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Glaxosmithkline Pharmaceuticals Ltd.

BSE: 500660 Sector: Health care
NSE: GLAXO ISIN Code: INE159A01016
BSE 00:00 | 15 Nov 1603.70 2.45






NSE 00:00 | 15 Nov 1606.20 4.95






OPEN 1598.00
52-Week high 1699.95
52-Week low 1131.05
P/E 55.00
Mkt Cap.(Rs cr) 27,168
Buy Price 1603.70
Buy Qty 100.00
Sell Price 1608.00
Sell Qty 13.00
OPEN 1598.00
CLOSE 1601.25
52-Week high 1699.95
52-Week low 1131.05
P/E 55.00
Mkt Cap.(Rs cr) 27,168
Buy Price 1603.70
Buy Qty 100.00
Sell Price 1608.00
Sell Qty 13.00

Glaxosmithkline Pharmaceuticals Ltd. (GLAXO) - Director Report

Company director report

The Directors have pleasure in submitting their Report for the year ended 31stMarch 2019.


Year ended 31st March 2019 Year ended 31st March 2018
Revenue from operations 312853.46 289588.02
Sale of Products 308948.40 282003.24
Other operating revenue 3905.06 7584.78
Other Income 10147.84 5352.01
Total Income 323001.30 294940.03
Profit before Exceptional items and Tax 65881.75 52378.50
Add: Exceptional Items 488.88 1779.85
Profit before Tax 66370.63 54158.35
Less: Income tax expenses 23834.58 18959.58
Profit for the year 42536.05 35198.77
Add: Opening balance of Retained earnings from the previous year 111321.12 106706.32
Less: Transactions with owners of the company:
Dividend paid on Equity Shares (including tax on distributed Profits) (' 17.5 Per Share for FY 2017-2018 and ' 15 Per Share for FY 2016-17 retrospectively adjusted for September 2018 bonus issue) 35739.89 30583.97
Balance of Retained earnings at the end of the reporting period (excluding Other comprehensive income) 118117.28 111321.12


Your Directors are pleased to recommend a Dividend of ' 20 per Equity share for theyear (previous year ' 17.5 per Equity share retrospectively adjusted for September 2018bonus issue). The Dividend for the year ended 31st March 2019 is subject to theapproval of members at the Annual General Meeting on 22nd July 2019 and will

be paid on or after 22nd July 2019. If approved by the members at the AnnualGeneral Meeting the Dividend will absorb '408 crores inclusive of the DividendDistribution Tax of ' 70 crores borne by the Company.

The Board of the Directors of the Company have approved the Dividend DistributionPolicy on 27th October 2016 and it is available on the Company website


The Company has allotted fully paid up equity shares of ' 10 each during the quarterended 30th September 2018 pursuant to a bonus issue in ratio 1:1 as approvedby the members through postal ballot. 84703017 Bonus shares have been issued bycapitalization of profits transferred from general reserve.


(a) Finance and Accounts

We are pleased to report that FY 2018-19 was a year of good financial performance foryour Company and was also a year in which the strategic shape of your Company in thecoming years has been re-defined. We delivered almost double digit growth in sales highdouble digit growth in profits which is a turn around arising out of the revised strategy.Your Company strives to drive profitable volume growth in a competitive and partlyprice-controlled generic market with an underlying focus on delivering quality products topatients. Our new commercial model with increased focus on our priority brands and a newtrade channel strategy is working well. Furthermore the company is enhancing itstechnological capabilities to optimise its medical and field force engagement withhealthcare professionals which has been reflected in our results.

We continue to maintain our industry leading presence in Vaccines. Our new vaccineInfanrix Hexa launched during the year featured among the Industry Top-20 vaccines listin its first year. This conjugate vaccine helps protect infants against infections causedby diphtheria tetanus pertussis hepatitis B poliomyelitis and disease caused byHaemophilis influenzae type b.

One of the highlights of this year is the launch of Nucala (Mepolizumab) ahumanised monoclonal antibody which is indicated as an add-on treatment for severerefractory eosinophilic asthma in adult patients.

Revenue from operations of ' 3129 crores increased by 8% in value terms for the yearended 31st March 2019 as compared with the previous year. Revenue from sale ofproducts of ' 3089 crores increased by 10% for the year ended 31st March 2019as compared with the previous year. The Revenue is deflated arising from impact ofdivestments and discontinuations to the portfolio and the impact of GST rates effective 1stJuly 2017. The underlying Sales growth adjusting for tail-end brand rationalisation anddivestments is a healthy 12% and is driven by our priority brands.

Decline in other operating revenue primarily reflected the transfer out of headsperforming activities on behalf of other group companies.

The increase in other income primarily reflected interest on Income tax refundliabilities written back payable to a group company and increase in interest earnings ondeposit with banks.

Expenses were managed below inflation due to operating efficiencies and back endsimplification. A focused drive to improve efficiencies use of smart technology costreduction and a positive product mix has resulted in our EBITDA margin improving by 2percentage points versus previous year.

Profit Before Exceptional Items and Tax amounted to ' 659 crores and margins were at21% of Revenue from operations for the year as compared to the prior year of 18%.Exceptional items for the year ended 31st March 2019 of ' 5 crore incomecomprises of ' 43 crores on sale of property and ' 5 crores on sale of brands net ofimpairment charge on investment held in wholly owned subsidiary (Biddle Sawyer Limited) of' 23 crores and a charge of ' 20 crores on account of restructuring of the commercial andmanufacturing organisation. Profit After Tax at ' 425 crores is higher by 21% against theprior year period.

