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Laurus Labs Ltd.


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Series: EQ | ISIN: INE947Q01028 | SECTOR: Pharmaceuticals

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Annual Report

For Year :
2019 2018 2017 2016

Director’s Report

The Directors have pleasure in presenting the 14th Annual Report of the Company together with the Audited Financial Statements for the Financial Year ended 31st March 2019.

Standalone and Consolidated Financial Highlights:

(Rs. in million)








Net Revenue from Operations





Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)





Finance Charges










Net Profit Before Tax





Provision for Tax





Net Profit After Tax carried to Balance Sheet





Proposed Dividend amount - -



Proposed Dividend Tax amount - -



Company’s Affairs:

(i) Operations:

During the year under review, your Company achieved the following:

- Commenced commercial operations from Unit 4

- Incorporated a step down subsidiary in Germany

- Unit 2 - Formulations Establishment Inspection Report (EIR) received from USFDA.

- Unit 6 - USFDA inspection completed successfully with one observation. EIRs received for all regulatory inspections.

- Formulation business generated first Rs. 500 million revenue and launched Tenofovir, Metformin in US, Tenofovir in Canada, DLT (a three-product combination product) in LMIC countries under partnership with Global Fund for treatment of HIV/AIDS. Also commenced supply to Europe under contract manufacturing to an European partner

(ii) Outlook:

Business prospects will remain positive because of the growing global demand for generics and opportunities provided by expiry of patents in developed markets.

Management Discussion & Analysis:

Various business aspects including market conditions, business opportunities, challenges etc. have been discussed at length in the Management''s Discussion and Analysis (MD&A), which forms part of this Annual Report.


Your directors are pleased to recommend a dividend @ 15% (i.e. Rs.1.50 per share of face value of Rs.10/- each) for the Financial Year ended March 31, 2019. The dividend, if approved by the Members, in their forthcoming Annual General Meeting to be held on July 11, 2019, will be paid to the Members on or after July 15, 2019, whose names appear on the Register of Members as on Book Closure Date.

Transfer to Reserves:

Your Company does not propose to transfer any portion of profits to Reserves.

Share Capital:

During the year under review, the Company had allotted 4,07,000 equity shares of Rs.10/- each to the eligible employees under ESOP Schemes, 2011 & 2016. Accordingly, the share capital has increased as follows:

Paid Up Capital as on March 31, 2018

Movement during the year 2018-19

Cumulative Paid Up Capital after such movement

106,029,749 equity shares of Rs.10/- each

Allotted 4,07,000 equity shares of Rs.10/- each in September, 2018 under ESOP Schemes, 2011& 2016

106,436,749 equity shares of Rs.10/- each

Change in the nature of business, if any:

There is no change in the nature of business of the Company or any of its subsidiaries or associates, during the year under review.

Material Changes and commitments, affecting the financial position of the Company:

There are no material changes and commitments affecting the financial position of the Company that have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the Report i.e. between March 31, 2019 to May 02, 2019.

Fixed deposits:

The Company did not accept any fixed deposits.

Subsidiaries, Associates and Joint Ventures:

The Company has the following Wholly Owned Subsidiaries, namely, (i) Sriam Labs Private Limited; (ii) Laurus Synthesis Inc., USA and (iii) Laurus Holdings Ltd., United Kingdom (UK).

Laurus Holdings Ltd., UK, in turn, established two Wholly Owned Subsidiaries, namely (i) Laurus Generics Inc., United States of America; and (ii) Laurus Generics GmbH, Germany.

As per Sec.129(3) of the Companies Act, 2013 the consolidated financial statement of the Company and all its Subsidiaries and Associates prepared in accordance with the applicable accounting standards forms part of this Annual Report. Further, a statement containing salient features of the financial statements of our subsidiaries and associates in the prescribed form in AOC-1 is attached as Annexure-1 to the Directors'' Report.

