To the Members of Suven Life Sciences Limited
Your Company's Board of Directors has pleasure in presenting this 28th Annual Reporttogether with Ind AS compliant Audited Financial Statements of the Company for thefinancial year ended 31st March 2017.
(Rs. in lakhs)
| || |
|Particulars || |
|2016-17 ||2015-16 |
|Revenue from operations ||54447.78 ||50028.18 ||54447.78 ||50028.18 |
|Operating expenditure ||37913.45 ||37039.08 ||41540.33 ||39861.79 |
|Depreciation and amortization ||2141.31 ||1749.71 ||2141.31 ||1749.71 |
|Operating profit ||14393.02 ||11239.39 ||10766.14 ||8416.68 |
|Finance cost ||566.58 ||587.21 ||568.34 ||587.63 |
|Other income ||2109.25 ||1929.36 ||2109.25 ||1929.36 |
|Profit before Tax ||15935.69 ||12581.54 ||12307.05 ||9758.41 |
|Tax expenses ||3588.32 ||2573.55 ||3588.32 ||2573.55 |
|Profit for the year ||12347.37 ||10007.99 ||8718.73 ||7184.86 |
|Other Comprehensive Income Items that will not be reclassified to profit or loss ||(14.90) ||(69.16) ||(14.90) ||(69.16) |
|Income tax relating to items that will not be reclassified to profit or loss ||5.15 ||23.93 ||5.15 ||23.93 |
|Total Other Comprehensive Income ||(9.75) ||(45.23) ||(9.75) ||(45.23) |
|Total Comprehensive Income ||12337.62 ||9962.76 ||8708.99 ||7139.64 |
|Retained earnings - opening balance ||29926.11 ||25046.49 ||27102.99 ||25046.49 |
|Add: || || || || |
|Profit for the year ||12337.62 ||9962.76 ||8708.99 ||7139.64 |
|Less: || || || || |
|Dividend including dividend tax ||(1531.94) ||(3983.14) ||(1531.94) ||(3983.14) |
|Transfer to General Reserve ||(1200.00) ||(1100.00) ||(1200.00) ||(1100.00) |
|Retained earnings - closing balance ||39531.79 ||29926.11 ||33080.03 ||27102.99 |
REVIEW OF OPERATIONS
Your Company has performed well during the year under review and registered astandalone revenue from operations of Rs. 54448 lakhs as against Rs. 50028 lakhs in theprevious year. Profit after Tax (PAT) of the Company has gone up by 24% to Rs. 12338 lakhsfrom Rs. 9963 lakhs in the previous financial year. The Earnings per Share (EPS) of yourCompany has improved to Rs. 9.69 in fiscal 2016-17 per share from the previous year EPS ofRs. 7.83 in fiscal 2015-16 per share. Your Companys consolidated revenue fromoperations for the year 2016-2017 remained the same as that of standalone revenue. Theconsolidated profit after tax decreased to Rs. 8709 lakhs due to clinical developmentexpenditure incurred by Suven Inc. on SUVN-502.
The exports of the Company continue to be a major chunk of revenue accounting for avolume of Rs. 49963 lakhs representing 92% of the total revenue of Rs. 54448 lakhsduring the year under review.
Your Directors have declared an interim dividend of Rs. 1.00 per equity share duringFebruary 2017. The total cash outflow on account of dividends including dividend tax paidis Rs. 1532 lakhs. The Company has paid the interim dividend to the shareholders who areon the Register of Members of the Company as on the Record Date 09th February 2017notified to the stock exchanges in terms of SEBI (LODR) Regulations 2015. Keeping thefunding requirements for the expansion plans in view the Board recommends that interimdividend already paid may please be treated as the final dividend for the year 2016-2017.
TRANSFER TO RESERVES
The Company transferred Rs. 1200 lakhs to the general reserve during the currentfinancial year.
