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Sequent Scientific Ltd.

BSE: 512529 Sector: Health care
NSE: SEQUENT ISIN Code: INE807F01027
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OPEN 105.35
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VOLUME 157599
52-Week high 226.50
52-Week low 81.40
P/E 155.38
Mkt Cap.(Rs cr) 2,519
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 105.35
CLOSE 106.70
VOLUME 157599
52-Week high 226.50
52-Week low 81.40
P/E 155.38
Mkt Cap.(Rs cr) 2,519
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Sequent Scientific Ltd. (SEQUENT) - Director Report

Company director report

Dear Members

The Board of Directors present the Company's Thirty-sixth Annual Report along with theCompany's Audited Financial Statements for the Financial Year ended March 31 2021.

1. Financial Summary

The summarised financial performance (Standalone and Consolidated) of your Company forFinancial year 2020-21 and financial year 2019-20 is given below:

(Rs. in Millions)
Dnrtir'i ilrire

Stundulone

Consollduted

rU 1 LIcUIUI S 2020-21 2019-20 2020-21 2019-20
Revenue from operations 2654.57 2273.33 13616.15 11792.44
Other Income 199.66 145.61 83.63 100.89
Profit before interest depreciation and tax 552.56 367.98 2204.33 1804.11
Less: Finance costs 26.8 50.35 243.83 357.14
Less: Depreciation and amortisation expenses 91.28 89.50 505.98 506.22
Profit before tax (before exceptional items and tax) 434.48 228.13 1454.52 940.75
Exceptional items 25.61 - 88.23 -
Profit before tax (after exceptional items and tax) 408.87 228.13 1366.29 940.75
Provision for - Current Tax 73.05 31.83 320.99 227.44
- Deferred tax 26.89 (17.11) (28.6) (104.83)
- Current tax of prior period reversed (12.20) - 29.38 (2.32)
Profit after tax 321.13 213.41 1044.52 820.46
Net Profit for the year attributable to:
Owners of the Company 321.13 213.41 954.42 699.05
Non-controlling interest - - 90.10 121.41

2. COVID-19

Response

The COVID-19 pandemic has transformed the concept of Business Responsibility acrossindustries making the FY 2020-21 a true test in an unusual way. The situation remainschallenging having impacted many lives and continues to evolve. Conducting businessoperations with the utmost safety has become critical despite the uncertain andchallenging environment we face. This becomes significant on the account of the fact thatwe are part of the essential services sector.

The recent turn of events has increased our responsibilities and expectations towardall stakeholders. We have demonstrated our commitment by stepping up early enough toachieve business growth in a challenging environment. Simultaneously we have provided aprotected working environment for all and caring for our employees' well-being.

The Company's initiatives for its employees are documented in BRR which is included inthis Annual Report.

3. Business Performance Review

Financial year 2020-21 (FY20-21) was very significant year where we saw a seamlesstransition to the Carlyle group as the new promoter and broad-basing of the board with theaddition of global industry stalwarts. The year was full of uncertainty led by COVID-19resulting in prolonged lockdowns around the world which impacted the normal businessactivity. Despite these challenges we improved our margins significantly and ourinvestments have also played out. We have significantly ramped up growth during thefinancial year and have delivered a robust 15.5% growth in top-line.

During FY 2020-21 on consolidated basis your Company's revenue stood at '13616.15million as against '11792.44 million in FY 2019-20. The Company posted an EBITDA of'2162.86 million in FY 2020-21 as against '1758.10 million in FY 2019-20. EBITDA marginduring the year stood at 15.88% up by 97 bps over previous year.

On a standalone basis your Company's revenues for FY 2020-21 stood at '2654.57million as against '2273.33 million in FY 2019-20. The Company posted an EBITDA of'353.19 million in the year 2020-21 as against '222.37 million in 2019-20. The Companymade a net profit of '321.13 million.

Management's Discussion and Analysis Report which forms part of the Board's Reportdetails the Company's operational and financial performance for the year.

Business Overview:

Formulations

• Launched 3 new products in the European market

• Submitted first filings in the US Canada and Australia from India R&D

• Commercialised a multi-year distribution agreement with Zoetis for theirruminant portfolio in the domestic market

• Expanded operations in India to additional states of Kerala & Karnataka

API

• Commercialised 3 new APIs submitted 4 VMF filings and received CEP approvalfor 1 product

• Concluded the first phase of Vizag expansion project

• Completed de-bottlenecking of Mahad plant for enhanced production capacities

• Signed a long-term arrangement with a major animal health company for CDMO andproduct supplies

4. Dividend

Based on Company's performance the Board of Directors has recommended a dividend of'0.50/- per equity share (i.e. 25%) of face value of '2/- each for the Financial yearended March 31 2021.

