DIRECTORS
Your Directors take pleasure in presenting the Nineteenth Annual Report and Audited
Accounts for the year ended March 31, 2011.
FINANCIAL RESULTS
(Rs.in million except dividend per share and book value)
|
Year ended |
Year ended |
|
March 31, 2011 |
March 31, 2010 |
| Total Income |
32989 |
26084 |
| Pro t after tax |
13838 |
8987 |
| Dividend on Equity Shares |
3625 |
2848 |
| Corporate Dividend tax |
588 |
473 |
| Transfer to General Reserve |
5000 |
3000 |
| Amount of dividend per equity share of Rs.1/- each (Previous year per equity share of
Rs.5/- each) |
3.5 |
13.75 |
| Book value per equity share of Rs.1/- each(Previous year per equity share of Rs.5/-
each) |
65 |
276 |
Dividend
Your Directors are pleased to recommend an equity dividend of Rs.3.50 per equity share
of face value Rs.1/- each (previous year Rs.13.75 per equity share of face value Rs.5/-
each) for the year ended March 31, 2011.
Split of Equity Shares
As approved by the Shareholders of the Company by way of postal ballot conducted during
November, 2010, the results of which were announced on November 12, 2010, the Equity
Shares of Rs.5/- each of the Company were subdivided into 5 Equity Shares of Rs.1/- each
during the year under review.
Management Discussion and Analysis
The management discussion and analysis on the operations of the Company is provided in
a separate section and forms part of this report.
Your Directors recommended an equity dividend of Rs.3.50 per equity share of face value
Rs.1/- each for the year ended March 31, 2011.
The Equity Shares of Rs.5/- each were sub-divided into 5 Equity Shares of Rs.1/- each
during the year.
Your Company has a dedicated team of over 11200 multicultural employees at various
locations across our corporate office, associate companies, various R&D centers &
19 plant locations spread across three continents.
Human Resources
Human Resource development continues to be a key focus area at Sun Pharma and your
Company takes great pride in the commitment, competence and vigor shown by its workforce
in all realms of business. You have a dedicated team of over 11200 employees at various
locations across our corporate office, various R&D Centers & 19 plant locations
(including associate companies) spread across three continents. The Company continues to
take new initiatives to further align its HR policies to meet the growing needs of its
business. A transparent work culture, quality of work and supportive environment induces
discretionary behavior among employees which gives them the opportunity to personally
succeed in a way that leads to collective organizational success. Your Directors truly
appreciate the efforts and contribution by Team Sun Pharma for maintaining and further
accelerating the growth pace.
Information as per Section 217(2A) of the Companies Act, 1956, read with the Companies
(Particulars of Employees) Rules, 1975 as amended, is available at the registered office
of your Company. However, as per the provisions of Section 219(1)(b)(iv) of the said Act,
the Report and Accounts are being sent to all shareholders of the Company and others
entitled thereto excluding the aforesaid information. Any shareholder interested in
obtaining a copy of this statement may write to the Company Secretary/Compliance Officer
at the Corporate Office or Registered Office address of the Company.
Information on Conservation of Energy, Technology Absorption, Foreign Exchange Earning
and Outgo.
The additional information relating to energy conservation, technology absorption,
foreign exchange earning and outgo, pursuant to Section 217(1) (e) of the Companies Act
1956 read with the Companies (Disclosure of Particulars in the Report of the Board of
Directors) Rules, 1988, is given in Annexure and forms part of this Report.
Corporate Governance
Report on Corporate Governance and Certificate of the auditors of your Company
regarding compliance of the conditions of Corporate Governance as stipulated in Clause 49
of the listing agreement with stock exchanges, are annexed.
Consolidated Accounts
In accordance with the requirements of Accounting Standard AS-21 prescribed by the
Institute of Chartered Accountants of India, the Consolidated Accounts of the Company and
its subsidiaries is annexed to this Report.
Subsidiaries
The Ministry of Corporate A airs, Government of India, New Delhi has issued direction
under Section 212(8) of the Companies Act, 1956 vide general circular No.2/2011 dated
February 8, 2011 and in accordance with the same, the Balance Sheet, the Pro t and Loss
Account and other documents of the subsidiary companies are not being attached with the
Balance Sheet of the Company. The information relating to each subsidiary including
subsidiaries of subsidiaries, as required by the aforesaid circular, is disclosed in the
Annual Report. The Company will make available the Annual Accounts of the subsidiary
companies and the related detailed information to any member of the Company and its
subsidiaries who may be interested in obtaining the same. The annual accounts of the
subsidiary companies will also be kept open for inspection by any investor at the
Registered Office & Corporate / Head Office of the Company and that of the respective
subsidiary companies. The Consolidated Financial Statements presented by the Company
include financial results of its subsidiary companies also.
