Dear Members,
The Board of Directors of your Company have pleasure in presenting their 6th Annual Report (Post – IPO) on the business and operations of the Company together with the Audited Financial Statements for the year ended March 31, 2022. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.
1. FINANCIAL RESULTS:
During the year under review, the performance of your Company was as under:
2. STATE OF AFFAIRS (standalone):
The gross sales and other incomes for the financial year under review were Rs. 12,447.19 million as against Rs. 11,188.32 million in the previous year, recording a growth of 11.25%
The profit before tax was Rs. 4,585.38 million for the financial year under review as against Rs. 3,888.94 million for the previous financial year, registering an increase of 17.91%
The profit after tax for the financial year under review was Rs. 4,171.92 million as against Rs. 3,506.05 million for the previous financial year, registering an increase of 18.99%.
3. DIVIDEND:
In line with the Dividend Distribution Policy of the Company, during the year under review, the company had paid Rs. 6.01 per equity share (at the rate of 601%) as an interim dividend for the Financial Year 2021-22 (during the previous year the company had paid Rs. 5.50 (at the rate of 550%) per equity share as an interim dividend with no final dividend). No Final dividend was recommended by the Board of directors
The Company has adopted the Dividend Distribution Policy and the said policy is available on the website of the Company at http://eris.co.in/policies.
4. CAPITAL EXPENDITURE (standalone):
As on March 31st, 2022, the gross fixed assets (tangible and intangible) stood at Rs. 7,833.96 million (previous year Rs. 7,168.75 million) and the assets (tangible and intangible), at Rs. 6,420.03 million (previous year Rs. 5,843.23 million). Capital expenditure during the year amounted netfixed to Rs. 532.83 million (previous year Rs. 256.11 million). During the year under review, the Company has paid NIL amount for business acquisition/ consolidation of holding (previous year NIL).
5. TRANSFERS TO RESERVES:
The Company has not transferred any amount to the reserves during the year under review. (previous year: NIL)
6. CHANGES IN CAPITAL STRUCTURE:
During the year under review, the Company had issued and allotted 1,49,544 equity shares to its employees under the “Eris Lifesciences Employee
Stock Option Plan 2017”. As a result, the issued, subscribed, and paid-up share capital of the Company increased from Rs. 13,57,80,653/- (divided into 13,57,80,653 equity shares of Re. 1/- each) to Rs. 13,59,30,197/- (divided into 13,59,30,197 equity shares of Re. 1/- each). The equity shares issued under the Eris Lifesciences Employee Stock Option Plan 2017 ranks pari-passu with the existing equity shares of the Company.
7. STATUTORY AUDITORS:
M/s. Deloitte Haskins & Sells LLP, having Firm's Registration No. 117366W/W-100018, Statutory Auditors of the Company, were re-appointed at the
15th Annual General Meeting (AGM) held on 01.09.2021 and will complete their term at the end of the 19th AGM of the Company.
The Auditor's Report for the financial year ended 31st March, 2022 does not contain any qualification, adverse remark, reservation or disclaimer and therefore, does not call for any further explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.
8. COST AUDITORS:
The Company has made and maintained cost accounts and records as specified by the Central Government under Section 148(1) of the Companies Act, 2013. M/s Kiran J Mehta & Co., Cost Accountants have been duly reappointed by Board to conduct the audit of the cost records of the Company for the financial year 2022-23.
The remunerationpayabletotheCostAuditorissubjecttoratificationby the Members at the Annual General Meeting. Accordingly, the necessary
Resolution for ratification of the remuneration payable to M/s Kiran J Mehta & Co., Cost Accountants, to conduct the audit of cost records of the Company for the financial year 2022-23 has been included in the Notice of the forthcoming 16th Annual General Meeting of the Company. The Directors recommend the same for approval by the Members.
9. SECRETARIAL AUDITORS & SECRETARIAL AUDIT REPORT:
The Board, pursuant to Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 has duly re-appointed M/s. Ravi Kapoor & Associates, Practicing Company Secretaries, Ahmedabad as the Secretarial Auditor of the Company to conduct Secretarial Audit as per the provisions of the Companies Act, 2013 for the financial year 2022-23. The Secretarial Auditor has carried out Secretarial Audit accordingly and their report in Form MR-3, for the financial year 2021-22, is annexed as
“Annexure 1” to this report.
The Secretarial Auditor's Report for the financial year ended 31st March 2022 does not contain any qualification, adverse remark, reservation, or disclaimer and therefore, does not call for any further explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.
10. INTERNAL FINANCIAL CONTROLS:
The Board has adopted the policies, processes, and structure for ensuring the orderly and efficient conduct of its business with adequate and effective internal financial control across the organization, including adherence to the Company's policies, the safeguarding of assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures. Also, the Company has an internal audit system commensurate with the size of the Company and periodic audits of the internal functions and processes of the Company are ensured.
