Board's Report
Dear Members,
Your Directors are pleased to present the 76th Annual Report along with the
audited financial statement for the year ended March 31, 2024 ("year under
review").
Summary of Financial Results
|
|
(Rs. in million) |
| Particulars |
2023-24 |
2022-23 |
| Revenue from Operations |
3,350.7 |
3,787.4 |
| Total Income |
3,967.5 |
4,368.5 |
| Profit/(Loss) before Tax |
1,228.4 |
1,153.8 |
| Profit/(Loss) after tax |
851.9 |
1,033.6 |
| Other Comprehensive Income for the year |
12.1 |
31.1 |
| Retained Earnings balance brought forward from previous year |
7,597.2 |
6,779.4 |
| Available for appropriation |
8,461.2 |
7,844.1 |
| The Directors have made the following appropriations: |
|
|
| Dividend |
1,172.8 |
246.9 |
| Retained Earnings balance carried forward |
7,288.4 |
7,597.2 |
Dividend
We are pleased to inform our shareholders that your Board of Directors have recommended
a dividend for the reporting period, reflecting our commitment to delivering value to our
shareholders. We have diligently managed our financial resources and have continued
momentum of the improved profitability. The Board has recommended a Dividend of Rs.25 per
equity share of Rs.5 each to be apportioned out of the profits for the financial year
2023-24 subject to the approval of the shareholders at the ensuing Annual General Meeting
(AGM). The dividend, if approved, will result in cash outflow of Rs.617.3 million.
The Dividend Distribution Policy, approved by the board in terms of Regulation 43A of
the Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015 (hereinafter referred to as ‘SEBI Listing
Regulations') is available on the website of the Company at:
https://www.novartis.com/sites/novartis_in/files/Dividend%20Distribution%20policy.pdf
The Dividend will be paid to members whose names appear in the register of members as
on record date and in respect of shares held in dematerialized form, it will be paid to
the members whose names are furnished by NSDL and CDSL as beneficial owners as on that
date.
Transfer to General Reserves
Your Company does not propose to transfer any amount to the General Reserves for the
financial year ended March 31, 2024.
Management Discussion and Analysis
For the financial year under review, the business operations of the Company comprise
Pharmaceuticals.
a. Economy, Industry and Development
The global medicine market is expected to grow at 3 - 6 per cent CAGR through 2026,
touching close to USD 1.8 trillion in total market size by 2026.i Several
countries are presently looking at healthcare reforms. Drug manufacturers face stricter
access and pricing environments as we go into 2024. Governments across various
jurisdictions including the US, EU, Germany, Japan, China, etc. are introducing reforms
aimed at controlling healthcare spending/drug costs. Such initiatives are likely to place
significant pressure on the industry's revenue model.
The Indian Pharmaceutical Industry is currently valued at USD 50 billion and is
expected to reach USD 65 billion by 2024, and thereafter USD 120 - 130 billion by
2030." Indian pharma exports witnessed a growth of 103% between 2013 and 2022.iii
During FY18 to FY23, the Indian Pharmaceutical Industry logged a compound annual growth
rate of 6 - 8 per cent. The domestic formulations market is projected to grow at an 8-10
per cent CAGR (reaching USD 20-22 billion in FY24), slightly below pre-pandemic growth
rates, with export growth forecasted at 10 per cent (reaching USD 22-24 billion) compared
to the historical long-term 15 per cent CAGR pre-COVID.iv
Concerns about regulatory compliance, increased competition, and pricing pressures in
the US market will likely pose challenges to pharma export growth; nevertheless, Indian
manufacturers are expected to focus on diverse product offerings including complex
generics, biosimilars, and new branded products. Research and development will prioritize
innovations in delivery systems for generics, with limited emphasis on new chemical entity
(NCE) introductions/ Encouraged by the Government, the industry is looking at moving from
volume to value-led growth. The shift aims to position India as a hub for drug discovery,
development, and innovation. A collaborative mindset is emerging, with regulatory support,
digital adoption, sustainability, and academia-industry collaborations driving the
transformation. Indian pharma companies are expanding their global footprint by exporting
to over 200 countries. Additionally, Efforts to enhance the quality standards within the
domestic pharmaceutical industry have been underway through regulatory improvements.
The Government is expected to remain committed to universal healthcare and ensuring
access and affordability. The AB-PMJAY scheme has received an increased allocation in the
Interim Budget and may be extended to other vulnerable sections of the population, beyond
its current scope. Regarding upcoming significant reforms, the legal framework governing
the pharmaceutical sector, namely the pre-independence Drugs and Cosmetics Act, 1940 is
expected to undergo a long-overdue update through the Drugs, Medical Devices and
Cosmetics Bill, 2023 (‘Bill'). The pricing framework is also expected to undergo
a significant revamp following the constitution of the Committee for Reforms in the
Pricing Framework for Drugs and Medical Devices by the Department of Pharmaceuticals.vi
The new Uniform Code of Pharmaceutical Marketing Practices, 2024 (‘Code')
shows a shift away from the Government's earlier light touch regulatory approach wherein
the Government will be able to take cognizance of any violations taking place under other
laws and regulations by pharmaceutical companies as part of their marketing practices.
