A REPORT On MANAGEMENT CONTROL SYSTEMS In JUBILANT LIFESCIENCES

SUBMITTED TO PROF PADMAVATI

PREPARED BY:
KomalMadhan (11BSPHH010404) Poornima Sinha (11BSPHH010588) PavneetSahni (11BSPHH010571) NidhiBhargava (11BSPHH010527) AmitRanjan () Manish ()

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TABLE OF CONTENTS
COMPANY PROFILE3

FINANCIAL CONTROL...7

PORTFOLIO AND MIX9

MANAGEMENT CONTROL SYSTEM IN HUMAN RESOURCE.11 CODE OF CONDUCT... 13 OPERATIONS IN JUBILIANT .14 CONCLUSION. .16

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COMPANY PROFILE

Jubilant Life Sciences Limited, an integrated pharmaceutical and life sciences company, is the largest Custom Research and Manufacturing Services (CRAMS) player and a leading Drug Discovery and Development Solution (DDDS) provider out of India. Recently it has been ranked at No. 6 position amongst the Top 10 Global contract manufacturing & services outsourcing players of the pharmaceutical industry. The Company provides Life Science Products and Services across the value chain, serving its customers globally with its ground presence in India, North America, Europe and China. It is a Public Limited Company and is listed on Indian Stock Exchanges (NSE and BSE).

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JUBILANT FACT SHEET

Incorporated in 1978 and headquartered in New Delhi India Ownership of the company 52% with founders, 30% PE and institutions and 18% with public. Over 25 years of experience in chemical and knowledge based industry. Employs 4466 people including about 1050 in R &D Subsidiaries in Europe, USA and China. Global position in key products exported to over 120 countries. Strong Financials : Net sales 416 million dollar in FY 2007,PAT of $52 million

JUBILANT PHARMACEUTICAL FACT SHEET

Incorporated in 1993 Based in Gent Belgium Subsidiary of Jubilant Life Sciences since 2004 Broad-spectrum services and products provider to pharmaceutical marketing companies in Europe Knowledge-based company with excellent track record in national MAs, MRPs and DCP procedures

PRODUCTS AND SERVICES

Pharmaceuticals :APIS, Generics, Specialty Pharmaceuticals Life Sciences Ingredients Contract Manufacturing Outsourcing Drug Discovery and Development Solutions.

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BOARD STRUCTURE AND PROCESSES

The companys board is the judicious mix of executive, non executive and independent directors,8 Out of 12 directors 8 are non executive and independent Non executive director is the one who is not associated with the company in the executive capacity .A independent director is a non executive director who apart from receiving directors remuneration does not have any material pecuniary relationship with the company The board of directors of the company are the apex body responsible for framing and implementation of governance policies.

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GOVERNANCE STRUCTURE AND MANAGEMENT PROCESSES

R&D INVESTMENTS
At Jubilant, Innovation goes beyond R&D and focuses on creating an environment thatencourages out of box thinking and application of new ideas to develop innovative technological processes, value added products and services and optimum distribution channels to maximize value creation for its customers and other stakeholders.

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FINANCIAL CONTROL
Risk Management - Jubilant has a strong risk management framework in place that enables active monitoring of business activities for identification, assessment and mitigation of potential internal or external risks. Senior Management team sets the overall tone and risk culture through defined and communicated corporate values, clearly assigned risk responsibilities and appropriately delegated authority. Risk Management Structure- Companies risk management structure comprises the Board of Directors and Audit Committee at the Apex level, supported by Executive Directors, Heads of Businesses, Functional Heads, Unit Heads, Divisional Heads of Accounts and Finance and Head of Assurance function. As risk owners, the Heads are entrusted with the responsibility of identification and monitoring of risks. These are then discussed and deliberated at various review forums chaired by the Executive Directors and actions are drawn upon. The Audit Committee, Executive Director and Head of Assurance act as a governing body to monitor the effectiveness of the internal control framework. The Audit Committee, on a quarterly basis, reviews the adequacy and effectiveness of the internal control being exercised by various businesses and support functions and advises the Board on matters of core concern for appropriate redress measures.

