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IOL Chemicals & Pharmaceuticals Ltd.

BSE: 524164 Sector: Health care
NSE: IOLCP ISIN Code: INE485C01011
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NSE 00:00 | 23 Sep 562.25 -2.45
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OPEN 569.40
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VOLUME 34356
52-Week high 859.65
52-Week low 516.35
P/E 8.36
Mkt Cap.(Rs cr) 3,299
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 569.40
CLOSE 564.90
VOLUME 34356
52-Week high 859.65
52-Week low 516.35
P/E 8.36
Mkt Cap.(Rs cr) 3,299
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

IOL Chemicals & Pharmaceuticals Ltd. (IOLCP) - Director Report

Company director report

Dear Members

The Board of Directors presents the 34th Annual Report of the Company on thebusiness operations and performance of the Company along with the audited financialstatements for the year ended 31st March 2021.

1. Financial Results:

The brief summary of the financial performance of the Company for the Financial Yearended 31st March 2021 along with the comparative figures for the previous yearis summarized herein below:

(Rs. In Crore)

Particulars Year ended 31-Mar-2021 Year ended 31-Mar-2020 % increase/ (decrease)
Total income 1991.28 1910.49 4.23
Profit before interest & depreciation 616.40 589.9 4.49
Interest 5.83 20.93 (72.15)
Profit before depreciation 610.31 568.97 7.27
Depreciation 38.92 35.73 8.93
Profit before tax 571.39 533.24 7.15
Provision for tax (including deferred tax) 126.83 171.95 (26.24)
Profit after tax 444.56 361.29 23.05

2. Financial performance and review of operation

During the year under review the standalone operating revenue of your Company wasRs.1991.28 Crore higher by 4.23% as compared to Rs. 1910.49 Crore in the previous year.The Net Profit for the year was higher by 23.05% at Rs. 444.56 Crore as against theprevious year's Net profit of Rs. 361.29 Crore.

Absolute EBITDA grew over the last five years driven by growth in sale less cost andoptimisation utilisation of recourses .During the year under review the EBITDA increase 4%as Compared to previous year.

3. Covid 19:

The COVID-19 pandemic has emerged as a global challenge creating disruption across theworld. Due to the rapid spread of the second wave of pandemic globally the uncertaintiesin growth of key sectors are high and hence the outlook with respect to market dynamics isuncertain and unpredictable. Global solutions are needed to overcome the challenges -businesses & business mode have transformed to create a new work facility.

The physical and emotional wellbeing of employees continues to be a top priority forthe Company with several initiatives to support employees and their families during thepandemic. The Company has invested in medicine sanitizers hospital services andproviding mental & emotional support to employees. The Company has reframed employeeengagement which outdoes geographic barriers by embracing virtual technologies and gripsour diverse workforce.

4. Dividend

The Board of Directors has proposed a final dividend of Rs. 2.00 per share subject toapproval of shareholders at the AGM. Together with interim dividend of Rs. 4.00 per sharepaid by the Company during the year under review the total dividend for the financialyear ending 31st March 2021 amounts to Rs. 6.00 per share.

5. Transfer to reserves

The entire amount of profits is retained in the profit and loss account and thereforeno amount is transferred to General Reserves. The closing balance of the retained earningsof the Company as on 31st March 2021 after all appropriation and adjustmentsstood at Rs. 971.31 Crore as against Rs. 550.23 Crore as on 31st March 2020.

6. Fixed Deposits

Your Company has not accepted any deposit from the public in terms of the provisions ofSection 73 of the Companies Act 2013 read with the Companies (Acceptance of Deposits)Rules 2014 including any amendment thereto and as such there is no amount of principal orinterest was outstanding as on 31st March 2020.

7. Share Capital

The paid up equity share capital of the Company has been increased Rs. 587055020/-(Rupees Fifty Eight Crore Seventy Lakh Fifty Five Thousand and Twenty) consisting of58705502 (Five Crore Eighty Seven Lakh Five Thousand Five Hundred Two) equity shares ofRs. 10/- each on allotment of 1818000 (Eighteen Lakh Eighteen Thousand) equity shares onthe converted 1818000 warrants into equity shares. The amount raised through the issue ofequity shares has been utilised in expansion of projects and to meet working capitalrequirements.

