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Updated:20 Sep, 2021, 16:12 PM IST

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Updated:20 Sep, 2021, 16:00 PM IST

Directors' Report

Your Directors are pleased to present Twenty Second Annual Report and the Financial Statements for the financial year ended March 31, 2016.

Results of operations:

During the year under review, the consolidated gross sales revenue grew by 3.20% to Rs. 45,698 lacs from Rs. 44,301 lacs in 2014–15. The profit before tax, on a like–to–like basis, increased by 10.70% y–o–y to Rs. 11,523 lacs. Net profit after tax, on like–to–like basis, increased by 10.40% y–o–y to Rs. 10,169 lacs. The net profit margin, on a like–to–like basis, as a % to total operating income, has increased to 23.70% from 22.20% last year. A detailed analysis of performance for the year has been included in the Management Discussion and Analysis, which forms a part of the Annual Report.

Interim Dividend:

During the year under review, your Directors had declared and paid an interim dividend of Rs. 6.5/– [65%] per equity share of face value of Rs. 10/– each to the shareholders holding shares in physical form and whose names were listed on the Register of Members of the Company as on March 17, 2016, being the Record Date fixed for the purpose. Those shareholders holding shares in electronic form were paid dividend as per the beneficiary data provided by the Depositories. Your Directors did not recommend final dividend. The dividend payout ratio for the current year [inclusive of corporate dividend tax on dividend distribution] is 30.10%.

During the year, the unclaimed dividend pertaining to the dividend for the year ended March 31, 2008 was transferred to Investor Education and Protection Fund.

Management Discussion and Analysis [MDA]:

MDA, for the year under review, as stipulated under clause 49 of the Listing Agreement/Regulation 34[2][e] of SEBI [Listing Obligations and Disclosure Requirements] Regulations, 2015, [hereinafter referred to as Listing Regulations] is presented in a separate section, which forms a part of the Annual Report.

Consolidated Financial Statements:

Zydus Wellness, Sikkim [ZWS] is under the majority control of the Company and hence the accounts of ZWS are consolidated with the accounts of the Company in accordance with the provisions of Accounting Standard [AS]–21 on Consolidated Financial Statements issued by the Institute of Chartered Accountants of India and as provided under the provisions of Companies Act, 2013 [hereinafter referred to as "Act"] read with Schedule III of the Act and Rules made thereunder and Listing Agreement/Listing Regulations. The audited Consolidated Financial Statements are provided in the Annual Report.

Though Company does not have any subsidiary Company, in compliance of the provisions of Regulation 16[1][c] of the Listing Regulations, the Company has formed a policy relating to material subsidiaries, which is approved by the Board of Directors and may be accessed on the Company's website at the link: <http://www.zyduswellness.in/> investor/Policy%20on%20Material%20Subsidiary–May15.pdf

Related Party Transactions:

All transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. During the year, the Company had not entered into any transactions with related parties which could be considered as material in accordance with the policy of the Company on materiality of related party transactions.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company's website at the link: <http://www.zyduswellness.in/investor/> Policy%20on%20Related%20Party%20Transactions–May15.pdf. Disclosures on related party transactions are set out in Note No. 34 to the financial statements.

Directors:

i. Retirement by rotation:

In accordance with the provisions of section 152[6] of the Act and in terms of Articles of Association of the Company, Mr. Ganesh N. Nayak, Director [DIN–00017481] will retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment. The Board recommends his reappointment.

ii. Declaration of Independence:

The Company has received declarations of independence as stipulated under section 149[7] of the Act and Regulation 16[b] of the Listing Regulations from Independent Directors confirming that they are not disqualified from continuing as an Independent Director.

iii. Profile of Director seeking reappointment:

As required under Regulation 36[3] of the Listing Regulations, particulars of the Director seeking reappointment at the ensuing Annual General Meeting is annexed to the notice convening Twenty Second Annual General Meeting.

iv. Key Managerial Personnel:

The following persons are the Key Managerial Personnel:

1. Mr. Tarun G. Arora, Whole Time Director,

2. Mr. Amit B. Jain, Chief Financial Officer and

3. Mr. Dhaval N. Soni, Company Secretary.

There is no change in the Key Managerial Personnel during the year.

v. Board Evaluation:

Pursuant to the provisions of the Act and Rules made thereunder and as provided under Schedule IV of the Act and the Listing Regulations, Nomination and Remuneration Committee / Board has carried out the annual performance evaluation of itself, the Directors individually as well as the evalution of its committees. The manner in which the evaluation was carried out is provided in the Corporate Governance Report, which is a part of this Annual Report.

vi. Nomination and Remuneration Policy:

The Board has on the recommendations of Nomination and Remuneration Committee, framed a Policy on selection and appointment of Directors, Senior Management and their remuneration. The Nomination and Remuneration Policy is stated in the Corporate Governance Report, which is a part of this Annual Report.

Directors’ Responsibility Statement:

In terms of section 134[3][c] of the Act and to the best of their knowledge and belief, and according to the information and explanations provided to them, your Directors hereby make the following statements:

i. that in preparation of the Financial Statements, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any,

ii. that such accounting policies have been selected and applied consistently and judgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2016 and of the profit of the Company for the year ended on that date,

iii. that proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for prevention and detection of fraud and other irregularities,

iv. that the Financial Statements have been prepared on a going concern basis,

v. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively and

vi. that the systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

Board Meetings:

Information of meetings of the Board of Directors is given in Corporate Governance Report, forming a part of this report.

Audit Committee:

As provided in section 177[8] of the Act, the information about composition of Audit Committee and other details are given in Corporate Governance Report, forming a part of this report. The Board has accepted the recommendations of Audit Committee. The Audit Committee is comprising of Mr. H. Dhanrajgir, as Chairman and Dr. B. M. Hegde, Prof. Indiraben J Parikh and Mr. Ganesh N. Nayak as members.

Corporate Governance:

The Company has complied with the Corporate Governance requirements under the Act and as stipulated under clause 49 of the Listing Agreement/Listing Regulations. A separate section on detailed report on the Corporate Governance practices followed by the Company under the Listing Agreement/Listing Regulations along with a certificate from a Practicing Company Secretary, confirming the compliance form a part of this Annual Report.

Auditors:

i. Statutory Auditors and their Report:

M/s. Dhirubhai Shah & Doshi, Chartered Accountants, [Firm Registration No. 102511W] were appointed as Statutory Auditors from the conclusion of Twenty First Annual General Meeting until the conclusion of Twenty Sixth Annual General Meeting. They have informed to the Company that their appointment, if made, would be within the limits prescribed under section 141 of the Act. They have also furnished a declaration confirming their independence as well as their arm's length relationship with the Company and that they have not taken up any prohibited non–audit assignments for the Company. The Board has duly reviewed the Auditor's Report and the observations and comments, appearing in the report are self–explanatory and do not call for any further explanation / clarification by the Board of Directors as provided under section 134 of the Act.

ii. Cost Auditors:

Pursuant to provisions of section 148[3] of the Act read with Companies [Cost Records and Audit] Amendment Rules, 2014, the cost audit records maintained by the Company in respect of its product 'Nutralite' is required to be audited. The Board had, on the recommendation of Audit Committee, appointed M/s. Dalwadi & Associates, Cost Accountants [Firm Registration No. 000338] to audit the cost records of the Company for the financial year ending on March 31, 2017 on a remuneration of Rs. 2.00 lacs. As required under the Act and Rules made thereunder, the remuneration payable to the Cost Auditors is required to be placed before the Members at a general meeting for ratification. Accordingly, a resolution seeking ratification by members for the remuneration payable to M/s. Dalwadi & Associates is included at item No. 5 of the Notice convening Twenty Second Annual General Meeting.

iii. Secretarial Auditors and Secretarial Audit Report:

Pursuant to provisions of section 204 of the Act and The Companies [Appointment and Remuneration of Managerial Personnel] Rules, 2014, the Board has appointed M/s. Hitesh Buch & Associates, a firm of Company Secretaries in whole time practice to undertake Secretarial Audit of the Company for the financial year ended on March 31, 2016. The Secretarial Audit Report is attached herewith as Annexure–"A". The Board has duly reviewed the Auditor's Report and the observations and comments, appearing in the report are self–explanatory and do not call for any further explanation / clarification by the Board of Directors as provided under section 134 of the Act.

