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Directors Report of GlaxoSmithKline Pharmaceuticals Ltd.

Mar 31, 2023

The Directors of your Company are pleased to share their Report for the year ended 31 March 2023.

1. Financial Results for the year ended 31 March 2023

(? in crores)

Year

2022-23

2021-22

Continuing Operations:

Revenue from operations

3216

3218

Other income

102

76

Total income

3318

3294

Profit before exceptional items and tax

833

762

Add / (Less): Exceptional items

(1)

12

Profit before tax

832

774

Less: Income tax expenses

(227)

(397)

Profit for the year from continuing operations

605

377

Discontinued Operations:

Profit before tax from discontinued operations

4

1708

Less: Tax expense of discontinued operations

(1)

(394)

Profit from discontinued operations after tax

3

1314

Profit for the year

608

1691

2. Dividend

Your Directors'' are pleased to recommend a dividend of '' 32 per equity share for the year. This dividend for the year ended 31 March 2023 is subject to the approval of Members at the Annual General Meeting on 26 July 2023 and will be paid on or after 27 July 2023. If approved by the Members at the Annual General Meeting, the dividend will absorb '' 542 crores. The Board of Directors of your Company had approved the Dividend Distribution Policy on 27 October 2016, and it is available on the Company''s website (https://india-pharma.gsk.com/media/6486/dividend-distrubtion-policy.pdf)

3. Management Discussion and Analysis

As required by Regulation 34(2) of the Listing Regulations, a Management Discussion and Analysis Report given in Annexure ‘A’ forms part of this Report. The state of the affairs of the business along with the financial and operational developments has been discussed in detail in the Management Discussion and Analysis Report.

4. Directors

Mr. N. Kaviratne & Mr. S. Venkatesh ceased to be Independent Director & Managing Director with effect from 26 July 2022 & 30 November 2022 respectively. The Board places on record their appreciation of the valuable services rendered by Mr. N. Kaviratne & Mr. S. Venkatesh during their tenure and for their contribution to the deliberations of the Board.

Mr. B. Akshikar was appointed as Managing Director from 1 December 2022 for period of four years and his appointment has been approved by the Members through Postal Ballot.

As per the provisions under Section 149 of the Companies Act, 2013, the Board and Members have approved the appointment of all the existing Independent Directors viz.

Mr. P V. Bhide, Mr. A. N. Roy and Mr. D. Sundaram for second term of five years from 30 March 2020 and Dr. (Ms.) S. Maheshwari for a first term of five years from 18 May 2020 and Mr. M. Anand for a first term of five years from 16 May 2022.

The Independent Directors have submitted the Declaration of Independence, as required pursuant to Section 149 (7) of the Companies Act, 2013, stating that they meet the criteria of Independence as provided in sub-section (6).

During the year ended 31 March 2023, Five Board & Seven Audit Committee Meetings were held, the details of which are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013.

5. Remuneration Policy and Board Evaluation

In compliance with the provisions of the Companies Act, 2013 and Regulation 27 of the Listing Obligations & Disclosures Regulations (LODR), the Board of Directors on the recommendation of the Nomination & Remuneration Committee, adopted a Policy on remuneration of Directors and Senior Management. The Remuneration Policy is stated in the Corporate Governance Report. Performance evaluation of the Board was carried out during the period under review. The details are given in the Corporate Governance Report.

6. Familiarization programmes for the Independent Directors

In Compliance with the provisions of LODR, the Company has put in place a familiarization programme for the Independent Directors to familiarize them with their role, rights and responsibilities as Directors, the working of the Company, nature of the industry in which the Company operates, business model, etc. It is also available on the Company website: https://india-pharma.gsk.com/en-in/ investors/shareholder-information/policies

7. Particulars of Contracts and Related Party Transactions (RPT)

In line with the requirements of the Companies Act, 2013 and LODR, your Company has formulated a policy on RPT All RPTs entered into, during the year ended, were on arm''s length basis and were in ordinary course of business. There were no materially significant RPTs with the Promoters, Directors or Key Managerial Personnel which may have a potential conflict of interest of the Company at large. The Policy of RPTs can be accessed on the Company website: https://india-pharma.gsk.com/en-in/investors/shareholder-information/policies/.

All RPTs are placed before the Audit Committee for review and approval. Prior omnibus approval is obtained for RPTs on a quarterly basis for transactions which are of repetitive nature and / or entered in the ordinary course of business and are at arm''s length. All RPTs are subject to independent review by a reputed accounting firm to establish compliance with the requirements of RPTs under the Companies Act, 2013 and LODR.

8. Directors’ Responsibility Statement Your Directors confirm:

(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

(ii) that the Directors have selected such accounting policies and applied them 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 on 31 March 2023 and of the profit of the Company for the year ended on that date;

(iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts on a going concern basis;

(v) that proper internal financial controls laid down by the Directors were followed by the Company and such internal financial controls are adequate and were operating effectively and;

(vi) that proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems were adequate and were operating effectively.

9. Annual Return

In line with the requirement of the Companies (Amendment) Act, 2017 effective from 31 July 2018, the extract of annual return, is no longer required to be part of the Board''s Report. However, copy of the Annual Return is available on the Company''s website (https:/7india-pharma.gsk.com/en-in/ investors/shareholder-information/annual-return/).

10. Business Responsibility and Sustainability Reporting (BRSR) & Corporate Governance

A report on Business Responsibility and Sustainability Reporting (BRSR), describing the initiatives taken by your Company from an Environment, Social and Governance (ESG) responsibilities given in Annexure ‘B’, forms a part of this Report. Your Company is part of the GSK plc group and conforms to norms of Corporate Governance adopted by them. As a Listed Company, necessary measures are

taken to comply with the Listing Obligations & Disclosures Regulations, 2015 (LODR) with the Stock Exchanges. A report on Corporate Governance, along with a certificate of compliance from the Auditors, given in Annexure ‘C’, forms a part of this Report.

As per the provisions of section 139 of the Companies Act, 2013, Deloitte Haskins and Sells LLP, Chartered Accountants were appointed as the Statutory Auditors of the Company for a second term of five years at the 97 Annual General Meeting held on 27 July 2022 to hold office from the conclusion of the said Meeting till the conclusion of the 102 Annual General Meeting to be held in 2027 on a remuneration to be determined by the Board of Directors.

Pursuant to the provisions of section 204 of the Act, and the Rules made there under, the Company has appointed Parikh & Associates, Practicing Company Secretaries, to undertake Secretarial Audit of the Company for the financial year March 31, 2023. The Report of the Secretarial Auditor is annexed to the Board Report as Annexure ‘E’ which forms a part of this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Pursuant to Section 148 of the Companies Act, 2013, the Board of Directors on the recommendation of Audit Committee have appointed R. Nanabhoy & Co., Cost Accountants for conducting the audit of the cost accounting records maintained by the Company for its Formulations for the year 2023-24. The Committee recommended ratification of remuneration for year 2022-23 to the Members of the Company at the ensuing Annual General Meeting.

11. Transfer of Equity Shares Unpaid/ Unclaimed Dividend to the Investor Education Protection Fund (IEPF)

In line with the statutory requirements, the Company has transferred to the credit of the Investor Education and Protection Fund set up by the Government of India, equity shares in respect of which dividend had remained unpaid/ unclaimed for a period of seven consecutive years within the timelines laid down by the MCA. Unpaid/unclaimed dividend for seven years or more has also been transferred to the IEPF pursuant to the requirements under the Act.

12. Compliance with Secretarial Standards

The Board of Directors affirms that the Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India (SS1 and SS2) respectively relating to Meetings of the Board and its Committees which have mandatory application.

13. General

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated in section 134(3) (m) of the Companies Act, 2013, and the rules framed there under is attached herewith as Annexure ‘F’ which forms a part of this Report. The Disclosures pertaining to the remuneration and other details as required under section 197(12) of the Companies Act, 2013 and the rules made thereunder is enclosed as Annexure ‘G’ which forms a part of this Report. Pursuant to section 129(3) of the Companies Act, 2013, a statement in form AOC-1'' containing salient features of the Financial Statements of the Subsidiary Company is attached.

Although the audited statements of accounts, relating to Company''s subsidiary is no longer required to be attached to the Company''s Annual Report, the same is enclosed for better disclosure practice.

The information relating to top ten employees in terms of remuneration and employees who were in receipt of remuneration of not less than '' 1.02 cores during the year or '' 8.5 lakhs per month during any part of the year forms a part of this report and will be provided to any Shareholder on a written request to the Company Secretary. In terms of Section 136 of the Act, the said report will be available for inspection of the Members at the registered office of the Company during the business hours on working day of the Company up to date of Annual General Meeting and through electronic mode. The Members may write an email to [email protected] by mentioning “Request for Inspection” in the subject of the email.

14. Acknowledgments

The Directors expressed their appreciation for the contribution made by the employees to the significant improvement in the operations of the Company and for the support received from all other Stakeholders, including Members, Doctors, Medical Professionals, Customers, Suppliers, Business Partners, and the Government.

The Board and the Management of your Company are indeed appreciative of the substantial support being received from GSK Plc, the parent organization, in providing new healthcare solutions which are products of its discovery labs and the technology improvements which benefits your Company immensely.

On behalf of the Board of Director Ms. R. S. Karnad

Mumbai, 17 May 2023 Chairperson


Mar 31, 2022

The Directors of your Company are pleased to share their Report for the year ended 31 March 2022. 1. Financial Results for the year ended 31 March 2022

('' in crores)

Year

2021-22

2020-21

Continuing Operations:

Revenue from operations

3218

2921

Other income

76

110

Total income

3294

3031

Profit before exceptional items and tax

762

626

Add / (Less): Exceptional items

12

(173)

Profit before tax

774

453

Less: Income tax expenses

(397)

(166)

Profit for the year from continuing operations

377

287

Discontinued Operations:

Profit before tax from discontinued operations

1708

97

Less: Tax expense of discontinued operations

(394)

(26)

Profit from discontinued operations after tax

1314

71

Profit for the year

1691

358

2. Dividend

Your Directors are pleased to recommend a dividend of ''90 per equity share (including special dividend of ''60) for the year. This dividend for the year ended 31 March 2022 is subject to the approval of Members at the Annual General Meeting on 26 July 2022 and will be paid on or after 27 July 2022. If approved by the Members at the Annual General Meeting, the dividend will absorb ''1525 crores. The Board of Directors of your Company had approved the Dividend Distribution Policy on 27 October 2016, and it is available on the Company''s website (https://india-pharma.gsk.com/media/6486/dividend-distrubtion-policy.pdf)

3. Management Discussion and Analysis1. Economy reviewIndian economy and outlook

The Indian economy recovered from the pandemic-induced environment experienced in the previous year, witnessing sequential improvement as the year progressed. According to the Indian Economic Survey 2021-22 issued in February 2022, India''s GDP is estimated to have grown 9.2% in FY 2021-22 after contracting 7.3% in the previous year. The rapid roll-out of vaccination drives along with fiscal and monetary policy measures have supported this economic recovery.

The geopolitical fallouts of recent times have further aggravated inflationary pressures and policy makers the world over will be on a tight balancing act. As a

result, businesses will have to address supply chain disruptions and inflationary concerns through novel approaches.

2. Industry review and outlook

The Indian pharmaceutical industry is the third largest in the world by volume, making significant contributions to global health. According to ICRA, the pharmaceutical industry is expected to grow between 9-11% in 2021-22. The industry demonstrated commitment during the pandemic, by not only providing adequate medicines, but also contributing significantly to other areas such as sanitation, preventive healthcare and quarantine facilities. The industry was able to overcome the challenges posed by the pandemic by carefully evaluating the potential use of available drugs. According to the Indian Economic Survey 2021-22, the domestic market is expected to grow 3x in the next decade. India''s domestic pharmaceutical market stood at $ 42 billion in 2021 and is likely to grow to $ 65 billion by 2024.

The Indian pharma industry has been a key contributor to improving the country''s healthcare and economic outcomes. The pandemic has enhanced several opportunities and challenges for the industry. To emerge as a winner in the post-pandemic world, the industry needs to continue building on its strength while enhancing focus towards innovation. New capabilities need to be introduced across business functions to improve skills and to enhance the value

chain. The government also needs to provide the right enablers and a supportive business environment for growth.

3. Company overview

We aim to bring differentiated, high quality and essential pharmaceuticals and vaccines to as many people as possible, with our global business, scientific and technical know-how along with a diverse talent pool. Our greatest contribution is towards improving the health of people around the world and this clear ambition has resulted in our parent company, GSK plc, being ranked number one yet again in the Access to Medicine Index. Our three priorities -Innovation, Performance and Trust - help us realise our ambition for patients and drive robust growth for our shareholders and people.

Business performance Pharmaceuticals

Our business continuity measures ensured consistent growth of our focus brands, with Augmentin, Calpol, Ceftum, T-Bact and Neosporin featuring amongst the top brands in the Indian Pharmaceuticals Market (IPM). However, some of our leading categories such as Dermatology had early setbacks due to physical distancing restrictions during the Covid-induced lockdowns.

Our pharmaceutical manufacturing team worked round the clock to fulfil increased demand for our key brands, especially for Calpol (paracetamol). This effort ensured that patients continued to have access to this important medication during the pandemic. The first quarter of the financial year coincided with the second wave of the pandemic and presented an opportunity to serve significant sections of our population with brands like Calpol. Therefore, many of our key brands witnessed strong growth fueled by disciplined execution, enhanced digital capabilities and agility in the market, resulting in again in market share and higher-than-market evolution index.

Adapting to the Covid lockdowns, your Company''s field force remained active on the ground, using digital channels effectively to engage remotely with Healthcare Professionals (HCPs). Your Company''s robust digital infrastructure proved to be a reliable means of communicating the science behind our medicines. Touchpoints were increased to over 40 million across teams through enhanced use of telecalling, webinars and emailers, coupled with adoption of technology platforms for virtual detailing such as Veeva Engage. Your Company also successfully launched a line extension with Augmentin ES

deploying technology in reaching out to key specialists in ear, nose and throat (ENT) and Paediatrics practice.

Throughout the period of multiple pandemic waves, your Company focused on skill enhancement of its field force to upgrade their skills and efficiencies amid the new norms of functioning. As a result, your Company''s representatives were amongst the first in the industry to prudently adopt all necessary personal safety and physical distancing guidelines to resume field work. In line with the changing business realities, your Company adapted its in-clinic communications to the need for delivery of key messages with greater immediacy and impact.

These initiatives led to market share consolidation and gains in competitive performance for your Company across the categories of Anti-infectives, Pain, Dermatology and Vitamins. Augmentin and Calpol have figured consistently amongst the top 5 brands in the Indian Pharmaceuticals Market (IPM) with Evolution Index above market.

Your Company also repositioned Eltroxin as a women-centric brand. An HCP-focused campaign was started for creating awareness and better diagnosis in hypothyroidism roping in Indian playback singer, Neha Kakkar, as the brand ambassador for Eltroxin to share her experiences about her thyroid disorder.

Besides leading the topical antibiotics market, your Company has been making gains consistently in the topical corticosteroids and emollient categories. Within the growing moisturiser category, Physiogel emerged as one of the fastest growing brands driven by some innovative social media campaigns and online organised trade channels. Even though Dermatology was one of the impacted segments during Covid, your Company further consolidated its leadership in this segment during the year by remaining digitally engaged with key opinion leaders. Virtual platforms, such as Tell e-Skin, PG-ki-Paathshaala were deployed during the lockdown periods to disseminate the opinions and information shared by Dermatology experts with general practitioners, paediatricians and PG students on diagnosis and use of steroids, thereby improving the outcome for patients.

Biologicals

Over the past couple of years, globally, the role of vaccines has not only been better understood but has also been appreciated, giving GSK an opportunity to protect people as well as deliver growth. Your Company currently markets 10 vaccines across age groups - infants, adolescents and adults.

The financial year 2021-22 saw six of your Company''s vaccines featuring amongst the top 15 vaccines in the self-pay market (IQVIA MAT March 2022). Though the vaccines self-pay market is estimated to be over '' 2,285 crores, it is currently not reflecting any value growth (IQVIA MAT March 2022) on account of the slower uptake of vaccination during the Covid waves.

Your Company launched vaccination awareness campaigns during the year. Former captain of the Indian national cricket team and prolific scorer of sixes, MS Dhoni, featured in the 6 in 1 vaccination campaign to raise awareness about combination vaccination with the tagline ‘Less injections, less pain'' for infants. Also featured was Kareena Kapoor Khan, Indian actress and an aspirational icon for mothers, in the Health Ka Passport campaign to raise awareness about routine immunisation for children.

During the year, we launched a new vaccination awareness website (www.myvaccinationhub.co.in) that provides parents with vaccination related information.

It also has an interactive vaccination tracker tool, reminding users about missed or upcoming vaccinations.

An innovative and industry-first HCP vaccine ordering app called VaxiKart was also launched. This app enables HCPs to order GSK vaccines from their preferred distributors.

We plan to grow our vaccines business by optimising our portfolio and expanding into newer segments. During the year, we got approval for Herpes Zoster (Shingrix) vaccine for prevention of Herpes Zoster (HZ) and Post-Herpetic Neuralgia (PHN) it causes in adults over 50 years of age. Its launch plans are currently underway.

Specialty

Nucala is the first anti-IL5 drug launched in India (March 2019) for patients suffering from severe eosinophilic asthma (SEA) in adults. Since its launch, Nucala has positively impacted many patients'' lives across India by reducing exacerbations and hospitalisations, helping patients to reduce and even stop their oral corticosteroids.

We also launched the Nucala auto-injector formulation in June 2021 that enables patients to self-administer Nucala without the need for hospital visits. The autoinjector provided much needed compliance and ease during the pandemic-induced travel restrictions. The commercial and medical teams have actively engaged pulmonologists in the country to disseminate the robust clinical and real-world evidence of Nucala.

During the year, we organised RespiTalk roundtable meetings and forums led by experts on Severe Asthma across India, to increase understanding regarding the diagnosis of severe eosinophilic asthma, along with choosing the right treatment options based on phenotyping.

We launched Trelegy Ellipta in India, the country''s first single inhaler triple therapy (SITT) in a once-daily regime for chronic obstructive pulmonary disease (COPD) patients. The product was approved by the Drugs Controller General of India (DCGI) as a maintenance treatment to prevent and relieve symptoms associated with COPD patients aged 18 and above.

Supply chain and manufacturing excellence

Our manufacturing facility in Nashik, along with our Contract Manufacturing Organisations (CMOs), are consistent with our pursuit of excellence, ensuring that we tided over supply chain disruptions caused by the pandemic, to provide unhindered supply of products to patients. We de-risked operations by enhancing capabilities of existing CMOs and developing alternate product sources in vicinity of demand nodes and devising business continuity plans including re-aligning resources to execute them. Some of the key highlights were:

• Over 3 million safe man-hours without reportable illnesses

• Over 0.7 million safe man-hours without reportable injuries

• Installed 100 KWP Solar PV System

Increase in production capabilities, particularly for products such as Calpol and Eltroxin, expansion of our fleet count and the continued measures of Covid-appropriate behaviours at each of our CFAs were some of the hallmarks that ensured each link of our supply chain remained resilient to ensure last-mile connectivity.

Warehousing and distribution

Responding to the unprecedented challenges during the year, the warehousing and distribution team moved with agility, collaborating with our vast network of stockists, warehouses, and contract manufacturing facilities. This not only improved access to quality healthcare, but also ensured that the supply chain network was not disrupted during the lockdown period.

The warehousing and distribution network comprising of more than 30 contract manufacturing facilities, 26 warehouses and 6,000 stockists continued to provide high levels of customer service on time.

We continued to implement automation and digitalisation initiatives, helping rationalise costs, and driving excellence every step of the way to pharmacies, healthcare professionals'' clinics and patients.

4. Opportunities, risks, concerns and threats

With the pandemic came lockdowns and resulting disruptions to normal functioning of pharmaceutical businesses. Healthcare professionals continued practising at their clinics, as patient footfall through most of the year continued to remain comparatively low. This impacted prescription generation and demand for pharmaceuticals and vaccines.

Adapting learnings from the pandemic, we put in place agile business continuity processes, ensuring optimum levels of production and supply chain reliability are maintained. Over the medium- to long-term, we remain positive about delivering healthy growth.

Adverse regulations on product prices may impact revenues and profit margins, as we operate in a price-regulated market. We periodically assess our product portfolio to make it more diversified, with focus on high-volume growth products and operational efficiencies to control costs. With the revised National List of Essential Medicines (NLEM), expected to be released by the government later in 2022, we are engaging in various stakeholder discussions on NLEM.

We continue to adopt emerging technologies and expand the use of digital tools to equip our commercial teams with capabilities to better understand the needs of healthcare professionals, through innovations such as the My Vaccination Hub web portal and the HCP Persona Tool, a digital platform which leverages emerging technologies for better understanding of behavioural trends of healthcare professionals.

5. Finance and accounts

Revenue from continuing operations increased by 10% during FY 2021-22. This increase was mainly driven by growth in our General Medicine and Specialty portfolio, where we continued to gain market share in the respective categories. Our focus on key brands helped us revitalise growth, particularly in the Anti-infectives, Dermatology and pain therapeutic

areas, as we notched up our strategy to reach more patients. While our Vaccines business was impacted due to low vaccination rates, many of our key brands witnessed strong growth backed by disciplined execution. We continued to maintain leadership in the private vaccines market resulting in market share gains. The revenue from operations for the year are not strictly comparable with that of the previous year, on account of the impacts of Covid-19.

Profit before exceptional items and tax along with EBITDA from continuing operations, increased by 22% and 26% respectively, as compared to previous year. The tax expenses for the year have been impacted by provisions in respect to earlier years towards possible disallowances of expenses which are under litigation. Adjusting for these tax provisions for earlier years and any exceptional items, Profit After Tax has increased by 20%. During the year, your Company also completed the transfer of the trademarks pertaining to ‘Iodex'' and ‘Ostocalcium'' brands in India, along with legal, economic, commercial and marketing rights of such brands and other identified assets to GlaxoSmithKline Asia Private Limited, which form part of the profits from discontinued operations.

Despite the difficult external environment, cash generation from operations remained strong during the year and was in line with the good underlying business performance. The Company focused its efforts on achieving working capital efficiencies and faster cash conversion. The Company also continued its efforts towards pursuing refunds from the tax authorities for past years.

There are no loans or guarantees given, securities provided, and investments covered under Section186 of the Companies Act, 2013. The Company has not accepted any fixed deposits during the year. There was no outstanding amount towards unclaimed deposits payable to depositors, as on 31 March 2022. Further, there are no significant or material orders passed by regulators, courts or tribunals, which impact the going concern status of the Company and its future operations. There are also no material changes and commitments affecting the financial position of the Company as on the date of this report.

Financial Ratios

Key Financial Ratios

Year ended

31-Mar-22

31-Mar-21

Profitability Ratios

Operating Profit Margin (%)

Profit from Operations/ Sale of Products

21.79%

19.48%

Net Profit Margin (%)1

Profit after Tax (excl. exceptional)/ Revenue from operations

11.85%

16.61%

Return on Net Worth1

Profit after Tax (excl. exceptional)/ Shareholders equity

21.71%

26.37%

EBITDA %

EBITDA/Revenue from operations

23.57%

21.76%

Return on Capital Employed

Profit before tax (excl. Exceptional) / Net Worth

43.49%

35.90%

Key Financial Ratios

Year ended

31-Mar-22

31-Mar-21

Efficiency Ratios

Current Ratio

Current assets# / current liabilities

2.19

1.51

Inventory turnover ratio

Sale of products / Average inventories

673

6.28

Debtors turnover ratio

Sale of products / Average trade receivables

16.58

20.04

Ratios are calculated including profits from discontinued operations but excludes the impact of sale of brands and identified assets and other exceptional items (Refer Note 40 and 55 of the Standalone Financial Statements).

*Net profit margin (%) excluding the impact of tax adjustment of prior years would be 17.19%, Return on Net Worth would be 28.69%.

# Current Assets includes cash and bank balance which is mainly on account of cash received from sale of brands.

6. Regulatory affairs

The following applications were submitted to Central Drugs Standard Control Organisation (CDSCO) for marketing authorisation in India:

• Adsorbed Diphtheria, Tetanus, Pertussis (Acellular Component) and Inactivated Poliomyelitis vaccine I.P (Infanrix-IPV) for active immunisation in infants from the age of two months against diphtheria, tetanus, pertussis and poliomyelitis,

as well as a booster dose for children who have previously been immunised with diphtheria, tetanus, pertussis (DTP) and polio antigens

• Label expansion of Mepolizumab Solution for Injection (Nucala) to include two additional indications viz. Eosinophilic granulomatosis with polyangiitis (EGPA) and Hypereosinophilic syndrome (HES) in adults

• Marketing authorisation was successfully obtained for Herpes Zoster (Shingrix) vaccine for prevention of Herpes Zoster (HZ) and PostHerpetic Neuralgia (PHN), in adults 50 years of age or older, along with an alternate ready-to-use liquid formulation of Rotavirus vaccine (Rotarix liquid)

We also applied to CDSCO for two Global Clinical Trial Applications to conduct a multi-country phase 2 study with Belantamab Mafodotin, in participants with Relapsed or Refractory Multiple Myeloma, along with a Phase 1/Phase 2 study with Staphylococcus aureus vaccine, for prevention of staphylococcal infections respectively.

The following Clinical Trial Applications were also approved during the year:

• A Global Clinical Trial Application for conducting a multi-country phase 3 study with Respiratory Syncytial Virus (RSV) Maternal (RSVPreF3) vaccine in India [Study RSV-MAT-012] 1

• A real-world evidence, post marketing

observational non-interventional study with Mepolizumab Injection in Emerging Markets [Nucala Effectiveness Study (NEST)]

These filings and approvals will enable timely access to new and innovative therapeutic options and vaccines for patients in India, besides improving compliance and convenience of use with new formulations.

7. Medical affairs and medical governance

During the year, we launched several innovative digital programmes targeted at changing the ways in which we connect with our HCPs and key external experts.

The GSK Anti-infectives medical team has been at the forefront of driving correct science through local, regional, and national meetings, and prestigious congress presentations, as well as participating in industry-wide stakeholder consultations on combating antimicrobial resistance (AMR). The Primary Care medical team delivered over 200 scientific presentations to over 30,000 HCPs and conducted more than 300 one-on-one interactions with experts, including ear, nose and throat specialists (ENTs).

At GSK, we are advancing science through Phase 4 clinical trials that generate evidence on the safety and efficacy of our drugs in patients, along with several successful publications driving strong scientific messages on the appropriate use of antibiotics and reducing AMR.

In 2022, our Medical Affairs team has been leading ‘ASCENT'', a programme on Advanced Surgical Conclave for ENTs'' for disseminating high science to ENTs on advancements in surgery and perioperative infection management.

Through more than 900 scientific presentations to over 30,000 HCPs and approximately 1,500 one-on-one scientific interactions with dermatologists, the Dermatology medical team continued its efforts to drive scientific discussions on appropriate use of topical steroids and various important dermatological diseases. The Dermatology medical team created E-Clinics, a learning platform for post-graduate education of young physicians through case clinics conducted across the country throughout the year.

In addition, the ‘Dermatosis Case Study'' clinics are designed to exclusively engage key institutional dermatology experts through interesting clinical discussions on systematic approach. The ‘Challenging infectious diseases of skin'' initiative is aimed at driving interactive, case-based discussions on challenging clinical scenarios in skin infections amongst Dermatologists. The popular ‘PG ki Pathshala'' continues to be rolled out to help strengthen connect with Dermatology PG students and teachers through robust educational programmes.

Your Company is generating real-world data on Mepolizumab (Nucala) use in India by running clinical studies in patients with severe asthma. The efforts towards generating real world India-specific data in severe eosinophilic asthma would not only help pulmonologists be confident in the safety of newer biologics but also ensure the eligible patients get the right treatment at the right time. Your Company''s medical team is also ensuring that the patients are supported with the timely diagnosis of severe eosinophilic asthma as well as continue their biologic therapy from the convenience of their homes despite Covid-related restrictions. As a team, we have delivered over 1,300 scientific presentations through virtual and physical GSK standalone scientific promotional meetings (SPMs), national and regional webinars and focused group discussions, engaging more than 50,000 HCPs across the country.

8. Human resources

GSK aims to be a Company where outstanding people thrive. We provide an inclusive work environment in which we develop our talent, reward great performance, protect our people and value our differences. We believe that such an environment for our employees is essential to best deliver on our ambition for patients.

Your Company was recognised as one of India''s Best Workplaces in Health & Wellness 2021 by Great Place to Work Institute. Your Company was also recognised as one of the 100 Best Companies for Women in India 2021 by Working Mother and Avtar, a diversity, equity and inclusion solutions firm.

Organisational culture

GSK has globally rolled out its new purpose, strategy and culture to deliver a step-change in growth and

performance. To bring alive this change in India, cultural immersion workshops were conducted with senior management personnel to familiarise them with nuances of the change and cascading them to their teams.

Your Company conducted an organisation-wide annual culture survey to undertake a dipstick of the perception of culture. A score of 91% in the survey results demonstrated strong, continued engagement and connect amongst employees. They expressed confidence in our purpose, doing the right thing in addressing health needs, prioritising patient and product safety and acting with integrity and care.

Inclusion and diversity

Our inclusion and diversity agenda is central to the organisational culture that we are striving to foster within GSK. Your Company has strengthened the diversity in its workforce with 26% female diversity in hiring.

Your Company aims to ensure that its employees are empowered to be themselves, feel good and keep growing. Other supportive initiatives such as the Women''s Leadership Initiative, which functions as one of our Employee Resource Groups (ERGs), are being prepared to identify and report inclusion-related issues. Spectrum, our other ERG, provides a similar supportive and nurturing forum for GSK employees across the spectrum of sexual orientation or gender identities, where they have the freedom to truly be themselves.

WeLeAP is an initiative which aims to develop women professionals by enhancing their confidence, credibility, capability and connections. Another initiative involves hiring more young women in sales roles from pharma and science colleges located in tier-2 cities. Another pilot underway is Resurge or Second Careers for Women programme. As a part of this initiative, we are working with various NGOs and civil society organisations to induct women on a career break, after matching skillsets with role requirements. We are also leveraging digital platforms such as the Woloo app, which helps women employees on the move to easily locate safe and hygienic washrooms.

Learning and development

GSK has developed several in-house competencies to meet the diverse learning needs of our employees.

Our virtual university, Keep Growing Campus, provides a blended e-learning and experiential learning space to enable on-the-go learning.

