TO THE MEMBERS OF THE COMPANY
Your Directors have pleasure in presenting the Audited Accounts of your Company for theSixtieth financial year ended 31st December 2015.
Section 2 (41) of the Companies Act 2013 requires all companies to have the twelvemonth period from 1st April to 31st March as the financial year. However companies canseek exemption from this provision in case the accounts are required to be consolidatedwith that of the parent company which has a different financial year.
As your Company's ultimate holding company Sanofi has the calendar year as itsfinancial year your Company filed a Petition with the Company Law Board (CLB) forretaining the calendar year (January to December) as its financial year. The CLB haspermitted the Company to retain the calendar year as its financial year.
SHIFTING OF REGISTERED OFFICE
Your Company shifted its Registered Office from Andheri Mumbai to its newlyconstructed building called Sanofi House in Powai Mumbai with effect from 30th March2015.
|FINANCIAL RESULTS || |
Rs. in Lakhs
| ||2015 ||2014 |
|Net Sales ||204928 ||187500 |
|Other Operating Income ||14376 ||10248 |
|Other Income ||5137 ||6430 |
|Profit before Tax and Exceptional Items ||39701 ||30606 |
|Provision for Taxation ||15937 ||10901 |
|Net Profit after Tax and before Exceptional Items ||23764 ||19705 |
|Exceptional Item ||8385 ||6656 |
|Net Profit after Tax and Exceptional Items ||32149 ||26361 |
|Balance brought forward from previous year ||114380 ||103022 |
|Available for appropriation ||146529 ||129383 |
|Which your Directors have appropriated as follows: || || |
|Interim dividend (paid in August 2015) ||4146 ||2303 |
|Provision for Final dividend and Special one-time dividends ||10824 ||8061 |
|Tax on Interim proposed Final dividend and Special one-time dividends ||3047 ||2003 |
|Transfer to General Reserve ||3215 ||2636 |
|Balance carried to Balance Sheet ||125297 ||114380 |
An Interim dividend of Rs. 18 per Equity Share of Rs. 10 was declared by the Board ofDirectors and was paid in August 2015.
Your Directors recommend payment of Final dividend of Rs. 25 per Equity share of Rs.10.
Having regard to the cash generation during the year from the sale of the commercialpremises owned by the Company in Mumbai your Directors recommend a Special One-timedividend of Rs. 14 per Equity share of Rs.10.
As your Company completes sixty years having been incorporated on 2nd May 1956 yourDirectors recommend a Special One-time Diamond Jubilee dividend of Rs. 8 per Equity shareof Rs.10.
If declared by the Shareholders at the Annual General Meeting to be held on 29th April2016 the Interim Dividend proposed Final Dividend and the aforesaid two Special One-timedividends will absorb Rs.14970 lakhs (excluding Dividend Distribution tax).
The proposed Final dividend and the two Special One-time dividends will be paid to:
i) those Members whose names appear on the Register of Members of the Company on 29thApril 2016; and
ii) those whose names appear as beneficial owners as at the close of business on 18thApril 2016 as per details to be furnished by the National Securities Depository Limitedand Central Depository Services (India) Limited.
MANAGEMENT DISCUSSION AND ANALYSIS
As required by Regulation 34(2) of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 (SEBI LODR) a ManagementDiscussion and Analysis Report is appended.
DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)
Dr. Vijay Mallya Chairman of the Board of Directors has informed the Board that hewould not seek re-election as a Director at the ensuing Annual General Meeting.
Dr. Mallya will cease to be a Director and Chairman of the Board of Directors of yourCompany at the conclusion of the Annual General Meeting.
Dr. Mallya became a Director of the Company (then called Hoechst PharmaceuticalsLimited) in December 1973 and Chairman in December 1983. He has served on the Board ofyour Company for over 42 years.
The Board of Directors while accepting Dr. Mallyas decision placed on record itsdeep appreciation for his exceptional service and leadership firstly as a Director andsubsequently as Chairman of the Board for over four decades.
The Board of Directors has recommended that resolutions be passed at the ensuing AnnualGeneral Meeting for electing Mr. Aditya Narayan and Ms. Usha Thorat as IndependentDirectors for a term of five years each from 30th April 2016.
It is the intention of the Board to appoint Mr. Aditya Narayan as the next Chairman ofthe Board of Directors subject to his election as an Independent Director at the ensuingAnnual General Meeting and subject to the compliances laid down in the Articles ofAssociation of the Company the Companies Act 2013 and the rules framed thereunder.
During the year the three Independent Directors Mr. S. R. Gupte Mr. A. K. R.Nedungadi and Mr. Rangaswamy R. Iyer were elected by overwhelming majority by theshareholders through a postal ballot for a term of five years each from 31st March 2015.
The Company has received declarations from all the three Independent Directors thatthey meet the criteria of independence as laid down under Section 149 (6) of the CompaniesAct 2013 and the SEBI LODR.