Cash generation from Operations continued to remain strong this year and is in linewith business performance. To support the long-term strategy your Company is makingprogress in construction of its new manufacturing plant at Vemgal Bengaluru. Your Companyspent ' 291 crores as capital expenditure mainly for the new Vemgal plant. During theprevious year the Company had received ' 552 crores in advance towards disposal of ThaneLand. The transfer will conclude against obtaining all relevant statutory and otherapprovals/consents/ permissions as required in law. The amount received has been accountedas advance against sale of land. Your Company continues to look for ways and means ofdeploying accumulated cash balances as at 31st March 2019 which remain investedlargely in bank deposits.

There are no loans guarantees given securities provided and investments covered underSection 186 of the Companies Act 2013. Your Company has not accepted any fixed depositsduring the year. There was no outstanding towards unclaimed deposits payable to depositorsas on 31st March 2019.

There are no significant or material orders passed by the Regulators Courts orTribunals which impact the going concern status of the Company and its future operationsnor are there any material changes and commitments affecting the financial position of theCompany as on the date of this report.

(b) Pharmaceuticals Business Performance and Outlook

During 2018 your Company put in place an optimal commercial model to deliversustainable profitable growth. At the core of this model is the principle of puttingenergy where it matters - focus and efficiency - to accelerate growth. Therapy areas wereidentified for sharp focus namely anti-infectives dermatology respiratorygastro-intestinal and anti-pyretic. Your Company's product portfolio was optimized with20 focus brands to be actively promoted to the customers healthcare professionals (HCPs).Sales teams were optimized with investment to increase numbers build capabilities andstrengthen engagement of the trade channel. This led to an increase in share of voice(SOV) for focus brands as also an increase in the number of touchpoints in the engagementof HCPs.

The emphasis on enhancing customer experience through multi-channel marketing broughtabout a transformational increment in customer touchpoints in the Primary Care business.Over 17 million HCP touchpoints were reached through various channels like webinarse-mails text messages virtual calls and the GSK Pro platform. Your Company's majorPrimary Care brands are growing faster than the Indian Pharmaceutical Market. TheEvolution Index for certain top brands were: Augmentin at 106; Ceftum at 109; Eltroxin at101 and CCM at 105.

Your Company maintained its leadership in the Dermatology segment in the IndianPharmaceutical Market during the year. Within the GSK global dermatology franchise aswell your Company continued to maintain its lead with the maximum HCP engagements for theyear under consideration.

The BRIDGE (Bringing Insights from Dermatology Group of Experts) forum saw anencouraging response from the dermatologists' fraternity with over 450 HCPs engaged across17 cities over the year. Your Company doubled the feet on street of cosmeceutical range ofproducts reaching out to new geographies and more HCPs with a winning strategy. The teamcontinues its endeavour to increase awareness amongst patients on the dangers ofself-medication and the appropriate use of steroids through face-to-face differentialdiagnosis workshops and educational videos.

Your Company is forging ahead on the innovation front with the recent launch ofNucala a biologic for severe refractory eosinophilic asthma in adults. India has around30 million asthma patients and Nucala will bring significant relief to those among themwho suffer from severe eosinophilic asthma. In addition this breakthrough innovation willalso strengthen the respiratory portfolio to better serve the patients. The commercial andmedical teams are actively engaging with pulmonologists in the country to disseminate therobust data on Nucala.

As part of our new focused approach your Company is also harnessing the power ofDigital Data Analytics as Your Company evolves and aspires to a state of transformationwhereby highly credible scientific data digital tools and experiential learning willsignificantly improve HCP engagement and experience.

Preventive healthcare - Vaccines

In preventive healthcare your Company continues to be the No. 1 vaccines company inthe self-pay segment with a 30% value market share. Your Company began marketing vaccinesin India more than 25 years ago and currently markets 8 vaccines for varied age groups -infants adolescents and adults. The vaccines self-pay market is currently estimated to be' 2200 crore (IMS MAT Feb 2019) and is growing at around 13%. Eight of your company'svaccines feature in the Top-20 list of vaccines in the self-pay market (IMS MAT Feb 2019).

It has been seven years since the launch of Synflorix your Company's pneumococcalvaccine. Since then your Company has distributed more than ten million (one crore) dosesprotecting kids against pneumococcal diseases. Pneumococcal disease is the No. 1 cause ofvaccine-preventable deaths according to 2008 estimates of the WHO (World HealthOrganization). During the year to increase public awareness on the dangers of thisdisease among parents your company conducted a mass TV and digital campaign.

Your Company continues to promote maternal immunisation against pertussis withBoostrix. With this indication your Company now has a better presence in the vaccines forwomen segment. Your Company is also partnering with FOGSI (Federation of Obstetric andGynaecological Societies of India) and IAP (Indian Academy of Pediatrics) professionalorganizations representing practitioners of obstetrics and gynaecology and paediatriciansrespectively in India to drive awareness among women for vaccination against maternal& neonatal pertussis.

