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Sun Pharmaceuticals Industries Ltd.

BSE: 524715 Sector: Health care
NSE: SUNPHARMA ISIN Code: INE044A01036
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OPEN 470.00
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VOLUME 249463
52-Week high 504.85
52-Week low 315.20
P/E 35.26
Mkt Cap.(Rs cr) 110,140
Buy Price 459.05
Buy Qty 110.00
Sell Price 460.95
Sell Qty 28.00
OPEN 470.00
CLOSE 469.20
VOLUME 249463
52-Week high 504.85
52-Week low 315.20
P/E 35.26
Mkt Cap.(Rs cr) 110,140
Buy Price 459.05
Buy Qty 110.00
Sell Price 460.95
Sell Qty 28.00

Sun Pharmaceuticals Industries Ltd. (SUNPHARMA) - Director Report

Company director report

Your Directors take pleasure in presenting the Twenty-Seventh Annual Report andCompany's Audited Financial Statements for the financial year ended March 31 2019.

Financial Results

(र in Million)

Standalone

Consolidated

Year ended March 31 2019 Year ended March 31 2018* Year ended March 31 2019 Year ended March 31 2018#
Revenue from operations 103032.1 90062.5 290659.1 264894.6
Profit before exceptional item and tax 19338.3 12307.5 50245.8 44294.8
Exceptional Item 12143.8 9505.0 12143.8 9505.0
Profit before tax but after exceptional item 7194.5 2802.5 38102.0 34789.8
Tax expense:
- Current Tax 15.5 20.2 8039.6 6628.0
- Deferred Tax Charge/(Credit) (987.0) (274.1) (2030.8) (62.1)
- Deferred tax charge/(Credit)-exceptional - - - 2544.5
Profit after tax 8166.0 3056.4 32093.2 25679.4
Profit after Tax but before Share in profit/(loss) of associates/joint ventures - - 32093.2 25679.4
Share of (loss) of associates/joint ventures [Net] - - (14.6) (254.4)
Profit for the year before non-controlling interests - - 32078.6 25425.0
Non-controlling interests - - 5424.4 4468.0
Profit for the year attributable to owners of the Company - - 2665172 20957.0
Total other Comprehensive Income 1837.4 5669 16799.9 8282.5
Total Comprehensive Income for the year attributable to: 10003.4 36233 48878.5 30657.5
- Owners of the Company 10003.4 3623.3 42054.1 25711.8
- Non-Controlling Interest - - 6524.4 4945.7
Opening balance in Retained Earnings 120370.0 124860"0 389258.5
Additions:
Amount available for appropriation 8273.3 3490.8 26804.4 21454.7
Less: Appropriations
Dividend on Equity Shares 4791.6"'" 7977.4 4791.6 7977.4
Dividend Distribution Tax 5.6"" 3.4 9849 1624.0
Transfer to various Reserves:
- Capital redemption Reserve - - - -
- Debenture redemption Reserve - - (1250.0) (833.4)
- Capital reserve - - - -
- Buy-back of equity shares by overseas subsidiaries - - 2013.1 2168.1
- Adjustment on account of Ind AS 115 - - 6493.0 -
- Legal reserve - - 2039 2.5
- General reserve - - 43.0 -
Closing balance in Retained Earnings 123846.1 120370.0 3333019 3197775

*Refer Note 56(11) of Standalone Financial Statements 'Refer Note 66 of ConsolidatedFinancial Statements

Dividend

Your Directors have recommended a dividend of र2.75 (Rupees two and paise seventyfive only) per equity share of र1/- each [previous year र2.00/- per equity share ofर1/- each] for the year ended March 31 2019 subject to the approval of the equityshareholders at the ensuing 27th Annual General Meeting of the Company.

The dividend payout is in accordance with the Company's Dividend Distribution Policy.The Dividend Distribution Policy of the Company is provided as रAnnexure-A' to thisReport. The policy is also available on the website of the Company and can be accessedthrough the web link: http:// www.sunpharma.com/policies .

Changes in Capital Structure

During the year under review the Company has allotted 11790 equity shares of र1/-each under Sun Employee Stock Option Scheme-2015 thereby the paid up share capital of theCompany increased to र2399334970/- (Rupees Two Billion Three Hundred Ninety NineMillion Three Hundred Thirty Four Thousand Nine Hundred Seventy only) as on March 312019.

