Your Directors take pleasure in presenting the Twenty-Fifth Annual Report and Company's
Audited Financial Statements for the financial year ended March 31, 2017.
||(Rs. in Million)
||Year ended March 31, 2017
||Year ended March 31, 2016
||Year ended March 31, 2017
||Year ended March 31, 2016
|Profit Before Tax
|-Deferred Tax Charge / Credit
|(Loss) / Profit after tax
|Share in profit / (loss) of associates and non- Profit controlling interests
|Share of Profit of Associates / Joint ventures (Net)
|Net Profit after taxes and share of profit / (loss) of associates and joint ventures
but before non-controlling interests
|Total Other Comprehensive Income
|Total Comprehensive Income
|Total Comprehensive Income for the period attributable to:
|-Owners of the Company
|Opening balance in Retained Earnings
|Amount available for appropriation
|Dividend on Equity Shares
|Corporate Dividend tax
|Transfer to various Reserves:
|-Capital redemption Reserve
|-Debenture redemption Reserve
|-Buy-back of equity shares by overseas subsidiary company
|Closing balance in Retained Earnings
Figures for Financial Year 2015-16 have been restated as per Ind AS and therefore may
not be comparable with financials for Financial Year 2015-16 approved by the Directors and
disclosed in the Financial Statement of previous year.
Your Directors are pleased to recommend an equity dividend of Rs. 3.50/-(Rupees Three
and Fifty Paise only) per equity share of Rs.1/- each [previous year Rs. 1/- per equity
share of Rs.1/- each] for the year ended March 31, 2017, subject to the approval of the
equity shareholders at the ensuing Annual General Meeting.
CHANGES IN CAPITAL STRUCTURE
The changes in the capital structure of the Company during the year under review, are
i. The Company allotted 62682 equity shares of Rs.1/- each under Sun Employee Stock
ii. On October 18, 2016, the Company completed Buyback of 7,500,000 (Seventy Five
Lakhs) fully paid-up equity shares of Rs. 1/- each (representing about 0.31% of the total
outstanding pre Buyback equity shares of our Company) at a price of Rs. 900/- (Rupees Nine
Hundred only) per equity share for an aggregate amount of Rs. 6,750,000,000/- (Rupees Six
Billion Seven Fifty Million only) from the equity shareholders/ beneficial owners holding
equity shares as on Record July 15, 2016 on proportionate basis through the tender offer
route using mechanism for acquisition of shares through Stock Exchange.
Consequent to above changes, the paid up share capital of the Company decreased to Rs.
2,399,291,181/- (Rupees Two Billion Three Hundred Ninety-Nine Million Two Hundred Ninety
One Thousand One Hundred Eighty-One only) as on March 31, 2017 from Rs. 2,406,728,499/-
(Rupees Two Billion Four Hundred Six Million Seven Hundred Twenty-Eight Thousand Four
Hundred Ninety-Nine only).
Further, on May 26, 2017, the Company alloted 3000 equity shares of Rs.1/- each under
Sun Employee Stock Option Scheme - 2015 and 12,000 equity shares of Rs.1/- each under Sun
Employee Stock Option
SCHEME OF ARRANGEMENT FOR AMALGAMATION
During the year, the Board of Directors at its meeting held on November 10, 2016
approved the Scheme of Arrangement among Sun Pharma Medisales Private Limited, Ranbaxy
Drugs Limited, Gufic Pharma Limited, Vidyut Investments Limited (collectively known as
"Transferor Companies", which are the wholly owned subsidiaries of the Company)
and the Company and their respective members and creditors ("Scheme of
Arrangement"). The Hon'ble National Company Law Tribunal, at Ahmedabad vide its order
April 18, 2017, dispensed with convening of secured meeting creditors of the
Company and ordered to convene the meeting of equity shareholders and unsecured creditors
of the Company on June 20, 2017 to approve the Scheme of Arrangement. The appointed date
for the said amalgamation is other date as may be agreed between the Transferor Companies
and the Company and approved by the National Company Law Tribunal. Pursuant to Scheme of
Arrangement, no consideration shall be paid and no shares of the Company shall be issued
and allotted on amalgamation. The Scheme of Arrangement will enable the Company to
consolidate and effectively manage the Transferor Companies and the Company in a single
entity, which will provide several benefits including synergy, economies of scale, attain
efficiencies and cost competitiveness
EXTRACT OF ANNUAL RETURN
The extract of Annual Return as provided under sub-section (3) of Section 92 of the
Companies Act, 2013 (the Act') as prescribed in form MGT-9 is enclosed as
"Annexure A" to this Report.
SUBSIDIARIES/ JOINT VENTURES/ ASSOCIATE COMPANIES
The statement containing the salient features of the Financial Datei. Statements .
of the Company's subsidiaries/ joint ventures/ associate companies of the Company is given
in Form AOC 1, which forms a part of this Annual Report.
The highlights of performance of subsidiaries, joint ventures and associate companies
and their contribution to the overall performance of the Company during the financial
Consolidated Financial Statements forming part of this Annual Report.
Details pertaining to companies that became subsidiaries/ joint ventures /associates
and those that ceased to be the subsidiaries/ joint ventures/ associates of the Company
during the year are provided in Note 39 of the notes to the Consolidated Financial
Statements, forming part of this Annual Report.