Budget Control System Different Types of Budgets prepared in the company are as follows -: i) Sales Budget The sales budget expresses a realistic forecast. The responsibility for making the sales budget lies with the sales manager. The forecast related to the total volume of sales and also its break-up, productwise and areawise. Sales Managers in the company considers the following factors for preparing the sales budget : 1) Past sales figures and trends 2) Salesmans estimates 3) General Economic conditions 4) Orders at hand 5) Competition Once the sales budget is prepared to the sales manager then the same is forwarded to the board at the corporate office for final approval.

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ii)

R&D Budget R&D budget is dependent upon two main factors -: 1) Past year performance 2) Future Economic Environment A 5 year extensive R&D budget is prepared which is followed by annual budget.

iii)

Personnel Budget This budget is prepared in reference to the R&D budget and the sales budget. It is prepared by the HR department of the company. The HR department makes an estimate of the number and kind of personnel required both in R&D as well as in sales department. Based on that they prepare a personnel budget of the company. This budget is passed by the finance department and then is sent to the board for final approval. Cash Budget Cash budget of the company defines a cash plan for a specific period of time. It summarizes the monthly receipts and payments. It is prepared by the treasury department of the company. Treasury department prepares the cash budget for the following main uses :1) To maintain control over the firms cash requirements 2) To show the feasibility of the managements plans in cash terms 3) To illustrate the financial impact of changes in the management policy like the change of credit terms offered to customers.

iv)

All these Budgets are further verified by the Audit Committee so as to ensure minimum deviation between the planned and actual figures. The company has appointed Ernst & Young for various audit and controlling activities.

PORTFOLIO AND MIX: CUSTOMER AND PRODUCT CONCENTRATION

A balanced portfolio in terms of customers, markets and products is important to be able to execute business strategies and monitor and assess impact of decisions. A change in customer organization, behavior, needs and/ or expectations may lead to a decrease in market attractiveness and / or adverse competitive position. A high customer concentration poses a risk in terms of sudden dip in market share in the event of loss of key customers or share of business due to shift of customers preference to competitors. An over-dependence on single product or few customers may adversely impact the realization of long term business objectives in the event of any regulation limiting the end use application. In case of high dependence on specific geography, failure to accurately forecast socio-political-economical trends or regulatory changes in key customers market may significantly impact business performance.
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The Company regularly reviews its portfolio product, customer and geography and draws out strategies to achieve desired mix. With robust customer and account management programs in place, it safeguards itself against shift in customer preference. To mitigate the risk emerging from over-dependence on few / single products, it has committed investments in R&D to broaden its product mix and widen the portfolio to support forward integration with value added products such as Vitamins and Symtet businesses. As part of the annual business planning and periodic review meetings, it constantly strives to identify and explore new profitable markets for its products as well as new downstream opportunities in terms of applications and alternate use of the products available in its portfolio.

COMPLIANCE AND REGULATORY

We need to comply with a broad range of regulatory controls on testing, manufacturing and marketing of our products in the pharmaceutical and life sciences space. In some countries, including the US, regulatory controls have become increasingly demanding leading to increased costs and reduced operating margins for our line of products and services. Failure to achieve regulatory approval of new products can mean that we do not recoup our R&D investment through the sale of final products. Any time change in regulations or reassessment of safety and efficacy of products based on new scientific knowledge or other factors could result in the amendment or withdrawal of existing approvals to market our products, which in turn could result in revenue loss. This may occur even if regulators take action falling short of actual withdrawal. We have adopted measures to address these stricter regulations by increasing the efficiency of our R&D process, reducing the impact of extended testing and making our products available on time.

