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Strides Pharma Science Ltd.

BSE: 532531 Sector: Health care
NSE: STAR ISIN Code: INE939A01011
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OPEN 438.05
PREVIOUS CLOSE 436.55
VOLUME 43539
52-Week high 696.57
52-Week low 334.10
P/E 4.99
Mkt Cap.(Rs cr) 3,977
Buy Price 445.10
Buy Qty 200.00
Sell Price 446.40
Sell Qty 1.00
OPEN 438.05
CLOSE 436.55
VOLUME 43539
52-Week high 696.57
52-Week low 334.10
P/E 4.99
Mkt Cap.(Rs cr) 3,977
Buy Price 445.10
Buy Qty 200.00
Sell Price 446.40
Sell Qty 1.00

Strides Pharma Science Ltd. (STAR) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting the Twenty-Seventh AnnualReport together with the Audited Financial Statements for the financial year ended March31 2018.

We are also delighted to introduce a new name to the relationship youhave cherished with us for long. Strides Shasun Limited is now renamed as Strides PharmaScience Limited effective July 18 2018.

1. Financial Summary (Consolidated & Standalone)

Rs. in Million
Particulars Consolidated Basis Standalone Basis

FY 2017-18

FY 2016-17

FY 2017-18

FY 2016-17

INR USD* INR USD** INR USD* INR USD**
1.1 Financial Results
Continuing Operations
Income 29334.35 450.19 29165.22 449.66 16258.05 249.51 15508.74 239.11
Operating Profit (EBIDTA) 4906.02 75.29 6884.33 106.14 3532.89 54.22 3397.75 52.39
Net Profit (PAT) 702.14 10.78 2797.10 43.13 1564.48 24.01 1519.36 23.43
Reserve & Surplus 23650.61 362.96 26594.00 410.02 30725.16 471.53 31431.04 484.60
Non-Controlling Interest 1546.48 23.73 1335.01 20.58
1.2 Profits
Operating Profit (EBIDTA) 4906.02 75.29 6884.33 106.14 3532.89 54.22 3397.75 52.39
Less:
Interest 1962.43 30.12 1831.03 28.23 819.70 12.58 719.64 11.10
Depreciation & Amortisation 1540.35 23.64 1261.51 19.45 778.05 11.94 700.06 10.79
Exceptional Items 435.78 6.69 364.28 5.62 293.81 4.51 151.59 2.34
Profit Before Tax 967.46 14.85 3427.51 52.84 1641.33 25.19 1826.46 28.16
Share of profit / (loss) of joint ventures and associates (167.99) (2.58) 3.64 0.06
Profit Before Tax 799.47 12.27 3431.15 52.90 1641.33 25.19 1826.46 28.16
Less: Tax Expenses
Current tax expenses 485.12 7.45 484.74 7.47 373.22 5.73 124.97 1.93
Current tax expenses relating to prior years - - (6.61) (0.10) - - (6.61) (0.10)
Deferred tax expenses (107.03) (1.64) (3.86) (0.06) (15.61) (0.24) 28.96 0.45
MAT Credit entitlement (280.76) (4.31) 159.78 2.46 (280.76) (4.31) 159.78 2.46
Profit After Tax 702.14 10.78 2797.10 43.13 1564.48 24.01 1519.36 23.43
Profit/ (Loss) from Discontinued operations 6101.23 93.63 1662.37 25.63 7351.43 112.82 (433.99) (6.69)
Total Profit 6803.37 104.41 4459.47 68.76 8915.91 136.83 1085.37 16.73
Other Comprehensive Income
Items that will not be reclassified to profit/ (loss) (202.39) (3.11) (209.46) (3.23) (0.87) (0.01) (94.13) (1.45)
Items that may be reclassified to profit/ (loss) 42.12 0.65 (233.36) (3.60) (196.60) (3.02) 130.75 2.02
Total Other Comprehensive Income (Net of Tax) (160.27) (2.46) (442.82) (6.83) (197.47) (3.03) 36.62 0.56
Total Comprehensive income 6643.10 101.95 4016.65 61.93 8718.44 133.80 1121.99 17.30
Opening balance of Profit and Loss 2184.74 33.53 (1362.00) (21.00) 3930.01 60.31 3276.90 50.52
Pursuant to Scheme of Amalgamation (7038.43) (108.02) - - (7038.43) (108.02) - -
Available for appropriation 1751.00 26.87 2635.49 40.63 5807.49 89.13 4362.27 67.26
1.3 Appropriations
Dividend on Equity Shares
Final Dividend (402.72) (6.18) (357.46) (5.49) (402.72) _ 6.18) (357.46) (5.51)
Tax on Final Dividend (40.50) (0.62) (74.80) (1.15) (75.48) (1.16) (74.80) (1.15)
Dividend to non-controlling interest shareholders (9.78) (0.15) (18.49) (0.28)
Tax on dividend from foreign subsidiaries (to the extent adjusted against final dividend) (34.98) (0.54) - -
Balance carried to Balance Sheet 1263.02 19.38 2184.74 33.72 5329.29 81.79 3930.01 60.59

Note:

* 1 USD = INR 65.16 (Exchange Rate as on March 31 2018)

** 1 USD = INR 64.86 (Exchange Rate as on March 31 2017)

Previous year figures have been regrouped/ restated wherever necessaryto make them comparable with those of the current year

2. Company's performance

During the reporting period your Company recorded an overall subduedperformance. While our strategy continues to build momentum our execution did not matchexpectation especially in the second half of FY 2017-18. We faced significant number ofchallenges primarily in our US partnered venture and the institutional business. Duringthe year under review we also launched our consumer health division in a difficult marketenvironment. In hindsight we believe we could have strategised better for improvedoutcomes. Additionally we continue to struggle with the gap between our secondary andprimary sales in Africa.

Despite several headwinds our Australia operations reported asuccessful year. A non-US non-Australia regulated market was a win considering thesignificant growth that we have achieved albeit on a low base. We also exited the Indiabrands business that allowed us to pay significant debt and completed several corporateactions on schedule in line with our articulated strategy.

During FY 2017-18 your Company undertook several measures to developitself as a diversified business-to-customer (B2C) player.

The US continues to be our largest market but ~65% of our US businessis currently partnered. At present we are working very hard to reduce our dependency onour partners. We recalibrated our strategy for the US market and in FY 2018-19 we will beworking towards building the frontend business ourselves. We are also pleased to reportthat over 50% of the revenues that were partnered have since been brought back to our ownfold in terms of value. The US business still continues to be an exciting and profitableventure for a new player like us with our own frontend.

In Australia our strategy is to bolster our leadership position.During the reporting period our margins increased owing to operating leverage. We havealso announced a transaction involving Apotex recently. We believe that our focus onmarkets outside the US and Australia have led to early success with some traction visible.