Mr. J. M. Georges resigned as a Director of the Company with effect from 20th July2015. Your Directors have placed on record their appreciation of the services rendered byhim during his tenure as Director.
The Board has appointed Mr. P. Chocat as Director in the casual vacancy caused by theresignation of Mr. J. M. Georges.
Mr. J. Silvestre was appointed a Director of the Company in the casual vacancy causedby the resignation of Mr. A. Ortoli who had resigned in January 2015. Mr. Silvestre holdsoffice upto the Annual General Meeting and is eligible for election.
The Board of Directors has re-appointed Dr. S. Ayyangar as the Managing Director for aterm of five years from 25th October 2015 subject to the approval of the Members of theCompany.
Mr. N. Rajaram Mr. A. Sood and Mr. L. Guerin have been appointed as Alternates to Mr.Silvestre Mr. Chocat and Mr. F. Briens respectively with effect from 21st October 2015.They being employees of the Company have been appointed as Wholetime Directors subjectto the approval of the Members of the Company.
Dr. S. Ayyangar Managing Director Ms. Virginie Boucinha (Chief Financial Officer andWholetime Director upto 23rd July 2015) Mr. L. Guerin Chief Financial Officer (from 24thJuly 2015) and Wholetime Director (Alternate to Mr. F. Briens) (from 21st October
2015) Mr. N. Rajaram Wholetime Director (Alternate to Mr. J. Silvestre) (from 21stOctober 2015) Mr. A. Sood Wholetime Director (Alternate to Mr. P. Chocat) (from 21stOctober 2015) and Mr. K. Subramani Company Secretary were the Key Managerial Personnel(KMP) during the year under review.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information pursuant to Section 134(3)(m) of the Companies Act 2013 read with Rule8(3) of the Companies (Accounts) Rules 2014 is given in the Annexe to this Report.
CASH FLOW AND CONSOLIDATED FINANCIAL STATEMENTS
As required by Regulation 34(2) of the SEBI LODR a Cash Flow Statement is appended.
As the Company does not have any subsidiaries it is not required to publishConsolidated Financial Statements.
As required by Regulation 34 of the SEBI LODR a Report on Corporate Governance isappended along with a Certificate of Compliance from the Auditors.
MEETINGS OF THE BOARD OF DIRECTORS
Four meetings of the Board of Directors were held during the year. Dates of themeetings are given in the Report on Corporate Governance.
Details pertaining to composition of the Audit Committee are included in the Report onCorporate Governance. All the recommendations made by the Audit Committee were accepted bythe Board.
DIRECTORS' TRAINING FAMILARISATION & EVALUATION AND NOMINATION AND REMUNERATIONPOLICY
The Directors are regularly informed during meetings of the Board and Committees of theactivities of the Company its operations and issues facing the pharmaceutical industry.Considering the long association of the Directors with the Company and their seniority andexpertise in their respective areas of specialization and knowledge of the pharmaceuticalindustry their training and familiarisation were not considered necessary and accordinglyno such programmes were conducted.
Pursuant to the provisions of the Companies Act 2013 and Regulations 17 & 19 readwith part D of Schedule II to the SEBI LODR the Board has carried out an evaluation ofthe Directors as well as the evaluation of the Board and Committees. The process wascarried out by circulating evaluation forms on the Board and Committees' functioning oncertain parameters set out in the Performance Evaluation Policy adopted by the Board. Theperformance evaluation of the Independent Directors was carried out by the entire Board.The performance evaluation of the non- Independent Directors including the ExecutiveDirectors was carried out by the Independent Directors. The Directors expressedsatisfaction with the evaluation process and performance of the Board of Directors andCommittees.
Your Board has adopted a Nomination and Remuneration Policy as required by Section 178of the Companies Act 2013. The policy provides for the appointment and removal ofDirectors Key Mangaerial Personnel and Senior Management employees and theirremuneration. The terms of reference of the Nomination and Remuneration Committee aregiven in the Report on Corporate Governance.
SUBSIDIARIES ASSOCIATE COMPANIES AND JOINT VENTURES
Your Company does not have any subsidiaries or joint ventures. Fellow subsidiaries ofSanofi (ultimate holding company of the Company) are associate companies.
CORPORATE SOCIAL RESPONSIBILITY
The Board of Directors has constituted a Corporate Social Responsibility (CSR)Committee to monitor implementation of CSR activities of your Company.
Based on the recommendation of the CSR Committee your Board has adopted a CSR policy.The details of the composition of the CSR Committee CSR policy CSR initiatives andactivities during the year are given in the Annual Report on CSR activities in Annexe B tothis Report.
