Your Directors are pleased to present the Annual Report on the business and operations of your Company and the audited Financial Statements of the Company for the year ended March 31, 2018, in accordance with the Companies (Indian Accounting Standards) Rules, 2015 (IndAS) prescribed under Section 133 of the Companies Act, 2013 and other recognised accounting practices and policies to the extent applicable provisions of the Act from FY 2017-18.

*Dividend is recommended by the Directors and is subject to the approval of the Shareholders.

Performance of the Company

Your Company continued its journey to become a true Fast-Moving Consumer Healthcare Company and performed well amidst increased competitive intensity and volatile external environment. Net Sales and Profit after Tax for the year ended March 31, 2018 were Rs. 4,15,754 Lakhs and Rs. 70,010.22 Lakhs respectively. Your Company retained its leadership position in HFD category with volume and value market share at 64.6% and 55.3% respectively.

Your Company continued its focus on innovation, delivering products of value with superior science and has taken a step further in the advanced nutrition segment for consumers who want very high science products.

Your Company has extended the brand Horlicks into a new category of high protein drinks for active adults with the launch of its new variant Horlicks Protein+. Available in chocolate and vanilla variants, Horlicks Protein + contains a blend of three high quality proteins that provide all essential amino acids to address the issue of optimum quality protein intake amongst the modern-day adults.

Science remains the core of the product portfolio that addresses the nutritional needs of the consumers. The new Horlicks campaign launched in April 2017, focused on nutritional inadequacies in the daily diet of kids. The campaign was further strengthened by the new brand platform of supporting kids' "hunger for growth" which is in line with the product proposition of making child "Taller, Stronger and Sharper".

Boost continued robust performance in 2017-18 on the back the successful communication platform of ‘Play A Bigger Game' that was launched a year ago. The platform of ‘Play A Bigger Game' was supported with engaging long-form content on digital & was also extended seamlessly into on-ground activations. ‘Play The Pros': a unique initiative was launched that gave kids a chance to take on Pros like PV Sindhu, Virat Kohli, Sunil Chhetri etc. & thereby giving them an opportunity to "Play A Bigger Game".

From a competitive stand point, Boost continued to grow off-takes at 2X of the category growth in the core market of South India. The business performance in 2017-18 was well contributed by both sachets (Low Unit Packs) as well as the large packs with both having equal contribution to growth. Boost achieved highest ever market share and annual gain in household penetration in the 4-decade long history of the brand in the South Indian market.

Horlicks Growth+ launched a new campaign, focused on fostering growth in young children. Horlicks Growth+ is a breakthrough nutrition formula designed by international paediatric experts and contains high quality protein with essential nutrients that have been identified and are known to optimise growth without causing obesity in children. With the latest TV campaign featuring a young child, Horlicks Growth+ showcases the benefits of adopting a clinically proven scientific solution to address the rampant growth-related issues in children.

Women's Horlicks continued its differentiation through product launch in Feb'2018 with "Great New Taste" to penetration by offering new chocolate flavour. Moreover, a new campaign featuring film star Taapsee Pannu was launched. Fashioned around the theme of #StandStrong, the campaign sought to bring to the fore the issue of bone health amongst women in India and envisions to make them #StandStrong in following their passions.

Dividend

The Directors recommend a total dividend of Rs. 75 per equity share of Rs. 10 each for the year ended March 31,2018. If approved by the members at the ensuing Annual General Meeting to be held on August 8, 2018, it will be paid on or before, September 7, 2018 to those members whose names appear in the Company's Register of Members and to those persons whose names appear as beneficial owners (as per the details to be furnished by the depositories in respect of the shares held in dematerialised form) as at the close of business hours on August 1, 2018.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Fiscal year 2017-18 was characterised by enhanced global economic growth, stabilising crude oil prices, changing global political landscape, shifting attitudes to globalisation, free trade, wage stagnation and political uncertainty etc.

In India, the past year has been significant with implementation of key economic reforms such as GST. Indian government remains keen on driving economic reforms and initiatives such as Goods and Service tax (GST), Digitisation, Make in India, Infrastructure Capital Investments, Rural Development and Financial Inclusion etc. Last year saw Indian economy growing at 6.6% (projected for F.Y 18). Other major developments included improvement in Ease of Doing business index, Upgradation of India's sovereign credit rating and other digital inclusion initiatives.