We have been fairly successful with our operations in the UK parts ofEurope and now South Africa. Our IP portfolio in Australia is very valuable but fungibleacross all other markets. Therefore we are very focussed on leveraging it across CanadaEurope the UK and South Africa with minimal regulatory costs. This will allow us tomaximise our business in the segment and we are confident that in the next 2 to 3 yearsit would emerge as a significant part of our revenue mix.

Our Africa business is shaping very well based on our robust secondarysales and we are tracking ~3x industry growth which is great in the markets where IMSdata is available. Besides our Africa venture continues to have suboptimal base offeringus the headroom to grow; going forward we will focus in this space.

Our institutional business had its toughest year due to compressedopportunity in malaria treatment and the margins remained almost negligible vis--visprevious years. The long-term contracts for our ARV business su_ered significantly due toincrease in prices of APIs. However the increased pricing of APIs is now a very commontrend and we expect to recover soon in this segment. We have been very frugal in how weare approaching this business and it still forms a very important part of ourunder-recovery strategy for manufacturing operations.

During the reporting period our R&D operations remained effectiveas we filed 12 ANDAs against a target of 15-20 new product ANDA filings per year. Besideswe filed 5 additional ANDAs in April and May 2018. Our focus remains unwavering inreceiving the approvals in 10 months and for that we intend to take a month or two extrato ensure our filing qualities are superior.

We received fairly quick approvals for 14 new products during FY2017-18 and three additional approvals in April and May 2018. We also secured approval forIbuprofen Softgel capsule which is an extremely important product during this phase.

Going forward we will stay focussed on building our fortunes in the USmarket with constant emphasise on niche products or products on which we have completecontrol. Furthermore we are confident that our high compliance status across ourmanufacturing plants will play a key role in this endeavour.

We have completely rewired your Company with Strides 2.0 that ensures asharpened focus on productivity and outcomes. We are confident of our course correctionstrategies and expect all our businesses to bounce back in the next three to fourquarters.

A detailed analysis of each of the business verticals of the Company isprovided in the Management Discussion and Analysis Report.

3. Corporate Updates

During the year the Company completed several corporate actionsincluding exiting non-core operations and markets to sharpen its focus on the B2C businessand achieve leaner operations.

Corporate Actions undertaken during the year are provided herein below.

Acquisitions & JVs

1) Amneal Pharmaceuticals Australia

Arrow Pharmaceuticals a step-down subsidiary of the Company inAustralia acquired 100% stake in Amneal Pharmaceuticals Australia. Amneal is engaged inthe business of selling generic pharmaceutical products in Australia.

The acquisition has enabled improve Arrow's generics market sharethereby expanding its first-line pharmacies to 1200+ stores and provided significantsynergy opportunities with 100+ molecules being common with Arrow Portfolio.

The transaction achieved closure in September 2017.

2) Controlling stake in Trinity Pharma South Africa

Strides Pharma Asia the Company's wholly owned subsidiary inSingapore acquired controlling stake in Trinity Pharma ("Trinity") a companyincorporated in South Africa.

Trinity is engaged in the business of supply and distribution ofgeneric pharmaceutical products to pharmaceutical retailers and providing servicesrelating to regulatory and registration of products.

The transaction enabled Strides to establish a presence in the highentry market of South Africa where product dossier approval takes more than 5 years;enabling access to pipeline of more than 110 product dossiers and facilitating ARV launchin private non-tender market in South Africa.

The transaction achieved closure in January 2018.

3) JV between Amneal Pharmaceuticals and Douglas PharmaceuticalsAustralia

Amneal Pharmaceuticals Australia a step-down subsidiary of theCompany entered into a Joint Venture arrangement with Douglas Pharmaceuticals AustraliaPty Limited Australia.

Amneal holds approx. 50% stake in the JV Company viz. MyPak SolutionsAustralia Pty Ltd Australia (formerly MyPak Solutions Pty Ltd).

MyPak Solutions is expected to become the leading Dose AdministrationAid (DAA) company in the Australian pharmaceutical and aged care industries. DAAs havebeen designed to assist consumers in the community to better manage their medicines andimprove medication compliance.

MyPak will provide the Australian market with an end-to-end industryleading DAA solution and will enable the Company to provide the customers with a completesolution in the DAA market in Australia.

Divestments

4) India Brand Business

As part of the Company's portfolio re-prioritisation the Companyexited from the India Brand Business. India Brand Business comprising of a portfolio of130+ brands in the domains of Neurology Psychiatry Nutraceuticals Gastro etc. alongwith the employees forming part of the said business was sold to Eris LifesciencesLimited India ("Eris") for a consideration of Rs.410 Crore.

As part of the transaction the Company also divested its stake inStrides Healthcare Private Limited a subsidiary company which was catering to the BrandsBusiness to Eris for a consideration of Rs.90 Crore.

The Company retains global rights for the divested portfolio whichhave significant sales in Africa and will continue to grow the Company's emergingmarket business.

The transaction achieved closure in December 2017.

5) Demerger of the Commodity Active Pharmaceutical Ingredients (API)Business

During the year under review through a composite Scheme of Arrangementbetween the Company SeQuent Scientific Limited ("SeQuent") and Solara ActivePharma Sciences Limited ("Solara") and their respective shareholders andcreditors under section 230-232 of the Companies Act 2013 the Company completed thedemerger of its Commodity API Business to Solara. Pursuant to the aforesaid Scheme theHuman API business of SeQuent was also demerged to Solara.

Appointed Date and Effective Date for demerger was October 1 2017 andMarch 31 2018 respectively.

The Scheme received nod of the Equity Shareholders of the Company onDecember 27 2017 and approval of the National Company Law Tribunal Mumbai Bench vide itsOrder dated March 9 2018.

Consequent to the above Solara allotted shares to the EquityShareholders of the Company as at the Record Date April 9 2018 as consideration underthe Composite Scheme on April 11 2018. As provided in the Composite Scheme Solara waslisted on the Stock Exchanges (NSE and BSE) on June 27 2018.

Events Post Balance Sheet Date

6) Strides API Research Centre

On April 20 2018 the Company entered into Business Purchase Agreementwith Solara Active Pharma Sciences Limited India (Solara) to sell the assets (consistingof Plant & machinery equipment computer software and other related capital work inprogress) and business conducted by the Company at Strides API Research Centre (SRC) alongwith the employees for a consideration of Rs.357.28 Million and working capital subject toadjustment and finalisation for Rs.8.26 Million.

The Company has classified the assets of the SRC unit as ‘AssetsHeld for Sale' as on March 31 2018.

7) Proposed merger of Australian business of Strides and Apotex

The Company and Apotex have agreed in-principle to merge theirrespective Australian business operations. Currently Strides is one of the leadinggeneric players in the Australian pharmaceutical market and runs its business under theArrow brand. Apotex is the leading generic player in the Australian pharmaceutical marketand runs its business under the Apotex brand.

