The Board of Directors are delighted to present the Twenty First AnnualReport of the Company along with the Audited Financial Statements for the year ended 31stMarch 2020.
FINANCIAL RESULTS AND HIGHLIGHTS
(Rs. in Crore)
|Particulars ||Year ended March 31 2020 ||Year ended March 31 2019 |
|Consolidated || || |
|Total Revenue from Continuing operations ||2844 ||3566 |
|Profit Before Depreciation Finance Cost & Tax from Continuing operations ||158 ||(17) |
|Profit / (Loss) Before Tax from Continuing operations ||(342) ||(447) |
|Tax expense Credit / (charge) of Continuing operations ||204 ||135 |
|Profit / (Loss) After Tax before other Comprehensive Income from Continuing operations ||(138) ||(312) |
|Discontinued Operations || || |
|Profit / (Loss) from discontinued operation before tax ||145 ||146 |
|Tax expense of discontinued operations (charge) / credit ||(50) ||(51) |
|Profit / (Loss) from discontinued operations ||95 ||95 |
|Profit / (Loss) for the year ||(43) ||(217) |
|Total Comprehensive Income ||57 ||(208) |
|Standalone || || |
|Total Revenue from Continuing operations ||933 ||1588 |
|Profit Before Depreciation Finance Cost & Tax from Continuing operations ||(90) ||(31) |
|Profit / (Loss) Before Tax from Continuing operations ||(484) ||(322) |
|Tax expense - Credit / (charge) of Continuing operations ||158 ||145 |
|Profit / (Loss) After Tax before other Comprehensive Income from Continuing operations ||(326) ||(177) |
|Discontinued Operations || || |
|Profit / (Loss) from discontinued operation before tax ||145 ||146 |
|Tax expense of discontinued operations (charge) / credit ||(50) ||(51) |
|Profit / (Loss) from discontinued operations ||95 ||95 |
|Profit / (Loss) for the year ||(231) ||(82) |
|Total Comprehensive Income ||(227) ||(83) |
The consolidated total revenue for the financial year ended 31stMarch 2020 stood at Rs. 3325 crore as compared to Rs. 4158 crore of previousyear. Earnings before interest tax depreciation and amortization (EBITDA) for the yearended 31st March 2020 are Rs. 245 crore vis--vis Rs. 135 croreduring previous year. The total Comprehensive income for the year stood at Rs. 57 crorevis--vis total Comprehensive loss of Rs. 208 crore of previous year. The above figuresinclude discontinued operation figures.
On Standalone basis the Company registered total revenue of Rs. 1414crore as compared to Rs. 2181 crore during previous year and total Comprehensive Incomefor the year stood at Rs. (227) crore vis--vis Rs. (83) crore of previous year. Theabove figures include discontinued operation figures.
STATE OF COMPANY'S AFFAIRS
Your Company's strategic focus continues to be on Research andDevelopment (R&D'). With New Chemical Entity (NCE') WCK 6777 ofyour Company getting Quali_ed Infectious Disease Product1 (QIDP')designation from the United States Food and Drug Administration (USFDA')Wockhardt became the only Company in the world to hold QIDP Status for six antibiotics 3of them are targeting Gram Negative pathogens and the other 3 are e_ective against Grampositive diffcult-to-treat "Superbugs". R&D in pharmaceutical business notonly have long gestation period but demands heavy investments; and your Companyyear-on-years continues invest substantial part of topline on R&D. During the yearR&D expenses stood at Rs. 208 crore (6.26% of consolidated revenue) vis--vis.Rs. 291 crore of previous year.
Being a research based global Pharmaceutical and Biotech company yourCompany has strong focus on developing intellectual property. During the year the Companyhas _led 33 patents out of which 28 patents were granted. Accordingly the Company as on31st March 2020 cumulatively _led 3165 patents and holds 722 patentsworldwide.
During the year under review:
US FDA carried out inspection of Bioequivalence Centre located atR&D Centre Aurangabad during which Bioequivalence studies of Tamsulosin 0.4mgcapsules and Metoprolol Tartrate 200mg ER tablets were audited. At the end of inspectionthere was Nil observation (i.e. zero 483 observation) signifying that best practices werefollowed in compliance to applicable regulations.
US FDA accorded approvals for three ANDAs from third party approvedmanufacturing facility through site transfer submission of Wockhardt's ANDAs.
US FDA accorded approval for an ANDA for 50mg injection of Decitabinewhich is used to treat certain forms of cancer.
