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Orchid Pharma Ltd.

BSE: 524372 Sector: Health care
NSE: ORCHPHARMA ISIN Code: INE191A01027
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OPEN 420.80
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VOLUME 2782
52-Week high 2680.00
52-Week low 237.45
P/E
Mkt Cap.(Rs cr) 1,696
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Orchid Pharma Ltd. (ORCHPHARMA) - Director Report

Company director report

Dear Members

Your Board of Directors have pleasure in presenting the Twenty Eighth (28th)Directors' Report together with the Audited Financial Statements of the Company for theFinancial Year ended March 31 2021.

Brief background & Successful implementation of the approved Resolution Plan

The Hon'ble National Company Law Tribunal Chennai Bench ("NCLT") vide itsorder dated June 25/27 2019 approved the Resolution Plan submitted by M/s DhanukaLaboratories Limited ("Successful Resolution Applicant") under Section 31 of theInsolvency and Bankruptcy Code 2016. Thereafter one of the unsuccessful bidders filed anapplication before the Hon'ble NCLT seeking to consider his Resolution plan by theResolution Professional (RP) and Committee of Creditors (COC) which was dismissed by theHon'ble NCLT Chennai Bench on June 27 2019. Pursuant to the said order of dismissal thesaid unsuccessful bidder preferred an appeal before the Hon'ble National Company LawAppellate Tribunal (NCLAT) and the Hon'ble NCLAT New Delhi stayed the order dated June27 2019 passed by the Hon'ble NCLT Chennai. The Hon'ble NCLAT on November 13 2019 setaside the order passed by the Hon'ble NCLT Chennai approving the Resolution plan andremitted the matter back to Hon'ble NCLT Chennai for decision in accordance with law.However one of the financial creditors filed an appeal against the Order dated November13 2019 of the Hon'ble NCLAT before the Hon'ble Supreme Court of India. After hearing thematter a final Order was passed by the Hon'ble Supreme Court of India on February 282020 and it upheld the NCLT Order dated June 27 2019 and this paved way for theimplementation of the Resolution Plan submitted by Dhanuka Laboratories Limited (DLL).Post the Acquisition a new Board was constituted on March 31 2020 ("ReconstitutedBoard" or "Board") and a new management has been put in place. Inaccordance with the provisions of the Code and the NCLT & Supreme Court of IndiaOrders the approved resolution plan is binding on the Company and its employees memberscreditors guarantors and other stakeholders involved.

Financial summary / Performance /State of Company's affairs

The Highlights of the standalone and consolidated financial results for the FinancialYear 2020-2021 as per the IND AS are given below:-

IND-AS (Rs. Crores)

Standalone Consolidated
Particulars Year ended 31.03.2021 Year ended 31.03.2020 Year ended 31.03.2021 Year ended 31.03.2020
Sales & Operating Income 450.70 481.21 450.06 483.80
Other Income 6.48 24.28 15.23 24.28
Total Expenditure 392.81 471.88 400.28 455.68
Gross Profit /(Loss) 64.37 33.61 65.01 52.40
Interest & Finance Charges 51.34 4.16 51.34 4.16
Gross Profit after Interest but before Depreciation and Taxation 13.03 29.45 13.67 48.24
Depreciation 108.90 117.91 108.92 117.93
Profit / (Loss) before Tax and extraordinary items (95.87) (88.46) (95.25) (69.69)
Exceptional items - [Income / (Expenditure)] - - - -
Profit / (Loss) Before Tax (95.87) (88.46) (95.25) (69.69)
Current & Deferred Tax - - - -
Profit /(Loss) after Tax - Continuing Operations (95.87) (88.46) (95.25) (69.69)
Loss from discontinued operations after tax (21.28) (61.38) (21.28) (61.38)
Loss for the year (117.15) (149.84) (116.53) (131.07)
Re-measurement of post-employment benefit obligations 0.60 (1.89) 0.60 (1.89)
Gain /(Loss) on fair valuation of the Investments 0.07 (0.13) 0.07 (0.13)
Comprehensive Loss for the Year (116.48) (151.86) (115.86) (133.09)

Standalone Financials

During the financial year 2020-2021 your Company achieved a turnover and operatingincome of Rs. 450.70 crores against Rs. 481.21 crores in 2019-2020. The Gross Profitbefore interest depreciation and taxes during the year stood at Rs. 64.37 crores againsta Gross Profit of Rs.33.61 crores in 20192020. After providing for interest expensedepreciation exceptional item the Loss before tax of the Company for the year was Rs.95.87 Crores against Rs. 88.46 crores in 20192020. The Comprehensive Loss stood atRs.116.48 crores during 2020-2021 against Rs. 151.86 crores in 2019-2020.

