Torrent Pharmaceuticals Ltd
Directors Reports
To,
The Shareholders
The Directors have the pleasure of presenting the Forty Ninth Annual Report of your
Company together with the Audited Financial Statement for the year ended 31st
March, 2022.
HIGHLIGHTS
1. 2021-22: Accelerating growth with Sustainability:
• While the financial year witnessed gradual recovery trends across the markets,
the recovery trends were impacted intermittently by second and third wave of pandemic.
Torrent's business in Branded generic markets [viz. India, Brazil and ROW] witnessed
continued growth momentum backed by market recovery, performance of top brands and new
launches. Our business in generic-generic focused markets mainly US and Germany witnessed
de-growth during the year. While Germany performance was impacted mainly by market factors
and competition intensity, US continues to be impacted due to lack of new product
approvals which depends on the re-inspection of facilities and consequent clearance by
USFDA.
• At Torrent, sustainability has been bedrock of doing business and has always
been an integral part of growth and decision-making. During the year, the Company adopted
a structured ESG [Environment, Social, and Governance] framework & strategy, based on
international ESG standards and frameworks. The Company has designed multi-fold strategy,
with four core ESG pillars that will enable it to navigate its growth in a manner that
maximizes stakeholders' value, consistently and sustainably.
2. India business:
• After muted 2020-21, the Indian Pharmaceutical Market (‘IPM'), witnessed a
steady recovery throughout the year with growth of 15% including COVID portfolio and 11%
excluding COVID portfolio. The Company outperformed the market with growth of 17%
complemented by top brands and new launches.
• During the year, The Company entered into collaborations on COVID Drugs:
- Voluntary licensing agreements for Baricitinib and Molnupiravir
- Non-exclusive licensing agreement to use the patents and know-how in relation to the
compound nirmatrelvir with Medicine Patent Pool for manufacture and commercialisation of
the generic version of PAXLOVID™
• As at the year end, field force productivity is Rs 9.2 lacs per month, an
improvement of 10% over previous year. Field Force expansion during the year was around
20%.
• Torrent is ranked 8th in the IPM with 10 brands with sales of more
than Rs 100 crores.
• Torrent will continue to strengthen in competitive position through focus on new
launches, market expansion, field force productivity and brand building.
3. Brazil business:
• Torrent continues to be ranked the no. 1 Indian Pharmaceutical company in
Brazil.
• For 2021-22, Brazil registered strong growth of 18% with strong recovery of the
market, market outperformance, performance of top brands and strengthening of Brazilian
currency. The market grew by 10.1% in 2021-22.
• With high chronicity of its portfolio, Torrent will continue to focus on brand
building, in-clinic effectiveness, new launches and foraying into new therapies.
4. US business:
• US revenues continued to be impacted due to high price erosion on the base
portfolio coupled with lack of new launches pending re-inspection of its facilities [at
Dahej and Indrad]. Torrent has already completed its CAPAs and submitted the closure
report and it continues to await guidance from the USFDA on re-inspection.
• In 2021-22, Torrent has filed 5 ANDAs (PY 11) and launched 4 products.
• Torrent is ranked amongst top 3 players in 26 molecules.
5. Germany business:
• Torrent is ranked the no. 5 generic company and no. 1 Indian Pharmaceutical
company in Germany.
• Germany revenues were impacted due to muted market growth, normalization in
channel inventory and increasing competition in some of the large volume tenders.
• Torrent has taken initiatives to strengthen its cost and price competitiveness.
It shall continue to expand its market coverage through new launches, and expansion of its
non-tender & OTC business.
6. Rest of the World:
• ROW markets registered strong growth.
• Torrent will continue its focus on key ROW markets to develop them as growth
engines of the future.
7. The state-of-the-art Oral Oncology manufacturing facility in Gujarat, which will
cater to both regulated and non-regulated markets, is on track.
