Your Directors take pleasure in presenting the Twelfth Annual Report and AuditedAccounts for the financial year ended 31st March 2017.
|Particulars ||Year ended 31st March 2017 ||Year ended 31st March 2016 |
|Total Income ||19465.05 ||16421.91 |
|Profit/(Loss) before Interest Depreciation & Tax ||(11020.78) ||(6025.65) |
|Interest ||181.98 ||215.69 |
|Depreciation ||823.97 ||757.86 |
|Profit/(Loss) before Tax ||(12026.73) ||(6999.20) |
|Tax Expense ||0.00 ||0.00 |
|Profit/(Loss) after Tax ||(12026.73) ||(6999.20) |
|Balance brought forward from Previous Year ||(22297.93) ||(15298.73) |
|Balance carried to Balance Sheet ||(34324.66) ||(22297.93) |
In view of loss incurred during the year your Directors do not recommend any dividendfor the year under review.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return as provided under sub-section (3) of section 92 of theCompanies Act 2013 in prescribed form MGT-9 is enclosed as "Annexure 1" to thisreport.
SUBSIDIARY/ JOINT VENTURE/ ASSOCIATE COMPANY
The Company does not have any subsidiary joint venture or associate company.Consequent to restructuring of promoter group holding the Company has become a subsidiaryof Shanghvi Finance Pvt. Ltd. with effect from 30th March 20l7.
SHARE CAPITAL & RIGHTS ISSUE
During the year your Company had issued 10204081 fully paid-up equity shares offace value of ' 1 each ("Rights Issue Equity Shares") for cash at a priceof ' 245 per equity share including a share premium of ' 244 per equityshare aggregating up to ' 25000 Lakhs to the existing equity shareholders on arights basis in the ratio of 5 fully paid- up equity shares for every 116 fully paid-upequity shares held by the existing equity shareholders on the record date i.e. March 172016 ("The Issue").
The Issue was open for subscription from 28th March 2016 to 13th April 2016 (theIssue Closing Date was extended from April 112016 to April 13 2016). The Rights IssueCommittee in its meeting held on 27th April 2016 approved the allotment of 10204081Rights Issue Equity Shares to the successful applicants based on the basis ofallotment' approved by BSE
Limited the designated Stock Exchange for the issue. The shares were listed on BSELimited & National Stock Exchange of India Limited (NSE) and were admitted for dealingby both the exchanges with effect from 3rd May 2016.
The Board of Directors in its meeting held on 29th July 2016 and 28th October 2016annulled the forfeiture of 4351 shares and 191 shares respectively on receipt ofapplications along with the unpaid amount & interest for delayed payment from theconcerned shareholders.
Consequent to the aforesaid allotment & annulment of forfeited shares the paid-upshare capital of the Company has increased from ' 236687354 to '246895977 during the previous financial year.
The Board of Directors in their meeting held on 5th May 2017 approved theissue and allotment of up to 15151515 warrants each convertible into one fully paidequity share of the Company at a price of ' 330 each to certain Promoter andNon-promoter entities on Preferential basis subject to receipt of necessary approvalsincluding that of Shareholders.
TRANSFER OF SHARES TO UNCLAIMED SUSPENSE ACCOUNT
In compliance with the requirements of regulation 39 (4) of the Securities and ExchangeBoard of India Listing Obligation & Disclosure Requirements Regulations 2015 [SEBI(LODR) Regulations] the Company had transferred 1620 shares belonging to 14 shareholdersto "SPARC Unclaimed Suspense Account" after sending three reminders to theconcerned shareholders and following the procedures laid down under Schedule VI of theaforesaid Regulations.
As on 31st March 2017 1584 shares belonging to 13 shareholders were lying unclaimedin the aforesaid account.
In compliance with the requirements of the SEBI (LODR) Regulations all corporatebenefits declared by the Company in future in respect of the aforesaid shares shall betransferred to the aforesaid account until the rightful shareholders claim for theaforesaid shares. The voting rights on the aforesaid shares shall also remain frozen tillthe rightful owners claim the shares.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Dr. T Rajamannar (DIN: 01415412) retires by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for re-appointment.
Prof. Dr. Andrea Vasella (DIN: 01653058) Prof. Dr. Goverdhan Mehta (DIN: 00350615) andMr. S. Mohanchand Dadha (DIN: 00087414) Independent Directors of the Company hold officeupto the ensuing Annual General Meeting of the Company. The Board acknowledges and puts onrecord its appreciation for the valuable contributions made by the above members duringtheir tenure as Directors of the Company.
