Your Directors are pleased to present Twenty Sixth Annual Report along with theStandalone & Consolidated Audited Financial Statements of the Company for theFinancial Year ended on March 31 2020.
The financial statements of the Company have been prepared in accordance with theIndian Accounting Standards (Ind AS) notified under section 133 of the Companies Act 2013("the Act") read with Rule 7 of the (Companies Accounts) Rules 2014.
The standalone and consolidated financial performance of the Company for the FinancialYear ended on March 31 2020 are summarized below:
| || || || ||Rs. in Lakh |
|Particulars || |
|Consolidated || |
| ||For the year ended on March 31 2020 ||For the year ended on March 31 2019 ||For the year ended on March 31 2020 ||For the year ended on March 31 2019 |
|Revenue from Operations and other Income ||26291 ||31516 ||177753 ||88170 |
|Profit before Interest Depreciation Amortization and ||8862 ||13283 ||33177 ||22368 |
|Impairment expenses exceptional item and tax || || || || |
|Less: Finance Cost ||14029 ||2993 ||13991 ||3009 |
|Less: Depreciation Amortization and Impairment ||295 ||261 ||2639 ||1251 |
|Expenses || || || || |
|Profit/(Loss) before exceptional item and tax [PBT] ||(5462) ||10029 ||16547 ||18108 |
|Exceptional Items ||(32) ||(313) ||(4420) ||(1045) |
|Pro_t/(Loss) before tax ||(5494) ||9716 ||12127 ||17063 |
|Less: Tax Expenses ||(1421) ||86 ||(2045) ||(61) |
|Pro_t / (Loss) After Tax [PAT] ||(4073) ||9630 ||14172 ||17124 |
|Attributable to: || || || || |
|Owners of the Parent ||(4073) ||9630 ||14172 ||16914 |
|Non-Controlling Interests ||- ||- ||- ||210 |
|Other Comprehensive Income/(Loss) (net of tax) ||(29) ||43 ||218 ||2 |
|Total Comprehensive Income ||(4102) ||9673 ||14390 ||17126 |
|Attributable to: || || || || |
|Owners of the Parent ||(4102) ||9673 ||14390 ||16916 |
|Non-Controlling Interests ||- ||- ||- ||210 |
|Opening balance in Retained Earnings ||29101 ||60739 ||35220 ||60713 |
|Amount available for appropriation || || || || |
|Dividend: || || || || |
|Less : Dividend ||5767 ||3126 ||5767 ||3126 |
|Less : Dividend Distribution Tax (net of CDT Credit) ||1185 ||642 ||1185 ||642 |
|Less : Transfer to Debentures Redemption Reserve ||- ||37500 ||- ||37500 |
|Less : Profit elimination of acquired business ||- ||- ||- ||(1139) |
|Closing Balance in Retained Earnings ||18076 ||29101 ||42440 ||35220 |
|Earnings Per Share [EPS] ||(7.06) ||22.83 ||24.58 ||40.10 |
|[Face Value of shares of Rs. 10/- each] || || || || |
*Since results of financial year ended on March 31 2019 reflects the result oferstwhile Heinz India Private Limited operations with effect from January 30 2019financials for the year ended on March 31 2019 are not comparable with that of financialyear ended on March 31 2020.
The world has been witnessing an unprecedented crisis as a result of Covid-19. Intoday's trying times for the world in general and our nation in particular our focus ison ensuring the safety of our employees and all other stakeholders while we continue towork both on wellness and prevention of the pandemic. The healthy lives and protectinglivelihood both are of utmost importance to us.
In Zydus Wellness at a group level we have created a group of senior management teamto monitor the events happening in the external environment and take suitable preventiveand corrective measures to ensure continued safety of employees. The team has preparedbusiness continuity plan disaster management plan and also established liquiditymanagement office.
We are happy to mention that we have been doing whatever possible for the country interms of fight against Covid-19. During this pandemic the Company has launched Nycil handsanitizer so that consumers can take protective measures from spreading Covid-19.
