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Abbott India

BSE: 500488|NSE: ABBOTINDIA|ISIN: INE358A01014|SECTOR: Pharmaceuticals
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Directors Report Year End : Mar '19    Mar 18

TO THE MEMBERS

The Directors have pleasure in presenting their Seventy-fifth Report and the Audited Financial Statements of the Company for the financial year 2018-19.

FINANCIAL HIGHLIGHTS

(Rs, in Lakhs)

Particulars

For the year ended March 31,2019

For the year ended March 31,2018

Sale of Products

3640,30.02

3273,90.01

Other Operating Income

38,30.28

33,22.16

Other Income

113,28.60

116,98.72

Total Income

3791,88.90

3424,10.89

Profit Before Tax

698,85.41

621,48.26

Profit After Tax

450,33.18

401,21.78

Retained Earnings and Other Comprehensive Income (OCI)

Balance brought forward

1305,17.03

1047,45.13

Profit for the year

450,33.18

401,21.78

OCI arising from remeasurement of employee benefits

(2,08.82)

(1,07.64)

Dividend - FY 2017-18

(116,87.12)

-

Dividend - FY 2016-17

-

(84,99.72)

Dividend Distribution Tax

(24,02.32)

(17,30.34)

Transfer to Reserves

(45,03.32)

(40,12.18)

Balance carried forward

1567,48.63

1305,17.03

DIVIDEND

Your Directors recommend a final dividend of Rs, 50/- and special dividend of Rs, 15/- per share for the year ended March 31, 2019 on 2,12,49,302 fully paid-up Equity Shares of Rs, 10/- each. The proposed dividend, if approved at the Annual General Meeting, will absorb a sum of Rs, 138,12.05 Lakhs (Previous year : Rs, 116,87.12 Lakhs) and Corporate Dividend Tax of Rs, 28,39.11 Lakhs (Previous year : Rs, 24,02.32 Lakhs). The Corporate Dividend Tax is provided at the rate applicable on the day on which the accounts were approved by the Board of Directors.

DIVIDEND DISTRIBUTION POLICY

The Company has in place a Dividend Distribution Policy in terms of requirements under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The said Policy is available on the Company’s website at http://www.abbott.co.in/investor-relations/policies.html

I DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, your Directors state that :

a) in the preparation of the Annual Accounts for the year ended March 31, 2019, the applicable accounting standards have been followed and there are no material departures from the same;

b) they 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 31,2019 and of the profits of the Company for that year;

c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) they have prepared the Annual Accounts of the Company on a going concern basis;

e) they have laid down adequate Internal Financial Controls to be followed by the Company and that such Internal Financial Controls are adequate and are operating effectively;

f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

I RELATED PARTY TRANSACTIONS

Policy on dealing with Related Party Transactions and Materiality

The Company has in place the Policy on dealing with Related Party Transactions and Materiality in terms of requirements of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The said Policy is available on the Company’s website at http://www.abbott.co.in/investor-relations/policies.html

As per the said Policy, all Related Party Transactions are pre-approved by the Audit Committee and Board, as and when required. The details of such transactions are also reviewed by the Audit Committee on a quarterly/annual basis. Material transactions (transactions exceeding 10% of the annual turnover as per the last audited financial statements), if any, with any Related Parties are pre-approved by the Shareholders.

Details of Related Party Transactions

All the Related Party Transactions, including the material transactions entered into by the Company during the year 2018-19 (“said Transactions”), were in the ordinary course of business and on arm’s length basis. The said Transactions were pre-approved by the Audit Committee, Board and Shareholders, wherever necessary. The details of the same are provided in Note 41 to the Financial Statements.

CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility (CSR) Policy

The CSR Policy is available on the Company’s website at http://www.abbott.co.in/investor-relations/policies.html

CSR initiatives undertaken during the financial year 2018-19

The Company incurred an amount of Rs, 11,28.46 Lakhs on various CSR activities during the financial year 2018-19.

The Annual Report of CSR activities undertaken by the Company during the financial year 2018-19, is annexed as “Annexure I” and forms part of this Report.

DIRECTORS

During the year, Mr R A Shah (DIN : 00009851), Independent Director, retired upon completion of his term effective close of business hours on March 31, 2019. Mr Shah was associated with the Company for over 36 years and your Company has benefited immensely under his tenure. The Board places on record its sincere appreciation for the guidance and support received from Mr Shah over these years.

The Board, based on the recommendation of the Nomination and Remuneration Committee, appointed the following Directors on the Board of the Company upto the date of this Report. Their appointment/re-appointments shall be subject to the approval of the shareholders at the ensuing Annual General Meeting of the Company.