Our First Line Leaders (FLLs) undergo training through the Lakshya programme which serves to spot

and develop potential talent through an academia-oriented approach. This year, another programme called First Line Leader Training was conducted for all first-time team leaders, with a focus on four themes — ‘motivate'', ‘focus'', ''care'' and ‘develop''.

Career progression trainings are offered through programmes like Catalyst that work with FLLs over a four-month period and use a blend of training, development and evaluation to prepare them to take on roles of Second Line Leaders (SLLs).

Your Company''s One80 programme works at building openness and interactivity within the relationship that managers share with their teams. As a part of this programme, team members give feedback on their managers, which is also aligned with performance and evaluation systems and help people managers refine their interactions with their teams.

The Global Employee Recognition is an avenue through which managers can recognise employees championing GSK''s priorities and achieving its objectives. A sales incentive scheme is also in place which recognises both productivity and outcomes through efforts put in by our field force.

Leveraging technology to deliver solutions to employees

The Service Now portal, an online case management and resolution platform, was introduced to resolve employee queries related to various HR processes that could be raised via tickets, tracked and addressed. The introduction of this platform has ensured resolution of HR-pertinent queries for employees across the organisation with transparency and accountability.

Employee relations

Your Company works with unions for the mutual benefit of its members and provides them forums to voice their opinions and effectively represent themselves. Your Company considers these unions to be an integral part of its business and growth.

Four unions, based on the selling area zones (North, East, West and South), represent the Medical Business Associates (MBAs) in their respective locations. The union in the West Zone also represents employees of the Nashik manufacturing facility. The management and all the four unions of your Company have recently signed long-term wage and benefits settlements, operative for a period of four years i.e. till 30 September 2023. Your Company is grateful to its unions for their positive contributions and maintenance of cordial industrial relations.

Prevention of sexual harassment at the workplace

Your Company has a policy to make the workplace safer, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (India) and the rules thereunder. Your Company has established Internal Committees (ICs) across different zones and manufacturing facilities to address any kind of sexual harassment (SH) complaints. All the members of these ICs are trained to handle such complaints. During the year, your Company received two sexual harassment complaints and two sexual harassment complaints were already under investigation. All four complaints have been closed. Your Company aims to further increase awareness around prevention of sexual harassment and the working of ICs through refresher e-learning modules and training programmes.

Employee health and well being

Building a positive environment for our employees and taking care of their holistic healthcare needs has been an ongoing priority.

Our preventive healthcare programme, Partnership for Prevention (P4P), continues to be available to all our permanent employees and their dependents, as a corollary of the group medical insurance programme, providing 40 preventive healthcare services at little or no cost. These include immunisation for adults and children, preventive examinations covering disease clusters such as cardiovascular health and diabetes, communicable diseases, cancer screenings and women''s health issues.

The Employee Assistance Programme (EAP) enables access to professional, confidential counselling through a 24-hour helpline to your Company''s employees.

Effective January 2022, existing coverages under the medical insurance scheme for your Company''s employees in domains such as maternity coverage and home quarantine expense coverage have been increased. In alignment with our larger inclusion and diversity initiatives, gender reassignment surgery has also been added to the list of coverages.

GSK designed several special support packages to help our employees and their families through the Covid pandemic.

• Oxygen support: Oxygen concentrators were

available at the GSK offices at Ahmedabad, Bengaluru, Chennai, Delhi, Gurugram, Hyderabad, Kolkata, Lucknow, Mumbai, Nashik and Patna.

Oxygen concentrators were made available on first-come, first-served basis for our employees and their dependents.

• Accommodation to facilitate self-isolation:

We partnered with GIG hospitality, a hotel service provider, to offer rooms at very reasonable rates, in more than 130 mid-size hotels, across 29 cities for those seeking self-isolation on a self-pay model.

• Home isolation packages: In association with PORTEA Medical, GSK devised three home isolation programmes which could be used by asymptomatic to mild or moderate symptomatic Covid positive patients.

These timely initiatives helped to alleviate the difficulties that many families faced during those difficult months.

Environment and Human Health, Safety, and Security (EHSS)

The GSK head office in Mumbai was conferred the ‘Safe Place to Work'' recognition by Equinox Labs, a food, water and air testing lab. Your Company also introduced 12 ‘Life Saving Rules'' with an aim to ensure all employees get home safely. Nine of these rules are for job-specific roles while three of them are applicable to personnel across departments.

Your Company is subject to Extended Producer Responsibility (EPR) obligations, and we have collected 1,583.31 MT of post-consumption plastic garbage from across India until January 2022. The garbage was subsequently properly disposed of in an environmentally friendly manner. By the end of March 2022, we had collected 1,652.75 MT of total plastic garbage. Our Nashik manufacturing facility has been focused on Single Use Plastic Reduction (SUPR) and has eliminated 268 kgs in 2021. The Nashik site also has programmes in place to reduce water consumption, CO2 emissions, and hazardous waste.

9. Corporate social responsibility (CSR)

Giving back to society is integral to how your Company operates. With continued efforts in CSR activities, we have contributed significantly to society. The focus of our CSR efforts, during the year, was on impacting life-changing and lasting differences in human health by addressing the healthcare burdens of accessibility, affordability and awareness.

Education

The GSK Scholars programme enables meritorious, but financially disadvantaged students to study

Medicine from government colleges. Under this scholarship, a sum of upto '' 1,00,000 is granted over a four- and a half year period to cover the academic expenses incurred for the MBBS programme. The programme aims to make STEM education accessible within the country as it is one of the most expensive educational streams and every year, countless eligible students cannot pursue this line of education due to shortage of funds.

117

32 million

10,000

5,200

students

tablets

children supported

employee

benefitted

contributed

through water,

volunteering

across 15

for

sanitation and

hours

states

elimination

hygiene (WASH)

of LF

initiatives

Partnering India to eliminate lymphatic filariasis (LF)

In India, more than 650 million people are at risk across 272 districts. We have been donating albendazole tablets, used during mass drug administration (MDA) to the World Health Organization (WHO) since the inception of the programme in 2000. We have donated nearly 3 billion albendazole tablets to WHO for distribution in affected areas and have pledged to donate albendazole for as long as needed to help eliminate LF as a public health issue from the country.

During FY 2021-22, 32 million tablets were contributed for elimination of LF. We partnered with Project Concern International (PCI) and have been working to mobilise lymphedema and hydrocele patients and connect them with the services in endemic districts of Unnao, Sitapur in Uttar Pradesh. The project assists the state government in updating the line listing of patients—both hydrocele and lymphedema (based on the symptoms).

‘Trust in Science’ initiative

The life sciences industry faces acute shortage of well-trained and experienced biostatisticians and bio-informatics professionals. Under our ‘Trust in Science'' (TiS) initiative, your Company partnered with the Regional Centre of Biotechnology (RCB), an academic institution established by the Department of Biotechnology, Government of India, to support 12 PhD students over almost seven years, as they pursue their research. Through this, we hope to promote scientific and technological cooperation that has mainstream impact.

Employee volunteering

In 2021, we contributed over 5,200 volunteering hours towards varied social causes. Volunteering is

one of the key mechanisms that we have chosen to channelise our employees towards societal good. At GSK, we strive to strengthen communities and bring the change that we wish to see in this world through volunteering.

The CSR policy of GSK can be accessed on our website (https://india-pharma.gsk.com/media/6492/ csr-policy revised-310715.pdf). A detailed report on the CSR programmes undertaken during the year is provided in Annexure ‘A'' to the Directors'' Report of this Annual Report.

10. Risk management

The significance of risk management holds an important place in the management of a healthcare company. We focus on delivering products to serve millions of patients across the world. Hence, risk management goes beyond ensuring business success, gaining investor confidence or ensuring regulatory compliance. An adverse impact on the business could result in disruption to patient service, directly impacting quality and sustenance of human life.

We take immense pride in our culture, including the maturity of our risk management processes. Our risk management culture is driven via the Internal Control Framework (ICF) model which is approved by the Global GSK Leadership Team (GLT) and global Risk Oversight and Compliance Council (GROCC). At a country level, the Risk Management and Compliance Board (RMCB) is responsible for promoting the ‘tone from the top'' and an appropriate risk culture, in addition to ensuring effective oversight of internal controls and risk management processes. The risk management process is monitored by the RMCB on a regular basis (minimum bimonthly meetings). The Risk Management Framework, covering business, operational and financial risks, is also reviewed twice a year by the RMCB and presented to the Risk Management Committee of the Board of Directors.

Each function maintains risk registers where each risk is described, the root cause is identified, along with existing controls and monitoring. Mitigation actions along with owners and timelines are agreed upon. All significant risks are discussed at the bimonthly RMCB and then subsequently, at the Risk Management Committee of the Board at least twice a year.

Real-time internal risk management processes ensure that your Company is able to manage any crisis, including black-swan events like the global pandemic. The maturity of the process has changed the approach from risk mitigation to risk-resilience. This has helped with timely business decisions aligned with the risk appetite and culture, helping to ensure our brands remain available to our patients and customers, during the most challenging pandemic times.

At present, in the opinion of the Board of Directors, there are no risks which may threaten the existence of GSK.

Vigil mechanism

Your Company has a ‘Speak Up'' programme which offers people, whether working for GSK or not, a range of channels to voice concerns and report any misconduct. The Speak Up channel and procedures encourage everyone to raise concerns about potential unethical, illegal or inappropriate conduct and assures confidentiality and protection from retaliation, retribution or any form of harassment to those reporting such concerns.

An independent third party manages these reporting lines and calls are logged through their central system to ensure the integrity of the programme.

We endeavour to treat all questions or concerns about compliance in a confidential manner, even if the person reporting a question or concern identifies himself/herself. We also have an extensive and widely communicated process to prevent and take disciplinary action, and deter acts of sexual harassment. The Speak Up channels can be accessed on our website (https://gsk.com/speakup).

We also have in place a whistleblower policy, to provide a mechanism for its employees/external stakeholders to approach local/group management or the Chairperson of the Audit Committee in case of any grievance or concern (accindrx. [email protected]).

The GSK Code can be accessed on our website

(https://www.gsk.com/en-gb/about-us/codes-and-

standards/codes-and-standards).

11. Internal control framework

We conduct our business with integrity and high standards of ethical behaviour, in compliance with the laws and regulations that govern the business. Our Internal Control Framework (ICF) is a comprehensive enterprise-wide risk management model and supports the continuous process of identification, evaluation and management of the Company''s risks. ICF is supported by standard operating procedures, policies and guidelines, including suitable monitoring procedures and self-assessment exercises.

Compliance with laws and regulations is monitored through a well-crafted framework. As required by the Companies Act 2013, we have implemented

an Internal Financial Control (IFC) framework. We continue our annual Independent Business Monitoring (IBM), designed by GSK plc to review activities, data, exceptions and deviations, for monitoring and improving the quality of operations.

As part of the due diligence activities for onboarding of vendors and third parties engaged by us, they are required to confirm compliance with our corporate values through a detailed Third Party Oversight (TPO) process.

As an annual exercise, our senior executives review and confirm adherence to GSK plc''s IFC. The GSK Code (https://www.gsk.com/media/7727/the-code-printable-version.pdf) sets out the commitments your Company and its employees make to get ahead together - so we can deliver on our ambition in the right way, bring our culture to life and make GSK an exciting and inspiring place to work. During the year, an enterprise-wide training was undertaken for all employees on ‘Protecting GSK everyday'', ‘Focusing on Anti Bribery & Corruption (ABAC)'' and ‘Creating an Inclusive Workplace''. These trainings presented scenarios that explored our values and their application to our ways of working and risks such as those associated with information security, privacy, Anti-Bribery and Corruption (ABAC), inclusion & diversity, and conflicts of interest.

4. Directors

Ms. P. Thakur, ceased to be whole-time Director & Chief Financial Officer of the Company with effect from closing hours of 31 March 2022. Mr. M. Dawson would cease to be Director with effect from 30 June 2022. The Board places on record their appreciation of the valuable services rendered by Ms. P Thakur and Mr. M. Dawson during their tenure and for their contribution to the deliberations of the Board.

Mr. S. Venkatesh was re-appointed as Managing Director for a period of one year from 1 April 2022. Mr. J. Chandy was appointed as Whole-time Director and Chief Financial Officer of the Company for period of three years from 1 April 2022. Both their appointments have been approved by the Members through Postal Ballot.

As per the provisions under Section 149 of the Companies Act, 2013, the Board and Members have approved the appointment of all the existing Independent Directors viz. Mr. P. V. Bhide, Mr. N. Kaviratne, Mr. A. N. Roy and Mr. D. Sundaram for second term of five years from 30 March 2020 and Dr. (Ms.) S. Maheshwari for a first term of five years from 18 May 2020. Mr. Manu Anand''s first term of five years would be approved in upcoming AGM by the Members.

The Independent Directors have submitted the Declaration of Independence, as required pursuant to Section 149 (7) of the Companies Act, 2013, stating that they meet the criteria of Independence as provided in sub-section (6).

During the year ended 31 March 2022, seven Board & six Audit Committee Meetings were held, the details of which are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013.

5. Remuneration Policy and Board Evaluation

In compliance with the provisions of the Companies Act, 2013 and Regulation 27 of the Listing Obligations & Disclosures Regulations (LODR), the Board of Directors on the recommendation of the Nomination & Remuneration Committee, adopted a Policy on remuneration of Directors and Senior Management. The Remuneration Policy is stated in the Corporate Governance Report. Performance evaluation of the Board was carried out during the period under review. The details are given in the Corporate Governance Report.

6. Familiarization programmes for the Independent Directors

In Compliance with the provisions of LODR, the Company has put in place a familiarization programme for the Independent Directors to familiarize them with their role, rights and responsibilities as Directors, the working of the Company, nature of the industry in which the Company operates, business model, etc. It is also available on the Company website:

http://india-pharma.gsk.com/en-in/investors/shareholder-

information/policies/.

7. Particulars of Contracts and Related Party Transactions (RPT)

In line with the requirements of the Companies Act, 2013 and LODR, your Company has formulated a policy on RPT. All RPTs entered into, during the year ended, were on arm''s length basis and were in ordinary course of business. There were no materially significant RPTs with the Promoters, Directors or Key Managerial Personnel which may have a potential conflict of interest of the Company at large. The Policy of RPTs can be accessed on the Company website:

http://india-pharma.gsk.com/en-in/investors/shareholder-

information/policies.

All RPTs are placed before the Audit Committee for review and approval. Prior omnibus approval is obtained for RPTs on a quarterly basis for transactions which are of repetitive nature and / or entered in the ordinary course of business and are at arm''s length. All RPTs are subject to independent review by a reputed accounting firm to

establish compliance with the requirements of RPTs under the Companies Act, 2013 and LODR.

8. Directors’ Responsibility Statement Your Directors confirm:

(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

(ii) that the Directors have selected such accounting policies and applied them 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 on 31 March 2022 and of the profit of the Company for the year ended on that date;

(iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts on a going concern basis;

(v) that proper internal financial controls laid down by the Directors were followed by the Company and such internal financial controls are adequate and were operating effectively and;

(vi) that proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems were adequate and were operating effectively.

9. Annual Return

In line with the requirement of the Companies (Amendment) Act, 2017, effective from 31 July 2018, the extract of annual return, is no longer required to be part of the Board''s Report. However, copy of the Annual Return is available on the Company''s website (https://india-pharma. gsk.com/en-in/investors/shareholder-information/annual-return/).

10. Corporate Governance & Business Sustainability Report

Your Company is part of the GSK plc group and conforms to norms of Corporate Governance adopted by them.

As a Listed Company, necessary measures are taken to comply with the Listing Obligations & Disclosures Regulations, 2015 (LODR) with the Stock Exchanges. A

Business Responsibility Report, describing the initiatives taken by your Company from an environmental, social and governance perspective, given in Annexure ‘B'', forms a part of this Report. A report on Corporate Governance, along with a certificate of compliance from the Auditors, given in Annexure ‘C'', forms a part of this Report.

11. Auditors

As per the provisions of section 139 of the Companies Act, 2013, Deloitte Haskins and Sells LLP, Chartered Accountants were appointed as the Statutory Auditors of the Company for a period of five years at the 92nd Annual General Meeting held on 25 July 2017 to hold office from the conclusion of the said Meeting till the conclusion of the 97th Annual General Meeting to be held in 2022 on a renumeration to be determined by the Board of Directors.

Subject to the approval of the Members, the Board of Directors has recommended the re-appointment of Deloitte Haskins and Sells LLP, Chartered Accountants as the Statutory Auditors of the Company for the second term of five years effective conclusion of this Annual General Meeting. Member''s attention is drawn to a Resolution proposing the reappointment of Deloitte Haskins and Sells LLP as Statutory Auditors of the Company, which is included as Item No 4 of the Notice convening the Annual General Meeting.

Pursuant to the provisions of section 204 of the Act, and the Rules made there under, the Company has appointed Parikh & Associates, Practicing Company Secretaries, to undertake Secretarial Audit of the Company for the financial year March 31,2023. The Report of the Secretarial Auditor is annexed to the Board Report as Annexure ‘D'' which forms a part of this Report. The Secretarial Audit Report does not contain any qualification, reservation, or adverse remark.

Pursuant to Section 148 of the Companies Act, 2013, the Board of Directors on the recommendation of Audit Committee have appointed R. Nanabhoy & Co.,

Cost Accountants for conducting the audit of the cost accounting records maintained by the Company for its Formulations for the year 2022-2023. The Committee recommended ratification of remuneration for year 202122 to the Members of the Company at the ensuing Annual General Meeting.

12. Transfer of Equity Shares Unpaid/Unclaimed Dividend to the Investor Education Protection Fund (I EPF)

In line with the statutory requirements, the Company has transferred to the credit of the Investor Education and Protection Fund set up by the Government of India, equity shares in respect of which dividend had remained unpaid/ unclaimed for a period of seven consecutive years within

the timelines laid down by the MCA. Unpaid/unclaimed dividend for seven years or more has also been transferred to the IEPF pursuant to the requirements under the Act.

13. Compliance with Secretarial Standards

The Board of Directors affirms that the Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India (SS1 and SS2) respectively relating to Meetings of the Board and its Committees which have mandatory application.

14. General

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated in section 134(3) M of the Companies Act, 2013, and the rules framed there under is attached herewith as Annexure ‘E'' which forms a part of this Report. The Disclosures pertaining to the remuneration and other details as required under section 197(12) of the Companies Act, 2013 and the rules made thereunder is enclosed as Annexure ‘F'' which forms a part of this Report. Pursuant to section 129(3) of the Companies Act, 2013, a statement in form ‘AOC-1'' containing salient features of the Financial Statements of the Subsidiary Company is attached. Pursuant to section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014, a statement in form ‘AOC-2'' relating to material contracts or arrangement or transactions at arm''s length basis of Company is attached.

Although the audited statements of accounts, relating to Company''s subsidiary is no longer required to be attached to the Company''s Annual Report, the same is enclosed as and in way of better disclosure practice.

The information relating to top ten employees in terms of remuneration and employees who were in receipt of remuneration of not less than ''1.02 crores during the year or ''8.5 lakhs per month during any part of the year forms part of this report and will be provided to any Member on a written request to the Company Secretary. In terms of Section 136 of the Act, the said report will be available for inspection of the Members through electronic mode up to the date of Annual General Meeting. The Members may write an email to [email protected] by mentioning “Request for Inspection” in the subject of the email.

15. Acknowledgments

The Directors expressed their appreciation for the contribution made by the employees to the significant improvement in the operations of the Company and for the support received from all other stakeholders, including members, doctors, medical professionals, customers, suppliers, business partners, and the government.

The Board and the Management of your Company are indeed appreciative of the substantial support being received from GSK plc, the parent organization, in providing new healthcare solutions which are products of its discovery labs and the technology improvements which benefits your Company immensely.

On behalf of the Board of Directors Ms. R. S. Karnad

Mumbai, 16 May 2022 Chairperson

1

A local Phase 3 Clinical Trial Application for Herpes Zoster Vaccine (Shingrix) [Study Zoster-081]


Mar 31, 2021

The Directors of your Company are pleased to share their Report for the year ended 31 March 2021.

1. Financial results for the year ended 31 March 2021

'' in lakhs

Year ended 31 March 2021

Year ended 31 March 2020

Revenue from Operations

3193,73

3224,68

Other Income

110,19

77,56

Total Income

3303,92

3302,24

Profit before Exceptional Items and Tax

722,33

646,99

(Less) / Add: Exceptional Items

(172,60)

(324,49)

Profit before Tax

549,73

322,50

Less: Income Tax Expenses

192,17

212,45

Profit for the year

357,56

110,05

Basic and Diluted EPS after Exceptional Items (''/Share)

21.11

6.50

Basic and Diluted EPS before Exceptional Items (''/Share)

31.32

26.69

2. Dividend

Your Directors are pleased to recommend a dividend of '' 30 per equity share for the year. This dividend for the year ended 31 March 2021 is subject to the approval of shareholders at the Annual General Meeting on 27 July 2021 and will be paid on or after 27 July 2021. If approved by the shareholders at the Annual General Meeting, the dividend will absorb '' 508 crores.

The Board of Directors of your Company had approved the Dividend Distribution Policy on 27 October 2016, and it is available on the Company''s website (https:// india-pharma.gsk.com/media/834228/dividend-distrubtion-policy.pdf)

3. Management Discussion and Analysis (a) Finance and accounts

The unprecedented adverse business environment, triggered by the COVID-19 pandemic, impacted the overall Indian Pharmaceuticals Market (IPM) during FY 202021. As operations resumed after the initial lockdown, your Company sharpened its focus on investing in, and promoting its established brands. As a result of its concerted efforts, the Company not only maintained but successfully consolidated its market position during the

year. Its market share in represented segments showed increase, while the key established brands quickly bounced back to double-digit growth.

At '' 3,194 crores, the Revenue from operations marked a 1% decline in value terms for the year ended 31 March 2021, as compared to the previous year. Despite the detrimental impact of COVID-19 on operations for the year, your Company registered an underlying sales growth of 3%, driven by sustained focus on key brands and appropriate rationalisation of tail-end brands. Other income was higher on account of '' 71 crores in interest on refunds from the income tax authorities.

Despite the unfavourable macro environment, EBITDA improved by 5% compared to previous year, mainly on account of better operational efficiencies, effective use of digital tools, focused cost reduction and renewed impetus on development of our innovative product portfolio. Profit After Tax was impacted due to exceptional charges and stood at '' 358 crores for the year.

In the previous year, a strategic assessment for the Vemgal manufacturing facility was undertaken to evaluate various options arising from the global discontinuation of the Zinetac brand. These options included, among others, modification of the plant to a multi-product facility and in-sourcing of products currently being manufactured at internal or external manufacturing facilities. The evaluation concluded that none of these alternatives were economically viable. As a result, the immediate sale of the facility was proposed as the best option. In line with this decision, your Company, during the quarter ended March 2021, entered a binding agreement for the sale of Vemgal assets. The conclusion of this sale is subject to necessary statutory and regulatory approvals.

Exceptional charges during the year, amounting to '' 173 crores largely comprise impairment charge to reflect the estimated realisable value of the assets, reversal of associated costs and of earlier provisions no longer required on account of the Zinetac recall. Profit Before Exceptional Items and Tax amounted to ''722 crores, at 23% of sales for the year.

Key Financial Ratios

Year ended

31-Mar-21

31-Mar-20

Profitability Ratios

Operating Profit Margin (%)

Profit from Operations/ Sale of Products

19%

18%

Net Profit Margin (%)*

Profit after Tax/ Revenue from operations

11%

3%

Return on Net Worth*

Profit after Tax/ Shareholders equity

24%

6%

EBITDA %

EBITDA/Sales

22%

21%

Efficiency Ratios

Current Ratio

Current assets/ current liabilities

1.5

1.8

Inventory turnover ratio

Sale of products/ Average inventories

6.3

6.6

Debtors turnover ratio

Sale of products/ Average trade receivables

20.0

28.9

FA Turnover Ratio

Sale of Products/ Average Fixed Assets

6.5

6.2

*If the impact of exceptional items is excluded then the net profit margin (%) would be 17% (previous year 14%), Return on Net Worth would be 35% (previous year 25%).

Interest coverage ratio and Debt Equity Ratio are not relevant for the company as it has negligible debt.

Despite the difficult external environment, Cash Generation from Operations remained strong even in FY 2020-21 and was in line with the good underlying business performance. Your Company focused its efforts on achieving working capital efficiencies and faster cash conversion. A deposit of '' 180 crores was received towards the sale of Vemgal assets. Your Company continues to deploy accumulated cash balances in bank deposits.

There are no loans or guarantees given, securities provided, and investments covered under Section 186 of the Companies Act, 2013. Your Company has not accepted any fixed deposits during the year. There was no outstanding amount towards unclaimed deposits payable to depositors, as on 31 March 2021.

Further, there are no significant or material orders passed by regulators, courts or tribunals which impact the going concern status of your Company and its future operations. There are

also no material changes and commitments affecting the financial position of your Company as on the date of this report.

(b) Business performance and outlook Pharmaceuticals

Even amid the lockdown, your Company''s field force remained active on the ground, using digital channels effectively to engage remotely with Health Care Professionals (HCPs). Your Company''s robust digital infrastructure proved to be a reliable means of communicating the science behind the medicines. Touch points were increased to 30 million through enhanced use of tele-calling, webinars and emailers, coupled with adoption of state-of-the-art technology platforms such as Veeva Engage.

On resumption of interpersonal interactions, your Company focused on skill enhancement of its field force to upgrade their skills and efficiencies amid the new norms of functioning. As a result, Company''s representatives were among the first

to prudently adopt all necessary personal safety and physical distancing guidelines to resume field work. In line with the changing business realities, your Company adapted its in-clinic communication to the need for delivery of key messages with greater immediacy and impact.

These initiatives led to gains in the market share for your Company across the categories of Anti-Infectives, Pain, Dermatology, Vitamins, Minerals and Supplements. The Evolution Index for top brands stood at: Augmentin 119, Ceftum 112, Calpol 103, T-Bact 104, Cobadex CZS 117 (IMS MAT March 2021).

Your Company also continued to focus on effective partnerships with key healthcare organisations to engage on important topics, such as judicious use of antibiotics, particularly after the administration of COVID-19 vaccine. Besides leading the topical antibiotics market, your Company has been making gains consistently in the topical corticosteroids and emollient categories.

Even though Dermatology was one of the adversely impacted segments, your Company maintained and consolidated its leadership in this segment during the year by remaining digitally engaged with key opinion leaders. Virtual platforms, such as Tell e-Skin, were deployed during the lockdown to disseminate the opinions and information shared by dermatology experts with general practitioners and pediatricians on diagnosis and use of steroids, thereby improving the outcome for patients.

Biologicals

Five of your Company''s vaccines feature among the top 20 vaccines in the self-pay market (IMS MAT March 2021), in which it remains the No. 1 company. Though the vaccines self-pay market is estimated to be over '' 2,500 crores, it is currently not reflecting any value growth (IMS MAT March 2021) on account of the slower uptake of vaccination during the COVID-19 related lockdowns.

Your Company currently markets 10 vaccines across age groups - infants, adolescents and adults. In September 2020, it launched tetravalent influenza Northern Hemisphere vaccine (Fluarix Tetra NH 2020-21) to help combat influenza.

Within three months of the launch, the vaccine had garnered 30% volume share in the market. The vaccine, which builds on the demonstrated promise of Menveo that was launched in 2019, is a testament to the Company''s strategy of leveraging the global innovation pipeline while bringing differentiated, high-quality vaccines to addressable markets.

Your Company launched three engaging direct-to-consumer awareness campaigns during the year to strengthen its value proposition in this segment. It has also partnered with the Federation of Obstetric and Gynaecological Societies of India (FOGSI) and Indian Academy of Pediatrics (IAP) to increase awareness about vaccination and the benefits of its vaccines.

Your Company plans to continue to grow its vaccines business by launching new brands to optimise its portfolio and by expanding into new consumer segments.

Supply chain Manufacturing excellence

Consistent with your Company''s pursuit of excellence, the Nashik manufacturing facility is positioned to be critical to supply chain and sourcing. The facility continued to invest in culture improvement initiatives, while ensuring unhindered supply of products to patients. During the year, the Nashik manufacturing facility set new benchmarks in excellence:

• Over three million safe person hours without reportable illnesses;

• 81% reduction in repeat deviations (from 14.9% to 2.8%);

• Significant improvement in productivity

Warehousing and distribution

The COVID-19 crisis necessitated agile adaptation of the supply chain operations, in keeping with the prevailing government mandates. Your Company conformed to the regulations notified by the government from time to time, by coordinating with more than 30 manufacturing facilities, 26 warehouses, 6,000 stockists, a distribution team of more than 700 external workers across warehousing and 280 transporters across the country. Your Company is pleased to report that there was not a single day of interruption or delay in the supply chain network during the year.

Your Company''s warehousing and distribution network continued to deliver high levels of customer service on time and in the right quantity, while maintaining the supply chain fundamentals. Your Company is also implementing automation initiatives within supply chain operations to proactively track products until they reach the customer. This insight into customer requirements not only supports business growth but also ensures a positive impact on the society and the ecosystem.

(c) Opportunities, risks, concerns and threats

With the pandemic leading to lockdowns and other curtailments, Outpatient Departments (OPDs) at hospitals remained shut and doctors either stopped functioning or avoided visiting clinics for most part of the year. This had a significant impact on generation of new prescriptions, a critical growth driver for the pharmaceutical industry.

With the gradual relaxation in lockdown rules and the introduction of COVID-19 vaccines, hospitals and clinics started returning to pre-COVID activity level. Though operations were again impacted by the second wave of the pandemic at the start of FY 2021-22, the situation is expected to start normalising again as the surge ebbs. Your Company''s investment in digital initiatives, deep customer relationships and a resilient supply chain will continue to ensure high service levels across stakeholders and give it a competitive advantage.

Several experts have predicted that India may experience future waves of COVID-19, which could further stretch the country''s healthcare ecosystem. This may also impact your Company''s ability to service its patients and HCPs on time. With agile business continuity processes in place, your Company will, however, ensure that optimum levels of production and supply chain reliability are maintained. Over the medium to long-term, your Company remains positive about delivering healthy growth.

The outbreak of the global pandemic has also created raw material (Active Pharmaceuticals Ingredients or APIs) related disruptions for the Indian pharmaceutical industry. Your Company has long-term loan licenses with various Contract Manufacturing Organisations (CMOs) that should

help it tide over such unpredictable situations with minimum impact. However, in the event of an extended period of shutdown, there are risks of supply disruption and higher input costs. From a long-term advocacy perspective, your Company is working closely with industry associations and policy makers to propose a more predictable, transparent API pricing regime, that will be a win-win for all stakeholders.

