The Board of Directors presents the 35th Annual Report ofthe Company on the business operations and performance of the Company along with theaudited financial statements for the financial year ended 31st March 2022.
1. Financial Results
The summary of the financial performance of the Company for theFinancial Year ended 31st March 2022 along with the comparative figures for theprevious year is summarized herein below:
| || ||(Rs. in Crore) |
|Particulars ||Year ended 31-Mar-2022 ||Year ended 31-Mar-2021 |
|Total income ||2216.06 ||1991.28 |
|Profit before interest & depreciation ||288.32 ||616.14 |
|Interest ||8.29 ||5.83 |
|Profit before depreciation ||280.03 ||610.31 |
|Depreciation ||43.26 ||38.92 |
|Profit before exceptional items ||236.77 ||571.39 |
|Exceptional items ||13.93 ||- |
|Profit before tax ||222.84 ||571.39 |
|Provision for tax (including deferred tax) ||57.18 ||126.83 |
|Profit after tax ||165.66 ||444.56 |
During the year under review the standalone operating revenue of yourCompany was ` 2216.06 Crore higher by 11.29% as compared to ` 1991.28 Crore in theprevious year.
During the year under review the due to continued volatility in theoutput prices higher raw materials and energy cost margins were impacted adversely. Thegross margin for FY 2021-22 was ` 403.55 Crore as compared to ` 712.06 Crore in theprevious year.
The product portfolio of the Company in the pharamceutical segment isimproving year on year basis by adding new products and therefore the non-Ibu business hasachived a growth of about 70% in FY 2021-22 as comapraed to last year.
During the year under review. The Company has filed 4 new DMFs withUSFDA in addition to 3 CEP applications with EDQM. The Company has got additional approvalfrom Korean FDA for 2 products and 6 products have got approval from Russian regulatoryAuthorities.
The Board of Directors has declared interim dividends of ` 4/- perequity share involving a cash outflow of ` 23.48 crore during the year. The Board ofDirectors considers the same as final dividend and has not recommended any furtherdividend for the financial year 2021-22. The Board has recommended the divided based onthe parameters laid down in the dividend distribution policy.
The Dividend Distribution Policy in terms of Regulation 43A of theSecurities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations 2015 ("SEBIListing Regulations") is available on the Company's website athttps://www.iolcp.com/uploads/Dividend%20 Distribution%20Policy.pdf.
3. Transfer to reserves
The Company has not transferred any amount of profits to reserves forFY 2021-22.
4. Fixed Deposits
The Company has not accepted any deposits within the meaning of Section73 of the Companies Act 2013 and as such no amount of principal or interest wasoutstanding as on 31st March 2022.
5. Share Capital
The paid-up equity share capital of the Company has been `587055020/- (Rupees fty eight crore seventy lakh fty five thousand and twenty only)consisting of 58705502 (Five crore eighty seven lakh five thousand five hundred two)equity shares of ` 10/- each as on 31st March 2022. There is no change in theCapital of the Company during the Financial year 2021-22.
6. Investor Education and Protection Fund (IEPF)
Pursuant to the provisions of Section 124 of the Companies Act2013("the Act") read with Investor Education and Protection Fund Authority(Accounting Audit Transfer and Refund) Rules 2016 ("IEPF Rules") andrelevant circulars and amendments thereto the amount of dividend remaining unpaid orunclaimed for a period of seven years from the due date is required to be transferred tothe Investor Education and Protection Fund ("IEPF") constituted by the CentralGovernment.
During the year under review no amount of unpaid/ unclaimed dividendwas due for transfer to the Investors Education protection Fund.
Members who have not encashed any dividend declared by the Company areadvised to write to the Company immediately at email: firstname.lastname@example.org
7. Holding & Subsidiary Company
Details of subsidiaries / associates of your Company are provided innotes to financial statements.
During the year under review IOL- Foundation was incorporated as whollyowned subsidiary company under the provisions of Section 8 of the Companies Act 2013 withcharitable objects for implementing the Companies CSR activities.
Pursuant to the provisions of Section 129(3) of the Act a statementcontaining the salient features of financial statements of the Company'ssubsidiaries associates & joint ventures in Form No. AOC-1 is attached as Annexure 1 to this report.