All our manufacturing facilities CFA network are operating at a reasonable capacityutilization and we are ensuring that our products are available to consumers withoutinterruptions. We have strengthened our supply chain with a specific focus on helping MSMEparties in surviving the difficult times.
We have taken several steps aimed at ensuring the safety which include work from homesocial distancing in the office premises sanitization of our office premises; plantlocations and company vehicles thermal screening for employees working at sitesproviding sanitizers masks gloves etc. to employees. Apart from following all protocolsand guidelines issued by global health organizations like WHO for Covid-19 we have comeout with our own advisory for the safety of our employees.
Results of operations (Consolidated):
Duringtheyearunderreviewtheconsolidatedrevenuefromoperations grew by 109.63% to Rs.176682 Lakhs from Rs. 84282 Lakhs in 2018-19. The profit before tax decreased by 28.93%y-o-y to Rs. 12127 Lakhs. Net profit after tax (before OCI and after Non-ControllingInterest) decreased by 16.2% y-o-y to Rs. 14172 Lakhs. The Net Profit margin as a %(Percentage) to total operating income during the current year is 8.02%. A detailedanalysis of performance for the year has been included in the Management Discussion andAnalysis Report which forms part of the Annual Report.
During the year under review your Directors have declared and paid an Interim dividendof Rs. 5/- [50%] per Equity Share on 57664144 Equity Shares of Rs. 10/- each fullypaid-up for the Financial Year ended on March 31 2020 amounting to Rs. 3475.86 Lakhs(inclusive of Dividend Distribution Tax of Rs. 592.65 Lakhs). The Dividend Payout Ratiofor the current year (inclusive of Dividend Distribution Tax) is 49.05% of profits.
During the year the unclaimed dividend pertaining to the dividend for the financialyear ended on March 31 2012 was transferred to Investor Education and Protection Fund("IEPF").
As per SEBI Notification the Company has formulated a Dividend Distribution Policywhich is approved by the Board of Directors ("the Board") and is uploadedon Company's website www.zyduswellness.in. The link for the same is http://www.zyduswellness.in/investor/Dividend_Policy-May17.pdf.
Interest payment on Secured Non-Convertible Debentures ("NCDs"): -
During the year under review your Company has made the timely payment of interest onthe 15000 Lakh 9.14% Secured Listed Rated Redeemable Non-Convertible Debentures of theCompany.
The Company has four wholly owned subsidiary companies namely Zydus Wellness ProductsLimited (formely known as Zydus Nutritions Limited) Liva Nutritions Limited LivaInvestment Limited and Zydus Wellness International DMCC (Dubai). During the year underreview the name of Zydus Nutritions Limited was changed to Zydus Wellness ProductsLimited w.e.f June 4 2019.
Zydus Wellness International DMCC (Dubai) was incorporated during the year on May 282019.
Further as provided in section 136 of the Act the Balance Sheet Statement of Profitand Loss and other documents of the subsidiary companies are not being attached with theBalance Sheet of the Company. The Company will make available free of cost the AuditedFinancial Statements of the subsidiary companies and the related detailed information toany member of the Company who may be interested in obtaining the same. The FinancialStatements of the subsidiary companies will also be kept open for inspection at theRegistered Office of the Company and that of the respective subsidiary companies. TheConsolidated Financial Statements presented by the Company include financial results ofits subsidiary companies.
As provided under section 129(3) of the Act and Rules made thereunder a statementcontaining the salient features of the financial statements of its subsidiaries in theformat prescribed under the rules is attached to the financial statements. The policyrelating to material subsidiaries as approved by the Board may be accessed on theCompany's website at the link: https://zyduswellness.in/investor/Policy%20on%20Material%20Subsidiary%20Adopted.pdf.
