Director's Report
Home >> Markets >> Corporate Information >> Director's Report
Sun Pharmaceuticals Industries LtdIndustry : Pharmaceuticals - Indian - Bulk Drugs & Formln
BSE Code:524715
ISIN Demat:INE044A01036
Book Value(Rs):82.40
Div & Yield %:0.31
Market Cap (Rs Cr.):153508.79
Face Value(Rs):1
  Change Company 

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)
Standalone Consolidated
Particulars Year ended March 31, 2017 Year ended March 31, 2016 Year ended March 31, 2017 Year ended March 31, 2016
Total Revenue 78,067.0 78,636.9 315,784.4 284,870.3
Profit Before Tax (324.4) (10,820.6) 90,478.7 65,706.3
Tax Expense:
-Current Tax 25.1 54.5 4,046.4 11,954.1
-Deferred Tax Charge / Credit - - 8,069.3 (2,816.4)
(Loss) / Profit after tax (349.5) (10,875.1) 78,363.0 56,568.6
Share in profit / (loss) of associates and non- Profit controlling interests - - 78,363.0 56,568.6
Share of Profit of Associates / Joint ventures (Net) - - 99.3 14.5
Net Profit after taxes and share of profit / (loss) of associates and joint ventures but before non-controlling interests
Total Other Comprehensive Income (633.8) (247.9) (14,871.9) 14,353.4
Total Comprehensive Income (983.3) (11,123.0) 63,590.4 70,936.5
Total Comprehensive Income for the period attributable to:
-Owners of the Company (983.3) (11,123.0) 56,306.1 58,251.6
-Non-Controlling Interest 7,284.3 12,684.9
Opening balance in Retained Earnings 126,353.4 146,184.5 251,630.4 216,743.1
Amount available for appropriation (949.6) (11,141.9) 68,933.4 45,109.6
Dividend on Equity Shares (2,406.8) (7,219.5) (2,406.8) (7,219.5)
Corporate Dividend tax (74.7) (1,469.7) (490.0 ) (1,469.7)
Transfer to various Reserves:
-Capital redemption Reserve (7.5) - (7.5) -
-Debenture redemption Reserve - - (1,041.7) (1,041.7)
-Capital reserve - - (50.6) (188.9)
-Buy-back of equity shares by overseas subsidiary company - - (10,110.3) (302.3)
-Legal reserve - - - (0.2)
-General reserve - - - -
Closing balance in Retained Earnings 122,914.8 126,353.4 306,456.9 251,630.4

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.


The changes in the capital structure of the Company during the year under review, are as follows:

i. The Company allotted 62682 equity shares of Rs.1/- each under Sun Employee Stock Option Scheme-2015.

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


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


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.


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.


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 Meeting.

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 Meeting.

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.


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").



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 this Report.


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 and may be accessed through the web link:


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.



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 Non-executive Directors.

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.


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.


Statutory Auditors

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, 2015.

Secretarial Auditor

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.

Cost Auditor

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.


The particulars of loans, guarantees and investments have been disclosed in the Financial Statements.


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 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 shareholders.

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.


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.


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.


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:// 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".


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:


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.


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.


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.



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".


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.


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.


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.


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.


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.

in accordance For and on behalf of the Board of Directors
Israel Makov
May 26, 2017



(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 Designation Ratio of remuneration (1) of each Director to Remuneration in median remuneration of employees % increase /(decrease) (1) in the Financial Year 2016-2017
Mr.Israel Makov Non-executive Chairman 2.30 11.1%
Mr. Dilip S. Shanghvi (2) Managing Director 90.40 15.0%
Mr. Sudhir V. Valia (2) Whole-Time Director 90.40 15.0%
Mr. Sailesh T. Desai (2) Whole-Time Director 31.89 15.0%
Mr. Kalyanasundaram Subramanian(3) Whole-Time Director - Not Applicable
Mr. S. Mohanchand Dadha Non-executive, Independent Director 3.91 6.3%
Mr. Hasmukh S. Shah Non-executive, Independent Director 3.91 (10.5)%
Mr. Keki M. Mistry Non-executive, Independent Director 3.68 45.5%
Mr. Ashwin S. Dani Non-executive, Independent Director 2.30 25.0%
Ms. Rekha Sethi Non-executive, Independent Director 2.99 18.2%
Mr. Uday Baldota(4) Chief Financial Officer Not Applicable 23.3%
Mr. Sunil Ajmera(4) Company Secretary Not Applicable 29.0%

(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 remuneration:

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 Israel Makov
Mumbai Chairman



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 stakeholders.

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


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


The Policy shall become effective from the date of its adoption by the Board i.e. November 10, 2016. of


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 circumstances.


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.


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 declarationor retention

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.


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 dividend declaration.

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.



Internal Factors

- 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 dividend declaration.

- Past performance/ reputation of the Company o Thetrendoftheperformance/reputation that has been during the past years determine the expectation of the shareholders.

External Factors

- 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 unforeseen circumstances.

- 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.


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



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 & plants;

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. declarationof


The Board may review and amend or modify this policy in whole or in part, at any time.

declaration of dividend shall have




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 compressor

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 requirement.

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.

Lightings load

Use of Solar water system for Canteen use.