References:
" https://www. investindia.gov. in/sect or/pharmaceuti cals#: ~:text=The%20
pharmaceuti cal %20 in dust ry%20 in%20India,served%20by%20Indian%20pharma%20exports.
111 https://pib.gov.in/PressReleasePage.aspx?PRID=1821747
lv
https://www.pharmaindustrial-india.com/articles-interviews-online-watch/pharma-trends-in-2024-key-trends-
and-future-projections#:~:text=An%200verview%20of%20the%20Indian%20Pharma%20Industry%20in%20
2023&text=The%20domestic%20formulations%20market%20is,in%20the%20pre%2Dpandemic%20era.
v ibid
vi
https://pharmaceuticals.gov.in/sites/default/files/Reforms%20in%20the%20Pricing%20Framework_0.pdf
b. Performance
Revenue from operations for the financial year ended March 31, 2024 was Rs.3,350.7
million illustrating a decrease of 11.5 per cent over the previous year. The Profit before
tax for the year stood at Rs.1,228.4 million indicating increase of 6.5 per cent over the
previous year. Profit before Tax for year 2022-23 was Rs.1,153.8 million.
The Ministry of Health and Family Welfare, Government of India, released the revised
National List of Essential Medicines (NLEM), 2022. The revised list of NLEM impacted 9
(Nine) brands marketed by the Company. These brands are majorly in the areas of Oncology
and Neurology.
Organ transplant procedures are projected to grow at 11 per cent in year 2024 primarily
contributed by increased medical tourism supported by budget-friendly packages,
advancement in surgical techniques, and government initiatives like the "Angdaan
Mahotsav" awareness campaign1.
The incorporation of kidney, heart, lung, and liver transplants under PM-JAY Ayushman
Bharat and Rashtriya Arogya Nidhi with financial support for BPL (Below Poverty Line)
patients demonstrates a commitment to accessibility of Organ transplants in India.
Novartis continues to engage Physicians for high brand recall and for dissemination of
key scientific messages. This is done through differentiated campaigns channelized through
RTEs (Rep Triggered Emails) and CMEs (Continuing Medical Education). We continue to create
high differentiation for Novartis brands in the Transplant maintenance portfolio.
Physicians have adapted well to digital engagements, and we continue to implement them.
During the Financial Year 2023-24, the Transplant Maintenance portfolio grew by 11 per
cent, which helped the organization to offset the impact on the sales due to shortage of
Simulect. This growth was achieved despite a highly cluttered genericized market, by
bringing in sharp focus on individual brands in Transplant Maintenance portfolio with
high-pitch share of voice campaigns coupled with the innovative TRIO campaign aimed at
driving a portfolio-based approach.
It has been 2 years of the exclusive sales and distribution arrangement entered into
with Dr. Reddy's Laboratories (Dr. Reddy's) for a number of our Established Medicines
which include the Voveran range, the Calcium range and Methergine. The arrangement aimed
to broaden access of these medicines to larger geographies to benefit many more patients,
more efficiently through an expanded field force.
Pain portfolio with its flagship brand Voveran range grew by 6 per cent in MAT Mar'24
vs MAT Mar'23. The team worked towards leveraging the efficacy perception of Voveran among
HCPs and focus on urban and rural markets with a high in-clinic share of voice drive with
the ‘Zindagi se milao kadam' campaign. Voveran orals range has overall grown by 28
per cent for YTD February 2024 vs. YTD Feb 20233 with a 10 per cent increased
prescription response in the November to February 2024 vs. November to February 2023
period4.
There is an increase in the share of voice and Voveran gaining prescription share among
doctor specialties across India. The team continued exhibiting success with ‘The Cool
Movement' demonstration campaign to create a strong differentiation for Voveran Emulgel in
a cluttered counter-irritant market. This has resulted in Voveran gels range overall
growth by 18 per cent for YTD February 2024 vs YTD February 20233.‘Awareness
for life' initiative focused on improving bone & joint health conditions reached to
people working in more than 100 corporates across India5.
References:
1 SAI market research on Transplant Procedure Market Overview - March 2024
2 IQVIA MAT Mar 2024
3 IQVIA MAT February 2024
4 SMSRC November-February 2024 report
5 Dr Reddy's reported information
The Indian population currently has a very high burden of vascular risk factors, such
as diabetes, hypertension, and obesity, which can adversely impact the onset and
progression of dementia6. An estimated 8.8 million Indians older than 60 years
have dementia7. Offering great convenience and safety, our Neurosciences'
innovative medicine for Alzheimer's disease dementia, Exelon Patch has seen greater
patient acceptance and usability which is reflecting in the growth numbers6.