An emerging area of focus will be raising awareness about vaccination for school-goingkids who may have either missed childhood vaccines or may be due for certain vaccines.

(c) Opportunities Risks Concerns & Threats

In the interim budget 2019 the government has increased allocation for the AyushmanBharat Scheme also known as Pradhan Mantri Jan Arogya Yojana (PMJAY) from ' 4000 crorein 2018-2019 to ' 6400 crore for 2019-2020. But given the large out-of-pocketexpenditure the question is will this be enough.

Quality in general is a comparison to standards. Pharmaceutical quality is veryspecific because for each pharma product like a tablet or capsule there arespecifications. A uniform standard needs to be adhered to in terms of aesthetics as wellas functionality of the medicine to ensure patient safety is not compromised. Efficacy ofdrugs is big on Your Company's agenda to ensure quality healthcare. Your Company alwaysadvocated good manufacturing practice (GMP) as a step to ensure that drugs areconsistently produced and controlled according to quality standards. GMP is designed tominimise the risks involved in any pharmaceutical production like unexpected contaminationof products causing damage to health; incorrect labels on containers which could meanthat patients receive the wrong medicine; insufficient or too much active ingredientresulting in ineffective treatment or adverse effects. GMP covers all aspects ofproduction; from the starting materials premises and equipment to the training andpersonal hygiene of staff. Your Company believes that there must be systems to providedocumented proof that correct procedures are consistently followed at each step in themanufacturing process - every time a product is made. The Uniform Code for PharmaceuticalsMarketing Practices (UCPMP) which is awaited final government approval is also a stepforward in this direction.

As the future of medicine is evolving into personalised medicines immuno-oncology andspeciality drugs an ecosystem that fosters innovation is critical for addressing theunmet medical needs. In this backdrop Your Company looks forward to the government'sefforts to continue investing in the Ayushman Bharat Scheme and increase the healthcarebudgets to 3.5% of GDP. Your Company will continue to collaborate with policy makers increating an ethical responsible and inclusive healthcare ecosystem.

(d) Regulatory Affairs

During the year under review to support the commercial availability of new drugs andvaccines that would benefit and improve the quality of life of Indian patients sufferingfrom various diseases your Company submitted necessary applications for new products inIndia to the CDSCO (Central Drugs Standard Control Organisation) Ministry of Health andFamily Welfare Government of India.

Some of the applications made were to register a quadrivalent Inactivated InfluenzaVaccine (Fluarix Tetra) for active immunisation of adults and children from 6 months ofage for the prevention of influenza disease caused by the two influenza A and B viruses.In addition applications were made to register the Fluticasone Propionate range ofinhalation products that is Fluticasone Propionate pressurised metered- dose inhalation(Flixotide Evohaler) for Asthma and Fluticasone Propionate Powder for Inhalation(Flixotide Accuhaler) for Asthma and COPD. An application was also submitted for grant ofmarketing authorisation of a new anti-malarial drug Tafenoquine succinate and its tabletformulation which is indicated for the radical cure (prevention of relapse) of Plasmodiumvivax malaria to support GSK's Global Health programme.

After a thorough review of its applications your Company has received an approval ofMepolizumab Powder for solution for injection (Nucala) for the treatment of severerefractory eosinophilic asthma and has launched the product in the Indian market.

In addition your company has also introduced a new pack presentation of its AugmentinDDS (fixed dose combination of Amoxycillin and Potassium Clavulanate Oral Suspension)co-packed with water for reconstitution and Calpol tablets in a new jar pack. Your companyhas also obtained necessary approval from the Aurangabad Food and Drug AdministrationMaharashtra for the manufacture of a new line extension of its anti-fungal drugGriseofulvin 500mg Tablets (Grisovin).

These approvals will enable timely access to new and innovative therapeutic options topatients in our country as well as improve compliance to treatment of existingformulations with new pack presentation and strength.

Medical Affairs & Medical Governance

Your Company's medical team including disease area experts and the field-based medicalteam have had a robust external engagement during the year by delivering more than 600scientific presentations through GSK standalone scientific promotional meetings (SPMs)reaching close to 20000 HCPs. In addition the team conducted more than 2500 scientificone-on-one interactions with HCPs focusing on patient benefit. 95% of HCPs have statedthat the interaction with your company's medical team during these meetings has helpedthem to take a more informed decision that benefits patient care. Your company's internalmedical team was invited as speakers for several national as well as state-level medicalconferences for scientific deliberations thus strengthening trust in your company as ascience-led organisation.

In the anti-infective arena leveraging digital technologies your company conducted apan- India webcast in collaboration with Association of Healthcare Providers of India(AHPI) connecting 8000 HCPs of various specialties-General Practitioners ENTs InternalMedicine specialists Pulmonologists and Paediatricians - to spread awareness onanti-microbial resistance (AMR) and sensitise HCPs on appropriate antibiotic usage. Inaddition your Company's internal medical team also conducted 250 Appropriate AntibioticPrescribing (AAP) scientific meetings across India last year.

The "Differential diagnosis campaign" is an important initiative driven byyour company's Internal medical team that focuses on the accurate diagnosis of common skinconditions by general practitioners who are the first point of contact for the patientwith dermatological conditions. For this the team reached out to almost 4000 primary carephysicians in 180 meetings through face-to-face and digital mediums.