Transfer of Shares to Investor Education and Protection Fund ("IEPF"):
In compliance with the provisions of section 124 of the Companies Act 2013 and Rulesmade thereunder the Company has transferred 5717 shares of 126 shareholders whosedividend has remained unclaimed / unpaid for a consecutive period of seven years to IEPF.
The Company has not accepted any fixed deposit and as such no amount of principal orinterest was outstanding as of the Balance Sheet date.
The Company's plant properties equipments and stocks are adequately insured againstall major risks. The Parent Company has taken Directors' and Officers' Liability Policy toprovide coverage against the liabilities arising on them which includes the Directors ofthe Company also.
Management Discussion and Analysis [MDA]:
MDA for the year under review as stipulated under SEBI [Listing Obligations andDisclosure Requirements] Regulations 2015 as amended ["the Listing Regulations"]is presented in a separate section which forms a part of the Annual Report.
Consolidated Financial Statements:
Liva Nutritions Limited Liva Investment Limited Zydus Wellness Products Limited(formerly known as Zydus Nutritions Limited) and Zydus Wellness International DMCC (Dubai)are the four wholly owned subsidiaries of the Company and hence the accounts of all thesefour companies are consolidated with the accounts of the Company in accordance with theprovisions of Ind AS-110 on Consolidated Financial Statements issued by the Ministry ofCorporate Affairs and as provided under the provisions of the Act read with Schedule IIIof the Act and Rules made thereunder and the Listing Regulations. The audited ConsolidatedFinancial Statements are provided in the Annual Report.
Further in compliance of the provisions of regulation 16[c] of the ListingRegulations the Company has formed a policy relating to material subsidiaries which isapproved by the Board and may be accessed on the Company's website atwww.zyduswellness.in.
During the year no fraud was reported by the statutory auditors under section 143(12)of the Act.
Related Party Transactions:
All transactions entered by the Company during the financial year with related partieswere in the ordinary course of business and on an arm's length basis.
The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's website atwww.zyduswellness.in. Disclosures on related party transactions are set out in Note No. 41to the financial statements.
Particulars of Loans Guarantees and Investments:
Details of loans guarantees and investments covered under section 186 of the Act aregiven in the notes to the financial statements.
Directors and Key Managerial Personnel: i. Retirement by rotation:
In accordance with the provisions of section 152 of the Act and in terms of Articlesof Association of the Company Dr. Sharvil P. Patel Non-executive Director[DIN00131995] will retire by rotation at the ensuing Annual General Meeting andbeing eligible offers himself for re-appointment. The Board recommends hisre-appointment.
ii. Re-appointment of Mr. Tarun G. Arora as a CEO and Whole Time Director:
During the year under review Mr. Tarun G. Arora completed the five years with theCompany and his tenure of appointment expired on May 13 2020.
The Board of Directors of the Company based on the recommendation of Nomination andRemuneration Committee and subject to approval of members at the ensuing Annual GeneralMeeting has reappointed Mr. Arora as a Whole Time Director designated as Chief ExecutiveOfficer for a further period of 5 (five) years at its meeting held on May 7 2020 witheffect from May 7 2020.
iii. Declaration of Independence:
The Company has received declarations of independence as stipulated under section149(7) of the Act and regulation 16(b) of the Listing Regulations as amended fromIndependent Dirctor ("ID") confirming that they are not disqualified forcontinuing as an Independent Director.
All the Independent Directors of the Company have registered themselves with the IndianInstitute of Corporate Affairs
(" IICA"). Further as per the declarations received only Mr.