The introduction of GST marked a huge stride towards a single economic union of India with unified tax structure. It is an indirect tax levied on the supply of goods and services implemented to replace several cascading taxes levied by the central and state governments. However, your Company was proactive to ensure GST readiness well in advance. To ensure GST readiness and compliance, several key processes were reviewed, IT systems were upgraded and stakeholders across the different nodes of the value chain were trained. These dedicated efforts ensured orderly and smooth transition into a new economic environment. A uniform taxation system resulted in economic benefits for the business and it was one of the first organizations to pass on the benefits to consumers.

The implementation of uniform tax regime led to a short-term disruption in Trade. FMCG Industry continued to remain under pressure but picked up growth in the last two quarters of the year owing to stabilizing rural demand, rising urban consumption and low-base effect (demonetization in Q3, Q4 in F.Y 2017).

Despite challenges, it was well placed to deliver consistent performance given the understanding of consumer behaviour. It also has robust price value proposition, high-science based products, Go-to-Market Strategy, pipeline for innovative products, efficient cost and talent management processes. These, it believes, fortifies us against headwinds.

The rural business has been working with the vision of building a strong connect with the communities it serves. Over the years, your Company has built a strong rural business that continues to reach over 21,500 villages directly. This has helped the Company build categories & brands and create positive social impact by building awareness on nutrition & promoting good health practices.

Two key growth drivers in the Rural Programme are Horlicks Swasthya Abhiyan (HSA) and Village Level Entrepreneurs (VLE); HSA program aims to improve the standard of hygiene & health in the rural areas, engaging with rural medical practitioners and community workers, thus creating awareness, education and relevance for the brands. HSA now reaches over 5,900 villages, 14,000 Rural Medical practitioners and connects with over a million consumers. VLE has reached more than 3,600 villages by which we are reaching out to bottom of the pyramid (Direct reach of 2,16,000 households) and in this process, create livelihood for underprivileged rural women while enhancing access of the products in small villages economically empowering rural women. Mobile Sakhi, a mobile based advisory service for pregnant mothers, delivers vital information pertaining to pregnancy is used by over 63,000 rural women.

Further, your Company has continued to address the issue of malnutrition under Mission Health, working with strategic partners as part of CSR initiatives during the year. It has also formulated a clear outline on the CS R philosophy and further details are provided in CSR Section.

Your Company brings a strong heritage and years of trust and credibility. It has strong R&D capabilities and the product portfolio continues to be strengthened by accelerated innovation and renovation to stay relevant to the emerging and differentiated needs of the consumers. Your Company continues to invest in brands and connect with the consumers through innovative and diversified platforms of online and offline advertising. Recognizing the trend of increasing digitization, your Company enhanced its presence in ecommerce channels.

Your Company has made significant efforts towards digital advocacy programs including activity targeting moms online, social media amplification of TVCs, Bone Density Tests on Women's Day, popularisation of "Horlicks Brand Store", digital launches for Protein+ etc. All these have helped increase engagement, consideration and strengthen benefit perception amongst customers.

Your Company's focus on cost management, working capital optimisation and simplification program continued to deliver positive results in mitigating inflation and supporting profitable growth. Improvement in working capital, better cash flow and cost optimization have supported sustained investments in Company's brands.

Reserves

The total reserves as on March 31,2018 stood at Rs. 34,43,06.34 Lacs representing an increase of 11.77% from March 31,2017

Research and Development (R&D)

Your Company's R&D vision is to improve lives of more by creating and sustaining consumer-led science based innovation. Science remains the core of the product portfolio that addresses the nutritional needs of consumers. At R&D, new product innovation teams have been working on new claims, new formats, product platforms and science platforms to build Innovation pipeline. There were 2 New products launched in the year.

• Horlicks Protein+: Launched in Feb'2018 in 2 flavours i.e. Vanilla and Chocolate, Protein + extended Horlicks presence in the high protein HFD segment for adults (30- 45 yrs.). Protein+ helps adults in the age group 30+ to support healthy muscles and energy release. Product has been designed with triple sources of protein and better quality of proteins with higher levels of essential amino acids.

• Women's Horlicks relaunch: Women Horlicks continued its differentiation through product launch in Feb'2018 with "Great New Taste" to Increase penetration by offering new chocolate flavour.