Dividend Payout has been determined in accordance with Dividend Distribution Policywhich is available on the Company's website and can be accessed at https://sequent.in/pdf/policies/SequentDividend Distribution Policy.pdf

Record date for dividend is Friday September 10 2021. Dividend if approved by theShareholders will be paid within 30 days from date of approval.

5. Transfer to Reserves

During the year under review the Company has not made any transfer to the Reserves.

6. Share Capital

As on March 31 2021 the Authorised Share Capital of the Company is '800000000/-divided into 400000000 equity shares of '2/- each.

During the year under review the Authorised Share Capital of the Company was increasedfrom '500000000/- divided into 250000000 equity shares of '2/- each to '800000000/-divided into 400000000 equity shares of '2/- each vide Ordinary Resolution passed by theMembers of the Company through Postal Ballot on January 17 2021.

The issued subscribed and paid-up equity capital of the Company as on March 31 2021is '496741990/- divided into 248370995 equity shares of '2/- each. The Company has notissued any equity shares during the year. Further your Company has not allotted anyequity shares after the balance sheet date i.e. March 31 2021.

7. Corporate Actions

Acquisition of control over the Company by CA Harbor Investments (A Carlyle GroupCompany)

On May 08 2020 certain promoters of the Company (together the "Sellers" or"Original Promoters") entered into a Share Purchase Agreement with CA HarborInvestments ("Carlyle") (as subsequently amended and which agreement read withsuch amendments are collectively referred to as "SPA") under which Carlyleagreed to acquire (a) control over SeQuent Scientific Limited ("Company") fromthe Sellers and (b) equity shares amounting to 53.02% (fifty three point zero twopercent) of the paid-up equity share capital of the Company held by the Sellers inaccordance with the terms and conditions thereof. Pursuant to the SPA Carlyle made apublic announcement for open offer ("Open Offer") under Regulations 3(1) and 4of the Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011 ("SAST Regulations"). The said open offer opened onAugust 25 2020 and closed on September 07 2020.

On August 17 2020 Carlyle and the Sellers consummated the first tranche under the SPApursuant to which Carlyle acquired equity shares from the Sellers amounting to 25.20%(twenty-five point two zero percent) of the paid-up equity share capital of the Companyalong with control over the Company and became a 'Promoter' of the Company. On August 172020 the Company notified the Stock Exchanges that Carlyle has acquired control over theCompany and has become a Promoter of the Company w.e.f. August 17 2020. Further onSeptember 08 2020 Carlyle acquired equity shares amounting to 27.82% (twenty-seven-pointeight two percent) from the Sellers.

Carlyle also acquired 4467 equity shares through the Open Offer which concluded onSeptember 07 2020. Carlyle currently holds 131680103 equity shares aggregating to53.02% of the paid-up equity share capital in the Company.

Consequent to the change in Promoters the Original Promoters have requested forre-classification of category from 'Promoter' to 'Public'. The said request was approvedby the Board on November 06 2020 and the Shareholders through Postal Ballot on March 142021. The Company has filed requisite application for re-classification of Promoters withthe Stock Exchanges.

8. Consolidated Financial Statements

In accordance with the provisions of the Companies Act 2013 (hereinafter referred toas the "Act") read with the Companies (Accounts) Rules 2014 applicableAccounting Standards prescribed by the Institute of Chartered Accountants of India and theprovisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 (hereinafter referred to as the "Listing Regulations") the ConsolidatedAudited Financial Statements forms part of the Annual Report.

9. Subsidiaries Joint Ventures and Associate Companies

As on March 31 2021 your Company has 22 (Twenty-two) Subsidiaries out of which 12are Wholly Owned Subsidiaries and your Company does not have any Joint Ventures/ AssociateCompanies.

