Suven Life Sciences Ltd Directors Report.

To the Members of

Suven Life Sciences Limited

Your Companys Board of Directors has pleasure in presenting this 30th Annual Report together with Ind AS compliant Audited Financial Statements of the Company for the financial year ended 31st March, 2019.

Financial Performance
(र. in lakhs)

Standalone

Consolidated

Particulars
2018-19 2017-18 2018-19 2017-18
Revenue from operations 66,350.44 62,525.84 66,350.44 62,525.84
Operating expenditure 43,996.71 39,234.24 50,307.62 42,706.55
Depreciation and amortization 2,214.05 2,130.99 2,214.05 2,130.99
Operating profit 20,139.68 21,160.61 13,828.77 17,688.30
Finance cost 376.31 461.11 377.38 462.78
Other income 2,422.93 2,327.07 2,422.93 2,327.07
Profit before Tax 22,186.30 23,026.57 15,874.32 19,552.59
Tax expenses 7,180.01 7,183.84 7,180.01 7,183.84
Profit for the year 15,006.29 15,842.73 8,694.31 12,368.75
Other Comprehensive Income
Items that will not be reclassified to profit or loss (21.16) (42.33) (21.16) (42.33)
Income tax relating to items that will not be reclassified to profit or loss 7.39 14.65 7.39 14.65
Total Other Comprehensive Income (13.77) (27.68) (13.77) (27.68)
Total Comprehensive Income 14,992.52 15,815.05 8,680.54 12,341.07
Retained earnings - opening balance 51,548.86 39,531.80 41,623.11 33,080.03
Add:
Profit for the year 14,992.52 15,815.05 8,680.54 12,341.07
Less:
Dividend including dividend tax (2,301.68) (2,297.99) (2,301.68) (2,297.99)
Transfer to General Reserve (1,500.00) (1,500.00) (1,500.00) (1,500.00)
Retained earnings - closing balance 62,739.70 51,548.86 46,501.97 41,623.11

Review of Operations

During the year under review your Company performed well and recorded standalone revenue from operations of र.66,350 lakhs as against र.62,526 lakhs in the previous year. Profit after Tax (PAT) of the Company was down by 5% to र.14,992 lakhs from र.15,815 lakhs in the previous financial year. The Earnings per Share (EPS) of your

SUVEN

Company has come down to र.11.79 in fiscal 2018-19 per share from the previous year EPS of र.12.45 in fiscal 2017-18 per share.

Your Companys consolidated revenue from operations for the year 2018-2019 remained the same as that of standalone revenue. The consolidated profit after tax decreased to र.8,681 lakhs mainly due to clinical development expenditure incurred by Suven Neurosciences, Inc., (formerly Suven Inc.,) on SUVN-502. The new Wholly Owned Subsidiary (WOS) companies, Suven Pharma Inc., in USA and Suven Pharmaceuticals Limited (SPL) are yet to commence operations, as such there are no reportable financials as of 31st March, 2019 in respect of the said new WOS(s).

The consolidated financial statements of the Company prepared in accordance with Indian Accounting Standards as specified in the Companies (Indian Accounting Standards) Rules, 2015, form part of the Annual Report.

Scheme of Arrangement (Demerger)

During the year under review, subject to approval of NCLT and other stakeholders your Companys Board considered and decided that the Company shall demerge CRAMS undertaking on a going concern basis to its wholly owned subsidiary, Suven Pharmaceuticals Limited (SPL) through a Scheme of Arrangement between SLSL and SPL keeping in view the expected growth prospects in both CRAMS and Discovery business, which shall not only enable both the businesses to grow independently with their focused vision, strategies and operations, but also contribute significantly towards unlocking the potential value of the businesses for the shareholders.

The consideration for the demerger shall be issue of 1 (One) fully paid up equity share of face value of INR 1/- (Rupee One only) each of SPL for every 1 (One) fully paid up equity share of face value of INR 1/- (Rupee One only) each held by each shareholder in the Demerged Company (SLSL) as on the Record Date, thereby resulting in a mirror shareholding of SLSL in SPL.

Exports

The exports of the Company continue to be a major chunk of revenue accounting for a volume of र.61,586 lakhs, representing 93% of the total revenue of र.66,350 lakhs during the year under review.