The following brands hold key positions in major therapeutic areas such as:
| Therapeutic Area |
Therapeutic Area Product |
| Bone and Pain |
Voveran? |
| Transplantation Immunology |
Simulect?, Certican?, Sandimmun?, Neoral?, Myfortic? |
| Neurosciences |
Tegrital?, Exelon? |
References:
6 Vijayalakshmi et al. Changing demography and the challenge of dementia in
India. Nature Reviews Neurology 17, 747-758 2021
7 Lee J, et al. Prevalence of dementia in India: National and state estimates
from a nationwide study. Alzheimers Dement. 2023 Jul;19(7):2898-2912. doi:
10.1002/alz.12928. Epub 2023 Jan 13. PMID: 36637034; PMCID: PMC10338640.
Key Financial Indicators
| Particulars |
2023-24 |
2022-23 |
| Operating profit margin (%) |
18.7 |
15.6 |
| Net profit margin (%) |
25.4 |
27.3 |
| Debtors' turnover ratio |
8.6 |
9.4 |
| Current ratio |
4.4 |
4.2 |
| Return on Equity (%) |
11.2 |
14.1 |
| Inventory turnover ratio |
6.7 |
6.6 |
| Debt service coverage ratio |
24.2 |
19.4 |
| Debt equity ratio |
0.01 |
0.03 |
| Return on capital employed (%) |
9.2 |
7.9 |
| Return on Investment |
6.4 |
5.2 |
Reasons for change compared to the previous financial year in key financial ratios are
as follows:
Operating profit margin
Operating profit margin is a profitability or performance ratio used to calculate the
percentage of profit of a company produced from its operations. It is calculated by
dividing the operating earnings before interest and tax by turnover. Margins have improved
because of operational efficiencies.
Net profit margin
The net profit margin is equal to how much net income or profit is generated as a
percentage of revenue. It is calculated by dividing profit for the year by turnover. Net
profit margin in the financial year 2023-24 has decreased due to higher tax expenses
compared to previous financial year 2022-23. Current tax expense for the year ended March
31, 2024 and March 31, 2023 includes tax adjustments for earlier years of Rs.61.6 million
and (' 194.0 million) respectively.
Debtors' turnover ratio
It is calculated by dividing turnover by average trade receivables, to quantify a
company's effectiveness in collecting its receivables. No major movement compared to
previous year.
Current ratio
The current ratio is a liquidity ratio that measures a company's ability to pay
short-term obligations or those due within one year. It is calculated by dividing the
current assets by current liabilities. No major movement compared to previous year.
Return on Equity
Return on equity is a measure of profitability of a company expressed in percentage. It
is calculated by dividing profit for the year by average shareholder's equity. Return on
equity in the financial year 2023-24 has decreased due to higher tax expenses compared to
previous financial year 2022-23.
Inventory turnover ratio
Inventory turnover is the number of times a company sells and replaces its inventory
during a period. It is calculated by dividing turnover by average inventory. No major
movement compared to previous year.
Debt service coverage ratio
The debt service coverage ratio measures how many times a company can cover its current
interest payment with its available earnings. It is calculated by dividing earning
available for debt service by lease payments. The ratio has been impacted positively due
to significant reduction in lease liabilities on account of remeasurement.
Debt equity ratio
The ratio is used to evaluate a company's financial leverage. It is a measure of the
degree to which a company is financing its operations through debt versus wholly owned
funds. It is calculated by dividing lease liabilities by shareholders equity. The ratio
has been improved due to significant reduction in lease liabilities on account of
remeasurement.
Return on Capital employed
Return on equity is a measure of profitability of a company expressed in percentage. It
is calculated by dividing profit before interest and tax for the year by capital employed.
Return on capital employed has improved due to operational efficiencies.
Return on Investment
Return on investment is defined as return earned on the investment done. It is
calculated by dividing weighted average interest income on bank deposit by weighted
average bank deposits. Return on investment has improved due to operational efficiencies.
c. Risks, Threats, and Concerns
Supply continuity, quality of drugs, increasing cost pressure, inflation, high price
elasticity, control of prices of certain drugs under the Drug Price Control Order
(‘DPCO'), including regulations to cap trade margins on non-scheduled products,
continue to affect the profitability of the industry. The central government has been
inclined to introduce Trade Margin Rationalisation (TMR) in furtherance of its effort to
bring transparency and consistency to the pricing structure and to ultimately make
medicine more affordable. The tilt towards domestic industry, in line with Atmanirbhar
Bharat and ‘Make in India,' will likely affect policies and incentives and may
adversely impact competition.
d. Outlook
Medicine spending in India is projected to grow 9 - 12 percent over the next five
years, leading India to become one of the top 10 countries in terms of medicine
spending™.
The Budget allocation for the Department of Pharmaceuticals (DoP) is estimated to go up
by 29.4 per cent to Rs.4,089.95 crore during the FY 2024-25, as compared to the
Rs.3,160.06 crore outlay estimated for the FY 2023-24, backed by a 78.6 per cent increase
in allocation towards the production linked incentive (PLI) schemes'"".
