Your Directors are pleased to present the Twenty Seventh Annual Report and the Audited Financial Statements of Zydus Lifesciences Limited ("the Company") for the Financial Year ended on March 31, 2022.
Pursuant to the resolutions passed by the Board of Directors ("the Board") and the members and upon receipt of fresh certificate of incorporation from Registrar of Companies, Ahmedabad, Gujarat, name of Cadila Healthcare Limited is changed to Zydus Lifesciences Limited w.e.f. February 24, 2022. The change of name has not affected any of the rights of the Company or of the members / stakeholders of the Company. Further, with the name change, the objects and the line of business remains unaltered.
Memorandum of Association and Articles of Association of the Company were altered consequent upon change in name of the Company.
The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards ("Ind AS") notified under section 133 of the Companies Act, 2013 ("the Act"), read with rule 7 of The Companies (Accounts) Rules, 2014 (" Accounts Rules").
The standalone and consolidated financial performance of the Company, for the Financial Year ended on March 31, 2022 is summarized below: in mio.
|Particulars||For the year ended on March 31, 2022||For the year ended on March 31, 2021||For the year ended on March 31, 2022||For the year ended on March 31, 2021|
|Revenue from Operations and Other Income||81,606||78,693||154,899||144,491|
|Profit before Interest, Depreciation, Amortisation and Impairment Expenses & Tax (PBIDT)||17,775||22,105||36,781||32,276|
|Less: Finance Cost||1,349||709||1,270||1,588|
|Less: Depreciation, Amortisation and Impairment Expenses||4,787||4,511||7,130||6,696|
|Less/(Add) : Exceptional Items||3,193||1,875||(1,127)||2,051|
|Profit Before Tax (PBT)||11,639||16,885||28,381||23,992|
|Less: Tax Expenses||3,060||2,123||5,117||1,936|
|Profit After Tax (PAT)||8,579||14,762||23,264||22,056|
|Add: Share of Profit of Joint Ventures (Net of Tax)||-||-||462||474|
|Profit for the year from continuing operations||8,579||14,762||23,726||22,530|
|Add: Profit after tax from discontinued operations||-||-||22,457||(680)|
|Profit for the year||8,579||14,762||46,183||21,850|
|Owners of the Parent||8,579||14,762||44,873||21,336|
|Other Comprehensive Income / (Loss) (Net of Tax)||42||81||(1,045)||731|
|Total Comprehensive Income||8,621||14,843||45,138||22,581|
|Owners of the Parent||8,621||14,843||43,832||22,059|
|Opening balance in Retained Earnings||87,969||73,360||113,842||86,124|
|Amount available for appropriation||96,479||87,969||158,678||111,682|
|Transferred from Debenture Redemption Reserve||-||-||-||2,160|
|Closing Balance in Retained Earnings||92,894||87,969||154,958||113,842|
|Earnings Per Share (EPS) from continuing operations (Face Value of shares of Rs 1/- each)||8.38||14.42||21.90||21.51|
|Earnings Per Share (EPS) from continuing and discontinued operations (Face Value of shares of Rs 1/- each)||8.38||14.42||43.83||20.84|
The Company proposes to retain an amount of Rs 92,894 mio. (Rupees Ninety Two Thousand Eight Hundred Ninety Four Million only) in the Statement of Profit and Loss. The Company proposes not to transfer any amount to general reserve on declaration of dividend.
RESULTS OF OPERATIONS:
During the year under review, the consolidated revenue from operations and other income was Rs 1,54,899 mio. (Rupees One Lakh Fifty Four Thousand Eight Hundred Ninety Nine Million only). The Company has achieved consolidated Profit Before Tax from continuing operations of Rs 28,381 mio. (Rupees Twenty Eight Thousand Three Hundred Eighty One Million only) and consolidated Profit After Tax (from continuing and discontinued operations) of Rs 46,183 mio. (Rupees Forty Six Thousand One Hundred Eighty Three Million only). The Company achieved a consolidated total Comprehensive Income of Rs 45,138 mio (Rupees Forty Five Thousand One Hundred Thirty Eight Million only). The consolidated EPS for the Financial Year ended on March 31, 2022 was Rs 43.83 (Rupees Forty Three and paisa Eighty Three). During the year under review, the standalone revenue from operations and other income was Rs 81,606 mio (Rupees Eighty One Thousand Six Hundred Six Million only). The Company has achieved standalone Profit Before Tax of Rs 11,639 mio (Rupees Eleven Thousand Six Hundred Thirty Nine Million only) and standalone Profit After Tax of Rs 8,579 mio (Rupees Eight Thousand Five Hundred Seventy Nine Million only). The Company achieved a standalone total Comprehensive Income of Rs 8,621 mio (Rupees Eight Thousand Six Hundred Twenty One Million only). The standalone EPS for the Financial Year ended on March 31, 2022 was Rs 8.38 (Rupees Eight and paisa Thirty Eight).
