To

The Members

The Directors are pleased to present the 34^th Annual Reportwith the Audited Accounts for the financial year ended 31 March 2022.

1. FINANCIAL RESULTS

` in Million

2. COMPANY PERFORMANCE

The Company achieved total revenue of ` 19476 million in FY 2021-22against ` 17254 million in the previous year recording a growth of 12.9%. The sales ofthe pharmaceutical business recorded a growth by 6.6% to ` 11297 million while the salesof the Crop Protection saw a growth of 23% to ` 8129 million.

The EBIDTA margins stood at around 17.8% growing in line with theturnover from ` 3278 million in the previous year to ` 3454 million in FY 2021-22.Absolute EBITDA also increased by ` 176 million (5.4%). The Profit before Tax (PBT) wentup by 5.9% from ` 2064 million in the previous year to ` 2185 million in FY 2021-22.Profit after Tax (PAT) witnessed a growth of 20.6% from ` 1331 million in the previousyear to ` 1605 million in FY 2021-22. The Earning per Share (EPS) also increased from `10.80 in the previous year to ` 13.02 in FY 2021-22.

The Company is incurring substantial capital expenditure for growth inthe Pharmaceutical and Crop Protection businesses to augment capacities for existingproducts and to create capacities for new products as well as investments in Research& Technology.

The Company has prudently been funding the growth capex with a mixbetween internal accruals and long-term loans. In doing so the Company ensures that itmaintains a healthy liquidity position and that its financial gearing and debt servicecoverage are at comfortable levels.

The Current Ratio of the Company is at a healthy 1.25 for FY 2021-22as against 1.34 in the previous year. The net Debt to Equity Ratio improved from 0.61 inthe previous year to 0.59 in FY 2021-22 while the Debt Service Coverage Ratio (DSCR)strengthened from 1.29 in the previous year to 1.31 in FY 2021-22.

3. EXPORTS

Exports for the year 2021-22 were ` 14141.98 million (73% of totalsales) as compared to ` 11822.59 million (69% of total sales) in the previous year. Wediversified our customer base which included more local customers who in turnre-exported our manufactured products.

4. MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis on the Company?s operationsis provided in a separate section and forms part of this Annual Report.

5. BUSINESS RESPONSIBILITY REPORT

The Company?s Business Responsibility Report in terms ofRegulation 34 of SEBI (Listing Obligations & Disclosure Requirements) Regulations2015 (Listing Regulations) is provided in a separate section and forms part of this

Annual Report.

6. DIVIDEND

The Board declared an interim dividend of 60% ( ` 1.20 per share)which was paid to shareholders in March 2022 and recommended a final dividend of 20%( `0.40 per share) for the year 2021-22. If approved by the shareholders the dividend forthe financial year 2021-22 shall aggregate 80% (previous year: 100%).

7. SHARE CAPITAL

There has been no change in the Company?s paid-up share capitalduring the current financial year. The paid up equity share capital as on 31 March 2022stood at ` 246.60 million. During the year under review the Company did not issue shareswith differential voting rights nor granted any stock options or sweat equity. As on 31March 2022 none of the Company?s Directors held instruments convertible into equityshares of the Company

8. ANNUAL RETURN

The Annual Return of the Company as required under Section 92 of theCompanies Act 2013 read with the Rules framed thereunder in the prescribed Form MGT-7is available on the website of the Company www.hikal. com.

9. SUBSIDIARIES

The Company has two subsidiaries viz. Acoris Research Limited and HikalLLC USA (became a subsidiary during the year). A statement containing the salientfeatures of the Financial Statements of Subsidiaries in the prescribed Form AOC-1 isattached as "Annexure A" to this Report. The Company will provide the FinancialStatements of the subsidiaries and the related information to any member of the Companywho may be interested in obtaining the same. The financial statements of the subsidiarieswill also be available for inspection in electronic mode. Members who wish to inspect thesame are requested to write to the Company by sending an email to secretarial_agm@hikal.com. The Consolidated Financial Statements of the Company forming part of thisAnnual Report include the Financial Statements of Subsidiaries. The Financial Statementsof Subsidiaries are also hosted on the website of the Company www.hikal.com.

