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Neuland Laboratories Ltd.

BSE: 524558 Sector: Health care
NSE: NEULANDLAB ISIN Code: INE794A01010
BSE 00:00 | 23 Mar 1685.85 32.10
(1.94%)
OPEN

1648.40

HIGH

1705.00

LOW

1644.30

NSE 00:00 | 23 Mar 1684.00 36.45
(2.21%)
OPEN

1652.00

HIGH

1707.95

LOW

1641.05

OPEN 1648.40
PREVIOUS CLOSE 1653.75
VOLUME 4383
52-Week high 2004.05
52-Week low 965.85
P/E 21.48
Mkt Cap.(Rs cr) 2,163
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1648.40
CLOSE 1653.75
VOLUME 4383
52-Week high 2004.05
52-Week low 965.85
P/E 21.48
Mkt Cap.(Rs cr) 2,163
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Neuland Laboratories Ltd. (NEULANDLAB) - Director Report

Company director report

The Board of Directors are pleased to present the Company?s ThirtyEighth Annual Report and the Company?s audited financial statements (standalone andconsolidated) for the financial year ended March 31 2022.

Financial Performance

The Company?s financial performance (standalone) for the yearended March 31 2022 is summarised below:

(Rs in lakhs)

Particulars 2021-22 2020-21
Total Income 95315.33 95300.80
Profit before Finance costs Depreciation Amortisation and Tax 14427.06 16253.81
Finance costs 1349.44 1789.75
Profit before Depreciation Amortisation and Tax 13077.62 14464.06
Less: Depreciation and Amortisation 4903.64 3967.85
Profit before Tax 8173.98 10496.21
Less: Current tax 2042.19 1248.29
Deferred tax (221.55) 1218.43
Profit after Tax 6353.34 8029.49
Add: Other comprehensive income (599.17) (139.25)
Total comprehensive income for the year 5754.17 7890.24

For the financial year ended March 31 2022 a Total Income of Rs95315.33 lakhs as against Rs 95300.80 lakhs in the previous year.

For the year ended on March 31 2022 the Company has reported EarningsBefore Interest Finance Cost Depreciation and Amortization and Tax (EBIDTA) of Rs14427.06 lakhs as against the EBIDTA of Rs 16253.81 lakhs during the previous year.

The Net Profit of the Company for the year 2021-22 was Rs 6353.34lakhs compared to Rs 8029.49 lakhs during the previous year.

Business Review

During the year under review your Company was impacted by variousfactors including the macro-economic and geopolitical situation combining with the secondand third waves of the COVID19 pandemic. We saw a decline in GDS revenues as customersfaced inventory pile-up issues for some of the key Prime products. The GDS Specialtybusiness did well as several products contributed to the revenue even in this turbulentperiod. In the CMS business we saw continued traction even as we saw the commercializationof 2 molecules and saw growth in development revenues even as one of the key molecules wasimpacted due to genericization. During the year the Company strengthened certaincapabilities like Project Management which are crucial to the growing CMS business.

Dividend

Your directors are pleased to recommend a final dividend of Rs 5/-(50%) per equity share on face value of `10/- each of the Company for the FY 2021-22. Thefinal dividend if approved at the 38th Annual General Meeting will be paid to memberswithin the period stipulated by the Companies Act 2013 as amended from time to time. Theoutflow on account of final dividend is estimated to be Rs 64149445/-.

In terms of Regulation 43A of the Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 (ListingRegulations) the dividend distribution policy is available on the Company?s websiteon website-www.neulandlabs.com

Share Capital

The equity shares of your Company continue to be listed and traded onthe BSE Limited and National Stock Exchange of India Limited. The paid-up equity sharecapital of the Company as on March 31 2022 is `1290.05 lakhs. During the year underreview the Company has not issued any shares with differential voting rights nor grantedstock options nor sweat equity.

Outlook

Both business verticals of Generic Drug Substances (GDS) and CustomManufacturing Solutions (CMS) will continue to be pivotal to the growth of your Company.Highest focus will be maintained on quality technological excellence and transparentpartnerships for deepening existing customer relationships as well as attracting newcustomers. With several steps being taken to strengthen the organisation internally andenhance customer focus Neuland is poised to be one of the leading partners of choice forthe Pharmaceutical industry in both the GDS and CMS space.