Indian drug regulator DCGI approved Wockhardt's 2 newantibiotics EMROK (IV) and EMROK O (Oral) for acute bacterial skin and skin structureInfections including diabetic foot infections and concurrent bacteraemia based on thePhase 3 study involving 500 patients in 40 centres across India. The new drug will targetsuperbug like Methicillin resistant Staphylococcus aureus (MRSA) which is a leading causeof rising antimicrobial resistance (AMR). By virtue of its broad spectrum activity againstwidely prevalent pathogens including MRSA superior safety over the currently availableanti-
MRSA agents and its unique properties your Company believe EMROK /EMROK-O has a strong potential to effectively address the unmet medical need of theclinicians in the country thereby helping to reduce the morbidity and mortality.
Wockhardt's NCE WCK 6777 a first ever once-a-day ß-lactamenhancer class antibiotic has been granted QIDP status by US FDA. WCK 6777 is aonce-a-day combination antibiotic based on Wockhardt's NCE Zidebactam which imparts
WCK 6777 novel mechanism of ß-lactam enhancer. Driven by theenhancer action WCK 6777 overcomes an array of problematic bacterial resistancemechanisms such as metallo-ß-lactamases KPC and OXA carbapenemases. FurtherZidebactam has the unique ability to overpower other tough resistance mechanisms such asreduced drug uptake and drug efflux encountered in contemporary multidrug (MDR) resistantGram negative pathogens. WCK 6777 for injection has been awarded QIDP for the treatmentsof complicated urinary tract infections including pyelonephritis (cUTI); and complicatedintra-abdominal infections (cIAI) indication.
The dual coveted objectives attained by this drug are the prevention ofhospitalization and the facilitation of early discharge of hospitalized patients.
Your Company during the year also continued its long-term strategicinitiatives in value creation through cost containments fostering culture ofcost-consciousness budgetary controls to improve e_ciencies and working capitaloptimization which gave positive impact. Nonetheless ongoing expenditures on remedialmeasures (for US FDA related matter) continued to impact the Profitability of the Company.
Current status of QIDP products: Spurring Clinical development of NCEsin different territories:
WCK 5222: An abridged Phase 3 global study protocol _nalized inconsultation with US FDA EMA and Chinese FDA (NMPA). The study is estimated to commencein second half of 2020. Investigational product manufactured for phase III trials at FDAapproved contract manufacturing sites in Europe.
WCK 4282: Protocol for Global Phase III complicated urinary tractinfection (cUTI) study has been discussed and approved by FDA and EMA. Chinese NMPAconcurred that product meets unmet medical need and agreed with the clinical developmentplan and clinical study protocol. The study is estimated to commence by Q1 2021.
WCK 4873: Obtained Indian regulator DCGI's approval forinitiating Phase 3 study in India for the indication of community acquired pneumonia.Discussion with ANVISA completed on the study protocol. Similar approval is being soughtfrom Mexico.
Phase III study in India and LATAM is estimated to commence in secondhalf of 2020.
WCK 771 & WCK 2349: Phase 3 study was completed for both WCK771 (IV) and WCK 2349 (Oral). The study demonstrated that both the NCEs are comparable tostandard of care MRSA drug Linezolid. DCGI approvals have been received for manufacturingand marketing in India for both WCK 771 & WCK 2349 which represents the first everIndia discovered antibiotics receiving approval. Both the drugs have been approved forAcute Bacterial Skin and Skin Structure Infections (ABSSSI) including diabetic footinfections and concurrent bacteraemia.
WCK 6777: US FDA has accepted WCK 6777 US IND application. Phase Istudies scheduled to commence by end of 2020 in USA. Wockhardt planned for theglobal development of WCK 6777 covering important markets of the US Europe China andIndia.
All the above NCEs have distinction of QIDP status by US FDA.
During the year the following approvals post successful audits werereceived from various authorities:
TMMDA- MOH (Turkey) PICs Certification EAC-Uganda GMP Renewal State FDA& WHO (GMP) approval for Biotech API and formulation.
ANSM France PMDA Japan State FDA & WHO (GMP) approvals for Ankleshwarfacility.
State FDA and WHO (GMP) approval for Biotech H14/2 OSD facility.
State FDA & WHO (GMP) approval for Baddi facility.
There is no change in the nature of business of the Company or any ofits Subsidiaries.
