BOARDS REPORT TO, THE MEMBERS OF SUVEN LIFE SCIENCES LIMITED our Company's Board of Directors has pleasure in presenting this 27th Annual Report together with Audited financial Statements of the Company for the financial year ended 31st March, 2016. Review of operations Your Company has achieved a standalone sales volume of Rs.49,952 lakhs as against Rs.52,086 lakhs in the previous year. Profit after Tax (PAT) of the Company was down by 13% to Rs.9,497 lakhs from Rs.10,875 lakhs in the previous financial year. The Earnings per Share (EPS) of your Company has come down to Rs.7.46 in fiscal 2015-16 per share from the previous year EPS of Rs.9.04 in fiscal 2014-15 per share. During the year your Company has formed a wholly owned subsidiary by name Suven, Inc a Delaware Company in USA. As result of the consolidation for the year 2015-2016 the profit after tax reduced from INR 9496.97 lakhs to 6673.85 lakhs due to clinical development expenditure incurred by Suven, Inc., on SUVN-502. Exports Your Company continue to achieve a major chunk of revenues from the exports accounting for a volume of Rs.46879 lakhs, representing 94% of the total revenue of Rs.49952 lakhs during the year under review. Dividend Your Directors had recommended and paid an interim dividend of Rs. 1.00 per equity share and a onetime special dividend of H 1.00 per equity share totaling to Rs.2.00 per equity share (last year Rs.0.60 paise per equity share) during March, 2016. Your Directors recommend that interim dividend paid may be treated as the final dividend for the year 2015-2016. The total cash outflow on account of dividends paid including dividend distribution tax paid is Rs.3064 lakhs. The Company has paid the said dividend to the shareholders who are on the Register of Members of the Company as on the Record Date 15th March 2016 notified to the stock exchanges in terms of SEBI (LODR) Regulations, 2015. Transfer to reserves The Company transferred 1100 lakhs to the general reserve during the current financial year. Research and development During the year Suven's thrust on innovative R&D in CNS therapies continued with an R&D spend of Rs.7096 lakhs accounting to 14% on sales with an increase of 20% over the previous year. Your Company's main focus stayed 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 3 clinical stage compounds, a Phase 2 undergoing candidate SUVN-502, Phase 1 completed candidate SUVN-G3031 and Phase 1 undergoing candidate SUVN-D4010 for Alzheimer's disease and Schizophrenia. In addition to that the Company has ten (10) internally-discovered therapeutic drug candidates currently in pre-clinical stage of development targeting conditions such as ADHD, dementia, depression, Huntington's disease, Parkinson's disease and pain. Share capital The paid up Equity Share Capital as on March 31, 2016 was Rs.1,272.83 lakhs. During the year under review, the Company has not issued any shares. Your 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 March 31, 2016 forms part of this report as "Annexure - A". Number of meetings of the board and audit committee During the year under review five Board Meetings were convened and held on 26th May 2015, 14th August 2015, 10th November 2015, 12th February 2016 and 05th March 2016 and four Audit Committee Meetings were convened and held on 26th May 2015, 14th August 2015, 10th November 2015, 12th February 2016. The Audit Committee composed of all independent directors. Shri D G Prasad is the Chairman of the Audit Committee and Dr M R Naidu, Dr K. V. Raghavan and Shri M Gopalakrishna are members of the Audit Committee. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013. Directors responsibility rtatement Your Directors state that: i) The applicable accounting standards have been followed in the preparation of the Annual Accounts. ii) 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. iii) 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. iv) The Directors have prepared the Annual Accounts on a going concern basis. v) Proper internal financial controls were in place to be followed by the Company and that the financial controls were adequate and were operating effectively. vi) 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. Particulars of loans, guarantees or investments The Company has invested a sum of Rs.2298 lakhs in Suven, Inc., a wholly owned subsidiary as at 31st March 2016 for its business purpose. Apart from the investment 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 During the year 2015-2016 your Company has formed wholly owned subsidiary company by name Suven, Inc., in USA. The consolidated financial statements of the Company prepared in accordance with Accounting Standards 21 and 27 as specified in the Companies (Accounts) Rules, 2014, form part of the annual report. 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 Board's 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/> AnnualReports.htm 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 Company's website. Material changes and commitment affecting financial position of the Company There are no 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. March 31, 2016 and the date of the Directors' report i.e. 27th May, 2016. 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 assets against all perils with appropriate insurance policies. Corporate social responsibility In compliance with Section 135 of the Companies Act, 2013 read with 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 Venkateswarlu Jasti and Smt Sudha Rani Jasti as members. The committee is responsible for formulating and monitoring the CSR policy 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. Appointments / resignations of directors or key managerial personnel The Company did not appoint any directors or Key Managerial Personnel during the year. 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, 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/ re-appointment at the ensuing Annual General Meeting are presented in the Annual Report. Public deposits The Company has not accepted any public deposits and as such, no amount on account of principal or interest on public 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 management's general or specific authorisation and the maintenance of records that 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 Company's share registry operations (physical as well as electronic form of holdings) will continue with Karvy Computershare Private Limited, Registrars and Transfer Agents. They can be contacted at Karvy Selenium, Tower B, Plot 31-32, Gachibowli, Financial District, Nanakramguda, Hyderabad - 500 032, 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 (LODR) Regulations, 2015 with the Stock Exchanges together with the Auditors' Certificate regarding the compliance of conditions of corporate governance, forms part of Annual Report. Management's discussion and analysis Management's 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 held on 12th August 2014 has appointed M/s. Karvy & Co., Chartered Accountants, as statutory auditors of the Company, from the conclusion of the 25th Annual General Meeting till the conclusion of the 28th Annual General Meeting to be held in the year 2017, subject to ratification of their appointment at every Annual General Meeting. The Auditors' Report does not contain any qualifications. Cost Auditors 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. However the Cost Auditors M/s DZR & Co., Cost Accountants are continuing in their office to carry out cost audit of company's cost records on voluntary basis. 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 firm of Company Secretaries 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. 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/AnnualReports.htm> Employees stock option schemes The applicable disclosures as stipulated under SEBI guidelines with regard to 'Suven Employees Stock Option Scheme, 2004', as on 31 March 2016 annexed to this report. General During the FY2016, there is no change in the nature of business of the Company or any of its subsidiaries and your Company formed a wholly owned subsidiary (WOS) by name Suven, Inc., in USA. Except this WOS there are no companies which have become or ceased to be its subsidiaries, joint ventures or associate companies during the year. 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 Company's 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 Venkateswarlu Jasti Chairman & CEO DIN: 00278028 Date: 27th May 2016 Place: Hyderabad |