Consolidated Financials

During the financial year 2020-2021 your Company achieved a turnover and operatingincome of Rs. 450.06 crores as against Rs. 483.80 crores in 2019- 2020. The Gross Profitbefore interest depreciation and taxes during the year stood at Rs. 65.01 crores againsta Gross Profit of Rs. 52.40 crores in 2019- 2020. After providing for interest expensedepreciation exceptional item the Loss before tax of the Company for the year was Rs.95.25 Crores against a loss of Rs. 69.69 crores in 2019-2020. The Comprehensive Loss stoodat Rs. 115.86 crores during 2020-21 against a loss of Rs. 133.09 crores in 2019-2020. Youwill appreciate that despite of lock down across the country due to Covid 19 pandemicmost of the plants of your Company were in operation and utilizing maximum capacity of thesame and your Company managed to sustain standalone sales of Rs.450.70 crores but couldnot achieve gross margins due to the reduced turnover.

Capex and liquidity

During the year the Company has spent Rs. 3.91 crores on Plant & Equipment etclargely towards balancing facilities and essential sustenance capital items. As on March31 2021 the long-term secured financial facility availed by the Company is Rs. 364crores. During the reporting period the Company had availed a short secured financialfacility of Rs. 50 crores as an LC facility.

Implementation of the Resolution Plan and Material events during the year under review.

The Hon'ble National Company Law Tribunal Chennai Bench ("NCLT"] videits order dated June 25/27 2019 the Hon'ble National Company Law Appellate Tribunal videits Order dated November 13 2019 and the Hon'ble Supreme Court vide its Order datedFebruary 28 2020 (received on March 02 2020) has approved the resolution plan("Resolution Plan") of DLL under MA /579 /2019 in CP /540 /IB /2017 inaccordance with the provisions of the Insolvency and Bankruptcy Code 2016. In accordancewith the approved resolution plan the following matters have been discussed and approvedby the members of the Monitoring Committee at their meeting held on ~ March 30 2020 andMarch 312020 (prior to effective date) and the corporate actions for the same wereeffected during the financial year 2020-2021.

a. Reduction and Consolidation of Share Capital of the Company from INR 889643270/-(Rupees Eighty Eight Crores Ninety Six Lakhs Forty Three Thousand Two Hundred Seventyonly) consisting of 88964327 (Eight Crore Eighty Nine Lakhs Sixty Four Thousand ThreeHundred Twenty Seven) equity shares of INR 10 (Rupees Ten only) each to INR 4081640 /-(Rupees Forty Lakhs Eighty One Thousand Six Hundred Forty only) consisting of 408164(Four Lakh Eight Thousand One Hundred Sixty Four) equity shares of INR 10 (Rupees Tenonly) thereby cancelling and extinguishing 88556163 equity shares of Rs. 10/- each.

b. Allotment of 408164 Equity Shares of Rs.10 each at an issue price of Rs. 10 each(fully paid) to the eligible Secured Financial Creditors for the conversion and settlementof part of their Debt.

c. Allotment of 39990072 (Three Crore Ninety Nine Lakhs Ninety Thousand and SeventyTwo) equity shares at 10/- per share for cash to Dhanuka Laboratories Limited("DLL").

d. Allotment of 10000 equity shares of Rs.10/- each pursuant to Scheme of Amalgamationto Dhanuka Laboratories Limited ("DLL").

Further the approval for reclassification of erstwhile Promoters as "Public"was accorded by the NSE Limited and BSE Limited on June 15 2021.

Future Outlook

It is been more than a year now since the implementation of the approved Resolutionplan and your Company is moving in the positive direction. Huge efforts are required stilltowards rebuilding the organisation and taking it to greater heights. In financial termsthe objective of your Company is to lower earnings volatility strive for higherpredictable and calibrated growth and improve Sales EBITDA margin and reduce Debt. Thetarget is to stay cash flow positive and expand earnings year-on-year. Your Company isstriving hard to reverse the direction of the downward curve by ramping up businesses andachieve sizeable growth. The greatest challenge your Company is facing is to achievegrowth and profit margins in spite of the COVID 19 pandemic situation which has resultedin a significant reduction in Anti-Biotics demand across the world. The Board and theManagement of your Company are committed and will put in their best efforts to turnaroundyour Company with optimum cost structure.

Management Discussion and Analysis report

A report on the Management Discussion and Analysis in terms of the provisions ofRegulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 (Listing Regulations 2015) is provided as a separate annexure in the annual report.

Corporate Governance Report and Additional Shareholder's information

A report on the Corporate Governance systems and practices of your Company along with acertificate of compliance from the Practising Company Secretary is given in Annexure IVwhich forms part of this report.

