Alkem Laboratories Ltd.
|BSE: 539523||Sector: Health care|
|NSE: ALKEM||ISIN Code: INE540L01014|
|BSE 13:28 | 20 Sep||3781.70||
|NSE 13:19 | 20 Sep||3785.50||
|Mkt Cap.(Rs cr)||45,210|
|Mkt Cap.(Rs cr)||45210.22|
Alkem Laboratories Ltd. (ALKEM) - Director Report
Company director report
To the Members
Alkem Laboratories Limited
Your Directors are pleased to present their 47th Annual Report on thebusiness and operations together with the Audited Financial Statements of the Company forthe financial year ended 31s* March 2021. Consolidated performance of theCompany and its subsidiaries has been referred to wherever required.
(Rs. in million)
India is currently experiencing a massive second wave of Covid-19 infections. Duringthe unprecedented Covid-19 pandemic situation the Company has taken a number of drasticmeasures to ensure safety of workforce. This Covid-19 crisis is having a far-reachingsocio-economic impact throughout the world. We are humbled to be part of an industry thatdirectly impacts lives and remain committed to serve our great country and our peopleduring this crisis. During this period of nationwide lockdown the Company has mobilisedits resources and experience to ensure the uninterrupted supply of its medicines andcritical drugs in the market. Through this period of global health crisis the Companywill continue to work towards ensuring availability of medicines for treatment of thepatients.
Safeguarding the health of our health warriors who are the major mainstay to continuethe fight against this deadly virus is the most important aspect where support is needed.The Company has been upfront in providing support to these warriors and have supplied themwith masks gloves and PPE kits. Providing these kits helps the Doctors Medical Staffsthe Police personnel etc. some preparedness and mental strength to battle the crisis outin their work places and helps to instill relationship building between them thepatients and the public. We have also supported in providing food packets and ration kitsto the poor families to safeguard them and their families from the impact of hunger andstarvation in different parts of the country. The senior management team came together insolidarity to support the establishment of the Covid-19 testing Laboratories which wasof dire need at that moment of time and has also provided oxygen concentrators and oxygencylinders in the hospitals of Dhar Sikkim Daman and Baddi (H.P) to support our healthwarriors in treatment of this deadly virus. Further the physical and emotional wellbeingof employees continues to be a top priority for the Company with several initiatives tosupport employees and their families during this pandemic.
OVERVIEW OF FINANCIAL PERFORMANCE
During the financial year ended 31st March 2021 the Company's totalrevenue including other income was Rs. 74096.9 Million on standalone basis as against Rs.67730.6 Million achieved in the previous year registering a growth of 9%.
The export turnover of the Company during the financial year 2020-21 was Rs. 19039.0Million as against Rs. 15917.1 Million achieved in the previous year registering a growthof 19.6%.
During the financial year ended 31s* March 2021 the Company and itssubsidiaries achieved a total revenue including other income of Rs. 90982.2 Million onconsolidated basis as against a turnover of Rs. 84485.8 Million achieved in the previousyear registering a growth of 8%.
During the financial year ended 31s* March 2021 Standalone Profit beforeinterest depreciation and tax increased by 36% at Rs. 21261.6 Million as against Rs.15636.3 Million in the previous year whereas Consolidated Profit before interestdepreciation and tax increased by 38% at Rs. 21756.0 Million as against Rs. 15776.2Million in the previous year. As a result Standalone Profit before tax grew by 41% overthe previous year to Rs. 18843.0 Million and Consolidated Profit before tax was Rs.18421.0 Million which grew by 46% over the previous year.
The Standalone net profit after tax for the financial year ended 31s* March2021 increased by 33% to Rs. 16850.8 Million over the previous year while theConsolidated net profit after tax increased by 41 % over the previous year to Rs. 15850.2Million.