Consolidated financial Statements:

Consolidated Financial Statements have been prepared by the Company in accordance with the requirements of applicable Accounting Standards and the provisions of Companies Act, 2013. As per the provisions of Section 136 of the Companies Act, 2013, the Company has placed separately the audited financial statements of its subsidiaries on its website and copies of audited financial statements of the subsidiaries will be provided to the Members at their request.

Particulars of Loans, Guarantees and Investments:

During the year, your Company has continued the Corporate Guarantee to Citi Bank, India and, in turn, Standby Letter of Credit issued by Citi Bank, India to Citi Bank Inc. USA on behalf of the Subsidiary Company, namely Laurus Synthesis Inc.

USA, for US Dollars 2 Million, to meet the objectives of the said Subsidiary Company.

Further, the Company has also issued two Corporate Guarantees to the Bankers of Sriam Labs Private Limited in the previous financial year for an amount of Rs.500.00 Million, both of which are well within the limits prescribed under Sec.186 of the Companies Act, 2013.

Board of Directors and Key Management Personnel:

As per the provisions of the Companies Act, 2013,

Mr. Chandrakanth Chereddi and Dr.Venkata Lakshmana Rao, Directors, will retire at the ensuing annual general meeting and, being eligible, seek reappointment. The Board of Directors recommends their re-appointment.

Mr. Chandrakanth Chereddi and Dr.Venkata Lakshmana Rao have been appointed as Whole Time Directors for a period of 5 years with effect from August 9, 2016 and March 8, 2018 respectively and have been approved by the Members in their respective Annual General Meetings and they continue to function as Whole Time Directors of the Company. Dr.M.Venu Gopala Rao has been appointed as the Chairman of the Board for a further period of two years in May 2018.

Board Meetings:

The Board and Committee meetings are pre-scheduled and a tentative calendar of the meetings shall be finalized in consultation with the Directors to facilitate them to plan their schedule. However, in case of urgent business needs, approval is taken by passing resolutions through circulation. During the year under review, seven board meetings were held. The details of the meetings including composition of various committees are provided in the Corporate Governance Report.

Performance Evaluation:

The formal annual evaluation of the performance of the Board as well as non-independent directors was undertaken by the Nomination and Remuneration Committee. The performance of Board Committees and of individual independent directors was undertaken by the Board.

The manner of the evaluation of the Board and other Committees has been determined by the Nomination and Remuneration Committee as per SEBI circular dated January 05, 201 7.

Declaration from Independent Directors:

The independent directors have submitted the declaration of independence stating that they meet the criteria of independence as prescribed in sub-section (6) of Section 149 of the Companies Act, 2013 as well as under Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Policy on Directors’ Appointment and Remuneration:

The policy of the Company on directors'' appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters are adopted as per the provisions of the Companies Act, 2013. The remuneration paid to the Directors is as per the terms laid out in the nomination and remuneration policy of the Company.

The nomination and remuneration policy is adopted by the Board and the salient features of the policy are as follows:

- Non-Executive and Independent Directors (“NEDs”) will be paid remuneration by way of sitting fees and commission. The remuneration/ commission/ compensation to the NEDs will be determined by the Nomination and Remuneration Committee (“Compensation Committee”) and recommended to the Board for its approval.

- As approved by the shareholders at the shareholders meeting held on July 20, 2016, commission will be paid at a rate not exceeding 1% per annum of the profits of the Company computed in accordance with section 198 of the Act.

- The payment of the Commission to the NEDs will be placed before the Board every year for its consideration and approval. The sitting fee payable to the NEDs for attending the Board and Compensation Committee meetings will be fixed, subject to the statutory ceiling. The fee will be reviewed periodically and aligned to comparable best in class companies.

- NEDs will not be eligible to receive stock options under the existing employee stock option scheme(s) (“ESOP”) of the Company.

- The compensation paid to the executive directors (including managing director) will be within the scale approved by the shareholders. The elements of the total compensation, approved by the Compensation Committee will be within the overall limits specified under the Act.