Finance
CRISIL continued to reaffirm its highest rating of “AAA/ Stable” and
“P1+”, for your Company’s Banking Facilities throughout the year enabling
your Company to avail facilities from banks at attractive rates. The Company does not
offer any Fixed Deposit scheme.
Corporate Social Responsibility
At the close of a relatively event-free, disaster-free year, your Company persisted
with participation in activities at the local, grassroots level across health and
education. In the past, support has been offered towards disaster relief as well as
participation in the facilitation of civic utilities around the plants/research centers.
Your Company remains interested in these contributions.
Directors
Shri Dilip S. Shanghvi, Shri Sailesh T. Desai and Shri S.Mohanchand Dadha retire by
rotation and being eligible offer themselves for re-appointment.
Directors’ Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with
respect to Directors’ Responsibility Statement, it is hereby confirmed:
(i) that in the preparation of the annual accounts for the financial year ended March
31, 2011, the applicable accounting standards have been followed along with proper
explanation relating to material departures;
(ii) that the Directors have selected appropriate accounting policies and applied them
consistently and made judgements and estimates that were reasonable and prudent so as to
give a true and fair view of the state of a airs of the Company at the end of the
financial year and on the profit of the Company for the year under review;
(iii) that the Directors have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the Companies Act, 1956
for safeguarding the assets of the Company and for preventing and detecting fraud and
other irregularities; and,
(iv) that the Directors have prepared the annual accounts for the financial year ended
March 31, 2011 on a ‘going concern’ basis.
Auditors
Your Company’s auditors, M/s. Deloitte Haskins & Sells, Chartered Accountants,
Mumbai, retire at the conclusion of the forthcoming Annual General Meeting. Your Company
has received a letter from them to the effect that their re-appointment, if made, will be
in accordance with the provisions of Section 224(1-B) of the Companies Act, 1956.
Cost Auditors
The Company has appointed Messrs. Kailash Sankhlecha & Associates, Cost
Accountants, Vadodara as Cost Auditors of our Company for conducting Cost Audit in respect
of Bulk Drugs & Formulations of your Company for the year ended March 31, 2011.
Acknowledgements
Your Directors wish to thank all stakeholders and business partners, your
Company’s bankers, financial institutions, medical profession and business associates
for their continued support and valuable co-operation. The Directors also wish to express
their gratitude to investors for the faith that they continue to repose in the Company.
For and on behalf of the Board of Directors
Dilip S. Shanghvi
Chairman & Managing Director
May 28, 2011 Mumbai
ANNEXURE (1) TO DIRECTOR’S REPORT
|
2010-11 |
2009-10 |
| CONSERVATION OF ENERGY |
|
|
| A. Power and Fuel Consumption |
|
|
| 1. Electricity |
|
|
| (a) Purchased |
|
|
| Unit (in ‘000 KWH) |
26,775 |
43,396 |
| Total Amount ( in Millions) |
151.5 |
245.8 |
| Rate ( / Unit) |
5.7 |
5.7 |
| (b) Own Generation through Diesel Generator |
|
|
| Units (in ’000 KWH) |
2,702 |
2,783 |
| Units per Litre of Diesel Oil |
3.1 |
3.0 |
| Cost ( / Unit) |
12.9 |
11.1 |
| (c) Own Generation through Gas |
|
|
| Units (in ‘000 KWH) |
45,219 |
24,852 |
| Units per M3 of Gas |
10.8 |
10.6 |
| Cost ( / Unit) |
5.5 |
4.2 |
| 2. Furnace Oil |
|
|
| Quantity (in ‘000 Litres) |
771 |
2,591 |
| Total Amount ( in Millions) |
20.5 |
62.7 |
| Average Rate |
26.6 |
24.2 |
| 3 Gas (for Steam) |
|
|
| Gas Units (in ‘000 M3 ) |
6,395 |
9,891 |
| Total Amount ( in Millions) |
119.8 |
151.6 |
| Average Rate ( / Unit) |
18.7 |
15.3 |
| 4 Wood / Briquitte |
|
|
| Quantity (in ‘000 Kgs) |
29,008 |
8,852 |
| Total Amount ( in Millions) |
65.8 |
19.9 |
| Average Rate ( / Unit) |
2.3 |
2.2 |
B. Consumption per unit of production
It is not feasible to maintain product category-wise energy consumption data, since we
manufacture a large range of formulations and bulk drugs having different energy
requirements.
C. Energy conservation measures
1 Internal and External Energy Audits for improvisation and continuous monitoring
of Power Factor.
2 ML lamps are replaced by 20 W CFL lamps thereby saving power.
3 Energy Efficient Gas fired Boiler installed, steam to fuel ratio improved and
therefore reduction in gas consumption.
4 Installation of Surface Aerator in Aeration tank – 1 of ETP and stopping of
Root Blower hence power saving . Dissolve Oxygen level improved in Aerator tank. Hence
improving effectiveness of biodegradation.
