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Suven Life Sciences Ltd.

BSE: 530239 Sector: Health care
NSE: SUVEN ISIN Code: INE495B01038
BSE 15:03 | 10 Aug 53.40 4.85
(9.99%)
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52.90

HIGH

53.40

LOW

49.25

NSE 14:59 | 10 Aug 53.35 4.85
(10.00%)
OPEN

52.00

HIGH

53.35

LOW

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OPEN 52.90
PREVIOUS CLOSE 48.55
VOLUME 390606
52-Week high 67.40
52-Week low 11.25
P/E
Mkt Cap.(Rs cr) 680
Buy Price 53.40
Buy Qty 161590.00
Sell Price 53.40
Sell Qty 2575.00
OPEN 52.90
CLOSE 48.55
VOLUME 390606
52-Week high 67.40
52-Week low 11.25
P/E
Mkt Cap.(Rs cr) 680
Buy Price 53.40
Buy Qty 161590.00
Sell Price 53.40
Sell Qty 2575.00

Suven Life Sciences Ltd. (SUVEN) - Director Report

Company director report

To the Members of

Suven Life Sciences Limited

Your Company's Board of Directors has pleasure in presenting this 30thAnnual Report together with Ind AS compliant Audited Financial Statements of the Companyfor the financial year ended 31st March 2019.

Financial Performance
(र. in lakhs)

Standalone

Consolidated

Particulars
2018-19 2017-18 2018-19 2017-18
Revenue from operations 66350.44 62525.84 66350.44 62525.84
Operating expenditure 43996.71 39234.24 50307.62 42706.55
Depreciation and amortization 2214.05 2130.99 2214.05 2130.99
Operating profit 20139.68 21160.61 13828.77 17688.30
Finance cost 376.31 461.11 377.38 462.78
Other income 2422.93 2327.07 2422.93 2327.07
Profit before Tax 22186.30 23026.57 15874.32 19552.59
Tax expenses 7180.01 7183.84 7180.01 7183.84
Profit for the year 15006.29 15842.73 8694.31 12368.75
Other Comprehensive Income
Items that will not be reclassified to profit or loss (21.16) (42.33) (21.16) (42.33)
Income tax relating to items that will not be reclassified to profit or loss 7.39 14.65 7.39 14.65
Total Other Comprehensive Income (13.77) (27.68) (13.77) (27.68)
Total Comprehensive Income 14992.52 15815.05 8680.54 12341.07
Retained earnings - opening balance 51548.86 39531.80 41623.11 33080.03
Add:
Profit for the year 14992.52 15815.05 8680.54 12341.07
Less:
Dividend including dividend tax (2301.68) (2297.99) (2301.68) (2297.99)
Transfer to General Reserve (1500.00) (1500.00) (1500.00) (1500.00)
Retained earnings - closing balance 62739.70 51548.86 46501.97 41623.11

Review of Operations

During the year under review your Company performed well and recorded standalonerevenue from operations of र.66350 lakhs as against र.62526 lakhs in theprevious year. Profit after Tax (PAT) of the Company was down by 5% to र.14992 lakhsfrom र.15815 lakhs in the previous financial year. The Earnings per Share (EPS) ofyour

SUVEN

Company has come down to र.11.79 in fiscal 2018-19 per share from the previousyear EPS of र.12.45 in fiscal 2017-18 per share.

Your Company's consolidated revenue from operations for the year 2018-2019 remained thesame as that of standalone revenue. The consolidated profit after tax decreased toर.8681 lakhs mainly due to clinical development expenditure incurred by SuvenNeurosciences Inc. (formerly Suven Inc.) on SUVN-502. The new Wholly Owned Subsidiary(WOS) companies Suven Pharma Inc. in USA and Suven Pharmaceuticals Limited (SPL) are yetto commence operations as such there are no reportable financials as of 31st March 2019in respect of the said new WOS(s).

The consolidated financial statements of the Company prepared in accordance with IndianAccounting Standards as specified in the Companies (Indian Accounting Standards) Rules2015 form part of the Annual Report.

