BOARD OF DIRECTORS REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT TO THE MEMBERS Your Directors have pleasure in presenting their Seventy-second Annual Report and the Audited Financial Statements of the Company for the financial year 2015-16. DIVIDEND Your Directors have pleasure in recommending a dividend of Rs. 35 per share on 2,12,49,302 fully paid-up Equity Shares of Rs. 10 each of the Company for the year ended March 31, 2016. The proposed dividend, if approved at the Annual General Meeting, will absorb a sum of Rs. 74,37.26 Lakhs (Previous year : Rs. 65,87.28 Lakhs) and Corporate Dividend Tax of Rs. 15,14.05 Lakhs (Previous year : Rs. 13,41.02 Lakhs). The Corporate Dividend Tax is provided at the rate applicable on the day on which the Accounts were approved by the Board of Directors. RESERVES During the year, Rs. 25,96.28 Lakhs was transferred to General Reserve. The total Reserves as on March 31, 2016 amounted to Rs. 1086,39.29 Lakhs comprising of Amalgamation Reserve Rs. 37.82 Lakhs, Capital Reserve Rs. 5,22.62 Lakhs, Capital Redemption Reserve Rs. 2,52.48 Lakhs, General Reserve Rs. 267,98.19 Lakhs and Surplus as per Statement of Profit & Loss amounting to Rs. 810,28.18 Lakhs. MANAGEMENT DISCUSSION AND ANALYSIS REPORT ECONOMIC OVERVIEW The Indian economy with GDP in excess of USD 2 trillion is amongst the top 10 economies in the world. The World Economic Outlook 2016 published by the International Monetary Fund (IMF) suggests that the Indian economy is expected to outperform other emerging markets like China, Russia and Brazil. The growth will be driven by private consumption, which has benefited from lower oil prices and pick up in industrial activity. IMS Health Market Prognosis Report suggests that economic growth in the medium term will be driven by rapid growth in the workforce, an expanding middle class, urbanization and shift away from low-productivity agriculture to manufacturing and services. For sustaining long term economic growth, fiscal consolidation, reduction in subsidies, labour reforms and dismantling bottlenecks in infrastructure will be required. According to Asian Development Bank, the all-round India growth story continues with GDP growth of 7.6% for 2015-16 and expected to grow at 7.8% during 2016-17. INDIAN HEALTHCARE ENVIRONMENT The Indian Healthcare environment is characterized by a peculiar mix of accountability structure, policy interventions and evolving demographics. The Constitution of India makes health in India the responsibility of State Governments, rather than the Central Government. This puts the onus of implementation of various healthcare initiatives on the states. Different studies have shown uneven achievement of Indian states on various healthcare parameters. Given this background, the public expenditure on healthcare is expected to remain low compared to international standards, and patients ending up paying majority of the expenses out-of-pocket. The developments in the last year suggest that a key policy goal will be improving access to a broad range of primary care services including availability of drugs. This will require investment in the primary health infrastructure and recruiting and training of personnel. Expansion of initiatives like Jan Aushadhi will lead to increased allocation of resources for purchase of essential medicines by the Government. Finally, the changes in demographics will have a long term impact on the healthcare environment. By 2019, India will be home to more than 8 crore senior citizens above the age of 65 years. This will be the fastest growing demographic. Thus chronic, non-communicable diseases (NCDs) are being diagnosed with increasing frequency while incidence of most communicable diseases is falling. The concern is that onset of serious chronic conditions is being recorded at a much earlier age in Indian patients than those in many developed countries. INDUSTRY STRUCTURE AND DEVELOPMENTS The Indian Pharmaceuticals Market (IPM) registered a growth of Rs. 104,633 crores growing at 14.4% over prior year. In line with the demographic changes, the chronic therapies segment is the fastest growing sector. Chronic therapy market contribution has now increased to 33% from 27% at the beginning of this decade. This trend is more acutely observed in urban areas. For example, in Metros chronic therapy share of pharmaceutical market is 37% compared to 26% in rural areas. The market continues to be fragmented and intensely competitive with top 10 players having 43% market share and only three multinational companies in top 10. Typically there are 25-30 brands competing for prescriptions of a molecule. The new product pipelines have shrunk substantially. In 2015, Indian regulators approved the lowest number of new products since 2001. Also in March 2016, the Government banned over 300 fixed dose combinations some of which had DCGI approvals. These developments indicate increased challenges on pipeline of new products. OPPORTUNITIES AND THREATS IMS Health (IMS) has forecasted a Compounded Annual Growth Rate (CAGR) of 11%-12% for 2015 to 2020 period. Economic expansion, population growth and epidemiological trends will all continue to drive up demand for medicines. The following trends are expected to impact the IPM: More stringent