Reduction boiler.

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.


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 anti-diabetic, pipeline.

4. Expenditure on R&D
Rs. in Million
Year ended March 31, 2017 Year ended March 31, 2016
a) Capital 1,392.3 543.7
b) Revenue 9,038.0 9037.9
c) Total 10,430.3 9581.6
d) Total R&D 13.4% 12.2%
expenditure as % of
Total Turnover

b. Technology Absorption, Adaptation and

1. Efforts in brief, made towards technology absorption, adaptation and innovation

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 technologies.

(c) Offer technologically advanced which are convenient and safe for administration patients.

(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 higher exports.

(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 cost.

3. Your Company has not imported technology during the last 5 years reckoned from the beginning of the financial year.


Rs. in Million
Year ended March 31, 2017 Year ended March 31, 2016
1. Earnings 44,118.1 42,171.0
2. Outgo 24,484.1 21,582.6



For and on behalf of the Board of Directors
May 26, 2017


Adani Ports & Special Economic Zone Ltd     337.95   Down   -7.90 (-2.28%)   Asian Paints Ltd     1,289.90   Up   17.95 (1.41%)   Axis Bank Ltd     614.35   Up   17.00 (2.85%)   Bajaj Auto Ltd     2,788.70   Up   29.40 (1.07%)   Bajaj Finance Ltd     2,299.20   Up   38.40 (1.70%)   Bajaj Finserv Ltd     6,185.65   Up   118.00 (1.94%)   Bharat Petroleum Corporation Ltd     364.20   Down   -3.20 (-0.87%)   Bharti Airtel Ltd     360.50   Up   4.30 (1.21%)   Bharti Infratel Ltd     269.35   Down   -8.50 (-3.06%)   Cipla Ltd     661.75   Up   16.15 (2.50%)   Coal India Ltd     275.25   Down   -5.90 (-2.10%)   Dr Reddys Laboratories Ltd     2,611.70   Up   57.75 (2.26%)   Eicher Motors Ltd     25,599.70   Down   -253.10 (-0.98%)   GAIL (India) Ltd     369.90   Down   -11.00 (-2.89%)   Grasim Industries Ltd     1,039.10   Up   19.65 (1.93%)   HCL Technologies Ltd     1,116.35   Up   20.05 (1.83%)   HDFC Bank Ltd     1,952.40   Up   26.70 (1.39%)   Hero Honda Motors Ltd     3,112.60   Up   2.40 (0.08%)   Hindalco Industries Ltd     243.05   Up   3.15 (1.31%)   Hindustan Petroleum Corporation Ltd     243.15   Down   -5.00 (-2.01%)   Hindustan Unilever Ltd     1,630.85   Up   40.40 (2.54%)   Housing Development Finance Corporation Ltd     1,773.35   Up   54.65 (3.18%)   ICICI Bank Ltd     311.10   Up   2.35 (0.76%)   Indiabulls Housing Finance Ltd     929.65   Down   -52.30 (-5.33%)   Indian Oil Corporation Ltd     154.15   Down   -0.80 (-0.52%)   IndusInd Bank Ltd     1,696.75   Up   22.55 (1.35%)   Infosys Technologies Ltd     726.20   Up   7.95 (1.11%)   ITC Ltd     301.15   Up   3.20 (1.07%)   Kotak Mahindra Bank Ltd     1,183.35   Up   34.65 (3.02%)   Larsen & Toubro Ltd     1,319.05   Up   0.70 (0.05%)   Lupin Ltd     882.55   Up   21.80 (2.53%)   Mahindra & Mahindra Ltd     893.00   Down   -3.05 (-0.34%)   Maruti Suzuki India Ltd     7,999.45   Up   206.40 (2.65%)   NIFTY (S&P CNX)     11,067.45   Up   100.05 (0.91%)   NTPC Ltd     170.00   Up   2.10 (1.25%)   Oil & Natural Gas Corpn Ltd     182.30   Up   1.70 (0.94%)   Power Grid Corporation of India Ltd     192.60   Down   -5.00 (-2.53%)   Reliance Industries Ltd     1,230.60   Down   -1.45 (-0.12%)   State Bank of India     270.90   Up   6.55 (2.48%)   Sun Pharmaceuticals Industries Ltd     641.10   Up   17.10 (2.74%)   Tata Consultancy Services Ltd     2,183.20   Down   -15.25 (-0.69%)   Tata Motors Ltd     240.80   Up   0.60 (0.25%)   Tata Steel Ltd     601.00   Down   -6.70 (-1.10%)   Tech Mahindra Ltd     758.75   Up   7.30 (0.97%)   Titan Company Ltd     796.85   Up   5.75 (0.73%)   UltraTech Cement Ltd     4,028.70   Up   53.80 (1.35%)   UPL Ltd     660.95   Up   9.55 (1.47%)   Vedanta Ltd     230.40   Up   0.50 (0.22%)   Wipro Ltd     328.30   Down   -4.40 (-1.32%)   Yes Bank Ltd     219.70   Down   -6.70 (-2.96%)   Zee Entertainment Enterprises Ltd     449.40   Up   1.35 (0.30%)      NSE Data  - (5 minutes delayed) syndicated by