- The Company''s total compensation for Directors and Key Managerial Personnel as defined under the Act / other employees will consist of:

- fixed compensation

- variable compensation in the form of annual incentive

- benefits

- work related facilities and, perquisites Changes made to the policy: Nil

The Nomination and Remuneration Policy is placed on the Company''s website and the following is web address of the said policy. PDF/Policies/Remuneration Policy.pdf

Dividend Distribution Policy:

The Dividend Policy of the Company is attached as Annexure-2 to this Report.

The said Dividend Distribution policy is placed at the website of the Company Policy.pdf.

Risk Management:

Your Company had formulated a risk management policy for dealing with different kinds of risks which it faces in day-to-day operations of the Company. Risk Management Policy of the company outlines different kinds of risks and risk mitigating measures to be adopted by the Board. The Company has adequate internal financial control systems and procedures to mitigate the risk. The risk management procedure is reviewed by the Risk Management Committee and Board of Directors on regular basis at the time of review of quarterly financial results of the Company. Further, your Company had constituted a Risk Management Committee which lays down various risk mitigating practices that your Company is required to implement in the Company.

Adequacy of Internal Financial Controls:

The internal financial controls with reference to the Financial Statements, apart from statutory audit, internal audit and cost compliance, are adequate to the size and operations of the Company.

Directors’ Responsibility Statement:

In terms of Section 134(3)(c) of the Companies Act, 2013, the Board of Directors of the Company states that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had 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 at the end of the financial year and of the profit and loss of the Company for that period;

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

(d) the directors had prepared the annual accounts on a going concern basis;

(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operative effectively; and

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operative effectively.

Related Party Transactions:

In accordance with Sec 134(h) of the Companies Act, 2013 and Rule 8(2) of Companies (Accounts) Rules, 2014, the particulars of contracts or arrangements entered into by the Company with the Related Parties referred to in Sec.188(1) of the Act, have been provided in Form AOC-2 and attached the same as Annexure-3

The details of related party disclosures as stated in the notes to the financial statements forms part of this annual report.

Vigil Mechanism:

The Company established whistle blower policy in order to assure that the business is conducted with integrity and that the Company''s financial information is accurate.


(i) Statutory Auditors:

M/s. Deloitte, Haskins & Sells LLP, Firm Registration No.1 17366W/W-100018 who were appointed as Statutory Auditors of the Company by the Shareholders of the Company in their 12th Annual General Meeting held in July 2017 for a period of five years shall be the Statutory Auditors of the Company.

The requirement under the proviso to Sec.139(1) that “the Company shall place the matter relating to such appointment (of auditors) for ratification by members at every annual general meeting” has been omitted from the Companies Act, 2013. Therefore, the Company does not propose ratification of appointment of statutory auditors for the approval of the members.

(ii) Cost records and Auditors:

The Company is required under Section 148(1) of the Companies Act, 2013 read with Companies (Audit & Auditors'') Rules, 2014 and the Companies (Cost Records and Audit) Amendments Rules, 2014, the Company is required to maintain the cost records in respect of its business and accordingly such accounts and records are made and maintained.

Your Board has appointed M/s. Bharathula & Associates, Cost Accountants, as the Cost Auditors of the Company for the Financial Year 2019-20. As required by the Act, the remuneration of the Cost Auditors has to be ratified by the Members and accordingly the resolution relating to the Cost Auditors is being placed before the Members for their ratification.

(iii) Secretarial Auditors & Secretarial Audit Report:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Y.Ravi Prasada Reddy, Practising Company Secretary (CP No. 5360) proprietor of RPR & Associates, to undertake the Secretarial Audit of the Company for the financial year 2018-19. The Secretarial Audit Report issued in Form MR-3 is in Annexure-4 to this Report. There are no qualifications, reservations or adverse remarks in the Secretarial Audit Report.

Auditors’ Qualifications/reservations/adverse remarks/Frauds reported:

There are no Auditors'' Qualifications or reservations or adverse remarks on the financial statements of the Company. The Auditors have not reported any frauds to the Audit Committee as prescribed under Sec. 143(12) of the Companies Act, 2013.

