The Directors take pleasure in presenting the 81st Annual Report of the Company along
with the audited financial statements for the year ended As at 31st March, 2017.
Cipla is a leading global pharmaceutical company which uses cutting-edge technology and
innovation to meet the everyday needs of all patients. For over eight decades, the Company
has emerged as one of the most respected pharmaceutical companies in India as well as in
over 80 countries. The Company's portfolio includes over 1500 products across a wide range
of therapeutic categories with one uniform global standard of quality.
Whilst delivering a long-term sustainable business, the Company recognises its duty to
provide a3ordable medicines. The Company's pioneering role in HIV/ AIDS treatment in 2001
was recognised globally when it became the first pharmaceutical company to offcer a triple
combination anti-retroviral (ARV) therapy in Africa at less than a dollar a day, thereby
ensuring access to lifesaving medicines for millions of patients. The Company's R&D
focuses on developing innovative products and drug delivery systems.
|Financial Summary and Company A3airs
||(` in Crore)
|Year ended 31st Standalone
||March, 2016 Consolidated
||Year ended 31st Standalone
||March, 2017 Consolidated
||Gross total revenue
||Profit before tax
||Profit for the year
||Other comprehensive Income for the year (not to be reclassified to P&L)
||Surplus brought forward from last balance sheet
||Adjustment of tax on dividend of previous year
||Profit available for appropriation
||Tax on dividend
||Surplus carried forward
The details of the Company's operations have been further discussed in detail in the
Management Discussion and Analysis Report.
The Company adopted Indian Accounting Standards (Ind AS') from 1st April, 2016 as
prescribed under section 133 of the Companies Act, 2013 read with the relevant rules
issued thereunder and other accounting principles generally accepted in India. The
adoptions were carried out in accordance with Ind AS 101, First-time Adoption of Indian
During the year under review, 11,25,792 equity shares were issued and allotted under
Employee Stock Option Schemes. Accordingly, the issued share capital of the
Company as on As at 31st March, 2017 stood at ` 161.10 crore divided into 80,55,13,469
equity shares of ` 2/- each. The subscribed and paid-up share capital of the Company as on
As at 31st March, 2017 stood at ` 160.90 crore divided into 80,45,10,074 equity shares of
` 2/- each.
The Board recommend a final dividend of ` 2/- per equity share (i.e. 100%) for the FY
2016-17. The dividend, if approved at the Annual General Meeting (AGM), will be paid to
those members whose names appear in the Company's Register of Members on Thursday, 27th
July, 2017. The total dividend pay-out will amount to approximately
` 161 crore (excluding dividend distribution tax) resulting in a pay-out of 16.50% of
the standalone profit after tax of the Company.
The Company has not transferred any amount to the General Reserve for the financial
year ended As at 31st March, 2017.
Management Discussion and Analysis Report
Pursuant to Regulation 34 of the Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations, 2015, (SEBI Listing Regulations) the
Management Discussion and Analysis Report for the year under review, is presented in a
separate section, forming part of the Annual Report.
Corporate Social Responsibility (CSR)
Cipla has remained both patient-centred and community-focused. Cipla Foundation upholds
the OneCipla Credo of Caring for Life', to empower the most vulnerable in society.
As a vibrant and thriving global foundation, it endeavours to minimise gaps in access and
a3ordability in quality healthcare, education, skill advancement and disaster response
initiatives. Across geographies, Cipla Foundation is united and aligned with Cipla's
commitment and approach to enhance the quality of life.
The Company's CSR Committee complies with the requirements of the Companies Act, 2013.
The composition and terms of reference of the CSR Committee are provided in the Report on
Corporate Governance, which forms part of the Annual Report. The Company's Corporate
Social Responsibility Policy, is available on the Company's website at
The Annual Report on CSR initiatives as required under section 135 of the Companies
Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014 as
amended from time to time forms part of this report as Annexure I.
Business Responsibility Report
As mandated by the Securities and Exchange Board of India (SEBI), the Business
Responsibility Report (BRR) forms part of the Annual Report. The BRR contains a detailed
report on business responsibilities vis--vis the nine principles of the National
Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business
framed by the Ministry of Corporate A3airs.
Pursuant to the SEBI Listing Regulations, the Report on Corporate Governance for the
year under review, is presented in a separate section, forming part of the Annual Report.
A certificate from M/s. BNP & Associates, confirming compliance of conditions of
Corporate Governance, as stipulated under the SEBI Listing Regulations, is annexed as
Annexure II to this report.
