Torrent Pharmaceuticals Ltd
Directors Reports
To,
The Shareholders
The Directors have the pleasure of presenting the Fiftieth Annual
Report of your Company together with the Audited Financial Statement for the year ended 31st
March, 2023.
HIGHLIGHTS
1. Expanding Horizons, Deepening Trust:
• The Company has made incremental investments in its branded
business segment for augmenting growth and improving market share over the next few years.
• Acquisition of Curatio Health Care (I) Private Limited
("Curatio"), expansion of field force in India and Brazil to complement new
launch focus and expand the customer coverage, strategic alliance with Boehringer
Ingelheim India Private Limited ("Boehringer Ingelheim India") to co-market its
anti-diabetic drug and its fixed dose combination in India, investments in new branded
generic markets have been some of the important incremental capital allocations during the
year.
• The Company invested in Hybrid Solar-Wind Power project, to meet
its captive power requirements. The project will act as key catalyst in reducing the
Company's carbon footprints, which is one of key pillars of our ESG roadmap.
2. India business:
• Mergers & acquisitions: During the year, the Company
acquired 100% of equity share capital of Curatio, positioning itself as the largest player
in Cosmetic Dermatology and improving its ranking within overall dermatology therapy to 7th.
The acquisition will enable the Company to tap into high-growth opportunities in the
Derma; more importantly, the Cosmo Derma segment.
Curatio is a fast growing portfolio with underlying market growing by
~16% i.e. ~1.6 times of the growth of Indian Pharmaceutical
Market (IPM). The integration strategy entails a blend of revenues,
cost and margin synergies. With little less than 2 quarters of integration during the
year, the Company has already started leveraging and realizing these synergies.
• Market outperformance: As per secondary market data (AIOCD), the
Company's growth (including growth of Curatio portfolio) for 2022-23, was 16% versus
IPM growth of 9%. Growth was aided by strong performance of top brands, new launch
momentum, market share gain in focus therapies and growth synergies bolstered by
integration of Curatio Portfolio.
• Field force expansion: During the year, the Company has expanded
field force to complement its new launches and selectively expand its reach amongst
Consulting Physicians and General Practitioners. At the end of 2022-23, total
numberoffield force stood at 5,500 (including field force from Curatio portfolio).
• Strategic alliance: With an objective of fortifying our presence
in anti-diabetic and cardiovascular therapeutic segments, the Company entered into a
strategic alliance with Boehringer Ingelheim India for in-licensing and co-marketing of
novel SGLT-2 anti-diabetic medications in India viz. Empagliflozin & Combinations.
• OTC foray: By the end of financial year, the Company has also
forayed in to Over-the-Counter (‘OTC') segment by launching
Shelcal 500 on the OTC platform. As a part of its OTC expansion
strategy, the Company shall gradually add more brands to the OTC platform.
• IPM ranking: With the acquisition of Curatio and consistent
market share gain in base business, the Company's IPM rank has gained 2 ranks and now
the Company is the 6th largest player in the IPM (2021-22: 8th).
• The Company's growth levers includes - Continued market
outperformance, new launches, in-clinic effectiveness and implementation of synergies from
acquired portfolio.
3. Brazil business:
• The Company continues to be ranked no. 1 Indian Pharmaceutical
Company in Brazil.
• In 2022-23, Brazil registered a growth of 26% (BRL growth of
14%). Brazil saw all round performance with improvement in market share of existing
portfolio, decent / competitive share in the new product launches and the generic segment
scaling up very fast.
• The Company launched six products in the CNS, diabetic and
cardio segments with Rivaroxaban and Desvenlafaxine being the two biggest success.
• The Company has expanded its field force by ~40 representatives,
with an objective to expand its market coverage as well as complement new launches.
• The Company's plan is to enhance coverage in the CNS and
Cardio markets over the medium term through calibrated expansion in field force, continued
expansion of product portfolio and steady improvement in in-clinic effectiveness. We also
plan to foray in to newer therapy in near to medium term.
4. Germany business:
• The Company is ranked no. 5 generic company and no. 1 Indian
Pharmaceutical Company in Germany.
• The Company has seen sequential growth recovery from H2 of
2022-23 with new tender wins and better growth in the non-tender segments.
• The Company's focus areas will include working on cost
efficiency efforts to improve its market share in the tender segment, expanding non-tender
segment & developing new segments.
5. US business:
• In 2022-23, US registered flattish growth due to lack of new
product approvals pending USFDA clearance of Company's Manufacturing facilities at
Indrad and Dahej. The Company is fully committed to maintaining highest quality standards
and has been continuously engaging with regulatory authorities to meet with their
expectations.
• The legacy portfolio continued to be impacted by price erosion
of mid to high single digit.
• At end of year, 46 ANDAs were pending approval with USFDA and 3
tentative approvals were received. During the year, 5 ANDAs were filed.
6. Rest of the World:
• ROW markets registered strong growth trends.
• The Company shall continue to invest in ROW markets, with an
objective to develop them as growth engines for future.
7. Manufacturing:
• State-of-the-art Oral Oncology manufacturing facility [Gujarat],
which will cater to both regulated and non-regulated markets, was inspected by USFDA and
the Company has received its first product approval from the facility.
8. Financial performance:
• In 2022-23, the Company registered strong revenue growth of 13%
and Operating EBITDA growth of 17%.
• In 2022-23, Operating EBITDA margins were 30% versus 29% in
2021-22.
• 2022-23 witnessed strong performance led by Branded Generic
markets and sustained improvement in profitability aided by higher BGx share, operating
leverage, cost efficiencies and margin synergies from the acquired portfolio.
• At end of 2022-23, leverage in terms of Net debt to EBITDA
stands at 1.6x.
