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J B Chemicals & Pharmaceuticals Ltd.

BSE: 506943 Sector: Health care
NSE: JBCHEPHARM ISIN Code: INE572A01028
BSE 00:00 | 03 Feb 2056.35 15.40
(0.75%)
OPEN

2020.05

HIGH

2071.85

LOW

2020.05

NSE 00:00 | 03 Feb 2059.65 19.60
(0.96%)
OPEN

2040.85

HIGH

2072.25

LOW

2019.05

OPEN 2020.05
PREVIOUS CLOSE 2040.95
VOLUME 1983
52-Week high 2149.90
52-Week low 1339.05
P/E 44.65
Mkt Cap.(Rs cr) 15,906
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 2020.05
CLOSE 2040.95
VOLUME 1983
52-Week high 2149.90
52-Week low 1339.05
P/E 44.65
Mkt Cap.(Rs cr) 15,906
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

J B Chemicals & Pharmaceuticals Ltd. (JBCHEPHARM) - Director Report

Company director report

Your directors are pleased to present forty-sixth report and audited financialstatement of the Company for the financial year ended on March 31 2022.

1. FINANCIAL HIGHLIGHTS

The following are the highlights of financial performance of the Company during theyear under review.

(Rs in lakhs)
Standalone Consolidated
2021-22 2020-21 2021-22 2020-21
Sales 216239.43 184907.75 239761.56 200211.39
Other Operating revenue 2748.20 4291.80 2662.83 4040.76
Other Income 3861.38 11188.94 3922.63 11238.32
Total Income 222849.01 200388.49 246347.01 215490.47
Profit before finance cost and depreciation 54752.34 66825.48 58268.24 67279.21
Less: Finance cost 494.87 719.18 512.05 724.12
Less: Depreciation & Amortisation expense 7128.21 6735.50 7265.99 6866.55
Profit before tax 47129.26 59370.80 50490.20 59688.54
Tax Expense (Net) 11029.06 14662.32 11886.31 14836.24
Net Profit after tax 36100.20 44708.48 38603.89 44852.30
Other Comprehensive Income 106.60 (1249.67) 400.60 33.46
Total Comprehensive Income after tax 36206.80 43458.81 39004.49 44885.76
Earnings per share of Rs 2 (in Rs)
- Basic 46.71 57.85 49.86 57.96
- Diluted 46.67 57.85 49.82 57.96

2. DIVIDEND

Your directors recommend a final dividend of Rs 8 (400%) per equity share offace value of Rs 2 payment whereof will be subject to deduction of tax at source. Duringthe year Board of directors declared interim dividend of Rs 8.50 (425%) per equity sharewhich was paid on March 4 2022. The final dividend if declared together with interimdividend already paid would result in total outgo of Rs 127.52 crores. The Board has notproposed any for the financial year to reserves in relation to transferoutofprofit thesedividend payments. The Company paid interim dividend of Rs 8.50 (425%) and finaldividend of Rs 8 (400%) per equity share in the previous year.

3. OPERATIONS/STATE OF AFFAIRS

The Company's strong performance and sales momentum continued throughout the year withseveral businesses outperforming. Revenue for the organisation was at

Rs 2424 crores as compared to Rs 2043 crores recording growth of

19 %. The domestic business continued its outperformance while the internationalbusiness bounced back strongly in the fourth quarter to record double digit growth for thefinancial year.

Total standalone sales during the year at Rs 2189.88 crores were

15.7% higher over the previous year.

Domestic formulations business revenue was at Rs 1173 crores as compared to Rs 892crores for the previous financial year registering growth of 32%. Domestic businesscontinued to maintain its stellar performance. The business continued to retain itsposition as the fastest growing company in IPM amongst top 30. This outperformance ismainly attributed to factors such as the 5 pillar brands driving market-beating growthincreasing contribution from Chronic Therapies improved field-force productivityacceleration in new launches. Going forward we will continue to capitalize on synergiesfrom the acquired brands. Consequently we have seen a significant improvement in our IPMranking over the past 12 months from 32 to 25. As per IQVIA MAT Mar'22 data the Companygrew at 29% vs market growth of 18%. Its main brands continue their market-beatingperformance and remain well above market growth rates. During the year the businessintroduced fifteen new products. Further the integration of the newly acquired brandsfrom Sanzyme is on track towards stability and maximization of synergistic growth.

The international business revenue was at Rs 1236 crores for

FY 22 as compared to Rs 1127 crores recording growth of 10%.