Further pursuant to the provisions of Section 136 of the Act thestandalone and consolidated financial statements of the Company along with relevantdocuments and separate audited financial statements in respect of subsidiaries areavailable on the website of the Company at www.iolcp.com.
The Company has no holding company.
8. Credit Rating
During the year under review The Credit Analysis & Research Ltd(CARE) has upgraded the credit rating for Long term Bank Facilities from CAREA' (Single A; Outlook: Stable) to CARE A+' (Single A plus; Outlook:Stable) and the credit rating for Short Term Bank Facilities from CAREA1'(A One) to CARE A1+'(A One plus).
During the financial year 2021-22 the Company has successfully set upmulti product manufacturing facilities Unit 10' for manufacturing pharma APIs.The Company has identified to manufacture Feno brate Lamotrigine etc in this unit.
Further the Company also initiated the project for installation of newmanufacturing facilities (Unit-9) for manufacturing Gabapentin and other Pharma productsduring the year which is under implementation.
10. Directors and Key Managerial Personnel
During the Financial Year 2021-22 the Board of Directors based on therecommendation of the Nomination and Remuneration Committee has appointed Mr Kushal KumarRana as Wholetime Director having designation as Director (Works) for a period of 3 yearswith effect from 4th June 2021 liable to retire by rotation. The saidappointment of Mr Kushal Kumar Rana was approved by the shareholders in their 34thAnnual General Meeting held on 18th September 2021.
Further the Nomination and Remuneration Committee based on performanceevaluation of Mr Rajender Mohan Malla (DIN: 00136657) and Mr Harpal Singh (DIN: 06658043)as Member of the Board / Committees also their contribution in Board / Committeedeliberations during their tenure as an Independent Directors and their skills backgroundand experience recommended to the Board for re-appointment as Independent Directors ofthe Company for a second term of five years. The Board of Directors in their meeting heldon 4th February 2022 unanimously endorsed the view of the Nomination andRemuneration Committee and recommended to the Shareholders for re-appointment of Mr.Rajender Mohan Malla and Mr Harpal Singh as Independent Directors of the Company for asecond term of five years with effect from 6th February 2022 not liable toretire by rotation. The Shareholders of the Company approved the re-appointment of Mr.Rajender Mohan Malla and Mr Harpal Singh as Independent Directors of the Company for their2nd term as mentioned above by way of a Special Resolution passed throughpostal ballot on 18th March 2022
Pursuant to the provisions of the Section 161 149 read with ScheduleIV of the Companies Act 2013 and applicable regulations of SEBI (Listing Obligations andDisclosure Requirement) Regulations 2015 and on the basis of recommendations of theNomination and Remuneration Committee the Board of Directors in its meeting held on 30thMay 2022 appointed Mr Sharad Tyagi as Additional Director in the category of IndependentDirector of the Company for a term of 5 years with effect from 30th May 2022and recommended to the Shareholders for approving the appointment of Mr Sharad Tyagi asIndependent Director of the Company for a period of 5 years effective from 30thMay 2022 not liable to retire by rotation. Pursuant to the provisions of Section 161 ofthe Companies Act 2013 Mr Sharad Tyagi holds the office of director upto theensuing Annual General Meeting of the Company.
The Board of Directors on 30th May 2022 based on therecommendations of Nomination and Remuneration Committee appointed Dr Sanjay Chaturvediwho is working as Chief Executive Officer of the Company as Additional Director of theCompany in the category of Wholetime Director having designation as Executive Director& CEO of the Company for a period of 5 years with effect from 30th May2022. Pursuant to the provisions of Section 161 of the Act Dr Sanjay Chaturvedi holds theoffice of director upto the ensuing Annual General Meeting of the Company.
Further in terms pf the provisions of the Companies Act 2013 MrVikas Gupta Executive Director of the Company retires by rotation at the ensuing AnnualGeneral Meeting and being eligible offers himself for re-appointment. The necessaryresolution seeking shareholders' approval for his re-appointment forms part of theNotice for the ensuing Annual General Meeting.