Dividend

Your Companys Board of Directors declared an interim dividend of र.1.50 per equity share on 5th February, 2019. The total cash outflow on account of dividends including dividend tax paid is र.2,302 lakhs. The Company has paid the interim dividend to the shareholders who are on the Register of Members of the Company as on the Record Date 15th February, 2019 notified to the stock exchanges in terms of SEBI (LODR) Regulations, 2015.In view of the funds requirements for meeting the expansion plans, the Board recommends that interim dividend already paid may please be treated as the final dividend for the year 2018-2019.

Transfer to Reserves

The Company transferred र.1,500 lakhs to the general reserve during the current financial year.

Research and Development

During the year your Company has spent र.6,478 lakhs on innovative R&D in CNS therapies accounting for 10% on sales. Suven is a biopharmaceutical company focused on discovering, developing and commercialising novel pharmaceutical products, which are first in class or best in class CNS therapies through the use of GPCR targets. Suven has 4 clinical stage compounds, a Phase 2 undergoing SUVN-502, Phase 2 ready SUVN-G3031, Phase 1 completed SUVN-D4010 and Phase 1 commenced SUVN-911.

In addition to these clinical compounds the Company has nine (9) internally-discovered therapeutic drug candidates currently in various stages of pre-clinical development targeting conditions such as ADHD, dementia, depression, Huntingtons disease, Parkinsons disease and pain.

Share Capital

The paid up Equity Share Capital as on 31st March, 2019 was

र.1272.82 lakhs. During the year under review, the Company has not issued any shares with differential voting rights nor granted stock options or sweat equity shares.

Extract of Annual Return

Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Companies Act 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the extracts of the Annual Return as at 31st March, 2019 forms part of this report as "Annexure – A".

Number of Meetings of the Board and Audit Committee

During the year under review six Board Meetings were convened and held and four Audit Committee Meetings were convened and held. The details of Board meetings and Audit Committee meetings are presented in the Corporate Governance report, which forms part of this Annual Report.

The Audit Committee composed of all independent directors. Shri D. G. Prasad is the Chairperson of the Audit Committee and Dr. M. R. Naidu, Shri M. Gopalakrishna and Shri Santanu Mukherjee are members of the Audit Committee. The time gap between the said meetings was within the period prescribed under the provisions of the Companies Act, 2013 and the SEBI guidelines thereof.

Directors Responsibility Statement

Your Directors state that:

(a) The applicable accounting standards have been followed in the preparation of the Annual Accounts.

(b) Such accounting policies have been selected and applied consistently and judgments and estimates made when required 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 of the Company for that period.

(c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(d) The Directors have prepared the Annual Accounts on a going concern basis.

(e) Proper internal financial controls were in place to be followed by the Company and that the financial controls were adequate and were operating effectively.

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

Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

Dividend Policy

The Board has adopted a suitable Policy for Dividend Distribution as per the requirements of SEBI Guidelines. The policy is stated in the Annual Report and has been uploaded on the Companys website and can be accessed at http://www.suven.com/pdf/Policy-for-Dividend-Distribution.pdf

Particulars of Loans, Guarantees or Investments

Your Company has invested a sum of र.13,636 lakhs in Suven Neurosciences, Inc., for its business purpose. Your Company acquired entire share capital of र.1.00 lakh in Suven Pharmaceuticals Limited identified as Resulting Company for the purpose of Scheme of Arrangement (Demerger) and as of 31st March, 2019 no investments were made in newly formed Suven Pharma, Inc. in USA. Apart from these investments, the Company did not give any Loans, or provided Guarantees or any security during the year under the provisions of Section 186 of the Companies Act, 2013.

Subsidiary companies

Your Company has two international wholly owned subsidiary companies and one Indian wholly owned subsidiary company as on 31st March, 2019. During the FY 2018-2019, Suven Pharmaceuticals Limited in India and Suven Pharma, Inc., in USA have become subsidiary companies.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of financial statements of subsidiary in Form AOC-1 forms part of Boards Report as "Annexure B". The separate audited financial statements in respect of the subsidiary company shall be kept open for inspection at the Registered Office of the Company during working hours for a period of 21 days before the date of the Annual General Meeting. Your Company will also make available these documents upon request by any Member of the Company interested in obtaining the same. The separate audited financial statements in respect of the subsidiary company is also available on the website of your Company at http://www.suven.com/annual-reports.html

Related Party Transactions

The Particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188 in the prescribed Form

AOC-2 pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014, forms part of this report as "Annexure – C".

The Board has approved a policy for related party transactions which has been uploaded on the Companys website.