FINANCIAL RESULTS
The summary of Standalone (Company) and Consolidated (Company and its
subsidiaries) operating results for the year and appropriation of divisible profit is
given below:
(I in crores except per share data)
|
Standalone |
|
Consolidated |
|
|
2022-23 |
2021-22 |
2022-23 |
2021-22 |
| Sales & Operating Income |
7,695 |
6,742 |
9,620 |
8,508 |
| Profit Before Depreciation, Net Finance Cost, Exceptional
Items |
2,545 |
2,301 |
2,883 |
2,621 |
| & Tax |
|
|
|
|
| Less: Depreciation & Amortization |
672 |
602 |
707 |
662 |
| Less: Net Finance Cost |
296 |
233 |
329 |
248 |
| Profit Before Exceptional Items & Tax |
1,577 |
1,466 |
1,847 |
1,711 |
| Less: Exceptional Items |
- |
- |
- |
485 |
| Less: Tax Expense |
526 |
475 |
602 |
449 |
| Net Profit for the Year |
1,051 |
991 |
1,245 |
777 |
| Balance brought forward |
3,213 |
2,900 |
2,917 |
2,807 |
| Other Comprehensive income and other adjustments |
(7) |
(1) |
4 |
10 |
| Balance available for appropriation |
4,257 |
3,890 |
4,166 |
3,594 |
| Appropriated as under: |
|
|
|
|
| Transfer to General Reserve |
- |
- |
- |
- |
| Dividend |
863 |
677 |
863 |
677 |
| Tax on Distributed Profits for Dividend- |
- |
- |
- |
| Balance Carried Forward |
3,394 |
3,213 |
3,303 |
2,917 |
| Earnings Per Share (I per share) |
31.07 |
29.29 |
36.79 |
22.96 |
Consolidated Operating Results
The consolidated sales and operating income increased to I 9,620 crores
from I 8,508 crores in the previous year showing a growth of 13%. The consolidated
operating profit for the year was I 2,883 crores as against I 2,621 crores in the previous
year registering growth of 10%. The consolidated net profit stood at I 1,245 crores
compared to I 777 crores in the previous year registering growth of 60%.
Management Discussion and Analysis (MDA)
The details of operating performance of the Company for the year, the
state of affairs and the key changes in the operating environment have been analysed in
the Management Discussion and Analysis section which forms a part of the Annual Report.
APPROPRIATIONS
i) Dividend
The Board in its meeting held on 30th May, 2023 revised the
Dividend Distribution Policy. The Company will now endeavor to distribute 50% of its
annual consolidated net profit after tax without taking into account non-cash charges
relating to the business acquisitions. The revised policy is available on the website http://www.torrentpharma.com/pdf/investors/Dividend_Policy.pdf
During the year under review, an interim dividend of I 14/- per equity
share of face value of I 5/- each (@ 280%) amounting to I 474 crores was paid to
the shareholders. Further the Board considered it prudent to recommend the final dividend
for 2022-23 as per the revised Dividend Distribution Policy and accordingly recommended a
final dividend of I 8/- per equity share of face value of I 5/- each (@ 160%) amounting to
I 271 crores for approval of shareholders at the 50th Annual General Meeting
(AGM) of the Company. Hence, the total dividend paid / payable with respect to the year
under review was of I 22/- per equity share
(@ 440%) amounting to I 745 crores.
ii) Transfer to Reserves
The Board of Directors of the Company has decided not to transfer any
amount to the reserves for the year under review.
HUMAN RESOURCES
At Torrent Pharma, Human Resources are considered the Company's most
valuable assets and its growth would not have been possible without the commitment,
loyalty and hard work put up by its employees at all levels. In order to sustain this, we
continue to build competencies to embrace the new skills for a sustainable future. This
has enabled the Company to develop an inclusive organization that is multicultural and
inspires a sense of satisfaction and belonging in its employees. We believe that the
Company's success is the result of the combined efforts of all its employees. During the
year, the Company took several initiatives to increase organizational performance and
productivity in order to be value-driven and future-ready. With the acquisition of
Curatio, Human
Resources Department has continued to arrange various training and
development programs that have helped smooth transition for all employees of Curatio in
embracing the culture of Torrent. In addition, Managers from field and Corporate Office
are provided continuous training to sharpen and understand new managerial skills.
The Company is committed to provide a safe and healthy working
environment and achieving an injury and illness free work place. Economic considerations
do not take precedence over the implementation of health and safety measures. While safety
is everyone's primary responsibility, at Torrent Pharma, leaders take the lead in
exhibiting visible commitment to health and safety.
All lead and lag incidents are reported through an incident reporting
system. The system has well-established procedures for reporting incidents,
investigations, determining corrective actions and improvements and a non-retaliatory
mechanism for employees and contract staff to report incidents.
Through cadre and capability building efforts, we remain focused on
strengthening our talent processes and building the talent pipeline for the organization.
Significant efforts have been made to strengthen our leadership and hire the best talent
available. These have helped to bring a new perspective and energy to the organization.
Our training and development activities also provided impetus for the development of
talent and for sharpening new management skills amongst employees.
In order to promote a sense of togetherness among employees, the
Company has taken various initiatives such as SAMPARK, where management regularly
interacts with new employees. This initiative is divided into three cycles that provide
employees with Orientation program, Comfort rating, and employees' futuristic approach to
the organization. Aside from coaching and mentoring, which make an employee more valuable
to your organization by developing and improving their skills both professionally and
personally, our other initiatives such as Sahyog, Baat-cheet and uCoffee sessions also
help employees to learn new skills.
The Company recognizes that safety is everyone's responsibility and
that to foster a culture of safety, all of our employees must consider how their actions
affect others and our workplace, and engage in meaningful, open and respectful advice on
health issues.
Various women-friendly initiatives such as day care centers and flexi
timings support female employees in pursuing their careers, among other things.
The Company will continue to invest in the professional development of
its employees and instill in them the importance of responsible growth. As a result, they
recognize that their success depends on providing innovative solutions to patient needs,
community betterment and environmental protection.
The Company has a diverse workforce of 13,573 employees as on 31st
March, 2023 vis-a-vis 12,910 employees as on 31 st March, 2022.