regulatory standards : In order to preserve India’s status as pre-eminent supplier of generic medicines, Indian regulators are expected to pursue a number of initiatives for improving quality of medicines. Amongst these will be changes in manufacturing standards, alignment of norms to global standards and increased monitoring. Increased collaboration between different stakeholders : Partnerships, alliances between Indian and multinational companies are expected to increase. This will be driven by complementary requirements of companies. For multinational companies, these partnerships will provide increased reach to customers, whereas Indian companies will get access to new products and technologies. Emergence of large product brands and brand building : As per IMS Health, 2015 was the first year when a pharmaceutical brand generated annual sales in excess of Rs. 500 crores. Today, 117 brands have annual sales in excess of Rs. 100 crores. In the absence of robust new product pipelines, companies will focus on driving growth through existing brands, which will lead to more brand building efforts. Lack of Awareness : Despite significant improvements over the years, India continues to lag in terms of healthcare outcomes. Part of the challenge lies in lack of disease awareness. This is expected to improve with different stakeholders coming together for improved screening, early diagnosis, health education and prevention in disease areas that have significant gaps. Evolving Over The Counter (OTC) market : Enhanced implementation of dispensing guidelines of prescription products has started to limit unsupervised patient access to these products. Moreover, patients are increasingly aware of perils of self-medication due to rising education levels and access to information through digital media. Finally, increased affordability due to rising income levels are expected to drive stronger and more defined evolution of the OTC market. Increased consolidation across the value chain : Intensified pressure on costs and prices is expected to drive consolidation in the manufacturing sector.In addition to the roll out of harmonized GST, emergence of internet pharmacies will lead to structural changes in the distribution and retail markets. REVIEW OF OPERATIONS Financial Performance Sales : Net Sales for the year ended March 31, 2016 amounted to Rs. 2580,22.97 Lakhs, registering a growth of 15.3% over the previous year, mainly driven by volumes. Material Cost : Material Cost has reduced marginally from 58.6% in 2014-15 to 58.4% of Net Sales in the current year. Employee Benefit Expenses : During the year under review, the Company increased its people strength by 3.1% to 2,956. The increase of 10.3% in employee cost is mainly on account of merit increase and statutory pronouncements. Other Expenses : Other expenses including depreciation and finance cost, increased by 15.2% over the prior year mainly on account of inflation, marketing spend to support volume growth, market research projects and new vaccine division launch. The spend, as a percentage of Net Sales, was 16.7% compared to 16.8% for the year 2014-15. Other Income : During the year, Other Income grew by 6.1% mainly due to increase in Interest Income from Bank Deposits. The Company continued to invest in Bank Deposits, with a view to safeguarding the principal and maintaining liquidity. Income from Bank Deposits grew by 10.6%.Investment strategy is reviewed periodically by the Finance Committee. Profit Before Tax and Dividend : Profit Before Tax for the year ended March 31, 2016 stood at Rs. 401,72.46 Lakhs being 15.6% of Net Sales as compared to 15.4% in the previous year. The Board of Directors has recommended a dividend of Rs. 35 per equity share. Division-wise PerformanceThe Company operates in a single reportable business segment i.e. "pharmaceuticals". The Company’s business operations are divided into four business divisions i.e. (i) Women’s Health & Gastrointestine, Gastroenterology and Hepatic Care, (ii) Specialty Care, (iii) GenNext & Vaccines and (iv) Consumer Care. The key performance highlights of each business division for the year 2015-16 are as follows : Women’s Health & Gastrointestine, Gastroenterology and Hepatic Care Division The division has a mix of global and local brands present in the pregnancy, constipation and liver diseases segments. Several of the Company’s largest brands including Duphaston (Women’s Health Hormone), Duphalac (Laxative), Udiliv (Hepatic Protective), Cremaffin (Laxative), Cremaffin Plus (Laxative) and Creon (Digestives Enzymes) are part of this division. Women’s Health & Gastrointestine : This segment grew by 18.4% during the year. Some of the key brands like Duphaston, Udiliv, Duphalac and Creon have shown double digit growth during the year and contributed significantly to overall segment growth. Gastroenterology : This segment posted a strong growth of 20.7% during the year. This growth was majorly driven by brands like Cremaffin and Cremaffin Plus. Hepatic Care : This segment grew by 42.7% during the year. The growth was majorly driven by newly introduced brand Viroclear (Antiviral). Specialty Care Division This segment consists of comprehensive range of products in treatment of Central Nervous System and Metabolic disorders. It is