Your Company operates in a price-regulated market. Adverse regulations on product prices may impact revenues and profit margins. To mitigate these, your Company periodically assesses its product portfolio to make it more diversified, with focus on high-volume growth products and operational efficiencies to control costs. With the revised National List of Essential Medicines (NLEM), expected to be released by the Government later in 2021, your Company is engaging in various stakeholder discussions on NLEM.

The healthcare policy landscape in India is at an inflection point. Amid the pandemic, the uptake and acceptance of new areas of healthcare delivery, such as telemedicine, e-pharmacies, Over-the-Counter (OTC) medicines, are at an all-time high. New Government regulations could redefine the healthcare sector in the long term, and your Company is in discussion with policymakers and stakeholders on the subject.

(d) Regulatory affairs

Your Company applied to Central Drugs Standard Control Organisation (CDSCO) for registration of (i) Herpes Zoster Vaccine (recombinant, adjuvanted) [Shingrix] for prevention of Herpes Zoster and Post-Herpetic Neuralgia in adults aged >50 years; (ii) Belimumab Solution for Injection 200mg/ml [Benlysta] for treatment of adults with systemic Lupus Erythematosus and Lupus Nephritis; and (iii) indication expansion for Quadrivalent Inactivated Influenza Vaccine (Fluarix tetra) for use in adults over 64 years of age.

A Global Clinical Trial (GCT) application was approved during the year, for conducting a multicountry phase 3 study with Respiratory Syncytial Virus (RSV) Maternal (RSVPreF3) vaccine in India.

Registrations were successfully completed for (i) a new fixed dose combination of Fluticasone Furoate, Umeclidinium and Vilanterol Powder for Inhalation (Trelegy) for chronic obstructive pulmonary disease (COPD); (ii) new strength of an already marketed oral suspension of Augmentin viz. Amoxycillin and Potassium Clavulanate oral suspension 642.9 mg/5ml (Augmentin ES); and (iii) a ready-to-use liquid formulation of Mepolizumab Injection 100mg (Nucala) for treatment of severe refractory eosinophilic asthma in adults.

These approvals will enable timely access to new and innovative therapeutic options to patients in India, besides improving compliance to treatment of existing products with new formulations and strength.

(e) Medical affairs and medical governance

Despite challenges associated with the pandemic during the year, your Company''s medical team maintained its robust connect with the healthcare community, to keep them updated on the science of disease and the Company''s products. The team delivered over 2,200 scientific presentations through virtual GSK standalone scientific promotional meetings (SPMs) and webcasts, reaching over 90,000 HCPs.

In addition, your Company''s medical affairs team ensured continued one-to-one interactions with HCPs, by utilising an optimal mix of digital platforms and delivering over 3,300 interactions. Full support was provided to the healthcare community in the fight against COVID-19 through webinars with experts across specialties on effective diagnosis and management of the coronavirus, in addition to various aspects of telemedicine. These initiatives have helped your Company build greater trust and credibility as a science-led organisation, focused on benefitting patients.

In the Anti-Infective therapy area, your Company''s medical team delivered over 1,200 scientific presentations, reaching over 30,000 HCPs, and more than 1,500 one-to-one interactions with experts across specialties. In Dermatology, the medical team continued its efforts to drive appropriate use of topical steroids and dissemination of science behind relevant disease areas through more than 900 scientific presentations. The medical team responsible for

Primary Care contributed by delivering over 220 scientific presentations, reaching over 30,000 HCPs, and more than 300 one-to-one interactions with experts, including endocrinologists.

In the Respiratory therapy area, your Company''s medical experts participated in over 100 promotional meetings as speakers and moderators, reaching approximately 1,900 HCPs, in addition to more than 1,300 one-to-one scientific interactions with external experts. The medical science liaisons (MSLs) led six non-promotional meetings on severe asthma and conducted an advisory board meeting to gather insights on the role of eosinophils in health and disease. The medical team initiated the Nucala Home Administration programme in 2020, to support eligible patients to continue treatment amid the pandemic challenges. The team also launched the Severe Asthma Clinic programme to support HCPs in early diagnosis and phenotyping of patients of the disease.

Several key evidence generation activities, such as two Investigator Sponsored Studies (ISS) and eight key review articles published in peer-reviewed indexed medical journals, were undertaken to spread vaccine awareness. The medical team delivered 390 scientific presentations and 860 one-to-one scientific interactions, reaching out to more than 23,000 doctors. The vaccines medical team also collaborated with the Indian Medical Association (IMA) to support the module development of the Life Course Immunisation Guidebook and its rollout to their members.

(f) Internal control framework

Your Company conducts its business with integrity and high standards of ethical behaviour, and in compliance with the laws and regulations that govern the business. Its Internal Control Framework (ICF) is a comprehensive enterprisewide risk management model and supports the continuous process of identification, evaluation and management of the Company''s risks. ICF is supported by standard operating procedures, policies and guidelines, including suitable monitoring procedures and self-assessment exercises.

Compliance with laws and regulations is monitored through a well-crafted framework. As required by the Companies Act 2013, your

Company has implemented an Internal Financial Control (IFC) framework. It also continues its annual Independent Business Monitoring (IBM), designed by GSK plc and requiring a regular review of activities, data, exceptions and deviations, for monitoring and improving the quality of operations.

As part of the due diligence activities for onboarding of vendors and third parties engaged by your Company, they are required to confirm compliance with our corporate values through a detailed Third Party Oversight (TPO) process.

As an annual exercise, your Company''s senior executives review and confirm adherence to GSK plc''s IFC. Mandatory training on the GSK Code of Conduct is conducted for all employees. During the year, an enterprise-wide ''Living our Values'' training was undertaken for all employees and complementary workers. This training accounted for scenarios that explored your Company''s values and their application to its ways of working and risks such as those associated with Privacy as well as Anti-Bribery and Corruption (ABAC).

Risk management

Your Company has a Risk Management and Compliance Board (RMCB), comprising a team of senior leaders responsible for promoting the ''tone from the top'' and an appropriate risk culture, besides ensuring effective oversight of internal controls and risk management processes. Each principal risk has an assigned risk owner, accountable for managing the risk, including setting of risk mitigation plans, their implementation, and reporting their approach and progress to the RMCB on a regular basis. The Risk Management Framework, covering business, operational and financial risks, is also reviewed annually by the RMCB.

At present, in the opinion of the Board of Directors, there are no risks which may threaten the existence of your Company.

Vigil mechanism

Your Company has a ''Speak Up'' programme which offers people whether working for GSK or not, a range of channels to voice concerns and report any misconduct. The Speak Up channel and procedures encourage everyone to raise concerns about potential unethical, illegal or inappropriate conduct, and assure confidentiality

and protection from retaliation, retribution or any form of harassment to those reporting such concerns.

Confidential Speak Up channels are available to people within and outside the Company. An independent third party manages these reporting lines and calls are logged through their central system to ensure integrity of the programme. Your Company endeavours to treat all questions or concerns about compliance in a confidential manner, even if the person reporting a question or concern identifies himself/herself. Your Company also has an extensive and widely communicated process to prevent, take disciplinary action, and deter acts of sexual harassment.

The Speak Up channels can be accessed at https://gsk.i-sight.com/landing-page/ on the Company''s website.

Your Company also has in place a Whistleblower policy, to provide a mechanism for its employees/external stakeholders to approach local/group management or the Chairperson of the Audit Committee (accindrx. [email protected]) in case of any grievance or concern.

The Whistleblower policy can be accessed on your Company''s website (https://india-pharma.gsk.com/en-in/investors/shareholder-information/policies/).

(g) Human resources

Your Company is focused on delivering the strategic priorities set under GSK plc''s global Innovation, Performance and Trust (IPT) framework.

Organisational culture

The pandemic induced disruptions notwithstanding, your Company continued to prioritise the safety, health and development of its employees, in line with its commitment on People inclusion and diversity, health and wellbeing and continuous learning and development.

During the year, the ''GSK Culture Survey'' was rolled out to obtain feedback from employees and elicit their views on the future ways of working and collaboration. For India, the engagement scores remained greater than 95% even in these

challenging times, highlighting your Company''s strong connect with employees. Your Company also launched several culture and capability building initiatives, such as Performance with Choice, GSK Learning Warriors League, GSK Women and Leadership Action Programme (WeLeAP), Commercial Development Programmes, with wide and enthusiastic participation from employees.

''Workplace by Facebook'', the preferred mode of connecting and collaborating with GSK employees across the globe, helped your Company stay engaged and connected with all employees through the lockdown period. The platform has helped to transform the way employees work together and accelerate the delivery of the IPT framework, while shaping the cultural evolution.

Inclusion and diversity

Your Company has instituted the Women''s Leadership Initiative (WLI) to promote women''s representation, foster a more inclusive workplace, ensure diversity in perspectives, accelerate capabilities, build talent pool, and pave the way for career growth.

Your Company has 11% gender diversity in its workforce, 15% of new hires being women in the commercial organisation, which was traditionally male dominated, 30% women at Board level and 26% women in top leadership positions. During the year, your Company focused on sensitising employees across the organisation through campaigns such as #BreakingBias and WeLeAP 2.0 - GSK Women and Leadership Action Programme, to develop high potential mid-level women talent.

As a result of these efforts, your Company was recognised among the 100 Best Companies for Women by Working Mother and AVTAR, the Best Workplaces for Women by Great Places to Work and was also conferred the Advancement of Women Award by Community Business in 2020.

Your Company was recognised as one of the top employers by the India Workplace Equality Index (IWEI) - the country''s first comprehensive index for LGBT equality. Several initiatives were also undertaken to cater to the differently abled.

Learning and development

Your Company offers a wide range of learning resources and tools to support individual and team development needs. During the year, employees participated in, and benefited from GSK''s global talent programmes, such as the Asia Leadership Programme for Emerging Leaders, Accelerating Difference Programme, Asia Global Leaders Programme, and IMPACT programme for building specific capabilities to develop leadership talent.

Pursuing commercial excellence

In 2020, GSK''s Selling Excellence team partnered with the HR team to launch the GSK Learning Warriors League for the commercial organisation, to promote virtual learning for capability building and engagement.

Apart from new initiatives to promote excellence, your Company continued to invest in the Future Leaders Programme, Commercial Leadership Programme and the Pharma Supply Chain Leadership Programme, wherein hires from premier B-schools undergo an extensive experiential training before taking up important roles, such as First Line Sales Leader (FLSL).

In 2020, with the objective of enhancing its brand awareness among potential campus hires, your Company also launched a virtual case study competition across top B-schools.

Wellness and wellbeing

Committed to people wellbeing, your Company expanded its offerings under the Partnership for Prevention (P4P) programme during the year, by including two more vaccines in the Flu category.

Medical insurance benefits offered to employees were reviewed, as your Company included additional coverage designed specifically for COVID-19, such as home quarantine expenses. Your Company also introduced modular plans in health insurance, giving options to employees to increase their medical coverage. To help employees and their families build resilience and cope with the COVID-19 related challenges, it partnered with external experts for sessions on mental health under the Employee Assistance Programme (EAP) and activities centered around physical health, augmenting mental and emotional resilience, wellbeing and nutrition.

Employee relations

Your Company works with unions for the mutual benefit of its members and provides them forums to voice their opinions and effectively represent themselves. The Company believes these unions to be an integral part of its business and growth.

Four unions, based on the selling area zones (North, East, West and South), represent the Medical Business Associates (MBAs) in their respective locations. The union in the West Zone also represents employees of the Nashik manufacturing facility.

The management and the unions of your Company are currently engaged in negotiations to arrive at a long-term wage and benefits settlement to be valid for a period of four years.

Your Company is grateful to its unions for their positive contributions and maintenance of cordial industrial relations.

Prevention of sexual harassment at the workplace

Your Company has a policy for making the workplace safer, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (India) and the rules thereunder. Your Company has established Internal Committees (ICs) across different zones and manufacturing facilities to address any kind of sexual harassment (SH) complaint. All the members of these ICs are well trained to handle such complaints.

During the year, your Company received three SH complaints. One case has been closed after taking appropriate action following detailed investigation, while the remaining two are currently under investigation.

The Company aims to further increase awareness around prevention of sexual harassment (POSH) and the working of internal committees through refresher e-learning modules and training programmes.

Environment, health, safety and sustainability

Your Company''s Environment, Health, Safety and Sustainability (EHSS) strategy is embedded across its value chain. From sourcing of raw

materials to the delivery of products, the EHSS practices conform to local laws as well as GSK''s global standards.

Your Company is committed to the reduction of the environmental footprint from the production of antibiotics at its manufacturing facility at Nashik, and also resulting from operations of third-party manufacturers, by controlling the release of antibiotic residues into the environment within the science-driven, risk-based discharge limits. This is also in accordance with the AMR (antimicrobial resistance) Industry Alliance''s Antibiotic Manufacturing Framework. Your Company is a signatory to the AMR Industry Alliance, which is one of the largest private sector coalitions set up to provide sustainable solutions to curb AMR and wastewater discharge limits.

Your Company continues to invest in the safety of its employees through multiple initiatives. These include the global driver safety programme - ''Safe Driving: Every Journey Counts'' - for the safety of employees in the field. This is complemented with other initiatives, such as Virtual Risk Manager, OnetoOne , Mentor and other driving programmes that are instituted to inculcate defensive driving skills. Your Company remains committed to environmental sustainability, and the safety of employees and patients, in line with locally applicable laws and regulations. Your Company has complied with the Extended Producer Responsibility (EPR) obligations and collected 2,070.52 MT of postconsumer plastic waste from the market in FY 2020-21 and disposed it in an environmentally sustainable manner.

(h) Corporate Social Responsibility (CSR)

Your Company has a rich legacy of partnering with the communities in which it operates. Strong partnerships with these groups are critical to understanding the needs of the communities and formulate strategies accordingly, to maximise their outreach and impact.

The focus of your Company''s CSR efforts, during the year, was on impacting life changing and lasting differences in human health by addressing the healthcare burdens of accessibility, affordability and awareness. The Company touched the lives of over a million

people suffering from Lymphatic Filariasis (LF) through its flagship CSR project - Partnering India to Eliminate Lymphatic Filariasis.

Pursuant to the provisions of Section 135 of the Companies Act, 2013, and the rules made thereunder, your Company has constituted a CSR Board Committee to monitor its CSR programmes.

The CSR policy of your Company can be accessed on its website (https://india-pharma.gsk.com/ media/911273/annual-csr-report-2020-21.pdf). A detailed report on the CSR programmes undertaken during the year has been provided in Annexure ‘A’ of this Annual Report.

4. Directors

Mr. R. Krishnaswamy ceased to be a Director on the Board with effect from 27 January 2021. The Board places on record its appreciation of the valuable services rendered by Mr. Krishnaswamy during his tenure on the Board. Mr. M. Dawson was appointed as Additional Non-Executive Director from 28 January 2021.

In terms of the provisions under Section 149 of the Companies Act, 2013, the Board and Shareholders have approved the appointment of all the existing Independent Directors viz. Mr. P.V. Bhide, Mr. N. Kaviratne, Mr. A. N. Roy and Mr. D. Sundaram, for a second term of five years from 30 March 2020, and Dr. (Ms.) S. Maheshwari for a first term of five years from 18 May 2020.

The Independent Directors have submitted the Declaration of Independence, as required pursuant to Section 149 (7) of the Companies Act, 2013, stating that they meet the criteria of Independence as provided in sub-section (6).

During the year ended 31 March 2021, eight Board and five Audit Committee Meetings were held, the details of which are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013.

Remuneration policy and Board evaluation

In compliance with the provisions of the Companies Act, 2013, and Regulation 27 of the Listing Obligations & Disclosures Regulations (LODR), the Board of Directors, on the recommendation of the Nomination

& Remuneration Committee, adopted a Policy on remuneration of Directors and Senior Management. The Remuneration Policy is stated in the Corporate Governance Report. Performance evaluation of the Board was carried out during the period under review. The details are given in the Corporate Governance Report.

Familiarisation programmes for Independent Directors

In compliance with the requirements of SEBI Regulations, your Company has put in place a familiarisation programme for the Independent Directors, to familiarise them with their role, rights and responsibility as Directors, the working of the Company, the nature of the industry in which it operates, its business model, etc. The programme details are available on the Company''s website (https://india-pharma.gsk.com/en-in/investors/ shareholder-information/policies/).

5. Particulars of contracts and Related party transactions

In line with the requirements of the Companies Act, 2013 and LODR, your Company has formulated a policy on Related Party Transactions. All related party transactions entered during the year were on an ''arm''s length'' basis and were in the ''ordinary course of business''. There were no materially significant related party transactions made with the Promoters, Directors or Key Managerial Personnel which may have a potential conflict of interest of the Company at large. The Policy of related party transactions can be accessed on the company''s website (https://india-pharma.gsk.com/en-in/investors/shareholder-information/policies/).

All Related Party Transactions are placed before the Audit Committee for review and approval. Prior omnibus approval is obtained for Related Party Transactions on a quarterly basis for transactions which are of repetitive nature and/or entered in the ordinary course of business and are at arm''s length. All Related Party Transactions are subjected to independent review by a reputed accounting firm to establish compliance with the requirements of Related Party Transactions under the Companies Act, 2013 and LODR.

6. Directors’ responsibility statement

Your Directors confirm:

(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

(ii) that the Directors have selected such accounting policies and applied them 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 on 31 March 2021, and of the profit of the Company for the year ended on that date;

(iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company, and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts on a going concern basis;

(v) that proper internal financial controls laid down by the Directors were followed by the Company and such internal financial controls are adequate and were operating effectively and

(vi) that proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems were adequate and were operating effectively.

7. Annual return

In line with the requirement of the Companies (Amendment) Act, 2017, effective from 31 July 2018, the extract of annual return, is no longer required to be part of the Board''s Report. However, a copy of the Annual Return shall be placed on the Company''s website (https://india-pharma.gsk.com/en-in/investors/ shareholder-information/annual-return/).

8. Corporate governance & Business sustainability report

Your Company is part of the GlaxoSmithKline plc group and conforms to norms of Corporate Governance adopted by them. As a listed Company, necessary measures are taken to comply with the Listing Obligations & Disclosures Regulations, 2015 (LODR) with the Stock Exchanges. A report on Corporate Governance, along with a certificate of compliance from the Auditors, given in Annexure ‘B’, forms a part of this Report. Further, a Business Responsibility Report describing the initiatives taken by your Company from an Environmental, Social and Governance perspective are given in Annexure ‘C’, which forms a part of this Annual Report.


9. Auditors

As per the provisions of section 139 of the Companies Act 2013, Deloitte Haskins and Sells LLP, Chartered Accountants were appointed as the Statutory Auditors of the Company for the period of five years at the 92nd Annual General Meeting held on 25 July 2017 to hold office from the conclusion of the said Meeting till the conclusion of the 97th Annual General Meeting to be held in 2022, on a remuneration to be determined by the Board of Directors. Their appointment was subject to ratification of their appointment by the Members of the Company at every Annual General Meeting. Pursuant to the amendments made to section 139 of the Companies Act, 2013 by the Companies (Amendment) Act, 2017 effective from 7 May 2018, the requirement of seeking ratification of the Members for the appointment of the Statutory Auditors has been withdrawn from the statute. In view of the above, ratification of the members at Annual General Meeting is not being sought.

Pursuant to the provisions of section 204 of the Act, and the Rules made thereunder, the Company has appointed Parikh & Associates, Practicing Company Secretaries, to undertake Secretarial Audit of the Company. The Report of the Secretarial Auditor is annexed to the Board Report as Annexure ’D’ which forms a part of this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Pursuant to Section 148 of the Companies Act, 2013, the Board of Directors, on the recommendation of the Audit Committee, have appointed R. Nanabhoy & Co., the Cost Accountants, for conducting the audit of the cost accounting records maintained by the Company for its Formulations for FY 2021-22. The Committee recommended ratification of remuneration for year 2020-21 to the Shareholders of the Company at the ensuing Annual General Meeting.

10 Transfer of equity shares unpaid/Unclaimed dividend to the Investor Education Protection Fund (IEPF)

In line with the statutory requirements, the Company has transferred to the credit of the Investor Education and Protection Fund, set up by the Government of India, the equity shares in respect of which dividend had remained unpaid/ unclaimed for a period of seven consecutive years, within the timelines laid down by the Ministry of Corporate Affairs. Unpaid/unclaimed dividend for seven years or more has also been transferred to the IEPF pursuant to the requirements under the Act.

11 Compliance with secretarial standards

The Board of Directors affirms that the Company has complied with the applicable Secretarial Standards issued by the Institute of Companies Secretaries of India (SS1 and SS2) respectively, relating to Meetings of the Board and its Committees which have mandatory application.

12. General

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo, as stipulated in section 134(3) M of the Companies Act, 2013 and the rules framed thereunder, is attached herewith as Annexure ’E’, which forms a part of this Report. The disclosures pertaining to the remuneration and other details, as required under section 197(12) of the Companies Act, 2013, and the rules made thereunder, are enclosed as Annexure ’F’, which forms a part of this Report. Pursuant to section 129(3) of the Companies Act, 2013, a statement in form “AOC-1”, containing salient features of the Financial Statements of the Subsidiary Company, is attached.

Although the audited statements of accounts relating to the Company''s Subsidiary are no longer required to be attached to the Company''s Annual Report, the same is enclosed as and in way of better disclosure practice.

The information relating to top ten employees in terms of remuneration and employees, who were in receipt of remuneration of not less than '' 1.02 cores during the

year or '' 8.5 lakhs per month during any part of the year, forms part of this report and will be provided to any shareholder on a written request to the Company Secretary. In terms of Section 136 of the Act, the said report will be available for inspection of the shareholders through electronic mode. The shareholders may write an email to [email protected] by mentioning “Request for Inspection” in the subject of the email.

13. Acknowledgments

The Directors express their appreciation for the contribution made by the employees for remarkable agility and resilience throughout the year in unprecedented circumstances including significant improvement in the operations of the Company and also for the support received from all other stakeholders, including Shareholders, doctors, medical professionals, customers, suppliers, business partners and the government.

The Board and the Management of your Company are appreciative of the support being received from GSK plc.

On behalf of the Board of Directors Ms. R. S. Karnad

Mumbai, 18 May 2021 Chairperson


Mar 31, 2019

The Directors have pleasure in submitting their Report for the year ended 31st March 2019.

1. FINANCIAL RESULTS FOR THE YEAR ENDED 31st MARCH 2019

Rs. in lakhs

Year ended 31st March 2019

Year ended31st March 2018

Revenue from operations

3128,53.46

2895,88.02

Sale of Products

3089,48.40

2820,03.24

Other operating revenue

39,05.06

75,84.78

Other Income

101,47.84

53,52.01

Total Income

3230,01.30

2949,40.03

Profit before Exceptional items and Tax

658,81.75

523,78.50

Add: Exceptional Items

4,88.88

17,79.85

Profit before Tax

663,70.63

541,58.35

Less: Income tax expenses

238,34.58

189,59.58

Profit for the year

425,36.05

351,98.77

Add: Opening balance of Retained earnings from the previous year

1113,21.12

1067,06.32

Less: Transactions with owners of the company:

Dividend paid on Equity Shares (including tax on distributed Profits) (Rs. 17.5 Per Share for FY 2017-2018 and Rs. 15 Per Share for FY 2016-17, retrospectively adjusted for September 2018 bonus issue)

357,39.89

305,83.97

Balance of Retained earnings at the end of the reporting period (excluding Other comprehensive income)

1181,17.28

1113,21.12

2. DIVIDEND

Your Directors are pleased to recommend a Dividend of Rs. 20 per Equity share for the year (previous year Rs. 17.5 per Equity share, retrospectively adjusted for September 2018 bonus issue). The Dividend for the year ended 31st March 2019 is subject to the approval of members at the Annual General Meeting on 22nd July 2019 and will be paid on or after 22nd July 2019. If approved by the members at the Annual General Meeting, the Dividend will absorb ‘408 crores inclusive of the Dividend Distribution Tax of Rs. 70 crores borne by the Company.

The Board of the Directors of the Company have approved the Dividend Distribution Policy on 27th October 2016 and it is available on the Company website http://www.gsk-india.com/investor-Policies.

3. BONUS

The Company has allotted fully paid up equity shares of Rs. 10 each during the quarter ended 30th September 2018, pursuant to a bonus issue in ratio 1:1, as approved by the members through postal ballot. 8,47,03,017 Bonus shares have been issued by capitalization of profits transferred from general reserve.

4. DIRECTORS

Mr. D. S. Parekh resigned as a Non-Executive Director and Chairman of the Company with effect from 31st March 2019. Mr. R. R. Bajaaj, Independent Director and Mr. M. Jones, Non-Executive Director resigned as Directors from the Company with effect from 24th July 2018. The Board thanked Mr. Parekh for his invaluable contribution and guidance to the Company as Director for more than 25 years and as Chairman for more than 20 years. Further Board places on record its appreciation of the valuable services rendered by Mr. R. R. Bajaaj & Mr. M. Jones during their tenure and for their contribution to the deliberations of the Board.

The Board of Directors has appointed Ms. R. S. Karnad as Non - Executive, Non - Retiring Director & Chairperson with effect from 1st April 2019.

In terms of the provisions under Section 149 of the Companies Act, 2013, the Board and Shareholders have approved the appointment of all the existing Independent Directors viz Ms. A. Bansal, Mr. P.V. Bhide, Mr. N. Kaviratne, Mr. A. N. Roy and Mr. D. Sundaram for a term for five years from 30th March 2015.

The Independent Directors have submitted the Declaration of Independence, as required pursuant to Section 149 (7) of the Companies Act, 2013, stating that they meet the criteria of Independence as provided in sub-section (6).

During the year ended 31st March 2019, six Board & Audit Committee Meetings were held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

Remuneration Policy and Board Evaluation

In compliance with the provisions of the Companies Act, 2013 and Regulation 27 of the Listing Obligations & Disclosures Regulations (LODR), the Board of Directors on the recommendation of the Nomination & Remuneration Committee, adopted a Policy on remuneration of Directors and Senior Management. The Remuneration Policy is stated in the Corporate Governance Report. Performance evaluation of the Board was carried out during the period under review. The details are given in the Corporate Governance Report.

Familiarisation programmes for the Independent Directors

In Compliance with the requirements of SEBI Regulations, the Company has put in place a familiarisation programme for the Independent Directors to familiarise them with their role, rights and responsibility as Directors, the working of the Company nature of the industry in which the Company operates business model, etc. It is also available on the Company website: http://india-pharma.gsk.com/en-in/ investors/shareholder-information/policies/.

5. PARTICULARS OF CONTRACTS AND RELATED PARTY TRANSACTIONS

In line with the requirements of the Companies Act, 2013 and LODR, your Company has formulated a policy on Related Party Transactions. All related party transactions that are entered during the year ended were on arm’s length basis and were in ordinary course of business. There were no materially significant related party transactions made with the Promoters, Directors or Key Managerial Personnel which may have a potential conflict of Interest of the Company at large. The Policy of related party transactions can be accessed on Company website: http://india-pharma.gsk.com/en-in/investors/ shareholder-information/policies.

All Related Party Transactions are placed before the Audit Committee for review and approval. Prior omibus approval is obtained for Related Party Transactions on a quarterly basis for transactions which are of repetitive nature and / or entered in the ordinary course of business and are at arm’s length. All Related Party Transactions are subject to independent review by a reputed accounting firm to establish compliance with the requirements of Related Party Transactions under the Companies Act, 2013 and LODR.

6. DIRECTORS’ RESPONSIBILITY STATEMENT

Your Directors confirm:

(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

(ii) that the Directors have selected such accounting policies and applied them 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 on 31st March 2019 and of the profit of the Company for the year ended on that date;

(iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts on a going concern basis;

(v) that proper internal financial controls laid down by the Directors were followed by the Company and such internal financial controls are adequate and were operating effectively and

(vi) that proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems were adequate and were operating effectively.

7. ANNUAL RETURN

The Annual Return of the Company has been placed on the website of the Company and can be accessed at http://india-pharma.gsk.com/en-in/investors/shareholder-information/Annual Return.

8. CORPORATE GOVERNANCE & BUSINESS SUSTAINABILITY REPORT

Your Company is part of the GlaxoSmithKline Plc group and conforms to norms of Corporate Governance adopted by them. As a Listed Company, necessary measures are taken to comply with the Listing Obligations & Disclosures Regulations, 2015 (LODR) with the Stock Exchanges. A report on Corporate Governance, along with a certificate of compliance from the Auditors, given in Annexure ‘B’, forms a part of this Report. Further, a Business Responsibility Report, describing the initiatives taken by your Company from an environmental, social and governance perspective, is given in Annexure ‘C’, which forms a part of this Report.

9. AUDITORS

As per the provisions of section 139 of the Companies Act 2013, Deloitte Haskins and Sells LLP, Chartered Accountants were appointed as the Statutory Auditors of the Company for the period of five years at the Ninety second Annual General Meeting held on 25th July 2017 to hold office from the conclusion of the said Meeting till the conclusion of the Ninety Seven Annual General Meeting to be held in 2022 on a renumeration to be determined by the Board of Directors. Their appointment was subject to ratification for their appointment by the Members of the Company at every Annual General Meeting. Pursuant to the amendments made to section 139 of the Companies Act, 2013 by the Companies (Amendment) Act, 2017 effective from 7th May 2018 the requirement of seeking ratification of the Members for the appointment of the statutory Auditors has been withdrawn from the statue. In view of above, ratification of the members at Annual General Meeting is not being sought.

Pursuant to the provisions of section 204 of the Act, and the Rules made there under, the Company has appointed Parikh & Associates, practicing Company Secretaries, to undertake secretarial audit of the Company. The Report of the Secretarial Auditor is annexed to the Board Report as Annexure “D” which forms a part of this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Pursuant to Section 148 of the Companies Act, 2013, the Board of Directors on the recommendation of Audit Committee have appointed. R. Nanabhoy & Co., Cost Accountants for conducting the audit of the cost accounting records maintained by the Company for its Formulations for 2019-20. The Committee recommended ratification of remuneration for year 2018-19 to the Shareholders of the Company at the ensuing Annual General Meeting. As required by section 92(3) of the Act and the Rules framed there under, the extract of the Annual Return in Form MGT 9 is enclosed as Annexure “E” and also forms a part of this Report.