The ability of companies to orient their product portfolio towards chronic therapies
for diseases like cardiovascular, anti-diabetes, anti-depressants, and anti-cancers, which
are on the rise, will also play a role in future domestic sales growth, according to
observers. Speedy introduction of generic drugs into the market has remained in focus and
is expected to benefit Indian pharmaceutical companies, it is opined. Successful
companies' businesses will focus on specialty products and therapies. The move from volume
to value led growth will drive innovation within the pharmaceutical sector.
In addition, the thrust on rural health programmes, lifesaving drugs and preventive
vaccines also augurs well for the pharmaceutical companies.
References:
v " A focus on progress of pharmaceutical industry of India (indiatimes.com)
vl " https://www. pharmabiz.com/ArticleDetails. a spx?aid=166149&sid=1
e. Internal control systems and their adequacy
The Company maintains appropriate systems of internal control, including monitoring
procedures, to ensure that all assets are safeguarded against loss from unauthorised use
or disposal. Company policies, guidelines and procedures provide for adequate checks and
balances and are meant to ensure that all transactions are authorised, recorded and
reported correctly.
The Internal Auditor reviews the effectiveness and efficiency of these systems and
procedures to ensure that all assets are protected against loss and that the financial and
operational information is accurate and complete in all respects. The Audit Committee
approves and reviews audit plans for the year based on internal risk assessment. Audits
are conducted on an ongoing basis and significant deviations are brought to the notice of
the Audit Committee of the Board of Directors following which corrective action is
recommended for implementation. All these measures facilitate timely detection of any
irregularities and early remedial steps.
During the year, the Company conducted a detailed review of its internal control
systems, evaluated the internal financial control systems with the Audit Committee and
discussed relevant issues with internal and statutory auditors. Based on the
recommendations of the Audit Committee, the Board has stated in its responsibility
statement that the Company followed proper internal financial controls and that such
internal financial controls are adequate and were operating effectively.
f. Personnel
The Company regards its employees as a great asset and accords high priority to
training and development of employees.
Number of employees in the Company as on March 31, 2024 was 62.
Disclosures pertaining to remuneration and other details as required under Section
197(12) of the Companies Act, 2013 (‘the Act') read with Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this
report as an Annexure A.
In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)
of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a
statement showing the names and other particulars of employees drawing remuneration in
excess of the limits set out in the said Rules forms part of this Report. However, in
terms of first provision of Section 136(1) of the Act, the Annual Report and Accounts are
being sent to the members and others entitled thereto, excluding the aforesaid
information. If any member is interested in obtaining a copy thereof, such member may
write to the Company Secretary & Compliance Officer, whereupon a copy would be sent.
Corporate Social Responsibility
The Company continues to support various initiatives in the areas of health. These
activities are in accordance with Schedule VII of the Act. The Board of Directors and CSR
Committee review and monitor from time to time all the CSR activities being undertaken by
the Company. The CSR Policy adopted by the Board of Directors is available on the
Company's website at: novartis.com/sites/novartis_in/files/NIL CSR Policy Final_0_0.pdf
Health: The Government of India announced its commitment to eradicate leprosy from
the country by year 2030. Aligned with this vision, the Company reinforced its commitment
to leprosy as part of its CSR work in India. The Company continued its support to a
non-profit organization with projects based in Andhra Pradesh and Maharashtra. The project
gives students affected by leprosy the ability to get jobs through vocational training and
build a community of empowered young people who can further empower their families and
communities.
The Annual Report on Corporate Social Responsibility Activities in terms of Section 135
of the Act and Rule 8(1) of the Companies (Corporate Social Responsibility Policy) Rules,
2014 as amended by Companies (Corporate Social Responsibility Policy) Amendment Rules,
2021, effective January 22, 2021 read with Companies (Corporate Social Responsibility
Policy) Amendment Rules, 2022, effective September 20, 2022 (hereinafter referred to as
‘CSR Rules') is annexed herewith as an Annexure B.
Related Party Transactions
The Audit Committee approved all the Related Party Transactions (‘RPTs') entered
into during the year under review, from time to time.
The Audit Committee granted omnibus approval for RPTs as per the provisions and
restrictions contained under the Act read with SEBI Listing Regulations. A statement
giving details of all Related Party Transactions is placed before the Audit Committee for
their review on a quarterly basis.
The Company has formulated a ‘Policy for dealing with Related Party Transactions'
(‘Policy') which includes dealing with material RPTs. The Board at its meeting held
on May 19, 2022, as recommended by the Audit Committee, considered and approved amendments
to the said Policy in line with the amendments in the SEBI Listing Regulations vide SEBI
Notification (SEBI/LAD-NRO/GN/2021/55) dated November 09, 2021 and Circular (SEBI/HO/CFD/
CMD1/CIR/P/2021/662) dated November 22, 2021 read with clarificatory SEBI Circular
(SEBI/HO/CFD/CMD1/CIR/P/2022/40) dated March 30, 2022. The updated Policy is available on
the website of the Company at: https://www.novartis.com/in-en/sites/novartis_
in/files/Policy%20for%20dealing%20with%20Related%20Party%20Transactions.pdf
Further, in terms of the provisions of Sections 177 and 188(1) of the Act read with the
Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 23 of the SEBI
Listing Regulations, all the requisite approvals were taken for the
contracts/arrangements/ transactions entered into by the Company with its related parties,
during the year under review.
