To the Members of Suven Life Sciences Limited
Your Company's Board of Directors has pleasure in presenting this 29th Annual Reporttogether with Ind AS compliant Audited Financial Statements of the Company for thefinancial year ended 31st March 2018.
(Rs. in lakhs)
|Particulars || |
| ||2017-18 ||2016-17 ||2017-18 ||2016-17 |
|Revenue from operations ||62525.84 ||54447.78 ||62525.84 ||54447.78 |
|Operating expenditure ||39234.24 ||37913.45 ||42706.55 ||41540.33 |
|Depreciation and amortisation ||2130.99 ||2141.31 ||2130.99 ||2141.31 |
|Operating profit ||21160.61 ||14393.02 ||17688.30 ||10766.14 |
|Finance cost ||461.11 ||566.58 ||462.78 ||568.34 |
|Other income ||2327.07 ||2109.25 ||2327.07 ||2109.25 |
|Profit before Tax ||23026.57 ||15935.69 ||19552.59 ||12307.05 |
|Tax expenses ||7183.84 ||3588.32 ||7183.84 ||3588.32 |
|Profit for the year ||15842.73 ||12347.37 ||12368.75 ||8718.73 |
|Other Comprehensive Income || || || || |
|Items that will not be reclassified to profit or loss || || || || |
| ||(42.33) ||(14.90) ||(42.33) ||(14.90) |
|Income tax relating to items that will not be reclassified to || || || || |
|profit or loss ||14.65 ||5.15 ||14.65 ||5.16 |
|Total Other Comprehensive Income ||(27.68) ||(9.75) ||(27.68) ||(9.74) |
|Total Comprehensive Income ||15815.05 ||12337.62 ||12341.07 ||8708.99 |
|Retained earnings - opening balance ||39531.80 ||29926.12 ||33080.04 ||27102.99 |
|Add: || || || || |
|Profit for the year ||15815.05 ||12337.62 ||12341.07 ||8708.99 |
|Less: || || || || |
|Dividend including dividend tax ||(2297.99) ||(1531.94) ||(2297.99) ||(1531.94) |
|Transfer to General Reserve ||(1500.00) ||(1200.00) ||(1500.00) ||(1200.00) |
|Retained earnings - closing balance ||51548.85 ||39531.80 ||41623.12 ||33080.04 |
REVIEW OF OPERATIONS
Your Company has performed well during the year under review and registered standalonerevenue from operations of Rs 62526 lakhs as against Rs 54448 lakhs in the previousyear. Profit after Tax (PAT) of the Company has gone up by 28% to Rs 15815 lakhs from Rs12338 lakhs in the previous financial year. The Earnings per Share (EPS) of your Companyhas improved to Rs 12.43 in fiscal 2017-18 per share from the previous year EPS of Rs 9.69in fiscal 2016-17 per share.
Your Company's consolidated revenue from operations for the year 2017-2018 remained thesame as that of standalone revenue. The consolidated profit after tax decreased to Rs12341 lakhs mainly due to clinical development expenditure incurred by SuvenNeurosciences Inc. (formerly Suven Inc.) on SUVN-502.
The exports of the Company continue to be a major chunk of revenue accounting for avolume of Rs 57651 lakhs representing 92% of the total revenue of Rs. 62526 lakhsduring the year under review.
Your Board of Directors has declared an interim dividend of Rs. 1.50 per equity shareduring January 2018. The total cash outflow on account of dividends including dividendtax paid is Rs. 2298 lakhs. The Company has paid the interim dividend to the shareholderswho are on the Register of Members of the Company as on the Record Date 07th February2018 and notified to the stock exchanges in terms of SEBI (LODR) Regulations 2015.Keeping the funding requirements for meeting the expansion plans in view the Boardrecommends that interim dividend already paid may please be treated as the final dividendfor the year 2017-2018.
TRANSFER TO RESERVES
The Company transferred Rs. 1500 lakhs to the general reserve during the currentfinancial year.
RESEARCH AND DEVELOPMENT
During the year your company has spent Rs 6390 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.
The paid up Equity Share Capital as on March 31 2018 was Rs.1272.82 lakhs. During theyear under review the Company has not issued any shares with differential voting rightsnor 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 March 31 2018 forms part of thisreport as "Annexure A".
NUMBER OF MEETINGS OF THE BOARD AND AUDIT COMMITTEE
During the year under review four 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 a part ofthis Annual Report.
The Audit Committee composed of all independent directors. Shri D. G. Prasad is theChairman of the Audit Committee and Dr. M. R. Naidu and Shri M. Gopalakrishna are membersof the Audit Committee. The time gap between the said meetings was within the periodprescribed under the provisions of the Companies Act 2013 and the SEBI guidelinesthereof.
DIRECTORS RESPONSIBILITY STATEMENT
Your Directors state that: i) The applicable accounting standards have been followed inthe preparation of the Annual Accounts. ii) Such Accounting policies have been selectedand applied consistently and judgments and estimates made when required that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the financial year and of the profit of the Company for that period.iii) Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities. iv)The Directors have prepared the Annual Accounts on a going concern basis. v) Properinternal financial controls were in place to be followed by the Company and that thefinancial controls were adequate and were operating effectively. vi) Proper systemsdevised to ensure compliance with the provisions of all applicable laws and that suchsystems are adequate and operating effectively.
