| Dear Members,
The Directors have pleasure in presenting the Fortieth Annual Report
of Shasun Pharmaceuticals Limited (the Company) together with the
audited statement of accounts for the year ended March 31, 2015.
FINANCIAL RESULTS
Rs. in Mn
Financial Standalone Consolidated
Results for
the year ending 31.03.2015 31.03.2014 31.03.2015 31.03.2014
Gross Revenue 10,923.09 9,469.91 13,288.58 12,356.22
Profit before 1,282.80 1,017.19 1,296.58 1,238.35
interest,
Depreciation
and Tax
Profit before 458.24 279.50 301.69 229.67
tax
Profit after 413.48 352.25 237.55 302.11
tax
Appropriated as
follows
Dividend on Equity - 56.62 - 56.62
Shares
Tax on Dividend - 9.62 - 9.62
Transfer to General - 35.22 - 35.22
Reserve
EPS (diluted) on 6.77 6.22 3.89 5.34
the basis of
Rs 2/- share
A detailed analysis of the operations of the company has been provided
in the management discussion and analysis report, which forms a part of
this annual report
1. Dividend
The Board of Directors of the company have not recommended any dividend
for the financial year ended March 31, 2015.
2. Business performance
During the financial year 2014-15, your Company has achieved
Stand-alone gross revenue of Rs. 10923.09 Mn as against Rs. 9469.91 Mn
in the year 2013-14, registering a growth of 15% on standalone basis.
The profit after tax Rs. 413.48 Mn. as against Rs. 352.25 Mn.
The Company achieved Consolidated gross revenue of Rs. 13288.58 Mn. as
against Rs. 12356.22 Mn. in the year 2013-14, registering a growth of
7.5% on consolidated basis. The profit after tax Rs. 237.55 Mn. as
against Rs. 302.11 Mn.
3. Material changes affecting financial position of the Company
There are no material changes and commitments occurred, affecting the
financial position of the Company, between the end of the financial
year and the date of this report.
4. Subsidiaries / Joint Ventures
The details of Subsidiaries, Joint Ventures and Associate Companies and
their financial position as required under the first proviso to Section
129(3) is given in Form AOC-1 in Annexure as part of this report.
Based on the Shareholders approval, your Company has divested its
entire stake of 24.78% in joint venture viz. M/s. Alivira Animal Health
Ltd. to the other shareholder M/s. Sequent Scientific Ltd. for a
consideration of Rs. 75 crores.
5. Amalgamation
The Board of Directors at its meeting held on September 29, 2014, have
approved the Scheme of Amalgamation between the Company and M/s.
Strides Arcolab Limited, subject to various approvals under Section 391
to 394 of the Companies Act, 1956. The appointed date of the proposed
scheme is April 1, 2015.
As per terms of the Scheme, shareholders of the Company will receive 5
equity shares of Rs. 10 each of Strides Arcolab Limited for 16 equity
shares of Rs. 2 each of the Company. The swap ratio has been arrived at
based on the joint valuation report issued by M/s. Price Waterhouse &
Co. and M/s. S.R. Batliboi & Co. LLP. The Scheme is subject to
regulatory and other necessary approvals.
Pursuant to an Order of the Honourable High Court of Judicature at
Madras, shareholders of the Company at their meeting held on March 12,
2015, duly approved the scheme. Company had filed the petition before
the said court for sanction of the scheme.
6. Corporate Governance
Your Company has been complying with the provisions of Corporate
Governance as stipulated in Clause 49 of the Listing Agreement. A
separate report on Corporate Governance along with Auditors'
certificate on compliance of the Corporate Governance norms as
stipulated in Clause 49 of the Listing Agreement and Management
Discussion & Analysis forming part of this report are provided in this
Annual Report.
7. Composition and Number of Meetings of the Board
The Board of Directors of the Company comprises of well qualified and
experienced persons having expertise in their respective areas. It has
appropriate combination of Executive, Non-Executive Directors and
Independent Directors.
During the financial year 2014-15, the Directors met seven times i.e.,
on 23.04.2014; 21.05.2014; 30.05.2014; 06.08.2014; 29.09.2014;
06.11.2014 and 05.02.2015.
8. Directors/Key Managerial Personnel
In accordance with the provisions of the Act and the Articles of
Association of the Company, Mr. S. Abhaya Kumar and Dr. S. Devendra
retire by rotation and are eligible for reappointment.
Dr. Arun Chandra Karmakar appointed as an Additional Director and
Director - Operations & EHS of the Company with effect from August 6,
2014.