10 TRANSFER OF EQUITY SHARES UNPAID/ UNCLAIMED DIVIDEND TO INVESTOR EDUCATION PROTECTION FUND

In line with the statutory requirements, the Company has transferred to the credit of the Investor Education and Protection Fund (IEPF) set up by the Government of India, equity shares in respect of which dividend had remained unpaid/ unclaimed for a period of seven consecutive years within the time lines laid down by the MCA. Unpaid/unclaimed dividend for seven years of more has also been transferred to the IEPF pursuant to the requirements under the Act.

11 COMPLIANCE WITH SECRETARIAL STANDARDS

The Board of Directors affirms that the Company has complied with the applicable Secretarial Standards issued by the Institute of Companies Secretaries of India (SS1 and SS2) respectively relating to Meetings of the Board and its Committees which have mandatory application.

12. GENERAL

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated in section 134(3) M of the Companies Act, 2013 and the rules framed there under is attached herewith as Annexure “F” which forms a part of this Report. The Disclosures pertaining to the remuneration and other details as required under section 197(12) of the Companies Act, 2013 and the rules made thereunder is enclosed as Annexure “G” which forms a part of this Report. Pursuant to section 129(3) of the Companies Act, 2013 a statement in form “AOC-1” containing salient features of the Financial Statements of the Subsidiary Company is attached.

Although the audited statements of accounts, relating to Company’s Subsidiary are no longer required to be attached to the Company’s Annual Report the same is enclosed as and in way of better disclosure practice.

The information relating to top ten employees in terms of remuneration and employees who were in receipt of remuneration of not less than Rs. 1.02 cores during the year or Rs. 8.5 lakhs per month during any part of the year forms part of this report and will be provided to any Shareholder on a written request to the Company secretary. In terms of Section 136 of the Act, the report entitled at the registered office of the Company during the business on working day of the Company up to date of Annual General Meeting.

13. ACKNOWLEDGMENTS

The Directors express their appreciation for the contribution made by the employees to the significant improvement in the operations of the Company and for the support received from all other stakeholders, including Shareholders, Doctors, Medical Professionals, Customers, Suppliers, Business Partners and the Government.

The Board and the Management of your Company are indeed appreciative of the substantial support being received from GSK Plc, the parent organization, in providing new healthcare solutions which are products of its discovery labs and the technology improvements which benefits your Company immensely.

On behalf of the Board of Directors

Ms. R.S. Karnad

Mumbai, 20th May 2019 Chairperson


Mar 31, 2018

Directors’ Report

The Directors have pleasure in submitting their Report for the year ended 31st March 2018.

1. FINANCIAL RESULTS FOR THE YEAR ENDED 31st MARCH 2018

Rs, in lakhs

Year ended

31st March

2018

Year ended 31st March 2017

Revenue from operations

2895,88.02

2994,50.50

Other Income

53,52.01

72,01.24

Total Income

2949,40.03

3066,51.74

Profit before Exceptional items and Tax

523,78.50

465,34.86

Add: Exceptional Items

17,79.85

45,73.05

Profit before Tax

541,58.35

511,07.91

Less: Income tax expenses

189,59.58

174,30.40

Profit for the year

351,98.77

336,77.51

Add: Opening balance of Retained earnings from the previous year

1067,06.32

1240,02.23

Less: Transactions with owners of the company:

Dividend paid on Equity Shares (including tax on distributed Profits) (Rs, 30 Per Share for FY 2016-17 and Rs, 50 Per Share for FY 2015-16)

305,83.97

509,73.42

Balance of Retained earnings at the end of the reporting period

1113,21.12

1067,06.32

2. DIVIDEND

Your Directors are pleased to recommend a Dividend of Rs, 35 per Equity share for the year (previous year Rs, 30 per Equity share). The Dividend for the year ended 31st March 2018 is subject to the approval of shareholders at the Annual General Meeting on 24th July 2018 and will be paid on or after 25th July 2018. If approved by the shareholders at the Annual General Meeting, the Dividend will absorb Rs, 357 crores inclusive of the Dividend Distribution Tax ofRs, 61 crores to be borne by the Company.

The Board of the Directors of the Company have approved the Dividend Distribution Policy on 27th October 2016 and it is available on the Company website http://www.ask-india.com/investor-Policies/.

3. MANAGEMENT DISCUSSION & ANALYSIS

Economic Scenario

The upswing in global investment and notable rebound in global trade contributed to a global growth rate of 3.8% in 2017, the fastest since 2011, according to the World Economic Outlook, April 2018, International Monetary Fund (IMFWEO).

Emerging Markets and Developing Economies grew by 4.8% in 2017. This growth is projected to increase further to 4.9% in 2018 and 5.1% in 2019. The high growth rate reflects continued strong economic performance in emerging Asia, (IMF WEO).

Gross Domestic Product (GDP) in India grew 7.1% in 2017 and is projected to increase to 7.4 percent in 2018 and 7.8% in 2019, expected to be lifted by strong private consumption as well as fading transitory effects of the currency exchange initiative and implementation of the national goods and services tax (IMF WEO). Over the medium term, growth is expected to gradually rise with continued implementation of structural reforms that raise productivity and incentivise private investment. The OECD has pegged GDP growth in India at 7.0% in 2018, before picking up to 7.4% in 2019, thanks to reforms that are expected to boost investment, productivity and growth, according to the OECD Economic Outlook, November 2017.

In the Union Budget 2018, the government demonstrated its commitment to increase healthcare spending. In another path-breaking move, the government unveiled the National Health Protection Scheme under which an annual health insurance cover ofRs, 5 lakh will be provided to nearly 100 million under-privileged households in the country. In addition, the National Health Policy (approved in 2017) proposes to increase government spending on healthcare from the current 1.1% of GDP to 2.5% over the next 5-7 years, predominantly through levying the health cess. As proposed, Government would provide free primary care supplemented by public/private hospital care for roughly 70% of the population. The proposed policy references the importance of “a dynamic regulatory regime” to ensure the safety, efficacy, and quality of drugs and medical devices that are manufactured, imported, or sold in the country to safeguard the public from sub-standard or unsafe drugs and to ensure the Indian pharmaceutical industry’s global and domestic reputation and leadership.”

Overview of the Indian Pharmaceutical Market

In this economic scenario, the Indian Pharmaceuticals Market (IPM) has seen value growth in line with the market for the last one year. The IPM is forecasted to grow at a compounded annual growth rate (CAGR) 9.2% (±3.0%) over the period 2016-2021, reaching a total value of'' 1833.6 billion by 2021. (Source: IMS Market Prognosis 2016-2021)

Business Performance

Your Company continues to enjoy a leadership position in many of the therapy areas in which it provides healthcare solutions to patients. Six of your Company’s brands feature in the top-50 IPM brand list (IMS MAT March’18), namely Augmentin, Calpol, Synflorix, Zinetac, Betnovate

- N, and Betnovate - C. Your Company will continue to witness tangible outcomes from initiatives to re-engineer its business model to maintain competitive margins and to best deliver value to patients and stakeholders.

(a) Finance and Accounts

Your Company strives to drive profitable volume growth in a competitive and partly price-controlled generic market with an underlying focus on delivering quality products to patients. To support the long-term strategy, your Company is making progress in the construction of its new manufacturing plant at Vemgal, Bengaluru. Furthermore, the company is enhancing its technological capabilities to optimize its medical and field force engagement with healthcare professionals.

Revenue from operations of Rs, 2896 crores decreased by 3% in value terms for the year ended 31st March 2018 as compared with the previous year. The Revenue is deflated; arising from impact of divestments and discontinuations to the portfolio and the impact of GST rates effective 1st July 2017. Our underlying financial performance for the year, excluding the impact of GST and prior year product disposals is a high single-digit growth with strong volume growth.

Our revised strategy of focused brands and portfolio led to an improved product mix and a sustainable improvement in EBITDA margins to 18% (compared to 14% in the previous financial year).

Profit Before Exceptional Items and Tax amounted to Rs, 524 crores and margins were at 18% of Revenue from operations for the year as compared to 16% in prior year. Exceptional income for the year of Rs, 17.80 crores is mainly driven by proceeds from sale of property. Profit before Tax and exceptional items grew by 13% versus the previous year, reflecting strong core performance delivery.

Cash generation from Operations continued to remain favourable this year and is in line with business performance. Your Company spentRs, 403 crores as capital expenditure, mainly for the new manufacturingfacility atVemgal, Bengaluru. During the year, the Company has received Rs, 552 crores in advance towards disposal of Thane Land. The transfer of the said land will happen upon obtaining all relevant statutory and other permissions. The amount received has been accounted as advance against sale of land. Your Company continues to look for ways and means of deploying accumulated cash balances as at 31st March 2018 which remain invested largely in bank deposits.

During the year, your Company further strengthened its finance operating model through successful implementation of its new Enterprise Resource Planning (ERP) systems which has created value to both internal and external stakeholders by bringing in process efficiencies, reduction in human efforts, stronger financial governance across the organization and better reporting.

Furthermore, your Company has successfully adopted the requirements under the new Goods and Services Tax (GST) Laws and integrated it with the ERP system. Your Company also focused its attention towards resolution of old tax litigations and has been successful in securing a favourable outcome in some of those cases.

There are no loan, guarantees given, securities provided and investments covered under Section 186 of the Companies Act, 2013. Your Company has not accepted any fixed deposits during the year. There was no outstanding towards unclaimed deposits payable to depositors as on 31st March 2018.

There are no significant or material orders passed by the Regulators, Courts or Tribunals which impact the going concern status of the Company and its future operations, nor are there any material changes and commitments affecting the financial position of the Company as on the date of this report.

(b) Pharmaceuticals Business Performance and Outlook

Your Company continued to focus on increasing access to its medicines to serve Indian patients better. Around 68% of Indian population resides in rural India. The expanding rural economy is expected to increase the pool of patients at a much faster rate than metros and major towns. Healthcare professionals (HCPs) that serve rural patients find it difficult to update their knowledge due to inadequate educational infrastructure. Your Company expanded its presence in these markets through the REACH division with the aim of improving patient access by informing HCPs on your Company’s portfolio for

appropriate therapy areas. Your Company earlier pioneered unique scientific programmes like Van SPMs (Scientific Promotional Meetings) wherein, your Company’s doctors travel as speakers to interior towns and conduct scientific promotional meetings in a modified bus. During the year, your Company expanded this unique initiative to seven states and conducted ninety SPMs. A robust pharmacists’ engagement campaign was conducted by bringing select pan-India and regional chemists together on a common platform to increase awareness on their role and responsibility in guiding patients on treatment adherence, right ways of dispensing medicines and inventory management to ensure the high quality of our medicines till it reaches patients. During the year, your Company also enhanced engagement of rural HCPs through increased digital touch points, disseminating scientific knowledge through SMS, emails, webinars and even online Continuing Medical Education (CME) certifications for rural HCPs. Through these multi-channel initiatives, your Company could reach 10x more HCPs than the previous year, primarily through webinars. An SMS hypothyroidism awareness campaign created 30,000 rural patient touch points. Your Company also contributed to the continuing medical education of rural HCPs by aiding 3800 of them to participate in an online course, approved by the Royal College of Physicians.

Your Company’s flagship brand in the Mass Specialty segment, Augmentin, had faced mandatory price reductions in 2016. The team used this opportunity to increase access of the drug to more patients. The results continue to show that Augmentin achieved its all-time high sales in 2017, reaching even more patients. It is the No. 1 antibiotic brand in the country by value. It registered 11% value growth and 26% unit growth (IMS MAT Mar’18). Augmentin solids is No.1 by value in the Amoxyclav solids market. With your Company’s patient-focused initiatives, 6 strips of Augmentin 625 mg were sold per second in 2017. One of the key efforts during the year are the ‘India Inspiration’ webcast series conducted during the World Antibiotic Awareness week (observed by the World Health Organization, WHO) to curb the rising challenge of anti-microbial resistance due to inappropriate prescribing of antibiotics.

In the Primary Care (PC) segment, during the year, your Company focused on effective execution to drive value and these efforts led to improved performance across indicators like prescription growth, prescriptions per doctor, the number of increased digital touch points for HCP engagement, and innovation in such engagement. During the year, the PC portfolio grew by 8%, driven mainly by brands like Eltroxin, Ceftum, Supacef, Zyloric, and Betnovate with an Evolution Index (El) more than 100 for these brands.

Your Company maintained its leadership in the Dermatology segment during the year. Even internally, within the GSK global dermatology franchise, your Company continued to maintain its lead with the maximum HCP engagement for the year under consideration. Your Company gained a share in the Indian topical antibiotic market with resumption of supply of T - bact, which now is the No.1 prescribed brand in the market. It was a year of furthering scientific leadership in the dermatology segment with the initiation of the BRIDGE (Bringing Insights from Dermatology Group of Experts) forum. BRIDGE is now active in 14 key cities and scientifically engages 450 dermatologists. The purpose of this forum is to encourage a dialogue on improving disease outcomes by using a multi-disciplinary approach while managing “difficult to treat or challenging cases”. The forum has received appreciation amongst the dermatologists. The team continues its Endeavour to increase awareness amongst patients on the dangers of self-medication and the appropriate use of topical corticosteroids through posters, educational material, both in clinic and at pharmacies and through SMS & email campaigns.

Your Company has been instrumental in the dissemination of scientific knowledge in engaging HCPs and in addition, with pharmacists as well. With pharmacists, your Company has been emphasizing the role of the pharmacist, when dispensing topical corticosteroids. During the year, your Company touched 40,000 retailers I pharmacists with a one-minute video on the appropriate use of topical corticosteroids. STEP, a Topical Steroid Education Programme, is one such initiative to enhance the Primary Care physician’s understanding of appropriate use of topical steroids in their patients with steroid-responsive skin conditions. This programme has been specifically designed for general practitioners (GPs). As a part of STEP, your Company rolled out a series of educational programmes for 10,000 GPs through internal dermatologists, including a monthly webcast series on topical corticosteroids. Your Company has collaborated with the Royal College of Physicians for a one-year certification programme on the appropriate use of topical steroids. To aid rapid and early diagnosis of Thyroid disorders, your Company undertook several digital SPMs on maternal hypothyroidism and American Thyroid Association’s ATA2017 Guidelines, engaging more than 25,000 HCPs during the year.

In the Mass Markets segment, your Company’s brands have been performing well. Zinetac has been a pioneer in acid peptic disorders (APD) management for more than 30 years and the No.1 in the Ranitidine market (TSA MAT Mar 2018). Zinetac also led the prescription growth for the Ranitidine

Market at 21%, accounting for 44% (IMS MAT Feb 2018) of the incremental prescriptions added to the Ranitidine market. This robust prescription growth stands testament to the strong and deep-rooted foundation of the brand in the medical fraternity. During the year, Zinetac’s unit share gain was 1% (TSA MAT Mar 2018) in the proton pump inhibitors (PPI) market which comprises of2009 brands.

During the year, Neosporin was re-launched in the market and within six months of the launch, Neosporin ranks No. 3 in the topical antibiotic market with a value share of 8.9%. Calpol continues its legacy of leadership in Fever, generating two prescriptions per second and being the No. 1 prescribed brand in the IPM. Your Company launched a series of scientific webinar programmes on Fever (‘Fever Pitch’) with elite panelists as a platform for dissemination of scientific knowledge. Your Company was also the first in launching the LGG probiotic strain, Entero Plus, in the form of a capsule and sachet in India. The response to this innovative brand in the market has been encouraging.

In the Respiratory segment, your Company initiated ‘RespiTalk’, a campaign aimed at disseminating recent advances and practical guidance for better management of patients suffering from Chronic Obstructive Pulmonary Disorder (COPD) and asthma through webcasts. During the year, your Company conducted three webcasts, as part of the RespiTalk series, which was attended by more than 1800 HCPs. Keeping patients in mind and to improve the gap in perception of asthma control, your Company also initiated www.asthmacontroltest.com. a simple intuitive test available to patients, online and offline, to assess their asthma control and approach the HCPs for better treatment options. Seretide continues to outgrow competition and has an El of 100 (IMS MAT - Mar 2018) with a value market share of 13%. On the prescription front Seretide increased its share in the Salmeterol Fluticasone market from 9% to 12% from the corresponding period last year (IMS MAT Feb 2018) with a growth of 66% in prescriptions and 37% in prescriber base.

Your Company’s Hospital Business Team (HBT) continues to deliver high double-digit growth with a compounded annual growth rate (CAGR) of 23% over 2015-2017 and your Company emerged as the fastest growing company among the Top 10 companies in the HSA Audit (IMS Dataset for hospitals, Mar 2018), on a MAT basis, with an El of 109. During the year, HBT fortified its presence in Infection control and management space with the launch of an in-licensed product, Biopatch. BioPatch is a specialized skin sterilization product, for critical care patients on central line catheters. With its continued focus, HBT continued to lead scientific dissemination of knowledge, especially in the area of appropriate use of antibiotics through SPMs, webcasts/webinars and symposiums and engaged around 5000 HCPs during the last 12 months. Building partnerships with healthcare organizations and service providers remain a pivotal focus for your HBT Team. To achieve greater sustainability and contribute towards improvement in public and environmental health, the team embarked on the Green and Clean Hospitals’ Accreditation Programme, launched in 5 major hospitals in India.

Preventive healthcare - Vaccines

In the area of preventive healthcare, your Company continues to be the No. 1 vaccines company in the self-pay segment with a 28% value market share. Your Company began marketing vaccines in India more than 25 years ago and currently markets 12 vaccines for varied age groups - infants, adolescents and adults. The vaccines self-pay market is currently estimated to be 1992 crore (IMS MAT Mar 2018) and is growing at around 15%. Seven of your company’s vaccines feature in the Top-20 list of vaccines in the self-pay market (IMS MAT Mar 2018).

Innovation is our top global priority and in alignment with this, your Company launched the World No.1 hexavalent DTaP vaccine, Infanrix Hexa in April 2018. The DTP (diphtheria, tetanus, pertussis) vaccines market is currently valued at around Rs, 275 crores and is growing at 135% (IMS MAT Feb 2018). It has been five years since the launch of Synflorix, your Company’s pneumococcal vaccine. Since then, your Company has distributed more than seven million (75 lakh) doses, vaccinating around 2.5 million (25 lakh) Indian kids, to help protect them against pneumococcal disease. Pneumococcal disease is the No. 1 cause of vaccine-preventable deaths, according to 2008 estimates of the WHO (World Health Organization.) During the year, to increase public awareness on the dangers of this disease among parents, your company conducted a mass TV and digital campaign.

Since its launch in 2016, Priorix Tetra, your Company’s MMRV (Measles, Mumps, Rubella & Varicella) vaccine, has helped regain leadership in the Varicella vaccines market. This was driven through increased focus on scientific engagement with healthcare professionals (HCPs) during the year. During the year, your Company was granted regulatory approval for maternal immunization against pertussis with Boostrix. With this new indication, your Company now has a better presence in the vaccines segment for women. Your Company is also partnering with FOGSI (Federation of Obstetric and Gynaecological Societies of India), a professional organization representing practitioners of obstetrics and gynecology in India, to drive awareness among women, for vaccination against maternal & neonatal peruses and human papillomavirus (HPV).

(c) Opportunities, Risks, Concerns & Threats

The Indian pharmaceutical sector can be divided into two major segments, namely, Active Pharmaceutical Ingredients (API) or bulk drugs and formulations. The API can be branded or generic and these ingredients will form a part of formulations, which will be used to treat acute or chronic diseases.

The first draft of the pharmaceutical policy was released in mid-2017 and reflects the government’s commitment to address issues surrounding drug quality and availability in the Indian pharmaceutical market. The policy states: “The quality assurance of indigenously manufactured drugs is another area of concern. While the drugs that get exported have a stringent quality assurance system, put in place and insisted upon by the importing countries’ internal requirements; concerns have been raised on the quality surveillance of the indigenously manufactured drugs for domestic consumption.” Availability and pricing of APIs also finds mention in the policy and it includes provisions to encourage indigenous API manufacturing through increase of import duties. Also, in India, the monitoring of pharmaceutical quality is the responsibility of the Ministry of Health and Family Welfare, Government of India (MoH) and is governed by the provisions of the Drugs and Cosmetics Act, 1940. Pharmaceutical companies that manufacture for the domestic market are required to strictly comply with the requirements of Good Manufacturing Practices (GMP) as codified in Schedule M of the Drugs and Cosmetic Rules, 1945.

In addition, the National Health Policy 2017 proposes to increase government spending on healthcare from the current 1.1% of GDP to 2.5% over the next 5-7 years predominantly through levying health cess. As proposed, the government would provide free primary care supplemented by public I private hospital care for roughly 70% of the population. The proposed policy references the importance of “a dynamic regulatory regime” to ensure the safety, efficacy, and quality of drugs and medical devices that are manufactured, imported, or sold in the country to safeguard the public from sub-standard or unsafe drugs and to ensure the Indian pharmaceutical industry’s global and domestic reputation and leadership.

(d) Regulatory Affairs

During the year under review, to support the commercial availability of new drugs and vaccines that would benefit and improve the quality of life of Indian patients suffering from various diseases, your Company submitted necessary applications for new products in India to the CDSCO (Central Drugs Standard Control Organization), Ministry of Health and Family Welfare, Government of India.

Some of the applications made were to register a humanised monoclonal antibody, Mepolizumab (Nucala) for the treatment of severe refractory eosinophilic asthma. In addition, applications were made to register a new formulation of the already registered pneumococcal polysaccharide conjugate vaccine (Synflorix) as a 4-dose vial presentation with preservative, an expansion of indication for the Human Papillomavirus Vaccine (Cervarix) for prevention of anal premalignant lesions and cancers causally related to certain oncogenic Human Papillomavirus (HPV) and also for obtaining approval for Fixed dose combination of Calcium and Vitamin D3 Tablets (Ostocalcium Plus).

After a thorough review of its applications, your Company has received approval of the following products and new indications-a hexavalent vaccine for diphtheria, tetanus, pertussis, hepatitis B, haemophilus influenza type B and inactivated polio vaccine (Infanrix hexa), a fixed dose combination of Fluticasone Furoate and Vilanterol Trifenate (Relvar) for COPD, Fixed dose combination of Calcium and Vitamin D3 tablets (Ostocalcium Plus), the 4-dose vial presentation with preservative of pneumococcal polysaccharide conjugate vaccine (Synflorix) and expansion of indication for the Human Papillomavirus Vaccine (Cervarix) for prevention of anal premalignant lesions and cancers causally related to certain oncogenic Human Papillomavirus (HPV) and use of Diphtheria, Tetanus and Pertussis (Acellular Component) Vaccine (Adsorbed, reduced antigens content) [Boostrix] for maternal immunisation. These approvals will enable timely access to new and innovative therapeutic options to patients in our country.

Medical Affairs & Medical Governance

Your Company’s Medical Team, including disease area experts and the field-based Medical team, have had a robust external engagement during the year by delivering more than 600 scientific presentations through the GSK standalone SPMs, reaching close to 20,000 HCPs. To address the infrastructural challenges to conduct SPMs in rural areas, your company has also conducted ten rural Van SPMs, as mentioned earlier in the Report, with the internal medical team in a modified bus and provided scientific education to close to 1000 HCPs. The rural Van SPMs initiative has also won an internal Gold Global Medical Excellence Award. 96% of the 3000 HCPs attending the Medical Team-led meetings have shared feedback that the interaction with your Company’s Medical Team has helped them to take a more informed decision that benefits patient care.

Global and regional medical experts were selected to speak at the ‘India Inspiration’ webcast on anti-microbial resistance and Respi Talk webcasts, garnering excellent feedback from participating HCPs. BRIDGE meetings provided a good platform for the Medical Team to engage with multi-disciplinary scientific experts to discuss the various aspects in the field of dermatology. The team led the Topical Steroid Education program (STEP) webcasts to enhance the understanding of topical steroids and their use amongst GPs. The team also provided valuable contribution towards the launch of our two new products, Enteroplus (LGG) and Biopatch, and displayed strategic alignment to deliver products of value. Insights related to COPD, pediatric asthma, probiotic usage and catheter-related blood stream infection (CRBSI) were obtained by the internal Medical Team through conducting Advisory Board meetings with chest physicians, pediatricians, gastroenterologists and infectious disease specialists.

(e) Internal Control Framework

Your Company conducts its business with integrity and high standards of ethical behavior and in compliance with the laws and regulations that govern its business. Your Company follows a risk-based approach for evaluating its operations. Your Company has a well-established framework of internal controls in operation, supported by standard operating procedures, policies and guidelines, including suitable monitoring procedures and self-assessment exercises. Your Company leverages best practices in the field of risk management and controls by drawing on global standards designed by GSK Pic group. In addition to the external statutory audit, the financial and operating controls of your company at various locations are reviewed periodically by the internal auditors, to report significant findings to the Audit Committee of the Board. The annual internal audit plan is reviewed and approved by the Audit Committee and Head of Internal Audit has a direct reporting line to the Audit Committee. The Audit Committee reviews the adequacy and effectiveness of the implementation of audit recommendations, including those relating to strengthening your company’s risk management policies and systems. Compliance with laws and regulations is also monitored through a matrix of a well-laid down framework which requires individual functions to confirm and report statutory compliances on all laws and regulations, concerning their respective functions, and which gets integrated with the overall compliance reporting on all laws and regulations for the purposes of review and monitoring by the Audit Committee.

As required by the Companies Act 2013, your Company has implemented an Internal Financial Control (IFC) Framework. Section 134(5)(e) requires the Directors to make an assertion in the Directors Responsibility Statement that your company has laid down internal financial controls, which are in existence, adequately designed and operate effectively. Under Section 177(4)(vii), the Audit Committee evaluates the internal financial controls and makes a representation to the Board. The purpose of the IFC is to ensure that policies and procedures adopted by your Company for ensuring the orderly and efficient conduct of its business are implemented, including policies for the safeguarding its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information. The IFC implementation required all processes of your Company to be documented alongside the controls within the process. All processes were satisfactorily tested for both design and effectiveness during the year.

Furthermore, your Company continues its annual Independent Business Monitoring (IBM). The IBM Framework is designed by the GSK Group requiring a regular review of activities, data, exceptions and deviations in order to continuously monitor and improve the quality of operations. It is a risk-based enterprise approach ensuring consistency, quality, transparency and clear accountability of Risk Management and Internal Controls across all business units. In addition, your Company has an active tracking of all agreed remedial actions and ensures that corrective actions are addressing underlying root causes. Your Company expects all employees to act transparently, respectfully and with integrity and to put the interests of patients and consumers first always. Your company aims to put these core values at the heart of everything it does and every decision it makes. The GSK Code of Conduct and accompanying training seek to ensure everyone has a solid understanding on how to implement and uphold the values in practice.

During the year, your company rolled out a new third party due diligence programme, ‘Third Party Oversight’ (TPO) which is used for risk assessment of all new vendors and third parties. As part of the due diligence activities, vendors are required to confirm adherence to our corporate values and third-party Code of Conduct. As an annual exercise, your Company’s senior executives review and confirm adherence to GSK’s Internal Control Framework. Mandatory training on the Code of Conduct helps your Company’s employees gain the confidence to make the right decisions and become familiar with the policies and procedures applicable to their areas of operation, avoid any conflicts of interest and report all unethical and illegal conduct. During the year, Part 1 of the enterprise-wide ‘Living our Values’ training was issued to your employees and complementary workers. The training included scenarios which explored our values and their application to the company’s ways of working, including the awareness of our enterprise risks and Speak Up mechanism. Part 2 of the training focused on several critical risks, including Privacy and Anti-bribery & Corruption (ABAC). Employees are also required to certify on an annual basis whether there have been any transactions which are fraudulent, illegal or violate our Code of Conduct. Strong oversight and self-monitoring policies and procedures demonstrate your Company’s commitment to the highest standards of integrity.

Your Company’s policies and updated Global Code of Practice for Promotion and Customer Interactions prescribe the nature of practices and prohibits specifically those which are unethical. Your Company is a signatory to the OPPI (Organization of Pharmaceuticals Producers in India) Code of Marketing Conduct.

Risk Management

Your Company has a Risk Management and Compliance Board (RMCB) which follows a pre-laid charter. Risk maps stating the significant business risks, potential consequences and mitigation plans are prepared by each function and reviewed by the RMCB on a regular basis. Business Continuity Plans are periodically reviewed to enhance their relevance. The Risk Management Framework covering business, operational and financial risks is reviewed annually by the Audit Committee. At present, in the opinion of the Board of Directors, there are no risks which may threaten the existence of the Company.

Vigil Mechanism

Your Company has a Speak Up programme, which offers people within and outside GSK a range of channels to voice concerns and report misconduct. The Speak Up culture and procedures encourages everyone to raise concerns about potential unethical or illegal conduct and assures confidentiality and protection from retaliation, retribution or any form of harassment to those reporting such concerns. Confidential Speak Up integrity line phone numbers are available to people within and outside of your Company. An independent company manages these reporting lines and calls are logged through their central system to ensure integrity of the programme. Your Company endeavours to treat all questions or concerns about compliance in a confidential manner, even if the person reporting a question or concern identifies themselves. Your

Company also has a well laid down process to prevent, take disciplinary action and deter acts of sexual harassment.

Your company has in place, a whistle blower policy, with a view to provide a mechanism for its employees/ external stakeholders to approach Local/Group management or the Chairman of Audit Committee (accindrx.audicomitteechairmanaskindiarx@ask. com) in case of any grievance or concern. The Whistle Blower policy can be accessed on your Company’s website http://india-pharma.ask.com/ en-in/investors/shareholder-information/policies/.

(f) Human Resources

Your Company, in the year under consideration, aligned its Human Resources practices to reflect the new business strategy which focuses on Innovation, Performance and Trust (IPT), while renewing its commitment to partner with the businesses. This year, the team focused on gathering real time feedback from customers and identifying new strategic priorities, leading to a changed approach to leadership and talent development, capability building, talent acquisition, employee engagement and wellness & wellbeing.

Organisational Development and Culture

Your Company ensured that the IPT strategy was clearly embedded in the organization through extensive communication with the clear message to put ‘Energy where it Matters’. The communication clearly articulated the DNA of your Company showing our purpose, goal and strategy, values and expectations connected to our IPT priorities. Our values (patient focus, transparency, respect and integrity) have now been strengthened by defining our new expectations (courage, accountability, development and teamwork). Our values and expectations work hand in hand to guide our everyday actions and decision-making.

This was followed by administering the GSK Culture Survey where over 90% of employees responded, sharing their thoughts about IPT priorities, new expectations, values and ways of working in GSK. The GSK India survey results revealed that India’s Engagement Index moved to 94% in 2017 from 80% in 2015 with 97% feeling proud to work in GSK and 95% believing the way we work at GSK places patients, consumers and customers at the heart of our business.

