The Board of Directors have pleasure in presenting their 3rd 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 2019.
1. FINANCIAL RESULTS:
During the year under review the performance of your Company was as under:
|Particulars || |
| ||Year ended 31st March 2019 ||Year ended 31st March 2018 ||Year ended 31st March 2019 ||Year ended 31st March 2018 |
|Revenue from Operations ||8965.39 ||7606.01 ||9821.61 ||8556.04 |
|Other Income ||324.99 ||282.23 ||316.94 ||264.08 |
|Total Revenue ||9290.38 ||7888.24 ||10138.55 ||8820.12 |
|Operating EBITDA ||3336.59 ||3158.87 ||3449.13 ||3220.13 |
|Profit/loss before Depreciation Finance Costs Exceptional items and Tax Expense ||3661.58 ||3441.10 ||3766.07 ||3484.21 |
|Less: Depreciation/ Amortisation/ Impairment ||315.89 ||217.92 ||363.54 ||256.42 |
|Profit /loss before Finance Costs Exceptional items and Tax Expense ||3345.69 ||3223.18 ||3402.53 ||3227.79 |
|Less: Finance Costs ||227.93 ||104.29 ||228.95 ||105.50 |
|Profit /loss before Exceptional items and Tax Expense ||3117.76 ||3118.89 ||3173.58 ||3122.29 |
|Add/(less): Exceptional items ||0 ||0 ||0 ||0 |
|Profit/(Loss) before taxation ||3117.76 ||3118.89 ||3173.58 ||3122.29 |
|Less : Tax Expenses (Current & Deferred) ||263.95 ||182.34 ||262.11 ||172.51 |
|Profit /loss for the year ||2853.81 ||2936.55 ||2911.47 ||2949.78 |
|Profit after tax before share of profit/(loss) of minority interest ||2853.81 ||2936.55 ||2911.47 ||2949.78 |
|Share of profit/(loss) attributable to Minority Interest ||0 ||0 ||3.51 ||8.73 |
|Profit for the year attributable to the shareholders of the company ||2853.81 ||2936.55 ||2907.96 ||2941.05 |
|Other Comprehensive Income/Loss ||(0.99) ||(0.73) ||(1.13) ||0.66 |
|Total Comprehensive Income/Loss ||2852.82 ||2935.82 ||2910.34 ||2950.44 |
|- Owners of the company ||2852.82 ||2935.82 ||2906.83 ||2941.71 |
|Add : Balance B/F from the previous year ||8537.29 ||5601.47 ||8468.57 ||5526.86 |
|Less: Transfer to Debenture Redemption Reserve If any ||0 ||0 ||0 ||0 |
|Less: Transfer to Reserves ||0 ||0 ||0 ||0 |
|Less: Interim dividend/Final Dividend ||0 ||0 ||0 ||0 |
|Less: Utilised for issuing bonus shares ||0 ||0 ||0 ||0 |
|Add: Acquisition of Minority stake ||0 ||0 ||(40.18) ||0 |
|Balance Profit / (Loss) C/F to the next year ||11390.11 ||8537.29 ||11335.22 ||8468.57 |
2. STATE OF AFFAIRS:
The gross sales and other incomes for the financial year under review was ' 9290.38million as against ' 7888.24 million in the previous year recording a growth of 17.78 %.The profit before tax was ' 3117.76 million for the financial year under review as against' 3118.89 million for the previous financial year registering decrease of 0.04 %. Theprofit after tax for the financial year under review was ' 2853.81 million as against '2936.55 million for the previous financial year registering decrease of 2.82 %.
3. CHANGE IN THE NATURE OF BUSINESS:
The Company continues to operate in one segment i.e. pharmaceuticals.
The Board of Directors of the Company have decided to reinvest the profits into thebusiness and for this reason do not recommend the payment of any dividend for thefinancial year 2018-19 (during the previous year Nil).
The Company has adopted the Dividend Distribution Policy and the said policy appears at"Annexure 1" and is also available on the website of the Company at the linkhttp://eris.co.in/policies.