Savyasachi S. Sengupta and Mr. Kulin S. Lalbhai are required to appear for onlineproficiency test as per the first proviso to Rule 6(4) of the MCA Notification datedOctober 22 2019.
iv. Pro_le of Directors seeking appointment / re-appointments:
As required under regulation 36 of the Listing Regulations particulars of theDirectors seeking appointment / reappointment at the ensuing Annual General Meeting areannexed to the notice convening Twenty Sixth Annual General Meeting.
v. Key Managerial Personnel:
The following persons are the Key Managerial Personnel
1. Mr. Tarun G. Arora Chief Executive Officer & Whole Time Director
2. Mr. Umesh V. Parikh Chief Financial Officer and
3. Mr. Dhanraj P. Dagar Company Secretary.
The Board of Directors at their meeting held on May 7 2020 re-appointed Mr. Tarun G.Arora as a Whole Time Director designated as Chief Executive Officer for a furtherperiod of five years w.e.f. May 7 2020. vi. Board Evaluation:
Pursuant to the provisions of the Act and the Rules made thereunder and as providedunder Schedule IV of the Act and the Listing Regulations the Nomination and RemunerationCommittee / Board has carried out the annual performance evaluation of itself theDirectors individually as well as the evaluation of its committees. The manner in whichthe evaluation was carried out is provided in the Corporate Governance Report which is apart of the Annual Report.
vii. Nomination and Remuneration Policy:
The Board has on the recommendations of the Nomination and Remuneration Committee["NRC"] framed a Policy on selection and appointment of Director(s)Senior Management Personnel and their remuneration. The Remuneration Policy is stated inthe Corporate Governance Report which is a part of this Report.
Directors' Responsibility Statement:
In terms of section 134[c] of the Act and to the best of their knowledge and beliefand according to the information and explanations provided to them your Directors herebymake the following statements: i. that in preparation of the Financial Statements theapplicable accounting standards have been followed along with proper explanation relatingto material departures if any ii. that such accounting policies have been selected andapplied consistently and judgments and estimates made that are reasonable and prudent soas to give a true and fair view of the state of affairs of the Company as on March 312020 and of the loss of the Company for the year ended on that date iii. that proper andsufficient care has been taken for maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor prevention and detection of fraud and other irregularities iv. that the FinancialStatements have been prepared on a going concern basis v. that proper internal financialcontrols were in place and that the financial controls were adequate and operatingeffectively and vi. that the systems to ensure compliance with the provisions of allapplicable laws were in place and adequate and operating effectively.
Information of meetings of the Board of Directors is given in Corporate GovernanceReport forming part of this Report.
As provided in section 177 of the Act the information about composition of AuditCommittee and other details are given in Corporate Governance Report forming part of thisreport. The Board has accepted the recommendations of Audit Committee.
Composition of other Committees:
Composition of other Committees and other details on the Committees are given in theCorporate Governance Report forming part of this Annual Report.
The Company has complied with the Corporate Governance requirements under the Act andas stipulated under the Listing Regulations. A separate section on detailed report on theCorporate Governance practices followed by the Company under the Listing Regulations alongwith a certificate from a Practicing Company Secretary confirming the compliance forms apart of this Report.
Auditors: i. Statutory Auditors and their Report:
Dhirubhai Shah & Co. LLP Chartered Accountants [Firm Registration No. 102511W /W100298] were appointed as Statutory Auditors from the conclusion of Twenty First AnnualGeneral Meeting until the conclusion of Twenty Sixth Annual General Meeting. They havefurnished a declaration confirming their independence as well as their arm's lengthrelationship with the Company and that they have not taken up any prohibited non-auditassignments for the Company. The Board has duly reviewed the Statutory Auditor's Reportfor the Financial Year ended on March 31 2020 and the observations and commentsappearing in the report are self-explanatory and do not call for any further explanation /clarification by the Board in their Report as provided under section 134 of the Act.
The term of the existing auditors of the Company is expiring after the conclusion ofensuing Annual General Meeting of the Company.
The Board of Directors of the Company based on the recommendation of the AuditCommittee in their meeting held on June 2 2020 and subject to the approval of the membersof the Company in the ensuing Annual General Meeting recommends the appointment of M/s.Mukesh M. Shah & Co. Chartered Accountants [Firm Registration No. 106625W] as thestatutory auditors of the Company for a period of five consecutive years from theconclusion of this Twenty Sixth Annual General Meeting of the Company till the conclusionof Thirty First Annual General Meeting of the Company.