8. Financial performance:
• During the year, Torrent registered EBITDA margins at 30.8% (PY 31.6%). While
branded businesses for the Company continue to contribute positively to the overall
margins for the Company, US business was negative due to high double digit pricing
pressure and lack of new product launches pending the USFDA re-inspection of the
manufacturing facilities. The Company has initiated cost optimization measures to counter
the margin impact from US business.
• Leverage (Net Debt-to-EBITDA) reduced to 1.3x as of 31st March, 2022
compared to 1.6x as of 31st March, 2021.
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:
(Rs in crores except per share data)
|
Standalone |
Consolidated |
|
2021-22 |
2020-21 |
2021-22 |
2020-21 |
| Sales & Operating Income |
6,742 |
6,451 |
8,508 |
8,005 |
| Profit Before Depreciation, Net Finance Cost, Exceptional Items & Tax |
2,301 |
2,306 |
2,621 |
2,532 |
| Less: Depreciation & Amortization |
602 |
610 |
662 |
658 |
| Less: Net Finance Cost |
233 |
330 |
248 |
348 |
| Profit Before Exceptional Items & Tax |
1,466 |
1,366 |
1,711 |
1,526 |
| Less: Exceptional Items |
- |
- |
485 |
- |
| Less: Tax Expense |
475 |
228 |
449 |
274 |
| Net Profit for the Year |
991 |
1,138 |
777 |
1,252 |
| Balance brought forward |
2,900 |
2,093 |
2,807 |
1,893 |
| Other Comprehensive income and other adjustments |
(1) |
7 |
10 |
- |
| Balance available for appropriation |
3,890 |
3,238 |
3,594 |
3,145 |
| Appropriated as under: |
|
|
|
|
| Transfer to General Reserve |
- |
- |
- |
- |
| Dividend |
677 |
338 |
677 |
338 |
| Tax on Distributed Profits for Dividend |
- |
- |
- |
- |
| Balance Carried Forward |
3,213 |
2,900 |
2,917 |
2,807 |
| Earnings Per Share (' per share) |
58.59 |
67.24 |
45.93 |
73.98 |
Consolidated Operating Results
The consolidated sales and operating income increased to Rs 8,508 crores from Rs 8,005
crores in the previous year showing a growth of 6%. The consolidated operating profit for
the year was Rs 2,621 crores as against Rs 2,532 crores in the previous year registering
growth of 4%. The consolidated net profit decreased to Rs 777 crores from Rs 1,252 crores
in the previous year due to exceptional item of Rs 485 crores.
Exceptional Item
Basis assessment of the financial viability of liquid business of its wholly owned
subsidiary in the US taking into account incremental investments required for bringing the
pipeline products into the market and increased competition intensity, the Company has
considered it to be prudent to discontinue the liquid facility operations. Based on best
estimate assumptions of the recoverable value of the assets of liquid facility, the
Company has recognized an impairment provision in aggregating to Rs 439 crores during the
year ended 31st March, 2022. Further, management has considered provision for
expenses of Rs 46 crores related to discontinuation of liquid facility. The impairment
provision as well as the provision for expenses are presented as exceptional items.
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 Company endeavours to distribute 40% of its annual consolidated net profit after
tax without taking into account non-cash charges relating to the business acquisitions as
dividend, in accordance with the dividend policy. The policy is available on the website
http://www.torrentpharma.com/pdf/investors/Dividend Policy.pdf
During the year under review, an interim dividend of Rs 25/- per equity share of face
value of Rs 5/- each (@ 500%) amounting to Rs 423 crores was paid to the shareholders. The
Company is completing 50 years of its incorporation this year. To commemorate the same,
the Board has, inter alia, recommended to the members, a final dividend of Rs 23/- per
equity share of face value of Rs 5/- each (@ 460%) including the special dividend of Rs
15/- per equity share of face value of Rs 5/- each amounting to Rs 389 crores for approval
of shareholders at the 49th Annual General Meeting (AGM) of the Company. Hence,
the total dividend paid / payable with respect to the year under review was of Rs 48/- per
equity share (@960%) amounting to Rs 812 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.