Following are the changes in subsidiaries during the financial year ended March 312021:

Name of the Subsidiary Changes during the year
Alivira Animal Health UK Limited Incorporated on April 29 2020
Alivira Animal Health Australia Pty Limited Struck-off w.e.f. May 13 2020

10. Consolidation of Subsidiaries

During the year under review the Company has consolidated its shareholding in thefollowing subsidiaries by making them wholly owned subsidiaries of the Company:

a) In October 2020 Alivira Animal Health Limited Ireland Wholly Owned Subsidiary ofthe Company acquired 15% stake in Fendigo BV Netherlands (Fendigo Netherlands) for aconsideration of Euro 191947.50 to make Fendigo Netherlands a wholly owned subsidiary ofthe Company.

b) In November 2020 Alivira Animal Health Limited Ireland Wholly Owned Subsidiary ofthe Company acquired 40% stake in Provet Veteriner Urunleri San. Ve Tic. A. S. Turkey(Provet) for a consideration of USD 18.04 Million to make Provet a wholly owned subsidiaryof the Company.

c) In March 2021 Alivira Animal Health Limited Ireland Wholly Owned Subsidiary ofthe Company acquired 7.5% stake in Fendigo SA Belgium (Fendigo Belgium) for aconsideration of Euro 551075 to make Fendigo Belgium a wholly owned subsidiary of theCompany.

11. Accounts of Subsidiaries

In accordance with Section 129(3) of the Companies Act 2013 ('the Act') read withrules made thereunder a statement providing details of performance and salient featuresof the Financial Statements of Subsidiaries is given in Form AOC-1 attached as an "Annexure1" forming part of this Report.

Further in accordance with the provisions of Section 136(1) of the Act the AnnualReport of the Company containing therein Audited Standalone and the ConsolidatedFinancial Statements of the Company and the Audited Financial Statements of each of theSubsidiary Companies have been placed on the website of the Company at www.sequent.in.

The Company has formulated a Policy for determining Material Subsidiaries. The Policyis available on the Company's website and can be accessed athttps://www.sequent.in/pdf/policies/Sequent Policy%20on%20Determination%20of%20Material%20Subsidiaries 2019.pdf

12. Annual Return

The Annual Return of the Company as on March 31 2021 is available on the Company'swebsite and can be accessed at https://sequent.in/pdf/annual-report/MGT-7%202020-2021.pdf.

13. Credit Rating

As on the date of this Report the credit rating assigned by India Ratings &Research (Fitch Group) was "IND A+" with outlook being "Positive"(upgraded from "IND A" with outlook being "Positive") for long-termbank facilities of the Company. The said ratings signify a high degree of safety regardingthe timely servicing of financial obligations.

Further India Ratings & Research (Fitch Group) assigned the rating as "INDA1+" (upgraded from "IND A1") for the Company's short-term bank facilitieswhich signifies strong safety regarding timely payment of financial obligations and carrythe lowest credit risk.

14. Public Deposit

During the year under review your Company has not accepted or renewed any publicdeposits in terms of Sections 73 and 74 of the Act read with rules framed thereunder.

15. Directors & Key Managerial Personnel

As on March 31 2021 the Board comprises of 9 (Nine) Directors out of which 2 (Two)Directors are Executive 3 (Three) Directors are Non-Executive Independent including oneWoman Director and 4 (Four) Directors are Non-Executive Non-Independent. All Directors arecompetent and experienced personalities in their respective fields. The Board is chairedby Dr. Kamal Sharma Independent Director of the Company.

During the year under review CA Harbor Investments a Carlyle Group Company becamePromoter of the Company by acquiring 53.02% from the Original Promoters led by Mr. ArunKumar as detailed under head 'Corporate Actions' in Point No. 7 of this Report.

Consequently the Board underwent the following changes:

Cessation of Directorships

• Mr. Narendra Mairpady (DIN: 00536905) ceased to be a Director of the Companyw.e.f. July 31 2020 upon completion of his term as an Independent Director of theCompany.

• Mr. KEC Rajakumar (DIN: 00044539) and Dr. S. Devendra (DIN: 00050440) resignedfrom the Directorship of the Company w.e.f. August 17 2020 and Dr. Gopakumar Nair (DIN:00092637) resigned from the Directorship of the Company w.e.f. August 25 2020.

We place on record our appreciation for the immense contribution and valuable guidancegiven by Mr. Narendra Mairpady Mr. KEC Rajakumar Dr. S. Devendra and Dr. Gopakumar Nairduring their association as Board Members of the Company.

Appointment of Directors

• Mr. Neeraj Bharadwaj (DIN: 01314963) and Mr. Rahul Mukim (DIN: 06996915) whowere appointed as Additional Directors (Non-Executive Non-Independent) of the Companyw.e.f. August 17 2020 automatically ceased to be Directors on conclusion of the 35th AGMheld on August 25 2020. They were re-appointed as Additional Directors (Non-ExecutiveNon-Independent) by the Board of Directors w.e.f. August 25 2020.