All transactions with related parties were in accordance with the Policy formulated by
the Company.
Pursuant to Clause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) of
the Companies (Accounts) Rules, 2014, the particulars of contracts/arrangements entered
into by the Company with related parties referred to in sub-section (1) of Section 188 of
the Act including certain arm's length transactions under third proviso thereto are
required to be disclosed in Form AOC-2. Form AOC-2 envisages disclosure of material
contracts or arrangements or transactions on an arm's length basis.
Details of the material RPTs in the financial year 2023-24, as per the Policy adopted
by the Company, is disclosed as an Annexure C. The transactions disclosed in the
said Annexure relates to material RPTs with Novartis Pharma AG for purchase, transfer or
receipt of products, goods, active pharmaceutical ingredients, materials, services and
other obligations as approved by members under erstwhile Clause 49(VII)(E) of the Listing
Agreement at the 67th AGM of the Company held on July 23, 2015.
The details of the related party transactions as per Indian Accounting Standards (IND
AS) - 24 are set out in Note No. 31 to the Financial Statements of the Company. The
Company in terms of Regulation 23 of the SEBI Listing Regulations, submits disclosures of
all related party transactions to the stock exchanges, within time stipulated and in the
format stipulated under the said SEBI Listing Regulations.
Risk Management
Pursuant to the Regulation 21 of the SEBI Listing Regulations, your Company has
constituted a Risk Management Committee (‘RMC') to identify elements of risk in
different areas of operations and to develop policy for actions associated to mitigate the
risks.
The RMC is supported by Internal Risk Steering Committee, risk champions and on some
occasions supported by an external risk advisory firm. The teams undertake assessment of
internal and external risks, adopts the risk mitigation plan and regularly monitors them
in a structured and controlled environment. The Committee provides updates on risk
management to the Audit Committee of the Board of Directors of the Company on a regular
basis. There are no risks, which in the opinion of the Board, threaten the existence of
your Company.
Details of composition of the RMC and the Risk Management Policy, adopted by the Board,
is provided in the Report on Corporate Governance, which forms part of this Report.
Deposits
The Company has not accepted any deposits within the ambit of Section 73 of the Act and
the Rules framed thereunder during the financial year 2023-24. Hence, no further
disclosure is required.
Particulars of Loans, Guarantees or Investments
As on March 31, 2024, there were no outstanding loans or guarantees covered under the
provisions of Section 186 of the Act.
Board of Directors and Key Managerial Personnel Appointment of Director
The Board of Directors of the Company at its meeting held on February 17, 2024, based
on the recommendation of the Nomination and Remuneration Committee, approved the
appointment of Ms. Gira Sardesai (DIN: 02610502) as Independent Director (designated as
Non-Executive and Independent Director) of the Company effective March 31, 2024.
Ms. Gira Sardesai, aged about 64 years, is a Chartered Accountant and Certified Public
Accountant (CPA). Ms. Sardesai was earlier associated with companies like Pidilite
Industries Limited, ICICI Bank, British Petroleum and Johnson & Johnson.
She is a dynamic and result oriented finance professional with more than 35 years of
experience across different industries and multiple geographies. She holds extensive
hands-on experience in management and business leadership, with an established record of
success in significantly growing enterprise value.
Ms. Sardesai is proven ‘People's leader', holds the skills to effectively manage a
large group of people and build highly competent teams to drive result delivery. She also
exercises a high degree of discretion, mature judgment, and tact in handling issues of a
sensitive nature. Ms. Sardesai also has extensively travelled across the world. She is
currently involved in philanthropic activities.
The shareholders approved the appointment of Ms. Gira Sardesai as Independent Director
through Postal Ballot conducted in accordance with Sections 108 and 110 and other
applicable provisions of the Act read with the applicable Rules, Secretarial Standards and
the SEBI Listing Regulations on February 21, 2024 with requisite majority.
Cessation and Resignation of Director
Mr. Jai Hiremath, Independent Director of the Company ceased/ retired from the said
position from close of business hours of March 31, 2024.
Further, Mr. Sanjay Murdeshwar, Vice Chairman and Managing Director of the Company
resigned from the said position from close of business hours of April 02, 2024.
The Board places on record its immense appreciation for their contribution to the
Company.
Continuation of appointment of Mr. Christopher Snook as Non-Executive and
Non-Independent Director.
Pursuant to the SEBI's amendment in the regulations dated July 15, 2023 applicable
w.e.f April 01, 2024 read with Regulation 17(1D) of SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015, the appointment of Mr. Christopher Snook was
approved by shareholders through postal ballot held on February 21, 2024 with requisite
majority for a period of 4 (four) consecutive years with effect from March 31, 2024 till
March 30, 2028 and that he shall not be liable to retire by rotation.
