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ERIS Lifesciences Ltd.

BSE: 540596 Sector: Health care
NSE: ERIS ISIN Code: INE406M01024
BSE 14:44 | 03 Dec 705.60 -22.25
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NSE 14:39 | 03 Dec 704.75 -21.15
(-2.91%)
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OPEN 723.50
PREVIOUS CLOSE 727.85
VOLUME 2480
52-Week high 863.15
52-Week low 519.65
P/E 24.95
Mkt Cap.(Rs cr) 9,589
Buy Price 705.10
Buy Qty 3.00
Sell Price 705.80
Sell Qty 1.00
OPEN 723.50
CLOSE 727.85
VOLUME 2480
52-Week high 863.15
52-Week low 519.65
P/E 24.95
Mkt Cap.(Rs cr) 9,589
Buy Price 705.10
Buy Qty 3.00
Sell Price 705.80
Sell Qty 1.00

ERIS Lifesciences Ltd. (ERIS) - Director Report

Company director report

Dear Members

The Board of Directors have pleasure in presenting their 5th Annual Report (Post - IPO)on the business and operations of the Company together with the Audited FinancialStatements (standalone and consolidated) for the year ended March 31 2021.

1. FINANCIAL RESULTS:

During the year under review the performance of your Company was as under:

(Rs. In Million)

Particulars

Standalone

Consolidated

Year ended 31st March 2021 Year ended 31st March 2020 Year ended 31st March 2021 Year ended 31st March 2020
Revenue from Operations 11088.34 10202.31 12118.63 10740.59
Other Income 99.98 147.28 87.08 153.96
Total Revenue 11188.32 10349.59 12205.71 10894.55
Operating EBITDA 4173.14 3556.00 4305.76 3683.74
Profit/loss before Depreciation Finance Costs Exceptional items and Tax Expense 4273.12 3703.28 4392.84 3837.70
Less: Depreciation/ Amortisation/ Impairment 376.40 448.82 429.85 502.58
Profit /loss before Finance Costs Exceptional items and Tax Expense 3896.72 3254.46 3962.99 3335.12
Less: Finance Costs 7.78 18.54 18.02 21.62
Profit /loss before Exceptional items and Tax Expense 3888.94 3235.92 3944.97 3313.50
Add/(less): Exceptional items 0 0 0 0
Profit/(Loss) before taxation 3888.94 3235.92 3944.97 3313.50
Less : Tax Expenses (Current & Deferred) 382.89 323.18 393.62 348.43
Profit /loss for the year 3506.05 2912.74 3551.35 2965.07
Profit after tax before share of profit/(loss) of minority interest 3506.05 2912.74 3551.35 2965.07
Share of profit/(loss) attributable to Minority Interest 0 0 0 0.10
Profit for the year attributable to the shareholders of the company 3506.05 2912.74 3551.35 2964.97
Other Comprehensive Income/(Loss) (12.80) (11.71) (14.89) (12.18)
Total Comprehensive Income/Loss 3493.25 2901.03 3536.46 2952.89
Owners of the company 3493.25 2901.03 3536.46 2952.79
Add : Balance B/F from the previous year 12830.93 11390.11 12713.46 11335.22
Less: Transfer to Debenture Redemption Reserve If any 0 0 0 0
Less: Transfer to Reserves 0 0 0 (83.82)
Less: Interim dividend (746.79) (469.79) (746.79) (469.79)
Less: Utilised for buy back of shares 0 (990.42) 0 (990.42)
Add: Acquisition of Minority stake 0 0 0 (30.52)
Balance Profit / (Loss) C/F to the next year 15577.39 12830.93 15503.13 12713.46

2. STATE OF AFFAIRS (Standalone):

• The gross sales and other incomes for the financial year under review was Rs.11188.32 million as against Rs. 10349.59 million in the previous year recording agrowth of 8.10 %.