Consolidated Financial Statements

The Audited Consolidated Financial Statements of your Company as onMarch 31 2022 which forms part of the Annual Report have been prepared pursuant to theprovisions of Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 as amended from time to time and also as per theapplicable Indian Accounting Standard (IndAS) on Consolidated Financial Statements(IndAS-110) as notified by the Ministry of Corporate Affairs.

The annual accounts of the subsidiary companies are kept for inspectionby any member at the Registered Office of the Company as well as at the Registered Officeof the respective subsidiary companies and also available on the website of the Companywww.neulandlabs.com. Any member interested in a copy of the accounts of the subsidiariesmay write to the Company Secretary at the Registered Office of the Company.

Subsidiaries

Your Company has two subsidiaries Neuland Laboratories K.K.Japan andNeuland Laboratories Inc. USA working on market development. Your Company does not haveany joint venture or associate companies. Further there has been no material change in thenature of business of the subsidiaries.

A report on the performance and financial position of the subsidiariesset out in the prescribed form AOC-1 in terms of proviso to sub-section (3) of Section 129of the Companies Act 2013 as amended from time to time is provided as Annexure to theconsolidated financial statements and hence not repeated here.

Corporate Governance Report Management Discussion & Analysis andOther Information Required under the Companies Act 2013 and Listing Agreement

As per Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 as amended from time to time CorporateGovernance Report with Certificate from a Practicing Company Secretary thereon andManagement Discussion and Analysis report are attached and form part of this report.

Directors and Key Managerial Personnel

With deep regret we report the sad demise of our Independent DirectorDr. William Gordon Mitchell on December 6 2021. Your directors would like to place onrecord their highest gratitude and appreciation for the invaluable contributions andachievements of Dr. Mitchell over the years.

Mr.DavuluriSaharshRaoretiresbyrotationattheforthcoming38th AnnualGeneral Meeting and being eligible seeks re-appointment. The profile of Mr. DavuluriSaharsh Rao is included in the Report on Corporate Governance and the Notice of the AGM.

Dr. Davuluri Rama Mohan Rao Executive Chairman Mr. Davuluri SuchethRao Vice Chairman & Chief Executive Officer Mr. Davuluri Saharsh Rao Vice Chairman& Managing Director Mr. Deepak Gupta Chief Financial Officer and Ms. SaradaBhamidipati Company Secretary & Compliance Officer are the Key Managerial Personnelof the Company as on the date of this Report.

Listing at Stock Exchanges

The equity shares of your Company continue to be listed and traded onthe BSE Limited and National Stock Exchange of India Limited. The Annual Listing fee forthe year 2022-23 has been paid to both the stock exchanges.

Directors? Responsibility Statement

Pursuant to Section 134(3)(c) of the Companies Act 2013 as amendedfrom time to time your directors confirm that to the best of their knowledge and beliefand according to the information and explanation obtained by them:

a. in the preparation of the annual financial statements for the yearended March 31 2022 the applicable accounting standards have been followed along withproper explanation relating to material departures if any;

b. such accounting policies as mentioned in 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 March 31 2022 and of the profit of the Company for theyear ended on that date;

c. proper and sufficient care has been taken for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013as amended from time to time for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;

d. the annual financial statements have been prepared on a goingconcern basis;

e. proper internal financial controls were in place and that thefinancial controls were adequate and were operating effectively; and

f. systems to ensure compliance with the provisions of all applicablelaws were in place and were adequate and operating effectively.

Board Meetings

During the year under review five Board Meetings were convened andheld the details of which are given in the Corporate Governance Report which forms partof this report.

The intervening gap between the Meetings was within the periodprescribed under the Companies Act 2013 and Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 as amended from timeto time.

Composition of various Committees

Details of various committees constituted by the Board as per theprovisions of Companies Act 2013 as amended from time to time and Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 as amended from time to time and their meetings are given in the CorporateGovernance Report which forms part of this report.