GSK Consumer Health advisory Board 2017-2019 is a category led initiative. The first meeting was conducted in Dec'201 7 for Nutrition category wherein various aspects of "Childhood Growth and Development in Indian Children" were discussed. Renowned scientists and physicians in the field of nutrition and paediatrics attended this meeting to discuss about the current & future nutrition status, challenges and opportunities for growth and development in Indian children.

The R&D function continues to focus on the regulatory compliance with local food laws, and proactively engages with the regulatory authorities and industry associations to shape the regulatory environment for science based innovation in food and nutrition. FSSAI released Food Safety & Standards Amendment Regulations, 2016 (notification), stating changes in permitted levels/or removal of specific ingredient/actives from food items. It has successfully complied with the FSSR regulations including technical feasibility of regulatory initiatives on proposed Codex changes on Food Safety & Standards Amendment (Ingredients & Additives) & Proprietary food products meeting ONE RDA (ICMR) for all vitamins & minerals meeting July'17 timelines.

Also, a high science packaging lab has been established to drive science based packaging innovation program. This high science lab will help conducting the product package interactions at early stage of project to enhance speed of execution. It received many packaging excellence awards and recognitions for the efforts.

Printed electronics Point of Sale (POS) for Horlicks growth Plus: Printed electronics technology was developed on commercial scale in India as a part of Horlicks Growth+ POS to enable "Go for More Strategy" in the market. Moreover, CLS (Core Lab Systems) has been implemented as improvement in R&D Product development process to enhance the compliance and data integrity.

You will be pleased to know your Company's R&D function has adopted best practices as mentioned below:

• As part of the initiative to build future innovation pipeline, ideation workshops and consumer insights, developments have been made during the year by consumer Insight group and commercial category teams with active participation from R&D. The ideas and concepts generated through this workshop are under validation and scoping, to build the medium and long-term pipeline. It also adopted best practices in consumer insights and have a strong network with GSK's global capabilities on scientific exploration, clinical science, sensory and product understanding, packaging expert networks to access best information to deliver product of best quality, science and relevance.

• Profitable growth ambitions are actively supported by R&D through a structured Value Engineering Program which also helps to mitigate the increasing cost of raw materials. Design to value remains an integral part of R&D product development process to provide most efficient cost advantage to end consumer.

• R&D is working towards the environment sustainability initiatives. In the area Packaging (Material science), it moved into more sustainable foil less primary laminate pack structure.

You will be glad to know that your Company's R&D is significantly involved in building and defining new science and benefits through modern technology that would give cutting edge advantage to the offerings along with scientific research to drive differentiated claims, enabling us to sustain our category leadership. Some of the high science differentiated products are in advance stage of development for launches in short, medium, and long term, and thus making it innovation pipeline robust.

ISO Certification

Your Company's manufacturing facilities at Nabha, Rajahmundry and Sonepat continue to be certified to ISO 9001: 2008, ISO 22000: 2005, ISO 14001: 2004 and OHSAS 18001: 2007 by SGS, a leading International Certification Company. These certifications indicate its commitment in meeting in a sustainable manner Global Quality, Environment, Health, and Safety Standards.

Information Technology

Your Company strengthened its efforts in integration of Information Technology for business efficiencies.

The Information Technology function has been a key business enabler across all functions of the Company.

During the year, the Company has kicked off simplification projects like creation of E-forms for streamlining the requisition process. CH tech roadshow was organized to increase the Tech Quotient of employees by showcasing the technologies readily available and future innovations which will enhance their productivity.

Internal Control System and Adequacy

Your Company has established and maintained adequate internal control framework in line with the Internal Financial Controls ("IFC") requirement within the meaning of the explanation to Section 134(5)(e) of the Companies Act, 2013 including financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). The Company has evaluated the operating effectiveness of internal control systems which are supplemented by:

• Well-documented standard operating procedures, policies, risk and control matrices for all material processes and fraud risk mitigation. Further, these documents are tested for operating effectiveness, regularly reviewed and updated to align with global best practices. ^•

• Any material variances from the budget are reviewed on a monthly basis and require approval of the Management Team. All major policy changes are approved by the Managing Director.

• The self-assessment by process/ control owner is also used as the basis of CEO/CFO certification as required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with the Stock Exchange. Further, the self-certification is reviewed by the Audit Committee on a half yearly basis.