Resignation of Company Secretary and Compliance Officer
Mr. Nikhil Malpani, Company Secretary and Compliance Officer of the Company resigned
from the said position from close of business hours of April 30, 2024.
Appointment of Company Secretary and Compliance Officer.
Ms. Chandni Maru, Company Secretary and Compliance Officer of the Company was appointed
with effect from May 08, 2024.
Re-appointment of Director retiring by rotation
Ms. Shilpa Joshi, Whole-Time Director and Chief Financial Officer, retires by rotation
and being eligible, offers herself for re-appointment. The Board recommends her
re-appointment. Her brief resume, nature of expertise, details of directorships held in
other companies along with her shareholding in the Company, if any, as stipulated under
Secretarial Standard-2 and Regulation 36 of the SEBI Listing Regulations are forming part
of the Notice of the ensuing AGM.
Declarations by Independent Directors
The Company has received necessary declarations from all the Independent Directors of
the Company confirming that they continue to meet the criteria of independence, as
prescribed under Section 149(6) of the Act read with Regulations 25(8) and 16(1)(b) of the
SEBI Listing Regulations. There has been no change in the circumstances affecting their
status as Independent Directors of the Company. The Independent Directors have also
confirmed that they have complied with Schedule IV to the Act and the Company's Code of
Conduct.
They have further confirmed that they are not aware of any circumstance or situation
which exists or may be reasonably anticipated that could impair or impact their ability to
discharge their duties. Further, the Independent Directors have also submitted their
declaration in compliance with the provision of Rule 6(3) of the Companies (Appointment
and Qualification of Directors) Rules, 2014 which mandated the inclusion of an Independent
Director's name in the data bank of Indian Institute of Corporate Affairs (‘IICA')
for a period of one year or five years or lifetime till they continue to hold the office
of an Independent Director.
Committees of Board; Meetings of the Board of Directors and Board Committees
The Board currently has 5 (five) Committees, namely, the Audit Committee, the
Nomination and Remuneration Committee, the Corporate Social Responsibility Committee, the
Stakeholders Relationship Committee, and the Risk Management Committee.
During the year under review, the Board of Directors met 5 (five) times to transact
various affairs of the Company. A detailed update on the Board, its composition, including
synopsis of terms of reference of various Board Committees, number of Board and Committee
meetings held during the financial year 2023-24 and attendance of the Directors at each
meeting is provided in the Report on Corporate Governance, which forms part of this
Report.
Key Managerial Personnel (KMP)
In terms of provisions of Section 203 of the Act, the following are the KMP of the
Company as on date:
Ms. Shilpa Joshi - Whole Time Director and Chief Financial Officer
Ms. Chandni Maru - Company Secretary and Compliance Officer (Appointed w.e.f. May 08,
2024)
Nomination and Remuneration Policy
The Company has in place a Nomination and Remuneration Policy (‘Policy') which
provides guidance on selection and nomination of Directors to the Board of the Company;
appointment of the Senior Management Personnel of the Company; and remuneration of
Directors, KMP and other employees. The said Policy is also provided in the Report on
Corporate Governance which forms part of this Report and is also available on the website
of the Company and can be accessed at:
https://www.novartis.com/sites/novartis_in/files/NRC%20Policy.pdf
Performance Evaluation of Board
Pursuant to the provisions of Section 178 read with Schedule IV of the Act and
Regulation 17 read with Part D of Schedule II to the SEBI Listing Regulations, your
Company has in place a Board Evaluation process for the Board of Directors as a whole,
Board Committees and also for the Directors (Executive and Non-Executive) individually by
seeking responses/inputs from all the Directors to an assessment questionnaire.
A structured questionnaire was prepared for the Board evaluation process for the
financial year 2023-24, covering various aspects of the Board's functioning such as proper
mix of competencies, sufficient diversity and reviewing of Company's business, financial
performance, governance and compliance etc.
A separate exercise was carried out to evaluate the performance of individual
Directors, who were evaluated on parameters such as level of engagement and contribution,
independence of judgement, safeguarding the interest of the stakeholders of the Company
etc.
The Independent Directors of the Company met on April 03, 2024, without the presence of
Non-Independent Directors and members of the management to review the performance of
Non-Independent Directors and the Board of Directors as a whole, to review the performance
of the Chairperson, Managing Director and Whole-Time Director of the Company, and to
assess the quality, quantity and timeliness of flow of information between the management
and the Board of Directors for the financial year 2023-24. The performance evaluation of
the Independent Directors was carried out by the entire Board.
The final outcome of the Board evaluation process for the financial year 2023-24 was
placed before the Board of Directors at its meeting held on May 10, 2024 and the Directors
expressed their satisfaction with the evaluation process carried out.