present in the therapy areas like hypothyroidism, vertigo, epilepsy, depression and migraine. The key brands are Thyronorm (thyroid preparations), Vertin (antivertigo), Prothiaden (antidepressant), Surbex Gold (multivitamin antioxidants) and Inderal (migraine prophylaxis) which enjoy market leadership position in their respective therapeutic areas. The segment grew by 10.1% over previous year. Metabolics : This segment grew at 13.3% during the year. Thyronorm continues to grow significantly and retains flagship position* in its segment. Central Nervous System : This segment grew by 7.4% during the year. In the vertigo treatment sub-segment, Vertin continues as the market leader*. In the anti-depression sub-segment, Prothiaden has shown a double digit growth this year. GenNext This segment is present in several therapy areas including pain management, vitamins and pregnancy. It comprises multi-specialty drugs and applications, and is primarily aimed at general physicians. Key brands include Brufen (pain killer), Duvadilan (peripheral vasodilator), Zolfresh (sleep management), Arachitol (Vitamin D nano preparations), and Digecaine (antacid anaesthetic). in the market and has grown significantly over the last year. This division focuses on building on the brand equity of its legacy brands as well as scientific promotion to build its newer brands In the current year, the division had a remarkable growth of 14.8%. All the key brands in the segment like Brufen, Digecaine registered sturdy performance. Zolfresh retains number 1* position in its segment. Vaccines The Company continues to dominate the Influenza market. During the year, the Company entered into a licensing arangement with Bharat Biotech India Limited to market vaccines in immunology segment. Influvac (Influenza vaccine) continued a strong performance. Newly introduced Enteroshield (typhoid vaccine) and Rotasure (rotavirus diarrhea vaccine), outperformed in the first year of launch. This segment contributed 2.1% of Net Sales for the year. Consumer Care Consumer Care Division is present in the Over The Counter (OTC) antacid segment. This division promotes all variants of Digene (antacid – antiflatulent) brand – tablets, liquids and powders.The segment focuses on connecting with patients through positioning of its products mainly through mass media, social media and point of sale promotion. New advertisement and marketing strategies will help sustaining the growth of this portfolio. ANew Product Launches Your Company launched 17 new products during the year in various therapy segments, which together contributed 1.9% of the Net Sales of the Company. MEDICAL RESEARCH In India, it is observed that there is a constant need for generating data on the epidemiology of diseases and understanding of the perspectives of physicians and patients in various disease areas. This has become an important need for Health Care Professionals to improve patient care based on real life evidence. Some of the important ways by which the Company has emerged as a scientific leader in the Indian branded generic space is by generating ethical evidence to support the portfolio, creating disease awareness, and generating clinical data and evidence, specifically catering to the Indian population, in various disease and therapeutic areas. We conduct approximately 15-20 Medical Research studies in a year. Details of a few Studies : Studies supporting Thyroid Portfolio : Our first study was designed to assess the nationwide prevalence of thyroid disorder, particularly hypothyroidism in adults residing in various cities in India as there was paucity of data. The study results demonstrated that hypothyroidism was found to be a common form of thyroid dysfunction affecting 10.9% of the study population. The prevalence of undetected hypothyroidism was 3.5%. This suggested that a significant proportion of patient population might be going undetected and untreated. The results of the study were published as an abstract in The American Thyroid Association Journal and the manuscript was published in the Indian Journal of Endocrinology and Metabolism in 2013. As a follow up, we are currently conducting a Thyroid Registry which is aimed to study the disease profile and real world treatment paradigm of hypothyroid patients in India. Study for Insomnia : This study was designed to evaluate the prevalence of insomnia among employees of various corporate offices across India. The results demonstrated that the prevalence of insomnia in corporate employees was 13.8%. Of the participants with insomnia, 96.4% were previously undiagnosed/undetected, reflecting the large scale of unawareness related to insomnia. This study was done in smaller corporate settings and needs larger studies for validation but it shows a possibility of high prevalence of insomnia which remain undetected in our current urban population. Study in Women’s Health : The Recurrent Miscarriage Study was conducted in five metropolitan cities across India. The study results demonstrated that 32% of the approximately 2,400 participants had suffered spontaneous miscarriage and the prevalence of recurrent spontaneous miscarriage was as high as 7.5% among Indian urban women. This study was published in The Journal of Obstetrics and Gynecology of