TO THE MEMBERS OF THE COMPANY
Your Directors have pleasure in presenting the Audited Accounts of your Company for thefinancial year ended 31st December 2018.
|FINANCIAL RESULTS || |
Rs. in million
| ||2018 ||2017 |
|Revenue from operations ||27708 ||24914 |
|Other income ||897 ||807 |
|Total income ||28605 ||25721 |
|Profit before tax ||6098 ||5146 |
|Tax expense ||2292 ||1886 |
|Profit for the year ||3806 ||3260 |
|Other comprehensive income (Net of tax) ||13 ||(13) |
|Total comprehensive income for the year ||3819 ||3247 |
Your Company does not propose to transfer any amount in the general reserves of theCompany.
An interim dividend of Rs.18 per equity share of Rs.10 was declared by the Board ofDirectors on 25th July 2018 and paid on 14th August 2018. Your Directors recommend paymentof a final dividend of Rs. 66 per equity share of Rs.10. The total dividend for thefinancial year 2018 is Rs.84 per equity share of Rs.10.
The interim dividend and proposed final dividend if approved by the members at theAnnual General Meeting (AGM) scheduled on 7th May 2019 will result in cash outflow ofRs.1935 million (excluding Dividend Distribution Tax) for the year 2018.
These dividends are in accordance with the Dividend Distribution Policy of the Companywhich is available on the Company's website www.sanofiindialtd.com.
As part of streamlining business processes for better efficiency the Board intends tochange the past practice of declaring small interim dividend at the half year and it wouldrecommend final dividend only from the year 2019. This change is not intended atdecreasing the payout ratio of dividend and the total dividend amount will continue to bedecided by the Board as per the Dividend Distribution Policy.
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)
Mr. A. K. R. Nedungadi vide his letter dated 15th January 2018 informed the Companythat he would like to resign as Independent Director with effect from 15th January 2018in view of his involvement in various other matters requiring his immediate attention. TheBoard noted this resignation on 15th January 2018.
Mr. Lionel Guerin resigned as the Whole Time Director and Chief Financial Officer ofthe Company with effect from end of the day on 30th June 2018 to take up a new role withinSanofi group. He continued to be on the Board of the Company as Non-Executive Director andthereafter resigned as Non-Executive Director with effect from the end of the day on 25thJuly 2018.
The Board of Directors at its meeting held on 8th May 2018 appointed Mr. CharlesBillard as Chief Financial Officer of the Company with effect from 1st July 2018. TheBoard of Directors at its meeting held on 25th July 2018 subject to approval of membersand Central Government approved appointment of Mr. Charles Billard as Additional Directorand Whole Time Director of the Company. The appointment as Whole Time Director was as perthe provisions of Section 196 of the Companies Act 2013 (the Act) except for clause (e)of Part I of Schedule V as Mr. Charles Billard was not resident in India for a continuousperiod of twelve months immediately preceding the date of his appointment as Whole TimeDirector. In terms of the provisions of Section 196 of the Act the Company made anapplication to the Central Government for this appointment on 21st November 2018. TheCentral Government vide its letter dated 4th February 2019 informed the Company that theapplication has been taken on record and would be considered after receipt of the copy ofthe shareholders' approval.
The necessary resolutions for appointment of Mr. Charles Billard as Director and WholeTime Director of the Company have been included in the Notice of the forthcoming AGM forthe approval of the members.
As on 31st December 2018 Mr. Rajaram Narayanan Managing Director; Mr. CharlesBillard Whole Time Director and Chief Financial Officer; Mr. Ashwani Sood Whole TimeDirector and Mr. Girish Tekchandani Company Secretary were designated as Key ManagerialPersonnel (KMP).
The Company has received declarations from all Independent Directors that they meet thecriteria of independence as laid down under Section 149(6) of the Act and the ListingRegulations. In the opinion of the Board the Independent Directors fulfill the conditionsspecified in these regulations and are independent of the management.
Dr. Shailesh Ayyangar and Mr. Cyril Grandchamp-Desraux retire by rotation at theforthcoming Annual General Meeting and are eligible for re-appointment.
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 by Regulation 34 of the Listing Regulations a Report on CorporateGovernance along with a Certificate of Compliance from the Auditors is part of thisReport.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report for the year ended 31st December 2018 as stipulatedunder Regulation 34 of the Listing Regulations is given in Annexure - B to thisReport.
MEETINGS OF THE BOARD OF DIRECTORS
Four meetings of the Board of Directors were held during the year. Dates of themeetings are given in 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 theactivities of the Company its operations and issues faced by the pharmaceutical industry.During the year the Company organized a visit for the Directors to the manufacturingfacility of the Company situated at Ankleshwar Gujarat for familiarization with itsoperations.
