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Suven Life Sciences Ltd.

BSE: 530239 Sector: Health care
NSE: SUVEN ISIN Code: INE495B01038
BSE LIVE 15:54 | 22 Aug 161.45 -3.10
(-1.88%)
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HIGH

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NSE 15:40 | 22 Aug 161.95 -3.40
(-2.06%)
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HIGH

167.70

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OPEN 166.00
PREVIOUS CLOSE 164.55
VOLUME 48722
52-Week high 213.10
52-Week low 151.10
P/E 17.07
Mkt Cap.(Rs cr) 2,055
Buy Price 161.45
Buy Qty 131.00
Sell Price 0.00
Sell Qty 0.00
OPEN 166.00
CLOSE 164.55
VOLUME 48722
52-Week high 213.10
52-Week low 151.10
P/E 17.07
Mkt Cap.(Rs cr) 2,055
Buy Price 161.45
Buy Qty 131.00
Sell Price 0.00
Sell Qty 0.00

Suven Life Sciences Ltd. (SUVEN) - Director Report

Company director report

Board's Report

To

The Members of Suven Life Sciences Limited

Your Company's Board of Directors has pleasure in presenting this 27th Annual Reporttogether with Audited Financial Statements of the Company for the financial year ended31st March 2016.

Financial performance

(Rs. in lakhs)

Particulars Standalone Consolidated
2015-16 2014-15
2015-16
(i) Revenue from operations 49952.24 52085.50 49952.24
(ii) Operating expenditure 37626.79 36139.66 40449.50
(iii) Depreciation and amortisation 1672.04 1177.57 1672.04
(iv) Operating profit 10653.41 14768.27 7830.70
(v) Interest expenses 541.70 470.92 542.11
(vi) Other income 1935.02 858.12 1935.02
(vii) Profit before Tax 12046.73 15155.46 9223.61
(viii) Tax expenses 2549.75 4280.44 2549.75
(ix) Profit for the year 9496.98 10875.03 6673.85
(x) Balance brought forward from previous year 24004.42 15617.65 24004.42
(xi) Less: Adjustment of depreciation reserve as per Schedule II of Companies Act 2013 - 469.06 -
(xii) Profit available for appropriation 33501.40 26023.61 30678.28
Appropriations:
(xiii) Interim dividend (last year proposed) 2545.65 763.69 2545.65
(xiv) Tax on dividend 518.32 155.47 518.32
(xv) Difference in final dividend plus tax (201314) 0.00 0.02 0.00
(xvi) Transfer to General Reserve 1100.00 1100.00 1100.00
(xvii) Balance carried to balance sheet 29337.43 24004.42 26514.31

Review of operations

Your Company has achieved a standalone sales volume of H49952 lakhs as against H52086lakhs in the previous year. Profit after Tax (PAT) of the Company was down by 13% toH9497 lakhs from H 10875 lakhs in the previous financial year. The Earnings per Share(EPS) of your Company has come down to H7.46 in fiscal 2015-16 per share from the previousyear EPS of H9.04 in fiscal 2014-15 per share.

During the year your Company has formed a wholly owned subsidiary by name Suven Inc aDelaware Company in USA. As result of the consolidation for the year 2015-2016 the profitafter tax reduced from INR 9496.97 lakhs to 6673.85 lakhs due to clinical developmentexpenditure incurred by Suven Inc. on SUVN-502.

Exports

Your Company continue to achieve a major chunk of revenues from the exports accountingfor a volume of H46879 lakhs representing 94% of the total revenue of H49952 lakhs duringthe year under review.

Dividend

Your Directors had recommended and paid an interim dividend of H1.00 per equity shareand a onetime special dividend of H1.00 per equity share totaling to H2.00 per equityshare (last year H0.60 paise per equity share) during March 2016. Your Directorsrecommend that interim dividend paid may be treated as the final dividend for the year2015-2016.

The total cash outflow on account of dividends paid including dividend distribution taxpaid is H3064 lakhs. The Company has paid the said dividend to the shareholders who are onthe Register of Members of the Company as on the Record Date 15th March 2016 notified tothe stock exchanges in terms of SEBI (LODR) Regulations 2015.

Transfer to reserves

The Company transferred 1100 lakhs to the general reserve during the current financialyear.

Research and development

During the year Suven’s thrust on innovative R&D in CNS therapies continuedwith an R&D spend of H7096 lakhs accounting to 14% on sales with an increase of 20%over the previous year.