Mr Sudarshan Jain (DIN : 00927487) has been appointed as Additional and Independent Director of the Company for a period of 3 (three) years effective April 1, 2019;

Mr Mark Murphy II (DIN : 08385393) has been appointed as Additional Director effective April 1, 2019;

Mr Rajiv Sonalker (DIN : 07900178) has been re-appointed as Whole-time Director of the Company for a period effective August 8, 2019 up to June 30, 2021.

In compliance with Section 152 of the Companies Act, 2013, Mr Jawed Zia (DIN : 00191276) and Mr Kaiyomarz Marfatia (DIN : 03449627) retire by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves for re-appointment.

Based on recommendation of the Nomination and Remuneration Committee, your Directors recommend appointment/ re-appointment of Mr Sudarshan Jain, Mr Mark Murphy II, Mr Rajiv Sonalker, Mr Jawed Zia and Mr Kaiyomarz Marfatia.

Declaration of Independence

The Company has received declarations from all the Independent Directors confirming that they meet with the criteria of independence prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time.

Number of Board Meetings

Six Board Meetings were held during the year on May 14, 2018; July 18,2018; August 13,2018; November 13,2018; February 8,2019 and March 30,2019.

Policy on Nomination and Appointment of Directors/Criteria for appointment of Senior Management and Remuneration Policy

The Company has adopted the Policy on Nomination and Appointment of Directors/Criteria for appointment of Senior Management and Remuneration Policy as per the provisions of Section 178(3) of the Companies Act, 2013 and the Rules framed there under. The said Policies are available on the Company’s website at http://www.abbott.co.in/investor-relations/policies.html

Nomination Policy acts as a guideline for determining qualifications, positive attributes and independence of Directors and matters related to the appointment and removal of Directors and Senior Management. The Policy lays down -

i) criteria and terms and conditions with regard to identifying suitable candidates who are qualified to become Directors and Senior Management;

ii) appointment mechanism for Managing Director/Executive and Non-Executive Directors/Independent Directors/Key Managerial Personnel and Senior Management;

iii) tenure of Managing Director/Executive Directors/ Independent Directors;

iv) their removal process and succession planning.

Remuneration Policy lays down the Company’s philosophy and criteria as well as manner of determining the remuneration of Managing Directors, Executive/Non- Executive Directors, Independent Directors, Senior Management, Key Managerial Personnel and other employees.

Performance Evaluation of the Board, Board Committees and Directors

The Company has adopted the Board Evaluation Framework and Policy, which sets a mechanism and criteria for the evaluation of the Board, Board Committees and Directors, including Independent Directors. The same is available at https://www.abbott.co.in/investor-relations/policies.html

During the year 2018-19, the Board and Nomination and Remuneration Committee carried out performance evaluation of each individual director (excluding the director being evaluated) and also evaluated if the Independent Directors continue to fulfill the criteria of independence prescribed under the Companies Act, 2013, Rules framed there under and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time. The Board evaluated performance of entire Board and each of the Committees.

Independent Directors, at their separate meeting, reviewed the performance of Non-Independent Directors, Board and the Chairman, considering the views of the other Executive and Non-Executive Directors.

Performance Evaluation, as stated above, was conducted through self-assessment and group discussions basis the suggested set of questions/parameters provided in the aforesaid Framework.

I KEY MANAGERIAL PERSONNEL

Mr Ambati Venu, Managing Director, Mr Rajiv Sonalker, Chief Financial Officer and Ms Krupa Anandpara, Company Secretary, are the Key Managerial Personnel of the Company.

I AUDIT COMMITTEE

The Audit Committee comprises Ms Anisha Motwani (Chairperson), Mr Krishna Mohan Sahni, Mr Sudarshan Jain and Mr Munir Shaikh. Role of the Committee is provided in detail in the Corporate Governance Report, forming part of this Report. All the recommendations made by the Audit Committee during the year were accepted by the Board.

I VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Company has in place Vigil Mechanism/Whistle Blower Policy called “Abbott India Limited - Procedure for Internal Investigations”. It lays down a mechanism for reporting and investigation of all unethical behavior, alleged or potential violations of laws, regulations or Abbott Code of Business Conduct, policies, procedures or other standards.

The said Policy is available on the website of the Company at http://www.abbott.co.in/investor-relations/policies.html

Employees have numerous ways to voice their concerns and are encouraged to report the same internally for resolution. The said Policy provides for adequate safeguards against retaliation and access to the Chairman of the Audit Committee.

Any concerns/grievance can be communicated through various sources as provided under the said Policy or via toll free number 0008001001058 or online at http://speakup.abbott.com

AUDITORS’ REPORT

The Auditors’ Report for the financial year 2018-19 does not contain any adverse remarks, qualifications or reservations or disclaimers, which require explanations/comments by the Board.