Board Committees

The details pertaining to the Audit Committee and other Committees of the Board areprovided in the Corporate Governance section forming part of this Report. All therecommendations made by the Committees of the Board including the Audit Committee wereaccepted and implemented by the Board.

Adequacy of Internal Financial Control System

The Internal Financial Control over Financial Reporting System are existing andoperative however based on the observations of the auditors the Company is furtherstrengthening the Internal Financial Control systems over financial reporting.

Regulatory Filings and Approvals

In the generic formulations domain Orchid's cumulative New Drug Application (ANDA)approvals for the US market stood at 40. This includes 8 Para IV FTF (First-To-File)filings. The break-up of the total ANDA approvals is 11 in Cephalosporins segment and 29in NPNC space.

In the European Union (EU) region the cumulative count of Marketing Authorisation (MA)active approvals stood at 2 in the NPNC segment. In the API (Active PharmaceuticalIngredients) domain Orchid's cumulative filings of US DMF stand at 76. The break-up ofthe total filings is 28 in the Cephalosporin Segment and 48 in NPNC segment. In Europeanmarket space the cumulative filings of COS (Certificate of Suitability) count remained at19 which includes 14 in cephalosporin segment and 5 in NPNC segment. In Japan market thecumulative filings of JDMFs count remained at 7 all in Cephalosporin segment.

Intellectual Property Rights

The total number of active patent portfolio maintained by Orchid in various nationaland international patent offices so far is 40 including Process & New ChemicalEntities (NCE). Out of 40 patents 26 patents have been granted 12 patent applicationsare published and 2 patent applications filed as of March 31 2021.

Dividend & Reserves

In view of the net loss incurred during the financial year ended March 31 2021 theBoard does not recommend any dividend to the shareholders of the Company. Also no amounthas been transferred to the reserves.

Dividend Distribution Policy

Regulation 43A of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 ('Listing Regulations') as amended requiresthe top 1000 listed entities computed based on market capitalization as on March 31 ofevery Financial Year to formulate a Dividend Distribution Policy and disclose the same onthe website of the Company and a weblink of the policy be disclosed in the Annual Report.

The Board of Directors of the Company has adopted a Dividend Distribution Policy whichaims to ensure fairness sustainability and consistency in distributing profits to theShareholders. The Policy is available on the website of the Company i.e.http://www.orchidpharma.com/downloads/ Dividend%20Distribution%20policy.pdf

Employees Stock Option Plan

The Employee stock options plans namely a) ORCHID ESOP 2010 b) ORCHID ESOP - DIRECTORS2011 and c) Orchid ESOP - Senior Management 2011 have all lapsed quite a few years ago.Moreover these schemes are no longer a desirable and viable employee benefit; all theabove three ESOP Schemes have become infructuous and hence have been terminated.

Subsidiaries

Bexel Pharmaceuticals Inc. USA (Bexel)

Bexel was incorporated basically to conduct Research & Development activities innew drug discovery segment. The current Bexel IP portfolio is being maintained by GlobalIP Unit of your Company.

Orchid Pharmaceuticals Inc. USA

Orchid Pharmaceuticals Inc. is a wholly owned Delaware based subsidiary of yourCompany and also the holding company in the United States under which all the operationalbusiness subsidiaries have been structured. The Company currently has two operatingSubsidiaries namely Orgenus Pharma Inc. and Orchid Pharma Inc. in the US. OrgenusPharma Inc. is the entity that provides all business development and operational servicesfor the parent Company including the initiation of marketing alliances with partnercompanies. It continues to represent your Company for all matters relating to the reviewand approval of such filings by the FDA and handling of logistics and product importationinto the US as the Importer of Record for the US Customs.

Orchid Pharma Inc. is the commercial entity that started direct marketing and sellingyour Company's products in the US generics market place. Orchid Pharma Inc. hasestablished a strong corporate image for your Company in the US.

Diakron Pharmaceuticals Inc. USA

Orchid's stake in Diakron has been a part of the original transaction which includesdirect investment and Master Services Agreement (MSA). Though your Company has completedmost of its MSA obligations to develop and supply clinical quantities of API and extendedrelease formulation a sizeable outstanding liabilities is still in its Books. A properevaluation of cost and benefit would be done for revival and funding.

Orchid Europe Limited United Kingdom

Your Company's subsidiary in Europe namely Orchid Europe Limited (OEL) is a whollyowned subsidiary which provides liaising support to the parent Company and its customersin Regulatory Pharma covigilance Testing & Release Retention of samples ServiceProviders and Business Development in Europe.

