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Directors Report of AstraZeneca Pharma India Ltd.

Mar 31, 2016

The Directors are pleased to present the 37th Annual Report together with the Audited Financial Statements of the Company for the financial year ended March 31, 2016.

Financials

( Rs. in Million)

Particulars 2015-16 2014-15

Sales and Other Income 5,705 5,229 Profit/(Loss) before Tax 58 -208 Provision for Taxation

- Income Tax 5 -

- Adjustment for Deferred Tax - -

Total Tax 5 -

Profit/(Loss) after Taxation 53 -208

Surplus brought forward from the previous year 203 411

Total amount available for appropriation 255 203 Appropriation made by Directors

Transfer to General Reserve - - Appropriation recommended by Directors

Dividend - -

Tax on proposed Dividend - -

Surplus carried over 255 203

Dividend

Though the Company made significant progress during the year in terms of its business performance, considering its overall financial position, the Directors are unable to recommend any dividend for the year 2015-16.

The Company registered sales of Rs. 5167.6 Million with a growth of 11% achieving a Net Profit of Rs. 53 Million, during the year. The Company''s key growth brands - Brilinta, Forxiga, Onglyza, Kombiglyze and Symbicort, witnessed robust growth of 76% over last year, providing strong momentum to the Company''s performance throughout the year.

Diabetes portfolio of the Company grew by 74% post acquisition from Bristol Myers-Squibb and launch of Forxiga. Forxiga is part of a newer class of medicines known as SGLT2 (Sodium Glucose Cotransporter 2) inhibitors that act to block reabsorption of sugar in the kidneys.

The drug, Brilinta (Ticagrelor) which provides cardiologists with a new and effective treatment to help reduce the rate of heart attack and cardiovascular deaths in adult patients with Acute Coronary Syndrome (ACS), is being received well by the market and continues to register rapid growth. During the year, the brand continued to grow its market share, as per IMS Health, from 9.43% (MAT March 201 5) to 1 4.3% (MAT March 201 6) and continued to be the #1 Oral Antiplatelet brand". During the year, Brilinta won the most prestigious OPPI Marketing Excellence Awards in the category of "Best New Pharma Product Launch". Brilinta also won the prestigious "Brand of The Year" AWACS - AIOCD Award for Chronic category under "Best New Pharma Product Launch".

Meronem, became the Company''s first brand to cross the Rs. 100 Crores milestone and also won the prestigious AWACS - AIOCD Award for "Brand of The Year" in Acute category.

Distribution Services Agreements

During the year, the Company has entered into three Distribution Services Agreement. With Dr. Reddy''s Laboratories for Saxagliptin and its fixed dose combination with metformin, our patented therapy for the treatment of type 2 Diabetes. The second Distribution Services Agreement is with Sun Pharma for Ticagrelor, our treatment for acute coronary syndrome (ACS) and the third Distribution Services Agreement for the treatment of type 2 Diabetes with Sun Pharma to promote and distribute Dapagliflozin and its fixed dose combination with metformin.

Pursuant to the above agreements, the Company, Dr. Reddy''s Laboratories and Sun Pharma will co-promote, market & distribute Saxagliptin, Dapagliflozin and Ticagrelor under different brand name in Indian market.

These partnerships are in line with our commitment to transform patient care in Diabetes and ACS. It will enable us to increase the share of voice for the molecules through a wider reach to physicians, thereby benefitting more number of patients.

Manufacturing

Your Directors are pleased to inform that the manufacturing operations at the Company''s factory situated at Bangalore have improved significantly. The factory has been able to manufacture and supply products as per the demand. The factory has now streamlined production of Formulations & Packaging of oral solids with a strong focus on key performing parameters. The factory management has spearheaded many quality and compliance driven initiatives to bring about a quality culture change at the site. Several employee engagement, quality and compliance improvement programs were launched during the year.

In view of low demand for Terbutaline Sulphate (TBS), which was manufactured predominantly for export markets and TBS being the only Active Pharmaceutical Ingredient (API) which was manufactured at the Company''s factory in Bangalore and no other API manufacturing activity was planned to be carried out in the future, the Board of Directors of your Company decided to close the Active Pharmaceuticals Ingredient Unit (API Unit) situated at Yelahanka, Bangalore.

Material changes and commitment, if any, affecting financial position of the Company from the end of the Financial Year and till the date of this Report

There has been no material change and commitment, affecting the financial performance of the Company which occurred between the end of the financial year of the Company to which the financial statements relate and the date of this Report.

Deposits

During the year under review, your Company has neither accepted nor renewed any deposits from public within the meaning of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014.

Safety Health and Environment

Safety as well as health & wellbeing of employees is a core focus area of the Company. During the year under review, the Company''s field force was trained in defensive driving techniques to enhance their on-road safety. There was a significant reduction in the number of road accidents in the field. Health awareness activities were carried out, during the year.

Human Resources and Employee Relations

The Company is committed to provide career opportunities for its employees and enable their growth and development. During the year, the India Development Week was conducted to enable employees to understand how to build careers and gain experiences across functions and businesses. Further, there is a focus on hiring science and pharmacy graduates to strengthen the scientific orientation in the workforce. There continues to be a focus on building gender diversity in the workforce. Training programs to strengthen scientific and technical knowledge of the employees were extensively implemented across all businesses.

Number of Employees

The total number of employees of the Company as on March 31, 2016 was 1587 as against 1654 as on March 31, 2015.

Factory Land

In the last Directors'' Report, the Members were informed that the Company had received compensation amount of (a) Rs. 13.7 million in respect of the first acquisition of land made by National Highways Authority of India (NHAI) in 2004 and

(b) Rs. 102.8 million in respect of second acquisition of land made by NHAI in 2011.

The arbitration proceedings initiated by NHAI before the Arbitrator at Bangalore, in relation to the first acquisition of land made by NHAI in 2004, are still pending.

Further, the arbitration invoked by the Company seeking, inter-alia, enhancement of compensation from NHAI in respect of second acquisition of land made by NHAI in 2011, is also pending.

Other Matters

In November 2012, the Company had received a notice from Bruhat Bangalore Mahanagara Palike (BBMP) demanding from the Company, improvement charges amounting to Rs. 15,58,04,930/-. The Company had filed a Writ Petition before the Karnataka High Court challenging the said demand notice from BBMP. The Court had granted interim stay against the notice issued by BBMP and the stay continues to be in force.

Further, the Company had received a notice dated August 7, 2014 from BBMP demanding improvement charges amounting to Rs. 7,08,20,430/-. The Company had filed a Writ Petition before the Karnataka High Court challenging the said demand notice from BBMP. The Court has granted interim stay against the notice issued by BBMP and the stay is in force till the next date of hearing. There is no further development in the matter since the last hearing held on 26th April 2016.

Voluntary Delisting Offer

In last year''s Directors? Report, the Members were informed that an appeal has been filed by two shareholders of the Company (''Appellants'') before the Securities Appellate Tribunal (SAT), against part of the Order of Securities and Exchange Board of India (SEBI) dated June 24, 2014, in relation to delisting proposal of AstraZeneca Pharmaceuticals AB, Sweden (AZPAB).

The SAT which heard the appeal on September 11, 2015, had disposed of the same and passed the following order:

a) Statement made by the Counsel for Respondent No.2 (i.e., AstraZeneca Pharma India Limited) and Respondent No.5 (AZPAB) that they shall not proceed with the delisting of equity shares of Respondent No.2 Company till completion of investigation and passing order by SEBI on merits, is accepted.

b) SEBI shall complete the investigation within a period of six months from September 11, 2015 and pass appropriate order on merits after hearing the parties including the Appellants, as expeditiously as possible.

c) If the order to be passed by SEBI on merits is adverse to the Appellants, then the said order shall not be given effect to from the date of passing the said order till it is communicated to the Appellants and four weeks thereafter.

There is no further development in the matter.

Transfer to Investor Education and Protection Fund

As required under Section 205C of the Companies Act, 1956, the unclaimed dividend amount aggregating Rs. 19.96 Lacs lying with the Company for a period of seven years pertaining to the financial year ended December 2007 was transferred during June 2015, to the Investor Education and Protection Fund, established by the Central Government.

Further, the unclaimed debenture amount including the interest payable thereon aggregating Rs. 27.62 Lacs lying with the Company for a period of seven years since January 2009 was transferred during February 2016, to the Investor Education and Protection Fund, established by the Central Government.

Directors'' Responsibility Statement

To the best of our knowledge and belief and according to the information and explanations obtained by us, your Directors state in terms of Section 134 (5) of the Companies Act, 2013 ("the Act"):

(a) that in the preparation of the annual financial statements for the year ended March 31, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

(b) that they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2016 and of the profit of the Company for the year ended on that date.

(c) that they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(d) that they had prepared the annual financial statements on a going concern basis.

(e) that they had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

(f) that they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

The details in respect of internal financial controls and their adequacy are included in the Management Discussion & Analysis Report, which forms part of this Report.

Disclosure as required under Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

AstraZeneca is committed to provide a healthy environment to all its employees. Hence, it does not tolerate any discrimination and/or harassment in any form. The Company has in place a Prevention of Sexual Harassment Policy and an Internal Complaints Committee as per the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the year under review, the Internal Complaints Committee received one complaint which was investigated. Post the investigation, a report was submitted to management indicating that the facts of the complaint could not be substantiated. However, to ensure comfortable working conditions, there was a management decision to separate the reporting line of the complainant with her consent.

Board Meetings

During the year, 6 meetings of the Board were held. For details of the meetings of the Board, please refer to the Corporate Governance Report, which forms part of this Report.

Board Evaluation

The Board of Directors has carried out an annual evaluation of its performance, Board Committees and individual Directors pursuant to the requirements of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("the Listing Regulations").

The performance of the Board was evaluated by the Board after seeking inputs from all the Directors on the basis of the criteria such as the Board composition and structure, effectiveness of Board processes, information and functioning etc.

The performance of the Committees was evaluated by the Board after seeking inputs from each of the committee members on the basis of the criteria such as the composition of committees, effectiveness of the functioning of committee meetings etc.

The Board and the Nomination & Remuneration Committee also reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and Committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.

In a separate meeting of Independent Directors, the performance of Non-Independent Directors and the performance of the Board as a whole were evaluated taking into account the views of executive directors and non-executive directors. The same was discussed in the Board meeting, at which the performance of the Board, its Committees and individual directors were also discussed.