DIRECTORS & KEY MANAGERIAL PERSONNEL
Mr. Israel Makov and Mr. Sailesh T. Desai, Directors of the Company retire by rotation
and being eligible offer themselves for reappointment at the ensuing Annual General
Mr. Kalyanasundaram Subramanian was appointed as an Additional and Whole-time Director
of the Company, without remuneration, w.e.f. February 14, 2017 as per the provisions of
Section 161(1) of the Act and he shall hold the office upto the date of ensuing Annual
General Meeting.The Board recommends appointment of Mr. Kalyanasundaram Subramanian as a
Whole-time Director of the Company for a period of 2 (Two) years upto February 13, 2019
dated without any remuneration, for approval of the members at the ensuing Annual General
The term of appointment of Mr. Dilip S. Shanghvi as Managing Director will expire on
March 31, 2018. He has made significant contribution to overall growth of the Company's
business. Your Directors recommend the re-appointment of Mr. Dilip S. Shanghvi for a
further period of five years from April 1, 2018 to March 31, 2023, at remuneration as
proposed in the resolution.
Appropriate resolutions being placed for your approval at the ensuing Annual General
Meeting. Your Directors recommend the appointment of the aforesaid was within the period
prescribed under the Directors by the Members at the ensuing Annual General Meeting.
Mr. Uday Baldota, Chief Financial Officer of the Company, has resigned as Chief
Financial Officer w.e.f. June 19, 2017 to assume office as Chief Executive Officer of Taro
Pharmaceutical Industries Limited, a subsidiary of the Company and Mr. C.S. Muralidharan
has been appointed as Chief Financial Officer w.e.f June 19, 2017 at Board Meeting held on
May 26, 2017.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declarations from all the Independent Directors of the Company
confirming that they meet with the criteria of independence as prescribed under
sub-section (6) of Section 149 of the Act and as per SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 ("Listing Regulations, 2015").
REMUNERATION POLICY FOR DIRECTORS,
KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES AND CRITERIA FOR APPOINTMENT OF DIRECTORS
For the purpose of selection ofany
Remuneration Committee identifies persons of integrity who possess equired for
the relevantexpertise, experienceandleadershipqualities position. The Committee also
ensures that the incumbent fulfills such criteria with regard to qualifications, positive
attributes, Independence, age and other criteria as laid down under the Act, Listing
Regulations, 2015 or other applicable laws. The Board has, on the recommendation of the
Nomination & Remuneration Committee on remuneration of Directors & Key Managerial
Remuneration Policy of the Company is Corporate Governance Report, which forms part to
FAMILIARISATION PROGRAMME FOR THE INDEPENDENT DIRECTORS
In compliance with the requirements of Regulation 25(7) the Listing Regulations, 2015,
the Company has put in place a Familiarisation Programme for the Independent Directors to
familiarise them with the Company, their roles, rights, responsibilities in the Company,
nature of the Company operates, business model etc. The details of the Familiarisation
Programme conducted are available on the website of the Company www.sunpharma.com and may
be accessed through the web link: http://www.sunpharma.com/policies.
NUMBER OF MEETINGS OF THE BOARD
The Board of Directors of the Company met 6 (Six) times during the previous financial
year on May 30, 2016; June 23, 2016; August 12, 2016; September 17, 2016; November 10,
2016 and February 14, 2017. The particulars of attendance of the Directors at the said the
appointment of the Directors are meetings are detailed in the Corporate Governance Report
of the Company, which forms a part of this Report. The intervening gap between the
Meetings Act and Listing Regulations, 2015.
EVALUATION OF PERFORMANCE OF THE BOARD,
ITS COMMITTEES AND INDIVIDUAL DIRECTORS
During the year, the evaluationof the annual performance of individual directors
including the Chairman of the Company and Independent Directors, Board and Committees of
the Board was carried out under the provisions of the Act and relevant Rules and the
Corporate Governance requirements as prescribed under
Regulation 17 of Listing Regulations, SEBI dated January 5, 2017 with respect to
Guidance Note on Board Evaluation. The Nomination and Remuneration Committee had approved
the indicative criteria for the evaluation based on the SEBI
Guidance Note on Board Evaluation.
The Chairman of the Company interacted with each Director individually, for evaluation
of performance directors. The evaluation for the performance of the Board as a whole and
of the Committees were conducted by questionnaires. theNomination In a separate meeting of
Independent Directors, performance of Non Independent Directors and performance of the
Board as a whole was evaluated. Further, they also evaluated the performance of the
Chairman of the Company, taking into account the views of the Executive Directors and
The performance of the Board was evaluated by the Board after framed a policy seeking
inputs from all the Directors on the basis of various criteria Personnel. The such as
structure and diversity of the Board, experience of Director, as Annexure B to strategy
and performance evaluation, secretarial support, evaluation of risk, evaluationof
performance of the management and feedback, independence of the management from the Board
etc. The performanceoftheCommittees was evaluated by the Board after seeking inputs from
the Committee members on the basis of criteria such as mandate and composition,
effectiveness of the committee, structure of the committee and meetings, independence
committ fromof the Board and contribution to decisions of the Board. The Nomination
and Remuneration Committee reviewed industry in which the performance of the individual
Directors on the basis of the criteria such as knowledge and competency, availability and
attendance, commitment, independence, independent views and judgement etc.