Mrs. Taru Rajesh Mardia was appointed as an Additional Director of the
Company with effect from April 30, 2015.
Mr. M. Mohan, Director - EHS resigned with effect from August 6, 2014.
Prof. Indira J Parikh, Independent Director, resigned with effect from
February 6, 2015. The Board places on record their appreciation for the
valuable guidance and support rendered by Mr. M. Mohan and Prof. Indira
J Parikh during their association with the Company.
The Company has received declarations from all the Independent
Directors of the Company confirming that they meet the criteria of
independence as prescribed both under the Act and Clause 49 of the
Listing Agreement with the Stock Exchanges.
Pursuant to the provisions of Section 203 of the Act, the appointment
of Mr. S. Abhaya Kumar, Managing Director; Mr. S. Hariharan, Chief
Financial Officer and Mr. S. Murali Krishna, Company Secretary, were
formalized as the Key Managerial Personnel of the Company.
9. Particulars of Employees and related disclosures
In terms of the provisions of Section 197(12) of the Companies Act,
2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, a statement showing
the names and other particulars of the employees drawing remuneration
in excess of the limits set out in the said Rules are provided in the
annexure forming part of the Annual Report.
Having regard to the provisions of Section 136(1) read with its
relevant proviso of the Companies Act, 2013, the Annual Report
excluding the aforesaid information is being sent to the members of the
Company. The said information is available for inspection at the
registered office of the Company during working hours and any member
interested in obtaining such information may write to the Company
Secretary and the same will be furnished without any fee and free of
cost.
10. Board Evaluation
A formal evaluation of the Board, its committees and of the individual
director is one potential effective way to respond to the demand for
greater Board's accountability and effectiveness. A questionnaire is
prepared and is being circulated amongst the Directors for their
comments. The performance evaluation of Directors including Independent
Directors is done by the entire Board of Directors excluding the
directors being evaluated. The Board of Directors expressed their
satisfaction with the evaluation process.
11. Directors' Responsibility Statement
Pursuant to the provisions of Section 134(5) of the Companies Act, 2013
the Directors of your Company confirm that:
a) in the preparation of the Annual Accounts, the applicable accounting
standards had been followed along with proper explanation relating to
material departures.
b) they have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the company at the end of the financial year and of the profit or loss
of the company for that period;
c) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of this
Act for safeguarding the assets of the company and for preventing and
detecting fraud and other irregularities.
d) they have prepared the annual accounts on a going concern basis.
e) they have laid down internal financial controls to be followed by
the Company and that such internal financial controls are adequate and
operating properly; and
f) they have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems were adequate
and operating effectively.
12. Remuneration Policy
The remuneration policy of the Company has been so structured in order
to match the market trends of the industry. The Board in consultation
with the Nomination and Remuneration Committee decides the remuneration
policy for directors. The Company has made adequate disclosures to the
members on the remuneration paid to directors from time to time.
Remuneration / Commission payable to Directors is determined by the
contributions made by the respective directors for the growth of the
Company.
13. Risk Management
During the year, your Directors have constituted a Risk Management
Committee which has been entrusted with the responsibility to assist
the Board in overseeing and approving the company's enterprise wide
risk management framework and overseeing that all the risks that the
organization faces such as strategic, financial, credit, market,
liquidity, regulatory and other risks have been identified and assessed
and there is an adequate risk management infrastructure in place
capable of addressing those risks.
14. Internal Financial Controls
The Company has in place adequate internal financial controls with
reference to financial statements. During the year, such controls were
tested and no reportable material weakness in the design or operation
were observed.
15. Auditors
Cost Auditor: The Board has appointed M/s. Geeyes & Co., Cost
Accountants as Cost Auditor of the Company for the financial year
2014-15. The cost audit is under progress and the Company will submit
the cost audit report within the prescribed time.
Secretarial Auditor: The Board has appointed Mrs. Lakshmmi Subramanian,
Practicing Company Secretary, to conduct Secretarial Audit for the
financial year 2014-15. The Secretarial Audit Report for the financial
year ended March 31, 2015 is given in annexure to this report.
16. Audit Committee Recommendation
During the year all the recommendations of the Audit Committee were
accepted by the Board. The Composition of the Audit Committee is as
described in the Corporate Governance Report.