Remuneration Policy of the Company

The Remuneration Policy of the Company for appointment and payment of remuneration to the Directors, Key Managerial Personnel and Senior Executives of the Company along with other related matters have been provided in the Corporate Governance Report, which forms part of this Report.

Vigil Mechanism / Whistle Blower Policy

The Company has a vigil mechanism for Directors and Employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company''s code of conduct. The mechanism provides for adequate safeguards for victimization of Director(s) / Employee(s) who avail of the mechanism. In exceptional cases, Directors and Employees have direct access to the Chairman of the Audit Committee. The Whistle Blowing Policy is available on the Company''s website at www.astrazeneca.com/india.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outflow

The 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 herewith as Annexure - I.

Related Party Transactions

There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel and Senior Management which may have a potential conflict with the interest of the Company at large.

All related party transactions are placed before the Audit Committee for its prior approval. Omnibus approval of the Audit Committee is obtained for the transactions which are repetitive in nature or when the need for them cannot be foreseen in advance.

The Company has adopted a Policy for dealing with Related Party Transactions. The Policy as approved by the Board is uploaded on the Company''s website and can be accessed at www.astrazeneca.com/india.

The related party transactions which are of material nature, as defined in the Listing Regulations, require to be approved by the Members by way of an Ordinary Resolution. In this connection, the material related party transactions requiring Members'' approval, are dealt with at Item No. 5 of the Notice, read with the relative Explanatory Statement.

Details of the related party transactions as required under Section 134(3)(h) read with Rule 8 of the Companies (Accounts) Rules, 2014, are attached as Annexure - II.

Risk Management

The Company has in place a mechanism to inform the Board about the risk assessment and minimization procedures and periodical review is carried out to ensure that executive management controls risks by means of a properly defined frame work.

Corporate Social Responsibility (CSR)

The Company had introduced AstraZeneca''s signature global initiative ''the Young Health Programme'' (YHP) in the year 2010-11, designed to help marginalized young people deal with health problems they face , enabling them to live a better life. The programme has made significant progress since then.

YHP India has directly been able to reach out to 199,387 young people (84,848 boys and 114,539 girls) and has influenced 119,770 wider community members, including health professionals , educators and policy makers.

Since the average net profit of the Company during the three immediately preceding financial years being negative, the Company was not required to spend on CSR activities during the financial year 2015-16.

The Annual Report on CSR activities in terms of the requirements of Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed herewith as Annexure - III, which forms part of this Report.

Extract of Annual Return

In terms of the requirements of Section 92(3) of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014, the extract of the Annual Return in the prescribed form i.e., MGT - 9 is annexed herewith as Annexure - IV, which forms part of this Report.

Details of remuneration of Directors / Key Managerial Personnel

The information relating to remuneration of Directors/ Key Managerial Personnel as required under Section 197(12) read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 201 4 of the Act, is given in Annexure - V, which forms part of this Report.

Particulars of Employees

The statement under Rule 5(2) and 5(3) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are set out in Annexure - VI which forms part of this Report.

However, the said Annexure shall be provided to Members on a specific request made in writing to the Company. The said information is available for inspection by the Members at the Registered Office of the Company on any working day of the Company up to the date of the 37th Annual General Meeting.

Management Discussion and Analysis Report

Management Discussion and Analysis Report as required under the Listing Regulations is annexed as Annexure - VII, which forms part of this Report .

Corporate Governance

Your Company has been practicing the principles of good corporate governance. A detailed report on corporate governance as required under the Listing Regulations is annexed as Annexure - VIII. Certificate of the Practicing Company Secretary regarding compliance with the conditions stipulated in the Listing Regulations forms part of the Report on Corporate Governance, which forms part of this Report.

Reporting of frauds

There was no instance of fraud during the year under review, which required the Statutory Auditors to report to the Audit Committee and / or the Board, as required under Section 143(12) of the Act and Rules framed thereunder.

Particulars of Loans, Guarantees or Investments

During the year under review, your Company has not granted any Loan, Guarantees or made Investments within the meaning of Section 186 of the Companies Act, 2013.

Significant and material orders passed by the Regulators or Courts or Tribunals

During the year under review, there was no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its future operations.

Committees

Pursuant to Section 178 of the Companies Act, 2013 and the rules made thereunder, the Board of Directors at its meeting held on May 30, 2014, had constituted the Nomination & Remuneration Committee and the StakeholdersRs. Relationship Committee. Further, pursuant to Section 135 of the Companies Act, 201 3 and the rules made thereunder, the Board of Directors at its meeting held on August 12, 2014 had constituted the Corporate Social Responsibility Committee. Details of these Committees are given in the Corporate Governance Report, which forms part of this Report.

Audit Committee

The details pertaining to composition of the Audit Committee are included in the Corporate Governance Report, which forms part of this Report.

Directors and Key Managerial Personnel

The Companies Act, 2013 provides for appointment of Independent Directors, who shall hold office for a term of upto five consecutive years on the Board of the Company and shall be eligible for re-appointment on passing of a special resolution by the Company. Further, the provisions of retirement by rotation as envisaged under Section 152 of the Companies Act, 2013, shall not apply to such Independent Directo'' The Independent Directors of your

Company viz., Mr. D. E. Udwadia, Mr. K. S. Shah and Mr. Narayan K Seshadri have furnished the required declaration under Section 149 of the Companies Act, 2013, affirming that they meet the criteria of independence.

Ms. Rebekah Martin and Mr. Justin Ooi resigned as Director(s) of the Company, effective November 6, 2015 and January 11, 2016, respectively.

The Board of Directors at its meeting held on November 6, 2015 appointed Ms. Claire-Marie O''Grady as Director of the Company in the vacancy caused by the resignation of Ms. Rebekah Martin, to hold office as such upto the date Ms. Rebekah Martin would have held the office of Director.

Pursuant to Section 152 of the Companies Act, 2013, Mr. Sanjay Murdeshwar, Managing Director, will retire by rotation at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment. A resolution in this behalf is set out at Item No.2 of the Notice of the Annual General Meeting.

The details of familiarization programme and Annual Board Evaluation process for Directors have been provided in the Corporate Governance Report.

As on date, Mr. Sanjay Murdeshwar, Managing Director, Mr. Rajesh Marwaha, Chief Financial Officer and Mr. Anantha Murthy N, Legal Counsel & Company Secretary, are the Key Managerial Personnel of the Company.

Auditors

a) Statutory Auditors:

The present Auditors - M/s. BSR & Co. LLP, Chartered Accountants, Bangalore who hold office up to the ensuing Annual General Meeting have conveyed that they do not wish to be re-appointed as Statutory Auditors of the Company for the financial year 2016-17. As such, the Board of Directors of your Company based on the recommendation of the Audit Committee, have approved the proposal for appointment of M/s. Price Waterhouse & Co Chartered Accountants LLP (Firm Registration No. 304026E/E-300009), as Statutory Auditors of the Company to hold office for a period of 5 years from the conclusion of the 37th Annual General Meeting, subject to the approval of the Members of the Company at the ensuing Annual General Meeting. The Notice of AGM contains a business to this effect

for your approval.

The Board of Directors wishes to place on record its appreciation of the guidance and support ably provided by M/s. BSR & Co. LLP during their tenure as the Statutory Auditors of the Company.

b) Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and amendments made thereto, your Company engaged the services of Mr. Vijayakrishna KT, Practicing Company Secretary, to conduct the Secretarial Audit of the Company for the financial year ended March 31, 2016. The Secretarial Audit Report in Form MR-3 is annexed as Annexure - IX, which forms part of this Report.

c) Cost Auditors:

The Board of Directors of the Company, based on recommendation of the Audit Committee, has appointed M/s. Rao, Murthy & Associates, Cost Accountants, Bangalore, (holding Registration No.000065), as Cost Auditor of the Company, for conducting the Cost Audit for the financial year 2016-17, on a remuneration as mentioned in the Notice convening the 37th Annual General Meeting.

A Certificate from M/s. Rao, Murthy & Associates, Cost Accountants, has been received to the effect that their appointment as Cost Auditor of the Company, if made, would be in accordance with the limits specified under Section 141 of the Act and Rules framed thereunder.

Cost Audit Report for the year 2014-15 was filed with the Ministry of Corporate Affairs on September 29, 2015.

Acknowledgements

Your Directors take this opportunity to thank AstraZeneca Pharmaceuticals AB, Sweden and AstraZeneca PLC, for their valuable guidance and strong support to the Company''s operations during the year.

Your Directors would also like to thank the Central and the State Governments, other Statutory and Regulatory Authorities, the Company''s Bankers, the Medical Profession and Trade, Vendors & Business Associates and the Members for their continued valuable support to the Company''s operations.

Your Directors place on record their sincere appreciation of the significant contribution and continued support of the employees at all levels to the Company''s operations during the year.

On behalf of the Board of Directors

Place: Bangalore D E UDWADIA

Date: May 25,2016 CHAIRMAN


Mar 31, 2015

Dear Members,

The Directors present the 36th Annual Report together with the Audited Financial Statements of the Company for the financial year ended March 31, 2015.

FINANCIALS

( Rs. in Million)

Particulars 2014-15 2013-14

Sales and Other Income 5,229 4,832

Profit/(Loss) Before Tax -208 -

Provision for Taxation

- Income Tax - 5

- Adjustment for Deferred Tax - -

Total Tax - 5

Profit/(Loss) after Taxation -208 -5

Surplus brought forward from the previous year 411 416

Total amount available for appropriation 203 411

Appropriation made by Directors

Transfer to General Reserve - -

Appropriation recommended by Directors

Dividend - -

Tax on proposed Dividend - -

Surplus carried over 203 411

DIVIDEND

Though the Company made significant progress during the year in terms of its business performance, considering its overall financial position, the Directors are unable to recommend any dividend for the year 2014-15.

The Company registered sales of Rs. 4657.8 Million (excluding export sales), a 12.4% growth over the last year. The growth has been steady and while over the 9 months April-December 2014, the Company grew by 13.6%, last quarter registered a 9% growth over the same quarter previous year (excluding export sales).

The Company's key growth brands - Brilinta, Onglyza, Kombiglyze, witnessed robust growth, providing strong momentum to the Company's performance throughout the year. Diabetes portfolio of the Company grew by 33% post acquisition from BMS.