VIGIL MECHANISM
Over the years, the Company has earned a reputation for conducting its
business with honesty and integrity and has zero tolerance to any form of unethical
behavior or misconduct. The Organization has a rigorous reporting system for reporting
unethical behavior to promote professionalism, fairness, dignity and ethical behavior by
all of its employees and stakeholders, details of which are covered in the Corporate
Governance Report.
The system also protects employees who use the whistle blower mechanism
and grant them direct access to the Audit Committee.
In addition, the Company's Code of Business Conduct which lays down the
important corporate ethical practices that shapes the
Company's business practices and represent the Company's valued
principles.
Whistle-blower Policy and Code of Business Conduct have been hosted on
the Company's website www.torrentpharma.com.
In accordance with the provisions of the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules made thereunder,
the Company has formulated a Policy on protection of women against sexual harassment at
workplace. In this context, the Company regularly organizes a series of interactive
awareness workshops for its employees.
The Company has complied with the provisions of the Sexual Harassment
of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013 relating to the formation of Internal Complaints
Committee. During the year, no complaints were received under this policy.
In addition, the Company has rolled out Human Rights Policy defining
the guiding principles for respecting and protecting the Human
Rights across the Company's operations.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The CSR Activities undertaken by the Company were under the thrust
areas of Community Healthcare, Sanitation & Hygiene, Education & Knowledge
Enhancement and Social Care & Concern. During the year, the Company was required to
spend
Rs. 26.50 crores (2% of the average net profit of the past three
financial years and surplus arising at implementing agency level from temporary investment
of funds for FY 2021-22). The Company contributed to implementing agency Rs. 24.96 crores
during the year. The total amount spent during the year was Rs. 22.96 crores. Further, the
unspent amount at the end of the year was transferred to "Unspent CSR Account"
of related ongoing projects at the implementing agency level. The Board in its meeting
held on 30th May, 2023 revised the existing CSR Policy of the Company to
harmonize with the amendments carried out by the Ministry of Corporate Affairs in the
Companies (Corporate Social Responsibility Policy) Rules, 2014. The brief details of the
major CSR activities are described hereunder:
REACH: Driven by the belief of Chairman Emeritus, Sudhir Mehta ‘Children
are the future of our nation and this future must be well preserved', the
flagship CSR program of the Group "REACH" – Reach EAch CHild was initiated
in the year 2016 under the aegis of UNM Foundation, a Section 8 Company. REACH has three
major pillars: (a) Grass Root Interventions (b) Green Field Actions and (c) Other
Allied Initiatives. Salient achievements are:
• Grassroot Interventions:
It targets to establish baseline health status of children in age group
of 6 months to 6 years, through medical camps in villages around Surat, Dahej, Indrad and
Balasinor. In Pre-Covid period, over 71,000 children were screened in 351 villages.
Post-covid, an additional 649 villages were covered, addressing malnutrition in over 7,500
children with Mauji biscuits, bringing the total to 1,000 villages and over 78,000
children. Appropriate treatment regime resulted in benefiting more than 69% Malnourished
children and more than 90% anaemic children. About 73% children having other ailments were
also provided appropriate treatment with encouraging outcomes.
During the year, for the 1000 villages covered, fresh baseline medical
camps were organized to identify underweight malnourished and anaemic children across all
four locations. 748 villages have been covered and more than 37,000 children have been
screened. Supplement distribution and follow-up activities for identified malnourished and
anaemic children are ongoing.
In order to expand the coverage of REACH initiative, started conducting
baseline medical camps in Banaskantha and Radhanpur in Gujarat and more than 7,300
children have been screened in 238 villages across these two locations.
Pilot projects have also been started in Agra, Bhiwandi and Union
Territory of Dadra and Nagar Haveli. 14 villages are covered and more than 500 children
have been screened across these three locations.
Till FY 2022-23, on cumulative basis, more than 1,24,000 children of
1,252 villages are screened. Baseline screening camps in villages and subsequent follow-up
activities continue.
Greenfield Actions:
Healthcare services are provided to children up to 18 years. There are
3 Pediatric Health Centres (PHCs) with basic laboratory and day-care facility at Dahej,
Balasinor and Indrad, while fourth major centre near Sugen Power Plant has a 150 bed
paediatric hospital ‘UNM Children Hospital' which is part of
‘Rangtarang' complex started in FY 2019-20. In FY 2022-23, more than
94,000 OPDs have been carried out across all 4 locations.
Further, 2 PHCs have been started at Waghai and Chhapi during FY
2021-22 and 3 PHCs have been started at Dediapada, Naswadi and Radhanpur during FY
2022-23. Regular OPDs are conducted at Waghai, Dediapada and Chhapi while weekly OPDs are
conducted at Naswadi and Radhanpur. In FY 2022 23, more than 14,000 OPDs had been carried
out across these PHCs.
These PHCs will be scaled up appropriately in future depending on
feedback as well as demand of health care services from the respective local population.
In FY 2022-23, more than 1,00,000 OPDs had been carried out across all
9 locations. Cumulative OPDs are more than 4,34,000 till 31st March, 2023
across all locations.
• Other Allied Initiatives:
Counselling and Support was provided to rural adolescent girls around
Sugen, Dahej & Indrad centres covering menstrual hygiene and sanitation, by providing
sanitary napkins absolutely free of cost to the beneficiaries. This has resulted in
reducing prevalent social taboos and ultimately increasing confidence and self-esteem
amongst beneficiaries.
During the year, based on encouraging feedback of pilot
experiment for biodegradable and reusable sanitary napkins, more than 27,000 beneficiaries
of 615 villages have been switched over to such napkins. More than 7,800 beneficiaries of
167 villages were enrolled and provided regular sanitary napkins on monthly basis.
More than 35,000 beneficiaries have been covered in 800 villages across
Sugen, Dahej & Indrad centers. More than 28,000 beneficiaries of 633 villages have
been switched to Bio-degradable reusable sanitary napkins
• UNM Children Hospital:
Previously known as Balsangam, the hospital underwent a name change to
UNM Children's Hospital in October, 2022. Towards expanding its operations, the focus has
been to offer regular as well as complex surgeries.
