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RPG Life Sciences Ltd.

BSE: 532983 Sector: Health care
NSE: RPGLIFE ISIN Code: INE105J01010
BSE 00:00 | 16 May 475.40 2.80
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NSE 00:00 | 16 May 476.80
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OPEN 476.60
PREVIOUS CLOSE 472.60
VOLUME 1130
52-Week high 751.80
52-Week low 422.00
P/E 15.27
Mkt Cap.(Rs cr) 786
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 476.60
CLOSE 472.60
VOLUME 1130
52-Week high 751.80
52-Week low 422.00
P/E 15.27
Mkt Cap.(Rs cr) 786
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

RPG Life Sciences Ltd. (RPGLIFE) - Director Report

Company director report

Your Directors have pleasure in presenting the annual report and audited statement ofaccounts of the Company for the year ended on March 312021.

1. FINANCIAL RESULTS

The summary of financial performance of the Company for the year under review is givenbelow:

(Rs. in crores)
Particulars 2020-21 2019-20
A Operations
Total Income 390.05 376.30
Profit before depreciation interest and tax 70.84 59.88
Less: Interest 0.79 1.75
Less: Depreciation 16.47 16.36
Profit before exceptional items for the year before tax 53.58 41.77
Exceptional items Gain/(Loss) - (5.32)
Profit before tax 53.58 36.45
Tax (including deferred tax) 13.58 7.44
B Profit for the year after tax 40.00 29.01
C Other Comprehensive income net of tax (0.12) (0.17)
D Total comprehensive income 39.88 28.84
E Appropriations:
Dividend on equity shares - 6.62
Dividend Distribution Tax - 2.18

2. DIVIDEND

Your Directors recommend a dividend of Rs.7.20 (90%) per equity share of Rs.8/- eachfor the financial year ended March 312021.

3. OPERATIONS

The Company earned a total income of Rs.390.05 crores for the year as compared toRs.376.30 crores during the previous year and a profit after tax from existing operationsof Rs.40.00 crores as against Rs.29.01 crores during the previous year. The increase insales and net profit was mainly due to improved performance of International Formulationsbusiness.

The Company's Formulation facility at Ankleshwar Plant (F1) has WHO GMP Nigeria andKenya Health Authority certifications and Plant (F2) has WHO GMP EU GMP TGA AustraliaGMP Health Canada Kenya Ethiopia Nigeria and Sudan Health Authority certifications.API facility at Navi Mumbai plant has WHO GMP and TGA Australia certifications.

Domestic Formulations Business:

Performance

During the year under review the Domestic Formulations business achieved sales revenueof Rs.235.42 crores higher than 1.5% over the previous year. The division's performanceimprovement was a result of prescription generation augmented product portfolio throughnew product launches and line extensions and control on sales hygiene and marketinventories. Sales of legacy products in antidiarrheal anti-ulcerant pain management andcardiovascular therapeutic areas amongst others which constitute 63% of the Domesticformulations registered flat growth. As a part of Life Cycle Management strategy of legacyproducts Romilast BL and Aldactone T new line extensions were launched.

Specialty business which contributes 37% of domestic formulations grew by 4% with thehelp of greater digital reach and connect with specialty customers. The Company focused onlaunching new product viz. T-JAKi and driving active promotion in the immunosuppressantrange of products in Rheumatology and Gastroenterology. Azoran 75 mg new line extensionwas launched. Reduction in transplants and chemo therapies had negative impact on sales ofrelated products.

As per the data compiled by Pharmatrac a market researcher the Company achieved 68thrank in sales value terms in the country during the year.

Outlook

In the current year the Company will continue its emphasis on strengthening its Focusbrands. The Company will continue its strategy of demand generation introducing of newproducts and line extensions identifying alternate therapies for existing products skillbuilding of field force and control of sales hygiene parameters.

International Formulations Business:

Performance

The International Formulations business achieved sales revenue of Rs.80.15 crores in FY21 registering growth of 15% as against the previous year mainly on account of expandingthe base business with existing customers new customer development and new productoffering viz. Sodium Valproate Nicorandil Propantheline Bromide and Azathioprine in newstrength of 75 mg and 100 mg. In June 2020 the Company commercialized a complex genericproduct Prolonged Release Sodium Valproate formulation for a UK customer after itssuccessful approval by UK MHRA.