Material Changes and Commitments Affecting Financial Position of the Company

Your company invested in the month of April, 2019 30 Million USD in Suven Pharma, Inc. a newly formed Wholly Owned Subsidiary in USA for the purpose of acquisition of the assets of Rising Pharmaceuticals as per the US Court Bankruptcy proceedings. Except the said investment, there are no other material changes and commitments, affecting the financial position of the Company which has occurred between the end of the financial year of the Company i.e. 31st March, 2019 and the date of the Directors report i.e. 25th May, 2019.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The information on conservation of energy, technology absorption, foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule, 8 of the Companies (Accounts) Rules, 2014, forms part of this report as

"Annexure – D".

Risk Management Policy

The Board formulated a suitable risk policy to take care of unique business models of your Company: Contract Technical Services (CTS) and CRAMS. Suven is an IP creating and protecting company, strictly adheres to and harmonise with the global patent regime. To ensure the security and confidentiality of client data access to client data, is restricted to the senior most team leader working on the respective project and observes strict standards of confidentiality by entering into an internal CDA. We believe that strict compliances to the non-disclosure requirements insulate our Company against risks relating to IPR infringement claims of our clients. In addition to these practices, your company regularly conducts safety and preventive audits in all plants and ensures that necessary safeguards are in place to protect the work force and assets against all perils with appropriate insurance policies.

Corporate Social Responsibility

IncompliancewithSection135oftheCompaniesAct,2013readwith the Companies (Corporate Social Responsibility Policy) Rules 2014, the Company has established Corporate Social Responsibility (CSR) Committee composed of Shri M. Gopalakrishna as Chairperson, Shri D. G. Prasad, Prof. Seyed E. Hasnain, Shri Venkateswarlu Jasti and Smt. Sudharani Jasti as members. The CSR programs of the Company are being implemented by Suven trust formed for this purpose.

As of 31st March, 2019 there were no amounts due payable to Suven Trust by your Company. The CSR Committee is responsible for formulating, monitoring the CSR policy and review of CSR programs of the Company. Annual Report on CSR Activities forms part of this Report as "Annexure – E".

Performance Evaluation of the Board

Pursuant to the provisions of the Companies Act, 2013 and as per the SEBI (LODR) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Directors and Key Managerial Personnel

Mr. Santanu Mukherjee (DIN: 07716452) was appointed as an Independent and Non-Executive Additional Director by the Board of Directors of the Company w.e.f. 15th May 2018 in accordance with the applicable provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, he is not liable to retire by rotation for a term of 5 years from 15th May, 2018. The shareholders approved his appointment as Independent Director in the 29th AGM held on 14th August, 2018. He was also inducted as a member of Audit Committee of your Company.

Ms. J.A.S. Padmaja (DIN: 07484630) was appointed as an Independent and Non-Executive Additional Director by the Board of Directors of the Company w.e.f. 14th November, 2018 in accordance with the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, she is not liable to retire by rotation for a term of 5 years from 14th November, 2018. The shareholders approved her appointment through postal ballot voting concluded on 20th March, 2019.

During the year under review the Two Independent Directors Dr. M. R. Naidu and Shri M Gopalakrishna were re-appointed for 2nd term of 5 years each as per the requirements of SEBI (Listing Obligations and Disclosure), Regulations, 2015 as amended and Shri D. G. Prasad was also re-appointed as Independent Director by the members through the postal ballot voting concluded on 20th March, 2019 for 2nd term of 5 years w.e.f. 1st April, 2019.

The Company did not appoint any Key Managerial Personnel during the year under review. All Independent Directors have given declarations confirming that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. None of the Directors or Key Managerial Personnel has resigned during the year under review.

Directors Retiring by Rotation

In accordance with the provisions of the Companies Act, 2013, Smt. Sudharani Jasti, Whole-time Director retires by rotation at the ensuing Annual General Meeting and being eligible, offers herself for re-appointment.

The brief profile(s) of the director(s) seeking appointment/reappointment at the ensuing Annual General Meeting are presented in the Annual Report.

Deposits

During FY 2018-19, the Company has not accepted any fixed deposits, and, as such, no amount on account of principal or interest on deposits was outstanding as on the date of the balance sheet.

Internal Financial Control Systems and their Adequacy

Your Company has laid down set of standards which enables to implement internal financial control across the organisation and ensure that the same are adequate and operating effectively(1) to provide reasonable assurances that: transactions are executed in conformity with generally accepted accounting principles/ standards or any other criteria applicable to such statements, (2) to maintain accountability for assets; access to assets is permitted only in accordance with managements general or specific authorisation and the maintenance of records that are in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; and (3) Provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of the assets that could have a material effect on the financial statements.