COVID-19 PANDEMIC RESPONSE
COVID-19 pandemic has impacted Global Economy and Human Lives in anunprecedented manner. The number of cases of COVID-19 is rising every day. WhileGovernments and Administrations around the world are grappling with how to respondbusinesses can not avoid its moral responsibilities of supporting the health andwell-being of Employees & Society at large and need to focus on initiatives tohelp "_atten the curve". None of us can predict the true impact of the pandemicon the global economy but at this pivotal moment there are clear choices to be made.At this time as there is no o_-the shelf guidelines for the current situation itwill be critical to initiate pragmatic steps for an organization's ability to emergefrom the current crisis and push forward into a new era of economic recovery andopportunity for the bene_t of all stakeholders.
Your Company has taken prudent measures for "work from home"institutionalising health safety measures across all Offices manufacturing &distribution facilities in accordance with the local administrative guidelines apart fromcreating core Covid 19 team to routinely review assess and respond to evolving scenariosin business manufacturing supply chain HR and Finance.
SALE OF BUSINESS UNDERTAKING
The Board of Directors of your Company in their meeting held on 12thFebruary 2020 approved the transfer of business comprising 62 products and lineextensions along with related business assets and liabilities contracts permitsintellectual properties employees marketing sales and distribution of the same in theDomestic Branded Division in India Nepal
Bhutan Sri Lanka and Maldives; and manufacturing facility in BaddiHimachal Pradesh India where some of the above pharmaceutical products which are beingtransferred are manufactured (Business Undertaking'); by way of a slump sale toDr. Reddy's Laboratories Limited as per the terms and conditions specified in theBusiness Transfer Agreement (BTA') for a consideration of INR 1850 crore.
The Business Undertaking being transferred reported revenue fromoperation ~INR 481 crore which is ~15% of the consolidated revenue for Financial Yearended 31st March 2020. The proposed divestment is ~3.8 times of annualizedrevenue of the business being transferred.
The intended sale of Business is in line with the Company'sstrategic plan to shift from acute therapeutic areas to more chronic business likeanti-diabetes CNS etc. and also to its niche antibiotic portfolio of NCEs. The divestmentwill additionally ensure adequate liquidity to bring in robust growth in the chronicdomestic branded business international operations investments in Biosimilars for the USmarket apart from the Company's Global clinical trials of Break-throughAnti-Infectives (NCEs approved under coveted QIDP program of United States Food & DrugAdministration) and R&D activities.
The sale of Business will enable Wockhardt to:
Have adequate liquidity for robust growth in international operations andinvestments in Biosimilars for the US market;
Augment remaining significant Domestic Branded Business portfolio of the Companyand re-focus towards chronic segment with differentiated product portfolio;
Continue its ongoing research and development activities;
Necessary action for completion of clinical trials of the Company'sbreakthrough NCEs in the anti-infective space duly approved by coveted QIDP Program of USFDA; and
Strengthen the balance sheet.
All international operations in UK USA Ireland and other locations through its stepdown subsidiaries.
Formulation plants located at Waluj Shendra and Chikalthana in Aurangabad Bhimporeand Kadaiya in Daman; bulk drugs plant at Ankleshwar India and manufacturing facilitiesat all existing international locations.
Research & Development centers located at Chikalthana Aurangabad India andexisting facilities in the international locations.
Significant part of Domestic Branded Business constituting Chronic & Specialityportfolios.
The transaction is expected to be completed during Q1 of FY 2020-21.
During the year 2019-20 CARE Ratings Limited (CARERatings') has revised the Company's Rating for Long-Term Bank Facilities (FundBased) as "CARE BB+; (Under credit watch with positive implications)" from"CARE BBB-; Negative [Triple B Minus; Outlook: Negative]"; and for Short TermBank Facilities (Non Fund Based) as "CARE A4+; (Under credit watch with positiveimplications)" from "CARE A3 [A Three]".
CARE Ratings has also revised rating for the proposed issue of NCDs foran amount of Rs. 500 crore of the Company as "CARE BB+; (Under credit watch withpositive implications)" from "CARE BBB-; Negative [Triple B Minus; Outlook:Negative]". Further India Rating & Research Private Limited has also revised theCompany's ratings for short-term Bank facilities to "IND A4+ / RWE"from "IND A3" and for long-term loan facilities rating "IND BB+/ RWE"from "IND BBB-/ outlook: Negative".
DIVIDEND AND RESERVES
The Board of Directors of your Company due to inadequate profit doesnot recommend any dividend on the equity and preference shares of the Company for the yearended 31st March 2020; and no amount has been transferred to the GeneralReserve of the Company.
DIVIDEND DISTRIBUTION POLICY
Dividend Distribution Policy of your Company aims at striking the rightbalance between the quantum of dividend paid to its shareholders and the amount of profitsretained for its business r equirements present and future. The intent of the Policy isto broadly specify various external and internal factors that shall be considered whiledeclaring dividend and the circumstances under which the shareholders of theCompany may or may not expect dividend.