Scheme of Arrangements

1. During the year the Hon'ble National Company Law Tribunal of Gujarat at Ahmedabadhad vide its Order dated October 31 2018 sanctioned the Scheme of Arrangement among theCompany and Sun Pharma Global FZE ("Transferor Company") a wholly ownedsubsidiary of the Company and their respective members and creditors ("Scheme")whereby the Specified Undertaking (as defined in the Scheme) of Transferor Company standsdemerged into the Company w.e.f. December 01 2018 with appointed date being April 012017. No consideration was paid pursuant to the Scheme.

2. During the year the Board of Directors at its meeting held on May 25 2018 hadapproved a Composite Scheme of Arrangement among the Company and Sun Pharma (Netherlands)B.V. (Transferee Company-1) and Sun Pharmaceutical Holdings USA Inc.

(Transferee Company-2) wholly owned subsidiaries of the Company and their respectivemembers and creditors ("Composite Scheme") for demerger of Specified InvestmentUndertaking -1 (as defined in the Composite Scheme) of the Company into Sun Pharma(Netherlands) B.V. and Specified Investment Undertaking -2 (as defined in the CompositeScheme) of the Company into Sun Pharmaceutical Holdings USA Inc. The Hon'ble NationalCompany Law Tribunal of Gujarat at Ahmedabad ("NCLT") has vide its Order datedApril 11 2019 dispensed with convening of meeting of secured creditors of the Company andordered to convene the meeting of equity shareholders and unsecured creditors of theCompany on June 04 2019 to approve the Composite Scheme with appointed date as April 012017 or such other date as may be agreed between the Transferee Company-1 TransfereeCompany-2 and the Company and approved by the NCLT. Pursuant to said Composite Scheme noconsideration shall be paid. This demerger shall enable the Company to address the risksand policies ability to strategise the remaining business for long term growthconsolidation and creation of shareholder value etc.

Extract of Annual Return

The extract of Annual Return as required under sub-section (3) of Section 92 of theCompanies Act 2013 (‘the Act') in form MGT-9 is provided as ‘Annexure-B' tothis Report and is also made available on the website of the Company athttps://www.sunpharma.com/investors/annualreports .

Subsidiaries/ Joint Ventures/ Associate Companies

The statement containing the salient features of the Financial Statements of theCompany's subsidiaries/ joint ventures/ associate companies is given in Form AOC-1provided in Notes to the Consolidated Financial Statements forming part of the AnnualReport.

The highlights of performance of subsidiaries joint ventures and associate companiesand their contribution to the overall performance of the Company during the financial yearis given under ‘Annexure A' to the Consolidated Financial Statements forming part ofthe Annual Report.

Details pertaining to companies that became subsidiaries/ joint ventures/associates andthose that ceased to be the subsidiaries/joint ventures/associates of the Company duringthe year are provided in Note no. 39 of the Notes to the Consolidated FinancialStatements forming part of the Annual Report.

Directors and Key Managerial Personnel

Mr. Sailesh T. Desai and Mr. Kalyanasundaram Subramanian Whole-time Directors of theCompany retire by rotation at the ensuing 27th Annual General Meeting of the Company andbeing eligible offer themselves for reappointment.

During the year Mr. Gautam Doshi was appointed as an Additional Independent Directorof the Company with effect from May 25 2018. Mr. Vivek Chaand Sehgal and Mr. Gautam Doshihave been appointed as Independent Directors of the Company for a term of 5 (five) yearseach effective from November 14 2017 and May 25 2018 upto November 13 2022 and May 242023 respectively by the members at the 26th Annual General Meeting of the Company held onSeptember 26 2018.

Pursuant to Regulation 17(1A) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ("Listing Regulations") the consent of the members by way ofSpecial Resolution was obtained at the 26th Annual General Meeting of the Company forcontinuation as Director beyond the age of seventy five years of Mr. Israel MakovNon-Executive Director and the Chairman of the Company as he had attained an age of 79years.

Mr. S. Mohanchand Dadha Mr. Keki Mistry and Mr. Ashwin Dani Independent Directorshaving completed second term of 2 (two) years of their respective appointments on theconclusion of the 26th Annual General Meeting of the Company all the three aforementionedIndependent Directors retired and ceased to be Directors of the Company w.e.f. theconclusion of the 26th Annual General Meeting of the Company held on September 26

2018. The Board of Directors places on record their appreciation for contribution madeby Mr. S. Mohanchand Dadha Mr. Keki Mistry and Mr. Ashwin Dani during their tenure asIndependent Directors of the Company.

