piramal enterprises ltd share price Directors report


<dhhead>BOARDS REPORT</dhhead>

Dear Shareholders,

Your Directors have pleasure in presenting the 75th Annual Report on the business and operations of Piramal Enterprises Limited (the Company or PEL) and the Audited Financial Statements for the financial year ended March 31, 2022.

(Rs in Crores)

Particulars

Consolidated

Standalone

FY2022

FY2021

FY2022

FY2021

Net sales

13,993.30

12,809.35

2,225.68

1,824.70

Non-operating other income

720.11

363.64

467.50

95.76

Total income

14,713.41

13,172.99

2,693.18

1,920.46

Other expenses

7,543.08

5,345.10

1,257.79

629.72

OPBIDTA

7,170.33

7,827.89

1,435.39

1,290.74

Interest expenses

4,479.87

4,208.53

761.16

1,068.77

Depreciation

665.78

560.88

22.92

32.82

Profit before tax & exceptional items

2,024.68

3,058.48

651.31

189.15

Exceptional items expenses

(168.00)

58.86

(10.20)

(258.35)

Income tax

510.79

2,042.91

68.83

51.02

Net Profit/(Loss) after tax and before share of net profit of associates and joint ventures

1,345.89

1,074.43

572.28

(120.22)

Share of net profit of associates and joint ventures#

652.88

338.43

-

-

Net Profit/(Loss) after tax and after share of net profit of associates and joint ventures

1,998.77

1,412.86

572.28

(120.22)

Profit from discontinued operations

-

-

-

160.12

Profit after tax from continuing and discontinued operations

1,998.77

1,412.86

572.28

39.90

Net profit/(loss) margin % (Profit from continuing operations as a % of revenue from continuing operations)

14.28%

11.03%

25.71%

(6.59%)

Normalised net profit from continuing operations1

2,131.58

2,627.11

582.48

128.98

Normalised net profit margin % (Profit from continuing operations as a % of revenue from continuing operations)

15.23%

20.51%

26.17%

7.07%

Basic EPS from continuing operations

80.70

56.19

24.02

(5.07)

Diluted EPS (C/share) from continuing operations

80.40

55.68

23.93

(5.07)

Normalised basic EPS (C/share)1

89.45

110.79

24.44

5.20

Normalised diluted EPS (C/share)1

89.12

109.80

24.35

5.15

 

# Income under Share of associates primarily includes Companys share of profits for Companys associates, as per the applicable accounting standards. Note:

1. Normalised net profit excludes tax adjustment for earlier years and exceptional items (net of tax).

DIVIDEND

The Board has recommended a dividend of RS33 (Rupees Thirty-Three only) i.e. @ 1,650 % per equity share of the face value of RS2 each for the financial year ended March 31, 2022.

As per Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), the Company has adopted a Dividend Distribution Policy which is available on the website of the Company at https://www.piramal.com/investor/overview.

The dividend declared by the Company for the financial year ended March 31, 2022 is in compliance with the Dividend Distribution Policy of the Company.

SHARE CAPITAL

During the year under review, the Company had:

1. issued and allotted 1,15,89,400 equity shares of face value of RS2 each pursuant to conversion of 1,15,894 Compulsorily Convertible Debentures (CCDs). The equity shares were issued pursuant to the terms of the private placement offer cum application letter dated December 18, 2019. The CCDs were convertible into equity shares in the ratio of 100 equity shares of the face value of RS2 each per CCD. Thereafter, there is no outstanding CCD as on March 31, 2022;

2. issued and allotted 15,35,944 equity shares of the face value of RS2 each at an issue price of RS1,300 per share (including premium of RS1,298 per share), out of the Rights equity shares reserved for Compulsorily Convertible Debentures holders (CCD holders) as per Regulation 74 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, under the Rights Issue made by the Company vide Letter of Offer dated December 24, 2019;

3. cancelled unsubscribed issued equity share capital representing 5,75,372 equity shares of RS2 each, reserved in favour of the CCD holders issued under rights issue of the Company vide its Letter of Offer dated February 1, 2018.

Accordingly, as on March 31, 2022, the issued share capital of the Company stood at RS47,73,76,546 made up of 23,86,88,273 equity shares of RS2 each and subscribed and paid up share capital of the Company stood at RS47,73,27,400 consisting of 23,86,63,700 equity shares of face value of RS2 each.

There has been no deviation in the utilisation of Rights Issue proceeds from the Objects stated in the Letter of Offer dated December 24, 2019.

CHANGES IN SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

Changes in subsidiaries, joint ventures and/or associate companies during the year under review are listed in Annexure A to this Report.