Directors' Responsibility Statement
Pursuant to section 134(3)(c) of the Companies Act, 2013 it is confirmed that the
i. Followed applicable accounting standards in the preparation of the annual accounts
and there are no material departures for the same;
ii. 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 a3airs of the Company as on As at 31st March, 2017 and of the profit of the
Company for that period;
iii. Taken proper and su3cient care for 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. Prepared the annual accounts on a going concern basis;
v. Laid down internal financial controls to be followed by the Company and that such
internal financial controls are adequate and were operating effect ively; and
vi. Devised proper systems to ensure compliance with the provisions of all applicable
laws and that such systems were adequate and operating effect ively.
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
The details of Energy Conservation, Technology Absorption and Foreign Exchange Earnings
and Outgo as required under section 134(3)(m) of the Companies Act, 2013, read with Rule
8(3) of the Companies (Accounts) Rules, 2014 is annexed to this report as Annexure III.
Employee Stock Option Scheme
Presently the Company has one Employee Stock Option (ESOP) scheme, namely
"Employee Stock Option Scheme 2013-A" which helps the Company to retain and
attract the right talent. The Nomination and Remuneration Committee monitors the Company's
ESOP scheme. There is no change in the ESOP scheme during the financial year under review.
The ESOP scheme is in compliance with the Securities and Exchange Board of India (Share
Based Employee Benefits) Regulations, 2014.
As required under the Securities and Exchange Board of India (Share Based Employee
Benefits) Regulations, 2014, the applicable disclosures as on As at 31st March, 2017 are
available on the Company's website at http://www.cipla.com/en/
Details of remuneration as required under section 197(12) of the Companies Act, 2013
read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 is annexed as Annexure IV.
Particulars of employee remuneration as required under section 197(12) of the Companies
Act, 2013 read with Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014 forms
partofthisreport.Howeverpursuanttotheprovisionsofthe first proviso to section 136(1) of
the Companies Act, 2013, the Annual Report is being sent to shareholders excluding the
aforementioned information. The information will be available on the Company's website
www.cipla.com and is available for inspection at the registered Offce of the Company
during working hours 21 days before the Annual General Meeting. Any member interested in
obtaining such information may write to the Company Secretary at the Registered Offce of
Particulars of Loans, Guarantees and Investments
Particulars of loans, guarantees and investments under section 186 of the Companies
Act, 2013 are provided in Note No. 48 to the standalone financial statements.
Extract of Annual Return
As required under sections 92(3) and 134(3)(a) of the Companies Act, 2013 read with
Rule 12 of Companies (Management and Administration) Rules, 2014, the extract of Annual
Return in Form MGT-9 forms part of this report as Annexure V.
Secretarial Audit Report
The Board had appointed M/s. BNP & Associates, Company Secretaries, Mumbai as the
Secretarial Auditor for FY 2016-17. The Secretarial Audit Report for the financial year
ended As at 31st March, 2017 is annexed to this report as Annexure VI. The report,
confirms that the Company is in compliance with the applicable laws and does not contain
any qualification, reservation or adverse remark.
The Company believes in upholding professional integrity and ethical behaviour in the
conduct of its business. To uphold and promote these standards, the Company has formulated
a Vigil Policy which serves as a mechanism for its Directors and employees to report
genuine concerns about unethical behaviour, actual or suspected fraud or violation of the
Code of Conduct without fear of reprisal. The details of the Vigil Policy are available on
the Company's website at http://www.cipla.com/templates/ home_tpl/images/Vigil_Policy.pdf
A brief note on the highlights of the Vigil Policy and compliance with the Code of
Conduct is also provided in the Report on Corporate Governance, which forms part of this
Contract and Arrangements with Related Parties
A detailed note on procedure adopted by the Company in dealing with contracts and
arrangements with related parties is provided in the Report on Corporate Governance, which
forms part of this Annual Report.
All contracts, arrangements and transactions entered by the Company with related
parties during FY 2016-17 were in the ordinary course of business and on an arm's length
basis. During the year, the Company did not enter into any transaction, contract or
arrangement with related parties, that could be considered material in accordance with the
Company's policy on related party transactions. Accordingly, the disclosure of related
party transactions in Form AOC-2 is not applicable. However detailed disclosure on related
party transactions as per IND AS-24 containing name of the related party and details of
the transactions have been provided under Note No. 45 of the standalone financial
statements on Page No. 150.
The policy on materiality of and dealing with Related Party transactions is available
on the Company's website at http://www.cipla.com/uploads/investor/1443000127_
Material changes and commitments affect ing financial position between end of financial
year and date of report
No material changes and commitments have occurred after the close of the year till the
date of this report which may affect the financial position of the Company.