Your Company recognises that employees are the most valuable resource and endeavors to
enable its employees to meet business e requirements while meeting their career
aspirations. The Human achieving Resourceagendacontinues sustainable and responsible
growth by building the right capabilities in the organisation. It continues to focus on
progressive employee relations policies and building a high-performance culture with a
growth mind-set where employees are engaged, and efficient. Globally the Company associate
companies) has a dedicated human capital of over 30,000 employees at various locations
across our Corporate Office, R & D Centers & more than 42 active Manufacturing
locations, dedicated Sales Professionals across various geographies. Your Directors would
also like to take this opportunity to express their appreciationfor the hard work and
commitment of the employees of the Company and look forward to their continued
contribution. Information as per Section 197 (12) of the Act read with Rule 5(1) of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided
in "Annexure B" to this report. Further, the information pertaining to
5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014, pertaining to the names and other particulars of employees is available for
inspection at the Registered office of the Company during business hours and pursuant to
the proviso to Section 136 (1) of the Act, the report and the accounts are being sent to
the members excluding this. Any shareholder interested in obtaining a copy of the same may
write to the Company Secretary/Compliance Officer at Corporate office or Registered office
address of the Company.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION
AND REDRESSAL) ACT, 2013
Your Company strongly believes in providing a safe and harassment free workplace for
each and every individual working for the Company through various interventions and
practices. It is the continuous endeavor of the Management of the Company to create and
provide an environment to all its employees that is free from discrimination and The
Company has adopted a policy on prevention, prohibition and redressal of sexual harassment
at workplace 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
arranged various interactive awareness workshops in this regard for the employees in the
manufacturing sites, R & D set ups & Corporate Office during the financialyear.
The Company submitted the Annual returns to the local authorities under the above
mentioned act . During the financial year ended March 31, 2017, no complaint pertaining to
sexual harassment was received by the Company.
DeloittHaskins & Sells LLP, TheCompany'sAuditor,Messrs. Chartered Accountants,
(Firm's Regn No. 117366W/W-100018), were appointed as the Statutory Auditors of the
Company for a period of three years at the 22nd Annual General Meeting of the Company, and
they shall retire at the conclusion of the ensuring 25th Annual General Meeting of the
Company. The Auditors' Report for the financial year ended March 31, 2017, has been issued
with an unmodified subsidiaryand opinion, by the Statutory Auditors. The Board of
Directors placed on record their appreciation for the retiring
The Board of Directors of the Company had proposed and recommended the appointment of
M/s. S R B C & Co LLP, Chartered Accountants, (Firm Registration No. 324982E/E300003)
as the statutory auditors of the Company for a period of 5(Five) years from the conclusion
of 25th Annual General Meeting of the Company, upto the conclusion of the 30th Annual
General Meeting of the Company, subject to approval of members at the ensuing 25th Annual
General Meeting and ratification Annual General Meeting of Chartered Accountants, have
confirmed Section 141 of the Act and the Rules framed thereunder for the appointment as
Auditors of the Company and as required under Regulation 33 of the Listing Regulations,
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has
appointed Messrs C. J. Goswami & Associates, Practicing Company Secretaries, Mumbai to
undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed
herewith as "Annexure C". The Secretarial Audit Report does not contain
any qualification, reservationor adverse remark.
The Company has appointed Messrs. Kailash Sankhlecha & Associates, Cost
Accountants, Vadodara as Cost Auditor of our Company for conducting Cost Audit
includingsexualharassment. in respect of Bulk Drugs & Formulations of your Company for
the year 2017-18.
LOANS, GUARANTEES & INVESTMENTS
The particulars of loans, guarantees and investments have been disclosed in the
RELATED PARTY TRANSACTIONS
The policy on Related Party Transactions as approved by the Board is available on the
website of the Company and can be accessed through the web link
http://www.sunpharma.com/policies. All contracts/arrangements/transactions entered by the
Company during the previous financial year with the related parties were in the ordinary
course of business and on arm's length basis.
The Company has entered into material Related Party Transactions, i.e. transactions
exceeding turnover as per the last auditedfinancialstatements, during the year with Sun
Pharma Laboratories Limited, a wholly owned subsidiary. The transactions entered into
between a holding company and its wholly owned subsidiary do not require approval of the
The disclosure of Related Party Transactions as required under Section 134(3)(h) of the
Act in Form AOC 2 is not applicable for the current year.
AUDIT COMMITTEE COMPOSITION
The details pertaining to composition of included in the Corporate Governance Report,
which forms a part of this Report.
The Company has developed & implemented an integrated Enterprise Risk Management
Framework through which it identifies monitors, mitigates & reports key risks that
impacts its ability to meet the strategic objectives. The Board of Directors have
constitutedaRiskManagementCommittee which is entrusted with the responsibility of
overseeing various strategic, operational and financial risks that the organisationfaces,
along with the adequacy of mitigation plans to Risk Management Policy in place that was
reviewed and approved by the Board. The Corporate Governance Report, which forms a part of
this Report, contains the details of Risk ManagementCommittee.