Outlook

The International Formulations business is focused on increasing the penetration ofexisting and new products in multiple countries within EU along with UK AustraliaCanada Myanmar and other Emerging Markets. The Company is also actively scouting foropportunities for geographic expansion through strategic partnerships in variousinternational markets in India and South East Asian markets - Sri Lanka VietnamPhilippines Egypt and increasing the penetration of the current product assets -Azathioprine Nicorandil Sodium Valproate PR and Mycophenolate Mofetil globally.

Active Pharmaceutical Ingredients (API/Bulk Drugs) Business:

Performance

With sales of Rs.67.89 crores API business was marginally higher by 0.8% as againstthe previous year due to higher sales of its flagship APIs like Azathioprine Haloperidoland Quinfamide to both international and domestic customers.

Outlook

API business continues to be of strategic importance in the overall growth of theCompany. Backward integration in products ensures lesser dependency on procuring APIs fromexternal sources and increased reliability of supplies thus playing a crucial role in thecurrent competitive and external environment. The Government's focus on developing API'sand reducing the dependence on imports further augments the strategic importance of thebusiness. The Company is also working on scouting opportunities in Russia South KoreaChina Brazil and MENA markets.

This business could see increase with overseas companies looking at India as a globalhub for supply of APIs.

4. INDIAN ACCOUNTING STANDARDS (IND AS)

As notified by the Ministry of Corporate Affairs the Company adopted Indian AccountingStandards (‘Ind AS') with effect from April 012017.

5. EXTRACT OF ANNUAL RETURN

Pursuant to Sections 92 and 134 of the Companies Act 2013 read with Rule 12 of theCompanies (Management and Administration) Rules 2014 the Annual Return as on March 312021 is available on Company's Website www.rpglifesciences.com.

6. DISCLOSURE UNDER SECRETARIAL STANDARDS ON MEETINGS OF BOARD OF DIRECTORS (SS-1):

During the year under review the Company has complied with all applicable SecretarialStandards.

7. MEETINGS OF THE BOARD

The details of Board Meetings held during the year are given in the CorporateGovernance Report.

8. MEETINGS OF AUDIT COMMITTEE

The details of Audit Committee meetings and composition of the Committee are given inthe Corporate Governance Report.

9. DIRECTORS' RESPONSIBILITY STATEMENT

The Directors confirm that -

a) in the preparation of the annual accounts for the financial year ended March 312021 the applicable accounting standards had been followed and there was no materialdepartures;

b) the Directors had 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 as atMarch 312021 and of the profit and loss of the Company for that period;

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 and that such internal financial controls are adequate and were operatingeffectively;

f) the Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

10. STATEMENT ON DECLARATION OF INDEPENDENT DIRECTORS

The Company has received declaration from each of the Independent Directors underSection 149 (6) and (7) of the Companies Act 2013 and Regulation 16 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 as amended from time to time.There has been no change in the circumstances affecting their status as IndependentDirectors of the Company.

The Board is of the opinion that the Independent Directors of the Company possessrequisite qualifications experience and expertise and they hold highest standards ofintegrity. As per the proviso to Rule 6(4) of the Companies (Appointment and Qualificationof Directors) Rules 2014 all the Independent Directors of the Company are exempted fromundertaking the online proficiency selfassessment test.

11. PECUNIARY RELATIONSHIP OR TRANSACTIONS OF THE NON-EXECUTIVE DIRECTORS ANDDISCLOSURES ON THE REMUNERATION OF THE DIRECTORS

All pecuniary relationship or transactions of the NonExecutive Directors vis-a-vis theCompany along with criteria for such payments and disclosures on the remuneration of theDirectors along with their shareholding are disclosed in Corporate Governance Report whichforms part of this Report.

12. NOMINATION AND REMUNERATION POLICY

The Company's policy on Directors' appointment and remuneration including criteria fordetermining qualifications positive attributes independence of a Director and othermatters provided under Section 178 (3) is annexed with this Report as Annexure A.

13. EXPLANATION AND COMMENTS ON AUDITORS' AND SECRETARIAL AUDIT REPORT

There is no qualification disclaimer reservation or adverse remark made by theStatutory Auditors in Auditor's Report.

As per the provisions of Section 143 (12) of the Companies Act 2013 read with rule 13of the Companies (Audit & Auditors) Rules 2014 the Statutory Auditors have notreported any instances of fraud to the Central Government and/or Audit Committee.