Scheme of Arrangement (Demerger)

During the year under review subject to approval of NCLT and other stakeholders yourCompany's Board considered and decided that the Company shall demerge CRAMS undertaking ona going concern basis to its wholly owned subsidiary Suven Pharmaceuticals Limited (SPL)through a Scheme of Arrangement between SLSL and SPL keeping in view the expected growthprospects in both CRAMS and Discovery business which shall not only enable both thebusinesses to grow independently with their focused vision strategies and operations butalso contribute significantly towards unlocking the potential value of the businesses forthe shareholders.

The consideration for the demerger shall be issue of 1 (One) fully paid up equity shareof face value of INR 1/- (Rupee One only) each of SPL for every 1 (One) fully paid upequity share of face value of INR 1/- (Rupee One only) each held by each shareholder inthe Demerged Company (SLSL) as on the Record Date thereby resulting in a mirrorshareholding of SLSL in SPL.

Exports

The exports of the Company continue to be a major chunk of revenue accounting for avolume of र.61586 lakhs representing 93% of the total revenue of र.66350lakhs during the year under review.

Dividend

Your Company's Board of Directors declared an interim dividend of र.1.50 perequity share on 5th February 2019. The total cash outflow on account ofdividends including dividend tax paid is र.2302 lakhs. The Company has paid theinterim dividend to the shareholders who are on the Register of Members of the Company ason the Record Date 15th February 2019 notified to the stock exchanges in termsof SEBI (LODR) Regulations 2015.In view of the funds requirements for meeting theexpansion plans the Board recommends that interim dividend already paid may please betreated as the final dividend for the year 2018-2019.

Transfer to Reserves

The Company transferred र.1500 lakhs to the general reserve during the currentfinancial year.

Research and Development

During the year your Company has spent र.6478 lakhs on innovative R&D in CNStherapies accounting for 10% on sales. Suven is a biopharmaceutical company focused ondiscovering developing and commercialising novel pharmaceutical products which are firstin class or best in class CNS therapies through the use of GPCR targets. Suven has 4clinical stage compounds a Phase 2 undergoing SUVN-502 Phase 2 ready SUVN-G3031 Phase 1completed SUVN-D4010 and Phase 1 commenced SUVN-911.

In addition to these clinical compounds the Company has nine (9) internally-discoveredtherapeutic drug candidates currently in various stages of pre-clinical developmenttargeting conditions such as ADHD dementia depression Huntington's disease Parkinson'sdisease and pain.

Share Capital

The paid up Equity Share Capital as on 31st March 2019 was

र.1272.82 lakhs. During the year under review the Company has not issued anyshares with differential voting rights nor granted stock options or sweat equity shares.

Extract of Annual Return

Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of theCompanies Act 2013 read with Rule 12 of the Companies (Management and Administration)Rules 2014 the extracts of the Annual Return as at 31st March 2019 forms partof this report as "Annexure – A".

Number of Meetings of the Board and Audit Committee

During the year under review six Board Meetings were convened and held and four AuditCommittee Meetings were convened and held. The details of Board meetings and AuditCommittee meetings are presented in the Corporate Governance report which forms part ofthis Annual Report.

The Audit Committee composed of all independent directors. Shri D. G. Prasad is theChairperson of the Audit Committee and Dr. M. R. Naidu Shri M. Gopalakrishna and ShriSantanu Mukherjee are members of the Audit Committee. The time gap between the saidmeetings was within the period prescribed under the provisions of the Companies Act 2013and the SEBI guidelines thereof.

Directors Responsibility Statement

Your Directors state that:

(a) The applicable accounting standards have been followed in the preparation of theAnnual Accounts.

(b) Such accounting policies have been selected and applied consistently and judgmentsand estimates made when required that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit of the Company for that period.

(c) Proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.

(d) The Directors have prepared the Annual Accounts on a going concern basis.

(e) Proper internal financial controls were in place to be followed by the Company andthat the financial controls were adequate and were operating effectively.

(f) Proper systems devised to ensure compliance with the provisions of all applicablelaws and that such systems are adequate and operating effectively.