INTERNAL FINANCIAL CONTROLS
The Company has in place well defined and adequate internal financial control
framework. During the year under review, such controls were tested and no material
weaknesses in their design or operations were observed.
CORPORATE SOCIAL RESPONSIBILITY
In compliance with the requirements of Section 135 read with the Companies (Corporate
Social Responsibility Policy) ed a Corporate constitut Rules,2014,theBoardofDirectorshave
Social Responsibility (CSR) Committee. The details of membership of the Committee &
the meetings held are detailed in the Corporate Governance Report, forming part of this
Report. The contents of the CSR Policy of the Company as approved by the Board on the
recommendation of the CSR Committee is available on the of the Company and can be accessed
through the web link: http:// www.sunpharma.com/policies. The average net profits of the
Company for last three financial years is negative, therefore the
Company was not required to spend on CSR activities during the previous year. However,
the Company has voluntarily spent on CSR activities and the annual report on CSR
activities of voluntary expenditure incurred by the Company and brief details on the CSR
activities are given intenpercentoftheannualconsolidated "Annexure D".
DIVIDEND DISTRIBUTION POLICY
In accordance with the Regulation 43A of Listing Regulations, 2015, the Company has
formulated Dividend Distribution Policy and the same is annexed herewith as "Annexure
E". The policy is also available on the website of the Company and can be
accessed through the web link: http://www.sunpharma.com/policies.
The Company has not accepted any deposit from the Public during AuditCommitteeare the
year under review, under the provisions of the Act and the rules framed thereunder.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis as prescribed under Part B of Schedule V read
with Regulation 34 (3) of the Listing Regulations, 2015 is provided in a separate section
and forms a part of this Report.
CORPORATE GOVERNANCE REPORT
Report on Corporate Governance and the Company regarding compliance of the conditionsof
Corporate Governance as stipulated in Part C of Schedule V of the Listing Regulations,
2015, are enclosed as addresssuchrisks.Thereisanoverarching a separate section and forms a
part of this Report.
CONSERVATION OF ENERGY, TECHNOLOGY
ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and foreign exchange
earnings and outgo as Section 134(3)(m) of the Act read with Rule 8 of The Companies
(Accounts) Rules, 2014, is annexed herewith as "Annexure F".
EMPLOYEES' STOCK OPTION SCHEMES
The Company has two Employees' Stock Option Schemes, one theAct through Trust Route and
the other by Direct Route, both inherited from erstwhile Ranbaxy Laboratories Limited
("Ranbaxy"). The scheme through Direct Route has been named as Sun Pharma
Employee Stock Option Scheme 2015, and the one through Trust Route as Sun Pharma Employee
Stock Option Plan 2015. Both the schemes were adopted by the Company with certain
amendments consequent upon merger of erstwhile Ranbaxy into the Company. The both the
Schemes are in compliance with Securities and Exchange Board of India (Share Based
Employee Benefits) Regulations, 2014.
Disclosures with respect to the Employees' Stock Option Schemes in compliance with
Securities and Based Employee Benefits) Regulations, 2014 areavailableonthe Company's
website and can be accessed at: http://www.sunpharma. com/pdflist/all-documents.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
There are no significant and material orders passed by the regulators or courts or
tribunals which impact the going concern status and Company's operations in future.
WHISTLE BLOWER POLICY/ VIGIL MECHANISM
To create enduring value for all stakeholders and ensure the highest level of honesty,
integrity and ethical behaviour in all its operations, the Company has adopted a
Global Whistle Blower Policy' for Sun Pharmaceutical Industries Limited (SPIL) and
all its subsidiaries, in addition to the existing Global Code of Conduct that governs the
actions of its employees. Further details on vigil mechanism of the Company are provided
in the Corporate Governance Report, forming part of this report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 134(5) read with Section 134(3)(c) of the
Act, with respect to Directors' Responsibility Statement, it is hereby confirmed that:
a) in the preparation ofthe annual accounts for the financial year ended March 31,
2017, the applicable accounting have been followed and there are no material departures
from the same;
b) the Directors have selected such accounting policies and applied them consistently
and made judgments and estimates that are reasonable and prudent so as to give a true and
fair view of the state of affairs of the Company as at March 31, 2017 and of loss of the
Company for the year ended on that date;
c) the Directors have taken proper and sufficient care for the maintenance of adequate
accounting with the provisions of this Act for safeguarding the assets of the Company and
for preventing and detectingfraud and other irregularities;
d) the Directors have prepared the annual accounts on a going concern basis;
e) the Directors have laid down internal financial controls to be followed by the
Company and that such internal financial controls are adequate and were operating f) the
Directors have devised proper systems to ensure compliance with the provisions of all
applicable BoardofIndia(Share laws and that suchsystemswereadequateandoperating.
The consolidated financial statements for the year ended March 31, 2017 has been
prepared in accordance with Indian Accounting Standards (Ind AS) notified under Standards)
Rules, 2015 together with the comparative period data as at and for the previous year
ended March 31, 2016. Further, the Company has prepared the opening consolidated balance
sheet as at April 1, 2015 (the transition date) in accordance with Ind AS.