5 3TPH Briquette fire boiler installed & stopped furnace oil boiler saving of
fossil fuel.
6 To utilize heat from economizer for Boiler by giving forced circulation instead
of existing thermo gradient heat transfer. This saved steam by recovering heat from temp.
160 Deg. C to 120 Deg. C.
TECHNOLOGY ABSORPTION
A. Research and Development
1. Specific areas in which R&D is carried out by the Company
Even several years after separating out our innovative research programs, we. continue
to be one of the most aggressive investors and developers of generic-related
pharmaceutical research and technology in the country, with research programs to support
our generic business pursued at our modern R&D centres. Our expert scientist team is
engaged in complex developmental research projects in process chemistry and dosage forms,
including complex generics based on drug delivery systems at these research centres. This
research activity supports the short, medium and long term business needs of the company,
in India and all the other markets that your company invests in.
Projects in formulation development and process chemistry help us introduce a large
number of new and novel products to the Indian market including products with complexity
or a technology edge. Process chemistry enables us to be integrated right up to the API
stage for important products. This helps us maintain our leadership position in the Indian
market with specialty formulations and derive market and cost advantage from API’s
developed and scaled up In-house. Further, it helps us to compete in the international
regulated markets across US / Europe.
The team also works on projects involving complex drug delivery systems for India
Complex API like steroids, sex hormones , peptides, carbohydrates and taxanes which
require special skills and technology, are developed and scaled up for both API and dosage
forms. This complete integration for some products works to the company’s advantage.
These projects may offer higher value addition and sustained revenue streams.
2. Benefits derived as a result of the above R&D
In 2010-11, 38 formulations were introduced across marketing divisions, (not including
line extensions, but including complex products). All of these were based on technology
developed in house. Technology for 28 API was commercialised. For some of the important
API that we already manufacture, processes were streamlined so as to have more energy
efficient or cost effective or environment friendly processes. Some of the new processes
were non-infringing, so as to support our plans for ANDA filings for the US. A large part
of our API sales is to the regulated market of US / Europe, and this earns valuable
foreign exchange and also a reputation for quality and dependability. The company’s
formulation brands are exported to 40 international markets where a local field force
promotes the same.
The Department of Scientific and Industrial Research, Ministry of Science and
Technology of Government of India has granted approval to the in house research and
development facility of your Company under the provision of the Income Tax Act, 1961.
3. Future plan of action
A state of the art bioequivalence facility with a functional capacity of 220 beds with
a well equipped, Phase I Clinical unit and ECG Core Laboratory for clinical studies and
safety studies and has been expanded to more than 300 beds. Eighteen high capacity LCMS,
fully computerised blood chemistry labs capable of comprehensive analysis are being used
extensively for biostudies. This facility has been inspected and approved for India and
for the US.
|
Year ended |
Year ended |
|
31st March, 2011 |
31st March, 2010 |
|
in Million |
in Million |
| 4. Expenditure on R&D |
|
|
| a) Capital |
236.1 |
159.0 |
| b) Revenue |
1572.8 |
1440.8 |
| c) Total |
1808.9 |
1599.8 |
| d) Total R&D expenditure as % of Total Turnover |
9.4% |
8.8% |
B. Technology Absorption, Adaptation and Innovation
1. Efforts in brief, made towards technology absorption, adaptation and
innovation
Year after year, your company continues to invest on R&D revenue as well as capex.
A large part of the spend is for complex products, ANDA filings for the US and API
technologies that are complex and may require dedicated manufacturing sites. Investments
have been made in creating research sites, employing scientifically skilled and
experienced manpower, adding equipment and upgrading continuously the exposure and
research understanding of the scientific team in the therapy areas of our interest.
Laboratories and instrument facilities have been set up to initiate R&D activities in
biotechnology for the development of biosimilars.
2. Benefits derived as a result of the above efforts e.g. product improvement,
cost reduction, product development, import substitution
(a) Market leader for several complex products. Offers complete baskets of products
under speciality therapeutic classes. Strong pipeline of products for future introduction
in India, emerging markets, as well as US and European generic market.
(b) Not dependent on imported technology, can make high cost products available at
competitive prices by using indigenously developed manufacturing processes and formulation
technologies.
(c) Offer products which are convenient and safe for administration to patients,
products with a technology advantage.
(d) We are among the few selected companies that have set up completely integrated
manufacturing capability for the production of anticancer, hormones, peptide,
cephalosporins and steroidal drugs.
(e) The Company has benefited from reduction in cost due to import substitution and
increased revenue through higher exports.
3. Your company has not imported technology during the last 5 years reckoned
from the beginning of the financial year.
C. Foreign Exchange Earnings and Outgo
|
Year ended |
Year ended |
|
31st March, 2011 |
31st March, 2010 |
|
in Million |
in Million |
| 1. Earnings |
9005.6 |
8508.3 |
| 2. Outgo |
5156.8 |
4629.0 |
|