Your Company's medical team met key respiratory external experts in a series ofmeetings - advisory boards round tables scientific promotional meetings (SPMs) nationaland regional conferences severe asthma forums and workshops and one-on-one meetings onsevere asthma. These scientific engagements will help pave the path for the effectivemanagement of severe eosinophilic asthma in India.

(e) Internal Control Framework

Your Company conducts its business with integrity and high standards of ethicalbehavior and in compliance with the laws and regulations that govern its business. TheInternal Control Framework (the Framework) is a comprehensive enterprisewide riskmanagement model and supports the continuous process of identification evaluation andmanagement of the company's risks. The framework is supported by standard operatingprocedures policies and guidelines including suitable monitoring procedures andself-assessment exercises. Your Company leverages best practices in the field of riskmanagement and controls by drawing on global standards designed by its parent company theGSK Plc group. In addition to the external statutory audit the financial and operatingcontrols of your company at various locations are reviewed periodically by the internalauditors to report significant findings to the Audit Committee of the Board.

The annual internal audit plan is reviewed and approved by the Audit Committee and theHead of Internal Audit has a direct reporting line to the Audit Committee. The AuditCommittee reviews the adequacy and effectiveness of the implementation of auditrecommendations including those relating to strengthening your company's risk managementpolicies and systems. Compliance with laws and regulations is also monitored through amatrix of a well-laid down framework which requires individual functions to confirm andreport statutory compliances on all laws and regulations concerning their respectivefunctions and which gets integrated with the overall compliance reporting on all laws andregulations for the purposes of review and monitoring by the Audit Committee.

As required by the Companies Act 2013 your Company has implemented an InternalFinancial Control (IFC) Framework. Section 134(5)(e) requires the Directors to make anassertion in the Directors Responsibility Statement that your Company has laid downinternal financial controls which are in existence adequately designed and operateeffectively. Under Section 177(4)(vii) the Audit Committee evaluates the internalfinancial controls and makes a representation to the Board. The purpose of the IFC is toensure that policies and procedures adopted by your Company for ensuring the orderly andefficient conduct of its business are implemented including policies for safeguarding itsassets prevention and detection of frauds and errors accuracy and completeness ofaccounting records and timely preparation of reliable financial information. The IFCimplementation required all processes of your Company to be documented alongside thecontrols within the process. All processes were satisfactorily tested for both design andeffectiveness during the year.

Furthermore your Company continues its annual Independent Business Monitoring (IBM).The IBM Framework is designed by the GSK Group requiring a regular review of activitiesdata exceptions and deviations to continuously monitor and improve the quality ofoperations. It is a risk- based enterprise approach ensuring consistency qualitytransparency and clear accountability of Risk Management and Internal Controls across allbusiness units. In addition your Company has an active tracking of all agreed remedialactions and ensures that corrective actions are addressing underlying root causes. YourCompany expects all employees to act transparently respectfully and with integrity and toput the interests of patients and consumers first always. Your company aims to put thesecore values at the heart of everything it does and every decision it makes. The GSK Codeof Conduct and accompanying training seek to ensure everyone has a solid understanding onhow to implement and uphold the values in practice.

As part of the due diligence activities for onboarding vendors and third partiesengaged by the company vendors are required to confirm adherence to our corporate valuesand third-party Code of Conduct as part of a detailed 'Third Party Oversight' (TPO)process. As an annual exercise your Company's senior executives review and confirmadherence to GSK's Internal Control Framework. Mandatory training on the Code of Conducthelps your Company's employees gain the confidence to make the right decisions and becomefamiliar with the policies and procedures applicable to their areas of operation avoidany conflicts of interest and report all unethical and illegal conduct.

During the year Part 1 of the enterprise-wide 'Living our Values' training was issuedto your employees and complementary workers. The training included scenarios whichexplored our values and their application to the company's ways of working including theawareness of our enterprise risks and Speak Up mechanism. Part 2 of the training focusedon several critical risks including Privacy and Antibribery & Corruption (ABAC).Strong oversight and self-monitoring policies and procedures demonstrate your Company'scommitment to the highest standards of integrity.

Your Company's policies and updated Global Code of Practice for Promotion and CustomerInteractions prescribe the nature of practices and prohibits specifically those which areunethical. Your Company is a signatory to the OPPI (Organisation of PharmaceuticalsProducers in India) Code of Marketing Conduct.

Risk Management

Your Company has a Risk Management and Compliance Board (RMCB) a team of seniorleaders responsible for promoting the local 'tone from the top' and risk culture as wellas ensuring effective oversight of internal controls and risk management process. Eachprincipal risk has an assigned risk owner accountable for management of the riskincluding setting of risk mitigation plans their implementation and reporting theirapproach and progress to the RMCB on a regular basis. The Risk Management Frameworkcovering business operational and financial risks is also reviewed annually by the RiskManagement Committee. At present in the opinion of the Board of Directors there are norisks which may threaten the existence of the Company.