Significant and Material Orders
No significant or material orders were passed by the regulators or courts or tribunals
which could impact the going concern status of the Company and its future operations.
Internal Financial Controls
The Board has adopted policies and procedures for ensuring orderly and e3cient conduct
of its business, including adherence to the Company's policies, safeguarding its assets,
prevention and detection of frauds and errors, accuracy and completeness of the accounting
records and timely preparation of reliable financial disclosures.
Cipla has aligned its current systems of internal financial control with the
requirement of Companies Act, 2013, on lines of globally accepted risk-based framework as
issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. The
Internal Control Integrated Framework (2013) is intended to increase transparency
and accountability in an organisation's process of designing and implementing a system of
internal control. The framework requires a company to identify and analyse risks and
manage appropriate responses. The Company has successfully laid down the framework and
ensured its effect iveness. During testing of such controls no reportable material
weaknesses in the design or operation were observed.
During the year under review, there were no instances of fraud reported by the auditors
under section 143(12) of the Companies Act, 2013 to the Audit Committee or the Board of
Risk Management is embedded in Cipla's operating framework. The Company has a duly
approved Risk Management Policy, which lays down broad guidelines for the appropriate
authority to identify, assess, categorise and prioritise risks in a timely manner and
formulate plans for mitigation of such risks.
The Risk Management framework is reviewed periodically by the Board and the Investment
& Risk Management Committee, which includes discussing the overall risk management
framework, key risks, mitigation plans etc, with the Management. The Internal Audit
function is responsible for assisting the Investment & Risk Management Committee on an
independent basis with a full status of the risk assessments and management.
Operationally, management process to identify key risks across the organisation and
prioritise relevant action plans to mitigate these risks.
Detailed discussion on Risk Management is part of the Threats, Risks and
Concerns' section of the Management Discussion and Analysis, which forms part of this
Annual Report. At present, in the opinion of the Board of Directors, there are no risks
which may threaten the existence of the Company. However, the top risks and their
mitigation plans are set out in the Management Discussion and Analysis Report.
During FY 2016-17, the Company did not accept any deposit within the meaning of
sections 73 and 74 of the Companies Act, 2013 read together with the Companies (Acceptance
of Deposits) Rules, 2014 and therefore no amount of principal or interest was outstanding,
as on the balance sheet closure date.
Pursuant to the provisions of the Companies Act, 2013 and the SEBI Listing Regulations,
the Board has carried out an annual performance evaluation of its own performance, the
Directors individually and that of its Committees. A detailed disclosure on the manner of
the Board evaluation undertaken by the Board has been provided in the Corporate Governance
Subsidiaries, Associates and Joint Ventures
The Company had 54 subsidiaries, joint ventures and associates as on As at 31st March,
2017. Details of these subsidiaries, joint ventures and associates are set out on Page 270
of the Annual Report. Pursuant to section 129(3) of the Companies Act, 2013 read with Rule
5 of the Companies (Accounts) Rules, 2014, a statement containing salient features of the
financial statement of the subsidiary, associate and joint venture companies is given on
Page 270 of the Annual Report. The statement also provides details of the performance and
the financial position of each of the subsidiaries, joint ventures and associates. The
consolidated financial statements presented in this Annual Report include financial
results of the subsidiary companies.
During FY 2016-17, Cipla BioTec South Africa (Pty) Limited and CIPLA Algrie became
subsidiaries of the Company and Four M Propack Pvt. Ltd., Cipla Canada Inc. and
Cipla Medpro Research and Development Proprietary Ltd., ceased to be subsidiaries of the
There was no change in the joint venture / associate companies during FY 2016-17.
Copies of the financial statement of the subsidiary companies will be available on the
Company's website www.cipla.com and will also be available for inspection by any member at
the registered Offce of the Company during business hours. Copies of the said financial
statements will be made available to any member of the Company and those of the respective
subsidiary companies upon request.
The Policy for Determining Material Subsidiaries is available on the Company's website
at http://www.cipla.com/ uploads/investor/1443000071_Policy-for-determining-
Directors and Key Managerial Personnel
Ms. Samina Vaziralli was elevated to the position of Executive Vice-Chairperson by the
Board w.e.f. 1st September, 2016. In view of the change in her role and responsibilities,
the Board on the recommendation of the Nomination and Remuneration Committee and subject
to the approval of the shareholders, had approved revision to the terms of her appointment
including remuneration structure. The Board recommends the revision in the terms of
appointment of Ms. Samina Vaziralli including remuneration structure for approval of
During the year, Mr. Subhanu Saxena resigned as Managing Director and Global Chief
Executive Offcer w.e.f. close of business hours on 31st August, 2016. Mr. Umang Vohra
relinquished Offce as Global Chief Financial Offcer w.e.f. 1st August, 2016 and was
appointed as Managing Director and Global Chief Executive Offcer w.e.f. 1st September,
Ms. Ireena Vittal and Mr. Peter Lankau were appointed as Additional Directors of the
Company to hold Offce as Independent Directors with effect from 1st December, 2016 and
10th January, 2017, respectively. They hold Offce up to the date of the ensuing AGM. The
Company has received requisite notice from a member proposing the appointment of Ms.