Orchid Pharmaceuticals (South Africa) Proprietary Limited South Africa

Your Company's wholly owned subsidiary Orchid Pharmaceuticals (South Africa)Proprietary Limited was incorporated in the year 2006 mainly to register and market yourCompany's products in South Africa. As not much progress has happened so far thereconstituted Board has decided to wind up this entity.

There are no Companies / Bodies Corporate which have become/ ceased to be subsidiary /Joint Venture / Associate during the financial year 2020-2021. However your Company hassubscribed to 2600 equity shares of Rs.10/- each constituting 26% of paid up equity sharecapital of M/s OrBion Pharmaceuticals Private Limited during the financial year 2021-2022by virtue of which the Company has become an Associate of your Company.

Highlights of the performance of subsidiaries and their contribution to the overallperformance of the Company during the period under report

One of the Subsidiary Companies contributed 1.89 % of the consolidated sales of theCompany. The Company accesses the US market through this subsidiary and expects reasonablegrowth in the US market in the years to come either through its wholly owned subsidiary ordirectly. The R&D subsidiaries of the Company were used for carrying out Research& Development of selected molecules having good potential. Your Company has asubsidiary for holding Product registrations and approvals in Europe. The Board andManagement is reviewing the operations of all the subsidiaries and representative officesof your Company and would take appropriate steps for either the revival of its businessesbased on cost-benefit analysis or their closure to save costs.

Consolidated financial statements

Pursuant to Section 129(3) of the Companies Act 2013 the Consolidated FinancialStatements presented by the Company include the financial statements of its subsidiaries.Further a statement containing the salient features of the financial statements of thesubsidiaries of the Company in the prescribed form AOC-1 is given in Annexure-VII &forms part of this report. This statement also provides the details of the performance andfinancial position of each subsidiary in accordance with Section 136 of the Companies Act2013.

Directors and Key Managerial Personnel

Pursuant to the implementation of the approved Resolution plan the Board wasreconstituted on March 31 2020. Shri Ram Gopal Agarwal Shri Manish Dhanuka Shri MridulDhanuka and Shri Arun Kumar Dhanuka were appointed as an Additional Directors(Non-Executive Non-Independent) of the Company as on March 31 2020 and regularized asDirector by the Members of the Company at 27th Annual General Meeting held onDecember 30 2020.

Further Shri Ram Gopal Agarwal was re-designated as Chairman of the Company ShriManish Dhanuka was redesignated as Managing Director of the Company and Shri MridulDhanuka was re-designated as Executive Director (Whole Time Director) of the Company atthe Board Meeting held on June 29 2020.

All the Independent Directors were appointed as Additional Directors of the Company onJune 29 2020 and regularized as Directors (Independent) by the Members of the Company at27th Annual General Meeting held on December 30 2020. None of the Directors of theCompany are disqualified under Section 164(2) of the Companies Act 2013.

Shri. Sunil Kumar Gupta was appointed as the Chief Financial Officer of the Companywith effect from June 29 2020.

Names of the Directors retiring by rotation at the ensuing Annual General Meeting andwhether or not they offer themselves for re-appointment

In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of the Company Shri Arun Kumar Dhanuka (DIN: 00627425) Non-Executive Directorretires by rotation at the ensuing Annual General Meeting and being eligible offershimself for re-appointment.

Extract of Annual Return

In accordance with Section 92(3) of the Companies Act 2013 every company shall placea copy of the annual return on the website of the Company if any and the web-link ofsuch annual return shall be disclosed in the Board's report. A copy of the Annual returnof the Company is available on the website of the Company www.orchidpharma.com under the"Investors" section.

Board meetings held during the year

During the year 4 meetings of the Board of Directors were held. The Board Meetingswere held in accordance with provisions of the Companies Act 2013 and the relevant rulesmade there under. The details of the meetings held are furnished in the CorporateGovernance Report forming part of this report.

Director's Responsibility Statement

Pursuant to the provisions contained in Section 134(3)(c) of the Companies Act 2013the Board to the best of its knowledge and belief and according to the information andexplanations obtained by it confirms that:

a) In the preparation of the annual accounts for the financial year ended March 312021 the applicable accounting standards have been followed along with proper explanationrelating 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 a true andfair view of the state of affairs of the company at the end of the financial year endedMarch 31 2021 and of the profit and loss of the company for that period;

c) The Directors have 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 have prepared the Annual accounts for the financial year ended March31 2021 on a going concern basis;

e) The Directors have laid down Internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively;

f) The Directors have devised proper systems to ensure compliance with the provisionsof applicable laws and that such systems were adequate and operating effectively.