Remuneration Policy

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Remuneration Policy is stated in the Corporate Governance Report.

Dividend Policy

The Board has adopted a suitable Policy for Dividend Distribution as per therequirements of SEBI Guidelines. The policy is stated in the Annual Report and has beenuploaded on the Company's website and can be accessed athttp://www.suven.com/pdf/Policy-for-Dividend-Distribution.pdf

Particulars of Loans Guarantees or Investments

Your Company has invested a sum of र.13636 lakhs in Suven Neurosciences Inc.for its business purpose. Your Company acquired entire share capital of र.1.00 lakhin Suven Pharmaceuticals Limited identified as Resulting Company for the purpose of Schemeof Arrangement (Demerger) and as of 31st March 2019 no investments were madein newly formed Suven Pharma Inc. in USA. Apart from these investments the Company didnot give any Loans or provided Guarantees or any security during the year under theprovisions of Section 186 of the Companies Act 2013.

Subsidiary companies

Your Company has two international wholly owned subsidiary companies and one Indianwholly owned subsidiary company as on 31st March 2019. During the FY2018-2019 Suven Pharmaceuticals Limited in India and Suven Pharma Inc. in USA havebecome subsidiary companies.

Pursuant to the provisions of Section 129(3) of the Companies Act 2013 a statementcontaining salient features of financial statements of subsidiary in Form AOC-1 forms partof Board's Report as "Annexure B". The separate audited financialstatements in respect of the subsidiary company shall be kept open for inspection at theRegistered Office of the Company during working hours for a period of 21 days before thedate of the Annual General Meeting. Your Company will also make available these documentsupon request by any Member of the Company interested in obtaining the same. The separateaudited financial statements in respect of the subsidiary company is also available on thewebsite of your Company at http://www.suven.com/annual-reports.html

Related Party Transactions

The Particulars of contracts or arrangements with related parties referred to insub-section (1) of section 188 in the prescribed Form

AOC-2 pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2)of the Companies (Accounts) Rules 2014 forms part of this report as "Annexure– C".

The Board has approved a policy for related party transactions which has been uploadedon the Company's website.

Material Changes and Commitments Affecting Financial Position of the Company

Your company invested in the month of April 2019 30 Million USD in Suven Pharma Inc.a newly formed Wholly Owned Subsidiary in USA for the purpose of acquisition of the assetsof Rising Pharmaceuticals as per the US Court Bankruptcy proceedings. Except the saidinvestment there are no other material changes and commitments affecting the financialposition of the Company which has occurred between the end of the financial year of theCompany i.e. 31st March 2019 and the date of the Directors' report i.e. 25thMay 2019.

Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo

The information on conservation of energy technology absorption foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 forms part of this report as

"Annexure – D".

Risk Management Policy

The Board formulated a suitable risk policy to take care of unique business models ofyour Company: Contract Technical Services (CTS) and CRAMS. Suven is an IP creating andprotecting company strictly adheres to and harmonise with the global patent regime. Toensure the security and confidentiality of client data access to client data isrestricted to the senior most team leader working on the respective project and observesstrict standards of confidentiality by entering into an internal CDA. We believe thatstrict compliances to the non-disclosure requirements insulate our Company against risksrelating to IPR infringement claims of our clients. In addition to these practices yourcompany regularly conducts safety and preventive audits in all plants and ensures thatnecessary safeguards are in place to protect the work force and assets against all perilswith appropriate insurance policies.

Corporate Social Responsibility

IncompliancewithSection135oftheCompaniesAct2013readwith the Companies (CorporateSocial Responsibility Policy) Rules 2014 the Company has established Corporate SocialResponsibility (CSR) Committee composed of Shri M. Gopalakrishna as Chairperson Shri D.G. Prasad Prof. Seyed E. Hasnain Shri Venkateswarlu Jasti and Smt. Sudharani Jasti asmembers. The CSR programs of the Company are being implemented by Suven trust formed forthis purpose.