India in 2015 and the finding of this epidemiological study has furnished important information regarding the prevalence of recurrent spontaneous miscarriages and the associated risk factors in the Indian population.The studies are part of evidence building, and strive to address gaps between treatment guidelines and real life clinical practice, with the overall objective of improving patient care. OUTLOOK IMS Health (IMS) has forecasted a Compounded Annual Growth Rate (CAGR) of 11%-12% for 2015 to 2020 period. Economic expansion, population growth and epidemiological trends will all continue to drive up demand for medicines. The Company enjoys a strong reputation as a science based organization with key specialists and opinion leaders. Leveraging its strengths, the Company has identified specific initiatives to gain advantage of market opportunities. Some of these are : Accelerate growth of existing brands through market shaping initiatives : Several of the Company’s brands are leaders in their respective segments. The Company is focusing on initiatives that will expand the market through increased patient awareness and diagnosis. Strengthen portfolio depth in existing therapy areas: The Company is evaluating several opportunities to expand its portfolio in existing therapy areas like hepatology, gastroenterology and vaccines. Use technology to engage different stakeholders : In the last few years India has seen increasing usage of digital tools targeted towards patients, doctors and diagnostics. The Company plans to leverage the opportunity offered by digital to enhance engagement with healthcare professionals and patients. RISKS AND CONCERNS Indian drug regulatory environment is going through aphase of many changes. The Regulator’s focus is on streamlining of regulatory procedures, ease of doing business, skill development, digitalization of services and enforcement mechanism along with further strengthening of drug regulatory system in the country. While the Regulators look committed to create an environment conducive for pharma companies to do business in India, policy and operations do not seem to be in sync. This remains a major challenge. Some of the new initiative and regulations include alignment of data requirements from animal toxicity studies for approval of new drugs, removal of requirement of obtaining export NOC for pharmaceutical exports to developed countries; launch of SUGAM portal for submission of applications for import & registration of drugs, medical devices, registration of cosmetics & various other applications. These initiatives are expected to improve the speed and transparency in regulatory review process. On the downside, the Pricing policy continues to trouble hamper industry with more and more products being brought under price control. Some of the important changes expected in the near future include online submission of New Drug & Clinical Trial applications, increased vigilance on quality of drugs through site inspections for GMP compliance; amendments in Drugs and Cosmetics Act & Rules for clarity, ease and operational efficiency, revision of 2012 Biosimilar guidelines, which seems to dilute the existing guidelines in terms of data requirements for approval; changes and clarity in the regulations for food & nutrition related products. INTERNAL CONTROL AND ITS ADEQUACY The internal controls of the Company operate through well documented standard operating procedures, policies and process guidelines. The Company has an adequate system of internal financial control commensurate with its size and nature of business which helps in ensuring orderly and efficient conduct of its business. These systems provide a reasonable assurance in respect of financial and operational information, complying with applicable statutes, safeguarding of assets of the Company, prevention & detection of frauds, accuracy and completeness of accounting records and ensuring compliance with corporate policies. Significant internal audit observations and management actions thereon are reported to the Audit Committee on a quarterly basis. The Audit Committee reviews the observations and assesses the adequacy of the actions proposed as well as monitors their implementation. Internal Auditors conduct a quarterly follow up for implementation / remediation of all audit recommendations and the status report is presented to the Audit Committee regularly. The Company has a formal system of internal control testing which examines both the design and operational effectiveness to ensure reliability of financial and operational information and all statutory/regulatory compliances. The Company Management has assessed the effectiveness of internal control over financial reporting for the year ended March 31, 2016 and, based on the assessment, believe that the Company’s internal controls are adequate and working effectively. The Statutory Auditors have issued an audit report on the adequacy and effectiveness of the internal financial control systems over financial reporting. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES At Abbott India Limited, we are committed to building a future-ready organization, to ensure that the current growth rate is sustainable over the long term. Our team of 2900+ colleagues remain our biggest advantage in the highly competitive pharma industry. The Human Resource (HR) team has built specific programs to encompass the entire employee lifecycle covering attraction of the best talent, both internally and externally, retention via career management and rewards and development across all cadres. Talent Strategy The integrated approach to the Talent Strategy helped to drive focus on two key facets of people management - attracting the best talent and developing people within the organization. Attracting the Best Talent We have driven differentiated talent hiring from multiple channels including premier business schools in India, and Internationally. The team is conscious about the imperative need to also organically build a robust field sales force that forms the backbone of the organization. This has been achieved via hiring from leading graduate colleges in the country – 91 hires in the last academic year - as well looking to diverse backgrounds such as FMCG, MBA in addition to peer pharma organisations while onboarding experienced resources. Over 60% of our Therapy Business Managers come from the said differentiated backgrounds. Developing People Robust Career Management : In order to ensure sustained retention and development of the workforce in a highly competitive talent market, we have continued our focus on creating a structured career development framework for our employees. This has enabled transparent and objective cross function and location movements across the Company. 106 roles have been closed via internal applications. 63 managerial roles were filled by internal career progression. In addition to this, the team is driving the identification of roles that are critical and can have a significant impact on the operations of the business with the objective to ensure resource adequacy, in terms of capacity and capability; ‘feeder roles’ and internal successors have been identified. Training and Certification : The HR team continues to partner with the Commercial Excellence function to execute the three tier ‘Field Certification Program’ (Prima, Magna and Maxima) to enable transition across the career path for the sales team. Over 2,000 successful certifications have now been completed across these programs. Our other key initiatives include :? Extension of our activation capability to Women’s Health & Gastrointestine team through the setting up of dedicated team of 18 employees.? Chalo Bazaar, an initiative in which all Head Office employees took active part and invested a day in field work. This was highly successful is building a deeper sense of appreciation for the Head Office staff towards the field sales teams.2015-16 has been a significant step towards building a stronger workforce across functions and levels at the Company and further consolidating the Company’s position as an ‘Employer of Choice’. Prevention of Sexual Harassment at Work Place : The Company had constituted Internal Complaints Committee (ICC) under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year, HR team also incorporated the training on the facets of this law as part of New Hire Orientation Program. There were no complaints received by the Company/ICC during the year under the aforesaid Act. Total Number of Employees : Total number of employees as on March 31, 2016 is 2,956. DIRECTORS’ RESPONSIBILITY STATEMENT Pursuant to Section 134 (5) of the Companies Act, 2013, your Directors state that : a. in the preparation of the Annual Accounts for the year ended March 31, 2016, the applicable accounting standards have been followed and there are no material departures from the same; b. they have selected such accounting Policies and applied them consistently and made judgments 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, 2016 and of the profits of the Company for that year; c. they have taken proper and sufficient care 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. they have prepared the Annual Accounts of the Company on a going concern basis; e. they have laid down adequate Internal Financial Controls to be followed by the Company and that such Internal Financial Controls are adequate and are operating effectively; f. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. RELATED PARTY TRANSACTIONS Policy on dealing with Related Party Transactions and Materiality :Policy on dealing with Related Party Transactions and Materiality, is available on the Company’s website at http://www.abbott.co.in/investor-relations-policies-and-procedures.html As per the said Policy, all Related Party Transactions are pre-approved by the Audit Committee and Board as and when required. The same are also reviewed by the Audit Committee on a quarterly/annual basis. Details of Related Party Transactions : All contracts/arrangements/transactions entered into by the Company during the financial year 2015-16 with Related Parties were in the ordinary course of business and on arm’s length basis. Also, there was no contract/arrangement/ transaction with any of the Related Parties which could be considered material in accordance with the Companies Act, 2013, Rules framed thereunder and Regulation 30 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.Details of Related Party Transactions entered into by the Company during the