During the financial year 2020-21 Board of Directors on 05th February 2021declared and paid an interim dividend at Rs. 25/- (Rupees Twenty Five only) per equityshare of Rs. 2/- (Rupees Two only) each being 1250% of paid up share capital of theCompany. In addition your Directors are pleased to recommend payment of Rs. 5/- (RupeesFive only) per equity share of Rs. 2/- (Rupees Two only) each as final dividend for thefinancial year 2020-21 for the approval of the Members at the ensuing Annual GeneralMeeting (AGM) of the Company. If approved the total dividend (interim and final dividend)for the financial year 2020-21 will be Rs. 30/- (Rupees Thirty only) per equity share ofRs. 2/- (Rupees Two only) each as against the total dividend of Rs. 25/- (Rupees TwentyFive only) per equity share of Rs. 2/- (Rupees Two only) each paid for the previousfinancial year.
In compliance with the requirement of Regulation 43A of the SEBI (Listing Obligationand Disclosure Requirements) Regulations 2015 (hereinafter referred to as "SEBI LODRRegulations") the Company has formulated its Dividend Distribution Policy which isavailable on the Company's website at https://www.alkemlabs.
The said Policy is also annexed to this Report as Annexure A.
TRANSFER TO RESERVES
The Company has not transferred any amount to the General Reserve for the financialyear 2020-21.
The paid up Equity Share Capital of the Company as on 31s* March 2021 wasRs. 239.1 Million. The Company has neither issued shares with differential rights as todividend voting or otherwise nor issued shares to the Employees or Directors of theCompany under any Scheme (including sweat equity shares).
The Company has not accepted any deposits from the public/ members during the yearunder review and accordingly no amount on account of principal or interest on publicdeposits was outstanding as on 31s* March 2021.
As on 31s* March 2021 the Company has 23 subsidiaries. The Company doesnot have any joint venture / associate company(ies) within the meaning of Section 2(6) ofThe Companies Act 2013 (hereinafter referred to as "the Act").
During the year under review while none of the companies ceased to be a subsidiary ofthe Company the following companies were added in the list of subsidiaries of theCompany:
S&B Pharma LLC has been incorporated as a step down subsidiary of theCompany in USA on 08th April 2020 and
On 12th June 2020 the Company acquired M/s Connect 2 Clinic PrivateLimited a Company incorporated under the Companies Act 2013.
Pursuant to the first proviso to Section 129(3) of the Act and Rule 5 and Rule 8(1) ofthe Companies (Accounts) Rules 2014 the salient features of financial statementsperformance and financial position of each subsidiary is given in Form AOC-1 as Annexure Bto this Report.
The Audited Financial Statements of the subsidiaries are available on the Company'swebsite athttps://www.alkemlabs.com/ subsidiary-accounts.php pursuant to Section 136 of the Act.
MANAGEMENT DISCUSSION AND ANALYSIS
A detailed report on the Management Discussion and Analysis is provided as a separatesection forming part of this Report.
In compliance with Regulation 34 read with Schedule V of the SEBI LODR Regulations aReport on Corporate Governance for the year under review is provided as a separate sectionalong with a certificate from the Statutory Auditors conforming the Company's compliancewith the conditions of Corporate Governance forming part of this Report.
BUSINESS RESPONSIBILITY REPORT
In compliance with Regulation 34 of SEBI LODR Regulations the Business ResponsibilityReport describing the initiatives taken by the Company from an environmental social andgovernance perspective is provided as a separate section forming part of this Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company's CSR initiatives are as per the Company's CSR Policy. Our CSR program aimsto address the immediate and long term needs of the community and focus on where we canmake the major impact on marginalized sections of the society. The Company's CSR strategyinvolves a multi-sectoral inclusive approach to focus on community needs. It strives toimprove the well-being of our communities by focusing on education vocational traininghealthcare and sanitation environmental concerns and rural development. The Companyimplements these activities directly or through strategic trust-based partnerships withvarious NGOs. During the financial year 2020-21 the Company has addressed therequirements of local communities in the vicinity of its manufacturing facilities andR&D centers through focused projects in the areas of education health and hygieneenvironment and community development.