Significant and material orders passed by the Courts/Regulators:

There are no significant and material orders passed by the Courts or Regulators against the Company.


CARE has reaffirmed its rating of AA- with a stable outlook on the long term bank facilities of the Company and A1 on the short term bank facilities of the Company.


All properties and insurable interests of the Company including buildings, plant and machinery and stocks have been fully insured.

Corporate Social Responsibility initiatives:

Pursuant to the provisions of Section 135 and Schedule VII of the Companies Act, 2013, CSR Committee of the Board of Directors had framed the policy on Corporate Social Responsibility and the Projects and Programs undertaken by the Company during the year under review have been provided in Annexure-5 and forms part of this Report.

Extract of Annual Return:

As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 is given in the Annexure-6 and forms part of this Report.

Further, the Annual Return is placed in the Website of the Company at

Statement of Particulars of Appointment and Remuneration of Managerial Personnel/ employees:

In accordance with the provisions of Section 134 and Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the statement of particulars of appointment and remuneration of managerial personnel and employees is attached in Annexure-7 to this Report.

Human resources:

The management believes that the competent and committed human resources are vitally important to attain success in the organization. In line with this philosophy, utmost care is being exercised to attract quality resources and suitable training is imparted on various skill-sets and behavior. Annual sports and games were conducted across the organization apart from family day celebrations to enhance the competitive spirit and encourage bonding teamwork among the employees.

Employee Stock Options:

During the year, the Company has allotted 407,000 (Four Lakhs Seven Thousand only) equity shares of Rs.10/- to various eligible employees of the Company under Employee Stock Option Schemes-2011&2016 upon exercise of their vesting rights.

The details of stock options are as mentioned in Annexure 8 and forms part of this Report. Further, the details of the stock options stated in the notes to accounts of the financial statements also forms part of this Annual Report.

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

The information required under Section 134 (3) (m) of the Companies Act, 2013, read with Rule 8(3) of Companies (Accounts) Rules, 2014, is appended hereto as Annexure 9 and forms part of this Report.

Policy on Prevention of Sexual Harassment:

The Company has formulated and implemented a policy for Prevention of Sexual Harassment of Women at workplace.

During the year under review, the Company has not received any complaints under the policy.

The Company has many systems, processes and policies to ensure professional ethics and harmonious working environment. We follow Zero Tolerance towards Corruption and unethical conduct. These are ensured through Whistle Blower Policy, Anti-Corruption Policy, Gift Policy, Sexual Harassment Policy and Redressal Guidelines.

The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

BSE 500:

The Equity Shares of your Company have been inducted in S&P BSE 500 indices with effect from March 31, 2017.

Corporate Governance:

A separate section on Corporate Governance practices followed by your Company, as stipulated under Schedule V(C) of the SEBI (LODR) Regulations, 2015 is enclosed and forming part of this report.

The certificate of the Practising Company Secretary Mr.Y.Ravi Prasada Reddy with regard to compliance of conditions of corporate governance as stipulated under Schedule V (E) of the SEBI (LODR) Regulations, 2015 is annexed to the Report on Corporate Governance.

Business Responsibility Report (BRR)

The Listing Regulations mandate the inclusion of the BRR as part of the Annual Report for top 500 listed entities based on market capitalization. In accordance with the Listing Regulations, we have integrated BRR disclosures into our Annual Report.


Your Directors would like to place on record their sincere appreciation to customers, business associates, bankers, vendors, government agencies and shareholders for their continued support.

Your Directors are also happy to place on record their sincere appreciation to the co-operation, commitment and contribution extended by all the employees of the Laurus family and look forward to enjoying their continued support and cooperation.

For and on behalf of the Board

Dr. Satyanarayana Chava Ravi Kumar V.V

Executive Director & Executive Director &

Chief Executive Officer Chief Financial Officer

DIN:00211921 DIN: 01424180

Place: Hyderabad

Date: 2nd May 2019

Director’s Report