financial year 2015-16 are provided in Note 41 to the Financial Statements. CORPORATE SOCIAL RESPONSIBILITY Corporate Social Responsibility (CSR) Policy: The CSR Policy of the Company is available on its website at http://www.abbott.co.in/investor-relations-policies-and-procedures.html CSR initiatives undertaken during the financial year 2015-16 : During the year, the Company spent Rs. 6,45.34 Lakhs on various CSR activities. The Annual Report of CSR activities undertaken by the Company during the financial year 2015-16, is annexed as "Annexure I" and forms part of this Report. RISK MANAGEMENT FRAMEWORK The Company recognizes Risk Management as an integrated, forward-looking and process-orientated approach. It has developed a Risk Framework that broadly encompasses : aligning risk appetite and strategy; enhancing risk response and reducing operational surprises. During the year, Risk Management Core Team comprising of representatives of various functions and business had carried out risk assessment exercise to identify the various significant risks associated with the business operations and mitigation plans to address such risks. Material risks and mitigation plans were reviewed by the Risk Management Committee and then presented to the Board. DIRECTORS Mr Rehan A. Khan resigned as the Managing Director and Director of the Company effective April 30, 2016. The Board placed on record its sincere appreciation for the significant contribution made by Mr Khan in the overall growth of the Company during his tenure. Mr Kaiyomarz Marfatia (DIN : 03449627) ceased as Whole-time Director of the Company effective February 29, 2016 upon completion of his term. The Board approved his continuation as a Non-Executive Director, liable to retire by rotation, subject to approval of the Shareholders at the ensuing Annual General Meeting. During the year under review, Mr R. A. Shah (DIN : 00009851) ceased to be Independent Director effective July 31, 2015 consequent to his resignation from this position and continued as Non-Executive, Non-Independent Director of the Company. Mr Shah vide his letter dated October 12, 2015 requested the Company and accordingly was re-appointed as Independent Director by the Board effective October 28, 2015 for a term upto March 31, 2019 subject to approval of the Shareholders at the ensuing Annual General Meeting as per the provisions of Section 149 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. In compliance with provisions of Section 152 of the Companies Act, 2013, Mr Munir Shaikh (DIN : 00096273) and Ms Nancy Berce (DIN : 07190005) retire by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves for re-appointment. Based on the recommendation of the Nomination and Remuneration Committee, your Directors recommend the appointment/re-appointment of Mr Kaiyomarz Marfatia, Mr R. A. Shah, Mr Munir Shaikh and Ms Nancy Berce on the Board of the Company. Declaration of Independence : The Company has received declarations from the Independent Directors confirming that they meet with the criteria of independence prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. Number of Meetings of the Board : 6 Board Meetings were held during the year on May 27, 2015; July 29, 2015; August 12, 2015; November 6, 2015; February 1, 2016 and February 29, 2016. Policy on Nomination and Appointment of Directors/ Criteria for appointment of Senior Management and the Remuneration Policy : Policy on Nomination and Appointment of Directors/ Criteria for Appointment of Senior Management and Remuneration Policy as formulated under Section 178 (3) of the Companies Act, 2013 is annexed as "Annexure II" and forms part of this Report. Performance Evaluation of the Board, Board Committees and Directors : Performance Evaluation of the Board, Board Committees and Directors was carried out through self-assessment and group discussions in line with Performance Evaluation Framework and Policy adopted by the Company. KEY MANAGERIAL PERSONNEL Mr Rajiv Sonalker, Chief Financial Officer and Ms Krupa Anandpara, Company Secretary are the Key Managerial Personnel of the Company. Mr Rehan A. Khan resigned as Managing Director and Director of the Company effective April 30, 2016.Mr Kaiyomarz Marfatia ceased to be Whole-time Director on the Board effective February 29, 2016 upon completion of his term and continued as Director, liable to retire by rotation. AUDIT COMMITTEE The Audit Committee comprises of Mr R. A. Shah (Chairman), Mr Ranjan Kapur, Mr Krishna Mohan Sahni and Mr Munir Shaikh. Role of the Committee is provided in the Corporate Governance Report annexed to this Report. All the recommendations made by the Audit Committee during the year were accepted by the Board. VIGIL MECHANISM/WHISTLE BLOWER POLICY The Vigil Mechanism/Whistle Blower Policy called "Abbott India Limited – Procedure for Internal Investigations" lays down a mechanism for reporting and investigations of all unethical behavior, alleged violations or potential violations of laws, regulations or Abbott’s Code of Business Conduct, policies, procedures or other standards. The said Policy is available on the website of the Company at http://www.abbott.co.in/investor-relations-policies-and-procedures.html Employees have numerous ways to voice concerns and are encouraged to