RESEARCH AND DEVELOPMENT
During the year your company has spent Rs. 6973 lakhs on innovative R&D in CNStherapies accounting for 13% on sales. Your Companys focus remained on discoveringdeveloping and commercializing novel pharmaceutical products which are first in class orbest in class CNS therapies through the use of GPCR targets. Suven has 4 clinical stagecompounds a Phase 2 undergoing SUVN-502 Phase 2 ready SUVN-G3031 Phase 1 completedSUVN-D4010 and Phase 1 commenced SUVN-911. In addition to these clinical compounds theCompany has nine (9) internally-discovered therapeutic drug candidates currently invarious stages of pre-clinical development targeting conditions such as ADHD dementiadepression Huntingtons disease Parkinsons disease and pain.
The paid up Equity Share Capital as on March 31 2017 was Rs. 1272.83 lakhs. Duringthe year under review the Company has not issued any shares with differential votingrights nor granted stock options or sweat equity shares.
EXTRACT OF ANNUAL RETURN
Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of theCompanies Act 2013 read with Rule 12 of the Companies (Management and Administration)Rules 2014 the extracts of the Annual Return as at March 31 2017 forms part of thisreport as "Annexure A".
NUMBER OF MEETINGS OF
THE BOARD AND AUDIT COMMITTEE
During the year under review four Board Meetings were convened and held and four AuditCommittee Meetings were convened and held. The details of Board meetings and AuditCommittee meetings are presented in the Corporate Governance report which forms a part ofthis Annual Report.
The Audit Committee composed of all independent directors. Shri D G Prasad is theChairman of the Audit Committee and Dr M R Naidu Dr K.V.Raghavan and Shri M Gopalakrishnaare members of the Audit Committee. The intervening gap between the meetings was withinthe period prescribed under the Companies Act 2013.
DIRECTORS RESPONSIBILITY STATEMENT
Your Directors state that: i) The applicable accounting standards have been followed inthe preparation of the Annual Accounts. ii) Such Accounting policies have been selectedand applied consistently and judgments and estimates made when required that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the financial year and of the profit of the Company for that period.iii) Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities. iv)The Directors have prepared the Annual Accounts on a going concern basis. v) Properinternal financial controls were in place to be followed by the Company and that thefinancial controls were adequate and were operating effectively. vi) Proper systemsdevised to ensure compliance with the provisions of all applicable laws and that suchsystems are adequate and operating effectively.
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Remuneration Policy is stated in the Corporate Governance Report.
The Board has adopted a suitable Policy for Dividend Distribution as per therequirements of SEBI Guidelines. The policy is stated in the Annual Report and has beenuploaded on the Companys website and can be accessed at h t t p : / / s u v e n . co m / P O L I C Y % 2 0 F O R % 2 0 DIVIDEND%20DISTRIBUTION.pdf
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The Company has invested a sum of Rs 6501 lakhs in Suven Inc. a wholly ownedsubsidiary as at 31st March 2017 for its business purpose. Apart from the investment theCompany did not give any Loans or provided Guarantees or any security during the yearunder the provisions of Section 186 of the Companies Act 2013.
The Company has one international wholly owned subsidiary company by name Suven Inc.in USA. The consolidated financial statements of the Company prepared in accordance withIndian Accounting Standards as specified in the Companies (Indian Accounting Standards)Rules 2015 form part of the annual report.
Pursuant to the provisions of Section 129(3) of the Companies Act 2013 a statementcontaining salient features of financial statements of subsidiary in Form AOC 1 forms partof Boards Report as "Annexure B". The separate audited financialstatements in respect of the subsidiary company shall be kept open for inspection at theRegistered Office of the Company during working hours for a period of 21 days before thedate of the Annual General Meeting. Your Company will also make available these documentsupon request by any Member of the Company interested in obtaining the same. The separateaudited financial statements in respect of the subsidiary company is also available on thewebsite of your Company at http://www.suven.com/AnnualReports.htm
RELATED PARTY TRANSACTIONS
The Particulars of contracts or arrangements with related parties referred to insub-section (1) of section 188 in the prescribed Form AOC-2 pursuant to clause (h) ofsub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules2014 forms part of this report as "Annexure C".