As of 31st March 2019 there were no amounts due payable to Suven Trust byyour Company. The CSR Committee is responsible for formulating monitoring the CSR policyand review of CSR programs of the Company. Annual Report on CSR Activities forms part ofthis Report as "Annexure – E".

Performance Evaluation of the Board

Pursuant to the provisions of the Companies Act 2013 and as per the SEBI (LODR)Regulations 2015 the Board has carried out an annual performance evaluation of its ownperformance the directors individually as well as the evaluation of the working of itsCommittees. The manner in which the evaluation has been carried out has been explained inthe Corporate Governance Report.

Directors and Key Managerial Personnel

Mr. Santanu Mukherjee (DIN: 07716452) was appointed as an Independent and Non-ExecutiveAdditional Director by the Board of Directors of the Company w.e.f. 15th May2018 in accordance with the applicable provisions of the Companies Act 2013 and the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 he is not liable toretire by rotation for a term of 5 years from 15th May 2018. The shareholdersapproved his appointment as Independent Director in the 29th AGM held on 14thAugust 2018. He was also inducted as a member of Audit Committee of your Company.

Ms. J.A.S. Padmaja (DIN: 07484630) was appointed as an Independent and Non-ExecutiveAdditional Director by the Board of Directors of the Company w.e.f. 14thNovember 2018 in accordance with the provisions of the Companies Act 2013 and the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 she is not liable toretire by rotation for a term of 5 years from 14th November 2018. Theshareholders approved her appointment through postal ballot voting concluded on 20thMarch 2019.

During the year under review the Two Independent Directors Dr. M. R. Naidu and Shri MGopalakrishna were re-appointed for 2nd term of 5 years each as per therequirements of SEBI (Listing Obligations and Disclosure) Regulations 2015 as amendedand Shri D. G. Prasad was also re-appointed as Independent Director by the members throughthe postal ballot voting concluded on 20th March 2019 for 2nd termof 5 years w.e.f. 1st April 2019.

The Company did not appoint any Key Managerial Personnel during the year under review.All Independent Directors have given declarations confirming that they meet the criteriaof independence as laid down under Section 149(6) of the Companies Act 2013 and SEBI(LODR) Regulations 2015. None of the Directors or Key Managerial Personnel has resignedduring the year under review.

Directors Retiring by Rotation

In accordance with the provisions of the Companies Act 2013 Smt. Sudharani JastiWhole-time Director retires by rotation at the ensuing Annual General Meeting and beingeligible offers herself for re-appointment.

The brief profile(s) of the director(s) seeking appointment/reappointment at theensuing Annual General Meeting are presented in the Annual Report.

Deposits

During FY 2018-19 the Company has not accepted any fixed deposits and as such noamount on account of principal or interest on deposits was outstanding as on the date ofthe balance sheet.

Internal Financial Control Systems and their Adequacy

Your Company has laid down set of standards which enables to implement internalfinancial control across the organisation and ensure that the same are adequate andoperating effectively(1) to provide reasonable assurances that: transactions are executedin conformity with generally accepted accounting principles/ standards or any othercriteria applicable to such statements (2) to maintain accountability for assets; accessto assets is permitted only in accordance with management's general or specificauthorisation and the maintenance of records that are in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company; and (3)Provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the assets that could have a material effect on thefinancial statements.

Vigil Mechanism

The Company has put in place Whistle Blower Policy a vigil mechanism to deal withinstance of fraud and mismanagement if any. The details of the Whistle Blower Policy isexplained in the Corporate Governance Report and also posted on the website of the Company

Particulars of Employees and Remuneration

The information required under Section 197(12) of the Act read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 forms partof this report as

"Annexure – F".

Investor Service

Your Company's share registry operations (physical as well as electronic form ofholdings) will continue with Karvy Fintech Private Limited Registrars and TransferAgents. They can be contacted at Karvy Selenium Tower B Plot 31-32 GachibowliFinancial District Nanakramguda Hyderabad - 500032 Phone No. 040-6716 1565 Fax No. 040-2300 1153 for any query relating to Shares.