FINANCIAL DETAILS OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 (the Act), a statement containing salient features of the financial statements of subsidiaries, joint venture and associate companies in Form AOC-1 is attached to the financial statements.

The separate financial statements of the subsidiaries are available on the website of the Company and can be accessed at https://www.piramal.com/investor/overview.

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR 2022

Acquisition of Hemmo Pharmaceuticals Private Limited (HPPL):

In June 2021, Piramal Pharma Limited (PPL), subsidiary of the Company, acquired 100% stake in HPPL, an Indian manufacturer of peptide active pharmaceutical ingredient for an upfront consideration of RS775 Crores and milestone linked earn-outs.

Acquisition and merger of Dewan Housing Finance Corporation Limited (DHFL):

The Honble National Company Law Tribunal, Mumbai Bench (NCLT), vide its order dated June 7, 2021, had approved the Resolution Plan submitted by Piramal Capital & Housing Finance Limited (erstwhile PCHFL), wholly owned subsidiary of the Company, for the Corporate Insolvency Resolution Process of DHFL under Section 31 of the Insolvency and Bankruptcy Code, 2016.

In September 2021, the payment of consideration for the acquisition of DHFL amounting to ~RS34,250 Crores was made by erstwhile PCHFL on the completion of the acquisition, which included an upfront cash component of ~RS14,700 Crores and issuance of debt instruments of ~ RS19,550 Crores (Non-Convertible Debentures having a tenure of 10 years, at an interest of 6.75% p.a. payable on a half-yearly basis).

In terms of the Resolution Plan, erstwhile PCHFL was merged into DHFL with effect from September 30, 2021 pursuant to the reverse merger as contemplated under scheme of arrangement provided under the Resolution Plan. Consequently, the name of DHFL was changed to Piramal Capital & Housing Finance Limited with effect from November 3, 2021.

Composite Scheme of Arrangement amongst the Company, PPL, Convergence Chemicals Private Limited (CCPL), HPPL and PHL Fininvest Private Limited (PFPL):

In October 2021, the Board of Directors had approved a composite scheme of arrangement amongst the Company, PPL, CCPL, HPPL, PFPL and their respective shareholders and creditors under Sections 230 to 232 and other applicable provisions of the Act and rules made thereunder (Scheme), which provides for the following:

i. the transfer by way of demerger of the Pharma Business from PEL to PPL, and the consequent issue of equity shares to shareholders of PEL by PPL as per the share entitlement ratio i.e. for every 1 equity share of face and paid-up value of RS2 each held in PEL, 4 equity shares of face and paid-up value of RS10 each in PPL shall be issued by PPL;

ii. the amalgamation of CCPL and HPPL (both being wholly owned subsidiaries of PPL) into PPL;

iii. the amalgamation of PFPL (a wholly owned subsidiary of PEL) into PEL. The Company, pursuant to the aforesaid Scheme, will become a Systemically Important Non-Deposit taking NonBanking Financial Company (NBFC) and has filed an application with the Reserve Bank of India (RBI) for obtaining registration and license to commence the business as a NBFC.

Further, in April 2022, the Company, jointly with PPL, CCPL, HPPL and PFPL had filed a Company Application in relation to the Scheme with the NCLT, following the No Objection received from the stock exchanges in terms of Regulation 94 of the Listing Regulations by their respective Observation Letters. The NCLT vide its order dated May 12, 2022 has directed the Company to convene separate meetings of the Equity Shareholders, Secured and Unsecured Creditors of the Company on July 5, 2022, for the purpose of considering and, if thought fit, approving the Scheme.

The scheme is subject to the approval of the shareholders, creditors and regulatory authorities.

Acquisition of stake in Yapan Bio Private Limited (Yapan)

In December 2021, PPL entered into agreement and acquired an initial stake of 27.78% in Yapan for an investment of RS101.77 Crores. Yapan is a Contract Development and Manufacturing Organisation in Hyderabad. Further, in April 2022, PPL entered into an agreement and acquired a further stake of 5.55% in Yapan for an investment of RS20.35 Crores and thus the aggregate stake in Yapan is 33.33%.

OPERATIONS REVIEW

Standalone

Total income from continuing operations for FY 2022, increased by 21.98% to RS2,225.68 Crores as compared to RS1,824.70 Crores in FY 2021. Earnings before interest, taxes, depreciation and amortisation (EBITDA) for FY 2022 from continuing operations increased by 11.21% to RS1,435.39 Crores as compared to RS1,290.74 Crores in FY 2021. Net Profit for the year from continuing and discontinuing operations was RS572.28 Crores as compared to RS39.90 Crores in FY 2021. Basic and diluted earnings per share, from continuing and discontinuing operations, was RS24.02 per share and RS23.93 per share, respectively, for the year, as compared to RS1.68 per share each, during the previous year.