5. CAPITAL EXPENDITURE:
As on March 31st 2019 the gross fixed assets (tangible and intangible) stood at '5518.05 million (previous year ' 5329.32 million) and the net fixed assets (tangible andintangible) at ' 4838.47 million (previous year ' 4897.47 million). Capital expenditureduring the year amounted to ' 374.15 million (previous year ' 242.69 million).Additionally during the year under review consideration of ' 107.22 million (previousyear ' 5061.52 million) was paid towards business acquisition / consolidation of holding.
6. AMOUNT TO BE CARRIED TO RESERVES:
The Company has not transferred any amount to the reserves during the financial yearunder review. (previous year: Nil)
7. CHANGES IN CAPITAL STRUCTURE:
There is no material change in the capital structure of the Company during thefinancial year under review.
However the Company has allotted 19783 equity shares to Employees under "ErisLifesciences Employee Stock Option Plan 2017" and the paid up capital of the Companystood increased accordingly.
8. STATUTORY AUDITORS:
M/s. Deloitte Haskins & Sells LLP having Firm's Registration No. 117366W/ W-100018Statutory Auditors of the Company were appointed at the 10th AGM held on 25.10.2016 tohold office till the 15th AGM.
The Ministry of Corporate Affairs vide its Notification dated 7th May 2018 amendedprovisions of Rule 3(7) of Companies (Audit and Auditors) Rules 2014 and accordingly therequirement of ratification of appointment of auditor at every general meeting isdispensed with. Therefore at the ensuing general meeting members are not required toratify Auditor's appointment and M/s Deloitte Haskins & Sells LLP CharteredAccountants will continue to act as auditors of the Company till financial year 2020-21.
The Auditor's Report for the financial year ended 31st March 2019 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.
9. COST AUDITORS:
M/s Kiran J Mehta & Co. Cost Accountants have been duly reappointed as the CostAuditors for the financial year 2019-2020. 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.
10. 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 year2019-20. The Secretarial Audit Report for the financial year 2018-19 appears at"Annexure 2" to this report. The Secretarial Auditor's report does not containany qualification reservation adverse remark or disclaimer.
11. 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.
12. 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 appear at "Annexure3" to this report.
13. SUBSIDIARY COMPANIES/JOINT VENTURE/ ASSOCIATE COMPANY:
As on March 31 2019 the Company has (5) five subsidiaries out of which four (4) arewholly owned subsidiaries. The Board of Directors reviewed the affairs of all thesubsidiaries. Neither any Company has become nor ceased to be its subsidiaries jointventures or associate companies during the year.
The Company has acquired the remaining shares of Kinedex Healthcare Private Limitedthereby making it a wholly owned subsidiary in April 2019.
The Company has formulated a policy for determining material subsidiaries. The Policymay be accessed at http://eris.co.in/ policies.
14. 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 - 1which is enclosed at "Annexure 4" to this report. Details pertaining to thesubsidiaries of the Company are provided in the notes to the Consolidated FinancialStatements.
The Audited Financial Statements of Company's subsidiaries for the financial year endedon 31st March 2019 are available on the web linkhttp://eris.co.in/financial-statement-subsidiaries/ and the same are also available forinspection at the Registered Office of the Company as per the details mentioned in noticeof the 13th Annual General Meeting. Your Company will also make available these documentsupon request by any Member of the Company interested in obtaining the same subject tocompliance of provisions of the Companies Act 2013.
15. 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.
16. ANNUAL RETURN (MGT-9):
The extract of the Annual Return pursuant to the provisions of Section 92 read withRule 12 of the Companies (Management and administration) Rules 2014 appears at"Annexure 5" to this Report.
17. 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 the link: http://eris.co.in/policies.
18. 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.
19. 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 appears atAnnexure 7" to this report.
20. 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.
21. DIRECTORS & KEY MANAGERIAL PERSONNELS:
The composition of the Board of Directors underwent changes set out below:
During the year under review:
Mr. Prashant Gupta was appointed as an Additional Independent Director of the Companyw.e.f. 30th April 2018 and appointed as a Regular Independent Director at 12th AnnualGeneral Meeting held on 29th September 2018.
