TO THE MEMBERS OF THE COMPANY
Your Directors have pleasure in presenting the Audited Accounts of your Company for thefinancial year ended 31st December 2020.
|FINANCIAL RESULTS || |
Rs. in million
| ||2020 ||2019 |
|Revenue from operations ||29019 ||30706 |
|Other income ||898 ||941 |
|Total income ||29917 ||31647 |
|Profit before exceptional items and tax ||7189 ||6592 |
|Profit before tax ||6772 ||5999 |
|Tax expense ||1996 ||1857 |
|Profit for the year ||4776 ||4142 |
|Other comprehensive income (Net of tax) ||(88) ||(165) |
|Total comprehensive income for the year ||4688 ||3977 |
The financial results for the year ended 31st December 2020 are not comparable withthat of year ended 31st December 2019 due to completion of the slump sale transaction on29th May 2020 which resulted in transfer of Ankleshwar manufacturing facility and fewproducts to Zentiva Private Limited. Details on the slump sale transaction and impact ofpandemic has been discussed in Management Discussion and Analysis Report. Salesperformance for the year ended 31st December 2020 was negatively impacted due to COVID-19pandemic. The impact assessment of COVID-19 pandemic is a continuing process given theuncertainties associated with its nature and duration.
Your Company does not propose to transfer any amount in the general reserves of theCompany.
Your Directors recommend payment of final dividend of Rs. 125 per equity share of Rs.10for the year ended 31st December 2020 and one-time special dividend of Rs. 240 per equityshare of Rs.10 each for the year ended 31st December 2020 after considering the closureof the slump sale transaction relating to Ankleshwar manufacturing facility and reviewingthe cash requirements for the Company's operations. The dividend will be paid afterapproval of members at the ensuing Annual General Meeting (AGM) of the Company. Thedividend if approved by the members at the AGM scheduled on 27th April 2021 will resultin cash outflow of Rs. 8406.2 million.
The dividend payment is in accordance with the Dividend Distribution Policy of theCompany which is available on the Company's website - www.sanofiindialtd.com.
MANAGEMENT DISCUSSION AND ANALYSIS
As required by Regulation 34(2) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (Listing Regulations) a Management Discussion andAnalysis Report is part of this Report.
The state of the affairs of the business along with the financial and operationaldevelopments has been discussed in detail in the Management Discussion and AnalysisReport.
DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)
Dr. Shailesh Ayyangar vide his letter dated 25th February 2020 informed the Board ofDirectors of the Company (the Board) that due to his retirement as an employee of Sanofigroup he would like step down as Director of the Company with effect from end of the dayon 25th February 2020. The Board noted and accepted this resignation on 25th February2020.
Mr. Thomas Rouckout informed the Board vide his letter dated 25th February 2020 that hehas taken up a new role within Sanofi Group and would not be able to spend time on Sanofibusiness in India and therefore he would like to step down as Director of the Companywith effect from the noting of his resignation by the Board. The Board noted and acceptedthis resignation on 25th February 2020.
Mr. Rangaswamy R. Iyer was appointed as an Independent Director of the Company to holdoffice for a term of five years from 31st March 2015 to 30th March 2020. On completion ofthis term Mr. Rangaswamy R. Iyer ceased to be an Independent Director of the Company atthe end of the day on 30th March 2020.
The Board at its meeting held on 28th July 2020 approved appointment of Mr. RahulBhatnagar as Additional (Independent) Director of the Company with effect from 29th July2020 to hold office till the conclusion of the next Annual General Meeting and subject tothe approval of the members in the ensuing AGM for appointment as an Independent Directorfor a term of five consecutive years from the effective date of this appointment.
The Board at its meeting held on 28th July 2020 also approved appointment of Mr.Marc-Antoine Lucchini as Additional (Non-Executive) Director with effect from 29th July2020 to hold office up to the date of next AGM of the Company.
The necessary Resolutions for appointment of Mr. Rahul Bhatnagar and Mr. Marc-AntoineLucchini as Directors of the Company have been included in the Notice of the forthcomingAGM for the approval of the members.