The Policy is available on the website of the Company weblink theretois http://www.wockhardt.com/_les/dividend-distribution-policy.pdf
Pursuant to the allotment of 48800 equity shares of Rs. 5 each againstexercise of stock options granted under Wockhardt Employees Stock Option Scheme 2011(the Scheme') the paid-up equity share capital of the Company increased fromRs. 553431015 to Rs. 553675015 during the year under review.
During the year 2019-20 the Company has extended the date ofredemption of 160000000 Nos. of 0.01% Non-Convertible Cumulative Redeemable PreferenceShares (NCRPS Series 5') for a period of 1 year i.e. from 31stMarch 2020 to 31st March 2021 at a redemption premium of 8% p.a. onthe redemption value of said Preference Shares as on 31st March 2020.Redemption value of said Preference Shares as on 31st March 2020 stands Rs.99.84 crore. During this period of 1 year both the Company and NCRPS Series 5 holdershall have the right of early redemption by giving one month notice. In such caseredemption premium would be charged for the period commencing 1st April 2020till the actual date of redemption of the said Preference Shares.
As on 31st March 2020 the total paid up share Capital ofthe Company comprises of: i. 110735003 Equity Shares of Face value of Rs. 5/ each. ii.500000000 Nos. of 4% Non-Convertible Non-Cumulative Redeemable Preference Shares(NCCRPS') of Face Value of Rs. 5/- each. iii. 160000000 Nos. of 0.01%Non-Convertible Cumulative Redeemable Preference Shares (NCRPS Series 5') ofFace Value of Rs. 5/- each.
There were no issue of equity shares with differential voting rightsand sweat equity shares during the year 2019-20. The Company does not have any scheme tofund its employees to purchase the shares of the Company. Further no shares have beenissued to employees of the Company except under the Scheme mentioned above.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review all the Independent Directors havefurnished Declaration of Independence stating that they meet the criteria of independenceas provided under Section 149(6) of the Companies Act 2013 (the Act') andRegulation 16 of the Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 (SEBI Listing Regulations') andthere has been no change in the circumstances which may a_ect their status as IndependentDirector during the year. Independent Directors have also submitted declaration that theyhave registered themselves on the online data bank of Indian Institute of CorporateAffairs (IICA) in accordance with the Companies (Appointment and Quali_cation ofDirectors) Fifth Amendment Rules 2019.
In terms of the provision of:
Section 161 and other applicable provisions of the Act Ms. RimaMarphatia (DIN: 00444343) Chief General Manager of Export-Import Bank of India(EXIM') has been appointed as a Nominee Director on the Board of the Companyeffective 6th May 2019. In accordance with the provision of Section 178 andother applicable provisions of the Act and SEBI Listing Regulations if any theNomination and Remuneration Committee has considered and recommended the aboveappointments to the Board of Directors of the Company.
Section 152 of the Act Ms. Zahabiya Khorakiwala (DIN: 00102689)Non-Executive Director retires by rotation as Director at the ensuing AGM and beingeligible o_ers herself for re-appointment. The Board recommends her re-appointment.
In accordance with the provisions of Section 2(51) and 203 of the Actread with the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 Dr. Murtaza Khorakiwala Managing Director Mr. Manas Datta Chief Financial Officerand Mr. Narendra Singh Company Secretary & Compliance Officer are the Key ManagerialPersonnel (KMP') of your Company. Mr. Narendra Singh has resigned from theposition of Company Secretary and Compliance Officer of the Company with e_ect fromclosure of the working hours on 11th May 2020 and Mr. Gajanand Sahu has beenappointed as the Company Secretary and Compliance Officer (Acting) of your Company w.e.f.12th May 2020.
None of the directors are disqualified under Section 164(2) of theCompanies Act 2013. Further they are not debarred from holding the Office of Directorpursuant to order of SEBI or any other authority.
During the financial year 2019-20 the meetings of the Board ofDirectors and Audit Committee were held 5 (_ve) times each. Details of these meetings andother Committees of the Board / General Meeting / Postal Ballot are given in the Report onCorporate Governance forming part of this Annual Report.
As on 31st March 2020 the Audit Committee comprises of Mr.Aman Mehta Chairman Mr. Davinder Singh Brar Dr. Sanjaya Baru Ms. Tasneem Mehta Mr.Baldev Raj Arora and Mr. Vinesh Kumar Jairath as its Members.