COST AUDITORS

M/s Kishore Bhatia & Associates, Cost Accountants (Registration No. 00294), are appointed as the Cost Auditors of the Company for the financial year 2019-20 at a remuneration of Rs, 6.65 Lakhs plus taxes as applicable and reimbursement of out-of-pocket expenses.

The said remuneration to the Cost Auditors shall be subject to ratification by the Members at the ensuing Annual General Meeting.

COST AUDIT REPORT

Cost Audit Report along with the Compliance Report for the financial year 2017-18, issued by M/s Kishore Bhatia & Associates, Cost auditors, was filed with the Ministry of Corporate Affairs on July 25, 2018 (due date of filing was September 27, 2018).

INTERNAL AUDITORS

M/s KPMG, Chartered Accountants, (ICAI Firm Registration No. BA62445) are the Internal Auditors of the Company. Internal Audit Report, their significant findings and follow up actions taken by the Management is reviewed by the Audit Committee on a quarterly basis.

SECRETARIAL AUDITOR

Ms Neena Bhatia, Practising Company Secretary (Membership No. FCS 9492 and Certificate of Practice No. 2661) is the Secretarial Auditor of the Company for the financial year 2018-19.

SECRETARIAL AUDIT REPORT

The Secretarial Audit Report issued by Ms Neena Bhatia, Practicing Company Secretary (Membership No. FCS 9492 and Certificate of Practice No. 2661) for the financial year ended March31,2019 doesnot contain any adverse remark, qualifications, reservations or declaimer which requires any explanation/ comments by the Board except for the observation that the name of the Company appears in the breach list displayed on the website of the Depositories and Bombay Stock Exchange for having foreign investments in excess of sect oral cap.

In the opinion of the Board, there is no breach of the sectoral cap and inclusion of the Company''s name in the breach list is incorrect. The Company is in the process of writing to the Government highlighting the issues involved and seeking necessary resolution of the same.

The said Report is annexed as “Annexure II” and forms part of this Report.

HEALTH, SAFETY AND ENVIRONMENT

Health and Safety:

Providing a safe workplace and keeping the employees healthy is the Company’s top priority. The Company has clear, consistent policies and standards to manage employee health, safety and productivity while also protecting the environment.

We are committed to keeping employees safe by preventing dangerous incidents in and around the workplace. In educating our employees, we also empower them to promote safer and healthier lives in their wider communities. We strive to maintain the highest standards of Environment, Health and Safety (EHS) practices.

The EHS Policy has been implemented through our Global EHS standards based on ISO 14001 and OHSAS 45001, supported by a well-defined EHS organizational structure, EHS Standard Operating Procedures and EHS specific programs, ensure that we meet all the local regulatory requirements.

Suggestions from the Safety Committee, comprising representatives from the workforce and Management, are implemented promptly to resolve issues impacting Plant safety and employee health. Regular self-audits and third-party safety audits are conducted to verify compliance with the regulatory and internal safety requirements. The Plant has a record of completion of seven years without lost time injury

During the year, the site has upgraded the fire pumps and fire hydrant system making provision for sprinklers to provide site with advanced fire protection. The sprinkler system will be fully operational in 2019.

Training programs are conducted at the Plant on health and safety issues to build technical capabilities. Employees are also encouraged to attend external training programs on various topics such as regulatory requirements, ergonomics, machine guarding, hot work safety, road safety, industrial hygiene, industrial safety and so on. A cross-functional teams for emergency response and firefighting is in place. Mock drills for fire-fighting and rescue operations are conducted in association with local fire brigade to keep the staff in a state of preparedness for any emergencies. The Company has a detailed Business Continuity Plan in place. We are continuously improving on the Behavior Based Safety (BBS) program and visible improvement in safety culture is observed. Stop for Safety initiative is being practiced to support the BBS program.

Special focus is maintained on critical safe work initiatives like contractor safety, hand safety and working on heights. Additionally, we have invested in several employee engagement programs like celebration of National Safety week, World Environment day and Abbott EHS month, that help build a sustainable EHS culture.

Environment:

A responsibility towards the environment is part of Abbott’s mandate. We continuously endeavor to minimize the use of renewable resources and cut down on carbon emission. In all our initiatives, we adopt a holistic approach and make efforts to curtail the adverse environmental impact, if there is any, during product-manufacturing and its disposal either by us, our vendors or customers. The site continued to implement multiple water conservation and emission reduction projects. Examples include Effluent treatment plant up gradation for efficiency improvement, sludge reduction through skimming, HVAC condensate reuse for utilities, optimization of water chiller operation to reduce electricity and LED lighting throughout the site. The treated water from our waste water treatment plant is recycled for toilet flush and horticulture within the site.

The Company has a state-of-the-art effluent treatment plant with parameters of treated effluents well below the limit set by the local State Pollution Control Board. Our Goa Plant is a “ZERO” discharge plant.