Consolidated

The Companys revenue increased by 9.24% to RS13,993.30 Crores in FY 2022 as compared to RS12,809.35 Crores in FY 2021. The increase in revenue is primarily driven by increase in Pharma segment. Revenue generated in foreign currencies are 38.96% of the Companys FY 2022 revenue.

A detailed discussion on operations for the year ended March 31, 2022 is provided in the Management Discussion and Analysis Report, which is presented in a separate section forming part of the Annual Report.

SUBSIDIARY COMPANIES

Piramal Dutch IM Holdco B.V.

Piramal Dutch IM Holdco B.V. includes financials of its wholly owned subsidiary PEL-DRG Dutch Holdco B.V. which was merged during the year. There were no net sales of this group for FY 2022. Profit before tax for the year was at RS8.16 Crores. Piramal Dutch IM Holdco B.V. reported a net profit of RS8.16 Crores for the year.

 

Piramal Capital & Housing Finance Limited (Formerly known as Dewan Housing Finance Corporation Limited) [Consolidated]

Piramal Capital & Housing Finance Limited (Consolidated) includes financials of DHFL Investments Limited, DHFL Advisory & Investments Private Limited and DHFL Holdings Limited. Income from operations for FY 2022 was at RS5,486.17 Crores. Profit before tax for the year was at RS728.73 Crores. Piramal Capital & Housing Finance Limited reported a net profit of RS540.50 Crores for the year.

Piramal Fund Management Private Limited [Consolidated]

Piramal Fund Management Private Limited (Consolidated) includes financials of Indiareit Investment Management Co. and Piramal Asset Management Private Limited, Singapore. Income from operations for FY 2022 was at RS33.15 Crores. Profit before depreciation and tax for the year was at RS5.09 Crores. Piramal Fund Management Private Limited (Consolidated) reported a net Profit of RS3.12 Crores for the year.

Piramal Securities Limited

Income from operations for FY 2022 was at RS10.30 Crores. Profit before depreciation and tax for the year was at RS1.47 Crores. Piramal Securities Limited reported a net profit of RS1.46 Crores for the year.

PHL Fininvest Private Limited [Consolidated]

PHL Fininvest Private Limited (Consolidated) includes financials of Piramal Finance Sales and Service Private Limited. Income from operations for FY 2022 was at RS1,518.05 Crores. Profit before tax for the year was at RS574.79 Crores. PHL Fininvest Private Limited (Consolidated) reported a net profit of RS426.23 Crores for the year.

Piramal Pharma Limited [Consolidated]

Piramal Pharma Limited (Consolidated) includes financials of:

i. Piramal Healthcare Inc. [Consolidated]

ii. PEL Pharma Inc. [Consolidated]

iii. Piramal Healthcare UK Limited [Consolidated]

iv. Piramal Healthcare (Canada) Limited

v. Piramal Critical Care Limited

vi. Piramal Critical Care Italia SPA

vii. Piramal Critical Care South Africa

viii. Piramal Critical Care Pty. Ltd. (Australia)

ix. Piramal Critical Care Deutschland GmbH

x. Piramal Critical Care B.V.

xi. Convergence Chemicals Private Limited

xii. Hemmo Pharmaceuticals Private Limited

xiii. Piramal Pharma Japan GK

Consolidated income from operations for FY 2022 was at RS6,559.10 Crores. Consolidated profit before interest, depreciation and tax for the year was at RS1,225.46 Crores. Piramal Pharma Limited (Consolidated) reported a net profit of RS375.96 Crores.

Viridis Power Investment Managers Private Limited

Viridis Power Investment Managers Private Limited reported negligible loss for FY 2022.

Viridis Infrastructure Investment Managers Private Limited

Viridis Infrastructure Investment Managers Private Limited reported negligible loss for FY 2022.

Piramal Holdings (Suisse) SA

There was no income from operations for FY 2022. Profit before tax for the year was at RS10.28 Crores. Piramal Holdings (Suisse) SA reported a net profit of RS10.26 Crores for the year.

Piramal Consumer Products Private Limited

Income from operations for FY 2022 was at RS1.51 Crores. Profit before interest, depreciation and tax for the year was at RS1.43 Crores. Piramal Consumer Products Private Limited reported a net profit of RS1.21 Crores for the year.