RELATED PARTY TRANSACTIONS
All related party transactions which were entered into during the year under reviewwere on arm's length basis and in the ordinary course of business. There were nomaterially significant related party transactions made by the Company with the PromotersDirectors and Key Managerial Personnel which may have a potential conflict with theinterests of the Company at large. Your Company had entered into material related partytransactions with sanofi-aventis Singapore Pte. Ltd. for the purchase of raw materials andfinished goods and exports of finished goods. The transactions were within the limitsapproved by the Members at the Fifty-ninth Annual General Meeting held on 29th April 2015.
Pursuant to Section 134 of the Companies Act 2013 and rules made thereunderparticulars of transactions with related parties as required under Section 188 (1) of theCompanies Act 2013 in the prescribed form AOC-2 is annexed herewith as Annexe C to thisReport.
DEPOSITS FROM PUBLIC
Your Company has not accepted any deposits from the public and as such no amount ofprincipal or interest on deposits from the public was outstanding as on the date of theBalance Sheet.
LOANS GUARANTEES OR INVESTMENTS
Your Company has not given any guarantees or given new loans or made any newinvestments during the year under review. Details of the existing loans and investmentsmade by your Company are given in the notes to the financial statements.
Your Company has implemented a mechanism for risk management and has formulated a RiskManagement Policy. The policy provides for creation of a Risk Register identification ofrisks and formulating mitigation plans. The Audit Committee and the Board are informed ofthe risk assessment and minimization procedures.
DIRECTORS' RESPONSIBILITY STATEMENT
As required by Section 134(3) of the Companies Act 2013 your Directors to the bestof their knowledge and belief confirm that:
1. in the preparation of the annexed accounts for the financial year ended 31stDecember 2015 all the applicable accounting standards have been followed along with properexplanation relating to material departures;
2. your Directors have 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 of the Company for that year;
3. your Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
4. the said accounts have been prepared on a going concern basis;
5. internal financial controls to be followed by the Company have been laid down andthat internal controls are adequate and were operating effectively; and
6. proper systems to ensure compliance with the provisions of all applicable laws havebeen devised and that such systems are adequate and operating effectively.
Pursuant to Section 148 of the Companies Act read with the Companies (Cost Records andAudit) Rules 2014 the cost records maintained by the Company in respect of bulk drugsand formulations are required to be audited. Your Directors have on the recommendation ofthe Audit Committee appointed M/s N.I.Mehta & Co. to audit the cost accountsmaintained by the Company for bulk drugs and formulations for the financial year ending31st December 2016. As required by the Companies Act 2013 the remuneration payable tothe Cost Auditor is required to be placed before the Members in General Meeting for theirratification. Accordingly a resolution seeking aproval of the remuneration payable toM/s. N.I.Mehta & Co. as fixed by the Board is included in the Notice convening theAnnual General Meeting.
The cost audit reports for the financial year ended 31st December 2014 were filed on28th August 2015.
The cost audit reports for the financial year ended 31st December 2015 are required tobe submitted by the Cost Auditor to the Board of Directors by 27th June 2016 and the sameare required to be filed by the Company with the Central Government within 30 days of thereceipt of the reports.
M/s. S R B C & CO. LLP Chartered Accountants were appointed Statutory Auditors ofyour Company for a term of two years from the conclusion of the Fifty- ninth AnnualGeneral Meeting held on 29th April 2015 till the conclusion of the Sixty-first AnnualGeneral Meeting subject to ratification by Members at every subsequent Annual GeneralMeeting.
They have confirmed their eligibility and willingness to be re-appointed.
A resolution seeking ratification of their appointment has been included in the Noticeconvening the Annual General Meeting.
The Auditors have issued a clean report and there are no qualifications.
EXTRACT OF ANNUAL RETURN
As required by Section 92 (3) of the Companies Act 2013 read with Rule 12(1) of theCompanies (Management and Administration) Rules 2014 extract of the Annual Return inForm MGT 9 is annexed herewith as Annexe D to this Report.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 your Directors hadappointed M/s. S.N.Ananthasubramanian & Co. a firm of Company Secretaries inPractice to undertake the Secretarial Audit of your Company. Their report is annexedherewith as Annexe E to this Report.
Information required under the provisions of Sections 134(3)(q) and 197(12) of theCompanies Act 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is respect of employees of the Company forms part ofthis report. Details of remuneration of managerial personnel as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 also form part of this report.
In terms of the first proviso to sub-section (1) of Section 136 of the Companies Act2013 the report and accounts are being sent to the shareholders excluding the aforesaidinformation. Any shareholder interested in inspection of the documents pertaining to theabove information or desires a copy thereof may write to the Company Secretary.
Your Directors place on record their appreciation of the valuable contribution made bythe employees of your Company.
| ||By Authority of the Board |
| ||S. R. GUPTE ||SHAILESH AYYANGAR |
| ||DIRECTOR ||MANAGING DIRECTOR |
|Mumbai 23rd March 2016 ||DIN:00109548 ||DIN:00268076 |