• Dr. Kamal Sharma (DIN: 00209430) and Mr. Milind Sarwate (DIN: 00109854) wereappointed as Additional Directors (Non-Executive Independent) by the Board of Directorsw.e.f. August 25 2020.

• Mr. Gregory Andrews (DIN: 08904518) was appointed as an Additional Director(Non-Executive Non-Independent) by the Board of Directors w.e.f. November 06 2020.

• Dr. Fabian Kausche (DIN: 08976500) was appointed as an Additional Director(Non-Executive Non-Independent) by the Board of Directors w.e.f. December 14 2020.

All the aforesaid appointments of Directors were duly approved by the Members of theCompany vide Ordinary Resolutions passed through Postal Ballot on January 17 2021.

The Company has received declarations from all the Independent Directors of the Companyconfirming that:

a) they meet the criteria of independence prescribed under the Act and the ListingRegulations; and

b) they have registered their names in the Independent Directors' Databank.

As on March 31 2021 Mr. Manish Gupta Managing Director Mr. Sharat Narasapur JointManaging Director

Mr. Tushar Mistry Chief Financial Officer and Mr. Krunal Shah Company Secretary arethe Key Managerial Personnel of the Company in terms of Section 203 of the Act.

In accordance with the provisions of the Act and the Articles of Association of theCompany Mr. Manish Gupta Managing Director and Mr. Sharat Narasapur Joint ManagingDirector retires by rotation at the ensuing AGM.

The Board of Directors has recommended their re-appointment.

16. Board Evaluation

Pursuant to provisions of Schedule IV of the Act and rules made thereunder andprovisions of Listing Regulations the Company has formulated a policy called 'SeQuentBoard Performance Evaluation Policy' (the 'Policy') for performance evaluation of theBoard its Committees Chairperson of the Board and other individual Directors (includingIndependent Directors). Based on the criteria mentioned in the Policy your Company hasprepared a questionnaire to carry out the performance evaluation of the Board itsCommittees Chairperson of the Board and other individual Directors (includingIndependent Directors) on an annual basis. The questionnaire is structured to embedvarious parameters based on which the performance of the Board can be evaluated. Based onthese criteria's the Nomination and Remuneration Committee (hereinafter referred to as"NRC") and the Board carried out annual performance evaluation of the Board itsCommittees Chairperson of the Board and Individual Directors (including IndependentDirectors). The Independent Directors carried out annual performance evaluation of theChairperson of the Board the Non-independent Directors and the Board as a whole andassessed the quality quantity and timeliness of flow of information between themanagement of the Company and the Board of Directors that is necessary for the Board ofDirectors to effectively and reasonably perform their duties.

17. Meetings of the Board

During the year under review 9 (Nine) Board Meetings were held on May 08 2020 May12 2020 July 30 2020 August 12 2020 August 17 2020 August 25 2020 November 062020 December 14 2020 and February 03 2021.

The maximum interval between any two consecutive Board Meetings did not exceed 120days. The particulars of the meetings held and attended by each Director are detailed inthe Corporate Governance Report.

I n case of special and urgent business needs the Board's approval was taken bypassing resolutions through circulation as permitted by law which is confirmed in thesubsequent Board Meeting.

18. Company's Policy on Appointment and Remuneration of Directors Key ManagerialPersonnel and Senior Management Personnel

Pursuant to Section 178 of the Act NRC has formulated "SeQuent's Policy onDirector's Appointment and Remuneration" which deals inter-alia with appointment andremuneration of Directors Key Managerial Personnel Senior Management and other employeesof the Company. The said policy is uploaded on the website of the Company and can beaccessed at http://www.sequent.in/pdf/policies/Nomination-Remuneration-Policy 2019.pdf

The salient features of the policy are as under:

• NRC to identify persons who are qualified to become Directors Key ManagerialPersonnel and Senior Management Personnel of the Company;

• NRC to guide Board in relation to appointment retention and removal ofDirectors Key Managerial Personnel and Senior Management Personnel of the Company;

• NRC to evaluate the performance of the Members of the Board includingIndependent Directors to provide necessary information/ report to the Board for furtherevaluation;

• NRC to recommend to the Board on remuneration payable to the Directors KeyManagerial Personnel and Senior Management Personnel;

• To retain motivate and promote talent and to ensure long term sustainability oftalented managerial person and create competitive advantage;

• To devise a policy on Board diversity;

• To develop a succession plan for the Directors Key Managerial Personnel andSenior Management Personnel and to regularly review the plan.