• Your Company has a Risk Management and Compliance Board (RMCB), now called the ‘Risk Management Committee' (RMC), comprising of the Managing Director, Finance Director, Operations Director, Executive Vice President - Legal and Executive Vice President -Human Resource. Risk maps stating the significant business risks, potential consequences along with mitigation plans are prepared by each function and reviewed by RMC on a regular basis.

• Your Company has a robust internal audit function, that reports into the Audit Committee and carries out review of operations, systems and functions basis the plan approved by Audit Committee.

All significant Audit observations and follow-up actions thereon are reported to the Audit Committee. The Committee reviews the adequacy and effectiveness of your Company's internal control framework and monitors the implementation of audit recommendations including those relating to strengthening your Company's risk management policies and systems.

Human Resource Development

Your Company has set a new goal to be one of the most innovative, best performing and trusted healthcare companies in the world. The Company has also defined a new set of GSK Expectations to realize this goal - Courage, Accountability, Development and Teamwork. The new GSK expectations alongside the values will be the foundation of the culture; it wants to establish at GSK.

A large part of embedding this culture in the organization is linked to providing rewarding careers to the people. Building on the 2017 integrated approach to Career Frameworks (My Winning Career), the focus this year was on employee experience - enabling people to chart their long-term careers, have conversations with senior leaders and build plans to develop skills for their next career move.

Various initiatives around ‘My Winning Career', enabled employees in the organization to come together, take a step back and spend time dedicated to conversations around careers & development.

The focus has resulted in improved engagement scores in 2017 The latest engagement survey scores have increased across the themes of the Values, Expectations and Priorities of Innovation, Performance & Trust.

Your Company continued to invest significantly in developing talent across levels, leveraging processes such as integrated talent management to ensure sustainability of talent, role changes and robust succession pipelines for all key roles. It started the ‘India Leadership Program' - an initiative to develop, engage and retain emerging leaders in the organization to strengthen succession pipeline at leadership level.

In 2017 it has focused on ‘Employee Experience' - to enable employees experience key people processes/offerings in the Company. It set-up Kiosks in the annual conferences to enable employees understand & experience ‘Learning on-the-go' (online learning resources), Workday (HR management system), Employee Referral Program, GSK Values & Expectations, Career Frameworks, Employee Safety and Partnership for Prevention (Health & Wellbeing initiative).

The focus on Differentiated Development ensured that employees can leverage a variety of opportunities to develop and take on greater responsibilities in line with their career aspirations. It also continued to build the early talent pipeline by hiring from the best B-schools in the country, as well as sending the high potential talent on global talent acceleration programs.

Your Company is strongly committed to principles of inclusion and diversity (I&D) which is a critical element of the global HR strategy, as well. In 2017, it planned and executed the second "Inclusion and Diversity Week" which included a set of events conducted across locations, designed to help our employees value and draw on diverse knowledge and experiences. In 2017, it also launched the first Inclusion & Diversity Council. The council created a roadmap for themselves and identified the areas that they will work on such as awareness & training around I&D, new mothers related initiatives, talent acquisition & talent management. It focussed itself in ensuring 100% coverage of all employees in the Prevention of Sexual Harassment (POSH) training. It also participated in external I&D forums to share and understand best practices as well as to build future plans around this agenda. Your Company also initiated discussions with external agencies around child care centres for the benefit of its women employees.

Building a healthy, engaged workforce remains one of the key priorities thus, it focussed on embedding the Partnership for Prevention (P4P) program further in India. The program was launched in India in 2016, offering a host of preventive healthcare services for employees and their dependents. 2017 saw multiple on ground activations around P4P like awareness sessions, health and vaccine camps organised across locations to drive awareness and increase uptake.

Awards and Recognition

Your Company efforts to deliver the best quality products backed up by science based innovation, strong talent base and brands have been recognised during the year. Some of the key recognitions are:

• Mission Health won the best award in category of Food and Nutrition Education Program of the Year at Nutrition and Food Security Awards 201 7 by ASSOCHAM (Associated Chambers of Commerce and Industry of India).

• Horlicks won a Gold at DBA Design Effectiveness Awards 2017 for the product design in the beverage category.

• Sensodyne won a Bronze at Big Bang Awards 2017 under the social media category for the Whitening launch Facebook campaign.

• Boost has won a Silver @ EMVIEs'17 for the Best Media Strategy for the campaign Play A Bigger Game.

