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RPG Life Sciences Ltd.

BSE: 532983 Sector: Health care
NSE: RPGLIFE ISIN Code: INE105J01010
BSE 00:00 | 03 Jun 266.40 -7.35
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OPEN 281.00
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VOLUME 7912
52-Week high 351.00
52-Week low 146.00
P/E 15.98
Mkt Cap.(Rs cr) 441
Buy Price 261.00
Buy Qty 1.00
Sell Price 266.40
Sell Qty 130.00
OPEN 281.00
CLOSE 273.75
VOLUME 7912
52-Week high 351.00
52-Week low 146.00
P/E 15.98
Mkt Cap.(Rs cr) 441
Buy Price 261.00
Buy Qty 1.00
Sell Price 266.40
Sell Qty 130.00

RPG Life Sciences Ltd. (RPGLIFE) - Director Report

Company director report

Your Directors have pleasure in presenting the annual report and audited statement ofaccounts of the Company for the year ended on March 31 2019.

1. FINANCIAL RESULTS

The summary of financial performance of the Company for the year under review is givenbelow:

(Rs. in crores)
Particulars 2018-19 2017-18
A Total Income 330.96 348.12
Profit before depreciation interest and tax 34.36 38.50
Less: Interest 3.99 3.80
Less: Depreciation 15.32 14.34
Profit for the year before tax 15.05 20.36
Tax (including deferred tax) 4.24 6.91
B Profit for the year after tax 10.81 13.45
C Other Comprehensive income net of tax (0.27) (0.14)
D Total Comprehensive Income 10.54 13.31
E Appropriations:
Dividend Proposed 3.97 3.97*
Tax on proposed dividend 0.81 0.81*

*Paid in 2018-19

2. DIVIDEND

The Directors recommend a dividend of Rs. 2.40 (30%) per equity share of Rs. 8/- eachfor the financial year ended March 31 2019.

3. OPERATIONS

The Company earned a total income of Rs. 330.96 crores for the year as compared to Rs.348.12 crores during the previous year and a profit after tax from existing operations ofRs. 10.81 crores as against Rs. 13.45 crores during the previous year. The reduction innet profit was mainly due to the below par performance of Domestic Formulations division.

The Company continues to hold the WHO GMP and TGA - Australia certifications for itsAPI facility at the Navi Mumbai plant. The Company's Formulation Facilities at Ankleshwarviz. Plant (F1) has WHO GMP and certification issued by countries i.e. Kenya and Nigeriaand Plant (F2) has EU GMP local WHO GMP TGA GMP Clearance certifications andaccreditations by countries i.e. Ethiopia Kenya Sudan and Nigeria.

Domestic Formulations Business:

Performance

During the year under review the Domestic Formulations business achieved sales revenueof Rs. 188.66 crores lower by 10.50 % over the previous year. High market inventorieslow demand in acute therapies and supplements segments and increased competition fromgeneric players led to the drop in revenues.

The Company's Speciality division which comprises of Nephrocare Neolife and UrologyDivisions showed a growth of 12 %. Nephrocare Division continues to feature among the top5 Indian companies operating in the renal care therapy segment. The new product Darbashowed a growth of 27% and 'Rituximab' showed a growth of 29%. Among the existingproducts Immunotac and Arpimune range showed strong growth.

As per the data compiled by Pharmatrac a market researcher the Company achieved 66thrank in sales value terms in the country during the year.

Outlook

In the current year the Company in the Main Division will continue its emphasis onstrengthening of 'Textbook' brands like Azoran Aldactone Naprosyn Lomotil andSerenace. The Company will also be focusing on prescription generation and productportfolio augmentation in chronic therapies and line of extensions of these brands such asNaprosyn D Naprosyn ES and Tricaine Alma. The specialty segment is expected to growthrough greater market penetration new indication portfolio augmentation and highermedico marketing. Brand extensions and new product launches in therapies where theCompany's core competencies exist would also be growth drivers.

Training of field force will continue to remain the cornerstone for improvingproductivity by strengthening product knowledge and selling skills.

International Formulations Business:

The International Formulations business comprises of Global Generics (RegulatedMarkets) and Rest of World (RoW).

Global Generics Business:

Performance

The Global Generics business achieved sales revenue of Rs. 42.95 crores in FY 19registering degrowth of 15.12% mainly on account of a key customer's strategy of pruningtheir product portfolio and steep corrections in price of a product in UK market. TheCompany focused on expanding the product portfolio in European Union region by sellingNicorandil. It has filed the first pANDA for Amiocaproic Acid.

