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Glaxosmithkline Pharmaceuticals Ltd.

BSE: 500660 Sector: Health care
NSE: GLAXO ISIN Code: INE159A01016
BSE 11:54 | 01 Dec 1551.45 -3.65






NSE 11:44 | 01 Dec 1553.65 0.20






OPEN 1553.00
52-Week high 1805.00
52-Week low 1046.40
P/E 71.30
Mkt Cap.(Rs cr) 26,283
Buy Price 1550.45
Buy Qty 1.00
Sell Price 1553.95
Sell Qty 1.00
OPEN 1553.00
CLOSE 1555.10
52-Week high 1805.00
52-Week low 1046.40
P/E 71.30
Mkt Cap.(Rs cr) 26,283
Buy Price 1550.45
Buy Qty 1.00
Sell Price 1553.95
Sell Qty 1.00

Glaxosmithkline Pharmaceuticals Ltd. (GLAXO) - Director Report

Company director report

The Directors have pleasure in submitting their Report for the year ended 31 March2020.

1. Financial Results for the year ended 31 March 2020

Rs in lakhs

Year ended Year ended
31 March 2020 31 March 2019
Revenue from operations 322468 312853
Other Income 7756 10148
Total Income 330224 323001
Profit before Exceptional items and Tax 64699 65882
(Less) /Add: Exceptional Items (32449) 489
Profit before Tax 32250 66371
Less: Income tax expenses 21245 23835
Profit for the year 11005 42536
Add: Opening balance of retained earnings from the previous year (excluding other comprehensive income) 118117 111321
Less: Transactions with owners of the Company:
Dividend paid on Equity Shares (including tax on distributed Profits) ('20 Per Share for FY 2018-19 and '17.5 Per Share for FY 2017-18 retrospectively adjusted for September 2018 bonus issue) 40845 35740
Balance of retained earnings at the end of the reporting period (excluding other comprehensive income) 88277 118117

2. Dividend

Your Directors are pleased to recommend a Dividend of '40 per Equity share for the year(including special dividend of '20 per equity share). The Dividend for the year ended 31March 2020 is subject to the approval of shareholders at the ensuing Annual GeneralMeeting on 27 July 2020 and will be paid on or after 27 July 2020. If approved by theshareholders at the Annual General Meeting the Dividend will absorb '678 crores.

The Board of the Directors of your company have approved the Dividend DistributionPolicy on 27 October 2016 and it is available on your company's website at distrubtion-policy.pdf

3. Management Discussion and Analysis

(a) Finance and accounts

Your company's strategy which was introduced in 2018 gained traction in FY19-20 anddelivered double digit growth in the key therapeutic areas where your company is investingresources to drive growth. Identified key therapies which were supported by incrementalsales force investment have expanded our reach by over 30%. The new trade channel strategyis also showing initial success. Your company strives to drive profitable volume growth ina competitive and partly price- controlled generic market with an underlying focus ondelivering quality products to patients.

Your company has significantly enhanced its technological capabilities to optimise itsmedical and field force engagement with healthcare professionals. With the unprecedentedchallenge in the form of a global pandemic and the nationwide lockdown your company'sinvestment into digital transformation has helped it immensely during these times to stayconnected to healthcare professionals (HCPs) and pay closer attention to their needs.

Your company continues to be the No. 1 vaccines company in the self-pay segment withalmost 40% value market share in represented segments. As part of your company'sunwavering commitment to serving patients it continues to invest to bring innovativemedicines and vaccines to India. Your company has seen some early success on the launch ofNucala (Mepolizumab) which is a humanised monoclonal antibody and indicated as an add-ontreatment for severe refractory eosinophilic asthma in adult patients. In December 2019your company launched Menveo (Quadrivalent Meningococcal Conjugate Vaccine) which hasdemonstrated early success and within four months of its launch has a 30% unit share.

