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Lyka Labs Ltd.

BSE: 500259 Sector: Health care
NSE: LYKALABS ISIN Code: INE933A01014
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OPEN 85.80
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VOLUME 72740
52-Week high 85.80
52-Week low 16.10
P/E
Mkt Cap.(Rs cr) 238
Buy Price 0.00
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Lyka Labs Ltd. (LYKALABS) - Director Report

Company director report

To

The Members

Lyka Labs Limited

The Directors are pleased to present the Forty Second Annual Report together withmerged Annual Audited Financial Statements of Lyka Healthcare Ltd a wholly ownedsubsidiary with Lyka Labs Limited for the Financial Year from 1st April 2020 (appointeddate of merger) to 31st March 2021 in terms of the NCLT Ahemdabad Order dated 12thOctober 2020.

1. FINANCIAL RESULTS:

(Rs.in Lakhs)

Particulars For the Year ended 31.03.2021 *For the year ended 31.03.2020
Total revenue 6447.33 4333.92
Profit/(loss) before Interest provision for depreciation & Taxes and Write offs 1663.59 (61.94)
Less: Interest 2555.28 1901.21
Operational Profit before Depreciation (891.69) (1963.15)
Less: Depreciation 804.97 776.69
Exceptional Items (Net) 142.87 2775.29
Less: Tax Expenses (393.64) 23.52
Less: Other Comprehensive Income (8.88) 40.48
Profit/(loss) for the year (1437.01) (5579.13)

* Previous financial year 2019-2020 figures are reinstated as per Indian AccountingStandards.

2. DIVIDEND:

Since the Company has notearnedprofits Dividend is recommended for the financial yearno ended on 31st March 2021.

3. RESERVE:

Since the Company has not earned profits no amount was transferred to Reserve for thefinancial year ended on 31 st March 2021.

4. OPERATIONS:

During the financial year the total Income from Operations was Rs 64.47 crores asagainst a total income of Rs 43.33 crores of the previous financialYear ended on 31stMarch 2020. During the year under Report the company has earned operating profit of Rs16.63 Crores before charging interest and depreciation as against loss of Rs 61.94 lakhsof the Previous Financial Year ended on 31st March 2020.

During the financial year the overall performance of the Company has improvedsignificantly compared to the previous financialyear. P2P and Domestic Sales were higher.Due to Covid 19 the company received major orders for Remdesivir Injections under Jobwork from renowned

Pharmaceutical Companies.

Its subsidiaries viz. Lyka BDR International Limited also increased its sales comparedto the previous financial year in some of its international markets despite tight Lockdownconditions globally due to Pandemic. Lyka Exports Limited which had a slight setback inthe first quarter due to Lockdown conditions performed well during the remaining threequarters of the financial year.

5. KEY FEATURES:

The Company maintains high quality and GMP/GLP standards in manufacturing and testingof its products.

The Company manufactures pharmaceutical products such as Dry Powder Liquid andLyophilised Injections and external preparations and cosmetics covering varioustherapeutic areas.

The Company is also engaged in manufacturing on P2P basis and Job Work basis for Covid19 medicines.

The Company’s R&D Centre is engaged in the development of new formulations andhas successfully developed several products in the following product categories:

1. Injectables- Liquid Injections Lyophilised Injections in anti -bacterialantifungal NSAIDS

Proton Pump Inhibitors and Anaesthetics.

2. Topical preparations: Ointments/Creams and lotions.

Company’s Core Competencies lie in:

1. Lyophilisation Formulations/Sterile APIs.

2. New Product Development including Novel Drug Delivery Systems.

3. Quality Practices and Systems.

4. Experienced and responsive management.

6. FUTURE OUTLOOK:

Company is constantly exploring possibilities of entering into newer internationalmarkets with reputed partners and has also introduced new products in existing markets.

It is also modernising its existing manufacturing facilities to improve through put andreduce manufacturing costs thereby increasing profitability.

Company is also trying to add reputed customers to its clientele list in the DomesticP2P and Job work business.

The Company also expects to have Plant approvals from PICS and other RegulatoryAuthorities within the next financial year.

To meet the increase in demand for lyophilised products the company has embarked on anexpansion project of its Lyophilization Plant at its Ankleshwar factory. This Project islikely to be completed in 9-12 months with a 50% enhancement in capacity forlyophilisation.

Company has received permission to manufacture and marketing of Liposomal AmphotericinB Injection 50 mg/vial from Government of India Directorate General of Health ServicesNew

Delhi.

7. REGISTRATIONS:

The company has submitted new applications for Registration of Products in variousCountries many of which are expected to be received in 2021-22. A total of 83 submissionshave been made for new Registration/Renewals in various countries in the previous yearsout of which 32 Renewals/New Registrations were received in 2020-21. A further 25 NewRegistrations/

Renewals are expected to be received in 2021-22. This will enhance the productportfolio in the current year.