In FY 2022-23, more than 44,000 OPD consultations for children were
done culminating into an average of 142 per day as opposed to 37 average per day in FY
2021-22. More than 1,400 IPD cases handled during the year.
A total of 209 patients were served through the Neo-natal ICU (NICU)
and Paediatric ICU (PICU) for their critical conditions.
Looking to the continuous growing need, the capacities of the NICU and
PICU were enhanced in February, 2023.
The Hospital handled more than 700 surgeries in FY 2022-23, which
included major and supra- major operations.
Facilities and services offered under UNM Children Hospital have been
enhanced to cover paediatric super specialties like Ophthalmology, Orthopaedic, Neurology,
Plastic surgery, Endocrinology, Haematology, and Pulmonology. The number of visiting
Doctors in FY 2022-23 have been increased to 27 covering a total of 14
speciality disciplines.
To spread awareness of the hospital, various camps were organized in
village schools and temples, targeting areas with less healthcare facilities like Vankal
(Mangrol), Sutharvada, Kalwada (Near Valsad), Kamrej, Vyara etc. Team of Doctors screen
children and provide treatment. In appropriate cases, counselling is also provided to
them. Awareness campaigns have also been done via newspapers, leaflets distribution, radio
advertisement, hoardings, community meetings, etc.
Through Founder's Day documentary and video clip regarding
hospital subsequently circulated, we could reach out to patients from Pan India, and have
recorded 157 patients coming to the hospital for treatment, of which 25 were operated upon
in the hospital.
Pratiti - Development of Public Parks: The Pratiti initiative is
supported & funded by the UNM Foundation and all the gardens are designed and
developed with a mission to provide the best environmental conditions to live in, by
providing the citizens with recreational areas by creating parks, gardens, ponds, and
lakes near their neighborhood with reduced level of air and noise pollution by improving
micro-alignment at the city level and to recharge groundwater through ponds and lakes.
The Company along with one of India's best known landscape design
firms developed an approach for development of urban public parks. In Ahmedabad, total 9
nos. of parks measuring more than 98,000 sq. mt. area were fully developed and opened for
Public use in last five years. Further, 5 parks admeasuring approx. 2,70,000 sq. mts have
been taken for redevelopment by the Company in Ahmedabad.
Lake Development: The Company has also taken two Lakes for
development at Zolapur and Kesardi villages in Sanand and Bavla districts respectively for
providing the citizens with basic facilities and recreational areas. The major activities
to be undertaken include refurbishing of crematorium, community hall & surrounding
area near by temple, development of gazebo with siting arrangement, children play area,
open gym area and Green belt development with walking track. In addition to above, the
Company continued other social activities during the year, as described here under.
Community Healthcare: Post COVID-19, the OPD and day care clinic
"Sumangal", part of the ‘Rangtarang' hospital complex, has also been
scaled up and caters to the communities and villages around. The footfalls at
"Sumangal" are now about 300 patients per day. Cumulatively, more than 3,92,000
OPDs have been carried out till March, 2023. Services being provided include ENT, Dental
Care, Physiotherapy, Pathology and Radiology facilities and special
consultations in ophthalmology, dermatology, gynaecology etc. The Report on CSR activities
is annexed herewith as Annexure B.
ENVIRONMENT, HEALTH & SAFETY (HSE)
The Pharmaceutical industry is unique as it faces ethical dilemmas
distinct from other industries. Given the evolving global regulatory environment &
Safety, there is substantial increase in regulatory scrutiny and stakeholder expectations.
Environment (E), Health (H) and Safety (S), HSE is an abbreviation for
the set that studies and implements the practical aspects of protecting the environment
and maintaining health and safety at occupation. We have made it a cornerstone of our
mindset at Torrent
Pharma to have a mission Zero Accidents for health and safety of our
workforce. In simple terms, Organization goes beyond the statutory call to ensure that our
activities do not cause harm to anyone in any aspects.
We believe HSE Management Systems are attributing to our sustainable
business growth and we continuously strive to embed HSE in every aspect of the business
way beyond compliance.
We have well defined HSE Policy, applicable uniformly across the
organization. HSE Policy affirms by top management depicts the clear vision and
reiterating commitment in totality for adopting safe, secure and sustainable practices for
its day to day operations.
The HSE Policy covers the fundamentals of not only complying with the
regulatory requirements but also excelling in improving the HSE performance through
continual improvement and regular & focused efforts are made to ensure a safe and
healthy work environment for our employees. Our facilities are designed in accordance with
the highest safety standards and state-of the-art safety controls for all our employees to
generate awareness and nurture individual responsibility towards health and safety
practices.
The governance and execution of the HSE management system, along with
the mitigation plan for critical HSE risks, Environmental sustainability aspects come
under the purview of Torrent HSE Leadership and site leadership team. Line functions
implement sustainability initiatives in alignment with local HSE procedures based on
corporate HSE standards and guidelines.
We have sustainability data management system to capture environmental
sustainability parameters for strengthening integrity and completeness of data. The
accuracy of data is assured by providing controls at different levels of data reported at
site, which are reviewed by respective site HSE heads and approved by the site heads.
Our constant and focused endeavours in HSE domain like adopting various
digitalization in our prevailing HSE practices like Online portal for reporting Unsafe Act
/ Conditions and Incidents with Corrective and Preventive actions, Continual Safety
training and counselling on Technical and behavioural approach, Organizing various HSE
Campaigns, Internal and External Safety Inspections & audits have contributed
substantially to bring down incident rates and thus leading to sustainable, safe and
healthy working environment for our work force and other Stakeholders. Health and Safety
training is provided to all employees and contract workers on a regular basis by external
and internal HSE Specialist. To foster a healthy HSE culture inside the firm, we encourage
all employees, including contract workers to embrace safe working habits and behavior.