The Board has approved a policy for related party transactions which has been uploadedon the Companys website.
MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY
There are no material changes and commitments affecting the financial position of theCompany which has occurred between the end of the financial year of the Company i.e. March31 2017 and the date of the Directors report i.e. 13th May 2017.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy technology absorption foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 forms part of this report as"Annexure D".
RISK MANAGEMENT POLICY
The Board formulated a suitable risk policy to take care of unique business models ofyour Company: Contract Technical Services (CTS) and CRAMS. Suven is an IP creating andprotecting company strictly adheres to and harmonize with the global patent regime. Toensure the security and confidentiality of client data access to client data isrestricted to the senior most team leader working on the respective project and observesstrict standards of confidentiality by entering into an internal CDA. We believe thatstrict compliances to the non disclosure requirements insulate our company against risksrelating to IPR infringement claims of our clients. In addition to these practices yourcompany regularly conducts safety and preventive audits in all plants and ensures thatnecessary safeguards are in place to protect the work force and assets against all perilswith appropriate insurance policies.
CORPORATE SOCIAL RESPONSIBILITY
In compliance with Section 135 of the Companies Act 2013 read with the Companies(Corporate Social Responsibility Policy) Rules 2014 the Company has established CorporateSocial Responsibility (CSR) Committee composed of Shri M. Gopalakrishna as ChairpersonShri Venkateswarlu Jasti and Smt. Sudharani Jasti as members. The committee is responsiblefor formulating and monitoring the CSR policy of the Company. Annual Report on CSRActivities forms part of this Report as "Annexure E".
PERFORMANCE EVALUATION OF THE BOARD
Pursuant to the provisions of the Companies Act 2013 and as per the SEBI (LODR)Regulations 2015 the Board has carried out an annual performance evaluation of its ownperformance the directors individually as well as the evaluation of the working of itsCommittees. The manner in which the evaluation has been carried out has been explained inthe Corporate Governance Report.
APPOINTMENTS/ RESIGNATIONS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL
The Company did not appoint any directors or Key Managerial Personnel during the year.All Independent Directors have given declarations confirming that they meet the criteriaof independence as laid down under Section 149(6) of the Companies Act 2013 and SEBI(LODR) Regulations 2015. None of the Directors or Key Managerial Personnel has resignedduring the year under review.
DIRECTORS RETIRING BY ROTATION
In accordance with the provisions of the Companies Act 2013 Prof Seyed E HasnainDirector retires by rotation at the ensuing Annual General Meeting and being eligibleoffers himself for re-appointment.
The brief profile(s) of the director(s) seeking appointment/ re-appointment at theensuing Annual General Meeting are presented in the Annual Report.
The Company has not accepted any public deposits and as such no amount on account ofprincipal or interest on public deposits was outstanding as on the date of the balancesheet.
CONTROL SYSTEMS AND THEIR ADEQUACY
Your Company has laid down set of standards which enables to implement internalfinancial control across the organization and ensure that the same are adequate andoperating effectively (1) to provide reasonable assurances that: transactions are executedin conformity with generally accepted accounting principles/standards or any othercriteria applicable to such statements (2) to maintain accountability for assets; accessto assets is permitted only in accordance with management's general or specificauthorization and the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company; and (3)Provide reasonable assurance regarding prevention or timely detection of unauthorizedacquisition use or disposition of the assets that could have a material effect on thefinancial statements.
The Company has put in place Whistle Blower Policy a vigil mechanism to deal withinstance of fraud and mismanagement if any. The details of the Whistle Blower Policy isexplained in the Corporate Governance Report and also posted on the website of the Company
PARTICULARS OF EMPLOYEES AND REMUNERATION
The information required under Section 197(12) of the Act read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 forms partof this report as "Annexure F".