19. Committees of the Board

The Board of Directors have the following Committees:

a. Audit Committee

b. Nomination and Remuneration Committee

c. Stakeholders Relationship Committee

d. Corporate Social Responsibility Committee

e. Risk Management Committee

f. Ethics and Governance Committee

g. Board and General Committee

The Risk Management Committee was constituted by the Company on July 30 2020 in termsof Regulation 21 of the Listing Regulations and was re-constituted by the Company onAugust 25 2020.

The Ethics and Governance Committee was voluntarily constituted by the Company onFebruary 03 2021.

The details of the Committees along with their composition number and dates of theMeetings and attendance at the Meetings are provided in the Corporate Governance Report.

20. Auditors and Auditors Report

Statutory Auditors

In accordance with the provisions of Section 139 of the Act at the Annual GeneralMeeting held on August 29 2019 M/s. S R B C & CO LLP Chartered Accountants (FirmRegistration No. 324982E/ E300003) were appointed as Statutory Auditors of the Company fora period of 5 years commencing from the conclusion of 34th Annual General Meeting (AGM)till the conclusion of 39th AGM.

The Independent Auditors' Report on Standalone and Consolidated Financial Statementsfor the year ended March 31 2021 forms integral part of this Annual Report. Except as setforth below there are no qualifications/ reservations/adverse remarks/disclaimer/emphasisof matter in their reports referred above:

(i) Emphasis of matter in the Independent Auditor's Report on Consolidated FinancialStatements with respect to restated goodwill and foreign currency translation reserve asof April 01 2020 and March 31 2021 and Other Comprehensive Income for the year endedMarch 31 2021 in Consolidated Financial Statements as elaborated in Note No. 52 to theConsolidated Financial Statements;

(ii) Qualifications in the Auditor's Report on Internal Financial Controls on FinancialReporting forming part of their report on Standalone Financial Statements and in theIndependent Auditor's Report on Internal Financial Controls on Financial Reporting formingpart of their report on Consolidated Financial Statements with respect to above-referredmatters concerning revenue recognition.

(iii) The Statutory Auditors have included remarks in their report under the Companies(Auditors report) Order 2016 with respect to the above-referred matter concerning revenuerecognition which was detected by the management. The Statutory Auditors of the Companyhave not reported any fraud under Section 143(12) of the Act.

The management's response on the above-mentioned Emphasis of Matter and Qualificationsconcerning revenue recognition is given below:

Revenue Recognition: The matters in question were detected by the management andsubjected to a detailed review including examination by an external independent agency.The impact of acceleration of revenue recognition is detailed in the notes to accountsreferred above. The Company's management considers this issue to have arisen on account oflack of training for personnel and control gaps and has corrected the processes leading tosuch non-adherence related to revenue recognition and will continue to strengthen themfurther and hence does not expect any continuing impact.

Secretarial Auditors

Pursuant to provisions of Section 204 of the Act read with rules therunder andRegulation 24A of the Listing Regulations the Board has appointed M/s. Nilesh Shah &Associates Practicing Company Secretaries (Certificate No. 2631) to conduct secretarialaudit for the Company and its unlisted material subsidiary Alivira Animal Health Limited(Alivira).

The Secretarial Audit Report in Form No. MR-3 of the Company and Alivira are attachedas "Annexure 2A" and "Annexure 2B" respectively to this Board'sreport.

The Secretarial Audit report of the Company and Alivira does not contain anyqualification reservation or adverse remark.

Cost Auditors

In accordance with the provisions of Section 148(1) of the Act read with the Companies(Cost Records and Audit) Rules 2014 the Company has maintained cost records.

Pursuant to Section 148(3) of the Act read with Companies (Cost Records and Audit)Rules 2014 M/s. Kirit Mehta & Co Practicing Cost Accountants were appointed as theCost Auditors of the Company for the financial year 2020-21 for conducting the audit ofcost records of products and services of the Company. The Cost Audit Report for thefinancial year ended March 31 2021 would be filed within the due date prescribed by law.

The remuneration proposed to be paid to the Cost Auditors for the financial year2021-22 forms part of the Notice of the ensuing AGM for approval of the Shareholders.