Revenue from operations of '3225 crores increased by 3% in value terms for the yearended 31 March 2020 as compared with the previous year. Despite the headwinds caused byCovid-19 towards the year end and the voluntary global recall of ranitidine productsincluding Zinetac in India your company benefited from its strategy of focusing itsefforts towards key brands and divestment and discontinuation of its tail-end portfolio.The underlying sales growth adjusting for tail-end brand rationalisation and divestmentsis a healthy 13% driven by key brands that grew by over 20%.

The other income was lower primarily on account of a liability write back payable to agroup company in the previous year.

A focused drive to improve operational efficiencies use of smart technology costreduction and a positive product mix has resulted in EBITDA margin improving by 1% pointsversus previous year.

Profit After Tax for the year was at '110 crores primarily impacted by exceptionalcharges during the year. Consequent to the detection of NDMA in ranitidine products yourcompany voluntarily made the decision to suspend the release distribution and supply ofall dose forms of ranitidine hydrochloride products including Zinetac as a precautionaryaction. Your company also initiated a comprehensive strategic review of the impact of thisrecall on all related assets in India. Exceptional charges during the year of '324 croresinclude impact of financial impairment of '637 crores connected to the underutilisation ofits manufacturing facilities and '96 crores on account of other related assets / cost;costs related to the voluntary recall of Zinetac of '108 crores and other charges '29crores. The exceptional charges are offset by profit on sale of company's land at Thane of'546 crores which was concluded during the year. Profit Before Exceptional Items and Taxamounted to '647 crores and margins were at 20% of revenue from operations for the year.

As per the provisions of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the key financial ratios are given below:

Particulars 2020 2019
Operating Profit Margin(%) (Profit From Operations/Sale of Products) 18% 18%
Net Profit margin (%) (Profit After Tax/Revenue from operations)* 3% 14%
Return on Net Worth (%) (Profit After Tax/ Shareholders Equity)* 6% 20%
Current Ratio (Current Assets/Current liabilities) 1.7 1.4
Inventory turnover Ratio (Sale of products/Average Inventories) 6.6 6.3
Debtors Turnover Ratio (Sale of products/Average trade receivables) 28.9 23.2

Interest coverage ratio and Debt Equity Ratio are not relevant for the company as ithas negligible debt.

* Due to exceptional items this ratio has declined during the year; without consideringexceptional items the net profit margin (%) would be 14% and return on net worth (%) wouldbe 25%.

Cash generation from operations continued to remain favourable this year and is in linewith business performance. Your company focused its efforts on achieving working capitalefficiencies and remains focused on unlocking cash. Your company spent '41 crores ascapital expenditure towards renovation of its corporate office into a modern workplace.Your company continues to look for ways and means of deploying accumulated cash balancesas on 31 March 2020 which remain invested largely in bank deposits.

Your company also focused its attention towards resolution of old tax assessments andlitigations which has seen initial success.

There are no loans or guarantees given securities provided and investments coveredunder Section 186 of the Companies Act 2013. Your company has not accepted any fixeddeposits during the year. There was no outstanding towards unclaimed deposits payable todepositors as on 31 March 2020.

There are no significant or material orders passed by the Regulators Courts orTribunals which impact the going concern status of your company and its futureoperations nor are there any material changes and commitments affecting the financialposition of your company as on the date of this report.

(b) Business performance and outlook Pharmaceuticals

In 2019 your company continued to focus on delivering sustainable profitable growth.It accelerated growth in the anti-infectives dermatology and anti-pyretic therapy areasthrough a skill-enhanced sales force and improved engagement with healthcare professionals(HCPs). Trade channel was further strengthened through a dedicated salesforce and yourcompany also initiated trade engagements leveraging cutting end technology. This led to anincrease in share of voice for focus brands as also an increase in the number oftouchpoints in HCP engagement.