The Board of Directors of the Company in its meeting held on 5th May 2017 appointedDr. Ferzaan Engineer (DIN: 00025758) & Mr. Mark Simon (DIN: 07807378) as AdditionalDirectors of the Company under section 161 of the Companies Act 2013 to hold office up tothe ensuing Annual General Meeting of the Company. In view of the impressivequalifications & experience of the aforesaid Directors it is proposed to appoint Dr.Ferzaan Engineer & Mr. Mark Simon as Independent Directors of the Company for a termof 3 years to hold office up to the conclusion of the fifteenth Annual General Meeting ofthe Company.
Mr. Sudhir V. Valia resigned from his position as the Chief Financial Officer of theCompany at the end of working hours on 31st January 2017. In view of the above the Boardhas appointed Mr. Chetan Rajpara as the Chief Financial Officer of the Company with effectfrom 1st February 2017. Post his resignation as the Chief Financial Officer of theCompany Mr. Sudhir V. Valia continues to be associated with the Company in his positionof Non-Executive Director.
Appropriate resolutions for the appointment/re-appointment of Directors as detailedabove are being placed for your approval at the ensuing Annual General Meeting.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declaration from all the Independent Directors of the Companyconfirming that they meet with the criteria of independence as prescribed undersub-section (6) of Section 149 of the Companies Act 2013.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
For the purpose of selection of any Director the Nomination & RemunerationCommittee identifies persons of integrity who possess relevant expertise experience andleadership qualities required for the position and also takes into considerationrecommendation if any received from any member of the Board. The Committee also ensuresthat the incumbent fulfils such other criteria with regard to age and other qualificationsas laid down under the Companies Act 2013 or other applicable laws.
The Board on the recommendation of the Nomination & Remuneration Committee hasframed a policy for selection appointment and remuneration of Directors and SeniorManagement.
The summary of Remuneration Policy is disclosed in the Corporate Governance Reportwhich forms a part of this Report.
FAMILIARISATION PROGRAMME FOR THE INDEPENDENT DIRECTORS
In compliance with the requirements of the SEBI (LODR) Regulations the Company has putin place a Familiarisation Programme for the Independent Directors to familiarize themwith the Company their roles rights responsibilities in the Company nature of theindustry in which the Company operates business model etc. The detail of such programmeis available on the website of the company www.sparc. life and may be accessed through theweb link http://www. sunpharma.in/regulatory-compliance.htm.
NUMBER OF MEETINGS OF THE BOARD
The Board of Directors of the Company met four times during the previous financial yearon 6th May 2016 29th July 2016 28th October 2016 and 27th January 2017. Theparticulars of attendance of the Directors at the said meetings are detailed in theCorporate Governance Report which forms a part of this Report. The intervening gapsbetween the meetings were within the period prescribed under the Companies Act 2013 andSEBI (LoDR) Regulations.
EVALUATION OF PERFORMANCE OF THE BOARD ITS COMMITTEES AND INDIVIDUAL DIRECTORS
In view of Securities and Exchange Board of India's (SEBI') notification no.SEBI/HO/CFD/CMD/CIR/P/2017/004 dated 5th January 2016 on Guidance Note on BoardEvaluation' the Board of Directors on the recommendation of the Nomination &Remuneration Committee adopted revised set of criteria aligned with the recommendationsof SEBI for evaluation of the Board of Directors of the Company including the individualDirectors and the Committees of the Board.
The Board of Directors have also carried out an annual evaluation of its ownperformance its various committees and individual directors pursuant to the provisions ofthe Act and the Corporate Governance requirements as prescribed under regulation 17(10)25(4) and other applicable provisions of the SEBI (Listing Obligation and DisclosureRequirements) Regulations 2015.
The performance of the Board was evaluated by the Board after seeking inputs from allthe directors on the basis of various criteria such as Structure of the Board Meetings ofthe Board Functions of the Board Board and Management Professional Development etc.
The performance of the committees was evaluated by the board after seeking inputs fromthe committee members on the basis of criteria such as Mandate and compositionEffectiveness of the Committee Structure of the Committee and meetings Independence ofthe Committee from the Board Contribution to decisions of the Board etc.
The Board and the Nomination and Remuneration Committee reviewed the performance of theindividual Non-Independent Directors on the basis of criteria such as qualificationsexperience knowledge & competency fulfilment of functions ability to function as ateam initiative availability and attendance commitment (as a Director) contribution& integrity.