Mr. Charles Billard informed the Company vide his letter dated 16th September 2020 thathe will relocate outside of India to take up a new role within Sanofi group and would liketo step down as Chief Financial Officer and Whole Time Director of the Company with effectfrom the end of the day on 30th September 2020. The Board approved resignation of Mr.Charles Billard as the Chief Financial Officer and Whole Time Director on 16th September2020. Mr. Charles Billard however continues to be engaged with the Company as aNon-Executive Director.
The Board at its meeting held on 5th October 2020 approved appointment of Mr. VaibhavKarandikar as Chief Financial Officer and KMP with effect from 6th October 2020.
The members had approved appointment of Mr. Aditya Narayan and Ms. Usha Thorat asIndependent Directors of the Company at the AGM held on 29th April 2016 for a term of fiveconsecutive years from 30th April 2016. The term of Mr. Aditya Narayan and Ms. Usha Thoratas Independent Directors of the Company will conclude on 29th April 2021. The Board at itsmeeting held on 23rd February 2021 based on the recommendation of the Nomination andRemuneration Committee and subject to the approval of the members through SpecialResolution re-appointed Mr. Aditya Narayan and Ms. Usha Thorat as Independent Directorsfor a second term of five consecutive years commencing from 30th April 2021. The necessaryResolutions for re-appointment of Mr. Aditya Narayan and Ms. Usha Thorat as IndependentDirectors of the Company have been included in the Notice of the forthcoming AGM for theapproval of the members.
The Board also approved re-appointment of Mr. Aditya Narayan as Chairman of the Boardfor a second term of five consecutive years commencing from 30th April 2021. Thisappointment is subject to his re-appointment as an Independent Director by the members atthe forthcoming AGM of the Company.
The Board at its meeting held on 23rd February 2021 subject to approval of membersapproved appointment of Mr. Vaibhav Karandikar as an Additional Director and Whole TimeDirector of the Company. The necessary Resolutions for appointment of Mr. VaibhavKarandikar as Director and Whole Time Director of the Company have been included in theNotice of the forthcoming AGM for the approval of the members.
As on 31st December 2020 Mr. Rajaram Narayanan Managing Director; Mr. VaibhavKarandikar Chief Financial Officer; Mr. Cherian Mathew Whole Time Director and Mr.Girish Tekchandani Company Secretary were designated as KMP of the Company.
The Company has received declarations from all Independent Directors that they meet thecriteria of independence as laid down under Section 149(6) of the Companies Act 2013 (theAct) and the Listing Regulations. In the opinion of the Board the Independent Directorsfulfill the conditions specified in these regulations and are independent of themanagement.
Mr. Charles Billard retires by rotation at the forthcoming AGM and is eligible forre-appointment.
The Board places on record its deep appreciation for exceptional contribution made byDr. Shailesh Ayyangar Mr. Thomas Rouckout and Mr. Rangaswamy R. Iyer during their tenureas Directors of the Company.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information on conservation of energy technology absorption and foreign exchangeearnings and outgo pursuant to Section 134(3)(m) of the Act read with Rule 8(3) of theCompanies (Accounts) Rules 2014 is given in Annexure - A to this Report.
CASH FLOW AND CONSOLIDATED FINANCIAL STATEMENTS
As required under Regulation 34 of the Listing Regulations a Cash Flow Statement ispart of the Annual Report.
The Company does not have any subsidiaries and hence not required to publishConsolidated Financial Statements.
As required under Regulation 34 of the Listing Regulations a Report on CorporateGovernance along with a Certificate of Compliance
from the Statutory Auditors is part of this Report.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report for the year ended 31st December 2020 as stipulatedunder Regulation 34 of the Listing
Regulations is given in Annexure B to this Report.
MEETINGS OF THE BOARD
Five meetings of the Board were held during the year. Dates of the meetings are givenin the Report on Corporate Governance.
Details pertaining to composition of the Audit Committee are included in the Report onCorporate Governance. All the recommendations made by the Audit Committee were accepted bythe Board.
FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS
The Directors are regularly informed during meetings of the Board and Committees on thebusiness strategy business activities manufacturing operations and issues faced by thepharmaceutical industry. The Independent Director appointed during the year was given adetailed orientation on the Company pharmaceuticals industry regulatory mattersbusiness financial matters human resource matters and corporate social responsibility.