• The profit before tax was Rs. 3888.94 million for the financial year underreview as against Rs. 3235.92 million for the previous financial year registering anincrease of 20.18 %.

• The profit after tax for the financial year under review was Rs. 3506.05million as against Rs. 2912.74 million for the previous financial year registering anincrease of 20.37 %.

3. DIVIDEND:

During the year under review the company had paid Rs. 5.50 per equity share as interimdividend for the Financial Year 2020-21. No Final dividend was recommended by the Board ofdirectors (during the previous year the company had paid Rs. 2.87 per equity share asinterim dividend with no final dividend). The Company has adopted the DividendDistribution Policy and the said policy appears at "Annexure 1" and is alsoavailable on the website of the Company at http://eris.co.in/policies.

4. CAPITAL EXPENDITURE (Standalone):

As on March 31st 2021 the gross fixed assets (tangible and intangible) stood at Rs.7168.75 million (previous year Rs. 6956.52 million) and the net fixed assets (tangibleand intangible) at Rs. 5843.23 million (previous year Rs. 6006.40 million). Capitalexpenditure during the year amounted to Rs. 256.16 million (previous year Rs. 1487.21million). During the year under review the Company has not paid any amount for businessacquisition / consolidation of holding (previous year Rs. 213.73 million).

5. AMOUNT TO BE CARRIED TO RESERVES:

The Company has not transferred any amount to the reserves during the year underreview. (previous year: Rs. 1.74 Million on account of Buy Back of securities)

6. CHANGES IN CAPITAL STRUCTURE:

There is no change in the capital structure of the Company during the year underreview.

7. STATUTORY AUDITORS:

M/s. Deloitte Haskins & Sells LLP having Firm's Registration No. 117366W/W-100018 Statutory Auditors of the Company were appointed at the 10th Annual GeneralMeeting (AGM) held on 25.10.2016 and will complete their present term at the end of theensuing 15th AGM of the Company.

The Auditor's Report for the financial year ended 31st March 2021 does not contain anyqualification adverse remark reservation or disclaimer and therefore does not call forany further explanation or comments from the Board under Section 134(3) of the CompaniesAct 2013.

The Board of Directors on the recommendation of the Audit Committee in their meetingheld on 13th May 2021 have proposed the appointment of M/s. Deloitte Haskins & SellsLLP having Firm's Registration No. 117366W/ W-100018 as the Statutory Auditors of theCompany for the period of next 4 years subject to approval of the Shareholders at theensuing Annual General Meeting.

8. COST AUDITORS:

M/s Kiran J Mehta & Co. Cost Accountants have been duly reappointed as the CostAuditors for the financial year 2021-22. The cost records as specified by the centralgovernment under subsection (1) of section 148 of the Companies Act 2013 are made andmaintained by the Company.

9. SECRETARIAL AUDIT REPORT:

M/s. Ravi Kapoor & Associates Practicing Company Secretaries Ahmedabad have beenduly re-appointed as the Secretarial Auditor of the Company for the financial year2021-22. The Secretarial Audit Report for the financial year 2020-21 appears at‘‘Annexure 2" to this report. The board desires to explain that a delay ofeleven days in the submission of disclosure of Related party transactions on Consolidatedbasis for the quarter ended 30th September 2020 as required under Regulation 23(9) ofSEBI (Listing Obligation and Disclosure Requirements) Regulations Directors as broughtout in the Secretarial Audit Report occurred on account of prevailing pandemic conditionswhich delayed the gathering of applicable data its verification and eventual filing. Theboard desires to additionally explain the other observation in the Secretarial AuditorsReport w.r.t the delay of 25 days in the making of appointment of Non-executive andIndependent Directors of the Company. As the said compliance requires numerous steps aimedat finding meritorious persons who could do full justice to the role your companyconscientiously avoided undue rush in the matter so as to avoid the possibility of anywrong selections which could have been detrimental to the governance framework enshrinedin the SEBI Listing Regulations and Company laws.

