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Granules India

BSE: 532482|NSE: GRANULES|ISIN: INE101D01020|SECTOR: Pharmaceuticals
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Directors Report Year End : Mar '17    Mar 16

Board''s Report

To,

The Members,

The Directors are pleased to present 26th Annual Report and the Company''s audited financial statements for the financial year ended March 31, 2017.

Financial Results:

Summary of your Company''s financial performance, both standalone and consolidated, for the year ended March 31, 2017 is tabulated below:

(Rs, In Lakhs)

Standalone

Consolidated

Particulars

Year ended March 31, 2017

Year ended March 31, 2016

Year ended March 31, 2017

Year ended March 31, 2016

Revenue from Operations

1,37,416.90

1,35,349.02

1,43,525.34

1,38,293.02

Other Income

1,452.02

628.70

992.53

523.89

Total Income

1,38,868.92

1,35,977.72

1,44,517.87

1,38,816.91

EBITDA

31,031.89

27,625.14

30,876.33

28,150.41

Less: Finance Costs

3,216.41

3,704.57

3,225.63

3,706.79

Less: Depreciation

7,135.16

5,824.71

7,151.27

5,840.15

Profit Before Tax

20,680.32

18,095.86

20,499.43

18,603.47

Less: Tax Expenses

6,397.65

6,017.51

6,520.14

6,114.97

Net Profit After Tax

14,282.66

12,078.35

13,979.29

12,488.50

Add : Share of (profit)/loss in joint ventures

-

-

2,472.61

(188.45)

Net Profit after taxes and share of profit /

(loss) of associates

14,282.66

12,078.35

16,451.90

12,300.05

Add: Surplus Brought Forward from Previous

17,587.47

7,859.40

17,545.58

7,595.81

Year

Surplus Available

31,870.14

19,937.75

33,997.48

19,895.86

Appropriations made to Surplus:

Dividends including dividend tax

2,233.04

2,350.28

2,233.04

2,350.28

Transfer to General Reserve

10,000.00

-

10,000.00

-

Balance carried to Balance Sheet

19,637.09

17,587.47

21,764.44

17,545.58

Basic Earnings per share

6.53

5.84

7.52

5.95

Diluted Earnings per share

6.49

5.73

7.48

5.83

Note: The above figures are extracted from the standalone and consolidated financial statements

Your Company is covered under phase I of the Indian Accounting Standards (Ind AS) implementation program notified by Ministry of Corporate Affairs, Government of India. Accordingly, your Company has prepared financial statements for the FY 2016-17 as per Ind AS because of which previous year figures have been restated as per Ind AS wherever required.

Overview of Financial and Business Operations:

The Company''s Standalone revenues from operations was H 1,37,416.90 lakhs for the FY 2016-17 as compared to H 1,35,349.02 lakhs for the previous year registering growth of 1.53% in the current financial year. The Company has made Net Profit of H 14,282.66 lakhs on standalone basis for the year under review as compared to H 12,078.35 lakhs for the previous year, registering a growth of 18.25% in the current financial year.

The primary growth driver in FY 2016-17 was led by change in product mix. On a standalone basis, the Active Pharmaceutical Ingredients (API) business contributed the largest share of revenue of the Company at 39% while Pharmaceutical Finished Intermediates (PFI) and Finished Dosages contributed 24% and 37%, respectively while it was 38%, 28% and 34% for API, PFI and Finished Dosages respectively for FY 2015-16. The profitability outpaced revenue growth due to several reasons. Our continuous efforts on operational excellence, process innovation, yield improvement and lower raw material cost resulted in improved earnings.

During the year under review, we have received the Establishment Inspection Report from the USFDA for Jeedimetla plant. We had completed the US FDA audit for Gagillapur facility and INFARMED audit for our Gagillapur and Bonthapally facilities during the year under review. In the FY 2016-17, we have filed four ANDAs from Hyderabad, India. We have also filed three DMFs from vizag facility which will be used for building future revenue from API business. The management believes that the profitability margins from the operations are sustainable and it will continue to strengthen its leadership position through dedicated research and introduction of new products.

Vertical integration has always been our strength and focus area. We will continue our focus on our core business and strengthen it by enhancing our capacities, improving our efficiencies, adding new products, moving up in the value chain and most importantly offering better services to our customers. The Company will continue to solidify its business model and build systems that are sustainable as it continue to scale-up.