During the year, your company also launched a new performance system, which included the introduction of ‘My Plan’ to track our 2018 IPT objectives and connect how all employees will contribute to the company’s success. Your Company also decided to move away from a rating system, but instead focus on performance through a system of monthly ‘check-in conversations’ between managers and employees. IPT, new expectations, objectives and values will form the basis of these conversations. This lays emphasis and responsibility on the line manager.

Capability Building

During the year, your Company leveraged the global programmes for building capable Asian leaders through the Asia Leadership Programme for Emerging Leaders, the CEO Future Strategy Group and the Espirit programme. Towards building capability in our women managers-identified high-potential women managers were also put through the Accelerating Difference Programme. Other programmes included the First Line Leaders programme, Practical Coaching at the Workplace, Personal Resilience, Energy for Performance, Implementing Strategy, Cross Cultural Skills, Business Acumen and Project Experience. A “Hi Pot Programme” was also implemented and completed for the front-line sales force. This talent development programme followed the 70:20:10 principle focusing on ‘on-the-job’ training, projects and classroom knowledge sessions.

Your Company has invested significantly in building the sales capability of its large and distributed field-based workforce. Your Company saw significant improvement across the capabilities of Scientific Knowledge, Business Planning and Selling Skills. This was achieved through consistent improvements in sales enablement, sales coaching and targeted training. Technology played a key role and a mobile learning solution used for sales training has now been adopted as a global best practice across various international markets within GSK. Your company won two Gold awards. The ‘Best in technology for learning’ category by TISS and CLO forum and the Gold award for leveraging technology for learning by CIPD and UK’s Training Journal, London for its innovation in building sales capabilities.

Leadership and Talent Development

During the year, your Company’s sustained focus on leadership and talent management reaped rich dividends with employees being selected for key roles in the global organisation, towards enhancing their development to take on future leadership roles on their return. Your Company has made significant investments in developing First Line Leaders (FLL) at its Nashik site. 18 FLLs were sponsored for a Post Graduate Diploma in Operations Management to a leading institution in Operations Management. Your Company has also hired over 100 skilled managerial and supervisory staff for its new site at Vemgal, Bangalore.

Energy for Performance is a flagship programme offered by GSK which helps in developing healthy, high-performing teams and individuals and is aligned to your Company’s mission to help people do more, feel better, live longer. Six employees participated in the E4P Train the Trainer workshop and they then collaborated and planned the roll-out of the programme across India. Your company also launched the ‘Learning at Work Week’ for the first time in India. It is a week-long campaign to place a spotlight on the importance and benefits of Learning and Development (L&D) at work.

Employee Engagement and Wellness & Wellbeing

The year was another good year for employee engagement initiatives and corporate volunteering. Your company also participated in ‘Stepathalon’ and ranked No. 1 in the pharmaceutical sector & No. 4 among 80 other industries. Ten employees participated in the PULSE programme, contributing their skills to solve healthcare challenges in India and abroad, through our NGO non-profit partners. Wellness and wellbeing of employees and their families continued to be a top priority. The Partnership for Prevention (P4P) (a preventive healthcare programme) for all employees and their families has seen a good utilization. A number of new initiatives have been launched to ensure that employees are made aware on the need to use defensive driving techniques to ensure their safety through the GSK Driver Safety Programme ‘Every Journey Counts’. The programme has now been implemented across India and is well accepted and appreciated by employees.

Diversity and Inclusion

Your Company’s Women’s Leadership Board (WLB) has made strides to help reap the gender divide. The aim of this Board is to develop women talent across all levels and build a pipeline of senior women leaders. Your Company has moved from 15% to 20% at the women leadership level and 30% of workforce at your upcoming manufacturing facility at Vemgal, Karnataka are women. While there is a continued focus in hiring women across all levels, your Company is also focusing on policy changes supporting women to build an enabling environment, besides also providing a coaching and mentoring programme by senior leaders to enhance their development.

Employee Relations

There are four recognized unions based on the Selling Area (zonal), that is, North, East, West and South to address the grievances of employees in the sales force. The Union in the West selling area also represents the workers at Nashik site. The

Unions are an integral part of the business and are committed to the progress of the company. The management and the unions, in the areas where we have a sales force, have signed long-term settlement contracts valid for a period of four years. The salient features of the agreement include adoption of technology, acceptance of our new ways of working and supporting management in all initiatives to strengthen the company’s position in the market. Similarly, we have also signed long-term settlement for Nashik - based employees for four years, increase in efficiency, optimum utilization of manpower and cost reduction are some of the highlights. Your Company thanks its Unions for its contributions and maintenance of cordial relations.

Your Company’s sales force is also compensated through a variable pay component that is linked to process parameters, such as disease product knowledge, on-the-job coaching, business planning, digital calls etc. Your Company continues to no longer incentivize its sales force on individual sales targets. However, the incentive scheme provides a 60% weight age to individual key performance indicators referred to above and 40% weight age to the achievement of the country sales plan. Incentive payouts are made based on the calendar year and paid periodically during the year. Your Company continues to put a huge emphasis on values and compliance with many programmes to ensure that employees ensure that its values are at the heart of everything it does.

Prevention of Sexual Harassment at Work Place

Your Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at the workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (India) and the Rules made there under. Your Company has established an Internal Committee, across its commercial offices and manufacturing sites. Your Company has implemented an e-learning module which includes all aspects of the Sexual Harassment Act, to create awareness on the Act amongst all employees. During the year, the Company received one complaint which was investigated and closed after taking appropriate action.

During the year, your company was featured as one of the top 50 companies in India for a high degree of employee satisfaction for its talent development efforts by People Capital Index (A Jombay Initiative along with BSI their standards & audit partner). The year started with your company being certified as a ‘Great Place to Work’ by GTPW Institute, India. As on 31st March 2018, your company had 4620 employees on its rolls.

(g) Supply Chain

Manufacturing Excellence

Manufacturing operations in India are being progressively upscaled and strengthened. The Nashik manufacturing site has continued to deliver on its overall strategic intent and has invested heavily in Safety and Quality in the past year, while further securing supplies and capability to serve the patient. The new Eltroxin facility with highest safety standards will be fully operational in 2018. Continuous improvement on the shop floor, led by the first line leaders group has yielded 12.7 crores in operation expense saving in 2017. Also, DCGI (Drug Controller of Government of India) certification is completed for all shop floor employees, which means that all shop floor employees are re-assessed and certified to work in the Pharmaceutical industry. The Nashik site has embarked a journey on the GSK Production System (GPS) which is based upon lean working principles. This year, the site has also launched the Regional GPS Awards program to encourage employees to embrace GPS ways of working.

Employee Health & Safety and Environment

At the Nashik site, an environmental, health, safety and sustainability strategy has been implemented across the entire value chain - from raw materials to product disposal. As your Company grows business to bring innovative medicines to people across the world, environment sustainability continues to be a priority and we remain committed to reducing any adverse impact to our environment. The policy on EHSS conforms to local laws as well as GSK’s global standards. Various initiatives for Environment, Health, Safety & Sustainability were undertaken at our Nashik site. Key highlights were: A green gym & play garden welfare facility with water fountain was built and inaugurated at an NGO called ADHAR. 50 employees spent time at local schools in Nashik as part of a sanitation and hygiene programme. The Engagement Index in Nashik rose from 58% in 2014 to 93% in 2017. This was due to a robust action plan to improve on opportunities for employees. Energy conservation was a key success in 2017 with the commissioning of Biomass Boiler reducing carbon footprint by 270 tons in the year. Nashik site has also implemented biometric registration to control entry at the Nashik site, linked to Aadhar-enhanced security and verification of all people entering the site. This will ensure further security measures at site.

At the green field manufacturing site at Vemgal, Karnataka, environmental considerations have been at the forefront of the factory design and future operation. Your Company is aiming to achieve LEED (Leadership in Energy and Environmental Design) Gold standard which is an internationally

recognized US set of rating systems for the design, construction, operation, and maintenance of green buildings, that aims to help building owners and operators be environmentally responsible and use resources efficiently. In addition, your company is investing in renewable energy in the form of a 0.5 MW Photovoltaic array, which will generate a significant part of the site’s energy requirement. All waste water will be recycled with zero waste.

New Manufacturing Site

Your company has invested in a new green field manufacturing site at Vemgal, Karnataka. This location has been identified for many reasons, including amongst others; Bengaluru is a recognized pharmaceutical/biotechnology hub, availability of skilled staff, located close to the Southern Distribution hub, moderate climate, easy accessibility, availability of state-based investment incentives, availability of government-owned land. This new site is part of the strategic plan to rationalize, streamline and reduce costs in the supply network, whilst increasing capacity to meet the growing demands for important medicines. Quality, safety and compliance are the key drivers for the Project Team, along with rigorous cost management and control.

The new site, which represents up to a thousand crores in investment, will be the first green field pharmaceutical site that GSK has built across the globe over the past ten years. This site will be ‘state-of-the-art’ and will be the first factory designed for the new ‘GSK Production Systems’, whereby it will deliver, by first design intent, the concepts of zero accidents, defects and waste. A major focus has been to ensure that we employ a diverse workforce, as such, the design ensures easy access and support for those with disabilities, externally recognized as ‘best in class’. Gender diversity and local employment is also a key part of the operational strategy. With the local community, your Company has also invested in two significant CSR activities, including a youth training centre, feminine hygiene product manufacturing and residential ablution facilities. The site has been designed with the future in mind; an innovative design will support easy expansion well into the future as the need arises. Initially, the site will supply a range of solid dose form products. Start-up of production is planned later in 2018 with validation batches then followed by commercial supplies in 2019. Focusing on “Make in India”, the factory will produce 8 billion tablets and 1 billion capsules per year for the Indian market.

End-to-End Supply Chain & Logistics

For the sustainable supply chain network, your Company has initiated warehouse network optimization framework which will ensure cost-effective and enhanced services. Opportunities are explored to move material from site to destination through a single movement, reducing the number of transits, thereby reducing costs and also fuel usage. Your Company is taking steps to reduce overall energy consumption for storage and handling equipment’s. To move the supply chain closer to the customer, your Company has launched a customer relations programme, which will track the progress of our relationship with customers, thereby ensuring enhanced business. This will streamline understanding of the business potential, trends in purchases and enable alignment of supplies to meet market demand. End-to-end supply chain has upgraded its ERP system to SAP in 2017 through the CERPS programme, which will ensure better visibility of the product in the network and increase efficiency. By implementing tracking through GPS, inter locking systems, the supply chain has ensured movement of products only through authorized supply channels.

(h) Corporate Social Responsibility

Your Company has a rich legacy of partnering with the communities in which we live and operate. Strong partnerships with community groups are critical, as local organizations have the greatest insights into the needs of their people and the strategies that stand the greatest chance of success. Your Company’s focus is on making life-changing, long-term differences in human health by addressing the healthcare burdens of accessibility, affordability and awareness. Your Company works to fulfill this and other social change efforts, through our Corporate Social Responsibility programmes. During the last year, the CSR programme touched the lives of over 40 million people across India, based on our lead CSR project on ‘Partnering India for Elimination of Lymphatic Filariasis’. Pursuant to the provisions of Section 135 and rules made there under of the Companies Act, 2013, the Company has constituted a CSR committee to monitor CSR activities of the Company. The CSR policy of the Company may be accessed on the Company website: http en-in/investors/shareholder-information/policies/. The CSR report on the activities undertaken during the year, given in Annexure ‘A’, forms a part of this Report.

4. DIRECTORS

Mr. A. Aristidou, Whole- time Director and Chief Financial Officer (CFO) resigned as Director from 31st December 2017. The Board places on record its appreciation of the valuable services rendered by Mr. A. Aristidou during his tenure and for his contribution to the deliberations of the Board. The Board of Directors has appointed Ms. P. Thakur as Whole-time Director and Chief Financial Officer (CFO) with effect from 1st January 2018.

In terms of the provisions under Section 149 of the Companies Act, 2013, the Board and Shareholders have approved the appointment of all the existing Independent Directors viz; Mr. R.R. Bajaaj, Ms. A. Bansal, Mr. P.V. Bhide, Mr. N. Kaviratne, Mr. A. N. Roy and Mr. D. Sundaram for a term for five years from 30th March 2015.

The Independent Directors have submitted the Declaration of Independence, as required pursuant to Section 149 (7) of the Companies Act, 2013, stating that they meet the criteria of Independence as provided in sub-section (6).

During the year ended 31st March 2018, seven Board Meetings were held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

Remuneration Policy and Board Evaluation

In compliance with the provisions of the Companies Act, 2013 and Regulation 27 of the Listing Obligations & Disclosures Regulations (LODR), the Board of Directors on the recommendation of the Nomination & Remuneration Committee, adopted a Policy on remuneration of Directors and Senior Management. The Remuneration Policy is stated in the Corporate Governance Report. Performance evaluation of the Board was carried out during the period under review. The details are given in the Corporate Governance Report.

Familiarization programmes for the Independent Directors

In Compliance with the requirements of SEBI Regulations, the Company has put in place a familiarization programme for the Independent Directors to familiarize them with their role, rights and responsibility as Directors, the working of the Company, nature of the industry in which the Company operates, business model, etc. It is also available on the Company website:http://india-pharma. ask.com/en-in/investors/shareholder-information/ policies/.

5. PARTICULARSOFCONTRACTSANDRELATED PARTY TRANSACTIONS

In line with the requirements of the Companies Act, 2013 and LODR, your Company has formulated a policy on Related Party Transactions. All related party transactions that are entered during the year ended were on arm’s length basis and were in ordinary course of business. There were no materially significant related party transactions made with the Promoters, Directors or Key Managerial Personnel which may have a potential Conflict of Interest of the Company at large. The Policy of related party transactions can be access on Company website:http://india-pharma.ask.com/en-in/investors/ shareholder-information/policies/.

All Related Party Transactions are placed before the Audit Committee for review and approval. Prior omnibus approval is obtained for Related Party Transactions on an annual basis for transactions which are of repetitive nature and / or entered in the ordinary course of business and are at arm’s length. All Related Party Transactions are subjected to independent review by a reputed accounting firm to establish compliance with the requirements of Related Party Transactions under the Companies Act, 2013 and LODR.

6. DIRECTORS’ RESPONSIBILITY STATEMENT

Your Directors confirm:

(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

(ii) that the Directors have 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 on 31st March 2018 and of the profit of the Company for the year ended on that date;

(iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts on a going concern basis;

(v) that proper internal financial controls laid down by the Directors were followed by the Company and such internal financial controls are adequate and were operating effectively; and

(vi) that proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems were adequate and were operating effectively.

7. CORPORATE GOVERNANCE & BUSINESS SUSTAINABILITY REPORT

Your Company is part of the GlaxoSmithKline Pic group and conforms to norms of Corporate Governance adopted by them. As a Listed Company, necessary measures are taken to comply with the Listing Obligations & Disclosures Regulations, 2015 (LODR) with the Stock Exchanges. A report on Corporate Governance, along with a certificate of compliance from the Auditors, given in Annexure ‘B’, forms a part of this Report. Further a Business Responsibility Report, describing the initiatives taken by your Company from an environmental, social and governance perspective, given in Annexure ‘C’, which forms a part ofthis Report.

8. AUDITORS

As per the provisions of Section 139 of the Companies Act 2013, Deloitte Haskins and Sells LLP, Chartered Accountants were appointed as the Statutory Auditors of the Company for the period of five years.

Pursuant to the provisions of Section 204 of the Act, and the Rules made there under, the Company has appointed Parikh & Associates, practicing Company Secretaries, to undertake secretarial Audit of the Company. The Report of the Secretarial Auditor is annexed to the Board Report as Annexure “D” which forms a part of this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Pursuant to Section 148 of the Companies Act, 2013, the Board of Directors on the recommendation of Audit Committee have appointed R. Nanabhoy & Co., Cost Accountants for conducting the audit of the cost accounting records maintained by the Company for its Formulations for 2018-2019. The Committee recommended ratification of remuneration for year 2017-18 to the Shareholders of the Company at the ensuing Annual General Meeting. As required by Section 92(3) of the Act and the Rules framed there under, the extract of the Annual Return in Form MGT 9 is enclosed as Annexure “E” also forms a part of this Report.

9. GENERAL

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated in Section 134(3) M of the Companies Act, 2013 and the rules framed there under is attached herewith as Annexure “F” which forms a part of this Report. The Disclosures pertaining to the remuneration and other details as required under Section 197(12) of the Companies Act, 2013 and the rules made there under is enclosed as Annexure “G” which forms a part of this Report. Pursuant to Section 129(3) of the Companies Act, 2013 a statement in form “AOC-1” containing salient features of the Financial Statements of the Subsidiary Company is attached.

Although the audited statements of accounts, relating to Company’s Subsidiary are no longer required to be attached to the Company’s Annual Report, the same is enclosed as and in way of better disclosure practice.

The information relating to top ten employees in terms of remuneration and employees who were in receipt of remuneration of not less than Rs, 1.02 cores during the year or Rs, 8.5 lakhs per month during any part of the year forms part of this report and will be provided to any Shareholder on a written request to the Company Secretary. In terms of Section 136 of the Act, the said report is open for inspection at registered office of the Company during the business on any working day of the Company up to the date of Annual General Meeting.

10. ACKNOWLEDGMENTS

The Directors express their appreciation for the contribution made by the employees to the significant improvement in the operations of the Company and for the support received from all other stakeholders, including Shareholders, Doctors, Medical Professionals, Customers, Suppliers, Business Partners and the Government.

The Board and the Management of your Company are indeed appreciative of the substantial support being received from GSK Pic, the parent organization, in providing new healthcare solutions which are products of its discovery labs and the technology improvements which benefits your Company immensely.

On behalf of the Board of Directors

D. S. Parekh

Mumbai, 24th May 2018 Chairman


Mar 31, 2017

The Directors have pleasure in submitting their Report for the year ended 31st March 2017 prepared in accordance with Indian Accounting Standards.

1. FINANCIAL RESULTS FOR THE YEAR ENDED 31st MARCH 2017

Rs, in lakhs

Year ended 31st March 2017

Year ended 31st March 2016

Revenue from operations

2994,50.50

2826,21.22

Other Income

71,76.24

121,82.51

Total Income

3066,26.74

2948,03.73

Profit before Exceptional items and Tax

465,34.86

573,62.60

Add: Exceptional Items

45,73.05

2,31.07

Profit before Tax

511,07.91

575,93.67

Less: Income tax expenses

174,30.40

201,40.96

Profit for the year

336,77.51

374,52.71

2. DIVIDEND

Your Directors are pleased to recommend a Dividend of Rs, 30 per Equity share for the year ended 31st March 2017 (previous year Rs, 50 per Equity share). The Dividend is subject to the approval of shareholders at the Annual General Meeting on 25th July 2017 and will be paid on or after 26th July 2017. If approved by the shareholders at the Annual General Meeting, the Dividend will absorb Rs, 306 crores inclusive of the Dividend Distribution Tax of Rs, 52 crores borne by the Company .

The Board of the Directors of the Company have approved the Dividend Distribution Policy on 27th October 2016 and it is available on the Company website at http://india-pharma.gsk.com/en-in/investors/shareholder-information/policies.

3. management discussion & analysis Economic scenario

With buoyant financial markets and a cyclical recovery in manufacturing and trade under way, world growth is projected to rise from 3.1% in 2016 to 3.5% in 2017 and 3.6% in 2018, according to the International Monetary Fund''s World Economic Outlook (WEO) forecast (April 2017). Growth in Emerging Markets and developing economies is forecast to rise to 4.5% and 4.8%, in 2017 and 2018 respectively, from an estimated growth of 4.1% in 2016, according to the IMF.

In India, Gross Domestic Product (GDP) grew by 7.1% in the Fiscal Year 2016-2017, which makes India the fastest-growing G20 economy. The acceleration of structural reforms, the move towards a rule-based policy framework and low commodity prices have provided a strengthening growth impetus. Recent deregulation measures and efforts to improve the ease of doing business have boosted foreign investment. (Source: 2017 Economic Survey of India, OECD). In April 2017, the World Economic Outlook (WEO) report by the International Monetary Fund, estimated that domestic demand and a growth in exports will remain key drivers towards GDP growth. Medium-term growth prospects remain favorable, according to the WEO report, with growth forecast to rise to about 8% due to the implementation of key reforms, loosening of supply-side bottlenecks, and appropriate fiscal and monetary policies. In addition, the country''s most significant tax reform in decades, the Goods & Services Tax (GST), was approved in Parliament with an expectation for implementation during the latter half of 2017.

In the Union Budget 2017, the government has demonstrated its commitment to increase healthcare spending. The National Health Plan has been approved by the Cabinet and aims at a holistic approach to address the healthcare problems of all sectors of society and their solutions with participation from the private sector as strategic partners in this mission.

overview of the Indian Pharmaceuticals Market

In this economic scenario, the Indian Pharmaceuticals Market (IPM) has seen double-digit growth in the last one year. The Indian pharmaceutical market is forecasted to grow at a compound annual growth rate (CAGR) of 11.8% ( /-3%), between 2015 to 2020, reaching '' 1859.5 billion by 2020. (Source: IMS Market Prognosis 2016-2020)

Business Performance

I n this environment, your Company has delivered value, aided predominantly through manufacturing and supply chain excellence to ensure continuity and secure supply of medicines, with initiatives to increase reach so that patients can easily access medicines. Your Company continues to enjoy a leadership position in many of the therapy areas in which it provides healthcare solutions to patients. Six of your Company''s brands feature in the top-50 IPM brand list (IMS MAT March ''17), namely Augmentin, Calpol, Zinetac, Betnovate - N, Betnovate - C, and Synflorix. Your Company has set in motion, initiatives to re-engineer its business model to maintain competitive margins and to best deliver value to patients and stakeholders.

(a) Finance and Accounts

Your Company strives to drive profitable volume growth in a competitive and partly price-controlled generic market with an underlying focus on delivering quality products to patients. To support the long-term strategy, your Company is making progress in the construction of its new manufacturing plant at Vemgal, Bengaluru. Furthermore, the Company is enhancing its technological capabilities to optimize its medical and field force engagement with healthcare professionals.

Revenue from operations of Rs, 2995 crores increased by 6% in value terms for the year ended 31st March 2017 as compared with the previous year. The Revenue growth was adversely impacted by 5% from a series of mandatory price revisions during the year on products under National List of Essential Medicine (NLEM) price control. Consequently, the gross margin, defined as Revenue from operations less cost of goods sold, decreased by 3% as compared to previous year, mainly due to mandatory price revisions.

Employee benefit expenses increased in line with inflation as compared to the previous year and includes the full year effect of being the fourth year since the wage increase for unionized field staff. Other expenses were optimized and grew 3% as compared to prior year representing a ratio of Revenue from operations of 23% as compared to 24% in the prior year. Other Income reduced by 41% as the Company progresses with its capital investment programme as well as a reduction in interest rates.

Profit Before Exceptional Items and Tax of Rs, 465 crores amounted to 16% of Revenue from operations for the year as compared to the prior year of 20% directly attributable to the NLEM price revisions. Exceptional income for the year of Rs, 45.73 crores is mainly driven by the disposal of surplus assets, such as the profit on sale of property of Rs, 41.76 crores and the sale of non-core brands of Rs, 6.41 crores, that is partly offset by restructuring costs of Rs, 1.70 crores. This compares favorably to the prior year net Exceptional Income of Rs, 2.31 crores from the profit on disposal of property of Rs, 15.99 crores that is partly offset by the rationalization costs of Rs, 5.15 crores relating to Portfolio and Manufacturing activities as well as the one-time costs associated with the Novartis Asset Sale transaction of Rs, 7.70 crores.

Cash generation from Operations continued to remain favorable this year and is in line with business performance. Your Company spent Rs, 304 crores as capital expenditure mainly for the new manufacturing facility at Vemgal, Bengaluru. Your Company continues to look for ways and means of deploying accumulated cash balances as at 31st March 2017, which remain invested largely in bank deposits.

During the year, the Company embedded its finance operating model to enhance the efficiency of end-to-end processing of transactions, increase capabilities toward finance partnering with the business as well as ensuring a strong financial governance across the organization. The implementation of the finance operating model has enabled the Company to commence a project to upscale its future Enterprise Resource Planning systems.

Furthermore, your Company has enhanced its Indirect Tax Capabilities, as it prepares for the country''s implementation of the Goods and Services Tax (GST) system, as well as its ongoing strengthening of its Assurance and Control team structure.

There are no loans, guarantees given, securities provided and investments covered under Section 186 of the Companies Act, 2013. Your Company has not accepted any fixed deposits during the year. There was no amount outstanding towards unclaimed deposits payable to depositors as on 31st March 2017.

There are no significant or material orders passed by the Regulators, Courts or Tribunals which impact the going concern status of the Company and its future operations, nor are there any material changes and commitments affecting the financial position of the Company as on the date of this report.

Novartis Transaction

The Company successfully completed the transaction with Novartis on 30th September 2015, upon receipt of all applicable legal and regulatory approvals. Your company acquired the distribution rights of Novartis vaccines portfolio, predominantly the distribution of the anti-rabies vaccine, whilst terminating its distribution rights to a portfolio of oncology products. Your Company''s sales performance for the current year was Rs, 91 crores from the acquired vaccines as compared to Rs, 61 crores in the prior period. Transitional arrangements were implemented upon deal closure to ensure the ongoing market supply on oncology products to patients during the transfer period of the Marketing Authorization to Novartis. The effect of these transitional arrangements enabled your Company to record sales of Rs, 81 crores during the year relating to the terminated Oncology business.

(b) Pharmaceuticals Business Performance and outlook

Your Company has been focused on increasing access to its medicines in order to serve patients better. Around 68% of the Indian population resides in rural India. The expanding rural economy is expected to increase the pool of patients at a much faster rate than metros and major towns. Healthcare professionals (HCPs) that serve rural patients find it difficult to update their knowledge due to inadequate educational infrastructure. Your Company expanded its presence in these markets through the REACH division with the aim of improving patient access by educating HCPs on your Company''s portfolio for appropriate therapy areas. Your Company conducted unique scientific programmes like Van SPMs (Scientific Promotional Meetings) wherein, your Company''s doctors travel as speakers to interior towns and conduct scientific promotional meetings in a modified bus. Your Company also conducted chemist meetings, to educate pharmacists about the right ways of inventory management, dispensing and their role in guiding patients on treatment adherence. Your Company is one of the first few to reach rural doctors through webcasts to educate them on disease therapy areas in which your company is present with a portfolio. Your Company is clearly ahead of the curve in leveraging technology to increase access and train HCPs.

Your Company launched the innovative strain LGG as brand Entero Plus in India for the very first time as a probiotic capsule and sachet. The strain is in-licensed from Chr Hansen, Denmark, and is the world''s most researched probiotic strain. Entero Plus was recognized as the best new introduction in the Indian Pharmaceutical market by Quintiles IMS, amongst 359 new launches in the last quarter of 2016-17. EnteroPlus is received well by HCPs and the trial feedback has been positive.

I n Mass Markets, according to IMS data (December 2016), Calpol, a significant 50-year old brand of your Company''s Mass Markets portfolio saw 27% unit volume growth and still remains the most prescribed brand in the Indian Pharmaceutical Market (IPM). Calpol also won the Silver award for Brand of the Year for Marketing Excellence.

Another classic and established product, Zinetac, completed 30 years of serving patients. It remains the top brand in the highly competitive acid peptic ulcer therapy area with a double-digit growth rate (IMS Dec 2016). The team behind Zinetac initiated an expansion plan in 2016 by entering many new specialties and in keeping with your Company''s new ways of working, the focus was on expansion through multi-channel marketing initiatives.

Though Zentel de-grew by value (-5%) due to inclusion in the NLEM, it grew by 36% in volume and attained market share of 47% in its category for 2016 (IMS Dec 2016). Your Company plans to expand this category and reach out to the maximum number of patients by increasing awareness on worm infestations through digital channels, in addition to our HCP engagement initiative to improve diagnosis of worm infestation.

Your company maintained its leadership in the Dermatology segment in the Indian Pharmaceutical Market during the year. Within the GSK global dermatology franchise, your Company continued to maintain significant salience. Amongst notable initiatives for the year under consideration, the team rolled out a “Treat and Care” campaign to present a complete management approach for Psoriasis

- a psychologically debilitating condition. Keeping patients at the focus of activities, the team sought to help HCPs optimize management of the condition, with a steroid portfolio in conjunction with the emollient range - Oilatum. The team also took on the challenge of increasing awareness amongst patients on the dangers of self-medication and the appropriate use of steroids through posters and educational material both in clinic and at pharmacists. The team has been in the forefront in engaging dermatologists, pediatricians and GPs through multi-channel activities and webinars that have seen up to 7000 HCP registrations.

During the year, your Company took the initiative to launch team “Invictus”, a dedicated team of therapy executives for high-quality scientific engagement with endocrinologists for Eltroxin, your Company''s flagship therapeutic solution for thyroid management. An innovative media awareness campaign on congenital hypothyroidism was undertaken in six cities. Your Company won the ''Social Responsibility Communication'' award for our campaign on Congenital Hypothyroidism by the Association of Business Communicators of India.

I n order to aid rapid and early diagnosis of thyroid disorders and to improve treatment outcomes, your Company undertook several digital Scientific Promotional meetings (SPMs) on “maternal hypothyroidism” and “translating thyroid guidelines to Indian practice.” The team engaged 20,000 HCPs during the year. The team conducted a nation-wide pharmacist campaign on Appropriate Corticosteroid Dispensing, engaging around 17,000 pharmacists in the year.

I n the respiratory segment, your Company undertook a price-volume initiative in 2015 to make Seretide Accuhaler accessible to more asthma and COPD (Chronic Obstructive Pulmonary Disorder) patients in India. As a result, patient share in the ICS-LABA market tripled in the first 18 months, with a volume growth of 45%. The respiratory team re-launched the Seretide Accuhaler in March 2015, since then, there has been an increase in patient user base from 0.2 million in 2000-2010 to 1 million in 2016. This has made Seretide the fastest growing brand in the ICS-LABA market.

Your Company''s flagship brand in the Mass Specialty segment, Augmentin, faced fresh mandatory price reductions in 2016. The management team used this opportunity to increase access of the drug to more patients. This helped Augmentin to achieve unit leadership in the market with Augmentin Solids 625 mg.

Neosporin, your Company''s range of topical antibiotics, has returned to the market after a gap of almost two years. The brand faced a temporary setback related to supply of its API (Active Pharmaceutical Ingredients) and its absence has impacted patients across the country. IMS prescription audit indicated a modest prescription erosion of Neosporin and subsequent share gain by other companies. One million prescriptions were reported for the Neosporin range according to IMS January 2017 data on a MAT basis.