Nomination & Remuneration policy

This Policy lays down standards with respect to the appointment remuneration andevaluation of Senior Management Personnel Directors and Key Managerial Personnel of theCompany. The Policy is available on the website of the Company and the web-link for thesame is http://www.orchidpharma.com/downloads/NOMINATION_AND_REMUNERATION_POLICY.pdf

Appointment and Remuneration of Non- Executive Directors

Non-Executive Directors are entitled to receive sitting fees for attending the meetingsof the Board or Committee thereof as approved by the Board and within the overall limitsprescribed under the Companies Act 2013 and rules there under.

The Criteria for determining independence of a director are based on the academicaccomplishments qualifications expertise and experience in their respective fieldsdiversity of the Board global exposure professional network technical expertisefunctional domain expertise independence and innovation.

The Company has received the necessary declarations from each Independent Director inaccordance with Section 149(7) of the Act confirming that he/she meets the criteria ofindependence as laid out in Section 149(6) of the Act and in accordance with Regulations16(1) (b) and 25(8) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.

Further the Board after taking these declaration/ disclosures on record andacknowledging the veracity of the same concluded that the Independent Directors arepersons of integrity and possess the relevant expertise and experience to qualify asIndependent Directors of the Company and independent of the Management. All theIndependent Directors have been registered and are members of Independent DirectorsDatabank maintained by the Indian Institute of Corporate Affairs and whoever be requiredto qualify the online proficiency self-assessment test will be complied in due course oftime.

Opinion of the Board

The Board opines that all the Independent Directors of the Company strictly adhere tocorporate integrity possesses requisite expertise experience and qualifications todischarge the assigned duties and responsibilities as mandated by the Companies Act 2013and Listing Regulations diligently.

Related Party Transaction Policy

Your Company has framed a Related Party Transaction Policy in compliance with Section177 of the Companies Act 2013 and Regulation 23 of SEBI (Listing Obligation and DisclosureRequirements) Regulations 2015 in order to ensure proper reporting and approval oftransactions with related parties. The Policy is available on the website of the Companyand the web-link for the same is http://www.orchidpharma.com/downloads/Policv%20on%20materialitv%20and%20dealing%20with%20Related%20Party%20Transactions.pdf.

All the transactions entered with the related parties were in ordinary course ofbusiness and are on arm's length basis. There were no 'material' contracts or arrangementsor transactions and therefore disclosure in form AOC-2 is not applicable.

Corporate Social Responsibility (CSR)

Your Company does not meet the thresholds as prescribed under Section 135 (1) of theCompanies Act 2013 and hence the constitution of the CSR Committee is not applicable.However the erstwhile Board of the Company has approved the CSR policy and the same isavailable on the website of the Company and the web-link for the same ishttp://www.orchidpharma.com/downloads/Orchid%20CSR %20Policy-approved.pdf

Since the Company did not have any pro fits for the last three financial years yourcompany is not mandatorily required to contribute towards CSR activities.

Your Company has undertaken in a small manner the CSR activities voluntarily onEducation Health Youth development and Women Empowerment during the financial year2020-2021 through "Orchid Trust".

Material changes and commitment if any affecting financial position of the Companyfrom the end of Financial Year and till the date of this Report

Except otherwise stated herein in this Report there are no material changes andcommitment affecting financial position of the Company from the end of Financial YearMarch 31 2021 and till the date of this Report.

Conservation of Energy

Your Company has always been striving in the field of energy conservation. With theavailable limited resources certain measures to conserve energy and to reduce associatedcosts were taken in a small way during the fiscal under review. The particulars in respectto conservation of energy as required under Section 134 (3) (m) of the Companies Act2013 are given in Annexure I to this report.

Technology Absorption

The particulars in respect of R&D/Technology absorption as required under Section134 (3) (m) of the Companies Act 2013 are given in Annexure II to this report.

Foreign Exchange Earnings and Outgo

The particulars in respect of Foreign Exchange Earnings and Outgo as required underSection 134 (3) (m) of the Companies Act 2013 are given in Annexure III to thisreport.

A statement indicating development and implementation of a risk management policy forthe company including identification therein of elements of risk if any which in theopinion of the Board may threaten the existence of the company

The details and the process of Risk Management as were existing and implemented in theCompany are provided as part of Management Discussion and Analysis which forms part ofthis Report.

The Company has a risk management mechanism in place to manage uncertainties throughidentification analysis assessment implementing and monitoring to reduce the impact ofrisks to the business which was discussed in detail in the Management Discussion andAnalysis section of this Annual Report.