Outlook

The Global Generics business is focused on increasing the penetration of existingproducts in multiple countries within EU as well as expanding its product offerings in EUand North America. The Company is also actively scouting for opportunities in geographicexpansion through strategic partnerships in various international markets.

Rest of World (RoW) Business:

Africa & South-East Asia (SEA) constitute the RoW geographical space for theCompany

Performance:

During the year the RoW business achieved sales of '24.16 crores. In SEA Myanmarremained the key market where Siloxogene continued to maintain its leadership positionwith a market share of 35% in the antacid segment. The other SEA markets of CambodiaVietnam and Philippines registered significant growth over the previous year.

The Company has successfully completed the Sudanese MOH audit which would facilitatebusiness in Africa region. The Company retained its leadership position in Mauritiusthrough its anti-diabetic range while in Egypt its immunosuppressant range remained thechosen alternative to innovator brands.

Outlook:

Nephrology will be the core therapy in RoW markets. However the business will continueto tap opportunistic tenders in the Anti-diabetic

and Cardiovascular therapies across RoW tender markets. In FY 20 the focus areas forthe business will be geographical expansion as well as product portfolio enhancementthrough internal Research & Development.

Active Pharmaceutical Ingredients (API/Bulk Drugs) Business:

Performance

With the highest ever sales of Rs. 68.06 crores API business registered a growth of27.17% over the previous year. Latin America the key market for the API businesscontributed largely to this performance. In FY 19 the flagship product sold in the LatinAmerican market had a growth of 57% over the previous year. Mexico and Brazil contributed60% to the API business in FY 19.

Outlook

API business continues to be of strategic importance in the overall growth of theCompany. Backward integration in products ensures lesser dependency on procuring APIs fromexternal sources and increased reliability of supplies thus playing a crucial role in thecurrent competitive scenario. This has enabled the Company to move towards goodimprovement in the key export products. The Company is also working on growing itsbusiness in Russia South Korea China and USA which are key focus markets for API.

4. INDIAN ACCOUNTING STANDARDS (IND AS)

As notified by the Ministry of Corporate Affairs the Company adopted Indian AccountingStandards ('Ind AS') with effect from April 01 2017.

5. EXTRACT OF ANNUAL RETURN

As required under Section 92 of the Companies Act 2013 details forming part of theExtract of Annual Return in Form MGT-9 is annexed herewith as Annexure A. The sameis available on Company's website www.rpglifesciences.com.

6. DISCLOSURE UNDER SECRETARIAL STANDARDS ON MEETINGS OF BOARD OF DIRECTORS (SS-1):

During the year under review the Company has complied with all applicable SecretarialStandards.

7. MEETINGS OF THE BOARD

The details of Board Meetings held during the year are given in the CorporateGovernance Report.

8. MEETINGS OF AUDIT COMMITTEE

The details of Audit Committee meetings and composition of the Committee are given inthe Corporate Governance Report.

9. DIRECTOR'S RESPONSIBILITY STATEMENT

The Directors confirm that -

a) in the preparation of the annual accounts for the financial year ended March 312019 the applicable accounting standards had been followed and there were no materialdepartures;

b) the Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year as atMarch 31 2019 and of the profit and loss of the Company for that period;

c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors had prepared the annual accounts on a going concern basis;

e) the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively;

f) the Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

10. STATEMENT ON DECLARATION OF INDEPENDENT DIRECTORS

The Company has received declaration from each of the Independent Directors underSection 149 (6) and (7) of the Companies Act 2013 Regulation 16 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 as amended from time to time.

11. PECUNIARY RELATIONSHIP OR TRANSACTIONS OF THE NON-EXECUTIVE DIRECTORS ANDDISCLOSURES ON THE REMUNERATION OF THE DIRECTORS

All pecuniary relationship or transactions of the Non-Executive Directors vis-a-vis theCompanyalong with criteria for such payments and disclosures on the remuneration of theDirectors along with their shareholding are disclosed in Corporate Governance Report andForm MGT-9 available on the website of the Company which forms a part of this report.

12. NOMINATION AND REMUNERATION POLICY

The Company's policy on Directors' appointment and remuneration including criteria fordetermining qualifications positive attributes independence of a Director and othermatters provided under Section 178 (3) is annexed with this Report as Annexure B.

