<dhhead>Board’s Report</dhhead>
Your Directors take pleasure in presenting the Thirty-first Annual
Report and Company’s Audited Financial Statements for the financial year ended March
31, 2023 (‘FY23’).
Financial Results
( in Million)
|
Standalone |
Consolidated |
|
Year ended |
Year ended |
Year ended |
Year ended |
|
March 31, 2023 |
March 31, 2022 |
March 31, 2023 |
March 31, 2022 |
| Revenue from operations |
208,121.4 |
155,859.8 |
438,856.8 |
386,544.9 |
| Profit before exceptional item and tax |
46,788.4 |
21,273.9 |
95,798.8 |
90,481.4 |
| Exceptional Item |
29,377.9 |
18,205.3 |
1,714.5 |
45,668.2 |
| Profit before tax but after exceptional item |
17,410.5 |
3,068.6 |
94,084.3 |
44,813.2 |
| Profit after tax |
16,907.2 |
(999.9) |
85,608.4 |
34,058.2 |
| Opening balance in Retained Earnings |
136,120.8 |
159,645.5 |
376,456.5 |
365,980.9 |
| Closing balance in Retained Earnings |
127,908.8 |
136,120.8 |
436,102.5 |
376,456.5 |
Material changes and commitments affecting the financial position of
the Company, between the end of the financial year and the date of this report
There have been no material changes and commitments affecting the
financial position of the Company, between the end of the financial year and the date of
this report.
Consolidated Accounts
The consolidated financial statements for the year ended March 31, 2023
pursuant to Section 129(3) of the Companies Act, 2013, form part of this Annual Report.
Dividend
During the year under review, the Directors have declared an interim
dividend of 7.50/- (Rupees Seven and Paise Fifty only) per equity share of 1/- (Rupee One
only) each [previous year 7.00/- (Rupees Seven only) per equity share of 1/- (Rupee One
only) each] for the year ended March 31, 2023.
In addition to above, the Directors have recommended a final dividend
of 4.00/- (Rupees Four only) per equity share of 1/- (Rupee One only) each [previous year
3.00/- (Rupees Three only) per equity share of 1/- (Rupee One only) each] for the year
ended March 31, 2023, subject to the approval of the shareholders at the ensuing 31st
Annual General Meeting of the Company.
The total dividend payout for the FY23 is 11.50/- (Rupees Eleven and
paise fifty only) per equity share of
1/- each [previous year 10.0/- (Rupees Ten only) per equity share of
1/- (Rupee One only) each].
The dividend payout is in accordance with the Company’s Dividend
Distribution Policy. The policy is available on the website of the Company,
https://sunpharma.com/policies.
Transfer to Reserves
The Directors do not propose any transfer to reserve.
Loans, Guarantees & Investments
The particulars of loans, guarantees and investments have been
disclosed in the Financial Statements.
Public Deposits
The Company has not accepted any deposit from the public during the
year under review.
Changes in Capital Structure
During the year under review there was no change in the capital
structure of the Company.
Credit Rating
The highest credit rating has been reaffirmed by CRISIL and ICRA and
the ratings are disclosed in the Corporate Governance Report which forms part of this
Annual Report.
Subsidiaries/ Joint Ventures/ Associates
The statement containing the salient features of the Financial
Statements of the Company’s subsidiaries/ joint ventures/ associates is given in Form
AOC – 1, provided in Notes to the Consolidated Financial Statements, forming part of
this Annual Report.
During the year under review, apart from the other acquisitions, the
Company has completed the acquisition of Concert Pharmaceuticals, Inc. which was a
strategic investment to strengthen global specialty product portfolio of the Company.
Details pertaining to entities that became subsidiaries/ joint
ventures/ associates and those that ceased to be the subsidiaries/ joint ventures/
associates of the Company during the year under review are provided in the notes to the
Consolidated Financial Statements, forming part of the Annual Report.
Directors and Key Managerial Personnel
During the year, following were the changes in Director/ Key Managerial
Personnel:
1. Mr. Dilip Shanghvi (DIN: 00005588) is re-appointed as Managing
Director for a further period of 5 years, from April 1, 2023 to March 31, 2028 at the 30th
Annual General Meeting held on August 29, 2022.