International business delivered a good performance against the odds of a challengingand volatile market. This strong bounce-back especially in the fourth quarter was madepossible by surging demand in Contract Manufacturing & Lozenge business and reviveddemand in several pockets of ROW business. Exports formulation business revenue was at Rs892 crores growing at 10% over the previous year. CMO business aided by new launches andnew customers performed well with revenue at Rs 253 crores registering a growth of 12%over the previous year. The API sales at Rs 91 crores achieved growth of 1% over theprevious year.

The business saw a challenging cost environment during the year especially in thesecond half of the year. Inflation in material costs power & fuel and shipping costsaccentuated alongwith the normalisation of operating costs. These could be partlymitigated through cost savings initiative pricing & business mix. Reported EBIDTA wasRs 655 crores (previous year Rs 560 crores). Adjusted EBIDTA (after adjusting non-cashESOP & one-time costs) was Rs 543 crores (previous year Rs 560 crores).

Profit Before Tax was at Rs 505 crores as compared to Rs 597 crores. Profit After Taxwas atRs 386 crores as compared to Rs 449 crores. PAT and PBT was impacted due to thenon-cash ESOP charge and one time related non-recurring charges in this financial year andhigher other income recorded in the previous year.

4. ACQUISITIONS

During the year the Company acquired portfolio of brands from Sanzyme Private Limitedwhich has marked the Company's entry into the fast-growing probiotics therapeuticnutraceuticals and reproductive health market in the country.

Subsequent to the year end the Company acquired the brand AzmardaR indicated for heartfailure patients with reduced ejection fraction (HFrEF) from Novartis AG Switzerland forIndia. The said brand shall help the Company in strengthening its presence in theCardiology segment in the country.

5. RESPONSIBILITY STATEMENT

Thedirectors

(i) that in the preparation of the annual accounts for the year under review theapplicable accounting standards have been followed;

(ii) that they have selected appropriate accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of financialyear 2021-22 and of profit of the Company for that year;

(iii) that they have taken proper and sufficient care 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;

(iv) that they have prepared the annual accounts for the year ended on March 31 2022on a going concern basis; (v) that they have laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively; and

(vi) that they have devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

6. SUBSIDIARIES

The highlights of performance of subsidiary companies in Rupee terms for the year2021-22 is presented in Schedule-A. After inter-company adjustments subsidiary companiescontributed Rs 234.37 crores to consolidated income and Rs 33.60 crores to consolidatedprofit before tax of the Company.

Sales of Biotech Laboratories (Pty.) Ltd. South Africa for the financial year 2021-22were Rand 576.66 million which represents growth of 20.84% over the previous year whileits operating profit and profit after tax at Rand 38.77 million and Rand 28.53 millionwere 12.12% and 11.14% higher over the previous year respectively. Sales of LLC UniquePharmaceutical Laboratories Russia for the financial year 2021-22 at Rouble 734.56million were 12.39% higher over the previous year while it earned net profit of Rouble26.96 million against loss of Rouble 1.45 million in the previous year. UniquePharmaceutical Laboratories FZE Dubai is presently not engaged in any business activity.It has incurred loss of AED 0.78 million due to operating and other expenses.

7. CORPORATE GOVERNANCE AND COMPLIANCES

A certificate from practising company secretary with conditions of corporate governanceis annexed to this Board's report. Management Discussion and Analysis Report Compliancereport on Corporate Governance Business Responsibility Report and Dividend DistributionPolicy form part of this annual report.

8. PUBLIC DEPOSITS

The Company has not accepted any deposit covered under Chapter V of the Companies Act2013 during the year. All the public deposits accepted prior to the commencement of thesaid Act have been repaid in 2014-15.

9. DIRECTORS AND KEY MANAGERIAL PERSONNEL

The members of the Company at annual general meeting held on September 9 2021appointed Mr. Gaurav Trehan as Non-executive director liable to retire by rotation andre-appointed Ms. Ananya Tripathi who was retiring by rotation.

Mr. Sanjay Nayar and Ms. Ananya Tripathi resigned from the Board of directors witheffect from January 25 2022 and March 11 2022 respectively.

In accordance with provisions of the Companies Act 2013 Mr. Prashant Kumarwould retire by rotation at the ensuing annual general meeting. Being eligible he hasoffered himself for re-appointment.