8. MERGER:

National Company Law Tribunal (NCLT) Ahmedabad has approved merger of Lyka HealthcareLimited a wholly owned subsidiary with Lyka Labs Limited vide its Order dated 12thOctober 2020. This will help in reduction of administrative cost and increase the salesand profitability in the coming years.

9. SEBI ORDER ON GDR:

SEBI Vide its adjudication order dated 28th September2020 imposed penalty of Rs 10Lakhs u/s. 23E of Securities Contract (Regulation) Act 1956 for not giving properdisclosures pertaining to GDR issue made by the Company in the year 2005. The penalty hassince been paid by the Company.

10. SHARE CAPITAL:

Subsequent to the merger of Lyka Healthcare Ltd a wholly owned subsidiary with LykaLabs Limited the Authorised Share Capital of the Company has increased from Rs.42 croresto Rs.50 crores.

11. DIRECTORS:

A. BOARD DIVERSITY:

The Company recognizes and embraces the importance of a diverse board in its success.Diverse Board comprising of professionals from various fields helps in guiding the Companyfrom time to time.

B. BOARD MEETING:

During the financial year four(4) Board Meetings were held. The particulars of meetingsheld and attended by each Director are detailed in the Corporate Governance Report whichis marked as Annexure F of this Annual Report.

C. INDEPENDENT DIRECTORS MEETING:

As required under the provisions of the Companies Act 2013 and SEBI (ListingObligations and Disclosures Requirement) Regulations 2015 the Company has to convene anIndependent Directors Meeting once in a year. The Company has convened an IndependentDirectors Meeting on 30th March 2021.

D. COMPOSITION OF THE BOARD AND APPOINTMENT AND CESSATION OF DIRECTORS:

The Company has appropriate mix of Executive Non- Executive and Independent Directors.as on 31st March 2021 the Board consist of Six Directors out of which two areExecutive Directors One is Non - Executive Director and Three are Independent Directors.an Independent Director of theDuringthe financial Company has resigned w.e.f 3rdJuly 2020. The Board records its appreciation for services rendered by her.

E. DECLARATION BY INDEPENDENT DIRECTORS:

The Company has received necessary Declarations from each of the Independent Directorsunder Section 149(7) of the Companies Act 2013 that they meet the criteria laid downunder Section 149(6) of the Companies Act 2013 and Regulation 16(b) of the SEBI (ListingObligation and Disclosure Requirements) Regulations 2015 (Listing Regulations 2015).

F. RETIREMENT BY ROTATION:

In accordance with the provisions of Section 152 of the Companies Act 2013 Smt. NehalN. Gandhi (DIN: 00021580) will retire by rotation at the ensuing Annual General Meetingand being eligible offers herself for re-appointment. Brief resume of the Directorseeking re-appointment along with other details are disclosed in the Notice convening theAnnual General Meeting.

G. COMPLETION OF TERM OF AN INDEPENDENT DIRECTOR:

The Second term of Shri. Atit N. Shukla who was appointed as an Independent Director inthe 40th Annual General Meeting will complete in the ensuing Annual GeneralMeeting.

H. INDEPENDENT DIRECTORS FAMILIARIZATION PROGRAMME:

The Independent Directors have visited plant at Ankleshwar Gujarat and arefamiliarised with company’s operations. They are provided with quarterly and annualfinancial statements. They are also appraised with material events of the Company. Theyare also updated towards of legal cases filed against or by the Company. about theCompliances under various statutes in the Board Meeting.

I. EVALUATION OF DIRECTORS AND BOARD :

The Board has carried out performance evaluation of its own and Individual Directorspursuant to the provisions of the Companies Act 2013 and applicable provisions of SEBI(Listing Obligation and Disclosure Requirements) Regulations 2015.

The performance evaluation is done once in a year. Performance evaluation is done onthe basis of various criteria such as Active Participation Financial Literacycontribution by a Director Positive Inputs Effective Deployment of Knowledge andExpertise Integrity and Maintenance of Confidentiality and Independence of Behavior andJudgement.

J. COMMITTEE OF BOARD:

Currently the Board hasfive(5)Committees namely Audit Committee Nomination andRemuneration Committee Stakeholder Relationship Committee Share Transfer Committee andRisk Management Committee. A detailed note on composition of the Board and its committeeis provided in the Corporate Governance Report which is marked as

Annexure F. 12. AUDITORS:

A. STATUTORY AUDITOR

The members of the Company at their 40th Annual General Meeting held on 18thSeptember 2019 appointed M/s. D Kothary & Co. Chartered Accountants (FirmRegistration No. 105335W) as Statutory Auditor of the Company for a term of 5 years upto45th Annual General Meeting. The Company has received their eligibilitycertificate pursuant to the provisions of section 139 and 141 of the Companies Act 2013read with Companies (Audit & Auditors) Rules 2014.