Your Directors have recommended a final dividend of Rs 2.50/- (i.e. 250%) per equity share of Rs 1/- each fully paid-up for the Financial Year ended on March 31, 2022. The final dividend, if declared by the members at the ensuing Annual General Meeting ("AGM"), will be paid to those members, whose names stand registered in the Register of Members on Friday, July 29, 2022 i.e. the record date. In respect of shares held in dematerialized mode, it will be paid to the members whose names are furnished by the National Securities Depository Limited and the Central Depository Services (India) Limited, as beneficial owners. The Dividend Payout Ratio for the Financial Year ended on March 31, 2022 is 11.42% of profits from continuing operations.
In terms of regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("the Listing Regulations") the Company has formulated Dividend Distribution Policy, which is approved by the Board and is uploaded on Company?s website and the link of the same is provided in a separate section of Corporate Governance Report.
BUYBACK OF EQUITY SHARES:
The Board at its meeting held on May 20, 2022 passed a resolution to buyback 1,15,38,461 (One Crore Fifteen Lakh Thirty Eight Thousand Four Hundred Sixty One) equity shares of Rs 1/- (Rupee One only) each fully paid-up at a price of Rs 650 (Rupees Six Hundred Fifty only) aggregating to Rs 7500,000,000 (Rupees Seven Thousand Five Hundred Million only), excluding the transaction cost relating to the buyback, from the members of the Company on proportionate basis under the tender offer route in accordance with the provisions of SEBI (Buyback of Securities) Regulations, 2018 and the Act and Rules framed thereunder. Said buyback is within the powers of the Board.
The buyback exercise is proposed to be undertaken by the Company to return a part of the onetime funds received on sale of India centric animal health business undertaking in July 2021, to the members and thereby enhancing overall return to the members.
Buyback exercise will be undertaken as per the statutory provisions.
During the year under review, the Company had redeemed whole of the Commercial Papers of Rs 6,250 mio. (Rupees Six Thousand Two Hundred Fifty Million only) on its maturity. The corresponding ISIN was extinguished.
The Company is in compliance with Secretarial Standards on Meetings of Board of Directors and General Meetings issued by the Institute of Company Secretaries of India.
MANAGEMENT DISCUSSION AND ANALYSIS ("MDA"):
MDA for the year under review, as stipulated under the Listing Regulations, is presented in a separate section which forms a part of the Annual Report.
CONSOLIDATED FINANCIAL STATEMENTS:
In accordance with Ind AS-110 on Consolidation of Financial Statements read with Ind AS-28 on Accounting for Investments in Associates and Joint Ventures and as provided under the provisions of the Act read with Schedule III of the Act and Rules made thereunder and the Listing Regulations, the Audited Consolidated Financial Statements are provided in the Annual Report, which show the financial resources, assets, liabilities, income, profits and other details of the Company, its associate companies and its subsidiary companies after elimination of minority interest, as a single entity.
i. The Company has 15 (fifteen) Indian subsidiary companies, 26 (twenty six) foreign subsidiary companies and 3 (three) joint venture companies as at March 31, 2022. There has been no material change in the nature of business of the Company, subsidiary companies and joint venture companies. There is 1 (one) partnership firm in the group, in which 2 (two) subsidiary companies of the Company are the partners. More details are provided in the Audited Financial Statements. During the year under review, the Board has reviewed the performance / affairs of the subsidiary companies.
ii. Zydus Wellness Products Limited, a wholly owned subsidiary of Zydus Wellness Limited, which in turn is a subsidiary of the Company, has incorporated a wholly owned subsidiary in Bangladesh in the name of Zydus Wellness (BD) Pvt Limited, to carry on the business of distribution and marketing of consumer products.
