Your Directors take pleasure in presenting the Thirty-Second Annual
Report and Company's Audited Financial Statements for the financial year ended March
31, 2024 ("FY24").
Financial Highlights
The Company's financial performance for FY24:
|
Standalone |
Consolidated |
|
Year ended March 31, 2024 |
Year ended March 31, 2023 |
Year ended March 31, 2024 |
Year ended March 31, 2023 |
| Revenue from operations |
202,751.7 |
208,121.4 |
484,968.5 |
438,856.8 |
| Profit before exceptional item and tax |
36,686.7 |
46,788.4 |
115,822.1 |
95,798.8 |
| Exceptional Item |
2,190.2 |
29,377.9 |
4,943.2 |
1,714.5 |
| Profit before tax but after exceptional item |
34,496.5 |
17,410.5 |
110,878.9 |
94,084.3 |
| Profit after tax |
28,581.8 |
16,907.2 |
96,484.4 |
85,608.4 |
| Opening balance in Retained Earnings |
127,908.8 |
136,120.8 |
436,102.5 |
376,456.5 |
| Closing balance in Retained Earnings |
127,310.4 |
127,908.8 |
501,545.5 |
436,102.5 |
Material Changes and Commitments
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, 2024
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 8.50/- (Rupees Eight and Paise Fifty only) per equity share of 1/- (Rupee One
only) each [previous year 7.50/- (Rupees Seven and Paise Fifty only) per equity share of
1/- (Rupee One only) each] for the year ended March 31, 2024.
In addition to above, the Directors have recommended a final dividend
of 5/- (Rupees Five only) per equity share of 1/- (Rupee One only) each [previous year 4/-
(Rupees Four only) per equity share of 1/- (Rupee One only) each] for the year ended March
31, 2024, subject to the approval of the shareholders at the ensuing 32nd
Annual General Meeting of the Company.
The total dividend payout for FY24 is 13.50/- (Rupees Thirteen and
Paise Fifty only) per equity share of 1/- each [previous year 11.50/- (Rupees Eleven and
Paise Fifty 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 at
https://sunpharma.com/policies.
Transfer to Reserves
The Directors do not propose any transfer to reserves.
Loans, Guarantees and 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
There is no change in the credit rating and the same is disclosed in
the Corporate Governance Report forming 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.
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 this Annual Report.
Directors and Key Managerial Personnel
During the year, following were the changes in Directors/ Key
Managerial Personnel:
1. Mr. Aalok Shanghvi (DIN: 01951829) is appointed as Whole-time
Director for a term of five years commencing from June 1, 2023 to May 31, 2028 at the 31st
Annual General Meeting held on August 28, 2023.
2. Mr. Rolf Hoffmann (DIN:10200311) is appointed as an Independent
Director for a term of five years commencing from June 15, 2023 to June 14, 2028 at the 31st
Annual General Meeting.
3. Mr. Sailesh Trambaklal Desai (DIN: 00005443), Whole-time Director
retired and ceased to be the Director effective from March 31, 2024.
Subsequent to the year end at the Board Meeting held on May 22, 2024,
Mr. Dilip Shanghvi, Managing Director, is also appointed as the Chairman of the Board with
immediate effect.
Mr. Dilip Shanghvi, Managing Director of the Company, will retire by
rotation at the ensuing 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 and 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
re-appointment is provided in the Notice of 32nd Annual General Meeting 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. There
has been no change in the circumstances affecting their status as Independent Directors of
the Company and 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 are available on the website of the Company at
https://sunpharma.com/policies/
Board Performance Evaluation
During the year, annual performance evaluation of the Board and
Committees of the Board, individual Directors including the Chairman of the Board, 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 performance evaluation outcome 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 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 and skill required including complexity of
his/her 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 at 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) & 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
and there has been no change in the nature of business of the Company during FY24.