Annual evaluation of Board its Committees and individual Directors

Pursuant to the provisions of the Companies Act 2013 and the Listing Regulations theBoard carried out an annual performance evaluation of its own performance the Directorsindividually the Chairman of the Board and its Committees as per the evaluation frameworkadopted by the Board on the recommendation of the Nomination and Remuneration Committee.The performance evaluation has been done by the entire Board of Directors excluding theDirector being evaluated. Various evaluation techniques are used to assess the performanceof the Directors. The Directors have participated in this evaluation process. TheIndependent Directors in their separate meeting have also evaluated the performance of theChairman of the Company Non-Independent Directors and the Board as a whole. Separatequestionnaires were used to evaluate the performance of individual Directors on parameterssuch as their participation and contribution objective judgment etc. The Chairman wasalso evaluated based on the key aspects of his role.

Change in the Nature of Business

There is no change in the nature of business carried on by your company during thefinancial year ended March 31 2021.

Details regarding deposits covered under Chapter V of the Act

During the Financial Year 2020-21 your company did not accept any deposits within themeaning of the provisions of Chapter V - Acceptance of Deposits by Companies read with theCompanies (Acceptance of Deposits) Rules 2014 and as such no amount of principal orinterest was outstanding as of the balance sheet date.

Significant and Material Orders Passed by the Regulators or Courts or Tribunalsimpacting the Going Concern status of the Company

There have been no significant nor material orders passed by the regulators or courtsor tribunals impacting the going concern status and Company's operations. Further anOrder was passed by the Honourable NCLT Chennai Bench on September 15 2020 pertaining tothe Resolution plan.

Vigil Mechanism (Whistle Blower Policy)

Your Company has established a vigil mechanism that enables the Directors & theEmployees report genuine concerns. The Company encourages its employees who have concernsabout unethical behaviour actual or suspected fraud or violation of the Company's code ofconduct to come forward and express their concerns without fear of punishment or unfairtreatment. The Policy is available on the website of the Company and the web link for thesame is http://www.orchidpharma.com/downloads/Policy%20on%2 0%20Whistle%20Blower.pdf

Policy for determining material subsidiaries

Your Company has framed a Policy for determining material subsidiaries in compliancewith Regulation 16 (1) (c) of the Listing Regulations 2015 in order to determine thematerial subsidiaries of the Company and the same is available at the website of theCompany and the web link for the same ishttp://www.orchidpharma.com/downloads/Policy%20for%20determining%20material%20subsidiaries.pdf

Disclosure under the sexual harassment of women at work place (Prevention Prohibitionand Redressal) Act 2013

The details pertaining to captioned header are disclosed in the Corporate Governancereport which is annexed to the Board's report.

Prevention of insider trading

The Company has adopted a Code of Prevention of Insider Trading with a view to regulatetrading in securities by the Directors and the Designated Persons of the Company. The Coderequires pre-clearance for dealing in the Company's shares and prohibits the purchase orsale of Company shares by the Directors and the Designated Persons while in possession ofunpublished price sensitive information in relation to the Company and during the periodwhen the Trading Window is closed.

Environment

Environment management is the prime concern in Orchid Pharma Limited. Orchid hasemployed a state-of-the-art technology zero liquid trade effluent treatment plant andworld class treatment facilities for its liquid and gaseous pollutants generated from theproduction processes. The zero discharge of liquid trade effluent treatment plantcomprising Membrane Bio Reactor Nano Filtration Reverse Osmosis Solvent StrippingColumn Thermal Evaporation & Crystallization plant will treat the entire tradeeffluent and recycle back into the utility process.

Waste Water Treatment

Low TDS effluent is collected equalized and neutralized into neutral pH and treatedaerobically by Membrane Bio Reactor process comprising of aeroapc equipped with jetaeration system made up of Glass Fibre Reinforced Plastic & Ultrafiltration Systemloaded with ceramic membrane (aluminum zirconium). The permeate from ultrafiltrationpasses through nano filtration to separate divalent ions. The permeate of nano filtrationpasses through reverse osmosis to separate monovalent ions. The permeate of reverseosmosis is utilized in the cooling towers as make up water. The reject from the reverseosmosis plant and nano filtration plant is mixed with high total dissolved solids effluentfor further treatment. The excess bio mass from the aerobic system is centrifuged and sentto bio composting process to convert into useful manure. High TDS effluent is collectedand neutralized into neutral pH. This effluent is sent to stripping column having sievetrays with a height of 21 meters to enrich the traces of solvents to the level of 70%using steam energy for further usage. The effluent from the bottom of stripping column issent to Mechanical Evaporators (Single stageThree stage and Five stage) to concentratethe salts to the level of 35%. The concentrate from the evaporators are sent to AgitatedThin Film Dryers (ATFD) where it gets dried and the dried salt is collected at the bottomof ATFD. The collected salt is bagged and stored in protected storage sheds for furtherdisposal in Government approved landfill sites.