Further there is no qualification disclaimer reservation or adverse remark made bythe Company Secretary in practice in Secretarial Audit Report.

14. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

The Loans Guarantees and Investments made by the Company are within the limitsprescribed under the provisions of Section 186 of the Companies Act 2013 and the detailsare given in the notes to the Financial Statements.

15. RELATED PARTY TRANSACTIONS

There were no contracts or arrangements or transactions entered into by the Companywith related parties referred to in sub-section (1) of Section 188 of the Companies Act2013 during the course of business which were not at arm's length basis.

Suitable disclosure as required by the Indian Accounting Standards (IND AS 24) has beenmade in the notes to the Financial Statements. The policy on Related Party Transactions asapproved by the Board is uploaded on the Company's website www.rpglifesciences.com.

16. TRANSFER TO RESERVES

The Company has not transferred any sum to the General Reserve during the financialyear ended March 312021.

17. MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY

There are no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year on March 31 2021 towhich the financial statements relate and the date of this report.

18. 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 Companies (Accounts) Rules 2014 are given in Annexure B tothis report.

19. RISK MANAGEMENT

The details of Risk Management Committee (RMC) and its terms of reference are set outin the Corporate Governance Report.

The Company has a robust Risk Management framework to identify evaluate business risksand opportunities.

This framework seeks to create transparency minimize adverse impact on the businessobjectives and enhance the Company's competitive advantage.

The business risk framework defines the risk identification and its management approachacross the enterprise at various levels including documentation and reporting. Theframework help in identifying risks trend exposure and potential impact analysis atCompany's business.

20. CORPORATE SOCIAL RESPONSIBILITY (CSR)

In accordance with the provisions of Section 135 read with Schedule VII of the Act theCompany as a part of its Corporate Social Responsibility ("CSR") initiativehas adopted a CSR Policy outlining various CSR activities to be undertaken by the Companyin the area of health water sanitation promoting education skill development etc. TheCSR policy of the Company is available on the Company's website i.e. www.rpglifesciences.comunder ‘Investors' tab.

During the year under review the Company has contributed Rs.39.34 Lakhs to RPGFoundation the implementing agency towards CSR activities and Rs.12.23 Lakhs wastransferred to a separate Bank Account viz. ‘RPG Life Sciences Limited UnspentCorporate Social Responsibility Account FY 2020-21' to be disbursed in the future towardsapproved projects pursuant to CSR rules dated January 22 2021. The Board has constituteda CSR Committee inter alia to recommend on the CSR projects/ programs recommend theamount on each CSR activity and to monitor such CSR activities being undertaken by theCompany. The report on CSR activities as required under the Companies (Corporate SocialResponsibility Policy) Rules 2014 is set out as Annexure C.

21. DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year under review Mr. Bhaskar Iyer was appointed as an Independent Directorby the Members at the Annual General Meeting of the Company held on August 20 2020 forhis first term of five consecutive years from October 30 2019 to October 29 2024.

Mr. Rajat Bhargava was appointed as an Additional and Non-Executive Director on theBoard of the Company w.e.f. January 25 2021.

Mr. Harsh V. Goenka retires by rotation and being eligible offers himself forre-appointment at the ensuing Annual General Meeting.

Mr. Mahesh Narayanaswamy Vice President - Finance was relieved from discharging theresponsibilities and duties of CFO w.e.f. August 3 2020. The Board placed on record itsappreciation for the services rendered by Mr. Narayanaswamy during his tenure with theCompany.

Mr. Vishal Shah was appointed as Chief Financial Officer of the Company w.e.f. August3 2020.

In accordance with provisions of Section 149 and other applicable provisions ofCompanies Act 2013 your Directors are seeking re-appointment of Ms. Zahabiya Khorakiwalafor five consecutive years from July 27 2021 to July 26 2026. In the opinion of theBoard she possesses requisite qualification experience and expertise and holds higheststandards of integrity. Details of the said Director are mentioned in the ExplanatoryStatement under Section 102 of the Companies Act 2013 of the 14th Annual General Meeting.

At the Board Meeting held on April 30 2021 Mr. Yugal Sikri was re-appointed as theManaging Director of the Company with effect from October 1 2021 to April 30 2024subject to approval of shareholders.