Vigil Mechanism

Your Company is committed to creating an ethical values-driven culture in whichissues are responded to swiftly and transparently. Your Company expects everyone at GSK tolive our values and expectations speak up if they have any concerns and engageappropriately with stakeholders. Your Company also extends these ethical expectations tothe third parties they work with. Your Company has a Speak Up programme which offerspeople within and outside GSK a range of channels to voice concerns and reportmisconduct. The Speak Up culture and procedures encourages everyone to raise concernsabout potential unethical or illegal conduct and assures confidentiality and protectionfrom retaliation retribution or any form of harassment to those reporting such concerns.Confidential Speak Up integrity line phone numbers are available to people within andoutside of your Company. An independent company manages these reporting lines and callsare logged through their central system to ensure integrity of the programme. Your Companyendeavours to treat all questions or concerns about compliance in a confidential mannereven if the person reporting a question or concern identifies themselves. Your Companyalso has a well-laid down process to prevent take disciplinary action and deter acts ofsexual harassment.

Your company has in place a whistle blower policy with a view to provide a mechanismfor its employees/ external stakeholders to approach Local/Group management or theChairman of Audit Committee (accindrx.audicomitteechairmangskindiarx@gsk. com) in case ofany grievance or concern. The Whistle Blower policy can be accessed on your Company'swebsite [ en-in/investors/shareholder-information/policiesl.

(f) Human Resources

Your Company in the year under consideration focused on enabling the organisation todeliver on its strategic priorities linked to Innovation Performance Trust (IPT)supporting managers in their journey to be 'Brilliant Managers' and embedding severalinitiatives aligned to your Company's commitment to be a Modern Employer.

Organizational Culture

An important part of Trust is for your Company is to be a modern employer underpinnedby brilliant managers and technology. Your Company want to represent the modern world thatwe live work and compete in so every single employee can feel supported when they cometo work and give the best of themselves every day. In 2018 your Company launched themodern employer initiative with three key pillars.

• BeYou: Focus on inclusion and diversity as when we combine our knowledgeexperiences and styles together the impact is incredible. One way your Company aims toachieve this is through Employee Resource Groups including our LGBT+ network Spectrum andthe Women's Leadership Initiative.

• FeelGood: Focus on wellbeing with the flexibility to manage our lives as thenwe can thrive and do great things at work and home.

• KeepGrowing: Focus on learning and development as when we grow as individualswe grow as a business.

The GSK Culture Survey continued to be administered twice in the year to garnerfeedback from employees. For India engagement scores remained more than 90% against thebackdrop of transitioning to a new business model. To reinforce our commitment of keepingyour Company's values at the heart of everything that we do your Company launched the'Values in Action' workshop for all second line sales leaders which soon be extended tofirst line sales leaders. As a part of the 'Brilliant Manager' initiative your Companylaunched the Manager One80 survey a feedback tool to be taken by team members. This willgive managers an opportunity to get feedback and grow brilliant managers being those who(i) know their people (ii) deliver results and (iii) maximise potential.

Recognition is part of your Company's culture where your Company looks to celebrateeach other's achievements in line with our organisation's strategic goals. Leadersrecognise and reward employees both in forums and in informal conversations which servesas a motivating factor and guidance for desired workplace behaviors and exceptionalindividual and team performance.

To stay connected with our colleagues across the world and to share best practices inreal time your organisation launched an online platform - Workplace by Facebook. This isan amazing opportunity to transform the way we work together and accelerate the deliveryof IPT and needed culture change at GSK. This gave the opportunity to stay connected andmake our online community even bigger and more engaged.

Diversity and Inclusion

The Women's Leadership Board (WLB) has made significant strides to help reap the genderdividend. The aim of this Board is to develop women talent across all levels and build apipeline of senior women leaders. We now have 16% gender diversity in our workforce 16%women at Board level and 28% women representation in top leadership positions. Significantfocus on conscious hiring through expanded pool of campuses visited and referrals leadingto 18% of new hires being women in the commercial organisation.Your Company was recognisedas one of the 100 Best Companies for Women by Working Mother and AVTAR.

Employee Engagement and Wellness & Wellbeing

Your Company has a range of health and wellbeing programmes and support services tohelp employees understand how to feel healthier happier and more energised at work and athome. Providing our people with a safe workplace is extremely important whether inlaboratories manufacturing sites or offices.

Your company in the year under consideration sustained its offerings under Health andWellbeing:

The Partnership for Prevention (P4P) programme which offers around 40 preventivehealthcare services at very little or no cost to its employees; Employee assistanceprogramme; Energy and Resilience learning offerings for employees and managers;Personalised fitness and nutrition consultation customised programmes groupparticipation in marathons and sports events and leader-led running and trekking. 'OrangeDay' and 'Pulse' programmes are aimed at enabling employees to give back to the society:During the year under consideration eight employees participated in the PULSE programme.

Keep Growing-Capability Building Development is part of one of Your Company's fourexpectations (others being Courage Teamwork and Accountability) and core to ourorganisational DNA. Your Company offers a wide range of learning resources and tools tosupport individual or team development needs.

During the year your Company continued leveraging the global talent programmes likeAsia Leadership Programme for Emerging Leaders Accelerating Difference Programme JobPlus Coaching for building specific capabilities and global leaders. Your Company's pastefforts in nurturing internal talent is yielding significant return with several of ourcandidates moving to senior roles within the country or to regional/global roles.

Your Company also have dedicated sales and site learning teams driving learning. Theselling excellence team is responsible for building strong commercial capabilities in thesales organisation including sales reps first line and second line sales managers. Theirefforts are aimed at improving the in-clinic effectiveness of our customer-facingcolleagues and ensuring that sales managers can coach their teams for results.