In the opinion of the Board of directors Mr. Ranjit Shahani Mr. Sumit Bose and Ms.Padmini Khare Kaicker independent directors are persons of integrity and they allpossess relevant expertise and experience necessary for effective functioning of theCompany. These independent directors have given declarations to the Board that they meetthe criteria of independence as provided in Section 149(6) of the Companies Act 2013 aswell as in Regulation 16 of Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015. They have also confirmed that they haveregistered with the Indian Institute of Corporate Affairs to include their names in thedatabank of independent directors. However in terms of Companies (Appointment andQualification of Directors) Rules 2014 as amended these independent directors are notrequired to pass an online proficiency self-assessment test conducted by the saidInstitute notified under sub-section (1) of section 150 of the Companies Act 2013.

Ten meetings of the Board of directors were held during the financial year ended onMarch 31 2022. These meetings were held on April 1 2021 April 28 2021 June 14 2021July 14 2021 August 12 2021 October 1 2021 November 11 2021 January 252022 February 14 2022 and March 22 2022. Mr. Vijay Bhatt resigned as Chief FinancialOfficer with effect from August 31 2021 and Mr. Lakshay Kataria was appointed as ChiefFinancial Officer of the Company with effect from October 4 2021. Mr. Mayur Mehtaresigned as Complany Secretary with effect from July 14 2021 and Mr. Sandeep Phadnis wasappointed as Company Secretary and compliance officer with effect from July 15 2021.

10. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION

The Company's policy on directors' appointment is set out in Schedule-B. The salientfeatures of the Company's policy on remuneration for the directors key managerialpersonnel and other employees is set out in Schedule-C. The said Policy including criteriafor determining qualifications positive attributes and independence of a director hasbeen posted on the Company's website www.jbpharma.com.

11. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars as required under Section 134(3)(m) of the Companies Act 2013 readwith Rule 8(3) of the Companies (Accounts) Rules 2014 are given in Schedule-D.

12. CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility (CSR) Committee of the Board consists of Mr. RanjitShahani Mr. Sumit Bose Mr. Nikhil Chopra and Mr. Prashant Kumar. The CSR Committeeformulated and recommended revised CSR Policy to the Board which the Board approved onFebruary 10 2021. The salient features of the said CSR Policy of the Company and theannual report on CSR in the prescribed form are set out in Schedule-E. The CSR Policy andannual report on CSR are posted on the Company's website www.jbpharma.com.

The Company spent Rs 6.95 crores on CSR activities (Rs 6.61 crores on CSR activitiesand Rs 0.34 crore on administrative overheads for general management and administration ofCSR function) on prescribed CSR activities during financial year 2021-22 as againstobligation of Rs 6.94 crores being 2% of the averagenetprofitsof the Company made duringthree immediately preceding financial years.

13. AUDIT COMMITTEE AND VIGILANCE MECHANISM

The Board has constituted Audit Committee that consists of Ms. Padmini KhareKaicker Chairperson Mr. Ranjit Shahani Mr. Sumit Bose and Mr. Prashant Kumar.There has been no instance of non-acceptance of recommendation of Audit Committee by theBoard.

The Board of directors has on November 10 2020 adopted revised vigil mechanism in theform of Whistle Blower Policy to enable directors employees and other stakeholders tomake Protected Disclosures (as defined in the Policy) in relation to Alleged WrongfulConduct (as defined in the Policy) to the Redressal Committee for evaluation andinvestigation in consultation with the Audit Committee. The Policy empowers theRedressal Committee to initiate inquiry and investigation if the issue raised constitutesbona fide Protected Disclosure made in good faith. The Redressal Committee is required tocomplete the investigation in a time bound manner. Where it concludes that Unethicaland/or Improper Activity (as defined has been committed it shall recommend afterconsultation with the Audit Committee to the management of the Company to takesuch disciplinary or corrective action as it or the Audit Committee deems fit. The Policyprovides for access of whistle blower to the Chairman of the Audit Committee inappropriate or exceptional circumstances. The Policy provides for adequate safeguards ofwhistle blowers against any kind of victimisation or unfair treatment but also providesfor taking stern disciplinary action against who abuses the protection so granted. Thisfunctioning of vigil mechanism will be periodically reviewed by the Audit Committee. TheCompany has posted the Whistle Blower Policy and the associated Complaint Response PlanPolicy on its website www.jbpharma.com.

14. ANNUAL PERFORMACE EVALUATION

The Board of directors carried out formal annual evaluation of performance of theBoard its Committees and individual directors during 2021-22 in accordance with themanner specified by the Nomination and Remuneration Committee (NRC) and using evaluationcriteria recommended by the NRC and approved by the Board. The performance evaluation wascarried out in the following manner being manner recommended by the NRC.