Waste Air Treatment

The major emissions from the unit is from the boiler power plant production processand powder processing area.

Process Scrubbers: Orchid installed process scrubbers in all production blocks totreat the waste air generated from process reactors.

Vent Gas Condensation: Orchid installed vent gas condensation system for fugitiveemissions from the storage tanks of solvents and secondary condensers of solvent recoveryarea to control the fugitive emissions.

Reverse Jet Ventury Filter: Orchid installed reverse jet ventury filter to controlthe dust emission during the powder processing of bulk drugs.

Adequate Stack Height: Adequate stack heights are provided for Steam Boiler andPower Plant for better dispersion.

Electro Static Precipitator (ESP): ESP is provided at the boiler emission tocontrol the particulate matter.

Hazardous waste Management

Hazardous wastes are collected and stored in protected storage shed and disposed intothe approved landfill sites / authorized recyclers.

World Environment Day Celebration

World Environment Day was celebrated on 5th June 2020 by planting trees with in ourfactory premises to create awareness on environment.

Safety

Orchid is highly committed to Safety Health and Environment aspects. In spite ofchallenging circumstances brought about by COVID-19 there has been no compromise oncritical needs of safety. This has been possible because of committed Line Managementdedicated Safety Professionals and relentless Leadership direction. Central SafetyCommittee (CSC) the apex committee of the organization have ensured that risks have beencontained to keep us free from any major incident. Orchid strongly believes that humanbehaviour plays key role in safety management. Reinforcing the Safety observation &Audit (SOA) - a Lead indicator becomes a key focus area always in our Central SafetyCommittee meetings. CSC continues to meet every month review critical concerns on Safetyand provides directions to minimize the risks at all levels.

In light of the evolving Coronavirus situation organization is taking criticalmeasures to contain the spread of COVID-19. Essential preventive measures have been takento ensure that we keep ourselves our families and our communities are safe. Orchidestablished a comprehensive crises management plan to handle the pandemic. This planaddresses the adequate preparedness and response measures for the following risks thatarises out of the pandemic situation.

• Spread of infection across employees operating within plants

• Contract employee health issues

• Contamination from employees returning from hot spots

• Inadequate availability of work force due to absenteeism spikes

• Inadequate focus on Safe work practices maintenance under restricted work force

• Shutdown and start-up of process

• Contamination of work place / warehouse

• Contamination risk from Visitors / Contractors

• Inadequate social distancing

• Risk of movement of Contaminated vehicles

• Gap in Sanitation and hygiene requirements

At Orchid we have initiated protocols for hygiene and sanitation social distancingVirtual meetings medical assistance and vaccination initiatives in alignment withNational /Global guidelines on disease prevention and control to prevent contamination andto cope with adverse situations. These measures have been rolled out across all Orchidbusiness processes Manufacturing Sites offices and Technology Development facilities.

Process Safety is of paramount importance for any Chemical and Pharmaceuticalorganization therefore we have built a strong Process safety culture at Orchid over theyears. The company also realized the need of effective safety communication in culturebuilding activity / exercise. This is backed up by periodical safety talks Safety Postersand Interactive discussions. Several safety-related initiatives awareness campaigns wereconducted to promote a "zero incidents" mindset among employees. These effortsresulted in behavioural change making a zero-reportable-incidents year. By applying RiskAssessment technologies at work on chemicals and process we ensured that highestworkplace safety standards were implemented across the manufacturing value chain.

Particulars of Employees and Remuneration

The Information as required pursuant to Section 197 (12) of the Act read with Rule 5 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 aregiven in Annexure V to this report. The information as per Rule 5(2) and 5(3) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 formspart of this Report. However as per First proviso to Section 136(1) of the Companies Act2013 and Second proviso to Rule 5(2) of the Rules the Report and Financial Statements arebeing sent to the Members of the Company excluding the Statement of Particulars ofEmployees under Rule 5(2) of the Rules. Any Member interested in obtaining a copy of thesaid statement may write to the Company Secretary at the address of the Corporate Officeof the Company.

Particulars of Loans Guarantees or investments under Section 186 of the Companies Act2013

Particulars of Loans Guarantees or investments as required under Section 186 of theCompanies Act 2013 are provided in the Note no.7 & 15 to Standalone financialstatements for the financial year 2020-2021.

Suspension of Trading

The details pertaining to suspension of trading in shares of the Company during thereporting period are disclosed in the Corporate Governance report annexed to this report.

Transfer of Shares to the Investor Education and Protection Fund (IEPF)

The details pertaining to the transfer of shares to the Investor Education andProtection Fund during the reporting period are disclosed in the Corporate Governancereport annexed to this report.