The Combination shall enable Strides through the merged business tobecome the leading player in the Australian generic pharmaceutical market by both volumeand revenue. The proposed transaction will be EPS accretive from Year 1 through mergersynergies. The merged business will have the largest portfolio of owned product IP for theAustralian market. Potential synergies will accrue through higher volumes and improvedCOGS.

Strides' and Apotex's business will be run independently under thebrands Arrow and Apotex respectively and will continue to enjoy preferred partnerrelationship with their respective wholesalers. The merged business will continue to besupported by Strides' and Apotex's manufacturing facilities and will haveapprox. 3200 first line pharmacy accounts.

The proposed structure will be arrived through a share swap. Theexisting hospital business of Apotex will not form part of the merged entity and will beretained by Apotex.

The transaction is subject to entering into definitive agreementsbetween the parties satisfactory due diligence customary closing conditions andstatutory approvals including approval of Australian Competition and Consumer Commission.

8) Proposed merger of Arrow Remedies and Fagris Medica into the Company

The Board of Directors of the Company at its meeting held on May 182018 have approved the Scheme of Amalgamation for merger of Arrow Remedies Private Limitedand Fagris Medica Private Limited (collectively known as Transferor Companies which arewholly owned subsidiaries of the Company) into the Company (Transferee Company) in termsof Section 230 to 232 of the Companies Act 2013.

The Scheme is subject to necessary statutory and regulatory approvalsincluding the approvals of National Company Law Tribunal the shareholders and creditorsof each of the companies.

The appointed date for the said amalgamation is April 1 2018 or suchother date as may be agreed between the Transferor Companies and the Transfree Company andapproved by the National Company Law Tribunal.

The Scheme of Amalgamation will enable the Company to consolidate andeffectively manage the Transferor Companies and the Company in a single entity eliminateduplication of operating and administrative expenses and simplify the group structure.

There will not be any change in the shareholding pattern of theTransferee Company pursuant to the Scheme of Amalgamation as both the Transferor Companiesare wholly-owned subsidiaries of the Transferee Company.

9) Divestment of Strides Chemicals Private Limited

Pursuant to the approval of the Shareholders of the Company obtained bymeans of Postal Ballot the Company proposes to divest its 100% stake in Strides Chemicalsto Solara Active Pharma Sciences. The divestment is pursuant to evaluation conducted bythe Management and as part of measure to improve and sharpen the focus on the formulationsbusiness and profitability of the Company.

As part of the arrangement Solara has offered the Company long-termdevelopment and manufacturing arrangement and a ‘Most Favoured Customer' statusfor all the DMF's required for the integrated formulations portfolio of the Company.The divestment will help Strides become leaner while retaining supply chain security forthe formulations portfolio.

The divestment process is expected to completed post receipt ofshareholder's approval for the same by Solara.

4. Board of Directors and Key Managerial Personnel as at thedate of this Report

Board of Directors of the Company

Mr. Deepak Vaidya Non-Executive Director Chairperson of the Board.

Mr. S Sridhar Mr. Bharat Shah Ms. Sangita Reddy and Mr. HomiKhusrokhan -Independent Directors of the Company.

Mr. Arun Kumar Group CEO and Managing Director

Mr. Badree Komandur Executive Director – Finance.

Key Managerial Personnel

Mr. Arun Kumar Group CEO and Managing Director Mr. Badree KomandurExecutive Director – Finance Ms. Manjula Ramamurthy Company Secretary

Appointment Re-designation of Director and Retirement by Rotation

1. Mr. Badree Komandur Executive Director – Finance retires byrotation at the ensuing Annual General Meeting and being eligible offers himself forreappointment.

2. Appointment of Mr. Arun Kumar as Executive Director of the Companyfor a period of 3 years.

3. Continuation of Mr. Homi Rustam Khusrokhan as Independent Directorof the Company till the completion of his current term i.e upto May 17 2022.

Number of meetings of the Board

During the year under review the Board met 6 times. Details of thesame are provided in the Corporate Governance Report which is part of this report.

5. Share Capital

The Authorised Share Capital of the Company as at the date of thisreport is Rs.1767500000/- divided into 176750000 equity shares of Rs.10/- each.

The Issued Subscribed and Paid-up Share Capital of the Company as atthe date of this report is Rs.895489130/- divided into 89548913 equity shares ofRs.10/- each.

There has been an increase in the Paid-up Equity Share Capital of theCompany on account of allotment of 125907 equity shares consequent to exercise of stockoptions by employees.

6. Dividend

Your Directors are pleased to recommend a Dividend of Rs.2/- (RupeesTwo Only) per equity share of face value of Rs.10/- each for the financial year endedMarch 31 2018 subject to the approval of the shareholders at the ensuing Annual GeneralMeeting which is scheduled on September 24 2018.

The Register of Members and Share Transfer Books will remain closedfrom September 15 2018 to September 24 2018 (both days inclusive) for the purpose ofpayment of final dividend for the financial year ended March 31 2018 and the AGM.

Dividend if approved by shareholders will be paid within 30 days fromthe date of declaration of dividend.

In terms of Regulation 43(A) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 ("SEBI Listing Regulations") theCompany has adopted a Dividend Distribution Policy. The said Policy is available on theCompany's website and can be accessed athttp://www.strides.com/investor-committeboard. html

7. Subsidiary JVs and Associate Companies

As at March 31 2018 the Company had 51 subsidiaries (46 overseas and5 India) 3 Joint Ventures (2 overseas and 1 India) 4 Associate Companies (3 overseas and1 India).

List of subsidiaries/ JVs/ Associates which have become or ceased to bepart of the Company is enclosed as Annexure 1

Accounts of Subsidiaries

In accordance with Section 129 (3) of the Companies Act 2013 theCompany has prepared a consolidated financial statement of the Company and all itssubsidiary companies which is forming part of the Annual Report. Statement containingsalient features of the financial statements of the subsidiary companies/ joint venturesas required in Form AOC 1 is enclosed as Annexure 2 to this Report.

8. Corporate Governance and Management Discussion and Analysis

As per SEBI Listing Regulations the Corporate Governance Report withthe Auditor's Certificate thereon and the Management Discussion and Analysis formspart of this report.

9. Employee Stock Option Scheme

The Company has 3 ESOP Schemes viz. Strides Arcolab ESOP 2011 StridesArcolab ESOP 2015 and Strides Shasun ESOP 2016 Schemes.

Statement giving detailed information on stock options granted toEmployees under the Company's Employee Stock Option Schemes as required under theSEBI Regulation is enclosed as Annexure 3 to this Report.

10. Particulars of Employees

The statement containing particulars in terms of Section 197 (12) ofthe Companies Act 2013 read with rule 5(1) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 forms part of this report and is appended herewith asAnnexure 4 to the Boards' report.