We are fully committed to optimize the use of natural resources in the
operation by minimizing its use of natural resources, increasing the use of renewable
energy resources employing state of art technology, reducing wastages, utilization of
waste as an alternate fuel in cement industries etc. We are cognizant of the global
climate change crisis and aims to reduce our Carbon footprint and positively strive to
give back to the environment.
We aspire to become Zero Landfill Hazardous Waste generator in future.
As a responsible corporate citizen, we have been striving for green
energy as resource by replacing fossil fuel fired Boiler with Briquette (Bio-mass) fired
boiler at Indrad, Dahej and Baddi manufacturing facilities. It will bring down the
consumption of fossil fuel and promoting the utilisation of green fuel (bio
fuel-briquette) and thus, will reduce our environmental impact / carbon footprint
significantly (Scope-1).
In order to achieve this green initiative, the Company has invested the
capital investment of around I 35 crores. The entire project will be commissioned in FY
2023-24 thereby resulting in annual saving of upto I 13 crores.
Further the Company has taken one more step in the direction of optimum
utilization of renewable resources by way of commencement of installation of Hybrid Power
generation plant with an investment of I 85 crores (Solar & Wind) for Indrad
manufacturing facility, Bileshwarpura Project Site and R&D Centre. This generation
facility is situated at Tal: Kalawad, Dist : Jamnagar, Gujarat and comprises of Two Wind
Mills having capacity of 2.7 MW each and 5.0 MW AC Solar Power Plant. This will enable the
Company to generate green energy equivalent to 2.88 crores KWH per annum. The entire
project will be commissioned in FY 2023-24. This will reduce our environmental impact /
carbon footprint significantly (Scope-2). This initiative will cater 30% of our total
power consumption at Indrad Manufacturing Facility, Bileshwarpura Project Site and R&D
Centre with an annual saving of upto I 17 crores.
We truly believe in 4Rs of circular economy – Reuse, Reduce,
Recover and Recycle. Our continuous ongoing efforts in environment sustainability have
certainly reduced our water consumption, hazardous waste and energy consumption.
Under the Plastic Waste Management Rules, 2016 and its subsequent
amendment, the Company is registered as a Brand Owner with Central Pollution Control Board
(CPCB). Under Extended Producer Responsibility (EPR), the Company is collecting back the
plastic waste across Pan India and disposing them off safely.
All our manufacturing facilities across India including few functions
of our corporate office are certified for ISO 14001:2015 (Environment Management System)
and ISO 45001:2018 (Occupational Health & Safety Management System). Two manufacturing
facilities and R&D Centre of the Company are also accredited with ISO
50001:2018 (Energy Management System).
Our efforts are directed towards building and enhancing employee
capacity on HSE through training programmes.
Concisely, in order to achieve the organization goal as "Zero
Harm, Zero Injury, Zero Accident", Company has come up with unique concept of
Consequence Management System (CMS) as a decision-making policy for further fostering the
safety culture amongst employees and contract workers at manufacturing facilities and
R&D Centre.
FINANCE
(a) Share Capital
During the year, pursuant to the approval of the shareholders by
passing requisite resolution through postal ballot, the Authorised Capital of the Company
was increased from I 150 crores (divided into 25 crores Equity Shares of I 5/- each and 25
lakh Preference
Shares of I 100/- each) to I 225 crores (divided into 40 crores Equity
Shares of I 5/- each and 25 lakh Preference Shares of I 100/- each) by creation of
15 crores Equity Shares of I 5/- each ranking pari passu with the existing Equity Shares.
Further, pursuant to the approval of the Scheme of Amalgamation of
Curatio with the Company and their respective shareholders and creditors
("Scheme") by the Hon'ble National Company Law Tribunal, Ahmedabad Bench
vide its Order dated 17th May, 2023, with an appointed date as 14th
October, 2022, the Authorised Share Capital of Curatio aggregating to I 10 crores has been
consolidated with Authorised Capital of the Company. Pursuant to which, the Authorised
Capital of the Company stands to I 235 crores, divided into 42 crores Equity Shares of I
5/- each and 25 lakh Preference Shares of I 100/- each.
(b) Bonus Issue
The Board, at its meeting held on 25th May, 2022, approved
and recommended the issue of bonus shares in proportion of 1:1 to commemorate completion
of 50 years of Company's successful and rewarding business operations and considering
the accumulated reserves.
Such bonus issue was approved by shareholders through postal ballot on
30th June, 2022.
Pursuant to the above, 169,222,720 bonus shares of I 5 each fully paid
up were issued and allotted to the eligible shareholders by way of capitalization of I
4.34 crores from Securities Premium Account and I 80.27 crores from General reserve. Post
bonus issue, the issued and paid up capital of the Company was increased from I 84.62
crores to I 169.23 crores.
(c) Deposits and Loans, Guarantees and Investments
The Company has neither accepted nor renewed any deposits. None of the
deposits earlier accepted by the Company remained outstanding, unpaid or unclaimed as on
31st March, 2023.
Details of Loans, Guarantees and Investments by Company under the
provisions of Section 186 of the Companies Act, 2013, during the year, are provided in
Note 10 and 11 to the Standalone Financial Statements.
(d) Debentures and other debt instruments
The Company has raised an amount of I 500 crores by way of issue of
Unlisted Non-Convertible Debentures on private placement basis during the year. The
outstanding amount of Non-Convertible Debentures issued by the Company is I 1273.56 crores
as on 31st March, 2023.
(e) Contracts or Arrangements with Related Parties
All Related Party transactions are entered in compliance to the
provisions of law, the Policy on Materiality of and dealing with Related Party
Transactions ("Related Party Policy") and were entered with the approval of
Audit Committee, Board and
Shareholders if and as applicable. The particulars of material
contracts and arrangements entered into with the related parties in accordance with the
Related Party Policy of the Company and pursuant to the provisions of Section 188(1) of
the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014 are annexed
herewith as Annexure A.