Piramal Systems and Technologies Private Limited [Consolidated]

Piramal Systems and Technologies Private Limited (Consolidated) includes financials of Piramal Technologies SA. There was no income from operations for FY 2022. Profit before tax for the year was at RS16.88 Crores. Piramal Systems and Technologies Private Limited (Consolidated) reported a net profit of RS16.88 Crores for the year.

PEL Finhold Private Limited

There was no income from operations for FY 2022. Loss before depreciation and tax for the year was at RS1.97 Crores. PEL Finhold Private Limited reported a net loss of RS1.97 Crores for the year.

Piramal Alternatives Private Limited (Formerly known as Piramal Asset Management Private Limited)

Income from operations for FY 2022 was at RS1.85 Crores. Loss before depreciation and tax for the year was at RS10.09 Crores. Piramal Alternatives Private Limited reported a net loss of RS10.36 Crores for the year.

Piramal Investment Advisory Services Private Limited

Income from operations for FY 2022 was at RS41.44 Crores. Profit before depreciation and tax for the year was at RS14.78 Crores. Piramal Investment Advisory Services Private Limited reported a net profit of RS10.62 Crores for the year.

Shrilekha Business Consultancy Private Limited

The Company has an effective 74.95% equity stake in Shrilekha Business Consultancy Private Limited. Share of profit of Shrilekha Business Consultancy Private Limited considered in consolidation for FY 2022 amounts to RS384.43 Crores.

JOINT VENTURES AND ASSOCIATE COMPANIES

Investment in joint ventures and associates are accounted for using the equity method of accounting. Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the Companys share of post-acquisition profits or losses and other comprehensive income of joint ventures and associates. Dividends received or receivable from associates or joint ventures are recognised as a reduction in the carrying amount of the investment.

Piramal Pharma Limited, subsidiary of the Company, owns 49% and 27.78% equity stake in Allergan India Private Limited and Yapan Bio Private Limited, respectively. Share of profit of Allergan India Private Limited and loss of Yapan Bio Private Limited considered in consolidation for FY 2022 amounts to RS59.07 Crores and RS0.04 Crores, respectively.

India Resurgence ARC Private Limited is a 50:50 joint venture between the Company and Bain Capital Credit India Investments (a company existing under the laws of the Republic of Mauritius). Share of profit of India Resurgence ARC Private Limited considered in consolidation for FY 2022 amounts to RS31.52 Crores.

India Resurgence Asset Management Business Private Limited is a 50:50 joint venture between the Company and Bain Capital Credit India Investments. Share of profit of India Resurgence Asset Management Business Private Limited considered in consolidation for FY 2022 amounts to RS0.94 Crores.

Asset Resurgence Mauritius Manager is a joint venture between Bain Capital Credit Member LLC and Piramal Fund Management Private Limited. Share of profit of Asset Resurgence Mauritius Manager considered in consolidation for FY 2022 amounts to RS24.91 Crores.

Pramerica Life Insurance Company Limited (formerly known as DHFL Pramarica Life Insurance Company Limited) is a joint venture between DHFL Investments Limited, a wholly owned subsidiary of Piramal Capital & Housing Finance Limited and Prudential International Insurance Holdings Ltd, a wholly owned subsidiary of Prudential Financial Inc.

Share of profit of Pramerica Life Insurance Company Limited considered in consolidation for FY 2022 amounts to RS14.42 Crores.

DEPOSITS FROM PUBLIC

The Company has not accepted any deposits from the public and as such, no amount of principal or interest was outstanding as on the balance sheet date.

STATUTORY AUDITORS AND AUDITORS REPORT

The Auditors Report does not contain any qualification, reservation or adverse remark on the financial statements for the year ended March 31, 2022. The notes on financial statements referred to in the Auditors Report are self-explanatory and do not call for any further comments.

In terms of Section 139(2) of the Act, the existing Auditors, M/s. Deloitte Haskins & Sells LLP (Deloitte) hold office until the conclusion of this Annual General Meeting of the Company (AGM).

In terms of the ongoing composite scheme of arrangement, PHL Fininvest Private Limited, wholly owned subsidiary and a Systemically Important Non-Deposit taking NBFC would merge with the Company. The Company has filed an application with the RBI for obtaining a NBFC license and as a result, the Company would become a NBFC regulated by RBI.

In view of the guidelines issued by RBI for appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) dated April 27, 2021, Deloitte, the existing statutory auditors would become ineligible to continue as statutory auditors consequent to receipt of the NBFC license and accordingly, it is proposed to appoint M/s. Suresh Surana & Associates LLP (Firm Registration No. 121750W/W100010), Chartered Accountants as the Statutory Auditors of the Company for a period of three consecutive years i.e. from the conclusion of the ensuing AGM until the conclusion of the 78th AGM of the Company, to be held in calendar year 2025, subject to approval by the shareholders.