report concerns internally for resolution. The said Policy provides for adequate safeguards against retaliation and access to the Chairman of the Audit Committee. Any concerns can be communicated through any sources provided under the said Policy or via toll free number 0008001001058 or online at http://speakup.abbott.com STATUTORY AUDITORSS R B C & CO LLP, Chartered Accountants, (ICAI Firm Registration No : 324982E/E300003), were appointed as the Statutory Auditors for a term of 5 years at the 70th Annual General Meeting of the Company held on August 1, 2014. In terms of provisions of Section 139(1) of the Companies Act, 2013, the continuation of the appointment of S R B C & CO LLP as Statutory Auditors shall be subject to ratification by the Members at the ensuing Annual General Meeting. The Company has received a confirmation from S R B C & CO LLP regarding their eligibility and willingness to continue as the Statutory Auditors. AUDITORS’ REPORT The Auditors’ Report for the financial year 2015-16 does not contain any adverse remarks, qualifications or reservation or disclaimer, which required explanation/comments by the Board. COST AUDITORS M/s N I Mehta & Co., Cost Accountants (Registration No. : 000023), having its office at 1101, Dalamal Tower ‘B’ Wing, Nariman Point, Mumbai – 400 021, are appointed as the Cost Auditors of the Company for the financial year 2016-17 at a remuneration of Rs. 6.65 Lakhs plus applicable taxes and reimbursement of out-of-pocket expenses.The said remuneration to the Cost Auditors shall be subject to ratification by the Members at the ensuing Annual General Meeting.Cost Audit Report along with the Compliance Report for the financial year 2014-15, was filed on September 21, 2015 (Due date of filing was September 27, 2015). INTERNAL AUDITORS M/s KPMG, Chartered Accountants, (Registration No. : BA62445) are the Internal Auditors of the Company. SECRETARIAL AUDIT REPORT The Secretarial Audit Report issued by Ms Neena Bhatia, Practicing Company Secretary (Membership No. : ACS 11950 and Certificate of Practice No. 2661) for the financial year ended March 31, 2016 does not contain any adverse remark, qualification or reservation or declaimer which requires any explanation/ comments by the Board. The said Report is annexed as "Annexure III" and forms part of this Report. HEALTH, SAFETY AND ENVIRONMENT At Abbott India, we say, "Health, Safety and Environment First". Each of the three issues is of equal importance to our operations, and our compliance with relevant regulations is intrinsic to our philosophy as a Company. Our commitment to this 3-point program is one that we renew every day, through initiatives that are designed to make a genuine and lasting difference. Health and Safety : Health and safety of our employees is paramount to us. The Company has a dedicated Safety Officer and a Safety Committee, comprising representatives from the workforce and management, which meet regularly to review issues impacting plant safety and employee health. The Company’s Environment Health Safety (EHS) program includes the policy on safety, health and environment, a well-defined EHS organizational structure, EHS Standard Operating Procedures and EHS specific programs. Numerous training programs are conducted at the Plant on health and safety issues including dealing with epidemics, ergonomics, machine guarding, work safety, road safety and so on. Each employee gets an Annual Health Check-up. Mock drills for fire-fighting and rescue operations are conducted to keep the staff in a state of preparedness for any emergencies. The Plant has a well-appointed first-aid room with a full-time nurse and Occupational Health Physician catering to employee needs, as well as a fully-equipped ambulance van. A cross-functional team for Employee Health and Safety (EHS) and Emergency Action Plan (EAP) is also in place. The Plant celebrated National Safety Week from 4th to 11th of March, 2016. Various activities were held that week, including a training program for e-waste disposal conducted by an external agency, and a training program on women’s health and related issues. Health Training Programs for employees well-being were also conducted during the year. An elaborate audit for Environment, Health and Safety in accordance with Abbott’s global standards and local regulations compliance was conducted by Abbott’s global corporate team and external consultants. Environment : A responsibility towards the environment is part of our mandate. We continuously endeavor to minimize adverse environmental impact, and demonstrate our commitment to protecting the environment through everything we do. Our Goa plant is a "ZERO" discharge plant. The Company has in place a state-of-the-art effluent treatment plant at the Goa unit, with parameters of treated effluents well below the limit set by the local Pollution Control Board. The treated water from our waste water treatment plant is recycled for horticulture within the site. Our rain water harvesting project, initiated three years ago, was effectively continued at the Plant this year as well, which resulted in 480 KL of water-saving during the monsoons. Emissions from boiler and generator stacks are monitored regularly and are, once again, well below the limits set by the State Pollution Control Board. Ambient air quality is monitored on a regular basis to conform to ambient air quality standards. There is also a vermi-composting unit to convert canteen waste into organic manure, which is used in the lawns and plantation inside the factory premises. The site retains its certification of Zero Waste to landfill in purview of waste disposal. 