Board Evaluation

Pursuant to the provisions of the Companies Act 2013 and Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 as amended the annual evaluation of the performance of the Board its Committeesand of individual directors has been carried out by the Board. The process was carried outby circulating questionnaires on the Board and Committees functioning on certainparameters. The performance evaluation of the Independent Directors was carried out by theentire Board except the director being evaluated. The performance evaluation of thenon-Independent Directors including Executive Directors was carried out by the IndependentDirectors.

Independent Directors

The Independent Directors met on January 31 2022 without the presenceof non-Independent Directors and members of the management. The Independent Directorsinter alia discussed matters pertaining to the Company?s affairs and reviewed theperformance of non-Independent Directors the Chairman and the Board as a whole andassessed the quality quantity and timeliness of flow of information between the CompanyManagement and the Board that is necessary for the Board to effectively and reasonablyperform their duties.

The Company has received declarations from all the IndependentDirectors of the Company confirming that they meet the criteria of independence prescribedunder the Companies Act 2013 and the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 as amended. Further they haveafirmed compliance to the code of conduct for Independent Directors as prescribed inSchedule IV of the Act. The terms and conditions of appointment of Independent Directorsis available on the website of the Company.

Disclosures by Directors

None of the Directors of your Company is disqualified as per provisionsof Section 164(2) of the Companies Act 2013 as amended from time to time. Your directorshave made necessary disclosures to this effect as required under Companies Act 2013 asamended from time to time.

Audit Committee

During the year under review four Audit Committee Meetings wereconvened and held. The details of the committee meetings and composition of the AuditCommittee and its terms of reference are included in the Report on Corporate Governanceannexed. All the recommendations made by the Audit Committee were accepted by the Board ofDirectors.

Nomination and Remuneration Committee

Your Company has a Nomination and Remuneration Policy as required underSection 178 of the Companies Act 2013 as amended from time to time for selection andappointment of Directors Key Managerial Personnel Senior Management and theirremuneration. During the year under review two Nomination and Remuneration CommitteeMeetings were convened and held. The details of the Nomination and Remuneration Committeeare set out in the Report of Corporate Governance forming part of this Report.

Remuneration Policy

The Company has formulated a Nomination and Remuneration Policy whichis available on the website of the Company at www.neulandlabs.com. Your Company?sPolicy on Directors? appointment and remuneration including criteria for determiningqualifications positive attributes independence of a director and other matters providedunder Section 178(3) of the Act are covered in the policy.

Corporate Social Responsibility

The Company has in place a Corporate Social Responsibility Policy whichis available on the website of the Company at www.neulandlabs.com. Further your Companyhas met its CSR obligations for the FY 2021-22 under the provisions of the Companies Act2013 and rules made thereunder.

Annual report on CSR activities as required under Rule 8 of theCompanies (Corporate Social Responsibility Policy) Rules 2014 read with Section 134(3)and 135(2) of the Companies Act 2013 as amended from time to time has been appended asAnnexure-1 and forms an integral part of this Board?s Report.

Business Responsibility Report

In accordance with regulation 34(2)(f) of the Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015 theBusiness Responsibility Report (BRR) is forming part of this report as Annexure-2describing the detailed report on business responsibilities vis-?-vis the nine principlesof the National Voluntary Guidelines on Social Environmental and EconomicResponsibilities of Business framed by the Ministry of Corporate Affairs.

Code of Conduct for Board of Directors and Senior Management Personnel

The directors and members of Senior Management have afirmed compliancewith the Code of Conduct for Board of Directors and Senior Management Personnel of theCompany. A declaration to this effect has been signed by the Vice Chairman & ChiefExecutive Officer and forms part of the Annual Report.

Vigil Mechanism/Whistle Blower Policy

Your Company has a Vigil Mechanism/Whistle Blower Policy which servesas a mechanism for its directors and employees to report genuine concerns about unethicalbehaviour actual or suspected fraud or violation of the Code of Conduct without fear ofreprisal. The policy also provides access to the Chairperson of the Audit Committee undercertain circumstances. The Whistle Blower Policy is available on the website of theCompany www.neulandlabs.com. A brief note on the Whistle Blower Policy is also providedin the Report on Corporate Governance which forms part of this Annual Report.