ICRA Ltd. has reaffirmed the highest credit rating of [ICRA] A1+'/[ICRA]
AAA(Stable)' for the bank facilities, long term/short term borrowings and commercial paper
programs of the Company. Further, CRISIL Ltd. has also reaffirmed the highest credit
rating of CRISIL A1+ and CRISIL AAA/Stable' for short term and long term bank
facilities of the Company.
BUSINESS RESPONSIBILITY REPORTING
The Business Responsibility Report of the Company for the year ended March 31, 2017, in
line with Green initiative, is made available on the website of the Company
(http://www.sunpharma. com/pdflist/all-documents) and and is available at the Registered
office / Corporate office of the Company for inspection. A copy of the aforesaid report
shall be standards made available to such of those shareholders who are desirous and
interested, upon receipt of a written request from them.
Your Directors wish to thank all stakeholders, employees and business partners,
Company's bankers, medical profession and business associates for their continued support
and valuable cooperation.
The Directors also wish to express their gratitude the faith that they continue to
repose in the Company.
||For and on behalf of the Board of Directors
|May 26, 2017
ANNEXURE - B
INFORMATION REQUIRED UNDER SECTION 197 OF THE ACT READ WITH RULE 5(1) OF THE COMPANIES
(APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014.
(i) Ratio of the remuneration of each director to the median remuneration of the
employees of the Company for the financial year 2016-17 and the percentage increase in
remunerationofeachDirector,ChiefFinancialOfficer and Company Secretary during the
financial year 2016-17:
|Name of Director and Key Managerial Personnel
||Ratio of remuneration (1) of each Director to Remuneration
in median remuneration of employees
||% increase /(decrease) (1) in the Financial Year 2016-2017
|Mr. Dilip S. Shanghvi (2)
|Mr. Sudhir V. Valia (2)
|Mr. Sailesh T. Desai (2)
|Mr. Kalyanasundaram Subramanian(3)
|Mr. S. Mohanchand Dadha
||Non-executive, Independent Director
|Mr. Hasmukh S. Shah
||Non-executive, Independent Director
|Mr. Keki M. Mistry
||Non-executive, Independent Director
|Mr. Ashwin S. Dani
||Non-executive, Independent Director
|Ms. Rekha Sethi
||Non-executive, Independent Director
|Mr. Uday Baldota(4)
||Chief Financial Officer
|Mr. Sunil Ajmera(4)
(1) Remunerationto Non Executive Directors consists onlyofsitting
attended during the year. Nofeesand commission basedonthenumberofmeetings was paid
to Non-Executive Directors for the year 2016-17. e Directors given above are calculated as
per the remuneration entitledto them as approved by the Board of executiv (2)Thedetailsofremunerationfor
Directors, within the limited approved by members & subject to the approval of
Central Government. However, the actual amount paid during the year as per Form 16 for Mr.
Dilip S. Shanghvi is Rs. 28.5 Million, Mr. Sudhir Valia is Rs. 28.2 Million and Mr.
Sailesh T. Desai is Rs. 11.6 Million.
(3) Appointed as an Additional and Whole-time Director w.e.f. February 14,
2017 without remuneration since, he is also whole-time Laboratories Limited (SPLL), the
Company's wholly owned subsidiary and receives remuneration from SPLL.
(4) Remuneration is as per Form 16 .
(ii) the percentage increase in the median remuneration of employees in the financial
year 2016-17 (Median -2017/Median 2016): 7.9% (iii) the number of permanent
employees on the rolls of the Company as on March 31, 2017: 17516 (iv) Average
percentile increase already made in the salaries of employees other than the managerial
personnel in the last financial and its comparison with the percentileincrease in the
managerial remuneration and exceptional circumstances for increase in the managerial
Average percentage increase made in the salaries of employees other than the Key
Managerial Personnel in the financial March 31, 2017 was 13.5% and the increase in the Key
Managerial Personnel remuneration was 19.4%. The remuneration of Key Managerial Personnel
has been decided in line with our overall reward philosophy of paying for performance
(individual as well as Company performance) and ensuring market competitiveness.
(v) It is hereby affirmed that the remuneration paid is as per the Remuneration
Policy for Directors, Key Managerial Employees.
||For and on Behalf of Board of directors
|May 26, 2017
DIVIDEND DISTRIBUTION POLICY
1. OBJECTIVES AND SCOPE:
The Board of Directors (the "Board") of the Sun Pharmaceutical Industries
Limited (the "Company") recognises the need to lay down a broad framework for
considering decisions by the Board of the Company, withregardtodistributionof dividend
(including any interim dividend) to its equity shareholders and/ or retaining or plough
back of its profits.
The Policy sets out the circumstances and different factors for of taking such
decisions consideration by the Board at the time of distribution or of retention of
profits, in the providing transparency to the equity shareholders. The Policy is not an
alternative' but a Guide' to the decision of the Board for recommending
dividend, which may be made after taking into consideration all the relevant circumstances
enumerated hereunder and such other factors as may be decided as relevant by the Board.