BONUS ISSUE
Along with the recommendation of special dividend, the Board has also recommended the
issue of Bonus Shares in the proportion of 1:1 i.e. 1 (one) new fully paid-up Equity share
of Rs 5/- each for every 1 (one) fully paid-up Equity share of Rs 5/- each, to the
eligible shareholders of the Company as on the Record Date as may be fixed by the Board or
a Committee thereof authorised for the purpose and increase in Authorised Share Capital
and consequent amendment to Capital clause of the Memorandum of Association of the
Company. Pursuant to Section 110 of the Companies Act, 2013 read with the rules
thereunder, the Board seeks shareholder's approval through passing of necessary
resolutions by Postal Ballot for the above.
HUMAN RESOURCES
Torrent values its employees and believes that the Company's success is a result of the
collective efforts of all of its employees. The Human Resource Development team strives to
create a positive work environment that influences employees' ability, motivation and
creates opportunities for them to perform. Our work environment encourages high
performance work culture with focus on employee health / safety, welfare, engagement,
development, diversity, productivity, Cost and Quality. Comprehensive policies of the
Company covers the entire spectrum of the life cycle of an employee from recruitment to
retention. We are committed to hiring, nurturing and developing exceptionally talented
human resources. Company's unique culture and robust People Practices & Policies,
inspire and ensure that every employee aspires to grow in the organization.
The Company strongly believes in providing a safe and harassment free workplace through
various interventions and practices. During the pandemic, the Organization's top priority
was the health and safety of its employees. Safety awareness programs and counselling
sessions were critical in spreading necessary knowledge and assisting employees in dealing
with the challenges of working in the midst of the COVID pandemic. Efforts are also taken
towards improving employee connect.
Through cadre and capability building interventions, we continue to focus on
strengthening our talent processes and building the talent pipeline for the organization.
Significant efforts were made to strengthen our leadership and hire the best available
talent. These have aided in bringing a new perspective and renewed energy in the
organization. Our Training & Development activities further gave fillip towards the
development of talent as well as sharpening of new management skills of the employees.
On-the-job training, meaningful interactions with senior leadership and development
programs created an enabling culture in harnessing the necessary competencies in their
work environment, whether technical, managerial, or behavioral. For holistic development
of employees, periodic job rotation programs are implemented to allow every employee to
understand the nuances of the function, preparing them to take on a larger role in the
future. This empowers everyone in the organization, resulting in job enrichment and
satisfaction. On the industrial front, the Company maintained positive Industrial
Relations with its workforce throughout the year.
Various gender diversity initiatives, such as flexi-shift hours, have helped female
workers balance work and other responsibilities. Special events that promote woman's
personal and professional development are frequently planned, with an emphasis on fitness,
well-being and a stress-free lifestyle.
The Company will continue to invest in employees' professional development and instill
in them the importance of a responsible growth. As a result, they recognize that their
success is dependent on the provision of innovative solutions to patient needs, community
upliftment and environmental protection.
The Company has a diverse workforce of 12,910 employees as on 31st March,
2022 vis-a-vis 12,531 employees as on 31st March, 2021.
VIGIL MECHANISM
Over the years, the Company has built a reputation for doing business with honesty and
integrity, and it has zero tolerance for any type of unethical behaviour or wrongdoing.
The Organization has in place a stringent vigil system to report unethical behaviour in
order to promote professionalism, fairness, dignity and ethical behaviour in its employees
and stakeholders, the details of which are covered in the Corporate Governance Report.
The system also protects employees who use the vigil mechanism from victimisation and
gives them direct access to the Audit Committee. Furthermore, the Company's Code of
Business Conduct defines critical corporate ethical practices that underpin the Company's
belief structure and business operations, as well as representing the Company's valued
principles.
Whistle-blower Policy and Code of Business Conduct have been hosted on 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 adopted a Policy on protection of women against sexual harassment at
workplace. In this regard, the Company has organized a number 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.