(f) Internal Financial Control System
The Company has a formal framework of Internal Financial Control
("IFC") in alignment with the requirement of Companies
Act, 2013 and has also laid down specific responsibilities on the
Board, Audit Committee, Independent Directors and Statutory
Auditors with regard to IFC.
Accordingly, the Company has a well-placed, proper and adequate IFC
system, which ensures:
• The orderly and efficient conduct of its business,
• Safeguarding of its assets,
• The prevention and detection of frauds and errors,
• The accuracy and completeness of the accounting records and
• The timely preparation of reliable financial information.
The Board reviews the effectiveness of controls documented as part of
IFC framework and take necessary corrective and preventive actions wherever weaknesses are
identified as a result of such reviews. This review covers entity level controls, process
level controls, fraud risk controls and Information Technology controls.
Based on this evaluation, no significant events had come to notice
during the year that have materially affected, or are reasonably likely to materially
affect, our IFC. The management has also cometo financial reportingconclusionthattheIFCandother
was effective during the year and is adequate considering the business operations of the
Company. The Statutory Auditors of the Company has audited the IFC with reference to
Financial Reporting and their Audit Report is annexed as Annexure B to the
Independent Auditors' Report under Standalone Financial Statements
and Consolidated Financial Statements.
(g) Material changes affecting the Company
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.
INSURANCE
The Company's manufacturing facilities, properties, equipment and
stocks are adequately insured against all major risks including loss on account of
business interruption caused due to property damage. The Company has appropriate liability
insurance covers particularly for product liability, clinical trials and cyber liability.
The Company has also taken Directors' and Officers' Liability Policy to provide
coverage against the liabilities arising on them.
BUSINESS RISK MANAGEMENT
Risk Management is an integral part of our strategy for
stakeholders' value enhancement and is embedded in to governance & decision
making process across the Organisation. The Company has in place the Risk Management
Policy to ensure effective responses to strategic, operational, financial and compliance
risks faced by the Organisation
As a part of this Policy, all the risks are discussed and deliberated
with the concerned functional heads and business process owners to continually identify,
assess, mitigate and monitor risks across the entity, its business functions and units.
The Policy also encompasses identification, assessment and mitigation of ESG risks. The
Risk Management Committee meets periodically to assess and deliberate on the key risks and
adequacy of mitigation plan. It has formulated a comprehensive ‘Risk Register',
which is periodically updated to capture new risks / threats augmenting from changes in
internal / external environment. Inputs from risk assessment are also embedded into annual
internal audit programme. Key risks and mitigation measures are summarised in Management
Discussion and Analysis section of the Annual Report.
SUBSIDIARIES & JOINT VENTURES
As of 31st March, 2023, the Company has 16 subsidiaries, out
of which 3 are step down subsidiaries.
During the year, the Company acquired 100% stake in Curatio including
its two subsidiaries at Sri Lanka and Philippines w.e.f. 14th October,
2022.
The Board approved the Scheme of Amalgamation of Curatio with the
Company and their respective shareholders and creditors
("Scheme") pursuant to provisions of Section 230 to 232 of
the Companies Act, 2013 read with the rules framed thereunder on
21st December, 2022. The said Scheme has been sanctioned by
the Hon'ble National Company Law Tribunal, Ahmedabad Bench vide its Order dated 17th
May, 2023 with an Appointed Date as 14th October, 2022 and the same is now
effective.
The highlights of performance of major subsidiaries of the Company have
been discussed and disclosed under the Management Discussion and Analysis section of the
Annual Report. The contribution of each of the subsidiaries in terms of the revenue and
profit is provided in Form AOC-1, which forms part of the Annual Report.
The details of UNM Foundation, associate company of the Company is also
shown in the AOC-1. This associate company is Section 8
Company and primarily floated with another company of the Torrent group
to carry out the CSR activities.
The annual accounts of the subsidiary companies will be made available
to any Member of the Company seeking such information at any point of time and are also
available for inspection by any Member of the Company at the Registered Office of the
Company on any working day during business hours up to the date of the AGM. The annual
accounts of the subsidiary companies are also available on the website of the Company at www.torrentpharma.com.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
(a) Board of Directors
The Board of Directors of the Company is led by the Executive Chairman
and comprises nine other Directors as on 31st March, 2023, including two
Whole-time Director, six Independent Directors which includes two Women Directors and one
Non-Executive Director (other than Independent Directors).
All the Independent Directors of the Company have furnished
declarations that they meet the criteria of independence as prescribed under the Companies
Act, 2013 and under SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015 ("Listing Regulations").
During the year under review, the members of the Company have approved
(through Postal Ballot):
• Appointment of Dr. Maurice Chagnaud (holding DIN: 09592878) as
an Independent Director of the Company for a term of 3 (three) consecutive years effective
from 11th May, 2022.
• Appointment of Manish Choksi (holding DIN: 00026496) as an
Independent Director of the Company for a term of 5 (five) consecutive years effective
from 29th July, 2022.
• Appointment of Aman Mehta (holding DIN: 08174906) as Director
and also appointed as a Whole-time Director of the Company for a term of 5 (five) years
effective from 01 st August, 2022.
In the opinion of the Board, the directors appointed during the year
possess requisite expertise, integrity and experience (including proficiency) for
appointment as Independent Directors of the Company.
As per the provisions of the Companies Act, 2013, Samir Mehta,
Executive Chairman (holding DIN 00061903), retires by rotation at the ensuing AGM and
being eligible has offered himself for re-appointment.
The brief resume and other relevant information of the Director being
re-appointed is given in the explanatory statement to the
Notice convening the AGM, for your perusal.
(b) Meetings of Board of Directors
Regular meetings of the Board are held to review performance of the
Company, to discuss and decide on various business strategies, policies and other issues.