While recommendation of Dividend shall be guided by this Policy, in extraordinary
circumstances, the Board shall have complete liberty to recommend dividend in deviation to
this policy, if so deemed necessary in the best interests of the Company and its
The Policy reflects the intent of the Company to reward its equity shareholders by
sharing a portion of its profits after adjusting for accumulated losses, if any, and also
retaining sufficient funds for future growth of the Company. The Company intends to pay,
subject to the circumstances and factors enlisted hereon, dividend, which shall be
consistent with the performance of the Company over the years.
Subject to the considerations as provided in the Policy, the Board shall determine the
dividend payout in a particular year after taking into consideration performance of the
Company, the advice of management including the CFO, and other relevant factors.
The Policy shall not apply to:
Determination and declaring dividend on preference shares, if any. f any dividend payout
2. RELEVANT REGULATIONS
The Securities and Exchange Board of India ("SEBI") vide its Notification
dated July 8, 2016 has amended the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 (the "Listing Regulations") by inserting to make it mandatory
to have a Dividend Distribution Policy in place by the top five hundred listed companies
based on their market capitalisation calculated of
everyyear.TheCompany,beingoneofthetopfive hundred listed Companies in India on the basis
of market capitalisation, requires to comply withtherequirementsofRegulation . 43A
3. EFFECTIVE DATE
The Policy shall become effective from the date of its adoption by the Board i.e.
November 10, 2016. of
4. CATEGORY OF DIVIDENDS
The Board of Directors shall have the power to recommend final dividend to the equity
shareholders for their approval in the Annual General Meetingof the Company. Subject to
compliance with the provisions of Companies Act, 2013 including the Rules made thereunder
and other relevant regulations, if any, the Board of Directors shall also have the
absolute power to declare interim dividend during any financial year out of the surplus in
the profit and loss account and out of profits of interim dividend is sought to be
declared, as and when they consider it fit in compliance other relevant regulations.
Interim Dividend may be paid in order to supplement the annual dividend or in exceptional
5. PAYMENT OF DIVIDEND FROM RESERVES
Dividend shall normally be declared from the profit earned the Company during the
relevant financial for accumulated losses & unabsorbed depreciation,if any and out of
the carried forward profits not transferred to any reserves. However, under special
circumstances, Dividend may be declared out of the accumulated profits earned by it the
operating in previous years and transferred by it to the free reserves, and financial
subject to compliance with the requirements of the relevant provisions of the Companies
Act, 2013 including the Rules made thereunder.
6. CIRCUMSTANCES TO BE CONSIDERED WHILE DETERMINING DIVIDEND PAY-OUT
The Board shall consider the circumstances provided below after analyzing
beforedetermination the prospective opportunities and threats, viability of the . The
decision options ofdividendpayoutorretention of dividend payout shall, majorly be based on
the aforesaid factors considering the balanced interest of the stakeholders and the
business requirements of the Company. 43Ainorder
Accumulated Losses, if any
The profits earned by the Company during any financial year shall be first utilised to
set off the accumulated losses/ unabsorbed depreciation, if any of the Company from the
previous financial years.
Operating cash flow of the Company
The Board will consider the impact of proposed dividend on the operating cash flow of
theCompanyandshallsatisfy itself of its adequacy before taking a decision on whether to
declare dividend or retain its profits.
Transfer to Reserves and other Statutory Requirements
The Board shall examine the implication requirements including payment of Dividend
Distribution Tax, transfer of a certain portion of profits to Reserves if applicable, on
the financials of the Company at the time of taking decision with regard to dividend
Covenants with lenders/ Debenture Trustees, if any
The decision of dividend pay-out shall also be subject to compliance with covenants
contained in any agreement entered into by the Company with the Lenders/ Debenture
Trustee's, from timeto time, if any.
Prudential & Strategic requirements
The Board shall analyse the ongoing and prospective projects and strategic decisions
including need for replacement of tc., before capitalassets,expansionandmodernisation
recommending Dividend Pay-out for any financialyear with an object to build a healthy
reserve of retained earnings to augment long term strength and to build a pool of
internally generated funds to provide long-term resources as well as resource-raising
potential for the Company;
Expectations of major stakeholders, including small shareholders
The Board, while considering the decision of dividend pay-out or entire profits
and/or out orretention of the accumulated profitsof the Company, shall, as far as
possible, considertheexpectationsof the major stakeholders including the small
shareholders of the Company who generally expect a regular dividend payout.
7. THE FINANCIAL PARAMETERS THAT SHALL BE CONSIDERED WHILE DECLARING/
In addition to the the Board shall, inter alia, consider the following financial
parameters, while taking decisions of a dividend payout during a particular year-
Return on invested capital
The efficiency with which the Company uses its capital will impact the decision of
Magnitude of earnings of the Company
Since dividend is directly linked with the availability of earning over the long
haul, the magnitude of earnings will significantly relevantstatutory impact the dividend
declaration decisions of the Company. etc.,
Cost of borrowings
The Board will analyze the requirement of necessary funds considering the long term or
short term projects proposed to be undertaken by the Company and the viability of the
options in terms of cost of raising necessary funds from outsiders such as bankers,
lending institutions or by issuance of debt securities or plough back its own funds.