Expansion Programs and Projects:

We have initiated expansion of API capacities in Bonthapally for Paracetamol, Metformin and Guaifenesin. The project is in progress and we expect it to be complete by first quarter of FY18. This should remove the API level bottleneck and translate into increased revenues from our core business activity from the second quarter of FY18 onwards. PFI Capacity enhancement in Gagillapur up to 4,000 TPA is in progress and expected to complete by second quarter of FY18.

Dividend:

The Board of Directors has recommended a final dividend of 25 paisa per equity share (Face value H 1/- per equity share) for the FY 2016-17, amounting to RS, 571.76 lakhs. This is in addition to the interim dividend of 65 paisa per equity share paid during the year. The total dividend for the

FY 2016-17 aggregates 90 paisa per equity share amounting to RS, 1,993.1 1 lakhs as compared to 65 paisa per equity share paid in the previous year.

Transfer of Amount to Reserves:

The Board has recommended transfer of RS, 10,000 lakhs to general reserve from the profits of the year under review.

Share Capital:

Consequent to amalgamation of M/s. GIL Life sciences Private Limited with the Company during the year, the authorized share capital of GIL Life sciences Private Limited of H 160,000,000 was merged with the authorized share capital of the Company in terms of the scheme of amalgamation approved by Honorable High Court of Judicature at Hyderabad. Thus the Authorized Share Capital of the Company stood increased from H 345,000,000/- to H 505,000,000/- for the financial year ended 31st March 2017.

The Company has allotted 114,01,000 equity shares of RS, 1/- each to the promoters upon exercise of an equal number of warrants vested in them pursuant to the approval of the members obtained during the financial year 2015-16. The Company has also allotted 590,000 equity shares of H 1/each upon exercise of an equal number of stock options by the employees pursuant to the extant Stock Option Scheme of the company.

In view of the above allotments, the outstanding shares of the company increased from 216,71 1,770 equity shares of RS, 1/- each to 228,702,770 equity shares of RS, 1/- each.

Transfer to the Investor Education & Protection Fund (IEPF):

In terms of Section 124(5) of the Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, unclaimed dividend amounting to RS, 142,701 (one lakh forty two thousand seven hundred and one only) for the financial year 2008-09, was transferred to the Investor Education and Protection Fund established by the Central Government during the year under review.

Management''s Discussion and Analysis Report:

Management''s Discussion and Analysis Report for the year under review, as stipulated under regulation 34(2) of the Listing Regulations, is presented in a separate section forming part of the Annual Report.

Business Responsibility Report:

Business Responsibility Report for the year under review, as stipulated under regulation 34(2) of the Listing Regulations, is presented in a separate section forming part of the Annual Report.

Subsidiaries, Joint Ventures and Associate Companies:

Subsidiary Companies and their Performance and Developments M/s GIL Life sciences Private Limited

During the year, the Honb''le High Court of Judicature at Hyderabad for the state of Telangana and for the state of Andhra Pradesh by an order dated 1st September 2016 made in Company Petition no. 231 of 2016 filed by M/s. GIL Life sciences Private Ltd., a wholly owned subsidiary of the Company sanctioned Scheme of amalgamation of M/s. GIL Life sciences Private Ltd. with the Company with effect from 1st April, 2016 being the appointed date fixed in the said scheme. Consequent to the said order, M/s. GIL Life sciences Private Ltd. was amalgamated with the Company on 26th October 2016, being the effective date. By virtue of the aforesaid amalgamation, M/s GIL Life sciences Private Ltd. ceased to be the subsidiary of your company and stood dissolved pursuant to the scheme of amalgamation sanctioned by the Honb''le High Court.

- Granules USA, Inc.

Granules USA, Inc., a wholly-owned foreign subsidiary of your Company, caters to the requirements of customers in the U.S market. The Share Capital of the Company as on March 31, 2017 is RS, 116.31 lakhs. During the FY 2016-17, the Company achieved a turnover of RS, 39,558.16 lakhs against the turnover of RS, 29,828.82 lakhs for FY 2015-16 and the profit after tax is RS, 346.21 lakhs against RS, 168.67 lakhs for FY 2015-16.

- Granules Pharmaceuticals, Inc.

Granules Pharmaceuticals. Inc. (GP Inc.), a wholly-owned foreign subsidiary of your Company located in Virginia, USA focuses in formulation R&D. The Share Capital of the Company as on March 31, 2017 is RS, 1,225.00 lakhs. One ANDA was filed from this facility in March 2017 and another ANDA was filed in April 2017. These are first set product filling from this facility towards building a niche portfolio for the US market. It also received license from the Drug Enforcement Agency of the United States which will enable to store and develop narcotics products.