Environment Health and Safety (EHS)

In the current business climate of reputational threats and rising political backlash, corporates need to tread carefully to maintain public trust. Social acceptance and Corporate Social Responsibility (CSR) have become increasingly important over the last decade. Compliance with stringent emission standards for the manufacturing facilities and other environmental regulations may adversely affect the business. R&D, life science services and manufacturing of products involve dangerous chemicals, process and by-products and are subjected to stringent regulations. The Company anticipates that environmental laws and regulations in the jurisdictions, where it operates, may become more restrictive and be enforced more strictly in the future. It also anticipates that customer requirements as to the quality and safety.
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of products will continue to increase. In anticipation of such requirements, the Company has incurred substantial expenditure and allocated other resources to proactively adopt and implement manufacturing processes to increase its adherence to environmenta quality standards and enhance its industrial safety levels.At Jubilant, the challenges due to Companys operations related to EHS aspects of the business, employees and society are mapped and mitigated through a series of systematic and disciplined sets of policies and procedures.

Protecting Intellectual Property Rights (IPRs)

Our success will depend, in part, on our ability in the future to obtain and protect IPRs and operate without infringing the same of others. Our competitors may have filed patent applications, or hold issued patents, relating to products or processes that compete with those we are developing, or their patents may impair our ability to do business in a particular geography. The Company in addition to patents has relied on trade secrets, knowhow and other proprietary information and hence our employees, vendors and suppliers sign confidentiality agreements.

MANAGEMENT CONTROL SYSTEM IN HUMAN RESOURCES

MCS influences human behaviour. Good management control systems influence behaviour in a goal congruent manner i.e. individual actions taken to achieve personal goals also help to achieve organizational goals. Personnel control refers to the quality of the reward system (organizational flexibility: number of incentives, career policy etc.) on the one hand, and the competence of the top management to react on changing situations. The challenge of control management is to create the conditions that help to meet the corporate goals of scientific performance as well as the scientists need for satisfaction and motivation. Some of the policies which help the company to impose control on its employees are: Recruitment policy Compensation and Benefits Policy Employee Assistance policy

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The above figure shows the expenditure done by the company for its employees. Thus showing that to retain talent, company spends a lot of money. Being knowledge based industry manpower is the biggest asset to the company. Therefore acquisition and retention of right talent is critical to maintain desired operational standards. Insufficient focus on human resource processes (e.g. recruiting, talent management, labour management, development and training) may result in an organisations inability to recruit and/or hold the required personnel. Pharmaceutical industry banks on continuous innovation. Given the Companys dependence on R&D activity, it is imperative that it recruits and retains high quality R&D specialists. So that it can continuously innovate and maintain its competitive advantage in the market. Lack of credible successors may expose the Company in case of unexpected departures in key position. Inability to attract the talent required to execute business objectives may result in deteriorating business performance. The Company has committed substantial resources to this effort given the competition for qualified and experienced scientists from biotechnology, pharmaceutical and chemical companies, as well as universities and research institutes, in India and outside India. To execute its growth and diversification plans, while on one hand the Company continues to hire new, highly-skilled scientific and technical personnel staff, it also introduced Rewards & Recognition policies for effective employee engagement.
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In order to attract and retain the best talent the company employs incentive compensation plans. Various short term and long term incentives are given to motivate employees. Short term incentives (monetary and non-monetary) like bonus, pat-on-the-back, vouchers etc are given .While the long term incentives consists of stock option schemes. Theses help to build long-term relationship with the employees. ESOPs are given only after an employee reaches a certain hierarchical level. ESOPs give a sense of ownership to the employee.