M/s. Suresh Surana & Associates LLP, Chartered Accountants, have confirmed that they are eligible for appointment as Statutory Auditors at this AGM.

Accordingly, approval of shareholders is being sought at this AGM for appointment of M/s. Suresh Surana & Associates LLP as Statutory Auditors of the Company for a period of three consecutive years based on the recommendation of the Audit & Risk Management Committee and the Board of Directors.

CORPORATE SOCIAL RESPONSIBILITY

The annual report on Corporate Social Responsibility (CSR) containing, details of CSR Policy, composition of CSR Committee, CSR projects undertaken and web-link thereto on the website of the Company, as required under Companies (Corporate Social Responsibility Policy) Rules, 2014, is set out in Annexure B of this Report.

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

Particulars regarding Conservation of energy, technology absorption, foreign exchange earnings and outgo are given as Annexure C to this Report.

ANNUAL RETURN

The Annual Return for FY 2022 is available on the website of the Company at https://www.piramal.com/investor/overview.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Members of the Company at the AGM held last year, appointed Mr. Khushru Jijina (DIN: 00209953) as a Whole-Time Director, liable to retire by rotation, to hold office for a term of three years effective from April 1, 2021. Further, Mr. Kunal Bahl (DIN: 01761033) and Mr. Suhail Nathani (DIN: 01089938) were appointed with effect from October 14, 2020 and Ms. Anjali Bansal (DIN: 00207746) was appointed with effect from November 19, 2020, as Independent Directors of the Company for a period of five years.

The Board of Directors of the Company (Board) had based on the recommendation of Nomination and Remuneration Committee (NRC) and subject to approval of the Members, approved:

1. Appointment of Mr. Puneet Dalmia (DIN:00022633) as an Additional Director and also as an Independent Director, not liable to retire by rotation, for a term of five years i.e. from October 7, 2021 to October 6, 2026;

2. Appointment of Ms. Anita George (DIN: 00441131) as an Additional Director and also as an Independent Director, not liable to retire by rotation, for a term of five years i.e. from February 10, 2022 to February 9, 2027;

3. Appointment of Ms. Shikha Sharma (DIN:00043265) as an Additional Director and also as Director (Non Executive NonIndependent) of the Company, liable to retire by rotation, with effect from March 31, 2022;

4. Re-appointment of Mr. Ajay G. Piramal (DIN:00028116) as Chairman, not liable to retire by rotation, for a further period of five years i.e. from April 1, 2022 to March 31, 2027;

5. Re-appointment of Dr. (Mrs.) Swati A. Piramal (DIN:00067125) as Vice-Chairperson, liable to retire by rotation, for a period of five years i.e. November 20, 2022 to November 19, 2027;

6. Re-appointment of Ms. Nandini Piramal (DIN:00286092) as an Executive Director, liable to retire by rotation, for a period of five years i.e. April 1, 2022 to March 31, 2027.

In accordance with Regulation 17(1C) of the Listing Regulations, with effect from January 1, 2022, approval of the shareholders for appointment of a person on the Board of Directors is required to be obtained either at the next general meeting or within a time period of three months from the date of appointment, whichever is earlier. The approval of the shareholders of the Company was required within 3 months for appointment of Ms. Anita George, Ms. Shikha Sharma, Mr. Ajay G. Piramal and Ms. Nandini Piramal. The Company received approval of the Members of the Company on May 5, 2022, through Postal Ballot, for the aforementioned appointments and reappointments on the Board, along with approval for appointment and re-appointment of Mr. Puneet Dalmia and Dr. (Mrs.) Swati A. Piramal, respectively.

The Board, on the recommendation of NRC and subject to approval of the Members at the ensuing AGM, appointed Mr. Rajiv Mehrishi (DIN: 00208189) as an Additional Director and also as an Independent Director, not liable to retire by rotation, for a term of five years i.e. from May 26, 2022 to May 25, 2027.

Further, the following Directors resigned during the year under review:

1. Mr. Deepak Satwalekar as an Independent Director of the Company with effect from July 26, 2021;

2. Mr. Rajesh Laddha as an Executive Director of the Company with effect from February 10, 2022;

3. Mr. Gautam Banerjee as an Independent Director of the Company with effect from March 31, 2022.

The Board places on record its appreciation and gratitude for the invaluable contributions made by Mr. Deepak Satwalekar, Mr. Rajesh Laddha and Mr. Gautam Banerjee during their tenure as Directors of the Company.