The shares of the Company are listed on National Stock Exchange of India Limited (NSE)and BSE Limited (BSE)

Corporate Governance

A detailed Report on Corporate Governance prepared in substantial compliance with theprovisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015with the Stock Exchanges together with the Auditors' Certificate regarding the complianceof conditions of corporate governance is presented in a separate section forming part ofthe Annual Report.

Management's Discussion and Analysis

Management's Discussion and Analysis Report for the year under review as stipulatedunder Regulation 34 of the SEBI (LODR) Regulations 2015 is presented in a separatesection forming part of the Annual Report.

AUDITORS Statutory Auditors

Pursuant to the provisions of section 139 of the Companies Act 2013 and the Rulesframed thereunder the Company in its Annual General Meeting (AGM) held on 14thAugust 2017 has appointed M/s. TUKARAM& Co LLP Chartered Accountants (FirmRegistration No. 004436S) as statutory auditors of the Company from the conclusion ofthe 28th Annual General Meeting till the conclusion of the 33rdAnnual General Meeting to be held in the year 2022. The Companies (Amendment) Act 2017dispensed the ratification of auditor's appointment at every Annual General Meeting. TheAuditors' Report does not contain any qualifications.

Secretarial Auditors

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 M/s. dvmgopal & associates a Company Secretary in Practice to undertake theSecretarial Audit of the Company. The Report of the Secretarial Audit Report forms part ofthis report as "Annexure–G". The Secretarial Audit Report does notcontain any qualifications.

Cost Audit

In terms of Cost (Records and Audit) Amendment Rules 2014 dated 31stDecember 2014 issued by the Central Government the requirement for Cost Audit is notapplicable to the Company based on the export turnover criteria prescribed under CostAudit Rules.

Business Responsibility Report

A detailed Business Responsibility Report (BRR) is prepared. As a green initiative theBRR is placed on website of your company and can be accessed at web link athttp://www.suven.com/annual-reports.html

Employees Stock Option Schemes

During the year there has been no material change in the ‘Suven Employees StockOption Scheme 2004' (referred as ‘the scheme'). The scheme is in compliance with theSEBI (Share Based Employee Benefits) Regulations 2014. The details are available on thecompany's web link at: http://suven.com/pdf/ESOP-Annexure_to_ the_Board's_Report.pdf

Transfer of Unpaid and Unclaimed amounts to Investor Education and Protection Fund(IEPF)

Pursuant to the provisions of the Companies Act 2013 read with IEPF Authority(Accounting Audit Transfer and Refund) Rules 2016 as amended declared dividends whichremained unpaid or unclaimed for a period of seven years have been transferred by thecompany to the IEPF which has been established by the central government.

The above referred rules also mandate transfer of dividends remained unpaid andunclaimed for a period of seven years as well as the underlying equity shares to IEPFAuthority. The Company shall accordingly follow the procedures prescribed in this regard.

General

During the FY 2019 there is no change in the nature of business of the company or ofits wholly owned subsidiaries. Except Suven Pharma Inc. in USA and Suven PharmaceuticalsLimited in India which have become wholly owned subsidiary companies there are no othercompanies have become or ceased to be your Company's subsidiaries joint ventures orassociate companies during the year.

The Company has complied with the provisions of all applicable Secretarial Standardsissued by the Institute of Company Secretaries of India during the year under review.

There are no significant material orders passed by the Regulators/ Courts which wouldimpact the going concern status of the Company and its future operations.

Your Directors further state that during the year under review there were no casesfiled pursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.

Acknowledgements

Your Directors wish to place on record their gratitude to Shareholders for theconfidence reposed by them and thank all the shareholders customers dealers suppliersand other business associates for their contribution to your Company's growth. TheDirectors also wish to place on record their appreciation of the valuable servicesrendered by the executives staff and workers of the Company.

Your Directors also thank the Central Government and State Government the FinancialInstitutions and Banks for their support during the year and we look forward to itscontinuance.

For and on behalf of the Board of Directors
Place: Hyderabad
Date: 25th May 2019
Venkateswarlu Jasti
Chairman & CEO
DIN: 00278028