The statement containing particulars in terms of Section 197(12) of theCompanies Act 2013 read with rule 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 forms part of this report.

Considering the first proviso to Section 136(1) of the Companies Act2013 the Annual Report excluding the aforesaid information is being sent to the membersof the Company and others entitled thereto. The said information is available forinspection at the registered office of the Company during business hours on working daysof the Company up to the date of the ensuing Annual General Meeting. Any shareholderinterested in obtaining a copy thereof may write to the Company Secretary in this regard.

11. Corporate Social Responsibility (CSR)

The Company has undertaken "Corporate Social Responsibility(CSR)" initiatives in areas of Health Education and Employability which areprojects in accordance with Schedule VII of the Companies Act 2013.

A detailed report on CSR activities undertaken during the financialyear 2017-18 is enclosed as Annexure 5 to this Report.

12. Loans Guarantees or Investments

Details of Loans granted Guarantees given and Investments made duringthe year under review covered under the provisions of Section 186 of the Companies Act2013 are given in the Note no. 40 to the standalone financial statements in the AnnualReport.

13. Contracts or Arrangements with Related Parties

All the transactions with related parties are in the ordinary course ofbusiness and at arm's length basis. Hence disclosure under Form AOC - 2 is not partof this report. Transactions with related parties are disclosed in Note no. 45 to thestandalone financial statements in the Annual Report.

The Company has formulated a policy for transacting with RelatedParties which is uploaded on the Company's website at http://www.strides.com/investor-committeboard.html

Further there are no materially significant related party transactionsmade by the Company which may have potential conflict with the interests of the Company.

14. Auditors and Audit Reports

Secretarial Audit Report

M/s. Gopalkrishnaraj HH & Associates a firm of Company Secretariesin Practice (Certificate of Practice No: 4152) is the Secretarial Auditor for the Company.

The Secretarial Audit for the financial year 2017-18 inter-aliaincluded audit of compliance with the Companies Act 2013 and the Rules made under theAct SEBI Listing Regulations and applicable Regulations prescribed by SEBI amongstothers.

The Secretarial Audit Report is enclosed as Annexure 6 to theBoard's Report. The Secretarial Audit Report does not contain any qualificationsreservations or adverse remarks.

Statutory Auditors

During the period under review M/s Deloitte Haskins & Sellscompleted their term of appointment and were replaced by M/s B S R & Co. LLPChartered Accountants (Firm Registration no. 101248W/ W-100022) as Statutory Auditors ofthe Company at the 26th AGM held on September 15 2017.

BSR & Co. LLP Chartered Accountants holds office for a period of 5years i.e. till the conclusion of the 31st AGM of the Company to be held in FY 2021-22.

In accordance with Companies (Amendment) Act 2017 appointment ofStatutory Auditors is not required to be ratified at every AGM.

There are no qualifications observations or adverse remarks in theAudit Report issued by the Statutory Auditors of the Company for financial year endedMarch 31 2018.

Internal Auditors

M/s. Grant Thornton India LLP Chartered Accountants are the InternalAuditors of the Company. The Internal Auditors carry out audit as per the audit plandefined by the Audit Committee and regularly updates the committee on their internal auditfindings at the Committee's meeting.

The Internal Auditors were satisfied with the management response onthe observation and recommendations made by them during the course of their audit and haveexpressed satisfaction with the internal systems controls and process followed by theCompany.

Cost Auditors

M/s. Rao Murthy & Associates Cost Accountants has carried out theCost Audit for the applicable business for the year under review.

The Board of Directors of the Company have appointed M/s. Rao Murthy& Associates Cost Accountants (Firm Registration No.: 000065) as Cost Auditors toaudit the cost accounts of the Company for the Financial Year 2018-19.

15. Internal Financial Controls

The Company has in place well defined and adequate framework forInternal Financial Controls ("IFC") as required under Section 134 (5) (e) of theCompanies Act 2013.

During the year under review such controls were tested and no materialweaknesses in their design or operations were observed.

16. Risk Management

The Company has a risk management framework for identification andmanaging risks. Please refer the "Management Discussion and Analysis" reportforming part of the Annual Report for additional details.

17. Other Disclosures

Nature of Business of the Company

There has been no change in the nature of business of the Companyduring the year under review.

Deposits

The Company has not accepted any deposits covered under chapter V ofthe Companies Act 2013. Accordingly no disclosure or reporting is required in respect ofdetails relating to deposits.

Whistle Blower Policy

The Company has a Whistle Blower Policy. The Policy providesappropriate avenues to the directors employees and stakeholders of the Company to makeprotected disclosures in relation to the matters concerning the Company. ProtectedDisclosures are appropriately dealt with by the Whistle Officer or the Chairperson of theAudit Committee.

The Policy is also available on the Company's website and can beaccessed at http://www.strides.com/ investor-committeboard.html

Policy on Directors Appointment and Remuneration

The policy of the Company on Directors' appointment andremuneration including the criteria for determining qualifications positive attributesindependence of a director and other matters as required under Section 178 of theCompanies Act 2013 is available on the

Company's website and can be accessed at http://www.strides.com/investor-committeboard.html

Insurance

The assets/ properties of the Company are adequately insured againstloss due to fire riots earthquake terrorism etc. and against other perils that areconsidered necessary by the management.

Significant and material orders passed by the Regulators or Courts

There are no significant and material orders passed by the Regulators/Courts that would impact the going concern status of the Company and its futureoperations.

Extract of Annual Return

Extract of Annual Return in Form MGT 9 is enclosed as Annexure 7 to theBoard's Report.

Conservation of Energy R&D Technology

Absorption and Foreign Exchange Earnings/ Outgo

Details of Energy Conversation R&D Technology Absorption andForeign Exchange Earnings/ Outgo are enclosed as Annexure 8 to this Report.

18. Declaration by Independent Directors

In accordance with Section 149(7) of the Companies Act 2013 eachindependent director has confirmed to the Company that he or she meets the criteria ofindependence as laid down in Section 149 (6) of the Companies Act 2013 and Regulation 25of the SEBI Listing Regulations.

19. Board Evaluation

The evaluation of all the directors committees Chairperson of theBoard and the Board as a whole was conducted. The evaluation parameters and the processhave been explained in the Corporate Governance Report which is part of this report.

20. Directors' Responsibility Statement

Pursuant to the requirement under clause (c) of subsection (3) ofSection 134 of the Companies Act 2013 with respect to the Directors' ResponsibilityStatement the Board of Directors of your company state that:

(a) in the preparation of the annual accounts the applicableaccounting standards have been followed along with proper explanation relating to materialdepartures;

(b) the directors have selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit and loss of the Company for that period;

(c) the directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

(d) the directors have prepared the annual accounts of the Company on agoing concern basis;

(e) the directors have laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and areoperating effectively.

(f) the directors have devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.