Also the necessary resolutions and brief details of all the directorsseeking appointment/re-appointment at the ensuing Annual General Meeting are furnished inthe notice calling the Annual General Meeting.
During the year under review Mr Varinder Gupta Managing Director; MrKushal Kumar Rana Director (Works) (being Whole-time Director); Mr Vikas Gupta ExecutiveDirector (being Whole-time Director); Mr Pardeep Kumar Khanna Chief Financial Officer; MrAbhay Raj Singh VP & Company Secretary and Dr Sanjay Chaturvedi Chief ExecutiveOfficer continues to be the Key Managerial Personnel (KMP) of the Company in accordancewith the provisions of Section(s) 2(51) and Section 203 of the Companies Act 2013 readwith the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.
11. Woman Director
In terms of the provisions of Section 149 of the Companies Act 2013and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 Dr Sandhya Mehta is serving as Independent Woman Director on the Boardof the Company. She is Chairperson of Stakeholders Relationship Committee and Nominationand Remuneration Committee. She is also member of CSR Committee Risk Management Committeeand Banking & Finance Committee.
12. Board Evaluation
Pursuant to the provisions of Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the annual evaluation iscarried out by the Board of its own performance and that of its committees and individualDirectors by way of individual and collective feedback from all the 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 considering the views of executive as well asnon-executive directors. The evaluation criteria are mainly based on the Guidance Note onBoard Evaluation issued by the SEBI.
13. Meetings of the Board and Committees of the Board
During the year the Board met 4 times. The gap between any 2 twoconsecutive meetings was within the period prescribed under the Companies Act 2013 andSEBI (Listing Obligations and Disclosure Requirement) Regulations 2015. The details ofmeetings of the Board of Directors and its Committees are provided in the CorporateGovernance Report forming part of this report.
14. Meeting of Independent Directors
Pursuant to the requirements of Schedule IV of the Companies Act 2013and in terms of Regulation 25 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a separate meeting of the Independent Directors of theCompany has been convened on 24th March 2022 to review the matters as laid downin the aforesaid Schedule and Regulations.
15. Directors' Responsibility Statement
To the best of their knowledge and belief and according to theinformation and explanations obtained by them your Directors make the followingstatements in terms of Section 134(3)(c) of the Companies Act 2013:
a. that in the preparation of the annual financial statements for the year ended 31stMarch 2022 the applicable accounting standards have been followed and that there was nomaterial departures.
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
16. Declaration by Independent Directors
All the Independent Directors have submitted declarations that each ofthem meets the criteria of independence as provided in Section 149(6) of the CompaniesAct 2013 along with Rules framed thereunder and Regulation 16(1)(b) of the SEBI (ListingObligations and Disclosure Requirement) Regulations 2015. There has been no change in thecircumstances affecting their status as independent directors of the Company.
17. Remuneration Policy
The Board has on the recommendation of the Nomination &Remuneration Committee framed a policy for selection and appointment of Directors SeniorManagement and fixation of their remuneration. The Remuneration Policy can be viewed onthe company's website www.iolcp.com.
18. Internal financial control systems and their adequacy
The details in respect of internal financial control and their adequacyare included in the Management Discussion & Analysis which forms part of this report.
19. Corporate Governance
The Company has in place a system of Corporate Governance. A separatereport on Corporate Governance along with Auditors' Certificate regarding complianceof conditions of corporate governance set out by the Securities and Exchange Board ofIndia (SEBI) under Listing Regulations is annexed to this Annual Report.
20. Management Discussion and Analysis
In terms of the Regulation 34(2)(e) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 Report on Management Discussion and Analysisforms part of the Annual Report.
21. Audit Committee
The Composition and role of the Audit Committee has been provided inthe Corporate Governance Report annexed with the report.
22. Risk Management
The risk management is to assess risks deploy mitigation measures andreview them including risk management policy on a periodic basis along with the top keyrisk indicators of the organisation. This is done through periodic review meetings of theRisk Management Committee comprising of the Board members.
Risk Management Committee meeting held on 4th February 2022and 29th March 2022 for reviewing the implement and monitor the risk managementplan for the Company. It has been covered in the Management Discussion and AnalysisReport which forms part of this report.