iii. In line with the philosophy to enhance the share of renewable power source in its operation and to comply with regulatory requirement for being a ‘captive user? under Electricity Laws, 2003, the Company has entered into Share Purchase, Subscription and Shareholders? Agreement to acquire up to 11.86% stake on a fully diluted basis in AMP Energy Green Nine Private Limited, for setting up captive Wind Solar Hybrid power project in Gujarat.
iv. Zydus Discovery DMCC, Dubai, a wholly owned subsidiary of Zydus Worldwide DMCC, Dubai, which in turn is a wholly owned subsidiary of the Company, got merged with Zydus Therapeutics Inc., USA w.e.f. July 1, 2021.
v. Zydus Healthcare Limited and Zydus Animal Health and Investments Limited, both wholly owned material subsidiary companies redeemed their preference shares amounting to Rs 10,065 mio. (Rupees Ten Thousand Sixty Five Million only) and Rs 5,000 mio. (Rupees Five Thousand Million only) respectively.
vi. As provided in section 136 of the Act, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. The Company will make available free of cost the Audited Financial Statements of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The Financial Statements of the subsidiary companies will also be kept open for electronic inspection. The Consolidated Financial Statements presented by the Company include financial results of its subsidiary companies.
vii. As provided under section 129(3) of the Act and Rules made thereunder, a statement containing the salient features of the financial statements of its subsidiaries in the format prescribed under the rules is attached to the financial statements. The policy relating to material subsidiaries, pursuant to the provisions of the Listing Regulations may be accessed on the Company?s website at the link provided in a separate section of Corporate Governance Report.
DISPOSAL OF AN UNDERTAKING OF A WHOLLY OWNED SUBSIDIARY:
Pursuant to the special resolution passed by the members at the extra ordinary general meeting held on June 11, 2021 in accordance with the provisions of regulation 24(6) of the Listing Regulations, Zydus Animal Health and Investments Limited ("ZAHL"), a wholly owned subsidiary of the Company disposed of its Animal Healthcare Established Markets Undertaking ("Undertaking") (having animal healthcare business in India and certain other countries) to Zenex Animal Health India Private Limited ("Purchaser"), by way of a slump sale, without values being assigned to the individual assets and liabilities at a lump sum consideration of Rs 29,210 mio. (Rupees Twenty Nine Thousand Two Hundred Ten Million only) on debt free and cash free basis, subject to certain closing date adjustments specified in the Business Transfer Agreement.
The transaction of sale and disposal of the Undertaking was completed / closed on July 14, 2021.
EXTENSION OF JOINT VENTURE AGREEMENT:
The tenure of joint venture agreement with Bayer (South East Asia) PTE Limited, was extended for a further period of 3 (three) years till May 1, 2024. The Company believes that the said extension would be beneficial considering the prospects of the growth of Bayer Zydus Pharma Private Limited, the joint venture company, over next 3 (three) years.
EXTRA ORDINARY GENERAL MEETINGS:
During the Financial Year ended on March 31, 2022, 2 (two) extra ordinary general meetings of the members of the Company were held as per the below details:
1. June 11, 2021: to approve disposal of the Undertaking of ZAHL and
2. February 18, 2022: to (i) approve change in name of the Company, (ii) approve necessary amendments in the Memorandum of Association and the Articles of Association and (iii) re-appoint Dr. Sharvil P. Patel as the Managing Director for a further period of 5 (five) years with effect from April 1, 2022.
The Company?s plants, properties, equipments and stocks are adequately insured against all major risks. The Company has insurance cover for product liability and clinical trials. The Company has also taken Directors? and Officers? Liability Policy to provide coverage against the liabilities arising on them.
The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.
COST ACCOUNTS AND RECORDS:
The Company has made and maintained the cost accounts and records as specified by the Central Government under section 148(1) of the Act and Rules made thereunder.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS:
Details of loans, guarantees and investments covered under section 186 of the Act are given in the notes to the financial statements.
During the year under review, neither the statutory auditors nor the secretarial auditor have reported to the Audit Committee, under section 143(12) of the Act, any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Board?s Report.