A calendar of Board / Committee meetings for the year is prepared and circulated to the
Directors well in advance to enable them to plan their schedule for
effective participation in the meetings. During the year, seven meetings of the Board of
Directors were convened and held on 11th May, 2022, 25th May, 2022,
29th July, 2022, 21st October, 2022, 02nd November, 2022, 21st
December, 2022 and 25th January, 2023. The intervening gap between two
consecutive meetings was not more than one hundred and twenty days. Detailed information
on the meetings of the Board is included in the Corporate
Governance Report which forms part of the Annual Report.
(c) Audit Committee
The composition of the Audit Committee is in compliance with the
provisions of Section 177 of the Companies Act, 2013 and
Regulation 18 of the Listing Regulations. The composition of the
Committee as on 31st March, 2023 is given below:
| Name of Director |
Category of Directorship |
| Shailesh Haribhakti, Chairman |
Independent Director |
| Haigreve Khaitan |
Independent Director |
| Ameera Shah |
Independent Director |
| Nayantara Bali |
Independent Director |
| Dr. Maurice Chagnaud1 |
Independent Director |
1. Dr. Maurice Chagnaud was appointed as member of the Committee with
effect from 11th May, 2022.
During the year, the Board has accepted all the recommendations made by
the Audit Committee.
(d) Appointment of Directors
(i) Criteria for Appointment of Directors
The Board of Directors of the Company has identified following criteria
for determining qualification, positive attributes and independence of Directors:
1) Proposed Director ("Person") shall meet all statutory
requirements and should: • possess the highest ethics, integrity and values;
• not have direct / indirect conflict with present or potential
business / operations of the Company; • have the balance and maturity of judgment;
• be willing to devote sufficient time and energy;
• have demonstrated high level of leadership and vision, and the
ability to articulate a clear direction for an organization;
• have relevant experience (in exceptional circumstances,
specialization / expertise in unrelated areas may also be considered);
• have appropriate comprehension to understand or be able to
acquire that understanding
Relating to Corporate Functioning
Involved in scale, complexity of business and specific market and
environment factors affecting the functioning of the Company.
2) The appointment shall be in compliance with the Board Diversity
Policy of the Company.
The key qualifications, skills and attributes which the Board is
collectively expected to have for the effective discharge of their duties are explained in
Corporate Governance Report of the Company.
(ii) Process for Identification / Appointment of Directors
• Board members may (formally or informally) suggest any potential
person to the Chairman of the Company meeting the above criteria. If the Chairman deems
fit, necessary recommendation shall be made by him to the Nomination and
Remuneration Committee (NRC).
• Chairman of the Company can himself also refer any potential
person meeting the above criteria to the NRC.
• NRC delibrates the matter and recommends such proposal to the
Board.
Board considers such proposal on merit and decide suitably.
(e) Familiarisation Programme of Independent Directors
The Independent Directors have been updated with their roles, rights
and responsibilities in the Company by specifying them in their appointment letter along
with necessary documents, reports and internal policies to enable them to familiarise with
the Company's procedures and practices. The Company endeavours, through presentations
at regular intervals, to familiarise the Independent Directors with the strategy,
operations and functioning of the Company and also with changes in the regulatory
environment having a significant impact on the operations of the Company and the
pharmaceutical industry as a whole. Site visits to various plant locations and CSR sites
get organized for the Directors to enable them to understand the operations of and CSR
activities carried out by the Company. The Independent Directors also meet with senior
management team of the Company in formal / informal gatherings.
The details of such familiarisation programs for Independent Directors
are posted on the website of the Company and can be accessed at https://www.torrentpharma.com/pdf/cms/Familiarization_Programme_2022-23.pdf
(f) Board Evaluation
The Evaluation of Board, its Committees, Individual Directors
(Independent and Non Independent Directors) and Chairperson was carried out as per the
process and criteria laid down by the Board of Directors based on the recommendation of
the NRC:
• Chairperson of meeting of Independent Directors briefed the
Board that the Independent Directors have carried out the performance evaluation of the
Board as a whole, its committees, the Non Independent Directors, Chairman and flow of
information between the management and the Board.
• The evaluation of Chairperson was co-ordinated by the
Chairperson of the Independent Directors meeting.
• Pursuant to above, the Board expressed the satisfaction on the
functioning of the Board, the Committees and performance of Individual Directors.
• The Independent Directors met on 25th January, 2023
with respect to the above process.
(g) Key Managerial Personnel
Chintan Trivedi was appointed as Company Secretary and Compliance
Officer of the Company being Whole-time Key
Managerial Personnel of the Company with effect from 1st
August, 2022 in place of Mahesh Agrawal, who has attained the age of superannuation and
was retired from the services with effect from close of working hours of 31st
July, 2022.
Except as mentioned above and other than the directors as already
captured in this report, there has been no change in the key managerial personnel of the
Company during the year under review.
(h) Directors' Responsibility Statement
In terms of Section 134(3)(c) of the Companies Act, 2013, in relation
to financial statements of the Company for the year ended 31st March, 2023, the
Board of Directors state that:
i. the applicable Accounting Standards have been followed in
preparation of the financial statements and there are no material departures from the said
standards; ii. reasonable and prudent accounting policies have been used in preparation of
the financial statements and that they have been consistently applied and that reasonable
and prudent judgments and estimates have been made in respect of items not concluded by
the year end, so as to give a true and fair view of the state of affairs of the Company as
at 31st March, 2023 and of the profit for the year ended on that date;
iii. proper and sufficient care has been taken 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. the financial statements have been prepared on a going concern
basis;
v. proper internal financial controls were in place and were adequate
and operating effectively; proper systems to ensure compliance with the provisions of
applicable laws were in place and were adequate and operating effectively.
REMUNERATION
(a) Remuneration Policy
The Remuneration policy covers the remuneration for the Directors
(Chairman, Managing Director, Whole-time Directors, Independent Directors and other
non-executive Directors) and other employees (under senior management cadre and management
cadre). The Policy has been formulated with the following key objectives:
• To ensure that employee remuneration is in alignment with
business strategy & objectives, organisation values and long-term interests of the
organisation.