Your company's multi-channel marketing has also evolved not just to enhance customertouchpoints but also to improve customer engagement. Your company reached 21.6 million HCPtouchpoints through various channels like webinars e-mails text messages virtual callsand through the GSK Pro platform. Your company's major primary care brands are growingfaster than the Indian Pharmaceutical Market. The Evolution Index for top brands are:Augmentin at 114; Ceftum at 106; Calpol at 108 and CCM at 107 (MAT Dec 2019 IQVIAInternal MCM Dashboard).

Your company maintained and consolidated its leadership in the dermatology segment inthe Indian Pharmaceutical Market during the year. In addition to gaining share in topicalantibiotics market your company is now gaining consistently in the anti-fungal marketwith Zimig and Zoderm two key anti-fungal medications. The BRIDGE (Bringing Insights fromDermatology Group of Experts) forum gained further traction and mobilized commitmentamongst the dermatology fraternity with over 50 meets conducted last year connecting 450specialists from 17 cities in India.


In preventive healthcare your company continues to be the No. 1 vaccine company in theself-pay segment with almost 40% value market share in represented segments. The vaccinesself-pay market is currently estimated to be '2400 crores and is growing at around 10%(IMS MAT Mar 2020). Six of your company's vaccines feature in the Top-20 list of vaccinesin the selfpay market (IMS MAT Mar 2020). Your company currently markets vaccines forvaried age groups - infants adolescents and adults.

Since its launch about eight years back your company has distributed more than tenmillion (one crore) doses of Synflorix protecting kids against pneumococcal diseases.Infanrix Hexa (6-in-1 combination DTP vaccine) launched in April 2018 is already amarket leader in the Inactivated Polio Vaccine (IPV) containing combination vaccinesegment. In December 2019 your company launched Menveo (Quadrivalent MeningococcalConjugate Vaccine). Menveo has demonstrated early success and currently has a 30% unitshare within four months of its launch (IMS Mar 2020).

Your company continues to promote maternal immunisation against pertussis withBoostrix. Your company is partnering with Federation of Obstetric and GynaecologicalSocieties of India (FOGSI) and Indian Academy of Pediatrics (IAP) to drive awarenessamong women for vaccination against maternal and neonatal pertussis.

Your company also launched an awareness campaign on vaccination for school-going kidswho may have either missed childhood vaccines or may be due for certain vaccines.

(c) Opportunities risks concerns and threats

The Covid-19 pandemic is re-defining the conventional way of business. It has alsoexposed sectoral vulnerabilities forcing the policy-makers to take corrective measuresthat will benefit the industry in the long-term. Dependency on imported ActivePharmaceutical Ingredient(s) (APIs) is one such area. The recent government's decision onpromotion of domestic manufacturing of critical APIs and Key Starting Materials (KSMs)bodes well for the country.

A robust domestic supply shall also help greatly in stabilising the API prices.

The healthcare policy landscape in India is at an inflection point. The government hasbegun a fresh exercise to revise the National List of Essential Medicines (NLEM) hopingthat it would result in better quality of medical care better management of medicines andcost-effective use of healthcare resources. The government started the process in late2019 and since then has had a series of stakeholder dialogues. Additionally newregulations like the Personal Data Protection Bill 2019 and the E-Pharmacy Rules areexpected to be introduced in the current financial year. Your company is a part of variousstakeholder discussions with the government and the relevant subject-matter committees onthese and has been presenting your company's perspectives on a regular basis.

Your company is aligned with the government's broader mandates on public health and itsvarious programmes to reduce the disease burden of the country. Your company's existingcommitment and support to the government on various public health mandates shall continueunabated and collaboration opportunities will continue to be explored to leverage mutualsynergies for greater good.

(d) Regulatory affairs

In the financial year 2019-20 your company made various applications to the centraldrug regulator - the Central Drugs Standard Control Organisation (CDSCO) - in accordancewith the existing laws and regulations.