13. EXPLANATION AND COMMENTS ON AUDITOR'S AND SECRETARIAL AUDIT REPORT

There is no qualification disclaimer reservation or adverse remark made by theStatutory Auditors in Auditor's Report.

As per the provisions of Section 143 (12) of the Companies Act 2013 read with rule 13of the Companies (Audit & Auditors) Rules 2014 the Statutory Auditors have notreported any instances of fraud to the Central Government and/or Audit Committee.

Further there is no qualification disclaimer reservation or adverse remark made bythe Company Secretary in practice in Secretarial Audit Report.

14. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

The Loans Guarantees and Investments made by the Company are within the limitsprescribed under the provisions of Section 186 of the Companies Act 2013 and the detailsare given in the notes to the Financial Statements.

15. RELATED PARTY TRANSACTIONS

There were no contracts or arrangements or transactions entered into by the Companywith related parties referred to in sub-section (1) of Section 188 of the Companies Act2013 during the course of business which were not at arm's length basis.

Suitable disclosure as required by the Indian Accounting Standards (IND AS 24) has beenmade in the notes to the Financial Statements. The policy on Related Party Transactions asapproved by the Board is uploaded on the Company's website www.rpglifesciences.com.

16. TRANSFER TO RESERVES

The Company has not transferred any sum to the General Reserve during the financialyear ended March 31 2019.

17. MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY

There are no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year on March 31 2019 towhich the financial statements relate and the date of this report.

18. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars as required under Section 134(3) (m) of the Companies Act 2013 readwith Rule 8 (3) of Companies (Accounts) Rules 2014 are given in Annexure C tothis report.

19. RISK MANAGEMENT

The details of Risk Management Committee (RMC) and its terms of reference are set outin the Corporate Governance Report.

The Company has a robust Risk Management framework to identify evaluate business risksand opportunities. This framework seeks to create transparency minimize adverse impact onthe business objectives and enhance the Company's competitive advantage.

The business risk framework defines the risk identification and its management approachacross the enterprise at various levels including documentation and reporting. Theframework help in identifying risks trend exposure and potential impact analysis atCompany's business.

20. CORPORATE SOCIAL RESPONSIBILITY (CSR)

In accordance with the provisions of Section 135 read with Schedule VII of the Act theCompany as a part of its Corporate Social Responsibility ("CSR") initiativehas adopted a CSR Policy outlining various CSR activities to be undertaken by the Companyin the area of health water sanitation promoting education skill development etc. TheCSR policy of the Company is available on the Company's website i.e.www.rpglifesciences.com under 'Investors' tab.

During the year under review the Company has contributed the entire amount of Rs.30.00 lakhs to RPG Foundation the implementing agency towards CSR activities during FY2018-19. The Board has constituted a CSR Committee inter alia to recommend on the CSRprojects/programs recommend the amount on each CSR activity and to monitor such CSRactivities being undertaken by the Company. The report on CSR activities as requiredunder the Companies (Corporate Social Responsibility Policy) Rules 2014 is set out as AnnexureD.

21. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. H. V. Goenka retires by rotation and being eligible offers himself forre-appointment at the ensuing Annual General Meeting.

Mr. Yugal Sikri was appointed as an Additional Director and Managing Director on theBoard of the Company w.e.f. October 1 2018 consequent to his vacation of office as anIndependent Director on September 27 2018.

Mr. CT. Renganathan was re-designated as Whole Time Director w.e.f. October 1 2018. Heresigned as a Whole Time Director and from the Board w.e.f. November 30 2018.

The shareholders through resolutions passed by postal ballot have approved appointmentof and payment of remuneration to Mr. Yugal Sikri as Managing Director of the Company fora period of 3 years from October 1 2018 to September 30 2021; besides regularizing himas a Director of the Company and also approved re-designation of Mr. CT. Renganathan asWhole Time Director of the Company for a period of 2 months from October 1 2018 toNovember 30 2018.

In accordance with provisions of Section 149 and other applicable provisions ofCompanies Act 2013 your Directors are seeking re-appointment of Dr. Lalit Kanodia Mr.Narendra Ambwani Mr. Mahesh Gupta and Mr. Manoj Maheshwari for five consecutive yearsfrom September 25 2019 to September 24 2024. Details of the said directors are mentionedin the Explanatory Statement under Section 102 of the Companies Act 2013 of the 12thAnnual General Meeting.