• Boost won the Gold for Best Video Content & Silver for Best In-App Strategy for the digital video campaign #playabiggergame at The Maddies'17.

• Boost won the Silver for Best Work in Mobile Analytics for its digital video campaign #playabiggergame at The Big Bang Awards'17

• GSK Consumer Health Care was awarded at the prestigious India Star 2017 for Boost restage and Horlicks growth Plus for the packaging design in consumer category.

• The "Sustainable sourcing of Horlicks raw materials' project won first place in ‘Environmental sustainability' category in this year's CET Environment, Health, Safety and Sustainability Awards.

Directors

Mr. Navneet Saluja was nominated as Director by Horlicks Limited under Article 97A of the Articles of Association of the Company w.e.f. January 1, 2018, in place of Mr. Manoj Kumar. The change was noted and resolution for appointment of Mr. Navneet Saluja as the Managing Director of the Company for a period of 3 years and 10 months was passed in the meeting held on December 6, 2017 The Board of Directors wishes to place on record its sincere appreciation for the valuable advice and guidance rendered by Mr. Manoj Kumar.

Mr. Subodh Bhargava ceased to be the Chairman of the Board from the close of business hours on March 31,2018, consequent to withdrawal of his nomination by Horlicks Limited. The Board of Directors wishes to place on record its sincere appreciation for the valuable advice and guidance rendered by Mr. Subodh Bhargava during his tenure as the Chairman.

Mr. Zubair Ahmed was nominated as Director by Horlicks Limited under Article 97A of the Articles of Association of the Company w.e.f. April 1, 2018. The change was noted and resolution for appointment of Mr. Zubair Ahmed as the Nominee Director w.e.f. April 1,2018 was passed and noted in the meeting held on December 6, 2017

Mr. Mukesh Butani has resigned from the Board of Directors w.e.f. March 31, 2018. The Board of Directors wishes to place on record its sincere appreciation for the valuable advice and guidance rendered by Mr. Mukesh Butani during his tenure.

Performance Evaluation of Board

A regular process of evaluating the Board's performance can help the Board in validating the relevance of its processes and provide insights for strengthening its overall efficiency and effectiveness. It evaluate the Board, the Directors, the Committees and the Chairman of the Board through a survey that takes place annually and the mechanism followed is mentioned below:

1. In February 2018, multiple surveys were sent to all Directors through a secured online survey portal.

2. The evaluation was based on Board's effectiveness, processes adopted by the Board, contribution by the Board Members, value addition by the Board and effectiveness & contribution of the Committees.

3. Once the Directors completed the survey, the third party appointed compiled the results and shared the analysis with the NRC Chairman and Chairman of the Board.

4. The Chairman of the Board then individually discussed the results and shared feedback with all Directors.

5. Based on the report of performance evaluation, it was determined whether to extend or continue the term of appointment of the Independent Directors.

It continued to use the same surveys for Board Evaluation which were revised & used in February 2017. Your Company is compliant to all guidelines circulated by SEBI on the Board Evaluation process.

Criteria for Appointment of Directors

The success of the Board of Directors depends on the composition, structure, resources, diligence, and authority of the entire Board, as well as their working relationships with other participants of corporate governance, including management. Your Company is committed to corporate governance best practices and is vigilant at the time of appointment of its Directors.

Key Responsibilities:

The Board of Directors is ultimately responsible for the Company's business affairs and governance. To that goal a Director would be expected to:

• Represent organization's shareholders' interests and create value for them.

• Align the interests of management with those of shareholders while protecting the interests of other stakeholders (customers, creditors, suppliers).

• Oversee the Company's performance by setting objectives, establishing short-term and long-term strategies to achieve these objectives.

• Provide counsel to the Company's senior executives on material strategic decisions and risk management. Establish or approve strategic plans and decisions to achieve these goals.

• Oversee the sustainability of the Company in creating long-term shareholder value and protecting interests of other stakeholders.

Pre-requisites for consideration:

• The candidate to acknowledge that she/he has sufficient time to effectively discharge her/his duties.

• The candidate should have skill sets and expertise area which is complementary to the current Board. The Board assesses the needs of the current Board to ensure that there is a range of skills, experience and diversity represented, including an understanding of:

- The industry and markets in which the Company operates.