During the year under review your Company has partnered with Tata Memorial Centre forestablishment of: (i) an advanced Radiotherapy Facility as a part of the Homi BhabhaCancer Hospital and Research Center Muzaffarpur; and (ii) 3 mini cancer units in thefollowing cities of Bihar namely Buxar Jehanabad and Bhagalpur as part of its CSRactivity.
Details about the Company's CSR Policy and initiatives undertaken by the Company duringfinancial year 2020-21 are outlined in the Report on CSR Activities annexed to this Reportas Annexure C.
The Policy on CSR is posted on Company's website:
DIRECTORS AND KEY MANAGERIAL PERSONNEL Appointments
There has been no change in the constitution of the Board of Directors and KeyManagerial Personnel of the Company during the year under review.
Considering the expiry of term of Dr. Dheeraj Sharma Independent Director of theCompany on 25*h May 2022 on the recommendation of Nomination &Remuneration Committee the Board of Directors of the Company pursuant to the provisionsof Sections 149 and 152 of the Act the Articles of Association of the Company andconsidering the integrity expertise and experience of Dr. Dheeraj Sharma has approvedhis re-appointment as an Independent Director of the Company for a second term of 5 (five)consecutive years w.e.f. 26*h May 2022 up to 25*h May 2027subject to the approval of the Members of the Company.
Resignations/Retirements/Demise/Completion of Tenure
The Company did not receive any resignation of Directors or Key Managerial Personnelduring the year under review.
Directors liable to Retirement by Rotation
Mr. Sandeep Singh (DIN: 01277984) and Mr. Mritunjay Kumar Singh (DIN: 00881412) areliable to retire by rotation at the ensuing AGM of the Company pursuant to the provisionsof Section 152 of the Act read with the Companies (Appointment and Qualification ofDirectors) Rules 2014 and the Articles of Association of the Company and being eligiblethey have offered themselves for re-appointment. Appropriate resolutions as recommendedby the Board of Directors for their re-appointment are included in the Notice of AGM forseeking approval of Members.
Particulars in pursuance of Regulation 36 of the SEBI LODR Regulations read withSecretarial Standard - 2 on General Meetings relating to Mr. Sandeep Singh and Mr.Mritunjay Kumar Singh are given in the Notice of AGM.
Key Managerial Personnel
Mr. Sandeep Singh Managing Director Mr. Rajesh Dubey President Finance and ChiefFinancial Officer and Mr. Manish Narang President - Legal Company Secretary andCompliance Officer are the Key Managerial Personnel of the Company as on 31s*March 2021 in accordance with the provisions of Section 203 of the Act read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014.
The Independent Directors hold office for a term of 5 (five) years and are not liableto retire by rotation.
Declaration of independence from Independent Directors
The Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed under the provisions of the Actread with the Schedules and Rules issued thereunder as well as clause (b) ofsub-regulation (1) of Regulation 16 of the SEBI LODR Regulations (including any statutorymodification(s) or re-enactment(s) thereof for the time being in force). In terms ofRegulation 25(8) of the SEBI LODR Regulations the Independent Directors have confirmedthat they are not aware of any circumstance or situation which exist or may be reasonablyanticipated that could impair or impact their ability to discharge their duties with anobjective independent judgement and without any external influence.
The terms and conditions of appointment of the Independent Directors are posted onCompany's website
In compliance with the requirements of SEBI LODR Regulations the Company has put inplace a framework for Directors' Familiarization Programme to familiarize them with theirroles rights and responsibilities as Directors the working of the Company nature of theindustry in which the Company operates business model etc. The details of theFamiliarization Programme conducted during the financial year under review are explainedin the Corporate Governance Report. The same is also available on the Company's website at
Annual Evaluation of Board's Performance
The details of the annual evaluation of the Individual Directors Board as a whole andall the Committees of the Board etc. have been provided in the Corporate GovernanceReport which forms part of this Report.
The Independent Directors at a separate meeting held on 16*h March 2021evaluated performance of Non-Independent Directors performance of the Board as a wholeand performance of the Chairperson of the Company.