The drug, BRILINTA (Ticagrelor) which provides cardiologists with a new and effective treatment to help reduce the rate of heart attack and cardiovascular deaths in adult patients with Acute Coronary Syndrome (ACS), is being received well by the market and continues to register rapid growth. During the year, the brand continued to grow its market share, as per IMS Health, from 6.7% (MAT March 2014) to 9.7% (MAT March 2015)1. Members were informed that, as per IMS Health data (YTD March 2015)2, Brilinta became the #1 brand in the oral anti platelets segment in the Indian Pharmaceutical Market, within 29 months of launch.

In the last Directors' Report, Members were informed that Drug Pricing Control Order was notified in May 2013. Since then, ceiling prices have been announced by the Government in a phased manner. In the year 2014-15, 10 selling units across 5 brands of the Company were additionally covered under the NLEM. While the said Order benefits the patients by making essential drugs affordable, it had an adverse impact on the Company's profitability due to average price reduction of 41%.

The Company, during the year, undertook a comprehensive review of the manufacturing standards of its contract manufacturers and identified certain process weaknesses. Production was stopped pending the review. Due to this, a significant part of the Company's portfolio, including several of its major brands, namely, Bricanyl (Respiratory), Bricarex (Respiratory), Linctus Codeinae (Respiratory), Xylocaine (Local Anesthesia), Sensorcaine (Local Anesthesia), Cerviprime (Maternal), Prostodin (Maternal), Seloram and Selomax (Cardiovascular) were not available in the market during a substantial part of the year.

MANUFACTURING

The Company continues to benefit from the comprehensive review of its manufacturing operations with assistance from AstraZeneca Group.

The manufacturing site at Yelahanka has resolved many constraints in the supply during the year 2014-15, consistently meeting supply requirements. The Tablet Manufacturing Plant has been progressively ramping up production volumes.

The Directors are pleased to inform that the entire manufacturing of Oral Solid Dosages has been shifted to the New Tablet Manufacturing Plant on 1st July 2014 and the Old Pharma Plant has been shut down in December 2014. Now all the manufacturing and supply of all oral solids from the site is being carried out from the New Tablet Plant only.

The current oral solid dosage facility has spare manufacturing capacity. Different options are under consideration to utilize this capacity to put the Company on a stronger footing for the future.

DEPOSITS

During the year under review, your Company has neither accepted nor renewed any deposits from public within the meaning of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014.

SHIFTING OF REGISTERED OFFICE

Your Company has shifted its Registered Office to its new premises situated at Block N1, 12th Floor, Manyata Embassy Business Park, Rachenahalli, Outer Ring Road, Bangalore - 560045, effective September 1, 2014.

SAFETY HEALTH AND ENVIRONMENT

Providing a safe workplace and promoting the health and wellbeing of all its people remains a core consideration for the Company. During the period under review, the Company's field force was trained in defensive driving techniques which resulted in decrease in number of road accidents. Medical check-up for all the field employees was done during the period under review.

HUMAN RESOURCES AND EMPLOYEE RELATIONS

The Company continued to enjoy good industrial relations and co-operation with its employees. The pending long term settlement was signed with the field union in this year effective January 1, 2013. Employee engagement continued to be high as reflected in our employee survey which was done during the year. Talent management and providing career opportunities to our employees remained key focus in our people devolepment strategy, The Campus Hire Program was started to induct Pharmacy Graduates into the field force.

FACTORY LAND AT YELAHANKA

In the last Directors' Report, the Members were informed that the Company had received compensation amount of (a) Rs. 13.7 million in respect of the first acquisition of land made by NHAI in 2004 and (b) Rs. 102.8 million in respect of second acquisition of land made by NHAI in 2011.

The arbitration proceedings initiated by NHAI before the Arbitrator at Bangalore, in relation to the first acquisition of land made by NHAI in 2004, are still pending.

Further, the arbitration invoked by the Company seeking, inter-alia, enhancement of compensation from NHAI in respect of second acquisition of land made by NHAI in 2011, is also pending.

OTHER MATTERS

In November 2012, the Company had received a notice from Bruhat Bangalore Mahanagara Palike (BBMP) demanding from the Company, improvement charges amounting to Rs. 15,58,04,930/-. The Company had filed a Writ Petition before the Karnataka High Court challenging the said demand notice from BBMP. The Court had granted interim stay against the notice issued by BBMP and the stay continues to be in force.

Further, the Company received a notice dated August 7, 2014 from BBMP demanding improvement charges amounting to Rs. 7,08,20,430/-. The Company filed a Writ Petition before the Karnataka High Court challenging the said demand notice from BBMP. The Court has granted interim stay against the notice issued by BBMP and the stay is in force till the next date of hearing.

In the last Directors' Report, the members were informed of the ongoing investigation pursuant to a First Information Report filed in February 2012 by the Central Bureau of Investigation against, among others, the Company. The investigation was concluded and a charge sheet was filed in the Court by CBI on August 5, 2013. Neither your Company nor any of its officials/employees have been named as accused in the charge sheet. The proceedings are going on against the accused named in the charge sheet.

VOLUNTARY DELISTING OFFER

In last year's Directors' Report, Members were informed that a Writ Petition had been filed by two shareholders of the Company before the Bombay High Court seeking, inter-alia, an order from the Court, restraining the Company and AstraZeneca Pharmaceuticals AB, Sweden (AZPAB) from implementing the voluntary delisting as proposed by AZPAB.

The Bombay High Court, which heard the Petition on October 8, 2014, disposed of the same, with the following directions:

(i) the Petitioners as well as the Company and AZPAB are at liberty to prefer appeal against Securities and Exchange Board of India (SEBI) Order dated June 24, 2014, to the Securities Appellate Tribunal (SAT), Mumbai, within 6 weeks;

(ii) until SAT hears and disposes of the petitioners' appeal, the Company and AZPAB, shall not take any further steps in the process of delisting of equity shares and

(iii) SAT to hear and decide the appeals as expeditiously as possible and preferably by February 28, 2015.

Pursuant to the above, an appeal has been filed by two shareholders of the Company before the SAT, against part of the Order of SEBI dated June 24, 2014, in relation to delisting proposal of AZPAB. There is no material development in the appeal and the matter has been adjourned by SAT from time to time. The next hearing has been scheduled for August 11,2015.

DIRECTORS' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134 (5) of the Companies Act, 2013 (the Act):

(a) that in the preparation of the annual financial statements for the year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures - if any.

(b) that such accounting policies as mentioned in notes to the financial statements have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31,2015 and of the loss of the Company for the year ended on that date.

(c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(d) that the annual financial statements have been prepared on a going concern basis.

(e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

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

The details in respect of internal financial controls and their adequacy are included in the Management Discussion & Analysis Report, which forms part of this Report.

Disclosure as required under Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

AstraZeneca is committed to provide a healthy environment to all its employees. Hence, it does not tolerate any discrimination and/or harassment in any form. The Company has in place a Prevention of Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the year under review, the Company has not received any complaint of sexual harassment at the workplace.

Board Meetings

Eight meetings of the Board were held during the year. For details of the meetings of the Board, please refer to the Corporate Governance Report, which forms part of this Report.

Board Evaluation

The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and individual Directors pursuant to the requirements of the Companies Act, 2013 and the revised Clause 49 of the Listing Agreement.

The performance of the Board was evaluated by the Board after seeking inputs from all the Directors on the basis of the criteria such as the Board composition and structure, effectiveness of Board processes, information and functioning etc.

The performance of the Committees was extensively evaluated by the Board after seeking inputs from each of the committee members on the basis of the criteria such as the composition of committees, effectiveness of the functioning of committee meetings etc.

The Board and the Nomination & Remuneration Committee also reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and Committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.

In a separate meeting of Independent Directors, the performance of Non-Independent Directors and the performance of the Board as a whole were evaluated taking into account the views of executive directors and non-executive directors. The same was discussed in the Board meeting, at which the performance of the Board, its Committees and individual directors were also discussed.

Policy on Directors' appointment and remuneration and other details

The Company's Policy on Directors' appointment and remuneration and other matters provided in Section 178(3) of the Companies Act, 2013 has been disclosed in the Corporate Governance Report, which forms part of this Report.

Number of Employees

The total number of employees of the Company as on March 31,2015 was 1654 as against 1559 as on March 31,2014.

Vigil Mechanism / Whistle Blower Policy

The Company has a vigil mechanism for Directors and Employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company's code of conduct. The mechanism provides for adequate safeguards for victimization of Director(s) / Employee(s) who avail of the mechanism. In exceptional cases, Directors and Employees have direct access to the Chairman of the Audit Committee. The Whistle Blowing Policy is available on the Company's website www.astrazeneca.com/india.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outflow

The 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 herewith as Annexure - I.

RELATED PARTY TRANSACTIONS

There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel and Senior Management which may have a potential conflict with the interest of the Company at large.

All related party transactions are placed before the Audit Committee for its approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are repetitive in nature, in terms of the requirements of Clause 49(VII) of the Listing Agreement entered into with Stock Exchanges ('Clause 49').

The Company has adopted a Policy for dealing with Related Party Transactions. The Policy as approved by the Board is uploaded on the Company's website and can be accessed at www.astrazeneca.com/india.

The related party transactions which are of material nature, as defined in Clause 49, require to be approved by the Members by way of a Special Resolution. In this connection, the material related party transactions requiring Members' approval, are dealt with at Item Nos.6 and 7 of the Notice, read with the relative Explanatory Statement.

Details of the related party transactions as required under Section 134(3)(h) read with Rule 8 of the Companies (Accounts) Rules, 2014, is attached as Annexure - II.

Risk Management Policy

The Company has framed a Risk Management Policy which was approved by the Board pursuant to the requirements of Clause 49 of the Listing Agreement. The details of the Risk Management Committee and its terms of reference are set out in the Corporate Governance Report which forms part of this report.

Corporate Social Responsibility

The Company introduced AstraZeneca's signature global initiative the Young Health Programme (YHP) in Financial Year 2010-11, designed to help marginalized young people deal with health problems they face, enabling them to live a better life. The programme has made significant progress since then.

YHP India has directly been able to reach out to 104,343 young people (47,088 boys and 57,255 girls) and has influenced 103,940 wider community members, including health professionals, educators and policy makers.

The several achievements of YHP India have been through two key approaches namely, the establishment of 15 Health Information Centers (HICs) which act as a forum for youth. The second vital approach is the training and support of 2,136 Peer Educators (of which 1,103 are girls) who are responsible for spreading awareness in their respective communities.