B. BRANCH AUDITOR:

M/s. M.I. Shah & Co. Chartered Accountants (Firm Registration No. 119025W) wereappointed as Branch Auditor of the Company in 38th Annual General Meeting for a term of 5(five) years up to 43rd Annual General Meeting. Their appointment is proposed forratification in the ensuing Annual General Meeting as Branch Auditor from conclusion of42nd Annual General Meeting till conclusion of 43rd Annual General Meeting.

The Company hasreceived certificatefrom the Branch Auditors to the effect thatthey fulfill the eligibility criteria of the provisions of Section 141 of the CompaniesAct 2013. The Audit Committee has recommended ratification of their appointment as BranchAuditors.

C. COST AUDITOR:

The Company has appointed M/s. Sarvottam Rege & Associates Cost Accountants(Registration No. 104190) to audit the cost records of the Company for the Financial Year2021-22. The remuneration payable to them is proposed to the Shareholders for theirapproval at the ensuing Annual General Meeting.

D. SECRETARIAL AUDITOR:

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies

(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s Kaushal Doshi & Associates Practicing Company Secretaries to undertakethe Secretarial Audit of the Company. The Secretarial Audit Report is annexed to thisreport as "Annexure A".

13. MATERIAL CHANGES AND COMMITMENT AFTER THE END OF THE FINANCIAL YEAR WHICH HAVEIMPACT ON FINANCIAL POSITION:

There are no material changes and commitment after the end of the Financial Year tillthe date of this report which have an impact on financial position.

14. EXPLANATION OR COMMENTS ON QUALIFICATIONS RESERVATION OR ADVERSE REMARKS ORDISCLAIMERS MADE BY THE AUDITORS IN THEIR REPORT ON FINANCIAL STATEMENTS FOR THE FINANCIALYEAR ENDED 31ST MARCH 2021:

The Statutory Auditors has not made any qualifications reservations or adverse remarksor disclaimers in their report on the Financial Statements for Financial Year 2020 21.

15. ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The information pertaining to particulars as prescribed under sub-section (3)(m) ofSection 134 of the Companies Act 2013 read with the Companies (Accounts) Rules 2014 isattached to this report and annexed as "Annexure B".

16. STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OFTHE COMPANY:

The Company has constituted Risk Management Committee and formulated Risk Managementpolicy.

17. PARTICULARS OF LOAN GUARANTEE AND INVESTMENTS UNDER SECTION 186 OF THE COMPANIESACT 2013:

The Company has not provided any loan and guarantee during the year under review. Thedetails of investments made under Section 186 of the Companies Act 2013 are given in thenotes to the Balance Sheet.

18. DETAILS OF ESTABLISHMENT OF WHISTLE BLOWER CUM VIGIL MECHANISM POLICY:

The Company has adopted Whistle Blower Policy/Vigil Mechanism. The details ofestablishment of such mechanism are disclosed on the website of the Company at www.lykalabs.com

19. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES:

The related party transactions during the financial year 2020-2021 are on arms lengthbasis and in the ordinary course of business. The financial limits of related partytransactions for the financial year 2021-2022 as recommended by Audit Committee andconsidered by the the Board is proposed for approval of the shareholders in the ensuingAnnual General Meeting.

The related party transactions affected during the financial year 2020-2021 aredisclosed in the notes to the Financial Statements. The particulars of contracts orarrangements with related parties referred to in Section 188 of the Companies Act 2013is attached to this report as "Annexure C".

20. COMPANY’S POLICY:

The highest ethical standards are followed by the Company in business transactions. TheSEBI (Listing Obligation and Disclosure Requirements) Regulations 2015 and the CompaniesAct 2013 mandated the formulation of certain policies. The Company has framed variousPolicies such as Nomination and Remuneration Policy Policy on Materiality Subsidiariesand Related Matters Policy on Materiality of Events Related Party Transactions PolicyRisk Management Policy Whistle Blower Policy Code for Insider Trading etc which aredisplayed on the Company’s Website i.e. www.lykalabs.com

21. ANNUAL RETURN:

As per provision of Section 92(3) of the Companies Act 2013 the Annual Return of thecompany is hosted on the website of the Company. the same can be assessed in weblink athttp://lykalabs.com/annual-return-2021.pdf.