All the Members of the Committee are Independent Directors andrecommendations made by the Audit Committee were accepted by the Board of Directors of theCompany. Further the Committee has carried out the role assigned to it. Other detailsabout the Audit Committee and other Committees of the Board are provided in the Report onCorporate Governance forming part of this Annual Report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(3)(c) of the Companies Act2013 the Directors state that:
(a) in the preparation of Annual Accounts for the year ended 31st March2020 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 2020 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 loss of the Company for the year ended 31st March 2020;
(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 2020 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
B S R & Co. LLP Chartered Accountants were appointed as theStatutory Auditors of the Company at the Annual General Meeting (AGM') of theCompany held on 14th August 2019 for a term of _ve years i.e. till theconclusion of 25th AGM (to be held during calendar year 2024).
The reports of the Statutory Auditors on Standalone and ConsolidatedInd AS Financial Statements forms part of this Annual Report. The Auditors'Report does not contain any qualification reservation and adverse remark.
Pursuant to the provisions of Section 148 of the Companies Act 2013read with the Companies (Audit and Auditors) Rules 2014 as amended from time to time andas recommended by the Audit Committee the Board of Directors of the Company appointedM/s. Kirit Mehta & Co. Cost Accountants as Cost Auditors to conduct the cost audit ofthe Company for the financial year 2020-21. The Company has received consent from M/s.Kirit Mehta & Co. to act as Cost Auditors. Further pursuant to the aforesaidprovisions of the Act the remuneration payable to M/s. Kirit Mehta & Co. forconducting the cost audit of the Company for the financial year ending on 31stMarch 2021 needs to be rati_ed by the Members of the Company and resolution for the saidrati_cation is placed for approval of Members of the Company at the ensuing AGM.
The Cost Auditors' Report for the financial year ended 31stMarch 2019 did not contain any qualification reservation and adverse remark and the samewas duly _led with the Ministry of Corporate Affairs within the due date.
SECRETARIAL AUDIT AND COMPLIANCE WITH SECRETARIAL STANDARDS
The Board of Directors of your Company has appointed Mr. VirendraBhatt Practising Company Secretary as Secretarial Auditors to conduct Secretarial Auditof the Company for the year ended 31st March 2020. The Secretarial AuditReport issued by Mr. Virendra Bhatt does not contain any qualification reservationand adverse remark. The Secretarial Audit Report is annexed as Annexure I to this Report.During the year your Company has complied with all the applicable Secretarial Standardsissued by the Institute of Company Secretaries of India.
Pursuant to the provision of Section 92 of the Companies Act 2013 anextract of the Annual Return is annexed as Annexure II to this report.
EMPLOYEE STOCK OPTIONS
Pursuant to SEBI (Share Based Employee Benefits) Regulations 2014 andother applicable laws if any the required disclosures as on 31st March 2020are annexed as Annexure III to this Report.
During the year under review there were no changes in the EmployeeStock Option Scheme and the same is in compliance with the said Regulations.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Pursuant to the provisions of Section 135 of the Companies Act 2013read with the Companies (Corporate Social Responsibility Policy) Rules 2014 CSRPolicy' as recommended by the CSR Committee and approved by the Board is uploaded onthe website of the Company www.wockhardt.com.
The average Net Profit of the Company for the immediately preceding 3financial years calculated as per Section 198 of the Companies Act 2013 was negative.year 2019-20. However as a continuing corporate governance practice the Companycontributed Rs. 0.56 crore to Wockhardt Foundation CSR arm of the Company for spendingon CSR activities which has undertaken CSR projects in the areas of healthcare educationetc.
The details on CSR activities as required under Section 135 of theCompanies Act 2013 and the Companies (Corporate Social Responsibility Policy) Rules2014 as amended from time 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 appointmentand remuneration of Directors KMP and Senior Management Personnel.
The appointment of Directors is made pursuant to the recommendation ofNomination and Remuneration Committee (NRC'). The remuneration of ExecutiveDirectors comprises of Basic Salary Perquisites & Allowances and follows applicablerequirements as prescribed under the Companies Act 2013. Approval of shareholders forpayment of remuneration to Whole-time Directors is sought from time to time.
The remuneration of Non-Executive Directors comprises of sitting fees& commission if any in accordance with the provisions of Companies Act 2013; andreimbursement of expenses incurred in connection with attending the Board meetingsCommittee meetings General meetings and in relation to the business of the Company.During the year under review the Company has not paid any commission to the Non-ExecutiveDirectors.