Mr. Inderjeet Singh Negi Whole-time Director of the Company being longest in officeretired by rotation and was reappointed as a Whole-time Director at the 12th AnnualGeneral Meeting held on 29th September 2018.
Subsequent changes in composition till the date of this Report:
Mr. Amit Bakshi Managing Director of the Company being longest in office retires byrotation and being eligible offers himself for reappointment at the ensuing Annual GeneralMeeting.
Mr. Himanshu Shah Whole-time Director of the Company has furnished his resignationwhich is effective from 16th July 2019.
22. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:
During the year under review the Board of Directors of the Company duly met 4 (Four)times. The applicable details of these Board meetings including the attendance of theDirectors at those meetings appear in the Report on Corporate Governance which separatelyappears in this Annual Report.
23. COMMITTEES OF 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:
Nomination and remuneration Committee
Corporate Social Responsibility Committee
Stakeholders Relationship Committee
Risk Management Committee
The details with respect to the composition terms of reference number of meetingsheld and other disclosure 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.
24. 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 ratified the said Plan. The details as required tobe disclosed under the Companies Act 2013 and read with rules thereunder and SEBI (ShareBased Employee Benefits) Regulations 2014 [SEBI SBEB 2014] appear at Annexure 8 and areavailable on the Company's website at: https://eris. co.in/downloads/
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.
25. 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.
26. PARTICULARS OF LOANS GIVEN GUARANTEES GIVEN INVESTMENTS MADE OR SECURITY PROVIDEDBY THE COMPANY:
Details of loans guarantees and investments covered under section 186 of the CompaniesAct 2013 appear in the notes to the financial statements.
27. 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 Complaint Committee under the Sexual Harassment of Woman atWorkplace (Prevention Prohibition and Redressal) Act 2013.
28. RISK MANAGEMENT:
The Board of Directors of the Company has duly formulated and implemented a riskmanagement plan for enabling the Company to identify elements of risks as contemplated bythe provisions of Section 134(3)(n). During the year under review the Board of Directorshave constituted the Risk Management Committee on 29th January 2019.
29. 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. Furtherthe Policy has been duly amended to enable employees and directors to report instances ofleak of unpublished price sensitive information.
This provides for adequate safeguards against victimization of employees and Directorswho wish to use the vigil mechanism to bring any wrong deed to the notice of the Company.
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 content of Policy is available on theCompany's Website at the link: http://eris.co.in/policies.
30. 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.
31. 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 Annexure10" to this report.
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.
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 nonindependent 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 Directors have assessed the veracity ofthe same to their satisfaction.
34. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosure required pursuant to provisions of Section 197(12) of the Act read with Rule5(1) 5(2) & 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 forms part of this report and appears at Annexure11".
35. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION OF THE COMPANY:
Following material changes and commitments have occurred between the end of thefinancial year to which the financial statements relate and the date of this Report:
The Company has pre-paid the entire outstanding loan amount ' ~175 crore resulting incompletion of repayment of ' 400 Crore loan which was availed from Axis Bank Limited inApril 2019.
The Company has further acquired the remaining shares of Kinedex Healthcare PrivateLimited thereby making it a wholly owned subsidiary in April 2019.
Other than this no material changes and commitments that would affect the financialposition of the Company from the end of the financial year of the Company to which thefinancial statements relate till the date of the directors report.
36. SIGNIFICANT AND MATERIAL ORDER(S) PASSED BY REGULATORS / COURTS / TRIBUNALS
No material order has been passed by the Regulators / Courts / Tribunals against yourcompany during the year under review.
37. PUBLIC DEPOSITS
The Company has not accepted deposits from public during the year under review. Nodeposits were outstanding at the beginning or at the closure of the financial year underreview.
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 inapplicability of the provisions:
Reporting of fraud by the Auditors within the meaning of Section 143(12) of theCompanies 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.
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 utilisation of money raised by public issue.
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
Chairperson & Managing Director
Ahmedabad 21st May 2019