Granules Pharmaceuticals. Inc. has entered into an agreement during the year under review with USpharma Limited to acquire 12.5% of its equity. This investment will also enable us to participate in the product selection and have the first right of refusal to market the select products which are under development by them. USpharma Limited in collaboration with its manufacturing partners have submitted 5 ANDAs with Para IV and Para III certifications, out of which 4 ANDAs have already been out-licensed to GP Inc. exclusively for the marketing and distribution of the products in the United States after final approval from US FDA, pursuant to the agreement entered with it for product-in-licensing.

- Granules Europe Limited

Granules Europe Limited is a wholly owned foreign subsidiary set up in UK for focusing on marketing to European customers.

The Policy for determining material subsidiaries as approved by the Board may be accessed on the Company''s website at the link: www. granulesindia.com

Joint Venture Companies:

The developments in business operations / performance of Joint Venture Companies consolidated with the Company are as below:

- Granules-Biocause Pharmaceutical Co. Limited

The Share Capital of the Company as on March 31, 2017 is RS, 3638.06 lakhs. The Company achieved a turnover of RS, 21,999.83 lakhs during the year under review as against turnover of RS, 17,008,32 lakhs in the previous year. Profit after tax for the year under review is RS, 2,458.56 as against RS, 645.55 lakhs during the previous year of which Granules India Limited reports 50% share in profit from Joint Ventures. However, previous year figures are not comparable as previous year figures are for nine months period from April to December 2015 whereas current year figures are from January to December 2016.

- Granules OmniChem Private Limited

The Share Capital of the Company as on 31st March 2017 is RS, 8,576.19 lakhs. The Company achieved a turnover of RS, 20,031.91 lakhs during the FY 2016-17 as against RS, 1,425.66 lakhs during the FY 2015-16. Profit after tax for the year under review is RS, 2,486.65 as against loss of RS, 1020.82 lakhs in the previous year of which Granules India Limited reports 50% share in profit from Joint Ventures. US FDA had inspected the facility and issued seven observations, which were responded within the stipulated period. The Company is awaiting clearance from US FDA.

As per the provisions of section 129 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, a separate statement containing the salient features of the financial statements of the subsidiary Companies and Joint Ventures is prepared in Form AOC-1 and it forms part of the consolidated financial statements.

Consolidated Financial Statements:

The consolidated financial statements, in terms of Section 129 of the Companies Act, 2013 and regulation 34 of the Listing Regulations and prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended thereof forms a part of this annual report. The consolidated financial statements have been prepared on the basis of audited financial statements of your Company, its subsidiaries and associate companies, as approved by the respective Board of Directors. As per the provisions of Section 136 of the Companies Act, 2013, the Company has placed separate audited accounts of its Subsidiaries on its website www.granulesindia.com and copy of separate audited accounts of its Subsidiaries will be provided to the members at their request.

Director''s Responsibility Statement:

Pursuant to the requirement of Section 134(5) of the Companies Act, 2013 and based on the representations received from the operating management, the Directors hereby confirm that:

a) in the preparation of the annual accounts for the year ended March 31, 2017, the applicable accounting standards read with requirements set out under Schedule III to the Act, 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 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 for the financial year ended March 31, 2017;

e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

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

Corporate Governance Report:

The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The report on Corporate Governance as stipulated under the Listing Regulations forms an integral part of this Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance is attached to the report on Corporate Governance.

Corporate Social Responsibility (CSR):

The Composition of the Committee is provided below.

Name

Category

Mrs. Uma Devi Chigurupati, Chairperson

Non-Independent, Executive

Mr. Krishna Prasad Chigurupati

Non-Independent, Executive

Mr. A. Arun Rao

Independent, Non-Executive

The CSR Policy may be accessed on the Company''s website at the link: www.granulesindia.com

The Company is undertaking CSR initiatives in compliance with Schedule VII to the Act. During the year under review, the Company has spent H 276.16 lakhs on CSR activities. The annual report on CSR activities is annexed herewith marked as Annexure I to the Board''s Report.

Nomination and Remuneration Committee:

The Company''s Nomination and Remuneration committee consists of majority of Independent Directors which ensures transparency in determining the remuneration of Directors, KMPs and other employees of the Company. The Chairman of the committee is an Independent Director, thereby resulting in independent and unbiased decisions.