The individual Independent Directors were reviewed based on the additional criteria ofIndependence and Independent Views & Judgment. Similarly the performance of theChairman was evaluated based on the following additional criteria such as effectiveness ofleadership and ability to steer the meetings impartiality commitment (as Chairperson)and ability to keep shareholders' interests in mind.
In a separate meeting of Independent Directors performance of non-independentdirectors performance of the various Committees of the Board and the Board as a whole andperformance of the Chairman was evaluated taking into account the views of the executivedirectors and nonexecutive directors. The same was discussed in the board meeting thatfollowed the meeting of independent directors at which the performance of the Board itscommittees and individual Directors was also discussed.
As on 31st March 2017 your Company had a dedicated team of over 398 people of whicharound 330 are highly qualified and experienced scientists. In the last year weconsiderably strengthened our team by attracting top quality scientific talent withextensive experience in drug research internationally.
In addition to increasing our participation at international conferences for continuousknowledge up-gradation we have also put in place effective training and careerprogression plans for our employees.
Your Directors recognize the team's valuable contribution and place on record theirappreciation for Team SPARC.
Information as per Section 197 (12) of the Companies Act 2013 read with rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed(''Annexure 2") to this report. Further pursuant to section 136 (1) of the CompaniesAct 2013 the Report and the accounts are being sent to the members excluding theinformation under rule 5(2) & 5(3) aforesaid. In terms of section 136 of the Act thesaid annexure is available for inspection at the Registered Office of the Company. Anyshareholder interested in obtaining a copy of the same may write to the Company Secretary.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
Your Company strongly believes in providing a safe and harassment-free workplace foreach and every individual working for the Company through various interventions andpractices. It is the continuous endeavour of the Management of the Company to create andprovide an environment to all its employees that is free from discrimination andharassment including sexual harassment.
During the year ended 31st March 2017 no complaint pertaining to sexual harassmentwas received by the Company.
AUDITORS Statutory Auditors
The Company's Auditors Deloitte Haskins & Sells LLP Chartered Accountants Mumbai(Regn. No. 117366W/W- 100018) were appointed as the Statutory Auditors of the Company fora period of three years up to the conclusion of the twelfth Annual General Meeting of theCompany subject to ratification by members at every Annual General Meeting of theCompany. In terms of section 139 of the Companies Act 2013 Deloitte Haskins & SellsLLP Chartered Accountants retire as the Auditors of the Company at the conclusion of theensuing Annual General Meeting.
The Audit Committee and the Board of Directors of the Company in its meeting held on5th May 2017 recommended the appointment of SRBC & Co. LLP Chartered Accountants(Regn. No. 324982E) as the new Statutory Auditors of the Company for a term of five yearsto hold office up to the conclusion of the seventeenth Annual General Meeting of theCompany.
The Board of Directors places on record its appreciation for the valuable contributionof Deloitte Haskins & Sells LLP during their association as the Statutory Auditors ofthe Company.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed C. J. Goswami & Associates Company Secretaries to undertake theSecretarial Audit of the Company.
The Secretarial Audit Report is annexed herewith as "Annexure 3".
The Financial Audit Report and the Secretarial Audit Report for the financial year2016-17 do not contain any qualification reservation or adverse remark by the Auditors.
LOANS GUARANTEES & INVESTMENTS
The particulars of loans guarantees and investments have been disclosed in thefinancial statements.
RELATED PARTY TRANSACTIONS
All contracts/arrangements entered by the Company during the previous financial yearwith the related parties were in the Ordinary Course of Business' and on Arm'sLength Basis'.
There are no materially significant Related Party Transactions between the Company andthe Directors the management or the relatives except for those disclosed in thefinancial statements and Form AOC-2 ("Annexure 4").
All Related Party Transactions were subjected to independent review by Dhruv A. &Co. Chartered Accountants to determine adherence to Arm's Length Price' and byBathiya & Associates LLP Chartered Accountants to establish compliance withOrdinary Course of Business' requirement. All Related Party Transactions along withthe aforesaid certificates were also placed before the Audit Committee for review andapproval. Prior Omnibus approval is obtained for Related Party Transactions which are ofrepetitive in nature and are entered in Ordinary Course of Business and at Arm's LengthPrice.
The policy on Related Party Transactions as approved by the Board is available on thewebsite of the company www.sparc. life and may be accessed through the web link http://www . sunpharma.in/regulatory-compliance.htm.
