The Board of Directors are pleased to present the Nineteenth Annual Report of theCompany along with the Audited Financial Statements for the year ended 31stMarch 2018.
FINANCIAL RESULTS AND HIGHLIGHTS
| || ||(Rs in Crore) |
|Particulars ||Year ended March 31 2018 ||Year ended March 31 2017 |
|Consolidated || || |
|Total Revenue ||4057 ||4129 |
|Profit Before Depreciation Finance Cost & Tax ||122 ||127 |
|Profit / (Loss) Before Exceptional Items & Tax ||(283) ||(247) |
|Profit / (Loss) Before Tax ||(641) ||(247) |
|Tax expense Credit/(charge) ||(26) ||21 |
|Profit / (Loss) After Tax ||(667) ||(226) |
|Other Comprehensive Income / (Loss) ||139 ||(182) |
|Total Comprehensive Income / (Loss) ||(528) ||(408) |
|Standalone || || |
|Total Revenue ||2534 ||2546 |
|Profit Before Depreciation Finance Cost & Tax ||380 ||393 |
|Profit Before Tax ||104 ||119 |
|Tax expense Credit/(charge) ||(35) ||18 |
|Profit After Tax before other Comprehensive Income ||69 ||137 |
|Total Comprehensive Income ||69 ||136 |
The consolidated total revenue of the Company for the financial year ended 31stMarch 2018 stood at Rs 4057 crore as compared to Rs 4129 crore of previous year. Thetotal Comprehensive loss for the year stood at Rs 528 crore vis-a-vis total Comprehensiveloss of Rs 408 crore of previous year.
On Standalone basis the Company registered total revenue of Rs 2534 crore as comparedto Rs 2546 crore during previous year.
Total Comprehensive Income for the year stood at Rs 69 crore vis-a-vis Rs 136 crore ofprevious year.
Performance of the Company has also been discussed in detail in the ManagementDiscussion and Analysis Report' forming part of this Annual Report.
STATE OF COMPANY'S AFFAIRS
During the year the focus of your Company continued on Research & Development withits consolidated revenue R&D expenses at Rs 287 crore (7% of consolidated revenue) andin pursuit of creating a strong Intellectual Property (IP) base the Company as on 31stMarch 2018 cumulatively filed 3037 patents and holds 628 patents worldwide. The Companyhad also received approvals for its six ANDAs from US Food and Drugs Administrator(US FDA') from third party approved manufacturing facility during the year which isan important development.
During the year under review as a part of long-term strategic initiatives yourCompany has undertaken various measures for sustainable value creation through costcontainments outsourcing of approved ANDAs by transfer to third party approvedmanufacturing locations for US market working capital optimization and Budgetary controlsto improve efficiencies etc. to name a few. Continued focus on new Product launches inIndia UK and Emerging Markets during the year is also expected to yield positive resultsin forthcoming periods.
Financial Year 2017-18 has also experienced a major tax reform in India Goods andServices Tax (GST') that had impacted domestic business of your Company. GST beinga major tax reform is expected to positively impact the economy in the long run whileshort-term disruptions were in line with the expectation. The strategic drive forimprovement in the operational efficiencies across the organization's global operationsand working capital your Company during the year partnered with Accenture Consulting toleverage their global industry expertise.
Whereas rationalization and cost containment initiatives gave positive impact theongoing expenditures on remedial measures (for US FDA related matter) continued to impactthe profitability of the Company. In addition during the year your Company tookcognizance of subdued growth and profitability in the businesses due to various factorsbeyond the control of the organization continued its prudent action for optimization ofR&D expenses. The strategic focus of your Company in R&D initiatives thoughimpacted the profitability; it is worth mentioning that such expenditures are for thefuture even if they are expensed o_.
STATUS OF NCEs _Breakthrough Antibiotics effective against Super Bugs_:
WCK 5222 (Combination of Zidebactam and Cefepime that meets the urgent threatof Carbopenem-resistant Entero- bacteriaceae and serious threats like Multidrug-resistantAcinetobacter Extended spectrum -lactamase producing Enterobacteriaceae (ESBLs) Drug-resistantSalmonella typhi and Multidrug-resistant Pseudomonas aeruginosa) During theyear in a major development in Phase 3 Clinical trial your Company finalized the Phase 3study protocol in consultation with US FDA. Study to commence in 2nd half offiscal 2018-19.