In line with the provisions of the Act and the Articles of Association of the Company, Dr. (Mrs.) Swati A. Piramal (DIN: 00067125) will retire by rotation at the ensuing AGM and being eligible, has offered herself for re-appointment. The Board recommends her re-appointment for the consideration of the Members of the Company at the ensuing AGM.

The Company has received declarations from all its Independent Directors, confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the Listing Regulations. In the opinion of the Board, the Independent Directors appointed during the year under review, are persons with integrity and possess requisite experience, expertise and proficiency required under applicable laws and the policies of the Company.

BOARD EVALUATION

Evaluation of performance of all Directors is undertaken annually. The Company has implemented a system of evaluating performance of the Board and of its Committees and the Non-Executive Directors on the basis of a structured questionnaire which comprises evaluation criteria taking into consideration various performance related aspects. The performance of the Executive Directors is evaluated on the basis of achievement of their Key Result Areas.

The Board of Directors has expressed its satisfaction with the evaluation process.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

During the year, seven Board Meetings were convened and held, details of which are given in the Report on Corporate Governance forming part of the Annual Report.

VIGIL MECHANISM/WHISTLE BLOWER POLICY FOR DIRECTORS AND EMPLOYEES

The Company has established a Vigil Mechanism, which includes a Whistle Blower Policy, for its Directors and Employees, to provide a framework to facilitate responsible and secure reporting of concerns of unethical behavior, actual or suspected fraud or violation of the Companys Code of Conduct & Ethics. The details of establishment of Vigil Mechanism/Whistle Blower Policy are posted on the website of the Company at https://piramal.com/investor/overview.

AUDIT & RISK MANAGEMENT COMMITTEE

The Audit & Risk Management Committee (Audit Committee) comprises of the following:

Name Category
Mr. N. Vaghul - Chairman Non-Executive, Independent
Mr. Suhail Nathani Non-Executive, Independent
Mr. Rajesh Laddha* Executive Director
Mr. S. Ramadorai# Non-Executive, Independent

 

*Ceased to be Executive Director of the Company and thereby member of the Audit Committee with effect from February 10, 2022.

# Appointed as member of the Audit Committee with effect from February 11, 2022.

Further details on the Audit Committee are provided in the Report on Corporate Governance forming part of the Annual Report.

NOMINATION AND REMUNERATION POLICIES

The Board has approved a Policy which lays down a framework for selection and appointment of Directors and Senior Management and for determining qualifications, positive attributes and independence of directors.

The Board has also approved a Policy relating to remuneration of Directors, Key Managerial Personnel and other Employees.

Details of the Nomination Policy and the Remuneration Policy are given in Annexure D to this Report and is available on the website of the Company at https://www.piramal.com/investor/overview.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Reference be made to Note nos. 6, 13 & 38 of the standalone financial statements for loans to bodies corporate. Further, as on March 31, 2022, the Company has provided guarantee amounting to RS3,199.82 Crores to its subsidiaries.

As regards details of investments in bodies corporate, the same are given in Note no. 4 of the standalone financial statements.

RELATED PARTY TRANSACTIONS

During the year under review, all contracts/arrangements/transactions entered into by the Company with related parties were in ordinary course of business and on an arms length basis. There were no material related party transactions by the Company during the year. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Act in Form AOC-2 is not applicable.

Systems are in place for obtaining prior omnibus approval of the Audit Committee on an annual basis for transaction with related parties which are of a foreseeable and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted and a statement giving details of all transactions with related parties are placed before the Audit Committee for their review on a periodic basis.

The Securities Exchange Board of India (SEBI) vide amendments to the Listing Regulations had introduced substantial changes in the related party transaction framework, inter alia, by enhancing the purview of the definition of related party, and overall scope of transactions with related parties effective April 1, 2022 or unless otherwise specified. The Board of Directors on recommendations of the Audit Committee approved the revised Policy on Related Party Transactions to align it with the said amendments and the same is available on the website of the Company at https://www.piramal.com/investor/overview.

MANAGERIAL REMUNERATION

A) Remuneration to Directors and Key Managerial Personnel (KMP)

i. The percentage increase in remuneration of each Director, Chief Financial Officer and Company Secretary during FY 2022 and the ratio of the remuneration of each Director to the median remuneration of the employees of the Company for FY 2022 are as under:

Name of Director/KMP and Designation

Remuneration of Director/KMP for FY2022 (D in Lakhs)

% increase/ decrease in remuneration in FY2022

Ratio of remuneration of each Whole-Time Director to median remuneration of employees

1. Ajay G. Piramal+ Chairman

1,276.16

121.76

257.87

2. Swati A. Piramal+ Vice - Chairperson

592.82

126.22

119.79

3. Nandini Piramal Executive Director

108.67*

N.A.