Mr. Sudhir V. Valia has stepped down from the position of Whole-time Director of theCompany w.e.f. May 29 2019. However he shall continue as a Non-Executive andNon-Independent Director of the Company.

Appropriate resolutions for the re-appointment of the Directors are being placed foryour approval at the ensuing 27th Annual General Meeting. Your Directors recommend thesame for approval by the members at the ensuing 27th Annual General Meeting of theCompany.

Declaration by Independent Directors

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet with the criteria of independence as prescribed under Section149(6) of the Act and under Listing Regulations.

In the opinion of the Board the Independent Directors of the Company fulfil theconditions specified in the Act and Listing Regulations and are independent of themanagement.

Remuneration Policy for Directors Key Managerial Personnel and Other Employees andCriteria for Appointment of Directors

For the purpose of selection of any Director the Nomination and Remuneration Committeeidentifies persons of integrity who possess relevant expertise experience and leadershipqualities required for the position. The Committee also ensures that the incumbent fulfilssuch criteria with regard to qualifications positive attributes independence age andother criteria as laid down under the Act Listing Regulations or other applicable laws.The Board has on the recommendation of the Nomination and Remuneration Committee framed apolicy on remuneration of Directors Key Managerial Personnel and other Employees.

The salient features of the Remuneration Policy of the Company are as under:

(A) Guiding Principles for remuneration: The Company shall remunerate all its personnelreasonably and sufficiently as per industry benchmarks and standards. The remunerationshall be commensurate to retain and motivate the human resources of the Company.

The compensation package will inter alia take into account the experience of thepersonnel the knowledge & skill required including complexity of his job workduration and risks associated with the work and attitude of the employee like positiveoutlook team work loyalty etc.

(B) Components of Remuneration: The following will be the various remunerationcomponents which may be paid to the personnel of the Company based on the designation andclass of the personnel.

a) Fixed compensation: The fixed salaries of the Company's personnel shall becompetitive and based on the individual personnel's responsibilities and performance.

b) Variable compensation: The personnel of the Company may be paid remuneration by wayof variable salaries based on their performance evaluation. Such variable salaries shouldbe based on the performance of the individual against his short and long term performanceobjectives and the performance of the Company.

c) Share based payments: The Board may on the recommendation of the Nomination andRemuneration Committee issue to certain class of personnel a share and share pricerelated incentive program.

d) Non-monetary benefits: Senior management personnel of the Company may on a case tocase basis be awarded customary non-monetary benefits such as discounted salaryadvance/credit facility rent free accommodation Company cars with or without chauffershare and share price related incentive reimbursement of electricity and telephone billsetc.

e) Gratuity/group insurance: Personnel may also be awarded to group insurance and otherkey man insurance protection. Further as required by the law necessary gratuity shall bepaid to the personnel.

f) Commission: The directors may be paid commission if approved by the shareholders.The shareholders may authorise the Board to declare commission to be paid to any directorof the Board.

C) Entitlement: The authority to determine the entitlement to various components asaforesaid for each class and designation of personnel shall be as follows

Designation/Class To be determined by
Director Board of Directors on the recommendation of the Nomination and Remuneration Committee within the limits approved by the shareholders
Key Managerial Personnel and Senior Management Board of Directors on recommendation of the Nomination and Remuneration Committee
Other employees Human Resources Head

Note: For the purpose of this Policy the term 'Senior Management' shall have the samemeaning as defined under the SEBI (Listing Obligation and Disclosure Requirements)Regulations 2015

The complete Policy as approved by the Board is available on the website of the Companyand can be accessed through the web link: http://www.sunpharma.com/policies .

Familiarisation programme for the Independent Directors

In compliance with the requirements of Regulation 25(7) of the Listing Regulations theCompany has put in place a Familiarisation Programme for the Independent Directors tofamiliarise them with the Company their roles rights responsibilities in the Companynature of the industry in which the Company operates business model etc.

The details of the Familiarisation Programme conducted are available on the website ofthe Company www.sunpharma . com and can be accessed through the web link: http:// www.sunpharma.com/policies.

Number of meetings of the Board

The Board of Directors of the Company met 5 (Five) times during the year under reviewon May 25 2018; August 14 2018; September 26 2018; November 13 2018 and February 122019. The particulars of attendance of the Directors at the said meetings are provided indetail in the Corporate Governance Report which forms a part of this Report. Theintervening gap between the meetings was within the period prescribed under the Act andListing Regulations.