Applications were made for registration of a (i) new fixed dose combination ofFluticasone Furoate Umeclidinium and Vilanterol Powder for Inhalation (Trelegy) forchronic obstructive pulmonary disease (COPD) (ii) new strength of an already marketedoral suspension of Augmentin viz. Amoxycillin and Potassium Clavulanate Oral Suspension642.9 mg/5ml (Augmentin ES) (iii) registration of a ready-to-use liquid formulation ofRotavirus vaccine (Rotarix). In addition indication expansion application was submittedand subsequently successfully approved for quadrivalent inactivated influenza vaccine(Fluarix tetra) to extend its use in children and adults (approval received). Applicationfor indication expansion for Mepolizumab Powder for solution for Injection (Nucala) toinclude paediatric population of severe eosinophilic asthma is under consideration by theregulator.

These approvals will enable timely access to new and innovative therapeutic options topatients in our country as well as improve compliance to treatment of existing productswith new formulation and strength.

Medical affairs and medical governance

In the year under review your company's medical team worked closely with variousexternal stakeholders to build an informed healthcare community. During this period theteam made about 750 scientific presentations through GSK standalone Scientific PromotionalMeetings (SPMs) reaching close to 50000 HCPs. In addition the team conducted more than2500 scientific in-person interactions with HCPs focusing on patient benefit. Yourcompany's medical team also participated in various medical conferences - both nationaland state level - and leveraged speaking opportunities to position your company as ascience and innovation led organisation.

In anti-infective therapy area with a vision of driving science that curbsantimicrobial resistance (AMR) and benefits patients your company's medical teamcollaborated with various medical associations to deliver 360 scientific presentations and1300 one-to-one interactions with experts. In dermatology under the 'DifferentialDiagnosis Campaign' the medical team delivered more than 100 scientific presentations1200 one-to- one scientific interactions thus reaching out to 15000 doctors.

In respiratory your company's medical experts and field based medical team partneredwith respiratory experts on planning of the conduct of Phase 4 clinical trial Real WorldEvidence and Investigator Sponsored Clinical Research.

In Vaccines your company's medical team buttressed numerous research studies had keyreview articles published in the peer-reviewed indexed medical journals and supported over500 scientific meetings thereby engaging more than 10000 HCPs.

(e) Internal Control Framework

Your company conducts its business with integrity and high standards of ethicalbehaviour and in compliance with the laws and regulations that govern its business. TheInternal Control Framework (ICF) is a comprehensive enterprisewide risk management modeland supports the continuous process of identification evaluation and management of thecompany's risks. ICF is supported by standard operating procedures policies andguidelines including suitable monitoring procedures and self-assessment exercises.

Compliance with laws and regulations is monitored through a matrix of a well-laid downframework. As required by the Companies Act 2013 your company has implemented an InternalFinancial Control (IFC) Framework. Furthermore your company continues its annualIndependent Business Monitoring (IBM). The IBM Framework is designed by the GSK Grouprequiring a regular review of activities data exceptions and deviations to continuouslymonitor and improve the quality of operations.

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 valuesas part of a detailed 'Third Party Oversight' process.

As an annual exercise your company's senior executives review and confirm adherence toGSK's ICF. Mandatory training on the GSK Code of Conduct is conducted for all employees.During the year enterprise-wide 'Living our Values' training was issued to all employeesand complementary workers. The training included scenarios that explored our values andtheir application to the company's ways of working and risks including those related toprivacy and Anti-bribery and Corruption (ABAC).

Risk management

Your company has a Risk Management and Compliance Board (RMCB) a team of seniorleaders responsible for promoting the 'tone from the top' and risk culture as well asensuring effective oversight of internal controls and risk management process. Eachprincipal risk has an assigned risk owner accountable for managing the risk includingsetting of risk mitigation plans their implementation and reporting their approach andprogress to the RMCB on a regular basis. The Risk Management Framework covering businessoperational and financial risks is also reviewed annually by the RMCB. At present in theopinion of the Board of Directors there are no risks which may threaten the existence ofyour company.