CORPORATE SOCIAL RESPONSIBILITY
During the year, the Company was required to spend Rs 22.84 Crore (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 2020-21). The Company contributed,
directly or to implementing agency Rs 23.00 Crore during the year. The total amount spent
during the year was Rs 13.08 Crore. Further, unspent amount at the end of the year at the
implementing agency level was transferred to "Unspent CSR Account" of related
ongoing project. The CSR Activities undertaken by the Company were under the thrust areas
of Community Healthcare, Sanitation & Hygiene, Education & Knowledge Enhancement
and Social Care & Concern. 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 (earlier known as Tornascent Care Institute), a Section 8 Company. REACH
has three major pillars: (a) Grass Root Interventions (b) Green Field Actions and (c)
Other Allied Activities. Salient achievements are:
• Grassroot Intervention Model: It targets to establish baseline health status of
children in age group of 6 months to 6 years, through medical camps in communities and
villages surrounding the industrial establishments of the Group. In pre-covid period,
71,387 children in 351 villages have been screened. Appropriate treatment regime resulted
in benefiting more than ~74% Malnourished children and more than ~90% Anaemic children.
About ~73% children having chronic illnesses were also provided appropriate treatment with
encouraging outcomes.
During FY 2021-22, as second wave of COVID-19 ebbed, REACH program was extended to
additional 649 villages starting from June, 2021, making total number of villages covered
under REACH to 1,000. Anganwadi Model is followed in additional villages to identify and
serve Malnourished children. 7,511 Malnourished Children have been provided with Mauji
biscuits as special nutritional supplement. Till now 39% of children from additional
villages have been treated out of malnourishment. Additionally, intensive Awareness
activities about prevention of Malnourishment and Anemia is carried out including
audio-visual film show in vernacular language.
• Greenfield Actions: Healthcare services are provided to children up to 18 years.
There are three Primary Pediatric Health Centers (PPHCs) with basic laboratory and day
care facility at Dahej, Balasinor and Indrad, while fourth major center near SUGEN Power
Plant has a 150 bed pediatric hospital ‘Balsangam' which is part of ‘Rangtarang'
hospital complex started in FY 2019-20. Till Date more than 3,25,000 patients have been
treated under OPDs across all four centers since its inception in 2017. More than 40,000
OPD cases have been handled across all Locations in FY 2021-22.
Balsangam, a 150-bed state-of-the-art paediatric hospital is fully operational within
the Rangtarang complex which also has Sumangal, a multi-disciplinary clinic for patients
of all age groups. Activities at Balsangam, which were affected during covid period, have
been scaled up post pandemic at a fast pace from June, 2021.
Additionally, two more multi purpose Satellite centers have been started at Waghai and
Chhappi in Gujarat and three more would be started at Radhanpur, Naswadi and Dediapada,
Gujarat. These multi purpose centers will be scaled up appropriately in future depending
on feedback as well as demand of healthcare services from the respective local population.
• Other Allied Initiatives: Counseling and Support was provided to rural
adolescent girls around SUGEN, Dahej & Indrad centers covering menstrual hygiene and
sanitation, by providing free health and hygiene kits. This has resulted in reducing
prevalent social taboos and ultimately increasing confidence and self-esteem amongst
beneficiaries. Hygiene Kits were provided to total 14,000+ Adolescent girls from all camp
villages, between 11-18 years of age on monthly basis under this programme. Biodegradable
and Reusable Sanitary Napkins were provided as a pilot project to solve issue of disposal
and Initial feedback from the beneficiaries was encouraging.
Shiksha Setu: Phase-III of Shiksha Setu i.e. the Teaching and Learning Support
Programme, conducted through UNM Foundation, was initiated during FY 2021-22. The program
covers 45 Government primary schools located near SUGEN power plant, Chhatral, Chhapi,
Memadpur and Ahmedabad reaching out to 15,000+ students and 480+ teachers of 1st
to 8th standard. Due to Covid, schools were closed for about two years which
had adversely impacted student learning levels. Remedial classes for more than 4,000
Students from Grade for 3rd to 8th were organized to support
students achieve basic reading and arithmetic skills. About 1,500 mothers were reached
through Mothers' Engagement and School Readiness activities.