Evaluation of performance of the Board: Each member of the Board evaluated the Board onthe given criteria on scale of 1 to 4 (4 being highest). The aggregate of simple averageof rating assigned by each Board member was further averaged to ascertain Board'sperformance.

Evaluation of performance of the Board Committees: Each member of the concernedcommittee evaluated performance of the committee on the given criteria on scale of 1 to 4.Aggregate of simple average of rating assigned by each such member was further averaged toascertain performance of the concerned committee.

Evaluation of performance of Individual Director: Each Board member (excluding directorbeing evaluated) evaluated performance of all other Board members on the given criteria onscale of 1 to 4. Aggregate of simple average of rating assigned to each Board member wasfurther averaged to ascertain performance of such director.

15. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

Form AOC-2 prescribed under Section 134(3)(h) read with Rule 8(2) of the Companies(Accounts) Rules 2014 provides for disclosure of (a) details of contracts or arrangementsor transactions not at arm's length basis and (b) details of material contracts orarrangement or transactions at arm's length basis. All the transactions entered into bythe Company with the related parties during the year were pursuant to the contract orarrangement approved by the Audit Committee and the Board of directors. The transactionsso entered into were in the ordinary course of business of the Company and on arm's lengthbasis. The contract or arrangement or transactions were neither material in terms of thePolicy on materiality of related party transactions adopted by the Company nor it exceededthe threshold limit prescribed pursuant to first proviso to Section 188(1) of theCompanies Act 2013. Accordingly the disclosure of related party transactions in FormAOC-2 is not applicable. However disclosure on related party transactions as per INDAS-24 has been provided under Note No. 46 of the standalone financial statements and NoteNo. 44 of the consolidated financial statements

16. PARTICULARS OF EMPLOYEES AND OTHER REMUNERATION RELATED DISCLOSURES

The remuneration related and other disclosure required in terms of Section 197(12) ofthe Companies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 as amended are given in Schedule-F. A statementshowing name and other particulars of the employees in terms of Section 197(12) of theCompanies Act 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 as amended is given in Schedule-G.

17. EMPLOYEE STOCK OPTION SCHEME

During the year the Company implemented "JBCPL Employee Stock Option Scheme2021" ("Scheme") as approved by the shareholders on July 31 2021 and hasalso received in-principle listing approval from the Stock Exchanges in respect thereof.The Compensation Committee of the Board administers the Scheme and granted time basedoptions and performance based options to eligible employees and director(s) of the Companyand its subsidiary companies with a view to achieve overall growth objective. The Schemeis in compliance with the Securities and Exchange Board of India (Share Based EmployeeBenefits) Regulations 2014 (saved under the Securities and Exchange Board of India (ShareBased Employee Benefits and Sweat Equity) Regulations 2021) and there has been no changein the Scheme since the shareholders' approval date.

Disclosure of details of the Scheme as required under (a) Regulation 14 of theSecurities and Exchange Board of India (Share Based Employee Benefits and SweatEquity) Regulations 2021 are posted on the Company's website www.jbpharma.com andweb link thereto is https://jbpharma.com/download/esop-disclosure-for-the-year-ended-31-03-2022/?wpdmdl=6061&refresh=62cbdc37cecb81657527351and (b) the Companies (Share Capital and Debentures) Rules 2014 is set out in Schedule-Hto this report.

18. RISK MANAGEMENT

The Board of directors has developed and implemented risk management policy for theCompany. Pursuant to the Listing Regulations the Board has constituted Risk ManagementCommittee and delegated monitoring and review of the risk management plan to theCommittee. Committee would periodically review status of mitigation measures taken inrespect of risk management plan and would report progress thereof and new risks identifiedto the Board and Audit Committee. Board at present does not perceive any element of riskwhich may threaten existence of the Company.

19. INTERNAL FINANCIAL CONTROLS

The Board has adopted internal financial controls encompassing policies and proceduresfor ensuring the orderly and efficient conduct of the business including adherence toCompany's policies safeguarding the Company's assets prevention and detection of fraudand errors accuracy and completeness of the accounting records and timely preparation ofreliable financial information. The specific internal financial controls with reference tofinancial statements include internal audit of important activities and processes relatingto preparation of financial statements adoption of well-defined standard operatingprocedure for business transactions and compliance relating thereto use of ERP foraccuracy and control review of periodically prepared financial statements with objectiveto ensure that financial statements present true and fair view and are sufficient/credibleand in compliance with legal and regulatory requirement. The Board has appointed Ernst& Young LLP as internal auditor to periodically audit systems and controls in all keyareas of operations to ascertain effective functioning of internal controls includinginternal financial controls. In the opinion of the Board the Company has adequateinternal controls with reference to the financial statements.