In India, YHP focuses on hygiene, infection, reproductive health and wider health issues (such as tobacco and alcohol abuse) of adolescents. Customized packages comprising of training curriculum is disseminated through various mediums such as street plays, magic shows, workshops, community meetings, video shows, competitions, thematic camps and fairs. Training of 588 healthcare workers including Anganwadi workers (family health), ASHA workers (community health) and Auxiliary Nurse Midwives (ANMs) have been a part of YHP's achievements as well. YHP India continues to enhance knowledge of health issues and ways to cope with it for adolescents and hopes to reach a larger audience as the time progresses.

The Annual Report on CSR activities in terms of the requirements of Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed herewith as Annexure - III, which forms part of this Report.

Extract of Annual Return

In terms of the requirements of Section 92(3) of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014, the extract of the Annual Return in the prescribed form i.e., MGT - 9 is annexed herewith as Annexure - IV, which forms part of this Report.

Details of remuneration of Directors / Key Managerial Personnel

The information relating to remuneration of Directors/ Key Managerial Personnel as required under Section 197(12) read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 201 4 of the Act, is given in Annexure - V, which forms part of this Report.

Particulars of Employees

Information required under the provisions of Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are set out in Annexure - VI which forms part of this Report.

Management Discussion and Analysis Report

Management Discussion and Analysis Report as required under Clause 49 of the Listing Agreement is annexed as Annexure - VII, which forms part of this Report.

Corporate Governance

Your Company has been practicing the principles of good corporate governance. A detailed report on corporate governance as required under Clause 49 of the Listing Agreement is annexed as Annexure - VIII. Certificate of the Statutory Auditors regarding compliance with the conditions stipulated in Clause 49 of the Listing Agreement forms part of the Report on Corporate Governance, which forms part of this Report.

Particulars of Loans, Guarantees or Investments

During the year under review, your Company has not granted any Loan, Guarantees or made Investments within the meaning of Section 186 of the Companies Act, 2013.

Significant and material orders passed by the Regulators or Courts or Tribunals

During the year under review, there was no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its future operations.

COMMITTEES

Pursuant to Section 178 of the Companies Act, 2013 and the rules made thereunder, the Board of Directors at its meeting held on May 30, 2014, constituted the Nomination & Remuneration Committee and the Stakeholders' Relationship Committee. Further, pursuant to Section 135 of the Companies Act, 201 3 and the rules made thereunder, the Board of Directors at its meeting held on August 12, 2014 constituted the Corporate Social Responsibility Committee. Details of these Committees are given in the Corporate Governance Report.

Further, in terms of Clause 49 of the Listing Agreement, the Board of Directors at its meeting held on February 11, 2015, constituted the Risk Management Committee, which comprises of Mr. K S Shah, Mr. Justin Ooi, Ms. Rebekah Martin and Mr. Sanjay Murdeshwar, as Members of the Committee.

Audit Committee

The details pertaining to composition of the Audit Committee are included in the Corporate Governance Report, which forms part of this Report.

DIRECTORS

The Companies Act, 2013 provides for appointment of Independent Directors, who shall hold office for a term of upto five consecutive years on the Board of the Company and shall be eligible for re-appointment on passing of a special resolution by the Company. Further, the provisions of retirement by rotation as envisaged under Section 152 of the Companies Act, 2013, shall not apply to such Independent Directors. Based on the recommendation of the Nomination & Remuneration Committee, the Board of Directors at its meeting held on August 12, 2014, appointed Mr. D. E. Udwadia, Mr. K. S. Shah and Mr. Narayan K Seshadri, as Independent Directors, to hold office as such, for a period of 5 years i.e., upto September 29, 2019, which was approved by the shareholders at the last Annual General Meeting of the Company held on September 30, 2014. The Independent Directors have furnished the required declaration under Section 149 of the Companies Act, 2013, affirming that they meet the criteria of independence.

Pursuant to Section 152 of the Companies Act, 2013, Mr. Ian Brimicombe, Director, will retire by rotation at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment.

The Board of Directors at its meeting held on November 3, 2014, appointed Ms. Rebekah Martin, as an Additional Director. She will hold office up to the date of the ensuing Annual General Meeting and is eligible for appointment as Director. A resolution in this behalf is set out at Item No.5 of the Notice of the Annual General Meeting.

Mr. Robert Haxton resigned as Wholetime Director of the Company, effective December 14, 2014.

The details of familiarization programme and Annual Board Evaluation process for Directors have been provided in the Corporate Governance Report.

DETAILS OF KEY MANAGERIAL PERSONNEL

a) Mr. Rajesh Marwaha, was appointed as the Chief Financial Officer of the Company, effective August 4, 2014.

b) Mr. Pawan Singhal, resigned as VP - Legal & Company Secretary, effective July 31,2014.

c) Mr. Anantha Murthy N, was appointed as the Legal Counsel & Company Secretary, effective August 1,2014.

AUDITORS

a) Statutory Auditors:

The present Auditors - M/s. BSR & Co. LLP, Chartered Accountants, hold office up to the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

b) Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Secretarial Audit has been carried out by Mr. Vijayakrishna KT, Practising Company Secretary and the Report is annexed as Annexure - IX.

c) Cost Auditors:

The Board of Directors of the Company has appointed M/s. Rao, Murthy & Associates, Cost Accountants, Bangalore, (holding Registration No.000065), as Cost Auditors of the Company, for conducting the Cost Audit for the year 2014-15. Cost Audit Report for the year 2013-14 was filed with the Ministry of Corporate Affairs on September 18, 2014.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to thank AstraZeneca Pharmaceuticals AB, Sweden and AstraZeneca PLC, for their valuable guidance and strong support to the Company's operations during the year.

Your Directors would also like to thank the Central and the State Governments, other Statutory and Regulatory Authorities, the Company's Bankers, the Medical Profession and Trade, Vendors & Business Associates and the Members for their continued valuable support to the Company's operations.

Your Directors place on record their sincere appreciation for the significant contribution and continued support of the employees at all levels to the Company's operations during the year.

On behalf of the Board of Directors

Place: Bangalore D E UDWADIA Date : August 4, 2015 CHAIRMAN


Mar 31, 2014

Dear members,

The Directors present the 35th Annual Report together with the Audited Financial Statements of the Company for the Financial Year ended March 31, 2014.

FINANCIALS

(RS. in Million)

Particulars 2013-14 2012-13

Sales and Other Income 4,832 4,009

Profit/ (Loss) Before Tax - (703)

Provision for Taxation

-Income Tax 5 15

-Adjustment for Deferred Tax - 178

Total Tax 5 193

Profit/(Loss)after Taxation (5) (895)

Surplus brought forward from the previous year 416 1,312 Total amount available for appropriation 411 416

Appropriation made by Directors

Transfer to General Reserve - -

Appropriation recommended by Directors

Dividend - -

Tax on proposed Dividend - -

Surplus carried over 411 416

DIVIDEND

Though the Company made significant progress during the year in terms of its business performance, considering its overall financial position, the Directors are unable to recommend any dividend for the year 2013-14.

The Year 2013-14 has been the first full year post supply stabilization from the Company''s factory operations, which had impacted the performance of the Company since March 2012. Continuing with its commitment to growth, the Company registered sales of RS. 4415.6 Million, a 24% growth over the last year. The growth has been steady and while over the 9 months April-December 2013, the Company grew by 22%, the last quarter growth surpassed the growth rate by registering a 30% growth over the same quarter previous year.

In the last Directors'' Report, the Members were informed that the Company''s efforts would be focused on regaining the market position by re- introduction of the products which were impacted due to supply constraints. The Directors are pleased to inform that, despite the long disruption in the supply, the Company has delivered strong growth in these products and has been able to regain 60-80% of the market share1 in respect of most of the key products not impacted by regulatory changes.

The Year 2013-14 witnessed a series of regulatory interventions in the Indian Pharmaceutical Market. In the last Directors'' Report, Members were informed that the National Pharmaceutical Pricing Policy 2012 announced by the Government in December 2012 had brought 348 medicines covered in the National List of Essential Medicines (NLEM), under price control. Based on this policy, Drug Pricing Control Order was notified in May 2013. Since then, ceiling prices have been announced by the Government in a phased manner. Uncertainty around the announcements on the ceiling prices and the multiple notifications by the Government impacted the market growth for these products. 15 SKUs across 8 brands of the Company were covered under the NLEM.

The drug, BRILINTA® (Ticagrelor) which provides cardiologists with a new and effective treatment to help reduce the rate of heart attack and cardiovascular deaths in adult patients with Acute Coronary Syndrome (ACS), has been received well by the market and continues to register rapid growth. During the year, the brand continued to grow its market share, as per IMS Health, from 1.4% (MAT March 2013) to 6.7% (MAT March 2014). Members were informed that, as per IMS Health data, the brand ranked in the top 10 brands in the oral antiplatelets segment in the Indian Pharmaceutical Market.

MANUFACTURING

The Company benefitted from a comprehensive review of its manufacturing operations with assistance from AstraZeneca group, initiated during 2012-13.

The manufacturing site at Yelahanka has resolved many constraints in the supply during the year 2013- 14, consistently meeting supply requirements. The remediation measures established in the previous year have delivered discernible improvements in Quality Management System and Quality Capabilities in the current year, such as Good Manufacturing Practices (GMP), root cause analysis and shop floor Quality Assurance Controls. Resultantly, GMP metrics tracked by the Company on site have also shown significant improvements.

The Directors are pleased to inform that the planned move of manufacture and Quality Control laboratory from its existing facilities to the new state-of-the- art tablets and laboratory facility was completed as per the plan with the first commercial supply from the new facility taking place in the first quarter of Financial Year 2013-14. The establishment programme was delivered to plan, with planned QC transfers and the majority of tablet transfers delivered by the end of the Financial Year 2013-14. This will enable the cessation of manufacture from the existing manufacturing facility and will ensure a platform for consistent supply of global quality medicines.

The supply assurance of Terbutalane Sulphate (TBS) API to AstraZeneca Group was strengthened with an INR 185.5 million investment. The upgrade programme was completed in the last quarter of Financial Year 2013-14. The Company is currently establishing new quality control testing equipment and is experiencing some product supply delays.

As has been widely reported, regulatory authorities around the world have recently adopted a more stringent and forensic approach to their audit programmes, with particular emphasis on data integrity. In line with this, our World Wide Audit Group (WWAG) is now following a similar format for their audits.