The details of familiarization programs provided to the Directors of the Company areavailable on the Company's website -
SUBSIDIARIES ASSOCIATE COMPANIES AND JOINT VENTURES
Your Company does not have any subsidiaries joint ventures or associate companies.
CORPORATE SOCIAL RESPONSIBILITY
The Board has constituted a Corporate Social Responsibility (CSR) Committee to monitorimplementation of CSR activities of your
The details of the composition of the CSR Committee CSR policy CSR initiatives andactivities undertaken during the year are given in
the Annual Report on CSR activities in Annexure C to this Report.
RELATED PARTY TRANSACTIONS
All related party transactions which were entered into during the year under reviewwere on arm's length basis and in the ordinary course of business. There were nomaterially significant related party transactions made by the Company with the PromotersDirectors and KMP which may have a potential conflict with the interests of the Company atlarge.
The Company has formulated a policy on materiality of related party transactions andalso on dealing with related party transactions. The policy is available on the Company'swebsite - www.sanofiindialtd.com. Pursuant to Clause (h) of sub-section (3) of Section 134of the Act and Rule 8(2) of the Companies (Accounts) Rules 2014 the particulars ofcontracts/arrangements entered into by the Company with related parties referred to in subsection (1) of Section 188 of the Act including certain arm's length transactions underthird proviso thereto are required to be disclosed in Form AOC 2.
The Form AOC 2 envisages disclosure of material contracts or arrangements ortransactions at arm's length basis. The details of the material related party transactionsin financial year ended 31st December 2020 as per the Policy on dealing with relatedparties adopted by the Company are disclosed in Annexure D to this Report.
Your Company has entered into material related party transactions with sanofi-aventisSingapore Pte. Ltd for the purchase and sale of products and services and with SanofiHealthcare India Private Limited (formerly known as Shantha Biotechnics Private Limited)to provide a loan. These transactions were in the ordinary course of business and at arm'slength duly certified by the third-party experts. The transactions were within the limitsapproved by the members.
In view of the prevailing interest rate scenario and overall reduction in bank ratesthe Board at its meeting held on 25th February 2020 approved reduction in interest ratepayable by Sanofi Healthcare India Private Limited from 9.5% to 7.5% with effect from 15thApril 2020. The Board at its meeting held on 27th October 2020 also approved extension oftenure of loan to Sanofi Healthcare India Private Limited till 15th April 2022 with allother terms remaining same including the continuation of the corporate guarantee by Sanofigroup.
DEPOSITS FROM PUBLIC
Your Company has not accepted any deposits from the public and as such no amount ofprincipal or interest on deposits from the public was outstanding as on the date of theBalance Sheet.
LOANS GUARANTEES OR INVESTMENTS
The particulars of the loan to Sanofi Healthcare India Private Limited (formerly knownas Shantha Biotechnics Private Limited) are disclosed in Form AOC-2 which forms part ofthis Report.
Details of the loans made by your Company are also given in the notes to the financialstatements.
Your Company has implemented a mechanism for risk management and formulated a RiskManagement Policy. The policy provides for creation of a risk register identification ofrisks and formulating mitigation plans. Your Company has also constituted a RiskManagement Committee details of which are disclosed in the Corporate Governance Report.As per the governance process described in the Policy the Risk Management Committeereviews the risk identification risk assessment and minimization procedures on quarterlybasis and updates the Audit Committee and the Board on regular basis.
The key risks impacting the Company are discussed in the Management Discussion andAnalysis section of the Annual Report.
DIRECTORS' RESPONSIBILITY STATEMENT
As required by Section 134(3) of the Act your Directors to the best of theirknowledge and belief confirm that:
1. in the preparation of the annexed accounts for the financial year ended 31stDecember 2020 all the applicable accounting standards have been followed along with properexplanation relating to material departures;
2. your Directors have 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 and ofthe profit of the Company for that year;
3. your Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
4. the said accounts have been prepared on a going concern basis;
5. internal financial controls to be followed by the Company have been laid down andthat internal controls are adequate and were operating effectively; and
6. proper systems to ensure compliance with the provisions of all applicable laws havebeen devised and that such systems are adequate and operating effectively.