Your Company's share registry operations (physical as well as electronic form ofholdings) will continue with Karvy Computershare Private Limited Registrars and TransferAgents. They can be contacted at Karvy Selenium Tower B Plot 31-32 GachibowliFinancial District Nanakramguda Hyderabad - 500 032 Phone No. 040-6716 1565 Fax No. 040-2300 1153 for any query relating to Shares.
The shares of the Company are listed on National Stock Exchange of India Limited (NSE)and BSE Limited (BSE)
A detailed Report on Corporate Governance prepared in substantial compliance with theprovisions of SEBI (LODR) Regulations 2015 with the Stock Exchanges together with theAuditors Certificate regarding the compliance of conditions of corporate governanceforms part of Annual Report.
MANAGEMENTS DISCUSSION AND ANALYSIS
Managements Discussion and Analysis Report for the year under review asstipulated under Regulation 34 of the SEBI (LODR) Regulations 2015 is presented in aseparate section forming part of the Annual Report.
M/s. Karvy& Co. Chartered Accountants (Firm Registration No. 001757S) wereappointed as first auditors of the Company at the 1st AGM of the Company held on 07thSeptember1990 and would be rotated with new statutory auditors upon the conclusion of the28th AGM in accordance with the provisions of the Companies Act 2013.
Accordingly as per the said requirements of the Act M/s. TUKARAM & CO CharteredAccountants (Firm Registration No. 004436S) are proposed to be appointed as auditorsfor aperiod of 5 years commencing from the conclusion of 28th AGM till the conclusion of the33rd AGM subject to ratification by shareholders every year as may be applicable inplace of M/s. Karvy& Co. Chartered Accountants.
The Audit Committee and the Board of Directors recommend the appointment of M/s.TUKARAM & CO Chartered Accountants as statutory auditors of the Company from theconclusion of the 28th AGM till the conclusion of 33rd AGM to the shareholders forapproval.
In terms of Cost (Records and Audit) Amendment Rules 2014 dated 31st December 2014issued by the Central Government the requirement for Cost Audit is not applicable to theCompany based on the export turnover criteria. However the Cost Auditors M/s DZR &Co. Cost Accountants are continuing in their office to carry out cost audit ofcompanys cost records on voluntary basis.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. dvmgopal & associates a firm of Company Secretaries in Practice toundertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Reportforms part of this report as "Annexure G".The Secretarial Audit Reportdoes not contain any qualifications.
BUSINESS RESPONSIBILITY REPORT
A detailed Business Responsibility Report (BRR) is prepared. As a green initiative theBRR is placed on website of your company and can be accessed at weblink athttp://www.suven.com/ AnnualReports.htm
EMPLOYEES STOCK OPTION SCHEMES
The applicable disclosures as stipulated under SEBI guidelines with regard toSuven Employees Stock Option Scheme 2004 as on 31 March 2017 annexed to thisreport.
During the FY2017 there is no change in the nature of business of the companyor of itswholly owned subsidiary (WOS) Suven Inc. in USA. There are no companies which havebecome or ceased to be its subsidiaries joint ventures or associate companies during theyear.
There are no significant material orders passed by the Regulators / Courts which wouldimpact the going concern status of the Company and its future operations.
Your Directors further state that during the year under review there were no casesfiled pursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013
Your Directors wish to place on record their gratitude to Shareholders for theconfidence reposed by them and thank all the shareholders customers dealers suppliersand other business associates for their contribution to your Companys growth. TheDirectors also wish to place on record their appreciation of the valuable servicesrendered by the executives staff and workers of the Company.
Your Directors also thank the Central Government and State Government the FinancialInstitutions and Banks for their support during the year and we look forward to itscontinuance.
| ||For and on behalf of the Board of Directors |
| ||Venkateswarlu Jasti |
|Place: Hyderabad ||Chairman & CEO |
|Date: 13 May 2017 ||DIN: 00278028 |