The selling excellence team played a key role in supporting the new commercialoperating model by cross training all front-line sales colleagues and onboarding 700+ newemployees. Your Company won the prestigious OPPI (industry association of pharmamanufacturers in India) Sales Force Excellence Award in October 2018.

Our upcoming manufacturing facility in Vemgal Karnataka has a 45-day IndustrialReadiness Programme for our diploma pharma trainees (campus hires) once their induction iscomplete.

The programme is compliant with the government's Skill development body - Life SciencesSector Skill Development Corporation (LSSSDC). At Nashik site your Company offers softskills development programmes to keep employees motivated and build a learning culture atthe site.

Talent Development

In your Company career development is about building experience and capability and notdefined solely by promotion and advancement. Talent Reviews were conducted acrossbusinesses and functions to identify and develop talent so that they are groomed toleadership roles. This was followed with a robust developmental plan to support theindividual's career aspirations and ensure they are confident to achieve their careergoals in GSK.

Employee Relations

There are four recognized unions based on the Selling Area (zonal) that is NorthEast West and South to address the grievances of employees in the sales force. The Unionsare an integral part of the business and are committed to the progress of the company. Themanagement and the unions in the areas where your Company have a sales force have signedlong-term settlement contracts valid for a period of four years. Similarly we have alsosigned long-term settlement for Nasik-based employees for four years. Your Company thanksits Unions for its contributions and maintenance of cordial relations.

Prevention of Sexual Harassment at Work Place

Your Company has adopted a policy on prevention prohibition and redressal of sexualharassment at the workplace in line with the provisions of the Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013 (India) and the Rules madethere under. Your Company has also established an Internal Committee across itscommercial offices and manufacturing sites. This year the focus was on increasing theawareness around POSH and the working of the internal committee. Your Company engaged withdiverse employee groups for the same. During the year the Company received one complaintwhich was investigated and closed after taking appropriate action.

(g) Supply Chain

Manufacturing Excellence

Manufacturing operations in India are being progressively upscaled and strengthened.The Nashik manufacturing site has continued to deliver on its overall strategic intent andhas invested heavily in Safety and Quality in the past several years while furthersecuring supplies and capability to serve the patient. The new Eltroxin facility withhighest safety standards is fully operational and commercial supplies to the market havestarted. The site has also received Good Manufacturing Practice (GMP) and Good LaboratoryPractice (GLP) certification from the FDA in 2018.

Nashik Site is setting new benchmarks on the GSK Production System (GPS) which is basedupon lean working principles. Along with management staff shop floor employees are alsopart of the continuous improvement culture. The best practices from Nashik are also sharedwith our CMO partners who have started their GPS journey this year. The site was awarded"Best in Class Excellence in Continuous Improvement" at the Manufacturing SupplyChain Awards summit presented by the Future Supply Chain Solutions group.

New Manufacturing Site

Your Company has invested in a greenfield manufacturing site at Vemgal Karnataka. Thisnew site ensures supply security by increasing capacity to meet the growing demands forimportant medicines. Quality safety and compliance are the key drivers for thisinvestment.

The new site at Vemgal which represents upwards of ' 1000 crores in investment willbe the first greenfield pharmaceutical site that GSK has built across the globe over thepast ten years. This site is 'state-of-the-art' and is the first factory designed for thenew 'GSK Production Systems' whereby it will deliver by first design intent theconcepts of zero accidents zero defects and zero waste. A major focus has been to ensurethat we employ a diverse workforce as such the design ensures easy access and supportfor those with disabilities externally recognised as 'best in class'. Gender diversityand local employment is also a key part of the operational strategy.

The site has been designed with the future in mind; an innovative design will supporteasy expansion well into the future as the need arises. Initially the site will supply arange of solid dose form products. Start-up of production is planned early in 2019 withvalidation batches then followed by commercial supplies in Quarter three 2019. Focusing on"Make in India" the factory will produce 8 billion tablets and 1 billioncapsules per year for the Indian market. In 2018 the site has received various permitsand licenses. The site was awarded "GOLD" in

Arogya Health assessment which is a phenomenal achievement for a greenfield site whichis transitioning from Project to Operations.

End-to-End Supply Chain & Logistics

Your company has initiated Warehouse Network Optimisation which will make yourcompany's distribution set up lean and yet enhance the service capability in the route andspeed to the market. There is significant progress in making the distribution processrobust flexible and efficient with the implementation of CERPS Track & tracemechanisms temperature maintenance during transit of your products right from site tillthey reach the wholesalers. Beyond this the supply chain focuses strongly in ensuring ontime and in full service to customer's demand and has also taken up measures to reduce anytype of wastage.

We have been the leaders in incorporating digital capabilities in our packaging withthe implementation of the Quick Response (QR) code instead of physical leaflets on all ourpacks. With effective use of technology we will be able to provide most updated patientinformation and at the same time demonstrate our responsibility to the environment byGoing Green through the elimination of physical paper inserts.

Employee Health & Safety and Environment

Environmental Health Safety and Sustainability (EHSS) strategy has been implementedacross the entire value chain from raw materials to product delivery. The policy on EHSSconforms to local laws as well as GSK's global standards. As our Company grows itsbusiness to bring innovative medicines to people across the world environmentalsustainability continues to be a priority and we remain committed to reducing any adverseimpact to our environment. Your Company has also initiated collection of post consumedMulti-layered plastic from the market in a phased manner which is brand and geographyneutral.