Evaluation of performance of the Board its Committees and Individual Directors

During the year the evaluation of the annual performance of individual Directorsincluding the Chairman of the Company and Independent Directors Board and Committees ofthe Board was carried out under the provisions of the Act relevant Rules and theCorporate Governance requirements as prescribed under Regulation 17 of Listing Regulationsand based on the circular issued by SEBI dated January 5 2017 with respect to GuidanceNote on Board Evaluation. The Nomination and Remuneration Committee had approved thecriteria for the performance evaluation of the Board its Committees and individualDirectors as per the SEBI Guidance Note on Board Evaluation.

The Chairman of the Company interacted with each Director individually for evaluationof performance of the individual Directors. The evaluation for the performance of theBoard as a whole and of the Committees were conducted by way of questionnaires.

In a separate meeting of Independent Directors performance of Non IndependentDirectors and performance of the Board as a whole was evaluated. Further they alsoevaluated the performance of the Chairman of the Company taking into account the views ofthe Executive Directors and Non-executive Directors.

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 and diversity of theBoard competency of Directors experience of Director strategy and performanceevaluation secretarial support evaluation of risk evaluation of performance of themanagement and feedback independence of the management from the Board etc. Theperformance of the Committees was evaluated by the Board after seeking inputs from theCommittee members on the basis of criteria such as mandate and composition effectivenessof the committee structure of the committee and meetings independence of the committeefrom the Board and contribution to decisions of the Board. The Nomination and RemunerationCommittee reviewed the performance of the individual Directors on the basis of thecriteria such as qualification experience knowledge and competency fulfilment offunctions availability and attendance initiative integrity contribution and commitmentetc. and the Independent Directors were additionally evaluated on the basis ofindependence independent views and judgement etc. Further the evaluation of Chairman ofthe Board in addition to the above criteria for individual Directors also includedevaluation based on effectiveness of leadership and ability to steer the meetingsimpartiality etc.

The Chairman and other members of the Board discussed upon the performance evaluationof every Director of the Company and concluded that they were satisfied with the overallperformance of the Directors individually and that the Directors generally met theirexpectations of performance.

The summary of the feedback from the members were thereafter discussed in detail by themembers. The respective Director who was being evaluated did not participate in thediscussion on his/her performance evaluation and had exited the meeting for the saiddiscussion. During the discussion in respect of performance of Mr. Dilip Shanghvi and Mr.Sudhir Valia both Mr. Dilip Shanghvi and Mr. Sudhir Valia had exited the meeting.

The Chairman additionally interacted with each Director individually for evaluation ofperformance of all Individual Directors and Mr. Dilip Shanghvi along with other Directorshad evaluated the performance of Mr. Israel Makov as the Chairman and as an IndividualDirector. They were satisfied with the overall performance of the Directors individuallyand that the Directors generally met their expectations of performance.

Human Resources

We have more than 32000 talented employee base spread across multiple geographies invarious sales offices R&D centers 40 + manufacturing locations Regional offices andCorporate office. We believe our employees are pivotal to all the initiatives that driveus to realise our future plans. Human Resource agenda encourages high performance culturewith focus on Employee safety & welfare Employee development & Productivity. YourDirectors would also like to take this opportunity to express their appreciation for thededication and commitment of the employees of the Company and look forward to theircontinued contribution.

Information as per Section 197 (12) of the Act read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is provided in‘Annexure-C' to this Report. Further the information pertaining to Rule 5(2) &5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014pertaining to the names and other particulars of employees is available for inspection atthe Registered office of the Company during business hours and pursuant to the secondproviso to Section 136(1) of the Act the Report and the accounts are being sent to themembers excluding this. Any shareholder interested in obtaining a copy of the same maywrite to the Company Secretary/Compliance Officer at Corporate office or Registered officeaddress of the Company.

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. The Company has adopted a policy on preventionprohibition and redressal of sexual harassment at workplace in line with the provisions ofthe Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013 and the Rules made thereunder. The Company has arranged various interactive awarenessworkshops in this regard for the employees at the manufacturing sites R & D set ups& corporate office during the year under review. The Company has submitted the AnnualReturns to the local authorities as required under the above mentioned Act.

During the financial year ended March 31 2019 three complaints pertaining to sexualharassment were received and the same were resolved by the Company. There are nocomplaints pending as at the end of the financial year.

Your Company has complied with provisions relating to the constitution of InternalComplaints Committee under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013

Auditors Statutory Auditors

S R B C & Co LLP Chartered Accountants (Firm's Regn. No. 324982E/ E300003) wereappointed as the Statutory Auditors of the Company for a period of 5 (five) years at the25th Annual General Meeting of the Company to hold office till the conclusion of the 30thAnnual General Meeting of the Company.