17. Related Party Transactions
All related party transactions that were entered into during the
financial year were on an arm's length basis and were in the ordinary
course of business. The Audit Committee granted omnibus approval for
the transactions (which are repetitive in nature) and the same was
reviewed by the Audit Committee and the Board of Directors. There were
no materially significant related party transactions made by the
Company with Promoters, Directors, Key Managerial Personnel or other
designated persons which may have a potential conflict with the
interest of the company at large. The transactions with the related
parties are disclosed in the Notes to the financial statements in the
Annual Report.
18. Listing arrangements
The company's shares are listed in the BSE Ltd. and National Stock
Exchange of India Ltd. and the annual listing fee has been paid to
these stock exchanges.
19. Vigil Mechanism
The Company has established a whistle blower policy and also
established a mechanism for directors and employees to report their
concerns. The details of the same is explained in the Corporate
Governance Report.
20. Corporate Social Responsibility (CSR)
The CSR Policy of the Company and the details about the initiatives
taken by the Company on CSR during the year as per the Companies
(Corporate Social Responsibility Policy) Rules, 2014 have been
disclosed in Annexure as part of this report. Further the details of
composition of the CSR Committee and other details are provided in the
Corporate Governance Report which forms part of this report.
21 . Disclosure under the Sexual harassment of woman at workplace
(Prevention, Prohibition and Redressal) Act, 2013
The company has put in place an anti-sexual harassment mechanism in
line with the requirements of the Sexual Harassment of Women at the
Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal
Complaints Committee have been set up to redress complaints received
regarding sexual harassment. All employees (permanent, contractual,
temporary, trainees) are covered under this policy. The Company has not
received any complaint of sexual harassment during the year 2014-15.
22. Particulars of loans, guarantees or investments under Section 186
of the Companies Act, 2013
Details of loans, guarantees and investments covered under the
provisions of Section 186 of the Companies Act, 2013 are given in the
Notes to the financial statements.
23. Share Capital
Consequent to the allotment of 35,00,000 equity shares to M/s. Sequent
Scientific Ltd., on preferential basis on 30.05.2014, the paid up
equity share capital has gone upto Rs. 12.02 crores from Rs. 11.32
crores.
24. Employees Stock Option
The Company has reserved 11,02,477 (Eleven Lakh Two Thousand Four
Hundred Seventy Seven) stock options under the Shasun ESOP Scheme and
granted 2,23,000 (Two Lakh Twenty Three Thousand) stock options to
identified Employees at a price of Rs. 85.60/- (Rupees Eighty Five and
Sixty Paise) on August 6, 2014, which options will be vested over a
period of five years at the rate of one-fifth of the options (i.e.,
44,600 each year) with the first vesting date being one year from the
date of grant of the option (i.e., August 5, 2015).
25. Public Deposits
The Company did not accept any deposits within the meaning of
provisions of Chapter V - Acceptance of Deposits by Companies of the
Companies Act, 2013 read with the Companies (Acceptance of Deposits)
Rules, 2014.
26. Extract of Annual Return
An extract of Annual Return in form MGT-9 as on March 31, 2015 is
attached as Annexure forming part of this Report.
27. Environment, Health & Safety
Shasun enjoys the services of a team that is experienced and competent
in the management of Environment, Health and Safety issues. The team
invests proactively in impact mitigation initiatives coupled with
simulations. All modern tools and techniques like PHA, Hazop and PSM
are covered to improve Environment, Health and Safety. Internal and
external audits measure our Environment, Health and Safety performance
and also inspire the Company to achieve an international standard with
zero deviations. Testimony to this are ISO 14001 and ISO 2007
certifications for both Pondy and Cuddalore APIs.
At Shasun Pharmaceuticals Limited, a responsible Environment, Health &
Safety (EHS) commitment is integral to our existence. Regular audits
are conducted and improvements carried out to provide a safe and
secured atmosphere.
28. Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and Outgo
Particulars in respect of conservation of energy, technology absorption
and foreign exchange earnings and outgo as required under Section 134
of the Companies Act, 2013, read with Rule 8(3) of the Companies
(Accounts) Rules, 2014 is attached as Annexure to this Report.
29. Acknowledgement
Your Directors would like to express their grateful appreciation for
the assistance and co-operation received from the Banks during the year
under review. Your Directors also place on record their deep sense of
appreciation for the continued support of customers, suppliers,
employees and investors of the company.
For and on behalf of Board of Directors
S. Vimal Kumar S. Abhaya Kumar Dr. S. Devendra
Wholetime Director Managing Director Wholetime Director
Place : Chennai
Date : April 30, 2015
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