Vigil mechanism

Your company has a Speak Up programme which offers people within and outside GSK arange of channels to voice concerns and report misconduct. The Speak Up channel andprocedures encourage everyone to raise concerns about potential unethical or illegalconduct and assures confidentiality and protection from retaliation retribution or anyform of harassment to those reporting such concerns. Confidential Speak Up channels(https://gsk.i- are available to people within and outside ofyour company. An independent third party manages these reporting lines and calls arelogged 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 theChairperson of the Audit Committee (accindrx. incase of any grievance or concern. The Whistle Blower policy can be accessed on yourcompany's website at policies/.

(f) Human resources

Your company in the year under consideration focused on embedding the culturenarrative and delivering on the strategic priorities set under the IPT (InnovationPerformance Trust) agenda.

Organisational culture

In 2019 your company's commitment to be a 'Modern Employer' resonated well with theemployees and we built upon our experience and employee feedback to make the initiative

more inclusive and topical. As a part of this the company focused on the followingthree pillars:

• Inclusion and diversity

• Wellness and wellbeing

• Learning and development

The GSK Culture Survey continued to be administered to garner feedback from employees.For India engagement scores remained >90%. Initiatives like the Great Manager Manager

One80 survey and Global Employee Recognition scheme designed to build capabilities andacknowledge talent continued to be implemented and received encouraging responses from theemployees.

Since its launch Workplace by Facebook has become the preferred mode of connecting andcollaborating with employees across the globe. The tool has helped to transform the wayemployees work together and accelerate the delivery of IPT and influence the necessaryculture change in your company.

Inclusion and diversity

Your company has instituted the Women's Leadership Initiative (WLI) with a purpose ofcreating an inclusive culture which helps your company to bring diverse perspectivesaccelerate capabilities build talent pool and pave way for growth. Your company boasts ofover 15% gender diversity in its workforce 18% of new hires being women in the commercialorganisation 30% women at Board level and 38% women representation in top leadershippositions. Your company launched Wave Regional Circles for the commercial organisation asa platform for women in sales to connect engage and inspire. Your company also launched adevelopment programme GSK WeLeAP - GSK Women Leadership Action Programme - to develop highpotential mid-level women talent.

In 2019 your company won the 100 Best Companies for Women by Working Mother and AVTARBest Workplaces for Women by Great Places to Work and Advancement of Women Award byCommunity Business.

Your company launched Spectrum an employee resource group for raising awareness onLGBT+ among the employees. Several initiatives were undertaken to cater to the differentlyabled as well.

Wellness and wellbeing

Your company in the year under consideration sustained its offerings under thePartnership for Prevention (P4P) programme which offers around 40 preventive healthcareservices at very little or no cost to its employees; employee assistance programme; energyand resilience learning offerings; personalised fitness and nutrition consultation andgroup participation in marathons and sports events. A driver safety programme wassustained for around 3000 of your company's employees who work as sales representativesand are required to drive for work purposes.

Learning and development

Your company offers a wide range of learning resources and tools to support individualor team development needs. During the year your company continued leveraging the globaltalent programmes like Asia Leadership Programme for Emerging Leaders AcceleratingDifference Programme Asia Global Leaders Programme IMPACT programme for buildingspecific capabilities to develop leadership talent.

In 2019 the selling excellence team partnered with HR team to launch a 'PerformanceConversations' training module for all first and second-line sales managers. Thiscapability positively impacted performance conversations with over 3000 commercialcolleagues with 93% of the participants rating the programme as highly effective. Yourcompany continued to invest in the 'Future Leader Programme' where hires from premierB-Schools undergo an extensive experiential training for 18 months before off-boarding infirst line sales leader roles. Your company also launched two additional local earlytalent programmes - Commercial Leadership Programme and Pharma Supply Chain LeadershipProgramme - to meet the talent demand in the commercial and pharma supply chain teams. In2019 with the objective to enhance your company's brand awareness among potential campushires a case study competition was launched across top B-schools named as GSK EA3(Engaging and Exciting minds for Excellence).