During the financial year 2016-17, the composition of Nomination and Remuneration Committee is provided below

Name

Category

Mr. C. Parthasarathy, Chairman

Independent, Non-Executive

Mr. L. S. Sarma

Independent, Non-Executive

Mr. A. Arun Rao

Independent, Non-Executive

Mr. K.B. Sankar Rao

Non-Independent, Non-Executive

Mr. Krishna Prasad Chigurupati

Non-Independent, Executive

The Performance Evaluation and Remuneration Policy framed by the Committee and approved by the Board is directed towards rewarding performance of Executive and Non-Executive Directors, Key Managerial Personnel and Senior Management Personnel of the Company based on review of achievements periodically.

Risk Management Committee:

Risk Management Committee has been entrusted with the responsibility to assist the Board in (a) overseeing and approving the Company''s enterprise wide risk management framework; and (b) overseeing that all the risks that the organization faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. Your Company has proper process for Risk Management.

Internal Audit & Controls:

Your Company continues to engage M/s Dhanunjaya & Haranath, Chartered Accountants as its Internal Auditors. During the year, your Company continued to implement their suggestions and recommendations to improve the internal controls. Their scope of work includes review of operational efficiency, effectiveness of systems & processes, compliances and assessing the internal control strengths in all areas. Internal Auditors findings are discussed and suitable corrective actions are taken as per the directions of Audit Committee on an on-going basis to improve efficiency in operations.

The Company''s internal control systems are well established and commensurate with the nature of its business and the size and complexity of its operations. The Audit Committee reviews adequacy and effectiveness of the Company''s internal control environment and monitors the implementation of audit recommendations. The recommendations/suggestions of the internal auditors are discussed in the Audit Committee meetings.

Directors and Key Managerial Personnel:

Dr. V.V.N.K.V. Prasada Raju was appointed as an Additional Director and consequently, a Whole Time Director in the Board meeting held on January 4, 2017, subject to approval of the members at the 26th Annual General Meeting. He was also designated as Key Managerial Personnel (KMP) in the Company.

Mrs. Uma Devi Chigurupati was appointed as Whole-Time Director by the members in the 21st Annual General Meeting held on 2nd July 2012 for a period of five years w.e.f.31st May 2012. The current term of office of Mrs. Uma Devi Chigurupati as Whole-Time Director expires on 30th May 2017. Considering the commitment consistently shown and results exhibited, the Board of Directors on the recommendation of the Nomination and Remuneration Committee, has decided to re-appoint Mrs. Uma Devi Chigurupati as Whole-Time Director of the Company for a further period of 5 (five) years effective from 31st May 2017.

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Kolli Basava Sankar Rao, Non- Executive Director of the Company, retires by rotation at the 26th Annual General Meeting and being eligible offers himself for re-appointment.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under the Companies Act and the Listing Regulations.

The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which include criteria for performance evaluation of the Non-Executive Directors and Executive Directors. Pursuant to the provisions of the Companies Act, 2013 read with the Rules issued there under and the Listing Regulations (including any statutory modification(s) or re-enactment(s) for the time being in force), the process for evaluation of the annual performance of the Directors/ Board/ Committees was carried out in accordance with the policies in force.

The Board of Directors has complete access to the information within the Company. Independent Directors have the freedom to interact with the Company''s management. Interactions happen during Board / Committee meetings, when CXOs are asked to make presentations about performance of the Company. Apart from this, they also have independent interactions with the Statutory Auditors, the Internal Auditors and external advisors appointed from time to time. Further, they meet without the presence of any management personnel and their meetings are conducted informally to enable the Independent Directors to discuss matters pertaining to the Company''s affairs and put forth their combined views to the Board of Directors of the Company.

Mr. Krishna Prasad Chigurupati, Chairman and Managing Director, Mrs. Uma Devi Chigurupati, Executive Director, Dr. V.V.N.K.V. Prasada Raju, Executive Director, Mr. VVS Murthy, Chief Financial Officer and Mrs. Chaitanya Tummala, Company Secretary are Key Managerial Personnel of the Company during the year under review. The Board in its meeting held on 11th May 2017, appointed Mr. K. Ganesh as Chief Financial Officer and Key Managerial Personnel of the Company w.e.f 12th May 2017 in place of Mr. V V S Murthy.

Employee Stock Option Scheme:

The Nomination and Remuneration Committee of the Board of Directors of the Company, inter alia, administers and monitors the Employee Stock Option Scheme of the Company in accordance with the applicable SEBI Regulations.