WCK 4282 (Combination of high dose cefepime and tazobactam that meets theurgent threat of certain Carbapenem-resistant Enterobacteriaceae and serious threats likeExtended spectrum -lactamase producing Enterobacteriaceae (ESBLs)
Drug-resistant Salmonella typhi) - Phase 3 study protocol finalized in consultationwith US FDA during the year. Study is expected to commence in mid 2018-19. EMEA feedbackon Phase 3 protocol also received during the year and EMEA accepted WCK 4282 as carbapenemsparing drug and single Phase 3 study size of 1100 patients would be acceptable.
WCK 4873 (Respiratory antibiotic active against MDR Pneumococci which areregarded as serious threat as Pneumococci cause life threatening pneumonia often requiringhospitalization. WCK 4873 is also effective against clindamycin resistantstreptococci which are regarded as concerning threat) In a major developmentduring the year Phase 2 study has been completed in USA and Europe.
WCK 771 (This is a broad spectrum anti drug MRSA are regardedas serious threat as they could cause life threatening infections such as pneumonia andblood stream infection. WCK 771 is also active against MDR pneumococci a serious threatcategory pathogen as well as Vancomycin resistant Staphylococcus aureus (VRSA) which isregarded as concerning threat category pathogen) Phase 3 complicated skin andskin structure infections study progressing well in India.
325 patients already recruited with a target of 500 patients.
WCK 2349 an oral drug corresponding to WCK 771 and has similar pathogencoverage as described above.
All the above NCEs have distinction of QIDP1 status by US FDA.
Keeping in line with the Company's strategic actions on breakthrough R&Ds yourCompany in the past raised long term financial resources in terms of Borrowings to ensureadequate liquidity to withstand any major Polito-economic volatility in the Global marketand that strategy continued to be working well with commensurate liquidity beingmaintained in the system in terms of Cash & Bank balances. This ensured uninterruptedR&D activities which is expected to garner significant positives for the Company inthe future in Generics Bio-similar & New Chemical Entity (NCE'.) During theyear the following approvals post successful audits were received from variousauthorities:
Pharmaceutical Inspection Convention and Pharmaceuticals Inspection Co-operation Scheme(PICS') Malaysia Federal Committee for Protection from Sanitary Risks(COFEPRIS') Mexico Latam and the Gulf Coopeation Council (GCC') Auditapprovals for Biotech API & Formulation.
EU GMP Certification of Shendra Site till February 2020.
Uganda Tanzania & Kenya [East African Community (EAC')] for Baddi unit.
Health Products Regulatory Authority of Ireland ('HPRA') has granted Certificate of GMPCompliance for Shendra
1 QIDP sta tus is granted to drugs identified by CDC (Centre for DiseaseControl USA) that act against pathogens which have a high degree of unmet need in theirtreatment. QIDP status provides fast track clinical development and review of the drugapplication by US FDA for drug approval. The drug is also awarded five-year extension ofmarket exclusivity. QIDP was constituted under Generating Antibiotic Incentives Now (GAIN)Act in 2012 as part of the FDA Safety and Innovation Act to underline the urgency in newantibiotics development.
UK MHRA STATUS
The Company's manufacturing facility at L1 Chikalthana continued to enjoy approvals ofUK MHRA. UK MHRA has also confirmed compliance with the principles and guidelines of GMPfor the Company's manufacturing facility at Kadaiya Daman.
Constructions of the Company's State-of-Art manufacturing facility in Jebel Ali FreeZone (JAFZA) Dubai UAE for manufacturing of speciality drugs for the US / Europeanmarkets has also progressed well.
There is no change in the nature of business of the Company or any of its Subsidiaries.
During the year under review the Company and its two subsidiaries Wockhardt UKHoldings Limited and CP Pharmaceuticals Limited (CP') in the United Kingdom havesettled an ongoing commercial litigation before the High Court in London United
Kingdom in relation to a supply contract for a drug named Trisenox. The dispute betweenthe parties was in respect of the price charged by CP to its counterparty to the contractCephalon Inc (Cephalon') an affiliate of Teva Pharmaceuticals USA Inc.(Teva'). Under the above referred settlement between the parties CP has agreed towaive its claim for the outstanding trade receivable of GBP 20 mn and accordingly droppedits counterclaim for the said amount and further paid a sum of GBP 23 mn to Teva andCephalon by way of full and final settlement of Teva's claims. The High Court has acceptedthe settlement between the parties and a Consent Order was issued on June 21 2017.Pursuant to this settlement the ongoing litigation stands closed and all claims aredismissed.