Prevention of Insider Trading

Pursuant to Securities and Exchange Board of India (Prohibition ofInsider Trading) (Amendment) Regulations 2018 the Company has adopted the Code ofInternal Procedures and Conduct for Regulating Monitoring and Reporting of Trading byDesignated Persons and their Immediate Relatives along with Code of Fair Disclosures.Periodically insider trading awareness sessions are conducted for the benefit ofdesignated persons. Trading window closures when the directors and designated persons arenot permitted to trade in the securities of the Company are intimated in advance to allconcerned. Violations of the Code if any are appropriately acted on and reported to theSEBI/SEs.

Disclosure as per Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013

The Company is committed to ensure that there is no scope for sexualharassment at workplace and has adopted a policy on prevention prohibition and redressalof sexual harassment at workplace in line with the provisions of Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013 and the rules framedthereunder. The Company has not received any complaints on sexual harassment during thecalendar year 2021 and as on the date of this report.

Employee Stock Option Scheme

As on March 31 2022 no employee stock options available in theCompany and hence no disclosures are required to be made under Regulation 14 of theSecurities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity)Regulations 2021.

Statutory Auditors

The financial statements have been audited by M/s. MSKA &Associates (Firm Registration No: 105047W) Chartered Accountants Statutory Auditors ofthe Company.

The Statutory Auditors were appointed in the AGM held on July 5 2019to hold office from the conclusion of the thirty fifth Annual General Meeting until theconclusion of the fortieth Annual General Meeting.

Auditors? Report

There are no qualifications reservations or adverse remarks made byM/s. MSKA & Associates Statutory Auditors in their report for the financial yearended March 31 2022.

Pursuant to provisions of Section 143(12) of the Companies Act 2013as amended from time to time the Statutory Auditors have not reported any incident offraud to the Audit Committee during the year under review.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act 2013and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 asamended from time to time the Company has appointed M/s. P.S. Rao & Associates afirm of Company Secretaries in Practice to conduct the Secretarial Audit of the Company.The report of the Secretarial Audit for the financial year ended March 31 2022 is annexedto the Corporate Governance Report and forms part of this report. There are noqualifications reservations or adverse remarks made by the Secretarial Auditor in theirreport.

Cost Auditors

Pursuant to Section 148 of the Companies Act 2013 read with theCompanies (Cost Records and Audit) Amendment Rules 2014 as amended from time to timesubject to the approval of the Central Government if any required the Audit Committeehas recommended and the Board of Directors had appointed M/s. Nageswara Rao & Co.(Registration No. 000332) Cost Accountants Hyderabad being eligible and having soughtre-appointment as Cost Auditors of the Company to carry out the cost audit of theproducts manufactured by the Company during the financial year 2022-23.

Insurance

Your Company has taken necessary steps to mitigate risks and obtainedappropriate insurances and the Board is kept appraised of the risk assessment andminimization procedures. The assets of the Company have been adequately covered underinsurance. The policy values have been determined taking into consideration the value ofthe assets of the Company.

Material Changes

There have been no material changes and commitments affecting thefinancial position of the Company between the end of the financial year of the Company towhich the financial statements relate and the date of the report. Further it is herebyconfirmed that there has been no change in the nature of business of the Company.

Energy Conservation Technology Absorption and Foreign ExchangeEarnings and Outgo

The information on conservation of energy technology absorption andforeign exchange earnings and outgo stipulated under Section 134(3)(m) of the CompaniesAct 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 as amended from timeto time is annexed herewith as Annexure-3.

Annual Return

Pursuant to Section 92 and Section 134 of the Companies Act 2013 asamended from time to time the Annual Return as on March 31 2022 in form MGT-7 isavailable on the website of the Company at www.neulandlabs.com.

Particulars of Employees and related disclosures

The information relating to remuneration and other details as requiredpursuant to Section 197 of the Act read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 as amended is provided as anAnnexure-4 to this report.