10. INTERNAL FINANCIAL CONTROLS:

The Company has in place adequate internal financial controls in order to ensure thatthe financial statements of the Company depict a true and fair position of the business ofthe Company. The Company continuously monitors and looks for possible gaps in itsprocesses and it devices and adopts improved controls wherever necessary.

11. CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION FOREIGNEXCHANGE EARNINGS AND OUTGO:

The particulars as prescribed under Sub-section (3)(m) of Section 134 of the CompaniesAct 2013 read with the Companies (Accounts) Rules 2014 appears at ‘‘Annexure3" to this report.

12. SUBSIDIARY COMPANIES/JOINT VENTURE/ ASSOCIATE COMPANY:

As on March 31 2021 the Company has (3) three wholly owned and (1) one other thanwholly owned subsidiaries. The Board of Directors reviewed the affairs of all thesubsidiaries.

During the year under review two Companies namely Aprica Healthcare Limited and ErisTherapeutics Private Limited ceased to be subsidiaries of the Company. The details of thesame are given in point no. 26.1 of the standalone financial statements.

Eris Healthcare Private Limited wholly owned subsidiary of the Company hadincorporated a subsidiary company "Eris Pharmaceuticals Private Limited" on 2ndJune 2020.

The Company has formulated a policy for determining material subsidiaries. The Policymay be accessed at http://eris.co.in/policies.

13. PERFORMANCE AND FINANCIAL POSITION OF THE SUBSIDIARY COMPANIES /JOINT VENTURE/ASSOCIATE COMPANY:

The Board has reviewed the affairs of its subsidiary companies. Pursuant to Rule 5 ofthe Companies (Accounts) Rules 2014 a statement containing the salient features of thefinancial statements of the Company's subsidiaries/ joint ventures/ associate companies ofthe Company bringing out the highlights of their performance appears in Form AOC-1 at"Annexure 4" to this report. Details pertaining to the subsidiaries of theCompany are provided in the notes to the Consolidated Financial Statements.

The Audited Financial Statements of Company's subsidiaries for the financial year ended31st March 2021 are available on the web link https://eris.co.in/financial-statements-of-subsidiaries/ and the same are also available for inspection atthe Registered Office of the Company as per the details mentioned in the notice of the15th Annual General Meeting. Your Company will also make available these documents uponrequest by any Member of the Company interested in obtaining the same subject tocompliance of the applicable provisions of the Companies Act 2013.

14. CONSOLIDATED FINANCIAL STATEMENTS:

The Consolidated Financial Statements have been prepared pursuant to Section 129(3) ofthe Companies Act 2013 read with Rule 8(1) of the Companies (Accounts) Rules 2014 asalso the Indian Accounting Standards prescribed by the Institute of Chartered Accountantsof India (ICAI) in this regard. The Consolidated Financial Statements have been preparedon the basis of audited financial statements of the Company and its subsidiaries asapproved by their respective Board of Directors.

15. ANNUAL RETURN (MGT-9):

Pursuant to Section 92(3) read with Section 134(3)(a) of the Companies Act 2013 theAnnual Return as on 31st March 2021 is available on the Company's website athttps://eris.co.in/ under Investor tab. Further the extract of the Annual Return appearsat ‘‘Annexure 5" to this Report.

16. CORPORATE SOCIAL RESPONSIBILITY (CSR):

In compliance with the requirements of Section 135 of the Act read with the Companies(Corporate Social Responsibility Policy) Rules 2014 the Board of Directors haveconstituted a Corporate Social Responsibility (CSR) Committee.

The details of the CSR Committee composition meetings and the attendance of theMembers at the meetings along with other details appear in the Report on CorporateGovernance which forms part of this Annual Report.

The annual report on CSR in the prescribed form appears at ‘‘Annexure 6"to this Report. The content of the CSR Policy is available on the website of the Companyat http://eris.co.in/policies.