CODE OF CONDUCT
This Code of Conduct gives the standards of conduct expected from the Companys Directors and Senior Management so as to align these with the Companys Vision, Promise and Values. Jubilant Life Sciences Ltd. (Jubilant) has a well drafted Vision which drives the business and promises of Caring, Sharing, and Growing to all the stakeholders We will, with utmost care for the environment, continue to enhance value for our customers by providing innovative products and economically efficient solutions and for our shareholders through sales growth, cost effectiveness and wise investment of resources. Jubilants Vision is driven by its Values, which are Inspire Confidence We will carefully select, train and develop our people to be creative, empower them to take decisions, so that they respond to all stakeholders with agility, confidence and teamwork. Always Stretch We stretch ourselves to be cost effective and efficient in all aspects of our operations and focus on flawless delivery to create and provide the best value to our stakeholders. Excellent Quality
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With utmost care for the environment and safety, we will always strive to excel in the quality of our processes, our products and our services. Nurture innovation By sharing our knowledge and learning from each other and from markets we serve, we will continue to surprise our stakeholders with innovative solutions.

PENALTY FOR BREACH

The Directors and Senior Management are accountable for full compliance with this Code of Conduct. Sanctions for breach of this Code shall be determined by the Board of Directors in case of Directors and by the Chairman & Managing Director/Co-Chairman and Managing Director in case of Senior Management. Sanctions may include disciplinary action, removal from office as well as other remedies, deemed appropriate and permitted by law. Any significant breach of the Code must be notified to the Board of Directors and the Chairman & Managing Director/Co-Chairman and Managing Director, as the case may be, who will in turn report it to the Jubilants Board of Directors on the Code's operation and effectiveness along with any significant breach of the Code.

OPERATIONS MANAGEMENT IN JUBILANT

To leverage on strong R&D and manufacturing capabilities Jubilant has an efficient SUPPLY CHAIN .The supply chain enables Jubilant to have a competitive advantage besides delivering value at the value chain. The value chain flow at the Jubilant is as:

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THE SUPPLY CHAIN MODEL AT JUBILANT

In order to have a functional excellence the Supply Chain Model of Jubilant is focusing on 4 areas which are: 1) E-procurement This Program of Jubilant is Powered by Vendex*Technology. This tool enables superior connection with partners. It is easy to use and has a standardized templates and quotes. Apart from ensuring speed delivery and access across various partners. It also offers a platform for online auction which aids in gaining cost advantage.

IMPACT OF E-PROCUREMENT ON JUBILANT SUPPLY CHAIN

2) Bar coding It enables coding, with regards to lot no , manufacturing date ,expiry date .It is integrated with ERP.
Benefits:-

Easy accountability, FIFO enforcement , Accuracy, Speed Fool proof system

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3) Green Supply Chain Awareness sessions conducted during Quality Audits. Partners were briefed on: Importance & significance of ISO 9001-2008, OHSAS and EHS system Encourage Supplier to implement ISO 9001-2008 General Health and Hygiene Use of Safety Tools and Equipments Encourage Supplier for the recycle and reuse of the resource. Reduction of the waste and disposal of the waste as per prescribed rules. Compliance of the Safety and Environment regulations New Suppliers Selected based new questionnaire feed back

4) Supplier Quality Assurance: Meeting quality standards and maintaining quality standards is the Key to Jubilant Business They follow a 6 step procedure to select the quality experts.

SUPPLY CHAIN GOVERNANCE:

Measure Supplier Performance Against contact &SLA through scorecard Jubilant Uses SCOR cards for both Internal & External deliverables & reengineer the supply chain .The SCOR card stands for SUPPLY CHAIN OPERATING REFERENCE.

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CONCLUSION
As a result of various efficient disciplines such as Finance, Operations, Human Resources Marketing the Jubilant gains a competitive advantage among its various counterparts in Biotech and Pharma . Some of the Key strengths exhibited by Jubilant are : Quality & Reliability Complete project management in-house Availability of large number of qualified experts Strict adherence to EU/US FDA guidelines High quality Drug Master Files and CoS

Skill / Technologies Highly qualified and experienced scientists Novel, patented and non-infringing technologies

One stop solution Providing integrated offers for licensing and supply of finished dosage forms to clients in Europe

Cost Significant cost saving through full integration

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