2. Mr. Gautam Doshi (DIN: 00004612) is re-appointed as an Independent
Director for a second term of 5 years, from May 25, 2023 to May 24, 2028 at the 30th
Annual General Meeting held on August 29, 2022.
3. Mr. Sanjay Asher (DIN: 00008221) is appointed as an Independent
Director for a term commencing from November 1, 2022 till March 31, 2025, by the
shareholders vide resolution passed by Postal Ballot on January 27, 2023.
4. Mr. Israel Makov (DIN: 05299764) retired and ceased to be the
Chairman and Director upon the conclusion of 30th Annual General Meeting held
on August 29, 2022.
5. Mr. Kalyanasundaram Subramanian (DIN: 00179072) retired and ceased
to be the Director effective from February 13, 2023.
After the year end and upto the date of the Report, following were the
changes:
6. The Board of Directors at its meeting held on May 26, 2023, on the
recommendation by Nomination and Remuneration Committee, has approved the appointment of
Mr. Rolf Hoffmann as an Independent Director for a term of five years to be effective from
the date of allotment of Director Identification Number, subject to approval of the
shareholders.
7. The Board of Directors at its meeting held on May 26, 2023, on the
recommendation by Nomination and Remuneration Committee, has approved the appointment and
remuneration of Mr. Aalok Shanghvi (DIN: 01951829) as a Whole-time Director for a term of
five years effective from June 1, 2023, subject to approval of the shareholders.
Mr. Sudhir Valia Director of the Company, retires by rotation at the
ensuing 31st Annual General Meeting, and being eligible has offered himself for
re-appointment.
The necessary disclosures required under the Companies Act, 2013
("Act") and the SEBI (Listing Obligations & Disclosure Requirements)
Regulations, 2015 ("Listing Regulations") and Secretarial Standards-2 on General
Meetings issued by the Institute of Company Secretaries of India, for the above-mentioned
appointments/ re-appointment are provided in the 31st Annual General Meeting
Notice of the Company.
Declaration by Independent Directors
The Company has received declarations from all the Independent
Directors confirming that they meet with the criteria of independence as prescribed under
Section 149(6) of the Act and the Regulation 16(1)(b) of the Listing Regulations. In the
opinion of the Board, the Independent Directors fulfil the conditions specified under the
Act and the Listing Regulations and are independent of the management.
Familiarisation Programme for the Independent Directors
In compliance with the requirements of Regulation 25(7) of the Listing
Regulations, 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 industry in which the Company operates, business model etc. The
details of the Familiarisation Programme conducted are available on the website of the
Company: https://sunpharma.com/policies.
Evaluation of performance of the Board, its Committees and Individual
Directors
During the year, annual performance evaluation of the Board and
Committees of the Board, individual Directors including the Chairman of the Company, was
carried out as per the criteria and process approved by Nomination and Remuneration
Committee, which is in line with the SEBI Guidance Note on Board Evaluation.
The Board discussed upon the outcome of performance evaluation and
concluded that they were satisfied with the overall performance of the Board and
Committees of the Board and Directors individually. The Board also assessed the fulfilment
of the independence criteria by the Independent Directors of the Company and their
independence from the management as specified in the Listing Regulations.
The performance evaluation of the Non-Independent Directors and the
performance of the Board as a whole was discussed at the separate meeting of the
Independent Directors as well.
Remuneration policy for Directors, Key Managerial Personnel and Other
Employees and Criteria for appointment of Directors
The Company has in place a process for selection of any Director,
wherein the Nomination and Remuneration Committee identifies persons of integrity who
possess relevant expertise, experience and leadership qualities required for the position
and the Committee also ensures that the incumbent fulfils such criteria with regard to
qualifications, positive attributes, independence, age and other criteria as laid down
under the Act, Listing Regulations or other applicable laws and the diversity attributes
as per the Board Diversity Policy of the Company.
Further, the Company has a Policy on remuneration of Directors, Key
Managerial Personnel and other Employees. The salient features of the Remuneration Policy
of the Company are as under:
A. Guiding Principles for remuneration: The Company shall remunerate
all its personnel reasonably and sufficiently as per industry benchmarks and standards.