8. Dividend Distribution Policy

Pursuant to the Regulation 43A of SEBI (Listing Obligations & DisclosureRequirements) Regulation 2015 (the 'SEBI Listing Regulations') the Board of Directors ofthe Company formulated and adopted the Dividend Distribution Policy of the Company basedon the parameters provided under the said regulation. The Policy is available on Company'swebsite at https://www.iolcp.com/policies.html

9. Investor Education and Protection Fund (IEPF)

Pursuant to the provisions of Section 124 and 125 of the Companies Act 2013 read withIEPF Authority (Accounting Audit Transfer and Refund) Rules 2016 ('the Rules') duringthe year under review no amount of unpaid/unclaimed

dividend was due for transfer to the Investors Education protection Fund.

10. Holding & Subsidiary Company

The Company has neither any holding company nor a subsidiary company.

11. Credit Rating

During the year under review Credit Analysis & Research Limited (CARE) hasupgraded the credit rating for Long Term Bank Facilities from 'CARE A-' (Single A Minus;Outlook: Stable) to 'CARE A' (Single A; Outlook: Stable) and the credit rating for ShortTerm Bank Facilities from 'CARE A2+'(A Two Plus) to 'CARE A1'(A One).

12. Expansion

During the year the Company successfully set up an another manufacturing Unit-7 formanufacturing Metformin with an additional capacity of 7200 MT per annum with a capex ofRs. 28 Crore which is funded fully through internal accruals only.

During the year 2020-21 the Company has also installed new manufacturing facilities"Unit-8" to manufacture Ibuprofen Derivatives and other Pharma Products.

During the year 2020-21 the Company has increased existing manufacturing facilities ofEthyl Acetate from 87000 MT per annum to 100000 MT per annum in Chemical segment.

13. Directors and Key Managerial Personnel

Mr. Vijay Garg Joint Managing Director of the Company resigned from the directorshipof the Company effecting from closure of the 31st March 2021. The Board placeson record their appreciation for the services rendered by Mr. Vijay Garg during hisassociation with Company.

The Board of Directors appointed Mr. Sanjay Chaturvadi as Chief Executive Officer ofthe Company effective from 16th March 2021.

Further on the recommendation of Nomination & Remuneration Committee the Board ofDirectors has also appointed Mr. Kushal Kumar Rana as Additional Director in the categoryof wholetime director having Designation as Director (Works) with effect from 4thJune 2021 for a period of 3 years liable to retire by rotation. In terms of theprovisions of Section 161 of the Act Mr. Kushal Kumar Rana holds the office of directorupto the ensuing AGM of the Company. The Board recommends appointment of Mr. Kushal KumarRana as wholetime director having designation of Director (Works) for a term of 3 yearsw.e.f. 4th June 2021 till 3rd June 2024 at the ensuing AGM.

Mr. Vikas Gupta Executive Director of the Company retires by rotation at the ensuingAnnual General Meeting and being eligible offers himself for re-appointment. A resolutionseeking shareholders' approval for his re-appointment forms part of the Notice for theensuing AGM.

The brief details of all the directors seeking appointment/ re-appointment at theensuing Annual General Meeting is furnished in the explanatory statement to the noticecalling the Annual General Meeting.

During the year under review Mr. Varinder Gupta Managing Director; Mr. Vijay GargJoint Managing Director (since resigned from the closure of the 31st March2021); Mr. Vikas Gupta Executive Director (Whole-time Director); Mr. Pardeep KumarKhanna Chief Financial Officer (CFO); Mr. Abhay Raj Singh AVP & Company Secretaryand Mr. Sanjay Chaturvadi Chief Executive Officer (wef 16th March 2021)continues to be the Key Managerial Personnel (KMP) of the Company in accordance with theprovisions of Section(s) 2(51) and Section 203 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014.