Pursuant to Section 148 of the Act read with the Companies (Cost Records and Audit)Rules 2014 the Company is required to maintain cost records . The accounts and recordsare made and maintained by the Company and are required to be audited. Your Directorshave on the recommendation of the Audit Committee appointed M/s. Kirit Mehta & Co.Cost Accountants to audit the cost accounts maintained by the Company for the financialyear ending 31st December 2021.
As required by the Act the remuneration payable to the Cost Auditor is required to beplaced before the members in General Meeting for their ratification. Accordingly aResolution seeking ratification of the remuneration payable to M/s. Kirit Mehta & Co.as approved by the Board is included in the Notice convening the AGM of the Company.
M/s. Price Waterhouse & Co. Chartered Accountants LLP (Firm Registration Number304026E/E300009) were appointed as Statutory Auditors of your Company to hold office fromthe conclusion of the Sixty-first AGM held in the year 2017 until the conclusion of theSixty-sixth AGM to be held in the year 2022.
The Statutory Auditors have issued an unqualified audit report on the annual accountsof the Company for the year ended 31st December 2020.
REPORTING OF FRAUD BY AUDITORS
During the year under review the Statutory Auditors Cost Auditors and SecretarialAuditors have not reported any instances of frauds committed in the Company by itsOfficers or Employees to the Audit Committee under section 143(12) of the Act details ofwhich needs to be mentioned in this Report.
Disclosures with respect to the remuneration of Directors KMPs and employees asrequired under Section 197(12) of the Act read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are given in Annexure Eto this Report.
Details of employee remuneration as required under provisions of section 197(12) of theAct read with Rule 5(2) and 5(3) of Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 form part of this Report. However the reports and accounts arebeing sent to the members excluding the aforesaid remuneration. Any member interested ininspection of the documents pertaining to the above information or desiring a copy thereofmay write to the Company Secretary.
PREVENTION OF SEXUAL HARASSMENT POLICY
The Company has in place a Prevention of Sexual Harassment Policy in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. An Internal Committee has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent contractual temporary trainees)are covered under this policy.
During the year 2020 the Company received two complaints of alleged sexual harassmentwhich was thoroughly investigated by the Internal Committee. In such matters on therecommendations of Internal Committee appropriate disciplinary and corrective actions aretaken by the Company.
As on 31st December 2020 no complaints related to sexual harassment are pending fordisposal.
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 your Directors had appointed M/s.Makarand M. Joshi & Co. a firm of Company Secretaries in Practice to undertake theSecretarial Audit of your Company for the year ended 31st December 2020.
The Secretarial Auditors have issued an unqualified audit report for the year ended31st December 2020.
Their report is annexed herewith as Annexure F to this Report.
The Annual Secretarial Compliance Report has been submitted to the stock exchangeswithin 60 days of the end of the financial year.
The Company has complied with Secretarial Standards on Meetings of the Board ofDirectors (SS-1) and General Meetings (SS-2) issued by the Institute of CompanySecretaries of India.
As required under Section 92(3) of the Act Annual Return is hosted on the website ofthe Company - www.sanofiindialtd.com.
MATERIAL CHANGES AND COMMITMENTS AFTER THE FINANCIAL YEAR
No material changes and commitments have occurred after the closure of the financialyear ended 31st December 2020 till the date of this Report which would affect thefinancial position of your Company.
There has been no change in the nature of business of your Company.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS/TRIBUNALS
No significant or material orders were passed by the Regulators or Courts or Tribunalswhich impacts the going concern status and Company's operations in future.
Your Directors place on record their deep appreciation to employees at all levels fortheir hard work dedication and commitment. In the period of extreme uncertainty due tothe public-health and economic disruption created by the COVID-19 the employees andassociates of your Company have extended splendid support and made significantcontribution to ensure uninterrupted supply of medicines to needy patients.
The Board also places on record its appreciation for the support and co-operation thatyour Company has been receiving from the medical fraternity suppliers distributorsretailers business partners government departments both at central & state level andall other stakeholders.
| ||By Authority of the Board |
| ||ADITYA NARAYAN |
| ||CHAIRMAN |
|23rd February 2021 ||DIN: 00012084 |