21. Acknowledgement

Your Directors place on record their sincere appreciation for thesignificant contribution made by the employees through their dedication hard work andcommitment and the trust and confidence reposed on us by the medical profession and trade.

We also acknowledge the support extended to us by the bankersfinancial institutions Government agencies analysts shareholders and investors atlarge.

For and on behalf of the Board of Directors
Date: August 8 2018 Deepak Vaidya
Place: Bengaluru Chairperson of the Board

Annexure 1

Details of Subsidiaries

Part A - Entities incorporated in FY' 2018

Incorporation Date
Sl. No. Name of the Entity
1 Strides Lifesciences Limited Nigeria April 10 2017
2 Arrow Life Sciences (Malaysia) Sdn. Bhd Malaysia May 11 2017
3 Strides Pharma Canada Inc Canada May 11 2017

Part B - Entities that became part of Strides Group in FY' 2018

Effective Date
Sl. No. Name of the Entity
1 Vivimed Life Sciences Private Limited India May 18 2017
2 Strides Vivimed Pte Ltd Singapore (formerly Vivimed Global Generics Pte Ltd) May 18 2017
3 Amneal Pharma Australia Pty Ltd Australia August 31 2017
4 Amneal Pharmaceuticals Pty Ltd Australia August 31 2017
5 Trinity Pharma Proprietary Limited South Africa January 1 2018
6 Apollo Life Sciences Holdings Proprietary Limited South Africa January 1 2018
7 MyPak Solutions Australia Pty Ltd Australia (formerly MyPak Solutions Pty Ltd Australia) March 29 2018

Part C - Entities divested during the FY' 2018

Effective Date
Sl. No. Name of the Entity
1 Strides Healthcare Private Limited India December 1 2017
2 Divestment pursuant to Scheme of Demerger Appointed Date:
October 1 2017
a. Solara Active Pharma Sciences Limited India Effective Date:
b. Chemsynth Laboratories Private Limited India March 31 2018
c. Shasun USA Inc USA

Part D – Entities wound up/ merged during FY' 2018

Effective Date
Sl. No. Name of the Entity
1 Akorn Strides LLC USA Wound up August 4 2017
2 Shasun NBI LLC USA Wound up October 25 2017
3 Strides Africa Limited BVI Wound up March 7 2018
4 Strides Pharma Limited Cyprus Merged with Strides Pharma December 12 2017
International Limited Cyprus

Annexure 2

FORM AOC 1

(Pursuant to first proviso to sub section (3) of Section 129 read withRule 5 of Companies (Accounts) Rules 2014) (Statement containing salient features of thefinancial statement of subsidiaries/associate companies/ joint ventures)