The evaluation of the Independent Directors was carried out by the entire Board ofDirectors without the participation of the respective Independent Director.
The Company follows a policy for selection and appointment of Directors SeniorManagement and their remuneration which is available on the Company's website at
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The disclosure pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed to this Report as Annexure E.
Further a statement showing the names and other particulars of top ten employees interms of remuneration drawn and of employees drawing remuneration in excess of the limitsrequired under Section 197(12) of the Act read with Rule 5(2) and Rule 5(3) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 forms part ofthis Report. However in terms of first proviso to Section 136(1) of the Act the AnnualReport and Annual Financial Statements are being sent by email to the Members and othersentitled thereto excluding the aforesaid information. The said information shall beprovided electronically to any Member on a written request to obtain a copy of the same tothe Company Secretary.
NUMBER OF MEETINGS OF THE BOARD
The Board of Directors met 5 (Five) times during the financial year 2020-21. Thedetails of the Board Meetings and the attendance of Directors thereat are provided in theCorporate Governance Report which forms part of this Report.
COMMITTEES OF THE BOARD Audit Committee
As on 31 March 2021 the Audit Committee comprised of Mr. Ranjal Laxmana Shenoy asChairman and Mr. Sandeep Singh Mr. Mritunjay Kumar Singh Ms. Sudha Ravi Ms. SangeetaSingh and Mr. Narendra Kumar Aneja as Members.
Further the Board of Directors of the Company at its meeting held on 25*hMay 2021 reconstituted with immediate effect the Audit Committee comprising of Mr. ArunKumar Purwar as Chairman and Mr. Sandeep Singh Mr. Mritunjay Kumar Singh Mr. RanjalLaxmana Shenoy Ms. Sangeeta Singh and Mr. Narendra Kumar Aneja as Members.
The brief terms of reference of the Audit Committee and the particulars of meetingsheld and attendance thereat are mentioned in the Corporate Governance Report which formspart of this Report.
Nomination and Remuneration Committee
As on 31st March 2021 the Nomination and Remuneration Committee comprisedof Mr. Arun Kumar Purwar as Chairman and Mr. Basudeo N. Singh Ms. Sangeeta Singh and Mr.Ranjal Laxmana Shenoy as Members.
Further the Board of Directors of the Company at its meeting held on 25*hMay 2021 reconstituted with immediate effect the Nomination and Remuneration Committeecomprising of Mr. Ranjal Laxmana Shenoy as Chairman and Mr. Basudeo N. Singh Ms. SudhaRavi and Dr. Dheeraj Sharma as Members.
The brief terms of reference of the Nomination and Remuneration Committee and theparticulars of meetings held and attendance thereat are mentioned in the CorporateGovernance Report which forms part of this Report.
Corporate Social Responsibility Committee
As on 31s* March 2021 the Corporate Social Responsibility Committeecomprised of Mr. Ranjal Laxmana Shenoy as Chairman and Mr. Dhananjay Kumar Singh Mr.Mritunjay Kumar Singh Mr. Arun Kumar Purwar Mr. Balmiki Prasad Singh as Members.
Further the Board of Directors of the Company at its meeting held on 25thMay 2021 reconstituted with immediate effect the CSR Committee comprising of Mr. ArunKumar Purwar as Chairman and Mr. Basudeo N Singh Mr. Sandeep Singh Mr. Dhananjay KumarSingh Mr. Mritunjay Kumar Singh Ms. Sangeeta Singh and Mr. Ranjal Laxmana Shenoy asMembers.
The brief terms of reference of the Corporate Social Responsibility Committee and theparticulars of meetings held and attendance thereat are mentioned in the CorporateGovernance Report which forms part of this Report.
Stakeholders' Relationship Committee
As on 31s* March 2021 the Stakeholders' Relationship Committee comprisedof Mr. Ranjal Laxmana Shenoy as Chairman and Mr. Dhananjay Kumar Singh and Mr. MritunjayKumar Singh as Members. The brief terms of reference of the Stakeholders' RelationshipCommittee and the particulars of meetings held and attendance thereat are mentioned in theCorporate Governance Report which forms part of this Report.