23. Related Party Transactions
All related party transactions that were entered into during thefinancial year were on arm's length and were in the ordinary course of business.These related party transactions did not attract the provisions of Section 188 of theCompanies Act 2013. Also there was no material transaction entered into with any relatedparty during the year under review.
All related party transactions were approved by the Audit Committee andperiodically reported to the Audit Committee. Prior omnibus approval of the AuditCommittee was taken for related party transactions which are of repetitive nature andentered in the ordinary course of the business on arm's length basis.
The details of the related party transaction during financial year2021-22 are provided in the accompanying financial statements.
Accordingly the disclosures of related party transactions as requiredunder Section 134(3)(h) of the Companies Act 2013 read with Rule 8(2) of the Companies(Accounts) Rules 2014 in Form No. AOC-2 is not applicable to the Company for thefinancial year 2021-22 and hence does not form part of this report.
Pursuant to the provisions of the Companies Act 2013 and SEBI ListingRegulations 2015 the Company has formulated a Policy on Materiality of and Dealing withRelated Party Transactions and the same is available on the Company's websitewww.iolcp.com.
24. Corporate Social Responsibility (CSR)
The Board has constituted a CSR Committee comprising of Mr VarinderGupta as Chairman and Dr Sandhya Mehta Mr Vikas Gupta Directors as its members.The report on the Corporate Social Responsibility (CSR) initiatives undertaken by theCompany during the year under review are set out in Annexure - 2 of this report inthe format prescribed in the Companies (Corporate Social Responsibility Policy) Rules2014. The CSR Policy is available on Company's website: www.iolcp.com
25. Research and Development
Last two years pharma industry has seen huge crests & troughs interms of emerging opportunities and regulatory supply chain complexities. To surmount thedifficulties aroused by the pandemic IOL is transforming into different dynamics byadopting the innovative technologies for high end sustainability. These evolving tools andskills are also contributing towards reduction in carbon footprint. Thus IOL is focusingon bringing the innovation through Research and Development to get a larger share inglobal volumes of their portfolios.
At IOLCP we are embracing advanced technologies scientificbreakthroughs that enabled us to advance research and development towards building adiversified portfolio and gain a leadership position in important new productintroductions. Our R&D team constantly aspires to provide novel solutions andprocesses that enable the regulatory teams to file DMFs across the globe so as themarketing team can reach the customers worldwide.
R&D is focusing on advanced technologies like Enzymaticbio-conversions instead of classical chemical reactions which are highly product specificwith high atom efficient throughputs & use of Continuous flow reactions whichminimizes by-products improves process efficiencies and are also less energy & CAPEXintensive.
The scientists at IOLCP demonstrated that enzymatic transformationsare highly useful in production of high-quality APIs in cost affordable by use ofengineered enzyme and recycling them.
Collaborations with the topnotch scientists on the modern trends inindustry ensured the core competencies of R&D team are of the highest standards evenwhen compared with Indian market leaders.
To highlight few achievements IOLCP filed four patents developedprocesses of various products using novel technologies and filed DMFs & CEPs for sixproducts in US & Europe.
26. Statutory Auditors
Pursuant to the provisions of Section 139 of the Companies Act 2013and the Rules framed thereunder M/s Ashwani & Associates Chartered AccountantsLudhiana Registration 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.
The Statutory Auditors' Report on the accounts is self-explanatoryand does not contain any qualifications reservations or adverse remarks. The Auditorshave given an unmodified report.
27. Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act 2013and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theBoard had appointed M/s B. K. Gupta & Associates Practicing Company Secretary forconducting secretarial audit of the Company. The Secretarial Audit Report is annexedherewith as Annexure - 3.
The Secretarial Audit report does not contain any qualificationreservation or adverse remark.
28. Secretarial Standard
The Company has proper system in place to ensure the due compliancewith the provisions of the applicable secretarial standards issued by the Institute of theCompany Secretaries of India.
29. Cost Records & Cost Auditors
Pursuant to the provisions of Section 148 of the Companies Act 2013the Company is required to maintain the cost records which are subject to the audit byRamanath Iyer & Co. Cost Accountants New Delhi the Cost Auditors of the Company forFY 2021-22.