Part A - Subsidiaries

(a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k)
SI. No. Name of the Subsidiary Country of incorporation Reporting Currency Exchange Rate Capital (Includes Monies pending allotment) Reserves Total Assets Total liabilities (other than Capital & reserves) Investments other than in subsidiaries Turnover Profit before taxation Provision for taxation Profit after taxation Proposed dividend Share- holding (%)
1 Alliance Pharmacy Pty Limited Australia AUD 49.92 - - - - - - - - - - 100%
2 Altima Innvovations Inc. USA USD 65.16 - (172.58) 11.82 184.40 - 5.24 (16.62) - (16.62) - 100%
3 Amneal Pharma Australia Pty Ltd Australia AUD 49.92 - - - - - - - - - - 100%
4 Amneal Pharmaceuticals Pty Ltd Australia AUD 49.92 3982.81 (3160.05) 1005.78 183.02 36.17 1184.08 344.86 36.62 308.24 - 100%
5 Apollo Life sciences Holding Proprietary Limited South Africa ZAR 5.54 - (0.91) 25.16 26.07 - 46.19 (0.09) - (0.09) - 100%
6 Arrow Life Sciences (Malaysia) Sdn. BHD Malaysia MYR 16.83 0.93 (0.23) 0.72 0.02 - - (0.22) - (0.22) - 100%
7 Arrow Pharma (Private) Limited Sri Lanka LKR 0.42 21.04 (17.85) 3.30 0.11 - 2.04 8.89 - 8.89 - 100%
8 Arrow Pharma Life Inc. Philippines PHP 1.24 11.94 (8.04) 4.06 0.16 - 0.59 (1.07) - (1.07) - 100%
9 Arrow Pharma Pte Limited Singapore USD 65.16 55.03 (122.62) (63.07) 4.52 - 9.11 (61.47) - (61.47) - 100%
10 Arrow Pharma Pty Limited Australia AUD 49.92 - - - - - - - - - - 100%
11 Arrow Pharmaceuticals Pty Limited Australia AUD 49.92 5881.77 80.03 8495.74 2533.94 0.54 6009.09 333.65 81.53 252.12 - 100%
12 Arrow Remedies Private Limited India INR 1.00 0.10 (0.44) (0.10) 0.24 - 1.15 0.55 0.17 0.38 - 100%
13 Beltapharm SpA Italy EUR 80.20 116.77 44.46 441.15 279.92 - 264.15 (95.24) 2.33 (97.57) - 97.94%
14 Chemsynth Laboratories Private Limited* India INR 1.00 - - - - - - (0.04) - (0.04) - 0.00%
15 Fagris Medica Private Limited India INR 1.00 10.40 (9.39) 8.99 7.98 - 12.82 0.06 - 0.06 - 100%
16 Generic Partners Holding Co. Pty Limited Australia AUD 49.92 741.14 7.72 753.85 4.99 - - (1.81) - (1.81) - 51%
17 Generic Partners Pty Limited Australia AUD 49.92 741.22 (362.04) 1060.06 680.88 - 1453.31 (83.75) (78.24) (5.51) - 100%
18 Generic Partners (Canada) Inc Canada CAD 50.42 0.01 31.30 134.10 102.79 - 85.98 82.55 6.30 76.25 - 100%
19 Generic Partners (International) Pte Limited Singapore SGD 49.67 7.27 (0.01) 15.42 8.16 - - (0.57) - (0.57) - 51%
20 Generic Partners (M) SDN BHD Malaysia MYR 16.83 - (0.02) 0.46 0.48 - - (0.38) - (0.38) - 100%
21 Generic Partners (NZ) Limited New Zealand NZD 47.05 - (2.32) - 2.32 - - (0.36) - (0.36) - 100%
22 Generic Partners (SA) Pty Limited South Africa ZAR 5.54 - (0.02) - 0.02 - - - - - - 100%
23 Generic Partners UK Limited UK GBP 91.73 0.01 57.13 79.11 21.97 - 354.05 36.12 5.29 30.83 - 100%
24 Pharmacy Alliance Group Holdings Pty Limited Australia AUD 49.92 1358.21 (1358.22) 29.27 29.28 - 19.97 19.96 - 19.96 19.97 51%
25 Pharmacy Alliance Investments Pty Limited Australia AUD 49.92 704.77 29.28 734.05 - - 10.18 10.18 - 10.18 - 100%
26 Pharmacy Alliance Pty Limited Australia AUD 49.92 74.18 171.48 572.17 326.51 - 817.79 140.51 45.04 95.47 19.97 100%
27 Shasun Foundation Trust India INR 1.00 - - - - - - (0.03) - (0.03) - 0.00%
28 Shasun Pharma Solutions Inc. USA USD 65.16 35.67 (36.06) - 0.39 - - (0.13) 0.07 (0.20) - 100%
29 Shasun USA Inc.* USA USD 65.16 - - - - - (1.44) 201.75 - 201.75 - 0.00%
30 Smarterpharm Pty Limited Australia AUD 49.92 0.07 29.51 42.12 12.54 - 36.73 28.81 7.32 21.49 - 100%
31 Solara Active Pharma Sciences Limited* India INR 1.00 - - - - - - (3.80) - (3.80) - 0.00%
32 Stabilis Pharma Inc. USA USD 65.16 0.06 0.04 0.33 0.23 - - (0.14) 0.08 (0.22) - 100%
33 Stelis Biopharma (Malaysia) SDN. BHD. Malaysia MYR 16.83 140.03 (58.61) 81.63 0.21 - - (13.95) - (13.95) - 100%
34 Strides Africa Limited** British Virgin Islands USD 65.16 - - - - - - (0.13) - (0.13) - 0.00%
35 Strides Arcolab (Australia) Pty Limited Australia AUD 49.92 5973.88 (111.68) 9130.19 3267.99 - (3.02) (127.33) - (127.33) - 99.99%
36 Strides Arcolab International Limited UK USD 65.16 4004.50 355.37 4369.33 9.46 92.15 0.22 (148.21) - (148.21) - 100%
37 Strides Chemicals Private Limited India INR 1.00 797.00 498.01 1495.23 200.22 - 353.11 (165.87) - (165.87) - 100%
38 Strides CIS Limited Cyprus USD 65.16 0.20 12.72 72.81 59.89 - 114.36 4.97 - 4.97 - 100%
39 Strides Consumer Private Limited India INR 1.00 0.10 (168.60) (11.38) 157.12 - 11.89 (168.60) - (168.60) - 100%
40 Strides Emerging Markets Limited (formerly Strides Emerging Markets Private Limited) India INR 1.00 56.27 (143.41) 175.86 263.00 - 72.19 (124.17) - (124.17) - 100%
41 Strides Foundation Trust India INR 1.00 - 32.50 35.96 3.46 - 0.78 9.20 - 9.20 - 100%
42 Strides Healthcare Private Limited India INR 1.00 - - - - - 6.20 (26.02) (7.96) (18.06) - 0.00%
43 Strides Life Sciences Limited Nigeria NGN 0.18 0.53 (37.70) 211.95 249.12 - 70.86 (39.76) - (39.76) - 100%
44 Strides Pharma (Cyprus) Limited Cyprus USD 65.16 912.43 1029.27 2586.63 644.93 - 1278.70 (1211.31) 4.97 (1216.28) - 100%
45 Strides Pharma (SA) Pty Limited South Africa ZAR 5.54 - (9.55) 37.29 46.84 - - (5.14) - (5.14) - 100%
46 Strides Pharma Global (UK) Limited (formerly Strides Pharma (UK) Limited) UK GBP 91.73 3977.13 (2062.26) 2273.95 359.08 101.41 (0.11) 0.73 - 0.73 - 100%
47 Strides Pharma Asia Pte Limited Singapore USD 65.16 10447.08 (37.60) 10496.46 86.98 - 185.37 (635.28) 1.62 (636.90) - 100%
48 Strides Pharma Canada Inc Canada CAD 50.42 0.05 (1.11) 0.05 1.11 - - (1.11) - (1.11) - 70%
49 Strides Pharma Global Pte Limited Singapore USD 65.16 11013.17 2631.76 31307.60 17662.67 - 6187.72 1020.32 86.52 933.80 - 100%
50 Strides Pharma Inc. USA USD 65.16 8.45 1433.66 4949.38 3507.27 - 2675.48 (758.63) 0.12 (758.75) - 100%
51 Strides Pharma International Limited Cyprus USD 65.16 28.54 1218.62 1553.64 306.48 - 204.37 146.00 3.25 142.75 493.74 100%
52 Strides Pharma Limited*** Cyprus USD 65.16 - - - - - 49.49 3.61 13.04 (9.43) 202.00 -
53 Strides Pharma UK Limited (formerly Strides Shasun (UK) Limited) UK GBP 91.73 - - 390.83 79.30 - - - - - - 100%
54 Strides Shasun Latina SA de CV Mexico MXN 3.54 13.00 (4.42) 18.39 9.81 - (0.26) (4.35) - (4.35) - 80%
55 Strides Specialties (Holdings) Limited Mauritius USD 65.16 - - - - - 1.63 1.51 - 1.51 - 100%
56 Strides Vivimed Pte Ltd (formerly Vivimed Global Generics Pte Limited) Singapore USD 65.16 185.54 (15.16) 170.22 (0.16) - 0.01 (15.00) - (15.00) - 50%
57 SVADS Holdings SA Switzerland CHF 68.11 466.59 232.79 788.51 89.13 - 32.57 (245.37) - (245.37) - 100%
58 Trinity Pharma Proprietary Limited South Africa ZAR 5.54 0.01 32.65 546.31 513.65 - 198.69 7.91 2.84 5.07 - 51.76%
59 Universal Corporation Limited Kenya KES 0.64 117.47 883.59 2281.02 1279.96 - 1382.56 64.44 67.38 (2.94) - 51%

*Ceased to be part of the Group pursuant to Composite Scheme ofDemerger effective date of the demerger being March 31 2018 **Wound up effective March7 2018 ***Strides Pharma Limited Cyprus merged with Strides Pharma International Limitedeffective December 12 2017

Part B - Associates/ Joint Venture

Statement pursuant to Section 129 (3) of the Companies Act 2013related to Associate Companies and Joint Ventures

SI. No. Name of Associate / Joint Venture Stelis Biopharma Private Limited India Regional Bio Equivalence Centre S.C. Ethiopia Aponia Laboratories Inc USA Akorn Strides LLC USA Shasun NBI LLC USA Oraderm Pharmaceuticals Pty Limited Australia Vivimed life Sciences Private Limited India Mypak Solutions Australia Pty Limited Australia Generic Partners ( R&D) Pte. Ltd Singapore
1 Latest audited Balance Sheet Date

March 31 2018

December 31 2017

March 31 2018

Akorn Strides LLC does not have an independent audit performed in its financials they are incorporated in the audit conducted on Akorn Inc. USA