21. Segment

The Company operates only in a single segment i.e. Pharmaceuticals Segment.

22. Particulars of Employees and Related Disclosures

The statement containing particulars of employees as required to be disclosed underSection 197(12) of the Act read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is attached as an ‘Annexure 3' formingpart of this report except the report as per Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014. In terms of Section 136 of the Act thesaid report is open for inspection at the Registered Office of the Company during workinghours and any Member interested in obtaining a copy of the same may write to the CompanySecretary at investorrelations@sequent.in.

23. Vigil Mechanism/Whistle Blower Policy

Pursuant to provisions of Section 177(9) of the Act and the Listing Regulations theCompany has established Vigil Mechanism and a Whistle Blower Policy for the directors andemployees to report concerns about unethical behaviour actual or suspected fraud orviolation of Company's Code of Conduct. It also provides adequate safeguards against thevictimisation of employees who avail this mechanism and allows direct access to theChairperson of the Audit Committee in exceptional cases. The Whistle-blower Policy ishosted on the Company's website and can be accessed at http://www.sequent.in/pdf/policies/SequentWhistle%20Blower%20Policy 2019.pdf.

24. Particulars of Loans Given Investments Made Guarantees Given and SecuritiesProvided

Particulars of loans given investments made guarantees given and securities providedalong with the purpose for which the loan or guarantee or security is proposed to beutilised by the recipient are provided in Note No. 5

6 12 16 and 45 to the Standalone Financial Statements in the Annual Report.

25. Related Party Transactions

All contracts/arrangements/transactions entered by the Company during the financialyear with related parties were in its ordinary course of business and on an arm's lengthbasis.

The particulars of material contracts/arrangements/transactions entered with relatedparties as required to be reported in Form No. AOC-2 in terms of Section 134(3)(h) readwith Section 188 of the Act and Rule 8(2) of Companies (Accounts) Rules 2014 is attachedas an ‘Annexure 4' forming part of this report.

The Policy on Materiality of Related Party Transactions and on dealing with RelatedParty Transactions as approved by the Board is available on the Company's website and canbe accessed at https://www.sequent. in/pdf/policies/SequentPolicy%20on%20RPT%20&%20Material%20Subsidiary 2019.pdf

Further there were no materially significant related party transactions which couldhave potential conflict with the interests of the Company at large.

Members may refer to Note No. 45 to the Standalone Financial Statements which sets outrelated party disclosures pursuant to Ind AS.

26. Corporate Social Responsibility

The Corporate Social Responsibility Committee of the Company was re-constituted by theBoard of Directors on August 25 2020 comprising of Dr. Kamal Sharma IndependentDirector Mr. Rahul Mukim Non-Executive Director and Mr. Sharat Narasapur Joint ManagingDirector as its Members. Your Company in the Meeting of Corporate Social Responsibility('CSR') Committee held on March 12 2021 has formulated a revised policy on CSR and thesame can be accessed at https://www.sequent.in/pdf/policies/CSR%20Policy.pdf.

The Annual Report on CSR activities as required under Companies (Corporate SocialResponsibility Policy) Rules

2014 is attached as an ‘Annexure 5' forming part of this report.

27. Internal Financial Controls

Reference is drawn to Qualification in the Independent Auditor's Report on InternalFinancial Controls on Financial Reporting forming part of their report on StandaloneFinancial Statements and in the Independent Auditor's Report on Internal FinancialControls on Financial Reporting forming part of their report on Consolidated FinancialStatements with respect to matters concerning revenue recognition as set forth under"Auditors and Auditors' report" above.

Subject to these observations: (i) your Company believes that it has in place adequateinternal financial controls with reference to financial statements; (ii) During the yearunder review such controls were tested and no reportable material weakness in the designor operations were observed; and (iii) internal financial controls have been designed toprovide reasonable assurance with regards to the recording and providing reliablefinancial and operational information complying with applicable Accounting Standards.

Your Company has adopted accounting policies which are in line with the IndianAccounting Standards notified under Section 133 of the Act read together with theCompanies (Indian Accounting Standards) Rules 2015.