The outsourcing programme of sterile products, liquid orals and semisolids completed during the previous year has presented significant challenges in sustaining supply in accordance with GMP. The Company continues to monitor and review the performance of its external partners. As compliance issues arise, the Company makes its assessment and develops and implements corrective action plans as appropriate.

VOLUNTARY NON-REPAYABLE FINANCIAL GRANT BY ASTRAZENECA PHARMACEUTICALS AB, SWEDEN

As you are aware, last year, in order to assist the Company in its efforts to establish/grow its presence in the Indian market despite the significant losses incurred, AstraZeneca Pharmaceuticals AB Sweden (Promoter Company) had agreed to provide a voluntary non-repay able financial grant of approximately USD 22.5 million to USD 26.5 million over the three years period Financial Year 2013-14 to Financial Year 2015-16 under a Subvention Agreement dated May 7, 2013.

During the year ended 31 March 2014, the Company received a sum of RS. 862.4 million as financial grant under the said agreement. The Promoter Company vide its letter dated March 1, 2014 informed the Board of Directors of the Company of a revision of the said agreement, whereby the payment under the said agreement was revised to USD 14 million (Indian rupee equivalent 862.4 million) and period covered under the said agreement to financial year 2013-14. The Promoter Company, in terms of the said agreement, vide its letter dated April 25, 2014 terminated it effective March 25, 2014 on the ground that the Company''s business and financial performance has been in line with more recent expectations and that the Company shall not require any further grant for the financial years 2014-15 and 2015-16.

SAFETY HEALTH AND ENVIRONMENT

Providing a safe workplace, and promoting the health and wellbeing of all its people remains a core consideration for the Company. During the period under review, the Company''s field force was trained in defensive driving techniques which resulted in a decreased number of road accidents. Regular initiatives like ''Hypertension awareness'' and ''Diabetes Awareness'' continued during the year to encourage the Company''s employees to adopt healthy and productive lifestyle practices.

HUMAN RESOURCES AND EMPLOYEE RELATIONS

The Company continued to enjoy good industrial relations and cooperation with its employees. Retaining and developing talent during a period when the Company is targeting to return to growth, employee morale and motivation was a priority. The increased focus on employee engagement through improved communication and building accountability at all levels had a positive impact on talent management. Managers were trained in conducting performance coaching and feedback with a view to enhancing capabilities of employees.

FACTORY LAND AT YELAHANKA

The Company received compensation amount of RS. 13.7 million in respect of first acquisition of land made by NHAI in 2004. However, the review petition which was filed by NHAI before the Karnataka High Court, and the arbitration proceedings initiated by NHAI before the Arbitrator at Bangalore, are still pending.

The Company received further compensation amount of RS.102.8 million in respect of second acquisition of land made by NHAI in 2011. The Company subsequently invoked arbitration seeking, inter alia, enhancement of compensation from NHAI.

OTHER MATTERS

In December 2012, the Company had received a notice from Bruhat Bangalore Mahanagar Palike (BBMP) demanding from the Company improvement charges amounting to Rs.15,58,04,930/-. The Company had filed a Writ Petition before the Karnataka High Court challenging the said demand notice from BBMP. The Court had granted interim stay against the notice issued by BBMP and the stay is in force.

In the last Directors'' Report, the members were informed of the ongoing investigation pursuant to a First Information Report filed in February 2012 by the Central Bureau of Investigation against, among others, the Company. During the year, the investigation was concluded and a charge sheet was filed in the Court by CBI on August 5, 2013. Neither your Company nor any of its officials/employees have been named as accused in the charge sheet.

VOLUNTARY DELISTING OFFER

AstraZeneca Pharmaceuticals AB, Sweden (AZPAB) vide its letter dated March 1, 2014, notified the Company of its proposal to make a voluntary delisting offer to the public shareholders of the Company, in accordance with the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009, with a view to delist the equity shares of the Company from BSE Limited (BSE), National Stock Exchange of India Limited (NSE) and Bangalore Stock Exchange Limited (BgSE), where the equity shares of the Company are currently listed (delisting proposal).

The Board at its meeting held on March 5, 2014 considered the delisting proposal as above and sought additional information from AZPAB. On receipt of the additional information, the Board had a further meeting on March 15, 2014, at which, after consideration of the additional information, it approved the delisting proposal.

Thereafter, the Board met on April 15, 2014 to consider seeking approval of shareholders through Postal Ballot and deferred the decision in light of further clarifications and explanations sought from ICICI securities Ltd. (Manager) and Walker Chandiok & Co LLP (Valuer). Upon receipt of the clarifications sought, the Board again met on May 5, 2014 and after consideration of the clarifications provided, approved seeking approval of shareholders of the Company through Postal Ballot, for voluntary delisting of equity shares from the stock exchanges.

In terms of the report submitted by the Scrutinizer, the Special Resolution in relation to voluntary delisting of equity shares of the Company from stock exchanges has been duly approved by the requisite majority of shareholders. Further, the number of votes cast by public shareholders in favour of the Special Resolution being two times more than the votes cast against it by the public shareholders, the additional requirement as envisaged in Regulation 8(1)(b) of Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 has been satisfied and accordingly, the Special Resolution would be acted upon by the Company.

SABI ORDER DATED JUNE 24, 2014

The Securities & Exchange Board of India (SABI), came across certain reports stating that the Offer for Sale (NFS) of the shares of the Company carried out by the Promoter - AstraZeneca Pharmaceuticals AB, Sweden, (AZPAB) on May 26, 2013, was a deliberate attempt to subsequently get the shares of the Company delisted at ease. It was also reported that more than 94% of total shares offered through OFS had been subscribed by 6 Foreign Institutional Investors (FII).

SEBI has in its order dated June 24, 2014, stated that the facts and circumstances stated in the order, raises suspicion that Elliott Group who are the end subscribers in respect of shares held by Fils, may have been working in collaboration/ concert with the Promoters, to facilitate the delisting of shares of the Company.

The Order also states that the matter requires further examination and in rder to protect the interest of the retail investors in the delisting process which is already on, SEBI issues the following directions:

(a) Bombay Stock Exchange Limited and National Stock Exchange of India Limited shall closely monitor the entire delisting process of the Company and allow the final delisting of shares only after satisfying themselves that the process has been fair and transparent

(b) Bombay Stock Exchange Limited and National Stock Exchange of India Limited shall promptly report any aberrations noticed in the delisting process of the Company, to SEBI

(c) The Promoters of the Company shall finally purchase shares from public shareholders in the delisting offer only after seeking approval of Bombay Stock Exchange Limited and National Stock Exchange of India Limited.

WRIT PETITION - VOLUNTARY

DELISTING OFFER

A Writ Petition has been filed by two shareholders of the Company before the Bombay High Court seeking inter-alia an order from the Court, restraining the Company and AZPAB from implementing the said voluntary delisting as proposed by AZP AB.

The Hon''ble High Court which heard the matter on July 14, 2014 adjourned the same to July 24, 2014, with a direction that any steps taken hereafter shall be subject to further orders and shall not entitle any of the parties to claim equities.

The Company has filed its affidavit before the Court stating that it is only a target Company and that it has no stake in the Delisting Proposal of AZPAB other than to comply with the mandatory requirements under the SEBI (Delisting of Equity Shares) Regulations, 2009 (‘Delisting Regulations'') and the procedure prescribed thereunder & the Companies Act, 2013 and that it has duly complied with the requirements as such.

At the hearing held on July 24, 2014, SEBI had sought additional time to file its affidavit in the matter and in view thereof, the Court adjourned the matter by 2 weeks. Further, at the hearing held on August 7, 2014, SEBI sought further additional time to file its affidavit, based on which, the Court has granted one week''s time to enable SEBI file its affidavit. The matter is now scheduled for hearing by the Court on August 14, 2014.

ACQUISITION OF BMS''S DIABETES INTEREST

In December 2013, AstraZeneca globally announced an agreement to purchase BMS''s 50% interest in AstraZeneca''s and BMS''s joint diabetes business. On February 1, 2014, AstraZeneca completed the acquisition of BMS''s interests in the companies'' diabetes alliance. The acquisition provided AstraZeneca with 100% ownership of the intellectual property and global rights for the development, manufacture and commercialisation of the diabetes business, which includes Onglyza (saxagliptin), Kombiglyze XR (saxagliptin and metformin HCI extended release), Komboglyze (saxagliptin and metformin HCI), Farxiga (dapagliflozin, marketed as Forxiga outside the US), Byetta (exenatide), Bydureon (exenatide extended release for injectable suspension), metreleptin and Symlin (pramlintide acetate).

The Company had since 2010 been associated with BMS in promotions of Onglyza (Saxagliptin), Kombiglyze XR (Saxagliptin and Metformin HCI extended release) and Byetta in the Indian Pharmaceutical Market. The acquisition enables the Company to focus on the Diabetes segment, which today impacts approximately 65 million people in India, who are suffering from the disease. The Company, over the next few years, expects to launch more products in disease segment and strengthen its position.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956 (the Act), the Board of Directors states that:

a) In the preparation of the Company''s Annual Accounts, the applicable accounting standards had been followed and proper explanations had been provided for material departures, wherever applicable.

b) It has selected such accounting policies which had been applied consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at the end of the year March 31, 2014 and of the Loss of the company for that period.

c) It had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

d) The financial statements had been prepared on a going concern basis.

BOARD''S RESPONSE TO AUDIT OBSERVATIONS

The observations made by the Auditors under para (x) of the Annexure to the Auditors'' Report relating to cash loss in the immediately preceding financial year is self explanatory. The management has initiated and is vigorously pursuing plans and actions to drive the Company back to profitability. These measures would help the Company in stabilizing its fund position during the Financial Year2014-15.

INFORMATION PURSUANT TO SECTION 217 OF THE COMPANIES ACT, 1956

Information required under Section 217(1)(e) of the Companies Act, 1956 (1956 Act), read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is given in Annexure-I and forms part of this Report.

Information under Section 217 (2A) of the 1956 Act, read with Companies (Particulars of Employees) Rules, 1975, forms part of this Report. However, as per the provisions of Section 219(1)(b)(iv) of the 1956 Act, the Report and the Accounts are being sent to all the members, excluding the information under Section 217(2A) of the 1956 Act. Any member, desirous of obtaining a copy of this Statement, may write to the Company Secretary.

CORPORATE SOCIAL RESPONSIBILITY

The Company introduced AstraZeneca''s signature global initiative the Young Health Programme (YHP) in Financial Year 2010-11, designed to help marginalized young people deal with health problems they face, enabling them to live a better life. The programme has made significant progress since then.