Directors' Responsibility Statement
The Audited Financial Statement of your Company for the year under review
(‘financial statement') are in conformity with the requirements of the Act read with
the Rules made thereunder (‘Act') and the Accounting Standards. The financial
statement fairly reflects the form and substance of transactions carried out during the
year under review and reasonably present your Company's financial condition and results of
operations.
Pursuant to Section 134(3)(c) of the Act, the Board of Directors, to the best of its
knowledge and ability confirm that:
(a) in the preparation of the annual accounts, the applicable accounting standards have
been followed along with proper explanation relating to material departures, if any
(b) appropriate accounting policies have been selected and applied consistently and
have 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 on March 31, 2024 and of the
profit of the Company for the year ended March 31, 2024
(c) proper and sufficient care has been taken for the maintenance of adequate
accounting records in accordance with the provisions of the Act for safeguarding the
assets of the Company and for preventing and detecting fraud and other irregularities.
(d) the annual accounts have been prepared on a going concern basis.
(e) proper internal financial controls were laid down and followed by the Company and
such internal financial controls are adequate and were operating effectively.
(f) proper systems are devised to ensure compliance with the provisions of all
applicable laws and that such systems are adequate and operating effectively.
Familiarization programme for Independent Directors
The Company keeps its directors informed of the activities of the Company, its
management and operations and provides an overall industry perspective on issues being
faced by the industry including changes in regulatory landscape, in a proactive manner.
Details of familiarisation programme provided to the Directors of the Company are
available on the website of the Company at:
https://www.novartis.com/sites/novartis_in/files/Familiarization%20Program%20for%20
independent%20Directors_0.pdf
Auditors and auditors report
(i) Statutory Auditors, Auditors Report and Statutory Audit Fees:
Pursuant to the provisions of Section 139 of the Act read with the Companies (Audit and
Auditors) Rules, 2014, M/s B S R & Co. LLP Chartered Accountants (Firm Registration
No. 101248W/ W100022), were appointed as Statutory Auditors of the Company at the AGM held
on July 29, 2022 for a term of 5 (five) years to hold office from the conclusion of the 74th
AGM till the conclusion of the 79th AGM of the Company.
The Auditors' Report issued by M/s. B S R & Co. LLP to the shareholders on the
Financial Statement of the Company for the year ended March 31, 2024 does not contain any
qualification, reservation or adverse remark. The said Report for the financial year ended
March 31, 2024 read with the explanatory notes therein are self-explanatory and therefore,
do not call for any further explanation or comments from the Board under Section 134(3) of
the Act. The Auditors' Report is enclosed with the Financial Statement in this Annual
Report.
During the financial year 2023-24, the total fees for the statutory audit rendered by
the Statutory Auditors are given below:
| Auditors' Remuneration (Excluding GST where applicable) |
(Rs. in million) |
|
2023-24 BSR & Co LLP |
2022-23 Deloitte Haskins & Sells LLP* |
2022-23 BSR & Co LLP |
2022-23 Total |
| Period |
April 23- March 24 |
April 22- June 22 |
July 22- March 23 |
FY 22-23 |
| Audit Fees |
6.9 |
0.7 |
5.6 |
6.3 |
| Reimbursement of expenses |
0.9 |
- |
0.5 |
0.5 |
| Total |
7.8 |
0.7 |
6.1 |
6.8 |
* The tenure of M/s Deloitte Haskins & Sells LLP expired at the conclusion of the
74th AGM of the Company
(ii) Secretarial Auditor and Secretarial Audit Report:
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed Saraf &
Associates, Company Secretaries, for conducting Secretarial Audit of the Company for the
financial year 2023-24. The Secretarial Audit Report is annexed herewith as an Annexure
D. The Secretarial Audit Report does not contain any qualification, reservation, or
adverse remark.
The Board has re-appointed Saraf & Associates, Company Secretaries, to conduct the
Secretarial Audit of the Company for the financial year 2024-25. They have confirmed their
eligibility for the said re-appointment.
(iii) Cost records and Cost Audit:
Maintenance of cost records and requirement of cost audit as prescribed under the
provisions of Section 148(1) of the Act are not applicable for the business activities
carried out by the Company for the Financial Year 2023-24.
During the year under review, neither the Statutory Auditors nor the Secretarial
Auditor has reported to the Audit Committee or the Board, under Section 143(12) of the
Act, any instances of fraud committed against the Company by its officers or employees.
Compliance with Secretarial Standards
During the financial year 2023-24, the Company has complied with the applicable
Secretarial Standards issued by the Institute of Company Secretaries of India.
Annual Secretarial Compliance Report
The Company has undertaken an examination of all applicable compliances as per SEBI
Listing Regulations and Circulars/Guidelines issued thereunder, for the Financial Year
2023-24.
The Annual Secretarial Compliance Report as issued by Saraf & Associates, Company
Secretaries, is required to be submitted to the Stock Exchanges within 60 days of the end
of the financial year. The Report does not contain any qualification, reservation or
adverse remark.