N.A.

4. Vijay Shah Non-Executive Director

N.A.

N.A.

N.A.

5. Anand Piramal Non-Executive Director

N.A.

N.A.

N.A.

6. Rajesh Laddha# Executive Director

519.59

N.A.

N.A.

7. Khushru Jijina$ Executive Director

N.A.

N.A.

N.A.

8. Gautam Banerjee@ Independent Director

42.00

N.A.

N.A.

9. S. Ramadorai Independent Director

48.00

N.A.

N.A.

10. Deepak SatwalekarA Independent Director

39.00

N.A.

N.A.

11. N. Vaghul Independent Director

57.00

N.A.

N.A.

12. Suhail Nathani Independent Director

33.00

N.A.

N.A.

13. Kunal Bahl Independent Director

26.00

N.A.

N.A.

14. Anjali Bansal Independent Director

26.00

N.A.

N.A.

15. Puneet Yadu Dalmia** Independent Director

3.00

N.A.

N.A.

16. Anita George## Independent Director

3.00

N.A.

N.A.

17. Shikha Sharma$$ Non-Executive Director

N.A.

N.A.

N.A.

18. Vivek Valsaraj @@ Chief Financial Officer

N.A.

N.A.

N.A.

19. Bipin Singh Company Secretary

128.04

75.73

N.A.

 

Notes:

1. Independent Directors are entitled to sitting fees and commission as per the statutory provisions and within the limits approved by shareholders. Remuneration details for Independent Directors in the above table, is comprised of sitting fees and commission. Details in the corresponding columns are applicable for Whole-Time Directors and KMPs.

2. Mr. Vivek Valsaraj and Mr. Bipin Singh also receive ESOPs under the Companys ESOP Scheme.

3. Mr. Anand Piramal and Mr. Vijay Shah, Non-Executive Directors do not receive any sitting fees or any other remuneration.

4. Remuneration details have been provided on the basis of remuneration/commission paid during FY 2022 and sitting fees for meetings attended during FY 2022.

+ In view of the economic conditions and the heightened uncertainty caused by the COVID-19 pandemic, there was a voluntary reduction in their remuneration during FY 2021 and they had also foregone their performance linked incentive for FY 2020, which was payable in FY 2021. For FY 2022, their remuneration was reinstated and as a result of which there has been significant increase in overall percentage change in the remuneration and median remuneration.

* Ms. Nandini Piramal received remuneration from Piramal Pharma Limited, subsidiary of the Company. Remuneration reported is against the performance linked incentives for the FY 2021, which is paid during the FY 2022. Hence, the percentage change in remuneration and ratio to median remuneration of employees is not applicable.

# Resigned with effect from February 10, 2022 and accordingly the remuneration reported is up to the date of his employment with the Company and includes full and final settlement. Hence, percentage change in remuneration and ratio to median remuneration of employees is not applicable.

$ Mr. Khushru Jijina received remuneration from Piramal Capital & Housing Finance Limited and PHL Fininvest Private Limited, wholly owned subsidiaries of the Company during his respective tenure as Managing Director in the said companies and hence the percentage change in remuneration and ratio to median remuneration of employees is not applicable.

@ Resigned as an Independent Director with effect from March 31, 2022.

 

A Resigned as an Independent Director with effect from July 26, 2021.

** Appointed as an Independent Director of the Company with effect from October 7, 2021.

 

## Appointed as an Independent Director of the Company with effect from February 10, 2022.

$$ Appointed as a Non-Executive Director of the Company with effect from March 31, 2022.

@@ Mr. Vivek Valsraj received remuneration from Piramal Pharma Limited, subsidiary of the Company. Hence, the percentage change in remuneration and ratio to median remuneration of employees is not applicable.

ii. The median remuneration of employees of the Company during FY 2022 was RS4,94,874;

iii. In the financial year, there was 26% increase in the median remuneration of employees;

iv. There were 392 permanent employees on the rolls of the Company as on March 31, 2022;

v. Average percentage increase made in the salaries of employees other than the managerial personnel during

FY 2022 was 22%. As regards, comparison of Managerial Remuneration of FY 2022 over FY 2021, details of the same are given in the above table at Sr. No. (i);

vi. It is hereby affirmed that the remuneration paid is as per the Remuneration Policy for Directors, KMP and other Employees.