The remuneration shall be commensurate to retain and motivate the human resources of the
Company. The compensation package will, inter alia, take into account the experience of
the personnel, the knowledge & skill required including complexity of his job, work
duration and risks associated with the work, and attitude of the employee like positive
outlook, team work, loyalty etc.
B. Components of Remuneration: The following will be the various
remuneration components which may be paid to the personnel of the Company based on the
designation and class of the personnel.
(a) Fixed compensation (b) Variable compensation (c) Share based
payments (d) Non-monetary benefits (e) Gratuity/group insurance (f) Commission
The Remuneration Policy as approved by the Board is available on the
website of the Company and can be accessed through the web link:
https://sunpharma.com/policies.
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 – A’ to this Report. Further, the information
pertaining to Rule 5(2) and 5(3) of the aforesaid Rules, pertaining to the names and other
particulars of employees is available for inspection at the Registered office of the
Company during business hours and the Annual Report is being sent to the members excluding
this. Any shareholder interested in obtaining a copy of the same may write to the Company
Secretary and Compliance Officer either at the Registered/ Corporate Office address or by
email to secretarial@sunpharma.com.
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 is provided in a separate
section and forms part of this Report which includes the state of affairs of the Company.
Corporate Governance Report
The Corporate Governance Report and the Certificate from the Auditors
of the Company as stipulated in Schedule V of the Listing Regulations, are provided in a
separate section and forms part of this Report.
Board Meetings
The Board of Directors of the Company met 6 (six) times during the year
under review. The dates of the Board meeting and the attendance of the Directors at the
said meetings are provided in the Corporate Governance Report, which forms a part of this
Report.
Committees of the Board
As on March 31, 2023, the Board has 6 (six) Committees. Audit
Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee,
Risk Management Committee, Corporate Social Responsibility Committee and Corporate
Governance & Ethics Committee.
The details pertaining to the meetings and composition of the
Committees of the Board are included in the Corporate Governance Report, which forms part
of this Report.
Related Party Transactions
The policy on Related Party Transactions as approved by the Board is
available on the website of the Company, https://www.sunpharma.com/policies. All
contracts/ arrangements/ transactions entered by the Company during the year under review
with the related parties were in the ordinary course of business and on an arm’s
length basis.
As required under Section 134(3)(h) of the Act, details of transactions
entered with related parties under the Act are given in Form AOC-2, provided as
‘Annexure – B’ to this Report.
Internal Controls and Internal Financial Controls
The management believes that internal controls are the prerequisite of
governance and that action emanating from agreed business plans should be exercised within
a framework of checks and balances. The management is committed to ensuring adequate
internal controls environment commensurate with the size and complexity of the business,
which assures compliance with internal policies, applicable laws and regulations, ensures
reliability and accuracy of records, promotes operational efficiency, protects resources
and assets, helps to prevent and detect fraud, errors and irregularities and overall
minimises the risks.
The Company has a well-established internal controls framework
comprising a set of policies, procedures and systems, instrumental in enhancing the
efficiency and effectiveness of business operations, reducing risks and costs, and
improving decision-making and accountability.
Internal financial controls framework, sub-set of internal controls
framework assures the reliability and accuracy of financial reporting and the preparation
of financial statements for external purposes following generally accepted accounting
principles.
Whistle-Blower Policy/Vigil Mechanism
As a Company of repute and global standing, Sun Pharma is committed to
conducting its business by adopting the highest standards of professional integrity and
ethical behaviour. The organisation has a detailed Global Code of Conduct
(‘Code’) that directs the Employees to uphold the Company values and urges them
to conduct business with integrity and the highest ethical standards. Management intends
to prevent the occurrence of any practice not in compliance with this Code through the
Global Whistle Blower Policy. This mechanism aims to provide a secure environment to
Employees for responsible reporting of Code violations by Employees. The Board approved
Global Whistle-blower Policy is available on the website, https://sunpharma.com/policies.
Further details on the vigil mechanism of the Company are provided in the Corporate
Governance Report, forming part of this Report.
Global Internal Audit
An independent and empowered Global Internal Audit Function (GIA) at
the corporate level with support from highly skilled and reputed external audit firms,
carries out risk-based internal audits of the Company’s operations, governance, risk
management and internal controls wherever required. GIA audits all businesses &
support functions on a rotation basis to ensure that business process controls are
adequate and functioning effectively. These reviews include financial, operational, and
compliance controls’ design and operating effectiveness and risk mitigation plans.