• To ensure objectivity, fairness and transparency in
determination of employees' remuneration.
• To ensure the level and composition of remuneration are
reasonable and sufficient to attract, retain and motivate a high performance workforce and
are in compliance with all applicable laws.
It covers various heads of remuneration including benefits for
Directors and employees. It also covers the process followed with respect to annual
performance reviews and variables considered for revision in the remuneration. The said
Policy is available on the website of the Company www.torrentpharma.com.
(b) Criteria for Remuneration to Non-Executive Directors (NEDs):
1. The payment of commission to the Directors of the Company who are
neither in the whole time employment nor Managing
Director(s) (NEDs) is approved by the shareholders of the Company and
is subject to the condition that total commission paid to the NEDs shall not exceed the
percentage limits of the net profit of the Company as specified in the Companies Act, 2013
(presently 1% of the net profit), calculated in accordance with Section 197 read with
Section 198 and any other applicable provisions of the Companies Act, 2013.
Further, as per the Regulation 17(6)(ca) of the Listing Regulations,
approval of the shareholders by special resolution shall be required every year, in which
the annual remuneration payable to a single NED exceeds fifty per cent of the total annual
remuneration payable to all NEDs, giving details of the remuneration thereof.
2. The Board or its Committee specifically authorised for this purpose,
determines the manner and extent upto which the commission is paid to the NEDs within the
limit as approved by the shareholders. The commission is determined based on the
participation of the Directors in the meetings of Board and / or Committees thereof, as
well as on industry practice, performance of the Company and contribution by the
Directors, etc.
3. Payment of Commission is made annually on determination of profit.
4. Sitting fees of I 1 lakh is paid to Independent Directors for each
meeting of the Board or any Committee thereof attended by them.
5. Independent Directors are reimbursed for all the expenses incurred
for attending any meeting of the Board or Committees thereof and which may arise from
performance of any special assignments given by the Board.
(c) Remuneration to Managerial Personnel
The details of remuneration paid to the Managerial Personnel forms part
of the Corporate Governance Report.
(d) Particulars of Employees and related disclosures
In terms of the provisions of Section 197(12) of the Companies Act,
2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, disclosures pertaining to remuneration and other details are
provided in the Annexure C to this Report.
AUDITORS
(a) Statutory Auditors
As per Section 139 of the Companies Act, 2013 read with Companies
(Audit and Auditors) Rules, 2014, the members of the Company in Forty Ninth AGM of the
Company approved the re-appointment of B S R & Co. LLP, Chartered Accountants (Firm
Registration No. 101248W/W-100022) as Statutory Auditors of the Company for a term of 5
(five) consecutive years from the conclusion of Forty Ninth AGM until the conclusion of
the Fifty Forth AGM to be held with respect to the financial year 2026-27.
(b) Cost Auditors
In terms of the Section 148 of the Companies Act, 2013 read with Rule 8
of the Companies (Accounts) Rules, 2014, the Company has prepared and maintained the cost
accounts and records for the year 2022-23.
The Company has appointed M/s. Kirit Mehta & Co., Cost Accountants,
Mumbai (Firm Registration No. 000353) as the Cost
Auditors of the Company for audit of cost accounting records of its
activities (Formulation & Bulk Drugs activities) for the financial year ended 31st
March, 2023. The Cost Audit Report to the Central Government for the financial year ended
31st March, 2022 was filed on 24th August, 2022, within the statutory timeline.
Further, the Board of Directors has appointed M/s. Kirit Mehta & Co. as the Cost
Auditor of the Company for the financial year 2023-24 and fixed their remuneration,
subject to ratification by the shareholders in the ensuing AGM of the Company.
(c) Secretarial Auditor
The Board, pursuant to Section 204 of the Companies Act, 2013 read with
Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014, had appointed M/s. M. C. Gupta & Co., Company Secretaries, as the
Secretarial Auditors of the Company to conduct the Secretarial Audit as
per the provisions of the Companies Act, 2013 for the year 2022-23.
M/s. M. C. Gupta & Co. have carried out the Secretarial Audit
accordingly and their report in Form MR-3, is annexed with this Report as Annexure D.
There were no qualification / observations in the report.
During the year 2022-23, the Company has complied with all the
applicable Secretarial Standards issued by the Institute of
Company Secretaries of India.
CORPORATE GOVERNANCE
As required by Regulation 34 read with Schedule V of the Listing
Regulations, a separate Report on Corporate Governance forms part of the Annual Report.
The Report on Corporate Governance also contains certain disclosures required under the
Companies
Act, 2013. A certificate from the Statutory Auditors of the Company
regarding compliance of conditions of Corporate Governance as stipulated under Clause E of
Schedule V of the Listing Regulations forms part of this Report as Annexure E.
ANNUAL RETURN
In terms of Section 92(3) of the Companies Act, 2013 and Rule 12 of the
Companies (Management and Administration) Rules, 2014, the Annual Return of the Company is
available on the website of the Company at the link https://torrentpharma.com/index.php/
investors/annual_return
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ETC.
A statement containing the necessary information on Conservation of
energy, Technology absorption and Foreign exchange earnings and outgo stipulated under
Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts)
Rules, 2014 is annexed to this Report as Annexure F.
APPRECIATION AND ACKNOWLEDGEMENTS
Your Directors appreciate the trust reposed by the medical fraternity
and patients in the Company and look forward to their continued patronage. The Directors
are also grateful and pleased to place on record their appreciation for the excellent
support, guidance and cooperation extended by the Government of India and various State
Governments specifically the Governments of Gujarat, Himachal Pradesh, Sikkim, Madhya
Pradesh and Andhra Pradesh, Central and State Government Bodies and Authorities, Financial
Institutions and Banks. The Board also expresses its appreciation of the understanding and
support extended by the shareholders and the commitment shown by the employees of the
Company.
|
For and on behalf of the Board of
Directors |
|
Samir Mehta |
| Mumbai |
Executive Chairman |
| 30th May, 2023 |
DIN: 00061903 |
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