None of the Directors and Key Managerial Personnel (KMP) is related to any otherDirector of the Company.

Mr. Yugal Sikri Managing Director Mr. Mahesh Narayanaswamy Vice President - Financeand Mr. Rajesh Shirambekar Head - Legal and Company Secretary are Key ManagerialPersonnel of the Company within the meaning of Section 203 of the Companies Act 2013.

22. SUBSIDIARY COMPANIES

There were no Companies which have become or ceased to be our subsidiaries jointventures or associate companies during the year.

23. FIXED DEPOSITS

The Company has not accepted any fixed deposit from public during the year under reviewunder Chapter V of the Companies Act 2013. As on March 31 2019 no deposit was overdueor lying unclaimed with the Company on repayment of unclaimed deposits of Rs. 5.40 lakhsduring the year under review.

24. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALSIMPACTING THE GOING CONCERN STATUS

There are no significant and material orders passed by the Regulators or Courts orTribunals impacting the going concern status and company's operations in future.

25. CHANGE IN THE NATURE OF BUSINESS

During the year under review there was no change in the nature of business.

26. INTERNAL FINANCIAL CONTROL

Details in respect of adequacy of internal financial controls with reference to theFinancial Statements are stated in Management Discussion and Analysis which forms part ofthis annual report.

27. INFORMATION PURSUANT TO SECTION 197 (12) OF THE COMPANIES ACT 2013 AND RULE 5 OFTHE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL REMUNERATION) RULES 2014

1 The ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year; Mr. H. V. Goenka (Chairman) 1.49
Mr. C. L. Jain 2.05
Dr. Lalit S. Kanodia 1.53
Mr. Mahesh Gupta 1.75
Mr. Manoj Maheshwari 1.49
Mr. Narendra Ambwani 1.65
Ms. Zahabiya Khorakiwala 1.02
Mr. Sachin Nandgaonkar 2.02
Mr. Yugal Sikri (Managing Director) 28.25
Mr. CT. Renganathan (Wholetime Director) 83.26
2 The percentage increase in remuneration of each director Chief Financial Officer Chief Executive Officer Company Secretary or Manager if any in the financial year; Mr. H. V. Goenka (Chairman) Nil
Mr. C. L. Jain Nil
Dr. Lalit S. Konadia Nil
Mr. Mahesh Gupta Nil
Mr. Manoj Maheshwari Nil
Mr. Narendra Ambwani Nil
Ms. Zahabiya Khorakiwala Nil
Mr. Sachin Nandgaonkar Nil
Mr. Yugal Sikri* -
Mr. CT. Ranganathan 8%
Mr. Mahesh Narayanaswamy 8%
Mr. Rajesh Shirambekar 9.5%
3 The percentage increase in the median remuneration of employees in the financial year; 12%**
4 The number of permanent employees on the rolls of Company; 1160 employees as on March 31 2019
5 Average percentile increase already made in the salaries of employees other than the • Average Salary increase of non-managerial employees is around 12%.
managerial personnel in the last financial year and its comparison with the percentile • Average Salary increase of managerial employees is around 11%.
increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration; • There are no exceptional circumstances in increase of managerial remuneration.
6 Affirmation that the remuneration is as per the remuneration policy of the Company. Remuneration Paid during the year ended March 31 2019 is as per the Remuneration Policy of the Company.

Notes:

"Increase in remuneration is not comparable between previous and current financialyear as the concerned Director was appointed as Managing Director during the year.

**The percentage increase in the median remuneration of employee has been calculatedafter excluding Managing Director's remuneration.

28. WHISTLE BLOWER POLICY

The Audit Committee's terms of reference inter-alia include vigil mechanism which alsoincorporates a Whistle Blower Policy in terms of Section 177(10) of the Companies Act2013 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. The Company has adopted Whistle Blower Policy. The Whistle Blowermechanism provides for Directors and employees to report concerns about unethicalbehavior actual or suspected fraud or violation of Company's Code of Governance andEthics. The Whistle Blower Policy is uploaded on the Company's websitewww.rpglifesciences.com.