Employee relations

Your company has four recognised unions based on the selling area zones - North EastWest and South - to address the grievances of employees in the sales force. Union in theWest zone also represents the workers of Nashik manufacturing site. These Unions are anintegral part of the business and are committed to the progress of your company. Themanagement and the unions of your company are currently engaged in negotiation forarriving at long-term settlement contracts valid for a period of four years. Your companythanks its Unions for its contributions and maintenance of cordial relations.

Prevention of sexual harassment at workplace

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 madethereunder. Your company has also established Internal Committees across its commercialoffices head office and manufacturing site. The focus is on increasing awareness aroundPOSH and the working of internal committees. During the said year your company receivedthree complaints which were investigated and closed after taking appropriate action.

(g) Supply chain

Manufacturing excellence

The Nashik manufacturing site has continued to deliver on its overall strategic intentand has invested heavily in safety and quality in the past several years while furthersecuring supplies and capability to serve the patients. The Nashik site is setting newbenchmarks on the GSK Production System (GPS) which is based upon lean workingprinciples. Along with management staff shop floor employees are also part of thecontinuous improvement culture.

The best practices from the Nashik site were shared with your company's partneringContract Manufacturing Organisations and Warehouse and Distribution teams where it isbeing currently implemented. Apart from financial gains the GPS culture is proving to bea morale booster for the teams and helping to meet the increased demands withoutsignificant investments.

Vemgal update

The Vemgal greenfield site was completed in March 2019 and the registration batches ofZinetac 150 mg was initiated in April 2019 and completed by end of June 2019. The site hadobtained all necessary licenses to operate the factory including obtaining themanufacturing license in August 2019.

The NDMA issue in ranitidine was brought to notice in September 2019. As a result andin compliance with your company's values of placing patient safety at the forefront thesite did not start the planned commercial production in October 2019. Following GSK Plc'sdecision to initiate a global voluntary recall (pharmacy/retail level) of ranitidineproducts including Zinetac in India and a comprehensive strategic review of the impact ofthis recall on all related assets in India your company took a financial impairment of'637 crores connected to the under-utilisation of the Vemgal site. Your company iscurrently exploring future options for the Vemgal facility including a potential sale ofthe site.

Warehousing and distribution

Your company has initiated Warehouse Network Optimisation which will make yourcompany's distribution set up lean and yet enhance the service capability in route andspeed to the market. There is significant progress in making the distribution processrobust flexible and efficient with the implementation of CERPS track and tracemechanisms temperature maintenance during transit of products right from site till theyreach the wholesalers. Beyond this the supply chain focuses strongly in ensuring on timeand in full service to customers demands and has also taken up measures to reduce any typeof wastage.

Your company has been leaders in incorporating digital capabilities in its packagingwith implementation of the Quick Response (QR) code instead of physical leaflets on allpacks. With effective use of technology your company will be able to provide most updatedpatient information and at the same time demonstrate responsibility to the environment by'Going 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 of your company from raw materials to product delivery. Thepolicy on EHSS conforms to local laws as well as your company's global standards.

Under the Extended Producer Responsibility (EPR) your company has collected anddisposed 310 MT in FY18-19 and 1828 MT for FY19-20 of post-consumed plastic waste (brandsector and geography neutral) on pan- India basis. This is first-of-its-kind project everinitiated in the Global GSK network under Plastic Waste Management. This initiative willensure environmental sustainability and compliance with local regulations.

Various initiatives for EHSS were undertaken at your company's manufacturing site inNashik. In relation to Safety Nashik site achieved Zero reportable incident and illnessrate (RIIR). The site crossed two million safe man hours since last reported incident.

Under GSK global driver safety programme 'Safe Driving: Every Journey Counts' for thesafety of employees in the field various initiatives are ongoing to imbibe defensivedriving skills.