March 31 2017

Not Applicable

March 31 2018

Newly incorporated entity

Not Applicable

2 Shares of Associate/ Joint Venture held by the Company on the year end No. 251527 shares 342 shares 3734074 shares - - 50 shares 14133440 shares 51 shares 19 shares
Amount of Investment in Associate/ Joint Venture Extent of Holding % Rs.1905.36 Million Nil Rs.92.15 Million Nil Nil Rs.0.54 Million Rs.629.38 Million Rs.36.17 Million Nil
53.47% 24.98% 24.00% 50% 50.00% 50.00% 50.00% 50.495% 19.00%
3 Description of how there is significant influence 53.47% and board representation 24.98% 24% and board representation 50% 50% 50% and board representation 50% and board representation 50.495% and board representation 19% and board representation
4 Reason why the Associate/ Joint Venture is not consolidated Not Applicable Not Applicable Not Applicable The JV has been wound up during the year. The JV has been wound up during the year. Not Applicable Not Applicable Not Applicable Not Applicable
5 Networth attributable to Shareholding as per latest auditied Balance Sheet Rs.1120.19 Million Rs.28.31 Million Nil Nil Rs..50 Million Rs.635.91 Million
6 Profit/ (Loss) for the year Considered in Consolidation Not considered in Consolidation (Rs.144.06) Million (Rs.3.14) Million Rs.8.59 Million Nil Nil Nil (Rs.29.38) Million Nil Nil
Nil Nil Nil Nil Nil Nil Nil Nil Nil

Annexure 3

Details of Strides Employee Stock Options pursuant to SEBI Regulationand Companies Act 2013

As at March 31 2018 the Company had three ESOP schemes viz. StridesArcolab ESOP 2011 Strides Arcolab ESOP 2015 and Strides Shasun ESOP 2016 Scheme.

With respect to the above please find below the details of EmployeeStock Options pursuant to SEBI Regulation and Companies Act 2013 as at March 31 2018.

Sl. No. Description Strides Arcolab Strides Arcolab Strides Shasun ESOP 2016
ESOP 2011 ESOP 2015
A Options available under the Scheme 1500000 70000 3000000

B

Pricing formula

Decided by the Compensation Committee from time to time which shall be not less than 85% of the market price of the shares on the date of grant of option.

This ESOP Scheme is exclusively for erstwhile Shasun employees who were holding stock options under the Shasun ESOP Plan and became part of the Strides Group pursuant to merger of Shasun Pharmaceuticals with Strides in FY 2015-16. In terms of the Scheme of Amalgamation between the two companies Exercise Price per equity share of the Company shall be equal to the quotient of the option of the Shasun Exercise Price per equity share divided by the Share Exchange Ratio (rounded up to the nearest higher whole cent). This would translate to 0.3125 (5/16) New Stock Options in the Company in relation to each option granted under the Shasun - ESOP Plan 2012. Accordingly the Exercise price per New Stock Option is Rs.273.92 per Share of the Company

Decided by the Compensation Committee from time to time which shall be not less than 75% of the market price of the shares on the date of grant of option.

C Outstanding options as at April 1 2017 170000 23097 100000
D Options granted during the year under review NIL NIL 200000
E Options vested during the year under review 170000 16157 20000
F Options exercised during the year under review 50000 7029 20000
G Total number of shares arising as a result of exercise of options 50000 7029 20000
H Options lapsed / surrendered during the year under review 80000 5376 -
I Variation of terms of options - - -
J Money realised by exercise of options 16115000 1925384 16825000
K Total number of options in force at the end of the period ending March 31 2018 40000 10692 280000
L Available for further grant NIL – Refer Note 1 NIL – Refer Note 2 & 3 2700000
M Employee-wise details of options granted during the year under review
(i) Key Management Personnel NONE NONE 100000 options
(i) Any other employee who received grant in any one year of option amounts to 5% or more of options during the year NONE NONE 100000 options
(i) Identified employees who were granted options during any one year equal or exceeding 1% of the issued capital (excluding outstanding warrants and conversion) of the Company at the time of grant NONE NONE NONE
N Diluted Earnings Per Share (DEPS) pursuant to issue of shares on exercise of option calculated in accordance with Indian Accounting Standard (IND AS) - 33 – Earnings Per Share Continuing Operations 17.48
Discontinued Operations 82.13
Total Operations 99.61
O Where the Company has calculated the employee compensation cost using the intrinsic value of the stock options the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognised if it had used the fair value of the option shall be disclosed. The impact of the difference on profits and EPS of the Company shall be disclosed. The Compensation cost has been accounted under fair value.
P Weighted Average exercise price of options shall be disclosed separately for options whose exercise price either equals or exceeds or is less than the market price of the stock Rs. 322.30 Rs.273.92 Rs.841.25

Note 1:

SEBI had notified the Share Based Employee Benefits Regulations 2014which replaced the erstwhile ESOP guidelines. It mandates that all listed companies havingexisting stock option schemes comply with the revised regulation in their entirety.

Considering the above the Nomination and Remuneration Committeeresolved that it shall not grant further stock options under the ESOP 2011 Scheme.However the outstanding options under the ESOP 2011 shall continue to vest as per theoffer letter granted to employees of the Company.

Note 2:

ESOP 2015 was an exclusive Scheme for the employees of erstwhile ShasunPharmaceuticals and its subsidiaries which merged into Strides. Under the Scheme 30625options were granted to employees of erstwhile Shasun and 6813 options were granted toemployees of its subsidiary.

Stock Options as per the Scheme of Arrangement to all EligibleEmployees of erstwhile Shasun have already been granted and no further grant is pendingunder the Scheme.

Note 3:

Pursuant to Demerger of Commodity API business of the Company to SolaraActive Pharma Sciences Limited the Company accelerated vesting of 9128 stock optionsunder the Strides Arcolab ESOP 2015 Scheme held by identified employees who weretransferred to Solara. Out of the accelerated options 8878 options were exercised by theemployees.

Annexure 4

Details pursuant to Section 197 of the Companies Act 2013 read withRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014

a The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year ending March 31 2018 As at March 31 2018 the Board comprised of 8 Directors - comprising of 2 Executive Directors 4 Independent Directors and
2 Non-Executive Directors.
The Non-Executive & Independent Directors receive sitting fees of Rs.100000/- for attending each meeting of the Board and Audit Committee (effective August 11 2017. Prior to August 11 2017 the siting fees paid was Rs.50000/-). They do not receive any other form of remuneration. The ratio of remuneration of the Executive Directors of the Company to the median remuneration of the employees of the Company for the financial year ended March 31 2018 are as below:
1) Mr. Arun Kumar Non-Executive Director1 - 28
2) Mr. Abhaya Kumar Shankarlal Executive Director2 - 24
3) Mr. Shashank Sinha Managing Director3 - 131
4) Mr. Badree Komandur Executive Director - Finance4 - 56
The median remuneration for the period under review is Rs. 496500/- per annum (without considering the Sitting Fees paid to Non-Executive & Independent Directors of the Company).
b. The percentage increase in remuneration of each Director Chief Executive Officer Chief Financial Officer Company Secretary in the financial year ending March 31 2018:
# Particulars % Increase
1) Mr. Arun Kumar 0%
Non-Executive Director1
2) Mr. Abhaya Kumar Shankarlal 0%
Executive Director2
3) Mr. Shashank Sinha 10%
Managing Director3
4) Mr. Badree Komandur4 9%
Executive Director - Finance
5) Ms. Manjula Ramamurthy 68%
Company Secretary
c. The percentage increase in the median remuneration of employees in the financial year ending March 31 2018 13%
d. The number of permanent employees on the rolls of Company as at March 31 2018 2507 Employees
e. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration The average annual increase across the organisation was around 13%.