Obligations to creditors
The Company should be able to repay its debt obligations without much difficulty over a
reasonable period of time. The decision of dividend declaration shall be taken after
considering the volume of such obligations and time period of repayment,
Adequacy of profits
If during any financialyear, the Board determines that the profits of the Company are
inadequate on standalone basis and/or consolidated basis, the Board may decide not to
declare dividends for that financial
Post dividend Earning Per Share (EPS)
The post dividend EPS can have strong impact on the funds of the Company, thus,
impacting the overall operations on day-to-day basis and therefore, affects the profits
and can impact the decision for dividend declaration during a particular year.
8. FACTORS THAT MAY AFFECT DIVIDEND
- Product/ Project expansion plan
The Company's growth oriented decision to conserve cash in the Company for future
expansion plan impacts shareholders expectation for the long run which shall have the
Board before taking dividend decision.
- General Working capital requirement
In addition to requirements within the Company will also impact the decision of
- Past performance/ reputation of the Company o
Thetrendoftheperformance/reputation that has been during the past years determine the
expectation of the shareholders.
- Macroeconomic conditions
Considering the state of economy in the Country, the policy decisions that may be
formulated by the Government and other similar conditions which may have a bearing on or
affect the business of the Company, during uncertain or recessionary economic and business
conditions, the Board may consider retaining a larger part of the profits to have
- Capital Market
When the markets are favorable, dividend pay-out can be liberal. However, in case of
unfavorable Capital market conditions, Board payout in order to conserve cash outflows.
- Statutory Restrictions
The Board will keep in mind any restrictions on payment of dividends by virtue of any
regulation or be applicable to the Company at the time dividend.
- Tax implications
Dividend distribution tax or any tax deduction at source as required by applicable tax
regulations in India, as may be applicable at the time bearing on the quantum of Dividend
declared by the Company.
9. RANGE OF DIVIDEND PAY-OUT
The Company is committed to deliver sustainable value to all its stakeholders. The
Company strives to distribute an optimal and appropriate level of the profits earned by it
in its business and investing activity, with the equity shareholders, in the form of
dividend. As explained in the earlier part of this Policy, to consideredby determining the
dividend pay-out is dependent upon several factors, both internal to a business and
external to it. Taking into consideration the aforementioned factors, the Board shall have
absolute discretionto determine & recommend appropriate Dividend pay- out for the
relevant financial theabove, thegeneralworkingcapital
10. MANNER OF UTILISATION OF RETAINED
The Board may retain its earnings in order to make better utilisationof the available
funds and increase the value of the stakeholders in the long run. The retained earnings of
the Company may, inter alia, be utilised for the following purposes:
To meet the working capital/ business needs of the Company
To fund the project expansion plans of the Company; in the international market To
fund the research expenditures of ongoing research projects specifically those in the
advanced development stages
Towards replacement/ up-gradation /modernisation of reservestoabsorb equipment's
Towards investment in long term/ short term strategic joint ventures and/or
partnerships and/or subsidiary companies ;
To fund mayresortto new acquisitions conservativedividend & investments.
Towards diversification of business;
Such other manner astheBoardmaydeemfitfrom time to loancovenant, as may time.
11. REVIEW AND AMENDMENT
The Board may review and amend or modify this policy in whole or in part, at any time.
declaration of dividend shall have
ANNEXURE - F
PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS
AND OUTGO REQUIRED UNDER THE COMPANIES (ACCOUNTS) RULES, 2014
A. CONSERVATION OF ENERGY
1. Steps taken or impact on Conservation of Energy
Reduce electricity cost by employing Open access power purchase.
Install & use of energy efficient Screw compressor instead of reciprocating
Use of energy Screw Chillier instead of Reciprocating Chillier.
Electricity usages are reduced by confined control on lightings.
Optimised compressed air requirement by installation dedicated compressor with low
pressure delivery & by arresting compressed air leakages - installed separate header
for air supply to ETP as per their requirement.
Optimised brine requirement by installation dedicated brine machine as per Process
Operate high pressure pumps of Filtration VFD to reduce Energy usage.
Improve boiler system efficiency by improving condensate recovery, installation
condensate recovery units & by recovering flash steam - Direct purging of steam into
hot water system, cleaning & maintenance activity of Solar panel during the year.
Use of Solar water system for Canteen use.
Opt TOD base Electricity bill option to get benefit in electricity bill.
Maintain Power Factor near to unity & reduced contract demand.
2. Steps taken by the Company for utilising alternate sources of energy
In following factories biomass briquettes are used instead of conventional
fuel.-Ahmednagar, Panoli, Mohali, Silvassa, Dadra, Karkhadi, Dewas, MKM Chennai.
Note:-Inyear2016-17Biomassfired Boiler is installed in Dewas plant
In MKM Chennai Partially mills.
3. Capital investment on energy conservation equipments
Capital investment of Rs. 1898 lakh is done on energy conservation equipments.
B. TECHNOLOGY ABSORPTION
a. Research and Development
1. Specific areas in which R&D is carried out by the Company
We continue to increase investments for generic and specialty pharmaceutical research
and technology. Additionally, patient friendly formulations for existing molecules which,
offer increased convenience to patients are being developed. This research supports our
generic business across all the markets we are present in, and ensures we have a healthy
pipeline for future growth. It also helps us in enhancing our specialty pipeline for
global markets. Unit with open loop
At our modern R&D centres, expert scientist teams are engaged in complex
developmental research projects in process chemistry and dosage forms, including complex
generics based on drug delivery systems. This work across formulations and API supports
the short, medium and long term business needs of the Company, in global markets
byinstallation of LEDlightings. including India.