GOODS AND SERVICES TAX
The Goods and Services Tax (GST') a landmark reform which is expected to havelasting impact on the economy and businesses came into force effective 1stJuly 2017. Dedicated Task forces ensured requisite changes in IT systems Supply Chainand operations of the Company for smooth implementation of GST.
During the year 2017-18 CARE Ratings Limited (CARE Ratings') has revised theCompany's Rating for Long-Term Bank
Facilities (Fund Based Working Capital limit) from "CARE AA; Outlook:Negative" to "CARE A+; Outlook: Stable"; and for Short Term Bank Facilities(Non Fund Based Working Capital limit) from "CARE A1+" to "CARE A1".
CARE Ratings has also revised rating for the proposed issue of NCDs for an amount of Rs250 crore of the Company as "CARE A+; Outlook: Stable" from "CARE AA;Outlook: Negative".
Further India Rating & Research Private Limited has revised the Company's ratingsfor short-term Bank facilities/
Commercial Paper from "IND A1+" to "IND A1" and for long-term loanfacilities rating from "IND AA-/ Outlook: Negative" to "IND A/ Outlook:Negative".
DIVIDEND AND RESERVES
During the year 2017-18 the Board recommend dividend @ 0.01% (Rs 0.0005 per PreferenceShare of Rs 5 each) on
475659941 Non-Convertible Cumulative Redeemable Preference Shares of Rs 5 each and121454927 Optionally Convertible Cumulative Redeemable Preference Shares of Rs 5 eachabsorbing a sum of Rs 298557. These Preference Shares are due for redemption and/orconversion during the year 2018-19.
No amount is proposed to be transferred to the General Reserves of the Company out ofthe profits for the year.
DIVIDEND DISTRIBUTION POLICY
Dividend Distribution Policy of your Company aims at striking the right balance betweenthe quantum of dividend paid to its shareholders and the amount of profits retained forits business requirements present and future. The intent of the Policy is to broadlyspecify various external and internal factors that shall be considered while declaringdividend and the circumstances under which the shareholders of the Company may or may notexpect dividend. The Policy is available on the website of the Company weblink thereto ishttp://www.wockhardt.com/files/dividend-distribution-policy.pdf
Pursuant to the allotment of 82425 equity shares of Rs 5 each against exercise ofstock options granted under Wockhardt
Employees Stock Option Scheme 2011 (the Scheme') the paid-up equityshare capital of the Company increased from Rs 552740140 to Rs 553152265 during theyear under review.
There were no issue of equity shares with differential voting rights and sweat equityshares during the year 2017-18. The_Company does not have any scheme to fund its employeesto purchase the shares of the Company. Further no shares have been issued to employees ofthe Company except under the Scheme mentioned above.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review Ms. Zahabiya Khorakiwala (DIN: 00102689) was appointed asan Additional Director (Non-Executive) with effect from 30th October 2017. Theresolution for her appointment as a Non-Executive Director liable to retire by rotationis placed for the approval of Members of the Company at the ensuring Annual GeneralMeeting.
All the Independent Directors have furnished Declaration of Independence stating thatthey meet the criteria of independence as provided under Section 149(6) of the CompaniesAct 2013 (the Act') and Regulation 16 of the Securities and Exchange
Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015(SEBI Listing Regulations') and there has been no change in the circumstances whichmay affect their status as Independent Directors during the year.
In terms of the provision of:
Section 149 and other applicable provisions of the Act and SEBI Listing RegulationsMr. Aman Mehta (DIN: 00009364) Mr. Davinder Singh Brar (DIN: 00068502) and Dr. SanjayaBaru (DIN: 05344208) Independent Directors of the Company holds office upto 31stMarch 2019 and being eligible offers themselves for re-appointment. Considering theperformance evaluation the resolution for their re-appointment as recommended by theNomination & Remuneration Committee and the Board for another term upto 31stMarch 2024 as Independent Directors is placed for the approval of Members of theCompany at the ensuring AGM. Further Mr. Shekhar Datta (DIN: 00045591) who also holdsoffice upto 31st March 2019 has made a remarkable contribution for thesustainable growth and success of the Company. Strategic direction and support extended byhim in all the phases the Company went through would always be reminisced at all times.