None of the Directors and Key Managerial Personnel (KMP) is related to any otherDirector of the Company.

Mr. Yugal Sikri Managing Director Mr. Vishal Shah Chief Financial Officer and Mr.Rajesh Shirambekar Head - Legal and Company Secretary are Key Managerial Personnel of theCompany within the meaning of Section 203 of the Companies Act 2013.

22. SUBSIDIARY COMPANIES

There were no Companies which have become or ceased to be our subsidiaries jointventures or associate companies during the year.

23 FIXED DEPOSITS

The Company has not accepted any fixed deposit from public during the year under reviewunder Chapter V of the Companies Act 2013. As on March 312021 no deposit was lyingunclaimed or unpaid with the Company.

24. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALSIMPACTING THE GOING CONCERN STATUS

There are no significant and material orders passed by the Regulators or Courts orTribunals impacting the going concern status and Company's operations in future.

25. CHANGE IN THE NATURE OF BUSINESS

During the year under review there was no change in the nature of business.

26. INTERNAL FINANCIAL CONTROL

Details in respect of adequacy of internal financial controls with reference to theFinancial Statements are stated in Management Discussion and Analysis which forms part ofthis annual report.

27. INFORMATION PURSUANT TO SECTION 197 (12) OF THE COMPANIES ACT 2013 AND RULE 5 OFTHE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL REMUNERATION) RULES 2014

1 The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year; Mr. Harsh V. Goenka (Chairman) 1.47
Dr. Lalit S. Kanodia 1.55
Mr. Mahesh S. Gupta 2.38
Mr. Manoj Maheshwari 1.47
Mr. Narendra Ambwani 2.31
Ms. Zahabiya Khorakiwala 0.81
Mr. Bhaskar Iyer 2.09
Mr. Sachin Nandgaonkar 2.11
Mr. Rajat Bhargava 0.61
Mr. Yugal Sikri (Managing Director) 94.12
2 The percentage increase in remuneration of each director Chief Financial Officer Chief Executive Officer Company Secretary or Manager if any in the financial year; Mr. Harsh V. Goenka (Chairman) Nil
Dr. Lalit S. Kanodia Nil
Mr. Mahesh S. Gupta Nil
Mr. Manoj Maheshwari Nil
Mr. Narendra Ambwani Nil
Ms. Zahabiya Khorakiwala Nil
Mr. Bhaskar Iyer Nil
Mr. Sachin Nandgaonkar Nil
Mr. Rajat Bhargava Nil
Mr. Yugal Sikri 15%
Mr. Mahesh Narayanaswamy 10%
Mr. Vishal Shah Nil
Mr. Rajesh Shirambekar 8%
3 The percentage increase in the median remuneration of employees in the financial year; 8.9%*
4 The number of permanent employees on the rolls of Company; 1107 employees as on March 312021
5 Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration; • Average Salary increase of non-managerial employees is around 8.4%.
• Average Salary increase of managerial employees is around Q
• There are no exceptional circumstances in increase of managerial remuneration.
6 Affirmation that the remuneration is as per the remuneration policy of the Company. Remuneration paid during the year ended March 312021 is as per the Remuneration Policy of the Company.

Notes:

*The percentage increase in the median remuneration of employee has been calculatedafter excluding Managing Director's remuneration.

28. WHISTLE BLOWER POLICY

The Audit Committee's terms of reference inter-alia include vigil mechanism which alsoincorporates a Whistle Blower Policy in terms of Section 177(10) of the Companies Act2013 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. The Company has adopted Whistle Blower Policy. The Whistle Blowermechanism provides for Directors and employees to report concerns about unethicalbehavior actual or suspected fraud or violation of Company's Code of Governance andEthics. The Whistle Blower Policy is uploaded on the Company's website www.rpglifesciences.com.

29. FAMILIARISATION PROGRAMMES FOR INDEPENDENT DIRECTORS

The Company conducts familiarization programme for Independent Directors and thedetails are uploaded on the website of the Company on the below mentioned link:https://rpglifesciences.com/website/code policies forms.php

30. FORMAL ANNUAL EVALUATION OF BOARD AND ITS COMMITTEES

Pursuant to provisions of Section 134 of the Companies Act 2013 and the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Nomination andRemuneration Committee laid down a criteria for evaluating Board effectiveness byassessing performance of the Board as a whole performance of individual Director andCommittees of the Board namely Audit Committee Nomination and Remuneration CommitteeStakeholders Relationship Committee Corporate Social Responsibility Committee and RiskManagement Committee. The Board approved the criteria laid down by Nomination andRemuneration Committee for evaluating Board effectiveness and engaged a third party agencyto conduct Board effectiveness survey during the year under review. The Board has carriedout annual performance evaluation of its own performance the Directors individually andof its Committees as mandated under the Act and Listing Regulations.