The Board of Directors of the Company on the recommendations of AuditCommittee approved the reappointment of M/s Ramanath Iyer & Co. Cost AccountantsNew Delhi as Cost Auditors of the Company for conducting the Cost audits for FY 2022-23. Aresolution seeking approval of the Shareholders for ratifying the remuneration payable tothem for FY 2022-23 is provided in the Notice of the ensuing Annual General Meeting.
30. Particulars of managerial remuneration and related disclosures
Disclosures relating to remuneration and other details as requiredunder Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are provided in Annexure 4'.
In terms of the provisions of Section 197(12) of the Act read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as amended a statement showing the names and other particulars ofthe employees drawing remuneration in excess of the limits set out in the said rules formspart of this Report.
31. CEO & CFO Certification
In accordance with the provisions of the SEBI Listing Regulations theExecutive Director & CEO and Chief Financial Officer of the Company have submitted therelevant certificate for the Financial Year 2021-22 to the Board of Directors.
32. Annual Return
Pursuant to the provisions of Section 134(3)(a) of Companies Act 2013the web address of the Annual Return of the Company ishttps://www.iolcp.com/investors/annual-returns
33. Loan Guarantees or Investment Under Section 186 of the CompaniesAct 2013
The particulars of loans guarantees and investments have been providedin the notes of the financial statements.
34. Material Changes and Commitments
There have been no material changes and commitments affecting thefinancial position of the Company which occurred between the end of the Financial Year ofthe Company as on 31st March 2022 and the date of this report.
35. Significant and Material Orders Impacting Operations of Company inFuture
There has been no significant or material orders passed by anyRegulators / Court or Tribunals impacting the going concern status and future operationsof your Company.
36. Reporting of Frauds
There have been no instances of fraud reported by the StatutoryAuditors of the Company under Section 143(12) of the Companies Act 2013 and the Rulesframed thereunder either to the Company or to the Central Government.
37 Industrial Relations
Industrial relations remained cordial and harmonious throughout theyear under review.
38. Safety Health and Environment
Safety is Company's top priority with regard to employment and itis encouraging safety measures at all levels of operations especially at the floor level.Regular training programmes are being conducted to bring in awareness of safety atworkplace.
39. Prevention of Sexual Harassment Policy and Disclosure as per theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013
In line with the requirements of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 the Company has set up aComplaints Committees at its workplace. The Company has zero tolerance towards sexualharassment at workplace and accordingly adopted a policy on prevention prohibition andredressal of sexual harassment in pursuance of the provisions of the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013. During the yearunder review the Company received only one complaints of sexual harassment which hasbeen addressed / resolved by taking appropriate action.
40. Vigil Mechanism
In pursuant to the provisions of Section 177(9) & (10) of theCompanies Act 2013 a Vigil Mechanism for directors and employees to report genuineconcerns has been established.
The Vigil Mechanism Policy can be accessed at company's website:www.iolcp.com
41. Business Responsibility Report
In terms of Regulation 34(2)f of the SEBI Listing Regulations theBusiness Responsibility Report (BRR) of your Company detailing initiatives undertaken bythe Company on environmental social and governance front during the year under reviewforms part of this Annual Report and is also available on the website of the Company atwww.iolcp.com
42. Energy Conservation / Technology Absorption and Foreign ExchangeEarnings and Outgo
Energy conservation continues to be an area of major emphasis in theCompany. A statement giving details of conservation of energy technology absorptionforeign exchange earnings and outgo in accordance with Section 134 of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is annexed hereto as Annexure 5 and forms part of the Report.
Your Directors state that no disclosure or reporting is required inrespect of the following items as there were no transactions on these items during theyear 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.
The Directors wish to place on record their appreciation of thecontinuous support received by the Company from the investors Bankers Central/StateGovernment Departments its Customers and Suppliers.
We also place on record our sincere appreciation of the contributionmade by the employees at all levels. Our consistent growth is made possible by theirdevout sincere and unstinted services.
Further the Board expresses its gratitude to you as Shareholders forthe confidence reposed in the management of the Company