10. DIRECTORS

All Independent Directors have given declarations that they meet thecriteria of independence as laid down under Section 149(6) of the Companies Act 2013 andSecurities and Exchange Board of India (Listing Obligations & Disclosure Requirements)Regulations 2015. In accordance with the provisions of Section 152 of the Companies Act2013 and the Company?s Articles of Association Mr. B. N. Kalyani (DIN - 00089380)Director retires by rotation at the forthcoming Annual General

Meeting (AGM) and being eligible offers himself for re-appointment.The Board has in its meeting held on 22 December 2021 appointed Mr. Shrikrishna K.Adivarekar (DIN-06928271) as an Additional Director of the Company in the category ofIndependent Director for a term of three years with effect from 22 December 2021 subjectto the approval of the members of the Company at the 34th Annual General Meeting. TheBoard proposes appointment of Mr. Shrikrishna K. Adivarekar as an Independent Director ofthe Company for a term of three years w.e.f. 22 December 2021. The Board of Directorsvide their circular resolution passed on 19 July 2022 re-appointed Mrs. Shivani BhasinSachdeva (DIN: 00590500) as an Independent Director of the Company for a secondconsecutive term of 5 years with effect from 1 August 2022 subject to the approval of themembers of the Company. In the opinion of the Board the Independent Director appointedduring the year possesses the integrity expertise and experience (including proficiency)required to contribute to the quality and better governance of the Board processes.

During the financial year Mr. Ravindra Kumar Goyal resigned as anIndependent Director of the Company w.e.f. 22 December 2021 due to personal reasons. The

Board places on record its appreciation for his invaluable contributionand guidance during his tenure as an Independent Director.

Details of the number of Board meetings held during 2021-22 arementioned in the Corporate Governance Report which forms part of this Annual Report.

11. BOARD EVALUATION

Pursuant to the provisions of the Companies Act 2013 and Securitiesand Exchange Board of India (Listing Obligations & Disclosure Requirements)Regulations 2015 a structured questionnaire was prepared after taking into considerationthe various aspects of the Board?s functioning like composition of the Board and itsCommittees culture execution and performance of specific duties obligations andgovernance.

The performance evaluation of the Independent Directors was completed.In a separate meeting of Independent Directors performance of Non-Independent Directorsthe Board as a whole and the Chairman of the Company was evaluated taking into accountthe views of Executive Directors and Non-Executive Directors. The Board of Directorsexpressed their satisfaction with the evaluation process.

12. WHISTLE-BLOWER POLICY

The Company has a Whistle-Blower policy to report genuine concerns orgrievances. The Whistle-Blower Policy is posted on the Company?s website www.hikal.com.

13. REMUNERATION POLICY

The Company has a policy which lays down a framework in relation toremuneration of Directors Key Managerial Personnel and Senior Management of the Company.The Remuneration and Nomination Policy of the Company is attached as "AnnexureB" to this Report. This policy also lays down criteria for selection and appointmentof Board members. The details of this policy are explained in the Corporate GovernanceReport and uploaded on the

Company?s website www.hikal.com.

14. RELATED PARTY TRANSACTIONS

All related party transactions entered during the financial year wereat an arm?s length basis and in the ordinary course of business. There were nomaterially significant related party transactions made by the Company with PromotersDirectors Key Managerial Personnel or other designated persons which may have apotential conflict with the Company?s interest at large. The disclosure of RelatedParty Transactions as required under Section 134(3)(h) of the Act in Form AOC-2 isattached as "Annexure C".

All related party transactions were placed before the Audit Committeeand also the Board for approval. The policy on Related Party Transactions as approved bythe Board is uploaded on the Company?s website www. hikal.com.

15. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

The Maharashtra Pollution Control Board (MPCB) had vide its orderdated 15 February 2022 directed the Company to stop the manufacturing activities at itsmanufacturing Unit located at Taloja MIDC Dist. Raigad against which the Company fileda Writ Petition before the Hon?ble Bombay High Court. Vide order dated 21 February2022 the Hon?ble Bombay High Court set aside the MPCB order dated 15 February 2022and directed MPCB to grant a fresh personal hearing to the Company on 1 March 2022.

After granting the aforementioned personal hearing the MPCB had videits order dated 22 April 2022 directed the Company again to stop the manufacturingactivities at the Taloja Plant. The Company has again challenged the said MPCB directionsand filed a Writ Petition before the Hon?ble Bombay High Court. Vide order dated 23June 2022 the Hon?ble Bombay High Court set aside the MPCB order dated 22 April 2022and directed MPCB to grant permission to restart the manufacturing activities at theTaloja plant of the Company. Consequently MPCB has granted permission vide order dated29 June 2022 to restart the manufacturing activities at the Taloja plant of the Company.

There were no significant and material orders passed by theregulators/courts that could impact the going concern status of the Company and its futureoperations other than what is mentioned above.

16. RISK MANAGEMENT

The Company has a robust business risk management framework in place toidentify and evaluate all business risks. The Company recognises risk management as acrucial aspect of the Company?s management and is aware that identification andmanagement of risk effectively is instrumental to achieving its corporate objectives. TheCompany has identified the business risks and the business heads who are termed as riskowners to assess monitor and manage these risks on an ongoing basis. The risk ownersassess the identified risks and continually identify any new risks that can affect thebusiness. Different risks such as technological operational maintenance of qualityreputational competition environmental foreign exchange financial human resource andlegal compliances among others are assessed on a continuous basis. The Risk ManagementCommittee and Audit Committee review and submit to the Board of Directors their findingsin the form of risk register at regular intervals. At the Board meetings the members havea detailed discussion to assess each risk and the measures that are in place to lower themto acceptable limits.