Section 196 and other applicable provisions of the Act Dr. Huzaifa KhorakiwalaExecutive Director (DIN: 02191870) and Dr. Murtaza Khorakiwala Managing Director(DIN: 00102650) holds office upto 30th March 2019 and being eligible offersthemselves for re-appointment. Approval of Shareholders for payment of remuneration tothem is also upto 30th March 2019. The Board recommends the resolutionfor their re-appointment for a term upto 30th March 2024; and for fixation oftheir remuneration. In accordance with the provision of Section 178 and other applicableprovisions of the Act and SEBI Listing Regulations if any the Nomination andRemuneration Committee has considered and recommended the aboveappointments/re-appointments to the Board of Directors of the Company. A brief resume andother details of all the above Directors seeking appointment/ re-appointment are providedin the Notice of AGM.
Pursuant to the provisions of Section 152 of the Act Dr. Huzaifa KhorakiwalaExecutive Director retires by rotation as Director at the ensuing AGM and being eligibleoffers himself for re-appointment. The Board recommends his re-appointment.
In accordance with the provisions of Section 2(51) and 203 of the Act read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 Dr. MurtazaKhorakiwala Managing Director Mr. Manas Datta Chief Financial Officer and Mr. NarendraSingh Company Secretary & Compliance Officer are the Key Managerial Personnel(KMP') of your Company.
During the financial year 2017-18 the meetings of the Board of Directors and AuditCommittee were held 4 (four) times each. Details of these meetings and other Committees ofthe Board/General Meeting/Postal Ballot are given in the Report on Corporate Governanceforming part of this Annual Report.
As on 31st March 2018 the Audit Committee comprises of Mr. Shekhar DattaChairman Mr. Aman Mehta Mr. Davinder Singh Brar Dr. Sanjaya Baru Ms. Tasneem MehtaMr. Baldev Raj Arora and Mr. Vinesh Kumar Jairath as its Members. All the Members of theCommittee are Independent Directors and recommendations made by the Audit Committee wereaccepted by the Board of Directors of the Company. Further the Committee has carried outthe role assigned to it. Other details about the Audit Committee and other Committees ofthe Board are provided in the Report on Corporate Governance forming part of this AnnualReport.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(3)(c) of the Companies Act 2013 theDirectors state that:
(a) in the preparation of Annual Accounts for the year ended 31st March2018 the applicable Accounting Standards have been followed and that no materialdepartures have been made from the same;
(b) such Accounting Policies as mentioned in the Notes to the Financial Statements forthe year ended 31st March 2018 have been selected and applied consistently andjudgments and estimates have been made that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company at the end of the financial yearand of the profit of the Company for the year ended 31st March 2018;
(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 Annual Accounts for the year ended 31st March 2018 have beenprepared on a going concern basis;
(e) the internal financial controls to be followed by the Company have been laid downand that such internal financial controls are adequate and operating effectively; and
(f) proper systems to ensure compliance with the provisions of all applicable laws havebeen devised and that such systems are adequate and operating effectively.
STATUTORY AUDITORS AND AUDITORS' REPORT
Haribhakti & Co. LLP Chartered Accountants were appointed as the StatutoryAuditors of the Company at the AGM of the Company held on 15th September 2014for a term of five years i.e. till the conclusion of 20th AGM (to be held incalendar year 2019) subject to rati_cation of their appointment at every AGM of theCompany. The resolution for rati_cation of their appointment is placed for approval ofMembers of the Company at the ensuing AGM. The Company has received a letter fromStatutory Auditors confirming that they are eligible for rati_cation of their appointment.
The reports of the Statutory Auditors on Standalone and Consolidated Ind AS FinancialStatements forms part of this Annual Report. The Auditors' Report does not containany qualification reservation and adverse remark.