The details of familiarization programs provided to the Directors of the Company areavailable on the Company's website www.sanofiindialtd.com.
SUBSIDIARIES ASSOCIATE COMPANIES AND JOINT VENTURES
Your Company does not have any subsidiaries joint ventures or associate companies.
CORPORATE SOCIAL RESPONSIBILITY
The Board of Directors has constituted a Corporate Social Responsibility (CSR)Committee to monitor implementation of CSR activities of your Company.
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 Key Managerial Personnel which may have a potential conflict with theinterests of the Company at large.
Your Company had entered into material related party transactions with sanofi-aventisSingapore Pte. Ltd for the purchase and sale of products and services and with ShanthaBiotechnics Private Limited to provide a loan. These transactions were in the ordinarycourse of business and at arm's length duly certified by the third party experts. Thetransactions were within the limits approved by the members.
The Board of Directors at its meeting held on 31st October 2018 approved extension oftenure of loan to Shantha Biotechnics Private Limited i.e. till 15th April 2020 with allother terms remaining same including the continuation of the corporate guarantee.
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 insub section (1) of Section 188 of the Act including certain arm's length transactionsunder third 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 2018 as per the Policy on dealing with RelatedParties adopted of the Company are disclosed in Annexure - D to this Report.
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 Shantha Biotechnics Private Limited are disclosed inForm AOC-2 which forms part of this Report. Details of the loans and investments made byyour Company are also given in the notes to the financial statements.
The Board of Directors at its meeting held on 31st October 2018 constituted a RiskManagement Committee. Your Company has implemented a mechanism for risk management andformulated a Risk Management Policy. The policy provides for creation of a risk registeridentification of risks and formulating mitigation plans. The Audit Committee and theBoard of Directors review the risk assessment and minimization procedures on regularbasis.
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 2018 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 cost records maintained by the Company in respect of bulk drugs andformulations are required to be audited. Your Directors have on the recommendation of theAudit Committee appointed M/s. Kirit Mehta & Co. Cost Accountants to audit the costaccounts maintained by the Company for bulk drugs and formulations for the financial yearending 31st December 2019.
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 approval of the remuneration payable to M/s. Kirit Mehta & Co. asfixed by the Board is included in the Notice convening the AGM of the Company.
M/s. Price Waterhouse & Co. Chartered Accountants LLP (PW) (Firm RegistrationNumber 304026E / E300009) were appointed as Statutory Auditors of your Company to holdoffice from the conclusion of the Sixty-first AGM held in the year 2017 until theconclusion of the Sixty-sixth AGM to be held in the year 2022. However this will besubject to PW remaining eligible to conduct statutory audits of the listed companies inIndia in view of the ongoing litigation regarding the two year ban imposed on PW by theauthorities.
The Statutory Auditors have issued an unqualified audit report on the annual accountsof the Company for the year ended 31st December 2018.
REPORTING OF FRAUD BY AUDITORS
During the year under review the Statutory Auditors Cost Auditors and SecretarialAuditor have not reported any instances of frauds committed in the Company by its Officersor Employees to the Audit Committee under section 143(12) of the Act details of whichneeds 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- E to 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 shareholders excluding the aforesaid remuneration. Any shareholderinterested in inspection of the documents pertaining to the above information or desiringa copy thereof may 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 2018 the Company received three complaints of alleged sexualharassment. These complaints were investigated by the Internal Committee and on itsrecommendations appropriate disciplinary and corrective actions were taken by theCompany.
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. S. N.Ananthasubramanian & Co. a firm of Company Secretaries in Practice to undertake theSecretarial Audit of your Company.
The Secretarial Auditors have issued an unqualified audit report for the year ended31st December 2018.
Their report is annexed herewith as Annexure - F to this Report.
EXTRACT OF ANNUAL RETURN
As required by Section 92(3) of the Act read with Rule 12(1) of the Companies(Management and Administration) Rules 2014 extract of the Annual Return in Form MGT-9 isannexed herewith as Annexure - G to this Report.
MATERIAL CHANGES AND COMMITMENTS AFTER THE FINANCIAL YEAR
No material changes and commitments have occurred after the closure of the financialyear ended 31st December 2018 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.
Your Directors place on record their deep appreciation to employees at all levels fortheir hard work dedication and commitment.
The Board also places on record its appreciation for the support and co-operation yourCompany 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 |
| ||DIN:00012084 |
|26th February 2019 || |