14. Woman Director

In terms of the provisions of Section 149 of the Companies Act 2013 and Regulation 17of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 Dr.Sandhya Mehta is serving as Independent Woman Director on the Board of the Company. She isalso Chairperson of Stakeholders Relationship Committee Nomination and RemunerationCommittee and member of Audit Committee CSR Committee and Risk Management Committee.

15. Board Evaluation

Pursuant to the provisions of Companies Act 2013 and SEBI Listing Regulations theannual evaluation has been carried out by the Board of its own performance its Committeesand individual Directors by way of individual and collective feedback from Directors. TheDirectors expressed their satisfaction with the evaluation process. In a separate meetingof independent directors performance of non-independent directors the Board as a wholeand Chairman of the Company was evaluated taking into account the views of executivedirectors and non-executive directors.

16. Familiarisation Programme for Directors

As a policy to familiarise the new directors (including independent directors) withthe company's business operations products Board constitutions functioning and

director's roles and responsibilities the management go through an orientationprogramme. Presentations are made to provide an overview of the operations to familiarisethe new directors with the Company's business operations also visits to plant locationare organised for the new Directors to enable them to understand the business better.During the year under review no new directors were inducted to the Board.

17. Number of Meetings of the Board

During the year six Board Meetings were held. The intervening gap between the meetingswas within the period prescribed under the Companies Act 2013. For details of meetings ofthe Board of Directors and its Committees please refer to the Corporate GovernanceReport which is a part of this report.

18. Meeting of Independent Directors

Pursuant to the requirements of Schedule IV of the Companies Act 2013 and in terms ofRegulation 25 of the SEBI Listing Regulations a separate meeting of the IndependentDirectors of the Company was convened on 26th March 2021 to review the mattersas laid down in the aforesaid Schedule and Regulations.

19. Directors' Responsibility Statement

To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013:

a. that in the preparation of the annual financial statements for the year ended 31stMarch 2021 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;

b. that such accounting policies as mentioned in Note 1 of the Notes to the FinancialStatements have been selected and applied consistently and judgement and estimates havebeen made that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at the end of the year and of the profit of the Company forthat year;

c. that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

d. that the annual financial statements have been prepared on a going concern basis;

e. that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively.

f. that systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively

20. Declaration by Independent Directors

All the Independent Directors have submitted declarations that each of them meet thecriteria of independence as provided in Section 149(6) of the Companies Act along withRules framed thereunder and Regulation 16(1 )(b) of the SEBI Listing Regulations. Therehas been no change in the circumstances affecting their status as Independent Directors ofthe Company.

21. Remuneration Policy

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and fixationof their remuneration. The Remuneration Policy can be viewed on the company's website athttps://www.iolcp.com/policies.html.

22. Internal financial control systems and their adequacy

The details in respect of internal financial control and their adequacy are included inthe Management Discussion & Analysis which forms part of this report.

23. Corporate Governance

Pursuant to the Regulation 34 of the SEBI Listing Regulations Report on CorporateGovernance along with a certificate issued by Statutory Auditor of the Company certifyingcompliance with conditions of corporate governance is part of the Annual Report.

24. Management Discussion and Analysis

In terms of the Regulation 34(2)(e) of SEBI Listing Regulations Report on ManagementDiscussion and Analysis forms part of the Annual Report.

25. Audit Committee

The Composition and role of the Committee has been provided in the Corporate GovernanceReport annexed with the report.

26. Risk management

The Board has formed Risk Management Committee on 10th February 2021 interalia to frame implement and monitor the risk management plan for the Company. TheCommittee is responsible for reviewing the risk management plan

and ensuring its effectiveness. It has been covered in the Management Discussion andAnalysis Report which forms part of this annual report.

27. Related Party Transactions

All Related Party Transactions that were entered into during the financial year were onarm's length and were in the ordinary course of business. During the year the Company hadentered into contract / arrangement / transaction with related parties which could beconsidered material in accordance with the provisions of Policy on materiality of anddealing with Related Party Transactions. The disclosures of related party transactions areprovided in notes to financial statements.