Pursuant to the provisions of Section 148 of the Companies Act 2013 read with theCompanies (Audit and Auditors) Rules 2014 as amended from time to time and asrecommended by the Audit Committee the Board of Directors of the Company appointed M/s.Kirit Mehta & Co. Cost Accountants as Cost Auditors to conduct the cost audit of theCompany for the financial year 2018-19. The Company has received consent from M/s. KiritMehta & Co. to act as Cost Auditors. Further pursuant to the aforesaid provisions ofthe Act the remuneration payable to M/s. Kirit Mehta & Co. for conducting the costaudit of the Company for the financial year ending on 31st March 2019 needs tobe rati_ed by the Members of the Company and resolution for the said rati_cation is placedfor approval of Members of the Company at the ensuing AGM.
The Cost Auditors' Report for the financial year ended 31st March 2017 didnot contain any qualification reservation and adverse remark and the same was duly filedwith the Ministry of Corporate Affairs.
SECRETARIAL AUDIT AND COMPLIANCE WITH SECRETARIAL STANDARDS
The Board of Directors of your Company has appointed Mr. Virendra Bhatt PractisingCompany Secretary as Secretarial Auditors to conduct Secretarial Audit of the Company forthe year ended 31st March 2018. The Secretarial Audit Report issued by Mr.Virendra Bhatt does not contain any qualification reservation and adverse remark. TheSecretarial Audit Report is annexed as Annexure I to this Report.
During the year your Company has complied with all the applicable SecretarialStandards issued by the Institute of Company Secretaries of India.
Pursuant to the provision of Section 92 of the Companies Act 2013 an extract of theAnnual Return is annexed as Annexure_II to this report.
EMPLOYEE STOCK OPTIONS
Pursuant to SEBI (Share Based Employee Benefits) Regulations 2014 and other applicablelaws if any the required disclosures as on 31st March 2018 are annexed asAnnexure III to this Report.
During the year under review there were no changes in the Employee Stock Option Schemeand the same is in compliance with the said Regulations.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Pursuant to the provisions of Section 135 of the Companies Act 2013 read with theCompanies (Corporate Social Responsibility Policy) Rules 2014 CSR Policy' asrecommended by the CSR Committee and approved by the Board is uploaded on the website ofthe Company www.wockhardt.com. The Average Net Profit of the Company for the immediatelypreceding 3 financial years calculated as per Section 198 of the Companies Act 2013 wasnegative. Hence no amount was required to be spent on CSR activities during the financialyear 2017-18. However as a continuing corporate governance practice the Companycontributed Rs 4.67 crore to Wockhardt Foundation CSR arm of the Company for spending onCSR activities which has undertaken CSR projects in the areas of healthcare educationetc.
The details on CSR activities as required under Section 135 of the Companies Act 2013and the Companies (Corporate Social Responsibility Policy) Rules 2014 as amended fromtime to time is annexed as Annexure IV to this Report.
POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS
Your Company has been following well laid down policy on appointment and remunerationof Directors KMP and Senior Management Personnel.
The appointment of Directors is made pursuant to the recommendation of Nomination andRemuneration Committee (NRC'). The remuneration of Executive Directors comprises ofBasic Salary Perquisites & Allowances and follows applicable requirements asprescribed under the Companies Act 2013. Approval of shareholders for payment ofremuneration to
Whole-time Directors is sought from time to time.
The remuneration of Non-Executive Directors comprises of sitting fees & commissionif any in accordance with the provisions of Companies Act 2013 and reimbursement ofexpenses incurred in connection with attending the Board meetings Committee meetingsGeneral meetings and in relation to the business of the Company. During the year underreview the Company has not paid any commission to the Non-Executive Directors.
A brief of the Remuneration Policy on appointment and remuneration of Directors KMPand Senior Management is provided in the Report on Corporate Governance forming part ofthis Annual Report. Further the Policy is available on the website of the Company and theweblink thereto is http://www.wockhardt.com/pdfs/wl-remuneration-policy.pdf NRC have alsoformulated criteria for determining qualifications positive attributes and independenceof a director and the same have been provided in the Report on Corporate Governanceforming part of this Annual Report.
PERFORMANCE EVALUATION OF DIRECTORS
The Nomination and Remuneration Committee of the Board of Directors of the Company havelaid down criteria for performance evaluation of the Board of Directors includingIndependent Directors. Pursuant to the requirement of the Companies Act 2013 the SEBIListing Regulations and considering criteria specified in the SEBI Guidance Note on BoardEvaluation the Board has carried out the annual performance evaluation of entire BoardCommittee and all the Directors based on the parameters as detailed in the Report onCorporate Governance forming part of this Annual Report. The parameters of performanceevaluation were circulated to the Directors in the form of questionnaire.
INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS
M/s. Ernst and Young has been engaged to review and comment on adequacy of InternalFinancial Control (IFC') process of the Company in accordance with the requirementof the Companies Act 2013. There were no material observations noted in this review.
The Company has adequate internal financial control procedures commensurate with itssize and nature of business. These controls include well defined policies guidelinesStandard Operating Procedures (SOPs') authorization and approval procedures andtechnology intensive processes. The internal financial controls of the Company areadequate to ensure the accuracy and completeness of the accounting records timelypreparation of reliable financial information prevention and detection of frauds anderrors safeguarding of the assets and that the business is conducted in an orderly andefficient manner.
The Company during the year has adopted a co-sourced model for internal audit. TheCompany's internal audit team is assisted by M/s. Ernst and Young who carry out internalaudit reviews in accordance with the approved internal audit plan. Internal audit teamreviews the status of implementation of internal audit recommendations. Summary ofCritical observations if any and recommendations under implementation are reported tothe Audit Committee.
Enterprise Risk Management (ERM) framework encompasses practices relating to theidentification analysis evaluation treatment mitigation and monitoring of thestrategic external and operational controls risks in achieving key business objectives.
The Company identifies and mitigates risk that matter on an ongoing basis. Riskmanagement is embedded in the strategic business decision making. Key risks and theirmitigation arising out of periodic reviews by the Committee are assessed and reported tothe Audit Committee on a periodic basis.
Strategic Risks comprises of risks inherent to Pharmaceutical industry andcompetitiveness Company's choices of target markets business models and talent base.Your Company periodically assesses risks in new initiatives the impact of strategy onfinancial performance competitive landscape growth models and attracting and retainingtalented workforce.
External Risks arising out of uncontrollable factors in the external environment due tovarious developments in the regulatory environment in which your company operatesunfavourable trends in the macroeconomic environment including currency fluctuationsCountry specific risks economic and political environment technology disruptions etc.are actively assessed to take appropriate risk mitigation.
Operational controls risks encompasses risks of non-compliance to policies informationsecurity data privacy intellectual property individuals engaging in unlawful orfraudulent activity or breaches of contractual obligations that could typically result inpenalties financial loss litigation and loss of reputation are reviewed on an ongoingbasis.
The current key risk relates to regulatory risk on overseas operations and business.This is arising out of regulatory audits at Company's manufacturing locations which isbeing adequately addressed through strengthening of current processes and controls byCompany's internal quality assurance and manufacturing teams and through the help ofreputed external consultants. There are no risks which in the opinion of the Boardthreaten the existence of your Company. Other details about Risk Management have beenelaborated in the Report on Corporate Governance forming part of this Annual Report.
All properties and insurable interests of the Company including buildings plant &machinery and stocks have been fully insured.
To preserve environment your Company regularly undertakes green initiatives which notonly reduce burden on environment but also ensure secured dissemination of information.Such initiatives includes energy saving water conservation and usage of electronic modein internal processes & control statutory and other requirement.