Your Company’s main focus stayed on discovering developing and commercialisingnovel pharmaceutical products which are first in class or best in class CNS therapiesthrough the use of GPCR targets. Suven has 3 clinical stage compounds a Phase 2undergoing candidate SUVN-502 Phase 1 completed candidate SUVN-G3031 and Phase 1undergoing candidate SUVN-D4010 for Alzheimer’s disease and Schizophrenia. Inaddition to that the Company has ten (10) internally- discovered therapeutic drugcandidates currently in pre-clinical stage of development targeting conditions such asADHD dementia depression Huntington’s disease Parkinson’s disease and pain.

Share capital

The paid up Equity Share Capital as on March 31 2016 was H 1272.83 lakhs. During theyear under review the Company has not issued any shares. Your company has not issued anyshares with differential voting rights 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 2016 forms part of thisreport as "Annexure - A".

Number of meetings of the board and audit committee

During the year under review five Board Meetings were convened and held on 26th May2015 14th August 2015 10th November 2015 12th February 2016 and 05th March 2016 andfour Audit Committee Meetings were convened and held on 26th May 2015 14th August 201510th November 2015 12th February 2016.

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 MGopalakrishna are members of the Audit Committee. The intervening gap between the meetingswas within the period prescribed under the Companies Act 2013.

Directors responsibility rtatement

Your Directors state that:

i) The applicable accounting standards have been followed in the preparation of theAnnual Accounts.

ii) Such Accounting policies have been selected and applied consistently and judgmentsand estimates made when required 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 period.

iii) Proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.

iv) The Directors have prepared the Annual Accounts on a going concern basis.

v) Proper internal financial controls were in place to be followed by the Company andthat the financial controls were adequate and were operating effectively.

vi) Proper systems devised to ensure compliance with the provisions of all applicablelaws and that such systems are adequate and operating effectively.

Remuneration policy

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.

Particulars of loans guarantees or investments

The Company has invested a sum of H2298 lakhs in Suven Inc. a wholly owned subsidiaryas at 31st March 2016 for its business purpose. Apart from the investment the Company didnot give any Loans or provided Guarantees or any security during the year under theprovisions of Section 186 of the Companies Act 2013.

Subsidiary

During the year 2015-2016 your Company has formed wholly owned subsidiary company byname Suven Inc. in USA. The consolidated financial statements of the Company prepared inaccordance with

Accounting Standards 21 and 27 as specified in the Companies (Accounts) Rules 2014form 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 Board’s 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 Company’s 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 2016 and the date of the Directors’ report i.e. 27th May 2016.

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 readwith Rule 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 harmonise 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 your companyregularly conducts safety and preventive audits in all plants and ensures that necessarysafeguards are in place to protect the assets against all perils with appropriateinsurance 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 Sudha Rani 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 Smt Sudharani JastiDirector retires by rotation at the ensuing Annual General Meeting and being eligibleoffers herself for re-appointment.

The brief profile(s) of the director(s) seeking appointment/ reappointment at theensuing Annual General Meeting are presented in the Annual Report.

Public deposits

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.

Internal financial control systems and their adequacy

Your Company has laid down set of standards which enables to implement internalfinancial control across the organisation 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 specificauthorisation 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 unauthorisedacquisition use or disposition of the assets that could have a material effect on thefinancial statements.

Vigil mechanism

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".

Investor service

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)

Corporate governance

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.

Management's discussion and analysis

Management's Discussion and Analysis Report for the year under review as stipulatedunder Regulation 34 of the SEBI (LODR) Regulations 2015 is presented in a separatesection forming part of the Annual Report.

Auditors

Statutory Auditors

Pursuant to the provisions of section 139 of the Companies Act 2013 and the Rulesframed thereunder the Company in its Annual General Meeting held on 12th August 2014 hasappointed M/s. Karvy & Co.

Chartered Accountants as statutory auditors of the Company from the conclusion of the25th Annual General Meeting till the conclusion of the 28th Annual General Meeting to beheld in the year 2017 subject to ratification of their appointment at every AnnualGeneral Meeting. The Auditors’ Report does not contain any qualifications.

Cost Auditors

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 ofcompany’s cost records on voluntary basis.

Secretarial auditors

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 Report doesnot 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 web link at http://www.suven.com/AnnualReports.htm

Employees stock option schemes

The applicable disclosures as stipulated under SEBI guidelines with regard to‘Suven Employees Stock Option Scheme 2004’ as on 31 March 2016 annexed to thisreport.

General

During the FY2016 there is no change in the nature of business of the Company or anyof its subsidiaries and your Company formed a wholly owned subsidiary (WOS) by name SuvenInc. in USA. Except this WOS there are no companies which have become or ceased to be itssubsidiaries joint ventures or associate companies during the year.

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

Acknowledgements

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 Company’s 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: 27th May 2016 DIN: 00278028