11. CONSERVATION OF ENERGY, RESEARCH, AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS, AND OUTGO:
The particulars as prescribed under Sub-section (3)(m) of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, appears at “Annexure 2” to this report.
12. SUBSIDIARY COMPANIES/JOINT VENTURE/ ASSOCIATE COMPANY:
As on March 31, 2022, the Company has (3) three wholly-owned subsidiaries and (2) two other than wholly owned subsidiaries. As per the provisions of the Companies Act, 2013 there are no associates or joint venture companies of the Company. There has been no material change in the nature of the business of the subsidiaries of the Company. The Board of Directors had reviewed the affairs of all the subsidiaries of the Company.
• During the year under review, no company ceased to be a subsidiary of the Company.
• Eris Therapeutics Limited, wholly owned subsidiary of the Company, has been incorporated on 23rd June, 2021.
The Company's wholly owned subsidiary Eris M.J. Biopharm Private Limited (Formerly known as Kinedex Healthcare Private Limited) has issued fresh shares through private placement, pursuant to which Eris holding is now 70% in Eris M.J. Biopharm Private Limited.
The Company has formulated a policy for determining material subsidiaries. The Policy may be accessed at http://eris.co.in/policies.
13. PERFORMANCE AND FINANCIAL POSITION OF THE SUBSIDIARY COMPANIES /JOINT VENTURE/ ASSOCIATE COMPANY:
The Board has reviewed the affairs of its subsidiary companies. Pursuant to Section 129(3) of the Companies Act, 2013 and Rule 5 of the Companies
(Accounts) Rules, 2014, a statement containing the salient features of the financialstatements of the Company's subsidiaries/ joint ventures/ associate companies of the Company, bringing out the highlights of their performance, in the prescribed form Form AOC – 1 which appears at “Annexure 3” to this report. Details pertaining to the subsidiaries of the Company are provided in the notes to the Consolidated Financial Statements.
The Audited Financial Statements of Company's subsidiaries for the financial year ended 31st March, 2022 are available on the web link https://eris.co.in/financial-statements-of-subsidiaries/ and the same are also available for inspection at the Registered Office of the Company as per the details mentioned in the notice of the 16th Annual General Meeting. Your Company will also make available these documents upon request by any Member of the Company interested in obtaining the same, subject to compliance of the applicable provisions of the Companies Act, 2013.
14 CONSOLIDATED FINANCIAL STATEMENTS:
The Consolidated Financial Statements have been prepared pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 8(1) of the Companies (Accounts) Rules, 2014 and also as per the Indian Accounting Standards prescribed by the Institute of Chartered Accountants of India
(ICAI), in this regard. The Consolidated Financial Statements have been prepared on the basis of audited financial statementsof the Company and its subsidiaries as approved by their respective Board of Directors.
15. ANNUAL RETURN (MGT-7):
Pursuant to Section 92(3) read with Section 134(3)(a) of the Companies Act, 2013, the Annual Return of the Company as on 31st March 2022 is available on the Company's website at https://eris.co.in/annual-return-and-annual-secretarial-compliance-report/ under the Investor tab.
16. CORPORATE SOCIAL RESPONSIBILITY (CSR):
In compliance with the requirements of Section 135 of the Act, read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors has constituted a Corporate Social Responsibility (CSR) Committee.
The details of the CSR Committee composition, meetings, and the attendance of the Members at the meetings along with other details appear in the Report on Corporate Governance which forms part of this Annual Report.
The annual report on CSR in the prescribed form appears at “Annexure 4” to this Report. The content of the CSR Policy is available on the website of the Company at http://eris.co.in/policies.
17. MANAGEMENT DISCUSSION AND ANALYSIS:
The Management Discussion and Analysis Report, highlighting the important aspects of the business of the Company appears separately in the Annual Report.
18. CORPORATE GOVERNANCE:
The Company has complied with the Corporate Governance requirements under the Companies Act, 2013, and as stipulated under the SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015. A separate report on Corporate Governance and the Practicing Company Secretary's Certificate confirming compliances thereof appearsat “Annexure 5” to this report.
19. BUSINESS RESPONSIBILITY REPORT:
The Business Responsibility Report as required under Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, describing the initiatives taken by the Company from an environmental, social, and governance perspective appears separately in the Annual Report.
20. DIRECTORS & KEY MANAGERIAL PERSONNEL:
During the year under review, the composition of the Board of Directors did not undergo any changes.
The Company has received declarations from all the Independent Directors under Section 149(7) of the Companies Act, 2013 and Regulation 25(8) of the Listing Regulations confirming that they meet the criteria of independence as prescribed thereunder.