A brief of the Remuneration Policy on appointment and remuneration ofDirectors KMP and Senior Management is provided in the Report on Corporate Governanceforming part of this Annual Report. Further the Policy is available on the website of theCompany and the weblink thereto ishttp://www.wockhardt.com/pdfs/wl-remuneration-policy.pdf NRC have also formulated criteriafor determining qualifications positive attributes and independence of a director and thesame have been provided in the Report on Corporate Governance forming part of this AnnualReport.
PERFORMANCE EVALUATION OF DIRECTORS
The Nomination and Remuneration Committee of the Board of Directors ofthe Company have laid down criteria for performance evaluation of the Board of Directorsincluding Independent Directors. Pursuant to the requirement of the Companies Act 2013the SEBI Listing Regulations and considering criteria specified in the SEBI Guidance Noteon Board Evaluation the Board has carried out the annual performance evaluation of entireBoard Committee and all the Directors based on the parameters as detailed in the Reporton Corporate 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
The Company has adequate internal financial control procedurescommensurate with its size and nature of business. These controls include well de_nedpolicies guidelines Standard Operating Procedures (SOPs') authorization andapproval procedures and technology intensive processes. The internal financial controls ofthe Company are adequate to ensure the accuracy and completeness of the accountingrecords timely preparation of reliable financial information prevention and detection offrauds and errors safeguarding of the assets and that the business is conducted in anorderly and Efficient manner.
M/s. Ernst and Young during the year reviewed self-assessment tool onadequacy of Internal Financial Control (IFC') process of the Company inaccordance with the requirement of the Companies Act 2013. There were no materialobservations noted in this review.
The Company during the year continued with its past practice of aco-sourced model for internal audit. The Company's internal audit team is assisted byM/s. Ernst and Young who carry out internal audit reviews in accordance with the approvedinternal audit plan. Internal audit team reviews the status of implementation of internalaudit recommendations. Summary of critical observations if any and recommendations underimplementation are reported to the Audit Committee.
During the year under review there were no instances of fraud reportedby the Auditors under Section 143(12) of the Companies Act 2013.
As on 31st March 2020 Risk Management Committee comprisesof Dr. H. F. Khorakiwala Chairman Mr. Davinder Singh Brar
Independent Director Dr. Murtaza Khorakiwala Managing Director andMr. Manas Datta Chief Financial Officer as its members. Enterprise Risk Management (ERM)framework encompasses practices relating to the identi_cation analysis evaluationmitigation and monitoring of the strategic external and operational controls risks inachieving key business objectives. The Company identi_es and tries to mitigate risks thatmatter on an ongoing basis. Risk Management Policy approved by the Board is inplace. Risk management is embedded in the strategic business decision making.
Strategic Risks comprises of risks inherent to Pharmaceutical industryand competitiveness Company's choices of target markets business models and talentbase. Your Company periodically assesses risks in new initiatives the impact of strategyon financial performance competitive landscape growth models and attracting andretaining talented workforce. External Risks arising out of uncontrollable factors in theexternal environment due to various developments especially the unprecedented COVID-19pandemic in the regulatory environment in which your company operates unfavourabletrends in the macroeconomic environment including currency _uctuations Country speci_crisks economic and political environment technology disruptions etc. are activelyassessed to take appropriate risk mitigation.
Operational controls risks encompasses risks of disruptions to supplychain manufacturing operations due to the COVID-19 pandemic non-compliance to policiesinformation security data privacy intellectual property individuals engaging inunlawful or fraudulent activity or breaches of contractual obligations that couldtypically result in penalties financial loss litigation and loss of reputation arereviewed on an ongoing basis.
The current key risk relates to regulatory risk on overseas operationsand business. This is arising out of regulatory audits at Company's manufacturinglocations which is being adequately addressed through strengthening of current processesand controls by Company's internal quality assurance and manufacturing teams andthrough the help of reputed external consultants. There are no risks which in the opinionof the Board threaten the existence of your Company. Other details about Risk Managementhave also been elaborated in the Report on Corporate Governance forming part of thisAnnual Report.
All properties and insurable interests of the Company includingbuildings plant & machinery and stocks have been adequately insured.
Your Company regularly undertakes green initiatives to preserveenvironment which not only reduce burden on environment but also ensure secureddissemination of information. Such initiatives includes energy saving water conservationand usage of electronic mode in internal processes & control statutory and otherrequirement. Shareholders are also requested to register their e-mail IDs with theDepositories / RTA / Company as the case may be for receiving all communication from theCompany electronically.