The details of application made or any proceeding pending under the Insolvency andBankruptcy Code 2016 (31 of 2016) during the year along with their status as at the endof the financial year

Not Applicable to the company except the fact as disclosed in the section Brief background & Successful implementation of the approved Resolution Plan.

The details of difference between amount of the valuation done at the time of one-timesettlement and the valuation done while taking loan from the Banks or FinancialInstitutions along with the reasons thereof

Not Applicable to the company.

Statutory Auditors

The Statutory Auditors M/s. CNGSN & Associates LLP Chartered Accountants havebeen appointed for a period of five (5) years from the conclusion of 24thAnnual General Meeting held on September 13 2017 till the conclusion of 29th AnnualGeneral Meeting proposed to be held in 2022.

The resolution seeking approval for remuneration to M/s. CNGSN & Associates LLPChartered Accountants the Statutory Auditors of the Company for the four financial yearsfrom 2018-2019 to 2021-2022 has been obtained at the 25th AGM held on December 12 2018and the members have empowered the Audit Committee and the Board to Ox their remuneration.

Auditors' Report

The Auditors have audited the standalone and consolidated financial statements of theCompany for the financial year ended March 31 2021 and no fraud have been reported by theAuditors under Section 143(12) of the Companies Act 2013 requiring disclosure in theBoard's Report.

Explanation to the Audit qualifications

The explanation to the Audit Qualifications for the financial year ended March 31 2021are given in Annexure VIII to this report.

Secretarial Auditor

Pursuant to Section 204 of the Companies Act 2013 and the Companies (Appointment &Remuneration of Managerial Personnel) Rules 2014 M/s S Dhanapal & Associates (a firmof Practising Company Secretaries) were appointed to conduct the secretarial audit of yourCompany for the Financial Year 2020-2021. The Secretarial Audit Report is forming part ofthis Annual Report (Annexure VI).

Upon recommendation of the Audit Committee the Board has re-appointed M/s S Dhanapal& Associates (a firm of Practising Company Secretaries) as Secretarial Auditors ofthe Company for the Financial Year 2021-22.

Secretarial Audit report

In respect of delay in filing returns with relevant authorities on certain occasionsthe Company is taking necessary steps for filing the returns on time in the ensuing years.

Compliance with the provisions of Secretarial Standards

The Company has deployed proper systems to ensure compliance with the provisions of theapplicable secretarial standards issued by the Institute of Company Secretaries of India.

Cost Audit

The Central Government has prescribed that an audit of the cost accounts maintained bythe Company in respect of Bulk Drugs and Formulations be conducted under Section 148 ofthe Companies Act 2013. Consequently your Company had appointed Shri J Karthikeyan asCost Auditor for the FY 202021 for the audit of the cost accounts maintained by theCompany in respect of both Bulk Drugs and Formulations. The cost audit report for theFinancial Year 2020-2021 is under progress and will be filed with the Central Governmentwithin the stipulated timeline and the relevant Cost Audit reports for FY 2019-2020 werefiled within the due date to the Central Government. Pursuant to Section 148 of theCompanies Act 2013 read with the Companies (Audit and Auditors) Rules 2014 and theCompanies (Cost Records and Audit) Rules 2014 the Company maintains the Cost Auditrecords in respect of its pharmaceutical business. The Board at its meeting held on May222021 on the recommendation of the Audit Committee has appointed Shri J KarthikeyanCost Accountant Chennai (Membership No.29934 & Firm Reg. No.102695) to conduct theaudit of the cost accounting records of the Company for financial year 2021-2022 at aremuneration of Rs.200000/- (Rupees Two Lakhs Only) plus applicable taxes andreimbursement of out- of-pocket expenses. The remuneration is subject to the ratificationof the Members in terms of Section 148 read with Rule 14 of the Companies (Audit andAuditors) Rules 2014 and is accordingly placed for your ratification.

Acknowledgements

The Board is grateful and thankful to all the Banks Financial Institutions both inpublic sector and in private sector who have fully supported your Company's initiativesduring the CIRP period and for their wholehearted mandate for approving a resolution planand for the revival of your Company's businesses. The Board is grateful to the Central andState Government and the Central Drugs Standard Control Organization and State Food Safetyand Drugs Administration (State FDAs) for their support to the Company's business plans.The Board places on record their appreciation of the support provided by the Employeescustomers suppliers service providers medical fraternity and business partners.

For and on behalf of the Board of Directors of

Orchid Pharma Limited
Place: Gurgaon Manish Dhanuka Mridul Dhanuka
Date : July 15 2021 Managing Director Whole Time Director
DIN: 00238798 DIN: 00199441

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