The Auditor's Report for the financial year ended March 31 2019 has been issued withan unmodified opinion by the Statutory Auditors.

Secretarial Auditor

The Board had appointed KJB & Co. LLP Practicing Company Secretaries Mumbai toundertake the Secretarial Audit of the Company for the financial year ended March 312019. The Secretarial Audit Report in the Form No. MR-3 for the year is provided as‘Annexure-D' to this Report.

The Secretarial Audit Report for the year does not contain any qualificationreservation or adverse remark.

Cost Auditor

The Board has appointed Messrs B M Sharma & Associates Cost Accountants Pune(Firm's Registration No. 100537) as Cost Auditor of the Company for conducting Cost Auditin respect of Bulk Drugs & Formulations of your Company for the financial year2019-20.

The Company is required to maintain Cost Records as specified by the Central Governmentunder Section 148(1) of the Act and accordingly such accounts and records are made andmaintained by the Company.

Secretarial Standards

The Company has complied with the applicable Secretarial Standards as amended from timeto time.

Loans Guarantees & Investments

The particulars of loans guarantees and investments have been disclosed in theFinancial Statements.

Related Party Transactions

The policy on Related Party Transactions as approved by the Board is available on thewebsite of the Company and can be accessed through the web link http://www.sunpharma.com/ policies.All contracts/arrangements/transactions entered by the Company during the year underreview with the related parties were in the ordinary course of business and on an arm'slength basis.

As required under Section 134(3)(h) of the Act details of transactions entered withrelated parties under the Act exceeding ten percent of the annual consolidated turnover asper the last audited financial statements are given in Form AOC-2 provided as‘Annexure-E' to this Report.

Audit Committee Composition

The details pertaining to composition of Audit Committee are included in the CorporateGovernance Report which forms part of this Report.

Risk Management

The Board of Directors has constituted a Risk Management Committee which is entrustedwith the responsibility of overseeing various strategic operational and financial risksthat the organisation faces along with the adequacy of mitigation plans to address suchrisks. The Corporate Governance Report which forms part of this report contains thedetails of Risk Management Committee of the Company. There is an overarching RiskManagement Policy in place has been reviewed and approved by the Board.

The Company has developed & implemented an integrated Enterprise Risk ManagementFramework through which it identifies monitors mitigates & reports key risks thatimpacts its ability to meet the strategic objectives. The Company's ERM framework is basedon the recommendations by the Committee of Sponsoring Organisations (COSO) to further theorganisation's endeavor to strengthen ERM framework and processes using best practices.The ERM team engages with all Function heads to identify internal and external events thatmay have an adverse impact on the achievement of Company's objectives and periodicallymonitors changes in both internal and external environment leading to emergence of a newthreat/risk. These risks are captured in the form of a risk register with all the relevantinformation such as risk description root cause and any existing mitigation plans. Therisk register is refreshed annually.

Risks are categorised into Strategic Financial Operational Compliance &Reputational. ERM risk assessments covering Company's various businesses and functions area key input for the annual internal audit program. During FY 2018-19 the ERM team focusedon reviewing effectiveness of actions taken to mitigate certain business cyber securityand other operational risks.

Internal Financial Controls

The Company believes that internal control is a necessary prerequisite of Governanceand that freedom should be exercised within a framework of checks and balances.

The Company has a well-established internal control framework which is designed tocontinuously assess the adequacy effectiveness and efficiency of financial andoperational controls. The management is committed to ensure an effective internal controlenvironment commensurate with the size and complexity of the business which provides anassurance on compliance with internal policies applicable laws regulations andprotection of resources and assets.

Global Internal Audit

An independent and empowered Global Internal Audit Function (GIA) at the corporatelevel carries out risk-focused audits across all businesses (both in India and overseas)to ensure that business process controls are adequate and are functioning effectively.These audits include reviewing finance operations safeguarding of assets and compliancerelated controls. Areas requiring specialised knowledge are reviewed in partnership withexternal subject matter experts.

GIA's functioning is governed by the Audit Charter duly approved by the AuditCommittee of the Board which stipulates matters contributing to the proper and effectiveconduct of audit. The audit processes are fully automated on a ‘SunScience' toolwhich integrates audit Internal Financial Controls (IFC) and Enterprise Risk Management(ERM) modules.

The Company's operating management closely monitors the internal control environmentand ensures that the recommendations of GIA are effectively implemented.