Risk Management Committee
As on 31s* March 2021 the Risk Management Committee comprised of Mr.Dhananjay Kumar Singh as Chairman and Mr. Mritunjay Kumar Singh Mr. Sandeep Singh Ms.Sudha Ravi Dr. Dheeraj Sharma and Mr. Narendra Kumar Aneja as Members. The brief terms ofreference of the Risk Management Committee and the particulars of meeting held andattendance thereat are mentioned in the Corporate Governance Report which forms part ofthis Report.
The Company's Board of Directors has overall responsibility for the establishment andoversight of the Company's risk management framework. The Company has a Board approvedRisk Management Policy. The Board of Directors has constituted a Risk Management Committeewhich is delegated with the responsibility of overseeing various strategic operationaland financial risks that the organization faces along with assessment of risks theirmanagement and mitigation procedures. A detailed analysis of the business risks andopportunities is given under Management Discussion and Analysis Report.
DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief your Directors confirm that:
(a) in the preparation of the annual accounts for the financial year ended 31stMarch 2021 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
(b) they have selected such accounting policies and applied consistently and madejudgements and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at 31s* March 2021 and of theprofit of the Company for the year ended on that date;
(c) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(d) they have prepared the annual financial statements on a going concern basis;
(e) they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and operating effectively; and
(f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
The Directors state that applicable Secretarial Standards i.e. SS-1 relating to'Meetings of the Board of Directors' and SS-2 relating to 'General Meetings' have beenduly followed by the Company.
AUDITORS AND AUDITORS' REPORT Statutory Auditor
Pursuant to the provisions of Section 139 of the Act and the Companies (Audit andAuditors) Rules 2014 (including any statutory modification(s) or re-enactment(s) thereoffor the time being in force) M/s. B S R & Co. LLP (Firm Registration No:101248W/W-100022) Chartered Accountants the Statutory Auditors of the Company werere-appointed by the Shareholders at the Forty-Fifth AGM of the Company held on 27thAugust 2019 for another term of 5 (five) years from the conclusion of Forty-Fifth AGM ofthe Company until the conclusion of the Fiftieth AGM on such remuneration inclusive ofapplicable taxes and reimbursement of travelling and out of pocket expenses incurred inconnection with the audit as recommended by the Audit Committee and as may be mutuallyagreed between the Board of Directors of the Company and the Statutory Auditors from timeto time. The Company has received a certificate from the said Auditors that they areeligible to hold office as the Auditors of the Company for the current year and are notdisqualified from being so appointed.
The Auditors' Report for financial year ended 31s* March 2021 does notcontain any qualification reservation or adverse remark.
The Company is required to maintain cost records for certain products as specified bythe Central Government under sub-section (1) of Section 148 of the Act and accordinglysuch accounts and records are made and maintained in the prescribed manner.
Pursuant to the provisions of Section 148 of the Act and the Rules made thereunder readwith notifications/ circulars issued by the Ministry of Corporate Affairs fromtime-to-time and as per the recommendation of the Audit Committee the Board of Directorsat its meeting held on 05th June 2020 had appointed Mr. Suresh D. ShenoyCost Accountant (Membership No. 8318) as the Cost Auditor of the Company for thefinancial year 2020-21 to conduct the audit of the cost records of the Company. Aresolution for ratification of the remuneration payable to the Cost Auditor is included inthe Notice of AGM for seeking approval of Members. The Cost Audit Report will be filedwithin the period stipulated under the Act.
Pursuant to the provisions of Section 204 of the Act read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board of Directorshad appointed M/s. Manish Ghia & Associates Practicing Company Secretaries(Membership No. F6252 COP No. 3531) to conduct the Secretarial Audit of the Company forthe financial year 2020-21. The Secretarial Audit Report is annexed to this Report asAnnexure F. The said Report does not contain any qualification reservation or adverseremark.