During the year "Second Chance" programme was initiated at Chhatral cluster
in Mehsana District of Gujarat aiming to support School dropout Students for clearing
Grade 10th examination and enhance percentage of Students going for Higher
Education / Vocational Training. Total 112 Students were enrolled in the Programme out of
which 104 Students were mobilized and provided coaching for preparation of Grade 10th
examination. 93 Students appeared for Grade 10th examination through National
Institute of Open School out of which more than 70% students passed.
During the year "Vocational Skills Development Programme" was initiated at
Chhatral cluster in Mehsana District of Gujarat to enhance employable skills of Women and
Youth. The Programme aims at enhancing employable skills of 300+ Women and Youth and
providing them employment opportunities. Total 100 Women and Youth were mobilized and
trained on various skills viz. Sewing machine operator, Data entry operator, General duty
assistant etc.
Pratiti - Development of Public Parks: The Company along with one of India's best known
landscape design firm developed an approach for development of urban public parks. In
Ahmedabad, six small sized parks measuring approx. 33,000 sq. mt. have been fully
developed and opened for public use during FY 2018-19, one small sized park admeasuring
740 sq. mt. was fully developed and opened for public use in FY 2020-21 and one large
sized park measuring approx. 28,300 sq. mt. was fully developed and opened for public use
in FY 2021-22. One more large sized park measuring approx. 36,700 sq. mt. is at advanced
stage of completion and will be opened for public in FY 2022-23 in Ahmedabad.
In addition to above, the Company continued other social activities during the year, as
described hereunder:
Community Healthcare: Post COVID-19, the day care clinic "Sumangal" which is
a community health care clinic under the ‘Rangtarang' hospital complex, has also been
scaled up and caters to the communities and villages around. The footfalls at
"Sumangal" are now about ~150 patients per day. 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 Company is sensitizing, believing and committed in inculcating a proactive and well
matured HSE culture across the group. Conservation of our natural capital and resources
including Environment, ensuring the safety and well being of our colleagues and other
communities at large are essential for Sustainable future.
The Company's HSE function is efficiently driven by well-established HSE Policy, which
is commonly applied across the group. HSE Policy affirms by top management depicts the
clear vision and reiterating commitment by top management in totality for adopting safe,
secure and sustainable practices for its day to day operations.
Our constant and focused endeavors 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. Frequent Safety training and
counselling on Technical and behavioral approach (BBS), Organizing various HSE Campaigns,
Internal and External Safety Inspections and audits, Adopting various best in class new
technologies, Process and System Improvements have helped us substantially to bring down
incident rates and thus leading to sustainable, safe and healthy working environment for
our work force and interested parties / stake holders at large.
We always remain deeply concerned about the cause of the environment protection and in
this direction, the Company has undertaken initiatives, where, we have achieved measurable
reduction in waste generation, Utilization of waste as an alternative fuel in cement
industries, Conservation of energy (Saving of 7000 Tons of steam consumption per annum by
installation of Heat pumps in place of conventional hot water system), Usage of renewable
energy (Cumulatively generation of 2.20 Million KWH energy by installation of Solar Power
panels of 1688 KW capacity at Indrad manufacturing facility, Bileshwarpura project site
and R&D Centre). These activities have reduced our environmental impact /carbon
footprint significantly.
We are constantly endeavoring to make our employees feel valued, respected, empowered
and inspired to achieve our EHS goals. 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. Green building concepts are being introduced to maximize the usage of day
light, 43% developed lust green area, rain water harvesting systems, usage of
nonconventional energy sources like generation of solar power by installing roof top solar
panels and captive usage of biogas are some unique concepts being implemented. The Company
has also taken proactive steps to recycle water using state-of-art technologies to reduce
fresh water dependency; Treated effluents are reused in cooling towers and horticulture
activities. On account of these initiatives, most of our manufacturing facilities are now
zero landfill and had achieved 53% reduction in landfill waste disposal compared to
previous year. We have also targeted to dispose-off more than 90% of total such waste
generation for co-processing in upcoming years.