28. Directors' Responsibility Statement

Reference is drawn to matters concerning non-adherence with the Company's policy andpractices leading to accelerated revenue recognition during the financial year aselaborated in Note No. 54 to the Standalone Financial Statements and Note No. 53 to theConsolidated Financial Statements and the consequent:

(i) qualifications (in the auditors reports on internal financial controls on financialreporting; and

(ii) remarks in the auditor's report under the Companies (Auditors report) Order 2016;as detailed under the head "Auditors and Auditors' report" in this Board'sReport. Subject to the matters stated above pursuant to the provisions of Section 134(3)(c) and 134(5) of the Act your Directors to the best of their knowledge and beliefand according to the information and explanations obtained by them state and confirmthat:

a) in the preparation of the annual accounts for the year ended March 31 2021 theapplicable accounting standards have been followed along with proper explanation relatingto material departures if any;

b) such accounting policies as mentioned in the notes to the Financial Statements forthe year ended March 31 2021 have been selected and applied consistently and judgmentsand estimates have been made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as on March 31 2021 and of the profit of theCompany for the year ended on that date;

c) proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;

d) the annual financial statements for the year ended March 31 2021 have been preparedon a going concern basis;

e) i nternal financial controls to be followed by the Company have been laid down andthat the said financial controls were adequate and were operating effectively;

f) proper systems to ensure compliance with the provisions of all applicable laws havebeen devised and such systems were adequate and operating effectively.

29. Conservation of Energy Technology Absorption Foreign Exchange Earnings/ Outgo andExpenditure on Research & Development

The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under Section 134(3)(m) of theAct read with Rule 8(3) of the Companies (Accounts) Rules 2014 is attached as an ‘Annexure6' forming part of this report.

30. Policy on Prevention Prohibition and Redressal of Sexual Harassment of Women atWorkplace

In accordance with the requirements of the Sexual Harassment of Women at Workplace(Prevention Prohibition & Redressal) Act 2013 ("POSH Act") and Rules madethereunder the Company has in place a policy which mandates no tolerance against anyconduct amounting to sexual harassment of women at workplace. The Company has constitutedInternal Complaints Committee(s) (ICCs) to redress and resolve any complaints arisingunder the POSH Act. Training/awareness programs are conducted throughout the year tocreate sensitivity towards ensuring respectable workplace.

During the year under review no complaints pertaining to sexual harassment werereceived and no complaints were pending as on March 31 2021.

31. Corporate Governance Report

As per Regulation 34(3) read with Schedule V of the Listing Regulations your Companyhas complied with the requirements of Corporate Governance. The report on CorporateGovernance along with a certificate issued by M/s. Nilesh Shah & AssociatesPracticing Company Secretaries and Secretarial Auditors of the Company confirmingcompliance of Corporate Governance for the year ended March 31 2021 is providedseparately and forms integral part of this Annual Report.

32. Business Responsibility Report

As stipulated under the Listing Regulations the Business Responsibility Report (BRR)describing the initiatives taken by the Company from an environmental social andgovernance perspective is provided separately and forms integral part of this AnnualReport. BRR is also available on the Company's website and can be accessed at www.sequent.in.

33. Management Discussion and Analysis

Pursuant to Regulation 34 of the Listing Regulations Management Discussion andAnalysis containing Information inter-alia on industry trends your Company's performancefuture outlook opportunities and threats for the year ended March 31 2021 is providedseparately and forms integral part of this Annual Report.

34. Risk Management

Your Company has a risk management framework for identifying and managing risks.Additional details are provided in the 'Management Discussion and Analysis' Reportprovided in a separate section forming integral part of this Annual Report.

35. Secretarial Standards

During the year under review your Company has followed the applicable SecretarialStandards i.e. SS-1 and SS-2 relating to 'Meetings of Board of Directors' and 'GeneralMeetings' respectively.

36. Material Changes and Commitments Affecting the Financial Position of the Company

There are no material changes and commitments affecting the financial position of yourCompany between the end of the financial year 2020-21 and the date of this report.

37. Significant and Material Orders Passed by the Regulators or Courts or Tribunals

There are no significant and material orders passed by the Regulators Courts orTribunals during the year under review which would impact the going concern status of yourCompany and its future operations.

There is no proceeding pending under the Insolvency and Bankruptcy Code 2016 and therewas no instance of onetime settlement with any Bank or Financial Institution.

38. Employee Stock Option Scheme

Your Company currently has 2 (Two) ESOP Schemes as under:

a) SeQuent Scientific Employee Stock Option Plan 2010

An Employee Stock Option Plan titled "SeQuent Scientific Employee Stock OptionPlan 2010" (the "SeQuent ESOP 2010") in accordance with the provisions ofSecurities and Exchange Board of India (Share Based Employee Benefits) Regulations 2014(the "SEBI ESOP Regulations") as amended from time to time pursuant to aSpecial Resolution passed by the Shareholders of the Company on March 25 2008 and furthermodified by the Members on May 24 2010 August 02 2014 and September 24 2015. The totalnumber of options available under the Scheme is 7% of the total paid up capital of theCompany. This ESOP Scheme is managed through a Trust.