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 forming 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, 2024, 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 and 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 at 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 team recognises that robust internal controls are
foundational to sound governance. Actions derived from consensus-based business strategies
should operate within a structured system of oversight and balance. The leadership is
dedicated to maintaining an internal control environment proportionate to the
business's scale and intricacy. This environment is designed to ensure adherence to
internal protocols, compliance with pertinent laws and regulations, and the integrity and
precision of financial records. It also aims to bolster operational efficiency, safeguard
company assets, and aid in preventing and detecting fraud, inaccuracies, and anomalies,
thereby substantially mitigating risk exposure.
The Company has established a comprehensive internal controls
framework. This framework encompasses an array of policies, procedures, and mechanisms
that are pivotal in augmenting operational efficiency and effectiveness, curtailing risks
and expenditures, and fostering enhanced decision-making and accountability.
The internal financial controls framework, an integral component of the
broader internal controls system, is pivotal in guaranteeing the dependability and
precision of financial reporting. This framework facilitates the meticulous preparation of
financial statements by generally accepted accounting standards.
Whistle-blower Policy / Vigil Mechanism
At Sun Pharma, we are dedicated to upholding the pinnacle of
professional integrity and ethical conduct in all our business dealings. A comprehensive
Global Code of Conduct underpins our reputation as a distinguished global entity. This
Code mandates that our employees embody the Company's core values and engage in
business activities with unyielding integrity and the utmost ethical standards. Through
our Global Whistle-blower Policy, management proactively works to avert any actions that
deviate from this Code. This policy establishes a protected avenue for employees to
responsibly report any infractions of the Code. The board-sanctioned Global Whistle-blower
policy is accessible on our website at https://sunpharma.com/ policies. For more in-depth
information regarding the Company's Vigil Mechanism, please refer to the Corporate
Governance Report included within this Annual Report.
Global Internal Audit
The Global Internal Audit Function (GIA) operates with autonomy and
authority at the corporate echelon, bolstered by the expertise of renowned external audit
firms. This function conducts comprehensive risk-based audits across the Company's
spectrum of operations, governance, risk management, and internal controls as
necessitated. The GIA systematically reviews all business units and support functions on a
rotational basis, ensuring the robustness and efficacy of business process controls. These
evaluations encompass the architecture of financial and operational controls, their
functional effectiveness, and the strategies for risk mitigation.
The GIA team is an assembly of professionals with credentials such as
Chartered Accountants, Certified Internal Auditors, Certified Information System Auditors,
Certified Fraud Examiners, Company Secretaries, MBAs, and Engineers. This department is
instrumental in providing assurance and strategic counsel to management, aiming to refine
the Company's procedural and systemic efficiency and effectiveness.
Governed by the Audit Charter sanctioned by the Board's Committee,
the GIA's operations are meticulously defined to facilitate audits of the highest
standard. The Audit Committee regularly scrutinises pivotal findings, imparts strategic
direction, and evaluates the GIA's performance.
The Company's operational management diligently oversees the
internal control milieu, ensuring the swift and thorough implementation of audit
recommendations.
Enterprise Risk Management
The Board of Directors has established a Risk Management Committee to
oversee the spectrum of organisational risks diligently. Detailed insights into the
committee's operations are provided in the Corporate Governance Report, an integral
part of this document. The committee evaluates the effectiveness of risk mitigation
strategies, ensuring they are robust and responsive. In line with this, the Board has
endorsed a comprehensive Risk Management Policy, a Synopsis of which can be accessed on
our website at https://sunpharma.com/policies/.
Our Company has instituted a holistic Enterprise Risk Management (ERM)
Framework. This framework is instrumental in identifying, evaluating, prioritising, and
managing critical risks that could impact our strategic and operational goals. The ERM is
pivotal in harmonising the organisation's risk appetite with its strategic direction,
refining risk response decisions, minimising unexpected operational disruptions and
losses, and bolstering stakeholder confidence.
The ERM team collaborates with department heads to pinpoint potential
internal and external events that could impede the Company's objectives. It also
continuously monitors shifts in the internal and external landscapes that may give rise to
new risks. Risks such as financial, operational, sectoral, sustainability, cyber,
strategic, compliance, social, geopolitical, third-party, and others are systematically
classified. These are meticulously documented in a risk register, which includes
comprehensive details like the risk area, description, rating, underlying causes,
mitigation strategies, and action plans. This register is updated regularly to reflect the
evolving risk environment.