CCM & Fefol Z returned to the market during the year. In a crowded market of more than 300 calcium oral solid brands, CCM registered a growth of 25%. Avamys, Fluticasone furoate nasal spray, grew by 28% for the year under consideration.

Your Company''s success in these Mass Specialties can be attributed to the efforts of the field force in conducting more activities like virtual scientific promotional meetings (SPMs) - ''AOM vs. OME'' (Acute Otitis Media vs. Otitis Media with Effusion), ''Understanding Allergic Rhinitis'', ''Appropriate Antibiotic Prescribing'', ''SSP clinics for Paramedics''.

I n the hospital business segment, the Key Account Management programme was rolled out to all the Area Business Managers and Key Account Executives of the Hospital Business Team. This enabled them to provide value addition to hospitals by identifying attributes that are important to hospitals. The Green Cross pharmacy programme for hospital pharmacists was one such educational programme certified by the Indian Pharmaceutical Association (IPA). This has already seen participation of ten hospitals. In addition, the hospital business team, along with the Association of Healthcare Professionals of India (AHPI) and Bureau Veritas (BV) launched the “Green and Clean Hospital Programme” in 2016. This unique certification programme is the first in the industry and aims at achieving high standards of hygiene and sustainability, for which the hospital will be certified by AHPI and Bureau Veritas.

Preventive healthcare - Vaccines

I n the area of preventive healthcare, your Company continues to be the No. 1 vaccines company in the self-pay segment growing in double digits, well ahead of the vaccines market. Your Company began marketing vaccines in India more than 25 years ago and currently markets 10 vaccines for varied age groups-infants, adolescents and adults. The vaccines self-pay market is currently estimated to be '' 1700 crores (IMS MAT March 2017) and is growing at around 5%.

Your Company''s vaccines has consistently led the vaccines self-pay market with a share of ~34%. Six of your Company''s vaccines feature in the Top-20 list of vaccines in the self-pay market. Your Company launched Priorix Tetra during the year, India''s first combination MMRV (Measles, Mumps, Rubella and Varicella), which has been well received by pediatricians.

To ensure the highest quality, your Company has upgraded its primary vaccines cold chain to world standards. To increase awareness of vaccines amongst the journalist community, your Company conducted a novel journalist engagement workshop titled “Value of Vaccines” across 19 cities, reaching 500 journalists.

Digital footprint

Your Company strives to ensure that we have the right high-quality scientific knowledge catered to HCPs through the appropriate channel. During the year, your Company''s field force was equipped with Tablets, which enabled them to capture HCP insights and preferences on digital channels. With the launch of Veeva CRM (a customer relationship management tool), your Company aims to provide HCPs with high-quality information and education about our medicines in more convenient ways, using their channels of preference.

The Company''s HCP engagement model has consistently focused on ensuring sustained customer aggregation from all possible channels. This has given your Company unique customer differentiation within a fragmented market. From 25,000 touch points in a single activity, your Company has grown to 1,50,000 touch points through the multi-channel engagement model.

Also, the Company has successfully piloted a digital project, “Infectious Smiles”. This is a comprehensive, integrated 360° multi-channel programme with a new tele-call component. This will enable your Company to become more predictive in our value proposition as your Company continues to expand the programme and tailor engagements best suited to HCP and patient needs.

(c) Opportunities, Risks, Concerns & Threats

The National Health Policy (NHP), has been approved by the Union Cabinet in March 2017, aims to deliver quality healthcare services to all sections of society, at an affordable cost, in a comprehensive integrated way. The NHP, 2017 aims to tie up with the private sector for critical gap filling towards achieving national goals. It envisages private sector collaboration for strategic purchasing, capacity building, skill development programmes, awareness generation, developing sustainable networks for the community to strengthen mental health services and disaster management. The policy also advocates financial and non-financial incentives for encouraging private sector participation. Your Company welcomes these measures to serve more patients of our country.

The Union Budget 2017-2018 announced certain changes connected to the healthcare sector and has increased the health outlay to Rs, 48878 crores in Financial Year 2017-2018 (versus Rs, 39879 crores in Financial Year 2016-2017). Increase in funding to the National Health Mission will help strengthen efforts towards measles vaccination along with reduction in Maternal Mortality Rate to 100 by 2018-2020. Higher medical education will receive a much-needed boost by an increase in the number of post-graduate seats by 5,000 and adding more hospitals to offer the Diplomate National Board (DNB) degree and enhance specialty care in fields like endocrinology and oncology. In addition, primary care''s focus will be broadened with the conversion of 1.5 lakh health sub-centres into Health Wellness Centres.

Drug pricing received attention with proposals to reduce the cost of life-saving drugs. The government proposes to amend the Drugs and Cosmetics Act to ensure availability of drugs at reasonable prices. Aadhar-based smart cards for senior citizens, listing out their health conditions, will help in providing an efficient monitoring mechanism for geriatric health conditions. It will be piloted in 15 districts during Financial Year 2017-2018.

The ''Pradhan Mantri Bhartiya Janaushadhi Pariyojana'' is a campaign which has been launched by the Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, Government of India, to provide quality medicines at affordable prices to the masses through special stores known as Pradhan Mantri Bhartiya Jan Aushadhi Kendra.

The Government of India has recently announced that it is considering a legal framework to ensure doctors prescribe low-cost generic medicines to patients. Your Company shares the government''s priority of providing quality drugs at affordable prices and your Company''s business model resonates well with what the Government envisages to achieve. A mechanism should be developed to ensure that price alone does not become the foremost criteria in dispensing drugs and that quality and safety should receive equal consideration.

Your Company applauds the government''s efforts to ensure the quality of generic drugs approved

by the State FDAs (Food & Drug Administration). We understand that these may now require bio-equivalence (BE) studies to be conducted for all drugs (new or otherwise) for category II and category IV of the biopharmaceutical classification system (Gazette notification dated April 3, 2017). However, we urge that such quality assurance measures should be extended to existing licensed generics also, in the interests of patients. In addition, there should be an emphasis on adherence to global manufacturing standards certified by the World Health Organization.

(d) Regulatory Affairs

During the year under review, in order to support the commercial availability of new drugs that would benefit and improve the quality of life of Indian patients suffering from various diseases, your Company submitted necessary applications for new products in India to the CDSCO (Central Drugs Standard Control Organization), Ministry of Health and Family Welfare, Government of India. Some of the applications made were to register a hexavalent vaccine for diphtheria, tetanus, pertussis, hepatitis B, homophiles influenza type B and inactivated polio vaccine (Infanrix hexa). In addition, applications were made to register a new strength of the already registered drug lamotrigine (Lamictal DT) used in epilepsy. An expansion of indication to include 19A serotype effectiveness for the pneumococcal polysaccharide conjugate vaccine (Synflorix) was registered. Transfer of marketing authorization from Novartis to GSK for meningococcal vaccine (Menveo) and diphtheria, tetanus, pertussis (whole cell), hepatitis B and haemophilus type b conjugate vaccine (Quinvaxem) were also registered. After a thorough review of its applications, your Company has received approval for the expansion of indication to include 19A serotype effectiveness for the pneumococcal polysaccharide conjugate vaccine (Synflorix) and for transfer of Marketing Authorization from Novartis to GSK for meningococcal vaccine (Menveo) and the diphtheria, tetanus, pertussis (whole cell), hepatitis B and homophiles influenza Type b conjugate vaccine (Quinvaxem), which will enable timely access to new and innovative therapeutic options to patients in our country.

Medical Affairs & Medical Governance

Your Medical Affairs team has played a crucial role in shaping strategic direction and leading execution of the strategies for several key products / therapy areas including Seretide, Augmentin, Eltroxin, Vaccines, Dermatology, amongst others, and facilitated the launch of a new probiotic, EnteroPlus. Medical Affairs is at the forefront in getting the patient''s perspective to ensure that the activities and communication with the HCPs are patient-focused. The medical team also led the communication of high-quality and clinically relevant scientific information to the medical fraternity and regulatory authorities. The Medical Affairs and the Medical Governance teams ensure that your Company''s promotional activities and HCP engagements are consistent with global GSK standards and in line with all the applicable guidelines and standard operating procedures.

In line with your Company''s new HCP Engagement model that leads the new ways of working in the industry, your Company has taken steps to build internal medical capacity and capability to deliver this new model and enhance the way your Company interacts with HCPs. Disease area experts in dermatology and respiratory in the medical team were hired and a field-based medical team was introduced to strengthen the Medical Affairs team. The internal medical team, including disease area experts and the field-based medical team, delivered more than 500 scientific presentations to HCPs in 2016. To measure the impact of these talks, feedback was sought from 2801 HCPs and 96% of the HCPs have agreed that their interaction/meeting with your Company''s Medical team helped them to make a more informed decision benefitting patient care, in line with your Company''s value of patient focus.

Your Company has developed and/or supported high-quality scientific educational programmes for HCPs to update their knowledge about disease management which will ultimately help their patients receive appropriate treatment. During the year, an innovative rural Van Scientific Promotional Meeting (SPM) was conducted by the internal medical team to educate HCPs from rural areas within a modified bus. Rural HCPs have high patient load and there is a dearth of opportunities to update their scientific knowledge. Given the infrastructural challenges to conduct scientific meetings in rural areas, your company has organized rural Van SPMs with the internal medical team in a modified bus (converted to a class room setting) with all the facilities to conduct the meeting.

Your Company has been supporting independent medical education programmes aimed at enhancing the knowledge and skills of primary care physicians in the management of thyroid disorders, through an educational grant by your company towards the ''Certificate Course in Management of Thyroid Disorders (CCMTD)''. So far, more than 1800 HCPs across India have successfully completed this course and the programme has won many accolades and recognition internationally. Your Company has also initiated similar educational programmes in Respiratory (Asthma and COPD) and women''s health.

(e) Internal Control Framework

Your Company conducts its business with integrity and high standards of ethical behavior and in compliance with the laws and regulations that govern its business. Your Company follows a risk-based approach for evaluating its operations. Your Company has a well-established framework of internal controls in operation, supported by standard operating procedures, policies and guidelines, including suitable monitoring procedures and self-assessment exercises. Your Company leverages on best practices in the field of Risk management and controls by drawing on global standards designed by GSK Group. In addition to the external statutory audit, the financial and operating controls of your company at various locations are reviewed quarterly by Internal Auditors, to report significant findings to the Audit Committee of the Board. The annual internal audit plan is reviewed and approved by the Audit Committee and Head of Internal Audit has a direct reporting line to the Audit Committee. The Audit Committee reviews the adequacy and effectiveness of the implementation of audit recommendations, including those relating to strengthening your company''s risk management policies and systems. Compliance with laws and regulations is also monitored through a matrix of a well-laid down framework which requires individual functions to confirm and report statutory compliances on all laws and regulations, concerning their respective functions, and which gets integrated with the overall compliance reporting on all laws and regulations for the purposes of review and monitoring by the Audit Committee.

As required by the Companies Act, 2013, your Company has implemented an Internal Financial Control (IFC) Framework. Section 134(5)(e) requires the Directors to make an assertion in the Directors Responsibility Statement that your company has laid down internal financial controls, which are in existence, adequately designed and operate effectively. Under Section 177(4)(vii), the Audit Committee evaluates the internal financial controls and makes a representation to the Board. The purpose of the IFC is to ensure that policies and procedures adopted by your Company for ensuring the orderly and efficient conduct of its business are implemented, including policies for safeguarding its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information. The IFC implementation required all processes of your Company to be documented alongside the controls within the process. All processes were satisfactorily tested for both design and effectiveness during the year.

Furthermore, your Company continues its annual Independent Business Monitoring (IBM). The IBM Framework is designed by the GSK Group requiring a regular review of activities, data, exceptions and deviations in order to continuously monitor and improve the quality of operations. It is a risk-based enterprise approach ensuring consistency, quality, transparency and clear accountability of Risk Management and Internal Controls across all business units. In addition, your Company actively tracks all agreed remedial actions and ensures that corrective actions address underlying root causes.

Your Company expects all employees to act transparently, respectfully and with integrity and to put the interests of patients and consumers first at all times. Your Company aims to put these core values at the heart of everything it does and every decision it makes. The GSK Code of Conduct and accompanying training seek to ensure everyone has a solid understanding on how to implement and uphold the values in practice. Mandatory training on the Code of Conduct helps your Company''s employees gain the confidence to make the right decisions and become familiar with the policies and procedures applicable to their areas of operation, avoid conflicts of interest and report all unethical and illegal conduct. Your Company also has an Anti-Bribery and Corruption (ABAC) programme designed to prevent non-compliance through controls, practical guidance and mandatory training. The programme complies with the principles laid down under US Foreign Corrupt Practices Act and British Anti-Bribery laws. In addition, your Company conducts face-to-face sessions with commercial teams to ensure that all field-based colleagues are well versed on policies and their expected behavior.

Employees are also required to certify on an annual basis whether there have been any transactions which are fraudulent, illegal or violate the Code of Conduct. Strong oversight and self-monitoring policies and procedures demonstrate your Company''s commitment to the highest standards of integrity.

Your Company''s policies and updated Global Code of Practice for Promotion and Customer Interactions prescribe the nature of practices and prohibits specifically those which are unethical. Your Company is a signatory to the OPPI (Organization of Pharmaceuticals Producers in India) Code of Marketing Conduct.

Risk Management

Your Company has a Risk Management and Compliance Board (RMCB) which follows a charter. Risk maps stating the significant business risks, potential consequences and mitigation plans are prepared by each function and reviewed by the RMCB on a regular basis. Business Continuity Plans are periodically reviewed and tested to enhance their relevance. The Risk Management Framework covering business, operational and financial risks is being continuously reviewed by the Audit Committee. At present, in the opinion of the Board of Directors, there are no risks which may threaten the existence of the Company.

vigil Mechanism

Your Company has a Speak Up Programme, which offers people, within and outside, GSK a range of channels to voice concerns and report misconduct. The Speak Up culture and procedures encourage everyone to raise concerns about potential unethical or illegal conduct and assures confidentiality and protection from retaliation, retribution or any form of harassment to those reporting such concerns. Confidential Speak Up integrity line phone numbers are available to people within and outside of your Company. An independent company manages these reporting lines and calls are logged through their central system to ensure integrity of the programme.

Your Company endeavors to treat all questions or concerns about compliance in a confidential manner, even if the person reporting a question or concern identifies themselves. Your Company also has a well laid down process to prevent, take disciplinary action and deter acts of sexual harassment.

Your company has in place, a whistle blower policy, with a view to provide a mechanism for its employees/ external stakeholders to approach Local/Group management or the Chairman of Audit Committee ([email protected]) in case of any grievance or concern. The Whistle Blower policy can be accessed on your Company''s website [http://india-pharma.gsk.com/en-in/investors/ shareholder-information/policies.

(f) Human Resources

Your Company, in the year under consideration, enhanced its focus on its Human Resources practices and renewed its commitment to serving the needs of business. During the year, the Human Resources function was aligned to leverage the three circle structure, HR Business Leaders, HR Services and HR Centres of Excellence, enabling us to strengthen efforts on leadership and talent development, capability building, talent acquisition, employee engagement and wellness & wellbeing. New initiatives aligned to the corporate strategy were launched during the year.

Leadership and Talent Development: During the year, your Company''s sustained focus on leadership and talent management reaped rich dividends with a number of employees being selected for key roles in the global organization towards enhancing their development to take on future leadership roles on their return. With a focus to develop leaders for manufacturing sites and the regional hub within

Emerging Markets, the Asia Leadership Development programme was launched. This programme provides an opportunity to develop internal talent for key roles. Your Company has made significant investments in developing First Line Leaders (FLL) at its Nashik site. 20 FLLs were sponsored for a Post Graduate Diploma in Operations Management from Symbiosis Institute of Operations Management and 12 high potential employees (operators and FLLs) visited the International Site of Poznan (Poland) to study best practices and implement the same at Nashik.

Your Company continues to invest in its ''Future Leaders'' programme, drawing on fresh talent from leading universities/business schools around the country. This programme supports the organization in building a robust talent pipeline to meet the current and future business requirements.

Capability Building: During the year, employees participated in various programmes, such as the Asia Leadership Programme for Emerging Leaders, Accelerating Difference (specific to developing women managers) First Line Leaders, Practical Coaching at the Workplace, Personal Resilience, Energy for Performance, Implementing Strategy etc. The “GMAC-GSK Marketing Accreditation Programme” launched in 2015 to develop marketing capability was successfully concluded.

Your Company has invested significantly in building the sales capability of its large and distributed field-based workforce. During the year, the sales training team launched a sales competency framework which enables every employee to identify their learning needs across scientific knowledge, business planning and patient-focused selling skills and work with their manager towards continuous development. Your Company also leverages contemporary practices and technology, such as mobile learning apps and the internal social network (Yammer), to engage and train its field-based team.

Employee Engagement and Wellness & Wellbeing: 2016 was also a great year for employee engagement initiatives and corporate volunteering. There were 43 cross-functional teams across India participate in the Innovation Growth League (IGL). 10 employees participated in the 2016 PULSE programme, contributing their skills to solve healthcare challenges in India and abroad, through our NGO non-profit partners. India is now among the ''Top-5 volunteering countries'' in GSK.

Wellness and wellbeing of employees and their families continued to be a top priority. Your company launched the Partnership for Prevention (P4P), its preventive healthcare programme, for all employees and their families. This was very well received with a large number of employees and their families registering for the programme. The use of technology in the implementation made the programme successful as employees can avail the benefit at any time and any location. The GSK Driver Safety Programme ''Every Journey Counts'' won the first place in the ''Safe Workplace'' category of the 2016 CEO''s Environment, Health, Safety and Sustainability Awards. This programme was launched for employees based in the field who ride two-wheelers for work on a daily basis. A pilot was run in western India and a significant reduction in the instances of accidents was observed after implementation of this programme. Further to this, the programme is now being implemented across India.

Diversity and Inclusion: Your Company launched its Women''s Leadership Board (WLB) in December, 2016 to help reap the gender dividend. The aim of this Board is to develop women talent across all levels and build a pipeline of senior women leaders. The launch is supported by excellent progress in hiring women across all levels at our upcoming state-of-the-art manufacturing facility at Vemgal, Karnataka. At present, 30% of personnel hired at the upcoming site in Vemgal are women, of which four are a part of the site leadership team.

There are four recognized unions based on the Selling Area (zonal), that is, North, East, West and South to address the grievances of employees working in the field. The Union in the West selling area also represents the workers at Nashik . The Unions are an integral part of the business and are committed to the progress of the company. The management and the unions, in the areas where we have a sales force, have signed long-term settlement contracts valid for a period of four years. The salient features of the agreement include adoption of technology, acceptance of our new ways of working and supporting management in all initiatives to strengthen the company''s position in the market.

Your Company''s sales force is also compensated through a variable pay component that is linked to process parameters, such as disease product knowledge, coverage, business planning etc. Your Company no longer incentivizes its sales force on individual sales targets. However, the incentive scheme provides a 60% weight age to individual key performance indicators referred to above and 40% weight age to the achievement of the country sales plan. Incentive payouts are made based on the calendar year and paid periodically during the course of the year.

Your Company continued to ensure that its values are at the heart of everything it did. Importance of values was emphasized through story-telling, focused group discussions, leadership town halls and Let''s Talk sessions. During the year, your Company was selected for a follow-up Values Assurance Review by GSK Plc. Values Assurance is a programme that provides insightful feedback about the state of the GSK Values in the local culture and acts as an enabling tool to help management know where to focus their efforts. Your Company has made good progress on its Values Index since the last review completed in 2014.

Your Company ended 2016 by participating in the CII (Confederation of Indian Industry) HR Excellence Awards (2016). Your Company received the award for ''Significant Achievement in Human Resources Excellence'' in early 2017. As at 31st March 2017, your company had 4697 employees on its rolls.

Prevention of Sexual Harassment at Work Place

Your Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at the workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“the Act”) and the Rules there under.

Your Company has established an Internal Complaint Committee (ICC) across its commercial offices and manufacturing sites. In 2016, an e-learning module which includes all aspects of the Act was designed and leveraged to create awareness on the Act amongst all employees. In 2016, the Company received one complaint and was investigated. The Complaint was withdrawn at the end of investigation.

(g) Supply Chain

Manufacturing Excellence:

Manufacturing operations in India are being progressively upgraded and strengthened. Your Company''s manufacturing facility at Nashik has continued to deliver on its overall strategic intent and has invested heavily in Safety and Quality over the past years, while further securing supply and our capability to serve our patients better. The new Eltroxin facility will be fully operational in 2018 with the highest safety standards. The Nashik facility is delivering on its strategic intent with significant investments in processes, infrastructure and capability. Your company has plans to upgrade the Dermatological and Tablets facilities by investing in infrastructure with special focus on GMP, Safety & Sustainability at the Nashik site.

The Nashik facility has embraced the GSK Production System (GPS), based on Lean Working principles. There are 30 continuous improvement frameworks in place to meet the facility''s goals under Safety, Quality, Service and financial optimization for 2017.

Environment, Health, Safety and Sustainability (EHSS)

An environment, health, safety and sustainability strategy has been implemented across the entire value chain from raw materials to product disposal at the Nashik facility. As your Company grows its business to bring innovative medicines to people across the world, environment sustainability continues to be a priority and your Company remains committed to reducing any adverse impact to the environment.

Your Company''s policy on EHSS conforms to local laws as well as GSK''s global standards and various initiatives were undertaken at our Nashik facility. During the year, the Nashik facility received the commendation under the Group''s Global Manufacturing & Supply (GMS) President''s award and a CEO Runner up EHSS award for “Work on Wellness - Leading GSK Nashik for a Healthier Tomorrow”. An employee engagement programme on ergonomics at the workplace was initiated. The site also won the Water trophy for water reduction among all global GSK manufacturing sites.

With regard to waste management, waste is segregated and given to government-approved vendors for recycling, wherever appropriate. The facility at Nashik runs on zero discharge basis with respect to water. Treated site effluents are used for site gardening and cooling water recycling.

Your Company has invested in a new Greenfield manufacturing facility at Vemgal, Karnataka. Care for the environment has been at the forefront of factory design and future operation. Your Company aims to achieve LEED (Leadership in Energy and Environmental Design) Gold standard, an internationally recognized US set of rating systems for the design, construction, operation and maintenance of green buildings, that aims to help building owners and operators be environmentally responsible and use resources efficiently. In addition, your Company is investing in renewable energy in the form of a 0.5 MW Photovoltaic array, which will generate a significant part of the site''s energy requirement. All waste water will be recycled with zero waste.

New Manufacturing Facility

Vemgal, Karnataka, location has been identified for a number of reasons including amongst others; Bengaluru is a recognized pharmaceutical/ biotechnology hub with skilled staff, close to the Southern Distribution hub. It enjoys moderate climate, easy accessibility, availability of investment incentives by the State, and availability of government-owned land. This new site is part of the strategic plan to rationalize, streamline and reduce costs in the supply network, whilst increasing capacity to meet the growing local demands for important medicines. Quality, safety and compliance are the key drivers for the project team, along with rigorous cost management and control.

The new facility, which represents up to Rs, 1000 crores in investment, will be the first Greenfield pharmaceutical facility that GSK has built across the globe over the past twelve years. This site will be state-of-the-art and will be the first factory designed for the new ''GSK Production Systems'', whereby it will deliver, by first design intent, the concepts of zero accidents, defects and waste. A major effort has been made to ensure that we employ a diverse workforce. The design ensures easy access and support for those with disabilities. Gender diversity and local employment is also a key part of the operational strategy. With the local community, your Company has also invested in two significant CSR activities, including a youth training centre, feminine hygiene product manufacturing and residential sanitation facilities. The site has been designed with the future in mind and its innovative design will support easy expansion into the future as the need arises. Initially, the site will supply a range of solid dose form products and is expected to be operational in 2018. The site will have an installed capacity of more than 8 billion tablets and 1 billion capsules per year.

End-to-End Supply Chain & Logistics:

Your Company has been implementing several initiatives in driving greater safety and tracking when the products are transported from the manufacturing locations to various warehouses across the country by using GPS tracking devices, and engaging with the transporters to ensure that product handling is appropriate from the perspective of pilferage and theft. Your Company is looking at strengthening the cold chain capability across the supply chain through the warehouses, transportation and packaging. This initiative aims to further enhance compliance to patient safety and regulatory requirements.

Research and Development (R&D)

The Company''s R&D unit, namely Pharmaceutical Research & Development (PR&D) at Nashik, is approved by the Department of Science and Industrial Research, Government of India. Pharmaceutical R&D introduced Product Life Cycle Management (PLM), which provides a framework and mechanism to assess the effectiveness of our Product Control Strategies (PCS), via TRA (Technical Risk Assessment), Process Robustness Diagnostic and Product Performance Assessment (PPA) tool to tackle the defects and reduce the waste in our product and process. The department undertook a number of improvement initiatives and new source qualifications through MRA (Material Risk Assessment) process.

During the year, PR&D focused on building/ strengthening technical capability in PLM, TRA, process robustness, product ownership, technical due diligence, and statistical analysis, technical resources were fully aligned to support the supply chain strategy and product-related issues. The department has successfully transferred 13 products right first time and implemented 24 new sources of APIs and recipients which has resulted in significant improvement in security of supply and in cost savings.

The Company continues to be privileged to have access to various research databases used worldwide and to latest technologies/processes developed by the GlaxoSmithKline Group.

(h) Corporate Social Responsibility

Your Company has a rich legacy of partnering with the communities in which we live and operate. Strong partnerships with community groups are critical, as local organizations have the greatest insights into the needs of their people and the strategies that stand the greatest chance of success. Your Company''s focus is on making life-changing, long-term differences in human health by addressing the healthcare burdens of accessibility, affordability and awareness. Your Company works to fulfill this and other social change efforts, through our Corporate Social Responsibility (CSR) programmes. During the last year, the CSR programme touched the lives of over 50 million people across India based on our albendazole donation for our CSR project on ''Partnering India for Elimination of Lymphatic Filariasis''

Pursuant to the provisions of Section 135 and rules made there under of the Companies Act, 2013, the Company has constituted a CSR committee to monitor CSR activities of the Company. The CSR policy of the Company may be accessed on the Company website at the link: http://india-pharma.gsk. com/en-in/investors/shareholder-information/policies/. The CSR report on the activities undertaken during the year, given in Annexure ‘C'', forms a part of this Report.

i) Certain statements in the “Management Discussion and Analysis” section may be forward-looking and are stated as required by applicable laws and regulations. Many factors may affect the actual results, which could be different from what the Directors envisage in terms of future performance and outlook.

4. DIRECTORS

Mr. R. Simard, Non-Executive Director and Mr. R. Sequeira, Whole-time Director resigned as Directors from 11th February 2017. The Board places on record their appreciation of the valuable services rendered by Mr. Simard and Mr. Sequeira during their tenure and for their contribution to the deliberations of the Board.

The Board of Directors has appointed Mr. Marc Jones and Mr. Subesh Williams as Non-Executive Directors with effect from 7th April 2017.

In terms of the provisions under Section 149 of the Companies Act, 2013, the Board and Shareholders have approved the appointment of all the existing Independent Directors that is, Mr. R. R. Bajaaj, Ms. A. Bansal, Mr. P.V. Bhide, Mr. N. Kaviratne, Mr. A. N. Roy and Mr. D. Sundaram for a term for five years from 30th March 2015.

The Independent Directors have submitted the Declaration of Independence, as required pursuant to Section 149(7) of the Companies Act, 2013, stating that they meet the criteria of Independence as provided in sub-section (6).

During the year ended 31st March 2017, five Board Meetings were held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

Remuneration Policy and Board Evaluation

I n compliance with the provisions of the Companies Act, 2013 and Regulation 27 of the Listing Obligations & Disclosures Regulations (LODR), the Board of Directors on the recommendation of the Nomination & Remuneration Committee, adopted a Policy on remuneration of Directors and Senior Management. The Remuneration Policy is stated in the Corporate Governance Report. Performance evaluation of the Board was carried out during the period under review. The details are given in the Corporate Governance Report.

Familiarization programmes for the Independent Directors

In Compliance with the requirements of SEBI Regulations, the Company has put in place a familiarization programme for the Independent Directors to familiarize them with their role, rights and responsibility as Directors, the working of the Company, nature of the industry in which the Company operates business model, etc. It is also available on the Company website: http://india-pharma. gsk.com/en-in/investors/shareholder-information/policies/

5. PARTICULARS OF CONTRACTS AND RELATED PARTY TRANSACTIONS

In line with the requirements of the Companies Act, 2013 and LODR, your Company has formulated a policy on Related Party Transactions. All related party transactions that are entered into during the year, were on arm''s length basis and were in the ordinary course of business. There were no materially significant related party transactions made with the Promoters, Directors or Key Managerial Personnel which may have a potential conflict of Interest with the Company at large. The Policy of related party transactions can be accessed on Company website: http://india-pharma.gsk.com/en-in/investors/shareholder-information/policies/

All Related Party Transactions are placed before the Audit Committee for review and approval. Prior omnibus approval is obtained for Related Party Transactions on a quarterly basis for transactions which are of repetitive nature and / or entered in the ordinary course of business and are at arm''s length. All Related Party Transactions are subjected to independent review by a reputed accounting firm to establish compliance with the requirements of Related Party Transactions under the Companies Act, 2013 and LODR.

6. DIRECTORS'' RESPONSIBILITY STATEMENT

Your Directors confirm:

(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any

(ii) that the Directors have selected such accounting policies and applied them 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 on 31st March 2017 and of the profit of the Company for the year ended on that date;

(iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts on a going concern basis;

(v) that proper internal financial controls laid down by the Directors were followed by the Company and such internal financial controls are adequate and were operating effectively, and

(vi) that proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems were adequate and were operating effectively.

7. CORPORATE GOVERNANCE & BUSINESS Sustainability REPORT

Your Company is part of the GlaxoSmithKline Plc group and conforms to norms of Corporate Governance adopted by them. As a Listed Company, necessary measures are taken to comply with the Listing Obligations & Disclosures Regulations, 2015 (LODR) with the Stock Exchanges. A report on Corporate Governance, along with a certificate of compliance from the Auditors, given in Annexure ‘A'', forms a part of this Report. Further, a Business Responsibility Report, describing the initiatives taken by your Company from an environmental, social and governance perspective, given in Annexure ‘B'', forms a part of this Report.

8. AUDITORS

According to the provisions of Section 139 of the Companies Act, 2013 the term of office of Price Waterhouse & Co Bangalore LLP, Chartered Accountants, the Statutory Auditors of the Company, will conclude from the close of the forthcoming Annual General Meeting of the Company.