For better conduct of operations and in compliance with regulatory requirement yourCompany has framed and adopted certain policies. In addition to the Company's Code ofBusiness Conduct and Ethics key policies/code that have been adopted by the Company areas follows:
|Name of the Policy ||Brief Description ||Web Link |
|Policy for determining Materiality of Events ||This policy aims to determine Materiality of events/ information. ||http://www.wockhardt.com/files/policy- determining-materiality-of-events.pdf |
|Archival Policy ||The policy deals with archival of the Company's records and documents. ||http://www.wockhardt.com/files/archival- policy.pdf |
|Policy for determining Material Subsidiaries ||The policy determines the material subsidiaries and material non-listed Indian subsidiaries of the Company and to provide the governance framework for them. ||http://www.wockhardt.com/files/policy-on- material-subsidiaries-17-12-2515.pdf |
|Policy on Materiality of and Dealing with Related Party Transactions ||The policy regulates all transactions between the Company and its' related parties. ||http://www.wockhardt.com/files/policy-on- materiality-of-and-dealing-with-related-party- transactions.pdf |
|Vigil Mechanism / Whistle Blower Policy ||The Company has adopted the Vigil Mechanism for director and employees to report concerns about unethical behaviour actual or suspected fraud or violation of the Company's code of conduct. ||http://www.wockhardt.com/files/whistle- blower-policy.pdf |
|Code of Practices & Procedures for Fair Disclosure of Unpublished Price Sensitive Information ||The Code determines principles for fair disclosure of Unpublished Price Sensitive Information. ||http://www.wockhardt.com/Files/Code-of- Practices-&-Procedures-for-fair-disclosure- of-UPSI.pdf |
|Corporate Social Responsibility Policy ||The policy outlines the Company's strategy to bring about a positive impact on society through programs relating to education healthcare environment etc. ||http://www.wockhardt.com/files/csr-policy.pdf |
|Remuneration Policy ||This policy formulates the criteria for determining qualification competencies positive attributes and independence for the appointment of director and also the criteria for determining the remuneration of the directors key managerial personnel and other employees. ||http://www.wockhardt.com/pdfs/wl- remuneration-policy.pdf |
|Dividend Distribution Policy ||The policy determines the parameters/ basis for declaration of dividend. ||http://www.wockhardt.com/files/dividend- distribution-policy.pdf |
|Policy on Preservation of Records ||The policy deals with periodicity of retention of the Company records and documents. ||Available on internal portal |
|Forex Risk Management Policy ||The policy defines identify measure manage mitigate and review potential risks pertaining to fluctuations in Foreign Exchange. || |
|Code of Conduct for Regulating Monitoring and Reporting Trading by Designated Persons ||The policy provides the framework in dealing with securities of the Company by designated persons. || |
|Anti-bribery and Anti-corruption Policy ||The policy provides for prevention deterrence and detection of fraud bribery and other corrupt business practices in order to conduct the business activities with honesty integrity with highest possible ethical standards. || |
|Human Right Policy ||Policy aims at social & economic dignity and freedom regardless of nationality ethnicity gender race economic status or religion. Also focusses to uphold international human rights standards. || |
|Stakeholder Engagement Policy ||Policy aims to create a sustainable environment that involves relevant Stakeholders who may be affected by or can influence organisation's decisions. || |
|Policy on Safety Health and Environment ||The policy provides the provision of a safe and healthy work place for every employee and care for the environment to make the world a better place to live in. || |
|Acceptable usage Policy for IT System ||The policy outline the acceptable use of computing equipments and information security awareness. || |
|HR Policy Handbook ||This encompasses work timings Leave Policy No Smoking in Company Premises Employee Benefit related guidelines Policy on prevention of Sexual Harassment at work place etc. || |
PARTICULARS OF LOANS INVESTMENTS AND GUARANTEES UNDER SECTION 186 OF THE COMPANIESACT 2013
In accordance with the approval of the Shareholders' sought by way of Postal Ballot on15th March 2018 under Section 186 of the Companies Act 2013 the Company cangive loans guarantees and/or providing security(ies) and/or make investments upto Rs6000 crore. The particulars of loans investments and guarantees are provided under Note36 and Note 7 in the Notes to the Financial Statements.
PARTICULARS OF CONTRACTS/ ARRANGEMENTS WITH RELATED PARTIES
During the financial year 2017-18 all contracts/ arrangements/ transactions enteredinto by the Company with its related parties were reviewed and approved by the AuditCommittee. Prior omnibus approvals were obtained from the Audit Committee for relatedparty transactions which were of repetitive nature entered in the ordinary course ofbusiness and on an arm's length basis. No transaction with any related party was inconflict with the interest of the Company. The Company did not enter into any relatedparty transaction with its Key Managerial Personnel. The details of related partytransaction are provided under Note 41 in the Notes to the Financial Statements.
The particulars of contracts/arrangements with related parties in Form AOC2 areprovided in Annexure V to this Report.
Pursuant to the requirements laid down under Section 177 of the Companies Act 2013 andRegulation 22 of the SEBI Listing Regulations the Company has well laid down VigilMechanism. The details of the same are provided in the Report on Corporate Governanceforming part of this Annual Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosures with respect to the remuneration of Directors and employees as requiredunder Section 197 of the Act and Rule 5(1) of Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 have been annexed to this report as Annexure VI.