The Audit Committee of the Board monitors performance of GIA periodically reviews keyfindings and provides strategic guidance.

Corporate Social Responsibility

In compliance with the requirements of Section 135 of the Act read with the Companies(Corporate Social Responsibility) Rules 2014 the Board of Directors have constituted aCorporate Social Responsibility (CSR) Committee. The details of membership of theCommittee and the meetings held are detailed in the Corporate Governance Report formingpart of this Report. The contents of the CSR Policy of the Company as approved by theBoard on the recommendation of the CSR Committee are available on the website of theCompany and can be accessed through the web link: http://www.sunpharma.com/policies . Theaverage net profit of the Company in the three immediately preceding financial years isnegative therefore the Company was not required to spend on CSR activities during theyear however the Company has voluntarily spent on CSR activities.

The annual report on CSR activities containing details of voluntary expenditureincurred by the Company and brief details on the CSR activities are provided in‘Annexure-F' to this Report.

Public Deposits

The Company has not accepted any deposit from the Public during the year under reviewunder the provisions of the Act and the rules framed thereunder.

Management Discussion and Analysis

The Management Discussion and Analysis as prescribed under Part B of Schedule V readwith Regulation 34(3) of the Listing Regulations is provided in a separate section andforms part of this Report.

Corporate Governance Report

Report on Corporate Governance and Certificate of the Auditors of the Company regardingcompliance of the conditions of Corporate Governance as stipulated in Part C of Schedule Vof the Listing Regulations are provided in a separate section and forms part of thisReport.

Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo as stipulated under Section 134(3)(m) of the Act read with Rule 8 ofthe Companies (Accounts) Rules 2014 is provided as ‘Annexure-G' to this Report.

Employees' Stock Option Schemes

The Company presently has only one Employees' Stock Option Scheme which is inheritedfrom erstwhile Ranbaxy Laboratories Limited ("Ranbaxy"). The scheme is throughDirect Route and has been named as Sun Pharma Employee Stock Option Scheme-2015. Thescheme was adopted by the Company with certain amendments consequent upon merger oferstwhile Ranbaxy into the Company. The Scheme is in compliance with Securities andExchange Board of India (Share Based Employee Benefits) Regulations 2014.

Disclosure with respect to the Employees' Stock Option Scheme in compliance withSecurities and Exchange Board of India (Share Based Employee Benefits) Regulations 2014is available on the Company's website and can be accessed at:http://www.sunpharma.com/pdflist/all-documents .

Significant and Material Orders Passed by the Regulators or Courts or Tribunals

There are no significant and material orders passed by the regulators or courts ortribunals which impact the going concern status and Company's operations in future.

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 adopted a‘Global Whistle Blower Policy' for Sun Pharmaceutical Industries Limited and all itssubsidiaries in addition to the existing Global Code of Conduct that governs the actionsof its employees. Further details on vigil mechanism of the Company are provided in theCorporate Governance Report forming part of this Report.

Directors' Responsibility Statement

Pursuant to the requirements under Section 134(5) read with Section 134(3)(c) of theAct with respect to Directors' Responsibility Statement it is hereby confirmed that:

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

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 March 31 2019 and of the profit ofthe 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 the 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;

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

f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

Consolidated Accounts

The consolidated financial statements for the year ended March 31 2019 have beenprepared in accordance with Indian Accounting Standards (Ind AS) notified under theCompanies (Indian Accounting Standards) Rules 2015.

Credit Rating

ICRA Ltd. has reaffirmed the highest credit rating of ‘[ICRA] A1+'/‘[ICRA]AAA(Stable)' for the bank facilities long term/ short term borrowings and commercialpaper programs of the Company.

Further CRISIL Ltd. has also reaffirmed the highest credit rating of ‘CRISIL A1+and CRISIL AAA/Stable' for short term & long term bank facilities and commercial paperprograms of the Company.

Business Responsibility Reporting

The Business Responsibility Report of the Company for the year ended March 31 2019forms part of the Annual Report and is also made available on the website of the Companyat http://www.sunpharma.com/pdflist/all-documents .

Acknowledgements

Your Directors wish to thank all stakeholders employees and business partnersCompany's bankers medical professionals and business associates for their continuedsupport and valuable cooperation.

The Directors also wish to express their gratitude to investors for the faith that theycontinue to repose in the Company.

For and on behalf of the Board of Directors

Place: Mumbai Israel Makov
Date: May 28 2019 Chairman