- Accounting, finance and legal matters

- Other key areas of business operations

• The candidate should have experience and depth of knowledge in her/ his area of work to contribute meaningfully to the operations of the Board

• There should be no conflict of interest between the candidate and the Company. The individual should not be in relation to any current employee of the Company and should not be holding more than 2% of the Company's shares at the time or during the appointment

• The candidate should not be employed or related to another organization/body which can directly/indirectly influence the operations of the Company or is in direct competition with the Company.

• The Candidate has not been convicted of any offence, whether involving moral turpitude or otherwise and sentenced to imprisonment for not less than six months and a period of five years has not elapsed from the date of expiry of sentence.

Remuneration Policy for Non-Executive Directors

Your Company believes that its Board Members bring immense value in their independent evaluation and oversight of the operations of the Company. It is therefore expected that they will devote significant time and provide unbiased point of view to their Board duties.

The remuneration paid to each Non-Executive Director is as per the structure determined by the Nomination & Remuneration Committee and the Board. This is reviewed periodically and compared to other peer organizations. It is ensured that the remuneration paid to them is in accordance with the provisions of the Companies Act and any other applicable law.

The remuneration structure for the Non-Executive Directors comprises of annual Commission and sitting fee per meeting attended.

Remuneration Policy for Employees Philosophy

Your Company recognizes that reward is important in engaging employees and motivating them to do their best work to deliver the strategic priorities and mission. It rewards high performance and recognize outstanding achievements of employees in a way that is consistent with the values and behaviours.

Principles

• Competitive - Your Company provides competitive rewards in line with GSK global best practices.

• Differentiated - Your Company differentiates reward to attract and retain skilled employees; reward the greatest contributors and recognize employees who evolve their skills to enhance their individual contribution to GSK's success

• Alignment - Your Company's reward programs and practices are transparent and focus on ensuring alignment at several levels

• Business alignment - Your Company's reward program considers the common and business-specific skill/ performance requirements across the various business units

• Country alignment - Reward aims at meeting the needs of the diverse workforce and enabling them to live the mission - to do more, feel better and live longer

• Individual alignment - Individual objectives are set and reviewed annually to ensure employees have a clear understanding of the link between the business value they deliver and their own performance based reward

Managerial Remuneration

Your Company believes its employees are its biggest assets and aligns its compensation and benefits towards rewarding employees in line with its Rewards policy. Your Company focuses on being market aligned as well as differentiate basis performance to drive a high-performance culture.

Your Company has 3983 permanent workers, including workmen. The remuneration for the workmen at two of the factories is governed by Long Term Wage Settlement (LTWS) which is done in consultation with the unions. For the remaining employees, the targeted salary increase was 10% for all employees including KMP.

When it compare the remuneration of these to that of median employee, it observed the following ratio:

'Remuneration is calculated on accrual basis.

**Not Comparable.

***Not Applicable.

1. Appointed in the role with effect from January 01,2018, salary increase & ratio to median salary not comparable.

2. Ceased to be in the role with effect from December 31, 2017, salary increase & ratio to median salary not comparable.

3. Salary change is negative due to reduced variable payment as per his terms of appointment.

4. Appointed in the role with effect from September 01, 2016, salary increase & ratio to median salary not comparable.

5. Appointed in the role with effect from August 05, 2016, salary increase & ratio to median salary not comparable.

Your Company believes that by means of the variable pay plan the Company can link a portion of compensation to the individual and business performance which creates a strong positive reinforcement. It also ensures that the employees of the Company are rewarded only when the Shareholders' goals are met. Your Company's variable pay plan, therefore, links the variable pay to both - individual performance and business results such as sales growth and operating profits.

The ratio of the remuneration of the highest paid director to that of the employees who are not Directors but receive remuneration in excess of the highest paid Director during the fiscal year is not applicable. It is also, affirmed that the remuneration is as per the Remuneration Policy of your Company

1. Appointed in the role with effect from January 01,2018

2. Ceased to be in the role with effect from December 31, 2017

Total KMP Remuneration as a percentage of Revenue: 0.42% Total KMP Remuneration as a percentage of PBT: 1.69%

Your Company believes in balancing the competitiveness of pay as well as sustainability of the associated costs for the organization. The salary increases for this year were aimed at maintaining the pay competitiveness with market as well as performance of the Company.