The Company has received the consent and eligibility certificate from the saidstatutory auditors as required under the Act.
ii. Cost Auditors:
Pursuant to the provisions of section 148 of the Act read with Companies [CostRecords and Audit] Amendment Rules 2014 as amended from time to time the cost auditrecords maintained by the Company in respect of its product Nutralite' are requiredto be audited. The Board has on the recommendation of Audit Committee appointed Dalwadi& Associates Cost Accountants [Firm Registration No. 000338] to audit the costrecords of the Company for the financial year ending on March 31 2021 at a remunerationof Rs. 2.60 Lakh plus applicable taxes and out of pocket expenses at actuals.
As required under the Act and Rules made thereunder the remuneration payable to theCost Auditors is required to be placed before the Members at a general meeting forratification. Accordingly a resolution seeking ratification of the remuneration payableto Dalwadi & Associates Cost Accountants by the members is included at item No. 6 ofthe Notice convening Twenty Sixth Annual General Meeting.
iii. Secretarial Auditors and Secretarial Audit Report:
Pursuant to provisions of section 204 of the Act and the Companies [Appointment andRemuneration of Managerial Personnel] Rules 2014 the Board had appointed Hitesh Buch& Associates Practicing Company Secretaries to undertake Secretarial Audit of theCompany for the financial year ended on March 31 2020. The Secretarial Audit Report isattached herewith as Annexure"A".
The Board has reviewed the Secretarial Auditor's Report and is of the opinion that theobservations and comments appearing in the report are self-explanatory and do not callfor any further explanation / clarification by the Board in its Report as provided undersection 134 of the Act.
Cost Audit Records:
The Company is required to maintain the Cost Records as specified by the CentralGovernment under sub-section (1) of section 148 of the Companies Act 2013 and the rulesmade thereunder and accordingly such accounts and records are made and maintained.
Compliance with Secretarial Standards:
During the year under review the Company has complied with the applicable SecretarialStandards i.e. SS-1 and SS-2 relating to "Meetings of the Board of Directors"and "General Meetings" respectively issued by The Institute of CompanySecretaries of India.
Business Responsibility Report:
As per regulation 34[f ] of the Listing Regulations a separate section on BusinessResponsibility Report forms a part of this Report.
Corporate Social Responsibility [CSR]:
Pursuant to the provisions of section 135 of the Act and Rules made thereunder theBoard has constituted a CSR Committee under the Chairmanship of Dr. Sharvil P. Patel andwas lastly re-constituted on May 1 2019. The other members of the Committee are Mr.Ganesh N. Nayak and Mr. Savyasachi S. Sengupta. A CSR Policy has been framed and placed onthe Company's website: https://zyduswellness.in/investor/CSR%20Policy.pdf. Other detailsof the CSR activities as required under section 135 of the Act are given in the CSRReport as Annexure"B".
Business Risk Management:
A well-defined risk management mechanism covering the risk mapping and trend analysisrisk exposure potential impact and risk mitigation process is in place. The objective ofthe mechanism is to minimize the impact of risks identified and taking advance actions tomitigate them. The mechanism works on the principles of probability of occurrence andimpact if triggered. A detailed exercise is being carried out to identify evaluatemonitor and manage both business and non-business risks.
Pursuant to the provisions of section 134(3)(n) of the Act and requirements under theListing Regulations the Company has constituted a Risk Management Committee under theChairmanship of Dr. Sharvil P. Patel and Mr. Savyasachi S. Sengupta Mr. Kulin S. Lalbhaiand Mr. Umesh V. Parikh as the members of the Committee. The details of the Committee andits terms of reference are set out in the Corporate Governance Report which forms a partof this Report.
Discussions on risks and concerns are covered in the Management Discussion and AnalysisReport which forms a part of this Report.