Majority of Company's manufacturing facilities including few functions of our corporate
office are accredited with ISO 14001:2015 (Environment Management Systems) and ISO
45001:2018 (Occupational Health & Safety Management system). This truly brings
harmonization in HSE Systems and bringing more awareness amongst the working force at
large.
Rainwater harvesting systems have been installed at manufacturing facilities with 57
state of art injection wells with large sunken catchment area of approx. 25,000 sq mt and
10 nos. of inverted umbrella system (Ulta Chhata).
Under the Plastic Waste Management Rules, 2016, the Company is registered as a Brand
Owner with Central Pollution Control Board (CPCB). Pursuant to this, 1016 MT per annum
equivalent quantity of plastic waste was collected from PAN India during the year under
review and recycled and co-processed in cement industries. The Company has joined the
hands with local and state government for promoting various programmes under Extended
Producer Responsibility (EPR) under the state initiative of AZADI KA AMRIT MAHOTSAV. This
includes the adoption of total 8 nearby villages (5 Villages near Indrad manufacturing
facility and 3 villages near Dahej manufacturing facility) and the Company has extensively
worked for more than 100 days to collect and safe dispose off the plastic waste and
educated the community to bring awareness on sparingly usage of plastics and other natural
resources. Under this initiative, the Company had managed to collect and safely dispose
off 6.3 MT of Plastic waste.
During the year, the Company and its employees of all locations joined hand in facing
and combating 2nd wave of COVID-19 by devising and implementing various
strategies to curb this pandemic situation and thus ensures the safer plant operations as
well as well-beings of all working force at large. Such strategies include, encouraging
the employees work from home (Other than those front-line working force), Virtual Meetings
to ascertain the social distances, spreading awareness on Do's & Don'ts in pandemic
situation, developing and arming the COVID-19 task forces which in turn ensure the
compliance of their respective area / departments. The Company has gone extra mile in
ensuring that, all its work force have undergone required vaccination and various in-house
initiatives were undertaken by management in depth. Frequent Health Surveillance programs
were well executed as a proactive approach by the Company's medical staff.
In-house cross-functional teams, global customers, regulators and external third party
auditors, which helps us in achieving benchmark / highest levels of compliance, are
regularly auditing all the manufacturing facilities and R&D Centre. This also helps us
to review our own system through third eye, which enables us to understand risk /
opportunities / area of improvisation of our process / manufacturing facilities at large.
As a part of consultation and participation of contractors' workers in our day-to-day
operation, they all have been well covered under various HSE Drives. It is essential for
all contractors' workers to undergo HSE training and follow stipulated guidelines. All
contractors' workers are encouraged to maintain safety standards by abiding Company's
guidelines and procedures. Moreover, the Company has in place the "Conviction of
Safety Policy" which provides for substantial compensation to the personnel
(Employees as well as Contractors' workers) and their families, who are adversely affected
by any accident.
Concisely, in order to achieve the organization goal as "Zero Harm, Zero Injury,
Zero Accident", Company has brought in the unique concept of "Consequence
Management System" as a decision-making policy for further fostering the safety
culture amongst employees and contractors' workers at manufacturing facilities and R&D
centre.
FINANCE
(a) Share Capital
As on 31st March, 2022 the Authorised Capital of the Company is Rs 150
crores, divided into 25 crores Equity Shares of Rs 5/- each and 25 lakhs Preference Shares
of Rs 100/- each.
(b) 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, 2022.
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.
(c) Debentures and other debt instruments
The outstanding amount of Non-Convertible Debentures issued by the Company is Rs
1241.42 crores as on 31st March, 2022.
(d) 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.
(e) 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 environment.
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 come to a conclusion that the IFC and other financial reporting 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 and Annexure A to the
Independent Auditors' Report under Standalone Financial Statements and Consolidated
Financial Statements respectively.