The strategies are reviewed discussed and allocation of appropriateresources is done as and when necessary. The risk management program internal controlsystems and processes are monitored and updated on an ongoing basis. A built-up mechanismhas been established to identify measure control monitor and report the risks. Businessheads are responsible for rolling out the risk assessment and management plan within theorganisation.

17. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an internal control system commensurate with the sizescale and complexity of its operations. To maintain its objectivity and independence theInternal Audit function reports to the Chairman of the

Audit Committee of the Board.

The Internal Audit Department monitors and evaluates the efficacy andadequacy of the internal control system in the Company its compliance with operatingsystems accounting procedures and policies at all locations of the Company and itssubsidiaries. Based on the report of internal audit function process owners undertakecorrective action in their respective areas and thereby strengthen the controls.Significant audit observations and corrective actions thereon are presented to the

Audit Committee.

The Audit Committee actively reviews the adequacy and effectiveness ofthe internal control systems and suggests improvements to strengthen them. The Company hasa robust management information system which is an integral part of the controlmechanism.

During the year a thorough audit of the internal financial controlswas carried out by an independent firm of chartered accountants.

18. KEY MANAGERIAL PERSONNEL

Pursuant to the provisions of Section 203 of the Act following werethe Key Managerial Personnel of the Company as on 31 March 2022: Mr. Jai HiremathExecutive Chairman (WTD) Mr. Sameer Hiremath Managing Director Mr. Kuldeep Jain ChiefFinancial Officer Mr. Rajasekhar Reddy Company Secretary

19. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS BY THE COMPANY

The details under Section 186 of the Companies Act 2013 are given inthe Note No. 54 to the notes to the standalone financial statements.

20. DIRECTOR?S RESPONSIBILITY STATEMENT

Your Directors state that:

(i) In the preparation of the annual accounts the applicableaccounting standards read with requirements set out under Schedule III to the CompaniesAct 2013 (the Act) were followed and there are no material departures from the same;

(ii) The Directors have selected such accounting policies and appliedthem consistently and made judgements and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company at the end of thefinancial year 2021-22 and of the profits of the Company for that year; (iii) TheDirectors have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the

Act for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; (iv) The annual accounts have been prepared on agoing concern basis; (v) The Directors have laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and areoperating effectively; and (vi) The Directors have devised a proper system to ensurecompliance with the provisions of all applicable laws and that such systems are adequateand are operating effectively.

21. AUDITOR

At the 31st Annual General Meeting held on 1 August 2019 S R B C &CO LLP Chartered Accountants Mumbai (FRN: 324982E/E300003) were appointed as theStatutory Auditors of the Company to hold office from the conclusion of 31st AnnualGeneral Meeting of the Company till the conclusion of the 36^th Annual GeneralMeeting to be held in the year 2024.

The Auditor?s report prepared by S R B C & CO. LLP to themembers on the accounts of the Company for the year ended 31 March 2022 does not containany qualifications adverse or disclaimer remarks. No fraud has been reported by theAuditors to the Audit Committee or the Board.

22. COST AUDITOR

The Company has re-appointed M/s. V. J. Talati & Co. as the CostAuditor to carry out the audit of cost accounts for the financial year 2022-23. Therequisite resolution for ratification of remuneration payable to Cost Auditors for theyear 2022-23 by the shareholders has been set out in the Notice of AGM. The cost auditreport for the financial year 2020-21 was filed with the Ministry of Corporate AffairsGovernment of India on 28 August 2021.

23. SECRETARIAL AUDITOR

The Board had appointed M/s. Ashish Bhatt & Associates PracticingCompany Secretaries to conduct the Secretarial Audit for the financial year 2021-22. TheSecretarial Audit Report for the financial year ended 31 March 2022 is annexed to thisreport as "Annexure D". The observations/ remarks made in the secretarial auditreport are self-explanatory and do not require any further elaboration.

24. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Corporate Social Responsibility Committee (CSR

Committee) has formulated and recommended to the Board a CorporateSocial Responsibility Policy (CSR Policy) indicating the activities to be undertaken bythe Company which has been approved by the Board. The CSR Policy may be accessed on theCompany?s website www.hikal.com.

The Annual Report on CSR activities is annexed herewith marked as"Annexure E".

25. PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

Pursuant to the provisions of the Sexual Harassment of Women atWorkplace (prevention prohibition and redressal) Act 2013 ("POSH Act") theCompany adopted a ‘Policy on Appropriate Social Conduct at Workplace?. Thepolicy is applicable for all employees of the organisation which includes corporateoffice and manufacturing units. The policy is applicable to non-employees as well i.e.business associates vendors and trainees among others.

A Complaints Committee has also been set up to redress complaintsreceived on sexual harassment as well as other forms of verbal physical written orvisual harassment. During the financial year 2021-22 the Company did not receive anycomplaints of sexual harassment and no cases were filed under the POSH Act.

26. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND("IEPF")

• Transfer of Unclaimed Dividend to IEPF

During the financial year dividend relating to the year ended 31March 2014 amounting to ` 284276/- that had not been claimed by the shareholders wastransferred to the credit of IEPF as required under

Sections 124 and 125 of the Act.

• Unclaimed dividend as on 31 March 2022 The Shareholders arerequested to lodge their claims with the Registrar and Share Transfer Agents of theCompany i.e. Universal Capital Securities Pvt. Ltd. for unclaimed dividend.

Pursuant to the provisions of Investor Education and

Protection Fund Authority (Accounting Audit Transfer and Refund)Rules 2016 the Company has uploaded the details of unpaid and unclaimed amounts lyingwith the Company as on 31 March 2021 on the website of the Company www.hikal. com. Thesame are also available on the website of the IEPF Authority www. iepf.gov.in.

• Transfer of Equity Shares

As required under Section 124 of the Act during the financial year4007 Equity Shares in respect of which dividend has not been claimed by the members forseven consecutive years or more were transferred by the Company to the IEPF Authority.Details of such shares transferred have been uploaded on the website of the Companywww.hikal.com. The same are also available on the website of the IEPF Authority www.iepf.gov.in.

27. SAFETY AND ENVIRONMENT

The Company continued to maintain the highest standards in environmenthealth and safety. The Company has become the first Indian life sciences company toreceive the Responsible Care certification. It is applicable to all manufacturing andresearch sites of the Company. Continuous training and awareness programs for theemployees are undertaken on a frequent basis.

28. DEPOSITS

The Company did not accept any deposits and as such there were nooverdue deposits outstanding as on 31 March 2022.

29. EMPLOYEES

The Company considers its human capital as an invaluable asset. TheCompany continued to have cordial relationships with all its employees. Management andemployee development programs and exercises were conducted at all sites. Employees hadvarious team building exercises and were sponsored for various external seminars and otherdevelopmental programs to enhance their skill sets. The total workforce of the Companystood at 2850 as on 31 March 2022 including 1906 permanent employees.

The statement containing particulars of employees as required underSection 197(12) of the Companies Act 2013 read with Rule 5 of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 forms part of this Report. Furtherthe Report and the financial statements are being sent to the members excluding theaforesaid statement. In terms of Section 136 of the Companies Act 2013 the saidstatement is open for inspection. Any member interested in obtaining such particulars maywrite to the Company Secretary at secretarial_agm@hikal.com.

30. CONSERVATION OF ENERGY RESEARCH & DEVELOPMENT TECHNOLOGYABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

In accordance with the requirements of Section 134(3) (m) of theCompanies Act 2013 read with rule 8(3) of the Companies (Accounts) Rules 2014 astatement showing particulars with respect to Conservation of Energy TechnologyAbsorption and Foreign Exchange Earnings and Outgo forming a part of the Directors?Report is given in the enclosed "Annexure F" which forms part of this Report.

31. CORPORATE GOVERNANCE

A report on Corporate Governance along with a certificate from theAuditors of the Company regarding the compliance of the requirements of CorporateGovernance as stipulated under the provisions of

Regulation 34 of the Securities and Exchange Board of

India (Listing Obligations & Disclosure Requirements) Regulations2015 is annexed to this Annual Report.

32. SECRETARIAL STANDARDS

The Company has complied with the applicable Secretarial Standardsissued by the Institute of Company Secretaries of India during the Financial Year2021-22.

33. ACKNOWLEDGEMENTS

The Board of Directors place on record their appreciation of thecontribution and sincere support extended to the Company by our bankers financialinstitutions and valued customers and suppliers.

The Board also places on record its appreciation for the impeccableservice and generous efforts rendered by its employees at all levels across the Boardtowards the overall growth and success of the Company.

34. CAUTIONARY STATEMENT

Statements in the Board?s Report and the Management Discussion andAnalysis describing the Company?s objectives expectations or forecasts may beforward looking within the meaning of applicable securities laws and regulations. Actualresults may differ materially from those expressed in the statement. Important factorsthat could influence the Company?s operations include global and domestic demand andsupply conditions affecting selling prices of finished goods input availability andprices changes in Government regulations tax laws economic developments within thecountry and other factors such as litigation and industrial relations.