The particulars of Related Party Transactions entered into by the Company during theprevious financial year individually or taken together with similar transactions duringthe last financial year which exceeded ten percent of the annual turnover of the Companyduring the financial year 2015-16 are enclosed in prescribed Form AOC-2 as "Annexure4".
Your Directors also draw your attention to "Annexure A" to the Notes on theFinancial Statements which sets out Related Party Disclosures.
AUDIT COMMITTEE COMPOSITION
The details of composition of Audit Committee are included in the Corporate GovernanceReport which forms a part of this Report.
The Board of Directors has developed & implemented a robust Risk Management Policywhich lays down the procedure to identify monitor and mitigate the key elements of risksthat threaten the existence of the Company. The Audit Committee reviews the status of keyrisks and steps taken by the Company to mitigate such risks at regular intervals.
INTERNAL FINANCIAL CONTROLS
The Company has in place a well-defined organizational structure and adequate internalcontrols for efficient operations which is cognizant of applicable laws and regulationsparticularly those related to protection of intellectual properties resources assetsand the accurate reporting of financial transactions in the financial statements. TheCompany continually upgrades these systems. The internal control systems are supplementedby extensive internal audits conducted by an independent firm of chartered accountants.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In compliance with the requirements of section 135 of the Companies Act 2013 read withthe Companies (Corporate Social Responsibility) Rules 2014 the Board of Directors hasconstituted a Corporate Social Responsibility Committee. The details of membership of theCommittee & the meetings held are given in the Corporate Governance Section of theReport.
The CSR Policy of the Company as approved by the Board on the recommendation of theCorporate Social Responsibility Committee is available on the website of the company www.sparc.life and may be accessed through the web link http://www.sunpharma.in/regulatory-compliance.htm
Since the average net profits of the Company during the three immediately precedingfinancial years were negative the Company was not required to spend any money on CSRactivities during the previous financial year.
The Company has not accepted any Public Deposit during the year under review under theprovisions of the Companies Act 2013 and the rules framed thereunder.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis on the operations of the Company as prescribedunder Schedule V read with regulation 34(3) of the SEBI (LODR) Regulations is provided ina separate section and forms a part of this Report.
CORPORATE GOVERNANCE REPORT
Report on Corporate Governance and Certificate of the Auditors of your Companyregarding compliance of the conditions of Corporate Governance as stipulated in Schedule Vread with regulation 34(3) of the SEBI (LODR) Regulations are provided in a separatesection and forms a part of this Report.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report of the Company for the year ended 31st March 2017in line with Green Initiative as required under Clause 34 (2) (f) of the SEBI (LODR)Regulations forms part of this Report and is available on the website of the Companywww.sparc.life and may be accessed through the web linkhttp://www.sunpharma.in/regulatory-compliance.htm. The same is also kept at the RegisteredOffice of the Company for inspection. Any shareholder interested in obtaining a copy ofthe same may write to the Company Secretary.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of The Companies (Accounts) Rules 2014 is annexed as "Annexure 5".
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
No significant or material orders were passed by the Regulators or Courts or Tribunalsduring the previous year which may impact the Going Concern Status of the Company's futureoperations.
WHISTLE BLOWER POLICY/ VIGIL MECHANISM
To create enduring value for all stakeholders and ensure the highest level of honestyintegrity and ethical behaviour in all its operations the Company has formulated a VigilMechanism named as SPARC Whistle Blower Policy' in addition to the existing Code ofConduct that governs the actions of its employees. This Policy aspires to encourage allemployees to report suspected or actual occurrence of illegal unethical or inappropriateevents (behaviours or practices) that affect Company's interest / image.
The Policy is available on the website of the Company www.sparc.life and may beaccessed through the web link http://www.sunpharma.in/regulatory-compliance.htm.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements under section 134(5) read with section 134(3) (c) of theCompanies Act 2013 with respect to Directors Responsibility Statement it is herebyconfirmed that:
a) in the preparation of the annual accounts for the financial year ended 31st March2017 the applicable accounting standards have been followed along with proper explanationrelating to material departures;
b) the 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 as at 31 st March 2017 and of the lossof the Company for the year ended on that date;
c) the Directors have 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 have prepared the annual accounts on a going concern basis; and
e) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and operating effectively.
f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
Your Directors wish to thank all stakeholders business partners Company's bankersmedical professionals and business associates for their continued support and valuableco-operation. The Directors also wish to express their gratitude to investors for thefaith that they continue to repose in the Company.
For and on behalf of the Board of Directors
Dilip S. Shanghvi
Chairman & Managing Director
Date: May 5 2017