Various initiatives for Environment Health Safety & Sustainability wereundertaken at our sites. In 2018 the Nashik site was recognised for its Safety Standardsby the National Safety Council and Department of Industrial Safety and Health Maharashtrawhere we won three awards in the Management and Non-Management staff categories. On theHealth and Hygiene front the Nashik site was awarded "Gold" in the HealthyWorkplace assessment by 'Arogya World' which recognises our work in leading the way inHealth and Wellness programmes for employees.

At our greenfield manufacturing site at Vemgal Karnataka environmental considerationshave been at the forefront of the factory design and future operation. The site isdesigned and built to obtain LEED (Leadership in Energy and Environmental Design) Goldcertification (as per the US Green building council) by adopting environment friendlydesign and using environmentally responsible resources like recyclable material forconstruction efficient processes throughout its life cycle etc. Also any green buildingcertified to reduce overall impact on environment & human health by reducing pollutionand degradation of environment efficiently using water energy & other resourcesprotecting occupant health and improving productivity. In addition our company hasinvested in renewable energy in the form of a 0.5 MW Photovoltaic array which willcontribute to the site's energy requirement.

(h) Corporate Social Responsibility

Your Company has a rich legacy of partnering with the communities in which we live andoperate. Strong partnerships with community groups are critical as local organisationshave the greatest insights into the needs of their people and the strategies that standthe greatest chance of success. Your Company's focus is on making life-changing longtermdifferences in human health by addressing the healthcare burdens of accessibilityaffordability and awareness. Your Company works to fulfill this and other social changeefforts through our Corporate Social Responsibility programmes (CSR). During the lastyear the CSR programme touched the lives of over a million people across India with ourlead CSR project on Partnering India for Eliminating Lymphatic Filariasis'. Pursuant tothe provisions of Section 135 and rules made thereunder of the Companies Act 2013 theCompany has constituted a CSR committee to monitor CSR activities of the Company. The CSRpolicy of the Company may be accessed on the Company website at the link: policies-codes-and-standards/.The CSR reporton the activities undertaken during the year given in Annexure 'A' forms a part of thisReport.


Mr. D. S. Parekh resigned as a Non-Executive Director and Chairman of the Company witheffect from 31st March 2019. Mr. R. R. Bajaaj Independent Director and Mr. M.Jones Non-Executive Director resigned as Directors from the Company with effect from

24th July 2018. The Board thanked Mr. Parekh for his invaluable contributionand guidance to the Company as Director for more than 25 years and as Chairman for morethan 20 years. Further Board places on record its appreciation of the valuable servicesrendered by Mr. R. R. Bajaaj & Mr. M. Jones during their tenure and for theircontribution to the deliberations of the Board.

The Board of Directors has appointed Ms. R. S. Karnad as Non - Executive Non -Retiring Director & Chairperson with effect from 1st April 2019.

In terms of the provisions under Section 149 of the Companies Act 2013 the Board andShareholders have approved the appointment of all the existing Independent Directors vizMs. A. Bansal Mr. PV. Bhide Mr. N. Kaviratne Mr. A. N. Roy and Mr. D. Sundaram for aterm for five years from 30th March 2015.

The Independent Directors have submitted the Declaration of Independence as requiredpursuant to Section 149 (7) of the Companies Act 2013 stating that they meet thecriteria of Independence as provided in sub-section (6).

During the year ended 31st March 2019 six Board & Audit CommitteeMeetings were held. The details of which are given in the Corporate Governance Report. Theintervening gap between the Meetings was within the period prescribed under the CompaniesAct 2013.

Remuneration Policy and Board Evaluation

In compliance with the provisions of the Companies Act 2013 and Regulation 27 of theListing Obligations & Disclosures Regulations (LODR) the Board of Directors on therecommendation of the Nomination & Remuneration Committee adopted a Policy onremuneration of Directors and Senior Management. The Remuneration Policy is stated in theCorporate Governance Report. Performance evaluation of the Board was carried out duringthe period under review. The details are given in the Corporate Governance Report.

Familiarisation programmes for the Independent Directors

In Compliance with the requirements of SEBI Regulations the Company has put in place afamiliarisation programme for the Independent Directors to familiarise them with theirrole rights and responsibility as Directors the working of the Company nature of theindustry in which the Company operates business model etc. It is also available on theCompany website:


In line with the requirements of the Companies Act 2013 and LODR your Company hasformulated a policy on Related Party Transactions. All related party transactions that areentered during the year ended were on arm's length basis and were in ordinary course ofbusiness. There were no materially significant related party transactions made with thePromoters Directors or Key Managerial Personnel which may have a potential conflict ofInterest of the Company at large. The Policy of related party transactions can be accessedon Company website:

All Related Party Transactions are placed before the Audit Committee for review andapproval. Prior omibus approval is obtained for Related Party Transactions on a quarterlybasis for transactions which are of repetitive nature and / or entered in the ordinarycourse of business and are at arm's length. All Related Party Transactions are subject toindependent review by a reputed accounting firm to establish compliance with therequirements of Related Party Transactions under the Companies Act 2013 and LODR.