The Annual Return of the Company in prescribed Form MGT-7 is available on the websiteof the Company at https://www.alkemlabs.com/annual-returns.php
RELATED PARTY TRANSACTIONS
All the Related Party Transactions entered into during financial year 2020-21 by theCompany were at arm's length basis and in compliance with the applicable provisions ofthe Act and the SEBI LODR Regulations and are in conformity with the Company's Policy onRelated Party Transactions.
The disclosure of material related party transactions entered into by the Companyduring the financial year 2020-21 as required under Section 134(3)(h) of the Act readwith Rule 8(2) of the Companies (Accounts) Rules 2014 in Form AOC-2
is annexed to this Report as Annexure G. The Related Party Transactions Policy asapproved by the Board is uploaded on the Company's website at
PARTICULARS OF LOANS/GUARANTEES GIVEN AND INVESTMENTS MADE AND SECURITIES PROVIDED
The particulars of loans guarantees investments and securities provided covered underthe provisions of Section 186 of the Act have been disclosed in the notes to the financialstatements forming part of the Annual Report.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
Pursuant to the provisions of Section 177(9) of the Act the Board of Directors of theCompany has framed the Vigil Mechanism / Whistle Blower Policy for Directors and Employeesof the Company. Under the said Policy provisions have been made to safeguard persons whouse this mechanism from victimization. The Policy also provides access to the Chairpersonof the Audit Committee under certain circumstances. The Whistle Blower Policy is uploadedon the website of the Company at
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
The Company has adopted a policy in line with the provisions of Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013 and the Rules madethereunder.
Internal Complaints Committees have been set up at the head office of the Company aswell as at all the Company's plants and R&D Centers to redress complaints received onsexual harassment. During the financial year 2020-21 the Company had not received anycomplaints of sexual harassment.
DISCLOSURES UNDER THE ACT Change in Nature of Business if any:
During the financial year 2020-21 there was no change in the nature of business of theCompany.
Material Changes and Commitments affecting the financial position of the Company:
There are no material changes and commitments which have occurred between the end ofthe financial year and the date of the Report which have affected the financial positionof the Company.
Significant and Material Orders:
The Company has not received any significant or material orders passed by anyregulatory authority court or tribunal which shall impact the going concern status andCompany's operations in future.
Reporting of Frauds by Auditors:
During the year under review there were no frauds reported by Auditors under Section143(12) of the Act.
Details on Insolvency and Bankruptcy Code:
During the year under review no application has been made by the Company under theInsolvency and Bankruptcy Code and accordingly the requirement of disclosing the followingdetails are not applicable to the Company:
(i) the details of application made or any proceeding pending under the Insolvency andBankruptcy Code 2016 (31 of 2016) during the year alongwith their status as at the end ofthe financial year; and
(ii) the details of difference between amount of the valuation done at the time ofonetime settlement and the valuation done while taking loan from the Banks or FinancialInstitutions along with the reasons thereof.
DETAILS ON INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS
The Company has designed and implemented a process driven framework for InternalFinancial Controls (IFC) as mandated under the Act. The Company's policies guidelines andprocedures provide for adequate checks and balances and are meant to ensure that alltransactions are authorized recorded and reported correctly.
During the financial year under review Internal Auditors of the Company with theexternal audit consultants have reviewed the effectiveness and efficiency of these systemsand procedures. As per the said assessment Board is of the view that IFC were adequateand effective during the financial year.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo as stipulated under Section 134(3)(m) of the Act and the Rules framedthereunder is annexed herewith as Annexure H to this Report.
Your Directors would like to express sincere gratitude to all valuable stakeholders ofthe Company viz. the Central and State Government Departments Organizations Agenciesour customers shareholders dealers vendors banks medical fraternity patients andother business associates for their excellent support and co-operation extended by themduring the financial year under review.
The Board ofDirectors also places on record its appreciation for the significantcontribution made by the employees of the Company through their dedication hard work andunstinted commitment.