The Independent Directors have complied with the Code for Independent Directors prescribed under Schedule IV of the Companies Act, 2013 and the Listing Regulations. The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience, and expertise.
The Company familiarises the Independent Directors of the Company with their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model and related risks of the Company, etc. Monthly updates on performance/developments of the Company are sent to the Directors. The brief details of the familiarisation programme are available on the website of the Company at: https://eris.co.in/policies/.
There were no changes in Key Managerial Personnel during the financial year 2021-22.
Re-appointment / Appointment
In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Amit Bakshi (DIN: 01250925) retires by rotation at the forthcoming 16th Annual General Meeting and being eligible, offers himself for re-appointment.
Necessary resolutions for approval of the appointment / re-appointment of the aforesaid Directors have been included in the Notice of the forthcoming
16th Annual General Meeting of the Company. The Directors recommend the same for approval by the Members.
21. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:
During the year under review, the Board of Directors of the Company duly met 5 (five) times. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and Listing Regulations.
The applicable details of these Board meetings including the attendance of the Directors at those meetings are given in the report on Corporate Governance which forms part of the Annual Report.
22. COMMITTEES OF THE BOARD:
The Company has the following 6 (six) Board Committees which have been established in compliance with the requirement of applicable law(s) and statute(s) and function accordingly:
The details with respect to the composition, terms of reference, number of meetings held and other disclosures required to be made in the Board's report etc. of these Committees are given in the report on Corporate Governance which forms part of the Annual Report.
23. EMPLOYEES' STOCK OPTION SCHEME:
Eris Lifesciences Employee Stock Option Plan 2017
The ‘Eris Lifesciences Employee Stock Option Plan 2017' (“ESOP 2017”/ “Plan”) was approved by the shareholders at their Extra Ordinary General Meeting held on 3rd February, 2017 and subsequently in the 11th Annual General Meeting held on 29th September, 2017, the Shareholders duly ratified the said Plan. The details as required to be disclosed under the Companies Act, 2013, read with the rules made thereunder and SEBI (Share Based
Employee Benefits and Sweat Equity) Regulations, 2021 [SEBI SBEB, 2021] appears at“Annexure 6” and are available on the Company's website at: https://eris.co.in/corporate-announcements/
Eris Lifesciences Limited Employee Stock Option Plan 2021
The ‘Eris Lifesciences Employee Stock Option Plan 2021' (“ESOP 2021”/ “Plan”) was approved by the shareholders at their 15th Annual General Meeting held on 01st September 2021. The details as required to be disclosed under the Companies Act, 2013, read with the rules made thereunder and SEBI (Share Based Employee Benefits and sweat equity) Regulations, 2021 [SEBI SBEB, 2021] appears at“Annexure 7” and are available on the Company's website at: https://eris.co.in/corporate-announcements/
The objects of the Schemes are, inter alia, to provide an incentive to reward and motivate employees and enable them to participate in the long-term financial growth of the Company. The Company has granted stock options to eligible employees. The options will be exercisable into equity shares as per the terms and conditions stipulated in the Plan.
The certificate from the Secretarial Auditors of the Company certifying that the Scheme is implemented in accordance with the SEBI SBEB, 2021 and the resolutions passed by the members in this regard shall be available at the Annual General Meeting for inspection by members.
24. CONTRACTS WITH RELATED PARTIES:
The policy on Related Party Transactions as approved by the Board is available on the website of the Company and can be accessed through the web link: https://eris.co.in/policies/. All contracts/ arrangements/transactions entered by the Company during the year under review with the related parties were in the ordinary course of business and on an arm's length basis.
As required under Section 134(3)(h) of the Act, details of transactions entered with related parties under the Act as per the last audited financial statements are given in Form AOC-2 provided at “Annexure 8” to this Report.
25. PARTICULARS OF LOANS GIVEN, GUARANTEES GIVEN, INVESTMENTS MADE OR SECURITY PROVIDED BY THE COMPANY:
Details of loans, guarantees and investments, etc covered under section 186 of the Companies Act, 2013 appear in the notes to the financial statements.
26. PROTECTION OF WOMEN AT WORKPLACE:
No complaints pursuant to the provisions of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 have been received during the year under review. Further, the Company has complied with the provisions relating to the constitution of Internal
Complaints Committee under the Sexual Harassment of Woman at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
27. RISK MANAGEMENT:
The Board of Directors of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company.
The Committee is responsible for monitoring and reviewing the risk management plan and ensuring its effectiveness. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management policy has been covered in the Management Discussion and Analysis, which forms part of this report.