Your Directors confirm:

(i) that in the preparation of the annual accounts the applicable accounting standardshave been followed along with proper explanations relating to material departures if any;

(ii) that the Directors have selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as on 31stMarch 2019 and of the profit of the Company for the year ended on that date;

(iii) that the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

(iv) that the Directors have prepared the annual accounts on a going concern basis;

(v) that proper internal financial controls laid down by the Directors were followed bythe Company and such internal financial controls are adequate and were operatingeffectively and

(vi) that proper systems to ensure compliance with the provisions of all applicablelaws have been devised and such systems were adequate and were operating effectively.


The Annual Return of the Company has been placed on the website of the Company and canbe accessed at information/AnnualReturn.


Your Company is part of the GlaxoSmithKline Plc group and conforms to norms ofCorporate Governance adopted by them. As a Listed Company necessary measures are taken tocomply with the Listing Obligations & Disclosures Regulations 2015 (LODR) with theStock Exchanges. A report on Corporate Governance along with a certificate of compliancefrom the Auditors given in Annexure 'B' forms a part of this Report. Further a BusinessResponsibility Report describing the initiatives taken by your Company from anenvironmental social and governance perspective is given in Annexure 'C' which forms apart of this Report.


As per the provisions of section 139 of the Companies Act 2013 Deloitte Haskins andSells LLP Chartered Accountants were appointed as the Statutory Auditors of the Companyfor the period of five years at the Ninety second Annual General Meeting held on 25thJuly 2017 to hold office from the conclusion of the said Meeting till the conclusion ofthe Ninety Seven Annual General Meeting to be held in 2022 on a renumeration to bedetermined by the Board of Directors. Their appointment was subject to ratification fortheir appointment by the Members of the Company at every Annual General Meeting. Pursuantto the amendments made to section 139 of the Companies Act 2013 by the Companies(Amendment) Act 2017 effective from 7th May 2018 the requirement of seekingratification of the Members for the appointment of the statutory Auditors has beenwithdrawn from the statue. In view of above ratification of the members at Annual GeneralMeeting is not being sought.

Pursuant to the provisions of section 204 of the Act and the Rules made there underthe Company has appointed Parikh & Associates practicing Company Secretaries toundertake secretarial audit of the Company. The Report of the Secretarial Auditor isannexed to the Board Report as Annexure "D" which forms a part of this Report.The Secretarial Audit Report does not contain any qualification reservation or adverseremark.

Pursuant to Section 148 of the Companies Act 2013 the Board of Directors on therecommendation of Audit Committee have appointed. R. Nanabhoy & Co. Cost Accountantsfor conducting the audit of the cost accounting records maintained by the Company for itsFormulations for 2019-20. The Committee recommended ratification of remuneration for year2018-19 to the Shareholders of the Company at the ensuing Annual General Meeting. Asrequired by section 92(3) of the Act and the Rules framed there under the extract of theAnnual Return in Form MGT 9 is enclosed as Annexure "E" and also forms a part ofthis Report.


In line with the statutory requirements the Company has transferred to the credit ofthe Investor Education and Protection Fund (IEPF) set up by the Government of Indiaequity shares in respect of which dividend had remained unpaid/ unclaimed for a period ofseven consecutive years within the time lines laid down by the MCA. Unpaid/unclaimeddividend for seven years of more has also been transferred to the IEPF pursuant to therequirements under the Act.


The Board of Directors affirms that the Company has complied with the applicableSecretarial Standards issued by the Institute of Companies Secretaries of India (SS1 andSS2) respectively relating to Meetings of the Board and its Committees which havemandatory application.


The information on conservation of energy technology absorption and foreign exchangeearnings and outgo as stipulated in section 134(3) M of the Companies Act 2013 and therules framed there under is attached herewith as Annexure "F" which forms a partof this Report. The Disclosures pertaining to the remuneration and other details asrequired under section 197(12) of the Companies Act 2013 and the rules made thereunder isenclosed as Annexure "G" which forms a part of this Report. Pursuant to section129(3) of the Companies Act 2013 a statement in form "AOC-1" containing salientfeatures of the Financial Statements of the Subsidiary Company is attached.

Although the audited statements of accounts relating to Company's Subsidiary are nolonger required to be attached to the Company's Annual Report the same is enclosed as andin way of better disclosure practice.

The information relating to top ten employees in terms of remuneration and employeeswho were in receipt of remuneration of not less than ' 1.02 cores during the year or ' 8.5lakhs per month during any part of the year forms part of this report and will be providedto any Shareholder on a written request to the Company secretary. In terms of Section 136of the Act the report entitled at the registered office of the Company during thebusiness on working day of the Company up to date of Annual General Meeting.


The Directors express their appreciation for the contribution made by the employees tothe significant improvement in the operations of the Company and for the support receivedfrom all other stakeholders including Shareholders Doctors Medical ProfessionalsCustomers Suppliers Business Partners and the Government.

The Board and the Management of your Company are indeed appreciative of the substantialsupport being received from GSK Plc the parent organization in providing new healthcaresolutions which are products of its discovery labs and the technology improvements whichbenefits your Company immensely.

On behalf of the Board of Directors
Ms. R.S. Karnad
Mumbai 20th May 2019 Chairperson