Corporate Social Responsibility [CSR]:

Pursuant to provisions of section 135 of the Act and Rules made thereunder, the Board has constituted a Corporate Social Responsibility [CSR] Committee under the Chairmanship of Dr. Sharvil P. Patel. The other members of the Committee are Mr. Ganesh N. Nayak and Prof. Indiraben J. Parikh. CSR Policy has been framed and placed on the Company's website. Other details of the CSR activities, as required under section 135 of the Act, are given in the CSR Report as Annexure–"B".

Business Risk Management:

A well–defined risk management mechanism covering the risk mapping and trend analysis, risk exposure, potential impact and risk mitigation process is in place. The objective of the mechanism is to minimize the impact of risks identified and taking advance actions to mitigate them. The mechanism works on the principles of probability of occurrence and impact, if triggered. A detailed exercise is being carried out to identify, evaluate, monitor and manage both business and non–business risks.

Discussion on risks and concerns are covered in the Management Discussion and Analysis Report, which forms a part of this Annual Report.

Internal control system and its adequacy:

The Company has designed and implemented a process driven framework for Internal Financial Controls [IFC] within the meaning of the explanation to section 134[5][e] of the Act. For the year ended on March 31, 2016, the Board is of the opinion that the Company has sound IFC commensurate with the size, scale and complexity of its business operations. The IFC operates effectively and no material weakness exists. The Company has a process in place to continuously monitor the same and identify gaps, if any, and implement new and / or improved controls whenever the effect of such gaps would have a material effect on the Company's operations.

Managing the risks of fraud, corruption and unethical business practices:

i. Vigil Mechanism / Whistle Blower Policy:

The Company has established vigil mechanism and framed whistle blower policy for Directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of Company's Code of Conduct or Ethics Policy. Whistle Blower Policy is disclosed on the website of the Company.

ii. Zydus Business Conduct Policy:

The Company has framed "Zydus Business Conduct Policy". Every employee is required to review and sign the policy at the time of joining and an undertaking has to be given for adherence to the Policy. The objective of the Policy is to conduct the business in an honest, transparent and ethical manner. The policy provides for anti–bribery and avoidance of other corruption practices by the employees of the Company.

Extract of Annual Return:

As per the provisions of section 92[3] of the Act, an extract of the Annual Return in the prescribed Form No. MGT–9 is attached to this Report as Annexure–"C".

Composition of Audit Committee:

More details on the Committee are given in the Corporate Governance Report.

Particulars of Employees:

The information required under section 197 of the Act read with Rule 5[1] of The Companies [Appointment and Remuneration of Managerial Personnel] Rules, 2014, is given in Annexure–"D".

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo:

Information on conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under section 134[3][m] of the Act read with Rule 8[3] of the Companies [Accounts] Rules, 2014, is provided in the Annexure–"E" and forms a part of this Report.

General Disclosure:

Your Directors state that the Company has made disclosures in this report for the items prescribed in section 134[3] of the Act read with Rule 8[3] of The Companies [Accounts] Rules, 2014 to the extent the transactions took place on those items during the year.

There are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report.

Acknowledgement:

Your Directors place on record their sincere appreciation for the continued co–operation and support extended to the Company by the Banks. Your Directors also thank the Trade and Consumers for their patronage to the Company's products. Your Directors also place on record sincere appreciation of the continued hard work put in by the employees at all levels. Your Directors also thank the Company's vendors, investors, business associates, Stock Exchanges, Government of India, State Government and various departments and agencies for their support and co–operation.

For and on behalf of the Board

Sharvil P. Patel

Chairman

Place : Ahmedabad

Date : May 12, 2016

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