YHP India has directly been able to reach out to 89,493 young people (40,271 boys and 49,222 girls), and has influenced 84,387 wider community members, including health professionals, educators and policy makers.

The several achievements of YHP India have been through two key approaches namely, the establishment of 15 Health Information Centres(HICs) which act as a forum for the youth. The second vital approach is the training and support of 1,581 Peer Educators (of which 814 are girls) who are responsible for spreading awareness in their respective communities.

In India, YHP focuses on hygiene, infection, reproductive health and wider health issues (such as tobacco use and alcohol abuse) of adolescents. Customized packages comprising of training curriculum is disseminated through various mediums such as street plays, magic shows, workshops, community meetings, video shows, competitions, thematic camps and fairs. Training of 588 healthcare workers including Anganwadi workers (family health), ASHA workers (community health) and ANMs (Auxiliary Nurse Midwives) have been a part of YHP''s achievements as well. YHP India continues to enhance knowledge on health issues and ways to cope with it for adolescents and hopes to reach a larger audience as the year progresses.

COMMITTEES

Pursuant to Section 178 of the Companies Act, 2013 and the rules made thereunder, the Board of Directors at its meeting held on May 30, 2014, constituted the Nomination & Remuneration Committee and the Stakeholders'' Relationship Committee, details of which are given in the Corporate Governance Report.

Further, pursuant to Section 135 of the Companies Act, 2013 and the rules made thereunder, the Board of Directors at its meeting held on August 12, 2014, constituted the Corporate Social Responsibility Committee, which comprises of Mr. Ian Brimicombe, Mr. DE Udwadia and Mr. Sanjay Murdeshwar, as Members of the Committee.

CORPORATE GOVERNANCE

The Company has taken steps to ensure that all mandatory provisions of Corporate Governance as per the Listing Agreement with the Stock Exchanges, where the Company shares are listed, have been complied with.

The Management Discussion and Analysis is attached as Annexure-ll and forms part of this Report.

The Report on Corporate Governance, along with a certificate from the Statutory Auditors confirming compliance, is annexed as Annexure-lll and forms part of this Report.

DIRECTORS

The Companies Act, 2013 provides for appointment of Independent Directors, who shall hold office for a term of upto five consecutive years on the Board of the Company and shall be eligible for re-appointment on passing of a special resolution by the Company. Further, the provisions of retirement by rotation as envisaged under Section 152 of the Companies Act,2013, shall not apply to such Independent Directors.

Based on the recommendation of the Nomination & Remuneration Committee, the Board of Directors at their meeting held on August 12, 2014, have appointed Mr. D. E. Udwadia, Mr. K. S. Shah and Mr. Narayan K Seshadri, as Independent Directors, to hold office as such, for a period of 5 years i.e., upto September 29, 2019, subject to approval by the shareholders at the ensuing Annual General Meeting.

Pursuant to Section 152 of the Companies Act, 2013, Mr. Justin Ooi, Director will retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

During the year, the Company received approvals from the Central Government for the appointment of (a) Mr. Sanjay Murdeshwar as Managing Director and (b) Mr. Rob Haxton as Whole Time Director, both being persons not resident in India, as envisaged in Part I of Schedule XIII to the Companies Act, 1956. Their appointments were approved by the members at the last Annual General Meeting of the Company.

AUDITORS

The present Auditors Messrs. BSR & Co. LLP Chartered Accountants, hold office up to the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to thank AstraZeneca Pharmaceuticals AB, Sweden and AstraZeneca PLC, for their valuable guidance and strong support to the Company''s operations during the year.

Your Directors would also like to thank the Central and the State Governments, other Statutory and Regulatory Authorities, the Company''s Bankers, the Medical Profession and Trade, Vendors & Business Associates and the Members for their continued valuable support to the Company''s operations.

Your Directors place on record their sincere appreciation of the significant contribution made by and the continued support of the employees at all levels to the Company''s operations during the year.

On behalf of the Board of Directors

D E UDWADIA CHAIRMAN

Place: Bangalore Date : August 12, 2014


Mar 31, 2013

The Directors present their 34th Annual Report together with the Audited Accounts of the Company for the Financial Year ended March 31, 2013.

FINANCIAL RESULTS

(Rs. in Million)

Particulars 2012-13 2011-12

Sales and Other Income 4,009 5,379

Profit/(Loss) Before Tax (703) 293

Provision for Taxation

- Income Tax 15 197

- Adjustment for Deferred Tax 178 (102)

Total Tax 193 95

Profit/(Loss) after Taxation (895) 198

Surplus brought forward from the previous year 1,312 1,235

Total amount available for appropriation 416 1,433

Appropriation made by Directors

Transfer to General Reserve - 19

Appropriation recommended by Directors

Dividend - 88

Tax on proposed Dividend - 14

Surplus carried over 416 1,312

DIVIDEND

The Company has incurred a Net Loss after Tax of Rs. 895 Million during the Financial Year 2012-13, consequent to significantly lower sales. Considering the Company''s overall financial position, the Directors regret they are unable to recommend a dividend for the year 2012-13.

Net worth

SALES AND MARKETING

In the last Directors'' Report, Members were informed that the Company had, as a measure of extra and abundant caution, undertaken a voluntary recall of sterile products manufactured at its Bengaluru plant following AstraZeneca Worldwide Audit Group''s quality audit. During the year, the Company had to undertake voluntary recall of two more products - Actamase and Pulmicort. As a precautionary measure, the Company had also voluntarily suspended production temporarily to review manufacturing practices at the plant resulting in a temporary disruption of supplies.

The Company, during the year, undertook a comprehensive review of its factory operations and that of its contract manufacturers. As a consequence of this review, a significant part of the Company''s portfolio, including several of its major brands, namely, Imdur (Cardiovascular), Betaloc (Cardiovascular), Ramace (Cardiovascular), Xylocaine (Local Anesthesia), Sensorcaine (Local Anesthesia), Linctus Codeinae (Respiratory), were not available in the market (Impacted Products*) during a substantial part of the year.

In the above circumstances, the Company registered sales of Rs. 3,557 Million (including exports) in the Financial Year ended March 31, 2013, a steep decline of 28.8% from the previous year ended March 31, 2012.

Having completed the review of the Company''s factory operations and that of its contract manufacturers, a majority of the impacted products have already been reintroduced in to the market in a phased manner. The Company''s effort is focused on regaining its lost market position by increasing the supply of these products to meet the market demand. The Company has discontinued a few impacted products on account of portfolio rationalization and in some cases inability to find local supplier for these products. These products contributed about 8 to 10% of its sales turnover in the Financial Year 2011-12.

With the impacted products being reintroduced in to the market, the sales turnover for the fourth quarter of the Financial Year 2012-13 has registered a growth of 2.8% as against the successive decline in sales turnover across the three previous quarters during the year. With strong and concerted efforts being made to regain the lost market position for these products, the Company expects to resume its growth path during the Financial Year 2013-14.

In the last Directors'' Report, Members were informed that the Company had obtained marketing approval from the Drugs Controller General of India (DCGI) for its new patented antiplatelet drug - BRILINTA®(Ticagrelor). Your Directors are glad to inform that the Company launched BRILINTA in India in September 2012. BRILINTA is an oral antiplatelet treatment for Acute Coronary Syndrome (ACS) in adult patients. BRILINTA provides cardiologists with a new and effective treatment to help reduce the rate of heart attack and cardiovascular deaths in these patients. Since its launch in September 2012, the brand has been progressing satisfactorily. As per IMS Health data, the brand has broken into top 10 brands in the oral antiplatelets segment in the Indian market, within 6 months of its launch - an achievement which has already placed the brand amongst some of the best patented launches in the Indian market.

The National Pharmaceutical Pricing Policy 2012 announced by the Government in December 2012 had brought 348 medicines covered in the National List of Essential Medicines (NLEM), under price control. Based on this policy, Drug Pricing Control Order 2013 was notified in May 2013. On 14th June 2013, the ceiling prices of 151 formulations were notified.

While the said Policy will benefit the patients by making essential drugs affordable, it is likely to have an adverse impact on the profitability of pharmaceutical companies including the Company in the near to medium term. The Company is closely monitoring the developments and evaluating the impact of the ceiling prices, on its portfolio.

MANUFACTURING

During the year, the Company undertook a comprehensive review of its entire manufacturing facility in the wake of the concerns that had emerged during the last quarter of the Financial Year 2011-12. In its efforts to review the processes and remediate the concerns, the Company has received strong and invaluable support from the AstraZeneca Group in terms of expertise and best practices in manufacturing, including support for resuming production post remediation, and outsourcing manufacture of certain products.

The Directors are pleased to inform you that remediation has been completed and majority of the impacted products have been reintroduced in to the market. Further, the manufacture of sterile products, liquid orals and semisolids has been successfully outsourced to select contract manufacturers in India through technology transfer.

The remediation measures have delivered significant improvements to Quality Management System and Quality Capabilities, such as Good Manufacturing Practices (GMP), root cause analysis and shop floor Quality Assurance controls. Resultantly, GMP metrics tracked by the Company have also shown significant improvements.

The Directors are also pleased to inform the members that the New Tablet Manufacturing Facility and New Quality Control Laboratory received the approval of the Drug Controller of Karnataka in May 2013. With this approval to operate, the Company expects to get the New Tablet Manufacturing Facility operational by end of first quarter of Financial Year 2013-14. This will provide a platform for ensuring consistent supply of global quality medicines.

In its pursuit for continuous improvement, a Site Compliance Improvement Plan for the Financial Year 2013-2014 has been prepared, in line with AstraZeneca Global Standards. The Plan will address 12 core areas of Quality. The Company is taking support from the AstraZeneca Group and its Global resources have been deployed on site in Quality Assurance, Manufacturing, Human Resources and other support functions to actively support and strengthen the factory site capabilities. These resources have been carefully selected based on their proven track record of performance and capabilities.

The Company has, in pursuance of its objective of driving a stringent compliance culture, undertaken new initiatives including electronic laboratory management systems. These initiatives will enhance visibility, vigilance over processes and effective compliance to sustain the improvements.

Mr. Robert Ian Haxton, having over 20 years of diverse experience in the Pharmaceutical Industry working across various roles and regions within the AstraZeneca Group, joined the Company as Vice President - India Operations and Whole Time Director in February 2013. The Directors are confident that Mr. Robert Ian Haxton, with his diverse experience and creditable track record, with support of his team at the manufacturing facility, will ensure continuous improvement enabling a stable base for supply of high quality products.

