the year under review.Pursuant to section 135 of the Act and the relevant rules the Board has constituted aCorporate Social Responsibility [CSR] Committee under the Chairmanship of Mr. Pankaj R.Patel. The other members of the Committee are Dr. Sharvil P. Patel and Ms. Dharmishta N.Rawal. CSR Policy has been framed and placed on the Company's website. Other details ofthe CSR activities as required under section 135 of the Act are given in the CSR Reportas Annexure - c.
business risk management:
Pursuant to provisions of section 134[n] of the Act and requirement under clause 49of the Listing Agreement/ Listing Regulations 2015 the Company has constituted a RiskManagement Committee. The details of the Committee and its terms of reference are set outin the Corporate Governance Report which forms a part of this Annual Report.
A well-defined risk management mechanism covering the risk mapping and trend analysisrisk exposure potential impact and risk mitigation process is in place. The objective ofthe mechanism is to minimize the impact of risks identified and taking advance actions tomitigate them. The mechanism works on the principles of probability of occurrence andimpact if triggered. A detailed exercise is being carried out to identify evaluatemonitor and manage both business and non-business risks. The Company has formally framed aRisk Management Policy to identify and assess the key risk areas monitor and reportcompliance and effectiveness of the policy and procedure.
Discussion on risks and concerns are covered in the Management Discussion and AnalysisReport which forms a part of this Annual Report.
Internal control system and its adequacy:
The Company has designed and implemented a process driven framework for InternalFinancial Controls [IFC] within the meaning of the explanation to section 134[e] of theAct. For the year ended on March 31 2016 the Board is of the opinion that the Companyhas sound IFC commensurate with the size scale and complexity of its business operations.The IFC operates effectively and no material weakness exists. The Company has a process inplace to continuously monitor the same and identify gaps if any and implement new and/or improved controls whenever the effect of such gaps would have a material effect on theCompany's operations.
Managing the risks of fraud corruption and unethical business practices:
i) Vigil Mechanism/Whistle Blower policy:
The Company has established vigil mechanism and framed whistle blower policy forDirectors and employees to report concerns about unethical behavior actual or suspectedfraud or violation of the Company's Code of Conduct or Ethics Policy. Whistle BlowerPolicy is disclosed on the website of the Company.
ii) Zydus Business conduct policy:
The Company has framed "Zydus Business Conduct Policy" and is monitored bythe Group President [Human Resources and Corporate Communication]. Every employee isrequired to review and sign the policy at the time of joining and an undertaking shall begiven for adherence to the Policy. The objective of the Policy is to conduct the businessin an honest transparent and ethical manner. The policy provides for antibribery andavoidance of other corruption practices by the employees of the Company.
EXTRACT OF ANNUAL RETURN:
As per the provisions of section 92 of the Act an extract of the Annual Return inthe prescribed form MGT-9 is attached to this report as Annexure - D.
COMPOSITION OF AUDIT COMMITTEE:
More details on the Committee are given in the Corporate Governance Report.
PARTICULARS OF EMPLOYEES:
The information required under section 197 of the Act read with Rule 5 of theCompanies [Appointment and Remuneration of Managerial Personnel] Rules 2014 is given inAnnexure - E.
Energy Conservation Technology Absorption and Foreign Exchange Earnings and Outgo:
Information on conservation of energy technology absorption foreign exchange earningsand outgo as required to be disclosed under section 134[m] of the Act read with Rule8 of the Companies [Accounts] Rules 2014 is provided in the Annexure - F and forms apart of this Annual Report.
Your Directors state that the Company has made disclosures in this report for the itemsprescribed in section 134 of the Act and Rule 8 of the Companies [Accounts] Rules2014 to the extent the transactions took place on those items during the year.
There are no material changes and commitments affecting the financial position of theCompany between the end of the financial year and the date of this report.
Your Directors place on record their sincere appreciation for the continuedco-operation and support extended to the Company by the Consortium Banks. Your Directorsalso thank the Medical Profession the Trade and Consumers for their patronage to theCompany's products. Your Directors also place on record sincere appreciation of thecontinued hard work put in by the employees at all levels. The Directors also thank theCompany's vendors investors business associates Stock Exchanges Government of IndiaState Government and various departments and agencies for their support and co-operation.
| ||On behalf of the Board of Directors |
|Place : Ahmedabad ||Pankaj R. patel |
|Date : May 13 2016 ||Chairman |