RELATED PARTY TRANSACTIONS:
All contracts / arrangements / transactions entered into by the Company during the Financial Year ended on March 31, 2022 with related parties were in the ordinary course of business and on an arm?s length basis and had no conflict with the interest of the Company. All related party transactions are placed before the Audit Committee for review and approval. As provided under section 134(3)(h) of the Act and Rules made thereunder disclosure of particulars of material transactions (i.e. transactions exceeding Rs 10,000,000,000/- (Rupees Ten Thousand Million only) or 10% (ten percent) of the annual consolidated turnover as per the last Audited Financial Statements) with related parties entered into by the Company in the prescribed format (Form No. AOC-2) is annexed to this report as Annexure-A.
Disclosures on related party transactions are set out in Note No. 41 of the financial statements.
The link to view the policy on materiality of related party transactions and dealing with related party transactions is provided in a separate section of Corporate Governance Report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL:
i. Re-appointment of Directors:
Based on the recommendation of Nomination and Remuneration Committee ("NRC") and the Board, the members passed the following 3 (three) resolutions during the Financial Year ended on March 31, 2022-
• August 11, 2021-to re-appoint Mr. Ganesh N. Nayak (DIN-00017481) as the Executive Director of the Company for a further period of 3 (three) years w.e.f. July 12, 2021. His appointment is liable to retire by rotation.
• August 11, 2021-to re-appoint Mr. Apurva S. Diwanji (DIN-00032072) as the Independent Director (" ID") of the Company for the second term of 5 (five) consecutive years w.e.f. May 13, 2021. His appointment is not liable to retire by rotation.
• February 18, 2022-to re-appoint Dr. Sharvil P. Patel (DIN-00131995) as the Managing Director of the Company for a further period of 5 (five) years w.e.f. April 1, 2022. His appointment is liable to retire by rotation.
ii. Retirement by rotation:
In accordance with the provisions of section 152(6) of the Act and in terms of the Articles of Association of the Company, Mr. Pankaj R. Patel (DIN-00131852) and Mr. Mukesh M. Patel (DIN-00053892), Non-Executive Directors will retire by rotation at the ensuing AGM and being eligible, offer themselves for re-appointment. The Board recommends their re-appointment.
iii. Declaration of independence:
The Company has received declaration of independence as stipulated under sections 149(6) and 149(7) of the Act and regulations 16(1)(b) and 25 of the Listing Regulations from IDs confirming that they are not disqualified for continuing as an ID. There has been no change in the circumstances affecting their status as an ID of the Company.
All the Directors of the Company, who are required to get registered, have registered themselves with the Indian Institute of Corporate Affairs. Further, as per the declarations received, none of the Directors of the Company are required to give online proficiency test as per the first proviso to rule 6(4) of The Companies (Appointment and Qualification of Directors) Rules, 2014, as amended from time to time.
iv. Profile of Directors seeking re-appointment:
As required under regulation 36(3) of the Listing Regulations, particulars of Directors seeking reappointment at the ensuing AGM are annexed to the notice convening Twenty Seventh AGM.
v. Key Managerial Personnel:
The following persons are the Key Managerial Personnel (" KMP") as on March 31, 2022:
1. Dr. Sharvil P. Patel, Managing Director,
2. Mr. Ganesh N. Nayak, Executive Director,
3. Mr. Nitin D. Parekh, Chief Financial Officer and
4. Mr. Dhaval N. Soni, Company Secretary.
vi. Board Evaluation:
Pursuant to provisions of the Act and Rules made thereunder and as provided in Schedule IV of the Act and the Listing Regulations, the NRC / Board have carried out an annual evaluation of its own performance, the Directors individually as well as its committees. The manner in which the evaluation was carried out has been provided in the Corporate Governance Report, which forms a part of this Annual Report.
In a separate meeting of IDs, the performance of the non-independent directors, the Board as a whole and the Chairman of the Company was evaluated, taking into account the views of executive directors and non-executive directors.
The Board and the NRC reviewed the performance of individual directors on the basis of criteria fixed by the Board / NRC.
The functioning of the Board, the Committees and performance of individual Directors was found satisfactory.
vii. Nomination and Remuneration Policy:
The Board has, on the recommendation of the NRC, framed a policy on selection and appointment of Directors, Senior Management and their remuneration. The Nomination and Remuneration Policy and link of the same is provided in a separate section of Corporate Governance Report.
viii. Pecuniary relationship:
During the year under review, except those disclosed in the Audited Financial Statements, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company.
The Company has not obtained any credit rating during the year under review for any debt instruments or fixed deposit programme. During the year under review, CRISIL Limited gave CRISIL AA+ / Stable and CRISIL A1+ (Reaffirmed) rating for long term and short term bank loan facilities respectively.