17. MANAGEMENT DISCUSSION AND ANALYSIS:

The Management Discussion and Analysis Report highlighting the important aspects ofthe business of the Company appears separately in the Annual Report.

18. CORPORATE GOVERNANCE:

The Company has complied with the Corporate Governance requirements under the CompaniesAct 2013 and as stipulated under the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. A separate report on Corporate Governance and thePracticing Company Secretary's Certificate confirming compliances thereof appears at‘‘Annexure 7" to this report.

19. BUSINESS RESPONSIBILITY REPORT:

The Business Responsibility Report as required under Regulation 34 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 describing the initiativestaken by the Company from an environmental social and governance perspective appearsseparately in the Annual Report.

20. DIRECTORS & KEY MANAGERIAL PERSONNELS:

The composition of the Board of Directors underwent changes set out below: During theyear under review:

Mr. Inderjeet Singh Negi Director of the Company being longest in office retired byrotation and was reappointed as a Director at the 14th Annual General Meeting held on 29thSeptember 2020.

Mr. Himanshu Shah had resigned from the Directorship of the Company on 31st May 2020.

Mr. Kaushal Shah has been appointed as an additional executive director on 4th August2020 and with the approval of Members in AGM he was designated as a whole time director ofthe Company w.e.f 1st October 2020 for a period of 5 years.

Dr. Kirit Shelat resigned from the Directorship of the Company on 11th September2020.

Mr. Rajeev Dalal was appointed as an additional independent director of the companyw.e.f. 19th December 2020.

Ms. Kalpana Unadkat was appointed as an additional independent director of the companyw.e.f. 05th January 2021.

Mr. Krishnakumar Vaidyanathan was appointed as an Additional Director- Executive ofthe Company w.e.f. 20th December 2020.

Subsequent changes in composition till the date of this Report:

Mr. Kaushal Shah Whole-time Director of the Company being longest in office retiresby rotation and being eligible offers himself for reappointment as a Director at theensuing Annual General Meeting.

Pursuant to section 160 of the Companies Act 2013 the Company has receivedrecommendations from the Nomination and remuneration committee for proposing there-appointment of Mrs. Vijaya Sampath as an Independent Director for another term of fiveyears from 3rd February 2022 the appointment Mr. Rajeev Dalal as an Independent Directorfor a term of five years w.e.f 19th December 2020 the appointment Ms. Kalpana Unadkat asan Independent Director for a term of five years w.e.f 05th January 2021 and theappointment Mr. Krishnakumar Vaidyanathan as a Whole time Director of the Company for aterm of five years w.e.f the date of Annual General Meeting of the Company.

21. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:

During the year under review the Board of Directors of the Company duly met 6 (Six)times. The applicable details of these Board meetings including the attendance of theDirectors at those meetings are given in the report on Corporate Governance which formspart of the Annual Report.

22. COMMITTEES OF THE BOARD:

The Company has the following 6 (six) Board Committees which have been established incompliance with the requirement of applicable law(s) and statute(s) and functionaccordingly:

• Audit Committee

• Nomination and remuneration Committee

• Corporate Social Responsibility Committee

• Stakeholders Relationship Committee

• Executive Committee

• Risk Management Committee

The details with respect to the composition terms of reference number of meetingsheld and other disclosures required to be made in the Board's report etc. of theseCommittees are given in the report on Corporate Governance which forms part of the AnnualReport.

23. EMPLOYEES' STOCK OPTION SCHEME:

The 'Eris Lifesciences Employee Stock Option Plan 2017' ("ESOP 2017"/"Plan") was approved by the shareholders at their Extra Ordinary General Meetingheld on 3rd February 2017 and subsequently in the Eleventh Annual General Meeting held on29th September 2017 the Shareholders duly ratified the said Plan. The details asrequired to be disclosed under the Companies Act 2013 read with the rules madethereunder and SEBI (Share Based Employee Benefits) Regulations 2014 [SEBI SBEB 2014]appears at Annexure 8 and are available on the Company's website at: https://eris.co.in/corporate-announcements/

The objects of the Scheme are inter alia to provide an incentive to reward andmotivate employees and enable them to participate in the long-term financial growth of theCompany. The Company has granted stock options to the eligible employees. The options willbe exercisable into equity shares as per the terms and conditions as stipulated in thePlan.