The GIA department comprises qualified Chartered Accountants, Certified
Internal Auditors, Certified Information System Auditors, Certified Fraud Examiners,
Company Secretaries, MBAs and Engineers. GIA provides assurance and advice to management
on improving the effectiveness and efficiency of the Company’s processes and systems.
GIA’s functioning is governed by the Audit Charter, duly approved
by the Audit Committee of the Board, which stipulates matters contributing to the proper
and effective conduct of the audit. The Audit Committee of the Board periodically reviews
key findings, provides strategic guidance, and monitors the performance of the GIA
function.
The Company’s operating management closely monitors the internal
control environment and ensures that the audit recommendations are effectively
implemented.
Enterprise Risk Management
The Board of Directors has constituted a Risk Management Committee
which is entrusted with the responsibility of overseeing various organisational risks. The
Corporate Governance Report, which forms part of this Report, contains the details of the
Risk Management Committee of the Company. The Risk Management Committee assesses the
adequacy of mitigation plans to address such risks. The Board approved an overarching Risk
Management Policy. The Policy synopsis is available on the website at
https://sunpharma.com/policies.
The Company has developed and implemented an integrated Enterprise Risk
Management (ERM) Framework through which it identifies, assesses, prioritises, mitigates,
monitors, reports and manages, critical risks impacting its ability to meet its key
strategic and operational objectives. ERM helps to align the risk appetite and strategy of
the organisation, enhance risk response decisions, reduce operational surprises and
losses, and improve stakeholder confidence and trust.
The ERM team engages with all Functional heads/designees to identify
internal and external events that may harm the achievement of the Company’s
objectives and periodically monitors changes in both internal and external environments
leading to a new threat/risk. Risks are categorised into various categories viz.
Financial, Operational, Sectorial, Sustainability, Cyber, Strategic, Compliance, Social,
GeoPolitical, Third-Party etc. These risks are captured in a risk register with all the
relevant information such as risk area, risk description, risk rating, root cause,
mitigation plans, action items etc. The risk register is refreshed periodically.
AUDITORS
Statutory Auditors
S R B C & Co. LLP, Chartered Accountants, (Firm’s Regn. No.
324982E/ E300003), were re-appointed as the Statutory Auditors of the Company for a period
of 5 (five) years at the 30th Annual General Meeting of the Company to hold
office till the conclusion of the 35th Annual General Meeting of the Company.
The Auditor’s Report for the financial year ended March 31, 2023,
has been issued with an unmodified opinion, by the Statutory Auditors. Further, the
Statutory Auditors of the Company have not reported any fraud as specified under Section
143(12) of the Companies Act, 2013.
Secretarial Auditor
The Board had appointed KJB & Co. LLP, Practicing Company
Secretaries, to undertake the Secretarial Audit of the Company for the financial year
ended March 31, 2023. The Secretarial Audit Report in the Form No. MR - 3 for the year is
provided as ‘Annexure – C1’ to this Report.
The Secretarial Audit Report for the year does not contain any
qualification, reservation or adverse remark except a comment, as follows, which, in the
opinion of the Board is self-explanatory.
"We report that the UDIN and date of issue of certificate annexed
in the Annual Report for FY 2021-22, issued under Regulation 34 read with Schedule V, Para
C, Clause 10(i) of SEBI LODR Regulations was incorrectly mentioned. It is clarified that
there is no change in the contents of such certificate and such certificate was without
any qualifications."
In accordance with the provision of Regulation 24A of the Listing
Regulations, Secretarial Audit of two material unlisted Indian subsidiaries of the Company
namely, Sun Pharma Laboratories Limited (SPLL) and Sun Pharma Distributors Limited (SPDL),
was undertaken by KJB & Co. LLP, Practicing
Company Secretaries, Mumbai and the Secretarial Audit Reports issued by
them are provided as ‘Annexure - C2’ and ‘Annexure - C3’ respectively
to this Report. The Secretarial Audit Reports for these material unlisted Indian
subsidiaries do not contain any qualification, reservation or adverse remark.