(f) 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 & decisionmaking 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 continuously 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, 2022, the Company has 14 subsidiaries, out of which 3 are
step down subsidiaries.
During the year, TPL (Malta) Limited, wholly owned subsidiary of the Company and
Torrent Pharma (Malta) Limited wholly owned subsidiary of TPL (Malta) Limited were
incorporated on 17th August, 2021.
Further, Torrent Pharma SRL, Romania and Torrent Pharma France S.A.S, France, wholly
owned subsidiaries of the Company were liquidated w.e.f 11th January, 2022 and
13th January, 2022 respectively.
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 (earlier known as Tornacent Care Institute), 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
six other Directors as on 31st March, 2022, including one Whole Time Director,
four Independent Directors which includes two Women Director 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").
The Board had at its meeting dated 11th May, 2022 appointed Dr. Maurice
Chagnaud (holding DIN: 09592878) as an Independent and Additional Director of the Company
w.e.f 11th May, 2022 for a term of 3 (three) consecutive years subject to
approval of shareholders, not liable to retire by rotation. The Board seeks the approval
of shareholders through special resolution by Postal Ballot Notice dated 25th
May, 2022 in relation to the above matter.
During the last AGM held on 27th July, 2021, the members approved:
• the re-appointment of Ameera Shah as an Independent Director of the Company for
the second term of 5 (five) consecutive years effective from 2nd August, 2021;
• the re-appointment of Nayantara Bali as an Independent Director of the Company
for the second term of 5 (five) consecutive years effective from 7th March,
2022;
In the opinion of the Board, the directors appointed / re-appointed during the year
possess requisite expertise, integrity and experience (including proficiency) for
appointment / reappointment as an Independent Directors of the Company.
As per the provisions of the Companies Act, 2013, Jinesh Shah, Director (Operations)
(holding DIN 00406498), 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, five meetings of the Board of Directors were convened and held on 7th
May, 2021, 18th May, 2021,27th July, 2021,26th October,
2021 and 25th January, 2022. 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, 2022 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 |
The Committee was expanded by the Board by appointing Dr. Maurice Chagnaud as its
Member 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 programmes for Independent Directors are posted on
the website of the Company and can be accessed at
http://www.torrentpharma.com/pdf/cms/Familiarization Programme 2021-22.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, 2022 with respect to
the above process.
(g) Key Managerial Personnel
There was no change in the Key Managerial Personnel during the year under review
(h) Directors' Responsibility Statement
In terms of Section134(3)(c) of the Companies Act, 2013, in relation to financial
statements of the Company for the year ended 31st March, 2022, 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, 2022 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 Rs 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
B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022),
were appointed as the Statutory Auditors of the Company to hold office for five years from
the conclusion of Forty Fourth AGM held with respect to the financial year 2016-17, up to
the conclusion of the Forty Ninth AGM.
The Board of Directors of the Company at their meeting held on 25th May,
2022, based on the recommendation of the Audit Committee have made recommendation for
re-appointment of B S R & Co. LLP as the Statutory Auditors of the Company by the
Members at the Forty Ninth AGM of the Company for a second term of five years i.e. from
the conclusion of Forty Ninth AGM till the conclusion of Fifty Forth AGM of the Company to
be held with respect to the financial year 2026-27. Accordingly, a resolution, proposing
to the aforesaid re-appointment of M/s. B S R & Co. LLP, as the Statutory Auditors of
the Company forms part of the Notice of the Forty Ninth AGM of the Company. The Company
has received their written consent and a certificate that they satisfy the criteria
provided under Section 141 of the Companies Act, 2013 and that the appointment, if made,
shall be in accordance with the applicable provisions of the Companies Act, 2013 and rules
framed thereunder.
(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 2021-22.
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, 2022. The Cost Audit Report to the Central Government for the
financial year ended 31st March, 2021 was filed on 10th August,
2021, 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 2022-23
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 2021-22.
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 2021-22, 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 |
| Ahmedabad |
Samir Mehta |
| 25th May, 2022 |
Executive Chairman |
|
DIN:00061903 |