The slowdown of business in the US and regulatory challenges being faced by Lupin are having a major impact on the salaries of its key managerial personnel.
The remuneration of Managing Director Nilesh Gupta dropped by a whopping 80 percent year-on-year to Rs 1.8 crore in FY19, while his sister and CEO Vinita Gupta's annual remuneration saw a steeper drop of 91.28 percent to Rs 1.5 crore during the same period.
Nilesh earned Rs 9.1 crore in FY18, out of which he got 2.1 crore as performance linked incentive (PLI), while Vinita earned Rs 17.2 crore of which Rs 5 crore was PLI.
"The Company follows a market-linked remuneration policy. Ms. Vinita Gupta and Mr. Nilesh Deshbandhu Gupta opted out of receiving any remuneration for one-year period from August 8, 2018 to August 7, 2019," Lupin said in its FY19 annual report.
The Gupta siblings haven't received any performance-linked incentives in FY19, in fact there was a reversal of Rs 1.3 crore and Rs 3.4 crore excess PLI provided for the year 2017-18, respectively from the annual salaries of the brother-sister duo.
Vice Chairman Kamal K Sharma's salary was impacted as well, but it was not as grave as compared to that of the Guptas. His remuneration dropped 18 percent to Rs 15.4 crore YoY.
Chief Financial Officer Ramesh Swaminathan, who stepped down in November last year to join Larsen & Toubro (L&T), was paid Rs 6.8 crore as compensation, which was 3 percent lower than the previous year.
The remuneration of key managerial personnel including MD, whole time directors and independent directors declined by 43 percent.
The slowdown in growth is being seen on the wage hike of its workforce as well. During the year ended March 31, 2019, there was an average 7.55 percent increase in salaries of employees other than key managerial personnel. In the previous year, the average rise in salaries was 12 percent.
Lupin's wage bill, however, rose 11 percent YoY to Rs 2,666.8 crore in FY19.
As on March 31, 2019, the company had 17,684 permanent employees, which grew by 3.8 percent over the previous year.
Sales of the company grew at a moderate 5 percent to Rs 16,369.4 crore in FY19, but sales in the US, which is its largest market and contributes 34 percent overall, declined to 12 percent to $777 million. It was the second consecutive sales drop for Lupin in the US.
The decline has been attributed to the competition in generics, categorically to its specialty product Methergine, which is used in the treatment of postpartum bleeding. The company lost exclusivity on two metformin products -- Glumetza and Fortamet -- which exasperated the dip in sales.
Lupin is the third-largest drugmaker by prescriptions, trailing Teva and Aurobindo Pharma in the US.
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