Subject to the approval of the Members, the Board of Directors has recommended the appointment of Deloitte Haskins and Sells LLP, Chartered Accountants as the Statutory Auditors of the Company. Member''s attention is drawn to a Resolution proposing the appointment of Deloitte Haskins and Sells LLP as Statutory Auditors of the Company, which is included as Item No 5 of the Notice convening the Annual General Meeting.

Pursuant to the provisions of Section 204 of the Act, and the Rules made there under, the Company has appointed Parikh & Associates, Practicing Company Secretaries, to undertake Secretarial Audit of the Company. The Report of the Secretarial Auditor is annexed to the Board Report as Annexure “D” forms a part of this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Pursuant to Section 148 of the Companies Act, 2013, the Board of Directors, on the recommendation of Audit Committee, have appointed R. Nanabhoy & Co., Cost Accountants, for conducting the audit of the cost accounting records maintained by the Company for its Formulations for 2017-2018. The Committee recommended ratification of remuneration for the year 2016-17 to the Shareholders of the Company at the ensuing Annual General Meeting. As required under Section 92(3) of the Act and the Rules framed there under, the extract of the Annual Return in Form MGT 9 is enclosed as Annexure “G” forms a part of this Report.

9. GENERAL

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated in Section 134(3) M of the Companies Act, 2013, and the rules framed there under is attached herewith as Annexure “E” forms a part of this Report. The Disclosures pertaining to the remuneration and other details as required under Section 197(12) of the Companies Act, 2013 and the rules made there under is enclosed as Annexure “F” forms a part of this Report. Pursuant to Section 129(3) of the Companies Act, 2013 a statement in form “AOC-1” containing salient features of the Financial Statements of the Subsidiary Company is attached.

Although the audited statements of accounts, relating to the Company''s Subsidiary are no longer required to be attached to the Company''s Annual Report, the same is enclosed as and in way of better disclosure practice.

The information relating to top ten employees in terms of remuneration and employees who were in receipt of remuneration of not less than Rs, 1.02 cores during the year or Rs, 8.5 lakhs per month during any part of the year forms part of this Report and will be provided to any Shareholder on a written request to the Company Secretary. In terms of Section 136 of the Companies Act, 2013 the report entitled at the registered office of the Company during the business on working day of the Company up to date of Annual General Meeting.

10. ACKNOWLEDGMENTS

The Directors express their appreciation for the contribution made by the employees to the significant improvement in the operations of the Company and for the support received from all other stakeholders, including Shareholders, Doctors, Medical Professionals, Customers, Suppliers, Business Partners and the Government.

The Board and the Management of your Company are indeed appreciative of the substantial support being received from GSK Plc, the parent organization, in providing new healthcare solutions which are products of its discovery labs and the technology improvements which benefits your Company immensely.

On behalf of the Board of Directors

D.S. Parekh

Chairman

Mumbai, 19th May 2017


Mar 31, 2015

Dear Members,

The Directors have pleasure in submitting their Report for the fifteen months period ended 31st March 2015. The Accounting year of the Company has been changed from January-December to April-March in line with the provisions of the Companies Act, 2013, which prescribe a uniform financial year. Accordingly, current year''s Annual Accounts and Report of the Company are for a period of fifteen months from 1st January 2014 to 31st March 2015. These figures, therefore, are not comparable with those of the previous year ended 31st December 2013.

1. Financial Results & Dividend for the fifteen months ended 31st March 2015

15 months ended Year ended 31st March 31st December 2015 2013 Rs. in lakhs Rs. in lakhs

Sale of Products (Net of Excise Duty) 3253,40.98 2520,17.24

Other Operating Revenue 34,16.82 25,97.50

Revenue from Operations 3287,57.80 2546,14.74

Profit before Exceptional Items and Tax 800,50.43 703,16.57

Less: Exceptional Items (51,88.14) 26,15.46

Profit before Tax 748,62.29 729,32.03

Less: Tax expense 276,97.71 227,43.79

Net Profit for the year 471,64.58 501,88.24

Add: Opening Surplus brought forward from the previous year 1099,93.27 1142,94.60

Less: Appropriations:

Proposed Dividend (including tax on distributed Profits) 637,16.78 494,70.75

Transfer to General Reserve 47,16.46 50,18.82

Closing Surplus carried forward 887,24.61 1099,93.27

2. Dividend

The Directors recommend a Dividend of Rs. 62.50 per Equity Share for the fifteen months period (previous twelve months period: Rs. 50 per Equity Share). If approved by the Shareholders at the Annual General Meeting, the Dividend will absorb Rs. 529 crores. The Dividend Distribution Tax borne by the Company will amount to Rs. 108 crores.

3. Directors

Mr. Mehernosh Kapadia retired as Director from 30th November 2014. Mr. Simon Harford resigned as a Director from 18th May 2015. The Board places on record its appreciation of the valuable services rendered by Mr. Kapadia and Mr. Harford during their tenure as Directors and for their contribution to the deliberations of the Board.

The Board of Directors has appointed Mr. Andrew Aristidou as Executive Director & CFO with effect from 1st December 2014, in the casual vacancy caused by the resignation of Mr. Mehernosh Kapadia. The Shareholders have approved his appointment by Postal Ballot. Approval to his appointment from Central Government is awaited. The Board has also appointed Mr. Regis Simard as Non-Executive Director with effect from 18th May 2015 in the casual vacancy caused by the resignation of Mr. Simon Harford.

In terms of the provisions under Section 149 of the Companies Act, 2013, the Board and Shareholders have approved the appointment of all the existing Independent Directors viz. Mr. R. R. Bajaaj, Ms. A. Bansal, Mr. P V. Bhide, Mr. N. Kaviratne, Mr. P V. Nayak, Mr. A. N. Roy and Mr. D. Sundaram for a term for five years from 30th March 2015. The Independent Directors have submitted the Declaration of Independence, as required pursuant to Section 149(7) of the Companies Act, 2013, stating that they meet the criteria of Independence as provided in sub-section (6).

Glaxo Group Limited U.K. have rights enshrined in the Articles of Association to appoint Directors not exceeding one-third of the total number of Directors. Accordingly they have appointed four Non-retiring Directors. In terms of the provisions of the Companies Act, 2013, the Independent Directors will be excluded for ascertaining the number of Directors liable to retire by rotation. In view of this Glaxo Group Limited will have right to appoint one third of the retiring Directors and can appoint two Non-retiring Directors. Accordingly, Mr. V. Thyagarajan and Mr. Regis Simard will now be the Directors retiring by rotation and, being eligible, offer themselves for re-appointment.

During the fifteen months period eight Board Meetings were held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

In compliance with the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board of Directors on the recommendation of the Nomination & Remuneration Committee, adopted a Policy on remuneration of Directors and Senior Management. The Remuneration Policy is stated in the Corporate Governance Report.

Performance evaluation of the Board was carried out during the period under review. The details are given in the Corporate Governance Report.

5. Related Party Transactions

All related party transactions that are entered into during the fifteen months period were on arms length basis and were in the ordinary course of business. There were no materially significant related party transactions made with the Promoters, Directors or Key Managerial Personnel which may have a potential conflict of interest of the Company at large.

6. Directors'' Responsibility Statement

Your Directors confirm:

(i) t hat in the preparation of the annual accounts, the applicable accounting standards have been followed;

(ii) that the Directors have selected such accounting policies and applied them 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 at the end of the fifteen months period ended 31st March 2015 and of the profit of the Company for that period;

(iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts on a going concern basis.

7. Corporate Governance & Business Sustainability Report

Your Company is part of the GlaxoSmithKline plc group and conforms to norms of Corporate Governance adopted by them. As a Listed Company, necessary measures are taken to comply with the Listing Agreements with the Stock Exchanges. A report on Corporate Governance, along with a Certificate of Compliance from the Auditors, given in Annexure ''B'', forms a part of this Report. Further a Business Responsibility Report, describing the initiatives taken by your Company from an environmental, social and governance perspective, given in Annexure ''C'', also forms a part of this Report.

8. Auditors

M/s. Price Waterhouse & Co Bangalore LLP Chartered Accountants (Firm Registration No. 007567S/S-200012), the Statutory Auditors of the Company, will hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment as per Section 139 of the Companies Act, 2013. Members are requested to re-appoint M/s. Price Waterhouse & Co., Bangalore LLP, Chartered Accountants, as the Auditors of the Company and authorise the Board of Directors to fix their remuneration.

Pursuant to Section 148 of the Companies Act, 2013, the Board of Directors on the recommendation of Audit Committee have appointed M/s. R. Nanabhoy & Co., Cost Accountants for conducting the audit of the cost accounting records maintained by the Company for its Formulations for 2015-2016 and have recommended their remuneration to the members of the Company for their ratification at the ensuing Annual General Meeting.

9. General

The particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo are given in Annexure ''A'' forming part of this Report. The particulars of employees required to be furnished under Section 217(2A) of the Companies Act, 1956, read with the rules thereunder, forms part of this Report. However, as per the provisions of Section 219(1)

(b)(iv) of the Companies Act, 1956, the reports and accounts are being sent to all the Shareholders of the Company excluding the statement of particulars of employees. Any Shareholder interested in obtaining a copy may write to the Company Secretary at the Registered Office of the Company. Further, attached to the accounts of the Company are the Report and Audited Accounts of Biddle Sawyer Limited a, subsidiary company.

10. Employees

The Directors express their appreciation for the contribution made by the employees to the significant improvement in the operations of the Company and for the support received from all other stakeholders, including shareholders, doctors, medical professionals, customers, suppliers and business partners.

The Board and the Management of your Company are indeed appreciative of the substantial support being received from GSK plc the parent organization in providing new healthcare solutions which are products of its discovery labs and the technology improvements which benefits your Company immensely.

11. Disclaimer

The Ministry of Corporate Affairs vide its Circular No. 8/2014 dated 4th April 2014 clarified that the financial statements and the documents required to be attached thereto, the Auditor''s and Boards'' Report in respect of the financial year under reference shall continue to be governed by the relevant provisions of the Companies Act, 1956 schedules and rules made thereunder. Accordingly, whilst the financial statements and the Auditor''s Report as aforesaid are prepared as per the requirements of the Companies Act, 1956, the Company as a good governance practice has provided the information to the extent possible in the Directors'' Report as per the Companies Act, 2013.

On behalf of the Board of Directors

D. S. Parekh Chairman

Mumbai, 18th May 2015


Dec 31, 2013

The Directors have pleasure in submitting their Report for the year ended 31st December 2013

1. Results & Dividend for the year ended 31st December 2013

Year ended Year ended 31st December 31st December 2013 2012 Rs. in lakhs Rs. in lakhs

Sale of Products (Net of Excise Duty) .. .. .. 2520,17.24 2599,93.10

Other Operating Revenue .. .. 25,97.50 26,50.37

Revenue from Operations .. .. 2546,14.74 2626,43.47

Profit before Exceptional Items and Tax .. 703,16.57 994,77.65

Exceptional Items .. .. .. .. 26,15.46 (148,21.70)

Profit before Tax .. .. .. .. 729,32.03 846,55.95

Tax expense .. .. .. .. .. .. 227,43.79 269,30.06

Net Profit for the year .. .. .. 501,88.24 577,25.89

Add: Opening Surplus brought forward from the previous year 1142,94.60 1110,59.15

Less: Appropriations:

Proposed Dividend (including tax on distributed Profits) 494,70.75 487,17.85

Transfer to General Reserve.. .. 50,18.82 57,72.59

Closing Surplus carried forward .. 1099,93.27 1142,94.60

2. Dividend

The Directors recommend a Dividend of Rs. 50 per Equity Share for the year (previous year: Rs. 50 per Equity Share). If approved by the Shareholders at the Annual General Meeting, the Dividend will absorb Rs. 424 crores. The Dividend Distribution Tax borne by the Company will amount to Rs. 71 crores.

3. Management Discussion and Analysis

(a) Finance and Accounts

Sale of Products (net of Excise Duty) declined by 3.1% as compared with the previous year, with sales of the Pharmaceutical business being lower than last year by 4.3%. The introduction of the revamped Drugs (Prices Control) Order extending coverage to the National List of Essential Medicines impacted sales in the second half of the year. The Pharmaceuticals business was also affected by significant supply constraints through the year. In addition, during the second half of the year, a segment of the trade did not buy the Company''s products and the Company believes that, having regard to its internal plans, it would have lost a sales opportunity on this account in the region of Rs.180 crores. The maximum impact of the above developments was felt in the Mass Markets and Mass Speciality businesses, each of which declined by 12% compared to last year. Sales in the Speciality segments which include dermatologicals and oncology grew by 9%, and Vaccines sales recorded a growth of 12% compared to the previous year.

The above factors, coupled with material cost escalations and the adverse exchange rate movement, had its inevitable impact on Gross Margin which declined by 9.3% compared to last year. Incremental investments were required on the manufacturing side in manpower and other spends and in costs associated with outsourcing finished products from third parties. Field force recruitment was restricted to segments that required resourcing for growth. Significant investments were made for the consumer brands lodex and Ostocalcium which are managed by GSK''s Consumer Healthcare business in India. Profit after Exceptional items and Tax amounted to 20% of Net Sales (previous year: 22%) and declined by 13.1% as compared to the previous year.

Cash generation from Operations continued to remain favourable this year and is in line with business performance. Your Company continues to look for ways and means of deploying accumulated cash balances which remain invested largely in bank deposits.

Your Company has not accepted any fixed deposits during the year. There was no outstanding towards unclaimed deposit payable to depositors as on 31st December 2013.

(b) Pharmaceuticals Business performance and outlook

Your Company continues to enjoy a leadership position in the therapy areas in which it provides health care solutions to patients.

Your Company has strategically decided to expand its presence in the Specialty segment six years back. The initiative continues to reflect in its outcome. The growing trend from Specialty contribution to Sales continued in 2013 and has reached 23%.

Your Company''s leadership in the therapeutic area of Dermatology has been maintained. In clinical dermatology, most of the steroid products like Betnovate N, Betnovate C, T Bact, Tenovate and the cosmetology products like Ansolar and Oilatum sustained market competitive growth, thereby benefiting increased number of patients.

Your Company''s Oncology division''s vision to improve patient care in cancer management by offering access to breakthrough medicine from GSK''s pipeline at an affordable price (Tiered Pricing Policy) has benefited almost six thousand patients with our range of products - Tykerb, Hycamtin, Revolade & Votrient in 2013. Your Company has also initiated two patient support and management programs "Swasti" for Tykerb and Votrient to enhance patients access. Patient care is the basic mantra of Oncology and the mission has reflected in its competitive performance, ranked as the 6th largest MNC in Oncology segment (source: IPSOS MAT JUNE 13). In June 2013, your Company has launched XGEVA licensed from Amgen, USA for the prevention of SRE (Skeletal Related Events) in the management of bone metastasised solid tumors. The XGEVA launch has helped treat more than one thousand patients within six months of its introduction. Oncology division''s ability to differentiate from competition has reflected in an independent survey conducted by McCANN Health & GFK in the Asia Pacific Region which rated your Company as the number one company to provide medical education to Health Care Providers especially, Oncologists, Diabetologists and Consulting Physicians.

Your Company''s Cardio Vascular presence was strengthen by launching "Cardio Check" in the diagnostics segment. The device helps establish the patient''s lipid profile in a few minutes. The point of care addresses the unmet need of the physician to diagnose the lipid profile in the Doctor''s clinic itself to improve the patient outcome. This strategic expansion is aimed at improving the Company''s equity among the physicians in the cardiology segment. This will help your Company to leverage for its existing range of products.

The revitalised Respiratory division focus has become strong with the launch of a dose counter supported Seretide Evohaler. The new product has achieved 5% of the market share in the SFC Inhaler segment in 2013. Your Company''s recently launched CNS division has begun making its impact with Lamictal becoming the 3rd largest prescribed Lamotrogine in treating Anti Epileptic Disease as per SMSRC Prescription Track.

The Mass Speciality business saw constraints on Augmentin on account of limitations at the site of the overseas supplier. Limitations of supply from a local contract manufacturer impacted the antibiotic Ceftum in the first half of the year. Sustained and focused efforts have helped the Mass Speciality business record a market competitive growth in the prescriber base resulting in benefits to a larger pool of patients.

Market competitive growth has helped some dosage forms of Augmentin to record significant gain in share, thereby benefiting a much larger patient pool. To help patients with hypothyrodism, two additional put ups of Eltroxin were launched and were well received by patients and prescribers. A focused campaign to increase awareness of congenital hypothyroidism has helped increase disease awareness and resulted in early treatment of patients, thereby enabling better patient outcomes.

The need for calcium supplements is a growing problem arising out of improper nutrition and limited outdoor activity in urban India. To service this growing need, your Company has launched CCM and this brand has rapidly become the 2nd largest product in the therapeutic area (source: IMS MAT DEC 13). It has also in the current year become one of the top three hundred products in the Pharmaceutical Industry in India. To help patients afflicted by allergic rhinitis, your Company has launched Avamys, a leading health solution from GSK plc''s portfolio. It has been well received by the patients and the prescribers and has rapidly become the 2nd largest brand in its relevant market in the first year of introduction (source: IMS TSA MAT DEC 13).

Serious fungal infections in the intensive care setting are a barrier to treatment of patients. Mycamine which was launched by your Company a few years ago has become the 2nd largest product in this therapeutic area among twenty six offerings with competitive increase in market share. (source: IMS TSA MAT DEC 13).

Mass Markets service the largest patient pool of your Company. New offerings like Uricostat in the treatment of gout, Cefspan, an anti-infective, Lilo, a statin for lowering blood cholesterol and the nutritional range (being marketed by your Company on behalf of GSK''s Consumer business) have all recorded significant acceptance by the patients and the prescribers alike. To meet the increasing healthcare needs of rural India, the rural team "Reach" continued to expand its patient base as the portfolio of products offered to patients in these geographies continued to expand. This team now services six thousand villages and twenty thousand healthcare professionals. Your Company''s efforts at increasing the knowledge base of healthcare professionals in these geographies continued and 140 programs were conducted for the benefit of healthcare professionals in these geographies. Calpol continues to remain the most prescribed brand in the Indian Pharmaceutical Industry (source: IMS TSA JAN 14).

In the area of preventive healthcare, GSK Vaccines became the leading company in the private market for vaccines in India. The recently introduced vaccine for pneumococcal conjugate disease, Synflorix, became the biggest brand in the vaccine portfolio of your Company in the second year of its launch. The efforts of your Company in raising awareness about vaccines preventable diseases continued with increasing fervour.

Exports recorded a sales turnover of Rs. 9.5 crores comprising of both Bulk Drugs and Formulations. Exports of Bulk Drugs were to major markets like Japan, France, Jordan, and Sri Lanka.

(c) Opportunities, risk, concerns and threats

The Indian Government notified the National Pharmaceutical Policy and the new Drugs (Prices Control) Order, 2013 was implemented in May 2013. The new DPCO expanded the list of drugs from 74 to 348 (approximate 650 formulations got added). It brought about challenges for the Pharmaceutical Industry with regard to labeling of the new notified prices on all the products available in the market within a period of 45 days from the date of the Notification coupled with challenges with regard to recall and storage of recalled drugs. This has impacted sales in the second half of the year.

However, some of the stakeholders continued to oppose the new DPCO and a petition is pending before the Supreme Court. Any changes to the new DPCO would have an impact on the working of your Company.

Your Company has recently made an announcement with regard to its intent of creating a new Greenfield site with additional manufacturing capability, with an estimated investment of Rs. 860 crores. This new facility will substantially increase the capacity of manufacturing base and enable us to bring more medicines to the people of India.

(d) Regulatory Affairs, Clinical Research, Medical Affairs and Medical Governance

During the year under review, in order to support the commercial availability of new drugs that would benefit and improve the quality of life of Indian patients suffering from various diseases, your Company submitted several applications for New Products in India to the CDSCO (Central Drugs Standard Control Organization), Ministry of Health and Family Welfare, Government of India. After a thorough review of these applications, your Company has received approval for some of these products from CDSCO, which will enable timely access to new and innovative therapeutic options to patients in our country.

Some of the innovator products approved by the regulatory agency in India during the year under review include a biological oncology product panitumumab in-licenced from Amgen (Vectibix) for the treatment of patients of metastatic colorectal carcinoma as third line treatment option, a line extension for amoxicillin and clavulanic acid formulation (Augmentin Drops) for paediatric use, expansion of use of DTaP vaccine (Boostrix) for use in adults and new indication for the use of cefixime formulation (Cefspan) in enteric fever. All these new products approved for the Company during the year under review will be beneficial to Indian patients. In addition, the Company also received approval for import and marketing of 7 cosmetic products in India.

GlaxoSmithKline globally continues to be committed to Research and Development of medicines that will improve the quality of life of people around the world and truly make a difference to patients. Our scientists work hard to discover new medicines that prevent, treat or cure diseases.

Your Company conducted studies in oncology, anti-infectives and osteoporosis, after obtaining necessary Ethics Committee and regulatory approvals. Your Company has trained 42 new investigators on Good Clinical Practices and protocol-related science at approximately 40 clinical trial sites across India. Quality continues to be a priority as demonstrated by a number of internal and external compliance audits with no critical findings. To strengthen quality of data, quality checks are meticulously reviewed, systems and processes are simplified to ensure compliance to regulations. This will help generate accurate and meaningful data, and ensure that the rights, dignity and safety of patients taking part in our studies are protected.

The Medical Affairs team has provided valuable medical inputs for the development and execution of launch strategy for several products including Avamys (fluticasone furoate), Xgeva (denosumab), Cardio Check, Physiogel and Acne-aid wash. The team played a crucial role in communicating high-quality scientific information to the medical fraternity. It was involved in conducting scientific engagement activities such as advisory board meetings, congress presentations, publications, satellite symposia and provision of evidence-based medical information to healthcare practitioners. The Medical Affairs team and the Medical Governance teams ensure that your Company''s promotional activities and HCP (healthcare practitioner) engagements are in line with all the applicable guidelines and standard operating practices.

(e) Internal Control Framework

Your Company conducts its business with integrity and high standards of ethical behaviour, and in compliance with the laws and regulations that govern its business. Your Company has a well-established framework of internal controls in operation, supported by standard operating procedures, policies and guidelines, including suitable monitoring procedures and self-assessment exercises. In addition to external audit, the financial and operating controls of your Company at various locations are reviewed by the Internal Auditors, who report significant findings to the Audit Committee of the Board. Compliance with laws and regulations is also monitored.

Your Company''s Code of Conduct sets out the fundamental standards to be followed by employees in their everyday actions. In accordance with the Code of Conduct, and Standards associated with the Code of Conduct, employees are required to become familiar with the legal requirements, policies and procedures applicable to their areas of operation, avoid conflicts of interest and are tasked with upward reporting of all unethical and illegal conduct. All employees are committed to the principle of performance with integrity and ensuring that activities comply with all applicable laws.

Additionally, employees are required to certify on an annual basis whether there have been any transactions which are fraudulent, illegal or violative of the Code of Conduct. Strong oversight and self monitoring policies and procedures demonstrate your Company''s commitment to the highest standards of integrity.

Your Company''s policies and updated Global Code of Practice for Promotion and Customer Interactions prescribe the nature of practices and prohibits specifically those which are unethical. Your Company is a signatory to the OPPI (Organisation of Pharmaceuticals Producers in India) Code of marketing conduct. Your Company is also governed by the anti- bribery and corruption programme which is applicable across the global organisation and complies with the principles laid down under US Foreign Corrupt Practices Act and British anti-bribery laws.

(f) Human Resources

2013 has seen a good progress in the key areas of the Human Resources function in your Company i.e. Talent Management, Capability Building and Employee Engagement. Your Company has been conferred the prestigious Confederation of Indian Industries (CII) Award for "Significant Achievement in HR Excellence" in 2013. A team of trained assessors from CII spent around 300 man-hours for evaluation, post submission of the application document. The robustness of the assessing process continued through a review of assessor findings by distinguished jurors. Your Company was rated amongst top 50 (41) companies in India and also amongst the top 3 in the Drugs, Pharmaceuticals & Healthcare segment in the Fortune magazine study of "India''s Most Admired Companies" in 2013. Business Today in its "The Best Companies to Work For" also ranked your Company amongst the top three among the pharmaceutical companies in India.

Talent Management practices have seen a continued investment in building the talent pipeline across the business. The Management Trainees programme branded as ‘future leaders programme'' has seen continued hiring in this area, like previous years, from key business school campuses.

The Learning & Development plan has been in place to provide training inputs for employees across functions and levels. They have addressed both skill and knowledge gaps. Leadership programs continue with First Line Leaders program, Leading Delivery for second line leaders and Leading Business for grooming people into senior leadership roles.

Coaching continues to be an important leadership approach and your Company has covered a significant population of its managers through the "Practical Coaching at the Workplace" programme. In addition select leaders have attended a Job Plus Coaching programme by which they have been trained and certified to coach key talent and other employees.

Lecture series and other knowledge sessions have been conducted on the important aspect of Employee Safety e.g. Driving Two Wheelers Safely. Wellness and Wellbeing services provided employees with counselling opportunities on the day-to-day issues faced in life.

"PULSE" volunteering and "Orange Day" wherein employees are encouraged to contribute to society saw good enthusiasm amongst the employees. PULSE is a volunteering programme by which selected employees work with an NGO on projects for a span of 3-6 months while Orange Day sees employees going on joint field work with specific NGOs for a day.

On the Industrial Relations front, your Company continues to share a cordial relationship with the Unions and acknowledges the contribution of the Unions and the Employees towards meeting the objectives of your Company.

(g) Supply Chain Manufacturing

The India manufacturing operations continues its journey on the road-map and defined long term strategy. Capacity expansion project of Eltroxin have been started at the Nashik site. Your Company continues to work on building capacities through dual sourcing for key products. The Nashik site is continuously building capabilities through productivity, OEE improvements, recruitment of professionals, specifically in Quality, EHS and Manufacturing, as well as recruitment of fresh diploma engineers on the shop floor. High speed Ointment filling and packing line was installed and commissioned during the year. The Nashik site continues to deliver for Government Tenders which are highly customised packs, and is geared up for implementation of Serialisation requirements as mandated by Government for Export products.

Manufacturing Excellence

The Nashik Site is working on various regional initiatives like operations excellence programme, End to End Supply chain, performance management systems in line with Global Manufacturing and Supply initiatives.

In line with Global Best Practices in the area of Manufacturing and Supply chain, your Company has been working on strategy deployment, performance management, lean leadership, visual factory, gemba with purpose etc. Through strategy deployment, the Nashik site is striving to engage everybody and aligning the collective efforts of everyone with the site roadmap to deliver the business goals. Several improvement projects have been identified related to OEE improvement, cost reduction, productivity improvement, quality & safety improvement which are in progress. The Nashik site achieved a new landmark in supporting patient requirements by recording the highest production in the dermatology range of 128 Mn tubes.

Logistics

I n line with business needs, the focus continued on base capability build up, infrastructure development, standardizing the way of working and making progress in our performance system & governing mechanism. The year saw the enhancement in cool storage capability, complete Corporate Security & Investigations (CSI) review of business partners, roll out of various quality & customer connect programs. There was an external challenge of implementing the new DPCO within 45 days and detailed planning and execution ensured compliance.

(h) Corporate Social Responsibility

As a part of its social development initiatives, your Company''s commitment towards Corporate Social Responsibility continued by supporting the ongoing long term social projects and the addition of new projects through various non-governmental organisations.

Your Company through Gramin Arogya Vikas Sanstha (GAVS), a registered public trust promoted by the Company, through its tribal healthcare project in Nashik, Maharashtra has reached out to approximately 260 villages through health centres and mobile vans. There have been more than 40,000 direct beneficiaries and 1.25 lakh indirect beneficiaries through health checkup camps and education sessions. This project is in partnership with NGO Niramaya Health Foundation.

Your Company continued its support to the Institute for Indian Mother and Child, an NGO in West Bengal with primary healthcare services to mother and child, educating the community on ante-natal, natal and post natal. In 2013, there have been more than 2.2 lakh beneficiaries which included mothers for maternal and child health screening, dietary supplements and other healthcare needs.

Your Company continued to support through Niramaya Health Foundation, another healthcare project in the slums of the dumping grounds of Deonar, Mumbai. To meet the immediate health care needs, a fully-equipped mobile medical van is available to attend to 30,000 slum dwellers.

During the year, your Company continued to support three voluntary organisations for cancer care towards underprivileged patients - Sri Chaitanya Seva Trust, Mumbai; Indian Cancer Society, Mumbai; and Bangalore Hospice Trust, Karunashraya, Karnataka through screening camps to facilitate early detection, treatment, rehabilitation and palliative care etc. Over 95 camps were conducted, following which approximately 9000 patients were screened for cancer. More than 100 cancer patients were rehabilitated through vocational training and more than 1100 critically ill cancer patients were supported through donation of medicines.

A successful partnership with Pratham continued in 2013 with the education projects in Behraich, Uttar Pradesh and Jodhpur, Rajasthan. Through the shelter homes a total of 63 children went back to their homes with social workers of Pratham monitoring that they have been continuing with their education in the local schools successfully and 89 new children were enrolled. GSK continued to support Paraplegic Foundation in Mumbai for rehabilitation of the severely orthopaedically disabled lower socio-economic class patients. Besides, your Company extended its support towards the education of disadvantaged orphaned children in Barasat district of West Bengal through Kamakhya Balak Ashram by building a school block and has partnered with Aural Education for Hearing Impaired (AURED) in Hyderabad, Andhra Pradesh to help early intervention and detection.

Your Company supported other education projects including Ashirwad Special Education School, Delhi which serves mentally challenged children, Pushpawati Runtha Kanya Vidyalaya, Chandak Kanya Vidyalaya, Vanita Vikas Mandal in Nashik, Maharasthra and Nai Dharti in Patna, Bihar, by supporting the education of underprivileged girls. Your Company continued its support to educate the underprivileged children of Shree Ichhyaamni Vidyamandir, Avishkar Education Sanstha, Shri Ram Vidyalaya managed by Tarun Aikal Mandal and the Down''s Syndrome Care Association in Nashik, Maharashtra. Besides, your Company initiated support to The Association of Parents of Mentally Retarded Children, Nashik for medical equipments and The National Federation of Blind, Nashik, towards vocational training and rehabilitation.

Your Company also supported the relief operations of the disaster hit victims of the Uttarakhand floods and Typhoon Phailin by donating medicines through Americares India Foundation.