INSIDER TRADING REGULATIONS:
The Company has adopted the Code for Insider Trading as per the SEBI (Prohibition of Insider Trading) Regulations, 2015. Other details on insider trading regulations are provided in the Corporate Governance Report, which forms a part of this Annual Report.
DIRECTORS? RESPONSIBILITY STATEMENT:
In terms of sections 134(3)(c) and 134(5) of the Act and to the best of their knowledge and belief, and according to the information and explanations provided to them, your Directors hereby make the following statements:
i. that in preparation of the Financial Statements, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any,
ii. that such accounting policies have been selected and applied consistently and judgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2022 and of the profit of the Company for the year ended on that date,
iii. that proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for prevention and detection of fraud and other irregularities,
iv. that the annual financial statements have been prepared on a going concern basis,
v. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively, and
vi. that the systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
TRANSFER OF SHARES AND DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND ("IEPF"):
During the year under review, in compliance with the provisions of sections 124 and 125 of the Act and Rules made thereunder, the Company has transferred-
i 1,49,321(One Lakh Forty Nine Thousand Three Hundred Twenty One) equity shares of 163(One Hundred Sixty Three) members whose dividend has remained unclaimed / unpaid for a consecutive period of 7 (seven) years to IEPF.
ii Rs 4.98 mio. (Rupees Four Million Nine Hundred Eighty Thousand only) held by 2,715 (Two Thousand Seven Hundred Fifteen) members, being the unclaimed dividend, pertaining to the dividend for the Financial Year ended on March 31, 2014 to IEPF, after giving notice to the members to claim their unpaid / unclaimed dividend.
8 (eight) Board meetings were held during the Financial Year ended on March 31, 2022. The Board approved 5 (five) resolutions by circulation, vide circulars dated July 29, 2021, August 2, 2021, December 13, 2021, January 17, 2022 and March 31, 2022. Other information with regard to the Board meetings is given in the Corporate Governance Report, which forms a part of this Annual Report.
As provided in section 177(8) of the Act, the information about composition of Audit Committee and other details are given in the Corporate Governance Report, which forms a part of this Annual Report.
RECOMMENDATION OF COMMITTEES:
The Board has accepted the recommendations of all the committees constituted by the Board.
The Company has complied with the Corporate Governance requirements under the Act and as stipulated under the Listing Regulations. A separate section on detailed report on the Corporate Governance practices followed by the Company under the Listing Regulations, along with a certificate from Manoj Hurkat & Associates, Practicing Company Secretaries, confirming the compliance, forms a part of this Annual Report.
i. Statutory Auditors and Audit Report:
Deloitte Haskins & Sells LLP, Chartered Accountants ("Deloitte"), were appointed as the Statutory Auditors of the Company for a period of 5 (five) consecutive years from the conclusion of Twenty Second AGM till the conclusion of Twenty Seventh AGM. Their term shall expire after the ensuing AGM.
The Audit Committee and the Board at their respective meetings, both held on May 20, 2022 recommended the re-appointment of Deloitte as the Statutory Auditors of the Company for a further period of 5 (five) consecutive years from the conclusion of Twenty Seventh AGM till the conclusion of Thirty Second AGM in year 2027, with an authority to the Audit Committee and the Board to decide the remuneration payable to them. Re-appointment of Deloitte is subject to approval of members at the ensuing AGM. Necessary agenda item, resolution and statutory details are provided in the Notice of AGM.
Deloitte have furnished a declaration confirming their independence as well as their arm?s length relationship with the Company and that they have not taken up any prohibited non-audit assignments for the Company. The Board has duly reviewed the Statutory Auditor?s Report and the observations and comments, appearing in the report, are self-explanatory and do not call for any further explanation / clarification by the Board as provided under section 134(3)(f) of the Act.