The Board has on the recommendation of the Nomination
& Remuneration Committee framed a policy for selection and appointment ofDirectors Senior Management and their remuneration. The Remuneration Policy is stated inthe Corporate Governance Report.
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 at http://www.suven.com/pdf/Policy-for-Dividend-Distribution.pdf
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The Company has invested a sum of Rs 10223 lakhs in Suven Neurosciences Inc.(formerly Suven Inc.) a wholly owned subsidiary as at 31st March 2018 for its businesspurpose. Apart from the investment the Company did not give any Loans or providedGuarantees or any security during the year under the provisions of Section 186 of theCompanies Act 2013.
The Company has one international wholly owned subsidiary company by name SuvenNeurosciences Inc. (formerly Suven Inc.) in USA. The consolidated financial statementsof the Company prepared in accordance with Indian Accounting Standards as specified in theCompanies (Indian Accounting Standards) Rules 2015 form part of the annual report.
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 financial statements inrespect of the subsidiary company shall be kept open for inspection at the RegisteredOffice of the Company during working hours for a period of 21 days before the date of theAnnual General Meeting. Your Company will also make available these documents upon requestby any Member of the Company interested in obtaining the same. The separate auditedfinancial statements in respect of the subsidiary company is also available on the websiteof 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) ofsub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules2014 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 COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY
There are no material changes and commitments affecting the financial position of theCompany which has occurred between the end of the financial year of the Company i.e. March31 2018 and the date of the Directors' report i.e. 15th May 2018.
CONSERVATION OF ENERGY TECHNOLOGY ABSORP3 TION 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
In compliance with Section 135 of the Companies Act 2013 read with the Companies(Corporate Social Responsibility Policy) Rules 2014 the Company has established CorporateSocial Responsibility (CSR) Committee composed of Shri M. Gopalakrishna as ChairpersonShri D. G. Prasad Prof. Seyed E. Hasnain Shri Venkateswarlu Jasti and Smt. SudharaniJasti as members. The committee is responsible for formulating and monitoring the CSRpolicy of the Company. Annual Report on CSR Activities forms part of this 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.
APPOINTMENTS/ RESIGNATIONS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL
The Company did not appoint any directors or Key Managerial Personnel during the yearunder review. All Independent Directors have given declarations confirming that they meetthe criteria of independence as laid down under Section 149(6) of the Companies Act 2013and SEBI (LODR) Regulations 2015. None of the Directors or Key Managerial Personnel hasresigned during the year under review.
CHANGES IN DIRECTORS
Dr. K.V. Raghavan Independent Director passed away on 12th October 2017. YourDirectors deeply mourn the sudden demise of Dr. Raghavan and place on record theirappreciation for the valuable contribution made by Dr. Raghavan during his tenure asDirector on the Board of your Company.
DIRECTORS RETIRING BY ROTATION
In accordance with the provisions of the Companies Act 2013 Shri Venkateswarlu JastiChairman & CEO retires by rotation at the ensuing Annual General Meeting and beingeligible offers himself for re-appointment.
The brief profile(s) of the director(s) seeking appointment/ re-appointment at theensuing Annual General Meeting are presented in the Annual Report.
The Company has not accepted any public deposits and as such no amount on account ofprincipal or interest on public deposits was outstanding as on the date of the balancesheet.
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.
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".
Your Company's share registry operations (physical as well as electronic form ofholdings) will continue with Karvy Computershare Private Limited Registrars and TransferAgents. They can be contacted at Karvy Selenium Tower B Plot 31-32 GachibowliFinancial District Nanakramguda Hyderabad - 500 032 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)
A detailed Report on Corporate Governance prepared in substantial compliance with theprovisions of SEBI (LODR) Regulations 2015 with the Stock Exchanges together with theAuditors' Certificate regarding the compliance of conditions of corporate governance ispresented in a separate section forming part of the 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.
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 14th August 2017has appointed M/s. TUKARAM & Co. Chartered Accountants (Firm Registration No.004436S) as statutory auditors of the Company from the conclusion of the 28th AnnualGeneral Meeting till the conclusion of the 33rd Annual General Meeting to be held in theyear 2022. The Companies (Amendment) Act 2017 dispensed the ratification of auditor'sappointment at every Annual General Meeting. Accordingly the Ordinary Business Agenda Itemrelating to ratification of statutory auditors appointment is not placed in the AGM. TheAuditors' Report does not contain any qualifications.
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.
In terms of Cost (Records and Audit) Amendment Rules 2014 dated 31st December 2014issued by the Central Government the requirement for Cost Audit is not applicable to theCompany based on the export turnover criteria prescribed under Cost Audit 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_ tofithe_Board's_Report.pdf
TRANSFER OF UNPAID AND UNCLAIMED AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND3IEPF3
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 now mandate transfer of dividends lying unpaid and unclaimedfor a period of seven years as well as the underlying equity shares to IEPF. The companyshall accordingly follow the prescribed procedures in this regard.
During the FY2018 there is no change in the nature of business of the company or ofits wholly owned subsidiary (WoS) Suven Neurosciences Inc. (formerly Suven Inc.) inUSA. There are no companies which have become or ceased to be its subsidiaries jointventures or associate 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.
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 |
| ||Venkateswarlu Jasti |
|Place: Hyderabad ||Chairman & CEO |
|Date: 15 May 2018 ||DIN: 00278028 |