Over the period of last five years, the site has achieved more thaii20% absolute water reduction in usage. T he rainwater harvesting project was effectively continued at the Plant this year, which resulted in 600 KL of water storage during the monsoon season.

Major focus during the year was process optimization and yield improvement. Along with increasing productivity, this initiative has helped save the discharge of raw materials and solvents into the environment.

Furthermore, gas emissions from the boiler and generator stacks as well as the ambient air quality are monitored regularly by us and they are well below the limits set by the State Pollution Control Board. There is also a vermi-composting unit in place to convert canteen waste into organic manure, which is used in the lawns and on the plantation inside the factory premises. The site retains its Zero Waste to landfill certification in the purview of waste disposal. In 2018, 62% of the waste was sent for recycling, 36% for co-processing and 2% for composting. The site continued sending hazardous waste for Co-processing. With this change, we have ensured that the energy from the waste is recovered, thus contributing to the reduction of C02 emission and global warming. 36% of site waste was incinerated with energy recovery.

I CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars as required under the provisions of Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo, etc. are annexed as “Annexure III” and forms part of this Report.

I ANNUAL RETURN

The Annual Return of the Company has been placed on the website of the Company at https://www.abbott.co.in/investor-relations / financials.html

Extract of Annual Return as provided under sub-section (3) of Section 92 of the Companies Act, 2013 and Rules framed there under is annexed as “Annexure IV” and forms part of this Report.

| DISCLOSURE UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 AND OTHER DISCLOSURES AS PER RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

Disclosures required in accordance with the provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as “Annexure V” and forms part of this Report.

Statement containing Particulars of Employees pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. However, as per the provisions of Sections 134 and 136 of the Companies Act, 2013, the Report and Financial Statements are being sent to the Members and others entitled thereto, excluding the Statement containing Particulars of Employees, which is available for inspection by the Members at the Registered Office of the Company during business hours on all working days (except Saturdays), up to the date of ensuing Annual General Meeting. Any Member interested in obtaining a copy of such Statement may write to the Company Secretary at the Registered Office of the Company.

CORPORATE GOVERNANCE REPORT

Corporate Governance Report and Certificate from the Statutory Auditors of the Company with regard to compliance of the conditions of Corporate Governance pursuant to the requirements of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, form part of this Report.

BUSINESS RESPONSIBILITY REPORT

Business Responsibility Report, as required under Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms part of this Report.

COMPLIANCE WITH SECRETARIAL STANDARDS

The Board of Directors affirms that the Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India (SSI and SS2) respectively relating to Meetings of Board and its Committees and General Meetings.

DISCLOSURES OF ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL

No orders have been passed by any Regulator or Court or Tribunal which can have impact on the going concern status and the Company’s operations in future.

FIXED DEPOSITS

No fixed deposits were accepted during the year.

PARTICULARS OF LOANS, INVESTMENTS AND GUARANTEES

During the year ended March 31, 2019, the loan of Rs, 200,00.00 Lakhs which was granted to Alere Medical Private Limited, India (Alere) [a Related Party as per the provisions of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)

Regulations, 2015], for a period of six months on December 26, 2017 was rolled over for a further period of six months effective June 27, 2018, at an interest rate of 10% per annum in accordance with the provisions of Section 186 of the Companies Act, 2013 and Rules made there under. The said loan was availed by Alere for the purpose of working capital funding requirement and was guaranteed by Abbott Laboratories, LISA i.e. the ultimate holding company. The said loan was repaid by Alere on November 15, 2018 with outstanding interest up to that date.

GENERAL

No disclosure or reporting is required in respect of the following items as there were no transactions relating to these items during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise;

2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme;

3. The Company does not have any joint venture or subsidiaries.

AWARDS AND RECOGNITIONS

During the year, The Company was awarded as the “Company of the Year” by AWACS. The Company also received several other prestigious awards and recognitions including the National Awards for Training and Development by World HRD Congress for Excellence in Content Development for e-detailing training - Rajni ka iPad; DMA Asia ECHO Award by Direct Marketing Association India (DMAi) for Best Marketing Campaign - #MomvsFlu; Golden Globe Tiger Award for Thyronorm; AIOCD - Brand of the Year Award for Thyronorm by AWACS and Outstanding Patient Support Award for Gutfit by CMO Asia and Leveraging Technology for Better Patient Management (for Gutfit) at the Connected Health India Summit & Awards 2018.

ACKNOWLEDGEMENT

Your Board expresses gratitude towards all our employees, business partners, institutions, banks and in particular, the Members, for their steadfast trust and support to the Company.

For and on behalf of the Board

Munir Shaikh Ambati Venu

Chairman Managing Director

DIN : 00096273 DIN : 07614849

Source : Dion Global Solutions Limited
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