The Company affirms remuneration to the Directors and Key ManagerialPersonnel is as per the remuneration policy of the Company.

1Re-designated as Non-Executive Director effective May 18 2017.2Resigned as Executive Director effective May 18 2017.

3Appointed as Managing Director effective May 18 2017

4Appointed as Executive Director - Finance effective May 18 2017

Annexure 8

Particulars on Energy Conservation and Technology Absorption

(A) Conservation of Energy

(i) Steps taken and impact on conservation of energy a) 187300 KL ofprocess water treated by waste water treatment plants and reused for garden/lawn insidethe plant premises across all sites in India.

85000 KL process water was treated in ZLD & reused for non processusage in API – Puducherry.

30000 KL RO Reject was recycled & reused for non process usage inAPI – Cuddalore.

b) 58260 KL of water recycled from steam condensate and reused forsteam generation across all sites.

c) 8717 KL rain water collected and recharged to improve the groundwater table across all sites.

d) Replacement of TFL/CFL/SVL with energy efficient LED lights resultedin saving of about 480370 kWh across all sites.

(ii) Steps taken by the Company for utilising alternative sources ofenergy a) Utilisation of 12.82 MU renewable energy resulted in 6795 MT CO2 emissionsreduction across all sites.

b) Utilised Indian Energy Exchange and Power Exchange of India asalternate energy sources and consumed 9.17 MU across all sites in India.

(B) Technology absorption:

(i) E_orts made towards technology absorption are: At Oral DosageFacility – Bengaluru a) Tablet Inspection system in two CVC Bulk filling linescommissioned to detect & reject tablets/Hard gel capsules not meeting acceptancecriteria.

b) 200 BPM High speed Bulk filling line commissioned.

At Oral Dosage facility – Puducherry a) Tablet Inspection systemin three CVC Bulk

filling lines commissioned to detect & reject tablets/Hard gelcapsules not meeting acceptance criteria.

b) Installed automatic moving pallet station of 1000 pallet capacityfor FG.

c) 5 Fully automated KRAEMER UTS 4.1 Tablet testing machines installedfor improved compliance.

At API facility – Cuddalore a) High efficiency water chillers withscrew compressors and eco friendly R-134a refrigerant installed for process coolingapplication resulted in power savings of 589750 KWH per year.

At API facility – Puducherry a) 6 Ultra high performance liquidchromatography Instruments 5 Gas chromatography Instruments with Liquid auto samplers 1ICP MS 2 Gas chromatography Instruments are installed in Quality Control Laboratory toimprove the lab testing capabilities.

At API facility – Ambernath a) Microbiology lab is upgraded fromISO Class - 8 (Grade-D) to ISO Class -7 (Grade-C) without any additional HVAC/Areamodifications in the existing facility.

b) -35C customised set up is made with dry ice arrangement forR&D batches (Cinacalcet).

SSRC – Chennai a) New Pharma refrigerator installed for storage oforganic lab raw materials requiring low temp storage conditions in place of multiple lowvolume refrigerators.

(ii) Product Improvement & Technology Absorption: At Oral DosageFacility – Bengaluru a) MES (Manufacturing Execution System - eBMR) implementedsuccessfully for tablet manufacturing process. First Product - LNZ Tablets are beingmanufactured consistently.

b) Cycle time improved by 30 % in LNZ tablets Coating process.

c) Frusemide Tablets 500mg technical issues in manufacturing resolvedand commercial volumes are being delivered.

d) The productivity improvement is achieved by carrying out about 8batch size changes.

e) The products are validated with alternate equipment's in 19products to accommodate the business requirement and there by achieve customersatisfaction.

f) The sustainability of existing products achieved from the challengesof existing sources regulatory requirements by carrying out source change validations for6 products.

g) 26 products from the existing lots which were giving lessproductivity and in turn creating road block for smooth deliveries due to efficiency andquality compliance are now improved and made more robust. This has helped in achieving animprovement of their performance.

h) 13 products from the recent added Arrow basket of products are sitetransferred to the in-house manufacturing facilities.

i) 3 commercial launches for US market are achieved to have the highershare in regulated market.

j) Product Robustness Drive resulted in Improved quality andproductivity in the following products Prochlorperazine Maleate tab 5 mg MethoxsalenCapsules USP 10 mg Vancomycin Caps 125 mg & 250 mg. Prednisone Tabs 1 mg.

Camvit plus capsules.

Frusemide Tablets 20mg 40 mg & 500mg.

Efavirenz Tabs 200 mg & 600mg. Prednisone Tabs 25 mg.

At Oral Dosage facility – Puducherry a) Improved the productivityof 4 products by increasing the compression machine speed and reduced the stickingfrequency of products for overall efficiency.

b) 6 products were launched in Arrow basket of products & are sitetransferred to the in-house manufacturing facilities.

c) 4 commercial launches for US market are achieved to have the highershare in regulated market.

d) Mesalamine capsules 250 mg & 500 mg – Scale up batchsuccessfully completed in higher capacity wurster coater (FBE 500 C).

(iii) In case of import technology (imported during the last threeyears) the year of Import whether the technology has been fully absorbed:

Integrated High speed counting line from CVC From Taiwan commissionedin Bengaluru site to deliver 200 BPM with improved controls and compliance

Dedicated Fully automated KRAEMER UTS 4.1 Tablet testing machines fromSwitzerland installed in 5 compression machine cubicles in Puducherry site to checkcompressed tablet parameters for improved compliance and efficiency.

Expenditure on R&D:

Rs. in Million
Particulars March 31 2018 March 31 2017
Capital 274.76 150.41
Revenue 1741.69 1531.17
Total 2016.45 1681.58

Total Foreign Exchange Earned and Used

Rs. in Million
Particulars Year ended March 31 2018
Foreign exchange earned in terms of actual inflows 15697.12
Foreign exchange outgo in terms of actual outflows 735.42

 

For and on behalf of the Board of Directors
Date: August 8 2018 Deepak Vaidya
Place: Bengaluru Chairperson of the Board