GlaxoSmithKline Plc continued their donation of Albendazole. In 2013, we donated 325 million albendazole tablets to support the Government of India''s Lymphatic Filariasis elimination programme. In addition, for de-worming of school-age children in India, in 2013, 11.2 million albendazole tablets were donated.

(i) Cautionary Note

Certain statements in the "Management Discussion and Analysis" section may be forward- looking and are stated as required by applicable laws and regulations. Many factors may affect the actual results, which could be different from what the Directors envisage in terms of future performance and outlook.

4. Directors

Ms. A. Bansal, Mr. PV. Nayak and Mr. D. Sundaram retire by rotation and, being eligible, offer themselves for re-appointment.

5. Directors'' Responsibility Statement

Your Directors confirm:

(i) t hat in the preparation of the annual accounts, the applicable accounting standards have been followed;

(ii) that the Directors have selected such accounting policies and applied them 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 at the end of the financial year ended 31st December 2013 and of the profit of the Company for that year;

(iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts on a going concern basis.

6. Corporate Governance & Business Sustainability Report

Your Company is part of the GlaxoSmithKline plc group and conforms to norms of Corporate Governance adopted by them. As a Listed Company, necessary measures are taken to comply with the Listing Agreements with the Stock Exchanges. A report on Corporate Governance, along with a certificate of compliance from the Auditors, given in Annexure ‘B'', forms a part of this Report. Further a Business Responsibility Report, describing the initiatives taken by your Company from an environmental, social and governance perspective, given in Annexure ‘C'', also forms a part of this Report.

7. Auditors

Members are requested to re-appoint M/s. Price Waterhouse & Co., Bangalore, Chartered Accountants, as the Auditors of the Company and authorise the Audit Committee to fix their remuneration.

Pursuant to the Order issued by the Central Government under Section 233B of the Companies Act, 1956, the Board of Directors of your Company have appointed Messrs R. Nanabhoy & Co., Cost Accountants for conducting the audit of the cost accounting records maintained by the Company for its Formulations.

8. General

The particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo are given in Annexure ‘A'' forming part of this Report. The particulars of employees required to be furnished under Section 217(2A) of the Companies Act, 1956, read with the rules thereunder, forms part of this Report. However, as per the provisions of Section 219(1) (b)

(iv) of the Companies Act, 1956, the reports and accounts are being sent to all the Shareholders of the Company excluding the statement of particulars of employees. Any Shareholder interested in obtaining a copy may write to the Company Secretary at the Registered Office of the Company. Further, attached to the accounts of the Company are the Report and Audited Accounts of Biddle Sawyer Limited, a subsidiary company.

9. Employees

The Directors express their appreciation for the contribution made by the employees to the significant improvement in the operations of the Company and for the support received from all other stakeholders, including shareholders, doctors, medical professionals, customers, suppliers and business partners.

The Board and the Management of your Company are indeed appreciative of the substantial support being received from GSK plc the parent organization in providing new healthcare solutions which are products of its discovery labs and the technology improvements which benefits your Company immensely.

On behalf of the Board of Directors

D. S. Parekh

Chairman

Mumbai, 18th February 2014


Dec 31, 2012

The Directors have pleasure in submitting their Report for the year ended 31st December 2012

1. Results for the year ended 31st December 2012

Year ended Year ended 31st December 31st December 2012 2011 Rs. in lakhs Rs. in lakhs

Sale of Products (Net of Excise Duty) 2599,93.10 2338,03.40

Other Operating Revenue 30,37.21 37,84.70

Revenue from Operations 2630,30.31 2375,88.10

Profit before Exceptional Items and Tax 994,77.65 921,59.78

Less: Exceptional Items (148,21.70) (322,54.14)

Profit before Tax 846,55.95 599,05.64

Less: Tax expense 269,30.06 168,45.22

Net Profit for the year 577,25.89 430,60.42

Add: Opening Surplus brought forward from the previous year 1110,59.15 1164,52.81

Less: Appropriations:

Proposed Dividend (including tax on distributed Profits) 487,17.85 441,48.04

Transfer to General Reserve 57,72.59 43,06.04

Closing Surplus carried forward 1142,94.60 1110,59.15

2. Dividend

The Directors recommend a Dividend of Rs. 50 per Equity Share for the year (previous year: Rs. 45.00 per Equity Share). If approved by the Shareholders at the Annual General Meeting, the Dividend will absorb Rs. 423 crores. The Dividend Distribution Tax borne by the Company will amount to Rs. 64 crores.

3. Directors

Dr. A. Banerjee resigned as Alternate Director to Mr. S. Harford from 31st July 2012 and Mr. V. Narayanan resigned as Director from 9th November 2012. The Board places on record its appreciation of the valuable services rendered by Dr. A. Banerjee and Mr. V. Narayanan during their tenure as Directors and for their contributions to the deliberations of the Board.

The Board of Directors has appointed Ms. Anjali Bansal as Non-Executive Independent Director with effect from 19th February 2013, in the casual vacancy caused by the resignation of Mr. V. Narayanan.

Mr. P. V. Bhide, Mr. M. B. Kapadia and Mr. R. C. Sequeira retire by rotation and, being eligible, offer themselves for re-appointment.

4. Directors'' Responsibility Statement

Your Directors confirm:

(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed;

(ii) that the Directors have selected such accounting policies and applied them 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 at the end of the financial year ended 31st December 2012 and of the profit of the Company for that year;

(iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts on a going concern basis.

5. Corporate Governance & Business Responsibility Report

Your Company is part of the GlaxoSmithKline plc group and conforms to norms of Corporate Governance adopted by them. As a Listed Company, necessary measures are taken to comply with the Listing Agreements with the Stock Exchanges. A report on Corporate Governance, along with a certificate of compliance from the Auditors, given in Annexure ‘B'', forms a part of this Report. Further a Business Responsibility Report, describing the initiatives taken by your Company from an environmental, social and governance perspective, given in Annexure ‘C'', also forms a part of this Report.

6. Auditors

Members are requested to re-appoint M/s. Price Waterhouse & Co., Bangalore, Chartered Accountants, as the Auditors of the Company and authorise the Audit Committee to fix their remuneration.

Pursuant to the Order issued by the Central Government under Section 233B of the Companies Act, 1956, the Board of Directors of your Company have appointed M/s. R. Nanabhoy & Co., Cost Accountants for conducting the audit of the cost accounting records maintained by the Company for its Formulations.

7. General

The particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo are given in Annexure ‘A'' forming part of this Report. The particulars of employees required to be furnished under Section 217(2A) of the Companies Act, 1956, read with the rules thereunder, forms part of this Report. However, as per the provisions of Section 219(1)(b) (iv) of the Companies Act, 1956, the reports and accounts are being sent to all the Shareholders of the Company excluding the statement of particulars of employees. Any Shareholder interested in obtaining a copy may write to the Company Secretary at the Registered Office of the Company. Further, attached to the accounts of the Company are the Report and Audited Accounts of Biddle Sawyer Limited, a subsidiary company.

8. Employees

The Directors express their appreciation for the contribution made by the employees to the significant improvement in the operations of the Company and for the support received from all other stakeholders, including shareholders, doctors, medical professionals, customers, suppliers and business partners.

The Board and the Management of your Company are indeed appreciative of the substantial support being received from GSK plc, the parent organization, in providing new healthcare solutions which are products of its discovery labs and the technology improvements which benefits your Company immensely.

On behalf of the Board of Directors

V. Thyagarajan

Vice-Chairman

Mumbai, 19th February 2013


Dec 31, 2010

The Directors have pleasure in submitting their Report for the year ended 31st December 2010

1. Results for the year ended 31st December 2010

Year ended Year ended 31st December 31st December 2010 2009 Rs. in Lakhs Rs. in Lakhs

SALES (Gross) 2155,08.20 1912,77.03

Less: Excise duty on Sales 43,43.95 42,00.31

NET SALES 2111,64.25 1870,76.72

PROFIT BEFORE TAXATION AND

EXCEPTIONAL ITEMS 867,26.60 758,48.20

Less: Provision for Taxation 285,88.43 253,58.88

PROFIT AFTER TAXATION AND

BEFORE EXCEPTIONAL ITEMS 581,38.17 504,89.32

Exceptional Items (Net of Tax) (17,69.36) 7,39.77

NET PROFIT AFTER TAX 563,68.81 512,29.09

Add: Balance brought forward from

the previous year 1049,23.41 882,40.80

Amount available for disposal 1612,92.22 1394,69.89

APPROPRIATIONS :

General Reserve 56,36.88 51,22.91

Equity Dividend 338,81.20 254,10.90

Distribution Tax on Dividend 53,21.33 40,12.67

Balance carried forward 1164,52.81 1049,23.41

2. Dividend

The Directors recommend a Dividend of Rs. 40 per Equity Share for the year (previous year: Rs.30 per Equity Share). If approved by the Shareholders at the Annual General Meeting, the Dividend will absorb Rs. 339 crores. The Dividend Distribution Tax borne by the Company will amount to Rs. 53 crores.

4. Directors

Resignation

Mr. Ajit Nimbalkar resigned as Director from 27th April 2010. The Board places on record its appreciation of the valuable services rendered during his tenure as Director and for his contributions to the deliberations of the Board.

Appointments

The Board of Directors has appointed Mr. Pradeep Bhide as Non-Executive Independent Director with effect from 28th October 2010, in the casual vacancy caused by the resignation of Mr, Ajit Nimbalkar. The Board has also appointed Mr. Simon Harford as Non-Executive, Non - Retiring Director with effect from 28th October 2010.

Mr. P. V. Nayak, Mr. V. Narayanan and Mr. D. Sundaram retire by rotation and, being eligible, offer themselves for re-appointment.

5. Directors Responsibility Statement

Your Directors confirm:

(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed;

(ii) that the Directors have selected such accounting policies and applied them 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 at the end of the financial year ended 31s December 2010 and of the profit of the Company for that year;

(iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts on a going concern basis.

6. Corporate Governance

Your Company is part of the GlaxoSmithKline pic group and conforms to norms of Corporate Governance adopted by them. As a Listed Company, necessary measures are taken to comply with the Listing Agreements with the Stock Exchanges. A report on Corporate Governance, along with a certificate of compliance from the Auditors, given in Annexure B, forms a part of this Report.

7. Auditors

Members are requested to re-appoint M/s. Price Waterhouse & Co, Chartered Accountants, as the Auditors of the Company and authorise the Audit Committee to fix their remuneration.

Pursuant to the Order by the Central Government under Section 233B of the Companies Act, 1956, the Board of Directors of your Company have appointed Messrs R. Nanabhoy & Co., Cost Accountants for conducting the audit of the cost accounting records maintained by the Company for its Bulk Drugs and Formulations.

8. General

The particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo are given in Annexure A forming part of this Report. The particulars of employees required to be furnished under Section 217(2A) of the Companies Act, 1956, read with the rules thereunder, forms part of this Report. However, as per the provisions of Section 219(1) (b) (iv) of the Companies Act, 1956, the reports and accounts are being sent to all the Shareholders of the Company excluding the statement of particulars of employees. Any Shareholder interested in obtaining a copy may write to the Company Secretary at the Registered Office of the Company. Further, attached to the accounts of the Company are the Report and Audited Accounts of Biddle Sawyer Limited, a subsidiary company.

9. Appreciations and Acknowledgements

The Board places on record its appreciation of enormous contribution and support received by your Company from GlaxoSmithKline pic, by providing access to the latest innovative products, other products relevant to the local market, sales/marketing and training inputs, technological support and global business processes which have played an important role in helping your Company to become a leading player in the Indian pharmaceutical market.

The Directors express their appreciation for the contribution made by the employees to the significant improvement in the operations of the Company and for the support received from all other stakeholders, including shareholders, doctors, medical professionals, customers, suppliers and business partners.

On behalf of the Board of Directors

D.S. Parekh Chairman

Mumbai, 14th February 2011


Dec 31, 2009

The Directors have pleasure in submitting their Report for the year ended 31st December 2009

1. Results & Dividend for the year ended 31st December 2009

Year ended Year ended 31st December 31st December 2009 2008 Rs. in Lakhs Rs. in Lakhs

SALES (Gross) . . 1912,77.03 1751,56.06

Less: Excise duty on Sales . . .. .. 42,00.31 91,15.53

NET SALES 1870,76.72 1660,40.53

PROFIT BEFORE TAXATION AND EXCEPTIONAL ITEMS 758,48.20 679,89.76

Less: Provision for Taxation 253,58.88 231,53.94

PROFIT AFTER TAXATION AND BEFORE

EXCEPTIONAL ITEMS . . 504,89.32 448,35.82

Exceptional Items (Net of Tax) 7,39.77 128,21.08

NET PROFIT AFTER TAX . . 512,29.09 576.56.90

Add: Balance brought forward from the previous year . . 882,40.80 759,88.90

Amount available for disposal 1394,69.89 1336,45.80

APPROPRIATIONS :

General Reserve . . 51,22.91 57,65.69

Equity Dividend (including special additional Dividend in the previous year) 254,10.90 338,81.20

Distribution Tax on Dividend 40,12.67 57,58.11

Balance carried forward 1049,23.41 882,40.80

The growth in Net Sales (net of Excise duty) was 12.7% and in Profit after Tax and before Exceptional Items was 12.6% for the year ended 31st December 2009. The growth in Gross Sales was impacted on account of lower selling prices as a result of the benefit of excise duty reduction being passed on to the consumer.

2. Dividend

The Directors recommend a Dividend of Rs.30 per Equity Share for the year (previous year: Rs.22 per Equity Share and a special additional Dividend of Rs.18 per Equity Share). If approved by the Shareholders at the Annual General Meeting, the Dividend will absorb Rs.254 crores. The Dividend Distribution Tax borne by the Company will amount to Rs.40 crores.

3. Management Discussion and Analysis

(a) Your Company maintained its leadership position in the Pharmaceuticals market with Net Sales registering a growth of 12.7%. Profit Before Tax and Exceptional Items grew by 11.6%. Sales performance in all of the Companys diversified business units i.e. in the mass market and mass specialty segments, dermatologicals, oncology, critical care and vaccines helped to support sales growth. Despite significant investments in sales promotion and field force expansion, Profit before investment income and tax was maintained at 35% of Net Sales.

Cash generation from operations was favourable, driven by the strong business performance and management of working capital. The Companys investment portfolio continues to remain deployed largely in Bank Deposits.

(b) Pharmaceuticals Business Performance, Opportunities and Outlook

Your Company continues to enjoy a leadership position in the categories in which its products are represented. The growth of your Company was marginally better than the growth of the Indian Pharmaceuticals market.

The Mass Markets activity comprising mainly of acute care products grew faster than the market in their represented segments: the rural marketing initiative has picked up momentum. Calpol, an anti-pyretic drug, is now the largest prescribed product in the industry (Source: CMarc - Dec09) while other products such as Parit, Vozet, Cobadex CZS, Neosporin and Zentel have gained market share in their represented categories.

The Mass Specialty team continued to record good growth. Augmentin, currently the largest selling antibiotic brand in the industry, Arixtra, Zobactin, Supacef and Eltroxin are major growth drivers for this team. Arixtra is the 6th largest brand in the anti-thrombotic market. The focus on Hospital and Tender businesses will help further growth opportunities in these specialities.

The Companys chronic care portfolio includes the Dermatology, Oncology, Cardiovascular, Respiratory and Diabetes segments. Your Company is currently the leader in the Dermatology category with 14% market share and key products such as Betnovate, Zovirax, Zimig and Tenovate are consistently maintaining a leadership position in their respective categories. In Oncology, your Company has supported approximately 400 patients with the drug Tykerb. Lanoxin has consistently maintained a leadership position and launch of Benitec makes the Companys foray in cardiovascular therapy. In diabetes care, Windia is the leader in the Rosiglitazone segment. With the acquisition of distribution rights for the Stiefel (a global dermatologicals company) range of products in India, plans are in hand for market expansion in cosmetic dermatology therapies like acne, sun protection, emollients and moisturizers.

The Vaccines business continued to perform well in the current year. Rotarix, a vaccine for rotaviral diarrhoea is making significant strides. Cervarix, a vaccine for prevention of cervical cancer, was launched during the year. Your Company expects to introduce newer and sophisticated vaccines which will help increase market penetration.

New products launched during the year included Benitec A (Olmesatan in combination with Amilodipine) in Cardiology, Dermocalm (Calamine lotion) in Dermatology, Ventorlin CFC free inhaler (Salbutamol) in Respiratory and Esblanem (Meropenem) in Antibiotic segments.

Your Company continued the search for new Business Development opportunities in high growth therapeutic areas like Cardiology, Diabetes and Oncology and in therapeutic areas in which your Company has well established presence like Dermatology, Gynecology, Antibiotics and Gastroenterology. Going forward, your Company intends to enter into high growth segments such as CNS (Central Nervous System).

Exports recorded a sales turnover of Rs.71.50 crores comprising both Bulk Drugs and Formulations. Exports of bulk drugs were to major markets like Japan, Mexico, France, Indonesia, Jordan, U.K. and Germany.

(c) Risk, Concerns and Threats

As expected, India has been relatively insulated from the global recession, without any significant impact on the growth of the pharmaceutical industry. The industry growth is largely driven by chronic disease segments viz. cardiovascular, diabetes, asthma, cancer, and largely influenced by changing lifestyles. There are signs that health awareness has increased due to higher disposable incomes, urbanization and greater health insurance coverage, which could improve further with acceleration in Government spend on healthcare infrastructure. The adoption of intellectual property rights has encouraged innovation. The industry continues to remain under price control; the scope and coverage of the Governments new pharmaceuticals policy cannot be ascertained, since it is pending review by the Government and remains an area of uncertainly for the pharmaceutical industry. It is hoped that Government will consider several representations made by industry associations in framing the new policy. Data Exclusivity/Data Protection remain concern area for the industry.

(d) Research & Development and Regulatory Matters

GlaxoSmithKline continues to be committed to research and development of medicines that will improve the quality of life of people around the world and that truly make a difference to patients. The Clinical Operations group in India, which conducts clinical studies across a number of disease areas ranging from Cancer, Coronary Heart Disease including acute coronary syndrome, Diabetes, Chronic Liver Disease and Hepatitis C, supports this effort.

Last year, your Company conducted 18 clinical trials, of which 7 were new studies initiated in 2009. In all, over 800 patients participated. The therapeutic area focus for 2009 has been Oncology and Cardiovascular diseases. Your Company has so far trained clinical trial investigators in over 131 hospitals / institutes across India. The quality of work continues to be of a very high order, evidenced by a number of successful internal compliance audits as well as US FDA inspections at two of our investigational sites.

During the year under review, in order to support the launch of new drugs that would benefit and improve the quality of life of Indian patients suffering from various diseases, your Company submitted 7 NDAs (New Drug Applications) for GlaxoSmithKline innovator and in-licensed products and 2 INDs (Investigations New Drug Applications) to the CDSCO (Central Drugs Standard Control Organization), Ministry of Health and Family Welfare, Government of India. Your Company has received approval for 3 NDAs and 1 IND from CDSCO which paves the way for speedy introduction of new drugs. Additionally, to support the R&D efforts of GlaxoSmithKline, your Company submitted 3 global Clinical Trial applications to CDSCO, and was granted approval to conduct these studies in the Indian population through the Clinical Operations group in India.

Efforts towards a speedy review and approval by regulatory authorities for some of these products, particularly a calcium supplement, micafungin, retapamulin and a new indication for Carzec help achieve early access to new and innovative therapeutic options to patients in the country. The Medical Affairs team is adequately resourced to play a pivotal role in communicating cutting edge scientific information to internal and external stakeholders.

(e) Internal Control Framework

Your Company conducts its business with integrity and high standards of ethical behavior, and in compliance with the laws and regulations that govern its business. Your Company has a well established framework of internal controls in operation, including suitable monitoring procedures and self-assessment exercises. In addition to external audit, the financial and operating controls of your Company at various locations are reviewed by the Internal Auditors, who report their findings to the Audit Committee of the Board. Compliance with laws and regulations is also monitored.

Your Companys Code of Conduct sets out the fundamental standards to be followed by employees in their everyday actions. In accordance with the Code of Conduct, and Standards associated with the Code of Conduct, employees are required to become familiar with the legal requirements, policies and procedures applicable to their areas of operation, avoid conflicts of interest and are tasked with upward reporting of all unethical and illegal conduct. All employees are committed to the principle of performance with integrity and ensuring that activities comply with all applicable laws.

Additionally, Managers are required to certify on an annual basis whether there have been any transactions which are fraudulent, illegal or violative of the Code of Conduct. Strong oversight and self monitoring policies and procedures demonstrate your Companys commitment to the highest standards of integrity.

(f) Human Resources

With the increasing importance of Human Resources, emphasis has been laid on capability building and towards enhancing the effectiveness of specialised teams. Structured Management Trainee schemes have been set up/revamped to support the different functions. Your Companys employees have played a key role in contributing to the growth and maintaining its status as one of the most reputed companies in India and more specifically in the pharmaceuticals industry.

In reaching out to its employees, the Company has also launched a Wellness and Well being Program, a recognition scheme called AAA award (Acknowledge, Appreciate and Award) to recognize employees who have made good contributions as well as an Empowerment Program for employees to contribute their ideas through small group activities. Talent management continues to be an important area for your Company and key talent amongst the first line managers attended a three Module Leadership and Development program in collaboration with the SP Jain Institute of Management. Other employees were encouraged to avail of an educational assistance policy so as to encourage a learning culture.

Your Company has maintained an amicable relationship with its Unions. During the course of the year, long term settlements have been signed at the two manufacturing sites, Thane and Nashik. Long term settlements were also signed with the Unions representing the field sales force.

Sales training supports the delivering of quality communication to the medical fraternity. A Brand Calling Card prompts Medical Representatives on differentiating their Brand communication to Doctors. This interactive detailing also has a bank of FAQs, Rebuttals, Clinical Papers and other Pathology-Product-Promotion literature for training. A new Development Navigator and Field Coaching Tool enables Performance Tracking and Continuous Improvement from the sales teams.

Your Company had staff strength of 4006 employees as on 31st December, 2009 compared to 3722 employees at the end of the previous year. The additional headcount is on account of new initiatives in the Field to extend our reach.

(g) Procurement

To meet the challenges in procurement which surfaced in 2008, strategic contracts helped in capitalizing on the opportunities in key raw material categories. This has ensured procurement efficiency and assurance of supply. Focus on risk based sourcing management received a thrust with the launch of advance procurement initiatives aimed at building capability of vendors. Supplier Quality Management, through a dedicated team launched this year, aims at ensuring best quality of all our ingredients by end to end quality management at vendors sites. A vendor assessment tool specifically aimed at measuring capability and capacity of vendors was developed and deployed.

Sourcing strategies were developed for spend optimization in the area of marketing promotional support items, promotional printing, air travel and events management.

(h) Manufacturing

Your Companys Nashik site commenced manufacture and supply of Albendazole tablets to WHO for the Lymphatic Filriasis eradication programme. Thane site continued to supply Betamethasone and its derivatives to highly regulated markets. Upgradation at Nashik site has been undertaken resulting in significant increase in productivity. There was considerable focus on improving Environment, Health and Safety and a number of activities have been undertaken at both the Nashik and Thane sites during the year.

(i) Information Technology (IT) & Supply Chain

As a global initiative to bring down cost and reinvest for further improvements in technology, the IT function has been restructured globally to form IT demand (business facing) and IT supply (technology delivery) functions. The transition to the new model was well planned and executed, with no adverse impact on the business.

A mobile phone based Field activity reporting initiative was successfully piloted across two cities. Another major IT initiative, aimed at risk mitigation and control, was successfully completed during the year. IT enabled external facing web applications were reviewed and the identified risks were mitigated through a well coordinated plan.

In a goods and services tax regime, a Hub and Spoke initiative is being piloted in the distribution network. New ways of working were put in place for better networking of supply sites, both local and global, using global GSK systems and resources to ensure an uninterrupted supply.

(j) Corporate Social Responsibility

During the year, your Company undertook several community development projects by continuing to make a positive and significant contribution to the society.

Gramin Arogya Vikas Sanstha (GAVS), the Trust established and supported by the Company continues to operate in predominantly tribal and remote villages around Nashik. The Trusts Mobile Clinic operates in these remote regions covering a distance of over 160 kms each day, visiting around 35 clusters of villages in rotation. GAVS during the year has been successful in reaching out to over 40000 tribal people as direct and indirect beneficiaries, covering six blocks of Peth Taluka. Three Medical centres located in the pre-dominantly remote villages provide primary healthcare services to the tribals, who are socio-economically disadvantaged and marginalized group of people living in very difficult terrain, with very limited access to healthcare services. The project was executed in collaboration with Niramaya Health Foundation.

GAVS, in its on-going education initiative for the Rural Tribal youth, runs three Vocational Training Centers in Peth Taluka, Nashik, in collaboration with partner organization Kherwadi Social Welfare Association. The project was undertaken with the long term objective of imparting specialized skills and making the tribal youth more employable in the areas of computer literacy, tailoring, beauty training, wireman/ electrician training, English speaking, motor training etc. Various batches covering around 700 youth have successfully completed their courses, with over 50% of them currently gainfully employed.

During the year, the Company continued its support to Pratham, a charitable Organization, in running a Shelter home for children under the age of 16. This Shelter home is located in Behraich, Lucknow, which is one of the highest child migrating regions in the country. During the year the shelter home catered to 120 children and provided shelter to 52 needy and vulnerable children. The Shelter home provides education, food and shelter to these children for their holistic development.

Your Company continues supporting the medical healthcare services in Deonar dumping ground, the largest garbage dumping ground in Mumbai. The project involves providing primary healthcare services to children who are rag-pickers and their families who work in and around the dumping ground. The intervention has achieved improved life expectancy of the children working as rag pickers in the dumping ground, while reducing the rate of anaemia and other nutritional deficiencies and general ailments in the community.

Donation of essential medicines / products for humanitarian causes was continued with, while also continuing to support ISKCON Foundations Mid-Day Meal project in Mumbai for municipal school children by way of Cash Donation.

Your Company also undertook new projects for capacity building in Kolkata. It supported Institute of Child Health, a charitable organisation, by providing donation to set up a technically sound NICU step down Unit for its 150 bedded hospital, benefiting increased number of infants from economically weaker section. Your company also extended its support to Indian Institute for Mother and Child, a voluntary organization, committed to promote child and maternal health and literacy. An annual financial support was provided to the organization to run its on-going medical programs benefiting over 1 lakh poor people.

As part of its regional CSR program, your Company supported smaller projects in Nashik and New Delhi. The Company also supported St. Jude India Care centre by way of providing infrastructure support to its new centre in Navi Mumbai for cancer afflicted poor children and also donated a dialysis machine to Tamilnadu Kidney Research Association, a Charitable organization supporting economically weak patients in need of dialysis.

The Company also initiated new projects in support of the geriatric population. The first project, your Company initiated was a long term project for supporting annually a 24 X 7 Helpline for senior citizens in Mumbai, run by Dignity Foundation, a voluntary non profit organization. The Helpline provides immediate and emergency support, rescue and relief to elderly people calling at the Helpline. The second project was for providing medical support to the aged in the remote and under developed Khurda district of Orissa. The project envisages support to about 14,000 underserved villagers suffering from debilitating diseases, especially orthopaedic conditions and helping in their rehabilitation.

The Company also took active steps by partnering with the Mumbai Municipal Corporation in spreading awareness of swine flu. There were a number of promotional initiatives that were taken that included release of advertisements, creation of bus panels, posters etc. among other initiatives.

India is increasingly becoming an integral part of GlaxoSmithKlines CSR initiatives. During the year, our parent fulfilled its plans of up scaling its efforts in India and building a new manufacturing production line in India that would help substantially towards helping eliminate Lymphatic Filariasis (LF) by 2020. The Global Community partnerships project, Personal Hygiene and Sanitation Education (PHASE) has also been successfully launched during the year in India covering 16 municipal schools in Mumbais Deonar Dumping ground and Dharavi.

(k) Cautionary Note

Certain statements in the "Management Discussion and Analysis" section may be forward- looking and are stated as required by applicable laws and regulations. Many factors may affect the actual results, which could be different from what the Directors envisage in terms of future performance and outlook.

4. Directors

Resignation

Mr. Peter Bains and Dr. Mark Reilly resigned as Directors from 27th July 2009. The Board places on record its appreciation of the valuable services rendered during their tenure as Directors and for their contributions to the deliberations of the Board.

Appointment

The Board of Directors has appointed Mr. D. Sundaram as Non-Executive Independent Director of the Company with effect from 27th July 2009, in the casual vacancy caused by the resignation of Dr. Mark Reilly. The Board has also appointed Mr. A. M. Nimbalkar as additional Director of the Company with effect from 27th July 2009. A proposal for his appointment as Non-Executive Independent Director is being placed before the Members for approval at the ensuing Annual General Meeting.

Mr. R. R. Bajaaj, Mr. M. B. Kapadia and Mr. R. C. Sequeira retire by rotation and, being eligible, offer themselves for re-appointment.

5. Directors Responsibility Statement

Your Directors confirm:

(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed;

(ii) that the Directors have selected such accounting policies and applied them 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 at the end of the financial year ended 31st December 2009 and of the profit of the Company for that year;

(iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts on a going concern basis.

6. Corporate Governance

Your Company is part of the GlaxoSmithKline pic group and conforms to norms of Corporate Governance adopted by them. As a Listed Company, necessary measures are taken to comply with the Listing Agreements with the Stock Exchanges. A report on Corporate Governance, along with a certificate of compliance from the Auditors, given in Annexure B, forms a part of this Report.

7. Auditors

Members are requested to re-appoint M/s. Price Waterhouse & Co., Chartered Accountants, as the Auditors of the Company and authorise the Audit Committee to fix their remuneration.

8. General

The particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo are given in Annexure A forming part of this Report. The particulars of employees required to be furnished under Section 217(2A) of the Companies Act, 1956, read with the rules thereunder, forms part of this Report. However, as per the provisions of Section 219(1 )(b) (iv) of the Companies Act, 1956, the reports and accounts are being sent to all the Shareholders of the Company excluding the statement of particulars of employees. Any Shareholder interested in obtaining a copy may write to the Company Secretary at the Registered Office of the Company. Further, attached to the accounts of the Company are the Report and Audited Accounts of Biddle Sawyer Limited, a subsidiary company.

9. Employees

The Directors express their appreciation for the contribution made by the employees to the significant improvement in the operations of the Company and for the support received from all other stakeholders, including shareholders, doctors, medical professionals, customers, suppliers and business partners.

On behalf of the Board of Directors

D.S. Parekh Chairman Mumbai, 15th February 2010

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