Internal Control System and their adequacy:
The Company has Internal Control Systems commensurate with the size scale andcomplexity of its operations. The Internal Audit Department monitors and evaluates theefficacy and adequacy of internal control systems in the Company its compliances withoperating systems accounting procedures and policies within the Company. Based on thereport of internal audit function process owner undertake the corrective action in theirrespective areas and thereby strengthen the internal controls. Significant observationsand corrective actions thereon are presented to the Audit Committee from time to time.
Internal Financial Control and their adequacy:
The Company has designed and implemented a process driven framework for InternalFinancial Controls ["IFC"] within the meaning of the explanation tosection 134[e] of the Act. For the year ended on March 31 2020. The Board is of theopinion that the Company has sound IFC commensurate with the size scale and complexity ofits business operations. The IFC operates effectively and no material weakness exists. TheCompany has a process in place to continuously monitor the same and identify gaps if anyand implemented new and / or improved controls whenever the effect of such gaps would havea material effect on the Company's operations.
Managing the risks of fraud corruption and unethical business practices: i. VigilMechanism / Whistle Blower Policy:
The Company has established Vigil Mechanism and framed Whistle Blower Policy forDirectors and employees to report concerns about unethical behaviour actual or suspectedfraud or violation of the Company's Code of Conduct or Ethics Policy and SEBI InsiderTrading Regulations. Whistle Blower Policy is disclosed on the website:https://zyduswellness.in/ investor/Whistle_Blower_Policy-May19.pdf.
ii. Zydus Business Conduct Policy:
The Company has framed "Zydus Business Conduct Policy". Every employee isrequired to review and sign the policy at the time of joining and an undertaking has to begiven for adherence to the Policy. The objective of the Policy is to conduct the businessin an honest transparent and ethical manner. The policy provides for anti-bribery andavoidance of other corruption practices by the employees of the Company.
Disclosure as per the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013:
The Company has zero tolerance towards sexual harassment at the workplace and hasadopted a policy on prevention prohibition and redressal of sexual harassment atworkplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules thereunder.
The Company always endeavors to create and provide conducive work environment that isfree from discrimination and harassment including sexual harassment. The Company has inplace a robust policy on prevention of sexual harassment at workplace. The policy aims atprevention of harassment of employees as well as contractors and lays down the guidelinesfor identification reporting and prevention of sexual harassment.
During the Financial Year ended on March 31 2020 the Company has not received anycomplaint of sexual harassment.
Extract of Annual Return:
As per the provisions of section 92 of the Act an extract of the Annual Return inthe prescribed Form No. MGT9 is provided as Annexure"C" andis available on the website of the Company at www.zyduswellness.in.
Particulars of Employees:
The information required under section 197 of the Act read with Rule 5 of theCompanies [Appointment and Remuneration of Managerial Personnel] Rules 2014 is given in Annexure"D".
Energy Conservation Technology Absorption and Foreign Exchange Earnings and Outgo:
Information on conservation of energy technology absorption foreign exchange earningsand outgo as required to be disclosed under section 134[m] of the Act read with Rule8 of the Companies [Accounts] Rules 2014 is provided in the Annexure"E"and forms a part of this Report.
Your Directors state that the Company has made disclosures in this report for the itemsprescribed in section 134 of the Act read with Rule 8 of The Companies [Accounts]Rules 2014 to the extent the transactions took place on those items during the year.
Apart from what are mentioned in this report there are no material changes andcommitments affecting the financial position of the Company between the end of thefinancial year and the date of this report.
Your Directors place on record their sincere appreciation for the continuedco-operation and support extended to the Company by the Banks. Your Directors also thankthe Trade and Consumers for their patronage to the Company's products. Your Directors alsoplace on record sincere appreciation of the continued hard work put in by the employees atall levels. Your Directors also thank the Company's vendors investors businessassociates Stock Exchanges Government of India State Government and various departmentsand statutory and government agencies or bodies for their support and co-operation.
Place : Ahmedabad Date : June 2 2020
For and on behalf of the Board
Dr. Sharvil P. Patel