Policy on Board Diversity

As stated in the policy for appointment of Directors, your Company recognizes that the success of the Board of Directors depends on the composition, structure, resources, diligence, and authority of the entire Board, as well as their working relationships with other participants of corporate governance, including management. GSK is committed to build a truly diverse Board which brings with it diversity of expertise, skills, regional and industry experience, gender and demographics. GSK believes that such a Board will enhance the quality of decisions by utilizing the diversity of its members.

The Nomination and Remuneration Committee (NRC) is responsible for reviewing and assessing the composition and performance of the Board, as well as identifying appropriately qualified persons to occupy Board positions. At the time of appointment, the candidate must bring with him/ her skill sets and expertise area which is complementary to the current Board composition. The Board will have an optimum combination of Executive, Non-executive and Independent Directors with at least one women Director in compliance with all statutory provisions. The Board of Directors shall maintain an appropriate mix of diversity, skill, experience and expertise on the Board.

The NRC and the Board of Directors shall refer to this Policy on Board Diversity at the time of appointment of persons as a Board Member.

Particulars of Employees

The information required pursuant to Section 197 of the Companies Act, 2013 read with Rules, 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company will be provided to members upon request in writing made before the Annual General Meeting where in Financial Statements for the relevant fiscal year are proposed to be adopted. In terms of Section 136 of the Act, the copy of the Annual Report is being sent to the Members and others entitled thereto, and is also available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.

The Annual Report of the Company is also available on the Company's website- www.gsk-ch.in.

Particulars of Loans, Guarantee, Investment U/S 186

There are no Loans, guarantees, Investments to be reported u/s 186 of Companies Act 2013.

Details of Board Meetings

A calendar of Meetings is prepared and circulated in advance to the Directors.

During the year six Board Meetings and five Audit Committee Meetings were convened and 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.

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

Information required as per the Companies Accounts Rules, 2014 is given in the Annexure I to this Report.

Auditors

Messrs Deloitte Haskins & Sells LLP, who are appointed till the conclusion of the 63rd Annual General Meeting, being eligible, are being ratified at the forthcoming Annual General Meeting.

Secretarial Audit

Pursuant to provisions of Section 204 of the Companies Act, 2013, the Secretarial Audit Report is annexed herewith as Annexure II to this Report duly certified by S.N. Ananthasubramanian & Co., a firm of Company Secretaries in practice to undertake the Secretarial Audit of the Company.

Composition of Audit Committee

Please refer corporate governance report for composition of audit committee.

Risk Management Policy

The Company has a Risk Management policy and an internal control framework, which is used to manage risks.

Vigil Mechanism for Directors and Employees of Company

The detailed policy for Vigil Mechanism and Whistle blower is available at www.gsk-ch.in.

Extract of Annual Report

Information required under this clause is given in the Annexure III to this report.

Related Party Transaction

Disclosures as required under Form AOC 2 are contained in Note 28 (Financial Statements). There are no transactions, which are not at arm's length and all the Related Party transactions are at arm's length basis.

The detailed policy for Related Party Transactions is available at http://www.gsk-ch.in/Policies.aspx

Fixed Deposits

The Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

Information on Company's Share Performance

The market capitalisation of the Company increased by 18% (Rs 2,56,33,27 lacs) Vs March 31,2017 (Rs 2,16,99,82 lacs). The EPS stands at Rs.166.47 vs Rs.156.15 as on closing date of last fiscal year. The PE ratio as on March 28, 2018 (last trading day) stands at 36.6 vs 33 as on last trading day of fiscal year 2017-18.

Environment and Social Commitment

Your Company is on a mission "to help people to do more, feel better, live longer". Your Company has revamped its CSR programme and launched its "Mission Health" programme which is in aligned with United Nations' (UN) Sustainable Development Goals (SDG) and Government of India's National Health Policy. Mission Health is a national movement of your Company which is in line with its philosophy and goals to address the need of the country, engaging with key stakeholders and linking brands with purpose, cause and focus.

Mission Health programme is implemented in 7 states viz Bihar, UP, MP, Karnataka, AP, Haryana and Punjab where micro-nutrient programme is being implemented in 1000 government schools and reaching out to 150,000 children. Mission Health is implemented in the states of UP, MP and Karnataka. The NITI (National Institution for Transforming India) Aayog has announced partnership with these three states each to radically transform their Health and Education sector under its Sustainable Action for Transforming Human Capital (SATH) initiative.