For better conduct of operations and in compliance with regulatoryrequirement your Company has framed and adopted certain policies. In addition to theCompany's Code of Business Conduct and Ethics key policies / code that have beenadopted by the Company are as 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/_les/policy- determining-materiality-of-events.pdf |
|Archival Policy ||The policy deals with archival of the Company's records and documents. ||http://www.wockhardt.com/_les/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/_les/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/_les/policy-on- rpt-01-4-19.pdf |
|Vigil Mechanism / Whistle Blower Policy ||The Company has adopted the Vigil Mechanism for directors 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/_les/whistle- blower-policy-04-03-20.pdf |
|Code of Practices & Procedures for Fair Disclosure of Unpublished ||The Code determines principles for fair disclosure of Unpublished Price Sensitive Information. ||http://www.wockhardt.com/_les/code-of- fair-disclosur-of-upsi-2-4-19.pdf |
|Price Sensitive Information 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/pdfs/csr-policy.pdf |
|Remuneration Policy ||This policy formulates the criteria for determining qualification competencies positive attributes and independence for the appointment of directors 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/_les/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 |
|Risk Management Policy ||The Policy is intended to institutionalize the risk management framework of the Company which includes identi_cation review and reporting of material risks. || |
|Forex Risk Management Policy ||The policy defines identify measure manage mitigate and review potential risks pertaining to _uctuations 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. || |
|Policy for Inquiry in case of Leak/ Suspected Leak of Unpublished Price Sensitive Information (UPSI') ||The Policy is intended to set procedure to conduct inquiry in case of leak or suspected leak of UPSI in violation of SEBI (Prohibition of Insider Trading) Regulations 2015 and Code of Conduct for Regulating Monitoring and Reporting Trading 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 focuses to uphold international human rights standards. || |
|Stakeholder Engagement Policy ||Policy aims to create a sustainable environment that involves relevant Stakeholders who may be a_ected by or can in_uence 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 outlines the acceptable use of computing equipment and information security awareness. || |
|HR Policy Handbook ||This encompasses work timings Leave Policy No Smoking in Company Premises Employee Bene_t related guidelines Policy on prevention of Sexual Harassment at work place etc. || |
PARTICULARS OF LOANS INVESTMENTS AND GUARANTEES UNDER SECTION 186 OFTHE COMPANIES ACT 2013
In accordance with the approval of the Shareholders' sought by wayof Postal Ballot on 15th March 2018 under Section 186 of the CompaniesAct 2013 the Company can give loans guarantees and / or provide security(ies) and / ormake investments upto Rs. 6000 crore. The particulars of loans investments andguarantees are provided under Note 35 and Note 6 in the Notes to the Standalone FinancialStatements.
PARTICULARS OF CONTRACTS/ ARRANGEMENTS WITH RELATED PARTIES
During the financial year 2019-20 all contracts / arrangements /transactions entered into by the Company with its related parties were reviewed andapproved by the Audit Committee. Prior omnibus approvals were obtained from theAudit Committee for related party transactions which were of repetitive nature entered inthe ordinary course of business and on an arm's length basis. No transactionwith any related party was in con_ict with the interest of the Company.
The Company did not enter into any related party transaction with itsKey Managerial Personnel. The details of related party transaction are provided under Note42 in the Notes to the Standalone Financial Statements.
The particulars of contracts / arrangements with related parties inForm AOC-2 are provided in Annexure V to this Report.
Pursuant to the requirements laid down under Section 177 of theCompanies Act 2013 and Regulation 22 of the SEBI Listing Regulations the Company haswell laid down Vigil Mechanism. The details of the same are provided in the Report onCorporate Governance forming part of this Annual Report. During the year the Company didnot receive any complaint under Vigil mechanism.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosures with respect to the remuneration of Directors and employeesas required under Section 197 of the Act and Rule 5(1) of Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 have been annexed to this report asAnnexure VI.
In accordance with the provisions of Section 197(12) of the CompaniesAct 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 as amended a statement showing the names and otherparticulars of the employees drawing remuneration in excess of the limits set out in thesaid rules which includes the name of top 10 employees in term of remuneration drawn formspart of this Report. Pursuant to the provisions of Section 136(1) of the CompaniesAct 2013 the Board's Report is being sent to the Shareholders of the Companyexcluding the said statement. Any shareholder interested in inspection or obtaining a copyof the statement may write to the Company
Secretary and the same will be furnished on request.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO
The information on conservation of energy technology absorption andforeign exchange earnings and outgo stipulated under Section 134(3)(m) of the CompaniesAct 2013 read with Rule 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 2020 the Company has total 32Subsidiaries. However during the year under review the Company does not have any jointventure or associate company.