VOLUNTARY NON-REPAYABLE FINANCIAL GRANT BY ASTRAZENECA PHARMACEUTICALS AB, SWEDEN

In order to assist the Company in its efforts to establish/grow its presence in the Indian market despite the significant losses incurred, AstraZeneca Pharmaceuticals AB Sweden, the promoter of the Company, has agreed to provide a voluntary non repayable financial grant of approximately USD 22.5million (~ Rs. 1192* million) to USD 26.5million (~ Rs. 1404*million) over the three years period Financial Year 2013-14 to Financial Year 2015-16 under a Subvention Agreement dated May 7, 2013. The first tranche of USD 14 million (~ Rs. 740* million) has been agreed to be provided to the Company during the Financial Year 2013-14.

*Exchange rate 1 USD = Rs. 53

SAFETY HEALTH AND ENVIRONMENT (SHE)

Providing a safe workplace, and promoting the health and wellbeing of all its people remains a core consideration for the Company. A new initiative called "Well Women" was launched this year to bring focus on personal safety of women employees. Women employees were provided with a basic personal protection kit. During the period under review, the Company''s field force was trained in defensive driving techniques which resulted in a decreased number of road accidents. Regular initiatives like Annual Health Check-up, ''Hypertension Awareness'' and ''Diabetes Awareness'' continued during the year to encourage the Company''s employees to adopt healthy and productive lifestyle practices.

HUMAN RESOURCES AND EMPLOYEE RELATIONS

During the year, the Company enjoyed good industrial relations and cooperation with its unionised staff. There have been trainings and assessments conducted at the factory to prepare the workmen for meeting required standards for deployment at the New Tablet Production Facility.

Retaining and developing talent during a period when the Company''s sales declined and sustaining employee morale was a priority. The increased focus on employee engagement through improved communication and building accountability at all levels had a positive impact on talent management. This was reflected in the lower attrition levels vis-a- vis the industry. The employee strength as on March 31, 2013 was 1588.

FACTORY LAND AT YELAHANKA

In the last Directors'' Report, the members were informed that the National Highways Authorities of India (NHAI) had acquired a portion of the factory land at Yelahanka for expansion of the Hyderabad- Bengaluru Highway. Pursuant to the Writ Petition filed by the Company, the Karnataka High Court had directed NHAI to pay as per the original award to the Company upon it furnishing a Bank Guarantee. The final amount determined to be payable for the Company''s portion of land is Rs. 13.7 million. The Company has submitted a Bank Guarantee to NHAI as per the Court''s direction and is awaiting release of the compensation amount. NHAI has, in meantime, filed a review petition before the Karnataka High Court, stating that, while the High Court in its judgment was pleased to reserve liberty to NHAI to raise arbitration proceedings but due to inadvertence, the operative portion of the Court''s Order did not mention the same. The Petition is pending before the Court. NHAI has also initiated arbitration proceedings before the Arbitrator at Bangalore.

In 2011, NHAI had acquired a further portion of the factory land at Yelahanka for expansion of the Hyderabad-Bengaluru Highway. The Special Land Acquisition Officer, (SLAO) had awarded compensation @ Rs. 1,314/- per square feet for the said land. The Company, notwithstanding continuous follow-up, has not received the said compensation @ Rs. 1,314/- psf. The Company has filed a Writ Petition before the Karnataka High Court seeking early release of compensation by NHAI.

OTHER MATTERS

In December 2012, the Company received a notice from Bruhat Bangalore Mahanagar Palike (BBMP) demanding from the Company improvement charges amounting to Rs. 15,58,04,930/-. The Company filed a Writ Petition before the Karnataka High Court challenging the said demand notice from BBMP. The Court has granted interim stay against the notice issued by BBMP.

In the last Directors Report, the members were informed that a First Information Report was filed in February 2012 by the Central Bureau of Investigation against, among others, the Company wherein it is alleged that the Company submitted a false affidavit with respect to rates quoted by the Company to the Directorate of Health Services, Delhi (DHS). It is further alleged that unknown officers of DHS and unknown officials of the Company and other private persons conspired to cancel the recovery proceedings by DHS. The investigation is ongoing. The Company continues to fully cooperate with the investigation.

OFFER FOR SALE OF SHARES BY ASTRAZENECA PHARMACEUTICALS AB, SWEDEN

To comply with the mandatory requirement of minimum public shareholding in a public listed company, as specified in Securities Contracts (Regulation) Rules, 1957, AstraZeneca Pharmaceuticals AB Sweden, the Company''s promoter, reduced its shareholding in the Company from 89.99% to 75% by selling 37,49,950 equity shares of the Company through ''Offer For Sale'' mechanism in May 2013.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956 (the Act), the Board of Directors states that-

(A) in the preparation of the Company''s Annual Accounts, the applicable accounting standards have been followed and proper explanations have been provided for material departures, wherever applicable,

(B) it has selected such accounting policies which have been applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the year March 31, 2013 and of the loss of the Company for that period,

(C) it has taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, and

(D) the financial statements have been prepared on a going concern basis.

BOARD''S RESPONSE TO AUDIT OBSERVATIONS

The observations made by the Auditors under paras (x) and (xvii) of the Annexure to the Auditors'' Report relating to cash loss in the financial year and of using short term funds for long term investments in fixed assets respectively are self explanatory. The management has initiated and is vigorously pursuing plans and actions to drive the Company back to profitability. These measures would help the Company in stabilizing its fund position during the Financial Year 2013-14.

INFORMATION PURSUANT TO SECTION 217 OF THE COMPANIES ACT, 1956

Information required under Section 217(1)(e) of the Act, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is given in Annexure-I and forms part of this Report.

Information required under Section 217 (2A) of the Act, read with the Companies (Particulars of Employees) Rules, 1975, forms part of this Report. However, as per the provisions of Section 219(1) (b)(iv) of the Act, the Report and the Accounts are being sent to all Members, excluding the Statement of Particulars under Section 217(2A). Any Member, desirous of obtaining a copy of this Statement, may kindly write to the Company Secretary.

CORPORATE SOCIAL RESPONSIBILITY

Young Health Programme

The Company introduced AstraZeneca''s signature global initiative the Young Health Programme (YHP) in Financial Year 2010-11, designed to help marginalized young people deal with health problems they face, enabling them to live a better life. The programme has made significant progress since then. The YHP India has directly been able to reach out to 65,250 young people, and has influenced 60,988 wider community members, including health professionals, educators and policy makers, through its around 1400 peer educators. This is more than twice the target set out for the three year programme.

CORPORATE GOVERNANCE REPORT

The Company has taken steps to ensure that all mandatory provisions of Corporate Governance as prescribed by the Listing Agreement of the Stock Exchanges, on which the Company shares are listed, have been complied with.

The Management Discussion and Analysis is attached as Annexure-II and forms part of this Report.

A Report on Corporate Governance, along with a certificate from the Statutory Auditors confirming compliance, is annexed as Annexure-III and forms part of this Report.

REMUNERATION COMMITTEE OF THE BOARD

In view of the absence of profits in the Financial Year ended March 31, 2013, the Remuneration Committee of the Board, comprising four directors including three independent directors, was constituted by the Board at its meeting held on February 6, 2013 pursuant to the requirements of sub-para (C) of Section II of Part II of Schedule XIII to the Companies Act, 1956, to consider and approve the remuneration paid to Mr. Anandh Balasundaram in respect of the period April 1, 2012 to August 31, 2012 (when he ceased to be the Managing Director), to Ms. Ruby Lau in respect of the period April 1, 2012 to February 27, 2013 (when she ceased to be a Whole Time Director), and to Mr. Robert Ian Haxton and Mr. Sanjay Murdeshwar, respectively.

DIRECTORS

In accordance with the provisions of the Act and the Company''s Articles of Association, Mr. Ian Brimicombe, Director will retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Mr. Anandh Balasundaram ceased to be the Managing Director of the Company effective August 31, 2012. Ms. Ruby Lau ceased to be a Whole Time Director of the Company effective February 27, 2013.

Mr. Narayan K Seshadri was appointed on the Board as an additional director on December 6, 2012. He will hold office up to the date of the ensuing Annual General Meeting and being eligible offers himself for appointment as a Director. Mr. Justin Ooi joined the Board as Non Executive Director effective May 2, 2013, in the casual vacancy caused by the resignation of Mr. Luigi Felice La Corte from the Board.

Mr. Robert Ian Haxton was appointed by the Board as an additional director and as Whole Time Director of the Company with effect from February 6, 2013, subject to requisite approvals of the Members and also of the Central Government since he is not a person resident in India as envisaged in Part I of Schedule XIII to the Act. He holds office as an additional director up to the date of the ensuing Annual General Meeting and being eligible offers himself for appointment as a Director.

Mr. Sanjay Murdeshwar was appointed by the Board as an Additional Director and as Managing Director of the Company with effect from May 2, 2013, subject to requisite approvals of the Members and also the Central Government since he is not a person resident in India as envisaged in Part I of Schedule XIII to the Act. He holds office as an Additional Director up to the date of the ensuing Annual General Meeting and being eligible offers himself for appointment as a Director.

AUDITORS

The present Auditors Messrs. BSR & Co., Chartered Accountants, hold office up to the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to thank AstraZeneca Pharmaceuticals AB, Sweden and AstraZeneca PLC, for their valuable guidance and strong support to the Company''s operations in the extremely challenging times encountered during the year.

Your Directors thank the Central and the State Governments, various other Statutory and Regulatory Authorities, the Company''s Bankers, the Medical Profession and Trade, Vendors & Business Associates and the Members for their understanding and continued valuable support to the Company''s operations.

Your Directors place on record their sincere appreciation of the significant contribution made, and the continued support extended, by the employees at all levels to the Company''s operations during the period under review.

On behalf of the Board of Directors

Place: Bengaluru D E UDWADIA

Date: 24 June 2013 CHAIRMAN


Mar 31, 2011

The Directors have pleasure in presenting their 32nd Annual Report together with the Audited Accounts of the Company for the 15 Months period ended March 31, 2011.