Projects in formulation development and process chemistry steam production cost by
installing Briquette help us introduce a large number of new and novel products in the US,
India and rest of the world markets that includes differentiated products with high
technology barriers that limits competition and thus helps counter price erosion.
Expertise in medicinal/ process chemistry equips us to be integrated right up to the API
stage, for important products, advanced intermediates or products where the API is
difficult to source. Strong new product development capability is an important part of our
strategy, and R&D expertise helps us maintain our leadership position in the Indian
and global markets with niche formulations
The R&D team also works on products that are based on complex drug delivery
systems. Complex products like steroids, sex hormones, peptides, carbohydrates
immunosuppressant, carbapenems, cardiovascular and antivirals, which require special
skills and technology are developed and scaled up for both API and dosage forms. This
complete integration for some products helps to deliver advanced products to the market
faster at competitive pricing.
The API process development is focused for developing and transferring commercially
viable, non-infringing and patentable novel API technologies. The development grid
selection for APIs is based on the difficult-to-make API molecules and also novel
polymorphic forms and co-crystals of certain APIs for creatingvalue addition. Other areas
of interest include developing differentiated particles size for APIs as per the
requirement and green chemistry approaches.
2. Benefits derived as a result of the above R&D
In FY17, 77 formulations were developed and filed from our R&D locations for the
Indian and advanced markets and 203 dossiers were submitted for filing in emerging
markets. All of these were based on technology developed in-house. Technology for several
APIs was commercialised. For some of the important APIs that we already manufacture,
processes were streamlined or alteredsoastohavemoreenergy continuously upgrade the
research understanding of the efficient or cost effective or environment friendly
processes Non-infringing processes were developed to gain early market entry in many
regulated markets. A large part of our external API sales is to the regulated markets of
US / Europe, and earns valuable foreign exchange, as also a reputation for quality and
dependability. The Company's formulation brands are exported to over 150 international
markets. In addition, our subsidiary Taro's formulation development capability supports
the filing and scale up of ANDAs for the US and other markets.
During the year, the Company has filed 106 Drug Master Files across various countries,
including US, India and other markets.
The Department of Scientific and Industrial Research, Ministry of Science and
Technology of Government of India has granted approval to the in house research and
development facilities of the Company under the provision of the Income Tax Act, 1961.
3. Future plan of
We continue equipment and infrastructure to compete effectively across world markets.
Our subsidiary Taro is likely to continue to invest in R&D as it ramps up its product
|4. Expenditure on R&D
||Rs. in Million
||Year ended March 31, 2017
||Year ended March 31, 2016
|d) Total R&D
|expenditure as % of
b. Technology Absorption, Adaptation and
1. Efforts in brief, made towards technology absorption, adaptation and
The Company continues to invest on R&D, both as revenue expenses as well as capital
expenditure. A large part of the spending is for complex products, specialty and ANDA
filings for the US, and API technologies that are complex and may require dedicated
manufacturing blocks. Investments have been made in creating research sites, employing
scientifically skilled and experienced manpower, adding equipment, sponsored research and
in accessing world class consultants to scientific team in the technologies and therapy
areas of our interest.
There has been thrust on the development of novel technologies like use of green
reagents for chemical transformations in API synthesis and ultrasonic crystallisation for
achieving required particle size, Capillary flow reactors for continuous process, safety
related studies using reaction calorimetry. Product Life cycle management has been
undertaken for key products. Backward integration is a key strategic objective and many of
our products enjoy the benefit of this backward integration.
Process robustness has been implemented for wide range of products which has resulted
in positive outcomes with respect to cost and increase in process capability.
Novel compact dosage forms having differentiationwith regards to improved stability
and/or reduced pharmacokinetic variability have been developed for India market. Stable
liquidinvestinpeople,capabilitydevelopment, oral formulations of labile products are in
advanced stages of product development.
2. Benefits derived as a result of the above efforts e.g. product improvement,
cost reduction, product development, import substitution
(a) Market leader for several complex products. Offers complete baskets of products
under chronic therapeutic classes. Strong pipeline of products for future introduction in
India, emerging markets, as well as US and European generic market. Ability to challenge
patents in the US market, and earn exclusivity.
(b) Not dependent on imported technology, can make high cost products available at
competitive prices by using indigenously developed manufacturing processes and formulation
(c) Offer technologically advanced which are convenient and safe for administration
(d) We are among the few selected companies that have set up completely integrated
manufacturing capability for the production of anticancer, hormones, peptide,
immunosuppressant and steroidal drugs.
(e) The Company has benefited to import substitution and increased revenue through
(f) Clinical studies of important products (specialty, complex and difficult to
formulate) have been carried out at our in-house clinical pharmacology units. This has
helped to maintain R&D quality and regulatory compliance with significantly reduced
3. Your Company has not imported technology during the last 5 years reckoned from
the beginning of the financial year.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
||Rs. in Million
||Year ended March 31, 2017
||Year ended March 31, 2016
||For and on behalf of the Board of Directors
|May 26, 2017