29. FAMILIARISATION PROGRAMMES FOR INDEPENDENT DIRECTORS

The Company conducts familiarisation programme for Independent Directors and thedetails are uploaded on the website of the Company on the below mentioned link:http: / /www.rpglifesciences.com/ PolicyonFamiliarisationanddetailprogram.pdf

30. FORMAL ANNUAL EVALUATION OF BOARD AND ITS COMMITTEES

Pursuant to provisions ofSection 134 of the Companies Act 2013 and the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Nomination andRemuneration Committee laid down a criteria for evaluating Board effectiveness byassessing performance of the Board as a whole performance of individual Director andCommittees of the Board namely Audit Committee Nomination and Remuneration CommitteeStakeholders Relationship Committee Corporate Social Responsibility Committee and RiskManagement Committee. The Board approved the criteria laid down by Nomination andRemuneration Committee for evaluating Board effectiveness and engaged a third party agencyto conduct Board effectiveness survey during the year under review.

31. AUDITORS

Statutory Auditors:

The members of the Company at its Annual General Meeting held on July 24 2017appointed M/s. BSR & Co. LLP Chartered Accountants (Firm RegistrationNo.101248W/W-100022) as Statutory Auditors of the Company for a period of 5 (five)consecutive years from the conclusion of the tenth AGM till the conclusion of thefifteenth AGM. The auditors confirmed that their appointment shall be in compliance withSection 139 and 141 of the Companies Act 2013.

Internal Auditors:

M/s. Deloitte Touche Tohmatsu India LLP are the Internal Auditors of the Company.

Secretarial Auditors:

M/ s. Parikh Parekh & Associates Practicing Company Secretaries are theSecretarial Auditors of the Company. The Secretarial Audit Report required pursuant tosub-section (3) of Section 134 and Section 204 (1) of the Companies Act 2013 is given inAnnexure E to this report.

Cost Auditors:

The Company maintains cost records as specified by the Central Government undersub-section (1) of Section 148 of the Companies Act 2013.

Pursuant to the provisions of Section 148(3) of the Companies Act 2013 M/ s. KiritMehta & Co. (Registration No. 000353) Cost Accountants was appointed to conductaudit of cost records of Pharmaceutical Activities for the year ended March 31 2019. CostAudit reports would be submitted to the Central Government within the prescribed time.Pursuant to Rule 6 of the Companies (Cost Records and Audit) Rules 2014 cost auditreports for Pharmaceutical Activities for the year ended March 31 2018 was filed with theCentral Government on September 5 2018.

32. EMPLOYEES STOCK OPTION PLAN

The Company has no employee stock option scheme.

33. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The particulars of employees in compliance with the provisions of Section 134 (3) (q)read with Rule 5 (2) and 5 (3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 will be provided to the shareholder upon request. Thesame shall be available for inspection by the shareholder of the Company at the RegisteredOffice of the Company during business hours on working days of the Company till the dateof Annual General Meeting of the Company.

34. MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE GOVERNANCE REPORT

In compliance with Regulation 34(3) read with Schedule V of SEBI (Listing Obligations& Disclosure Requirements) Regulations 2015 Management Discussion and Analysis andCorporate Governance Report as approved by the Board of Directors together with acertificate from a Practicing Company Secretary confirming the compliance with therequirements of Corporate Governance policies are set out in the Annexures forming part ofthis annual report.

35. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT THE WORK PLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013

The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Women at the Workplace (Prevention Prohibition and Redressal)Act 2013.

Internal Complaints Committee has been set up to redress complaints.

During the financial year 2018-19 the Company has not received any complaints ofsexual harassment.

36. MATERIAL TRANSACTIONS WITH RELATED PARTIES

The Company has not entered in to any transaction with related parties during the yearunder review which requires reporting in Form AOC-2 in terms of Companies Act 2013 readwith Companies (Accounts) Rules 2014.

37. SAFETY

The Company conducts regularly Safety audit and Environment audit through competentauthorities for its manufacturing facilities located at Navi Mumbai and Ankleshwar. TheCompany also organised various safety awareness programmes to impart safety training toits employees.

38. AWARDS

The Company has received an award for leveraging technology for sales force excellencein ''DigiPharmaX Awards 2018''.

The Company also received ''National Safety Award 2017'' for zero accident frequencyrate by National Safety Council - Maharashtra Chapter.

39. APPRECIATION

Your Directors record their appreciation of the valuable services rendered by allemployees of the Company their gratitude to the banks for their assistance and to theCompany's shareholders customers and suppliers for their continued support.

For and on behalf of the Board of Directors
Place : Mumbai H.V. Goenka
Date : April 29 2019 Chairman