In accordance with the provisions of Section 197(12) of the Companies Act 2013 readwith Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as amended a statement showing the names and other particulars ofthe employees drawing remuneration in excess of the limits set out in the said rules whichincludes the name of top 10 employees in term of remuneration drawn forms part of thisReport. Pursuant to the provisions of Section_136(1) of the Companies Act 2013 theBoard's Report is being sent to the Shareholders of the Company excluding the saidstatement. Any shareholder interested in inspection or obtaining a copy of the statementmay write to the Company Secretary and the same will be furnished on request.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 is provided in Annexure VII to this Report.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANY
As on 31st March 2018 the Company has total 31 subsidiaries. Howeverduring the year under review the Company does not have any joint venture or associatecompany.
There were no companies who ceased to be subsidiaries of the Company during thefinancial year under review.
In accordance with Section 129(3) of the Companies Act 2013 a statement containingsalient features of the Subsidiaries of the Company is provided in Form AOC1 annexedas Annexure VIII to this Report.
CONSOLIDATED FINANCIAL STATEMENT
The Consolidated Financial Statement of your Company for the financial year 2017-18 areprepared in compliance with applicable provisions of the Companies Act 2013 read with theRules issued thereunder applicable Accounting Standards and provisions of the SEBIListing Regulations.
A copy of the Audited Financial Statements of the Subsidiaries shall be made availablefor inspection at the Registered Office of the Company during business hours. The AuditedFinancial Statement of the Company including Consolidated Financial Statement andFinancial Statements of its Subsidiaries are also available on the website of the Company.Any Shareholder interested in obtaining a copy of the separate Financial Statement of thesubsidiary(ies) shall make specific request in writing to the Company Secretary and thesame will be furnished on request.
During the year under review your Company has not accepted any Fixed Deposits underChapter V of the Companies Act 2013 and as such no amount on account of Principal orInterest on Deposits from Public was outstanding as on 31st March 2018.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/COURT
There are no significant and material orders passed by the Regulators or Courts orTribunals which impact the going concern status and operations of the Company during theyear under review. However Member's attention is drawn on the following:
During the year under review the Company and its two subsidiaries Wockhardt UKHoldings Limited and CP Pharmaceuticals Limited in the United Kingdom have settledan ongoing commercial litigation before the High Court in London United Kingdom inrelation to a supply contract for a drug named Trisenox details of which is elaboratedunder the heading "Exceptional Item" above.
The Company had filed summary suit in the Hon'ble High Court of Bombay for recovery ofconsideration against the supplies to T.A.I. Pharma Limited. Hon'ble High Court of Bombayissued judgement in favour of the Company asking the T.A.I. Pharma Limited to payto the Company a sum of Rs 28.39 crore along with interest @18% per annum from the date of_ling of the suit which aggregates to about Rs 40 crore which has since been upheld by theHon'ble Supreme
Court. The process of recovery of payments and incidental procedures thereto isunderway.
Ministry of Health and Family Welfare vide its Notification dated 10thMarch 2016 prohibited manufacture for sale sale and distribution for human use some ofthe Fixed Dose Combination (FDC') with immediate effect. The said Notificationincluded some of the Products of the Company. The Hon'ble Delhi High Court vide orderdated 1st December 2016 quashed the said Notification. However Ministry ofHealth and Family Welfare have filed an appeal before the Hon'ble
Supreme Court which has since been dismissed.
MATERIAL CHANGES AND COMMITMENTS OCCURRED AFTER THE END OF FINANCIAL YEAR
There are no material changes and commitments between the end of the financial year ofthe Company and as on the date of this report which can affect the financial position ofthe Company.
BUSINESS RESPONSIBILITY REPORT
In compliance with Regulation 34(2)(f) of the SEBI Listing Regulations the BusinessResponsibility Report forms part of this Annual Report.
CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION & ANALYSIS REPORT
A Report on Corporate Governance along with a Certificate from Practicing CompanySecretary confirming the compliance of the conditions of Corporate Governance andManagement Discussion and Analysis Report forms part of this Annual Report.
Your Directors wishes to place on records its sincere appreciation and acknowledge thededication & contribution made by the employees of the Company at all levels. YourDirectors wish to place on record their appreciation to all the Stakeholders of theCompany viz. customers members of medical profession investors banks regulators fortheir unrelenting support during the year under review.
| ||For and on behalf of the Board of Directors |
| ||Dr. H. F. KHORAKIWALA |
|Place : Mumbai ||Chairman |
|Date : 4th May 2018 ||DIN: 00045608 |