Auditors
Statutory Auditor
S R B C & CO LLP, Chartered Accountants, (Firm's Registration.
No. 324982E/ E300003), have been re-appointed as the Statutory Auditor 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 35thAnnual General Meeting of the
Company.
The Auditor's Report for the financial year 2023-24 has been
issued with an unmodified opinion.
The Auditor's Report contains a comment on the requirement of
maintenance of books of account which states that "the Company has used accounting
software for maintaining its books of account which have a feature of recording audit
trail (edit log) facility and the same has operated throughout the year for all relevant
transactions recorded in the software except that, audit trail feature is not enabled for
certain changes made using privileged/ administrative access rights, as described in note
55(11) to the standalone Ind AS financial statements. Further, during the course of our
audit we did not come across any instance of audit trail feature being tampered with in
respect of accounting software where audit trail has been enabled."
In the opinion of the Board of Directors, the comment in the
Auditor's Report is self-explanatory. Further, the Board of Directors confirms that
subsequently the feature of recording audit trail has been enabled in compliance with the
relevant legal requirements, as on the date of the Board meeting.
Secretarial Auditor
The Board had appointed KJB & CO LLP, Practicing Company
Secretaries, to undertake the Secretarial Audit of the Company for FY24. 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.
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 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 the Company for FY24.
The Company has maintained the Cost Records as specified by the Central
Government under Section 148(1) of the Act.
The Cost Audit Report for the year does not contain any qualification,
reservation or adverse remark.
Business Responsibility and Sustainability Report
The Business Responsibility and Sustainability Report of the Company
for the year ended March 31, 2024, 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 ("CSR")
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 at
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
FY24 was an exciting year for us. Our dedicated workforce worked
relentlessly to ensure medicines continue to reach patients who rely on us. Driven by
Sunology, our employees, who are spread across R&D centers, manufacturing sites,
corporate offices and sales offices globally, enabled us in delivering a higher
performance and stronger growth. The priority for the Human Resource function continued to
provide a work environment which is safe, diverse, inclusive and full of growth
opportunities. Going forward, focus will be on further enhancing our employer brand,
providing growth & development opportunities to our employees along with focus on high
performance and effectiveness.
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 the 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 two complaints received during the year. All the complaints
were disposed of and no complaints were pending as on the end of March 31, 2024.
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.
Regulatory Orders
There are no significant and material orders passed by the regulators
or courts or tribunals which impact the going concern status.
Annual Return
The draft Annual Return as required under sub-section (3) of Section 92
of 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
1. The Board of Directors of the Company at its meeting held on
November 1, 2023 has approved the Composite Scheme of Arrangement for (1) Amalgamation of
Sun Pharmaceutical Medicare Limited, Green Eco Development Centre Limited, Faststone
Mercantile Company Private Limited, Realstone Multitrade Private Limited, Skisen Labs
Private Limited, Wholly-owned Subsidiaries of the Company with the Company and (2)
Reclassification of general reserves to retained earnings, subject to necessary approvals
required under the Companies Act, 2013. This Composite Scheme of Arrangement is in
supersession of the Scheme of Amalgamation approved by the Board on May 30, 2022.
The Company has made an application to the BSE Limited and National
Stock Exchange of India Limited for obtaining NOC of the stock exchanges, upon receipt of
NOC, the application shall be filed with the National Company Law Tribunal.
2. During the year under review, the Statutory Auditor, Cost Auditor
and Secretarial Auditor have not reported any instances of frauds committed in the Company
by its Officers or Employees to the Audit Committee and / or Board under section 143(12)
of the Act.
3. 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.
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 FY24, 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 on March 31, 2024
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 |
|
| Dilip Shanghvi |
Aalok Shanghvi |
| Chairman and Managing Director |
Whole-time Director |
| (DIN: 00005588) |
(DIN: 01951829) |
| Place: Mumbai |
|
| Date: May 22, 2024 |
|