The Plan is in compliance with the SEBI SBEB 2014. There were no material changes inthe Plan. The certificate from the Statutory Auditors of the Company certifying that theScheme is implemented in accordance with the SBEB Regulations and the resolutions passedby the members in this regard shall be available at the Annual General Meeting forinspection by members.

24. CONTRACTS WITH RELATED PARTIES:

Related party transactions that were entered into during the financial year were onarm's length basis and were in the ordinary course of business. The information ontransactions with related parties compiled in Form AOC-2 appears at "Annexure9" to this report.

25. PARTICULARS OF LOANS GIVEN GUARANTEES GIVEN INVESTMENTS MADE OR SECURITY PROVIDEDBY THE COMPANY:

Details of loans guarantees and investments etc covered under section 186 of theCompanies Act 2013 appear in the notes to the financial statements.

26. PROTECTION OF WOMEN AT WORKPLACE:

No complaints pursuant to the provisions of the Sexual Harassment of Women at theWorkplace (Prevention Prohibition and Redressal) Act 2013 have been received during theyear under review. Further the Company has complied with the provisions relating to theconstitution of Internal Complaints Committee under the Sexual Harassment of Woman atWorkplace (Prevention Prohibition and Redressal) Act 2013.

27. RISK MANAGEMENT:

The Board of Directors has constituted a Risk Management Committee which is entrustedwith the responsibility of Overseeing the implementation /Monitoring of Risk ManagementPlan/Policy Cyber Securities Risk Periodically reviewing and evaluating the RiskManagement Plan etc. Further the Company has duly formulated and implemented a riskmanagement plan for enabling the Company to identify the elements of risks as contemplatedby the provisions of Section 134(3)(n).

28. DISCLOSURE ON ESTABLISHMENT OF VIGIL MECHANISM:

The Company provides an avenue to the Directors and Employees of the Company to reportwithout fear any instance of actual or suspected violation wrong doings or any illegal orunethical or improper practice which may adversely impact the image and / or thefinancials of the Company. For this the Company has in place a Vigil Mechanism Policy(Whistle Blower Policy) for Directors and employees to report genuine concerns.

This provides for adequate safeguards against victimization of employees and Directorswho wish to use the vigil mechanism to bring any wrong deed(s) to the notice of theCompany.

During the year under review the implementation of the vigil mechanism has beenproperly and regularly monitored by the Audit Committee. However no complaints orinstances in this regard have been reported. The said policy is available on the Company'sWebsite at http://eris.co.in/policies.

29. DIRECTORS' RESPONSIBILITY STATEMENT:

The Board of Directors of the Company confirms that:

• In the preparation of the Annual Accounts the applicable accounting standardshad been followed along with proper explanation relating to material departures if any;

• They had selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the Financial year and of theprofit of the Company for that period;

• They had taken proper and sufficient care 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;

• They had prepared the annual accounts on a going concern basis;

• They had laid down internal financial controls to be followed by the Company andsuch internal financial controls are adequate and are operating efficiently; and

• They had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and were operating effectively.

30. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND OTHER DETAILS:

The Company has in place a policy on remuneration of Directors Key ManagerialPersonnel ("KMP") and Other Employees which appears at "Annexure 10"to this report.

The Company has placed the said policy on the website of the company athttp://eris.co.in/policies.

The details of parameters adopted for evaluating the performance of Non-ExecutiveDirectors appears in the Report on Corporate Governance which forms part of this AnnualReport.