During the year under review NRC in its meeting held on August 17 2020 has approvedgrant of 111600 options under the ESOP Scheme at an exercise price of '40 per option tocertain eligible employees of the Company. The options allotted under this plan isconvertible into equal number of equity shares after a vesting period of 1 year from thedate of grant of options.

Further in terms of the ESOP Scheme 2313750 outstanding unvested options got vestedon September 12 2020 consequent to change in control triggered by the acquisition ofmajority stake by the Carlyle Group in the Company on August 17 2020.

The Company does not propose to grant further stock options under this Scheme.

b) SeQuent Scientific Limited Employees Stock Option Plan 2020

During the year the Board of Directors ("the Board") of the Company at itsmeeting held on December 14 2020 based on the recommendation of the NRC approvedintroduction of Sequent Scientific Limited Employees Stock Option Plan 2020 ("SeQuentESOP 2020") under which the maximum number of equity shares of the

Company that could be created offered issued and allotted should not exceed18500000 (One Crore Eighty-Five lakhs) options exercisable into equivalent number ofEquity Shares of '2/- each fully paid up of the Company.

The synopsis of the Scheme is as under:

i) Overall limit of 18500000 Options to be split into 3 types of options:

a) 10000000 (One Crore) Class A Options

b) 6000000 (Sixty Lakhs) Class B Options

c) 2500000 (Twenty-Five Lakhs) Class C Options

ii) The Scheme is extended to Permanent employees of the Company whether working inIndia or outside India and/or to the directors of the Company whether whole-time or notbut excluding independent director(s) and to such other persons as may be decided by theBoard and/or permitted under SEBI ESOP Regulations (hereinafter referred to as 'EligibleEmployees') but does not include an employee who is a promoter or a person belonging tothe promoter group and the director(s) who either himself or through his relative orthrough any body corporate directly or indirectly holds more than 10% of the outstandingequity shares of the Company.

iii) Permanent employee(s) and Directors of any existing and future subsidiarycompany(ies) of the Company whether in or outside India as may be permissible under theSEBI ESOP Regulations from time to time

iv) The first lot of Grants was proposed to be issued at an Exercise Price of '86/- peroption by NRC. It will decide on the exercise price for future grants.

v) The Company sought and received Shareholder's approval for the said Scheme throughPostal Ballot on January 17 2021.

vi) Under the Scheme 7350000 Class A Options were granted to eligible employees onMarch 01 2021 by the Company at an exercise price of '86/- per option. None of theoptions granted are vested or exercised as on date.

The above ESOP schemes are in compliance with the SEBI ESOP Guidelines. A certificatefrom M/s. S R B C & CO LLP Chartered Accountants the Statutory Auditors of theCompany with respect to the implementation of the Company's Employee Stock OptionScheme(s) would be placed at the ensuing AGM for inspection by the Members. The saidcertificate is available for inspection by the Members in electronic mode.

The details as required to be disclosed under Section 62 of the Act read with Rule 12of Companies (Share Capital and Debentures) Rules 2014 and SEBI (Share Based EmployeeBenefits) Regulations 2014 is attached as an ‘Annexure 7' forming part ofthis report.

39. Transfer of Equity Shares of the Company to the Investor Education and ProtectionFund (IEPF) Account

During the year under review there were no amounts which were required to betransferred to the IEPF account by the Company pursuant to the provisions of Section124(6) of the Act read with the Investor Education and Protection Fund Authority(Accounting Audit Transfer and Refund) Rules 2016.

40. Acknowledgment

Your directors place on record their sincere gratitude and appreciation for theemployees at all levels for their staunch dedication and highly motivated performanceacross the globe which contributed greatly for persistent performance of the Company.

Your directors would like to sincerely thank all the stakeholders medicalprofessionals business partners customers vendors stock exchanges government &regulatory authorities banks financial institutions analysts and shareholders for theircontinued assistance co-operation and support.

For and on Behalf of the Board of Directors of
SeQuent Scientific Limited
Place: Thane Dr. Kamal Sharma
Date: June 30 2021 Chairman

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