The information on transactions with related parties pursuant to Section 134(3)(h) ofthe Act read with Rule 8(2) of the Companies (Accounts) Rules 2014 are given inAnnexure-1 in Form No. AOC-2.

The Company has formulated a Policy on materiality of and dealing with Related PartyTransactions. The policy is available on the Company's website athttps://www.iolcp.com/policies.html

28. Corporate Social Responsibility (CSR)

The Company has in place a CSR Policy which sets the principles for conducting the CSRactivities of the Company. To implement the CSR Policy of the Company the Board hasconstituted a CSR Committee comprising of Mr. Varinder Gupta as Chairman and Dr. SandhyaMehta and Mr. Vikas Gupta Directors as its members. The report on the Corporate SocialResponsibility (CSR) initiatives undertaken by the Company during the year under revieware set out in Annexure-2 of this report in the format prescribed in the Companies(Corporate Social Responsibility Policy) Rules 2014. The CSR Policy is available onCompany's website: https://www.iolcp.com/ policies.html

29. Research and Development

The pharma industry is immensely competitive where innovation is essential to financialstability and growth. So companies attempt to outperform their rivals and ensurecommercial success by doing innovation and increasing efficiency through Research andDevelopment (R & D) and helps to increase revenue. At IOLCP we are embracing advancedtechnologies scientific breakthroughs that enable us to advance research and developmenttowards building a diversified portfolio and gain a leadership position in important newproduct introductions. Our Research & Development helps build a solid foundation as weprogress to become a Complex Generics producer. R&D work

closely with the business teams to generate innovative concepts and ideas exploringboth the unmet market and synergies across therapeutic areas. We are well on track toemerge as an innovation led transnational pharmaceutical powerhouse providing affordablehealthcare solutions with uncompromising quality. R&D have a proven track record ofdelivering high-quality technology-intensive products Active Pharmaceutical Ingredients(APIs) KSM which are commercially viable throughout the life cycle of productinfiltrating continuous process improvements. Apart from this R&D helps QA withinvestigations & in answering queries from regulatory bodies.

30. Statutory Auditors

Pursuant to the provisions of Section 139 of the Companies Act 2013 and the Rulesframed thereunder M/s Ashwani & Associates Chartered Accountants LudhianaRegistration No:000497N were appointed as statutory auditors of the Company fromconclusion of 31st Annual General Meeting of the Company held on 29thSeptember 2018 till the conclusion of the 36th Annual General Meeting to beheld in the year 2023.

Statutory Auditors' Report Auditors' Report on the accounts is self-explanatory anddoes not contain any qualifications reservations or adverse remarks. The Auditors havegiven unmodified report.

31. Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board hadappointed M/s B. K. Gupta & Associates practicing Company Secretary for conductingsecretarial audit of the Company. The Secretarial Audit Report is annexed herewith asAnnexure-3.

The Secretarial Audit report does not contain any qualification reservation or adverseremark.

32. Cost Auditors

Pursuant to the provisions of Section 139 of Companies Act 2013 the Board hadre-appointed M/s Ramanath Iyer & Co. Cost Accountants New Delhi as Cost Auditor toconduct the audit of cost accounts of bulk drugs and chemicals for the financial year2021-22 subject to determination of their remuneration by members of the Company thereto.

The Cost Audit Report for the year ended 31st March 2020 has been filed on29th August 2020 with Ministry of Corporate Affairs New Delhi.

33. CEO and CFO Certification

In accordance with the provisions of the SEBI Listing Regulations the Managing Directorand Chief Financial Officer of the Company have submitted the relevant certificate for theyear ended 31st March 2021 to the Board of Directors

34. Annual Return

Pursuant to the provisions of Section 134(3)(a) of Companies Act 2013 and Rules madethereunder the Annual Returns of the Company for the is available on the website athttps://www.iolcp.com/annual-return.html

35. Loan guarantees or investment under Section 186 of the Companies Act 2013

The particulars of loans guarantees and investments have been provided in the notes ofthe financial statements.