81% of our waste goes for recycling, 17% for incineration and 2% for composting. Environmental Key Performance Indicators are shared and discussed with employees on a regular basis in order to continuously minimize the impact on environment. Installation of a Filter Press System for drying ETP sludge will help in reducing the generation of ETP sludge. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The particulars as required under the provisions of Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo, etc. are annexed as "Annexure IV" and forms part of this Report. EXTRACT OF ANNUAL RETURN Extract of Annual Return as provided under sub-section (3) of Section 92 is annexed as "Annexure V" and forms part of this Report. DISCLOSURE UNDER SECTION 197 (12) OF THE COMPANIES ACT, 2013 AND OTHER DISCLOSURES AS PER RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OFMANAGERIAL PERSONNEL) RULES, 2014 Disclosures required in accordance with the provisions of 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 VI" and forms part of this Report. Statement containing Particulars of Employees pursuant to Section 197 (12) of the Companies Act, 2013 read with Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. However, as per the provisions of Sections 134 and 136 of the Companies Act, 2013, the Report and Financial Statements are being sent to the Members and others entitled thereto, excluding the Statement containing Particulars of Employees, which is available for inspection by the Members at the Registered Office of the Company during business hours on all working days (except Saturdays), upto the date of ensuing Annual General Meeting. Any Member interested in obtaining a copy of such Statement may write to the Company Secretary at the Registered Office of the Company. CORPORATE GOVERNANCE REPORT Corporate Governance Report along with a Certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance pursuant to the requirements of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed hereto and forms part of this Report. DISCLOSURES OF ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL No orders have been passed by any Regulator or Court or Tribunal which can have impact on the going concern status and the Company’s operations in future. FIXED DEPOSITS No fixed deposits were accepted during the year. PARTICULARS OF LOANS, INVESTMENTS AND GUARANTEES During the year, the Company granted loan of Rs. 190,00.00 Lakhs to Abbott Healthcare Private Limited, India (AHPL), a Fellow subsidiary at an interest rate of 10% per annum for a period of 90 days pursuant to the provisions of Section 186 of the Companies Act, 2013 and relevant Rules framed thereunder for the purpose of project funding. The said loan was fully repaid within the said period by AHPL along with interest of Rs. 2,91.51 Lakhs.The Company has not provided any guarantees to or invested in securities of any other body corporate during the year. INDIAN ACCOUNTING STANDARDS (IND AS) - IFRS CONVERGED STANDARDS The Ministry of Corporate Affairs has notified the Companies (Indian Accounting Standard) Rules, 2015.In pursuance of this notification, the Company will adopt IND AS with effect from April 1, 2016. The implementation of Ind AS is a major change process for financial reporting and the Company is dedicating considerable resources for effective and timely implementation of the same GENERAL Your Directors state that no disclosure or reporting is required in respect of the following items as there were no Atransactions relating to these items during the year under review : 1. Issue of equity shares with differential rights as to dividend, voting or otherwise. 2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme. 3. The Company does not have any joint venture or subsidiaries. AWARDS AND RECOGNITIONS Your Company’s Annual Report for the year ended March 31, 2015 has been awarded the most prestigious "Silver Shield" Award by The Institute of Chartered Accountants of India for Excellence in Financial Reporting. The Company received prestigious recognitions such as Best CSR Program of the Year (2014-15), by the Department of Pharmaceuticals and Government of India and Golden Peacock Award by the Institute of Directors for its Corporate Social Responsibility initiatives undertaken during the year 2015-16. Amongst various other awards and recognitions, your Company also won the Porter prize in 2015 and Star MNC of the year Award by the Business Standard. EMPLOYEES Your Board places on record its sincere appreciation for the dedication, hard work and significant contributions made by the employees across the Company. ACKNOWLEDGEMENT Your Board sincerely thanks all the business partners, institutions, banks and in particular, the shareholders for their continued support to and trust in the Company. For and on behalf of the Board Munir Shaikh Chairman DIN : 00096273 Ranjan Kapur Director DIN : 00035113 |