Two projects - leaflet digitalisation and last mile vaccine distribution in active modehave won special recognition from Corporate Executive Team (GSK Plc) EHSS in 2019.

(h) Corporate social responsibility

Your company has a rich legacy of partnering with the communities in which it operates.Strong partnerships with community groups are critical as local organisations have thegreatest insights into the needs of their people and the strategies that stand thegreatest chance of success. Your company's focus is on making life-changing longtermdifferences in human health. Your company works to fulfill this and other social changeefforts through its Corporate Social Responsibility (CSR) programmes. During the year inreview your company's CSR programmes touched the lives of over a million people acrossIndia with its lead CSR project being 'Partnering India for Eliminating LymphaticFilariasis'. Pursuant to the provisions of Section 135 and rules made thereunder of theCompanies Act 2013 your company has constituted a CSR Committee to monitor the CSRprogrammes. The CSR policy of your company can be accessed on the company website from thefollowing link: https:// Report on the CSR programmes undertaken during the year given in Annexure‘A' forms a part of this Report.

(i) Material impact of COVID 19 pandemic

The spread of Covid-19 from mid-March 2020 is having an unprecedented impact on peopleand economy. Your company has been swift in extending support to multiple stakeholders andmaintain operations through the crisis. Your company's response to the pandemic and itsimpact have been driven by its core guiding principles:

a) employee safety and well-being

b) business continuity and

c) social responsibility

Your company's people are its priority. Your

company has been proactive and swift in ensuring safe working conditions and providingthe necessary infrastructure and equipments across all operations. Your company has beenworking closely with all its partners associations and the various authorities to ensureundisrupted supply of products and continued service to the patients. Despite the initialdisruptions to supply chain due to the lockdown your company has been able to smoothlymanage its production cycles and distribution. Both at company and at channel levelssufficient inventory is maintained to meet patient requirements. With relaxation of thelockdown across various zones of the country your company has redeployed its front linesalesforce as per the guidelines received from the Central / State / Municipalauthorities.

From an operational perspective your company has discharged all its obligations infull on payroll (including all contractual workers). There is no impact on capital andfinancial resources of your company. None of the assets of your company have been impactedor impaired as a result of the pandemic.

4. Directors

Ms. A. Bansal Independent Director completed her term on 29 March 2020. Mr. A.Vaidheesh retired as Managing Director as on 31 March 2020. The Board places on record itsappreciation of the valuable services rendered by Ms. A. Bansal and Mr. A. Vaidheeshduring their tenure and for their contribution to the deliberations of the Board.

The Board of Directors have appointed Mr. S. Venkatesh as Non-Retiring Director andManaging Director with effect from 1 April 2020.

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 viz.Mr. P. V. Bhide Mr. N. Kaviratne Mr. A. N. Roy and Mr. D. Sundaram for a second term offive years from 30 March 2020.

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 31 March 2020 five Board and six Audit Committee meetings wereheld the details of which are given in the Corporate Governance Report. The interveninggap between the Meetings was within the period prescribed under the Companies Act 2013.

Remuneration policy and Board evaluation

In compliance with the provisions of the Companies Act 2013 and Regulation 27 of theListing Obligations and Disclosures Regulations (LODR) the Board of Directors on therecommendation of the Nomination and 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 year under review the details of which are given in the Corporate Governance Report.

Familiarisation programmes for the Independent Directors

In compliance with the requirements of SEBI Regulations your company has put in placea familiarisation programme for the Independent Directors to familiarise them with theirrole rights and responsibility as Directors the working of your company nature of theindustry operating business model etc. It is also available on your company's website: shareholder-information/policies/.