36. Material Changes and Commitments

There have been no material changes and commitments affecting the financial position ofthe Company which occurred between the end of the Financial Year of the Company as on 31stMarch 2021 and the date of this report.

37. Particulars of managerial remuneration and related disclosures

Disclosures relating to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided in Annexure-4.

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 asamended a statement showing the names and other particulars of the employees drawingremuneration in excess of the limits set out in the said rules are provided in Annexure-4.

38. Significant and Material Orders impacting Operations of Company in Future

There are no significant or material orders that have been passed by anyRegulators/Court or Tribunals impacting the going concern status and future operations ofyour Company.

39. Reporting of Frauds

There have been no instances of fraud reported by the Statutory Auditors of the Companyunder Section 143(12) of the Companies Act 2013 and the Rules framed thereunder either tothe Company or to the Central Government.

40. Industrial Relations

Industrial relations remained cordial and harmonious throughout the year under review.

41. Safety Health and Environment

Safety is Company's top priority with regard to employment and it is encouraging safetymeasures at all levels of operations especially at the floor level. Regular trainingprogrammes are being conducted to bring in awareness of safety at workplace. The Companycontinues to endeavor in improving its efforts to minimise environmental impact throughreduced process emission waste and consumption of energy water and raw materials.

42. Prevention of Sexual Harassment Policy

In line with the requirements of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 the Company has adopted a policy onprevention prohibition and redressal of sexual harassments. The Company has zerotolerance towards sexual harassment at work place. No complaint was received during theyear 2020-21.

43. Vigil Mechanism and Whistle Blower Policy

In pursuant to the provisions of Section 177(9) & (10) of the Companies Act 2013a Vigil Mechanism for directors and employees to report genuine concerns has beenestablished. This Policy provides a framework to promote responsible and secure reportingof undesirable activities ("whistle blowing"). The Company aims to provide amechanism to the whistleblower to disclose any misconduct or unethical practice takingplace in the Company for appropriate action and reporting without fear of any kind ofdiscrimination harassment victimisation or any other unfair treatment or employmentpractice being adopted against the whistleblower. The Vigil Mechanism Policy can beaccessed at company's website: www.iolcp.com

44. Business Responsibility Report

In terms of Regulation 34(2)f of the SEBI Listing Regulations the BusinessResponsibility Report (BRR) of your Company detailing initiatives undertaken by theCompany on environmental social and governance front during the year under review formspart of this Annual Report and is also available on the website of the Company atwww.iolcp.com

45. Energy Conservation / Technology Absorption and Foreign Exchange Earnings and Outgo

Energy conservation continues to be an area of major emphasis in the Company. Astatement giving details of conservation of energy technology absorption foreignexchange earnings and outgo in accordance with Section 134 of the Companies Act 2013read with Rule 8(3) of the Companies (Accounts) Rules 2014 is annexed hereto asAnnexure-5 and forms part of the Report.

46. General

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend voting or otherwise.

2. Change in the nature of business of the Company.

3. The Company does not have any scheme of provision of money for the purchase of itsown shares by employees or by trustees for the benefit of employees.

4. Neither the Managing Director nor the Whole-time Directors of the Company receiveany remuneration or commission from any of its subsidiaries.

5. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.

6. No fraud has been reported by the Auditors to the Audit Committee or the Board.

47. Acknowledgement

The Directors wish to place on record their appreciation of the continuous supportreceived by the Company from the investors Bankers Central/State Government Departmentsits Customers and Suppliers.

We also place on record our sincere appreciation of the contribution made by theemployees at all levels. Our consistent growth is made possible by their devout sincereand unstinted services.

By Order of the Board
Sd/- Sd/-
Place: Ludhiana Varinder Gupta Rajender Mohan Malla
Date: 04th June 2021 Managing Director Chairman
DIN-00044068 DIN-00136657

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