The applicable disclosures as stipulated under the SEBI Guidelines as on March 31, 2017 (cumulative position) with regard to the Employee''s Stock Option Scheme are herein under provided. The issue of equity shares pursuant to exercise of options does not affect the Statement of Profit and Loss of the Company, as the exercise is made at the market price prevailing as on the date of the grant plus taxes as applicable.

Pursuant to regulation 13 of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014. certificate from M/s. Kumar & Giri, Statutory Auditors is given as Annexure II to the Board''s Report. Voting rights on the shares issued to employees under the Employee Stock Option Scheme are either exercised by them directly or through their appointed proxy.

The details of the stock options granted / vested / exercised under the Granules India Limited - Employee Stock Option Scheme 2009 approved by the members in 18th Annual General Meeting, are given below:

Sl.

no.

Description

Details

(a)

Options granted till date under the scheme

8,200,000 options

(b)

Pricing formula

Closing market price as on the date prior to the grant date on National Stock Exchange (where there was highest trading volume).

(c)

Options vested during the year

690,000

(d)

Options exercised during the year

590,000

(e)

Total number of shares arising as a result of exercise of options

590,000

(f)

Options lapsed during the year

390,000

(g)

Options lapsed till date under the scheme

2,640,000

(h)

Variation in terms of options

Nil

(i)

Money realized by exercise of options during the year

RS, 14,168,000/-

(i)

Total number of options in force

1,570,000

(k) Employee wise details of options granted during the year to :

(i) Senior managerial personnel Nil

(ii) Any other employee who receives a grant in any one year of options amounting to 5% or more of options granted during the year. Employee wise details of options amounting to 5% or more of options granted during the year to be exercised at RS,133/-:

Name

Designation

Details

Mr. Jaiashokan Velusamy

Sr. Director, R&D- GPI

20,000

Mr. Desireddy Mallikarjuna Reddy

Sr. Vice President - GPI

20,000

Mr. Gangasani Harinath Reddy

Vice President - GPI

20,000

Mr. Kapur Nivaran

President - GUSA

20,000

Mr. Rajesh Kumar Rapolu

AGM- API R&D

13,300

Mr. Rama Seshaiah Kanuparthy

AGM- AR&D

13,300

Mr. Thrilok Kumar Peela

AGM- Process Engineering

13,300

Mr. Goverdhan Gilla

DGM-API R&D

13,300

Ms. Chaitanya Tummala

Company Secretary

13,300

Mr. Sumanta Bajpayee

AGM-Investor Relations

13,300

Mr. Kishan Chand Gutta

AGM-Procurement

13,300

Mr. Nanduri Venkata Chalam

G M, Quality

13,300

Mr. Manchiganti Muralidhar

G M, SLT

13,300

(iii) Identified employees who were granted option, during any one year, equal to or Not Applicable

exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant.

(l)

Diluted Earnings per share (EPS) pursuant to issue of shares on exercise of options calculated in accordance with Accounting Standard (AS) 20 - Earning per share.

RS, 6.49 per share

(m)

Where the company has calculated the employee compensation cost using the intrinsic value of the stock options, the difference between the employee compensation cost that shall have been recognized if it had used the fair value of the options.

Not Applicable

(n)

Weighted-average exercise price, whose exercise price either equals or exceeds or is less than the market price of the stock

RS, 24.01/- per share

(o)

Description of the method and significant assumptions used during the year to estimate the fair values of options.

The assumptions and model used for estimating fair value are disclosed in Note 29 of Standalone financial statements.

As stock options for further grant under ESOS 2009 are not available, Employee Stock Option Scheme 2017 was formulated and approved by your Board in the meeting held on 11th May 2017, subject to approval of the members in the 26th Annual General meeting of the Company.

Auditors & Their Report:

Statutory Auditors

Pursuant to the provisions of Sections 139, 141 & 142 and other applicable provisions, if any, of the Companies Act, 2013 and rules made thereon, M/s. Kumar & Giri, Chartered Accountants, Hyderabad was re-appointed for three years in the 23rd Annual General meeting subject to ratification at every Annual General meeting. M/s. Kumar & Giri, Chartered Accountants, have completed their tenure including the transitional period allowed by the Act. Thus the Company needs to appoint new Statutory Auditor. The Company has received a certificate from M/s. B.S.R. & Associates LLP, Firm of Chartered Accountants registered vide Firm Registration No.