5. Particulars of contracts and related party transactions

In line with the requirements of the Companies Act 2013 and Listing Obligations andDisclosures Regulations 2015 (LODR) your company has formulated a policy on RelatedParty Transactions. All related party transactions that are entered during the year endedwere on arm's length basis and were in ordinary course of business. There were nomaterially significant related party transactions made with the promoters directors orkey managerial personnel that may have a potential conflict of interest of your company atlarge. The Policy of related party transactions can be accessed on your company's website:https://india- in/investors/shareholder-information/policies.

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

6. Directors' responsibility statement

Your Directors confirm:

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

(ii) that the Directors have selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent to give atrue and fair view of the state of affairs of your company as on 31 March 2020 and of theprofit of your 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 your 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 byyour 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.

7. Annual return

In line with the requirement of the Companies (Amendment) Act 2017 effective from 31July 2018 the extract of annual return is no longer required to be part of the Board'sReport. However for the compliance of conditions of Section 92 and Section 134 copy ofthe Annual Return shall be placed on your company's website shareholder-information/Annual Return.

8. Corporate governance and business sustainability report

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 and 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. Furthera Business Responsibility Report describing the initiatives taken by your company from anenvironmental social and governance perspective given in Annexure ‘C' formsa part of this Report.

9. Auditors

As per the provisions of Section 139 of the Companies Act 2013 Deloitte Haskins &Sells LLP Chartered Accountants were appointed as the Statutory Auditors of your companyfor the period of five years at the ninety second Annual General Meeting held on 25 July2017 to hold office from the conclusion of the said Meeting till the conclusion of theninety seventh Annual General Meeting to be held in 2022 on a remuneration to bedetermined by the Board of Directors. Their appointment was subject to ratification by theMembers of your company at every Annual General Meeting. Pursuant to the amendments madeto section 139 of the Companies Act 2013 by the Companies (Amendment) Act 2017 effectivefrom 7 May 2018 the requirement for seeking ratification of the Members for theappointment of the Statutory Auditors has been withdrawn from the statute. In view ofabove ratification of the members at Annual General Meeting is not being sought.

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Rules madethereunder your company has appointed Parikh & Associates Practicing CompanySecretaries to undertake Secretarial Audit of your company. The Report of the SecretarialAuditor is annexed to the Board Report as Annexure ‘D' which forms a part ofthis Report. The Secretarial Audit Report does not contain any qualification reservationor adverse remark.

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 your company for itsFormulations for 2020-21. The Committee recommended ratification of remuneration for year2019-20 to the Shareholders at the ensuing Annual General Meeting. As required by Section92(3) of the Act and the Rules framed thereunder the extract of the Annual Return in FormMGT-9 is enclosed as Annexure ‘E' and also forms a part of this Report.

10. Transfer of equity shares unpaid/unclaimed dividend to the Investor EducationProtection Fund (IEPF)

In line with the statutory requirements your company has transferred to the credit ofthe Investor Education and Protection Fund set up by the Government of India equityshares in respect of which dividend had remained unpaid/unclaimed for a period of sevenconsecutive years within the timelines laid down by the MCA. Unpaid/unclaimed dividend forseven years or more has also been transferred to the IEPF pursuant to the requirementsunder the Act.

11. Compliance with secretarial standards

The Board of Directors affirms that your 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.

12. General

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 thereunder is attached herewith as Annexure ‘F' which forms apart of 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 toSection 129(3) of the Companies Act 2013 a statement in form “AOC-1” containingsalient features 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 your company's Annual Report the same is enclosed asand in 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 Rs 1.02 cores during the year or Rs8.5 lakhs per month during any part of the year forms a part of this report and will beprovided to any Shareholder on a written request to the Company Secretary. In terms ofSection 136 of the Act the said report will be available for inspection of theshareholders through electronic mode. The shareholders may write an email to askus@gsk.comby mentioning “Request for Inspection” in the subject of the email.

13. Acknowledgments

The Directors express their appreciation for the contribution made by the employees tothe significant improvement in the operations of your 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 organisation in providing new healthcaresolutions that 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 18 May 2020 Chairperson