28. DISCLOSURE ON ESTABLISHMENT OF VIGIL MECHANISM:
The Company provides an avenue to the Directors and Employees of the Company to report without fear any instance of an actual or suspected violation, wrongdoings, or any illegal or unethical, or improper practice which may adversely impact the image and/or the financials of the Company. For this, the Company has in place a Vigil Mechanism Policy (Whistle Blower Policy) for Directors and employees to report genuine concerns. This provides for adequate safeguards against the victimization of employees and Directors who wish to use the vigil mechanism to bring any wrong deed(s) to the notice of the Company.
During the year under review, the implementation of the vigil mechanism has been properly and regularly monitored by the Audit Committee. However, no complaints or instances in this regard have been reported in the financial year 2021-22. The said policy is available on the Company's Website at http://eris.co.in/policies.
29. DIRECTORS' RESPONSIBILITY STATEMENT:
The Board of Directors of the Company confirms that:
• In the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;
• They had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial year and of the profit of the Company for that period;
They 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;
• They had prepared the annual accounts on a going concern basis;
They had laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and are operating efficiently; and
• They had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and were operating effectively.
30. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND OTHER DETAILS:
The Company has in place a policy on remuneration of Directors, Key Managerial Personnel (“KMP”) and Other Employees which appears at
“Annexure 9” to this report.
The details of parameters adopted for evaluating the performance of Non-Executive Directors appears in the Report on Corporate Governance which forms part of this Annual Report and also available on the Website of the Company at https://eris.co.in/policies/.
31. MANNER IN WHICH FORMAL ANNUAL EVALUATION OF PERFORMANCE OF BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS HAS BEEN CARRIED OUT:
The Board adopted the evaluation performed by the Independent Directors on the Board's performance carried out in accordance with the requirements of LODR Reg. 25(4)(a) which took into account factors like ‘ability to create value for its shareholders while ensuring legal compliances' and ‘corporate governance norms'. Satisfaction has been recorded about the performance based on the aforesaid criteria. The performance of the Committees was adjudged based on the criteria approved by the Nomination and remuneration committee of the Company. The Board records its satisfaction about the performance of all the committees of the Board. The performance evaluation of Chairperson and Managing Director of the Company has been carried out by the Independent Directors in accordance with LODR Reg. 25(4)(b) and stands duly adopted by the Board. The performance evaluation of non-independent directors has been carried out by the Independent Directors in accordance with LODR Reg. 25(4)(a) and it has been likewise adopted by the Board. The remaining members of the Board were evaluated at the Board Meetings based on parameters adopted by the Nomination and Remuneration Committee.
32. COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETINGS:
The Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and General Meetings.
33. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:
Disclosures required pursuant to the provisions of Section 197(12) of the Act read with Rule 5(1), 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this report and appears at “Annexure 10”.
34. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY:
The Company acquired 100% stake in Oaknet Healthcare Private Limited at the Company Valuation of Rs. 650 Crores through judicious mix of internal accruals and borrowings.
Except the above, no material changes and commitments have occurred between the end of the financial year to which the financial statements relate and the date of this Report.
35. PUBLIC DEPOSITS
The Company has not accepted deposits from the public during the year under review. No deposits were outstanding at the beginning or at the closure of the financial year under review.
36. GENERAL
Your Directors state that no disclosure or reporting is required in respect of the following matters under the Companies Act, 2013, and SEBI Regulations either on account of absence of any transaction or the inapplicability of the provisions:
• Reporting of fraud(s) by the Auditors within the meaning of Section 143(12) of the Companies Act, 2013.
• Disclosure pursuant to section 43(1) read with Rule 4(4) of Companies (Share Capital and Debenture) Rules, 2014 regarding issue of equity shares with differential rights.
Details of any scheme for providing money for the purchase of shares of the Company by employees for the benefit of employees.
Issue of shares (including sweat equity shares) to the employees of the Company under any scheme, save and except Employees' Stock Options Plans referred to in this Report.
Receipt of any commission from the Company or remuneration from any of its subsidiaries by the Managing Director or the Wholetime Directors of the Company as per section 197(14) of the Companies Act, 2013.
Revision in the financial statements (apart from regrouping adjustments) or directors' report in any ofthethreeprecedingfinancials . years
• Regulation 32 (4) of SEBI LODR Regulations regarding explanation for the variation in the utilisation of money raised by public issue.
• Change in the nature of business as per rule 8(5)(ii) of the Companies Account Rule, 2014.
Significant or material orders passed by the regulators, courts, tribunals impacting the going concern status and Company's operations in future.
• Details of an application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year under review along with their status as at the end of the financial year.
• Details of difference between the amount of the valuation done at the time of one-time settlement and the valuation done while taking a loan from the Banks or Financial Institutions along with the reasons thereof.
37. ACKNOWLEDGEMENT
The Board of Directors would like to express their sincere appreciation for the assistance and co-operation received from all the stakeholders during the year under review. The Board of Directors also wish to place on record its deep sense of appreciation for the committed services by the Company's executives, staff and workers.