B) Employee Particulars

Details of employee remuneration as required under the provisions of Section 197 of the Act and Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in a separate statement and forms part of the Annual Report. Further, this Report is being sent to the Members excluding the said statement. The said statement is available on the Companys website at https://www.piramal.com/ investor/overview.

Requisite details relating to ESOPs are available on the Companys website at https://www.piramal.com/investor/overview.

SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Act and the Rules made thereunder, the Company has appointed M/s. N L Bhatia & Associates, Practicing Company Secretaries as the Secretarial Auditor of the Company. The Secretarial Audit Report is annexed as Annexure E and forms an integral part of this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

As per the requirements of the Listing Regulations, the material subsidiaries of the Company viz. Piramal Pharma Limited, Piramal Capital & Housing Finance Limited and PHL Fininvest Private Limited have undertaken secretarial audit for the financial year 2021-22. The Secretarial Audit Report of these material subsidiaries are annexed as Annexure E1, E2 and E3 and does not contain any qualification, reservation or adverse remark.

CERTIFICATIONS FROM COMPANY SECRETARY IN PRACTICE

A certificate has been received from M/s. N L Bhatia & Associates, Practising Company Secretaries, that none of the Directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as Directors of companies by SEBI, Ministry of Corporate Affairs or any such statutory authority. The certificate is attached as Annexure F to this Report.

The Report on Corporate Governance as stipulated in the Listing Regulations forms part of the Annual Report. The requisite certificate from M/s. N L Bhatia & Associates, Practicing Company Secretaries, confirming compliance with the conditions of Corporate Governance as stipulated under the Listing Regulations is annexed hereto as Annexure G to this Report.

RISK MANAGEMENT FRAMEWORK

The Company has a robust risk management framework to identify, measure, manage and mitigate business risks and opportunities. This framework seeks to create transparency, minimise adverse impact on the business strategy and enhance the Companys competitive advantage. This risk framework thus helps in managing market, credit and operational risks and quantifies potential impact at a Company level. Further, information on the risk management process of the Company is contained in the Management Discussion & Analysis Report which forms part of the Annual Report.

COMPLIANCE WITH SECRETARIAL STANDARDS

The Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

DIRECTORS RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls and systems of compliance which are established and maintained by the Company, audits conducted by the Internal, Statutory and Secretarial Auditors including audit of internal financial controls over financial reporting by the Statutory Auditors and review by the Management and the Audit Committee, the Board is of the opinion that the Companys internal financial controls were adequate and effective during FY 2022.

The Directors confirm to the best of their knowledge and ability, that:

(a) in the preparation of the annual financial statements for the year ended March 31, 2022, the applicable accounting standards have been followed with no material departures;

(b) the Directors have selected such accounting policies and applied them consistently and made judgements 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, 2022 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 financial statements on a going concern basis;

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

COST AUDIT

In terms of Section 148 of the Act, the Company is required to maintain cost records and have the audit of its cost records conducted by a Cost Accountant. Cost records are prepared and maintained by the Company as required under Section 148(1) of the Act. M/s. G. R. Kulkarni & Associates, Cost Accountants have been duly appointed as Cost Auditors for conducting cost audit in respect of products manufactured by the Company which are covered under the Companies (Cost Records and Audit) Rules, 2014 for the financial year ending March 31, 2023. They were also the Cost Auditors for the financial year ended March 31, 2022. As required under Section 148 of the Act, necessary resolution has been included in the Notice convening the AGM, seeking ratification by Members to the remuneration proposed to be paid to the Cost Auditors for the financial year ending March 31, 2023.

BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report of the Company for FY 2022 as required under Regulation 34(2)(f) of the Listing Regulations is enclosed with this Report.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has always believed in providing a safe and harassment free workplace for every individual working in Companys premises through various interventions and practices. The Company always endeavours 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 which is in line with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has complied with provisions relating to the constitution of Internal Complaints Committee (ICC) under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. ICC has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary and trainees) are covered under this policy. ICC has its presence at corporate offices as well as at site locations.

The policy is gender neutral. During the year under review, no complaints with allegation of sexual harassment were filed with ICC under the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

OTHERS

The Directors state that no disclosure or reporting is required in respect of the following items, during the year under review:

1. No sweat equity shares and shares with differential rights as to dividend, voting or otherwise were issued;

2. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companys operations in future; and

3. None of the Auditors of the Company have reported any fraud as specified under Section 143(12) of the Act.

ACKNOWLEDGEMENT

We take this opportunity to thank the employees for their dedicated service and contribution to the Company.

We also thank our banks, business associates, members and other stakeholders for their continued support to the Company.

For and on behalf of the Board of Directors

Place: Mumbai Date: May 26, 2022

Chairman