1 16231W/W-100024, to the effect that their appointment if made, would be in accordance with the conditions as specified under Section 141 of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014. The Directors recommend for appointment of M/s. B.S.R. & Associates LLP, Firm of Chartered Accountants as Statutory Auditors for a term of five years commencing from the conclusion of 26th Annual General Meeting till the conclusion of the 31st Annual General Meeting of the Company, subject to ratification of such appointment at every Annual General Meeting. A resolution proposing appointment of M/s. B.S.R. & Associates LLP, Firm of Chartered Accountants as the Statutory Auditors of the Company for a term of five years pursuant to section 139 of the Companies Act, 2013 forms part of the Notice.

Audit Report

Comments of the Auditors in their report and the notes forming part of the accounts are self-explanatory and need no comments. However, the Auditors have not made any adverse qualifications or comments in their report on the accounts of the Company for the year under review which requires explanation by the Board of Directors.

Secretarial Auditor

The Board has appointed M/s. Saurabh Poddar & Associates, Company Secretaries, to conduct Secretarial Audit for the financial year 2016-17. The Secretarial Audit Report for the financial year ended March 31, 2017 is annexed herewith marked as Annexure III to the Board''s Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark which requires explanation by the Board of Directors.

Contracts and Arrangements with Related Parties:

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length basis. During the year, except with the wholly owned subsidiary, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company''s website at the link: www.granulesindia.com.

The particulars of contracts or arrangements with related parties referred to in section 188(1) are prepared in Form No. AOC-2 pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 and the same is enclosed as Annexure IV to the Board''s Report.

Disclosures:

Audit Committee

The Audit Committee comprises majority Independent Directors namely Mr. C. Parthasarathy (Chairman), Mr. L.S. Sarma, Mr. A.P Kurian, Mr. A. Arun Rao and Mr. Krishna Prasad Chigurupati as other members. All the recommendations made by the Audit Committee were accepted by the Board.

Vigil Mechanism

The Company has a Vigil mechanism and Whistle blower policy in terms of the Listing Regulations, under which the employees are free to report violations of applicable laws and regulations and the Code of Conduct. Protected disclosures can be made by a whistle blower through a dedicated e-mail, or a letter to the Chairman of the Audit Committee.

The Policy on vigil mechanism and whistle blower policy may be accessed on the Company''s website at the link:www.granulesindia.com

Meetings of the Board

Six (6) meetings of the Board of Directors were held during the year under review. The details of the Board Meetings with regard to their dates and attendance of each of the Directors thereat have been provided in the Corporate Governance Report.

Code of Conduct

A declaration regarding compliance with the code of conduct signed by the Company''s Chairman and Managing Director is published in the Corporate Governance Report which forms part of the annual report.

Particulars of Loans given, Investments made, Guarantees given and Securities provided

Particulars of loans given, investments made, guarantees given and securities provided are provided in the standalone financial statement (Please refer to Note No.4A, 4B and 28C to the standalone financial statement).

Conservation of energy, technology absorption and foreign exchange earnings and outgo

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act, are provided in Annexure V to the Board''s Report.

Extract of Annual Return

Extract of Annual Return of the Company is annexed herewith as Annexure VI to the Board''s Report.

Particulars of Employees and related disclosures

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended thereof, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules forms part of this Report.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 also forms part of this Report.

However, having regard to the provisions of the first proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the registered office of the Company during working hours for a period of 21 days before the date of ensuing Annual General Meeting and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request. This information is available on the Company''s website link: www.granulesindia.com

Your Directors further state that, the remuneration paid to the Key managerial Personnel and others is as per the Remuneration Policy of the Company.

Remuneration from Subsidiaries

During the year under review, Mr. Krishna Prasad Chigurupati, Chairman and Managing Director of the Company has received remuneration of 4,615.44 from Granules Pharmaceuticals Inc., wholly owned subsidiary of the Company.

Policy on Sexual Harassment

The Company has a Policy on Prevention of Sexual Harassment of Women at Workplace for the matters connected therewith or incidental thereto covering all the aspects as contained under the The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013.

During the year under review, the Company has not received any complaints pertaining to Sexual Harassment.

General:

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

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

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this Report.

4. Cost Audit is not applicable for the financial year 2016-17.

5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future.

Appreciations and Acknowledgements:

Your Directors would like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. Your Directors wish hereby to place on record their appreciation of the services rendered by the employees, without whose whole-hearted efforts, the overall satisfactory performance would not have been possible.

Your Directors look forward to the long term future with confidence

On behalf of the Board of Directors

Krishna Prasad Chigurupati

Chairman and Managing

Director DIN: 00020180

Hyderabad,

July 5, 2017

Source : Dion Global Solutions Limited
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