There were no companies who ceased to be Subsidiaries of the Companyduring the financial year under review.
In accordance with Section 129(3) of the Companies Act 2013 astatement containing salient features of the Subsidiaries of the Company is provided inForm AOC-1 annexed as Annexure VIII to this Report.
CONSOLIDATED FINANCIAL STATEMENT
The Consolidated Financial Statement of your Company for the financialyear 2019-20 are prepared in compliance with applicable provisions of the Companies Act2013 read with the Rules issued thereunder applicable Accounting Standards and provisionsof the SEBI Listing Regulations.
A copy of the Audited Financial Statements of the Subsidiaries shall bemade available for inspection at the Registered Office of the Company during businesshours. The Audited Financial Statement of the Company including Consolidated FinancialStatement and Financial Statements of its Subsidiaries are also available on the websiteof the Company. Any Shareholder interested in obtaining a copy of the separate FinancialStatement of the Subsidiary(ies) shall make specific request in writing to the CompanySecretary and the same will be furnished on request.
During the year under review your Company has not accepted any FixedDeposits under Chapter V of the Companies Act 2013 and as such no amount on account ofPrincipal or Interest on Deposits from Public was outstanding as on 31st March2020.
DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013
The Company strongly believes in providing a safe and harassment freeworkplace for each and every individual working for the Company through variousinterventions and practices. It is the continuous endeavour of the Management of theCompany to create and provide an environment to all its Associates that is free fromsexual harassment. Pursuant to the requirement of The Sexual Harassment of Women atWorkplace (Prevention Prohibition & Redressal) Act 2013 ("Act") theCompany has constituted Internal Committees (IC) across all the locations which areresponsible for redressal of complaints related to sexual harassment at respectivelocations. The Company arranged various interactive awareness workshops in this regard forthe Associates at all the manufacturing sites & Corporate Office during the year underreview. During the year 2019-20 the company has not received any Complaints in thematter.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS / COURT
There are no significant and material orders passed by the Regulatorsor Courts or Tribunals which impact the going concern status and operations of the Companyduring the year under review. However Member's attention is drawn on the following:
Writ Petition _led against Noti_cation No. S.O. 4379(E) dt 07.09.2018("Impugned Noti_cation") Aceclofenac + Paracetamol + Rabeprazol on 14thSeptember 2018. The judgment is passed by Hon'ble High Court Delhi with a view thatthe impugned noti_cation cannot be sustained. The same is set aside. The matter isremanded to DTAB / Sub-committee constituted by it to examine the issue regarding the saidFDC in accordance with the directions issued by the Hon'ble Supreme Court in P_zerLtd. (supra). The DTAB / Sub-committee shall submit a report to the Central Government.The Central Government may take an informed decision whether to restrict or approve thesaid FDC. No decision is taken by Central Government in the matter so far.
The Company has earlier filed the caveat before Hon'ble SupremeCourt and the Union of India (UoI) has filed a Special Leave Petition (SLP) in SupremeCourt of India against the Judgment passed by the Delhi High Court quashing thenotification issued by the UoI wherein it stipulated the prohibition of the manufacturesale and distribution of certain FDCs being manufactured by the Company. The Hon'bleSupreme Court has after hearing the parties dismissed the SLP filed by UoI on 14thOctober 2019.
MATERIAL CHANGES AND COMMITMENTS OCCURRED AFTER THE END OF FINANCIALYEAR
There are no material changes and commitments between the end of thefinancial year of the Company and as on the date of this report which can a_ect thefinancial position of the Company.
BUSINESS RESPONSIBILITY REPORT
In compliance with Regulation 34(2)(f) of the SEBI Listing Regulationsthe Business Responsibility Report forms part of this Annual Report.
CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION & ANALYSIS REPORT
A Report on Corporate Governance along with a Certificate fromPracticing Company Secretary con_rming the compliance of the conditions of CorporateGovernance and Management Discussion and Analysis Report forms part of this Annual Report.
Your Directors wishes to place on records its sincere appreciation andacknowledge the dedication & contribution made by the employees of the Company at alllevels. Your Directors wish to place on record their appreciation to all the Stakeholdersof the Company viz. customers members of medical profession investors banks regulatorsfor their unrelenting support during the year under review.
|For and on behalf of the Board of Directors ||Place : Mumbai |
|Dr. H. F. KHORAKIWALA ||Date : 11th May 2020 |
|Chairman || |
|DIN: 00045608 || |