22. DIRECTORS’ RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 134(5) of the Companies Act 2013 the annualreturn of the company is hosted on the website the same can be assessed in

a. In the preparation of the Annual Accounts the applicable Accounting Standards havebeen followed along with proper explanation relating to material departures;

b. The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that year;

c. The Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

d. The Directors had prepared the annual accounts on a going concern basis;

e. The Directors had laid down internal financial controls to be followed by thecompany that such internal financial controls are adequate and were operating effectively;and

f. The Company has Proper system to ensure compliance with the provisions of allapplicable laws were in place and that such system were adequate and operatingeffectively.

23. DETAILS OF SUBSIDIARY JOINT VENTURE OR ASSOCIATE COMPANIES:

The Company has two subsidiaries namely Lyka BDR International Limited and Lyka ExportsLimited. The details of their performance are as under:

a) LYKA BDR INTERNATIONAL LIMITED (LBDR)

Lyka Labs Limited is holding 65.22% of the Issued capital of Lyka BDR InternationalLimited. During the financial year the total revenue earned by the Company was Rs.26.79Crores as against total revenue of previous year of Rs. 17.95 Crores. During the year theCompany has reported Net Profit of Rs. 3.66 Crores as against Net Loss of Rs.1.39 Croresof previous financial year.

b) LYKA EXPORTS LIMITED (LEL)

Lyka Labs Limited is holding 72.80% of Issued capital of Lyka Exports Limited. Duringthe financial year the Company has reported total revenue of Rs.12.69 Crores as againsttotal revenue of Rs. 17.84 Crores of previous financial year. During the year the Companyhas reported Net Profit of Rs. 0.73 Crores as against Net Loss of Rs.5.76 Crores ofprevious financial year.

The Performance and financial position of each of the above mentioned subsidiaries forthe year ended 31st March 2021 is attached in ‘Annexure D‘and forms part of this report.

24. DISCLOSURE OF CORPORATE SOCIAL RESPONSIBILTY STATEMENT:

Corporate Social Responsibility is not applicable to the Company.

25. DEPOSIT:

During the financial year the Company has not accepted any deposits under CompaniesAct 2013 read with the Companies (Acceptance of Deposits) Rules 2014.

The Company has repaid fixed deposits accepted under Companies Act 1956 as per CompanyLaw Board (CLB) order. As of 31st March 2021 the company has unclaimed fixed deposits ofRs. 42 lakhs.

26. DEBENTURES:

During the financial year the Company has not issued any Debentures under theCompanies Act 2013. As of 31st March 2021 the Company has unclaimeddebentures of Rs. 13 lakhs.

27. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS COURTS AND TRIBUNALIMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE :

During the year under review no order was passed by Regulators Courts or Tribunalswhich have Significant & Material impact on the going concern status andcompany’s operations in future.

28. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013 :

The Company is complying with the Provisions of Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013. A Committee has been set up to redresscomplaints received regarding Sexual Harassments. No Complaints have been received by theCommittee during the year under review.

29. INTERNAL FINANCIAL CONTROL:

The Company maintains a system of internal financial control including suitablemonitoring procedures in various functional areas. The system is reviewed from time totime to update the same with changing requirement. Internal Audit of Company’sfinancial accounts and related records is conducted by independent firms of CharteredAccountants.

30. PARTICULARS OF EMPLOYEES PURSUANT TO RULE 5(2) OF THE COMPANIES (APPOINTMENT ANDREMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014:

Disclosure with respect to the remuneration of Directors and Employees as requiredunder Section 197 of the Companies Act 2013 read with Rule 5(1) of Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 have been annexed to this report as

"Annexure E".

31. CORPORATE GOVERNANCE :

A Report on Corporate Governance along with certificate from Practicing CompanySecretary confirming the Compliance of the condition of Corporate Governance as stipulatedin the Listing Regulations 2015 is annexed as "Annexure F" and forms anintegral part of this Annual report.

32. MANAGEMENT DISCUSSION ANALYSIS REPORT:

Management Discussion and Analysis Report is annexed as "Annexure G".

33. GREEN INITIATIVE:

The Ministry of Corporate Affairs had taken Green Initiative approach in Reporting ofCorporate Governance by allowing paperless compliances by Companies through electronicmode.

The Company supports Green Initiative approach appeals to its Shareholders who are yetto register their Email addresses with RTA or Depository parties. that they should takenecessary steps for registering the same and contribute towards Green Initiative.

34. ACKNOWLEDGEMENT:

Your Directors place on record their appreciation of the continued assistanceco-operation and support received from various Ministries of the Government of IndiaGovernment of

Maharashtra Government of Gujarat the Company’s Bankers Customers Shareholdersand loyal & committed Employees for their unstinted support.

For and on behalf of the Board of

LYKA LABS LTD

Kunal N Gandhi

Chairman & Managing Director

(DIN:01516156)

Place: Mumbai

Date: 02nd June 2021

.