Cost Auditor
The Board has appointed K D & Co, Cost Accountants, (Firm’s
Registration No. 004076) as Cost Auditor of the Company for conducting Cost Audit in
respect of Bulk Drugs & Formulations of your Company for the FY23.
The Company has maintained the Cost Records as specified by the Central
Government under Section 148(1) of the Act.
Business Responsibility & Sustainability Report
The Business Responsibility and Sustainability Report of the Company
for the year ended March 31, 2023, is provided in a separate section and forms part of
this Annual Report and is also made available on the website of the Company at
https://sunpharma.com/investors-annual-reports-presentations.
Corporate Social Responsibility
In compliance with the requirements of Section 135 of the Act read with
the Companies (Corporate Social Responsibility Policy) Rules, 2014, the CSR Policy of the
Company is available on the website of the Company and can be accessed through the web
link: https://sunpharma. com/policies.
The Annual Report on CSR activities containing details of expenditure
incurred by the Company and brief details on the CSR activities are provided in
‘Annexure – D’ to 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 stipulated under Section 134(3)(m) of the Act read
with Rule 8 of the Companies (Accounts) Rules, 2014, is provided as ‘Annexure –
E’ to this Report.
Human Resources
FY23 was an exciting year for everyone. Our 41,000+ strong global
workforce worked relentlessly to ensure medicines continue to reach patients who rely on
us. Driven by Sunology, our employees spread across manufacturing sites, distribution
centres, R&D centres and sales offices worldwide enabled us in delivering a high
performance. The top priority for the Human Resource function is to provide a work
environment which is safe, diverse, inclusive and full of growth opportunities.
Your Directors would like to take this opportunity to express their
gratitude and appreciation for the passion, dedication and commitment of the employees and
look forward to their continued contribution.
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 endeavour of the Management of the
Company to create and provide an environment to all its employees that is free from
discrimination and harassment including sexual harassment. 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 made thereunder. The Company has
arranged various interactive awareness workshops in this regard for the employees at the
manufacturing sites, R & D set ups & corporate office during the year under
review.
There were four complaints received during the year. All the complaints
were disposed of and no complaints were pending as on the end of March 31, 2023.
Your Company has complied with provisions relating to the constitution
of Internal Complaints Committee under the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013.
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 of the Company.
Annual Return
The Annual Return as required under sub-section (3) of Section 92 of
the Companies Act, 2013 (‘the Act’) in form MGT-7 is made available on the
website of the Company and can be accessed at https://sunpharma.com/annual-return
Secretarial Standards
The Company has complied with the applicable Secretarial Standards as
amended from time to time.
Other Disclosures
There are no proceedings initiated/ pending against your Company under
the Insolvency and Bankruptcy Code, 2016 and there is no instance of one-time settlement
with any Bank or Financial Institution.
Cyber Security Incident
In March 2023, the Company experienced an IT Security Incident that
impacted some of the Company’s IT assets and operations. Based on the Company’s
investigation, the Company currently believes that the incident’s effects on its IT
system include a breach of certain file systems and the theft of Company data and personal
data. A ransomware group has claimed responsibility for this incident. As part of the
Company’s containment and remediation efforts, the Company has taken various
measures, including but not limited to strengthening its cybersecurity infrastructure to
safeguard against such risks in the future. The details on the IT Security Incident are
also provided in Note 55(11) of the standalone financial statements.
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 of the annual accounts for the financial year
ended March 31, 2023, the applicable accounting standards 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 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 as at March 31, 2023
and of the profit 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 records in accordance with the provisions of the Act
for safeguarding the assets of the Company and for preventing and detecting fraud 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 effectively; and
(f) the Directors have devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were adequate and operating
effectively.
Acknowledgements
Your Directors wish to thank all stakeholders, employees and business
partners, Company’s bankers, medical professionals and business associates for their
continued support and valuable cooperation.
The Directors also wish to express their gratitude to investors for the
faith that they continue to repose in the Company.
For and on behalf of the Board of Directors
| Mr. Dilip Shanghvi |
Mr. Sailesh Desai |
| Managing Director |
Whole-time Director |
| (DIN: 00005588) |
(DIN: 00005443) |
| Place: Mumbai |
|
| Date: May 26, 2023 |
|
|