31. AUDITORS

Statutory Auditors:

The members of the Company at its Annual General Meeting held on July 24 2017appointed M/s. BSR & Co. LLP Chartered Accountants (Firm RegistrationNo.101248W/W-100022) as Statutory Auditors of the Company for a period of 5 (five)consecutive years from the conclusion of the tenth AGM till the conclusion of thefifteenth AGM. The auditors confirmed that their appointment shall be in compliance withSections 139 and 141 of the Companies Act 2013.

Internal Auditors:

M/s. Deloitte Touche Tohmatsu India LLP are the Internal Auditors of the Company.

Secretarial Auditors:

M/s. Parikh Parekh & Associates Practicing Company Secretaries are theSecretarial Auditors of the Company. The Secretarial Audit Report required pursuant tosubsection (3) of Section 134 and Section 204 (1) of the Companies Act 2013 is given in AnnexureD to this report.

Cost Auditors:

The Company maintains cost records as specified by the Central Government undersub-section (1) of Section 148 of the Companies Act 2013.

Pursuant to the provisions of Section 148(3) of the Companies Act 2013 M/s. KiritMehta & Co. (Registration No. 000353) Cost Accountants was appointed to conductaudit of cost records of Pharmaceutical Activities for the year ended March 312021. CostAudit reports would be submitted to the Central Government within the prescribed time.Pursuant to Rule 6 of the Companies (Cost Records and Audit) Rules 2014 cost auditreports for Pharmaceutical Activities for the year ended March 312020 was filed with theCentral Government on August 212020.

32. EMPLOYEES STOCK OPTION PLAN

The Company has no employee stock option scheme.

33. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The particulars of employees in compliance with the provisions of Section 134 (3) (q)read with Rule 5 (2) and 5 (3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 will be provided to the shareholder upon request. Thesaid information is open for inspection and any Member interested in obtaining a copy ofthe same may write to the Company.

34. MANAGEMENT DISCUSSION AND ANALYSIS BUSINESS RESPONSIBILITY REPORT AND CORPORATEGOVERNANCE REPORT

In compliance with Regulation 34 read with Schedule V of SEBI (Listing Obligations& Disclosure Requirements) Regulations 2015 Management Discussion and AnalysisBusiness Responsibility Report and Corporate Governance Report as approved by the Boardof Directors together with a certificate from a Practicing Company Secretary confirmingthe compliance with the requirements of Corporate Governance policies are set out in theAnnexures forming part of this annual report.

35. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT THE WORK PLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013

The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Women at the Workplace (Prevention Prohibition and Redressal)Act 2013.

Internal Complaints Committee has been set up to redress complaints.

During the financial year 2020-21 the Company has not received any complaints ofsexual harassment.

36. MATERIAL TRANSACTIONS WITH RELATED PARTIES

The Company has not entered into any transaction with related parties during the yearunder review which requires reporting in Form AOC-2 in terms of Companies Act 2013 readwith Companies (Accounts) Rules 2014.

37. SAFETY

The Company conducts regularly Safety audit and Environment audit through competentauthorities for its manufacturing facilities located at Navi Mumbai and Ankleshwar. TheCompany also organises various safety awareness programmes to impart safety training toits employees.

38. AWARDS

The Company has been recognised by ‘Great Place to Work' Institute and is ranked85 amongst India's 100 Best Companies to Work for the year 2020 (participation by morethan 1000 companies) and one of India's Best Workplaces in Biotechnology &Pharmaceuticals segment through the study conducted by ‘Great Place to Work'Institute which validates the progressive culture of the organization.

39. APPRECIATION

Your Directors record their appreciation of the valuable services rendered by allemployees of the Company their gratitude to the banks for their assistance and to theCompany's shareholders customers and suppliers for their continued support.

For and on behalf of the Board of Directors
Place: Mumbai Harsh V. Goenka
Date: April 30 2021 Chairman

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