Financial Results

(Rs. in Mio)

Particulars 2010-11 2009 (15 months)*

Sales and Other Income 6003 4024

Profit Before Tax 1010 884

Provision for Taxation

-Income Tax 415 310

- Adjustment for Deferred Tax (46) (6)

- Fringe Benefit Tax 369 3 307

Profit after Taxation 641 577

Surplus brought forward from the previous year 948 409

Total amount available for appropriation 1589 986

Appropriation made by Directors Transfer to General Reserve 64 58

Transfer from Debenture Redemption Reserve _ (312)

Appropriation recommended by Directors

Dividend 250 250

Tax on proposed Dividend 40 42

Surplus carried over 1235 948

Consequent to the change in the Accounting year of the Company from January-December to April-March, the last accounting period was for a period of 15 months.

Dividend

The Directors are pleased to recommend payment of a Dividend of 500% (Rs.10/- per Equity share of the face value of Rs.2/- each), which, if approved by Members at the Annual General Meeting will involve an outflow of Rs.250 Mio towards Dividend and ^40

Mio as Dividend Distribution Tax resulting in a total outflow of Rs.290 Mio representing distribution of 45% of the net profits of the Company for the year.

Sales and Marketing

"he Company registered sales of Rs.5339.2 Mio (excluding export sales) in the 15 months period ended March 31, 2011.

The Company grew by 14% during the calendar year 2010 (Jan - Dec 2010). However, in Quarter 1 of 2011 (Jan - Mar 2011) the Company grew by 35% over same period last year.

The growth during the period under review, was broad based with all the therapy areas registering good growths.

The Company has a strong portfolio of established and originator brands well complemented with the launch of branded generics products in 2009 and 2010. Our power brands - Crestor, Seloken, Selomax, Meronem, Neksium and Linctus Codeinae witnessed robust growth and provided strong momentum to the Companys performance. The AstraZeneca original research brand, Crestor (Rosuvastatin) launched in 2009 (in Cardiovascular Therapeutic Area) was a huge success and achieved over Rs.100 Million sales in the first 9 months of 2010.

Branded Generics products launched in 2009 and 2010 made significant contribution to the Companys sales and growth. Seloram and Actamase recorded strong growth and are the leading brands in their respective categories. The Company launched

6 new products - Olways and Valfect in the Cardiovascular therapy area, Diprivan, Naropin and Enclere in the Infection therapy area and Bricacef in the Respiratory therapy area.

During the Financial Year 2011-12, your Company will focus on driving growth in its established power brands along with launch of new branded generics products in its key therapy areas. In the coming years, the Companys product portfolio and performance will be further strengthened by the launch of AZ patented innovator products.

Sales Force Effectiveness (SFE)

SFE team partnered with business units (BU) in aiding the Companys performance by driving new sales training initiatives & embedding SFE metrics across a newly recruited field Force.

A large scale segmentation & targeting (S&T) exercise was planned and executed to assist the primary care BU expand their reach and customer coverage. Restructuring the speciality care (SC) team into sub-teams and driving a new S&T strategy for Cardiovascular (CV) team helped drive business efficiencies.

By imparting cutting edge training to our field force has enhanced the usage of our e-learning platform AZLEARN and also improved the efficiency in reporting and communication. To manage the challenge of selling many brands together with the new launches, enhanced selling skill models like Multi Product Selling (MPS) were introduced.

Medical, Regulatory and Clinical Trials

During the period under review, medical and regulatory support was provided for the launch of several new products.

The Regulatory team ensured early registration of new products and also obtained additional indication approvals and product registration renewals in time.

Strategic medico-marketing initiatives such as setting up and conducting of Advisory Board meetings, Web casts, scientific meetings and symposium in order to disseminate scientific knowledge to the medical fraternity were undertaken. Pharmacovigilance workshops were conducted across the country with a view to increasing the awareness on adverse event reporting amongst the healthcare professionals.

Your company saw increased participation in, and contribution to, pivotal global clinical trials as per Good Clinical Practice (GCP) norms for AstraZeneca pipeline and approved products in the therapy areas of Respiratory, Oncology, Cardiovascular and Diabetes in accordance with local and global standards.

Manufacturing

The Companys Operation team supported the launch of new products during the year. Productivity continues to improve both in terms of value & volume at its manufacturing plant.

The Company also continued with its initiatives towards better-cost management through purchasing efficiency, improved Overall Equipment Effectiveness and pack rationalizations. Product pack security features were introduced as an anti- counterfeit measure for the products manufactured at the plant.

The manufacturing plant successfully underwent AstraZenecas global current Good Manufacturing Practices (cGMP) audit. Further the plant received AstraZenecas regional and global recognition for its operational excellence.

The new tablet manufacturing facility involving an outlay of Rs.700 Mio, is expected to be completed by end of this year as per schedule- Safety Health and Environment (SHE)

During the period under review the Companys manufacturing site was re-certified for Occupational Health Safety Assessment Series (OHSAS) 18001 for health and safety and ISO 14001 for the environment by M/s Germanischer Lloyd, Germany. The site achieved 2 million accident free man hours during the period under review.

Highest safety standards are being observed at the construction site for the new Tablet manufacturing facility.

All suppliers of formulations and Active Pharmaceutical Ingredients (APIs) are regularly evaluated on AstraZenecas global quality and safety standards.

Human Resources and Employee Relations

Attracting, retaining and developing talent continued to be a focus area for the Company. The increased focus on capability enhancement and employee engagement had a positive impact on talent retention as reflected in the lower attrition levels. The Company has a total employee strength of 1705.

A settlement with field union was signed on February 4, 2011, for three years effective January 1, 2010. Employee Relations continued to be cordial at all levels.

Factory Land at Yelahanka

In the last Directors Report members were informed that the National Highways Authorities of India (NHAI) had acquired a portion of the factory land at Yelahanka for expansion of the Hyderabad - Bangalore Highway. The Special Land Acquisition Officer (SLAO) had awarded compensation of Rs.23,709,554/- for the said acquisition. The SLAO reduced the above amount of compensation awarded to Rs.4,98,879/-, on the basis of a direction received from the Government of Karnataka. The Company has not accepted the amended award and has disputed the same. The Company has invoked the arbitration provisions under the National Highways Act, 1956. The Company has further filed a Writ Petition challenging the above direction given by the Government of Karnataka and for directing the SLAO to pay compensation as per the original amount awarded.

The Writ Petition filed by the Company is part heard before the Honble High Court of Karnataka.

In this connection reference may be made to note No.2 in Schedule 17 of the Accounts for the 15 months period under review.

Open Public Offers made by Astra Pharmaceuticals AB, Sweden to the Shareholders of the Company Members have been advised of the Writ Petitions filed by the under mentioned shareholder challenging the First Open Public Offer made pursuant to the Letter of Offer dated May 11, 2002, by Astra Pharmaceuticals AB, Sweden (APAB). The status of the same as of March 31, 2011 continues to remain unchanged, in that the suit filed by Ms. Annie Koshy in the Kerala High Court, Kochi, is still pending hearing before the Court.

Directors Responsibility Statement

Pursuant to Section 217 (2AA) of the Companies Act, 1956 (the Act), the Board of Directors states that- (A) In the preparation of the Companys Annual Accounts, the applicable accounting standards have been followed and proper explanations have been provided for material departures, wherever applicable, (B) It has selected such accounting policies which have been applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the 15 Months period ended March 31, 2011 and of the profit of the Company for that period, (C) It has taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, and (D) The financial statements have been prepared on a going concern basis.

Boards Response to Audit Observations

The observation made by the Auditors under para (xxi) of the annexure to the Auditors Report is self explanatory. The management has since then strengthened the controls to prevent the occurance of such incidents in future.

Information Pursuant to Section 217 of the Companies Act, 1956

Information required under Section 217 (1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is given in Annexure-I and forms part of this Report.

Information required under Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of the Employees) Rules, 1975, forms part of this Report. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and the Accounts are being sent to all shareholders, excluding the Statement of Particulars under Section 217(2A). Any shareholder, desirous of obtaining a copy of this Statement, may kindly write to the Company Secretary.

Corporate Social Responsibility

Your Company continues to contribute meaningfully to local communities through charitable donations, sponsorships and other initiatives that help make a difference to peoples lives.

The Company continued its community activities focused on making the Katigenahalli Primary School, Yelahanka, a better place to study for the children. Your Company also continues to contribute to the monthly operating cost of the emergency ambulance service Operation Sanjeevini run by the Comprehensive Trauma Care Consortium, Bangalore.

Your Company, with a view to address the need for adolescent healthcare amongst the urban poor, embarked on a 3 year program in partnership with PLAN India (a multinational NGO) to improve the health of adolescents in five disadvantaged communities of Delhi. The program will reach around 31,000 households and indirectly influence an estimated population of 190,000, including policy makers, educators, and health professionals in the communities in which these young people live. This program aims at dissemination of information on healthcare, hygiene and sanitation to create awareness amongst adolescents.

Corporate Governance Report

The Company has taken steps to ensure that all mandatory provisions of Corporate Governance as prescribed by the Listing Agreement of the Stock Exchanges on which the Company shares are listed, have been complied with.

The Management Discussion and Analysis is attached as Annexure-ll and forms part of this Report.

A Report on Corporate Governance forming part of the Directors Report, along with a certificate from the Statutory Auditors confirming compliance, is annexed as Annexure-lll and forms part of this Report.

Directors

Mr. Francis McNamara III resigned as Director with effect from September 30, 2010. The Board places on record its appreciation of the services rendered and contribution made by Mr. Francis McNamara III to the Company, during his tenure as a Director.

In accordance with the provisions of the Companies Act 1956 and the Companys Articles of Association,

Mr. D. E. Udwadia & Mr. Ian Brimicombe, Directors will retire by rotation at the ensuing Annual General Meeting. Being eligible, they offer themselves for re- election. Your Board of Directors has recommended their re-election.

Auditors

The present Auditors M/s. BSR & Co., Chartered Accountants, retire at the ensuing Annual General Meeting. However, being eligible, they offer themselves for re-appointment.

Acknowledgements

Your Directors take this opportunity to thank AstraZeneca Pharmaceuticals AB, Sweden and AstraZeneca PLC, for their continued support to the Companys operations.

Your Directors thank the Central and the State Governments, various other Statutory and Regulatory Authorities, the Companys Bankers, the Medical Profession and Trade, Vendors & Business Associates and the Shareholders for their continued interest in, and valued support to the Companys operations.

Your Directors place on record their sincere appreciation of the significant contribution made and the continued support extended, by the employees at all levels to the Companys operations during the period under review.

On behalf of the Board of Directors

D E UDWADIA

Chairman

Place: Bangalore

Date: May 13, 2011



 
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