Neither management of the Company has come across any instance of fraud duringthe year 2021-22 nor the auditors of the Company has reported any such instance tothe Audit Committee.

20. LOANS GUARANTEES AND INVESTMENTS

During the year the Company has not given any loan or guarantee or made any investmentattracting the provisions of Section 186 of the Companies Act 2013. Hence there is noinformation to be furnished pursuant to Section 134(3)(g) of the Companies Act 2013.

21. COST RECORDS

The Company is required to maintain cost records as specified by the Central Governmentunder sub-section (1) of Section 148 of the Companies Act 2013 and such accounts andrecords are duly made and maintained by the Company. The Company is further required toget such cost records audited by a cost auditor in accordance with the Companies (CostRecords and Audit) Rules 2014 and furnish cost audit report received from the costauditor to the Central Government within the prescribed time.

The Company is in compliance with these provisions.

22. SECRETARIAL AUDIT REPORT or material order affecting the going Ashish Bhatt& Associates Practising Company Secretaries Secretarial Auditor of the Companycarried out secretarial audit for the financialyear 2021-22 as provided under Section 204of the Companies Act 2013 and the rules made there under. The secretarial audit reportgiven by the said auditor is annexed to this report as Schedule-I.

23. AUDITORS

The members at annual general meeting held on September 9 2021 has appointed DeloitteHaskins & Sells LLP (having firm registration no. 117366W/W-100018) as statutoryauditors of the Company until conclusion of the 49th annual general meeting of the Companyat such remuneration as may be agreed by the

Board of directors with the auditors.

24. ESG (ENVIRONMENT SOCIAL & GOVERNANCE)

We continue to embrace the triple bottom-line philosophy of People Planet and Profits.During the year under review we reaffirmed Governance) and have instituted a sustainablebusiness strategy to positively impact the environment and society while also benefitingshareholders. ESG in today's context is not just about goodwill and reputation but it canbe used as a competitive edge at the marketplace. While as an organisation we have focusedon all these areas in different aspects we are committed to dedicating further resourcesand efforts towards this area. During the year under review we undertook a detailed gapassessment analysis regarding our ESG parameters. Our gap assessment was based onbenchmarks established by GRI ( Global Reporting Initiative) and the local ESG standardsset by reputed institutions. As you are aware GRI is the benchmark standard for most

Fortune 500 companies when reporting on ESG parameters. We have instituted variouspolicies to strengthen the governance mechanism including ABAC POSH etc. We have alsoensured that our employees are trained on various governance mechanisms so that thesepolicies are embraced by every employee in the organisation. We have introduced aframework that will help us monitor measure and improve our environmental footprint; likewater usage waste and effluent generated use of renewable energy sources implementationof zero discharge norms across sites and instituting a strong HSE policy. We haveinstituted a sustainable business strategy which encompasses short-term and medium-termgoals for the organisation. Our efforts will continue to focus on increasing ESG standardswithin the organisation. We also plan to publish a sustainability report based on GRIstandards. All these initiatives and efforts will ensure that we continue raise the barevery year regarding ESG standards.

25. OTHER DISCLOSURES AND CONFIRMATIONS

Board has to make further disclosures and provide confirmations as required as under:

The Company has placed annual return referred to in subsection (3) of section 92 on itswebsite www.jbpharma.com.

No regulator or court or tribunal has passed during the year any significant statusand Company's operations in future.

The Company has complied with applicable Secretarial Standards specified by theInstitute of of India and approved by the Central Government under Section 118(10) of theCompanies Act 2013.

The Company has complied with the provisions relating to the constitution of InternalComplaints Committee under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013.

26. HEALTH AND SAFETY

The Company continues to accord high priority to health and safety of employees andworkmen at all manufacturing locations. Annual medical check-up of all employees at allsites was carried out. The Company also conducted safety training programmes andmock-drills for increasing disaster preparedness awareness among all employees at theplants. There was no casualty at any site during the year. our commitment toESG(Environment Social and

For and on behalf of the Board of Directors
Ranjit Shahani
Chairman
Place : Mumbai
Date : May 26 2022

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