In terms of the provisions of Section 197 of the Act read with Rules5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 as amended a statement showing the names and other particulars of theemployees drawing remuneration in excess of the limits set out in the said rules areprovided in the Annual Report which forms part of this Report.

Pursuant to the provisions of the first proviso to Section 136(1) ofthe Act the Annual Report is being sent to the members and other persons entitledthereto excluding the information in respect of employees of the Company containing theparticulars as specified in Rule 5 (2) of the said Rules. The said information isavailable for inspection on all working days during business hours at the RegisteredOffice of the Company up to the date of the ensuing Annual General Meeting. Any memberinterested in obtaining such information may write to the Company Secretary and the samewill be furnished on request.

Related Party Transactions

All contracts/arrangements/transactions entered into by the Companyduring the financial year with related parties were in the ordinary course of business andat an arm?s length basis.

During the year the Company has not entered into any material contractor arrangements with related parties which could be considered material in accordance withthe policy of the Company on materiality of related party transactions. Further therewere no materially significant related party transactions which could have potentialconflict with interest of the Company at large.

The Policy on Materiality of Related Party Transactions and on dealingwith Related Party Transactions as approved by the Board may be accessed on theCompany?s website www.neulandlabs.com

The particulars of transactions with related parties in the prescribedformat is annexed to this report as Annexure-5. Members may refer to Note No. 39 to thestandalone financial statement which sets out related party disclosures pursuant to IndAS.

Particulars of Loans Guarantees and Investments

The Company has not given any loans and guarantees or made anyinvestments under Section 186 of the Act during the year under review.

Deposits from Public

The Company has not accepted any deposits from the public and as suchno amount of principal or interest on deposits from the public was outstanding as on thedate of the Balance Sheet.

Significant and Material Orders passed by the Regulators or Courts

There are no significant material orders passed by the Regulators/Courts which would impact the going concern status of the Company and its futureoperations.

Transfer to Reserves

The Company has not proposed to transfer any amount to the generalreserve.

Risk Management

The Board oversees Company?s processes for determining risktolerance and review management?s action and comparison of overall risk tolerance toestablished levels. The framework is designed to enable risks to be identified assessedand mitigated appropriately. Major risks identified by the businesses and functions aresystematically addressed through appropriate actions on a continuous basis. For detailsplease refer to the Management Discussion and Analysis report which forms part of thisReport.

Internal Financial Controls

Internal Financial Controls are an integral part of the risk managementprocess addressing financial and financial reporting risks. The internal financialcontrols have been embedded and documented in the business processes. The controls inplace include essential components of internal financial controls required under theCompanies Act 2013 as amended from time to time and also the internal financialcontrols over financial reporting as per the Guidance Note on Audit of Internal Controlsover Financial Reporting as issued by Institute of Chartered Accountants of India.

Assurance on the effectiveness of internal financial controls isobtained through management reviews continuous monitoring by functional owners as well astesting of the internal financial control systems by the internal auditors during thecourse of their audits. We believe that these systems provide reasonable assurance thatour internal financial controls are designed effectively and are operating as intended.

The Company has in place adequate internal financial controls withreference to financial statements. During the year under review such controls were testedand no reportable material weakness in the design or operation were observed.

Human Resources and Industrial Relations

Your Company?s relations with its employees continue to becordial. Dedicated work by the workmen supervisors and executives of your Company made itpossible to achieve success under trying and difficult circumstances.

Acknowledgement

The Board of Directors would like to place on record its sincereappreciation for the continued support and guidance received from the banks financialinstitutions statutory and regulatory authorities Ministry of Corporate Affairs StockExchanges and Depositories for their continued support and guidance. The Board places onrecord its appreciation to the members of the Company for their continued support and toits valued customers and vendors for their continued patronage. The Board of Directorsalso wish to place on record its deep sense of appreciation for the committed services bythe Company?s employees at all levels.

For and on behalf of the Board
Dr. Davuluri Rama Mohan Rao
Place: Hyderabad Executive Chairman
Date: May 10 2022 (DIN: 00107737)

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