31. MANNER IN WHICH FORMAL ANNUAL EVALUATION OF PERFORMANCE OF BOARD ITS COMMITTEESAND INDIVIDUAL DIRECTORS HAS BEEN CARRIED OUT:

The Board adopted the evaluation performed by the Independent Directors on the Board'sperformance carried out in accordance with the requirements of LODR Reg. 25(4)(a) whichtook into account factors like 'ability to create value for its shareholders whileensuring legal compliances' and 'corporate governance norms'. Satisfaction has beenrecorded about the performance based on the aforesaid criteria. The performance of theCommittees was adjudged based on the criteria approved by the Nomination and remunerationcommittee of the Company. The Board records its satisfaction about the performance of allthe committees of the Board. The performance evaluation of Chairperson and ManagingDirector of the Company has been carried out by the Independent Directors in accordancewith LODR Reg. 25(4)(b) and stands duly adopted by the Board. The performance evaluationof non-independent directors has been carried out by the Independent Directors inaccordance with LODR Reg. 25(4)(a) and it has been likewise adopted by the Board. Theremaining members of the Board were evaluated at the Board Meetings based on parametersadopted by the Nomination and Remuneration Committee.

32. COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETINGS:

The Company has complied with the applicable Secretarial Standards issued by theInstitute of Company Secretaries of India on Board Meetings and General Meetings.

33. DECLARATION OF INDEPENDENCE:

The Company has received necessary declarations from each of the Independent Directorsto the effect that they respectively meet the criteria of independence as stipulated underSection 149 (6) of the Companies Act 2013. The Board has assessed the veracity of thesame to their satisfaction. The Board of Directors have satisfied themselves about theintegrity expertise and experience (including the proficiency) of the independentdirectors of the Company.

34. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:

Disclosures required pursuant to the provisions of Section 197(12) of the Act read withRule 5(1) 5(2) & 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 forms part of this report and appears at "Annexure 11".

35. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY:

No material changes and commitments have occurred between the end of the financial yearto which the financial statements relate and the date of this Report.

36. PUBLIC DEPOSITS

The Company has not accepted deposits from the public during the year under review. Nodeposits were outstanding at the beginning or at the closure of the financial year underreview.

37. GENERAL

Your Directors state that no disclosure or reporting is required in respect of thefollowing matters under the Companies Act 2013 and SEBI Regulations either on account ofabsence of any transaction or the inapplicability of the provisions:

• Reporting of fraud(s) by the Auditors within the meaning of Section 143(12) ofthe Companies Act 2013.

• Disclosure pursuant to section 43(1) read with Rule 4(4) of Companies (sharecapital and debenture) rules 2014 regarding issue of equity shares with differentialrights.

• Details of any scheme for providing money for the purchase of shares of theCompany by employees for the benefit of employees.

• Issue of shares (including sweat equity shares) to the employees of the Companyunder any scheme save and except Employees' Stock Options Plan referred to in this Report.

• Receipt of any commission from the Company or remuneration from any of itssubsidiaries by the Managing Director or the Wholetime Directors of the Company as persection 197(14).

• Revision in the financial statements (apart from regrouping adjustments) ordirectors' report in any of the three preceding financials years.

• Regulation 32 (4) of SEBI LODR Regulations regarding explanation for thevariation in the utilisation of money raised by public issue.

• Change in the nature of business as per rule 8(5)(ii) of the Companies AccountRule 2014.

• Significant or material orders passed by the regulators courts tribunalsimpacting the going concern status and Company's operations in future.

38. ACKNOWLEDGEMENT

The Board of Directors would like to express their sincere appreciation for theassistance and co-operation received from all the stakeholders during the year underreview. The Board of Directors also wish to place on record its deep sense of appreciationfor the committed services by the Company's executives staff and workers.

For and on behalf of the Board of Directors

Amit Bakshi

(DIN: 01250925)

Chairperson & Managing Director

Ahmedabad 13th May 2021

.