ii. Cost Auditors:
Pursuant to the provisions of section 148(3) of the Act read with The Companies (Cost Records and Audit) Amendment Rules, 2014 and rule 8 of the Accounts Rules, the cost audit records maintained by the Company in respect of Drugs and Pharmaceuticals are required to be audited. The Board had, on the recommendation of the Audit Committee, appointed Dalwadi & Associates, Cost Accountants to audit the cost records of the Company for the Financial Year ending on March 31, 2023 on a remuneration of Rs 1.32 mio. (Rupees One Million Three Hundred Twenty Thousand only) plus applicable Goods and Services Tax and out of pocket expenses on actuals. As required under the Act and Rules made thereunder, the remuneration payable to the Cost Auditors is required to be placed before the members in a general meeting for ratification. Accordingly, a resolution seeking ratification by members for the remuneration payable to Dalwadi & Associates is included at Item No. 7 of the Notice convening Twenty Seventh AGM.
iii. Secretarial Auditors and Secretarial Audit Report:
Pursuant to the provisions of section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed Manoj Hurkat & Associates, Practicing Company Secretaries to undertake the Secretarial Audit of the Company for the Financial Year ended on March 31, 2022. The Secretarial Audit Report is annexed herewith as Annexure-B. The Board has duly reviewed the Secretarial Auditors? Report and the observations and comments, appearing in the report are self-explanatory and do not call for any further explanation / clarification by the Board as provided under section 134(3)(f) of the Act.
Further, as per regulation 24A(1) of the Listing Regulations, the secretarial audit reports of Zydus Healthcare Limited and Zydus Animal Health and Investments Limited, unlisted material subsidiary companies are annexed herewith as Annexure-B1 and Annexure-B2 respectively.
iv. Annual Secretarial Compliance Report
In compliance with regulation 24A(2) of the Listing Regulations, Manoj Hurkat & Associates, Practicing Company Secretaries issued Annual Secretarial Compliance Report for the Financial Year ended on March 31, 2022. The Report, presented at the Board meeting held on May 20, 2022, confirmed that the Company has maintained proper records as stipulated under various Rules and Regulations and that, no action has been taken against the Company or its material subsidiaries or promoters / directors by SEBI / BSE / NSE. The Company has submitted the Report to the Stock Exchanges within the prescribed time.
BUSINESS RESPONSIBILITY REPORT ("BRR"):
As per regulation 34(2)(f) of the Listing Regulations, a separate section on BRR forms a part of this Annual Report.
CORPORATE SOCIAL RESPONSIBILITY ("CSR"):
Pursuant to section 135 of the Act and Rules made thereunder, the Board has constituted a CSR Committee under the Chairmanship of Mr. Pankaj R. Patel. Other members of the Committee are Ms. Dharmishtaben N. Raval and Dr. Sharvil P. Patel. CSR Policy is placed on the Company?s website. Other details of the CSR activities, as required under section 135 of the Act read with CSR Rules, are given in the CSR Report at Annexure-C.
The Board at its meeting held on May 20, 2022, changed the nomenclature of CSR Committee to CSR & ESG Committee.
BUSINESS RISK MANAGEMENT:
Pursuant to the provisions of section 134(3)(n) of the Act and regulation 21 of the Listing Regulations, the Company has constituted a Risk Management Committee. The details of the Committee and its terms of reference are set out in the Corporate Governance Report, which forms a part of this Annual Report.
A well-defined risk management mechanism covering the risk mapping and trend analysis, risk exposure, potential impact and risk mitigation process is in place. The objective of the mechanism is to minimize the impact of risks identified and taking advance actions to mitigate them. The mechanism works on the principles of probability of occurrence and impact, if triggered. A detailed exercise is being carried out to identify, evaluate, monitor and manage both business and non-business risks. The Company has framed a Risk Management Policy to identify and assess the key risk areas, monitor and report compliance and effectiveness of the policy and procedure.
Discussion on risks and concerns are covered in the MDA, which forms a part of this Annual Report.
INTERNAL CONTROL SYSTEM AND ITS ADEQUACY:
The Company has designed and implemented a process driven framework for Internal Financial Controls ("IFC") within the meaning of the explanation to section 134(5)(e) of the Act. For the Financial Year ended on March 31, 2022, the Board is of the opinion that the Company has sound IFC commensurate with the size, scale and complexity of its business operations. The IFC operates effectively and no material weakness exists. The Company has a process in place to continuously monitor the same and identify gaps, if any, and implement new and / or improved internal controls whenever the effect of such gaps would have a material effect on the Company?s operations.
The Company has a well-placed, proper and adequate IFC system, which ensures:
• The orderly and efficient conduct of its business,
• Safeguarding of its assets,
• The prevention and detection of frauds and errors,
• The accuracy and completeness of the accounting records and
• The timely preparation of reliable financial information.