Energy, Technology Absorption and Foreign Exchange
Information required under Section 134(3)(m) of the Act read with Rule 8(3) of the
Companies (Accounts) Rules, 2014, with respect to conservation of energy, technology
absorption and foreign exchange earnings/outgo is included in Annexure E, annexed
herewith.
Corporate Governance
The Company is committed to follow best practices of Corporate Governance and is in
compliance with the provisions on Corporate Governance specified in the SEBI Listing
Regulations and Novartis Group Corporate Governance norms.
Pursuant to the SEBI Listing Regulations, the Report on Corporate Governance for the
year under review, presented in a separate section, is forming part of the Annual Report.
A certificate from Dr. K. R. Chandratre, Practicing Company Secretary, confirming
compliance of conditions of Corporate Governance, as stipulated under the SEBI Listing
Regulations, also forms part of the Report on Corporate Governance.
Business Responsibility and Sustainability Reporting (‘BRSR')
In terms of amendment to regulation 34(2)(f) of the SEBI Listing Regulations vide
Gazette notification no. SEBI/LAD-NRO/GN/2021/22 dated May 05, 2021 as amended from time
to time, SEBI has mandated to 1000 companies by market capitalization to publish Business
Responsibility and Sustainability Report (‘BRSR') based on 9 ESG principles. Since
Novartis India is amongst the top 1000 companies, it has prepared BRSR which is enclosed
as Annexure F.
Whistle Blower Policy: Vigil Mechanism
Pursuant to Section 177 of the Act read with Regulation 22 of the SEBI Listing
Regulations, it is mandated for every listed entity to formulate Vigil Mechanism
(‘Whistle Blower Policy') for Directors and employees to report genuine concerns. The
Company has established a Vigil Mechanism and Whistleblower Policy which provides for (a)
adequate safeguards against victimisation of persons who avail the Vigil Mechanism; and
(b) direct access to the Chairperson of the Audit Committee of the Board of the Company in
appropriate or exceptional cases. Details of the Vigil Mechanism and Whistleblower Policy
are made available on the website of the Company at:
https://www.novartis.com/sites/novartis_in/files/Vigil%20Mechanism%20
%26%20Whistle%20Blower%20Policy_.pdf
Prevention of Sexual Harassment Policy
The Company has in place a Prevention of Sexual Harassment Policy in line with the
requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition
and Redressal) Act, 2013 and Rules made thereunder. An Internal Complaints Committee has
been set up to redress complaints received regarding sexual harassment. All persons
whether employed as permanent, contractual, temporary or trainees are covered under this
Policy.
During the Financial Year 2023-24, no complaint was received by the Company related to
sexual harassment. There are no pending complaints to be resolved.
Annual Return
Pursuant to the provisions of Sections 92(3) and 134(3)(a) of the Act read with Rule 12
of the Companies (Management and Administration) Rules, 2014, the draft Annual Return of
the Company for the Financial Year ended March 31, 2024 is available on the website of the
Company at: https://www.novartis.com/in-en/investors/novartis-india-financials
Significant and material orders passed by the Regulators or Court
There are no significant and material orders passed by the regulators or courts or
tribunals impacting the going concern status and Company's operations in future.
Other Disclosures
• There were no material changes and commitments affecting the financial position
of the Company between the end of the Financial Year 2023-24 and the date of this Report.
• There is no change in the capital structure of the Company during the financial
year 2023-24.
• The Company has not issued any shares with differential voting rights/sweat
equity shares.
• There was no revision in the financial statement.
• There has been no change in the nature of business of the Company as on the date
of this Report.
• No application has been made under the Insolvency and Bankruptcy Code; hence the
requirement to disclose the details of application made or any proceeding pending under
the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their
status as at the end of the financial year is not applicable.
• The requirement to disclose the details of difference between amount of the
valuation done at the time of one-time settlement and the valuation done while taking loan
from the Banks or Financial Institutions along with the reasons thereof, is not
applicable; and
• The Company does not have any subsidiary, associate companies and joint ventures
for the year ended March 31, 2024.
Green Initiative
We request all the shareholder to support the ‘Green Initiative' of the Ministry
of Corporate Affairs and Company's continuance towards greener environment by enabling the
service of Annual Report, AGM Notice and other documents electronically to your email
address registered with your Depository Participant/ RTA.
Cautionary Note
The statements forming part of the Board's Report may contain certain forward-looking
remarks within the meaning of applicable securities laws and regulations. Many factors
could cause the actual results, performances or achievements of the Company to be
materially different from any future results, performances or achievements that may be
expressed or implied by such forward looking statements.
Acknowledgement
The Board appreciates and places on record the contribution made by all stakeholders,
particularly employees, shareholders, customers, the medical fraternity and all business
partners, during the year under review and acknowledges the support received from the
parent Company, Novartis AG.
|
On behalf of the Board of Directors |
|
CHRISTOPHER SNOOK |
|
Chairman |
| Date: May 10, 2024 |
DIN: 00369790 |
| Place: Mumbai |
|
|