The Mission Health programme is planned to focus on thematic areas of micronutrient deficiency, tackling dengue and eradicating lymphatic Filariasis (elephantiasis).

Your Company has spent 2% of its average net profit of last three fiscal years as part of your CSR in the reporting period.

Your Company undertakes these activities in the following different ways:

a) Nutrition: Your Company has started three key programs to address the nation's issue of malnutrition with strategic partners. Following are the programs initiated during the reporting period:

• Holistic nutrition program for 50,000 kids with The Akshaya Patra Foundation in Karnataka

• Mass Outreach Through Schools with SHARP for 1,50,000 in Karnataka; Madhya Pradesh; Uttar Pradesh; and Bihar

• Improve awareness about malnutrition with NGO Sakshi for 200 kids in Haryana

b) Skill development: It has started a program with Confederation of Indian Industry focussing on Capacity building of FBOs including MidDay Meal Organisers, Self Help Groups, Mass and Railways Catering, Food Storage Locations on how to prepare, produce and serve Safe Food.

c) Water Sanitation & Hygiene programme (WASH): In partnership with Save the Children, JSI R&T India foundation and Sakshi, it is implementing WASH programme in Haryana, Punjab and AP to create awareness on sanitation and hygiene among communities. This programme will link with Government of India's Swachh Bharat Mission.

d) Healthcare: It supports its Global program for eradicating Lymphatic Filariasis (elephantiasis) through Albendazole contribution to World Health Organization (WHO).

Allied against Dengue: This programme is implemented in 5 districts of UP by WISH Foundation. Programme is in line with National Vector Control Programme and focuses on continuous medical education for Doctors & Pharmacists and community awareness on prevention and management of Dengue.

For other details regarding CS R, please refer Annexure IV to Directors' Report.

Significant Material Orders Passed by the Court/ Regulator/ Tribunal Impacting Going Concern Status and Company's Operations in Future

Your Company has not received any material Show cause under the Companies Act/SEBI Regulations. Notices received from other regulatory/ statutory authorities are being suitably dealt with.

There are no significant legal /arbitral proceedings against the Company. All such matters are being brought to the notice of the Audit Committee/Board.

Director's Responsibility Statement

To the best of their knowledge and belief and according to the information and explanation obtained, your Directors make the following statement in terms of Section 134 (3) (c) and 134(5) of the Companies Act 2013 for the year ended March 31, 2018:

a. The Financial Statements of the Company for the period ended March 31, 2018 have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standard) Rules, 2015 (as amended)] and other relevant provisions of the Act. There have been no material departures in the adoption and application of accounting standards.

b) All Financial Statements have been prepared on historical cost convention, as a going concern and on the accrual basis.

c) The estimates and judgments relating to Financial Statements have been made on a prudent and reasonable basis to ensure that Financial Statements reflect, in a true and fair manner, the form and substance of the transactions and reasonably present the Company's state of affair and profit for the year.

d) The Directors of the Company have taken adequate care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding of assets of the Company and for preventing and detecting fraud and other irregularities.

e) The Company has established and maintained adequate internal control framework in line with the Internal Financial Controls ("IFC") requirement within the meaning of the explanation to Section 134(5) (e) of the Companies Act, 2013 including financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). The internal financial controls are adequate and operating effectively and the internal auditors have conducted periodic audits to provide reasonable assurances on the same.

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

Declaration of Independent Directors

Pursuant to Sections 149(6) & 149(7) of Companies Act 2013, the Independent Directors of your Company have given a declaration that they have complied with the criteria of independence as set out under sub section (6) of Section 149 of the Companies Act, 2013.

Cautionary Statement

Statements in this report particularly that pertains to Management Discussion and Analysis may contain certain statements that might be considered forward looking. These statements are subject to certain risks and uncertainties. Actual results may differ materially from those expressed in the statement as important factors could influence the Company's operations such as Government policies, local, political and economic development, risks inherent to the Company's growth and such other factors.

Acknowledgements

The Directors wish to extend their thanks and appreciation to all the employees of the Company at all levels, agents and other business associates for their commitment, dedication and respective contributions to the Company's operations during the year under review.

The Directors would also like to acknowledge the valuable guidance, technical assistance and advice being received from the Associate Company in the U.K. Your Directors look forward to the future with confidence.