The Board reviews the effectiveness of controls documented as part of IFC framework, and take necessary corrective and preventive actions wherever weaknesses are identified as a result of such reviews. This review covers entity level controls, process level controls, fraud risk controls and Information Technology environment.
Based on this evaluation, no significant events had come to notice during the Financial Year ended on March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our IFC. The management has also come to a conclusion that the IFC and other financial reporting was effective during the Financial Year ended on March 31, 2022 and is adequate considering the business operations of the Company. The Statutory Auditors of the Company has audited the IFC with reference to Financial Reporting and their Audit Report is annexed as an Annexure to the Independent Auditors? Report under Standalone Financial Statements and Consolidated Financial Statements.
MANAGING THE RISKS OF FRAUD, CORRUPTION AND UNETHICAL BUSINESS PRACTICES:
i. Vigil Mechanism / Whistle Blower Policy:
The Company has built a reputation for doing business with honesty and integrity and it has zero tolerance for any type of unethical behaviour or wrongdoing.
The Company has in place a stringent vigil system to report unethical behaviour in order to promote professionalism, fairness, dignity and ethical behaviour in its employees.
In compliance with provisions of section 177(9) of the Act and Rules made thereunder and regulation 22 of the Listing Regulations, the Company has established vigil mechanism and framed Whistle Blower Policy for Directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of the Company?s Code of Conduct or Ethics Policy and SEBI (Prohibition of Insider Trading) Regulations, 2015. Whistle Blower Policy is uploaded on Company?s website and the link of the same is provided in a separate section of Corporate Governance Report.
ii. Zydus Business Conduct Policy:
The Company has framed "Zydus Business Conduct Policy" and is monitored by the President-Group Human Resources. Every employee is required to review and sign the policy at the time of joining and an undertaking shall be given for adherence to the Policy. The objective of the Policy is to conduct the business in an honest, transparent and ethical manner. The policy provides for anti-bribery and avoidance of other corruption practices by the employees of the Company.
DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:
The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. The Company has constituted an Internal Complaints Committee as required under the said Act.
The Company always endeavors to create and provide an environment that is free from discrimination and harassment including sexual harassment. The Company has in place a robust policy on prevention of sexual harassment at workplace. The policy aims at prevention of harassment of employees as well as contractors and lays down the guidelines for identification, reporting and prevention of sexual harassment.
During the Financial Year ended on March 31, 2022, 2 (two) complaints were received and both of them were resolved. No complaint was pending to be resolved as at March 31, 2022.
As per the provisions of section 92(3) read with section 134(3)(a) of the Act, Annual Return for the Financial Year ended on March 31, 2022, in prescribed Form No. MGT-7 is available on the website of the Company at https://www.zyduslife. com/public/pdf/financial/annualreturn2021-2022/Zydus-Lifesciences-Limited.pdf.
PARTICULARS OF EMPLOYEES:
The information required under section 197(12) of the Act read with rule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure-D.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:
Information on conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under section 134(3)(m) of the Act read with rule 8(3) of the Accounts Rules, is provided in Annexure-E and forms a part of this Annual Report.
Your Directors state that the Company has made disclosures in this report for the items prescribed in section 134(3) of the Act and rule 8 of the Accounts Rules to the extent the transactions took place on those items during the year under review.
Apart from what is mentioned in this report, there are no material changes and commitments affecting the financial position of the Company between the end of the financial year to which the financial statements relate and the date of this report.
Your Directors place on record their sincere appreciation for the continued co-operation and support extended to the Company by various Banks. Your Directors also thank the Medical Profession, the Trade and Consumers for their patronage to the Company?s products. Your Directors also place on record sincere appreciation of the continued hard work put in by the employees at all levels, amidst the challenges due to pandemic. The Directors also thank the Company?s customers, vendors, investors, business associates, Stock Exchanges, Government of India, State Government and various departments and agencies for their support and co-operation.
Your Directors mourn the loss of lives due to COVID-19 pandemic and are deeply grateful and have immense respect for every person who risked his life and safety to fight this pandemic.
Your Directors appreciate and value the contribution made by every member of the Zydus group.
|On behalf of the Board of Directors|
|Pankaj R. Patel|
|Place : Ahmedabad||Chairman|
|Date : May 20, 2022||DIN: 00131852|