Ireena Vittal and Mr. Peter Lankau as Independent Directors of the Company for a period of
five years with effect from the date of their respective appointment. Mr. S. Radhakrishnan
retires by rotation and, being eligible, offcer s himself for re-appointment. The Board
recommends the appointment of Ms. Ireena Vittal and Mr. Peter Lankau as Independent
Directors and re-appointment of Mr. S. Radhakrishnan as Director liable to retire by
A brief resume of the Directors seeking appointment/ re-appointment is provided
in the Notice of AGM.
Mr. Kedar Upadhye was appointed as Global Chief Financial Offcer w.e.f. 1st August,
2016. Mr. Mital Sanghvi relinquished Offce as Company Secretary w.e.f. 9th
February, 2017, as part of the planned transition and has now moved into a senior business
finance role in the Company. Mr. Rajendra Chopra was appointed as Company Secretary w.e.f.
9th February, 2017.
The criteria for determining qualification, positive attributes and independence of a
Director have been set out as Annexure VII.
The Remuneration Policy has been disclosed in the Report on Corporate Governance.
Declaration by Independent Directors
All Independent Directors of the Company have submitted requisite declarations
confirming that they continue to meet the criteria of independence as prescribed under
section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI Listing
Regulations. The Independent Directors have also confirmed that they have complied with
the Company's Code of Conduct.
Neither the Managing Director nor the Whole-time Directors, received any remuneration
or commission from any of the Company's subsidiaries during the previous year.
Committees of Board, Number of Meetings of the Board and Board Committees
The Board currently has six committees, namely, Audit Committee, Nomination and
Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders
RelationshipCommittee,InvestmentandRiskManagement Committee and Securities Issuance
Committee. All the recommendations made by the Committees of Board including the Audit
Committee were accepted by the Board.
During the year under review, the Board met seven times. A detailed update on the
Board, its composition, detailed charter including terms of reference of various Board
Committees, number of Board and Committee meetings held during FY 2016-17 and attendance
of the Directors at each meeting is provided in the Report on Corporate Governance, which
forms part of this report.
Pursuant to the provisions of section 148 of the Companies Act, 2013, Mr. D. H. Zaveri,
practising Cost Accountant (Fellow Membership No. 8971) has been re-appointed to conduct
the audit of Company's cost records for the financial year ended As at 31st March, 2017.
Pursuant to section 148(6) of the Companies Act, 2013 and Rule 6(6) of the Companies (Cost
Records and Audit) Rules, 2014, the Cost Audit Report, for the year ended As at 31st
March, 2016, was filed with the Central Government within the prescribed time.
In accordance with the provisions of section 148 of the Companies Act, 2013 read with
the Companies (Audit and Auditors) Rules, 2014, since the remuneration payable to the Cost
Auditors for FY 2017-18 is required to be ratified by the shareholders, the Board
recommends the same for approval by shareholders at the ensuing AGM.
Walker Chandiok & Co LLP, Chartered Accountants was appointed as the Statutory
Auditor of your Company at the last AGM held on 28th September, 2016 to hold the Offce
till the conclusion of 85th AGM. As per the provisions of section 139 of the Companies
Act, 2013, the appointment of Statutory Auditor is to be ratified by members at every AGM.
The Company has received a certificate from the Statutory Auditor confirming that
ratification of their appointment if made, will be in accordance with the provisions of
section 141 of the Companies Act, 2013. The Board recommends the ratification of the
appointment of Walker Chandiok & Co LLP, Chartered Accountants as the Statutory
Auditor of the Company.
The Auditor's Report for FY 2016-17 does not contain any qualification, reservation or
The Board wishes to place on record its appreciation to government authorities, banks,
business partners, shareholders, medical practitioners and other stakeholders for the
assistance, co-operation and encouragement extended to the Company. The Board would also
like to place on record its deep sense of appreciation to the employees for their
contribution and services.
|On behalf of the Board
|Y. K. Hamied
|Date: 25th May, 2017