Vigil Mechanism

The Company has put in place Whistle Blower Policy a vigil mechanism to deal with instance of fraud and mismanagement, if any. The details of the Whistle Blower Policy is explained in the Corporate Governance Report and also posted on the website of the Company

Particulars of Employees and Remuneration

The information required under Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this report as

"Annexure – F".

Investor Service

Your Companys share registry operations (physical as well as electronic form of holdings) will continue with Karvy Fintech Private Limited, Registrars and Transfer Agents. They can be contacted at Karvy Selenium, Tower B, Plot 31-32, Gachibowli, Financial District, Nanakramguda, Hyderabad - 500032, Phone No. 040-6716 1565 Fax No. 040 -2300 1153 for any query relating to Shares.

The shares of the Company are listed on National Stock Exchange of India Limited (NSE) and BSE Limited (BSE)

Corporate Governance

A detailed Report on Corporate Governance prepared in substantial compliance with the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with the Stock Exchanges together with the Auditors Certificate regarding the compliance of conditions of corporate governance, is presented in a separate section forming part of the Annual Report.

Managements Discussion and Analysis

Managements Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 of the SEBI (LODR) Regulations, 2015, is presented in a separate section forming part of the Annual Report.

AUDITORS Statutory Auditors

Pursuant to the provisions of section 139 of the Companies Act, 2013 and the Rules framed thereunder the Company in its Annual General Meeting (AGM) held on 14th August, 2017 has appointed M/s. TUKARAM& Co LLP, Chartered Accountants (Firm Registration No. 004436S), as statutory auditors of the Company, from the conclusion of the 28th Annual General Meeting till the conclusion of the 33rd Annual General Meeting to be held in the year 2022. The Companies (Amendment) Act, 2017 dispensed the ratification of auditors appointment at every Annual General Meeting. The Auditors Report does not contain any qualifications.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. dvmgopal & associates, a Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report forms part of this report as "Annexure–G". The Secretarial Audit Report does not contain any qualifications.

Cost Audit

In terms of Cost (Records and Audit) Amendment Rules, 2014 dated 31st December, 2014 issued by the Central Government, the requirement for Cost Audit is not applicable to the Company based on the export turnover criteria prescribed under Cost Audit Rules.

Business Responsibility Report

A detailed Business Responsibility Report (BRR) is prepared. As a green initiative the BRR is placed on website of your company and can be accessed at web link at http://www.suven.com/annual-reports.html

Employees Stock Option Schemes

During the year, there has been no material change in the ‘Suven Employees Stock Option Scheme, 2004 (referred as ‘the scheme). The scheme is in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014. The details are available on the companys web link at: http://suven.com/pdf/ESOP-Annexure_to_ the_Boards_Report.pdf

Transfer of Unpaid and Unclaimed amounts to Investor Education and Protection Fund (IEPF)

Pursuant to the provisions of the Companies Act, 2013, read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, as amended, declared dividends which remained unpaid or unclaimed for a period of seven years have been transferred by the company to the IEPF, which has been established by the central government.

The above referred rules also mandate transfer of dividends remained unpaid and unclaimed for a period of seven years as well as the underlying equity shares to IEPF Authority. The Company shall accordingly follow the procedures prescribed in this regard.

General

During the FY 2019, there is no change in the nature of business of the company or of its wholly owned subsidiaries. Except Suven Pharma Inc., in USA and Suven Pharmaceuticals Limited in India which have become wholly owned subsidiary companies, there are no other companies have become or ceased to be your Companys subsidiaries, joint ventures or associate companies during the year.

The Company has complied with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India during the year under review.

There are no significant material orders passed by the Regulators/ Courts, which would impact the going concern status of the Company and its future operations.

Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Acknowledgements

Your Directors wish to place on record their gratitude to Shareholders for the confidence reposed by them and thank all the shareholders, customers, dealers, suppliers and other business associates for their contribution to your Companys growth. The Directors also wish to place on record their appreciation of the valuable services rendered by the executives, staff and workers of the Company.

Your Directors also thank the Central Government and State Government, the Financial Institutions and Banks for their support during the year and we look forward to its continuance.

For and on behalf of the Board of Directors
Place: Hyderabad,
Date: 25th May, 2019
Venkateswarlu Jasti
Chairman & CEO
DIN: 00278028